The civil engineering contractor was awarded the design, construct and commission contract in April 2013 by utility 2OC. The plant aims to provide up to 18Mw of electricity back into the National Grid and 1Mw of renewable heat to power Thames Water鈥檚 Beckton Waste Water Treatment Plant, using recycled fuels derived from fats, oils and greases. Murphy described the facility as 鈥渢he first of its kind, with future potential for a further seven plants鈥�.
However, difficulty with the contract has plunged Murphy's UK business into the red for 2014, after it posted a healthy 拢34.7m pre-tax profit in 2013.
Director Bernard Murphy said: 鈥淭he loss before tax of 拢9.1m was caused by a very significant loss on the Beckton combined heat-and-power plant. Difficulties in design, cost escalation, supply chain and engine-related technical breakdowns all had major impacts on the cost to complete this project.
鈥淭he group is reviewing its entitlements for recovery on all fronts for this project whilst maintaining our accounting policy of recognising losses when they are visible and forecasted.鈥�
The project also hit Murphy's cash reserve, which was down from 拢81.7m in 2013 to 拢74.7m. The contractor said: 鈥淭he scale of the losses on the Beckton project was the significant factor behind the reduction in cash balances, albeit some of the cash impact will filter through in the next calendar year.鈥�
The civil engineering contractor posted turnover of 拢780.5m, down considerably from the 拢953.9m reported in 2013. The firm said this was chiefly due to a reduction in revenue from its Australian business, where 鈥�2013 was an exceptional year which saw growth of 拢200m鈥�.
Murphy said it remained 鈥渃ommitted to pursuing growth opportunities in its core sectors in the UK market鈥� but warned that 鈥渄espite the high level of activity... the tender market remains highly competitive.鈥�
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