Losses set to widen at construction firm after internal investigation
Huithwaite construction firm nmcn says losses brought about by legacy contracts in its water business will mean it will post an even bigger loss than first thought this year.
The company says that it anticipates losses for 2020 to be in the region of £16.5m after previously forecasting it would slip into the red by between £13.5-£15m.
nmcn has undertaken an investigation into the contracts in its water division which showed up £5.3m of prior year contract adjustments across five pieces of work. The firm said these threw up accounting errors.
Because of this, the company has downgraded its 2019 performance from a profit of £7.4 to £2.1m. Consequently, loss before tax for the current year is expected to be about £11.2 million, including £1.2 million for the final settlement of the last remaining legacy contract.
A statement to the London Stock Exchange this morning (December 23) said: “In addition to the prior year adjustments a number of difficult contracts are being brought to a conclusion. This, together with Covid-19 and the AMP project cycle have made for an extremely challenging year. Some £20 million of secured orders originally scheduled to be completed this financial year have slipped into 2021, due to the effects of coronavirus. This revenue is now reflected within the 2021 budgets.”
Ian Elliott, acting chairman, said: “2020 has unquestionably been a difficult year for the Group, with the combination of the Covid-19 constraints, the AMP transition and the consequences of prior year contract adjustments. However, I would like to acknowledge the fortitude of everyone within the Group in rising to the challenges we have faced.
“We will enter 2021 with many issues already addressed, with an encouraging order book, a strengthened management team and with the optimism of a return to profitability.”
