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Diploma posts $1.2m first-half loss

Diploma Group has posted a $1.2 million first-half loss in what it described as a difficult period for the company.

The loss, down from a profit of $1.9 million in the previous corresponding period, came on revenue of $47.1 million, down 58 per cent on the previous corresponding period.

The company said the bottom line result was affected by delays in the start-up of new third party construction work along with the completion of other work during the period.

"The result was further impacted by a provision for non-recovery of back charges levied against a subcontractor at completion of the Wickham project in the North West of WA," Diploma said in a statement.

"Diploma incurred significant cost in the rectification and re-works in the supply and installation of modules for this project and is expecting to recover this from the subcontractor.

"A provision for non-recovery has been allowed for in the half-year results."

Diploma said it had a record amount of its own internal construction work on hand resulting in a significant amount of revenue and earnings being eliminated prior to achieving practical completion of the projects.

It said it was expecting to complete four internal projects during full-year 2016, two of which had been sold for $63.5 million.

The company said it would net $20 million in the sale of the Rockingham Quest and Quest Adelaide Terrace developments next financial year.

288 Lord in Highgate and Capri Apartments in Rockingham were 82 per cent and 80 per cent pre-sold respectively and were tracking to program.

Managing director Nick Di Latte said the first-half loss was disappointing.

"Delays to commencing third party construction work have really impacted the profit result for the first six months as has the decision to provision against the Wickham contract," he said.

"However, with the work book ahead in both the construction and property divisions and a significantly improved cash position expected upon completion of our four internal projects, Diploma is well placed to turn this result around and return to profit in full-year 2016."

Diploma shares were off 0.3 cents, or 7.9 per cent, to 3.5 cents at 10.45am.