Delayed payments could hit engineering consultancy although it will comply with banking covenants
WSP Group today said it expects trading profits for the year ending 31 December 2010 to be in line with expectations, but warned that its debt might be higher than anticipated because of delayed payments.
Unveiling a pre-close trading statement, the engineering consultancy said the year has proved challenging in varied but generally difficult markets.
“We have experienced some slowing of debtor collections as clients manage their cash more tightly and some expected receipts could be temporarily delayed beyond the year end,” WSP said.
“As a consequence of this, our reported net debt at 31 December 2010 may be higher than previously anticipated although the group will continue to comfortably comply with its banking covenants and remains well financed with a £150m committed credit line through to 2013.”
WSP said it had sold a loss-making testing laboratory in its UK Environment & Energy business and was progressing with the disposal of its small UK donor aid business.
It was also restructuring its industrial process business, CEL, which had found trading very difficult, to integrate it into the core UK operations.
The net losses associated with these actions, including the partial write-off of goodwill associated with CEL, would be reported as an exceptional item.
Looking ahead to 2011, WSP expects the UK market to remain subdued as a consequence of reduced public sector spending and without a compensating recovery in the private sector.
It said it was more optimistic about its European operations, specifically Sweden, where workloads and prospects remain strong.
WSP also announced the appointments of Tony Thorne, former chief executive of packaging firm DS Smith, and Wates Group finance director Huw Davies as non-executive directors, effective from 1 January 2011.