Brierty hit by project blowout

Shares in local diversified contractor Brierty slumped after it flagged a $6 million hit to its profit result on the back of a cost blowout on a Mains Road WA project.

In a statement today, Brierty said net profit for the 2015 financial year would be between $2.9 million and $9.2 million, depending on the outcome of a contract variation and insurance claim with Main Roads.

“The variance includes weather-related insurance claims and direct negotiations with Main Roads on increased costs incurred by Brierty in reliance on data used in the tender process,” Brierty said.

“Negotiations regarding the variations are now in the final stages. For the purposes of the preliminary unaudited results, the board has elected to take a conservative view and report a net profit at the minim level of this range at $2.9 million.

“However, the board expects the variations to be resolved during September, prior to the release of its audited FY15 accounts,” it said.

Shares in Brierty were 12 per cent lower to 25.5 cents at the close of trade.

Brierty posted $9.9 million in net profit in FY14.

The company has also flagged a $40 million increase in revenue to $292.8 million, but has elected not to declare a final dividend.

The company also has an order book of $412 million.

Managing director Peter McBain said Brierty, like most contractors, had experienced a challenging year financially due to margin pressure on projects, but it had continued to operate profitably.

“The nature of contracting is that there are often variations to be finalised at the conclusion of a project,” Mr McBain said.

“It’s unfortunate that process on one of our larger jobs has coincided with a year-end financial reporting period, but we’re hopeful a successful conclusion will be reached in the coming weeks.

“That would lead to a final audited result that we feel is a more accurate representation of our performance for the year,” he said.

Brierty is being audited by EY.