Chairman steps down
Davies taking ‘decisive action’ as Kier plunges to £245m loss
New CEO faces a big turnaround task
Kier Group chief executive Andrew Davies accepted the scale of the task facing him as the firm slumped to a £245m pre-tax loss last year.
Mr Davies, who took over at the contractor in April , has already axed more than 5% of its workforce and is selling a number of businesses, including its housing arm, after blaming the firm’s buying spree of recent years for making the company too diverse.
Chairman Phil Cox is stepping down with immediate effect after two years in the role. Kier has begun the search for his successor.
Mr Davies said the company “experienced a difficult year, resulting in a disappointing financial performance”.
In a statement with annual figures, he said: “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.”
In the year to the end of June, Kier said exceptional items of £341m saw the firm plunge deep into the red from a £106m pre-tax profit last time.
Kier said £172m had been allocated against its up-for-sale businesses, which also include its property, FM and environmental services arms.
It added that a further £50m in exceptionals had come from contract losses with £44m of this attributed to its job to build a new hospital at Broadmoor in west London – a rise from the £25m hit it said it was taking in March – with the remainder coming from its job to build the Mersey Gateway bridge.
In addition, a further £29m of costs has come from its decision to buy civils and utilities specialist McNicholas, known as Green Macs, two years ago.
It has also been hit by £56m of restructuring costs associated with its Future Proofing Kier initiative introduced by Davies’ predecessor Haydn Mursell who left the business earlier this year. This will see a further 550 staff leave by next summer on top of the 650 that have already gone.
Mr Davies said the sale of its housing business was “progressing well” and the firm is looking at freeing up cash from its extensive property portfolio. It had used a “significant” amount of the £250m raised in last year’s rights issue to speed up payments to its suppliers.
Its net debt at the end of the year was £167m, down from £186m last time, but average month-end next debt was £422m, up from £375m.
Group revenue during the period stayed flat at £4.5bn while underlying pre-tax profit slipped from £164m to £98m.
In Scotland the company is involved in a number of landmark projects including the £21.5m redevelopment of the Citizens Theatre and the £32m Alness Academy.