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Difficulties on what is described as a "remote construction project on the Isle of Lewis" have hit the latest accounts of construction group Trench Holdings, according to a report on the Construction Index website which specialises in news from and about that sector.

In the 18-months to 30 June 2022 Trench Holdings, a subsidiary of McLaughlin & Harvey Holdings, made a pre-tax loss of £3.7m on turnover of £331m.

This compares with a pre-tax profit of £3.1m for the year to 31 December 2020 with turnover of £208m.

The board decided to delay the financial year-end because of an ongoing legal dispute between its subsidiary Barr Environmental Ltd (BEL) and the tax authority, Revenue Scotland, over landfill tax.

According to the report, the second factor hitting the company’s profits during the period was a single construction contract in "remote Stornaway" – the Goathill Care home development.

Chairman Ken Cheevers writes in Trench’s annual report: “Construction activities were strong across leisure, education and industrial & commercial sectors for both public and private clients resulting with a number of key standout projects including a recently completed and very successful stadia project for the Birmingham Commonwealth Games.”

However, he continued: “Despite a suite of solid performing projects throughout the year a large care and residential facility which is being construction in the remote location of Stornoway has resulted in an exceptional loss and is dominating annual performance.

"The extent of the loss provided is £8.3m in the most recent accounts and has undermined otherwise strong performances from the remaining projects.”

According to Comhairle nan Eilean Siar, the project is being delivered as part of the Comhairle's Strategic Housing Investment Plan 2017-22 with the support of Cùram Is Slàinte nan Eilean Siar (Western Isles Integrated Joint Board (IJB)) and Hebridean Housing Partnership (HHP).

During the summer of 2017, HHP and the Comhairle partnered with Scottish Government’s More Homes Scotland to undertake a Master Planning and Options Appraisal exercise for a large strategic housing site in the Goathill area of Stornoway with the objective to deliver affordable housing, housing with Extra Care, and a Residential Care Home hub to meet the needs of the island’s elderly population and to fulfil wider strategic housing objectives.

The development is based on the preferred model of care identified by the IJB and comprises a 52 bed residential care home and a 50 unit extra care facility on a greenfield site at the former Goathill Farm. In addition to the buildings, the development also comprises ancillary facilities such as car parking and bus drop-off areas, courtyard and external garden areas, refuse compound, delivery zones, and works to the existing road infrastructure and access to the site at Perceval Road.

Meanwhile, parent company McLaughlin & Harvey Holdings made a pre-tax profit of £3.2m for the same 18-month period to 30 June 2022 on turnover of £799.6m. In the year to December 2020 it had made £4.4m profit before tax on turnover of £480.3m.

“Whilst market conditions in the UK and Ireland continue to be highly competitive across the business sectors we operate in, the on-going investment in business development, infrastructure and in our peoples and skills base will ensure continued success for the group going forward,” group finance director David O’Neill said in McLaughlin & Harvey’s annual report.