Kier has announced that it is looking to sell Mouchel’s consulting business, just over a year after it bought the entire Mouchel group in a £265M cash deal.
In a statement to investors this morning, Kier said that simplification of its portfolio is a priority and it wanted to focus on areas that will underpin its growth expectations in its core markets of infrastructure, housing and building. Overall it said the Mouchel business is performing well, with the integration of the strategic highways and local authority highways maintenance businesses now complete. Much of the Mouchel business that Kier bought has year has now been fully integrated into Kier, for example the Mouchel business services operations have been integrated with Kier’s facilities management operations, creating Kier Workplace Services.
However the statement said: “As a result, a review has been undertaken of those operations which do not meet the Group’s strict financial hurdles and/or do not provide a long-term strategic fit with the Group’s core businesses.”
It said there is going to be an ‘evaluation of the strategic options’ for the Mouchel Consulting business, including a possible sale. Mouchel Consulting’s earnings before interest and tax for the last year were £8M and its net assets were £25M at the end of June. The statement said: “It is expected that a profit would be realised on the completion of any disposal.”
Kier also used the statement to say that it is winding down its Caribbean arm, due to a challenging trading environment. It means the group results well take a one-off exception hit of £18M.
The range of cutbacks in total will lead to exception charges of £53M.
Overall, for the year end results to June 30, Kier says its net debt position of less than £140m at 30 June 2016 is ahead of the forecast range of £150m to £170m. This position includes the cash expenditure of £44m on the Mouchel integration and £25m on new systems and upgrades. The company said trading was in line with expectations.