In the year to 30th June 2023 Kier Group made a pre-tax profit of £51.9m (2022: £15.9m) on revenue up 5% to £3,405m (2022: £3,256).
While the figures are not startling, they are Kier’s best for six years and good enough for it to resume paying dividends this year.
In 2017 Kier’s share price topped £14. Then came several loss-making years, including two consecutive years when pre-tax losses topped £200m (in fiscal 2019 and 2020 – pre Covid). Acquisitions like Mouchel and May Gurney didn’t help. The share price has never recovered and these days trades around the 70-80 pence mark.
However, the latest results show a degree of stability not usually associated with Kier.
Chief executive Andrew Davies said: “The group has achieved considerable operational and financial progress over the last two years. This is reflected in the significantly improved financial performance of the group over the last year. It is testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our financial position in line with the objectives set out in our medium-term value creation plan.
“Our order book remains strong at £10.1bn and provides us with good, multi-year revenue visibility. The contracts within our order book reflect the bidding discipline and risk management now embedded in the business. I am also particularly pleased to report, the group significantly improved its year-end net cash position and has confidence in sustaining this momentum going forward.
“The new financial year has started well, and we are trading in line with our expectations. The group is well positioned to continue benefiting from UK government infrastructure spending commitments and we are confident in sustaining the strong cash generation evidenced this year. This, combined with our focus on operational delivery, gives the group a clear line-of-sight to significantly de-lever. As a result, the group intends to resume dividend payments during FY24, with the first dividend to be declared alongside our interim results.”
In its annual results statement Kier also disclosed the price it paid for Buckingham Group Contracting’s rail division from Buckingham’s administrators – £9.6m. Buckingham had a subcontract supplying Kier’s HS2 joint venture, EKFB. The rail assets consisted of design, build and project integration contracts for a range of customers including Network Rail. In addition, the group acquired a limited amount of working capital in the form of trade debtors, work in progress and client retentions. Kier expects the acquisition to add £50m to £75m of revenue next year (FY 2025).