Bolton social housing contractor Forrest ran up total pre-tax losses of nearly £26m in 2015 and 2016, according to restated accounts just published for the group’s holding company.
The contractor agreed a refinancing deal with banks at the start of March and restructured the business with CEO, Lee McCarren leaving by mutual agreement and the loss of up to 30 staff.
Now revised accounts published for holding company Ensco 996 reveal the extent of Forrest’s problems with legacy maintenance projects.
The restated accounts show that in the 17 months up to the end of February 2015, the group lost £19.2m rather than making a £3.6m pre-tax profit as initially stated.
Results were revised after directors carried out a full review of contracts and work in progress.
This led to fresh write-offs of work in progress on legacy refurbish and respond projects that had finished, which directors judged would not be recovered.
Forrest’s holding group suffered further losses of £6.8m in 2016 contributing to liquidity problems forcing the company to refinance.
The package includes new shareholder equity funding and a new revolving credit facility.
The Greater Manchester Combined Authority became a new lender to the group replacing the Royal Bank of Scotland.
| Forrest holding company Ensco 996 | |||
| 2016 (12 months to Feb) | Restated 2015 (17 months) | Previous 2015 (17 months) | |
| Pre-tax profit (loss) | – £6.8m | -£19.2m | £3.6m |
| Revenue | £103m | £118m | £144m |
Forrest is now scaling back its troubled maintenance business, which accounted for 70% of revenue last year to concentrate on residential new build opportunities and photovoltaic energy projects.
The new business plan for the year ahead will see Forrest reduce revenue from refurbishment and respond projects to 20% with new build residential work rising to 70% of group turnover.
New finance director Keith Reid said: “The group has faced liquidity challenges during the year as a result of cash losses due to historic challenging contracts, which the group has now exited, and a change in working capital profile due to the change in revenue mix.
“The refinance puts the financial risk behind us and provides liquidity to support the planned growth.
“The group has experienced the strongest year of new business wins in its 62-year trading history.
“The growth in new build construction is driven by a strong North West construction market, in particular in PRS apartment developments.”
He added that combined with national affordable housing shortfall, Forrest saw a strong market opportunity for the group.
Reid added that the firm had secured £240m of contract wins since the last accounts and was looking at a £1.4bn pipeline of work.
