Contractor announces ‘exceptionally poor’ year as West Midlands scheme leads to overall loss of £19.9m

Contractor Sir Robert McAlpine’s eventful year has continued after the firm lost £23.8m on a PFI hospital scheme in Dudley, West Midlands.

The firm revealed the loss in a statement that described its results in the year to 31 October 2003 as “exceptionally poor”.

The statement from parent Newarthill said the PFI scheme, which is due for completion this August, was “highly complex”.

It added: “We have encountered considerable difficulty in agreeing the scope of the work with the Dudley health trust.”

McAlpine asked M&E contractor Emcor Drake & Scull to leave the scheme in December 2002, which led to legal action between the two.

The contracting division, which contributed £785m of Newarthill’s £928m turnover, made a net loss of £19.9m because of the PFI scheme, compared with a £5.7m loss in 2002.

The group said it remained confident about the future. The statement pointed to the firm’s completion of the Bullring retail scheme in Birmingham ahead of schedule and under budget last year.

It also emphasised that two major projects had been signed up during past year – the £550m Colchester Garrison PFI in Essex and the £240m deal to build Arsenal’s new stadium in Ashburton Grove, north London.

The statement said: “While 2003 has undoubtedly been a difficult year for the group, we believe future prospects are good and the financial position remains very strong.”

A source close to the firm added: “The firm has never hidden the fact that the [PFI] scheme was a problem. Apart from that, the contracting business had a pretty good year.”

The hit on the Dudley scheme contributed to a loss after tax of £16.8m for Newarthill.

In March this year Sir Robert won a high-profile court case against Alfred McAlpine over the use of the McAlpine brand.

McAlpine has emerged as the favourite to build the 20,000 capacity Dome Arena scheme, designed by HOK, on the Millennium Dome site. Market sources claim that McAlpine, which built the dome in the late 1990s in a joint venture with Laing, is ahead of rival Multiplex in the race to redevelop the site, which has lain dormant for two-and-a-half years. The news was broken in Building’s new website, launched on Monday.