Kier Group reduces net debt to £230m

Kier Group has published a trading update for the year ended 30 June 2023 – reporting a strong performance by its construction division. 

Highlights 

• Revenue and profit “in line with expectations” 
• Order book above £10 billion 
• Net cash (year-end)*: £60 million (FY2022: £2.9 million) 
• Strong construction growth in final quarter 
• Average net debt: £230 million 
• 85% of revenue for FY2024 secured 

* Kier expects “positive adjusted operating cash flow” for the year ended 30 June 2023, “significantly” above Board expectations.   

Despite inflationary pressures, the Group’s results reflect a “strong operational performance”, said Kier. Adding: “The company remains confident it can continue to mitigate these pressures going forward.”  

Recent awards 

• £5.1 billion Strategic Alliance Contract connected to the Defence Estate Optimisation Portfolio by the Ministry of Defence 
• Reappointed to the £4.5 billion Southern Construction Framework 
• Appointed to L&Q Major Works Investment Programme to deliver homes maintenance 
• Trade City scheme in Manchester 

New contract wins reflect the “bidding discipline and risk management” embedded in the business, said Kier. 

Debt 

Positive cashflow was used to repay the remaining average month-end supply chain finance facility balance of £56 million. 

Schuldschein Notes and US Private Placement Notes we repaid by Kier, totalling £44 million.  

Its Revolving Credit Facility was reduced by £40 million. 

Kier also repaid its remaining HMRC Covid-19 support sum of £6 million. 

Pension 

The Group agreed a three-year valuation for funding its pension schemes. Deficit payments will decrease from £10 million in FY2023 to £9 million in FY2024.  

Thereafter, they are expected to continue as follows: £8 million in FY2025, £6 million in FY2026, £4 million in FY2027 and £1 million in FY2028. 

“Once the pension schemes are in surplus, they will cover their own administration expenses. In FY22, expenses amounted to £4 million. The largest of the six schemes is already in surplus,” said Kier. 

Restructure 

In May, Kier announced the realignment of its Infrastructure Services segment, whereby its Highways, Utilities and Infrastructure Projects businesses became two: Transportation, and Natural Resources, Nuclear and Networks. 

Kier will publish its full-year results on 14 September.  

“The Group has delivered another year of strong operational and cash performance,” said Andrew Davies, chief executive of Kier Group. “We have now completed the second year of our medium-term value creation plan. This plan has embedded bidding discipline and risk management into the business and is allowing us to maximise value and convert the many high quality and profitable opportunities in our chosen markets, which remain favourable. We have also strengthened our balance sheet and grown our order book despite the uncertainty in the wider economy. These factors give the Board confidence in the continued success of the Group.” 

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