Shares in consultant WSP plunged by more than 5% this morning, admitting it is still uncertain of developments in Dubai, where it has £15M in unpaid bills.
The consultant admitted that: “As expected, the year has proved to be challenging for the Group in some very testing markets,” in a statement released to the London Stock Exchange although it said it did not anticipate any further restructuring costs.
“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.
“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,” it read.
The statement said that group revenues in Dubai had been squeezed to just 5% of turnover and work had been shifted to other Middle Eastern countries.
”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,” read the statement.
The consultant reported strong banking credit lines of £150M to 2013 and was operating within covenants.
Forward orders had fallen to £970M from more than £1bn reported in half-year results in July.
“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.
“Our strategy of sector and regional diversification has provided the Group with some overall resilience to generally difficult market conditions.”
Shares in WSP fell more than 5% to 265p in early trading.