August 5, 2013 / 7:13 AM / 4 years ago

Morgan Sindall first-half profit falls 95 pct

Aug 5 (Reuters) - British construction company Morgan Sindall Group Plc said first-half profit fell 95 percent as increased competition hurt margins.

The company said that an exceptional charge of 13 million pounds ($19.85 million) taken as a provision against amounts recoverable on a small number of older construction contracts also hurt profit.

Morgan Sindall, which builds houses, refurbishes offices and undertakes redevelopment projects, said it did not expect overall market conditions to improve significantly in the second half of 2013.

Profit before tax fell to 1 million pounds in the six months ended June 30 from 18.8 million pounds a year earlier. Revenue rose 2 percent to 1.02 billion pounds.

Adjusted gross margin fell 120 basis points to 8.1 percent.

Morgan Sindall, which gets roughly half its revenue from government contracts, had reported an 8 percent decline in 2012 revenue, hurt by government spending cuts.

The company, which got 70 percent of its work in the construction business from the public sector about four years ago, has been reducing its exposure to the public sector as it copes with government budget cuts.

Morgan Sindall’s order book was flat at 3.1 billion pounds.

Shares in the company were down 4.7 percent at 627.5 pence in thin trading on Monday morning on the London Stock Exchange.

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