Sir Robert McAlpine becomes a casualty of Bermuda hospital’s ‘severe problems’
Substantial losses on Bermuda hospital contract leave construction group Sir Robert McAlpine Holdings nursing pre-tax losses of £37.7m.
Sir Robert McAlpine’s Bermuda joint venture BCM McAlpine has required an emergency £50m injection after a hospital contract suffered ‘substantial losses’.
By Harriet Dennys, City Diary Editor from the Telegraph
6:32PM BST 05 May 2014
Substantial losses on a Bermuda hospital contract have thrown the builder behind the London 2012 Olympic stadium deep into the red.
Accounts for Sir Robert McAlpine Holdings, the umbrella company for the McAlpine family’s privately owned portfolio of construction and engineering interests, show a pre-tax loss of £37.7m for the year to October 31 2013, down from a £19.2m profit the previous year.
Operating profits fell from £17.4m in 2012 to a £40.2m operating loss.
Directors say the “deterioration” was due to having to provide financial support to the company’s Bermuda-registered joint venture, BCM McAlpine Limited, which is part of the consortium redeveloping Bermuda’s King Edward VII Memorial Hospital (KEMH).
The £176m contract has suffered “severe problems with design and performance”, say the accounts, resulting in “substantial losses” that have been covered by a £50m provision from Sir Robert McAlpine Holdings.
Director Ian McAlpine said: “The performance of the Caribbean construction business has been severely impacted by the difficulties encountered on the King Edward VII redevelopment.”
The hospital project, which is due to be completed next month, is a public-private partnership (PPP) between the Bermuda Hospitals Board and the Paget Health Services (PHS) consortium.
The government of Bermuda approved the decision for the BHB to enter into the PPP based on a business case study by KPMG. Under this model, the development is funded by the BHB, but cost over-runs are borne by PHS.
Although BCM McAlpine has “significant claims” outstanding, no allowance has been made for any recovery. As of October 31 last year, BCM McAlpine owed Sir Robert McAlpine Holdings £18.8m, widening from £0.7m in 2012.
In the UK, the company’s construction arm remains “cautious”, pursuing work “only where … suitable margins can be obtained”.
Notable contracts that started during the year include the £650m US Embassy building in south London.
The company declined to comment.