Kier has it all to do

So, for Kier, the second half of 2018 provided something of a challenge. Profits from operations fell 15 per cent to £51.8m but these were wiped out by £59.9m of non-underlying charges including a £26m provision relating to a loss-making waste collection contract and £25m on its Broadmoor Hospital redevelopment project. There was also an additional net cost of £10m on the Kier Future Proofing programme launched in June 2018 with the aim of streamlining the business and driving operational efficiencies. The group’s net debt position at the December half year was down from £238.5m to £180.5m, reflecting the net proceeds of the rights issue. Average month-end net debt for the period was £430m, up from £350m a year earlier.

Net working capital outflows rose significantly from the £56m seen previously to £220m, including a £97m trade payables reduction and a similar increase in funds committed to work-in-progress. There was also £26m of work-in-progress relating to the residential business caused by planning delays and on-site start-ups. This reduced unit completions from 965 a year earlier to 842. The focus will now be on simplifying the group’s operations, improving cash-flow generation and reducing debt, with a net cash position forecast for the June 2019 year-end.

Analysts at Numis are forecasting adjusted pre-tax profits for the June 2019 year-end of £152.5m and EPS of 94.7p, from £136.9m and 113p a year earlier.