Kier Group (KIE) Investor Update summary

Market Outlook and Order Book

• UK government committed to a £725bn infrastructure reinvestment program over 10 years, with a three-year funded pipeline and strong visibility for contractors.

• Access to a £156bn addressable market through frameworks, covering sectors like health, education, housing, water, and roads.

• Order book reached a record £11bn, securing 91% of FY26 and 70% of FY27 revenue, providing strong multi-year visibility.

• Focus on vital infrastructure (defense, housing, schools, hospitals) ensures resilience against government spending pressures.

• Conservative order book recognition excludes unfunded or speculative framework positions.

Financial Performance and Capital Allocation

• Revenue grew 3% to £4,087.8m, with adjusted operating profit up 6% to £159.1m and margin rising to 3.9%.

• Profit before tax increased 15% to £78.1m; net cash improved 22% to £204m; free cash flow was £155.4m.

• Dividend per share increased 38% to 7.2p, with a three-times cover target; £10m of a £20m share buyback completed.

• Capital allocation prioritizes capex, dividends, property investment, opportunistic M&A, and share buybacks.

• £400m of debt facilities in place, including £250m Senior Loan Notes (2029) and £150m RCF (2027); optimal cash position is near zero, supported by property assets.

Strategic Approach and Risk Management

• Strategy centers on essential, non-discretionary infrastructure, with 70% of the order book government-funded, 15% regulated, and the rest private.

• Frameworks are critical for market access, with a 98% success rate in construction; qualitative criteria increasingly important.

• Prudent forecasting and portfolio effect mitigate risks from government delays or sectoral shifts.

• 60% of order book under target cost/cost reimbursable contracts, limiting risk exposure.

• Labor and supply chain risks managed through strong training culture, national coverage, and in-house design capability.