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Kier begins sale of housebuilding business
Construction firm Kier Group has begun the process of selling its housebuilding arm as it seeks to reduce its debts.
In a stock market update posted today, the contractor said it “has received significant interest in Kier Living” and that it has “commenced the sale process for this business”.
Kier did not confirm whether a buyer for the company has yet been found when contacted by Inside Housing.
The construction giant announced plans to sell Kier Living in June, following a strategic review of the business to control rising debts at the company. Before Christmas the company launched a £250m rights issue, which saw their share price plummet by 40%.
The group also revealed today that its net debt at 30 June was £167m, while its average month-end net debt for 2018/19 was £422m. This, it said, is “at the lower end of previous guidance of £420m to £450m”.
The turnover for the year is expected to be £100m lower than the 2017/18 financial year despite “resilient” trading in its infrastructure services and buildings divisions. The company blamed “property and land-led transactions which did not complete in June 2019” for the drop.
The drop in turnover “will have an impact on the group’s profitability broadly in line with its historic gross margins”, according to the market update.
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However, the firm reported cutting the average time taken to pay supply chain partners from 57 days in the first six months of 2018/19 to 41 days in the second half of the year, “while maintaining significant liquidity headroom”.
In a separate update, Kier announced it has hired Simon Kesterton as chief financial officer designate.
Mr Kesterton will take over from Kier’s finance director, Bev Dew, who will stand down immediately when the group publishes its full results for 2018/19 on 19 September.
Mr Dew is expected to remain on garden leave until his notice period ends in May 2020.
Mr Kesterton comes from his role as group finance director at RPC Group, and was previously chief strategic officer and European chief financial officer at IAC Group.
Andrew Davies, chief executive of Kier, said: “Simon has a broad range of finance experience across a number of sectors.
“In particular, he has played a key role in implementing programmes which focus on the disposal of non-core assets, the reduction of overheads and cost control.
“I would like to welcome Simon to Kier and I look forward to working with him.”
Kier Living has a special focus on affordable housing and built 2,042 homes in the financial year 2017/18 and 842 in the six months to 31 December 2018.
It has a number of joint ventures, notably including a 10-year deal with Homes England and Cross Keys Homes to build 5,400 homes. Kier said that all its joint ventures will be transferred to whoever buys the housebuilding business.
Kier is the country’s second-biggest contractor.
