Kier plunges to £273m loss

Aaron Morby 1 month ago
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Kier has suffered another eye-watering loss this year plunging deeper into the red than the £245m loss ratcheted up in 2019.

Andrew Davies says it has been another challenging year for Kier
Andrew Davies says it has been another challenging year for Kier

The debt-laden group attributed the heavy losses to its construction division which suffered a £60m operating loss, £156m of group-wide restructuring charges and book losses at Kier Living.

Kier reported a statutory pre-tax loss of £225m on continuing operations but this did not include Kier Living now classified as a discontinued business despite not yet being sold.

Total post-tax and discontinued business losses amounted to £273m, after taking into account Kier Living streamlining costs and land writedowns.

Kier operations at a glance
Business Revenue Profit
2020 2019 2020 2019
Infrastructure £1.51bn £1.67bn £7.9m -£3.3m
Construction £1.59bn £1.85bn -£60m £30m
Other £317m £430m -£25m -£86m
Corporate £11m £2.9m -£148m -£167m

 

The big group restructuring bill included £29m of redundancy costs, nearly £62m from the restructure of the Southern Build UK business, including a £28m charge on recoverability of assets and the challenging Covid-impacted market conditions.

It also incurred costs of nearly £34m on preparations to sell its housing arm Kier Living.

The business this morning reported higher than forecast average monthly net debt up to £436m from £422m previously.

As a result, Kier said it had also agreed covenant waivers with its banks.

Revenues in the year to June 2020 fell 15% to £3.48bn, primarily due to Covid-19 on the last three months as well as the challenging market conditions through the year affecting both construction and infrastructure services, where revenues were down 15% and 10%, respectively.

Kier said it has taken advantage of the HMRC’s time to pay agreement deferring tax payments of £79m.

Andrew Davies, chief executive, said that after a difficult year Kier remained focused on deleveraging through cash generation, sale of Living and potential equity raise

“The progress made in the first nine months, despite challenging market conditions, reflected the successful execution of many elements of our strategic plan, as we began to experience the benefits of the decisive cost reduction actions taken.

“The effects of Covid-19 adversely impacted the group’s performance in the final three months of the financial year, as the business adapted to working under revised site operating procedures.

“During the year we have recognised substantial one-off costs, including the costs associated with the reorganisation of our Southern Regional Building business stream and associated with the cost reduction programmes, our engagement with the group’s lenders, as well as the fees associated with the execution of our strategy.”

He said these would bring annual cost savings of at least £100m by the end of June 2021.

“The new senior management team continues to focus on driving a range of strategic and operational actions throughout the group,” he added.

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