WSP Group plc, the leading international business supplying specialist and integrated services in the built and natural environment, today provides the following update on trading in advance of its preliminary announcement to be made on 1 March 2010.
Profits for the year ended 31 December 2009 will be in line with the Board’s expectations subject to any further provisions required arising from recent events in Dubai.
As expected, the year has proved to be challenging for the Group in some very testing markets. We have responded proactively and vigorously to the downturn experienced in most markets in the private sector and taken action to match our cost base with revenues. The public sector has proved more resilient and we have seen a good performance across all our markets, in particular from our substantial European operations where activities are weighted towards the public sector.
Although now representing only about 5% of Group revenues, we are well established in the Middle East and active in many countries across the region. We have reported regularly on the ongoing and severe lack of liquidity in Dubai following the unprecedented slowdown experienced in that market towards the end of 2008 and the impact this was having on the resolution of contracts. Recent announcements from Dubai have only served to increase the level of uncertainty as to when and how these matters will be resolved, although we are encouraged by the most recent indication of support from Abu Dhabi.
The Group currently has £15m of trade receivables and unbilled amounts due on contracts with clients in Dubai, after reflecting £8m of provisions made in 2008. These are being reassessed and any further provisions considered necessary will be charged against 2009 profits and reported as part of our preliminary announcement on 1 March 2010. In the meantime we continue to actively pursue our contractual entitlements to amounts due, accepting this could take some time.
Notwithstanding events in Dubai, our net bank debt is at expected levels. We remain comfortably within our banking covenants and well financed with a £150m committed credit line to 2013. We expect this situation to be maintained.
As we move into 2010 our long-term order book is resilient but has fallen slightly from that reported at the half year to £970m. Our 3 month order book, against which we manage resource, is appropriately balanced. Looking forward, we expect conditions in the private sector in our main markets to remain subdued. We are anticipating that public expenditure will come under further pressure with some negative impact on pricing and margins. We continue to proactively monitor our cost base although, at this time, we do not anticipate the requirement for any significant further restructuring costs.
Our strategy of sector and regional diversification has provided the Group with some overall resilience to generally difficult market conditions. We are appropriately positioned and resourced to grow our market share and we have been encouraged by recent project wins. This strategy and positioning should ensure we will benefit strongly when economic and market conditions improve.
For further information please contact:
WSP Group plc
Christopher Cole Chief Executive 020 7314 5121
Peter Gill Finance Director 020 7406 7011
Buchanan Communications
Charles Ryland / Nicola Cronk / Ben Romney 020 7466 5000