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Sustainable
Growth
Annual Report and Accounts 2024
Operating profit
1
£103.1m
FY23: £81.5m
Adjusted
operating profit
1,2
£150.2m
FY23: £131.5m
Dividend
4
5.15p
FY23: nil
Earnings
per share
1,3
11.8p
FY23: 9.5p
Net debt –
average
5
£(116.1)m
FY23: £(232.1)m
Total Group
revenue –
excluding joint
ventures
1
£3.9bn
FY23: £3.4bn
Total Group
revenue –
including joint
ventures
1
£4.0bn
FY23: £3.4bn
Adjusted earnings
per share
1,3
20.6p
FY23: 19.2p
Net cash –
30 June
5
£167.2m
FY23: £64.1m
Apprentices
666
Capacity of
four reservoirs
maintained
c.3.6m
3
Donated to
Trussell Trust
+£125k
Value of health
projects delivered
over the last
3 years
c.168m
Roads
maintained
+21k km
Financial
highlights
Non-financial
highlights
Kier’s purpose is to sustainably deliver infrastructure
which is vital to the UK.
We are a leading provider of infrastructure
services, construction, and property developments.
We are committed to delivering for communities
and leaving lasting legacies through our work.
Strategic report
1 Kier at a glance
5 Chairman’s statement
7 Chief Executive’s review
15 Our business model
18 Our strategy
22 Operational review
30 Our marketplace
34 Our key performance
indicators
36 ESG Report
38 Building for a
Sustainable World
48 Built by Brilliant
People™
58 TCFD report
65 Our stakeholders
68 How we manage risk
77 Financial review
83 Section 172 statement
84 Non-financialand
sustainability information
statement
Corporate governance
86 Governance at a glance
87 Chairman’s introduction
to corporate governance
90 Board of Directors
92 Corporate governance
98 Risk Management and
Audit Committee report
104 Nomination Committee
report
107 Environmental, Social
and Governance
Committee report
109 Directors’ Remuneration
report
135 Directors’ report
138 Statement of Directors’
responsibilities
Financial statements
140 Independent auditors’
report to the members
of Kier Group plc
148 Consolidated income
statement
149 Consolidated statement
of comprehensive income
150 Consolidated balance sheet
151 Consolidated statement
of changes in equity
152 Consolidated statement
ofcashflows
153 Notes to the consolidated
financialstatements
209 Company balance sheet
210 Company statement
of changes in equity
211 Notes to the Company
financialstatements
Other information
215 Financial record
216 Glossary of alternative
performance measures
Who we are and what we do
Find out more on our website
www.kier.co.uk
See Our business model
on page 15
3. See note 12 to the
consolidatedfinancial
statements.
4. See note 11 to the
consolidatedfinancial
statements.
5. See note 21 to the
consolidatedfinancial
statements.
1. See consolidated
income statement
on page 148.
2. See note 5 to the
consolidatedfinancial
statements.
Order book
£10.8bn
FY23: £10.1bn
Property
Our Property business invests in
and develops schemes and sites
across the UK. It concentrates
on mixed-use commercial and
residential development delivered
through joint venture partnerships.
Infrastructure Services
Transportation: designs, builds
and maintains infrastructure for the
highways, rail, aviation and ports
sectors. It delivers work for National
Highways, Network Rail, Transport for
London and HS2 as well as a number
of local and combined authorities.
Natural Resources, Nuclear
& Networks: delivers long-term
contracts in maintenance and capital
projects to the water, nuclear and
energy sectors; and protection of
habitats and communities in our
natural environment and waterways.
Construction
Construction comprises our
Regional Building, Strategic Projects
and Kier Places (workplace solutions,
residential solutions and building
solutions). Kier is a leading UK national
builder, providing project delivery for
the public and private sectors
across a number of sectors including
education, healthcare, defence, justice
and borders and commercial.
Trusted
We deliver what we promise.
We act safely and ethically and
we care for the environment and
the communities in which we work.
Collaborative
We enjoy what we do and work
closely with clients and stakeholders
to reach innovative solutions.
Focused
We are clear in our approach.
We are disciplined and thorough
in how we work and deliver for
our clients and customers.
Our vision is to be the UK’s
leading infrastructure services
and construction company.
Our
operations
Our
values
Kier at a glance
See our Operational review
on pages 22–29
1www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
We are a ‘strategic supplier’ to the UK Government
with c.90% of our revenue with the public sector and
regulated companies. Our work winning reflects our
long-standing client relationships and regionally
based UK operations.
Our core businesses are well-placed to benefit from
UK Government and regulated industry spending
commitments to invest in UK infrastructure.
Our customers’ behaviours are shifting further
towards value-for-money and 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.
Sustainable growth
2www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Sustainable growth continued
Sustainable growth is developing our business,
increasing stakeholder value, including local
communities, and reducing our environmental
impact.Wearewell-placedtobenefitfromtheUK
Government’s spending commitments to invest
ininfrastructureandthesignificantinvestment
plansannouncedbyregulatedUKassetowners.
Our delivery of these projects ensures we play
acrucialroleforUKcommunitiesandthe
environment. This, combined with our regional
coverage, customer relationships and project
management expertise, will deliver our strategic
actions of sustainable growth, consistent and
safe delivery and strong cash generation.
Sustainable growth
“ Our approach to sustainability
safeguards our business and
builds a resilient environment,
community and profits over
the long term.”
Andrew Davies
Chief Executive
Read more in Our strategy
on pages 18–21
Our commitment to sustainable growth
is demonstrated through our sustainability
framework ‘Building for a Sustainable
World’. This framework covers sustainability
from both an environmental and social
perspective and focuses the Group on
three pillars: People, Places and Planet.
We aim to leave a lasting legacy, building
low-carbon, nature-rich and community-
orientated infrastructure and projects.
Read more on Building for a
Sustainable World from page 38
3www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
5 Chairman’s statement
7 Chief Executive’s review
15 Our business model
18 Our strategy
22 Operational review
30 Our marketplace
34 Our key performance indicators
36 ESG Report
38 Building for a
Sustainable World
48 Built by Brilliant
People™
58 TCFD report
65 Our stakeholders
68 How we manage risk
77 Financial review
83 Section 172 statement
84 Non-financialandsustainability
information statement
How our strategic management is achieving
sustainable growth:
The Strategic report explains in more detail how Kier is
growing its business and profits by sustainably delivering
infrastructure that is vital to the UK, how we integrate
ESG principles across our business through our Building
for a Sustainable World framework and how we deliver
benefit from our operations for our people, communities,
shareholders and other stakeholders over the long term.
Strategic
report
4www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic report Corporate governance Financial statements Other informationOverview
Introduction
I am pleased to report that Kier has continued
to build on the strong foundations which
underpin the delivery of the medium-term
valuecreationplan(‘MTVCP’).Thefinancial
performance of the Group has been very
strong. Disciplined contract selection,
consistent operational delivery and good
cash generation mean that the business has
resumed paying dividends, a key component
of the MTVCP. Whilst not an objective, it was
pleasing to see our return to the FTSE 250.
The Board’s objectives cover delivery of
the Group’s strategy, ensuring it continues
to understand the competitive business
environment, development of our people,
ESG and culture. Our work on these
objectives is explained further below.
Financial performance
The Board has continued its focus on
delivering our MTVCP which was launched in
2021. The strong FY24 performance means
we have substantially delivered on the MTVCP.
This year, our revenue is up 17% to £4bn,
adjustedoperatingprofitmarginat3.8%,
aheadofthemedium-termtargetof3.5%,
average month-end net debt is down 50%
to £116m and an interim dividend of 1.67p
waspaidon31May2024.Afinaldividend
of3.48phasbeenproposedforapprovalby
shareholdersatourAGM.Whencombined
with the interim dividend, this represents
a total dividend of 5.15p declared for FY24.
Theorderbookhasincreasedto£10.8bn,
a 7% increase compared to the prior year.
The Group continues to win new, high-quality
andprofitableworkinourcoremarkets.
ThisgivestheBoardconfidenceinthe
longer-term prospects of the Group.
We continue to believe that having the ability
to invest in an integrated property business,
focused on areas where other parts of Kier
have expertise, is an attractive component
ofKier’sstrategy.Accordingly,theBoard
approved an increase in the maximum capital
to be allocated to the Property business.
Itisrewardingtoseethesignificantreduction
in average net debt. The business will
continue to de-lever as part of the MTVCP.
This progress has enabled the business
to restructure its debt facilities in a secure
manner for the longer term.
Strategy
The Board has started work on our strategy
beyond the MTVCP. We aim to ensure we
promote the long-term sustainable success
of Kier, and to generate value for
shareholders by meeting stakeholder needs.
This culminated in our Board strategy day,
where the Board considered the structural
drivers, client and market trends, the
macro and political environment and Kier’s
competitive advantage and market share,
and the key growth markets and sectors.
We particularly focused on the opportunities
in the Property business, which we expect
tobeamaterialcontributortoprofitsin
the future.
Chairman’s statement
Matthew Lester
Chairman
“ The Board believes
that our leaders and
all of our people have
achieved an exemplary
turnaround of Kier and
the medium-term
value creation plan is
substantially delivered.”
5www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Chairman’s statement continued
Withabusinessthatisfinanciallystronger,
Kier is well-placed to deliver a longer-term
sustainable growth plan. These longer-term
targets have similar elements of revenue
growth,adjustedoperatingprofitmargin,
cashconversionofoperatingprofitand
sustainable dividend policy, plus a new target
to invest any surplus cash. Details of these
longer-term targets are set out in the Chief
Executive’s review on page 10.
TheBoardhasbenefitedfromtheintroduction
of a balanced scorecard to monitor the holistic
performance of the Group. This ensures we
focus on continuous improvement from the
foundations of Kier’s turnaround.
Culture
Management has continued to focus on
ensuring our culture underpins the alignment
of the Group’s purpose, values and strategy.
The Board is highly supportive of the continued
high levels of investment in the culture
programme. More details of this are in the
BuiltbyBrilliantPeople™reportonpage48.
One of the most important functions of an
independent board is to monitor the culture
of a company. The Board received feedback
from key stakeholders such as customers,
joint-venture partners and UK Government,
as well as employee feedback through
employee surveys and site engagement
visits, to make a direct assessment of how
our cultural objectives are being met.
The Board considered various metrics, plus
a range of initiatives, and concluded that the
culture at Kier was supportive of our strategy
and values and an enabler of sustainable
performance. More information on how we
monitor culture and the Board’s programme
of engagement with employees, including
a summary schedule of discussion topics,
keypoints,theimprovementareasidentified
and actions taken, is set out in the Corporate
governance report on pages 96 and 97.
Our people
The Board would like to thank our people for
their commitment and contribution to deliver
another year of strong performance. I have
ensured that we have passed on the Board’s
appreciation for the commitment and delivery
of all of our colleagues whenever I have had
the opportunity to meet them. In order to
ensure this appreciation is not just words, we
spendsignificanttimelookingatourpeople
agenda, which includes our development and
trainingprogrammes,rewardandbenefits
offerings and our diversity and inclusion
initiatives, to ensure we have the skills,
capabilities and resources to deliver
longer-term sustainable growth.
Safety is our licence to operate and we want
to send our people home safely every day.
AsourAccidentIncidentRatehasincreased
by76%(from88to155)comparedtotheprior
year, the Board through the ESG Committee
has considered reports from management
on the reasons for this increase. The Board
will monitor the actions each division is taking
to drive improved safety performance as a
priority. Despite the FY24 position, given
our high standards, we retain a strong safety
record and continue to outperform historic
industry league tables. Further information
on the actions is set out in the Built by Brilliant
People™ report on page 50.
Environmental, Social and Governance
(‘ESG’)
ESG is fundamental to Kier’s ability to win
work and secure positions on long-term UK
Government frameworks, as UK Government
contracts above £5m per annum require net
zero carbon and social value commitments.
We continue to support our clients in their
decarbonisation and social value agendas
and examples of our work on this are
showcasedinthisAnnualReport.
The ESG Committee has approved a number
of milestone plans with key activities and
timelines to reach our targets under the
various pillars of our sustainability framework,
Building for a Sustainable World, which was
approved last year. It will continue to review
our progress against environmental and
social targets; and monitor customer and
key stakeholder feedback, developments and
trends to ensure sustainable growth for Kier.
We continue to make good progress against
our carbon reduction targets.
Further information on our work in ESG
is set out in the Building for a Sustainable
Worldreportonpages38to47andinthe
ESGCommitteereportonpages107to108.
Our Board
We welcomed Mohammed Saddiq as a
Non-Executive Director on 1 January 2024.
Mohammed has brought valuable in-depth
knowledge and experience in operational
delivery, engineering and infrastructure
services to the Board.
JustinAtkinson,ourSeniorIndependent
Director, will be retiring from the Board on
30September2024ashewillbereaching
his ninth year as a Director. I am pleased to
announce the appointment of Chris Browne
OBE to succeed Justin as Senior
Independent Director from 1 October 2024.
Asanexperiencednon-executivedirector,
she is well-equipped to take on the additional
responsibilities of the Senior Independent
Director role in the next phase of Kier’s
growth. I would like to thank Justin for his
significantcontributiontoKier,especially
on our successful turnaround, and on behalf
of the Board, I wish him well for the future.
Upon Justin’s retirement, Stuart Togwell,
Group Managing Director Construction,
will be joining the Board as an Executive
Director with effect from 1 October 2024.
The Board believes that we need to replace
the construction industry expertise Justin
broughtandStuart’ssignificantstrategic
and operational delivery experience in the
constructionsectorwillbebeneficial.Further,
Stuart has insights into UK government as
it plans future infrastructure investment.
We believe having this direct insight available
to us will enhance our understanding of their
priorities and our strategic decision making.
I am also grateful to the Board Committee
chairsfortheirworkandexpertise.Anew
Directors’ Remuneration Policy was crafted
and approved, we have milestone plans for
the environmental and social initiatives and
our risk management continuously improves.
Looking forward
The Board believes that our leaders and
all of our people have achieved an exemplary
turnaround of Kier and the MTVCP is
substantially delivered. We have set out
what shareholders can expect Kier to deliver
in future, through the cycle. By focusing on
all stakeholder needs, Kier will remain based
on the sound, sustainable foundations which
are now in place and which we will
continuously improve.
Matthew Lester
Chairman
6www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Chief Executive’s review
Andrew Davies
Chief Executive
“ The strong results
for FY24 are testament
to the hard work and
commitment of our
people who have
enhanced our resilience
and strengthened our
financial position in line
with our medium-term
value creation plan.”
Introduction
The Group delivered a strong set of results
for the 12 months ended 30 June 2024 with
significant growth in revenue and operating
profitability. The material deleveraging is the
result of the Group’s focus on operational
excellence and cash management. A clear
demonstration of the commitment to our
medium-term value creation plan launched
three years ago.
Accordingly, on 7 March 2024, we
announced the resumption of dividend
distributions with an interim dividend payment
with clear line-of-sight to a sustainable average
month-end net cash position, alongside an
appropriate longer-term debt structure.
On 15 February 2024, we completed
a successful £250m Senior Notes issue
and extended the existing £261m Revolving
Credit Facility (‘RCF’), thereby securing a
long-term debt structure for the Group. Given
the considerable progress Kier has made
and the Board’s ongoing confidence in the
Group’s future prospects, a final dividend
of 3.48p per share has been proposed –
giving a total of 5.15p for FY24.
The success for future years is underpinned
by the year-end order book growing to
£10.8bn in FY24, an increase of 7% against
the prior year, resulting from a large number
of contract wins across Infrastructure Services
and Construction, providing multi-year
revenue visibility. The new wins consist
of high quality and profitable work in our
markets reflecting the bidding discipline and
risk management embedded in the business.
Benefiting from the order book strength and
Kier’s framework positioning, c.90% of Group
revenue for FY25 is already secured which
provides the Board with a high degree of
confidence in our outlook.
New long-term sustainable
growth plan
Since the medium-term value creation plan
was announced in June 2021, the Group has
made significant progress against these
financial targets with operating free cash flow
conversion and profit margins met consistently
over recent reporting periods. During that
time, the Group has significantly de-risked,
having deleveraged the business markedly,
enabling the Group to commence
incremental returns to shareholders.
7www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Chief Executive’s review continued
Value accretive earnings-led
business model
– Aligned to the UK Government’s
infrastructure investment priorities
which are critical to the future
economic growth of the UK
– Integrator with design, project
management, engineering,
logistics, supply chain
management and ongoing
maintenance capabilities
Attractive market
positions
– Attractive market positions
in growing markets
– Focused on UK markets in
Infrastructure Services, Construction
and Property
– Delivery capability at both national
and regional levels in the UK
– Property development capability
Strong order book
underpinned by frameworks
– Established position in core markets
underpinned by long-term contracts
and framework agreements
– Order book of £10.8bn
– We have places on agreements with
an advertised value of up to £144bn
across all of our core markets
covering both national and regional
geographies and market sectors
– Contracts across a number of sectors
including healthcare, education,
justice and borders, rail, water,
nuclear defence, and private
– Contracting with the UK Government,
regulated and blue-chip clients
– Long-standing customers
and supply chain relationships
Management team with
expertise and track record
of delivery
– Proven track record of operational
and financial delivery
– Successfully executed an ambitious
self-help programme and right-
sized the business
– Operating framework embedded
in organisation to manage risk
– Commercial and financial discipline
in quoting new contracts and
capital allocation
– Continuing focus on sustainable
growth, business improvement
and managing costs
Places on
frameworks
£144bn
Advertised Value
Order book
£1 0.8bn
Key investment proposition
For more information please visit:
www.kier.co.uk/investors
8www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Chief Executive’s review continued
Executive Committee
Executive Board members Corporate functions Group Managing Directors
For more information on our
Executive Committee, please
refer to: www.kier.co.uk
Alpna Amar
Corporate
Development
Director
Louisa Finlay
Chief People Officer
Sophie Timms
Corporate
Affairs Director
Joe Incutti
Group Managing
Director,
Transportation
Leigh Thomas
Group Managing
Director, Property
Stuart Togwell
Group
Managing
Director,
Construction
Andrew Bradshaw
Group Managing
Director, Natural
Resources,
Nuclear
& Networks
Andrew Davies
Chief Executive
Simon Kesterton
Chief Financial Officer
Note: Stuart Togwell, Group Managing
Director Construction, will be joining the
Board as an Executive Director with effect
from 1 October 2024.
9www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Chief Executive’s review continued
The direction of travel is expected to
be maintained with the recently secured
long-term funding alongside our cash
generative business model. We believe this
will comfortably support our organic growth
including further increases to Property
investment and value accretive acquisitions.
We are now in a position where we have
capital allocation options to drive shareholder
value over the long term.
Accordingly, the Group has evolved its targets.
– 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
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.
Customers and winning new work
The Group’s core markets have remained
favourable. We continue to be a ‘strategic
supplier’ to the UK Government, with c.90%
of our revenue generated from public sector
and regulated companies. Our contract awards
reflect our long-standing client relationships
and regionally based UK operations.
Highlights in the year:
Infrastructure Services:
– Birmingham – appointed on a two-year
interim extension to deliver maintenance
and repair services across Birmingham’s
extensive road network
– United Utilities – five-year framework
to deliver £100m per annum of design,
engineering, project management and
construction services for water and waste
water infrastructure
– Southern Water – appointed to the
£3.1bn seven-year Strategic Development
Partnership framework to increase
capacity at water supply and waste water
treatment sites
– South West Water – appointed to the
£2.8bn five-year Mechanical, Electrical,
Instrumentation, Control and Automation
(‘MEICA’) framework. An alliance to deliver
their water infrastructure plan for 2025–2030
– Anglian Water – appointed on an extension
for the next five years of the Integrated
Maintenance, Repair and Developer
Services (‘IMRDS’) alliance to provide
vital repair services and infrastructure
improvements across East Anglia
Construction:
– Defence – appointed by the Defence
Infrastructure Organisation (‘DIO’) on
a six-year alliance to create 16,000 bed
spaces for the Armed Forces in single-
living accommodation
– Education – awarded four projects worth
over £130m
– Healthcare – awarded three projects worth
over £55m including Cheshire Surgical
Centre and Princess Royal University
Hospital Endoscopy Unit
– Justice and Borders – awarded HMP
Channings Wood and HMP Bullingdon
design and build houseblock projects,
together worth over £300m
– Other – appointed by Essex County
Council to Lot 3 of a four-year £400m
framework to provide design and
construction services to public
sector projects
– Kier Places – appointed by Heathrow
Airport to deliver its Quieter Neighbour
Support Scheme, a major programme of
works over the next eight years to reduce
the impact of aircraft noise on homes,
businesses and community buildings
around the airport
Financial summary
Kier’s revenue of £4.0bn (FY23: £3.4bn)
reflects growth across Infrastructure
Services and Construction. The Group’s
FY24 results reflect a strong operational
and financial performance.
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
substantial and largely non-discretionary.
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 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.
Read more in Our strategy
on pages 18–21
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Chief Executive’s review continued
Our order book has continued to grow and
increased 7% year over year to £10.8bn.
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 live 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.£20m 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 £150.2m which represents a 14% increase
on the prior year (FY23: £131.5m) driven
predominantly by profitable growth in
Infrastructure Services.
Group adjusted operating profit margin
decreased by 10 basis points to 3.8%
(FY23: 3.9%) due to the timing and mix
of projects. The margin remains above
the Group’s medium-term plan target and
is industry leading. Profit for the year from
continuing operations increased 25% to
£51.3m (FY23: £41.0m) with lower adjusting
items, partially offset by an increase in
interest costs and taxation.
Adjusted earnings per share (‘EPS’) increased
7% to 20.6p (FY23: 19.2p) and reported EPS
increased 24% to 11.8p (FY23: 9.5p).
The Group generated £185.9m of free
cash flow in FY24 (FY23: £132.3m), with the
increase attributable to the Group’s revenue
growth converted to increased profit and
excellent cash conversion. The incremental
cash has allowed the Group to invest further
in the Property business, which is currently
seeing a number of exciting opportunities.
In addition, the Group experienced a
seasonal working capital inflow of £68.4m,
predominantly driven by Construction.
The Group’s net cash position at 30 June 2024
was £167.2m (FY23: £64.1m) with supplier
payment days remaining consistent with
the prior year as the strong volume growth
translated to increased cash receipts.
Average month-end net debt for the
year ended 30 June 2024 was £(116.1)m
(FY23: £(232.1)m). As noted above the
increased activity seen across the Group
which started in Q4 FY23 has translated
into cash generation and lower net debt
as well as allowing us to deploy cash to our
Property business, acquire certain assets
of Buckingham Group and paying pension
deficit obligations.
In February 2024, we announced the
completion of our £250m 5 year Senior
Notes. The proceeds were used to further
reduce our USPP (‘US Private Placement’)
Notes by £37m and lower the RCF to £261m.
These revised long-term debt facilities
completed the last stage of the Group’s
recapitalisation and provides us with both
flexibility and optionality whilst we continue
to deleverage.
Capital allocation
In addition to the long-term sustainable
growth plan, the Group has clear capital
allocation priorities, which remain largely
unchanged. The Group maintains a disciplined
approach to capital and continuously reviews
capital allocation priorities with the aim of
maximising shareholder returns. The Group’s
capital allocation is underpinned by its
commitment to maintain a strong balance
sheet. The capital priorities are:
– Capex – investment to support
its businesses
– Deleveraging – further deleveraging.
Targeting an average month-end net cash
position with investment of any surplus cash
– Dividend – targeting a dividend cover of
around 3 x earnings through the cycle
– Property – disciplined non-speculative
investment in the Property segment.
ROCE target of 15%
– Mergers and acquisitions – the Group
will consider value accretive acquisitions
in core markets
“ The Group is well
positioned to continue
benefiting from UK
Government infrastructure
spending commitments
and we are confident in
sustaining our strong
cash generation.”
Read more in our Operational review
on pages 22–29
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Chief Executive’s review continued
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 c.3x by adjusted earnings
over the cycle and in a payment ratio of
approximately one-third interim dividend
and two-thirds final dividend.
The Group has continued to deliver strong
operating and financial performance resulting
in material deleveraging during the period.
This significant improvement, combined with
the strength of the order book and future
prospects of the Group have resulted in the
Board proposing a final dividend of 3.48p
per share. When combined with the interim
dividend of 1.67p, the total dividend of 5.15p
in FY24 represents an earnings cover of
4x as we progressively move to our target
of 3x cover.
The final dividend will be paid on
29 November 2024 to shareholders on the
register at close of business on 25 October
2024. The shares will be marked ex-dividend
on 24 October 2024. 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 8 November 2024.
Property
Kier’s Property business invests in and
develops sites across the UK, largely through
joint ventures where it partners with local
authorities, as well as blue-chip and regulated
businesses. The business typically delivers
mixed-use commercial and residential
developments and specialises in urban
regeneration, last mile logistics, modern
sustainable office developments and
affordable housing.
The Property division targets a return on
capital employed of 15%. A component of
the cash generated by our Construction and
Infrastructure Services segments is invested
in long-term property developments. It also
recycles cash generated from completed
property transactions as a further source
of capital.
With the new Government’s focus on the
delivery of affordable housing combined with
the cyclical recovery in the property market,
the Group is currently seeing many attractive
investment opportunities in Property.
Accordingly, during FY24, the Board
reviewed the capital employed in Property
and increased the range to between £160m
and £225m (previously £140m to £170m).
Acquisition
On 4 September 2023, Kier agreed to
acquire substantially all of the rail assets
of Buckingham Group Contracting Limited
(‘in Administration’) and their HS2 contract
supplying Kier’s HS2 joint venture, Eiffage
Kier Ferrovial BAM (‘EKFB’), for a total cash
consideration of £9.4m.
The Group has previously stated it would
consider value accretive acquisitions in core
markets where there is potential to accelerate
the medium-term value creation plan. This is
an excellent example of an acquisition which
provides a cultural fit as well as accelerating
Kier’s broader rail strategy. The rail assets
consisted of design, build and project
integration contracts for a range of customers
including Network Rail.
As part of the acquisition, Kier achieved
positions on various frameworks and projects
including, the Control Period 6 (‘CP6’) North
West & Central framework for Network Rail,
Transport for Greater Manchester (‘TfGM’)
framework, Transport for Wales (‘TfW’)
framework, West Midlands Combined
Authority: Willenhall & Darlaston Project,
East Midlands Railway: Etches Park Project
and Nexus’ Whitley Bay Project.
The acquisition has been successfully
integrated into the Group’s Transportation
business and is performing ahead of our
initial expectations.
Performance Excellence
Through our Performance Excellence
programme, 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.
See our Financial review
on pages 77–82
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Chief Executive’s review continued
The Group’s focus for FY24 was Digital and
Simplification as we continuously improve the
operational performance of the business.
The key tenets were 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
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 January 2024 to 30 June 2024,
the Group’s aggregate average payment
days was 34 days (H1: 33 days) and the
percentage of payments made to suppliers
within 60 days was 86% (H1: 88%).
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. To
achieve this, we are focused on growth that
supports a just transition towards a greener,
fairer, resilient and inclusive economy. As
a ‘strategic supplier’ to the UK Government,
Environmental, Social, Governance (‘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 per annum require net zero
carbon and social value commitments.
Building for a Sustainable World
Last year, we launched our refreshed
sustainability framework, ‘Building for a
Sustainable World’. It covers sustainability
from both an environmental and social
perspective and focuses on three pillars:
Our People, Our Places and Our Planet,
alongside relevant metrics to report progress.
Our actions during FY24 have been on
establishing strong foundations: developing
and embedding milestone plans to govern
our actions and deliver against each
framework topic and pillar.
We believe that to be a responsible business
and to play a leading role in our industry,
we must address both the impact of climate
change and leave a positive lasting legacy
in the communities in which we operate.
Health, Safety and Wellbeing
The Group’s 12-month rolling Accident
Incident Rate (‘AIR’) in FY24 of 155
represents an increase of 76% compared
to the prior year (FY23: 88).
Accreditations
In FY24, we received external verification
of our approach to delivering our net
zero ambitions:
– The Science Based Target initiative
confirmed that our targets are aligned
to limiting global warming to 1.5°C
and Net Zero
– PAS 2080 accreditation shows that
our processes are contributing to
reducing lifecycle carbon emissions
from our customers’ buildings and
infrastructure projects
– The British Standards Institute (‘BSI’)
provided ISO14064-1 standards assurance
of our FY23 and FY24 carbon footprint
As well as reducing our own carbon footprint,
Kier continues to work with its clients to
design out carbon from UK infrastructure
projects, and with our supply chain to reduce
their carbon emissions.
In February 2024, Kier was provided the
London Stock Exchange Green Economy
Mark demonstrating that 69% of our FY24
revenue was derived from green products
and services.
Social
Delivering a legacy of social value continues
to be a key priority for our customers and
for Kier. This year we delivered £583m
1
of added social value through our workforce,
supply chain and positive impact in our
local communities.
The Group’s 12-month rolling All Accident
Incident Rate (‘AAIR’) in FY24 of 363 increased
by 13.5% from the FY23 result of 320.
These FY24 figures are an increase
on the high performing benchmark that we
achieved last year. We are disappointed with
these trends given our high standards, but
we continue to outperform historic industry
league tables. Safety remains our licence
to operate. During FY24, we rolled out our
culture programme, which complements
safety-specific behavioural training across
our projects. These programmes have been
designed to bring positive health, safety and
wellbeing approaches into our operations,
and apply to all personnel, including our
supply chain. They sit alongside our existing
policies and procedures.
Environment
Net Zero Carbon Targets
In FY24, c.4% of Kier’s carbon emissions came
directly from our operations (Scope 1 & 2),
such as the fuel in our fleet and energy
consumed in the offices and depots that
we operate. Scope 3 predominantly relates
to the emissions from the materials we buy
and the supply chain partners we rely on to
deliver our projects. Scope 3 makes up the
remaining c.96% of the emissions.
We have prepared a milestone plan to
become net zero carbon for Scope 1 & 2
by 2039. We achieved a 9% year-on-year
reduction in Scope 1 & 2 carbon emissions
in FY24. For value chain emissions (Scope 3),
we are aiming for net zero carbon by 2045.
We are working with our supply chain to target
our most carbon intensive materials and
activities. This is our third year of reporting
on our Scope 3 emissions as we continue
to improve the process.
See our ESG Report
on pages 36–64
1. We now measure our added social value,
which excludes the economic value gained from
subcontracted spend if not with an SME or VCSE.
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Emerging Talent
We continue to offer apprenticeships as a key
means of upskilling employees and bringing
in diverse emerging talent to reduce the
industry skills gap.
Kier is a people-based business and our
performance depends upon our ability to
attract and retain a dedicated workforce.
In FY24, we had over 660 apprentices
participating in programmes, representing
c.6.5% of our workforce and we welcomed
c.60 future graduates on work experience
placements and c.100 graduates onto our
graduate programme, c.36% of which
comprised women.
We contribute to a variety of educational
engagement activities, including playing
a leading role in Open Doors Week to
introduce students and the general public
to the construction industry.
Making Ground programme
As part of our drive to recruit diverse talent,
Kier operates a prison engagement and
employment programme, Making Ground.
We have provided employability training
to over 35 candidates in custody, offered
41 prison leavers employment and over
25 Released on Temporary Licence (‘ROTL’)
opportunities to people in custody within our
business or with our supply chain in FY24.
Kier also remains committed to offering
employment opportunities to those who have
served in our armed forces and has offered
employment to 67 veterans and 11 reservists
during the year.
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 backlog
remains profitable and cash generative in line
with our long-term sustainable growth plan.
Built by Brilliant People™
Kier is Built by Brilliant People™. We have
therefore invested in the rewards and
benefits that we offer to them and their
families. We are a proud Real Living Wage
employer, and c.1,000 employees received a
Real Living Wage increase of, on average,
7.3% in January 2024. All our employees
receive life assurance and access to a range
of wellbeing support including a virtual GP,
confidential advice and counselling services.
Focus has also been made on wellbeing
including such initiatives as Your Voice, a
survey which enables employee engagement.
This is an important measure to ensure our
approach to employees is successful. The
current surveys show a 67% employee
engagement score for FY24, an increase
from the previous year (FY23: 65%).
Our approach to sustainability safeguards our
business and builds a resilient environment,
community and profits over the long term.
Summary and outlook
The past three years have seen the Group
achieve significant operational and financial
progress. The strong results for FY24 are
testament to the hard work and commitment
of our people who have enhanced our
resilience and strengthened our financial
position in-line with our medium-term value
creation plan. Our order book remains strong
and growing at £10.8bn and provides us with
good multi-year revenue visibility. The
contracts within our order book reflect the
bidding discipline and risk management now
embedded in the business.
We are also pleased to report that the Group
significantly reduced its average month-end
net debt position as well as improved its
year-end net cash position. We are confident
we can sustain this momentum going forward.
The Group has started the financial year
well and is trading in-line with the Board’s
expectations. The Group is well-positioned
to continue benefiting from UK Government
infrastructure spending commitments and
we are confident in sustaining the strong
cash generation evidenced especially over
the last two years allowing us to significantly
deleverage, increase dividends to
shareholders and deliver the evolved
long-term sustainable growth plan which
will benefit all stakeholders.
Andrew Davies
Chief Executive
“ Kier is also a people-
based business and our
performance depends
upon our ability to
attract and retain a
dedicated workforce.”
Chief Executive’s review continued
See our ESG report
on pages 36–64
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What
we do
How we
do it
Infrastructure Services
This comprises our Transportation
and Natural Resources, Nuclear
& Networks businesses.
Transportation undertakes design, build
and maintenance of assets to support the
movement of people, goods and equipment.
It includes our road, rail and aviation business.
Natural Resources, Nuclear & Networks
delivers long-term contracts for repairs,
maintenance, and supporting capital projects
in the water, environment, energy, and
telecoms sectors.
Construction
Construction comprises our Regional
Buildings, Strategic Projects and Kier Places.
Kier is a leading UK national contractor,
providing project delivery for our public and
private clients across a number of sectors,
including education, healthcare, justice
and borders, defence, and commercial.
The Kier Places business comprises
three business streams:
– Residential solutions which provides
housing maintenance and fire safety
work for local authorities and
housing associations
– Workplace solutions which provide
building facilities management for
public sector clients
– Building solutions providing
construction works for customers
with a build value <£10m
Property
Our Property business invests in
and develops schemes and sites across
the UK. It concentrates on mixed-use
commercial and residential development
business delivered through joint venture
partnerships. The Property business
includes affordable housing.
Read more in our Operational review
from page 22
Our strategy and risk management
Kier is focused on the successful delivery
of our sustainable long-term plan. Our risk
appetite aligns with our culture, and the
Board reviews risk as part of its strategy
development sessions.
Read Our strategy
from page 18
Read How we manage risk
from page 68
Sustainability
Sustainability is at the heart of our purpose
to ‘sustainably deliver infrastructure which
is vital to the UK.’
Sustainability is fundamental to Kier’s
ability to win work and secure positions on
long-term UK Government frameworks and
contracts which require carbon and social
value commitments. We also aim to minimise
our environmental impact and support our
employees through our ‘Building for a
Sustainable World’ framework.
Read more in Our
ESG report from page 36
Governance
The Board has focused on delivering
our strategy and the medium-term value
creation plan, ensuring we generate value
for shareholders and other stakeholders.
The Board is now in a position to drive
shareholder value in the long term through
the evolved sustainable growth plan.
Read our Governance report
from page 86
Our business model
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Our business model continued
Technical
Preparing technical designs and
undertaking supporting building
work for some of the largest
and most complex infrastructure
projects throughout the UK on
behalf of our clients. Driving
value engineering, optimisation
of assets and minimising
disruption. This is done through
our team of c.300 designers
in FY24.
Modern Methods of
Construction (‘MMC’)
Utilising MMC to maximise
efficiency in timing and labour
costs through our formed
partnerships with a network
of suppliers. We use a ‘choice
factory’ approach to deliver
a step change in our projects
across a range of sectors.
Experienced in delivering
large-scale civil engineering
projects, both capital and
maintenance works, as well
as property development.
Managing highly-complex
projects and teams across
our business units.
A large number of our contracts
are secured through frameworks.
We have early, close and
continuous engagement with
our clients, local supply chains
and local communities to
successfully deliver our projects.
The Group aims to have
consistency in our approach
to people, projects, processes,
cash management and future
ways of working.
We continue to share best
practice and look for continuous
improvements across the Group
e.g. through our Performance
Excellence workstreams.
ESG is fundamental to our ability
to win work and secure positions
on long-term frameworks.
To successfully win contracts
with the UK Government,
we must demonstrate we can
meet environmental and social
value commitments under
procurement policy notes PPN
06/20 and 06/21.
As c.90% of Kier’s revenue is
derived from the public sector and
regulated clients, our ability to win
work is dependent on delivering
on our ESG commitments.
Design and
engineering
capability
Specialist
expertise
in project
management
Strong
delivery
culture
A responsible
approach to
sustainability
Why our clients
choose us…
Innovation and Digital
We work with leading software
partners to deliver safer, smarter
and more sustainable buildings
for our clients. Our in-house
digital construction team are
located on projects across
the UK.
Support
Structural and civil engineers
providing technical advice and
support across our network
of UK offices including areas
such as decarbonisation and
energy efficiency.
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Society
Customers
Supply chain
Our people are at the heart
of our business and our
success depends upon our
ability to attract and retain
a dedicated workforce.
Our people use their skills,
knowledge and creativity to
provide solutions to clients and
customers and we are looking to
bring a new generation of talent
into the construction industry.
We are able to operate
at scale through the
collective strength of our
supply chain partnerships.
Our supply chain partners
are key to the success of the
Group. They help us deliver
our projects. It is important
that the Group has an ethical,
sustainable and resilient supply
chain. During FY24 Kier spent
c.61% of subcontracted
expenditure with SMEs.
We are mindful of our
impact on communities
and society.
We benefit many communities
through the creation of
employment and continued
support of employees.
We deliver financial
returns for reinvestment
back into the business and
for our shareholders.
Shareholder returns
We aim to generate long-term
sustainable shareholder returns
through the execution of our
sustainable growth plan.
We sustainably deliver
projects and services that
are vital for UK infrastructure
and connectivity.
The Group delivers projects
and services to customers on
time and within budget through
project management expertise
and supply chain partnerships.
We ensure that our employees
have skills and experience from
a range of locations, sectors
and backgrounds to reflect the
communities where we work.
We have various entry points
to the Group, including graduate
and apprenticeship opportunities.
Kier offers our colleagues a
comprehensive rewards and
benefits package, career
development opportunities, an
inclusive work environment as
well as a range of family friendly
policies and wellbeing services.
We work to build strong,
collaborative relationships
with our suppliers and invest
in them by:
– Providing partner
value through workshops,
training and resources
on sustainability
– Supporting our suppliers
to meet high standards of
compliance expected by
us and our customers
Communities
We are focused on social
sustainability by ensuring our
actions directly and positively
impact the communities we
serve, and this in turn generates
wider value for society.
Apprentices
The Group onboarded over
120 apprentices in FY24.
Kier Foundation
Independent charity donated
c.£125k to the Trussell Trust,
our new charity partner
for FY24.
Dividend
Our sustainable growth plan
outlines our dividend policy.
This policy targets dividend
cover of around three times
earnings across the cycle.
Financial strength
Investment – strong, resilient
and flexible balance sheet,
providing capacity to invest
and no excess cash.
We support our main customer
base, the UK Government, to
deliver on its policy objectives
through our ESG activities,
supporting customers on their
path to achieving net zero
emissions by 2050 and creating
social value.
Every region of our UK-wide
business ensures consistent
delivery wherever required.
Our People
Shareholders
The value
we create
Our business model continued
No. of employees
c.10k
SME Spend
c.61%
Revenue from public
and regulated sectors
c.90%
Dividend
5.15p
Apprentices
666
17www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
Corporate governance Financial statements Other informationOverview
OUR PURPOSE
To sustainably deliver
infrastructure which is vital to the UK
OUR VISION
To be the UK’s leading infrastructure services and construction company
Focus on government,
regulated or blue-chip
client base
An integrator
and strategic
partner
Collaborative Trusted Focused
Innovation and
digitalisation
Breadth, depth and
diversity of talent
A culture of
Performance
Excellence
Supply chain
partnerships
Delivering
safely and
sustainably
Contracting
through long-term
frameworks
Operate in
business to business
markets
OUR STRATEGY
Consistent and
Safe Delivery
STRATEGIC ACTIONS
OUR BUILDING BLOCKS FOR SUCCESS
OUR VALUES
Sustainable
Growth
Generate
Cash
Long-term sustainable growth plan
Following the significant progress of the Group
over the last three years, the Group is now
focused on driving long-term shareholder
value through our evolved targets to FY30.
Our strategy
Our strategy focuses on leveraging our
attractive market positions to sustainably
deliver infrastructure which is vital to the UK.
We have four objectives to deliver
on our strategic actions:
Objective 1:
Leverage our attractive market
share positions in growing markets
Objective 2:
Maintain and enhance long-term
customer relationships
Objective 3:
Resilient and well-balanced
portfolio
Objective 4:
Deliver disciplined growth,
consistent profitability and
cash generation
Revenue: GDP + growth
through the cycle
Adjusted operating
profit margin
Cash conversion of
operating profit
Average month-end
net cash with
investment of
surplus cash
Balance sheet
Sustainable
dividend policy:
c.3 x earnings cover
through the cycle
Dividend
3.5%+
c.90%
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Kier Group plc Annual Report and Accounts 2024
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Our progress this year:
Infrastructure Services
Transportation
Our market leading position in roads is
underpinned by spending on roads, e.g. the
Road Investment Strategy 3 (‘RIS3’) funding
for the national road network complemented
by the predictable revenue streams generated
by local authority maintenance contracts.
Investment in improving connectivity
between northern England and Scotland
also benefits the Group.
The UK rail network will benefit from
additional funding through the Network Rail
Control Period 7 (‘CP7’) covering the period
2024 to 2029. Following our acquisition of
certain rail assets of Buckingham Group, we
were appointed to deliver the North West and
Central area of CP7. We continue to deliver
80km of HS2 – Europe’s largest rail project
with a pipeline of further work opportunities
available. With the rebound of aviation following
the COVID-19 pandemic, this is another
potential area of growth.
Natural Resources, Nuclear
& Networks
We are accessing the significant growth
opportunities in water, environment and
the nuclear and energy sectors.
With wide experience in the water industry,
the Group has successfully provided solutions
across the water cycle, with further growth
opportunities through the planned £88bn
(subject to Ofwat determination) Asset
Management Plan 8 (‘AMP8’) running from
2025 and 2030. Recent awards in AMP8 bids
will expand our water portfolio to a prominent
geographical presence across England.
In addition to water management, our
environment business is delivering key
projects and emergency response to severe
weather, addressing the need for increased
investment in water management driven
by climate change.
With the UK government committed to
increasing energy generation by up to four
times by 2050, and investing 2.5% of GDP
in defence, our experience in nuclear and
energy environments, such as the ongoing
projects in Sellafield, Devonport and Hinkley
Point, positions us for targeted growth
opportunities in this sector.
Our progress this year:
Construction
Regional Build
The focus on the business being a national
one but delivered locally is driving growth
in our core markets. The Department for
Education remains focused on vital upgrades
across the schools’ estate and the recent
need to address RAAC issues which results
in a significant pipeline of opportunities to be
delivered through frameworks that Kier has
places on.
The UK’s growing prison population,
combined with ageing infrastructure, has
resulted in the Ministry of Justice instigating
a construction programme including new
prisons, more accommodation in existing
prisons and refurbishment of existing facilities
using an alliancing model which plays to
Kier’s strengths.
Investment in the healthcare market, where
significant spending is required to clear the
maintenance backlog, is another attractive
opportunity in a core market.
Kier Places
With increasing housing standards and
fire and safety compliance, we expect the
housing maintenance services business
within Kier Places to benefit by leveraging
our capability and relationships with local
authorities and housing associations. Our
history of working in public sector-occupied
residential buildings supports customers
as they decarbonise their portfolios and
retrofit their buildings.
Forward focus:
Supporting the infrastructure needs of our
clients in light of structural change such as
population growth, transportation pressures,
aged infrastructure, energy security and
climate change.
Our progress this year:
Property
Our property business provides mixed-use
commercial and residential property
development schemes for customers,
predominantly delivered through joint ventures.
We use established relationships to source
projects, and deliver them successfully which
generates repeat business. We specialise
in urban regeneration, last mile logistics and
sustainable office developments. Property
includes our partnership housing business
which delivers residential homes through
open market sales, build to rent and
affordable housing.
Forward focus:
The customer driven opportunities of:
– Asset optimisation for capital constrained
public sector clients
– Continuing long-term trends of population
growth, e.g. urbanisation
– Combating the effects of long-term climate
change by reducing carbon in buildings
for our customers
– Changing demographics with ageing
populations and household make-up and
their consequent housing requirements
– Adapting assets as consumer shifts
change retail offerings.
– Support public sector clients with
their historical underspend on building
affordable housing
Objective 1:
Leverage our attractive
market share positions
in growing markets
Why this is vital
Supports the UK Government and asset
managers to deliver much-needed UK
infrastructure, particularly in areas impacted
by historical under investment and the
decarbonisation agenda such as water,
environment, energy, affordable housing
and housing maintenance.
Our strategy continued
19www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Our progress this year:
– Orderbook increase of 7% to £10.8 billion
at 30 June 2024
– Positions on c.£144 billion of
frameworks for the UK Government
and regulated entities
– Environment and social commitments
and progress made in the year including:
– Scope 1 & 2 carbon reduction of 9%
from April 2023 to March 2024.
Forward focus:
– Continue to align the Group to our
customers’ needs and the increasing
movements toward alliancing, long-term
partnerships and delivering value for money
– Win new business with low-risk profiles
and attractive margins
– Continue to deliver projects on time,
to budget and in line with customer
requirements
Objective 2:
Maintain and enhance
long-term customer
relationships
Why this is vital
Delivers long-term capital and
maintenance of assets for our customers
including supporting them to achieve their
environmental and social commitments
– Maintain and enhance the Group’s
relationship with the UK Government,
regulated and blue-chip client base
– Operating under long-term frameworks,
which require strong client relationships
and sector expertise
Our strategy continued
Orderbook
£1 0.8bn
Places on frameworks
£144bn
(Advertised value)
20www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Our progress this year:
– Continued deleveraging, allocating the
cash generated from our Infrastructure
Services and Construction segments
and investing for future growth from
our Property segment and successfully
completed and integrated acquired rail
assets from Buckingham Group
– Infrastructure Services segment
re-aligned to support evolving client needs,
especially in higher growth sectors of
water and nuclear
– Attracted and retained talent through
our people programmes including:
– Culture programme including workshops
and launch of our nine healthy
behaviours to support the growth
of both Kier and our people
– Improved measuring of performance
through launch of our Balanced
Performance Scorecard
– Relationships with supply chain developed
and retained through:
– Investing in supply chain partners
through the prompt payment
code adherence
– Training using the Supply Chain
Sustainability School
Forward focus:
Infrastructure Services and Construction
– focus on winning market opportunities
driven by UK Government spending and
investment plans from UK asset owners.
Kier Property – focus on employing
additional capital efficiently and delivering
appropriate returns.
Objective 3:
Resilient and
well-balanced
portfolio
Why this is vital
– It enables the Group to reduce risk
and maximise opportunities
– Unlocks synergies from integrated business
– Enables a platform to attract and retain
people talent
– Supports with supply chain relationships
Why this is vital
Disciplined growth, consistent delivery
and generation of cash leads to a
sustainable business
Our progress this year:
– Revenue growth of 17% to £4.0bn
– Adjusted Operating Profit growth
of 14% to £150.2m
– Free Cash Flow of £185.9 million
(FY23: £132.3m)
Forward focus:
– Continue to grow the business
in a disciplined way
– Monitor risk at every stage of the project
Revenue growth to
£4.0bn
Adjusted Operating Profit
£150 .2m
Free Cash Flow
£185.9m
Our strategy continued
Objective 4:
Deliver disciplined
growth, consistent
profitability and
cash generation
21www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Group operations
69%
is ‘green’ revenue
Infrastructure Services
£2.0bn
revenue
2
Construction
£1.9bn
revenue
2
Property
£71m
revenue
2
1. The Corporate segment comprises the costs of the Group’s central
functions which have increased over the prior year due to inflation
and investment in people and systems to support the Group’s
volume growth.
2. Financial data for our segments can be found in the segmental
reporting note on page 167.
Operational review
Sustainable growth:
through our operations:
Infrastructure Services page 23
Construction page 26
Property page 28
Corporate segment
1
page 167
22www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
Sustainable growth:
through our Infrastructure Services
Creating a vital road link
in the Cotswolds
Project background
The A417 Missing Link scheme is a National
Highways major strategic road upgrade and
off-line build near Gloucester that will deliver
over three miles of much-needed dual
carriageway. It will support active travel for
the people of Gloucestershire, with improved
cycling and pedestrian lanes. There are a
number of bridges, the main one being an
environmental bridge, 37 metres wide where
native plants will be planted alongside the
bridge. A bat underpass will be constructed
to give local wildlife safe passage from one
side of the road to another.
The increased road capacity is anticipated to
reduce congestion, traffic delays and improve
safety while meeting specific requirements
to preserve the Cotswolds landscape.
Approximately, 428,000 cubic metres of
earth has been moved since the construction
phase started in FY23. The project deployed
a highly skilled team of ecologists and
archaeologists to support the conservation
and environmental enhancement of the area.
It is also being used as the testing ground
for an award-winning innovation to remove
microplastics from road water runoff, developed
through laboratory testing by Kier and TerrAfix.
At the end of FY24, the project had achieved
over £10m in social value. This was achieved
through volunteer work, and working with
our charitable partners in particular, Great
Western Air Ambulance charity and the Sam
Polledri Foundation where 5 defibrillators
have been placed on the network in hard to
reach walking, cycling, horse-riding locations.
The project has also provided training and
employment opportunities in the local area.
Project
A417 Missing Link
Contract type
Road – design and
project management
Project value
£460m
Social value
to date
c.£10.1m
Earth moved to date:
m
3
c.428k
Biodiversity:
Environmental Bridge
37m wide
For more information please visit:
www.kier.co.uk
23www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
Infrastructure Services segment comprised
the Transportation and Natural Resources,
Nuclear & Networks businesses.
Infrastructure Services revenue increased
16% against the prior year primarily due to
the continued volume of work on HS2 and
the impact of the Buckingham acquisition.
Excluding the impact of Buckingham,
revenue increased 9% on a like-for-like basis.
Adjusted operating profit increased 41% to
£112.3m due to these higher volumes.
The Transportation business division
undertakes design, build and maintenance
of assets to support the movement of people,
goods and equipment. It includes our road,
rail and aviation businesses.
The business experienced a period of
continued work winning, including new
contracts and contract extensions in road
maintenance, rail projects, and the design and
build of three National Highways major capital
projects. The business has transitioned from
a predominantly maintenance-focused to an
established roads maintenance and capital
works contractor. Adjusting items largely
relate to acquisition activity including costs
related to the Buckingham acquisition and
the amortisation of contract rights from this
and previous acquisitions.
During the year, the business benefited
from a one-off £6m customer claim.
The Natural Resources, Nuclear
& Networks division delivers long-term
contracts in maintenance and capital projects
to the water, nuclear and energy sectors,
and protection of habitats and communities
in our natural environment and waterways.
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 environment and energy sectors.
In FY24, we delivered volume and margin
growth in these key growth sectors which
offset managed lower activity in telecoms.
Sustainable growth:
Key contract wins include:
Transportation:
– Birmingham – appointed on a two-year
interim extension to deliver maintenance
and repair services across Birmingham’s
extensive road network
Natural Resources, Nuclear & Networks:
– United Utilities – five-year framework
to deliver £100m per annum of design,
engineering, project management and
construction services for water and waste
water infrastructure
– Southern Water – appointed to the
£3.1bn seven-year Strategic Development
Partnership framework to increase capacity
at water supply and waste water
treatment sites
– South West Water – appointed to the
£2.8bn five-year Mechanical, Electrical,
Instrumentation, Control and Automation
(‘MEICA’) framework. An alliance to
deliver their water infrastructure plan
for 2025–2030
– Anglian Water – appointed on an extension
for the next five years of the Integrated
Maintenance, Repair and Developer
Services (‘IMRDS’) alliance to provide
vital repair services and infrastructure
improvements across East Anglia
– 86% of revenue secured for FY25
Infrastructure Services
Revenue £m
Adjusted operating margin %
Order book £bn
Adjusted operating profit
1
£m
Reported operating profit £m
1,988.3
FY24
FY23
1,712.3
112.3
FY24
FY23
79.8
5.6
FY24
FY23
4.7
88.7
FY24
FY23
57.2
6.4
FY24
FY23
5.8
1. Stated before adjusting items of £23.6m
(FY23: £22.6m).
24www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
Sustainable growth:
through our Infrastructure Services
Project background
Kier is working with the Environment Agency,
the Royal Society for the Protection of Birds
and Natural England on a 150 hectare parcel
of land on the Isle of Purbeck in Dorset,
to create compensatory intertidal habitat.
This will replace habitat protected under 2017
conservation regulations which is being lost
in other areas of Poole Harbour due to rising
sea levels pressing against fixed sea defences.
The project team at Arne Moors is working
to adapt low-lying grasslands into diverse
wetlands through constructing new 4,300
metres of new embankments which will
be 500 metres further inland, creating
78 hectares of new intertidal habitat, a new
15 hectare freshwater habitat area and two
shallow saline lagoons of 35 hectare.
Over time, the movement of the tides will help
create features such as saltmarsh, mudflats,
reed beds ensuring the vast array of wildlife
the coastline is home to will remain protected
for decades to come.
The site is home to many rare species
of plants and animals including water voles,
sand lizards and a wide variety of birds,
botany and invertebrates, with our work
creating enhanced habitats for plants and
animals already on site while adding new
habitats for a wider range of species.
Project
Arne Moors
Contract type
Natural Resources,
Nuclear & Networks
– project management
Project value
c.£37m
Social value
to date
c.£1.3m
Biodiversity:
Intertidal habitat creation
78 hectares
For more information please visit:
www.kier.co.uk
Protecting the coast from
the impact of climate change
25www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
The Construction segment comprises
Regional Building, Strategic Projects and Kier
Places (comprises three streams: residential
solutions (housing maintenance and fire
safety work), workplace solutions (building
facilities management) and building solutions
(construction works for customers with a
build value less than £10m)). Construction
has national coverage delivering schools,
hospitals, prisons, defence estate optimisation
as well as commercial, residential and
heritage buildings for local authorities, the
Ministry of Justice and other government
departments and the private sector.
Revenue increased 15% largely due to
increased volume in our regional build business.
Adjusted operating profit was in line with the
prior period at £69.2m. In the prior year, the
business benefited from a larger weighting
towards the higher margin Kier Places
business. In FY24, the mix was weighted
towards the regional build business.
In addition, the segment experienced increased
overheads for site starts, as anticipated.
As a regional 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 prisons where our Construction
business has specialist expertise.
1. Stated before adjusting items of £9.6m
(FY23: £23.1m).
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.
Sustainable growth:
Key contract wins include:
– Defence – appointed by the Defence
Infrastructure Organisation (‘DIO’) on
a six-year alliance to create 16,000 bed
spaces for the Armed Forces in
single-living accommodation
– Education – awarded four projects
worth over £130m
– Healthcare – awarded three projects
worth over £55m including Cheshire
Surgical Centre and Princess Royal
University Hospital Endoscopy Unit
– Justice and Borders – awarded HMP
Channings Wood and HMP Bullingdon
design and build houseblock projects,
together worth over £300m
– Other – appointed by Essex County
Council to Lot 3 of a four year £400m
framework to provide design and
construction services to public
sector projects
– Kier Places – appointed by Heathrow
Airport to deliver its Quieter Neighbour
Support Scheme, a major programme of
works over the next eight years to reduce
the impact of aircraft noise on homes,
businesses and community buildings
around the airport
– 97% of revenue secured for FY25
Construction
Revenue £m
Adjusted operating margin %
Order book £bn
Adjusted operating profit
1
£m
Reported operating profit £m
1,907.8
FY24
FY23
1,652.5
69.2
FY24
FY23
69.5
3.6
FY24
FY23
4.2
59.6
FY24
FY23
46.4
4.4
FY24
FY23
4.3
26www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
Project background
Kier is delivering a new 1,000 place school
for City of Edinburgh Council, which is set
to be delivered to Passivhaus standard.
It is the third school to be built in Scotland
to Passivhaus standards and expected to use
70% less energy when in operation compared
to a traditionally built school. The school has
been modelled to withstand predicted changes
in climate conditions up to 2080.
Kier has a track record of delivering
Passivhaus buildings, which focus on the five
principles of insulation, heat controls, airtight
construction, heat recovery ventilation and
thermal bridge free design.
The project goes beyond the build and offers
the opportunity for students to take their first
step into the construction industry. Through
Kier’s ‘Constructing Futures’ programme,
a construction academy was opened on site,
offering 15 pupils from Currie and the nearby
Balerno High School employability skills and
an insight into the construction industry.
This additional commitment has been
supplemented by working with the City
of Edinburgh Council to deliver social value
tailored to the needs of the community,
including employment opportunities, education
engagement events and volunteering with
local community groups.
Sustainable growth:
through Construction
Delivering Scotland’s
third Passivhaus school
Project
Passivhaus Currie
Community High School
Contract type
Construction –
design and project
management
Project value
£65m
For more information please visit:
www.kier.co.uk
Social value
to date
c.£5.6m
Less energy used than
traditionally built school
70%
27www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
The Property business invests in and
develops mixed-use commercial and
residential schemes across the UK, largely
through joint ventures. For FY24, Property
generated revenue of £71m (FY23: £37.6m)
despite wider market conditions. The growth
was predominantly driven by the sale of
our Southampton Student scheme in
March 2024 for £44m.
The Property business has seen a
challenging environment with scheme
evaluations, developments and transactions
being delayed due to market conditions.
Despite the conditions, Property generated
£6.2m in adjusting operating profit
(FY23: £12.8m). These results include a fair
value gain of £5.1m related to investments
in various sectors, including the students
and green investments.
The Group is focused on the disciplined
expansion of the Property business through
select investments and strategic joint ventures.
As at 30 June 2024, the capital employed in
the Property segment was £166m excluding
third party debt and fair value gains. Due to
the Group’s increased operating cash flows,
the benefit of building out projects such as
19 Cornwall Street in Birmingham, and
market conditions, we have reviewed the
capital employed in our Property segment
and increased the range to between £160m
and £225m (previously £140m to £170m).
In FY24 the Property business had a ROCE
of 3.9%. The Group targets the Property
business to generate a ROCE of 15%. The
Property business is well-positioned to deliver
this over time as it continues to support its
capital-constrained public sector clients with
asset optimisation, as well as leverage the
structural trends in changing demographics,
population growth and climate change.
The business has had limited investment
over the past three years. An increase in the
value and consistency of capital investment
is expected to smooth out the returns profile
of the Property segment over time.
Sustainable growth:
Key contract wins
and highlights
– Disposed of a 423-bed redeveloped
student accommodation asset in
Southampton to Greystar.
Property
Revenue £m
Adjusted operating margin %
Reported operating profit £m
Adjusted operating profit
1
£m
Capital employed £m
1. Stated before adjusting items of £4.3m
(FY23: £(1.5)m).
71.0
FY24
FY23
37.6
6.2
FY24
FY23
12.8
8.7
FY24
FY23
34.0
1.9
FY24
FY23
14.3
166
FY24
FY23
150
28www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Operational review continued
Project background
Kier has been working with Watford Borough
Council since 2013 on a 20-year joint venture
to regenerate 70 acres of land in the town,
delivering residential, retail, leisure, industrial
and hotel space.
Built around Watford General Hospital, the
development takes a whole-place approach
to improve local infrastructure, access and
community facilities. To date, over £31m
has been invested in remediation and
infrastructure to support the transformation
of this previously underutilised brownfield
industrial land.
Watford Riverwell will provide c.1,000
much-needed new homes. The houses are
being constructed with a fabric first design,
making them more cost and energy efficient
for homeowners.
The regeneration has also delivered over
70,000 sq ft of industrial space, a senior living
village of 250 units and a 1,455 space car
park for Watford General Hospital. A new
neighbourhood centre with a hotel, shop and
restaurant is also proposed. Green space is
another important part of this scheme, with
a public park already delivered as part of
the plans.
Sustainable growth:
through Property
Regenerating Watford
Project
Watford Riverwell
Contract type
Property – joint venture
regeneration
Project value
GDV of c.£500m
For more information please visit:
www.kier.co.uk
Social value from
FY22 to FY24
c.£1.5m
New homes
delivered
c.1,000
29www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Our marketplace
Positive market environment
underpinning UK Government
spending commitments
Infrastructure Investment
The attractive market served by Kier
is expected to grow materially over
the next few years as structural and
non-discretionary UK Government
infrastructure spending is committed
to solving the long-term issues deriving
from population growth, transportation
pressures, aged infrastructure, energy
security and climate change. The
Government has committed to boosting
infrastructure spending. In addition,
UK-regulated water companies have
announced their investment plans.
Kier’s position
Kier’s scale, leading delivery capability
at both national and regional levels,
operational delivery, processes and
expertise should enable Kier to take
maximum advantage of the significant
and committed UK Government
and regulated industry spend over
the long term.
Demographic change
– Population expansion with people
living longer, net migration and
mini baby boom
– Pressure on health, social care
and housing driving change
Climate change
– Energy supply shortage and rising
demand driving investment
– UK Government’s commitment
to net zero carbon with energy
plans and decarbonisation
of infrastructure
Economic growth
– UK economic growth slow to recover
– Construction industry historically
used to stimulate economy
Addressing geographic imbalance
– Increased spending in previously
deprived areas to narrow the UK’s
regional inequality
Aged infrastructure
– Transport – aged roads and
rail infrastructure
– Water – deteriorating treatment
plants and piping
– Social infrastructure – aged
schools, hospitals and prisons
Market drivers
30www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Market Opportunity:
– Water: England & Wales (Asset
Management Plan 8 (‘AMP8’): £88bn
by 2025 (subject to Ofwat determination)
– Water: Northern Ireland Price Control 21
(‘NI PC21’) – £4bn from 2021–2027
– Energy Distribution: £30bn of investment
in the energy network by 2026
– Great British Energy: £8.3bn
– Flood defences: £1.3bn for 34 flood
defence projects
Kier’s Market Positioning:
– Extensive experience in water
– Key infrastructure provider of maintenance
and capital projects to water, nuclear and
energy sectors
– Long-standing strong customer
relationships operating in regulated
and government funded sectors
– Specialist design, project management
and integrator capability to civil
engineering and mechanical, electrical,
instrumentation, control and automation
(MEICA) delivery
– Large geographical presence in the Water
Asset Management plan £88bn (subject
to Ofwat determination) AMP8 from 2025
– Expertise in the protection and restoration
of natural habitats and waterways
– Well-placed in high quality and secure
environments for infrastructure to nuclear
and defence
Natural
Resources,
Nuclear &
Networks
Transportation
Road Investment
Strategy
2020–2025
£27bn
RIS2 to 2025
Water Asset
Management
Plan 8
£88bn
AMP 8 from 2025
Great British
Energy
established
£8.3bn
Public funding
Rail Control
Period 7
£44bn
5 years from 2024
Market Opportunity:
– National Highways: Road Investment
Strategy 2 (‘RIS2’): £27 billion investment
in England’s strategic roads from
2020–2025
– Local Authorities: £8.3bn fund for potholes
and other highways maintenance
– Managing the transports sectors response
to changes resulting from climate change
– £44bn committed over 5 years for CP7
rail network from April 2024
– TfL has agreed another £250m injection
in 2024
Kier’s Market Positioning:
– Market-leading position
– Integrator with unique in-house design,
construction and maintenance capabilities.
Long track record of successful delivery
– Established relationships with strategic
clients on long-term frameworks of
typically 5 years
– Asset and investment management
expertise. UK highways assets valued
at £500bn driving ongoing demand for
major projects and maintenance
– Project delivery expertise
Our marketplace continued
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Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Our marketplace continued
PropertyConstruction
Education
Market Opportunity:
– 500 DfE school replacement projects
over 10 years including 100+ of RAAC
schemes to 2030
Health
Market Opportunity:
– Spending to address backlog
of underinvestment in hospitals
Justice
Market Opportunity:
– 14,000 new prison places required
– £4bn committed over four years
– c.£250m per annum of maintenance
work required to Ministry of Justice’s
retained estate
Defence
Market Opportunity:
– £5.1bn Defence Estate Optimisation
Programme
– £1.2bn alliance to be spent in improving
military homes framework
– £1.1bn future capital investment across
US Visiting Forces estate in UK
Kier Places
Market Opportunity:
– UK Government net zero carbon agenda
and increased housing standards both
require significant retrofitting and
maintenance of public housing particularly
in high density urban areas
Kier’s Market Positioning:
– A leading UK builder with attractive
market positions and regional footprint
to take advantage of UK Government
committed spend
– Track record of successful delivery with
design, operational and support capability
– Long-standing collaborative relationships
across chosen sectors and a ‘strategic
supplier’ to the UK Government
– Contracting through frameworks providing
competitive advantage, consistency and
visibility over revenue streams
– Experienced facilities management and
housing maintenance services provider
Market Opportunity:
– Increasing focus on affordable housing
results in significant opportunities of
urban regeneration
– Geographic redistribution agenda –
increased spending in deprived areas
Kier’s Market Positioning:
– Well-established relationships with
land-owners and local authorities
providing access to a large land bank
– Proven track record of delivery in
the urban regeneration and property
development market. Experienced team
with in-house capability
– Commercial and operational synergies
with Kier’s other businesses
– Potential to deliver ROCE of 15%
Climate change
– Legislation change – driving
obsolescence in real estate market
– ESG – net zero carbon, and attracting
and retaining employees, a key driver
of demand
– Regional relocation – businesses
relocating to regional cities; growth
of urban population and improved
infrastructure
– Energy efficiency – crucial factor
in home moves
Population growth
– Population growth – 65–79 age
group is predicted to increase by
nearly a third in the next 40 years
– Households – increase in single
person households
– Ownership – increased demand
for build to rent
– Supply – shortage of housing,
especially in affordable housing
and restrictive planning policies
Changing consumer trends
– Demand – significant demand for
high-quality large-scale warehouses
– Logistic vacancy rate – rate
currently c.7%
– Retail– increase in online retail
sales which is changing UK high
streets and driving demand for
last mile logistics
– Global supply chains – stockpiling
and onshoring
– Technology – growth in AI, robotics
and automation driving demand
Market drivers
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01
02
03
04
05
06
07
08
09
Our marketplace continued
Addressable
Market
£66bn
Construction
£35bn
Infrastructure
£31bn
Addressable Market
The overall UK construction market is estimated
to be worth £139bn
1
.
The Group’s addressable market is
estimated at £66bn. This comprises £31bn
for Infrastructure Services and £35bn for
Construction. The Group serves this market
through its three segments: Infrastructure
Services, Construction and Property as
detailed in our business model.
The importance of Frameworks
Frameworks are our main route to market as
nearly all major public sector work is awarded
through frameworks. Kier remains focused
on maintaining and growing our positions on
both local and national frameworks.
We have places on agreements with an
advertised value of up to £144bn across all of
our core markets covering both national and
regional geographies and market sectors.
In our Infrastructure Services segment,
we have places on 6 national and 33 regional
frameworks with a total advertised value
of £17bn.
In Construction, we have been awarded
places on 22 national and 34 regional
frameworks worth £127bn.
Kier’s addressable market
1. CPA Construction Industry Forecasts Spring Edition.
Infrastructure Services – £31bn
01 22% Infrastructure Other New
02 6% Infrastructure Other Repairs
& Maintenance
03 14% Roads New
04 6% Roads Repairs & Maintenance
Construction – £35bn
05 23% Commercial
06 7% Industrial
07 11% Public Non-Housing
08 2% Repairs & Maintenance Private
09 9% Repairs & Maintenance Public
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Kier Group plc Annual Report and Accounts 2024
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Our key performance indicators
Financial
Total Group revenue
including joint ventures
1
£bn
£4.0bn
£4.0bn
FY24
FY23
£3.4bn
The growth in revenue is driven by increased
activity in both the Infrastructure Services and
Construction segments.
In particular the acquisition of the Buckingham
Group rail assets has been successfully
integrated into the Group’s Transportation
business, within Infrastructure Services.
Net cash – 30 June
4
£m
£167.2m
£167.2m
FY24
FY23
£64.1m
The Group’s revenue growth converted to a
significant increase in net cash. In addition, the
Group experienced a seasonal working capital
inflow, predominantly driven by Construction.
Adjusted operating profit
1,2
£m
£150.2m
£150.2m
FY24
FY23
£131.5m
Adjusted operating profit has increased primarily
due to an improvement in the volume/price/mix
changes as well as the impact of management
actions undertaken. These are partly offset by
cost inflation experienced across the business
and fewer Property transactions.
Net debt – average
4
£m
£(116.1)m
£(116.1)m
FY24
FY23
£(232.1)m
Increased activity across the Group has translated
into cash generation and lower average net debt,
as well as allowing us to be deploy cash to our
Property business, acquire certain assets of
Buckingham Group and paying pension
deficit obligations.
Adjusted earnings per share
1,3
p
20.6p
20.6p
FY24
FY23
19.2p
Adjusted earnings per share has increased due
to the improved profit generation of the Group.
Free cash flow
4
£m
£185.9m
£185.9m
FY24
FY23
£132.3m
Free cash flow has increased compared to prior
year due to the improved underlying performance
in the business.
Order book
£bn
£10.8bn
£10.8bn
FY24
FY23
£10.1bn
The order book remains strong and is
underpinned by high-quality and profitable work.
Dividend
5
p
5.15p
5.15p
FY24
FY23
Nil
The Group’s commitment to our medium-term
plan has resulted in the Group materially
deleveraging. This has allowed Kier to return
to the dividend list in FY24. The total dividend
declared represents a cover of 4x.
1. See consolidated income statement on page 148.
2. See note 5 to the consolidated financial statements.
3. See note 12 to the consolidated financial statements.
4. See financial review on page 81.
5. See note 11 to the consolidated financial statements.
Link to strategic objectives
Leverage our attractive market share positions in growing markets
Maintain and enhance long-term customer relationships
Resilient and well-balanced portfolio
Deliver disciplined growth, consistent profitability and cash generation
Link to remuneration
34www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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Safety – Group Accident
Incident Rate (‘AIR’)
155
155
FY24
FY23
88
Achieve year-on-year improvement in the
Group AIR. Remain below the Health and
Safety Executive benchmark for the UK
The Group’s monthly 12-monthly rolling
Accident Incident Rate (‘AIR’) of 155 represents
an increase of 76% compared to 88 in FY23.
The AIR rate is calculated by headcount and is
therefore volume adjusted. The AIR rate includes
both Kier employees and contractors. It equates
to 41 RIDDOR reportable incidents in FY24
compared to 22 in FY23.
The Group’s 12-month rolling All Accident
Incident Rate (‘AAIR’) of 363 is an increase
of 13.5% compared to 320 in FY23.
These FY24 figures are an increase on the
high performing benchmark that we achieved
last year. Despite the increase, we retain a
strong safety record and continue to outperform
historic industry league tables. We rolled out our
culture programme in FY24, together with our
safety-specific behavioural training which sits
alongside our existing policies and procedures.
Payment performance
34 days
34 days
FY24 H2
FY24 H1
33 days
Maintain a good relationship with supply
chain partners
In line with the Prompt Payment Code,
our latest Duty to Report on Payment Practices
and Reporting submission covers the period
from 1 January 2024 to 30 June 2024, showing
the Group’s aggregate average payment days
had increased by 1 day (H1: 33 days).
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.
Employee engagement
67%
67%
FY24
FY23
65%
Achieve continuous improvement scores
in employee engagement surveys
We continue to engage with our people through
the Your Voice surveys. In FY24, our surveys
focused on wellbeing and culture.
Overall, we have seen a consistent increase in
our employee engagement (positive emotions)
score since FY22 (58% in FY22; 65% in FY23)
which shows that our strong focus on taking
action on the feedback received from our
people is making a positive difference.
Scope 1 & 2
carbon intensity
7.4
FY24 7.4
FY23
9.7
We have achieved a 24% decrease in our
carbon intensity for Scope 1 & 2 compared
with FY23 and a 69% decrease against
our FY19 baseline
We continue to build on these successful
reductions in line with our pathway to net zero.
Baseline Scope 3
carbon intensity
200.5
200.5
FY24
FY23
276.5
During FY24 our Scope 3 carbon emissions
intensity has reduced 27%
We continue to focus on the enhancement
of our Scope 3 data and delivery of our pathway
to net zero.
Non-financial
Our key performance indicators continued
Link to strategic objectives
Leverage our attractive market share positions in growing markets
Maintain and enhance long-term customer relationships
Resilient and well-balanced portfolio
Deliver disciplined growth, consistent profitability and cash generation
Link to remuneration
35www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
ESG report
Andrew Davies
Chief Executive
People in training
and development
programmes
1
12.3%
Apprentices in
Kier’s workforce
666
Spent with
SMEs
2
/VCSEs
3
£1.4bn
Operational
(Scope 1 & 2)
carbon emissions
reduction
9%
Value chain
(Scope 3) carbon
emissions
reduction
13%
Kier’s purpose is to sustainably deliver
infrastructure which is vital to the UK. To
achieve this, we are focused on growth that
supports a just transition towards a greener,
fairer, resilient and inclusive economy. As
a ‘strategic supplier’ to the UK Government,
Environmental, Social & Governance (‘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 per annum require net zero
carbon and social value commitments.
Building for a Sustainable World
Last year, we launched our refreshed
sustainability framework, Building for a
Sustainable World. It covers sustainability from
both an environmental and social perspective
and focuses on three pillars: Our People,
Our Places and Our Planet, alongside relevant
metrics to report progress. Our actions during
FY24 have been on establishing strong
foundations: developing and embedding
milestone plans to govern our actions and
deliver against each framework topic and pillar.
We believe that to be a responsible business
and to play a leading role in our industry,
we must both address the impact of climate
change and leave a positive lasting legacy
in the communities in which we operate.
Health, Safety and Wellbeing
The Group’s 12-month rolling Accident
Incident Rate (‘AIR’) in FY24 of 155 represents
an increase of 76% compared to the prior
year (FY23: 88). The Group’s 12-month rolling
All Accident Incident Rate (‘AAIR’) in FY24 of
363 increased by 13.5% from FY23 of 320.
These FY24 figures are an increase on the
high performing benchmark that we achieved
last year. We are disappointed with these
trends given our high standards, but we
continue to outperform historic industry
league tables. Safety remains our licence
to operate. During FY24, we rolled out our
culture programme, which complements
safety-specific behavioural training across
our projects. These programmes have been
designed to bring positive health, safety and
wellbeing approaches into our operations,
and apply to all personnel, including our
supply chain. They sit alongside our existing
policies and procedures.
Environment
Net Zero Carbon Targets
The Group has set out its pathway to
become net zero carbon across all business
operations by 2039 (Scope 1 & 2), and in the
value chain (Scope 3) by 2045 together with
interim targets.
As a Tier 1 supplier, the majority of our
carbon emissions relate to the use of fuel,
either on our sites or during travel to our sites.
The Group continues to reduce our carbon
footprint. During the year, we achieved a
further 9% reduction in Scope 1 & 2 emissions,
and cut Scope 3 emissions by 13%.
Accreditations
In FY24, we received external verification
of our approach to delivering our net
zero ambitions:
– The Science Based Targets initiative
confirmed that our targets are aligned
to limiting global warming to 1.5°C and
net zero.
Scan to visit the Sustainability
pages on our website
1. Percentage of Kier’s workforce in formal
development programmes i.e., an accredited
course of more than one year in duration.
It includes apprentices and excludes Kier’s
wider learning and development offering.
2. Small and medium sized enterprises.
3. Voluntary, community and social enterprises.
36www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
– PAS 2080 accreditation shows that our
processes are contributing to reducing
lifecycle carbon emissions from our
customers’ buildings and infrastructure
projects.
– The British Standards Institute (‘BSI’)
provided ISO 14064-1 assurance of our
FY23 and FY24 carbon footprint.
As well as reducing our own carbon footprint,
we continue to work with our clients to design
out carbon from UK infrastructure projects,
and with our supply chain to reduce their
carbon emissions.
In February 2024, Kier was provided with
the London Stock Exchange Green Economy
Mark demonstrating that 69% of our FY24
revenue was derived from green products
and services.
We continue to progressively enhance our
Task Force on Climate-Related Financial
Disclosures (‘TCFD’) assessment and
disclosure, taking on board recommendations
from the Financial Reporting Council (‘FRC’)
in our disclosure. You can find this from
page 58.
Social
Delivering a legacy of social value continues
to be a key priority for our customers and
for Kier. This year, we delivered £583m
2
of added social value through our workforce,
supply chain and positive impact in our
local communities.
Emerging Talent
We continue to offer apprenticeships as a key
means of upskilling employees and bringing
in diverse emerging talent to reduce the
industry skills gap.
Kier is a people-based business, and our
performance depends upon our ability to
attract and retain a dedicated workforce.
In FY24, we had over 660 apprentices
participating in programmes, representing
c.6.5% of our workforce, and we welcomed
c.60 future graduates on work experience
placements and c.100 graduates onto our
graduate programme, c.36% of which
comprised women.
We contribute to a variety of educational
engagement activities, including playing a
leading role in Open Doors Week to introduce
young people to the construction industry.
Making Ground programme
As part of our drive to recruit diverse talent,
Kier operates a prison engagement and
employment programme (Making Ground).
We have provided employability training
to over 35 candidates in custody, offered
41 prison leavers employment and over
25 Released on Temporary Licence (‘ROTL’)
opportunities to people in custody within our
business or our supply chain in FY24.
Kier also remains committed to offering
employment opportunities to those who have
served in our armed forces and have offered
employment to 67 veterans and 11 reservists
during the year.
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 backlog
remains profitable and cash generative in line
with our long-term sustainable growth plan.
Built by Brilliant People™
Kier is Built by Brilliant People™. We have
therefore invested in the rewards and benefits
that we offer to our employees and their
families. We are a proud Real Living Wage
employer, and c.1,000 employees received
a Real Living Wage increase of, on average,
7.3% in January 2024. All our employees
receive life assurance and access to a range
of wellbeing support including a virtual GP,
confidential advice and counselling services.
Focus has also been made on wellbeing
including such initiatives as Your Voice, a
survey which enables employee engagement.
This is an important measure to ensure
our approach to employees is successful.
The current surveys show a 67% employee
engagement score for FY24, an increase
from the previous year (FY23: 65%).
Our approach to sustainability safeguards our
business and builds a resilient environment,
community, and profits over the long term.
Andrew Davies
Chief Executive
1. In 2020, we revised existing sustainability goals
to reflect our refreshed strategy. In this timeline,
and up to 2023, we report on our 2020–2023
10 pillar strategy; from 2023 onwards, we report
on our 2023–2028 3 pillar strategy.
2. We now measure our added social value,
which excludes the economic value gained from
subcontracted spend if not with an SME or VCSE.
Our sustainability journey
highlights (2020–2024)
2024
– Received verification from SBTi
– Received ISO 14064-1 verification for FY23
and FY24 carbon footprints
– Evolved our social value measurement
2
Long-term destination
To further enhance our impact as a
purpose-driven organisation which sustainably
delivers infrastructure that is vital to the UK,
including our net zero journey, our legacy in
the communities we serve, and our inclusive
workplace where everyone fulfils their potential
and has their voice heard.
2023
– Launched ‘Building for a Sustainable World’
three pillar strategy
– Achieved LSE Green Economy Mark
– Achieved £5bn in social value over
three years
2020
1
– Launched ‘Building for a Sustainable World’
10 pillar strategy
– Aligned targets to UN SDGs
2021
– Committed to net zero carbon emissions
by 2045
– Committed to £5bn in social value by 2030
2022
– Set target to meet net zero by 2039
– Conducted EFRAG-aligned double
materiality assessment
ESG report continued
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Corporate governance Financial statements Other informationOverview
OUR PURPOSE
To sustainably deliver infrastructure which is vital to the UK
Our People
Building a workforce and
supply chain for the future
Prioritising all our people
Ethical labour
Making a positive difference
in our local communities
Social impact
Enabling social mobility
Improving the
environment now and
for future generations
% of apprentices and people
in training and development
programmes
Deliver ethical
labour plan
Spend with SMEs and
social enterprises
Deliver a social
mobility plan inclusive
of benchmarking
Carbon emissions
(scope 1-3) / £m revenue
Significant Environmental
Incident Rate (SEIR)
Tonnes waste /
£m revenue
Climate action
Valuing nature
Resource efficiency
Our Planet
STRATEGIC PILLARS
Our Places
Building for a Sustainable World
OBJECTIVES
ADDED SOCIAL VALUE
TOPICS
MEASURES
ESG report continued
As a responsible business, Kier
understands that we must adapt
our ways of working to be successful
in a changing world, and to ensure
that the impacts of our business
in that world are positive.
To support our adaptation, we developed our
sustainability framework around three pillars
– Our People, Our Places and Our Planet
– which guides our enduring commitments in
these areas. Kier is Built by Brilliant People™
and our sustainability framework is no
different, its successful delivery is underpinned
by core functions in its strategic foundations,
namely Diversity & Inclusion, Emerging
Talent, Health, Safety & Wellbeing and
Talent & Organisational Development.
We explore these foundations in more detail
in the Built by Brilliant People™ section from
page 48. We are implementing this strategy
within Kier’s robust governance framework,
and we track our progress against detailed
milestone plans.
Each pillar has several clearly defined
non-financial measures, chosen to help
demonstrate continual improvement and
aligned with our key stakeholders’ own
priorities. These are a mixture of qualitative
and quantitative targets and measures to
reflect our approach, as well as the maturity
of our framework.
We continue to report our added social
value using the Impact Evaluation Standard
measurement framework. The Standard is
fully aligned with the UK Government’s Social
Value Model (PPN 06/20) and is guided by
an independent steering committee of social
impact experts. Our definition of added social
value excludes the economic value gained
from subcontracted spend if not with a small
or medium enterprise or social enterprise.
Materiality and aligning our targets
To guide our approach to developing not only
our sustainability framework, but also how we
report on our progress, we conducted a
European Financial Reporting Authority
Group (‘EFRAG’)-aligned double materiality
assessment in 2022.
As part of our double materiality assessment
and the development of milestone plans,
we have improved our alignment to the
United Nation’s Sustainable Development
Goals (‘UN SDGs’), identifying 11 SDGs
and 35 associated targets.
Building for a
Sustainable World
Further details can be found
in our statement on materiality
and UN SDG alignment, available
on our website
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Kier Group plc Annual Report and Accounts 2024
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www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
ESG report continued
Building for a Sustainable World continued
Our People
Building a workforce
and supply chain for
the future
Apprentices
in Kier’s
workforce
666
People in training
and development
programmes
1
12.3%
Added social
value for
this pillar
£31m
Our people are at the heart of our business
and Kier’s success depends upon our ability
to attract and retain a dedicated workforce.
This includes those working within our
supply chain.
As a business, we are committed to shaping
a safe, collaborative and high-performing
culture where our people feel they can
belong, contribute and want to do their best
work. We do this by prioritising our people
and sourcing labour ethically.
Prioritising all our people
At Kier, we build for sustainable growth,
recognising that a well-trained, forward-
focused workforce is essential to meeting
our strategic and sustainability objectives.
We are committed to providing training
and development opportunities to equip
our people and our business for a changing
world. In 2024, we were awarded gold at
the European Foundation for Management
Development’s Excellence in Practice
awards for our leadership development
programmes, which is explored in detail
on page 54.
1. Percentage of Kier’s workforce in formal
development programmes i.e., an accredited
course of more than one year in duration.
It includes apprentices and excludes Kier’s
wider learning and development offering.
Find out more about how we prioritise
our people in Built by Brilliant People™
on pages 48–57
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Kier Group plc Annual Report and Accounts 2024
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ESG report continued
Building for a Sustainable World: Our People continued
Our people use their knowledge and
creativity to provide solutions to our clients
and customers and, to support with their
personal and professional development, Kier
provides them with skills and experience to
best serve the communities in which we work.
The 5% Club is an employer collective
committed to offering training and
development opportunities to their workforce.
Following an audit by the 5% Club, we were
awarded gold membership once again,
demonstrating our commitment to attract
and develop future talent.
For the workforce of tomorrow, we offer
graduate and apprenticeship opportunities,
encouraging a new generation of talent to join
the construction industry. Such opportunities
are explored on page 53. Kier also supports
local colleges in their delivery of T-Levels
with content that meets our needs as a
business and helps students to be ready
for work or further training. During the year,
we have supported more than 50 students
on industry placements across our divisions.
We run a variety of upskilling activities in our
local communities.
At The Forum in Gloucester, we developed
an on-site Learning Hub for members of the
local community to access training, career
development and wellbeing support, in
partnership with local social enterprises and
over 2,500 individuals have been supported
to date.
Ethical labour
According to the Unseen Modern Slavery
Helpline, slavery experts estimate the
number of people in modern slavery in the
United Kingdom to be more than 100,000.
As a strategic supplier to the UK Government,
we support the aims in PPN 02/23 to tackle
modern slavery in government supply chains.
At Kier, we are committed to following best
practice and collaborating with our peers to
combat modern slavery in our industry. We
implement policies to establish our approach
and set out our position on modern slavery.
We report on the effectiveness and progress
against our targets in our modern slavery
statement. In FY24, we worked with specialist
companies to identify good practice and
to develop opportunities to strengthen our
approach. Furthermore, we trained more
than 4,000 employees and people in our
supply chain on our approach, as well as to
recognise the signs of modern slavery and
encourage action.
Our supply chain partners are a key part
of our workforce, essential to delivering our
projects and to the Group’s overall success.
We are committed to ensuring that our supply
chain is fair and ethical, sustainable and
resilient, and that we protect the human rights
of everyone we encounter in our business
operations and in the wider communities
where we operate. Our supplier due diligence
process supports our aim to work with UK
Real Living Wage employers with a public
commitment to preventing modern slavery.
Furthermore, our Ethical Labour working
group meets regularly to strengthen our
procedures and to enable us to develop
campaigns to raise awareness of this
important issue. The group is working with
a modern slavery social enterprise to review
our understanding of and response to modern
slavery and labour exploitation risks within
our business. This is allowing us to develop
a focused plan that centres around
education, audit and mitigation. We share our
experiences in the Supply Chain Sustainability
School’s Modern Slavery Working Group to
drive industry-wide change. With our supply
chain comprising 3,425 small and medium
sized enterprises, it is important that we
approach this collaboratively.
Sustainucation®: Promoting
sustainability literacy
Part of our strategy for sustainable growth
is to upskill our people to understand how
their roles contribute to Kier’s sustainability
journey. In a recent survey, 92% of our
people were aware of the impact their role
has on the environment and communities.
We aim to provide knowledge and skills,
and foster sustainability mindsets, both at
work and at home, to support informed and
effective decision making for a sustainable
future. This is part of our commitment to
prioritise our people.
In the spirit of this commitment, and as part
of our online and in-person sustainability
literacy programme, our Natural Resources,
Nuclear & Networks (‘NRNN’) division have
developed Sustainucation
®
, a programme
designed to educate, engage, empower
and drive ownership of sustainability in our
teams. In May 2024, NRNN brought together
84 divisional leaders in the inaugural
Sustainucation
®
event, an opportunity to
engage in, commit to and learn about Kier’s
sustainability journey, as well as that of
individuals in the team. NRNN reflected on
positive changes and steps that can be taken
in our professional and personal lives, from
procurement practices to supermarket
choices, diverse and inclusive recruitment to
volunteering in our communities, from Kier’s
carbon reduction goals to understanding
our personal carbon footprint.
By maturing sustainability literacy across
our business, we aim to nurture innovation
to support our sustainability goals and
our journey of sustainable growth.
The programme continues.
Read more in Built by Brilliant People™
on pages 48–57
People trained on
recognising and
reporting modern
slavery in FY24
4,186
Scan for more on our:
– Modern Slavery statement
– Anti-slavery and human
trafficking policy
– Real living wage policy
– Sustainability policy
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Building for a Sustainable World: continued
ESG report continued
Our Places
Making a positive
impact in our local
communities
Raised for UK
charities through
The Kier
Foundation
£225k
Spent with
SMEs
1
& VCSEs
2
£1.4bn
Added social
value for
this pillar
£552m
Prison leavers
offered
employment
41
Veterans and
reservists offered
employment
78
At Kier, we focus on ensuring our
business directly and positively impacts the
communities we serve, and in turn, benefits
wider society. Furthermore, by creating
employment opportunities and supporting our
workforce, we deliver positive social impact
and drive social mobility to make a difference
where we work. To ensure we meet our
objectives and leave a lasting legacy, we
engage with communities local to our projects.
Doing so is part of our commitment to the
Considerate Constructors Scheme (‘CCS’).
As part of our engagement, we provide an
openly accessible helpline for our projects
to allow the public to raise a concern, as well
as provide a dedicated stakeholder liaison to
maintain dialogue. In FY24, 36 of our projects
received recognition in the CCS National Site
Awards, and our average score through
monitor visits is 43/45.
1. Small and medium-
sized enterprises.
2. Voluntary, community
and social enterprises.
41www.kier.co.uk
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Building for a Sustainable World: Our Places continued
ESG report continued
Kier Construction
Careers Hub
Kier Construction Careers Hub is a
seven-month programme, piloted in London,
delivering key workshops to students to
provide wider awareness of Kier’s work
and of future career paths available. In FY24,
sessions were delivered to c.50 students,
which included career education from senior
leaders from across the business. Further
cohorts are now taking place in the
South-East of England and in Scotland.
Social impact
Social impact is intrinsically linked to
sustainable growth: the long-term effect on
people and local communities resulting from
actions or activities to support development.
At Kier, we make a positive social impact
by providing support that addresses needs
in local communities, focusing on the most
vulnerable and disadvantaged, according to
the indices of deprivation in the areas where
we operate.
We generate positive social impact by
delivering places that offer new green spaces,
reduced carbon emissions, and which sit at
the heart of the local community; by using
local goods and labour; providing school
children with hands-on learning experiences;
and making donations of much needed items
to the community.
Furthermore, as part of our commitment
to our people and our communities, Kier
employees are encouraged to take two paid
volunteering days per year and have completed
more than 850 days during the period. In
FY25, we will simplify our processes to boost
uptake of the volunteering day allowance.
By supporting small and medium enterprises
(‘SMEs’) as well as voluntary, community
and social enterprises (‘VCSEs’) across our
contracts and projects, we create positive
social impact as we generate revenue within
our local economies.
In the last financial year, we spent c.61%
of our subcontracted spend with SMEs and
£7.4m with VCSEs.
Supporting the Crumbs Project
Our Natural Resources, Nuclear & Networks
team supports ‘The Crumbs Project’, a local
social enterprise in Bournemouth providing
hospitality-based professional training
programmes for neurodiverse adults. Kier’s
team procures their catering services, as well
as regularly spending time volunteering on
pro-bono projects.
Raising money through
The Kier Foundation
Kier’s own independently registered charity,
The Kier Foundation, manages the Group
charity partnership, which is currently with
the Trussell Trust for FY24 – FY25. Since the
beginning of this partnership, we have raised
over £125k to support their work fighting UK
poverty and our employees have volunteered
their time at food banks across the UK.
The Foundation also supports other charities
across the UK, and during the period has
donated c.£100k in much-needed funds.
Moving through May is our annual
fundraising activity that encourages teams
to move more through May, completing a
distance by walking, running or swimming.
Employees covered c.180,000km to raise
c.£80k in Moving Through May’s 2024 edition.
For Kier, this activity is also a drive to boost
employee wellbeing and mental health
through exercise, teambuilding and getting
outdoors. Kier takes an integrated approach
to sustainability and by combining our health
and wellbeing objectives with our social
sustainability initiatives, we demonstrate
how physical activity can support multiple
outcomes for people, communities and our
business. Find out more about how we
integrate health and wellbeing into our
performance on page 50.
Kierriculum
Grassroots engagement with communities
is fundamental to improving the long-term
social impact of our projects. Recognising
this, and to continue delivering value in
local communities, we developed our
educational engagement offering. In FY24,
Kier’s people developed and launched an
educational programme to inspire the next
generation: Kierriculum.
Kierriculum’s resources and activities are
linked to the national curriculum and are
designed to introduce students of all ages
to the construction industry, by connecting
what they’re learning at school or college
to real jobs and workplace scenarios.
No. of students
to whom we
delivered career
path sessions
c.50
Find out more about
Kierriculum on our website
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To get Kierriculum into as many schools and
colleges as possible, we have also boosted
the number of Kier colleagues who volunteer
their time as STEM Ambassadors. We now
have 113 ambassadors across the Kier Group
who can engage young people in careers
in construction.
Enabling social mobility
Kier believes that we should all have the
opportunity to be successful, regardless
of where we make our start in life, or what
happens along the way.
Externally, a member of our executive
committee is part of the UK Government’s
Social Mobility Commission employer
advisory group, put in place to drive social
mobility in the UK workplace and to support
the Commission’s employer-focused
programme of work. Internally, we were
inspired to establish a working group to
begin addressing such inequalities within
our business. As an important first step,
we are establishing a socioeconomic diversity
baseline for our workforce. This will provide
a benchmark to set meaningful targets and
identify where we need to focus our efforts.
Representatives from our Social Value,
Emerging Talent, and Equality, Diversity
& Inclusion teams sit on this working group.
In parallel, Kier drives several schemes
aimed at supporting individuals from
disadvantaged backgrounds both into
employment, and to develop their career.
Making ground – Prison engagement
and employment programme
Kier is an industry leader in the recruitment
of people with convictions. In FY24, we
have provided employability training to over
35 candidates in custody, offered 41 prison
leavers employment and over 25 ROTL
1
opportunities to people in custody within
our business or our supply chain.
For Kier, this initiative brings diverse
new skills into our business, and supports
us to deliver on social value commitments.
We believe that providing opportunities
to all is a primary opportunity to sustainably
strengthen our business and our societies.
We share our experiences within our supply
chain, amongst our clients and with local
and national governments to drive continued
positive change. In FY24, Making Ground
won the Diversity and Inclusion Initiative of
the Year award at the Water Industry Awards.
Armed forces recruitment
Kier aims to support Armed Forces veterans
with their return to the civilian job market,
and recognises the value and skills veterans
bring to our business. In FY24, we offered
employment to 67 veterans and 11 reservists
(50 overall in FY23). We also expanded our
recruitment offering to actively target military
spouses and family members.
Open Doors
We partner with Build UK’s Open Doors
programme. The event goes ‘behind the
site hoardings’ to showcase the range of
careers available in the construction industry.
Each year, we open sites across the country,
and welcome hundreds of visitors from local
schools, colleges and communities. Open
Doors is an important opportunity to break
down some of the stereotypes associated
with the construction industry and encourage
people into a possible career. Whilst the
events are open to anyone, we target
schools, colleges and underrepresented
groups to inspire the next generation
of apprentices and graduates, in line with
the Our People pillar of our sustainability
framework and our ambition to grow our
business sustainably.
For a week in March 2024, we opened doors
to 47 of our sites, depots and offices across
the UK and welcomed over 900 visitors.
Visitors included local schools, colleges,
universities, prisons, charities, Job Centres
and members of the public.
Building for a Sustainable World: Our Places continued
ESG report continued
1. Released on Temporary Licence.
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ESG report continued
Building for a Sustainable World continued
Our Planet
Improving the
environment
now and for future
generations
CDP Climate
Change 2023
Score
B
LSE green economy mark
of revenue from projects delivering
a net environmental benefit
69%
Our planet does a lot for us: it cleans the air
we breathe, protects us from flooding, and
provides us with food and natural resources.
All essential elements for our everyday lives.
However, climate change and human
activity are putting increasing pressure
on our planet and its ability to provide these
services, causing more extreme weather,
loss of biodiversity, erosion of soil, and
increased pollution.
As a business, we are committed to
accelerating our action and maintaining a
healthy and safe environment for nature and
our communities; using resources efficiently
and playing our part to address the climate
and nature emergencies.
Key achievements under the Our Planet
pillar this year include:
– Receiving validation from the Science
Based Targets initiative that our carbon
targets are aligned to limiting global
warming to 1.5°C and achieving net
zero operations, as well as reasonable
assurance of our FY23 and FY24 carbon
footprint to ISO 14064-1 standards
– Undertaking an initial nature materiality
exercise that is aligned to the Taskforce
on Nature-related Financial Disclosures
(‘TNFD’) LEAP methodology. Following
this assessment, we are setting long-term
nature-related metrics and targets
– Enhancing our water data quality, with
a focus on disclosing defined metrics
in FY25
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Building for a Sustainable World: Our Planet continued
ESG report continued
Climate Action
Our climate is changing. Across the world,
as well as in the UK, our weather is less
predictable and increasingly extreme. We are
committed to taking climate action, reducing
carbon emissions and working with clients
to deliver infrastructure and buildings which
are resilient to the effects of climate change.
Recognition
In order to provide our stakeholders with
confidence and to play our part in mitigating
climate change, this year we received external
recognition of our approach to delivering our
net zero ambitions, with the Science Based
Targets initiative validating our Scope 1, 2 & 3
net zero targets. To demonstrate the accuracy
of our reported carbon footprint, BSI provided
reasonable assurance
2
, using the ISO 14064-1
standard, of our Scope 1, 2 & 3 carbon
footprint for FY23 and FY24. Additionally,
our Construction and Infrastructure Services
businesses achieved PAS2080 accreditation,
showing that our processes are contributing
to reducing lifecycle carbon emissions from
our buildings and infrastructure projects.
Supporting best practice
HVO procurement guidance
Petrol and diesel use accounted for 95% of
our Scope 1 & 2 emissions in FY24. A focus
on fuel efficiency has reduced our petrol and
diesel emissions by 11% (from 30,659 tonnes
in FY23 to 27,425 tonnes in FY24). In the
context of our growth, this reduction
demonstrates our efforts to decouple
business development and emissions
We recognise that, over the next decade,
sustainable biofuels, such as Hydrotreated
Vegetable Oil (‘HVO’), will be a key action
for our transition to a low carbon future.
Therefore, working collaboratively with our
peers, we have co-funded the development
of HVO procurement guidance to mitigate
nature, modern slavery and climate risks.
Improving supply chain
carbon data quality
This year, our Scope 3 emissions
decreased by 13%. This is associated with
our Purchased Goods and Services (‘PGS’),
where we employ a spend-based calculation
methodology, applying UK Government
carbon factors. Updated carbon factors and
a c.9% reduction in applicable spend has
driven the reduction. We are working to
evolve our approach to use a more accurate
supplier-specific inventory methodology.
Reliable supply chain data is essential
to understanding our impact and identifying
reduction opportunities. Our PGS emissions
account for 89% (697,937 tonnes) of our
Scope 3 emissions, down from 790,384
tonnes in FY23 (16% reduction against 2022
baseline). In collaboration with our peers,
we are supporting the development of tools
to accurately and consistently capture carbon
data and improve performance
Delivering climate resilient projects
As well as reducing the climate impact
of our operations, we deliver buildings and
infrastructure that support a climate transition.
This includes buildings which are net zero in
operation, and infrastructure resilient to our
changing climate. Our capabilities to deliver
these projects continue to grow. Over the last
year 69% of project revenue supported climate
resilience, an increase from 64% in FY23.
Climate resilience and adaptation
Read about our approach to climate
resilience and adaptation in our Task Force
on Climate-Related Financial Disclosures
report on pages 58–64.
Net zero
operational
carbon
(Scope 1 & 2)
by 2039
Net zero carbon
across our value
chain by 2045
(Scope 3)
Value chain
(Scope 3) carbon
emissions
reduction
13%
Operational
(Scope 1 & 2)
carbon emissions
reduction
9%
Project revenue
supporting
climate resilience
1
69%
Target
Performance
1. Classified using the FTSE Russell’s Green
Revenues Classification System (‘GRCS’).
2. Reasonable assurance is a high level of assurance
ensuring reported historical data and information
is materially correct.
Climate resilience in action:
Trade City Manchester
Forming part of the established Cheetham
Hill Industrial area, Trade City Manchester
provides Grade A industrial and trade
space. This Kier Property development
regenerates a derelict and contaminated
brownfield former brick works and scrap
yard, delivering high levels of sustainability
including a BREEAM excellent rating and
Energy Performance Certificate – A.
Additionally, the site supports nature and
adapts to our changing climate with the
creation of a rain garden to capture water
during extreme weather.
Scan to find out more about
climate resilience in action
Scan to discover our
Carbon Reduction Plan
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Building for a Sustainable World: Our Planet continued
ESG report continued
Valuing Nature
Nature and biodiversity are under increasing
pressure from human activity and climate
change. We value nature, and as a major
construction business, we understand
our responsibility to protect, restore and
enhance habitats and biodiversity across
our value chain.
In previous years, we have reported
all environmental incidents as a metric of
environmental performance. It is important
to instil a culture of recognising and reporting
environmental incidents to identify
opportunities for improvement and, in the
past 12 months, additional focus has resulted
in a positive increase in overall incidents
reported. Whilst we continue to collate
all environmental incident (‘AEIR’) statistics
(reported on page 55), we are now focusing
our attention on incidents that have the
most critical impact. Our aim is to reduce
significant risk to business operations while
recognising efforts to reduce the overall
number of incidents.
During the year, significant incidents (‘SEIR’)
increased from 21 in FY23. 80% of contributing
incidents related to instances of extreme
rainfall which overwhelmed protection
measures, leading to surface water runoff.
In response to our changing climate,
particularly an extremely wet year with
numerous extreme rainfall events and the
expectation of increased future risks, we are
updating our surface water management
controls across all divisions. Additionally, we
have implemented processes to continuously
review and improve these controls. While our
attention is particularly focused on reducing
significant impacts, all incidents were
investigated to support our continuous
improvement journey and remediated in
accordance with our ISO 14001-certified
environmental management system.
Developing our valuing nature baseline
In readiness for the Taskforce on Nature-
related Financial Disclosures (‘TNFD’)
framework, and to ensure we focus on our most
material nature impacts and dependencies,
we have undertaken a baseline assessment
aligned to TNFD’s LEAP approach.
Additionally, working with the Green Finance
Institute and the Supply Chain Sustainability
School, Kier led the establishment of a
working group to collaboratively progress
both the protection and enhancement of
nature in the construction sector.
Providing nature training and guidance
Biodiversity Net Gain training has been
delivered by the Wildlife Trust to our
Infrastructure Services and Property business
divisions. This training focused on embedding
best practice assessment and delivery of
biodiversity net gain on construction and
infrastructure projects.
Placemaking guidance is being developed by
our Property team. This includes our approach
to using nature-based solutions that support
wellbeing and wildlife, whilst also adapting
projects to our changing climate.
Updating our Environmental
Management System
To ensure our environmental management
systems remain current, we are updating
our wildlife and habitats assessment and
management controls, reaffirming Kier’s
commitment to assess and protect ecology
across all of our projects.
Significant
Environmental
Incident Rate
(‘SEIR’)
1
59
Performance
1. SEIR is calculated as significant environmental
incidents divided by headcount and then multiplied
by 100,000. It excludes our HS2 joint venture.
Valuing nature in action:
Biochar innovation
to tackle microplastics
Working with RSK Group company
TerrAffix, we have been testing the ability of
biochar to reduce the environmental impact
of road runoff. Biochar is a carbon-rich
material derived from organic waste.
Our laboratory trials replicated potential
approaches to treat runoff water, with
successful outcomes, demonstrating that
even the lowest biochar/filter stone mix
was effective at removing microplastics,
resulting in significant improvements
in runoff water quality.
Following an award-winning laboratory
demonstration, we are moving to real
world trials within our A417 project to further
demonstrate the potential of biochar in
this application.
Additionally, the biochar itself sequesters
carbon, contributing to carbon footprint
reduction. This project not only enhances
environmental sustainability but also
showcases Kier’s commitment to innovation
and incorporating sustainability solutions
into our projects.
Scan to find out more about
valuing nature in action
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Resource Efficiency
Unsustainable consumption and wastefulness
are driving resource scarcity, pollution and
unnecessarily accelerating climate change.
We aim to embed resource efficiency within
Kier and across our supply chain to use
resources in a sustainable way throughout
the lifecycle of our projects.
Resource efficiency is not a new concept
to Kier, and we continually improve our
performance. However, we understand
the opportunity to design out waste, and to
further enhance resource efficiency through
modern methods of construction. To embed
the priorities of our evolved Building for
a Sustainable World framework this year,
we have focused on establishing strong
foundations, as follows.
Establishing a Group-wide resource
efficiency working group
Formed of subject matter experts, the group
has grown our previous waste focus to drive
resource efficiency with the aim to embed
circular economy principles. As part of this
work, we are focusing on major opportunities
to improve resource efficiency. After success
reducing single use plastics across our
business, we have evolved this approach
to focus on cutting down on packaging.
Evolving our resource efficient metrics
and targets
One of our resource efficiency working group’s
first tasks was to establish measures and
targets. Supported by Rio AI’s (see opposite)
focus on data quality and automation, the
Group has proposed and established our
key targets and continues to work on further
secondary metrics and targets that provide
additional insights.
This year we have continued to report m
3
of waste intensity, having reduced this by 2%,
from 152.1 m
3
per £1m revenue in FY23. To
allow comparison with our peers, we intend
to move to tonnage reporting from FY25.
Using AI to enhance environmental
data and reporting
In FY24, we began our transition to Rio AI,
an enterprise environmental data platform
streamlining and enhancing the interrogation
and reporting of environmental performance
at all levels of our business, from project
to Group-wide.
By focusing on accurate and timely data,
we are building a solid foundation for all
environmental data. This is key to strategic
decision making for long-term value creation,
client reporting and disclosure requirements.
Retendering our Group-wide waste
management supplier framework
To ensure the continued sustainable
management of waste from Kier projects,
we are retendering our waste management
framework, including criteria to:
– drive increased diversion from landfill
– enhance data integrity and quality
– improve use of local providers, including
social enterprises
– ensure financial sustainability
Resource efficiency in action:
Remediating brownfield sites
at Darlaston
The new Darlaston Station is located on
a legacy contaminated brownfield site and
over a protected aquifer. Kier implemented
an innovative remediation approach to
protect the aquifer from contamination during
construction of the station. We de-watered
the site, cleaned the ground water and
installed impermeable barriers to preserve
cleaned areas. Using this approach, we have
restored more than a hectare of brownfield
land efficiently, reducing the volume of
contaminated material otherwise requiring
removal by 70%.
Additionally, we recycled waste concrete
from an adjacent site for aggregate,
avoiding the off-site delivery 3,700 tonnes
of virgin aggregate.
Landfill
diversion
rate
93%
Cubic metres
of waste/£1m
revenue
1
148.5
Performance
Building for a Sustainable World: Our Planet continued
ESG report continued
1. Approx. 0.4% of FY24 waste data, proportional
to revenue, is derived from waste management
contractual spend.
Scan for more information
on resource efficiency in action
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Trusted
Be safe
and
responsible
Collaborative
Communicate
clearly
Focused
Be bold
and future
focused
Respect
others
Prioritise
people
Pride
in Kier
Work
brilliantly
together
High performance Find safe,
simple
solutions
At Kier, we put our people – their
health, safety and wellbeing, and
their development – at the core
of what we do.
Our culture mission statement is to create
a safe, collaborative and high-performing
workplace, where we all belong, contribute
and thrive. Ensuring our people feel
challenged, encouraged and valued in their
roles is paramount to the business achieving
its strategic goals.
Our culture programme was designed
and delivered in partnership with an expert
consultant. The key outputs of the programme
Built by Brilliant People™
included a clearly defined narrative,
a balanced scorecard and a behaviour
framework, comprised of nine healthy
behaviours which align to our value. This
forms the foundation of our culture today.
Over the last year, we have delivered a
‘Built by Brilliant People™’ upskill culture
programme to senior leaders and managers
comprised of three modules about working
brilliantly together, being safe and responsible
and driving performance. c.1,100 people
have attended the modules and 91 culture
champions were trained to support with
facilitation and embedding the culture.
We continue to develop activities,
self-assessment tools, learning resources
and initiatives to maintain momentum with
embedding our culture and cementing
the nine healthy behaviours.
People have
completed
the Culture
programme
1,124
Understand
how their role
contributes to the
goals of their team
93%
Employee
engagement
1
67%
Kier’s Nine Healthy
Behaviours
ESG report continued
1. Employee engagement is measured
using employee positive emotions.
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Built by Brilliant People™ continued
ESG report continued
Building a health, safety
and wellbeing-focused culture
Trained mental
health first aiders
824
People trained
in behavioural
safety techniques
1,463
Further details on our safety
performance can be found in
our ESG performance data table
on page 55
Our health, safety, and wellbeing-
focused culture applies to all
personnel, including contractors.
We formalise our commitments to
health, safety and wellbeing (‘HSW’)
in our policies, and all projects where
Kier is principal contractor operate
within the business’ ISO 9000,
ISO 14001 and ISO 45001-certified
management system.
Safety performance
At Kier, safety is our licence to operate.
Underlying this is a focus on the health,
safety and wellbeing of our employees,
supply chain and other stakeholders, which
is key to our approach. Notwithstanding this
strong focus, our FY24 AIR (Accident Incident
Rate) and AAIR (All Accident Incident Rate)
figures have increased year over year by
76% to 155 and by 13.5% to 363 respectively.
These FY24 figures are an increase on the
high performing benchmark that we achieved
last year. We are disappointed with these
trends given our high standards, but we
continue to outperform historic industry
league tables.
Celebrating HSW
at Pride of Kier
We celebrate our innovative Health,
Safety and Wellbeing culture every year
at our Pride of Kier awards. In 2024, Tyler
Eastham, the winner of the HSW award
was recognised for his contribution to
mental health awareness, risk identification
and building a culture of acceptance
across Kier.
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ESG report continued
Built by Brilliant People™ continued
During FY24, we rolled out our culture
programme, which includes our nine healthy
behaviours and forms the basis of our
culture. It complements our safety-specific
behavioural training, which is being rolled out
across our projects. These programmes have
been designed to bring positive health, safety
and wellbeing approaches into our operations,
and apply to all personnel, including our
supply chain. They sit alongside our existing
policies and procedures.
Safety governance
Our safety management system is accredited
to ISO 45001 standards. Our health, safety
and wellbeing strategy – approved by our
ESG Committee – is implemented by senior
leaders and integrated into our governance
structure. This approach ensures that health,
safety and wellbeing is embedded into our
company culture and considered alongside
our Building for a Sustainable World framework,
giving parity to our wider objectives and
performance targets.
We support this integration with regular
Visible Leadership Tours, an initiative
designed to strengthen mutual dialogue
between sites and senior leadership.
These tours ensure that strategic messaging
is shared face-to-face between our leaders
and site teams, and gives time to discuss
opportunities for efficiency and business
improvements.
Reporting and driving fast learning
At Kier, we learn fast to ensure that today’s
lessons are built into tomorrow’s plans. Major
incidents are reported through Kier’s dedicated
24/7 reporting line. All incidents are investigated
and key outputs, root cause analysis and
causations are reviewed at divisional Incident
Review Boards (‘IRBs’). Specific incidents with
notable or widely applicable learnings are
escalated to the Group level IRBs, which are
chaired by the Chief Executive, underlining
the importance we place on Group-wide
learning from incidents.
Learnings are shared widely through a
combination of alerts and bulletins. Weekly
calls are held to share details within and
across the business divisions. Our senior
leaders meet quarterly to review safety
performance and confirm that necessary
actions to prevent recurrence have been
identified and undertaken.
Training
Divisional-level behavioural safety
programmes, which nurture and promote
our safety culture, have been a strong focus
in FY24. Our bespoke ‘Cleartrack’ training
programme began in our Transportation
division in FY20. Our ‘Think Safety Differently’
(‘TSD’) programme was developed within
our Construction division and has been rolled
out during FY24. TSD sessions are held at
key project stages to promote the safety
leadership behaviours that enhance safety
culture. Over 1,400 people have attended
Cleartrack and TSD sessions during FY24.
Integrating health and wellbeing
into our performance
We recognise that workplace safety is strongly
linked to mental health and wellbeing. We
have implemented a community of Wellbeing
Champions across our business and a further
16 people were trained in FY24. The Wellbeing
Champions are a point of contact and active
promoter of our offerings that support both
physical and mental health, as well as social
and financial wellbeing. Additionally, we trained
266 new Mental Health First Aiders in FY24,
expanding our network to 824 people, all
educated in how to recognise the mental
health needs of our teams, provide the time to
talk, and signpost to the appropriate services.
Our employee assistance programme
provides all of our personnel and their
dependents with round-the-clock, confidential
health and wellbeing support. We are a
supporter of construction industry charity The
Lighthouse Club, and regularly promote their
mental, physical, emotional and wellbeing
support services on our sites and to our
supply chain.
Nurturing our site leaders
Kier’s success relies on our people
working brilliantly together, being safe and
responsible, and performing in their roles.
We strive to grow leaders across our
business, and to nurture and retain their
knowledge and expertise.
Since joining Kier in 2015, Laurence has
progressed from the role of Foreman to
Works Manager through ILM, Building
Leaders and other training and development
opportunities. He is based at our EKFB joint
venture delivering HS2, currently the largest
infrastructure project in Europe. Overseeing
a site spanning 7.5km, Laurence ensures
site supervisors complete their mandatory
safety and leadership Certificate to Operate
training, empowering them to carry out their
roles as leaders on site and manage safety,
environmental and assurance requirements.
“Kier has given me the opportunity to learn
and challenge myself. I have developed
skills for success, for myself and for my
team, as well as knowledge of the safety,
environmental and commercial aspects
of a project.”
Read more about our Raising and
Building Leaders development
programmes on page 54
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Built by Brilliant People™ continued
ESG report continued
Creating an
environment to thrive
Graduates
enrolled in FY24
c.100
Networks to
improve D&I
7
Apprentices
666
Graduate work
experience
placements
c.60
Employees in
formal learning
programmes
1
12.3%
Kier is Built by Brilliant People™:
vibrant, diverse, motivated, highly
trained teams, who feel valued for
their contribution to Kier’s business.
In this section, we explore how Kier
creates a diverse, inclusive
environment which attracts
talented individuals and
encourages them to thrive.
Fostering a diverse, inclusive workplace
At Kier, our mission is to shape a high-
performing, diverse and inclusive business
where we can all belong, contribute and thrive.
To weave diversity and inclusion (‘D&I’) into
our culture, all employees complete an
introduction to D&I as part of their induction,
with regular refresher training thereafter.
Additionally, our ‘Expect Respect’ campaign
is visible across our sites and offices, driving
awareness of our culture of respect and of
Kier’s expectations of our people.
Key policies to support diversity and inclusion
are listed on our website, are reviewed
annually, and apply to all our employees.
Our family-friendly policies, explored in more
detail on page 54, support us to foster an
inclusive workplace.
Our Diversity & Inclusion (‘D&I’) roadmap
is published on our website. It sets out how
we intend to support this mission, as well
as our priorities. We measure our progress
through our employee demographic data
as well as through regular pulse surveys with
our employees and against four overarching
aims – developing our strategic approach,
building a diverse workforce, developing
inclusive workplaces and culture, and
engaging everyone in the journey. We review
our progress twice per year and revise our
objectives where necessary to drive
meaningful change.
Through our seven D&I networks, we are
regularly engaged with the diverse voices
of our workforce, which share experiences,
suggest improvements and drive our
roadmap forward.
We publish our gender pay gap information
on our website and are preparing to collate
ethnicity-related pay gap information for
potential, future external reporting
requirements.
More information about our
approach to ensuring equality,
diversity and inclusion, including
our gender pay gap report can
be found on our website
1. Percentage of Kier’s workforce in formal
development programmes i.e., an accredited
course of more than one year duration. It includes
apprenticeships and excludes Kier’s wider learning
and development offering.
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01
02
01
02
03
01
02
0102
Inclusive recruitment
Part of our D&I strategy is to diversify our
talent, which corresponds to Kier’s overarching
sustainability strategy: the Our Places pillar
of our framework aims, through our projects,
to promote social impact and enable social
mobility in our communities. Our flagship
inclusive recruitment programmes ‘Making
Ground’ and ‘Armed Forces Recruitment’,
underpin this strategic ambition. Find out
more about these initiatives on page 43.
To support our D&I strategy, we train all hiring
managers in inclusive recruitment practices,
challenging them to think differently towards
accepted recruitment processes and combat
unconscious bias. In FY24, we launched
an enhanced, inclusive careers system
in a drive to boost applications from diverse
backgrounds. In FY25, we will be able to
measure the results of this investment
in achieving our D&I aims.
All abilities
Kier is a disability confident employer and
is committed to ensuring that the organisation
is an inclusive place for all abilities. In support
of our D&I strategic objective, we recruit our
people based on abilities and individual
merits, as measured against the criteria for
the job, in a fair and inclusive manner, with
the intention of finding the best candidate and
ensuring we are actively removing barriers
and disadvantage from our process.
We have an Ability employee network
with over 350 members which supports
neurodiverse and disabled colleagues. We
are also members of the Business Disability
Forum, a business membership organisation
that works in partnership with businesses,
Government, and disabled people to remove
barriers to inclusion. Such activities help Kier
to become more inclusive. With the support
of our occupational health department, we
support colleagues that need workplace
adjustments to ensure that they can fulfil their
potential and progress their careers at Kier.
This includes adjustments to roles, premises,
workstations and equipment, amongst others.
Gender and ethnic diversity
We measure the effectiveness of our
D&I roadmap against our workforce-wide
diversity figures. Opposite, we disclose our
FY24 gender and ethnic diversity at Board
and senior manager level and overall Kier
level. As a percentage of our workforce,
our overall gender diversity has progressed
from 24.58% in FY23, to 25.20% in FY24.
Our ethnic diversity has progressed from
15.91% in FY23 to 16.64% in FY24.
Embracing, developing and
supporting talent
Throughout the year, our Emerging Talent,
Learning & Development and Reward teams
work to embrace, develop and retain our
talent to not only safeguard our business
for the future, but also to contribute to our
communities and future generations of the
workforce. This is in line with our culture
mission statement described on page 48, and
essential to meeting our strategic objectives.
Built by Brilliant People™ continued
ESG report continued
Board – Gender All employees – Gender
Senior managers – Gender All employees – Ethnicity
Gender and Ethnic diversity
1
1. Kier employees only. Excludes contingent workers.
01 75% Male
02 25% Female
01 74% White
02 17% Ethnic minority
03 9% Not stated
01 67% Male
02 33% Female
01 53% Male
02 47% Female
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Kier Group plc Annual Report and Accounts 2024
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1. Percentage of Kier’s workforce in formal
development programmes i.e., an accredited
course of more than one year duration. It
includes apprenticeships and excludes Kier’s
wider learning and development offering.
Embracing our emerging talent
Developing the workforce of tomorrow
is a key strategic opportunity for Kier. By
encouraging and welcoming young people
from a variety of backgrounds and locations
in the UK into Kier, we ensure diverse
ideas form the foundation of our business.
We also contribute to overcoming an ageing
population in the construction industry and
address the consequent skills gap. As part
of our investment in the future of our business
and industry, we offer ‘Earn and Learn’
opportunities – an opportunity to develop
professionally and academically,
simultaneously – to people of all ages, every
year. In FY24, we welcomed c.60 future
graduates on work experience placements and
c.100 graduates onto our graduate programme.
Additionally, c.120 apprentices joined us in
FY24, either in traditional apprenticeships or
through a degree-apprenticeship programme.
Apprenticeship programmes are available to
new and emerging talent, as well as to existing
talent as a development opportunity.
Developing our learning and
performance culture
Retaining our talent is crucial to our business
success and we are committed to ensuring
our workforce is equipped, competent and
confident to carry out their roles. We provide
training to managers to support their team’s
performance, ensuring they feel valued,
challenged and encouraged. We empower
our employees to reach their full potential
providing professional development
programmes, opportunities to work on
significant projects at the forefront of our
industry, and mobility within our organisation
to broaden their expertise.
As of June 2024, 12.3%
1
of employees were
in formal learning programmes (9% in FY23).
In FY24, we launched Kier Learn & Perform,
a new, dynamic online system to allow our
people to develop at every stage of their
career with Kier.
Learn
Kier Learn & Perform hosts all mandatory
compliance, safety and job-specific training,
which can be tailored to the learner’s
requirements. With strengthened accessibility
and automation, our people have improved
oversight of their mandatory training, and are
empowered to autonomously make use of
the available suite of self-paced courses.
Perform
One of Kier’s Nine Healthy Behaviours
is ‘high performance’. To support our people
in their development, we track their annual
performance in Kier Learn & Perform,
enhancing engagement with this important
process and ensuring we are all working
towards our personal and collective goals.
Built by Brilliant People™ continued
ESG report continued
“ I am so glad that I took
the leap and applied
for a job in construction.
Kier’s apprenticeship
scheme presented me
with opportunities and
pathways that I didn’t
know existed. In my
work, I apply theory
and knowledge
cultivated during
my apprenticeship
to build for a more
sustainable future.”
Emily
Quantity Surveyor, Kier Places
Providing opportunities
to earn & learn: Emily’s story
After finishing college in 2016, Emily joined
Kier as a Junior Commercial Administrator.
Once in post, she learned about Kier’s
apprenticeship scheme, which would allow
her to study for a degree, whilst developing
her skills and gaining valuable work
experience. After six years of hard work,
Emily graduated as a Quantity Surveyor,
and continues to work with us in Kier Places.
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Supporting our talent
How our people feel at work is vital to
their sense of belonging, and hence their
performance, at work. This is also essential
to Kier’s ability to retain our teams. We
provide strategic training and development
opportunities, as well as attractive reward
and benefits to support our talent, their
career progression, and their wellbeing.
Employee engagement is an important
measure of the success of our approach.
As such, we run our Your Voice survey every
year. In FY24, our employee engagement
score was 67% (65% in FY23), reflecting not
only Kier’s investment in our people, but our
people’s investment in Kier. Furthermore, our
most recent Your Voice survey demonstrated
that 93% of our people understand where
their role links to Kier’s purpose.
Part of Kier’s investment is the reward and
benefits we offer to all our employees. Kier is
a proud Real Living Wage employer, and over
1,000 employees received an average Real
Living Wage increase of 7.3%, in January
2024. For peace of mind, all Kier employees
receive life assurance and access to a range
of wellbeing support including a virtual GP,
confidential advice and counselling services
and market-leading health expertise. There
is also a wide range of opt-in benefits such
as the cycle-to-work scheme, discounted
gym membership and the ability to purchase
technology, white goods and car maintenance
and spread the repayments. All these benefits
help to support the wellbeing of our employees
and their families.
Beyond remuneration, through the Kier Reward
scheme, employees are able to secure savings
across a wide range of retailers on both
everyday spending and larger purchases. In
FY24, our c.10,000 employees made savings
of c.£276k through using this scheme.
All employees have access to two tax-efficient
employee share plans enabling them to
contribute and save on a regular basis and
to share in the future success of Kier. Over
4,000 employees currently participate in one
or both of the schemes, enabling them to
benefit from buying shares at a discounted
price or to receive free Kier shares, depending
on the arrangement they choose.
Kier is a family-orientated business and
offers a range of family friendly policies.
Published on our website, policies such as
our Agile and Flexible Working policy and
Enhanced Maternity Leave and Paternity
Leave policies, amongst others, foster our
diverse and inclusive workplace. Kier’s
approach to diversity and inclusion is
explored on page 51.
Built by Brilliant People™ continued
ESG report continued
Empowering, Raising
and Building Leaders
Our strategy to develop a diverse,
inclusive workforce culminates in three
key programmes.
Empower
Empower is a six-month development
programme, specifically designed to support
colleagues from diverse groups to embark
on a journey of professional and personal
development, build leadership skills and
understand how their role impacts Kier.
It is an opportunity for formal learning,
networking, and to offer unique perspectives
to the business’ leaders.
Raising & Building Leaders
Kier’s flagship talent development and
retention programmes Raising Leaders and
Building Leaders have been running since
2020 and 2021, respectively. Partnered with
Cranfield University, these programmes
equip management and leadership talent
with the knowledge and skillset to evolve
in their careers, meeting their aspiration
and potential to reach senior positions
in the business.
The efficacy of these programmes was
awarded ‘Gold’ in the 2024 Excellence
in Practice Awards, run by the European
Foundation for Management Development
in the Talent Development category.
The programmes continue.
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ESG report continued
Theme Pillar/Strategic foundation Metric (Unit) For more
information
see pages
FY24 FY23 FY22
Building for a
Sustainable
World
Our People Population of apprentices (count) 39–40 and 53 666 646 591
Population of apprentices (% of total workforce) 39–40 and 53 6.5% 6% 6%
People in formal training & development programmes
(% of total workforce)
1
39–40 and 54 12.3% 9% 6%
People trained on modern slavery (count)
2
40 4186 3,288 c.1,400
Our Places Spend with SMEs & VCSEs (£m) 41–42 £1,357m £1,228m £908m
Subcontracted spend made with SMEs (% of total) 42 61% 69% 48%
Our Planet Scope 1 & 2 carbon emissions (tonnes)
3
45 and 56 28,968 31,670 38,967
Scope 3 carbon emissions (tonnes)
3
45 and 56 787,008 905,529 971,314
Volume of waste generated (m
3
/£1m) 47 148.5 152.1 149.9
Volume of waste diverted from landfill (% of total volume) 47 93% 90% 88%
Significant Environmental Incident Rate (rate)
4
46 59 21 -
5
All Environmental Incident Rate (rate)
4
46 382 247 227
LSE GEM | Revenue from green projects (% of total) 44 69% 64% 53%
Built by
Brilliant People™
Health, safety and wellbeing Fatal Accident Rate (rate)
6
49–50 0 0 0
RIDDOR incidents (count)
6
49–50 41 22 28
Accident Incident Rate
(rate)
6
49–50 155 88 115
All Accident Incident Rate (rate)
6
49–50 363 320 316
Diversity & Inclusion Gender diversity (all employees) 52 25.20% 24.58% 24.20%
Ethnic diversity (all employees) 52 16.64% 15.91% 14.12%
Employee Engagement Your Voice survey (%) 54 67% 65% 63%
ESG performance
Performance metrics
1. Percentage of Kier’s workforce in formal development programmes i.e., an accredited course
of more than one year duration. It includes apprenticeships and excludes Kier’s wider learning
and development offering.
2. In the reporting year.
3. FY23 and FY24 Scope 1, 2 & 3 emissions data has been reasonably assured as materially
correct and a fair representation. Verification completed in accordance with ISO 14064-1 by BSI.
4. Excluding HS2 joint venture.
5. Not applicable.
6. Including employees and contractors.
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Energy and carbon reporting notes:
1. Scope 1: combustion of fuel and operation of facilities.
2. Scope 2: electricity purchased.
3. Scope 3: indirect emission sources.
4. Our GHG emissions quantification methodology is aligned with the GHG Reporting Protocol – Corporate Standard.
5. Location-based uses the average emissions intensity from the grid where we source the energy.
6. Market-based uses the emissions intensity based specifically on the energy mix procured.
7. We employ a spend-based methodology to calculate Scope 3 emissions from purchased goods and services.
We are working to evolve our approach to make use of a more accurate inventory methodology.
8. Our targets as validated by the Science Based Targets initiative use a market-based approach,
therefore all carbon emission statistics which include Scope 2 in this report use a market-based method.
9. Energy usage (Scope 1 & 2) is rounded to the nearest MWh.
10. FY23 and FY24 Scope 1, 2 & 3 emission data has been reasonably assured as materially correct and a fair
representation. Verification completed in accordance with ISO 14064-1 by BSI.
11. FY23 Annual Report published emissions are identified between brackets alongside FY24 verified emissions.
12. As required by SBTi and ISO 14064, we exclude no more than 5% of GHG emissions from our reported total.
13. Additional information relating to the emissions data presented in this table, including calculation methodology
and uncertainty assessment can be found in our Climate Report on our website.
Global UK
Year ending
31 March 2024
Year ending
31 March 2023
Year ending
31 March 2022
(S3 base year)
Year ending
31 March 2019
(S1&2 base
year)
Year ending
31 March 2024
Year ending
31 March 2023
Year ending
31 March 2022
(S3 base year)
Year ending
31 March 2019
(S1&2 base
year
Scope 1 tCO
2
e
28,853
31,342
(31,340)
38,643 89,490
28,675
30,941 36,113 77,468
Scope 2 (market-based) tCO
2
e
115
328 324 5,970
106
313 298 5,934
Scope 2 (location-based) tCO
2
e
2,521
3,601
(3,600)
4,589 7,170
2,512
3,585 4,543 7,132
Scope 1 & 2 (market-based) tCO
2
e 28,968
31,670
(31,668)
38,967 95,460
28,781
31,254 36,411 83,402
Scope 3 tCO
2
e
787,008
905,529
(905,839)
971,314 –
786,959
903,747
(905,732)
970,680 –
Scope 1, 2 (market-based) & 3
tCO
2
e
815,976
937,199
(937,507)
1,010,281 –
815,740
935,001
(936,986)
1,007,091 –
Market-based intensity
Scope 1, 2 & 3
tCO
2
e/£m revenue 207.9
286.1
(286.2)
311.9 –
207.8
286.6
(286.0)
310.9 –
Scope 1 & 2 tCO
2
e/£m revenue
7.4
9.7 12.0 23.7
7.3
9.5 11.2 20.7
Location-based intensity
Scope 1, 2 & 3
tCO
2
e/£m revenue 208.5
287.1
(287.2)
313.2 –
208.4
286.6
(287.0)
312.2 –
Scope 1 and 2 tCO
2
e/£m revenue
8.0
10.7 13.3 24.0
7.9
10.5 12.6 21.0
Energy consumption kWh 138,746,000
162,099,000 179,465,000 380,090,000
138,714,000
160,371,000 169,551,000 330,568,000
ESG performance continued
ESG report continued
Energy and Carbon reporting
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Here, we outline strategic management of
Building for a Sustainable World, our sustainability
strategy, and Built by Brilliant People™, our People
strategy, collectively ‘ESG matters’.
During the year, we reviewed and evolved
our governance and decision-making structures
at all levels of business to increase integrated
management.
We expanded our climate change principal risk
to include other material aspects of sustainability.
Aligned to our Building for a Sustainable World
strategy, this approach reflects our understanding
that social and environmental sustainability are
intrinsically linked and that action to mitigate risks
and realise opportunities is most effective when
considered holistically.
Management of climate-related risks and
opportunities is integrated into our governance
approach. A climate working group co-ordinates
delivery of our climate action and carbon
reduction strategies. Our expert carbon
consulting partner supports each Kier division
with its transition pathway to net zero, accurate
reporting of carbon emissions and delivery of
climate management projects.
ESG risk management
ESG risk management is integrated into the
Group risk management framework through
our Principal Risks and Uncertainties (‘PRU’)
and operational risk processes. Further details
are set out in the ‘How do we manage risk’
section on pages 68 to 76, which also contain
more detail on the Health and Safety, People and
Sustainability PRUs, as well as mitigating actions.
Strategic management of ESG matters
Sustainability framework governance
Board
ESG Committee
Sustainability Literacy
Kier group functions
Responsible Business Function (Health, Safety & Wellbeing, Assurance & Sustainability) & Human Resources
Business Divisions
Building for a Sustainable World and Built by Brilliant People™
Sustainability Teams
Building for a Sustainable World Pillar Groups
Executive
Group Managing Director ESG Committee
Learning & Performance
Subject Matter Experts
Working Groups Task & Finish Groups
Leaders & Subject Matter Experts
Leadership Forums
Health, Safety and Wellbeing Competencies
Chair: Non-Executive Director
Scope: Oversees all ESG matters, including
climate-related issues, risks and opportunities;
Advises on strategic direction, embedding ESG
priorities into strategic decisions, objectives and
annual budget process. The committee is advised
by the Group Managing Director ESG Committee
and Leadership Forums.
Providing knowledge and skills, and fostering
sustainability mindsets, both at work and at home,
to support informed and effective decision making
for a sustainable future.
Scope: Providing business-wide co-ordination and direction for ESG strategy; including chairing management meetings and ensuring collaboration across
business divisions; leading group-wide governance and reporting; and relationships with internal and external stakeholders.
Scope: Co-ordinate and implement sustainability- and people-related priorities; deliver division-specific action plans, initiatives and policies; support and embed
awareness, compliance and enhanced standards; share innovation and collaborate to continually improve.
Context: Each of the three strategic pillars of our Building for a
Sustainable World framework has a dedicated pillar working group.
Lead: Each working group is led by a senior member of the
sustainability team.
Scope: Co-ordinate strategy, activity and innovation with each
strategic pillar.
Chair: Chief Executive
Scope: Monitors, challenges and provides
direction on all Building for a Sustainable World
and Built by Brilliant People™ topics.
Supporting professional development and
performance reviews to ensure an equipped,
competent and confident workforce.
Context: Material topics have dedicated working groups.
Lead: Nominated Subject Matter Expert.
Scope: Working Groups explore climate, ethical labour, social value, diversity
& inclusion, and inclusive PPE; Task & Finish Groups develop improvements
and tackle common challenges.
Chair: Chief People Officer
Members: Health, Safety & Wellbeing, Human
Resources and Sustainability Leaders & Subject
Matter experts
Scope: Lead implementation of Building for a
Sustainable World and Built by Brilliant People™
strategic frameworks and commitments across
all divisions.
Ensuring appropriate skills and competency to
manage health, safety and wellbeing in all areas
of the business.
LeadershipFoundations Implementation Management
ESG report continued
57
Strategic report
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Corporate governance Financial statements Other informationOverview
ESG report continued
TCFD report
As the effects of climate change
become an ever-growing part
of our daily lives, both abroad and
at home, Kier, like all businesses,
has a responsibility to reduce our
emissions. This, while continuing to
create value for our shareholders
and stakeholders, including our
employees and local communities,
and supporting a just transition
towards a greener, fairer, resilient
and inclusive economy.
At Kier, we are committed to sustainably
delivering infrastructure which is vital to the
UK. This is our purpose. To fulfil it, we must link
our business ambitions with our environmental
and social goals. In FY23, we relaunched our
sustainability framework
1
, designed to tackle
our most material topics, as identified in our
double materiality assessment
2
. Climate
action – reducing the carbon footprint of our
operations and adapting to the impacts of
climate change – is key to this framework,
which, in turn, underpins our strategy to
deliver on our purpose.
Since 2021, we have progressed on our
carbon-reduction pathway to meet our
ambition of net zero carbon emissions
(Scopes 1, 2 & 3) by 2045, and we report
on our achievements throughout the ESG
section of this annual report. Here, in our
‘TCFD report’, we detail our climate-related
financial disclosures consistent with all of
the Task Force on Climate-related Financial
Disclosures (‘TCFD’) Recommendations
and the recommended disclosures as outlined
in ‘Implementing the Recommendations of
the Task Force on Climate-related Financial
Disclosures’ published in October 2021,
including the sector-specific content from
the Materials and Buildings Group. We
outline how our climate goals align with our
business decisions, explore Kier’s climate
change governance, and demonstrate how
climate-related risks and opportunities are
managed, and how our strategic planning
and decision-making processes drive us
towards our net zero ambitions.
Strategy
Climate change generates accepted risks to
our business, but climate action, in particular
a just transition to net zero, presents
compelling opportunities. In this report,
we outline our relevant climate-related risks
and opportunities and how each impacts our
activities and strategy. Whilst our evaluation
of the risks and opportunities covers all of our
divisions, some risks and opportunities are
specific to particular markets, and therefore
divisions. This subtlety is reflected in our
assessment of risk magnitude.
In FY24, we worked with our external
experts to improve our understanding of
the impacts of risks and opportunities under
different climate outcomes, aligning our time
horizons for risk and opportunity assessment
to three climate-related scenarios and
to our goals and targets supporting the
Paris Agreement’s ‘net zero by 2050’ targets.
To assess the resilience of our business to
climate change, we continue in our approach
to scenario analysis, adopting global (CMIP5
mean model from the World Meteorological
Organisation) and regional (UK Climate
Projections 2018) physical and transition
scenarios. These scenarios remain in
place for our identification, management,
and mitigation of climate-related risks
and opportunities.
Scenarios (climate impacts by 2100):
– An orderly transition, with early action
and a temperature rise of ~1.5°C (RCP2.6)
– A disorderly transition, with late action
and a temperature rise of ~2°C (RCP2.6)
– High emission, with a temperature rise
of greater than 3°C (RCP8.5)
To align with the projections from these
scenarios and with the timescales of climate
change, we assessed scenarios under the
following time horizons.
Disclosures Pages
Governance
(a) Board oversight of
climate-related risks
and opportunities
(b) Management’s role relating
to climate-related risks
and opportunities
57
57
Strategy
(a) Climate-related risks
and opportunities
(b) Impacts of climate-related
risks and opportunities
(c) Description of the resilience
of strategy in different
climate-related scenarios
60–63
59–61
63–64
Risk management
(a) Processes for identifying and
assessing climate-related risks
(b) Processes for managing
climate-related risks
(c) How climate-related risks
are integrated into overall
risk management
59
59
57–59
Metrics and targets
(a) Metrics used to assess
climate-related risks
and opportunities
(b) Scope 1, Scope 2 and Scope 3
greenhouse gas (‘GHG’) emissions
(c) Targets used to manage
climate-related risks
and opportunities and
associated performance
55–56,
60–61
& 64
55–56
64
1. Kier’s sustainability framework, and progress
against its objectives, are explored in the Building
for a Sustainable World section of this ESG report
(pages 38–47).
2. More details on Kier’s double materiality assessment
can be found on our website: www.kier.co.uk/
sustainability/
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Time horizons:
– Short-term: 2024–2026 (reflecting our
strategic and business risk management
processes)
– Medium-term: 2027–2030 (reflecting
the timescales for our near-term
science-based targets)
– Long-term: 2031–2050 (reflecting the
lifecycle impacts of the buildings and
infrastructure we construct and maintain
in alignment with the Paris Agreement
net zero 2050 targets)
(N.B. We have updated our short and
medium term assessments this year from
2023–2025 and 2026–2030 to ensure our
risk assessments remain contemporary
and aligned to corporate risk horizons.)
As a result of our enhanced processes,
we identified five climate-related risks and
five climate-related opportunities that were
assessed to have the potential to materially
impact our business. Materiality is determined
to be risks and opportunities that, when not
managed properly, have the potential to
significantly impact on business or value chain
operations, associated environmental impact
or financial performance. As part of this
assessment, we have reviewed the risks to
each of our operating divisions, enabling us to
develop informed mitigation and management
strategies. We have also gained insight into
potential market growth opportunities as we
support our clients in their response to the
climate emergency through their climate
mitigation and adaptation strategies.
We have quantified our risks and disclose
these in line with the low, medium and high
definitions for risk impact outlined in the risk
management section on page 70, and our
amended strategic risks and opportunities are
identified and described on pages 60 and 61.
We continue to work to address the
challenges caused by climate change,
to transition Kier to a low-carbon business
and to support our supply chain and clients
with their own climate priorities.
Finally, because of the long-term nature
of some of our climate-related risks and
opportunities, we acknowledge the challenges
associated with aligning these to financial
planning corporate risk processes. We have
started a financial assessment of our risks
and opportunities internally this year, and
continue to seek possible improvements
as our TCFD reporting matures.
Risk management
We consider climate-related risks and
opportunities in all physical and transition risk
categories, current and emerging, regulatory
requirements whether they occur within our
own operations, upstream, or downstream of
the Group and whether they first occur within
the short (until 2026), medium (2027–2030)
or long term (2031–2050) time horizons.
Climate-related risks and opportunities
relevant to us were initially identified in
FY22, being built upon and enhanced with
our climate consultants in FY23 and FY24.
Climate-related risks and opportunities
are assessed on the existing Group risk
management framework to determine their
relative significance in relation to other Group
risks and allow for integration into the Group
risk management framework. Prioritisation
of risks is primarily based on the risk score
resulting from a 3x3 matrix encompassing
impact magnitude and likelihood, combined
with a supplemental measure of risk velocity,
which provides an additional perspective
to risk likelihood.
In FY24, the Board evolved our climate change
principal risk to a sustainability principal risk
to better reflect interconnectedness of climate
change and other sustainability topics. Our
sustainability governance, including climate
change, is outlined on page 57.
In line with our risk management framework,
explored in detail on pages 68 to 76, we review
sustainability, and in particular climate-related
risk, at Board level in our ESG Committee.
However, our sustainability ambitions are
integrated into everything we do, and everyone
involved in our operations is expected to take
ownership of the sustainability-risk and
opportunities within their remit.
Each Kier business division has its own
climate-related risks and opportunity register.
Within each division climate-related risks and
opportunities are overseen by our sustainability
teams, with significant risks elevated to the
divisional risk register and controls integrated
into operational processes, an example being
physical climate risks being managed through
severe weather plans, dust management
plans and surface water management plans.
Risk and opportunity assessment
Risks and opportunities are assessed through
assessment of the likelihood and magnitude
of risk.
Magnitude (quantification):
– Low: the exposure is well understood,
with a relatively low cost of mitigation,
less than £10m
– Medium: risk may be tolerated provided
that the benefits are considered to
outweigh the consequence, £10m-£50m
– High: risk threatens the viability of the
Group or there is a reasonable likelihood
of danger to people or material reputational
damage (greater than £50m).
Likelihood:
– Improbable: the risk is not foreseen as
likely to occur or may occur in exceptional
circumstances
– Possible: a relatively infrequent occurrence
for the Group
– Probable: a relatively frequent occurrence
for the Group
Likelihood
Probable
Possible
Improbable
Low Medium High
Magnitude
High risk/opportunity
Medium risk/opportunity
Low risk/opportunity
The Chief Executive has ultimate responsibility
for climate-related risks, and the Board has
overall responsibility for risk management
across the Group. The Chief Executive, Chief
Financial Officer and Executive Committee
carry out a quarterly risk review where the
response, mitigations and controls of risks
are assessed. The Group’s Risk Management
and Audit Committee (‘RMAC’) considers
principal risks and reviews the effectiveness
of the systems of risk management and
internal control.
ESG report continued
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Risks
Five key climate-related risks have been identified in our assessments.
Case studies demonstrating our progress to mitigate risks can be found in the Building for a Sustainable World section of this ESG report (see pages 38–47).
Risk
1.
Carbon pricing
mechanisms
2.
Failure of development
or adoption of technology
and innovation
3.
Increasing customer
requirements &
industry standards
4.
Disruption due to
extreme weather events
5.
Long-term climate
impacts on productivity
Risk rating
High Medium Low Medium Low
Type Transition (emerging regulation) Transition (technology) Transition (markets) Physical (acute) Physical (chronic)
Area Own operations Upstream Downstream Upstream Own operations/Upstream/
Downstream
Primary potential
financial impact
Increased direct costs Increased direct costs Decreased revenues due to reduced
demand for products and services
Increased direct costs, lost revenue
and disruption
Decreased revenues due to reduced
production capacity
Description Legislation designed to reduce
emissions through the application
of a carbon tax to businesses and
materials, expected to come into
force around 2030.
The highest impact is under
the orderly transition with early
climate action.
Achieving our Scope 3 climate
targets relies in part on technological
improvements and innovation within
the supply chain which, in the short
and medium term, may be
prohibitively expensive where contract
budgets do not allow for this cost.
Emerging disclosure requirements,
e.g. ISSB, creates additional reporting
burden and associated auditing and
administrative costs.
We may be at risk of reduced investor
confidence and of losing contracts if
our business divisions do not meet the
latest standards or face penalties if
contracts are in progress and
standards are not met.
Various acute physical events related
to climate change (storms, floods,
wildfires, etc.) could disrupt supply
chains and operations, especially
for materials sourced from areas
with less capacity to respond to
such events.
Some of our key material
dependencies may be impacted
by these risks, which could result
in non-availability of key goods
and associated project delays.
To date climate change impacts have
been infrequent in our operating
locations and in our upstream supply
chain. However, over the long term
we expect to see increasing
temperatures, with extreme heat
impacting productivity through:
– Direct health impacts.
– Heat-induced productivity loss.
– Indirect losses resulting from
heat-related economic disruptions
throughout the supply chain.
Time horizon Medium term Medium term Short term Long term Long term
Mitigation Kier has:
– Committed to net zero Scope 1,
2 & 3 operations by 2045
– Expanded our carbon design and
assessment capability
– Created operational decarbonisation
pathways for all divisions
– Committed to developing an internal
carbon pricing mechanism in the
next year
We collaborate with suppliers, peers
and clients regularly through various
channels to address this risk,
including the Supply Chain
Sustainability School.
An example this year is the continued
collaboration relating to Hydrotreated
Vegetable Oil (‘HVO’) due diligence
(see page 45).
In addition, a rigorous client and
partner screening process ensures
we choose to work with organisations
whose goals are aligned to our own.
We regularly engage with our clients
to incorporate their carbon reduction
plans into our design and planning.
We report in full on our net zero
processes, performance and ambition
and continue to align with the
strategies of our key stakeholders
as identified through our double
materiality analysis and ongoing
engagement.
Our Whole Life Carbon Assessment
Service has been expanded, to lower
project embodied and operational
carbon, ahead of expected increasing
client and regulatory requirements.
We continue to use UKCP18 within
our scenario analysis allowing the
assessment of climate risks regionally
to inform management and mitigation.
We are using market-specific scenario
analysis and risk assessments to
continually improve operational
risk controls.
We integrate weather and climate
risk mitigation into project design
and delivery schedules ensuring
operations are prepared and adapted
to our changing climate.
Our ISO 14001-certified
environmental management system
(‘EMS’), across most divisions,
ensures environmental risks are
effectively assessed and managed.
In FY24, we have progressed the
alignment of our EMS to our project
lifecycle management approach
– enhancing operational controls
at each lifecycle stage.
Associated metrics
see pages 55–56
Carbon emissions Carbon emissions Green revenue % Significant environmental incident rate Significant environmental incident rate
ESG report continued
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Opportunity
1.
Increased operating income
for green-aligned projects
2.
Resource efficiency
and natural resources
3.
Resilience to fossil fuel
market volatility
4.
Enhanced reputation
5.
Increased demand for
repair/maintenance services
Opportunity rating
High Medium Low Medium Medium
Type Transition (Products and services) Transition (Resource efficiency) Transition (Resilience) Physical (Products and services) Transition (Products and services)
Area Own operations/Upstream/
Downstream
Own operations Own operations/Upstream Downstream Own operations/Upstream/
Downstream
Primary potential
financial impact
Increased revenues through access
to new and emerging markets
Reduced direct costs Reduced direct costs Additional revenue resulting from
increased demand for products
and services
Increased revenues through access
to new and emerging markets
Description Kier’s revenue has been assessed
in alignment with the FTSE Russell
Green Revenues Classification
System and has observed a growing
proportion of green-aligned revenue
over the past three years, focused
primarily of low carbon construction.
These projects provide market growth
opportunities and opportunities for
Kier to differentiate our business.
Energy and resource efficiency will
be key components of Kier’s early
decarbonisation efforts and is
increasingly incentivised or required
by regulation and clients. Kier stands
to benefit through lower expenditure
on resources, fuels and energy.
As we transition our operations to work
towards our near-term and net zero
targets, we are exploring opportunities
to increase self-generation of
renewable electricity and opportunities
to source renewable energy via lower
carbon sources such as sustainable
biomethane, Hydrotreated Vegetable
Oil (‘HVO’) and electricity from Power
Purchase Agreements (‘PPAs’). If
these opportunities are implemented,
this will reduce emissions and increase
resiliency to energy market volatility
and potential price increases over time.
Cultivating a reputation as a climate
leader with a history of consistently
going beyond compliance and
delivering effective climate action
across our value chain could lead to:
– outperforming competitors and
significant growth.
– an ability to attract and retain
top talent.
– improved supply chain terms
and costs.
The chronic impacts of climate
change are expected to increase
the frequency and severity of extreme
weather events in the UK. This will
create adaptation opportunities for
additional maintenance/repair
contracts for Kier, especially among
large public sector clients.
Time horizon Short term Short term Medium term Medium term Medium term
Management We continue to build upon
our expertise and experience
of delivering low carbon buildings,
with our in-house climate consultancy
supporting projects and clients to
embed low carbon features.
In FY24, our Construction and
Infrastructure Services business
divisions achieved PAS 2080
certification, recognising our
performance, and aligning our
operations and approach to the
climate ambitions of our key clients.
Our ISO 14001-certified environmental
management system (‘EMS’) ensures
resources are managed sustainably,
waste is avoided and we protect the
natural environment.
Our in-house carbon assessment
and advice service helps design out
high carbon materials and identify
opportunities for construction
process efficiency.
Our continuing partnership with the
Supply Chain Sustainability School
provides a forum to increase supply
chain skills and collaborate with our
peers and clients to drive change.
We have begun the development
of an internal energy scheme to gain
deeper insight into renewable energy
self-generation across our sites
and offices.
Due to limited availability of PPAs we
are exploring opportunity to progress
in collaboration with our peers.
We continue to work towards our
Building for a Sustainable World
framework which was created to
align to the most material topics
and our stakeholders’ priorities.
We regularly disclose our climate
performance and supporting
information through voluntary and
mandatory disclosure schemes to
evidence on continuous improvement.
In FY24, we have better understood
this opportunity by carrying out a
review of the climate adaptation
strategies of our clients within
key markets.
Associated metrics
see pages 55–56
Green revenue Operational carbon emissions
(Scope 1 & 2)
Operational carbon emissions
(Scope 1 & 2)
Green revenue Green revenue
Opportunities
Five key climate-related opportunities were identified in our assessments. Opportunity 1 and 5 expand on the FY23 opportunity ‘1. Customer Demand’ providing more detailed disclosure.
Case studies demonstrating our progress to act on opportunities can be found in the Building for a Sustainable World section of this ESG report (see pages 38–47).
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Infrastructure Services
Transportation
Construction
Natural Resources, Nuclear & Networks
Property
Risks
Risks
Risks
Risks
Changes in temperature creating
operational disruption
Changes in temperature impacting
building design requirements
Increasing fuel and energy costs
Exposure to carbon pricing
mechanisms
Physical climate impacts causing
operational disruption and damage
to assets
Exposure to carbon pricing
mechanisms
Failure to meet client demand
for climate performance
Increasing regulations and
standards for climate resilience
and carbon mitigation
Opportunities
Opportunities
Opportunities
Opportunities
Reputational growth from strong
performance
Growth in existing markets as a
result of climate change adaptation
Growth in customer demand
for sustainability
Growth in existing markets as a
result of climate change adaptation
Growth in existing markets as a
result of climate change adaptation
Modern methods of construction
delivering reduced project carbon
Growth in existing markets as a
result of climate change adaptation
Increased demand due to client
onshoring operations associated
with climate risks
Significant climate-related risks and opportunities by division
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Climate-related risks and opportunities by climate scenario
before and after mitigation or management
(Refer to pages 60–61 for additional context)
Scenario
Orderly transition
~1.5°C
Early climate action/low
carbon transition
Disorderly transition
<2°C
Late climate action/low
carbon transition
High emissions scenarios
>3°C
No/limited addition climate/
carbon action
Climate aspect Risk/Opportunity Time horizon
Transition Risks
Emerging regulation Carbon pricing mechanisms Medium term Before mitigation
After mitigation
Technology Failure of development or adoption
of technology & innovation
Medium term Before mitigation
After mitigation
Markets Increasing customer requirements
and industry standards
Short term Before mitigation
After mitigation
Physical Risks
Acute Disruption due to extreme
weather events
Long term Before mitigation
After mitigation
Chronic Long term climate impacts
on productivity
Long term Before mitigation
After mitigation
Opportunities
Products and
services
Increased operating income
for green-aligned projects
Short term Before management
After management
Resource
efficiency
Resource efficiency
and natural resources
Medium term Before management
After management
Resilience Resilience to fossil fuel
market volatility
Short term Before management
After management
Products and
services
Enhanced reputation Medium term Before management
After management
Products and
services
Increased demand for repair/
maintenance services
Medium term Before management
After management
High risk Medium risk Low risk High opportunity Medium opportunity Low opportunity
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Metrics and targets
We monitor and report on Scope 1, 2 & 3
greenhouse gas (‘GHG’) emissions as well
as energy consumption. The calculation
of our carbon footprint is in line with the
Greenhouse Gas Protocol Corporate
Accounting and Reporting Standard,
as reported on page 56.
The Group’s Building for a Sustainable World
strategy provides a framework to manage
climate-related risks and opportunities at
Group and divisional levels. The strategy
contains clear targets associated with climate
action, which have been validated by the
Science Based Targets initiative (‘SBTi’)
as being aligned to limiting global warming
to 1.5°C and achieving net zero operations,
and are in line with the UK Government’s
commitment to net zero by 2050.
Additional controls, actions and targets
are in place for broader sustainability topics,
as outlined on pages 38–47.
During FY24, we have progress the
implementation of the evolved Building for
a Sustainable World framework including:
– Receiving reasonable assurance of
our FY23 and FY24 carbon footprint
to ISO 14064-1 standard.
– Undertaking a nature materiality exercise;
aligned to the Taskforce on Nature-related
Financial Disclosures (‘TNFD’) LEAP
methodology. Following this assessment,
we are setting long-term nature-related
metrics and targets.
– Enhancing our water data quality, with
a focus on disclosing defined metrics
in FY25.
Scenarios
We have analysed and quantified how each of our climate-related risks and opportunities behaves under the three scenarios outlined in
the table below. When taken in aggregate, we concluded that our risk management strategies, strategy, disclosure, and ambition make our
business resilient to climate change. We will continue to develop our analysis as new data is made available both internally and externally, and
we will continue to monitor our climate exposures and action plans through Kier’s risk management framework, governance structure, and with
support from our climate consulting partner. The opportunities identified continue to be developed in line with the Group strategy and objectives.
Scenario Temperature range Source Overview
Orderly
transition
Global temperatures
rise of well below 2°C
by 2100
REMIND-MAgPIE
1.7–3.0 – Immediate
1.5°C with CDR
(Orderly, Alt)
1
IPCC
2
UKCP18 RCP 2.6
3
CMIP5 RCP2.6
4
A co-ordinated global low carbon transition, which limits the global
temperature rise to 1.5°C by 2100 from pre-industrial levels. It assumes
current net zero pledges are achieved in full and there are extensive
efforts to realise near-term emissions reductions. This includes clear and
consistently implemented government policies. This scenario includes a
carbon price pathway of $135–$6,050 USD/tCO
2
e in 2030, and $245–
$14,300 USD/tCO
2
e in 2050
2
. Under this scenario physical risks are
reduced within increased risks and opportunities relating to transition.
Disorderly
transition
Global temperatures
rise of less than 2°C
by 2100
REMIND-MAgPIE
1.7–3.0 – Delayed
2°C with CDR
(Disorderly, Alt)
1
IPCC
2
UKCP18 RCP2.6
3
CMIP5 RCP2.6
4
A more conservative pathway, where it is not taken for granted that
governments will reach all announced goals. This scenario is based on
current policies that are projected to result in a 2°C temperature increase
by the end of the century. Because the transition is delayed there must
be more severe action to compensate. Carbon prices increase to
$135–$6,050 USD/tCO
2
e in 2030, and $245–$14,300 USD/tCO
2
e in
2050
2
. Under this scenario physical risks and opportunities occur earlier,
and transitions impacts are more severe due to delayed action.
High emissions
scenario
Global temperatures
rise of greater than
3°C by 2100
REMIND-MAgPIE
1.7–3.0 – Nationally
determined
contributions (‘NDCs’)
(Hot house world, Alt)
1
IPCC
2
UKCP18 RCP8.5
3
CMIP5 RCP8.5
4
A ‘high emissions’ climate change scenario, with limited climate action
beyond current levels and energy intensive growth and increasing fossil
fuel consumption throughout the century. Carbon prices are limited to
$15–$220 USD/tCO
2
e in 2030 and $45–$1,050 USD/tCO
2
e in 2050
2
.
High physical climate risks are expected (extreme weather), with limited
transition risks and lower opportunities for low carbon growth.
1. REMIND-MAgPIE. REgional Model of INvestments and Development.
2. IPCC (2018) Synthesis Report (SR1.5). Global warming of 1.5°C.
3. UKCP18: UK Climate Projections 2018 (part of the Met Office Hadley Centre Climate Programme).
4. CMIP5 mean model from the World Meteorological Organization.
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Our business performance comes
from the contribution of both our
internal and external stakeholders.
Our values contribute to Kier
benefiting all of them and our
approach to each one are set
out below.
Our colleagues, customers, shareholders,
supply chain partners, the UK Government
as well as financial and commercial partners
are all key stakeholders. We connect with
them at all levels of our business through
our frontline operations, support teams and
our businesses, our senior leadership team,
the Executive Committee and the Board
and its committees.
We engage with stakeholders in lots of
different ways – from virtual and in person
meetings and conferences to reviews, forums
and webcasts. To understand how well we’re
engaging with different groups, the Board
and its committees receive regular updates
and use them to make better decisions, and
provide feedback and constructive challenge
on activities, programmes and initiatives
being considered.
The owners of the Group backed Kier with
significant investment during the 2021 capital
raise and, therefore, engagement with them
is very important.
Their expectations are:
– to generate long-term sustainable
shareholder returns through the execution
of our strategy
What we’ve done
– Regularly communicate with shareholders
through:
– our relaunched corporate website
– Annual Report and Accounts
– trading statements
– a site visit to HMP Millsike in East
Yorkshire
– Held our AGM in November open
to all shareholders
– Extensive investor relations programme
including:
– one-to-one conversations
– roadshows
– group meetings
– conferences
– industry events
– an online event specifically
for retail investors
– Remuneration consultation undertaken
by our Remuneration Committee Chair,
Margaret Hassall
The Board receives regular reports on
shares being bought and sold, share price
performance and how we’re engaging with
institutional investors and analysts.
Our stakeholders
We connect with
our stakeholders
Shareholders
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Our business is based upon long-term
regional and sector relationships which
supports our work winning at a local and
national level with the UK Government,
regulated customers and blue-chip clients.
We aim to meet our clients’ and customers’
expectations including pricing and scope
of work with a risk-disciplined approach
Their expectations are:
– to deliver projects on time and to budget
using our workforce, design and project
management skills
– supporting our customers achieve
their environmental and social value
commitments
What we’ve done
– Maintain good relationships with key
customers
– Ensure that we are organised internally
to better serve them
– Regular reports to the Cabinet Office
as the Group is a key strategic supplier
to the UK Government
In addition, the Board receive regular reports
covering customer feedback and we also
measure our performance through customer
satisfaction surveys.
Kier is a people based business and our
performance as a Group depends upon
our ability to attract and retain a dedicated
workforce of c.10,000 employees.
Their expectations are:
– our workforce is skilled, motivated and
competitively compensated
– the safety, health and wellbeing of all
our employees is our number one priority,
and it remains of paramount importance
– we have policies and programmes in place
to provide an inclusive work environment
What we’ve done
– We regularly review how our people are
performing including:
– progress against key people strategy
initiatives
– culture
– overall sentiment within the organisation
– Safety with 12-month rolling Accident
Incident Rate (‘AIR’) in FY24 of 155,
76% increase from FY23
– Operate seven employee networks to
create a diverse and inclusive workplace
– ExCo employee roadshows across
the county
– Held a ‘Kier Live’ event and opportunities
for colleagues to engage and feedback
with our executive committee
– Roll out of Culture programme
Our supply chain partners are key to the
success of the Group. They help us deliver
our projects. It is important that the Group
has an ethical, sustainable and resilient
supply chain.
Their expectations are:
– pay them in line with our agreed terms
– collaborate with them to benefit
all stakeholders
– help them optimise their own supply chains
What we’ve done
– Invest in our supply chain partners’ training;
– Through the Supply Chain Sustainability
School, we provided total partner
value of c.£1.2m including workshops,
training and other resources such as
online courses
– Prompt payment:
– The Group’s average payment days
were 34 days (H1: 33 days)
– percentage of payments made to
suppliers within 60 days was 86%
(H1: 88%)
– Further improvements in our payment
practices are anticipated:
– Fully committed to complying with
the 30-day payment requirements
for small- and medium-sized firms
– 60.6% of expenditure with small- and
medium-term enterprises (SMEs) on public
sector frameworks
As a strategic supplier to the UK Government
and a key supplier to UK regulated asset
owners, we are vital to building and maintaining
infrastructure. In addition, we also support
them in achieving their environmental and
social value targets.
Their expectations are:
– invest in skills and capability aligned to
their investment in infrastructure priorities
– assist in the delivery of their net zero
carbon agenda and social value
commitments
– provide value for money solutions
What we’ve done
– Regular engagement with Cabinet Office.
– Participation in:
– Stakeholder events
– workshops
– roundtables
– site visits and official site opening
ceremonies with representatives of UK
Government departments, agencies and
local government
– In addition, Kier plays its part in a number
of industry bodies and working groups within
the infrastructure services, construction
and property sectors as well as outside of
the sector to share best practice and drive
positive change
Customers Colleagues Supply Chain
Partners
UK
Government
Our stakeholders continued
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The services these partners provide are
essential to the day-to-day operation of the
Group and supporting the medium-term
value creation plan.
Their expectations are:
– commitment to generate cash
from operations and strengthen
the balance sheet
– operate the Group to the highest
professional standards, protecting
our insurers from unreasonable loss
– meet our covenant obligations
What we’ve done
– Successful refinancing with 5 year
Senior Notes to 2029 and extension
of RCF to 2027
– Renewed annual insurance programme
– Covenant compliance completed every
six months
The Group ensure effective cash forecasting
and working capital management through
quarterly reviews, monthly management
accounts and daily monitoring of our
financial position.
The trustees are responsible for ensuring
our colleagues pension schemes are run
properly and that the benefits for the
members are secure.
Their expectations are:
– Kier continues to fulfil our commitments
under the deficit reduction plan
– clear and open communication is
maintained between trustees and
the Group
What we’ve done
– Payment of agreed deficit reduction
payments
– Regular meetings between the Group
and the trustees
– Strong company covenant underpinning
improved pension performance
In order to ensure that we offer our
customers the best solutions we often
use joint venture partners to deliver
projects, particularly on complex large
scale infrastructure projects. In addition,
the Property business will often form
joint ventures with public and private
sector bodies.
Their expectations are:
– Kier and the partner work together
to deliver the agreed project outcome
– risks to be shared and mitigated
What we’ve done
The Group continues to successfully deliver
our section of HS2 through our EKFB joint
venture with Eiffage, Ferrovial and BAM.
We ensure that there is regular
communication with the delivery partners
to ensure that we meeting the expectations
of the UK Government.
Banks,
lenders,
sureties and
insurers
Pension
Trustees
Joint
Ventures
partners
Our stakeholders continued
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How we manage risk
Our risk management
framework
Risk management is fundamental
to the sustainable growth of the
business and remains at the heart
of our operational delivery. Our risk
management framework ensures
we identify and manage the
evolving internal and external risk
landscape collaboratively with our
clients. Further developments have
been made to the risk management
framework, in particular developing
the assurance map to align to the
principal risks and uncertainties.
The roles and responsibilities for
the framework are as shown here.
Board
Retains overall responsibility for how the Group manages risk and for the Group’s systems of risk
management and internal controls. The Board determines its appetite with respect to the Group’s
principal risks and, via the Risk Management and Audit Committee (‘RMAC’), assesses the
effectiveness of the systems of risk management and internal control which are designed to mitigate
the impact of those risks on the Group’s operations. The Board reviews risk as part of its strategy
development sessions. As part of the Board’s overall responsibility for risk, there is a structured flow
of risk information for its notification and approval. The Board is provided with regular updates on
risk management of critical contracts, ensuring effective awareness of risk management actions.
Risk Management and Audit Committee
Responsibility for overseeing the management of the Group’s systems of risk management and
internal control.
Group Risk Committee
Acts as the link between the businesses and the Board and RMAC with respect to risk management.
Other Group-wide committees
These include the Investment Committee which reviews risks relating to the Group’s investment
decisions and the Group Tender Risk Committee which provides independent review and risk
mitigation recommendations relating to trading opportunities and tenders undertaken by
all Group businesses.
Group Risk function
Provides risk challenge and support to the first line teams and provides a Group-wide risk update on
principal and emerging risks. In addition, the function maintains the risk management framework
and consolidates risk information and reports across the Group, monitoring risk and action plans.
Business management
Responsible for risk management frameworks, risk policy and processes. Commercial Directors,
Group function heads and risk owners are on point for identifying, assessing, managing and
mitigating current and emerging risks, and are pivotal in ensuring the right cultures and behaviours
are demonstrated throughout business divisions.
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Risk reporting and insight
The Group reviews its operations through
the Executive Committee and Group Risk
Committee (‘GRC’), based on the Principal
Risks and Uncertainties (‘PRUs’) and
operational risk processes to identify both
risks and opportunities. Key Risk Indicators
(‘KRIs’) are used to evidence if a risk is
improving or deteriorating in terms of likelihood
and impact. KRIs have clear tolerance levels
and are monitored and reported against
each of the PRUs. ESG risk management is
integrated into the PRU and operational risk
processes and specifically the Health and
Safety, People and Sustainability PRUs.
Group risks are assessed quarterly, agreed
with risk owners and reported to the GRC
and RMAC. In addition, a risk management
refresh is carried out with the Executive
Committee annually. The business division
commercial teams continue to ensure that
the risk management principles of the Group
are reflected within their operations and
manage the process to allow the GRC to
consider both top-down and bottom-up risks.
The Board undertook a review of the Group’s
principal and emerging risks (aligned to Kier’s
strategic actions), together with its appetite
for the nature and extent of the risks that the
Group is willing and able to take including
those that would threaten its business model,
future performance, solvency or liquidity,
so as to inform the parameters within which
the business is authorised to operate. Risk
appetite qualitative statements provide further
risk context and standards of mitigation from
which they can be reported and monitored
against. In addition, risk opportunities are
also articulated and reviewed.
Assurance
Internal Audit supports the Group
through independent review and objective
assessment, and by promoting and supporting
continuous improvement in the quality of
business operations, the control environment
and overall risk management. Third party
assurance is provided over various Kier
activities as agreed with independent service
providers including accreditation bodies,
External Audit and regulators.
An Audit and Assurance Policy, supporting
documents and assurance mapping across
the various sources of assurance are in
development with their primary purpose
to demonstrate to senior management,
the RMAC and Board how Kier is assuring
information related to its PRUs, external
corporate reporting (such as the Annual
Report and Accounts and investor
presentations) and fraud risk.
“ Risk management
is fundamental to the
sustainable growth
of the business and
remains at the heart of
our operational delivery.”
Sources of assurance
Business teams (first line of defence)
– Design and own operational risk and
compliance frameworks
– Identify, assess, manage, monitor and report
risks/issues controls and action plans
Internal Audit (third line of defence)
– Independently review first and second
lines of defence
– Deliver assurance over risk management
frameworks
External Assurance
– Deliver assurance over various Kier
risks and activities
Risk and Compliance (second line of defence)
– Design strategic risk and compliance
frameworks
– Monitor adherence to the risk and compliance
frameworks
– Provide support and challenge to the first line
– Monitor and report on risk
How we managed risk continued
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Low Medium High
ProbablePossibleImprobable
Likelihood
Impact
Principal risks and uncertainties
During the year, the Board
identified the PRUs facing the
Group and assessed its appetite
with respect to each PRU.
Understanding the Group’s
risk profile, and how the Group
manages risk, is central to the
Board’s decision-making process.
The Board’s assessment of risk
The Board’s assessment of the PRUs facing
the Group, their potential impact, the mitigating
actions proposed in respect of each risk, the
change in risk profile during the year (in terms
of impact and likelihood), and an indication
of the Board’s risk appetite for each risk are
summarised in the Risk heatmap opposite.
The risks are not listed in any order of priority.
Risks are plotted on a net basis, including
current mitigations.
Changes to the PRUs
Last year’s PRUs remain with one change
– at half year, the Climate Change principal
risk has been replaced with a Sustainability
principal risk ‘Failure to identify and effectively
manage sustainability risks and opportunities’
which incorporates climate change and
environmental incidents and aligns with Kier’s
Building for a Sustainable World framework.
Risk heatmap
The list below sets out the Group’s principal
risks and the Board’s appetite with respect
to each risk:
Risk appetite
Health and safety
Low
Legislation and regulation
Low
Funding
Low
Maintaining an order book within
selected markets
Low
Contract management
Low
People
Medium
Supply chain
Low
Strategy
Low
IT security, resilience, cyber and
data protection
Low
Sustainability
Low
Macroeconomic
Medium
Risk appetite
Low – the Group has a very low appetite for risk
that is likely to have adverse consequences and
aims to eliminate, or substantially reduce,
such risks.
Medium – the Group has some appetite for risk
and balances its mitigation efforts with its view
of the potential rewards of an opportunity.
High – the Group has a greater risk appetite
where there is a clear opportunity for a greater
than normal reward.
Impact
Low – the exposure is well understood with
a relatively low cost of mitigation.
Medium – risk may be tolerated provided
that the benefits are considered to outweigh
the costs.
High – risk threatens the viability of the Group
or there is a reasonable likelihood of danger
to people or material reputational damage.
Likelihood
Improbable – the risk is not foreseen as likely to
occur or may occur in exceptional circumstances.
Possible – a relatively infrequent occurrence
for the Group.
Probable – a relatively frequent occurrence
for the Group.
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Principal risk Description Impact/actions
1
Health
and safety
Board risk appetite
Low
Level of impact
High
Level of likelihood
Improbable
Risk status
No change
Risk owner
Chief People Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
Failure to maintain a safe
working environment and
prevent a major incident
The Group’s operations are complex
and potentially hazardous, and
require rigorous management of
health, safety and wellbeing matters.
Risk appetite rationale
Safety is, and will always be, our
licence to operate. The health, safety
and wellbeing of our people has a
direct impact on our operations.
The Group will always have
a low appetite for risk when it
comes to protecting all our people,
stakeholders and members of
the public.
Risk appetite statement
We create and enable a working
environment which ensures the
health, safety and wellbeing of
all our people and stakeholders.
Potential impact
– An increase in safety or
environmental incidents on site
– The failure to meet clients’
expectations, adversely
affecting the ability to bid
for and win new work
– Financial penalties arising
from fines, legal action and
project delays
– An unhealthy employee
population resulting in greater
levels of absence, lowered
operational performance
and resilience.
Mitigating actions
– Simplified Integrated
Management System making
it easier for our people to access
and understand, freeing them
up to proactively manage Health
and Safety on our projects
– Improve safety performance
by sharing lessons learnt from
incidents via alerts, safety
bulletins and the Incident
Review Board Process
– Embed the Responsible
Business Strategy, including a
focus on the five Safety, Health
and Environment basics, our
Group wide culture and emerging
behavioural safety programmes
– Proactive HSW Leadership
including senior management
Visible Leadership Tours,
Operational Safety and Site
Safety Inspections and the
sharing of best practice
– Compliance with ISO 45001
– Promotion of our network
of Mental Health First Aiders,
Wellbeing Champions and
Employee Assistance
Programme.
Principal risk Description Impact/actions
2
Legislation
and regulation
Board risk appetite
Low
Level of impact
Medium
Level of likelihood
Improbable
Risk status
No change
Risk owner
Group Legal and
Compliance Director
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Failure to comply with and
manage effectively current
legislation and regulation,
and any changes to them
The sectors in which the Group
operates are subject to increasing
scrutiny from stakeholders,
oversight from regulators and
requirements including those
introduced by new legislation
or regulation.
Risk appetite rationale
To operate in our chosen markets,
Kier must comply with all applicable
legislation and regulation. To win
high-quality work from our intended
client base we must be able to
demonstrate compliance.
Therefore, it is fundamental to
Kier’s continued success that
we remain compliant.
Risk appetite statement
We ensure compliance with legal
and regulatory requirements and
continue to identify and plan for
the implementation of new
requirements via horizon scanning
and subsequent policy/procedure
implementation.
Potential impact
– Penalties for failing to adhere
to legislation or regulation
– Increased operating costs
of compliance
– The loss of business
– Reputational damage.
Mitigating actions
– Appropriate policies that
are regularly reviewed and
relevant training and awareness
programmes to support
policy implementation
– Regular engagement with
Government and Government
agencies with respect to the
Group’s continued compliance
– Monitoring of, and planning for,
the impact of new legislation
and regulations
– Collaborative engagement
with external stakeholders.
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Principal risk Description Impact/actions
3
Funding
Board risk appetite
Low
Level of impact
High
Level of likelihood
Improbable
Risk status
No change
Risk owner
Chief Financial Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Failure to maintain
adequate financial liquidity
and/or comply with
financial covenants
Failure to maintain adequate
financial liquidity and/or comply
with financial covenants resulting
in an inability to execute the
Group’s strategy effectively.
Risk appetite rationale
Our risk appetite is low as
having access to committed
funding is critical to ensuring
operational stability.
Risk appetite statement
Ensuring the Group operates
responsibly within its agreed
borrowing covenants is a key
component of the Group’s financial
planning and monitoring processes.
The Group is targeting a
sustainable net cash position
in the medium term.
Potential impact
– The loss of confidence by
other stakeholders (for example,
investors, clients, subcontractors
and employees)
– Conducting existing business
becomes increasingly challenging
– The loss of future business.
Mitigating actions
– Effective cash forecasting and
working capital management
in combination with continued
monitoring and prudent
financial planning to ensure
cash generation and covenant
compliance is maintained
– Continued collaborative
engagement with
key stakeholders
– Through financial planning
the Group ensures that
appropriate levels of headroom
under committed facilities
and their financial covenants
are in place to accommodate
reasonable downside
– Established funding through
to February 2029.
Principal risk Description Impact/actions
4
Maintaining
an order
book within
selected
markets
Board risk appetite
Low
Level of impact
Medium
Level of likelihood
Possible
Risk status
No change
Risk owner
Group Managing
Directors
Link to strategic
action
– Sustainable growth
– Generate cash
A general market or sector
downturn materially and
adversely affects the Group’s
ability to secure work –
UK Government spending,
certainty and timing,
including competitiveness
of the current market
The Group strategy sets out specific
sectors that it wishes to trade within.
The pipeline of work could be
adversely affected by a general
or sector downturn or cause a
delay to projects going to site.
Risk appetite rationale
Low appetite to move away from
our selected markets because
of the higher risk of securing loss
making projects and the additional
costs associated with serving too
many sectors.
Risk appetite statement
We are disciplined by operating
in selected markets where
opportunities are right for us in terms
of our skills, expertise and suitability
– enabling optimal delivery and
benefits for our stakeholders.
Potential impact
– A failure of one or more
of the Group’s businesses
– Increased competition
for new work
– A decrease in stakeholder
confidence in the Group.
Mitigating actions
– To continue to secure
long-term frameworks within
each of our businesses
– Tailoring the Kier offer to meet
customer needs
– Maintaining an efficient
cost base
– Project Lifecycle Management
gateway process.
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Principal risks and uncertainties continued
Principal risk Description Impact/actions
5
Contract
management
Board risk appetite
Low
Level of impact
Medium
Level of likelihood
Possible
Risk status
No change
Risk owner
Group Managing
Directors
Link to strategic
action
– Sustainable growth
– Generate cash
Failure to manage contracts
effectively at each stage
of a project’s lifecycle.
The business suffers a significant
loss as a result of failing to adequately
undertake bidding, design,
mobilisation, delivery and handover
(including any remediation works).
Risk appetite rationale
The Group has a low risk appetite
in relation to tender and change
management because of the
increased risk of a loss making
project or unacceptable work
in progress.
Risk appetite statement
We are disciplined with our
project selection to ensure we
select projects under frameworks
or with clients who provide repeat
business. We then proactively
manage contracts at each stage
of a project’s lifecycle gateway.
Frameworks, policies and standards
are in place and are consistently
effective throughout the business.
Potential impact
– A failure to manage project
delivery and work in progress
and, ultimately, to meet the
Group’s financial targets
– The Group incurring losses
on individual contracts
– The Group failing to win new work
because of reputational impact.
Mitigating actions
– Tender peer review through the
Group Tender Risk Committee
– Kier standards for contract
amendments
– Commercial Handbook explains
how we manage change
– In-built escalation to identify
unacceptable levels of
unagreed change
– Project Lifecycle Management
gateway process.
Principal risk Description Impact/actions
6
People
Board risk appetite
Medium
Level of impact
Medium
Level of likelihood
Possible
Risk status
No change
Risk owner
Chief People Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Failure to attract and retain
key employees
The Group’s employees are critical
to its ability to deliver the business
plan. The Group needs to attract,
retain and develop people to
ensure they have the right skills,
experience and behaviours.
Risk appetite rationale
While there are market fluctuations
outside of our control, we have
appetite for people risk to a degree.
We have strong mitigating controls
and actions to ensure a workforce
with strong competencies, skills
and capabilities.
Risk appetite statement
We develop a workforce with the
required competencies, skills and
capabilities to deliver our business
plan. We ensure we have a
compelling employee proposition
to ensure people are attracted,
developed and retained in order
to deliver operations.
Potential impact
– An adverse effect on the
delivery of the Group’s purpose
and strategy
– A lack of operational leadership,
potentially leading to poor
project performance
– An erosion of the Group’s
employer brand.
Mitigating actions
– Embed and develop the Kier
Culture (Values and healthy
behaviours) to drive high and
balanced performance.
– Delivering the People strategy
and strategic workforce planning
aligned to the business plan
– Deliver the responsible
business strategy
– Deliver award winning
leadership, management and
technical development offer
supported by a proactive talent
management process
– Employee engagement,
feedback and positive action
plan (Your Voice)
– Compelling and competitive
employee value proposition.
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Principal risk Description Impact/actions
7
Supply chain
Board risk appetite
Low
Level of impact
Medium
Level of likelihood
Possible
Risk status
No change
Risk owner
Chief Financial Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
Failure to maintain effective
working relationships with
the supply chain, supply
chain insolvencies, capacity,
pricing and inflation volatility
The Group relies upon its
partners for the delivery of its
projects. Maintaining a close
working relationship is a priority
for the Group.
Risk appetite rationale
We have a low appetite to exposing
ourselves to unmanageable supply
chain risk because of the impact on
our ability to deliver to customers.
Risk appetite statement
We continue to have positive
relationships with our supply chain
and subcontractors. They are risk
assessed and vetted for good
financial and reputational standing.
We have a strong relationship
with our suppliers and product
associations and maintain a constant
dialogue over the availability of
products and alternatives.
Potential impact
– Unavailability of appropriate
resources, impacting on project
delivery and cost
– Use of suppliers from outside the
preferred supplier list increases
cost and decreases quality
– Poor relationships lead to lack
of confidence in the Group
and adverse publicity.
Mitigating actions
– Continued updating of the
Kier subcontracts to reflect
the principles of the
Construction Playbook
– Placement of divisional
Procurement Directors
to deliver the supply chain
management strategy
– Continued focus to meet prompt
payment reporting requirements
– Further use of the Shared Service
Centre and division resources
to channel spend and reduce
risk – early engagement project
– Continued support of security
software and investigate right
to work module for further risk
reduction across the business.
Principal risk Description Impact/actions
8
Strategy
Board risk appetite
Low
Level of impact
High
Level of likelihood
Improbable
Risk status
No change
Risk owner
Chief Executive
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Failure to deliver
the Group’s strategy
The Group fails to deliver its
long-term sustainable growth plan.
Risk appetite rationale
Delivery of the Group’s long-term
sustainable growth plan is critical
to delivering our investment case.
Risk appetite statement
We have business plans that
underpin the long-term sustainable
growth plan. All of our operational
performance management reviews
are geared towards the achievement
of this plan. Performance Excellence
is in place to ensure we have the
necessary focus on those capabilities
to meet the strategic plan.
Potential impact
– An adverse impact on the
Group’s net debt and liquidity
– Failure to secure positions on
national and regional frameworks
– Failure to meet stakeholders’
expectations may lead
to a decline in confidence
in the Group.
Mitigating actions
– Maintaining the balance
sheet strength
– Maintaining a well bid order book
– Delivery of project performance
– Delivery of our Performance
Excellence culture
– Continued focus on
cash management
– Effective communication
with stakeholders.
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Principal risk Description Impact/actions
9
IT security,
resilience,
cyber and data
protection
Board risk appetite
Low
Level of impact
Medium
Level of likelihood
Possible
Risk status
No change
Risk owner
Chief Information
Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Kier is exposed to IT security,
resilience, cyber and data
protection incidents
Failure to keep up to date with the
modern attack landscape as well as
protecting infrastructure from cyber/
loss of data risks and Artificial
Intelligence increasing cyber threats.
Risk appetite rationale
We need to hold and send data
related to our people and our
clients. The geopolitical pressures
have increased the level of UK
exposure to state sponsored events
and ransomware sophistication,
so our partners and ourselves are
at a heightened state of vigilance
in relation to a cyber attack.
Risk appetite statement
We ensure that effective security
is in place to prevent the loss of
data/sensitive information or assets.
Any potential loss of data regarding
key IT infrastructure and systems is
carefully protected against, including
cyber-attack counter measures.
Potential impact
– Operational impact – e.g.,
delivery of projects, key systems
outage, failure to win work, loss
of confidential and/or other data
– Financial impact – regulatory
fines/prosecutions
– Reputational/brand damage.
Mitigating actions
– Staff mandatory training,
awareness and phishing
campaigns
– Vulnerabilities, access
and incident management
– ISO 27001 and Cyber
Essentials accreditation
– Information security business
continuity plan
– System alerts, patching/updates
and monitoring
– Partners and suppliers follow
Group minimum standards
re cyber, security and data.
Principal risk Description Impact/actions
10
Sustainability
Board risk appetite
Low
Level of impact
High
Level of likelihood
Improbable
Risk status
No change
Risk owner
Chief People Officer
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
Failure to identify
and effectively manage
sustainability risks
and opportunities
Our ability to win work is dependent
on delivering on our Environmental,
Social and Governance (‘ESG’)
commitments.
Our approach to sustainability aims
to safeguard our business and build
a resilient environment, community
and profits over the long term.
Sustainability development is a
key focus within current legislation
and regulation, with expectations
for transparent ESG data
reporting growing.
Risk appetite rationale
Sustainability is at the heart of
our purpose and informs everything
we do at Kier. To successfully win
contracts we must demonstrate we
can meet environmental and social
commitments, including managing
the risks and opportunities
associated with climate change.
Risk appetite statement
Our sustainability framework,
‘Building for a Sustainable World’
(‘BfaSW’), has evolved to ensure
that we address the topics that are
most important to our stakeholders
across our three pillars of Our
People, Our Places and Our Planet.
Potential impact
– Failure to win work
– Failure to meet our BfaSW targets
– Failure to meet client and
investor expectations or
regulatory requirements
– Not attracting or retaining people
– Reputational damage.
Mitigating actions
– Delivering against the BfaSW
framework including monitoring
key metrics and progress
against targets
– Work with our supply chain
to help deliver the actions
associated with our strategic
pillars and further embed
product innovation, including
modern methods of construction
and digitalisation
– Embed the new environmental
data management system (Rio)
– Maintain and improve
performance through ESG
certification, accreditation
and benchmarks and continue
proactive stakeholder reporting
and disclosure
– Undertake climate scenario
analysis, to mitigate risks and
maximise opportunities.
– Retain ISO 14001 certification
and embed environmental
best practice.
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Principal risk Description Impact/actions
11
Macro-
economic
Board risk appetite
Medium
Level of impact
Low
Level of likelihood
Probable
Risk status
No change
Risk owner
Chief Executive
Link to strategic
action
– Sustainable growth
– Consistent and
safe delivery
– Generate cash
Changes in
macroeconomic conditions
negatively impact on Kier,
its workforce and its clients
Our ability to win and deliver projects
is impacted by developments in the
UK economy which may arise from
economic slowdown, interest rate
rises, unemployment, inflation
or UK political and geopolitical
instability, resulting in a reduction in,
or pausing of, UK Government and
private sector spending in our
selected markets.
Risk appetite rationale
Whilst economic conditions are
outside of our control, our risk
appetite is medium. Our selected
markets offer a counter cyclical
opportunity and we also have a
robust tender process, operating
model, financial position and
a strong order book.
Risk appetite statement
We are disciplined by operating
in selected markets and focus on
business where opportunities have
an acceptable risk. We continue to
deliver our contracts, supported by
our risk management framework,
Operating Framework and
Performance Excellence processes.
Potential impact
– Reduced revenue or margins
– Project affordability
– Availability of labour
and materials
– Increased supply chain
insolvency risk.
Mitigating actions
– Use of financial derivative
instruments to hedge exposure
to fluctuations in interest and
exchange rates.
– Various market insights and
intelligence relating to pricing,
lead times
– Kier risk management framework
– Supply chain management
– Kier Operating Framework
and Performance Excellence
processes
– Kier Commercial Standards.
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Financial review
Simon Kesterton
Chief Financial Officer
“ The Group has
delivered a strong set of
results for the year with
further improvement in
the order book, which
has been converted
into strong revenue
growth in both
Construction and
Infrastructure Services.”
Summary of financial performance
Adjusted
1
results Statutory reported results
30 June 24 30 June 23 Change % 30 June 24 30 June 23 Change %
Revenue (£m) – Total 3,969.4 3,405.4 16.6 3,969.4 3,405.4 16.6
Revenue (£m) –
Excluding JV’s 3,905.1 3,380.7 15.5 3,905.1 3,380.7 15.5
Operating profit (£m) 150.2 131.5 14.2 103.1 81.5 26.5
Profit before tax (£m) 118.1 104.8 12.7 68.1 51.9 31.2
Earnings per share (p) 20.6 19.2 7.3 11.8 9.5 24.2
Total dividend per
share (p) 5.15 – 100.0 5.15 – 100.0
Free cash flow (£m) 185.9 132.3 40.5
Net cash (£m) 167.2 64.1 160.8
Net debt (£m) –
average month-end (116.1) (232.1) (50.0)
Order book (£bn) 10.8 10.1 6.9
1. Reference to ‘Adjusted’ excludes adjusting items, see note 5.
Introduction
The Group has delivered a strong set of
results for the year with further improvement
in the order book, which has been converted
into strong revenue growth in both Construction
and Infrastructure Services. The Group’s
focus on operational delivery and cash
management has seen the Group continue
to deleverage materially with average
month-end net debt improving significantly.
As a result of the clear line-of-sight to a
sustainable net cash position alongside
an appropriate longer-term debt structure,
on 7 March 2024 the Group returned to the
dividend list and declared an interim dividend
payment. A final dividend of 3.48p has
been proposed.
In February 2024, the Group completed a
refinancing of its principal debt facilities and
has secured significant committed funding
to support its evolved long-term sustainable
growth plan.
The Group delivered strong growth of 16.6%
giving total Group revenues of £3,969.4m
(FY23: £3,405.4m) and which helped deliver
an adjusted operating profit of £150.2m
(FY23: £131.5m).
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The continued strong operational
performance led to a 26.5% increase in
operating profit to £103.1m (FY23: £81.5m)
and an increase in profit before tax to £68.1m
(FY23: £51.9m).
Adjusting items were £50.0m (FY23:
£52.9m). The current period charge includes
£23.2m of amortisation of intangible contract
rights arising from acquisitions, and £15.0m
of fire and cladding compliance costs. As
expected, the Group’s restructuring activities
are now complete and no further restructuring
costs have been incurred in adjusting items
in the year.
Net finance charges, excluding adjusting items,
for the period were £32.1m (FY23: £26.7m),
with the benefit of lower average month-end
net debt offset by higher interest rates
through the year following the completion
of the Group’s refinancing in February 2024.
Interest on the RCF facility remains at SONIA
plus c.2.5%, the Senior Notes are issued at
a fixed interest rate of 9% whilst the USPP
notes incur fixed interest at c.5%.
Adjusted earnings per share increased 7.3%
to 20.6p (FY23: 19.2p).
The Group generated a free cash inflow
of £185.9m during the year (FY23: £132.3m)
driven by a strong volume growth across
Infrastructure Services and Construction
and a focus on working capital management.
Free cash flow was used to fund the
acquisition of the Buckingham Group’s
rail assets, adjusting items, pension deficit
obligations as well as an interim dividend.
Net cash at 30 June 2024 of £167.2m was
significantly improved compared to the prior
year (FY23: £64.1m).
Average month-end net debt for the
year ended 30 June 2024 was £(116.1)m
(FY23: £(232.1)m), reduced significantly
from the prior year.
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 has increased to £10.8bn
(FY23: £10.1bn), a 6.9% increase compared
to the prior year end, with c.90% of revenue
for FY25 is already secured which provides
certainty of further progress over next year,
an increase over the same time in the
prior year.
Revenue
The following table bridges the Group’s
revenue from the year ended 30 June 2023
to the year ended 30 June 2024.
£m
Revenue for the year ended
30 June 2023 3,405.4
Infrastructure Services –
existing businesses 156.1
Infrastructure Services –
Buckingham acquisition 119.9
Construction 255.3
Property and Corporate 32.7
Revenue for the year ended
30 June 2024 3,969.4
The Group grew revenue across all segments,
with Construction reporting revenue growth
of 15.4% compared to the prior period and
Infrastructure Services reporting revenue
growth of 16.1% for the same period.
On 4 September 2023, the Group acquired
substantially all of the rail assets of Buckingham
Group Contracting Limited from administration.
The acquisition has been successfully
integrated into the Group’s Transportation
business, within Infrastructure Services.
The Group continues to focus on delivering
high-quality and high-margin work.
Alternative performance measures
(‘APMs’)
The Directors continue to consider that it is
appropriate to present an income statement
that shows the Group’s statutory results only.
The Directors, however, still believe it is
appropriate to disclose those items which
are one-off, material or non-recurring in size
or nature. The Group is disclosing as
supplementary information an ‘adjusted
profit’ APM. The Directors consider doing
so clarifies the presentation of the financial
statements and better reflects the internal
management reporting and is therefore
consistent with the requirements of IFRS 8.
Adjusted Operating Profit
£m
Adjusted operating profit for
the year ended 30 June 2023 131.5
Volume/price/mix changes 21.0
Fewer Property transactions,
net of valuation gains (6.6)
Cost inflation (8.3)
Management actions 12.6
Adjusted operating profit for
the year ended 30 June 2024 150.2
A reconciliation of reported to adjusted
operating profit is provided below:
Operating profit Profit before tax
30 June 24
£m
30 June 23
£m
30 June 24
£m
30 June 23
£m
Reported profit from continuing operations 103.1 81.5 68.1 51.9
Amortisation of acquired intangible assets 23.2 19.2 23.2 19.2
Fire and cladding costs 15.0 12.6 15.0 12.6
Property-related items 7.2 (1.1) 7.2 (1.1)
Recycle of foreign exchange (5.9) – (5.9) –
Refinancing fees 4.5 – 4.5 –
Net financing costs – – 2.9 2.9
Insurance-related items – 5.3 – 5.3
Redundancy and other people-related costs – 4.8 – 4.8
Professional fees and
other non-people initiatives – 4.9 – 4.9
Other 3.1 4.3 3.1 4.3
Adjusted profit from continuing operations 150.2 131.5 118.1 104.8
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Additional information about these items
is as follows:
– Amortisation of acquired intangible assets
£23.2m (FY23: £19.2m):
– Comprises the amortisation of acquired
contract rights through the acquisitions
of MRBL Limited (Mouchel Group), May
Gurney Integrated Services PLC and
McNicholas Construction Holdings
Limited. The current year charge also
includes amortised contract rights in
respect of the Buckingham Group
rail acquisition.
– Fire and cladding costs £15.0m
(FY23: £12.6m):
– Costs have been incurred in rectifying
legacy issues where the Group has used
cladding solutions in order to comply with
the latest Government guidance. The net
charge of £15.0m includes a credit of
£11.8m in respect of insurance proceeds.
– Property-related items £7.2m (FY23: credit
of £1.1m):
– Property-related items consist of the
loss on disposal of a property previously
treated as adjusting items, and costs
incurred and fair value adjustments in
respect of corporate properties vacated
in prior years as part of the review of
Group premises.
– The prior year credit consisted of
vacated corporate property costs offset
by a credit of £1.6m relating to the profit
on the sale of mothballed land which
had previously been impaired through
adjusting items.
– Recycle of foreign exchange £5.9m credit
(FY23: £nil):
– The retranslation of the overseas balance
sheets has been recycled to the income
statement following the down-sizing of
the international business and has been
treated as an adjusting item.
– Refinancing fees £4.5m (FY23: £nil):
– These costs consist of professional
advisor fees that were incurred as part
of the refinancing exercise but that were
not directly attributable to the issue of
the debt instruments and so could not
be capitalised.
– Net financing costs £2.9m (FY23: £2.9m):
– Net financing costs relate to IFRS 16
interest charges on leased investment
properties previously used as offices.
– Other adjusting items £3.1m (FY23: £4.3m):
– Other costs consist of charges in respect
of the down-sizing of the International
business and costs incurred on the
acquisition of Buckingham Group’s
rail division.
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 has 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 has increased by £8.3m,
net of tax credit of £0.8m, the majority of
which remains as a provision on the year
end balance sheet. The £8.3m has been
recognised as an adjusting item within
discontinued operations.
Earnings per share
EPS before adjusting items amounted
to 20.6p (FY23: 19.2p). EPS after adjusting
items amounted to 11.8p (FY23: 9.5p).
Finance income and charges
The Group’s finance charges include interest
on the Group’s bank borrowings and finance
charges relating to IFRS 16 leases.
Net finance charges for the year were £32.1m
(FY23: £26.7m) before adjusting items of
£2.9m (FY23: £2.9m).
Interest on borrowings amounted to
£31.5m (FY23: £29.0m). The Group was
able to partially mitigate the risk of higher
interest rates with fixed interest rate swaps.
At 30 June 2024, the Group had an
interest rate swap of £50m due to expire
in June 2025.
Lease interest was £9.5m (FY23: £9.5m).
The Group had a net interest credit of £5.7m
(FY23: £7.8m) in relation to the defined
benefit pension schemes which has arisen
due to the combination of the overall pension
surplus and the discount rate (derived from
corporate bond yields), at the start of the
financial year. We anticipate this will reduce
to c.£4m in FY25.
The Group continues to exclude lease
liabilities from its definition of net cash/(debt).
Dividend
The Board recognises the importance of a
sustainable dividend policy to shareholders.
Given the strong operational and financial
performance in FY23 and throughout HY24,
together with continued confidence over
further progress in the short term, the Board
reinstated a dividend at the announcement
of its half year results in March 2024.
Over time, the Board’s target is to progress
to deliver a dividend, covered c.3x by
adjusted earnings and in a payment ratio
of approximately one-third interim dividend
and two thirds final dividend.
As a result, the Board has declared a final
dividend of 3.48p per share.
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Balance sheet
Net assets
The Group had net assets of £520.1m at
30 June 2024 (FY23: £513.0m). The primary
driver for this is the retained profit for the
year, offset by the decrease in the pension
scheme surplus during the period.
Goodwill
The Group held intangible assets of
£638.2m (FY23: £645.0m) of which goodwill
represented £543.5m (FY23: £536.7m).
The Group completed its annual review
of goodwill assuming a pre-tax discount rate
of 12.4% (FY23: 13.1%), and concluded that
no impairment was required.
The Infrastructure Services group of
Cash Generating Units (‘CGU’) comprise
£523.1m of the total goodwill balance. Whilst
no impairment is noted and management
believes the discounted cash flows applied
is underpinned by the order book and current
pipeline prospects, this CGU is sensitive to
changes in key assumptions. The key
assumptions in the value in use calculations
are the forecast revenues and operating
margins, the discount rates applied to future
cash flows and the terminal growth rate
assumptions applied.
Deferred tax asset
The Group has a deferred tax asset
of £133.1m recognised at 30 June 2024
(FY23: £128.8m) primarily due to historical
losses. The asset has increased in the year
predominantly due to the deferred tax debit
in relation to the movement in the pension
scheme asset. In addition, tax losses of
£20.4m have been used against current
year profits.
Based on the Group’s forecasts, it is expected
that the deferred tax asset will be utilised over
a period of approximately eight years.
An adjusted tax credit of £11.6m (FY23: £11.1m)
has been included within adjusting items.
Right-of-use assets and lease liabilities
At 30 June 2024, the Group had right-of-use
assets of £95.0m (FY23: £105.4m) and
associated lease liabilities of £173.1m
(FY23: £182.6m). The movements reflect
operational equipment requirements less
associated depreciation and lease repayments.
Investment properties
The Group has long-term leases on two
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.
In addition, the Group’s Property business
invests and develops primarily mixed-use
commercial and residential schemes and
sites across the UK. One of these sites is
held as an investment property, along with
the Group’s former mine at Greenburn,
Scotland, which has planning permission
for a wind farm.
The Group recognised an overall fair value
gain of £6.5m across these sites which has
been recognised in Other income.
Contract assets & liabilities
Contract assets represents the Group’s
right to consideration in exchange for works
which have already been performed.
Similarly, a contract liability is recognised
when a customer pays consideration before
work is performed. At 30 June 2024, total
contract assets amounted to £358.1m
(FY23: £401.9m).
Contract liabilities were £128.4m
(FY23: £90.5m).
Retirement benefits obligation
Kier operates a number of defined benefit
pension schemes. At 30 June 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 £80.5m (FY23: £104.5m),
before accounting for deferred tax, with the
movement in the year primarily as a result of
actuarial losses of £36.5m (FY23: £107.8m).
The net movement is due to both lower
than assumed asset returns and changes
in financial assumptions, with lower
corporate bond yields leading to increased
pension scheme liabilities. The impact of
these changes have been partially offset
by a change in demographic assumptions
and deficit reduction contributions, both
of which have led to a decrease in the
schemes’ liabilities.
In FY23 the Group agreed the triennial
valuation for funding six of its seven defined
benefit pension schemes, with the seventh
scheme being agreed during this year.
Given the Group’s improved covenant and
payments made under the existing schedule
of contributions, the schemes are in a
significantly improved position.
Accordingly, deficit payments will decrease
from £9m in FY24 to £7m in FY25, £5m
in FY26, £4m in FY27 and £1m in FY28.
Once the pension schemes are in actuarial
surplus, they will cover their own administration
expenses. In FY24, total expenses amounted
to £2.3m (FY23: £2.9m), of which £1.7m
(FY23: £nil) were paid by the schemes.
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Free cash flow and net cash
30 June 24
£m
30 June 23
£m
Operating profit 103.1 81.5
Depreciation of
owned assets 8.3 6.1
Depreciation of
right-of-use assets 39.0 43.7
Amortisation of
intangible assets 30.6 26.8
Amortisation of
mobilisation costs 3.2 7.1
EBITDA 184.2 165.2
Adjusting items
excluding adjusting
amortisation
and interest 23.9 30.8
Adjusted EBITDA 208.1 196.0
Working capital inflow 68.4 80.3
Net capital expenditure
including finance lease
capital payments (57.3) (51.4)
Joint venture dividends
less profits 0.7 0.7
Repayment of KEPS – (49.8)
Other free
cash flow items (2.8) (5.2)
Operating free
cash flow 217.1 170.6
Net interest and tax (31.2) (38.3)
Free cash flow 185.9 132.3
2024
£m
2023
£m
Net cash at 1 July 64.1 2.9
Free cash flow 185.9 132.3
Adjusting items (36.7) (27.0)
Pension deficit
payments and fees (9.2) (12.8)
Net purchase of
own shares (3.7) (11.9)
Net investment
in joint ventures (18.2) (18.6)
Acquisition of
Buckingham (9.4) –
Dividends paid (7.3) –
Other 1.7 (0.8)
Net cash at 30 June 167.2 64.1
The Group has delivered a strong free cash
flow for the year, driven by the underlying
business performance and good working
capital management.
The average month-end net debt position has
reduced by half to £(116.1)m (FY23: £(232.1)m).
Positive operating cash flow was used to pay
adjusting items, tax and interest, pension deficit
obligations, interim dividend, the acquisition
of the Buckingham rail assets, purchase
existing Kier shares on behalf of employees
and deploy cash to our Property business.
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 £3.7m (FY23: £11.9m).
Given the extent of Free Cash Flow (‘FCF’)
generation, we have a line-of-sight to further
reduce average month-end net debt for
FY25 and FY26.
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 year.
Treasury facilities
Bank finance
In February 2024 the Group completed
a refinancing of its principal debt facilities.
This included the issuance of a 5 Year £250m
Senior Notes, maturing February 2029 and
an extension of its RCF, with a committed
facility of £150m from January 2025 to
March 2027.
The proceeds of the Senior Notes were used
to reduce the USPP notes by £37m and lower
the RCF to £261m.
At 30 June 2024 the Group has committed
debt facilities of £548.2m with a further
£18.0m of uncommitted overdrafts.
The facilities comprise £250.0m Senior Notes,
£260.9m Revolving Credit Facility (‘RCF’),
£37.3m US Private Placement (‘USPP’)
Notes as well as £18.0m of overdrafts.
The remainder of its USPP notes and
reduction in the RCF of £111m in January
2025 will be met from operating free cash flow.
The Group has a fixed interest rate swap
of £50m through to June 2025.
With £400m of facilities (£250m Senior
Notes and £150m RCF), post January 2025,
the Group has secured significant committed
funding to support its long-term sustainable
growth plan.
Financial instruments
The Group’s 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.
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, 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.
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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 12 months
from the date of approving these financial
statements and, for this reason, they continue
to adopt the going concern basis in preparing
these financial statements.
Further information on this assessment is
detailed in note 1 of the consolidated financial
statements on page 154.
Viability statement
The UK Corporate Governance Code requires
the Board to explain how it has assessed the
prospects of the Group, over what period it
has done so and why it considers that period
to be appropriate.
Assessment period
Consistent with the practice of previous
years, the Board has assessed the prospects
of the Group over a period of three years
from 30 June 2024, taking account of its
current position and the potential impact of
the Group’s principal risks and uncertainties
(the ‘PRUs’) which is set out in this Annual
Report and certain other risks referred
to below.
The Board has identified a three-year period
as being a period over which it believes it is
able to forecast the Group’s performance with
reasonable certainty, principally because:
– The Group’s internal forecasting covers
a three-year period;
– The tender process and delivery
programme for a number of the Group’s
projects can, together, take a period of
up to approximately three years; and
– The visibility of the Group’s secured work
and bidding opportunities can reasonably
be assessed over a three-year period.
In February 2024 the Group completed
a refinancing of its principal debt facilities.
With £400m of facilities, post January 2025,
the Group has secured significant committed
funding to support its long-term sustainable
growth plan.
Assessment process
The work required to support the viability
statement was undertaken by management,
with the following being a summary of the
key elements of the assessment process:
– The model used as the basis of the
assessment included a number of key
assumptions (please see ‘Key assumptions’)
and was subject to stress-testing
(please see ‘Stress-testing’)
– The process considered the Group’s
current performance and future prospects,
strategy, the PRUs and the mitigation
of the PRUs
The process included a review of certain
other risks relating to the Group, including
macroeconomic and political risks affecting
the UK (and global) economy, and risks
relating to the Group’s trading, the Group’s
pensions, the availability of the Group’s
finance facilities, systemic margin erosion,
the execution of the Group’s strategy, the
supply chain, inflationary impacts and certain
project-specific risks.
Key assumptions
The key assumptions within the model used
to support the viability statement include:
– No material changes to Group operations,
including no material acquisitions
or disposals;
– The Group maintains its position as one
of the leading providers of construction and
infrastructure services to Government and
regulated entities;
– The Group operates within its financial
covenants under its principal debt facilities
during the review period;
– The Group’s facilities are repaid on their
respective maturity dates during the review
period; and
– The Group makes payments to the pension
schemes in line with the deficit recovery plan.
Stress-testing
Management assessed the financial impact
of a number of severe but plausible downside
scenarios (both individually and in combination)
by overlaying them against the three-year
business plan. These scenarios included:
– An adverse impact on the Group’s
forecasts, including a lower than forecast
volume, an erosion of forecast margins and
a reduction in the win rate of any revenue
which is to be obtained;
– A certain level of loss-making contracts
having an impact on the Group’s reported
profit and cash over the review period; and
– The application of certain, additional
macroeconomic factors which may impact
the Group, including the impacts of inflation
and interest rate risk.
Management also considered offsetting
mitigating actions that could be taken in such
a scenario. In addition, management have
concluded that any adverse financial impacts
from changes to operations regarding ESG
initiatives would be offset by opportunities
which present the Group with additional
volumes and profits over the period
of assessment.
Viability statement
The Board therefore has a reasonable
expectation that the Group has adequate
resources to continue to operate and to meet
its liabilities as they fall due across the
three-year review period.
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Section 172 statement
The Board recognises the importance of
effective stakeholder engagement and that
stakeholders’ views should be considered
in its decision making. We see stakeholder
engagement as key to the delivery of our
purpose and strategy and therefore our
long-term sustainable success. Although
there are often competing interests and
priorities involved, having an understanding
of what matters to our stakeholders allows
the Board to consider a wide range of factors.
S.172 factors Read more
Consequences of decisions
in the long-term
– Our business model
– Our strategy
– Our marketplace
– Building for a Sustainable World
– Built by Brilliant People™
– TCFD report
– Our stakeholders
– How we manage risk
– Directors’ Remuneration report
Interests of the Company’s employees
– Our business model
– Building for a Sustainable World
– Built by Brilliant People™
– Our stakeholders
– How we manage risk
– Directors’ Remuneration report
Foster the Company’s business
relationships with suppliers,
customers and others
– Our business model
– Our marketplace
– Building for a Sustainable World
– Our stakeholders
– How we manage risk
Impact of operations on communities
and the environment
– Our business model
– Building for a Sustainable World
– TCFD report
– Environmental, Social and Governance Committee report
High standards of business conduct
– Our business model
– Building for a Sustainable World
– How we manage risk
– Corporate governance report
Acting fairly between members
– Our stakeholders
– Directors’ report
Acquisition of the rail assets
of Buckingham Group
Contracting Limited
The Group’s capital allocation policy
includes value-accretive acquisitions.
In September 2023, the opportunity to
acquire substantially all of the rail assets
of Buckingham Group Contracting Limited
was presented to the Board. The Board
considered how the acquisition would
accelerate Kier’s existing rail strategy,
provide certainty of supply for Kier’s HS2
joint venture, Eiffage Kier Ferrovial BAM,
and would be a good cultural fit.
Alongside these benefits, the Board
considered the needs of other key
stakeholders such as customers,
employees, supply chain partners,
and the benefits the acquisition might
create for them.
During the year, the Directors believe that
they have acted to promote the long-term
success of the Group as set out in section
172(1) (a) to (f) of the Companies Act 2006.
Matters considered by the Board
Below are examples of decisions taken
by the Board during the year and how
stakeholder views and inputs, as well
as other section 172(1) considerations,
were considered.
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Non-financial and sustainability information statement
Implementation of policies
Online training on key policies (delivered
offline where required) is carried out across
the Group and is refreshed biennially.
The training modules include scenarios and
tests to enhance the understanding of, and
compliance with, the policies by all employees.
All employees, contractors and third parties
are encouraged to report any circumstances
where there is a suspected or actual breach
of any of the policies, applicable laws, or the
standards as set out in the Code of Conduct,
either through their managers, the
confidential ‘Speak-Up’ helpline (which is
run by an independent company, Safecall)
or directly to the Corporate Compliance team.
Further information on whistleblowing can be
found on page 95. Kier views infringements
of the policies, procedures and related
guidance seriously and reserves the right
to take disciplinary action in the event of
non-compliance. All reported incidences
of actual or suspected breach of any
of the policies are promptly and
thoroughly investigated.
The information below summarises how we comply with non-financial performance and
sustainability reporting requirements and is produced to comply with sections 414CA and
414CB of the Companies Act 2006 and signposts where in the Annual Report you can find
more information.
Reporting requirements Kier policy/standards
1
Read more
Anti-corruption
and anti-bribery
Anti-Bribery and Corruption Policy (including
Gifts and Hospitality)
Pages 95 and 108
Employees
Code of Conduct
Diversity & Inclusion Policy
Health, Safety and Wellbeing Policy
Real Living Wage Policy
Whistleblowing Policy
Pages 37–43,
48–55 and 95
Environmental matters
Environmental Policy
Sustainability Policy
Pages 36–38,
44–47 and 55–57
Respect for human
rights
Code of Conduct
Anti-Slavery and Human Trafficking Policy
Data Protection Policy
Pages 37 and 40
Social matters
Sustainability Policy Pages 36–47
Business model
Description of the Group’s business model Pages 15 –17
Non-financial KPIs
Description of the non-financial key
performance indicators relevant to the
Group’s business
Page 35
Principal risks
Description of the principal risks relating to
the matters set out in section 414CB(1) of the
Companies Act 2006 arising in relation to the
Group’s operations, and how those principal
risks are managed
Pages 68–76
Climate-related
financial disclosures
TCFD report Pages 58–64
1. All Kier Group policies are available on the Company’s website.
The Executive Committee receive assurance
via twice-yearly divisional and functional
management statements confirming the
extent to which employees have been
provided access to our corporate policies,
that appropriate training has been undertaken
as required and that there are no
unreported breaches.
The Board and the Risk Management and
Audit Committee receive regular compliance
updates from the Group Legal and
Compliance Director.
This Strategic report on pages 1–84
(inclusive) was approved by the Board
and signed on its behalf by:
Andrew Davies
Chief Executive
11 September 2024
Simon Kesterton
Chief Financial
Officer
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Strategic reportOverview Corporate governance Financial statements Other information
86 Governance at a glance
87 Chairman’s introduction
to corporate governance
90 Board of Directors
92 Corporate governance
98 Risk Management and Audit
Committee report
104 Nomination Committee report
107 Environmental, Social and
Governance Committee report
109 Directors’ Remuneration report
135 Directors’ report
138 Statement of Directors’
responsibilities
How our governance activities enable sustainable growth:
In this section we describe how the Board has
continued its focus on the delivery of our strategy and
medium-term value creation plan. We are committed
to promoting long-term success and generating value
for shareholders and stakeholders.
You will find an overview of our corporate governance
structure, policies, practices and the key activities
carried out by the Board and its Committees.
Corporate
governance
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Governance at a glance
Key activities supporting
sustainable growth
Approval of the acquisition of the
rail assets of Buckingham Group
Contracting Limited
Outcome: Supported our strategy as
a value accretive acquisition in our core
market, with potential to accelerate
achievement of our medium-term
value creation plan
Approved the amendment
and extension of the revolving
credit facility and an issuance
of Senior Notes
Outcome: Secured a long-term debt
structure for the Group
Approved additional capital
investment into the Property
business and Board site visit to
the Watford Riverwell project
Outcome: Enhanced earnings potential
for the Group and shareholders over time
supporting the achievement of our strategy
Appointment of
Mohammed Saddiq as an
independent Non-Executive
Director and appointment
of Chris Browne OBE as
Senior Independent Director
Outcome: Broadened the Board’s skills,
experience and diversity to improve
its decision making
Approved the interim dividend
for FY24 and recommended
a final dividend for FY24
to shareholders
Outcome: Supported the achievement
of our medium-term value creation plan
and resumption of dividend payment
to shareholders
Conducted an external
Board evaluation
Outcome: Continued effectiveness
of the Board and its Committees
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Chairman’s introduction
to corporate governance
Matthew Lester
Chairman
The Board has continued its focus on
the delivery of our strategy, medium-term
value creation plan and environmental and
social performance, ensuring we promote
long-term success and generate value for
our shareholders and other stakeholders.
Throughout the year, the Board considers
the risks, opportunities, challenges and
stakeholder views to ensure Kier remains
competitive and creates a platform for
sustainable growth.
Key activities undertaken during the year
are set out in the Corporate governance
report which includes:
– approval of the acquisition of Buckingham
Group’s rail assets
– approval of the amendment and extension
of our revolving credit facility and issuance
of Senior Notes
– resumption of dividend payments
– increasing capital investment into the
Property business
– Board visits to the Finance Shared Service
Centre and Watford Riverwell project
– looking beyond the medium-term value
creation plan.
UK Corporate Governance Code 2024
The Board received an update on the
changes required under the UK Corporate
Governance Code 2024 (‘2024 Code’).
The Risk Management and Audit Committee
is working towards meeting the new
requirements, in particular Provision 29.
In anticipation of the 2024 Code taking effect
for FY26, we have simplified the Corporate
Governance report with the aim of focusing
on key activities and outcomes during the
year where appropriate, and, where
signposted, we have utilised information
provided on our website as far as possible.
Board changes
Last year, I reported that the Nomination
Committee was prioritising a search for an
additional Non-Executive Director who would
be from an ethnic minority background, who
meets the skills, experience and diversity
of thought that contribute to the effective
decision making of the Board. I was pleased
to welcome Mohammed Saddiq to the Board
from 1 January 2024.
Justin Atkinson, our Senior Independent
Director, will retire from the Kier Board as
Senior Independent Director and a Non-
Executive Director on 30 September 2024.
Chris Browne OBE, will be appointed as
the Senior Independent Director with effect
from 1 October 2024. As an experienced
non-executive director, she is well equipped
to take on the additional responsibilities of the
Senior Independent Director role in the next
phase of Kier’s growth. I would like to thank
Justin for his nine years of service to Kier,
initially as a Non-Executive Director and more
recently as Senior Independent Director.
“ Throughout the year,
the Board considers
the risks, opportunities,
challenges and
stakeholder views
to ensure Kier remains
competitive and
creates a platform for
sustainable growth.”
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Strategic reportOverview Corporate governance Financial statements Other information
Justin has made a significant contribution to
Kier. He has provided excellent advice to me
and the Board and played an important role
in Kier’s successful turnaround. I wish him
well in the future.
Upon Justin’s retirement, Stuart Togwell,
Group Managing Director Construction,
will be joining the Board as an Executive
Director with effect from 1 October 2024.
The Board believes that we need to replace
the construction industry expertise Justin
brought and Stuart’s significant strategic
and operational delivery experience in
the construction sector will be beneficial.
See the Nomination Committee report
for further information.
Externally facilitated Board evaluation
This year’s Board evaluation was externally
facilitated by Clare Chalmers Limited. Details
of the process and scope are set out on
page 94. She found the Board dynamics and
performance have progressed significantly
since the last evaluation in 2021 and found
the Board to be engaged and demonstrating
our values.
Culture and people
Further information on our culture, the
outcome of employee engagement and site
visits, is set out in the following pages of the
Corporate governance report. I hope you will
find this report useful in understanding our
work. The Board concluded that the culture
at Kier was supportive of our purpose and
values and an enabler of sustainable growth.
Our focus for the 2025 financial year
The Board will continue to monitor progress
of the implementation of our strategy and
look forward to the delivery against the
long-term sustainable growth plan. We will
ensure that Kier has strong foundations, the
resources, appropriate risk management and
internal controls in place for sustainable growth.
Information on our Annual General Meeting
(‘AGM’) arrangements this year will be
provided in the Notice of AGM and I look
forward to meeting our shareholders at this
in-person event.
Matthew Lester
Chairman
The 2018 UK Corporate Governance Code compliance
The Board considers that it has complied with the provisions of the 2018 UK Corporate
Governance Code (the ‘2018 Code’) during the year. Information on how we have applied the
2018 Code is provided in this Corporate governance report and the Directors’ Remuneration
report and a guide is provided in the table below. The 2018 Code can be found at
www.frc.org.uk.
Further information
Board leadership and Company purpose
A. Board’s role Pages 89–97
B. Company’s purpose, values, strategy and culture Pages 1–3, 18–21 and 96
C. Resources, prudent and effective controls Pages 89 and 99
D. Shareholder and stakeholder engagement Pages 65–67
E. Workforce policies and practices and workforce concerns Pages 48–54 and 95–97
Division of responsibilities
F. Chairman’s role Page 89
G. Board balance and division of responsibilities Page 89
H. Non-Executive Directors’ time and role Page 89
I. Information and resources Page 89
Composition, succession and evaluation
J. Board appointments Pages 104–106
K. Board and Committee composition, skills and tenure Pages 90 and 91
L. Board evaluation Page 94
Audit, risk and internal control
M. Policies and procedures for internal and external audit Pages 101 and 103
N. Fair, balanced and understandable assessment Page 103
O. Risk and internal control framework, risk assessment
and management Pages 68–76 and 99
Remuneration
P. Remuneration policies and practices Pages 109–134
Q. Director and senior management remuneration Pages 109–134
R. Independent judgement and discretion on remuneration Pages 109–134
“ The Board will continue
to monitor progress of
the implementation of
our strategy and look
forward to the delivery
against the long-term
sustainable growth plan.”
Matthew Lester
Chairman
Chairman’s introduction to corporate governance continued
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Strategic reportOverview Corporate governance Financial statements Other information
Corporate governance
Group delegations
The decisions which can only be made by
the Board are clearly defined in the Schedule
of Matters Reserved for the Board, which is
available on the Company’s website. The
businesses are led by the Group Managing
Directors, each of whom sits on the
Executive Committee. They are responsible
and accountable for the performance of the
respective business divisions, in line with
the Operating Framework and the Group’s
Delegated Authorities as well as contributing
to the implementation of the strategy set by
the Board. Further information on the
delegations are available on our website.
Division of responsibilities
The responsibilities of the Chairman,
Chief Executive, Chief Financial Officer,
Senior Independent Director, Non-Executive
Directors and the Company are clearly
defined and are set out on our website.
Scan the QR code to our website
for further information on our
governance framework and
division of responsibilities
The governance framework at Kier
The Group’s primary decision-making body is the Board. The diagram below sets out the role
of the Board and how it has delegated certain responsibilities to a number of Committees.
Board
– Accountable to shareholders and responsible for the long-term
success of the Group
– Provides leadership of the Group, establishing the purpose,
values and strategy
– Monitors the implementation of the strategy and the safety,
financial, operational, environmental and social performance
of the Group
– Ensures that appropriate risk management systems and internal
controls are in place
– Sets and monitors the Group’s ethics and culture
– Ensures good corporate governance practices are in place
Board Committees
Environmental, Social and
Governance Committee
– Reviews the Group’s strategy
with respect to safety,
environment, social and
ethical business practice
Remuneration
Committee
– Sets the Group’s Remuneration
Policy for Directors
– Sets and monitors the level
and structure of remuneration
for the Executive Directors and
other senior executives
Nomination
Committee
– Makes recommendations
to the Board regarding the
structure, size, composition
and succession needs of the
Board and its Committees
– Oversees succession
planning for Directors and
the Executive Committee
Risk Management
and Audit Committee
– Oversees financial
reporting procedures,
systems of internal controls
and risk management, the
internal audit function and
the effectiveness of the
external auditors
Executive Committee
– Implements the strategy
– Discusses Group and business divisions’ performance
– Reviews and approves material operational matters such as
safety, people, IT, digital, business assurance and compliance,
environment, social and wellbeing
The Executive Committee is also supported by several
Operational Committees and steering groups including the
Group Risk Committee, the Investment Committee, the Group
Tender Risk Committee and Sustainable Leadership Forums.
See page 107 See page 104 See page 109 See page 98
See page 9 for information on the
composition of our Executive Committee
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Relevant skills and experience
– Experience of the construction sector
through her role as a Non-Executive
Director of Vistry Group plc
– Significant commercial and
operational experience through
senior leadership positions in the
aviation industry
– Previously Chief Operating Officer
of easyJet plc, where she also
separately served as their
Non-Executive Director, Non-
Executive Director of Norwegian
Air Shuttle AS and Non-Executive
Director of Constellium SE
– Doctorate of Science (Honorary)
for Leadership in Management from
the University of Ulster
Principal current external
appointments
– Non-Executive Director
of Vistry Group PLC
– Senior Independent Director
of C&C Group plc
Relevant skills and experience
– Broad range of financial, strategic
and IT leadership experience in his
former senior roles in the engineering
and manufacturing industries
– Formerly Chief Financial Officer,
Europe and Chief Strategic Officer
at IAC Group and Group Finance
Director of RPC Group plc
– Significant experience of the
implementation of cost reduction,
M&A and profitability improvement
programmes
– A member of the Chartered Institute
of Management Accountants
Principal current external
appointments
– None
Relevant skills and experience
– Strong track record of business
leadership across a number
of sectors
– Significant experience of mergers
and acquisitions and strategy
development and implementation
– Significant operational and
corporate experience through
senior roles and over 28 years
with BAE Systems plc
– Formerly Chief Executive Officer
of Wates Group Limited
– Fellow of the Institution
of Civil Engineers
Principal current external
appointments
– Non-Executive Director of
Chemring Group PLC and
Senior Independent Director
– Non-Executive Chairman
on the Eiffage, Kier, Ferrovial
Construction and BAM Nuttall
(EKFB) JV Board
Relevant skills and experience
– Substantial strategic and financial
experience, through senior finance
roles at Diageo plc and as Group
Finance Director of ICAP plc
and Chief Financial Officer
of Royal Mail plc
– Significant non-executive director
experience at Man Group plc,
Barclays PLC and Capita plc
– A chartered accountant
Principal current external
appointments
– Non-Executive Director of
Intermediate Capital Group plc
and Chair of the Audit Committee
Relevant skills and experience
– Significant operational experience
of project development and delivery
of large-scale infrastructure
projects in public and private sector
through her roles as Group Projects
& Development Director at Anglo
American plc and Chief Executive
Officer at AWE plc, and at Halcrow
– In-depth experience of oversight
of civil engineering and contracting,
safety, diversity and inclusion,
and sustainability matters
– A Chartered Civil Engineer and
a Fellow of the Royal Academy
of Engineering
Principal current external
appointments
– Member of the Executive
Leadership Team at Anglo
American plc as Group Projects
& Development Director
– Director of De Beers plc
(a subsidiary of Anglo American plc)
Simon Kesterton
Chief Financial Officer
Matthew Lester
Chairman
Chris Browne OBE
Non-Executive Director
(Senior Independent
Director from
1 October 2024)
Andrew Davies
Chief Executive
Alison Atkinson FREng, MICE CEng
Non-Executive Director
Age
61
Tenure
4 years
8 months
Independent
Yes (on
appointment)
Age
64
Tenure
2 years
Independent
Yes
Age
60
Tenure
5 years
5 months
Independent
No
Age
50
Tenure
5 years
Independent
No
Age
54
Tenure
3 years
9 months
Independent
Yes
Board of Directors
Board Committees key
Environmental,
Social and Governance
Nomination
Remuneration
Risk Management and Audit
Chair of the Committee
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02
01
01
02
03
Relevant skills and experience
– Significant experience of
remuneration matters through her
current and former appointments as
Chair of Remuneration Committees
– An experienced non-executive
director from past appointments
at Phoenix Group, Tandem Bank,
Nucleus Financial Group plc and
One Savings Bank plc
– Broad experience in business
operations, technology and large
transformational change developed
through senior positions across a
range of different industry sectors
Principal current external
appointments
– Non-Executive Director, Chair
of the Remuneration Committee
and a member of the Risk and
Compliance and Nomination
Committees of AJ Bell plc
Relevant skills and experience
– Significant experience in financial
matters, through senior finance
positions both in the UK and
overseas, latterly as the Group
Finance Director of Spectris plc
– Experience of the engineering
sector through his roles at Borealis
AG and Spectris plc, and as a
Non-Executive Director at
Spirax-Sarco Engineering plc
– Detailed knowledge of systems
of risk management and internal
control and a chartered accountant
Principal current external
appointments
– Senior Independent Director
and Chair of the Audit and Risk
Committee of Breedon Group plc
– Non-Executive Director, Chair of
the Audit and Risk Committee
of discoverIE Group plc
– Senior Independent Director
and Chair of the Audit and
Risk Committee of Trifast plc
Relevant skills and experience
– In-depth knowledge and experience
in operational delivery, engineering
and infrastructure services through
his previous roles in senior
management and engineering in the
water, waste and renewables sectors
– An Executive Director at Wessex
Water and Vice-Chair at Bristol
University until 2022
– Associate Fellow of the Institution of
Chemical Engineers, Fellow of the
Chartered Institution of Water and
Environmental Management and
Chartered Member of the Institution
of Environmental Sciences
Principal current external
appointments
– Chair of Bristol Climate and Nature
Partnership CIC
– Chair of Bristol Future Talent
Partnership CIC
– Lord-Lieutenant of the County
of Somerset
Relevant skills and experience
– Formerly Chief Executive of Keller
Group plc and previously Keller’s
Group Finance Director and
Chief Operating Officer
– Significant operational, financial
and strategic experience and
a chartered accountant
– In-depth knowledge of the
construction sector, both in
the UK and internationally
Principal current external
appointments
– Chairman of Forterra plc
– Non-Executive Director of
James Fisher and Sons plc and
Chairman of the Audit Committee
Tenure of Non-Executive
Directors
01 78% Independent
02 22% Non-independent
01 3 0 to 3 years
02 3 3 to 6 years
03 1 6 to 9 years
Board independenceMargaret Hassall
Non-Executive Director
Clive Watson
Non-Executive Director
Mohammed Saddiq
Non-Executive Director
Justin Atkinson
Senior Independent Director
(retiring from the Board
on 30 September 2024)
Age
63
Tenure
1 year
5 months
Independent
Yes
Age
54
Tenure
8 months
Independent
Yes
Age
63
Tenure
8 years
11 months
Independent
Yes
Age
66
Tenure
4 years
5 months
Independent
Yes
Board of Directors continued
Board Committees key
Environmental,
Social and Governance
Nomination
Remuneration
Risk Management and Audit
Chair of the Committee
Note: Stuart Togwell, Group
Managing Director Construction,
will be joining the Board as an
Executive Director with effect
from 1 October 2024.
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Board key activities
The Chairman in conjunction with the Chief Executive, and with support from the
Company Secretary, plans the Board meetings to ensure effective performance and
governance of Kier. In addition to the usual activities of monitoring progress against
business performance, the order book, financial targets, culture, whistleblowing and
governance matters, Board meetings also encompass chosen topics and deep dives
into matters of strategic importance. The key activities undertaken by the Board
during the financial year were as follows:
Link to Principal Risks
and Uncertainties Link to stakeholders
Strategy
Oversaw the review of our strategy, long-term sustainable growth plan and the growth areas for Kier
(details of the Board strategy day are set out on page 93)
Shareholders, People,
Customers, Supply chain
Monitored progress against the medium-term value creation plan
Shareholders, People,
Customers, Supply chain
Approved the acquisition of the rail assets of Buckingham Group Contracting Limited
Shareholders, People,
Customers, Supply chain
Business and operational
Approved the Digital and Simplification workstreams under Performance Excellence
People, Customers, Supply chain
Visited and received presentations from the Finance Shared Service Centre and Property business
to understand their challenges and opportunities and meet the management teams
People, Customers, Supply chain
Undertook deep dives into different functions and topics
Customers, Supply chain,
Shareholders
Budget and financing
Approved the budget for FY25
Shareholders, People,
Customers, Supply chain
Approved the amendment and extension of the revolving credit facility and the issuance of Senior Notes
Shareholders, Banks, People,
Customers, Supply chain
Approved the resumption of dividend payments which included an interim dividend for FY24
and a final dividend for recommendation to the shareholders
Shareholders
Approved additional capital investment into the Property business
Shareholders, Customers,
Supply chain
Key to Strategic Objectives
Key to Principal Risks and Uncertainties
Corporate governance continued
Health and safety
Legislation and regulation
Funding
Maintaining an order book
within selected markets
Contract management
People
Supply chain
Strategy
IT security, resilience,
cyber and data protection
Sustainability
Macroeconomic
Leverage our attractive market share positions in growing markets
Maintain and enhance long-term customer relationships
Resilient and well-balanced portfolio
Deliver disciplined growth, consistent profitability and cash generation
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Corporate governance continued
Link to Principal Risks
and Uncertainties Link to stakeholders
Leadership, people and culture
Appointed Mohammed Saddiq as a Non-Executive Director
Shareholders, People
Received updates on the Group’s people agenda including progress on diversity and inclusion, reward and benefit
enhancements, the outcomes of employee engagement surveys and the related actions taken, and on development
and talent programmes
People, Customers, Supply chain
Received updates on the implementation and impact of our culture programme
Shareholders, People,
Customers, Supply chain
Governance and key stakeholders
Received feedback and sentiments from institutional investors following our FY23 results roadshow and discussed
the Group Investor Relations programme
Shareholders
The Chair of the Remuneration Committee held meetings with key shareholders to discuss executive remuneration matters
and to understand their views
Shareholders
Received updates from our Corporate Affairs Director on our interactions with the UK Government and local councils,
their focus areas and the strength of our relationships with these key customers
Customers
Board strategy day
Purpose
To review our strategy beyond the medium-term value creation plan ensuring we continue to promote the long-term sustainable success of Kier,
generating value for shareholders and stakeholders
Attendees
The Board, Executive Committee members, certain senior management and external adviser
Strategic topics
reviewed and
discussed
– The structural drivers, client and market trends, and macro and political environment
– The competitive environment, Kier’s competitive advantage and market share
– Infrastructure Services, Construction and Property sector sentiments and themes
– Capital allocation priorities
– Investors’ views and priorities surrounding Kier’s strategy
– The future of work, skills and capabilities to deliver the strategy
– How our Digital and Simplification workstreams under Performance Excellence would support delivery of our strategy
Outcomes and
next steps
– Reviewed the long-term sustainable growth plan and the evolved targets
– Setting an ongoing programme of strategic questions and topics for consideration throughout FY25
Key to Principal Risks and UncertaintiesKey to Strategic Objectives
Health and safety
Legislation and regulation
Funding
Maintaining an order book
within selected markets
Contract management
People
Supply chain
Strategy
IT security, resilience,
cyber and data protection
Sustainability
Macroeconomic
Leverage our attractive market share positions in growing markets
Maintain and enhance long-term customer relationships
Resilient and well-balanced portfolio
Deliver disciplined growth, consistent profitability and cash generation
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2024 Board evaluation
This year’s Board evaluation was facilitated by Clare Chalmers Limited, who conducted
our last external evaluation in 2021. The firm has no connections with Kier or the Board.
Clare Chalmers attended the May 2024 Board and ESG Committee meetings to observe
the Board’s interactions. As the ESG Committee has been in operation for the third year
since its remit was broadened to cover environmental and social matters, it was thought to
be appropriate to give some focus to this Committee. Past Board papers and key governance
documents, such as the Schedule of Matters Reserved for the Board and Terms of Reference,
were also reviewed. Interviews were also carried out with each Board member and those who
regularly attend Board and/or Board Committee meetings.
Her findings were presented to the Board in July 2024. In summary, she found the Board
to be engaged and demonstrating our values: there was ‘trust’ and openness in challenges
and positive interaction, ‘collaboration’ in decision making and ‘focus’ on the delivery of our
medium-term value creation plan. To ensure the continued effective working of the Board
to deliver long-term sustainable success for our stakeholders, further enhancements were
suggested and these are set out below.
– Customers and suppliers – to hear more feedback from customers and suppliers
– Board and Committee papers – continue to make progress with the papers, aiming for
consistently good summaries, pulling out the highlights, better ‘storytelling’ and more focus
on outcomes
– Decision making – over the coming year, to give consideration to having a smaller group
of Non-Executive Directors on each Committee with the aim of creating more efficient and
focused groups, and a second layer of challenge at Board meetings
– Dynamics – to consider utilising more of the Non-Executive Directors’ skills and experience
as a sounding board for management outside of formal Board meetings
– Board succession planning – to implement a more formal process for determining
the priorities we are looking for from the next Board appointment.
The Board will be working through the above suggestions and building them into the Board
programme going forward.
The effectiveness of each of the Board Committees was also considered and it was concluded
that they each continue to be effective. Suggestions were provided for each Board Committee
to enhance its effectiveness and these are set out in the respective Committee reports.
Board and Committee membership and attendance
The Board held six meetings and two calls during the year. One day was also dedicated
to discussing strategy. In addition, there was one unscheduled Board call during the year.
Details of attendance by each Director at the scheduled Board and Committee meetings
during the financial year are as follows:
Board meeting RMAC meeting ESG Co meeting NomCo meeting RemCo meeting
Matthew Lester 6/6 n/a n/a 4/4 5/5
Alison Atkinson
1
5/6 4/4 4/5 3/4 3/5
Justin Atkinson 6/6 4/4 5/5 4/4 5/5
Chris Browne 6/6 4/4 5/5 4/4 5/5
Andrew Davies 6/6 n/a n/a 4/4 n/a
Margaret Hassall 6/6 4/4 5/5 4/4 5/5
Simon Kesterton 6/6 n/a n/a n/a n/a
Mohammed Saddiq
2
3/3 2/2 3/3 2/2 3/3
Clive Watson 6/6 4/4 5/5 4/4 5/5
1. Alison Atkinson was unable to attend a meeting due to illness and an unavoidable work commitment.
2. Mohammed Saddiq was appointed with effect from 1 January 2024.
Board evaluation
2023 Board evaluation
The Board made good progress on the recommendations and areas of focus from last year’s
internally facilitated review. An update on the progress is set out below:
Feedback Progress/Action
More meetings
for Non-Executive
Directors in view
of additional new
Board members
Additional time was added to the start or end of Board meetings
(as appropriate) to facilitate this.
Meet the pipeline
of talent coming
through the
business
The Nomination Committee monitored the development plans for our
Executive Committee members and also the pipeline of talent coming
up through the business. The Board has various touch points where
they can meet the talent, for example at Board meetings and Visible
Leadership Tours. More information on this is set out in the Nomination
Committee report on pages 104 to 106.
Corporate governance continued
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Conflicts of interest
The Board has a number of measures to manage conflicts of interest, so as to ensure that
the influence of third parties does not compromise or override its judgement. For example,
the Board’s agreement is required before a Director may accept any additional board
commitments, whether paid or unpaid, so as to ensure that potential conflicts of interest are
identified at an early stage and that the relevant Director will continue to be able to dedicate
sufficient time to the Group. The Board considered all of Mr Saddiq’s current commitments
before making a decision to appoint him as an Independent Non-Executive Director. In
addition, the Board also considered if there was an additional time requirement on Ms
Browne’s appointment as the Senior Independent Director of another listed company.
Whistleblowing
In order that employees can report any matters of concern in confidence, the Group makes
available an externally-hosted, confidential whistleblowing helpline, provided by Safecall.
During the year, the Board received reports on calls received via the Safecall helpline
and via other means. The reports categorised the matters raised into a range of topics such
as financial, HR, safety and compliance (including anti-bribery and corruption) and included
how management had investigated them. In FY24 there were 30 calls made to Safecall
(FY23: 31) and 8 reports received via other means, such as line management or directly
to Group Compliance (FY23: 15). Whilst there was a modest overall reduction of reports
in FY24, utilisation of our whistleblowing channels remains above industry benchmarks
and the Board and management remain highly attentive to all issues raised in this process.
Board development and training
To ensure the Board continually updates and refreshes its skills and knowledge, ongoing
training and development support is provided to the Board during the year. The Board is
regularly briefed on business-related matters, governance, investor expectations and legal
and regulatory matters such as the 2024 Code. The Board has a series of training programmes,
and this year had refreshed training on directors’ duties and the UK market abuse regime.
Both the Risk Management and Audit Committee and Remuneration Committee received
updates from external advisers and management on relevant accounting and remuneration
developments, evolving market trends and changing disclosure requirements.
As part of the Board’s annual programme of site visits, they undertook two visits during this
financial year and the details are set out below.
Board site visit to the Finance Shared Service Centre, Manchester
This was a great opportunity for the Board to understand how Kier is using automation and
AI application for our sales and invoice processing and accounts payable processes. There
was a demonstration on how the robots work by our external partner who develop the robots
with Kier. This is a great example of robotics which supports our digital strategy. The FTE
(‘full-time equivalent’) savings has allowed our people to work on other projects and there
are plans to extend the use of robotics into other areas of processes.
Corporate governance continued
Site visit to Watford Riverwell project and Property business presentation
As part of this presentation, the Board visited the Watford Riverwell project to gain first-hand
experience of this flagship project which is a 50% joint-venture with Watford Borough Council.
The Property senior leadership team gave the Board an in-depth presentation covering:
– the strategic aims and objectives of the partnership;
– the risks;
– the financial investments and returns; and
– the working relationship with the joint venture partner ensuring success for the project.
A representative from the joint-venture partner also attended the meeting to share his
perspectives which the Board found invaluable. Lessons learned from this project were also
covered and will be used on other joint ventures. The Board also received an update on the
process against the balanced scorecard. One key outcome of the site visit was the Board
had a deeper dive into this exemplar project and how the Property business supports the
achievement of our strategy.
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Culture in action
Three Non-Executive Directors participated
in the culture programme to gain a deeper
understanding of the programme and to join
our workforce on this journey. The outcome
was that our people felt supported by the
Board and felt that the Board understood
the importance of the programme.
No issues which were material in the context of the Group were reported to the helpline or via
other means during the year. The Chairman will personally be informed of any issues raised
concerning any members of the Board or senior management, even if not ordinarily qualifying
as being regarded as material, noting that there were no such cases to be advised of in FY24.
Culture
The Board recognises the important role that it plays in assessing and monitoring the
Group’s culture, so as to ensure that policy, practices and behaviour throughout the Group
are aligned with its purpose, values and strategy. Our culture programme with a framework
of nine healthy behaviours aligns to our values and forms the foundation of our culture.
Further information about this programme and how we embed culture throughout the
Group is explained in the Built by Brilliant People™ report on page 48.
The reports to the Board (via People updates or in other reports such as the Chief Executive’s
reports) included matters relating to culture such as:
Progress on the implementation of our culture programme
Employee surveys
Attrition rates
Whistleblowing and ‘speak-up’ data
Board interaction with senior management and workforce
Health and safety data
Promptness of payments to suppliers
Compliance including the annual review of key policies
Information from internal audits on the impact of policies and processes
The Board carefully considered the above matters, plus a range of initiatives, and concluded
that the culture at Kier was supportive of our purpose and values and an enabler of sustainable
growth. This was supported by the direct interactions the Non-Executive Directors had when
undertaking their engagement visits, see ‘Engaging with our people’ below.
S172 statement
How the Board took account of stakeholder views and the matters set out in section 172
of the Companies Act 2006 in Board discussions and decision making is set out on page 83.
The Board and our stakeholders
Kier engages with our stakeholders in different ways. Engagement activities with key
stakeholders are set out on pages 65–67 of the Strategic report. The Board and its Committees
receive regular updates on the engagements and use their views and feedback to either make
better decisions or provide constructive challenge on activities, programmes and initiatives
being considered. The following paragraphs set out the direct engagement that the Board
has had with our stakeholders.
Engaging with our people
The Board decided not to introduce any of the three methods suggested in the 2018 Code
but to develop an approach which built on the mechanism which we already had in place.
Due to the nature and locations of the business and that Kier’s workforce comprises individuals
with a wide range of skills and experiences, the Board concluded that each Board member
has responsibility for engaging with our people in order to gather their views and to
understand the culture within the Group.
During the financial year, the Chairman and Non-Executive Directors undertook a total of
22 employee engagement visits (FY23: 25). These visits (part of the Visible Leadership Tours,
VLTs) are structured in such a way as to allow the Directors to get an overview of the project,
speak directly to our employees by way of question-and-answer sessions and provide
visible leadership to the people on site. Each Board member had the opportunity to listen to
employees’ views on a wide range of areas such as Kier’s strategy and performance, methods
of communication, talent development programmes, impact of our diversity and inclusion
programmes, and our wellbeing and people agenda. A summary of feedback is reported
back to the Board. Management considered their feedback carefully and acted as appropriate.
The table on the next page sets out the discussion topics, key points and the improvement
areas and actions taken from the engagement.
“ Engagements levels
were extremely good
and the collaboration
between employees
was pleasing to see.
It was great to see
and feel the culture
in the room.”
Justin Atkinson
Senior Independent Director
Corporate governance continued
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Schedule of VLT discussion topics, key points, the improvement areas and actions taken from Non-Executive Directors’ engagement with our people
VLT discussion topics Safety Strategy and communications
Senior management
and career progression Pride in working for Kier Prioritise people and respect others
Key points
from the
Non-Executive
Directors’
engagement
Consistent evidence
of the 5 SHE basics and
‘Expect Respect’ on sites
and clear and consistent
safety signage.
Good adherence
to PPE requirements.
Feedback that VLTs from
senior leaders allow good
and varied discussions.
Our people are very positive
about communication
and engagement and have
sufficient information to
give context to their roles.
New starter experience could
be improved to ensure they
have equipment and access
to Kier systems on starting.
More communication and
education around benefits,
and specifically pensions,
would be welcomed.
Good process for
performance discussions
and good development
opportunities.
Open and transparent
management style valued.
Some comments that the
graduate programme could
be better structured.
Employees feel pride in
working for Kier and their
contribution to the business.
There is a real sense
of belonging.
Some employees feel a lack
of prospects for the over 50s.
Diversity and inclusion programmes
and initiatives seen as excellent.
Most employees feel Kier cares for our people.
Concerns raised about lack of suitable PPE
for female employees.
Processes and procedures can be
cumbersome with too much time spent
on form-filling meaning less time for work.
Improvements
areas and
actions taken
Arranging VLTs streamlined
by setting up an internal
SharePoint booking system.
HR/IT projects to enhance
induction programme for new
starters and ensure access
to IT and Kier systems from
Day 1 in progress.
Reward and Pensions
team hosting ongoing
roadshows and pension
provider holding webinars.
Introduced refreshed
emerging talent, including
graduate programme, to
improve development and
networking opportunities
and give a clear structure.
Implementing a new
accredited training
programme, including a
manager induction, for all
Kier managers to help them
upskill their experience.
A project has begun to
collate data on employees
over 50 years of age to inform
an action plan to both reskill
and ensure a workforce for
the future.
Our range of PPE expanded to include
female-fit and maternity PPE with a wide range
of footwear fit options. PPE forum created with
representatives from across the business to
help us continue to develop our PPE range.
Safety, Health and Environmental Management
System (‘SHEMS’) simplification process has
been implemented.
New workstreams for Performance Excellence
to be rolled out focusing on digital developments
and simplifications to address some of the
cumbersome processes feedback.
Corporate governance continued
Engaging with our shareholders
The Board engages with shareholders throughout the year in many different ways. We operate
a structured investor relations programme, based around our formal announcements and
the publication of the full year and half year results. Following our final results announcement
last year, we held a presentation aimed at retail investors. It is our intention to continue with
this programme. The Board is kept regularly apprised of the investor relations programme
and receives a detailed report including the specifics of investor feedback following key
engagements. Our corporate brokers also attend Board meetings as required to give their
perspective on institutional shareholder sentiment.
During the year, we held an investor day at one of our key sites, HMP Millsike, providing
investors with a deeper understanding of Kier’s market opportunities and capabilities and
of our environmental and social sustainability in action.
Details of the 2024 AGM are set out in the Notice of AGM. Shareholders may submit proxy
votes and any questions either electronically or by post.
More information on our shareholder engagement programme is set out in Our stakeholders
on page 65. Details of our engagement with shareholders on executive remuneration matters
are set out in the Directors’ Remuneration report.
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Risk Management and
Audit Committee report
Clive Watson
Chairman of the
Risk Management
and Audit Committee
Chair’s introduction
I am pleased to present the work of the
Risk Management and Audit Committee
(the ‘RMAC’ or the ‘Committee’) for the year.
The role of the RMAC is to establish formal
and transparent arrangements for considering
how it should apply corporate reporting, risk
management and internal control principles,
and for maintaining an appropriate relationship
with the Company’s external auditors. Further
details of the Committee’s responsibilities are
set out in the Terms of Reference which can
be found on the Company’s website.
During the year, we have spent time preparing
for proposed legislative and governance
changes, and the Committee has received
regular updates from external advisors on the
implementation of these changes. With the
publication of the UK Corporate Governance
Code 2024 (the ‘2024 Code’), we continue
to consider the enhancements that will be
required in respect of our risk management
reporting and will provide information in this
report on the steps that we have taken so far
to consider the new reporting requirements.
In the last year, the Committee has reviewed
all significant matters, accounting judgements
and disclosures on key accounting matters
for the interim and full-year results.
The RMAC has overseen the effectiveness
of PwC as our external auditor, with Darryl
Phillips appointed as the lead audit partner
for the financial year ended 30 June 2024
(‘FY24’) The Committee continues to look
to PwC for constructive challenge.
Following a tender process for an internal
audit co-source partner and for an External
Quality Assurance (‘EQA’) of the Internal
Audit function, KPMG were appointed
to carry out an EQA and subsequently
appointed as the co-source partner for
the financial year ending 30 June 2025.
Please see page 101 for further details.
The monitoring of the Group’s fraud and
detection processes has remained as a
priority for the Committee, with continued
focus on reviewing cyber risk management
and IT resilience.
Looking forward
For the coming year, the Committee will
continue to review and respond to the evolving
legal and regulatory landscape affecting the
Group as guidance becomes available.
Information on the following pages sets out
in detail the composition of the Committee,
its activities and priorities for the year ahead.
I hope that you will find this report useful
in understanding our work.
Clive Watson
Chairman of the Risk Management
and Audit Committee
“ The Committee has
spent time preparing
for proposed legislative
and governance
changes, whilst
continuing to consider
the enhancements
that will be required to
our risk management
reporting.”
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Composition of the Committee
In accordance with the 2018 Code
recommendations, all members of the
Committee are independent Non-Executive
Directors and have been appointed to the
Committee based on their individual financial
and commercial experience. Mohammed
Saddiq joined the Committee on 1 January
2024 when he was appointed to the Board
as a Non-Executive Director.
As Chairman of the Committee, Clive Watson
has recent and relevant financial experience
through his previous role as a Finance
Director of a listed company and his
experience as Audit Committee Chairman
of other listed companies. Justin Atkinson
is also a qualified accountant and holds the
position of Audit Committee Chairman for
another listed company.
Attendance of the members is set out on
page 94. The Chairman, Chief Executive,
Chief Financial Officer, Group Financial
Controller, Head of Risk and Internal Audit,
Group Legal and Compliance Director and
other relevant people from the Group attend
when appropriate. External meeting
attendees have included representatives
from PwC as external auditors and Deloitte,
the Group’s previous co-sourced internal
audit services partner. The secretary of
the Committee is the Company Secretary.
Outside of the formal meetings, the Chairman
of the Committee held discussions with
members of management (including the Chief
Financial Officer, the Group Financial Controller
and the Head of Risk and Internal Audit)
and with PwC without management present.
PwC and the Head of Risk and Internal Audit
have also met privately with the independent
Non-Executive Directors during the year.
No concerns were raised in respect of FY24.
As the Group’s risk management and internal
control systems mature, the Committee will
continue to review the adequacy and
effectiveness of these systems. In particular,
the RMAC is overseeing the development
of an Audit and Assurance Policy which
will include an assurance mapping exercise.
This will reflect a best practice approach to the
2024 Code provisions on risk management
and internal control which take effect from
1 July 2026.
Annual review of the effectiveness
of the systems of risk management
and internal control
The Board conducted its formal annual
review of the effectiveness of the Group’s
systems of risk management and internal
control following management’s assessment
of the key elements of these systems, when
considering the Financial Reporting Council’s
(‘FRC’) risk guidance. The review in respect
of FY24 covered existing risk management
practice and processes; risk appetite and
culture; consideration of the review of the
operation of the three lines of defence;
the Operating Framework and its policies,
minimum standards and procedures in
relation to managing technical, commercial,
legal and financial risks; compliance controls;
and financial monitoring, reporting and
internal control processes. It was concluded
that there were no material breakdowns or
weaknesses identified in the Group’s risk
management and internal control systems.
Annual evaluation
This year’s evaluation was externally
facilitated by Clare Chalmers Limited as part
of the Board evaluation. Details of this process
are set out on page 94. The outcome of this
evaluation concluded that the Committee
continues to be effective and operates with
the required technical skills. To enhance its
effectiveness, the Committee will continue to
provide appropriate challenge on the structure
of Committee papers with the aim to get better
highlights and more focused outcomes.
Systems of risk management
and internal control
The Board has ultimate responsibility for the
Group’s systems of risk management and
internal control, including those established
to identify, manage and monitor risks.
The Board has delegated the responsibility
for overseeing management’s implementation
of these systems to the RMAC.
The Head of Risk and Internal Audit reports
to the Committee on strategic risk issues and
oversees the Group’s risk management
framework. The Group Risk Committee,
chaired by the Group Legal and Compliance
Director, provides executive management
leadership and oversight of the Group’s risk
management framework, whilst acting as the
link between the RMAC and the business in
relation to the management of risk.
Information on how the Group identifies,
manages and monitors risks, including a
description of the principal aspects of the
Group’s systems of risk management and
internal control and the risk management
framework, is set out on pages 68–76.
Fraud prevention and
detection processes
With the implementation of the Economic
Crime and Transparency Act 2023 (‘ECATA’),
work has been ongoing throughout FY24 to
review our control environment, to respond to
the new ‘failure to prevent fraud’ offence, under
the ECATA. The Committee has received
regular updates on the key workstreams that
have been set up to ensure that the Group
is compliant with this requirement.
As a Group, we believe that we have an
effective control environment to prevent
financial misstatement or manipulation of
our financial systems. We manage the risk
of fraud in terms of prevention, deterrence
and detection. Our Code of Conduct sets clear
expectations of honesty and integrity for every
employee at all levels within the Group.
Financial reporting
The Group has clear policies and procedures
which are designed to ensure the reliability
and accuracy of financial reporting, including
the process for preparing the Group’s interim
and annual financial statements. The Group’s
financial reporting policies and procedures
cover financial planning and reporting, the
preparation of financial information, together
with the monitoring and control of capital
expenditure. The Group’s financial statements
preparation process includes reviews
at business division and Group levels.
The Committee reviewed the accounting
judgements, assumptions and estimates
as set out in the RMAC papers prepared by
management and determined, with external
auditor input, the appropriateness of these
assumptions and estimates. The significant
issues considered by the Committee in
relation to this year’s financial statements
are listed on page 102.
Risk Management and Audit Committee report continued
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Engagement with the FRC
In May 2024, the Company received a letter
from the FRC following its review of the
Group’s FY23 Annual Report and Accounts,
requesting further information in two principal
areas: offsetting of account balances in relation
to notional cash pooling arrangements; and
impairment testing of intangible assets.
The Group has consistently applied an
accounting policy of treating all the bank
accounts within its Group cash pooling
arrangement as a single unit of account,
where the legal right of set-off existed as
it was considered that this most appropriately
reflected the overall net commercial and
substantive position.
Following completion of this review, and
further to correspondence with the FRC,
the Committee has concluded that separate
presentation of these overdrafts and cash
balances within the Consolidated Balance
Sheet would be preferable. The Group has
therefore chosen to change its accounting
policy in respect of offsetting of bank
overdrafts and has presented cash held
in subsidiary company bank accounts
separately from overdrawn amounts in
the Group’s Consolidated Balance Sheet,
with the prior year comparative balances
re-presented accordingly. Further details are
provided in Note 1, on pages 154 and 155.
The restatement did not result in any change
to reported profit, earnings per share, net
assets, net cash or cash flows reported
in FY23.
Group’s financial reporting calendar to RMAC
– Management updates
the Committee on the
key accounting issues and
judgements for approval
by the Committee and for
recommendation to the
Board in respect of the
full-year results
– External auditors present
their findings of the audit,
together with their auditors’
report and provide
confirmation of their
independence
– The Committee
considers and makes
a recommendation to
the Board on whether the
annual report and financial
statements are fair,
balanced and
understandable
– The Committee
considers the proposed
reappointment of the
external auditors at
the AGM
– Review of external
auditors’ effectiveness
– Interim financial
statements review plan
– Auditors engagement
letter in respect of the
interim financial
statements
– Management updates
the Committee on the key
accounting issues and
judgements for approval
by the Committee and for
recommendation to the
Board in respect of the
interim financial
statements
– Management presents
the interim financial
statements
– External auditors present
interim review
memorandum, together
with their external
auditors’ report and
confirmation provided
of their independence
– Review of external
auditors’ independence
– Full-year audit strategy,
plan and fee
– Management provides
the Committee with an
overview on the key
accounting issues and
judgements in respect
of the full-year results
– Update on the audit
strategy, plan and fee
– Non-audit services policy
review (annual)
– Adjusting items policy
review (annual)
– Group Tax strategy
approval (annual)
December JulySeptember March
Risk Management and Audit Committee report continued
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Risk Management and Audit Committee report continued
External auditor effectiveness
and audit quality
The 2018 Code requires the RMAC
to undertake an annual assessment
of the effectiveness of the external audit.
This was performed through the use of
a questionnaire which was issued to key
stakeholders, including members of the
Committee and those involved in the
FY23 audit.
The review and qualitative assessment
focused on feedback and insights,
planning and communication, and the
quality and experience of the audit team.
The Committee considered the feedback
received and its wider knowledge and
concluded that the external audit process
for FY23 was effective and that PwC
provided an appropriate independent
challenge to management. The feedback
received was used for continuous
improvement in respect of the FY24 audit.
The Committee will formally assess PwC’s
performance in relation to the FY24 audit
following its completion.
Following provision of the information
requested on both matters, the FRC concluded
its enquiries in September 2024.
The FRC’s review provides no assurance
that the Annual Report and Accounts are
correct in all material respects. The FRC’s
role is not to verify the information provided
but to consider compliance with reporting
requirements.
Internal audit
During the year, the Committee monitored
progress against the FY24 internal audit
plan which included the work of Deloitte
as co-source partner. Before each internal
audit, the scope of the review, timetable
and resources required were agreed with
management. Updates were provided to
management and the Committee on the
status of ongoing audits at RMAC meetings
during the year.
The FY24 audits undertaken reflected the
size of the Group and covered a wide range
of areas that included, but were not limited to:
– Validation of risk owners’ assessment
of principal risks and uncertainties
– Contract management
– Specific business division audits
– Financial systems
– Cyber security and IT resilience
– Health and safety
– Sustainability
– Client satisfaction
– Published non-financial information metrics.
Results from these audits were discussed
and noted by the Committee, together with
the follow-up actions taken by management.
The Committee received, considered
and approved the annual internal audit
plan for FY25 which has taken into account
the increased maturity of the Group’s risk
management processes and control
environment. Overall, the FY25 internal
audit plan aligns to our principal risks and
uncertainties, with audits selected on a risk
and rotational basis, with rotational audits
typically on a three-year cycle, unless there
are significant changes to a business division
or process.
The co-source partner continues to carry
out or support internal audits where subject
matter expertise is required (for example
cyber security and sustainability). The
co-source partner also provides back up in
the event of a shortage of in-house resource.
On this basis, the Committee confirmed that
the internal audit function had sufficient
experienced resources to deliver the plan.
As of FY24, Deloitte had been the internal
audit co-source partner for five years.
Whilst the Committee was satisfied with
their service and contribution over this period,
the Committee determined it was appropriate
to retender the co-source partner contract.
Following the tender, KPMG were appointed
co-source partner with the final decision
based on bringing a fresh perspective
to our internal audit activities.
Internal Audit function effectiveness
The RMAC Terms of Reference state, in
relation to Internal Audit, that the Committee
will, inter alia, consider whether an
independent, third-party review of processes
is appropriate. The Committee commissioned
an EQA of the Internal Audit function which,
following a tender process, was carried out
by KPMG internal audit specialists.
The results of the EQA were discussed at
the July 2024 Committee meeting. Whilst the
results were positive overall, the Internal Audit
function is developing a Quality Assurance
and Improvement Programme (‘QAIP’) to
further enhance the function’s effectiveness.
The Committee will monitor progress in the
implementation of the QAIP.
External audit
FY24 audit
The Committee has taken the following
key steps in overseeing the FY24 PwC
external audit:
– Reviewed the PwC FY24 audit plan,
resources and audit risk assessments
– Agreed the materiality level for the audit
– Reviewed and agreed the timetable for the
FY24 Annual Report and audit plans for
the Group and specific business divisions,
including the key areas of focus
– Agreed and approved the final FY24
audit fee
– Discussed and reviewed the Going
Concern and Viability statements
– Discussed and reviewed the audit findings,
significant issues and other accounting
judgements
– Approved the management representation
letter, following a review by management
and noted PwC’s independence.
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Significant matters and accounting judgements relating to the financial statements
The Committee reviewed the following significant matters and other accounting judgements relating to the FY24 financial statements. These included:
Contract accounting
The Group has significant long-term contracts in the Infrastructure Services and Construction businesses. Accounting for long-term contracts has continued
to be a key area of focus for the FY24 audit.
An assessment of the likely profit on long-term contracts requires significant judgement because of the inherent uncertainty in preparing estimates of the forecast costs
and revenue. Recoverability of work-in-progress on long-term contracts involves significant estimates, including an estimate of the end-of-life outcome of the projects.
During the year, the Board reviewed and challenged management’s latest assessment of the forecast costs of, and revenues from, certain of the Group’s long-term
contracts and the Committee discussed PwC’s audit of management’s assessment of the performance of certain of the Group’s contracts so as to satisfy themselves
as to the positions taken in the FY24 financial statements.
Impairment of goodwill
The review of the carrying value of goodwill in Infrastructure Services was identified as a key area of focus for the FY24 audit.
Having discussed the review with management and PwC, the Committee noted the increase in headroom and agreed that, although there was no requirement to take
an impairment charge with respect to the Infrastructure Services business division, specific disclosures would be included in the notes to the FY24 financial statements
as to the sensitivity of impairment to changes in key assumptions.
Presentation of the Group’s
financial performance
As stated in the accounting policy, the Group uses alternative performance measures (‘APMs’) which are consistent with the measures used by management to assess
the Group’s financial performance and aid the understanding of the performance of the Group.
The Committee (i) reviewed the policy wording during the year and confirmed its ongoing application, (ii) reviewed the individual terms excluded from the adjusting
operating profit, and (iii) agreed the classification of, and disclosures relating to, the adjusting items presented in the FY24 financial statements, ensuring that the APMs
are presented with equal or lesser prominence than statutory figures and on a consistent basis year-on-year.
Going concern/Viability
statement
In conjunction with PwC, the Committee reviewed and assessed the work undertaken to support the adoption of the going concern basis for the FY24 financial
statements and the viability statement.
In particular, the Committee and the Board reviewed the Group’s cash flow forecasts over the period ending 31 December 2025, in assessing the going concern basis;
and over a period of three years from 30 June 2024 for the viability statement, which are included in the Group’s three-year strategic plan together with the assumptions
on which such forecasts are based. The Committee also considered the stress-testing of these forecasts for severe but plausible downside scenarios that could have
an impact on the Group and the availability of mitigating actions, as required, in the event that such scenarios occurred. The Committee noted the successful
refinancing that occurred during the year, which provided long-term debt facilities and a strengthened maturity profile.
For further information on the work to support the going concern basis of preparation for the FY24 financial statements, please see ‘Going concern’ on page 154
and further information on the work to support the viability statement can be found on page 82.
Carrying value of
investments in Kier Limited
and recoverability of
balances owed by
subsidiary undertakings
In light of the carrying value of the Company’s investment in its principal operating subsidiary, Kier Limited, and the carrying value of balances owed by subsidiary
undertakings, relative to the Company’s market capitalisation, the carrying value of these balances were identified as key areas of focus for the FY24 audit.
Following management’s review, which PwC concurred with, the Committee concluded that no impairment was required against either the carrying value
of the investment held by the Company in Kier Limited or the balances owed by subsidiary undertakings.
Retirement benefit
obligations
The Group operates a number of defined benefit pension schemes.
The Committee reviewed the assumptions made by management in determining the defined benefit surplus at 30 June 2024. This included considering
the advice from independent qualified actuaries, together with the views of PwC’s pension specialists, and concluded that they were appropriate.
Risk Management and Audit Committee report continued
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Risk Management and Audit Committee report continued
2024 Annual Report – fair, balanced and understandable statement
The Board and Committee discussed the ‘fair, balanced and understandable’ statement
and the work undertaken to support it which included:
Who How assurance was provided
Annual Report
Working group
The working group comprised individuals involved in the drafting
of the Annual Report.
Material disclosure items were discussed by the working group.
The working group members reviewed the sections drafted by them
in light of the ‘fair, balanced and understandable’ requirement.
Key contributors to
the Annual Report
Certain key contributors to sections of the Annual Report
(for example the Group Managing Directors and Finance Directors
of our business divisions) were asked to confirm the accuracy of
the information provided.
External review
Ellason, the Remuneration Committee’s independent adviser, reviewed
the Directors’ Remuneration report. Feedback was provided by PwC
on the overall FY24 Annual Report. All external reviews were
undertaken to enhance the quality of our reporting.
The Committee
and the Board
Drafts of the Annual Report were circulated individually to Board
members, the Committee and the full Board for review.
The Directors consider that this Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to assess the
Group’s position, performance, business model and strategy.
The total non-audit fees paid to PwC in
FY24 were £430,000. These non-audit fees
related to PwC’s work in relation to their
review of the Group’s FY24 interim results
and their verification of the banking refinance
documentation. The total non-audit fees
subject to the FRC’s 70% non-audit fee cap,
which excluded amounts attributable to public
reporting workstreams required by legislation,
was £430,000. This represented 12% of
the average audit fees over the previous
three years.
External auditor independence
The Committee concluded that PwC’s
independence and objectivity were not
compromised by the provision of these
services. As part of the FY24 audit, PwC
confirmed that it was independent within
the meaning of applicable regulatory and
professional requirements. Taking this into
account and having considered the steps
taken by PwC to preserve its independence,
the Committee concluded that PwC
continues to demonstrate appropriate
independence and objectivity.
Tenure and audit tender
PwC was originally appointed as external
auditors in 2014, for the financial year ended
30 June 2015. Following a formal tender
process in 2023, PwC was reappointed as
external auditor at the 2023 AGM. Darryl
Phillips was appointed as the audit partner
for FY24 and this was his first year in the role
following partner rotation. The Committee
confirms that the Company has complied
with regard to the requirement of the
provisions of the Statutory Audit Services
for Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014.
Provision of non-audit services
During the year, PwC provided certain
non-audit services to the Group. The
Committee monitors these services to
ensure that the associated fees are not of
a level that would affect PwC’s independence
and objectivity. The Chief Financial Officer
has authority to approve up to £50,000 on
individual assignments. For non-audit fees
above £50,000, these must be approved in
advance by the Committee. If approval is
required urgently, this may be provided by the
Chairman of the Committee with subsequent
reporting of the approval to the Committee.
The Committee reviewed the non-audit fee
policy for PwC as the external auditor during
the year and confirmed it remained appropriate.
The Company’s non-audit services policy
reflects the FRC’s revised Ethical Standard
for Auditors (2019). The policy provides that
the Committee expects that the level of
non-audit fees in any one financial year will
not exceed 15% of the audit fees payable in
relation to the previous year. The Committee
may approve non-audit fees in excess of this
figure, up to 70% of the average of audit fees
paid in the previous three years, subject to
the Committee being satisfied that (i) there
is clear evidence that the auditors’ skills and
experience make them the most appropriate
firm to provide the relevant services and
(ii) the auditors’ independence and objectivity
would not be compromised by the appointment.
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Nomination Committee report
Matthew Lester
Chairman of the
Nomination Committee
Chairman’s introduction
I am pleased to report the work of the
Nomination Committee (‘the Committee’)
for the year. The key role of the Committee
is to provide a formal, rigorous and
transparent procedure for the appointment
of new directors to the Board, to maintain
an effective succession plan for the Board
and senior management and to oversee
the development of a diverse pipeline for
succession to these bodies. Further details
of the Committee’s responsibilities are set
out in its Terms of Reference which can
be found on the Company’s website.
The members of the Committee comprise
all the Non-Executive Directors and the
Chief Executive. Mohammed Saddiq joined
the Committee on 1 January 2024 when
he was appointed to the Board as a
Non-Executive Director. The attendance of
Committee members is set out on page 94.
The Chief People Officer also attended the
Committee’s meetings during the year by
invitation. The secretary of the Committee
is the Company Secretary.
Kier believes a diverse board is a necessary
part of effective corporate governance. Most
importantly, we believe we need to recruit
directors who have different perspectives and
have a broad range of skills and experience as
this improves the decision making of the Board.
The Board recognises the UK Listing Rules
targets for board gender and ethnic diversity.
As with the rest of our business, our Board
composition needs to reflect the communities
we serve. I am very pleased we have been
able to recruit a number of experienced,
successful female leaders to our Board since
I was appointed in 2020. This has resulted
in Chris Browne OBE succeeding Justin
Atkinson as Senior Independent Director
upon his retirement on 30 September 2024.
Following the recruitment of Mohammed
Saddiq, and Chris Browne’s appointment as
Senior Independent Director, Kier complies
with the UK Listing Rules’ ethnicity target
and Board leadership target.
Upon Justin’s retirement, Stuart Togwell,
Group Managing Director Construction,
will be joining the Board with effect from
1 October 2024. The Committee believes that
we need to replace the construction industry
expertise Justin brought and Stuart’s
significant strategic and operational delivery
experience in the construction sector will be
beneficial to the Board. Further, Stuart has
insights into UK government as it plans future
infrastructure investment. We believe having
this direct insight available to us will enhance
our understanding of their priorities and our
strategic decision making.
We will continue to look for high quality
female candidates who can add value to the
Board and seek to achieve the Board gender
target of 40%. However, in its recent external
assessment, the Board valued the dynamics
afforded by its current size which is
appropriate for the scale and complexity of
its operations. So, the Committee will need
to balance the benefits of meeting the target
with its impact on Board dynamics.
The following pages explain the work of the
Committee during the year and provide more
details of how the Committee fulfils its roles
and responsibilities. The Committee will
continue its focus on maintaining an effective
succession plan for the Board and senior
management and overseeing the
development of a diverse pipeline.
Matthew Lester
Chairman of the Nomination Committee
“ The Committee was
pleased to announce
the appointment of
Mohammed Saddiq in
January 2024 and that
Chris Browne OBE will
become our Senior
Independent Director
from 1 October 2024.”
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UK Listing Rules and Disclosure Guidance and Transparency Rules
As at 30 June 2024, 33% of the Board and 40% of executive management are women.
There is one Board member from an ethnic minority background and there are two members
of executive management from an ethnic minority background. Executive management is
defined as the members of the Executive Committee including the Company Secretary.
Gender
Chart 1: Reporting table on sex/gender representation as at 30 June 2024
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(Chair, CEO,
CFO and SID)
Number
in executive
management
1
Percentage
in executive
management
1
Female
(including those self-identifying as female)
3 33%
2
–
2
4 40%
Male
(including those self-identifying as male)
6 67% 4 6 60%
Not specified/prefer not to say – – – – –
1. Executive management is defined as members of our Executive Committee including the Company Secretary.
2. Following the appointment of Chris Browne OBE as the Senior Independent Director on 1 October 2024, there
will be one female and three males in senior Board positions.
Ethnicity
Chart 2: Reporting table on ethnicity representation as at 30 June 2024
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board
(Chair, CEO,
CFO and SID)
Number
in executive
management
1
Percentage
in executive
management
1
White British or other White
(including minority-white groups)
8 89% 4 8 80%
Mixed/multiple ethnic groups – – – – –
Asian/Asian British 1 11% – 2 20%
Black/African/Caribbean/Black British – – – – –
Other ethnic group, including Arab – – – – –
Not specified/prefer not to say – – – – –
1. Executive management is defined as members of our Executive Committee including the Company Secretary.
The Company collects the above data used for the purposes of making this disclosure from
Directors on a voluntary basis. The data of our executive management is captured via the
Company’s internal HR system on a voluntary basis.
Succession planning
The Committee is responsible for the
effective and orderly succession planning
for the Board and senior management.
It monitors the tenure of Directors to ensure
that it plans sufficiently in advance of
retirements from the Board to ensure orderly
succession of Non-Executive Directors. All
the Directors stand for election or re-election
at our Annual General Meeting.
Along with considering Board succession,
the Committee oversees the development
of a strong pipeline of diverse and talented
individuals below Board level. It regularly
reviews the quality of the senior management
team as it recognises the importance of
creating and developing a suitably talented,
diverse pipeline of leaders ready to serve
as the next generation of Directors and
senior management.
The Chief Executive, supported by the Chief
People Officer, presents to the Committee on
senior management succession planning and
the talent development programme for the
wider workforce. For Executive Directors and
for roles in senior management, plans are in
place for both sudden, unforeseen absences,
and for longer-term succession. These form
the basis of development plans for our most
talented people and will ensure that, looking
forward, we have the right people to deliver
our strategy.
We encourage regular contact between
senior management and the Board. This
may be by way of presentations to the Board,
joint Visible Leadership Tours or one-to-one
sessions with Non-Executive Directors to
discuss a specific issue.
Diversity and inclusion policy
As set out in the Chairman’s statement and
the Chairman’s introduction to the Committee’s
report, the Board values diversity. Having a
workforce and leadership that reflects the
communities Kier supports is integral to our
culture. Achieving this will take time and a
variety of initiatives consistently delivered.
The Built by Brilliant People™ report sets out
the progress against our Diversity & Inclusion
roadmap, and the programmes and initiatives
that Kier is implementing. The Nomination
Committee continues to focus on diversity
matters at Board and its sub-Committees,
Executive Committee and senior management
levels. During the year, the Committee
monitored progress with the collection of
data regarding our people to enable Kier to
assess the current status and set longer-term
targets and objectives.
With reference to the Board and its
sub-Committees, this Diversity policy has
been implemented throughout the search
and appointment process for new directors.
Search firms are instructed to take diversity
into account when compiling a shortlist of
candidates to put forward for consideration
and diversity will be considered by the
Committee during the interview and selection
process. In the final selection decision,
all Board appointments are made on merit
and relevant experience, against the criteria
identified by the Committee with regard to
the benefits of diversity in the widest sense.
Find our more about
our Board Diversity Policy
Nomination Committee report continued
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Induction process
Upon joining the Board, Mohammed
Saddiq undertook an induction programme
in order to assist him in becoming effective
in his role as quickly as possible. The
Company Secretary devised a programme
in consultation with the Chairman and Chief
Executive which was essentially built around
a series of meetings with the Board, the
Executive Committee, the Company Secretary
and members of senior management
(for example, the Group Financial Controller,
Group Legal and Compliance Director, Head
of Risk and Internal Control, Chief Information
Officer and Group Health, Safety & Wellbeing
Director), as well as site visits to understand
our business operations.
Mohammed was also briefed on
shareholders’ views and focus areas,
including executive remuneration matters,
enabling him to have the context prior to such
matters being discussed at Board meetings.
He received tailored training from external
legal advisors on the legal and regulatory
framework of a director of a listed company.
He also completed online training on Kier’s
Code of Conduct and Inside Information
and Share Dealing. Our Senior Independent
Director also acted as an ‘induction buddy’
for Mohammed and had debrief sessions
with him post Board meetings to answer
any questions. Board and Committee papers,
Committee Terms of Reference, the Strategy
Paper, Capital Markets Day presentation and
internal Corporate policies such as the Code
of Conduct and Operating Framework were
made available on the Board portal for him
to read before his first Board meeting.
“ I have enjoyed getting
to know more about Kier
through the induction
programme. The site
visits were particularly
impactful, giving me
a deep appreciation
for the dedicated
employees who are not
only committed to their
work but also proud of
building a lasting
positive legacy for the
communities we serve.”
Mohammed Saddiq on his induction.
Annual evaluation
This year’s evaluation was externally facilitated
by Clare Chalmers Limited as part of the Board
evaluation. Details of this process and the
outcome of the Board evaluation are set out
on page 94. The outcome of this evaluation
concluded that since the last review, the
Committee has formalised with a more
thorough agenda. To ensure continued
effectiveness, the Committee will spend more
time on Non-Executive Director succession
planning, looking at long-term plans and
Committee composition.
Appointment process of Mohammed Saddiq as a Non-Executive Director
The Chairman led the search together with support from the Chief People Officer and
the Company Secretary. The chart below summarises the process, the outcome of which
culminated in the recommendation to the Board to approve the appointment of Mohammed
Saddiq as a Non-Executive Director. His biography can be found on page 91.
Board appointment process
Role requirements
A set of objective criteria for the role, including the skills, experience in particular from
relevant sectors of the construction and infrastructure market in which Kier operates,
and attributes required was prepared.
Candidate search
Nurole was then instructed to facilitate the search and identify a diverse long-list
of potential candidates. Nurole is independent of Kier and the Board.
Interview process
A short-list of candidates was selected and undertook an interview process
by a combination of the Chairman, Chief Executive, Senior Independent Director,
two Non-Executive Directors and Chief People Officer. The interviewees provided
feedback to the Chairman.
Approval
Due diligence, conflict checks and references were also carried out. Time commitments of
the candidates were also considered so as to ensure the candidates would have sufficient
time to devote to Kier. The Nomination Committee recommended its preferred candidate
to the Board for approval. The Company Secretary was then tasked with the formalities.
Total workforce that are women
(FY23: 25%)
25%
Direct reports to the Executive Committee
that are women (FY23: 42%)
47%
Nomination Committee report continued
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Alison Atkinson
Chair of the
Environmental, Social and
Governance Committee
Environmental, Social and
Governance Committee report
progressing our Safety, Health and
Environment Management System (‘SHEMS’)
simplification programme, as well as
broadening the roll-out of our behavioural
safety programmes. More context on our
health, safety and wellbeing performance
is set out in the Built by Brilliant People™
report on pages 49 to 50.
Our safety performance is our licence to
operate, and the Committee will continue
to monitor and challenge its management,
as part of our commitment to remain at the
forefront of our industry in this area.
We also looked to enhance our employee
wellbeing programmes. We invest in our
people’s health and wellbeing to ensure they
stay healthy, and feel energised, valued and
supported at work, which, in turn, drives strong
business performance, including our safety
performance. The Committee received
updates on activities designed to strengthen
such support programmes. Further information
on our wellbeing programmes are explained
in the Built by Brilliant People™ report.
Building for a Sustainable World
As reported last year, a double materiality
assessment was carried out in FY23,
which informed our evolved Building for a
Sustainable World framework. The framework
has three strategic pillars – Our People,
Our Places and Our Planet. As part of this
framework, our climate action (including
carbon) milestone plan was approved, setting
out the key activities and timelines to reach
our long-term carbon targets.
Chair’s introduction
I am pleased to set out the work of the
Environmental, Social and Governance
Committee (‘the Committee’) for the year.
The key role of the Committee is to oversee
the strategy for environmental, social and
governance (‘ESG’) matters, including the
implementation of that strategy by
management, to review the Group’s exposure
to ESG risks and monitor performance
against ESG targets. Further details of the
Committee’s responsibilities are set out in
the Terms of Reference which can be found
on the Company’s website.
The members of the Committee comprise
all the Non-Executive Directors. Mohammed
Saddiq joined the Committee on 1 January
2024 when he was appointed to the Board
as a Non-Executive Director. Attendance
of the members is set out on page 94. The
Chairman, Chief Executive, Chief Financial
Officer, Chief People Officer, Group Legal
and Compliance Director and Group Health,
Safety & Wellbeing Director also attended
the Committee’s meetings during the year
by invitation. The secretary of the Committee
is the Company Secretary.
Health, safety and wellbeing
There has been continued focus on our
safety performance. The Group’s 12-monthly
rolling Accident Incident Rate (‘AIR’) of 155
represents an increase of 76% compared
to 88 in FY23. It equates to 41 RIDDOR
reportable incidents in FY24 compared to 22
in FY23. These FY24 figures are an increase
on the high-performing benchmark that we
achieved last year. As a Committee this has
been in sharp focus and actions taken by
management to improve our safety
performance have included continued
implementation of our culture programme,
“ As a Committee,
safety has been in
sharp focus and the
Committee will
continue to monitor
and challenge its
management, as part
of our commitment to
remain at the forefront
of our industry.”
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Last year, the Committee recommended
a carbon target to the Remuneration
Committee for inclusion in the Long-Term
Incentive Plan (‘LTIP’) awards (of up to 10%
of the performance targets) and following
the approval of our Directors’ Remuneration
Policy by shareholders at the 2023 AGM,
this has been implemented in FY24. The
Committee has recommended the same
carbon reduction target, aligned with SBTi,
for LTIP awards to be granted in FY25.
The Committee was kept informed of our
work in our communities, for example our
annual fund-raising event Moving Through
May, and the work of The Kier Foundation,
an independent registered charity which
supports Kier’s charity partner.
For more information on our work on the
Building for a Sustainable World framework,
progress against our targets and how we
create social value, please see pages 36 to 47.
Governance
In addition to the usual updates on activities
to ensure compliance with corporate policies,
and as reported last year, we performed
a review of the effectiveness of the
implementation of major corporate policies,
with support from external advisors as
appropriate. The purpose of this review is to
ensure the implementation is ‘fit for purpose’.
This is a three-year programme. During the
year, the outcome of the planned review of
Kier’s Anti-Bribery and Corruption and
Competition Policies was reported. It was
concluded that the policies and their
implementation remained effective with
some recommendations to improve their
effectiveness, such as targeted training
to operatives.
During the year, the Committee monitored
inclusion of enhanced sustainability
disclosures, progress against targets set
in previous years, and the development of
milestone plans for remaining topics under
each of the three pillars, which included
the following:
– approval of milestone plan for social value;
– approval of milestone plan on ethical labour;
– approval of milestone plan on resource
efficiency and the target of achieving a
20% reduction in tonnes of waste per £m
of revenue by 2028; and
– carrying out a deep dive into nature and
biodiversity, enabling the Committee to
gain understanding of the upcoming change
in legislation and its impact on Kier’s
operations and how we work with clients.
As part of the approval of the milestone
plans, the Committee reviewed each of the
respective topics to understand the context,
purpose, objective, risks and opportunities.
The Committee also received updates on how
Kier is supporting our clients, such as the UK
Government and regulated companies, with
meeting their decarbonisation targets such
as by delivering buildings which are net zero
in operations and infrastructure resilient to
the impacts of climate change.
Our Scope 1, 2 & 3 carbon targets were
validated by the Science Based Targets
Initiative (‘SBTi’) during the year. The
Committee recognises this significant
achievement for the businesses and it gives
assurance to both the Committee and the
broader stakeholders that our carbon targets
are aligned to limit global warming to 1.5°C
and achieving net zero emissions. We
continued to reduce our carbon footprint
during the year with Scope 1 & 2 emissions
falling by 9% and Scope 3 emissions by 13%.
The Committee has continued its focus
on ESG reporting by way of improving
consistency and quality of data across each
of the business divisions. The ESG reporting
manual, which sets out the standards and
principles for ESG reporting across Kier
to support our disclosures, has been
embedded. The next stage is to transition
to Rio AI, an enterprise environmental data
platform, which will further streamline and
enhance the interrogation and reporting of
environmental performance at all levels of
our business, from project to Group-wide.
During the year, the Committee had a deep
dive into the Business Assurance function to
gain understanding of its role as the second
line of defence in Business Assurance and
Operational Compliance and how it fits
into the overall internal control framework.
This enabled the Committee to assess
and manage the risks and opportunities
of our business assurance and operational
compliance and ensures our systems and
processes meet the required UK and
international standards.
As explained in the Principal Risks and
Uncertainties report, the ‘Climate Change’
principal risk was replaced with the
‘Sustainability’ principal risk ‘failure to identify
and effectively manage sustainability risks
and opportunities’ which incorporates climate
change and environmental incidents and
aligns with Kier’s Building for a Sustainable
World strategy.
External rating agencies and reporting
Our approach to external rating agencies of
our ESG performance was also reviewed and
streamlined to ensure Kier discloses relevant,
key information to our stakeholders. Their
opinions inform our approach to strengthening
our management of ESG risks and
opportunities and support us in developing
our disclosures in future reporting years. We
also achieved the London Stock Exchange’s
Green Economy Mark during FY24.
A high-level summary of our ESG
performance reported by external rating
agencies during FY24 is available on
our website.
Annual evaluation
This year’s evaluation was externally
facilitated by Clare Chalmers Limited as
part of the Board evaluation. Details of this
process are set out on page 94. The outcome
of this evaluation concluded that the
Committee continues to be effective and has
settled well following the establishment of an
extended remit three years ago. To enhance
its effectiveness, the Committee will continue
to liaise with other Board Committee Chairs
to ensure complete coverage of relevant
matters and to avoid overlapping of remit.
Looking forward
For the coming year, the Committee will
continue to focus on our ESG performance,
monitoring safety performance and progress
against the various milestone plans as
described above.
Alison Atkinson
Chair of the ESG Committee
Environmental, Social and Governance Committee report continued
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Directors’ Remuneration report
That said, it was evident from these follow-up
conversations that shareholders continued
to fully support Kier’s strategy and there
was a clear recognition of the importance
of retaining and incentivising the CEO and
CFO as we deliver on our medium-term
value creation plan (‘MTVCP’).
The past two and a half years have seen
the Group achieve significant operational
and financial progress (as set out in the
FY24 Group performance section below).
During the consultation, we reconfirmed
our commitment to shareholders that the
additional opportunity under the bonus plan
would be achieved only if the Executive
Directors (‘the Executives’) accelerated
delivery of the MTVCP and achieved truly
stretching performance significantly above
previous expectations.
On the formalisation of the LTIP award level,
we appreciate that this was not set out as
clearly as it should have been in earlier
annual reports and should have been
clarified at the time of the previous policy
review in 2020. Granting awards at 175%
of salary was not an increase and simply
reflects the normal award levels that were
agreed at the time the CEO and CFO were
appointed in 2019. Since the award level
was not a change to the previous approach,
and given the strong support demonstrated
for the Directors’ Remuneration report,
the Committee considered it appropriate
to continue with the grant of the awards
shortly after the AGM.
Chair’s introduction
On behalf of the Board, I am pleased to
present the Directors’ Remuneration report
which is divided into three principal sections:
– my annual statement, which summarises
the Committee’s activities and decisions
during the year;
– the annual report on remuneration,
which provides details of the remuneration
paid to the Board in FY24 and to be paid
in FY25; and
– a summary of the Directors’ Remuneration
Policy (the ‘Policy’) which was approved
at the 2023 AGM.
Before I report on the latter two items, I would
like to start my statement by responding to the
2023 AGM vote on the Policy.
Following the AGM, the Remuneration
Committee (‘the Committee’) undertook
a further engagement exercise. Our major
shareholders that had supported the Policy
continued to express their support for the
management team and the Committee’s
implementation of the new Policy.
For those shareholders who did not
support the Policy, the primary reasons
for opposition were:
– the increase in the annual bonus
opportunity from 125% to 150% of salary
for the Chief Executive (‘CEO’) and Chief
Financial Officer (‘CFO’);
– the formalisation of the regular Long Term
Incentive Plan (‘LTIP’) awards being set at
175% of salary for the CEO and CFO; and
– the appropriateness of the benchmarking
peer group and its influence on decision
making.
“ The strength of
performance of the
Company under the
stewardship of the
executive directors
has been demonstrated
by the resumption of
dividend payments for the
first time in six years and
our return to the FTSE 250
after five years.”
Margaret Hassall
Chair of the
Remuneration Committee
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Directors’ Remuneration report continued
The Group’s Reward & Employee Benefits
Forum provides direct employee engagement
on new or amended workforce policies,
reward, benefits and pensions initiatives.
It enables feedback to be received on the
range of benefits available to employees,
their accessibility and how they are
communicated to our diverse workforce.
I attended the Forum and had the opportunity
to discuss the implementation of the new
Policy, how we engage with our shareholders
and the 2023 AGM process with
representatives from across the different
business areas and the Group’s inclusivity
networks. We discussed the Committee’s
approach to the governance of executive pay
and how the Policy aligns with our strategy.
I was pleased with the positive engagement
with the representatives at the meeting.
Over 1,500 employees that participated in
the Group’s January 2021 Sharesave which
matured during FY24 benefited from the
share price appreciation and received a
significant increase in value to their savings.
See page 116 for more information.
The performance targets applying to these
2023 awards, which were disclosed on our
website at the time of grant and which are set
out on page 121, show significant growth in
the financial targets (EPS and cash flow) vs
the range set for the 2022 awards. The 2023
awards were granted at a share price of
99.2p, being the three-month average share
price prior to the time of grant and ahead of
the 2021 capital raise issue price (85p).
The Committee notes the concerns raised
by shareholders previously about the share
price at which the 2022 LTIP award was
made and, consistent with our usual practice,
we will make an assessment prior to vesting
to ascertain whether any windfall gains have
arisen and whether Committee discretion
should be applied to moderate the outcome.
In determining the appropriate level of
variable pay for the Executives, the primary
consideration for the Committee was
implementing a framework that would continue
to drive positive outcomes for shareholders.
The strength of performance of the Company
under the stewardship of the Executives has
been demonstrated by the resumption of
dividend payments for the first time in six years
and our return to the FTSE 250 after five years.
Although benchmarking was used as a
reference point in determining changes to the
Policy, it was not the primary consideration in
determining any increase. The Committee
considered a range of factors when reviewing
the incentive opportunity and total remuneration
packages for the Executives, including
(i) Kier’s recent performance, showing
demonstrable progress against the MTVCP,
and (ii) the performance of the CEO and CFO
since their appointment, and their criticality
to the completion of Kier’s turnaround.
The Committee intends to continue with a
tailored peer group as the primary reference
for benchmarking pay. The tailored peer
group currently comprises Babcock, Balfour
Beatty, Capita, Costain, Galliford Try, Mitie,
Morgan Sindall and Serco, being companies
directly competing with Kier and/or with
similar levels of operational complexity.
This is consistent with the group that has been
used since 2021. The Committee considers
this group to be an accurate reflection of the
scope and complexity of Kier’s operations,
as well as the market in which we compete for
talent. The Committee recognises that some
companies in the peer group are larger than
Kier, and we have therefore size-adjusted the
pay data to take into account Kier’s relative
revenue and headcount.
The Committee remains of the view that the
positioning of the Policy is appropriate given
the calibre and experience of the Directors and
the emphasis, in the Policy, on performance
related pay, aligning with shareholder and
stakeholder interests over the longer term.
No changes have been made to the
implementation of the Policy for FY25,
but the Committee will continue to ensure
that there is clear alignment between pay
and performance and has improved the
disclosures given in this annual report
in this regard, to explain the remuneration
outcomes delivered under the new Policy.
FY24 Group performance
The Group has delivered a further year of
strong operational and cash performance,
with material debt reduction, as it moves
towards the completion of the MTVCP.
This has included:
– A year-end order book that has increased
by 7% to £10.8bn (£10.1bn in FY23)
– 14% increase in adjusted operating profit
(‘AOP’) to £150.2m (£131.5m in FY23)
– A year-end net cash position of £167.2m
(£64.1m in FY23)
– Average month end net debt of £(116.1)m
which is significantly lower than £(232.1)m
in FY23
– Operating free cash flow of £217.1m
(£170.6m in FY23)
– Adjusted Earnings Per Share (‘EPS’)
increasing to 20.6p (19.2p in FY23).
The Committee has been carefully
monitoring progress against the MTVCP,
and is pleased with the progress made
as set out in the table below.
Employee experience
Improvements were made to the benefits
for employees across the Group during the
year and these are set out on page 116.
Medium-term value creation plan targets Progress to date
Annual revenue c.£4.0bn–£4.5bn – FY24: Annual revenue of £4.0bn
– FY23: £3.4bn
Adjusted operating margin c.3.5% – FY24: Margin of 3.8%
– FY23: 3.9%
Cash flow conversion of operating
profit c.90%
– FY24: Adjusted free cash flow conversion: 145%
– FY23: 130%
Balance sheet: sustainable net cash
position with capacity to invest
– FY24: Average month-end net debt £(116.1)m
– FY23: £(232.1)m
Sustainable dividend policy: c.3x
earnings cover through the cycle
– A dividend of 5.15p per share being paid for FY24
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Group average month end net debt
40% of the FY24 annual bonus was based
on average month end net debt. Threshold
(£(155.0)m) required a material improvement
on the FY23 position. On-target (£(135.0)m)
was set in line with consensus at the time
the target was set. Maximum (£(115.0)m)
required considerable acceleration in
achieving the objectives of the MTVCP.
The average month end net debt achieved
was £(116.1)m.
The Committee considered the formulaic
outcome a fair representation of underlying
performance and payout was determined as
38.9% of the 40% opportunity for this element.
Health and safety
The safety target required an Accident
Incident Rate (‘AIR’) result of 84, which was
a 5% reduction on the previous year’s result,
for threshold achievement and an AIR of 79
or less, which was a 10% reduction on the
previous year’s result, for maximum
achievement. The threshold level was not
met and therefore no payment was made
for this element.
Health and safety is our license to operate
and remains a key operational focus at Kier.
Actions have been taken by management
to improve our safety performance including
the roll out of our culture programme during
FY24. This includes our nine healthy
behaviours which form the basis of our
culture and complement our safety specific
behavioural training which is being rolled
out across our projects. These programmes
have been designed to bring positive health,
safety and wellbeing approaches into our
operations, and apply to all personnel,
including our supply chain. They sit alongside
our existing policies and procedures. More
context on our health, safety and wellbeing
performance is set out in the Built by Brilliant
People™ report on pages 48 to 54.
Personal objectives
10% of the FY24 annual bonus was based
on the achievement of personal objectives.
The personal objectives for the Executives
included rolling out and embedding the
culture programme and driving improvement
via a balanced scorecard of financial and
operational business measures.
The Committee reviewed the extent to which
the Executives had satisfied their personal
objectives and this is set out in detail on page
118. The employee engagement target that
we had set had been achieved and progress
against the KPIs in the balanced scorecard
was strong. The Committee considered the
strong foundations upon which the recent
financial success has been built and
concluded that this was the result of
consistent focus by the Executives across
a range of metrics. After due consideration,
the Committee was supportive of full payment
for this element of the bonus plan.
In light of the business and stakeholder
context set out above, the Committee believes
the overall bonus outcome of 82.1% of
maximum opportunity is fair and appropriate.
The FY24 bonuses will be delivered two-thirds
in cash and one-third will be awarded in shares
which will not be released until a three-year
holding period is complete.
Further detail on the FY24 annual bonus
outcome can be found on page 118.
Shareholder experience
During FY24, dividend payments recommenced with an interim payment of 1.67p per share
paid in May 2024 and a final dividend of 3.48p to be paid in November, subject to approval
at the 2024 AGM.
Our share price increased from 75p at the end of FY23 to 132p at the end of FY24 and
in March 2024 we returned to the FTSE 250 for the first time in five years.
FY24 outcomes
Annual bonus
The FY24 annual bonus targets related to AOP, average month end net debt, health and
safety and personal objectives.
AOP
40% of the FY24 bonus was based on AOP. When setting the performance range,
the Committee was keen to reward (i) progression on our objectives under the MTVCP,
(ii) growth over the prior year, and (iii) outperformance of market consensus at the time
the targets were set.
Threshold
£135.0m The minimum pay out under the bonus required
delivering £3.5m above FY23 actual.
On-target
£141.9m The on-target pay out required outperformance
of analyst consensus at the time the target was set.
Maximum
£153.0m Full pay out required over 16% growth on FY23 actual,
and 8% outperformance of the analyst consensus
at the time the target was set.
The AOP achieved was £150.2m, equivalent to growth of 14% over FY23 and ahead of the
growth observed for the same period amongst Kier’s immediate construction peers.
The Committee considered the impact on the formulaic outcomes for both the AOP and
average month end net debt targets from the acquisition of the rail assets of Buckingham
Group Contracting Limited during the financial year. The Committee exercised its discretion
to reduce the AOP achievement by £1m to £149.2m for which the payout was 33.2% of the
40% opportunity for this element of the annual bonus.
Directors’ Remuneration report continued
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2021 LTIP award
The targets for the 2021 LTIP award were
adjusted EPS, with a weighting of 50%, total
shareholder return (‘TSR’) with a weighting
of 25% and adjusted free cash flow (‘FCF’)
conversion with a weighting of 25%.
The targets were set at the start of
the MTVCP and demanded significant
improvement in EPS by FY24 of over 23%
from the FY21 position, and an average
adjusted free cash flow conversion of 95%
to achieve maximum pay-out. In addition
Kier’s TSR needed to match or outperform
the FTSE 250 (excluding investment trusts).
Actual adjusted EPS performance in FY24
was 20.6p resulting in 48.75% of the 50%
opportunity for this element vesting. TSR was
above upper quartile and average adjusted free
cash flow conversion was 123.3%, resulting
in both of these elements vesting in full.
When considering the LTIP vesting
outcomes, the Committee recognised the
significant improvements that have been
made to the Group’s financial position during
the three-year performance period and the
substantial delivery against all elements
of the MTVCP since 2021.
The Committee considered the grant price
of the 2021 LTIP award (108.4p) in the
context of the award price for the prior year
2020 LTIP (78p) and the share price at the
time of assessing the vesting level, and was
satisfied that no adjustments were required
for windfall gains.
The Committee was further satisfied that
(i) the vast majority of the vest-date value
of the 2021 LTIP award was attributable to
strong performance leading to a high vesting
percentage, with only c.20% attributable to
share price gain; (ii) the high vesting of the
financial components of the award indicated
strong underlying company performance;
and (iii) that the overall pay outcome for
the CEO and CFO for FY24 was appropriate
in the context of this strong performance.
A final assessment will be made at the
vest date in October.
Consequently, the 2021 LTIP award will
vest at 98.75% of maximum opportunity
which the Committee considers to be a fair
representation of management performance
over the period. The net shares vesting will
be subject to a two-year holding period before
being made available to the Executives.
Further detail on the vesting can be found
on page 119.
Looking forward – FY25
Base salary
The Committee decided that the CEO and
CFO would receive a salary increase of
3.75%, which is lower than the average 4%
increase that will be applied to the majority
of the wider workforce. The increases will
be effective from the normal review date
of 1 October 2024.
Board appointment
As referenced in the Chairman’s statement
on page 6, Stuart Togwell will be joining the
Board as an Executive Director with effect
from 1 October 2024. His remuneration
arrangements will be in line with the
approved Policy.
As Committee Chair, I would like to reiterate
my appreciation for the valuable feedback
from shareholders and I hope to receive your
support for the 2024 Directors’ Remuneration
report at the AGM in November.
Margaret Hassall
Chair of the Remuneration Committee
Annual bonus
The maximum bonus opportunity for the
CEO and CFO is unchanged at 150% of
base salary.
The FY25 bonus targets will continue to
be based on AOP (40%), average month
end net debt (40%), Group health and safety
(10%) and personal objectives (10%). The
Committee has considered a range of factors
to ensure targets are stretching. Significant
outperformance will be required to achieve
maximum pay out.
Full details of the performance targets
will be provided in the 2025 Directors’
Remuneration report.
LTIP awards
The LTIP award level is unchanged at 175%
of base salary for the CEO and CFO.
The 2024 LTIP grant will use a grant price of
the three-month average share price leading
up to the date of grant. The performance
conditions will continue to be EPS (40%),
TSR outperformance (25%), FCF (25%) and
reductions in the Group’s Scope 1 & 2 carbon
emissions (10%). The targets are set out on
page 128.
Directors’ Remuneration report continued
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Remuneration at a glance
Strategic alignment
of remuneration
Remuneration
framework
Approach to
remuneration at Kier
Align with strategy and
incentivise and reward performance:
Over two-thirds of the Executives’ maximum
remuneration opportunity is variable and
relates to the Group’s performance against
its strategic priorities.
Align Executives’ interests with those
of shareholders:
Approximately half of the Executives’
maximum remuneration opportunity is
satisfied in shares and the Executives are
encouraged to build up shareholdings in
the Company of 200% of base salary over
a period of up to five years.
Support the delivery of the
Group’s strategy and promote
its long-term success:
To achieve this aim, the Group needs to
attract and retain talented management.
The Committee therefore considers
practices in comparable businesses to
ensure that remuneration at Kier remains
competitive, enabling it to attract and
retain talented individuals, but without
paying more than is necessary.
For the Executives and senior management, a significant part of the total
remuneration opportunity is performance related, and the performance targets
are directly linked to the delivery of the Group’s strategy and long-term returns.
The following table illustrates how that is achieved:
There are three elements to the
framework for the Executives’
remuneration:
Fixed
element
Comprises base salary, taxable benefits
(private health insurance and a company
car or car allowance) and pension
contributions.
Short-term
element
An annual bonus, which incentivises
and rewards the delivery of a balanced
selection of financial and non-financial
targets in a financial year, with payments
being satisfied in cash (two-thirds), which
are subject to clawback, and shares
(one-third), which are deferred for three
years and subject to malus.
Long-term
element
Performance share awards which
incentivise and reward the delivery
of sustainable, long-term performance
and align executives with the interests of
shareholders. Shares vest after three years
subject to the achievement of a scorecard
of financial, TSR and ESG-based measures.
Shares (net of tax) must be held for a
further two years post-vesting and remain
subject to clawback.
Strategic actions
Sustainable growth Consistent and
safe delivery
Generate cash
Medium-term value creation plan
Annual revenue
c.£4.0bn–£4.5bn
Adjusted
operating
margin c.3.5%
Cash flow
conversion of
operating profit
c.90%
Balance sheet:
sustainable net
cash position
with capacity
to invest
Sustainable
dividend policy:
c.3x earnings
cover through
the cycle
Annual bonus targets for FY25
LTIP performance conditions for FY25
Adjusted
operating profit
40%
Group adjusted
earnings per share
40%
Health, safety
& wellbeing
10%
Total shareholder
return
25%
Personal
objectives
10%
Carbon emissions
reduction
10%
Average month
end net debt
40%
Group free
cash flow
25%
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How strategy links to remuneration
Directors’ Remuneration report continued
Strategic measure selection
Measures are strategic,
taking into account budget
and long-term forecasts
FY24 annual bonus:
Metrics included Group AOP (40%),
average month end net debt (40%),
Accident Incident Rate (AIR) (10%)
and personal objectives (10%).
The financial targets were directly linked
to the Group’s strategic priorities and to
the achievement of the MTVCP.
The non-financial targets reflected
the priorities around health and safety
performance, employee engagement
and delivery of KPIs measured through
a balanced scorecard.
2021 LTIP:
Metrics included adjusted EPS (50%),
TSR (25%) and adjusted FCF (25%).
When the Committee selected performance
metrics in 2021, the Group’s turnaround
was in progress but profitability and cash
generation remained of primary importance
and consequently long-term performance
in these key areas was prioritised.
Set stretching targets
The Committee considers
a range of factors to ensure
targets are stretching
We take into account the MTVCP,
the annual budget, analysts’ forecasts
(consensus), economic conditions that
impact revenue or margin including
cost inflation, individuals’ areas of
responsibilities and the Board’s
expectations over the relevant period.
Significant outperformance of target is
required to achieve maximum pay out.
Take account of wider
circumstances
The Committee takes a big
picture approach
The Committee believes that the range
of measures used to drive the annual
bonus and LTIP ensures performance is
assessed using a balanced and strategic
approach. The Committee also considers
the wider workforce remuneration and
policies when making decisions on
executive remuneration.
Given the Group’s performance and
wider operational achievements, and after
considering the potential for windfall gains
arising on the LTIP vesting, the Committee
is satisfied that the FY24 bonus and 2021
LTIP outcomes represent a fair reward
for performance delivered.
Apply discretion if required
Depending on circumstances, the
Committee may exercise judgement in
determining the level of achievement
The Committee has full discretion to
override formulaic outcomes. Deferred
shares and unvested LTIP awards are
subject to a ‘malus’ provision during the
three-year deferral/performance period.
This allows the Committee to apply
a reduction in certain circumstances
including a material misstatement of the
Group’s financial statements, a material
error in determining the satisfaction of
a performance condition, a participant
deliberately misleading the Company,
the market and/or shareholders, material
reputational damage to the Group, gross
misconduct and any other circumstances
similar in nature.
Clawback applies to the cash element of the
annual bonus and the two-year holding period
which applies to LTIP awards post-vesting.
The circumstances in which clawback
applies are the same (or substantially the
same) as for malus. The Committee has
the right to apply the malus and clawback
on an individual or on a collective basis.
The Committee exercised its discretion
in the year to reduce the formulaic out-turn
under the adjusted operating profit measure
in the annual bonus to reflect the impact
of the acquisition of the rail assets of
Buckingham Group (which was completed
after the targets were originally set).
Remuneration at a glance continued
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Directors’ Remuneration report continued
Target setting and determining
incentive outcomes
On-target
Maximum
Fixed
£889
100%
48%
33%
19%
25%
35%
40%
21%
29%
50%
£1,855
£3,532
£4,243
Maximum +50%
share price growth
On-target
Maximum
Fixed
£626
100%
48%
33%
19%
25%
35%
40%
21%
29%
50%
£1,300
£2,472
£2,969
Maximum +50%
share price growth
Simon Kesterton
Andrew Davies
£3,753
846
598
674
1,305
965
1,942
£2,577
FY24 bonus performance:
Group AOP:
£149.2m (83% of max)
Average month end net debt:
£(116.1m) (97.3% of max)
Reduction in Group’s Accident
Incident Rate: 0%
Personal objectives:
100% achieved
2021 LTIP performance:
Adjusted EPS:
20.6p (97.5% of max)
Relative TSR against FTSE 250:
above upper quartile
(100% of max)
Adjusted Free Cash Flow:
123.3% (100% of max)
Base salary:
Andrew Davies (CEO): £813,141 (+3.75%)
Simon Kesterton (CFO): £568,153 (+3.75%)
Effective 1 October 2024
Annual bonus:
Maximum: 150% of salary
Targets: Group AOP (40%),
average month end net debt (40%),
Group safety performance (10%)
and personal objectives (10%)
LTIP:
Maximum: 175% of salary
Targets: EPS (40%), FCF (25%), TSR (25%),
carbon emission reduction (10%)
Pension:
7.5% of base salary
Andrew Davies
Simon Kesterton
1. ‘Fixed’ remuneration comprises base salary, taxable benefits and a pension contribution/cash allowance.
2. The ‘on-target’ remuneration assumes an annual bonus payment of 50% of the maximum opportunity (150% of base salary) and a ‘threshold’
LTIP vesting of 25% of the maximum opportunity (175% of base salary).
3. The ‘maximum’ remuneration assumes maximum performance is achieved and therefore awards under the annual bonus and the LTIP pay
out or vest at their maximum levels.
4. The ‘maximum +50% share price growth’ assumes maximum performance is achieved and therefore the annual bonus pays out and the LTIP
awards vest at their maximum levels and at a share price which is 50% higher than the share price on the date of grant.
5. No dividend equivalents are included and no value is assumed for participation in the Save As You Earn or the Share Incentive Plan.
Fixed Annual bonus LTIP vesting
Remuneration at a glance continued
Directors’ Remuneration report continued
Pay-out as a % of max
(both Executives)
FY24 Remuneration
(£000s)
Bonus:
82.1%
LTIP:
98.75%
Fixed Annual bonus LTIP vesting
Illustration of application of Remuneration Policy in FY25
(£000’s)
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Summary of the Executive Directors’
FY24 remuneration outcome
Summary of the Executive Directors’
FY25 remuneration framework
Directors’ Remuneration report continued
Alignment between executive and employee pay
Element of remuneration All employees Executive Directors
Salary
Pay review boundaries approved by the Committee Increases typically in line with average awarded
to wider workforce
Annual Bonus
Participants 9.2% of employees CEO and CFO
Opportunity Grade related (between 10%–100% of salary) 150% of salary
Measures Profit; average month end net debt; health & safety Profit; average month end net debt; health & safety;
personal objectives
Deferral Executive Committee: 25% of net bonus deferred for 3 years 33% of net bonus deferred for 3 years
(40% if share ownership guidelines not met)
LTIP
Participants Leadership and strategic senior managers CEO and CFO
Opportunity Grade related (between 25%–75% of salary) 175% of base salary
Measures EPS; shareholder return; cash flow; carbon emissions EPS; shareholder return; cash flow; carbon emissions
Performance Period 3 years 3 years
Holding Period n/a 2 years
Pension
7.5% of base salary 7.5% of base salary
All-employee plans
Sharesave Max: £6,000 p.a. (3 year saving period) Max: £6,000 p.a. (3 year saving period)
Share Incentive Plan Max: £1,800 p.a.
(Group funded matching shares provided on 1:2 basis)
Max: £1,800 p.a.
(Group funded matching shares provided on 1:2 basis)
Employee benefits
Benefits and support
are critical to the Group
attracting and retaining
a diverse, motivated
workforce
During FY24, the Group continued to review and improve employee policies, benefits and wellbeing initiatives. The outcome included enhancements to the service
recognition scheme, with awards available for five years of service and an increase to car allowances (excluding Executives). In addition, a workplace adjustments
policy was introduced to support employees returning to the business following, for example, periods of short-term illness and pregnancy.
In addition to the annual pay review, over 1,000 employees received an enhanced pay increase in January 2024 when the Real Living Wage increased by an average
of 7.3%.
All employees have the opportunity to participate in two tax-efficient share plans. During FY24, 1,500 employees participating in the Sharesave scheme which
launched in 2021 benefited from the increase in the Group’s share price over the last three years. Employees exercising their share options at the scheme’s maturity
in April 2024, made an average gain of £3,113.
Remuneration at a glance continued
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Annual report on remuneration
Directors’ remuneration for the 2024 financial year (audited)
The following table provides details of the Directors’ remuneration for the 2024 financial year, together with their remuneration for the 2023 financial year.
Fixed Pay Variable Pay Total
Salary/fee
(£000)
Taxable benefits
1
(£000)
Pension
2
(£000)
Total fixed pay
(£000)
Bonus
(£000)
LTIP vesting
(£000)
Total variable pay
(£000)
Total
(£000)
2024 2023 2024 2023 2024 2023 2024 2023 2024
3
2023 2024
4
2023
5
2024 2023
5
2024 2023
5
Executive Directors
Andrew Davies 773 750 15 15 58 56 846 821 965 855 1,942 658 2,907 1,513 3,753 2,334
Simon Kesterton 542 519 15 15 41 39 598 573 674 597 1,305 536 1,979 1,133 2,577 1,706
Non-Executive Directors
6
Alison Atkinson 69 69 – – – – 69 69 – – – – – 69 69
Justin Atkinson 69 69 – – – – 69 69 – – – – – 69 69
Chris Browne 57 48 – – – – 57 48 – – – – – – 57 48
Margaret Hassall 77 19 – – – – 77 19 – – – – – – 77 19
Matthew Lester 248 235 – – – – 248 235 – – – – – 248 235
Mohammed Saddiq
6
29 – – – – – 29 – – – – – – 29 –
Clive Watson 69 69 – – – – 69 69 – – – – – 69 69
Total 1,933 1,778 30 30 99 95 2,062 1,903 1,639 1,452 3,247 1,194 4,886 2,646 6,948 4,549
All figures in the above table have been rounded to the nearest £1,000.
1. Comprises private health insurance and a company car or a car allowance.
2. Comprises the payment of employer pension contributions and/or a cash allowance.
3. 33% of the total net bonus payment will be deferred into shares for three years.
4. The estimated value of the LTIP award that was granted in respect of the 2022–24 performance period is included in the table above, based on a share price of 137p (the three-month average share price for the period ending 30 June 2024).
The award will vest in October 2024 and the shares will then be subject to a two-year holding period. For Andrew Davies, £390,809 of the estimated value of the LTIP is attributable to share price growth and dividend equivalents of
£70,000 have been included. For Simon Kesterton, £262,561 of the estimated value of the LTIP is attributable to share price growth and dividend equivalents of £47,000 have been included.
5. The figures in these columns have been restated, compared to the estimated values included in the 2023 Annual Report, to reflect the Company’s share price on the vesting date for the 2020 LTIP award of 105p.
6. All the Non-Executive Directors were members of the Remuneration Committee for the 2024 financial year other than Mohammed Saddiq who joined the Board on 1 January 2024.
Notes to the Table
Pension entitlements (audited)
The Executive Directors are eligible to participate in the Kier Retirement Savings Plan, a defined contribution plan. The employer pension contributions are aligned with those made available
to the majority of the workforce. The contributions payable to the Executive Directors are subject to the annual allowance, with the balance being payable as a cash allowance. Cash allowances
are subject to tax and national insurance deductions and are excluded when determining annual bonus and long-term incentive arrangements.
The pension contributions paid on behalf of, and the cash allowances paid to, the Executive Directors in respect of the 2024 financial year were:
Director
Employer pension
contribution
Pension
contribution Cash allowance Total
Andrew Davies 7.5% of salary – £57,938 £57,938
Simon Kesterton 7.5% of salary – £40,629 £40,629
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Annual bonus – 2024 financial year (audited)
Details of the annual bonus target setting process are set out on page 114. Bonus outcomes for the Executive Directors in respect of the 2024 financial year were:
Financial performance (weighting: 80%)
Target Weighting Threshold
1
Target
1
Maximum
1
Actual
performance
Actual
performance as a
% of bonus
element
Group adjusted operating profit (‘AOP’)
2
40% £135.0m £141.9m £153.0m £149.2m 33.2%
Group average month end net debt 40% £(155.0)m £(135.0)m £(115.0)m £(116.1)m 38.9%
1. Bonus payment opportunity was 0% for threshold performance, 50% for target performance and 100% for maximum performance.
2. The AOP actual performance was reduced by £1m from £150.2m to reflect a deduction in respect of the impact on the targets from the acquisition of the rail assets from the Buckingham Group Contracting Limited. Please see below
for further information.
Health, Safety & Wellbeing (weighting: 10%)
Target Weighting Threshold Maximum
Actual
performance
Actual
performance as a
% of bonus
element
Reduction in the Group’s Accident Incident Rate (‘AIR’)
1
10% 84 79 155 0%
1. Bonus payment opportunity was 50% for threshold performance (a reduction of 5% on the FY23 AIR) and 100% for maximum performance (a reduction of 10% on the FY23 AIR). Further information is set out on page 111.
Personal objectives (weighting: 10%)
A maximum of 10% of the total bonus opportunity is related to the satisfaction of personal objectives as determined by the Committee. The Committee assessed performance against those
objectives as follows:
Strategic priority Summary of objectives set Summary of performance achieved Determination
Actual
performance as a
% of bonus
element
Andrew Davies
Simon Kesterton
Performance
Excellence
Roll-out and embed the culture programme
with employee engagement (positive emotions)
score of 67%.
Drive improvement via the balanced scorecard
which measures key metrics around people,
responsible business, customer and operational,
and commercial and financial performance.
The balanced scorecard is reviewed and
discussed by the Board on a quarterly basis.
Roll-out of culture programme completed and moving into sustain
phase. The employee survey that was focused on culture achieved
an employee engagement (positive emotions) score of 68%.
The weighted average score across all surveys undertaken
in FY24 was 67%.
The balanced scorecard for FY24 indicated improved
performance in the four key areas. Specific measures to support
the improvement in the metrics relating to people, responsible
business, customer and operational, and commercial financial
performance were:
– reduction in the voluntary attrition rate;
– increase in added social value (Thrive);
– increase in female representation;
– increase in customer satisfaction (‘NPS’); and
– digital adoption – use of Your Kier % increase.
Fully
Achieved
10%
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Total outcome of annual bonus
As referenced on page 111, the Committee considered the impact on the formulaic outcomes for both the AOP and average month end net debt targets from the acquisition of the rail assets
from the Buckingham Group Contracting Limited during the financial year. As a result, the Committee exercised its discretion to reduce the AOP achievement by £1m to £149.2m.
Director
Bonus payable as
% of opportunity
Maximum
opportunity as
% of salary
Bonus payable as
% of salary Total bonus
Andrew Davies 82.1% 150% 123.15% £965,188
Simon Kesterton 82.1% 150% 123.15% £674,390
In accordance with the approved Remuneration Policy, 33% of the net bonus payments will be deferred into shares which will be held for three years.
LTIP award – performance period ended 30 June 2024 (audited)
The three-year performance period for the LTIP award granted in 2021 ended on 30 June 2024. Achievement against the performance conditions for the LTIP award was as follows:
Performance Conditions Weighting Targets
Actual
performance
Level of vesting as
% of target
1
Level of vesting as
% of opportunity
Adjusted Earnings Per Share
2
50% 0% vesting if less than 17.7p
25% vesting if equal to 17.7p
100% vesting if 20.7p or above
Straight-line vesting between these points 20.6p 97.5% 48.75%
Total Shareholder Return vs FTSE 250
excluding investment trusts
25% 0% vesting for below median performance
25% vesting for at median
100% vesting for upper quartile or above
Straight-line vesting between these points
Above upper
quartile 100% 25%
Adjusted Free Cash Flow Conversion 25% 0% vesting if less than 68%
25% vesting if equal to 68%
100% vesting if 95% or above
Straight-line vesting between these points 123.3% 100% 25%
Total 98.75%
1. Expressed as a percentage of maximum opportunity.
2. For the financial year ended 30 June 2024.
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The vesting of these awards will result in the allocation of the following number of shares:
Director
Estimated
number of shares
due to vest
1,2
Value
3
Andrew Davies 1,417,833 £1,942,431
Simon Kesterton 952,556 £1,305,003
1. The vesting date is 28 October 2024.
2. Gross number of shares vesting including an estimate of the additional shares to be added at vesting from dividend equivalents. Following vest, the shares are subject to a mandatory two-year holding period.
3. The value of the shares has been calculated using the average share price for the three-month period ended 30 June 2024 which was 137p.
The Committee considered the grant price of the 2021 LTIP award (108.4p) in the context of the award price for the prior-year 2020 LTIP (78p) and the share price at the time of assessing the
vesting level, and was satisfied that no adjustments were required for windfall gains. The Committee was further satisfied that (i) the vast majority of the vest-date value of the 2021 LTIP award
was attributable to strong performance leading to a high vesting percentage, with only c.20% attributable to share price gain; (ii) the high vesting of the financial components of the award
indicated strong underlying company performance; and (iii) that the overall pay outcome for the CEO and CFO for the 2024 financial year was appropriate in the context of this strong
performance. A final assessment will be made at the vest date in October.
Share awards granted during the 2024 financial year (audited)
The following share awards were granted to those persons who, during the 2024 financial year, served as a Director:
Award
1
Basis of award Director Shares awarded Face value
2
Award for threshold
performance Performance period Vesting date Performance measures
LTIP Percentage of base
salary for the year
ended 30 June 2024
Andrew Davies 1,382,623 £1,371,562 25% 1 July 2023 –
30 June 2026
17 November 2026 The performance conditions are set out
on page 121.
Simon Kesterton 966,058 £958,330
Deferred
Shares
One-third of the net
bonus for the year
ended 30 June 2023
Andrew Davies 151,809 £151,050 n/a n/a 30 October 2026 n/a
Simon Kesterton 106,070 £105,540
1. The LTIP awards were granted as conditional awards, based on 175% of base salary. On vesting, the LTIP awards are subject to a two-year mandatory holding period. The deferred shares are Ordinary Shares with a holding period
of three years.
2. For the LTIP awards, the face value of the shares has been calculated using the average share price for the three-month period preceding the date of grant, which was 99.2p. For the deferred shares, the face value has been calculated
using the share price on 27 October 2023, which was 99.5p.
No persons who, during the 2024 financial year, served as a Director received awards under the Share Incentive Plan.
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LTIP 2023 Grant – Performance Conditions (audited)
The performance measures and targets for the LTIP awards that were granted during the 2024 financial year are set out in the table below. The performance period is three years and the
awards will, subject to the satisfaction of the performance conditions, vest on the third anniversary of the grant date (17 November 2026). In setting the EPS and FCF targets, the Committee
considered a range of internal and external reference points, including the Group’s operating and strategic plans, and analyst consensus to reflect market expectations. The targets were
aligned with the ambition set out in the Group’s medium-term value creation plan.
The EPS target represents a 9% (1.8p) increase at threshold and a 16% (3.6p) increase at maximum compared to the range set for the 2022 LTIP grant. The FCF target is a 9% (£10.3m)
increase at threshold and a 14% (£20.4m) increase at maximum compared to the range set for the 2022 LTIP grant.
The Committee has introduced a new performance condition related to the reduction in carbon emissions, based on the Group’s Scope 1 & 2 carbon emissions between the FY23 position
and the 2030 near-term net zero ambition (as validated by SBTi). This reflects the Group’s commitment to become net zero for business operations (Scope 1 & 2).
The Committee is satisfied that the performance targets represent the right balance between incentivising management and alignment with shareholder interests.
Performance Conditions Weighting Targets
1
Adjusted Earnings Per Share
2
40% 0% vesting for below 21.0p
25% vesting for 21.0p
100% vesting for 26.2p
TSR vs FTSE 250 excluding investment trusts 25% 0% vesting for below median
25% vesting at median
100% vesting for upper quartile
Adjusted Free Cash Flow
2
25% 0% vesting for below £130.4m
25% vesting for £130.4m
100% vesting for £163m
Reduction in Carbon Emissions
2,3
10% 0% vesting for above 27,625 tCO
2
e
25% vesting at 27,625 tCO
2
e
100% vesting for 26,171 tCO
2
e or below
1. Straight-line vesting between threshold (25% achievement) and maximum (100% achievement).
2. For the financial year ending 30 June 2026.
3. Measured over the period 1 April 2025–31 March 2026 to align with carbon reporting periods.
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Directors’ shareholdings and share interests (audited)
The Committee encourages the Executive Directors to build up a shareholding in the Company of at least two years’ base salary, to be accumulated over a period of up to five years.
Executive Directors are therefore encouraged to retain any shares allocated to them as part of the annual bonus arrangements, and upon the vesting of LTIP awards, until this shareholding
level has been reached. The Executive Directors are required to retain shares equal in value to 200% of base salary for a period of two years from the date on which employment is
terminated (or if the number of shares owned at such date is less than such value, the shares then owned).
The following table sets out details, as at 30 June 2024, of the shareholdings and share interests of those persons (together with, where relevant, the shareholdings and share interests of their
connected persons) who, during the 2024 financial year, served as a Director:
Shares held Options held
As at 30 June 2024
Owned outright
or vested
1
Vested but
subject to a
holding period
2
Unvested and
subject to
performance
conditions
3
Vested but not
exercised
Unvested and
subject to
continued
employment
4
Shareholding
guideline
(% of salary)
Current
shareholding
(% of salary)
5
Guideline met?
Alison Atkinson 10,738 – – – – n/a n/a n/a
Justin Atkinson 89,308 – – – – n/a n/a n/a
Chris Browne – – – – – n/a n/a n/a
Andrew Davies 159,275 1,369,307 4,886,741 – 13,625 200% 257% Yes
Margaret Hassall 18,234 – – – – n/a n/a n/a
Simon Kesterton 159,024 939,848 3,377,245 – 13,625 200% 265% Yes
Matthew Lester 149,821 – – – – n/a n/a n/a
Mohammed Saddiq – – – – – n/a n/a n/a
Clive Watson 83,219 – – – – n/a n/a n/a
1. Comprising shares held legally or beneficially by the relevant Director or their connected persons.
2. Comprising shares allocated following the vesting of LTIP awards (after the payment of tax) and subject to a holding period, and deferred shares allocated to the relevant Director in connection with annual bonuses.
3. Comprising unvested LTIP awards.
4. Comprising options under the Sharesave (SAYE) schemes. See pages 123 and 124.
5. Calculated by reference to (i) shares owned outright or vested by the Director or their connected persons, (ii) deferred shares allocated (on a net of tax basis) in connection with annual bonuses, (iii) shares allocated following vested
LTIP awards in the post-vesting holding period using the closing market price of a share in the capital of the Company on 28 June 2024 of £1.32 and (iv) the gross base salaries for the year ended 30 June 2024.
There have been no changes in the interests of the Directors (or their connected persons) in the Ordinary Shares in the capital of the Company since 30 June 2024.
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LTIP awards, Deferred Shares and Sharesave options (audited)
The table below summarises the LTIP awards, deferred shares and sharesave options held by the Executive Directors.
Andrew Davies
As at
30 June
2023
Awards granted
during the year
Awards vested
during the year
Awards lapsed
during the year
Awards exercised
during the year
Net shares
received after
income tax and
NIC deduction
As at
30 June
2024 Date of grant
1
Grant price at
date of award
2,3
Market price on
date awards
exercised
End of
performance
period
4
End of holding
period
5
LTIP
2020 1,154,816 – 1,154,816 527,751 627,065 332,344 – 18/12/2020 78.3p 105.0p 30 June 2023 18/12/2025
2021 1,383,763 – – – – – 1,383,763 28/10/2021 108.4p – 30 June 2024 28/10/2026
2022 2,120,355 – – – – 2,120,355 21/10/2022 61.9p – 30 June 2025 21/10/2027
2023 – 1,382,623 – – – – 1,382,623 17/11/2023 99.2p – 30 June 2026 17/11/2028
Deferred Bonus Shares
6
2021 109,092 – – – – – 109,092 29/10/2021 108.4p – – 29/10/2024
2022 309,808 – – – – – 309,808 31/10/2022 61.7p – – 31/10/2025
2023 – 151,809 – – – – 151,809 30/10/2023 99.5p – – 30/10/2026
Sharesave
7
2021 5,625 – – – – – 5,625 29/10/2021 96p – – –
2022 4,909 – – – – – 4,909 02/11/2022 55p – – –
2023 – 3,091 – – – – 3,091 31/10/2023 90p – – –
For notes see page 124.
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Simon Kesterton
As at
30 June
2023
Awards granted
during the year
Awards vested
during the year
Awards lapsed
during the year
Awards exercised
during the year
Net shares
received after
income tax and
NIC deduction
As at
30 June
2024 Date of Grant
1
Grant price at
date of award
2,3
Market price on
date awards
exercised
End of
Performance
Period
4
End of holding
period
5
LTIP
2020 940,350 – 940,350 429,740 510,610 270,623 – 18/12/2020 78.3p 105.0p 30 June 2023 18/12/2025
2021 929,667 – – – – – 929,667 28/10/2021 108.4p – 30 June 2024 28/10/2026
2022 1,481,520 – – – – – 1,481,520 21/10/2022 61.9p – 30 June 2025 21/10/2027
2023 – 966,058 – – – – 966,058 17/11/2023 99.2p – 30 June 2026 17/11/2028
Deferred Bonus Shares
6
2021 98,702 – – – – – 98,702 29/10/2021 108.4p – – 29/10/2024
2022 138,761 – – – – – 138,761 31/10/2022 61.7p – – 31/10/2025
2023 – 106,070 – – – – 106,070 30/10/2023 99.5p – – 30/10/2026
Sharesave
7
2021 5,625 – – – – – 5,625 29/10/2021 96p – – –
2022 4,909 – – – – – 4,909 02/11/2022 55p – – –
2023 – 3,091 – – – – 3,091 31/10/2023 90p – – –
1. The LTIP awards vest on the third anniversary of the date of grant and are subject to a two year post-vesting holding period.
2. For LTIP awards and deferred shares, this is the market price of a share from the business day immediately prior to the date of the award or exercise, other than for the LTIP 2023 award (see note 3 below). For Sharesave, it is the
exercise price.
3. The grant price for the LTIP 2023 award was the average share price for the three-month period immediately prior to the date of the grant.
4. See ‘LTIP Award – Performance Period ended 30 June 2024’ on page 119 for vesting outcome. The performance conditions for the LTIP 2022 and 2023 awards are set out on page 123 of the 2022 Annual Report and page 134 of the
2023 Annual Report.
5. For LTIP, the post-vesting holding period is two years. For deferred shares, the holding period is for three years subject to early release for ‘good leavers’ and upon a Change of Control (see Remuneration Policy for further information).
6. The amount of net bonus allocated as deferred shares was FY21: 33%, FY22: 50% (Andrew Davies) & 33% (Simon Kesterton) and FY23: 33%.
7. Assumes saving at the current rate for the three year savings period. The exercise period for each Award is six months commencing three years after date of grant.
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Total shareholder return
The graph below shows the value, at the end of each financial year, of £100 invested in shares
in the capital of the Company on 30 June 2014, compared with the value of £100 invested
in the FTSE 250 (excluding investment trusts). The FTSE 250 was chosen because it includes
companies of a similar size and complexity to the Group and is the comparator used for the
LTIP TSR performance target.
£175
£150
£125
£100
£75
£50
£25
£0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Kier FTSE 250 Excluding Investment Trust Index
CEO’s remuneration
The table below sets out the total remuneration of the CEO paid with respect to each financial
year indicated:
Year 2015 2016 2017 2018 2019
1
2019
1
2020
2
2021 2022 2023 2024
Chief Executive
Haydn
Mursell
Haydn
Mursell
Haydn
Mursell
Haydn
Mursell
Haydn
Mursell
Andrew
Davies
Andrew
Davies
Andrew
Davies
Andrew
Davies
Andrew
Davies
Andrew
Davies
Chief Executive
single figure
of remuneration
(£000)
3
£1,079 £1,311 £1,199 £1,459 £423 £140 £613 £1,323 £2,119 £2,334 3,753
Annual bonus
pay-out against
maximum
opportunity (%)
92 90 48 75 – – – 90 78.8 91.2 82.1
LTIP vesting
against
maximum
opportunity (%)
– 34 29 24 – – – – 75 54.3 98.75
1. Haydn Mursell stood down as Chief Executive on 22 January 2019 and Andrew Davies was appointed with effect
from 15 April 2019.
2. Includes the temporary reduction in base salary and employer pension contributions and/or a cash allowance
in response to COVID-19.
3. All figures are rounded to the nearest £1,000.
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Executive Directors’ external appointments
Andrew Davies is a non-executive director of Chemring plc and is entitled to retain the fees that he receives for this role.
Payments for loss of office (audited)
No payments were made for loss of office during the 2024 financial year.
Payments to past Directors (audited)
No payments were made to past Directors during the 2024 financial year.
Percentage change in Directors’ remuneration
The table shows the percentage change in base salary or fees, taxable benefits and annual bonus of each Director in the financial year indicated, compared to previous financial years,
together with the approximate comparative average figures for those employees who were eligible for salary reviews on 1 October of each year and who were not subject to collective agreements.
In respect of the 2024 financial year, this section of the employee population (comprising approximately 6,390 individuals across a number of levels) is considered to be the most appropriate
group for comparison purposes, as its remuneration is controlled by the Group and is subject to similar external market forces as those that relate to the Executives’ remuneration.
Approximately 940 employees are eligible to receive a bonus.
Base salary/fee
1,2
Taxable benefits
1
Annual bonus
3
2024 2023 2022 2021 2020 2024 2023 2022 2021 2020 2024 2023 2022 2021 2020
Executive Directors
Andrew Davies 4.5% 0% 26.1% 6.7% (6.2%) 0% 0% 7.1% 7.7% 8.3% 12.9% 15.7% 10.5% n/a –%
Simon Kesterton 4.5% 4% 3.5% 8.2% (6.3%) 0% 0% 7.1% 7.7% 8.3% 12.9% 20.4% (18.2)% n/a –%
Chairman
Matthew Lester
4
7.7% 0% 0% 4.9% (4.6%) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Non-Executive Directors
Alison Atkinson 0% 0% 8.1% –% –% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Justin Atkinson 0% 0% 8.1% 6.9% (6.5%) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Chris Browne 0% 0% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Margaret Hassall 0% 0% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Mohammed Saddiq 0% n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Clive Watson 0% 0% 8.1% 8.1% (6.5%) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Other employees
5,6
7.17% 7.12% 6.56% 4.73% 2.35% (9.21)% (8.0)% (6.6)% (0.57)% 11.35% 29% 48.7% 8.0% n/a –%
1. Base salary/fee and taxable benefits as shown in the table on page 117 and the 2023, 2022, 2021 and 2020 Annual Reports.
2. Calculated on an annualised basis where base salary/fee or taxable benefits paid for part of financial year.
3. ‘Other employees’ percentage change calculated for employees subject to Group bonus targets.
4. The Chairman’s fees increased in October 2023. The previous fee had been in place since his appointment in January 2020.
5. Includes relevant employees of subsidiaries of Kier Group plc as there are no employees other than the Executives in Kier Group plc.
6. The reduction in taxable benefits is primarily due to company cars with lower emissions.
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Pay ratio of CEO to average employee
The table below shows the ratio of the Chief Executive’s total remuneration using the information set out in the single total figure table, compared to the total remuneration of a lower quartile,
median and upper quartile employee of the UK workforce.
Year Methodology 25th percentile pay ratio Median pay ratio 75th percentile
2024 Option B 121:1 86:1 57:1
2023 Option B 77:1 52:1 34:1
2022 Option B 89:1 61:1 36:1
2021 Option B 50:1 36:1 22:1
2020 Option B 24:1 20:1 10:1
Further details of the remuneration of the CEO in the 2024 financial year and those individuals whose remuneration in the 2024 financial year was at the 25th percentile, median and 75th
percentile amongst UK-based employees are as follows:
CEO 25th percentile Median 75th percentile
Salary £772,500 £30,000 £42,190 £58,125
Total remuneration £3,752,574 £30,940 £43,563 £65,277
The median, lower and upper quartile figures used to determine the above ratios were calculated by reference to the full-time equivalent, annualised remuneration (as at 30 June 2024) of the
Group’s UK-based employees (comprising salary, benefits, pension, annual bonus and share-based and other incentives), based on the Group’s gender pay gap data at April 2024, to determine
‘best equivalents’ in accordance with Option B in the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended). The Committee selected this
calculation methodology as it was considered to be the most efficient method of calculating the pay ratio given it utilises pre-existing data available to Kier.
The CEO’s remuneration package is more heavily weighted to variable pay components than is the case for the general employee population (consistent with market practice), leading to
an increase in the ratio when bonus and LTIPs vest at high rates following strong performance, as is the case for FY24. The Committee considers that the median pay ratio for 2024 disclosed
in the above table in consistent with the pay, reward and the progression opportunities available to UK-based employees across the business.
Relative importance of spend on pay
The graph below shows the total employee remuneration and dividends paid between FY23 and FY24:
Total employee remuneration
(£m)
Dividend
(£m)
£735.3m
2024
2023
£648.0m
£22.4m
2024
2023
£0m
Employee remuneration is remuneration paid to or receivable by all employees of the Group and the dividends are those paid in the 2023 and 2024 financial years as stated in notes 8 and 11
to the 2024 consolidated financial statements on pages 170 and 177 respectively.
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Implementation of the Remuneration Policy in 2025
Remuneration Element Implementation in the 2024 Financial Year Implementation in the 2025 Financial Year
Executive Directors’
base salary
Andrew Davies: £783,750 (effective 1 November 2023)
Simon Kesterton: £547,617 (effective 1 October 2023)
With effect from 1 October 2024, salaries will be:
Andrew Davies: £813,141 (+3.75%)
Simon Kesterton: £568,153 (+3.75%)
The base salaries for the majority of the workforce are ordinarily reviewed in July with
any increase effective from 1 October. The wider workforce increase for FY25 is c.4%.
Annual bonus The maximum opportunity for the Executives was 150% of salary
(75% of salary at target).
The performance measures and their weighting as a percentage
of maximum opportunity were:
Group AOP: 40%
Average month end net debt: 40%
Group health and safety: 10%
Personal objectives: 10%
Group AOP and average month end net debt pay-out ranges were as follows
(as a percentage of maximum opportunity):
Threshold performance: 0%
On-target performance: 50%
Maximum performance: 100%
No change to award opportunity, measures or their weighting. The performance targets
are considered to be commercially sensitive and will be disclosed, on a retrospective basis,
in the 2025 Annual Report.
LTIP The LTIP awards made to the Executives were at 175% of salary.
The performance conditions (and respective weightings) and targets
for the LTIP awards are set out on page 121.
The performance period is three years and the awards will, subject to
the satisfaction of the performance conditions, vest on the third anniversary
of the grant date.
A two-year holding period will apply to any vested awards.
No change to the level of award, length of performance period and post-vesting holding period.
The performance conditions for the award will be:
Adjusted Earnings Per Share
1,2
(40% weighting)
0% vesting for below 22.4p
25% vesting for 22.4p
100% vesting for 27.1p
TSR outperformance
2,3
(25% weighting)
0% vesting for below median
25% vesting at median
100% vesting for upper quartile
Adjusted Free Cash Flow
1,2
(25% weighting)
0% vesting for below £135.8m
25% vesting for £135.8m
100% vesting for £169.8m or higher
Reduction in Carbon Emissions
2,4,5
(10% weighting)
0% vesting for above 26,804 tCO
2
e
25% vesting for 26,804 tCO
2
e
100% vesting for 25,394 tCO
2
e or below
Pensions The pension contributions or cash allowances payable on behalf of or to the
Executive Directors is 7.5% of salary. This is aligned with the pension benefit
available to the majority of the workforce.
No change
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Remuneration Element Implementation in the 2024 Financial Year Implementation in the 2025 Financial Year
Benefits The Executives receive private health insurance and either a company car
or a car allowance, which will be £13,900 per annum.
No change
All-employee
share plans
The Executives are entitled to participate in the all-employee share plans
on the same terms as all other eligible employees.
No change
Shareholding
requirements
200% of salary. The deferral allocation of any net bonus payment into shares
increases from 33% to 40% until the shareholding requirements are met.
Post-employment: the Executives are required to retain the lower of the
shares held at cessation of employment or shares to the value of 200%
of base salary for a period of two years.
No change
Non-Executive
Directors’ fees
With effect from 1 October 2023:
Chair of the Board £253,000
Base fee for Non-Executive £57,000
Additional Fees:
Chair of Environmental, Social and Governance Committee £12,000
Chair of Nomination Committee –
Chair of Remuneration Committee £20,000
Chair of Risk Management and Audit Committee £12,000
Senior Independent Director £12,000
With effect from 1 October 2024, the base fees will be increased by 3.75% which is aligned
with the increase for the Executive Directors:
Chair of the Board £262,488
Base fee for Non-Executive £59,138
Additional Fees:
Chair of Environmental, Social and Governance Committee £12,000
Chair of Nomination Committee –
Chair of Remuneration Committee £20,000
Chair of Risk Management and Audit Committee £12,000
Senior Independent Director £12,000
1. For the financial year ending 30 June 2027.
2. Straight-line vesting between threshold (25% achievement) and maximum (100% achievement).
3. The comparator group comprises FTSE 250 Index excluding investment trusts.
4. Kier’s ESG performance metrics are set out on page 56.
5. Measured over the period 1 April 2026–31 March 2027 to align with carbon reporting periods.
Annual evaluation
2024 evaluation
This year’s evaluation was externally facilitated by Clare Chalmers Limited as part of the Board evaluation. Details of this process are set out on page 94. The outcome of this evaluation
concluded that the Committee continues to be effective with papers shared earlier for discussion and improved metrics. To maintain effectiveness and ensure relevant stakeholder views
are being considered, the Committee will continue to engage with shareholders and management prior to determining and making a decision on executive remuneration matters.
Advisers
During the 2024 financial year, the Committee undertook a review of its advisers and following a selection process appointed Ellason LLP to replace Willis Towers Watson (‘WTW’) as its
independent adviser. Both Ellason and WTW are signatories of and adhere to the Code of Conduct for Remuneration Consultants which has been developed by the Remuneration Consultants
Group. There are no connections between Ellason or WTW and either the Company or any of the Directors. The Committee was satisfied that the advice it received from both Ellason and
WTW is objective and independent. During the year, fees paid to Ellason and WTW for advice to the Committee were £41,010 and £74,223 (excluding VAT) respectively. The fees were
charged on a time spent basis. During the year, WTW also provided rewards and benefits advice to the Group.
Annual report on remuneration continued
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Directors’ Remuneration report continued
Shareholder voting
The Directors’ Remuneration report and the Remuneration Policy were subject to shareholder votes at the 2023 AGM. The results of the vote on the resolutions were:
Directors’ Remuneration report
Votes for
1
Percentage votes for Votes against
2
Percentage votes against Votes withheld
267, 251, 80 5 99.69% 835,349 0.31% 82,147
1. Includes those votes for which discretion was given to the Chairman.
2. Does not include votes withheld.
Remuneration Policy
Votes for
1
Percentage votes for Votes against
2
Percentage votes against Votes withheld
158,612,472 61.40% 99,696,433 38.60% 9,860,396
1. Includes those votes for which discretion was given to the Chairman.
2. Does not include votes withheld.
The Board understood the sensitivities around the issue of executive remuneration and the Chair of the Committee has engaged directly with key investors. Please refer to the Chair’s
statement on pages 109 to 112 for more information.
How the Remuneration Policy aligns with the UK Corporate Governance Code 2018
The Policy is available at www.kier.co.uk. The Committee has determined the Policy in line with the UK Corporate Governance 2018 (the ‘2018 Code’) as set out below:
Principle Committee approach
Clarity Remuneration arrangements should be transparent and promote
effective engagement with shareholders and the workforce.
The Group’s remuneration arrangements are clearly communicated to shareholders through this Directors’
Remuneration report. The Board actively engages with shareholders and the Chair discussed the
arrangements with workforce representatives through the Group’s Reward & Employee Benefits Forum.
Simplicity Remuneration structures should avoid complexity and their rationale
and operation should be easy to understand.
The remuneration structures are straightforward with a small number of performance measures which
are tied to the Group’s strategy.
Risk Remuneration arrangements should ensure reputational and other
risks from excessive rewards, and behavioural risks that can arise
from target-based incentive plans, are identified and mitigated.
The reputational and other risks that may result from excessive rewards are clearly understood.
The Committee has the discretion to adjust annual bonus payments and vesting levels of LTIPs to address
this issue. Wide-ranging malus and clawback provisions apply to the incentives.
Predictability The range of possible values of rewards to individual directors and any
other limits or discretions should be identified and explained at the time
of approving the policy.
The Committee maintains caps on the maximum incentive opportunities as reflected in the Group’s
Remuneration Policy.
Proportionality The link between individual awards, the delivery of strategy and the
long-term performance of the Group should be clear. Outcomes should
not reward poor performance.
Discretion can be applied in relation to variable remuneration to ensure that rewards reflect the long-term
performance of the Group; and the performance measures attached to awards are carefully chosen.
Alignment
to culture
Incentive schemes should drive behaviours consistent with the Group’s
purpose, values and strategy.
The Committee reviews the incentive schemes to ensure alignment with the strategy and medium-term
value creation plan.
Compliance statement
This Directors’ Remuneration report complies with the Companies Act 2006, Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008
(as amended) and the Listing Rules of the Financial Conduct Authority and applies the main principles relating to remuneration which are set out in the 2018 Code.
Annual report on remuneration continued
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Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Introduction
The Company’s Remuneration Policy received shareholder approval at the AGM held in November 2023 and a summary of the key features is set out below. The full policy can be found
on pages 144 to 153 of the 2023 Annual Report.
Element and link to strategy Operation Opportunity Performance measures
Base salary
To attract and retain Executive
Directors of the calibre required
to deliver the Group’s strategy
Salaries are reviewed annually by reference to a number
of factors, including an individual’s experience, performance
and role within the Group, the external market (including
FTSE companies of a similar size and sector peers) and
any increase awarded to the wider employee population.
Any increase will typically be in line with those
awarded to the wider employee population.
The Committee has discretion to award higher
increases in circumstances that it considers
appropriate, such as a material change in the
complexity of the business or an individual’s
responsibility.
Details of salary changes will be disclosed
in the Annual Report.
Not applicable.
Benefits
To provide benefits which are
competitive with the market
Benefits are reviewed from time to time and typically include,
but are not limited to, a company car or car allowance,
private health insurance and life assurance.
Benefits are set at a level which the Committee
considers appropriate in light of the market and
an individual’s circumstances.
Not applicable.
Save As You Earn
(‘SAYE’) schemes
To encourage ownership
of the Company’s shares
One or more HMRC-approved schemes allowing all
employees, including Executive Directors, to save up to
the maximum limit specified by HMRC rules. Options are
granted at up to a 20% discount.
The maximum amount that may be saved
is the limit prescribed by HMRC (or such other
lower limit as determined by the Committee)
at the time employees are invited to participate
in a scheme. Typically, employees are invited
to participate on an annual basis.
Not applicable.
Share Incentive Plan
To encourage ownership
of the Company’s shares.
An HMRC-approved scheme which is open to all UK tax
resident employees of participating Group companies.
Executive Directors are eligible to participate.
The Company may match shares purchased with an
award of free shares. Matching shares may be forfeited
if employees leave within three years of their award,
in accordance with the SIP rules.
Participants can purchase shares up
to the prevailing limit approved by HMRC
(or such other lower limit as determined by
the Company) at the time they are invited
to participate.
The Company currently offers to match
purchases made through the plan at the rate of
one free share for every two shares purchased
but may increase this to the prevailing limit
approved by HMRC.
Not applicable.
Pension
To provide a retirement
benefit which is competitive
with the market
Executive Directors participate in a defined
contribution scheme.
The maximum employer contribution for the
Executive Directors is aligned with those made
available to the workforce, being, at the date
of this policy, 7.5% of pensionable salary.
Executive Directors may elect to receive
all or part of the employer contribution
as a taxable cash supplement.
Not applicable.
Directors’ Remuneration Policy
Directors’ Remuneration report continued
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Directors’ Remuneration report continued
Element and link to strategy Operation Opportunity Performance measures
Annual bonus
To reward the delivery of
short-term performance targets
and business strategy
The Company operates a discretionary bonus scheme.
Whether a bonus is awarded and the amount (if any)
of bonus awarded will be determined at the Committee’s
discretion.
The Committee may determine that it is appropriate to
adjust the bonus outcome taking into account such factors
it considers relevant, including but not limited to:
(i) the performance of the Company or of any member of
the Group; (ii) the conduct or performance of a participant;
and/or (iii) any circumstances or events which have
occurred in the year.
Payments under the bonus scheme are based on an
assessment of performance against targets over the year.
One-third of any net payment is satisfied by an allocation
of Kier Group plc shares, which is deferred for three years
(subject to early release for good leavers and upon a change
of control).
The proportion of the net payment to be allocated into Kier
Group plc shares is increased to 40% until the Executive
Director share ownership guideline is achieved.
Dividend payments accrue on deferred bonus shares over
the deferral period.
Malus and, in the case of the cash element of a bonus,
clawback will apply.
The maximum potential bonus for the
Executive Directors is 150% of base salary.
‘Threshold’ performance, for which an element
of bonus may become payable under each
component of the annual bonus, is set by
the Committee each financial year.
The level of bonus for achieving threshold
performance varies by performance target,
and may vary for a target from year to year,
to ensure that it is aligned with the Committee’s
assessment of the degree of difficulty (or
‘stretch’) in achieving it.
No payment is made for a performance
outcome below the threshold target. The
outcome for achieving on-target performance
would be 50% of maximum bonus opportunity.
The Committee determines the bonus targets
and their relative weightings each year.
The weighting towards non-financial targets
will be no higher than 20% of the maximum
potential bonus.
Actual bonus targets (and performance against
each of these targets), and any use by the
Committee of its discretion with respect to bonus
payments, will be disclosed in the Annual Report
immediately following the end of the relevant
performance period.
Directors’ Remuneration Policy continued
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Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Element and link to strategy Operation Opportunity Performance measures
LTIP awards
To reward the sustained strong
performance by the Group over
the longer term
Awards are granted annually and will typically vest, subject
to the achievement of performance conditions, on the third
anniversary of the date of grant. The performance period will
be no less than three years. A two-year post-vesting holding
period applies.
A malus provision applies to awards pre-vesting and a
clawback provision applies to the post-vesting holding period.
Dividend equivalents may apply to awards.
The awards are subject to the LTIP rules and the Committee
may adjust or amend the awards only in accordance with the
LTIP rules.
The LTIP rules permit the Committee to exercise its
discretion to modify any performance condition(s) when it
deems it fair and reasonable to do so. Any use of Committee
discretion with respect to modifying any performance
condition(s) will be disclosed in the relevant Annual Report.
The Committee may adjust the number of shares which
will vest if, in its discretion, it determines that it would be
appropriate to do so in order to override the formulaic
outcome of any performance condition, taking into account
such factors as it considers relevant, including but not limited
to: (i) the performance of the Company or of any member
of the Group; (ii) the conduct or performance of a participant;
and/or (iii) any circumstances or events which have occurred
since the award was granted.
The maximum award is 200% of base salary.
The Committee may grant awards of up
to the maximum permitted in exceptional
circumstances. It considers 175% to be the
normal annual grant level but shall reduce this
level where it considers it appropriate to do so.
On achieving the threshold performance level
for each element of the award, 25% of the
relevant element of the award will vest.
Vesting is on a straight-line basis between
threshold and maximum levels of performance.
Prior to granting an award, the Committee
sets performance conditions which it considers
to be appropriately stretching.
The performance conditions relating to
an award, and their respective weightings,
will be disclosed in the Annual Report
immediately following its grant.
Directors’ Remuneration Policy continued
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Kier Group plc Annual Report and Accounts 2024
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Non-Executive Director remuneration policy
General
The Non-Executive Directors’ remuneration (including that of the Chairman) reflects the anticipated time commitment to fulfil their duties. Non-Executive Directors do not receive bonuses, long-term
incentive awards, a pension or compensation on termination of their appointments. The policy on Non-Executive Directors’ remuneration is as follows:
Element and link to strategy Operation Opportunity Performance measures
Fees
To attract and retain
Non-Executive Directors
of the calibre required
and with appropriate skills
and experience
Fee levels are reviewed annually with reference to individual
experience, the external market and the expected time
commitment required of the Director.
Additional fees are payable to the Chairs of the Board’s
committees and to the Senior Independent Director.
Fees may be increased in line with the
outcome of the annual review and will not
normally exceed the increase awarded to the
wider employee population. Higher increases
may be awarded should there be a material
change to the requirements of the role,
such as additional time commitment.
Any changes to fees will be disclosed
in the annual report on remuneration
for the relevant year.
Not applicable.
Benefits
To reimburse Non-Executive
Directors for expenses
Reasonable and necessary expenses are reimbursed,
together with any tax due on them.
Expenses (including, without limitation, travel
and subsistence) incurred in connection with
Kier business and any tax payable thereon.
Not applicable.
Directors’ Remuneration Policy continued
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Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Directors’ report
Introduction
This Directors’ report and the Strategic report
on pages 1 to 84 (inclusive) together comprise
the ‘management report’ for the purposes
of Disclosure Guidance and Transparency
Rule 4.1.5R .
Information incorporated by reference
The information shown in table 1 opposite is
provided in other appropriate sections of this
Annual Report and the financial statements
and is incorporated into this Directors’ report
by reference.
Disclosures required under UK Listing
Rule 6.6.1R
Table 2 opposite sets out the location of
information required to be disclosed under
UK Listing Rule 6.6.1R, where applicable.
Results and dividends
The Group’s results and performance
highlights for the year are set out on pages
77 to 82. An interim dividend of 1.67p per
Ordinary Share of 1p each (‘Ordinary Share’)
in the capital of the Company (FY23: nil) was
paid on 31 May 2024. The Directors propose
a final dividend of 3.48p per Ordinary Share
(FY23: nil). Subject to approval at the 2024
Annual General Meeting (‘AGM’), the final
dividend will be paid on 29 November 2024
to shareholders on the register of members
at close of business on 25 October 2024.
Share capital
As at 30 June 2024, the issued share capital
of the Company consisted of 452,133,752
Ordinary Shares. During FY24, the Company
issued 5,819,317 Ordinary Shares in
connection with the exercise of options under
the Kier Group plc Sharesave Scheme 2016
(the ‘Scheme’) with an aggregate nominal
value of £58,193.17 (FY23: 72,753 Ordinary
Shares with an aggregate nominal value
of £727.53). Between 1 July 2024 and
10 September 2024, 488,694 Ordinary
Shares were issued in connection with
the exercise of options under the Scheme.
Further details of changes to the Ordinary
Shares issued and of options and awards
granted during the year are set out in the
Consolidated statement of changes in equity
and in note 25 to the consolidated financial
statements. The Company does not currently
hold any Ordinary Shares in Treasury.
Subject to the provisions of the articles
of association of the Company (the ‘Articles’)
and prevailing legislation, shares may be
issued with such rights or restrictions as
the Company may by ordinary resolution
determine or, if the Company has not so
determined, as the Directors may decide.
As authorised by shareholders at the 2023
AGM, the Company undertook a capital
reduction pursuant to section 641(1)(b)
of the Companies Act 2006, whereby the
Company’s share premium account of
£684.4m and capital redemption reserve
of £2.7m were cancelled in their entirety (the
‘Capital Reduction’). This was undertaken as
a housekeeping exercise in order to create
distributable reserves to support the potential
future payment by the Company of dividends
as well as future share buybacks, should
circumstances dictate it desirable to do so.
The Capital Reduction was effective on
22 December 2023.
1. Information incorporated by reference
Information Reported in Pages
Corporate governance Corporate governance
Statement of Directors’
responsibilities
85–134 (inclusive)
138
Directors Board of Directors
Directors’ shareholdings
and share interests
90–91 (inclusive)
122–124 (inclusive)
Employee engagement Built by Brilliant People™
Our key stakeholders
Engaging with our people
48–54 (inclusive)
66
96–97 (inclusive)
Employment of disabled persons Creating an environment to thrive 52
Engagement with suppliers,
customers and others
Our key stakeholders 65–67 (inclusive)
Financial instruments Consolidated financial statements
– note 27
195–199 (inclusive)
Going concern Financial review 82
Greenhouse gas emissions Energy and carbon reporting 56
Important events since the end
of the financial year
n/a n/a
Likely future developments Chief Executive’s review 7–14 (inclusive)
Results and dividends Financial review 77–82 (inclusive)
2. Disclosures required under UK Listing Rule 6.6.1R
Information required to be disclosed Page(s)
(1) Amount of interest capitalised n/a
(2) Publication of unaudited financial information n/a
(3) Long-term incentive schemes n/a
(4)–(10) Miscellaneous n/a
(11)–(12) Waiver of dividends 136
(13) Agreement with controlling shareholders n/a
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Strategic reportOverview Corporate governance Financial statements Other information
Directors’ report continued
3. Substantial holdings – section 793 information as at 30 August 2024
Shareholder Interest
Hargreaves Lansdown Asset Management 4.62%
Schroder Investment Management 4.36%
JO Hambro Capital Management 4.25%
abrdn (Standard Life) 3.89%
Columbia Threadneedle Investments (formerly BMO Global Asset Management) 3.30%
M&G Investments 3.19%
4. Substantial holdings – DTR disclosures as at 10 September 2024
Shareholder
1
Interest
2
abrdn plc 5.76%
Pendal Group Limited 5.04%
Brewin Dolphin Limited 5.01%
Charles Stanley Group plc 5.00%
BlackRock, Inc. 4.99%
M&G Plc 4.99%
Lombard Odier Asset Management (Europe) Limited 4.98%
Rathbone Investment Management Limited 4.93%
Schroders plc 4.93%
Jupiter Fund Management PLC 4.78%
Aviva plc 4.77%
Norges Bank 3.03%
1. The most recent notification received by the Company from Woodford Investment Management Limited (‘WIM’)
in July 2019 indicated a shareholding of 22,901,145 shares, which would represent 5.06% of the Company’s
issued share capital as at 10 September 2024. Although the Directors of the Company believe that the number
of shares held by WIM has decreased significantly since that time, as they understand that the funds managed
by WIM are in the process of being closed down, the Company has not received an updated notification of
change in shareholding pursuant to the Disclosure Guidance and Transparency Rules.
2. Subject to rounding.
Substantial holdings
The information in table 3 opposite has been
provided as at 30 August 2024 under requests
made to shareholders under section 793
of the Companies Act 2006. As such this
information is regarded by the Company
as providing an up-to-date representation
of our major shareholders’ interests.
In addition, we have included in table 4
opposite the interests in the share capital
of the Company which have been notified
to the Company as at 10 September 2024
under Rule 5.1 of the Disclosure Guidance
and Transparency Rules. The information
in table 4 is based on the latest notifications
that have been made to the Company by
the relevant shareholders; accordingly, it may
not accurately represent the actual interests
of the relevant shareholders in the share
capital of the Company.
Rights under employee share schemes
As at 30 June 2024, JTC Employer Solutions
Trustee Limited (‘JTC’), as the trustee of the
Kier Group 1999 Employee Benefit Trust,
owned 11,785,236 Ordinary Shares (2.61%
of the Company’s issued share capital at
that date). These shares are made available
to satisfy share-based awards granted to
senior management under the Group’s
remuneration arrangements and may be
used to satisfy the exercise of options granted
under all employee share plans. JTC does not
exercise any voting rights in respect of these
shares and waives any dividends payable.
In addition, as at 30 June 2024, JTC held
1,498,159 Ordinary Shares (0.33% of the
Company’s issued share capital at that date)
in a nominee capacity on behalf of senior
management in connection with the
Company’s deferred bonus arrangements.
JTC votes to the extent instructed by the
holders of the beneficial interests in these
shares (the ‘Beneficial Holders’) and
distributes any dividends received to the
Beneficial Holders.
As at 30 June 2024, Equiniti Limited (‘Equiniti’)
held 9,741,302 Ordinary Shares (2.15% of the
Company’s issued share capital at that date)
on trust for the benefit of members of the
Kier Group plc Share Incentive Plan. Equiniti
does not exercise any voting rights in respect
of the shares held by the trust (although
beneficiaries may authorise Equiniti to vote
in accordance with their instructions). Equiniti
distributes dividends received to beneficiaries
under the trust.
As at 30 June 2024, the trustee of the May
Gurney Integrated Services PLC Employee
Benefit Trust held 19,045 shares (0.004% of
the Company’s issued share capital at that
date). These shares are made available to
satisfy awards of shares under the Group’s
remuneration arrangements. The trustees
do not exercise any voting rights in respect
of shares held by its trust and waive dividends
payable with respect to such shares.
Restrictions on transfer of securities
in the Company
There are no restrictions on the transfer of
securities in the Company, other than those
that are set out in the Articles or apply as
a result of the operation of law or regulation.
The Company is not aware of any
agreements between holders of securities
that may result in restrictions on the transfer
of securities in the Company.
Securities carrying special rights
No person holds securities in the Company
carrying special rights with regard to control
of the Company.
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Strategic reportOverview Corporate governance Financial statements Other information
Restrictions on voting rights
No shareholder will, unless the Board
otherwise determines, be entitled to vote at any
general meeting if any calls or other sums then
payable by the shareholder in respect of that
share are unpaid or if that shareholder has
been served with a disenfranchisement notice.
The Company is not aware of any
agreements between holders of securities
that may result in restrictions on voting rights.
Appointment and replacement
of Directors
Directors may be appointed by the Company
by ordinary resolution or by the Board. A
Director appointed by the Board holds office
until the next AGM of the Company after his/
her appointment and is then eligible to stand
for election.
Each of the Directors will stand for election
or re-election by shareholders at the 2024
AGM. Further information about the Directors’
skills and experience can be found on
pages 90 and 91.
The Company may by ordinary resolution, of
which special notice has been given, remove
any Director before the expiry of the Director’s
period of office.
Directors’ insurance and indemnities
The Directors have the benefit of the
indemnity provisions contained in the Articles
and the Company maintains Directors’ and
officers’ liability insurance for the benefit
of the Directors and the Company’s officers.
The Company and Kier Limited have also
entered into qualifying third-party indemnity
arrangements in a form and scope which
comply with the Companies Act 2006.
Each of these arrangements remain in force
as at the date of this Annual Report.
Powers of the Directors
Subject to the Articles, applicable law and
any directions given by shareholders, the
Company’s business is managed by the
Board, which may exercise all the powers
of the Company.
Powers in relation to the Company
issuing its shares
The Directors were granted authority at the
2023 AGM to allot shares in the Company (i) up
to an aggregate nominal amount of £1,487,731
and (ii) up to an aggregate nominal amount of
£2,975,462 in connection with a rights issue.
The Directors were also granted authority to
allot shares (i) non-pre-emptively and wholly for
cash up to an aggregate nominal amount of
£446,319 and (ii) for the purposes of financing
an acquisition or other capital investment up
to a further nominal amount of £446,319.
In addition, at the 2023 AGM, the Directors
were granted authority in connection with
follow-on offers, up to a maximum amount of
£178,527. The concept of follow-on offers was
introduced by the latest institutional shareholder
guidelines, including the Pre-Emption Group’s
Statement of Principles which were updated
in November 2022 to help existing and retail
investors to participate in equity issues.
Powers in relation to the Company
buying back its shares
The Company was granted authority at the
2023 AGM to make market purchases of up
to 44,631,938 Ordinary Shares (representing
10% of its the Company’s issued shares as
at 21 September 2023) up until the earlier
of the conclusion of the 2024 AGM and close
of business on 31 December 2024. The
Directors had no intention at the time of the
2023 AGM of exercising the authority but
wished to have the flexibility to do so in
future. No Ordinary Shares were purchased
by the Company during the year.
The Company proposes to seek at the 2024
AGM renewal of its authority to make market
purchases of up to 10% of its issued shares
as at the latest practicable date prior to the
publication of the Notice of AGM. As in 2023,
the Directors have no present intention of
exercising this authority but wish to have
the flexibility to do so in the future.
Amendment of Articles
The Articles may be amended by a special
resolution of the Company’s shareholders.
Change of control
The Group’s senior borrowing facilities, being:
(i) a bank funded £260m revolving credit
facility, (ii) 2014 note purchase agreements
relating to the Group’s US private placements
of notes, and (iii) the £250m 2024 senior
notes each contain provisions under which,
in the event of a change of control of the
Company, the Company may be required
to repay all outstanding amounts borrowed.
Certain of the Group’s commercial
arrangements, including certain of its joint
venture agreements, contract bond agreements
and other commercial agreements entered
into in the ordinary course of business,
include change of control provisions.
Certain of the Group’s employee share
schemes or remuneration arrangements
contain provisions relating to a change of
control of the Company. Outstanding awards
or options may become exercisable or vest
upon a change of control.
There are no agreements between the
Company and the Directors providing for
compensation for loss of office that occurs
as a result of a takeover bid (other than those
referred to above).
Subsidiaries and branches
A list of the Group’s subsidiaries and the
branches through which the Group operates
are listed in note 31 to the consolidated
financial statements.
Political donations
The Company made no political donations
during the year (FY23: nil).
Research and development
The Group undertakes research and
development activities when providing
services to its clients. The total amount of
the direct expenditure incurred by the Group
when undertaking such activities is not
readily identifiable, as the investment is
typically included in the relevant project.
Auditors
The Board has decided that
PricewaterhouseCoopers LLP will
be proposed as the Group’s auditors for
the financial year ending 30 June 2025.
A resolution relating to this re-appointment
will be proposed at the forthcoming AGM.
AGM
The Company’s 2024 AGM is scheduled to
be held on 14 November 2024. Please see
the Notice of AGM for further information.
This Directors’ report was approved by the
Board and signed on its behalf by:
Jaime Tham
Company Secretary
11 September 2024
2nd Floor, Optimum House,
Clippers Quay, Salford M50 3XP
Directors’ report continued
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Strategic reportOverview Corporate governance Financial statements Other information
Statement of Directors’ responsibilities in respect of the financial statements
The Directors are responsible for preparing
the Annual Report and Accounts 2024 and
the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors
to prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group financial statements
in accordance with UK-adopted international
accounting standards and the Company
financial statements in accordance with United
Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting
Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’, and applicable law).
Under company law, Directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and Company and of the profit or loss of
the Group and Company for that period.
In preparing the financial statements,
the Directors are required to:
– select suitable accounting policies
and then apply them consistently;
– state whether applicable UK-adopted
international accounting standards have
been followed for the Group financial
statements and United Kingdom
Accounting Standards, comprising FRS
101 have been followed for the Company
financial statements, subject to any
material departures disclosed and
explained in the financial statements;
– make judgements and accounting estimates
that are reasonable and prudent; and
– prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and Company will continue in business.
The Directors are responsible for
safeguarding the assets of the Group and
Company and hence for taking reasonable
steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for
keeping adequate accounting records that
are sufficient to show and explain the Group’s
and Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Group and Company
and enable them to ensure that the financial
statements and the Directors’ Remuneration
report comply with the Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination
of financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual
Report and Accounts 2024, taken as a whole,
is fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Group’s and
Company’s position and performance,
business model and strategy.
Each of the Directors, whose names and
functions are listed in Governance section,
confirm that, to the best of their knowledge:
– the Group financial statements, which
have been prepared in accordance with
UK-adopted international accounting
standards, give a true and fair view of the
assets, liabilities, financial position and
profit of the Group;
– the Company financial statements, which
have been prepared in accordance with
United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair
view of the assets, liabilities, financial
position and profit of the Company; and
– the Strategic report includes a fair review
of the development and performance of the
business and the position of the Group and
Company, together with a description of
the principal risks and uncertainties that
it faces.
In the case of each Director in office at
the date the Directors’ report is approved:
– so far as the Director is aware, there is
no relevant audit information of which the
Group’s and Company’s auditors are
unaware; and
– they have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that the
Group’s and Company’s auditors are aware
of that information.
Andrew Davies
Chief Executive
11 September 2024
Simon Kesterton
Chief Financial
Officer
Directors’ report continued
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Strategic reportOverview Corporate governance Financial statements Other information
140 Independent auditors’ report to
the members of Kier Group plc
148 Consolidated income statement
149 Consolidated statement
of comprehensive income
150 Consolidated balance sheet
151 Consolidated statement
of changes in equity
152 Consolidated statement
of cash flows
153 Notes to the consolidated
financial statements
209 Company balance sheet
210 Company statement
of changes in equity
211 Notes to the Company
financial statements
Other information
215 Financial record
216 Glossary of alternative
performance measures
Financial
statements
Financial statements
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Independent auditors’ report to the members of Kier Group plc continued
Independent auditors’ report to the members of Kier Group plc
Report on the audit of
the financial statements
Opinion
In our opinion:
– Kier Group plc’s Group financial
statements and Company financial
statements (the ‘financial statements’)
give a true and fair view of the state of the
Group’s and of the Company’s affairs as
at 30 June 2024 and of the Group’s profit
and the Group’s cash flows for the year
then ended;
– the Group financial statements have
been properly prepared in accordance
with UK-adopted international accounting
standards as applied in accordance with
the provisions of the Companies Act 2006;
– the Company financial statements have
been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, including FRS 101
‘Reduced Disclosure Framework’, and
applicable law); and
– the financial statements have been prepared
in accordance with the requirements of
the Companies Act 2006.
We have audited the financial statements,
included within the Annual Report and
Accounts 2024 (the ‘Annual Report’), which
comprise: the Consolidated and Company
balance sheets as at 30 June 2024; the
Consolidated income statement, the
Consolidated statement of comprehensive
income, the Consolidated and Company
statements of changes in equity and the
Consolidated statement of cash flows for
the year then ended; and the notes to the
financial statements, comprising material
accounting policy information and other
explanatory information.
Our opinion is consistent with our reporting to
the Risk Management and Audit Committee.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK)
(‘ISAs (UK)’) and applicable law. Our
responsibilities under ISAs (UK) are further
described in the Auditors’ responsibilities for
the audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group
in accordance with the ethical requirements
that are relevant to our audit of the financial
statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to
listed entities, and we have fulfilled our other
ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we
declare that non-audit services prohibited by
the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 4,
we have provided no non-audit services to
the company or its controlled undertakings
in the period under audit.
Our audit approach
Overview
Audit scope
– The Group is primarily UK based and
we have conducted audit work across
all four of the Groups segments and
achieved coverage over 97% (2023: 98%)
of Group revenues.
Key audit matters
– Contract accounting (Group).
– Impairment of goodwill (Group).
– Carrying value of investment in Group
companies and recoverability of amounts
owed by subsidiaries (Company).
Materiality
– Overall Group materiality: £13.7m
(2023: £11.8m) based on 0.35%
of Group revenue.
– Overall Company materiality: £13.0m
(2023: £11.2m) based on 1% of total
assets limited by the application
of component materiality.
– Performance materiality: £10.2m
(2023: £8.9m) (Group) and £9.7m
(2023: £8.4m) (Company).
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in
the auditors’ professional judgement, were of
most significance in the audit of the financial
statements of the current period and include
the most significant assessed risks of material
misstatement (whether or not due to fraud)
identified by the auditors, including those
which had the greatest effect on: the overall
audit strategy; the allocation of resources
in the audit; and directing the efforts of the
engagement team. These matters, and any
comments we make on the results of our
procedures thereon, were addressed in the
context of our audit of the financial statements
as a whole, and in forming our opinion
thereon, and we do not provide a separate
opinion on these matters.
This is not a complete list of all risks identified
by our audit.
Presentation of the Group’s financial
performance, which was a key audit matter
last year, is no longer included because the
quantum and categories of adjusting items
recognised continues to decrease year on
year. Furthermore, no significant errors were
identified in the previous years, therefore we
have changed the risk assessment to normal
and removed this as a key audit matter in the
current year. Otherwise, the key audit matters
below are consistent with last year.
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Key audit matter How our audit addressed the key audit matter
Contract accounting (Group)
Refer to page 102 (Risk Management and Audit Committee report)
and page 163 (Accounting policy).
The Group has significant long-term contracts in its Infrastructure
Services and Construction businesses. The recognition of revenue in
relation to long-term contracts is in accordance with IFRS 15 where for
the majority of contracts revenue is recognised over time. Where this is
the case the measure of progress is based on the ‘input method’ which
is based on the stage of completion of contract activity. This is determined
based on the actual costs incurred to date compared to the estimated
forecast costs at completion. For other contract arrangements, including
for cost plus and schedule of rates contracts, revenue is recognised as
costs are incurred.
Contracts accounted for on a stage of completion basis involve estimation
uncertainty as management are required to accurately forecast the costs
to come for each project. They are also required to assess whether
revenue recognised to date is highly probable of not reversing. These
estimates include the determination of the expected recovery of costs
arising from, for example, variations to the contract requested by the
customer, compensation events and claims made both by and against
the Group for delays or other additional costs arising or projected to arise.
An error in the contract forecast could result in a material variance in the
amount of profit or loss (including for any onerous contracts) recognised
to date and, therefore, the current financial year.
The Group’s accounting policy is to recognise additional contractual
revenue from customers only when these amounts are considered highly
probable of having no significant reversal. Amounts receivable from third
party suppliers or insurers are recognised only when they are determined
to be virtually certain.
On the basis of the significant estimates, judgements and inherent
uncertainty involved in determining the appropriate revenue recognition
and associated profit, we have identified Contract Accounting as a Key
Audit Matter and are particularly focussed on the existence/occurrence
and accuracy of revenue recognition.
Our work focused primarily on those contracts with the greatest estimation uncertainty over the final contract values and,
therefore, profit or loss outcome. We selected a risk based sample of contracts for our testing, based on both quantitative
and qualitative risk criteria, including (for example):
– contracts with high levels of revenue recognised in the year;
– low margin or loss making contracts;
– contracts with significant work in progress balances and/or other balances sheet exposure; and
– contracts identified through our discussions with management, review of Board minutes, review of legal reports and review
of publicly available information.
Our audit procedures were then tailored according to the specific risk profile of each contract and included, but were not
limited to, the following procedures:
– Obtaining an understanding of the relevant contractual clauses and terms and conditions and agreeing forecast revenue
to signed contracts, signed variations, agreed compensation events or other corroborative and supporting documentation;
– Challenging management’s forecasts. In particular assessing the appropriateness of the key assumptions, which included
the expected recovery of variations, claims and compensation events from clients, to determine the basis on which
associated revenue was considered to be ‘highly probable’ of not reversing;
– Challenging those assumptions in respect of estimated recoveries (where relevant) from subcontractors, designers and
insurers included in the forecasts, to determine whether these could be considered ‘virtually certain’ of recoverability;
– Substantively tested a sample of actual costs incurred to date to ensure that these had been recorded accurately;
– Performing a margin analysis of the end of life forecasts (‘ELFs’) to assess the consistency of the performance of the
contract portfolios year-on-year;
– Inspecting correspondence and meeting minutes with customers concerning variations, claims and compensation events
and reviewing third party assessments of these from legal or technical experts contracted by the Group, where applicable
to assess whether this information was consistent with the estimates made;
– Reconciling revenue recognised with amounts certified by clients and agreeing on a sample basis to cash received;
– Agreeing forecast costs to complete to supporting evidence (such as orders signed with subcontractors, performing look
back testing and assessing the appropriateness of forecast run rates); and
– Attending certain contract review meetings virtually and inspecting minutes of meetings that considered value cost
reconciliations (‘VCRs’) in order to understand, but not rely upon, the controls operated by management.
For the residual contract population (the tail), we performed targeted risk based procedures including, for example,
testing costs to complete, material unagreed changes, reviewing the contract forecast for unusual items and recalculating
the percentage of completion.
For all contracts selected for testing we also assessed the impact of other identified risks including the impact of climate
change, the current economic environment and the associated impact on the forecast cost at completion.
Based on the evidence obtained from the above procedures we concluded on the appropriateness of the recognition
of contract revenues and profits/losses and of the amounts held as contract assets and liabilities. Given the degree
of estimation, we also reviewed the disclosures regarding significant judgements and estimates included in note 1
to the financial statements.
Independent auditors’ report to the members of Kier Group plc continued
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Independent auditors’ report to the members of Kier Group plc continued
Key audit matter How our audit addressed the key audit matter
Impairment of goodwill (Group)
Refer to page 102 (Risk Management and Audit Committee report)
and page 164 (Accounting policy).
The Group has £543.5m of goodwill on its balance sheet at 30 June 2024
of which £523.1m relates to the Infrastructure Services segment and
£20.4m relates to the Construction segment.
The audit of Infrastructure Services goodwill of £523.1m was
a focus area given the value of the Group’s assets in comparison
to its market capitalisation.
The carrying value of goodwill is required to be supported by the
recoverable value, the higher of value in use (through future cash flows)
or the fair value less cost to sell. The VIU model requires estimation of
projected future cash flows and a number of estimates including discount
rates, long-term growth rates and expected changes to revenue and
operating margins during the forecast periods. In making such future
assumptions, there is an inherent level of estimation uncertainty
to consider.
We determined there to be a significant audit risk that the carrying value
of goodwill allocated to Infrastructure Services may not be supportable
when compared to its recoverable amount. The headroom in the
Director’s assessment is £303.5m (2023: £166.3m).
In evaluating the Directors’ annual impairment assessment for goodwill in respect of Infrastructure Services, we performed
the following procedures:
– We tested the integrity of the Directors’ model and assessed the allocation of goodwill and acquired intangibles, and
considered the Directors’ conclusion that the significant majority of goodwill related to the Infrastructure Services segment
and that this represented the lowest level at which goodwill is monitored for internal management purposes;
– We evaluated the basis of allocation of corporate assets and central costs ensuring these were allocated on a reasonable
and consistent basis;
– We obtained the Board-approved three year forecasts which formed the basis of the model used in the Directors’
impairment calculation. We considered whether the planned growth rates and expected operating margins in the
impairment model were consistent with the Board-approved cash flows;
– We tested certain contracts in the Group’s order book to provide evidence of the associated revenue forecast in the cash
flow model;
– We challenged the Directors’ forecasts and compared future cash flow performance to historic levels, as well as to industry
forecasts as part of our assessment as to whether the planned performance was considered achievable;
– We challenged the assumption within the forecasts that the business’s cash flows would be earned into perpetuity,
including considering whether the impact of climate change posed a risk to the Group’s long-term operations and
associated impairment assessments;
– We tested the discount rate and long-term growth rate applied with the support of our internal valuation experts; and
– We sensitised key assumptions including, the short-term and long-term growth rates applied to revenue, forecast operating
profits and margins, the discount rate and established the impact of reasonably possible changes in these assumptions;
we then ensured, if relevant, that these sensitivities were appropriately disclosed in accordance with IAS 36, ‘Impairment
of assets’.
Based on the procedures performed, we were satisfied that no impairment of goodwill allocated to Infrastructure
Services was required, and that the associated disclosures included in the financial statements were appropriate.
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Key audit matter How our audit addressed the key audit matter
Carrying value of investments in Group companies and
recoverability of amounts owed by subsidiaries (Company)
Refer to page 102 (Risk Management and Audit Committee report)
and page 213 (Company notes to the financial statements).
The Company holds investments in subsidiaries of £455.5m
(2023: £446.2m), the largest of which is in Kier Limited of £454.2m
(2023: £445.0m) and net amounts owed by subsidiary undertakings
of £1,534.7m (2023: £1,469.4m).
IAS 36 ‘Impairment of assets’ requires management to consider whether
there are any indicators of impairment in respect of non-financial assets.
Due to the quantum of the carrying amount and the market capitalisation
of the Group this was an area of focus for the audit of the Company.
The Directors’ assessment of the carrying value of investments was that
no impairment was required. Similarly, all amounts owed by subsidiary
undertakings were assessed as being recoverable.
We reviewed the Directors’ impairment assessment of the carrying value of the investment in Kier Limited and net amounts
owed by subsidiary undertakings.
In respect of the investment in Kier Limited, we agreed the forecast cash flows used in this assessment to the forecasts used
in the assessment of impairment of goodwill and other intangible assets. We also considered wider market evidence and
possible contradictory views, for example current enterprise value, and cross checked to other listed companies in the sector.
Our work performed on those cash flows is set out in the Goodwill Key Audit Matter above.
We verified that the amounts owed by subsidiary undertakings were recoverable based on counterparty cash balances
and/or expected future cash flows.
As a result of these procedures, we were satisfied with the Directors’ conclusion that no impairment was required against
the carrying value of the investments in subsidiaries or the net amounts owed by subsidiary undertakings.
Independent auditors’ report to the members of Kier Group plc continued
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Independent auditors’ report to the members of Kier Group plc continued
How we tailored the audit scope
We tailored the scope of our audit to ensure
that we performed enough work to be able
to give an opinion on the financial statements
as a whole, taking into account the structure
of the Group and the Company, the accounting
processes and controls, and the industry in
which they operate.
The Group’s operations and reporting
processes are structured into four segments
represented by Infrastructure Services,
Construction, Property and Corporate.
The Group audit partner, supported by other
UK engagement leaders, led UK-based teams
responsible for the audit of each of these
segments. The four segments include a
number of statutory entities/reporting units
in the Groups’ consolidation, each of which
is considered to be a financial component.
Except for inconsequential revenue in
Kier International, the Group’s operations
are entirely within the UK. Our audit approach
was designed to obtain coverage over 97%
of the Group’s revenue. We are satisfied that
we obtained appropriate audit coverage over
the Group’s income statement, balance sheet
and cash flows through our audit work on the
UK and overseas operations.
The impact of climate risk on our audit
As part of our audit we made enquiries with
management to understand the extent of the
potential impact of climate change risk on the
Group’s financial statements. Management
concluded that there was no material impact
on the financial statements. Our evaluation
of this conclusion included challenging key
judgements and estimates in areas where we
considered that there was greatest potential
for climate change impact. We particularly
considered how climate change risks (and
opportunities) could impact the assumptions
made in areas such as goodwill impairment,
recoverability of contract assets (see key
audit matters above) and the valuation of
investment property. We also considered the
consistency of the disclosures in relation to
climate change in the other information within
the Annual report with that of the financial
statements and our knowledge from our audit.
Materiality
The scope of our audit was influenced by
our application of materiality. We set certain
quantitative thresholds for materiality. These,
together with qualitative considerations,
helped us to determine the scope of our audit
and the nature, timing and extent of our audit
procedures on the individual financial
statement line items and disclosures and in
evaluating the effect of misstatements, both
individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement,
we determined materiality for the financial
statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £13.7m (2023: £11.8m). £13.0m (2023: £11.2m).
How we determined it 0.35% of Group revenue 1% of total assets limited by the
application of component materiality
Rationale for
benchmark applied
We considered different
benchmarks based on a number
of profit measures and revenue,
taking into account the fluctuating
performance of the business
over the last few years and the
overall scale of the business.
This gave us a range within
which to determine materiality.
Based on our professional
judgement, we concluded
that an amount of £13.7m was
appropriate representing 0.35%
of the Group’s revenue
The Company primarily holds
intercompany receivables,
investments in subsidiaries and
debt. Accordingly we considered
that total assets is the primary
measure for shareholders when
assessing the financial statements
of the ultimate holding Company of
the Group.
For each component in the scope of our
Group audit, we allocated a materiality that
is less than our overall Group materiality.
The range of materiality allocated across
components was £0.8m and £13.0m. Certain
components were audited to a local statutory
audit materiality that was also less than our
overall Group materiality.
We use performance materiality to reduce to
an appropriately low level the probability that
the aggregate of uncorrected and undetected
misstatements exceeds overall materiality.
Specifically, we use performance materiality
in determining the scope of our audit and the
nature and extent of our testing of account
balances, classes of transactions and
disclosures, for example in determining sample
sizes. Our performance materiality was 75%
(2023: 75%) of overall materiality, amounting to
£10.2m (2023: £8.9m) for the Group financial
statements and £9.7m (2023: £8.4m) for the
Company financial statements.
In determining the performance materiality,
we considered a number of factors – the
history of misstatements, risk assessment
and aggregation risk and the effectiveness
of controls – and concluded that an amount
at the upper end of our normal range
was appropriate.
We agreed with the Risk Management
and Audit Committee that we would report to
them misstatements identified during our audit
above £0.6m (Group audit) (2023: £0.6m)
and £0.6m (Company audit) (2023: £0.6m)
as well as misstatements below those
amounts that, in our view, warranted
reporting for qualitative reasons.
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Strategic reportOverview Corporate governance Financial statements Other information
Conclusions relating to going concern
Our evaluation of the directors’ assessment
of the Group’s and the Company’s ability
to continue to adopt the going concern basis
of accounting included:
– Reviewing the Directors’ going concern
paper to ensure it was based upon the latest
Board approved forecasts and that the cash
flow assumptions were consistent with our
understanding of the outlook for the Group’s
businesses and the wider market;
– Testing, on a sample basis, significant
contracts in the Group’s pipeline to obtain
evidence in support of the revenue
forecasts in the going concern model;
– Performing sensitivity analysis over
management’s forecasts, including
with respect to the current interest rate
environment in order to determine whether
under severe but plausible scenarios the
Group’s peak debt could exceed its lending
limits and/or Group could breach covenant
limits. This included consideration as to
whether management has mitigating
actions available to it, within its control
to prevent such a situation occurring;
– Comparing the prior year forecasts against
actual performance to assess the Directors’
ability to forecast accurately;
– Inspecting new financing agreements
entered into during the year; and
– Reviewing the Directors’ covenant
calculations, covering the period from
30 June 2024 to 31 December 2025,
ensuring that the covenant thresholds
and definitions were consistent with
financing agreements.
Based on the work we have performed,
we have not identified any material
uncertainties relating to events or conditions
that, individually or collectively, may cast
significant doubt on the Group’s and the
Company’s ability to continue as a going
concern for a period of at least twelve months
from when the financial statements are
authorised for issue.
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate.
However, because not all future events or
conditions can be predicted, this conclusion
is not a guarantee as to the Group’s and
the Company’s ability to continue as a
going concern.
In relation to the directors’ reporting on
how they have applied the UK Corporate
Governance Code, we have nothing material
to add or draw attention to in relation to the
directors’ statement in the financial statements
about whether the directors considered it
appropriate to adopt the going concern basis
of accounting.
Our responsibilities and the responsibilities
of the directors with respect to going concern
are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the
information in the Annual Report other than
the financial statements and our auditors’
report thereon. The directors are responsible
for the other information. Our opinion on the
financial statements does not cover the other
information and, accordingly, we do not
express an audit opinion or, except to the
extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read the
other information and, in doing so, consider
whether the other information is materially
inconsistent with the financial statements
or our knowledge obtained in the audit,
or otherwise appears to be materially
misstated. If we identify an apparent material
inconsistency or material misstatement,
we are required to perform procedures
to conclude whether there is a material
misstatement of the financial statements or a
material misstatement of the other information.
If, based on the work we have performed, we
conclude that there is a material misstatement
of this other information, we are required to
report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic report and
Directors’ report, we also considered whether
the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course
of the audit, the Companies Act 2006 requires
us also to report certain opinions and matters
as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken
in the course of the audit, the information
given in the Strategic report and Directors’
report for the year ended 30 June 2024
is consistent with the financial statements
and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and understanding
of the Group and Company and their
environment obtained in the course of
the audit, we did not identify any material
misstatements in the Strategic report and
Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’
Remuneration report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review
the directors’ statements in relation to going
concern, longer-term viability and that part of
the corporate governance statement relating
to the Company’s compliance with the
provisions of the UK Corporate Governance
Code specified for our review. Our additional
responsibilities with respect to the corporate
governance statement as other information
are described in the Reporting on other
information section of this report.
Independent auditors’ report to the members of Kier Group plc continued
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Independent auditors’ report to the members of Kier Group plc continued
Based on the work undertaken as part
of our audit, we have concluded that each
of the following elements of the corporate
governance statement is materially consistent
with the financial statements and our
knowledge obtained during the audit, and we
have nothing material to add or draw attention
to in relation to:
– The directors’ confirmation that they
have carried out a robust assessment
of the emerging and principal risks;
– The disclosures in the Annual Report
that describe those principal risks,
what procedures are in place to identify
emerging risks and an explanation of how
these are being managed or mitigated;
– The directors’ statement in the financial
statements about whether they considered
it appropriate to adopt the going concern
basis of accounting in preparing them,
and their identification of any material
uncertainties to the Group’s and Company’s
ability to continue to do so over a period
of at least twelve months from the date
of approval of the financial statements;
– The directors’ explanation as to their
assessment of the Group’s and Company’s
prospects, the period this assessment covers
and why the period is appropriate; and
– The directors’ statement as to whether
they have a reasonable expectation that
the Company will be able to continue
in operation and meet its liabilities as they
fall due over the period of its assessment,
including any related disclosures drawing
attention to any necessary qualifications
or assumptions.
Our review of the directors’ statement
regarding the longer-term viability of the
Group and Company was substantially less
in scope than an audit and only consisted
of making inquiries and considering the
directors’ process supporting their statement;
checking that the statement is in alignment
with the relevant provisions of the UK
Corporate Governance Code; and
considering whether the statement is
consistent with the financial statements and
our knowledge and understanding of the
Group and Company and their environment
obtained in the course of the audit.
In addition, based on the work undertaken
as part of our audit, we have concluded that
each of the following elements of the
corporate governance statement is materially
consistent with the financial statements and
our knowledge obtained during the audit:
– The directors’ statement that they consider
the Annual Report, taken as a whole,
is fair, balanced and understandable,
and provides the information necessary
for the members to assess the Group’s
and Company’s position, performance,
business model and strategy;
– The section of the Annual Report that
describes the review of effectiveness
of risk management and internal control
systems; and
– The section of the Annual Report
describing the work of the Risk
Management and Audit Committee.
We have nothing to report in respect of our
responsibility to report when the directors’
statement relating to the Company’s
compliance with the Code does not properly
disclose a departure from a relevant provision
of the Code specified under the Listing Rules
for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the directors
for the financial statements
As explained more fully in the Statement
of directors’ responsibilities in respect of
the financial statements, the directors are
responsible for the preparation of the financial
statements in accordance with the applicable
framework and for being satisfied that they
give a true and fair view. The directors are
also responsible for such internal control as
they determine is necessary to enable the
preparation of financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the
Group’s and the Company’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 the Company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement
when it exists. Misstatements can arise from
fraud or error and are considered material if,
individually or in the aggregate, they could
reasonably be expected to influence the
economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances
of non-compliance with laws and regulations.
We design procedures in line with our
responsibilities, outlined above, to detect
material misstatements in respect of
irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the Group
and industry, we identified that the principal
risks of non-compliance with laws and
regulations related to UK pensions and
employment legislation, data protection
legislation, the Health and Safety Executive
legislation and equivalent local laws, Fire
Safety Act 2021, anti-bribery and corruption
legislation, environmental legislation,
construction laws and regulations applicable
to overseas operations, and we considered
the extent to which non-compliance might
have a material effect on the financial
statements. We also considered those laws
and regulations that have a direct impact on
the financial statements such as Companies
Act 2006, Listing Rules and tax legislation.
We evaluated management’s incentives
and opportunities for fraudulent manipulation
of the financial statements (including the risk
of override of controls), and determined that
the principal risks were related to posting
inappropriate journal entries and management
bias in accounting estimates, in particular
long-term contracting accounting estimates.
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Strategic reportOverview Corporate governance Financial statements Other information
The Group engagement team shared this
risk assessment with the component auditors
so that they could include appropriate audit
procedures in response to such risks in their
work. Audit procedures performed by the
Group engagement team and/or component
auditors included:
– Discussions with management, Internal
Audit and internal legal counsel, including
consideration of known or suspected
instances of non-compliance with laws
and regulation and fraud;
– Assessment of matters reported to
the Board, including those raised through
the Group’s whistleblowing helpline;
– Review of external press releases;
– Challenging assumptions and judgements
made by management in the estimates
involved in accounting for long term
contracts and where applicable, inspecting
correspondence with external advisors; and
– Identifying and testing journal entries in
particular any journal entries posted with
unusual account combinations.
There are inherent limitations in the audit
procedures described above. We are less
likely to become aware of instances of
non-compliance with laws and regulations
that are not closely related to events and
transactions reflected in the financial
statements. Also, the risk of not detecting
a material misstatement due to fraud is
higher than the risk of not detecting one
resulting from error, as fraud may involve
deliberate concealment by, for example,
forgery or intentional misrepresentations,
or through collusion.
Our audit testing might include testing
complete populations of certain transactions
and balances, possibly using data auditing
techniques. However, it typically involves
selecting a limited number of items for
testing, rather than testing complete
populations. We will often seek to target
particular items for testing based on their
size or risk characteristics. In other cases,
we will use audit sampling to enable us
to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for
the audit of the financial statements is located
on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been
prepared for and only for the Company’s
directors as a body in accordance with
Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not,
in giving these opinions, 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.
Other required reporting
Companies Act 2006
exception reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
– we have not obtained all the information and
explanations we require for our audit; or
– adequate accounting records have not been
kept by the Company, or returns adequate
for our audit have not been received from
branches not visited by us; or
– certain disclosures of directors’ remuneration
specified by law are not made; or
– the Company financial statements and the
part of the Directors’ Remuneration report
to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Appointment
Following the recommendation of the Risk
Management and Audit Committee, we were
appointed by the members on 24 September
2014 to audit the financial statements for the
year ended 30 June 2015 and subsequent
financial periods. The period of total
uninterrupted engagement is 10 years,
covering the years ended 30 June 2015
to 30 June 2024.
Other matter
The Company is required by the Financial
Conduct Authority Disclosure Guidance and
Transparency Rules to include these financial
statements in an annual financial report
prepared under the structured digital format
required by DTR 4.1.15R–4.1.18R and filed
on the National Storage Mechanism of the
Financial Conduct Authority. This auditors’
report provides no assurance over whether
the structured digital format annual financial
report has been prepared in accordance with
those requirements.
Darryl Phillips
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants
and Statutory Auditors
London
11 September 2024
Independent auditors’ report to the members of Kier Group plc continued
147www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
20242023
Note£m£m
Continuing operations
Group revenue including share of joint ventures
1
3
3,969.4
3,405.4
Less share of joint ventures
3
(64.3)
(24.7)
Group revenue
3,905.1
3,380.7
Cost of sales
(3,570.1)
(3,074.4)
Gross profit
335.0
306.3
Administrative expenses
(240.0)
(240.0)
Share of post-tax results of joint ventures
16
1.6
1.1
Other income
6
6.5
14.1
Operating profit
3,4
103.1
81.5
Finance income
7
9.2
9.4
Finance costs
7
(44.2)
(39.0)
Profit before tax
3
68.1
51.9
Taxation
10
(16.8)
(10.9)
Profit for the year from continuing operations
3
51.3
41.0
Discontinued operations
Loss for the year from discontinued operations
(attributable to equity holders of the Company)
3,5
(8.3)
–
Profit for the year
43.0
41.0
Attributable to:
Owners of the Company
42.7
41.1
Non-controlling interests
0.3
(0.1)
43.0
41.0
Consolidated income statement
For the year ended 30 June 2024
20242023
Note£m£m
Earnings/(losses) per share
Basic:
– Continuing operations
12
11.8p
9.5p
– Discontinued operations
12
(1.9)p
–
Total
9.9p
9.5p
Diluted:
– Continuing operations
12
11.3p
9.3p
– Discontinued operations
12
(1.8)p
–
Total
9.5p
9.3p
Supplementary information – continuing operations
Adjusted
2
operating profit
5
150.2
131.5
Adjusted
2
profit before tax
5
118.1
104.8
Adjusted
2
basic earnings per share
12
20.6p
19.2p
1. Group revenue including share of joint ventures is an alternative performance measure.
2. References to ‘adjusted’ exclude adjusting items, see note 5. These are alternative performance measures.
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Consolidated statement of comprehensive income
For the year ended 30 June 2024
20242023
Note£m£m
Profit for the year
43.0
41.0
Other comprehensive (loss)/income
Items that may be reclassified subsequently
to the income statement
Fair value movements on cash flow hedging instruments
(2.6)
2.1
Fair value movements on cash flow hedging instruments
recycled to the income statement
7
–
1.2
Deferred tax on fair value movements on cash flow
hedging instruments
0.9
(0.8)
Foreign exchange translation differences
(0.1)
0.3
Foreign exchange movements recycled
to the income statement
(9.2)
–
Items that will not be reclassified
to the income statement
Re-measurement of retirement benefit assets
and obligations
9
(36.5)
(107.8)
Tax on re-measurement of retirement benefit assets
and obligations
9.1
26.5
Other comprehensive loss for the year
(38.4)
(78.5)
Total comprehensive income/(loss) for the year
4.6
(37.5)
20242023
Note£m£m
Attributable to:
Equity holders of the Company
4.3
(37.4)
Non-controlling interests
0.3
(0.1)
4.6
(37.5)
Total comprehensive income/(loss) for the year attributable
to equity holders of the Company arises from:
Continuing operations
12.6
(37.4)
Discontinued operations
(8.3)
–
4.3
(37.4)
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2024
2023
1,2
Note£m£m
Non-current assets
Intangible assets
13
638.2
645.0
Property, plant and equipment
14
27.7
29.8
Right-of-use assets
22
95.0
105.4
Investment properties
15
104.9
98.4
Investments in and loans to joint ventures
16
91.7
78.6
Deferred tax assets
17
133.1
128.8
Contract assets
18
53.6
43.7
Trade and other receivables
19
28.5
24.8
Retirement benefit assets
9
105.0
129.3
Other financial assets
27
–
9.7
Non-current assets
1,277.7
1,293.5
Current assets
Inventories
20
74.0
72.9
Contract assets
18
304.5
358.2
Trade and other receivables
19
237.3
189.2
Corporation tax receivable
–
13.4
Other financial assets
27
7.1
1.0
Cash and cash equivalents
21
1,563.1
1,389.5
Current assets
2,186.0
2,024.2
Total assets
3,463.7
3,317.7
Current liabilities
Bank overdrafts
21
(1,101.4)
(1,012.6)
Borrowings
21
(58.8)
–
Lease liabilities
22
(42.2)
(36.2)
Trade and other payables
23
(1,109.8)
(1,075.0)
Contract liabilities
18
(128.4)
(90.5)
Provisions
24
(55.3)
(38.2)
Current liabilities
(2,495.9)
(2,252.5)
2024
2023
1,2
Note£m£m
Non-current liabilities
Borrowings
21
(242.0)
(319.1)
Lease liabilities
22
(130.9)
(146.4)
Trade and other payables
23
(28.4)
(36.9)
Retirement benefit obligations
9
(24.5)
(24.8)
Provisions
24
(21.9)
(25.0)
Non-current liabilities
(447.7)
(552.2)
Total liabilities
(2,943.6)
(2,804.7)
Net assets
3
520.1
513.0
Equity
Share capital
4.5
4.5
Share premium
3.2
684.3
Retained earnings/(accumulated losses)
162.1
(539.5)
Merger reserve
350.6
350.6
Other reserves
(0.2)
13.5
Equity attributable to owners of the Company
520.2
513.4
Non-controlling interests
(0.1)
(0.4)
Total equity
520.1
513.0
1. £1 ,012.6m has been re-presented in the comparative information from cash and cash equivalents to bank
overdrafts, as a result of a change in accounting policy (see note 1).
2. £6. 3m has been re-presented in the comparative information from capitalised mobilisation costs to trade and
other receivables in non-current assets. £2.7m capital redemption reserve, £1.6m cash flow hedge reserve and
£9. 2m translation reserve have been re-presented in the comparative information to other reserves within equity.
The financial statements of Kier Group plc, company registration number 2708030, on pages
148–214 were approved by the Board of Directors on 11 September 2024 and were signed
on its behalf by:
Andrew Davies Simon Kesterton
Chief Executive Chief Financial Officer
Consolidated balance sheet
As at 30 June 2024
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Strategic reportOverview Corporate governance Financial statements Other information
(Accumulated Equity
losses)/ attributable Non-
Shareretained Merger Other to owners of controlling
Share capital
1
premium
2
earnings
reserve
3
reserves
4
the Company interests Total equity
Note£m £m£m£m£m£m£m£m
At 1 July 2022
4.5
684.3
(494.9)
350.6
10.7
555.2
(0.6)
554.6
Profit/(loss) for the year
–
–
41.1
–
–
41.1
(0.1)
41.0
Other comprehensive (loss)/income
–
–
(81.3)
–
2.8
(78.5)
–
(78.5)
Total comprehensive (loss)/income for the year
–
–
(40.2)
–
2.8
(37.4)
(0.1)
(37.5)
Issue of own shares
–
–
–
–
–
–
0.3
0.3
Changes in ownership of subsidiary
–
–
(0.9)
–
–
(0.9)
–
(0.9)
Share-based payments
25
–
–
8.4
–
–
8.4
–
8.4
Purchase of own shares
25
–
–
(1 1.9)
–
–
(1 1.9)
–
(1 1.9)
At 30 June 2023
4.5
684.3
(539.5)
350.6
13.5
513.4
(0.4)
513.0
Profit for the year
–
–
42.7
–
–
42.7
0.3
43.0
Other comprehensive loss
–
–
(27.4)
–
(11.0)
(38.4)
–
(38.4)
Total comprehensive income/(loss) for the year
–
–
15.3
–
(11.0)
4.3
0.3
4.6
Dividends paid
11
–
–
(7.3)
–
–
(7.3)
–
(7.3)
Issue of own shares
–
3.3
–
–
–
3.3
–
3.3
Capital reduction
–
(684.4)
687.1
–
(2.7)
–
–
–
Share-based payments
25
–
–
9.3
–
–
9.3
–
9.3
Deferred tax on share-based payments
–
–
0.9
–
–
0.9
–
0.9
Purchase of own shares
25
–
–
(3.7)
–
–
(3.7)
–
(3.7)
At 30 June 2024
4.5
3.2
162.1
350.6
(0.2)
520.2
(0.1)
520.1
1. The share capital includes 452,133,752 of authorised, issued and fully paid ordinary shares of 1p each (2023: 446,314,435). The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company. During the year, 5,819,317 shares were issued under the Sharesave Scheme (2023: 72,753).
2. On 22 December 2023, the Company completed a capital reduction exercise, resulting in £6 8 4. 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.
Consolidated statement of changes in equity
For the year ended 30 June 2024
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2024 2023
Note£m£m
Cash flows from operating activities
Profit/(loss) before tax
– continuing operations
68.1
51.9
– discontinued operations
5
(9.1)
–
Net finance cost
7
35.0
29.6
Share of post-tax trading results of joint ventures
16
(1.6)
(1.1)
Pension cost charge
9
1.8
0.1
Equity-settled share-based payments charge
25
9.3
8.4
Amortisation of intangible assets
and mobilisation costs
13,19
33.8
33.9
Change in fair value of investment properties
15
(6.5)
(1 1.4)
Research and development expenditure credit
10
(28.3)
(22.8)
Depreciation of property, plant and equipment
14
8.3
6.1
Depreciation of right-of-use assets
22
39.0
43.7
Recycling of foreign exchange movements to the income
statement
(9.2)
–
Profit on disposal of property, plant and equipment and
intangible assets
4
(1.3)
(1.8)
Operating cash inflows before movements in
working capital and deficit contributions to pension
funds
139.3
136.6
Deficit contributions to pension funds
9
(8.6)
(9.9)
Increase in inventories
21
(1.1)
(18.8)
(Increase)/decrease in receivables
21
(20.3)
12.2
Decrease/(increase) in contract assets
18
43.8
(4.4)
Increase in payables
21
23.7
26.1
Increase in contract liabilities
18
37.9
23.2
Increase in provisions
21
8.1
15.2
Cash inflow from operating activities
222.8
180.2
Dividends received from joint ventures
16
6.7
1.8
Interest received
7
3.5
1.6
Income tax paid
10
(2.9)
(0.1)
Net cash inflow from operating activities
230.1
183.5
2024 2023
Note£m£m
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
1.8
2.6
Purchase of property, plant and equipment
14
(7.1)
(3.9)
Purchase of intangible assets
13
(9.5)
(2.7)
Purchase of capitalised mobilisation costs
(1.9)
(1.8)
Acquisition of assets
29
(9.4)
–
Investment in joint ventures
16
(23.8)
(35.7)
Acquisition of joint venture debt
16
–
(0.9)
Loan repayment and return of equity from joint ventures
16
5.6
17.1
Net cash used in investing activities
(44.3)
(25.3)
Cash flows from financing activities
Issue of shares
3.3
0.3
Purchase of own shares
25
(3.7)
(1 1.9)
Interest paid
(32.7)
(39.5)
Principal elements of lease payments
22
(40.6)
(45.6)
Drawdown of borrowings
21
247.5
56.8
Repayment of borrowings
21
(267.4)
(43.2)
Settlement of derivative financial instruments
–
4.7
Changes in ownership interests of subsidiaries
–
(0.9)
Dividends paid
11
(7.3)
–
Net cash used in financing activities
(100.9)
(79.3)
Increase in cash, cash equivalents and bank
overdrafts
84.9
78.9
Effect of change in foreign exchange rates
(0.1)
0.3
Opening cash, cash equivalents and bank overdrafts
376.9
297.7
Closing cash, cash equivalents and bank overdrafts
21
461.7
376.9
Consolidated statement of cash flows
For the year ended 30 June 2024
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Strategic reportOverview Corporate governance Financial statements Other information
1 Significant accounting policies
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 the registered office is 2nd Floor, Optimum House,
Clippers Quay, Salford, England, M50 3XP.
The consolidated financial statements of the Company for the year ended 30 June 2024
comprise the Company and its subsidiaries (together referred to as the Group) and the
Group’s interest in joint arrangements.
The consolidated financial statements were approved by the Directors on 11 September 2024.
Statement of compliance
The Group’s consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards effective for accounting periods beginning
on or after 1 July 2023 and with the requirements of the Companies Act 2006 as applicable
to companies reporting under those standards.
The Company has elected to prepare its parent company financial statements in accordance
with the FRS 101 ‘Reduced Disclosure Framework’. These are presented on pages 209–214.
Basis of preparation
The financial statements are presented in pounds sterling. They have been prepared on
the historical cost basis except for investment properties, defined benefit pension plans and
derivative financial instruments which are stated at their fair value, and the IFRS 2 share-based
payments charge which is based on the fair value of the options granted.
The following new standard and amendments to standards are effective for the financial year
ended 30 June 2024 onwards:
– IFRS 17 ‘Insurance contracts’
– Narrow-scope amendments to IAS 1, Practice statement 2 and IAS 8
– Amendments to IAS 12 ‘Income Taxes’ – Deferred tax related to assets and liabilities arising
from a single transaction
– Amendments to IAS 12 ‘Income Taxes’ – International tax reform (pillar two model rules)
IFRS 17 replaced IFRS 4, which permitted a wide variety of practices in accounting for
insurance contracts. IFRS 17 fundamentally changes the accounting by entities that issue
insurance contracts. The new standard has been applied for the first time by the Group in the
accounting year ended 30 June 2024. Whilst the Group does have its own captive insurance
company, Tempsford Insurance Company Limited, this company does not issue insurance
contracts to parties outside of the Group and therefore this arrangement has no impact on
the Group’s consolidated financial statements. The widely drawn definition of an insurance
contract means that a number of relatively common contracts entered into by non-insurers
may be considered to be insurance contracts, even if they are not typically thought of in those
terms. Some contracts that provide a service for a fixed fee can meet the definition of an
insurance contract, where the level of service provided depends on uncertain future events
(for example, reactive repair and maintenance services). However, the Group has reviewed
the application of IFRS 17 to its fixed fee service contracts and determined that there is no
material effect on the Group’s financial statements from adopting IFRS 17.
None of the above amendments to standards has had a material effect on the Group’s
financial statements for the current year nor is expected to do so for future periods.
The following new standards and amendments to standards have been issued but were
not yet effective and therefore have not been applied in these financial statements:
– IFRS 18 ‘Presentation and Disclosure in Financial Statements’
– IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’ (not yet UK endorsed)
– Amendments to IAS 1 ‘Presentation of Financial Statements’ on classification of
non-liabilities with covenants
– Amendments to IFRS 16 ‘Leases’ in relation to the lease liability in a sale and leaseback
– Amendments to IAS 7 & IFRS 7 regarding supplier finance arrangements
– Amendments to IAS 21 (not yet UK endorsed) regarding lack of foreign currency exchangeability
– Amendments to IFRS 9 and IFRS 7 (not yet UK endorsed) regarding the classification and
measurement of financial instruments
IFRS 18 sets out new requirements for the presentation and disclosure of information in the
financial statements and, subject to UK endorsement, will be effective for the first time in Kier’s
financial statements for the year ending 30 June 2028. The new standard will have an impact
on how information is reported, with a focus on the presentation of the income statement, and
could also change the extent of information disclosed in the notes to the financial statements.
IFRS 18 will not impact the recognition or measurement of items in the financial statements
and therefore won’t have an impact on Kier’s overall results; however it might change what
Kier reports as its ‘operating profit’.
Notes to the consolidated financial statements
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
IFRS 19 is only relevant to eligible subsidiary financial statements and as such will have
no impact on Kier’s Group financial statements or the individual financial statements of
Kier Group plc.
No significant net impact from the adoption of the above amendments to standards is
expected. The Group has chosen not to adopt any of the above standards or amendments
earlier than required.
Going concern
In determining the appropriate basis of preparation of the 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 31 December 2025.
In February 2024 the Group completed a refinancing of its principal debt facilities, issuing
a 5 Year £250m Senior Notes maturing February 2029; and an extension of its RCF, with
a committed facility of £150m to March 2027. With £400m of facilities, post January 2025,
the Group has lowered its facilities and secured significant committed funding to support its
long-term sustainable growth plan. As at 30 June 2024, the Group had £548.2m of unsecured
committed facilities and £18.0m of uncommitted overdrafts.
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 financial
statements. This assessment has involved the review of cash flow forecasts for the period
to 31 December 2025 for each of the Group’s divisions. The Directors have also considered
the strength of the Group’s order book which amounted to £10.8bn at 30 June 2024 and
will provide a pipeline of secured work over the going concern assessment period.
The Directors have considered a number of stressed 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.
Having reviewed the Group’s cash flow forecasts, the Directors consider that the Group
is expected to continue to have available liquidity headroom under its finance facilities and
operate within its financial covenants over the going concern period, including in a 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
financial statements and, for this reason, they continue to adopt the going concern basis in
preparing these financial statements.
Climate-related matters
As reported in the TCFD report (on pages 58 to 64) and the principal risks on page 75,
the Group assessed the risks and implemented policies in relation to climate-related matters.
In preparing these financial statements, the Directors have considered the impact of these
climate-related matters on the various estimates and assumptions used in the accounts,
particularly in the following areas: going concern and viability assessments; cash flow
forecasts used for impairment assessments of non-financial assets, including goodwill;
the useful economic lives of property, plant and equipment; and judgements in relation
to long-term contracts.
There has been no material impact on the financial statements for the current year in respect
of financial adjustments resulting from climate-related matters.
Change in accounting policy
In May 2024, the Company received a letter from the Financial Reporting Council (‘FRC’)
following its review of the Group’s FY23 Annual Report and Accounts.
Following completion of this review, which included correspondence with the FRC, the
Directors have concluded that separate presentation of subsidiary company bank overdrafts
and cash balances within the Consolidated Balance Sheet would be preferable. The Group
has therefore chosen to change its accounting policy in respect of offsetting of bank overdrafts
and has presented cash held in subsidiary company bank accounts separately from overdrawn
amounts in the Consolidated Balance Sheet with the prior year comparative balances
re-presented accordingly.
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1 Significant accounting policies continued
The Consolidated Balance Sheet at 30 June 2023 has been restated as follows:
As previously Impact of
reported restatement Restated
2023 2023 2023
£m £m £m
Current assets
Cash and cash equivalents
376.9
1,012.6
1,389.5
Current liabilities
Bank overdrafts
–
(1,012.6)
(1,012.6)
The restatement did not result in any change to reported profit, earnings per share, net assets
or cash flows reported for the year ended 30 June 2023.
The impact on the opening Consolidated Balance Sheet as at 1 July 2022 is as follows:
As previously Impact of
reported restatement Restated
2022 2022 2022
£m £m £m
Current assets
Cash and cash equivalents
297.7
1,248.7
1,546.4
Current liabilities
Bank overdrafts
–
(1,248.7)
(1,248.7)
Basis of consolidation
(a) Subsidiaries
The consolidated financial statements comprise the financial statements of the Company
and subsidiaries controlled by the Company drawn up to 30 June 2024. Control exists when
the Group has direct or indirect power to govern the financial and operating policies of an
entity so as to obtain economic benefits from its activities. Subsidiaries are included in the
consolidated financial statements from the date that control transfers to the Group until the
date that control ceases.
Business combinations are accounted for using the acquisition method as at the acquisition
date, which is the date on which control is transferred to the Group. Control is the power
to govern the financial and operating policies of an entity so as to obtain benefits from its
activities. In assessing control, the Group takes into consideration potential voting rights
that currently are exercisable.
If a business combination is achieved in stages, the acquisition date carrying value of the
acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the
acquisition date; any gains or losses arising from such remeasurements are recognised
in profit or loss.
The Group measures goodwill at the acquisition date as:
– The fair value of the consideration transferred; plus
– The recognised amount of any non-controlling interests in the acquiree; plus
– If the business combination is achieved in stages, the fair value of the existing equity
interest in the acquiree; less
– The net recognised amount (generally fair value) of the identifiable assets acquired
and liabilities assumed.
When the result is negative, a ‘bargain purchase’ gain is recognised immediately in the
income statement.
Provisional fair values allocated at a reporting date are finalised within 12 months of the
acquisition date.
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognised in the income statement.
Costs related to the acquisition, other than those associated with the issue of debt or equity
securities, that the Group incurs in connection with a business combination are expensed as
incurred. Any contingent consideration payable is recognised at fair value at the acquisition
date. Subsequent changes to the fair value of the contingent consideration are recognised
in the income statement unless the contingent consideration is classified as equity, in which
case settlement is accounted for within reserves.
Accounting policies of subsidiaries are adjusted where necessary to ensure consistency with
those used by the Group. All intra-Group transactions, balances, income and expenses are
eliminated on consolidation.
(b) Joint arrangements
A joint arrangement is a contractual arrangement whereby the Group undertakes an economic
activity that is subject to joint control with third parties.
The Group’s interests in joint ventures are accounted for using the equity method. Under
this method the Group’s share of the profits less losses of joint ventures is included in the
consolidated income statement and its interest in their net assets is included in investments
in the consolidated balance sheet. Where the share of losses exceeds the Group’s interest in
the entity and there is no obligation to fund these losses the carrying amount is reduced to nil,
following which no further losses are recognised. Interest in the entity is the carrying amount
of the investment together with any long-term interests that, in substance, form part of the net
investment in the entity.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
From time to time the Group undertakes contracts jointly with other parties. These fall under
the category of joint operations as defined by IFRS 11. In accordance with IFRS 11, the Group
accounts for its own share of sales, profits, assets, liabilities and cash flows measured
according to the terms of the agreements.
Foreign currencies
Transactions denominated in foreign currencies are recorded at the exchange rates in effect
when they take place. Resulting monetary foreign currency denominated assets and liabilities
are translated at the exchange rates ruling at the balance sheet date. Exchange differences
arising from foreign currency transactions are reflected in the income statement.
Items included in the financial statements of each of the Group’s subsidiaries are measured
using the currency of the primary economic environment in which each entity operates
(the functional currency). The consolidated financial statements are presented in GBP,
which is the Group’s presentation currency.
The assets and liabilities of overseas subsidiary undertakings are translated at the rate of
exchange ruling at the balance sheet date. Trading profits or losses are translated at average
rates prevailing during the accounting period. Differences on exchange arising from the
retranslation of net investments in overseas subsidiary undertakings at the year-end rates
are recognised in other comprehensive income. All other translation differences are reflected
in the income statement.
Revenue and profit recognition
Revenue comprises the fair value of the consideration received or receivable, net of value
added tax, rebates and discounts and after eliminating sales within the Group. It also includes
the Group’s proportion of work carried out under jointly controlled operations.
The general principles for revenue and profit recognition across the Group are as follows:
– Provision is made for any unavoidable future net losses arising from contract obligations,
as soon as they become apparent. These are accounted for under IAS 37 and are shown
as onerous contract provisions in note 24;
– Additional consideration for contract modifications (variations) is only included in revenue
(or the forecast contract out-turn) if the scope of the modification has been approved by the
customer. If the scope of the modification has been approved but the parties have not yet
determined the corresponding change in the contract price, an estimate of the change to
the transaction price is made and included in calculating revenue to the extent that it is
highly probable that a significant reversal of the amount in cumulative revenue recognised
will not occur;
– Contract modifications are treated as separate contracts if the scope of the contract
increases because of the addition of promised goods or services that are distinct, and
the price of the contract increases by an amount of consideration that reflects the Group’s
stand-alone selling prices of the additional promised goods or services and any appropriate
adjustments to that price to reflect the circumstances of the particular contract;
– Variable consideration amounts (gain-share amounts, KPI bonuses, milestone bonuses,
compensation event claims, etc.) are included in revenue (or forecasts to completion) only
to the extent that it is highly probable that a significant reversal of the amount in cumulative
revenue recognised will not occur;
– Refund liabilities (liquidated damages, pain-share amounts, KPI penalties, etc.) are
accounted for as a reduction in revenue (or in forecasting contract out-turns) as soon
as it is expected that the Group will be required to refund some or all of the consideration
it has received from the customer;
– Where revenue that has been recognised is subsequently determined not to be recoverable
due to the inability of a customer to meet its payment obligations, these amounts are
charged to administrative expenses as a credit loss;
– Claims against third parties (such as insurance recoveries and claims for cost
reimbursements) outside of normal supplier price adjustments are recognised only when
the realisation of income is virtually certain. The associated income is accounted for as
reduction in costs rather than revenue; and
– Contract mobilisation is not considered to be a separate performance obligation in most
situations, as the customer receives little or no benefit from mobilisation activities. Any
consideration received from the customer in relation to the mobilisation phase of a contract
is deferred and recognised as additional revenue relating to the performance obligations
in the contract that benefit the customer.
If the timing of payments agreed with the customer provides the Group or the customer with
a significant benefit of financing the transfer of goods or services, the amount of consideration
is adjusted for the effects of the time value of money. The Group does not make an adjustment
for the time value of money in the following circumstances:
– When the Group expects, at contract inception, that the period between the entity
transferring a good or service and the customer paying for it will be one year or less; or
– Where the timing of the payments is for commercial rather than financing reasons,
e.g. construction contract retentions, where the payment terms are to provide the customer
with protection from Kier failing to adequately complete some or all of its obligations under
the contract.
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Revenue and profit recognition policies applied to specific businesses are as follows:
(a) Construction contracts
Revenue is recognised on construction services over time as the benefit is transferred to the
customer. The Group uses an input method to measure progress. The percentage of completion
is measured using cost incurred to date as a proportion of the estimated full costs of completing
the contract and is applied to the total expected contract revenue to determine the revenue
to be recognised to date.
The assessment of the final outcome of each contract is determined by regular review
of the revenues and costs to complete that contract. Consistent contract review procedures
are in place in respect of contract forecasting.
(b) Services
Revenue and profit from services rendered, which include facilities management,
transportation network maintenance, utilities maintenance, street cleaning and recycling,
is recognised over time as the service is performed. Progress on capital works and
infrastructure renewal projects in the Transportation and Natural Resources, Nuclear &
Networks businesses is measured using costs incurred as a percentage of the estimated
full costs of completing the performance obligation.
Where the contract includes bundled services, and those services are distinct, the transaction
price is allocated to each performance obligation identified in the contract based on the
relative stand-alone selling prices of each of the performance obligations. Revenue is then
recognised independently when each of the performance obligations is satisfied.
If, as part of an overall service provision, the Group arranges for certain goods or services
to be provided to a customer by another party, without taking control over those goods or
services, the Group is considered to be acting as an agent in the provision of those goods
or services. It these circumstances, amounts received from the customer are netted off the
associated cost of the goods or services, with only the Group’s fee or commission element
recognised as revenue.
Any variable consideration (e.g. performance bonus) attributable to a single performance
obligation is allocated entirely to that performance obligation. Where variable consideration
is attributable to the entire contract and is not specific to part of the contract, the consideration
is allocated based on the stand-alone selling prices of each of the performance obligations
within the contract.
Service contracts are reviewed monthly to assess their future operational performance
and profitability.
(c) Property development
Revenue in respect of property developments is recorded on unconditional exchange
of contracts on disposal of finished developments. Profit taken is subject to any amounts
necessary to cover residual commitments relating to development performance.
Where developments are sold in advance of construction being completed, revenue and profit
are recognised at the point of sale, reflecting the transfer of control to the customer in its current
stage of completion. Thereafter, revenue for construction services provided to the customer
to complete the property is recognised over time in line with the percentage of completion,
consistent with the Group’s accounting policy for recognition of revenue on construction
contracts (see above).
Where consideration is paid in advance of the development’s construction phase at a price
less than market value, revenue is recognised on a discounted basis to reflect a financing
component of the transaction. This revenue and forward funded interest unwinds as the
construction takes place.
(d) Private Finance Initiative (‘PFI’) service concession agreements
Revenue relating to construction or upgrade services under a service concession agreement
is recognised based on the stage of completion of the work performed, consistent with the
Group’s accounting policy on recognising revenue on construction contracts (see above).
Operation or service revenue is recognised in the period in which the services were provided
by the Group. When the Group provides more than one service in a service concession
agreement, the consideration received is allocated by reference to the relative stand-alone
selling prices of the services delivered.
Pre-contract and contract mobilisation costs
Pre-contract costs to obtain a contract that would have been incurred irrespective of whether
the contract was obtained are recognised as an expense when incurred, unless those costs
are explicitly chargeable to the customer irrespective of whether the contract is obtained.
Mobilisation costs incurred in respect of a specific contract that has been won or an anticipated
contract that is expected to be won (e.g. when the Group has secured preferred bidder status)
are carried forward in the balance sheet as capitalised mobilisation costs if: the costs
generate or enhance resources of the Group that will be used in satisfying (or in continuing
to satisfy) performance obligations in the future; and the costs are expected to be recovered
(i.e. the contract is expected to be sufficiently profitable to cover the mobilisation costs).
The vast majority of contracts incurring significant mobilisation costs are contracts that exceed
12 months in duration. The Group’s policy is therefore to show its capitalised mobilisation
costs as a non-current asset, amortised over the expected contract duration.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
Warranties and rectification costs
The Group does not offer extended insurance-type warranties at an additional cost to
the customer (which would represent separate performance obligations). Standard industry
assurance-type warranties are provided and are accounted for as rectification cost provisions
based on the estimated costs of making good any latent defects.
Alternative performance measures
IAS 1 permits an entity to present additional information for specific items to enable users
to better assess the entity’s financial performance. The Directors have considered the
requirements of applicable accounting standards, along with additional guidance around
alternative performance measures (‘APMs’) and believe it is appropriate to inform users
regarding various items and disclose those items which are deemed one-off, material or
non-recurring in size or nature, in alignment with the Group’s internal management reporting.
As such, the Group is disclosing as supplementary information an ‘Adjusted profit’ APM which
is reconciled to statutory profit in the notes to the financial statements and is consistent with
IFRS 8 segmental reporting.
Separate presentation of these items is intended to enhance understanding of the financial
performance of the Group in the particular year under review and the extent to which results
are influenced by material unusual and/or non-recurring items. The Directors review segmental
results under an adjusted items basis to analyse the performance of operating segments.
The Directors exercise judgement in determining the classification of certain items as adjusting
using quantitative and qualitative factors. In assessing whether an item is an adjusting item, the
Directors give consideration, both individually and collectively, as to an item’s size, the specific
circumstances which have led to the item arising and if the item is likely to recur, or whether
the matter forms part of a group of similar items.
Amortisation of acquired intangible assets and certain financing costs are also included
as adjusting items on the basis of being ongoing non-cash items generated from
acquisition-related activity.
A full reconciliation from statutory numbers to adjusted profit measures has been presented
in note 5.
The Group presents revenue including share of joint ventures as an alternative performance
measure. The Directors believe this is a useful measure as it provides visibility over the scale
of the Group’s operations, particularly within its Property business where a significant
proportion of developments are set up in joint ventures.
The Group also presents cash outflow from adjusting items, free cash flow and net cash/debt
as alternative performance measures. The Directors consider that these provide useful
information about the Group’s liquidity and debt profile.
A glossary of alternative performance measures is included on page 216.
Finance income and costs
Interest receivable and payable on bank balances is credited or charged to the income
statement as incurred using the effective interest rate method. In the cash flow statement,
interest received is presented within operating cash flows and interest paid is presented
within cash flows from financing activities.
Borrowing costs are capitalised where the Group constructs qualifying assets. All other
borrowing costs are written off to the income statement as incurred.
Borrowing costs incurred within the Group’s jointly controlled entities relating to the
construction of assets in PFI and PPP projects are capitalised until the relevant assets
are brought into operational use.
Notional interest payable, representing the unwinding of the discount on long-term liabilities,
is charged to finance costs.
Taxation
Income tax comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided using the balance sheet method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The deferred tax provision is based on the expected
manner of realisation or settlement of the carrying amount of the assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised
or where offsetting temporary differences are not available.
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Deferred tax assets and liabilities are offset where there is a legally enforceable right to
offset current tax assets and liabilities and where the deferred tax balances relate to the same
taxation authority. Current tax assets and liabilities are offset where the entities have a legally
enforceable right to offset and intend to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
The Group participates in the UK Government’s Research and Development Expenditure
Credit (‘RDEC’) tax incentive scheme. Credits receivable under the RDEC scheme are
recognised within operating profit and are treated as taxable income. Amounts receivable
in respect of RDEC claims are included on the balance sheet within other receivables.
Goodwill and other intangible assets
Goodwill arising on consolidation represents the excess of the consideration over the Group’s
interest in the fair value of the identifiable assets and liabilities of a subsidiary.
Goodwill is recognised as an asset and reviewed for impairment at least annually. Any
impairment is recognised immediately in the income statement and is not subsequently
reversed. Negative goodwill is recognised in the income statement immediately. On disposal
of a subsidiary or jointly controlled entity, the attributable carrying amount of goodwill is
included in the determination of the profit or loss on disposal.
Other intangible assets which comprise contract rights and computer software are stated
at cost less accumulated amortisation and impairment losses. Amortisation is charged to
administrative expenses in the income statement on a straight-line basis over the expected
useful lives of the assets, which are principally as follows:
Contract rights Over the remaining contract life
Computer software 3–10 years
Internally generated intangible assets developed by the Group are recognised only if all
of the following conditions are met:
– An asset is created that can be identified;
– It is probable that the asset created will generate future economic benefits; and
– The development cost of the asset can be measured reliably.
Other research expenditure is written off in the period in which it is incurred.
Software as a service
Costs incurred relating to software as a service (‘SaaS’) that provide future benefit to the
Group are included within prepayments and written off over the period to which they relate.
All other costs in respect of SaaS are expensed to the income statement as incurred.
Property, plant and equipment and depreciation
The cost of an acquired asset comprises the purchase price, any directly attributable costs
and the estimated costs of dismantling and removing the item at the end of its life. Depreciation
is based on historical or deemed cost, including expenditure that is directly attributable to the
acquisition of the items, less the estimated residual value, and the estimated economic lives of
the assets concerned. Freehold land is not depreciated. Other tangible assets are depreciated
to residual values in equal annual instalments over the period of their estimated economic
lives, which are principally as follows:
Land and buildings 25–50 years or period of lease
Plant and equipment 3–12 years
Leases
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease liabilities include the net present value of the following lease payments:
– Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
– Variable lease payments that are based on an index or a rate, initially measured using the
index or rate as at the commencement date;
– Amounts expected to be payable by the Group under residual value guarantees;
– The exercise price of a purchase option if the Group is reasonably certain to exercise
that option; and
– Payments of penalties for terminating the lease, if the lease term reflects the Group
exercising that option.
Lease payments to be made under reasonably certain extension options are also included
in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate
cannot be readily determined, which is generally the case for leases in the Group, the lessee’s
incremental borrowing rate is used, being the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in
a similar economic environment with similar terms, security and conditions.
Most Group companies do not have any recent independent third-party financing to use
as a starting point for the incremental borrowing rate. Therefore, the Group uses a build-up
approach that starts with a risk-free interest rate adjusted for credit risk, lease term, country,
currency and security.
The Group is exposed to potential future increases in variable lease payments based on an
index or rate, which are not included in the lease liability until they take effect. When adjustments
to lease payments based on an index or rate take effect, the lease liability is reassessed and
adjusted against the right-of-use asset.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
Lease payments are allocated between principal and finance cost. The finance cost is
charged to profit or loss over the lease period so as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
– The amount of the initial measurement of lease liability;
– Any lease payments made at or before the commencement date less any lease
incentives received;
– Any initial direct costs; and
– Any restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the
lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying asset’s useful life.
The Group has elected to use the following recognition exemptions, as permitted by the standard:
– Leases of low-value items – The Group has defined low-value items as assets that have a
value when new of less than c.£5,000. Low-value items comprise IT equipment and small
items of plant.
– Short-term leases – Leases with a lease term of less than 12 months at inception.
For leases in the above categories, a lease liability or right-of-use asset is not recognised.
Instead, the Group recognises the related lease payments as an expense on a straight-line
basis over the lease term.
Contracts may contain both lease and non-lease components. The Group allocates the
consideration in the contract to the lease and non-lease components based on their relative
stand-alone prices.
Leased properties that meet the definition of investment properties are presented within
‘investment properties’ rather than ‘right-of-use assets’ on the balance sheet.
The Group enters into lease agreements as a lessor with respect to its investment properties.
Leases for which the Group is a lessor are classified as finance or operating leases.
Whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All other leases are classified as
operating leases.
When the Group is an intermediate lessor, it accounts for the head lease and the sub-lease
as two separate contracts. The sub-lease is classified as a finance or operating lease by
reference to the right-of-use asset arising from the head lease.
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised on a straight-line basis over
the lease term.
Amounts due from lessees under finance leases are recognised as receivables at the amount
of the Group’s net investment in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the Group’s net investment
outstanding in respect of the leases. Finance lease income is calculated with reference to the
gross carrying amount of the lease receivables, except for credit-impaired financial assets for
which interest income is calculated with reference to their amortised cost (i.e. after a deduction
of the loss allowance).
When a contract includes both lease and non-lease components, the Group applies IFRS 15
to allocate the consideration under the contract to each component.
Investment properties
Investment properties are held for the purpose of earning rentals and/or for capital
appreciation and are not occupied by the Group. Investment properties are measured using
the fair value model. Gains and losses arising from a change in the fair value of investment
properties are recognised in the income statement in the period in which they arise.
Rental income and costs in respect of investment properties are included within administrative
expenses and are disclosed in note 15(b). Where the investment property has come about
through vacating corporate offices following the restructure of the Group’s property portfolio,
amounts in the income statement are treated as adjusting items.
Inventories
Inventories, including land held for and in the course of development, are valued at the lower
of cost and net realisable value. Cost comprises direct materials and, where appropriate,
labour and production overheads which have been incurred in bringing the inventories and
work in progress to their present location and condition. Cost in certain circumstances also
includes notional interest as explained in the accounting policy for finance income and costs.
Net realisable value represents the estimated selling price less all estimated costs of
completion and costs to be incurred in marketing, selling and distribution.
Inventories are valued on a first in, first out (‘FIFO’) basis.
Land inventory is recognised at the time a commitment to purchase the land is made,
generally at exchange of unconditional contracts.
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Property inventory, which represents all development land and work in progress, is included
at cost less any losses foreseen in completing and disposing of the development less any
amounts received or receivable as progress payments or part disposals. Where a property is
being developed, cost includes cost of acquisition and development to date, including directly
attributable fees, expenses and finance charges net of rental or other income attributable to
the development. Where development property is not being actively developed, net rental
income and finance costs are taken to the income statement.
Contract assets and liabilities
When the Group transfers goods or services to a customer before the customer pays
consideration or before payment is due, the amount of revenue associated with the transfer of
goods or services is accrued and presented as a contract asset in the balance sheet (excluding
any amounts presented as a receivable). A contract asset represents the Group’s right to
consideration in exchange for goods or services that the Group has transferred to a customer.
Contract assets are reduced by appropriate allowances for expected credit losses calculated
using the simplified approach (as with trade receivables).
If a customer pays consideration, or the Group has a right to an amount of consideration that
is unconditional (i.e. a receivable), before the Group transfers a good or service to the customer,
the amount is presented as a contract liability on the balance sheet. A contract liability
represents the Group’s obligation to transfer goods or services to a customer for which the
entity has received consideration (or an amount of consideration is due) from the customer.
Given the varied activities of the Group, it is not practicable to identify a common operating
cycle. The Group has therefore allocated contract assets and liabilities due within 12 months
of the balance sheet date to current with the remainder included in non-current.
Assets held for sale
Assets classified as held for sale are measured at the lower of their carrying amount and
fair value less costs to sell. Assets are classified as held for sale if their carrying amount will
be recovered through a sale transaction rather than through continuing use. This condition
is regarded as met only when the sale is highly probable, and the assets are available for sale
in their present condition.
Share capital
The ordinary share capital of the Company is recorded as the proceeds received, net of directly
attributable incremental issue costs.
Merger reserve
Where equity raises are effected through a structure which is eligible for merger relief under
section 612 of the Companies Act 2006, the Group transfers the excess of the net proceeds
over the nominal value of the share capital issued to the merger reserve.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation
as a result of a past event, and where it is probable that an outflow will be required to settle
the obligation and the amount can be reliably estimated.
Contingent liabilities
The Group discloses a contingent liability in circumstances where it has a possible obligation
depending on whether some uncertain future event occurs, or has a present obligation but
payment is not probable, or the amount cannot be measured reliably.
Government grants
Government grants are recognised in profit or loss on a systematic basis over the periods
in which the entity recognises expenses for the related costs for which the grants are intended
to compensate. A grant is only recognised when there is reasonable assurance that the Group
will comply with the conditions attached to it, and that the grant will be received.
Employee benefits
(a) Retirement benefit obligations
For defined contribution pension schemes operated by the Group, amounts payable are
charged to the income statement as they fall due.
The Group accounts for defined benefit obligations in accordance with IAS 19. Obligations
are measured at discounted present value while plan assets are measured at fair value.
The operating and financing costs of such plans are recognised separately in the income
statement; current service costs are spread systematically over the lives of employees and
financing costs are recognised in full in the period in which they arise. Remeasurements of
the net defined pension surplus or liability, including actuarial gains and losses, are recognised
immediately in other comprehensive income.
The net finance income or cost is calculated by applying the discount rate to the net balance
of the defined benefit obligation and the fair value of plan assets. This income or cost is
included in finance income or finance costs in the income statement.
Where the calculations result in a surplus to the Group, the recognised asset is limited to the
present value of any available future refunds from the plan or reductions in future contributions
to the plan that the Group has the unconditional right to realise.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
(b) Share-based payments
Share-based payments granted but not vested in relation to the Sharesave and Long-Term
Incentive Plan (‘LTIP’) schemes are valued at the fair value of the awards at the date of grant.
The fair values of options under these schemes are calculated using the Black-Scholes model
apart from the total shareholder return element of the LTIP which is based on a Stochastic
model. Awards that are subject to a post-vesting holding period are valued using the Finnerty
model. The cost of each scheme is based on the fair value of the options spread on a
straight-line basis over the relevant vesting period.
Shares purchased and held in trust in connection with the Group’s share schemes are
deducted from retained earnings. No gain or loss is recognised within the income statement
on the market value of these shares compared with the original cost.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s balance sheet when
the Group becomes a party to the contractual provisions of the instrument. An assessment
of whether a financial asset is impaired is made at least at each reporting date. The principal
financial assets and liabilities of the Group are as follows:
(a) Trade receivables and trade payables
Given the varied activities of the Group it is not practicable to identify a common operating
cycle. The Group has therefore allocated receivables and payables due within 12 months
of the balance sheet date to current with the remainder included in non-current.
A trade receivable is recognised when the Group has a right to consideration that is
unconditional (subject only to the passage of time before payment is due). Trade receivables
do not carry interest and are stated at their initial cost reduced by appropriate allowances
for expected credit losses.
The Group applies the simplified approach to measurement of expected credit losses
in respect of trade receivables, which requires expected lifetime losses to be recognised
from initial recognition of the receivables.
Trade payables on normal terms are not interest-bearing and are stated at their nominal value.
Trade payables on extended terms, particularly in respect of land purchases, are discounted
and recorded at their present value.
(b) Cash and cash equivalents
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand,
including bank deposits with original maturities of three months or less.
(c) Bank overdrafts and other borrowings
Bank overdrafts, interest-bearing bank and other borrowings are recorded at the fair value
of the proceeds received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on an accruals
basis in the income statement using the effective interest method and are added to the
carrying value of the instrument to the extent that they are not settled in the period in which
they arise.
(d) Derivative financial instruments
Derivatives are initially recognised at fair value on the date that the contract is entered into
and subsequently remeasured in future periods at their fair value. The method of recognising
the resulting change in fair value depends on whether the derivative is designated as a
hedging instrument and whether the hedging relationship is effective.
For cash flow hedges, the effective portion of changes in the fair value of these derivatives is
recognised in the cash flow hedge reserve within equity. Any ineffective portion is recognised
immediately in the income statement. Amounts accumulated in equity are recycled to the
income statement in the periods when the hedged items will affect profit or loss. If the hedging
instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or
exercised, the hedge accounting is discontinued prospectively. The cumulative gain or loss
previously recognised in equity remains there until the forecast transaction occurs. When the
forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity are immediately reclassified to profit or loss.
The Group enters into forward contracts in order to hedge against transactional foreign
currency and interest rate exposures. In cases where these derivative instruments are
significant, hedge accounting is applied as described above. Where hedge accounting is not
applied, changes in fair value of derivatives are recognised in the income statement. The fair
values of derivative instruments have been derived from proprietary models used by the bank
counterparties using mid-market mark to market valuations for trades at the close of business
on the balance sheet date.
Critical accounting judgements and estimates
The following are the critical judgements and estimates that the Directors have made in
the process of applying the Group’s accounting policies and that have a significant effect
on the amounts recognised in the financial statements:
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(a) Revenue and profit recognition (judgement and estimate)
The estimation techniques used for revenue and profit recognition in respect of property
development, construction contracts and services contracts require forecasts to be made of
the outcome of long-term contracts which require assessments and judgements to be made
on the recovery of pre-contract costs, changes in the scope of work, programme of works,
maintenance and defect obligations and changes in costs. The estimates and judgements
in respect of construction contracts are considered to be critical.
There are a small number of contracts that the Group considers require significant
accounting estimates and, as at 30 June 2024, the Group has included estimated recoveries
from customers and other third parties with a combined value of £67.9m (2023: £74.0m).
These recoveries are recognised in line with the Group’s stated accounting policies.
However, estimation uncertainty exists and there are a number of factors which will affect the
final outcome once these contracts are finalised. The Group estimates that the final outcome
on these contracts could collectively range from an upside of £28.5m (2023: £82.8m) to a
downside, including the risk of counterclaims being levied against the Group, of £20.6m
(2023: £47.0m).
Over 400 construction contracts (2023: over 400) were income generating during the year
within the Group’s Construction and Infrastructure Services operating divisions. Of these,
three (2023: three) individually had a material impact on operating profit.
The key judgements and estimates relating to determining the revenue and profit of material
contracts are:
– costs to complete;
– achieving the planned build programme; and
– recoverability of claims and variations in accordance with IFRS 15.
Each contract is treated on its merit and is subject to a regular review of the revenue and
costs to complete that contract, determined by a combination of management judgement and
external professional assistance, backed up by accounting position papers for the contracts
that have a material impact on the income statement.
The level of estimation uncertainty in the Group’s Construction business is reduced by the
effect of its substantial portfolio and significant experience of the division’s management team.
The level of estimation is further reduced by the combination of the modest scale and short
contract durations of the majority of the Group’s projects. Nevertheless, the profit recognition
in the Construction business is a critical estimate, due to the inherent uncertainties in any
construction project over revenues and costs.
The level of estimation and uncertainty varies across each project within Regional Build and
Strategic Projects. Regional Build operates around 300 sites (2023: 300) each year with an
average project size of £19.3m (2023: £15.8m) and with average revenue in the year of £5.9m
(2023: £4.4m). These projects typically operate under framework contracts where costs are
known with a greater degree of certainty. Natural Resources, Nuclear & Networks (‘NRNN’)
manages around 30 sites with projects ranging from a relatively small number of higher value
major Infrastructure civil engineering projects to a larger number of more modest minor
signalling upgrades and replacements.
The major infrastructure civil engineering projects typically include two stage Design and
Build, Construct only and Target Cost contracts. The nature and length of these contracts
means there can be a greater level of estimation and uncertainty. The blended portfolio risk
of the overall construction businesses is mitigated by the relative sizes of the Regional Build,
Strategic Projects and NRNN businesses.
Construction revenue for the year was £1.9bn (2023: £1.7bn) with an associated adjusted
operating profit margin of 3.6% (2023: 4.2%).
The historic profit margins in the construction businesses typically range from 3.2% to 4.2%.
A potential downside risk in margin would be 0.4% (2023: 1.0%). Given the short-term average
duration of the construction portfolio, the impact of such a decrease in margin across projects
in delivery at the year-end would be a decrease in operating profit of £7.7m (2023: £16.5m).
In addition, the Group has a number of ongoing contracts where lifecycle funds are
established to meet contractual obligations. At the 30 June 2024 the carrying value of these
non-current contract assets was £53.6m (2023: £43.7m). The key sensitivity in the calculation
is the percentage of the funds build-up required for future maintenance. A reasonably likely
change would be an increase or decrease of 10% in the percentage of funds build-up required.
Such a change would result in a profit impact of approximately £3.7m in any one year.
(b) Defined benefit pension scheme valuations (estimate)
In determining the valuation of defined benefit pension scheme assets and liabilities, a number
of key assumptions have been made. The key assumptions, which are given below, are largely
dependent on factors outside the control of the Group:
– expected return on plan assets;
– inflation rate;
– mortality;
– discount rate; and
– salary and pension increases.
Details of the assumptions used and sensitivity to changes in these assumptions are included
in note 9.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
1 Significant accounting policies continued
(c) Goodwill (estimate)
Determining whether goodwill is impaired requires an estimation of the value in use of cash
generating units (‘CGUs’) to which the goodwill has been allocated. The value in use calculation
requires an estimate to be made of the timing and amount of future cash flows expected to
arise from the CGU and the application of a suitable discount rate in order to calculate the net
present value. Cash flow forecasts for the next three years are based on the Group’s budgets
and forecasts. Other key inputs in assessing each CGU are revenue growth, operating
margin, discount rate and terminal growth rate. The assumptions are set out in note 13
together with an assessment of the impact of reasonably possible sensitivities.
In undertaking the assessment, the potential net impact of climate change on the forecasts
has been considered. At present, it has been concluded that it will not be significant.
(d) Adjusting items (judgement)
Adjusting items are items of financial performance which the Group believes should be
separately presented to assist in understanding the financial performance achieved by the
Group in accordance with the accounting policy set out on page 158. Determining whether
an item is classified as an adjusting item requires judgement.
Total adjusting items of £50.0m were charged to the income statement in respect of continuing
operations for the year ended 30 June 2024 (2023: £52.9m). The items that comprise this are
set out in note 5 together with an explanation of their nature and consideration points as to
why the Directors have treated these as adjusting items.
(e) Taxation (judgement and estimate)
The Group is predominantly UK-based and all entities are subject to UK tax regulations.
Deferred tax liabilities are generally provided for in full and deferred tax assets are recognised
to the extent that it is judged probable that future taxable profit will arise against which the
temporary differences will be utilised. In particular, the Group has exercised judgement in
recognising a deferred tax asset of £106.8m (2023: £106.2m) in respect of tax losses.
The key judgements in assessing the recoverability of the deferred tax asset relate to the
taxable profit forecasts. These forecasts are based on the same Board-approved information
used to support the going concern and goodwill impairment assessments. The critical
judgements related to these forecasts are the same as those described in the goodwill section
of this note. In assessing the recoverability, the Group has considered various sensitivities
regarding future profitability, those of which are also disclosed within the goodwill section
of this note.
The basis for recognising this tax asset is set out in note 17 together with the period in which
it is expected to be utilised.
RDEC income is recorded based on management’s view of qualifying spend in the year of
£139.3m. Management are experienced in RDEC claims and are assisted by external advisers.
However, if qualifying spend was to reduce by £10m, this would result in a decrease in RDEC
income of £2m.
(f) Land and property valuations (estimate)
The recoverability of property development work in progress is an area which requires
significant judgement due to the ongoing volatility in property valuations. An assessment
of the net realisable value of inventory is carried out at each balance sheet date and is
dependent upon the Group’s estimate of forecast selling prices and build/development costs
(by reference to current prices), which may require significant judgement. Where applicable,
third-party valuations are used to support the position as at the balance sheet date. In valuing
work in progress at the lower of cost and net realisable value the Group has already recognised
any expected downside, and any upside is contingent on the Group’s continued development
of the projects as it is not in the business of selling partly developed sites. At 30 June 2024,
the value of land and work in progress held for development, included within inventory on the
balance sheet, was £61.2m (2023: £59.6m).
The Group continues to rationalise its property portfolio and exited its leased corporate offices
in Foley Street, London and Fountain Street, Manchester during prior years. The properties
are now being sublet for the remaining period of the lease and the associated right-of-use
asset is classified as an investment property. Given the length of the underlying leases and
the uncertainty in the property market, in calculating the fair value of the right-of-use asset
judgement has been exercised. These areas of judgement are detailed in note 15.
(g) Fire and cladding (judgement and estimate)
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 (see note 24). No provision has been made where
an obligation has not been established.
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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.
2 Revenue
Revenue is entirely derived from contracts with customers. Information on the nature
and timing of satisfaction of performance obligations, including significant payment terms,
is provided below. For the related revenue accounting policies, see note 1.
Infrastructure Services
The Group derives revenue from capital infrastructure projects as well as the maintenance of
infrastructure assets across various sectors including highways, rail, water, gas and domestic
fibre installation.
Capital projects can range from the construction of power station infrastructure, roads,
railways, bridges and tunnels, over a period of several years (e.g. Hinkley Point C, Sellafield
SRP and HS2), to small schemes completed in a matter of days. Revenue is recognised over
time as the construction services are rendered to the customer. Each capital project is
typically treated as a single performance obligation.
The Group also provides maintenance services for the UK road, rail and utilities infrastructure
through both routine, preventative maintenance as well as reactive repairs. These services
are generally delivered under framework contracts of between five to eight years; however,
individual performance obligations under the framework are normally determined on an
annual, monthly or ad hoc basis. Revenue is recognised over time as the maintenance
services are rendered to the customer.
Where multiple services are supplied under a single contract they are treated as separate
performance obligations and revenue is recognised separately as each performance
obligation is satisfied.
Infrastructure services are normally invoiced monthly in arrears under normal commercial
credit terms. Under some contracts, amounts are held back as a retention for periods that
can exceed 12 months. However, as the purpose of the retentions is to ensure that the
performance obligations on the contract are carried out to a satisfactory standard, the Group
does not deem there to be a significant financing component in the timing of the cash flows
on these amounts.
Construction
The Group undertakes over 300 building projects each year, providing construction services
in the private, education and health sectors and on public sector frameworks. Projects range
from minor extensions costing less than £0.5m to the construction of major strategic assets
costing hundreds of millions of pounds. The construction of a building, including any
associated design work, is normally accounted for as a single performance obligation as the
services provided are normally highly interrelated. Whilst the bulk of consideration associated
with construction contracts is usually fixed, variable consideration elements can exist
(milestone bonuses, gain share, event claims, etc.). Revenue is recognised over time as the
performance obligation is satisfied in accordance with the accounting policies in note 1.
Invoices are typically raised monthly, based on valuations of the work completed, and have
normal commercial payment terms. It is common in the construction industry for an amount
to be held back as a retention for periods that can exceed 12 months. However, as the
purpose of the retentions is to ensure that the performance obligations on the contract are
carried out to a satisfactory standard, the Group does not deem there to be a significant
financing component in the timing of the cash flows on these amounts.
The Group also provides maintenance services to local authorities and private landlords with
large housing portfolios. Revenue for maintenance services is recognised over time as the
services are rendered. Services are either invoiced monthly or shortly after completion of
individual performance obligations. Normal commercial payment terms apply.
Facilities management and maintenance services revenue is recognised over time
as the services are rendered. Invoices for services rendered are typically raised monthly.
Normal commercial payment terms apply, with the exception of the PFI lifecycle contracts,
as noted below.
The Group has a number of long-term PFI lifecycle contracts to maintain properties over
periods of 25–30 years. A fund is established at the start of the contract and amounts are
drawn down by the Group as maintenance work is performed. The Group is also entitled
to share in any surplus left in the fund at the end of the contract. Revenue is recognised
over time to reflect the rendering of the service including an assessment of the appropriate
proportion of the likely surplus in the fund, subject to being highly probable not to reverse.
As the surplus amount will not be paid until the end of the contracts, the contract asset
associated with the surplus recognised to date is shown as a non-current asset in the balance
sheet. Due to the length of time between performance of the services and payment of the
surplus, the Group considers there to be a significant financing component within this element
of the transaction price and has therefore adjusted for the time value of money in measuring
the revenue recognised in respect of end-of-contract surpluses.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
2 Revenue continued
Property
The Group undertakes property development on its own sites as well as a service for
customers. Revenue in respect of the sale of property developments owned by the Group
is recognised at a point in time (unconditional exchange of contracts). In most cases payment
is received on legal completion. Revenue for property development services in respect of
customer owned sites is recognised over time and normally invoiced monthly based on
valuations under normal commercial payment terms.
Transaction price allocated to remaining performance obligations
The following table includes revenue expected to be recognised in the future related to
performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.
At 30 June 2024
2027
2025 2026 onwards
£m £m £m
Infrastructure Services
1,643.3
796.7
1,506.5
Construction
1,177.6
391.9
90.4
Total transaction price allocated to
remaining performance obligations
2,820.9
1,188.6
1,596.9
At 30 June 2023
2026
2024 2025 onwards
£m £m £m
Infrastructure Services
958.3
872.1
1,930.0
Construction
1,196.0
322.8
6.8
Total transaction price allocated to
remaining performance obligations
2,154.3
1,194.9
1,936.8
No revenue was linked to future related performance obligations in the Property segment
(2023: £nil).
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose
information about remaining performance obligations that have original expected durations
of one year or less and excludes any estimate of revenue from framework contracts for which
a firm commitment or order has not been received at the reporting date.
3 Segmental reporting
The Group operates three divisions: Infrastructure Services, Construction and Property,
which is the basis on which the Group manages and reports its segmental information.
Corporate principally includes unrecovered overheads and the charge for defined benefit
pension schemes.
Segment information is based on the information 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 segments are discussed in the Operational Review on pages 22–29.
The accounting policies of the operating segments are the same as those described in
the summary of significant accounting policies (note 1). The Group evaluates segmental
information on the basis of adjusted operating profit (see note 5), interest and tax expense.
The segmental results that are reported to the Chief Executive include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis.
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3 Segmental reporting continued
2024
2023
Infrastructure Infrastructure
Services Construction Property Corporate Group Services Construction Property Corporate Group
£m £m £m £m £m £m £m £m £m £m
Revenue
1
Group revenue including share of joint ventures
1,988.3
1,907.8
71.0
2.3
3,969.4
1,712.3
1,652.5
37.6
3.0
3,405.4
Less share of joint ventures
–
(2.4)
(61.9)
–
(64.3)
–
(2.4)
(22.3)
–
(24.7)
Group revenue
1,988.3
1,905.4
9.1
2.3
3,905.1
1,712.3
1,650.1
15.3
3.0
3,380.7
Timing of revenue
1
Products and services transferred at a point in time
5.9
0.6
57.8
–
64.3
3.9
0.8
21.5
–
26.2
Products and services transferred over time
1,982.4
1,907.2
13.2
2.3
3,905.1
1,708.4
1,651.7
16.1
3.0
3,379.2
Group revenue including share of joint ventures
1,988.3
1,907.8
71.0
2.3
3,969.4
1,712.3
1,652.5
37.6
3.0
3,405.4
Profit/(loss) for the year
Adjusted operating profit/(loss)
2
112.3
69.2
6.2
(37.5)
150.2
79.8
69.5
12.8
(30.6)
131.5
Adjusting items
2
(23.6)
(9.6)
(4.3)
(9.6)
(47.1)
(22.6)
(23.1)
1.5
(5.8)
(50.0)
Operating profit/(loss)
88.7
59.6
1.9
(47.1)
103.1
57.2
46.4
14.3
(36.4)
81.5
Net finance income/(costs)
3
4.4
1.4
(3.7)
(37.1)
(35.0)
1.4
(4.3)
(0.6)
(26.1)
(29.6)
Profit/(loss) before tax
93.1
61.0
(1.8)
(84.2)
68.1
58.6
42.1
13.7
(62.5)
51.9
Taxation
(16.8)
(10.9)
Profit for the year from continuing operations
51.3
41.0
Loss for the year from discontinued operations
(8.3)
–
Profit for the year
43.0
41.0
Balance sheet
Operating assets
4
908.3
424.4
217.9
342.9
1,893.5
973.7
413.1
188.5
342.3
1,917.6
Operating liabilities
4
(499.8)
(814.2)
(14.8)
(212.6)
(1,541.4)
(511.7)
(732.7)
(18.5)
(210.2)
(1,473.1)
Net operating assets/(liabilities)
4
408.5
(389.8)
203.1
130.3
352.1
462.0
(319.6)
170.0
132.1
444.5
Cash, cash equivalents, bank overdrafts and borrowings
540.4
700.4
(171.3)
(908.6)
160.9
456.6
594.5
(134.1)
(859.2)
57.8
Net financial assets
–
–
–
7.1
7.1
–
–
–
10.7
10.7
Net assets/(liabilities)
948.9
310.6
31.8
(771.2)
520.1
918.6
274.9
35.9
(716.4)
513.0
Other information
Inter-segmental revenue
4.9
0.1
–
39.8
44.8
31.5
0.1
–
40.5
72.1
Capital expenditure on property, plant, equipment
and intangible assets
2.4
4.4
–
9.8
16.6
0.7
0.1
–
5.8
6.6
Depreciation of property, plant and equipment
(0.7)
(0.4)
(0.2)
(7.0)
(8.3)
(0.9)
(0.4)
(0.2)
(4.6)
(6.1)
Amortisation of computer software
(1.1)
(0.2)
–
(6.1)
(7.4)
(1.4)
(0.8)
–
(5.4)
(7.6)
1. Revenue is stated after the exclusion of inter-segmental revenue. 100% of the Group’s revenue is derived from UK-based customers. 15% of the Group’s revenue was received from High Speed Two (HS2) Limited (2023: 15%).
Group revenue including joint ventures is an alternative performance measure, see page 216.
2. See notes 1 and 5 for adjusting items.
3. Interest was (charged)/credited to the divisions at a notional rate of 4.0% (2023: 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.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
4 Operating profit
Operating profit is stated after charging/(crediting):
2024 2023
Note £m £m
Amortisation of intangible assets
13
30.6
26.8
Depreciation of property, plant and equipment
14
8.3
6.1
Profit on sale of property, plant and equipment
and right-of-use assets
(1.3)
(1.8)
Depreciation of right-of-use assets
22
39.0
43.7
Fair value adjustment to investment properties
15
(6.5)
(11.4)
Services provided by the Group’s auditors
2024 2023
Note £m £m
Fees payable for the audit of the parent company
and consolidated financial statements
1
2.7
2.3
Fees payable to the Company’s auditors
for other services:
Audit of the Company’s subsidiaries,
pursuant to legislation
0.5
1.2
Audit-related assurance services
2
0.4
0.2
1. The auditors’ remuneration relates to amounts paid to PricewaterhouseCoopers LLP (‘PwC’). Included in the
2024 audit fees are £0.3m for prior year work (2023: £0.2m).
2. A summary of other services provided by PwC during the year is provided on page 103. In 2024, the fees relating
to other assurance services include the verification of the re-finance documentation of £250,000, and £178,000
for the review of the interim statements (2023: £191,000). Also included are £2,000 (2023: £2,000) for a
subscription service providing factual updates and changes to applicable law, regulation or accounting and
auditing standards.
5 Adjusting items
(a) Reconciliation to adjusted profit
2024
2023
Adjusting Adjusting
Adjusted items Total Adjusted items Total
£m £m £m £m £m £m
Group revenue
3,905.1
–
3,905.1
3,380.7
–
3,380.7
Cost of sales
(3,555.1)
(15.0)
(3,570.1)
(3,055.5)
(18.9)
(3,074.4)
Gross profit
350.0
(15.0)
335.0
325.2
(18.9)
306.3
Administrative
expenses
(216.2)
(23.8)
(240.0)
(208.0)
(32.0)
(240.0)
Share of post-tax
results of joint
ventures
6.0
(4.4)
1.6
1.1
–
1.1
Other income
10.4
(3.9)
6.5
13.2
0.9
14.1
Operating profit
150.2
(47.1)
103.1
131.5
(50.0)
81.5
Net finance charges
(32.1)
(2.9)
(35.0)
(26.7)
(2.9)
(29.6)
Profit before tax
118.1
(50.0)
68.1
104.8
(52.9)
51.9
Taxation
(28.4)
11.6
(16.8)
(22.0)
11.1
(10.9)
Profit for the year
from continuing
operations
89.7
(38.4)
51.3
82.8
(41.8)
41.0
Loss for the year
from discontinued
operations
–
(8.3)
(8.3)
–
–
–
Profit for the year
89.7
(46.7)
43.0
82.8
(41.8)
41.0
Adjusting items include:
Cost of sales:
– Fire and cladding compliance costs of £15.0m – these consist of costs incurred in rectifying
legacy issues to comply with the latest Government guidance. The net charge of £15.0m
includes a credit of £11.8m in respect of insurance proceeds.
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5 Adjusting items continued
Administrative expenses:
– Amortisation of acquired intangible assets of £23.2m – comprises amortised contract rights
arising from prior year acquisitions, along with the amortisation of contract rights relating
to the Buckingham acquisition.
– Recycle of foreign exchange gain of £(5.9)m – the retranslation of the overseas subsidiary
balance sheets has been recycled to the income statement following the down-sizing of the
international business and has been treated as an adjusting item.
– Refinancing fees of £4.5m – these costs consist of professional advisor fees that were
incurred as part of the refinancing exercise but that were not directly attributable to the issue
of the debt instruments and so could not be capitalised.
– Property-related items of £(1.1)m – these costs primarily consist of income and costs
incurred in respect of corporate properties vacated in prior years as part of the review
of Group premises.
– Other adjusting items of £3.1m – other costs consist of charges in respect of the down-
sizing of the International business and costs incurred on the acquisition of Buckingham
Group’s rail division.
Share of post-tax results of joint ventures and other income:
– Property-related items of £8.3m – these costs primarily consist of the loss on disposal
of a property previously treated as adjusting items, and a fair value adjustment of £2.3m
in relation to the Group’s former head office.
Net finance charges:
– Net financing costs of £2.9m – these relate to IFRS 16 interest charges on leased
investment properties previously used as offices.
(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 has 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 has increased by £8.3m, net of tax credit of £0.8m, the majority of which remains as
a provision on the year end balance sheet. The £8.3m has been recognised as an adjusting
item within discontinued operations.
(c) Cash outflow from adjusting items
2024 2023
£m £m
Adjusting items reported in the income statement:
– Continuing operations
50.0
52.9
– Discontinued operations
8.3
–
Less: non-cash items incurred in the year
(31.4)
(39.0)
Add: payment of prior year accruals and provisions
9.8
13.1
Cash outflow from adjusting items
36.7
27.0
6 Other income
2024 2023
Note £m £m
Insurance proceeds
–
2.7
Fair value gain on investment properties
15
6.5
11.4
Other income
6.5
14.1
7 Finance income and costs
2024 2023
£m £m
Finance income
Bank deposits
3.4
0.5
Interest receivable on loans to related parties
0.1
1.1
Net interest on net defined benefit surplus
5.7
7.8
9.2
9.4
Finance costs
Interest payable on loans and overdrafts
(23.1)
(29.0)
Interest payable on bonds
(8.4)
–
Interest payable on leases
(9.5)
(9.5)
Foreign exchange movements on foreign denominated borrowings
(0.6)
2.5
Fair value movements on cash flow hedges recycled from other
comprehensive income
–
(1.2)
Other
(2.6)
(1.8)
(44.2)
(39.0)
Net finance costs
(35.0)
(29.6)
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
8 Information relating to Directors and employees
2024 2023
No. No.
Monthly average number of people employed during the year
including Executive Directors by segment was:
Infrastructure Services
5,764
5,714
Construction
3,842
3,631
Property
70
75
Corporate
542
544
10,218
9,964
19 employees are located outside of the UK (2023: 55).
2024 2023
Note £m £m
Group staff costs by segment are as follows:
Infrastructure Services
384.7
346.1
Construction
288.0
246.2
Property
11.5
13.7
Corporate
51.1
42.0
735.3
648.0
Comprising:
Wages and salaries
632.4
562.4
Social security costs
65.8
59.0
Defined benefit pension scheme net credit
to the income statement
9
(3.9)
(7.7)
Contributions to defined contribution
pension schemes
31.7
25.9
Share-based payments charge
25
9.3
8.4
735.3
648.0
The amounts disclosed above are in relation to the entirety of the Group’s Directors
and employees.
Information relating to Directors’ emoluments, pension entitlements, share options and LTIP
interests appears in the Directors’ Remuneration report on pages 109–134.
9 Retirement benefit obligations
The Group operates a number of pension schemes for eligible employees. The Kier Group
scheme is the principal scheme and includes a defined benefit section and a defined
contribution section. The defined benefit section of the scheme was closed to new entrants on
1 January 2002; existing members continued to accrue benefits for service until the scheme
was closed to future accrual on 28 February 2015. A total of six other defined benefit schemes
were acquired with the past acquisition of the May Gurney, Mouchel and McNicholas groups.
These schemes are all closed to new entrants and to future accrual, with the exception of
one small scheme which remains open to future accrual for 5 (2023: 5) active members.
This scheme is a multi-employer scheme; however, Kier’s share is separately identifiable and
therefore the movements in the period are determined by reference to the change in valuation
of this separate subsection.
The assets of all of the defined benefit schemes are held in trust separate from the assets
of the Group. The Trustees are responsible for investing the assets and delegate day-to-day
decisions to independent professional investment managers. The schemes are established
under UK trust law and have a corporate trustee that is required to run the schemes in
accordance with the schemes’ Trust Deed and Rules and to comply with all relevant
legislation. Responsibility for the governance of the schemes lies with the Trustees.
The pension obligations of the Group are valued separately for accounting and funding
purposes. The accounting valuations under IAS 19 require ‘best estimate’ assumptions to
be used whereas the funding valuations use more prudent assumptions. A further difference
arises from the differing dates of the valuations. The accounting pension surplus or deficit is
calculated at the balance sheet date (30 June) each year, whereas the actuarial valuations are
carried out on a triennial basis at 31 March, or in the case of one scheme, 31 December. The
differing bases and timings of the valuations can result in materially different pension surplus
or deficit amounts.
Contributions to defined benefit schemes
The aggregate contributions payable in the year ended 30 June 2024 in respect of the Group’s
defined benefit pension schemes amounted to £8.6m (2023: £9.9m), which included past
service deficit contributions of £8.5m (2023: £9.8m) and current service employer
contributions of £0.1m (2023: £0.1m).
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9 Retirement benefit obligations continued
The Group agreed revised deficit recovery plans with the Trustees of the Kier Group scheme,
May Gurney scheme and Mouchel schemes on 25 May 2023, and agreed the latest schedule
of contributions for the McNicholas scheme on 27 February 2024. Based on these
contribution plans, the Group expects to make the following contributions in future years:
2025 2026 2027 2028 2029 & beyond
£m £m £m £m £m
Deficit contributions
6.9
5.2
3.5
0.9
–
In addition to the above contributions, the Group has agreed with the Trustees of most of the
schemes (including the Kier Group scheme) that additional deficit contributions will be payable
in certain circumstances, including in the event of the Group meeting certain financial targets.
The Group has also agreed with the Trustees of a number of the schemes to meet each
of the scheme’s expenses including their Pension Protection Fund levies. As the Kier Group
scheme and one of the Mouchel schemes were in surplus at the last funding valuation date,
the Trustees agreed that Kier would stop paying the expenses for these schemes with effect
from 1 July 2023. If either of these schemes subsequently move into deficit, on the basis
determined by the schemes’ actuary at a 31 March measurement date, Kier will recommence
payment of the scheme’s expenses from 1 July the following year. During the year the Group
incurred fees totalling £0.6m (2023: £2.9m) in respect of the running and administration of the
defined benefit schemes, with a further £1.7m (2023: nil) paid directly by the schemes.
The deficit recovery plans agreed with the Trustees of each of the defined benefit schemes
constitute minimum funding requirements for the purposes of IFRIC 14. These minimum
funding requirements do not give rise to any additional liabilities on the Group’s balance sheet,
as the Group has determined that it has a right to benefit from any surplus created by overpaid
contributions, through either a reduction in future contributions or refunds of the surpluses on
winding up of the schemes.
Contributions to defined contribution schemes
Contributions are also made to a number of defined contribution arrangements. The Group
paid contributions to these arrangements of £31.7m (2023: £25.9m) during the year.
The Group makes contributions to local government defined benefit pension schemes in respect
of certain employees who have transferred to the Group under TUPE transfer arrangements.
The Group is unable to identify its share of the underlying assets and liabilities in the schemes
on a consistent and reasonable basis and consequently the pension costs for these schemes
are treated as if they were defined contribution schemes.
IAS 19 ‘Employee Benefits’ disclosures
The Group recognises any actuarial gains or losses through the statement of comprehensive
income as required under IAS 19.
The weighted average duration of the schemes’ liabilities is approximately 12 years
(2023: 13 years).
The IAS 19 accounting valuations at 30 June 2024 of some of the Group’s defined benefit
schemes, indicated that the assets of each scheme exceeded their respective scheme
liabilities. The Group has recognised these surpluses as retirement benefit assets on its
balance sheet under IAS 19 and IFRIC 14, as the Group has determined that it has a right to
benefit from any surpluses, through either reduced contributions or a refund of the surpluses
on winding up of the schemes.
The principal assumptions used by the independent qualified actuaries are shown in the
following table. This set of assumptions was used to value all of the defined benefit schemes,
and has been based on the weighted average duration of the schemes’ liabilities with the
exception of CPI assumptions, which have been based on the expected durations of each
individual scheme.
2024 2023
No. No.
Discount rate
5.15
5.30
Inflation rate (Retail Price Index (‘RPI’))
3.20
3.20
Inflation rate (Consumer Price Index (‘CPI’))
2.40–2.85
2.30–2.75
Rate of general increases in pensionable salaries
3.20
3.20
Rate of increase in pensions payments liable
for Limited Price Indexation
– RPI subject to minimum of 0% and a maximum 5%
2.95
2.90
– RPI subject to minimum of 0% and a maximum 2.5%
1.90
1.85
The mortality assumptions used were as follows:
2024 2023
Male years Female years Male years Female years
Life expectancy for a male/female currently
aged 60
– Kier Group scheme
25.9
28.0
26.7
28.7
– Acquired schemes
24.6–26.3
27.4–28.2
25.4–27.0
28.1–29.2
Life expectancy for a male/female member
aged 60, in 20 years’ time
– Kier Group scheme
27.2
29.2
27.9
29.8
– Acquired schemes
26.2–27.4
28.8–29.5
26.9–28.2
29.5–30.7
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
9 Retirement benefit obligations continued
The amounts recognised in the income statement and statement of other comprehensive income and the movements in the net retirement benefit surplus/(deficit) in respect of the defined
benefit schemes are as follows:
2024
2023
Kier Acquired Kier Acquired
Group schemes Total Group schemes Total
£m £m £m £m £m £m
Opening net surplus/(deficit)
117.5
(13.0)
104.5
170.2
24.5
194.7
Current service cost
–
(0.1)
(0.1)
–
(0.1)
(0.1)
Administration expenses
(1.4)
(0.3)
(1.7)
–
–
–
Net interest on net defined benefit surplus
6.2
(0.5)
5.7
6.6
1.2
7.8
Total income/(expense) recognised in the income statement
4.8
(0.9)
3.9
6.6
1.1
7.7
Actual return less than that recognised in net interest
(28.0)
(13.1)
(41.1)
(193.4)
(122.0)
(315.4)
Actuarial (losses)/gains due to changes in financial assumptions
(14.9)
(10.2)
(25.1)
135.7
94.8
230.5
Actuarial gains due to changes in demographic assumptions
17.2
8.9
26.1
17.8
10.7
28.5
Actuarial gains/(losses) due to liability experience
0.3
3.3
3.6
(19.8)
(31.6)
(51.4)
Total amount recognised in other comprehensive income
(25.4)
(11.1)
(36.5)
(59.7)
(48.1)
(107.8)
Contributions by the employer
–
8.6
8.6
0.4
9.5
9.9
Closing net surplus/(deficit)
96.9
(16.4)
80.5
117.5
(13.0)
104.5
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9 Retirement benefit obligations continued
2024
2023
Kier Acquired Kier Acquired
Group schemes Total Group schemes Total
£m £m £m £m £m £m
Changes in the fair value of scheme assets
Fair value at 1 July
850.9
396.8
1,247.7
1,048.0
509.0
1,557.0
Interest income on scheme assets
44.0
20.7
64.7
40.0
19.7
59.7
Remeasurement losses on scheme assets
(28.0)
(13.1)
(41.1)
(193.4)
(122.0)
(315.4)
Contributions by the employer
–
8.6
8.6
0.4
9.5
9.9
Net benefits paid out
(40.3)
(19.3)
(59.6)
(44.1)
(19.4)
(63.5)
Administration expenses
(1.4)
(0.3)
(1.7)
–
–
–
Fair value at 30 June
825.2
393.4
1,218.6
850.9
396.8
1,247.7
Changes in the present value of the defined benefit obligation
Fair value at 1 July
(733.4)
(409.8)
(1,143.2)
(877.8)
(484.5)
(1,362.3)
Current service cost
–
(0.1)
(0.1)
–
(0.1)
(0.1)
Interest expense on scheme liabilities
(37.8)
(21.2)
(59.0)
(33.4)
(18.5)
(51.9)
Actuarial (losses)/gains due to changes in financial assumptions
(14.9)
(10.2)
(25.1)
135.7
94.8
230.5
Actuarial gains due to changes in demographic assumptions
17.2
8.9
26.1
17.8
10.7
28.5
Actuarial gains/(losses) due to liability experience
0.3
3.3
3.6
(19.8)
(31.6)
(51.4)
Net benefits paid out
40.3
19.3
59.6
44.1
19.4
63.5
Fair value at 30 June
(728.3)
(409.8)
(1,138.1)
(733.4)
(409.8)
(1,143.2)
Amounts included in the balance sheet
Fair value of scheme assets
825.2
393.4
1,218.6
850.9
396.8
1,247.7
Net present value of the defined benefit obligation
(728.3)
(409.8)
(1,138.1)
(733.4)
(409.8)
(1,143.2)
Net surplus/(deficit)
96.9
(16.4)
80.5
117.5
(13.0)
104.5
Related deferred tax (liability)/asset
(24.0)
4.0
(20.0)
(29.4)
3.3
(26.1)
Net pension asset/(liability)
72.9
(12.4)
60.5
88.1
(9.7)
78.4
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
9 Retirement benefit obligations continued
The net surplus/(deficit) above is split between retirement benefit assets and obligations in the statement of financial position based on whether the individual pension schemes have a net surplus
or deficit, as follows:
2024
2023
Kier Acquired Kier Acquired
Group schemes Total Group schemes Total
£m £m £m £m £m £m
Retirement benefit assets
96.9
8.1
105.0
117.5
11.8
129.3
Retirement benefit obligation
–
(24.5)
(24.5)
–
(24.8)
(24.8)
Net surplus/(deficit)
96.9
(16.4)
80.5
117.5
(13.0)
104.5
The assets, liabilities and net pension liabilities for the defined benefit arrangements are shown below. The assets are invested with professional investment managers and are measured
based on quoted market valuations at the balance sheet date, with the exception of property assets and annuity policies, which are based on unquoted valuations.
2024
2023
Kier Acquired Kier Acquired
Group schemes Total Group schemes Total
£m £m £m £m £m £m
Equities
210.0
127.7
337.7
100.4
53.1
153.5
Corporate bonds
91.0
10.0
101.0
93.3
62.8
156.1
Government bonds
186.5
60.5
247.0
–
–
–
Fixed income aggregate funds
84.5
48.8
133.3
–
–
–
Cash
41.0
17.6
58.6
40.8
49.7
90.5
Property
14.2
6.2
20.4
15.6
1.1
16.7
Absolute return
–
0.1
0.1
62.9
27.9
90.8
Annuity policies
–
0.5
0.5
–
0.5
0.5
Multi-asset
–
14.1
14.1
95.0
44.8
139.8
Index-linked bonds
196.9
108.8
305.7
–
–
–
Liability-driven investments
–
–
–
442.9
156.9
599.8
Derivatives
1.1
(0.9)
0.2
–
–
–
Total market value of assets
825.2
393.4
1,218.6
850.9
396.8
1,247.7
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9 Retirement benefit obligations continued
History of experience gains and losses for defined benefit schemes in aggregate:
2024 2023 2022 2021 2020
£m £m £m £m £m
Fair value of scheme assets
1,218.6
1,247.7
1,557.0
1,909.9
1,937.9
Net present value of the defined
benefit obligation
(1,138.1)
(1,143.2)
(1,362.3)
(1,863.7)
(1,899.1)
Net surplus
80.5
104.5
194.7
46.2
38.8
Related deferred tax liability
(20.0)
(26.1)
(49.3)
(12.6)
(7.4)
Net pension asset
60.5
78.4
145.4
33.6
31.4
Difference between expected and
actual return on scheme assets
(41.1)
(315.4)
(339.9)
(26.6)
177.6
Experience gains/(losses) on
scheme liabilities
3.6
(51.4)
(10.4)
19.2
40.2
Risk exposure
As IAS 19 actuarial assumptions are driven by market conditions, there is a risk that significant
changes in financial market conditions could lead to volatility in the defined benefit obligation
disclosed in the balance sheet from year to year. In addition, the asset position may also be
volatile as it will be influenced by changes in market conditions. However, the risk of significant
changes to the overall balance sheet position has been mitigated to an extent due to the risk
management strategy used by the schemes as described below.
Most of the Group’s defined benefit schemes share a common single corporate trustee and
have aligned their investment strategy and risk management process, providing a consistent
framework across the schemes to achieve their long-term objective. These schemes appointed
Schroders Investment Management Limited as their outsourced chief investment officer
(‘OCIO’) during the year. The scheme assets are managed by the OCIO using a combination
of external and internal funds. All of the assets in these schemes consist of four high-level
strategic building blocks, i.e. growth, structured equity, cash flow driven investments and
liability hedging.
The growth asset portfolio is designed for long-term stable returns. It is an actively managed
diversified portfolio consisting of equity, return seeking credit, alternatives, property, cash and
sovereign bonds. The schemes access further equity exposure with built in explicit down
protection through their structured equity allocation.
The liability hedging portfolio (consisting of cash, physical gilts, gilt repurchase agreements
as well as interest and inflation swaps) is designed to hedge each scheme’s sensitivity to
changes in interest rate and inflation and targets a high hedge ratio. The Kier Group Pension
Scheme is hedging 100% of funded low dependency liabilities, with other schemes hedging
100% of funded technical provisions liabilities. The schemes hedge the majority of the
currency exposure within their investment strategy.
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. Given the timing of the decision, the Group has not
had adequate time to begin detailed investigations before the signing of these financial statements.
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.
Pension sensitivity
The following table shows the change in the net surplus or deficit arising from a change in the
significant actuarial assumptions used to determine the Group’s retirement benefit obligations:
2024
2023
+0.25%/+1 year -0.25%/-1 year +0.25%/+1 year -0.25%/-1 year
Kier Group scheme: £m £m £m £m
Discount rate (+/-0.25%)
32.5
(34.0)
33.3
(35.2)
Inflation rate (+/-0.25%)
(19.2)
18.0
(18.6)
18.6
Mortality (+/-1 year)
33.2
(33.3)
32.3
(32.3)
The sensitivity analyses above have been determined based on reasonably possible changes
in the respective assumptions occurring at the end of the reporting period, derived from an
isolated change in a key assumption while holding all other assumptions constant, and may
not be representative of the actual change. When calculating the sensitivity to the assumption,
the same method used to calculate the liability recognised in the balance sheet has been
applied. The inflation sensitivities shown above include the impact of both RPI and CPI
inflation, and of other inflation related assumptions (such as pension increases in payment).
The methods and types of assumptions used in preparing the sensitivity analyses did not
change compared with the previous year.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
10 Taxation
Taxation in respect of continuing operations is analysed below.
(a) Recognised in the income statement
2024 2023
£m £m
Current tax
UK corporation tax
12.5
8.4
Adjustments in respect of prior years
(0.3)
(1.1)
Total current tax charge
12.2
7.3
Deferred tax
Origination and reversal of temporary differences
8.0
3.2
Adjustments in respect of prior years
(3.4)
2.4
Rate change effect on deferred tax
–
(2.0)
Total deferred tax
4.6
3.6
Total tax charge in the income statement
16.8
10.9
Reconciliation of effective tax rate
Profit before tax
68.1
51.9
Losses/(income) from joint venture companies
1.6
(3.6)
Profit before tax excluding income from joint ventures
69.7
48.3
Income tax at UK corporation tax rate of 25% (2023: 20.5%)
17.4
9.9
Non-deductible expenses
3.4
3.1
Income not taxable
(3.1)
(1.2)
Impact of Group relief and consortium relief
1.7
(0.1)
Effect of change in UK corporation tax rate
–
(2.0)
Share-based payment
0.8
1.5
Deferred tax not recognised/(utilisation and recognition
of tax losses)
0.3
(1.6)
Adjustments in respect of prior years
(3.7)
1.3
Total tax
16.8
10.9
Kier Group and its subsidiaries are based predominantly in the UK and are subject to
UK corporation tax. The Group does not have an aggressive tax policy and since 1 July 2012
Kier has not entered into any tax avoidance schemes which were or should have been notified
under the Disclosure of Tax Avoidance Scheme (‘DOTAS’) rules.
The Group tax charge excluding joint ventures of £16.8m (2023: £10.9m) shown in the table
equates to an effective tax rate of 24.1% (2023: 22.6%) on profit before tax excluding joint
ventures of £69.7m (2023: £48.3m). This effective rate is different from the standard rate of
corporation tax of 25% (2023: 20.5%) due to items shown in the table. The non-deductible
expenses mainly relate to depreciation on non-qualifying assets, disallowed provisions,
entertaining and legal and professional fees not eligible for tax relief. Income not taxable
relates mainly to the reversal of impairments, insurance receipts and foreign exchange gains.
Deferred tax not recognised/(utilisation and recognition of tax losses) relates to deferred tax on
losses not previously recognised less deferred tax on losses not expected to be recoverable.
In accordance with UK tax legislation, capital gains arising on disposal of certain investments,
including some of the joint ventures disposed of during the year, are not subject to tax.
Tax relief on expenses not recognised in the income statement includes the impact of the
tax deduction received in respect of the cost of shares exercised under the Group’s employee
Save As You Earn scheme and Long-Term Incentive Plan.
The Group provides for future liabilities in respect of uncertain tax positions where additional
tax may become payable in future periods and such provisions are based on management’s
assessment of exposure. At the balance sheet date, a deferred tax liability of £1.7m
(2023: £2.0m) has been recognised in respect of uncertain tax positions.
The net credit of £3.7m (2023: £1.3m charge) in respect of prior years’ results arise from
differences between the estimates of taxation included in the previous years’ financial
statements and the actual tax liabilities calculated in the tax returns submitted to HMRC.
The Group is monitoring tax reforms driven by the OECD’s BEPS initiative, including the
Pillar Two rules which seek to implement a global 15% minimum tax rate. The United Kingdom
substantively enacted Pillar Two rules in Finance (No.2) Act 2023 on 20 June 2023 and similar
legislation has been enacted in other territories in which the group operates. Based on prior
year financial data, the Group has assessed the potential tax impact of Pillar Two. There is
no impact on the Group’s results for the year ended 30 June 2024 as the rules were not yet
effective. In future periods, the impact is not expected to be material to the Group, initially due
to the availability of temporary safe harbours. The Group has applied the temporary exception
to recognising and disclosing information about deferred tax assets and liabilities related to
Pillar Two income taxes, as detailed in amendments to IAS 12 issued by the IASB in May 2023.
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10 Taxation continued
(b) Recognised in the cash flow statement
The cash flow statement shows cash of £7.8m, in respect of RDEC credits and foreign tax,
was received during the year (2023: £14.0m) (see note 21), and made tax payments on
account of £2.9m (2023: £0.1m).
(c) Recognised in the statement of comprehensive income
2024 2023
£m £m
Deferred tax credit
(including effect of change in tax rate)
Fair value movements on cash flow hedging instruments
(0.9)
0.8
Actuarial losses on defined benefit pension schemes
(7.1)
(24.5)
Total deferred tax credit
(8.0)
(23.7)
Corporation tax credit in respect of pension contributions paid
(2.0)
(2.0)
Total tax credit in the statement
of comprehensive income
(10.0)
(25.7)
(d) Factors that may affect future tax charges
The deferred tax balance as at the year-end has mainly been recognised at 25.0%
(2023: 25.0%), which is the enacted corporation tax rate effective from 1 April 2023.
Further disclosures in respect of the recoverability of the deferred tax asset have been
included in note 17.
(e) Tax losses
At the balance sheet date, the Group has unused tax losses of £591.5m (2023: £612.7m)
available for offset against future profits. A deferred tax asset has been recognised on
£427.0m (2023: £425.0m) of these losses.
No deferred tax asset has been recognised in respect of the remaining losses as it is unlikely
that there will be future taxable profit on which these tax losses could be utilised against.
Under present tax legislation, these losses may be carried forward indefinitely.
(f) RDEC
The Research and Development Expenditure Credit (‘RDEC’) of £28.3m was included in
operating profit during the year (2023: £22.8m). Included in other receivables at 30 June 2024
were RDEC receivables of £30.0m (2023: £16.1m).
11 Dividends
The following dividends were recognised in the year:
2024
2023
£m
pence per share
£m
pence per share
Current year interim
7.3
1.67
–
–
Total dividend recognised in year
7.3
1.67
–
–
The following dividends were declared in the year:
2024
2023
£m
pence per share
£m
pence per share
Interim
7.3
1.67
–
–
Final
15.1
3.48
–
–
Total dividend relating to the year
22.4
5.15
–
–
The proposed final dividend for the year ending 30 June 2024 of 3.4 8p per share (2023: nil)
has not yet been paid and so has not been included as a liability in these financial statements.
The dividend totalling approximately £15.1m will be paid on 29 November 2024 to
shareholders on the register at the close of business on 25 October 2024.
The parent company of the Group, Kier Group plc, is a non-trading holding company
which derives its distributable reserves in part from dividends received from its subsidiaries.
In determining the level of dividend payable in any year, in addition to the stated policy,
the Board considers a number of other factors, including the following:
– the level of distributable reserves in the parent company, Kier Group plc;
– the level of distributable reserves in Kier Group plc’s subsidiaries that are available
to be distributed to Kier Group plc;
– the availability of cash resources;
– the Group’s borrowing covenants;
– future cash commitments and investment plans to support the long-term growth
of the Group; and
– potential strategic opportunities under consideration.
The Board reviews the level of distributable reserves in the parent company at least twice
a year ahead of announcing proposed interim and final dividends. Distributable reserves can
be significantly impacted by movements in pension liabilities. The reserves of Kier Group plc
are not directly affected by these movements as the pension surpluses and liabilities are on
the balance sheets of a certain number of the Company’s subsidiaries. However, movements
in the pension liabilities do have an effect on the level of distributable reserves in Kier Group
plc’s subsidiaries that are available to be paid up to the parent. Actuarial gains only increase
the distributable reserves to the extent that they represent reversals of previous actuarial
losses; otherwise they are treated as unrealised and are not distributable.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Notes to the consolidated financial statements continued
For the year ended 30 June 2024
12 Earnings per share
2024
2023
Basic Diluted Basic Diluted
£m £m £m £m
Continuing operations
Profit for the year
51.3
51.3
41.0
41.0
Less: non-controlling interest share
(0.3)
(0.3)
0.1
0.1
Profit after tax and minority interests
51.0
51.0
41.1
41.1
Adjusting items (excluding tax)
50.0
50.0
52.9
52.9
Tax impact of adjusting items
(11.6)
(11.6)
(11.1)
(11.1)
Adjusted profit after tax from
continuing operations
89.4
89.4
82.9
82.9
Discontinued operations
Adjusting items from discontinued operations
(net of tax)
(8.3)
(8.3)
–
–
Weighted average number of shares (no, m)
433.5
451.7
431.2
441.5
Basic earnings (p)
Attributable to the ordinary equity holders of
the Company from continuing operations
11.8
11.3
9.5
9.3
Attributable to the ordinary equity holders of
the Company from discontinued operations
(1.9)
(1.8)
–
–
Total basic earnings per share
attributable to the ordinary equity holders
of the Company
9.9
9.5
9.5
9.3
Adjusted basic earnings (p)
Adjusted basic earnings per share
attributable to the ordinary equity holders
of the Company
20.6
19.8
19.2
18.8
The weighted average number of shares is lower than the number of shares in issue by 18.6m
(2023: 15.1m) primarily due to shares that are held by the Group’s employee benefit trusts
(see note 25), which are excluded from the calculation, and the weighting applied to the new
shares issued in the year in respect of the Sharesave scheme, which were predominantly
in the fourth quarter of FY24.
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. Details relating to the
share option schemes are set out in note 25.
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13 Intangible assets
Intangible Computer
Goodwill contract rights software Total
£m £m £m £m
Cost
At 1 July 2022
538.8
252.2
132.6
923.6
Additions
–
–
2.7
2.7
Disposals
–
(16.5)
(9.6)
(26.1)
At 30 June 2023
538.8
235.7
125.7
900.2
Additions
–
–
9.5
9.5
Arising on acquisition
6.8
7.5
–
14.3
Disposals
–
–
(0.1)
(0.1)
At 30 June 2024
545.6
243.2
135.1
923.9
Accumulated amortisation and impairment
At 1 July 2022
(2.1)
(168.2)
(84.2)
(254.5)
Charge for the year
–
(19.2)
(7.6)
(26.8)
Disposals
–
16.5
9.6
26.1
At 30 June 2023
(2.1)
(170.9)
(82.2)
(255.2)
Charge for the year
–
(23.2)
(7.4)
(30.6)
Disposals
–
–
0.1
0.1
At 30 June 2024
(2.1)
(194.1)
(89.5)
(285.7)
Net book value
At 30 June 2024
543.5
49.1
45.6
638.2
At 30 June 2023
536.7
64.8
43.5
645.0
Goodwill largely relates to the group of cash generating units (‘CGUs’) in the Infrastructure
Services segment and has been built up through acquisitions, primarily MRBL Limited
(Mouchel Group) (£299.2m), May Gurney Integrated Services PLC (£194.7m), McNicholas
Construction (Holdings) Limited (£42.8m) and the acquisition arising in the year of the rail
assets of the Buckingham Group (£6.8m). These balances have been subject to an annual
impairment review based upon the projected cash flows of each CGU.
The intangible contract rights were recognised on the acquisition of:
– May Gurney Integrated Services plc – Cost £106.8m (2023: £106.8m). Net book value
£22.5m (2023: £30.1m).
– MRBL Limited (Mouchel Group) – Cost £127.1m (2023: £127.1m). Net book value £21.9m
(2023: £33.5m).
– Rail assets of the Buckingham Group – Cost £7.5m (2023: £nil). Net book value £3.6m
(2023: £nil).
– Certain business and assets of Babcock Civil Infrastructure Limited – Cost £1.6m
(2023: £1.6m). Net book value £1.1m (2023: £1.2m).
Contract rights on May Gurney and Mouchel are amortised on a straight-line basis over the
expected total contract duration. All other contract rights are amortised on a straight-line basis
over the remaining contract life.
Carrying amounts of goodwill and intangible contract rights by CGU
For impairment testing purposes, goodwill has been allocated to the Infrastructure Services
and Construction segments, being the lowest level at which management monitors goodwill.
There is no goodwill attributed to the Property segment. The recoverable amount of the
goodwill and intangibles has been determined based on value in use calculations, which use
cash flow projections based on the Group’s forecasts approved by management, covering a
three-year period. The forecasts are consistent with those used for the Group’s going concern
assessment and viability statement.
The resulting cash flows are discounted to present value, with the discount rate used in the
value in use calculations based on an industry average cost of capital.
The cost of equity is calculated using observable market data from the Group’s competitors.
This data is used to calculate an average unlevered beta value after excluding any outliers.
The average beta is then applied to the UK’s equity risk premium and a risk-free rate added.
The cost of debt is calculated by taking the expected renewal costs of the Group’s debt
and adjusting for the tax rate.
The cost of equity and cost of debt are then combined using our competitors’ average
debt/equity split. The post-tax discount rate is then used to calculate the pre-tax discount
rates. The pre-tax discount rates, which have been applied to the cash flows for each CGU,
are 12.4% (2023: 13.1%).
2024
2023
Intangible Intangible
contract contract
Goodwill rights Total Goodwill rights Total
£m £m £m £m £m £m
Infrastructure Services
523.1
48.0
571.1
516.3
63.6
579.9
Construction
20.4
1.1
21.5
20.4
1.2
21.6
543.5
49.1
592.6
536.7
64.8
601.5
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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13 Intangible assets continued
Goodwill allocated to the Construction segment is not significant in comparison to the Group’s
total goodwill and is not sensitive to changes in assumptions.
Infrastructure Services
Forecast revenue growth rates and operating profit margins are based on historical
experience, adjusted for the impact of expected changes to contract portfolio and profitability.
Based on the value in use calculation, these assumptions detailed below derived a recoverable
amount for the Infrastructure Services segment that is £303.5m (2023: £166.3m) above the
carrying value of the assets.
The Infrastructure Services segment impairment review is sensitive to changes in the
following key assumptions: discount rate and operating margins. Management considers that
a reasonably possible change in any single assumption could give rise to an impairment of
the carrying value of goodwill and intangibles.
2024
2023
Rate at which Rate at which
headroom headroom
would be would be
eliminated eliminated
%
%
%
%
Pre-tax discount rate
12.4
18.1
13.1
16.0
Operating margin – forecast period
5.5–5.9
4.0–4.5
5.5–5.7
4.7–4.9
Operating margin – perpetuity
5.5
3.6
5.5
4.3
The Infrastructure Services segment achieved a 5.6% operating margin in the year
(2023: 4.7%) which is in line with the value in use forecast.
A terminal growth rate of 1.7% (2023: 2.0%) has been applied into perpetuity.
In terms of the possible impacts of climate change, the two key assumptions that could
be sensitive to this are the growth rate and discount rates noted above. If climate change
has a negative impact on revenues and/or the operating costs of the Group, there could be
a potential impact on the discounted cash flow growth rates used within the valuation model.
Lower future growth rates would reduce the level of the discounted cash flow valuation and
hence the amount of headroom available to the Group above an impairment trigger. At present,
the material short- to medium-term risks presented by possible climate change impacts are
considered to be factored into the growth and discount rates where they are known and can
be quantified. Using the current assumptions, no reasonably foreseeable change in the
assumptions used within the value in use calculations would cause an impairment. Therefore,
at present, changes in the long-term assumptions due to the impact of climate change would
also not be expected to trigger an impairment.
14 Property, plant and equipment
Land and Plant and Mining
buildings equipment asset Total
£m £m £m £m
Cost
At 1 July 2022
24.9
54.0
4.8
83.7
Additions
–
3.9
–
3.9
Disposals
(1.0)
(14.0)
(4.8)
(19.8)
Transfers
–
0.7
–
0.7
At 30 June 2023
23.9
44.6
–
68.5
Additions
0.1
7.0
–
7.1
Disposals
(0.5)
(12.2)
–
(12.7)
At 30 June 2024
23.5
39.4
–
62.9
Accumulated depreciation and impairment
At 1 July 2022
(7.6)
(38.6)
(4.8)
(51.0)
Charge for the year
(0.2)
(5.9)
–
(6.1)
Disposals
0.4
13.5
4.8
18.7
Transfers
–
(0.3)
–
(0.3)
At 30 June 2023
(7.4)
(31.3)
–
(38.7)
Charge for the year
(1.7)
(6.6)
–
(8.3)
Disposals
0.1
11.7
–
11.8
At 30 June 2024
(9.0)
(26.2)
–
(35.2)
Net book value
At 30 June 2024
14.5
13.2
–
27.7
At 30 June 2023
16.5
13.3
–
29.8
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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15 Investment properties
(a) Reconciliation of carrying amount
Owned Right-of-use
assets assets Total
£m £m £m
Cost
At 1 July 2022
13.0
47.4
60.4
Transfers
2.7
–
2.7
Additions
22.8
1.1
23.9
Fair value gain/(loss)
14.4
(3.0)
11.4
At 30 June 2023
52.9
45.5
98.4
Fair value gain/(loss)
8.2
(1.7)
6.5
At 30 June 2024
61.1
43.8
104.9
Investment properties comprise office buildings and commercial land/properties that were
formerly utilised by the Group but have been vacated, along with a student accommodation
property held by the Group (previously held within a joint venture). They are leased out
(or intended to be leased out) to third parties under operating leases and/or are held for
capital appreciation. The investment properties include properties held as right-of-use assets,
as well as a property owned by the Group. The investment properties are carried at fair value.
Changes in fair values are presented in the profit or loss within other income.
(b) Amounts recognised in the income statement
2024 2023
£m £m
Rental income from operating leases
6.0
5.1
Direct operating expenses for property that generated
rental income
(3.9)
(2.7)
Fair value gain
6.5
11.4
Total net income recognised in the income statement
8.6
13.8
(c) Leasing arrangements
The investment properties are leased to tenants under operating leases with rentals payable
either monthly or quarterly. Lease payments for some contracts include provisions for RPI
increases. One contract entitles the Group to an element of variable lease rentals (in addition
to the base rent payments) based on a share of the tenant’s revenue in carrying out their
business of providing serviced offices and hot desking space at the premises. Some of the
leases include a tenant option to renew the lease for a further period. Expectations about
the future residual values are reflected in the fair value of the properties.
Minimum lease payments receivable on leases of investment properties are as follows:
2024 2023
£m £m
Less than one year
2.3
3.0
One to two years
2.1
2.3
Two to three years
1.3
2.1
Three to four years
1.1
1.3
Four to five years
–
1.1
Total
6.8
9.8
(d) Measurement of fair values
The fair value of the owned investment properties was determined as at 30 June 2024
by external, independent property valuers, having appropriate recognised professional
qualifications and recent experience in the location and category of the property being valued.
The fair values of the right-of-use investment properties have been determined by the Group
without the use of an independent valuer. The fair value measurements for all of the investment
properties have been categorised as Level 3 fair values (as defined in note 27), based on the
inputs to the valuation techniques used.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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15 Investment properties continued
Investment Valuation Significant Inter-relationship between key unobservable inputs
property technique unobservable inputs and fair value measurement
Owned Market approach: The fair values have been External valuations are performed every two years. The estimated fair value would increase/(decrease) if:
assets determined by adopting an investment approach The last valuations were carried out as at 30 June 2024, Expected market rental growth were higher/(lower);
and assuming continued use as offices/student using the following inputs: The occupancy rate was higher/(lower);
accommodation/future use as a wind farm. Void periods were shorter/(longer);
Offices Rent-free periods were shorter/(longer);
Expected market rental growth of 0% (2023: 0%); Expected market yields were lower/(higher); or
Void periods of 12 months to 36 months Expected electricity price was higher/(lower).
(2023: 24 months to 36 months); and
Rent-free periods of 12 months on a 5-year lease
(2023: 12 months on a 5-year lease).
Student accommodation
Expected market rental growth of 11% (2023: 10%);
Occupancy rate average of 98% (2023: 98%); and
Expected market yields of 5.5% (2023: 5.8%-6.0%).
Wind farm
Expected electricity price of £62 MWh (2023: £55 MWh); and
Expected market yields of 7% (2023: 7%).
In years where no valuation is performed, the fair value is reviewed
taking into consideration any changes in market conditions and any
offers received on the property and adjustments made accordingly.
Right-of- Income approach using discounted cash flows: Expected market rental growth of 1% to 2% The estimated fair value would increase/(decrease) if:
use assets The valuation model considers the present value (2023: 1% to 2%); Expected market rental growth were higher/(lower);
of net cash flows to be generated from the property, Occupancy rate average of 92% to 99% The occupancy rate was higher/(lower);
taking into account the expected rental growth rate, (2023: average of 92% to 99%); Rent-free/void periods were shorter/(longer); or
void periods, occupancy rate, lease incentive costs Rent-free/void periods of 6–9 months at the end of each tenancy The risk-adjusted discount rate was lower/(higher).
such as rent-free periods and other costs not paid (2023: 6–9 months); and
by tenants. The expected net cash flows are Risk-adjusted discount rate of 4.2% (2023: 4.2%).
discounted using risk-adjusted discount rates.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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16 Investments in and loans to joint ventures
(a) Movements in year
2024 2023
£m £m
Investments in joint ventures
At 1 July
78.6
82.3
Additions
23.8
35.7
Acquisition of joint venture debt
–
0.9
Disposals
–
(22.5)
Loan repayments and return of equity
(5.6)
(17.1)
Share of:
Operating (loss)/profit
(0.7)
1.3
Finance costs
(0.5)
(0.1)
Tax income/(expense)
2.8
(0.1)
Post-tax results of joint ventures – continuing operations
1.6
1.1
Dividends received
(6.7)
(1.8)
At 30 June
91.7
78.6
(b) Interests in joint ventures
Set out below are the joint ventures of the Group as at 30 June 2024 which, in the opinion
of the Directors, are material to the Group. See note 31 for the full list of joint ventures.
All of the entities are private entities and therefore do not have a quoted fair value. The country
of incorporation or registration is also their principal place of business. All are measured under
the equity method.
% of ownership % of ownership
interest/voting interest/voting Carrying amount Carrying amount
rights rights 2024 2023
Name of entity 2024 2023 £m £m
Kier Cornwall Street
90%/50%
90%/50%
32.1
23.2
Solum Regeneration
50%/50%
50%/50%
25.0
21.1
Kier Trade City
90%/50%
90%/50%
9.1
6.5
Kier PGIM Logistics
25.5%/25.5%
25.5%/25.5%
7.1
6.7
Immaterial joint ventures
18.4
21.1
91.7
78.6
All material joint ventures are incorporated in England and Wales and are in the Group’s
Property division.
(c) Borrowing facilities and guarantees to joint ventures
The Group has provided guarantees to support borrowing facilities of joint ventures as follows:
2024
2023
Borrowing Drawn Borrowing Drawn
facility Guarantees at 30 June facility Guarantees at 30 June
£m £m £m £m £m £m
Kier Trade City
12.0
2.7
9.0
17.8
3.5
8.4
Other than as disclosed above the liabilities of the joint ventures are without recourse
to the Group. Details of the Group’s interests in joint ventures are given in note 31.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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16 Investments in and loans to joint ventures continued
(d) Summarised financial information for joint ventures
The tables below provide summarised financial information for those joint ventures that are material to the Group. The information disclosed reflects the amounts presented in the financial
statements of the relevant joint ventures and not the Group’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method,
including fair value adjustments and modifications for differences in accounting policy.
Kier Cornwall Street
Solum Regeneration
Kier Trade City
Kier PGIM Logistics
2024 2023 2024 2023 2024 2023 2024 2023
Summarised balance sheet £m £m £m £m £m £m £m £m
Current assets
Cash and cash equivalents
0.2
–
1.0
1.2
0.7
0.4
0.3
0.6
Other current assets
56.1
37.2
53.1
44.8
19.4
16.4
35.0
43.6
Current assets
56.3
37.2
54.1
46.0
20.1
16.8
35.3
44.2
Non-current assets
–
–
–
–
–
–
5.4
2.5
Current liabilities
Other current liabilities
(2.0)
(1.2)
(4.0)
(3.9)
(1.0)
(1.2)
(0.7)
(0.4)
Total current liabilities
(2.0)
(1.2)
(4.0)
(3.9)
(1.0)
(1.2)
(0.7)
(0.4)
Non-current liabilities
Financial liabilities (excluding trade payables)
(21.7)
(12.3)
–
–
(9.0)
(8.4)
(13.7)
(20.1)
Total non-current liabilities
(21.7)
(12.3)
–
–
(9.0)
(8.4)
(13.7)
(20.1)
Net assets
32.6
23.7
50.1
42.1
10.1
7.2
26.3
26.2
Reconciliation to carrying amounts:
Net assets at 1 July
23.7
8.0
42.1
42.6
7.2
7.5
26.2
29.0
Capital introduced
7.5
19.4
11.1
7.8
4.4
–
8.8
4.7
Profit/(loss) for the year
1.4
(3.7)
(2.1)
(0.4)
1.2
(0.3)
(8.7)
(7.5)
Loan repayments and return of equity
–
–
(1.0)
(7.9)
(2.7)
–
–
–
Net assets at 30 June
32.6
23.7
50.1
42.1
10.1
7.2
26.3
26.2
Group’s share (%)
90%
90%
50%
50%
90%
90%
25.5%
25.5%
Group’s share
29.4
21.3
25.0
21.1
9.1
6.5
6.7
6.7
Capital introduced on behalf of joint venture partner
2.7
1.9
–
–
–
–
–
–
Cumulative unrecognised share of losses
–
–
–
–
–
–
0.4
–
Investment in joint venture
32.1
23.2
25.0
21.1
9.1
6.5
7.1
6.7
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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16 Investments in and loans to joint ventures continued
Kier Cornwall Street
Solum Regeneration
Kier Trade City
Kier PGIM Logistics
2024 2023 2024 2023 2024 2023 2024 2023
Summarised income statement £m £m £m £m £m £m £m £m
Revenue
–
–
–
24.3
10.5
0.5
–
0.3
Finance costs
(0.5)
(0.1)
–
–
–
–
–
–
Taxation
–
–
–
–
–
–
2.9
2.5
Profit/(loss) for the year from continuing operations
1.4
(3.7)
(2.1)
(0.4)
1.2
(0.3)
(8.7)
(7.5)
Profit/(loss) for the year
1.4
(3.7)
(2.1)
(0.4)
1.2
(0.3)
(8.7)
(7.5)
Total comprehensive income/(expense)
1.4
(3.7)
(2.1)
(0.4)
1.2
(0.3)
(8.7)
(7.5)
(e) Individually immaterial joint ventures
In addition to the interests in joint ventures disclosed above, the Group also has interests in a number of individually immaterial joint ventures that are accounted for using the equity method.
2024 2023
£m £m
Aggregate carrying amount of individually immaterial joint ventures
18.4
21.1
Dividends received from individually immaterial joint ventures
13.5
1.8
Aggregate amounts of the Group’s share of:
Profit from continuing operations
2.2
4.8
Total comprehensive expense
2.2
4.8
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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17 Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group
and movements thereon:
Property, Short-term Retirement
Intangible plant and temporary benefit Tax
assets equipment
differences
1
obligations losses Total
£m £m £m £m £m £m
At 1 July 2022
(19.8)
34.8
37.5
(49.3)
105.6
108.8
Credited/(charged) to
income statement –
continuing
3.9
(10.6)
3.8
(1.3)
0.6
(3.6)
Acquisitions and
disposals
–
(0.1)
–
–
–
(0.1)
(Charged)/credited
directly to
comprehensive income
–
–
(0.8)
24.5
–
23.7
At 30 June 2023
(15.9)
24.1
40.5
(26.1)
106.2
128.8
Credited/(charged) to
income statement –
continuing
4.8
(8.1)
(0.9)
(1.0)
0.6
(4.6)
Credited directly to
comprehensive income
–
–
0.9
7.1
–
8.0
Credited directly to
equity
–
–
0.9
–
–
0.9
At 30 June 2024
(11.1)
16.0
41.4
(20.0)
106.8
133.1
1. Included in short-term temporary differences are deferred tax assets of £13.1m (2023: £15.8m) in respect of
RDEC Step 2 amounts carried forward and £25.5m (2023: £23.3m) in respect of the restricted interest amount
caught under the UK Corporate Interest Restrictions (‘CIR’) tax rules.
Deferred tax assets and liabilities are attributed to temporary differences relating
to the following:
Assets
Liabilities
Total
2024 2023 2024 2023 2024 2023
£m £m £m £m £m £m
Property, plant and
equipment
16.0
24.1
–
–
16.0
24.1
Intangible assets
–
–
(11.1)
(15.9)
(11.1)
(15.9)
Retirement benefit
obligations
–
–
(20.0)
(26.1)
(20.0)
(26.1)
Other short-term
timing differences
41.4
40.5
–
–
41.4
40.5
Tax losses
106.8
106.2
–
–
106.8
106.2
Total
164.2
170.8
(31.1)
(42.0)
133.1
128.8
Set-off tax
(31.1)
(42.0)
31.1
42.0
–
–
Net deferred tax
assets
133.1
128.8
–
–
133.1
128.8
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. More information on these forecasts and the methodology
applied are included in notes 1 and 13.
The following evidence has been considered when assessing whether these forecasts
are achievable and realistic:
– The business traded in line with Board expectations in 2024;
– The Group has completed its restructuring activities and is focusing on the achievement
of the long-term sustainable growth plan; and
– The Group’s core businesses are well-placed to benefit from the announced and committed
UK Government spending plans to invest in infrastructure and decarbonisation.
When considering the length of time over which the losses are expected to be utilised,
the Group has taken into account that generally only 50% of profits in each year can
be offset by brought forward losses.
Based on these forecasts, the Group is expected to utilise its deferred tax asset over a period
of approximately 8 years (2023: 10 years).
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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18 Contract assets and liabilities
(a) Current contract assets
2024 2023
£m £m
At 1 July
358.2
366.3
Transferred to receivables
(329.4)
(342.6)
Revenue adjustments recognised in the period for
performance obligations satisfied in previous periods due
to changes in the transaction price arising from changes
in estimates of variable revenue
(3.3)
(0.5)
Balance remaining in relation to contract assets at the start
of the year
25.5
23.2
Increase related to services provided in the year
279.0
335.0
At 30 June
304.5
358.2
(b) Non-current contract assets
2024 2023
£m £m
At 1 July
43.7
31.2
Increase related to services provided in the year
9.9
12.5
At 30 June
53.6
43.7
Non-current contract assets relate to Kier’s share of the funding surpluses receivable
at the end of long-term PFI maintenance contracts.
(c) Current contract liabilities
2024 2023
£m £m
At 1 July
(90.5)
(67.3)
Revenue recognised in the year that was included in contract
liabilities at the beginning of the year
80.8
60.0
Contract liabilities repaid
2.4
4.4
Balance remaining in relation to contract liabilities
at the start of the year
(7.3)
(2.9)
Increase due to cash received or invoices raised in the year
for performance obligations not recognised in revenue
(121.1)
(87.6)
At 30 June
(128.4)
(90.5)
19 Trade and other receivables
2024 2023
£m £m
Current:
Trade receivables
70.7
50.5
Construction contract retentions
59.8
52.4
Amounts receivable from joint ventures
5.1
2.1
Other receivables
65.1
26.0
Prepayments
29.4
53.5
Accrued income
7.2
4.7
237.3
189.2
Non-current:
Construction contract retentions
20.6
18.5
Capitalised mobilisation costs
5.0
6.3
Other
2.9
–
28.5
24.8
Construction contract retentions are amounts withheld by the customer until they are satisfied
with the quality of the work undertaken.
£3.2m of capitalised mobilisation costs were amortised during the year (2023: £7.1m).
20 Inventories
2024 2023
£m £m
Raw materials and consumables
12.8
13.3
Land and work in progress held for development
61.2
59.6
74.0
72.9
As at 30 June 2024, there were £5.5m provisions held against inventory relating to land and
work in progress for development (2023: £nil).
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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21 Net cash
2024 2023
£m £m
Cash and cash equivalents
1,563.1
1,389.5
Bank overdrafts
(1,101.4)
(1,012.6)
Net cash, cash equivalents and bank overdrafts
461.7
376.9
Borrowings due within one year
(58.8)
–
Borrowings due after one year
(242.0)
(319.1)
Impact of cross-currency hedging
6.3
6.3
Net cash
1
167.2
64.1
1. Net cash’ is an alternative performance measure, see page 216.
Average month-end net debt was £116.1m (2023: £232.1m). Net cash excludes lease liabilities.
Cash, cash equivalents and bank overdrafts are subject to Group-wide cash pooling
arrangements, where the banks have right of set off to the credit and debit balances. The table
above has been re-presented to show both the gross and net positions, as a result of a
change in accounting policy (see note 1).
Cash and cash equivalents include £90.9m (2023: £76.9m) being the Group’s share of cash
and cash equivalents held by joint operations and £90.7m (2023: £92.3m) of bank balances
that are not part of the Group-wide cash pooling arrangement. Information on borrowings is
detailed in note 27.
(a) Reconciliation of working capital between the consolidated balance sheet
and consolidated cash flow statement
2024
2023
Trade and Trade and
other other
Inventories receivables Inventories receivables
£m £m £m £m
1 July balance sheet
72.9
214.0
56.8
231.5
30 June balance sheet
74.0
265.8
72.9
214.0
Movement per balance sheet
1.1
51.8
16.1
(17.5)
RDEC
–
(27.3)
–
–
Rents receivable on sub-lease
–
(2.9)
–
–
Movements in capitalised mobilisation costs
–
1.3
–
5.3
Arising on acquisition
–
(2.6)
–
–
Transfers
–
–
2.7
–
Movement per cash flow statement
1.1
20.3
18.8
(12.2)
2024
2023
Trade and Trade and
other other
payables Provisions payables Provisions
£m £m £m £m
1 July balance sheet
(1,111.9)
(63.2)
(1,099.8)
(48.0)
30 June balance sheet
(1,138.2)
(77.2)
(1,111.9)
(63.2)
Movement per balance sheet
(26.3)
(14.0)
(12.1)
(15.2)
Net RDEC receipts
(7.8)
–
(14.0)
–
Bond interest accrued
8.4
–
–
–
Arising on acquisition
1.6
5.9
–
–
Discount unwind
0.4
–
–
–
Movement per cash flow statement
(23.7)
(8.1)
(26.1)
(15.2)
(b) Reconciliation of movements in net cash
Cash, cash
equivalents Borrowings Borrowings Impact of
and bank due within due after cross-currency
overdrafts one year one year hedging Total
£m £m £m £m £m
Net cash/(borrowings)
as at 1 July 2022
297.7
(40.5)
(266.5)
12.2
2.9
Cash flows
78.9
40.5
(54.1)
–
65.3
Foreign exchange movements
0.3
–
1.5
(5.9)
(4.1)
Net cash/(borrowings)
as at 30 June 2023
376.9
–
(319.1)
6.3
64.1
Cash flows
84.9
–
19.9
–
104.8
Amortisation of capitalised loan fees
–
–
(1.2)
–
(1.2)
Foreign exchange movements
(0.1)
–
(0.4)
–
(0.5)
Transfers
–
(58.8)
58.8
–
–
Net cash/(borrowings)
as at 30 June 2024
461.7
(58.8)
(242.0)
6.3
167.2
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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21 Net cash continued
(c) Reconciliation of movements in liabilities arising from financing activities
Hedging Lease
Borrowings derivatives liabilities
£m £m £m
(Liabilities)/assets as at 1 July 2022
(307.0)
12.2
(157.6)
Changes from financing cash flows:
Drawdown of borrowings
(56.8)
–
–
Repayment of borrowings/principal elements of lease
payments
43.2
–
45.6
Settlement of derivative financial instruments
–
(4.7)
–
Non-cash movements:
Net lease additions
–
–
(70.6)
Foreign exchange movements
1.5
–
–
Changes in fair value of derivatives
–
3.2
–
(Liabilities)/assets as at 30 June 2023
(319.1)
10.7
(182.6)
Changes from financing cash flows:
Drawdown of borrowings
(247.5)
–
–
Repayment of borrowings/principal elements of lease
payments
267.4
–
40.6
Non-cash movements:
Net lease additions
–
–
(31.1)
Amortisation of capitalised loan fees
(1.2)
–
–
Foreign exchange movements
(0.4)
–
–
Changes in fair values of derivatives
–
(3.6)
–
(Liabilities)/assets as at 30 June 2024
(300.8)
7.1
(173.1)
22 Leases
(a) Group as a lessee
The Group has lease contracts for various properties, and items of plant, machinery, vehicles
and other equipment used in its operations and for administration of the Group’s business.
Leases of properties have remaining durations of up to 41 years. Leases of plant and
machinery and other equipment generally have lease terms of between one and three years,
while motor vehicles generally have lease terms of between three and six years.
Lease contracts are negotiated on an individual basis and contain a wide range of different
terms and conditions. The lease agreements do not impose any covenants other than the
security interests in the leased assets that are held by the lessor. Leased assets may not be
used as security for borrowing purposes. A number of property leases contain extension or
termination options. In these circumstances, the Group makes a judgement about the period
for which it is reasonably certain to lease the property.
The Group’s accounting policies for leases are set out in note 1. The Group has elected
not to recognise right-of-use assets and lease liabilities for short-term leases and leases
of low-value assets. The expense included in the income statements relating to these leases
was £115.5m (2023: £115.6m). The assets leased under short-term leases are predominantly
small items of plant and equipment and therefore are also of low value. The utilisation of these
assets varies depending on the nature and levels of the Group’s activities.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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22 Leases continued
(b) Right-of-use assets
Set out below are the carrying amounts of right-of-use assets recognised in respect
of the Group’s leases and the movements during the year:
Land and Motor Plant and
buildings vehicles equipment Total
£m £m £m £m
At 1 July 2022
47.3
19.3
14.0
80.6
Additions
5.4
11.8
80.4
97.6
Depreciation
(8.1)
(9.5)
(26.1)
(43.7)
Transferred to owned assets
–
–
(0.4)
(0.4)
Disposals
(1.9)
(2.1)
(24.7)
(28.7)
At 30 June 2023
42.7
19.5
43.2
105.4
Additions
5.0
14.1
27.7
46.8
Depreciation
(7.5)
(8.9)
(22.6)
(39.0)
Disposals
(4.7)
(0.2)
(13.3)
(18.2)
At 30 June 2024
35.5
24.5
35.0
95.0
(c) Lease liabilities
2024 2023
£m £m
Current
42.2
36.2
Non-current
130.9
146.4
173.1
182.6
The maturity profile of the contractual cash flows associated with the lease liabilities is
presented in note 27. The interest expense in respect of lease liabilities is included within
finance costs in the income statement and is disclosed in note 7.
(d) Amounts recognised in the statement of cash flows
2024 2023
£m £m
Principal elements of lease payments
1
40.6
45.6
Interest paid
1
9.5
9.5
Payments for short-term leases and leases of low-value assets
2
115.5
115.6
Total cash outflow for leases
165.6
170.7
1. Included within cash flows from financing activities within the statement of cash flows.
2. Included within operating cash flows within the statement of cash flows.
23 Trade and other payables
2024 2023
£m £m
Current:
Trade payables
328.4
310.0
Accruals
580.2
585.1
Subcontract retentions
30.8
22.5
Other taxation and social security
152.1
138.4
Other payables and deferred income
18.3
19.0
1,109.8
1,075.0
Non-current:
Trade payables
3.9
5.1
Subcontract retentions
24.5
31.8
28.4
36.9
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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24 Provisions
Warranty,
rectification
and other
Insurance Onerous contractual
claims contracts obligations Other Total
£m £m £m £m £m
At 1 July 2022
18.4
9.0
15.4
5.2
48.0
Charged to income statement
5.1
6.2
12.4
2.5
26.2
Utilised
–
(5.5)
(4.6)
(6.2)
(16.3)
Unwinding of discount
–
0.2
–
–
0.2
Transfer from creditors
3.9
(0.8)
2.1
–
5.2
Currency realignment
–
–
–
(0.1)
(0.1)
At 30 June 2023
27.4
9.1
25.3
1.4
63.2
(Credited)/charged to income
statement
(0.1)
0.7
34.9
0.3
35.8
Arising on acquisition
–
–
5.9
–
5.9
Utilised
(4.8)
(7.1)
(21.1)
(0.4)
(33.4)
Unwinding of discount
–
0.2
–
–
0.2
Transfer from creditors
0.2
–
5.3
–
5.5
At 30 June 2024
22.7
2.9
50.3
1.3
77.2
Expected utilisation
Within one year
4.0
0.3
49.7
1.3
55.3
After one year
18.7
2.6
0.6
–
21.9
At 30 June 2024
22.7
2.9
50.3
1.3
77.2
Within one year
6.8
6.5
24.3
0.6
38.2
After one year
20.6
2.6
1.0
0.8
25.0
At 30 June 2023
27.4
9.1
25.3
1.4
63.2
Insurance provisions are held in the Group’s insurance captive in respect of legal and other
disputes in various Group companies. Due to the nature of the provision for insurance claims,
the timing of any potential outflows can be uncertain. Where there is uncertainty, they are
classified as due after one year.
Onerous contracts provisions are for loss-making contracts that the Group is legally obligated
to complete.
Warranty and rectification provisions are for potential claims against work completed
by the Group. This includes provisions in respect of fire compliance and cladding.
Other provisions include potential fines arising from safety, health and environmental
legislation and regulation, and costs in respect of redundancy and site closure.
25 Share-based payments
The Group operates a number of share-based payment schemes for eligible employees
as described below.
Sharesave Scheme
The number of options over the Company’s ordinary shares outstanding at 30 June 2024
were as follows:
Sharesave Sharesave Sharesave Sharesave
Scheme Scheme Scheme Scheme
15 February 29 October 2 November 31 October
2021 2021 2022
2023
Total
Number of options
Directors
–
11,250
9,818
6,182
27,250
Employees
1
714,390
4,821,705
7,650,460
6,513,511
19,700,066
714,390
4,832,955
7,660,278
6,519,693
19,727,316
Exercise price (pence)
1
56.5
96.0
55.0
90.0
1. Where the options were granted before the share issue that completed on 18 June 2021, the numbers of options
and the exercise prices have been adjusted to take account of the dilution resulting from the new shares.
Options to acquire shares in the capital of Kier Group plc have been granted to eligible
employees who enter into a Sharesave (‘SAYE’) contract. The number of options granted to
each participating employee are the number of shares which have an aggregate option price
not exceeding the projected proceeds of the employee’s Sharesave contract. Participation
in the Kier Sharesave Scheme is offered to all employees of the Group who have been
employed for a continuous period determined by the Board. Under the Sharesave contract,
participating employees save a regular sum each month for three years up to a maximum
of £500 per month.
6,841,037 options were granted in the year (2023: 8,730,264) under the Sharesave Scheme,
which will all be equity settled.
5,819,317 Sharesave Scheme options were exercised during the year (2023: 72,753).
The weighted average market price of Kier Group plc shares at the date of exercise
of Sharesave Scheme options during the year was 129.5p (2023: 66.9p).
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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25 Share-based payments continued
Long-Term Incentive Plan
The number of awards over the Company’s ordinary shares outstanding at 30 June 2024
were as follows:
LTI P LTI P LTI P
award award award
FY22 FY23
FY24
Tot al
Number of awards
Directors
2,313,430
3,601,875
2,348,681
8,263,986
Employees
4,601,607
8,838,289
6,779,387
20,219,283
6,915,037
12,440,164
9,128,068
28,483,269
Exercise price (pence)
nil
nil
nil
The Group has established a Long-Term Incentive Plan (‘LTIP’) under which Directors
and senior employees can receive awards of shares. Awards made under the scheme are
normally able to vest following the third anniversary of the date of the grant. Vesting may be
in full or in part (with the balance of the award lapsing) and is subject to the Group achieving
specific performance targets. Participants are entitled to receive dividend equivalents on
these awards. Awards under the LTIP are all equity settled. The awards made to Directors
are subject to a two-year post-vesting holding period and malus and clawback provisions.
9,322,979 new options were granted under the LTIP scheme in the year (2023: 15,492,751)
and 8,695,601 shares vested during the year (2023: 8,432,381). The weighted average market
price of Kier Group plc shares at the date of exercise of LTIP options during the year was
105.0p (2023: 62.3p).
Further description of the above share schemes and the terms and conditions of each scheme
are included in the Directors’ Remuneration report on pages 109–134.
Shares held in trusts
The LTIP awards, which are taken as shares, are intended to be satisfied from shares
held by the Kier Group 1999 Employee Benefit Trust and May Gurney Group Trustees Ltd
Employee Share Ownership Trust or the issue of new shares. The shares held by the trusts
are accounted for as a deduction from equity within retained earnings. The movements in
the number and historical cost value of shares held by the trusts are as follows:
2024
2023
Historic cost Historic cost
Number value Number value
of shares £m of shares £m
At 1 July
16,952,961
11.2
7,555,030
7.7
Acquired during the year
3,990,154
4.2
18,607,232
12.4
Issued in satisfaction of share scheme
awards
(8,695,601)
(6.1)
(8,432,381)
(8.0)
Issued in satisfaction of deferred bonus
schemes
(443,233)
(0.3)
(776,920)
(0.9)
At 30 June
11,804,281
9.0
16,952,961
11.2
The market value of these shares at 30 June 2024 was £15.6m (2023: £12.7m).
The shares acquired by the trusts in the year at a cost of £4.2m (2023: £12.4m), net of cash
received by the trusts in respect of the deferred bonus schemes of £0.5m (2023: £0.5m)
is reflected in the statement of changes in equity as a net purchase of own shares of £3.7m
(2023: £11.9m).
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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25 Share-based payments continued
Fair value of share-based payments
The fair values per option granted have been calculated using the Black-Scholes model for all options, apart from the total shareholder return (‘TSR’) element of the LTIP, which is based
on a Stochastic model. For awards made to the Directors which are subject to a two-year holding period post-vesting, the Finnerty model is used. The following assumptions were used
in calculating the fair values of share options granted in the year:
2024
2023
Scheme
Sharesave
LTIP
LTIP (Directors)
LTIP
Sharesave
LTIP
LTIP (Directors)
31 October 17 November 17 November 8 March 2 November 21 October 21 October
Date of grant 2023 2023 2023 2024 2022 2022 2022
Share price at grant (pence)
100.8
107.8
107.8
142.6
58.2
60.0
60.0
Exercise price (pence)
90.0
nil
nil
nil
55.0
nil
nil
Expected term (years)
3.3
3.0
3.0
2.7
3.3
3.0
3.0
Holding period (years)
n/a
n/a
2.0
n/a
n/a
n/a
2.0
Expected volatility
43.7%
37.9%
32.9%
37.9%
62.1%
53.7%
44.5%
Dividend yield
0.0%
n/a
n/a
n/a
0.0%
n/a
n/a
Risk-free interest rate
4.50%
4.23%
3.97%
4.23%
3.13%
3.83%
4.14%
Value per option (pence):
– Sharesave
40.7
–
–
–
27.6
–
–
– LTIP Market condition (25%)
–
88.8
83.0
117.5
–
41.2
38.1
– LTIP Non-market condition (75%)
–
107.8
100.8
142.6
–
60.0
55.6
The value per option represents the fair value of the option less any consideration payable. The fair value of the proportion of the awards subject to performance conditions that are market
conditions under IFRS 2 ‘Share-based Payments’ (the TSR – total shareholder return element) incorporates an assessment of the number of shares that will vest.
The performance conditions linked to adjusted earnings per share, free cash flow and carbon emissions reduction, are non-market conditions under IFRS 2. Therefore, the fair values of these
elements do not include an assessment of the number of shares that will vest. Instead, the amount charged is based on the fair values factored by a ‘true-up’ for the number of awards that
are expected to vest.
The expected volatility is based on historical volatility over the period of time commensurate with the expected award term immediately prior to the date of grant. The risk-free rate of return
is the yield on UK Government securities over a term consistent with the expected term.
A charge of £9.3m relating to share-based payments has been recognised in the income statement as employee costs (2023: £8.4m). Included in other payables is an amount of £1.7m
(2023: £1.0m) relating to the accrual of employer’s national insurance in respect of share-based payments expected to vest in the future.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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25 Share-based payments continued
Summary of movements in the number of options
A reconciliation of option movements is shown below:
2024
2023
Weighted Weighted
Number average Number average
of options exercise price of options exercise price
Outstanding at 1 July
57,184,804
23.9p
57,273,676
26.3p
Granted
16,164,016
38.1p
24,223,015
19.8p
Lapsed or forfeited
(10,623,317)
13.1p
(15,806,753)
39.0p
Exercised
(14,514,918)
22.8p
(8,505,134)
0.5p
Outstanding at 30 June
48,210,585
31.4p
57,184,804
23.9p
Exercisable at 30 June
158,477
72.3p
105,434
66.8p
The options outstanding at 30 June 2024 have a weighted average remaining contractual life
of 1.43 years (2023: 1.42 years).
26 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. Details of
financial guarantees provided to support joint ventures are disclosed in note 16(c).
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 review
As disclosed in note 1 of the financial statements, 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 (see note 24). 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.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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27 Financial instruments
2024
2023
Financial Financial
assets at liabilities at Financial Financial
amortised amortised assets at liabilities at
cost cost Derivatives amortised cost amortised cost Derivatives
£m £m £m £m £m £m
Financial assets
Trade and other
receivables (less
prepayments)
231.5
–
–
154.2
–
–
Cash and cash
equivalents
1,563.1
–
–
1,389.5
–
–
Equity loans provided
to joint ventures
89.4
–
–
101.8
–
–
Other financial assets
–
–
7.1
–
–
10.7
Total
1,884.0
–
7.1
1,645.5
–
10.7
Financial liabilities
Bank overdrafts
–
(1,101.4)
–
–
(1,012.6)
–
Borrowings
–
(300.8)
–
–
(319.1)
–
Lease liabilities
–
(173.1)
–
–
(182.6)
–
Trade and other
payables
1
–
(984.9)
–
–
(971.8)
–
Total
–
(2,560.2)
–
–
(2,486.1)
–
Net
1,884.0
(2,560.2)
7.1
1,645.5
(2,486.1)
10.7
1. Trade and other payables exclude other taxes and social security and deferred income.
Capital risk management
The Group’s capital management objectives are to ensure the Group’s ability to continue
as a going concern and to optimise the capital structure in order to minimise the cost of
capital whilst maintaining a strong balance sheet to support business development and tender
qualification. The Group’s capital management strategy is to use a blend of capital types with
different risk, return and maturity profiles to support the operating divisions and deliver the
Group’s capital management objectives.
The capital structure of the Group comprises: equity, consisting of share capital, share
premium, retained earnings and other reserves as disclosed in the consolidated statement
of changes in equity; and cash, cash equivalents and borrowings as disclosed in note 21 and
described further below. The Group forecasts and monitors short-, medium- and longer-term
capital needs on a regular basis and adjusts its capital structure as required through the
payment of dividends to shareholders, the issue of new share capital and the increase or
repayment of borrowings. All investment decisions typically require a pre-tax annualised
return of at least 15.0% to ensure such investments are value enhancing for shareholders.
Financial risk management
Financial risk management is an integral part of the way the Group is managed. In the course
of its business, the Group is exposed primarily to credit risk, market risk and liquidity risk.
The overall aim of the Group’s financial risk management policies is to minimise any potential
adverse effects on financial performance and net assets.
The Group’s treasury team manages the principal financial risks within policies and operating
limits approved by the Board. The treasury function is not a profit centre and does not enter
into speculative transactions. Derivative financial instruments are used to hedge exposure
to fluctuations in interest and exchange rates.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting
mismatch between the hedging instrument and the hedged item. This will effectively result
in recognising interest expense at a fixed interest rate for the hedged floating rate borrowings
and elimination of exchange rate movements in the income statement relating to the hedged
foreign currency denominated borrowings.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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27 Financial instruments continued
Credit risk
Credit risk arises on financial instruments such as trade receivables, short-term bank deposits
and interest rate and currency hedges. Policies and procedures exist to ensure that customers
have an appropriate credit history. The Group’s most significant clients are public or regulated
industry entities which generally have high credit ratings or are of a high credit quality due
to the nature of the client.
Short-term bank deposits and hedging transactions are executed only with strong credit-rated
authorised counterparties based on ratings issued by the major ratings agencies. Counterparty
exposure positions are monitored regularly so that credit exposures to any one counterparty
are within acceptable limits. At the balance sheet date there were no significant concentrations
of credit risk.
Trade and other receivables and contract assets included in the balance sheet are stated
net of expected credit loss (‘ECL’) provisions which have been calculated using a provision
matrix grouping trade receivables and contract assets on the basis of their shared credit
risk characteristics.
An analysis of the provision held against trade receivables is set out below:
2024 2023
£m £m
Provision as at 1 July
1.6
2.1
Credited to the income statement
(0.9)
(1.4)
Charged to the income statement
1.2
1.5
Utilised in the year
(1.4)
(0.6)
Provision as at 30 June
0.5
1.6
There were £17.2m (2023: £12.4m) of trade receivables that were overdue at the balance
sheet date that have not been provided against, of which £11.2m (2023: £3.7m) had been
received by the end of August 2024. There are no indications as at 30 June 2024 that the
debtors will not meet their payment obligations in respect of the amount of trade receivables
recognised in the balance sheet that are overdue and unprovided. The proportion of trade
receivables at 30 June 2024 that were overdue for payment was 24% (2023: 25%). Credit
terms vary across the Group; the average age of trade receivables was as follows:
Infrastructure Services 3 days (2023: 5 days)
Construction 12 days (2023: 9 days)
Property 217 days (2023: 186 days)
Overall, the Group considers that it is not exposed to significant credit risk.
Equity loans to joint ventures of £89.4m (2023: £76.3m) are considered under the general
ECL model and have been compared to future cash flows and net assets of the joint venture
to ensure that they are still expected to be fully recoverable.
Market risk
Interest rate risk
The Group has borrowing facilities to finance short-term working capital and term loans
to finance medium-term capital requirements. Instruments are subject to fixed and floating,
based on a margin over SONIA, interest. The Group’s borrowings, allowing for the effect
of derivatives, can be analysed as follows:
2024 2023
£m £m
Fixed rate
293.7
80.8
Variable rate
15.1
239.6
Cost of raising finance
(8.0)
(1.3)
300.8
319.1
The Group has entered into a fixed interest rate swap in order to mitigate the Group’s
exposure to movements in interest rates. One of the Group’s joint ventures has also entered
into interest rate swaps in order to mitigate its own interest rate risk.
Interest rate risk arises on the Group’s borrowings where they are not at fixed interest
rates and are not hedged. A 50 basis point increase/decrease in the interest rate against
the balances outstanding at 30 June 2024 would lead to a £nil increase (2023: £2.1m)
or £nil decrease (2023: £2.1m) in the Group’s net finance cost.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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27 Financial instruments continued
Foreign currency risk
The Group operates primarily within the UK such that its exposure through its trading operations
to currency risk is not considered to be significant. Where material foreign currency exposures
are identified, these are hedged using forward foreign exchange contracts or swaps.
Changes in foreign exchange rates affect the carrying amount of the liability relating to
foreign currency denominated debt on the Group’s balance sheet. The utilisation of derivatives
ensures that the movement recognised in the profit and loss is offset by movements on the
derivative which are recycled from other comprehensive income. As at 30 June 2024 the
Group had the equivalent £25.2m (2023: £25.2m) of debt denominated in US dollars at fixed
currency rates using derivatives. A 5% increase/decrease in the US dollar to sterling exchange
rate would lead to a £2.7m decrease (2023: £2.7m) or £2.9m increase (2023: £2.9m) in the
carrying amount of the liability on the Group’s balance sheet, with the movement recognised
in other comprehensive income.
As at 30 June 2024 the Group had unhedged debt outstanding of US$0.8m (2023: US$35.9m).
A 5% increase/decrease in the US dollar to sterling exchange rate would lead to a decrease
of £nil/increase of £nil (2023: decrease of £1.4m/increase of £1.3m) in the carrying amount
of the liability.
Liquidity risk
The Group’s policy on liquidity risk is to ensure that sufficient borrowing facilities are available
to fund operations over the medium term. The Group’s principal committed borrowing facilities,
being: a high yield bond, a floating rate revolving credit facility and a number of loan notes,
are all unsecured. The amount of committed borrowing facilities available to the Group
is reviewed regularly and is designed to exceed forecast peak gross debt levels.
Details of guarantees provided by the Group to support the borrowing facilities of its joint
ventures are given in note 16(c). The Group provides no other financial guarantees other
than those provided to its joint ventures.
Derivative financial instruments
As at 30 June 2024, the Group had the following cross-currency and interest rate swaps:
– One cross-currency swap taken out in 2014 to hedge the currency risk on a US dollar-
denominated loan, nominal value US$40.0m.
– One floating to fixed interest rate swap taken out in 2024 to hedge the interest rate risk
on part of the Group’s revolving credit facility, nominal value £50.0m.
The Group has assessed the effectiveness of these swaps and concluded that they are highly
effective. No amount in relation to hedge ineffectiveness has been charged or credited to the
income statement in relation to any cross-currency or interest rate swap.
The following table indicates the periods in which the cash flows associated with cash flow
hedges are expected to occur and the fair value of the related hedging instruments:
Expected cash outflow
Fair value 0–1 years
Continuing operations £m £m
Cross-currency swaps: asset
Gross settled inflows
–
32.4
Gross settled outflows
–
(25.7)
6.5
6.7
Interest rate swaps: asset
Net settled
0.6
0.8
In addition to the above, one of the Group’s property joint ventures has entered into an
interest rate derivative as a means of hedging interest rate risk. The interest-bearing debt and
associated interest rate derivative with this joint venture expires in May 2026 and is without
recourse to the Group. At 30 June 2024, the aggregate amount outstanding on this interest-
bearing debt against which an interest rate derivative is held is £21.7m (2023: £12.3m). The
Group’s share of the total net fair value asset of this interest rate derivative at 30 June 2024
amounted to £0.1m (2023: £0.3m), which has met the criteria for hedge accounting.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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27 Financial instruments continued
Financial liabilities – analysis of maturity dates
At 30 June 2024, the Group had the following financial liabilities at amortised cost together
with the maturity profile of their contractual cash flows:
Trade and
other Bank Lease
payables
1
overdrafts Borrowings liabilities Total
30 June 2024 £m £m £m £m £m
Carrying value
984.9
1,101.4
300.8
173.1
2,560.2
Contractual undiscounted
cash flows
Less than one year
956.6
1,101.4
76.4
50.1
2,184.5
One to two years
23.2
–
22.5
30.4
76.1
Two to three years
3.2
–
22.5
20.6
46.3
Three to four years
2.3
–
22.5
14.2
39.0
Four to five years
–
–
272.5
12.0
284.5
Over five years
–
–
–
88.9
88.9
985.3
1,101.4
416.4
216.2
2,719.3
Trade and
other Bank Lease
payables
1
overdrafts Borrowings liabilities Total
30 June 2023 £m £m £m £m £m
Carrying value
971.8
1,012.6
319.1
182.6
2,486.1
Contractual undiscounted
cash flows
Less than one year
935.0
1,012.6
23.2
44.2
2,015.0
One to two years
31.4
–
325.2
35.7
392.3
Two to three years
6.1
–
–
24.5
30.6
Three to four years
2.1
–
–
16.0
18.1
Four to five years
–
–
–
11.6
11.6
Over five years
–
–
–
97.9
97.9
974.6
1,012.6
348.4
229.9
2,565.5
1. Trade and other payables exclude other taxes and social security and deferred income.
There is no material difference between the carrying value and fair value of the Group’s
financial assets and liabilities.
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
The Group uses cross-currency and interest rate swaps for hedging. These derivatives are
classified as level 2. The prices of derivative transactions have been derived from proprietary
models used by the bank counterparties using mid-market mark to market valuations for
trades at the close of business on 30 June 2024.
Level 3 – Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
The following table presents the Group’s financial assets and liabilities that are measured
at fair value at 30 June 2024:
Level 2
£m
Assets
Derivatives used for hedging – Cross-currency swaps
6.5
Derivatives used for hedging – interest rate swap
0.6
7.1
There were no transfers between levels 1 and 2 during the year ended 30 June 2024.
The following table presents the Group’s financial assets and liabilities that are measured
at fair value at 30 June 2023:
Level 2
£m
Assets
Derivatives used for hedging – Cross-currency swaps
6.5
Derivatives used for hedging – interest rate swap
4.2
10.7
There were no transfers between levels 1 and 2 during the year ended 30 June 2023.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
198www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
27 Financial instruments continued
Borrowings and borrowing facilities
As at 30 June 2024, the Group had the following unsecured committed facilities after the effect
of derivatives:
– High yield bond of £250.0m, at fixed rate of 9.0%, maturing in February 2029, fully drawn
at 30 June 2024 (2023: £nil);
– Revolving credit facility of £260.9m (2023: £495.0m), reducing to £150.0m in January 2025,
at a margin over SONIA, due for renewal on 31 March 2027, which was undrawn at
30 June 2024 (2023: £229.9m);
– Two loan notes, principal amounts of £11.5m, US$40.8m, with fixed coupons of between
5.2% and 5.4% repayable on 31 January 2025, fully drawn at 30 June 2024, totalling
£37.3m (2023: £74.4m), net of swap of £6.3m (2023: £6.3m); and
– Non-recourse project finance of £15.1m (2023: £nil) for property development activity within
the Property business.
In addition, the Group has unsecured overdraft facilities of £18.0m (2023: £18.0m), at a margin
over base rate, repayable on demand, undrawn at 30 June 2024 and 2023.
Included within borrowings are capitalised loan fees of £8.0m (2023: £1.3m).
The Group repaid and reduced total available facilities by £21.2m (2023: £83.8m) in the year
ended 30 June 2024.
28 Financial and capital commitments
2024 2023
£m £m
Commitments for capital expenditure
–
7.8
–
7.8
Capital commitments recognised during the year ended 30 June 2023 related to capital
contributions to a joint venture.
29 Acquisitions
On 4 September 2023, the Group acquired the rail assets of the Buckingham Group, primarily
consisting of 180 employees and a number of customer contracts.
The purchase has been accounted for as a business combination in accordance with IFRS 3.
The final fair value amounts recognised in respect of the identifiable assets acquired and
liabilities assumed are set out in the table below:
Fair value total
£m
Intangible assets
7.5
Trade and other receivables
2.6
Trade and other payables
(1.6)
Provisions
(5.9)
Total identifiable assets and liabilities
2.6
Goodwill
6.8
Consideration paid
9.4
Adjustments to the acquired balance sheet primarily relate to intangible assets in relation
to customer contracts along with the recognition of necessary provisions.
The goodwill recognised includes certain intangible assets that cannot be separately identified
and measured due to their nature. This includes control over the acquired business and the
skills and experience of the assembled workforce. Goodwill also represents the opportunity
for Kier’s Infrastructure segment to grow its business within the rail market.
Consideration consisted of £9.4m cash.
The Buckingham acquisition contributed £119.9m to the Group revenue for the period
5 September 2023 to 30 June 2024.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
199www.kier.co.uk
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Strategic reportOverview Corporate governance Financial statements Other information
30 Related parties
Identity of related parties
The Group has a related party relationship with its joint ventures, key management personnel
and pension schemes in which its employees participate.
Transactions with key management personnel
The Group’s key management personnel are the Executive and Non-Executive Directors
as identified in the Directors’ Remuneration report on pages 109–134.
In addition to their salaries, the Group also provides non-cash benefits to Directors and
contributes to their pension arrangements as disclosed on page 117. Key management
personnel also participate in the Group’s share option programme (see note 25).
Key management personnel compensation comprises:
2024 2023
£m £m
Total fixed pay as analysed in the Directors’ Remuneration report
2.1
2.0
Bonus as analysed in the Directors’ Remuneration report
1.6
1.5
Employer’s national insurance contributions
0.7
0.6
Share-based payment charge
1
1.6
1.8
Total key management personnel compensation
6.0
5.9
1. Share-based payment charge is calculated under IFRS 2 ‘Share-based Payments’ as described in note 25.
Transactions with pension schemes
Details of transactions between the Group and pension schemes in which its employees
participate are detailed in note 9.
Transactions with joint ventures
2024 2023
£m £m
Construction services and materials
2.4
0.9
Staff and associated costs
2.6
2.5
Management services
0.9
1.3
Interest on loans to joint ventures
–
0.4
Plant hire
0.2
0.2
6.1
5.3
Balances due from joint ventures
2024 2023
£m £m
Equity accounted investment
89.4
76.3
Loans
2.3
2.3
Investment in and loans to joint ventures
91.7
78.6
Trading balances
0.2
0.1
Total balances due from joint ventures
91.9
78.7
Those joint ventures which the Directors consider to be material to the Group are disclosed in
note 16.
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
200www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
31 Subsidiaries and other undertakings
A full list of subsidiaries, branches, associated undertakings, and joint arrangements as at
30 June 2024 is detailed below. Unless stated otherwise, all undertakings are wholly owned
and held indirectly by Kier Group plc.
Subsidiaries
Registered Share % held
Company name
office
1
class(es) held by Group
2020
Liverpool Limited (in liquidation)
13
Ordinary
100%
A C Chesters & Son Limited
1
Ordinary
100%
AK Student Living Limited
1
A Ordinary
100%
B Ordinary
100%
Arena Central Developments LLP
1
–
100%
Arena Central Management Limited
1
A Ordinary
100%
25%
3
Caribbean Construction Company Limited
2
Ordinary
100%
Caxton Integrated Services Holdings Limited
1
Ordinary
100%
ClearBOX Limited
1
Ordinary
100%
Dudley Coles Limited
1
Ordinary
100%
FDT (Holdings) Ltd
1
Ordinary
100%
FDT Associates Ltd
1
Ordinary A
100%
Heart of Wales Property Services Limited
3
Ordinary
50%
J L Kier & Company (London) Limited
1
Ordinary
100%
J L Kier & Company Limited
1
Ordinary
100%
Kier (Catterick) Limited
1
A Ordinary
100%
B Ordinary
100%
Kier (Kent) PSP Limited
1
A Ordinary
100%
B Ordinary
100%
Kier (Malaysia) SDN. BHD. (in liquidation)
4
Ordinary
100%
Kier (Newcastle) Investment Ltd
1
Ordinary
100%
Kier (Newcastle) Operation Limited
1
Ordinary
100%
Kier (NR) Limited
1
Ordinary
100%
Registered Share % held
Company name
office
1
class(es) held by Group
Kier Asset Partnership Services Limited
1
Ordinary
100%
Kier Benefits Limited
1
Ordinary
100%
Kier Build Limited
1
Ordinary
100%
Kier Business Services Limited
1
Ordinary
100%
Kier Caribbean and Industrial Limited
1
Ordinary
100%
Kier CB Limited
1
Ordinary
100%
Kier Commercial Investments Limited
1
Ordinary
100%
Kier Commercial UKSC Limited
1
Ordinary
100%
Kier Construction Limited
1
Ordinary
100%
Kier Construction Limited
5
Ordinary
100%
Kier Construction LLC
9
6
Ordinary
49%
Kier Construction SA
7
Ordinary
100%
Kier Developments Limited
1
A Ordinary
100%
B Ordinary
100%
C Ordinary
100%
Kier Dubai LLC
9
8
Ordinary
49%
Kier Education Investments Limited
1
B Ordinary
100%
M Ordinary
100%
Kier Education Services Limited
1
B Ordinary
100%
M Ordinary
100%
Kier Energy Solutions Limited
1
Ordinary
100%
A Ordinary
100%
Kier Ewan Limited
1
Ordinary
100%
Kier Facilities Services Limited
1
Ordinary
100%
Kier Finance & Treasury Holdings Limited
1
Ordinary
100%
Kier Finance Limited
1
Ordinary
100%
Kier Fleet Services Limited
1
Ordinary
100%
Kier Green Investments Limited
1
Ordinary
100%
Kier Group Trustees Limited
2
1
Ordinary
100%
Kier Harlow Limited
1
Ordinary
100%
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
201www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Registered Share % held
Company name
office
1
class(es) held by Group
Kier Holdco 2 Limited
1
Ordinary
100%
Kier Holdings Limited
1
Ordinary
100%
Irredeemable
preference
100%
Kier Infrastructure and Overseas Limited
1
Ordinary
100%
Kier Infrastructure and Overseas Limited –
Hong Kong Branch
Kier Infrastructure and Overseas Limited –
Jamaica Branch
Kier Infrastructure and Overseas Limited –
Trinidad Branch
Kier Infrastructure Pty Ltd
9
Ordinary
100%
Kier Insurance Management Services Limited
1
Ordinary
100%
Kier Integrated Services (Estates) Limited
1
Ordinary
100%
Kier Integrated Services (Holdings) Limited
1
Ordinary
100%
Deferred
100%
Kier Integrated Services (Trustees) Limited
1
Ordinary
100%
Kier Integrated Services Group Limited
1
Ordinary
100%
Kier Integrated Services Limited
1
Ordinary
100%
Kier International (Investments) Limited
1
Ordinary
100%
Kier International Limited
1
Ordinary
100%
Kier International Limited – India Branch
(in liquidation)
Kier International Limited – Jamaica Branch
Kier International Limited
10
Ordinary
100%
Kier Islington Limited (in liquidation)
13
Ordinary
100%
Islington
100%
Kier Jamaica Development Limited (dissolved 2 July 2024)
1
Ordinary
100%
Kier Limited
2
1
Ordinary
100%
Registered Share % held
Company name
office
1
class(es) held by Group
Kier Management Consulting Limited
1
Ordinary
100%
A Ordinary
100%
B Ordinary
100%
Kier MBS Limited
1
Ordinary
100%
Kier Midlands Limited
1
Ordinary
100%
Kier Minerals Limited
1
Ordinary
100%
Kier Mining Investments Limited
1
Ordinary
100%
Kier National Limited
1
Ordinary
100%
Kier North Tyneside Limited
5
1
B Ordinary
100%
80%³
Kier Overseas (Four) Limited (in liquidation)
13
Ordinary
100%
Kier Overseas (Nine) Limited
1
Ordinary
100%
Kier Overseas (Seventeen) Limited
1
Ordinary
100%
Kier Overseas (Twenty-Three) Limited
1
Ordinary
100%
Kier Parkman Ewan Associates Limited
1
Ordinary A
100%
Kier Plant Limited
1
Ordinary
100%
Kier Professional Services Limited
1
Ordinary
100%
Kier Project Investment Limited
1
Ordinary
100%
Kier Property Developments Limited
1
Ordinary
100%
Kier Property Limited
1
Ordinary
100%
Kier Property Management Company Limited
1
Ordinary
100%
Kier Rail Limited
1
Ordinary
100%
Kier Recycling CIC
1
Ordinary
100%
Kier Services Limited
1
Ordinary
100%
Kier Sheffield LLP
1
–
80.1%
Kier South East Limited
1
Ordinary
100%
Kier South Wokingham LLP
1
–
100%
Kier Southern Limited
1
Ordinary
100%
Kier Stoke Limited
1
A Ordinary
100%
31 Subsidiaries and other undertakings continued
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
202www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Registered Share % held
Company name
office
1
class(es) held by Group
Kier Sydenham Limited
1
Ordinary
100%
Kier Traffic Support Limited
1
Ordinary
100%
Kier Transportation Limited
1
Ordinary
100%
Kier UKSC LLP
1
–
100%
Kier Ventures Limited
1
Ordinary
100%
Kier Ventures UKSC Limited
1
Ordinary
100%
Kier York Street LLP
1
–
100%
Liferange Limited
1
Ordinary
100%
Magnetic Limited
1
Ordinary
100%
McNicholas Construction (Holdings) Limited
1
Ordinary
100%
McNicholas Construction Services Limited
1
Ordinary
100%
MPHBS Limited (in liquidation)
13
Ordinary
100%
MRBL Limited
1
Ordinary A
100%
Ordinary B
100%
Deferred B
100%
Parkman Consultants Limited
1
Ordinary
100%
Pure Buildings Limited (dissolved 2 July 2024)
1
Ordinary
100%
Pure Recycling Warwick Limited
1
Ordinary A
100%
Ordinary B
100%
T Cartledge Limited
1
Ordinary
100%
T H Construction Limited
1
Ordinary
100%
T J Brent Limited
1
Ordinary
100%
Ordinary B
100%
Ordinary C
100%
Tempsford Insurance Company Limited
2
11
Ordinary
100%
The Impact Partnership (Rochdale Borough) Limited
1
Ordinary
80.1%
Tor2 Limited
1
PSP Shares
100%
80.01%³
TradeDirect Logistics Limited
1
Ordinary
100%
Registered Share % held
Company name
office
1
class(es) held by Group
Turriff Contractors Limited
12
Ordinary
100%
Turriff Group Limited
12
Ordinary
100%
Ordinary A
100%
Ordinary B
100%
Usherlink Limited
1
Ordinary
100%
W. & C. French (Construction) Limited
1
Ordinary
100%
Wallis Limited
1
Ordinary
100%
Wallis Western Limited
1
Ordinary
100%
William Moss Construction Limited (in liquidation)
13
Ordinary
100%
William Moss Group Limited (The)
1
Ordinary
100%
1. See list of registered office details and explanatory notes on page 208.
31 Subsidiaries and other undertakings continued
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
203www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
31 Subsidiaries and other undertakings continued
Listed below are subsidiaries controlled and consolidated by the Group, which under
Section 479A of the Companies Act 2006 (the ‘Act’) are exempt from the requirements
of the Act relating to the audit of accounts.
Company
registration
Company name
number
Year-end
Arena Central Developments LLP
OC305452
30 June 2024
Caxton Integrated Services Holdings Limited
01531034
30 June 2024
ClearBOX Limited
08658406
30 June 2024
Kier (Catterick) Limited
07372563
30 June 2024
Kier (Newcastle) Investment Ltd
09978111
30 June 2024
Kier (Newcastle) Operation Limited
10609470
30 June 2024
Kier (NR) Limited
06648175
30 June 2024
Kier Asset Partnership Services Limited
06928701
30 June 2024
Kier Build Limited
01551959
30 June 2024
Kier Business Services Limited
03679828
30 June 2024
Kier Caribbean and Industrial Limited
01406098
30 June 2024
Kier Commercial Investments Limited
04002798
30 June 2024
Kier Developments Limited
04407754
30 June 2024
Kier Education Investments Limited
06458919
30 June 2024
Kier Education Services Limited
05457729
30 June 2024
Kier Energy Solutions Limited
05488866
30 June 2024
Kier Finance and Treasury Holdings Limited
05887555
30 June 2024
Kier Finance Limited
05887689
30 June 2024
Kier Fleet Services Limited
02127113
30 June 2024
Kier Green Investments Limited
08922437
30 June 2024
Kier Harlow Limited
05961079
30 June 2024
Kier Holdco 2 Limited
11632431
30 June 2024
Kier Holdings Limited
05887559
30 June 2024
Kier Insurance Management Services Limited
07406107
30 June 2024
Kier Integrated Services (Estates) Limited
00216679
30 June 2024
Kier Integrated Services (Holdings) Limited
04321657
30 June 2024
Kier Integrated Services (Trustees) Limited
03510967
30 June 2024
Kier Integrated Services Group Limited
02372311
30 June 2024
Company
registration
Company name
number
Year-end
Kier International (Investments) Limited
01463191
30 June 2024
Kier International Limited
00810557
30 June 2024
Kier Management Consulting Limited
02491619
30 June 2024
Kier MBS Limited
11632543
30 June 2024
Kier Minerals Limited
02099531
30 June 2024
Kier Mining Investments Limited
01531037
30 June 2024
Kier National Limited
02100338
30 June 2024
Kier Overseas (Nine) Limited
01531039
30 June 2024
Kier Overseas (Seventeen) Limited
01462100
30 June 2024
Kier Overseas (Twenty-Three) Limited
02127112
30 June 2024
Kier Plant Limited
04233359
30 June 2024
Kier Professional Services Limited
08881783
30 June 2024
Kier Property Limited
04459403
30 June 2024
Kier Recycling CIC
03153490
30 June 2024
Kier South East Limited
01611216
30 June 2024
Kier Southern Limited
01611137
30 June 2024
Kier Stoke Limited
06391459
30 June 2024
Kier Sydenham Limited
08486944
30 June 2024
Kier Traffic Support Limited
03998110
30 June 2024
Magnetic Limited
07775665
30 June 2024
MRBL Limited
08177998
30 June 2024
Parkman Consultants Limited
01165456
30 June 2024
Pure Recycling Warwick Limited
06436462
30 June 2024
T Cartledge Limited
01451435
30 June 2024
T H Construction Limited
01532971
30 June 2024
TradeDirect Logistics Limited
11400572
30 June 2024
Wallis Western Limited
01961061
30 June 2024
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
204www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
31 Subsidiaries and other undertakings continued
Joint ventures
Registered Interest
Company name
office
1
held
Property
3 Sovereign Square Holdings 1 LLP
1
50%
3 Sovereign Square Holdings 2 LLP
1
50%
3 Sovereign Square LLP
1
50%
Dragon Lane Holdings 1 LLP
1
50%
Dragon Lane Holdings 2 LLP
1
50%
Dragon Lane LLP
1
50%
Kent LEP 1 Limited
1
80%
Kier (Southampton) Development Limited
1
75%
Kier (Southampton) Investment Limited
1
75%
Kier (Southampton) Operations Limited
1
75%
Kier Cornwall Street Holdings 1 LLP
1
90%
Kier Cornwall Street Holdings 2 LLP
1
90%
Kier Cornwall Street LLP
1
90%
Kier Countryside Holdings 1 LLP
14
50%
Kier Countryside Holdings 2 LLP
14
50%
Kier Foley Street Holdco 1 LLP
1
90%
Kier Foley Street Holdco 2 LLP
1
90%
Kier Foley Street LLP
1
90%
Kier HGP Devco 2 LLP
1
50%
Kier HGP Holdings 2 Limited
1
50%
Kier HGP Holdings LLP
1
50%
Kier HGP Tunbridge Wells LLP
1
50%
Kier Maidenhead Holdings 1 LLP
1
90%
Kier Maidenhead Holdings 2 LLP
1
90%
Kier Maidenhead LLP
1
90%
Kier PGIM Logistics (Bognor) Ltd
1
25.5%
Kier PGIM Logistics (Bracknell) Ltd
1
25.5%
Registered Interest
Company name
office
1
held
Kier PGIM Logistics (Knowsley) Ltd
1
25.5%
Kier PGIM Logistics (Milton Keynes) Ltd
1
25.5%
Kier PGIM Logistics (St. Albans) Ltd
1
25.5%
Kier PGIM Logistics Holdco Ltd
1
25.5%
Kier PGIM Logistics Propco 5 Ltd
1
25.5%
Kier PGIM Logistics Propco 7 Ltd
1
25.5%
Kier PGIM Logistics Propco 8 Ltd
1
25.5%
Kier Reading Holdco 1 LLP
1
90%
Kier Reading Holdco 2 LLP
1
90%
Kier Reading LLP
1
90%
Kier Richmond Holdings Limited
1
90%
Kier Richmond Limited
1
90%
Kier Sydenham GP Holdco Limited
1
50%
Kier Sydenham GP Limited
1
50%
Kier Sydenham LP
1
50%
Kier Sydenham Nominee Limited
1
50%
Kier Trade City Holdco 1 LLP
1
90%
Kier Trade City Holdco 2 LLP
1
90%
Kier Trade City LLP
1
90%
Kier Warth Limited
1
50%
Lysander Student Properties Investments Limited
1
75%
Lysander Student Properties Limited
1
75%
Lysander Student Properties Operations Limited
1
75%
MVDC Kier Holdco 1 LLP
1
50%
MVDC Kier Holdco 2 LLP
1
50%
Penda Limited
1
50%
Premier Inn Kier Limited
1
50%
Saffron Walden LLP
14
50%
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
205www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Registered Interest
Company name
office
1
held
Saltbox Business Park (Management) Limited
1
16.75%
Solum Regeneration (Bishops) LLP
1
50%
Solum Regeneration (Epsom) Limited Partnership
1
50%
Solum Regeneration (Guildford) LLP
1
50%
Solum Regeneration (Haywards) LLP
1
50%
Solum Regeneration (Kingswood) LLP
1
50%
Solum Regeneration (Maidstone) LLP
1
50%
Solum Regeneration (Redhill) LLP
1
50%
Solum Regeneration (Surbiton) LLP
1
50%
Solum Regeneration (Twickenham) LLP
1
50%
Solum Regeneration (Walthamstow) LLP
1
50%
Solum Regeneration Epsom (GP Subsidiary) Limited
1
50%
Solum Regeneration Epsom (GP) Limited
1
50%
Solum Regeneration Epsom (Residential) LLP
1
50%
Solum Regeneration Holding 1 LLP
1
50%
Solum Regeneration Holding 2 LLP
1
50%
Transcend Property Limited (dissolved 16 July 2024)
15
50%
Tri-Link 140 Holdings 1 LLP
1
50%
Tri-Link 140 Holdings 2 LLP
1
50%
Tri-Link 140 LLP
1
50%
Watford Health Campus Limited
1
50%
Watford Health Campus Partnership LLP
1
50%
Watford Riverwell (Central Zone) LLP
1
50%
Watford Riverwell (Family Housing) LLP
1
50%
Watford Riverwell Management Company Limited
1
50%
Watford Woodlands LLP
1
50%
Winsford Devco LLP
1
50%
Winsford Holdings 1 LLP
1
50%
Winsford Holdings 2 LLP
1
50%
Company name
Registered Interest
office
1
held
Construction
Kier Graham Defence Limited
1
50%
Services
2020
Knowsley Limited (in liquidation)
13
80.1%
Hackney Schools for the Future Limited
1
80%
Hackney Schools for the Future 2 Limited
1
8%
Team Van Oord Limited
16
25%
1. See list of registered office details and explanatory notes on page 208.
31 Subsidiaries and other undertakings continued
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
206www.kier.co.uk
Kier Group plc Annual Report and Accounts 2024
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31 Subsidiaries and other undertakings continued
Joint operation name
Description
Trading address
Crossrail Contracts a joint arrangement between Kier Infrastructure and Overseas Limited, BAM Ferrovial Kier JV C435, The London School of Beauty,
300/410/435 BAM Nuttall Limited and Ferrovial Agroman (UK) Limited 18–19 Long Lane, London, EC1A 9LP
Deephams
a joint arrangement between Kier Infrastructure and Overseas Limited,
Deephams Sewage Treatment Wales, Pickett’s Lock Lane,
J Murphy & Sons Limited, and Aecom Limited Edmonton, N9 0BA
Devonport
a joint arrangement between Kier Infrastructure and Overseas Limited
St. James House, Knoll Road, Camberley, Surrey, GU15 3XW
and BAM Nuttall Limited
EKFB
a joint arrangement between Kier Infrastructure and Overseas Limited,
5th Floor, Exchange House, Midsummer Boulevard, Milton Keynes, MK9 2EA
Eiffage Génie Civil, Ferrovial Agroman (UK) Limited and BAM Nuttall Limited
Hercules
a joint arrangement between Kier Construction Limited and Balfour Beatty
Hercules Site Offices, The Wessex Building, MOD Lyneham, Calne Road,
Lyneham, Chippenham, SN15 4PZ
Hinkley Framework
a joint arrangement between Kier Infrastructure and Overseas Limited
J23 P&R HPC Postal Consolidation Centre, Huntsworth Business Centre,
and BAM Nuttall Limited North Petherton, Somerset, TA6 6TS
Kier BAM JV
a joint arrangement between Kier Integrated Services Limited and BAM Civil
2nd Floor, Optimum House, Clippers Quay, Salford, M50 3XP
Limited (company number 17543, registered office Kill, County Kildaire)
KCD
a joint arrangement between Kier Integrated Services Limited and Clancy
Thames Water Offices, Clear Water Court, Vastern Rd, Reading, RG1 8DB
Docwra Limited
Luton People Mover
a joint arrangement between Kier Infrastructure and Overseas Limited
Hertford Road, Hoddesdon, EN11 9BX
and VolkerFitzpatrick Limited
Mersey Gateway
a joint arrangement between Kier Infrastructure and Overseas Limited,
Forward Point, Tan House Lane, Widnes, WA8 0SL
Samsung C&T ECUK Limited and FCC Construccion S.A.
RAF Lakenheath
a joint arrangement between Kier Construction Limited and
Hertford Road, Hoddesdon, EN11 9BX
VolkerFitzpatrick Limited
Tarmac Kier JV
a joint arrangement between Kier Transportation Limited and
2nd Floor, Optimum House, Clippers Quay Salford, M50 3XP
Tarmac Trading Limited
Kier Graham Defence (Clyde)
a joint arrangement between Kier Construction Limited and
Campsie House, Buchanan Business Park, Cumbernauld Road, Stepps,
John Graham Construction Limited Glasgow, G33 6HZ
Kier McAvoy
a joint arrangement between Kier Construction Limited and McAvoy
Ferguson Road, Knockmore Hill Industrial Estate, Lisburn, BT28 2FW
MTRC Contract 824
a joint arrangement between Kier Infrastructure and Overseas Limited and
Tower B, 6/F, Manulife Financial Centre, 223 Wai Yip Street, Kwun Tong,
BuildKing Construction Limited Kowloon, Hong Kong
MTRC Contract 901
a joint arrangement between Kier Infrastructure and Overseas Limited,
Room 905, 9/F, King’s Road, North Point, Hong Kong
Laing O’Rourke Hong Kong Limited and BuildKing Construction Limited
Saadiyat Rotana Hotel a joint arrangement between Kier Construction LLC and Ali and P.O. Box 2153, Abu Dhabi
and Resort Complex Sons Contracting Co LLC
Kier ACC
a joint arrangement between Kier Dubai LLC and Arabian Construction
P.O. Box 24461, Dubai
Co.SAL
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Explanatory notes
1. The share capital of all entities is wholly owned and held indirectly by Kier Group plc unless indicated
otherwise.
2. Shares held directly by Kier Group plc.
3. Total interest in entity held by the Group as there are other share class(es) held by a third party.
4. In some jurisdictions in which the Group operates, share classes are not defined and in these instances,
for the purposes of disclosure, these holdings have been classified as ordinary shares.
5. The Group has entered into a partnership arrangement with North Tyneside Council whereby the Council has
a participating ownership interest and receives a minority share of the profits of Kier North Tyneside Limited.
6. Joint operations are contracted agreements to co-operate on a specific project which is an extension of the
Group’s existing business. Joint ventures are ongoing businesses carrying on their own trade.
7. Interests in the above joint ventures are held by subsidiary undertakings.
8. The joint ventures where the Group has an interest in excess of 50% are still considered joint ventures
as the Group has joint control.
9. Accounted for as a subsidiary as control is achieved through an agreement between shareholders.
10. Where companies are shown as being in liquidation, in all cases this is either a members’ voluntary liquidation
or a strike-off application.
31 Subsidiaries and other undertakings continued
Registered office addresses
Number
Address
1
2nd Floor, Optimum House, Clippers Quay, Salford, M50 3XP, UK
2
Harbour Head, Harbour View, Kingston 17, Jamaica
3
Unit 31, Ddole Road Industrial Estate, Llandrindod Wells, Powys, LD1 6DF, UK
4
9–5 & 7–5, Jalan 8/146, Bandar Tasik Selatan, Kuala Lumpur, 57000, Malaysia
5
c/o Grant Thornton, Cnr Bank Street and West Independence Sq Street, Basseterre,
Saint Kitts and Nevis
6
Unit 869, Al Gaith Tower, Hamdan Street, PO Box 61967, Abu Dhabi,
United Arab Emirates
7
151
Angle Avenue, Jean Paul II et Impasse Duverger, Turgeau, Port-au-Prince, Haiti
8
905, 9th Floor, Thuraya Tower, Tecom, P.O. Box 24461, Dubai, United Arab Emirates
9
Pinsent Masons, Level 46, 101 Collins Street, Melbourne, VIC 3000, Australia
10
6th Floor, Emperor Commercial Centre, 39 Des Voeux Road Central, Hong Kong
11
PO Box 33, Dorey Court, Admiral Park, St Peter Port, GY1 4AT, Guernsey
12
Campsie House, Buchanan Business Park, Cumbernauld Road, Stepps,
Glasgow, G33 6HZ, UK
13
1 More London Place, London, SE1 2AF, UK
14
Countryside House, The Drive, Brentwood, Essex, CM13 3AT, UK
15
1 Kingsway, London, WC2B 6AN, UK
16
Bankside House, Henfield Road, Small Dole, Henfield, West Sussex, BN5 9XQ, UK
Notes to the consolidated financial statements continued
For the year ended 30 June 2024
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Note
2024
£m
2023
£m
Non-current assets
Investments 5 455.5 446.2
Deferred tax assets 3.3 3.1
Amounts due from subsidiary undertakings 6 1,585.6 1,525.4
Other financial assets 8 – 9.7
Non-current assets 2,044.4 1,984.4
Current assets
Other financial assets 8 7.1 1.0
Current assets 7.1 1.0
Total assets 2,051.5 1,985.4
Current liabilities
Bank overdraft (521.2) (444.3)
Creditors: amounts falling due within one year 7 (53.5) (2.5)
Corporation tax payable (15.4) (15.2)
Provisions for liabilities (0.2) (2.2)
Current liabilities (590.3) (464.2)
Non-current liabilities
Creditors: amounts falling due after more than
one year 7 (242.0) (309.4)
Amounts due to subsidiary undertakings 7 (51.0) (56.0)
Non-current liabilities (293.0) (365.4)
Total liabilities (883.3) (829.6)
Net assets 1,168.2 1,155.8
Shareholders’ funds
Called up share capital 4.5 4.5
Share premium account 3.2 684.3
Merger reserve 350.6 350.6
Capital redemption reserve – 2.7
Profit and loss account 809.9 111.1
Cash flow hedge reserve – 2.6
Total equity 1,168.2 1,155.8
The profit for the year was £13.4m (2023: £34.9m).
The financial statements of Kier Group plc, company registration number 2708030, on pages
209–214 were approved by the Board of Directors on 11 September 2024 and were signed
on its behalf by:
Andrew Davies Simon Kesterton
Chief Executive Chief Financial Officer
Company balance sheet
As at 30 June 2024
209www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
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Called up
share capital
£m
Share
premium account
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Profit and
loss account
£m
Cash flow
hedge reserve
£m
Total
equity
£m
At 1 July 2022 4.5 684.3 350.6 2.7 79.7 0.1 1,121.9
Profit for the year – – – – 34.9 – 34.9
Other comprehensive income – – – – – 2.5 2.5
Total comprehensive income for the year – – – – 34.9 2.5 37.4
Purchase of own shares – – – – (11.9) – (11.9)
Share-based payments – – – – 8.4 – 8.4
At 30 June 2023 4.5 684.3 350.6 2.7 111.1 2.6 1,155.8
Profit for the year – – – – 13.4 – 13.4
Other comprehensive expense – – – – – (2.6) (2.6)
Total comprehensive income for the year – – – – 13.4 (2.6) 10.8
Dividends paid – – – – (7.3) – (7.3)
Issue of own shares – 3.3 – – – – 3.3
Capital reduction – (684.4) – (2.7) 687.1 – –
Share-based payments – – – – 9.3 – 9.3
Purchase of own shares – – – – (3.7) – (3.7)
At 30 June 2024 4.5 3.2 350.6 – 809.9 – 1,168.2
Included in the profit and loss account is the balance on the share scheme reserve which comprises the investment in own shares of £9.0m (2023: £11.2m) and a credit balance on the share
scheme reserve of £14.5m (2023: £12.8m).
Details of the shares held by the Kier Group 1999 Employee Benefit Trust and of the share-based payment scheme are included in note 25 to the consolidated financial statements.
Company statement of changes in equity
For the year ended 30 June 2024
210www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
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1 Accounting policies
The principal accounting policies are summarised below. Other than where new accounting
policies have been adopted (as noted below), they have been applied consistently throughout
the year and the preceding year.
Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting
Standard 101 ‘Reduced Disclosure Framework’ (‘FRS 101’) and the Companies Act 2006.
The financial statements have been prepared under the historical cost convention, except for
derivative financial instruments which are stated at their fair value.
Kier Group plc is a company incorporated in the United Kingdom under the Companies Act.
The address of the registered office is 2nd Floor, Optimum House, Clippers Quay, Salford,
England, M50 3XP.
The Company’s financial statements are included in the Kier Group plc consolidated financial
statements for the year ended 30 June 2024. As permitted by Section 408 of the Companies
Act 2006, the Company has not presented its own profit and loss account.
None of the standards, interpretations or amendments effective for the first time from
1 July 2023 have had a material effect on the Company’s financial statements.
The Company has taken advantage of the following disclosure exemptions in preparing
these financial statements, as permitted by FRS 101:
– The requirement of paragraphs 45(b) and 46–52 of IFRS 2 ‘Share-Based Payments’
– The requirements of IFRS 7 ‘Financial Instruments: Disclosures’
– The requirements of paragraphs 91–99 of IFRS 13 ‘Fair Value Measurement’
– The requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present
comparative information in respect of paragraph 79(a)(iv) of IAS 1
– The requirement of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D,
111 and 134–136 of IAS 1 ‘Presentation of Financial Statements’
– The requirements of IAS 7 ‘Statement of Cash Flows’
– The requirements of paragraphs 30 and 31 of IAS 8 ‘Accounting Policies, Changes
in Accounting Estimates and Errors’
– The requirements of paragraphs 88C and 88D of IAS 12 ‘Income Taxes’
– The requirement of paragraphs 17 and 18A of IAS 24 ‘Related Party Disclosures’
– The requirements in IAS 24 ‘Related Party Disclosures’ to disclose related party
transactions entered into between two or more members of a group
– The requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 ‘Impairment
of Assets’.
These financial statements are separate financial statements.
Where required, equivalent disclosures are given in the Annual Report and Accounts
of the Group as shown in notes 1–8.
Going concern
The Directors have made enquiries and have a reasonable expectation that the Company
has adequate resources to continue in existence for the foreseeable future. For this reason,
they adopt the going concern basis in preparing the financial statements. See also page 154.
Fixed asset investments
Investments in subsidiary undertakings are included in the balance sheet at cost less any
provision for impairment.
Taxation
Income tax comprises current and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided using the balance sheet method, providing for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for taxation purposes. The deferred tax provision is based on the expected
manner of realisation or settlement of the carrying amount of the assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable
profits will be available against which the asset can be utilised. Deferred tax assets are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation
as a result of a past event, and where it is probable that an outflow will be required to settle
the obligation and the amount can be reliably estimated.
Notes to the Company financial statements
For the year ended 30 June 2024
211www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Notes to the Company financial statements continued
For the year ended 30 June 2024
1 Accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised in the Company’s balance sheet when
the Company becomes a party to the contractual provisions of the instrument. The principal
financial assets and liabilities of the Company are as follows:
(a) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, including bank deposits with
original maturities of three months or less, net of bank overdrafts where legal right of set-off exists.
Bank overdrafts are included within financial liabilities in current liabilities in the balance sheet.
(b) Bank and other borrowings
Interest-bearing bank and other borrowings are recorded at the fair value of the proceeds
received, net of direct issue costs. Finance charges, including premiums payable on settlement
or redemption and direct issue costs, are accounted for on an accruals basis in the income
statement using the effective interest method and are added to the carrying value of the
instrument to the extent that they are not settled in the period in which they arise.
(c) Amounts due from subsidiary undertakings
Amounts due from subsidiaries are initially recorded at their fair value. Subsequent to initial
recognition, the loans are measured at amortised cost. In accordance with IFRS 9, the
Company has undertaken an exercise of calculating the expected credit losses on the amounts
due from subsidiaries. The Directors regard the relevant subsidiaries as having a relatively low
probability of default on the loans and do not consider that there has been a significant increase
in credit risk since the loan was first recognised. By virtue of their participation in Group bank
pooling arrangements, the subsidiaries had access to sufficient facilities to enable them to
repay the loans, if demanded, at the reporting date. Only immaterial amounts of expected
credit losses were calculated and, therefore, the Company has chosen not to adjust the value
of the loans for any expected credit loss provisions.
(d) Derivative financial instruments
Derivatives are initially recognised at fair value on the date that the contract is entered into
and subsequently remeasured in future periods at their fair value. The method of recognising
the resulting change in fair value depends on whether the derivative is designated as a
hedging instrument and whether the hedging relationship is effective.
For cash flow hedges, the effective portion of changes in the fair value of these derivatives is
recognised in the cash flow hedge reserve within equity. Any ineffective portion is recognised
immediately in the income statement. Amounts accumulated in equity are recycled to the
income statement in the periods when the hedged items will affect profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold,
terminated or exercised, the hedge accounting is discontinued prospectively. The cumulative gain
or loss previously recognised in equity remains there until the forecast transaction occurs. When
the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity are immediately reclassified to profit or loss.
The Company enters into forward contracts in order to hedge against transactional foreign
currency exposures. In cases where these derivative instruments are significant, hedge
accounting is applied as described above. Where hedge accounting is not applied, changes
in fair value of derivatives are recognised in the income statement. The fair values of derivative
instruments have been derived from proprietary models used by the bank counterparties
using mid-market mark to market valuations for trades at the close of business on the
balance sheet date.
Share-based payments
Share-based payments granted but not vested in relation to the Sharesave and Long-Term
Incentive Plan (‘LTIP’) schemes are valued at the fair value of the shares at the date of grant.
The fair value of these schemes at the date of award is calculated using the Black-Scholes
model, apart from the total shareholder return element of the LTIP which is based on a
Stochastic model. Awards that are subject to a post-vesting holding period are valued using
the Finnerty model. The cost of each scheme is based on the fair value of the options spread
on a straight-line basis over the relevant performance period. As the Company provides these
benefits to employees of its subsidiary companies, the cost is recognised in each subsidiary’s
income statement, with a corresponding credit in equity representing the capital contribution.
The Company, as the parent providing the equity instruments to satisfy the share-based
payments, recognises these capital contributions to its subsidiaries as an increase in its
investment in subsidiaries.
Shares purchased and held in trust in connection with the Company’s share schemes are
deducted from retained earnings. No gain or loss is recognised within the income statement
on the market value of these shares compared with the original cost.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company accounting policies which are described above,
the Directors are required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates are based on historical experience and the factors that are considered
to be relevant. Actual results may differ from those estimates.
The estimates are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised.
There are no critical judgements, apart from those involving estimates, that the Directors have
made in the process of applying the Company’s accounting policies and that have a significant
effect on the amounts recognised in the financial statements.
212www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
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1 Accounting policies continued
Valuation of investments
The Company tests annually whether its investments have suffered any impairment.
The recoverable amounts of subsidiaries are determined based on value in use calculations
or fair value less cost to sell, if held for sale. These calculations require the use of estimates.
Considerable headroom exists when comparing the book value of the investments with their
recoverable amounts. Therefore, the Directors have determined that the investment value is
not particularly sensitive to changes in the assumptions used in the value in use calculations.
Any reasonable adjustment to any of the assumptions would not result in an impairment of
the investments.
2 Profit for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not
to present its own profit and loss account for the year. The profit for the year was £13.4m
(2023: £34.9m).
The auditors’ remuneration for audit services to the Company was £0.1m (2023: £0.1m).
3 Information relating to Directors and employees
Information relating to Directors’ emoluments, pension entitlements, share options and LTIP
interests appears in the Directors’ Remuneration report on pages 109–134. The Company
has no employees other than the Directors.
4 Dividends
£7.3m dividends have been paid by the Company (2023: £nil). See note 11 to the consolidated
financial statements.
5 Investments
2024
£m
2023
£m
At 1 July 446.2 437.8
Capital contributions 9.3 8.4
At 30 June 455.5 446.2
Details of the Company’s subsidiaries at 30 June 2024 are provided in note 31 to the
consolidated financial statements.
Capital contributions of £9.3m were made during the year ended 30 June 2024 in relation
to share-based payments on behalf of subsidiaries (2023: £8.4m).
Certain subsidiaries of the Group have opted to take advantage of a statutory exemption from
having an audit in respect of their individual statutory accounts. Strict criteria must be met for this
exemption to be taken and it must be agreed to by the directors of those subsidiary companies.
Listed in note 31 are subsidiaries controlled and consolidated by the Group where the Directors
have taken advantage of the exemption from having an audit of the companies’ individual
financial statements in accordance with Section 479A of the Companies Act 2006.
In order to facilitate the adoption of this exemption, Kier Group plc, the ultimate parent
company of the subsidiaries concerned, undertakes to provide a guarantee under Section
479C of the Companies Act 2006 in respect of those subsidiaries.
6 Amounts due from subsidiary undertakings
2024
£m
2023
£m
Amounts falling due after more than one year:
Amounts due from subsidiary undertakings
1
1,585.6 1,525.4
1. Loans due from subsidiary undertakings incur interest at 4.0%, loans are contractually repayable on demand
or in a period of up to 4 years but no amounts are expected to be repaid within 12 months.
7 Creditors
2024
£m
2023
£m
Amounts falling due within one year:
Borrowings 43.8 –
Other creditors 9.7 2.5
53.5 2.5
Amounts falling due after more than one year:
Borrowings 242.0 309.4
Amounts due to subsidiary undertakings
1
51.0 56.0
293.0 365.4
1. Loans due to subsidiary undertakings incur interest at 4.0% and are repayable after one year.
Further details on borrowings are included in note 21 to the consolidated financial statements.
Notes to the Company financial statements continued
For the year ended 30 June 2024
213www.kier.co.uk
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Notes to the Company financial statements continued
For the year ended 30 June 2024
8 Other financial assets
The Company has the following cross-currency and interest rate swaps:
– One cross-currency swap taken out in 2014 to hedge the currency risk on a US dollar-
denominated loan, nominal value US$40.0m.
– One floating to fixed interest rate swap taken out in 2024 to hedge the interest rate risk
on part of the Group’s revolving credit facility, nominal value £50.0m.
The Company has assessed the effectiveness of these swaps and concluded that they are
highly effective. No amount in relation to hedge ineffectiveness has been charged or credited
to the income statement in relation to any cross-currency or interest rate swap.
The following table indicates the periods in which the cash flows associated with cash flow
hedges are expected to occur and the fair value of the related hedging instruments:
Fair
value
£m
0–1 year
£m
Cross-currency swaps: asset
Gross settled inflows – 32.4
Gross settled outflows – (25.7)
6.5 6.7
Interest rate swaps: assets
Net settled inflows 0.6 0.8
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method.
The different levels have been defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within level 1 that are observable for
the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
The Company uses cross-currency and interest rate swaps for hedging. These derivatives are
classified as level 2. The prices of derivative transactions have been derived from proprietary
models used by the bank counterparties using mid-market mark to market valuations for
trades at the close of business on 30 June 2024.
Level 3 – Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs).
The following table presents the Company’s financial assets and liabilities that are measured
at fair value at 30 June 2024:
Level 2
£m
Assets
Derivatives used for hedging – Cross-currency swaps 6.5
Derivatives used for hedging – Interest rate swaps 0.6
7.1
The following table presents the Company’s financial assets and liabilities that are measured
at fair value at 30 June 2023:
Level 2
£m
Assets
Derivatives used for hedging – Cross-currency swaps 6.5
Derivatives used for hedging – Interest rate swaps 4.2
10.7
There were no transfers between levels 1 and 2 during the year.
214www.kier.co.uk Kier Group plc Annual Report and Accounts 2024
Strategic reportOverview Corporate governance Financial statements Other information
Continuing operations
Year ended 30 June
2024
£m
2023
£m
2022
£m
2021
£m
2020
£m
Group revenue including share of joint ventures 3,969.4 3,405.4 3,256.5 3,328.5 3,475.6
Less share of joint ventures (64.3) (24.7) (112.6) (67.5) (53.1)
Group revenue 3,905.1 3,380.7 3,143.9 3,261.0 3,422.5
Profit
Group operating profit
1
142.1 116.3 93.6 96.4 41.0
Share of post-tax results of joint ventures 1.6 1.1 26.9 3.9 (0.2)
Other income 6.5 14.1 – – 0.6
Adjusted operating profit 150.2 131.5 120.5 100.3 41.4
Net finance costs before adjusting items (32.1) (26.7) (26.4) (34.9) (24.5)
Adjusted profit before tax 118.1 104.8 94.1 65.4 16.9
Amortisation of acquired intangible assets relating to contract rights (23.2) (19.2) (19.7) (21.0) (23.7)
Adjusting finance costs (2.9) (2.9) (2.8) (3.2) (5.2)
Other adjusting items (23.9) (30.8) (55.7) (35.6) (213.3)
Profit/(loss) before tax 68.1 51.9 15.9 5.6 (225.3)
Basic earnings per share before adjusting items 20.6p 19.2p 16.8p 25.0p 12.2p
Dividend per share 5.15p – – – –
At 30 June
Shareholders’ funds (£m) 520.1 513.0 554.6 435.0 240.8
1. Stated before adjusting items. See note 5 for reference to adjusting items.
Financial record
(unaudited)
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The Group presents various alternative performance measures (‘APMs’) as the performance of the Group is reported and measured on this basis internally. This includes key performance
indicators (‘KPIs’).
APM Purpose Reference
Total Group revenue Revenue from the Group from continuing operations including joint ventures KPIs
Consolidated income statement
Adjusted operating profit Operating profit for the year from continuing operations before adjusting items KPIs
Note 5
Adjusted profit before tax Profit before tax for the year from continuing operations before adjusting items Note 5
Adjusted earnings per share Earnings per share for the year generated from continuing operations before adjusting items KPIs
Note 12
Cash outflow from adjusting items Cash flow from operating activities for the year before adjusting items Note 5
Net cash The Group’s net cash at the year-end date KPIs
Note 21
Average net debt The Group’s net cash/(debt) as an average of the month end positions up to the previous year-end date KPIs
Note 21
Free cash flow An alternative cash flow measure to evaluate what is available for distribution KPIs
Financial review
Operating free cash flow Free cash flow before the payment of interest and tax Operational review
Financial review
Operating free cash flow conversion Cash conversion calculated as a percentage of operating free cash flow over adjusted operating profit Operational review
Financial review
Adjusted operating margin Operating margin calculated as a percentage of adjusted operating profit over total Group revenue Operational review
Order book Secured and probable future contract revenue not currently recognised in the financial statements KPIs
Glossary of alternative performance measures
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chain of custody and an ISO 14001
certified environmental management system diverting 100% of dry waste from landfill.
This report has been printed on Amadeus Silk and Arena Extra White Smooth Uncoated paper.
Amadeus Silk is an FSC
®
certified paper from well-managed forests and other controlled
sources. The paper is Carbon Balanced with the World Land Trust, an international
conservation charity, who offset carbon emissions through the purchase and preservation
of high conservation value land.
Through protecting standing forests, under threat of clearance, carbon is locked in that would
otherwise be released. These protected forests are then able to continue absorbing carbon
from the atmosphere, referred to as REDD (Reduced Emissions from Deforestation and forest
Degradation). This is now recognised as one of the most cost-effective and swiftest ways to
arrest the rise in atmospheric CO
2
and global warming effects. Additional to the carbon
benefits is the flora and fauna this land preserves, including a number of species identified
at risk of extinction on the IUCN Red List of Threatened Species.
Arena Extra White Smooth Uncoated is made from an FSC
®
certified paper from well-managed
forests and other controlled sources. The manufacturing mill is ISO14001 registered and is
Forest Stewardship Council
®
(FSC
®
) chain-of-custody certified.
Kier Group plc
2nd Floor
Optimum House
Clippers Quay
Salford
M50 3XP
kier.co.uk