Brierty cuts profit again, MD resigns

Contracting group Brierty Ltd today announced its second profit revision in six weeks, slashing its forecast to $3.6 million after tax, and the resignation of founder Alan Brierty as managing director to focus on the operational side of the business.

Brierty chairman Dalton Gooding said the Board was deeply disappointed with the result and investors had every right to be angry, especially given the company had revised its guidance as recently as 16 April.

Mr Brierty, who founded the business 27 years ago will remain on the board as an executive director.

Mr Brierty said that although the reasons for the profit downgrade relate to an unexpected increase in costs, he appreciated the impact this has on investors.

"We took Brierty to the market last year as a well-run company with a proud history and great prospects. All of that remains true today but the profit downgrade is extremely disappointing," said Mr Brierty.

Full announcement pasted below

BRIERTY ANNOUNCES REVISED PROFIT GUIDANCE, BOARD
CHANGES
Civil construction group Brierty Limited (ASX: BYL) has today issued revised pro
forma profit guidance of $3.6 million after tax for the financial year to 30 June 2008.
The revised pro forma profit guidance compares with a forecast range of $8.2-9.2
million announced to the market in April 2008 and a pro forma net profit forecast of
$10.3 million contained in the Company's 2007 prospectus.
The downgrade is the result of higher than expected costs and margin erosion on a
small number of significant contracts that have been or will shortly be completed.
Brierty's forecast revenue for the 2008 financial year of $199 million remains on track,
but the increase in costs has eroded the expected margins on the contracts in
question.
Brierty Chairman Dalton Gooding said the Board was deeply disappointed with the
result and investors had every right to be angry, especially given the Company had
revised its guidance as recently as 16 April.
Mr Gooding said the additional project costs had emerged on completion and
reconciliation of final claims on 3 major contracts in recent weeks.
"It is clear to the Board that the Company has battled in some areas to keep pace with
the high levels of business growth in recent years," he said.
"It has become evident that notwithstanding the strength of the revenue growth
achieved in recent years - including in 2008 - internal systems growth has not kept
pace."
Brierty founder Alan Brierty has informed the Board of his decision to step down as
Managing Director to concentrate fully on the operational side of the business which
he has built up over 27 years.
Mr Gooding said the Board had engaged a national professional recruitment firm to
find a suitable replacement CEO. The Board is also undertaking a search for a new
non-executive director with relevant industry experience.
Mr Brierty will step down from his position on the appointment of the new CEO but will
remain on the board as an executive director.
Mr Gooding said the Board had engaged international construction and management
consultants Turner & Townsend to conduct a review of Brierty's project management
capability.
In addition, human resource consultant Gerard Daniels is close to completing a
structure review to identify areas in which Brierty's management structure and
systems can be improved.
Mr Brierty said that although the reasons for the profit downgrade relate to an
unexpected increase in costs, he appreciated the impact this has on investors.
"We took Brierty to the market last year as a well-run company with a proud history
and great prospects. All of that remains true today but the profit downgrade is
extremely disappointing," said Mr Brierty.
Mr Gooding said Brierty had faced challenges in making its transition from a private to
a public company:
"Brierty has a strong underlying business but the demanding task of managing a listed
company has challenged a management group whose track record and experience
are based in operations.
The positive news is that Brierty has maintained strong underlying revenues and
continued demand for its services, with a track record of quality and timely project
delivery. The recent appointment of Tony Bevan as CFO is another positive step
forward.
Our objective now is to move on with an improved performance in 2009.
We are confident Brierty has a good future and as a Board we are committed to
restoring value for shareholders."