Kier plunges to £245m loss

Aaron Morby 9 months ago
Share

Kier suffered a £245m pre-tax loss this year after booking a raft of charges related to preparing businesses for sale, restructuring and significant loss-making contracts.

Davies clears the decks as recovery plan advances
Davies clears the decks as recovery plan advances

The bundle of impairments and write-downs totalled £341m. Around £50m came from contract losses, primarily from the Broadmoor Hospital project and around a further £7m from the Mersey Gateway bridge project.

Its ongoing restructuring programme has so far cost £56m with over 751 lay-offs to date. A further 450 roles will be axed in the year ahead mainly from back-office roles in IT and procurement.

A £29m charge was also taken after the McNicholas acquisition two years ago, which included an ongoing problem contract and added business integration costs.

Andrew Davies, chief executive, said: “Kier experienced a difficult year, resulting in a disappointing financial performance.

“However, we are building firm foundations for the future.  We have a new management team in place, we have defined our strategic priorities and we are taking decisive actions to deliver them.”

He added: “We will not be reporting a set of results like this again. It is important to remember that the core businesses of regional building, highways, utilities and infrastructure are in good shape.

“We have a stable topline revenue of £4.5bn and an operating profit of £124m, which is down a third on last year but a credit to the people that work at Kier.”

Kier trading divisions
Buildings
Year ended 30 June 2019 Year ended 30 June 2018 Change
Revenue £1,883m £1,778m 6%
Operating profit £62m £55m 13%
margin 3.3% 3.1%
Infrastructure
Revenue £1,671m £1,733m -4%
Operating profit £56m £95m -41%
Operating margin 3.4% 5.5%
Housing & Development
Revenue £940m £1,002m -6%
Operating profit £56m £72 -22%

He said that the sale of the Kier Living housing business was advancing well and progress was being made to offload properties.

Davies said he expected to reduce the capital invested in property from around £184m to £100m by the end of this new financial year.

Among the exceptional costs, Kier took a £172m hit on preparing its business for sale, including exiting a series of contracts in facilities management at a cost of £22m and, within the environmental services business pulling out of the Cheshire West and Chester recycling contract.

Kier’s net debt at 30 June 2019 was £167m (2018: £186m), although average month-end net debt increased to £422m from £375m a year ago.

Average payment days to its supply-chain partners improved to 41 days for the second half of the year, down from 57 days for the first half.

Kier’s order book remained at £9.4bn, while without HS2, this would stand at £7.9bn.

Davies said: “We are on track with restoring out balance sheet. The re-shaping of the group is designed to reduce its overall indebtedness during FY2020 and to restore Kier to robust financial health.

“We have a strong order book, reflecting the strength of the underlying business,  the quality of our people and the Group’s capabilities.

Latest news

Stepnell lifts Covid pay cuts two weeks early

Family owned contractor returns to pre-pandemic salaries
2 days ago

Laing O’Rourke office staff to face temperature checks

Contractor rolls out site screening initiative ahead of white collar workers return
2 days ago

Delay confirmed for “cash flow chaos” VAT change

Domestic reverse charge plan put back to March 2021
2 days ago

BAM signs first university pain-gain share alliance deal

£220m Sheffield Hallam alliance includes designers and FM contractor
2 days ago

Willmott Dixon praises staff and supply chain for Covid response

Contractor made 2.5% profit margin in 2019 providing strong platform for pandemic challenges
2 days ago

TfL picks consultants for £500m project framework

Costain, Mace and Lendlease feature among big multi-disciplinary firms
2 days ago

SES Engineering Services MD steps down

Jason Knights to leave Wates, once successor found
3 days ago

Government protects trade credit insurance cover

£10bn guarantee to stop the market seizing up
2 days ago

Construction occupational health scheme to close

Owner B&CE pulls plug on Constructing Better Health
2 days ago

Buyers report downturn easing after April Covid carnage

Supply chain disruptions still hampering reopened sites
3 days ago

Keep the industry updated by joining the Enquirer Directory

Membership lets construction know you are open for business now or in the future
2 years ago

Leeds civil engineering contractor collapses

Athena Civil Engineering placed into administration
3 days ago

Barhale back in profit after problem contracts loss

Civils giant bounces back after tunnelling issues on aqueduct scheme contribute to £15m loss
3 days ago

Coronavirus disruption tips Van Elle into the red

Former Galliford Try finance director to become chairman of piling specialist
3 days ago

£300m to kick-start three major London schemes

Infrastructure funding for 20,0000 homes at Brent Cross, Silvertown and Barking Riverside
3 days ago

JRL Group names new civils MD

Matt Love to lead £18m specialist piling business
3 days ago

HB Reavis acquires prime Shoreditch site

Construction to start next year on latest workplace scheme
3 days ago

Premier Inn restarts construction work on 35 sites

Hotel giant committed to long term expansion plans
4 days ago

London £130m Old Kent Road scheme approved

Work to start early next year at former Carpetright warehouse
3 days ago

Plans go in for 42 acre London food market

Billingsgate, Spitalfields and Smithfield to get a new home in Dagenham
4 days ago

Kier Highways and Seddon reinstated to Prompt Payment Code

Contractors now keeping to pledge to pay 95% of suppliers within 60 days
4 days ago

Leading brick makers to axe 600 jobs

Ibstock and Forterra restructure businesses to meet forecast fall in demand
4 days ago

London fit-out firm Square Metre in administration

Fifty jobs cut as lockdown tips £32m fit-out firm over the edge
4 days ago

Last webinar for contractors interested in £600m plant

Final procurement information event before OJEU notice next month
4 days ago

Offsite system to cut staircase construction times by 80%

New integrated balustrade system added before precast stairs lifted into place on site
4 days ago

Arup bags job to re-open Cardiff city centre

Arup plans to improve public spaces, repurposed streets and digital infrastructure
5 days ago

Hard-hat mounted cough guard will help protect site workers

New product from JSP will help keep sites safe
5 days ago
JSP Ltd

Balfour Beatty to start £355m Hull A63 scheme

All systems go for delayed Castle Street upgrade to transform Hull
5 days ago

Contractors face data danger fighting covid contract disputes

Redundancies could see project knowledge lost
5 days ago

Mace bags role on £39bn Northern Powerhouse Rail plan

Firm takes lead on project controls, project, stakeholder and commercial management
5 days ago

Contractor services