Kier Group plc · LSE:KIE

Kier — H1 FY2014 Earnings Presentation

43 slides from Kier's earnings presentation, Feb 27, 2014

  1. Slide 1: Interim Results

    Interim Results For the six months ended 31 December 2013 Kier Group plc - Interim results for the six months ended 31 December 2013

  2. Slide 2: Paul Sheffield, Chief Executive

    Paul Sheffield Chief Executive Kier Group plc - Interim results for the six months ended 31 December 2013 2

  3. Slide 3: Agenda

    Agenda  Highlights of the period  Financials  Operational update  Outlook Kier Group plc - Interim results for the six months ended 31 December 2013 3

  4. Slide 4: Highlights

    Highlights  First half results in line with expectations  Operating profit £44m*  Order books improved to >£6bn  Particularly in UK Infrastructure  Successful integration of May Gurney  100% retention of customers  Synergy realisation on target  Interim dividend increased by 5% to 22.5p *Exc

  5. Slide 5: Key achievements

    Key achievements Construction Services Property Revenue £742m Revenue £563m Revenue £127m (2012: £627m) (2012: £211m) (2012: £138m) Order book £2.5bn Order book £3.6bn (incl. May Gurney) - Development & mixed-tenure housing - 100% secured for 2014 97% secured for 2014 pipeline held at £1.5bn Highlig

  6. Slide 6: Haydn Mursell, Group Finance Director

    Haydn Mursell Group Finance Director Kier Group plc - Interim results for the six months ended 31 December 2013 6

  7. Slide 7: Overview: Revenue & operating profit

    Overview: Revenue & operating profit *Excluding corporate costs, significant one-off costs related to restructuring, acquisitions and business closures, amortisation of contract right costs held as intangibles on the balance sheet. Prior year comparatives have been re-presented to reflect this prese

  8. Slide 8: Income statement

    Income statement Six months to 31 December Change 2013* 2012*† £m £m % Operating profit: Group 41.9 16.7 Joint ventures (JVs) 0.4 0.7 Profit on disposal of PFI investments 2.1 5.3 Total operating profit 44.4 22.7 +96 Net finance cost (7.6) (3.3) Profit before tax 36.8 19.4 +90 Underlying earnings pe

  9. Slide 9: Operating profit

    Operating profit Six months to 31 December Change Performance by division 2013* 2012*† £m £m % Construction 17.3 13.5 +28 Services 24.4 9.0 +171 Property Property & PFI 10.6 4.9 +56 Homes 0.5 2.2 Corporate (8.4) (6.9) -22 Total operating profit 44.4 22.7 +96 Net finance cost (7.6) (3.3) Profit befor

  10. Slide 10: Exceptional items

    Exceptional items Six months to 31 December 2013 2012 £m £m Closure and discontinuation of scaffolding and related businesses - (2.1) Restructuring programme - (2.3) Costs in relation to the acquisition of May Gurney Integrated Services plc Transaction (7.5) - Integration (14.5) - Total exceptional

  11. Slide 11: Order books

    Order books At 31 December At 30 June Change At 31 December 2013 2013 % 2012 £bn £bn £bn Construction 2.5 2.2 +15 2.1 Services 3.6 2.0 +77 2.1 Total 6.1 4.2 +45 4.2 Kier Group plc - Interim results for the six months ended 31 December 2013 11

  12. Slide 12: Balance sheet summary

    Balance sheet summary At 31 At 30 June Change At 31 December December 2013 2013 2012 £m £m £m £m Intangible assets 324 30 +294 27 Property, plant and equipment 192 109 +83 104 Investment in JVs 32 30 +2 21 Residential land and work in progress 260 249 +11 255 Other working capital (130) (232) +102 (

  13. Slide 13: Group net debt

    Group net debt Kier Group plc - Interim results for the six months ended 31 December 2013 13

  14. Slide 14: Pensions

    Pensions At 31 At 30 June Change At 31 December December 2013 2013 2012 £m £m £m £m Kier Group Pension Scheme: Market value of assets 815 784 +31 752 Present value of liabilities (872) (832) -40 (815) Deficit in the scheme (57) (48) -9 (63) Deferred tax 12 11 +1 15 Net pension liability (45) (37) -8

  15. Slide 15: May Gurney update

    May Gurney update  Cost savings  Progressing in line with the integration plan  On track to deliver £5m in FY14  Integration costs forecast at c£28m as planned  £15m incurred to 31 December 2013, shown in exceptional  Remainder to be spent in second half  Fair value exercise completed  Provi

  16. Slide 16: Summary

    Summary  Operating profit in line with expectations at £44m*  MG acquisition  Cost savings on track and fair value exercise completed  Today’s cash position broadly in line with guidance  Tight supply chain payment terms continue  ‘Amend and extend’ of RCFs has further strengthened the capital

  17. Slide 17: Construction

    CONSTRUCTION Kier Group plc - Interim results for the six months ended 31 December 2013 17

  18. Slide 18: Construction

    Construction Six months to 31 December Year to June 2013 2013 2012 Change £m £m £m % Revenue 742 627 +18 1,308 Operating profit* 17.3 13.5 +28 30.4 Operating margin* 2.3% 2.1% 2.3% Order book (secure and probable) 2,577 2,083 +23 2,229 Cash 272 313 320 *Excluding significant one-off costs related to

  19. Slide 19: Construction revenue by sector

    Construction Revenue Year to Expectation Future Sector June 2012 June 2014 trend Education 37% 23% Living / Residential 7% 12% Health 6% 7% Transportation 6% 7% Commercial and mixed use 11% 11% Power, industrial, utilities and waste 7% 17% (incl. nuclear) Overseas 5% 10% Defence 0% 1% Other (inc blu

  20. Slide 20: Construction - UK building

    Construction - UK building Broadmoor Hospital  Increased market share growth in health and defence sectors  £115m redevelopment of Broadmoor Hospital  £170m award from NHS frameworks  £121m Hercules joint venture for RAF Lyneham first phase at RAF Lyneham  £400m MOD National Capital Works frame

  21. Slide 21: Construction - UK building: Education

    Construction - UK building Education  Continued strong contribution from education sector c£200m new work including:  £120m East 2 and North East 2 Priority Schools Building Programme through academies framework ArtHouse, King’s Cross  King’s Cross development generating further £100m new opportu

  22. Slide 22: Construction - Infrastructure

    Construction - Infrastructure 2009/10 Revenue - £6bn* 2013/14 Revenue - £7bn* 2017/18 Revenue - £10bn* 3% market share 5% market share Maintain market share • Significant potential in transport • Energy sector growth impacted by timing on political decision making Source: Industry / Kier data * Addr

  23. Slide 23: Construction - Infrastructure

    Construction - Infrastructure Crossrail  Increased capability providing access to larger market  Increased interest from joint venture partners  Expanding business model  2017/18 markets underpinned Mersey Gateway by Government infrastructure investment plans Kier Group plc - Interim results for

  24. Slide 24: Construction - Overseas

    Construction - Overseas Hotel development in St Kitts  >£50m new hotel work secured in Caribbean with new opportunities  Strong pipeline >£300m of new negotiated opportunities in Middle East  £34m Meeras development  £35 Kempinsky hotel  £26m Dubai University – now awarded  On target to delive

  25. Slide 25: Services

    SERVICES Kier Group plc - Interim results for the six months ended 31 December 2013 25

  26. Slide 26: Services

    Services Six months to 31 December Year to June 2013 2013 2012 Change £m £m £m % Revenue 563 211 +167 437 Operating profit* 24.4 9.0 +171 19.3 Operating margin* 4.3% 4.3% 4.4% Order book (secure and probable) 3,583 2,111 +69 2,023 Cash 9 24 30 *Excluding significant one-off costs related to restruct

  27. Slide 27: Services revenue by sector

    Services Revenue Expectation Future trend Sector June 2014 Highways 24% Housing maintenance - public 23% Housing maintenance - private 4% Utilities and other regulated 22% Environmental 13% Facilities Management (FM) 11% Fleet & Passenger Services (FPS) 3% Kier Group plc - Interim results for the si

  28. Slide 28: Services

    Services  Successful mobilisation of £200m Suffolk Highways contract– 1 Highways maintenance October  Key wins of >£450m  £110m 3 year Sheffield housing maintenance  £20m Sheffield FM contract Sheffield FM  £107m 5 year Western Power Distribution  FM servicing of MOD sites  AMP6 – key target

  29. Slide 29: May Gurney

    May Gurney Gritting and snow removal  Integration on course  100% customer contracts retained  IT investment  Cost synergies on track Waterways maintenance  Opportunities in key sectors e.g. utilities, highways Kier Group plc - Interim results for the six months ended 31 December 2013 29

  30. Slide 30: May Gurney & Kier

    May Gurney & Kier Rail opportunities  Revenue synergies  Western Power Distribution  Rail opportunities e.g. Wales  Highways Agency maintenance  Environment Agency flooding and coastal protection Flood protection  Aberdeen Western Peripheral Route Kier Group plc - Interim results for the six m

  31. Slide 31: Property

    PROPERTY Kier Group plc - Interim results for the six months ended 31 December 2013 31

  32. Slide 32: Property

    Property Year to Six months to 31 December June 2013 2013 2012 Change £m £m £m % Revenue Property and PFI 55 68 -19 98 Homes 72 70 +3 140 Operating profit* Property and PFI 10.6 4.9 16.2 Homes 0.5 2.2 } +56 4.3 Net operating assets Property and PFI 142 113 +25 92 Homes (land bank: 4,168 units) 256 2

  33. Slide 33: Property achievements

    Property achievements Costco  15% return on capital achieved on development schemes  £100m set aside for development property  On track to deliver >500 private homes on our land St Peter’s Waterside, Northampton  Good growth in affordable housing business Kier Group plc - Interim results for the

  34. Slide 34: Property - Development

    Property - Development  Pipeline maintained at £1.1bn  £41m sale of Costco membership warehouse in January 2014  Continued focus on non speculative developments  Preferred bidder for Reading Borough Council regeneration and Northampton development  Positive outlook  Occupier market improving 

  35. Slide 35: Property - Other

    Property - Other  Private Housing  Landbank at 31 December 4,168 plots (June 2013: 4,005 plots)  Completed 263 homes  0.7unit sales per week /trading site  PFI  One disposal contributed £2m profit  Portfolio of eight projects  Valuation: £32m at 7.5% (20 June 2013: £35m) Kier Group plc - Int

  36. Slide 36: Outlook

    Outlook  Construction – workloads improving  Margin pressure remains  Cash generation constrained  Infrastructure and overseas markets growing  Services – continued outsourcing opportunities  May Gurney integration on track  Good customer retention  Cost savings on track  Revenue synergies

  37. Slide 37: Slide 37

  38. Slide 38: Appendices

    APPENDICES Kier Group plc - Interim results for the six months ended 31 December 2013 38

  39. Slide 39: Services Division capabilities

    Services Division capabilities Kier Group plc - Interim results for the six months ended 31 December 2013 39

  40. Slide 40: Property PFI portfolio

    Property PFI portfolio Kier equity/loan stock Sector Project Status Capital value £m Equity % £m Oldham Library Operational 14 1.0 50.0 Local authority Woking Housing In construction 31 2.0 50.0 Student Salford University In construction 64 2.1 25.0 accommodation Kent BSF PFI 1 Operational 69 7.8 80

  41. Slide 41: Net (debt)/cash by division

    Net (debt)/cash by division Kier Group plc - Interim results for the six months ended 31 December 2013 41

  42. Slide 42: Current facilities

    Current facilities Following the Kier Total Facility type May Gurney acq’n Maturity (£m) (£m) (£m) Existing: RCF 120 120 Extended to Sept 2018 Overdraft 20 25 45 FLS loan 30 30 Jan 2017 USPP 62 62 2019, 2022 Leasing 15 90 105 New: RCF 70 70 Extended to Sept 2018 Term loan 50 50 Sept 2016 Total 247 2

  43. Slide 43: Slide 43

Kier Group — H1 FY2014 Earnings Presentation on 6ix