A “routine review” with the Financial Reporting Council led to Kier’s pre-tax profit being restated for its previous financial year, according to chief executive Haydn Mursell.
“The FRC goes through a natural rotation [of companies], but our sector is probably more in focus post-Carillion’s liquidation,” Mr Mursell told Construction News.
Kier was contacted by the FRC within the last three months and agreed with the watchdog that it would restate its accounts for the previous financial year to 30 June 2017.
A £40.1m profit from the sale of Mouchel was reclassified as from a discontinued operation rather than as a profit for the construction division.
“We received a letter querying presentational items, nothing to do with the underlying trading of the business,” the chief executive said.
“We had already identified that we would need to represent this Mouchel disposal and they concurred with us.”
He added: “In conjunction with the FRC we both agreed we should re-present the profit and loss account.”
The change meant that Kier’s construction operating loss for its previous year increased from £10.1m to £50.1m.
It also resulted in the company’s £25.8m pre-tax profit for those 12 months being restated to a £14.2m pre-tax loss.
The post-tax profit of £11.8m was unchanged.
In June the company commenced a ‘streamlining’ programme entitled Future Proofing Kier to reduce costs and layers of management, which saw construction and infrastructure director Nigel Brook and development and property services director Nigel Turner leave their division.
At the same time Claudio Veritiero, who has a background in banking and finance, was made chief operating officer.
As a result, the three executive directors now running the group all having an accountancy or finance-focused background.
Mr Mursell said the executives’ CVs did not mean they lacked appreciation for the operational side of construction.
“All of us, myself included, have been in the construction and contracting industry for more than 20 years,” he said.
He added: “I have very, very strong operating managing directors in each of our businesses and I’m very pleased with the breadth of expertise and the experience we have.
“I’m very happy with the management team.”
Another element of the streamlining programme will see the company sell off £30m-£50m of non-core assets between now and the end of June 2021.
Mr Mursell said he hoped the disposals would be completed by the end of the 2020 financial year.
“With disposals it’s always hard to determine the timetable,” he said.
“I would be disappointed not to see £30m-£50m achieved between now and 2020, so probably over the next 18-24 months.”
Kier’s order book jumped from £8.9bn to £10.2bn over the 12 months to 30 June 2018, but the company was not aggressively pursuing revenue growth, according to Mr Mursell.
“We’re not chasing revenue at all, we’re simply servicing the Department of Health, the Department for Education, with the spend they have on new schools and new hospital extensions,” he said.
“I’m much more focused on profit and cash generation.”
Kier has been targeted by short-sellers who held more than 10 per cent of its shares when the 2018 financial results were released last Thursday.
Mr Mursell told CN the company was strong and would “ride out this period”.