Net debt at UK-contractor Kier Group rose to £180 million (€208.11 million) at 31 December, 2018, from the approximately £130 million (€150.30 million) given in a trading statement of 22 January, 2019.
Kier has, therefore, re-calculated its average month-end net debt for the six months ended 31 December, 2018, as being approximately £430 million (€496.87 million) rather than £370 million (€427.54 million).
It said that in the course of preparing its full-year 2019 interim results and finalising the 31 December, 2018, net debt position, it had identified a number of adjustments – £10.3 million (€11.90 million) in aggregate – principally in relation to the group’s hedging activities. Also, it said it had revised the classification of the debt – £40.2 million (€46.45 million) in aggregate – associated with certain developments’ assets held for resale at 31 December, 2018.
The group said it had originally consolidated this debt balance within assets held for resale on its balance sheet. Following the re-classification, the debt has been included within the group’s net debt position.
Of the £40.2 million net debt, £9.8 million (€11.32 million) relates to assets which have been sold since 1 January, 2019; £14.1 million (€16.29 million) relates to sales which are subject to binding sale agreements and expected to complete by 30 April, 2019; and the balance of £16.3 million (€18.84 million) relates to assets which are either being marketed for sale by 30 June, 2019, or are under offer.
Kier said it remained focused on reducing its average month-end net debt.
The Kier board has also reviewed the operational progress and cost recovery programme of the redevelopment project for Broadmoor Hospital mental health facility in Crowthorne, Berkshire, UK.
Kier was given preferred bidder status for the project in 2013. The West London NHS (National Health Service) Trust, which is responsible for the hospital, reported in September 2018 that final completion of the construction of the new hospital was taking longer than originally planned, and said it was “very disappointed” by this.
Kier has now said that the first phase of the project was expected to be handed over shortly, and the remaining work on the project, which accounted for less than 10% of its value, would begin shortly after that.
The group said it had recently agreed a process with the client which was designed to reach agreement with respect to the group’s entitlement to additional costs associated with the project’s delay.
Following its most recent review, the Kier board said it had concluded that a non-underlying provision of £25 million (€28.93 million) would be included in the group’s full-year 2019 interim results in respect of future recoveries from the client and other third parties.
It added that while it noted the current political and economic uncertainty in the UK, and the implications for third party investment, it remained on course to meet its underlying full-year expectations, with the full-year results, to be released on 20 March, being weighted towards the second-half of the financial year, as expected.
Kier’s CEO, Haydn Mursell, left the company suddenly in January.