12th Jun 2015 12:24
LONDON (Alliance News) - Mountfield Group PLC Friday reported that it swung to a GBP3.9 million pretax loss in 2014, a considerable change in fortunes since the GBP765,339 pretax profit reported for the prior year, hurt by the performance of its building group business.
Mountfield is engaged in two main types of business: Mountfield Building Group Ltd (MBG), a specialist in the installation of data centres; and Connaught, which installs flooring to commercial offices and data centre installations.
Revenue slipped to GBP11.8 million from GBP12.3 million as administrative expenses rose to GBP1.7 million from GBP1.6 million, meaning that - even before a GBP3.9 million goodwill impairment - the company's operating profit fell to GBP74,385 from GBP844,512.
The goodwill impairment was due to "the overall poor performance of MBG when viewed over the last four years."
"In summary, as a result of the review MBG will now concentrate primarily on construction contracts where its contractual relationship is made directly with the client and the board is satisfied that the risk profile and margins are satisfactorily robust. The board is satisfied that it was the collapse of margins on three particular subcontract contracts that were undertaken in 2014 coupled with the high level of overhead costs that MBG had taken on in order to service them that caused the substantial decline in MBG's profitability in that year," Chairman Peter Jay said in a statement.
Mountfield said it is "extremely optimistic" about the future because of a series of changes recommended by a strategic review. The company said the review is creating a company focused on growth and "substantially improving" profit by cutting operating costs and pursuing a "more focused approach to the selection of contracts."
A key part of the group's strategy was the decision that profitability is not "predominantly dependent" on demand from the data centre construction market.
"It is for this reason that it has sought to widen the scope of the group's activities by seeking to ensure that the group has a strong presence in other areas where there is demand for high quality construction services and project management skills. The directors are pleased to report that around half of the group's revenue is now earned from non-data centre related activities," Peter Jay said.
Mountfield shares were untraded on Friday. The stock last traded at 1.48 pence.
By Samuel Agini; [email protected]; @samuelagini
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