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News » UK » Kier to take £53m hit on restructuring » published 4 Jul 2016

Kier to take £53m hit on restructuring

Having swallowed up two big acquisitions in the shape of May Gurney and Mouchel, Kier’s indigestion has now become apparent.

Above: "Which way?"

Kier’s annual accounts for the year to 30th June 2016 will show a £53m black hole for exceptional restructuring charges.

“Simplification of the group's portfolio is a priority,” the board said today.

It is now looking to offload part of Mouchel after integration costs spiralled threefold from £15m to £44m.

Kier bought Mouchel in June 2015 for £265m, primarily for it its highway maintenance business. Mouchel’s historic core business is as a consulting engineer, before it started delving into the public services contracting market.

Kier has now put a ‘for sale’ sign on Mouchel Consulting, whose earnings before interest and tax last year were £8m and net assets were £25m at 30th June 2016. It said that “an evaluation of the strategic options for the Mouchel Consulting business, including a possible sale” is expected to be completed “in the coming months”.

The Environmental Services business, predominantly May Gurney’s bin rounds and waste recycling, is also proving costly.  

In a trading update today, Kier’s board said: “The financial performance of the Environmental Services continues to be affected by the low oil price and, consequently, the price of recyclates, despite stable operational performance at contract level. As a result, a provision of £35m will be taken in FY16, which provides for all future cash outflows on two environmental contracts of eight and 10 years' duration, respectively.”

Of the West Indies, it said: “The trading environment in the Caribbean remains challenging and, as a consequence, activities in the region are being wound down. A one-off exceptional charge of £18m will be incurred in the results for FY16, which relates to a write down in asset values, work in progress and redundancy arrangements.”

Kier said: “Following the integration of recent acquisitions, simplification of the group's portfolio is a priority, and will provide focus on the businesses which will underpin the group's growth expectations in our core markets; infrastructure, building and housing.”





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This article was published on 4 Jul 2016 (last updated on 6 Jul 2016).

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