Kier Group Plc · LSE:KIE

Kier — Canaccord Genuity UK Housebuilding breakfast (October 2017)

25 slides from Kier's conference presentation, Oct 11, 2017

  1. Slide 1: Kier Group – Canaccord Genuity UK Housebuilding breakfast

    Document title Subtitle for the presentation Kier Group Canaccord Genuity UK Housebuilding breakfast Kier Group plc 1

  2. Slide 2: Disclaimer

    Disclaimer No representation or warranty, expressed 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

  3. Slide 3: Market-leading positions

    Market-leading positions Strong Stronglong-term fundamentals long-term fundamentals Property & Investment Leading UK Leading Housing infrastructure player regional builder (new build and maintenance) £1.5bn+ £1.8bn+ £600m+ Represents 90% of Group turnover Invest, Build and Maintain all asset classes

  4. Slide 4: Revenue and underlying operating profit – June 2017

    Revenue and underlying operating profit – June 2017 Revenue1 Underlying operating profit2 Property Residential Construction Services 4% 9% 15% 40% 13% £4,265m 49% £175m +5% +5% 47% 23% 1 Group and share of joint ventures from continuing operations. 2 Arising on continuing operations, stated before n

  5. Slide 5: Housebuilding highlights

    Housebuilding highlights  Kier delivers all aspects of tenure  Private sales and pricing remain strong ‒ Private sales ASP c.£240,000 ‒ Selling 0.7 units per trading site per week  Demand for mixed tenure housing continues ‒ Assisted by Government initiatives and cross party support  Secured a p

  6. Slide 6: Kier's mixed tenure model

    Kier’s mixed tenure model Mixed tenure  Open market sales Blended  Affordable housing business  Contracting  Operating margin 10% Financial  ROCE >20% targets  Double current volumes by 2020  Significant HCA, Local Market authority and Housing position Association relationships  4% market sh

  7. Slide 7: Residential performance

    Residential performance Year ended 30 June 2017 2016 Change £m £m % Revenue1 376 353 +6 Underlying operating profit2 22.8 20.3 +12 Average capital3 Mixed tenure 39 39 - Private including Cross Keys JV (Kier owned land) 160 192 -17 Total average capital 199 231 -14 Return on average capital (ROCE) 11

  8. Slide 8: Case studies: Silver Court, Brownhills, West Midlands

    Case studies: Silver Court, Brownhills, West Midlands  Strong long-term relationships with Walsall MBD and Walsall Housing Group  The 6th in a programme of schemes  3.5 ha site, brief to build 101 apartments in 2 blocks and 6 elderly care bungalows  Masterplan to maximise private sales to delive

  9. Slide 9: Case studies: Silver Court, Brownhills, West Midlands

    Case studies: Silver Court, Brownhills, West Midlands  Kier produced a masterplan for 157 new homes - 107 for Walsall Housing Group - 50 for open market sale - Surplus market sale proceeds cross subsidise the affordable housing - Monthly valuations for the balance of affordable housing cost  Blend

  10. Slide 10: Case studies: Balaam Wood, Birmingham

    Case studies: Balaam Wood, Birmingham  Partnership with Birmingham City Council  Cleared sink estate in a socially-challenged environment  Birmingham City Council required a masterplan to maximise affordable housing delivery with no capital outlay  Utilised our core skills - Finding imaginative

  11. Slide 11: Case studies: Balaam Wood, Birmingham

    Case studies: Balaam Wood, Birmingham  Kier master-planned 400 new homes - 128 affordable homes to Birmingham City Council - 272 for open market sale by Kier - Affordable housing completely cross subsidised by private sale  Scheme delivery over 6 years, 2 years early  ROCE in excess of 20%  Blen

  12. Slide 12: Residential outlook

    Residential outlook  Shortage of housing in the UK ‒ Affordable and private  Well positioned ‒ Modest value range ‒ National coverage, outside London ‒ Provision of new build and maintenance  On track with Vision 2020 targets ‒ >15% ROCE on £200m capital base following Cross Keys joint venture V2

  13. Slide 13: Modern Methods of Construction

    Modern Methods of Construction Design / Offsite / Component Form • Ability to leverage Kier Construction Capability • BIM innovators with in-house IP • Case studies of full offsite manufacture • MoD, Hotels, Steel Frame • Manufacture for build • “Roof in a Day” Kier Group plc 13

  14. Slide 14: Labour availability and Demographics

    Labour availability and Demographics Skills Gap / Brexit • Shaping your World • https://shapingyourworld.co.uk/ • 180,000 Non-UK construction workers impacted by Brexit • Fundemental Image Gap • 73% of Parents would not want their child in construction • 2/3 of teachers and career advisors perceive

  15. Slide 15: Strong platform for future growth

    Strong platform for future growth  Leading market positions in robust and growing sectors - >90% of Group revenue and profit  Stronger, simplified and focused Group - Portfolio simplification substantially complete - Well managed balance sheet - Improved order book  Clear strategy and direction 

  16. Slide 16: Financial appendix

    Financial appendix Kier Group plc 16

  17. Slide 17: Group net debt

    Group net debt Strong operating cash conversion1 of 113% £m 100 164 4 50 67 0 (72) (50) (48) (100) (76) (99) (50) (110) (150) (200) June 2016 Operating Working Capex and Net Exceptionals Pension, Dividend June 2017 net debt 2 cash flows capital finance investment interest tax interest, tax net debt

  18. Slide 18: Stable working capital

    Stable working capital Working capital flows FY15 FY16 FY17 £m 70 Previous working Debtor days 18 16 16 60 capital gains have been maintained 50 WIP days 55 50 44 40 30 20 Creditor days (33) (32) (38) 10 - Accrual days (19) (26) (19) FY15 FY16 FY17  Working capital improvement over the last three y

  19. Slide 19: Contracting cash balance

    Contracting cash balance Net cash Construction & Services £m 450 400 FY 17 350 300 FY 16 250 200 150 100 50 - Jun Oct Dec Mar Jun  Average net cash in Construction and Services increased by £60m to £200m Kier Group plc 19

  20. Slide 20: Well managed Group net debt

    Well managed Group net debt Discipline 2017 2016 Net debt : EBITDA1 <1x 0.7 0.7 Peak Group net debt: Property & Residential division asset cost <1x 0.9 0.8  Cash is a key metric  Vision 2020 target of net debt: EBITDA1 <1x maintained at June 2017  Net debt growth in line with EBITDA1 growth, main

  21. Slide 21: Asset backed Group net debt

    Asset backed Group net debt Net Debt (£m) Asset value (£m) - - Jun Oct Dec Mar Jun (100) Net debt FY16 100 Net debt FY17 (200) 200 (300) 300 (400) 400 Assets FY16 (500) Assets FY17 500 (600) 600  The quantum and timing of investments and disposals in Property and Residential increased average net d

  22. Slide 22: Other appendix

    Other appendix Kier Group plc 22

  23. Slide 23: Safety, Health and Environment

    Safety, Health and Environment Vision 2020 Targets  Accident incidence rate of zero  Best in sector safety performance  Workforce health and wellbeing improved  Minimise the impact of our activities on the environment  All employees take ownership of safety, health and environmental issues Curr

  24. Slide 24: Portfolio simplification

    Portfolio simplification P & L £m Cash £m 3 year 3 year FY16 FY17 FY18 FY16 FY17 FY18 total total £ Closure of businesses Caribbean (23) (60) (83) (18) (43) (17) (78) Hong Kong (26) (26) (11) 14 3 Sale of non-core operations Mouchel Consulting 40 40 59 59 Biogen (5) (8) (13) 10 10 Other Cross Keys (

  25. Slide 25: Kier Group plc

    Kier Group plc 25

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