Kier drafts in advisor to turn around flagging May Gurney waste contracts
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.
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'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.'
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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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