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Alf McAlpine loses £27m

NEWS - CITY WOES: Bad week for public construction companies as se eries of problems forces three high-profile firms to issue profit warnings

PROBLEMS with two old construction contracts and a poor performance at its infrastructure services arm have helped blow a £27 million hole in Alfred McAlpine's accounts and cost a board director his job.

The news caps a rollercoaster 12 months for the firm, which announced increased profits for 2003 earlier this year but lost a High Court battle with namesake Sir Robert McAlpine over use of the McAlpine name and found itself on the wrong end of a £25 million writ from United Utilities following a row over sewerage works in Liverpool.

The loss will be booked in its accounts for the year ending December 2004 - the first calendar year overseen by chief executive Ian Grice, who stepped up to the role in August 2003. Figures for 2004 will be announced in March.

Mr Grice said he still expected pre-tax profit growth to be in double figures, with analysts anticipating a rise of around 25 per cent to come in at close to £38 million.

The two construction contracts, which have not been named, began in 2000 and 2001 with a building contract expected to make an £8 million loss, while a civil engineering scheme is expected to lose £7 million.

A spokesman said the pair, which have been carried out under its capital projects business, would be wrapped up next April. He added: 'We found there were some problems with earlier work, which needed to be fixed.'

A senior company source said: 'These are just a couple of historic jobs with private one-off clients which are in litigation.

'The decision was taken that as things were going well at the moment we would book in the money but there is a good chance some of it will come back after the cases are finished.'

The firm is spending £6 million restructuring its infrastructure business, which specialises in utilities work and highways maintenance, with around 30 white-collar jobs being shed.One of these will be Peter Carolan, managing director at infrastructure services, who leaves at the end of the month.

Mr Carolan is the youngest board member at the firm and was only appointed to it in March. He is unlikely to receive any pay-off because compensation claims under so-called service agreements for Alfred McAlpine directors are only triggered following a change of control of the company.

The firm is also having to write off £5 million at Ryan Utility Services after overestimating the amount of ongoing work.

Ryan was bought by McAlpine in 2001 - one of a number of acquisitions it made that year.These included Kennedy Construction, where Mr Carolan was joint managing director.