TIDMKIE
RNS Number : 8816S
Kier Group PLC
19 July 2022
19 July 2022
Kier Group plc
Trading Update
Kier Group plc ("Kier" or "the Group"), a leading infrastructure
services, construction and property group issues a trading update
for the year ended 30 June 2022, ahead of publishing Full Year 2022
Results on 15 September 2022.
Trading
The Group's full year results are anticipated to be in-line with
the Board's expectations. This reflects a strong operational
performance despite inflationary pressure which the company remains
confident it can continue to mitigate going forward.
These results also reflect the cost savings realised in
responding to the anticipated reduced volumes in the Construction
division during the financial year.
Order Book
Despite political and economic uncertainties, core markets
remain favourable. The year-end order book is expected to be in
excess of GBP9.7bn, a significant increase of c.26% against the
prior year (FY21: GBP7.7bn) reflecting a significant number of
contract wins across all divisions.
Long term framework positions, as well as the pipeline and fees
from the Property Development division, are excluded from the order
book and represent an additional opportunity.
The Group continues to maximise value and opportunities. Kier
has won new, high quality and profitable work in its markets
reflecting the bidding discipline and risk management embedded in
the business.
Recent awards include:
-- Infrastructure Services:
o Highways - GBP560m maintenance work and services contracts for
North Northamptonshire and West Northamptonshire Councils for 7
years (with an option for a further 7-year extension)
o Infrastructure - appointed to the GBP1.56bn Pagabo Civils and
Infrastructure Framework for 4 years; Kier BAM joint venture
appointed by Babcock International on a refurbishment project at
Devonport's 10 dock facility in Plymouth. The project is expected
to run for 10 years
o Utilities - awarded a place on Northern Ireland Water's
GBP1.2bn Major Projects Partnership Framework in joint venture with
BAM for 4 years (with an option for a further 4-year extension)
-- Construction - GBP500m contract to deliver new houseblock
buildings across six prisons with Wates; awarded a pre-construction
services agreement to deliver HMP Glasgow, a new prison on a
54-acre site in Scotland; awarded a GBP32.5m refurbishment contract
for Manchester Aquatics Centre; selected by Baring and LBS
Properties to design and construct a GBP69m mixed-use sustainable
building in London
o Kier Places - appointed to GBP35bn Crown Commercial Service's
Facilities Management and Workplace Services Framework for 4
years
-- Property - agreed an GBP80m equity residential 50:50 joint
venture with Housing Growth Partnership to develop urban brownfield
sites across the UK over 5 years
Given the nature of our business, 85% of revenue for FY23 is
already secured which provides us with a level of certainty against
a backdrop of wider market uncertainty.
Net cash/ debt
The Group is expected to generate positive adjusted operating
cash flow for the full year 2022.
With positive cash flow, we anticipate reporting a net cash
position at the year-end in-line with the Board's expectations.
The Group's average month-end net debt for FY22 has
significantly reduced from GBP432m to less than GBP220m year over
year as a result of the capital raise, the sale of Kier Living and
cash generation. This was partially impacted by a reduction of
GBP38m in the average month-end supply chain finance facility
("KEPS") balance, repayment of the remaining HMRC Government
support and the cash impact of adjusting items.
Cash adjusting items largely relate to ongoing restructuring
costs in the Construction division and fire cladding claims.
The Group's supplier payment days have improved from 34 to 33
days over the last 6 months.
On 1 July 2022, the Group repaid the remainder of its KEPS
facility and is reviewing options for an improved facility.
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:
"Kier delivered a strong operational performance over the last
year, despite inflation and political uncertainties. Core markets
remain favourable and we continue to maximise value and
opportunities. This, coupled with the strong order book and
strengthened balance sheet, gives the Board confidence in our
medium-term value creation plan and the continued success of the
Group."
- 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
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
About Kier Group plc
Kier is a leading UK infrastructure services, construction and
property 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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END
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