TIDMKIE
RNS Number : 1055E
Kier Group PLC
09 March 2022
9 March 2022
Kier Group plc
Results for the six months ended 31 December 2021
Kier Group plc (the "Company" or the "Group"), a leading
infrastructure services and construction company, announces its
results for the six months ended 31 December 2021 ("HY22" or the
"period").
Key Financial Highlights
Six months to
Six months to 31 December 2020
31 December 2021 1
----------------------------------- ------------------ ------------------
Adjusted results
Revenue (GBPm) 2 1,536 1,624
Adjusted operating profit (GBPm)
3 54.2 47.6
Adjusted operating margin 3.5% 2.9%
Adjusted profit before tax (GBPm)
4 43.0 27.8
Adjusted basic earnings per share
(note 8) 7.8p 10.4p
Net debt (GBPm) 5 (131.3) (353.5)
Average month-end net debt (GBPm) (190.8) (436.3)
Reported
Group revenue (GBPm) 1,482 1,617
Profit from operations (GBPm) 25.3 28.8
Profit before tax (GBPm) 12.7 9.0
Basic earnings per share (note 8) 2.2p 3.8p
1 Continuing operations
2 Revenue of the Group and its share of joint ventures.
3 Stated before adjusting items of GBP19.0m (HY21: GBP7.5m) and
amortisation of acquired intangible assets of GBP9.9m (HY21:
GBP11.3m).
4 Stated before adjusting items of GBP20.4m (HY21: GBP7.5m) and
amortisation of acquired intangible assets of GBP9.9m (HY21:
GBP11.3m).
5 Disclosed net of the effect of hedging instruments and
excludes leases - see note 10 to the interim financial
statements.
Highlights
-- H1 FY22 strategic and operational highlights
o Strong performance despite inflationary pressure
o Positive momentum
-- Strong performance in Infrastructure and Property, partially
impacted by reduced volumes in Construction
o High quality order book of GBP8bn; focused on winning work
through long-standing client relationships and regional-based
business model
o Disciplined investment in the Property business in line with
medium-term plan
o Continued commitment to Sustainability Framework and ESG
targets
-- Robust operational performance
o Revenue of over GBP1.5bn (HY21: GBP1.6bn)
o Adjusted operating profit of GBP54m, (HY21: GBP48m): reported
profit GBP25m (HY21: GBP29m)
o Adjusted operating margin improvement by 60 basis points to
3.5%
o Adjusted basic EPS: 7.8p (HY21: 10.4p): reflecting dilution
from recent equity raise
o Free cash outflow of GBP(110)m (HY21: inflow GBP19m): impacted
by anticipated seasonal working capital unwind
o Significant reduction in net debt position
-- Net debt at 31 December 2021 of GBP(131)m (HY21: GBP(354)m)
-- Average month-end net debt of GBP(191)m (HY21: GBP(436)m)
-- Recent contract awards
o Highways: over GBP1bn of work awarded over the last six months
including the delivery of the A417 Missing Link
o Infrastructure: appointed by Network Rail to deliver the
design and enabling works for the GBP65m Oxford railway station
improvement project
o Infrastructure & Utilities: appointed by Thames Water to
deliver GBP66m improvement project at Mogden Sewage Treatment
Works
o Construction: appointed as main contractor to phase 2 of the
GBP107m digital campus in Gloucester and in 2022 was awarded a
place on the Procure Partnerships North West framework worth up to
GBP1.8bn
o Property: entered into a joint venture with PGIM Real Estate
to develop a portfolio of light industrial and urban logistics
warehouses across the UK
o Focused on winning and executing contracts with appropriate
risk and reward
-- High quality order book of GBP8.0bn
o Covering 96% of FY22 expected revenue
o Strong levels of awards in H1 providing a good platform for
growth
o Underpinned by long-term frameworks and agreements
o Well positioned to continue benefiting from UK Government
infrastructure spending commitments
-- Focused on delivering medium-term value creation plan
o Revenue: GBP4.0 - 4.5bn
o Adjusted operating profit margin: c.3.5%
o Cash conversion of operating profit: c.90%
o Balance sheet: Sustainable net cash position with capacity to
invest
o Dividend: Sustainable dividend policy: c.3 x cover through the
cycle
Andrew Davies, Chief Executive, said:
"The performance of the Group over the last six months reflects
our significantly enhanced resilience and strengthened financial
position. We achieved our medium-term plan margin target in the
first half of the year. The Group is well positioned to continue
benefiting from UK Government infrastructure spending commitments
and has seen strong levels of awards in the first half of the year.
We continue to trade in line with expectations. Our high quality
order book underpinned by long-term frameworks and agreements,
gives us confidence in our medium-term value creation plan and the
continued success of the Group."
HY22 Results Presentation
Kier Group plc will host a presentation for analysts and
investors at 8:30am on 9 March 2022 at the offices of FTI
Consulting, 200 Aldersgate Street, London EC1A 4HD.
Analysts wishing to attend should contact FTI Consulting to
register - becky.west@fticonsulting.com.
Analysts unable to attend in person will be able to join the
webcast using the details below:
Webcast:
https://www.investis-live.com/kier/6217920903c5201200869a14/wrwwpo
United Kingdom: 0800 640 6441
United Kingdom (Local): 020 3936 2999
All other locations: +44 20 3936 2999
Conference password: 061426
An audio recording will be available on our website in due
course.
Capital Markets Event
Kier Group plc will be hosting a Capital Markets Event on 25 May
2022.
The in-person event will be hosted by Andrew Davies, CEO and
Simon Kesterton, CFO, and will include presentations from our Group
Managing Directors of our core business units:
-- Infrastructure Services - Highways, Infrastructure and Utilities
-- Construction
-- Property
Investor and analysts will also be able to join the Capital
Markets Event through a webcast. Details will be announced closer
to the time.
Further Information:
Kier Group plc
Investor Relations +44 (0) 7933 388 746
Kier Press office +44 (0) 1767 355 096
FTI Consulting +44 (0) 20 3727 1340
Richard Mountain
Cautionary Statement
This announcement does not constitute an offer of securities by
the Company. Nothing in this announcement is intended to be, or
intended to be construed as, a profit forecast or a guide as to the
performance, financial or otherwise, of the Company or the Group
whether in the current or any future financial year. This
announcement may include statements that are, or may be deemed to
be, "forward-looking statements". These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "anticipates",
"expects", "intends", "plans", "target", "aim", "may", "will",
"would", "could" or "should" or, in each case, their negative or
other variations or comparable terminology. They may appear in a
number of places throughout this announcement and include
statements regarding the intentions, beliefs or current
expectations of the directors, the Company or the Group concerning,
amongst other things, the operating results, financial condition,
prospects, growth, strategies and dividend policy of the Group or
the industry in which it operates. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future and may be beyond the Company's ability to control or
predict. Forward-looking statements are not guarantees of future
performance. The Group's actual operating results, financial
condition, dividend policy or the development of the industry in
which it operates may differ materially from the impression created
by the forward-looking statements contained in this announcement.
In addition, even if the operating results, financial condition and
dividend policy of the Group, or the development of the industry in
which it operates, are consistent with the forward-looking
statements contained in this announcement, those results or
developments may not be indicative of results or developments in
subsequent periods. Important factors that could cause these
differences include, but are not limited to, general economic and
business conditions, industry trends, competition, changes in
government and other regulation, changes in political and economic
stability and changes in business strategy or development plans and
other risks.
Other than in accordance with its legal or regulatory
obligations, the Company does not accept any obligation to update
or revise publicly any forward-looking statement, whether as a
result of new information, future events or otherwise.
Principal Risks and Uncertainties
You are advised to read the section headed "Principal risks and
uncertainties" in the Company's Annual Report and Accounts for the
year ended 30 June 2021 for a discussion of the factors that could
affect the Group's future performance and the industry in which it
operates. The Board believes that these principal risks and
uncertainties will continue to apply to the Group in the
second-half of the financial year.
About Kier
Kier is a leading UK infrastructure services and construction
group. The services we offer to our clients fit in to three core
market propositions: Infrastructure Services, Construction and
Property.
We provide specialist design and build capabilities and the
knowledge, skills and intellectual capital of our people ensure we
are able to project manage and integrate all aspects of a
project.
We take pride in bringing specialist knowledge, sector-leading
experience and fresh thinking to create workable solutions for our
clients across the country.
Together, we have the scale and breadth of skills of a major
company, while retaining a local focus and pride that comes from
never being far from our clients, through a network of offices
spanning across England, Wales, Scotland and Northern Ireland.
For further information and to subscribe to our news alerts,
please visit: www.kier.co.uk
Follow us on Twitter: @kiergroup
Connect with us on LinkedIn: Kier Group
Introduction
The Group performed well during the half year despite
inflationary pressure.
Kier reported revenues of GBP1.5bn, a slight decrease of 5% on
HY21 reflecting procurement delays and project completion timing
being partially offset by the start of certain capital works on
HS2.
The Group delivered adjusted operating profit of GBP54m (HY21:
GBP48m) and increased its margin by 60 basis points to 3.5% (HY21:
2.9%). This reflects the disciplined management of both materials
inflation and extended delivery times; which was achieved through
agile sourcing, as well as our continued focus applying the
principles of Performance Excellence where c.55% of the order book
is under target cost or cost reimbursable contracts. The Group
achieved its medium-term plan margin target. The continued strong
operational performance led to the Group recording an increased
statutory profit before tax from continuing operations of GBP12.7m
(HY21: GBP9.0m), despite the reduction in revenue.
Adjusted earnings per share was 7.8p from continuing operations
(HY21: 10.4p (restated)). The prior year has been restated as a
result of the bonus element of the FY21 equity raise.
As anticipated, the Group experienced a free cash outflow of
GBP(110)m (HY21: GBP19m inflow). This was the result of seasonal
working capital and a GBP10m reduction in Kier Early Payment Scheme
(KEPS). The prior period had benefited from procurement policy note
PPN 04/20.
The Group's net debt position at 31 December 2021 of GBP(131)m
(HY21: GBP(354)m) and average period-end net debt of GBP(191)m
(HY21: GBP(436)m), significantly improved period-on-period. The
average period-end net debt improvement was driven by cash
generation, the successful capital raise and the sale of Kier
Living. This was partially impacted by a GBP42m period over period
reduction in the average month-end KEPS balance, repayment of HMRC
Government support and the payment of adjusting items. The Group's
supplier payment days remain unchanged compared to HY21.
Strategy Update
The simplification and strengthening of the Group's balance
sheet has resulted in Kier being well-placed to continue to pursue
its strategic objectives within its chosen markets and allow it to
further enhance and capitalise on its position as a strategic
partner to its customers.
The Group's strategy continues to be focused on:
-- UK Government, regulated industries and blue-chip customers;
-- operating in the business-to-business market; and
-- contracting through long-term frameworks.
Our core businesses are well-placed to benefit from the
announced and committed UK Government spending plans to invest in
infrastructure, decarbonisation and the post COVID-19 recovery. We
have secured places on long-term frameworks through which much of
the increased spend will be deployed.
This, combined with our nationwide coverage and project
management expertise, is expected to drive our strategic actions of
disciplined growth, consistent delivery and strong cash
generation.
Medium-Term Value Creation Plan
The Group is focused on delivering its medium-term targets:
Revenue: GBP4.0 - 4.5bn
Adjusted operating profit c. 3.5%
margin:
Cash conversion of operating c. 90%
profit:
Balance sheet: Sustainable net cash position with capacity
to invest
Dividend: Sustainable dividend policy: c.3 x cover
through the cycle
The Group aims to achieve these medium-term targets through:
-- volume growth and improved contract profitability;
-- continued management discipline;
-- deploying additional capital in the Property business; and
-- a recovery from COVID-19
Capital Allocation
In addition to the medium-term value creation plan, the Group
has set out its capital allocation priorities. The Group maintains
a disciplined approach to capital and continuously reviews capital
allocation priorities with the aim of maximising shareholder
returns. The Group's capital allocation is underpinned by its
commitment to maintain a strong balance sheet. The capital
priorities are:
-- Capex - disciplined and non-speculative investment to support its businesses
-- Deleveraging - further deleveraging. Targeting a sustainable
net cash position in the medium-term and a funding profile which is
appropriate for the medium and long-term needs of the Group
-- Dividend - reinstating the dividend is key to ensuring that
shareholders share the benefits of Group's growth. In the
medium-term, the Group is targeting a dividend cover of around
three times cover through the cycle
-- Mergers and acquisitions - the Group will consider value
accretive acquisitions in core markets where there is potential to
accelerate the medium-term value plan
Performance Excellence
Kier operates with a strong operational and financial risk
management framework, which is fundamental to, and embedded into,
Kier's contract selection and delivery processes.
Kier's Performance Excellence culture introduced a consistent
approach in how Kier develops and manages people, as well as
processes, projects, costs and its way of working. The key tenets
are as follows:
-- deliver projects on time and to budget, thereby meeting clients' and customers' expectations;
-- do not enter into contracts with unacceptable risk profiles;
-- introduce increased levels of resilience, and a consistency
of approach, across the Group; and
-- win new business with attractive margins.
Performance Excellence is also fundamental to Kier's approach to
safety, with the aim of continuing to improve the Group's overall
safety performance.
Supply Chain Partners
Our supply chain partners are key long-term stakeholders in the
Group and will be central in the growth of Kier.
The Group's aggregate average payment days for the six months to
31 December 2021 remained at 34 days and the percentage of payments
made to suppliers within 60 days increased to 92% from 89% (both
compared to HY21).
We remain committed to further improvements in our payment
practices and continue to work with both customers and suppliers to
achieve this.
Management Changes
The Group has continued to strengthen its management team
through the period with the promotion of Andrew Bradshaw as Group
Managing Director, Utilities, who replaces Barry McNicholas who
retired from the Group during the period.
Customers and winning new work
We remain focused on winning work through our long-standing
client relationships and regionally based operations. The Group's
order book at 31 December 2021 amounted to GBP8.0bn (30 June 2021:
GBP7.7bn) as we continue to win new high quality and profitable
work underpinning future growth.
During the period:
-- Highways - over GBP1bn of work awarded over the last six
months including the design and build of the A66
Northern-Trans-Pennine schemes
-- Infrastructure & Utilities - appointed by Thames Water to
deliver GBP66m improvement project at Mogden Sewage Treatment
Works
-- Construction - appointed as main contractor to phase 2 of the
GBP107m digital campus in Gloucester and GBP43m Surgical Centre for
NHS Golden Jubilee
-- Property - Entered into a joint venture with PGIM Real Estate
to develop a portfolio of light industrial and urban logistics
warehouses across the UK
-- Kier Places - extensions of two existing long-term contracts worth a combined GBP71m
Health, Safety and Wellbeing (HS&W)
The Group's 12-month rolling Accident Incident Rate ('AIR') at
HY22 of 132 and the 12-month rolling All Accident Incident Rate
('AAIR') at HY22 of 378 represents increases of c.17% and c.8%
respectively compared to the end of FY21. Whilst we recognise this
is disappointing, we retain a solid safety record and maintain high
safety standards in our industry.
Given the recent trend, the Group realigned its Safety, Health,
Environment and Assurance (SHEA) function and plans to roll out a
behavioural programme focusing on all aspects from safety, health
and wellbeing.
Safety remains our license to operate and we continue to embed
best practice and make conditions as safe as possible for our
workforce.
AIR and AAIR are important metrics to baseline our performance
but as we move forward into FY22 we will look to develop more
proactive leading indicators where our teams focus on hazard and
risk frequency and develop strong processes and plans to mitigate
prior to incident.
Environmental, Social and Governance (ESG)
Following the successful launch of our Building for a
Sustainable World Framework in July 2020, the Group continues to
deliver against its key deliverables and balance the environmental
and community resilience and profitability in day-to-day decision
making.
The framework is governed through the ESG Board Committee.
-- Environmental
Our Building for a Sustainable Framework sets out that our
sustainability approach is based on five pillars; pollution
prevention, sustainable procurement, net zero carbon, zero
avoidable waste and biosphere protection for which we will report
progress each year.
As at 31 December 2021, the Group's environmental performance is
on target to achieve its targets including the measurement of our
scope 3 carbon emissions. Within this the Group is changing how it
operates. We are trialling the use of Hydrotreated Vegetable Oil
(HVO) as a replacement for red diesel for our fleet. This change
would potentially save carbon emissions by up to 90% and nitrogen
oxide emissions by up to 27% in comparison to red diesel.
-- Social
Kier operations have direct impacts on, and leave positive
impacts on the communities we serve which then generate wider
societal value. In order to capture this value the Group has
invested in an online cloud-based system, Thrive. This tracking
system links our sustainability framework, our social value model
and UN Sustainability goals within an industry comparable
system.
-- Governance
Governance remains a core component of the Group's approach to
operations. The Group monitors governance matters through Annual
BSI audits on ISO14001, 45001 & 9001 compliance, Integrated
Operational Assurance Statement, processes and operating assurance
statements.
Summary and Outlook
The performance of the Group over the last six months reflects
our significantly enhanced resilience and strengthened financial
position. We achieved our medium-term plan margin target in the
first half of the year. The Group is well positioned to continue
benefiting from UK Government infrastructure spending commitments
and has seen strong levels of awards in the first half of the year.
We continue to trade in line with expectations. Our strong order
book underpinned by long-term frameworks and agreements, gives us
confidence in our medium-term value creation plan and the continued
success of the Group.
Operational Review
Infrastructure Services
Six months to Six months to
31 December 2021 31 December 2020
---------------------------------- ------------------ ------------------
Revenue (GBPm) 777 673
Adjusted operating profit (GBPm)
6 32.9 27.3
Adjusted operating margin 4.2% 4.1%
Reported operating profit (GBPm) 22.5 20.8
Order book (GBPbn) 4.5 4.6
6 Stated before adjusting items of GBP10.4m (HY21: GBP6.5m).
-- Key contract wins include
o Highways - over GBP1bn of work awarded over the last six
months including the design and build of the A66
Northern-Trans-Pennine schemes
o Infrastructure & Utilities - appointed by Thames Water to
deliver GBP66m improvement project at Mogden Sewage Treatment
Works
o Infrastructure - appointed by Network Rail to deliver the
design and enabling works for the GBP65m Oxford railway station
improvement project
-- 98% of orders secured for FY22
The Infrastructure Services segment comprises the Highways,
Infrastructure and Utilities businesses.
Segmental revenue was 15% higher than the comparative period due
primarily to the ramp up of capital works on HS2. This increase in
volumes of the segment has primarily driven the 20.5% increase in
adjusted operating profit to GBP33m.
The Highways business designs, builds and maintains roads for
National Highways, Transport for London and a number of district
and county councils. The business has enjoyed a period of strong
work winning success, including new contracts and contract
extensions in Highways Maintenance, alongside the design and build
of three National Highways Major Projects. The marketplace is
seeing a shift towards major projects with demand at unprecedented
levels. Success in the Major Projects market requires relevant
experience alongside a suite of skills and capabilities through the
project life cycle, for which Kier is positioned strongly. As such
the business forecasts to continue to grow its project portfolio to
offset any downside risk on maintenance. In total, over GBP1bn of
work was won over the last six months including Birmingham Highways
contract extension, National Highways Schemes Delivery Framework,
A66 Northern-Trans-Pennine scheme, M6 Lune Gorge Structures and
A417 Missing Link.
The Infrastructure business delivers major and complex
infrastructure and civil engineering projects, including the HS2
project in joint venture with Eiffage, Ferrovial and BAM Nuttall,
the A13 dualling project and ongoing works at both Hinkley Point C
and Sellafield. The ramp up also increased adjusted operating
profit period over period.
The Utilities business delivers long-term contracts providing
construction and maintenance services to the water, energy, and
telecommunications sectors. The period reflects the commencement of
several telecoms contracts and the resultant cost of mobilisation
of this increased activity. The business has continued to win work
such as being appointed by Thames Water to deliver GBP66m
improvement project at Mogden Sewage Treatment Works. Utilising the
depth of the Kier offer, this combines Utilities and Infrastructure
strengths to deliver a turnkey solution for our client . The
pipeline for attractive high-quality, long-term infrastructure work
remains strong with opportunities to provide decarbonisation
solutions to the energy sector.
Construction
Six months to Six months to
31 December 2021 31 December 2020
---------------------------------- ------------------ ------------------
Revenue (GBPm) 681 903
Adjusted operating profit (GBPm)
7 26.3 33.6
Adjusted operating margin 3.9% 3.7%
Reported operating profit (GBPm) 12.8 30.7
Order book (GBPbn) 3.5 3.4
-- Awarded places on frameworks worth up to GBP11bn lasting typically four years
-- Appointed as main contractor to phase 2 of the GBP107m digital campus in Gloucester
-- 93% of orders secured for FY22
-- Margin improvement due to realisation of cost saving
programme and alignment to lower revenues
The Construction segment comprises Regional Building, Strategic
Projects, Kier Places (including Housing Maintenance, Facilities
Management and Environmental Services) as well as our International
business. Construction has national coverage delivering schools,
hospitals, defence, custodial facilities and amenities centres for
local authorities, councils and the private sector.
As previously highlighted, revenue was impacted by procurement
delays with deferred orders and delayed project starts as well as
the ramp down of activity following the successful completion of
the HMP Five Wells prison project in Wellingborough. The reductions
in volume resulted in revenue decreasing by 25% and adjusted
operating profit reducing by 22% to GBP26m. Adjusting items include
costs related to the restructuring of our Southern regional
business following our strategic review and a limited amount of
cladding rectification costs.
The business continued to win contracts, as reflected in an
increased order book, including being awarded a place on the GBP7bn
Department for Education 2021 Construction Framework and being
appointed as preferred bidder to deliver the GBP36m new Sunderland
Eye Hospital and in 2022 was awarded a place on the Procure
Partnerships North West framework worth up to GBP1.8bn. We are well
placed to benefit from the GBP5bn "New Deal" opportunities
announced by the Government which focus on areas such as health,
education and custodial services, where the Group has specialist
expertise.
Our Construction business has continued to see a few deferrals
in project awards caused by procurement delays. In addition, whilst
we recognise the risk of cost inflation, we continue to mitigate
this with our contractual agreements and ongoing tender selectivity
and controls.
Our Kier Places business specialises in working in occupied
properties both residential and offices, delivering maintenance,
repairs, fire safety and compliance services. The business has
benefited from increased work opportunities from existing
customers, resulting in increases in both volumes and
profitability. It continues to win new work and the period saw the
extensions of two existing long-term contracts worth a combined
GBP71m.
The UAE-based International business is now focused on managing
its cost base and projects in line with the continued weakness in
its markets.
Property
Six months to Six months to
31 December 2021 31 December 2020
---------------------------------- ------------------ ------------------
Revenue (GBPm) 76 46
Adjusted operating profit (GBPm)
8 10.4 2.6
Adjusted operating margin 13.7% 5.7%
Reported operating profit (GBPm) 9.8 0.1
ROCE % 15.0% 3.6%
7 Stated before adjusting items of GBP13.5m (HY21: GBP2.9m).
8 Stated before adjusting items of GBP0.6m (HY21: GBP2.5m).
-- Entered into a joint venture with PGIM Real Estate to develop
a portfolio of light industrial and urban logistics warehouses
across the UK.
-- Partner Investec to develop a multi-unit 4.9 acre industrial
scheme in Manchester under our Trade City JV.
-- Completed sales of Maidenhead and Gravesend Trade City sites during the period.
The Property business invests and develops primarily mixed-use
commercial and residential schemes and sites across the UK.
Revenue increased 64% compared to the prior year due to the
completion of several property sales during the period particularly
within the industrial sector.
Adjusted operating profit increased from GBP2.6m to GBP10.4m
period over period due to the increased completions. The Group is
focused on the controlled expansion of the Property business
through select investments and strategic joint ventures using a
disciplined capital approach.
Corporate
Six months to Six months to
31 December 2021 31 December 2020
---------------------------------- ------------------ ------------------
Adjusted operating loss (GBPm) 9 (15.4) (15.9)
Reported operating loss (GBPm) (19.8) (22.8)
The Corporate segment comprises the costs of the Group's central
functions and remains consistent with the prior period as the Group
continues to retain the benefits of the previous periods' cost
reduction programmes.
9 Stated before adjusting items of GBP4.4m (HY21: GBP6.9m).
Financial Review
Introduction
The Group performed well during the half year despite
inflationary pressure. The Group delivered adjusted operating
profit of GBP54.2m (HY21: GBP47.6m, FY21: GBP100.3m) with a margin
of 3.5% (HY21: 2.9%, FY21: 3.0%).
The continued strong operational performance led to the Group
recording an increased statutory profit before tax from continuing
operations of GBP12.7m (HY21: GBP9.0m, FY21: GBP5.6m), despite a
reduction in revenue.
Adjusted earnings per share was 7.8p from continuing operations
(HY21: 10.4p (restated), FY21: 25.0p). The prior year has been
restated as a result of the bonus element of the FY21 equity
raise.
As anticipated, the Group experienced a free cash outflow of
GBP110m (HY21: GBP19m inflow, FY21: GBP93m inflow) in the first
half of the year. The Group converted operating profit into cash
offset by a working capital unwind, typical for the first six
months of the year.
The Group remains well placed to benefit from the UK
Government's commitment to national infrastructure investment.
The order book was GBP8.0bn at 31 December 2021 (HY21: GBP8.0bn,
FY21: GBP7.7bn). The Group continued to win new, high quality and
profitable work in its markets on terms and rates which reflect the
bidding discipline and risk management introduced under the Group's
Performance Excellence programme.
The order book continues to be underpinned by significant
long-term framework agreements. New awards exceeded the prior year,
albeit the growth in order book was later than anticipated due to
procurement delays.
Summary of financial performance
Adjusted 1 (0) results Reported results
----------------------------
31 Dec 31 Dec 31 Dec 31 Dec
21 20 1 (1) change 21 20(11) change
-------- ---------- --------- -------- -------- --------
Revenue (GBPm) - Total 1,536.2 1,624.2 (5.4)% 1,536.2 1,624.2 (5.4)%
Revenue (GBPm) - Excluding
JV's 1,482.2 1,617.1 (8.3)% 1,482.2 1,617.1 (8.3)%
Profit from operations
(GBPm) 54.2 47.6 13.9% 25.3 28.8 (12.2)%
Profit before tax
(GBPm) 43.0 27.8 54.7% 12.7 9.0 41.1%
Earnings per share
(p) 7.8 10.4 (25.0)% 2.2 3.8 (42.1)%
Free cash flow (GBPm) (109.7) 19.0 (128.7)
Net debt (GBPm) (131.3) (353.5) 222.2
Net debt (GBPm) -
average month end (190.8) (436.3) 245.5
Order book (GBPbn) 8.0 8.0 -
Supply Chain Financing
(GBPm) 69.3 109.4 (40.1)
---------------------------- -------- ---------- --------- -------- -------- --------
1 (0) Reference to 'Adjusted' excludes adjusting items, see note 3.
1 (1) Continuing operations
Revenue from continuing operations
The following table represents a bridge in the Group's revenue
from the period ended 31 December 2020 to the period ended 31
December 2021.
GBPm
------------------------------------------------ --------
Revenue for the six months to 31 December 2020 1,624.2
Infrastructure Services 104.5
Construction (221.7)
Property and Corporate 29.2
Revenue for the six months to 31 December 2021 1,536.2
------------------------------------------------ --------
The Group experienced strong growth in Infrastructure, primarily
due to the ramp up in HS2. Construction revenue decreased due to
reduced volumes. There were also additional transactions in
Property compared to the prior period. The Group continues to focus
on delivering high quality and high margin work.
Alternative performance measures (APM)
The Directors continue to consider that it is appropriate to
present an income statement that shows the Group's statutory
results only.
The Directors, however, still believe it is appropriate to
disclose those items which are one-off, material or non-recurring
in size or nature. The Group is disclosing as supplementary
information an 'adjusted profit' APM. The Directors consider doing
so clarifies the presentation of the financial statements and
better reflects the internal management reporting and is therefore
consistent with the requirements of IFRS 8.
Adjusted Operating Profit
GBPm
------------------------------------------------- -------
Adjusted operating profit for the six months to
31 December 2020 47.6
Volume / price / mix changes (6.7)
Additional property transactions 7.8
Cost inflation (3.4)
Management actions 8.9
Adjusted operating profit for the six months to
31 December 2021 54.2
------------------------------------------------- -------
Adjusted operating profit improved compared to the prior period
despite the reduction in revenue. The main reasons for this were
management actions to reduce costs and increased property
transactions compared to HY21, which offset volume and inflation
pressures.
A reconciliation of reported to adjusted operating profit is
provided below:
Operating profit Profit before tax
---------------------- ----------------------
Six months Six months Six months Six months
to 31 Dec to 31 Dec to 31 Dec to 31 Dec
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
------------------------------------ ---------- ---------- ---------- ----------
Reported profit from continuing
operations 25.3 28.8 12.7 9.0
Amortisation of acquired intangible
assets 9.9 11.3 9.9 11.3
Restructuring and related charges 11.8 6.0 11.8 6.0
Preparation for business divestment
or closure (0.3) (0.8) (0.3) (0.8)
Other 7.5 2.3 8.9 2.3
------------------------------------ ---------- ---------- ---------- ----------
Adjusted profit from continuing
operations 54.2 47.6 43.0 27.8
------------------------------------ ---------- ---------- ---------- ----------
Additional information about these items is as follows:
-- Amortisation of acquired intangible assets GBP9.9m (HY21: GBP11.3m, FY21: GBP21.0m):
Comprises the amortisation of acquired contract rights primarily
relating to the acquisitions of May Gurney in 2013, Mouchel in 2015
and McNicholas in 2017.
-- Restructuring and related charges GBP11.8m (HY21: GBP6.0m. FY21: GBP31.6m):
The Group incurred restructuring costs and related charges in
the period totalling GBP11.8m. The Group continued its strategic
restructuring of its Regional Southern Build business, which has
included the closure of offices, a down-sizing of personnel and the
withdrawal/early settlement of certain contract positions. As a
result of these ongoing restructuring activities, a cost of GBP6.0m
was charged in the current period, which represents an extension of
the prior year charges. This relates predominantly to charges in
respect of the recoverability of assets and increased project costs
due to settlements and delays, which have been directly impacted by
this restructuring programme.
In addition, GBP4.1m was incurred on redundancies and other
people related costs.
A further GBP1.4m relates to fair value movements on the Group's
vacated properties. This includes a GBP5.2m impairment in relation
to Fountain Street, Manchester, which has been recognised upon
transfer from right-of-use assets to investment properties. This is
offset by a GBP1.4m fair value uplift on the Group's other
investment properties. Following a fire, the land at our recycling
plant has been transferred to investment property and has been
included at fair value, which has resulted in a GBP2.7m credit.
-- Costs relating to the preparation of business divestment or
closure GBP(0.3m) (HY21: GBP(0.8m), FY21: GBP0.5m):
The current year credit represents the reversal of an impairment
charge on land held for development. The original impairment was
classified as an adjusting item and so the reversal has been
recognised for consistency.
-- Other costs GBP8.9m (HY21: GBP2.3m, FY21: GBP6.7m)
Other costs include GBP5.3m in relation to the fire at the Pure
Recycling site in Warwickshire, of which GBP4.1m represents an
impairment of the property, plant and equipment. Following the
fire, the building has been demolished and the majority of the
contracts terminated. The discussions with the insurer are ongoing
and as such no insurance proceeds have been recognised in the
period.
In addition to the costs of the Pure Recycling site, a GBP1.7m
charge has been made in respect of fire compliance and cladding
claims, an IFRS 16 interest charge of GBP1.4m on leased properties
that were previously vacated and GBP0.5m for the settlement of an
out of period legal claim that was notified in the current
period.
Earnings per share
Earnings per share (EPS), before adjusting items, from
continuing operations amounted to 7.8p (HY21: 10.4p (restated),
FY21: 25.0p). EPS, after adjusting items, from continuing
operations amounted to 2.2p (HY21: 3.8p (restated), FY21: 11.6p).
The prior period restatement of EPS numbers is as a result of the
FY21 equity raise.
Finance charges
Finance costs have decreased to GBP12.9m (HY21: GBP21.7m, FY21:
GBP41.8m) due to a reduction in bank interest as a result of the
Group's improved average net debt position and a decrease in
forward funding interest within Property. The Group chooses to
forward fund certain developments in Property to de-risk the
portfolio following COVID-19.
Total finance costs included bank interest of GBP9.6m, related
to the Group's committed bank facilities, finance costs of GBP3.3m
relating to interest and finance charges for lease liabilities. The
Group continues to exclude lease liabilities from its definition of
net debt.
Balance sheet
Net assets
The Group had net assets of GBP509.1m at 31 December 2021 (HY21:
GBP189.3m, FY21: GBP435.0m). The primary drivers for this are the
equity raise completed in FY21 and the increase in the pension
scheme asset during the period.
Goodwill
The Group held intangible assets of GBP683.7m (HY21: GBP705.7m,
FY21: GBP697.2m) of which goodwill represented GBP536.7m (HY21:
GBP536.7m, FY21: GBP536.7m). No impairment indicators were
identified in the period.
Deferred tax asset
The Group has a deferred tax asset of GBP116.9m recognised at 31
December 2021 (HY21: GBP124.1m, FY21: GBP138.0m) primarily due to
prior year losses. The asset has decreased in the period primarily
due to the deferred tax charge in relation to the movement in the
pension scheme asset.
Based on the Group's forecasts, it is expected that the deferred
tax asset will be utilised over a period of approximately 12
years.
A tax credit of GBP5.6m has been recognised in respect of
adjusting items.
Free cash flow and Net debt
GBPm
------------------------------------------------------------------ --------
Operating profit 25.3
Depreciation of owned assets 3.3
Depreciation of right-of-use assets 15.4
Amortisation 13.8
------------------------------------------------------------------ --------
EBITDA 57.8
Adjusting items excluding adjusting amortisation and interest 19.0
Adjusted EBITDA 76.8
Working capital outflow (143.0)
Net capital expenditure including finance lease capital payments (19.6)
Joint Venture dividends less profits 0.1
Other free cash flow items 2.2
Net interest and tax (10.1)
------------------------------------------------------------------ --------
Free cash flow before COVID-19 (93.6)
Net COVID-19 tax repayment (16.1)
------------------------------------------------------------------ --------
Free cash flow (109.7)
------------------------------------------------------------------ --------
GBPm
Net cash at 30 June 2021 3.0
Free cash flow (109.7)
Adjusting items (15.6)
Pension deficit payments (5.8)
Fees paid in respect of prior year equity raise (6.1)
Other 2.9
Net debt at 31 December 2021 (131.3)
------------------------------------------------- --------
The Group experienced a free cash outflow during the period,
which was driven by an anticipated working capital outflow and
reduced volumes within the Construction business. The working
capital outflow includes a continued reduction in the Group's use
of its supply chain finance facility (KEPS), which reduced by
GBP9.8m to GBP69.3m.
The Group's average month end net debt has significantly reduced
from GBP436m to GBP191m as a result of the successful capital
raise, the sale of Kier Living and free cashflow generation. This
was partially impacted by a GBP42m reduction in the average month
end KEPS balance, repayment of HMRC Government support of GBP53m
and adjusting items of GBP66m.
Government support
As of 31 December 2021, the Group's remaining total indirect tax
deferred amounted to GBP2.7m (HY21: GBP49.9m, FY21: GBP18.8m)
representing VAT deferred in accordance with HMRC guidance.
Contract assets & liabilities
Contract assets represents the Group's right to consideration in
exchange for works which has already been performed. Similarly, a
contract liability is recognised when a customer pays consideration
before work is performed. At 31 December 2021, contract assets
amounted to GBP332.6m (HY21: GBP279.2m, FY21: GBP366.4m). Contract
liabilities were GBP55.7m (HY21: GBP86.7m, FY21: GBP59.9m).
Retirement benefits obligation
Kier operates a number of defined benefit pension schemes. At 31
December 2021, the reported surplus, which is the difference
between the aggregate value of the schemes' assets and the present
value of their future liabilities, was GBP133.9m (HY21: deficit of
GBP1.4m, FY21: GBP46.2m), before accounting for deferred tax, with
the movement in the period primarily as a result of actuarial gains
of GBP81.6m.
Right-of-use assets and lease liabilities
At 31 December 2021 the Group had right-of-use assets of
GBP88.5m (HY21: GBP92.6m, FY21: GBP96.5m) and associated lease
liabilities of GBP167.8m (HY21: GBP161.6m, FY21: GBP163.8m).
Accounting policies
The Group's annual consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards as adopted by the UK (IFRS). There have been no
significant changes to the Group's accounting policies during the
period.
Treasury facilities
Bank finance
The Group has committed debt facilities of GBP650.8m with a
further GBP18.0m of uncommitted overdrafts. During the prior year,
following the sale of Kier Living and the equity raise, the Group
extended a number of its committed facilities, including GBP475m of
its GBP535m Revolving Credit Facility and GBP69.6m of US Private
Placement Notes (USPP) to January 2025. In addition, the Group has
GBP32.6m of USPP maturing December 2022 and GBP7.9m of Schuldschein
notes maturing May 2023.
Supply chain finance
The Group offers its supply chain in the Construction business
the opportunity to participate in KEPS. The balance owed on this
facility is included in trade creditors. The balance at 31 December
2021 was GBP69.3m (HY21: GBP109.4m, FY21: GBP79.1m).
Financial instruments
The Group's financial instruments comprise cash and liquid
investments. The Group selectively enters into derivative
transactions (interest rate and currency swaps) to manage interest
rate and currency risks arising from its sources of finance. The US
dollar denominated USPP notes have been hedged with fixed
cross-currency swaps at inception to mitigate the foreign exchange
risk. One non-recourse, project specific, property joint venture
loan is hedged using an interest rate derivative to fix the cost of
borrowing.
There are minor foreign currency risks arising from the Group's
operations both in the UK and through its limited number of
international activities. Currency exposure to international assets
is hedged through inter-company balances and borrowings, so that
assets denominated in foreign currencies are matched, as far as
possible, by liabilities. Where exposures to currency fluctuations
are identified, forward exchange contracts are completed to buy and
sell foreign currency.
The Group does not enter into speculative transactions.
Going concern
The Directors continue to adopt the going concern basis in
preparing the Group's interim financial statements.
The Group performed well through the half year ended 31 December
2021 and produced results in line with the Board's expectations.
Average net debt compared to the prior period has reduced
significantly following the sale of Kier Living and the equity
raise in the last quarter of FY21. The Group continues to win new,
high quality and profitable business in its markets on terms and at
rates which reflect the new bidding disciplines and risk management
practices introduced under the Group's Performance Excellence
programme. As a result, the order book as at 31 December 2021
increased to GBP8.0bn compared to 30 June 2021 (GBP7.7bn).
Following the revised debt facility agreements, at 31 December
2021, the Group had GBP650.8m of unsecured committed facilities,
GBP18.0m of uncommitted overdrafts and GBP69.3m of uncommitted
supply chain financing facilities.
Financial covenant certificates for December 2021 have been
prepared with no breaches noted. The Directors have reviewed the
Group's cash flow forecasts for the period to 30 June 2023, which
are included in the Group's three-year strategic plan, on the basis
of certain key assumptions and including a number of stressed but
plausible downside scenarios.
These scenarios included the consideration of risks which may
arise to the Group's available liquidity and its ongoing compliance
with revised financial covenants within the Group's principal debt
facilities as a result of or in light of the following factors or
circumstances:
-- Potential reductions in trading volumes;
-- Potential margin erosion;
-- Potential future unknown risks in respect of ongoing projects; and
-- The availability of supply-chain finance.
The Board continue to monitor the ongoing impact of COVID-19,
however a full shut-down of the construction industry akin to that
of March 2020 is currently not considered plausible in light of the
continued lifting of government restrictions.
The Board also considered the macroeconomic and political risks
affecting the UK economy, including the availability of labour and
increased supply chain costs. The Board noted that the Group's
forecasts are underpinned by a significant proportion of revenue
that is either secured or considered probable, often as part of
long-term framework agreements, and that the Group operates
primarily in sectors such as health, education and utilities, which
are considered likely to remain largely unaffected by macroeconomic
factors.
The Board has also considered the potential impact of climate
change and has concluded that any adverse financial impacts from
changes to operations regarding ESG initiatives would be offset by
opportunities which present the Group with additional volumes and
profits, such as replacement of non-sustainable buildings,
construction of new 'clean' power plants and 'green' building
conversions.
The Group is expected to continue to have available liquidity
headroom under its finance facilities and operate within its
financial covenants over the going concern period, including in a
downside scenario. The Directors therefore believe the risk
associated with going concern has reduced following the corporate
actions taken in the previous financial year and in light of the
Group's execution of its strategic milestones, its most recent
trading performance and latest forecasts, and the associated
improved headroom over liquidity and covenant limits.
As a result, the Directors are satisfied that the Group has
adequate resources to meet its obligations as they fall due for a
period of at least twelve months from the date of approving these
interim financial statements and, for this reason, they continue to
adopt the going concern basis in preparing these interim financial
statements.
Statement of directors' responsibilities
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial
Reporting', and the Disclosure Guidance and Transparency Rules
sourcebook of the UK's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the consolidated financial
statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
There have been no changes to the directors of Kier Group plc as
listed on pages 78 and 79 of the 2021 Annual Report and Accounts. A
list of the current directors is also maintained on Kier Group
plc's website at: www.kier.co.uk.
Signed on 8 March 2022 on behalf of the Board.
Andrew Davies Simon Kesterton
Chief Executive Chief Financial Officer
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
Condensed interim financial statements of Kier Group plc for the 6
month period ended 31 December 2021 (the "period").
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 UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
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 Condensed consolidated balance sheet as at 31 December 2021;
-- the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then
ended;
-- the Condensed consolidated cash flow statement for the period then ended;
-- the Condensed 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 Condensed
interim financial statements of Kier Group plc have been prepared
in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Condensed interim 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 Condensed interim 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 Condensed interim 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 Condensed
interim 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
8 March 2022
Condensed consolidated income statement Kier Group plc
Condensed interim
financial statements
for the six
months ended
31 December
2021
For the six months ended 31 December 2021
Unaudited Unaudited
six months six months Year
to 31 to 31 to
December December 30 June
2021 2020(2) 2021
Total Total Total
Notes GBPm GBPm GBPm
----------------------------------------------------- ----- ----------- ----------- ---------
Continuing operations
Revenue
Group and share of joint ventures 2 1,536.2 1,624.2 3,328.5
Less share of joint ventures 2 (54.0) (7.1) (67.5)
----------------------------------------------------- ----- ----------- ----------- ---------
Group revenue 1,482.2 1,617.1 3,261.0
Cost of sales (1,350.9) (1,459.4) (2,976.9)
----------------------------------------------------- ----- ----------- ----------- ---------
Gross profit 131.3 157.7 284.1
Ad ministrative expenses (116.9) (124.3) (240.1)
Share of post-tax results of joint ventures 10.9 (4.6) (0.3)
Profit from operations 2 25.3 28.8 43.7
Finance income 4 0.3 1.9 3.7
Finance cost 4 (12.9) (21.7) (41.8)
----------------------------------------------------- ----- ----------- ----------- ---------
Profit before tax 2 12.7 9.0 5.6
Taxation 6 (2.7) (1.9) 17.4
----------------------------------------------------- ----- ----------- ----------- ---------
Profit for the period from continuing operations 10.0 7.1 23.0
----------------------------------------------------- ----- ----------- ----------- ---------
Discontinued operations
Loss for the period from discontinued operations
(attributable to equity holders of the parent) - (1.8) (24.6)
----------------------------------------------------- ----- ----------- ----------- ---------
Profit/(loss) for the period 10.0 5.3 (1.6)
----------------------------------------------------- ----- ----------- ----------- ---------
Attributable to:
Owners of the parent 9.6 5.9 (0.3)
Non-controlling interests 0.4 (0.6) (1.3)
----------------------------------------------------- ----- ----------- ----------- ---------
10.0 5.3 (1.6)
----------------------------------------------------- ----- ----------- ----------- ---------
Earnings per share from continuing operations
Basic 8 2.2p 3.8p 11.6p
Diluted 8 2.1p 3.8p 11.4p
Total earnings/(loss) per share
Basic 8 2.2p 2.9p (0.1)p
Diluted 8 2.1p 2.9p (0.1)p
----------------------------------------------------- ----- ----------- ----------- ---------
Supplementary information from continuing operations
Adjusted(1) operating profit 3 54.2 47.6 100.3
Adjusted(1) profit before tax 3 43.0 27.8 65.4
Adjusted(1) earnings per share 8 7.8p 10.4p 25.0p
Adjusted(1) diluted earnings per share 8 7.5p 10.4p 24.6p
----------------------------------------------------- ----- ----------- ----------- ---------
(1) Reference to 'adjusted' excludes adjusting items, see notes
1 and 3.
(2) Earnings per share has been re-presented in the comparative
information as a result of the bonus element of the equity raise,
which completed on 18 June 2021, see note 15.
Condensed consolidated statement of comprehensive Kier Group plc
income Condensed interim
financial statements
for the six
months ended
31 December
2021
For the six months ended 31 December 2021
Unaudited Unaudited
six months six months Year
to 31 to 31 to
December December 30 June
2021 2020 2021
Notes GBPm GBPm GBPm
Profit/(loss) for the period 10.0 5.3 (1.6)
-------------------------------------------------------- ----- ----------- ----------- --------
Items that may be reclassified subsequently to
the income statement
Fair value gain/(loss) on cash flow hedging instruments 1.8 (13.6) (16.6)
Fair value movements on cash flow hedging instruments
recycled to the income statement (2.4) 10.4 15.0
Deferred tax credit on fair value movements on
cash flow hedging instruments 0.1 0.6 0.3
Foreign exchange translation differences 0.6 (2.9) (3.2)
Foreign exchange movements recycled to the income
statement - 0.1 0.1
-------------------------------------------------------- ----- ----------- ----------- --------
Total items that may be reclassified subsequently
to the income statement 0.1 (5.4) (4.4)
-------------------------------------------------------- ----- ----------- ----------- --------
Items that will not be reclassified to the income
statement
Re-measurement of retirement benefit assets and
obligations 5 81.6 (66.5) (29.8)
Deferred tax on re-measurement of retirement benefit
assets and obligations (20.4) 12.6 4.8
-------------------------------------------------------- ----- ----------- ----------- --------
Total items that will not be reclassified to the
income statement 61.2 (53.9) (25.0)
-------------------------------------------------------- ----- ----------- ----------- --------
Other comprehensive income/(loss) for the period 61.3 (59.3) (29.4)
-------------------------------------------------------- ----- ----------- ----------- --------
Total comprehensive income/(loss) for the period 71.3 (54.0) (31.0)
-------------------------------------------------------- ----- ----------- ----------- --------
Attributable to:
Equity holders of the parent 70.9 (53.4) (29.7)
Non-controlling interests - continuing operations 0.4 (0.6) (1.3)
-------------------------------------------------------- ----- ----------- ----------- --------
71.3 (54.0) (31.0)
-------------------------------------------------------- ----- ----------- ----------- --------
Total comprehensive income/(loss) attributable
to equity shareholders arises from:
Continuing operations 70.9 (51.6) (5.1)
Discontinued operations - (1.8) (24.6)
-------------------------------------------------------- ----- ----------- ----------- --------
70.9 (53.4) (29.7)
-------------------------------------------------------- ----- ----------- ----------- --------
Condensed consolidated statement of changes in equity Kier Group plc
Condensed interim
financial statements
for the six
months ended
31 December
2021
For the six months ended 31 December 2021
Equity
Cash attributable
Capital flow to owners
Share Share redemption Accumulated hedge Translation Merger of Non-controlling Total
capital premium reserve losses reserve reserve reserve the parent interests equity
Notes GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
At 30 June
2020 1.6 684.3 2.7 (592.0) 1.2 8.1 134.8 240.7 0.1 240.8
Profit/(loss)
for the
period - - - 5.9 - - - 5.9 (0.6) 5.3
Other
comprehensive
loss - - - (53.9) (2.6) (2.8) - (59.3) - (59.3)
Share-based
payments 14 - - - 2.8 - - - 2.8 - 2.8
Purchase of
own shares - - - (0.3) - - - (0.3) - (0.3)
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
At 31 December
2020 1.6 684.3 2.7 (637.5) (1.4) 5.3 134.8 189.8 (0.5) 189.3
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
Loss for the
period - - - (6.2) - - - (6.2) (0.7) (6.9)
Other
comprehensive
income/(loss) - - - 28.9 1.3 (0.3) - 29.9 - 29.9
Issue of own
shares 15 2.9 - - - - - 215.8 218.7 - 218.7
Share-based
payments 14 - - - 4.2 - - - 4.2 - 4.2
Purchase of
own shares - - - (0.2) - - - (0.2) - (0.2)
At 30 June
2021 4.5 684.3 2.7 (610.8) (0.1) 5.0 350.6 436.2 (1.2) 435.0
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
Profit for
the period - - - 9.6 - - - 9.6 0.4 10.0
Other
comprehensive
income/(loss) - - - 61.2 (0.5) 0.6 - 61.3 - 61.3
Issue of own
shares - - - - - - - - 0.6 0.6
Share-based
payments 14 - - - 4.0 - - - 4.0 - 4.0
Purchase of
own shares - - - (1.8) - - - (1.8) - (1.8)
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
At 31 December
2021 4.5 684.3 2.7 (537.8) (0.6) 5.6 350.6 509.3 (0.2) 509.1
-------------- ------ ------- ------- ---------- ----------- ------- ----------- -------- ------------ --------------- ------
The numbers in the table above are shown net of tax as
applicable.
Condensed consolidated balance sheet Kier Group plc
Condensed interim
financial statements
for the six
months ended
31 December
2021
A t 31 December 2021
Unaudited Unaudited
31 December 31 December 30 June
2021 2020 2021
Notes GBPm GBPm GBPm
------------------------------------------------- ----- ------------- ------------- ---------
Non-current assets
Intangible assets 9 683.7 705.7 697.2
Property, plant and equipment 37.5 45.4 43.3
Right-of-use assets 88.5 92.6 96.5
Investment properties 63.0 49.8 49.6
Investments in and loans to joint ventures 96.5 102.0 98.9
Capitalised mobilisation costs 3.5 2.0 3.8
Deferred tax assets 6 116.9 124.1 138.0
Contract assets 30.7 28.8 30.7
Trade and other receivables 15.5 30.7 24.1
Retirement benefit assets 5 151.7 67.1 87.2
Other financial assets 5.5 14.3 11.4
------------------------------------------------- ----- ------------- ------------- ---------
Non-current assets 1,293.0 1,262.5 1,280.7
------------------------------------------------- ----- ------------- ------------- ---------
Current assets
Inventories 56.7 54.3 54.7
Contract assets 301.9 250.4 335.7
Trade and other receivables 240.2 287.5 203.1
Corporation tax receivable 12.0 8.1 13.6
Other financial assets 2.3 2.3 2.0
Cash and cash equivalents 10 300.1 328.6 391.2
------------------------------------------------- ----- ------------- ------------- ---------
Current assets 913.2 931.2 1,000.3
Assets held for sale as part of a disposal group - 234.8 -
------------------------------------------------- ----- ------------- ------------- ---------
Total assets 2,206.2 2,428.5 2,281.0
------------------------------------------------- ----- ------------- ------------- ---------
Current liabilities
Borrowings 10 (32.6) (99.6) (38.2)
Lease liabilities (30.0) (28.1) (27.4)
Trade and other payables 11 (934.2) (1,000.6) (1,093.1)
Contract liabilities (55.7) (86.7) (59.9)
Provisions (14.4) (13.7) (14.9)
Current liabilities (1,066.9) (1,228.7) (1,233.5)
------------------------------------------------- ----- ------------- ------------- ---------
Liabilities held for sale as part of a disposal
group - (124.8) -
------------------------------------------------- ----- ------------- ------------- ---------
Non-current liabilities
Borrowings 10 (406.0) (599.4) (362.3)
Lease liabilities (137.8) (133.5) (136.4)
Trade and other payables (35.9) (40.4) (39.9)
Retirement benefit obligations 5 (17.8) (68.5) (41.0)
Provisions (32.7) (43.9) (32.9)
Non-current liabilities (630.2) (885.7) (612.5)
------------------------------------------------- ----- ------------- ------------- ---------
Total liabilities (1,697.1) (2,239.2) (1,846.0)
------------------------------------------------- ----- ------------- ------------- ---------
Net assets 2 509.1 189.3 435.0
------------------------------------------------- ----- ------------- ------------- ---------
Equity
Share capital 4.5 1.6 4.5
Share premium 684.3 684.3 684.3
Capital redemption reserve 2.7 2.7 2.7
Accumulated losses (537.8) (637.5) (610.8)
Cash flow hedge reserve (0.6) (1.4) (0.1)
Translation reserve 5.6 5.3 5.0
Merger reserve 350.6 134.8 350.6
------------------------------------------------- ----- ------------- ------------- ---------
Equity attributable to owners of the parent 509.3 189.8 436.2
Non-controlling interests (0.2) (0.5) (1.2)
------------------------------------------------- ----- ------------- ------------- ---------
Total equity 509.1 189.3 435.0
------------------------------------------------- ----- ------------- ------------- ---------
Condensed consolidated cash flow statement Kier Group plc
Condensed interim
financial statements
for the six
months ended
31 December
2021
For the six months ended 31 December 2021
Unaudited Unaudited
six months six months Year
to 31 to 31 to
December December 30 June
2021 2020(2) 2021
Notes GBPm GBPm GBPm
--------------------------------------------------------- ------- ------------ ----------- --------
Cash flows from operating activities
Profit before tax - continuing operations 12.7 9.0 5.6
Loss before tax - discontinued operations - (1.8) (24.6)
Net finance cost 12.6 19.8 38.1
Share of post-tax trading results of joint ventures (10.9) (2.3) 0.3
Current and past service costs for defined benefit
pension schemes 0.1 0.6 0.7
Equity-settled share-based payments charge 4.0 2.8 7.0
Amortisation of intangible assets and mobilisation
costs 13.8 15.7 30.9
Fair value adjustments to assets held for sale,
intangible assets and investment properties (4.0) (3.8) (5.1)
Research and development expenditure credit (6.9) (7.9) (13.3)
Impairment and depreciation of property, plant
and equipment 7.4 4.4 6.4
Impairment and depreciation of right-of-use assets 20.6 16.2 33.7
Loss on disposal of joint ventures and subsidiaries - - 12.1
(Profit)/loss on disposal of property, plant and
equipment and intangible assets (0.1) 0.7 (0.2)
--------------------------------------------------------- ------- ------------ ----------- --------
Operating cash inflows before movements in working
capital and pension deficit contributions 49.3 53.4 91.6
Deficit contributions to pension fund 5 (5.8) (26.5) (37.0)
(Increase)/decrease in inventories (2.0) 5.7 3.9
(Increase)/decrease in receivables (29.7) (48.6) 43.0
Decrease/(increase) in contract assets 33.4 (6.0) (95.3)
(Decrease)/increase in payables (149.5) 36.4 100.7
Decrease in contract liabilities (4.2) (22.0) (48.8)
Decrease in provisions (0.7) (15.2) (31.3)
--------------------------------------------------------- ------- ------------ ----------- --------
Cash (outflow)/inflow from operating activities (109.2) (22.8) 26.8
Dividends received from joint ventures 10.9 7.1 6.3
Interest received 0.3 1.9 3.7
Income tax received - 10.9 11.2
Net cash (outflow)/inflow from operating activities (98.0) (2.9) 48.0
--------------------------------------------------------- ------- ------------ ----------- --------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1.2 - 2.5
Proceeds from sale of subsidiaries and joint ventures,
net of cash disposed - - 120.8
Purchase of property, plant and equipment (3.5) (0.8) (3.3)
Purchase of intangible assets 9 (0.6) (0.1) (3.1)
Purchase of capitalised mobilisation costs (0.2) (0.5) (3.5)
Investment in or loans to joint ventures (7.4) (5.5) (9.2)
Loan repayment and return of equity from joint
ventures(2) 9.7 4.4 9.3
Classification to assets held for sale - (0.1) -
Net cash (used in)/from investing activities (0.8) (2.6) 113.5
--------------------------------------------------------- ------- ------------ ----------- --------
Cash flows from financing activities
Issue of shares net of associated transaction costs 15 (6.1) - 224.8
Issue of shares in subsidiary to non-controlling
interests 0.6 - -
Purchase of own shares (1.8) (0.3) (0.5)
Interest paid (11.9) (15.2) (28.4)
Principal elements of lease payments (16.4) (19.1) (39.6)
Drawdown of borrowings 76.3 - -
Repayment of borrowings (41.1) (42.4) (337.4)
Settlement of derivative financial instruments 7.5 - -
Net cash from/(used in) financing activities 7.1 (77.0) (181.1)
--------------------------------------------------------- ------- ------------ ----------- --------
Decrease in cash, cash equivalents and overdraft (91.7) (82.5) (19.6)
Effect of change in foreign exchange rates 0.6 (2.8) (3.1)
Opening cash, cash equivalents and overdraft 391.2 413.9 413.9
--------------------------------------------------------- ------- ------------ ----------- --------
Closing cash, cash equivalents and overdraft 10 300.1 328.6 391.2
--------------------------------------------------------- ------- ------------ ----------- --------
Supplementary information(1)
Adjusted cash (outflow)/ inflow from operating
activities 3(93.6) 4.3 98.9
----------------------------------------------- ------ --- ----
(1) Reference to 'adjusted' excludes adjusting items, see notes
1 and 3.
(2) GBP4.4m has been re-presented in the HY21 comparative
information from financial activities to investing activities for
loan repayment and return of equity from joint ventures.
Notes to the financial statements Kier Group plc
Condensed interim
financial statements
for the six
months ended
31 December
2021
1 Accounting policies
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 2nd
Floor, Optimum House, Clippers Quay, Salford, M50 3XP.
The condensed interim consolidated financial statements (interim
financial statements) for the six months ended 31 December 2021
comprise the Company and its subsidiaries (together referred to as
the Group) and the Group's interest in jointly controlled
entities.
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. Kier Group Plc
transitioned to UK-adopted International Accounting Standards in
its consolidated financial statements on 1 January 2021. This
change constitutes a change in accounting framework. However, there
is no impact on recognition, measurement or disclosure in the
period reported as a result of the change in framework.
This condensed interim financial statements for the half year
ended 31 December 2021 has been prepared in accordance with the
UK-adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
The unaudited financial information contained in this
announcement does not constitute the Company's statutory accounts
as at and for the six months ended 31 December 2021. Statutory
financial statements for the year ended 30 June 2021 were approved
by the Board of Directors on 15 September 2021 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.
Going concern
The Directors continue to adopt the going concern basis in
preparing the Group's interim financial statements.
The Group performed well through the half year ended 31 December
2021 and produced results in line with the Board's expectations.
Average net debt compared to the prior period has reduced
significantly following the sale of Kier Living and the equity
raise in the last quarter of FY21. The Group continues to win new,
high quality and profitable business in its markets on terms and at
rates which reflect the new bidding disciplines and risk management
practices introduced under the Group's Performance Excellence
programme. As a result, the order book as at 31 December 2021
increased to GBP8.0bn compared to 30 June 2021 (GBP7.7bn).
Following the revised debt facility agreements, at 31 December
2021, the Group had GBP650.8m of unsecured committed facilities,
GBP18.0m of uncommitted overdrafts and GBP69.3m of uncommitted
supply chain financing facilities.
Financial covenant certificates for December 2021 have been
prepared with no breaches noted. The Directors have reviewed the
Group's cash flow forecasts for the period to 30 June 2023, which
are included in the Group's three-year strategic plan, on the basis
of certain key assumptions and including a number of stressed but
plausible downside scenarios.
These scenarios included the consideration of risks which may
arise to the Group's available liquidity and its ongoing compliance
with revised financial covenants within the Group's principal debt
facilities as a result of or in light of the following factors or
circumstances:
-- Potential reductions in trading volumes;
-- Potential margin erosion;
-- Potential future unknown risks in respect of ongoing projects; and
-- The availability of supply-chain finance.
The Board continue to monitor the ongoing impact of COVID-19,
however a full shut-down of the construction industry akin to that
of March 2020 is currently not considered plausible in light of the
continued lifting of government restrictions.
The Board also considered the macroeconomic and political risks
affecting the UK economy, including the availability of labour and
increased supply chain costs. The Board noted that the Group's
forecasts are underpinned by a significant proportion of revenue
that is either secured or considered probable, often as part of
long-term framework agreements, and that the Group operates
primarily in sectors such as health, education and utilities, which
are considered likely to remain largely unaffected by macroeconomic
factors.
The Board has also considered the potential impact of climate
change and has concluded that any adverse financial impacts from
changes to operations regarding ESG initiatives would be offset by
opportunities which present the Group with additional volumes and
profits, such as replacement of non-sustainable buildings,
construction of new 'clean' power plants and 'green' building
conversions.
The Group is expected to continue to have available liquidity
headroom under its finance facilities and operate within its
financial covenants over the going concern period, including in a
downside scenario. The Directors therefore believe the risk
associated with going concern has reduced following the corporate
actions taken in the previous financial year and in light of the
Group's execution of its strategic milestones, its most recent
trading performance and latest forecasts, and the associated
improved headroom over liquidity and covenant limits.
As a result, the Directors are satisfied that the Group has
adequate resources to meet its obligations as they fall due for a
period of at least twelve months from the date of approving these
interim financial statements and, for this reason, they continue to
adopt the going concern basis in preparing these interim financial
statements.
Significant accounting policies
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
2021.
Adjusting items
IAS 1 permits an entity to present additional information for
specific items to enable users to better assess the entity's
financial performance. The Directors have considered the
requirements of applicable accounting standards, along with
additional guidance around alternative performance measures (APMs)
and believe it is appropriate to inform users regarding various
items and disclose those items which are deemed one-off, material
or non-recurring in size or nature, in alignment with the Group's
internal management reporting. As such, the Group is disclosing as
supplementary information an 'Adjusted Profit' APM which is
reconciled to statutory profit in the notes to the financial
statements and is consistent with IFRS 8 segmental reporting.
Separate presentation of these items is intended to enhance
understanding of the financial performance of the Group in the
particular reporting period under review and the extent to which
results are influenced by material unusual and/or non-recurring
items. The Directors review segmental results under an adjusted
items basis to analyse the performance of operating segments.
The Directors exercise judgement in determining the
classification of certain items as adjusting using quantitative and
qualitative factors. In assessing whether an item is an adjusting
item, the Directors give consideration, both individually and
collectively, as to an item's size, the specific circumstances
which have led to the item arising and if the item is likely to
recur, or whether the matter forms part of a group of similar
items.
Amortisation of acquired intangible assets are also included as
adjusting items on the basis of being ongoing non-cash items
generated from acquisition related activity.
A full reconciliation from statutory numbers to adjusted profit
measures has been presented in note 3.
The Group presents revenue including from joint venture
arrangements as an alternative performance measure. The Directors
believe this is a useful measure as it provides visibility over the
scale of the Group's operations, particularly within its Property
business where a significant proportion of developments are set up
in joint ventures.
The Group also presents adjusted cash flow from operations, free
cash flow and net debt as alternative performance measures. The
Directors consider that these provide useful information about the
Group's liquidity and debt profile.
Segmental reporting
The Group operates three divisions: Infrastructure Services,
Construction and Property, which is the basis on which the Group
manages and reports its primary segmental information. Corporate
includes unrecovered overheads and the charge for defined benefit
pension schemes.
Segmental information is based on the information, which is
provided to the Chief Executive, 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 accounting policies of the operating segments are consistent
across the Group. The Group evaluates segmental information on the
basis of profit or loss from operations before adjusting items (see
note 3), interest and tax expense. The segmental results reported
to the Chief Executive include items directly attributable to a
segment as well as those that can be allocated on a reasonable
basis.
2 Segmental reporting
For the six months ended 31 December Infrastructure
2021 Services Construction Property Corporate Group
Continuing operations GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- ------------ -------- --------- -----------
Revenue(1)
Group and share of joint ventures 777.1 680.9 75.6 2.6 1,536.2
Less share of joint ventures - (1.4) (52.6) - (54.0)
----------------------------------------- -------------- ------------ -------- --------- -----------
Group revenue 777.1 679.5 23.0 2.6 1,482.2
----------------------------------------- -------------- ------------ -------- --------- -----------
Profit for the period
Operating profit/(loss) before adjusting
items 32.9 26.3 10.4 (15.4) 54.2
Adjusting items (10.4) (13.5) (0.6) (4.4) (28.9)
----------------------------------------- -------------- ------------ -------- --------- -----------
Profit/(loss) from operations 22.5 12.8 9.8 (19.8) 25.3
Net finance income/(costs)(2) 0.5 (2.0) (1.2) (9.9) (12.6)
Profit/(loss) before tax from continuing
operations 23.0 10.8 8.6 (29.7) 12.7
========================================= ============== ============ ======== ========= ===========
Taxation (2.7)
========================================= ============== ============ ======== ========= ===========
Profit for the period from continuing
operations 10.0
----------------------------------------- -------------- ------------ -------- --------- -----------
Profit for the period from discontinued
operations -
----------------------------------------- -------------- ------------ -------- --------- -----------
Profit for the period 10.0
----------------------------------------- -------------- ------------ -------- --------- -----------
Balance sheet
Operating assets (3) 911.3 427.4 162.4 397.1 1,898.2
Operating liabilities (3) (385.7) (643.7) (15.9) (213.1) (1,258.4)
----------------------------------------- -------------- ------------ -------- --------- -----------
Net operating assets/(liabilities)(3) 525.6 (216.3) 146.5 184.0 639.8
Cash, cash equivalents and borrowings 257.8 333.0 (122.7) (606.6) (138.5)
Net financial assets - - - 7.8 7.8
----------------------------------------- -------------- ------------ -------- --------- -----------
Net assets/(liabilities) excluding net
assets held for sale 783.4 116.7 23.8 (414.8) 509.1
----------------------------------------- -------------- ------------ -------- --------- -----------
Net assets held for sale -
----------------------------------------- -------------- ------------ -------- --------- -----------
Net assets 509.1
----------------------------------------- -------------- ------------ -------- --------- -----------
For the six months ended 31 December Infrastructure
2020 Services Construction Property Corporate Group
Continuing operations GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- ------------ -------- --------- ---------
Revenue(1)
Group and share of joint ventures 672.6 902.6 46.1 2.9 1,624.2
Less share of joint ventures - (0.8) (6.3) - (7.1)
----------------------------------------- -------------- ------------ -------- --------- ---------
Group revenue 672.6 901.8 39.8 2.9 1,617.1
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit for the period
Operating profit/(loss) before adjusting
items 27.3 33.6 2.6 (15.9) 47.6
Adjusting items (6.5) (2.9) (2.5) (6.9) (18.8)
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit/(loss) from operations 20.8 30.7 0.1 (22.8) 28.8
Net finance costs(2) (0.1) (1.8) (7.0) (10.9) (19.8)
Profit/(loss) before tax from continuing
operations 20.7 28.9 (6.9) (33.7) 9.0
========================================= ============== ============ ======== ========= =========
Taxation (1.9)
========================================= ============== ============ ======== ========= =========
Profit for the period from continuing
operations 7.1
----------------------------------------- -------------- ------------ -------- --------- ---------
Loss for the period from discontinued
operations (1.8)
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit for the period 5.3
----------------------------------------- -------------- ------------ -------- --------- ---------
Balance sheet
Operating assets (3) 845.3 518.0 180.0 305.1 1,848.4
Operating liabilities (3) (361.1) (724.3) (27.3) (302.6) (1,415.3)
----------------------------------------- -------------- ------------ -------- --------- ---------
Net operating assets/(liabilities)(3) 484.2 (206.3) 152.7 2.5 433.1
Cash, cash equivalents and borrowings 299.7 355.1 (130.0) (895.2) (370.4)
Net financial assets - - - 16.6 16.6
----------------------------------------- -------------- ------------ -------- --------- ---------
Net assets/(liabilities) excluding net
assets held for sale 783.9 148.8 22.7 (876.1) 79.3
----------------------------------------- -------------- ------------ -------- --------- ---------
Net assets held for sale 110.0
----------------------------------------- -------------- ------------ -------- --------- ---------
Net assets 189.3
----------------------------------------- -------------- ------------ -------- --------- ---------
Infrastructure
For the year ended 30 June 2021 Services Construction Property Corporate Group
Continuing operations GBPm GBPm GBPm GBPm GBPm
----------------------------------------------- -------------- ------------ -------- --------- -----------
Revenue(1)
Group and share of joint ventures 1,421.6 1,769.1 133.6 4.2 3,328.5
Less share of joint ventures - (1.5) (66.0) - (67.5)
----------------------------------------------- -------------- ------------ -------- --------- -----------
Group revenue 1,421.6 1,767.6 67.6 4.2 3,261.0
----------------------------------------------- -------------- ------------ -------- --------- -----------
Loss for the year
Operating profit/(loss) before adjusting
items 65.3 56.7 5.7 (27.4) 100.3
Adjusting items (23.9) (16.0) (3.4) (13.3) (56.6)
----------------------------------------------- -------------- ------------ -------- --------- -----------
Profit/(loss) from operations 41.4 40.7 2.3 (40.7) 43.7
Net finance costs(2) - (3.9) (10.8) (23.4) (38.1)
Profit/(loss) before tax from continuing
operations 41.4 36.8 (8.5) (64.1) 5.6
=============================================== ============== ============ ======== ========= ===========
Taxation 17.4
=============================================== ============== ============ ======== ========= ===========
Profit for the year from continuing operations 23.0
----------------------------------------------- -------------- ------------ -------- --------- -----------
Loss for the year from discontinued operations (24.6)
----------------------------------------------- -------------- ------------ -------- --------- -----------
Loss for the year (1.6)
----------------------------------------------- -------------- ------------ -------- --------- -----------
Balance sheet
Operating assets (3) 945.3 459.6 167.0 304.5 1,876.4
Operating liabilities (3) (457.0) (749.0) (24.0) (215.5) (1,445.5)
----------------------------------------------- -------------- ------------ -------- --------- -----------
Net operating assets/(liabilities)(3) 488.3 (289.4) 143.0 89.0 430.9
Cash, cash equivalents and borrowings 346.7 480.7 (126.4) (710.3) (9.3)
Net financial assets - - - 13.4 13.4
----------------------------------------------- -------------- ------------ -------- --------- -----------
Net assets/(liabilities) excluding net
assets held for sale 835.0 191.3 16.6 (607.9) 435.0
----------------------------------------------- -------------- ------------ -------- --------- -----------
Net assets held for sale -
----------------------------------------------- -------------- ------------ -------- --------- -----------
Net assets 435.0
----------------------------------------------- -------------- ------------ -------- --------- -----------
(1) Revenue is stated after the exclusion of inter-segmental
revenue and before adjusting items. Over 90% of the Group's revenue
is derived from UK based customers. 11% of the Group's revenue was
received from National Highways (six months ended 31 December 2020:
12%, year ended 30 June 2021:12%).
(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.
3 Adjusting items
The Group's policy in respect of adjusting items is described in
note 1. These items are discussed in detail below:
Operating profit Profit before tax
------------------------------------ --------------------------------------- ---------------------------------------
Unaudited Unaudited Unaudited Unaudited
six months six months Year six months six months Year
to 31 to to to 31 to to
December 31 December 30 June December 31 December 30 June
2021 2020 2021 2021 2020 2021
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ------------- ------------- --------- ------------- ------------- ---------
Reported profit from continuing
operations 25.3 28.8 43.7 12.7 9.0 5.6
Amortisation of acquired intangible
assets 9.9 11.3 21.0 9.9 11.3 21.0
Restructuring and related
charges 11.8 6.0 31.6 11.8 6.0 31.6
Preparation for business divestment
or closure (0.3) (0.8) 0.5 (0.3) (0.8) 0.5
Other 7.5 2.3 3.5 8.9 2.3 6.7
------------------------------------ ------------- ------------- --------- ------------- ------------- ---------
Adjusted profit from continuing
operations 54.2 47.6 100.3 43.0 27.8 65.4
------------------------------------ ------------- ------------- --------- ------------- ------------- ---------
a) Amortisation of acquired intangible assets
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
Note GBPm GBPm GBPm
-------------------------------------------- ----- ----------------- ------------- ---------
Amortisation of acquired intangible assets 9 (9.9) (11.3) (21.0)
-------------------------------------------- ----- ----------------- ------------- ---------
b) Restructuring and related charges
The Group has incurred significant restructuring charges
relating to costs of organisational change associated with the
Group's cost saving programmes and, latterly, the Group's Strategic
Review. These are discussed further in the Financial Review and are
considered to be adjusting items on the basis of their size and the
fact that they relate to significant changes to the Group's
activities or workforce.
Unaudited Unaudited
six months six months Year
to 31 to to
December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
------------------------------------------------------- ------------- ------------- ---------
Restructure of Regional Southern Building business(1) (6.0) (3.5) (13.6)
Redundancy and other people related costs(2) (4.1) (1.4) (5.4)
Professional adviser fees and other costs incurred
implementing non-people initiatives(3) (0.3) (0.5) (11.9)
Movements in fair value of investment properties
and related costs(4) (1.4) (0.6) (0.7)
Total (11.8) (6.0) (31.6)
------------------------------------------------------- ------------- ------------- ---------
(1) The Group has continued its strategic restructuring of its
Regional Southern Build business. The current period costs
predominantly relate to five remaining projects, all of which are
due to complete within the next 18 months. These costs consist of
charges in respect of the recoverability of assets and increased
project costs due to settlements and delays, which have been
directly impacted by this restructuring programme and represent an
extension of costs incurred in the prior years.
(2) Costs in respect of roles made redundant as a result of the
ongoing implementation of cost saving programmes and from strategic
decisions taken to reduce headcount in a number of the Group's
principal operating divisions following the continued
implementation of the strategic review. The current period charge
also includes costs incurred in the re-sizing of the International
operations.
(3) This includes a credit of GBP1.3m as a result of the
finalisation of costs incurred on the equity raise in the prior
year. This is offset by GBP1.6m of various other non-people related
initiatives undertaken in the period.
(4) Includes an impairment of GBP5.2m in respect of the property
in Fountain Street, Manchester, which was vacated during the period
and is now held as an investment property. Following the fire, the
land at the recycling plant has been transferred to investment
property and has been included at fair value, which has resulted in
a GBP2.7m credit. Also included is a further GBP1.4m credit in
relation to fair value adjustments to the two other investment
properties.
c) Preparation for business divestment or closure
The Group has incurred various charges driven by the change in
strategic direction of the Group and the decision to exit certain
divisions deemed non-core to its ongoing operations. Most of these
charges are non-cash and are considered to be adjusting items on
the basis that they relate to a major restructuring of the Group
following the Strategic Review.
Unaudited
Unaudited six months Year
six months to 31 to
to 31 December December 30 June
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------- ----------------- ------------ ---------
Business closure and sales costs(1) 0.3 (2.2) (3.5)
Fair value impairment of Assets Held for Sale - 3.0 3.0
Total 0.3 0.8 (0.5)
----------------------------------------------- ----------------- ------------ ---------
(1) The current period credit of GBP0.3m relates to land
impaired in prior years through adjusting items. For consistency,
an element of the subsequent reversal of this impairment has been
taken through adjusting items.
d) Other
Other adjusting items are analysed below:
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
---------------------------------------------------- ----------------- ------------- ---------
Net financing costs (1) (1.4) - (3.2)
Legal compliance(2) (2.2) (1.8) (3.0)
Recycling Plant impairment and associated costs(3) (5.3) - -
GMP equalisation pension charge - (0.5) (0.5)
Total before tax (8.9) (2.3) (6.7)
---------------------------------------------------- ----------------- ------------- ---------
(1) Net financing costs relate to IFRS 16 interest charges on
investment properties.
(2) The Group has incurred GBP1.7m of costs in the period in
complying with the updated fire compliance regulations. The
remaining charge relates to a settlement made in respect of an out
of period claim that was notified during the period and so was
treated as an adjusting item.
(3) During the period a fire occurred at one of the Group's
recycling plants in Warwickshire. Following the fire, the building
has been demolished and the majority of the contracts terminated.
The fire is considered a one-off, significant event and as such all
costs relating to the business are considered to be adjusting items
in accordance with the Group's policy. These costs include a
GBP4.1m impairment of the property, plant and equipment.
e) Taxation
Adjusting items in respect of taxation are analysed below:
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
----------------------------------------------- ----------------- ------------- ---------
Deferred tax credit as a result of the change
in tax rate (1) - - 25.5
Tax impact of adjusting items (2) 5.6 5.6 12.2
Other tax charges(3) - - (6.0)
Total tax credit 5.6 5.6 31.7
----------------------------------------------- ----------------- ------------- ---------
(1) In the prior period, the change in tax rate from 19% to 25%
led to a significant deferred tax credit in the income statement.
This was a one-off event that is out of the Group's control and so
is considered to be an adjusting item.
(2) The tax impact of the adjusting items charged to continuing
operations has also been included as an adjusting item.
(3) In the prior period, other tax charges primarily consisted
of the write off of losses in legal entities which have ceased to
trade or are going to be wound up and therefore can no longer be
used within the Group.
f) Discontinued operations
Adjusting items within discontinued operations are analysed
below:
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------- ------------------ ------------- ---------
Loss on disposal - - (12.1)
Fair value adjustment of Kier Living - 0.8 -
Closure costs relating to non-core businesses(1) - (1.0) (1.0)
Out of period charges in relation to the Eastern
region(2) - (6.5) (6.5)
Other disposal costs(3) - - (5.2)
Total after tax - (6.7) (24.8)
--------------------------------------------------- ----------------- ------------- ---------
(1) Prior period costs were incurred in respect of Living's
decision to exit the affordable housing market as well as the Welsh
and Northern regions.
(2) In preparing the Kier Living business for disposal in the
prior period, the Group identified GBP6.5m of historic costs within
a Kier Living joint venture that had built up in prior periods
within work in progress and that were considered irrecoverable.
These were written off in arriving at the loss from discontinued
operations in the year.
(3) Other disposal related costs in the prior period included
management incentives and impairment charges as a result of the
disposal of Kier Living.
g) Adjusted cash flow
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------- ----------------- ------------- ---------
Reported cash (outflow)/inflow from operating
activities (109.2) (22.8) 26.8
Cash outflow from operating activities (adjusting
items) 15.6 27.1 72.1
---------------------------------------------------
Adjusted cash (outflow)/inflow from operating
activities (93.6) 4.3 98.9
--------------------------------------------------- ----------------- ------------- ---------
4 Finance income and costs
Unaudited
Unaudited six months Year
six months to to
to 31 December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------------------------- ----------------- ------------- ---------
Finance income
Interest receivable on loans to related parties(1) 0.3 1.9 3.7
-------------------------------------------------------- ----------------- ------------- ---------
0.3 1.9 3.7
-------------------------------------------------------- ----------------- ------------- ---------
Finance costs
Bank interest (9.6) (12.2) (26.0)
Forward funding interest(2) (0.5) (6.0) (8.8)
Interest payable on leases (3.3) (3.4) (6.7)
Discount unwind(3) (0.4) (0.5) (1.1)
Net interest on net defined benefit obligation 0.4 0.4 0.9
Recycling of translation reserve - - (0.1)
Foreign exchange (losses)/gains on foreign denominated
borrowings(4) (1.9) 10.4 15.0
Fair value gains/(losses) on cash flow hedges
recycled from other comprehensive income 2.4 (10.4) (15.0)
-------------------------------------------------------- ----------------- ------------- ---------
Total (12.9) (21.7) (41.8)
-------------------------------------------------------- ----------------- ------------- ---------
Net finance costs (12.6) (19.8) (38.1)
-------------------------------------------------------- ----------------- ------------- ---------
(1) Includes GBPnil (six months ended 31 December 2020: GBP1.3m,
year ended 30 June 2021: GBP2.3m) receivable from discontinued
operations. The Group disposed of Kier Living in May 2021. No
further amounts will be received.
(2) The forward funding interest costs of GBP8.8m in the year to
30 June 2021 reflect an alignment of the accounting treatment
across all forward funding development contracts. The charge of
GBP8.8m includes GBP3.9m that represents a cumulative catch up of
interest costs that would have been recognised in previous
reporting periods if the Group had always applied this accounting
treatment to all applicable contracts. An offsetting credit is
included within revenue, with a corresponding impact on the Group's
operating profit. There was no impact on the statutory profit for
the year from continuing operations.
(3) Unwind of discount in respect of acquired intangible
assets.
(4) Foreign exchange (losses)/gains arise from foreign currency
denominated borrowings, which are hedged by cross-currency
swaps.
5 Retirement benefit obligations
The principal assumptions used by the independent qualified
actuaries are shown below.
Unaudited
at
31 December At
Unaudited
at 31
December 30 June
2021 2020 2021
% % %
--------------------------------------------- ----------- ------------- ---------
Discount Rate 1.90 1.40 1.90
Inflation rate (Retail Price Index (RPI)) 3.30 2.85 3.15
Inflation rate (Consumer Price Index (CPI)) 2.75 2.15 2.60
--------------------------------------------- ----------- ------------- ---------
The amounts recognised in the financial statements in respect of
the Group's defined benefit schemes are as follows:
Unaudited
six months
Kier May to 31
Group Gurney Mouchel McNicholas December
Pension Pension Pension Pension 2021
Scheme Scheme Schemes(1) Scheme Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- --------- -------- ----------- ---------- -----------
Opening surplus/(deficit) 78.6 (1.3) (24.5) (6.6) 46.2
Credit/(charge) to income statement 0.7 - (0.3) (0.1) 0.3
Employer contributions 0.3 1.0 3.9 0.6 5.8
Actuarial gains 54.2 3.5 21.8 2.1 81.6
--------------------------------------------- --------- -------- ----------- ---------- -----------
Closing surplus/(deficit) 133.8 3.2 0.9 (4.0) 133.9
--------------------------------------------- --------- -------- ----------- ---------- -----------
Comprising:
Total market value of assets 1,339.1 91.0 559.0 29.1 2,018.2
Present value of liabilities (1,205.3) (87.8) (558.1) (33.1) (1,884.3)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Net surplus/(deficit) 133.8 3.2 0.9 (4.0) 133.9
--------------------------------------------- --------- -------- ----------- ---------- -----------
Presentation of net surplus/(deficit) above
in the Consolidated balance sheet:
Retirement benefit assets 133.8 3.2 14.7 - 151.7
Retirement benefit obligations - - (13.8) (4.0) (17.8)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Net surplus/(deficit) 133.8 3.2 0.9 (4.0) 133.9
--------------------------------------------- --------- -------- ----------- ---------- -----------
Unaudited
six months
Kier May to 31
Group Gurney Mouchel McNicholas December
Pension Pension Pension Pension 2020
Scheme Scheme Schemes(1) Scheme Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- --------- -------- ----------- ---------- -----------
Opening surplus/(deficit) 89.8 (5.2) (38.1) (7.7) 38.8
Credit/(charge) to income statement 0.4 - (0.5) (0.1) (0.2)
Employer contributions 13.3 3.0 9.6 0.6 26.5
Actuarial losses (42.2) (3.7) (19.8) (0.8) (66.5)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Closing surplus/(deficit) 61.3 (5.9) (48.8) (8.0) (1.4)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Comprising:
Total market value of assets 1,323.4 86.4 537.4 28.8 1,976.0
Present value of liabilities (1,262.1) (92.3) (586.2) (36.8) (1,977.4)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Net surplus/(deficit) 61.3 (5.9) (48.8) (8.0) (1.4)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Presentation of net surplus/(deficit) above
in the Consolidated balance sheet:
Retirement benefit assets 61.3 - 5.8 - 67.1
Retirement benefit obligations - (5.9) (54.6) (8.0) (68.5)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Net surplus/(deficit) 61.3 (5.9) (48.8) (8.0) (1.4)
--------------------------------------------- --------- -------- ----------- ---------- -----------
Year
Kier May to 30
Group Gurney Mouchel McNicholas June
Pension Pension Pension Pension 2021
Scheme Scheme Schemes(1) Scheme Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- --------- -------- ----------- ---------- ---------
Opening surplus/(deficit) 89.8 (5.2) (38.1) (7.7) 38.8
Credit/(charge) to income statement 1.1 - (0.8) (0.1) 0.2
Employer contributions 13.9 4.9 17.0 1.2 37.0
Actuarial losses (26.2) (1.0) (2.6) - (29.8)
--------------------------------------------- --------- -------- ----------- ---------- ---------
Closing surplus/(deficit) 78.6 (1.3) (24.5) (6.6) 46.2
--------------------------------------------- --------- -------- ----------- ---------- ---------
Comprising:
Total market value of assets 1,273.2 85.1 525.3 26.3 1,909.9
Present value of liabilities (1,194.6) (86.4) (549.8) (32.9) (1,863.7)
--------------------------------------------- --------- -------- ----------- ---------- ---------
Net surplus/(deficit) 78.6 (1.3) (24.5) (6.6) 46.2
--------------------------------------------- --------- -------- ----------- ---------- ---------
Presentation of net surplus/(deficit) above
in the Consolidated balance sheet:
Retirement benefit assets 78.6 - 8.6 - 87.2
Retirement benefit obligations - (1.3) (33.1) (6.6) (41.0)
--------------------------------------------- --------- -------- ----------- ---------- ---------
Net surplus/(deficit) 78.6 (1.3) (24.5) (6.6) 46.2
--------------------------------------------- --------- -------- ----------- ---------- ---------
(1) The Mouchel figures comprise four individual schemes
(Mouchel Superannuation Fund, Mouchel Staff Pension Scheme, Mouchel
Business Services Limited Pension Scheme (Final Salary Section) and
EM Highways Prudential Platinum Scheme) which have been grouped
together because they were purchased as part of the Mouchel Group.
The composition of these schemes has not changed since the prior
year.
6 Taxation
Unaudited
Unaudited six
six months months Year
to 31 to 31 to
December December 30 June
2021 2020 2021
Total Total Total
GBPm GBPm GBPm
--------------------------------------------- ---------------------------- ---------- --------- --------
Profit before tax 12.7 9.0 5.6
Add: tax on joint ventures - - (1.4)
--------------------------------------------- ---------------------------- ---------- --------- --------
Profit before tax including joint
ventures 12.7 9.0 4.2
--------------------------------------------- ---------------------------- ---------- --------- --------
Current tax (2.1) (1.9) (5.2)
Deferred tax (0.6) - 22.6
Total income tax (charge)/credit
in the income statement (2.7) (1.9) 17.4
Tax on joint ventures - - 1.4
Effective tax (charge)/credit (2.7) (1.9) 18.8
--------------------------------------------- ---------------------------- ---------- --------- --------
Effective tax rate 21.3% 21.1% 447.6%
--------------------------------------------- ---------------------------- ---------- --------- --------
The deferred tax asset includes GBP108.9m of tax losses (six
months ended 31 December 2020: GBP96.1m; year ended 30 June 2021:
GBP108.6m), and GBP8.0m of other deferred tax assets and
liabilities (six months ended 31 December 2020: GBP28.0m; year
ended 30 June 2021: GBP29.4m).
When considering the recoverability of net deferred tax assets,
the taxable profit forecasts are based on the same Board-approved
information used to support the going concern assessment.
The following evidence has been considered when assessing
whether these forecasts are achievable and realistic:
-- Significant progress has been made on the operational and
financial turnaround strategy announced in June 2019, with the
business trading in line with forecasts for the half-year FY22;
-- The Group has substantially completed its restructuring activities; and
-- The Group's core businesses are well-placed to benefit from
the announced and committed UK Government spending plans to invest
in infrastructure, decarbonisation and spending to support post
COVID-19 recovery.
When considering the length of time over which the losses are
expected to be utilised, the Group has taken into account that
generally only 50% of profits in each year can be offset by brought
forward losses.
Based on these forecasts, the Group is expected to utilise its
deferred tax asset over a period of approximately 12 years.
The Research and Development Expenditure Credit (RDEC) of
GBP6.9m was included in operating profit during the year (six
months ended 31 December 2020: GBP7.9m; year ended 30 June 2021:
GBP13.3m). Included in the corporation tax asset at 30 December
2021 were RDEC receivables of GBP12.9m (six months ended 31
December 2020: GBP12.0m; year ended 30 June 2021: GBP12.4m).
7 Dividends
The Group's focus on cash generation and reducing net debt has
required a suspension in dividend payments. No interim or final
dividends have been declared during the period (six months ended 31
December 2020: GBPnil, year ended 30 June 2021: GBPnil).
8 Earnings per share
A reconciliation of profit and earnings per share, as reported
in the income statement, to profit and earnings per share before
adjusting items is set out below. The disclosure is made to
illustrate the impact of adjusting items .
Unaudited Unaudited Year to
six months six months 30 June 2021
to to
31 December 31 December
2021 2020 (2)
Basic Diluted Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Earnings
Continuing operations
Earnings (after tax and non-controlling
interests), being net profits attributable
to equity holders of the parent 9.6 9.6 7.7 7.7 24.3 24.3
Impact of adjusting items (1) net of
tax:
Amortisation of intangible assets -
net of tax credit of GBP2.0m (31 December
2020: GBP2.1m, 30 June 2021: GBP4.0m) 7.9 7.9 9.2 9.2 17.0 17.0
Other adjusting items (1) - net of tax
credit of GBP3.6m (31 December 2020:
GBP3.5m, 30 June 2021: GBP27.7m) 16.8 16.8 4.0 4.0 11.1 11.1
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Earnings from continuing operations
before adjusting items (1) 34.3 34.3 20.9 20.9 52.4 52.4
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Discontinued operations
Earnings/(losses)/ (after tax and non-controlling
interests), being net profits attributable
to equity holders of the parent - - 4.9 4.9 (0.3) (0.3)
Adjusting items from discontinued operations - - (6.7) (6.7) (24.3) (24.3)
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Loss from discontinued operations - - (1.8) (1.8) (24.6) (24.6)
-------------------------------------------------- ------- ------- ------- ------- ------- -------
million million million million million million
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Weighted average number of shares used
for earnings per share 445.3 458.9 201.6 201.6 210.3 212.3
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Basic Diluted Basic Diluted Basic Diluted
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Earnings per share pence pence pence pence pence pence
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Continuing operations
Earnings (after tax and non-controlling
interests), being net profits attributable
to equity holders of the parent 2.2 2.1 3.8 3.8 11.6 11.4
Impact of adjusting items (1) net of
tax:
Amortisation of intangible assets -
net of tax credit 1.8 1.7 4.6 4.6 8.1 8.0
Other adjusting items (1) - net of tax
credit 3.8 3.7 2.0 2.0 5.3 5.2
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Earnings from continuing operations
before adjusting items 7.8 7.5 10.4 10.4 25.0 24.6
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Discontinued operations
Earnings/(losses) (after tax and non-controlling
interests), being net profits attributable
to equity holders of the parent - - 2.4 2.4 (0.1) (0.1)
Adjusting items from discontinued operations - - (3.3) (3.3) (11.6) (11.4)
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Loss from discontinued operations - - (0.9) (0.9) (11.7) (11.5)
-------------------------------------------------- ------- ------- ------- ------- ------- -------
Total earnings/(losses) per share
Statutory 2.2 2.1 2.9 2.9 (0.1) (0.1)
Before adjusting items (1) 7.8 7.5 12.8 12.8 24.9 24.5
-------------------------------------------------- ------- ------- ------- ------- ------- -------
(1) See note 1 for reference to adjusting items.
(2) Earnings per share has been re-presented in the comparative
information as a result of the bonus element of the equity raise,
which completed on 18 June 2021, see note 15.
9 I ntangible assets
Intangible
contract Computer
Goodwill rights software Total
GBPm GBPm GBPm GBPm
-------------------------------------------- ----------- ------------- ----------- --------
Cost
At 1 July 2020 538.8 259.4 125.4 923.6
Additions - - 0.1 0.1
Transfers to property, plant and equipment - - (0.7) (0.7)
Transfers from assets held for sale - - 1.0 1.0
At 31 December 2020 538.8 259.4 125.8 924.0
-------------------------------------------- ----------- ------------- ----------- --------
Additions - - 3.0 3.0
Disposals - - (1.1) (1.1)
Transfers from property, plant and
equipment - - 1.6 1.6
Transfers to assets held for sale - - (1.0) (1.0)
-------------------------------------------- ----------- ------------- ----------- --------
At 30 June 2021 538.8 259.4 128.3 926.5
-------------------------------------------- ----------- ------------- ----------- --------
Additions - - 0.6 0.6
Disposals - (7.2) (0.1) (7.3)
Transfers from property, plant and
equipment - - (0.6) (0.6)
At 31 December 2021 538.8 252.2 128.2 919.2
-------------------------------------------- ----------- ------------- ----------- --------
Accumulated amortisation and impairment
At 1 July 2020 (2.1) (134.7) (66.2) (203.0)
Charge for the period - (11.3) (3.9) (15.2)
Transfers from assets held for sale - - (0.1) (0.1)
At 31 December 2020 (2.1) (146.0) (70.2) (218.3)
-------------------------------------------- ----------- ------------- ----------- --------
Charge for the period - (9.7) (4.4) (14.1)
Disposals - - 0.6 0.6
Impairment - - 2.4 2.4
Transfers to assets held for sale - - 0.1 0.1
At 30 June 2021 (2.1) (155.7) (71.5) (229.3)
-------------------------------------------- ----------- ------------- ----------- --------
Charge for the period - (9.9) (3.5) (13.4)
Disposals - 7.2 - 7.2
At 31 December 2021 (2.1) (158.4) (75.0) (235.5)
-------------------------------------------- ----------- ------------- ----------- --------
Net book value
At 31 December 2021 536.7 93.8 53.2 683.7
-------------------------------------------- ----------- ------------- ----------- --------
At 30 June 2021 536.7 103.7 56.8 697.2
-------------------------------------------- ----------- ------------- ----------- --------
At 31 December 2020 536.7 113.4 55.6 705.7
-------------------------------------------- ----------- ------------- ----------- --------
1 0 Cash, cash equivalents, overdraft and borrowings
Unaudited Unaudited
at 31 at At
December 31 December 30 June
2021 2020 2021
GBPm GBPm GBPm
--------------------------------------------------- ----------- ------------ --------
Net debt consists of:
Cash and cash equivalents - bank balances and cash
in hand 300.1 328.6 391.2
Borrowings due within one year (32.6) (99.6) (38.2)
Borrowings due after one year (406.0) (599.4) (362.3)
Impact of cross-currency hedging 7.2 16.9 12.3
--------------------------------------------------- ----------- ------------ --------
Net (debt)/cash (131.3) (353.5) 3.0
--------------------------------------------------- ----------- ------------ --------
Average month-end net debt for the six months to 31 December
2021 was GBP190.8m (six months to 31 December 2020: GBP436.3m, year
to 30 June 2021: GBP431.9m). Net debt excludes lease
liabilities.
1 1 Trade and other payables
Unaudited Unaudited
at 31 at 31 At
December December 30 June
2021 2020 2021
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- --------
Trade payables(1) 338.8 351.1 330.3
Accruals 407.2 488.2 531.8
Sub-contract retentions 42.3 39.4 39.1
Other taxation and social security(2) 106.3 88.7 144.2
Other payables 39.6 33.2 47.7
-------------------------------------- ----------- ----------- --------
934.2 1,000.6 1,093.1
-------------------------------------- ----------- ----------- --------
(1) Included within the trade payables balance is GBP69.3m (31
December 2020: GBP109.4m, 30 June 2021: GBP79.1m) relating to
payments due to suppliers who are on bank-supported supply chain
finance arrangements.
(2) Included within other taxation and social security is tax
deferred of GBP2.7m (31 December 2020: GBP49.9m, 30 June 2021:
GBP18.8m). This is comprised of GBP2.7m (31 December 2020:
GBP23.2m, 30 June 2021: GBP18.8m) of VAT deferred in accordance
with HMRC guidance and GBPnil (31 December 2020: GBP26.7m, 30 June
2021: GBPnil) subject to a Time To Pay agreement with HMRC.
1 2 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.
1 3 Related parties
The Group has related party relationships 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 2021. Share of post-tax results
of joint ventures was a GBP10.9m profit (31 December 2020: GBP4.6m
loss, 30 June 2021: GBP0.3m loss). The increase was due to the
completion of several property sales during the period.
Details of contributions made to the pension schemes by the
Group are detailed in note 5.
1 4 Share-based payments
The Group has an established long-term incentive plan (LTIP)
under which directors and senior employees can receive awards of
shares subject to the Group achieving certain performance targets.
Participants are entitled to receive dividend equivalents on these
awards. Awards under the LTIP are all equity settled. The awards
made to directors are subject to a two-year post vesting holding
period and malus and claw-back provisions. Further details of the
LTIP schemes were disclosed in the 2021 annual financial
statements. 8,264,521 new awards were granted under the LTIP during
the six months to 31 December 2021 (six months to 31 December 2020
and year ended 30 June 2021: 17,856,246). No shares vested under
the LTIP schemes during the six months to 31 December 2021 (six
months to 31 December 2020 and year ended 30 June 2021: no share
awards vested).
In 2017, the Group established a Conditional Share Award Plan
(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. Participants are entitled to receive dividend
equivalents on these awards. No new awards were granted under the
CSAP during the six months to 31 December 2021 (six months to 31
December 2020 and year ended 30 June 2021: no awards granted).
650,951 shares vested under the CSAP during the six months to 31
December 2021 (six months to 31 December 2020 and year ended 30
June 2021: 515,093). In accordance with the rules of the scheme, a
further 9,777 shares were provided to recipients of the vesting
CSAP shares, equivalent to the dividends that would have been
received during the vesting period (six months to 31 December 2020
and year ended 30 June 2021: 72,562).
The Group also has an established Sharesave (SAYE) scheme.
Options to acquire shares in the capital of Kier Group plc are
granted to eligible employees who enter into a Sharesave contract,
saving a regular sum each month. Participation in the scheme is
offered to all employees of the Group who have been employed for a
continuous period determined by the Board. 7,943,643 options were
granted under the Sharesave scheme during the six months to 31
December 2021 (six months to 31 December 2020: no options granted;
year ended 30 June 2021: 8,634,038). 40,487 Sharesave Scheme
options were exercised during the six months to 31 December 2021
(six months to 31 December 2020 and year ended 30 June 2021: no
share options were exercised).
The following assumptions were used in calculating the fair
values of the grants made under the share-based payment schemes
during the six months to 31 December 2021:
LTIP
subject
to a
holding
LTIP period Sharesave
28 October 28 October 29 October
Grant date 2021 2021 2021
Shares granted 5,951,091 2,313,430 7,943,643
Share price at grant 108.40p 108.40p 106.80p
Exercise price nil nil 96.00p
Expected term 3 years 3 years 3.3 years
Holding period n/a 2 years n/a
Expected volatility 83.21% 66.55% 82.67%
Dividend yield n/a n/a 0.00%
Risk-free interest rate 0.67% 0.77% 0.73%
Value per option:
LTIP - TSR element (25%) (1,3) 85.22p 76.25p -
LTIP - EPS (50%) and free cash flow (FCF)
(25%) elements (2,3) 108.40p 96.99p -
Sharesave (2) - - 61.87p
(1) Based upon a stochastic model.
(2) Based upon the Black-Scholes model.
(3) LTIP awards provided to the Board directors are subject to a
2-year post vesting holding period. The Finnerty model has been
used to estimate a discount for the lack of marketability of these
shares during the holding period.
The fair value of the total shareholder return '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 earnings per share 'EPS' and
free cash flow 'FCF' 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.
The share-based payment charge recognised in the Group's income
statement for the six months to 31 December 2021 was GBP4.0m (six
months to 31 December 2020: GBP2.8m, year to 30 June 2021:
GBP7.0m).
15 Share capital and reserves
Share capital
The share capital of the Company comprises:
Unaudited six
Unaudited six months to
months to 31 December Year to
31 December 2021 2020 30 June 2021
-------------------- ----------------- -----------------
Number GBPm Number GBPm Number GBPm
---------------------------------- -------------- ---- ----------- ---- ----------- ----
Authorised, issued and fully paid
ordinary shares of 1 pence each 446,206,186 4.5 162,115,870 1.6 446,165,699 4.5
---------------------------------- -------------- ---- ----------- ---- ----------- ----
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
During the six months to 31 December 2021, 40,487 shares were
issued under the Sharesave Scheme (six months to 31 December 2020
and year ended 30 June 2021: none).
Firm Placing and Placing and Open Offer
On 18 June 2021, the Group issued new share capital by way
of:
-- a Firm Placing of 141,851,386 Firm Placing Shares;
-- a Placing and Open Offer of 141,851,386 Open Offer Shares; and
-- Director Subscriptions of 347,057 Subscription Shares.
All of the above shares were issued at GBP0.85 per share. The
total new shares of 284,049,829 generated proceeds of GBP207.8m
after deducting costs of GBP33.6m, of which GBP22.7m were deducted
from equity. These costs were fully paid as at 31 December 2021 (30
June 2021: GBP6.1m unpaid).
Kier Group plc was transferred 100 fixed rate redeemable
preference shares in its subsidiary company, Kite (Jersey) Limited,
which were subsequently redeemed for cash. Following the receipt of
the cash proceeds of the capital raise through this cashbox
structure, the Group obtained merger relief for the new shares
issued by Kier Group plc. The excess of the net proceeds received
over the nominal value of the new shares was transferred to the
merger reserve.
Cash flow hedge reserve
This reserve comprises the effective portion of the cumulative
net change in the fair value of the cash flow hedging instruments
related to hedged transactions that have not yet occurred, net of
any related deferred tax.
Translation reserve
This reserve comprises the cumulative difference on exchange
arising from the retranslation of net investments in overseas
subsidiary undertakings. In accordance with the transitional
provisions of IFRS 1, this reserve was set to nil at 1 July
2004.
Merger reserve
The brought forward merger reserve of GBP134.8m arose on the
shares issued at a premium to acquire May Gurney on 8 July 2013.
The movement in the year ended 30 June 2021 of GBP215.8m relates to
the issue of new share capital as described above.
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END
IR SSDFUAEESELD
(END) Dow Jones Newswires
March 09, 2022 02:00 ET (07:00 GMT)
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