Kajima racks up £84m loss in UK construction

Kajima’s UK construction division has dived even further into the red. Latest financial results for 2005 show a pre-tax loss of £84m, adding to the woes of the previous year when losses ran to £73m.

As a result, the division’s immediate parent, Kajima Europe UK Holdings, racked up a loss in the 12 months to 31 December 2005 of £90m. This follows a loss in 2004 of £81m.

In a statement, the directors said that it was "another disappointing year" for the construction division "as further unforeseen costs have been incurred in order to mitigate risks on certain projects which are problematic."

The company said the losses were largely caused by Kajima’s decision to "extricate itself" from the £90m Accordia housing project in Cambridge, for an undisclosed cost, rather than incurring further expenses down the line, and also by some PFI projects.

During the period, a £7m provision for "losses on long-term contracts" was also paid out.

However, the directors said that continuing construction projects are "now under control" and added that the company remained "committed to UK construction projects".

The construction division, Kajima Construction Europe (UK), suffered a £50m rise in its net liabilities, ending the year at a figure of £77m.

On 29 June 2005, 25 million new £1 shares were created, taking the total from share capital funding from £65m to £90m. Five Kajima Construction directors resigned nine days before the new shares were issued, receiving £83,000 compensation for loss of office. Despite the woes, the highest-paid director’s salary rose to £190,000 (£161,000).

Construction turnover dropped by more than £50m to a 2005 figure of just over £70m.

Kajima Europe UK Holdings also had losses in its two other divisions. The design division’s £1.6m loss was the result of expected projects failing to materialise, while the £2.5m loss in the development division was put down to continuing inactivity at Stockley Park as a result of the stagnation in the property market affecting the M4 corridor.

Kajima’s interest in PFI runs to 10 projects.