July 24 2014 Latest news:
Ben Woods, Business writer
Wednesday, March 5, 2014
Support services giant Kier has parachuted in a top level advisor to shore up May Gurney’s flagging rubbish collection contracts that plunged the Norfolk company into the red during its final year of trading.
Julian Tranter – managing director environmental services at Kier Group – has been tasked with turning around the environmental arm of May Gurney, which recorded a £51m pre-tax loss last year due to under performing waste disposal deals covering Bristol and Chester.
May Gurney – which now trades as Kier MG after being taken over by the Bedfordshire-based group last year – revealed in its accounts ending March 31 2013 that it had made provisions for future losses of £46m after confirming that its May Gurney Optimised Solutions recycling contracts would remain loss making until they ended in 12-year’s time.
But Kier Group said the integration of The EDP Top 100 firm was on track and it had high hopes of bringing its £138m net debt back into the black within a couple of years as operating cash flow improves.
“The tactical integration plan for May Gurney spans all functions of the business; from HR, IT and marketing; to knowledge sharing, business winning and improvement,” Kier said. “The rebranding is well under way and many of our back office systems and processes – including the consolidation of the IT systems – have been implemented.
“That said, integration is an interactive complex process which takes time and we remain committed to that process to ensure that we create a collaborative, high performance, company.
“As highlighted previously, the performance of the environmental business, particularly the waste collection contracts for the Bristol and Cheshire West & Chester local authorities – acquired as part of May Gurney and identified during due diligence – continues to be challenging,” the firm added. “An improvement plan is in place and we have appointed Julian Tranter who is looking at ways of increasing their efficiency.”
May Gurney shareholders overwhelmingly backed a £221m takeover of the firm by Kier last year, marking the end of the road for the Trowse-based firm as a separate entity.
And last week, Kier announced that the acquisition had helped boost operating profits by 96pc.
Group revenue for the six months ended December 31 increased by 47pc to £1.432m, while underlying operating profit increased by 96pc to £44.4m.
But the acquisition of May Gurney had driven up the company’s net debt to £138m last year, compared to net cash of £60m in 2012.
“The net debt is in line with our expectations,” Kier added.
“The period ended with a net debt balance of £138m following the acquisition of May Gurney and it is anticipated that the reinvestment of approximately £93m of cash in new development schemes, housing land, and affordable housing work will drive future growth.
“We expect to be in a net cash position in the next couple of years as operating cash flows pull us towards the black.”
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