Construction, services and property group Kier has been forced to restate its debt by more than £40 million after uncovering an accounting error, reports have revealed.
In a recent trading update, the group said it has increased its debt from £130 million to £180.5 million after an audit had identified a “number of adjustments”.
Stocks in Kier plunged some 13 per cent after news of the error came to light.
According to reports, a large proportion of the additional debt comes from the group taking a £25 million hit on a delayed hospital project. It said the one-off “non-underlying provision” was going to be included in its next financial statement to cover “additional costs associated with the project’s delay”.
Kier Finance Director Bev Dew said an internal review led to an accounting restatement after the reclassification of £40.2 million of debt associated with an asset resale.
“We are not actually selling that debt when we sell the asset, so as a consequence there was an error and we have bought that debt back to the balance sheet,” she said.
The news marks a tough start to 2019 after a torrid 2018. Last year, it was revealed that Kier planned to sell new shares to existing investors at a one-third discount in a bid to cut its liabilities of more than £600 million. The move almost halved existing share values.
Commenting on the group’s latest trading update, a Kier spokesperson said: “Kier has revised its net debt position as at 31 December 2018 to £180.5 million (from c.£130 million) and, accordingly, has re-calculated its average month-end net debt for the six months ended 31 December 2018 as being c.£430 million (from c.£370 million).”
The group is expected to publish new interim results on 20 March 2019.