Kier Group plc Infrastructure Services Seminar 6 July 2016 1 - PowerPoint PPT Presentation

Facilities  Average duration of 7 years 400 RCF  85% beyond 4 350 years Term Loan  40% fixed rate USPP 300 Schuldschein 250 200 150 £82m/ € 100m 100 50 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 27

Net debt conclusion  Vision 2020 metrics re-validated  Net debt to EBITDA 1:1 by 2017 – achieved one year ahead of target  Group cash cycle results in peak net debt in line with assets in mid Feb  Facilities give Group long-term core financial strength and flexibility to invest  Maintenance of debt vs assets and EBITDA is key discipline  Additional cash from working capital discipline will provide investment options 28

Nigel Brook Executive Director Construction and Infrastructure Services 29

Today's operational team presenters Sean Jeffery Dave Wright Scott Cooper Executive Director Executive Director Service Director Infrastructure Infrastructure - Highways Highways 30

Health and Safety – Accident Incidence Rate (Kier UK) 500 450 HSE Benchmark 400 350 297 300 282 281 278 274 245 250 230 210 209 203 200 181 183 150 100 50 0 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 31 Source: HSE Benchmark October 2015

Market position Leading UK Leading Top 3 infrastructure regional housing player builder maintenance provider with new build capabilities £1.5bn £1.5bn £600m >80% of Group turnover 32

Market position Leading UK Leading Top 3 infrastructure regional housing player builder maintenance provider with new build capabilities £1.5bn £1.5bn £600m Construction Services (Capex) (Opex) Infrastructure Services - includes Highways Maintenance 33

Kier's areas of expertise Local  Breadth Strategic Authority of capability Highways (Opex)  Aligned to (Opex) Government spending  Wide skill base £1.5bn In-house Capital Design works (Capex) Design & Consultancy (Mouchel Consulting) Utilities & Waterways (Opex) 34

Infrastructure Services Construction Services 20% 36% 23% 100% Strategic Highways Local Authorities Utilities 7% 1% 1% 12% Infrastructure Waterways Streetlighting Surface Dressing Design Total revenue £0.4bn Total revenue £1.1bn Infrastructure Services accounts for c.30% of Group revenue 35

UK Highways market Highways England Local authorities and others Total annual highways spend £14bn £14bn  Kier is largest supplier £2bn  4 areas New  c.40% of spend expanded Capex opportunity  New procurement £5bn provides growth opportunities £1bn  c.14% of spend £2bn Outsourced  Healthy pipeline in Opex near term Not £4bn outsourced  Growth opportunity 36 Source: Credo, Highways England Delivery Plan

Highways England funding  Five year funding Capex Opex Minor Capex works (Delivery Plan funding) (Delivery Plan & CSR funding) visibility 4,075  Road Investment £m 3,640 3,321 Strategy (RIS) 1,101 2,903 2,854 Government 1,113 1,080 backed Kier 1,076 1,072 Highways  RIS1 totals 2,974 £17bn over five 2,527 Kier 2,241 years 1,827 1,782 Infrastructure 2015/16 2016/17 2017/18 2018/19 2019/20 37 Note: Highways England Delivery Plan confirms capex and opex funding. Additional CSR funding from 2017 will be confirmed in the next Spending Review.

Acquisition rationale JULY 2013 JUNE 2015 NOV 2015 APRIL 2016 Integration of Integration of infrastructure Local Strategic Kier Highway and utility Authority Highways operations business Services focus units including highways and utilities Development of an integrated capability in the Highways and Infrastructure sectors 38

Capital works: Infrastructure projects Over thirty projects across the UK 39

Capital works: Highways projects A number of highways projects including:  Mersey Gateway  Smart Motorways – M6  A30 40

Opex: Highways England footprint Maintaining approximately one third of England’s Strategic Highways network Area 13 Kier hold a Area 7 share of one of the four Scottish Area 9 regional Highway contracts Area 1 Area 3 41

Opex: Local Authority Highways footprint  Lincoln Responsible for  Northamptonshire maintaining  Suffolk over 16,000  Surrey miles of Local  Torbay Authority roads Harrow c.70% of Highways Westminster services not Bexley outsourced Merton Bromley Sutton 42 Source: Credo

Total Highways footprint Kier's Highways footprint is Highways England roughly one fifth Local Authority of the UK LoHAC landmass Streetlighting services Scotland Transerv 43

Infrastructure Services - order book and pipeline Order book Pipeline Infrastructure capital projects £1.5bn £20bn Strategic Highways £1bn c.£3bn Australia (JV share) £0.5bn c.£1bn Local Authority Highways £0.5bn c.£2bn Total Infrastructure Services £3.5bn + £25bn 44

Our risk approach JULY 2013 JULY 2015 JAN 2016 Continued Rolled out Services operation of Kier Risk Review Pre-Contract existing processes to Committee Committee robust Mouchel Mouchel implemented controls businesses Pre-contract gateway standards rolled out 45

People and skills  Over 1,000 on Kier early career schemes  Significant projects coming on stream requiring skills  Focus on managing the competitive market for early talent  New entrant, graduate and undergraduate placements or post A Level Foundation Degrees  2016 target - Recruiting 230 – 240 p.a. apprentices / undergraduates / graduates 46

Outlook Infrastructure Acquisitions Significant Services accelerated market business platform for opportunities growing growth 47

Sean Jeffery Executive Director Construction - Infrastructure 48

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Infrastructure – active sectors Highways Nuclear Energy Water Rail Coastal and Ports Airports 50

Infrastructure capital pipeline Water Coastal  £20bn & FD opportunity Energy  Strong opportunities in Highways and Rail Nuclear £20bn Highways Rail 51

Kier Infrastructure pipeline   Nuclear Highways   Hinkley Silvertown   Sellafield Congleton by-pass   Wylfa East Leeds Orbital   Moorside Rail   Energy HS2   MerseyRail Spalding power station  Trafford CCGT power station  Network Rail  Gateway  London Underground  Knottingly  Damhead Creek 2  Hirwaun 52  South Hook CHP

Highways 53

Mersey Gateway  Joint venture with Samsung C&T Corporation and FCC Construction SA  £450m four-year road scheme with six lane toll bridge  9.5 miles in length  Largest moving scaffold system currently in use in the world  Completion early 2018 54

Smart Motorways – M6  Highways England project to upgrade highways  Award for packages – one live, three coming on stream  Package 3 awarded in July 2015 to Kier j/v M6 J16 – 19 (tender £129.4m) M6 J13 – 15 (budget £160m) M23 J8 – 10 M20 J3 – 5 (budget £100m) (tbudget £61m) 55

A30, Cornwall  Cornwall – Temple and Higher Carblake  Capital investment project between Cornwall County Council and Highways England  Value £33m  Due to be open early 2017 56

Silvertown, London  Integrated offer  Transport for London PFI project  PQQ expected Autumn 2018  Expected start date Q4 2018  Value £700m 57

Rail 58

Rail  National presence covering broad range of works  Port Talbot  Windsor Road  Parson Street  Chelsea  Kingston  New Cross Gate  Wales and Western frameworks  Signalling  NLCRPR framework  Selby swing  Black Cart 59

Crossrail  Joint venture with BAM Nuttall C300 / 410 and Ferrovial (BFK) Western Running  Biggest engineering project in Tunnels Europe  Value £1.4bn C435 Farringdon 60

HS2 Enabling Works & Main Works Contract 61

Infrastructure Opportunities 62 Source: Kier

Jim O’Sullivan Chief Executive Highways England 63

Dave Wright Executive Director Kier Highways 64

What we do Manage Maintain Improve Build  Communications with the public  Incident response  Value management  Deliver improvement schemes to and stakeholders carriageway / structures renewal  Winter maintenance  Improvement scheme construction and major widening projects.  Management of Roadspace and and delivery  Vegetation maintenance access to the Highways  Congestion management and  Defect identification and repair  Network needs identification reduction  Manage and construct large asset  Value engineering  Structural surveys and renewal schemes assessments to identify  Scheme design project  Maintenance of highway assets improvements management and supervision including traffic signals and lighting  Develop sustainable, low noise and  Incident management  Roadside technology systems low energy asset improvements  Third Party Claims administration  Advice on impact adjacent to the  Health and Safety Management highway 65

Highways clients 66

Total UK highways footprint Highways England Local Authority Kier's Highways LoHAC footprint is roughly one fifth of the UK Streetlighting services landmass Scotland Transerv 67

Kier Highways England contracts Area 13 Cumbria and North Lancashire Area 7 East Midlands Area 9 Birmingham including the M6 Spaghetti Junction Area 3 Hampshire / Surrey / Wiltshire Area 1 Devon and Cornwall 68

Kier Strategic Highways current contracts Area Order book Expiration Area 1 £25m 2017  5 areas now available Area 3 £300m 2018  No % limit Area 9 £400m 2019 Area 13 £30m 2017 New Procurement Current Area 7 £50m 2021 tenders Recent Area 7 provide £50m design opportunity for contract award future growth 69

Strategic Highways market opportunity 4.50 Performance 4.00 Long term To renew and expectations on commitment to Lower Thames Crossing improve the pace, efficient 3.50 Capital Investment (£bn) significant network customer Capital renewals investment experience 3.00 2.50 2.00 Longer term investment 1.50 (SR13) Pinch points Medium term Roads Programme (SR13) 1.00 1 Smart Motorways Conventional schemes (widening, bypasses etc …) 2 Today’s Roads 0.50 Programme (SR10) 3 A14 Cambridge to Huntingdon scheme 0.00 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 70 Source: Highways England

Kier Strategic Highways - order book and pipeline (UK) 2017 £1.1bn 2017/18 opportunities  Areas 1 and 2 - £550m £1bn c£3bn  Areas13 and 14 - £500m Order Book Pipeline  NRTS2 - £450m - 2018 2019 2018 £0.9bn+ £1.0bn 71

Kier Local Authority Highways contracts Five contracts plus London presence Lincolnshire Harrow Suffolk Westminster Bexley Merton Bromley Sutton Surrey Torbay 72

Local Authority market - London £2.2bn addressable market up to 2021 to transform London’s roads, including: £1.4bn £350m £450m To maintain Major Highway For cycling, asset enhancements road safety performance to support and keeping including £1bn growth London moving of capital improvements 73 Source: TfL

Kier London Highways Alliance Contract (LoHAC)  Four area based frameworks for TfL and London Boroughs  8 year term, expires 2022, potential reductions  Open to TfL and all 33 London Boroughs  One provider per area capable of delivering the full range of services Streamline providers – Pre LoHAC 101 contracts let across London  Harrow  Authorities can select services as required – 25 ‘Service Lines’ Westminster Bexley  No minimal contract value or term – Merton i.e. one off projects acceptable Bromley Sutton  Complements Local Authority work e.g. Surrey 74

Kier Local Authority - order book and pipeline 2017 £0.8bn 2017 opportunities  Cambridgeshire - £600m £0.5bn c.£2bn Order Book Pipeline  Devon and Plymouth - £300m 2019 2018 £0.5bn £0.7bn 75

Australian Highways footprint Roads and Maritime Services, Kimberley New South Wales Transport and Main Roads, New South Wales NORTHERN TERRITORY Main Roads, South East Queensland WESTERN Western Australia AUSTRALIA QUEENSLAND Sydney North Zone Mid West and Gascoyne SOUTH AUSTRALIA Perth Office In-house Design Centre NEW SOUTH WALES Sydney West Zone Perth Metropolitan TASMANIA Represents c.15% of Highways revenue 76

Australian order book and pipeline 2017 opportunities  Western Australia - £150m £0.5bn c.£1bn  New South Wales - £250m Order Book Pipeline 2019 2017/18 £0.6bn £0.5bn 77

Highways England performance (March-May) HE operates two types of contracts – Asset Support ASCs  1200 1024 1010 998 Contracts (ASCs) and Managing Agent Contracts 1000 848 790 776 800 (MACs) 600  Based on Highways England's performance scoring 400 200  Kier ranked first (Area 3) in ASCs 0 Area 2 Area 3 Area 6 Area 8 Area 9 Area 10 Kier Kier  Kier have the best performing MAC with Area 1 MACs  HE use a Strategic Alignment Review Toolkit 1000 800 786 752 716 (START) to evaluate tenders for contracts 800 700 556 600  Kier have the highest START score of all HE contractors 400 200 0 Area 1 Area 4 Area 7 Area 12 Area 13 Area 14 Kier Kier 78

Systems  Fully integrated market leading solution  Intelligent costing  Efficient and seamless  Electronic workflow  On track to go live 1 July 2016  For future use by combined Strategic and Local Authority highways  BSI – pioneers UK’s first 11000 alliance arrangement for SMEs 79

Awards and certification 80

A591 - Reconnecting Cumbria Jan 2016 9 May 2016 81

Kier Group plc Analyst / investor seminar 6 July 2016 82

Geoff Dobson Chief of Resource Management Suffolk County Council 83

A Suffolk County Council Perspective Kier Analyst and Investment Seminar 6 th July 2016 Geoff Dobson Director of Resource Management

• About Suffolk • Some Facts & Figures • Council Priorities • Financial Environment • Devolution • Commercial Council • Our Relationship with Kier

Where is Suffolk?

About Suffolk Source: www.investinsuffolk.com

About Suffolk Source: www.investinsuffolk.com

About Suffolk Source: www.investinsuffolk.com

Facts & Figures

Facts & Figures

A few more Facts & Figures!!

Suffolk’s Priorities

Suffolk’s Finances 2016 -17

Suffolk’s Finances 2016 -17

Capital Investment 2016-17

Financing of Capital Programme 2016-17

Suffolk’s Budget Gap 2017 -18 – 2019-20 • Over £200m savings made to date • Further grant reductions of 25% by 2019-20

Financial Challenges • • Demography and Demand Lack of Money (continual grant reductions) • Higher Customer expectations • Capacity • Fragile Care Market – Devolution • National Living Wage – Health and Social Care Integration • Academisation • Brexit • National Funding Formula for – Inflation? Interest Rates? Schools – Incentivisation and Growth? • New Local Government Finance – More or longer austerity – where System from 2019-20 • next? Health and Social Care