Shares in Kier jumped 11% this morning as it said half-year results would be “slightly above the board’s expectations” following the impact of Covid-related cashflow measures.
A set of “self-help” steps were taken last year and would continue, the construction and infrastructure group said in a trading update for the six months to 31 December. Measures included furlough, closing its former HQ in Bedfordshire earlier than planned and pausing its early payment scheme for subcontractors.
Kier has its head office in Manchester’s Fountain Street. The group “performed well in the first half of its financial year” and there was an “improvement in site productivity through the period despite Covid-19 restrictions.”
Shares in Kier rose 11% to 83p, valuing the business at £122m.
Last year, Kier produced a £225m loss on turnover of £3.5bn.
The statement to shareholders on Tuesday continued: “Kier continues to win new business in its markets on terms and at rates which reflect the bidding discipline and risk management introduced under the group’s Performance Excellence programme. As at 31 December 2020, Kier had been awarded places on long-term frameworks worth up to £11bn, across a number of sectors including, health, education and justice. In addition, several existing frameworks were extended by 12 months.”
Kier said it still plans to sell the Kier Living residential division, as it “continues to execute its strategy to simplify the group and strengthen the balance sheet.”
The group expects to deliver at least £105m of annualised cost savings by the end of FY21.
In addition, Kier is considering a potential equity raise.
Kier added: “The cash generation has allowed the group to; reduce supplier payment days from 38 to 34 (57: HY19); to ensure that all Kier companies have been reinstated to the Prompt Payment Code; to start repaying deferred PAYE and VAT commitments from FY20; and paying the adjusting items accrued for at 30 June 2020.”