Legacy contracts drag down Daniel’s profits
DANIEL Contractors declared a loss after tax of £329,000 in the year to September 30, 2010 (2009: £492,000 profit) which it blamed on a “small number of legacy contracts” and write-downs related to anticipated losses in its energy division.
Sales at the family-owned civil engineering giant based in Warrington fell by 3% to £136.8m (£141.7m), which it blamed on the cancellation of a major contract by a customer. However, it said the payment of related compensation “negated the impact on profit”.
The company’s utilities division has also suffered from a “minor downturn” in volumes as the major water companies in the UK moved between multi-year framework agreements for maintenance of water and sewerage networks.
Despite this, a statement accompanying the firm’s newly-filed accounts by chief executive officer Andrew Ball states that the board is “satisfied with the performance of the business and remain confident in the future outlook” for the business, particularly as it has either secured or is confident of securing several key pieces of work.
By its year end, the utilities division had an order book of £40.8m and its energy and marine business had clocked up orders worth £32.7m.
The firm also said that it had taken steps to “make significant reductions” in its cost base, which it said would feed through into its economic performance this year. Accounts show that the average number of staff working for the business fell by more than 120 to 1,241.
Daniel Contractors was started in 1994 by brothers George and Conal Daniel. Although Conal died in 2009, the company is still owned by George and by other family members.
During the year, the value of its net assets fell by around £400,000 to £9.4m, but it managed what Ball described as a “significant improvement” in its cash position, generating cash of £6.2m. This meant by its year end the firm was debt-free and had a small cash surplus of £986,000.
