Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
https://www.constructionenquirer.com/2020/09/07/ex-kier-chief-takes-chairman-role-at-rooftop-developer/
Thought some of you might be interested in this.
https://www.constructionenquirer.com/2020/09/08/kier-wins-30m-semiconductor-research-hub/
The reason I post this is because it is not a Framework project (from what I can see) & it is also in the ideal price range for a company like Kier. Looks like it was negotiated or a 2-stage tender process so hopefully all the risk has been identified & allowed for. Lets see more like this please.
I can understand your thoughts & an Interserve scenario is the big elephant in the room which we all hope does not happen.
Is there anyway this can be prevented?
As for increased costs on contracts over 6 months, any contract sum will always have an element of Fixed Price included for all constituent parts of the price. From staff wages, to plant to materials to their Supply Chain. The Fixed Price is a sum added to the cost to allow for future price increases. This is not why margins are squeezed.
Good afternoon everyone, Kier is a big group as we all know. Made up principally of Construction (Building), Infrastructure/Services & Residential/Property. The groups total revenue, at their last set of full year accounts was £4,494 m. Of this Construction made up 42% or £1,883 m.
The majority of the awards posted on this site are construction wins & often civils projects which would be under Infrastructure. To maintain a turn over of £1,883 m they need to secure approx £38 m each week. Most works won by Kier these days as well as their competitors is on frameworks. I would be more interested to hear of new framework wins or extensions to existing frameworks which would have a steady flow of work. The odd project won outside a framework is more risky in todays climate as other smaller contractors will race to the bottom just to secure turnover. Infrastructure & Services contracts are often much larger & also over a much longer time period. Their average construction project size is probably somewhere around £10-15m with a duration of 50-60 wks.
Residential revenue will depend on the market & the number of properties they have ready.
When the price was this low a while ago there was a lot of talk about shorters forcing the price down or even forcing the company to go bust. Is there any evidence these unscrupulous people are circling again? Yes the company seem stronger, decent order book etc is this why Kier are no longer a target?
https://www.constructionenquirer.com/2020/07/23/kier-secures-13-school-projects-worth-170m/
https://www.constructionenquirer.com/2020/06/16/37bn-of-work-due-out-for-bid-by-april-2021/
Even with a modest strike rate, Kier should pick up a chunk of this.
I've said it on here many times. Construction generates the cash with positive valuations for the housing division to use cheaply to build the houses & make the profit. It has been the Kier model for years & they are good at it. Then along came the other divisions & it all went pear shaped. Especially when the cash dries up from loss making contracts.
In construction you generally get paid on a rolling month based on what you achieve. But house builders do not get paid until you hand over the keys. So unless you have a cash positive construction arm you have to borrow the money to build the houses until the revenue comes in when you complete them. This would include the land costs too.
Keep KL, most profitable part of the group.
Hi Caino, it will depend on many factors, type of project, type of contract, future pipeline with Customer, single stage or two stage, their current workload, slippage on other projects, & finally it will even vary around the different regions. Each regional office will have to deliver a pre-set margin back to the mother ship as well as their own regional overhead.
Anything over & above this gets lost in the accounts for years (in the good times)
These new contracts will not bear fruit possibly until long after completion & i very much doubt they have entered into any contract at a loss. Construction companies are experts at generating cash early on contracts, in better times the cash held in their accounts made up a tidy portion of the annual profit (interest earned). As for infrastructure - Kier too are a major player in this sector too, not the biggest but certainly a player.
https://www.constructionenquirer.com/2020/05/20/kier-wins-22m-edinburgh-school-of-engineering/
This is the size of project that Kier & their peers are after.
https://www.placenorthwest.co.uk/news/kier-names-manchester-as-official-office/
https://www.constructionenquirer.com/2020/04/15/hs2-signs-off-four-main-civils-contracts-worth-12bn/
https://www.constructionenquirer.com/2020/04/09/kier-secures-second-nightingale-hospital/
I too have long been a believer that KL should stay within the group. Approximately 3 years of KL margin equals the muted sale price - why sell. For years the construction arm generated the cash up front & early (not margin) for the housing arm to build with, they make the tidy margins. If a housing arm needs to finance a development they would need to borrow from someone, what better than to borrow from within your own group. This is how KG had been operating for years and the SP even reached £25.
Do you think they actually want to sell Kier Living? Yes they did make the announcement but its dragged out a long while since then. Why not keep the city dangling then eventually say - no buyer found for the right price, so we're keeping it. Why not, it makes money, how can any private house builder not make money in the south? They talk about returning to their core services, well Bellwinch , Twigden, Allison Homes etc were all consumed into the Kier Living brand. These have been in Kier since the early days of the MBO from Hanson. Surely these are their core services.
Construction (which is doing ok) generates the cash for House building to build houses with - simples. The serious profit is in housing, just look at the results of the major players Redrow / Persimmon etc for example.
If they are only expecting circa £150m for Living, it would generate this in profit inside two years. The news today, house completions for the year top 200,000; highest since the 1980's. Someone is building houses.