Slide 1: Results for the year ended 30 June 2022
Kier Group plc Results for the year ended 30 June 2022 15 September 2022
Slide 2: 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 the informati
Slide 3: Results Summary
Results Summary Andrew Davies, CEO
Slide 4: Strong financial performance despite ongoing inflationary pressures
▪ Strong financial performance despite ongoing inflationary pressures o Adjusted operating profit increased by 20% at £121m (FY21: £100m) o Industry leading margin at 3.7%, against medium-term target of c.3.5% o Free Cash Flow conversion of 90% following reversal of H1 working capital unwind o Net c
Slide 5: FY22 Results
FY22 Results Simon Kesterton, CFO
Slide 6: Ahead of medium-term plan margin target despite flat revenue
Ahead of medium-term plan margin target of 3.5% despite flat revenue £’m FY22 % FY21 % Δ ▪ Flat revenue with higher volumes in Revenue 3,257 3,329 (2.2%) Infrastructure Services offset by Adjusted operating profit 120.5 3.7 100.3 3.0 20.1% anticipated volume decline in Construction Net finance costs
Slide 7: Revenue decline of 2.2% in FY22
Higher activity in Infrastructure Services offset by lower volumes in Construction (2.2)% ▪ Revenue decline of 2.2% in FY22 ▪ Infrastructure – ramp up of capital works on HS2 ▪ Construction – anticipated lower volume from procurement delays driven by cost inflation ▪ Continued bidding discipline and
Slide 8: Adjusted Operating Profit
Adjusted Operating Profit Margin increase underpinned by Property and cost management ▪ Adjusted operating profit of £120.5m, 3.7% margin ▪ Increase against prior year: ▪ Property activity ▪ Management actions ▪ Volume / price / mix ▪ Decrease against prior year: ▪ Cost Inflation FY22 Results Presen
Slide 9: Cash adjusting items largely relate to restructuring of Construction
Cash adjusting items largely relate to the restructuring of Construction which is now complete £’m FY22 FY21 ▪ Restructuring costs include the fully accrued cost related to the regional restructuring of Business divestment related expenditure – 0.5 the Construction business Restructuring and related
Slide 10: Free cash generation with positive working capital inflow
Free cash generation with positive working capital inflow and reduction in KEPS £’m FY22 FY21 ▪ Operating adjusted cash flow conversion of 90% Adjusted EBITDA 165.4 150.3 Working capital 3.7 109.9 ▪ Working capital inflow: Net capex (including IFRS16 leases) (46.5) (47.0) ▪ Lower than FY21 due to Co
Slide 11: Net cash position maintained and average net debt reduced to £216m
Net cash position maintained and average month-end net debt significantly reduced to £216m (1) FY22 Results Presentation, 15 September 2022 11 Note: (1) Other includes purchase of own shares, FX movements and net JV investments
Slide 12: Progress towards sustainable net cash position
Progress towards our medium term plan and achieving a sustainable net cash position £582m ▪ FY22 - significant reduction in debt and debt-like items due to capital raise, sale of Kier Living and free cash flow generation ▪ Average month-end net debt of £(216)m ▪ Remaining HMRC Covid-19 debt repaid a
Slide 13: Facilities maturing in January 2025
Facilities maturing in January 2025 ▪ Committed debt facilities of £654m 600 Maturities ▪ Legacy facilities undergone a number of amendments and 500 extensions in recent years 400 ▪ Facilities maturing in FY23 £m 300 ▪ RCF and USPP Notes of £73m 200 ▪ Schuldschein Notes £8m 100 ▪ Majority of facilit
Slide 14: Significantly increased order book underpinned by long-term frameworks
Significantly increased order book underpinned by long-term framework positions ▪ Order book at £9.8bn (FY21: £7.7bn) Secured revenue ▪ 85% of FY23 revenue secured ▪ De-risked contracts: 4,500 4,000 ▪ c.60% of order book is under target cost or cost reimbursable contracts 3,500 ▪ Construction - regi
Slide 15: Capital allocation priorities aligned with strategic objectives
Capital allocation priorities aligned with strategic objectives ▪ Sources and uses of cash Sources of Cash Uses of Cash ▪ Free cash flow generation over medium-term ▪ Capex - investment to support business Cumulative Adjusted Free Cash Flow £’m ▪ Property - disciplined investment in Property busines
Slide 16: Operational Update
Operational Update Andrew Davies, CEO
Slide 17: Infrastructure Services: revenue growth of 17%
Revenue growth of 17%. Significant orders won by Highways, Infrastructure Projects and Utilities Commercial & Operational Update £’m FY22 FY21 Δ ▪ Significant wins across all 3 businesses – order book Revenue 1,667 1,422 17.2% increased by £1.2bn Adjusted Operating Profit 70.0 65.3 7.2% ▪ Highways –
Slide 18: Construction: overhead savings deliver profit growth
Overhead savings deliver adjusted operating profit growth £’m FY22 FY21 Δ ▪ Secured places on Frameworks with values up to £108bn – order book increased by £0.9bn Revenue 1,441 1,769 (18.5%) Adjusted Operating Profit 60.8 56.7 7.2% ▪ Significant awards: ▪ Design and construction of HMP Full Sutton O
Slide 19: Property delivering high returns with disciplined capital allocation
Property delivering high returns with disciplined capital allocation £’m FY22 FY21 Δ ▪ Announced an £80m equity residential joint venture with Housing Growth Partnership to Revenue 144 134 8.0% develop urban brownfield sites Adjusted Operating Profit 17.6 5.7 208.8% ▪ Selected as joint venture partn
Slide 20: Sustainability
Sustainability Andrew Davies, CEO
Slide 21: Building for a Sustainable World
Building for a Sustainable World Reminder of key focus areas: Environment – pollution prevention, sustainable 1 procurement, net zero carbon, zero avoidable waste and biosphere protection Social – building for tomorrow, diversity and inclusion, our social value and purpose, 2 employee wellbeing and
Slide 22: Environmental
Environmental Progress made on carbon, waste and water reduction in FY22 Carbon Waste Water (1) ✓ Carbon – reduction in carbon ✓ Waste – 29% year over year ✓ Biosphere protection reduction in the volume of non- intensity of 31% between FY21 and FY22 hazardous construction waste from ▪ Water – 67% ye
Slide 23: Social
Social Progress made on social commitments in FY22 Social Value Safety Supply Payment Days Employees ✓ Social value – £296m of ✓ Safety – 12-month AIR ✓ Supplier payments ✓ Apprenticeships – 591 social value creation in (115) an increase of 9% days – year over year apprentices participants, FY22 on
Slide 24: Summary and outlook
1 Outperformed medium-term margin target. Property delivered ROCE of 14% 2 Focused on winning profitable work. Significantly increased order book of £9.8bn Current trading in line with expectations despite continued inflationary pressures. Current year 3 outlook unchanged Remain focused on the deliv
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Slide 26: Appendix
Appendix
Slide 27: Creating value for the medium-term
Creating value for the medium-term 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 track record of Government’s construction markets f
Slide 28: Simple and focused operating units
Simple and focused operating units: Infrastructure Services, Construction and Property Infrastructure Services Construction Property 1 3 4 5 Property Infrastructure Highways Utilities Construction Urban Regeneration Projects and Property Development Delivery of high value Designs, constructs Repairs
Slide 29: Rationalised and recapitalised. Focused on growth
Rationalised and recapitalised. Focused on growth May 2021 April 2019 March 2020 Refinancing package agreed New CEO, New senior Andrew Davies management Sale of team in place housebuilding Strategic Review business, Kier Living June 2019 June 2020 June 2021 Cost savings of Portfolio c. £100m rationa
Slide 30: Strategic priorities for FY22 onwards
Strategic priorities for FY22 onwards 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 Focus on government, regulated Operate in business to Contracting or blue-chip client base busine
Slide 31: Medium-term targets provide visibility over Group direction
Medium-term targets provide visibility over Group direction 3 4 ▪ Annual revenue c. £4.0 bn - £4.5 bn ▪ Adjusted operating margin c.3.5% Infrastructure Highways Utilities Construction Property ▪ Cashflow conversion of operating profit c.90% Projects ▪ Balance sheet: sustainable net cash position wit
Slide 32: Positive market environment underpinning UK Government spending
Positive market environment underpinning UK Government spending commitments Population Economic Congested “Levelling up” Climate growth growth transport agenda change ▪ Population expansion ▪ UK economic ▪ Congested roads, ▪ Increased spending ▪ Energy supply with people living growth expected to ra
Slide 33: UK National Infrastructure Strategy – £650bn over next 10 years
UK National Infrastructure Strategy – commitment to spend £650bn over next 10 years Infrastructure Highways Utilities Rail and infrastructure Net Zero infrastructure ▪ Road investment Strategy 2: ▪ Water England/Wales AMP7 ▪ £37- £53bn forecast cost ranges ▪ UK leading net-zero pledge £27bn investme
Slide 34: UK Government spending focused on schools, hospitals, prisons and defence
UK Government spending focused on schools, hospitals, prisons and defence Construction Property Education Health Justice Defence Urban Regeneration ▪ 500 DfE school replacement ▪ £1.5bn additional ▪ 20,000 new prison ▪ £3.2bn Defence Estate ▪ “Levelling up” agenda – project over 10 years funding for
Slide 35: Maintaining and growing central and local framework positions
Maintaining and growing central and local framework positions ▪ Awarded places on long-term frameworks and contracts worth up to £124bn (total OJEU values) ▪ Driving long-term revenue streams, barriers to entry and strengthened customer relationships, underpinning strong order book Infrastructure Se
Slide 36: Further significant improvement to pension scheme
Further significant improvement to pension scheme £’m FY22 FY21 Δ Group Pension Schemes Market value of assets 1,557.0 1,909.9 (352.9) Present value of liabilities (1,362.3) (1,863.7) 501.4 Net pension asset 194.7 46.2 148.5 FY22 Results Presentation, 15 September 2022 36
Slide 37: Revenue split by sector
Total 23% 11% 3% 9% 4% 2% 10% 9% 21% 5% 1%2% Infrastructure Services 44% 21% 7% 17% 8% 3% 3% Construction 23% 20% 47% 11% Property 16% 21% 8% 54% Highways Rail Power Water Telecoms Other Education Health Government Private Alternatives Mixed Use Office Industrial FY22 Results Presentation, 15 Septem
Slide 38: Revenue split by sector: Infrastructure Services and Construction
Infrastructure Services Total 44% 21% 7% 17% 8% 3% Highways 99% 1% Infrastructure 6% 66% 5% 15% 8% Utilities 2% 20% 46% 29% 2% Highways Rail Power Water Telecoms Other Construction Total 23% 20% 47% 11% Regional Build 27% 24% 40% 9% Kier Places 5% 3% 79% 13% International 100% Education Health Gover