Kier announces staff pay cuts and pauses sale of housebuilding arm as part of COVID-19 response
Construction, infrastructure and housing firm Kier Group is cutting pay across its 6,500 staff as part of a mitigation strategy against the impacts of the spread of COVID-19.
Kier has announced a pay cut across its staff (picture: Getty)
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The publicly listed group has also paused the planned sale of Kier Living – its “discontinued” mixed-tenure housing arm that has worked in partnership with housing associations and councils – and the evaluation of the options for its property business.
The work of the £4.5bn-turnover group – which announced a £245m loss in September last year – includes maintenance contracts with housing associations and services for around 200,000 homes a year, providing repairs, fire safety and compliance.
Kier said 80 per cent of its sites or workplaces across its business continue to operate, “although we recognise that this may change”.
The group said many of its employees have key worker status as they operate across a number of sectors that are vital to the country. Almost three-quarters of its work last year were for government departments or quasi-governmental entities such as HS2 or Network Rail.
Other parts of the business cover UK highways; vital maintenance of people’s homes; facilities management services for the NHS; building schools and hospitals; and critical national infrastructure including repairs and maintenance services for the water, gas, power, telecoms and rail sectors.
The group said it introduced a 24-hour pause across sites and workplaces to ensure that the site operating procedures issued by the Construction Leadership Council on 24 March 2020 and endorsed by Public Health England have been implemented.
It added: “If sites or workplaces are not able to operate to this standard, we will either implement modifications to their layout or working practices or close them.”
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Financial impacts
The contractor said that it entered this period of uncertainty with a clear strategy, including a cost-saving programme and a focus on debt reduction, and that it is now rolling out a number of mitigations for the coronavirus pandemic.
It said: “These include c.6,500 employees, including the executive committee, and the board taking a reduction of between 7.5 per cent and 25 per cent in their base salaries or fees for a three-month period beginning on 1 April 2020 and bringing forward the closure of our head office at Tempsford Hall to 30 April 2020.”
Its cost-saving programme remains on track to deliver at least £65m for the financial year ending on 30 June 2021, it added.
Kier is also looking at government initiatives to provide financial support to companies during the crisis.
“We welcome the measures announced by the government to assist UK companies during this challenging period and we continue to explore their availability to the group.”
Kier reported total facilities of around £910m, including £700m of facilities that are due for renewal during 2022. For the six-month period ending on 31 December 2019, average month-end net debt was £395m.
Kier in transition
Kier’s half-year results for 2020 reported £46.7m in operating profit before exceptional items, and a nine per cent fall in revenue. Exceptionals, however, included £71.1m incurred from continuing operations, and £59.5m of charges, net of tax from discontinued operations.
The group said that while Kier Living is a strong business, it has limited operational synergies with other parts of the group and requires significant ongoing funding to deliver future growth.
“This business is now classified as discontinued and is expected to be disposed of within the next 12 months.”
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