Kier plans cash raise after return to profit
The construction group made a £9m pre-tax profit for the six months ended 31 December 2020 and is planning a £240m equity raise to tackle its high debt levels, according to a stock market filing.
Kier, which is behind the £200m mixed-use Pall Mall scheme in Liverpool, has returned to profit in the second half of 2020 after reporting a £225m loss for the 12 months ended 30 June 2020.
The company is now embarking on a strategy to whittle down its £353m debt pile, which will be aided by the recent disposal of its housebuilding division Kier Living.
“The proposed equity raise…will further strengthen the group’s balance sheet by reducing net debt and will facilitate investment in the business to help drive sustainable, profitable organic growth,” said chief executive Andrew Davies.
The group embarked on a restructuring programme two years ago following Davies’ appointment as chief executive and the sale of Kier Living formed a key part of that plan.
Davies added: “With the announcement of the sale of Kier Living, we have achieved many of the milestones required to improve cash generation and reduce net debt.
“The process of simplifying the group has been substantially completed through the exit of non-core businesses and the adoption of an appropriate cost base.”
These actions could deliver cost savings of at least £115m by the end of the financial year, according to Davies.
“The second half of the year has started well seeing a continuation of the positive trends of the first half and we are confident of achieving further progress this year in line with our expectations,” Davies said.
Kier’s share price has gone down by 4p this morning.