Kier Group PLC Trading Update (0150Z)

TIDMKIE

RNS Number : 0150Z

Kier Group PLC

20 January 2022

Kier Group plc

Trading Update

Kier Group plc ("Kier" or "the Group"), a leading infrastructure services and construction group issues a trading update for the six months ended 31 December 2021("the period" or "first half"), ahead of publishing H1 2022 results on 9 March 2022.

Trading

The Group performed well in the first half, despite inflationary pressure and expects to deliver half-year results in-line with the Board's expectations.

This reflects continued strong operational performance and the confidence outlined in our full year results announcement in September 2021.

Order Book

Kier continues to win new, high quality and profitable work in its markets on terms and at rates which reflect the bidding discipline and risk management introduced under the Group's Performance Excellence programme.

We remain focused on winning work through our long-standing client relationships and regionally based operations.

The Group's order book at 31 December 2021 was c.GBP8.0bn, an increase of c.4% from the year-end position (FY21: GBP7.7bn).

The order book continues to be underpinned by significant long-term framework agreements. New awards exceeded the prior year, albeit the growth in order book was later than anticipated due to procurement delays.

Recent contract awards include:

   --      Infrastructure Services:

o Highways - over GBP1bn of work awarded over the last six months including the design and build of the A66 Northern-Trans-Pennine schemes

o Infrastructure & Utilities - appointed by Thames Water to deliver GBP66m improvement project at Mogden Sewage Treatment Works

-- Construction - appointed to the GBP7bn Department for Education 2021 Construction Framework; appointed to design and build GBP93m worth of new clinical buildings at Luton and Dunstable hospital; appointed as preferred bidder to deliver GBP36m new Sunderland eye hospital

o Kier Places - extensions of two existing long-term contracts worth a combined GBP71m

Net debt

The Group is expecting a cash outflow in the first half of the year due to the typical unwind of working capital.

The Group's average month-end net debt has significantly reduced from GBP436m to below GBP200m period over period as a result of the successful capital raise, the sale of Kier Living and cash generation. This was partially impacted by a GBP42m reduction in the average month-end KEPS balance, payment of adjusting items, capex and cash unwind of procurement policy note 04/20. The Group's supplier payment days remain unchanged period over period.

Medium Term Value Creation Plan

The Group remains confident in achieving its medium-term targets of:

 
Revenue:                      GBP4.0 - 4.5bn 
Adjusted operating profit     c. 3.5% 
 margin: 
Cash conversion of operating  c. 90% 
 profit: 
Balance sheet:                Sustainable net cash position with capacity 
                               to invest 
Dividend:                     Sustainable dividend policy: c.3 x cover 
                               through the cycle

Andrew Davies, Chief Executive Officer of Kier Group plc commented:

"The performance of the Group over the last six months reflects our significantly enhanced resilience and strengthened financial position. The first half of the year has started well and we continue to trade in line with our expectations. The increased order book gives us the confidence in the achievement of our medium-term value creation plan and the continued success of the Group, which with financial and operational flexibility, is well placed to pursue its strategic objectives within its chosen markets."

- ENDS -

For further information, please contact:

 
                                     +44 (0)7933 388 
 Investor Relations                   746 
                                     +44 (0)1767 355 
 Kier press office                    096 
                                     +44 (0)203 727 
 Richard Mountain, FTI Consulting     1340

About Kier Group plc

Kier is a leading UK infrastructure and construction services group. We provide specialist design and build capabilities and the knowledge, skills and intellectual capital of our people to ensure we are able to project manage and integrate all aspects of a project.

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 2021 for a further discussion of 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.

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