© Provided by This Is MoneyMailOnline logo
Construction firm Kier Group has announced a proposed equity raise to help bolster its balance sheet and pay down its debts as it declared it ended 2020 with an £8billion order book.
The company said it hopes to obtain between £190million and £240million from the share sale, which will go towards paying down debts and growing its organic annual revenues to around £4billion to £4.5billion.
Should the Manchester-based firm conduct have a successful equity raise, which is due to happen in the coming weeks, it stated that lenders will extend its revolving credit facility to 2025.
© Provided by This Is MoneyKier's infrastructure services arm, which includes roadbuilding and utilities, recorded a £110million drop in revenues due partly to the finishing of numerous motorways projects
Kier declared the measure as it revealed operating profits climbed to £28.8million for the last six months of 2020 from a loss of £24.4million the previous year in spite of a weaker construction market.
Its largest division - construction - saw revenues fall by 9 per cent to £903million due to restrictions arising from the coronavirus pandemic and the significant departure from its environmental services business.
But its infrastructure services arm, which concentrates on roads and utilities, recorded a £110million drop in revenues because of the termination of a local authority contract and the finishing of numerous motorways projects.
However, the division's order book at the end of last year was up to £4.6billion as it gained an extension to a significant roads contract in Northamptonshire, while Kier's overall order book stood at £8billion.
Video: Next Leg of Bank Rally Needs to Be Revenue Growth: KBW CEO (Bloomberg)
Next Leg of Bank Rally Needs to Be Revenue Growth: KBW CEO
![UP NEXT]()
UP NEXT
Since then, it has won several contracts, including an eight-year deal with Transport for London (TfL) worth about £200million for new tunnels and pumping stations to help relieve congestion and road danger on the capital's transport network.
It added that it was 'well placed to benefit' from the £5billion in capital investment projects brought forward by the government last year as part of its strategy for a post-Covid economic recovery.
© Provided by This Is MoneyGoing underground: Since the start of 2021, Kier has won several contracts, including an eight-year c.£200m deal with Transport for London for new tunnels and pumping stations
Among the measures the government announced included £1.5billion for hospital maintenance, £760million towards repairs for school and further education colleges, and £142million to upgrade around 100 British courts.
Kier additionally hopes to gain from the public £1bn Building Safety Fund dedicated to removing dangerous cladding from high-rise buildings over 18 metres tall and the recently scrapped £2billion Green Homes Grant.
The firm's results come a few days after it confirmed the £110million sale of its housebuilding division Kier Living to a newly created company controlled by private equity magnate Guy Hands.
© Provided by This Is MoneyBuyout: Private equity magnate Guy Hands bought Kier Living for £110million last week
Kier Living posted an £84million loss in the last financial year and its sale formed part of its turnaround plan to lower its debt burden, which has already seen its dividend suspended for two years and jobs and offices cut.
'With the announcement of the sale of Kier Living on 16 April, we have achieved many of the milestones required to improve cash generation and reduce net debt,' remarked chief executive Andrew Davies.
He added: 'The proposed equity raise...will further strengthen the group's balance sheet by reducing net debt and will facilitate investment in the business to help drive sustainable, profitable organic growth and the achievement of our medium-term financial targets.
'The second half of the year has started well, seeing a continuation of the positive trends of the first half, and we are confident of achieving further progress this year in line with our expectations.'
Shares in Kier Group were down 2.9 per cent to 91.6p at midday today.