Mowlem profit takes £12m hit

Mowlem's financial hiccup in Australia - a £12m hit in the building division in New South Wales - was not the result of being caught on the hop by a surprise leap in inflation but rather by a shortage of skilled workers in finishing trades, something that Mowlem insists couldn't be repeated in the UK.
Announcing the group's interim financial results, finance director Gerry Brown said: "Australia is very strict on immigration. The problem was very isolated. Other players such as Multiplex and Bovis also suffered in that region.
"When we have a shortage of skill in the UK, we have people from Europe to call on. Mowlem employs construction workers from the Continent, as does the whole of the industry.
"Polish workers, for example, are exceedingly good, although we have to ensure there are no language problems that could impinge on health and safety issues. We don't even have to go to Poland to recruit as there is already an available pool to fish in here in the UK."
Mowlem announced that during the six months to 30 June, pre-tax profit was £4m, well below the £15m in the same period last year. The downturn was a result of the £12m one-off hit in Australia.
The construction element of Mowlem's group workload looked promising as margins climbed from 1.8% to 2%. Group turnover was unchanged at £960m.
Looking ahead, more than 60% of all orders are for one year or more and 30% extend into 2006 and beyond, offering longer-term revenues.
Brown said that with the £5bn Allenby Connaught project for the Ministry of Defence moving closer, there is a rising level of forward planning to ensure skills are available. Some pre-contract work is already under way on
a cost re-reimbursable basis.
The deal is expected to reach financial close in the first quarter of 2005.
In the past six months, Mowlem has added two PFI schemes, Exeter schools and Lewisham hospital, together with a pair of LIFT projects, in Cornwall and Bristol.
"We like LIFT as it is more towards PFI than conventional contracting," Brown said. "It gives security. We've always had the skills, such as temporary design engineers and project managers, to design and plan such schemes."