McAvoy Group recorded £17m pre-tax loss before acquisition, new report shows
A NEW report into the McAvoy Group has detailed how the construction firm recorded a £17 million pre-tax loss in 2019 after a succession of financial blows that eventually resulted in the McAvoy family relinquishing its controlling interest in the company.
A report produced by the company’s directors published by Companies House last week state the economic uncertainty created by Covid-19 threatens the ongoing efforts to turn the business around.
The set of accounts confirm London financier Mubashir Mukadam acquired the controlling interest in the offsite modular building specialist from the McAvoy family on February 13 2020.
At the time the company described the transaction as a multi-million pound boost from private equity investors. Two members of the family – Orla Corr and Conor McAvoy remain as shareholding directors.
Blantyre Capital specialises in partnering with firms ‘to relaunch stable business models with temporary financial challenges and reposition them both strategically and operationally'.
The move triggered significant restructuring of the company, with its flagship factory near Coalisland in Co Tyrone put up for sale in the summer of 2020.
McAvoy, which had operated in the Dungannon area for almost 50 years, said it would centralise all operations in Lisburn.
It’s understood the Ballynakilly Road factory site has now been sold.
At the time, the McAvoy Group said its closure would not result in any redundancies.
But accounts published last week confirm that redundancies have formed part of the ongoing restructuring process. The group’s workforce at the end of 2019 stood at 229.
Despite a 26 per cent rise in turnover to £56.7m, the report lists a series of costs which left it in serious financial difficulty in the year ending October 31 2019.
It took losses on three “onerous contracts”, including the group’s first residential contract. It also took a loss on the disposal of land and buildings at its site in Lisburn.
The McAvoy Group said “substantial costs” were also incurred in the course of seeking new investment in the business.
It was also forced to write off costs after aborting an attempt to open a third factory in England.
The acquisition by Blantyre Capital saw the company repay its loan and overdraft held with Danske Bank through loans provider by the new shareholders.
However, the efforts to save the business appear to have been shaken by the Covid-19 crisis.
A report signed by McAvoy managing director Mark Lowry, on behalf of the board, states that cash flow forecasts show the group can continue as a going concern.
But that forecast is dependent on a series of factors ranging from the resumption and maintenance of trade to the restoration of sales and profitability on contracts.
The directors state there can be no certainty that the outcome will be as forecast, with the result that the group may not be able to meet its liabilities as they fall due.
“These conditions… creates a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.”
The report, signed off at the end of October, states that Covid-19’s impact on the trading results had not been significant.
In a statement issued to The Irish News, Mr Lowry, who also holds the position of chief executive, said McAvoy Group’s 2020 financial results show “significant improvement” on the 2019 performance, despite the impact of Covid-19 on the business.
“The injection of capital by Blantyre Group in February strengthened the business’ standing and stability, while a series of changes made throughout the year have helped to ensure that we are in the best possible shape,” he said.
“We were also very fortunate to have been able to count on the support of both our customers and supply chain throughout what was a very challenging time for the business, and we now move into 2021 with the strongest forward order book for a number of years.
“With a renewed growth strategy in place, we have concentrated on securing profitable offsite projects and building our hire business, while successfully increasing our market share in core sectors including commercial, healthcare and education.
“During the last 12 months alone, we have completed 13 education projects totalling £50m, started on site with a further 10 and will begin work on seven more in the coming weeks.
"The trajectory demonstrated by our latest results is extremely positive and reflects our track record, focus on quality and our commitment to innovation in MMC [modern methods of construction].”