kier group plc preliminary results presentation 16 ...€¦ · preliminary results presentation 16...

Kier Group plc preliminary results for the year ended 30 June 2010 1

KIER GROUP PLCPRELIMINARY RESULTS PRESENTATION

16 September 2010


PRELIMINARY HIGHLIGHTS

• Underlying pre-tax profits up 10.6% to £58.4m

(2009: £52.8m)

• Adjusted EPS up 18.3% to 121.3p (2009: 102.5p)

enhanced by a 6% reduction in our effective tax rate

• Full year dividend up 5.5% to 58.0p (2009: 55.0p)

• Record net funds at £175.2m (2009: £92.5m)

• Secured and ‘probable’ order books for Construction

represent 98% of 2011’s revenue; order books for

Support Services at £2.1bn (2009: £2.3bn)

• Integrated model continues to provide unique growth

opportunities

KIER GROUP


REVENUE 2009 £2,146m

REVENUE 2010 £2,099m (-2.2%)

Construction (£1,417m)Support Services (£471m)Partnership Homes (£158m)Developments (£53m)

Construction (£1,492m)Support Services (£438m)Partnership Homes (£151m)Developments (£65m)

REVENUEYEAR TO 30 JUNE

KIER GROUP

68%

22%

8% 2%

70%

20%

7%3%


PROFIT SUMMARY

+146.616.139.7Profit after tax attributable to equity holders

-(0.8)(0.8)Minority interest

-(6.4)(17.2)Taxation

Change

%

2009

£m

2010

£m

+147.623.357.7Profit before tax after exceptional items

-(27.3)2.2Exceptional items

+9.750.655.5Profit before tax and exceptional items

-0.5(1.0)Net finance (cost)/income

+12.850.156.5Profit from operations

-(0.3)0.1Tax

-(0.7)(1.3)Finance cost

Share of joint ventures:

+12.951.157.7Group and share of joint ventures

-1.0(0.1)Operating (loss)/profit: joint ventures

+15.450.157.8Operating profit: Group

Year to 30 June

KIER GROUP


EXCEPTIONAL ITEMS

2009

£m

2010

£m

(19.7)(2.7)Exceptional items net of tax

1.5-Joint ventures

6.1(4.9)Group

Tax on exceptional items:

(27.3)2.2Total exceptional items

(7.3)-Developments write-downs

(42.5)-Partnership Homes land write-downs

(1.8)-Partnership Homes reorganisation/restructuring costs

24.3-Credit from change in salary related pension benefits

-(18.0)Provision for fine imposed by OFT

-4.2Profit from sale of PFI investments

-16.0Credit arising from changes to local authority pension scheme

Year to 30 June

KIER GROUP


OPERATING PROFITPERFORMANCE BY DIVISION

Change

%

2009

£m

2010

£m

* Before exceptional items and after charging amortisation of intangible assets of £2.9m (2009: £2.2m).

+9.750.655.5Pre-tax profit*

-(0.3)0.1Joint venture tax

-(0.7)(1.3)Joint venture finance cost

+14.6(4.8)(4.1)Finance cost

-41.55.33.1Finance income

+12.951.157.7Profit from operations*

-148.3(2.9)(7.2)Corporate costs

-(1.9)0.3Developments

-1.19.9Partnership Homes

+17.815.718.5Support Services

-7.439.136.2Construction

Year to 30 June

KIER GROUP


EARNINGS PER SHARE AND DIVIDEND

** Earnings per share in 2010 has benefited from a 6% reduction in the effective tax rate following agreement of certain tax planning matters with HMRC.

Change

%

20092010

* Adjustments made to exclude exceptional items and the amortisation of intangible assets.

+145.444.1p108.2pBasic earnings per share**

+18.3102.5p121.3p*Adjusted earnings per share**

+10.6£52.8m£58.4mAdjusted profit before tax*

-36.5m36.7mWeighted average number of shares

+5.555.0p58.0pDividend per share

Year to 30 June

KIER GROUP


BALANCE SHEETSUMMARY

1589104Net assets

(7)3(4)Tax and deferred tax

20(83)(63)Pensions (net of deferred tax)

(23)(38)(61)Provisions

-(30)(30)Long-term borrowings

83123206Cash

Movement

£m

2009

£m

2010

£m

(50)(438)(488)Other working capital

(17)424407Inventories

(6)3024Investment in joint ventures

(2)8785Property, plant and equipment

171128Intangible assets

At 30 June

KIER GROUP


-265

-248

175

93

400

418

37

32

-71

-20

-8

-7

NET CASH £m

-400 -200 0 200 400 600

2010 Net Group cash2009

2010 Construction2009

2010 Support Services2009

2010 Developments2009

2010 Partnership Homes2009

2010 Centre2009

KIER GROUP

• Average net cash £95m (2009: £62m)


INVENTORIESAS AT 30 JUNE

* All to be settled during the new financial year.

-19278Land commitments*

Movement

£m

2009

£m

2010

£m

-17424407Inventories

+103848Other work in progress

-22119Commercial land and work in progress

-9135126Residential work in progress

-16230214Residential land

KIER GROUP


PENSIONS

Actuarial valuation being carried out as at 1 April 2010 – results expected later in the financial year.

+7.2(13.4)(6.2)Net effect of Sheffield scheme

Additional cash contribution of £13.2m in the year settled by way of land asset transfer.

Deficit funding contributions of £8.0m per annum.

+19.8(82.6)(62.8)Net pension liability

+12.6(69.2)(56.6)Net pension liability

Change

£m

2009

£m

2010

£m

-4.926.922.0Deferred tax asset

+17.5(96.1)(78.6)Deficit in the scheme

-95.3(594.5)(689.8)Present value of liabilities

+112.8498.4611.2Market value of assets

Kier Group Pension Scheme:

At 30 June

KIER GROUP


KEY PERFORMANCE INDICATORS

Operating profit £m, operating margin %Revenue £m

Change

%

2009

£m

2010

£m

+4.5399.7417.8Cash

-9.02,2452,044Order book (secure and probable)

-2.6%2.6%Operating margin

-7.439.136.2Operating profit

-5.01,492.21,417.0Revenue

Year to 30 June

1,218.1

2006

1,411.2

2007

1,584.5

2008

1,492.2

2009

1,417.0

2010

CONSTRUCTION

2006 2007 2008 2009 2010

1.5%

1.6%

2.3%

2.6% 2.6%

18.0

21.9

36.6 36.239.1


KEY MARKETS AND AWARDS CONSTRUCTION

% awards by sector

41% Education

23% Custodial

7% Health

5% Hotels & leisure

4% Defence

4% Commercial

4% Retail

3% Industrial

3% Transport

2% Utilities

2% Residential

2% Other

• Little impact on order book from cancellation of BSF programme

• Academies still going ahead -£330m at preferred bidder stage

• Diverse and mobile skill sets


KEY MARKETS AND AWARDS

UK REVENUE GROWTH

• Over 50 frameworks nationally

• 65% of 2010 awards through frameworks

NEW KEY FRAMEWORKS

• Academies 2

• ProCure 21+

• Wm Morrison

• North West Construction Hub

• YorBuild

• West Midlands

• Construction Framework South West

CONSTRUCTION


POWER

• Market leading position – civils works on 33% of all major

gas power stations over the last 19 years

• Bidding contracts up to £1bn in joint venture at Hinckley

• Up to £6bn potential for Kier over 10 years

INFRASTRUCTURE

• Crossrail - bidding major works in joint venture

MIXED USE

• Benefiting from integrated model

PROSPECTS CONSTRUCTION


WASTE

• Includes recycling and power

generating opportunities

OVERSEAS

• Hong Kong: £125m tunnelling

contract awarded – more

being bid

• Saudi Arabia and

Abu Dhabi: significant

markets to expand existing

base

PROSPECTS CONSTRUCTION


• Geographic coverage - local everywhere we go

• Frameworks create access to large number of quality projects

• Intelligent bidding - adding value

• Versatile and responsive

• Ability to capitalise on growth areas

• Financial strength of Kier Group

• Prudent accounting practices

KIER STRENGTHS CONSTRUCTION


KEY PERFORMANCE INDICATORS

* Before amortisation of intangible assets.

Operating profit £m, operating margin %Revenue £m

Change

%

2009

£m

2010

£m

-12.036.732.3Cash

-7.22,2922,128Order book

+9.84.1%4.5%Operating margin*

+19.617.921.4Operating profit*

+7.5437.9470.7Revenue

Year to 30 June

SUPPORTSERVICES

281.3315.5

393.7

437.9470.7

2006 2007 2008 2009 2010

3.1%

3.9%4.1% 4.1%

4.5%

2006 2007 2008 2009 2010

8.7

12.2

16.217.9

21.4


ACTIVITIES

+7.5438471

-(33)(41)Intra-group revenue

-0.33029Plant hire to both internal and external clients

Plant:

-2020Waste collection and recycling, street scene and grounds maintenance

Change

%

2009

£m

2010

£m

Street Services:

+30.492120Building management and maintenance

Facilities Services:

+4.3329343Local authority and HA planned and reactive housing maintenance

Building Maintenance:

Revenue

SUPPORTSERVICES


NEW CONTRACT STARTS

• North Tyneside building maintenance - £60m pa for 10 years

(+5 years)

• Southwark building maintenance - £3m pa for 7 years

• Barnsley building maintenance - £11m pa for 5 years

(+5 years)

CONTRACT RENEWALS

• London Borough of Islington (Homes for Islington) - £20m

pa for 4 years (+6 years)

ACQUISITION OF NEW BUSINESS

• Pure Recycling – materials recycling facility at Ettington,

Warwickshire

ACHIEVEMENTS THIS YEARSUPPORTSERVICES


SECURED FORWARD REVENUE

SUPPORTSERVICES

Kier Street Services Kier Facilities Services Kier Building Maintenance

0

100

150

200

250

300

350

400

Valu

e

2011 2012 2013 2014

Years to 30 June

2016 2017 2018 2019 2020

50

2015

£m’s


• Creating operational

efficiencies for public and

private clients

• Creating revenue streams

through improved asset

management

• Waste recycling


• Prudent accounting

practices

KIER STRENGTHSSUPPORTSERVICES


KEY PERFORMANCEINDICATORS

-450 units6,1505,700Land bank (units)

-£10.8m£339.6m£328.8mNet operating assets

-£16.4m£264.9m£248.5mCash investment (internal)

* 2010: includes profits from land disposals and transfer to Kier Group Pension Scheme.

Change20092010

-0.7%6.3%Operating margin

-£1.1m£9.9mOperating profit*

-7.1%1,1411,060Unit sales

+4.6%£150.8m£157.7mRevenue

Year to 30 June

PARTNERSHIPHOMES

2010 (1,060)

47%499

10%105

43%456

Private salesSocial sales(from owned land)Social sales(contracted)

2009 (1,141)

41%46748%

552

11%122


KIER STRENGTHSPARTNERSHIPHOMES

• Land bank

• HCA delivery partner

• 29 framework agreements

• Planning and financial modelling

• Regeneration capability –integrated model


PROSPECTSPARTNERSHIPHOMES

• Shape of the business to come:

• 2,000 unit sales, £300m revenue

• 40/60 private/social

• 7% operating margin

• Smaller land bank

• Lower cash investment

• Sale of parts of the land bank over time

• £6bn of grant funding to 2014 (potential for £12bn leveraged through RSLs and private investors)

• Focus on development of mixed-tenure affordable housing

• Land led deals

• PFI opportunities includingWoking PFI (shortlisted)


DEVELOPMENTS

Includes Kier Property, Kier Project Investment, Kier Asset Partnership Services.

Change2009

£m

2010

£m

-£48.7m82.033.3Net operating assets

-£50.8m70.619.8Cash investment (internal)

-(1.9)0.3Operating profit/(loss)

-17.6%64.753.3Revenue

Year to 30 June

DEVELOPMENTS


KIER PROPERTY HIGHLIGHTS

DEVELOPMENTS

• Sale of UK Supreme Court

for over £30m – 5.0%

post-tax yield

• Sale of Uxbridge

development for a post-tax

yield of 5.5%

• Commencement of £20m

construction project on first

Solum project at Epsom

• Secured asset

management contract

at Chesterfield


KIER PROJECT INVESTMENT HIGHLIGHTS

DEVELOPMENTS

• Sale of two PFI investments for £7.3m generating £4.2m of profit (yield 8%)

• Financial close on Police Investigation Centres - £60m construction contract

• Preferred bidder on Gloucester Fire Stations

• Shortlisted on:

• Woking Social Housing

• London Fire

• West Yorkshire Police

• Avon & Somerset Police


STRENGTHS AND PROSPECTS DEVELOPMENTS

• Experienced team

• Solum Regeneration:

• 7 further schemes in the portfolio

• Twickenham & Walthamstow come on stream 2012

• Total development value £400m

• Further schemes to be included

• Similar businesses targeted to replicate the Solum partnership

• PFI portfolio:

• 13 schemes (1 at PB stage)

• Total equity £27.9m (£16m to date)

• Directors’ valuation at 7.5% -£49.1m


INVESTING IN OUR FUTURE KIER GROUP

• Training and development of key staff

• Bespoke development teams supporting our

integrated model:

• CRC – greening

• Waste

• Power

• Public sector services

• Mixed-use regeneration

• Investment in our property portfolio


OUTLOOK:CONSTRUCTION

KIER GROUP

• 98% of targeted construction revenue for 2011 secure and probable

• 45% of targeted revenue for 2012 secure and probable

• Versatile and flexible

Short/medium term impact

on Kier

Education

Custodial

Health

Hotels & leisure

Defence

Commercial

Retail

Industrial

Transport

Sector

Mixed-use

Power

Utilities

Residential

Overseas

41%

23%

7%

5%

4%

4%

4%

3%

3%

1%

0%

2%

2%

1%

% Awards2010


OUTLOOK:SUPPORT SERVICES

KIER GROUP

• £3bn pipeline of potential opportunities

• The greening agenda

• Enhanced offering in street services through Pure Recycling

• Good revenue visibility and opportunity

Short/medium term impact

on Kier Building Maintenance

Public: R&M

Capital

Private: R&M

Capital

Facilities Management

Public

Private

Street Services

Sector %Revenue

2010

55%

26%

2%

2%

7%

4%

4%


OUTLOOK: PARTNERSHIP HOMES & DEVELOPMENTS

KIER GROUP

Developments

• Innovative funding

capability creates

opportunities

• LA asset management

• Commitment to PFI

• SE rental demand

strengthening

• £400m exclusive portfolio

for Solum

Partnership Homes

• Cash generation from

land bank

• Land led deals

• Underlying demand

remains strong

• Few competitors in

affordable housing

sector have private

development skills


POSITIONING KIER FORTHE FUTURE

KIER GROUP

• Talented teams with extensive customer

relationships

• Robust order books


• Strong cash generation for future

investment opportunities

• Integrated model creates opportunities

even in challenging times


KIER PROJECT INVESTMENTCURRENT PROJECTS Appendix I

KIER GROUP

Directors valuation at 7.5% - £49.1m

Green: Kier Construction and Support Services Red: Kier Construction contractor

27.9Investment

701.822Preferred bidderGloucester Fire Stations

42.53.460ConstructionPolicy Investigation Centres

42.51.725OperationalNorth Kent Police HQ

500.818OperationalGreenwich Care HomesOthers

502.350OperationalSheffield SchoolsEducation

Operational

Operational

Operational

Operational

Operational

Operational

Operational

Operational

Status

727.769Kent BSF PFI 1

502.654Oldham Schools

501.739Norwich Schools

501.014Oldham Library

500.714Bournemouth LibraryLocal authority

501.327Ipswich Hospital

501.119Hinchingbrooke

501.825West Berkshire HospitalHealth

Equity

%

Kier equity/

loan stock

£m

Capital value

£m

ProjectSector


CASH GENERATION (excluding

Plant and Recycling Facility) Appendix II

SUPPORTSERVICES

0

5

10

15

20

25

£m

2006 2007 2008 2009 2010

Retained profit (cumulative)

Cash generation (cumulative)

30


BUILDING MAINTENANCE –MAJOR CONTRACTS Appendix III

April 20165 years +

5 years

£8mRepairs & maintenance and decent homes

Barnsley

September 201910 years +

5 years

£60mRepairs & maintenance,decent homes and construction

North Tyneside

June 20125 years +

5 years


LB Harrow

January 20147 years +3 years

£20mHousing, grounds & street services

Harlow DC

March 20125 years + 10 years


Hull City Council

February 201810 years + 5 years


Stoke-on-Trent

October 20144 years +

6 years

£20mRepairs & maintenance Homes for Islington

April 201310 years£60mRepairs & maintenance and decent homes

Sheffield City Council

ExpiryDurationAnnual revenue

DescriptionContract

SUPPORTSERVICES

kier group plc preliminary results presentation 16 ...€¦ · preliminary results presentation 16...

Documents