KIE Kier Group Plc

11 March 2025

Kier Group plc

Results for the period ended 31 December 2024

Significant operational and financial progress; strong net cash position; increased interim dividend

Kier Group plc ("Kier", the "Company" or the "Group"), a leading UK infrastructure services, construction and property group, announces its results for the six months ended 31 December 2024 ("HY25" or the "period").

Financial Highlights - Continuing Operations
(£m unless otherwise stated)	Six months to  31 December 2024	Six months to  31 December 2023	Change
Adjusted results
Revenue1	1,979	1,883	5%
Adjusted operating profit2	66.6	64.7	3%
Adjusted operating margin	3.4%	3.4%	-bps
Adjusted profit before tax3	50.6	49.0	3%
Adjusted basic earnings per share (note 9)	8.7p	8.7p	-%
Net cash4	57.9	17.0	241%
Average month-end net debt	(37.6)	(136.5)	72%
Statutory reported
Group revenue	1,973	1,862	6%
Operating profit	45.7	44.1	4%
Profit before tax	28.6	27.0	6%
Basic earnings per share (note 9)	4.6p	4.6p	-%
Interim dividend per share (note 8)	2.00p	1.67p	20%

1Revenue of the Group and its share of revenue from joint ventures

2Stated before adjusting items of £9.6m (HY24: £9.5m) and amortisation of acquired intangible assets of £11.3m (HY24: £11.1m).

3Stated before adjusting items of £10.7m (HY24: £10.9m) and amortisation of acquired intangible assets of £11.3m (HY24: £11.1m).

4Disclosed net of the effect of hedging instruments and excludes leases - see note 12 to the condensed consolidated financial statements.

 

HY25 Highlights 

·    Revenue and operating profit growth with significant deleveraging:

o   Revenue growth of 5% and adjusted operating profit growth of 3%

o   Strong operational delivery across Infrastructure Services and Construction

o   Adjusted operating margin maintained at 3.4%

o   Reported operating profit increased 4% to £45.7m (HY24: £44.1m)

o   Free Cash outflow of £(49.8)m reflecting a return to more normal seasonal working capital movement (HY24: £(7.9)m)

o   Strong balance sheet; net cash at period-end of £57.9m, a significant progression on the prior period-end (HY24: £17.0m)

o   Average month-end net debt materially reduced by £99m to £(38)m

·    Record order book:

o   High quality order book increased 2% to £11.0bn (FY24: £10.8bn) providing significant visibility

o   98% of expected FY25 revenue secured

·    Creating value through a disciplined approach to capital allocation:

o   Proposed 20% increase to interim dividend to 2.00p, representing a cover of c.3.5x

o   £20m share buyback announced in January 2025

o   Increased investment in the Property segment with ROCE target of 15%

 

 

Andrew Davies, Chief Executive, said:

"The Group has continued to make significant operational and financial progress. The first half saw Kier deliver increased revenue and profitable growth whilst maintaining strong margins. We continued to grow the order book which, at £11bn, provides us with good multi-year visibility. Our strong cash performance allowed us to significantly increase the interim dividend payment and commence an initial £20m share buyback programme in January 2025. I am also particularly pleased to report that the Group significantly improved both its period-end net cash position and its average month-end net debt position and the Board has confidence in sustaining this momentum going forward.

These developments are testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our financial position.

The second half of the financial year has started well, and we are trading in-line with the Board's expectations. The Group is confident in sustaining the strong cash generation achieved over the last few years and is well positioned to continue benefiting from UK Government infrastructure spending commitments. Kier operates in markets which are vital to the UK. We remain committed to delivering our long-term sustainable growth plan which will benefit all stakeholders."

HY25 Results Presentation

Kier Group plc will host a presentation for analysts and investors at 8:30am (GMT) on 11 March 2025 at the offices of FTI Consulting, 200 Aldersgate Street, London EC1A 4HD.

Analysts wishing to attend should contact FTI Consulting to register - Connie.Gibson@fticonsulting.com

Analysts unable to attend in person will be able to join the webcast using the details below:

Webcast: https://www.investis-live.com/kier/67ab6d18242e93000e3a87f4/palnrd

          

United Kingdom (Local): +44 20 3936 2999

United Kingdom (Toll-Free): +44 800 358 1035

Conference password: 205945                   

An audio recording will be available on our website in due course.

Further Information:   Kier Group plc
Investor Relations	+44 (0) 7933 388 746
Kier Press office	+44 (0) 1767 355 096
FTI Consulting	+44 (0) 20 3727 1340
Richard Mountain

 

Cautionary Statement

This announcement does not constitute an offer of securities by 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 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''. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''plans'', ''target'', ''aim'', ''may'', ''will'', ''would'', ''could'' or ''should'' or, in each case, their negative or other variations or comparable terminology. They may appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the directors, the Company or the Group concerning, amongst other things, the operating results, financial condition, prospects, growth, strategies and dividend policy of the Group or the industry in which it operates. 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 ability to control or predict. Forward-looking statements are not guarantees of future performance. The Group's actual operating results, financial condition, dividend policy or the development of the industry in which it operates may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if the operating results, financial condition and dividend policy of the Group, or the development of the industry in which it operates, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to, general economic and business conditions, industry trends, competition, changes in government and other regulation, changes in political and economic stability and changes in business strategy or development plans and other risks.

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.

Principal Risks and Uncertainties

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 discussion of the factors that could affect the Group's future performance and the industry in which it operates. The Board believes that these principal risks and uncertainties will continue to apply to the Group in the second half of the financial year.

About Kier

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 ensure we are able to project manage and integrate all aspects of a project.

We take pride in bringing specialist knowledge, sector-leading experience and fresh thinking to create workable solutions for our clients across the country.

Together, we have the scale and breadth of skills of a major company, while retaining a local focus and pride that comes from never being far from our clients, through a network of offices spanning across England, Wales, Scotland and Northern Ireland.

For further information and to subscribe to our news alerts, please visit: www.kier.co.uk

Follow us on X (formerly Twitter): @kiergroup

Connect with us on LinkedIn: Kier Group

 

 

Introduction

The Group's continued focus on operational excellence and cash management resulted in a strong set of results for the six months to 31 December 2024. The Group has continued to materially deleverage in line with our long-term sustainable growth plan as we convert activity into profits and cash.

On 21 January 2025, we announced the launch of an initial £20m share buyback having recommenced dividend payments during FY24. Given our significant operational and financial progress allied to the Board's ongoing confidence in the Group's performance, an interim dividend of 2.00p has been declared which represents a 20% increase on the HY24 interim dividend of 1.67p.  

The future prospects for the Group are underpinned by the period-end order book growing to £11bn by the end of HY25, an increase of 2% against the start of the period. This reflects a large number of contract wins across Infrastructure Services and Construction and provides multi-year revenue visibility. Long-term frameworks, as well as pipeline opportunities and income from the Property division, are excluded from the order book and represent an additional opportunity. The order book strength and Kier's framework positioning is reflected in approximately 98% of Group revenue for FY25 now being secured, which provides us with a high degree of confidence of further progress against a backdrop of wider market uncertainty.

During the period, Kier won new, high quality and profitable work in our markets reflecting the bidding discipline and risk management embedded in the business.

Long-term sustainable growth plan

The Group is focused on delivering against its long-term sustainable growth plan first announced in September 2024:

Revenue:	GDP + growth through the cycle
Adjusted operating profit margin:	3.5% +
Cash conversion of operating profit:	c.90%
Balance sheet:	Average month-end net cash with investment of surplus cash
Dividend:	Sustainable dividend policy: c.3 x earnings cover through the cycle

The Group aims to achieve these long-term targets through:

·    Volume growth and improved contract profitability

·    Continued management discipline

·    Deploying additional capital in the Property business

Strategy

The Group's strategy continues to be focused on:

·      UK Government, regulated industries and blue-chip customers

·      Operating in the business-to-business market

·      Contracting through long-term frameworks

Our core businesses are well placed to benefit from UK Government and regulated industry spending commitments to invest in UK infrastructure. Despite political and economic uncertainties, our core markets have remained favourable. We are a "strategic supplier" to the UK Government and c.91% of our contracts are with the public sector and regulated companies.

We believe UK infrastructure spending commitments are driven by structural demand which have a positive influence on Kier's chosen markets. Population growth, transportation pressures, aged infrastructure, energy security and climate change are significant drivers of structural growth in the markets in which we operate.

Given that public funding may be insufficient to maintain public assets, customer behaviours are shifting further towards long-term partnerships. These continue to favour Kier, given our scale, integrated design and project management capability, track record of delivery and Environment, Social and Governance ('ESG') credentials. 

These positive structural demand trends and customer behaviours are expected to expand our addressable market opportunities, particularly in water, environment, energy and affordable housing, as well as supporting increased demand in our Property business. In particular, the Group has been awarded a number of framework places as part of the significant investment across the AMP8 water cycle. Kier is well positioned with all the major water companies to support them with their water infrastructure upgrade and maintenance work.

Customers and winning new work

We remain focused on winning work through our long-standing client relationships and regionally based operations.

Highlights include:

·    Infrastructure Services: appointed by Yorkshire Water to their £850m AMP8 (2025-2030) Complex Non-Infrastructure Works Framework to support its investment in water processing and waste networks. Appointed to an Early Contractor Involvement ('ECI') by Severn Trent to design and build a replacement sewage treatment works in Worcester worth c.£20m.

·    Construction:  appointed by the Scottish Government to deliver HMP Glasgow, the replacement for HMP Barlinnie, worth £684m. Appointed to undertake preconstruction services to deliver new improved Army infrastructure at Rock Barracks, MOD Woodbridge, Suffolk to be delivered as part of the MOD's Defence Estate Optimisation Portfolio. Appointed to deliver two education projects worth £179m and a healthcare project worth £40m.

·    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.  

·    Property: has built on its 10-year relationship with Investec to create a new strategic industrial joint venture with Investec Realis, to be called Kier Realis Logistics. The JV successfully exchanged on its first site in Hemel Hempstead in December 2024, in an off-market deal with Aviva Life & Pensions UK

Financial summary

Kier's revenue in the period of £2.0bn (HY24: £1.9bn) reflects solid growth across Infrastructure Services and Construction.    

Our order book has continued to grow and increased 2% since the start of the period to £11bn. Approximately 60% of our order book is under target cost or cost reimbursable contracts. The remainder of the order book is on fixed priced contracts where the risk is negotiated and managed with our customers and supply chain partners.

With over 400 current projects at any given time, we are also regularly delivering on existing contracts and pricing new contracts which mitigates against cost pressures. In addition, we have an average order size of c.£21m in our Construction business which, given its modest size, limits our risk exposure in the event a project does not go to plan.    

The Group delivered adjusted operating profit of £66.6m which represents a 2.9% increase on the prior period (HY24: £64.7m) as volume growth from the Infrastructure Services and Construction segments converted to profits.  Group adjusted operating profit margin remained consistent with HY24 at 3.4%. Reported operating profit increased 3.6% to £45.7m (HY24: £44.1m).

Adjusted earnings per share were the same as the comparative period at 8.7p (HY24: 8.7p) and reported earnings per share remained consistent with the prior period at 4.6p.

Volume growth in the Infrastructure Services and Construction segments returned to normal levels resulting in working capital flows normalising, and after accounting for increasing investment in the Property segment, the Group achieved £(49.8)m of free cash flow in HY25 (HY24: £(7.9)m).

The Group's net cash position at 31 December 2024 grew to £57.9m (HY24: £17.0m) despite improving supplier payment days to 33 as the strong volumes translated into cash receipts.

Average month-end net debt for the period ended 31 December 2024 was £(37.6)m (HY24: £(136.5)m). The strong operational cash flow allowed the Group to continue to reduce levels of debt despite increasing investment in our Property Business, restarting payment of dividends and paying pension deficit obligations.

In January 2025, we fully repaid our remaining USPP Notes and the RCF reduced to £150m in line with both facility agreements. The RCF, combined with the £250m 5 year Senior Notes leave the Group with £400m of facilities.   

 

Capital allocation

In addition to the long-term sustainable growth plan, the Group has clear capital allocation priorities. The Group maintains a disciplined approach to capital and continuously reviews capital allocation priorities with the aim of maximising shareholder returns. The Group's capital allocation is underpinned by its commitment to maintain a strong balance sheet. The Group's capital allocation priorities are:

·           Capex - ongoing investment to support the business

·           Ordinary Dividend - targeting dividend cover of c.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 we have committed to returning this excess capital to shareholders.

·           Incremental Shareholder returns - initial £20m share buyback programme launched in January 2025

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

Dividend

The importance of dividends to the Group's shareholders has always been recognised by the Board and was an important facet of the medium-term value creation plan launched during FY21. Our stated aim is to deliver a dividend, covered at least 3x by adjusted earnings through the cycle and in a payment ratio of approximately one third interim dividend and two-thirds final dividend.

The Group has continued to deliver significant operating and financial progress resulting in material deleveraging during the period. The outlook for the Group remains strong, underpinned by our large order book and this resulted in the Board declaring an interim dividend of 2.00p per share. This represents an increase of 20% on HY24 (1.67p) and a dividend cover of c.3.5x in line with our capital allocation framework.

The interim dividend will be paid on 2 June 2025 to shareholders on the register at close of business on 25 April 2025. The shares will be marked ex-dividend on 24 April 2025. Kier has a Dividend Reinvestment Plan ("DRIP"), which allows shareholders to reinvest their cash dividends in our shares. The final election date for the DRIP is 12 May 2025.

Performance Excellence

Through our Performance Excellence culture, which was introduced in 2020, Kier has embedded a strong operational and financial risk management framework across the Group. It is essential to, and embedded into, Kier's contract selection and delivery processes. 

The Group's focus for FY25 is Digital and Simplification as we continuously improve the operational performance of the business. The key tenets are as follows:

·      Site set-up - standardisation of site offices and enhancing site connectivity

·      Health, safety and wellbeing - simplifying health and safety data and sharing best practice

·      Quality assurance - improving capability and digital tools

·      Functions - simplifying processes and enhancing current systems such as supplier onboarding

Supply chain partners

We continue to focus on maintaining and growing relationships with our key stakeholders, including our supply chain. Many of our suppliers are long-term partners of the Group and we value their contribution.

We were pleased to report that in our latest Duty to Report on Payment Practices and Reporting submission, covering the period from 1 July 2024 to 31 December 2024, the Group's aggregate average payment days improved to 33 days (H2 FY24: 34 days) and the percentage of payments made to suppliers within 60 days was 92% (H2 FY24: 86%).

We are committed to further improvements in our payment practices and continue to work with both customers and suppliers to achieve this. We are fully committed to complying with the 30-day payment requirements for small and medium-sized firms.

Environmental, Social and Governance ('ESG')

Kier's purpose is to sustainably deliver infrastructure which is vital to the UK. As a "strategic supplier" to the UK Government, ESG is fundamental to our ability to win work and secure positions on long-term frameworks. UK Government contracts with a value of, or above, £5m require net zero carbon and social value commitments.

Our evolved Building for a Sustainable World framework continues to cover sustainability from both an environment and social perspective with a focus on the three key pillars of Our People, Our Places and Our Planet.  Our framework follows the guiding principles of the United Nations Sustainable Development Goals ('SDGs').  

·        Environmental

Under the Group's sustainability framework, Kier has set out our pathway to become net zero carbon across our business operations by 2039 (Scope 1 and 2) and value chain (Scope 3) by 2045.

Last year Kier was awarded the London Stock Exchange Green Economy Mark by demonstrating that over 50% of our revenue was derived from green products and services in line with the FTSE Russell Green Revenues Classification System. We are seeing an increased demand for projects delivering a net environmental benefit. As a result, our London Stock Exchange-classified 'Green revenue' had increased from 64% to 69% at the end of FY24.

Key to the Group achieving our carbon footprint reduction target is to assist our supply chain to reduce their carbon usage. We sponsored and collaborated with the Supply Chain Sustainability School to develop responsible procurement guidance for Hydrotreated Vegetable Oil ('HVO'), a key transition fuel.

Kier's focus also includes our impact on nature and we have committed to enhance our reporting on nature in FY25 by adopting the disclosure requirements of the Taskforce on Nature-related Financial Disclosures ('TNFD').

These combined achievements represent a key milestone in the Group's ESG strategy as Kier continues in its aim to deliver sustainable infrastructure which is vital to the UK whilst operating as a responsible business in itself.

·        Social

Delivering a legacy of social value continues to be a key priority for our customers and for Kier. We continue to offer apprenticeships as a key means of upskilling employees and bringing in diverse emerging talent to reduce the industry skills gap.

At 31 December 2024, we had 665 apprentices employed within Kier, which equates to 6% of our workforce. In addition, 12% of the workforce were on a formal learning programme at 30 June 2024, a figure which earned Kier its 'Platinum' status with the 5% Club and supports our position on the UK Government's 2024 Top 100 Apprentice Employer list. This reflects the Group's continued commitment to upskill its people.

As part of our drive to recruit diverse talent, Kier has offered employment to 28 prison leavers or Released on Temporary Licence ('ROTL') either within our business or with our supply chain partners in the first half of the year. Kier also remains committed to offering employment opportunities to those who have served in our armed forces and has offered employment to 57 veterans in the same period.  

The Group's 12-month rolling Accident Incident Rate ('AIR') at HY25 of 132 represents a 15% improvement on FY24, and the 12-month rolling All Accident Incident Rate ('AAIR') at HY25 of 358 represents a small improvement on FY24.

We are seeing the benefits of our Culture Programme, and the Behavioural Safety Programmes that we continue to roll out. We launched a simplified Safety, Health and Environment Management system in September, as safety remains our license to operate and we continue to share and embed best practice across our divisions.

·        Governance

Governance is a core component of the Group's approach to operations. Governance is delivered within Kier's Operating Framework. The laws, policies and procedures underpinning the Operating Framework are regularly reviewed and updates implemented as necessary. Within the Operating Framework is Kier's Code of Conduct which sets the corporate compliance agenda.

Integral to this is our management of risk. We ensure that risk management is adopted at every stage of the project lifecycle to ensure that the delivery of the Group's order book remains profitable and cash generative in line with our long-term sustainable growth plan.

 

Summary and outlook

The Group has continued to make significant operational and financial progress. The first half saw Kier deliver increased revenue and profitable growth whilst maintaining strong margins. We continued to grow the order book which, at £11bn, provides us with good multi-year visibility. Our strong cash performance allowed us to significantly increase the interim dividend payment and commence an initial £20m share buyback programme in January 2025. I am also particularly pleased to report that the Group significantly improved both its period-end net cash position and its average month-end net debt position and the Board has confidence in sustaining this momentum going forward.

These developments are testament to the hard work and commitment of our people who have enhanced our resilience and strengthened our financial position.

The second half of the financial year has started well, and we are trading in-line with the Board's expectations. The Group is confident in sustaining the strong cash generation achieved over the last few years and is well positioned to continue benefiting from UK Government infrastructure spending commitments. Kier operates in in markets which are vital to the UK. We remain committed to delivering our long-term sustainable growth plan which will benefit all stakeholders.

 

 

Operational Review

Infrastructure Services

	Six months to 31 December 2024	Six months to 31 December 2023	Change
Revenue (£m)	1,032	944	9%
Adjusted operating profit (£m)5	46.1	44.0	5%
Adjusted operating margin (%)	4.5%	4.7%	(20)bps
Reported operating profit (£m)	34.8	32.4	7%
Order book (£bn)	6.7	6.7	-%

5 Stated before adjusting items of £(11.3)m (HY24: £(11.6)m).

 

·           Key contract wins include:

o     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

o     Appointed to an ECI by Severn Trent to design and build a replacement sewage treatment works in Worcester worth c. £20m

·           97% of orders secured for FY25

Infrastructure Services revenue increased 9% against the prior period primarily due to the continued ramp up of capital works on HS2 alongside volume growth in the water and nuclear sectors. Reported operating profit grew 7% to £34.8m (HY24: £32.4m). Adjusting items include the amortisation of contract rights from the Buckingham and other acquisitions.

The Transportation business division provides design, engineering, delivery and maintenance to support the movement of people, goods and equipment by land, sea and air.  It includes our road, rail and aviation businesses.

The business benefited from the start of contracts won in previous periods and the continued successful delivery of assets for HS2.  However, volume growth has been affected by the delays to finalising the new phase of the Road Investment Strategy (RIS 3) as well as delays to starting work under Control Period 7 (CP7) in our rail business.

The Natural Resources, Nuclear & Networks division includes our water, energy, nuclear and networks projects. The business is well positioned to benefit from the anticipated increased opportunities afforded by the new water spending cycle, AMP8 programme, as well as opportunities in the energy and environment sectors. During the period, we saw increased activity in water and nuclear markets as we start to fulfil projects being delivered under these new spending cycles.

The Group is working with a total of 9 customers through 15 frameworks with an advertised value of up to £15bn.

 

Construction

	Six months to 31 December 2024	Six months to 31 December 2023	Change
Revenue (£m)	932	915	2%
Adjusted operating profit (£m)6	36.5	33.2	10%
Adjusted operating margin (%)	3.9%	3.6%	30bps
Reported operating profit (£m)	29.0	25.1	16%
Order book (£bn)	4.3	4.0	8%

⁶Stated before adjusting items of £(7.5)m (HY24: £(8.1)m)

 

·      Key contract wins include:

o   appointed by the Scottish Government to deliver HMP Glasgow, the replacement for HMP Barlinnie, worth £684m

o   appointed to undertake preconstruction services to deliver new improved Army infrastructure at Rock Barracks, MOD Woodbridge, Suffolk to be delivered as part of the MOD's Defence Estate Optimisation Portfolio

o   appointed to deliver two education projects worth £179m and a healthcare project worth £40m

 

·    99% of orders secured for FY25

The Construction segment comprises Regional Building, Strategic Projects, and Kier Places. Construction has national coverage delivering schools, hospitals, prisons and defence estate optimisation.  It also delivers commercial, residential and heritage buildings for local authorities, the Ministry of Justice, other government departments, and the private sector.

Revenue increased 2% largely due to increased volume in our regional build business.

Reported operating profit increased 16% to £29.0m driven by increased revenue. Adjusting items include £7.5m relating to fire and cladding compliance costs. The increase in margin was driven by mix and HY24 being impacted by the increased overheads associated with site starts.

As a regional tier 1 contractor, we continue to be well placed to benefit from the UK Government's focus on spending to improve under-invested assets such as schools, hospitals and custodial services, where our Construction business has specialist expertise.

Kier Places is a client-focused building, construction and property management business which delivers end-to-end solutions for places where people live, work and play. As part of Kier Construction, we focus our business on three key areas: Building Solutions, Residential Solutions and Workplace Solutions, with expertise and services extended to planned and reactive maintenance, renovation, facilities management, capital building works, mechanical and electrical maintenance, decarbonisation and retrofit, cladding remediation and fire compliance.

Property

	Six months to 31 December 2024	Six months to 31 December 2023	Change
Revenue (£m)	13.1	22.1	(41)%
Adjusted operating profit (£m)7	0.9	4.6	(80)%
Adjusted operating margin (%)	6.9%	20.8%	(1,390)bps
Reported operating profit (£m)	0.9	4.6	(80)%
Capital employed (£m)	194	163	19%
ROCE (%)	1.0%	5.9%	(490)bps

7 Stated before adjusting items of £nil (HY24: nil)

 

·      Created a new strategic industrial joint venture with Investec Realis, to be called Kier Realis Logistics. The JV successfully exchanged on its first site in Hemel Hempstead in December 2024, in an off-market deal with Aviva Life & Pensions UK

·      Commenced the next phase in the long-term Watford Riverwell scheme (a regeneration initiative between Kier Property and Watford Borough Council) to deliver a purpose-built unit for Safestore opposite its successful Trade City development completed in 2017

The Property business invests in and develops mixed-use commercial and residential schemes across the UK, largely through joint ventures. Due to the limited number of transactions in the first half of the year, the Property business generated revenue of £13.1m (HY24: £22.1m) and a margin of £0.9m. Activity levels are expected to be second half weighted.

The Group is focused on the disciplined expansion of the Property business through select investments and strategic joint ventures with a target for this investment to generate a consistent ROCE of 15%.

As at 31 December 2024, the capital employed in the Property segment was £194m excluding third party debt and fair value gains. We expect to increase the average capital employed towards £225m and thereafter to recycle the capital employed to deliver consistent returns over the medium-term. The ROCE result for HY25 reflects the increased capital employed on the new attractive investment opportunities the business is now able to access, and the limited capital investment three years ago resulting in limited seasoned capital we were able to recycle.

 

Corporate

	Six months to 31 December 2024	Six months to 31 December 2023	Change
Adjusted operating loss (£m)8	(16.9)	(17.1)	1%
Reported operating loss (£m)	(19.0)	(18.0)	(6)%

8 Stated before adjusting items of £(2.1)m (HY24: £(0.9)m)

 

The Corporate segment comprises the costs of the Group's central functions.

 

 

Financial Review

Introduction

The Group performed well through the first half of the year with further improvement in the order book, which has been converted into revenue and profit growth in both Infrastructure Services and Construction. The Group's focus on operational delivery and cash management saw the Group continue to deleverage with average month-end net debt improving significantly.

The Group delivered volume growth of 5.1% giving total revenues of £1,978.6m (HY24: £1,882.9m, FY24: £3,969.4m) and which helped deliver an adjusted operating profit of £66.6m (HY24: £64.7m, FY24: £150.2m). 

The continued strong operational performance led to a 3.6% increase in operating profit to £45.7m (HY24: £44.1m, FY24: £103.1m) and an increase in profit before tax to £28.6m (HY24: £27.0m, FY24: £68.1m).   

Adjusting items were £22.0m (HY24: £22.0m, FY24: £50.0m). The current period charge includes £11.3m of amortisation of intangible contract rights and £7.5m of fire and cladding compliance costs.

Net finance charges for the period were £17.1m (HY24: £17.1m, FY24: £35.0m), with the higher cost associated with the Senior Notes issue offsetting the benefit of lower average debt.

Adjusted earnings per share were 8.7p (HY24: 8.7p, FY24: 20.6p).  

The Group experienced a free cash outflow of £49.8m during the period (HY24: £7.9m outflow, FY24: £185.9m inflow). This was driven by the expected seasonal H1 working capital outflow as well as additional investment in non joint venture property development, and was higher compared to the prior period due to HY24 working capital benefitting from a 23% year on year increase in revenue.

Out of its free cashflow, the Group paid dividends, adjusting items and pension deficit obligations, purchased existing Kier shares on behalf of its employees and invested in its Property division joint ventures. Net cash at 31 December 2024 of £57.9m was significantly improved compared to the prior period (HY24: £17.0m, FY24: £167.2m).   

Average month-end net debt for the period ended 31 December 2024 was £(37.6)m (HY24: £(136.5)m, FY24 £(116.1)m), reduced significantly from the prior period and the prior year end.  

The Group continued to win new, high quality and profitable work in its markets on terms and rates which reflect the Group's bidding discipline and risk management.   

The order book increased to £11.0bn, a 2.0% increase since the year-end (HY24: £10.7bn, FY24: £10.8bn). Approximately 98% of revenue for FY25 is already secured which provides certainty for the full year. 

Summary of financial performance     

	Adjusted9results			Statutory reported results
	31 Dec 2024	31 Dec 2023	Change %	31 Dec 2024	31 Dec 2023	Change %
Revenue (£m) - Total	1,978.6	1,882.9	5.1	1,978.6	1,882.9	5.1
Revenue (£m) - Excluding JV's	1,973.0	1,862.1	6.0	1,973.0	1,862.1	6.0
Operating profit (£m)	66.6	64.7	2.9	45.7	44.1	3.6
Profit before tax (£m)	50.6	49.0	3.3	28.6	27.0	5.9
Earnings per share (p)	8.7	8.7	-	4.6	4.6	-
Interim dividend per share (p)	2.00	1.67	19.8
Free cash flow (£m)	(49.8)	(7.9)	530.4
Net cash (£m)	57.9	17.0	240.6
Net debt (£m) - average month-end	(37.6)	(136.5)	72.5
Order book (£bn)	11.0	10.7	2.8

⁹ Reference to 'Adjusted' excludes adjusting items, see note 3.

 

Revenue 

The following table bridges the Group's revenue from the period ended 31 December 2023 to the period ended 31 December 2024.   

 

	£m
Revenue for the period ended 31 December 2023	1,882.9
Infrastructure Services	87.7
Construction	16.8
Property and Corporate	(8.8)
Revenue for the period ended 31 December 2024	1,978.6

 

The Group grew revenue in both Infrastructure Services, which reported revenue growth of 9.3% compared to the prior period, and Construction, which reported revenue growth of 1.8% for the same period.  

The Group continues to focus on delivering high quality and high margin work.    

Alternative performance measures ("APMs")

The Directors continue to consider that it is appropriate to present an income statement that shows the Group's statutory results only.  

In addition to the Group's statutory results, the Directors believe it is appropriate to disclose those items which are one-off, material or nonrecurring in size or nature. The Group is disclosing as supplementary information an "adjusted profit" APM. The Directors consider doing so clarifies the presentation of the financial statements and better reflects the internal management reporting and is therefore consistent with the requirements of IFRS 8.   

Adjusted Operating Profit 

	£m
Adjusted operating profit for the period ended 31 December 2023	64.7
Volume / price / mix changes	3.5
Fewer Property transactions	(3.7)
Cost inflation	(3.1)
Management actions	5.2
Adjusted operating profit for the period ended 31 December 2024	66.6

 

A reconciliation of reported to adjusted operating profit is provided below:

  

	Operating profit		Profit before tax
	31 Dec 2024 £m	31 Dec 2023 £m	31 Dec 2024 £m	31 Dec 2023 £m
Reported profit	45.7	44.1	28.6	27.0
Amortisation of acquired intangible assets	11.3	11.1	11.3	11.1
Fire and cladding compliance costs	7.5	7.2	7.5	7.2
Corporate office-related items	2.1	-	2.1	-
Net financing costs	-	-	1.1	1.4
Legacy legal claims	-	1.1	-	1.1
Other	-	1.2	-	1.2
Adjusted profit	66.6	64.7	50.6	49.0

 

Additional information about these items is as follows:  

·              Amortisation of acquired intangible assets £11.3m (HY24: £11.1m):

Comprises the amortisation of acquired contract rights through the acquisitions of MRBL Limited (Mouchel Group), May Gurney Integrated Services plc, McNicholas Construction Holdings Limited and the Buckingham Group.

 

·              Fire and cladding compliance costs £7.5m (HY24: £7.2m):

The Group continues to review all of its current and legacy constructed buildings where it has used cladding solutions and continues to assess the action required in line with the latest updates to Government guidance, as it applies, to multi-storey and multi-occupied residential buildings. 

 

The charge incurred in the period is for those projects where the Group has confirmed liability and has a reasonable estimate of the cost to rectify the issues identified, less any confirmed insurance recoveries.

 

·              Corporate office-related items £2.1m (HY24: £nil):

This includes costs relating to vacated corporate offices. Net costs of £2.1m predominately reflect the purchase and subsequent sale of a vacant leasehold office in Manchester, which allows the Group to de-risk the balance sheet and eliminate future rental payments.

 

Earnings per share

Earnings per share ("EPS"), before adjusting items, amounted to 8.7p (HY24: 8.7p, FY24: 20.6p). Reported EPS, after adjusting items, from continuing operations amounted to 4.6p (HY24: 4.6p, FY24: 11.8p). 

Finance income and charges

The Group's finance charges include interest on the Group's bank borrowings and Senior Notes as well as finance charges relating to leases recorded under IFRS 16.

Net finance charges for the period were £17.1m (HY24: £17.1m, FY24: £35.0m).

Interest on bank borrowings and Senior Notes amounted to £14.9m (HY24: £14.7m, FY24: £31.5m). Although average month-end net debt has decreased, the impact of this on the interest charge has been offset by the higher interest rates throughout the period associated with the Senior Notes issue.

The Group was able to partially mitigate the risk of higher interest rates with a £50m interest rate swap which is due to expire in June 2025.

Lease interest was £4.7m (HY24: £4.8m, FY24: £9.5m).

The Group had a net interest credit of £2.1m (HY24: £2.8m, FY24: £5.7m) in relation to the defined benefit pension schemes which has arisen due to the overall pension surplus.

The Group continues to exclude lease liabilities from its definition of net cash/(debt).

Dividend 

The Board has declared an interim dividend of 2.00p (HY24: interim dividend of 1.67p per share, FY24: final dividend of 3.48p) which represents c.3.5x adjusted earnings cover. 

Balance sheet

Net assets

The Group had net assets of £497.9m at 31 December 2024 (HY24: £517.1m, FY24: £520.1m).

Goodwill

The Group held intangible assets of £621.4m (HY24: £645.5m, FY24: £638.2m) of which goodwill represented £543.5m (HY24: £540.9m, FY24: £543.5m). No impairment triggers were identified in the period.

Deferred tax asset

The Group has a significant deferred tax asset of £141.3m recognised at 31 December 2024 (HY24: £128.6m, FY24: £133.1m) primarily due to historical losses. 

Based on the Group's forecasts, it is expected that the deferred tax asset will be utilised over a period of approximately 8 years.

An adjusted tax credit of £4.2m (HY24: £4.1m, FY24: £11.6m) has been included within adjusting items.

Right-of-use assets and lease liabilities

At 31 December 2024, the Group had right-of-use assets of £94.3m (HY24: £94.8m, FY24: £95.0m) and associated lease liabilities of £155.3m (HY24: £173.9m, FY24: £173.1m).  The movements at each balance sheet date, reflect operational equipment requirements less associated depreciation and lease repayments.  

Investment properties

As at 31 December 2024, the Group had investment properties of £95.5m (HY24: £102.2m, FY24: £104.9m).

The Group had long-term leases on three office buildings which were formerly utilised by the Group that have been vacated and are now leased out (or intended to be leased out) to third parties under operating leases, as well as two freehold properties no longer used by the business that are being held for capital appreciation. These are all held as investment properties.

During the period the Group disposed of Fountain Street, one of the leasehold properties.

In addition, the Group's Property business invests and develops primarily mixed-use commercial and residential schemes and sites across the UK. Two of these sites are held as investment properties.

Contract assets & liabilities

Contract assets represents the Group's right to consideration in exchange for works which have already been performed. Similarly, a contract liability is recognised when a customer pays consideration before work is performed. At 31 December 2024, total contract assets amounted to £349.0m (HY24: £323.1m, FY24: £358.1m). 

Contract liabilities were £171.2m (HY24: £119.2m, FY24: £128.4m).

Retirement benefits obligation

Kier operates a number of defined benefit pension schemes. At 31 December 2024, the reported surplus, which is the difference between the aggregate value of the schemes' assets and the present value of their future liabilities, was £52.8m (HY24: £96.4m, FY24: £80.5m), before accounting for deferred tax, with the movement in the period primarily as a result of actuarial losses of £32.4m (HY24: £15.1m losses, FY24: £36.5m losses) and lower than assumed asset returns. This is partly offset by a decrease in pension scheme liabilities, driven by deficit reduction payments and a change in financial assumptions, specifically higher corporate bond yields.

Future deficit payments have decreased from £9m in FY24 to £7m in FY25, then will decrease further to £5m in FY26, £4m in FY27 and £1m in FY28.  

Free cash flow and Net cash 

	31 Dec 2024	31 Dec 2023
	£m	£m
Operating profit	45.7	44.1
Depreciation of owned assets	2.7	3.5
Depreciation of right-of-use assets	22.3	18.7
Amortisation	20.2	16.4
EBITDA	90.9	82.7
Adjusting items excluding adjusting amortisation and interest	9.6	9.5
Adjusted EBITDA	100.5	92.2
Working capital outflow	(110.3)	(46.4)
Net capital expenditure including finance lease capital payments	(26.9)	(26.3)
Joint Venture dividends less profits	0.8	(5.9)
Other free cash flow items	5.4	(1.2)
Operating free cash flow	(30.5)	12.4
Net interest and tax	(19.3)	(20.3)
Free cash flow	(49.8)	(7.9)

 

 

	2024	2023
	£m	£m
Net cash at 1 July	167.2	64.1
Free cash flow	(49.8)	(7.9)
Adjusting items	(15.2)	(16.1)
Net investment in Joint Ventures	(16.8)	-
Pension deficit payments and fees	(4.1)	(5.0)
Purchase of own shares	(7.4)	(3.7)
Acquisition of Buckingham	-	(9.4)
Dividends paid	(15.2)	-
Other	(0.8)	(5.0)
Net cash at 31 December	57.9	17.0

 

As expected, the Group experienced a free cash outflow during the period driven by a seasonal working capital outflow, with summer being a higher period of activity compared to winter months. However, the working capital outflow in HY24 benefited from a 23% year on year increase in revenue compared to a 5% increase in HY25. Despite this the Group delivered a net cash position of £57.9m at 31 December 2024 (HY24: £17.0m, FY24: £167.2m).

The average month-end net debt position is better than the comparative period at £(37.6)m, (HY24: £(136.5)m, FY24: £(116.1)m). The business generated operating profit and positive working capital which was used to pay dividends, adjusting items, tax and interest, pension deficit obligations, invest in our Property business joint ventures and purchase existing Kier shares on behalf of employees.

The purchase of existing shares relates to the Group's employee benefit trusts which acquire Kier shares from the market for use in settling the Long Term Incentive Plan ("LTIP") share schemes when they vest. The trusts purchased and sold shares at a net cost of £7.4m (HY24: £3.7m, FY24: £3.7m). 

Accounting policies

The Group's annual consolidated financial statements are prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. There have been no significant changes to the Group's accounting policies during the period.  

Treasury facilities

At 31 December 2024, the Group had committed debt facilities of £548.2m with a further £18.0m of uncommitted overdrafts.  

The facilities comprised £250m Senior Notes, £260.9m Revolving Credit Facility ('RCF'), £37.3m USPP Notes as well as £18.0m of overdrafts.  

The Group has a fixed interest rate swap of £50m which is due to expire in June 2025.

Following the period end, in January 2025 the Group repaid the remaining £37.3m USPP notes and reduced its RCF facility by £111m. the repayments having been made from operating free cash flow.

With £400m of facilities, consisting of 5 Year £250m Senior Notes maturing in February 2029 and a £150m RCF expiring in March 2027, the Group has significant committed funding to support its evolved long-term sustainable growth plan. 

The Group's remaining financial instruments mainly comprise cash and liquid investments. The Group selectively enters into derivative transactions (interest rate and currency swaps) to manage interest rate and currency risks arising from its sources of finance. The US dollar denominated USPP notes were hedged with fixed cross-currency swaps at inception to mitigate the foreign exchange risk. Following the repayment of the final USPP notes in January 2025 these swaps have now matured.

One non-recourse, project specific, property joint venture loan is hedged using an interest rate derivative to fix the cost of borrowing.  

There are minor foreign currency risks arising from the Group's operations both in the UK and through its limited number of international activities. Currency exposure to international assets is hedged through inter-company balances and borrowings, so that assets denominated in foreign currencies are matched, as far as possible, by liabilities. Where exposures to currency fluctuations are identified, forward exchange contracts are completed to buy and sell foreign currency.

The Group does not enter into speculative transactions.

Going concern

The Directors are satisfied that the Group has adequate resources to meet its obligations as they fall due for a period of at least twelve months from the date of approving these financial statements and, for this reason, they continue to adopt the going concern basis in preparing these financial statements.

Further information on this assessment is detailed in note 1 of the condensed consolidated financial statements.

 

Statement of directors' responsibilities 

The Directors confirm that these condensed interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely: 

·      an indication of important events that have occurred during the first six months and their impact on the consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and 

·      material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report. 

The directors of Kier Group plc are as listed on pages 90 and 91 of the 2024 Annual Report and Accounts, with the exception of the following changes:

·      Justin Atkinson retired from the Board on 30 September 2024.

·      Stuart Togwell was appointed to the Board as an Executive Director on 1 October 2024.

A list of the current directors is also maintained on Kier Group plc's website at: www.kier.co.uk. 

Signed on 10 March 2024 on behalf of the Board. 

 

Andrew Davies	Simon Kesterton
Chief Executive	Chief Financial Officer

 

 

Independent review report to Kier Group plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Kier Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the results for the period ended 31 December 2024 of Kier Group plc for the 6 month period ended 31 December 2024 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

·      the condensed consolidated balance sheet as at 31 December 2024;

·      the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;

·      the condensed consolidated statement of cash flows for the period then ended;

·      the condensed consolidated statement of changes in equity for the period then ended; and

·      the explanatory notes to the interim financial statements.

The interim financial statements included in the interim condensed consolidated financial statements of Kier Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim condensed consolidated financial statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim condensed consolidated financial statements, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim condensed consolidated financial statements in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the interim condensed consolidated financial statements, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the interim condensed consolidated financial statements based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

10 March 2025