£73m reorganisation hit for Kier

Kier has said its underlying profit for the past year is forecast to be in line with expectations but has booked a charge of £73m from ‘portfolio simplification’ and other non-underlying items, such as health and safety fines.

In a pre-close trading statement, the property, residential, construction and services group said its construction division showed a strong regional building performance.

Its services division saw ‘organic revenue growth year-on-year’, delivering a 5% margin, with significantly increased activity with Highways England in the second-half.

Kier said its two-year portfolio simplification programme was nearing conclusion and was expected to result in a non-underlying charge of around £73m on its 2017 accounts, albeit with around £69m net cash generated.

The majority of the losses came from the closure of the company’s Caribbean and Hong Kong businesses, while the acquisition and subsequent sale of Mouchel Consulting generated £58m in cash over the year, with a net profit of £39m.

The charge also included ‘a provision relating to a likely increase in fines for health and safety incidents following the introduction of new sentencing guidelines’.

Overall, Kier said its cash performance ‘continued to improve in the period, reflecting its ongoing focus on working capital and the receipt of proceeds from the portfolio simplification programme and the other non-underlying items’. It said it expects to report a net debt position of around £150m as at 30 June, ‘which is at the lower end of market forecasts’.

It added that its property and residential pipelines continue to improve while its ‘robust’ construction and services order books total approximately £9bn, ‘providing an 85% secured revenue position for next year and giving us a strong foundation to deliver growth in 2018’.

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