Balfour Beatty has called in accountant KPMG to sift through its construction services division after finding a further significant profit shortfall.
The troubled contractor has told the City its 2014 figures would be affected by a fresh £75M write-down of contract values across the division.
Balfour Beatty said in May that it had identified a £30M shortfall in the UK construction business, which caused it to lower its forecast for this year’s group pre-tax profit to between £145M and £160M.
It said today: “Internal reviews conducted in recent days have forecast a further profit shortfall due to additional losses and write-downs across a number of contracts, estimated at £75M in aggregate.”
Major infrastructure projects were responsible for £10M of the shortfall; engineering services for £30M; London building schemes £20M; and regional projects £15M.
Balfour added in its trading update: “The group also announces that it has appointed KPMG to undertake a detailed independent review of the contract portfolio within Construction Services UK.
“The review will focus on commercial controls, on ‘cost to complete’ and contract value forecasting and reporting at project level. KPMG is expected to report back to the board by the end of the year,” it said. Trading across the rest of the group remains in line with expectations.
The firm announced in August that it had made a £1M pre-tax profit in the six months to 27 June 2014.
The UK’s largest contractor was subject to a major pursuit by rival Carillion over the summer.