Troubled AWPR consortium partner Carillion took another battering in the City yesterday after posting half-year losses of more than £1billion.
It also delivered a fresh warning over performance, saying full-year figures would fall below current market expectations.
More than £55million was wiped off the company’s market value as investors digested this news and first-half figures described by Carillion interim chief executive Keith Cochrane as “disappointing”.
The Wolverhampton-based group said pre-tax losses for the six months to June 30 totalled £1.15billion as it was dragged down by restructuring charges.
It compares with profits of £84million a year ago and includes an £845million write-down for support services contracts and a goodwill impairment charge of £134million linked to construction activities in the UK and Canada.
The company has also made a fresh £200million provision for support services contracts.
As a result, total revenue for the year is expected to come in between £4.6billion and £4.8billion, down from previous guidance for £4.8billion to £5billion.
On an underlying basis, pre-tax profits plunged 40% to £50million.
Carillion, which has around 43,000 staff worldwide, has been thrown into crisis since a hefty profit warning in July, which sent its shares tumbling by more than 70% in one week.
Most of the UK write-down is for three public-private partnership projects, one of which is believed to be the £745million AWPR road being built in and around Aberdeen.
Work on the bypass has also blown a large hole in the balance sheet at construction giant Galliford Try. In May, Galliford Try said two major infrastructure joint-venture projects accounted for a £78million shortfall in “legacy” contracts – sending its shares down more than 9%.
It is believed these contracts involved Scotland’s two biggest infrastructure projects – the AWPR and the now completed Queensferry Crossing over the Firth of Forth.
While Aberdeen’s city bypass is proving costly for at least two of the three partners in the Aberdeen Roads consortium, the project will not cost the public purse a penny more.
The 28-mile road is being built by Carillion, Balfour Beatty and Galliford Try-owned Morrison Construction.
Transport Scotland has said there is no risk to the project because if any one of the partners in Aberdeen Roads withdraws for any reason, the other two will take on extra contractural obligations.
Mr Cochrane said Carillion’s first half figures reflected the issues flagged in July, adding: “No one is in any doubt of the challenge that lies ahead.” The results included an update on the firm’s group-wide review as it battles for survival.
Carillion is a major supplier to the UK Government, with a number of long-term contracts, and was among the firms awarded deals for phase one of the HS2 high-speed rail line.
A government spokesman said: “The company has kept us informed of the steps it is taking to restructure the business.”