6th Nov 2014 09:09
LONDON (Alliance News) - Sweett Group PLC Thursday lost more than a quarter of its value after it issued a profit warning, saying it had "identified challenges" in some of its overseas operations.
The construction and property consultancy said its UK operations continued to recover in the first half of its financial year, but it said trading in Hong Kong had been disappointing and it is set to writedown the value of its Australian business in its full-year results unless there's a significant improvement in trading in the second half.
It also said the Middle East remains a challenge, and it is committed to reducing and restricting its exposure to the region.
Sweett also said it will book charges to cover the costs of its investigation into allegations of deception reported by the Wall Street Journal last year, as it continues to cooperate with a UK Serious Fraud Office probe into the allegations.
The company had been talking with the UK's Serious Fraud Office and the US Department of Justice since allegations were made in the Wall Street Journal in June last year about improper business conduct by a former employee of its subsidiary Cyril Sweett International Ltd. The paper alleged the former employee had offered to award a hospital design contract in Morocco to an architecture firm as long as that firm agreed to pay 3.5% of the contract value to an official inside the United Arab Emirates president's personal foundation, which was funding the project.
Sweett said the independent investigation it had commissioned into the affair is nearing completion.
"Since becoming Chairman in August, I have conducted a thorough review of the group's business, the outcome of which is set out in today's announcement. I am looking forward to taking the business forward with a greater focus on profitability and cashflow," Chairman John Dodds said Thursday.
The company said its order book remains at about GBP107 million, buoyed by significant wins in the UK including work for Jaguar Land Rover, the BBC and schemes at both Manchester and Liverpool universities as well as infrastructure appointments with the high-speed rail project HS2 and Battersea Power Station. In China, it secured work on Alibaba's 110,000 square metre commercial development.
Sweett also said its joint venture partnership in the US continued to make progress, winning work on Primark's flagship store in Boston.
However, these wins were not enough to offset the problems in other overseas markets. It said it is likely to make an impairment against the carrying value of GBP3.0 million of goodwill in its Australian operations unless trading in that business picks up significantly in the second half of its financial year to the end of March.
The company expects to report its full interim results on December 2.
Sweett shares were down 29.1% at 24.10 pence early Thursday, the second-biggest decline on the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
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