Scott Wilson Group PLC, the multi-disciplinary international design and engineering consultancy for the built and natural environments, are to make further staff cuts according to the Interim Management Statement released this morning for the period from 12 December 2008 to date.
The company said that the period under review has seen a rapidly deteriorating global economic environment during which the Group continued to address current market conditions and to restructure its organisation to match resources with its anticipated workload.
At the time of the Group’s interim results announcement on 12 December 2008, the Board indicated that Scott Wilson continued to make strong progress, despite the uncertain economic conditions, tangibly demonstrated by the strength of its order book. Since then the order book has continued to grow and now stands at record levels reflecting the Group’s success in securing commissions in many markets around the world.
However the company said that, more recently, certain market sectors in the UK and the Middle East have seen the deferral of client commitments to pipeline projects and, in a few cases, the postponement or curtailment of existing work-in-progress. This has caused disruption to short-term resource planning and an adverse impact on staff utilisation.
The Group said that looking beyond the current financial year, market conditions make it difficult to predict performance with any precise degree of certainty.
Cost reduction initiatives and exceptional charge
The interim results statement has highlighted the fact that management have implemented a number of measures across the Group with a view to increasing efficiency and preserving cash.
Employee numbers have already been reduced and further programmes are currently underway which in total will result in a 10% reduction in Scott Wilson global workforce, whilst salaries for remaining UK staff will be frozen. Five smaller offices in the UK have been closed and where appropriate office space in major hub cities is being consolidated. Aggregate annual cost savings from these initiatives are expected to be in the order of £20 million.
As a result of the current credit squeeze on many of the Group’s clients, the Board has also undertaken a reassessment of work-in-progress and debtor balances resulting in a combination of a precautionary increase in the overall level of provisioning against the debtor book and charges against specific contracts.
While the company remains optimistic about its prospects, the short-term challenge for the Group is the matching of capacity with its workload. The statement said that the continued strength of the Group’s order book and its diversified business model together mean that it remains well positioned to benefit when market conditions stabilise.
The total cost of streamlining the resource base, together with the provisions against work-in-progress and debtor balances, will result in an exceptional charge of £4-6 million in the current financial year.
The company remain optimistic about its prospects, but said that the short-term challenge for the Group is the matching of capacity with its workload. The statement said that the continued strength of the Group’s order book and its diversified business model together mean that it remains well positioned to benefit when market conditions stabilise.
The company remain optimistic about its prospects, but said that the short-term challenge for the Group is the matching of capacity with its workload. The statement said that the continued strength of the Group’s order book and its diversified business model together mean that it remains well positioned to benefit when market conditions stabilise.