Contractor makes disclosure in half-year results this morning

Carillion expects to pay over £10m compensating victims of the blacklisting scandal this year.

In half-year results posted this morning, the contractor made a £10.5m writedown it said represented what it expects to pay in compensation to blacklisted workers in 2016.

Carillion - alongside seven other contractors involved in blacklisting - made a landmark apology to blacklisting victims and agreed to pay out millions in compensation to bring a High Court class action against them to an end in May.

The legal action followed the 2009 discovery of a database of over 3,000 construction workers kept by The Consulting Association - since shut down - to vet new recruits on behalf of its then member contractors.

Explaining today’s £10.5m writedown, Carillion said: “[This] represents the compensation and associated costs that we expect to pay under The Construction Workers Compensation Scheme set up by eight UK companies for workers who have been impacted by use of the database vetting system operated by The Consulting Association.”

The writedown contributed to an 18% drop in Carillion’s half-year operating profit for the first six months of 2016 to £73.6m, down from £90.2m the previous year.

The firm’s UK and Canadian contracting businesses - which are reported together - posted an 18% drop in underlying operating profit to £15.2m, down from £18.5m. However, revenue increased 12% to £682.7m, up from £607.7m.

Carillion said underlying margins in UK contracting dipped slightly to 3%, down from 3.2%, but this still puts the firm ahead of most of its peers.

Overall revenue increased to £2.49bn, up from £2.26bn.

A net gain on finance costs meant the firm posted a 24% increase in pre-tax profit to £83.9m, up from £67.5m.