Kier Group Interim results for the six months to 31 December 2015 - PowerPoint PPT Presentation

Kier Group Interim results for the six months to 31 December 2015 17 March 2016 Kier Group plc – Interim results for the six months to 31 December 2015 1

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 the information contained in this presentation and no responsibility or liability is accepted for any such information. This presentation does not constitute an offer of securities by the Company and no investment decision or transaction in the securities of the Company should be made on the basis of the information contained in this presentation. This presentation contains certain information which the Company’s management believes is required to understand the performance of the Group. However, not all of the information in this presentation has been audited. Further, this presentation includes or implies statements or information that are, or may deemed to be, "forward-looking statements". These forward-looking statements may use forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should". By their nature, forward-looking statements involve risks and uncertainties and recipients are cautioned that any such forward-looking statements are not guarantees of future performance. The Company's or the Group’s actual results and performance may differ materially from the impression created by the forward-looking statements or any other information in this presentation. The Company undertakes no obligation to update or revise any information contained in this presentation, except as may be required by applicable law or regulation. Nothing in this presentation is intended to be, or intended to be construed as, a profit forecast or a guide as to the performance, financial or otherwise, of the Company or the Group whether in the current or any future financial year. This presentation and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person. Certain information in this presentation has been extracted from the announcement of interim results made by the Company on 17 March 2016 and this presentation is not a substitute for reading that announcement in full. Kier Group plc – Interim results for the six months to 31 December 2015 2

Haydn Mursell Chief Executive 3 Kier Group plc – Interim results for the six months to 31 December 2015 3

Agenda  Our markets  Six month highlights  Financials  Operational update  Group outlook Kier Group plc – Interim results for the six months to 31 December 2015 4

Our Markets  Leading market positions in growing sectors  £1.5bn revenue in infrastructure  £1.5bn revenue in regional building  £600m new build housing and maintenance presence  Focus aligned to growth areas and the UK’s spending priorities  Fluctuating external influences  Remain fit for growth  Operating efficiencies  Risk management Kier Group plc – Interim results for the six months to 31 December 2015 5

Highlights  Good performance – profit in line with expectations, net debt better than expected  Property  Second-half weighted, on track for >15% ROCE  Residential  Strong forward sales position, unit completions up 35%  Construction  Revenue growth of 15%, 2.0% margin, fully secured for FY16  Services  Revenue growth of 48%, 4.7% margin, fully secured for FY16  Order book of £9bn provides good revenue visibility  Mouchel integration - aiming to exceed synergy target  Improved financial position  High quality new work secured  Interim dividend increased to 21.5p up 12% Kier Group plc – Interim results for the six months to 31 December 2015 6

Financial update Bev Dew, Finance Director 7 Kier Group plc – Interim results for the six months to 31 December 2015 7

Revenue and Underlying Operating Profit December 2014 December 2015 £1,572m £2,076m Revenue 1, 3 Revenue 1 +32% Property Property Residential Residential 4% 8% 3% 6% Construction Construction Services Services 36% 40% 48% 55% December 2015 December 2014 £73.2m £57.1m Operating profit 2 +27% Operating profit 2,3 Property Property Residential Residential 10% Construction Construction 25% 9% Services Services 41% 1% 54% 27% 33% 1 Group and share of joint ventures from continuing operations. 2 Arising on continuing operations, stated before non-underlying items, see slide 11, excluding corporate costs. 3 Comparatives restated to reflect the reclassification of the UK mining activities to discontinued operations. Kier Group plc – Interim results for the six months to 31 December 2015 8

Income Statement Six months ended 31 December Change 2014 2 2015 % £m £m Operating profit 1 Group 51.9 42.9 +21 Joint ventures (JVs) 2.6 0.6 +333 Profit on disposal of PFI investments 2.6 1.3 +100 Total underlying operating profit 1 57.1 44.8 +27 Net finance costs (12.9) (7.8) +65 Underlying profit before tax 1 44.2 37.0 +19 42.4 3 Underlying earnings per share (pence) 37.1 -12 19.2 3 Dividend per share (pence) 21.5 +12 1 Arising on continuing operations, stated before non-underlying items, see slide 11. 2 Comparatives restated to reflect the reclassification of the UK mining activities to discontinued operations. 3 As restated for the bonus element of the rights issue associated with the Mouchel transaction. 9 Kier Group plc – Interim results for the six months to 31 December 2015 9

Underlying Operating Profit Six months ended 31 December Change 2014 2 2015 % Performance by division £m £m Property 7.2 14.0 -49 Residential 6.6 0.8 +725 Construction 3 19.5 18.6 +5 Operating margin 2.0% 2.2% Services 3 39.9 23.7 +68 Operating margin 4.7% 4.2% Corporate (16.1) (12.3) +31 Total underlying operating profit 1 57.1 44.8 +27 Net finance costs (12.9) (7.8) +65 Underlying profit before tax 1 44.2 37.0 +19 1 Arising on continuing operations, stated before non-underlying items, see slide 11. 2 Comparatives restated to reflect the reclassification of the UK mining activities to discontinued operations. 3 Restated to reflect the reallocation of certain activities between divisions. 10 Kier Group plc – Interim results for the six months to 31 December 2015 10

Non-Underlying Items Year ended Six months ended 31 December 30 June 2015 2014 2015 Profit impact Cash impact Continuing operations £m £m £m £m Transaction and integration costs following the acquisition (15.5) (12.7) - (21.9) of the Mouchel Group Costs associated with cessation of the Kier Group - - (1.0) (6.3) final salary pension scheme Gains/(costs) relating to the disposal of Fleet & Passenger Services 1.7 15.5 (0.6) (3.4) Other restructuring and transformation costs - - (0.5) - Total non-underlying items from continuing operations (13.8) 2.8 (2.1) (31.6) Associated tax credit 2.9 0.4 5.0 Charged against profit for the period from continuing operations (10.9) 2.8 (1.7) (26.6) Discontinued operations Impairment of mining operations (5.0) (11.0) - (21.8) Total non-underlying items from discontinued operations (5.0) (11.0) - (21.8) Total charged against profit for the year (15.9) (8.2) (1.7) (48.4) Excluding amortisation of intangible contracts rights and acquisition discount unwind. 11 Kier Group plc – Interim results for the six months to 31 December 2015 11

Order Book At 31 December At 30 June At 31 December 1 2015 1 2015 2014 Change £bn £bn £bn % Construction 3.5 3.5 2.6 Nil 5.5 5.8 3.9 Services -5 9.0 9.3 -3 6.5 Total 12.0 10.0 9.3 1.0 (1.0) 9.0 0.5 (0.8) AMP (£0.4bn) AMP (£0.6bn) 8.0 Highways England (£1.4bn) Highways England (£1.5bn) 6.0 £bn 4.0 2.0 0.0 June 2015 Construction Construction Services awards Services revenue December 2015 Construction and awards revenue recognised recognised Construction and Services orderbook Services orderbook 1 Restated to reflect the reallocation of certain activities between divisions 12 Kier Group plc – Interim results for the six months to 31 December 2015 12

Balance Sheet Summary At 31 At 30 At 31 December June December Change £m 2015 2015 2014 £m £m £m Intangible assets 782 784 -2 325 Property, plant and equipment 112 121 -9 184 Investment in JVs 107 79 +28 67 Residential land and work in progress 306 345 -39 260 Other working capital (303) (351) +48 (157) Net debt (174) (141) -33 (156) Provisions (69) (53) -16 (90) Pensions (net of deferred tax) (111) (123) +12 (65) Finance lease obligations (33) (41) +8 (77) Tax and deferred tax (31) (35) +4 (6) Net assets 586 585 +1 285 13 Kier Group plc – Interim results for the six months to 31 December 2015 13

Group Net Debt Operating Working Net Pension, Exceptionals cash flows capital investment interest, movement dividends and tax >100% operating cash conversion £m June 2015 net debt * (141) m December 2015 net debt * (174) m Excludes finance lease obligations. Kier Group plc – Interim results for the six months to 31 December 2015 14