Companies: SWG   

Fast growing consultancy group Scott Wilson, which sells professional services for engineering and transportation projects, has cemented its position in the London rail market by entering into a contract with a Balfour Beatty/Carillion joint venture.

Thought to be worth as much as £14m to Scott Wilson, the contract is for the provision of design services for Transport for London’s East London Line (ELL) project to upgrade and extend the line to the north and south of its current route.

Scott Wilson, recently named as the ninth largest UK-owned engineering consultant by fee income, will work alongside the joint venture, awarded the deal by TFL for ‘Phase One’ of the ELL project, which forms an integral part of the 2012 Olympics transport strategy.

Chairman Geoff French said the contract marks ‘the third significant major railway project announced’ since Scott Wilson went against the grain by floating on the Full List, rather than AIM, in March, by way of an oversubscribed placing priced at 158p.The ELL work follows Crossrail and Edinburgh Airport Rail Link wins announced earlier this year.

Forecasts in the market, before the ELL news, for the current year to April suggested a top line rise from £198m to £225m and a forceful leap in pre-tax profits to £14.5m (£8.7m). Earnings should grow from 11.8p to 13.2p, placing the shares on a forward price-earnings ratio of 17.5.

We think that is fairly undemanding with Scott Wilson thriving in buoyant markets, having beaten its own float predictions with maiden preliminary figures, and set to hit the dividend trail at the next interim period. Hold for further growth.