Payment issues highlighted as engineering group reports trading at 'lower end' of expectations

Engineering group Waterman is trading at “the lower end” of board expectations and may have to write off up to £4m of bad debts, it said in a trading update out today.

In a statement to the stock market for the period from 23 February, the firm said it had made further staff cuts and cost reductions in the second half of its financial year in response to worsening markets.

The group said that trading conditions were “extremely difficult and challenging”, particularly in Russia, Ireland and the UAE and that it was owed money by a number of clients.

It said: “Whilst for the most part cash collection across the group has been good, we have seen a very small number of instances of projects being suspended and clients suffering financial difficulties.

“This may require exceptional provisions for bad debts and a work in progress impairment to be made by the group in respect of the current financial year.

“No decision will be made in this regard until the full year results, but the current view is that the maximum amount of such provisions could be approximately £4m.”

The firm said the economic environment would “remain challenging” for some time but added that the UK public sector was providing new opportunities, with recent appointments including a Highways Agency job on the M62 and Network Rail's National Centre in Milton Keynes.