Stepnell accounts hit by £30m of problem contracts

Grant Prior 2 years ago

Stepnell has restated its 2019 accounts by £30m to reflect “grossly underestimated” forecast losses on problem contracts.

The adjustment means a previously stated small pre-tax profit for the year to March 31 2019 now becomes a £29.9m loss.

The updates were revealed in the firm’s latest results posted at Companies House.

External consultants were brought in by Stepnell directors to review contracts.

The company said: “In an number of instances, forecast losses on challenging contracts had been grossly understated.”

The strategic report at parent company Stepnell Holdings said the problems had been caused by “poor management procedures and inconsistent pricing.”

It added: “The directors have therefore had to remove under-performing staff, reduce the number of regions from five to three and impose tighter management controls on cash management, bidding and various construction activities.

“Directors are confident that the final legacy projects are being worked through and that the losses these projects have inflicted on the company are now under control.

“Directors expect Stepnell to return to profit in the current year.”

Latest results for the year to March 31 2020 show a group pre-tax loss of £3.4m from turnover of £127.6m.

Tom Wakeford, joint managing director of Stepnell said: “In 2019, we were impacted by onerous ground conditions on our largest project, which has proved expensive to remedy.

“We have taken a prudent position in our accounts, allowing our team to focus on the financial recovery on the project. March 2020 saw a write down of legacy contracts due to Covid-19 which had a profound effect on our clients and our sector as a whole.

“Therefore, 2019 and 2020 were difficult years for different reasons. The 2019 losses are now more than two years old and Stepnell looks very different, in a very positive way, in 2021, with an anticipated rise in profit to around £1 million.”

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