15th Sep 2005 07:00
Kier Group PLC15 September 2005 KIER GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2005 • 13th successive year of growth in profits • Pre-tax profits, including exceptional profits of £6.7m, up 39.8% to £60.4m* (2004: £43.2m*) • EPS, before exceptional profits, up 20.9% to 105.4p* (2004: 87.2p*) • Dividend increased by 16.8% to 22.2p (2004: 19.0p) • £86.4m of cash generated from operating activities • Construction and Support Services order books at record levels • The Homes order book together with unit completions to 31 August 2005 secure 43% of full year budgeted unit sales *Results are shown before deducting £2.5m (2004: £2.6m) relating to goodwillamortisation. After deducting goodwill amortisation results are: • Pre-tax profits, including exceptional profits of £6.7m, up 42.6% to £57.9m (2004: £40.6m) • EPS, including exceptional profits, up 31.0% to 106.8p (2004: 81.5p) Commenting on the results Peter Warry, Chairman of Kier Group, said: "This is the first set of full year results under my chairmanship and I ampleased to be announcing another record level of turnover and profits for theyear to 30th June 2005, the 13th successive year of profits increase, withgrowth across all divisions. "We enter this year with record levels of work in hand in Construction andSupport Services and a satisfactory order book in Homes. Our integrated businessmodel continues to provide competitive advantage. I therefore anticipate furtherprofitable growth in the current year." Chairman's statement This is the first set of full year results under my chairmanship and I ampleased that we have continued the pattern that was established under ColinBusby's stewardship with yet another record level of turnover and profit for theyear to 30 June 2005, the 13th successive year of profits growth. Pre-tax profits before exceptional items and goodwill have increased by 24.3% on2004; construction awards were the highest ever at £1,372m (2004: £931m) and,once again, cash generation has been excellent with £86.4m produced fromoperations. Financial performance A strong performance was achieved in all the divisions. Turnover grew by 9.8%to £1,621.4m (2004: £1,476.5m), operating profit, after deducting goodwillamortisation rose 25.4% to £53.4m (2004: £42.6m) and profit before tax (beforeexceptional profits) increased by 26.1% to £51.2m. The year end net cash balancewas £58.1m (2004: £7.6m). Exceptional profits of £6.7m (2004: £nil) comprise £2.1m arising on the sale ofour investment in the Neath Port Talbot Hospital concession, £3.8m on the saleof a fixed asset property and £0.8m arising on the sale of our remaininginterest in Kier Hong Kong. Tax of £1.8m has been charged on the combinedprofit. In addition, whilst no profit has been recognised, an exceptional taxcharge of £2.5m has arisen following refinancing and subsequent £8.1m cashextraction from the PFI investment vehicle for Hairmyres Hospital. Basicearnings per share, after all exceptional items, increased by 31.0% to 106.8p(2004: 81.5p). Adjusted earnings per share before goodwill amortisation andexceptional items increased by 20.9% to 105.4p (2004: 87.2p). The Board proposes a final dividend for the year ended 30 June 2005 of 15.2p(2004: 13.0p) making 22.2p for the year (2004: 19.0p) an increase of 16.8% andcovered 4.7 times by earnings per share before goodwill amortisation andexceptional items. The dividend will be paid on 6 December 2005 to shareholderson the register on 30 September 2005 and there will be a scrip alternative. Shareholders' funds increased by £31.0m to £147.4m (2004: £116.4m). Pre-taxreturn on shareholders' funds was 43.9%, having been sustained at around thislevel for the last eight years. International Financial Reporting Standards ('IFRS') This is the last set of results reported upon under UK Generally AcceptedAccounting Practice. The interim results to 31 December 2005 and those thatfollow will be reported upon under IFRS. The results for the year to 30 June2005 have also been restated under IFRS and, together with the restated balancesheet at 30 June 2005 and selective notes are disclosed in a separateannouncement released today. The key points relating to the restatement are:- • The transition to IFRS has no impact on business operations, cash, financing or our ability to pay dividends; • There is no impact on the profit recognition policy for Construction or Support Services and only minor impact on profit recognition for Housebuilding and Property; and • The most significant effect of IFRS is in accounting for pensions which reduces stated net assets. The Kier Group Board I am pleased to announce that, with effect from 1 October 2005, Ian Lawson,managing director of Kier Support Services, and Paul Sheffield, deputy managingdirector of Kier Regional, will be joining the Board. Ian returned to the Groupfive years ago as managing director of our Infrastructure Investment business,having previously worked for Kier International. He joined the Regional board in2003 and the Support Services board in 2004. Paul joined the Group as a graduateengineer 22 years ago. He has worked in the UK and overseas and was appointedmanaging director of Kier Construction in 2001, chairman of Kier Construction in2003 and joined the Regional board in 2004. I am looking forward to working withIan and Paul and am confident that they will both contribute strongly to theBoard and to the future direction of the Group. The Residential board Following the restructuring of the Residential board we have appointed MichaelO'Farrell, previously managing director of our subsidiary Allison Homes, asmanaging director of Kier Residential reporting to the Kier Group Board throughthe chief executive, John Dodds. With Mick's broad experience in housebuildingI am confident that he will make a significant contribution to the future growthof the Residential business. Prospects and markets We enter the year with record levels of work in hand in Construction and SupportServices and a satisfactory order book in Homes. Our integrated business modelcontinues to provide competitive advantage. I therefore anticipate furtherprofitable growth in the current year. Chief Executive's review The year has been an extremely busy one for Kier with record turnover and profitlevels achieved by all the divisions. A growing proportion of our work has beensecured from repeat business and negotiated contracts and an increasing amountis being generated from development schemes where two or more of the divisionswithin the Group are working together. An example of this is at Whitehall wherethe office development for DEFRA was completed during the year by Kier Build,working for developer Kier Property, with Kier Managed Services carrying out thefacilities management function. Further examples include PFI projects and otherschemes involving Kier Residential and Kier Partnership Homes. This rareoffering of a total solution to clients' increasingly complex requirements isproviding us with some unique opportunities and an ability to attract newclients. I am confident that further value can be achieved from these markets. Construction The full-year results for the Construction segment have been analysed separatelyfrom those of Support Services for the first time. Our Construction segmentincludes Kier Regional, comprising Regional Contracting, Affordable Housing andMajor Building Projects, and Kier Construction our Infrastructure and Overseasoperation. Turnover from the Construction segment reached £1,096.2m, 8.8% up on2004's £1,007.3m, fuelled by a good market and a strong supply of public sectorwork. Operating profit, before goodwill amortisation, increased by 35.7% to£15.6m (2004: £11.5m) and the operating margin increased from 1.1% to 1.4%.Cash generation has been exceptionally strong with cash balances at 30 June 2005over £50m higher than the previous year end and average cash balances for theyear £34m ahead. Contract awards were at a record £1,372m (2004: £931m)including a number of long-term framework contracts, providing a record orderbook of £1,030m at 30 June 2005 (2004: £662m). The year to 30 June 2005 saw a number of records for Kier Regional: turnover at£954.6m was 10.0% ahead of 2004; year end cash balances of £205m were £36mahead; and contract awards at £1,018m compare favourably with the previousrecord set in 2004 of £845m. The strength of Kier Regional lies in its wide network of UK constructionbusinesses which combine local knowledge with national presence enabling it torespond to a wide range of markets and sectors. Through strategic alliances andframeworks with public sector clients it delivers a co-ordinated service throughKier Health, for ProCure 21; Kier Custodial, for prisons; and Kier Education,for Building Schools for the Future. Other local authority and housingassociation frameworks have also been established including those to deliveraffordable housing. These frameworks and strategic alliances have contributed toan increase in public sector awards to 41% of the total, compared with 36% in2004. In the private sector, where commercial and retail awards dominate,similar frameworks exist, for example, through Kier Retail, for clients such asTesco, Waitrose and Morrisons. The proportion of total awards from negotiatedand two-stage bids has increased to 59% in 2005 from 52% in 2004. Kier Regional has started the new financial year with an order book of £647m(2004:£511m) comprising largely shorter-term contracts at an average value of£2.6m which provides protection against building cost inflation and maintains alow risk profile, a strategy that has been key to the success of this business.With this type and value of work in hand and a large volume of contracts pendingaward we anticipate further growth in the business during this financial year. In the UK, the civil engineering arm of Kier Construction successfully completeda major section of the Channel Tunnel Rail Link and secured a Network RailStructures Framework contract for the East Anglia region which is expected toprovide £100m of work over five years. The water sector has provided furtherwork through our second five year framework agreement with United Utilities, injoint venture, which will provide £130m of work for Kier over the period. Ourprivate opencast coal mine at Greenburn has now completed its first full year ofproduction. So far 750,000 tonnes have been mined and over 60% of that remainingin the ground has been forward sold at favourable, fixed prices. Possibleextensions to the mine are being explored which could extend the period ofactivity beyond the current anticipated completion date of 2009. Overseas, our activities in the Caribbean are thriving with the award of a newhotel contract for Sandals in Antigua and a transportation centre in Kingston,Jamaica. Our long term alliance with Alcoa continues on projects at aluminarefineries in Suriname and Jamaica and we are set to play a further major rolein Alcoa's worldwide capital expansion plans. During the year we sold ourremaining shares in Kier Hong Kong which provided an exceptional profit of£0.8m. We maintain our relationships with local Hong Kong contractors which may,in time, lead to future joint venture opportunities in the Far East. Support Services Our Support Services business continues to prosper. Overall turnover increasedby 15.1% to £227.5m (2004: £197.7m) and operating profit, after goodwillamortisation, rose to £3.2m; before goodwill it was £5.1m (2004: £4.7m)representing a margin of 2.2%. A number of contracts were awarded during theyear resulting in a record order book of £1.2bn at 30 June 2005 (2004: £1.1bn). Building Maintenance successfully implemented the Leeds North West and LeedsSouth repair and maintenance contracts with a combined value of over £10m perannum for the next five years, extendable for a further five. Kier Sheffieldadded to its, already successful, building maintenance contract by securing ashare of the Sheffield Decent Homes framework contract which will provide uswith around £160m of work over seven years. Other Decent Homes frameworkcontracts were awarded at Islington for £40m and Greenwich for £7.5m, both overfive years. New work is plentiful in this sector and we are hopeful of furtherawards in the current financial year. In Managed Services the portfolio of services provided under the Private FinanceInitiative continues to grow with the start of services at Essex, Harrow,Waltham Forest and Bexley Schools. We were pleased to have won Best OperationalHealth Scheme in the UK for Neath Port Talbot Hospital in the Public PrivateFinance Awards for the standard of service provided to clients and the award forBest Operational Education Project for Pembroke Dock Community School. Homes Kier Residential came forward at 1 July 2004 with an exceptionally strong orderbook which provided a high level of unit sales for the six months to 31 December2004. As predicted the number of unit sales was lower in the second half of theyear. Full year completions of 1,215 were 4.9% ahead of 2004's 1,158 at anaverage selling price of £181,700 (2004: £186,300) which provided turnover of£220.8m (2004: £215.7m) from housing sales. A land disposal, planned as part ofa larger site, generated a further £4.7m of turnover at no profit or loss. Thereduction in average selling prices year on year reflects both a 7% reduction inaverage unit size and an increase in the proportion of affordable housing salesfrom 5% of total sales in 2004 to 12% in 2005. Operating profit increased by 7.2% to £34.1m (2004: £31.8m) at a margin of 15.4%on housing turnover (2004: 14.7%), benefiting during the period from a largestrategic site at Royston which is now complete. Our Scottish based businesscontributed strongly to the growth following the restructuring and strengtheningof the local management team and assisted by a sound market. During the year £69m was spent on selective land purchases and in June 2005 weacquired the land and work in progress of Ashwood Homes, in an off-market deal,for £23.5m of which £8.5m is deferred. Nine sites, located in Lincolnshire andCambridgeshire, were acquired in the transaction comprising 389 units withplanning consent. At 30 June 2005 the land bank contained 5,178 units withplanning consent (2004: 4,961) representing slightly more than our targetholding of four years' unit sales. At 30 June 2005 we held approximately 12,000units of strategic land, mostly under option, after achieving planning consentduring the year for 550 units on a former Anglian Water site near the centre ofPeterborough. Significant planning progress has also been made in delivering asite at Aylesbury, part of a mixed-use development area, which should provide uswith 400 units for development. Strategic land is proving a valuable route forland acquisition. Historically approximately 18% of our annual unit sales haveoriginated from this process. Kier Residential is making good progress at Poole Harbour where contracts havebeen exchanged with Network Rail on a six acre mixed-use development site. Workis about to commence, in conjunction with Kier Construction and Kier Property,to deliver a new hotel, 250 apartments and a new railway station. Othermixed-use projects include the former Shippams paste factory site in Chichesterwhere planning consent has been granted for 165 apartments and 50,000sq ft ofretail units for redevelopment in conjunction with Kier Property and KierRegional. The holiday period has, as always, resulted in fewer visitors to our sites,however, the quality of those visitors has improved. Although purchasers aretaking longer to make their decision, we have taken more reservations in the twomonths to 31 August 2005 than in the same period last year. Taken together theorder book and completions to date are at a marginally lower level than lastyear reflecting the strong brought forward position at 1 July 2004. We will beselling from around 18% more outlets during the year compared with the year to30 June 2005 and therefore we anticipate growth in unit sales for the full yearof which 43% are already secure. The balance of unit sales is expected to bemore heavily skewed towards the second half of the year than 2005. Property Kier Property continues to establish itself as one of the UK's leadingcommercial property developers. It has a development pipeline totalling 4m sqft of space including offices, industrial, retail and mixed-use schemes with afuture sales value of nearly £700m developed directly and through joint venture.In the year to 30 June 2005 Kier Property achieved a 29.6% increase inturnover to £60.4m (2004: £46.6m) and a 51.5% increase in operating profit to£10.0m (2004: £6.6m). The completion, by contractors Kier Regional, of theoffice developments at Whitehall for DEFRA and at Swindon for the National Trustduring the year contributed strongly to the results. Also in the offices sectorthe 100,000sq ft head office for BAE subsidiary AMS was completed at FrimleyBusiness Park and plans are in preparation for a further 300,000sq ft officescheme in the same location. Under the Trade City industrial brand we acquired a site at Enfield for up to50,000sq ft of industrial space and completed our sites at Bicester, Exeter andRomford. In the retail sector we completed a further 75,000sq ft resource recovery unitat Waltham Park for Sainsbury adjacent to the 700,000sq ft distribution centrecompleted for the same client some time ago. Further investment in retailincluded the acquisition of the 100,000sq ft Mannington Retail Park in Swindonwhich is let to national occupiers and includes valuable redevelopment andrefurbishment opportunities. In Reading town centre a 22 storey residential and retail development has beengiven the go-ahead and at Sunbury consent has been granted for a new hotel and90 flats near to Kempton racecourse. More mixed-use opportunities are being bidfor in conjunction with Kier Residential as well as other office, retail andindustrial sites. In order to fund further expansion the bank facilities withinthe joint venture with the Bank of Scotland have been increased to £162m. Infrastructure Investment Our infrastructure investment business has continued to successfully bid and winwork by drawing together the Group's PFI, construction and services activitiesunder the banner of Kier. This formula has been a key factor in much of oursuccess to date. Financial close was reached on a £50m scheme for Sheffield City Council in May2005, our third schools project. Kier Regional has started construction on thefour new schools and on completion Kier Managed Services will provide theservices for the 25-year term. Our fourth schools project achieved preferredbidder status in July 2005 for five new schools and the refurbishment of oneschool in Norfolk. In health our fifth project was awarded preferred bidderstatus in February 2005 for a treatment centre in Ipswich. Upon financialclose, expected in the New Year, Kier Regional will carry out the £26mconstruction project and Kier Managed Services will maintain it for 30 yearsafter completion. Our response to the Building Schools for the Futureinitiative is brought together under the Kier Education banner which achievedits first short-listing, in July 2005, as one of three bidding to Sheffield CityCouncil. As well as investing in new projects this year we have been developing thereturns from our current portfolio. In August 2004 we refinanced our first PFIproject, Hairmyres Hospital which provided us with £8.1m of cash aftercontributing 30% of the gain to the Lanarkshire Health Board. No profit can berecognised on the gain unless we dispose of the investment but tax is payableresulting in an exceptional tax charge of £2.5m in the accounts. In December2004 we disposed of our 25.5% investment in the Neath Port Talbot Hospitalconcession to Secondary Market Infrastructure Fund UK LP. We received a cashconsideration of £5.0m on the sale and generated an exceptional profit of £2.1m. Following this disposal our portfolio of investments comprises 12 projects witha committed investment of £20.3m. As the secondary market for these investmentsdevelops there may be opportunity to realise future value from the portfolio. Pensions The FRS 17 deficit in the Kier Group Pension Scheme, after accounting fordeferred tax, has increased during the year from a net £67.2m to £82.6m at 30June 2005. The market value of the scheme's assets rose by 21% whilst thepresent value of liabilities increased by 21%, largely resulting from a 0.9%reduction in the discount rate compared with the previous year. The assumptionsfor longevity have also changed contributing to an increase in the deficit. TheGroup has continued to take a responsible approach to the funding requirementsof the pension fund and in March 2005, using the cash proceeds from refinancingthe Hairmyres PFI investment and the sale of the investment in the Neath PortTalbot Hospital concession, the Group made a £12.0m special cash contribution tothe pension fund, without which the deficit in the fund would have been greater.Under current accounting standards this contribution has no impact onoperating profits and is treated as a prepayment in the accounts. Other changes have been made to the way in which pension contributions are madewhich will result in savings to the Group and which are being contributed to thepension fund in addition to normal requirements. Health & Safety In an industry where incidents and accidents still occur, Kier Group health &safety standards are an integral part of the management process. The Groupremains focused on the continuous improvement of health & safety standardsthroughout all parts of the business and supply chain and is determined to playits part in creating an industry that presents a healthy and safe workingenvironment and is an attractive prospect for the employment of futuregenerations. The Group's Accident Incidence Rate is 598 per 100,000 staff andsubcontractors, comparing favourably with the Health & Safety Executivebenchmark of 1,023. The positive attitude displayed toward health & safety by Kier companies led tothe award of one bronze, one silver and 17 gold RoSPA awards and 13 BritishSafety Council Awards. We were also delighted that Kier Building Maintenance wonthe RoSPA Behavioural Safety and Best Practice award which is a greatachievement. Kier people I should like to thank each and every one of our employees for theircontribution to the advancement of the Group. It is the continuing commitment,innovation, professionalism and integrity of our people that has made the Groupthe success it is today and I am confident that the high quality of our teamswill take the Group forward to achieve further growth in the future. Summary and prospects Kier has had a very successful year, with strong performances achieved in allthe divisions. Looking forward the Group is in excellent shape to continue itsadvancement. The Construction order book is at record levels containing a highproportion of good quality negotiated work and framework contracts. The localauthority building maintenance outsourcing sector continues to provide ourSupport Services division with good opportunities. In Homes our land bankconsists of sites capable of delivering the right product in the right locationwhich should provide further growth in unit sales this year. In Property ourportfolio of office, retail and industrial developments continues to enhancevalue and we are investing further in new schemes; and in InfrastructureInvestment we have developed a good pipeline of projects and remain committed tothe Government's Private Finance Initiative. More opportunities are beingpresented to us where we are able to involve the many disciplines in the Groupto provide mixed-use solutions to clients and a total in-house service. Ours is a long-term business with firm foundations in place and I am confidentthat the Group will continue to deliver further growth in 2006 and beyond. For further information, please contact: John Dodds, Chief ExecutiveKier Group plc Tel: 01767 640111 Deena Mattar, Finance DirectorKier Group plc Tel: 01767 640111 Caroline SturdyMadano Partnership Tel: 020 7378 7033 Consolidated profit and loss accountfor the year ended 30 June 2005 Notes 2005 2004 £m £m Turnover - Continuing operationsGroup and share of joint ventures 2 1,621.4 1,476.5Less share of joint ventures' turnover (48.4) (32.4) ------------ ------------Group turnover 1,573.0 1,444.1 Cost of sales (1,430.7) (1,315.1) ------------ ------------Gross profit 142.3 129.0 Administrative expenses (93.7) (89.6) ------------ ------------Group operating profit - Continuing operations 48.6 39.4 Share of operating profit - joint ventures 4.8 3.2 ------------ ------------Operating profit: Group and share of joint ventures 2 53.4 42.6 Exceptional items 3 6.7 - ------------ ------------ Profit on ordinary activities before interest and taxation 60.1 42.6Net interest receivable/(payable) - Group 0.9 (0.2)Net interest payable - joint ventures (3.1) (1.8) ------------ ------------Profit on ordinary activities before taxation 2 57.9 40.6 Taxation on profit before exceptional items 4 (15.8) (12.0)Taxation on exceptional items 3 (4.3) - (20.1) (12.0) ------------ -----------Profit for the year 37.8 28.6 Dividends 5 (7.9) (6.8) ------------ ------------Retained profit for the Group and its share of jointventures 29.9 21.8 ------------ ------------Earnings per Ordinary Share 6- basic 106.8p 81.5p- diluted 105.9p 80.8p ------------ ------------Adjusted Earnings per Ordinary Share 6(before exceptional items and goodwill amortisation)- basic 105.4p 87.2p- diluted 104.5p 86.4p ------------ ------------Dividend per Ordinary Share 22.2p 19.0p ------------ ------------ All items in the profit and loss account relate to operations continuing as at30 June 2005. Group operating profit includes a charge of £2.5m for the amortisation ofgoodwill (2004: £2.6m). Consolidated balance sheetat 30 June 2005 Notes 2005 2004 £m £mFixed assetsIntangible assets - goodwill 16.1 18.6Tangible assets 75.8 68.9Investments Investments in joint ventures Share of gross assets 218.3 194.8 Share of gross liabilities (221.8) (190.7) Loans provided to joint ventures 27.3 28.1 ------------- ------------- Investment in joint ventures 23.8 32.2 ------------- ------------- 115.7 119.7 ------------- ------------- Current assetsStock 334.2 328.6Debtors 259.9 231.2Cash at bank and in hand 93.5 41.4 ------------- ------------- 687.6 601.2 ------------- -------------Current liabilitiesCreditors - amounts falling due within one year (587.3) (530.7) ------------- -------------Net current assets 100.3 70.5 ------------- ------------- Total assets less current liabilities 216.0 190.2 Creditors - amounts falling due after more than one year (48.3) (58.5) Provisions for liabilities and charges (20.3) (15.3) ------------- -------------Net assets 2 147.4 116.4 ============= ============= Capital and reservesCalled up share capital 0.4 0.4Share premium account 17.9 17.1Capital redemption reserve 2.7 2.7Share scheme reserve (0.2) (0.4)Profit and loss account 126.6 96.6 ------------- -------------Equity shareholders' funds 7 147.4 116.4 ============= ============= Consolidated cash flow statementfor the year ended 30 June 2005 Notes 2005 2004 £m £m Net cash inflow/(outflow) from operating activities 8(a) 86.4 (3.7) ------------ ------------Dividends received from joint ventures 0.4 0.3 ------------ ------------Returns on investments and servicing of financeInterest received 2.5 1.4Interest paid (2.6) (2.8)Interest on loans to joint ventures 1.2 2.0 ------------ ------------ 1.1 0.6 ------------ ------------Taxation paid (12.8) (11.5) ------------ ------------Capital expenditure and financial investmentPurchase of tangible fixed assets (19.9) (21.5)Sale of tangible fixed assets 6.0 2.8 ------------ ------------ (13.9) (18.7) ------------ ------------Acquisitions and disposals 8(c) (4.1) (17.2) ------------ ------------Equity dividends paid (6.4) (5.5) ------------ ------------Cash inflow/(outflow) before use of liquid resources andfinancing 50.7 (55.7) Management of liquid resourcesNet decrease in short-term bank deposits 16.1 20.7 ------------ ------------FinancingIssue of ordinary share capital 0.2 1.4Purchase of own shares (0.4) (0.1) ------------ ------------ (0.2) 1.3 ------------ ------------Increase/(decrease) in cash during the year 66.6 (33.7) ------------ ------------ Reconciliation of net cash flow to movement in net fundsIncrease/(decrease) in cash 66.6 (33.7)Decrease in liquid resources (16.1) (20.7) ------------ ------------ Movement in net funds in the year 50.5 (54.4)Cash, net of debt on 1 July 7.6 62.0 ------------ ------------ Cash, net of debt at 30 June 8(b) 58.1 7.6 ============= ============= 1. Accounting policies There have been no changes to accounting policies in these financial statements.They are prepared in accordance with UK Generally Accepted Accounting Practice. 2. Turnover, profit and segmental information Segmental analysis of the results is shown below: Turnover Operating profit Profit before tax 2005 2004 2005 2004 2005 2004 £m £m £m £m £m £m Construction 1,096.2 1,007.3 15.0 10.9 26.4 19.0 Support Services 227.5 197.7 3.2 2.7 3.0 2.2 Homes 225.5 215.7 34.1 31.8 24.7 24.5Property 60.4 46.6 10.0 6.6 7.2 5.0Infrastructure Investment 11.8 9.2 (0.9) (1.9) 1.4 (1.3)Corporate overhead/finance - - (8.0) (7.5) (4.8) (8.8) ----------- ----------- ----------- ----------- ----------- ----------- 1,621.4 1,476.5 53.4 42.6 57.9 40.6 =========== =========== =========== =========== =========== =========== Operating profit and profit before tax is after deducting the amortisation ofgoodwill in Construction of £0.6m (2004: £0.6m) and in Support Services of £1.9m (2004: £2.0m). Net operating assets Net assets 2005 2004 2005 2004 £m £m £m £m Construction (175.1) (132.6) 66.6 59.0Support Services (6.3) 10.6 8.1 7.3Homes 248.4 201.3 62.9 53.6Property 24.3 24.8 11.7 8.1Infrastructure Investment (1.7) 9.0 (3.7) (1.8)Corporate overhead/finance (0.3) (4.3) 1.8 (9.8) ------------ ------------ ------------ ------------ 89.3 108.8 147.4 116.4 ============ ============ ============ ============ Net operating assets represent assets excluding cash, bank overdrafts, long-termborrowings and interest-bearing inter-company loans. Operating profit and profit before tax for Support Services and corporateoverhead/finance have been adjusted to reallocate costs of bidding for SupportServices contracts from corporate overhead/finance to Support Services. Theadjustment is £2.0m in the year to June 2004. Profit before tax for the year to30 June 2005 includes: an exceptional profit of £0.8m relating to the sale of aninvestment in Construction, an exceptional profit of £2.1m relating to the saleof an investment in a PFI joint venture in Infrastructure Investment; and anexceptional profit of £3.8m relating to the sale of a fixed asset property incorporate overhead/finance. 3. Exceptional items Exceptional items for the year to 30 June 2005 arise from the following: Profit Tax Net profit/ before tax (loss) £m £m £m Disposal of investment in Kier Hong Kong Limited 0.8 - 0.8Disposal of investment in a PFI joint venture 2.1 (0.6) 1.5Refinancing of a PFI joint venture - (2.5) (2.5)Disposal of a fixed asset property 3.8 (1.2) 2.6 -------- -------- --------- 6.7 (4.3) 2.4 ======== ======== ========= 4. Analysis of taxation charge 2005 2004 £m £m Taxation on profit before exceptional items 15.8 12.0Taxation on exceptional items 4.3 - ----------- -----------Total taxation charge 20.1 12.0 ----------- -----------Current taxUK corporation tax on profit before exceptional items at 11.7 10.830%UK corporation tax on exceptional items 4.3 -Joint venture tax 0.6 0.1Overseas tax 0.3 0.5Adjustments in respect of previous years 0.4 0.6 ----------- -----------Total current tax 17.3 12.0 ------------ ------------Deferred taxOrigination and reversal of timing differences 2.8 0.3Joint venture tax 0.4 (0.3)Adjustments in respect of previous years (0.4) - ------------ ------------Total deferred tax 2.8 - ------------ ------------Total tax on profit on ordinary activities 20.1 12.0 ------------ ------------ 5. Dividends 2005 2004 £m £mOrdinary Shares Paid 7.0 pence (2004: 6.0 pence) 2.5 2.2 Proposed 15.2 pence (2004: 13.0 pence) 5.4 4.6 ------------ ------------ 7.9 6.8 ============ ============ 6. Earnings per share Earnings per share is calculated as follows: 2005 2004 Basic Diluted Basic Diluted £m £m £m £m Profit after tax 37.8 37.8 28.6 28.6Less: exceptional items (6.7) (6.7) - -Add: tax on exceptional items 4.3 4.3 - - ----------- ------------ ------------ ------------Profit after tax before exceptional items 35.4 35.4 28.6 28.6Add: goodwill amortisation 2.5 2.5 2.6 2.6Less: tax on goodwill amortisation (0.6) (0.6) (0.6) (0.6) ----------- ------------ ------------ ------------Adjusted profit after tax 37.3 37.3 30.6 30.6 ----------- ------------ ------------ ------------ Million Million Million MillionWeighted average number of shares 35.4 35.4 35.1 35.1Weighted average number of unexercised options- dilutive effect - 0.1 - 0.1Weighted average impact of LTIP - 0.2 - 0.2 ----------- ------------ ------------ ------------Weighted average number of shares used for EPS 35.4 35.7 35.1 35.4 ----------- ------------ ------------ ------------ Pence Pence Pence PenceEarnings per share (based on net profit for 106.8 105.9 81.5 80.8the year) ----------- ------------ ------------ ------------Adjusted earnings per share (before exceptional 100.0 99.2 81.5 80.8items) ----------- ----------- ------------ ------------Adjusted earnings per share (before exceptional 105.4 104.5 87.2 86.4items and goodwill amortisation) ----------- ----------- ------------ ------------ 7. Reconciliation of movements in shareholders' funds £m Profit for the year 37.8Dividends (7.9) ------------Retained profit for the year 29.9Currency translation 0.1Issue of shares 0.8Movement in share scheme reserve 0.2 ------------Net additions to shareholders' funds 31.0 Opening shareholders' funds 116.4 -----------Closing shareholders' funds 147.4 ----------- 8. Cash flow notes a) Reconciliation of operating profit to operating cash flows 2005 2004 £m £m Group operating profit 48.6 39.4Amortisation of goodwill 2.5 2.6Depreciation charges 12.3 8.1Profit on sale of fixed assets (0.5) (1.3)Decrease/(increase) in stocks 18.5 (52.1)Increase in debtors (28.7) (26.2)Increase in creditors 31.9 27.9Increase/(decrease) in provisions 1.8 (2.1) ----------- -----------Net cash inflow/(outflow) from operating activities 86.4 (3.7) =========== =========== b) Analysis of changes in net funds 1 July 2004 Cash flows 30 June 2005 £m £m £m Cash at bank and in hand 11.1 68.2 79.3Bank overdrafts (3.7) (1.6) (5.3)Short-term bank deposits 30.3 (16.1) 14.2Long-term borrowings (30.1) - (30.1) ------------- ------------- -------------Cash, net of debt 7.6 50.5 58.1 ============= ============= ============= Cash, net of debt includes £6.2m (2004: £10.2m) being the Group's share of cashand liquid resources held by joint arrangements and £16.6m (2004: £13.6m) ofcash not readily available to the Group. c) Acquisitions and disposals 2005 2004 £m £m Investment in subsidiary undertakings (16.5) (17.0)Disposal of investment in Kier Hong Kong Limited 0.8 -Disposal of investment in PFI joint venture 5.0 -Refinancing of PFI joint venture 8.1 -Investment in joint ventures (1.5) (0.2) ------------- ------------- (4.1) (17.2) ============= ============= 9. Statutory Accounts The financial information set out above does not constitute statutory accountsfor the years ended 30 June 2005 or 2004 but is derived from those accounts. Statutory accounts for 2004 have been delivered to the Registrar of Companiesand those for 2005 will be delivered following the Company's Annual GeneralMeeting. The auditors have reported on those accounts, their reports wereunqualified and did not contain statements under section 237 (2) or (3) of theCompanies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kier