Kier Group Interim results for the six months ended 31 December 2018 - PowerPoint PPT Presentation

Kier Group Interim results for the six months ended 31 December 2018 20 March 2019 Kier Group plc – Interim results for the six months ended 31 December 2018 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 be 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 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 20 March 2019 and this presentation is not a substitute for reading that announcement in full. Kier Group plc – Interim results for the six months ended 31 December 2018 2

Philip Cox Executive Chairman Kier Group plc – Interim results for the six months ended 31 December 2018 3

Agenda  Overview - Philip Cox, Executive Chairman  Financial review - Bev Dew, Group Finance Director  Operational review - Claudio Veritiero, Chief Operating Officer  Summary and outlook - Philip Cox Kier Group plc – Interim results for the six months ended 31 December 2018 4

Highlights  Solid operational performance  Increased Government focus on balance sheet strength and payment terms  £2.1bn new contract wins in period  £1bn contract awards since 1 December 2018  Order book of c.£10bn  Rights issue raised £250m net proceeds in December 2018 Group balance sheet strengthened   Well positioned to secure future work Kier Group plc – Interim results for the six months ended 31 December 2018 5

Future Proofing Kier (FPK) Programme progressing  A streamlining and efficiency programme  Focused on:  Cost reduction Process improvement   Improved efficiency  Continued progress on disposal of non-core businesses Kier Group plc – Interim results for the six months ended 31 December 2018 6

Financial review Bev Dew, Group Finance Director Kier Group plc – Interim results for the six months ended 31 December 2018 7

Financial summary Revenue 1 £2.2bn up 2%  Operating profit 2 £51.8m after net FPK costs of £10m   Non-underlying charges of £59.9m  Period end net debt £180.5m (H1 FY18: £238.5m)  Average month end net debt of £430m (H1 FY18: £350m)  Stable order book of c.£10bn (H1 FY18: £9.8bn) Dividend 3 of 4.9p per share reflects the move to 5x dividend cover for FY19 and 2.5x thereafter  1 Group and share of joint ventures for continuing operations 2 Arising on continuing operations, stated before non-underlying items 3 Reflecting the increased number of shares in issue following the rights issue in December 2018. Kier Group plc – Interim results for the six months ended 31 December 2018 8

New reporting structure Realigned to our three market positions 2019 revenue 2019 revenue Infrastructure HY19 Actual Services HY19 Actual 45% 4% 39% Services 4% margin margin Infrastructure Infrastructure Facilities management Buildings 3% 3% margin 43% Construction margin 42% Housing maintenance and environmental services 7% Residential Developments & 9% ROCE ROCE Housing 11% 19% 14% ROCE 5% Property Kier Group plc – Interim results for the six months ended 31 December 2018 9

Revenue and operating profit Revenue 1 Operating profit 2 HY18 HY19 HY18 HY19 19% 21% 24% 31% 37% 39% 43% 48% £86.0m £2.1bn £2.2bn £82.7m 36% 42% 21% 39% Infrastructure Services Buildings Developments & Housing 1 Group and share of joint ventures for continuing operations 2 Arising on continuing operations, stated before non-underlying items, excluding corporate costs. Kier Group plc – Interim results for the six months ended 31 December 2018 10

Income statement Six months to 31 December 2017 3 2018 Change £m £m % Revenue 1 2,201.5 2,149.9 +2 Operating profit 2 Infrastructure Services 37.2 39.3 -5 Buildings 30.8 17.7 +74 Developments & Housing 18.0 25.7 -30 Corporate (34.2) (22.1) +55 Underlying operating profit 51.8 60.6 -15 Underlying operating profit margin 2.4% 2.8% Net finance cost 2 (12.8) (11.2) +14 Profit before tax 2 39.0 49.4 -21 Basic earnings per share 30.8 40.9 -25 Interim dividend per share 4 4.9 23.0 -79  Corporate costs include the cost of implementing FPK 1 Group and share of joint ventures for continuing operations 2 Arising on continuing operations, stated before non-underlying items 3 Restated to classify Wheldon Contracts & Services as discontinued 4 Reflecting the increased number of shares in issue following the rights issue in December 2018. Kier Group plc – Interim results for the six months ended 31 December 2018 11

- Order book At 30 June 2018 1 At 31 Dec 2018 Change £bn £bn % Infrastructure Services 6.0 5.5 +9 Buildings 3.6 3.8 -5 Developments & Housing 0.4 0.5 -20 Total 10.0 9.8 +2 14 Infrastructure Services £bn Buildings 12 (0.8) 1.3 Developments & Housing (0.9) 0.7 10 (0.2) 0.1 8 6 10.0 9.8 4 2 0 1 June 2018 order book Awards Revenue recognised December 2018 order book 1 Restated to reflect the disposal of Kier Highways Services Australia; order book of £0.4bn. Kier Group plc – Interim results for the six months ended 31 December 2018 12

Group net debt Cash flow summary HY19 - (50) 85 (100) Trade payables (97) (150) 255 (200) (181) Payments in advance of cost (186) (97) (250) Residential WIP (26) (300) (220) (350) 12 (21) (400) (37) (23) (450) (46) (500) June 2018 Operating Working capital Capex Discretionary Net disposal Pension, Dividends Rights issue December 1 net debt cash flows movement investment in proceeds interest, 2018 1 property and tax & other net debt residential 1 Net debt is shown net of the impact of hedging instruments. Kier Group plc – Interim results for the six months ended 31 December 2018 13

Contracting working capital Working capital flows Working capital days WIP Trade receivables Accruals Trade payables WC as a % revenue Working capital as % of revenue 100 80 8% 60 40 3% 20 - -2% -20 -40 -7% -60 -80 -100 -12% HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 HY19 Kier Group plc – Interim results for the six months ended 31 December 2018 14

Contracting working capital Working capital flows Working capital as % revenue June 2018 -3% Working capital as % revenue December 2018 +2% WIP Trade receivables Accruals Trade payables WC as a % revenue Working capital Working capital as days % of revenue Receivable days June 2018 56 80 12% Receivable days December 2018 65 60 9% 40 6% Payable days June 2018 48 20 3% Payable days December 2018 42 - 0% -20 -3% -40 -6% -60 -9% -80 -12% -100 FY18 HY19 Kier Group plc – Interim results for the six months ended 31 December 2018 15

Net debt improvement plan FY18 spot net debt (£186m) Rights issue FPK Reduced dividend FCF post dividend FPK savings proceeds disposals for FY19 Improved spot and average net debt Kier Group plc – Interim results for the six months ended 31 December 2018 16