Before being sold to Kier, McNicholas Construction recorded a £36 million pre-tax loss in accounts. When buying the civil engineering firm for £24 million, Kier also acquired its debt in July last year. Latest private accounts for McNicholas, which were extended to cover a 15-month period to June 2017 to bring it into line with Kier reporting, reveal underlying profitability from ongoing contracts remained strong in line with expectations.

However, a detailed review of outstanding debtors and work in progress saw the firm book provisions on jobs where final accounts still needed to be agreed. In addition, the loss also took into account changes to estimates used in some long-term contracts and one-off costs in relation to the sale of the business.

This re-evaluation of the contracts resulted in the firm’s net assets of £6.8 million in the prior year becoming net liabilities of nearly £32 million, including a £10.9 million pension liability.

Over the 15-month period revenue rose £68 million to £248 million, due partly to the extended reporting term, while the average monthly turnover increased 10% to £16.5 million, driven by increased volume from ongoing contracts.

McNicholas has secured three contract wins since being acquired by Kier, such as a five year £31 million ‘Gas to the West’ network distribution operation for SGN Natural Gas in Northern Ireland. Other contracts include a £40 million extension until 2022 to the Phoenix Natural Gas contract in Northern Ireland and a one year £30 million contract extension until 2020 for the Network Rail CP5 High Voltage and Electrification and Plant framework.

Head of Kier’s strengthened utility division is now former McNicholas chief executive Barry McNicholas, who holds high hopes of securing more work in the upcoming rail and water capital spending period framework renewals.