REG - Kier Group PLC - Trading Update

KierAnnouncement

19/01/2023 07:00

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RNS Number : 1961N  Kier Group PLC  19 January 2023

19 January 2023

 

 

Kier Group plc

Trading Update

Kier Group plc ("Kier" or "the Group"), a leading infrastructure services and
construction and property group issues a trading update for the six months
ended 31 December 2022 ("the period" or "first half"). The Group will publish
its results for the six months ended 31 December 2022 ("half year results") on
9 March 2023.

 

Trading

 

The Group's half-year results are anticipated to be in line with the Board's
expectations. This reflects a strong operational performance in the period
despite inflationary pressure which the Group remains confident it can
continue to mitigate going forward.

 

 

Order Book

 

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

 

The order book at 31 December 2022 is expected to be c.£10.1bn, an increase
of c.3% from the year-end position (FY22: £9.8bn) and significantly higher
than the prior period (HY22: £8.0bn).

 

The Group has secured revenue of over 90% for FY23 providing a high degree of
visibility against a backdrop of ongoing wider market uncertainty.

 

Recent awards include:

 

·   Infrastructure Services:

o   Utilities - reappointed to the £55m per annum, 3 year extension of the
Network Service Alliance framework by South West Water and Bournemouth Water

 

·  Construction - re-appointed to the North West Construction Hub High
Value Construction Framework; appointed on a £22m investment programme by the
Isle of Wight NHS Trust to redevelop St Mary's Hospital and awarded three
school projects by the Department for Education

 

o   Kier Places - preferred bidder on a £75m housing maintenance contract
for 10 years with RHP Group across its housing portfolio in Richmond,
Hounslow, Kingston and Hillingdon

 

Net debt

Kier continues to make progress towards its medium term plan of achieving a
sustainable net cash position. There has been a significant reduction in
debt-like items from cash flow generation compared to HY22.

Net debt at 31 December 2022 is expected to be similar to 31 December 2021.
Net debt was impacted by the seasonal working capital unwind in the business.
This is typical for the first half and a reversal is expected in the second
half. The Group continues to generate positive operating cashflow in FY23 and
expects to have a net cash position at the year-end.

 

Average month-end net debt position is expected to be c.£50m higher than the
prior period (HY22: £191m). This is in line with the Board's expectations.
Positive operating cash flow was used to reduce the average month-end supply
chain finance facility ("KEPS") balance by over £60m, pay adjusting items,
pension deficit obligations and the remaining HMRC Covid-19 support of
c.£10m.

The Group fully repaid its remaining £50m KEPS facility in July 2022 followed
by c.£54m of its Revolving Credit Facility ("RCF") and USPP Notes which
matured in December.

Medium Term Value Creation Plan

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

 Revenue:                              £4.0 - 4.5bn
 Adjusted operating profit margin:     c. 3.5%
 Cash conversion of operating profit:  c. 90%
 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 Group's performance over the last six months is in line with our
expectations and reflects a good start to the year. We expect to generate
positive operating cashflow for the full year and deliver a net cash position
at the year end. The Group is well positioned to continue benefiting from UK
Government infrastructure spending commitments and focused on the delivery of
a sustainable net cash position and a sustainable dividend, in line with our
medium term value creation plan."

 

- ENDS -

 

For further information, please contact:

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

 

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 2022 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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