viewSweett Group

Sweett Group falls as it admits to bribery offence

The infrastructure and project management company says prosecution is now expected, with a fine likely, though it is not yet known how much the fine will be.

Sweett can progress unencumbered in the future, says chief executive Douglas McCormick

Sweett Group (LON:CSG) shares fell around 14% on Wednesday after revealing it had admitted an offence to the UK’s Serious Fraud Office.

The admission of an offence under Section 7(1) of the UK Bribery Act 2010 (failing to prevent an associated person bribing another to obtain or retain business for the company) follows an SFO investigation which was triggered by allegations in the Wall Street Journal in June 2013.

“During the process of our own investigations two related contracts within the Middle East were identified as suspicious and were duly reported to the SFO,” the company said in a stock market statement.

It added: “Subsequent prosecution is expected, with the likely outcome of a fine, the quantum of which cannot be ascertained at the present time. 

“Importantly, an offence under Section 7 (1) does not attract a mandatory debarment from public sector tendering under EU/UK law.”

City broker Sanlam Securities highlighted in a note that the admission “brings closure a little closer”.

Sweett chief executive Douglas McCormick, who joined the company earlier this year, meanwhile, said it would allow the company to progress unencumbered in the future.

“This is an important next step in the strategic turnaround of the business,” McCormick said.

"Sweett Group is a great business, the outlook for our European and North American markets is strong and I am confident that we will see further benefit in the second half of the year."

The building and infrastructure company also this morning revealed financial results for the six months to September 30.

Profit from continuing operations amounted to £0.4mln, compared with £0.8mln in the comparative period of 2014, and it included a £0.8mln loss for the operations in the MENA region and £0.2mln of bank refinancing costs.

The company said it had incurred £0.9mln of exceptional costs during the period relating to the SFO investigation.

At September 30, the company had £10.1mln of debt.

Since the end of the first half the company has sold its Asia Pacific and India based businesses for £9.3mln in cash.

It expects debt to have reduced to around £4mln by the end of the financial year.

On AIM, Sweett shares were down 3p, 14.46%, trading at 17.75p each.

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