Kier Group plc · LSE:KIE
Kier — FY2003 Earnings Presentation
39 slides from Kier's earnings presentation, Sep 17, 2003
Slide 1: Kier Group plc Preliminary results presentation to analysts
Kier Group plc Preliminary results presentation to analysts 17 September 2003
Slide 2: Introduction
Introduction Chairman - Colin Busby Kier Group plc preliminary results presentation to analysts 17th September 2003 2
Slide 3: Highlights
Highlights • Operating profit up 29.4% to £33.9m • Profit before tax at £33.3m up 22.0% (before 2002 exceptionals) • EPS of 69.5p up 19.2% (before exceptionals) • Strong cash performance - £53.5m generated from operating activities • Construction & Services order book at £1.75bn • Homes order book a
Slide 4: EPS record since 1993
EPS record: since 1993 (the employee buyout) 80 70 • 11th year of 60 continuous growth • Compound 50 growth in EPS of 23% per annum pence 40 Flotation since flotation 30 • Return on 20 shareholders’ funds of 40% per annum 10 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Kier Group plc pre
Slide 5: Financials
Financials Finance Director – Deena Mattar Kier Group plc preliminary results presentation to analysts 17th September 2003 5
Slide 6: Financial summary
Financial summary: £ million Year to 30 June 2003 2002 % change Total turnover 1,445.6 1,382.7 +4.5 Group and joint venture operating profit 37.1 26.2 +41.6 Share of operating loss – Belan (2.3) - - Goodwill amortisation (0.9) - - Total operating profit (acquisition: loss £7.3m) 33.9 26.2 +29.4 Prof
Slide 7: Financial summary (continued)
Financial summary (continued) Year to 30 June 2003 2002 % change Dividends per share – total for year 16.4p 14.2p +15.5 Dividend cover 4.2x 4.2x - Earnings per share: undiluted 69.5p 60.4p +15.1 fully diluted 68.2p 58.8p +16.0 Earnings per share excluding exceptional items: undiluted 69.5p 58.3p +19
Slide 8: Construction & Services: performance
Construction & Services: performance £ million Year to 30 June 2003 2002 % change Turnover: Kier Regional 787.6 724.9 +8.6 Kier National 334.9 412.6 -18.8 Support Services 115.4 80.9 +42.6 1,237.9 1,218.4 +1.6 Operating profit 12.9 12.5 +3.2 Margin % 1.04 1.03 - Pre-tax profit 21.2 20.8 +1.9 Kier Gr
Slide 9: Homes & Property: performance
Homes & Property: performance £ million Year to 30 June 2003 2002 % change Turnover: Kier Residential 180.1 145.6 +23.7 Kier Property 21.2 13.2 +60.6 201.3 158.8 +26.8 Operating profit: Kier Residential 26.3 20.4 +28.9 Kier Property 6.1 1.8 +238.9 32.4 22.2 +45.9 Operating margin: Kier Residential 1
Slide 10: Kier Property: performance
Kier Property: performance £ million Year to 30 June 2003 2002 Turnover: Kier 8.1 12.6 BoS joint venture 13.1 0.6 21.2 13.2 Operating profit: Kier 3.7 1.8 BoS joint venture 2.4 - 6.1 1.8 Kier Group plc preliminary results presentation to analysts 17th September 2003 10
Slide 11: Infrastructure Investment: performance
Infrastructure Investment: performance (excluding Construction & Support Services) £ million Year to 30 June 2003 2002 Turnover (Kier’s share of SPV) 6.4 5.5 SPV results – Kier share: Operating profit 1.1 0.6 Interest receivable/payable 0.4 (0.4) 1.5 0.2 Cost of bid team and abortive costs: Bid team
Slide 12: Segmental analysis: net operating assets
Segmental analysis: net operating assets £ million Year to 30 June 2003 2002 change Construction (154.0) (148.6) -5.4 Support Services 10.2 2.6 +7.6 Property (14.2) 22.9 -37.1 Homes 179.2 145.9 +33.3 Infrastructure Investment 11.1 6.7 +4.4 Centre (0.9) (1.4) +0.5 31.4 28.1 +3.3 Cash, net of debt 62.
Slide 13: Significant cash flows
Significant cash flows: £ million Year to 30 June 2003 2002 change Trading: Cash flow from operating activities 53.5 50.0 +3.5 Net purchase of fixed assets (8.6) (9.4) +0.8 44.9 40.6 +4.3 Corporate transactions: Allison Homes and others (2.2) (25.0) - Partnerships First/Belan (1.9) (2.5) - Sheffield
Slide 14: Profit to cash conversion since flotation
Profit to cash conversion £ million: since flotation Cumulative retained profit Cumulative adjusted cash flow 100 90 80 Cumulative adjusted cash 70 flow is the cumulative cash flow for the Group 60 excluding acquisitions, 50 investments, disposals 40 and share transactions and £28m relating to the 3
Slide 15: Goodwill
Goodwill: £ million £m Period of write-off (years) Partnerships First 6.2 10 Sheffield: paid on acquisition 8.7 7-10 deferred 7.1 7 22.0 Goodwill amortisation (0.9) At 30 June 2003 21.1 Goodwill amortisation 2004 e£2.7m Kier Group plc preliminary results presentation to analysts 17th September 2003
Slide 16: Pensions FRS 17
Pensions FRS 17: £ million Estimated 4 September 30 June 30 June 2003 2003 2002 Market value of assets 307.2 292.7 296.8 Present value of liabilities (392.4) (406.5) (362.9) Deficit (85.2) (113.8) (66.1) Deferred tax asset 25.6 34.1 19.8 Net pension liability (59.6) (79.7) (46.3) • Cash flows in the
Slide 17: Pensions
Pensions • SSAP 24 Charge - £13.0m (2002: £11.0) • Actions taken: • Defined benefit scheme closed to new members 1 January 2002 • Employer’s contributions increased by 1% of payroll • Employees’ contributions increasing by 1% of pay • Changes to early retirement terms Kier Group plc preliminary resu
Slide 18: Operating review
Operating review Chief Executive – John Dodds Kier Group plc preliminary results presentation to analysts 17th September 2003 18
Slide 19: Construction & Services
Construction & Services Construction & Services operating profit & margin (1996-2003) 14 • Outstanding performance from 12.9 12.5 12 11.1 Regional businesses 10 • Profits from final account settlements 8 • Losses from Partnerships First £m 6.5 6 • Another excellent 4.0 overseas result 4 2.7 2.8 3.2
Slide 20: Kier Regional
Kier Regional • Market leader • Outstanding performance in 2003 • Strategic acquisition in social housing – Partnerships First • Cash generation excellent - £15m more than 2002 • Orders of £760m at record levels • Public sector work 31% of awards (2002 – 23%) 111 Strand • ProCure 21 – one of 12 pref
Slide 21: Kier Regional: flexibility to react to markets
Kier Regional: flexibility to react to markets % of awards 12 month periods to June 2003 35 30 25 20 19 9 8 19 9 9 2000 2001 15 2002 2003 10 5 0 Commercial Industrial Residential Hotels & Education Health Transport Retail Defence Other Leisure Kier Group plc preliminary results presentation to analy
Slide 22: Kier National
Kier National • Planned reduction in awards and turnover • Modest loss overall – largely two UK contracts • Merger of Kier International and Kier Construction • Operating profit of £7.8m overseas CTRL 103 Kier Group plc preliminary results presentation to analysts 17th September 2003 22
Slide 23: Caxton Integrated Services: Building Maintenance
Caxton Integrated Services: Building Maintenance • Reactive and planned maintenance to houses, flats, schools and public buildings • Current local authority outsourced maintenance contracts: • Islington £160m 10 year contract • Sheffield £640m 10 year contract • Greenwich £20m 5 year contract • Brig
Slide 24: Caxton Integrated Services: Building Maintenance
Caxton Integrated Services: Building Maintenance • Building maintenance opportunities: • Seeking share of ALMO spend: • Islington (if awarded status) £157m in total • Sheffield £144m in total • Local authority outsourced maintenance: • Salford (prequalified) • Harlow • Havering • Ealing • Crawley •
Slide 25: Caxton Integrated Services: Managed Services
Caxton Integrated Services: Managed Services • Management of buildings: • Clients include: • Security • BAe Systems • Fleet management • Legal & General • Reception • Prudential • M&E • Lloyds TSB • Maintenance • National Audit Office • Health & safety • Vauxhall Motors • Catering & cleaning • DEFRA
Slide 26: Homes & Property
Homes & Property Homes & Property operating profit (1996-2003) 35 32.4 30 • Residential: • Operates through four brands 25 22.2 • Growth through acquisition and organic 20 • Property development: £m 16.2 15 • Development on a non- 12.0 13.2 speculative basis 10 • Joint venture formed with Bank 7.8 o
Slide 27: Kier Residential: statistics
Kier Residential: statistics Year to 30 June 2003 2002 % change Unit sales 990 877 +12.9 Average selling price (£) 181,900 166,100 +9.5 Land bank 3,700 3,814 - Years 3.7 4.3 - Strategic plots 12,000 11,000 - Kier Group plc preliminary results presentation to analysts 17th September 2003 27
Slide 28: Kier Residential: analysis of units
Kier Residential: analysis of units Year to 30 June 2003 2002 Average Average house size Units house size Units (sq ft) (sq ft) Allison Homes 1,554 241 1,419 186 Twigden Homes 1,171 330 1,099 352 Kier Homes 1,206 159 1,178 138 Bellwinch Homes 947 260 1,040 201 Total - 990 - 877 Kier Group plc prelim
Slide 29: Kier Residential: Bellwinch Homes
Kier Residential: Bellwinch Homes • Sovereign Harbour, Eastbourne – Nautica La Marina • A unique marina development of 108 apartments and 37 houses • High standard of workmanship and specification, which has achieved premium sale prices • Build programme accelerated by one year to meet public demand
Slide 30: Kier Residential: Allison Homes
Kier Residential: Allison Homes • St. Nicholas Park, Deeping St. Nicholas, Lincolnshire • Consortium development of 194 homes 11 miles from Peterborough. Allison has a one third share • 25 reservations taken with income of £140 per sq ft Kier Group plc preliminary results presentation to analysts 17
Slide 31: Kier Property: development programme
Kier Property: development programme 250 200 150 £m 250.0 100 145.0 130.0 50 0 In development Programmed Pre-planning Kier Group plc preliminary results presentation to analysts 17th September 2003 31
Slide 32: Kier Ventures
Kier Ventures • Whitehall – Kier Build on site. The 125,000sq ft office scheme for DEFRA has been pre-sold for more than £40 million • National Trust, Swindon – a new 80,000sq ft headquarters development to be built by Moss Construction Kier Group plc preliminary results presentation to analysts 17t
Slide 33: Kier Developments
Kier Developments • AMS House, Frimley – a pre-let to Alenia Marconi Systems Ltd, a subsidiary of BAe, for a new 89,000sq ft headquarters building • Palacexchange, Enfield – 250,000sq ft town centre scheme. Two major national retailers about to exchange contracts as anchor tenants. A further 34,000s
Slide 34: Infrastructure Investment: current projects
Infrastructure Investment: current projects Kier equity/ Sector Project Status Capital value £m Equity % loan stock £m Hairmyres Health Operational 68 4.2 50 Hospital Neath Port Operational 56 2.2 25 Talbot Hospital West Berkshire Operational 24 1.7 50 Hospital Hinchingbrooke Preferred Bidder 23 1.2
Slide 35: Prospects/conclusion
Prospects/conclusion Chairman - Colin Busby Kier Group plc preliminary results presentation to analysts 17th September 2003 35
Slide 36: Markets
Markets • All sectors remain sound • Construction is underpinned by Government spending • Support Services markets for building maintenance contracts are good • In Homes – combination of low interest rates and under supply continues to support demand Kier Group plc preliminary results presentation t
Slide 37: Prospects
Prospects • Order book in Construction & Services at £1.75bn • Strong order book in Homes • Property development portfolio is providing good opportunities for the future “All this, together with the quality of our management teams, their skills experience and commitment, ensure we are well placed to
Slide 38: Kier Regional (Appendix I)
Head Office Tempsford 1 Kier Regional Brazier Construction Southampton Kier Eastern 2 Appendix I Norwich 3 Wisbech 4 Witham 5 Henry Jones Havant 6 IEI Building Services Basingstoke 7 Kier London Loughton 8 Kier Northern 18 Carlisle 9 Durham 10 Leeds 11 Kier North West Liverpool 12 9 10 Mancheser 13
Slide 39: Kier Residential: operational area (Appendix II)
Kier Residential: operational area Appendix ll Current outlets & land owned Kier Group plc preliminary results presentation to analysts 17th September 2003 39