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Tue September 22 2020

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Sweett hangs hopes on Asia

8 Dec 11 Quantity surveying group Cyril Sweett fell into a loss and saw work decline across all regional operations except Asia Pacific.

However, it says that cost-cutting and restructuring in Europe has led to improved results and there are opportunities for growth in China on the back of the Widnell acquisition in July 2010.

Thanks to Widnell Sweett, total group revenue for the six months to 30 September 2011 was up 3% to £36.1m (H1 2010: 35.0m).  The bottom line was a pre-tax loss of £200,000, compared to a £1.3m profit for the same period last year.

The company said that restructuring had removed £2m a year of costs form the business and the order book was now at a record high of £91m, up 17% year-on-year.

Revenue from Europe, comprising operations in the UK, Ireland, France and Spain was £20.4m (H1 2011: £22.6m), accounting for 57% of group revenues. Segment profits before exceptional expenses and amortisation of acquired intangibles were £1.7m (H1 2011: £1.4m) and the order book is £41m (H1 2011: £34m).

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Revenue from Asia Pacific was £11.0m (H1 2011: £7.2m), accounting for 30% of group revenues. Widnell Sweett revenue was £6.8m in the period and £2.7m for the three months post-acquisition in 2010. After significant investment in the region, with new offices and increasing staff numbers from 350 to 550, segment profits before exceptional expenses and amortisation of acquired intangibles were £800k (H1 2011: £900k). The order book is £45m (H1 2011: £34m).

Revenue from Middle East, Africa and India was £4.7m (H1 2011: £5.2m),accounting for 13% of group revenues. Segment losses before exceptional expenses and amortisation of acquired intangibles were £500k (H1 2011: profit of £100k) and the order book is £5m (H1 2011: £10m).

CEO Dean Webster said: "The first half of the year was characterised by difficult market conditions. This has not stopped us from investing in the further expansion of our business, in particular across the Asia Pacific region. In China, our presence has grown from 350 to over 550 staff, with the opening of new offices in mainland China, together with Thailand and Vietnam. In Europe, we have continued with our investment in the energy sector and made further PPP investments. Whilst our expansion has increased our debt levels, we expect these to reduce significantly in the second half of the year as our cash generation improves.

"Our restructuring actions will deliver £2m of annualised cost savings from 1 April 2012, mainly in the Europe region. We are also encouraged by an improved level of bidding activity across the group, as evidenced by our growing order book. Whilst our markets remain fiercely competitive, improved trading in our core services, combined with opportunities to recycle some of our PPP investments, means we remain on track to deliver on our current expectations for the full year.”

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