VDM confirms 415% drop in profit

Consulting, construction and contracting company VDM Group says its outlook is dependent on winning new major work, after recording a disappointing interim loss of $16.4 million, down 415 per cent on the previous half-year.

The loss included a goodwill impairment charge of $21.2 million relating to VDM's consulting division.

Revenue was down 19.3 per cent to $195.9 million for the period.

VDM will not pay a dividend for the half year ended December 31.

The results are in line with the interim guidance VDM issued late last month.

VDM Group chief executive Ken Perry said a distinct lag in the award of major new projects contributed to momentum in revenue growth and profit margin improvement not being sustained.

"The half year results reflected the completion of two major projects commenced over a year ago," Mr Perry said.

"Neither project has yet been replaced due to the continued deferral of award of major projects for which we have tendered.

VDM said its order book currently held $200 million of contracts, $120 million of which fall in the second half of 2011.

The company also has $750 million in active tenders which are yet to be announced.

"Building the order book is the major priority and tendering activities remain high," Mr Perry said.

Mr Perry said the results were disappointing, particularly the $21.2 million write-down of goodwill pertaining to the consulting division.

"Although this division's performance has improved in recent times, particularly in WA and NSW, other states continue to feel the flow-on effects of the GFC, particularly those exposed to the property development sector," he said.

"Pleasingly the division is gradually building up work in the resources sector in Queensland and WA where the outlook remains strong."