Former Wembley steel contractor Cleveland Bridge (CBUK) has posted a loss of almost £12m, leaving it dependent on its Saudi Arabian parent for funding
The results reveal that CBUK was forced to halve its turnover and cut staff by almost 500 last year in order to offset its losses on the Wembley national stadium. The company is now reliant on financial assistance from its owner, the Al-Rushaid Investment Group, for survival.
In bleak accounts the company revealed a loss of £11.9m for the year to 31 December 2005, which is about half its £25m turnover.
The firm was offering a payment period of 76 days for its creditors, compared with 56 days the previous year.
CBUK says the loss contains provision for the outcome of its multimillion-pound court case with Multiplex, the main contractor at Wembley stadium, although the claims are yet to be settled. CBUK will not disclose an exact amount for legal reasons, but said only £700,000 of its deficit was an operating loss.
The contractor’s results were also hit by a legal case with a painting subcontractor on its Tinsley Viaduct contract in South Yorkshire, although this has now been resolved through mediation.
Multiplex is unlikely to get security for costs on the back of these results
Multiplex has repeatedly raised fears over CBUK’s financial stability since the Wembley court case in June, but lawyers say the disclosure of the firm’s accounts is unlikely to help Multiplex recover court costs more quickly.
Rupert Choat, a solicitor advocate with CMS Cameron McKenna, said: “The figures are startling but perhaps not surprising. Multiplex is unlikely to get security for costs on the back of these results, unless Cleveland obtain permission to appeal which looks uncertain.”
The High Court ruled in June that CBUK breached its contract by walking away from Wembley in August 2004. CBUK, which claimed it was put under undue pressure by Multiplex, won several minor points in the case. The outcome of damages has yet to be decided but, at worst, CBUK could be hit for £13m.
CBUK says support from Al-Rushaid is continuing, and directors are adamant that CBUK will continue as a going concern. Brian Rogan, managing director, said: “We’ve been badly affected by the fallout from Wembley, but since then we have been successful with new work and we will make a profit in 2006.”