DIRECTORS of Daviot Group Holdings vowed to focus on profitability ahead of turnover growth in its annual accounts – published days before a subsidiary firm collapsed.
Last week it emerged more than 30 jobs were lost at civil engineering specialist Daviot Group Ltd (DGL).
It reportedly fell victim to cashflow problems and directors Rachel Limbrick and David Mitchell petitioned Inverness Sheriff Court that DGL be wound up, and the court has appointed Gordon MacLure of Johnston Carmichael, Aberdeen, as provisional liquidator.
Johnston Carmichael said the holding company Daviot Group Holdings and DGL’s sister company Daviot Group Plant were not in liquidation.
The latest accounts for Inverness-based Daviot Group Holdings were published by Companies House on October 3 for the year ended December 31, 2016.
It shows a fall in pre-tax profit of almost £5 million and a drop in turnover of more than £6.5 million.
A strategic report accompanying the accounts states: "Daviot Group has had a challenging year, with several changes of directors and senior management while continuing to deliver a significant long-term contract which has become less profitable than originally expected."
The firm moved from having a pre-tax profit of £1,498,585 in 2015 to a pre-tax loss of £3,456,616 last year.
Revenue dropped from £25,511,245 to £18,855,936 for the same period.
The firm believes the fall in turnover was due to the group channeling its resources into the completion of the long-term contract, rather than persuing new business.
During the year, £851,000 of "work in progress and retentions" included within gross amount due from customers, for work during the year before, was written off because it was no longer considered "receivable". All of the money accounted in a similar way for last year was collected.
Old and under-utilised plant, machinery and vehicles – with a net book value of £4 million – were sold last year, resulting in a loss of £565,365. A review of the remaining plant and machinery added to a loss for the year.
The report states: "The directors’ objective for the business going forward is to focus on profitability rather than turnover growth, by selecting the right contracts and delivering defect-free works on time and within budget."
The average number of employees at Daviot Group Holdings increased from 76 in 2015 to 104 last year, while staff costs dropped to £4,936,678 in 2016, from £5,108,525 for the previous 12 months.
Accounts for DGL were published by Companies House on the same day.
DGL recorded almost identical turnover figures to Daviot Group Holdings for the same periods, but its pre-tax profit of £969,384 for 2015 moved to a pre-tax loss of £2,329,286 last year.
Just under a year ago, on October 28, Daviot Group Holdings was sold to Wyvis Holdings.