Mechan suffers bad debt blow to profits
LANCASHIRE-based safety switch manufacturer Mechan Controls has suffered a blow to its profits following the withdrawal of Government support for Hatfield Colliery in South Yorkshire.
The scrapping of £32m support for the last remaining deep coal mine in the country resulted in a one-off bad debt of £70,000 incurred by the Skelmersdale company’s subsidiary company PJO.
This led to Mechan’s post-tax profits falling from £205,914 to £124,114 for the first six months of the year to June 30, compared to the same period in 2014.
However, Mechan has a achieved moderate 0.64% growth to revenue of nearly £1.9m.
A company statement said: “The bad debt was particularly disappointing since we had just restored PJO to profitability after the trauma with UK Coal in 2013.”
A further one off exceptional cost of £30,000 also was incurred in the first half due to an up front agency fee to carry out a strategic review of the ongoing direction of the group.
“But for these one off costs, pre tax profits would have been down by just 7.6%,” Mechan said. “The second half of the year should continue to improve.”
Meanwhile, the company has also announced PJO’s breakthrough into the Russian coal mining market in 2014 with an international agency agreement with Turkey for coal mining equipment. The agreement also covers the Middle East and the Stan countries.
PJO is set to deliver their first order to Iran and a breakthrough into the Indian market is also set to follow.
