Kier Group has announced its preliminary results for the year to 30 June 2009. The Group reported “good results against the backdrop of a very challenging economic climate”.
Underlying profits before tax, the amortisation of intangible assets and exceptional items were ahead of expectations at £52.8m (2008: £89.2m); and underlying earnings per share on the same basis were 102.5p (2008: 174.8p). Overall the Group recorded only a modest reduction in revenue to £2,145.6m (2008: £2,374.2m).
Kier’s Construction and Support Services divisions achieved record levels of operating profit and strong cash balances. Combined order books of £4.5bn (2008: £4.1bn) for both divisions reflect the award of several new framework agreements and large contracts.
The Construction division comprises Kier Regional and Kier Construction. Kier Regional encompasses a network of 11 regional contracting businesses, mainly focused on building projects operating across the whole of the UK. Kier Construction represents the Group’s infrastructure and overseas operations which include civil engineering in the power, waste and nuclear sectors, infrastructure, rail and mining.
Overall revenue remained fairly flat at £1,492.2m, (2008: £1,584.5m) whilst operating profit grew from £36.6m to a record £39.1m, at a margin of 2.6% (2008: 2.3%). Contract award levels were marginally lower than those for last year giving a secured order book of £1,190m (2008: £1,357m) (comprising only the value of projects with a signed contract) but with a higher level of ‘probable’ awards (comprising contracts on which Kier is preferred bidder or in one-to-one negotiations); £1,055m compared with £757m last year.
In the water sector, as part of a joint venture, Kier Group was recently awarded a £250m contract extension to its framework with United Utilities to 2015. 56% of Kier’s awards were for public sector projects, with education, by far, the biggest source of work accounting for some £600m (45%) of total awards for the year, much of it generated through framework agreements and partnerships with government, local authorities and universities.
Commenting on the results, John Dodds, Chief Executive said:
Kier Group plc has performed well, with profits for the year ahead of expectations notwithstanding the harsh economic conditions that prevailed during the year, particularly for our Partnership Homes and Developments businesses. The Group continues to be cash positive with healthy order books in our Construction and Support Services businesses supported by framework agreements and public sector opportunities. This good performance is the result of our product diversification and spread of operations, the quality and commercial capability of our staff as well as our approach to risk management”.
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