REG - Kier Group PLC - Results for the period ended 31 December 2024
11/03/2025 07:15
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RNS Number : 0896A Kier Group PLC 11 March 2025
11 March 2025
Kier Group plc
Results for the period ended 31 December 2024
Significant operational and financial progress; strong net cash position;
increased interim dividend
Kier Group plc ("Kier", the "Company" or the "Group"), a leading UK
infrastructure services, construction and property group, announces its
results for the six months ended 31 December 2024 ("HY25" or the "period").
Financial Highlights - Continuing Operations
(£m unless otherwise stated) Six months to Six months to Change
31 December 31 December
2024 2023
Adjusted results
Revenue(1) 1,979 1,883 5%
Adjusted operating profit(2) 66.6 64.7 3%
Adjusted operating margin 3.4% 3.4% -bps
Adjusted profit before tax(3) 50.6 49.0 3%
Adjusted basic earnings per share (note 9) 8.7p 8.7p -%
Net cash(4) 57.9 17.0 241%
Average month-end net debt (37.6) (136.5) 72%
Statutory reported
Group revenue 1,973 1,862 6%
Operating profit 45.7 44.1 4%
Profit before tax 28.6 27.0 6%
Basic earnings per share (note 9) 4.6p 4.6p -%
Interim dividend per share (note 8) 2.00p 1.67p 20%
1Revenue of the Group and its share of revenue from joint ventures
2Stated before adjusting items of £9.6m (HY24: £9.5m) and amortisation of
acquired intangible assets of £11.3m (HY24: £11.1m).
3Stated before adjusting items of £10.7m (HY24: £10.9m) and amortisation of
acquired intangible assets of £11.3m (HY24: £11.1m).
4Disclosed net of the effect of hedging instruments and excludes leases - see
note 12 to the condensed consolidated financial statements.
HY25 Highlights
· Revenue and operating profit growth with significant deleveraging:
o Revenue growth of 5% and adjusted operating profit growth of 3%
o Strong operational delivery across Infrastructure Services and
Construction
o Adjusted operating margin maintained at 3.4%
o Reported operating profit increased 4% to £45.7m (HY24: £44.1m)
o Free Cash outflow of £(49.8)m reflecting a return to more normal
seasonal working capital movement (HY24: £(7.9)m)
o Strong balance sheet; net cash at period-end of £57.9m, a significant
progression on the prior period-end (HY24: £17.0m)
o Average month-end net debt materially reduced by £99m to £(38)m
· Record order book:
o High quality order book increased 2% to £11.0bn (FY24: £10.8bn)
providing significant visibility
o 98% of expected FY25 revenue secured
· Creating value through a disciplined approach to capital allocation:
o Proposed 20% increase to interim dividend to 2.00p, representing a cover
of c.3.5x
o £20m share buyback announced in January 2025
o Increased investment in the Property segment with ROCE target of 15%
Andrew Davies, Chief Executive, said:
"The Group has continued to make significant operational and financial
progress. The first half saw Kier deliver increased revenue and profitable
growth whilst maintaining strong margins. We continued to grow the order book
which, at £11bn, provides us with good multi-year visibility. Our strong cash
performance allowed us to significantly increase the interim dividend payment
and commence an initial £20m share buyback programme in January 2025. I am
also particularly pleased to report that the Group significantly improved both
its period-end net cash position and its average month-end net debt position
and the Board has confidence in sustaining this momentum going forward.
These developments are testament to the hard work and commitment of our
people who have enhanced our resilience and strengthened our financial
position.
The second half of the financial year has started well, and we are trading
in-line with the Board's expectations. The Group is confident in sustaining
the strong cash generation achieved over the last few years and is well
positioned to continue benefiting from UK Government infrastructure spending
commitments. Kier operates in markets which are vital to the UK. We remain
committed to delivering our long-term sustainable growth plan which will
benefit all stakeholders."
HY25 Results Presentation
Kier Group plc will host a presentation for analysts and investors at 8:30am
(GMT) on 11 March 2025 at the offices of FTI Consulting, 200 Aldersgate
Street, London EC1A 4HD.
Analysts wishing to attend should contact FTI Consulting to register -
Connie.Gibson@fticonsulting.com (mailto: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/67ab6d18242e93000e3a87f4/palnrd
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fkier%2F67ab6d18242e93000e3a87f4%2Fpalnrd&data=05%7C02%7Candrew.collins%40kier.co.uk%7C85363651384c4c5cf52c08dd4ab8ec15%7Cd8de327a9836443f8bbca1c10ff08dc0%7C0%7C0%7C638748880641612387%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=tVOziXYNuD%2FyLPwV3JyMZvFApQcK4BbrDk9EyHTnMSs%3D&reserved=0)
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 800 358 1035
Conference password: 205945
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 2024 for a discussion of the factors that could affect the Group's
future performance and the industry in which it operates. The Board believes
that these principal risks and uncertainties will continue to apply to the
Group in the second half of the financial year.
About Kier
Kier is a leading UK infrastructure services, 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 (http://www.kier.co.uk)
Follow us on X (formerly Twitter): @kiergroup
Connect with us on LinkedIn: Kier Group
Introduction
The Group's continued focus on operational excellence and cash management
resulted in a strong set of results for the six months to 31 December 2024.
The Group has continued to materially deleverage in line with our long-term
sustainable growth plan as we convert activity into profits and cash.
On 21 January 2025, we announced the launch of an initial £20m share buyback
having recommenced dividend payments during FY24. Given our significant
operational and financial progress allied to the Board's ongoing confidence in
the Group's performance, an interim dividend of 2.00p has been declared which
represents a 20% increase on the HY24 interim dividend of 1.67p.
The future prospects for the Group are underpinned by the period-end order
book growing to £11bn by the end of HY25, an increase of 2% against the start
of the period. This reflects a large number of contract wins across
Infrastructure Services and Construction and provides multi-year revenue
visibility. Long-term frameworks, as well as pipeline opportunities and income
from the Property division, are excluded from the order book and represent an
additional opportunity. The order book strength and Kier's framework
positioning is reflected in approximately 98% of Group revenue for FY25 now
being secured, which provides us with a high degree of confidence of further
progress against a backdrop of wider market uncertainty.
During the period, Kier won new, high quality and profitable work in our
markets reflecting the bidding discipline and risk management embedded in the
business.
Long-term sustainable growth plan
The Group is focused on delivering against its long-term sustainable growth
plan first announced in September 2024:
Revenue: GDP + growth through the cycle
Adjusted operating profit margin: 3.5% +
Cash conversion of operating profit: c.90%
Balance sheet: Average month-end net cash with investment of surplus cash
Dividend: Sustainable dividend policy: c.3 x earnings cover through the cycle
The Group aims to achieve these long-term targets through:
· Volume growth and improved contract profitability
· Continued management discipline
· Deploying additional capital in the Property business
Strategy
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 UK Government and
regulated industry spending commitments to invest in UK infrastructure.
Despite political and economic uncertainties, our core markets have remained
favourable. We are a "strategic supplier" to the UK Government and c.91% of
our contracts are with the public sector and regulated companies.
We believe UK infrastructure spending commitments are driven by structural
demand which have a positive influence on Kier's chosen markets. Population
growth, transportation pressures, aged infrastructure, energy security and
climate change are significant drivers of structural growth in the markets in
which we operate.
Given that public funding may be insufficient to maintain public assets,
customer behaviours are shifting further towards long-term partnerships. These
continue to favour Kier, given our scale, integrated design and project
management capability, track record of delivery and Environment, Social and
Governance ('ESG') credentials.
These positive structural demand trends and customer behaviours are expected
to expand our addressable market opportunities, particularly in water,
environment, energy and affordable housing, as well as supporting increased
demand in our Property business. In particular, the Group has been awarded a
number of framework places as part of the significant investment across the
AMP8 water cycle. Kier is well positioned with all the major water companies
to support them with their water infrastructure upgrade and maintenance work.
Customers and winning new work
We remain focused on winning work through our long-standing client
relationships and regionally based operations.
Highlights include:
· Infrastructure Services: appointed by Yorkshire Water to their £850m
AMP8 (2025-2030) Complex Non-Infrastructure Works Framework to support its
investment in water processing and waste networks. Appointed to an Early
Contractor Involvement ('ECI') by Severn Trent to design and build a
replacement sewage treatment works in Worcester worth c.£20m.
· Construction: appointed by the Scottish Government to deliver HMP
Glasgow, the replacement for HMP Barlinnie, worth £684m. Appointed to
undertake preconstruction services to deliver new improved Army infrastructure
at Rock Barracks, MOD Woodbridge, Suffolk to be delivered as part of the MOD's
Defence Estate Optimisation Portfolio. Appointed to deliver two education
projects worth £179m and a healthcare project worth £40m.
· Kier Places: awarded a place on the £814m Facilities Management
framework by Pagabo to provide a range of services to various public sector
organisations including, education, healthcare and local authorities.
· Property: has built on its 10-year relationship with Investec to
create a new strategic industrial joint venture with Investec Realis, to be
called Kier Realis Logistics. The JV successfully exchanged on its first site
in Hemel Hempstead in December 2024, in an off-market deal with Aviva Life
& Pensions UK
Financial summary
Kier's revenue in the period of £2.0bn (HY24: £1.9bn) reflects solid growth
across Infrastructure Services and Construction.
Our order book has continued to grow and increased 2% since the start of the
period to £11bn. Approximately 60% of our order book is under target cost or
cost reimbursable contracts. The remainder of the order book is on fixed
priced contracts where the risk is negotiated and managed with our customers
and supply chain partners.
With over 400 current projects at any given time, we are also regularly
delivering on existing contracts and pricing new contracts which mitigates
against cost pressures. In addition, we have an average order size of c.£21m
in our Construction business which, given its modest size, limits our risk
exposure in the event a project does not go to plan.
The Group delivered adjusted operating profit of £66.6m which represents a
2.9% increase on the prior period (HY24: £64.7m) as volume growth from the
Infrastructure Services and Construction segments converted to profits.
Group adjusted operating profit margin remained consistent with HY24 at
3.4%. Reported operating profit increased 3.6% to £45.7m (HY24: £44.1m).
Adjusted earnings per share were the same as the comparative period at 8.7p
(HY24: 8.7p) and reported earnings per share remained consistent with the
prior period at 4.6p.
Volume growth in the Infrastructure Services and Construction segments
returned to normal levels resulting in working capital flows normalising, and
after accounting for increasing investment in the Property segment, the Group
achieved £(49.8)m of free cash flow in HY25 (HY24: £(7.9)m).
The Group's net cash position at 31 December 2024 grew to £57.9m (HY24:
£17.0m) despite improving supplier payment days to 33 as the strong volumes
translated into cash receipts.
Average month-end net debt for the period ended 31 December 2024 was £(37.6)m
(HY24: £(136.5)m). The strong operational cash flow allowed the Group to
continue to reduce levels of debt despite increasing investment in our
Property Business, restarting payment of dividends and paying pension deficit
obligations.
In January 2025, we fully repaid our remaining USPP Notes and the RCF reduced
to £150m in line with both facility agreements. The RCF, combined with the
£250m 5 year Senior Notes leave the Group with £400m of facilities.
Capital allocation
In addition to the long-term sustainable growth plan, the Group has clear
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 Group's capital
allocation priorities are:
· Capex - ongoing investment to support the business
· Ordinary Dividend - targeting dividend cover of c.3x
earnings through the cycle
· Investment in Property - disciplined investment in the
Property segment. ROCE target of 15% with up to £225m of capital deployed
· Mergers and acquisitions - the Group will consider
value accretive acquisitions in core markets
If the Group has any remaining unallocated capital we have committed to
returning this excess capital to shareholders.
· Incremental Shareholder returns - initial £20m share
buyback programme launched in January 2025
The Group's capital allocation is underpinned by its commitment to maintain a
strong balance sheet with an average month-end net cash position.
Dividend
The importance of dividends to the Group's shareholders has always been
recognised by the Board and was an important facet of the medium-term value
creation plan launched during FY21. Our stated aim is to deliver a dividend,
covered at least 3x by adjusted earnings through the cycle and in a payment
ratio of approximately one third interim dividend and two-thirds final
dividend.
The Group has continued to deliver significant operating and financial
progress resulting in material deleveraging during the period. The outlook for
the Group remains strong, underpinned by our large order book and this
resulted in the Board declaring an interim dividend of 2.00p per share. This
represents an increase of 20% on HY24 (1.67p) and a dividend cover of c.3.5x
in line with our capital allocation framework.
The interim dividend will be paid on 2 June 2025 to shareholders on the
register at close of business on 25 April 2025. The shares will be marked
ex-dividend on 24 April 2025. Kier has a Dividend Reinvestment Plan ("DRIP"),
which allows shareholders to reinvest their cash dividends in our shares. The
final election date for the DRIP is 12 May 2025.
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.
The Group's focus for FY25 is Digital and Simplification as we continuously
improve the operational performance of the business. The key tenets are as
follows:
· Site set-up - standardisation of site offices and enhancing site
connectivity
· Health, safety and wellbeing - simplifying health and safety data
and sharing best practice
· Quality assurance - improving capability and digital tools
· Functions - simplifying processes and enhancing current systems
such as supplier onboarding
Supply chain partners
We continue to focus 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 July 2024 to 31
December 2024, the Group's aggregate average payment days improved to 33 days
(H2 FY24: 34 days) and the percentage of payments made to suppliers within 60
days was 92% (H2 FY24: 86%).
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.
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. UK
Government contracts with a value of, or above, £5m require net zero carbon
and social value commitments.
Our evolved Building for a Sustainable World framework continues to cover
sustainability from both an environment and social perspective with a focus on
the three key pillars of Our People, Our Places and Our Planet. Our
framework follows the guiding principles of the United Nations Sustainable
Development Goals ('SDGs').
· Environmental
Under the Group's sustainability framework, Kier has set out our pathway to
become net zero carbon across our business operations by 2039 (Scope 1 and 2)
and value chain (Scope 3) by 2045.
Last year Kier was awarded the London Stock Exchange Green Economy Mark by
demonstrating that over 50% of our revenue was derived from green products and
services in line with the FTSE Russell Green Revenues Classification System.
We are seeing an increased demand for projects delivering a net environmental
benefit. As a result, our London Stock Exchange-classified 'Green revenue' had
increased from 64% to 69% at the end of FY24.
Key to the Group achieving our carbon footprint reduction target is to assist
our supply chain to reduce their carbon usage. We sponsored and collaborated
with the Supply Chain Sustainability School to develop responsible procurement
guidance for Hydrotreated Vegetable Oil ('HVO'), a key transition fuel.
Kier's focus also includes our impact on nature and we have committed to
enhance our reporting on nature in FY25 by adopting the disclosure
requirements of the Taskforce on Nature-related Financial Disclosures
('TNFD').
These combined achievements represent a key milestone in the Group's ESG
strategy as Kier continues in its aim to deliver sustainable infrastructure
which is vital to the UK whilst operating as a responsible business in itself.
· Social
Delivering a legacy of social value continues to be a key priority for our
customers and for Kier. We continue to offer apprenticeships as a key means of
upskilling employees and bringing in diverse emerging talent to reduce the
industry skills gap.
At 31 December 2024, we had 665 apprentices employed within Kier, which
equates to 6% of our workforce. In addition, 12% of the workforce were on a
formal learning programme at 30 June 2024, a figure which earned Kier its
'Platinum' status with the 5% Club and supports our position on the UK
Government's 2024 Top 100 Apprentice Employer list. This reflects the Group's
continued commitment to upskill its people.
As part of our drive to recruit diverse talent, Kier has offered employment to
28 prison leavers or Released on Temporary Licence ('ROTL') either within our
business or with our supply chain partners in the first half of the year. Kier
also remains committed to offering employment opportunities to those who have
served in our armed forces and has offered employment to 57 veterans in the
same period.
The Group's 12-month rolling Accident Incident Rate ('AIR') at HY25 of 132
represents a 15% improvement on FY24, and the 12-month rolling All Accident
Incident Rate ('AAIR') at HY25 of 358 represents a small improvement on FY24.
We are seeing the benefits of our Culture Programme, and the Behavioural
Safety Programmes that we continue to roll out. We launched a simplified
Safety, Health and Environment Management system in September, as safety
remains our license to operate and we continue to share and embed best
practice across our divisions.
· 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. 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 to ensure that the delivery of
the Group's order book remains profitable and cash generative in line with our
long-term sustainable growth plan.
Summary and outlook
The Group has continued to make significant operational and financial
progress. The first half saw Kier deliver increased revenue and profitable
growth whilst maintaining strong margins. We continued to grow the order book
which, at £11bn, provides us with good multi-year visibility. Our strong cash
performance allowed us to significantly increase the interim dividend payment
and commence an initial £20m share buyback programme in January 2025. I am
also particularly pleased to report that the Group significantly improved both
its period-end net cash position and its average month-end net debt position
and the Board has confidence in sustaining this momentum going forward.
These developments are testament to the hard work and commitment of our
people who have enhanced our resilience and strengthened our financial
position.
The second half of the financial year has started well, and we are trading
in-line with the Board's expectations. The Group is confident in sustaining
the strong cash generation achieved over the last few years and is well
positioned to continue benefiting from UK Government infrastructure spending
commitments. Kier operates in in markets which are vital to the UK. We remain
committed to delivering our long-term sustainable growth plan which will
benefit all stakeholders.
Operational Review
Infrastructure Services
Six months to 31 December 2024 Six months to 31 December 2023
Change
Revenue (£m) 1,032 944 9%
Adjusted operating profit (£m)(5) 46.1 44.0 5%
Adjusted operating margin (%) 4.5% 4.7% (20)bps
Reported operating profit (£m) 34.8 32.4 7%
Order book (£bn) 6.7 6.7 -%
5 Stated before adjusting items of £(11.3)m (HY24: £(11.6)m).
· Key contract wins include:
o appointed by Yorkshire Water to their £850m AMP8 (2025-2030)
Complex Non-Infrastructure Works Framework to support their investment in
water processing and waste networks
o Appointed to an ECI by Severn Trent to design and build a
replacement sewage treatment works in Worcester worth c. £20m
· 97% of orders secured for FY25
Infrastructure Services revenue increased 9% against the prior period
primarily due to the continued ramp up of capital works on HS2 alongside
volume growth in the water and nuclear sectors. Reported operating profit grew
7% to £34.8m (HY24: £32.4m). Adjusting items include the amortisation of
contract rights from the Buckingham and other acquisitions.
The Transportation business division provides design, engineering, delivery
and maintenance to support the movement of people, goods and equipment by
land, sea and air. It includes our road, rail and aviation businesses.
The business benefited from the start of contracts won in previous periods and
the continued successful delivery of assets for HS2. However, volume growth
has been affected by the delays to finalising the new phase of the Road
Investment Strategy (RIS 3) as well as delays to starting work under Control
Period 7 (CP7) in our rail business.
The Natural Resources, Nuclear & Networks division includes our water,
energy, nuclear and networks projects. The business is well positioned to
benefit from the anticipated increased opportunities afforded by the new water
spending cycle, AMP8 programme, as well as opportunities in the energy and
environment sectors. During the period, we saw increased activity in water and
nuclear markets as we start to fulfil projects being delivered under these new
spending cycles.
The Group is working with a total of 9 customers through 15 frameworks with an
advertised value of up to £15bn.
Construction
Six months to 31 December 2024 Six months to 31 December 2023
Change
Revenue (£m) 932 915 2%
Adjusted operating profit (£m)(6) 36.5 33.2 10%
Adjusted operating margin (%) 3.9% 3.6% 30bps
Reported operating profit (£m) 29.0 25.1 16%
Order book (£bn) 4.3 4.0 8%
(6)Stated before adjusting items of £(7.5)m (HY24: £(8.1)m)
· Key contract wins include:
o appointed by the Scottish Government to deliver HMP Glasgow, the
replacement for HMP Barlinnie, worth £684m
o appointed to undertake preconstruction services to deliver new improved
Army infrastructure at Rock Barracks, MOD Woodbridge, Suffolk to be delivered
as part of the MOD's Defence Estate Optimisation Portfolio
o appointed to deliver two education projects worth £179m and a
healthcare project worth £40m
· 99% of orders secured for FY25
The Construction segment comprises Regional Building, Strategic Projects, and
Kier Places. Construction has national coverage delivering schools, hospitals,
prisons and defence estate optimisation. It also delivers commercial,
residential and heritage buildings for local authorities, the Ministry of
Justice, other government departments, and the private sector.
Revenue increased 2% largely due to increased volume in our regional build
business.
Reported operating profit increased 16% to £29.0m driven by increased
revenue. Adjusting items include £7.5m relating to fire and cladding
compliance costs. The increase in margin was driven by mix and HY24 being
impacted by the increased overheads associated with site starts.
As a regional tier 1 contractor, we continue to be well placed to benefit from
the UK Government's focus on spending to improve under-invested assets such as
schools, hospitals and custodial services, where our Construction business has
specialist expertise.
Kier Places is a client-focused building, construction and property management
business which delivers end-to-end solutions for places where people live,
work and play. As part of Kier Construction, we focus our business on three
key areas: Building Solutions, Residential Solutions and Workplace Solutions,
with expertise and services extended to planned and reactive maintenance,
renovation, facilities management, capital building works, mechanical and
electrical maintenance, decarbonisation and retrofit, cladding remediation and
fire compliance.
Property
Six months to 31 December 2024 Six months to 31 December 2023
Change
Revenue (£m) 13.1 22.1 (41)%
Adjusted operating profit (£m)(7) 0.9 4.6 (80)%
Adjusted operating margin (%) 6.9% 20.8% (1,390)bps
Reported operating profit (£m) 0.9 4.6 (80)%
Capital employed (£m) 194 163 19%
ROCE (%) 1.0% 5.9% (490)bps
7 Stated before adjusting items of £nil (HY24: nil)
· Created a new strategic industrial joint venture with Investec
Realis, to be called Kier Realis Logistics. The JV successfully exchanged on
its first site in Hemel Hempstead in December 2024, in an off-market deal with
Aviva Life & Pensions UK
· Commenced the next phase in the long-term Watford Riverwell
scheme (a regeneration initiative between Kier Property and Watford Borough
Council) to deliver a purpose-built unit for Safestore opposite its successful
Trade City development completed in 2017
The Property business invests in and develops mixed-use commercial and
residential schemes across the UK, largely through joint ventures. Due to the
limited number of transactions in the first half of the year, the Property
business generated revenue of £13.1m (HY24: £22.1m) and a margin of £0.9m.
Activity levels are expected to be second half weighted.
The Group is focused on the disciplined expansion of the Property business
through select investments and strategic joint ventures with a target for this
investment to generate a consistent ROCE of 15%.
As at 31 December 2024, the capital employed in the Property segment was
£194m excluding third party debt and fair value gains. We expect to increase
the average capital employed towards £225m and thereafter to recycle the
capital employed to deliver consistent returns over the medium-term. The ROCE
result for HY25 reflects the increased capital employed on the new attractive
investment opportunities the business is now able to access, and the limited
capital investment three years ago resulting in limited seasoned capital we
were able to recycle.
Corporate
Six months to 31 December 2024 Six months to 31 December 2023
Change
Adjusted operating loss (£m)(8) (16.9) (17.1) 1%
Reported operating loss (£m) (19.0) (18.0) (6)%
8 Stated before adjusting items of £(2.1)m (HY24: £(0.9)m)
The Corporate segment comprises the costs of the Group's central functions.
Financial Review
Introduction
The Group performed well through the first half of the year with further
improvement in the order book, which has been converted into revenue and
profit growth in both Infrastructure Services and Construction. The Group's
focus on operational delivery and cash management saw the Group continue to
deleverage with average month-end net debt improving significantly.
The Group delivered volume growth of 5.1% giving total revenues of £1,978.6m
(HY24: £1,882.9m, FY24: £3,969.4m) and which helped deliver an adjusted
operating profit of £66.6m (HY24: £64.7m, FY24: £150.2m).
The continued strong operational performance led to a 3.6% increase in
operating profit to £45.7m (HY24: £44.1m, FY24: £103.1m) and an increase in
profit before tax to £28.6m (HY24: £27.0m, FY24: £68.1m).
Adjusting items were £22.0m (HY24: £22.0m, FY24: £50.0m). The current
period charge includes £11.3m of amortisation of intangible contract rights
and £7.5m of fire and cladding compliance costs.
Net finance charges for the period were £17.1m (HY24: £17.1m, FY24:
£35.0m), with the higher cost associated with the Senior Notes issue
offsetting the benefit of lower average debt.
Adjusted earnings per share were 8.7p (HY24: 8.7p, FY24: 20.6p).
The Group experienced a free cash outflow of £49.8m during the period (HY24:
£7.9m outflow, FY24: £185.9m inflow). This was driven by the expected
seasonal H1 working capital outflow as well as additional investment in non
joint venture property development, and was higher compared to the prior
period due to HY24 working capital benefitting from a 23% year on year
increase in revenue.
Out of its free cashflow, the Group paid dividends, adjusting items and
pension deficit obligations, purchased existing Kier shares on behalf of its
employees and invested in its Property division joint ventures. Net cash at 31
December 2024 of £57.9m was significantly improved compared to the prior
period (HY24: £17.0m, FY24: £167.2m).
Average month-end net debt for the period ended 31 December 2024 was £(37.6)m
(HY24: £(136.5)m, FY24 £(116.1)m), reduced significantly from the prior
period and the prior year end.
The Group continued to win new, high quality and profitable work in its
markets on terms and rates which reflect the Group's bidding discipline and
risk management.
The order book increased to £11.0bn, a 2.0% increase since the year-end
(HY24: £10.7bn, FY24: £10.8bn). Approximately 98% of revenue for FY25 is
already secured which provides certainty for the full year.
Summary of financial performance
Adjusted(9)results Statutory reported results
31 Dec 31 Dec Change 31 Dec 31 Dec Change
2024 2023 % 2024 2023 %
Revenue (£m) - Total 1,978.6 1,882.9 5.1 1,978.6 1,882.9 5.1
Revenue (£m) - Excluding JV's 1,973.0 1,862.1 6.0 1,973.0 1,862.1 6.0
Operating profit (£m)( ) 66.6 64.7 2.9 45.7 44.1 3.6
Profit before tax (£m) 50.6 49.0 3.3 28.6 27.0 5.9
Earnings per share (p) 8.7 8.7 - 4.6 4.6 -
Interim dividend per share (p) 2.00 1.67 19.8
Free cash flow (£m) (49.8) (7.9) 530.4
Net cash (£m) 57.9 17.0 240.6
Net debt (£m) - average month-end (37.6) (136.5) 72.5
Order book (£bn) 11.0 10.7 2.8
(9) Reference to 'Adjusted' excludes adjusting items, see note 3.
Revenue
The following table bridges the Group's revenue from the period ended 31
December 2023 to the period ended 31 December 2024.
£m
Revenue for the period ended 31 December 2023 1,882.9
Infrastructure Services 87.7
Construction 16.8
Property and Corporate (8.8)
Revenue for the period ended 31 December 2024 1,978.6
The Group grew revenue in both Infrastructure Services, which reported revenue
growth of 9.3% compared to the prior period, and Construction, which reported
revenue growth of 1.8% for the same period.
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.
In addition to the Group's statutory results, the Directors believe it is
appropriate to disclose those items which are one-off, material or
nonrecurring 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
£m
Adjusted operating profit for the period ended 31 December 2023 64.7
Volume / price / mix changes 3.5
Fewer Property transactions (3.7)
Cost inflation (3.1)
Management actions 5.2
Adjusted operating profit for the period ended 31 December 2024 66.6
A reconciliation of reported to adjusted operating profit is provided below:
Operating profit Profit before tax
31 Dec 31 Dec 31 Dec 31 Dec
2024 2023 2024 2023
£m
£m
£m £m
Reported profit 45.7 44.1 28.6 27.0
Amortisation of acquired intangible assets 11.3 11.1 11.3 11.1
Fire and cladding compliance costs 7.5 7.2 7.5 7.2
Corporate office-related items 2.1 - 2.1 -
Net financing costs - - 1.1 1.4
Legacy legal claims - 1.1 - 1.1
Other - 1.2 - 1.2
Adjusted profit 66.6 64.7 50.6 49.0
Additional information about these items is as follows:
· Amortisation of acquired intangible assets
£11.3m (HY24: £11.1m):
Comprises the amortisation of acquired contract rights through the
acquisitions of MRBL Limited (Mouchel Group), May Gurney Integrated Services
plc, McNicholas Construction Holdings Limited and the Buckingham Group.
· Fire and cladding compliance costs £7.5m (HY24:
£7.2m):
The Group continues to review 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 charge incurred in the period is for those projects where the Group has
confirmed liability and has a reasonable estimate of the cost to rectify the
issues identified, less any confirmed insurance recoveries.
· Corporate office-related items £2.1m (HY24:
£nil):
This includes costs relating to vacated corporate offices. Net costs of £2.1m
predominately reflect the purchase and subsequent sale of a vacant leasehold
office in Manchester, which allows the Group to de-risk the balance sheet and
eliminate future rental payments.
Earnings per share
Earnings per share ("EPS"), before adjusting items, amounted to 8.7p (HY24:
8.7p, FY24: 20.6p). Reported EPS, after adjusting items, from continuing
operations amounted to 4.6p (HY24: 4.6p, FY24: 11.8p).
Finance income and charges
The Group's finance charges include interest on the Group's bank borrowings
and Senior Notes as well as finance charges relating to leases recorded under
IFRS 16.
Net finance charges for the period were £17.1m (HY24: £17.1m, FY24:
£35.0m).
Interest on bank borrowings and Senior Notes amounted to £14.9m (HY24:
£14.7m, FY24: £31.5m). Although average month-end net debt has decreased,
the impact of this on the interest charge has been offset by the higher
interest rates throughout the period associated with the Senior Notes issue.
The Group was able to partially mitigate the risk of higher interest rates
with a £50m interest rate swap which is due to expire in June 2025.
Lease interest was £4.7m (HY24: £4.8m, FY24: £9.5m).
The Group had a net interest credit of £2.1m (HY24: £2.8m, FY24: £5.7m) in
relation to the defined benefit pension schemes which has arisen due to the
overall pension surplus.
The Group continues to exclude lease liabilities from its definition of net
cash/(debt).
Dividend
The Board has declared an interim dividend of 2.00p (HY24: interim dividend of
1.67p per share, FY24: final dividend of 3.48p) which represents c.3.5x
adjusted earnings cover.
Balance sheet
Net assets
The Group had net assets of £497.9m at 31 December 2024 (HY24: £517.1m,
FY24: £520.1m).
Goodwill
The Group held intangible assets of £621.4m (HY24: £645.5m, FY24: £638.2m)
of which goodwill represented £543.5m (HY24: £540.9m, FY24: £543.5m). No
impairment triggers were identified in the period.
Deferred tax asset
The Group has a significant deferred tax asset of £141.3m recognised at 31
December 2024 (HY24: £128.6m, FY24: £133.1m) primarily due to historical
losses.
Based on the Group's forecasts, it is expected that the deferred tax asset
will be utilised over a period of approximately 8 years.
An adjusted tax credit of £4.2m (HY24: £4.1m, FY24: £11.6m) has been
included within adjusting items.
Right-of-use assets and lease liabilities
At 31 December 2024, the Group had right-of-use assets of £94.3m (HY24:
£94.8m, FY24: £95.0m) and associated lease liabilities of £155.3m (HY24:
£173.9m, FY24: £173.1m). The movements at each balance sheet date, reflect
operational equipment requirements less associated depreciation and lease
repayments.
Investment properties
As at 31 December 2024, the Group had investment properties of £95.5m (HY24:
£102.2m, FY24: £104.9m).
The Group had long-term leases on three office buildings which were formerly
utilised by the Group that have been vacated and are now leased out (or
intended to be leased out) to third parties under operating leases, as well as
two freehold properties no longer used by the business that are being held for
capital appreciation. These are all held as investment properties.
During the period the Group disposed of Fountain Street, one of the leasehold
properties.
In addition, the Group's Property business invests and develops primarily
mixed-use commercial and residential schemes and sites across the UK. Two of
these sites are held as investment properties.
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 31
December 2024, total contract assets amounted to £349.0m (HY24: £323.1m,
FY24: £358.1m).
Contract liabilities were £171.2m (HY24: £119.2m, FY24: £128.4m).
Retirement benefits obligation
Kier operates a number of defined benefit pension schemes. At 31 December
2024, the reported surplus, which is the difference between the aggregate
value of the schemes' assets and the present value of their future
liabilities, was £52.8m (HY24: £96.4m, FY24: £80.5m), before accounting for
deferred tax, with the movement in the period primarily as a result of
actuarial losses of £32.4m (HY24: £15.1m losses, FY24: £36.5m losses) and
lower than assumed asset returns. This is partly offset by a decrease in
pension scheme liabilities, driven by deficit reduction payments and a change
in financial assumptions, specifically higher corporate bond yields.
Future deficit payments have decreased from £9m in FY24 to £7m in FY25, then
will decrease further to £5m in FY26, £4m in FY27 and £1m in FY28.
Free cash flow and Net cash
31 Dec 31 Dec
2024 2023
£m £m
Operating profit 45.7 44.1
Depreciation of owned assets 2.7 3.5
Depreciation of right-of-use assets 22.3 18.7
Amortisation 20.2 16.4
EBITDA 90.9 82.7
Adjusting items excluding adjusting amortisation and interest 9.6 9.5
Adjusted EBITDA 100.5 92.2
Working capital outflow (110.3) (46.4)
Net capital expenditure including finance lease capital payments (26.9) (26.3)
Joint Venture dividends less profits 0.8 (5.9)
Other free cash flow items 5.4 (1.2)
Operating free cash flow (30.5) 12.4
Net interest and tax (19.3) (20.3)
Free cash flow (49.8) (7.9)
2024 2023
£m £m
Net cash at 1 July 167.2 64.1
Free cash flow (49.8) (7.9)
Adjusting items (15.2) (16.1)
Net investment in Joint Ventures (16.8) -
Pension deficit payments and fees (4.1) (5.0)
Purchase of own shares (7.4) (3.7)
Acquisition of Buckingham - (9.4)
Dividends paid (15.2) -
Other (0.8) (5.0)
Net cash at 31 December 57.9 17.0
As expected, the Group experienced a free cash outflow during the period
driven by a seasonal working capital outflow, with summer being a higher
period of activity compared to winter months. However, the working capital
outflow in HY24 benefited from a 23% year on year increase in revenue compared
to a 5% increase in HY25. Despite this the Group delivered a net cash position
of £57.9m at 31 December 2024 (HY24: £17.0m, FY24: £167.2m).
The average month-end net debt position is better than the comparative period
at £(37.6)m, (HY24: £(136.5)m, FY24: £(116.1)m). The business generated
operating profit and positive working capital which was used to pay dividends,
adjusting items, tax and interest, pension deficit obligations, invest in our
Property business joint ventures and purchase existing Kier shares on behalf
of employees.
The purchase of existing shares relates to the Group's employee benefit trusts
which acquire Kier shares from the market for use in settling the Long Term
Incentive Plan ("LTIP") share schemes when they vest. The trusts purchased and
sold shares at a net cost of £7.4m (HY24: £3.7m, FY24: £3.7m).
Accounting policies
The Group's annual consolidated financial statements are prepared in
accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006. There have been no significant changes
to the Group's accounting policies during the period.
Treasury facilities
At 31 December 2024, the Group had committed debt facilities of £548.2m with
a further £18.0m of uncommitted overdrafts.
The facilities comprised £250m Senior Notes, £260.9m Revolving Credit
Facility ('RCF'), £37.3m USPP Notes as well as £18.0m of overdrafts.
The Group has a fixed interest rate swap of £50m which is due to expire in
June 2025.
Following the period end, in January 2025 the Group repaid the remaining
£37.3m USPP notes and reduced its RCF facility by £111m. the repayments
having been made from operating free cash flow.
With £400m of facilities, consisting of 5 Year £250m Senior Notes maturing
in February 2029 and a £150m RCF expiring in March 2027, the Group has
significant committed funding to support its evolved long-term sustainable
growth plan.
The Group's remaining financial instruments mainly 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. Following the repayment of the final USPP notes in January 2025
these swaps have now matured.
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 condensed
consolidated financial statements.
Statement of directors' responsibilities
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting', and the Disclosure Guidance and
Transparency Rules sourcebook of the UK's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the consolidated financial statements,
and a description of the principal risks and uncertainties for the remaining
six months of the financial year; and
· material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The directors of Kier Group plc are as listed on pages 90 and 91 of the 2024
Annual Report and Accounts, with the exception of the following changes:
· Justin Atkinson retired from the Board on 30 September 2024.
· Stuart Togwell was appointed to the Board as an Executive
Director on 1 October 2024.
A list of the current directors is also maintained on Kier Group plc's website
at: www.kier.co.uk.
Signed on 10 March 2024 on behalf of the Board.
Andrew Davies Simon Kesterton
Chief Executive Chief Financial Officer
Independent review report to Kier Group plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Kier Group plc's condensed consolidated interim financial
statements (the "interim financial statements") in the results for the period
ended 31 December 2024 of Kier Group plc for the 6 month period ended
31 December 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the condensed consolidated balance sheet as at
31 December 2024;
· the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then ended;
· the condensed consolidated statement of cash flows for the period
then ended;
· the condensed consolidated statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim condensed
consolidated financial statements of Kier Group plc have been prepared in
accordance with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the interim condensed
consolidated financial statements and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim condensed consolidated financial statements, including the interim
financial statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the interim condensed
consolidated financial statements in accordance with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority. In preparing the interim condensed consolidated financial
statements, including the interim financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the interim condensed consolidated financial statements based on
our review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report. This
report, including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this conclusion,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
10 March 2025
Financial statements
Condensed consolidated income statement
For the six months ended 31 December 2024
Note Unaudited Unaudited Year to
six months to 31 December 2024 six months to 31 December 2023 30 June
£m
£m 2024
£m
Continuing operations
Group revenue including share of joint ventures(1) 2 1,978.6 1,882.9 3,969.4
Less share of joint ventures 2 (5.6) (20.8) (64.3)
Group revenue 1,973.0 1,862.1 3,905.1
Cost of sales (1,826.7) (1,715.1) (3,570.1)
Gross profit 146.3 147.0 335.0
Administrative expenses (100.2) (112.6) (240.0)
Share of post-tax (losses)/profits of joint ventures (0.6) 5.9 1.6
Other income 4 0.2 3.8 6.5
Operating profit 2 45.7 44.1 103.1
Finance income 5 4.3 4.0 9.2
Finance costs 5 (21.4) (21.1) (44.2)
Profit before tax 2 28.6 27.0 68.1
Taxation 7 (8.2) (7.4) (16.8)
Profit for the period from continuing operations 2 20.4 19.6 51.3
Discontinued operations
Loss for the period from discontinued operations (attributable to equity 2,3 - - (8.3)
holders of the Company)
Profit for the period 2 20.4 19.6 43.0
Attributable to:
Owners of the Company 20.4 19.6 42.7
Non-controlling interests - - 0.3
20.4 19.6 43.0
Earnings/(losses) per share
Basic:
- Continuing operations 9 4.6p 4.6p 11.8p
- Discontinued operations 9 - - (1.9)p
Total 4.6p 4.6p 9.9p
Diluted:
- Continuing operations 9 4.4p 4.4p 11.3p
- Discontinued operations 9 - - (1.8)p
Total 4.4p 4.4p 9.5p
Supplementary information - continuing operations
Adjusted2 operating profit 3 66.6 64.7 150.2
Adjusted2 profit before tax 3 50.6 49.0 118.1
Adjusted2 basic earnings per share 9 8.7p 8.7p 20.6p
(1 ) Group revenue including share of 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 six months ended 31 December 2024
Note Unaudited Unaudited Year to
six months to 31 December 2024 six months to 31 December 2023 30 June
£m
£m 2024
£m
Profit for the period 20.4 19.6 43.0
Other comprehensive expense
Items that may be reclassified subsequently to the income statement
Fair value movements on cash flow hedging instruments 0.2 (3.1) (2.6)
Fair value movements on cash flow hedging instruments recycled to the income 5 (0.3) 0.1 -
statement
Deferred tax on fair value movements on cash flow hedging instruments (0.1) 0.8 0.9
Foreign exchange translation differences - - (0.1)
Foreign exchange movements recycled to the income statement - (2.8) (9.2)
Items that will not be reclassified to the income statement
Re-measurement of retirement benefit assets and obligations 6 (32.4) (15.1) (36.5)
Tax on re-measurement of retirement benefit assets and obligations 8.1 3.8 9.1
Other comprehensive expense for the period (24.5) (16.3) (38.4)
Total comprehensive (expense)/income for the period (4.1) 3.3 4.6
Attributable to:
Equity holders of the Company (4.1) 3.3 4.3
Non-controlling interests - - 0.3
(4.1) 3.3 4.6
Total comprehensive (expense)/income for the period attributable to equity
holders of the Company arises from:
Continuing operations (4.1) 3.3 12.6
Discontinued operations - - (8.3)
(4.1) 3.3 4.3
Financial statements
Condensed consolidated balance sheet
As at 31 December 2024
Note Unaudited Unaudited 30 June
31 December 2024 31 December 2023(1,2) 2024
£m
£m
£m
Non-current assets
Intangible assets 10 621.4 645.5 638.2
Property, plant and equipment 26.7 29.6 27.7
Right-of-use assets 94.3 94.8 95.0
Investment properties 11 95.5 102.2 104.9
Investments in and loans to joint ventures 107.7 89.4 91.7
Deferred tax assets 7 141.3 128.6 133.1
Contract assets 53.6 48.5 53.6
Trade and other receivables 23.9 22.6 28.5
Retirement benefit assets 6 81.6 125.0 105.0
Other financial assets - 0.4 -
Non-current assets 1,246.0 1,286.6 1,277.7
Current assets
Inventories 94.8 74.2 74.0
Contract assets 295.4 274.6 304.5
Trade and other receivables 234.4 216.1 237.3
Corporation tax receivable - 23.9 -
Other financial assets 7.1 6.2 7.1
Cash and cash equivalents 12 1,136.7 1,087.1 1,563.1
Current assets 1,768.4 1,682.1 2,186.0
Total assets 3,014.4 2,968.7 3,463.7
Current liabilities
Bank overdrafts 12 (777.9) (759.8) (1,101.4)
Borrowings 12 (64.5) - (58.8)
Lease liabilities (38.6) (35.3) (42.2)
Trade and other payables 13 (969.7) (972.5) (1,109.8)
Contract liabilities (171.2) (119.2) (128.4)
Corporation tax payable (1.8) - -
Provisions (53.6) (29.7) (55.3)
Current liabilities (2,077.3) (1,916.5) (2,495.9)
Non-current liabilities
Borrowings 12 (243.2) (316.5) (242.0)
Lease liabilities (116.7) (138.6) (130.9)
Trade and other payables 13 (20.3) (27.4) (28.4)
Retirement benefit obligations 6 (28.8) (28.6) (24.5)
Provisions (30.2) (24.0) (21.9)
Non-current liabilities (439.2) (535.1) (447.7)
Total liabilities (2,516.5) (2,451.6) (2,943.6)
Net assets 2 497.9 517.1 520.1
Equity
Share capital 4.5 4.5 4.5
Share premium 3.6 - 3.2
Retained earnings 139.7 156.6 162.1
Merger reserve 350.6 350.6 350.6
Other reserves (0.4) 5.8 (0.2)
Equity attributable to owners of the parent 498.0 517.5 520.2
Non-controlling interests (0.1) (0.4) (0.1)
Total equity 497.9 517.1 520.1
(1 ) £759.8m has been re-presented in the 31 December 2023
comparative information from cash and cash equivalents to bank overdrafts, as
a result of a change in accounting policy (see note 12).
(2 ) £5.0m has been re-presented in the 31 December 2023 comparative
information from capitalised mobilisation costs to trade and other receivables
in non-current assets. (£0.6m) cash flow hedge reserve and £6.4m translation
reserve have been re-presented in the comparative information to other
reserves within equity.
Financial statements
Condensed consolidated statement of changes in equity
For the six months ended 31 December 2024
Note Share capital(1) Share (Accumulated losses)/ Merger Other reserves(4) Equity attributable to owners of Non- Total
£m
premium(2)
reserve(3)
the Company
controlling
equity
£m retained earnings
£m £m
£m
interests
£m
£m
£m
1 July 2023 4.5 684.3 (539.5) 350.6 13.5 513.4 (0.4) 513.0
Profit for the period - - 19.6 - - 19.6 - 19.6
Other comprehensive expense - - (11.3) - (5.0) (16.3) - (16.3)
Total comprehensive income/(expense) for the period - - 8.3 - (5.0) 3.3 - 3.3
Issue of own shares - 0.1 - - - 0.1 - 0.1
Capital reduction - (684.4) 687.1 - (2.7) - - -
Share-based payments - - 4.4 - - 4.4 - 4.4
Purchase of own shares - - (3.7) - - (3.7) - (3.7)
At 31 December 2023 4.5 - 156.6 350.6 5.8 517.5 (0.4) 517.1
Profit for the period - - 23.1 - - 23.1 0.3 23.4
Other comprehensive expense - - (16.1) - (6.0) (22.1) - (22.1)
Total comprehensive income/(expense) for the period - - 7.0 - (6.0) 1.0 0.3 1.3
Dividends paid 8 - - (7.3) - - (7.3) - (7.3)
Issue of own shares - 3.2 - - - 3.2 - 3.2
Share-based payments - - 4.9 - - 4.9 - 4.9
Deferred tax on share-based payments - - 0.9 - - 0.9 - 0.9
At 30 June 2024 4.5 3.2 162.1 350.6 (0.2) 520.2 (0.1) 520.1
Profit for the period - - 20.4 - - 20.4 - 20.4
Other comprehensive expense - - (24.3) - (0.2) (24.5) - (24.5)
Total comprehensive expense for the period - - (3.9) - (0.2) (4.1) - (4.1)
Dividends paid 8 - - (15.2) - - (15.2) - (15.2)
Issue of own shares - 0.4 - - - 0.4 - 0.4
Share-based payments - - 4.1 - - 4.1 - 4.1
Purchase of own shares - - (7.4) - - (7.4) - (7.4)
At 31 December 2024 4.5 3.6 139.7 350.6 (0.4) 498.0 (0.1) 497.9
(1. ) The share capital includes 452,875,390 of authorised,
issued and fully paid ordinary shares of 1p each (31 December 2023:
446,416,044, 30 June 2024: 452,133,752). 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 period, 741,638
shares were issued under the Sharesave Scheme (six months to 31 December 2023:
101,609, year to 30 June 2024: 5,819,317).
(2. ) On 22 December 2023, the Company completed a capital
reduction exercise, resulting in £684.4m of share premium being cancelled and
transferred to retained earnings.
(3. ) £134.8m of the merger reserve arose on the shares
issued at a premium to acquire May Gurney on 8 July 2013. In addition, a
further £215.8m relates to the issue of share capital on 18 June 2021.
(4. ) Other reserves includes capital redemption reserve,
cash flow hedge reserve and translation reserve. On 22 December 2023, the
Company completed a capital reduction exercise, resulting in £2.7m of capital
redemption being cancelled and transferred to retained earnings.
Financial statements
Condensed consolidated statement of cash flows
For the six months ended 31 December 2024
Note Unaudited Unaudited Year to
six months to 31 December 2024 six months to 31 December 2023(1) 30 June
£m
£m 2024(1)
£m
Cash flows from operating activities
Profit/(loss) before tax - continuing operations 28.6 27.0 68.1
- discontinued operations 3 - - (9.1)
Net finance cost 5 17.1 17.1 35.0
Share of post-tax trading results of joint ventures 0.6 (5.9) (1.6)
Pension cost charge 1.2 0.4 1.8
Equity-settled share-based payments charge 4.1 4.4 9.3
Amortisation of intangible assets and mobilisation costs 20.2 16.4 33.8
Change in fair value of investment properties 11 (0.2) (3.8) (6.5)
Depreciation of property, plant and equipment 2.7 3.5 8.3
Depreciation of right-of-use assets 22.3 18.7 39.0
Recycling of foreign exchange movements to the income statement - (2.8) (9.2)
Loss/(profit) on disposal of property, plant and equipment and intangible 0.5 (0.6) (1.3)
assets
Operating cash inflows before movements in working capital and deficit 167.6
contributions to pension funds
97.1 74.4
Deficit contributions to pension funds 6 (3.8) (4.6) (8.6)
Increase in inventories (29.6) (1.3) (1.1)
Decrease/(increase) in receivables 3.0 (34.0) (48.6)
Decrease in contract assets 9.1 78.8 43.8
(Decrease)/increase in payables (148.9) (110.4) 23.7
Increase in contract liabilities 42.8 28.7 37.9
Increase/(decrease) in provisions 6.6 (12.7) 8.1
Cash (outflow)/inflow from operating activities (23.7) 18.9 222.8
Dividends received from joint ventures 0.2 - 6.7
Interest received 5 2.2 1.2 3.5
Income tax paid (0.9) (3.0) (2.9)
Net cash (outflow)/inflow from operating activities (22.2) 17.1 230.1
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1.3 1.0 1.8
Purchase of property, plant and equipment (3.5) (3.4) (7.1)
Purchase of intangible assets 10 (1.8) (4.4) (9.5)
Purchase of capitalised mobilisation costs - (0.1) (1.9)
Acquisition of assets - (9.4) (9.4)
Investment in joint ventures (21.3) (13.0) (23.8)
Loan repayment and return of equity from joint ventures 4.5 8.1 5.6
Net cash used in investing activities (20.8) (21.2) (44.3)
Cash flows from financing activities
Issue of shares 0.4 0.1 3.3
Purchase of own shares (7.4) (3.7) (3.7)
Interest paid (19.9) (19.6) (32.7)
Principal elements of lease payments (23.1) (19.4) (40.6)
Drawdown of borrowings 5.3 - 247.5
Repayment of borrowings - (2.9) (267.4)
Dividends paid 8 (15.2) - (7.3)
Net cash used in financing activities (59.9) (45.5) (100.9)
(Decrease)/increase in cash, cash equivalents and bank overdrafts (102.9) (49.6) 84.9
Effect of change in foreign exchange rates - - (0.1)
Opening cash, cash equivalents and bank overdrafts 461.7 376.9 376.9
Closing cash, cash equivalents and bank overdrafts 12 358.8 327.3 461.7
(1. ) In the 31 December 2023 and 30 June 2024 comparative
information, £11.9m and £28.3m of research and development credit cash flows
that were previously disclosed within operating cash flows before movements in
working capital, have now been re-presented as part of movements in
receivables in cash flow from operating activities.
Financial statements
Notes to the condensed consolidated financial statements
For the period ended 31 December 2024
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 interim condensed consolidated financial statements (financial statements)
for the period ended 31 December 2024 comprise the Company and its
subsidiaries (together referred to as the Group) and the Group's interest in
jointly controlled entities.
Basis of preparation
The interim condensed consolidated financial statements for the half year
ended 31 December 2024 have been prepared in accordance with the UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The unaudited financial information contained in this announcement does not
constitute the Company's statutory accounts as at and for the six months ended
31 December 2024. Statutory financial statements for the year ended 30 June
2024 were approved by the Board of Directors on 11 September 2024 and
delivered to the Registrar of Companies. The auditor's report on these
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain a statement under section 498 of the Companies Act 2006.
The accounting policies adopted are consistent with those of the previous
financial year and corresponding interim reporting period, except as described
below.
A number of amendments to accounting standards became applicable for the
current reporting period, including amendments to IAS 1, 'Presentation and
Disclosure in Financial Statements'. As a result of the adoption of the
amendments to IAS 1, the Group changed its accounting policy for the
classification of borrowings: "Borrowings are classified as current
liabilities unless at the end of the reporting period, the Group has a right
to defer settlement of the liability for at least 12 months after the
reporting period."
This new policy did not result in a change in the classification of the
Group's borrowings. The Group did not make retrospective adjustments as a
result of adopting the amendments to IAS 1. The Group did not have to change
its accounting policies or make retrospective adjustments as a result of
adopting any of the other amendments.
Going concern
In determining the appropriate basis of preparation of the interim financial
statements, the Directors are required to consider whether the Group can
continue in operational existence during the going concern period, which the
directors have determined to be until 30 June 2026.
The Directors have carried out an assessment of the Group's ability to
continue as a going concern for the period of at least 12 months from the date
of approval of the interim financial statements. This assessment has involved
the review of cash flow forecasts for the period to 30 June 2026 for each of
the Group's divisions. The Directors have also considered the strength of the
Group's order book which amounted to £11.0bn at 31 December 2024 and will
provide a pipeline of secured work over the going concern assessment period.
The Directors have considered a number of severe but plausible downside
scenarios in assessing going concern:
· Potential reductions in trading volumes;
· Potential future challenges in respect of ongoing projects;
· Delays in Property transactions and cost of adoption of green
legislation;
· Plausible changes in the interest rate environment; and
· The availability of mitigating actions that could be taken by
management in such a scenario.
The Directors also considered the macroeconomic and political risks affecting
the UK economy. The Directors 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 road, rail, water, energy, prisons,
health and education, 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 Directors have also considered the potential impact of climate change and
do 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 Directors have 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 construction of sustainable buildings,
climate impact and water management, as well as nuclear infrastructure. As
such, the longevity of the Group's business model means that climate change
has no material adverse impact on going concern.
Following the period end, in January 2025 the Group repaid the remaining
£37.3m USPP notes and reduced its RCF facility by £111m, the result being
that the Group now has £400m of facilities, consisting of 5 Year £250m
Senior Notes maturing in February 2029 and a £150m RCF facility to March
2027.
Having reviewed the Group's cash flow forecasts, including the repayment of
facilities in January 2025, 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 severe but plausible downside scenario.
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 12 months
from the date of approving these interim financial statements and, for this
reason, they continue to adopt the going concern basis in preparing these
financial statements.
2 Segmental reporting
The Group operates three divisions: Infrastructure Services, Construction and
Property, which is the basis on which the Group manages and reports its
primary segmental information. Corporate includes unrecovered overheads and
the charge for defined benefit pension schemes.
Segmental information is based on the information, which is provided to the
Chief Executive, together with the Board, who is the Chief Operating Decision
Maker. The segments are strategic business units with separate management and
have different core customers and offer different services.
The accounting policies of the operating segments are consistent across the
Group. The Group evaluates segmental information on the basis of profit or
loss from operations before adjusting items (see note 3), interest and tax
expense. The segmental results reported to the Chief Executive include items
directly attributable to a segment as well as those that can be allocated on a
reasonable basis.
Unaudited six months to 31 December 2024
Continuing operations Infrastructure Services Construction Property Corporate Group
£m
£m
£m
£m
£m
Revenue1
Group revenue including share of joint ventures 1,032.1 932.2 13.1 1.2 1,978.6
Less share of joint ventures (0.9) - (4.7) - (5.6)
Group revenue 1,031.2 932.2 8.4 1.2 1,973.0
Profit for the period
Adjusted operating profit/(loss)2 46.1 36.5 0.9 (16.9) 66.6
Adjusting items2 (11.3) (7.5) - (2.1) (20.9)
Operating profit/(loss) 34.8 29.0 0.9 (19.0) 45.7
Net finance income/(costs)3 3.7 1.9 (2.2) (20.5) (17.1)
Profit/(loss) before tax 38.5 30.9 (1.3) (39.5) 28.6
Taxation (8.2)
Profit for the period 20.4
Balance sheet
Operating assets4 894.0 397.8 253.5 325.3 1,870.6
Operating liabilities4 (428.4) (767.3) (9.2) (1,003.9) (2,208.8)
Net operating assets/(liabilities)4 465.6 (369.5) 244.3 (678.6) (338.2)
Cash, cash equivalents, bank overdrafts and borrowings 345.3 470.5 (215.1) 228.3 829.0
Net financial assets - - - 7.1 7.1
Net assets/(liabilities) 810.9 101.0 29.2 (443.2) 497.9
Unaudited six months to 31 December 2023
Continuing operations Infrastructure Services Construction Property Corporate Group
£m
£m
£m
£m
£m
Revenue1
Group revenue including share of joint ventures 944.4 915.4 22.1 1.0 1,882.9
Less share of joint ventures - (1.4) (19.4) - (20.8)
Group revenue 944.4 914.0 2.7 1.0 1,862.1
Profit for the period
Adjusted operating profit/(loss)2 44.0 33.2 4.6 (17.1) 64.7
Adjusting items2 (11.6) (8.1) - (0.9) (20.6)
Operating profit/(loss) 32.4 25.1 4.6 (18.0) 44.1
Net finance income/(costs)3 1.8 0.2 (1.0) (18.1) (17.1)
Profit/(loss) before tax 34.2 25.3 3.6 (36.1) 27.0
Taxation (7.4)
Profit for the period 19.6
Balance sheet
Operating assets4 900.7 407.8 206.5 359.9 1,874.9
Operating liabilities4 (419.2) (712.6) (14.5) (228.9) (1,375.2)
Net operating assets/(liabilities)4 481.5 (304.8) 192.0 131.0 499.7
Cash, cash equivalents, bank overdrafts and borrowings 280.8 463.1 (153.8) (579.3) 10.8
Net financial assets - - - 6.6 6.6
Net assets/(liabilities) 762.3 158.3 38.2 (441.7) 517.1
Year to 30 June 2024
Infrastructure Services Construction Property Corporate Group
£m
£m
£m
£m
£m
Revenue1
Group revenue including share of joint ventures 1,988.3 1,907.8 71.0 2.3 3,969.4
Less share of joint ventures - (2.4) (61.9) - (64.3)
Group revenue 1,988.3 1,905.4 9.1 2.3 3,905.1
Profit/(loss) for the year
Adjusted operating profit/(loss)2 112.3 69.2 6.2 (37.5) 150.2
Adjusting items2 (23.6) (9.6) (4.3) (9.6) (47.1)
Operating profit/(loss) 88.7 59.6 1.9 (47.1) 103.1
Net finance income/(costs)3 4.4 1.4 (3.7) (37.1) (35.0)
Profit/(loss) before tax 93.1 61.0 (1.8) (84.2) 68.1
Taxation (16.8)
Profit for the year from continuing operations 51.3
Loss for the year from discontinued operations (8.3)
Profit for the year 43.0
Balance sheet
Operating assets4 908.3 424.4 217.9 342.9 1,893.5
Operating liabilities4 (499.8) (814.2) (14.8) (212.6) (1,541.4)
Net operating assets/(liabilities)4 408.5 (389.8) 203.1 130.3 352.1
Cash, cash equivalents, bank overdrafts and borrowings 540.4 700.4 (171.3) (908.6) 160.9
Net financial assets - - - 7.1 7.1
Net assets/(liabilities) 948.9 310.6 31.8 (771.2) 520.1
(1 ) Revenue is stated after the exclusion of inter-segmental
revenue. 100% of the Group's revenue is derived from UK-based customers (31
December 2023: 100%; 30 June 2024: 100%). 16% of the Group's revenue was
received from High Speed Two (HS2) Limited (31 December 2023: 16%; 30 June
2024: 15%). Group revenue including share of 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
(a) Reconciliation to adjusted profit
Unaudited Unaudited Year to
six months to six months to 30 June
31 December 2024 31 December 2023 2024
£m
£m
£m
Continuing operations Adjusting Total Adjusting Total Adjusting Total
£m
£m
£m
Adjusted items Adjusted items Adjusted items
£m
£m
£m
£m £m £m
Group revenue 1,973.0 - 1,973.0 1,862.1 - 1,862.1 3,905.1 - 3,905.1
Cost of sales (1,819.2) (7.5) (1,826.7) (1,707.9) (7.2) (1,715.1) (3,555.1) (15.0) (3,570.1)
Gross profit 153.8 (7.5) 146.3 154.2 (7.2) 147.0 350.0 (15.0) 335.0
Administrative expenses (86.9) (13.3) (100.2) (99.0) (13.6) (112.6) (216.2) (23.8) (240.0)
Share of post-tax results of joint ventures (0.6) - (0.6) 5.9 - 5.9 6.0 (4.4) 1.6
Other income 0.3 (0.1) 0.2 3.6 0.2 3.8 10.4 (3.9) 6.5
Operating profit 66.6 (20.9) 45.7 64.7 (20.6) 44.1 150.2 (47.1) 103.1
Net finance charges (16.0) (1.1) (17.1) (15.7) (1.4) (17.1) (32.1) (2.9) (35.0)
Profit before tax 50.6 (22.0) 28.6 49.0 (22.0) 27.0 118.1 (50.0) 68.1
Taxation (12.4) 4.2 (8.2) (11.5) 4.1 (7.4) (28.4) 11.6 (16.8)
Profit for the year from continuing operations (17.9) 19.6 (38.4) 51.3
38.2 (17.8) 20.4 37.5 89.7
Loss for the year from discontinued operations - - (8.3) (8.3)
- - - - -
Profit for the year 38.2 (17.8) 20.4 37.5 (17.9) 19.6 89.7 (46.7) 43.0
Adjusting items include:
· Cost of sales:
Fire and cladding compliance costs of £7.5m - these consist of costs incurred
in rectifying legacy issues to comply with the latest Government guidance.
· Administrative expenses:
o Amortisation of acquired intangible assets of £11.3m - this comprises
amortised contract rights arising from prior year acquisitions.
o Corporate office-related items of £2.1m - this predominately reflects the
purchase and subsequent sale of a vacant leasehold office in Manchester.
· Net finance charges:
o Net financing costs of £1.1m - these relate to IFRS 16 interest charges
on leased investment properties previously used as offices
· Taxation
o Taxation credit of £4.2m - this is the tax effect of the items described
above.
(b) Discontinued operations
Following the sale of its residential property building business ('Kier
Living') in FY21, the Group retained responsibility for the cost of defect
rectification works relating to former Kier Living sites. At the time of the
sale, provisions were made for the expected rectification costs. These costs
were included in discontinued operations as they were directly associated with
the disposal of Living.
During FY24, the Group reviewed the remaining liabilities for the defect
rectification works, based on the outstanding scope of works to be completed
and current market price. The cost increased by £8.3m, net of tax credit of
£0.8m, the majority of which remained as a provision on the year end balance
sheet. The £8.3m was recognised as an adjusting item within discontinued
operations.
(c) Cash outflow from adjusting items
Unaudited Unaudited Year to 30 June
six months to 31 December 2024 six months to 31 December 2023 2024
£m
£m
£m
Adjusting items before tax reported in the income statement
- Continuing operations 22.0 22.0 50.0
- Discontinued operations - - 8.3
Less: non-cash items incurred in the period (13.8) (14.8) (31.4)
Add: payment of prior year accruals and provisions 7.0 8.9 9.8
Cash outflow from adjusting items 15.2 16.1 36.7
4 Other income
Unaudited Unaudited Year to 30 June
six months to 31 December 2024 six months to 31 December 2023 2024
£m
£m £m
Fair value gain on investment properties 0.2 3.8 6.5
Other income 0.2 3.8 6.5
5 Finance income and costs
Unaudited Unaudited Year to 30 June
six months to 31 December 2024 six months to 31 December 2023 2024
£m
£m
£m
Finance income
Bank deposits 2.2 1.2 3.4
Interest receivable on loans to related parties - - 0.1
Net interest on net defined benefit obligation 2.1 2.8 5.7
4.3 4.0 9.2
Finance costs
Interest payable on loans and overdrafts (3.6) (14.7) (23.1)
Interest payable on bonds (11.3) - (8.4)
Interest payable on leases (4.7) (4.8) (9.5)
Foreign exchange movements on foreign denominated borrowings (0.3) 0.2 (0.6)
Fair value movements on cash flow hedges recycled from other comprehensive 0.3 (0.1) -
income
Other (1.8) (1.7) (2.6)
(21.4) (21.1) (44.2)
Net finance costs (17.1) (17.1) (35.0)
6 Retirement benefit assets and obligations
The principal assumptions used by the independent qualified actuaries are
shown below.
Unaudited 30 June 2024
Unaudited 31 December 2023 %
%
31 December 2024
%
Discount rate 5.40 4.60 5.15
Inflation rate (Retail Price Index) 3.20 3.05 3.20
Inflation rate (Consumer Price Index) 2.45 - 2.90 2.20 - 2.65 2.40 - 2.85
The amounts recognised in the financial statements in respect of the Group's
defined benefit schemes are as follows:
Unaudited Unaudited Year to
six months to six months to 30 June
31 December 31 December 2024
2024 2023
Kier Acquired schemes Total Kier Acquired schemes Total Kier Acquired schemes Total
Group
£m
£m
Group
£m
£m
Group
£m
£m
£m
£m
£m
Opening net surplus/(deficit) 96.9 (16.4) 80.5 117.5 (13.0) 104.5 117.5 (13.0) 104.5
Credit/(charge) to income statement 1.6 (0.7) 0.9 2.8 (0.4) 2.4 4.8 (0.9) 3.9
Employer contributions - 3.8 3.8 - 4.6 4.6 - 8.6 8.6
Actuarial losses (22.5) (9.9) (32.4) (4.2) (10.9) (15.1) (25.4) (11.1) (36.5)
Closing net surplus/(deficit) 76.0 (23.2) 52.8 116.1 (19.7) 96.4 96.9 (16.4) 80.5
Comprising:
Fair value of scheme assets 781.0 376.4 1,157.4 886.6 416.1 1,302.7 825.2 393.4 1,218.6
Net present value of the defined benefit obligation (705.0) (399.6) (1,104.6) (770.5) (435.8) (1,206.3) (728.3) (409.8) (1,138.1)
Net surplus/(deficit) 76.0 (23.2) 52.8 116.1 (19.7) 96.4 96.9 (16.4) 80.5
Presentation of net surplus/(deficit) in the consolidated balance sheet:
Retirement benefit assets 76.0 5.6 81.6 116.1 8.9 125.0 96.9 8.1 105.0
Retirement benefit obligations - (28.8) (28.8) - (28.6) (28.6) - (24.5) (24.5)
Net surplus/(deficit) 76.0 (23.2) 52.8 116.1 (19.7) 96.4 96.9 (16.4) 80.5
Pension scheme contingent liabilities
In June 2023, in the case of Virgin Media vs NTL Pension Trustees II Limited,
the High Court judged that amendments made to the Virgin Media scheme were
invalid because they were not accompanied by the correct actuarial
confirmation. On 25 July 2024, the Court of Appeal upheld the June 2023 High
Court decision. The Court's decision could have wider ranging implications,
affecting other schemes that were contracted-out on a salary-related basis,
and made amendments between April 1997 and April 2016. There is still further
uncertainty with the potential for overriding government legislation to be
introduced.
The Group had been waiting for the Court of Appeal's decision before
investigating any possible implications for the Group's pension schemes. The
Group has not yet completed detailed investigations. Therefore, the Group
considers the amount of any potential impact on the schemes' defined benefit
obligation cannot yet be measured with sufficient reliability and consequently
no allowance for this has been made in calculating the defined benefit
obligations at the reporting date.
7 Taxation
Unaudited Unaudited
six months to 31 December 2024 six months to 31 December 2023 Year to 30 June
£m
£m 2024
£m
Profit before tax 28.6 27.0 68.1
Less: (Loss)/profit from joint venture companies (0.2) 0.9 1.6
Profit before tax excluding income from joint ventures 28.4 27.9 69.7
Current tax (5.8) (3.8) (12.2)
Deferred tax (2.4) (3.6) (4.6)
Total tax charge in the income statement (8.2) (7.4) (16.8)
Effective tax rate 28.9% 26.5% 24.1%
The deferred tax asset of £141.3m (31 December 2023: £128.6m; 30 June 2024:
£133.1m), includes £107.5m in relation to tax losses (31 December 2023:
£107.3m; 30 June 2024: £106.8m), and £33.8m of other temporary differences
(31 December 2023: £21.3m; 30 June 2024: £26.3m).
At 31 December 2024, the Group had unused tax losses of £164.4m (six months
ended 31 December 2023: £186.2m; year ended 30 June 2024; £164.5m) on which
no deferred tax has been recognised.
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. Based on these
forecasts, the Group is expected to utilise its deferred tax asset over a
period of approximately 8 years.
Income tax expense is recognised based on management's estimate of the
weighted average effective annual income tax rate expected for the full
financial year. The estimated average annual tax rate is 28.9%, compared to
26.5% for the six months ended 31 December 2023. The tax rate was higher due
to an increase in non-deductible expenses.
8 Dividends
Unaudited Unaudited
six months to 31 December 2024 six months to 31 December 2023 Year to 30 June
£m
£m 2024
£m
£m pence per share £m pence per share £m pence per share
Current year interim - - - - 7.3 1.67
Prior year final 15.2 3.48 - - - -
Total dividend recognised in the year 15.2 3.48 - - 7.3 1.67
In addition to the above dividends, since the end of the interim period, the
directors have recommended the payment of an interim dividend for the year
ending 30 June 2025 of 2.00p pence per share (31 December 2023: interim 1.67p;
30 June 2024: final 3.48p). The dividend totalling approximately £9m will be
paid on 2 June 2025 to shareholders on the register at the close of business
on 25 April 2025, but is not recognised as a liability at the end of the
reporting period.
9 Earnings per share
Unaudited Unaudited Year to 30 June
six months to 31 December 2024 six months to 2024
31 December 2023
Continuing operations Basic Diluted Basic Diluted Basic Diluted
£m
£m
£m
£m
£m
£m
Profit for the year 20.4 20.4 19.6 19.6 51.3 51.3
Less: non-controlling interest share - - - - (0.3) (0.3)
Profit after tax and minority interests 20.4 20.4 19.6 19.6 51.0 51.0
Adjusting items (excluding tax) 22.0 22.0 22.0 22.0 50.0 50.0
Tax impact of adjusting items (4.2) (4.2) (4.1) (4.1) (11.6) (11.6)
Adjusted profit after tax from continuing operations 38.2 38.2 89.4 89.4
37.5 37.5
Discontinued operations
Adjusting items from discontinued operations (net of tax) (8.3) (8.3)
- - - -
Weighted average number of shares (no, m) 440.9 464.2 429.8 441.3 433.5 451.7
Basic and diluted earnings (p)
Attributable to the ordinary equity holders of the Company from continuing 4.6 4.4 11.8 11.3
operations
4.6 4.4
Attributable to the ordinary equity holders of the Company from discontinued (1.9) (1.8)
operations
- - - -
Total basic and diluted earnings per share attributable to the ordinary equity 4.6 4.4 9.9 9.5
holders of the Company
4.6 4.4
Adjusted basic and diluted earnings (p)
Adjusted basic and diluted earnings per share attributable to the ordinary 8.7 8.2 20.6 19.8
equity holders of the Company
8.7 8.5
The weighted average number of shares is lower than the number of shares in
issue by 12.0m (31 December 2023: 16.6m; 30 June 2024: 18.6m) primarily due to
shares that are held by the Group's employee benefit trusts, which are
excluded from the calculation, and the weighting applied to the new shares
issued in the year in respect of the Sharesave scheme.
Options granted to employees under the Sharesave 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.
10 Intangible assets
Unaudited Unaudited Unaudited Unaudited
Goodwill Intangible Computer Total
£m
contract rights
£m
£m software
£m
Cost
At 1 July 2023 538.8 235.7 125.7 900.2
Additions - - 4.4 4.4
Arising on acquisition 4.2 7.5 - 11.7
Disposals - - (0.6) (0.6)
At 31 December 2023 543.0 243.2 129.5 915.7
Additions - - 5.1 5.1
Arising on acquisition 2.6 - - 2.6
Disposals - - 0.5 0.5
At 30 June 2024 545.6 243.2 135.1 923.9
Additions - - 1.8 1.8
Disposals - - (5.4) (5.4)
At 31 December 2024 545.6 243.2 131.5 920.3
Accumulated amortisation
At 1 July 2023 (2.1) (170.9) (82.2) (255.2)
Charge for the period - (11.1) (3.9) (15.0)
At 31 December 2023 (2.1) (182.0) (86.1) (270.2)
Charge for the period - (12.1) (3.5) (15.6)
Disposals - - 0.1 0.1
At 30 June 2024 (2.1) (194.1) (89.5) (285.7)
Charge for the period - (11.3) (7.3) (18.6)
Disposals - - 5.4 5.4
At 31 December 2024 (2.1) (205.4) (91.4) (298.9)
Net book value
At 31 December 2024 543.5 37.8 40.1 621.4
At 30 June 2024 543.5 49.1 45.6 638.2
At 31 December 2023 540.9 61.2 43.4 645.5
11 Investment properties
Unaudited Unaudited Unaudited
Owned assets Right-of-use assets Total
£m
£m
£m
At 1 July 2023 52.9 45.5 98.4
Fair value gain 3.7 0.1 3.8
At 31 December 2023 56.6 45.6 102.2
Fair value gain/(loss) 4.5 (1.8) 2.7
At 30 June 2024 61.1 43.8 104.9
Transfers - (9.6) (9.6)
Fair value gain 0.2 - 0.2
At 31 December 2024 61.3 34.2 95.5
12 Net cash
Unaudited Unaudited 31 December 2023
£m
31 December 2024 Year to 30 June
£m 2024
£m
Cash and cash equivalents 1,136.7 1,087.1 1,563.1
Bank overdrafts (777.9) (759.8) (1,101.4)
Net cash, cash equivalents and bank overdrafts 358.8 327.3 461.7
Borrowings due within one year (64.5) - (58.8)
Borrowings due after one year (243.2) (316.5) (242.0)
Impact of cross-currency hedging 6.8 6.2 6.3
Net cash 57.9 17.0 167.2
Average month-end net debt for the six months ended 31 December 2024 was
£37.6m (six months ended 31 December 2023: £136.5m; year ended 30 June 2024:
£116.1m). Net debt excludes lease liabilities.
13 Trade and other payables
Unaudited Unaudited
31 December 2024 31 December 2023 30 June
£m
£m 2024
£m
Current:
Trade payables 331.6 303.1 328.4
Accruals 436.7 484.7 580.2
Sub-contract retentions 37.0 33.1 30.8
Other taxation and social security 145.2 134.8 152.1
Other payables and deferred income 19.2 16.8 18.3
969.7 972.5 1,109.8
Non-current:
Trade payables - 3.9 3.9
Sub-contract retentions 20.3 23.5 24.5
20.3 27.4 28.4
14 Guarantees and contingent liabilities
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.
Fire and cladding compliance 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 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.
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 which could give rise to the recognition of further
liabilities. Such liabilities, should they arise, are expected to be covered
materially by the Group's insurance arrangements thereby limiting the net
exposure. Any insurance recovery must be considered virtually certain before a
corresponding asset is recognised and so this could potentially lead to an
asymmetry in the recognition of assets and liabilities.
15 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 2024.
Details of contributions made to the pension schemes by the Group are detailed
in note 6.
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