Costs of legal dispute hit the building services firm as revenue also falls
Building services specialist T Clarke’s pre-tax profit has tumbled 75% in the first half of 2014 after it was forced to pay £600,000 in legal costs over a contract dispute.
In its results for the six months 30 June 2014, published today, the firm reported a pre-tax profit of £200,000, down from £800,000 over the same period of 2013.
However, the fall in pre-tax profit was largely due to paying out £600,000 in legal costs because of a contract dispute.
Without these costs pre-tax profit would have remained flat at £800,000.
In the accounts, the firm said one of its subsidiary companies was “one of a number of parties” that were subject to a damages claim for work carried out in 2007, before T Clarke bought the firm.
It said: “Damages were awarded against the company, which were settled by the company’s insurers. However, following an unsuccessful appeal the apportionment of costs exceeded the insurance cover in place.”
T Clarke said it had received legal advice that the award of costs against it would not result in it breaching its “obligations under its banking facilities”.
It added that while its banks had not confirmed this view they remained supportive of the firm.
T Clarke also reported a fall in revenue to £110m in the first half of 2014, down from £115m in the first half of 2013.
Mark Lawrence, chief executive, of T Clarke, said the firm’s order book currently stands at £275m of work “offering visibility for the second half of 2014 and through into 2015 and beyond”.
He added: “The group is seeing early signs of a return to an environment where sustainable growth can be achieved, although there still remain pockets of the market where unsustainable bidding practices by others continue.
“We are already seeing far less fixed price bids being demanded by clients and more opportunities to negotiate and lock in our resources”