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Former KPMG professional steps down from top Kier role

Professional services firm Kier Group has seen its CEO step down with immediate effect, following a coup in the construction company’s boardroom. Haydn Mursell, an accountant who began his career with KPMG, has been ousted as the company looks to commence a new era of growth, amid a UK construction sector that has struggled in the last year.

The British construction sector has endured a tumultuous 2018. Despite obtaining a sequence of lucrative public sector contracts throughout 2017, Leicester-based firm Carillion collapsed at the beginning of the year, sending shockwaves through the outsourcing sector as a whole.

Amid the chaos which ensued, Capita saw its share value slump repeatedly, while the first quarter of the year saw Serco suffer a 3.9% fall, alongside G4S (-1.1%) and Interserve (-1.9%). This was particularly unhelpful for the beleaguered Interserve, as the group – also best known for its work in construction – was already grappling with poor trading and climbing costs. Kier was also impacted, and the first quarter saw a similar -1.3% fall.

The infrastructure services, buildings and developments and housing group bounced back after that, however. Recent key contract awards included the renewal of a three-year £70 million utility services deal in the South West and being appointed to three lots on the North West Construction Hub three-year £1.5 billion framework. More than £500 million of regional building projects were also secured during November and December, such as a major office development for Argent at King’s Cross in London, a research facility for the Pirbright Institute in Surrey, and a new hospital for Frimley Health NHS Foundation Trust.

The firm’s balance sheet was further strengthened on December 31 after the receipt of the £250 million net cash proceeds of the recent rights issue, and Kier remains on track to report a net cash position at the year-end. Despite this, however, board discontent has reportedly led to the exit of the firm’s long-standing CEO Haydn Mursell.

A chartered accountant, Mursell commenced his career with KPMG in 1995, before working at Bovis Lend Lease and then moving to the construction sector firm Balfour Beatty. He joined Kier in 2010, initially as Group Finance Director, before being confirmed as CEO just two months later. During his time in the role, he took on operational responsibility for the company’s property division.

With his exit from the firm, Kier has commenced the search for its new CEO, in a bid to steer the company into a fresh era of growth. Until this search is completed, Chairman Philip Cox will act as Executive Chair on an interim basis, working closely with the Chief Operating Officer Claudio Veritiero. They will jointly oversee operations for the time being.

Commenting on the move, Cox said, “The board believes that, following the completion of the recent rights issue, now is the right time for a new leader to take Kier forward to the next stage of its development. The board would like to thank Haydn for his contribution during eight years, firstly as finance director and then as Chief Executive.”

KPMG PHOTO

KPMG partners receive bumper payouts despite Carillion fallout

KPMG, the auditing firm that gave Carillion a clean bill of health, has reported a leap in profits that will result in the average pay of its 635 partners soaring from £519,000 to more than £600,000 each.

Only months after KPMG was accused by MPs of being part of a “cosy club” and “complicit” in the run-up to the collapse of the construction and government outsourcing company, the accountancy group reported an 8% rise in revenue to £2.3bn in the 12 months to 30 September. Profits surged 18% to £365m.

Bumper profits helped to boost the pay packets of KPMG’s most senior executives, with the average payout per partner rising to £601,000. The chairman, Bill Michael, who was appointed last year, received £2.1m.

KPMG was one of the firms singled out in a damning report on the demise of Carillion, which collapsed under a mountain of debt in January.

“In its failure to question Carillion’s financial judgments and information, KPMG was complicit in the company’s questionable accounting practices, complacently signing off its directors’ increasingly fantastical figures over its 19-year tenure as Carillion’s auditor,” MPs on the work and pensions and the business select committees concluded in May.

KPMG was also fined £3m in August by the Financial Reporting Council (FRC) after the firm admitted to misconduct in its audits of the fashion chain Ted Baker in 2013 and 2014. That penalty followed a £4.5m fine by the FRC in June, for its audit of Quindell in 2013.

The boost to profits comes at a difficult time for the big four accountancy firms – KPMG, EY, Deloitte and PwC – which have attracted criticism from politicians and regulators over the quality of their audit work and face calls to be broken up.

They were all criticised for failing to spot problems at Carillion sooner and for prioritising profits over proper scrutiny of companies during their audits.

MPs accused the firms of “feasting” on the carcass of Carillion after banking £72m for work in the years leading up to the construction firm’s collapse.

Professional firms such as KPMG have also been criticised for conflicts of interest, given the wide array of work done for big clients such as Carillion. It has been claimed that firms are less willing to challenge auditing clients in the hope of winning lucrative contracts for consultancy and advisory work.

However, KPMG stressed in its latest results that it was the first UK firm to “voluntarily stop providing ‘non-audit’ services to the FTSE 350 companies it audits”. It has also recommended that the ban is rolled out across all audit firms in the UK.

Michael said: “I have been clear that our wider profession faces challenges. In order to safeguard against any perceptions of conflict of interest, we have drawn a clear line between our advisory and audit work for UK-listed businesses.”