18th Sep 2014 06:52
LONDON (Alliance News) - Kier Group PLC Thursday reported higher underlying profits for its last financial year as its acquisition of May Gurney and strong organic growth drove up revenue, and it appointed Balfour Beatty PLC executive Beverley Dew as its Finance Director, although it hasn't yet decided when the 43 year-old will start in the job.
In a statement, the property, construction and services engineering company said qualified accountant Dew is currently finance director of the regional construction business in the UK at Balfour Beatty, having previously held positions at Lend Lease, Redrow PLC and Invensys Rail.
"His wide range of experience across the construction, services and residential sectors will make him an excellent addition to the board," Kier Chairman Phil White said.
Kier's former finance director, Haydn Mursell, became chief executive of the company on July 1, after former CEO Paul Sheffield stepped down.
The company reported underlying pretax profit of GBP73.1 million for the year to end-June, up from GBP47.6 million a year earlier, as revenue grew by half to GBP3.0 billion, from GBP2.0 billion.
It pretax profit fell, however, to GBP14.8 million, from GBP25.9 million, as exceptional items more than doubled to GBP42.2 million due to the costs related to its acquisition of May Gurney.
It raised its total dividend for the year by 6% to 72.0 pence, from 68.0p, which it said reflected its confidence in its prospects. The final dividend will be 49.5p, up from 46.5p.
New CEO Mursell said the improvements in operating performance and the strong order book mean the company is on track to meet its own expectations for the year as a whole. He reiterated the medium-term targets he set out in July.
"Since taking up the CEO role on 1 July, we have reviewed and refreshed the group's strategy, Vision 2020, a strategy for sustainable profitable growth. This strategy will see the group aim to deliver double-digit compound annual profit growth for the period to 2020 and to be a top three in our chosen markets," he said.
The company said its construction and services order books stood at GBP6.2 billion at the end of June, up from GBP4.3 billion a year earlier, representing more than 90% of secured and probable orders for 2015, up from 88% a year earlier.
Its swung to a net debt position due to the May Gurney acquisition and investments it made in new development schemes, housing land and affordable housing work. Net debt was GBP123 million at the end of the year, compared with a net cash position of GBP60 million a year earlier.
Mursell did warn that the company was feeling pressure on margins due to rising input costs, but said it was confident in its prospects.
"While the economic climate continues to be positive, operating margins are under pressure due to inflationary cost increases in the supply chain. Cash generation will continue to be constrained in the short-term. However, strong risk management and our ability to offer a greater range of service offerings positions us well for the future," he said.
The pressure on margins in property and construction was evident in the divisional results.
The company's revenue grew 19% in its property and residential division, while operating profit was up just 2%; revenue grew 22% in construction, while operating profit grew 11%. Its services unit fared better thanks to the May Guerney acquisition, with revenue up 4% but underlying operating profit up 12%.
By Steve McGrath; [email protected]; @stevemcgrath1
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