Vinci posts £44m loss as provisions nearly double

Vinci Construction UK made a loss of more than £44m last year after taking a hit on two contracts and cranking up its fire-remediation provisions.

Newly released accounts for the 12 months to 31 December 2022 show the company fell to a £44.2m pre-tax loss, compared with a £23.6m profit in the year before.

The French-owned contractor’s turnover grew to £1.28bn from £1.16bn as work ramped up on projects including HS2’s Old Oak Common site (pictured), on which its subsidiary Taylor Woodrow is working.

But the group made £121.1m in provisions, including £51.5m for potential litigation and £47.8m for work on completed buildings.

This was a near-doubling of the £63m it set aside the previous year, with the accounts stating that some of this was due to the UK government extending liability for defects on completed buildings from six to 30 years.

It also suffered losses on two fixed-price contracts that it won in 2018, one for University College London (UCL) and the other for private hospital company HCA UK.

The contractor started work on UCL’s new East London campus at Stratford in 2019, and a £100m hospital for HCA the same year.

In a statement with the accounts, chief executive Scott Wardrop blamed Covid and inflation for those becoming loss-making.

“Our entire building business also suffered from hyperinflation, labour shortages and a higher than usual attrition rate. All of these were influenced heavily from the cost-of-living crisis across the world, war in Ukraine, Covid pandemic and Brexit,” he added.

Its Vinci Facilities arm also took a hit on a PFI contract with the Coventry and Rugby Hospital Company to provide facilities-management services to the Coventry and Rugby University Hospital.

Administrators’ reports for the Coventry and Rugby Hospital Company show that Vinci was accused of facilities-management service failings over which the hospital withheld payments to it prior to the contract being terminated.

Wardrop added that the contractor expects to return to positive margins during 2023.

Last month Bouygues UK revealed that it had also nearly doubled its building-safety provisions in the wake of “post-completion liabilities arising from recent legislative changes relating to building safety”. It made a £42m pre-tax loss on a £382m turnover as a result.

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