Kier Share Discussion Threads

[marksp2011] 16/9/2018 14:18

I have been through the last accounts and the previous.

It looks like the debt is actually goodness in that it is growth generating via JVs BUT you cannot spend your cash investing and chuck it at shareholders too. Holding the debt off balance sheet makes the numbers look prettier at the headline level but a shallow dig shows that the numbers at the top of the report are flatly misleading. When you do that, it attracts attention as reality and sound bites diverge.

Options - Come clean and make it all visible.Visibility removes the whispers and could be very positive
- Spin off the JV business
- raise capital
- rebase the divi

One other hing I hate but I always look for in every set of accounts - always at the back and often the last notes - Contingent liabilities

The Company has given guarantees and entered into counter-indemnities in respect of bonds relating to certain of the Group’s
contracts. The Company has also given guarantees in respect of certain contractual obligations of joint ventures and associates,
which were entered into in the normal course of business, as well as certain of the Group’s other obligations (for example, in respect
of the Group’s finance facilities and its pension schemes). A guarantee is treated as a contingent liability until such time as it
becomes probable that payment will be required under its terms.

I have no idea if there is £1 or £1 Billion at risk here. They should report what the liabilities are, the theoretical risk and the current view of that risk if they want people to understand what is happening and be able to value the shares happily.

lastly average debt...ie the debt you need to run the business at that level of activity was about £350M or 3 times PBT which is relatively high. Kier crow about YE debt which is silly as that isn't the industry metric everyone else uses

[marksp2011] 16/9/2018 13:31

The construction giant Kier will mount a defence this week against hedge funds that have placed a huge bet against its shares, with a pledge to cut costs and debt.

The FTSE 250 builder became the third-most shorted stock on the London market last week. Hedge funds — including several that bet against the collapsed construction firm Carillion — have built a 17.3% short position in its shares, according to data from Markit. Short-sellers borrow shares for a fee and then sell in the hope of buying them back later at a cheaper price.


Kier, which is run by chief executive Haydn Mursell, has come under pressure from institutions such as Marshall Wace, BlackRock Investment Management and GMT Capital since the start of the year. All three profited from betting against Carillion. The short position has risen from less than 2% at the turn of the year and peaked at almost 18% last week.

Some of the scrutiny has been prompted by debts at Kier, which worked on London’s new Crossrail Tube line. Net debt has grown from £99m in June 2016 to £239m by the end of last year, although Kier insisted this was easily serviceable at less than one times core profits.

However, short sellers have zeroed in on the growing gulf between Kier’s year-end and average debt, which stood at £350m at the last count. Experts argue that average debt is a more accurate measure in a construction business, as it is not flattered by the usual end-of-year scrabble for cash.

[8w] 16/9/2018 10:10

Haven't seen the Sunday Times article but I am pretty sure they are going to give greater clarity around debt and JV's. This has got to be a good thing, too much uncertainty at the moment. Presumably clarification will be followed by a reassuring plan to address perceived issues. Divi cut? I think things would have to be pretty bad for that. If debt is getting out of control long term investors may see a cut as desirable.

Couple of very positive broker notes last week, both with a buy rating , basically saying the worries are overdone and an alternative narrative on the debt, JV's etc. paints a positive picture.

Reread Barclays bear case and got to say I did not feel it was all doom and gloom.

Anyway Thursday will bring greater clarity (hopefully). Interesting times

[nomdeplume] 16/9/2018 09:17

Interesting comment on Kier in the Sunday Times today. It suggests that shorting is nearly 18% and raises the company's debt problems. The 20th should be interesting. We may well see a cut in the dividend.

[mmlakhani1] 08/9/2018 15:04

It's about time it rockets....

[nomdeplume] 08/9/2018 14:45

Either someone has seen the results or someone is closing a short or both. If the results are good and the shorts (8%) are closed, this will rocket.

[big7ime] 07/9/2018 15:57

Big move up today, what has sparked that I wonder

[mmlakhani1] 28/8/2018 14:25

I think this is definitely going up a lot more so pile in people ....

[eriktherock] 28/8/2018 14:00

Lot of 'hope' in this move up. My shorts well underwater now but I'll be right once the noise has abated and the commercials continue to lighten-up.

[ygor705] 26/8/2018 15:17

Grahamburn.....I am confused now: I thought the point that you were making was that Woodford may not have been doubling his stake size.

[grahamburn] 26/8/2018 12:17

Sorry ygor, think you're confused. How could Woodford deny information which the fund had given to the company which formed the basis of the both the RNS on Friday and the subsequent reporting of that RNS?



The holding was a public fact on Friday afternoon!

[ygor705] 25/8/2018 21:12

Well there has not been any denial from Woodford Grahamburn. Even journos have be reasonably accurate if they want to stay out of the Courts.

[grahamburn] 25/8/2018 19:01

The way you wrote that, ygor, you imply that The Times may be asserting without proof that Woodford has doubled his stake in the company. In fact, it is just reporting the company's own RNS from yesterday with a little embellishment within their Market Report.

[kangaroo joe] 16/8/2018 20:16

I've lost count of the number of companies that have over borrowed, over complicated the business, invested in Oracle or SAP at great expense, employed too many clever accountants that don't know the business that well; and then tried to keep things looking good by loads of exceptional entries in the accounts; economy drives etc. Then we see a few senior managers go, then eventually the executives when it all unravels and huge write downs are needed.

The dividend looks unsustainable. Confidence has been waning, but do we hang on thinking this is the exception? I dunno, just looks fishy.

[ygor705] 16/8/2018 19:30

Grahamburn.....sorry to be a bit slow in responding. Thanks for filling in the gap philanderer.

[grahamburn] 16/8/2018 12:56

Thanks, philanderer. So reasonably high up the Kier greasy pole, but not quite high enough to warrant an RNS. However, useful background for the role he has taken on.

[philanderer] 16/8/2018 12:47

Kier snaps up ex-Carillion MD


Former Carillion managing director James Hindes has joined Kier to head up its aviation and defence business.

Mr Hindes was managing director for Carillion’s southern region and before that served as the national operations director for its building business.

During his time at the contractor, which collapsed in January, Mr Hindes worked on Heathrow Terminal 5 and on estates projects for the Defence Infrastructure Organisation.

Mr Hindes will serve as managing director of Kier’s aviation and defence business, for which the company said it had “ambitious growth plans”.

In its half-year report released in March, Kier cited defence and aviation along with life sciences as three markets it is targeting for more construction work.

[grahamburn] 16/8/2018 12:39

ygor705

Please can you point me in the direction of the announcement of the "recent hiring of the ex MD of Carillion by Kier"?

A quick glance at recent RNS's (even going back to March) didn't show that appointment, so guess it's not at top level management.

[ygor705] 16/8/2018 10:29

In construction (as in any other business) there is always risk Z but I suspect that the recent hiring of the ex MD of Carillion by Kier suggests that they have assumed a significant number of contracts from that source. We are not looking at a jobbing builder here: the universe of contractors capable of assuming abortive Carillion work is limited - particularly if Kier was already heavily involved. Too easy to be pessimistic when the price of a share falls. All to often in modern markets predators pick up companies at an artificially low price and enjoy the recovery when it comes. With BREXIT on the horizon I'm afraid that we are likely to see a lot more of this kind of rape and pillage from overseas entities. It's done with shares rather than an axe and sword these days!

[zicopele] 16/8/2018 09:40

Carillon demise does not give Kier pricing power. The construction industry routinely underprices all work.

I doubt if Balfour Beatty, the biggest player in market has more 5 percent of the UK construction market.

Competitors come and go but there is always pricing risk.

[ygor705] 16/8/2018 08:59

Based on fundamentals, I'm having difficulty in understanding why the share price is so weak here.......particularly given that an underpricing competitor (ie Carillion) is no longer in the market. Unless we are dealing with a Board who are deliberately misleading investors, and there are hints of this on this BB, my own view is that an outside bid of some kind will soon be on the agenda.

[eriktherock] 16/8/2018 08:15

This is an information exchange so >
eriktherock - 24 Jul 2018 - 06:08:50 - 919 of 945 Kier Group 2005 - The Building Business - KIE
mark, the turning point was at the end of march last year and Kier have been in a downward trend since. There is support (yes, historic) around 920 which is clearly evidenced from the Weekly chart. If an Hourly candle is formed below this level(921) then there is sound technical reasons, based on past share price values, to indicate the levels referred to above e g 732p. There are no technical reasons
to support the targets you mention.

[nomdeplume] 15/8/2018 16:55

No it's not - it's just been dropping in line with the FTSI.