Analysts Site Visit and Trading Update

RNS Number : 7772I

Kier Group PLC

21 June 2011

 



ANALYSTS SITE VISIT AND TRADING UPDATE

21 June 2011

Kier Group plc, the integrated construction, services, social housing and property group, is pleased to provide the following update on current trading in advance of its site visit with analysts and investors to be held later today in Sheffield.

Current trading

Trading remains in line with the Interim Management Statement issued on 18 May 2011 (IMS), with our order books for Construction and Services remaining resilient and net cash balances remaining at healthy levels.

Construction

Trading within the Division remains strong, benefiting from high quality order books which generate good margins and healthy cash balances. Our presence on numerous public and private sector frameworks continues to put us in a strong position to secure further high quality work, ensuring that we maintain our operating margins firmly above 2%.

We have secured all our expected construction revenue for the year to 30 June 2011 and 86% of our targeted revenue for the year to 30 June 2012.

We continue actively to track a wide range of opportunities in the infrastructure market which are expected to generate significant work for us in the short-to-medium term. Our primary targets are in the power and waste sectors, in which we have long-standing relationships with key industry clients.

Services

Our Services Division continues to trade in line with our expectations. The Division has maintained its £2bn order book, providing us with long-term visibility of revenues and confidence in the sustainability of our 4.5% operating margin.

We are pleased to confirm that, since the IMS, we have agreed a 12-month extension from 2013 to our long-standing building maintenance contract with Sheffield City Council, with a value of £64m.

Developments

The Developments Division is active on several medium and long-term opportunities and remains a significant generator of opportunities for the Group.

In addition to the recent sales of our interests in two Private Finance Initiative (PFI) projects, Oldham and Norwich Schools, we are pleased to announce that, on 8 June 2011, we completed the sale of our 50% interest in the Sheffield Schools PFI project to the Kier Group Pension Scheme for £4.5m, representing a valuation discount rate on the base case cash flows of approximately 7%.

These sales are in line with our policy of selectively realising the value of the equity in our PFI portfolio.

Partnership Homes

Our Partnership Homes Division has continued to trade broadly in line with our expectations. It has maintained its focus on the development of mixed-tenure affordable housing, where demand remains high, and on reducing our land bank by developing private homes for sale or disposing of parcels of land when appropriate opportunities arise.

We remain on track to complete the first phase of plot disposals to a number of buyers by 30 June 2011, which will return approximately £30m of cash to the Group over the next two years.

Directorate change

As announced in connection with our interim results for the year to 30 June 2011, Dick Simkin, the executive director for Developments, will retire at the end of the current financial year. Ian Lawson, executive director for Support Services and Partnership Homes, will take over the role as executive director for Developments, in addition to his current responsibilities, from 1 July 2011. We would like to thank Dick for his sustained and valuable contribution to the Group and we wish him well in his retirement.

Site visit

The focus of the visit will be on the breadth of services provided by our Services Division to Sheffield City Council and will include presentations by senior management. The visit will demonstrate how Kier works in partnership with the Council to provide an integrated service comprising property management, development, construction, housing maintenance and facilities management.

During the visit, any comments on trading will be consistent with the IMS and this announcement.

Outlook

Although we continue to operate in a challenging environment, the Group's financial performance in the year to date remains in line with our expectations. In particular, our order books in Construction and Services remain strong and our net cash position remains healthy.

Our integrated business model, our network of local offices and our strong relationships with clients in both the private and public sectors continue to provide us with exciting new opportunities and also keep Kier on track to deliver a good performance this financial year.

Kier expects to announce its preliminary results for the year ended 30 June 2011 on 15 September 2011.

Contacts:

Paul Sheffield

Chief Executive

Kier Group                                01767 640111

Haydn Mursell             

Group Finance Director

Kier Group                                01767 640111

Faeth Birch                  

Conor McClafferty       

Finsbury                                   020 7251 3801

 

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