Re Contract

RNS Number:5994J
Kier Group PLC
03 April 2003


                                                                    3 April 2003

                          KIER SIGNS #640M PARTNERSHIP

                      CONTRACT WITH SHEFFIELD CITY COUNCIL

Kier Group plc has signed a partnership contract for the provision of the
Sheffield City Council's building maintenance and repairs service. The contract,
which will run for a period of ten years, is expected to provide approximately
#640m of turnover to Kier Group with over #60m expected in the first year.

Kier has established a Limited Liability Partnership (LLP) with the Council and
around 1,200 Council employees have transferred to the new LLP under TUPE
(Transfer of Undertakings and Protection of Employment). The LLP, to be known as
Kier Sheffield LLP, will take over the maintenance and repairs of 60,000 council
houses and other council buildings such as libraries, schools and social
services establishments and will be able to bid for private sector work, not
previously available to the Council.

Kier Group (through Caxton Integrated Services Limited and Caxton Integrated
Services Holdings Limited) holds 80.1% of the capital of Kier Sheffield LLP and
Sheffield City Council holds the remaining 19.9%. Kier Sheffield LLP is financed
with a nominal amount of capital and a #13m loan from Kier Group. Stock and
other assets amounting to #1.1m, employees and the business of the Council's
Construction and Building Services operation (C&BS) have been transferred to
Kier Sheffield LLP for a consideration of #7.7m. Kier Sheffield LLP has entered
into a long-term services agreement to supply back to Sheffield City Council the
services previously carried out by C&BS. Further payments of #1.4m per annum are
due to the Council contingent upon continuation of the services agreement and
certain turnover levels being achieved. In addition the Council holds a put
option in respect of its 19.9% interest in Kier Sheffield LLP exercisable upon
the termination of the services agreement at prevailing market value subject to
certain limitations.

Colin Busby, Chairman of Kier, said:

"I am delighted that the partnership has now been formalised. This represents
Kier Group's largest partnership contract of this nature and our aim is to
deliver significant improvements for the benefit of the Council, its tenants and
other stakeholders. The improvements we made for the London Borough of Islington
won us the title of 'Contract Services Team of the Year'. I am confident that
the Kier Sheffield team is set for equal success. I extend a warm welcome to all
new Kier Sheffield employees who I hope will enjoy being part of a winning team
focused on continuous improvement."

                                    - ENDS -



Enquiries:

Colin Busby, Chairman/Deena Mattar, Finance Director

Kier Group plc                              Tel: [phone]


Caroline Sturdy, Associate Director

Bell Pottinger Financial                    Tel: [phone]



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