Trading Update – Russian Contract Extension
In the recent preliminary results of 15th January the Company announced the signing of a 4,000,000 sq ft office complex for a major Russian financial institution. We are now pleased to advise that instructions have been received and a large advance payment made by the developer client to progress to a planning application this year. This will result in a significant uplift in the Russian operation’s income and profits for the current year.
The board’s stated intention has been to diversify revenue streams away from the deteriorating UK market and this has proved to be a successful strategy with good progress being made in both Russia and the Middle East. We continue to receive a number of enquires in Russia and have signed further project contracts in Moscow notwithstanding the fact that the Russian market is, in general, experiencing similar funding issues with property projects resulting in widespread deferrals of project starts.
The company stated in the recent preliminary results that it would be necessary to review the UK cost base in view of the decline in the UK market. The outlook for the UK has worsened since January with a number of projects experiencing delays. As a result further cost cuts have been made and the impact of this restructuring will be seen in the first half.
As a result of the continued growth in our overseas operations, compensating for the problems in the UK market, the Board remains confident that it will achieve market expectations for the full year. Due to the large advance payment from Russia, as referred to above, revenue will be increasingly dominated by non-UK based project income. Overall it is anticipated that improvement in second half profitability should more than offset the restructuring costs of the first half and the group will continue to be cash generative.
Aukett Fitzroy Robinson – 020 7636 8033
Duncan Harper, Group Finance Director