The Board has been restructured, with the Directors in charge of the three main operating divisions brought onto the holding company Board and given full responsibility for revenue, profit and cash generation. Central support functions have been reduced and accountability moved to the divisions. Good progress has been made by each of the main divisions during the second half of the year.
Following the revision of expectations in mid-February 2001, overhead costs are being reduced by £1.5m on an annualised basis mainly by shortening the lines of communication (including the removal of tiers of management) and the planned reduction of office accommodation costs through a review of spare capacity across the group.
Particular attention has been paid to staff utilisation. The total number of staff employed by VEGA at 30 April 2001 was 575 (down 4% on the 599 at end-October 2000). Staff numbers within the Defence division have fallen through natural staff turnover, but there have been increases within Space and Consultancy. Overall staff utilisation improved steadily during the latter months of the year to give an improvement of 5.5 percentage points for the second half year as a whole compared to the preceding first half year. The biggest improvement was achieved within Defence, particularly during the final quarter of the year. On the back of the improvement in utilisation, cash generation has also been strong, with net debt reducing by over £1.5m from the position at the end of October 2000.
Order intake has continued on track. Recent developments include :
– Re-commencement of work on the previously suspended £6m Nimrod contract for BAe;
– We have now commenced work on the Eurofighter contract, having received an Instruction to Proceed for both elements of the contract; and
– Over £4m of new Consultancy division orders have been signed in the latter part of the period.
At the year end, the total contracted order book stood at £38m (30 April 2000 £35m); this excludes the bulk of the multi-million pound Eurofighter contract which is expected to be VEGA’s largest ever contract win.
