TIDMKIE
RNS Number : 5213Z
Kier Group PLC
15 September 2022
15 September 2022
Kier Group plc
Results for the year ended 30 June 2022
Strong financial performance; Order Book increased 27%
Kier Group plc ("Kier", the "Company" or the "Group"), a leading
UK infrastructure services, construction and property group,
announces its results for the year ended 30 June 2022 ("FY22" or
the "year").
Highlights
Year to
Year to 30 June 2021
(GBPm unless otherwise stated) 30 June 2022 (1) Change
---------------------------------- ------------- ------------- ------
Adjusted results
Revenue 2 3,257 3,329 (2)%
Adjusted operating profit 3 120.5 100.3 20%
Adjusted operating margin 3.7% 3.0% 70bps
Adjusted profit before tax 4 94.1 65.4 44%
Adjusted basic earnings per share
(note 8) 16.8p 25.0p (33)%
Net cash 5 2.9 3.0 (3)%
Average month-end net debt (216) (432) 50%
Statutory reported
Group revenue 3,144 3,261 (4)%
Profit from operations 45.1 43.7 3%
Profit before tax 15.9 5.6 184%
Basic earnings per share (note 8) 2.9p 11.6p (75)%
1 Continuing operations
2 Revenue of the Group and its share of revenue from joint
ventures
3 Stated before adjusting items of GBP55.7m (FY21: GBP35.6m) and
amortisation of acquired intangible assets of GBP19.7m (FY21:
GBP21.0m).
4 Stated before adjusting items of GBP58.5m (FY21: GBP38.8m) and
amortisation of acquired intangible assets of GBP19.7m (FY21:
GBP21.0m).
5 Disclosed net of the effect of hedging instruments and
excludes leases - see note 10 to the preliminary financial
statements.
FY22 Highlights
-- Strong financial performance despite ongoing inflationary pressures
o Adjusted operating profit increased 20% to GBP121m (FY21:
GBP100m)
o Industry leading margin at 3.7%, higher than medium-term
target of c.3.5%
o Free Cash Flow conversion of 90% following reversal of H1
working capital unwind
o Net cash at 30 June 2022 of GBP3m (FY21: GBP3m)
o Significant reduction in average month-end net debt to
GBP(216)m from GBP(432)m
-- High quality order book, increased 27% to GBP9.8bn (FY21:
GBP7.7bn) providing certainty against the wider market backdrop
o Good visibility with 85% of expected FY23 revenue secured
-- Adjusted basic EPS: 16.8p (FY21: 25.0p), lower due to dilution from prior year equity raise
-- Strong performance across all divisions with Property delivering ROCE of 14%
-- Continued commitment to Sustainability Framework and ESG targets
Andrew Davies, Chief Executive, said:
" Over the last two years Kier has undergone a transformation,
rationalisation and recapitalisation and the Group is delivering
against its medium-term value creation plan.
"The performance over the last 12 months reflects our
significantly enhanced resilience and strengthened financial
position.
The Group is well positioned to continue benefiting from UK
Government infrastructure spending commitments and we have a
significantly increased order book of GBP9.8bn which gives us
certainty against the market backdrop. The new financial year has
started well and we are trading in line with our expectations,
despite continued inflationary pressure and see no change in the
current market outlook. We remain focused on the delivery of a
sustainable net cash position and sustainable dividend policy,
in-line with our medium-term value creation plan."
FY22 Results Presentation
Kier Group plc will host a presentation for analysts and
investors at 9:00am on 15 September 2022 at the offices of Numis,
45 Gresham Street, London EC2V 7BF.
Analysts wishing to attend should contact FTI Consulting to
register - Connie.Gibson@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/6305e532edad2c0c009d5294/gqjq
United Kingdom: 0800 640 6441
United Kingdom (Local): 020 3936 2999
United States: 1 855 9796 654
United States (Local): 1 646 664 1960
All other locations: +44 20 3936 2999
Conference password: 904076
An audio recording will be available on our website in due
course.
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 2022 for a discussion of the factors that could
affect the Group's future performance and the industry in which it
operates.
About Kier
Kier is a leading UK infrastructure services, construction and
property group.
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
Over the last two years Kier has undergone a transformation,
rationalisation and recapitalisation and the Group is delivering
against its medium-term value creation plan.
The year-end order book in FY22 was GBP9.8bn, a significant
increase of 27% against the prior year, reflecting a large number
of contract wins across all divisions and providing multi-year
revenue visibility. Long-term framework positions, as well as
pipeline opportunities and fees from the Property division, are
excluded from the order book and represent an additional
opportunity. Given the order book increase and Kier's framework
positioning, approximately 85% of Group revenue for FY23 is already
secured which provides us with a high degree of certainty against a
backdrop of wider market uncertainty.
The Group continued to maximise value and opportunities. Kier
won new, high quality and profitable work in our markets reflecting
the bidding discipline and risk management embedded in the
business.
Medium-Term Value Creation Plan
The Group is focused on delivering its medium-term targets over
a three to five year period:
Revenue: GBP4.0 - 4.5bn
Adjusted operating profit
margin: c. 3.5%
Cash conversion of operating
profit: c. 90%
Sustainable net cash position with capacity
Balance sheet: to invest
Sustainable dividend policy: c.3 x cover
Dividend: 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
The Group continues to make good progress against these targets.
Despite political and economic uncertainties, our core markets have
remained favourable. We are a "strategic supplier" to the UK
Government and over 90% of our contracts are with the public sector
and regulated companies.
Financial Summary
Kier reported revenue of GBP3.3bn (FY21: GBP3.3bn) which
reflected the anticipated reduced volumes in the Construction
division.
The Group's FY22 results reflect a strong operational
performance despite increased cost inflation relating to materials,
wages and other costs. We were successful in mitigating these
pressures through having c.60% of our order book under target cost
or cost reimbursable contracts, various procurement strategies,
ability to mitigate risk through negotiations on fixed price
contracts and an average order size of c.GBP13m in our Construction
business resulting in a regular re-pricing of contracts.
The Group delivered adjusted operating profit of GBP121m which
represents a 20% increase on the prior year (FY21: GBP100m). All
our divisions, Infrastructure Services, Construction and Property
performed well during the year, after adjustments. Accordingly,
Group adjusted operating profit margin increased by 70 basis points
to 3.7% (FY21: 3.0%).
Adjusted earnings per share was 16.8p (FY21: 25.0p). The
decrease was driven by the dilution from the FY21 equity raise.
The Group generated GBP55m of free cash flow in FY22 (FY21:
GBP93m). Following the seasonal working capital outflow in H1 of
GBP143m, as expected the full year showed a reversal of this
situation.
Free cash flow reduction from FY21 to FY22 was primarily due to
lower working capital inflow from lower Construction volumes, a
reduction in our working capital supply chain ("KEPS") facility and
repayment of COVID-19 support to HMRC.
The Group's net cash position at 30 June 2022 was GBP3m and
remains unchanged from FY21. The Group has worked with its supply
chain partners to reduce average payment days and pay in line with
terms over the last two years.
Average month-end net debt for the year was GBP(216)m (FY21:
GBP(432)m), significantly improved year over year, primarily due to
the equity raise and sale of the Group's housebuilding business,
Kier Living.
The average month-end net debt position was impacted by working
capital, a GBP29m KEPS reduction, GBP21m of HMRC COVID-19 support
repayment as well as from the cash impact of recent adjusting
items.
Subsequent to the year end, the Group repaid the remainder of
its GBP50m KEPS facility in full.
Customers and winning new work
We remain focused on winning work through our long-standing
client relationships and regionally based operations.
Highlights in the year:
-- Highways: awarded GBP560m maintenance work and services
contracts for North Northamptonshire and West Northamptonshire
Councils for 7 years (with an option for a further 7-year
extension)
-- Infrastructure: appointed to the GBP1.6bn Pagabo Civils and
Infrastructure Framework for 4 years; Kier BAM Joint Venture
appointed by Babcock International on a refurbishment project at
Devonport's 10 dock facility in Plymouth. The project is expected
to run for 10 years
Utilities: awarded a place on Northern Ireland Water's GBP1.2bn
Major Projects Partnership Framework in joint venture with BAM for
4 years (with an option for a further 4-year extension)
-- Construction: awarded a GBP500m contract to deliver new
houseblock buildings across six prisons with Wates; awarded a
GBP400m contract for HMP Full Sutton, a new prison in East
Yorkshire; awarded a GBP32.5m refurbishment contract for Manchester
Aquatics Centre; selected by Baring and LBS Properties to design
and construct a GBP69m mixed-use sustainable building in London
o Kier Places - appointed to GBP35bn Crown Commercial Service's
Facilities Management and Workplace Services Framework for 4
years
-- Property: agreed an GBP80m equity residential 50:50 joint
venture with Housing Growth Partnership to develop urban brownfield
sites across the UK over 5 years
Strategy
The simplification and strengthening of the Group's balance
sheet has resulted in Kier being well-placed to continue to pursue
its strategic objectives successfully 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
-- 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.
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 the Group's growth. In the
medium-term, the Group is targeting a dividend cover of around
three times 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
Through our Performance Excellence culture, which was introduced
in 2020, Kier has embedded a strong operational and financial risk
management framework across the Group. It is essential to, and
embedded into, Kier's contract selection and delivery
processes.
In 2022, we have updated Performance Excellence to match the
evolving needs of Kier and its clients. Five new workstreams have
been established, Culture and Behaviours, Customers, Digital,
Simplification and Wellbeing. These workstreams ensure we continue
to meet our obligations to the environment and the communities we
work within, as well as our investors and client expectations.
The key tenets are as follows:
-- measure clients' and customers' experiences objectively,
using data to improve our external relationships
-- adopt a digital-first approach through a digitally enabled workforce increasing productivity
-- instil best practices in our workforce through behaviour,
cultural programmes, and wellbeing initiatives
-- simplify processes across the Group
-- win new business with attractive margins
Performance Excellence is also fundamental to the Group's
overall approach to safety.
Supply Chain Partners
We have also focused on maintaining and growing relationships
with our key stakeholders, including our supply chain. Many of our
suppliers are long-term partners of the Group and we value their
contribution.
We were pleased to report that, in our latest Duty to Report on
Payment Practices and Reporting submission, covering the period
from 1 January 2022 to 30 June 2022, the Group's aggregate average
payment days was 33 days (H1: 34 days) and the percentage of
payments made to suppliers within 60 days was 89% (H1: 92%).
We are committed to further improvements in our payment
practices and continue to work with both customers and suppliers to
achieve this. We are fully committed to complying with the 30-day
payment requirements for small and medium sized firms.
Management Change
The Group has continued to strengthen its management team
through the year with the appointment of Andrew Bradshaw, Group
Managing Director, Infrastructure Services (Utilities) to the
Executive Committee. Andrew replaced Barry McNicholas who retired
from the business during the year.
Environmental, Social and Governance ("ESG")
Kier's purpose is to sustainably deliver infrastructure which is
vital to the UK. As a "strategic supplier" to the UK Government,
ESG is fundamental to our ability to win work and secure positions
on long-term frameworks. The UK Government contracts above GBP5m
require net zero carbon and social value commitments.
Last year, we launched our new sustainability framework,
"Building for a Sustainable World" which covers sustainability from
both an environment and social perspective. Our framework is based
on ten pillars and follows the guiding principles of the 17 United
Nation's Sustainable Development Goals ("SDGs").
We believe that to be a responsible business and to play a
leading role in our industry, we must address both the impact of
climate change and leave a lasting legacy in the communities in
which we operate.
Environment
This year we published our first Task Force on Climate Related
Financial Disclosure ("TCFD") report. The report outlines our
assessment of climate related risks and opportunities with respect
to our operations, against the four key areas of governance,
strategy, risk management - as well as metrics and targets, It
highlights how we are managing these risks and opportunities and
their short, medium or long term impact on the Group.
For carbon emissions, we have set out our pathway to become net
zero carbon across our business operations by 2039 (Scope 1 and 2),
value chain (Scope 3) by 2045 together with interim targets. We
achieved a 69% year over year reduction in carbon emissions from
our business operations (Scope 1 & 2) in FY22. We also started
reporting on our Scope 3 emissions for the first time.
Social
We have also made commitments on social value. Our target is to
create GBP5bn in social value by 2030.
In order to record our social value creation, we moved to a new
calculator called Thrive in FY22. Thrive has the ability to track
social value across our bidding activity and live projects. It
links back to the UK Government's Social Value Model. The
calculator will enable Kier to quantify and benchmark its positive
contribution against other companies.
Kier is a people based business and our performance depends upon
our ability to attract and retain a dedicated workforce. During
FY22 we had:
-- Over 590 apprentices participating in programmes, 6% of our workforce
-- Graduate intake comprising 38% women
-- Developed and implemented a new health, safety and wellbeing
strategy as well as launched a new behavioural programme
We are committed to becoming an inclusive business. Last year,
we launched our diversity and inclusion roadmap. As part of our
journey to becoming diverse, we began our Empower programme, a
reverse mentoring initiative which enables Kier employees from
under-represented groups to mentor members of the Executive
Committee and senior leadership teams.
We also have a number of other ongoing initiatives in the Group
including continuous training for our employees as part of our
Expect Respect campaign.
The Group's 12-month rolling Accident Incident Rate ('AIR') in
FY22 of 1 15 represents an increase of 9% compared to FY21. We are
disappointed with the AIR trend given our high standards. This
continues to be a keen area of focus for us. We retain a solid
safety record that is c.45% better than the industry benchmark.
Safety remains our license to operate and we continue to embed
best practice and make conditions as safe as possible for our
workforce. The Group's 12-month rolling All Accident Incident Rate
('AAIR') in FY22 of 3 represents a decrease of 5% against the prior
year.
During the year, we launched a behaviour programme focused on
employee physical safety, mental safety and wellbeing .
Governance
Governance is a core component of the Group's approach to
operations. Governance is delivered within Kier's Operating
Framework. The laws, policies and procedures underpinning the
Operating Framework are regularly reviewed and updates implemented
as necessary. The Operating Framework was refreshed in FY22. Within
the Operating Framework is Kier's Code of Conduct which sets the
corporate compliance agenda.
Integral to this is our management of risk. We ensure that risk
management is adopted at every stage of the project lifecycle.
Our ESG Committee oversees the adoption of our sustainability
framework and commitments, with this year being the first year of
operation. Our approach to sustainability aims to safeguard our
business and build a resilient environment, resilient community and
resilient profits over the long term.
Our People
The Group's strong performance is attributable to the dedication
of our c.10,000 employees across the UK. I would like to thank them
for their commitment and contribution throughout the year.
The Group remains committed to creating a workplace that aligns
with Kier's values of collaboration, trust and focus. We are
embracing new ways of working, as well as supporting and developing
our people. During the year, we implemented a range of family
friendly policies including enhanced maternity leave, paternity
leave, adoption and surrogacy. The Group is keen on listening to
its workforce and has deployed strategies to engage with our
employees . We have continued with our employee surveys which
indicate a 63% employee engagement score for FY22.
Summary and Outlook
The Group is well positioned to continue benefiting from UK
Government infrastructure spending commitments and we have a
significantly increased order book of GBP9.8bn which gives us
certainty against the market backdrop.
The new financial year has started well and we are trading in
line with our expectations despite continued inflationary pressure
and see no change in the current market outlook. We remain focused
on the delivery of a sustainable net cash position and sustainable
dividend policy in-line with our medium-term value creation
plan.
Operational Review
Infrastructure Services
Year ended
30 June Year ended
2022 30 June 2021 Change
------------------------------------- ----------- -------------- ---------
Revenue (GBPm) 1,667 1,422 17%
Adjusted operating profit (GBPm)(6) 70.0 65.3 7%
Adjusted operating margin 4.2% 4.6% (40)bps
Reported operating profit (GBPm) 48.1 41.4 16%
Order book (GBPbn) 5.6 4.4 27%
6 Stated before adjusting items of GBP21.9m (FY21: GBP23.9m)
-- Key contract wins include:
o Highways: awarded major highways maintenance works and
services contracts by North Northamptonshire and West
Northamptonshire Council
o Infrastructure: appointed to GBP1.6bn Pagabo Civils and
infrastructure framework
o Utilities: awarded a place on Northern Ireland Water's
GBP1.2bn Major Projects Framework in joint venture with BAM
-- 83% of orders secured for FY23
The Infrastructure Services segment comprises the Highways,
Infrastructure and Utilities businesses.
Infrastructure Services revenue increased 17% against the prior
year, primarily due to the ramp up of capital works on HS2.
Adjusted operating profit increased by 7% to GBP70m with a margin
mix impact. Higher HS2 volumes were offset by growth of costs in
Utilities.
The Highways business designs, builds and maintains roads for
National Highways, Transport for London and a number of district
and county councils. The business experienced a period of strong
wins, 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.
Contracts won include both North Northamptonshire and West
Northamptonshire Council, 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 the Luton DART rail system in joint
venture with VolkerFitzpatrick.
Our long-term relationships with key customers and joint venture
partners ensures access to a good pipeline of work such as our
joint venture with BAM being appointed by Babcock International on
a refurbishment project at Devonport's 10 dock facility in Plymouth
which is expected to run for 10 years. The business was also
appointed to all 12 Lots of Manchester Airport Group's GBP700m
Capital Works framework jointly with our Construction business.
The Utilities business delivers long-term contracts providing
construction and maintenance services to the water, energy, and
telecoms sectors. The Utilities business has seen higher activity
in the telecoms sector with the UK Government's commitment to
rolling out 5G connectivity to the UK. As a result, the business
has increased its investment in contract mobilisation costs.
The Utilities business has continued to win work including a
place on Northern Ireland Water's GBP1.2bn Major Projects Framework
in joint venture with BAM. 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
Year ended
30 June Year ended
2022 30 June 2021 Change
---------------------------------- ----------- -------------- ---------
Revenue (GBPm) 1,441 1,769 (19)%
Adjusted operating profit (GBPm)
(7) 60.8 56.7 7%
Adjusted operating margin 4.2% 3.2% 100bps
Reported operating profit (GBPm) 21.8 40.7 (46)%
Order book (GBPbn) 4.2 3.3 27%
7 Stated before adjusting items of GBP39.0m (FY21: GBP16.0m)
-- Won a significant number of contracts during the second half
of the financial year such as a GBP500m contract to deliver new
houseblock buildings across six prisons with Wates; awarded a
pre-construction services agreement to deliver HMP Glasgow, a new
prison on a 54-acre site in Scotland; awarded a GBP33m
refurbishment contract for Manchester Aquatics Centre; selected by
Baring and LBS Properties to design and construct a GBP69m
mixed-use sustainable building in London
-- Following the year-end Kier was appointed by the MoJ to
deliver HMP Full Sutton, a GBP400m new prison in East Yorkshire
-- 86% of orders secured for FY23
-- Margin improvement due to realignment of costs to anticipated lower revenue
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.
Revenue reduced by 19%, as anticipated, due to deferred orders
and delayed project starts. During the year, we also successfully
completed the HMP Five Wells prison project in Wellingborough which
resulted in a ramp down of activity.
However, in anticipation of the reduced revenue, we re-aligned
our cost base. Accordingly, adjusted operating profit increased by
7% to GBP61m. Adjusting items of GBP39.0m include costs related to
the restructuring of our Southern regional business and cladding
rectification costs.
Contracts wins have been strong during the year, as reflected in
a significantly increased order book from GBP3.3bn to GBP4.2bn.
We were recently awarded a GBP500m contract to deliver new
houseblock buildings across six prisons in conjunction with Wates
and appointed by the MoJ to deliver a GBP400m prison in Full
Sutton.
As a regional contractor, we continue to be 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 our Construction business has specialist
expertise. However, during the year, we have seen UK Government
procurement delays driven by cost inflation.
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 was appointed to the GBP35bn
CCS facilities management and workplace services framework as well
as securing a place on Lot 2 of the GBP600m YORbuild3 Minor Works
framework for four years.
The UAE-based International business is focused on managing its
cost base and projects in line with the continued weakness in its
markets.
Property
Year ended
30 June Year ended
2022 30 June 2021 Change
------------------------------------- ----------- -------------- ---------
Revenue (GBPm) 144 134 8%
Adjusted operating profit (GBPm)(8) 17.6 5.7 209%
Adjusted operating margin 12.2% 4.3% 790bps
Reported operating profit (GBPm) 16.7 2.3 626%
ROCE % 14% 4% 1,000bps
8 Stated before adjusting items of GBP0.9m (FY21: GBP3.4m)
-- Announced an GBP80m equity residential joint venture with
Housing Growth Partnership to develop urban brownfield sites
-- Selected as joint venture partner to Mole Valley District
Council for the GBP350m regeneration of Leatherhead town centre
-- Sold the newly built and 100% let Trade City scheme in Luton to abrdn
The Property business invests and develops primarily mixed-use
commercial and residential schemes and sites across the UK. The
business is a well-established urban regeneration and property
developer and largely operates through joint ventures.
Revenue increased 8% compared to the prior year due to the
completion and sale of several properties, particularly within the
industrial sector. The revenue from our share of joint ventures
increased by 66%.
Adjusted operating profit increased from GBP5.7m to GBP17.6m.
The improved profitability and improved margin % has primarily been
driven by industrial sector divestments..
The Group is focused on the controlled expansion of the Property
business through select investments and strategic joint ventures
using a disciplined capital approach.
We expect to increase the average capital employed over time
with a target of GBP140m - GBP170m with a consistent rate of
capital investment at the level expected to help smooth out the
returns profile of the business. As at 30 June 2022 capital
employed was GBP122m.
In FY22, the Property business had a Return on Capital Employed
("ROCE") of 14% in FY22, a significant improvement on FY21.
Corporate
Year ended
30 June Year ended
2022 30 June 2021 Change
---------------------------------- ----------- -------------- ---------
Adjusted operating loss (GBPm) 9 (27.9) (27.4) (2)%
Reported operating loss (GBPm) (41.5) (40.7) (2)%
9 Stated before adjusting items of GBP13.6m (FY21: GBP13.3m)
The Corporate segment comprises the costs of the Group's central
functions and have increased marginally year over year due to
inflationary pressures being offset by continuous improvement
initiatives. Financial Review
Introduction
The Group performed well during the year, despite inflationary
pressure, delivering an adjusted operating profit of GBP120.5m
(FY21: GBP100.3m). This represents a 70 basis points operating
margin increase year over year to 3.7% with the Group exceeding its
medium-term plan margin target of c.3.5% (FY21: 3.0%).
The continued strong operational performance led to an increased
statutory profit before tax from continuing operations of GBP15.9m
(FY21: GBP5.6m), despite the anticipated reduction in revenue.
Adjusted earnings per share were 16.8p from continuing
operations (FY21: 25.0p). This decreased compared to prior year as
a result of the dilution from the FY21 equity raise.
The Group generated a free cash inflow of GBP54.6m (FY21:
GBP92.6m) in the financial year which included a GBP29.3m repayment
of its supply chain finance facility ("KEPS") and the repayment of
its deferred HMRC obligations agreed during the pandemic
(GBP20.8m).
Net cash at 30 June 2022 of GBP2.9m remains at a similar level
to prior year.
The Group remains well placed to benefit from the UK
Government's commitment to national infrastructure spending. The
order book increased by c.27% to GBP9.8bn at 30 June 2022 (FY21:
GBP7.7bn). 85% of revenue for FY23 is already secured which
provides a level of certainty against the backdrop of wider market
uncertainty.
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 and new awards exceeded the prior
year.
Summary of financial performance
Statutory reported
Adjusted (1) results results
----------------------------
30 Jun 30 Jun 30 Jun 30 Jun
22 21 (2) change 22 21 (2) change
-------- -------- -------- -------- -------- --------
Revenue (GBPm) - Total 3,256.5 3,328.5 (2.2)% 3,256.5 3,328.5 (2.2)%
Revenue (GBPm) - Excluding
JV's 3,143.9 3,261.0 (3.6)% 3,143.9 3,261.0 (3.6)%
Profit from operations
(GBPm) 120.5 100.3 20.1% 45.1 43.7 3.2%
Profit before tax (GBPm) 94.1 65.4 43.9% 15.9 5.6 183.9%
Earnings per share (p) 16.8 25.0 (32.8)% 2.9 11.6 (75.0)%
Free cash flow (GBPm) 54.6 92.6 (41.0)%
Net cash (GBPm) 2.9 3.0 (0.1)
Net debt (GBPm) - average
month-end (216.1) (431.9) 215.8
Order book (GBPbn) 9.8 7.7 2.1
Supply Chain Financing
(GBPm) 49.8 79.1 (29.3)
---------------------------- -------- -------- -------- -------- -------- --------
(1) Reference to 'Adjusted' excludes adjusting items, see note
3.
(2) Continuing operations
Revenue from continuing operations
The following table bridges the Group's revenue from the year
ended 30 June 2021 to the year ended 30 June 2022.
GBPm
----------------------------------------- --------
Revenue for the year ended 30 June 2021 3,328.5
Infrastructure Services 245.0
Construction (328.3)
Property and Corporate 11.3
Revenue for the year ended 30 June 2022 3,256.5
----------------------------------------- --------
The Group experienced strong growth in Infrastructure Services,
primarily due to the ramp up in HS2. Construction revenue decreased
as anticipated due initially to delays in work being awarded and
then further as projects overcame inflationary pressures. There
were also additional transactions in Property compared to the prior
year driven by market demand. The Group continues to focus on
delivering high quality and high margin work.
Alternative performance measures (APMs)
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 year ended 30
June 2021 100.3
Volume / price / mix changes 1.1
Additional property transactions 11.9
Cost inflation (8.1)
Management actions 15.3
Adjusted operating profit for the year ended 30
June 2022 120.5
------------------------------------------------- ------
Adjusted operating profit improved compared to the prior year
despite the reduction in revenue. The main reasons for this were
management actions to reduce costs and increased property
transactions compared to FY21, which offset lower volume and
inflationary pressures.
A reconciliation of reported to adjusted operating profit is
provided below:
Operating profit Profit before tax
------------------ -------------------
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
------------------------------------ -------- -------- --------- --------
Reported profit from continuing
operations 45.1 43.7 15.9 5.6
Amortisation of acquired intangible
assets 19.7 21.0 19.7 21.0
Restructuring and related charges 40.0 31.6 40.0 31.6
Preparation for business divestment
or closure - 0.5 - 0.5
Other 15.7 3.5 18.5 6.7
------------------------------------ -------- -------- --------- --------
Adjusted profit from continuing
operations 120.5 100.3 94.1 65.4
------------------------------------ -------- -------- --------- --------
Additional information about these items is as follows:
-- Amortisation of acquired intangible assets GBP19.7m (FY21: GBP21.0m):
Comprises the amortisation of acquired contract rights primarily
relating to the historical acquisitions of May Gurney in 2013,
Mouchel in 2015 and McNicholas in 2017.
-- Restructuring and related charges GBP40.0m (FY21: GBP31.6m):
The Group incurred restructuring costs and related charges in
the year totalling GBP40.0m. The Group completed 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 restructuring activities, a cost of GBP22.2m was
charged in the current year, which represents an extension of the
prior year charges. This restructuring is now complete and no
future charges are anticipated.
In addition, GBP6.5m was incurred on redundancies and other
people related costs.
A total of GBP7.1m has been charged in respect of professional
adviser fees and other non-people initiatives. Of this amount,
GBP3.8m was incurred on financial and legal advisor fees, GBP1.1m
on fire cladding consultation services, GBP1.0m on closure costs
relating to Trade Direct and a further GBP2.2m on other
restructuring activities. This was offset by a GBP1.1m credit as a
result of finalisation of costs incurred on the equity raise in the
prior year.
A further GBP4.2m 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 net GBP0.3m 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 GBP0.7m credit.
-- Other costs GBP18.5m (FY21: GBP6.7m)
Other costs include GBP5.2m 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
year.
Legal and compliance costs of GBP8.8m include GBP7.8m of fire
compliance and cladding claims that have arisen during the
year.
In addition, GBP2.2m relates to a software impairment and
GBP2.8m relates to the IFRS 16 interest charge on leased properties
that were previously vacated. These are offset by a credit of
GBP0.5m as a result of a Pension Increase Exchange exercise
undertaken on one of the Group's pension schemes.
Earnings per share
Earnings per share (EPS), before adjusting items, from
continuing operations amounted to 16.8p (FY21: 25.0p). EPS, after
adjusting items, from continuing operations amounted to 2.9p (FY21:
11.6p).
Finance charges
The Group's finance charges include interest on the Group's bank
borrowings, finance charges relating to IFRS 16 leases and forward
funding costs relating to development contracts in Property. The
Group chooses to forward fund certain developments in Property to
de-risk the portfolio.
Interest on bank borrowings amounted to GBP18.9m (FY21:
GBP23.2m), finance lease charges were GBP6.5m (FY21: GBP6.7m) and
forward funding costs came to GBP0.5m.
Finance costs have significantly decreased to GBP29.9m (FY21:
GBP41.8m) due to a reduction in bank interest primarily as a result
of the Group's improved average month end net debt position as well
as a decrease in forward funding interest within Property.
The Group continues to exclude lease liabilities from its
definition of net cash / (debt).
Balance sheet
Net assets
The Group had net assets of GBP554.6m at 30 June 2022 (FY21:
GBP435.0m). The primary driver for this is the increase in the
pension scheme asset during the year.
Goodwill
The Group held intangible assets of GBP669.1m (FY21: GBP697.2m)
of which goodwill represented GBP536.7m (FY21: GBP536.7m).
The Group completed its review of goodwill at 30 June 2022,
assuming a pre-tax discount rate derived from a weighted average
cost of capital of 9.0% (FY21: 9.1%), and concluded that no
impairment was required.
The Infrastructure Services Cash Generating Unit ("CGU")
comprises GBP516.3m of the total goodwill balance. Whilst no
impairment is noted and management believe the discounted cash
flows applied is underpinned by the order book and current pipeline
prospects, this CGU is sensitive to changes in key assumptions. The
key assumptions in the value in use calculations are the forecast
revenues and operating margins, the discount rates applied to
future cash flows and the terminal growth rate assumptions applied.
Further details of the sensitivities of these assumptions are
disclosed in note 12 of the financial statements.
Deferred tax asset
The Group has a deferred tax asset of GBP108.8m recognised at 30
June 2022 (FY21: GBP138.0m) primarily due to prior year losses. The
asset has decreased in the year 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 10
years.
An adjusted tax credit of GBP16.3m (FY21: GBP31.7m) has been
included within adjusting items, of which GBP14.8m (FY21: GBP12.2m)
represents the tax impact of adjusting items.
Free cash flow and Net debt
2022 2021
GBPm GBPm
-------------------------------------------------- ------- ------
Operating profit 45.1 43.7
Depreciation of owned assets 6.6 6.4
Depreciation of right-of-use assets 30.0 33.7
Amortisation 28.0 30.9
-------------------------------------------------- ------- ------
EBITDA 109.7 114.7
Adjusting items excluding adjusting amortisation
and interest 55.7 35.6
Adjusted EBITDA 165.4 150.3
Working capital inflow 3.7 109.9
Net capital expenditure including finance
lease capital payments (46.5) (47.0)
Joint Venture dividends less profits 5.9 6.6
Repayment of KEPS (29.3) (46.4)
Other free cash flow items 9.0 7.0
-------------------------------------------------- ------- ------
Operating free cash flow 108.2 180.4
Net interest and tax (32.8) (26.8)
-------------------------------------------------- ------- ------
Free cash flow before COVID-19 75.4 153.6
Net COVID-19 tax repayment (20.8) (61.0)
-------------------------------------------------- ------- ------
Free cash flow 54.6 92.6
-------------------------------------------------- ------- ------
2022 2021
GBPm GBPm
Net cash at 30 June 3.0 (310.3)
Free cash flow 54.6 92.6
Adjusting items (41.2) (72.1)
Pension deficit payments and fees (15.0) (37.0)
Sales proceeds - 120.8
Equity raise (net of fees) (6.1) 224.8
Purchase of own shares (7.0) -
Other 14.6 (4.4)
Net cash at 30 June 2.9 3.0
----------------------------------- ------- -------
The Group experienced a free cash inflow during the year, which
included a working capital inflow before the repayment of the
Group's supply chain finance facility (KEPS) of GBP29.3m.
Working capital is driven by seasonality in the business with
summer being a higher period of activity compared to winter months.
Accordingly, in H2, the Group had a reversal of the H1 working
capital outflow. The working capital inflow in FY22 remained lower
than FY21 due to the anticipated lower Construction business
volumes.
We delivered free cash flow conversion, defined as operating
free cash flow as a percentage of adjusted operating profit of 90%
for the year. This is in line with the Group's medium-term value
creation plan.
The Group's average month end net debt has significantly reduced
to GBP216.1m from GBP431.9m as a result of the successful capital
raise, the sale of Kier Living and free cash flow generation. This
was partially impacted by a reduction in the average month end KEPS
balance, repayment of HMRC COVID-19 debt of GBP20.8m and adjusting
items of GBP41.2m . We anticipate continued progress towards our
medium-term plan target of achieving a sustainable net cash
position. In FY23, we notwithstanding positive free cash flow
expect an increase in average month-end net debt attributable to
the HMRC Covid-19 debt repayment and the repayment of the KEPS as
well as the impact of lower activity in our Construction business
until the fourth quarter of the year. In FY24, we expect the
reported net debt to decrease with free cash flow generation given
the Group's increased order book, expected revenue conversion and
associated working capital inflow. The Group also expects a
significant reduction in adjusting items.
Government support
As of 30 June 2022, the Group's remaining total indirect tax
deferred amounted to GBPnil (FY21: GBP20.8m).
Contract assets & liabilities
Contract assets represents the Group's right to consideration in
exchange for works which have already been performed. Similarly, a
contract liability is recognised when a customer pays consideration
before work is performed. At 30 June 2022, contract assets amounted
to GBP397.5m (FY21: GBP366.4m).
The increase in contract assets is due to the timing of
invoicing, the effect of new contracts and significant increases in
volumes on HS2.
Contract liabilities were GBP67.3m (FY21: GBP59.9m).
Retirement benefits obligation
Kier operates a number of defined benefit pension schemes. At 30
June 2022, the reported surplus, which is the difference between
the aggregate value of the schemes' assets and the present value of
their future liabilities, was GBP194.7m (FY21: GBP46.2m), before
accounting for deferred tax, with the movement in the year
primarily as a result of actuarial gains of GBP136.3m.
The Group started the process of its triennial pension valuation
in March 2022.
Right-of-use assets and lease liabilities
At 30 June 2022 the Group had right-of-use assets of GBP80.6m
(FY21: GBP96.5m) and associated lease liabilities of GBP157.6m
(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
year.
Treasury facilities
Bank finance
The Group has committed debt facilities of GBP654.0m with a
further GBP18.0m of uncommitted overdrafts.
These are legacy facilities that have undergone a number of
amendments and extensions in recent years. The borrowings comprise
of GBP535.0m Revolving Credit Facility ("RCF"), eq.GBP111.1m US
Private Placement ("USPP") Notes, eq.GBP7.9m Schuldschein Notes as
well as GBP18.0m of overdrafts.
Following the sale of Kier Living and the equity raise in FY21,
the Group successfully extended a number of its committed
facilities, including GBP475.0m of the RCF and eq.GBP73.3m of the
USPP Notes to January 2025.
The Group has eq.GBP32.6m of USPP Notes and GBP20.0m of its RCF
maturing in December 2022. The Schuldschein Notes are maturing in
May 2023 and further GBP20.0m of its RCF is expected to be repaid
in June 2023.
During the year the Group took out a GBP100m fixed interest rate
swap through to September 2023.
Supply chain finance
The Group offered its supply chain in the Construction business
the opportunity to participate in KEPS. The balance owed on this
facility is included in trade payables. The balance at 30 June 2022
was GBP49.8m (FY21: GBP79.1m). The Group has reduced KEPS over the
years. The total reduction since FY19 has been GBP170.4m which
includes the GBP49.8m, outstanding at 30 June 2022. KEPS was fully
repaid subsequent to the year end.
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 were 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 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 financial
statements and, for this reason, they continue to adopt the going
concern basis in preparing these financial statements.
Further information on this assessment is detailed in note 1 of
the consolidated financial statements on pages 21 and 22
Financial statements
Condensed consolidated income statement
For the year ended 30 June 2022
2022 2021
Note GBPm GBPm
----------------------------------------------------- ---- --------- ---------
Continuing operations
Revenue
Group and share of joint ventures(1) 2 3,256.5 3,328.5
Less share of joint ventures 2 (112.6) (67.5)
----------------------------------------------------- ---- --------- ---------
Group revenue 3,143.9 3,261.0
Cost of sales (2,879.9) (2,976.9)
----------------------------------------------------- ---- --------- ---------
Gross profit 264.0 284.1
Administrative expenses (245.5) (240.1)
Share of post-tax results of joint ventures 26.6 (0.3)
Profit from operations 2 45.1 43.7
Finance income 4 0.7 3.7
Finance costs 4 (29.9) (41.8)
----------------------------------------------------- ---- --------- ---------
Profit before tax 2 15.9 5.6
Taxation 6 (3.2) 17.4
----------------------------------------------------- ---- --------- ---------
Profit for the year from continuing operations 2 12.7 23.0
----------------------------------------------------- ---- --------- ---------
Discontinued operations
Loss for the year from discontinued operations
(attributable to equity holders of the parent) - (24.6)
----------------------------------------------------- ---- --------- ---------
Profit/(loss) for the year 2 12.7 (1.6)
----------------------------------------------------- ---- --------- ---------
Attributable to:
Owners of the parent 12.7 (0.3)
Non-controlling interests - (1.3)
----------------------------------------------------- ---- --------- ---------
12.7 (1.6)
----------------------------------------------------- ---- --------- ---------
Earnings per share from continuing operations
* Basic 8 2.9p 11.6p
* Diluted 8 2.8p 11.4p
Total earnings/(loss) per share
* Basic 8 2.9p (0.1)p
* Diluted 8 2.8p (0.1)p
----------------------------------------------------- ---- --------- ---------
Supplementary information from continuing operations
Adjusted2 operating profit 3 120.5 100.3
Adjusted 2 profit before tax 3 94.1 65.4
Adjusted 2 earnings per share 8 16.8p 25.0p
Adjusted2 diluted earnings per share 8 16.4p 24.6p
----------------------------------------------------- ---- --------- ---------
(1) Group revenue including joint ventures is an alternative
performance measure.
(2) Reference to 'adjusted' excludes adjusting items, see note
3. These are alternative performance measures.
Financial statements
Condensed consolidated statement of comprehensive income
For the year ended 30 June 2022
2022 2021
Note GBPm GBPm
------------------------------------------------------ ---- ------ ------
Profit/(loss) for the year 12.7 (1.6)
------------------------------------------------------ ---- ------ ------
Items that may be reclassified subsequently
to the income statement
Fair value movements on cash flow hedging instruments 6.4 (16.6)
Fair value movements on cash flow hedging instruments
recycled to the income statement 4 (7.4) 15.0
Deferred tax on fair value movements on cash
flow hedging instruments 0.2 0.3
Foreign exchange translation differences 3.9 (3.2)
Foreign exchange movements recycled to the income
statement 4 - 0.1
------------------------------------------------------ ---- ------ ------
Total items that may be reclassified subsequently
to the income statement 3.1 (4.4)
------------------------------------------------------ ---- ------ ------
Items that will not be reclassified to the income
statement
Re-measurement of retirement benefit assets
and obligations 5 136.3 (29.8)
Deferred tax on re-measurement of retirement
benefit assets and obligations (34.7) 4.8
------------------------------------------------------ ---- ------ ------
Total items that will not be reclassified to
the income statement 101.6 (25.0)
------------------------------------------------------ ---- ------ ------
Other comprehensive income/(loss) for the year 104.7 (29.4)
------------------------------------------------------ ---- ------ ------
Total comprehensive income/(loss) for the year 117.4 (31.0)
------------------------------------------------------ ---- ------ ------
Attributable to:
Equity holders of the parent 117.4 (29.7)
Non-controlling interests - continuing operations - (1.3)
------------------------------------------------------ ---- ------ ------
117.4 (31.0)
------------------------------------------------------ ---- ------ ------
Total comprehensive income/(loss) attributable
to equity shareholders arises from:
Continuing operations 117.4 (5.1)
Discontinued operations - (24.6)
------------------------------------------------------ ---- ------ ------
117.4 (29.7)
------------------------------------------------------ ---- ------ ------
Financial statements
Condensed consolidated statement of changes in equity
As at 30 June 2022
Equity
attributable
Cash to owners
Capital flow of Non-
Share Share redemption Accumulated hedge Translation Merger the controlling Total
capital premium reserve losses reserve reserve reserve parent interests equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
At 1 July 2020 1.6 684.3 2.7 (592.0) 1.2 8.1 134.8 240.7 0.1 240.8
Loss for the
year - - - (0.3) - - - (0.3) (1.3) (1.6)
Other
comprehensive
losses - - - (25.0) (1.3) (3.1) - (29.4) - (29.4)
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
Total
comprehensive
loss for the
year - - - (25.3) (1.3) (3.1) - (29.7) (1.3) (31.0)
Issue of own
shares 15 2.9 - - - - - 215.8 218.7 - 218.7
Share-based
payments 14 - - - 7.0 - - - 7.0 - 7.0
Purchase of
own shares - - - (0.5) - - - (0.5) - (0.5)
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
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 year - - - 12.7 - - - 12.7 - 12.7
Other
comprehensive
income/(loss) - - - 101.6 (0.8) 3.9 - 104.7 - 104.7
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
Total
comprehensive
income/(loss)
for the year - - - 114.3 (0.8) 3.9 - 117.4 - 117.4
Issue of own
shares - - - - - - - - 0.6 0.6
Share-based
payments 14 - - - 8.6 - - - 8.6 - 8.6
Purchase of
own shares - - - (7.0) - - - (7.0) - (7.0)
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
At 30 June
2022 4.5 684.3 2.7 (494.9) (0.9) 8.9 350.6 555.2 (0.6) 554.6
-------------- ---- ------- ------- ---------- ----------- ------- ----------- ------- ------------ ----------- ------
The numbers in the table above are shown net of tax as
applicable
Financial statements
Condensed consolidated balance sheet
As at 30 June 2022
2022 2021
Note GBPm GBPm
-------------------------------------------- ---- --------- ---------
Non-current assets
Intangible assets 9 669.1 697.2
Property, plant and equipment 32.7 43.3
Right-of-use assets 80.6 96.5
Investment properties 60.4 49.6
Investments in and loans to joint ventures 82.3 98.9
Capitalised mobilisation costs 11.6 3.8
Deferred tax assets 6 108.8 138.0
Contract assets 31.2 30.7
Trade and other receivables 17.0 24.1
Retirement benefit assets 5 199.2 87.2
Other financial assets 8.5 11.4
-------------------------------------------- ---- --------- ---------
Non-current assets 1,301.4 1,280.7
-------------------------------------------- ---- --------- ---------
Current assets
Inventories 56.8 54.7
Contract assets 366.3 335.7
Trade and other receivables 202.9 203.1
Corporation tax receivable 10.0 13.6
Other financial assets 3.7 2.0
Cash and cash equivalents 10 297.7 391.2
-------------------------------------------- ---- --------- ---------
Current assets 937.4 1,000.3
-------------------------------------------- ---- --------- ---------
Total assets 2,238.8 2,281.0
-------------------------------------------- ---- --------- ---------
Current liabilities
Borrowings 10 (40.5) (38.2)
Lease liabilities (25.9) (27.4)
Trade and other payables 11 (1,065.7) (1,093.1)
Contract liabilities (67.3) (59.9)
Provisions (22.2) (14.9)
-------------------------------------------- ---- --------- ---------
Current liabilities (1,221.6) (1,233.5)
-------------------------------------------- ---- --------- ---------
Non-current liabilities
Borrowings 10 (266.5) (362.3)
Lease liabilities (131.7) (136.4)
Trade and other payables 11 (34.1) (39.9)
Retirement benefit obligations 5 (4.5) (41.0)
Provisions (25.8) (32.9)
Non-current liabilities (462.6) (612.5)
-------------------------------------------- ---- --------- ---------
Total liabilities (1,684.2) (1,846.0)
-------------------------------------------- ---- --------- ---------
Net assets 2 554.6 435.0
-------------------------------------------- ---- --------- ---------
Equity
Share capital 15 4.5 4.5
Share premium 684.3 684.3
Capital redemption reserve 2.7 2.7
Accumulated losses (494.9) (610.8)
Cash flow hedge reserve (0.9) (0.1)
Translation reserve 8.9 5.0
Merger reserve 15 350.6 350.6
-------------------------------------------- ---- --------- ---------
Equity attributable to owners of the parent 555.2 436.2
Non-controlling interests (0.6) (1.2)
-------------------------------------------- ---- --------- ---------
Total equity 554.6 435.0
-------------------------------------------- ---- --------- ---------
Financial statements
Condensed consolidated statement of cash flows
For the year ended 30 June 2022
2022 2021
Note GBPm GBPm
---------------------------------------------------------- ---- ------- -------
Cash flows from operating activities
Profit/(loss)
before tax * continuing operations 15.9 5.6
* discontinued operations - (24.6)
Net finance cost 4 29.2 38.1
Share of post-tax trading results of joint ventures (26.6) 0.3
Difference between pension funding contributions
paid and the pension cost (credit)/charge (0.4) 0.7
Equity-settled share-based payments charge 14 8.6 7.0
Amortisation and impairment of intangible assets
and mobilisation costs 30.3 30.9
Reversal of impairment of assets held for sale
and intangible assets - (5.4)
Change in fair value of investment properties (0.2) 0.3
Research and development expenditure credit 6 (20.7) (13.3)
Depreciation and impairment of property, plant
and equipment 10.7 6.4
Depreciation and impairment of right-of-use assets 35.2 33.7
Loss on disposal of joint ventures and subsidiaries - 12.1
Loss/(profit) on disposal of property, plant and
equipment and intangible assets 0.8 (0.2)
---------------------------------------------------------- ---- ------- -------
Operating cash inflows before movements in working
capital and pension deficit contributions 82.8 91.6
Deficit contributions to pension funds 5 (10.8) (37.0)
(Increase)/decrease in inventories (2.1) 3.9
Decrease in receivables 7.3 43.0
Increase in contract assets (31.6) (95.3)
(Decrease)/increase in payables (12.4) 100.7
Increase/(decrease) in contract liabilities 7.4 (48.8)
Increase/(decrease) in provisions 0.2 (31.3)
---------------------------------------------------------- ---- ------- -------
Cash inflow from operating activities 40.8 26.8
Dividends received from joint ventures 32.5 6.3
Interest received 4 0.7 3.7
Income tax received - 11.2
---------------------------------------------------------- ---- ------- -------
Net cash inflow from operating activities 74.0 48.0
---------------------------------------------------------- ---- ------- -------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 4.2 2.5
Proceeds from sale of subsidiaries and joint ventures,
net of cash disposed - 120.8
Purchase of property, plant and equipment (6.0) (3.3)
Purchase of intangible assets 9 (0.7) (3.1)
Purchase of capitalised mobilisation costs (10.2) (3.5)
Investment in joint ventures (16.8) (9.2)
Loan repayment and return of equity from joint
ventures 27.5 9.3
Net cash (used)/from investing activities (2.0) 113.5
---------------------------------------------------------- ---- ------- -------
Cash flows from financing activities
Issue of shares net of associated transaction
costs 15 (6.1) 224.8
Issue of shares to non-controlling interest 0.6 -
Purchase of own shares (7.0) (0.5)
Interest paid (28.8) (28.4)
Principal elements of lease payments (33.8) (39.6)
Repayment of borrowings (101.8) (337.4)
Settlement of derivative financial instruments 7.5 -
Net cash used in financing activities (169.4) (181.1)
---------------------------------------------------------- ---- ------- -------
Decrease in cash, cash equivalents and overdraft (97.4) (19.6)
Effect of change in foreign exchange rates 3.9 (3.1)
Opening cash, cash equivalents and overdraft 391.2 413.9
---------------------------------------------------------- ---- ------- -------
Closing cash, cash equivalents and overdraft 10 297.7 391.2
---------------------------------------------------------- ---- ------- -------
Supplementary information
Adjusted cash flow from operating activities 3(g) 82.0 98.9
---------------------------------------------------------- ---- ------- -------
Financial statements
Notes to the condensed consolidated financial statements
For the year ended 30 June 2022
1 Significant 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 Company's registered number is 2708030.
The address of its registered office is 2(nd) Floor, Optimum House,
Clippers Quay, Salford, M50 3XP.
The preliminary consolidated financial statements (financial
statements) for the year ended 30 June 2022 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 July 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.
These preliminary results have been prepared in accordance with
the Disclosure Guidance and Transparency Rules of the UK Financial
Conduct Authority and in accordance with the UK-adopted
International Accounting Standards effective for accounting periods
beginning on or after 1 July 2021 and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
The financial information contained in this announcement does
not constitute the Company's statutory accounts as at and for the
year ended 30 June 2022, but is derived from those statutory
accounts. The Company's statutory accounts as at and for the year
ended 30 June 2022 will be delivered to the Registrar or Companies
following the Company's Annual General Meeting on 17 November
2022.
The Directors continue to adopt the going concern basis in
preparing the Group's financial statements.
The Group performed well through the year ended 30 June 2022 and
produced results in line with the Board's expectations. Average net
debt compared to the prior year 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 30 June 2022 increased to GBP9.8bn (2021:
GBP7.7bn).
As at 30 June 2022, the Group had GBP654.0m of unsecured
committed facilities and GBP18.0m of uncommitted overdrafts.
Additionally, as at 30 June 2022, the Group had invoices
outstanding to the value of GBP49.8m under uncommitted supply chain
financing facilities ('KEPS'). As from 10 July 2022, the Group had
no outstanding invoices under th e KEPS facilities.
Financial covenant certificates for June 2022 have been prepared
with no breaches noted. The Directors have reviewed the Group's
cash flow forecasts for the period to 31 December 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 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 future challenges in respect of ongoing projects;
- The availability of supply-chain finance;
- Project inflation and subcontractor insolvency;
- Reduced investment/delays in Property transactions and cost of
adoption of green legislation; and
- Plausible changes in the interest rate environment.
The Board also continues to monitor the ongoing impact of
COVID-19, however at present the risk of ongoing material impact
has been deemed low.
The Board also considered the macroeconomic and political risks
affecting the UK economy, including the availability of labour,
increased supply chain costs and increased interest rates. 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 infrastructure, health, education and utilities, which are
considered likely to remain largely unaffected by macroeconomic
factors. Although inflationary pressures remain a risk, both in the
supply chain and the labour market, this is partly mitigated by
c.60% of contracts being target cost or cost plus.
The Board has also considered the potential impact of climate
change and does not consider the Group's operations are at risk
from physical climate-related risks such as hurricanes and
temperature changes in the short term. In the medium term the Board
has concluded that any adverse financial impacts from required
changes to operations in line with ESG requirements will 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. As such, the longevity of the Group's business model
means that climate change has no material adverse impact on going
concern.
Having reviewed the Group's cash flow forecasts, the Directors
consider that 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 also note that 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
financial statements and, for this reason, they continue to adopt
the going concern basis in preparing these financial
statements.
Changes in significant accounting policies
Following the introduction of IFRS 9, which was effective from 1
July 2018, the Group chose to continue to apply the hedge
accounting requirements of IAS 39. The Group has elected to adopt
the general hedge accounting model in IFRS 9, with effect from 1
July 2021. This requires the Group to ensure that hedge accounting
relationships are aligned with its risk management objectives and
strategy, and to apply a more qualitative and forward-looking
approach to assessing hedge effectiveness.
The Group uses forward foreign exchange contracts to hedge the
variability in cash flows arising from changes in foreign exchange
rates relating to foreign currency borrowings. The Group's risk
management strategies and hedge documentation are aligned with the
requirements of IFRS 9. All hedging relationships designated under
IAS 39 at 30 June 2021 met the criteria for hedge accounting under
IFRS 9 at 1 July 2021 and are therefore regarded as continuing
hedging relationships.
The transition from IAS 39 to IFRS 9 hedge accounting
requirements has not had a material effect on the Group's financial
statements.
2 Segmental reporting
Year to 30 June 2022
Infrastructure
Services Construction Property Corporate Group
Continuing operations GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- ------------ -------- --------- ---------
Revenue1
Group and share of joint ventures 1,666.6 1,440.8 144.3 4.8 3,256.5
Less share of joint ventures - (3.1) (109.5) - (112.6)
----------------------------------------- -------------- ------------ -------- --------- ---------
Group revenue 1,666.6 1,437.7 34.8 4.8 3,143.9
----------------------------------------- -------------- ------------ -------- --------- ---------
Timing of revenue1
Products and services transferred
at a point in time 5.3 1.5 90.7 - 97.5
Products and services transferred
over time 1,661.3 1,439.3 53.6 4.8 3,159.0
----------------------------------------- -------------- ------------ -------- --------- ---------
Group and share of joint ventures 1,666.6 1,440.8 144.3 4.8 3,256.5
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit for the year
Operating profit/(loss) before adjusting
items2 70.0 60.8 17.6 (27.9) 120.5
Adjusting items2 (21.9) (39.0) (0.9) (13.6) (75.4)
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit/(loss) from operations 48.1 21.8 16.7 (41.5) 45.1
Net finance income/(costs)3 2.1 (4.1) (1.6) (25.6) (29.2)
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit/(loss) before tax from continuing
operations 50.2 17.7 15.1 (67.1) 15.9
----------------------------------------- -------------- ------------ -------- --------- ---------
Taxation (3.2)
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit for the year from continuing
operations 12.7
----------------------------------------- -------------- ------------ -------- --------- ---------
Result for the year from discontinued
operations -
----------------------------------------- -------------- ------------ -------- --------- ---------
Profit for the year 12.7
----------------------------------------- -------------- ------------ -------- --------- ---------
Balance sheet
Operating assets4 925.5 442.6 144.0 416.8 1,928.9
Operating liabilities4 (466.0) (706.2) (25.9) (179.1) (1,377.2)
----------------------------------------- -------------- ------------ -------- --------- ---------
Net operating assets/(liabilities)4 459.5 (263.6) 118.1 237.7 551.7
Cash, cash equivalents and borrowings 440.2 504.0 (90.3) (863.2) (9.3)
Net financial assets - - - 12.2 12.2
----------------------------------------- -------------- ------------ -------- --------- ---------
Net assets/(liabilities) 899.7 240.4 27.8 (613.3) 554.6
----------------------------------------- -------------- ------------ -------- --------- ---------
Other information
Inter-segmental revenue 25.7 - - 43.6 69.3
Capital expenditure on property, plant,
equipment and intangible assets 2.6 0.4 - 3.7 6.7
Depreciation of property, plant and
equipment (0.9) (0.4) (0.2) (5.1) (6.6)
Amortisation of computer software (0.7) (1.2) - (4.1) (6.0)
----------------------------------------- -------------- ------------ -------- --------- ---------
Year to 30 June 2021
Infrastructure
Services Construction Property Corporate Group
Continuing operations GBPm GBPm GBPm GBPm GBPm
----------------------------------------- -------------- ------------ -------- --------- ---------
Revenue1
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
----------------------------------------- -------------- ------------ -------- --------- ---------
Timing of revenue1
Products and services transferred
at a point in time 5.2 9.2 59.0 - 73.4
Products and services transferred
over time 1,416.4 1,759.9 74.6 4.2 3,255.1
----------------------------------------- -------------- ------------ -------- --------- ---------
Group and share of joint ventures 1,421.6 1,769.1 133.6 4.2 3,328.5
----------------------------------------- -------------- ------------ -------- --------- ---------
Loss for the year
Operating profit/(loss) before adjusting
items2 65.3 56.7 5.7 (27.4) 100.3
Adjusting items2 (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 costs3 - (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 assets4 945.3 459.6 167.0 304.5 1,876.4
Operating liabilities4 (457.0) (749.0) (24.0) (215.5) (1,445.5)
----------------------------------------- -------------- ------------ -------- --------- ---------
Net operating assets/(liabilities)4 488.3 (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) 835.0 191.3 16.6 (607.9) 435.0
----------------------------------------- -------------- ------------ -------- --------- ---------
Other information
Inter-segmental revenue 20.1 0.3 - 46.7 67.1
Capital expenditure on property,
plant, equipment and intangible
assets 1.7 0.5 - 4.2 6.4
Depreciation of property, plant
and equipment (1.2) (0.8) - (4.4) (6.4)
Amortisation of computer software (0.4) (1.3) - (6.6) (8.3)
----------------------------------------- -------------- ------------ -------- --------- ---------
(1) Revenue is stated after the exclusion of inter-segmental
revenue. Over 90% of the Group's revenue is derived from UK-based
customers. 11% of the Group's revenue was received from National
Highways (2021: 12%). Group revenue including joint ventures is an
alternative performance measure.
(2) See note 3 for adjusting items.
(3) Interest was (charged)/credited to the divisions at a
notional rate of 4.0%.
(4) Net operating assets/(liabilities) represent assets
excluding cash, cash equivalents, bank overdrafts, borrowings,
financial assets and liabilities, and interest-bearing
inter-company loans.
3 Adjusting items
These items are explained in detail below:
Profit before
Operating profit tax
---------------------- -------------------
2022 2021 2022 2021
GBPm GBPm GBPm GBPm
------------------------------------------- ---------- ---------- --------- --------
Reported profit from continuing operations 45.1 43.7 15.9 5.6
Amortisation of acquired intangible assets 19.7 21.0 19.7 21.0
Restructuring and related charges 40.0 31.6 40.0 31.6
Preparation for business divestment or
closure - 0.5 - 0.5
Other(1) 15.7 3.5 18.5 6.7
------------------------------------------- ---------- ---------- --------- --------
Adjusted profit from continuing operations 120.5 100.3 94.1 65.4
------------------------------------------- ---------- ---------- --------- --------
(1) Operating profit adjusting items exclude net financing costs
of GBP2.8m (2021: GBP3.2m), see note 3(d).
(a) Amortisation of acquired intangible assets
The Group has amortised contract rights, acquired primarily
through the acquisitions of MRBL Limited (Mouchel Group), May
Gurney Integrated Services PLC and McNicholas Construction Holdings
Limited.
2022 2021
Note GBPm GBPm
------------------------------------------- ---- ------ ------
Amortisation of acquired intangible assets 9 (19.7) (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 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.
2022 2021
GBPm GBPm
--------------------------------------------------- ------ ------
Restructure of Regional Southern Build business1 (22.2) (13.6)
Redundancy and other people related costs2 (6.5) (5.4)
Professional adviser fees and other costs incurred
implementing non-people initiatives3 (7.1) (11.9)
Impairments and other costs relating to investment
properties4 (4.2) (0.7)
---------------------------------------------------- ------ ------
Total charge before tax (40.0) (31.6)
---------------------------------------------------- ------ ------
(1) The Group has completed its strategic restructuring of its
Regional Southern Build business. The current year costs
predominantly relate to five remaining projects. These projects are
due to complete in FY23 although no additional cost is expected to
be incurred. 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 of GBP4.7m 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. The current year charge
also includes GBP1.8m of costs incurred in the re-sizing of the
International operations. The Directors consider this to be an
adjusting item due to its nature and size.
(3) This includes a credit of GBP1.1m as a result of the
finalisation of costs incurred on the equity raise in the prior
year. This is offset by GBP3.8m of aborted acquisition costs and
GBP4.4m of various other non-people related initiatives undertaken
in the year.
(4) Includes an impairment of GBP5.2m in respect of a corporate
property in Fountain Street, Manchester, which was vacated during
the year and is now held as an investment property. Following a
fire, the land at a recycling plant has been transferred to
investment property and has been included at fair value, which has
resulted in a GBP0.7m credit. Also included is a further GBP2.0m
credit in relation to fair value adjustments to Tempsford Hall and
net costs in respect of other investment properties of GBP1.7m.
(c) Costs incurred in 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.
2022 2021
GBPm GBPm
-------------------------------------------- ----- -----
Business closure and sales costs - (3.5)
Fair value reversal of assets held for sale - 3.0
--------------------------------------------- ----- -----
Total charge before tax - (0.5)
--------------------------------------------- ----- -----
(d) Other adjusting items
Other adjusting items are analysed below:
2022 2021
GBPm GBPm
--------------------------------------------------- ------ -----
Net financing costs1 (2.8) (3.2)
Legal compliance2 (8.8) (3.0)
Recycling Plant impairment and associated costs(3) (5.2) -
Software impairment4 (2.2) -
Pension credit/(charge) 5 0.5 (0.5)
---------------------------------------------------- ------ -----
Total charge before tax (18.5) (6.7)
---------------------------------------------------- ------ -----
(1) Net financing costs relate to IFRS 16 interest charges on
investment properties.
(2) The Group has incurred GBP7.8m of costs in the year in
complying with the updated fire compliance regulations. Of these
amounts, GBP5.2m are provided for at year-end. The remaining charge
relates to a settlement made in respect of an out of period claim
that was notified during the year and so was treated as an
adjusting item.
(3) During the year, 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.
(4) During the year, the Group impaired some software related to
one of its design businesses. This impairment has been treated as
an adjusting item due to its nature.
(5) During the year, a Pension Increase Exchange ('PIE')
exercise was undertaken which generated a GBP0.5m credit to the
income statement. In the prior year, a charge of GBP0.5m in respect
of GMP was incurred.
(e) Taxation
Adjusting items in respect of taxation are analysed below:
2022 2021
GBPm GBPm
---------------------------------------------- ----- -----
Deferred tax credit as a result of the change
in tax rate1 5.1 25.5
Tax impact of adjusting items2 14.8 12.2
Other tax charges3 (3.6) (6.0)
----------------------------------------------- ----- -----
Total tax credit 16.3 31.7
----------------------------------------------- ----- -----
(1) In the prior year, 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. During the year, the Group
now expects additional amounts to reverse at the 25% tax rate.
(2) The tax impact of the adjusting items charged to continuing
operations has also been included as an adjusting item.
(3) During the year, historical tax balances were identified
mainly as a result of historic acquisitions and were written off.
In the prior year, 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
The Group disposed of Kier Living in May 2021. Adjusting items
within discontinued operations in relation to this disposal are
analysed below:
2022 2021
GBPm GBPm
----------------------------------------------- ----- ------
Loss on disposal of Kier Living - (12.1)
Closure costs relating to non-core businesses1 - (1.0)
Charges in relation to the Eastern region2 - (6.5)
Other disposal related costs3 - (5.2)
Total charge before tax - (24.8)
------------------------------------------------ ----- ------
Tax on adjusting items (discontinued) - 0.5
------------------------------------------------ ----- ------
Total charge after tax - (24.3)
------------------------------------------------ ----- ------
(1) Prior year 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 year, the Group identified GBP6.5m of historic costs within a
Kier Living joint venture that had built up in prior years 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 year included
management incentives and impairment charges as a result of the
disposal of Kier Living.
(g) Adjusted cash flow
2022 2021
GBPm GBPm
------------------------------------------------------- --------- ---------
Reported cash inflow from operating activities 40.8 26.8
Add: Cash outflow from operating activities (adjusting
items) 41.2 72.1
-------------------------------------------------------- --------- ---------
Adjusted cash inflow from operating activities 82.0 98.9
-------------------------------------------------------- --------- ---------
(h) Cash outflow from operating activities (adjusting items)
2022 2021
GBPm GBPm
---------------------------------------------------- ---------- ----------
Adjusting items reported in the income statement 78.2 84.7
Less: non-cash items incurred in the year (38.4) (45.3)
Add: payment of prior year accruals and provisions 1.4 21.2
Add: disposal fees included within loss on disposal - 11.5
----------------------------------------------------- ---------- ----------
Cash outflow from operating activities (adjusting
items) 41.2 72.1
----------------------------------------------------- ---------- ----------
4 Finance income and costs
2022 2021
GBPm GBPm
------------------------------------------------------- ---------- ----------
Finance income
Interest receivable on loans to related parties 0.7 3.7
------------------------------------------------------- ---------- ----------
0.7 3.7
------------------------------------------------------- ---------- ----------
Finance costs
Bank interest (18.9) (23.2)
Interest payable on leases (6.5) (6.7)
Forward funding interest1 (0.5) (8.8)
Foreign exchange (losses)/gains on foreign denominated
borrowings (9.9) 15.0
Fair value gains/(losses) on cash flow hedges recycled
from other comprehensive income(2) 7.4 (15.0)
Discount unwind3 (0.7) (1.1)
Net interest on net defined benefit obligation 1.0 0.9
Recycling of translation reserve - (0.1)
Other (1.8) (2.8)
------------------------------------------------------- ---------- ----------
(29.9) (41.8)
------------------------------------------------------- ---------- ----------
Net finance costs (29.2) (38.1)
------------------------------------------------------- ---------- ----------
(1) The forward funding interest costs of GBP8.8m in the year to
30 June 2021 reflected an alignment of the accounting treatment
across all forward funding development contracts. The charge of
GBP8.8m included GBP3.9m which represented 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 was
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.
(2) Foreign exchange gains/(losses) arise from movements in
cross-currency swaps which hedge the currency risk on foreign
denominated borrowings.
(3) Unwind of discount in respect of acquired intangible
assets.
5 Retirement benefit obligations
The principal assumptions used by the independent qualified
actuaries are shown below.
2022 2021
% %
-------------------------------------- ---- ----
Discount rate 3.90 1.90
Inflation rate (Retail Price Index) 3.15 3.15
Inflation rate (Consumer Price Index) 2.65 2.60
-------------------------------------- ---- ----
The amounts recognised in the financial statements in respect of
the Group's defined benefit schemes are as follows:
2022 2021
------- -------- --------- --------- -------- ---------
Kier Acquired Kier Acquired
Group schemes Total Group schemes Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ------- -------- --------- --------- -------- ---------
Opening net surplus/(deficit) 78.6 (32.4) 46.2 89.8 (51.0) 38.8
Credit/(charge) to income
statement 1.5 (0.1) 1.4 1.1 (0.9) 0.2
Employer contributions 0.5 10.3 10.8 13.9 23.1 37.0
Actuarial gains/(losses) 89.6 46.7 136.3 (26.2) (3.6) (29.8)
-------------------------------------- ------- -------- --------- --------- -------- ---------
Closing net surplus/(deficit) 170.2 24.5 194.7 78.6 (32.4) 46.2
-------------------------------------- ------- -------- --------- --------- -------- ---------
Comprising:
Fair value of scheme assets 1,048.0 509.0 1,557.0 1,273.2 636.7 1,909.9
Net present value of the
defined benefit obligation (877.8) (484.5) (1,362.3) (1,194.6) (669.1) (1,863.7)
Net surplus/(deficit) 170.2 24.5 194.7 78.6 (32.4) 46.2
-------------------------------------- ------- -------- --------- --------- -------- ---------
Presentation of net surplus/(deficit)
in the Consolidated balance
sheet:
Retirement benefit assets 170.2 29.0 199.2 78.6 8.6 87.2
Retirement benefit obligations - (4.5) (4.5) - (41.0) (41.0)
-------------------------------------- ------- -------- --------- --------- -------- ---------
Net surplus/(deficit) 170.2 24.5 194.7 78.6 (32.4) 46.2
-------------------------------------- ------- -------- --------- --------- -------- ---------
6 Taxation
2022 2021
GBPm GBPm
-------------------------------------------------- ------- ------
Profit before tax 15.9 5.6
Add: tax on joint ventures included above 0.1 (1.4)
-------------------------------------------------- ------- ------
Adjusted profit/(loss) before tax 16.0 4.2
-------------------------------------------------- ------- ------
Current tax (8.5) (5.2)
Deferred tax 5.3 22.6
Total tax (charge)/credit in the income statement (3.2) 17.4
Tax on joint ventures (0.1) 1.4
-------------------------------------------------- ------- ------
Total tax (including joint ventures) (3.3) 18.8
-------------------------------------------------- ------- ------
Effective tax rate (20.6%) 447.6%
-------------------------------------------------- ------- ------
The Deferred Tax Asset includes GBP105.6m of tax losses (2021:
GBP108.6m), and GBP3.2m of other deferred tax assets and
liabilities (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 and goodwill
impairment assessments.
The following evidence has been considered when assessing
whether these forecasts are achievable and realistic:
The business traded in line with Board expectations in 2022;
The Group has substantially completed its restructuring
activities and is focusing on the achievement of the medium-term
growth strategy; 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 10 years.
The Research and Development Expenditure Credit (RDEC) of
GBP20.7m was included in operating profit during the year (2021:
GBP13.3m). Included in the corporation tax asset at 30 June 2022
were RDEC receivables of GBP12.0m (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 year (2021: GBPnil).
8 Earnings per share
a) Reconciliation of earnings used in calculating earnings per share
Profit attributable to the ordinary equity holders of the
company used in calculating basic earnings per share.
2022 2021
Note GBPm GBPm
------------------------------------------------------- ------ -------- --------
Continuing operations
Profit for the year from continuing operations 12.7 23.0
Less: non-controlling interest share - 1.3
------------------------------------------------------- ------ -------- --------
Profit (after tax and minority interests), being
net gains attributable to equity holders of the
parent (A) 12.7 24.3
------------------------------------------------------- ------ -------- --------
Adjusting items (excluding tax) 3 78.2 59.8
Tax impact of adjusting items 3 (16.3) (31.7)
Adjusted profit after tax from continuing operations
(B) 74.6 52.4
------------------------------------------------------- ------ -------- --------
Discontinued operations
Loss (after tax and non-controlling interests),
being net loss attributable to equity holders
of the parent (C) - (24.6)
------------------------------------------------------- ------ -------- --------
b) Weighted average number of shares used as the denominator
2022 2021
million million
Weighted average number of shares used as the
denominator in calculating basic earnings per
share (D) 443.3 210.3
Adjustments for calculation of diluted earnings
per share
Impact of share options 11.8 2.0
---------------------------------------------------- ---------- ----------
Weighted average number of shares used as the
denominator in calculating diluted earnings per
share (E) 455.1 212.3
---------------------------------------------------- ---------- ----------
Options granted to employees under the Sharesave, CSAP and LTIP
schemes are considered to be potential ordinary shares. They have
been included in the determination of diluted earnings per share if
the required performance obligations would have been met based on
the Group's performance up to the reporting date, and to the extent
to which they are dilutive. The options have not been included in
the determination of basic earnings per share. Details relating to
the share option schemes are set out in note 14.
c) Basic earnings per share
2022 2021
pence pence
From continuing operations attributable to the
ordinary equity holders of the company (A/D) 2.9 11.6
From discontinued operations (C/D) - (11.7)
Total basic earnings per share attributable to
the ordinary equity holders of the company 2.9 (0.1)
---------------------------------------------------- -------- --------
Adjusted from continuing operations attributable
to the ordinary equity holders of the company
(B/D) 16.8 25.0
---------------------------------------------------- -------- --------
d) Diluted earnings per share
2022 2021
pence pence
From continuing operations attributable to the
ordinary equity holders of the company (A/E) 2.8 11.4
From discontinued operations (C/E) - (11.5)
Total diluted earnings per share attributable
to the ordinary equity holders of the company 2.8 (0.1)
---------------------------------------------------- -------- --------
Adjusted from continuing operations attributable
to the ordinary equity holders of the company
(B/E) 16.4 24.6
---------------------------------------------------- -------- --------
9 Intangible assets
Intangible
contract Computer
Goodwill rights software1 Total
GBPm GBPm GBPm GBPm
--------------------------------------------- -------- ---------- ---------- -------
Cost
At 1 July 2020 538.8 259.4 125.4 923.6
Additions - - 3.1 3.1
Disposals - - (1.1) (1.1)
Transfers from property, plant and equipment - - 0.9 0.9
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2021 538.8 259.4 128.3 926.5
--------------------------------------------- -------- ---------- ---------- -------
Prior year reclassification(2) - - 4.5 4.5
--------------------------------------------- -------- ---------- ---------- -------
At 1 July 2021 538.8 259.4 132.8 931.0
--------------------------------------------- -------- ---------- ---------- -------
Additions - - 0.7 0.7
Disposals - (7.2) (0.9) (8.1)
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2022 538.8 252.2 132.6 923.6
--------------------------------------------- -------- ---------- ---------- -------
Accumulated amortisation and impairment
At 1 July 2020 (2.1) (134.7) (66.2) (203.0)
Charge for the year - (21.0) (8.3) (29.3)
Impairment reversal - - 2.4 2.4
Disposals - - 0.6 0.6
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2021 (2.1) (155.7) (71.5) (229.3)
--------------------------------------------- -------- ---------- ---------- -------
Prior year reclassification(2) - - (4.5) (4.5)
--------------------------------------------- -------- ---------- ---------- -------
At 1 July 2021 (2.1) (155.7) (76.0) (233.8)
--------------------------------------------- -------- ---------- ---------- -------
Charge for the year - (19.7) (6.0) (25.7)
Disposals - 7.2 - 7.2
Impairment - - (2.2) (2.2)
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2022 (2.1) (168.2) (84.2) (254.5)
--------------------------------------------- -------- ---------- ---------- -------
Net book value
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2022 536.7 84.0 48.4 669.1
--------------------------------------------- -------- ---------- ---------- -------
At 30 June 2021 536.7 103.7 56.8 697.2
--------------------------------------------- -------- ---------- ---------- -------
(1) Computer software mainly relates to the Group's ERP software
and is being amortised.
(2) Prior year reclassification amends fully depreciated
software disposals which were overstated in previous reporting
periods. There was no impact on the consolidated balance sheet.
10 Net cash
2022 2021
GBPm GBPm
------------------------------------------------------ ------- -------
Cash and cash equivalents - bank balances and cash in
hand 297.7 391.2
Borrowings due within one year (40.5) (38.2)
Borrowings due after one year (266.5) (362.3)
Impact of cross-currency hedging 12.2 12.3
------------------------------------------------------ ------- -------
Net cash 2.9 3.0
------------------------------------------------------ ------- -------
Average month-end net debt was GBP216.1m (2021: GBP431.9m). Net
debt excludes lease liabilities.
11 Trade and other payables
2022 2021
GBPm GBPm
-------------------------------------- --------- ---------
Current:
Trade payables1 354.2 330.3
Sub-contract retentions 32.7 39.1
Other taxation and social security2 122.1 144.2
Other payables 28.9 47.3
Accruals 527.4 531.8
Deferred income 0.4 0.4
-------------------------------------- --------- ---------
1,065.7 1,093.1
-------------------------------------- --------- ---------
Non-current:
Trade payables 11.0 14.1
Sub-contract retentions 23.1 25.8
-------------------------------------- --------- ---------
34.1 39.9
-------------------------------------- --------- ---------
(1) Included within the trade payables balance is GBP49.8m
(2021: GBP79.1m) relating to payments due to suppliers who are on
bank-supported supply chain finance arrangements.
(2) As at 30 June 2022, there was no remaining tax deferred
under the Government's COVID-19 support schemes (2021:
GBP20.8m).
12 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 initially measured at
fair value, based on the premium received from the joint venture or
the differential in the interest rate of the borrowing including
and excluding the guarantee. Subsequent to initial recognition,
financial guarantee contracts are measured at the higher of the
initial fair value measurement (adjusted for any income amounts
recognised) and the amount determined in accordance with the
expected credit loss model. 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.
As at 30 June 2022, the Group had contingent assets of GBP3.2m
(2021: GBP4.5m) in relation to claims against third parties for the
reimbursement of costs on construction contracts. Under IAS 37
these amounts may only be recognised when the economic benefit
arising from the claims is virtually certain. It is probable that
these amounts will be recognised in future periods when the
uncertainty over their recoverability has been removed.
Fire and cladding review
The Group has undertaken a review of all of its current and
legacy constructed buildings where it has used cladding solutions
and continues to assess the action required in line with the latest
updates to Government guidance, as it applies, to multi-storey and
multi-occupied residential buildings. The buildings, including the
cladding works, were signed off by approved inspectors as compliant
with the relevant Building Regulations at the time of
completion.
We recognise that Government guidance on the retrospective
review of building materials continues to evolve. In preparing the
financial statements, currently available information has been
considered, including the current best estimate of the extent and
future costs of work required, based on the reviews and physical
inspections undertaken.
Where an obligation has been established and a reliable estimate
of the costs to rectify is available, a provision has been made. No
provision has been made where an obligation has not been
established.
These estimates may be updated as further inspections are
completed and as work progresses or if Government legislation and
regulation further evolves.
13 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 for
the year ended 30 June 2021.
Details of contributions made to the pension schemes by the
Group are detailed in note 5.
14 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. Further details of the LTIP schemes were disclosed in the
2021 annual financial statements. No shares vested under the LTIP
schemes during the year (2021: no share awards vested). 8,570,392
new awards were granted under the LTIP during the year (2021:
17,856,246). Awards made to members of the Board are subject to a
two-year holding period post vesting.
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 year (2021: no awards granted). 650,951 shares
vested under the CSAP during the year (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 (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 year (2021:
8,634,038). 75,983 Sharesave Scheme options were exercised during
the year (2021: no share options were exercised).
The assumptions used in calculating the fair values of the
shares granted under the share-based payment schemes during the
year were as follows:
LTIP
subject
to a holding
LTIP period LTIP Sharesave
------------------------------------------ ---------- ------------- --------- ----------
28 October 28 October 20 April 29 October
Grant date 2021 2021 2022 2021
Shares granted 5,951,091 2,313,430 305,871 7,943,643
Share price at grant 108.4p 108.4p 80.8p 106.8p
Exercise price nil nil nil 96.0p
Expected term 3 years 3 years 2.5 years 3.3 years
Holding period n/a 2 years n/a n/a
Expected volatility 83.2% 66.6% 83.2% 82.7%
Risk-free interest rate 0.7% 0.8% 0.7% 0.7%
Dividend yield n/a n/a n/a 0.0%
Value per option:
LTIP - TSR element (25%)(1,3) 85.2p 76.3p 63.5p -
LTIP - EPS (50%) and free cash flow (FCF)
(25%) elements (2,3) 108.4p 97.0p 80.8p -
Sharesave (2) - - - 61.9p
(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 year was GBP8.6m (2021: GBP7.0m).
15 Share capital and reserves
Share capital
The share capital of the Company comprises:
2022 2021
--------------------- ---------------------
Number GBPm Number GBPm
------------------------------------ ------------- ------ ------------- ------
Authorised, issued and fully paid
ordinary shares of 1 pence each 446,241,682 4.5 446,165,699 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 year, 75,983 shares were issued under the Sharesave
Scheme (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 30 June 2022 (30
June 2021: GBP6.1m unpaid).
Under the capital raise arrangements, 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
GBP134.8m of the merger reserve arose on the shares issued at a
premium to acquire May Gurney on 8 July 2013. The movement in the
prior year of GBP215.8m relates to the issue of new share capital
as described above.
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END
FR SFEEELEESEDU
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September 15, 2022 02:00 ET (06:00 GMT)
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