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Results centre

Kier announced its Preliminary Results for the year ended 30 June 2014 at 07:00 GMT on Thursday 18 September 2014

RESULTS HIGHLIGHTS

Financial highlights – good set of results in line with expectations

  • Group revenue of £3.0bn (2013: £2.0bn) up 51%, including nearly a full year from the May Gurney acquisition;
  • Underlying profit before tax1 up 54% to £73.1m (2013: £47.6m);
  • Solid Construction division margin of 2.1% (2013: 2.3%) on increased revenue;
  • Improved Services division margin of 4.8% (2013: 4.4%), reflecting £5m cost saving and winning larger value contracts following the May Gurney acquisition;
  • 15% return on capital achieved on property development activities;
  • Underlying earnings per share up 2% to 107.7p (2013: 105.6p); having adjusted for the issue of shares for the acquisition of May Gurney;
  • Net debt position of £123m (2013: net cash £60m), reflecting continued investment to drive further growth and following the acquisition of May Gurney; and
  • Proposed full year dividend increased by 6% to 72.0p (2013: 68.0p), reflecting the Group’s progressive dividend policy and the Board’s confidence in the future of the Group.

Operational highlights – demonstrating the strength of Kier’s operations

  • Integration of May Gurney substantially complete and on track to achieve ROCE of 15%pa;
  • More than £1bn of new Services work and almost £2bn of new Construction work won;
  • Construction and Services order books of £6.2bn (2013: £4.3bn) represent more than 90% (2013: 88%1) secured and probable for 2015;
  • Mixed tenure housing and Property development pipeline maintained at a level in excess of £1.5bn;
  • Post year end new contracts secured include:
    • Preferred bidder to build new 270,000sqft HQ for Total E&P UK in Aberdeen, with construction commencing in spring 2015;
    • Preferred bidder for a £50m Knight Dragon high-rise residential block on the Greenwich Peninsula, London;
    • A place on all six lots of the Education Funding Agency (EFA) regional framework for school building and upgrades, estimated to be worth up to £5bn over four years;
    • £105m joint venture contract award for a prestigious hotel and spa in Abu Dhabi;
    • £87m joint venture contract to build a new data centre in Abu Dhabi for a leading UAE bank;
    • Five-year £25m pa Canal & River Trust National Engineering & Construction Contract (NECC) for England and Wales;
    • Five-year £20m pa contract with Bristol Water for network maintenance services, bringing awards under AMP6 bidding cycle to £190m pa; and
    • Preferred bidder for a two-year £7m pa contract with Severn Trent on the Asset Management Solutions (AMS) framework, with a possible five-year extension.
SUMMARY

  Year
ended
June 2014
Year
ended
June 2013*
Change Like
for like
increase
Revenue

£3.0bn

£2.0bn

51%

+13%

Underlying operating profit*

£88.0m

£55.5m

59%

+3%

Underlying profit before tax*

£73.1m

£47.6m

54%

 
Underlying earnings per share*

107.7p

105.6p

2%

 

Proposed full-year dividend per share

72.0p

68.0p

6%

 

* Underlying operating profits and margins, pre-tax profits and EPS are stated before exceptional items totalling £42.2m (2013: £17.0m), amortisation of intangible assets relating to contract rights of £10.8m (2013: £3.4m) and unwind of discount in respect of deferred consideration and fair value adjustments made on acquisition of £5.3m (2013: £1.3m). Reported operating profit was £35.0m (2013: £35.1m), reported pre-tax profit was £14.8m (2013 £25.9m) and reported EPS was 18.4p (2013: 62.6p). 2013 results have been restated to reflect this presentation (see note 3).

CHIEF EXECUTIVE'S COMMENT

Commenting on the results, Kier Group plc chief executive, Haydn Mursell said:

"I am pleased to report a good set of results that show significant progress on last year and demonstrate the strength of the operational performance of the business and the benefits of the May Gurney acquisition."

"Despite inflationary price and labour cost pressures in the market, our margins remained solid, particularly in our Services business. Following the integration of May Gurney, which transformed the scale and diversity of the Group, the breadth of our capabilities has resulted in new as well as larger contract awards. We are now able to help our customers maximise the value of their assets as they invest, build, maintain and renew them. Our capabilities extend from negotiating finance and planning permissions to constructing major buildings and infrastructure, as well as providing facilities management and environmental services. This breath of capabilities puts us in a good position to pursue future growth."

"While the economic climate continues to be positive, operating margins are under pressure due to inflationary cost increases in the supply chain. Cash generation will continue to be constrained in the short-term. However, strong risk management and our ability to offer a greater range of service offerings positions us well for the future."

"The continuing improvements in our operating performance and our strong order book mean that we are on course to meet the Board’s expectations for the current financial year."

"Since taking up the CEO role on 1 July, we have reviewed and refreshed the Group’s strategy, Vision 2020, a strategy for sustainable profitable growth. This strategy will see the Group aim to deliver double-digit compound annual profit growth for the period to 2020 and to be a top three in our chosen markets."

OUTLOOK

These results demonstrate the continued strength of the Group. The business offers a broad set of capabilities which, when combined with a strong regional presence, provides a resilient operating platform. Accordingly, our UK divisions are increasingly providing a more integrated offering to customers. The portfolio of Group businesses is also a natural hedge against the cyclical nature of the markets in which we operate, with our Property and Residential businesses at the front, while Construction and Services come into their own at the back of the cycle.

RESULTS DOWNLOAD

Preliminary results for the year ended 30 June 2014

Presentation

Statement

Webcast

Infrastructure services seminar - 6 July 2016

View Webcast

Presentation

Preliminary Results
for the Year Ended
30 June 2014

Preliminary Results 2014

Financial Calendar

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Kier Group plc. Registered office: Tempsford Hall, Sandy, Bedfordshire SG19 2BD

Registered in England No. 2708030

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