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Sweett Group chief executive Dean Webster said there was no plan to look at refinancing the 拢73m-turnover consultant business after a 鈥渄ifficult year鈥� in 2011/12.

Webster claimed the firm was back on track despite a technical breach of its loan covenants at its year-end in March when the sale of two PFI assets were delayed, and that he was 鈥渧ery optimistic鈥� given trading since March.

Shares in consultant Sweett Group, formerly known as Cyril Sweett, had fallen as much as 5% this morning as it reported a pre-tax loss of 拢1m and revealed it had breached its banking covenants.

The consultant, which earlier this year posted profit warnings and delayed publication of the accounts after expected sales of two PFI assets failed to materialise, said its principal banker, Lloyds HBoS, had granted it a 鈥渨aiver鈥� to the breach of loan covenants.

However, the share price had recovered by lunchtime and Webster said the firm was no longer in technical breach of covenants because of the completion - after year end - of the 拢2.2m sale of one of the delayed PFI assets, and that the group would not be forced to re-finance.

He said: 鈥淭here is a considerable amount of headroom on our debt facilities. If our covenants were tested today we would be absolutely fine,鈥� he said.

鈥淭he problem would only arise if all of our material uncertainties came to pass in aggregation, and that鈥檚 the test we鈥檝e done and passed with our auditors.鈥�

Sweett Group chief financial officer Chris Goscomb said the breaches had been a 鈥渟mall infringement鈥� on two of its covenants given the delayed asset sales, and that the issue was now 鈥渄one and dusted.鈥�

Webster added: 鈥淭he real issue is we have launched a three year plan to return us to the levels of operating profitability we鈥檙e used to, we have a good set of trading figures for the most recent period and our order book is up. I鈥檓 not disputing that [2011/12] was a difficult year, but we are now getting the benefit of reduced operating costs and trading is pretty encouraging. I鈥檓 very optimistic.鈥�

The firm said the group had a record forward order book of 拢90m and was showing continued growth in its Asian business, with the number of staff increasing by 30%.

Sweett鈥檚 results were 鈥渟everely affected鈥� by losses in Australia and the Middle East in the first half of the year due to spending cuts and the impact of the Arab Spring.

In the second half of the year further problems included delays in reaching financial close on the Leeds social housing PFI project, the deferral of two other PFI asset disposals, and 拢650,000 in finance costs relating to a foreign exchange exposure in Australian Dollars. 

The loss in the year to March 31 2012 compares to a profit of 拢2.3m in 2011. Revenue was exactly level with the amount recorded in 2011, however revenues in Europe were down by 8% to 拢39.8m, with the region now making up just 55% of the sales of the total business.

The firm鈥檚 results said it had net borrowings of 拢8.2m, with the principal laons from Lloyds held under five separate covenants. At 31 March 2012, the amount undrawn under the Group鈥檚 credit lines was 拢7m (2011: 拢7m). It said two of the financial covenants, being the cash flow cover and gearing covenants, were infringed at 31 March 2012.

The notes to the accounts list a set of seven uncertainties 鈥� including the continued deferral of closure for the Leeds social housing PFI scheme, which could cost up to 拢800,000 if no resolution is found 鈥� which it said, in aggregate, caused a 鈥渕aterial uncertainty which may cast doubt about the Group鈥檚 ability to continue as a going concern.鈥� However, it said it had assessed the risk and decided all of the risks were unlikely to materialise.

Webster said in the firm鈥檚 statement: 鈥淭he cost cutting actions implemented during the second half of last year have given us a strong platform from which to deliver on our strategy to grow our already diverse business across growth sectors in the UK and growth markets abroad, in particular in Asia Pacific.    

鈥淭he Group鈥檚 trading during the first four months of the current financial year has been in-line with the Board鈥檚 expectations, with each reporting region seeing significant increases in profits compared to the same period last year. 

鈥淥ur order book currently stands at 拢90m, with a healthy split across Europe, where we have secured major framework appointments in the energy sector, and Asia Pacific, where we are capitalising on vibrant construction markets. Our order book in the Middle East is also recovering, following the Arab Spring.鈥�