Kier Share Discussion Threads

[bathboy2] 13/5/2022 07:02

Kier the way it reads, is the project lead, not principal contractor, i would take this as an advisory role, with the possibility of doing some of the work, ie the biggest building

[stdyeddy] 12/5/2022 16:42

Wow!! Our favourite construction firm has won yet another massive regeneration project.



KIER PICKED FOR £350M LEATHERHEAD REGEN PLAN
Mole Valley District Council has signed up Kier Property as its joint venture partner to lead the £350m regeneration of Leatherhead town centre in Surrey.

Councillor Keira Vyvyan-Robinson, MVDC Cabinet Member for Projects, said: “Kier not only bring technical excellence, innovation and technology to the partnership but, more importantly, extensive in-house experience of complex public-sector regeneration projects.”

[wallywoo] 11/5/2022 09:53

Since there are 8x the number of shares in issue than there were 6 years ago (55m to 446m), Kier have no choice but to try and keep shareholders happy.


Unfortunately with cash still flowing out of the company that will be very difficult. I went through the last 6 years accounts to see the cash inflow / outflow in H2 compared to H1. I found the cash improvement was around +£40m for 5 of those years, and -£40m in 1 year. Not surprisingly all of those years had a large cash outflow in H1, but only 1 was worse than this years (2018/19). 2019/20 was the year where cash flowed out in H2, 6-12 months after a equity issue (ie like today). Kier like to spend money when shareholders give them more!!!


Since they have a operating £109m cash outflow in H1, that means the best you can hope for is £69m cash outflow (£40m improvement). Though I doubt it will be anywhere near. With 8x the number of shares and no chance of any dividend, and a weak market, Kier's share price will be under pressure for a long time!!!

The company will spin hard in their capital markets day, as they have always done but cold hard cash generation (ie lack of), will dictate where the share price goes. None of the figures above count the cost of debt, which with inflation and interest rates rising is only going one way (also increase pension liability with their massive £2B fund).

30p by July / August

[stdyeddy] 10/5/2022 13:44

The 'interesting times' continue. The Ruskis seem to be running out of puff. Meanwhile Europe is getting more and more organised behind the Ukrainians. Let's hope this terrible tragedy comes to an end soon.

However, I think the war, whilst it has probably been a major factor in tipping the world into recession, isn't the only one. China continues to struggle with covid. The fight for energy and food is manifesting in violence in the poorest countries (eg Sri Lanka) and this is bound to continue. The era of very low interest rates seems to be coming to an end.

How will this affect Kier? I will make a few guesses. First of all, many more firms in the construction sector will likely fail over the coming months. The demand for homes and new projects generally will likely diminish. The reduction in house-building MIGHT reduce inflation across the construction sector, although energy costs will, I suspect, remain high. Construction wages might be caught in the tug-of-war between higher living costs and wage inflation generally, versus a wind-down in construction in particular. It's a complex picture and impossible to predict easily, but I think personally that wages will not continue to rise in a recession. My guess is that we're going to see a short-term inflation hit (another one) on Kier's profits for the second half, but my guess is that it will likely not be as big as the trolls on here hope for.

New submarine pens for the Dreadnought class will POSSIBLY be an unadvertised opportunity for Kier, along with other military infrastructure, as well as all of the ongoing renewable and nuclear energy projects. Kier has experience in all of these. How will our government pay for it, plus new hospitals, HS2 and everything else in Kier's orderbook? Taxes are going up massively. VAT has not been reduced from the pre-Brexit crisis, and the recent rise in wages and frozen tax thresholds will suck money away from consumer spending and give it to government. So if there's a sector of construction (ie govt spending) which will do better than the economy generally, I think Kier is in it.

itsonlymoney - regarding profitability on the HS2 joint venture, I think that's a 'maybe'. That JV (known in the Kier accounts as simply HS2, and organisationally as EKFB) doesn't produce publicly available accounts, so it's not possible from where I sit to disentangle the profits from the rest of Kier's 'Infrastructure' earnings. JVs did however contribute £10.9m in dividends to Kier's last six months earnings -- a huge proportion of overall earnings. I presume though that the largest part of this may have come from the block sale of the Twickenham Gateway development. We will probably have to wait for the annual report in September to know for sure.

That said, the H1 results do show that infrastructure operating profit rose by £5.5m and margin increased to 4.2% for that segment. Kier said: 'Segmental revenue was 15% higher than the comparative period due primarily to the ramp up of capital works on HS2. This increase in volumes of the segment has primarily driven the 20.5% increase in adjusted operating profit to GBP33m.'

So you might be right, but no cigar yet. Two weeks to go until the capital markets day -- very nice to see Kier communicating with the investment community for a change. With any luck we'll get some answers on these issues then.

Regarding cash outflow in H1 -- I was not overjoyed to see THAT, but it seems to be a Kier tradition that cash flows out as working capital in H1 to fund work which then produces earnings in H2. Also, the business reduced the disreputable KEPS balance (the Kier early payment scheme) which pays suppliers with a form of factoring (surely unnecessary if Kier's avg payments are now running at 34 days) AND repaid outstanding VAT (the covid support deferment) of £53m. I will be very keen to see whether cash generation returns by the end of the full year (June 30th) and whether we actually return to net cash at that point. By then of course we could be in the middle of a market meltdown, so I have no idea where the shareprice will be.

Good luck everyone and please do your own research.

[bathboy2] 10/5/2022 08:22

Update on the HS2 contract, said by ItsOnlyMoney, to be profitable, but hasn't come back with any proof, thats probably what everyone thought with Roadbridge Uk,on HS2 also, massive debts, and nmcn, who i warned about, their debts are enormous, sadly a lot of subbies will end up going to the wall through this,

[wallywoo] 09/5/2022 11:30

Itsonly, you make the classic mistake of confusing supposed profit in this sector with cash generation. Remember that Carillion's last accounts showed a £50m profit. They never released another set because of administration. Kier had £109m cash outflow in H1!!!! I expect that to continue in H2. Compare that to BBY, COST, Mitie, MGNS , in fact any other company in the sector they all had healthy operating cash inflows. HUGE red flag.


In addition, Kier have over £690m of intangible assets. This ensures they will be have exceptional right off's for many years to come. No other builder have large intangible assets, so it is obvious that these are worth nothing. In addition the £2B of pension liability will be increasing massively as inflation increases. That will ensure any spare money goes to the pension fund.


Only another month to go before a likely profit warning. Market looks awful. 30p by July anyone??

[bathboy2] 08/5/2022 16:10

Do you have proof that HS2 contracts profitable, where have you got this information and the associated numbers to back this up

[itisonlymoney] 08/5/2022 15:54

why not. When kier was French Kier massive projects was what it specialised in. HS2 is a profitable contract for kier. so long as they manage the risk, there's no reason why they shouldn't do it. andrew daives is as risk averse a ceo as it's possible to find. there's no evidence that it's lower margin work than usual. daivies has said on every results broadcast that they are aiming to improve margin. that one contract is the same as tilbury douglas's entire annual turnover (though it is only a two/three year contract mst likely) and kier hasn't had to buy it. also we are heading into a recession so big infrastructure projects backed with govt money are the business to be in. the housebuilders have had their day. looks like a good move imo.

[bathboy2] 08/5/2022 15:42

It will be interesting soon, when the results out, but if turned around, on the smaller contracts, why risk, going after the big risky, low margin work, that is my point,

[itisonlymoney] 08/5/2022 15:21

shares are at the bottom alright. take the last rights issue out and the share price is probably equivalent to about 30p. the business showed £54m profit before exceptionals for the last half year. if they ever get on top of the never ending exceptionals kier will make £100m+ a year. that puts the current share price of 76p on a price/earnings of about 3.5

proof of the pudding will be the results for full year in 11-12 weeks time.

[itisonlymoney] 08/5/2022 15:11

'Chasing turnover' based on what? The facts say precisely the opposite. Kier has increased its margin every half-year for the last four reporting periods and reduced its turnover.


the A417 contract assuming it goes ahead, is kier's first massive project for two or three years which it is doing as the prime contractor in a consortium. The reason is because of its size. kier stepped in when carillion went broke and took over the HS2 contracts. kier id seen as a safe pair of hands.


the other consortium members are top quality firms. if any of them go broke, kier will find replacements. there will be contract commitments and insurances in place. andrew davies and simon kesterton will have been all over the contract with a fine tooth comb because of its size.


we could all get blown up by putin but there's no point in worrying needlessly about things that haven't happened and aren't likely to happen.

[bathboy2] 08/5/2022 09:12

It is not always the case, that some firms do not recover from a bad position, but it involves shrinking and going back to basics, smaller jobs have more chance of higher margins, but kier seem to be chasing turnover, larger job = more risk = generally lower margin, this is why imo they will struggle, and 1 bad job/marketplace is liable to sink them,

[stdyeddy] 07/5/2022 13:41

wolly, now that I've picked myself up off the floor and managed to stop laughing my ar$e off, I think it's time that I reminded everyone here that you are an attention-seeking pr@tt. No one here is going to fall for your claim that you are offering a 'public service'.

The reality is that you are a lying moron who has infested this thread for three years now, all because you lost a load of money by going long on Interserve before it went broke, and lost a load more money shorting Kier before it went to 130p and blew up your trading account (all of it documented on this thread during the years that you've been pointlessly wittering away on here). Your presence here is not a 'public service'. It is a personal vendetta and a very silly one, on which you expend huge effort.

And btw, who is saying that Kier is a 'one way bet'? The answer is no one. You just hate to see anyone posting any news about Kier.

[wallywoo] 07/5/2022 12:20

Silkear, I would happily stop posting here, as you say it's a lot of time and effort.


However, when you see the same scam artists ignoring the huge hole this company has and promoting Kier as a serious investment then it has to be countered. It's a sad fact that many on here have alternative agenda's to a PI looking to invest. There may well be some new naive investors who start to believe the bull case here. These scammers use the same tactics as they did with Carillion, Interserve etc, they post contract wins and say it's a one way bet. Kier have a very high chance of eventually going bust, it has been losing cash for 6 years now and it's important to say that.


This is a investment BB, we are all learning and discussing. It is just as important to spot the future losers (ie Kier)as the winners. Maybe shareholders will bail out Kier again with yet more money (I am amazed that £800m, and over 800 percent more shares issued, down the toilet has not deterred them so far). But I see it as a public service to warn investors of this money pit.

[silkear] 06/5/2022 22:21

wallywoo everyone knows this is not a popular sector at the mo due to a big European war that could get bigger and high inflation. That's why the shares are down. There are 350,000 construction businesses in the UK. Lots go broke every year like most sectors with a lot of businesses. You don't like Kier. You've made that point for a long time and were saying so every day several times a day when I was here two years ago. Calm down. Plenty of people still want to know what's going on with this business.

[silkear] 06/5/2022 22:12

Who is 'ramping'? Dunrentin, where is the froth? This thread is about Kier, right? Why are you so offended that people post current news stories about Kier? Do you think the A417 contract should be a secret and not mentioned on here?

[wallywoo] 06/5/2022 21:55

All you have to remember is that Carillion went bust with a £6B order book, Interserve went bust with a £4B order book. And numerous others before them.


Once you know that you look at the tangible net assets of all these companies and see that they all had larger £100m negative net assets.


Kier has (-£250m) negative net assets. It's just an accident waiting to happen. Once shareholders stop pumping in more money (£800m+ over the last 6 years), Kier will finally be laid to rest!!! Maybe there will be a debt for equity issue before that, but I doubt it

As for the constant share ramping, like all good scams; word has now spread, this sector does not attract idiot investors like it used to. They are beginning to wise up. Don't be one of them is my tip.

[dun rentin] 06/5/2022 21:11

Explain the dichotomy between all the good news stories and the share price if you can in a plausible way rather than simply reporting contract wins and covering them with froth.

[silkear] 06/5/2022 18:45

For the person here who doesn't seem to understand Kier's contracts and frameworks, there's some good videos on youtube. This one describes the Deer Park Secondary School project.

[silkear] 06/5/2022 18:16

Who is spinning?

[dun rentin] 06/5/2022 17:37

You are asking the wrong question as if all the positive spin translated into commercial confidence it is unlikely the price would be defying gravity and heading South.

[silkear] 06/5/2022 17:28

Which 'prophets'? I don't see anyone saying that the share price is going up?

[dun rentin] 06/5/2022 14:52

The Prophets (not profits) of optimism seem to be fighting a losing battle with the share price reality.

[bathboy2] 06/5/2022 13:38

Kier again win a job with no planning permission and still might not happen, how can that be classed as a contract win, when it might start in a couple of years, are they still expected to do it for the same price,