Ringway aims for profit in 2009 after first ever loss
08:01 04 Nov 2009
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Ringway managing director Scott Wardrop has pledged that the company will return to profit in 2009, after a difficult 2008 which saw it make the first loss in its history.
Wardrop described the results, which saw the company make a pre-tax loss of almost £7.5m (2007: £1.4m profit), despite increasing turnover 15% to £465.4m (2008: £404.1m) as "very poor".
The company was battered during tough trading conditions, particularly in road contracting asphalt production where volatile oil prices affected bitumen, fuel and raw material oil costs, which caused its direct cost base in some divisions to rise by more than 18%.
It also made significant write-offs in relation to the costs of tendering for the £2.7bn Birmingham City Council 25-year Highway PFI and the £6.2bn M25 DBFO, which saw the FLOW consortium in which Ringway and its parent Vinci are shareholders, lose out to Balfour Beatty. Ringway revealed that the FLOW consortium spent £8m bidding for the project.
And there was a £3.1m write-off of the goodwill associated with the acquisition of TE Beach (Contractors), which was transferred to Ringway Infrastructure Services in January 2008. The business has now been fully integrated into Ringway.
Wardrop signalled he hoped 2009 would be more positive: "We will return to profit in 2009 following a comprehensive restructuring," he said.
But he warned that he was concerned about how the anticipated fall in public spending would affect the business. “We are very concerned at the government Capital and Revenue Budgets for April 2011. We believe that the Department for Transport and Treasury appreciate the need to maintain asset value and will endeavour to protect the Revenue Budgets but there are very worrying comments concerning the level of cuts in the Capital Budgets which will affect the construction and service sectors.”
The firm has also suffered the recent loss of the £350m highways term maintenance contract to Lincolnshire County Council, where it was the incumbent, to May Gurney. "We were very disappointed not to be preferred bidder. Despite being first on price evaluation our quality was marked second. Despite this we are fortunate to have a solid order book in Ringway and our joint ventures," Wardrop said.
Ringway’s joint ventures include BEAR Scotland, which maintains North East and South East trunk roads for Transport Scotland, and South West Highways, which maintains roads in the South West of England.