Kier Group plc (lon:kie)
Kier - Popped Up Again With More Bad News.


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Title: Kier - Popped Up Again With More Bad News.
Company: KIE - Kier Group plc
Share Price Then: 108p
Author: Ian Smith
Date: Tue 18 Jun 2019
Comments: The headlines for Kier todays were 1,200 jobs to go, property construction business to be sold and no dividends for 2019 and 2020.

However the job cuts were mostly already known about, 650 by the end of this month and the rest by the end of 2020.

Despite the recent unloved share issue an announcement on the 3rd June had a drop of £25m in operating profit, debt creeping up again and the resurrecting costs were recently reported as being £15m higher than expected.

Pulling out of residential housing (Kier Living) and more general property (Kier Property) would see a drop in revenue and operating profit of about 20%-30% but would free up a significant amount of capital.

Selling the property business may reduce debt but I would be worried that this is the last chance for the company.

There seemed to be a belief that the worst was behind it, the share price at the end of last year was around 800p, compared to today’s 108p.

The dividend cancellation would normally mean that those who hold the shares for the dividend will sell, but will they as it would crystallising a big capital loss?

I could easily see 50p which would be a p/e of around 1 but there are now about 6% of the shares shorted and I will be looking to see if this reduces over the next few weeks.
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Previous Commentaries On Kier Group plc
Date Share Price Author Commentary
Mon 11 Mar 2019427pIan Smith

Kier – Too Much Pessimism Or Are The Doubter Right.

Kier popped up on the radar today with the announcement of an extra £50million of debt taking it up from £130million to £180million.

For a company who have just done a £250million rights issue (Dec 2018) which had only a 38% take-up and operating in a similar market to Carillion and Interserve this sounds disastrous.

Prior to this confidence seemed to be returning to Kier as about 3% their shares are currently shorted down from a peak of about 14% in Nov 2018.

Yet I am currently looking at a 13% drop in the share price and maybe surprisingly I am asking why?

This is because this is not new information but the movement of items in the balance sheet, £40million of this debt is assets marked as up for sale and about a half of that has already been sold or almost sold since the accounts were prepared.

It really does seem to be an accounting issue rather than anything else, yes the headline number is large, but by the middle of the year it will have disappeared

Just to stress again it was not new information.