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Kier CEO launches review to streamline business

Kier

Kier chief executive Andrew Davies has launched a strategic review into the debt-ridden business, after taking up the position this week.

Davies confirmed the top-to-bottom review will be designed to explore ways to simplify the business. Other areas to be explored by the review, according to Kier, will be the allocation of capital resources across the firm and additional steps to improve cash generation.

The strategic review will “consider ways of further simplifying Kier to create a more focused group”, Kier has said.

Prior to Davies' arrival, Kier’s board had already spent months re-evaluating the group strategy and are set to reveal their findings in July.

Davies had been the chief executive of Wates Group from 2014 until 2017. He left Wates in October 2017 before being announced he as the chief executive of Carillion, but the company became insolvent in January 2018 before he could take up the role.

Haydn Mursell resigned from the chief executive role in January following intense pressure from shareholders.

Sky News had reported that Woodford Investment Management – which holds a 16% stake in Kier – was among a group of investors casting doubt on the future of both Mursell and finance director Ben Dew.

Mursell joined Kier as a finance director in 2010, before taking over as chief executive in July 2014 at the start of the firm’s 2014/15 financial year.

His position came under severe pressure after Kier’s share price fell 40% following a £250M rights issue in November.

Revenue under Mursell’s tenure as chief executive rose from £2.91bn in June 2014 to £4.24bn in June last year. But Kier’s total borrowing nearly doubled over the same period from £235M to £536M.

Last month, Kier revised its end-of-year financial statement for 2018, declaring an additional £50M of debt that went unnoticed due to an “accounting error”.

The revised figures raised the net debt as of the end of December 2018 from the previously stated £130M to £180.5M. A large portion of the additional debt comes from Kier taking a £25M hit on a delayed hospital project.

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