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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