Kier Group Interim results for the six months to 31 December 2014 - PowerPoint PPT Presentation

Kier Group Interim results for the six months to 31 December 2014 25 February 2015 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 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 are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. 2

Haydn Mursell Chief Executive 3

Agenda  Introduction and highlights  Financials  Operational update  Group outlook 4

Introduction  Broad global recovery  Positive momentum but uncertainty exists  Our markets improving  UK confidence  Building, Housing, and Property  Cross party support  Infrastructure  Austerity to continue  Outsourcing  Integrated services 5

Highlights  Good results in line with expectations  Operating profit £44m  Net debt £156m, ahead of forecast  Strong performances from Property and Construction  Residential and Services second half weighted, as expected  Well positioned for 2015  Property development pipeline of more than £1bn  Strong forward sales position for Residential  Improved order books of £6.5bn in Construction and Services  Fully secured for 2015  Interim dividend increased by 7% to 24p 6

Financial update Bev Dew, Finance Director 7

Overview: revenue and operating profit December 2013 December 2014 Revenue Revenue £1,583m £1,432m Up 11% Property Property Residential Residential 3% 6% 4% 5% Construction Construction Services Services 36% 39% 52% 55% Operating profit* £56.5m Up 7% Operating profit* £52.8m Property Property Residential Residential Construction Construction 20% 25% Services Services 42% 1% 46% 1% 33% 32% *Excluding corporate costs, significant one-off costs related to restructuring, acquisitions and business closures, amortisation of contract right costs held as intangibles on the balance sheet and unwind of discount in respect of deferred consideration and fair value adjustments made on acquisition. 8

Income statement Six months ended 31 December Change 2014 2013 % £m £m Operating profit* Group 42.3 41.9 +1 Joint ventures (JVs) 0.6 0.4 +50 Profit on disposal of PFI 1.3 2.1 -38 investments Total operating profit 44.2 44.4 - Net finance costs (8.3) (7.6) +9 Profit before tax 35.9 36.8 -2 Underlying earnings per 51.1 54.6 -6 share (pence)* Dividend per share (pence) 24.0 22.5 +7 * Excluding one-off costs related to restructuring, acquisitions and business closures, amortisation of contract right costs held as intangibles on the balance sheet and unwind of discount in respect of deferred consideration and fair value adjustments made on acquisition. 9

Operating profit Six months ended 31 December Change 2014 2013 % Performance by division £m £m Property 14.0 10.6 +32 Residential 0.8 0.5 +60 Construction 18.0 17.3 +4 Operating margin 2.1% 2.3% Services 23.7 24.4 -3 Operating margin 4.2% 4.3% Corporate (12.3) (8.4) +46 Total operating profit* 44.2 44.4 - Net finance cost (8.3) (7.6) +9 Profit before tax* 35.9 36.8 -2 * Excluding one-off costs related to restructuring, acquisitions and business closures, amortisation of contract right costs held as intangibles on the balance sheet and unwind of discount in respect of deferred consideration and fair value adjustments made on acquisition. 10

Exceptional items Six months ended 31 December 2014 2013 £m £m Costs in relation to the acquisition of May Gurney Transaction - (7.5) Integrated Services plc Integration - (14.5) Restructuring and business disposal costs (1.1) - Costs associated with cessation of the Kier Group final salary pension scheme (1.0) - Total exceptional items (2.1) (22.0) Tax on exceptional items 0.4 3.3 Exceptional items after tax (1.7) (18.7) 11

Order book At 31 December At 30 June At 31 December Change 2013 2014 2014 % £bn £bn £bn Construction 2.6 2.5 2.5 +4 3.9 3.7 3.6 Services +5 Total 6.5 6.2 +5 6.1 8.0  90% 7.0 (0.6) (0.9) 1.0 0.8 forward 6.0 sold in Residential 5.0 division 4.0 £bn 6.5 6.2 3.0 2.0 1.0 0.0 June 2014 Construction awards Construction Services awards Services revenue December 2014 Construction and revenue recognised recognised Construction and Services order book Services order book 12

Balance sheet summary At 31 At 30 At 31 December June Change December £m 2014 2014 2013 £m £m £m Intangible assets 325 324 +1 324 Property, plant and equipment 184 192 -8 192 Investment in JVs 67 41 +26 32 Residential land and work in progress 343 334 260 +9 Other working capital (240) (236) (130) -4 Cash 150 112 +38 4 Borrowings (306) (235) -71 (142) Provisions (90) (84) -6 (99) Pensions (net of deferred tax) (65) (48) (49) -17 Finance lease obligations (77) (87) (81) +10 Tax and deferred tax (6) (3) -3 7 Net assets 285 310 -25 318 13 13

Group net debt 0 Operating cash flow Net capital and Working capital Tax, interest, Exceptionals (inc PFI disposals) investment movement dividends, pensions (20) (40) (60) (80) (55) £m 63 (100) June 2014 net debt * 5 (123m) (120) (44) December 2014 (140) net debt * (2) (156m) (160) (180) 14 * Excludes finance lease obligations.

Pensions At 31 At 30 At 31 December June December Change £m 2014 2014 2013 £m £m £m Kier Group Pension Scheme: Market value of assets 913 837 815 +76 Present value of liabilities (993) (900) -93 (872) Deficit in the scheme (80) (63) -17 (57) Deferred tax 16 13 +3 12 Net pension liability (64) (50) -14 (45) - - (3) Net effect of Sheffield Pension Scheme - Net effect of May Gurney and Translinc Schemes (1) 3 -4 (2) Total net pension liability (65) (47) -18 (50) Key assumptions: Discount rate 3.7% 4.4% 4.5% Inflation rate - RPI 3.1% 3.4% 3.5% Inflation rate - CPI 2.0% 2.4% 2.5% 15

Financial summary  Revenues up 11% to almost £1.6bn  Underlying operating profit in line with consensus at £44m  Net borrowings materially lower than consensus at £156m  Interim dividend increased by 7% to 24p  USPP closed in November 2014 providing an additional £120m of liquidity  Order book up £300m to £6.5bn in Construction and Services  Fully secured for FY15 in Construction and Services  90% forward sold in Residential 16

Operational update Haydn Mursell, Chief Executive 17

Property 18

Property - Performance Six months ended 31 December 2014 2013 Change Year to June £m £m % 2014*** £m Revenue Developments 44 40 +11 86 Structured finance and PFI 5 15 -68 16 Total 49 55 -10 102 Operating profit * Developments 12.4 7.4 +68 11.2 Structured finance and PFI 1.6 3.2 -50 4.8 Total 14.0 10.6 +32 16.0 Average capital** Developments (76) 67 +13 (70) Structured finance and PFI - 5 -96 9 Total (76) (62) +22 (61) * Excluding one-off costs related to restructuring, acquisitions and business closures. ** Equates to average net debt. *** Prior year comparatives have been represented to reflect the split of the Property division into Property (PFI and Structured Finance) and Residential. 19