Problems with two kerbside waste collection contracts helped drive the old May Gurney company to a £51.1m loss in its final year.
May Gurney was taken over by Kier last summer and is now known as Kier MG.
Its accounts to 31 March 2013 show a £20.9m pre-tax profit in 2012 became a £51.1m loss a year later, and that the firm decided to make a £46.5m provision for future losses on the contracts at Bristol and Chester.
In results filed at Companies House it said the two May Gurney Optimised Solution – known as MaGOS – contracts were underperforming in December 2012 but the board “did not consider that a provision for future losses on those contracts was required at that time”.
Progress was made in improving performance but the board changed its mind, believing “the contracts will remain loss-making over the life of the contract and have therefore recognised a provision for future losses of £46.5m”.
The company made a £9.4m pre-tax profit on continuing operations in 2013, down from £30.7m in 2012, a fall it blamed on the two MaGOS contracts and a downturn in its rail industry division.
Losses of £10m arose on discontinued operations and of £50.4m on non-recurring items most of which was the provision for the MaGOS contracts.
May Gurney was a civil engineering firm which branched into waste and facilities management.
It was last year the subject of a takeover battle between Costain and Kier, which the latter eventually won with a £221m offer.
The original May Gurney had won local authority waste contracts with: Barnet, Bath and North East Somerset, Bridgend, Bristol, Cheshire West and Chester, Essex, Gloucestershire, Hackney, North Yorkshire, Norfolk, North Somerset, Somerset, Torbay, Waltham Forest, West Oxfordshire and Walsall.