Kier Group Plc · LSE:KIE

Kier — H1 FY2017 Earnings Presentation

48 slides from Kier's earnings presentation, Mar 23, 2017

  1. Slide 1: Interim results for the six months ended 31 December 2016

    Kier Group Interim results for the six months ended 31 December 2016 23 March 2017 Kier Group plc – Interim results for the six months ended 31 December 2016 1

  2. Slide 2: Disclaimer

    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

  3. Slide 3: Haydn Mursell, Chief Executive

    Haydn Mursell Chief Executive Kier Group plc – Interim results for the six months ended 31 December 2016 3

  4. Slide 4: Agenda

    Agenda  Overview  Highlights  Market-leading positions  Vision 2020 to date  Financials  Divisional update  Vision 2020  Group summary and outlook Kier Group plc – Interim results for the six months ended 31 December 2016 4

  5. Slide 5: Highlights

    Highlights On Strong track with our strategic long-term goals fundamentals  Good results  Profit up and net debt ahead of expectations  Portfolio simplification ongoing  Consolidating our market-leading positions  Increased investment  Underpins profitability over the medium term  Strengtheni

  6. Slide 6: Market-leading positions

    Market-leading positions Strong Stronglong-term fundamentals long-term fundamentals Leading UK Leading Housing infrastructure player regional builder (new build and maintenance) £1.5bn+ £1.8bn+ £600m+ Represents 90% of Group turnover Invest, Build and Maintain all asset classes Kier Group plc – Inte

  7. Slide 7: Market-leading positions

    Market-leading positions Strong long-term fundamentals  Strategic focus aligned to the UK’s spending priorities Leading UK Leading Housing  Positive Autumn Statement infrastructure player regional builder (new build and maintenance)  Housing  Infrastructure  Regional building  Housing White Pa

  8. Slide 8: Vision 2020 - Update

    Vision 2020 - Update Key metrics 2020 target December 2016 Annual average operating profit growth (%) >10 On target Property – ROCE (%) >15 On target Residential – ROCE (%) to 15 Improving – JV Cross Keys will accelerate Construction – EBITA (%) to 2.5 2.0% - improving and on track Services – EBITA

  9. Slide 9: Vision 2020 to date - operational

    Vision 2020 to date - operational Good progress andlong-term Strong actionsfundamentals underpin future growth  Portfolio simplification  Solid platform for the future  Mouchel Consulting sale completed  Ongoing investment in systems  Exit of the Caribbean progressing  Oracle – financial, HR,

  10. Slide 10: Financial update

    Financial update Bev Dew, Finance Director Kier Group plc – Interim results for the six months ended 31 December 2016 10

  11. Slide 11: Financial highlights

    Financial highlights  Revenue of £2bn  Underlying operating profit of £56.5m, an increase of 4%  Underlying EPS increased 11% to 38.9p  Non-underlying gain of £2m  Mouchel Consulting disposal generating a £39m gain  Completion delays in Caribbean driving provision of £33m  Net debt of £179m i

  12. Slide 12: Income statement

    Income statement Six months ended 31 December Change 2016 20152 % Underlying operating profit1 £m £m Group 51.3 49.2 +4 Joint ventures (JVs) results post tax 3.4 2.6 +31 Profit on disposal of joint ventures 1.8 2.6 -31 Total underlying operating profit 56.5 54.4 +4 Net finance costs (10.2) (12.9) Un

  13. Slide 13: Revenue and underlying operating profit

    Revenue and underlying operating profit Property December 2016 Residential Revenue1 £2,004m -1% Operating profit2 £73.0m +4% Construction Services £50m £6.9m £169m £8.1m £769m £37.2m £1,017m £20.8m 1 Group and share of joint ventures for continuing operations. 2 Arising on continuing operations, sta

  14. Slide 14: Underlying operating profit

    Underlying operating profit Six months ended 31 December Change Performance by division 2016 2015 2 % £m £m Property 6.9 7.2 -4 Residential 8.1 6.6 +23 Construction 20.8 17.5 +19 Operating margin 2.0% 1.9% Services 37.2 39.1 -5 Operating margin 4.8% 4.7% Corporate (16.5) (16.0) +3 Total underlying o

  15. Slide 15: Property performance

    Property performance For the six months ended 31 December Year ended June 2016 2015 Change 2016 £m £m % £m Revenue1 Developments 43 43 - 135 Structured finance 7 32 -78 41 Total 50 75 -34 176 Underlying operating profit2 Developments 6.6 5.1 +29 20.2 Structured finance 0.3 2.1 -86 1.2 Total 6.9 7.2

  16. Slide 16: Residential performance

    Residential performance For six months ended 31 December Year ended June 2016 2015 Change 2016 £m £m % £m Revenue Mixed tenure 87 79 +10 187 Private (Kier land) 82 83 -1 166 Total 169 162 +4 353 Underlying operating profit1 Mixed tenure 1.3 0.9 +44 6.0 Private (Kier land) 6.8 5.7 +19 14.3 Total 8.1

  17. Slide 17: Construction performance

    Construction performance For the six months ended 31 December 2016 20153 Change £m £m % Revenue1 1,017 945 +8 Underlying operating profit2 20.8 17.5 +19 Underlying operating margin2 2.0% 1.9% Order book (secure and probable) 3.3bn 3.3bn - Revenue1 Operating profit and margins2 2,000 45 FY FY 1,800 2

  18. Slide 18: Services performance

    Services performance For the six months ended 31 December 2016 20153 Change £m £m % Revenue1 769 834 -8 Underlying operating profit2 37.2 39.1 -5 Underlying operating margin2 4.8% 4.7% Order book (secure and probable) 5.6bn 5.5bn +2 Revenue1 Operating profit and margins2 1,800 100.0 FY FY 1,600 90.0

  19. Slide 19: Non-underlying items

    Non-underlying items1 £m Gain relating to the disposal of Mouchel Consulting 38.7 Provision for closure of Caribbean operations and related contract final accounts (33.0) Other (3.9) Total non-underlying items from continuing operations 1.8 Associated tax credit 9.7 Credited to profit for the period

  20. Slide 20: Order book

    Order book At 31 December At 30 June1 At 31 December1 Change 2016 2016 2015 £bn £bn % £bn Construction 3.3 3.2 +3 3.3 Services AMP 0.5 0.4 +25 0.5 Services Highways England 1.4 1.2 +17 1.4 Services other 3.7 3.7 0 3.6 Services Total 5.6 5.3 +6 5.5 Total 8.9 8.5 +5 8.8 12.0 10.0 1.1 (1.0) 1.1 (0.8) 8

  21. Slide 21: Balance sheet summary

    Balance sheet summary At 31 At 30 At 31 Change December June December 2016 2016 2015 £m £m £m £m Intangible assets 794 795 -1 782 Property, plant and equipment 90 99 -9 112 Investment in JVs 130 130 - 107 Residential land and work in progress 370 315 +55 306 Net assets held for resale - 4 -4 (8) Oth

  22. Slide 22: Group net debt

    Group net debt1 Operating Strong cash conversion long-term of 124% fundamentals 0 - - - (28) (50) (99) 70 (179) (100) (98) £m (150) (49) 25 (200) (250) June 2016 Operating cash Working capital Net investment Pension, interest, Non-underlying December 2016 net debt flows movement FX, dividend and ite

  23. Slide 23: Pensions

    Pensions Effective risk management At 31 December At 30 June Change At 31 December 2016 2016 2015 £m £m £m £m Kier Group Pension Scheme: Market value of assets 1,125 1,066 +59 894 Present value of liabilities (1,146) (1,089) -57 (964) Deficit in the scheme (21) (23) +2 (70) Deferred tax 4 4 - 14 Net

  24. Slide 24: Financial summary

    Financial summary  Operating profit1 up 4% to £56.5m  Underlying EPS growth of 11% to 38.9p  Net debt stable  Well controlled pension position  Investment in Property, Residential and back-office systems  Improved order book of £8.9bn  Increased interim dividend by 5% to 22.5p 1 Arising on co

  25. Slide 25: Operational update

    Operational update Haydn Mursell, Chief Executive Kier Group plc – Interim results for the six months ended 31 December 2016 25

  26. Slide 26: Property

    Property Snowhill Retail Park, Wakefield Sovereign Square, Leeds York Street, Manchester Watford Health Campus, Riverside Kier Group plc – Interim results for the six months ended 31 December 2016 26

  27. Slide 27: Property

    Property On track for 15% ROCE on increasing capital  Solid performance taking advantage of Brexit opportunities  Increased capital investment  Good support from co-investors  Stable market conditions now  Greater focus on good locations, 80% outside London Twickenham Station, London  £1bn+ pi

  28. Slide 28: Residential

    Residential Crispin Gardens, Rushden Connect 21, Peterborough Pennance Field, Falmouth Millbrook Meadows, Cambridgeshire Private Mixed tenure Mixed tenure Private Kier Group plc – Interim results for the six months ended 31 December 2016 28

  29. Slide 29: Residential

    Residential Mixed tenure focus improving ROCE  Mixed tenure  Private (Kier land)  Increasing ROCE  Sales rates and prices ahead of prior year,  £42m HCA grant secured (c1,700 units) >85% forward sold  £600m pipeline (3-4 years); >90% secured  ROCE expected to improve following for 2017 Cross

  30. Slide 30: Residential: Joint Venture with Cross Keys Homes

    Residential: Joint Venture with Cross Keys Homes Acceleration of Vision 2020 strategy  Rationale  Retain strong Kier management  Capital efficiency  Higher ROCE  Structure  90/10 Kier/Cross Keys Homes JV (equal voting rights)  c.£97m assets transferred; 13 sites  c.£64m cash received  Modes

  31. Slide 31: Residential Homes

    Residential Homes Well positioned Strong long-termfor 15% ROCE fundamentals  Continue with our focus on mixed tenure housing  Cross Keys Homes JV has accelerated capital available to service growth  Vision 2020 goals in sight  Ongoing capital base of c£200m  On track with 15% ROCE strategy  We

  32. Slide 32: Construction

    Construction University of Cambridge, Peterhouse University of Nottingham, David Ross Sports Village Mersey Gateway Project Capella, Cambridge Kier Group plc – Interim results for the six months ended 31 December 2016 32

  33. Slide 33: Construction

    Construction Controlled growth in market share UK regional building Revenue Future trend  Strong organic growth Sector Dec June Short Medium 2016 2016 term term  Market leader with national coverage  Continued focus on frameworks Education 37% 29%  Education, Health, etc Commercial,  New growin

  34. Slide 34: Construction

    Construction International focus and stability International Revenue Future trend  Middle East focus Sector Dec June Short Medium 2016 2016 term term  Dubai focus - Expo 2020  Low oil price presents some challenges  UKEF differentiates  Caribbean activity expected to fully wind down in the Inte

  35. Slide 35: Construction

    Construction Positive and improving performance  Strong platform  Secured c.£1bn of work  Improved order book of £3.3bn  100% secured for 2017  Well positioned for the long term  Leading UK regional builder Beckley Court, Plymouth  Significant infrastructure pipeline  Focused international b

  36. Slide 36: Services

    Services Housing Maintenance Kier Workplace Services Highways Utilities Kier Group plc – Interim results for the six months ended 31 December 2016 36

  37. Slide 37: Infrastructure Services

    Infrastructure Services Strong market positions maintained Highways Revenue Future trend  Increasing market share Sector Dec June Short Medium 2016 2016 term term  HE % cap and area limit increased  Areas 13, 6 & 8, 1 & 2 awarded Highways 45% 45% (total value c£300m)  Design and maintenance capa

  38. Slide 38: Property Services

    Property Services Diverse and stable portfolio Housing Maintenance Revenue Future trend  Top 3 UK player Sector Dec 2016 June 2016 Short term Medium term  Challenging market remains Housing maintenance - 13% 12%  Clients’ interest public  Management and maintenance Housing maintenance - 5% 6% 

  39. Slide 39: Services

    Services Resilient with long-term visibility  Strong platform Secure & Probable Extensions 1.80  Secured c.£1bn of work 1.60 Contract  Improved order book £5.6bn extensions could 1.40 add £2.6bn to the  Well secured for 2017 order book 1.20  Strong market positions 1.00  Leading UK highways ma

  40. Slide 40: Group Outlook

    Group Outlook Kier Group plc – Interim results for the six months ended 31 December 2016 40

  41. Slide 41: Positive macro environment

    Positive macro environment Well-positioned in robust Strong long-term end markets fundamentals  UK priorities  Our position  Regeneration of regional cities  Regional builder with national coverage  Schools, Hospitals, Prisons, Social  Ability to cover all sectors and geographies care  Larges

  42. Slide 42: Positive macro environment

    Positive macro environment Well positioned in robust Strong long-term end markets fundamentals Leading UK Leading Housing infrastructure player regional builder (new build and maintenance) £1.5bn+ £1.8bn+ £600m+ Represents 90% of Group turnover  Capabilities to Invest, Build and Maintain all asset

  43. Slide 43: Group summary and outlook

    Group summary and outlook Strong platform Strong forfundamentals long-term future growth  Good first half performance  Profit in-line; net debt ahead of expectations  Focus on core operations  Portfolio simplification ongoing  Investing in strong platform for growth  Strengthening order book 

  44. Slide 44: Appendices

    Appendices Kier Group plc – Interim results for the six months ended 31 December 2016 44

  45. Slide 45: Financing Facilities

    Financing Facilities December 2016 June 2016 Maturity Facility type £m £m 2019,2021, US Private Placement 183 183 2022,2024 Schuldschein Loan Notes 81 81 2019, 2021, 2023 Revolving credit facility 380 380 2020 Funding for lending scheme loan 30 30 2017 Overdraft 35 45 Asset finance 42 46 Total 751 7

  46. Slide 46: Property

    Property Structured Strong finance long-term(as fundamentals at 31 December 2016) Project Status Capital value £m Kier equity/loan stock £m Equity % Woking housing In operation 31 2.0 50.0 Local authority Social Power, Harlow In operation 1.1 1.1 100.0 Glasgow (direct let) In operation 22 5.2 75.0 S

  47. Slide 47: UK highways footprint

    UK highways footprint Kier Group plc – Interim results for the six months ended 31 December 2016 47

  48. Slide 48: Kier Group plc – Interim results for the six months ended 31 December 2016

    Kier Group plc – Interim results for the six months ended 31 December 2016 48

Kier Group — H1 FY2017 Earnings Presentation on 6ix