On-going legacy problems relate to two fixed-price large building projects, University College London and Hospital Corporation of America in Birmingham, that were secured pre-Covid for Vinci Building, and a toxic healthcare PFI hard service contract in Coventry for Vinci Facilities.
The problems at the two building businesses overshadowed ‘exceptional’ results, at highways and civils firms Eurovia, Ringway and Taylor Woodrow, in the first consolidated accounts to be published for all Vinci’s UK activities.
These show that together the five core businesses lifted revenue by 8% to £2.1bn.
Previously the French-owned group had been financially organised as two separate reporting groups Vinci Construction UK and Eurovia UK.
The new consolidated reporting structure for Vinci Construction Holdings for the year ending December 2023 masks the extent of the continuing losses at the Building and Facilities operations.
Although the still-reported previous regime for Vinci Construction UK, which includes Taylor Woodrow ‘s profits with the losses of Building and Facilitiess, reveals operating losses deepened to £79m in 2023 from £54m.
The new consolidated business accounts detail extra provisions of £27m for construction project losses taking the running total to £90m at year-end, and extra provisions of £79m for after sales service relating to warranties on completed projects, taking this total to £95m.
Scott Wardrop, chief executive for Vinci Construction Holdings, said: “Our Eurovia, Ringway and Taylor Woodrow businesses, all had exceptional results, all over +4% operating result in 2023, but due to the impact of the significant provisions made for Vinci Building and Vinci Facilities risks, the groups’ first full year trading was a trading loss.
“We have three-year plans for each business and each business unit, and we plan to recover to +2.0% in 2024.
The consolidated group of five companies reported a combined order book of £2.8bn with Taylor Woodrow strongly ahead of a year ago.
Over the year, overall head count fell by 5% to 6,503 staff, while cash at bank jumped 40% to £569m.
Wardrop added: “Our UK group has had to endure significant external and internal factors, while merging the two groups into Vinci Construction Holding Limited.
“We are fortunate to have the full support of our board and our shareholder, Vinci Construction SAS, which has been vital to cope with the degree of reorganisation, restructuring, setting common policies and processes, while dealing with such significant legacy issues, and ensuring our five operating businesses are ready to face the challenges of the coming years in rapidly changing markets.
“The group is now in a position to face these challenges more effectively, becoming stronger through more effective governance, common systems and processes with greater accountability in all our business units and key operating businesses.
“We have achieved considerable change and through 2024 and 2025, we will emerge as a strong dynamic UK infrastructure group.”
