13 February 2019 – profit warning
The international consultancy group has announced that revenues in the current financial year to 31 March are likely to be at a similar level to last year and in line with expectations. However, a greater proportion of revenue will come from the group’s International Development business which has lower margins than the UK business and the current political climate is resulting in delays on investment decisions in the UK business itself. This means that the group is unlikely to see the usual upturn in activity in the final quarter of the year. In turn, the group expects to breach its banking covenants and the group has entered into discussions with its lenders to secure a deferment or waiver of the covenants. The share price has collapsed as a result and we suggest that those readers who are invested monitor the situation closely. We would not be tempted to sell at this stage as any successful outcome to these talks could see a sharp rebound in the share price. HOLD.