£245m pre tax loss posted by Kier

Kier has reported a £245m loss before tax for the year to 30th June 2019 due to costs associated with restructuring the business.

Kier’s annual revenue was largely unchanged at £4.49bn (2018: £4.51bn) but charges of £341m, relating to preparing businesses for sale, restructuring and loss-making contracts, devastated the bottom line result.

Operating profit was down 33% to £124m (2018: £187m)

A new chief executive, Andrew Davies, joined in April, inheriting a strategy review that began the previous year. In June he announced that Kier was selling its house-building business, Kier Living, quitting property development and exiting Environmental Services and Facilities Management. These developments are all now underway, at considerable expense, but are expected to save £55m a year by 2021.

Kier’s order book at 30th June 2019 was £9.4bn (2018:£9.8bn) with £1.1bn of new awards won in the second half of the year. Excluding HS2, the order book was £7.9bn (2018:£8.5bn).

Net debt at 30th June 2019 was £167m (2018: £186m) and average month-end debt was £422m (2018: £375m)

Kier’s Buildings business increased its revenue by 6% last year to £1,883m (2018: £1.778m). Profit before exceptionals increased by 13% to £62m (2018: £55m), with operating margins increasing to 3.3% (2018:3.1%).

Infrastructure Services (highways, utilities and infrastructure) suffered a 4% dip in revenue to £1.671m (2018: £1.733m). Profit before exceptionals decreased by 41% to £56m (2018:£95m) and operating margins decreased to 3.4% (2018:5.5%)

One off costs include £56.4m of restructuring costs and a £29.3m charge in respect of the 2017 acquisition of McNicholas.

There was also a £43.5m provision relating to the Broadmoor Hospital Redevelopment and a £6.4m charge in relation to the Mersey Gateway project.

Costs relating to the preparation of businesses for sale and closure came to £172m.

Commenting on the results Andrew Davies said: “Kier experienced a difficult year, resulting in a disappointing financial performance. However, we are buildidng 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. We have a strong order book, reflecting the strength of the underlying business, the quality of our people and the group;s capabilities. The sale of Kier Living is progressing well and we are exploring options to accelerate the release of capital from our Property business. The re-shaping of the group is designed to reduce its overall indebtedness during FY2020 and to restore Kier to robust financial health”.