Kier Group interims...

[Davidsb]

...are announced today.

http://www.investegate.co.uk/kier-group ... 00312618A/

Highlights:-

Financials
· Order book of approximately £9bn reflecting strong pipeline conversion in regional building and highway services;
· Forecast revenue in Construction and Services 100% secured for year to June 2017; approximately 70% secured for year to June 2018;
· Underlying operating profit of £56.5m, 4% organic growth on 2015;
· Net debt of £179m ahead of expectations and expected to be maintained at 1x EBITDA for the full year;
· Portfolio simplification;
· Profit on disposal of Mouchel Consulting of £39m;
· Provision for winding down of the Caribbean operations and final account negotiations of £33m;
· Basic earnings per share of 38.9p (December 2015: 34.9p), up 11%, in line with Vision 2020 goals;
· Interim dividend of 22.5p up 5%; and
· On track with Vision 2020 goals.

Divisional progress
· Property
o Strong pipeline of >£1bn; and
o On course for >15% ROCE for the full year.
· Residential
o Cross Keys Homes joint venture, announced today, providing up to £64m of further capital for future investment and underpins the delivery of the Residential division Vision 2020 goal of 15% ROCE;
o Revenue increased by 4% to £169m, on track to deliver 2,200 units by year end with a strong forward sales position; and
o On course for >10% ROCE for the full year.
· Construction
o Underlying operating profit up 19% to £20.8m;
o Operating margin of 2.0% (December 2015: 1.9%); and
o Robust framework positions and opportunities for further growth in new sectors including aviation and industrials.
· Services
o Operating margin of 4.8% (December 2015: 4.7%);
o Awarded more than £300m of highways maintenance contracts in the period; and
o Increased volume of revenue in highways in the second half.

CEO comments:-

"Today's results reflect the ongoing financial and operational discipline employed across the Group and the strength of our flexible, integrated business model.

"The Group has a balanced portfolio of businesses and market leading positions in regional building, infrastructure and housing. Our continued focus on simplifying the portfolio and working with clients in a collaborative way is delivering further growth opportunities. Our clients recognise this approach as a key differentiator when working with Kier.

"The Group's breadth provides some resilience against economic uncertainty and we continue to shape Kier to focus on our core competencies. We are encouraged by the pipeline in the Property and Residential businesses and our healthy order books of approximately £9bn in the Construction and Services businesses. We remain on course to deliver our expectations for the full year and we are well positioned to achieve our Vision 2020 goals."


The interim dividend is up 5%, and is payable on 19th May. The ex-div date is 30th March.

KIE also announced a new JV with Cross Keys, a housing association and residential builder based in Peterborough. Details here:-

http://www.investegate.co.uk/kier-group ... 00252598A/

I bought KIE in early 2016, as half of a 'pair' with GFRD - so far, neither has disappointed. They are both smaller than some would like, at £1.4bn and £1.3bn respectively, but I am happy with both in my 40+ share HYP.