Kier six monthly results on track

Property, residential, construction and services organisation Kier Group has announced its underlying trading performance for the half year ending on December 31, 2016, was in line with management’s expectations.

The group's net debt position for the six months ended December 31, 2016, was £179 million (€211 million) compared with £174 million (€205 million) a year earlier. This includes receipt of the proceeds from the disposal of Mouchel Consulting and an investment of £100 million (€118 million) since 1 July, 2016, in the property and residential divisions.

The average month-end net debt position for the six months to December 31, 2016, was in line with the previous year at £300 million (€354 million) compared with £280 million (€330 million) in 2015.

Kier said its construction and services divisions performed well, as the company continued with the closure of its Caribbean operations.

Total contract awards since mid-November 2016 have totalled more than £1 billion (€1.18 billlion), and the construction and services order books represent 100% of forecast revenue for the 2017 financial year.

Key contract awards since mid-November include three new highways maintenance contracts worth more than £300 million (€354 million); the award of a new 50:50 joint venture infrastructure contract with Severn Trent on the Birmingham Resilience Project worth £100 million (€118 million), and an £80 million (€94 million) contract for the construction of the Cardiff University Innovation Campus in Wales.

Kier also won a contract to deliver phase 2 of the £85 million (€100 million) extension to Eastbourne Arndale Shopping Centre for Eastbourne Borough Council and Legal & General in East Sussex, in the south of England, and a £75 million (€88 million) contract in Dubai to deliver a second staff accommodation project on behalf of Nshmi, a local developer and existing client. This project will be funded with the support of UK Export Finance.

Organic growth

The group said it continued to experience good underlying organic growth. The strength of the property pipeline, the good forward sold position in the residential division and the combined construction and services order book, which has been maintained at approximately £9 billion (€10.6 billion) excluding potential further renewals and extensions valued at more than £2.5 billion (€2.95 billion), is said to position the group well for the future.

The property division has a pipeline of more than £1 billion (€1.18 billion) and continues to deliver return on capital invested in excess of 15%.

The residential division continues to benefit from the demand in the UK for all forms of housing. Kier said it continued to recycle capital from its private land bank into its mixed-tenure business and improve the division’s ROCE (return on capital employed) through the use of cash efficient joint ventures.

In early January, the division secured a £42 million (€49.5 million) four-year allocation from the Homes & Communities Agency which will underpin the delivery of completions from 2019 onwards. The division is on track to deliver more than 2,200 completions by 30 June, 2017, said Kier.