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Balfour Beatty expects £45m hit over collapse

16 January 2018 | By CM Staff

The UK’s largest contractor has said it expects to lose up to £45m as a result of its joint venture partner Carillion going into liquidation.

Balfour Beatty, an international infrastructure group, is JV partner with Carillion on three major road projects: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.

In a statement yesterday it said “the cash impact to Balfour Beatty is likely to be an outflow in the range of £35 million to £45 million in 2018”.

“The profit impact of Carillion’s compulsory liquidation would be recorded as an exceptional non-underlying charge in the income statement,” Balfour Beatty said.

“Balfour Beatty does not have any other material financial exposure to Carillion.”

It said it will continue to work with its customers and will meet its contractual commitments.

Another UK contractor, Galliford Try, has also said it faces a financial hit of up to £80m from Carillion’s demise, due to its JV partnership on a Scottish infrastructure project. 

Today the firm warned investors: “The Group is in joint venture with Carillion and Balfour Beatty on the £550m Aberdeen Western Peripheral Route contract.

“The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract. 

“Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60-80 million, of which any shortfall will be funded equally between the joint venture members.”

Comments

When a company issues a profit warning as with Carillion back June-July 2017:
Why were there no steps taken to remove/cancel government contracts eg prisons, hospitals etc?
Why was Carillion awarded a section of the HS2 when it was known that it was in financial trouble?
Again we read the chairman was paid a substantial BONUS £1.6 million and directors carry on being paid massive salaries up until July 2018.
The knock-on effect from this will be felt for a long time, the small subcontractors and all the staff we feel for them all.
The excellent subcontractors that we will lose will be a massive loss to the industry.

Denis Lawler, 16 January 2018

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