黑洞社区

Kier has downgraded the fair value of the assets it acquired in the May Gurney takeover last July by 拢45m.

The firm said the downgrade was driven by its revaluation of long-term loss-making waste disposal contracts.

The value of May Gurney on Kier鈥檚 balance sheet remains 拢222m, but a larger portion of this is now listed as goodwill than at the time of the takeover in June 2013.

Goodwill now comprises 拢192m of May Gurney鈥檚 value, up from 拢147m it estimated in September 2013.

The firm said waste collection contracts with Bristol and Cheshire West and Chester councils 鈥渃ontinued to be challenging鈥�.

It added: 鈥淭his and other areas have necessitated a total 拢68m fair value adjustment of which 拢52m predominantly relates to the long duration loss-making environmental contracts.鈥�

These fair value adjustments were partially offset by an increase in the valuation of May Gurney鈥檚 intangible assets and tax liabilities and a lessening of its pension obiligations, leading to total downward adjustment of 拢45m.

The news comes as May Gurney鈥檚 final set of accounts were published revealing the same problem contracts had tipped the firm 拢51m into the red.

In accounts filed at Companies House, May Gurney reported it made a 拢51m pre-tax loss in the year to 31 March 2013, down from a pre-tax profit of 拢21m the year before.

Speaking to 黑洞社区, Haydn Mursell, Kier鈥檚 group finance director, said: 鈥淲hen we did due diligence we knew the contracts that would be challenging but the provision [this week] is not materially different to when we did due diligence.鈥�

Earlier this month, chief executive Paul Sheffield announced he would be leaving the business at the end of June and Mursell would takeover as chief executive.

Mursell, said he would not be making any major changes to the firm鈥檚 strategy.

He said: 鈥淢y primary focus, in the short term, is to bed down May Gurney and get the performance exactly where we want it. There鈥檚 no indication at the moment that that won鈥檛 be exactly where we expect it to be.鈥�

鈥淚 will get out and about the business and talk to as many people as I can. I wouldn鈥檛 expect a significant change in strategic direction.鈥�

Mursell said he would focus on growing the business organically.

He said: 鈥淚n construction our growth is going to come from our infrastructure business that has grown from around 拢150m of revenue three years ago to near on 拢400m this year.鈥�

He said the upcoming AMP6 regulated spending period in the water sector, which runs from April 2015 to March 2020, showed 鈥渁 lot of promise鈥�.

鈥淚 also want to see our overseas business grow, particularly in the Middle East with the opportunities that we can see,鈥� he said. 鈥淥ur residential presence will pick-up and the public sector will be reasonably stable.鈥�