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Wed August 10 2022

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Pochin’s hit by supply chain failures

26 Sep 13 Problems with failing suppliers and clients defaulting on payments prevented the construction division of Pochin’s from making any profit last year.

The group as a whole suffered a £6.7m pre-tax loss for the year to 31 May 2013 due to impairment charges and adverse property revaluations.

The construction division was only able to break even on turnover that increased from £68.4m to £73.7m. Two thirds of this was from repeat business. However, it endured numerous failures within its supply chain during the year, affecting the profit margin on some contracts.

“Whilst there are robust systems in place to check the credit status of subcontractors and suppliers, these have not always been capable of anticipating or identifying the problems experienced in the supply chain,” the company said. “It is only through diligent management and long established relationships across the wider supply chain that the effect of such failures has been limited.

“In a similar vein, a limited number of clients have defaulted on their payments, requiring more careful analysis of a client's status during the tendering process.”

Activity in the property division improved due chiefly to the sale of non-income producing assets, delivering improved revenues of £6.5m (2012: £4.9m). 

Since the disposal of the concrete pumping division in July 2012 – sold for £1 – the company has restructured into just the two divisions, construction and property. Headcount has shrunk from 266 to 158.

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