18th Feb 2014 08:38
LONDON (Alliance News) - Construction company Morgan Sindall Group PLC Tuesday said it is continuing to face challenges reported in the first-half, with margins under pressure and increased competition affecting profit.
The firm, which builds houses and refurbishes offices, said full-year profit for the period ended December 31 2013 fell 59% to GBP13.9 million, from GBP34.2 million a year earlier.
At the half-year, the company said profits had been dented after it booked exceptional operating items of GBP13 million as a provision against amounts recoverable in relation to a small number of construction contracts.
During the second-half, there has been commercial resolution achieved on one of these contracts, whilst another has been impaired to reduce the carrying value to nil, said the company.
The firm also saw its share of net profit from joint ventures drop to GBP900,000 during the period, from GBP5.7 million in the corresponding year.
Revenue, however, rose 2% to GBP2.09 billion from GBP2.04 billion boosted in part by the construction and infrastructure division.
The division reported a 6% increase in revenue to GBP1.23 billion, from GBP1.16 billion despite challenging market conditions through the year, which significantly impacted overall profitability.
Although divisional revenue rose, operating margin declined to 1.0% from 1.7% impacted by competitive pressures and by cost inflation, which resulted in operating profit of GBP12.7 million, from GBP19.7 million in 2012.
Fit Out revenue and Affordable Housing revenue did not fare as well, with the divisions reporting revenue declines of 2% and 1%, respectively.
On a positive note, the firm's order book held steady, with group committed order book rising 8% to 2.40 billion from 2.22 billion in 2012.
The committed order book comprises the secured order book and framework order book.
Financially, net cash at the end of the period was GBP69.7 million an increase of GBP19.3 million from January 1 2013.
"2013 has seen challenging conditions predominate across most of our markets, with competitive pressures impacting on margins and profitability," Chief Executive John Morgan said in a statement.
"Notwithstanding this, the positive operating cash flow generated by the business has allowed us to make further investment in strategic assets, key skills and resources, which positions the group well to benefit from future growth opportunities," he added.
The board declared an unchanged final dividend of 15.0 pence per share, resulting in a total dividend for the year of 27.0 pence - again unchanged from 2012.
Shares in the property firm were trading down 4.4% at 755.63 pence per share in early trading Tuesday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Morgan Sindall Group