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Shares in consultant Sweet Group, formerly known as Cyril Sweett, fell 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 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%.

Chief executive Dean Webster said the results were 鈥渟everely affected鈥� by losses in Australia and the Middle East in the first half of the year and further problems in the second half. These 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.

Sweett Group 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 says, in aggregate, cause 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 risk were unlikely to materialise.

Webster said: 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.  Our 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�