Slide 1: Welcome to Kier Group's Preliminary 2013 results
Welcome to Kier Group’s Preliminary 2013 results Paul Sheffield Haydn Mursell Chief Executive Group Finance Director
Slide 2: Highlights
Highlights Resilient performance Underlying profit before tax* £63m Strong net cash position £60m after investing approximately £77m Dividend increased to 68p Order book of £5.9bn (incl. May Gurney) Improved efficiency through restructuring and cost control Acquisition of May Gurney Cu
Slide 3: Key achievements
Key achievements Construction Services Property Revenue £1,308m Revenue £437m Revenue £238m Order book £2.2bn Order book £3.7bn Development & mixed- - 100% secured for 2014 (incl. May Gurney) - 95% secured for 2014 tenure housing pipeline Awards Potential extensions £1.7bn £1.5bn (incl. May Gurney)
Slide 4: Haydn Mursell
Haydn Mursell Group Finance Director 4
Slide 5: Overview: revenue & profit
Overview: revenue & profit June 2013 June 2012 Revenue £1,983m -4% Revenue £2,069m Construction £1,308m Construction £1,383m Services £437m Services £445m Property £238m Property £241m 12% 12% 22% 21% 66% 67% Operating profit* £70.2m -9% Operating profit* £77.3m Construction £30.4m Construction £35.
Slide 6: Income statement
Income statement Year to 30 June Change 2013 2012 £m £m % Operating profit: Group 59.0 66.4 Joint ventures (JVs) 0.9 1.3 Profit on disposal of PFI investments 9.8 6.7 Total operating profit * 69.7 74.4 -6 Net finance cost (6.3) (4.4) Profit before tax * 63.4 70.0 -9 Amortisation of intangible assets
Slide 7: Operating profit
Operating profit Year to 30 June Change Performance by division 2013 2012 £m £m % Construction 30.4 35.2 -14 Services 19.3 20.1 -4 Property 16.2 18.7 -13 Homes 4.3 3.3 +30 Corporate (0.5) (2.9) +83 Total operating profit * 69.7 74.4 -6 Net finance cost (6.3) (4.4) Pre-tax profit * 63.4 70.0 -9 * Bef
Slide 8: Exceptional items
Exceptional items Year to 30 June 2013 2012 £m £m Closure and discontinuation of scaffolding and related businesses (1.9) - Restructuring programme (10.1) - Loss on disposal of the tower crane and other discontinued businesses (3.2) - Costs relating to the acquisition of May Gurney Integrated Servic
Slide 9: Earnings per share and dividend
Earnings per share and dividend Year to 30 June Change 2013 2012 % Weighted average number of shares (m) 39.3 38.0 Underlying earnings per share* 136.2p 156.8p -13 Basic earnings per share 95.8p 142.6p Dividend per share 68.0p 66.0p +3 * Before exceptional items and amortisation of intangible assets
Slide 10: Order books
Order books At 30 June Change 2013 2012 £m £m % Construction 2,229 2,207 +1 Services 2,023 2,050 -1 Total 4,252 4,257 - Construction 6,500 Services 6,000 5,500 5,000 +1,703 +1,330 -1,308 4,500 +410 -437 4,000 5,955 3,500 3,000 4,257 4,252 2,500 2,000 1,500 June 2012 Construction Construction Service
Slide 11: Balance sheet summary
Balance sheet summary At 30 June Change 2013 2012 £m £m £m Intangible assets 30 29 +1 Property, plant and equipment 109 103 +6 Investment in JVs 30 8 +22 Inventories 399 395 +4 Other working capital (382) (431) +49 Cash 152 159 -7 Borrowings (92) (30) -62 Provisions (57) (50) -7 Pensions (net of def
Slide 12: Group net cash bridge
Group net cash bridge £m 225 200 -30 175 +76 150 -47 125 -17 -11 100 -20 75 -20 129 50 60 25 - - June 2012 net Operating cash Lloyds deferred Net capital and Working capital Exceptionals Pension deficit Tax, interest, June 2013 net cash inflow (incl PFI consideration investment movement contribution
Slide 13: Pensions
Pensions At 30 June Change 2013 2012 £m £m £m Kier Group Pension Scheme: Market value of assets 784 722 +62 Present value of liabilities (832) (781) -51 Deficit in the scheme (48) (59) +11 Deferred tax 11 14 -3 Net pension liability (37) (45) +8 Net effect of Sheffield Pension Scheme (1) 1 -2 Total
Slide 14: Acquisition of May Gurney - post balance sheet highlights
Acquisition of May Gurney - post balance sheet highlights £223m consideration 14.7m new shares issued, equates to approx £184m new share capital 50p per share in cash, equates to approx £35m, serviced by a new £50m 4-year term loan Manageable net debt position Increased banking facilities
Slide 15: Update on cost synergies
Update on cost synergies £20m Dedicated teams £4m Focussed approach with £15m specific work streams £15m Progressing in line with £5m plan £10m On track to deliver £5m in 2014 £5m £8m £5m Potential to deliver >£15m p.a. in 2015 £3m £0m Full update in February 2014 2015 2016 2014 One-of
Slide 16: Paul Sheffield
Paul Sheffield Chief Executive 16
Slide 17: Construction
Construction Southend Pier Maggotty Hydro Scheme, Jamaica Mersey Gateway London St.Saviours school 17
Slide 18: Construction
Construction Year to 30 June 2013 2012 Change £m £m % Revenue 1,308 1,383 -5 Operating profit * 30.4 35.2 -14 Operating margin * 2.3% 2.5% Order book (secure and probable) 2,229 2,207 +1 Cash 320 361 -11 FY 2.7% 2.6% 2.6% 2.5% H1 1,492 2.3% 1,445 39.3 1,383 1,417 39.1 1,308 36.2 35.2 30.4 1,492 1,58
Slide 19: Construction: revenue by sector
Construction Revenue Year to Year to Expectation Future Sector June 2012 June 2013 June 2014 trend Education 37% 31% 23% Living 7% 11% 14% Health 6% 10% 10% Transportation 6% 10% 10% Commercial and mixed use 11% 9% 11% Power, industrial, utilities and waste (incl. 7% 9% 11% nuclear) Overseas 5% 7% 9
Slide 20: Construction strategy (by revenue)
Construction strategy (by revenue) 2010 2013 Medium Term UK Building UK Infrastructure Overseas Historic Transition Future Transition • Focus on Infrastructure • UK Growth drivers • Power/Nuclear • Government investment targets • Waste • Energy markets • Transport • Transport strategy • Water • £100
Slide 21: Construction: UK Building
Construction: UK Building Education: £300m awards mainly through academies framework P21+ and Healthcare: £265m Living: £150m+ secured £130m+ of commercial Arthouse, London developments, including Argent £90m 100% of 2014 revenue secured More than 10% ahead of last year 21
Slide 22: Construction: UK Infrastructure
Construction: UK Infrastructure Crossrail >£800m of work underway Nuclear: £80m Urenco Waste-to-Energy: £90m Wakefield/Plymouth Mersey Gateway JV: £450m Mersey Gateway Increased presence in Rail with May Gurney Strong pipeline (£2.5bn) of tender opportunities being bid 22
Slide 23: Construction: Overseas
Construction: Overseas £40m hotel and commercial in Haiti, Caribbean £32m negotiated hotel in Middle East Government facility, Abu Dhabi, £48m Seeking opportunities for expansion in adjacent geographies in Asia, the Middle East and the Admiralty Integrated Station and Shatin Central Line Ena
Slide 24: Services
Services Maintenance, Sheffield Facilities Management, Legal & General Recycle First Highways maintenance 24
Slide 25: Services
Services Year to 30 June 2013 2012 Change £m £m % Revenue 437 445 -2 Operating profit * 19.3 20.1 -4 Operating margin * 4.4% 4.5% Order book (secure and probable) excluding May Gurney 2,023 2,050 -1 Cash 30 19 +57 4.5% 4.5% 4.5% 4.4% FY 4.1% 21.7 21.4 20.1 H1 19.3 1,492 1,585 1,417 17.9 484 4.5% 4.5
Slide 26: Services
Services Revenue Expectation Future trend Sector June 2014 Highways 24% Housing maintenance - public 21% Housing maintenance - private 5% Utilities and other regulated 21% Environmental 13% Facilities Management (FM) 11% Fleet & Passenger Services (FPS) 5% 26
Slide 27: Combined Services order book longevity
Combined Services order book longevity 900 • £3.7bn order book 800 • £1.7bn potential contract extensions 700 600 500 400 300 200 100 - 2014 2015 2016 2017 2018 2019 2020 2021 2022 Order Book Potential Contract Extensions 27
Slide 28: Stronger and broader LA markets
Stronger and broader LA markets PROPERTY ESTATE FACILITIES MANAGEMENT ENERGY MANAGEMENT HOUSING MAINTENANCE FLEET SERVICES AFFORDABLE HOUSING STREET MAINTENANCE GROUNDS MAINTENANCE STREET LIGHTING UTILITIES REFUSE COLLECTION HIGHWAY MAINTENANCE 28
Slide 29: May Gurney integration update
May Gurney integration update Customer feedback is positive: no loss of contracts since acquisition Combined capabilities creating opportunities already bidding together on >£500m of new work Key members of MG leadership have senior roles in ongoing business Consistent risk management and
Slide 30: Property
Property Sydenham Watford health centre campus Chestnut Hemel Place, Hempstead Potton Travelodge Dagenham fire station 30
Slide 31: Property
Property Year to 30 June 2013 2012 Change £m £m % Revenue Property and PFI 98 92 +7 Homes 140 149 -6 Operating profit Property and PFI 16.2 18.7 -13 Homes 4.3 3.3 +30 Net operating assets Property and PFI 92 42 +119 Homes (land bank: 4,005 units) 253 288 -12 • 15% return on capital achieved in prope
Slide 32: Property: Development
Property: Development Pipeline increased to £1.1bn+ Return on capital of 15% targeted >15 schemes completed per annum Non-speculative strategy maintained Swan Hunter shipyard Market sentiment improving £100m investment will be achieved during 2014 32
Slide 33: Property: Housing and PFI
Property: Housing and PFI Mixed tenure Delivered 376 homes Strong order book of c.£400m Private Land bank at June 2013 of 4,005 plots (2012: 4,180 plots) New housing land £17m; deferred land receipts £10m Beasley Place, Chesterton Stable private home sales, 556 completions PFI Reduced de
Slide 34: Outlook
Outlook Strong Construction and Services order books of £5.9bn FY2014 secured positions in line or ahead of last year Significant contribution from Property with £1.5bn pipeline 15% return on capital achieved in property development Strengthened capital structure over the medium term May
Slide 35: Appendices
Appendices Southend Pier Whitburn leisure centre, Scotland Central Mansfield bus station Wolsey Place shopping centre 35
Slide 36: Admiralty Station, Hong Kong
Admiralty Station, Hong Kong c£200m target cost contract - MTR Corporation 36
Slide 37: Southend Pier
Southend Pier [KIER DEFINING TOMORROW'S ENVIRONMENTS 37
Slide 38: Academies
Academies Wellington Academy Barking skills centre Essa Academy Ormiston Bushfield Academy 38
Slide 39: Services: current bid pipeline
Services: current bid pipeline Annual value Duration Potential Start Customer £m (years) Gross £m Date Ministry of Defence Housing Maint 60 5+5 600 2014 Staffordshire CC Highways 78 5(1) 390 2014 East Sussex CC (rebid) Highways 33 10 330 2015 Anglian Water (2) Utilities 30 5+5 300 2014 United Utilit
Slide 40: Post acquisition geographic coverage
Post acquisition geographic coverage Local Authority footprint Northamptonshire: £42m p.a. Kier: • Waste Collection • Kier: 43 LAs • Recycling • Grounds Maintenance • Street Cleansing • May Gurney: 30 LAs • Social Housing Planned Maintenance May Gurney: • The Enlarged Group would provide a service
Slide 41: Net cash by division
Net cash by division Net Group cash 60 129 Construction 320 361 Services 30 19 Average net debt £(4)m -40 Property (June 2012: average net cash £95m) -21 -226 Homes -242 -300 -200 -100 0 100 200 300 400 June 2013 June 2012 41
Slide 42: Post acquisition facilities
Post acquisition facilities Facility type Kier May Gurney Status re Combined Group May Gurney (£m) (£m) arrangements (£m) Existing: RCF 120 23 cancelled 120 Overdraft 20 25 retained £20m 40 FLS loan 30 30 USPP 62 62 Leasing 15 93 retained 108 New: RCF 70 Term loan 50 Total 247 141 480 42
Slide 43: Property: PFI portfolio
Property: PFI portfolio Sector Project Status Capital value Kier equity/loan Equity £m stock £m % Local authority Oldham Library Operational 14 1.0 50.0 Woking housing Preferred bidder 31 2.0 50.0 Student accommodation Salford university Preferred bidder 64 2.0 25.0 Education Kent BSF PFI 1 Operatio