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Kier cuts headcount by 4% and reduces debt despite overall loss in 2015/16

Kier has hit its debt reduction target a year early, despite acquisition costs leading to a pre-tax loss in 2015/16.

In its preliminary results for the year to 30 June 2016, Kier said it recorded an £8m pre-tax loss when factoring in costs such as £50m for its Mouchel integration and £35m costs incurred on two waste collection contracts.

The accounts also reveal Kier paid out £4.5m for its role in the blacklisting scandal through the Construction Workers Compensation Scheme.

Graphic kier

Graphic kier

Underlying profit from operations was up 44 per cent at £150m, with like-for-like revenue up 8 per cent.

Net debt stood at £99m (2014/15: £141m) after £31m investment in its property and residential divisions and IT systems.

Kier said it now had a net debt to EBITDA ratio of less than 1, a target it had set itself to achieve by next year.

In addition, the firm has reduced its net pension scheme deficit to £72m after tax from £123m the year before.

The results also revealed headcount across the group had been slashed by 4 per cent to find savings.

The job cuts were achieved through the “amalgamation of a number of management teams as well as the successful integration of Mouchel”, Kier chief executive Haydn Mursell said.

More than 850 jobs were lost through the Mouchel integration, contributing to £4m cost saving in the year, with a further £15m expected to be saved the following year.

The board has proposed increasing the dividend for shareholders by 17 per cent to 64.5p (2015: 55.2p).

Kier has an order book worth £8.7bn, with 50 per cent of profit from operations coming from its services division.

Mr Mursell said: “The group continues to perform well in growing market sectors including infrastructure, housing and regional building, providing a breadth of capabilities to our clients.”

He added: “We remain confident of achieving our goal of double-digit profit growth on average each year to 2020.”

On the political factors affecting Kier, Mr Mursell said a “low interest environment should encourage government spending” in infrastructure due to population growth, but added that the group would also benefit from the continuity of austerity, which will “promote more efficient and innovative solutions from service providers such as Kier”.

The contractor is also winding down operations in the Caribbean due to “challenging trading conditions”. 

There had been “no material impact” in the group’s activities from the EU referendum vote, Kier said.

Kier said it had reduced its accident incidence rate by 34 per cent during the year.

Its construction division posted record revenue of £2bn with underlying profit of £47.4m. It cited “buoyant sectors” as education, student accommodation, aviation, transport, defence and bio-tech – particularly within the Cambridge region.

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