Highways maintenance boosts Kier profits

A strong performance at the highways maintenance division helped Kier deliver a strong set of annual results.

Revenue at the Services division – which includes highways – was up 13% to £1,247m for the year to June 30 2015 as underlying operating profit rose 9% to £58m.

Performance at the division has been boosted by the acquisition of Mouchel and EM Highways.

Kier said: “The highways business continued to perform well, benefiting from the Government’s continued focus on infrastructure.

“Following the acquisition of Mouchel, Kier is now the sector leader in a growing UK highways maintenance and management market covering both the local authority and strategic highways sectors of the UK highways market, where Government spend has and will continue to increase.

“In the UK, total annual spend on the highways is £13bn, of which approximately £7bn relates to maintenance providing an opportunity for the Group to extend its presence in this market.

“This spend is further underpinned by Highways England’s £17bn five-year investment in the strategic road network.

“The local authority highways market is using funds made available by the new £575m Challenge Fund, set up by central Government, to help repair and maintain local infrastructure from 2016 and improve overall asset management.

“In Kier’s local authority highway business, a £200m four-year extension of the Northamptonshire County Council highways services contract, in joint venture, was confirmed.

“In addition, the extension of the Lincolnshire and East Sussex contracts were extended with an estimated value of £37m and £15m, respectively.

“Discussions are ongoing with Surrey County Council to develop a more strategic approach to their maintenance requirements, as well as a one-year extension with a value of approximately £50m.”

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