Kier Group plc · LSE:KIE
Kier — FY2010 Earnings Presentation
37 slides from Kier's earnings presentation, Sep 16, 2010
Slide 1: Preliminary Results Presentation
KIER GROUP PLC PRELIMINARY RESULTS PRESENTATION 16 September 2010 Kier Group plc preliminary results for the year ended 30 June 2010 1
Slide 2: Preliminary Kier Group Highlights
PRELIMINARY KIER GROUP HIGHLIGHTS • Underlying pre-tax profits up 10.6% to £58.4m (2009: £52.8m) • Adjusted EPS up 18.3% to 121.3p (2009: 102.5p) enhanced by a 6% reduction in our effective tax rate • Full year dividend up 5.5% to 58.0p (2009: 55.0p) • Record net funds at £175.2m (2009: £92.5m) • Se
Slide 3: Revenue
REVENUE KIER GROUP YEAR TO 30 JUNE Construction (£1,417m) Construction (£1,492m) Support Services (£471m) Support Services (£438m) Partnership Homes (£158m) Partnership Homes (£151m) Developments (£53m) Developments (£65m) 3% 8% 2% 7% 20% 22% 68% 70% REVENUE 2010 REVENUE 2009 £2,099m (-2.2%) £2,146m
Slide 4: Profit Summary
PROFIT SUMMARY KIER GROUP Year to 30 June 2010 2009 Change £m £m % Operating profit: Group 57.8 50.1 +15.4 Operating (loss)/profit: joint ventures (0.1) 1.0 - Group and share of joint ventures 57.7 51.1 +12.9 Share of joint ventures: Finance cost (1.3) (0.7) - Tax 0.1 (0.3) - Profit from operations
Slide 5: Exceptional Items
EXCEPTIONAL ITEMS KIER GROUP Year to 30 June 2010 2009 £m £m Credit arising from changes to local authority pension scheme 16.0 - Profit from sale of PFI investments 4.2 - Provision for fine imposed by OFT (18.0) - Credit from change in salary related pension benefits - 24.3 Partnership Homes reorga
Slide 6: Operating Profit by Division
OPERATING PROFIT KIER GROUP PERFORMANCE BY DIVISION Year to 30 June 2010 2009 Change £m £m % Construction 36.2 39.1 -7.4 Support Services 18.5 15.7 +17.8 Partnership Homes 9.9 1.1 - Developments 0.3 (1.9) - Corporate costs (7.2) (2.9) -148.3 Profit from operations* 57.7 51.1 +12.9 Finance income 3.1
Slide 7: Earnings per Share and Dividend
EARNINGS PER SHARE AND KIER GROUP DIVIDEND Year to 30 June 2010 2009 Change % Dividend per share 58.0p 55.0p +5.5 Weighted average number of shares 36.7m 36.5m - Adjusted profit before tax* £58.4m £52.8m +10.6 *Adjusted earnings per share** 121.3p 102.5p +18.3 Basic earnings per share** 108.2p 44.1p
Slide 8: Balance Sheet Summary
BALANCE SHEET KIER GROUP SUMMARY At 30 June 2010 2009 Movement £m £m £m Intangible assets 28 11 17 Property, plant and equipment 85 87 (2) Investment in joint ventures 24 30 (6) Inventories 407 424 (17) Other working capital (488) (438) (50) Cash 206 123 83 Long-term borrowings (30) (30) - Provision
Slide 9: Net Cash
NET CASH £m KIER GROUP 175 2010 Net Group cash 93 2009 418 2010 Construction 400 2009 32 2010 Support Services 37 2009 -248 2010 Partnership Homes -265 2009 -20 2010 Developments -71 2009 -7 2010 Centre -8 2009 -400 -200 0 200 400 600 • Average net cash £95m (2009: £62m) Kier Group plc preliminary r
Slide 10: Inventories
INVENTORIES KIER GROUP AS AT 30 JUNE 2010 2009 Movement £m £m £m Residential land 214 230 -16 Residential work in progress 126 135 -9 Commercial land and work in progress 19 21 -2 Other work in progress 48 38 +10 Inventories 407 424 -17 Land commitments* 8 27 -19 * All to be settled during the new f
Slide 11: Pensions
PENSIONS KIER GROUP At 30 June 2010 2009 Change £m £m £m Kier Group Pension Scheme: Market value of assets 611.2 498.4 +112.8 Present value of liabilities (689.8) (594.5) -95.3 Deficit in the scheme (78.6) (96.1) +17.5 Deferred tax asset 22.0 26.9 -4.9 Net pension liability (56.6) (69.2) +12.6 Net e
Slide 12: Construction Key Performance Indicators
KEY PERFORMANCE CONSTRUCTION INDICATORS Year to 30 June 2010 2009 Change £m £m % Revenue 1,417.0 1,492.2 -5.0 Operating profit 36.2 39.1 -7.4 Operating margin 2.6% 2.6% - Order book (secure and probable) 2,044 2,245 -9.0 Cash 417.8 399.7 +4.5 Revenue £m Operating profit £m, operating margin % 2.6% 2
Slide 13: Construction: Key Markets and Awards
KEY MARKETS AND AWARDS CONSTRUCTION % awards by sector • Little impact on 41% Education order book from 23% Custodial cancellation of BSF programme 7% Health 5% Hotels & leisure • Academies still going ahead - 4% Defence £330m at preferred 4% Commercial bidder stage 4% Retail • Diverse and mobile 3%
Slide 14: Construction: Key Markets and Awards (Frameworks)
KEY MARKETS AND AWARDS CONSTRUCTION UK REVENUE GROWTH • Over 50 frameworks nationally • 65% of 2010 awards through frameworks NEW KEY FRAMEWORKS • Academies 2 • ProCure 21+ • Wm Morrison • North West Construction Hub • YorBuild • West Midlands • Construction Framework South West Kier Group plc preli
Slide 15: Construction Prospects
PROSPECTS CONSTRUCTION POWER • Market leading position – civils works on 33% of all major gas power stations over the last 19 years • Bidding contracts up to £1bn in joint venture at Hinckley • Up to £6bn potential for Kier over 10 years INFRASTRUCTURE • Crossrail - bidding major works in joint vent
Slide 16: Construction Prospects: Waste and Overseas
PROSPECTS CONSTRUCTION WASTE • Includes recycling and power generating opportunities OVERSEAS • Hong Kong: £125m tunnelling contract awarded – more being bid • Saudi Arabia and Abu Dhabi: significant markets to expand existing base Kier Group plc preliminary results for the year ended 30 June 2010 1
Slide 17: Construction: Kier Strengths
KIER STRENGTHS CONSTRUCTION • Geographic coverage - local everywhere we go • Frameworks create access to large number of quality projects • Intelligent bidding - adding value • Versatile and responsive • Ability to capitalise on growth areas • Financial strength of Kier Group • Prudent accounting pr
Slide 18: Support Services Key Performance Indicators
KEY PERFORMANCE SUPPORT SERVICES INDICATORS Year to 30 June 2010 2009 Change £m £m % Revenue 470.7 437.9 +7.5 Operating profit* 21.4 17.9 +19.6 Operating margin* 4.5% 4.1% +9.8 Order book 2,128 2,292 -7.2 Cash 32.3 36.7 -12.0 * Before amortisation of intangible assets. Revenue £m Operating profit £m
Slide 19: Support Services Activities
SUPPORT ACTIVITIES SERVICES Revenue 2010 2009 Change £m £m % Building Maintenance: Local authority and HA planned and reactive 343 329 +4.3 housing maintenance Facilities Services: Building management and maintenance 120 92 +30.4 Street Services: Waste collection and recycling, street scene and 20 2
Slide 20: Support Services Achievements This Year
SUPPORT ACHIEVEMENTS THIS YEAR SERVICES NEW CONTRACT STARTS • North Tyneside building maintenance - £60m pa for 10 years (+5 years) • Southwark building maintenance - £3m pa for 7 years • Barnsley building maintenance - £11m pa for 5 years (+5 years) CONTRACT RENEWALS • London Borough of Islington (
Slide 21: Secured Forward Revenue
SECURED FORWARD SUPPORT SERVICES REVENUE Kier Street Services Kier Facilities Services Kier Building Maintenance £m’s 400 350 300 250 Value 200 150 100 50 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Years to 30 June Kier Group plc preliminary results for the year ended 30 June 2010 21
Slide 22: Support Services: Kier Strengths
SUPPORT KIER STRENGTHS SERVICES • Creating operational efficiencies for public and private clients • Creating revenue streams through improved asset management • Waste recycling • Versatile and responsive • Prudent accounting practices Kier Group plc preliminary results for the year ended 30 June 20
Slide 23: Partnership Homes Key Performance Indicators
KEY PERFORMANCE PARTNERSHIP HOMES INDICATORS Year to 30 June 2010 2009 Change Revenue £157.7m £150.8m +4.6% Unit sales 1,060 1,141 -7.1% Operating profit* £9.9m £1.1m - Operating margin 6.3% 0.7% - Cash investment (internal) £248.5m £264.9m -£16.4m Net operating assets £328.8m £339.6m -£10.8m Land b
Slide 24: Partnership Homes: Kier Strengths
PARTNERSHIP KIER STRENGTHS HOMES • Land bank • HCA delivery partner • 29 framework agreements • Planning and financial modelling • Regeneration capability – integrated model Kier Group plc preliminary results for the year ended 30 June 2010 24
Slide 25: Partnership Homes Prospects
PARTNERSHIP PROSPECTS HOMES • Shape of the business to come: • 2,000 unit sales, £300m revenue • 40/60 private/social • 7% operating margin • Smaller land bank • Lower cash investment • Sale of parts of the land bank over time • £6bn of grant funding to 2014 (potential for £12bn leveraged through RS
Slide 26: Developments
DEVELOPMENTS DEVELOPMENTS Year to 30 June 2010 2009 Change £m £m Revenue 53.3 64.7 -17.6% Operating profit/(loss) 0.3 (1.9) - Cash investment (internal) 19.8 70.6 -£50.8m Net operating assets 33.3 82.0 -£48.7m Includes Kier Property, Kier Project Investment, Kier Asset Partnership Services. Kier Gro
Slide 27: Kier Property Highlights
KIER PROPERTY DEVELOPMENTS HIGHLIGHTS • Sale of UK Supreme Court for over £30m – 5.0% post-tax yield • Sale of Uxbridge development for a post-tax yield of 5.5% • Commencement of £20m construction project on first Solum project at Epsom • Secured asset management contract at Chesterfield Kier Group
Slide 28: Kier Project Investment Highlights
KIER PROJECT INVESTMENT DEVELOPMENTS HIGHLIGHTS • Sale of two PFI investments for £7.3m generating £4.2m of profit (yield 8%) • Financial close on Police Investigation Centres - £60m construction contract • Preferred bidder on Gloucester Fire Stations • Shortlisted on: • Woking Social Housing • Lond
Slide 29: Developments: Strengths and Prospects
STRENGTHS AND PROSPECTS DEVELOPMENTS • Experienced team • Solum Regeneration: • 7 further schemes in the portfolio • Twickenham & Walthamstow come on stream 2012 • Total development value £400m • Further schemes to be included • Similar businesses targeted to replicate the Solum partnership • PFI po
Slide 30: Investing in Our Future
INVESTING IN OUR FUTURE KIER GROUP • Training and development of key staff • Bespoke development teams supporting our integrated model: • CRC – greening • Waste • Power • Public sector services • Mixed-use regeneration • Investment in our property portfolio Kier Group plc preliminary results for the
Slide 31: Outlook: Construction
OUTLOOK: KIER GROUP CONSTRUCTION Sector % Awards Short/medium 2010 term impact • 98% of targeted on Kier construction revenue Education 41% Custodial 23% for 2011 secure and Health 7% probable Hotels & leisure 5% • 45% of targeted Defence 4% revenue for 2012 Commercial 4% secure and probable Retail
Slide 32: Outlook: Support Services
OUTLOOK: KIER GROUP SUPPORT SERVICES Sector % Short/medium Revenue term impact • £3bn pipeline of Building Maintenance 2010 on Kier potential opportunities Public: R&M 55% Capital 26% • The greening agenda Private: R&M 2% • Enhanced offering in Capital 2% street services through Facilities Managemen
Slide 33: Outlook: Partnership Homes & Developments
OUTLOOK: PARTNERSHIP KIER GROUP HOMES & DEVELOPMENTS Partnership Homes Developments • Cash generation from • Innovative funding land bank capability creates • Land led deals opportunities • Underlying demand • LA asset management remains strong • Commitment to PFI • Few competitors in • SE rental de
Slide 34: Positioning Kier for the Future
POSITIONING KIER FOR KIER GROUP THE FUTURE • Talented teams with extensive customer relationships • Robust order books • Versatile and responsive • Strong cash generation for future investment opportunities • Integrated model creates opportunities even in challenging times Kier Group plc preliminary
Slide 35: Kier Project Investment Current Projects
KIER PROJECT INVESTMENT KIER GROUP CURRENT PROJECTS Appendix I Sector Project Status Capital Kier equity/ Equity value loan stock % £m £m Health West Berkshire Hospital Operational 25 1.8 50 Hinchingbrooke Operational 19 1.1 50 Ipswich Hospital Operational 27 1.3 50 Local Bournemouth Library Operati
Slide 36: Cash Generation (excluding Plant and Recycling Facility)
CASH GENERATION (excluding SUPPORT Plant and Recycling Facility) Appendix II SERVICES £m 30 25 20 15 10 5 0 2006 2007 2008 2009 2010 Retained profit (cumulative) Cash generation (cumulative) Kier Group plc preliminary results for the year ended 30 June 2010 36
Slide 37: Building Maintenance – Major Contracts
BUILDING MAINTENANCE – SUPPORT SERVICES MAJOR CONTRACTS Appendix III Contract Description Annual Duration Expiry revenue Sheffield City Repairs & maintenance and £60m 10 years April 2013 Council decent homes Homes for Repairs & maintenance £20m 4 years + October 2014 Islington 6 years Stoke-on-Trent