Kier Group Plc · LSE:KIE
Kier — H1 2010 Earnings Presentation
33 slides from Kier's earnings presentation, Feb 24, 2010
Slide 1: Interim Results Presentation
KIER GROUP PLC INTERIM RESULTS PRESENTATION 24 February 2010 KIER THE INTEGRATED CONSTRUCTION AND PROPERTY SERVICES GROUP Kier Group plc interim results for the six months ended 31 December 2009 1
Slide 2: Interim Highlights
INTERIM HIGHLIGHTS • Underlying pre-tax profits* up to 20.8% at £31.9m (2008: £26.4m) • Underlying EPS* up 20.5% at 61.6p (2008: 51.1p) • Construction margins at 2.5% (2008: 2.4%); Support Services margins at 4.4% (2008: 4.0%) • Interim dividend increased by 2.8% to 18.5p (2008: 18.0p) • £130.7m of
Slide 3: Revenue Headline Numbers
REVENUE HEADLINE NUMBERS SIX MONTHS TO 31 DECEMBER 2009 Construction (£678.3m) 2008 Construction (£794.2m) REVENUE Support Services (£229.7m) REVENUE Support Services (£224.4m) £m Partnership Homes (£74.6m) £m Partnership Homes (£67.5m) Developments (£27.2m) Developments (£22.6m) 3% 7% 6% 2% 20% 23%
Slide 4: Headline Numbers: Underlying Pre-Tax Profit
HEADLINE NUMBERS UNDERLYING PRE-TAX PROFIT SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 £m £m % £m Operating profit: Group 31.6 25.6 +23.4 50.1 Operating profit: joint ventures 0.0 0.6 - 1.0 Group and share of joint ventures 31.6 26.2 +20.6 51.1 Share of joint ventures: finance co
Slide 5: Headline Numbers: Exceptional Items
HEADLINE NUMBERS EXCEPTIONAL ITEMS SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 2009 £m £m £m Profit from sale of PFI investments 4.2 - - Provision for fine imposed by OFT (18.0) - - Credit from change in salary related pension benefits - 24.3 24.3 Partnership Homes reorganisation/restructuri
Slide 6: Operating Profit: Performance by Division
OPERATING PROFIT HEADLINE NUMBERS PERFORMANCE BY DIVISION SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 £m £m % £m Construction 16.9 19.0 -11.1 39.1 Support Services 8.8 7.8 +12.8 15.7 Partnership Homes 6.8 0.4 - 1.1 Developments 2.4 0.6 +300.0 (1.9) Corporate costs (3.3) (1.6) -10
Slide 7: Earnings per Share and Dividend
HEADLINE EARNINGS NUMBERS PER SHARE AND DIVIDEND SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 % Dividend per share 18.5p 18.0p +2.8 55.0p Weighted average number of shares 36.7m 36.4m - 36.5m Adjusted profit before tax excluding exceptional items and amortisation of intangibles £3
Slide 8: Balance Sheet Summary
BALANCE HEADLINESHEET NUMBERS SUMMARY AT 31 DECEMBER AT 30 JUNE 2009 2008 Change 2009 £m £m £m £m Intangible assets 22 12 +10 11 Property, plant and equipment 82 93 -11 87 Investment in joint ventures 29 26 +3 30 Inventories 422 515 -93 424 Other working capital (462) (509) +47 (438) Cash 161 112 +4
Slide 9: Headline Numbers: Inventories
HEADLINE NUMBERS INVENTORIES AT 31 DECEMBER AT 30 JUNE 2009 2008 Change 2009 £m £m £m £m Residential land 222 264 -42 230 Residential work in progress 128 165 -37 135 Commercial land and work in progress 20 35 -15 21 Other work in progress 52 51 +1 38 Inventories 422 515 -93 424 Land commitments 17
Slide 10: Headline Pensions Numbers
HEADLINE PENSIONS NUMBERS AT 31 DECEMBER AT 30 JUNE 2009 2009 Change £m £m £m Kier Group Pension Scheme: Market value of assets 591.8 498.4 93.4 Present value of liabilities (679.4) (594.5) (84.9) Deficit in the scheme (87.6) (96.1) 8.5 Deferred tax asset 24.5 26.9 (2.4) Net pension liability (63.1)
Slide 11: Cash Flow Numbers
CASH FLOWNUMBERS HEADLINE SUMMARY FOR THE SIX MONTHS TO 31 DECEMBER 2009 £m £m Balance at 1 July 2009 92.5 Operating profit (before exceptionals) 31.6 Depreciation and amortisation 10.1 Share-based payments 0.8 ‘Special’ pension contributions (17.9) Restructuring costs (0.8) Decrease in working capi
Slide 12: Cash Numbers by Division
HEADLINE CASH NUMBERS AT 31 DECEMBER AT 30 JUNE 2009 2009 Movement £m £m £m Construction 398 400 -2 Support Services 42 37 +5 Partnership Homes (251) (265) +14 Developments* (21) (71) +50 Centre (37) (8) -29 Net cash 131 93 +38 * Developments: inflow of £50m includes sale of UK Supreme Court develop
Slide 13: Construction
CONSTRUCTION SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 £m £m % £m Revenue 678.3 794.2 -14.6 1,492.2 Operating profit 16.9 19.0 -11.1 39.1 Operating margin 2.5% 2.4% - 2.6% Order book (secure and probable) 2,232 1,841 +21.3 2,245 Cash 397.8 410.0 -3.0 399.7 REVENUE £m OPERATING
Slide 14: Construction: Key Markets and Awards
CONSTRUCTION KEY MARKETS AND AWARDS SIX MONTHS TO 31 DECEMBER % AWARDS BY SECTOR 2009 2008 % % Public sector 75 67 Private sector 25 33 100 100 Negotiated and two-stage bids 74 65 Competitive tender 26 35 100 100 Kier Group plc interim results for the six months ended 31 December 2009 14
Slide 15: Construction: Frameworks
CONSTRUCTION KIER – FRAMEWORKS – 52 IN TOTAL • National: • Public sector: • Private sector: • Academies Contractors • BAA plc Commodity Framework (1 and 2) Build • Building Schools for the • Network Rail Future • United Utilities • Primary Schools Capital • Sainsbury Investment Programme • Morrison
Slide 16: Construction: Regional Local Authority Frameworks
CONSTRUCTION KIER REGIONAL LOCAL AUTHORITY FRAMEWORKS Kier Group plc interim results for the six months ended 31 December 2009 16
Slide 17: Construction: Key Sectors
CONSTRUCTION KEY SECTORS • Education: • Academies Contractors Framework 1: • £310m awarded and signed • £450m at preferred bidder stage including a BSF project at £195m for Telford & Wrekin • Academies Contractors Framework 2: • 15 contractors across the UK • Two areas – Kier on both • £4bn framewor
Slide 18: Construction: Key Sectors
CONSTRUCTION KEY SECTORS • Health: • ProCure 21: £70m awarded year to date • P21+: • £650m per annum for six years • One of 11 bidders – six to be selected • Custodial: • Ministry of Justice: £180m Featherstone Prison • Retail: • Sainsbury/Morrison/Tesco: • Preferred bidder on £24m Sainsbury store i
Slide 19: Construction: Key Sectors
CONSTRUCTION KEY SECTORS • Power: • Gas/coal fired/nuclear: • Track record of delivery in all areas • £100m contract at West Burton for EDF • Consortium established and bidding to EDF on nuclear power programme • Infrastructure: • Crossrail: • Demolition and enabling works • Tunnelling • Civil engin
Slide 20: Construction Prospects
CONSTRUCTION PROSPECTS KIER THE CONTRACTOR OF CHOICE • Order books stable at £2.2bn (2008: £1.9bn) • 2010 revenue secure, 2011 revenue 73% secure • Cash strong and margins robust • Protection against uncertainties surrounding public sector expenditure: • Frameworks • Negotiated and partnered work •
Slide 21: Construction: Kier Winning Themes
CONSTRUCTION KIER WINNING THEMES • Wide geographic spread • Integration into local communities, client base and supply chain • Strong central co-ordination of national clients • Track record of performance delivery • Financial strength of Kier Group • Ability to manage smaller contracts • Strong saf
Slide 22: Support Services
SUPPORT SERVICES SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 £m £m % £m Revenue 229.7 224.4 +2.4 437.9 Operating profit* 10.1 8.9 +13.5 17.9 Operating margin 4.4% 4.0% - 4.1% Order book (secure) 2,312 1,830 +26.3 2,292 Cash 42.1 19.7 +113.7 36.7 * Before amortisation of intangibl
Slide 23: Support Services: Activities
SUPPORT SERVICES ACTIVITIES Building Maintenance (£167m) • Building Maintenance: Facilities Services (£59m) Plant (£15m) • Local authority housing Street Services (£10m) maintenance ‘Decent Homes’ and housing association repairs and 4% maintenance 6% • Facilities Services: • Building management, mai
Slide 24: Support Services: Building Maintenance Secured Forward Revenue
SUPPORT SERVICES BUILDING MAINTENANCE SECURED FORWARD REVENUE – AS AT 31 DECEMBER 2009 Kier Group plc interim results for the six months ended 31 December 2009 24
Slide 25: Support Services: Prospects
SUPPORT SERVICES PROSPECTS • Good opportunities for outsourcing • Top five building maintenance services provider • 240,000 homes across the country • New bids include: • Southwark • Rotherham • North Lanarkshire • Renewal of Islington Facilities services, Kier Support Services Kier Group plc interi
Slide 26: Partnership Homes
PARTNERSHIP HOMES SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 % Revenue £74.6m £67.5m +10.5 £150.8m Unit sales 488 511 -4.5 1,141 Average selling price £135,900 £132,100 +2.9 £132,200 Operating profit* £6.8m £0.4m - £1.1m Operating margin** 9.1% 0.6% - 0.7% Cash investment £251.1
Slide 27: Partnership Homes: Unit Sales 2009
PARTNERSHIP HOMES UNIT SALES – SIX MONTHS TO 31 DECEMBER 2009 Private sales • Adding value: Social (owned land) Social (contracted) • Land transactions including and strategic land 2009 contribution to Kier Group Pension Scheme at a profit • HomeBuy Direct Equity working well • Listed as a partner f
Slide 28: Partnership Homes: Outlook
PARTNERSHIP HOMES OUTLOOK • Mortgage terms and availability are beginning to ease • Reservation levels are improving • Lower stock availability underpins pricing levels • Future: growth from current revenue levels, mid to high single digit margins, lower cash investment • Valuable land bank with goo
Slide 29: Developments
DEVELOPMENTS SIX MONTHS TO 31 DECEMBER YEAR TO 30 JUNE 2009 2008 Change 2009 £m £m % £m Revenue 27.2 22.6 +20.4 64.7 Operating profit/(loss) 2.4 0.6 +300.0 (1.9) Cash investment 20.5 49.8 - 70.6 Net operating assets 41.7 59.3 -29.7 82.0 Includes: Kier Property, Kier Project Investment, Kier Asset Pa
Slide 30: Kier Property: Highlights
KIER PROPERTY HIGHLIGHTS • Sale of UK Supreme Court to the Prudential for over £30m – 5.0% post-tax yield • Solum joint venture to start Epsom Station this financial year • Transfer of land assets at greater than book value to Kier Group Pension Scheme • Sale of development at Uxbridge for a yield o
Slide 31: Kier Project Investment: Highlights
KIER PROJECT INVESTMENT HIGHLIGHTS • Sale two PFI investments for £7.3m generating £4.2m of profit (discount 8%) • Financial close on Police Investigation Centres is imminent - £60m construction contract for Kier • Shortlisted on: • Woking Social Housing • Gloucester Fire Station • Gloucester Police
Slide 32: Kier Project Investment: Highlights
KIER PROJECT INVESTMENT HIGHLIGHTS • Kent BSF acquisition: • PFI: investment of £6.7m now plus a further £8.0m in future phases • Construction: £200m of additional schools work • FM contract: £80m over 25 years • Total PFI portfolio - £26m committed investment: • Valued at 8% gives £44.2m • 12 proje
Slide 33: Current Trading and Prospects
CURRENT TRADING AND PROSPECTS • 100% of targeted construction revenue for 2010 and 73% of revenue for 2011 secure and probable • Framework and repeat business underpin our awards • Support Services - good visibility and many outsourcing opportunities • Partnership Homes - market starting to improve