Kier Group plc

Good morning everyone. Tom and I are excited to be taking you through an excellent set of results and introducing our new strategy. Welcome to you all, be it those here in person or online and I'm delighted also to be joined by members of our executive team and these results and strategy are of course a team effort. I'm proud to be leading CAIR at this time and excited about how we shift from Recovery to Value Creation. Good morning. Last year I spoke about the need for Kier to evolve. This year I want to show how far we have progressed and how that progress puts us in a strong position to deliver consistent sustainable growth. It was really important to me as a new Chief Exec that we delivered on 26 as we evolved and we did. Kier delivered both a strong 26 performance Revenue up 7.5%, adjusted operating profit up by 6.7%, framework access up by 50 billion and monthly net cash up 60 million. We did that whilst we evolved into a simpler business model through the seamless transition of two divisions into one infrastructure powerhouse and the adoption of our Justice Blueprint into Defence and Health. A new management team is in place, whilst we delivered average net cash for the first time in a decade and strengthened our cyber protection and digital capability, all of which I believe are increasingly important in the delivery of sustainable growth. Now Kier is being recognised externally for its leading performance including social value and creating employment and being reported as one of the best places to work. Finally, to deliver this level of change and to report that 27 earnings are expected to be at the top end of the Board's prior expectations is outstanding and why I'm confident this team can deliver on our new strategy. The scale of opportunity in economic and social infrastructures delivered through long-standing customers who value Kier's capability represents a compelling opportunity to drive long-term value for the Group. To capitalise on this, we've identified three strategic priorities. Growth. There is a generational significant investment cycle in UK infrastructure, supported by strong underlying trends across markets. So we are simplifying the business to focus on our core infrastructure and construction divisions to capture that opportunity. In terms of resilience. Our customer mix, disciplined bidding and approach to risk contributed to our milestone net cash position in four year 26. And we will continue to strengthen the balance sheet, targeting more than 200 million of average net cash by four year 29. Performance, a simplified model at scale with a stronger balance sheet and productivity will deliver a medium term plan of mid single digit revenue growth. at a margin of four to four and a half percent and a double digit EPS cargo. I'll say it again and a double digit EPS cargo. Before going further there is an important strategic decision regarding our property business that I want to share with you. We have decided not to invest in new property developments and instead as each existing development comes to market we will return capital to the Group's balance sheet. This will be managed for a run-off process, balancing timing and value realisation. I will return shortly to provide more detail on the strategic rationale for the property capital reallocation and discuss our strategy. But first, hopefully Tom can spare, I will hand over to Tom to take you through the full year 26 financial highlights. Good luck Tom.

Good morning all. I'm delighted to be presenting Kier's full year 26 financial highlights. It's been an excellent year for Kier which we've delivered strong growth in revenue and profits and continued all about momentum and a full year average net cash position. I'm going to go into all of these in more detail now. Revenue in FY26 grew to £4.4 billion. It's up 7.5% on the prior year and it's continuing a strong period of successive year-on-year growth in our top line, which has seen Keir's revenue grow by a third since 2022. You can see the top left-hand box here. High-quality, profitable growth is underpinned by a high-quality, well-bid and commercially selective order book. such we're pleased to continue momentum this measure which grew 8.2% year-on-year it's now a record 11.9 billion pounds as of the 30th of June this order book growth is a direct result of Keir's leading positions across more than 120 frameworks it's a particular strength of Keir and Stuart will bring it to life later Casting your eye now down to the bottom three boxes, you can see the quality of Keir's recent growth. With strong flow through of revenue to adjusted operating profit and then to earnings per share. So you have an AOP of 170 million in FY26 representing a 6.7% increase year over year. We consolidated our AOP margin of 3.9% and subsequently adjusted EPS grew by 8.8% reflecting both the strong operational performance and the impact of the two recent share buyback programs. Now revenue and profit growth is also felt in our cash position where the strong cash generation is a defining characteristic of this business. During FY26 we generated 206 million of operating free cash flow and 165 million of free cash flow which represented a year-on-year increase of 6.2% and it's this cash generative nature of the business which has allowed us to further strengthen the balance sheet and distribute capital to shareholders. Since 2022 Kira has generated more than 650 million of free cash flow And it's this free cash flow that's been fundamental to the sustained improvement in the Group's average net cash position, which has been transformed over recent years from a significant net debt position to a positive and growing net cash position. The Group achieved an average month-end net cash position of 11 million in FY26, up 60 million from an average net debt position in FY25. Alongside this sustained strengthening of our balance sheet, we have maintained and enhanced shareholder distributions through the dividend and share buyback programme. I'm pleased to announce that the Board has approved the final dividend of 5.2 pence per share, taking the full year dividend to 7.8 pence. This is an 8.3% increase on FY25. During the year we concluded the Group's first £20 million share buyback. We purchased just under 11 million shares within the £20 million allocation. And in March we launched the second £25 million buyback, which as of the 30th June has seen just under 4 million shares repurchased. We expect the programme to be completed by the end of the calendar year 26. and we continue to see share buybacks as an important option for enhancing shareholder returns. We'll cover that approach to capital allocation a little bit later in the presentation. Now staying on cash, let's dive into it in a little bit more detail. So the Group's closing cash stood at £232 million, the right block, at the 30th of June. A year-on-year increase of 14%. So I'll walk through from left to right and pull out a few of the key drivers which have contributed to this strong year-end cash position. So firstly, the Group produced £106 million of operating free cash flow. It's a cash conversion yield of 121%, well ahead of our 90% target of operating free cash flow conversion. the strong cash performance was driven by 236 million of EBITDA and a small working capital inflow of 10 million pounds less around 65 million of capex which includes the capital payments on finance leases after net interest payments of 33 and the tax payments of 8 million the group generated free cash flow of 165 million our adjusting items here relate to fire and cladding remediation costs which are in line with our expectations and previous guidance. You see in FY26 we invested £22 million in our property JV businesses down from £51 million in FY25. Next step along you see we paid cash dividends of £34 million during the period and then £22 million of share buybacks. which as mentioned included the completion of the first 20 million and the commencement of the latest 25 million share buyback programme which we launched in March. So the half year I was pleased to put an average net cash position for the first six months of FY26 and I'm delighted to announce that for the full year we achieved an average net cash position of 11 million pounds. It's a significant milestone for the group. The first time since 2012 that the Group has achieved an average month-end net cash addition for the full year. This transformation of the Group's financial position from net debt to net cash has only been made possible by the quality of our core divisions, which have track records of multi-year growth and high levels of cash generation. So I'll now turn to look at the FY26 performance by division. So as you can see our core powerhouse businesses of infrastructure and construction both demonstrate strong momentum. Infrastructure delivered an excellent performance in FY26 with 10% growth in revenues and 16% increase in adjusted operating profit representing an AOP margin of 5.5% up 30 basis points on FY25. This standout performance was led by our water business which continues to benefit from the ramp up of the AMP8 investment cycle. Alongside this has been good performance in rail as the sector transitions to Control Period 7. Construction delivered a strong performance at FY26, reaching nearly 2 billion of revenues, up 4% year-on-year, and maintaining its top-end industry margin of 3.9%. The business benefited from a second half that saw the ramp-up of work at HFP Glasgow to full delivery phase. Our regionally focused businesses continue to build on their market positions, particularly in the education and defence, where our framework positions are critical for success. Stuart will talk more about the breadth of capability and credentials in that segment in a moment. Turning now to our property business. This continues to be impacted by a subdued market. reflecting the wider macroeconomic prevalence as the division generated revenue of 63 million, AOP of 9 million and a ROCI of 4.3%. And against this challenging backdrop the business has made good operational progress in the year. Planning has been secured on around 80% of projects including around 5,000 residential units. We secured tenancy or actively marketing on four projects including 270 residential units that are pre-funded. So as we've progressed into the first quarter fiscal year we're seeing continued strong momentum and I'm pleased to provide the following outlook and guidance for FY27. Recent significant contract awards and continued growth in the Group's order book and further expansion of our pipeline gives us a high degree of visibility into FY27. As such we've got confidence in FY27 adjusted earnings per share and we'll be at the top end of the Board's expectations. Now moving now to our strategy. Stuart has already laid out in broad terms the direction we're taking in regards to property. And I'll hand back to him and cover in more detail the rationale and the roadmap for realising and reallocating the capital currently invested in the portfolio.

There are some seats at the front if anyone wants to take them. Okay, so next slide please. Thank you. Thanks Tom. Let's return now to the three strategic priorities I outlined earlier, which underpin our approach to long-term value creation. To focus on growth in our core businesses, further strengthen the resilience of our balance sheet and drive performance through double-digit EPS growth. Just turning to property, the decision we have taken of property directly supports these priorities. does allow us to focus resources on our core growth businesses where we see the strongest opportunities to create long-term value, namely infrastructure and construction. As capital is returned from the existing property portfolio, it will strengthen the balance sheet and over time will also reduce the impact of more volatile transactionally led earnings and give us greater optionality over future capital allocation decisions. In terms of timing, I can confirm the following. From this point, we will not invest in any new property developments. Existing programs will continue to be delivered as planned, working with our partners to protect value and ensure continuity. As a result, total capital employed in property is expected to peak in December this year. We then expect to realise approximately the first $150 million of capital over the next three years. as individual developments mature and come to market, with that capital relocated to server strength from the Group's balance sheet. I return now to focus on one of our three priorities, that's growth, before Tom will elaborate further on resilience and performance. So why am I confident in our ability to grow? Well, we now have two powerhouse divisions in infrastructure and construction. both with the scale, capability and market positions to capture the opportunities ahead. They are operating from an established platform that is already growing with existing customer relationships and long-term framework positions. We already have three years of work through our order book and PCSA and ECIs, secured on the same disciplined approach to risk that has underpinned our recent performance. We are active in sectors where there is clear visibility of work over, I think, the next 10 to 15 years, giving us confidence in the depth and duration of the opportunity. Four of our existing sectors, water, energy, defence and healthcare, provide material opportunities for growth, supported by structural demand and Kier's proven delivery capability and comfortably cover any rundown from HS2 and Justice. Let's turn into water in a bit more detail. We are aiming to double our existing revenues from 400 million to 800 million by 29. We have strong visibility over a growing market for the next 15 years. That coverage is underpinned by a position on 10 of the 12 major water frameworks. Long-standing relationships with the Environmental Agency and the Canal and River Trust and hard to replicate credentials in the sector. Definitely the structural trends are clearly supportive even before allowing for potential AMP9 growth and major projects such as the strategic reservoir options. Our order book has grown to 1.4 billion. We have visibility over 3.5 billion of additional work in our pipeline. We have a strong delivery platform with around 140 live projects, more than 100 projects in early contractor involvement and we have approximately 150 in-house water and mechanical and electrical specialists. In energy, we are aiming to more than double our existing revenue from $170 million to $400 million by 2029. Energy is a multi-decade growth sector and Kier has hard-to-replicate credentials that position us well to capture that opportunity. Our growth currently is supported by the nuclear work visible within our order book of 680 million, 3 billion of frameworks and 900 million of pipeline opportunities. There is further opportunity beyond that with the current quoted figures including Sizewell C and STEP. and additional revenue I expect from complementary capability across construction and facilities management. This is a market with high barriers to entry driven by the key credentials of a suitably qualified experienced person of which Kier have more than 400 in-house people. The Step Fusion program was a massive win for us because it demonstrates our ability to act as a strategic delivery partner on nationally important mega projects. Longer term, I'm confident we can leverage our capability to grow our share of other energy sectors including transmission, resilience, decarbonisation and battery storage. In defence, we're also aiming to more than double our existing revenue from 150 to 350 million by 29. Kier is strongly positioned to grow its share supported by our frameworks with both the MOD and defence primes over the next 10 years. Our 29 revenue target is already supported by the current order book of 300 million, the PCSAs of 500 million and 11 billion of framework opportunities of which we can already see 7.1 billion of pipeline to bid. Our credentials again are hard to replicate, in particular in security. as more than 700 of our people have the necessary security clearance to work behind the line and in our design because of our recent awarded secure by design accreditation. So I'm confident growth in the sector that has been previously hard to grow because the new MOD alliances are adopting principles from our justice blueprint. Looking ahead, Defence represents a very significant further opportunity across both infrastructure and construction, including facilities management. Bless you. Okay, in healthcare, we are aiming to grow by 50%, from 170 million to 250 million by 29. Healthcare represents at least a 10 year opportunity. and we are well positioned for our role as an alliance partner on key frameworks. Because of this, we can see further growth coming after 29 from an order book of 600 million, framework access of 57 billion and known pipeline currently of 12 billion. Again, our technical expertise is hard to replicate. In particular, I'd point to our in-house M&E and hospital FM capability. Both are differentiators in this sector. Hinchinbrook Hospital is a good example of this. We targeted and secured the opportunity for a new hospital because of our existing FM contract performance with that hospital. Now just moving on to differentiators. Many of you in this room have asked me over the last year what really differentiates Kier. So today I want to set out the strengths I believe already distinguish us before going through a few of them in a bit more detail. TIER has a best-in-class capability in securing renewed frameworks across the UK. This framework strength underpins the quality and visibility of our order book and pipeline and gives me confidence that growth will continue to be secured with the same disciplined approach to risk. Of the 200 billion of frameworks available to us, this slide shows that a substantial proportion of these are aligned to our key sectors. Importantly, including the areas where we have seen the strongest growth opportunities. I also expect in time that central and regional frameworks to become increasingly important procurement routes after devolution. I wanted to bring our national scale and coverage to life. Our model gives us the breadth of resources and capability to meet customer needs across the UK. Our national approach provides consistent delivery Our local presence gives us the insight and relationships needed to meet customers' social value priorities. We can also move resources quickly to where demand is strongest, giving customers confidence that we can respond at scale. In many regions, the scale of our local business is larger than the total revenue of some of our competitors, which gives us both reach and resilience. Moving on to end-to-end capability. Delivering value for money and social value are becoming increasingly important priorities for our customers. Here is good at this because we can draw on our end-to-end capability at scale across the UK. The metrics on this slide demonstrate our breadth and depth. 800 people in design, more than 400 projects delivering 4.3 billion of revenue and our facilities management business. This combined capability allows us to co-create solutions with customers that deliver outcome-led results. I would like to highlight the pre-construction phase because this is where we shine, by shaping the right solution with customers, aligning scope, risk and value, and setting projects up for successful delivery. Finally, I want to highlight our culture because it is one of Kier's most important differentiators. Our connected high-performing culture enables us to attract, develop and retain the talent we need to deliver the opportunities ahead. It creates alignment across the business, supports discipline and execution and gives our people a clear sense of purpose in the work we do for customers and communities across the UK. That culture is a genuine source of competitive advantage It is built over time through consistent behaviours, strong relationships and pride in delivery and is not something that can be quickly or easily replicated. As we move into the next phase of growth, I believe it will be central to how we sustain performance and create long-term value. In short, our differentiators matter on national scale, regional presence, end-to-end capability and connected high performing culture gives us the agility to move resources to where demand is strongest, shape solutions, early win customers, and continue to deliver with discipline as markets evolve. We are also building differentials for the future, in particular, naturally digital, which I will bring back to you later in the year. So, to bring this section together, I want to step back. and just summarise why I'm confident in the growth opportunity ahead of us. We are operating in markets with long-term structural demand, clear customer need. These are essential sectors for the UK and they provide care with a significant, accessible and enduring growth opportunity. That opportunity is reinforced by the strength of our framework positions with access to around, I'll say it again, 200 billion of frameworks, just in case you missed it, which is substantially aligned to our key sectors. It is also underpinned by favourable structural trends that are familiar to all of us. From the need for investment in water and energy, to national security, healthcare capacity and the wider renewal of UK economic and social infrastructure. The four sectors we have just discussed are expected to deliver around 1 billion of revenue uplift over the next few years. Importantly, that growth is not dependent on a single market or a single client. It is supported by deep sector credentials, established customer relationships, disciplined bidding and the ability to bring the breadth of care's capability to complex programs across the UK. So that concludes my section on growth. I will now hand you back to Tom who will take you through the two closely connected priorities that support and label that growth, resilience and performance. Tom.