10 October 2019
Kier Group plc
Publication of the 2019 Annual Report and Notice of Annual General Meeting
Kier Group plc (the "Company") announces that its annual general meeting will be held at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ on Friday 15 November 2019 at 10.00 am.
The Company has today made available on its website at www.kier.co.uk/2019-annual-report-and-annual-general-meeting/ the annual report and accounts for the year ended 30 June 2019 (the "Annual Report"), the notice of annual general meeting and the form of proxy. These documents will be submitted to the National Storage Mechanism shortly, where they will be available for inspection at www.morningstar.co.uk/uk/NSM.
The Company announced its results for the year ended 30 June 2019 on 19 September 2019. Additional information has been extracted from the Annual Report in unedited full text and is included in the Appendix to this announcement for the purposes of compliance with the Disclosure Guidance and Transparency Rules. Page numbers and note references in the Appendix refer to page numbers in the Annual Report and the notes to the Company's consolidated financial statements for the year ended 30 June 2019 as included in the Annual Report.
For enquiries, please contact:
Phil Higgins
Deputy Company Secretary
07562 210 903
The Company's Legal Entity Identifier is 2138002RKCU2OM4Y7O48.
Cautionary statement
This announcement does not constitute an offer of securities by the Company. Nothing in this announcement is intended to be, or intended to be construed as, a profit forecast or a guide as to the performance, financial or otherwise, of the Company or the group of companies of which the Company is the holding company whether in the current or any future financial year. This announcement may include statements that are, or may be deemed to be, ''forward-looking statements''. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms ''believes'', ''estimates'', ''anticipates'', ''expects'', ''intends'', ''plans'', ''target'', ''aim'', ''may'', ''will'', ''would'', ''could'' or ''should'' or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Forward-looking statements are not guarantees of future performance. Important factors that could cause these differences include, but are not limited to, general economic and business conditions, industry trends, competition, changes in government and other regulation, changes in political and economic stability and changes in business strategy or development plans and other risks. Other than in accordance with its legal or regulatory obligations, the Company does not accept any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
APPENDIX
Principal risks and uncertainties
The following information is extracted from pages 32 to 37 (inclusive) of the Annual Report.
The Board's assessment of the principal risks and uncertainties facing the Group and a summary of the key controls and mitigations are each summarised below. The Board considers these to be the most significant risks facing Kier. Not all risks facing the business are listed and the risks are not listed in any order of priority.
|
Description |
Key mitigations/controls |
|
|
1. |
Safety, health and sustainability Principal risk: failure to maintain a safe and sustainable environment and prevent a major incident |
|
|
|
The Group's operations are inherently complex and potentially hazardous and require the continuous management of safety, health and sustainability issues.
|
Continuation of the Group's SHE behavioural change programme; Continued focus on the five basics of SHE risk management; and Setting a tone from the top through activities such as senior management visible leadership tours. |
|
2. |
Regulation Principal risk: failure to manage increased scrutiny and oversight and/or comply with new regulations |
|
|
|
The sectors in which the Group operates are subject to increasing scrutiny from stakeholders, oversight from regulators and requirements introduced by new legislation or regulation. |
Regular engagement with Government and Government agencies with respect to the Group's performance; Monitoring of, and planning for, the impact of new legislation and regulations; and Collaborative engagement with external stakeholders. |
|
3. |
Funding Principal risk: failure to maintain adequate funding or liquidity |
|
|
|
The Group requires access to funding and associated facilities (for example, bonding lines) to be able to operate and conduct its business effectively. |
Effective cash forecasting and working capital management; Collaborative engagement with banks, lenders and sureties; and Dispose of non-core businesses to reduce net debt. |
|
4. |
Market and sector performance Principal risk: a general market or sector downturn affects the Group's performance |
|
|
|
The Group's performance is affected by macroeconomic factors which affect UK business in general and/or the markets in which the Group operates. |
Evaluate markets, including the impact of macroeconomic factors and the associated market risk of specific events (for example, Brexit); Review the Group's pipeline of future work to identify market trends and plan accordingly; and Maintain a broad sector focus to mitigate against the decline of a particular sector. |
|
5. |
Operating model Principal risk: the Future Proofing Kier programme does not result in an efficient operating model |
|
|
|
The Group's future performance is in part dependent on the FPK programme delivering significant cost savings and an efficient operating model. |
Close project management of the FPK programme; Effectively communicate the benefits of the FPK programme to maintain its momentum; and Challenge the business to implement material, sustainable change. |
|
6. |
Contract management Principal risk: ineffective contract management leads to losses |
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|
|
Effective contract management is central to the Group's business model. The Group has a number of large and complex contracts in progress at any one time. Failure to manage the risks associated with these contracts could materially and adversely affect the Group's financial performance. |
Identify early warnings of under-performing contracts; Adhere to the Group's contract risk governance framework; and Timely and accurate reporting of contract performance. |
|
7. |
Pre-contract governance Principal risk: inadequate pre-contract governance fails to identify contract risk |
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|
|
Effective pre-contract governance is essential in ensuring that the Group understands the risks associated with its projects and puts in place appropriate mitigation plans. |
Careful selection of tender opportunities; Adhere to the Group's contract risk governance framework; and Continued focus on supply chain procurement. |
|
8. |
People Principal risk: failure to retain key employees and identify future leaders |
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|
|
The Group's employees are critical to its performance. The Group understands the need to identify, retain and motivate people with the right skills, experience and behaviours and to identify tomorrow's leaders. |
Focus on skills development and retention plans for the talent pipeline; Create an effective, inclusive work environment through our Performance Excellence culture; and Clear and effective communication with the workforce. |
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9. |
Supply chain Principal risk: maintain effective working relationships with the supply chain |
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|
|
The Group relies on its supply chain to deliver its projects. Maintaining close and effective working relationships with members of the supply chain is therefore a priority for the Group. |
Develop long-term relationships with critical subcontractors; Continue to reduce subcontractor payment terms; and Review the supply chain to ensure alternative delivery mechanisms are available and appropriate contingencies are in place. |
|
10. |
Strategy execution Principal risk: failure to execute strategy |
|
|
|
The Company recognises the importance of delivering the plans identified in its announcement of 17 June 2019 |
Focus from all stakeholders on driving forward the disposal programme; Effective engagement with key external parties including credit institutions; and Communication of progress of implementation of the plans. |
|
|
Brexit The UK is currently expected to leave the EU on 31 October 2019, although the timing remains uncertain. Management established a 'Brexit taskforce' which has considered the potential effects of Brexit on the Group. The Group has identified potential risks relating to, for example, the supply chain, the workforce and the supply and cost of materials. The Group has set up contingency plans in respect of potential risks which have been identified, is monitoring developments and will keep these plans under review. We are working closely with our supply chain at a project level to assess their approach to Brexit and have undertaken scenario planning sessions to develop plans to ensure continuity with respect to potentially critical points of supply. In addition, the Group is working with its employees from EU members states who are looking to continue to live and work in the UK post-Brexit. |
|
Related party transactions
The following information is extracted from note 30 to the Company's consolidated financial statements for the year ended 30 June 2019 on page 175 of the Annual Report.
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 78 to 97.
In addition to their salaries, the Group also provides non-cash benefits to Directors and contributes to their pension arrangements as disclosed on p83. Key management personnel also participate in the Group's share option programme (see note 26).
Key management personnel compensation comprised of:
|
|
2019 |
2018 |
|
Emoluments as analysed in the Directors' Remuneration Report |
5.2 |
5.6 |
|
Employer's national insurance contributions |
0.6 |
0.8 |
|
Total short-term employment benefits |
5.8 |
6.4 |
|
Share-based payment charge |
0.7 |
0.7 |
|
|
6.5 |
7.1 |
Transactions with pension schemes
Details of transactions between the Group and pension schemes in which its employees participate are detailed in note 8.
Transactions with joint ventures
|
|
2019 |
2018 |
|
Construction services and materials |
278.2 |
116.9 |
|
Staff and associated costs |
10.0 |
8.9 |
|
Management services |
16.0 |
4.4 |
|
Interest on loans to joint ventures |
0.6 |
0.7 |
|
Plant hire |
1.3 |
0.8 |
|
|
306.1 |
131.7 |
1 The comparative figures have been restated to include £13.2m of transactions with joint ventures previously not disclosed.
Equity loans due from joint ventures are analysed below:
|
|
2019 |
2018 |
|
Kier Cross Keys Holdco 1 LLP |
38.9 |
35 |
|
Kier Community Living Topco 1 LLP |
32.1 |
8.9 |
|
Solum Regeneration (Twickenham LLP) |
14.2 |
12.2 |
|
Kier Trade City Holdco 1 LLP |
12.7 |
4.3 |
|
Kier (Newcastle) Investment Ltd |
10.1 |
9.7 |
|
Kier (Southampton) Investment Limited |
10.0 |
9.3 |
|
Kier Richmond Holdings Limited |
9.9 |
9.9 |
|
Watford Health Campus Partnership LLP |
7.0 |
7.7 |
|
Kier Cornwall Street Holdings 1 LLP |
6.5 |
6.5 |
|
Kier Cornwall Street Holdings 2 LLP |
6.5 |
6.5 |
|
Solum Regeneration (Epsom) LP |
5.3 |
5.3 |
|
50 Bothwell Street Holdco 1 LLP |
5.2 |
4.8 |
|
Solum Regeneration (Bishops) LLP |
5.0 |
1.1 |
|
KCK Peterborough Holdco 1 LLP |
4.8 |
4.8 |
|
Solum Regeneration (Guildford) LLP |
3.4 |
1.9 |
|
Easingwold Holdco 1 LLP |
2.9 |
2.9 |
|
Stokesley Holdco 1 LLP |
2.7 |
2.7 |
|
Driffield Holdco 1 LLP |
2.5 |
0.8 |
|
Solum Regeneration (Walthamstow) LLP |
2.0 |
3.8 |
|
Strawberry Percy Holdings 1 LLP |
1.6 |
1.6 |
|
Strawberry Percy Holdings 2 LLP |
1.6 |
1.6 |
|
Link 140 Holdings 1 LLP |
1.4 |
1.4 |
|
Notaro Kier LLP |
1.3 |
2.9 |
|
Black Rock Holdco 1 LLP |
1.2 |
1.2 |
|
Solum Regeneration (Redhill) LLP |
1.2 |
1.2 |
|
Winsford Holdings 1 LLP |
1.2 |
1.1 |
|
Kier Sovereign LLP |
0.8 |
5.2 |
|
Solum Regeneration (Maidstone) LLP |
0.6 |
0.6 |
|
Solum Regeneration (Haywards) LLP |
0.4 |
0.4 |
|
Solum Regeneration Holding 1 LLP |
0.2 |
0.2 |
|
Solum Regeneration Holding 2 LLP |
0.2 |
0.2 |
|
Solum Regeneration (Kingswood) LLP |
0.1 |
0.1 |
|
Solum Regeneration (Surbiton) LLP |
0.1 |
0.1 |
|
Kier Reading Holdco 1 LLP |
- |
10.5 |
|
Lysander Student Properties Investments Limited |
- |
3.9 |
|
|
193.6 |
170.3 |
The comparative figures have been restated to include £68.1m of loans to joint ventures not previously disclosed.
Trading balances due from joint ventures are analysed below:
|
|
2019 £m |
2018 £m |
|
Kier Cross Keys Dev LLP Kier Community Living LLP Tri-Link 140 LLP Stokesley Devco LLP Hackney Schools for the Future Limited |
6.0 4.2 3.8 3.3 1.4 |
- 0.2 - 0.5 2.7 |
|
Winsford Devco LLP Easingwold Devco LLP Driffield Devco LLP Kier Richmond Limited Team Van Oord Limited KCK Peterborough Devco LLP Solum Regeneration (Guildford) LLP Kier (Southampton) Investment Limited Watford Health Campus Partnership LLP Kier Sydenham LP Kier Trade City LLP |
0.8 0.5 0.4 0.3 0.1 0.1 - - - - - |
- - 1.4 - 0.1 - 0.9 0.3 0.2 0.1 0.1 |
|
|
20.9 |
6.5 |
Directors' responsibility statement
The following statement is extracted from page 100 of the Annual Report.
Each of the Directors, whose names and functions are set out on pages 54 and 55, confirms that to the best of his or her knowledge:
the financial statements contained in this Annual Report, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation as a whole; and the management report contained in this Annual Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
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