23rd Apr 2015 07:17
LONDON (Alliance News) - Sweett Group PLC Thursday said trading in the recently-ended financial year was in line with its expectations, but it has decided to sell its Asian business after a strategic review, and it will also book a charge of about GBP1.6 million in its accounts related to a probe by the UK's Serious Fraud Office.
The construction and infrastructure projects consultancy is being probed by the SFO after allegations were made in the Wall Street Journal in June 2013 about improper business conduct by a former employee of its subsidiary Cyril Sweett International Ltd. The paper had 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 commissioned its own independent investigation into the matter, prompting the SFO to say it no longer considered that the company was cooperating with it. On Thursday, Sweett said the independent investigation is complete and a summary of facts have been passed to the SFO, which is continuing its own investigation. It will book the GBP1.6 million charge related to the matter in its accounts for the year to March 31.
Sweett has also been conducting an independent review of its business, after it appointed John Dodds as chairman in August of last year and Douglas McCormick as chief executive in March of this year. The aim was to try to improve profitability and cash flow and thereby reduce its debt.
"The review concluded that the UK and European businesses, which have strong market positions and financial dynamics, should be the central pillars of the group's growth strategy. It has also been decided that a buyer should be sought for the Group's APAC business who is better able to maximise the significant opportunities for growth available to the business," Sweett said.
It said it has started talks with a number of interested parties over its Asian business, although thet are at an early stage. It said it would use the proceeds of a sale to pay down debt, expand in the UK and Europe, and generate "sustainable" growth in North America.
"I have been in post for seven weeks and have visited many of our operations and met a large number of colleagues. I have found a great business which has had a difficult time. These difficulties are very clearly surmountable and we have outlined today a broad strategy, focusing on improving group profitability and cash flow, addressing a number of the key issues facing this business," McCormick said.
It said net debt stood at GBP9.5 million at the end of March, better than market expectations and an improvement on the GBP10.1 million debt position it had at the end of last September.
Sweett said trading in the financial year that ended March 31 was in line with market expectations, with trading strong in the UK and Europe, steady in Asia Pacific, and challenging in the Middle East and Africa.
The UK and Europe business accounts for about 55% of total revenue and 46% of the order book, while Asia Pacific accounts for about 35% of revenue but 46% of the order book.
It also said its US joint venture is performing well and contributed to profitability for the first time. It said there has been a noticeable increase in transatlantic client referrals, particularly in the corporate sector.
Sweett Group shares were up 4.2% at 23.45 pence early Thursday.
By Steve McGrath; [email protected]; @stevemcgrath1
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