Group financial highlights
• Order book of approximately £9bn reflecting strong pipeline conversion in regional building and highway services;
• Underlying operating profit of £56.5m, 4% organic growth on 2015.
• Divisional performance
o Property – strong pipeline of >£1bn, on course for >15% ROCE for the full year;
o Residential – revenue increased by 4% to £169m, on track to deliver 2,200 units by year end;
o Construction – underlying operating profit of £20.8m, up 19%, record revenue of over £1bn;
o Services – operating margin of 4.8%, awarded more than £300m of highways maintenance contracts in the period.
Highlights for the construction division include operating profit of £20.8m, up 19% and a number of regional construction wins to reinforce Kier’s position as the UK’s leading regional builder.
The current order book of £3.3bn represents all of the targeted revenue for the 2017 financial year and this has been underpinned by recent regional construction awards. Since the start of the year, Kier has been awarded over £200m of contracts:
• Kier has been named preferred bidder to design and build a new £36m comprehensive school for Torfaen County Borough Council. Procured as part of the SEWSCAP2 framework and Welsh Government’s 21st Century Schools Programme, the new build BREEAM Excellent 11-18 years secondary school will be built in the grounds of the existing school. Offering c. 12,000 sq m of education space, work will begin in early 2018 with completion for the new academic year in September 2019.
• In London, Kier has been appointed to build the £24m Maria Fidelis FCJ Catholic School in Camden. The project includes demolition of a former Metropolitan Police garage and construction of two new buildings; a concrete frame school and steel frame sports hall.
• Also in Camden, Kier has been awarded a £17.3m contract to redevelop two properties to provide a resource and community services centre for adult social care. The Greenwood Centre, as it will be known, will provide specialist high-quality services to both younger and older adults with learning disabilities and mental health needs.
These latest awards add to Kier’s strong regional construction performance in 2017. It was recently appointed to design and build a new £46m office and laboratory in Cambridge and is preferred bidder for the new £23m Woodside School in Sheffield, the Group’s first award through the YORbuild2 framework.
Kier is also currently on site delivering phase two of Eastbourne Arndale Centre’s £85m extension which will see the construction of 175,000 sq ft of retail and leisure space.
Nigel Brook, Kier executive director for construction and infrastructure services, commented: “These are a strong set of results for our construction division with record revenue and a 100% secured order book of £3.3bn for the 2017 financial year.
“Work across the division is evenly split between public and private sector, leaving us well-placed to capitalise on the Government’s areas of focus as well as growing sectors such as aviation and biotech.
“Our regional operations continue to perform well, reinforcing Kier’s position as the UK’s leading regional builder. Our extensive network of regional offices enables us to work closely with public and private sector clients across the country to understand their requirements on a local level. This is reflected in the raft of regional projects we’ve been awarded this year across the country.”