Forrest admits £26m of accounting ‘errors’
Directors of troubled contractor Forrest have reported £26m of “errors” in previous years’ official accounts, turning 2015’s pre-tax profit of £3.6m into a £19.2m loss followed by a £6.8m loss in 2016.
In restated group accounts for the year to 29 February 2016, published on Monday, the directors said: “The group undertook a full review of all contracts and related work in progress during the current year which brought to light errors in the prior years.”
The revised financial statement continued: “The effects of the change are a decrease in net assets and profits for the financial period by £22.8m due to a reduction in revenue and amounts due from construction customers of £26.3m and a reduction in cost of sales and accruals of £3.5m.”
The Bolton-based business announced a rescue refinancing deal at the start of this month that converted shareholder loans into equity and injected cash to continue trading from lenders that included the Greater Manchester Combined Authority.
In his review of the business, published with the fresh results, Keith Reid, finance director, appointed on 22 February, said: “The group has faced liquidity challenges during the year as a result of cash losses due to historic challenging contracts, which the group has now exited, and a change in working capital profile due to the change in revenue mix. The refinance puts the financial risk behind us and provides liquidity to support the planned growth. Our operational delivery is further improved by ensuring that the highest quality subcontractors are used and work is completed on time and not impacted by payment issues. We thank our customers, subcontractors and suppliers for their support over this period and we value the true partnership that we have with each of them.”
Reid added there was “certainty of revenue and growth for the coming years” after the company enjoyed its strongest year of new business wins in its 62-year trading history, although the impact of these new multi-year projects will not be felt until future years’ results are published.
Former chief executive Lee McCarren has exited the business. Thirty staff were made redundant at the end of February.