Interim Management Statement

RNS Number : 5215D

Kier Group PLC

17 May 2012

 



IMS 17 May 2012

KIER GROUP PLC

INTERIM MANAGEMENT STATEMENT

Kier Group plc today announces its Interim Management Statement covering the period from 31 December 2011 to the date of this announcement.

Current trading

Kier, the integrated construction, services and property group, remains on course to meet its expectations for the current financial year and is performing well in the current market.

Construction

Our Construction division continues to be resilient and has maintained operating margins above 2%. In the period, we have secured more than £400m of new work, and our order book of secured and probable work represents our entire forecast Construction revenue for the current financial year and 80% of our forecast Construction revenue for the 2013 financial year. We continue to win contract awards across both the private and public sectors, with education remaining a significant contributor and we have been selected as preferred bidder on a further £100m of health projects via the P21+ framework.

We have secured a place on the Ministry of Justice Northern Regional Framework and their National Framework for projects over £10m, both commencing in April for six years and each valued between £50m and £100m per framework contractor. We have also secured the Camden Civic Centre on the King's Cross development, and the Sainsbury Wellcome Centre contract at UCL, Howland Street, both in London, with a combined value of approximately £130m. As announced, we recently acquired certain of the construction operations of Aberdeen-based Stewart Milne for £1m, which will support the growth of our construction business in Scotland.

Our focus remains on high quality work that has high barriers to entry, such as power, waste and transport, where we can utilise our innovation and technical skills to deliver the best solution for our customers and we are making good progress with further schemes in negotiation.

Services

The Services division is trading as predicted and our order book continues to provide long-term visibility of revenues, delivering our expected 4.5% operating margin. We are bidding a number of tender opportunities across both the public and private sectors in what continues to be a competitive market and have been successful in securing more than £150m of new awards including extending our maintenance contracts at Harlow and our environmental contract at Corby. We continue to seek investment opportunities in the Services sector to deliver an increased scale of operations and growth in quality revenues over the next few years.

Property

Our Property division's results for the 2012 financial year will highlight its increasing importance to the Group, maintaining its targeted 15% return on capital employed. A Kier consortium has recently been chosen to design, build, finance and maintain nine fire stations on behalf of the London Fire Brigade. Property will finance the project, Construction will build the stations and Services will maintain them for 25 years in a contract with a combined value of approximately £64m.

We were also recently announced as the preferred development partner for Siemens' mixed-use site in Manchester with a development value of between £120m and £150m over the next five years. In March, we completed the £32m disposal of 3 Savile Row, London, and our development pipeline has increased to approximately £750m.

In our Homes businesses, the focus remains on developing mixed-tenure affordable housing, together with reducing our cash investment by developing and/or disposing of our existing land bank. In our private housing business, we expect to achieve in excess of 600 completions in the year, slightly ahead of forecast, reflecting healthy sales from two apartment schemes that will complete next year. In our affordable homes business we have secured Phase 3 of the Egghill redevelopment and two new mixed tenure sites involving a total of 500 houses with a combined development value of approximately £65m.

Outlook

The Group's trading performance remains in line with our expectations. In particular, our order books in Construction and Services remain robust and our net cash position remains healthy.

The positioning of our business, with a presence on nearly 90 frameworks across the Group, together with our Property division increasingly providing good quality work to our other divisions, gives us a competitive advantage and balances the trading pressures of open market opportunities. 

With our strong balance sheet, our excellent track record of delivery and our great people, we remain well placed to win new work, particularly in our chosen growth markets, to strengthen the business both now and over the medium term, which will enable us to maintain our progressive dividend policy.

Contacts

Paul Sheffield, Chief Executive, Kier Group                                   01767 640 111

Faeth Birch, RLM Finsbury                                                         020 7251 3801

Ends 

 

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