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Receivers examining debts at WH Brown Construction

Kim Cessford - 20.08.12 - pictured is the head office of Brown Construction, Ainslie Street, West Pitkerro Industrial Estate
Kim Cessford - 20.08.12 - pictured is the head office of Brown Construction, Ainslie Street, West Pitkerro Industrial Estate

Receivers at Dundee building firm WH Brown Construction have begun their efforts to quantify the debts which pushed the major city employer into its dramatic collapse.

Ernst & Young’s Derek Hyslop and Colin Dempster took charge of the West Pitkerro company and its subsidiary Bronco Timber Products on Monday morning, immediately shedding 130 jobs in a significant blow for the city economy.

Mr Hyslop blamed ”difficult” economic conditions, saying they had resulted in a situation in which the ”immediate cessation of trading” was necessary.

”We are now focused on establishing the full extent of the company’s debts as we aim to realise its assets on behalf of its creditors,” he added.

Accounts for the company’s latest financial year have not been filed with the authorities but were due to be posted at Companies House within days.

The most recent directors’ report, dated February 2011, said the firm had experienced the ”full impact” of the recession. Total debts increased in the period to around £6.8m, but the firm nonetheless managed to increase turnover to more than £18m, boosting pre-tax profits to £246,636.

”Public expenditure will be reducing once again this year as widely forecast and this will continue to impact severely on the construction industry,” the statement warned.

However, the company said it had received ”encouraging” reports in the housing market, and would continue to pursue its preferred social housing projects, as well as community and Government contracts.

Finance Secretary John Swinney said: ”This will be a difficult time for staff at WH Brown, and the Scottish Government will do everything we can to provide support for those affected.

”The Scottish Government and its agencies are supporting economic growth in the area with infrastructure projects and the creation of a new enterprise area.”

Dundee East MSP Shona Robison said: ”Brown Construction has been a leading firm in the construction sector locally for decades, and many of these workers are highly-skilled and experienced tradesmen with valuable skills in the traditional trades.”

Dundee West MP Jim McGovern said: ”As someone who served an apprenticeship and worked for 25 years in the construction industry I find this particularly disappointing.”

Construction union UCATT also offered its support for members affected.

Regional secretary Harry Frew said: ”This is a kick in the teeth for the local economy, which is already struggling. ”UCATT will be seeking a meeting with the administrators to establish what the future holds for our members.”

In January, Steven Coutts, Robert Barty and Grant McIntosh were appointed to the board of directors of Brown’s, joining the continuing Keith Coull and John Lindsay.

Former chairman and company secretary David Stout stood down at that time, as did former director Douglas Arnott.

In June, Brown’s corrected a ”mis-statement” in its filing records to make it clear a Bank of Scotland charge on its premises remained ”outstanding”. It had previously filed a statement saying the security had been fully paid off.

In its last full accounts for the year to the end of November 2010, the firm revealed it was forced to ”deal with problems” associated with one of its pension schemes, and took issue with accounting assumptions about the potential costs of that scheme.

It said the current impact of the pension figures could give a ”completely misleading” view of the company’s performance.

The statement said the calculations used to estimate the liabilities of the final salary pension scheme, which closed in 2000, were ”exaggerated” because they took an average age of 90 as the likely life expectancy of a Brown pensioner.