Kier has posted a significant loss of £225.3m in its latest annual accounts, with falling revenues as the pandemic struck in the key final quarter of the financial year.
The results, for the year ended 30 June 2020, revealed a pre-tax loss of £225.3m on revenue of £3.4bn. This follows a pre-tax loss of £229.5m on revenue of £3.9bn the previous year, 2019.
However, the group say the results reflect nine months of ‘good strategic progress and three months of Covid-19’, have pointed to a stable order book of £7.9bn, and say they are "well placed to benefit from UK government spending through established frameworks and other opportunities". The company also reports a net cash flow of £66m, compared to an £89m deficit in 2019.
Andrew Davies, Kier chief executive, 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 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.
“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 orderbook, and the current year has started in line with our expectations.”