Kier Group plc, the construction and services group, has reported comtinuing growth in its order book in its latest trading update for the period from 1 July 2014 to date.
The Services Division order book now stands at £3.7bn, excluding potential contract extensions of more than £2bn, providing Kier with good visibility of future work and representing more than 90% of targeted revenue for 2015.
Kier said that following the successful integration of May Gurney, the Group’s "broad range of capabilities and its geographic reach enables effective targeting of both existing and new clients for whom Kier can provide integrated solutions."
Services contracts awarded in the water sector since 1 July include:
- A six-year £180m Canal & River Trust National Engineering & Construction Contract (NECC) for England and Wales;
- A five-year £100m contract with Bristol Water for network maintenance services, bringing awards under AMP6 bidding cycle to over £150m pa; and
- Preferred bidder for a two-year £14m contract with Severn Trent on the Asset Management Solutions (AMS) framework, with a possible five-year extension.
The firm said that following the recent successes in Services, the business is undertaking “an intense mobilisation phase with contracts in their early stages of operation”, commenting:
“As is typical in the early stages of larger, long-term contracts, the operating margin lags the forecast total contract operating margin. However, ultimately these contracts underpin the long-term future performance of the Services division. As a result, we anticipate that the operating margins will be approximately 5% for the full year, with a weighting towards the second half of the year.”
Kier’s Construction division has maintained its good performance, with a significant contribution from frameworks. The order book of secured and probable work at £2.6bn provides for 100% of the anticipated revenue for the current financial year, ahead of the equivalent position last year. Operating margins remain in line with expectations for this financial year at approximately 2%.
Construction contracts awarded since 1 July include a place on the Highways Agency’s £1.15bn collaborative delivery framework and a £57m design, build, finance and maintain package for South Ayrshire Council and Hub South West Scotland in Troon and Ayr.
Kier said the combined Construction and Services order book is continuing to improve to £6.3bn (June: 2014: £6.2bn), representing more than 95% of forecast revenue for 2015 and an encouraging pipeline for 2016. The update said the Group remains on course to meet the Board's expectations for the current financial year.
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