Results coming up on June 8th...

14th May '09 by MrT

5 comments 2610 reads

Design consultancy, which was acquired in a management buy-out following the demise of Welsh utilities group Hyder.
Currently working on the world’s tallest building in Dubai, the Burj Dubai - http://bit.ly/8Ua1B
Quite neutral interim management statement in February - http://www.stockopedia.com/news/announcement/HYC/090212hyc1782n.htm Cautious over its prospects for the coming year. Hyder said the weak pound had helped its order book grow to almost £400m and that it had won contracts for Europe’s largest construction project, London’s Crossrail, covering tunnels, stations and rail systems. However, it announced that it was cutting its workforce in February by 8%: 400 job losses from its 5,000-strong workforce. This would lead to exceptional costs of £8m in the second half, but would result in annual cost savings of £4m.
More confident (but very brief) pre-close statement at beginning of April -http://www.stockopedia.com/news/announcement/HYC/090406hyc1419q.htm - saying:

The Group has substantially completed the restructuring announced on 12 February 2009 to align regional operations to core markets, improve efficiency and deal with changes in market conditions. Trading for the year has been in line with current
market expectations and ahead of the prior year. The year end net debt position will be substantially better than market expectations primarily as a result of a strong focus on cash generation, although collection of trade debt is more difficult in the
current economic climate. Whilst there remains uncertainty in the Group's markets, with over 65% of revenues derived from overseas, Hyder's diversity, strong order book and low gearing gives the Board confidence for the future.

Expects to announce its results for the year ended 31 March 2009 on 8 June 2009....

I am probably a seller given its dependence on the global construction industry - the orderbook growth seems to be pretty much currency driven, but would welcome any thoughts.

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emptyend

14th May '09

Can't say that exposures to the Dubai property market suggest anything but trouble to me. I think that is all going to end in tears - but I guess "the world's tallest building" would be too prestigeous to be allowed to see a default.

Just the type of business I'd personally avoid, but I guess if one can get close enough to know where the credit risks lie in this sort of outfit then some might reach a different conclusion?

SteveM

22nd May '09

Fortunately they're not just working on the Dubai property market - I believe that is a fairly small part of their overall business. They tend to have more exposure to the water and environmental sectors, probably as a result of their parentage, and have a decent spread of international businesses.

They are indeed finding the current business environment tough and have closed some offices and made some redundancies, however I think the share price more than reflects the challenging times and the company looks cheap to me - should have little debt in the light of the most recent trading statement, and reasonable earnings, albeit with a bit of a dip expected in 2010. Still, even with that dip, they're on a forward P/E of just over 4, with low debt, and are likely to benefit from stimulus work across the areas they work in. I've been buying and am optimistic that I shall make money on them. It looks like the directors also think so as they have been buying decent sized chunks of the business from February this year onwards. Still, if you don't like it, you don't like it. I do!

23rd May '09

Hi Steve,

Perhaps my view is a bit tainted by having worked in other forms of consultancy and seen problems first-hand, but my concern is always about the credit risk on customers. If they can keep getting paid on their major projects (and it is quite possible that long-running projects are "pay as you go" with monthly billing) then they will probably be fine.

Fair point re the water/environmental slant (given the Welsh Water link) - should be a safe enough sector for the most part.

Good luck with it.

25th May '09

Yes, take your point as I too have a long history in management consultancy. However, long running projects will normally benefit from regular monthly billing, and if the bill isn't paid, then work tends to stop. The other thing in their favour is the building of long term relationships with their clients. Should see soon, anyway.

Steve.

8th Jun '09

Don't know whether there is much interest in this here, but the results were out today and were pretty much as expected. Debt down to £5.7M, turnover and adjusted profit up before exceptionals. All looks pretty good, share price now 150p to buy, which is some way ahead of where it was when we discussed previously.

* Order book up 22% to £384.0m

* Revenue up 37% to £319.0m

* Adjusted operating profit(i) up 16% to £17.4m

* Adjusted profit before tax(i) up by 8% to £15.6m

* Final dividend up 50% to 4.5p per share

* Cash conversion 88%, with net debt of £5.7m (2008: £11.1m)

(i) Adjusted operating profit and profit before tax are before amortisation of intangible assets arising from
business combinations and exceptional items.

Sir Alan Thomas, Chairman of Hyder Consulting PLC commented:

"I am pleased to report another strong year for the Group with results ahead of last year and of market
expectations. Our leaner structure and low gearing, together with our geographic and market spread, equip us well
to manage the challenges ahead and to take advantage of the opportunities which will arise."

http://www.investegate.co.uk/Article.aspx?id=20090608065926M5302

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MrT

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