Civils firm grapples with claims against ex-subsidiary

Civils contractor Renew Holdings says it has made substantial provisions to deal with “contractual claims” against a firm it disposed of 10 years ago.

Renew sold off affordable housing specialist Allenbuild to Places for People in 2014, but, as part of its agreement with Places for People, it retained a liability for historical “contractual disputes” associated with Allenbuild.

Renew has made a provision of £1.8m to deal with the “likely costs required to settle Allenbuild Ltd’s other known contractual claims”, in its half-year report for the period to 31 March 2024.

The company does not provide any more information on the relevant contracts. But, in its most recent annual accounts for the year to 30 September 2023, Renew said they related to “ongoing legal matters”, meaning they “cannot be assessed with a high degree of certainty”.

It also settled a number of historical claims related to Allenbuild in the course of 2022/23, during which it penned provisions of £3.7m to settle them.

Renew warned the risk of legacy claims coming in had “increased” over the course of last year, from low to medium risk.

Construction News asked Renew for more information regarding the contractual claims, but had not received a reply at the time of publication.

Renew secured a pre-tax profit of £30.3m in the six-month period to March 2024, in comparison with £26.3m the year before, after it secured spots on substantial frameworks in the water and rail sectors.

In particular, it secured places on Control Period 7 frameworks with Network Rail, and extended its work on frameworks with South East Water, Thames Water and Dŵr Cymru Welsh Water.

Revenue, meanwhile, increased from £471.8m to £552.8m.

Renew also pointed to “strong momentum” carrying through to the second half of 2023/24.

Further ahead, it is looking towards the third iteration of the Road Investment Strategy (RIS3), which begins in April 2025. Renew expects to shift away from enhancements to the road network, to a stronger focus on maintenance work to structures, renewals and road restraints.

Renew said this would allow it to “take further market share” in the work.

Renew chief executive Paul Scott said the results represented a “record trading performance”.

“We are delighted with our early success in extending and securing frameworks across the new funding periods in water and rail,” he added.

“These successes, together with the core characteristics which underpin the markets in which we operate, provide highly visible revenue streams and reinforce our significant confidence in delivering against our growth targets in the medium to long term.”

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