Construction and development group Pochin's has been hit by an increased £16.2m loss for the 12 months ending 31 May 2010.
Last year, it was in the red to the tune of £9.4m.
The loss was due to “substantial provisions” being made for current and former joint ventures. In addition, the group said its concrete pumping business “has incurred significant losses and further write downs have been necessary in the value of residential work in progress”.
Pochin's group revenue was down more than a quarter at £74.8m (2009: £102m).
Bank borrowings were reduced from £28.3m to £26.9m during the period.
The construction division delivered a reduced turnover of £61m (2009: £79.8m), but made a profit before tax of £700,000 (2009: £1.1m). This was achieved “by making reductions to the base cost of the business”.
The concrete pumping division was affected by “over capacity in its market”, exacerbated by the general reduction in public sector infrastructure activity during the period.
A “significant re-organisation” of this division has been undertaken since the year end, including the resignation of David Pochin, who has served the company which bears his name for 22 years, six of them as a director on the group board.
In the residential division, further losses were suffered mainly in the form of value write downs of partially completed sites, and of land. The group's remaining residential investments will now be managed within the construction and property divisions with a saving in overheads.
Most of the losses occurred in joint ventures, including a large development in Birkenhead, now wholly-owned, but formerly jointly held.
Chief executive John Moss said: “Contracts for the sale of this painfully assembled land have recently been exchanged on terms which have been designed to avoid further losses in the current year.”
Similar action has been taken in connection with two large refurbished properties in Liverpool where the joint venture partner “has been unable to bear its share of the holding costs”.
Summarising the outlook, Moss said: “The renewed concentration on the construction businesses, and on the focussed management of the commercial property portfolio, is supported by the group's bankers, The Royal Bank of Scotland, who have indicated their continuing support through the agreement of new facilities.
“The corrective action taken over the last two years has been painful for both employees and shareholders. In that time, the number on the group payroll has reduced by more than a quarter, and in such circumstances both leavers and those who remain suffer in various ways.
“Provided that the economic conditions in the UK do not deteriorate further, and that the forthcoming public sector cuts are not too damaging to the construction industry, it should now be possible for Pochin's to progress once again.”
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