Kier Group has confirmed plans to sell off assets having conducted a strategic review of its business.
The firm said it would dispose of its Kier Living housebuilding brand.
In a statement it said “there was insufficient focus on cash generation and that the group today has debt levels that are too high”.
It continued: “The group’s portfolio is too diverse and contains a number of businesses that are incompatible with the group’s new strategy and working capital objectives.”
As a result, Kier will now focus on regional building, infrastructure, utilities and highways. It is looking to deliver annual cost savings of £55m from 2021 and reduce its employee headcount by 1,200.
Kier Living specialises on the affordable segment of the housing market. In the 2018 financial year, Kier Living completed 2,042 units.
The company said: “Kier Living is a strong business but has limited operational synergies with other parts of the group and would require significant ongoing funding from Kier to deliver future growth.”
It added that it had received “a number of inbound expressions of interest in Kier Living”.
However, any deal would not include “certain land assets” which were on the group balance sheet at £60m and are not “expected to be included” in the sale of Kier Living.
It will include Kier’s interests in joint ventures, including with Homes England, together with its share of the jvs’ net debt.
It is also considering selling Kier Property, its property development business.
The firm said: “The board has concluded that the investment requirements of the property business are incompatible with the group’s capital requirements. As a result, the board will accelerate a reduction in the level of capital invested in the business, which may extend to its sale.”
At the very least, the average level of capital allocated to this segment is expected to fall to £100m in 2020. In the second half of 2018, the average level of capital invested in the business was £184m.
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