Kier sells off fleet unit for £17.9m

2nd Jul 2015 07:32

Construction and property services group Kier has sold off its fleet and passenger services (FPS) business for £17.9m in cash, including the transfer of FPS' finance lease debt of roughly £32m.The FTSE 250 group, which had taken on the FPS unit as part of its acquisition of May Gurney in 2013, said the disposal had been made as part of its "disciplined approach to capital allocation and its strict return on capital criteria".The cash will be used to pay off debt and finance leases and to fund potential growth opportunities.Kier said it had signed a five-year agreement for FPS to continue to supply fleet services to its local authority highways and utilities businesses.In the last full year, FPS contributed revenues of £36m, a profit before interest and tax of £4m and had gross assets of £55m. In the year ended 30 June 2015, FPS' estimated third party revenues and profit before interest and tax are £34m and £5.6m, respectively.Chief executive Haydn Mursell said: "FPS was acquired as part of the May Gurney transaction. However, in light of our strict return on capital requirements, we concluded that it would be appropriate to dispose of FPS to a specialist operator which will be managed by the existing management team."