Contractor Kier has reported a £15m pretax loss for the year to 30 June 2016, citing a £116m one-off hit from closing its Caribbean business, takeover of Mouchel Consulting and legacy May Gurney waste contracts.
The company also revealed that it paid out £4.5m in compensation to blacklisted construction workers through the Construction Workers Compensation Scheme.
Aside from these costs, however, the company reported that underlying pretax profit increased 45% to £125m, up from £86m. The group’s revenue also broke the £4bn mark, rising 26% to £4.21bn, up from £3.35bn.
In its construction division, revenue was up 17% to £2,025m, from £1,732m last year and underlying operating profit was up 23% to £47.4m, from £38.4m in 2015.
Underlying operating margins for the construction division increased to 2.3% and the working capital position has improved. The current order book of £3.4bn for secured and probable work, excluding framework wins, includes more than 90% of forecast revenue for the 2017 financial year, on increasing volumes.
"In this financial year we have made substantial investment in the consolidation and evolution of the group generating exceptional costs. But this investment gives us a solid platform for growth moving forward."
Haydn Mursell, chief executive, Kier
Kier said that it was advancing plans to sell the Mouchel Consulting arm and that the search for a buyer continues.
Haydn Mursell, chief executive said: “The results reflect the group’s ongoing strength in core contracting, with the construction division revenue hitting a record high of £2bn, while maintaining one of the strongest margins in the sector at 2.3% and a dominant geographical footprint as the UK’s leading regional builder. And the rest of the group has performed well, with the services division now accounting for 50% of group profit, following the Mouchel acquisition.”
He added: “In this financial year we have made substantial investment in the consolidation and evolution of the group generating exceptional costs; whether that’s the integration of Mouchel, or reviewing parts of the business that don’t meet our financial hurdles. But this investment gives us a solid platform for growth moving forward.”
In its residential arm, the firm revenues increased to £353m from £257m in 2015. Underlying operating profit was up 81% to £20.3m and was achieved through its focus on increased building of mixed-tenure housing.
The group has shrugged off any Brexit impact and sales and visitor levels have remained consistent with historical seasonal trends and the sales rate per active site pre and post the vote has remained consistent. Notwithstanding, new investment in land is being tightly managed and monitored to align to the pace of sales.
Looking ahead in residential, the group said government stimulus for housing, such as Help to Buy, coupled with the availability of mortgages and the recent reduction in interest rates, should see the business continue to grow and improve.
