As outlined in previous trading updates and in our recent interim results, our Russian operation was successful in winning work on a large new mixed used scheme on the Moscow River.
Unfortunately, due to funding issues, the developer of this scheme has now asked us to temporarily suspend work whilst these matters are resolved. Whilst it is hoped these funding issues will be resolved swiftly, it is possible that the project will be suspended for a lengthy period. Continued suspension of this project will cause a significant shortfall in projected group revenues for the current year.
As also outlined in our recent interim results, the Group has three major claims for fees under existing contracts with clients. Two of these claims relate to additional work performed whilst the third relates to fees due where litigation is at an advanced stage. The directors have made estimates they consider reasonable and prudent of the most probable outcome of these three claims, but the actual outcome may differ from those estimates.
In addition we have continued to experience some slippage in UK projects and are currently undertaking a consultation process regarding a number of senior practice staff in the UK. Should a decision be made to further reduce the number of senior practice staff, the Group would incur additional restructuring charges in the current year.
Accordingly the directors believe that AFR will report a significantly worse result for the year to 30 September 2009 than previously anticipated. The extent of the difference will in part depend upon the length of suspension of the Russian project.
The Group’s management continues to focus on adjusting the Group’s cost base to reflect medium term work forecasts, and accordingly will take action to reduce costs where necessary to achieve this aim.
The board remains confident of the Group’s ability to trade through the current very difficult circumstances affecting the economy as a whole and the property industry in particular. A further update will be made in due course.
Aukett Fitzroy Robinson – 020 7636 8033
Tim Hodgson, Chairman
Nicholas Thompson, Chief Executive Officer
Duncan Harper, Group Finance Director
FinnCap – 020 7600 1658
Hermes Financial PR
Chris Steele – 07979 604687
Trevor Phillips – 07889 153628