Kier in shock debt restatement

Kier has revised up its estimated net debt and warned its plans to take a £25m hit on its long-delayed Broadmoor hospital project.

This morning Kier revealed it had revised up its average net debt for the six months to December after revisiting how it booked certain assets.

Its revised reporting of debt follows the announced immediate departure of chief executive Haydn Mursell in January along with a half-year trading update.

The new accounting revisions have raised net debt as of 31 December 2018 from the previously stated £130m to £180.5m.

This has raised average month-end net debt over the period from £370m to £430m.

In a surprise stock market statement this morning, ahead of reporting half-year results, next week, Kier also warned it expected to take a £25m hit on its long-running contract to build the Broadmoor hospital.

As reported by the Enquirer the main part of the project is now nearly two years late.

Kier said it had now 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, would commence shortly thereafter, it said.

“The group has recently agreed a process with the client which is designed to reach agreement with respect to the group’s entitlement to the additional costs associated with the project’s delay.”

The £25m hit will be recorded in Kier’s  2019 full year results.

It added: “While the board notes the current political and economic uncertainty in the UK, and the implications for third party investment, the group remains on course to meet its underlying 2019 expectations, with the full-year results being weighted towards the second-half of the financial year, as expected.” 

“The group continues to forecast a net cash position at 30 June 2019 and remains focused on reducing its average month-end net debt.”

from Construction Enquirer http://www.constructionenquirer.com/2019/03/11/kier-in-shock-debt-restatement/

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