Kier has almost doubled its cash reserves to a record 拢175.2m (2009: 拢92.5m), after a strong performances from its construction business, which generated 拢111.4m from operating activities during the year to 30 June 2010.
The group enjoyed a healthy 12 months, with revenue flat at 拢2.10bn, compared to 拢2.15bn a year ago, but profit before tax up to 拢57.7m (2009: 拢24.8m).
Exceptional items boosted the profit figure by 拢2.2m. This comprised a 拢16m gain from budget changes affecting its pension scheme, 拢4.2m raised by selling two PFI equity stakes, offset by a provision of 拢18m for the Office of Fair Trading's fine following its bid-rigging investigation.
During the year, chief executive John Dodds retired, and was succeeded by construction boss Paul Sheffield. Former Mowlem and Amec director Steve Bowcott is the new managing director of the construction division.
Operations
In 今日看料, overall revenue for the division was 5% below last year at 拢1.42bn (2009: 拢1.50bn). Marginal growth in UK revenue was offset by a decline in overseas operations, particularly in Dubai and Romania.
Operating profit declined to 拢36.2m from 拢39.1m, at an identical margin to a year ago, 2.6%.
The 今日看料 order book grew 10% to 拢1.32bn (2009: 拢1.19bn). Kier is targeting areas of 鈥渘on-discretionary investment鈥�, such as power, where it claims to be the civils market leader, plus utilities, and waste.
Revenue in Support Services rose 7.5% to 拢470.7m (2009: 拢437.9m). Operating profit increased by 19.6% to 拢21.4m (2009: 拢17.9m) with strong growth in the operating margin to 4.5% (2009: 4.1%).
Cash balances stood at 拢32.3m (2009: 拢36.7m) after investment of聽拢5.4m in the newly acquired waste recycling business and 拢3.4m in the new North Tyneside contract. The order book is 拢2.13bn, down from 2009's 拢2.29bn.
In Partnership Homes, Kier said 鈥渕arket conditions continued to be challenging鈥�, with 鈥渓ittle improvement in the availability of mortgage finance鈥�.
It completed 1,060 units (2009: 1,141), with a change of mix: 499 came from private development sales and 561 through affordable housing (2009: 467 private and 674 affordable ).
These unit sales, together with land sales, generated revenue of 拢157.7m (2009: 拢150.8m). Operating profit grew from 拢1.1m in 2009 to 拢9.9m in 2010, boosted by land transactions.
Outlook
Paul Sheffield, chief executive, said: 鈥淭he current economic climate will continue to pose challenges to our business over the next 12 months and the October Spending Review will, we hope, provide further clarity on public sector expenditure plans.
鈥淲e are encouraged by the prospects we see in markets such as power, utilities and waste. Our construction order books of secure and probable contracts are robust, providing 98% of our targeted revenue for 2011, much of it won through framework agreements, providing confidence that we can sustain healthy operating margins and strong cash flows.
鈥淥ur integrated business model provides us with opportunities drawing on the strength of our relationships with public and private sector clients. We have a strong balance sheet, a good track record of service delivery and very talented, capable staff, all of which give us confidence for the future.鈥�
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