Sweett Group posts £19.1m loss on eve of proposed takeover

On the eve of its planned acquisition by WSP|Parsons Brinckerhoff, cost consultant Sweett Group has posted a pre-tax loss of £19.1m on turnover of £77m for the year to March 31 2016.

Provided its shareholders agree, Sweett Group is due to be acquired for £24m by WSP|Parsons Brinckerhoff with effect from 8 July 2016 but the losses announced this week have led some industry observers to question whether the sale will go ahead as currently planned.

Sweett’s losses are split across three main areas. The consultant’s withdrawal from the Middle East market cost the firm £1.3m, while the investigation of bribery claims in the Middle East has cost the company a further £1.4m. Sweett was also ordered to pay £2.3m in fines after admitting to bribery offences in its Middle East subsidiary in February this year.

In a further hit to the balance sheet, the company will also have to pay a £1.3m adjustment to Currie & Brown over the sale of its Asia Pacific and India business.

Sweett has admitted that its financial position “is likely to deteriorate materially in the short term” as a result of the losses. The company has extended its banking facilities until 8 July when the takeover by WSP|Parsons Brinckerhoff is due to be completed. If the sale does not go ahead, Sweett say that they would face “potential significant difficulty without the renewal and/or renegotiation of its banking facilities,” casting doubts over the firm’s future.

In a statement in their annual report, Sweett said: “Should the sale to WSP or another bona fide alternative purchaser not materialise, the directors would need to seek alternative sources of funding in order for the group and company to be able to meet their debts as they fall due upon expiry of the Group’s current banking facilities.

“As a result, the directors have concluded that pending the acquisition of Sweett Group by WSP being completed as expected or successful agreement to raise additional funding being reached, there exists a material uncertainty which may cast significant doubt over the ability of the Group and the Company to continue as a going concern.”

Across the five regions of its operations - London and the South-east, England and Wales, Scotland, Ireland and Investments, Mainland Europe and North America – Sweett posted revenue of £54.9m for the year to 31 March 2016, compared with £51.5m in 2015, with a pre-tax profit of £2.2m (£2.9m in 2015). 

Sweett also reported a 10% increase in bidding over the year, increasing its overall win rate from 37% to 40%. 

Last month the Sweett board announced that it had reached agreement on the terms of a recommended offer from WSP|Parsons Brinckerhoff to acquire the firm. Writing in the firm’s annual report, Sweett chief executive Douglas McCormick said that he believed that the proposed sale “will provide Sweett with enhanced opportunities and the combined entity will achieve increased prominence in the global markets in which we work. Joining WSP will provide Sweett with a stronger platform both operationally and financially for growth in the years ahead.”

However, McCormick said that if the sale to WSP|Parsons Brinckerhoff was not approved, “the group faces potential significant difficulty without the renewal and/or renegotiation of its banking facilities”.

As we went to press we were unable to secure a comment from WSP|Parsons Brinckerhoff.

If you would like to contact Andy Walker about this, or any other story, please email