Underlying profits at support services provider May Gurney fell to 1.1m pounds in the first half of 2012, compared to 14.5m pounds in the corresponding period last year, according to the group's interim results published on Tuesday.
The results, which cover the half year ending September 30th, showed a reduction in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) and overall operating margin, although the company posted £314m of new business.
Underlying EBITDA was £12.6m, compared to £14.7m in the first half of 2011 and the group's overall operating margin was 3.7%, compared to 4.5% a year earlier.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The decline in operating margin was connected to a number of factors, including poor weather over the summer and underwhelming performance from two environmental services contracts.
The group's surface dressing operations were negatively affected by poor weather and a short-term downturn in rail services. In addition, provisions for SGN's reduction in outsourcing and poor performance of two MaGOS environmental services contracts contributed to the operating margin decline.
At the half-year, no provision for future losses had been made in respect of the two MaGOS contracts and the group said this would be reviewed again at the year end.
May Gurney secured £314m of new work and contract extensions in the first half of 2012, up from £290m in the corresponding period last year. Group revenue rose 4.0% to £338.9m, compared to £324.7m in the corresponding period last year.
Margaret Ford, Chairman of May Gurney, said: "May Gurney's first-half performance was in line with our revised expectations. We have taken steps to reinforce commercial disciplines and the plans we put in place to address the operational issues we announced in September are on track. As expected, the process to resolve the two MaGOS environmental services contracts is complex, and will continue well into next year."
The share price was unchanged at 14.04 GMT at 172p.
MF
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
