NCE Live News updates: Thursday 12 September: Network Rail missing efficiency targets; Oakervee HS2 absence over-hyped
Contractors Miller Group, Kier and VolkerWessels have issued upbeat statements alongside steady results; meanwhile intrigue around HS2 Ltd chairman Doug Oakervee’s three month absence
Follow us for news as it happens. Today at a glance:
- Oakervee to be “back at his desk” Monday
- Network Rail to miss five-year efficiency target
- VolkerWessels and Kier upbeat about prospects
12.30pm: And finally Miller Group: a good six months with construction revenue up 70%
Miller Group has boasted strong results for the six months to 30 June 2013, with turnover of £366M up 27% on the same period last year.
Construction revenue was up 70% to £193M.
But the firm recorded a loss in its construction division of £2.4M.
It said the loss recorded in construction was a consequence of an extremely competitive contracting market and the traditional contract approach used in a small number of projects. These projects encountered cost overruns as a result of operational issues, insolvency of subcontractors and difficulties in recovering the cost of client variations to project specifications.
It said it no longer tenders for projects on this traditional contract basis unless they are projects with clients with whom it has on-going long-term strategic relationships. The division’s strategy is now concentrated on providing end to end property solutions for public and private sector clients who have programmes of work and who “positively embrace” the value engineering approach the firm says it provides.
The division’s order book has increased by 18% to £1.8bn.
12.20pm: And now Kier - which has also announced “solid” full year results
Contractor Kier said there were “positive signs” that the market was improving as it posted “solid” results for the year ending 30 June 2013.
The firm, which completed its acquisition of May Gurney in July, said it was now well-placed to capitalise on any economic recovery. Following the acquisition the firm’s order book now stands at £5.9bn and stretches well beyond 2020.
Turnover for the year did fall slightly to £1.98bn from £2.01bn last year. Operating profit also dipped from £74.4M to £69.7bn.
But the firm said that completion of a restructuring of is construction division, which included closure of its scaffolding, joinery and temporary electrical businesses, office closures and staff reductions, meant it was now well-placed.
“The modest decline in revenue and profit reflects the tough trading conditions the industry has faced during the year, but I am delighted to see that the divisional trading results remain robust,” said chief executive Paul Sheffield.
“The acquisition of May Gurney in July 2013 creates a support services business with revenues in excess of £1bn and provides an excellent platform for growth. The integration and interaction with key clients are both proceeding well and the combination of the two businesses will deliver significant synergies.
“We have also had a number of significant project wins, enabling us to maintain strong order books. These include the Mersey Gateway Bridge, Broadmoor Hospital re-development, securing the re-development rights to the Swan Hunter shipyards on Tyneside and over £200M of housing maintenance awards.
“So after nearly five years of recessionary pressure, we are seeing positive signs of improvement in all our principal businesses, which gives rise to cautious optimism that the economy is recovering,” said Sheffield.
12pm: Back to those results. First Dutch contractor VolkerWessels: It has announced “solid” interim results for the six months to 30 June 2013.
While turnover was down slightly on the same period last year, net profit was up significantly. The firm said its order book was also up.
Turnover was EUR2.1bn (£1.8bn), down on £1.9bn for the same period last year. Net profit was EUR43M (£36M), up on £14M for the same period last year.
The order book stood at £5.6bn, up almost £1bn.
“Despite the tough Dutch and UK markets, we have managed to improve our results. We owe the solid result to the diversification and expansion of our activities, our companies’ collaborative involvement in major projects, and the good geographical spread of our home markets across the Netherlands, the UK and Canada/US,” said chief financial officer Jan van Rooijen.
In the UK VolkerWessels has added a number of significant new contracts to its order book. In rail, it has won contracts to build train depots for Crossrail and Thameslink, as well as work for Network Rail on its Stafford Area Improvement Programme on the West Coast Main Line. It has also won framework deals with the Environment Agency.
11.30am: Incoming Network Rail chief executive Mark Carne should be in no doubt about the task ahead after regulator slams performance of rail operator
Network Rail is underperforming on some of its efficiency objectives according to analysis from the Office of Rail Regulation (ORR). The report highlights that efficiency improvements slowed in 2012/13 and that it is ORR’s assessment that Network Rail is unlikely to deliver the potential 23.5% efficiencies identified for operations, renewals, maintenance and asset management by the end of CP4.
Read more here.
10.15am: Oakervee to be back at his desk on Monday
NCE has been told that HS2 Ltd chairman Doug Oakervee will be “back at his desk” on Monday
Organisers of the Batting for the West Midlands event, supported by NCE, have been told that Oakervee will attend to face-down criticism’s of the scheme, and that he will be back at work on Monday.
9.30am: Kier, Miller Group and VolkerWessels have made confident announcements alongside annual and half-year results statements
9am: Big news of the day is that HS2 chairman Doug Oakervee is reportedly taking three months off to recover from a torn calf muscle.
Oakervee’s leadership and experience is considered crucial at what is now a key juncture for the project. By the end of the year, HS2 Ltd, the advisory body set up by the Department for Transport to oversee the railway, must introduce to Parliament the biggest hybrid bill in legislative history.
Oakervee, 72, was selected to chair the body because he successfully steered the hybrid Bill for London’s Crossrail project through Parliament under the last Labour government.
However, it is reported that he will now be absent in the months leading up to the time the Bill is deposited, possibly in late November.
The news comes a day after government made a PR-fightback on the scheme, with KPMG publishing a report that shows HS2 could benefit the economy by £15bn a year and that the regions rather than London would be the big winners, countering criticisms made by the powerful Public Accounts Committee earlier this week.