Kier Regulatory News (KIE)

 30 March 2020

Kier Group plc

COVID-19 Update

Kier Group plc ("Kier" or the "Group"), a leading construction and infrastructure services group, today provides an update in light of COVID-19.

During this unprecedented time, the Group has continued to focus on promoting a safe working environment for our employees, suppliers and customers. We have put in place extensive continuity and mitigation plans to ensure that we can operate safely and in line with the Government's latest guidance. For example, we introduced a 24-hour pause across our sites and workplaces to ensure that the Site Operating Procedures issued by the Construction Leadership Council on 24 March 2020 and endorsed by Public Health England have been implemented. If sites or workplaces are not able to operate to this standard, we will either implement modifications to their layout or working practices or close them.

Current trading

Although COVID-19 has created uncertainty, Kier operates across sectors which are vital to the country. The Group maintains the UK's highways, delivers vital maintenance to peoples' homes, provides facilities management services to the NHS, builds schools and hospitals, delivers critical national infrastructure and provides key maintenance and repair services to the water, gas, power, telecoms and rail sectors. Many of these services have Government support and we retain key worker status for a number of our employees who are carrying out these activities. For the year ended 30 June 2019, c.73% of our core Construction and Infrastructure Services activities related to work for Government departments or quasi-governmental entities (for example, HS2 or Network Rail) and a further c.13% related to the provision of services to regulated entities (for example, in the utilities sector). There has been no material change to these figures during the current financial year.

Trading from 1 January 2020 to date has been in line with the Board's expectations. Approximately 80% of our sites or workplaces continue to operate (subject to the pause referred to above), although we recognise that this may change. We continue to receive support from our major customers, including Highways England, the Ministry of Justice and various utilities providers. In line with a number of other companies in the sector, we will pause work on our Kier Living house-building sites.

In light of COVID-19, the process to dispose of Kier Living and the evaluation of the options for our Property business have both been paused.

COVID-19 mitigating actions

We entered this period of uncertainty with a clear strategy, including a cost saving programme and a focus on debt reduction. In response to COVID-19, we have implemented a number of additional measures to enable the Group to continue operating as efficiently as possible. These include c.6,500 employees, including the Executive Committee, and the Board taking a reduction of between 7.5% and 25% in their base salaries or fees for a three-month period beginning on 1 April 2020 and bringing forward the closure of our head office at Tempsford Hall to 30 April 2020. We recognise that the situation is changing rapidly and will continue to review our plans to mitigate the effects of the pandemic.

Our cost saving programme remains on track to deliver at least £65m of savings for the financial year ending 30 June 2021.

We welcome the measures announced by the Government to assist UK companies during this challenging period and we continue to explore their availability to the Group. We continue to have a close dialogue and work together with all our key stakeholders, including the Government and our customers, suppliers and lenders.

Net debt

The Group continues to closely manage its net debt, which remains in line with management's expectations. The Group has total facilities of c.£910m, including c.£700m of facilities which are due for renewal during 2022. For the six-month period ended 31 December 2019, average month-end net debt was £395m.

- ENDS -

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This announcement does not constitute an offer of securities by Kier Group plc (the "Company"). Nothing in this announcement is intended to be, or intended to be construed as, a profit forecast or a guide as to the performance, financial or otherwise, of the Company or any of its subsidiaries (together, the "Group") whether in the current or any future financial year. This announcement may include statements that are, or may be deemed to be, ''forward-looking statements''. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's or the Group's ability to control or predict. Forward-looking statements are not guarantees of future performance. You are advised to read the section headed ''Principal risks and uncertainties'' in the Company's Annual Report and Accounts for the year ended 30 June 2019 and the Company's results announcement for the six months ended 31 December 2019 for a further discussion of the factors that could affect the Company's or the Group's future performance and the industry in which it operates. Other than in accordance with its legal or regulatory obligations, the Company does not accept any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

About Kier

Kier is a leading UK construction and infrastructure services group. The services we offer to our clients fit in to two core market propositions: Construction and Infrastructure Services.

We provide specialist design and build capabilities and the knowledge, skills and intellectual capital of our people ensure we are able to project manage and integrate all aspects of a project.

We take pride in bringing specialist knowledge, sector-leading experience and fresh thinking to create workable solutions for our clients across the country.

Together, we have the scale and breadth of skills of a major company, while retaining a local focus and pride that comes from never being far from our clients, through a network of offices spanning across England, Wales, Scotland and Northern Ireland.

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