Mersey Gateway Bridge

Profits down for Kier in 2014

Jessica Middleton-Pugh

The construction and development company has reported a dip in pre-tax profits compared to 2013, after being hit with £58m of exceptional items following the acquisition of May Gurney and contract write downs.

The underlying profit was £73.1m, up from £47.6m in 2013, but this is excluding exceptional items totalling £42.2m, amortisation of intangible assets relation to contract rights of £10.8m, and adjustments on acquisition of £5.3m. Once these additional costs are considered, reported profit before tax was £14.8m for 2014, down from £25.9m in 2013.

However Kier recorded a revenue increase of £3bn for the year ending June 2014, up from £2bn in 2013.

The preliminary results recorded more than £1bn of new services work, and almost £2bn of construction work, with 90% of a £6.2bn order book secured and probable for 2015.

The preliminary results included the acquisition of May Gurney in July 2013, and the financial close of the £450m Mersey Gateway construction joint venture in March 2014.

Kier is appointed to several high-profile projects in the North West, including the £1bn North West Construction Framework and the £875m Education Funding Agency Framework.

The results announcement saw Beverley Dew join the group as finance director, with former finance director Haydn Mursell moving to replace Paul Sheffield as chief executive.

Kier has local offices in Trafford Park and Liverpool.

Haydn Mursell, chief executive of Kier, said: "Despite inflationary price and labour cost pressures in the market, our margins remained solid, particularly in our Services business. Following the integration of May Gurney, which transformed the scale and diversity of the Group, the breadth of our capabilities has resulted in new as well as larger contract awards.

"We are now able to help our customers maximise the value of their assets as they invest, build, maintain and renew them. Our capabilities extend from negotiating finance and planning permissions to constructing major buildings and infrastructure, as well as providing facilities management and environmental services. This breadth of capabilities puts us in a good position to pursue future growth.

"While the economic climate continues to be positive, operating margins are under pressure due to inflationary cost increases in the supply chain. Cash generation will continue to be constrained in the short-term. However, strong risk management and our ability to offer a greater range of service offerings positions us well for the future."

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