Slide 1: Welcome to Kier Group's preliminary 2012 results
Welcome to Kier Group’s preliminary 2012 results Paul Sheffield Haydn Mursell Chief Executive Group Finance Director
Slide 2: Focus on today, prepare for tomorrow
Focus on today Prepare for tomorrow Improve operating efficiencies Invest in technology Invest in next generation frameworks Key target areas: Mixed tenure housing Complex mixed use regeneration schemes Infrastructure and overseas activities
Slide 3: Highlights
Highlights Resilient performance Underlying profit before tax increased to £70m Strong net cash position: £129m after significant investment Full year dividend increased to 66p Order book maintained at more than £4bn What sustained our results Selective bidding, focus on quality work Strict risk man
Slide 4: Key achievements
Key achievements Construction Services Property Awards Awards Development pipeline £750m+ UK building £1bn+ Circle £180m Mixed tenure • Education £400m pipeline £250m+ • P21+ & FM £150m Healthcare £150m Preferred bidder £100m+ • Kier Living £150m Environmental £100m Biogen investment Crossrail (JV)£
Slide 5: The next 12 months
The next 12 months Construction 95% of FY13 revenue and 45% of FY14 revenue secure and probable, similar to last year Work balance changing: • UK infrastructure and overseas growing • Frameworks stable • Open market more competitive Operating margin on target for FY13 Services Strong order book at £
Slide 6: Haydn Mursell, Group Finance Director
Haydn Mursell Group Finance Director
Slide 7: Overview: revenue & profit
Overview: revenue & profit 2012 2011 Revenue £2,069m -5% Revenue £2,179m Construction £1,383m Construction £1,445m Services £445m Services £484m Property £241m Property £250m 12% 11% 21% 22% 67% 67% Operating profit* £74.4m +5% Operating profit* £71.1m Construction £35.2m Construction £39.3m Service
Slide 8: Income statement
Income statement Year to 30 June Change 2012 2011 £m £m % Operating profit: Group 66.4 63.1 Joint ventures (JVs) 1.3 2.1 Profit on disposal of PFI investments 6.7 5.9 Total operating profit 74.4 71.1 +5 Share of JVs: Finance income / (cost) 0.2 (1.4) Tax (0.2) (0.3) Profit from operations 74.4 69.4
Slide 9: Operating profit
Operating profit Year to 30 June Change Performance by division 2012 2011 £m £m % Construction 35.2 39.3 -10 Services 20.1 21.7 -7 Property: Property & PFI (including profit on disposal of PFI investments) 18.7 11.1 +44 Homes 3.3 4.2 Corporate (2.9) (5.2) +44 Operating profit * 74.4 71.1 +5 Net fina
Slide 10: Exceptional items
Exceptional items Year to 30 June 2012 2011 £m £m Reduction in the provisions following OFT appeal results - 15.6 Credit arising from changes to Kier Group pension scheme - 25.7 Homes land and work in progress write-down - (33.5) Loss on disposal of the majority of the plant business & related costs
Slide 11: Earnings per share and dividend
Earnings per share and dividend Year to 30 June Change 2012 2011 % Weighted average number of shares (m) 38.0 37.2 +2 Underlying earnings per share* 156.8p 148.4p +6 Basic earnings per share 142.6p 166.1p -14 Dividend per share 66.0p 64.0p +3 * Before exceptional items and amortisation of intangible
Slide 12: Order books
Order books At 30 June Change 2012 2011 £m £m % Construction 2,207 2,245 -2 Services 2,050 2,030 +1 Total 4,257 4,275 - £m 6,000 Construction 5,500 Services 5,000 +1,345 -1,383 -180 4,500 +645 -445 4,000 3,500 3,000 4,275 4,257 2,500 2,000 1,500 June 2011 order Construction awards Construction reven
Slide 13: Balance sheet summary
Balance sheet summary At 30 June Change 2012 2011 £m £m £m Intangible assets 29 27 +2 Property, plant and equipment 103 96 +7 Investment in JVs 8 9 -1 Inventories 395 431 -36 Other working capital (440) (520) +80 Cash 159 195 -36 Borrowings (30) (30) - Provisions (50) (51) +1 Pensions (net of deferr
Slide 14: Group net cash bridge
Group net cash bridge £m 260 240 220 -53 +80 200 -30 180 +37 -30 -8 160 -11 140 -21 120 165 129 100 80 June 2011 net operating cash capital and tighter payment land and unit completion of redundancy & pension deficit tax, interest and June 2012 net cash inflow (incl PFI investment environment sales
Slide 15: Inventories
Inventories At 30 June Change 2012 2011 £m £m £m Residential land 132 159 -27 Residential work in progress 124 133 -9 Commercial land and work in progress 86 87 -1 Other work in progress 53 52 +1 Inventories 395 431 -36
Slide 16: Pensions
Pensions At 30 June Change 2012 2011 £m £m £m Kier Group Pension Scheme: Market value of assets 722 680 +42 Present value of liabilities (781) (711) -70 Deficit in the scheme (59) (31) -28 Deferred tax 14 8 +6 Net pension liability (45) (23) -22 Net effect of Kier Sheffield Pension Scheme 1 1 - Tota
Slide 17: IAS19 re-presentation
IAS19 re-presentation Indicative only 2012 2012 Using June 2012 pre-tax figures Current New Change £m £m £m Service cost (12.7) (12.7) - Expected return on scheme assets (June 2011: 7.0%) 57.7 - £10.4m net credit is re- Interest cost on scheme liabilities (June 2011: 5.5%) (47.3) - presented as £1.6
Slide 18: Summary
Summary Solid performance Operating profit* up 5% to £74.4m Average month-end net cash of £95m Construction and Services order books maintained at >£4bn Significant increase in Property’s contribution Prudent accounting practices underpin the financials Full year dividend increased to 66p A well-bal
Slide 19: Construction
Construction King’s Cross
Slide 20: Construction
Construction Year to June 2012 2011 Change £m £m % Revenue 1,383 1,445 -4 Operating profit 35.2 39.3 -10 Operating margin 2.5% 2.7% Order book (secure and probable) 2,207 2,245 -2 Cash 361 423 -15 Operating margin % 2.6% 2.6% 2.7% 2.5% FY 2.3% H1 39.3 1,585 39.1 36.2 1,492 35.2 36.6 1,411 1,445 1,41
Slide 21: Construction: revenue by sector
Construction Revenue Year to Year to Expectation Future Sector June 2011 June 2012 June 2013 trend Education 43% 37% 28% Health 6% 6% 11% Commercial and mixed use 5% 11% 11% Care home, high-rise affordable housing, student accommodation 4% 7% 9% Transportation 2% 6% 8% Power, industrial and waste (i
Slide 22: Construction: UK Infrastructure
Construction: UK Infrastructure Secured and probable awards c£300m Crossrail: £800m of work underway Farringdon station £210m in JV Strong pipeline: £1.8bn of tender opportunities being bid Power Water and wastewater Transport Energy from waste (EfW), Plymouth Waste-to-energy
Slide 23: Construction: UK Building
Construction: UK Building £1bn+ awarded in year Education: £400m through academies framework P21+ and Healthcare: £150m Living: £150m+ secured c£200m of commercial developments, mainly in London Open market increasingly Havelock Academy competitive
Slide 24: Construction: Overseas
Construction: Overseas c£400m on site: Hong Kong, Caribbean and the Middle East New offices in Trinidad and Iraq Seeking opportunities for expansion in adjacent countries in the Middle East Targeting in excess of £150m revenue by June 2014 Ngau Tam Mei to Tai Kong Po tunnels, Hong Kong
Slide 25: Services
Services
Slide 26: Services
Services Year to June 2012 2011 Change £m £m % Revenue 445 484 -8 Operating profit 20.1 21.7 -7 Operating margin 4.5% 4.5% Order book (secure and probable) 2,050 2,030 +1 Cash 19 28 -32 Operating margin % 4.5% 4.5% 4.5% FY 21.7 4.1% 4.1% 21.4 H1 20.1 484 471 3.9% 445 438 17.9 394 16.2 316 4.5% 12.2
Slide 27: Services: Maintenance
Services: Maintenance 2012 revenue Revenue down 20%, reflecting £280m public sector budget pressures as 63% expected Secured largest HA contract, Circle, worth up to £350m Revenues £m 400 Continued focus on costs and 350 - Potential Contract Extensions (£800m) efficiencies - Order Book 300 £5m of re
Slide 28: Services: FM & Environmental
Services: FM & Environmental 2012 revenue £165m Revenue up 23% 37% Approximately £250m of new work L&G, RAC, London Fire, Stoke and Staffs Fire Kings Lynn, Bromley, Corby Private sector growth targeted Strong bid pipeline
Slide 29: Property
Property Watford Health Campus
Slide 30: Property
Property Year to June 2012 2011 Change £m £m % Revenue Property and PFI 92 97 -5 Homes 149 153 -3 Operating profit Property and PFI (incl. £6.7m disposal profit) 18.7 11.1 +68 Homes (underlying) 3.3 4.2 -21 Net operating assets Property and PFI (inc. c.£5m PFI) 42 54 -22 Homes (land bank: 4,180 unit
Slide 31: Property: Development
Property: Development £750m (GDV) development Targeted return on capital of pipeline over 6 years 15% Non-speculative strategy
Slide 32: Property: Housing & PFI
Property: Housing & PFI Mixed tenure Delivered 300 homes, 80% affordable Strong forward order book >£250m, equating to 1,900 homes Private Balaam Wood, Birmingham Reducing land bank, down 35% from the peak £18m land sales Stable private home sales, >35% of FY13 sales secured PFI 2 disposals at 7% po
Slide 33: Biogen
Biogen Significant demand £24m investment, over 5 years 9 operating plants targeted by 2017 >15% return on capital
Slide 34: Outlook
Outlook Construction markets challenging, but opportunities in: Infrastructure – Government stimulus Health – for those on P21+ framework High rise residential and Care schemes Overseas markets Services Public sector likely to grow in 2014 Private sector more buoyant today and winning work Property
Slide 35: Conclusion
Conclusion Construction and Services order books maintained Significant contribution from Property with £1bn+ pipeline FY2013 on track and in line with our expectations Strong cash and balance sheet to pursue our chosen growth markets We have positioned ourselves to benefit from the changing markets
Slide 36: Appendices
Appendices EIKIER = —__/
Slide 37: Services: current bid pipeline (extract)
Services: current bid pipeline (extract) Annual value Duration Potential Start Council £m (years) Gross £m Date MoD Prime Housing Maint 100 5+5 1,000 2014 Housing 21 FM and Maint 25 10 250 2013 Hammersmith & Fulham Housing Maint 15 10 150 2013 East Sussex Environmental 12 10 120 2013 East Thames Hou
Slide 38: Property: PFI portfolio
Property: PFI portfolio Sector Project Status Capital value Kier equity/loan Equity £m stock £m % Health Ipswich Hospital Operational 27 1.3 50.0 Local Bournemouth Library Operational 14 0.7 50.0 authority Oldham Library Operational 14 1.0 50.0 Greenwich Care Homes Operational 18 0.7 50.0 Education
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