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Keller problem warehouse still unsold

Keller has still not found a buyer for a warehouse it bought last spring following a dispute, the ground engineering specialist revealed today alongisde its latest results.

Chief financial officer James Hind told Construction News the facility in Bristol was still on the market.

In 2013, VolkerFitzpatrick sued Keller over work on the warehouse, which completed in 2008, claiming the company had installed defective piles. This resulted in a long-running dispute that was settled in February 2015.

Last May Keller announced that it would buy the property in question for £62m with a view to carrying out works and selling it on.

Mr Hind said today: “It is on the market, it is relatively early days – we always knew it wouldn’t be the easiest property in the world because of its size.

“We said that we hope to recoup most if not all of the money back; that is still the case. But in the meantime we will take the rental income.”

Meanwhile Keller has reclaimed more than a quarter of the £54m exceptional charge it incurred from the contract dispute.

The firm revealed a £14.3m credit in its accounts for the year to 31 December 2016 as a “part reversal” of the £54m it set aside in 2014 because of the dispute.

The credit is understood to represent a combination of insurance proceeds and increases to the value of the property. 

Keller saw underlying pre-tax profit drop 11 per cent year on year to £85.1m in 2016. 

Much of the drop in underlying profit was down to weak performance in Keller’s Asia-Pacific arm, which posted losses of £18m.

Statutory pre-tax profit was up 31 per cent to £73.9m.

The ground engineering specialist said that it had seen strong overall performance in the UK over the year, with profit and sales both up on the previous year.

In August 2016 chief executive Alain Michaelis told Construction News that he feared a drop in revenue in the UK following the vote to leave the EU.

Mr Michaelis said today: “I don’t think this impact has come through yet properly, I think certainly in high-end apartments in London that’s dropped off, there is a little fragility there but volumes are ok.”

He added: “Civils work is relatively quiet for us but we are pitching on High Speed 2 as one of the consortium there.”

Mr Michaelis said he hoped to win millions of pounds of work on HS2 as part of the Bouygues TP, Sir Robert McAlpine and VolkerFitzpatrick consortium.

The Align JV is currently bidding for four of the seven civils packages on the project, which achieved royal assent last week.

Last August Keller identified Hinkley Point C as a project in which it expected to win work but has now said this looks unlikely due to the main contractors having the capacity to carry out the work themselves.

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