Begbies Traynor Group

Covenant Review of Major Construction Supplier


The major international company was a preferred product supplier to the construction and building industry with operations on a global scale. It had a large-scale UK subsidiary generating revenue in excess of £200 million which was well established.

Work Undertaken

The UK subsidiary had a substantial defined benefit scheme with a deficit running into many millions of pounds.

Our Pensions Advisory team undertook a Covenant Review of the internationally renowned construction supplier to establish the Scheme Employer’s ability to fund the deficit and establish the period during which it could be repaid.

The Covenant Assessment also assessed the quality of the Group’s earnings and the long-term financial forecasts by weighing the likelihood of these earnings running into the future. It is a pre-requisite of the Pensions Regulator to understand existing and future financial capabilities and the likely outcome for creditors in the event of insolvency.


The Covenant Review concluded that the Group was sufficiently strong to meet its pension obligations based on its current balance sheet and ongoing trading prospects.

The Review also highlighted the extent to which the business was materially benefitting from trading carbon credits, as opposed to the returns from its core business.

The report indicated the need for the Trustees to take into account the future of the carbon credit market, as well as the construction industry.

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