UK Small Caps

LONDON (ShareCast) - Multi-national engineering consultancy Hyder Consulting (LSE: HYC.L - news) reported full-year profits marginally ahead of market expectations.

Despite difficulties in the property sector and a slow-down in Dubai, adjusted pre-tax profit in the year to 31 March 2009 rose 8% to £15.6m, marginally above the most optimistic of broker forecasts.

With exceptional items of £9.14m included - mostly relating to restructuring charges - pre-tax profit fell to £3.2m from £12.7m the year before. Revenue jumped to £318.97m from £233.67m, driven by strong growth in the Middle East and the Asia Pacific region.

New chief executive officer Ivor Catto, who joined the company in December 2008, said the year had been characterised by a strong drive to generate cash. The cash conversion rate rose to 88% from 23% the year before.

'There was some carry over from the previous year, about £4m of payments,' Catto told Sharecast, 'but in the main it was about changing the company culture to get people focused on generating cash. This involved measures such as filling in weekly time sheets, invoicing on time, chasing up debt and getting the right sort of contract,' he added.

'We came down hard on some customers who have owed us money for a considerable time, and we were able to do so because we don't foresee them as future customers, because they are bad payers,' Catto said.

As a result of the vastly improved cash generation and the company's 'comfortable position of low net debt' the full year dividend has been bumped up 50% to 4.5p,.

Net debt fell to £5.7m from £11.1m at the end of March 2008 and the company's aim is 'to be cash positive in the current environment,' said finance director Russell Down.

Down added that net debt in the current financial year is expected to level out but the company expects to see debt to eliminated in fiscal 2010/11.

The order book rose 22% over the course of the year to £384m, having topped £390m at one point. Management told Sharecast that it had not seen any order slippage, though the potential for order delays is always there.

The company has already secured 60% of its budgeted revenue for the current financial year, around the same proportion seen at this time last year. Revenues are expected to ease slightly in the current financial year as a result of the company's restructuring.