KIER Group has announced that new boss Andrew Davies will lead a strategic review of the embattled construction firm.
The firm said the review will consider ways of “further simplifying Kier” to create a more focused group.
It will also examine the allocation of capital resources across the group and ways to improve cash generation and reduce debt.
Davies was appointed chief executive of the FTSE 250 business in March and joined officially yesterday. He replaces former boss Haydn Mursell, who left in the wake of Kier’s £250 million emergency rights issue, which was snubbed by nearly two-thirds of investors.
Davies was due to take on the top job at failed outsourcer Carillion, but the group went bust before he could take up the role.
He will lead a turnaround focused on improving cash flow and simplifying the business. The conclusion of his Kier review will be announced in July.
Kier – which is working on the new HS2 railway line – saw shares rise more than 3% to 359.7p after the announcement.
Prior to the ill-fated Carillion appointment, Davies was formerly chief executive of property and construction company Wates Group.
He also previously spent more than 28 years at BAE Systems, latterly as managing director of the maritime division.
He starts at Kier at a difficult time for the group and the sector, with the investor cash call late last year designed to cut its debt and strengthen its balance sheet.
Philip Cox, who had taken on the post of executive chairman, has resumed the role of non-executive chairman.
In March the company, which has contracts with Crossrail and Highways England among others, posted a pre-tax loss of £35.5m for the six months to December 31, compared with a profit of £34.3m the previous year.
Non-underlying charges of £59.9m were recorded, including a £25m hit from its Broadmoor Hospital redevelopment project.
On an underlying basis, revenue for the period was up 2% to £2.2 billion while pre-tax profits fell 21% to £39m.
The Future Proofing Kier cost-cutting programme delivered savings of £4m, with net savings of £20m anticipated next year. The financial results were supported by Kier Construction Scotland, which has maintained turnover stability at approximately £150m per annum and is gearing up for the future growth target of £200m by 2020. Kier Construction Scotland employs more than 220 people from its offices including Glasgow, Aberdeen and Inverness.
In March the company also announced that its net debt was higher than previously thought, coming in at £180.5m, up from the £130m stated at its previous trading update. Kier said the additional £40m had been misclassified in an accounting error.
Cox said at the time: “The group has a significantly strengthened balance sheet following the completion of the rights issue in December 2018. The board continues to focus on simplifying the group, improving cash flow generation and net debt reduction, and forecasts a net cash position at 30 June 2019.”
Britain’s construction industry has been under pressure particularly since the collapse of Carillion, which forced regulators to tighten rules for private companies operating in the public sector.
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