Kier eyes rights issue as debt rises to £440m

Aaron Morby 4 years ago
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Kier is considering another rights issue to raise cash as average net debt has risen again due to the impact of coronavirus.

Andrew Davies remains optimistic about year ahead based on £7.6bn order book
Andrew Davies remains optimistic about year ahead based on £7.6bn order book

This morning chief executive Andrew Davies said the reduction in revenue due to Covid-19 had resulted in a lower-level of working capital inflow taking forecast average month-end net debt for the year to £440m.

This is up from the monthly average of £395m at the end of the first half in December before Covid-19 hit and means that second-half debt could be as high as £485m.

In a year-end trading statement this morning he said: “Before COVID-19, the group had made good progress in implementing a number of measures to reduce its net debt and strengthen its balance sheet.

“As a result of COVID-19, over the next 12-18 months, further actions will be taken, including: continuing to implement a range of self-help measures, driving a further increase in the group’s operating cashflows, continuing the process to sell Living and a potential equity issue.”

Kier has also agreed covenant waivers with its banks to ensure financial facilities remain available.

Davies added that while Covid-19 would hit volumes and result in additional costs, he remained confident for the financial year ahead to June 2021, based on the strength of Kier’s order book at £7.6bn.

Around 60% of the core Construction and Infrastructure Services’ businesses’ order book is for Government departments or quasi-governmental entities and a further 25% for services to regulated entities.

Davies said that as a strategic supplier to the Department for Education Kier was well-placed to benefit from the new 10-year school modernisation programme, which will see £1.5bn spent on new and upgrading school over the next two years.

He added: “Over the past few months, we have taken a number of decisive management actions, which are delivering significant benefits and are enabling the group to maintain a good liquidity position. 

“The new senior management team is working well together and continues to focus on driving a range of strategic and operational actions throughout the Group.”

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