Financial director says the firm has turned a corner despite losses in 2010
Enterprise financial director David Arnold has insisted the support services group has turned the corner after a “tough year”, despite posting widening losses during 2010.
The group’s accounts for the year ending December 2010 revealed a pre-tax loss of £135.2m after exceptional charges and write downs.
These included an exceptional charge of £42.7m, partly attributable to restructuring costs of £4.7m, but primarily due to provisions related to legacy contracts. There was also a £73m non-cash goodwill write down, the result of a downward revision of growth rates in public sector work.
Stripping out the exceptional items, group operating profit during the year came in at £61m, down from £77m for the same period last year, on the back of increased bid costs and tougher trading conditions.
Profit margins fell to 5.6% from 7.3% in 2009, while group turnover came in at £1.1bn, up slightly on the previous year.
Arnold said: “Our capital structure is typical of a private equity business. It’s easy to look at the numbers [on the balance sheet] and see [losses], but we’ve posted an operating profit of £61m when you strip out the one-off costs. Last year was a year of consolidation. The cash generation of this business remains strong and we have entered the new financial year in a robust position.”
Enterprise parted company with chief executive Neil Kirby earlier this year and the group’s owner, private equity group 3i, installed Alan Peterson (left) as executive chairman to replace him.
Peterson, the former head of HSS and Jewson, is a renowned “company doctor” who has worked with 3i in the past. Arnold said Peterson had brought a “wealth of knowledge” to Enterprise and had been a “powerful catalyst” for improving the business.
Shortly after Kirby’s departure 3i revealed it had taken a £201m hit on its investment in Enterprise, which it bought at the height of the credit fuelled buy out boom in 2007 in a deal in worth £490m.
This year the restructuring has led to 200 job cuts.
Arnold said: “It’s been tough but there is a spring in the step of the business now, the business is in a good space.”
Enterprise has a turnover of £1.1bn of which £404m is derived from its work in utilities for clients such as Severn Trent Water, United Utilities and National Grid, and £696m comes from a wide range of public sector contracts, from highway maintenance work, to local authority road sweeping services.