TIDMKIE
RNS Number : 6699R
Kier Group PLC
01 July 2020
Kier Group plc
Trading update
Kier Group plc (the "Group"), a leading construction and
infrastructure services group, today provides an update on trading
since 1 April 2020 (the "period").
Andrew Davies, Chief Executive, said:
"The Group's underlying trading in the last quarter of its
financial year has remained resilient, despite the adverse impact
of COVID-19. The majority of our sites have remained open during
the period, operating in accordance with the Group's site
procedures which have been adapted to reflect Public Health
England's guidance. Over the past few months, we have taken a
number of decisive management actions, which are delivering
significant benefits and are enabling the Group to maintain a good
liquidity position. The new senior management team is working well
together and continues to focus on driving a range of strategic and
operational actions throughout the Group. I am delighted that we
are now beginning to experience the benefits of the changes in the
Group's culture which are being driven by Performance
Excellence."
Trading update
In its trading update of 30 March 2020, the Group confirmed that
trading since 1 January 2020 had been in line with the Board's
expectations.
Since then, COVID-19 has adversely affected the Group's revenue
and resulted in it incurring additional costs, some of which are
expected to be treated as exceptional. However, the Group's
underlying performance has remained resilient, as it has continued
to deliver critical national infrastructure projects and provide
services across a range of sectors with, on average, c.80% of the
Group's sites remaining open during the period. Almost all of the
Group's sites are now open and the Group is focusing on driving
on-site operational efficiencies, whilst working in accordance with
new site operating procedures.
Outlook
The Group continues to win high quality work in its key markets
and across a range of sectors. As at 31 May 2020, the Group's
orderbook was c.GBP7.6bn; c.60% of our core Construction and
Infrastructure Services' businesses' orderbook relates to work for
Government departments or quasi-governmental entities and a further
c.25% relates to the provision of services to regulated
entities.
On 15 April 2020, the Government issued the 'notice to proceed'
for the next stage of the HS2 project, following which the Group
(in joint venture) has been undertaking pre-contract mobilisation
activities. Contracts awarded to the Group during the period
include the GBP97m Heartlands Hospital project for University
Hospitals Birmingham NHS Foundation Trust. The Group also secured
places on a number of frameworks during the period, including Lots
1 and 2 of the GBP2.6bn Thames Water AMP7 Capital Programmes
Framework (Runway 2).
The Group is a Strategic Supplier to the Department for
Education and a leading provider of education facilities. The Group
is therefore well-placed to identify opportunities under the new,
10-year capital investment programme announced by Government on 29
June 2020, which provides for c.GBP1.5bn of investment in building,
repairing and upgrading the UK's schools .
Whilst the Group anticipates that the effects of COVID-19 will
continue to affect volumes and result in additional costs as the
Group adapts to operating in a post-COVID-19 environment, the
strength of the Group's orderbook, its expertise in managing
complex projects and its long-standing client relationships enable
the Group to remain confident in its outlook for the financial year
ending 30 June 2021.
Strategic actions
The Group has made good progress in relation to the delivery of
the strategic actions announced in June 2019:
-- Cost savings: the Group now anticipates cost savings of c.
GBP100m in the financial year ending 30 June 2021, with costs
associated with these savings having been incurred in the current
financial year.
-- Living: the new management of Living has re-organised the
business into a smaller, more disciplined organisation, with a
focus on cash generation.
-- Property: the Group continues to take steps to ensure that
the capital allocated to the business remains at an appropriate
level and is effectively deployed.
-- Non-core businesses: the Group has substantially exited its
Environmental Services business and has rationalised its Facilities
Management business, which now seeks to identify synergistic
opportunities with the Construction business for the benefit of the
Group.
Before COVID-19, the Group had made good progress in
implementing a number of measures to reduce its net debt and
strengthen its balance sheet. As a result of COVID-19, over the
next 12-18 months, further actions will be taken, including:
continuing to implement a range of self-help measures, driving a
further increase in the Group's operating cashflows, continuing the
process to sell Living and a potential equity issue.
Net debt
The Group continues to manage its net debt position closely and
has introduced a number of disciplines to improve its working
capital management and to continue to reduce the number of days
taken to pay the supply-chain. The reduction in the Group's revenue
due to COVID-19 has resulted in a lower level of working capital
inflow in the period than in the equivalent period in previous
years. The Group's average month-end net debt for the current
financial year is expected to be c.GBP440m.
Covenant waivers
In order to provide financial flexibility for the Group
following COVID-19, the Group has agreed waivers with its lenders
in respect of the Group's financial covenants for the test period
ended 30 June 2020. The Group continues to engage with its lenders
to ensure that sufficient flexibility under the Group's principal
finance facilities remains available.
Pension schemes
The Group continues to engage with the trustees of its pension
schemes in relation to a revised deficit repair plan following the
latest triennial actuarial scheme valuation.
This announcement contains inside information for the purposes
of Market Abuse Regulation (Regulation (EU) No. 596/2014). The
person responsible for making this announcement on behalf of the
Company is the General Counsel and Company Secretary.
For further information, please contact:
+44 (0)1767 355
Kier press office 096
Richard Mountain / Nick Hasell, +44 (0)203 727
FTI Consulting 1340
Cautionary statement
This announcement does not constitute an offer of securities by
Kier Group plc (the "Company"). Nothing in this announcement 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 any of its subsidiaries (together, the "Group") whether
in the current or any future financial year. This announcement may
include statements that are, or may be deemed to be,
"forward-looking statements". By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and may be beyond the Company's or the Group's ability to
control or predict. Forward-looking statements are not guarantees
of future performance. You are advised to read the section headed
"Principal risks and uncertainties" in the Company's Annual Report
and Accounts for the year ended 30 June 2019 and the Company's
results announcement for the six months ended 31 December 2019 for
further information about the factors that could affect the
Company's or the Group's future performance and the industry in
which it operates. Other than in accordance with its legal or
regulatory obligations, the Company does not accept any obligation
to update or revise publicly any forward-looking statement, whether
as a result of new information, future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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