IMS 25 April 2013
KIER GROUP PLC
INTERIM MANAGEMENT STATEMENT - CLARIFICATION
Further to the Interim Management Statement released on 24 April 2013, Kier would like to clarify that the statements regarding trading in line with expectations were management expectations for both the Property division and Group. Neither of these statements on management expectations are intended as profit forecasts. This clarification also applies to Paragraph 9 of the announcement of the offer for May Gurney Integrated Services PLC on 24 April 2013.
Kier Group plc, the integrated construction, services and property group, today announces its Interim Management Statement covering the period from 31 December 2012 to the date of this announcement.
Construction
Kier's Construction division continues to be resilient and has maintained operating margins around 2 per cent. In the period to the end of March, Kier has secured approximately £400 million of new contracts, and the order book of secured and probable work represents the entire forecast Construction revenue for the current financial year and 88 per cent. of the forecast Construction revenue for the 2014 financial year. Management of cash remains a core focus as the sector experiences ongoing challenging working capital conditions, particularly across public sector contracts.
Kier continues to secure contracts across both the private and public sectors, underpinned by its involvement on a significant number of frameworks. The Education sector continues to represent a large proportion of contract awards, and Kier has also secured more than £60 million in the health sector including three contracts for North Middlesex University Hospital NHS Trust. The residential market for Kier Living has also been strong with more than £30m of awards including a scheme for 122 homes in Cornwall.
In the Middle East, in March, Kier signed a joint venture agreement with the AA Turki Group of Companies (ATCO) of the Kingdom of Saudi Arabia, and is excited by the infrastructure and building opportunities in the country.
Across the division Kier's focus remains on winning quality work that has high barriers to entry, such as power, waste and transport, where its technical skills provide the opportunity to create better value for its customers whilst allowing Kier to maintain its strict approach to risk management.
Services
The Services division is trading as forecast and the order book of £2.1 billion continues to provide long-term visibility of revenues, with 97 per cent. of forecast Services revenue for the year to 30 June 2013 and 86 per cent. of forecast Services revenue for the year to 30 June 2014 secured or probable. In April, Kier signed the Circle Housing Group contracts to deliver its planned repairs and maintenance services across the Central and Eastern Regions worth in excess of £200 million over a period of five years, with the potential to be extended for a further five years. Also in the period Kier secured more than £100 million of new work, including hard and soft FM for Legal & General and a housing maintenance contract for Northampton Borough Council.
Bidding levels continue to remain high, and following Kier's success in securing new work, for example the Circle and East Sussex contracts, mobilisation costs for these new major schemes will, as expected, slightly decrease the operating margins that have been seen over recent years.
Property
The Property division is progressing well with its combined £1.4 billion housing and development pipeline and is trading in line with management's expectations, with transactions forecast to close in June as anticipated.
In the next few months, Solum Regeneration, the joint venture with Network Rail, will begin to regenerate the area around Haywards Heath station having received approval from Mid Sussex District Council. This £17 million scheme will include retail and residential apartments. Evolution, a consortium between Kier and Thames Valley Housing, has been named preferred bidder and has recently been granted planning consent to develop an £80m housing scheme by Woking Borough Council to create 371 new homes.
Across its housing activities, Kier has maintained its focus on the development of the mixed-tenure housing business which now has a pipeline of approximately £400 million, with more than £50 million of new awards, including a £27 million project to provide 197 new affordable dwellings in the Borough of Sandwell, West Bromwich. The private housing business remains on track to deliver in excess of 500 completions this year.
Outlook and current trading
Kier remains on course to meet management's expectations for the current financial year.
The Group's order books in Construction and Services remain robust, trading performance and cash position are in line with expectations and the Group is experiencing a good level of bidding activity across the Group.
Kier remains well placed to win new work, particularly in its chosen growth markets and the Group has a strong capital structure, augmented by securing the £30 million 4-year bilateral loan agreement with Lloyds in January 2013, provided under the Government's Funding for Lending Scheme.
The comprehensive review and restructuring of the business, which was highlighted in Kier's interim results in February, has made good progress to date. It promises to deliver significant reductions in costs, greater organisational efficiency and establish a strong platform for future growth.
Contacts
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Paul Sheffield, Chief Executive, Kier Group |
+44 (0) 1767 355 800 |
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RLM Finsbury |
+44 (0) 207 251 3801 |
Faeth Birch |
+44 (0) 776 894 3171 |
Charlotte Whitley |
+44 (0) 776 850 5685 |
Notes to editors:
About Kier
Kier Group is a leading construction, services and property group specialising in building and civil engineering, support services, commercial property development and structured property financing and private and affordable housing. The Group employs over 10,000 people worldwide and has an annual revenue of £2.1bn.
For more information contact the Kier Group communications department on: 01767 640 111 or visit www.kier.co.uk
