REG - Kier Group PLC - Trading Update

KierAnnouncement

21/01/2025 07:00

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RNS Number : 0307U  Kier Group PLC  21 January 2025

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

21 January 2025

Kier Group plc

 

Trading Update;

Trading in line and £20m Share Buyback Programme announced

 

 

Kier Group plc ("Kier" or the "Group"), a leading infrastructure services,
construction and property group issues a trading update for the six months
ended 31 December 2024 ("the period" or "first half"). The Group will publish
its results for the six months ended 31 December 2024 ("half year results") on
11 March 2025.

 

Trading

 

Consistent with the AGM trading update in November 2024, the Group continued
to trade well and in line with the Board's expectations in the first half of
the current financial year. Similar to last year, the Group's performance is
expected to be second-half weighted.

 

Order book

 

The order book as at 31 December 2024 was c.£11bn, a c.2% increase on the
year-end position (30 June 2024: £10.8bn) and c.3% above the prior year
comparative (31 December 2023: £10.7bn). The Group has secured revenue of
over 95% for FY25, providing a high degree of visibility. Long-term framework
positions are excluded from the order book and represent an additional
opportunity. Bidding discipline and risk management embedded across the
business continue to drive the high quality and profitable order book.

 

Recent awards include:

 

·   Infrastructure Services:

o   Natural Resources, Nuclear & Networks: appointed by Yorkshire Water
to their £850m AMP8 (2025-2030) Complex Non-Infrastructure Works Framework to
support their investment in water processing and waste networks.

·   Construction:

o   Awarded place on the 4 year £500m NHS Shared Business Services
Decarbonisation of Estates framework to support the NHS reduce the carbon
footprint of its estate.

o   Awarded a £240m contract by the Ministry of Defence under the Defence
Estate Optimisation Portfolio to design and build new accommodation at Keogh
Barracks.

o   Kier Places: awarded a place on the £814m Facilities Management
framework by Pagabo to provide a range of services to various public sector
organisations including, education, healthcare and local authorities.

 

We continue to believe that as a strategic supplier to key areas of the new
Government's priorities, including transport, education, healthcare, justice,
defence and nuclear, there are significant medium term growth opportunities
for the Group. Alongside these we should also further benefit from the very
substantial investment plans being announced in regulated industries, notably
water.

 

Net cash / debt

 

De-leveraging continues to be in line with the Board's expectations reflecting
a maintained focus on operational delivery and cash management with average
month-end net debt of c.£(38)m (HY24: £(136.5)m).

 

Kier is expected to report a net cash position as at 31 December 2024 which
will be above the prior year comparative period (HY24: £17m).

Share buyback

 

The Group has clear, disciplined capital allocation priorities, which are
continuously reviewed by the Board with the objective of maximising
shareholder value. The Group has demonstrated strong cash generation over the
last few years, which has resulted in the substantial de-gearing of the
balance sheet and facilitated a resumption of dividend payments during FY24.
The Group's current trading reflects a continuation of these positive trends,
and having reviewed the Group's ongoing capital requirements the Board has
approved an initial share buyback of £20m.

 

Full details, including confirmation of the launch of the share buyback
programme will be contained in a separate announcement today.

Capital allocation

As noted above, and consistent with our capital allocation priorities, we are
announcing a share buyback programme alongside our dividend policy reflecting
our aim to maximise shareholder returns.

The Group's capital allocation priorities, which remain largely unchanged,
are:

·    Capex - ongoing investment to support the business

·    Ordinary Dividend - targeting a dividend cover of circa 3x earnings
through the cycle

·    Investment in Property - disciplined investment in the Property
segment. ROCE target of 15% with up to £225m of capital deployed

·    Mergers and acquisitions - the Group will consider value accretive
acquisitions in core markets

If the Group has any remaining unallocated capital the Group has committed to
returning this excess capital to shareholders.

·    Incremental Shareholder returns - initial share buyback programme of
£20m commencing immediately

The Group's capital allocation is underpinned by its commitment to maintain a
strong balance sheet with an average month-end net cash position

Andrew Davies, Chief Executive of Kier, commented:

 

"Kier has delivered a strong first half performance, in line with our
expectations. The strength of our cash generation combined with the multi-year
revenue visibility afforded by our growing quality order book and underpinned
by our strong balance sheet, gives us the confidence that this momentum will
continue.

 

"We continue to be well positioned to benefit from UK Government and regulated
industry infrastructure spending plans into areas where Kier offers market
leading services, notably transport, education, healthcare, justice, defence,
nuclear and water.

 

"Given our order book growth combined with our continued de-levering and
greater confidence that we will achieve an average month-end net cash
position, we have announced today a £20m share buyback, as part of our
evolved capital allocation policy to maximise shareholder returns."

 

 

Capital Markets Event

 

Kier Group plc will be hosting a Capital Markets Event for analysts and
institutional investors on 3 June 2025.

 

The in-person event will be hosted by Andrew Davies, CEO and Simon Kesterton,
CFO, and will include presentations from our Group Managing Directors of our
core business divisions.

 

Details will be announced closer to the time.

 

Inside Information

 

The information relating to the share buyback programme in this announcement
constitutes inside information as stipulated under the Market Abuse Regulation
(EU) No.596/2014 (as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended). On the publication of this
announcement via a Regulatory Information Service, such information is now
considered to be in the public domain. The person responsible for arranging
for the release of this announcement on behalf of the Company is Jaime Tham,
Company Secretary.

 

- 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) 7909 684466

 

 

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 2024 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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