Kier: £63m profit after £24m of hits
09:23 18 Sep 2008
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Kier’s hybrid business model – containing both construction and housebuilding operations – has come up trumps in these turbulent times, delivering a pre-tax profit of £63m.
While the housebuilding division dived into the red to the tune of £23m, the day was saved by the healthy £59m profit racked up by the group’s construction operations.
Kier’s latest annual results cover the 12 months to 30 June 2008.
Turnover was ahead at £2.4bn (figure in previous year: £2.1bn). The pre-tax profit in 2007 ran to £78m.
Kier’s latest profit figure would have steamed higher, climbing up to £87m, but for exception charges which knocked £24m off the latest profit number.
The list of exceptionals started with good news:
- £16m one-off profit on the sale of PFI equity stake in
But that was more than cancelled out by the bad news:
- £27m provisions against land and work-in-progress in the homes division.
- £10m redundancy and reorganisation costs in homes.
- £4m provisions against land values in the property division.
John Dodds, chief executive, said: “The benefits of operating a hybrid model have been particularly highlighted this year as the legs of our business experience different market fundamentals.
“Continued demand in construction and support services contrasted with the sudden and dramatic effect of the credit crunch on the demand for private housing and development properties.
“We have extended our long-term contracting framework agreements, partnership programmes and negotiated and repeat business both in the public and private sectors.
Dodds said that the forward orderbooks for both construction and support services are running at a record level.
Cash generation, a key measure in the construction division, was strong and net cash inflow from group activities ran to £57m, down on the previous figure of £115m, but still resulting in the group ending the period with a net cash balance of £144m.
Kier reminded its shareholders of its ability to weather the current stormy weather by lifting the dividend it plans to hand out.
The biggest changes were in Kier’s home division where everything was pulled into a single base at the group’s headquarters in Sandy, Bedfordshire.
Out go the individual identities of five previous brands:
- Bellwinch
- Kier Homes Northern
- Twigden
Segmental analysis of the latest results shows turnover contributions of:
- £1.7bn construction (£1.4bn in previous year)
- £390m support services (£320m)
- £240m homes (£330m)
- £70m property (£60m)
- £15m infrastructure investment (£15m)
The financial performance of these five, measured by pre-tax profit or loss, but before the allocation of £7m of Kier’s central costs and without the inclusion of the £3m interest sum that Kier made on its more-and-handy pot of spare cash:
- £59m construction (£38m )
- £17m infrastructure investment (£15m)
- £14m support services (£11m)
- £4m property (£8m)
- loss of £23m in homes (previously a profit of £33m)