Water and Effluent Treatment Magazine
Issue link: https://fhpublishing.uberflip.com/i/971724
THE LEADERS 2018 Kier targets AMP7 contract wins Operating profit £M Kier Group 48.2 Morgan Sindall 47.4 Mott MacDonald 35.4 Costain 34.9 Morrison Utility Services 23.7 Skanska UK 22.6 J. Murphy & Sons 15.4 Bam Nuttall 12.7 Mace 9.4 Lanes 8.7 C onstruction and support services giant Kier turned in an impressive performance in 2016/17: the group recorded an operating profit of just over £48 million – the highest in the Leaders database – on a turnover of £4,128 million, a 3 per cent sales upli . The first half of this financial year has also seen underlying growth in both prof- its and revenue, although the company recently reported that it had been hin- dered by delayed project starts at the end of last year. The company has benefited from last summer's acquisition of McNicholas Con- struction, which had an £180 million annual turnover, and therefore boosted group revenue by around 8 per cent. The company also gained 1,880 staff in the acquisition, bringing the group's headcount to around 18,000. Former McNicholas chief executive Barry McNich- olas now heads up Kier's utility division, which is targeting further water contracts in AMP7. "McNicholas is a highly complemen- tary addition to our utility services busi- ness and enhances our presence in the power, rail and telecoms markets with its long-standing client relationships," Kier chief executive Haydn Mursell said at the time of the takeover. Since being acquired by Kier, McNicho- las secured three contract wins including a five-year £31 million 'Gas to the West' net- work distribution operation for SGN Kier Tempsford Hall, Sandy, Bedfordshire, SG19 2BD. Tel: 01767 35500. www.kier.co.uk Natural Gas in Northern Ireland. However, on the negative side, it has been reported that a recent re-evaluation of McNicholas's contracts since its acquisition by Kier revealed that rather than having net assets of £6.8 million, as was previously believed, it had net liabilities of nearly £32 million, including a £10.9 million pension liability. Recent key water industry projects for Kier on the utilities side have included the upgrade of Deephams sewage treatment works for Thames Water (as part of its AMK joint venture with AECOM and Mur- phy), and MEICA work for South West Water's £60 million Mayflower treatment works, while Kier is the sole contractor on Bristol Water's £100 million AMP6 net- work maintenance services programme. It was set to play a leading role in the construction of Severn Trent's £300 mil- lion Birmingham Resilience Project as part of a joint venture with Interserve before walking away from the deal last summer. Kier Services, a sub-division of the Kier Group, provides a comprehensive services offering to utilities to complement the group's construction business. Ser- vices division revenues were up 17 per cent to nearly £900 million, under- pinned by the highways business and the better than expected contribution in the first half from McNicholas. Services mar- gins remained stable at 4.9 per cent. An admirable focus on group effi- ciency is revealed by Kier's sales to employee ratio: this has increased mark- edly in the last five years, from £185,800 per employee in 2012 to £230,100 last year. Chief executive Haydn Mursell said: "The group is performing well. Our £9.5 billion construction and services order book, combined with our £3.5 billion pipeline in the property and residential divisions, provides good visibility of work over the medium term. "Our portfolio of businesses pro- vides 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." THE NUMBERS 12/13 13/14 14/15 15/16 16/17 % change Sales £m 1,943.0 2,906.9 3,275.9 3,991.4 4,128.8 3 Gross profit £m 193.8 250.4 282.9 356.3 288.7 -19 Operating profit £m 49.3 34.3 60.9 -7.4 48.2 n/a Pre-tax profit £m 43.0 15.4 39.5 -34.9 25.8 n/a Staff 10,455 15,335 17,931 18,447 17,940 -3 Net assets £m 155.8 306.7 583.6 573.9 508.4 -11 THE RATIOS 12/13 13/14 14/15 15/16 16/17 % change Return on capital % 27.6 5.0 6.8 -6.1 5.1 n/a Gross margin % 10.0 8.6 8.6 8.9 7.0 -22 Operating margin % 2.5 1.2 1.9 -0.2 1.2 n/a Net margin % 2.2 0.5 1.2 -0.9 0.6 n/a Sales/employee £k 185.8 189.6 182.7 216.4 230.1 6 24 LEADERS 2018