TIDMKIE
RNS Number : 4115T
Kier Group PLC
20 March 2019
20 March 2019
Kier Group plc, a leading infrastructure services, buildings and
developments & housing group, announces its results for the six
months ended 31 December 2018
Underlying(1,4)
====================================================================
Six months Six months
ended 31 ended 31
December December Change
2018 2017(2) %
Revenue(3) GBP2,201.5m GBP2,149.9m +2
Profit from operations GBP51.8m GBP60.6m -15
Operating margin 2.4% 2.8%
Profit before tax GBP39.0m GBP49.4m -21
Basic earnings per share 30.8p 40.9p -25
Net debt GBP180.5m GBP238.5m
------------------------------- ------------ ------------ -------
Statutory
====================================================================
Six months Six months
ended 31 ended 31
December December Change
2018 2017(2) %
Group revenue GBP2,064.7m GBP2,007.3m +3
(Loss)/profit from operations GBP(20.9)m GBP48.1m
(Loss)/profit before tax GBP(35.5)m GBP34.3m
Basic earnings per share (28.9)p 28.7p
Interim dividend per share 4.9p 23.0p
Financial summary
-- Revenue of GBP2.2bn (H1 FY18: GBP2.1bn)
-- Underlying operating profit of GBP51.8m (H1 FY18: GBP60.6m),
after GBP10m net costs from the Future Proofing Kier programme
-- Non-underlying charges of GBP59.9m
-- Net debt position as at 31 December 2018 of GBP180.5m (December 2017: GBP238.5m)
-- Average month-end net debt for the period of GBP430m (H1 FY18: c.GBP350m)
-- Rights issue completed in December 2018 to strengthen the balance sheet
-- Basic earnings per share of 30.8p (H1 FY18: 40.9p)(5)
-- Interim dividend of 4.9p.(5)
Future Proofing Kier (FPK) programme
-- Delivered savings of GBP4m, with implementation costs of GBP14m, in H1 FY19
-- FY19 forecast to be earnings and cash flow neutral
-- Net savings of GBP20m anticipated in FY20
-- Continued progress on disposal programme; sale of Kier
Highways Services Australia completed in December 2018.
Operational highlights
-- Order book of c.GBP10bn (H1 FY18: GBP9.8bn)
-- GBP2.1bn of new contract wins during the period
-- 9 property scheme sales completed in the period
-- 842 new residential units delivered (H1 FY18: 965)
-- Advanced stages of negotiations to exit significant loss-making waste collection contract.
1. Financial information in the table above relates to continuing operations.
2. Restated to classify Wheldon Contracts & Services as discontinued.
3. Group and share of joint ventures.
4. Stated before non-underlying items - see note 3 to the interim financial statements.
5. Reflecting the adjustment to the number of shares following the rights issue.
Commenting on the outlook, Philip Cox, Executive Chairman, said;
"Our regional building and property development businesses continue
to operate well, although we are experiencing some volume pressures
in the highways, utilities and housing maintenance markets.
The Group has a significantly strengthened balance sheet
following the completion of the rights issue in December 2018. The
Board continues to focus on simplifying the Group, improving cash
flow generation and net debt reduction, and forecasts a net cash
position at 30 June 2019.
Whilst the Board notes the current political and economic
uncertainty in the UK, and the implications for third party
investment, the Group is maintaining its underlying FY19
expectations, with the full-year results being weighted towards the
second-half of the financial year, as expected."
-S -
There will be a presentation of the results to analysts and
investors at 0900 hours GMT on 20 March 2019 at etc.venues St.
Pauls, 200 Aldersgate, London, EC1A 4HD and a live webcast:
https://www.investis-live.com/kier/5c5c5850cad1ac0c008dab1e/qeqe
which will also be recorded and made available later in the day on
Kier's website.
For further information, please contact:
Louise Turner-Smith, Kier investor relations +44 (0)7976 790012
Kier press office +44 (0)1767 355096
Richard Mountain/Nick Hasell, FTI Consulting +44 (0)203 7271340
EXECUTIVE CHAIRMAN'S STATEMENT
Overview
Following the announcement on 22 January 2019 that Haydn Mursell
would stand down as Chief Executive, I assumed the role of
Executive Chairman.
I am pleased to announce the Group's results for the six months
ended 31 December 2018. Revenue for the period was GBP2.2bn (H1
FY18: GBP2.1bn) and underlying operating profit was GBP51.8m (H1
FY18: GBP60.6m). Net debt at 31 December 2018 was GBP180.5m and
average month-end net debt for the period was GBP430m. These net
debt figures include the net proceeds from the December 2018 rights
issue (the Rights Issue), which resulted in a reduction in the
Group's trade creditors and significantly strengthened its balance
sheet. The Group's order book was c.GBP10bn at 31 December 2018 (H1
FY18: GBP9.8bn), following c.GBP2.1bn of awards in the period.
Following its launch in June 2018, the Future Proofing Kier
(FPK) programme has continued to progress well. The programme aims
to streamline the business, drive operational efficiencies and
improve profitability. The costs of implementing the programme in
H1 FY19 were GBP14m, with associated savings of GBP4m. We continue
to expect the FPK programme to be earnings and cash flow neutral in
FY19 and anticipate that it will deliver annual savings of GBP20m
in FY20. We continued to make progress on disposals and, in
December 2018, completed the sale of Kier Highways Services
Australia.
Our safety performance continues to improve, with the Group's
accident incidence rate (AIR) at 31 December 2018 being 79, a 40%
improvement year-on-year and significantly below the average for
the sector.
We are pleased to report that Andrew Davies will join the Group
as Chief Executive with effect from 15 April 2019. Andrew was the
Chief Executive Officer of Wates Group Limited from 2014 to 2018
and spent over 28 years with BAE Systems plc, undertaking a range
of senior operational and corporate roles, including Group Strategy
Director and, latterly, Managing Director of the Maritime Division.
Andrew brings a strong track record of business leadership and
operational experience and, on behalf of the Board, I would like to
welcome Andrew to the Group.
Outlook
Our regional building and property development businesses
continue to operate well, although we are experiencing some volume
pressures in the highways, utilities and housing maintenance
markets.
The Group has a significantly strengthened balance sheet
following the completion of the Rights Issue. The Board continues
to focus on simplifying the Group, improving cash flow generation
and net debt reduction, and forecasts a net cash position at 30
June 2019.
Whilst the Board notes the current political and economic
uncertainty in the UK, and the implications for third party
investment, the Group is maintaining its underlying FY19
expectations, with the full-year results being weighted towards the
second-half of the financial year, as expected.
FINANCIAL REVIEW
Summary of underlying results
The Group's results for the six months ended 31 December 2018
reflect the adoption of IFRS 15 (Revenue from Contracts with
Customers) and IFRS 9 (Financial Instruments) and are presented
under the Group's new reporting structure.
The Group's underlying revenue, including its share of revenue
from joint ventures, for the period was GBP2.2bn, an increase of 2%
compared to the equivalent period in FY18:
-- Infrastructure Services' revenue increased by 8%;
-- Buildings' revenue increased by 10%; and
-- Developments & Housing's revenue reduced by 19%.
The Group's underlying operating profit for the period of
GBP51.8m reflects net costs of GBP10m relating to the
implementation of the FPK programme. In particular:
-- In the Infrastructure Services division, margins decreased to
4.3% (H1 FY18: 4.9%), principally as a result of the change in the
overall mix of work from maintenance to lower value capital
projects;
-- In the Buildings division, margins increased to 3.4% (H1
FY18: 2.1% (including c.GBP8m of non-recurring exit costs relating
to the Hong Kong and Caribbean operations));
-- In the Developments & Housing division, margins reduced
from to 4.3% (H1 FY18: 5%), principally as a result of a reduction
of volumes. The businesses reported a ROCE of 14% and 9%,
respectively; and
-- Central costs increased by 55% to GBP34.2m, reflecting GBP14m
of gross FPK implementation costs.
Net financing costs
Underlying net financing costs for the period of GBP12.8m (H1
FY18: GBP11.2m) increased in line with average month-end net debt
for the period.
Taxation
The underlying tax charge for the period of GBP7.6m (H1 FY18:
GBP8.5m) represents an effective corporation tax rate of 20.5% (H1
FY18: 17%) and includes the effect of joint venture tax.
Non-underlying charges
The Group is reporting the following charges:
-- Curtailment of a loss-making waste collection contract: the
Group is in the advanced stages of negotiation with respect to the
early termination of a significant loss-making waste collection
contract. A non-underlying provision of GBP26m has been made in
respect of the anticipated phased settlement payments to be made to
the client between FY20 - FY26, which would be more than offset by
the savings resulting from the termination.
-- Broadmoor Hospital redevelopment project: as announced on 11
March 2019, a GBP25m non-underlying provision has been taken in
respect of future recoveries from the client and other third
parties.
-- Disposals: in the period, the Group sold its interests in
Kier Highways Services Australia, its pension administration
business and The Unity Partnership Limited for an aggregate cash
consideration of GBP29.7m and a total loss of GBP0.8m after the
application of non-cash goodwill and contract rights of GBP17.3m,
net of deferred tax.
-- Pension: following a court ruling relating to the Guaranteed
Minimum Pension in October 2018, the Group's actuaries have
recommended the recognition of a GBP6.1m equalisation charge in
respect of the Group's final salary pension schemes. There is no
cash impact associated with this charge.
-- McNicholas acquisition: the Group has incurred GBP5.4m of
non-recurring costs relating to the integration of the McNicholas
business into the Group's utilities business. These costs have been
offset by the reversal of a provision for deferred consideration of
GBP5.5m.
The net cash inflow associated with the above items is GBP17.5m.
GBP16.0m was reported as the net cash balances within the disposed
businesses at 30 June 2018.
Earnings per share
Underlying earnings per share from continuing operations (EPS)
was 30.8p (H1 FY18: 40.9p). The weighted average number of shares
in issue for the period of 103.1m reflects the shares issued in
connection with the Rights Issue. EPS for prior periods has been
restated to reflect the application of the adjustment factor of
1.0176, being the bonus element of the new shares issued in
connection with the Rights Issue.
Net debt
The Group's net debt position of GBP180.5m at 31 December 2018
(H1 FY18: GBP238.5m) and average month-end net debt of GBP430m for
the period (H1 FY19: GBP350m) reflect the net proceeds of the
Rights Issue.
The total net working capital outflow in the period of GBP220m
was materially higher than in prior years. This outflow comprised a
GBP97m reduction in trade payables, an increase in net
work-in-progress of GBP97m arising from a reduction in payments in
advance of costs in December 2018 and an increase of GBP26m in
work-in-progress in the Residential business following delays in
unit completions. This compares to average working capital outflows
of GBP56m over the first six months of the preceding three
financial years.
Supplier utilisation of the Kier supply chain finance facility
has increased to an average during the period of GBP196m (H1 FY18:
GBP176m). The differential between average daily net debt and
average month-end net debt during the period was c.GBP90m.
The Group reported average payment terms (excluding McNicholas)
of 55 days for the period under the Reporting on Payment Practices
and Performance Regulations, an improvement of two days on the
period ended 30 June 2018. The reported figure is based on the
volume of transactions processed by the Group.
Financial Reporting Standards
Impact of IFRS 9 (Financial Instruments)
The implementation of IFRS 9 relates primarily to hedge
accounting and the classification, measurement and impairment of
financial assets.
The adoption of IFRS 9 has had no material impact on the Group's
interim financial statements.
Impact of IFRS 15 (Revenue from Contracts and Customers)
The Group has made GBP43.1m of opening reserves adjustments, net
of tax, as a result of the transition to IFRS 15. Whilst IFRS 15
can impact on the timing of revenue and profit recognition on
individual contracts in a particular accounting period, it does not
change the overall revenue, profit or cash generated over the life
of the contract.
These adjustments relate to:
-- Transitioning from revenue recognition based on external
progress valuation to internal cost (GBP14.2m);
-- Certain claims receivable from non-customer third parties
which, under IAS 37, now require recovery to be "virtually certain"
(GBP24.6m);
-- Disaggregation of performance criteria relating to a single IT service contract (GBP3.4m);
-- Derecognition of variations on a contract in the Middle East (GBP9.7m); and
-- Less the deferred tax credit on the above at 17% (GBP8.8m).
The total reversal of these adjustments resulted in a non-cash
credit of GBP10.4m, after tax.
Impact of IFRS 16 (Leases)
The Group continues to work on assessing the impact of IFRS 16,
which will be adopted in FY20. The Group will provide an update on
the impact of adopting IFRS 16 in due course.
Financial Reporting Council (FRC) Corporate Reporting Review
The Company continues to engage with the FRC with respect to the
FRC's letter of 30 July 2018 about the Company's 2017 Annual Report
(as referred to on page 78 of the 2018 Annual Report). The
principal outstanding issues relate to: (i) the Company's
accounting treatment of certain joint ventures in its property and
residential businesses, as referred to on page 33 of the Company's
Rights Issue prospectus dated 30 November 2018; and (ii) the basis
of revenue recognition of certain items.
Order book
The combined order book was c.GBP10.0bn at 30 June 2018 (H1
2018: GBP9.8bn (adjusted for the disposal of Kier Highways Service
Australia)).
Retirement benefit obligation
The overall pension position has moved from a post-tax surplus
of GBP8m at 30 June 2018 to a deficit of GBP14m at 31 December
2018. This movement was primarily driven by the recent performance
of the schemes' assets and the recognition of the Guaranteed
Minimum Pension equalisation charge of GBP6.1m. The Group's cash
contributions in the period to the actuarial deficit were GBP12m.
The revised triennial actuarial valuation of the Group's principal
schemes commences on 31 March 2019.
Dividend
An interim dividend of 4.9p (H1 FY18: 23.0p), amounting to
GBP8m, will be paid on 17 May 2019 to shareholders on the register
at the close of business on 29 March 2019. As an alternative to the
cash dividend, shareholders will be offered the option to
participate in a dividend reinvestment plan (DRIP). The deadline
for shareholders to submit their instructions to participate in the
DRIP is 5.30 p.m. (London time) on 25 April 2019.
Principal risks and uncertainties
The principal risks and uncertainties relating to the Group
continue to be those which are set out on pages 38 - 43 of the
Group's annual report and accounts relating to the Group for the
year ended 30 June 2018. These comprise safety; health and
sustainability; regulation; funding; market and sector performance;
operating model; contract management; pre-contract governance;
people; innovation; cyber-security and the impact of Brexit. In
addition, the risks referred to in the section of the Company's
Rights Issue prospectus dated 30 November 2018 entitled "Risk
factors" continue to apply.
OPERATIONAL REVIEW
The Group is reporting its operations under Infrastructure
Services, Buildings and Developments & Housing.
Underlying operating
Revenue profit
six months ended six months ended
31 December Change 31 December Change
GBPm % GBPm %
2018 2017 2018 2017
--------- --------- ------- ----------- ---------- -------
Infrastructure
Services 867.7 801.5 +8 37.2 39.3 -5
--------- --------- ------- ----------- ---------- -------
Buildings 914.7 832.1 +10 30.8 17.7 +74
--------- --------- ------- ----------- ---------- -------
Developments &
Housing 419.1 516.3 -19 18.0 25.7 -30
--------- --------- ------- ----------- ---------- -------
Infrastructure Services (Highways, Utilities & Rail and
Major Projects - Infrastructure)
Revenues increased by 8% to GBP867.7m (H1 FY18: GBP801.5m),
generating an underlying operating profit of GBP37.2m (H1 FY18:
GBP39.3m) and an operating margin of 4.3% (H1 FY18: 4.9%),
reflecting the change in mix of revenues. The Infrastructure
Services businesses' order book at 31 December 2018 increased to
c.GBP6.0bn (30 June 2018: GBP5.5bn).
In Highways, Kier was appointed in November 2018 to a new
six-year framework to deliver capital schemes for Highways England
in the north of England and has continued to deliver four schemes
across the M6, M20 and M23, with one scheme nearing completion.
Within the Highways England GBP17bn five-year Road Investment
Strategy (RIS1) programme, the business is experiencing some volume
pressures. During the period, the business reported an increase in
turnover from capital projects awarded, but a reduction in turnover
from maintenance projects.
In Utilities, the Group was awarded the Gigaclear contract for
high-speed networks in Devon and Somerset, new contracts totalling
c.GBP250m by Anglian Water, as part of AMP7, and an additional
contract by Western Power Distribution. In early March 2019, the
business was awarded a place on the five-year GBP50m Severn Trent
Water civils framework.
In Major Projects - Infrastructure, the Group secured new work
under the Hinkley Point C framework. In the transport sector, work
continues on HS2 where we are working collaboratively with the
client to scope the programme while ensuring an appropriate risk
allocation for the Group. Work continues on the remaining
landscaping and site clearing at the Mersey Gateway project, with
the claims recovery process continuing.
Infrastructure Services outlook
In Highways, the business has identified a number of
opportunities for new local authority contracts and anticipates a
continued change in the mix of work awarded to it by Highways
England. In Utilities, although current trading remains positive,
the Group anticipates pressure on volumes in the second half of the
year.
Buildings (Regional Building, Major Projects - Building,
International and Facilities Management)
The Buildings businesses delivered a good performance, with
revenue increasing by 10% to GBP914.7m (H1 FY18: GBP832.1m),
generating an underlying operating profit increase of 74% to
GBP30.8m (H1 FY18: GBP17.7m). Underlying operating margins were
3.4% (H1 FY18: 2.1%) and the businesses have an order book of
c.GBP3.6bn (30 June 2018: GBP3.8bn). Over GBP0.7bn of new contracts
were secured during the period, a significant number of which were
under frameworks.
Regional Building secured a number of new opportunities across
different market sectors, including education and health,
principally through frameworks. These include: the Department for
Education framework, Priority Schools Building Programme 2 (PSPB),
Procure 22, Buildings for Wales, Health Facilities Scotland, Scape,
North West Construction Hub, Westworks, Procure North West and the
recently secured Southern Construction framework.
In the defence sector, significant contracts awarded to the
Group in the period included the GBP160m F35 Beddown scheme at RAF
Lakenheath, in joint venture, and additional work for the Army
Basing Programme at MOD Lyneham.
In the Major Projects - Building business, a number of major
projects are nearing completion, including the Abcam headquarters
in Cambridge and a new University of Cambridge laboratory. In
addition, the Group secured a number of new awards in the period,
including the GBP125m office development at King's Cross, London,
and has been appointed as the preferred bidder for a major
redevelopment for British Land in London.
The first phase of the Broadmoor Hospital redevelopment project
is expected to be handed over shortly. A GBP25m non-underlying
provision has been taken in respect of future recoveries from the
client and other third parties.
The Facilities Management business continues to focus on seeking
to exit under-performing contracts, reducing overhead and
recovering work in progress.
In the Middle East, the five-star Saadiyat Beach Rotana hotel,
the Nshama Barsha residential project and the Bluewaters island
development were completed during the period. Contract awards in
the period amounted to GBP89m and included infrastructure contracts
on Expo 2020 and on the Dubai Harbour development.
Buildings outlook
Regional Building has seen a good start to the second half of
the financial year, with its breadth of sectors and clients
providing the business with resilience. The business has recently
secured places on a number of frameworks, such as the GBP5.2bn
Southern Construction framework, and expects to continue to
identify opportunities for future growth.
Developments & Housing (Property Development, Residential
House Building, Housing Maintenance and Environmental Services)
Revenues were GBP419.1m (H1 FY18: GBP516.3m), generating an
underlying operating profit of GBP18.0m (H1 FY18: GBP25.7m),
principally reflecting reductions in housing completions in the
period (as compared to H1 FY18) and housing maintenance volumes.
Investment capital in these businesses continues to be capped at
GBP500m.
In Property, revenues were GBP106m (H1 FY18: GBP138m) generating
an underlying operating profit of GBP11.6m (H1 FY18: GBP12.2m) and
a ROCE of 14%. The business completed nine (9) sales in the period,
as compared to five (5) in the equivalent period in FY18. The
majority of the Group's development schemes are outside central
London, with opportunities across a range of sectors and regions.
During the period, the Group identified opportunities in the
industrial, office and residential market sectors. The business has
a good pipeline of forward sold work and expects to complete a
number of projects in the second half of the financial year. In
February 2019, the Group was awarded the GBP180m contract for the
Pall Mall regeneration project in Liverpool by Liverpool City
Council.
In Residential, revenues were GBP151m (H1 FY18: GBP166m), with
an operating profit of GBP9.1m (H1 FY18: GBP8.7m). The business
reported a sales rate of 0.8 units per sales outlet per week (H1
FY18: 0.7), although unit completions at 842 (H1 FY18: 965) were
impacted by delays in planning and on-site start-ups. ROCE was 9%
and the landbank comprised 4,739 units at 31 December 2018 (H2
FY18: 3,897).
The housing maintenance market continues to be influenced by the
budgetary pressures experienced by housing associations and local
authorities. During the period, the Housing Maintenance business
experienced a reduction in revenue (as compared to H1 FY18),
following the conclusion of the Stoke contract and the imminent
in-sourcing of the North Tyneside contract.
In Environmental Services, the Group is in the advanced stages
of negotiations with respect to the early termination of a
significant loss-making waste collection contract. Please see
"Financial Review - non-underlying charges" above for further
information.
Developments & Housing outlook
The Property business' forward sold strategy has supported a
good performance in the period and the business remains on course
to deliver its FY19 financial targets. In Residential, although the
business' sales rates remain good, the Group's principal focus in
the second half of the financial year will be to deliver the
required rate of unit completions, with an increasing number of
sites being managed through joint ventures. In the Housing
Maintenance business, the focus on streamlining the business and
operational efficiency will continue.
Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
Consolidated income statement 2018
For the six months ended 31 December 2018
Unaudited Unaudited
6 months 6 months Year
to 31 to 31 to
December December 30 June
2018 2017(1,2) 2018(2)
Non-underlying Non-underlying Non-underlying
items items items
Underlying (note Underlying (note Underlying (note
Continuing items(3) 3) Total items(3) 3) Total items(3) 3) Total
operations Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Revenue(4)
Group and share
of joint
ventures 2 2,201.5 (12.7) 2,188.8 2,149.9 11.9 2,161.8 4,493.3 19.5 4,512.8
Less share of
joint ventures 2 (124.1) - (124.1) (154.5) - (154.5) (273.2) - (273.2)
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Group revenue 2,077.4 (12.7) 2,064.7 1,995.4 11.9 2,007.3 4,220.1 19.5 4,239.6
Cost of sales (1,857.7) (39.3) (1,897.0) (1,820.6) (11.9) (1,832.5) (3,818.2) (19.5) (3,837.7)
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Gross
profit/(loss) 219.7 (52.0) 167.7 174.8 - 174.8 401.9 - 401.9
Administrative
expenses (182.1) (19.9) (202.0) (137.6) (12.5) (150.1) (288.1) (25.6) (313.7)
Share of
post-tax
results of
joint
ventures 14.2 - 14.2 22.8 - 22.8 42.7 - 42.7
Profit/(loss)
on disposal
of joint
ventures
and
subsidiaries - (0.8) (0.8) 0.6 - 0.6 3.5 - 3.5
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Profit/(loss)
from operations 2 51.8 (72.7) (20.9) 60.6 (12.5) 48.1 160.0 (25.6) 134.4
Finance income 1.0 - 1.0 0.5 - 0.5 0.9 - 0.9
Finance cost (13.8) (1.8) (15.6) (11.7) (2.6) (14.3) (24.0) (5.1) (29.1)
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Profit/(loss)
before tax 39.0 (74.5) (35.5) 49.4 (15.1) 34.3 136.9 (30.7) 106.2
Taxation 5 (7.6) 12.9 5.3 (8.5) 3.1 (5.4) (23.3) 5.6 (17.7)
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Profit/(loss)
for the period
from continuing
operations 31.4 (61.6) (30.2) 40.9 (12.0) 28.9 113.6 (25.1) 88.5
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Discontinued
operations
Profit/(loss)
for the period
from
discontinued
operations - - - (0.6) - (0.6) (1.0) - (1.0)
Profit/(loss)
for the period 31.4 (61.6) (30.2) 40.3 (12.0) 28.3 112.6 (25.1) 87.5
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Attributable
to:
Owners of the
parent 30.8 (60.6) (29.8) 39.8 (12.0) 27.8 112.4 (25.1) 87.3
Non-controlling
interests 0.6 (1.0) (0.4) 0.5 - 0.5 0.2 - 0.2
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
31.4 (61.6) (30.2) 40.3 (12.0) 28.3 112.6 (25.1) 87.5
================ ===== ========== ============== ========= ========== ============== ========= ========== ============== =========
Earnings per
share
Basic earnings
per share
From continuing
operations 7 30.8p (59.7)p (28.9)p 40.9p (12.2)p 28.7p 114.7p (25.4)p 89.3p
From
discontinued
operations 7 - - - (0.6)p - (0.6)p (1.0)p - (1.0)p
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Total 30.8p (59.7)p (28.9)p 40.3p (12.2)p 28.1p 113.7p (25.4)p 88.3p
Diluted earnings
per share
From continuing
operations 7 30.8p (59.7)p (28.9)p 40.6p (12.1)p 28.5p 113.4p (25.1)p 88.3p
From
discontinued
operations 7 - - - (0.6)p - (0.6)p (1.0)p - (1.0)p
---------------- ----- ---------- -------------- --------- ---------- -------------- --------- ---------- -------------- ---------
Total 30.8p (59.7)p (28.9)p 40.0p (12.1)p 27.9p 112.4p (25.1)p 87.3p
================ ===== ========== ============== ========= ========== ============== ========= ========== ============== =========
(1) Restated to reclassify Wheldon Contracts & Services as
discontinued.
(2) Earnings per share for the six months to 31 December 2017
and year to 30 June 2018 restated as a result of the rights issue
which completed on 20 December 2018, see note 7 to the financial
statements.
(3) Stated before non-underlying items, see note 3 to the
financial statements.
(4) Non-underlying revenue for the six months to 31 December
2017 and year to 30 June 2018 relates exclusively to UK Mining
operations. Non-underlying revenue for the six months to 31
December 2018 relating to the UK Mining operations of GBP2.3m is
presented net of a GBP15.0m revenue adjustment with respect to the
Group's Broadmoor Hospital development project (see note 3 for
further details).
Consolidated statement of comprehensive income Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
2018
For the six months ended 31 December 2018
Unaudited Unaudited
6 months 6 months Year
to 31 to 31 to 30
December December June
2018 2017 2018
GBPm GBPm GBPm
--------------------------------------------------------- --------- --------- ------
(Loss)/profit for the period (30.2) 28.3 87.5
---------------------------------------------------------- --------- --------- ------
Items that may be reclassified subsequently
to the income statement
Share of joint venture fair value movements
in cash flow hedging instruments - 0.1 0.4
Deferred tax on share of joint venture fair
value movements on cash flow hedging instruments - - (0.1)
Share of joint venture fair value movements
on cash flow hedging instruments recycled to
the income statement - - 2.3
Deferred tax on share of joint venture fair
value movements on cash flow hedging instruments
recycled to the income statement - - (0.4)
Fair value gain/(loss) on cash flow hedging
instruments 6.5 (5.8) (3.4)
Fair value movements on cash flow hedging instruments
recycled to the income
statement (4.3) 3.8 1.6
Deferred tax on fair value movements on cash
flow hedging instruments (0.4) 0.3 0.3
Foreign exchange gains/(losses) on long-term
funding of foreign operations 4.6 0.2 (0.2)
Foreign exchange translation differences (3.1) (1.7) (0.3)
Foreign exchange movements recycled to the income
statement (0.6) - (0.9)
---------------------------------------------------------- --------- --------- ------
Total items that may be reclassified subsequently
to the income statement 2.7 (3.1) (0.7)
---------------------------------------------------------- --------- --------- ------
Items that will not be reclassified to the income
statement
Re-measurement of defined benefit liabilities (30.2) 59.8 79.8
Deferred tax credit/(charge) on actuarial (losses)/gains
on defined benefit liabilities 5.1 (10.2) (13.6)
Total items that will not be reclassified to
the income statement (25.1) 49.6 66.2
---------------------------------------------------------- --------- --------- ------
Other comprehensive (loss)/income for the period (22.4) 46.5 65.5
---------------------------------------------------------- --------- --------- ------
Total comprehensive (loss)/income for the period (52.6) 74.8 153.0
========================================================== ========= ========= ======
Attributable to:
Owners of the parent (52.2) 74.3 152.8
Non-controlling interests - continuing operations (0.4) 0.5 0.2
---------------------------------------------------------- --------- --------- ------
(52.6) 74.8 153.0
========================================================= ========= ========= ======
Total comprehensive (loss)/income attributable
to equity shareholders arises from:
Continuing operations (52.2) 74.9 153.8
Discontinued operations - (0.6) (1.0)
------------------------------------------------ ------ ----- -----
(52.2) 74.3 152.8
=============================================== ====== ===== =====
Consolidated statement of changes in equity Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
2018
For the six months ended 31 December 2018
Equity
Cash attributable
Capital flow to owners
Share Share redemption Retained hedge Translation Merger of Non-controlling Total
capital premium reserve earnings reserve reserve reserve the parent interests equity
Unaudited GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------- ---------- -------- ------- ----------- -------- ------------ --------------- ------
At 30 June
2017 1.0 434.8 2.7 (63.9) (5.7) 4.7 134.8 508.4 3.0 511.4
Profit for the
period - - - 27.8 - - - 27.8 0.5 28.3
Other
comprehensive
income/(loss) - - - 49.6 (1.6) (1.5) - 46.5 - 46.5
Dividends paid - - - (43.7) - - - (43.7) (0.7) (44.4)
Issue of own
shares - 0.2 - - - - - 0.2 - 0.2
Share-based
payments - - - 3.3 - - - 3.3 - 3.3
Purchase of
own
shares - - - (0.5) - - - (0.5) - (0.5)
-------------- ------- ------- ---------- -------- ------- ----------- -------- ------------ --------------- ------
At 31 December
2017 1.0 435.0 2.7 (27.4) (7.3) 3.2 134.8 542.0 2.8 544.8
Profit/(loss)
for the
period - - - 59.5 - - - 59.5 (0.3) 59.2
Other
comprehensive
income - - - 16.6 2.3 0.1 - 19.0 - 19.0
Dividends paid - - - (22.4) - - - (22.4) (0.8) (23.2)
Share-based
payments - - - 2.1 - - - 2.1 - 2.1
Purchase of
own
shares - - - (0.8) - - - (0.8) - (0.8)
-------------- ------- ------- ---------- -------- ------- ----------- -------- ------------ --------------- ------
At 30 June
2018 1.0 435.0 2.7 27.6 (5.0) 3.3 134.8 599.4 1.7 601.1
Impact of
adopting
IFRS 15 (note
17) - - - (43.1) - - - (43.1) - (43.1)
-------------- ------- ------- ---------- -------- ------- ----------- -------- ------------ --------------- ------
At 1 July 2018 1.0 435.0 2.7 (15.5) (5.0) 3.3 134.8 556.3 1.7 558.0
Loss for the
period - - - (29.8) - - - (29.8) (0.4) (30.2)
Other
comprehensive
(loss)/income - - - (25.1) 1.8 0.9 - (22.4) - (22.4)
Dividends paid - - - (44.7) - - - (44.7) (1.6) (46.3)
Issue of own
shares 0.6 249.3 - - - - - 249.9 - 249.9
Share-based
payments - - - 5.1 - - - 5.1 - 5.1
Purchase of
own
shares - - - (0.5) - - - (0.5) - (0.5)
-------------- ------- ------- ---------- -------- ------- ----------- -------- ------------ --------------- ------
At 31 December
2018 1.6 684.3 2.7 (110.5) (3.2) 4.2 134.8 713.9 (0.3) 713.6
============== ======= ======= ========== ======== ======= =========== ======== ============ =============== ======
The numbers in the table above are shown net of tax as
applicable.
Under the terms of a fully underwritten rights issue, ordinary
shareholders of the Company on the register at the close of
business on 30 November 2018 were offered 64,455,707 new ordinary
shares of 1 pence each on the basis of 33 new ordinary shares for
every existing 50 ordinary shares held. The new shares were fully
subscribed on 20 December 2018, resulting in proceeds on issue of
GBP249.9m, net of expenses of GBP13.7m that were charged against
the share premium account.
Consolidated balance sheet Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
2018
At 31 December 2018
Unaudited Unaudited
31 December 31 December 30 June
2018 2017(1) 2018
Notes GBPm GBPm GBPm
------------------------------------------------- ----- ------------ ------------ ---------
Non-current assets
Intangible assets 829.9 866.6 862.2
Property, plant and equipment 83.7 89.1 91.6
Investments in and loans to joint ventures 238.3 188.4 226.1
Capitalised mobilisation costs 8.6 - -
Deferred tax assets 13.4 7.5 -
Contract assets 21.2 - -
Trade and other receivables 15.6 52.9 49.2
Retirement benefit assets 4 33.4 38.6 39.5
------------------------------------------------- ----- ------------ ------------ ---------
Non-current assets 1,244.1 1,243.1 1,268.6
------------------------------------------------- ----- ------------ ------------ ---------
Current assets
Inventories 286.5 588.7 575.0
Contract assets 456.5 - -
Trade and other receivables 466.5 530.5 603.0
Corporation tax receivable 8.5 - 15.4
Other financial assets 14 21.7 12.8 15.2
Cash and cash equivalents 9 434.0 415.0 330.9
------------------------------------------------- ----- ------------ ------------ ---------
Current assets 1,673.7 1,547.0 1,539.5
Assets held for sale as part of a disposal group 8 12.0 0.8 1.3
================================================= ===== ============ ============ =========
Total assets 2,929.8 2,790.9 2,809.4
================================================= ===== ============ ============ =========
Current liabilities
Borrowings 9 (49.7) - (12.0)
Finance lease obligations (2.3) (5.6) (4.0)
Trade and other payables 10 (1,270.3) (1,382.1) (1,526.8)
Contract liabilities (125.3) - -
Corporation tax payable - (5.7) -
Provisions (17.8) (15.1) (15.4)
Current liabilities (1,465.4) (1,408.5) (1,558.2)
------------------------------------------------- ----- ------------ ------------ ---------
Liabilities held for sale as part of a disposal
group 8 - (3.0) (3.4)
------------------------------------------------- ----- ------------ ------------ ---------
Non-current liabilities
Borrowings 9 (589.4) (671.6) (524.9)
Finance lease obligations (2.1) (3.0) (3.1)
Other financial liabilities 14 - (0.1) -
Trade and other payables (34.3) (30.0) (24.2)
Retirement benefit obligations 4 (49.9) (61.9) (31.6)
Provisions (75.1) (68.0) (52.1)
Deferred tax liability - - (10.8)
Non-current liabilities (750.8) (834.6) (646.7)
------------------------------------------------- ----- ------------ ------------ ---------
Total liabilities (2,216.2) (2,246.1) (2,208.3)
================================================= ===== ============ ============ =========
Net assets 713.6 544.8 601.1
================================================= ===== ============ ============ =========
Equity
Share capital 1.6 1.0 1.0
Share premium 684.3 435.0 435.0
Capital redemption reserve 2.7 2.7 2.7
Retained earnings (110.5) (27.4) 27.6
Cash flow hedge reserve (3.2) (7.3) (5.0)
Translation reserve 4.2 3.2 3.3
Merger reserve 134.8 134.8 134.8
------------------------------------------------- ----- ------------ ------------ ---------
Equity attributable to owners of the parent 713.9 542.0 599.4
Non-controlling interests (0.3) 2.8 1.7
------------------------------------------------- ----- ------------ ------------ ---------
Total equity 713.6 544.8 601.1
================================================= ===== ============ ============ =========
(1) Prior period restated to move GBP17.1m from current to
non-current other receivables in regard to PFI lifecycle funds.
Consolidated cash flow statement Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
2018
For the six months ended 31 December 2018
Unaudited Unaudited
6 months 6 months Year
to 31 to 31 to 30
December December June
2018 2017(1) 2018
Notes GBPm GBPm GBPm
------------------------------------------------------------------- --------- --------- -------
Cash flow from operating activities
(35.5) 34.3
Profit/(loss) before tax - continuing operations - - 106.2
- discontinued operations - (0.6) (1.0)
Non-underlying items excluding amortisation, depreciation
and finance costs 59.7 - -
Net finance cost 14.6 13.8 28.2
Share of post-tax trading results of joint ventures (14.2) (22.8) (42.7)
Normal cash contributions to pension fund in excess
of pension charge 0.2 0.9 0.8
Equity settled share-based payments charge 5.1 3.3 5.4
Amortisation of intangible assets less negative goodwill
recognised 25.1 17.1 37.7
Research and development expenditure credit (3.3) (1.5) (8.6)
Depreciation charges 7.1 9.9 19.1
Profit on disposal of joint ventures and subsidiaries - (0.6) (3.5)
Profit/(loss) on disposal of property, plant and equipment
and intangible assets 1.4 (1.8) (0.8)
------------------------------------------------------------------- --------- --------- -------
Operating cash inflows before movements in working
capital 60.2 52.0 140.8
Deficit contributions to pension fund (11.9) (14.5) (26.6)
(Increase)/decrease in inventories (35.7) 7.2 33.4
(Increase)/decrease in receivables (15.6) 39.9 (29.4)
Increase in contract assets (50.1) - -
(Decrease)/increase in payables (48.9) (94.8) 32.5
Decrease in contract liabilities (68.1) - -
Decrease in provisions (1.8) (8.6) (9.9)
------------------------------------------------------------------- --------- --------- -------
Cash (outflow)/inflow from operating activities before
non-underlying items (171.9) (18.8) 140.8
Cash outflow from operating activities (non-underlying
items) 3 (10.5) (15.0) (32.0)
------------------------------------------------------------------- --------- --------- -------
Cash (outflow)/inflow from operating activities (182.4) (33.8) 108.8
Dividends received from joint ventures 25.1 52.6 30.5
Interest received 1.0 0.5 0.9
Income tax received/(paid) 11.1 0.2 (9.9)
Net cash (outflow)/inflow from operating activities (145.2) 19.5 130.3
------------------------------------------------------------------- --------- --------- -------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 3.6 3.6
Proceeds from sale of joint ventures - - 4.9
Proceeds from sale of subsidiary - - 0.1
Proceeds from sale of subsidiary (non-underlying) 12.0 - -
Purchase of property, plant and equipment (5.5) (8.8) (22.1)
Purchase of intangible assets (11.2) (26.5) (41.2)
Purchase of capitalised mobilisation costs (1.8) - -
Acquisition of subsidiaries - (14.3) (16.7)
Investment in joint ventures (35.2) (35.3) (71.5)
Return of equity from joint ventures - - 40.6
Classification (from)/to assets held for sale (2.1) 2.5 2.1
Net borrowings acquired with subsidiaries - (6.1) (6.1)
Net cash used in investing activities (43.8) (84.9) (106.3)
------------------------------------------------------------------- --------- --------- -------
Cash flows from financing activities
Issue of shares 255.5 0.2 0.2
Purchase of own shares (0.5) (0.5) (1.3)
Interest paid (12.1) (10.7) (21.7)
Cash outflow incurred raising finance - (2.3) (2.0)
Inflow from finance leases on property, plant and
equipment - - 2.5
Inflow from borrowings 96.7 96.3 -
Finance lease repayments (2.7) (6.1) (10.2)
Repayment of borrowings - (50.4) (91.3)
Dividends paid to equity holders of the parent (44.7) (43.7) (66.1)
Dividends paid to non-controlling interests (1.6) (0.7) (1.5)
------------------------------------------------------------------- --------- --------- -------
Net cash from/(used in) financing activities 290.6 (17.9) (191.4)
------------------------------------------------------------------- --------- --------- -------
Increase/(decrease) in cash, cash equivalents and overdraft 101.6 (83.3) (167.4)
Effect of change in foreign exchange rates 1.5 (1.5) (1.5)
Opening cash, cash equivalents and overdraft 330.9 499.8 499.8
------------------------------------------------------------------- --------- --------- -------
Closing cash, cash equivalents and overdraft 9 434.0 415.0 330.9
=================================================================== ========= ========= =======
(1) Restated to reclassify Wheldon Contracts & Services as
discontinued.
Notes to the interim financial statements Kier Group plc
Interim Management
Report and Financial
Statements for
the six months
ended 31 December
2018
1 Basis of preparation
Reporting entity
Kier Group plc (the Company) is a public limited company which
is listed on the London Stock Exchange and incorporated and
domiciled in the UK. The address of its registered office is
Tempsford Hall, Sandy, Bedfordshire, SG19 2BD. The condensed
consolidated interim financial statements (interim financial
statements) for the six months ended 31 December 2018 comprise the
Company and its subsidiaries (together referred to as the Group)
and the Group's interest in jointly controlled entities.
These interim financial statements do not comprise statutory
financial statements within the meaning of section 434 of the
Companies Act 2006. Statutory financial statements for the year
ended 30 June 2018 were approved by the Board of Directors on 19
September 2018 and delivered to the Registrar of Companies. The
auditor's report on these accounts was unqualified, did not contain
an emphasis of matter paragraph and did not contain a statement
under section 498 of the Companies Act 2006.
Statement of compliance
These interim financial statements have been prepared in
accordance with International Financial Reporting Standard IAS 34
'Interim Financial Reporting' as adopted by the European Union and
the Disclosure and Transparency Rules (DTR) of the Financial
Conduct Authority. They do not include all of the information
required for the full annual financial statements and should be
read in conjunction with the financial statements of the Group as
at, and for the year ended, 30 June 2018.
These interim financial statements were approved by the
directors on 19 March 2019.
Significant accounting policies
Except as described below, the accounting policies applied by
the Group in these interim financial statements are consistent with
those applied by the Group in its financial statements as at, and
for the year ended, 30 June 2018.
The Group has applied IFRS 9 'Financial Instruments' and IFRS 15
'Revenue from Contracts with Customers' effective for the period
ending 31 December 2018. Both of these standards have been applied
retrospectively at 1 July 2018 by adjusting the opening balance
sheet at that date. Further details on the transitional impact on
adoption of these standards is described in note 17.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
Estimates and financial risk management
The preparation of interim financial statements requires the
directors to make judgements, estimates and assumptions that affect
the application of the accounting policies and the reported amounts
of assets and liabilities, income and expenses. Actual results may
differ from these estimates.
In preparing these interim financial statements, the significant
judgements made by the directors in applying the Group's accounting
policies and the key sources of uncertainty together with the
Group's financial risk management objectives and policies were
consistent with those that applied to the financial statements as
at, and for the year ended, 30 June 2018, with additional
consideration given to the requirements of the new revenue
accounting standard IFRS 15 when making certain judgements (see
note 17 for further details).
Going concern
The Group has significant financial resources, committed banking
facilities, long-term contracts and long-term order books. The
directors are satisfied that the Group has sufficient financial
resources to continue operating for the foreseeable future and,
therefore, have adopted the going concern basis in preparing the
Group's 2019 interim financial statements.
Segmental reporting
From 1 July 2018 the Group transitioned to a new reporting
format focused on three market positions. This change supports the
way the Group works with clients and underpins complementary
capabilities. The new reporting segments comprise Infrastructure
Services, Buildings and Developments & Housing, and this is the
basis on which the Group reports its primary segmental information.
Corporate includes unrecovered overheads and the charge for defined
benefit pension schemes.
The change in reporting structure has also resulted in a change
to the Group's previously reported cash generating units ('CGU').
In accordance with IAS 36 'Impairment of Assets' the Group has
reallocated the carrying value of the Group's goodwill as at 1 July
2018 to each of the Group's new CGUs as follows:
GBPm
------------------------- ------
Infrastructure Services 527.0
Buildings 20.4
Developments & Housings 12.8
------------------------- ------
560.2
------------------------- ------
Segment information is based on the information provided to the
executive chairman, together with the Board, who is the chief
operating decision maker. The segments are strategic business units
with separate management and have different core customers and
offer different services. The segments are discussed in the
operational review on pages 6-7.
The accounting policies of the operating segments are the same
as those of the Group. The Group evaluates segment information on
the basis of profit or loss from operations before non-underlying
items, amortisation of intangible contract rights, interest and
income tax expense. The segment results that are reported to the
chief operating decision maker include items directly attributable
to a segment as well as those that can be allocated on a reasonable
basis.
Fair values
The Group's derivatives are measured at fair value. These are
classified as level 2 financial instruments as the inputs are
observable indirectly and are derived from quoted market prices at
the balance sheet date.
Non-underlying items
Certain items are presented separately in the consolidated
income statement as non-underlying items where, in the judgement of
the directors, they need to be disclosed separately by virtue of
their nature, size or incidence in order to obtain a clear and
consistent presentation of the Group's underlying business
performance.
Examples of material items which may give rise to disclosure as
non-underlying items include gains or losses on the disposal of
businesses, significant contract provisions, costs of restructuring
and reorganisation of existing businesses, change in regulations,
integration of newly acquired businesses, asset impairments and
acquisition transaction costs and unwind of discounts. They also
include reclassification of provisions in respect of such
items.
Amortisation of acquired intangible assets is also treated as a
non-underlying item so that the underlying profit of the Group can
be measured on a comparable basis from period to period.
These are examples, and from time to time it may be appropriate
to disclose further items as non-underlying in order to highlight
the underlying performance of the Group.
Costs and benefits associated with the Future Proofing Kier
programme are included within underlying profit.
Underlying operating profit is one of the key measures used by
the Board to monitor the Group's performance.
Discontinued operations
Following its sale in the period to 30 June 2018, the results of
Wheldon Contracts & Services Ltd ('Wheldon') have been
reclassified to discontinued operations in the comparative period
to 31 December 2017.
Assets held for sale
Assets classified as held for sale are measured at the lower of
their carrying amount and fair value less costs to sell. Assets are
classified as held for sale if their carrying amount will be
recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly
probable and the assets are available for sale in their present
condition.
Standards issued but not yet effective
The Group continues to work on assessing the impact of IFRS 16
'Leases'. As previously disclosed, the main impact of IFRS 16 will
be to move the Group's larger, longer-term operating leases,
primarily in respect of property, onto the balance sheet, with a
consequential increase in non-current assets and finance lease
obligations. Operating lease charges included in administrative
expenses will be replaced by depreciation and interest costs.
The Group will be adopting IFRS 16 for the first time in the
year ended 30 June 2020. We will provide an update to the market on
the impact of adopting IFRS 16 in due course.
2 Segmental reporting
Infrastructure Developments
Services Buildings & Housing Corporate Group
Six months to 31 December 2018 GBPm GBPm GBPm GBPm GBPm
------------------------------- -------------- --------- ------------ --------- ---------
Revenue(1)
Group and share of joint
ventures 867.7 914.7 419.1 - 2,201.5
Less share of joint ventures - - (124.1) - (124.1)
------------------------------- -------------- --------- ------------ --------- ---------
Group revenue 867.7 914.7 295.0 - 2,077.4
=============================== ============== ========= ============ ========= =========
Timing of revenue(1)
Products and services
transferred
at a point in time 2.7 - 179.2 - 181.9
Products and services
transferred
over time 865.0 914.7 239.9 - 2,019.6
------------------------------- -------------- --------- ------------ --------- ---------
Group and share of joint
ventures 867.7 914.7 419.1 - 2,201.5
=============================== ============== ========= ============ ========= =========
Geographic split of revenue(1)
United Kingdom 829.1 884.2 419.1 - 2,132.4
Americas - - - - -
Middle East - 30.5 - - 30.5
Far East & Australia 38.6 - - - 38.6
------------------------------- -------------- --------- ------------ --------- ------------
Group and share of joint
ventures 867.7 914.7 419.1 - 2,201.5
=============================== ============== ========= ============ ========= ============
Profit
Group operating profit/(loss) 37.2 30.8 3.8 (34.2) 37.6
Share of post-tax results of
joint
ventures - - 14.2 - 14.2
Underlying operating
profit/(loss) 37.2 30.8 18.0 (34.2) 51.8
Underlying net finance
(costs)/income(2) (1.5) 2.9 (9.4) (4.8) (12.8)
------------------------------- -------------- --------- ------------ --------- ---------
Underlying profit/(loss) before
tax 35.7 33.7 8.6 (39.0) 39.0
Non-underlying items:
Amortisation of intangible
assets
relating to contract rights (12.3) - (0.5) - (12.8)
Non-underlying finance costs (0.9) - (0.9) - (1.8)
Other non-underlying items (1.1) (25.0) (25.4) (8.4) (59.9)
Profit/(loss) before tax from
continuing
operations 21.4 8.7 (18.2) (47.4) (35.5)
=============================== ============== ========= ============ ========= =========
Balance sheet
Operating assets(3) 1,236.3 530.8 682.9 12.1 2,462.1
Operating liabilities(3) (559.9) (701.6) (244.5) (71.1) (1,577.1)
------------------------------- -------------- --------- ------------ --------- ---------
Net operating
assets/(liabilities)(3) 676.4 (170.8) 438.4 (59.0) 885.0
Cash, cash equivalents and
borrowings 92.1 250.6 (442.7) (105.1) (205.1)
Net financial assets - - - 21.7 21.7
------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities)
excluding
net assets held for sale 768.5 79.8 (4.3) (142.4) 701.6
------------------------------- -------------- --------- ------------ --------- ---------
Net assets held for sale - - 12.0 - 12.0
------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities) 768.5 79.8 7.7 (142.4) 713.6
=============================== ============== ========= ============ ========= =========
Infrastructure Developments
Six months to 31 December 2017(4, Services Buildings & Housing Corporate Group
5) GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- --------- ------------ --------- ---------
Revenue(1)
Group and share of joint ventures 801.5 832.1 516.3 - 2,149.9
Less share of joint ventures - - (154.5) - (154.5)
----------------------------------------- -------------- --------- ------------ --------- ---------
Group revenue 801.5 832.1 361.8 - 1,995.4
========================================= ============== ========= ============ ========= =========
Timing of revenue(1)
Products and services transferred
at a point in time 2.6 - 211.9 - 214.5
Products and services transferred
over time 798.9 832.1 304.4 - 1,935.4
----------------------------------------- -------------- --------- ------------ --------- ---------
Group and share of joint ventures 801.5 832.1 516.3 - 2,149.9
========================================= ============== ========= ============ ========= =========
Geographic split of revenue(1)
United Kingdom 745.8 755.0 516.3 - 2,017.1
Americas - 7.6 - - 7.6
Middle East - 64.9 - - 64.9
Far East & Australia 55.7 4.6 - - 60.3
----------------------------------------- -------------- --------- ------------ --------- ---------
Group and share of joint ventures 801.5 832.1 516.3 - 2,149.9
----------------------------------------- -------------- --------- ------------ --------- ---------
Profit
Group operating profit/(loss) 39.3 17.7 2.3 (22.1) 37.2
Share of post-tax results of joint
ventures - - 22.8 - 22.8
Profit on disposal of joint ventures
and subsidiaries - - 0.6 - 0.6
----------------------------------------- -------------- --------- ------------ --------- ---------
Underlying operating profit/(loss) 39.3 17.7 25.7 (22.1) 60.6
Underlying net finance (costs)/income(2) (1.7) 3.7 (6.2) (7.0) (11.2)
----------------------------------------- -------------- --------- ------------ --------- ---------
Underlying profit/(loss) before tax 37.6 21.4 19.5 (29.1) 49.4
Non-underlying items:
Amortisation of intangible assets
relating to contract rights (12.4) - (0.1) - (12.5)
Non-underlying finance costs (1.0) - (1.6) - (2.6)
Profit/(loss) before tax from continuing
operations 24.2 21.4 17.8 (29.1) 34.3
========================================= ============== ========= ============ ========= =========
Balance sheet
Operating assets(3) 1,138.8 488.3 682.0 53.2 2,362.3
Operating liabilities(3) (488.5) (661.1) (261.9) (159.9) (1,571.4)
----------------------------------------- -------------- --------- ------------ --------- ---------
Net operating assets/(liabilities)(3) 650.3 (172.8) 420.1 (106.7) 790.9
Cash, cash equivalents and borrowings 158.8 276.6 (355.5) (336.5) (256.6)
Net financial assets - - - 12.7 12.7
----------------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities) excluding
net liabilities held for sale 809.1 103.8 64.6 (430.5) 547.0
----------------------------------------- -------------- --------- ------------ --------- ---------
Net liabilities held for sale - - (2.2) - (2.2)
----------------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities) 809.1 103.8 62.4 (430.5) 544.8
========================================= ============== ========= ============ ========= =========
Infrastructure Developments
Services Buildings & Housing Corporate Group
Year to 30 June 2018(5) GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- --------- ------------ --------- ---------
Revenue(1)
Group and share of joint ventures 1,713.9 1,777.5 1,001.9 - 4,493.3
Less share of joint ventures - - (273.2) - (273.2)
----------------------------------------- -------------- --------- ------------ --------- ---------
Group revenue 1,713.9 1,777.5 728.7 - 4,220.1
========================================= ============== ========= ============ ========= =========
Timing of revenue(1)
Products and services transferred
at a point in time 5.2 - 421.2 - 426.4
Products and services transferred
over time 1,708.7 1,777.5 580.7 - 4,066.9
----------------------------------------- -------------- --------- ------------ --------- ---------
Group and share of joint ventures 1,713.9 1,777.5 1,001.9 - 4,493.3
========================================= ============== ========= ============ ========= =========
Geographic split of revenue(1)
United Kingdom 1,600.0 1,650.2 1,001.9 - 4,252.1
Americas - 7.7 - - 7.7
Middle East - 114.8 - - 114.8
Far East & Australia 113.9 4.8 - - 118.7
----------------------------------------- -------------- --------- ------------ --------- ---------
Group and share of joint ventures 1,713.9 1,777.5 1,001.9 - 4,493.3
========================================= ============== ========= ============ ========= =========
Profit
Group operating profit/(loss) 68.3 54.7 25.9 (35.1) 113.8
Share of post-tax result of joint
ventures - - 42.7 - 42.7
Profit on disposal of joint ventures
and subsidiaries - - 3.5 - 3.5
----------------------------------------- -------------- --------- ------------ --------- ---------
Underlying operating profit/(loss) 68.3 54.7 72.1 (35.1) 160.0
Underlying net finance (costs)/income(2) (3.8) 7.0 (17.0) (9.3) (23.1)
----------------------------------------- -------------- --------- ------------ --------- ---------
Underlying profit/(loss) before tax 64.5 61.7 55.1 (44.4) 136.9
Non-underlying items:
Amortisation of intangible assets
relating to contract rights (25.0) - (0.6) - (25.6)
Non-underlying finance costs (1.4) - (3.7) - (5.1)
Profit/(loss) before tax from continuing
operations 38.1 61.7 50.8 (44.4) 106.2
========================================= ============== ========= ============ ========= =========
Balance sheet
Operating assets(3) 1,142.8 504.3 715.8 99.1 2,462.0
Operating liabilities(3) (522.9) (752.9) (310.7) (81.5) (1,668.0)
----------------------------------------- -------------- --------- ------------ --------- ---------
Net operating assets/(liabilities)(3) 619.9 (248.6) 405.1 17.6 794.0
Cash, cash equivalents and borrowings 141.1 340.0 (343.7) (343.4) (206.0)
Net financial assets - - - 15.2 15.2
----------------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities) excluding
net liabilities held for sale 761.0 91.4 61.4 (310.6) 603.2
----------------------------------------- -------------- --------- ------------ --------- ---------
Net liabilities held for sale - - (2.1) - (2.1)
----------------------------------------- -------------- --------- ------------ --------- ---------
Net assets/(liabilities) 761.0 91.4 59.3 (310.6) 601.1
========================================= ============== ========= ============ ========= =========
(1) Revenue is stated after the exclusion of inter-segmental
revenue.
(2) Interest was (charged)/credited to the divisions at a
notional rate of 4.0%.
(3) Net operating assets/(liabilities) excludes cash, cash
equivalents, bank overdrafts, borrowings, financial assets and
liabilities, assets and liabilities classified as held for sale and
interest-bearing inter-company loans.
(4) Restated to reclassify Wheldon Contracts & Services Ltd
as discontinued.
(5) Prior periods restated to show the new reporting segments
focused on the Group's three market positions of Infrastructure
Services, Buildings and Developments & Housing.
3 Non-underlying items
Unaudited Unaudited
6 months 6 months Year
to 31 to 31 to 30
December December June
2018 2017 2018
GBPm GBPm GBPm
--------------------------------------------------------- --------- --------- ------
Portfolio simplification - sale of assets and
other M&A activity
Loss on disposal of KHSA Limited (1.4) - -
Profit on disposal of the Group's pension administration
business 2.5 - -
Loss on disposal of Unity (1.9) - -
Remeasurement of McNicholas deferred contingent
consideration 5.5 - -
McNicholas integration costs (5.4) - -
Other non-underlying costs
Provision relating to Broadmoor Hospital redevelopment
project (25.0) - -
Provision relating to Environmental Waste contract (26.0) - -
Guaranteed Minimum Pension equalisation charge (6.1) - -
Result of Mining operations (2.1) - -
---------------------------------------------------------- --------- --------- ------
Total other non-underlying items (59.9) - -
Amortisation of intangible contract rights (12.8) (12.5) (25.6)
Financing costs (1.8) (2.6) (5.1)
---------------------------------------------------------- --------- --------- ------
Total non-underlying items (74.5) (15.1) (30.7)
Associated tax credit 12.9 3.1 5.6
========================================================== ========= ========= ======
Charged against (loss)/profit for the period (61.6) (12.0) (25.1)
========================================================== ========= ========= ======
In classifying items as non-underlying, management are required
to make judgements as to whether an item meets the criteria set out
in note 1, including whether by their size, nature or incidence
they need to be disclosed separately in order to obtain a clear,
consistent view of the Group's underlying business performance.
In the current year and prior year the following items have been
classified as non-underlying:
> Amortisation of intangible assets and discount unwind of
acquisition related fair value adjustments and deferred
consideration - these have been classified in non-underlying in
accordance with our criteria set out in note 1.
> The results of the Mining operation which have a net loss
impact of GBP2.1m (period to 31 December 2017: GBPnil; year to 30
June 2018: GBPnil) on underlying operating profit and the
associated interest costs continue to be classified as
non-underlying as the Group continues to wind down the business.
The 2018 financial year represents a full year's trading, however
trading is expected to be minimal in current and future years. The
key judgement in classifying the results as non-underlying is the
Directors' continued intention to wind the business down.
In the current year the following additional items have been
classified as non-underlying:
Portfolio simplification - sale of assets and other M&A
activity: the Group made three disposals in the year, which in the
judgement of the Directors were sufficiently material in nature to
distort the underlying results of the business if not separately
identified. The Group has also remeasured deferred contingent
consideration payable with respect to the McNicholas acquisition
completed in prior periods (see note 12 for further details); and
presented McNicholas integration costs as non-underlying on the
basis that they are material and one-off in nature and relate to
the integration of the Group's pre-existing utilities business with
the acquired McNicholas business.
Other non-underlying costs - in reviewing the accounts the
Directors judged a number of other items to be non-underlying on
the following basis: a Guaranteed Minimum Pension equalisation
charge on the basis that it was material and one-off in nature,
(see note 4 for further details); a GBP25.0m provision relating to
the Broadmoor Hospital development project in respect of future
recoveries of costs from the client and other third parties, of
which GBP15.0m is presented as a revenue adjustment; and an
additional onerous contract provision relating to exiting the
Group's largest loss-making environmental waste contract on the
basis both of size and the fact that it relates to a legacy
contract that the Group is working to close out.
Underlying operating profit for the period is after incurring
GBP14.0m of Future Proofing Kier costs. The Group's Future Proofing
Kier programme of simplification and cost savings has generated
GBP4m savings in the first half of the year and is on track to
achieve equality of cost and savings for the full year.
During the six months ended 31 December 2018 the Group has
continued to actively manage liabilities acquired as part of the
McNicholas balance sheet and has recognised a credit of GBP5.6m
within underlying operating profit with respect to the reversal of
such liabilities.
4 Retirement benefit obligations
The amounts recognised in the interim financial statements in
respect of the Group's defined benefit schemes are as follows:
Unaudited
6 months to
31 December
2018
--------------------------------------- ---------- -------- ---------- ---------------------
Kier Group Mouchel May Gurney McNicholas
Pension Pension Pension Pension
Scheme Schemes Scheme Scheme Total
GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ---------- -------- ---------- ---------- ---------
Opening surplus/(deficit) 25.2 (8.8) (1.1) (7.4) 7.9
Charge to income statement(1, 2) (3.8) (1.5) (0.6) (0.2) (6.1)
Employer contributions 6.0 4.5 0.8 0.6 11.9
Actuarial losses (5.9) (23.7) (0.1) (0.5) (30.2)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Closing surplus/(deficit) 21.5 (29.5) (1.0) (7.5) (16.5)
========================================= ========== ======== ========== ========== =========
Comprising:
Total market value of assets 1,112.2 442.4 74.5 22.9 1,652.0
Present value of liabilities (1,090.7) (471.9) (75.5) (30.4) (1,668.5)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 21.5 (29.5) (1.0) (7.5) (16.5)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Related deferred tax (liability)/asset (3.7) 5.0 0.2 1.3 2.8
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net pension asset/(liability) 17.8 (24.5) (0.8) (6.2) (13.7)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Presentation of net surplus/(deficit) above in the Consolidated balance
sheet:
Retirement benefit assets 21.5 11.9 - - 33.4
Retirement benefit obligations - (41.4) (1.0) (7.5) (49.9)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 21.5 (29.5) (1.0) (7.5) (16.5)
========================================= ========== ======== ========== ========== =========
Unaudited
6 months to
31 December
2017
--------------------------------------- ---------- -------- ---------- ---------------------
Kier Group Mouchel May Gurney McNicholas
Pension Pension Pension Pension
Scheme Schemes Scheme Scheme Total
GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ---------- -------- ---------- ---------- ---------
Opening deficit (31.1) (47.6) (5.9) - (84.6)
Acquired deficit - - - (10.9) (10.9)
Charge to income statement(1, 2) (0.7) (1.1) (0.2) (0.1) (2.1)
Employer contributions 7.1 5.4 1.2 0.8 14.5
Actuarial gains 56.1 3.7 - - 59.8
----------------------------------------- ---------- -------- ---------- ---------- ---------
Closing surplus/(deficit) 31.4 (39.6) (4.9) (10.2) (23.3)
========================================= ========== ======== ========== ========== =========
Comprising:
Total market value of assets 1,181.9 467.1 78.1 22.2 1,749.3
Present value of liabilities (1,150.5) (506.7) (83.0) (32.4) (1,772.6)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 31.4 (39.6) (4.9) (10.2) (23.3)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Related deferred tax (liability)/asset (5.3) 6.8 0.8 1.7 4.0
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net pension asset/(liability) 26.1 (32.8) (4.1) (8.5) (19.3)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Presentation of net surplus/(deficit) above in the Consolidated balance
sheet:
Retirement benefit assets 31.4 7.2 - - 38.6
Retirement benefit obligations - (46.8) (4.9) (10.2) (61.9)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 31.4 (39.6) (4.9) (10.2) (23.3)
========================================= ========== ======== ========== ========== =========
Year to
30 June 2018
--------------------------------------- ---------- -------- ---------- ---------------------
Kier Group Mouchel May Gurney McNicholas
Pension Pension Pension Pension
Scheme Schemes Scheme Scheme Total
GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ---------- -------- ---------- ---------- ---------
Opening deficit (31.1) (47.6) (5.9) - (84.6)
Acquired deficit - - - (10.9) (10.9)
Charge to income statement(1, 2) (1.0) (1.6) (0.2) (0.2) (3.0)
Employer contributions 13.4 9.2 2.4 1.6 26.6
Actuarial gains 43.9 31.2 2.6 2.1 79.8
----------------------------------------- ---------- -------- ---------- ---------- ---------
Closing surplus/(deficit) 25.2 (8.8) (1.1) (7.4) 7.9
========================================= ========== ======== ========== ========== =========
Comprising:
Total market value of assets 1,120.0 463.4 75.1 22.7 1,681.2
Present value of liabilities (1,094.8) (472.2) (76.2) (30.1) (1,673.3)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 25.2 (8.8) (1.1) (7.4) 7.9
----------------------------------------- ---------- -------- ---------- ---------- ---------
Related deferred tax (liability)/asset (4.3) 1.5 0.2 1.3 (1.3)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net pension asset/(liability) 20.9 (7.3) (0.9) (6.1) 6.6
----------------------------------------- ---------- -------- ---------- ---------- ---------
Presentation of net surplus/(deficit) above in the Consolidated balance
sheet:
Retirement benefit assets 25.2 14.3 - - 39.5
Retirement benefit obligations - (23.1) (1.1) (7.4) (31.6)
----------------------------------------- ---------- -------- ---------- ---------- ---------
Net surplus/(deficit) 25.2 (8.8) (1.1) (7.4) 7.9
========================================= ========== ======== ========== ========== =========
(1) On 26 October 2018, the High Court ruled in the Lloyds
Banking Group case that pension schemes must equalise Guaranteed
Minimum Pensions (GMP) between male and female members. Amounts
charged to the income statement for the period to 31 December 2018
include a non-underlying GMP charge of GBP6.1m (period to 31
December 2017: GBPnil; year to 30 June 2018: GBPnil).
(2) Amounts charged to income statement for Mouchel pension
schemes for the period to 31 December 2018 include a curtailment
gain of GBPnil (period to 31 December 2017: GBP0.3m; year to 30
June 2018: GBP0.3m).
5 Taxation
The taxation charge for the six months ended 31 December 2018
has been calculated at 20.5% (June 2018: 17.1%, December 2017:
17.2%) of adjusted profit before tax, being profits adjusted for
the Group's share in equity accounted joint ventures and excluding
non-underlying items. Non-underlying items are taxed at their
underlying rate.
Unaudited Unaudited
6 months 6 months
to to
31 December 31 December Year to
2018 2017(2) 30 June 2018
----------------- ---------- ---------------------- ---------- --------------------- ---------- ----------------------
Non-underlying Non-underlying Non-underlying
items items items
Underlying (note Underlying (note Underlying (note
items(1) 3) Total items(1) 3) Total items(1) 3) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- ---------- -------------- ------ ---------- -------------- ----- ---------- -------------- ------
Profit/(loss)
before tax 39.0 (74.5) (35.5) 49.4 (15.1) 34.3 136.9 (30.7) 106.2
Adjust: tax on
joint ventures
included above 0.5 - 0.5 - - - 0.1 - 0.1
------------------ ---------- -------------- ------ ---------- -------------- ----- ---------- -------------- ------
Adjusted
profit/(loss)
before tax 39.5 (74.5) (35.0) 49.4 (15.1) 34.3 137.0 (30.7) 106.3
------------------ ---------- -------------- ------ ---------- -------------- ----- ---------- -------------- ------
Current tax - - - (6.9) 0.6 (6.3) (3.9) 1.2 (2.7)
Deferred tax (4.9) 12.9 8.0 (0.7) 2.5 1.8 (16.8) 4.4 (12.4)
Overseas tax (2.7) - (2.7) (0.9) - (0.9) (2.6) - (2.6)
------------------ ---------- -------------- ------ ---------- -------------- ----- ---------- -------------- ------
Total income tax
(expense)/credit
in the income
statement (7.6) 12.9 5.3 (8.5) 3.1 (5.4) (23.3) 5.6 (17.7)
Tax on joint
ventures (0.5) - (0.5) - - - (0.1) - (0.1)
------------------ ---------- -------------- ------ ---------- -------------- ----- ---------- -------------- ------
Effective tax
(charge)/credit (8.1) 12.9 4.8 (8.5) 3.1 (5.4) (23.4) 5.6 (17.8)
================== ========== ============== ====== ========== ============== ===== ========== ============== ======
Effective tax
rate 20.5% 17.3% 13.7% 17.2% 20.5% 15.7% 17.1% 18.2% 16.7%
================== ========== ============== ====== ========== ============== ===== ========== ============== ======
(1) Stated before non-underlying items, see note 3 to the
financial statements.
(2) Restated to reclassify Wheldon Contracts & Services Ltd
as discontinued.
6 Dividends
Unaudited Unaudited
6 months 6 months Year
to 31 to 31 to 30
December December June
Amounts recognised as distributions to equity holders 2018 2017 2018
in the period: GBPm GBPm GBPm
------------------------------------------------------ --------- --------- -------
Final dividend for the year ended 30 June 2018 of
46.0 pence (2017: 45.0 pence) 44.7 43.7 43.7
Interim dividend for the year ended 30 June 2019
of 4.9 pence (2018: 23.0 pence) - - 22.4
------------------------------------------------------ --------- --------- -------
44.7 43.7 66.1
====================================================== ========= ========= =======
The interim dividend for the year ending 30 June 2019 of 4.9
pence per share (2018: 23.0 pence) has not yet been paid and so has
not been included as a liability in these financial statements. The
dividend totalling approximately GBP7.9m will be paid on 17 May
2019 to shareholders on the register at the close of business on 29
March 2019. A DRIP "dividend reinvestment plan" alternative will be
offered.
7 Earnings per share
Year to
Unaudited
Unaudited 6 months
6 months to to 30 June 2018
31 December 31 December
2018 2017 (restated) (restated)
------------------------------------------ --- ---------------- ------------------- ----------------
Basic Diluted Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ --- ------- ------- --------- -------- ------- -------
Continuing operations
Earnings (after tax and non-controlling
interests), being net profits/(losses)
attributable to equity holders of the
parent (29.8) (29.8) 28.4 28.4 88.3 88.3
Impact of non-underlying items net
of tax:
Amortisation of intangible assets -
net of tax credit of GBP2.1m (2017:
GBP2.5m) 10.7 10.7 10.0 10.0 20.9 20.9
Acquisition discount unwind(1) - net
of tax credit of GBP0.3m (2017: GBP0.6m) 1.5 1.5 2.0 2.0 2.8 2.8
Other non-underlying items - net of
tax credit of GBP10.5m (2017: GBPnil) 49.4 49.4 - - 1.4 1.4
Earnings from continuing operations 31.8 31.8 40.4 40.4 113.4 113.4
----------------------------------------------- ------- ------- --------- -------- ------- -------
Discontinued operations
Loss (after tax and non-controlling
interests), being net loss attributable
to equity holders of the parent - - (0.6) (0.6) (1.0) (1.0)
----------------------------------------------- ------- ------- --------- -------- ------- -------
Loss from discontinued operations - - (0.6) (0.6) (1.0) (1.0)
----------------------------------------------- ------- ------- --------- -------- ------- -------
million million million million million million
------------------------------------------ --- ------- ------- --------- -------- ------- -------
Weighted average number of shares used
for earnings per share 103.1 103.1 98.8 99.5 98.9 100.0
=============================================== ======= ======= ========= ======== ======= =======
Earnings per share pence pence pence pence pence pence
========================================== === ======= ======= ========= ======== ======= =======
Continuing operations
Earnings (after tax and non-controlling
interests), being net profits/(losses)
attributable to equity holders of the
parent (28.9) (28.9) 28.7 28.5 89.3 88.3
Impact of non-underlying items net
of tax:
Amortisation of intangible assets -
net of tax credit of GBP2.1m 10.4 10.4 10.2 10.1 21.1 20.9
Acquisition discount unwind(1) - net
of tax credit of GBP0.3m 1.5 1.5 2.0 2.0 2.8 2.8
Other non-underlying items - net of
tax credit of GBP10.5m 47.8 47.8 - - 1.5 1.4
Earnings from continuing operations 30.8 30.8 40.9 40.6 114.7 113.4
----------------------------------------------- ------- ------- --------- -------- ------- -------
Discontinued operations
Loss (after tax and non-controlling
interests), being net loss attributable
to equity holders of the parent - - (0.6) (0.6) (1.0) (1.0)
----------------------------------------------- ------- ------- --------- -------- ------- -------
Loss from discontinued operations - - (0.6) (0.6) (1.0) (1.0)
----------------------------------------------- ------- ------- --------- -------- ------- -------
Total earnings per share
Statutory (28.9) (28.9) 28.1 27.9 88.3 87.3
Underlying 30.8 30.8 40.3 40.0 113.7 112.4
----------------------------------------------- ------- ------- --------- -------- ------- -------
(1) Unwind of discount in respect of deferred consideration and
fair value adjustments made on acquisition and interest on UK
mining loan.
The weighted average number of ordinary shares for the six
months to 31 December 2017 and year to 30 June 2018, used in the
calculation of earnings per share information, have been restated
by multiplying those previously reported by an adjustment factor of
1.0176 to reflect the bonus element in the shares issued under the
terms of the rights issue which completed on 20 December 2018.
Earnings per share for the six months ended 31 December 2017
have also been restated to reclassify Wheldon Contracts &
Services Ltd as a discontinued operation.
In calculating the diluted earnings per share for the period to
31 December 2018, no adjustment for share options has been made to
the weighted average number of ordinary shares because, based on
the results for the period, any potential ordinary shares would
have been anti-dilutive.
In calculating the diluted earnings per share for the period to
31 December 2017 the weighted average number of ordinary shares
used as the denominator in calculating basic earnings per share has
been adjusted by 0.7 million shares (year to 30 June 2018: 1.1
million shares) in relation to share options. Options granted to
employees under the Sharesave, Conditional Share Award Plan (CSAP)
and Long-Term Incentive Plan (LTIP) schemes are considered to be
potential ordinary shares. They have been included in the
determination of diluted earnings per share if the required
performance obligations would have been met based on the Group's
performance up to the reporting date, and to the extent to which
they are dilutive. The options have not been included in the
determination of basic earnings per share.
8 Assets held for sale
The Group's investments in its joint venture interest in Kier
Hammersmith Limited ('KHL') and Strawberry Percy LLP ('SPL') have
been classified as held for sale. The Group's interests in these
joint ventures are either being actively marketed or discussions
are well advanced as at 31 December 2018, whereby the transactions
are either under offer or terms agreed, and the transactions are
expected to complete before the end of the financial year.
Unaudited Unaudited
31 December 31 December 30 June
Assets of disposal group classified as held 2018 2017 2018
for sale GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ -------
Intangible assets - computer software - 0.1 0.1
Investments in joint ventures 12.0 - -
Trade and other receivables - 0.7 1.2
-------------------------------------------- ------------ ------------ -------
Total 12.0 0.8 1.3
============================================ ============ ============ =======
Unaudited Unaudited
31 December 31 December 30 June
Liabilities of disposal group classified as 2018 2017 2018
held for sale GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ -------
Overdrafts - (2.5) (2.1)
Trade and other payables - (0.5) (1.3)
-------------------------------------------- ------------ ------------ -------
Total - (3.0) (3.4)
============================================ ============ ============ =======
9 Cash, cash equivalents, overdraft and borrowings
Unaudited Unaudited
31 December 31 December 30 June
2018 2017 2018
GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------ -------
Net debt consists of:
Cash and cash equivalents - bank balances and cash
in hand 434.0 415.0 330.9
Borrowings due within one year (49.7) - (12.0)
Borrowings due after one year (589.4) (671.6) (524.9)
Impact of cross-currency hedging 24.6 18.1 20.3
--------------------------------------------------- ------------ ------------ -------
Net debt (180.5) (238.5) (185.7)
=================================================== ============ ============ =======
10 Trade and other payables
Included within the trade and other payables balance is
GBP200.5m (31 December 2017: GBP174.6m; 30 June 2018: GBP184.8m)
relating to payments due to suppliers who are on bank-supported
supply chain finance arrangements.
11 Share-based payments
The Group has established a LTIP under which directors and
senior employees can receive awards of shares subject to the Group
achieving targets. Further details of the LTIP were disclosed in
the 2018 annual financial statements. 269,461 (2017: 232,159)
shares have vested under the LTIP during the six months to 31
December 2018.
The Group has also established a CSAP under which senior
employees receive awards of shares subject only to service
conditions, i.e. the requirement for participants to remain in
employment with the Group over the vesting period. Awards under the
CSAP are all equity settled. No shares have yet vested under the
CSAP.
During the six months to 31 December 2018 grants were made under
the LTIP and CSAP as follows:
LTIP CSAP
22 October 22 October
Grant date 2018 2018
Shares granted 242,756(1) 964,976(1)
Share price at grant GBP8.71(1) GBP8.71(1)
Exercise price nil nil
Option life 3 years 3 years
Expected volatility 28.37% n/a
Risk-free interest rate 0.78% n/a
Value per option:
LTIP TSR element (based upon a stochastic model) 447.1p(1) -
LTIP EPS and Net Debt:EBITDA element (based
upon the Black-Scholes model) 809.7p(1) -
CSAP (based upon the Black-Scholes model) - 870.7p(1)
(1) The number of shares granted, share price at grant and
values per option have been adjusted for the bonus factor arising
on the rights issue in the period.
The fair value of the TSR element incorporates an assessment of
the number of shares that will be awarded, as the performance
conditions are market conditions under IFRS 2 'Share-based
payments'.
The performance conditions of the EPS and Net Debt:EBITDA
elements are non-market conditions under IFRS 2. The fair value
therefore does not include an assessment of the number of shares
that will be awarded. Instead the amount charged for these elements
is based on the fair value factored by a 'true up' for the number
of awards that are expected to vest.
12 Acquisitions and disposals
(a) Disposal of KHSA Limited
On 21 December 2018 the Group, through its subsidiary Kier
Holdings Limited, disposed of its interest in KHSA Limited ('KHSA')
for a total consideration of AUS$43.7m (GBP24.5m), of which
AUS$41.7m (GBP23.4m) was received on completion, and the balance of
AUS$2.0m (GBP1.1m) is deferred subject to satisfaction of future
contractual commitments. KHSA, which was acquired as part of the
Mouchel group of companies in 2015, was a joint operation providing
road asset management and maintenance services in Australia.
GBPm
------------------------------------------------------ -------
Cash consideration 24.5
Cost of disposal (1.7)
Book value of assets sold excluding goodwill and
intangible contract rights (6.9)
------------------------------------------------------ -------
Profit on disposal excluding goodwill and intangible
contract rights 15.9
Goodwill disposed (10.8)
Intangible contract rights disposed (net of related
deferred tax liability of GBP1.3m) (6.5)
------------------------------------------------------ -------
Loss on disposal (1.4)
------------------------------------------------------ -------
(b) Disposal of the Group's pension administration business
On 31 October 2018 the Group disposed of its pensions
administration business, which was deemed non-core to the Kier
Group portfolio, for a total consideration of GBP3.7m. The business
was classified as held for sale as at 30 June 2018.
GBPm
------------------------------- ------
Consideration 3.7
Cost of disposal (0.9)
Book value of net assets sold (0.3)
------------------------------- ------
Gain on disposal 2.5
------------------------------- ------
(c) Disposal of Unity
On 2 July 2018 the Group, through its subsidiary MPHBS Limited
('MPHBS'), disposed of its interest in The Unity Partnership
Limited ('Unity') for a total consideration of GBP1.5m. Unity was a
partnership between MPHBS and Oldham Metropolitan Borough Council
('OMBC') and delivered property, highways, transactional services,
information and communication technology and business services.
GBPm
------------------------------- ------
Consideration 1.5
Cost of disposal (0.4)
Book value of net assets sold (3.0)
------------------------------- ------
Loss on disposal (1.9)
------------------------------- ------
(d) Prior year acquisition of McNicholas
On 12 July 2017 the Group acquired the entire share capital of
McNicholas Construction (Holdings) Limited ('McNicholas'). Included
in the acquisition consideration payable was GBP14.0m of deferred
contingent consideration comprising:
> GBP9.5m in cash payable on achieving certain EBITDA
(earnings before interest, tax, depreciation and amortisation)
targets over a two-year period; and
> GBP4.5m payable on achieving debt-recovery targets, of
which GBP2.4m was paid during the year ended 30 June 2018.
The outstanding discounted fair value of the deferred contingent
consideration payable was GBP11.0m as at 30 June 2018 and was
included as deferred consideration within trade and other payables.
During the six months ended 31 December 2018 non-underlying
interest expense of GBP0.2m has been recognised on unwinding the
discounted deferred consideration payable, consistent with prior
periods. In addition GBP6.7m has been credited to the income
statement on remeasurement of the expected deferred contingent
consideration to be paid, of which GBP5.5m relating to achieving
earnout targets has been credited within non-underlying operating
profit and GBP1.2m relating to debt-recovery has been credited
within underlying operating profit, resulting in discounted
deferred consideration payable as at 31 December 2018 of
GBP4.5m.
13 Related parties
The Group has a related party relationship with its joint
ventures, key management personnel and pension schemes in which its
employees participate.
There have been no significant changes in the nature of related
party transactions since the last annual financial statements as
at, and for the year ended, 30 June 2018.
Details of contributions made to the pension schemes by the
Group are detailed in note 4.
14 Financial Instruments - Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices).
The Group uses cross currency and interest rate swaps for hedging.
These derivatives are classified as level 2. The prices of
derivative transactions have been derived from proprietary models
used by the joint ventures' bank counterparties using mid-market
mark to market valuations for trades between the joint ventures and
those
counterparties at the close of business on 31 December 2018.
Level 3 - Inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 December
2018.
Level Level Level
1 2 3 Total
GBPm GBPm GBPm GBPm
----------------------------------------- ------- ------ ------ ------
Assets
Derivatives used for hedging - Cross
Currency Swaps - 21.5 - 21.5
Derivatives used for hedging - Interest
Rate Swaps - 0.2 - 0.2
Liabilities
Derivatives used for hedging - Interest
Rate Swaps - - - -
----------------------------------------- ------- ------ ------ ------
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 December
2017.
Level Level Level
1 2 3 Total
GBPm GBPm GBPm GBPm
----------------------------------------- ------- ------ ------ ------
Assets
Derivatives used for hedging - Cross
Currency Swaps - 12.8 - 12.8
Liabilities
Derivatives used for hedging - Interest
Rate Swaps - (0.1) - (0.1)
----------------------------------------- ------- ------ ------ ------
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 30 June 2018.
Level Level Level
1 2 3 Total
GBPm GBPm GBPm GBPm
----------------------------------------- ------- ------ ------ ------
Assets
Derivatives used for hedging - Cross
Currency Swaps - 15.0 - 15.0
Derivatives used for hedging - Interest
Rate Swaps - 0.2 - 0.2
Liabilities
Derivatives used for hedging - Interest
Rate Swaps - - - -
----------------------------------------- ------- ------ ------ ------
There were no transfers between Levels 1 and 2 during the
period.
15 Guarantees, contingent liabilities and contingent assets
The Company has given guarantees and entered into
counter-indemnities in respect of bonds relating to certain of the
Group's own contracts. The Company has also given guarantees in
respect of certain contractual obligations of its subsidiaries and
joint ventures, which were entered into in the normal course of
business, as well as certain of the Group's other obligations (for
example, in respect of the Group's finance facilities and its
pension schemes). Financial guarantees over the obligations of the
Company's subsidiaries and joint ventures are measured at fair
value. The fair value measurement is based on the premium received
from the joint venture or the differential in the interest rate of
the borrowing including and excluding the guarantee. Performance
guarantees are treated as a contingent liability until such time as
it becomes probable that payment will be required under its
terms.
Provisions are made for the Directors' best estimate of known
legal claims, investigations and legal actions relating to the
Group which are considered more likely than not to result in an
outflow of economic benefit. If the Directors consider that a
claim, investigation or action relating to the Group is unlikely to
succeed, no provision is made. If the Directors cannot make a
reliable estimate of a potential, material obligation, no provision
is made but details of the claim are disclosed.
At 31 December 2018 the Group had contingent assets of GBP22.9m
(30 June 2018: GBP24.3m) in relation to claims against third
parties for the reimbursement of costs on construction contracts.
Under IAS 37 these amounts may only be recognised when the economic
benefit arising from the claims is virtually certain. It is
probable that these amounts will be recognised in future periods
when the uncertainty over their recoverability has been
removed.
16 Events after the reporting period
After the end of the half year reporting period, the Group
launched a member options exercise, offering a Pension Increase
Exchange (PIE) to members of the Kier Group Pension Scheme and the
Mouchel Business Services Limited Pension Scheme. The initiative is
being carried out with support from the Trustees of the pension
schemes, in order to provide more flexibility and choice for
members, reduce risk, and reduce cost in the Group's defined
benefit pension schemes. The PIE offering is as follows:
1. A bulk PIE exercise. This involves offering members who are
already drawing a pension a one-off increase in pension in lieu of
future annual increases on part of their pension, supported with
independent financial advice paid for by Kier. The terms are such
that the IAS 19 pension liabilities are reduced if pensioners take
this option, with the gain recognised as a one-off income credit
recognised during the year to 30 June 2019.
2. A PIE option at the point of retirement as 'business as
usual' on the same terms as the bulk exercise. Kier will pay for
members to take financial advice at point of retirement, including
on the PIE at retirement option. A reduction in IAS 19 pension
liabilities can be recognised based on an assumed rate of future
take-up. The PIE at retirement option is expected to result in a
further income credit recognised during the year to 30 June
2019.
The actual financial impact will depend upon take-up of the
options (or an assumption of future take-up) and prevailing market
conditions when the exercises are recognised. Kier is directly
meeting the costs of implementing the exercises.
17 Changes in accounting policies
The Group has adopted IFRS 9 'Financial Instruments' and IFRS 15
'Revenue from Contracts with Customers' with effect from 1 July
2018 using the cumulative effect method, and as such comparative
information has not been restated.
IFRS 9 'Financial Instruments'
IFRS 9 replaced IAS 39 'Financial Instruments: Recognition and
Measurement. All financial instruments classified as trade and
other receivables under IAS 39, as well as contract assets
recognised in accordance with IFRS 15, have been classified and
measured at amortised cost under IFRS 9.
IFRS 9 requires the Group to recognise expected credit losses
('ECL') whereby expected losses as well as incurred losses are
provided for. The Group applies the simplified approach when
determining ECL provisions for contract assets and trade
receivables. In making the assessment of credit risk and estimating
ECL provisions, the Group uses reasonable and supportable
information about past events, current conditions and forecasts of
future events and economic conditions.
The adoption of IFRS 9 has had no material impact on the Group's
interim financial statements.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 replaces IAS 18 'Revenue' and IAS 11 'Construction
Contracts' and introduces a 5-step model to account for revenue,
with new guidance provided in areas on which previous IFRSs were
silent.
It is important to note that, whilst the change from the old
revenue recognition standards to IFRS 15 can impact on the timing
of revenue and profit recognition on individual contracts in a
particular accounting period, it does not change the overall
revenue, profit or cash generated over the life of the
contract.
The adoption of IFRS 15 has resulted in additional line items
being disclosed on the Group's Consolidated balance sheet and
Consolidated cash flow statement as follows:
> Consolidated balance sheet: Capitalised mobilisation costs
and contract assets have been included within non-current assets;
contract assets have been included within current assets; and
contract liabilities have been included within current
liabilities.
> Consolidated cash flow statement: Increase in contract
assets and decrease in contract liabilities have been included
within cash flow from operating activities; and purchase of
capitalised mobilisation costs have been included within cash flows
from investing activities.
Transition adjustments
The table below summarises the impact of the adoption of IFRS 15
at the date of first application:
Consolidated balance sheet
Impact
of adopting
30 June IFRS 1 July
Adjustment 2018 15 2018
reference GBPm GBPm GBPm
------------------------------------------------ ----------- --------- ------------ ---------
Non-current assets
Intangible assets E 862.2 (0.9) 861.3
Property, plant and equipment E 91.6 (2.8) 88.8
Investment in and loans to joint ventures A 226.1 (0.1) 226.0
Capitalised mobilisation costs E - 8.2 8.2
Contract assets F - 21.1 21.1
Trade and other receivables F 49.2 (21.1) 28.1
Other non-current assets 39.5 - 39.5
------------------------------------------------------------- --------- ------------ ---------
Non-current assets 1,268.6 4.4 1,273.0
------------------------------------------------------------- --------- ------------ ---------
Current assets
Inventories A,E,F 575.0 (322.9) 252.1
Contract assets A,F - 421.5 421.5
Trade and other receivables F 603.0 (150.0) 453.0
Other current assets 361.5 - 361.5
------------------------------------------------------------- --------- ------------ ---------
Current assets 1,539.5 (51.4) 1,488.1
Assets held for sale as part of a disposal
group 1.3 - 1.3
============================================================= ========= ============ =========
Total assets 2,809.4 (47.0) 2,762.4
============================================================= ========= ============ =========
Current liabilities
Trade and other payables A,F (1,526.8) 188.5 (1,338.3)
Contract liabilities F - (193.4) (193.4)
Other current liabilities (31.4) - (31.4)
Current liabilities (1,558.2) (4.9) (1,563.1)
------------------------------------------------------------- --------- ------------ ---------
Liabilities held for sale as part of a disposal
group (3.4) - (3.4)
------------------------------------------------------------- --------- ------------ ---------
Non-current liabilities
Deferred tax liability A-D (10.8) 8.8 (2.0)
Other non-current liabilities (635.9) - (635.9)
------------------------------------------------------------- --------- ------------ ---------
Non-current liabilities (646.7) 8.8 (637.9)
------------------------------------------------------------- --------- ------------ ---------
Total liabilities (2,208.3) 3.9 (2,204.4)
============================================================= ========= ============ =========
Net assets 601.1 (43.1) 558.0
============================================================= ========= ============ =========
Equity
Retained earnings A-D 27.6 (43.1) (15.5)
Other equity 571.8 - 571.8
Equity attributable to owners of the parent 599.4 (43.1) 556.3
Non-controlling interests 1.7 - 1.7
------------------------------------------------------------- --------- ------------ ---------
Total equity 601.1 (43.1) 558.0
============================================================= ========= ============ =========
The table below provides a breakdown of the movement in the
opening retained earnings by each of the principle adjustments.
Explanatory notes for each of the adjustments are provided below
the table.
Impact on retained earnings
Impact
of adopting
IFRS
15
Adjustment GBPm
Change in method of calculating the percentage
A of completion on construction contracts (14.2)
B Third party claims (24.6)
C Derecognition of certain variable revenue items (9.7)
D Disaggregation of performance obligations (3.4)
(51.9)
Deferred tax credit on the above (at 17.0%) 8.8
---------------------------------------------------- ------------
Total adjustment to retained earnings (43.1)
==================================================== ============
A - Change in the method of calculating the percentage of
completion on construction contracts
IFRS 15 requires a consistent revenue recognition method for
contracts and performance obligations with similar characteristics.
Previously, the Group used an output measure of progress (based on
external valuations) in its construction businesses and input
methods in its services businesses. For its construction
businesses, the Group has chosen to move to using the percentage of
completion method, using cost incurred to date as a proportion of
the estimated full costs of completing the contract, applied to the
total expected contract revenue. The Group believes that moving to
this input measure of progress better reflects the pattern of
transfer of control to the customer and achieves consistency with
other businesses within the Group. The change in method of
measuring the percentage of completion has resulted in a
transitional impact on retained earnings of GBP14.2m. Contracts
were found, on average, to have a lower percentage of completion
when compared to the previous measure.
B - Third-party claims
IAS 11 'Construction Contracts' permitted the recognition of
expected cost reimbursements resulting from claims against a third
party (as well as the customer) if it was probable that the claim
would be accepted. Certain third-party claims (such as insurance
recoveries and claims for cost reimbursements) are not covered by
similar provisions in IFRS 15, which only deals with claims against
the customer. Following the withdrawal of IAS 11, in order to
recognise an asset for these third-party claims the Group will need
to comply with the requirements of IAS 37 'Provisions, Contingent
Liabilities and Contingent Assets'. The requirements of IAS 37 are
more stringent than IAS 11, requiring recovery to be virtually
certain before an asset can be recognised. Whilst the Group still
expects to recover the amounts claimed from third parties that the
Group had recognised at the 30 June 2018 balance sheet date,
certain claims do not meet the virtually certain criteria of IAS
37. These claims have therefore been de-recognised at the
transition date and will be accounted for in future periods, when
the uncertainty over their recovery has been removed.
C - Derecognition of certain variable revenue items
IFRS 15 introduces a requirement for recognition of variable
consideration (for example pain/gain shares and milestone payments)
that is "highly probable not to reverse". The Group has therefore
reviewed its construction contracts and concluded that recognition
of some of these items will occur later in the projects.
D - Disaggregation of performance obligations
IFRS 15 introduces a clear link between the value provided to
the customer and the timing of revenue recognition. One of the
principles of the new standard is that individual performance
obligations within contracts should be identified and accounted for
separately. In the majority of cases, the Group's previous
accounting treatment was consistent with the principles of IFRS 15.
However, on some contracts in the IT business support area, it has
been necessary to disaggregate contracts and performance
obligations and account for them separately. This gives rise to
changes in the timing of revenue recognition. The Group will
potentially recognise lower profits in the early years of these
contracts, where there are higher operating costs compared to the
level of service delivered to the customer, with a compensating
increase in profits in later years. The impact on the Group on
transition to IFRS 15 reflects the fact that these contracts are in
the latter stages of their contract life cycles at the transition
date.
E - Capitalised mobilisation costs
The IFRS 15 guidance on which pre-contract costs can and can't
be capitalised is largely in line with the Group's previous
accounting policy. However, under IFRS 15 a specific category has
been introduced in non-current assets for capitalised mobilisation
costs. There has therefore been a presentational change as the
capitalised amounts have been reallocated to the new category.
F - Other balance sheet adjustments
The introduction of IFRS 15 does not only affect the timing of
revenues and profit recognition in the income statement. The new
standard introduces 'contract assets' and contract liabilities' as
new balance sheet categories. There are therefore a number of
presentational changes as accrued revenue amounts for work
undertaken, but not yet certified/invoiced, have been reclassified
as contract assets and amounts received or certified in advance of
completing performance obligations have been reclassified as
contract liabilities.
Conversely, balances within the IAS 11 related balance sheet
headings of 'amounts recoverable on contracts' within inventories
and 'construction contract balances' within trade and other
payables have been eliminated either through the adoption of the
new method of calculating the percentage of completion on
construction contracts (which no longer necessitates adjustments to
cost of sales) or else by reclassification to more appropriate
balance sheet categories, including contract assets and contract
liabilities.
Impact on the interim results for the six months ended 31
December 2018
The tables below summarise the impact of the adoption of IFRS 15
on the Group's interim consolidated income statement for the six
months ended 31 December 2018, and the consolidated balance sheet
for the period then ended. With the exception of the impact of
changes to the income statement, there was no material impact on
the Group's interim consolidated other comprehensive income. There
was no material impact on the Group's net cash flows from operating
activities, investing activities and financing activities.
Consolidated income statement - unaudited six months to 31
December 2018
Amounts without
adoption of IFRS Impact of adopting
15 IFRS 15 As reported
Non-underlying Non-underlying
items items
Underlying (note Underlying Non-underlying Underlying (note
Continuing Adjustment items(1) 3) Total items(1) items Total items(1) 3) Total
operations reference GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ----------- ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Revenue(2)
Group and share
of joint
ventures A,C,D 2,121.4 (12.7) 2,108.7 80.1 - 80.1 2,201.5 (12.7) 2,188.8
Less share of
joint ventures A (124.0) - (124.0) (0.1) - (0.1) (124.1) - (124.1)
---------------- ------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Group revenue A,C,D 1,997.4 (12.7) 1,984.7 80.0 - 80.0 2,077.4 (12.7) 2,064.7
Cost of sales A,B (1,790.1) (39.3) (1,829.4) (67.6) - (67.6) (1,857.7) (39.3) (1,897.0)
---------------- ------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Gross profit/(loss) 207.3 (52.0) 155.3 12.4 - 12.4 219.7 (52.0) 167.7
Administrative
expenses (182.1) (19.9) (202.0) - - - (182.1) (19.9) (202.0)
Share of
post-tax
results of
joint
ventures A 14.1 - 14.1 0.1 - 0.1 14.2 - 14.2
Profit/(loss)
on disposal
of joint ventures
and subsidiaries - (0.8) (0.8) - - - - (0.8) (0.8)
------------------------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Profit/(loss)
from operations 39.3 (72.7) (33.4) 12.5 - 12.5 51.8 (72.7) (20.9)
Finance income 1.0 - 1.0 - - - 1.0 - 1.0
Finance cost (13.8) (1.8) (15.6) - - - (13.8) (1.8) (15.6)
------------------------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Profit/(loss)
before tax 26.5 (74.5) (48.0) 12.5 - 12.5 39.0 (74.5) (35.5)
Taxation A-D (5.5) 12.9 7.4 (2.1) - (2.1) (7.6) 12.9 5.3
---------------- ------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Profit/(loss)
for the period
from continuing
operations 21.0 (61.6) (40.6) 10.4 - 10.4 31.4 (61.6) (30.2)
------------------------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Discontinued
operations
Profit for the
period from
discontinued
operations - - - - - - - - -
Profit/(loss)
for the period 21.0 (61.6) (40.6) 10.4 - 10.4 31.4 (61.6) (30.2)
------------------------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Attributable
to:
Owners of the
parent 20.4 (60.6) (40.2) 10.4 - 10.4 30.8 (60.6) (29.8)
Non-controlling
interests 0.6 (1.0) (0.4) - - - 0.6 (1.0) (0.4)
------------------------------ ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
21.0 (61.6) (40.6) 10.4 - 10.4 31.4 (61.6) (30.2)
============================ ========== ============== ========= ========== ============== ====== ========== ============== =========
Earnings per
share
Basic earnings
per share
From continuing
operations 20.8p (59.7)p (38.9)p 10.0p - 10.0p 30.8p (59.7)p (28.9)p
From
discontinued
operations - - - - - - - - -
---------------- ----------- ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Total 20.8p (59.7)p (38.9)p 10.0p - 10.0p 30.8p (59.7)p (28.9)p
Diluted earnings
per share
From continuing
operations 20.8p (59.7)p (38.9)p 10.0p - 10.0p 30.8p (59.7)p (28.9)p
From
discontinued
operations - - - - - - - - -
---------------- ----------- ---------- -------------- --------- ---------- -------------- ------ ---------- -------------- ---------
Total 20.8p (59.7)p (38.9)p 10.0p - 10.0p 30.8p (59.7)p (28.9)p
============================== ========== ============== ========= ========== ============== ====== ========== ============== =========
(1) Stated before non-underlying items, see note 3 to the
financial statements.
(2) Non-underlying revenue relating to the UK Mining operations
of GBP2.3m is presented net of a GBP15.0m revenue adjustment with
respect to the Group's Broadmoor Hospital development project (see
note 3 for further details).
Impact on profit/(loss) for the period
Impact
of
IFRS
15
Adjustment GBPm
Change in method of calculating the percentage
A of completion on construction contracts 8.6
B Third party claims 1.4
C Derecognition of certain variable revenue items (0.6)
D Disaggregation of performance obligations 3.1
12.5
Tax charge on the above (2.1)
---------------------------------------------------- ------
Total impact on profit/(loss) for the period 10.4
==================================================== ======
A - Change in the method of calculating the percentage of
completion on construction contracts
Additional profit has been recognised in relation to the
relative percentage of completion of construction jobs, under the
old and new calculation methods, at 31 December 2018 compared with
30 June 2018. The additional profit recognised in the period
reflects the fact that the cumulative impact of IFRS 15 compared to
the old percentage of completion measurement basis is, on average,
less marked at 31 December 2018, than at 30 June 2018, i.e. there
has been an acceleration of work when measured on a cost basis
compared to the previous, external valuation, basis.
B - Third-party claims
One of the third-party claims that was derecognised as an IFRS
15 transitional adjustment, was settled in the six months to 31
December 2018. This has resulted in a difference in the timing of
the accounting for the outcome of the settlement.
C - Derecognition of certain variable revenue items
The small additional charge to the income statement is a result
of the timing difference on when certain claims (accounted for as
variable consideration) should be recognised under IFRS 15 compared
to the previous standards.
D - Disaggregation of performance obligations
As described in the transitional adjustments section above, it
has been necessary to disaggregate contracts and performance
obligations in relation to some contracts in the IT business
support area, and account for them separately. This gives rise to
changes in the timing of revenue recognition. On these contracts a
transitional adjustment has been made to reflect the fact that less
revenue and profit would have been recognised in the earlier years
of these contracts. Conversely, more profit is recognised in the
later years under IFRS 15. The impact on the income statement for
the six months to 31 December 2018 reflects the fact that these
contracts are in the latter stages of their contract life
cycles.
Consolidated balance sheet - unaudited as at 31 December
2018
Amounts
without Impact
adoption of adopting
of IFRS IFRS
Adjustment 15 15 As reported
reference GBPm GBPm GBPm
------------------------------------------------ ------------- --------- ------------ -----------
Non-current assets
Intangible assets E 830.3 (0.4) 829.9
Property, plant and equipment E 86.8 (3.1) 83.7
Investment in and loans to joint ventures 238.3 - 238.3
Capitalised mobilisation costs E - 8.6 8.6
Deferred tax asset A-D 6.7 6.7 13.4
Contract assets F - 21.2 21.2
Trade and other receivables F 36.7 (21.1) 15.6
Other non-current assets 33.4 - 33.4
--------------------------------------------------------------- --------- ------------ -----------
Non-current assets 1,232.2 11.9 1,244.1
--------------------------------------------------------------- --------- ------------ -----------
Current assets
Inventories A,E,F 584.2 (297.7) 286.5
Contract assets A,F - 456.5 456.5
Trade and other receivables F 625.7 (159.2) 466.5
Other current assets 464.2 - 464.2
--------------------------------------------------------------- --------- ------------ -----------
Current assets 1,674.1 (0.4) 1,673.7
Assets held for sale as part of a disposal
group 12.0 - 12.0
=============================================================== ========= ============ ===========
Total assets 2,918.3 11.5 2,929.8
=============================================================== ========= ============ ===========
Current liabilities
Trade and other payables A,F (1,350.9) 80.6 (1,270.3)
Contract liabilities F - (125.3) (125.3)
Other current liabilities (69.8) - (69.8)
Current liabilities (1,420.7) (44.7) (1,465.4)
--------------------------------------------------------------- --------- ------------ -----------
Liabilities held for sale as part of a disposal
group - - -
------------------------------------------------ ------------- --------- ------------ -----------
Non-current liabilities (750.8) - (750.8)
--------------------------------------------------------------- --------- ------------ -----------
Total liabilities (2,171.5) (44.7) (2,216.2)
=============================================================== ========= ============ ===========
Net assets 746.8 (33.2) 713.6
=============================================================== ========= ============ ===========
Equity
Retained earnings A-D (77.8) (32.7) (110.5)
Other equity A,C 824.9 (0.5) 824.4
Equity attributable to owners of the parent 747.1 (33.2) 713.9
Non-controlling interests (0.3) - (0.3)
--------------------------------------------------------------- --------- ------------ -----------
Total equity 746.8 (33.2) 713.6
=============================================================== ========= ============ ===========
The areas of the balance sheet impacted by the adoption of IFRS
15 and the nature of the adjustments are consistent with the
transitional adjustments noted above.
Responsibility statement of the directors Kier Group
in respect of the interim financial report plc
Interim Management
Report and
Financial Statements
for the six
months ended
31 December
2018
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the European Union;
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
The Directors of Kier Group plc are listed on pages 64 and 65 of
the Kier Group plc Annual Report and Accounts 2018, with the
exception of Nick Winser who, having completed nine years on the
Board, decided not to offer himself for re-election at the AGM held
on 16 November 2018, and Haydn Mursell who resigned from the Board
on 22 January 2019. A list of current Directors is maintained on
the Kier Group plc website at: www.kier.co.uk.
Signed on 19 March 2019 on behalf of the Board.
Philip Cox CBE Bev Dew
Executive Chairman Finance Director
Independent review report to Kier Group plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Kier Group plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
interim management report and financial statements of Kier Group
plc for the 6 month period ended 31 December 2018. Based on our
review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Consolidated balance sheet as at 31 December 2018;
-- the Consolidated income statement and Consolidated statement
of comprehensive income for the period then ended;
-- the Consolidated cash flow statement for the period then ended;
-- the Consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim
management report and financial statements have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Independent review report to Kier Group plc Kier Group plc
Report on the condensed consolidated interim financial Interim Management
statements Report and Financial
Continued Statements for
the six months
ended 31 December
2018
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim management report and financial statements,
including the interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the interim management report and
financial statements in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim management report and financial
statements based on our review. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
management report and financial statements and considered whether
it contains any apparent misstatements or material inconsistencies
with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
19 March 2019
a) The maintenance and integrity of the Kier Group plc website
is the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEMSISFUSEDD
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