Construction and development company Diploma Group has blamed a $3.9 million first half loss on delays at one of its city apartment developments and a downturn in sales across its completed projects.
The result came despite a 55 per cent increase in revenue, from $61.6 million in the six months to December 31, 2010, to $95.6 million.
Diploma lodged a loss of $644,000 in the previous corresponding period.
Diploma said a $5 million profit from the Eleven78 development on Hay Street had been pushed back to the current half year, while slow sales at the Zenith, Sky and Rise apartments also impacted the result.
As of December 31, there was $25 million of apartments remaining to be sold out of the $55 million completed inventory across Zenith, Sky and Rise.
“The slower than expected commencement and award of new construction contracts in the first half have also had an adverse effect on the result,” Diploma said in a statement.
The company’s order book stands at $230 million, with $175 million in outstanding tenders..
Diploma managing director Nick Di Latte said since the end of the half year, Diploma had retired approximately $25 million of debt through the sale of completed stock, taking the company’s debt position to a historical low of around $20 million.
Mr Di Latte said the group held around $42 million in debt 12 months ago,
“The business remains in a sound financial position with its strategy of securing new construction work, retiring debt and selling completed inventory well in hand,” Mr Di Latte in a statement.
“The positive turnaround in the current cash position of the group is the result of the above strategy being well executed by all members of the Diploma team.”
Diploma also announced changes to its board yesterday, with executive chairman Dominic Di Latte set to move to a non-executive role from March 1.
Mr Di Latte has been with Diploma in a full-time capacity for the last 37 years.
The group also announced it would reduce remuneration for its directors, in light of the “unacceptable” recent financial performance.
“The changes announced today are in line with the group’s strategy of reducing overhead costs, securing new construction contracts, focusing on selling our completed inventory and returning the business to sustainable levels of long-term profitability,” Nick Di Latte said.
“Whilst the result for the first half of FY12 was disappointing, the cash position of the group has improved significantly and these changes to total fixed remuneration will further assist in achieving our objectives.”