Keltbray stays in the red in anticipation of regulatory sanction

For the year ended 31st October 2021, Keltbray posted a pre-tax loss of £4.2m down from a £9.4m loss the previous year, on turnover down 9% to £389.5m (2020: £428.6). This reduction was “in line with the strategy of aligning capabilities with attractive UK growth sectors,” the company said.

At an operating level, the loss this time was £1.8m, down from £8.3m last time.

The results include exceptional provision before tax of £8.7m “reflecting costs associated with employee furlough, disposal of non-core activities and projected settlement of a regulatory industry investigation relating to historic activities”, the company said.

On the regulatory investigation, the annual report states by way of explanation: “Keltbray Limited is addressing a civil regulatory matter relating to historical issues which arose under a previous management team. The directors are fully engaged with this matter and are cooperating in full with the relevant parties, The timing and outcome of this matter is uncertain, however the range of potential liability is between £3.9m and £16m. Having received advice, a best estimate provision of £6m in relation to potential liability as been considered by the directors to be appropriate.” A further £500,000 provision has been taken for legal fees.

The Competition & Markets Authority is expected to report soon on its investigation into activities in the UK demolition sector, an industry in which Keltbray is active. In January this year Keltbray published a competition law compliance statement setting out its zero tolerance to collusion or market abuse.

The CMA is not specifically mentioned in the annual report. Asked whether the expected fine does indeed relate to the probe into the demolition sector, a spokesperson replied: “We are bound by a confidentiality agreement and cannot comment.

Before interest, tax and exceptional items, Keltbray achieved a profit of £5.7m for the year to 31st October 2021, compared to a £6.0m loss in 2020. Gross margin pre-exceptional items increased to 13.6%, up from 9.4% the previous year and 12.7% in 2019.

The end-of-year order book is also strong, at £530m, compared to £310m a year before and £224m a year before that.  Orders include:

  • M621 Junctions 1-7 Improvement scheme for National Highways
  • Demolition, enabling and piling packages on The Network Building for Derwent
  • Heritage deconstruction package on The IBM Building, Southbank for Stanhope on behalf of Wolf
  • Structures package on the TV Centre Plot H for Kier
  • Complex integrated package for 2 Aldermanbury Square redevelopment in the City of London for Great Portland Estates PLC

Chief executive Darren James said: “We are pleased to have delivered good results with strong order book growth, as we return to profit. We continue to make significant strategic progress to transition Keltbray into the UK’s leading specialist engineering and construction services provider.

 “As a large and increasingly diverse engineering specialist, with a strong UK-wide brand and delivery footprint, we are well positioned to deliver on our core purpose to redefine the way sustainable development is delivered.”

Executive chairman Brendan Kerr said: “I am extremely proud of our strong performance as we continue to demonstrate the agility and commitment necessary to deliver the essential services our customers require and that protect our business for the future.”

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