Slide 1: Results for the year ended 30 June 2020
Kier Group Results for the year ended 30 June 2020 17 September 2020
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: Agenda
Agenda Results Summary Q&A Andrew Davies Financials Appendix Simon Kesterton Operational Update Andrew Davies 3
Slide 4: Results Summary
Results Summary Andrew Davies
Slide 5: FY20 Key Highlights
FY20 Key Highlights ✓ COVID-19 • Colleague safety paramount • Site Operating Procedures successfully implemented • Productivity normalised back to pre-COVID-19 levels ✓ Delivering revenue and profitability in-line with management expectations after impact of COVID-19 • Revenue of £3.5 billion (FY19:
Slide 6: Leading market positions
Leading market positions Construction Infrastructure Services Regional Building Highways Utilities Infrastructure • The country’s leading • The leading highways • A leading provider of • Manages high value regional builder maintenance provider repairs and maintains construction and civil essential s
Slide 7: Strategic actions. Significant progress made
Strategic actions. Significant progress made New senior management team appointed; plc board refreshed Cost saving programme, headcount reduced by 1,700 and empowered divisions Environmental Services business substantially exited Reduced capital allocation to the Property business Rationalised the F
Slide 8: COVID-19. Material impact on Fourth Quarter
COVID-19. Material impact on Fourth Quarter Impact Kier Response • Reduced volumes ✓ Cost reduction • Reduced productivity ✓ Temporary salary reductions of c.6,500 employees • New site starts delayed ✓ Accelerated closure of Tempsford Hall HQ • Volume reductions of c.£260m revenue & c.£20m lost adju
Slide 9: Financials
Financials Simon Kesterton New Picture needed
Slide 10: FY20 Income Statement – Continuing Operations
FY20 Income Statement – Continuing Operations Resilient financial performance despite COVID-19 £’m Δ FY20 % FY19 % • Revenue impacted by Revenue 3,475.6 4,106.0 (15.4)% COVID-19 Adj. Operating Profit before COVID costs 86.7 2.5 85.7 2.1 1.2% COVID costs (45.3) - • Adjusted operating profit of £41.4m
Slide 11: FY20 Revenue Performance – Continuing Operations
FY20 Revenue Performance – Continuing Operations Revenue impacted by challenging market conditions, conclusion of several contracts and COVID-19 (15.3)% • Revenue decline of 15.3% in FY20 • COVID-19 – 4th quarter impact c. £260m • Construction and Infrastructure – conclusion of several long-term inv
Slide 12: Adjusted Operating Profit – Continuing Operations
Adjusted Operating Profit – Continuing Operations Adjusted operating profit, before COVID impact of £87m • Adjusted operating profit of £41.4m in FY20 or 1.2% margin • COVID costs of £45m excluding volume impact • Decline against prior year: • Volume/ price/ mix impact due to market conditions and c
Slide 13: Adjusting Items – Continuing Operations
Adjusting Items – Continuing Operations Adjusting items primarily related to rightsizing the business £’m FY20 FY19 Previous acquisition costs 5.0 29.3 • Previous acquisition costs – charges related to contracts acquired as part of a previous Business divestment related expenditure 33.6 120.4 acquis
Slide 14: FY20 Cost Saving Programmes
FY20 Cost Saving Programmes One-off costs incurred to access + £100m of annualised cost savings run rate £’m FY20 FY19 £m FY21 run rate Redundancy costs 29.5 38.4 Wages & Salary 82 Professional advisor fees 34.2 13.3 Outsourcing 7 Footprint 11 Restructure of a Construction business stream 61.5 - Tot
Slide 15: FY20 Free Cash Flow – Continuing Operations
FY20 Free Cash Flow – Continuing Operations Driving for normalised levels of free cash flow generation £’m FY20 FY19 Adjusted EBITDA before COVID (a) 126.2 115.1 • Operating cash flow conversion of 72.3% (FY19: IFRS 16 (0.3) - (58.0)%) Working capital (54.7) (126.7) Net capex (8.3) (68.3) • Strong A
Slide 16: FY20 Net Debt Movement
FY20 Net Debt Movement Costs to access future savings and COVID-19 delaying net debt reduction (a) a) Discontinued items of £42m includes £28.9m COVID-19 impact 16
Slide 17: Financing and Liquidity
Financing and Liquidity Significant liquidity headroom under borrowing facilities Maturities 800 KPIs Jun 2020 700 Net debt (£m) 310 £m 600 500 Average month end net debt (£m) 436 400 300 Covenant amendments 200 • Jun 2020: covenants waived 100 • Through to Dec 2021 – covenant resets agreed subject
Slide 18: Pension
Pension Revised schedule of pension payments agreed • As at 30 June 2020, Group’s pension schemes’ surplus £’m 30 June 2020 30 June 2019 Δ was £32m (FY19: £16m) Group Pension Schemes Market value of assets 1,938 1,789 149 • Improved surplus position driven by better than expected returns on the sche
Slide 19: Kier Living Update
Kier Living Update Re-organised and optimised Living business held as asset for sale £’m FY20 % FY19 % • Strong business but limited operational synergies with other Revenue (including JV’s) 234 373 parts of the Group Adjusted Operating Profit (5.4) (2.3) 38.4 10.3 • Living business classified as di
Slide 20: Operational Update
Operational Update Andrew Davies
Slide 21: Construction
Construction Well placed to benefit from additional UK Government opportunities £’m FY20 FY19 Δ Commercial & Operational Update Revenue 1,588 1,849 (14)% • Awarded places on 16 frameworks - £38bn typically Adjusted Operating Profit 36.1 67.2 (46)% over 4 years Operating margin 2.3% 3.6% (130) bps •
Slide 22: Construction - adopting a modular approach
Construction - adopting a modular approach Overview ✓Design & Construct of HMP Wellingborough Prison ✓Contract value of £250m ✓14 separate buildings ✓“Design for Manufacture & Assembly” (DfMA) ✓Delivery optimised ✓Digitally enabled project ✓c.80% of the design standardised ✓Over 60,000 standardised
Slide 23: Infrastructure Services
Infrastructure Services High quality infrastructure work secured and continuing to be delivered £’m FY20 FY19 Δ Commercial & Operational Update Revenue 1,506 1,669 (10)% • Key contract wins include Area 4 maintenance for Adjusted Operating Profit 31.3 53.3 (41)% Highways England - £160m Operating ma
Slide 24: Property, Facilities Management & Environmental Services
Property, Facilities Management & Environmental Services Capital allocation and winding down certain legacy business remains a priority £’m FY 20 FY 19 Δ • Property – reduced capital employed Revenue 370 585 (36.8)% • Reduced by £40m to £145m over last 12 months Adjusted Operating Profit 5.1 12.3 (5
Slide 25: Strong Order Book
Strong Order Book Strong order book underpinned by contract wins and extensions £7.9bn Orderbook £4.6bn £2.3bn £1.0bn Infrastructure Construction Other (FY19: £4.3bn) (FY19: £2.6bn) (FY19: £1.0bn) • Order book of £7.9bn as at 30 June 2020 underpinning • FY20 revenue recognised £3.3bn: medium term gr
Slide 26: Performance Excellence
Performance Excellence A new culture at Kier 26
Slide 27: Summary
Summary Experienced management team 1 Significant progress on operational and financial turnaround Strong market positions in infrastructure and construction 2 Focus on organic growth through frameworks and contract wins Significant growth opportunities aligned with UK Government spending 3 c Perfor
Slide 28: Q&A
FiKIER Q&A
Slide 29: Appendix
eal KIER x Append nal KIER
Slide 30: Guidance
Guidance Item Technical Guidance Finance costs Proportional with average net debt Tax rate c.19% Pension 2020 Revised deficit recovery plan Capex c.£10m-£15m Item Market Drivers Construction Demographic drivers and UK Government investment Infrastructure UK Government investment Utilities AMP7 and U
Slide 31: IFRS 16
IFRS 16 IFRS 16 has no impact on cash flow and minimal impact on income statement Opening reserve adjustments £m • IFRS 16 ‘Leases’ adopted in FY20, replacing IAS 17 Right-of-use assets recognised 176.3 • Operating leases previously not recognised as liabilities brought onto the balance sheet along
Slide 32: Construction - Segment Revenue FY20
Construction - Segment Revenue FY20 Construction - Division % Education Health UK Govt Private Total Total Construction 35% 13% 25% 27% 100% Build - Regional 45% 15% 19% 21% 100% Build - Major Projects - 18% 72% 10% 100% Overseas - - - 100% 100% Housing Maintenance - - 73% 27% 100% 32
Slide 33: Infrastructure - Segment Revenue FY20
Infrastructure - Segment Revenue FY20 Infrastructure - Division % Highways Rail Power Water Telco Other Total Total Infrastructure 57% 9% 15% 14% 4% - 100% Highways 100% - - - - - 100% Utilities - 8% 33% 42% 16% - 100% Infrastructure - Other 10% 38% 33% 15% - 3% 100% 33
Slide 34: Sustainability
Sustainability Kier’s new sustainability framework to create a resilient business Key focus areas include: Resilient environment – resource security 1 and environmental protection Resilient community – better collaboration with 2 customers, suppliers, safeguarding employee health and retaining talen