Kier Share Discussion Threads

[stdyeddy] 20/1/2022 12:17

The update today:

Kier continues to win new, high quality and profitable work in its markets on terms and at rates which reflect the bidding discipline and risk management introduced under the Group's Performance Excellence programme.

We remain focused on winning work through our long-standing client relationships and regionally based operations.

The Group's order book at 31 December 2021 was c.GBP8.0bn, an increase of c.4% from the year-end position (FY21: GBP7.7bn).

The order book continues to be underpinned by significant long-term framework agreements. New awards exceeded the prior year, albeit the growth in order book was later than anticipated due to procurement delays.

Recent contract awards include:

-- Infrastructure Services:
o Highways - over GBP1bn of work awarded over the last six months including the design and build of the A66 Northern-Trans-Pennine schemes

o Infrastructure & Utilities - appointed by Thames Water to deliver GBP66m improvement project at Mogden Sewage Treatment Works

-- Construction - appointed to the GBP7bn Department for Education 2021 Construction Framework; appointed to design and build GBP93m worth of new clinical buildings at Luton and Dunstable hospital; appointed as preferred bidder to deliver GBP36m new Sunderland eye hospital

o Kier Places - extensions of two existing long-term contracts worth a combined GBP71m

Net debt

The Group is expecting a cash outflow in the first half of the year due to the typical unwind of working capital.

The Group's average month-end net debt has significantly reduced from GBP436m to below GBP200m period over period as a result of the successful capital raise, the sale of Kier Living and cash generation. This was partially impacted by a GBP42m reduction in the average month-end KEPS balance, payment of adjusting items, capex and cash unwind of procurement policy note 04/20. The Group's supplier payment days remain unchanged period over period.

Medium Term Value Creation Plan

The Group remains confident in achieving its medium-term targets of:


Revenue: GBP4.0 - 4.5bn
Adjusted operating profit c. 3.5%
margin:
Cash conversion of operating c. 90%
profit:
Balance sheet: Sustainable net cash position with capacity
to invest
Dividend: Sustainable dividend policy: c.3 x cover
through the cycle

[jaystevens1] 20/1/2022 12:16

Sparty is losing his shirt here.

Great news

[stdyeddy] 20/1/2022 12:06

wolly, as ever, you are lying. You should know after following this business for three years that Kier spends more working capital on the first half and has cash inflow on the second half. Construction has a seasonal rhythm. There is nothing unusual here. Group net debt, when trade debtors and creditors are reconciled is likely to be a positive net cash. Avg month-end of £200m is in the ballpark of what we were expecting. Again, you should know this from following the business for so long.

Also, it's very unlikely that there will be a cashraise for TD. My guess is that it'll be all-share or possibly a token payment plus shares. Kier could effectively swap Tempsford Hall for the business. The banks who own TD don't want to be responsible for running the management team there. They want to get it off their shoulders. Everything else that was Interserve is sold. This is the piece that no one particularly wants, looking for a home. It probably won't even end up with Kier, but if it does, it'll be for the reasons I've already mentioned.

The management at TD might even manage a buyout themselves -- but if you were one of the TD pension trustees sitting on a £100m surplus, who would you prefer to own the business; a large publicly-listed national firm with a huge pipeline of work or some novice entrepreneurs hoping to get richer doing their day job? I'm pretty sure the trustees would much prefer Kier as the owner and Davies now knows a lot about dealing with pension trustees after his experience in extricating Kier Living from Kier Group where the trustees were a major stakeholder. There's nothing to get excited about here.

[stutes] 20/1/2022 11:49

Typo £209m read £200m.

The City could be sensing K is set to buy TD as CEO was reported to be silent on takeover?

[bathboy2] 20/1/2022 10:29

I was waiting for some comments, before adding, the group debt is still around 500m, the month end debt is down but by around 230m, but they took in from KL sale and rights issue around 350m, so look like still hemorrhaging money, and interesting add that h1 will be impacted, by shortages etc, like I've said buying up companies is a way hit the markets for more money, justified by integration costs exactly as carillion did,

[stutes] 20/1/2022 09:59

The trading update shows debt has been reduced following rights issue and ssle of homes unit. In growing turnover and paying to HMG payment terms retaining profits - the net debt is around £209m. It seems K is doing more with less debt.

[wallywoo] 20/1/2022 09:54

Lol, you have to read between the lines with Kier's trading updates. Two words says it all, "cash outflow" for H1.That goes with the substantial cash outflow for the last 6 years!!!I wonder how long the cash will last this time 1-2 years is my bet before they are looking for yet more cash!!!

[davwal] 20/1/2022 09:08

I was thinking of reinvesting here but I don't think the update will keep some current investors interested, which could lead to slippage in the price. The construction industry just seems to lack any significant appeal, unfortunately. I'll be interested to see what comes re TD though.

[stdyeddy] 20/1/2022 08:30

Yep, but actual net debt, rather than avg month-end debt, is probably just about zero. Davies is definitely not getting any chattier. I get the impression that his wife is probably the fun part of that partnership. Also, is it my imagination, or are his eyebrows getting darker while his hair goes whiter?

Nothing at all about Tilbury Douglas. Not a bone. Not a sausage. Nuffink. I suppose that's to be expected -- what's he going to say? We've got month-end debt of £200m and want to make it £250m again? I reckon the TD deal, if it happens, will be an all-share deal for mutual interest -- TD gets access to Kier's massive framework client base and its pension fund gets the slightly better protection of a top tier construction business and whatever longevity that might produce, while Kier gets a quick £1/2bn added to its turnover, one less competitor and another brand to be subsumed within its stable of forgotten building marques.

There's no way AD can start saying it's an all-share deal at this point without damaging the negotiation, and he can't say there's money involved without unsettling investors. I wonder what his wife says.

[rumbers2] 20/1/2022 08:10

...dull as dishwater and still £200 million in debt even after the capital raise.

[dasty1] 20/1/2022 07:54

Kier trading updates are always dull. Always trading in line with expectations nonsense. Pointless.

[this_is_me] 20/1/2022 07:46

very positive update.

Trading

The Group performed well in the first half, despite inflationary pressure and expects to deliver half-year results in-line with the Board's expectations.

This reflects continued strong operational performance and the confidence outlined in our full year results announcement in September 2021.

Order Book

Kier continues to win new, high quality and profitable work in its markets on terms and at rates which reflect the bidding discipline and risk management introduced under the Group's Performance Excellence programme

[stutes] 19/1/2022 10:11

The media are reporting on the FRC disciplinary hearing involving former employees of KPMG, auditors of Carillion. It brings to memory , one of Carillion's financial problems related to Alfred McAlpine pension fund. Should K buy TD how will K protect itself from having to fund TD's pension pot in the future?

[stdyeddy] 18/1/2022 22:47

Thanks for that Peter. A more considered and better informed piece, I think. Although I might just be feeling that way because it echoes my thoughts on not much money being involved. A very interesting development. A big down day for most indices, but we seem to have bucked the trend here, so shareholders are definitely not spooked. Looking fwd to Thursday.

[petersw1] 18/1/2022 21:18

Another article:
Well worth a read. Seems a much more substantial account than the previous ones.
Google says it was published around 12:00 today.

[stdyeddy] 18/1/2022 17:08

I'd say that the market might be interpreting the possibility of a purchase as an indication that the last six months have been good for Kier's earnings. There's been a bit of a question mark over this given all the talk about inflation and materials shortages, even though most of the large firms have managed it well. Looking fwd to Thursday.

[stutes] 18/1/2022 16:48

The real question for K is why buy Tilbury Douglas when the safer option is to grow turnover organically? The banks that rescued TD might want to sell it but K's recent track record is poor in creating value from M&A.

[petersw1] 18/1/2022 10:39

Another article:
It just reports that Sky reported the talks and adds a little bit of discussion.

[stutes] 18/1/2022 09:34

I wonder why Balfour Beatty, Morgan Sindall are not interested in buying Tilbury Douglas? I think Morgan Sindall's approach of growing revenue through organic growth has shown a better return for shareholders than K's buying firms.

[stdyeddy] 18/1/2022 08:45

Davies doesn't need to do this deal, so it'll only happen if it benefits Kier. If TD can be bought for little cost and brings no debt, the business will bring turnover and remove a small competitor. AD is very cautious. He's got Kier out of the mire -- no reason for him to blow it now. This will be a good outcome either way; a small buy or walk-away. We will know more on Thursday.

[bathboy2] 18/1/2022 08:40

Put it on the main board, instead of this one, I agree though, don't think it's a good idea