Cost of Leeds hospital wrangle hits Lendlease profit

Profit at Lendlease last year was hit by the cost of a failed dispute on a hospital scheme it had previously believed it would win.

The firm’s European construction arm said it had booked the one-off cost in its accounts for the year to June 2023 on a court judgement made in November last year over a legal wrangle with a consultant on its work at the hospital in Leeds.

The scheme is not named but last year Lendlease was told it could not sue Aecom for fire safety defects on a cancer unit at St James’s Hospital in the city because it did not begin legal action in time before a liability period elapsed.

The work at the centre of the dispute was completed in late 2007 under a PFI deal.

In its accounts, signed off last month, Lendlease admitted that “based on external advice received, management had previously considered this recovery virtually certain of success”. The firm had been hoping to recoup £3m.

It added that it had booked the cost in its 2023 numbers which meant that pre-tax profit slip a third to £11.9m on turnover down 8% to £509m.

Lendlease said the fall in income was down to bidding less schemes over the covid-19 period but added that at its year-end it had £2.3bn of work at the preferred bidder stage. “This enviable pipeline of works provides a solid foundation for future growth in line with our strategic targets,” it added.

Net cash at the year-end was up 23% to £94m.