Kier Regulatory News (KIE)

22 January 2018

KIER GROUP PLC

INFRASTRUCTURE AND REGIONAL BUILDING UPDATE

Kier, a leading property, residential, construction and services group, provides the following updates relating to its infrastructure and regional building businesses.

· HS2 and Highways England smart motorway joint ventures transfer from Carillion;

· £140m additional infrastructure contracts awarded; and

· £160m Public Health England contract award.

Infrastructure

Further to the announcement of 15 January and after discussions with the Government and their clients, Kier confirms the following:

· On HS2, Kier and Eiffage are now 50/50 joint venture partners delivering two of the seven civil engineering packages, lots C2 and C3. All 51 Carillion employees, including apprentices, working on the CEK HS2 joint venture have been offered the opportunity to join Kier/Eiffage with continuous service to the client being maintained; and

· Kier has assumed full responsibility for the Highways England smart motorway schemes on which it had been working in joint venture with Carillion. All employees currently working on the schemes have been offered the opportunity to join Kier. In total c.150 employees will be making the transition to Kier in the next week including seven apprentices. Engagement with the existing supply chain on this project has also taken place, again ensuring continuity of skills, resources and suppliers.

The above contracts are all performing well, operationally and financially.

In addition, following the acquisition of McNicholas in July 2017, a number of contract extensions have been awarded to this business, totalling £140m. These include:

· A five-year £31m 'Gas to the West' network distribution operation for SGN Natural Gas in Northern Ireland, which secures the Group's place as the principal contractor to three gas distributors in Northern Ireland;

· A £40m contract extension to 2022 to the Phoenix Natural Gas contract in Northern Ireland, and;

· A one-year £30m contract extension to 2020 for the Network Rail CP5 High Voltage and Electrification and Plant framework.

Regional Building

In regional building, the Group has been awarded a £160m Public Health England contract for a new 17,000m² bioscience facility in Harlow, Essex. This is the largest lot of four in a new Public Health England development which will create a leading science campus and headquarters. The new building comprises specialist bioscience laboratories, an energy centre and associated support facilities. Work on the development is scheduled to commence in February 2018.

Haydn Mursell, chief executive of Kier, said: "We have been working collaboratively with our clients and are pleased to have reached agreement with Government concerning these joint ventures. We have been able to take action quickly and reassure the project teams that they continue to play an important role in the delivery of these contracts. The McNicholas acquisition is performing well, providing a highly complementary addition to our utilities services business, and the Public Health England award reflects our growing presence in the bioscience market."

The Group will announce its trading update for the half year ended 31 December 2017 on 25 January 2018.

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