27th Feb 2014 08:58
LONDON (Alliance News) - Construction and property group Kier Group PLC Thursday reported a 90% increase in profit for the recent half year, boosted by the acquisition of May Gurney and recovery in the UK construction market.
The company, which bought rival firm May Gurney in July for GBP221 million, posted pretax profit of GBP36.8 million for the period ended December 31, 2013, up from GBP19.4 million a year earlier, as revenue jumped 47% to GBP1.43 billion from GBP976 million in the 2012 period.
On a like-for-like basis, revenue rose 12% to GBP1.09 billion from GBP976 million a year earlier.
In September the construction giant posted pretax profit of GBP43.0 million for the year ended 30 June, 2013, down from GBP63.0 million a year earlier, which it blamed on tough trading conditions the industry had faced during the year.
However, the company said the construction market has picked up since, and it is seeing early signs of economic recovery across the country.
Kier's main division - construction - saw revenue rise 18% to GBP742 million from GBP627 million a year earlier after it won a number of profitable contracts, while the services division, which now incorporates May Gurney, saw revenue rise 167% to GBP563 million from GBP211 million in the corresponding period.
Kier said it now has unrivalled access to local authorities for outsourcing and the ability to cross sell a broadened capability set to clients following the deal.
The property division didn't fare as well with revenue down to GBP127 million from GBP138 million due to a decline in private finance initiative contracts. But the division delivered a strong profit contribution of GBP11.1 million compared with GBP7.1 million a year earlier.
The affordable housing business has experienced good growth driven by the strengthening recovery in the housing market together with the delivery of the HCA Affordable Housing Grant Programme. Kier said the number of active developments in the business grew by 40% with 119 homes delivered while the forward order book currently stands at more than GBP400 million.
The Homes and Communities Agency's scheme aims to increase the supply of new affordable homes in England
Kier said margins were maintained despite market pressures with construction margins at 2.3% from 2.1% a year earlier and services margins unchanged at 4.3%.
It warned that pressure on operating margins, cash and payment terms continues, and that the operating efficiency of the business remains a key priority.
Chief Executive Paul Sheffield, who is stepping down in June, said the underlying performance of the group has been encouraging but highlighted that the May Gurney acquisition undoubtedly dressed the recent results.
"The acquisition has consolidated the group's position in support services, providing a range of complementary services to clients in the highways, transport and utilities sectors," he said in a statement. "The integration remains on course, with good customer retention, new extended contracts and revenue synergies."
Sheffield will be replaced by Haydn Mursell, currently group finance director.
The company increased the interim dividend 5% to 22.5 pence from 21.5 pence a year earlier.
Kier shares were up 0.3% at 1,830.00 pence early Thursday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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