Engineer’s accounts also show that it broke banking covenants in 18 months up to September 2013

Paul Flatt

Engineer Hurley Palmer Flatt has reported a pre-tax loss of more than £500,000 in the six months since it went through a major refinancing, the firm’s latest accounts have revealed.

In accounts filed at Companies House, Hurley Palmer Flatt Group reported a pre-tax loss of £513,625 in the six months to 31 March 2014 on revenue of £14m.

The firm also filed its accounts for the 18 months to 30 September 2013 last month, in which it reported a pre-tax loss of £7.4m, equating to an average loss of £2.5m over a six-month period.

The company pointed out that its profit before tax, depreciation, amortisation restructuring costs, goodwill write downs and interest was £849,000 in the six months to 31 March 2014 and £1.7m in the 18 months to 30 September 2013.

Over the 18 months to 30 September 2013 the firm also reported it had breached its banking covenants because its revenue fell below 2011 levels.

The business has traded in excess of target levels within the revised banking covenants throughout the period

Paul Flatt, Hurley Palmer Flatt

In the 18 months to 30 September 2013 the firm reported revenue of £29.5m, an average of £1.6m a month, but this was below the level Hurley Palmer Flatt Limited - the previous controlling company, now wholly owned by Hurley Palmer Flatt Group - reported in the 12 months to 31 March 2011.

Over that year it reported total annual revenue of £26.2m, an average of £2.2m a month.

Hurley Palmer Flatt Group subsequently went through a refinancing deal on 4 October 2013 that entailed exchanging £17.3m of loans and £2.4m of interest that the company owed for equity and a further cash injection of £750,000.

The refinancing deal included buying back 30% of the company’s shares from private equity fund Isis IV, with Paul Flatt, chair of Hurley Palmer Flatt, also upping his stake in the firm to 67.6% of the total shares - giving him a controlling share of the group.

Writing in the accounts Flatt said the firm’s financial performance in the six months to 31 March 2014 had been “reasonable considering the challenging market conditions”.

He added: “The business has traded in excess of target levels within the revised banking covenants throughout the period and the cash balance at the period end is significantly in excess of the covenant requirements.”

Update

Since publication, the directors at Hurley Palmer Flatt have been in touch to point out that the firm has not been in financial difficulty, and that it undertook a consensual restructuring with ISIS Private Equity, which was a minority investor.

We understand that Hurley Palmer Flatt bought back the minority stake from ISIS, for an undisclosed sum, to return the company back to 100% independent. Hurley Palmer Flatt assures Building that the firm has at all times provided a profitable EBITDA, and continues to do so.

Paul Flatt said “The pretax loss figures reported in the group accounts are not connected with the day-to-day trading but are to do with the mechanics of writing off goodwill in the minority stake buy back returning the company independent.”

We are happy to provide this further information.

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