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Kier’s housebuilding arm posts £89m loss
The housebuilding arm of troubled contractor Kier has posted a £90m loss for the year, with much of it driven by an unpayable inter-company loan.
Kier Living, the organisation’s up-for-sale housebuilding arm, recorded an £89.4m pre-tax loss in the year to 30 June, while its turnover halved.
A £50m loan to wholly owned subsidiary Kier Homes Caledonia had to be written off by the company as the recipient did not have “sufficient assets to repay the debt”, according to the company’s annual accounts.
Another driver behind the poor financial results was the organisation’s decisions to move away from fixed-price build contracts and focus on mixed-tenure developments.
“The company incurred £22m of costs associated with the ongoing exit of these contracts with £16m being impairments of work in progress and the remaining £6m recorded as a provision for onerous contracts,” the accounts said.
Kier Living reported a fall in revenue from £118m in 2019 to £55m in the year to 30 June 2020.
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The housebuilding arm was put up for sale in 2019 by parent company Kier Group, following a two-month strategic review in order to fix a debt problem.
At the time Kier said the move would result in 1,200 employees leaving the organisation, resulting in estimated annual cost savings of £55m from 2020/21.
The results published on 10 January 2021 show the cost of redundancies topped £2m in the year, with the number of employees at the company falling from 606 to 554. Kier Living noted a further 111 employees were made redundant shortly after year end.
Despite this payroll costs, including wages and salaries and share-based payment, expenses rose from £20.4m to £23.8m over the year.
The results also show the impact that coronavirus had on the business, with the firm spending more than £4m in this area.
“The COVID-19 pandemic has had, and may continue to have, a material and adverse effect on the company’s results of operations and a number of the company’s stakeholders, including its employees, clients and supply chain,” the accounts said.
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