Tarmac hits back at Govt payments

Tarmac has accused the Government of double standards in calling for subcontractors to be paid on time while its own record of paying main contractors has worsened.

This week the company said that the average time taken to pay after contracts have been completed now runs to 18 months, six months longer than three years ago.

Speaking on Tuesday (11 April) after the announcement of Tarmac's annual results for 1994, Terry Mason, finance director, said: 'If government wants to see little people paid on time it must pay the major civil engineers on time, and it is not doing that. It is practicing double standards.'

Mason added that local authorities were just as bad.

Tarmac's pre-tax profit of œ107 million follows three years' losses. All divisions improved on their 1993 result with the exception of construction.

Tarmac put an extra œ25 million working capital into its construction division to ensure its subcontractors are paid promptly. Neville Simms, chief executive, said: 'We are investing in Latham. We have made a great effort to ensure subcontractors get paid on time.'

Three new businesses now account for a third of Tarmac Construction's œ1 billion turnover: Tarmac Professional Services, which generated 25% of Construction's profits, TBV Power and Europe.

In traditional contracting, Tarmac's margins have slipped from 2.2% to 1.7%.

The Channel Tunnel has been 'quite rewarding' for Tarmac, yielding a final profit of œ50 million. Tarmac almost wrote back some of its œ20 million Eurotunnel provisions, hesitating only because there is still 12 months of the tunnel's maintenance contract to run.

Eurotunnel warrants sold by Tarmac in 1991 yielded œ6 million profit, while the tranche sold last year produced a further profit of œ4 million. The 50% of warrants left are valued at only œ2.5 million, a consequence of the slide in Eurotunnel's share price.