McNicholas has reported a £36.5m pre-tax loss in its latest accounts after being forced to increase provisions on legacy projects.
The infrastructure services business also incurred costs for remedial works on “defective products” and on its sale to Kier, which bought McNicholas for around £24m in July 2017.
McNicholas has aligned its accounting period with Kier’s, meaning this last financial statement was extended to cover 15 months from 1 April 2016 to 30 June 2017.
Turnover for the firm was up 38 per cent from £179.5m to £247.7m, but this was partly due to the extended accounting period.
Monthly turnover averaged £16.5m, which was a 10 per cent increase on the £15m recorded in the firm’s previous period.
The various provisions and writedowns affected McNicholas’s balance sheet, which reported net liabilities at 30 June 2017 of £31.7m. This compared with net assets of £6.8m at the end of the previous period.
McNicholas’ order book also decreased by a third from £944m to £606m.
However, directors’ remuneration at the company more than tripled to £2.9m over the 15 months, compared with £863,000 for the previous 12 months.
Most of this went to one director who received £1.3m, which was a 224 per cent increase on the £412,000 paid out in the previous period.
Commenting on this accounts, chief executive Barry McNicholas said: “The underlying profitability from ongoing contracts remained strong and in line with expectations.”
Kier said McNicholas had performed “better than expected” since its takeover, with the division contributing underlying pre-tax profit of £11.7m on turnover of £119m between July and December 2017.
Kier acquired McNicholas’s £10m pension fund deficit as part of the £24m takeover.
McNicholas and Kier have been contacted for comment.