Piling And ground engineering, like most sectors of construction now, is starting to enjoy the fruits of the recovery. With the exception of Cementation Skanska, all of the top 10 contractors – as ranked by turnover – have enjoyed revenue growth compared to their previous results. And all are in profit apart from Bachy and Keller, who have both had to wrestle with a couple of nasty 'problem contracts'.
Bachy was a hit by an exceptional charge of £11.8m for “a joint arrangement completed a number of years ago that has been the subject of a long-running commercial dispute”. Otherwise it would have been in the black.
The firm said “the contract was carried out in Denmark as part of a major international consortium. The results of the arbitration hearings were received in 2013 and the board were disappointed with the final outcome. This matter has now been concluded and there will be no further profit or loss in respect of this contract.” Keller included £30m of exceptional costs in its results. It announced last July that the charge related to a dispute over defects in a floor slab on a UK warehouse project, where the company carried out the design and construction of the piling in 2008. In February, Keller told investors it had reached an agreement to settle the dispute, but would have to make a further provision of £20m-£30m, and estimates that the full cost of the remedial work could be as much as £60m.
Otherwise, the mood is generally positive. Cementation Skanska saw turnover drop nearly a third, but it boasts the second-best margin in the sector.
Balfour Beatty's turnover also dipped but the firm returned to profitability. Roger Bullivant, too, is back in the black and said that “restructuring and cost saving exercises carried out in recent years have placed the company in a strong position to take advantages of the improving economic backdrop”.
It said that “one of its key sectors, housebuilding, has seen an improvement led by government initiatives to stimulate the sector”.
Van Elle grew turnover by over 30% to £46.6m, and delivered an impressive £3m of profit – the highest in the top 10. The directors said the company “continues to invest to deliver organic growth... average headcount in the year has increased by 67 employees and capital additions were in excess of £6m”. They added that enquiry levels were up year-on-year by “nearly 20%”. Van Elle also cited housebuilding as “a primary contributor to our growth” and believes the rail sector will be “a major client over the long term”, particularly the Network Rail CP5 frameworks and HS2.
(See p39 for more on Van Elle’s recent performance). O'Keefe enjoyed a record increase in turnover (31%) to £55.2m, though its margin is anaemic. But the firm is making big investment in technology. It said: “We have committed a six figure sum to IT improvements with our BIM platform. We have a dedicated team of five people, wholly concentrated on the development of BIM within all our operational business fronts. BIM will be at the heart of O'Keefe.”
Bauer and Miller returned to the top 10 on the back of impressive growth in turnover – by 65% and 50% respectively.
|Rank by turnover||Rank by profit||Company||Latest turnover (£M)||Previous turnover (£M)||Latest pre-tax profit (£M)||Previous pre-tax profit (£M||Latest margin (%)||Previous margin (%)||Latest results|
|2||4||Balfour Beatty Ground Engineering||79.9||82.5||1||-2.6||1.3||-3.2||31/12/13|
This article first appeared in the June 2015 issue of The Construction Index magazine. To read the full magazine online, click here.
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