Slide 1: Results for the year ended 30 June 2024
Kier Group plc Results for the year ended 30 June 2024 12 September 2024
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: FY24 Highlights
FY24 Highlights Significant operational and financial progress over the last three years Revenue growth and improved profitability driving material deleveraging High quality order book, increased 7% to £10.8bn (FY23: £10.1bn) providing significant visibility over FY25 and beyond Successful a
Slide 5: Medium-Term Plan Update
Medium-Term Plan Update Evolution of medium-term plan into long term sustainable growth plan Medium-term value creation plan expectations FY24 Delivered Long-term sustainable growth plan Revenue Revenue c.£4.0bn - £4.5 bn £4bn Revenue GDP+ growth through the cycle Adjusted EBIT margin Adjusted ope
Slide 6: FY24 Results
FY24 Results Simon Kesterton, CFO
Slide 7: Financial Highlights
Financial Highlights Strong increase in revenue growth of 17%; achievement of £4bn medium term revenue target Significant volume growth across the Group £’m FY24 % FY23 % Δ Revenue 3,969.4 3,405.4 16.6% Strong adjusted operating profit of £150.2m Adjusted Operating Profit 150.2 3.8 131.5 3.9 14.
Slide 8: Revenue Performance
Revenue Performance Significant growth in Infrastructure Services and Construction 17% Revenue increase of 17% in FY24 Infrastructure – benefiting from HS2 volumes and Buckingham rail acquisition Construction – strong order book converting to revenue Continued bidding discipline and risk man
Slide 9: Adjusted Operating Profit
Adjusted Operating Profit Profit increasing on growing volumes Adjusted operating profit of £150.2m, 3.8% margin AOP benefits from: Increased volumes Management actions Offset by: Cost Inflation Property FY24 Results Presentation, 12 September 2024 9
Slide 10: Adjusting Items (excl. amortisation)
Adjusting Items (excl. amortisation) Restructuring activities complete £’m FY24 FY23 Adjusting items Fire / cladding costs 15.0 12.6 Property-related items 7.2 (1.1) Recycle of foreign exchange (5.9) - Fire and cladding compliance costs Refinancing fees 4.5 - of £15m relate to updated Insurance-re
Slide 11: High Quality Order Book
High Quality Order Book Order book of £10.8bn underpinned by long-term framework positions Order book at £10.8bn (FY23: £10.1bn) Secured revenue c.90% of FY25 revenue secured 5,000 De-risked contracts: 4,500 c.60% of order book is under target cost or cost reimbursable 4,000 contracts 3,500
Slide 12: Free Cash Flow
Free Cash Flow Strong free cash flow generation with positive working capital inflow £’m FY24 FY23 Adjusted operating cash flow conversion of Adjusted EBITDA 208.1 196.0 145% Working capital inflow 68.4 80.3 Working capital inflow of £68m driven by Net capital expenditure including finance lease
Slide 13: Net Cash Movement
Net Cash Movement Significant free cash flow generation of £186m and year-end net cash position of £167m FY24 Results Presentation, 12 September 2024 13
Slide 14: Average Month-End Net Debt
Average Month-End Net Debt Near-term pathway to sustainable average month-end net cash position £582m FY21 to FY24 significant reduction in average month- end net debt FY24 average month-end net debt materially reduced to £116m FY25 – expected improvement with free cash flow Average debt YoY £
Slide 15: Financing and Liquidity
Financing and Liquidity Long-term debt facilities: RCF to March 2027 and Senior Notes maturing February 2029 Committed debt facilities at 30 June 2024 of c.£548m 300 Maturities by calendar year Refinancing completed in February 2024 250 Debt structure in place: 200 £m £250m Senior Loan Notes
Slide 16: Capital Allocation
Capital Allocation Delivering enhanced shareholder returns with organic growth, property investment and acquisitions Current capital allocation Evolved capital allocation FY25+ 1 Capex Investment to support the business Investment to support the business Further deleveraging. Targeting a Further del
Slide 17: Dividend
Dividend Material deleveraging allows the declaration of a proposed 3.48p final dividend Significant improvement in balance sheet net cash Continued growth in the order book and future business prospects Declared dividend represents a dividend cover of 4x as we progressively move to the medium
Slide 18: Operational Update
Operational Update Andrew Davies, CEO
Slide 19: Infrastructure Services
Infrastructure Services Adjusted operating profit growth of 41% to £112m Commercial & Operational Update Order book increase of 10.3% to £6.4bn, significant awards: £’m FY24 FY23 Δ Revenue 1,988 1,712 16.1% Transportation– appointed on a two-year interim extension to deliver maintenance and repa
Slide 20: Water Operations
Water Operations Significant opportunities through AMP 8 investment cycle AMP 8 investment cycle currently under way; draft determination of £88bn Capital delivery programme driven by ageing asset base, environmental regulations and extending asset life One of the largest Tier 1 players in UK
Slide 21: Construction
Construction Commercial & Operational Update Revenue growth of 17% with order book conversion Significant awards: £’m FY24 FY23 Δ Defence – appointed by the Defence Infrastructure Revenue 1,908 1,653 15.4% Organisation (‘DIO’) on a six-year alliance to create 16,000 bed spaces for the Armed Forc
Slide 22: Property
Property Results impacted by difficult market conditions; significant opportunities for future growth available £’m FY24 FY23 Δ Commercial & Operational Update Revenue 71 38 89.0% Activity: Adjusted Operating Profit 6.2 12.8 (51.8)% Disposed of a 423 bed student accommodation asset in Southampto
Slide 23: Property – Overview
Property – Overview Mixed-use commercial and residential property development delivered through joint ventures Market Trends Mixed-use Industrial & Last Sector Focus Sustainable Offices Residential Mile Logistics Climate change & carbon reduction Population growth & affordable housing need South / S
Slide 24: Property – Value Creation Model
Property – Value Creation Model Unlocking UK Public land and investing through public and private partnerships Acquire / control Obtain planning Secure owner / Build Sell investment land permission occupier Source suitable land Secure planning Build and manage Secure occupier Handover to t
Slide 25: Property – Group Synergies and Key Relationships
Property – Group Synergies and Key Relationships Group synergies and established relationships provide a competitive advantage Group synergies Relationships Established relationships with land owners and Local Authorities Group Business Group Business Model Model Key for sourcing projects Commer
Slide 26: Sustainability
Sustainability Andrew Davies, CEO
Slide 27: Sustainability Framework
Sustainability Framework Building for a Sustainable World Key focus areas: Our People – we will build a workforce with the necessary skills and capabilities whilst ensuring fair and equal treatment for our entire workforce Our Places – we aim to leave a positive legacy in the communities we work in
Slide 28: Environmental
Environmental Further progress made on carbon and waste reduction during FY24 Carbon Waste Carbon – reduction in scope 1 & 2 • Waste – 2% year over year reduction carbon 9% in 2024 in the volume of waste from FY23 to FY24 reduction in scope 3 carbon by 13% in 2024. Continuing to Construction w
Slide 29: Social
Social Progress made on social commitments in FY24 Safety Apprenticeships SME Spend Supply Payment Days Safety – 12-month AIR Apprenticeships – 666 Small and Medium Supplier payments 155 an increase of 76% apprentice participants, Enterprise (“SME”) days – payment days of on FY23 6.5% of wor
Slide 30: Summary and Outlook
Summary and Outlook 1 Outperformed medium-term margin target 2 Order book of £10.8bn providing multi-year revenue visibility 3 FY25 started well and trading in line with expectations. 4 Focused on delivering the long term sustainable growth plan FY24 Results Presentation, 12 September 2024 30
Slide 31: Q&A
Q&A
Slide 32: Appendix
Appendix
Slide 33: Key Investment Proposition
Key Investment Proposition Creating value for the long-term sustainable growth plan Value accretive Attractive market Strong order book Experienced earnings-led business positions focused on underpinned by long- management team. model. Aligned to UK UK infrastructure and term contracts and Proven tr
Slide 34: Our businesses
Our businesses Client aligned Kier businesses focussed on core markets and clients Infrastructure Services * Property 1 3 4Construction 5 Property Urban Infrastructure Highways Construction Regeneration and Projects Transportation Natural Resources, Property Nuclear & Networks Development Regional B
Slide 35: Kier's Journey
Kier’s Journey Rationalised, recapitalised and growing business. Focused on accelerating growth and returns 2019 2020 2021 2022 2023 2024 2025 + through the cycle April 2019 March 2020 May 2021 2022 - 2023 March 2024 2025 + New CEO, New senior Refinancing package Delivering against medium-term value
Slide 36: Kier's Strategic Framework
Kier’s Strategic Framework Strategic priorities PURPOSE To sustainably deliver infrastructure which is vital to the UK VISION To be the UK’s leading infrastructure services and construction company GROUP STRATEGY Focuson Focus ongovernment, government, Operate in business Contracting through Contrac
Slide 37: Long-Term Sustainable Growth Plan
Long-Term Sustainable Growth Plan Long-term targets to drive shareholder value 3 4 Revenue - GDP + through the cycle Adjusted operating margin 3.5% + Transportation Natural Construction Property Cashflow conversion of operating profit c.90% Resources, Nuclear & Networks Balance sheet: averag
Slide 38: Market Drivers
Market Drivers Positive market environment underpinning UK Government spending commitments Population Economic Congested Addressing Climate growth growth transport geographic change imbalance Population expansion UK economic Congested roads, Increased spending Energy supply with people liv
Slide 39: UK Government Spending Commitments
UK Government Spending Commitments 10 year UK national infrastructure spending commitments Infrastructure Services Natural Resources, Transportation Net Zero infrastructure Nuclear & Networks Road Investment Strategy 2: £27bn Water England/Wales AMP8 £88bn by UK leading net-zero pledge investm
Slide 40: UK Government Spending Commitments continued
UK Government Spending Commitments continued Kier’s core competencies aligned with UK infrastructure needs Construction Property Education Healthcare Justice & Borders Defence Kier Places Urban Regeneration 500 DfE school Spending to address 14,000 new prison £5.1bn Defence Estate Retrofit
Slide 41: Frameworks – Route to Market
Frameworks – Route to Market Maintaining and growing central and local framework positions Awarded places on long-term frameworks and contracts worth up to £144bn (total advertised values) Driving long-term revenue streams, barriers to entry and strengthened customer relationships, underpinning
Slide 42: Pension
Pension Net pension scheme asset of £81m £’m Jun 24 Jun 23 Δ As at 30 June 2024, Group’s pension scheme Group Pension Schemes asset was £81m Market value of assets 1,218.6 1,247.7 (29.1) Present value of liabilities (1,138.1) (1,143.2) 5.1 Triennial valuation for funding the defined benefit sche
Slide 43: Group Revenue Analysis
Group Revenue Analysis Total 15% 18% 4% 10% 1%2% 12% 7% 21% 7% Infrastructure 30% 36% 8% 21% 3% 3% Services 3% Construction 24% 15% 45% 15% Property 60% 18% 8% 14% Highways Rail Power Water Telecoms Other Education Health Government Private Alternatives Mixed Use Office Industrial FY24 Results Prese
Slide 44: Segmental Revenue Analysis
Segmental Revenue Analysis Infrastructure Services Total 30% 36% 8% 21% 3% 3% Transportation 45% 54% 1% Natural Resources, 23% 61% 8% 8% Nuclear & Networks Highways Rail Power Water Telecoms Other Highways Rail Power Water Telecoms Other Construction FY24 Results Presentation, 12 September 2024 44