The profit of fit-out contractor Newco Interiors has been dragged down by the bankruptcy of a tenant planning to occupy the firm's largest job.
US web-hosting firm Exodus Communications, which filed for chapter 11 protection last October, was due to take up space on a Newco scheme in Mill Hill, north London. The scheme is understood to be valued at £4m.

Exodous' failure to pay Newco for the Mill Hill job led to a disappointing pre-tax profit of £24,841 for the year to 31 March 2001 – although this was still £20,000 more than the previous year. Newco's turnover jumped between the two years, from £1.2m to £14.9m.

In his review of the firm's progress to Companies House, managing director Stephen Banks admitted that the year "became very difficult" after Exodus' collapse. The web-hosting firm has since been bought out of administration by telecoms group Cable & Wireless.

Banks wrote: "This affected the reported and expected returns for the project; accordingly the profit anticipated was severely affected."

He added that the firm had reached an agreement with creditors and the job's client. He wrote: "We achieved the support from our creditors, which not only ensured and allowed the company to avoid more severe consequences, but to move forward with optimism.

The year became very difficult after Exodus collapsed. Profit was severely affected

Stephen Banks, managing director, Newco

"These difficulties also deflected a great deal of the management's time and effort needed in other areas of the business, particularly growth and expansion, but I sincerely hope that these matter are truly behind us."

The statement said that Newco had implemented management procedures in the 2000/1 year that, with the exception of the Exodus job, had proved successful.

Banks, a founding director of fit-out contractor Churchfield in the mid 1990s, joined Newco in February 2000. Churchfield went into administration in February the following year.