Trading Update

RNS Number : 1586L

Kier Group PLC

02 July 2014

 



2 July 2014

KIER GROUP PLC

TRADING UPDATE

Kier Group plc, the integrated construction, services and property group, provides the following update on current trading following the year end and in advance of an analyst and investor Capital Markets Day taking place in London on 3 July 2014.

Current trading and outlook

Underlying trading performance for the full year ended 30 June 2014 remains on course with good visibility of earnings in 2015. The Group is encouraged by its strong pipeline of opportunities.

Divisional Update

Construction

The Construction division has experienced a good second half with an encouraging level of opportunities.  Operating margins remain stable at around 2% and the order book of secured or probable work at approximately £2.6bn, represents approximately 90% of anticipated revenue for the year to 30 June 2015. Contract highlights of the period include:

·      £44m Nottingham Priority Schools Batch (PSB) for seven schools, bringing the number of awards on this PSB framework to over £200m in the past year;

·      £35m Kilmarnock Learning campus for East Ayrshire Council;

·      A programme of healthcare works valued at over £100m at University Hospital of North Staffordshire NHS Trust, under the P21+ framework was awarded; and

·      At the end of June Kier was selected for all of the six Education Funding Agency Regional Frameworks.

On the back of an increasing presence in the rail sector, Kier infrastructure has successfully won the Network Rail Western and Wales rail framework, one of its key strategic targets. This marks a first for the division in this region.

Our overseas business is seeing good quality opportunities, particularly in the Middle East. A number of negotiated opportunities in the Caribbean are being pursued where there is increasing activity, particularly in the tourism and hospitality sectors as investor confidence grows.

Services

The Services order book remains stable at £3.6bn, providing long-term visibility of revenue and approximately 85% of forecast Services revenue for the year to 30 June 2015 is secured or probable.  Operating margins for the full year across the division will exceed 4.5%, in line with expectations.

A high level of bidding continues in the utilities sector where the AMP6 bidding cycle is well underway.  In May, Kier was selected as preferred bidder for two new long-term contracts with Anglian Water under its AMP6 programme, with a combined total value of up to £130m. Both contracts start in 2015 and are expected to run for 15 years. At the end of May, a £40m five year contract was awarded by Bournemouth Water providing planned and reactive maintenance and at the end of June a further £90m five-year contract with an option to extend was awarded by Anglian Water for the IMR Alliance covering integrated maintenance and repair.

In the housing maintenance division, our strategy to increase penetration into the housing association and private rental markets has resulted in the following awards:

·      An initial £6m twelve month contract to deliver responsive repairs, voids, aids and adaptations, minor works and stand-by service to 16,000 homes across the East Midlands and the East of England for Metropolitan housing association;  

·      A four-year £140m repairs and maintenance contract, commencing early October, with Genesis Housing Association to provide responsive repair services to over 10,000 properties as well as undertaking planned maintenance work across the whole Genesis portfolio of 33,000 homes and;  and

·      Preferred bidder for Four Housing Group on a £7.0m three-year contract for planned programme of works to homes in Northumberland. 

Property

The Property division has a pipeline in excess of £1bn giving good development growth potential for the next financial year. The targeted 15% return on capital employed continues to be delivered and, as anticipated, the division is operating with £100m of capital, invested in a variety of development opportunities. With an increase in investor interest in property development and occupier sentiment improving nationally, the division is bidding for over one million square feet of office space including four regional office developments outside of London.

Residential

From 1 July Kier's proposition across all areas of the residential market has been enhanced by bringing together the Group's residential activities and skills into one business branded Kier Living, run by a single management team. With a buoyant residential house-building market and an increasingly broad range of housing opportunities, Kier continues to invest in this market through its residential contracting, affordable housing and private house building offerings.

Capital Markets Day

Following Haydn Mursell's appointment as Chief Executive which took effect on 1 July 2014, Kier will be holding a seminar for analysts and investors on Thursday 3 July, focusing on the strategic direction of the business and providing operational updates on its divisions. As part of this update Kier will be setting out its strategy for future profit growth targeting double digit compound annual growth for the period to 2020.

A webcast of the Capital Markets event will be available on www.kier.co.uk from 12 noon on 4 July. During the forum, comments on trading will be consistent with this trading update.

ENDS

For further information:

Faeth Birch/Charlotte Whitley, RLM Finsbury                            020 7251 3801

Kier press office                                                                 07791 719452

 

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