Balfour Beatty faces £45m hit from Carillion, as industry reacts

Construction firm Balfour Beatty has announced it faces a hit of up to £45m from the collapse of Carillion.

Balfour Beatty is in a joint venture with Carillion on three projects: the Aberdeen Western Peripheral Route, the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.

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

In a statement Balfour Beatty 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 does not have any other material financial exposure to Carillion.’

Kier Group plc (“Kier”), was also in partnership with Carillion through a joint venture on HS2 and the Highways England smart motorways programme.

In a statement it said:’We have put in place contingency plans for each of these projects and are working closely with clients so as to achieve continuity of service.

‘Following today’s announcement and after a short period of transition for these contracts, we do not expect there to be an adverse financial impact on the Group arising from these joint venture contracts.’

Infrastructure firm Amey has also issued a statement. Amey has incorporated joint ventures with Carillion to deliver the Regional Prime and National Housing contracts for the Ministry of Defence (MOD), through the Defence Infrastructure Organisation (DIO).

The statement said: ‘The terms of the joint ventures’ arrangements mean that Amey will continue the services now that Carillion has announced it is entering into immediate compulsory liquidation. Amey is committed to doing this and ensuring continuity of service to the DIO and MOD and the service men and women in the UK.

‘For the past few weeks, Amey has been working on detailed contingency plans with the DIO and the Cabinet Office to ensure it can effectively continue to manage the contracts and these are being implemented today. Amey confirms it is fully prepared to continue the service obligation of the contracts without adverse effect on the employees of the joint ventures or the supply chain.’

Meanwhile local government lobby group the Local Government Association tried to downplay the impact of the Carillion collapse for councils.

A spokesman said: ‘A relatively small number of councils are affected by the collapse of Carillion. They have been monitoring the situation closely and are implementing contingency plans to keep services running as normally as possible.

‘Councils are also working with other public sector partners in their local area to be ready for any wider knock-on effects of Carillion’s failure.’

 

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