Architect in talks with banks over paying tax bill as revenue and profit fall below expectations
Architecture firm Archial has issued a profit warning, blaming cancelled and delayed projects, as it seeks help from banks and shareholders in paying its tax bill.
The firm, which was involved in the design of Peckham Libary and many other high-profile projects, said its revenue and profit for the whole of 2010 will be well down on expectations, despite “cost saving action” at the end of 2009 and in the second quarter of 2010.
It has also started on another “programme of cost reductions” to try and save an annual £4.25m.
Since making the announcement the firm’s shares have plummeted two thirds, from 4.5p last night to 1.5p at 11.55am this morning.
The statement said: “The continuing economic slowdown and significant reduction in government spending together with the well publicised uncertainty in the construction industry, has led to several of the Group’s projects being cancelled and many being postponed or delayed.
“The Group is also in discussion with HMRC with regards to amounts due in respect of prior tax years. Negotiations with regard to the scheduling of these payments are continuing.
“In the light of this and current trading conditions reported above, discussions are being held with the Group’s bankers and principal shareholder with regard to financial support necessary to conclude these negotiations. The Group hopes to resolve this issue as soon as possible and will continue to update the market as appropriate.”
Two hours after the trading update was issued, Archial’s chief executive, Chris Littlemore, released a further quote in an attempt to steady the market’s nerves, saying: ‘’We continue to deliver great work. Like the vast majority of architectural and construction industry professional practices, we are finding trading challenging at the present time and we have, as many companies, issues requiring funding considerations and negotiations as a result. We are working to resolve the situation.”