Chief executive Andrew Davies admitted it had been a difficult year for Kier, which was still recovering from a £244.9m pre-tax loss the previous year when the impact of the Covid-19 crisis hit.
That’s nearly half a billion quid lost in two years.
Revenues in the latest year fell 15% to £3,476m, primarily due to the effects of Covid-19 in the last three months of the financial year, as well as ‘challenging’ market conditions throughout the year affecting both Construction and Infrastructure Services.
The Construction division made an operating loss of £58.9m on revenue down 15% to £1,588m. Infrastructure Services made an operating profit of £9.6m on revenue down 10% at £1,506m.
Group net debt at 30th June 2020 was £310m. Average month-end net debt for the period was £436m, an increase of £14m from the previous year.
Net assets amounted to £240.8m at year-end (FY19: £519.6m).
One-off costs included £156.1m of restructuring and related charges (including £29.5m on redundancies) and £33.6m preparing parts of the business for sale or closure.
Ignoring all the bad stuff (£237m of charges from continuing operations), adjusted profit before tax was £16.9m, down more than 70% on the previous year’s £61.4m.
Cost-cutting measures during the year have included reducing group headcount by 1,700, outsourcing IT and fleet management, and closing the former headquarters at Tempsford Hall in Bedfordshire. These measure are expected to save £100m in annual overheads from next year.
Kier Living’s adjusted loss after tax for the year was £12.8m due to Covid-19 site closures, but its results are classified as discontinued since the business is up for sale. A new management team has reorganised this business into a smaller operation and the long-running sales process continues to progress, the company says.
Chief executive Andrew 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. I would like to thank all my dedicated Kier colleagues for their commitment and resilience over the course of the year, many of whom have played a significant role in providing essential public services during the pandemic.
“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 31st 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.
“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.
“The new senior management team continues to focus on driving a range of strategic and operational actions throughout the group. We are also beginning to experience the benefits of the changes in the group’s culture which are being driven by Performance Excellence.
“Whilst 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 order book [£7.9bn], and the current year has started in line with our expectations.”