Engineer Halcrow鈥檚 final accounts before it was taken over by US giant reveal extent of its financial woes
Engineer Halcrow reported a pre-tax loss of 拢71m in its last year of independent trading before it was taken over by US giant CH2M Hill, it emerged this week.
Halcrow Group鈥檚 accounts for the year to 31 December 2011 show the firm鈥檚 pre-tax profit plummeted from 拢17m in 2010 to a 拢71m loss in 2011.
The accounts reveal the depth of Halcrow鈥檚 financial woes at the time of the acquisition, which also included a huge pension deficit of nearly 拢177m and a 28% fall in revenue over the year.
In September 2011, the firm announced that it was being bought by US engineering and project management firm
CH2M Hill. Only now, with the publication of the 2011 accounts - six months after they were due - has it become clear how much financial difficulty the firm was experiencing.
In the accounts the firm reported a 拢92m fall in turnover from 拢331m in 2010 to 拢238m in 2011. Its turnover in the UK, Ireland and Europe fell 11%from 拢229m to 拢204m over the period. In addition, its revenue in the Middle East collapsed, falling 80% to just 拢16m in 2011.
The firm鈥檚 business in the Americas, and Asian and Australasian markets also saw revenue decline 18% and 8% respectively, though these were smaller markets for the company.
Redundancy costs contributed to the firm鈥檚 financial problems as it racked up costs of 拢2.1m while it shed 1,240 staff in 2011, with average staff numbers falling from 4,617 in 2010 to 3,377 in 2011.
There were also 拢3.2m in costs associated with the sale of the group to CH2M Hill.
Writing in the accounts Geoffrey Roberts, Halcrow secretary, said 2011 had been a 鈥渄isappointing鈥� year for the firm and 鈥渢he effects of the global recession continued to impact results鈥�.
Speaking about the UK market he said: 鈥淒elays in commencement of projects were experienced and the state of the economy maintained uncertainty about government spending on engineering consultancy.鈥� He added that levels of work being won in the Middle East had also declined and the firm had had to reduce costs to mitigate the fall in workload.
The accounts revealed that CH2M Hill鈥檚 financial backing has been crucial to Halcrow鈥檚 financial health. The US firm agreed a secured loan to the company in December 2012 and the firm鈥檚 accountant, Ian Griffiths, senior auditor at KPMG, said that the firm was 鈥渄ependent鈥� on CH2M Hill鈥檚 support. He added that this cast 鈥渟ignificant鈥� doubt on the firm鈥檚 ability to 鈥渃ontinue as a going concern鈥� were this to be withdrawn.
Halcrow reported net liabilities of 拢177m in 2011, a fall from net assets totalling 拢25m in 2010. This fall was driven by the growth in the deficit of its pension fund from 拢65m in 2010 to 拢180m in 2011.
Halcrow turnover by region
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