Business Weekly - Cambridge, UK

The homes order book and completions for the two months to August 31 are already 43 per cent ahead of last year and chief executive John Dodds says Kier continues to see good opportunities in property.

The construction & services order books stand at £1.75bn. All of which has allowed Kier to boost earnings per share by 28 per cent to 87.2p and dividend per share by 15.9 per cent to 19p.

Dodds said: “All our operating companies have had a tremendous year, which has led to this record result. Our business model enables us to offer fully integrated services to clients throughout the UK which is becoming increasingly popular.

“The quality of the projects in the pipeline, solid order books and the strength of our management teams puts us in an excellent position to deliver another strong performance next year.”

It is the 12th year in succession that Kier has delivered increased profit, triggered through both organic growth and acquisition.

Twelve years ago, Kier’s profits arose almost exclusively from construction activities. Strategic investments in housing, property, support services and the Private Finance Initiative has broadened the group’s power base.

Construction & services recorded an operating profit of £15.6m, up 20.9 per cent year-on-year on marginally lower turnover of £1.205bn.

In construction, Kier Regional saw turnover increase 9.4 per cent to £862m and cash was, on average, £12m ahead of the previous year – reaching a record year-end balance of £169m.

Support services provided £174.3m of turnover, 51 per cent ahead of last year. The growth was largely attributed to the building maintenance division, which recorded a full year’s turnover of £64.7m from a 10-year outsourcing contract for Sheffield City Council.

Strong demand for housing continued through the second half and provided Kier Residential with a 19.8 per cent rise in turnover to £215.7m, arising from a 17 per cent surge in completions and a 2.4 per cent increase in average selling price to £186,300.

The property division posted a staggering 119.8 per cent increase in turnover to £46.6m.

The results are a fitting valediction to chairman Colin Busby, who steps down at the AGM in November after 35 years with Kier and at the very pinnacle of achievement.

Kier has not only broadened its business base but also achieved compound annual growth in earnings per share of 23.5 per cent since flotation as well as seeing equity shareholders’ funds increase from £2.4m to £116.4m.