19th Mar 2007 07:01
Kier Group PLC19 March 2007 19 March 2007 KIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2006 • Pre-tax profits up 27.5% to £36.2m (2005: £28.4m) • EPS* up 26.3% to 75.8p (2005: 60.0p) • Dividend increased by 17.1% to 9.6p (2005: 8.2p) • Net funds of £114.4m at 31 December 2006 (2005: £87.6m) • Construction and Support Services order books at strong levels • Homes order book over 50% ahead of last year with over 80% of projected full year unit sales secure * adjusted for amortisation of intangibles Commenting on the results, John Dodds, Chief Executive, said: "Our businesses are continuing to flourish, benefiting from public sectorspending in Construction and Support Services, continued demand for housing inHomes and a sustained appetite by investors for good quality properties atexcellent yields in our Property division. "The prospects for Kier Group are excellent. There continues to be ampleopportunity in all of the markets in which we operate, our order books are full,our balance sheet is strong and we have very capable management teams in place.All of this leads me to anticipate further profitable growth." For further information, please contact: John Dodds, Chief Executive Deena Mattar, Finance Director Kier Group plc Tel: 01767 640 111 Caroline Sturdy Madano Partnership Tel: 020 7593 4000 Chief Executive's Review Overview I am pleased to report that Kier Group plc has delivered another strong set ofresults for the six months to 31 December 2006 in a busy period that has seenrecord levels of revenue in each of our principal divisions: Construction,Support Services and Homes. Our businesses are continuing to flourish, benefiting from public sectorspending in Construction and Support Services, continued demand for housing inHomes and a sustained appetite by investors for good quality properties atexcellent yields in our Property division. Our Construction order book at 28February 2007 is robust at £1,196m; in Support Services the two recent majorbuilding maintenance contract wins in Harlow and Sefton have contributed to arecord order book of £1,589m at 28 February 2007 and in Homes, activity in ourmarkets has been encouraging, resulting in our order books at 28 February 2007being over 50% ahead of last year. In Property, opportunity remains plentifuland we were pleased to achieve financial close on a large project for OrdnanceSurvey earlier this month. Financial results Revenue for the six months to 31 December 2006 was at a record £1,020.5m (2005:£922.6m) and 10.6% ahead of last year; operating profit after the amortisationof intangible assets and joint venture interest and tax was 26.9% ahead at£36.3m (2005: £28.6m) and pre-tax profit was 27.5% ahead at £36.2m (2005:£28.4m) benefiting from growth across all divisions, particularly Property,where the majority of property sales targeted for the financial year have beenachieved in the first half. Earnings per share, adjusted for the amortisation ofintangibles, increased by 26.3% to 75.8p (2005: 60.0p). The results for the period are underpinned by strong cash balances, with £44.7mgenerated from operating activities (2005: £43.4m). Net funds at 31 December2006 were £114.4m, compared with £111.2m at 30 June 2006 and £87.6m at 31December 2005. The Construction division maintained strong cash balances in theperiod on average £47m ahead of last year and generated £23.7m in the six monthperiod. The Board has declared an interim dividend of 9.6p (2005: 8.2p), an increase of17.1% on last year continuing the growth record of 15% or more per annumachieved since 1997. The dividend is 7.7 times covered by earnings per share andwill be paid to shareholders on 18 May 2007 with the usual scrip alternative. Construction The Construction segment comprises Kier Regional and Kier Construction. KierRegional encompasses our ten regional contracting businesses, affordable housingand major projects. Kier Construction includes the Group's infrastructure andoverseas operations with civil engineering, rail, mining and remediationcapability. Overall revenue increased by 11.8% to £675.2m (2005: £603.7m) with good growthin both Kier Regional and Kier Construction. Operating profit increased by 15.9%to £9.5m (2005: £8.2m), maintaining the operating margin at 1.4% (2005: 1.4%).The order book at 28 February 2007 was £1,196m (2006: £1,057m) supported by astrong pipeline of orders which are close to being confirmed, leading us toexpect overall volume growth for the year. Kier Regional continues to see improvements in its key performance measures ofrevenue, profit margins and cash. It started the new financial year with a highlevel of orders on hand which converted to a record level of revenue in the sixmonths to 31 December 2006. Margins have continued to improve across thebusiness and the cash performance remains strong with average cash balancesaround £40m higher than the same period last year, ending the period at a record£262.4m (2005: £224.5m). Orders have remained strong throughout the period at £581m (2005: £493m) with49% arising from public sector clients (2005: 50%). Education continues to be animportant sector for us and we were delighted to have been selected as one ofsix preferred contractors on the 'Contractors' Framework for Academies and othereducational facilities' which is forecast to provide £1.7bn of work, in total,over the next four years. Our framework agreement with the Home Office forcustodial contracts is affording us good opportunities providing 14% of awardsin the period with a significant level of additional contracts in negotiation.The affordable housing sector, to which we anticipate providing around 1,000units this year, is also buoyant presenting good prospects through our frameworkagreements with housing associations and local authorities. Private sector demand has also been strong in the six months under review,particularly in the commercial property sector, which has provided 25% of theawards for the period, including a £66m office development in Snow Hill,Birmingham, for our major projects business. 65% of our total awards (2005: 59%)for the period were negotiated or awarded through two-stage tenders, reflectingour continued focus on partnering and repeat business. Kier Construction has had mixed fortunes in the period. In the UK good progressis being made on the LNG terminal in Milford Haven for South Hook LNG, despitepoor weather during most of December and January, and land remediation projectsfor the Homes and Property divisions have been completed on time and, moreimportantly for such projects, within budgets. Our private opencast coal mine atGreenburn, East Ayrshire, continues to make good progress with over 1.5m tonnesof coal extracted since production began in April 2004. 68% of the remaining1.8m tonnes from the original deposit has been forward sold at fixed prices andwe are delighted to report that our planning application for a further 0.8mtonnes has now been approved, which will extend the life of the mine by afurther two years to 2011. Overseas, good progress made in Jamaica on the Norman Manley InternationalAirport and on a large transportation centre has been overshadowed bydifficulties with a hotel project for Sandals in Antigua having an adverseimpact on profitability for that region. Support Services Support Services comprises four business streams: Kier Managed Services,providing facilities management services to public and private sector clients;Kier Building Maintenance, providing reactive and planned maintenanceprincipally to local authority clients, housing associations and Arms LengthManagement Organisations; Kier Building Services Engineers, our specialistmechanical and electrical design and installation and maintenance business; andKier Plant which hires plant to Kier Group companies and external clients. Overall revenue increased by 2.6% to £142.7m (2005: £139.1m) with 22.5% growthin Kier Building Maintenance offset by a planned reduction in Kier ManagedServices. Operating profit, before deducting the amortisation of intangibles of£1.0m (2005: £1.0m), increased by 30.8% to £5.1m (2005: £3.9m) at an improvedmargin of 3.5% (2005: 2.8%). In Kier Managed Services our focus on improving the quality of contracts hasbeen effective. Volumes have declined over the period but profitability hasimproved providing us with a sound base from which to grow the business. Kier Building Maintenance has made excellent progress in the last six months.Revenue is up from £80.8m to £99.0m and order books have grown significantlybenefiting from £232m of new orders from two major contract awards in theperiod; Harlow and Sefton. At Harlow we commenced work on 1 February 2007 on a£17m per annum seven-year contract, extendable by a further three years, inpartnership with Harlow District Council. We will provide environmentalservices, including street cleaning, as well as managing all the repairs for theCouncil's 10,000 property stock. At Sefton, Merseyside, we are about to commencework on a four-year outsourcing contract for One-Vision Housing valued at £62mwhich involves upgrading 5,600 council properties to the Government's DecentHomes standard. We have also recently been selected as preferred bidder on a five-yearoutsourcing contract for Kingston-upon-Hull District Council valued at £83mwhich will involve repairs and maintenance and Decent Homes work on 10,000council properties. Many more opportunities are available to us in this market including a ten-year£30m per annum repair and maintenance contract for Stoke-on-Trent City Councilon which we are short-listed as one of two bidders. At Harrow we areshort-listed on a £17m per annum contract for five years and at Hackney we areshort-listed on a £13m per annum four-year contract. Homes Kier Residential, our housebuilding division, is structured through fivecompanies: Allison Homes, operating throughout Lincolnshire and NorthCambridgeshire; Bellwinch Homes, with sites in the south and south east; KierHomes, operating across the central belt of Scotland; Twigden Homes withactivities in East Anglia and the West Midlands; and the recently acquired HughBourn Homes operating in North Lincolnshire. Kier Residential sold 819 homes in the six months to 31 December 2006, a 15.5%increase over 2005's 709 homes but with a greater proportion of affordable homesthan ever before at 20.9% of total sales (2005: 11.0%). Revenue for the sixmonths at £151.8m was 12.6% ahead of last year's £134.8m including land sales of£8.3m (2005: £3.0m) with the high proportion of affordable housing, togetherwith the inclusion of sales from Hugh Bourn Homes, reducing average sellingprices to £175,200 (2005: £185,900). Operating profit increased marginally to £20.4m (2005: £19.8m) including £0.2mrelating to land sales (2005: £0.3m) giving a margin on housing sales of 14.1%(2005: 14.8%), slightly lower than our 15.0% target with the high number ofaffordable housing sales having an impact. On 31 July 2006 we acquired the shares in Hugh Bourn Developments (Wragby)Limited for a total consideration of £53.3m, representing the market value ofland, work in progress and other assets and liabilities. £20m was paid oncompletion, with the balance due in instalments on 2 July 2007 and 1 July 2008.Hugh Bourn Homes (rebranded Kier Homes Northern) has formed the foundation for afifth trading division of Kier Residential, expanding its reach to the north ofAllison Homes' operating area. It contributed 54 units to sales in the periodsince acquisition. The land bank at 31 December 2006 contained 7,004 plots with planning consent(2005: 5,618) including 1,151 in Hugh Bourn Homes. A number of large sites onwhich we are progressing detailed planning consent have recently been acquiredincluding 192 units at Costessey, Norfolk, 245 units at Redding Park in thecentral belt of Scotland and 213 units at Little Paxton, Cambridgeshire. Inaddition to the land with planning consent the land bank also contains a further11,800 plots of strategic land, mostly under option. There is continued demand for homes in the markets in which we operate. Weeklyreservation rates are in line with those required in order to achieve our fullyear projection with recent interest rate increases having no discernableeffect. Our order books are over 50% ahead of last year (43% excluding HughBourn Homes) and completions to the end of February combined with our order bookfor the current year secure over 80% of our projected unit sales for the year. Looking forward to the full year we are expecting to see a similar pattern tothe distribution of unit sales as last year, with a bias towards the second halfof the year. The exceptional level of affordable housing units experienced inthe first half of the year is expected to reduce over the whole year to a levelsimilar to that achieved in the full year to 30 June 2006. Property Our Property development business activity covers commercial, offices,industrial, retail and mixed-use sectors largely on a non-speculative basis. Itoperates through Kier Ventures, a wholly owned subsidiary; and KierDevelopments, a 50% joint venture with the Bank of Scotland. The Property division had an extremely busy six months to 31 December 2006 withthe majority of the development sales targeted for this financial year takingplace in this period. Revenue for the six months of £43.5m (2005: £38.3m) was13.6% ahead of last year with operating profits 70.4% ahead at £9.2m (2005:£5.4m), before joint venture interest and tax, representing a margin of 21.1%(2005: 14.1%). Within our wholly owned business we sold a retail park at Haverhill during theperiod and made good progress on the development of offices pre-let toElectronic Data Systems in Milton Keynes where Kier is also the contractor. Inour joint venture with the Bank of Scotland a number of developments were soldincluding two to Invista Real Estate: Mannington Retail Park in Swindon; andReading Central, a commercial site in the centre of Reading. We have retained a50% equity stake in Mannington Retail Park and will be involved in its futuredevelopment. We are also planning to enter into a joint venture developmentagreement with Invista to redevelop the Reading Central site. Earlier this month we reached financial close on a project to develop a newcorporate headquarters for Ordnance Survey in Southampton. This will include theresidential and commercial redevelopment of their existing site withparticipation from our Construction, Support Services and Homes divisions. Wewere also pleased to have been selected as preferred developer on a project todeliver the UK's first Supreme Court in Parliament Square, London. Kier Propertyand Kier Regional (Wallis) are working together to remodel a 70,000sq ft listedbuilding which, on completion of the development, will be leased to theDepartment of Constitutional Affairs for 30 years. Our ability to provide a 'total solution' to clients including land remediation,mixed-use development (residential and commercial) and affordable housingcontinues to provide a flow of interesting opportunity to this division. Infrastructure Investment Kier Project Investment (KPI) manages the Group's interests procured under thePrivate Finance Initiative (PFI). The core strength of KPI is the ability tobring together the diverse range of skills and resources within the Group andcombine these with a financial package that will deliver high quality buildingsand services to meet the public sector's needs. In July 2006 we achieved financial close on a contract to provide a newheadquarters building in Gravesend for Kent Police bringing our total committedequity in PFI projects to £22.8m on which we expect to achieve an average yieldof around 14%. Construction was also successfully completed on two secondaryschools in Sheffield to add to the two completed last year and Kier ManagedServices has now commenced facilities management operations. Good constructionprogress is being made on a number of schools for Oldham Metropolitan Counciland Norfolk County Council and on the Garrett Anderson Health Centre at Ipswich,all by Kier Regional. With PFI health projects slowing down and schools largely being provided under'Building Schools for the Future' we are exploring new markets including firestations, social housing and prisons, all areas in which our Constructiondivision has a great deal of experience. Pensions At 31 December 2006 the net pension deficit calculated as required by IAS19'Employee Benefits' is £28.9m (December 2005: £93.0m, June 2006: £42.1m). Theimprovement in the period is attributable to: special contributions amounting to£31.5m in the six months to 30 June 2006 and £8.0m in the six months to 31December 2006; and an increase in the market value of assets. We continue tomake special contributions of £0.5m per month into the Kier Group PensionScheme, over and above our normal contributions. We are determined that Kier'spension deficit will continue to reduce. Health & Safety Kier Group's attention to behavioural issues affecting safety on sites hasincreased the focus of both employees and members of the supply chain onimproving standards and an understanding of what is needed to ensure safe sites.This initiative has resulted in an Accident Incidence Rate of 492 per 100,000staff and subcontractors measured against a Health & Safety Executive (HSE)target rate of 902 per 100,000. The HSE target for 2007 is set at 946. People Our successful track record is the tangible result of the skill,professionalism, enthusiasm and commitment of our people. They have ensured thatwe have achieved consistent growth in revenue, profits and cash flow and that wecontinue to excel in all of our chosen markets. I wish to pay tribute to allKier employees for their enduring hard work and dedication which havecontributed to the continued success of the Group. Prospects The prospects for Kier Group are excellent. There continues to be ampleopportunity in all of the markets in which we operate, our order books are full,our balance sheet is strong and we have very capable management teams in place.All of this leads me to anticipate further profitable growth. Consolidated income statement Unaudited Unaudited 6 months to 6 months to Year to 31 December 31 December 30 June 2006 2005 2006 Notes £m £m £m------------------------------------- ---- ------- ------- -------Revenue - continuing operationsGroup and share of joint ventures 2 1,020.5 922.6 1,838.3Less share of joint ventures (40.7) (41.3) (55.1)------------------------------------- ---- ------- ------- -------Group revenue 979.8 881.3 1,783.2Cost of sales (889.4) (804.0) (1,623.7)------------------------------------- ---- ------- ------- -------Gross profit 90.4 77.3 159.5Administrative expenses (55.9) (50.0) (103.5)Share of post tax profits from jointventures 1.8 1.3 3.2------------------------------------- ---- ------- ------- -------Profit from operations 2 36.3 28.6 59.2Finance income 3.3 2.7 5.3Finance cost (3.4) (2.9) (5.4)------------------------------------- ---- ------- ------- -------Profit before tax 2 36.2 28.4 59.1Taxation 3 (9.9) (7.8) (16.2)------------------------------------- ---- ------- ------- -------Profit for the period 26.3 20.6 42.9------------------------------------- ---- ------- ------- -------Earnings per ordinary share - basic 5 73.9p 58.0p 120.8p - diluted 72.9p 57.5p 118.8p------------------------------------- ---- ------- ------- -------Adjusted earnings per ordinary share(excluding the amortisation ofintangible assets) - basic 5 75.8p 60.0p 124.8p - diluted 74.8p 59.5p 122.7p------------------------------------- ---- ------- ------- ------- Consolidated statement of recognised income and expense Unaudited Unaudited 6 months to 6 months to Year to 31 December 31 December 30 June 2006 2005 2006 Notes £m £m £m------------------------------------- ---- ------- ------- -------Foreign exchange translationdifferences - - (0.3)Fair value movements in cash flowhedging instruments - (0.5) 4.1Actuarial gains and losses on definedbenefit pension schemes 10.2 (10.8) 30.0Deferred tax on items recogniseddirectly in equity (3.1) 3.4 (10.2)------------------------------------- ---- ------- ------- -------Net expense recognised directly inequity 7.1 (7.9) 23.6Profit for the period 26.3 20.6 42.9------------------------------------- ---- ------- ------- -------Total recognised income and expensefor the period 33.4 12.7 66.5Effect of change in accounting policyAdoption of IAS 32 and IAS 39, net oftax, on 1 July 2005 on cash flowhedge reserve - (7.5) (7.5)Deferred tax on above - 2.2 2.2------------------------------------- ---- ------- ------- ------- 33.4 7.4 61.2------------------------------------- ---- ------- ------- ------- Consolidated balance sheet Unaudited Unaudited 31 December 31 December 30 June 2006 2005 2006 Notes £m £m £m------------------------------------- ---- ------- ------- -------Non-current assetsIntangible assets 13.8 15.7 14.8Property, plant and equipment 80.3 71.8 78.5Investment in joint ventures 28.0 17.4 20.8Retirement benefit surplus 6.8 4.6 6.8Deferred tax assets 14.4 42.9 20.9Other financial assets 0.2 0.7 0.6Trade and other receivables 17.4 12.1 16.1------------------------------------- ---- ------- ------- -------Non-current assets 160.9 165.2 158.5------------------------------------- ---- ------- ------- -------Current assetsInventories 443.3 369.1 377.8Other financial assets 0.3 0.4 0.6Trade and other receivables 258.7 254.9 258.4Cash and cash equivalents 144.6 117.8 141.3------------------------------------- ---- ------- ------- -------Current assets 846.9 742.2 778.1------------------------------------- ---- ------- ------- -------Total assets 1,007.8 907.4 936.6------------------------------------- ---- ------- ------- -------Current liabilitiesBank overdrafts and loans - (0.1) -Trade and other payables (700.1) (600.6) (670.5)Tax liabilities (3.3) (11.4) (2.7)Provisions (1.2) (1.0) (0.9)------------------------------------- ---- ------- ------- -------Current liabilities (704.6) (613.1) (674.1)------------------------------------- ---- ------- ------- -------Non-current liabilitiesInterest-bearing loans and borrowings (30.2) (30.1) (30.1)Other payables (51.3) (50.8) (36.8)Retirement benefit obligations (48.1) (137.5) (67.0)Provisions (21.4) (19.1) (18.1)Deferred tax liabilities (12.7) (1.4) (2.0)------------------------------------- ---- ------- ------- -------Non-current liabilities (163.7) (238.9) (154.0)------------------------------------- ---- ------- ------- -------Total liabilities (868.3) (852.0) (828.1)------------------------------------- ---- ------- ------- -------Net assets 2 139.5 55.4 108.5------------------------------------- ---- ------- ------- -------EquityShare capital 0.4 0.4 0.4Share premium 22.7 19.6 20.0Capital redemption reserve 2.7 2.7 2.7Retained earnings 116.3 38.3 88.0Cash flow hedge reserve (2.4) (5.6) (2.4)Translation reserve (0.2) - (0.2)------------------------------------- ---- ------- ------- -------Total equity 6 139.5 55.4 108.5------------------------------------- ---- ------- ------- ------- Consolidated cash flow statement Unaudited Unaudited 6 months to 6 months to Year to 31 December 31 December 30 June 2006 2005 2006 £m £m £m------------------------------------- ---- ------- ------- -------Cash flows from operating activitiesProfit beforetax 36.2 28.4 59.1Adjustments Share of post tax profits from (1.8) (1.3) (3.2) joint ventures Normal contributions to pension (0.7) 0.2 (0.2) fund in excess of pension charge Share-based payments charge 1.6 0.4 1.1 Amortisation of intangible 1.0 1.0 1.9 assets Depreciation charges 7.3 6.1 13.5 Profit on disposal of property, (0.3) (1.2) (1.1) plant & equipment Net finance cost 0.1 0.2 0.1--------------------------------------- ---- ------- ------- -------Operating cashflows beforemovements inworkingcapital 43.4 33.8 71.2Specialcontributionsto pensionfund (8.0) - (31.5)Increase ininventories (2.8) (40.5) (49.3)Increase inreceivables (1.4) (18.7) (26.7)Increase inpayables 10.1 66.3 131.8Increase inprovisions 3.4 2.5 1.1------------------------------------- ---- ------- ------- -------Cash inflowfrom operatingactivities 44.7 43.4 96.6Interestreceived 3.1 2.5 5.3Income taxespaid (7.4) (6.5) (11.3)------------------------------------- ---- ------- ------- -------Net cashgenerated fromoperatingactivities 40.4 39.4 90.6------------------------------------- ---- ------- ------- -------Cash flows from investing activitiesProceeds fromsale ofproperty,plant &equipment 0.9 4.2 4.6Proceeds fromsale ofinvestments - - 1.4Dividendsreceived fromjoint ventures 0.5 1.0 1.3Purchases ofproperty,plant &equipment (7.7) (8.0) (23.2)Acquisition ofsubsidiaries (20.0) - (10.1)Investment injoint ventures (5.4) (0.6) (0.6)------------------------------------- ---- ------- ------- -------Net cash usedin investingactivities (31.7) (3.4) (26.6)------------------------------------- ---- ------- ------- -------Cash flows from financing activitiesPurchase ofown shares (0.4) (1.5) (2.0)Interest paid (1.3) (1.3) (2.7)Dividends paid (3.7) (3.7) (6.2)------------------------------------- ---- ------- ------- -------Net cash usedin financingactivities (5.4) (6.5) (10.9)------------------------------------- ---- ------- ------- -------Net increasein cash andcashequivalents 3.3 29.5 53.1Opening netcash and cashequivalents 141.3 88.2 88.2------------------------------------- ---- ------- ------- -------Closing netcash and cashequivalents 144.6 117.7 141.3------------------------------------- ---- ------- ------- -------Reconciliation of net cash flow to movementin net fundsNet increasein cash andcashequivalents 3.3 29.5 53.1Increase inlong termborrowings (0.1) - -Opening netfunds 111.2 58.1 58.1------------------------------------- ---- ------- ------- -------Closing netfunds 114.4 87.6 111.2------------------------------------- ---- ------- ------- -------Net funds consist of:Cash and cashequivalents 144.6 117.8 141.3Overdrafts - (0.1) -------------------------------------- ---- ------- ------- -------Net cash andcashequivalents 144.6 117.7 141.3Long-termborrowings (30.2) (30.1) (30.1)------------------------------------- ---- ------- ------- -------Net funds 114.4 87.6 111.2------------------------------------- ---- ------- ------- ------- Notes to the financial statements 1. Basis of preparation This interim financial information has been prepared applying the accountingpolicies and presentation that were applied in the preparation of the Company'spublished consolidated financial statements for the year ended 30 June 2006. The interim financial information in this statement does not constitutestatutory accounts, as defined in section 240 of the Companies Act 1985. Theauditors' report on the statutory accounts for the year to 30 June 2006 wasunqualified and did not contain a statement under section 237 of the CompaniesAct 1985. Statutory accounts for the year to 30 June 2006 have been delivered tothe Registrar of Companies. The interim financial statements were approved bythe Board of Directors on 16 March 2007. The preparation of the interimfinancial statements requires management to make assumptions and estimates aboutfuture events which are uncertain, the actual outcome of which may result in amaterially different outcome from that anticipated. 2 Segmental analysis For management purposes the Group is organised into five operating divisions,Construction, Support Services, Homes, Property and Infrastructure Investment.These divisions are the basis on which the Group reports its primary segmentalinformation. Support Infrastructure Construction Services Homes Property Investment Centre Group £m £m £m £m £m £m £m---------------------- ------- ------ ------ ------ ------- ------ ------Six months to 31December 2006RevenueGroup andshare of jointventures 675.2 142.7 151.8 43.5 7.3 - 1,020.5Less share ofjoint ventures - - - (34.1) (6.6) - (40.7)----------------------- ------- ------ ------ ------ ------- ------ ------Group revenue 675.2 142.7 151.8 9.4 0.7 - 979.8----------------------- ------- ------ ------ ------ ------- ------ ------ProfitGroupoperatingprofit 9.5 4.1 20.4 5.6 (0.3) (4.8) 34.5Share of jointventures'operatingprofit - - - 3.6 0.8 - 4.4----------------------- ------- ------ ------ ------ ------- ------ ------Group andshare of jointventures 9.5 4.1 20.4 9.2 0.5 (4.8) 38.9Share of jointventures -finance cost - - - (1.2) (0.5) - (1.7) - tax - - - (0.7) (0.2) - (0.9) ----------------------- ------- ------ ------ ------ ------- ------ ------Profit fromoperations 9.5 4.1 20.4 7.3 (0.2) (4.8) 36.3Financeincome/(cost) 7.8 - (6.9) (0.7) 0.7 (1.0) (0.1)----------------------- ------- ------ ------ ------ ------- ------ ------Profit beforetax 17.3 4.1 13.5 6.6 0.5 (5.8) 36.2----------------------- ------- ------ ------ ------ ------- ------ ------Balance sheetTotal assets 275.2 76.7 425.3 48.6 4.0 33.4 863.2Totalliabilities (516.2) (82.8) (138.6) (5.9) (4.6) (90.0) (838.1)----------------------- ------- ------ ------ ------ ------- ------ ------Net operatingassets/(liabilities) (241.0) (6.1) 286.7 42.7 (0.6) (56.6) 25.1Cash, net ofdebt 322.4 17.8 (163.0) (23.8) (5.7) (33.3) 114.4----------------------- ------- ------ ------ ------ ------- ------ ------Net assets 81.4 11.7 123.7 18.9 (6.3) (89.9) 139.5----------------------- ------- ------ ------ ------ ------- ------ ------ Notes to the financial statements continued 2 Segmental analysis continued Support Infrastructure Construction Services Homes Property Investment Centre Group £m £m £m £m £m £m £m---------------------- ------- ------- ------- ------- ------- ------- -------Six months to 31December 2005RevenueGroup andshare of jointventures 603.7 139.1 134.8 38.3 6.7 - 922.6Less share ofjoint ventures (2.7) - - (32.1) (6.5) - (41.3)---------------------- ------- ------- ------- ------- ------- ------- -------Group revenue 601.0 139.1 134.8 6.2 0.2 - 881.3---------------------- ------- ------- ------- ------- ------- ------- -------ProfitGroupoperatingprofit 8.0 2.9 19.8 2.9 (0.9) (5.4) 27.3Share of jointventures'operatingprofit 0.2 - - 2.5 0.7 - 3.4---------------------- ------- ------- ------- ------- ------- ------- -------Group andshare of jointventures 8.2 2.9 19.8 5.4 (0.2) (5.4) 30.7Share of jointventures -finance cost - - - (1.0) (0.3) - (1.3) - tax - - - (0.6) (0.2) - (0.8)---------------------- ------- ------- ------- ------- ------- ------- -------Profit fromoperations 8.2 2.9 19.8 3.8 (0.7) (5.4) 28.6Financeincome/(cost) 6.8 (0.5) (6.4) (0.3) 0.5 (0.3) (0.2)---------------------- ------- ------- ------- ------- ------- ------- -------Profit beforetax 15.0 2.4 13.4 3.5 (0.2) (5.7) 28.4---------------------- ------- ------- ------- ------- ------- ------- -------Balance sheetTotal assets 252.2 77.7 357.7 41.8 (3.1) 63.3 789.6Totalliabilities (452.6) (76.5) (103.9) (8.1) (2.6) (178.1) (821.8)---------------------- ------- ------- ------- ------- ------- ------- -------Net operatingassets/(liabilities) (200.4) 1.2 253.8 33.7 (5.7) (114.8) (32.2)Cash, net ofdebt 278.3 8.6 (187.7) (19.0) (4.5) 11.9 87.6---------------------- ------- ------- ------- ------- ------- ------- -------Net assets 77.9 9.8 66.1 14.7 (10.2) (102.9) 55.4---------------------- ------- ------- ------- ------- ------- ------- ------- Year to 30 June 2006RevenueGroup andshare of jointventures 1,218.1 281.3 277.9 47.5 13.5 - 1,838.3Less share ofjoint ventures (2.6) - - (40.0) (12.5) - (55.1)--------------------- ------- ------- ------- ------- ------- ------- -------Group revenue 1,215.5 281.3 277.9 7.5 1.0 - 1,783.2--------------------- ------- ------- ------- ------- ------- ------- -------ProfitGroupoperatingprofit 17.2 6.8 41.6 4.2 (2.1) (11.7) 56.0Share of jointventures'operatingprofit 0.8 - - 5.0 1.4 - 7.2--------------------- ------- ------- ------- ------- ------- ------- -------Group andshare of jointventures 18.0 6.8 41.6 9.2 (0.7) (11.7) 63.2Share of jointventures -finance cost - - - (2.1) (0.5) - (2.6) - tax (0.1) - - (0.8) (0.5) - (1.4)--------------------- ------- ------- ------- ------- ------- ------- -------Profit fromoperations 17.9 6.8 41.6 6.3 (1.7) (11.7) 59.2Financeincome/(cost) 13.7 (0.5) (13.1) (0.9) 1.2 (0.5) (0.1)--------------------- ------- ------- ------- ------- ------- ------- -------Profit beforetax 31.6 6.3 28.5 5.4 (0.5) (12.2) 59.1--------------------- ------- ------- ------- ------- ------- ------- -------Balance sheetTotal assets 281.3 77.3 351.1 44.6 (0.1) 41.1 795.3Totalliabilities (496.6) (78.2) (112.3) (5.2) (3.2) (102.5) (798.0)--------------------- ------- ------- ------- ------- ------- ------- -------Net operatingassets/(liabilities) (215.3) (0.9) 238.8 39.4 (3.3) (61.4) (2.7)Cash, net ofdebt 298.7 12.5 (165.8) (23.8) (3.8) (6.6) 111.2--------------------- ------- ------- ------- ------- ------- ------- -------Net assets 83.4 11.6 73.0 15.6 (7.1) (68.0) 108.5--------------------- ------- ------- ------- ------- ------- ------- ------- Net operating assets represent net assets excluding cash, bank overdrafts, longterm borrowings and interest-bearing inter-company loans. Notes to the financial statements continued 3 Taxation The taxation charge for the six months ended 31 December 2006 has beencalculated at 29% (June 2006 29%, December 2005 29.5%) of underlying profitbefore tax, being profits adjusted for the Group's share of tax in equityaccounted joint ventures. This represents the estimated effective rate of taxfor the year. Unaudited Unaudited 31 December 31 December 30 June 2006 2005 2006 £m £m £m---------------------------------------- ------- ------- -------Profit before tax 36.2 28.4 59.1Add: tax on joint ventures 0.9 0.8 1.4---------------------------------------- ------- ------- -------Underlying profit before tax 37.1 29.2 60.5---------------------------------------- ------- ------- -------Tax charge 9.9 7.8 16.2Add: tax on joint ventures 0.9 0.8 1.4---------------------------------------- ------- ------- -------Underlying tax charge 10.8 8.6 17.6---------------------------------------- ------- ------- -------Rate 29% 29.5% 29%---------------------------------------- ------- ------- ------- 4 Dividends Amounts recognised as distributions to equity holders in the period. Unaudited Unaudited 31 December 31 December 30 June 2006 2005 2006 £m £m £m---------------------------------------- ------- ------- -------Final dividend for the year ended 30June 2006 of 17.8 pence (2005: 15.2pence) 6.3 5.4 5.4Interim dividend for the year ended 30June 2006 of 8.2 pence - - 2.9---------------------------------------- ------- ------- ------- 6.3 5.4 8.3---------------------------------------- ------- ------- ------- The proposed interim dividend of 9.6 pence (2006: 8.2 pence) had not beenapproved at the balance sheet date and so has not been included as a liabilityin these financial statements. The dividend totalling £3.5m will be paid on 18May 2007 to shareholders on the register at the close of business on 30 March2007. A scrip dividend alternative will be offered. 5 Earnings per share Unaudited Unaudited 31 December 31 December 30 June 2006 2005 2006 £m £m £m---------------------------------------- ------- ------- -------Profit after tax 26.3 20.6 42.9Add: amortisation of intangible assets 1.0 1.0 1.9Less: tax on the amortisation ofintangible assets (0.3) (0.3) (0.5)---------------------------------------- ------- ------- -------Adjusted profit after tax 27.0 21.3 44.3---------------------------------------- ------- ------- ------- million million million---------------------------------------- ------- ------- -------Weighted average number of shares used forEPS- basic 35.6 35.5 35.5- diluted 36.1 35.8 36.1 pence pence pence---------------------------------------- ------- ------- -------Earnings per share- basic 73.9 58.0 120.8- diluted 72.9 57.5 118.8Adjusted earnings per share after excludingthe amortisation of intangible assets- basic 75.8 60.0 124.8- diluted 74.8 59.5 122.7---------------------------------------- ------- ------- ------- Notes to the financial statements continued 6 Reconciliation of changes in total equity Unaudited Unaudited 31 December 31 December 30 June 2006 2005 2006 £m £m £m---------------------------------------- ------- ------- -------Opening shareholders' equity 108.5 52.8 52.8Adjustments on adoption of IAS 32 andIAS 39 on 1 July 2005 (net of tax) - (5.3) (5.3)---------------------------------------- ------- ------- -------Restated opening shareholders' equity 108.5 47.5 47.5Recognised income and expense for theperiod 33.4 12.7 66.5Dividends paid (6.3) (5.4) (8.3)Issue of own shares 2.7 1.7 2.1Purchase of own shares (0.4) (1.5) (2.0)Share-based payments charge 1.6 0.4 1.1Deferred tax on share-based payments - - 1.6---------------------------------------- ------- ------- -------Closing shareholders' equity 139.5 55.4 108.5---------------------------------------- ------- ------- ------- Independent review report to Kier Group plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 31 December 2006 which comprises the income statement, thebalance sheet, statement of recognised income and expense and cash flowstatement. We have read the other information contained in the interim reportand considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the Company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the UK. A review consists principally of making enquiries of groupmanagement and applying analytical procedures to the financial information andunderlying financial data and, based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (UK and Ireland) and therefore provides a lower level of assurance thanan audit. Accordingly, we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2006. KPMG Audit PlcChartered AccountantsRegistered AuditorLondon 16 March 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kier