Building group faces courts battle

The directors of construction group Sisk have conceded it may take several years in Polish courts before claims from the group’s troubled joint ventures in the country are resolved.

Its joint ventures in Poland contributed to the Sisk group recording pre-tax losses of €153.2m last year.

The accounts show that Sisk wrote off €83.9m on its ill-fated Polish joint venture schemes last year, bringing its losses on the projects to €97m.

Accounts filed by Sicon Ltd to the Companies Office show that the group recorded the loss in spite of revenues increasing by 20%, from €972.8m to €1.17bn, in the 13 months to the end of Jan 31, 2012.

The filings also disclose a net loss of €49m on the sale of the group’s healthcare business.

According to the directors’ report, the 13-month period “was a difficult one for the group, particularly in respect of the well-publicised issues which certain joint ventures of the group have experienced in Poland”.

A 50% associate of the group, SRB Civil Engineering Ltd, was awarded contracts for three separate sections of the A1 motorway in Poland.

The accounts state that the joint venture has completed one, but “was left with little alternative choice but to terminate the other two contracts in September”.

The note adds that the directors “are of the opinion that the group has strong entitlement to some recovery of the costs incurred”.

However, the directors say it has become apparent that the client is intent on allowing the matters to go for resolution through the courts and “it is likely that the court process in Poland will take several years for these matters to be resolved”.

The directors state that revenues in Ireland fell by 7% “which in the circumstances is an extremely solid performance”, and that the business has a very strong order book for 2013”.

In relation to the UK, the directors state that the group increased revenues by 24%. The accounts show that the group recorded revenues of €549.2m in the UK last year, €400.9m in Ireland, with €160m generated in Poland.

Accumulated profits last year reduced to €32.1m and its cash fell from €175m to €76m.

Sisk employs 849 in Ireland, 906 in the UK, and 123 elsewhere.

The filings show that the group incurred €13.5m in non-cash depreciation and amortisation costs.

Remuneration for the directors increased from €2m to €2.8m last year.