A COMPANY set up by Bournemouth council to build properties is forecast to make no profit this year.

According to the borough's monthly budget monitoring report, Seascape South Ltd will merely break even for the period ending March 31 next year, falling short of its target of a £12,000 surplus.

The report by chief financial officer Adam Richens states: "Trading activity has been less profitable than expected and therefore the company is only able to meet its costs and is unable to deliver a profit overall.

"A review has been undertaken by the company to mitigate and address this situation."

The wholly council-owned company offers construction services to private clients, including for schools, conversions, offices and utilities.

Another council firm, Seascape Homes & Property is forecast to face a £4k deficit, £8k less than its target.

The report states: "This is due to the mix in the properties purchased. Whilst falling short of the revised target the forecast still exceeds the original business case expectations as the company has almost purchased the full portfolio of properties in two years rather than three."

Founded in November last year, the company was set up so the council can offer homes to residents on assured shorthold tenancies.

So far the authority has leased some 23 properties to Seascape as part of its ongoing strategy to tackle homelessness, most in East Cliff and Springbourne and Kinson South, and further homes will be purchased over the next three years.

Meanwhile, there is better news for Bournemouth Building & Maintenance, another limited subsidiary, which carries out building works on the council-owned properties.

It is forecast a £178k surplus by the end of the financial year, £4k more than was originally budgeted.

The report says the firm "is anticipated to pay a dividend of £100k to the council" by March 31.

In total, the borough expects to receive £411k from its subsidiary companies at the year's end.

The cash will contribute to closing the borough's funding gap of some £13 million by 2021, in the midst of a reduction in Government grants of some £49 million since 2011.

The report states: "The future financial position for local government is expected to be bleak with further reductions in funding being made.

"The pressures highlighted in this report demonstrate how tight the budget is and the limited scope there is to absorb any pressures within services.

"Amongst the unavoidable service pressures for 2016/17 the council agreed to allocate an additional £7.6m to adult social care before finalising the savings required across the council’s operations."