Kier Group Plc · LSE:KIE
Kier — H1 FY2022 Earnings Presentation
30 slides from Kier's earnings presentation, Mar 9, 2022
Slide 1: Kier Group Results for the six months ended 31 December 2021
Kier Group Results for the six months ended 31 December 2021 9 March 2022
Slide 2: Disclaimer
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 th
Slide 3: Results Summary
Results Summary Andrew Davies, CEO
Slide 4: Group HY22 Highlights
Group HY22 Highlights Robust financial performance Group revenue of £1.5bn (HY21: £1.6bn) Adjusted operating profit margin increased to 3.5% Adjusted basic EPS of 7.8p (HY21: 10.4p) Net debt £131m (HY21: £354m) Significant reduction in average month end net debt to £191m (HY21: £436m) Stra
Slide 5: HY22 Results
HY22 Results Simon Kesterton, CFO
Slide 6: Income Statement
Income Statement Medium-term plan margin target of 3.5% achieved despite volume declines Anticipated revenue decline reflects £’m HY22 % HY21 % Δ FY21 % procurement delays and project Revenue 1,536 1,624 (5.4)% 3,329 completions partially offset by ramp Adjusted Operating Profit 54.2 3.5 47.6 2.9
Slide 7: Revenue Performance
Revenue Performance Revenue impacted by procurement delays and timing of project completions (5.4)% Revenue decline of 5.4% in HY22 Infrastructure Services– ramp up of capital works on HS2 Construction – anticipated lower volume from procurement delays and completion of HMP Five Wells prison
Slide 8: Adjusted Operating Profit
Adjusted Operating Profit Margin increase underpinned by business mix and cost management Adjusted operating profit of £54m, 3.5% margin Increase against prior year: Property disposals Management actions Decrease against prior year: Volume / price / mix Cost inflation 8
Slide 9: Adjusting Items
Adjusting Items Cash adjusting items largely relate to restructuring costs in Construction £’m HY22 HY21 FY21 Restructuring costs in Construction business Business divestment related expenditure (0.3) (0.8) 0.5 and property related costs Restructuring and related charges 11.8 6.0 31.6 Amortisation
Slide 10: Free Cash Flow
Free Cash Flow Free cash outflow due to seasonal unwind of working capital and reduction in KEPS £’m HY22 HY21 HY20 Operating cash flow conversion in line with expectations Adjusted EBITDA 76.8 71.7 73.0 Working capital (143.0) 1.1 (84.8) Working capital: Net capex (Including IFRS16 leases) (19.
Slide 11: Net Debt Movement
Net Debt Movement Net Debt impacted by typical first half working capital unwind. Reduction in non-trading cash items 11
Slide 12: Financing and Liquidity
Financing and Liquidity Significant reduction in average net debt. Facilities maturing in January 2025 Maturities KPIs Dec 2021 600 Net debt (£m) 131 500 £m Average month-end net debt (£m) 191 400 300 Average month-end net debt 200 Significant reduction from £436m to £191m due to capital raise, sa
Slide 13: High Quality Order Book
High Quality Order Book Order book underpinned by long-term framework positions Order book at £8.0bn (FY21: £7.7bn) Secured revenue 96% of FY22 revenue secured 4,500 De-risked contracts: 4,000 c.55% of order book is under target cost or cost reimbursable contracts 3,500 Construction - regi
Slide 14: Capital Allocation
Capital Allocation Capital allocation to drive long-term shareholder returns Sources of cash - net cash generated from operations Uses of cash Capex Deleveraging Dividends Disciplined and non-speculative Further deleveraging – operate with a Targeting dividend cover of 3 x investment to su
Slide 15: Operational update
Operational update Andrew Davies, CEO
Slide 16: Infrastructure Services
Infrastructure Services Revenue growth of 15.5%. Continue to win Highways work £’m HY22 HY21 Δ Commercial & Operational Update Revenue 777 673 15.5% Success in winning new Highways work – over £1bn Adjusted Operating Profit 32.9 27.3 20.5% worth in the period alone including: Operating margin 4.2%
Slide 17: Construction
Construction Reduced volumes due to procurement delays and timing of project completions £’m HY22 HY21 Δ Awarded in the period places on frameworks worth Revenue 681 903 (24.6)% up to £11bn Adjusted Operating Profit 26.3 33.6 (21.7)% Significant awards: Operating margin 3.9% 3.7% 20 bps Appoin
Slide 18: Property
Property Property delivering high returns with disciplined capital allocation £’m HY22 HY21 Δ PGIM Real Estate Joint Venture – entered into Revenue 76 46 65.2% partnership with PGIM to develop a portfolio of light industrial and logistics warehouses across the Adjusted Operating Profit 10.4 2.6 +3
Slide 19: Sustainability
Sustainability Andrew Davies, CEO
Slide 20: Sustainability Framework
Sustainability Framework Building for a Sustainable World Reminder of key focus areas: Resilient environment – pollution prevention, 1 sustainable procurement, net zero carbon, zero avoidable waste and biosphere protection Resilient community – building for tomorrow, diversity and inclusion, our soc
Slide 21: Environmental
Environmental Carbon intensity reduction through change in fuel usage Fleet Trialling fleet from red diesel to an alternative fuel, Hydrotreated Vegetable Oil (“HVO”) High quality diesel fuel made from renewable and sustainable raw materials Potential to save site carbon emissions by up to 90%
Slide 22: Social
Social Committed to addressing social issues and creating social value Social Value Calculator – Thrive Moved to a new Social Value calculator, Thrive to measure social value impact Use of 100 + social value metrics Ability to track social value targets across bids and live projects which link
Slide 23: Summary and Outlook
Summary and Outlook 1 Continue to deliver on strategic actions 2 Focused on winning profitable work. Strong order book Current trading in line with expectations despite inflationary pressures. Current year outlook 3 unchanged 4 On track to deliver medium-term targets 23
Slide 24: Capital Markets Event 25 May 2022
Capital Markets Event 25 May 2022 Building sustainable infrastructure which is vital to the UK Value - Attractive accretive market earnings-led positions business model
Slide 25: Q&A
Q&A
Slide 26: Appendix
Appendix
Slide 27: Investment Proposition
Investment Proposition 1 Value accretive earnings-led business model. Aligned to UK Government’s investment priorities 2 Attractive market positions focused on UK infrastructure and construction markets 3 Strong order book underpinned by long-term contracts and framework agreements 4 Experienced man
Slide 28: Pension
Pension Significantly improved pension scheme £’m 31 Dec 2021 31 Dec 2020 Δ As at 31 December 2021, Group’s pension schemes’ surplus was £133.9m (Dec 20: £1.4m Group Pension Schemes deficit) Market value of assets 2,018.2 1,976.0 42.2 Improvement from asset performance, actuarial Present value o
Slide 29: Group Revenue Analysis
Group Revenue Analysis 23% 9% 5% 9% 4% 1% 10% 8% 21% 5% 1% Total 3% 45% 18% 9% 19% 7% 2% Infrastructure Services 23% 17% 48% 12% Construction 17% 25% 13% 45% Property Highways Rail Power Water Telecoms Other Education Health Government Private Alternatives Mixed Use Office Industrial 29
Slide 30: Segmental Revenue Analysis
Segmental Revenue Analysis Infrastructure Services 45% 18% 9% 19% 7% 2% Total 100% Highways 8% 60% 5% 20% 7% Infrastructure 3% 28% 45% 24% Utilities Highways Rail Power Water Telecoms Other Construction 23% 17% 48% 12% Total 27% 20% 42% 11% Regional Build 4% 82% Kier Places 100% International Educat