Kier Group Bev Dew CFO Louise Turner-Smith IR April 2018 Kier - PowerPoint PPT Presentation

Kier Group Bev Dew CFO Louise Turner-Smith IR April 2018 Kier Group plc – North America roadshow April 2018 1

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 the information contained in this presentation and no responsibility or liability is accepted for any such information. This presentation does not constitute an offer of securities by the Company and no investment decision or transaction in the securities of the Company should be made on the basis of the information contained in this presentation. This presentation contains certain information which the Company’s management believes is required to understand the performance of the Group. However, not all of the information in this presentation has been audited. Further, this presentation includes or implies statements or information that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may use forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should". By their nature, forward-looking statements involve risks and uncertainties and recipients are cautioned that any such forward-looking statements are not guarantees of future performance. The Company's or the Group’s actual results and performance may differ materially from the impression created by the forward-looking statements or any other information in this presentation. The Company undertakes no obligation to update or revise any information contained in this presentation, except as may be required by applicable law or regulation. Nothing in this presentation is intended to be, or intended to be construed as, a profit forecast or a guide as to the performance, financial or otherwise, of the Company or the Group whether in the current or any future financial year. This presentation and its contents should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. Certain information in this presentation has been extracted from the announcement of interim results made by the Company on 15 March 2018 and this presentation is not a substitute for reading that announcement in full. Kier Group plc – North America roadshow April 2018 2

Kier Group Overview Kier Group plc – North America roadshow April 2018 3

Market-leading positions Strong long-term fundamentals Infrastructure Services Buildings Developments & Housing c.£2bn c.£2bn c.£1bn Revenue Revenue Revenue Invest, build and maintain all asset classes Repeat clients and clients working with 2+ businesses > 50% of revenue Kier Group plc – North America roadshow April 2018 4

Strategy focused on market-leading positions Infrastructure Services Buildings Developments & Housing c.£2bn c.£2bn c.£1bn Revenue Revenue Revenue Major projects Private commercial & other Housing - Maintenance Property Development Build General Civils & other Utilities & Power Gen Central Government Housing - New Build Education & Health Local Government Mid-sized projects Roads Rail Minor works Maintain Maintenance & services Markets Clients Our approach  Procure multiple services  Leading market positions  Strong fundamentals  Focus on safety, quality, not just price  Appropriate risk profile  Aligned to the UK’s priorities  Understand teamwork and the benefits  Focus on cash generation  Balanced client base of early engagement  Broad sector spread  National coverage Kier Group plc – North America roadshow April 2018 5

Progression towards Services 1 Operating profit Property Residential Construction Services 15% 11% 10% 21% 25% 9% 11% 11% 41% 1% 47% 50% £51m £57m £70m £74m £82m 1% 54% 56% 25% 31% 28% 20% 33% HY14 HY15 HY16 HY17 HY18 1 Arising on continuing operations, stated before non-underlying items, excluding corporate costs. Kier Group plc – North America roadshow April 2018 6

Our strategic priorities Vision 2020 Grow to be Operate a Top quartile a top 3 safe performance Cash positive player and and ROCE > 15% in chosen sustainable efficiency business markets Attract Sector Embrace and leading technology retain customer and talent experience innovation Kier Group plc – North America roadshow April 2018 7

Approach Contracting risk management approach <£10m >70% Average Frameworks Lower risk contract models project size  Careful selection on ‘where to’ operate  Committee for capital investment appraisals  Post contract and reporting processes  Sectors  Geographies  Contract types / Procurement routes  Pre-contract / Pre-investment review  Group commercial standards  Risk and value based Kier Group plc – North America roadshow April 2018 8

Approach Infrastructure Services and Buildings INFRASTRUCTURE SERVICES BUILDINGS Two stage Cost bidding and Lower value Target cost reimbursable/ frameworks works plus <£7-8m average; <£2m average JV to manage <12 month duration resource JV to manage Schedule of rates Long-standing client resource relationships  Education 80% SERVICES HINKLEY CROSSRAIL  Health Lower risk Lower risk  e.g. Highways  Focus on people, cash flows, terms and  Commercial England conditions  Mixed-use Kier Group plc – North America roadshow April 2018 9

Corporate responsibility Accident incidence rate (AIR) – December 2017 450 HSE Benchmark 400 350 300 250 200 150 97 100 50 0 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Safety Environment  Industry-leading AIR <100  30x30 energy strategy launched and in progress  Workforce health and wellbeing improved Training and development Customer experience  Active member of the 5% Club  91% recommend us  ‘Shaping your World’ campaign launched to improve the image of the industry Investment in Oracle  Finance, HR, Procurement Kier Group plc – North America roadshow April 2018 10

Future growth How Growth opportunity  Leading market positions   UK under investment – fibre rollout, CP6, HS2+, Smart Motorways Infrastructure Services  Capital works 8% pa growth; maintenance contracts extended to 2022  Leading market positions   Growing population – schools, healthcare Buildings  New sectors – defence, life sciences, aviation  Property stable, non-speculative approach  Developments & Housing  Severe UK affordable housing shortage  Margin improvement also via land bank mix Average net debt £m 450 Previously 400 350 Now 300 250 2017 2018 2019 2020 Kier Group plc – North America roadshow April 2018 11

Financial highlights Interim results for the six months ended 31 December 2017 Kier Group plc – North America roadshow April 2018 12

Financial highlights  Good performance in line with management expectations 1 of £60.0m up 5%  Operating profit Earnings per share 1 of 41.0p up 3%   Net debt of £239m in line with expectations  Order book of c.£9.5bn with potential extensions of c.£2.5bn  Interim dividend of 23p up 2% 1 Arising on continuing operations, stated before non-underlying items. Kier Group plc – North America roadshow April 2018 13

On track with Vision 2020 targets Key metrics 2020 target December 2017 Annual average operating profit growth >10% On target Property – ROCE >15% Ahead Residential – ROCE to 15% Improving and on track Construction – EBITA to 2.5% On track Services – EBITA to 5.0% On track Net debt: EBITDA 1:1 Achieved Dividend cover 2x Improving and on track Kier Group plc – North America roadshow April 2018 14

Income statement EPS and dividend growth 3 Six months to 31 Dec 2017 Six months to 31 Dec 2016 Change £m £m % 1 Revenue 2,154 2,001 +8 2 Operating profit Property 12.2 7.7 +58 Residential 8.7 8.1 +7 Construction 16.7 20.8 -20 Services 44.4 37.2 +19 Corporate (22.0) (16.5) +33 Underlying operating profit 60.0 57.3 +5 Underlying operating profit margin 2.8% 2.9% Net finance cost 2 (11.2) (10.2) +10 Profit before tax 2 48.8 47.1 +4 Basic earnings per share 2 41.0p 39.7p +3 Interim dividend per share 23.0p 22.5p +2 1 Group and share of joint ventures for continuing operations. 2 Arising on continuing operations stated before non-underlying items. 3 Restated to classify Biogen as discontinued. Kier Group plc – North America roadshow April 2018 15