The 2011 Halcrow Accounts

  2011 Halcrow Group Accounts

The long-awaited 2011 accounts for Halcrow Group became available for public access on 9th April 2013 having been received by Companies House on 27th March - almost 6 months overdue. The accounts show that Halcrow Group made a loss of £71.3M in 2011 compared with a profit of £16.6M in 2010. Turnover declined from £330.5 million in 2010 to £238.2 million in 2011. Much of this reduction occurred in the Middle East and Africa region where turnover decreased from £80.8 million in 2010 to £16.2 million in 2011: A reduction of 80 per cent. The estimated pensions liability has increased from £65 million to almost £180 million.

Anyone who wishes to read the full accounts, may download it from Companies House upon payment of £1. Some extracts from the accounts are given below:

Page 1:

"The directors consider the longer term outlook of the company is positive, and are optimistic that, together with the skills and resources of its new ultimate parent, CH2M HILL Companies, Ltd ("CH2M HILL"),  the company's trading position can be improved.

"Halcrow experienced a disappointing 2011 as the effects of the global recession continued to impact results. Turnover declined from £330.5 million in 2010 to £238.2 million in 2011, a reduction of 28 per cent. A profit before taxation in 2010 of £16.6 million was reduced to a loss before taxation in 2011 of £71.3 million.

"Middle East and Africa - The most sigmficant reductions in turnover were reported in this region, where the levels of new work won continued to decline. Turnover decreased from £80.8 million in 2010 to £16.2 million in 2011, a reduction of 80 per cent.

Page 2:

"The company began a re-organisation in April 2011. This involved a necessary reduction in employee numbers globally, incurring severance and reorganisation costs in the year of £2.1 million. Onerous lease provisions of £1.2 million were required to be made in the year, relating to properties in the United Kingdom. Exceptional costs of £3.2 million were also incurred in respect of the sale of the group.

Page 8 - From the Auditor’s Report:

"Emphasis of Matter - going concern

"In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in Note 1 to the financial statements concerning the Company's abilty to continue as a going concern. At 31 December 2011 the Company had net current assets of £14,372,000 (2010 net current assets of £69,620,000) The Company is dependent on continued support from its Parent and ultimate Parent, CH2M HILL Companies, Ltd, including for any additional funding that might be required, and no certainty has been provided in respect of this support. This matter, together with the other matters explained in Note 1, indicates the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not include any adjustments that would result if the Company were unable to continue as a going concern.

Page 9 :
 

  Page 10: The net pension liability increases from  £65,213k in 2010 to £179,700k in 2011.

 Page 12:

Note 1(b)

"At the date of approving these financial statements the Company understands that CH2M HILL has indicated informally to the Halcrow Board that it is not its intention to demand repayment of either the secured facility or unsecured loans for a period of at least 12 months and therefore that Halcrow will be able to provide any required funding to the Company. To the extent the Company experiences future cash shortfalls, the Directors have received no assurances from either Halcrow or CH2M HILL that funding will be made available to the Company. Other than its ability to manage working capital, the Company has no other immediate access to funding However, whilst there can be no certainty that CH2M HILL will either continue to provide the existing funding or provide such extended funding as might be required, Halcrow remains a key part of the CH2M HILL global strategy and accordingly the Company Directors believe that this future funding (and any additional requirements resulting from any reasonably possible change m trading performance) will be made available, although recognise that there can be no certainty of this.

"This represents a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern and, therefore, to continue realising their assets and discharging their liabilities in the normal course of business. Nevertheless after making enquiries and considering the uncertainties described above, the Directors have a reasonable expectation that the Company will be able to continue in operational existence for the foreseeable future. The financial statements do not include any adjustments that would arise from the going concern basis not being appropriate.

 Page 17:

"The highest paid director had an accrued pension of £89k under the Halcrow Pension Scheme at the end of the year.

Page 26:

"Over the year to 31 December 2011, contributions by the company of £7.5m were made to the main UK pension scheme (2010 £7.5m) Contnbutions have been reviewed as part of the full actuarial valuation of the main scheme with an effective date of 31 December 2008. Under the new schedule of contributions, contributions of £10.4 m would be payable in 2012. Additional contributions dependent on Company performance may also be paid.

Pages 26 to 30 of the accounts all relate to the calculation of pensions commitments and include an updated actuarial valuation of the liabilities. The pages are of considerable interest to HPS members and can be downloaded here.

A thread has been created in the HPA Forum for discussion of the accounts and their possible implications for the Halcrow pensioners.