With Group revenue rising 8% to £2,154 million (2016: £2,001m) and underlying profit up 5% to £60m (2016: £57.3m), net debt rose to £239m (2016: £179m) yet this is expected to be less than 1x EBITDA by financial year end on 30 June 2018.
However, revenue in the company's Construction services division fell by 7% to £949m (2016: £1,017m) while operating profit dropped 20% to £16.7m (2016: £20.8m).
Kier said: "These results were impacted in particular by the final costs of closing the Caribbean and Hong Kong businesses which totalled £7.7m and delays in the commencement of certain projects to the second half of this financial year. Operating margins were consequently 1.8% (December 2016: 2.0%) and are expected to improve in the second half of the financial year.
"We continue to focus on the management of working capital and expect to see a continued improvement in the division's performance in the second half of the financial year. The current order book of £4.7bn represents all targeted revenue for the 2018 financial year."
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Over the year, the UK Building division secured £700m of awards on frameworks, while places were also secured on a number of new frameworks with an advertised value of £15 billion. These include;
• The £8bn Education and Skills Funding Agency (ESFA) Construction Framework with Kier appointed to all lots applied for in the high-value and low-value bands across England
• The £6bn LHC Schools and Community Building Framework covering England, Scotland and Wales
• The £750m London Procurement Partnership Healthcare Framework with Kier appointed on all lots applied for
• The Aberdeenshire Council's £160m Social Housing Improvement Framework
• The Defence Infrastructure Organisation (DIO) National Framework
• The University of Strathclyde £250m construction framework
Elsewhere, revenue within Kier's Services division rose 17% to £901m (2016: £769m), underpinned by the highways business and the acquisition of McNicholas in July 2017.
"Operating profit increased to £44.4m (December 2016: £37.2m), up 19% and operating margins were stable at 4.9% (December 2016: 4.8%). Excluding the McNicholas acquisition, turnover increased by 6% to £816m," the Group said.
Haydn Mursell, Kier's Chief Executive, said the Group is "performing well".
"Our £9.5bn Construction and Services order book, combined with our £3.5bn pipeline in the Property and Residential divisions, provides good visibility of work over the medium term," he said.
"The Group's performance reflects the strength of our business model and our financial and operational disciplines. Our portfolio of businesses provides 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."
(LM)
