Newarthill says 拢20m of exceptional items eat into firm鈥檚 bottom line
Restructuring costs, closing a pension scheme and being hit with an early repayment penalty on a PPP scheme helped wipe out most of the pre-tax profit Sir Robert McAlpine鈥檚 parent made last year.
Newarthill said it racked up exceptional items of 拢20.3m leaving it with a pre-tax profit of just 拢660,000 in the year to October 2018.
The cost of a rejig at its construction business hit it for 拢3.8m while it said closing a defined pension benefit scheme saw it having to fork out a further 拢9.9m. It was also hit with a prepayment penalty of 拢5.5m when one of the group鈥檚 PPP subsidiaries repaid its debt earlier than forecast.
In the accounts, McAlpine said it has now pulled out of bidding for energy-from-waste schemes after problem jobs in the sector had helped send Newarthill nosediving into the red the previous year.
In a note accompanying the latest accounts signed by director Cullum McAlpine, the builder said margins at its construction business 鈥渞emain below its medium-term expectations鈥� and added: 鈥淭he sectors in which the group operates are highly competitive and operate on low margins. Failure to compete effectively and evolve to clients鈥� needs increase the risk of losing market share and the future viability of the business.鈥�
But McAlpine said: 鈥淭he group鈥檚 construction business has performed well and [underlying] profits have again increased.鈥� Before exceptional items, the firm posted a pre-tax profit of 拢21m.
McAlpine chief executive Paul Hamer, who launched a five year revamp of the business last year, said: 鈥淥ur strategy will continue to focus on working with clients who share our business values and to prioritise profitability and risk mitigation over turnover growth.鈥�
Among the schemes the firm is working on is a new office for Deutsche Bank in the City of London and turning the grade II-listed Majestic building (pictured) in the middle of Leeds into the national headquarters for broadcaster Channel 4. It is also helping revamp the grade I-listed Royal Albert Hall in London.
Turnover during the period fell 8% to 拢871m, with 拢814m of that coming from contracting. A further 拢46m comes from its work in the Caribbean.
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