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Sir Robert McAlpine blames £23m loss on EfW problem jobs

Sir Robert McAlpine made a pre-tax loss of £23m in the year to 31 October 2017 as three energy-from-waste projects put the contractor in the red.

The contractor declined to comment specifically on the problem EfW projects, but two of the schemes behind the loss have since been completed.

Sir Robert McAlpine said it had completed EfW jobs for client HZI in Avonmouth and Buckinghamshire during the year.

It declined to identify the one remaining job, which is believed to be its £100m Lynemouth biomass conversion project that is now expected to complete in October.

In accounts filed to Companies House, Sir Robert McAlpine confirmed it would no longer bid for EfW projects and that in the first half of trading this financial year it had made an operational profit of £13m.

Sir Robert McAlpine reported revenue of £892m for the year to October 2017, up from £846m, and recorded a pre-exceptional profit of £14m.

Its parent company Newarthill Ltd posted total revenue of £942m, up from £870m the year before.

Newarthill reported a pre-tax loss of £20m with the EfW exceptional projects included, and underlying profit of £17m.

Exclusive: Sir Robert McAlpine boss speaks to CN

Sir Robert McAlpine boss Paul Hamer sat down for an exclusive interview with Construction News, to be published next week.

The contractor, which celebrates its 150th anniversary next year, has set a target of securing 50 per cent of its London revenue through construction management and Mr Hamer said he was targeting 4 per cent margins for the business overall.

He added that the company wanted to win more public sector work and that it would consider working on high-end residential projects in London, despite the well-known losses it incurred building luxury apartments on Fitzroy Place for Exemplar in 2015.

Mr Hamer said: ”On high end residential, we’ve been clear that in the London market or anywhere else, we wouldn’t be interested in taking on fixed price risk, but would we be interested in high end residential on other forms of contracting? Yes we would, with the right clients and the right projects.”

The company will not bid for any more work in the energy-from-waste sector due to recent problem projects, but will be bidding for future work in commercial offices, build-to-rent, health, retail and education.

CN subscribers can read Mr Hamer’s views on the contractor’s five-year plan, his relationship with the McAlpine family, its ambitions for civils infrastructure and much more from Tuesday on and in print.

Chief executive Paul Hamer (pictured) said: “While our 2017 financial results are disappointing and directly attributable to our exposure to the waste-to-energy sector, I am encouraged that our reinvigorated focus on engineering and operational excellence is already having an impact on our business performance.

“Our results for the first six months of 2018 are in line with budget and our secured order book is stronger than it has been for the last 10 years.” 

Mr Hamer said McAlpine would focus on its “already recognised strengths in key sectors” including commercial offices, build-to-rent, health, retail and education.

The contractor is bidding for Highways England work in joint venture with Amey and has targeted winning new nuclear work at Wylfa as part of the Construct Energy JV with Costain and Hochtief.

Last year the group was forced to include a £53.4m exceptional writedown of its pension scheme in its results after a 2015 valuation revealed a £107.6m pension deficit.

In the latest results, Sir Robert McAlpine reported that its pension scheme had a net pension deficit of £102.8m, down from £148.9m in its previous year. 

The group made pension contributions of £11.7m (up from £7.2m) including an additional payment of £8m agreed in its recovery plan following the 2015 valuation.

McAlpine had cash of £159.8m (down slightly from £168.9m in its previous year) and borrowings of £172.4m (down from £178m) comprised of non-recourse debt secured in its wholly owned PPP special purpose vehicles.

Newarthill had payroll costs (including director pay) of £154.8m, up from £149.4m. At Sir Robert McAlpine, director pay fell from £6.8m to £3.5m, following the restructure of its senior team.

The contractor was owed £122.4m from customers for contracted work, up from £92m the year before.

Among its completed projects last year was the new US Embassy, the West Quay shopping centre in Southampton for Hammerson, and 132,000 sq ft of offices at Silver Fin in Aberdeen for the BA Pension Trust Fund.

Both sets of accounts were audited by Deloitte.

The contractor is currently working on Big Ben, Wimbledon’s No.1 Court and British Land’s Broadgate Campus.

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