Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Accounting changes land Mowlem deeper in the red

Troubled Mowlem crashed to a £73.4 million pre-tax loss in the first six months of 2005 against a £6.8 million profit last year following a complete overhaul of how the group recognises profits and contract values.
Exceptional items included a £6 million one off restructuring cost and a £71.5 million hit on the way it accounts for contract values on projects.

Mowlem chief executive Simon Vivian said: 'This more prudent approach to profit recognition complements our previously announced moves to strengthen financial and commercial controls and introduce new risk management processes.'

Turnover increased over 10 per cent to £1.05 billion in the six months to June 30 up from £953.4 million previously.

Mowlem's new management team - headed by Simon Vivian who joined in January - restructured its construction division and made 200 redundancies. This is expected to save the firm £5 million a year.

During a review of the business, the company found that its long term strategy was being inhibited by overly complicated management structures and poor internal processes.

Mr Vivian overhauled its risk management to improve the quality of work it takes on and installed a risk management board to set policy, tender reviews and process compliance. Divisional risk committees were also beefed-up so that all contracts over £3 million are now subject to an assessment.

Its infrastructure business channelled its efforts into the highways rail and utilities sector and won the £429 million Early Contractor Involvement deal to widen the M1. But it plans to exit a number of smaller under-performing businesses.

Legacy issues in its loss-making Australian business, Barclay Mowlem, were addressed and it reduced its exposure to construction work to concentrate on rail and infrastructure.

Last week Mowlem was selected as preferred bidder on the £1 billion Northwood PFI project for the Ministry of Defence.

Contact the newsdesk