Contractor announces plan to cut some operations, with combined turnover of 拢50m, after declaring 拢73m loss

Mowlem chief executive Simon Vivian this week said the company would be closing down some of its loss-making construction businesses, which have a combined turnover of about 拢50m.

He said that the businesses, which he declined to name, were 鈥渟mall operations that are not successful鈥�. They will be sold on if possible but most likely closed.

The closures follow 200 job losses within the construction services division in May.

Vivian revealed the plan on Wednesday when the company announced a pre-tax loss of 拢73.4m for the six months to 30 June 2005.

The board did not recommend an interim dividend. Vivian said the company could not confirm that a dividend would be paid out after the year-end in December, and would 鈥渓eave the question open鈥�.

The market was prepared for the poor results following a series of profit warnings. The latest of these came last week when the firm said it would take a 拢70m hit on problem contracts after it revised the way that it recognised profit and valued contracts on the balance sheet.

Mowlem appointed Ernst & Young to advise on the contract review, and one of the standardised ways of reporting was to not book any job until 20% had been completed.

Turnover for the six months rose 11% to 拢1.05bn, and the firm鈥檚 order book stood at 拢2.3bn.

Vivian said it had been a difficult time for the group internally and that the board had appreciated the need for a consistent accounting policy. But, he added: 鈥淚t is behind us and we have a full agenda now.鈥�

After the results were announced, analysts said the company was now a lot more transparent. Howard Seymour, analyst at Bridgewell Securities, said he was still forecasting a pre-tax profit of 拢7-拢8m for Mowlem鈥檚 full year. Alastair Stewart, analyst at Dresdner Kleinwort Wasserstein, also said his full-year forecasts, which predicted a return to profitability, remained unchanged.

Mowlem鈥檚 shares remained unchanged on Wednesday at 157p.

好色先生TV revealed last week (23 September) that Mowlem had called in the restructuring team from financial consultant NM Rothschild to explore options for the company.