4th Jul 2016 06:24
LONDON (Alliance News) - Kier Group PLC on Monday said its underlying trading performance has remained in line with management's expectations, and it has seen no impact to date from the UK's vote to leave the European Union.
The FTSE 250 property, construction and services company said its net debt position on June 30 stood at GBP140.0 million, which was better than the forecast range of GBP150.0 million to GBP170.0 million, and equated to a net debt to earnings before interest, tax, depreciation and amortisation ratio of less than 1, ahead of Kier's Vision 2020 goal of a ratio of 1 by June 30, 2017.
Kier said its UK-based infrastructure and business services company Mouchel is performing well, and noted Mouchel's services operations have been integrated with Kier's facilities management operations, creating Kier Workplace Services, which should deliver cost savings of GBP4.0 million in the full year 2016 ended June 30. Kier said the integration is expected to deliver cost savings of GBP5.0 million in the following year.
Kier said a simplification of its business remained a priority, and a review has been undertaken of those operations which do not meet the group's strict financial hurdles or do not provide a long-term strategic fit with Kier's core businesses. As such, an evaluation of the strategic options for the Mouchel Consulting business, including a possible sale, will be undertaken in the coming months, it said.
In construction, Kier said the trading environment remains difficult in the Caribbean and, as a result, activities in the region are being wound down. In Services, the financial performance of the Environmental Services business continues to be affected by the low oil price and, consequently, the price of recyclates, despite stable operational performance at contract level, Kier said. This has meant a provision of GBP35.0 million will be taken in its financial year ended June 30.
Kier said current trading is positive and the group noted that, while there is some uncertainty resulting from the EU referendum, there has been no impact on Kier to date.
"The board, however, believes the group's breadth of activities and strong order books provide both visibility and resilience," Kier said in a statement, noting that the acquisitions of May Gurney and Mouchel have significantly increased the level of visible, long-term earnings from its Construction and Services divisions.
Meanwhile, Kier added the Property division has a healthy pipeline of projects totalling more than GBP1.00 billion, largely comprising non-speculative schemes, and the Residential division's mixed tenure business has a pipeline of over GBP600.0 million.
By Hannah Boland; [email protected]; @Hannaheboland
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Kier