Mountfield issues profit warning

Grant Prior 9 years ago
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AIM-listed contractor Mountfield has issued a profit warning following problems on two contracts.

Mountfield is also launching a cost-cutting review of the business following the “unsatisfactory financial performance of the group.”

The firm posted positive results for the year to December 31 2013 this summer showing pre-tax profits hit £765,339 from £218,505 last time.

Turnover dipped to £12.3m during the year from £13.5m as Mountfield unveiled bullish expansion plans.

But the mood has changed with today’s Stock Exchange announcement which stated: “Despite the demand for its services and buoyant market conditions, the Directors expect that Group earnings for the financial year to 31 December 2014 will be below market expectations.

“This anticipated drop in full year earnings is principally the result of problems on two contracts that were undertaken by the MBG division during the year where the expected profit in one was below budget and it is anticipated that a provision against the budgeted profit will have to be made in respect of the second.

“MBG is in discussion with the main contractor on the latter contract as to the final account and expects that to be finalised in early 2015. The Group will provide a further update in due course.

“As a result of the expected shortfall in profits and the unsatisfactory financial performance of the Group, taken as a whole, its Directors have commenced a Strategic Review.

“The Review will look at a set of strategic and administrative changes to be made within the Group that will be designed to enable it to reduce its operating costs and improve its margins and also make it less vulnerable to losses on contracts and thereby significantly improve its financial performance.”

Mountfield is still confident about prospects for 2015.

The firm said: “The board believes that the Group is set to perform strongly in 2015 due to the continued strong demand for its services and to Connaught Access Flooring Limited having already secured the new contracts that will enable it to improve on this division’s strong trading performance in 2014.

“Connaught already has approximately £6m of contracts in hand, including one previously announced in November for £4.5m for the supply and installation of raised access flooring in a new City HQ office development. It is also proposing to expand its business into new areas.

Mountfield Building Group Limited is also expected to perform better  in 2015 with a number of new contracts under negotiation.”

 

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