Kier in £225m loss after ‘difficult’ year
Kier has made a £225m pre-tax loss in the year to 30 June 2020 in what its chief executive Andrew Davies described as a “difficult” year for the group.
Kier’s group revenue and share of joint ventures declined to £3.5bn, down from £4.1bn in the previous year.
Net debt increased to £310m as of 30 June 2020, up from £167m at the end of the previous financial year.
Nonetheless, the business said it was on course to make savings of “at least” £100m by 30 June 2021 and has a “stable” order book of £7.9bn, while it remains well placed to benefit from UK government spending through frameworks and other opportunities.
Davies said: “This financial year has been a difficult one for the group. 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.
“As explained in 2019, Kier needs substantial restructuring, but has great potential. Whilst first half volumes were lower, this was anticipated as significant contracts concluded and frameworks transitioned. The decisive cost saving measures allowed profits to improve despite these reductions in revenues. As a result, the group was trading in line with expectations in the period up to 31 March 2020. However the effects of covid-19 has reduced the amount of work we were able to undertake in the key final quarter of the financial year and costs have increased. Revenues therefore decreased by 15% and adjusted operating profits have reduced to £41m. The working capital implications of the reduced volumes in the final quarter as compared to 2019 resulted in the group needing to agree a number of relaxations to its agreements with its lenders.
“While the group anticipates that the effects of covid-19 will continue, the strategic actions being implemented by the new senior management team are designed to ensure Kier is well placed to benefit from the proposed substantial increase in UK infrastructure investment. We have a strong orderbook, and the current year has started in line with our expectations.”