Companies: SWG   

Thriving consultancy outfit Scott Wilson floated on the main board in March by way of an oversubscribed placing at 158p. A shade over £68m was raised for the company – to top up working capital, to pay down bank debt and address pension deficits – and an additional £3.5m was raked in for selling shareholders.

Fronted by chairman Geoff French, Scott Wilson sells a range of professional services for civil and structural engineering projects, the transport sector and for environmental studies. It is the ninth biggest UK-owned engineering consultancy in fee income terms. Over the past three years, the bulk of revenues have been won in the UK, with around 33% emanating from overseas, and key clients and partners include Network Rail, Southern Water and London Underground.

Maiden ‘listed’ figures for the year to April matched upgraded forecasts, with pre-tax profits (before goodwill and exceptional items) rising from £4.6m to £8.3m on revenues of £198m. Operating margins grew from 4.8% to 5.6% and thanks to the float funds and strong trading cash flow, the year-end balance sheet was flush with £33.1m net cash and cash equivalents. Since the year-end, £16.6m has been injected into the group’s pension schemes.

Notable projects on which the company has recently worked include Victoria Station, London Crossrail and Bangkok Airport. The order book stands at a record £213m, with major contracts recently announced including London Crossrail and Edinburgh Airport Rail Link.

Prospects are compelling, with the UK market looking strong and international markets also offering significant growth potential. For April ’07, house broker Brewin Dolphin predicts a spike in profits to £14.1m from sales of £218m, giving earnings of 13p and a prospective multiple of 16.6. Not especially cheap after a good run, but investors can look forward to an interim payout and it is certainly worth adding to existing holdings.