Engineering firm Van Elle warns over potential Carillion hit

Engineering firm Van Elle has warned over a potential £1.6 million hit if it fails to claw back payments owed by collapsed construction giant Carillion.

A sign at a Carillion construction site in central London Photo: Yui Mok/PA Wire
A sign at a Carillion construction site in central London Photo: Yui Mok/PA Wire

The group said it would attempt to recoup the money by launching talks with Carillion, its advisers and The Official Receiver, which is leading the liquidation process of the stricken firm.

But in a note of caution to shareholders, Van Elle said it was bracing for an “adverse financial impact” if the money cannot be recovered.

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It also pinpointed a further £2.5 million worth of revenue linked to contracts with Carillion in the second half of the financial year, but said it was “too early to say” what impact the firm’s demise would have on the future work.

Van Elle had joined forces with Carillion on a string of contracts, mainly to carry out rail improvement and maintenance work for Network Rail.

Jon Fenton, chief executive of Van Elle, said: “While it is disappointing to note the Carillion announcement we continue to develop further our strong relationship with Network Rail and its principal contractors, and remain committed to developing high-quality solutions in the rail division both for upgrade and maintenance work.”

In a separate stock market announcement, John Laing Infrastructure Fund said it was rolling nine Carillion projects onto new providers as it triggered company contingency plans.

However, it said the firm should not suffer any “material impact” from the implosion of Britain’s second biggest construction company.

The updates join announcements made by companies on Monday when infrastructure group Balfour Beatty said it would have to stomach a financial blow of between £35 million to £45 million in the wake of Carillion’s collapse.

Galliford Try said the firm’s demise had left a £60 million to £80 million hole in the funding of the Aberdeen Western Peripheral Route road project in Scotland.

Meanwhile, Kier group said it has contingency plans in place for its joint ventures with Carillion, adding that it does not expect to take a financial hit.

The breakdown of Carillion has put thousands of jobs at risk and saw the Government heavily criticised for its role in the debacle.