WET News

26 Leaders 2016 Kier becomes a 'Top 3' player Kier Tempsford Hall, Sandy Bedfordshire,SG19 2BD T: 01767 35500 www.kier.co.uk The LeADeRS 2016 Kier said its utilities business marked the transition between AMP5 and AMP6 water cycle on the back of £700M of new contract awards for Anglian Water, Bournemouth, Bristol, Canal River Trust and Thames Water during the AMP6 bidding cycle and extensions with Scotia Gas Network ('SGN') and South West Water, The group said it is now Kier is now one of the top three participants in the UK regulated water sector. During the period, the business undertook four mobilisations in the water sector: one for Thames Water and three for Anglian Water, which have been completed successfully. As part of these, work has focused on cultural transformation of alliances, more efficient processes and an improved customer experience. In the energy sector, there have been significant opportunities particularly in the gas sector and there have been increased opportunities in the environmental protection market. With the growth in the utilities sector, availability of skills remains under pressure and Kier has created its own utilities skills academy to respond to this demand. The gas and telecoms sectors of the utilities market remain particularly attractive with opportunities under discussion with OpenReach, and SGN. In the UK, Kier has good positions in the highways maintenance, water utilities and housing maintenance markets, an established position in facilities management and opportunities in adjacent markets. We now also have a leading position in the Australian roads maintenance market. The £265M acquisition of Mouchel a year ago has made Kier the sector leader in the UK. More than 70% of Mouchel's business is in strategic highways which, when combined with Kier's highways work with local authorities, provides considerable opportunities for synergies. THe NUMBerS 11/12 12/13 13/14 % cHaNGe Sales £M 1,943.0 2,906.9 3,275.9 13 Gross profit £M 193.8 250.4 282.9 13 Operating profit £M 49.3 34.3 60.9 78 Pre-tax profit £M 43.0 15.4 39.5 156 Staff 10,455 15,335 17,931 17 Net assets £M 155.8 306.7 583.6 90 THe raTiOS 11/12 12/13 13/14 % cHaNGe Return on capital % 27.6 5.0 6.8 35 Gross margin % 10.0 8.6 8.6 0 Operating margin % 2.5 1.2 1.9 58 Net margin % 2.2 0.5 1.2 128 Sales/employee £K 185.8 189.6 182.7 -4 Loss on Beckton deal puts Murphy into the red J MUrpHy & SONS Hiview House, Highgate road, London, NW5 1TN Tel: 020 7267 4366 www.murphygroup.co.uk J Murphy & Sons has attributed "a substantial loss" on the major combined heat and power plant in Beckton, east London, for it reporting a £9.1M pre-tax loss for 2014. The group's director, Bernard Murphy, said the plant had suffered "difficulties with design, cost escalation, supply chain and engine related technical breakdowns" which he said "overshadowed what was otherwise a very satisfactory year". He added that the firm was "reviewing its entitlements for recovery on all fronts for this project". The pre-tax loss for the 2014 calendar year compares to a £34.7M pre-tax profit the previous year. Turnover dropped 18% to £780M, down from £954M in 2013, which the firm attributed to lower revenue from its joint venture business in Australia coming off an "exceptional" 2013 for the venture. Murphy said the UK tender market remains "highly competitive" despite the "high level of activity in the UK". He added that the firm will "continue its focus on growth oriented market sectors including rail, power and tunnels". Recent projects include piling work on a 100-year-old aqueduct as part of a multimillion-pound project to upgrade and modernise the Elan Valley aqueduct in mid-Wales. Severn Trent Water is upgrading the aqueduct as part of its Birmingham Resilience Project (BRP) and this part of the scheme will see the creation of three new tunnels at Bleddfa, Knighton and Nantmel. Appointed by the main contractor, the Barhale/ NMCNomenca JV, Murphy is constructing the retaining walls for two deep sha©s at either end of the new bypass tunnels at Bleddfa, allowing the connection into the existing aqueduct. Murphy said the tunnels sector, along with rail and power, is among "attractive and growth oriented markets that it will still focus on. THe NUMBerS 2012 2013 2014 % cHaNGe Sales £M 568.5 665.9 657.7 -1 Gross profit £M 17.2 3.7 -18.6 -598 Operating profit £M 17.2 7.5 -15.9 -312 Pre-tax profit £M 21.9 34.7 -9.1 -126 Staff 3,471 3,951 4,278 8 Net assets £M 203.5 219.7 206.5 -6 THe raTiOS 2012 2013 2014 % cHaNGe Return on capital % 10.8 15.8 -4.4 -128 Gross margin % 3.0 0.6 -2.8 -604 Operating margin % 3.0 1.1 -2.4 -315 Net margin % 3.9 5.2 -1.4 -127 Sales/employee £K 163.8 168.5 153.7 -9

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