Ex-Mowlem boss Sir John Gains this week defended his record as chief executive of the ailing contractor.
Since Gains resigned towards the end of last year the contractor has endured troubled times, with the latest blow being the announcement of a £73m pre-tax loss last month.
Simon Vivian, the current chief executive, has made veiled criticisms of Gains and former finance director Gerry Brown for their accounting policies. Since taking up his post, Vivian has hired accountant Ernst & Young to change the whole system of reporting.
Holidaying in Portugal, Gains said that he had had “nine great years” as chief executive, and appeared to make a slight dig at Vivian in regard to the recent write-offs.
He said: “We had consistent profit, we transformed the scale of Mowlem, built up the services businesses to run alongside construction without any write-downs, improved safety and took the share price from 53p to more than £2.”
However, the recent write-offs are associated with contracts won before Vivian’s tenure.
Gains declined to respond directly to reports that Vivian had been critical of his regime. It is understood that Gains has told friends that he does not want the situation to escalate while the business builds itself back up.
Mowlem has changed its accounting policies following a review by Vivian and installed finance director Paul Mainwaring earlier this year. These changes mean the company is more conservative when it accounts for profit in its balance sheet and writes off problem contracts earlier.
The suggestion was that Gains’ regime booked profit on contracts for which it had not yet received the cash.
Many City experts believe that Mowlem is now not accounting for profit on relatively safe contracts. Mowlem is understood to have assured analysts that its accounting is accurate, but many are speculating that it might have written off up to £20m too much. This could lead to better-than-expected results next time around.