Slide 1: Interim results presentation
Kier Group plc Interim results presentation 24 February 2011 Kier Group plc interim results for the six months ended 31 December 2010 1
Slide 2: Paul Sheffield, Chief Executive
Paul Sheffield Chief Executive Kier Group plc interim results for the six months ended 31 December 2010 2
Slide 3: Highlights
Highlights • Strong first half performance supported by • Strong revenue in Construction of £728m • Robust operating margins maintained in Construction of 2.7% and Support Services of 4.5% • Continuing strong underlying cash generation • All of 2011’s construction revenue and 65% of 2012’s construct
Slide 4: Highlights
Highlights • Growth of 19% in underlying* Group operating profit to £30.8m (2009: £25.9m**) • Growth of 33% in underlying* EPS to 63.5p (2009: 47.7p**) • Interim dividend increased by 8% to 20.0p (2009: 18.5p) • £144m of net cash at 31 December 2010 (June 2010: £175m) • After c£30m of investment spe
Slide 5: Haydn Mursell, Finance Director
Haydn Mursell Finance Director Kier Group plc interim results for the six months ended 31 December 2010 5
Slide 6: Revenue H1 2010/11
Revenue H1 2010/11 Revenue H1 2009/10 £1,097m (+9%) £1,010m Construction Support Services Partnership Homes Developments 6% 6% £66m 3% £60m 7% £27m £75m 22% 23% £243m £230m 67% 66% £678m £728m Kier Group plc interim results for the six months ended 31 December 2010 6
Slide 7: Income statement
Income statement SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 £m £m % £m Operating profit: Group 30.8 25.9 +19% 53.6 Partnership Homes land transactions - 7.1 - 7.1 Operating profit: joint ventures 1.4 - - (0.1) Operating profit: Group and share of joint ventures 32.2 33.0 -2% 60.
Slide 8: Operating profit
Operating profit Performance by division SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 £m £m % £m Construction 19.8 16.9 +17% 36.2 Support Services 10.9 10.1 +8% 21.4 Partnership Homes: Underlying 1.7 (0.3) - 2.8 Land transactions - 7.1 - 7.1 Developments 1.7 2.5 - 0.3 Corporate co
Slide 9: Earnings per share and dividend
Earnings per share and dividend SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 % 2010 Weighted average number of shares 37.0 36.7 - 36.7 Adjusted earnings per share* 63.5p 61.6p +3% 121.3p Excluding 2009 Partnership Homes land transactions* 63.5p 47.7p +33% 107.4p Basic earnings per shar
Slide 10: Balance sheet summary
Balance sheet summary AT 31 DECEMBER CHANGE AT 30 JUNE 2010 2009 2010 £m £m £m £m Intangible assets 29 22 +7 28 Property, plant and equipment 88 82 +6 85 Investment in joint ventures 28 29 -1 24 Inventories 420 422 -2 407 Other working capital (470) (462) -8 (487) Cash 174 161 +13 205 Long-term borr
Slide 11: Net cash
Net cash Net Group Cash 144 175 131 Construction 434 418 398 Support Services 51 (excluding Plant) 50 60 -271 Partnership Homes -248 -251 -31 Developments -20 -21 -300 -200 -100 0 100 200 300 400 500 December 2010 Average net cash £138m June 2010 December 2009 (December 2009: £71m) Kier Group plc in
Slide 12: Inventories
Inventories AT 31 DECEMBER CHANGE AT 30 JUNE 2010 2009 2010 £m £m £m £m Residential land 208 222 -14 214 Residential work in progress 139 128 +11 126 Commercial land and work in progress 19 20 -1 19 Other work in progress 54 52 +2 48 Inventories 420 422 -2 407 Kier Group plc interim results for the
Slide 13: Pensions
Pensions AT 31 DECEMBER AT 30 JUNE 2010 2010 Change £m £m % Kier Group Pension Scheme: Market value of assets 667 611 +9% Present value of liabilities (732) (690) -6% Deficit in the scheme (65) (79) +18% Deferred tax asset 17 22 - Net pension liability (48) (57) +16% Net effect of Sheffield scheme -
Slide 14: Summary
Summary • Record average net cash of £138m • Renewed bank facilities to 2014 • Interim dividend increased by 8% to 20.0p • Maintain progressive policy • Manageable pension position • Will be further improved by PFI asset transfers • Strong order books for Construction and Support Services at > £4bn
Slide 15: Construction
Construction SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 £m £m % £m Revenue 728 678 +7% 1,417 Operating profit 19.8 16.9 +17% 36.2 Operating margin 2.7% 2.5% - 2.6% Order book (secure and probable) 2,096 2,232 -6% 2,044 Cash 434 398 +9% 418 Revenue £m Operating profit £m; operati
Slide 16: Construction: Council frameworks
Construction Council frameworks • Over 60 frameworks Under bid nationally • 80% of awards through frameworks and collaborative bidding • 20% competitively tendered Kier Group plc interim results for the six months ended 31 December 2010 16
Slide 17: Construction: awards by sector
Construction Sector % Awards Predictions % Awards Year to June 2010 (medium 6 months to December 2010 (£1,369m) term) (£779m) Education 41% 34% Transport 3% 22% Commercial 4% 12% Overseas 1% 11% Residential 2% 6% Health 7% 5% Hotels & leisure 5% 3% Industrial 3% 2% Mixed-use 1% 2% Custodial 23% 1% R
Slide 18: Construction: awards by sector H1
Construction • Diverse and responsive % Awards by sector H1 2010/11 34% Education 6% Residential workforce allows access to a 5% Health 3% Hotels & leisure 1% Custodial 2% Industrial wide range of opportunities 0% Defence 2% Mixed use 22% Transport 1% Retail 12% Commercial 1% Utilities 11% Overseas
Slide 19: Construction: Infrastructure and Power
Construction Infrastructure • Major area of spend • National Infrastructure Plan £200bn • Well positioned Power • Market leader with retained skills • c£10bn power infrastructure potential for Kier over 5-10 years West Burton CCGT Power Station • Variety of opportunities Kier Group plc interim resul
Slide 20: Construction: Education and Health
Construction Education • Academies framework • £800m over 2 years • Secured 2 projects since October 2010 Health • ProCure 21+ • £4bn for 6 contractors over 6 years • Secured 4 projects £20m Dane Court Grammar School, Kent Kier Group plc interim results for the six months ended 31 December 2010 20
Slide 21: Construction: Commercial and Overseas
Construction Commercial • Early signs of recovery • London and south-east focus Overseas • Secured £85m in 6 months • Hong Kong £125m contract in JV Snow Hill, Birmingham Kier Group plc interim results for the six months ended 31 December 2010 21
Slide 22: Support Services
Support Services SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 £m £m % £m Revenue 243 230 +6% 471 Operating profit* 10.9 10.1 +8% 21.4 Operating margin* 4.5% 4.4% - 4.5% Order book (secure) 1,982 2,312 -14% 2,128 Cash (excluding plant investment) 51 60 -15% 50 * Before amortisation
Slide 23: Support Services: revenue split
Support Services Building Maintenance £179m SIX MONTHS TO 31 DECEMBER REVENUE FM and Environmental £64m 2010 2009 Change £m £m % Building Maintenance 26% Planned and reactive housing 179 167 +7% 64 maintenance FM and Environmental Building management, 64 63 +2% maintenance and environmental services
Slide 24: Support Services: order book
Support Services Building Maintenance Order book FM and Environmental £m 300 250 V a lu e 200 The order book excludes any potential contract negotiations 150 100 50 0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Kier Group plc interim results for the six months end
Slide 25: Support Services: sector revenue
Support Services Sector % Revenue Predictions % Revenue • Bundled services June 2010 (medium December 2010 Building term) being favoured Maintenance • Outsourcing Public: trend will drive R&M 55% 40% growth over Capital 26% 29% medium term Private: R&M 2% 2% • Growth sought Capital 2% 3% to improve
Slide 26: Support Services: contracts and Beco
Support Services New contracts • East Midlands – SCAPE framework over 4 years Contract renewals • London Borough of Islington (Building Maintenance) • £20m pa for 4 years (+6 years) Beco acquisition • Head start in the PV market Solar power measures, Stoke-on-Trent Kier Group plc interim results for
Slide 27: Partnership Homes
Partnership Homes SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 Revenue £60m £75m -20% £158m Unit sales 464 488 -5% 1,060 Underlying operating profit £1.7m £(0.3)m - £2.8m Land transactions - £7.1m - £7.1m Underlying operating margin 2.8% - - 1.8% Net operating assets £347m £326m +
Slide 28: Partnership Homes: Private
Partnership Homes • Private • Land bank decreasing • Cash will be generated over time from development and disposal of the land bank • Maintain a sustainable, private development business (c500 units per annum) Jewry Street, Winchester Kier Group plc interim results for the six months ended 31 Decem
Slide 29: Partnership Homes: Affordable
Partnership Homes • Affordable • Focus on mixed tenure • £74m of awards • c50% are land led deals • Regeneration capability • Predominant focus is London and south-east Roke Lane, Witley Kier Group plc interim results for the six months ended 31 December 2010 29
Slide 30: Developments
Developments SIX MONTHS TO 31 DECEMBER CHANGE YEAR TO 30 JUNE 2010 2009 2010 £m £m £m Revenue 66 27 +144% 53 Operating profit 1.7 2.5 -32% 0.3 Net operating assets 43 42 +£1m 33 Includes: Kier Property, Kier Project Investment, Kier Asset Partnership Services Property • On site on first Solum projec
Slide 31: Developments: PFI and KAPS
Developments PFI • Commitment to PFI and regular recycling • Short-listed on 5 further schemes KAPS • Provides property development opportunities • Integral to the LA service offering Ordnance Survey, Southampton • £7bn of cost savings targeted by Whitehall Kier Group plc interim results for the six
Slide 32: Conclusion
Conclusion • Strong and stable Construction division • Dealing well with transitioning markets • Quality revenues holding firm • Continuing strong cash generation, provides resources to invest in the business • Support Services well positioned alongside other Kier operations to focus on bundled serv
Slide 33: Outlook
Outlook • Well positioned to capitalise on growth markets • Infrastructure • Bundled outsourcing • Urban regeneration • Greening agenda • Strong balance sheet enables us to actively explore organic and acquisition growth opportunities Kier Group plc interim results for the six months ended 31 Decemb
Slide 34: Appendices
Appendices Kier Group plc interim results for the six months ended 31 December 2010 34
Slide 35: KPI: PFI investments
KPI 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 Operational 14 0.7 50 authority Oldham Library Operational 14 1.0
Slide 36: Support Services: key contracts
Support Services Contract Description Annual Duration Expiry excluding revenue extensions Sheffield City Repairs & maintenance and decent £60m 10 years April 2013 Council homes Homes for Islington Repairs & maintenance and gas £20m 4 years + October 2014 servicing 6 years Stoke-on-Trent Repairs & ma
Slide 37: Kier Group plc
Kier Group plc interim results for the six months ended 31 December 2010 37