Engineering consultant blames situation in Ireland, Poland, Belgium and Romania for one-off cost
Engineering and environmental consultant Waterman has said bad debt will hit the company by up to £5.7m in 2010.
In a trading update to the stock market this morning, it blamed poor payment in Ireland, Poland, Belgium and Romania for the one-off cost, which includes unused office costs for the remaining terms of its leases in the countries.
Its share price fell 11% to 42p in early trading on Thursday.
There will also be redundancy costs after the company reduced staff by 73 to 1,216 in the six months to 30 June 2010.
The company said: “We anticipate that a provision for the above mentioned exceptional items of up to a maximum of £5.7m may be required for the financial year ended 30 June 2010. A final decision will not be made in this regard until the full year results and the amount will be reviewed during the normal year end audit process.”
Waterman added that its banking covenants will not be affected by the £5.7m hit as its banker HSBC decided to exclude the one-off costs from its calculations.
Despite the news, it said was still intending to pay a dividend of 0.9p, taking the 2010 total to 1.8p per share.
Waterman has been particularly hit by the drop in the UK commercial property sector and it welcomed news that Land Securities will proceed with its 1msq ft Trinity retail scheme in Leeds, which was designed by Waterman.
It added: “We are currently working on the design of several London office buildings located in the City and West End which are also anticipated to progress to construction within the next twelve months.”
The UK accounts for about two-thirds of Waterman’s turnover.