Firm says four contracts and restructuring costs help push it deep into red
The scale of the rebuild facing Sir Robert McAlpine’s new chief executive was underlined this morning after the firm said it sank to a pre-tax loss of more than £100m last year which it blamed on four problem jobs and restructuring costs.
Neil Martin joined the firm in February after Paul Hamer left following seven years in the post but in his first set of annual numbers as chief executive Martin has been forced to preside over a near £105m pre-tax loss for the 12 months to October 2023.
The number, down from 2022’s £9.6m pre-tax profit, is believed to be the firm’s worst set of losses since it shipped £72.5m in 2004 on a PFI hospital scheme in Dudley.
As a result of the loss, Martin said McAlpine was “focusing on a process of derisking the company by targeting quality work-winning opportunities from long-term clients in our core sectors”.
He admitted “the market will remain challenging in the coming years” but added: “We’re focusing on where we excel and contract types that we have confidence [in].”
In a note accompanying the accounts, the firm said its operating loss, which stood at £110m from a £9.6m profit last time, was “attributed to the difficult trading environment, which had an adverse impact on the company’s assessment of end-of-life price-based contracts which completed in 2023 or are due to complete in 2024”.
Chief financial officer Leighton More added: “The company had four contracts where the financial position was reassessed in the year and write downs made. The underlying causes were in the main due to the performance of our supply chain partners and the delivery of legacy projects in sectors which no longer fit our strategic direction.”
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The four contacts are not named but two are believed to be its 21 Moorfields office scheme in the City of London and a cultural job in Edinburgh.
In addition, More said last year’s strategic review, carried out by Hamer and which saw several senior people leave as well as dozens of job losses as part of a switch in focus from regions to sectors, cost the business £7.8m.
The accounts said the McAlpine family pumped in £60m in cash through the issue of new shares “thereby adding additional resilience to the company’s balance sheet and liquidity position. This demonstrates its confidence in the company’s current order book, strategy and future direction.”
McAlpine said its provisions for liabilities had increased £6m to £26m, which was split between remedial and onerous contract provisions.
But there was better news on the cost of a fire at a mixed-use scheme in Reading last autumn with McAlpine saying: “At the point of signing these financial statements [9 July], in the opinion of the directors there is no material contingent or actual liability.”
Turnover for the year dropped 19% to £881m but the firm said its order book was £1.2bn with a further £700m-worth of work at preferred bidder or nearly secured stage.
It said that since its year-end, the firm has won a £721m in orders including a £554m deal to build a new tower at 2 Finsbury Avenue at Broadgate in the City for British Land. Earlier this month, it won the first phase of work at a new car battery plant in Somerset for a subsidiary of Indian firm Tata.
It added that revenue in the first six months to the end of April was around £500m with margins in line with expectations. Its cash position was up £5m to £105m while its order book was up £271m to £1.4bn.
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