Kier Group Forum

Kier has been awarded a contract for multiple lots in a £30bn Government framework: [link] The only lots which Kier was not awarded are residential and demolition. This huge seven-year contract win will produce many millions in revenue for Kier over the next seven years and produce great quality buildings for central and regional authorities. And as far as day-to-day contract wins go, Kier has also won a contract as the main contractor for Braintree Council's £30m Manor Street town-centre regeneration scheme. I hope that will help anyone here who keeps wondering how Kier manages to make money and why Kier has been the number one work winning contractor throughout the last 12 months up to September. And banks won't be getting tough with Kier since it's the second largest business in its sector, pays its debt obligations on time and rewards investors with 4% on its corporate bonds; a moderate rate of interest from a dependable business. My message here contains FACTS, not mere wonderings. That's why I'm invested in Kier.

You seem to do a lot of wondering, usually with some kind of negative tone towards Kier. The share price seems to be ignoring you so far. As far as selling the HQ is concerned, I see it as a good thing at this stage. Another HQ can be leased. Makes sense for Kier to free up as much cash as possible.

Kier sold one property in London yesterday and made £25m, enough to reduce group net debt from £167m to £142m, which is very low for a company with current turnover of £4.5bn. Order book is strong with £9.4bn in projects of which 90% are secured and probable. In addition to that, there's a logjam of projects waiting in the wings due to brexit uncertainty (so industry analysts say). Once that gets unclogged, Kier is likely to grow massively. But the firm doesn't need to grow for the share price to perform. It only needs to show debt reducing, and that's being accomplished by asset sales, small and large, and retaining the dividend which has been over £60m a year recently. If anyone here wants to know what Kier is doing in terms of growth and business strategy, all the answers are easy to find. Just take a look at the preliminary results on the investor results page of the company's website and if you want to hear the analysts grilling the CEO, there's a webcast too. Also, Andrew Davies has just put out a youtube video aimed at Kier staff, in which he discusses the direction of the business and the share price. Not hard to find. Dyor.

The share price is a stone cold bargain. Either it goes to £6 or the firm gets a speculative bid from a buyer. I don't see it staying at £1.20 for much longer. A lot of the promises from government involve infrastructure spending (hospitals, schools) and its record this yr, when business is supposed to be hamstrung by brexit, is that its beating all of the other construction firms and is having a good year. Andrew Davies essentially smashed the results down this year with massive paper writedowns and provisions and the next H1 results will show him as a massive success.

No. The business has more than enough cash; Kier is using only half of its available credit line; its paying suppliers almost twice as quickly as it was six months ago; and its retaining £60m+ in dividend cash that it would have paid out to shareholders. In terms of 'downsizing' it's only a reduction of about 10% of turnover. Kier Living (the residential housebuilding division) turned over about £400m out of the firm's total £4.5bn turnover last yr. The most amazing thing about all of this is that Kier Living is for sale at around £160m (with four or five 'very engaged buyers') but the total market cap of the whole £4.5bn business as it stands today is about £180m. Kier is hugely undervalued; the major part (the construction firm) is effectively valued at about £25m for a business which is the second largest regional construction business, turns over £4bn+ (yes, billions) with underlying annual profits of £100m+, and has been growing organically this year through winning more contract work by value than any other construction firm. Workforce has grown by over 10% by my reckoning. Last yr was 18,000, this year over 20,000.

They won't be selling it cheap. More liekly they won't sell it at all. The sale doesn't make a lot of sense to me; profitable division. Why sell it for £160m? Why buy it for £160m when you can buy the whole company for somewhere around £300m (assuming the share price were to double on news of a bid). I don't think Kier even NEEDS to sell Kier Living. Remember, they're saving over £60m a year through the cancelled dividend. All they need to do is keep making money. Kier is essentially a management company. Their subcontractors do all of the physical work. The Kier staff just do the work-winning, planning and overall management. The entire Kier workforce amounts to an average of around 20 people on each project. All they need to to do is keep on, keeping on. Avoid buying any more companies. Avoid getting involved in any loss-making contracts. This company will make its way back to £2 shortly in my view, probably before year end. I'd like to see a trading update in a fortnight or so.

If you read the question I said service business been for sale since January. I know when living went on the market. So in all your reading how is the service business sale going

Actually the divisions have been for sale since June, not January. Listen to the analyst briefing on the sale progress. It will be done by the end of the year. The loss btw was mostly on paper, not so very real. All writedowns and future provisions. So your doubts are NOT well founded. I suggest you do a bit of reading.

What’s happened to the high levels of interest Davies reported? Is it to be a management buy out? They’ve been trying to sell the services business since January? Enough to cover the very real loss they just reported - doubt it!

There is no 'restructuring' and no reason for the cabinet office to trouble itself with Kier. All Davies is doing is selling some Kier businesses. The company is solvent, debt is reducing anyway, it has plenty of financing and only draws on about half of its available credit. Nothing to see here. Just the UK's second biggest construction firm continuing to build schools, hospitals, commercial parks, roads etc all over the country. The share price will now recover steadily, maybe with a quick rise when the residential homes business gets sold.