Contractors outline the impact of Carillion collapse

Contractors caught up in the collapse of Carillion have outlined the likely short-term impact on their businesses.

Van Elle, a geotechnical engineering contractor, carried out regular work for Carillion as a specialist lead sub-contractor, principally in respect of rail improvement and maintenance work where Network Rail is the end customer.

The group, based at Pinxton, Nottinghamshire, said it had successfully undertaken several contracts for Carillion during December and had invoiced for the work but had not yet been paid.

Work has continued on some of these contracts into January and as a result, Van Elle said its outstanding debt and work-in-progress exposure with Carillion was now approximately £1.6m.

The group said it would be speaking with Carillion’s advisers (including the Official Receiver) to determine the status of the outstanding payments.

However, the company has warned shareholders that in the event it is unable to recover any money it is owed, there would be an adverse financial impact on the group.

Additionally, the group’s order book includes further work it had expected to sub-contract for from Carillion for the remainder of the current financial year and beyond.

In total, this represents approximately £2.5m of the firm’s anticipated revenue for the second half of the current year.

It said it was too early to say whether there would be any effect on the start or completion dates of contracted work with Carillion, or what impact these developments would have on future work programmes, either in the rail sector or elsewhere.

Jon Fenton, CEO, Van Elle, said: “While it is disappointing to note the Carillion announcement we continue to develop further our strong relationship with Network Rail and its principal contractors, and remain committed to developing high quality solutions in the rail division both for upgrade and maintenance work.”

John Laing Infrastructure Fund said it had nine public private partnerships with Carillion where the collapsed company had been the facilities management provider.

These included four schools projects, four emergency services projects and one road project.

Laing said the value of these projects was approximately 8.5% of the total portfolio value and approximately 9.6% of the Net Asset Value (NAV) based on June 30, 2017 valuations.

It said its investment adviser’s asset management team had been monitoring events at Carillion for some time and had put contingency plans in place should the worst happen and the company collapse.

The plans have involved talks with a number of potential replacement providers and Laing said the IA was now in the process of implementing these contingency plans and would look to appoint alternative FM providers on all of the nine projects to replace Carillion.

“At this stage the Investment Adviser expects that this can be achieved with minimal service disruption and minimal additional cost,” said the company.

“The IA believes the compulsory liquidation of Carillion should have no material impact on the company. The company will continue to manage the situation as it develops and provide further updates as appropriate.”

JLIF said it owned just one project where Carillion was still liable for any construction defects found on the project, with the construction project having completed over 10 years ago. A recently completed routine defects survey had not highlighted any significant areas of concern, it added.

Headquartered in Castleford, West Yorkshire, Premier Technical Services Group (PTSG) said the value of work it conducted on behalf of Carillion was worth around £800,000 annually.

“It is expected that this work will be taken on by existing PTSG clients. Therefore, the ongoing effect on the group is expected to be minimal. Given PTSG’s highly diversified customer base, the board expects that there will be no material impact on 2018 trading,” it said.

“The group has outstanding net debt of £0.3m due from Carillion and this has been fully accounted for in the group’s 2017 balance sheet.”

Gas heating, electrical and building services provider, Bilby was completing work as part of a joint venture between Carillion and Amey UK. It said it did not believe the collapse would have any financial impact on its trading.

Amey said on Monday that the work carried out through the CarillionAmey would now be delivered solely by Amey, without any adverse effect on the employees of the joint venture or its supply chain.

CarillionAmey is a separate legal entity that operates independently of Carillion.

Bilby currently has two contracts with the JV to provide building and support services for three of The Ministry of Defence regions.

Likewise, Aspire Defence Finance said its work as part of the Allenby/Connaught project was also not impacted by the Carillion collapse and the project would continue to deliver services as normal.

Carillion and KBR each have a 50% interest in two unincorporated joint ventures acting as sub-contractors to Aspire Defence, the special purpose vehicle set up for the project.

Carillion seconds approximately 110 management and supervisory staff to Aspire Defence Capital Works, the sub-contractor responsible for the Army Basing Programme Works. The construction of the ABP Works is not performed by Carillion.

Construction delivery is therefore progressing as normal.

Aspire said it has been monitoring the Carillion situation since October and had put contingency measures in place in case of collapse.

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