RE: Kier takes on21 Jan 2018 12:56
I bought a few here friday(have held a couple of times before and done ok). I think the news of a bigger slice of existing contracts is broadly positive. This bump up in work has come without really any significant extra time invested. It could almost be seen as akin to an acquisition, as in picking up some of the pipeline, workforce, supply contacts of another company with no cost. However I agree there may be questions over the margins involved, but that's the same in any industry and good management should not bid for work that is uneconomic, there should be some kind of contingency planning. C obviously didn't get this right, but doesn't necessarily mean all are in the same boat.
I also agree that the amount of intangible assets shown in kier's results seem high. I don't understand quite what justifies this number or the rate at which it has grown in recent years(perhaps someone with more knowledge can shed some light, I do wonder is this is perhaps related to as yet unrealised contracted work, but hard to say). Looking at sector peers though, other companies also seem to have big numbers in this type of 'asset'.
What changes will come to the sector due to the failure of C? Probably not much for a while imo, few years at least - but hopefully this'll get any management team cutting it too close on the risks thinking about what(personal) consequences there may be in the future.. ie it's not worth winning a contract at any cost. Mean time there will be marginally less competition and a bit more incentive to look at beefing up margins. Looking at contract wins on the sector recently, kier seems to have been doing reasonably well, so I'd hope/expect to see them keep to the forecasts made in their last update when it come to results this year. Margins may be tight working for govs but at least earnings should be fairly assured, time will tell how well K has managed the balance.
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