Slide 1: Preliminary Results Presentation
INTEGRATED EXCELLENCE INDIVIDUAL FLAIR RESULTS KIER GROUP PLC 18 September PRELIMIINARY PRESENTATION 2008
Slide 2: Contents
CONTENTS • Group overview and highlights • Financial review • Divisional review • Restructuring • Prospects Kier Group plc preliminary results for the year ended 30 June 2008 2
Slide 3: Group Overview and Highlights
GROUP OVERVIEW AND HIGHLIGHTS • Pre-tax profits before amortisation of intangibles and exceptional items up 12.1% to £89.2m (2007: £79.6m) • EPS before amortisation of intangibles and exceptionals up 10.0% to 174.8p (2007:158.9p) • Full year dividend up 10.0% to 55p (2007: 50p) • £56.6m of cash gene
Slide 4: Twelve-Year Performance
TWELVE-YEAR PERFORMANCE EPS 180 UK GAAP IFRS 160 140 120 100 pence 80 60 PRE-TAX PROFIT 40 100 UK GAAP IFRS 20 90 0 80 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 years 70 60 £m Record shown after deducting 50 amortisation of intangible assets 40 and before exceptional items 30 20 10
Slide 5: Financial Summary
FINANCIAL SUMMARY CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2008 Before Including Change exceptional Exceptional exceptional to pre- items items items exceptional 2008 2008 2008 2007 results £m £m £m £m % Revenue 2,374.2 - 2,374.2 2,127.9 +11.6 Operating profit: Group 82.9 (37.6) 45.3
Slide 6: Financial Summary: Exceptional Items
FINANCIAL SUMMARY EXCEPTIONAL ITEMS £m Profit from the sale of Hairmyres PFI asset 16.2 Homes reorganisation and restructuring costs (9.5) Homes write-downs (26.6) Property write-downs: Group (1.5) Joint ventures (3.2) (24.6) Tax on exceptional items: Group 9.3 Joint ventures 0.9 Exceptional items n
Slide 7: Financial Summary Continued
FINANCIAL SUMMARY CONTINUED YEAR TO 30 JUNE 2008 2007 Change % Dividend per share 55.0p 50.0p +10.0 Dividend cover (based on adjusted earnings per share) 3.2x 3.2x - Adjusted earnings per share excluding exceptional items and amortisation of intangibles: undiluted 174.8p 158.9p +10.0 fully diluted 1
Slide 8: Segmental Analysis: Operating Profit
SEGMENTAL ANALYSIS OPERATING PROFIT YEAR TO 30 JUNE 2008 2007 Change £m £m % Revenue: Construction 1,653.2 1,411.2 +17.1 Support Services 393.7 315.5 +24.8 Homes 242.8 325.1 -25.3 Property 69.6 61.3 +13.5 Infrastructure Investment 14.9 14.8 +0.7 2,374.2 2,127.9 +11.6 Operating Construction 38.3 21.9
Slide 9: Segmental Analysis: Profit Before Tax
SEGMENTAL ANALYSIS PROFIT BEFORE TAX YEAR TO 30 JUNE 2008 2007 Change £m £m % Revenue: Construction 1,653.2 1,411.2 +17.1 Support Services 393.7 315.5 +24.8 Homes 242.8 325.1 -25.3 Property 69.6 61.3 +13.5 Infrastructure Investment 14.9 14.8 +0.7 2,374.2 2,127.9 +11.6 Profit before Construction 59.0
Slide 10: Revenue and Profit Before Tax by Division
SEGMENTAL ANALYSIS REVENUE AND PROFIT BEFORE TAX BY DIVISION (2008) REVENUE PROFIT BEFORE TAX Construction (before exceptional items) Support Services Homes Property PFI 3% 1% 9% 1% 10% 13% 16% 15% 62% 70% Kier Group plc preliminary results for the year ended 30 June 2008 10
Slide 11: Segmental Analysis: Net Operating Assets
SEGMENTAL ANALYSIS NET OPERATING ASSETS AT 30 JUNE 2008 2007 Change £m £m £m Construction (312.5) (277.8) -34.7 Support Services 1.7 (1.4) +3.1 Homes 364.8 295.5 +69.3 Property 47.0 57.4 -10.4 Infrastructure Investment 11.6 10.5 +1.1 Centre (73.4) (49.6) -23.8 39.2 34.6 +4.6 Cash, net of debt 143.9
Slide 12: Balance Sheet Summary
BALANCE SHEET SUMMARY AT 30 JUNE 2008 2007 Change £m £m £m Intangible assets 13.4 13.6 -0.2 Property, plant and equipment 92.2 83.4 +8.8 Investments in joint ventures 39.9 40.7 -0.8 Inventories 516.4 460.1 +56.3 Other working capital (548.0) (511.6) -36.4 Cash 174.1 178.6 -4.5 Long-term borrowings (
Slide 13: Balance Sheet Items
BALANCE SHEET ITEMS AT 30 JUNE 2008 2007 Change £m £m £m Residential land 276.0 273.5 +2.5 Residential WIP 161.7 112.3 +49.4 Commercial land and WIP 24.8 30.2 -5.4 Other WIP 53.9 44.1 +9.8 Inventories 516.4 460.1 +56.3 Land creditors* 56.4 73.5 -17.1 * Includes deferred payments for Hugh Bourn Homes
Slide 14: Pensions
PENSIONS IAS 19 AT 30 JUNE 2008 2007 Change £m £m £m Kier Group Pension Scheme: Market value of assets 538.4 506.7 +31.7 Present value of liabilities (584.1) (537.3) -46.8 Deficit in the scheme (45.7) (30.6) -15.1 Deferred tax asset 12.8 8.7 4.1 Net pension liability (32.9) (21.9) -11.0 Net effect o
Slide 15: Cash Flow Summary
CASH FLOW SUMMARY FOR THE YEAR TO 30 JUNE 2008 £m Opening net funds at 30 June 2007 148.4 Cash inflow before movements in working capital 95.4 Special contributions to pension fund (6.0) Other working capital movements (32.8) Cash inflow from operating activities 56.6 1 Acquisitions (16.5) Proceeds
Slide 16: Group Structure
GROUP STRUCTURE FOR THE YEAR TO 30 JUNE 2008 SUPPORT INFRASTRUCTURE CONSTRUCTION HOMES PROPERTY SERVICES INVESTMENT KIER REGIONAL KIER SUPPORT KIER RESIDENTIAL KIER PROPERTY KIER PROJECT SERVICES INVESTMENT KIER CONSTRUCTION • Kier Ventures • Building Maintenance (100% owned) • Managed Services • Ki
Slide 17: Construction: Key Performance Indicators
CONSTRUCTION KEY PERFORMANCE INDICATORS YEAR TO 30 JUNE 2008 2007 Change % Revenue £1,653.2 £1,411.2m +17.1 Operating margin 2.3% 1.6% - Cash at 30 June £413.7m £361.2m +14.5 Order book £1,700m £1,710m - Kier North West Operating profit £m Operating margin % BDP headquarters 40 2.5 35 • Strong organ
Slide 18: Kier Regional: Key Markets
KIER REGIONAL KEY MARKETS % AWARDS BY SECTOR YEAR TO 30 JUNE 2008 2007 Education Hotels & leisure Public sector awards 51% 45% Commercial Health Private sector awards 49% 55% Residential Custodial 100% 100% Retail Other Negotiated and two-stage bids 80% 64% 4% 7% Competitive tender 20% 36% 100% 100%
Slide 19: Regional: Revenue vs Average Cash
KIER REGIONAL REVENUE VS AVERAGE CASH 2000 TO 2008 1,600 400 1,400 350 1,200 300 Construction revenue £m Average cash £m 1,000 250 800 200 600 150 400 100 200 50 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Revenue Average cash Kier Group plc preliminary results for the year ended 30 June 2008 1
Slide 20: Regional: Markets and Opportunities
KIER REGIONAL MARKETS AND OPPORTUNITIES SECTOR FRAMEWORKS OPPORTUNITIES EDUCATION • Academies framework • Preferred bidder on: • £482m of awards • Primary Capital • Samwall Academy (£18m) Investment • 51% in frameworks • Shropshire One School Pathfinder (£25m) Programme • Wirral One School Pathfinde
Slide 21: Regional: Markets and Opportunities
KIER REGIONAL MARKETS AND OPPORTUNITIES SECTOR FRAMEWORKS OPPORTUNITIES HEALTH • ProCure 21 • Has provided Kier with £326m to date and we continue to bid for new projects typically in the • £112m of awards £3m to £15m range • 86% in frameworks CUSTODIAL • Ministry of Justice • Several custodial proj
Slide 22: Kier Construction: UK Civil Engineering, Mining and Overseas
KIER CONSTRUCTION UK CIVIL ENGINEERING, MINING AND OVERSEAS • UK revenue £133m: • Energy: • South Hook LNG Terminal completed • Langage and Immingham CCGT power stations • West Burton CCGT power station awarded at £95m Kier-Besix South Hook LNG terminal • Waste plant at Wakefield: preferred bidder w
Slide 23: Greenburn Opencast Mine
KIER CONSTRUCTION UK CIVIL ENGINEERING, MINING AND OVERSEAS • Greenburn opencast mine: revenue £25m: • Cumulative production approximately 2.6m tonnes • 2.0m tonnes of deposit left of which 70% forward sold at favourable prices Kier Construction Greenburn mine, Scotland • Life expectancy of mine to
Slide 24: Overseas Operations
KIER CONSTRUCTION UK CIVIL ENGINEERING, MINING AND OVERSEAS • Overseas: revenue £82m: Romania • Caribbean: Liberty Center retail development • Norman Manley Airport, Jamaica • Transportation Centre, Jamaica • Romania: • Housing and retail projects • Middle East: • £150m of new infrastructure and dra
Slide 25: Construction Prospects
CONSTRUCTION CONSTRUCTION PROSPECTS KIER REGIONAL • Unrivalled spread of Regional OFFICE LOCATIONS offices • Low average contract size • Healthy order books for 2009 • Framework agreements and long-term partnerships help to insulate from uncertainty • Good prospects for energy and civils work • Over
Slide 26: Support Services: Key Performance Indicators
KIER SUPPORT SERVICES KEY PERFORMANCE INDICATORS YEAR TO 30 JUNE 2008 £m 2007 £m Change % Revenue 393.7 315.5 +24.8 Operating margin* 4.0% 3.9% - Cash at 30 June 17.4 15.8 +10.1 Order book: Building Maintenance 1,379 1,161 +18.7 Managed Services 543 528 +2.8 Street Services 65 50 +30.0 Building Serv
Slide 27: Support Services: Five Business Streams
KIER SUPPORT SERVICES FIVE BUSINESS STREAMS • Building Maintenance: YEAR TO 30 JUNE Revenue 2008 £m 2007 £m Change % • Local authority and Housing Association maintenance Building Maintenance 288.7 216.4 +33.4 contracts and Decent Homes. Managed Services 51.6 52.1 -1.0 • Managed Services: Building S
Slide 28: Building Maintenance: Secured Forward Revenue
KIER SUPPORT SERVICES BUILDING MAINTENANCE: SECURED FORWARD REVENUE AS AT JUNE 2008 350 300 250 Workload £m 200 150 100 50 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Maintenance Decent Homes Shortlisted Kier Group plc preliminary results for the year ended 30 June 2008 28
Slide 29: Support Services Prospects
KIER SUPPORT SERVICES PROSPECTS • Stoke awarded February 2008: • 20,000 homes • 500 workers transferred • £40m p.a. for 10 years (plus five) • Repairs, maintenance and Decent Homes • Shortlisted on North Tyneside: £40m p.a. for 10 years • Growth opportunities within the building maintenance contract
Slide 30: Residential: Key Performance Indicators
KIER RESIDENTIAL KEY PERFORMANCE INDICATORS YEAR TO 30 JUNE 2008 2007 Change % Revenue £242.8m £325.1m -25.3 Unit sales 1,438 1,767 -18.6 Operating margin* 12.6% 15.0% - Land bank (plots) 6,233 6,465 -3.6 * Before exceptional items Kier Residential The George, Fairfield Park Operating profit £m Oper
Slide 31: Residential Statistics
KIER RESIDENTIAL STATISTICS YEAR TO 30 JUNE 2008 2007 Change % Revenue: housing £242.8m £316.8m -23.4 land sales - £8.3m - Total revenue £242.8m £325.1m -25.3 Unit sales 1,438 1,767 -18.6 Average selling price £168,800 £179,300 -5.9 % of social units 18% 16% - Land bank with planning consent 6,233 6
Slide 32: Homes Prospects
KIER HOMES PROSPECTS CURRENT SITES • Order book 49% fewer units than last year • Significantly fewer sales expected in 2009 • Tight controls over work in progress • Opportunities with affordable housing business • Total Group housing unit sales of 2,161 units of which 46% are social • Long-term mark
Slide 33: Property: Key Performance Indicators
KIER PROPERTY KEY PERFORMANCE INDICATORS YEAR TO 30 JUNE 2008 £m 2007 £m Change % Operating profit:* Kier 9.3 6.9 +34.8 Joint venture 2.7 5.2 -48.1 12.0 12.1 -0.8 Operating margin 17.2% 19.7% - * Before exceptional items Kier Property EDS, Milton Keynes Operating profit £m Operating margin % 25 25 G
Slide 34: Property Highlights
KIER PROPERTY HIGHLIGHTS • Good progress on Supreme Kier Property New HQ facility Court with Wallis as contractor for Yell, Reading • Sale of Milton Keynes development pre-let to Electronic Data Systems: Kier Regional as contractor • Development agreement signed with Invista Real Estate Management t
Slide 35: Property Prospects
KIER PROPERTY PROSPECTS Kier Property • Western International Market Western International Market rejuvenation underway with 175,000sq ft replacement market completed: marketing on adjacent site has commenced • Joint venture formed with Network Rail for seven station-related sites: good Kier Propert
Slide 36: Project Investment: Key Performance Indicators
KIER PROJECT INVESTMENT KEY PERFORMANCE INDICATORS 30 JUNE Kier Project Investment Garrett Anderson Centre, Ipswich 2008 £m 2007 £m Revenue 14.9 14.8 Committed investment 18.4 22.8 Actual investment 14.1 15.5 • Sale of Hairmyres for £13.8m cash Kier Project Investment North Kent Police HQ and £16.2m
Slide 37: Project Investment: Current Projects
KIER PROJECT INVESTMENT CURRENT PROJECTS SECTOR PROJECT STATUS CAPITAL KIER EQUITY/ EQUITY % VALUE £M LOAN STOCK £M Health West Berkshire Hospital Operational 25 1.8 50 Hinchingbrooke Operational 19 1.1 50 Ipswich Hospital Operational 27 1.3 50 Local authority Bournemouth Library Operational 14 0.7
Slide 38: Restructuring from 1 July 2008
RESTRUCTURING FROM 1 JULY 2008 CONSTRUCTION CONSTRUCTION CONSTRUCTION • Kier Regional including Kier Partnership Homes • Kier Regional • Kier Construction • Kier Construction KPH SUPPORT SERVICES SUPPORT SERVICES • Kier Building Maintenance SUPPORT • Kier Building Maintenance • Kier Managed Services
Slide 39: Restructuring
RESTRUCTURING • Brings relevant businesses closer together to respond to clients and share efficiencies • 46% of total Group unit housing sales (2,161 units) for 2008 are social • Allows increased focus on regeneration and affordable housing • Opportunity to optimise existing residential land bank t
Slide 40: Prospects
PROSPECTS • Homes order book at 31 August 49% less than last year – tough market continues • Affordable housing-led regeneration sector will provide good opportunities for the Group • Property deals planned for 2008/2009 • Combined order books for Construction and Support Services at record levels •
Slide 41: Five-Year Record
FIVE-YEAR RECORD YEAR ENDED 30 JUNE IFRS UK GAAP 2008 2007 2006 2005 2004 £m £m £m £m £m Turnover 2,374.2 2,127.9 1,838.3 1,623.2 1,476.5 Operating profit (Group + JVs) 87.3 82.2 63.2 53.3 42.6 Total finance income/(cost) net 0.9 (3.2) (2.7) (4.3) (2.0) Joint venture tax (1.1) (1.4) (1.4) (1.2) - Ot
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