Local authority construction and maintenance outfit Connaught has reported a 21% fall in pre-tax profit to 拢10.7m (H1 2009: 拢13.5m) in its latest interim results, for the 6 months to 28 February 2010.
However, turnover was up 17% at 拢355m (H1 2009: 拢304m).
Connaught's profit was hit by exceptional costs of 拢5.8m, of which 拢3.2m represented reorganisation costs. A further 拢1.5m was incurred through integration of recent acquisitions Igrox, UK Fire and Fountains, with acquisition-related fees under IFRS3 adding another 拢1.1m.
Amortisation of intangible assets related to the acquisitions knocked off another 拢4.2m from the profit figure.
Cash generated from operating activities, excluding the impact from acquisitions, stood at 拢8.5m, up from 拢2.6m a year ago. Net debt for the period was 拢97.5m (H1 2009: 拢99.2m).
The order book was up marginally at 拢2.9bn (H1 2009: 拢2.7bn). This included 拢403m added during the six-month period (H1 2009: 拢385m)
Connaught's strongest business was Social Housing, where revenue rose 13% to 拢256m, and operating profit jumped 17% to 拢14.9m.
However, the firm said its decision to exit under-performing markets following a review will reduce revenues in social housing by around 拢25m in 2010 and by around 拢40m in 2011.
Connaught also said it was looking for cost-savings elsewhere in the business, through procurement, boosting productivity and rationalising its property portfolio.
Mark Tincknell, who was reappointed as chief executive in February, said: "Our client base is looking to us to help them cut costs in the face of budget constraints, and with our integrated business model we are well positioned to deliver these savings. This trend is reflected in our orderbook which is growing at a fast rate.
鈥淥ur order book stands at 拢2.9bn with a pipeline of 拢4.9bn, providing significant opportunities for the Group. We believe the strength of our core business, together with our ability to deliver complex, longer term partnerships will provide the foundation for continued earnings and dividend growth.
鈥淭he current economic environment in the UK is creating significant opportunities. Financial pressure in the public and private sectors is driving deep, leading to an increase in multi-service outsourcing. This represents a once in a generation opportunity for us.鈥�
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