Kier鈥檚 half-year results show a modest 1% growth in revenue for the six-month period ended 31st December 2017, to 拢2,011m and a 6% drop in statutory pre-tax profit to 拢33.7m.
At an underlying level, operating profit was up 5% to 拢60.0m.
Net debt rose to 拢239m, up from 拢179m a year before, but it is expected to be less than 1x Ebitda by financial year-end on 30th June, the board said. The debt is underpinned by Property and Residential assets of 拢500m.
Chief executive Haydn Mursell said: 鈥淭he group is performing well. Our 拢9.5bn Construction and Services order book, combined with our 拢3.5bn pipeline in the Property and Residential divisions, provides good visibility of work over the medium term.鈥�
He added: "The group's performance reflects the strength of our business model and our financial and operational disciplines. Our portfolio of businesses provides balance and resilience and our approach to risk management is evident in the margin performance we have delivered over many years. We remain on course to deliver double-digit profit growth in 2018 and to achieve our Vision 2020 strategic targets."
In the Construction division, revenue dipped 7% to 拢949m delivering an operating profit down 20% at 拢16.7m. These results were impacted by the 拢7.7m cost of closing the Caribbean and Hong Kong businesses and delays in project starts. Operating margins were 1.8%, down from 2.0% in the same period a year before, but are expected to improve in the second half of the financial year, the company said.
With lower volumes in the construction division, working capital outflow for the period spiked to 拢58m (2017: 拢28m outflow) but the board expects this to reverse in the second half of the year with new work expected to start.
The Services division revenue was 拢901m, up 17%, driven by the highways business and . Operating profit increased 19% to 拢44.4m and operating margins were stable at 4.9%. Excluding the McNicholas acquisition, turnover increased by 6% to 拢816m.
It is now revealed that McNicholas cost Kier 拢24m, including acquired debt, not the 拢18m previously indicated.
The Property division generated an operating profit of 拢12.2m, up 58%, on revenue of 拢138m.
For Kier Living, revenue was down 2% at 拢166m but operating profit was up 7% to 拢8.7m, with 965 unit completions during the period
Kier was impacted by Carillion going into liquidation in January 2018. Kier was involved in three joint arrangements with Carillion and has consequently increased its share in these projects. On a Highways England M6 smart motorway project, Kier has moved from a 50% share to a 100% share. On the two separate HS2 contracts, Kier moved from a 33% share to a 50% share with Eiffage.
The board said that these contracts 鈥渁re all performing well, operationally and financially鈥� but the impact on future profits is still being evaluated.
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