Kier Group Plc · LSE:KIE
Kier — H1 FY2005 Earnings Presentation
33 slides from Kier's earnings presentation, February 2005
Slide 1: Kier Group plc interim results six months ended 31 December 2004
Kier Group plc interim results six months ended 31 December 2004
Slide 2: Interim highlights
Interim highlights • Pre-tax profits, including exceptional profits of £5.9m, up 87.4% to £32.8m* • EPS, excluding exceptional items, up 49.7% to 53.0p* • Dividend per share up 16.7% to 7.0p • Construction & Services order books at £1.82bn with improving quality • Shift in balance of unit sales in H
Slide 3: EPS record: since 1996 (after flotation)
EPS record: since 1996 (after flotation) 1st Half 2nd Half 90 • Into 13th year of 80 continuous growth 70 since buyout 60 • Compound growth in EPS of 23% per 50 annum since flotation 40 • Return on 30 shareholders’ funds in excess of 40% 20 10 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 Earnings
Slide 4: Financial summary
Financial summary Year to Six months to 31 December 30 June 2004 2003 Change 2004 £m £m % £m Total turnover 816.1 726.6 +12.3 1,476.5 Operating profit including share of joint ventures* 26.7 17.0 +57.1 42.6 Net interest receivable/(payable) - Group 0.5 0.2 - (0.2) Net interest payable – joint ventur
Slide 5: Financial summary (continued)
Financial summary (continued) Year to Six months to 31 December Change 30 June 2004 2003 % 2004 Dividends per share 7.0p 6.0p +16.7 19.0p Dividend cover (EPS excluding exceptionals) 7.2x 5.4x - 4.3x Basic earnings per share: undiluted 54.7p 32.6p +67.8 81.5p fully diluted 54.4p 32.4p +67.9 80.8p Adj
Slide 6: Performance by segment
Performance by segment Year to Six months to 31 December 30 June 2004 2003 Change 2004 £m £m % £m Turnover: Construction 530.1 505.5 +4.9 1,007.3 Support Services 108.3 97.1 +11.5 197.7 Homes 134.5 103.9 +29.5 215.7 Property 37.7 15.7 +140.1 46.6 Infrastructure Investment 5.5 4.4 +25.0 9.2 816.1 726
Slide 7: Segmental analysis: net operating assets
Segmental analysis: net operating assets At 31 December At 30 June 2004 2003 Change 2004 £m £m £m £m Construction (161.4) (127.0) -34.4 (132.6) Support Services 4.7 13.0 -8.3 10.6 Homes 219.4 181.7 +37.7 201.3 Property 14.3 4.1 +10.2 24.8 Infrastructure Investment (6.4) 12.3 -18.7 9.0 Centre (7.6) (
Slide 8: Cash flow: summary for six months to 31 December 2004
Cash flow: summary for six months to 31 December 2004 £m Opening net funds at 30 June 2004 7.6 • advance sale of Swindon property Cash inflow from operating activities 62.3 Cash inflow: - refinancing Hairmyres 8.1 • reduction in investment in land - sale of PFI investment 5.0 • reduction in trade -
Slide 9: Balance sheet: summary
Balance sheet: summary At 31 December At 30 June 2004 2003 Change 2004 £m £m £m £m Tangible fixed assets 69.8 60.1 +9.7 68.9 Goodwill 17.3 19.9 -2.6 18.6 Investments 22.7 31.9 -9.2 32.2 Working capital (27.9) (21.3) -6.6 4.4 Cash (net) 100.3 56.8 +43.5 37.7 Long term borrowings (30.1) (30.1) - (30.1
Slide 10: Pensions
Pensions • Kier Group Pension Scheme deficit, net of deferred taxation - £67.2m at 30 June 2004 • Proceeds from refinancing and PFI investment sale applied towards a £12.0m additional contribution - no impact on operating profits for the year • Changes to the way in which contributions are made resu
Slide 11: International Accounting Standards: overview
International Accounting Standards: overview • Kier will commence reporting under International Accounting Standards in the year ending 30 June 2006 (first results will be interims to 31 December 2005) • Cash flows are unaffected • Dividend policy and ability to pay dividends are unaffected • Bankin
Slide 12: International Accounting Standards: key changes in accounting policy
International Accounting Standards: key changes in accounting policy • Goodwill frozen and subject to annual impairment IFRS 3 review • Recognition of imputed interest on land creditors IAS 2 • Pension scheme deficit included in the balance sheet IAS 19 • Development property profit recognition on c
Slide 13: Group operating structure
Kier Group operating structure Kier Group plc interim results six months ended 31 December 2004 13
Slide 14: Construction: performance
Construction: performance 31 December 2004 2003 Turnover £530.1m £505.5m Operating margin 1.3% 0.9% Cash £182m £147m Order book £600m £600m • £285m of further awards in the two months to 28 Feb 2005 Kier Regional Kier Construction Kier Group plc interim results six months ended 31 December 2004 14
Slide 15: Kier Regional
Kier Regional • Continued excellent performance • 37% of awards in six months in public sector (2003: 34%) • Education provides 25% of awards and health 11% (with further pending for ProCure 21) • Excellent cash performance throughout the six months (and continuing into 2005) Kier Group plc interim
Slide 16: Regional: local builder with national coverage
Kier Regional: local builder with national coverage • Local contracts and repeat business • National coverage through: • Kier Health: ProCure 21 Projects • Kier Retail: Tesco, Pillar, Waitrose, Morrison • Kier Custodial: HM Prisons framework • Kier Education: Building Schools for the Future • Key ac
Slide 17: Construction
Kier Construction • UK civil engineering • Rail framework awarded for Network Rail in East Anglia - £100m over 5 years • Framework for United Utilities, in joint venture, £130m to Kier over 5 years, extendable for further 5 years • Successful completion of Hong • Overseas Kong contract – with furthe
Slide 18: Construction: Mining
Kier Construction • Mining • Greenburn performing well • 500,000 tonnes transported from the site • Over 60% of sales forward sold at favourable prices • 60% Rail Grant received for construction of the rail head • Further opportunities are being explored Kier Group plc interim results six months end
Slide 19: Support Services: performance
Kier Support Services: performance 31 December 2004 2003 Turnover £108.3m £97.1m Operating margin 2.0% 2.1% Order book £1,137m £974m Net operating assets £4.7m £13.0m Kier Group plc interim results six months ended 31 December 2004 19
Slide 20: Support Services: three business streams
Kier Support Services: three business streams Building Maintenance • Local authority maintenance contracts • Decent Homes opportunities Managed Services: • Good opportunities in PFI, £79m secured in the six months to 31 December 2004 • Opportunities to work with the other Group companies Building Se
Slide 21: Support Services: Building Maintenance
Kier Support Services: Building Maintenance • Current local authority outsourced maintenance contracts include: • Islington £260m 10 year contract • Sheffield £640m 10 year contract • Greenwich £20m 5 year contract • Brighton £16m 4 year contract • Ealing £23m 5 year contract • Leeds (commenced Nov
Slide 22: Residential: performance
Kier Residential: performance Year to Six months to 31 December 30 June 2004 2003 Change 2004 % Unit sales (units) 721 562 +28.3 1,158 Average selling price (£) 180,500 184,800 -2.3 186,300 Turnover (£m) 134.5 103.9 +29.5 215.7 Land sale (£m) (4.4) - - - Turnover from housing (£m) 130.1 103.9 +25.2
Slide 23: Residential: completions, average sales price & plot cost
Kier Residential: completions, average sales price & plot cost Six months to 31 December 2004 2003 Units ASP (£) Units ASP (£) Allison Homes 251 163,500 151 169,000 Bellwinch Homes 162 200,900 171 186,800 Kier Homes 115 162,700 99 172,800 Twigden Homes 193 196,200 141 207,800 721 180,500 562 184,800
Slide 24: Property
Kier Property Operating profit Six months to 31 December 2004 2003 £m £m Kier 2.4 1.9 Joint venture 2.2 2.2 4.6 4.1 • Sale of property in Swindon pre-let to National Trust – cash in advance • Sale of two properties acquired with Sainsbury's portfolio • Good development opportunities continue • ROCE
Slide 25: Property: estimated end value of developments
Kier Property: estimated end value of developments (total £621m) 350 Total £324m 300 55 250 54 200 Total Retail £m £168m Industrial 26 Offices 150 Total £129m 58 215 100 61 50 84 68 0 In development Programmed Pre-planning Kier Group plc interim results six months ended 31 December 2004 25
Slide 26: Poole Harbour development: mixed use opportunity
Poole Harbour development: mixed use opportunity • Kier Rail • Kier Regional • Kier Property • Kier Residential • Support Services Kier Group plc interim results six months ended 31 December 2004 26
Slide 27: Project Investment
Kier Project Investment • Preferred bidder status awarded: • Garrett Anderson Centre, Ipswich Hospital • Capital value - £26m – contractor – Kier Regional • Support Services - £18m – service provider – Caxton FM • North Kent Police HQ • Capital value - £25m – contractor – Kier Regional • Refinanced
Slide 28: Infrastructure Investment: current projects
Infrastructure Investment: current projects Capital value Kier equity/ Sector Project Status Equity % £m loan stock £m Health Hairmyres Hospital Operational 68 4.3 50 West Berkshire Hospital Operational 25 1.6 50 Hinchingbrooke Construction 19 1.1 50 Ipswich Hospital Preferred bidder 26 1.5 50 Local
Slide 29: Markets
Markets • Construction: continued Government expenditure • Health • Education • Public Housing • Support Services: more Local Authority outsourcing contracts are available • Homes: market fundamentals remain favourable • Property: opportunities continue • Mixed-use sites with Residential Kier Group
Slide 30: Outlook
Outlook • Construction and Services volumes anticipated to increase • Homes - focus on profitability over volume • Property - on course for another successful year • Ample opportunities in PFI providing Kier with choice Kier Group plc interim results six months ended 31 December 2004 30
Slide 31: Regional map: Appendix I
Regional map: Appendix I Kier Group plc interim results six months ended 31 December 2004 31
Slide 32: Residential map: Appendix II
Residential map: Appendix II Kier Group plc interim results six months ended 31 December 2004 32
Slide 33: Infrastructure Investment: performance
Infrastructure Investment: performance Appendix III Six months to 31 December Year to 30 June 2004 2003 2004 £m £m £m Turnover (Kier’s share of SPVs) 5.5 4.4 9.2 SPV results, Kier Share Operating profit 0.9 0.7 1.5 Refinancing costs (0.9) (0.6) (1.0) Interest payable/receivable (0.4) (0.2) (0.2) (0.