Slide 1: Results for the 12 months ended 30 June 2021
Kier Group Results for the 12 months ended 30 June 2021 16 September 2021
Slide 2: Disclaimer
Disclaimer No representation or warranty, express or implied, is made or given by or on behalf of Kier Group plc (the “Company” and, together with its subsidiaries and subsidiary undertakings, the “Group”) or any of its directors or any other person as to the accuracy, completeness or fairness of th
Slide 3: Results Summary
Results Summary Andrew Davies, CEO
Slide 4: Group FY21 highlights
Group FY21 highlights 2019 strategic actions delivered Simplification of Group complete Gross proceeds of c.£350m through successful capital raise and divestment of Kier Living Extension of 2017 RCF to January 2025 Launched Sustainability Framework, Building for a Sustainable World Strong op
Slide 5: Infrastructure – UK Government Spending Commitments
Infrastructure – UK Government Spending Commitments (1) National Infrastructure Strategy- commitment to spend £650bn over next 5 years Infrastructure Highways Utilities Infrastructure Net Zero infrastructure Road Investment Strategy 2: Water England/ Wales AMP7 £37bn - 53bn forecast cost UK
Slide 6: Construction – UK Government Spending Commitments
Construction – UK Government Spending Commitments Spending focused on schools, hospitals, prisons and defence Construction Education Health Justice Defence Commercial 10 year School Re- £1.5bn additional 18,000 new prison c.£8bn 10-year capital Increase in refurbishment building Programme
Slide 7: Attractive Positions in Growing Markets
Attractive Positions in Growing Markets Infrastructure Services Highways Utilities Infrastructure Market leading position (#1 strategic Top 3 contractor in water and energy sectors Delivers complex high value civil engineering highways and top 3 local highways) projects for customers across ke
Slide 8: Attractive Positions in Growing Markets
Attractive Positions in Growing Markets (1) Construction Property Leading UK national builder A leading developer in the commercial occupier space Project delivery for public and private sectors Strategic Supplier to the Department for Education, Mixed sector property development focused o
Slide 9: Group Strategic Framework
Group Strategic Framework Refreshed strategy underpins the implementation of the Medium Term Value Creation Plan Purpose: To sustainably deliver infrastructure which is vital to the UK Vision: Be the UK leading infrastructure services and construction company Strategy: Focus on government, regulated
Slide 10: Summary Medium Term Targets
Summary Medium Term Targets Medium term targets provide clear visibility over longer-term direction of Group Organic annual revenue c.£4.0bn - £4.5 bn Adjusted operating margin c.3.5% (1) Cashflow conversion of operating profit c.90% Medium Term Value Creation Plan Balance sheet: sustainable net cas
Slide 11: FY21 Results
FY21 Results Simon Kesterton, CFO
Slide 12: Income Statement – Continuing Operations
Income Statement – Continuing Operations Delivery of strategic actions and operational performance driving improved results £’m FY21 % FY20 % Δ Slight revenue reduction reflects simplification of Group, motorway Revenue 3,329 3,476 (4.2)% upgrade completions, COVID-19 Adjusted Operating Profit (1)
Slide 13: Revenue Performance – Continuing Operations
Revenue Performance – Continuing Operations Revenue impacted by simplification of Group, completion of contracts and COVID-19 offset by growth in core businesses (4.2)% Revenue decline of 4.2% in FY21 Construction – exit of low margin or loss making non-core businesses and COVID-19 procurement d
Slide 14: Adjusted Operating Profit – Continuing Operations
Adjusted Operating Profit – Continuing Operations Margin increase underpinned by improved quality of earnings Adjusted operating profit of £100m, 3% margin Increase against prior year: Volume/ price/ mix Cost inflation Management actions Wages and salaries COVID-19 direct costs 14
Slide 15: Adjusting Items – Continuing Operations
Adjusting Items – Continuing Operations Adjusting items significantly reduced as 2019 strategic actions delivered £’m FY21 FY20 Restructuring costs in regional building Previous acquisition costs - 5.0 business, employee exit costs as well as Business divestment related expenditure 0.5 33.6 equity
Slide 16: Free Cash Flow – Continuing Operations
Free Cash Flow – Continuing Operations Profits translating to cash £’m FY21 FY20 Significant increase in operating cash flow conversion Adjusted EBITDA (1) (4) 150.3 161.1 Working capital (1) 63.5 (43.7) Working capital: (1) Net capex (Including IFRS16 leases) (47.0) (47.4) Reflects c. £50m be
Slide 17: Net Debt Movement
Net Debt Movement Capital raise, sale of Kier Living and underlying free cash generation leading to year end net cash position Notes: (1) Adjusting items excludes £17.5m of fees and £1.2m SDLT relating to Living divestment and equity raise (2) Pension payments excludes £10m additional payment relati
Slide 18: Financing and Liquidity
Financing and Liquidity Significant liquidity headroom under borrowing facilities Maturities KPIs Jun 2021 600 Net cash (£m) 3 500 £m Average month-end net debt (£m) (432) 400 300 Average month-end net debt 200 Receipts from capital raise and sale of Kier Living received in final months of FY21 10
Slide 19: Strong Order Book
Strong Order Book Order book underpinned by long-term framework positions Order book at £7.7bn (FY20: £7.9bn) 83% of FY22 revenue secured Secured revenue 3,500 De-risked contracts: 3,000 52% of order book is under target cost or cost reimbursable contracts 2,500 Construction - regional bui
Slide 20: Operational Update
Operational Update Andrew Davies, CEO
Slide 21: Infrastructure Services
Infrastructure Services Highways, Utilities and Infrastructure businesses positioned for work winning and delivery £’m FY21 FY20 Δ Commercial & Operational Update Revenue 1,422 1,506 (5.6)% Appointed by HS2 to deliver major programme of Adjusted Operating Profit 65.3 31.3 108.6% highway and utilit
Slide 22: Construction
Construction Reorganised profitable business well placed to benefit from UK Government opportunities £’m FY21 FY20 Δ Awarded places on frameworks worth up to Revenue 1,769 1,835 (3.6)% £11.5bn Adjusted Operating Profit 56.7 43.6 30.0% Significant awards in the new year (not included in Operating
Slide 23: Property
Property Disciplined growth with capital allocation £’m FY21 FY20 Δ Revenue 134 124 8.1% Adjusted Operating Profit 5.7 (3.2) +278% Operating margin 4.3% (2.6)% 690 bps Capital employed 135 145 (6.9%) Financial Performance A core business Measured capital allocation in-line with strategy Synerg
Slide 24: Sustainability Framework
Sustainability Framework Andrew Davies, CEO
Slide 25: Sustainability
Sustainability Launched sustainability framework, Building for a Sustainable World Key focus areas include: Resilient environment – pollution prevention, 1 sustainable procurement, net zero carbon, zero avoidable waste and biosphere protection Resilient community – building for tomorrow, diversity a
Slide 26: Environmental
Environmental Targeting 65% reduction in Scope 1 & 2 emissions over the next decade FY21 Progress Carbon – reduction in carbon intensity of 27% between FY20 and FY21 and 24% from FY19 baseline Waste – 22% year over year reduction in the volume of non-hazardous construction waste from 6.2 m3/£100
Slide 27: Social
Social Committed to addressing social issues and creating social value FY21 Progress Social value – generating £233m of social value through supporting initiatives Safety – 12-month AIR (105) and 12-month AAIR (332). Year over year increase of c.21% and c.9%, respectively. Disappointing but stro
Slide 28: Governance
Governance Visibility and widened accountability through operating and risk management frameworks Operating framework Risk management framework Group Strategic Framework The Group The Board The Executive Committee Organisational Structure D- Core Business Group B- Corporate C- Operating A- General G
Slide 29: Investment Proposition
Investment Proposition 1 Value accretive earnings-led business model. Aligned to UK Government’s investment priorities 2 Attractive market positions focused on UK infrastructure and construction markets 3 Strong order book underpinned by long-term contracts and framework agreements 4 Experienced man
Slide 30: Summary and Outlook
Summary and Outlook 1 Materially improved results following successful completion of 2019 strategic actions 2 Balance sheet strengthened through successful capital raise and sale of Kier Living Current trading in line with expectations despite inflationary pressures and increased national 3 insuranc
Slide 31: FY22 Capital Markets Event
FY22 Capital Markets Event Details to follow Building sustainable infrastructure which is vital to the UK Value - Attractive accretive market earnings-led positions business model
Slide 32: Q&A
Q&A
Slide 33: Appendix
Appendix
Slide 34: Management Team
Management Team Executive Board Members Corporate Functions Andrew Simon Alpna Amar Stuart Togwell Helen Redfern Sophie Timms Davies Kesterton Corporate Group Group Corporate Affairs Chief Executive Chief Financial Development Commercial HR Director Director Officer Officer Director Director Group M
Slide 35: Strategic Actions
Strategic Actions Successful disposal of Kier Living completed on 28 May 2021 Identified as non-core as limited operational synergies Significant capital requirements to grow business Disposal completed on 28 May 2021 Classified as discontinued operations £m Gross Proceeds £121m Transaction
Slide 36: Modern Methods of Construction (MMC)
Modern Methods of Construction (MMC) Cost, timing and social benefits of innovation Project: NHS Golden Jubilee Hospital Phase 2 April 2021 Support existing hospital to provide 9,400 new outpatient consultations, 4,400 pre-operative assessments 13,900 other procedures. Completion 2023 MMC capa
Slide 37: Pension
Pension Revised schedule of pension payments agreed £’m 30 Jun 2021 30 Jun 2020 Δ As at 30 June 2021, Group’s pension schemes’ surplus was £46.2m (June 20: £38.8m) Group Pension Schemes Market value of assets 1,909.9 1,937.9 (28.0) Additional payment of £10m re: sale of Kier Living Present value
Slide 38: Group Revenue Analysis
Group Revenue Analysis 22% 6% 5% 7% 2%1% 13% 5% 24% 11% 1% Total 3% 51% 13% 12% 17% 5% 2% Infrastructure Services 25% 10% 45% 20% Construction 22% 28% 33% 17% Property Highways Rail Power Water Telecoms Other Education Health Government Private Alternatives Mixed Use Office Industrial 38
Slide 39: Segmental Revenue Analysis
Segmental Revenue Analysis Infrastructure Services 51% 13% 12% 17% 5% 1% Total 100% Highways 13% 51% 12% 19% 5% Infrastructure 6% 33% 45% 16% Utilities Highways Rail Power Water Telecoms Other Construction Total 25% 10% 45% 20% Regional Build 33% 11% 37% 19% Kier Places 5% 4% 76% 15% Strategic Proje