16/04/2008 - 15:49

Brierty shares plunge 23% after profit downgrade

16/04/2008 - 15:49

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Shares in Maddington-based civil construction company Brierty Ltd plummeted today following a profit downgrade of as much as 20 per cent, just four months after listing on the ASX.

Shares in Maddington-based civil construction company Brierty Ltd plummeted today amid a profit downgrade of as much as 20 per cent, just four months after listing on the ASX.

Brierty shares dropped 23 per cent from their opening price of 77 cents, sliding to close of 59 cents. The shares had closed at $1 each on Tuesday, representing a 41 per cent fall in 24 hours.

The drop conicided with an announcement the company reduced its forecast profit guidance for the current financial year to $8.2-9.2 million range, down from $10.3 million in its prospectus.

Brierty managing director Alan Brierty said in a statement that the company had encountered operational issues on a number of its contracts which had led to an increase in the costs associated with these contracts, even though revenue was stable.

"The additional costs, some of which have been driven by the escalating skills shortage in the market and rising sub-contractor costs, have impacted on our margins," Mr Brierty said in a statement.

"In addition, we have experienced timing issues with a number of contracts which have seen start-up delays.

"The fall in housing affordability has also led to a fall in the number of major new contracts in that sector."

Last month Brierty Ltd announced it had won a contract by Midwest Corporation for the construction of the Tilley Siding Project in Morawa.

 

The statement is pasted below:

Brierty Limited wishes to advise that its Board of Directors has decided to revise its profit guidance for the 2008 financial year.

Following a review of the company's current contract operations as at 31 March 2008, Brierty has revised its forecast pro forma net profit for the year ending 30 June 2008 to a range of $8.2-9.2 million.

The revised profit forecast compares with a forecast pro forma net profit of $10.3 million contained in the Company's 2007 Prospectus.

Brierty Managing Director Alan Brierty said the company had encountered operational issues on a number of its contracts which had led to an increase in the costs associated with these contracts.

Group revenue remains on track to meet the Prospectus forecast of $199 million.

"The additional costs, some of which have been driven by the escalating skills shortage in the market and rising sub-contractor costs, have impacted on our margins," said Mr Brierty.

"In addition, we have experienced timing issues with a number of contracts which have seen start-up delays.

"The fall in housing affordability has also led to a fall in the number of major new contracts in that sector."

Mr Brierty said that while the projected result is disappointing for investors, the company's underlying business and contract pipeline remains solid and the company looked to FY09 with confidence.

"Brierty continues to perform very well in execution of its wide range of contracts and continues to achieve satisfactory operating margins on the vast majority of those contracts," he said.

"In addition, Brierty is currently tendering for a number of significant new contracts in the mining and infrastructure sectors."

Mr Brierty said the Company is undertaking an upgrade of project management systems to meet the demands of the expanded operations and will engage external consultants as required.

The upgrade is aimed at enhancing project management capability and maximising operating margins. Brierty will report its full year financial statements in late August.

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