Kier Group startled investors today (11 March) as it admitted an ‘accounting error’ had forced it to recalculate its net debt as £50m higher than previously stated
Kiers’ shares sank this morning as it revised its debt position £50m higher and said it would take £25m of losses on its Broadmoor Hospital redevelopment project.
Earlier in the year Kier was left disappointed with the response to its rights issue and was also hit by the resignation of its chief executive Haydn Mursell.
Kier said it has recalculated its net debt position for December 31 to £180m from the £130m previously disclosed.
Of the £40.2m net debt, £9.8m relates to assets which have been sold since 1 January 2019, £14.1m relates to sales which are subject to binding sale agreements and expected to complete by 30 April 2019 and the balance of £16.3m relates to assets which are either being marketed for sale by 30 June 2019 or are under offer.
Kiers’ board has reviewed the operational progress and cost recovery programme of the Broadmoor Hospital redevelopment project. The first phase of the project is expected to be handed over shortly and the remaining work on the project, which accounts for less than 10% of its value, will commence shortly thereafter.
The group has recently agreed a process with the client which is designed to reach agreement with respect to its entitlement to the additional costs associated with the project’s delay. Following its most recent review, the board has concluded that a non-underlying provision of £25m will be included in its FY19 interim results in respect of future recoveries from the client and other third parties.
Kier’s board also noted that despite “the current political and economic uncertainty in the UK, and the implications for third party investment,” the firm remains on track to meet its underlying FY19 expectations.
Kier will release its FY19 interim results on 20 March 2019.