Wrekin Group: new owner pulls business back after £9m loss last year

The reason why the Frain family found itself selling the Wrekin Group for next to nothing has surfaced today – the business ran up losses of more than £9m last year.

Wrekin has had a rocky ride in recent times with a string of three chief executives who came and left in fairly rapid succession, with the owning family reputed to have interfered with their freedom to run the business.

Everything changed six months ago when the Frain family sold to a new owner in the form of David Unwin.

Unwin has already given Wrekin a mighty shake: the disastrous “expansion at any cost” policy is history and £11m of cash has been poured in to clear the group’s debts.

Within six months of stepping in, Unwin has put the group back into profit.

But the latest figures from Companies House (12 months to 31 March 2007) show how big a hole Wrekin had fallen into prior to that, with turnover of £104m producing a major £9m loss.

In a statement accompanying the results, Unwin, as the group’s new chairman, said that heavy losses up to March 2007 were the result of:

• an overly ambitious growth strategy “which inevitably led to a number of mis-priced project awards
• poor management decision-making and termination of long-standing contracts rather than improvement management and renegotiation of terms
• management failure to control overhead spending.

Unwin’s statement continued: “The balance sheet will be strengthened in the next financial year. Loan and overdraft facilities have been renegotiated. Overheads have been realigned to meet ongoing operational needs. The forward orderbook is strong with all of the current year £90m turnover awarded.

“The trading operations are returning to the core civil engineering activities from which the group’s reputation was originally established.”