Bouygues UK has posted a pre-tax loss of £42m after almost doubling its building security provisions.
The contractor’s accounts for the year to 31 December 2022 showed it was down from a pre-tax profit of £835,000 in 2021. Its turnover also fell to £382m from 484 million in the previous year.
The French-owned company, which provides schools, housing, student accommodation and healthcare facilities, increased its “customer guarantee provisions” (money set aside for potential liabilities after the end of the year) to £62m from £31.5m.
In a statement released with the accounts, CFO Jean Luc Midena said: “The loss for the year arose as a result of increased costs due to inflation, labor availability, the conflict in Ukraine and the risk of post-completion liability. of recent legislative changes related to building safety.”
No specific schemes have been indicated in the accounts. A number of new safety measures have come into effect from the start of 2022, including extending liability for defects from six to 30 years under the Building Safety Act.
Midena also blamed the failure of a “small number of subcontractors working for the company” for its problems and said the company needed to revise cost forecasts because of the potential for other failures.
A week before the results were published, Bouygues UK announced the retirement of chief executive Rob Bradley and a restructuring of its operations.
It will be split into three business units, made up of two regional divisions: London and South East and South West and Wales, as well as a complex projects unit focused on health, science and research projects across the United Kingdom.
The 2022 accounts included a £1m provision for a restructuring of the company which was said to be completed by the end of June 2023.
Fabienne Viala has replaced Bradley as CEO and also continues as UK president and country director for parent company Bouygues Construction.
The accounts did not include Bouygues’ work on infrastructure schemes such as HS2 or Hinkley Point, which are being delivered through sister company Bouygues Travaux Publics and other parts of Bouygues Construction.
