TIDMKIE
RNS Number : 2582P
Kier Group PLC
15 October 2021
15 October 2021
Kier Group plc
Publication of the 2021 Annual Report and Notice of Annual
General Meeting
Kier Group plc (the "Company") announces that its annual general
meeting will be held at the offices of Linklaters LLP, One Silk
Street, London EC2Y 8HQ on Friday 19 November 2021 at 10.00 am.
The Company has today made available on its website
www.kier.co.uk the annual report and accounts for the year ended 30
June 2021 (the "Annual Report"), the Notice of Annual General
Meeting 2021 (the "AGM Notice") and the Notice of Availability.
These documents, together with the Proxy Form, will be submitted to
the National Storage Mechanism shortly, where they will be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . A hard
copy of the Annual Report and the AGM Notice have been posted to
shareholders who have requested them on or around 14 October
2021.
For the purposes of complying with Disclosure Guidance and
Transparency Rule ("DTR") 6.3.5R and the requirements it imposes on
issuers as to how to make public annual financial reports,
information has been extracted from the Annual Report in unedited
full text and is included in the Appendix to this announcement.
Page numbers and note references in the Appendix refer to page
numbers in the Annual Report and the notes to the Company's
consolidated financial statements for the year ended 30 June 2021
as included in the Annual Report. This information should be read
in conjunction with the Company's 2021 full-year results
announcement, released on 16 September 2021, which contained a
condensed set of financial statements and can be found at
https://www.kier.co.uk/investors/reports-results-presentations.
Together, these constitute the material required by DTR 6.3.5R
to be communicated to the media in unedited full text through a
Regulatory Information Service.
For enquiries, please contact:
Jaime Tham
Company Secretary
The Company's Legal Entity Identifier is
2138002RKCU2OM4Y7O48.
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 of
companies of which the Company is the holding company 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. 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. 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.
APPIX
PRINCIPAL RISKS AND UNCERTAINTIES
The Board's assessment of the principal risks and uncertainties
facing the Group and a summary of the potential impact and
mitigating actions are each summarised below. The risks are not
listed in any order of priority.
Principal Description Impact/actions
risk
1. Health Failure to maintain a Potential impact
and safety safe working environment * An increase in safety or environmental incidents on
and prevent a major incident site
The Group's operations
are inherently complex * The failure to meet clients' expectations, adversely
and potentially hazardous affecting the ability to bid for and win new work
and require the continuous
management of safety,
health and sustainability * Financial penalties arising from fines, legal action
issues. and project delays.
Mitigating actions
* Minimise the operational impact of relaxing
restrictions in the workplace and community
* Continued focus on the five basics of SHE risk
management
* Implementing the Group's new sustainability framework,
'Building for a Sustainable World'
* Setting a tone from the top, through activities such
as senior management visible leadership tours.
-------------------------------- ------------------------------------------------------------------
2. Legislation Failure to comply with Potential impact
and regulation and manage effectively * Penalties for failing to adhere to legislation or
current legislation and regulation
regulation and any changes
to them
* Increased operating costs of compliance
The sectors in which
the Group operates are
subject to increasing * The loss of business and resultant reputational
scrutiny from stakeholders, damage.
oversight from regulators
and requirements including
those introduced by new
legislation or regulation. Mitigating actions
* Appropriate policies that are regularly reviewed and
relevant training to support policy implementation
* Regular engagement with Government and Government
agencies with respect to the Group's performance
* Monitoring of, and planning for, the impact of new
legislation and regulations
* Collaborative engagement with external stakeholders.
-------------------------------- ------------------------------------------------------------------
3. Funding Failure to maintain adequate Potential impact
financial liquidity and/or * The loss of confidence by other stakeholders (for
comply with financial example, investors, clients, subcontractors and
covenants employees)
Failure to maintain adequate
financial liquidity and/or * Conducting existing business becomes increasingly
comply with financial challenging
covenants resulting in
an inability to execute
the Group's strategy * The loss of future business.
effectively.
Mitigating actions
* During the period, the Group completed a capital
raise, which together with the sale of Kier Living
raised c.GBP350m of gross proceeds for the Group. In
support of the capital raise the Group secured an
extension of a significant proportion of its
committed funding to 31 January 2025 providing the
Group with financial and operational flexibility to
continue to pursue its strategic objectives
* Effective cash forecasting and working capital
management in combination with continued monitoring
and prudent financial planning to ensure covenant
compliance is maintained
* Continued collaborative engagement with customers,
suppliers, HMRC, pension scheme trustees, banks,
lenders and sureties.
-------------------------------- ------------------------------------------------------------------
4. Maintaining A general market or sector Potential impact
an order downturn materially and * A failure of one or more of the Group's businesses
book within adversely affects the
selected Group's ability to secure
markets work - UK Government * Increased competition for new work
spending, certainty and
timing, including
competitiveness * A decrease in stakeholder confidence in the Group.
of current market
The Group strategy sets
out specific sectors Mitigating actions
that it wishes to trade * To continue to secure long-term frameworks within
within. The pipeline each of our business streams
of work could be adversely
affected by a general
or sector downturn or * Tailoring the Kier offer to meet customer needs
cause a delay to projects
going to site.
* Maintaining an efficient cost base.
The Group manages the
impact of an economic
downturn by building
a strong order book.
It concentrates on sectors
with long-term frameworks
and customers who prefer
repeat procurement.
-------------------------------- ------------------------------------------------------------------
5. Contract Failure to manage contracts Potential impact
management effectively at each stage * A failure to manage project delivery and WIP and,
of changes of a project's lifecycle. ultimately, to meet the Group's financial targets
The business suffers
a significant loss as
a result of failing to * The Group incurring losses on individual contracts
follow the contract
administration
* The Group failing to win new work.
The Group has a large
number of contracts in
progress at any one time.
Changes to contracts Mitigating actions
may lead to additional * To update the Kier standards for contract amendments
costs being incurred,
delays and delayed receipt
of cash. * To cascade the Commercial Handbook into the business
through webinars
* To implement the new Commercial Standards across the
Group.
-------------------------------- ------------------------------------------------------------------
6. People Failure to attract and Potential impact
retain key employees * An adverse effect on the delivery of the Group's
purpose and strategy
The Group's employees
are critical to its current
performance. The Group * A lack of operational leadership, potentially leading
needs to identify, retain to poor project performance
and motivate people with
the right skills, experience
and behaviours and to * An erosion of the Group's employer brand.
identify tomorrow's leaders.
Mitigating actions
* Diversity and Inclusion roadmap
* Wellbeing strategy
* New leadership development offer in place
* Create an effective, inclusive work environment,
through our Performance Excellence culture.
-------------------------------- ------------------------------------------------------------------
7. Supply Failure to maintain effective Potential impact
chain working relationships * Unavailability of appropriate resources, impacting on
with the supply chain project delivery and cost
and, as a result of COVID-19
bottlenecks and recovery,
supply chain insolvencies, * Use of suppliers from outside the preferred supplier
capacity, pricing, inflation list increases cost and decreases quality
volatility
The Group relies upon * Poor relationships lead to lack of confidence in the
its partners for the Group and adverse publicity.
delivery of its projects.
Maintaining a close working
relationship is a priority
for the Group. Mitigating actions
* To update the Kier subcontract to reflect the
principles of the Construction Playbook
* To place a Procurement Director directly into each
business to deliver their supply chain management
strategy
* To continue to meet prompt payment reporting
requirements.
-------------------------------- ------------------------------------------------------------------
8. Strategy Failure to deliver the Potential impact
Group's strategy * An adverse impact on the Group's net debt and
liquidity
The Group fails to deliver
its strategy in terms
of medium-term strategic * Failure to secure positions on national and regional
objectives - GBP4bn-4.5bn frameworks
turnover, 3.5% margin,
90% cash conversion and
a net cash balance. * Failure to meet stakeholders' expectations may lead
to a decline in confidence in the Group.
Mitigating actions
* Delivery of the balance sheet strategy
* Delivery of our Performance Excellence culture
* Continued focus on cash management
* Effective communication with stakeholders.
-------------------------------- ------------------------------------------------------------------
9. Cyber, Kier is exposed to cyber, Potential impact
IT Security IT security or data protection * Operational impact - e.g. delivery of projects, key
and data breaches systems outage, failure to win work, loss of
protection confidential and/or other data
(1) Failure to keep up to
date with modern attack
landscape as well as * Financial impact - regulatory fines/prosecutions
protecting from current
conventional cyber risks
could cause heavy reputational * Reputational/brand damage.
damage or financial fines.
Mitigating actions
* Vulnerabilities are understood and mitigated
* Certification to the Government's Cyber Essentials
Plus Scheme and ISO 27001
* Privileged access to all core systems subject to
multi-factor authentication; systems run security
agents for additional monitoring
* Advanced use of Microsoft Office 365, cloud and
collaboration services.
-------------------------------- ------------------------------------------------------------------
10. Climate Failure to identify and Potential impact
chan ge (1) effectively manage climate * Failure to meet client and investor expectations or
change risks and opportunities regulatory requirements
The Group's operations
are subject to physical * Loss of opportunity to contribute to UK climate
and financial climate action policy and direction
change risks, while climate
resilience measures offer
opportunities to innovate * Reputational damage
and expand/enhance
capabilities.
* Failure to prepare/plan for physical and financial
impacts of more extreme and frequent weather
conditions affecting operations and supply chain.
Mitigating actions
* Implementing the Group's new sustainability framework,
'Building for a Sustainable World', particularly:
o Net Zero Carbon pathway and
Science Based Targets
o Zero Avoidable Waste strategy
o Sustainable Procurement strategy
* Sustainability Leadership Forum ('SLF'); chaired by
our Chief Executive and supported by business stream
SLFs that are led by a managing director or
commercial director
* Developing the climate risk and opportunities
register and net zero management system to align with
TCFD reporting and managing the financial risk of
climate change
* Embracing modern methods of construction and product
innovation to deliver low-carbon solutions for
climate resilience.
-------------------------------- ------------------------------------------------------------------
(1 Risk introduced in 2021.)
Other risks
Brexit
The new UK-EU Trade and Cooperation Agreement ('TCA') removed
the uncertainty of a no-deal Brexit. While this has reduced the
Brexit risk, uncertainty remains around the full effect of Brexit,
and the ongoing impact this will have on our trading
relationships.
The Group continues to work with its supply chain to maintain
plans to ensure continuity of potentially critical supplies and
continues to monitor and refresh its contingency plans for
potential risk areas such as the workforce. We continue to work
with and update customers by providing up to date analysis on
availability and mitigation strategies of any resources that are
becoming under pressure.
COVID-19
The focus of the Group's management, and our colleagues,
throughout the unprecedented COVID-19 pandemic was ensuring that,
wherever it was safe to do so, the Group's activities remained safe
and operational.
The pandemic highlighted the need to be agile and flexible in
the way we operate and has brought about a fundamental shift in the
way we work. As a result of the lessons learnt during this time, we
have introduced the Kier way of working. In spite of the
significant challenge of the pandemic, the Group has delivered well
and has made significant progress on the 2019 operational and
financial turnaround strategy.
Whilst the COVID-19 pandemic had a continued negative effect on
the Group's results and operations, the impact has been effectively
managed across our operations through contractual arrangements and
extensive stakeholder engagement and communication.
The impact of the pandemic continues to be closely monitored by
the Board and the Executive Committee with particular focus on
maintenance of a safe working environment, supply chain, materials
continuity and availability of critical workforce. We continue to
be at the forefront of the sector approach to Site Operating
Procedures and safe working practices.
We will respond to any ongoing Government restrictions and
requirements and any further re-occurrence of the pandemic to
ensure continued compliance. We are maintaining a watching brief of
the extent and duration of lockdowns in Europe and will react
accordingly.
Emerging risks
The Group has identified the following as principal, emerging
risks:
-- Global recession
-- Ongoing COVID-19 bottlenecks and recovery impact
-- Continued development of the climate change risk agenda
-- Modern construction methods ('MCM') - embracing fast-paced
changes in construction methods, linked to digital pace of
change
-- Short-term concerns regarding the volatility of key commodity prices.
RELATED PARTY TRANSACTIONS
Identity of related parties
The Group has a related party relationship with its joint
ventures, key management personnel and pension schemes in which its
employees participate.
Transactions with key management personnel
The Group's key management personnel are the Executive and
Non-executive Directors as identified in the Directors'
remuneration report on pages 98 to 117.
In addition to their salaries, the Group also provides non-cash
benefits to Directors and contributes to their pension arrangements
as disclosed on page 102. Key management personnel also participate
in the Group's share option programme (see note 28).
Key management personnel compensation comprises:
2021 2020
GBPm GBPm
====================================================== ===== =====
Emoluments as analysed in the Directors' remuneration
report 2.9 2.2
Employer's national insurance contributions 0.4 0.3
====================================================== ===== =====
Total short-term employment benefits 3.3 2.5
Share-based payment charge 0.6 1.8
====================================================== ===== =====
3.9 4.3
------------------------------------------------------ ----- -----
Transactions with pension schemes
Details of transactions between the Group and pension schemes in
which its employees participate are detailed in note 9.
Transactions with joint ventures
2021 2020
GBPm GBPm
==================================== ===== =====
Construction services and materials 163.8 237.1
Staff and associated costs 7.9 10.2
Management services 12.1 13.4
Interest on loans to joint ventures 1.2 0.8
Plant hire 1.4 1.4
------------------------------------ ----- -----
186.4 262.9
------------------------------------ ===== =====
Equity loans due from joint ventures are analysed below:
2021 2020
GBPm GBPm
-------------------------------------- ----- -----
Solum Regeneration (Twickenham) LLP 16.2 14.5
Kier (Southampton) Investment Limited 12.2 10.0
Kier (Newcastle) Investment Ltd 11.1 10.1
Kier Trade City Holdco 1 LLP 10.1 17.6
Kier Richmond Holdings Limited 9.9 9.9
Solum Regeneration (Guildford) LLP 8.9 6.2
Watford Health Campus Partnership LLP 8.4 9.7
Solum Regeneration (Bishops) LLP 7.0 7.2
Kier Cornwall Street Holdings 1 LLP 6.5 6.5
Kier Cornwall Street Holdings 2 LLP 6.5 6.5
50 Bothwell Street Holdco 1 LLP 5.6 5.6
Kier Maidenhead Holdings 1 LLP 3.3 -
Winsford Holdings 1 LLP 2.4 2.4
Solum Regeneration (Kingswood) LLP 2.2 2.2
Solum Regeneration (Redhill) LLP 2.1 1.4
Solum Regeneration (Epsom) LP 1.5 1.4
Solum Regeneration (Maidstone) LLP 0.7 0.7
Solum Regeneration Holding 1 LLP 0.7 0.2
Solum Regeneration (Surbiton) LLP 0.4 0.3
Solum Regeneration Holding 2 LLP 0.2 0.2
Cross Keys Holdco 1 LLP(1) - 35.0
Kier Community Living Topco 1 LLP(1) - 32.1
Easingwold Holdco 1 LLP(1) - 4.7
Stokesley Holdco 1 LLP(1) - 4.2
Driffield Holdco 1 LLP(1) - 2.5
Solum Regeneration (Haywards) LLP - 0.1
Solum Regeneration (Walthamstow) LLP - 0.1
115.9 191.3
-------------------------------------- ----- -----
(1) Joint ventures disposed of as part of the sale of Kier
Living during the year, see note 33.
Trading balances and other loans due from/(to) joint ventures
are analysed below:
2021 2020
GBPm GBPm
----------------------------------------- ------ -----
Kier Cornwall Street LLP 0.8 -
Winsford Devco LLP 0.8 -
Kier (Southampton) Investment Limited 0.4 0.3
Dragon Lane LLP 0.3 0.1
Watford Health Campus Partnership LLP 0.3 -
Hackney Schools for the Future 2 Limited 0.2 0.6
Team Van Oord Limited 0.1 -
Kier Richmond Limited 0.1 -
Kier Maidenhead LLP (0.6) -
Lysander Student Operations Limited (0.6) -
Kier Trade City LLP (1.1) 0.1
Kier Community Living LLP(1) - 12.7
Kier Cross Keys Dev LLP(1) - 0.8
Stokesley Devco LLP(1) - 0.6
Easingwold Devco LLP(1) - 0.4
Driffield Devco LLP(1) - 0.2
Black Rock Devco LLP(1) - 0.1
0.7 15.9
----------------------------------------- ------ -----
(1) Joint ventures disposed of as part of the sale of Kier
Living during the year, see note 33.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
and Company's position and performance, business model and
strategy.
Each of the Directors, whose names and functions are listed in
Annual Report confirm that, to the best of their knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRSs as issued by the International Accounting
Standards Board (IASB), give a true and fair view of the assets,
liabilities, financial position and loss of the Group;
-- the Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
101, give a true and fair view of the assets, liabilities,
financial position and loss of the Company; and
-- the Directors' Report includes a fair review of the
development and performance of the business and the position of the
Group and Company, together with a description of the principal
risks and uncertainties that it faces.
In the case of each Director in office at the date the
Directors' Report is approved:
-- so far as the Director is aware, there is no relevant audit
information of which the Group's and Company's auditors are
unaware; and
-- they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Group's and Company's
auditors are aware of that information.
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