16th Mar 2006 07:00
Kier Group PLC16 March 2006 16 March 2006 KIER GROUP PLC INTERIM RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2005 • Pre-tax profits* before exceptional items up 19.8% to £28.4m (2004: £23.7m) • EPS before exceptional items up 22.6% to 58.0p (2004: 47.3p) • Dividend increased by 17.1% to 8.2p (2004: 7.0p) • £39.4m of cash generated from operating activities • Construction and Support Services order books at strong levels • Homes order book 50% ahead of last year with over 90% of projected full year unit sales secure *Pre-tax profits are after deducting joint venture tax of £0.8m (2004: £0.3m) Commenting on the results, John Dodds, Chief Executive, said: "Excellent prospects for growth arise out of all our markets. The constructionmarket is continuing to benefit from government spending evidenced by theincreasing proportion of work we are being awarded for public sector clients. InSupport Services there is a growing number of local authority outsourcingcontracts available to bid which we are in a strong position to pursue. InHomes, visitor and reservation levels are showing signs of a more active marketwhich, should they continue, would lead to material growth in unit sales for thefull year. Our Property business is attracting a wide range of new developmentsincluding mixed-use schemes and in PFI our pipeline and track record of awardswill provide further growth. "Our businesses are working ever better together to provide a total solution toclients' increasingly complex requirements." Chief executive's review Overview I am pleased to report that Kier Group has delivered another excellent set ofresults for the six months to 31 December 2005. Our Group, with its wellbalanced portfolio of businesses, has become a major force in each of thesectors of Construction, Support Services, Homes, Property and InfrastructureInvestment. This six month period has seen further substantial progress inestablishing Kier as a fully integrated business able to provide a totalsolution to clients through a multi-disciplinary offering. The strength of our business has enabled us to report continued revenue growthof 14.5% for the six months to 31 December 2005, with pre-tax profits beforeexceptional items up 19.8% on last year. The markets across all of our sectors have remained strong. Our Constructionorder books have continued to benefit from public sector expenditure maintainingour previously established record level of outstanding orders at £1,030m. InSupport Services the order book stands at £1,309m (2004: £1,137m) and as thelist of local authority outsourcing contracts available to bid continues to growwe are in a strong position to pursue many of them. The housing market in therun up to Christmas showed positive signs with reservations at good levels;activity since Christmas has been very encouraging resulting in our order booksat 28 February 2006 being 50% ahead of the previous year. Opportunities continue to emerge for our Property development business and wewere pleased to complete the purchase of a portfolio of nine properties,including one residential scheme, from Warner Estates in December 2005. Our PFIbusiness continues its successful run having achieved preferred bidder status ona schools project in Oldham, our fifth project in the education sector. With a good start to the second half of the financial year and plenty ofexciting opportunities available we are firmly on track to deliver year on yeargrowth for the full year. Financial results These results are the Group's first to be prepared under International FinancialReporting Standards (IFRS). The new standards have no impact on the profitrecognition policies for Construction and Support Services and only a minorimpact on Homes and Property. The significant impact arising from theintroduction of IFRS is on the Group's balance sheet which now includes the netpension deficit arising from our defined benefit pension scheme calculated inaccordance with IAS 19. Revenue, including the Group's share of joint ventures, at £922.6m, (2004:£805.6m) was 14.5% ahead of last year; operating profit after the amortisationof intangible assets and joint venture interest and tax was 16.3% ahead at£28.6m (2004: £24.6m); and pre-tax profit at £28.4m (2004: £23.7m) was 19.8%ahead of last year (before last year's exceptional profits of £5.9m). Adjusted earnings per share before last year's exceptional profits and taxincreased by 22.6% to 58.0p (2004: 47.3p). The trading result achieved in the six months to 31 December 2005 was supportedby strong cash generation. Overall there was a £29.5m inflow in the periodresulting in a cash balance of £87.6m, net of debt, at 31 December 2005 (2004:£70.2m) with £39.4m generated from operating activities. The Constructiondivision maintained strong cash balances in the period, on average, £50m aheadof last year and generated £20m in the six month period. The Board has declared an interim dividend of 8.2p (2004: 7.0p), an increase of17.1% continuing the growth record of 15% per annum or more achieved since 1997.This is 7.1 times covered by earnings per share. The dividend will be paid toshareholders on 18 May 2006 with the usual scrip alternative. Construction The Construction segment comprises Regional Contracting, which also includesboth Affordable Housing and Major Building Projects, and our Infrastructure &Overseas operations. Our plant hire operation, previously included within theConstruction segment, has been transferred to Support Services with effect from1 July 2005 with comparative results restated. Overall revenue increased by 15.1% to £603.7m (2004: £524.5m) with the growthlargely arising in our Regional Contracting business. Operating profit, beforejoint venture interest and tax, increased by 41.4% to £8.2m (2004: £5.8m)resulting in an operating margin for the period of 1.4% (2004: 1.1%). The orderbook at 31 December 2005 was maintained at the June 2005 level of £1,030m (2004:£600m) supported by a strong pipeline of virtually secure work leading us toanticipate volume growth overall for the year. Our Regional Contracting business continues to go from strength to strength. Agood trading result was supported by an excellent cash performance in the periodon average £37m ahead of last year and ending the period at a record £224.5m(2004: £189.1m). Orders remained strong throughout the period at £493m (2004:£391m) with 50% arising from public sector clients (2004: 37%) largely driven byeducation and affordable housing projects. The proportion of two-stage tenderand negotiated contracts rose to 59% of total awards (2004: 57%) reflecting ourcontinued focus on partnering and repeat business. In the UK, Kier Construction, our Infrastructure & Overseas division, hassuccessfully completed its second waste management facility in a developingrelationship with Shanks Waste Services and further opportunities are beingpursued. Our framework agreements with United Utilities and Network Rail areboth progressing satisfactorily albeit at lower initial volumes than firstanticipated. Our private opencast coal mine in Scotland continues to performwell and we were recently awarded 'Opencaster of the Year' by McCloskey's CoalUK. Nearly one million tonnes of coal have been mined to date and we have takenadvantage of strong coal prices by locking into a number of fixed price coalcontracts covering over 58% of the remaining identified deposit. Overseas our long-term relationship with Alcoa continues to bear fruitparticularly in Jamaica where we have started construction on a new railway andresidue lakes together with the early works programme for a major expansion oftheir alumina refinery. We have also been awarded a contract for the expansionof Norman Manley Airport in Kingston. Support Services Overall revenue increased by 22.1% to £139.1m (2004: £113.9m) with operatingprofit moving forward from £3.2m to £3.9m (before deducting the amortisation ofintangibles of £1.0m in each of the periods) at a margin of 2.8% (2004: 2.8%). In the Managed Services division our portfolio of contracts on which we provideservices under the PFI is continuing to expand with a further £128m eitherawarded or on which we were selected as preferred bidder in the six months to 31December 2005. Good results were achieved by the Building Maintenance division which now looksafter around 160,000 homes for local authority clients including Sheffield CityCouncil, Islington Borough Council and Leeds City Council. Revenue increasedfrom £63.5m to £80.8m largely due to the inclusion of Decent Homes work and theLeeds contract which was awarded last year. We have recently secured a five yearcontract for the City of Lincoln which will provide £7m of revenue per annumunder the Decent Homes initiative. A strong bid list is emerging in the £10m to£40m per annum revenue range and, with our proven ability to fulfil these highervalue contracts, we are well placed to secure further work in this arena. Homes The results for the year to 30 June 2005 reflected a shift in the balance ofunit sales towards the first half of the year with 721 units completed in thesix months to 31 December 2004 out of a total of 1,215 units for the year. Thisfinancial year is expected to show a more balanced picture with 709 unitscompleted in the six months to 31 December 2005 and significant year on yeargrowth in unit sales targeted for the full year. Revenue for the six months to31 December 2005 at £134.8m was marginally ahead of last year's £134.5mincluding land sales of £3.0m (2004: £4.4m). Average selling prices increased to£185,900 (2004: £180,500) which reflects the mix of unit sales despite a slightincrease in the number of affordable housing units from 10% to 11% of total unitsales. Operating profit increased marginally to £19.8m (2004: £19.6m) including £0.3mrelating to land sales (2004: £nil) giving a margin on housing sales of 14.8%(2004: 15.1%). The land bank at 31 December 2005 included 5,618 plots with planning consent(2004: 5,256 plots) representing over four years' worth of sales at 2005 levels.A number of large sites on which we are progressing detailed planning consenthave recently been acquired including 292 units at Stoke Mandeville and 375units in Cringleford. Final negotiations have concluded which will allowdetailed planning consent to be granted on a 550 unit former Anglian Water siteat Peterborough where Kier Construction has started remediation. In addition tothe land with planning consent the land bank also contains a further 11,000plots of strategic land, the majority of which are held under option. The demand for our homes is showing positive signs with both visitor andreservation levels well ahead of last year and a reduced level of incentivesrequired. At 28 February 2006 the order book of reservations and exchangedcontracts was 50% ahead of the same time last year and, together withcompletions for the current year, secure over 90% of projected unit sales forthe year. Property The Property segment recorded operating profit of £5.4m for the period, 45.9%ahead of last year's £3.7m. Within our wholly owned business we recently secured a site for 150,000sq ft ofoffices pre-let to EDS in Milton Keynes on which Kier Regional is carrying outthe construction. In December 2005 we acquired nine development properties fromWarner Estates, part of their Ashtenne portfolio. One of the properties has beentransferred internally to Kier Residential for residential development. Our joint venture with Bank of Scotland has secured the position of preferredbidder for a new corporate headquarters for Ordnance Survey in Southampton. Thisachievement was a result of the combined efforts of Kier Property, KierResidential, Kier Regional and Kier Support Services and involves thedevelopment, construction and facilities management of new offices for OrdnanceSurvey which will release land on their existing site for future development. Wealso recently completed the purchase of a former British Gas site in Uxbridgefrom Second Site Property Limited. Kier Construction will carry out theremediation of the site which will then be available for industrial use withpotential for some residential development. The Property division continues to benefit from opportunities in all its sectorsand, by combining with the talents of other Group businesses, is able to securemany opportunities for mixed-use and regeneration projects. Infrastructure Investment Our PFI business continues to be busy. In November 2005 we were announcedpreferred bidder on two new schools for Oldham Borough Council with aconstruction value of £54m. The construction of the schools will be carried outby Kier Regional with Kier Managed Services undertaking the facilitiesmanagement upon their completion. This brings the number of projects atpreferred bidder status to four, all of which are expected to reach financialclose within the next few months. The committed investment in our PFI portfolio is now £22.8m which will generatean average return of around 15% when all projects are fully operational. Yieldscontinue to improve enhancing the future value of our investment. We are short listed on two 'Building Schools for the Future' projects, one forSheffield and the other for Waltham Forest. This new procurement route forschools is time consuming and expensive as, once again, we are charting newterritory. However, should we be successful, the projects would provide us withvaluable additional experience in the education arena along with constructionand facilities management work. Pensions At 31 December 2005 the net pension deficit shown on the balance sheet,calculated as required by IAS 19, is £93.0m (December 2004: £79.8m, June 2005:£85.3m). The movement between the periods is attributable to the reduction inbond yields which, frustratingly, is the measure we are required to apply as adiscount rate to future liabilities under IAS 19 and does not necessarilyreflect the true level of liabilities. This has more than offset the increase inassets in each of the periods. The Board continues to take a responsibleapproach to pensions and, having made a special contribution of £12m in March2005, has agreed to make further 'special contributions' over the next fewmonths, amounting to £35m. The contributions will have no effect on the incomestatement for the year but will be shown as a reduction in cash and a reductionin pension deficit on the balance sheet. In addition to the above the Board hasagreed a schedule of payments with the pension trustees aimed at eliminating thedeficit over the next ten years. Recognising the cash outflow associated withfunding the special contributions the Group's committed borrowing facilitieshave been extended by a further £40m in order that this issue does not impact onthe Group's access to funds. Health & Safety The success of our Health & Safety initiative 'Don't Walk By' has resulted in anincident rate (AIR) of 595 per 100,000 members of staff and subcontractors atthe end of December 2005 compared with an Health & Safety Executive (HSE)benchmark at that time of 1,023 per 100,000. The revised HSE benchmark for 2005/6 is now 902 per 100,000 and our focus will be on behavioural issues to furtherreduce our AIR over the coming year. Prospects Excellent prospects for growth arise out of all our markets. The constructionmarket is continuing to benefit from government spending evidenced by theincreasing proportion of work we are being awarded for public sector clients. InSupport Services there is a growing number of local authority outsourcingcontracts available to bid which we are in a strong position to pursue. InHomes, visitor and reservation levels are showing signs of a more active marketwhich, should they continue, would lead to material growth in unit sales for thefull year. Our Property business is attracting a wide range of new developmentsincluding mixed-use schemes and in PFI our pipeline and track record of awardswill provide further growth. Our businesses are working ever better together to provide a total solution toclients' increasingly complex requirements and I am extremely proud of theirachievements. With a good reputation, sound financial strength, a rising generation oftalented people and favourable markets Kier can look forward to further growththis year and beyond. For further information, please contact: John Dodds, Chief ExecutiveKier Group plc Tel: 01767 640111 Deena Mattar, Finance DirectorKier Group plc Tel: 01767 640111 Caroline SturdyMadano Partnership Tel: 020 7593 4000 Consolidated income statement Unaudited Unaudited 6 months 6 months to to 31 31 Year to December December 30 June 2005 2004 2005 Notes £m £m £mRevenue - continuing operationsGroup and share of joint ventures 3 922.6 805.6 1,623.2Less share of joint ventures (41.3) (14.5) (50.2)Group revenue 881.3 791.1 1,573.0Cost of sales (804.0) (722.8) (1,433.8)Gross profit 77.3 68.3 139.2Administrative expenses (50.0) (43.7) (91.1)Share of post tax profits from joint ventures 1.3 - 0.9Profit from operations 3 28.6 24.6 49.0Exceptional items (other non-operating income) 4 - 5.9 6.7Finance income 2.7 1.8 4.0Finance cost (2.9) (2.7) (5.2)Profit before tax 3 28.4 29.6 54.5Taxation 5 (7.8) (11.3) (17.9)Profit for the period 20.6 18.3 36.6Earnings per ordinary share- basic 7 58.0p 51.8p 103.4p- diluted 57.5p 51.5p 102.5pUnderlying earnings per ordinary share (excluding exceptional items)- basic 7 58.0p 47.3p 96.6p- diluted 57.5p 47.0p 95.8p Consolidated statement of recognised income and expense Unaudited Unaudited 6 months 6 months to to 31 31 Year to December December 30 June 2005 2004 2005 Notes £m £m £mForeign exchange translation differences - (0.3) 0.1Fair value movements in cash flow hedging instruments (0.5) - -Actuarial gains and losses on defined benefit pension schemes (10.8) (21.5) (41.5)Deferred tax on items recognised directly in equity 3.4 6.5 12.5Net expense recognised directly in equity (7.9) (15.3) (28.9)Profit for the period 20.6 18.3 36.6Total recognised income and expense for the period 12.7 3.0 7.7Effect of change in accounting policyAdoption of IAS 32 and IAS 39, net of tax, on 1 July 2005 (with June 2005not restated) on:Cash flow hedge reserve 8 (5.3) - -Total recognised income and expense for the period attributable to 7.4 3.0 7.7shareholders Consolidated balance sheet Unaudited Unaudited 31 31 30 June December December 2005 2004 2005 Notes £m £m £mNon-current assetsIntangible assets 15.7 17.6 16.7Property, plant and equipment 71.8 69.8 75.8Investment in joint ventures 17.4 20.8 22.9Deferred tax assets 41.5 34.2 38.3Other financial assets 1.1 - -Trade and other receivables 12.1 5.8 14.6Non-current assets 159.6 148.2 168.3Current assetsInventories 369.1 296.8 325.7Trade and other receivables 254.9 193.0 233.3Cash and cash equivalents 117.8 100.3 93.5Current assets 741.8 590.1 652.5Total assets 901.4 738.3 820.8Current liabilitiesBank overdrafts and loans (0.1) - (5.3)Trade and other payables (600.6) (490.6) (566.5)Tax liabilities (11.4) (12.0) (9.5)Provisions (1.0) (1.9) (1.2)Current liabilities (613.1) (504.5) (582.5)Non-current liabilitiesInterest-bearing loans and borrowings (30.1) (30.1) (30.1)Other payables (50.8) (22.8) (17.2)Retirement benefit obligations (132.9) (114.0) (121.9)Provisions (19.1) (16.5) (16.3)Deferred tax liabilities - (0.4) -Non-current liabilities (232.9) (183.8) (185.5)Total liabilities (846.0) (688.3) (768.0)Net assets 3 55.4 50.0 52.8EquityShare capital 0.4 0.4 0.4Share premium 20.0 17.7 18.2Capital redemption reserve 2.7 2.7 2.7Share scheme reserve (1.5) (0.4) (0.3)Retained earnings 39.4 29.6 31.8Cash flow hedge reserve (5.6) - -Total equity 8 55.4 50.0 52.8 Consolidated cash flow statement Unaudited Unaudited 6 months 6 months to to 31 31 Year to December December 30 June 2005 2004 2005 £m £m £mCash flows from operating activitiesProfit from operations 28.6 24.6 49.0Adjustments Share of results of joint ventures (1.3) - (0.9) Pensions charge in excess of cash contributions 0.2 - (0.1) Share-based payments charge 0.4 0.3 0.6 Amortisation of intangible assets 1.0 1.0 1.9 Depreciation charges 6.1 6.4 12.3 Profit on disposal of property, plant & equipment (1.2) (0.2) (0.5) Increase in provisions 2.5 3.4 1.8Operating cash flows before movements in working capital 36.3 35.5 64.1Additional contribution to pension fund - - (12.0)(Increase)/decrease in inventories (40.5) 25.1 19.7(Increase)/decrease in receivables (18.7) 32.0 (16.7)Increase/(decrease) in payables 66.3 (30.3) 31.3Cash inflow from operating activities 43.4 62.3 86.4Interest received 2.5 2.4 3.7Income taxes paid (6.5) (5.1) (12.8)Net cash generated from operating activities 39.4 59.6 77.3Cash flows from investing activitiesProceeds from sale of property, plant & equipment 4.2 5.1 6.0Proceeds from sale of investments - 5.0 5.8Refinancing of PFI joint venture - 8.1 8.1Dividends received from joint ventures 1.0 0.4 0.4Purchases of property, plant & equipment (8.0) (8.5) (19.9)Acquisition of subsidiaries - - (16.5)Investment in joint ventures (0.6) (1.5) (1.5)Net cash used in investing activities (3.4) 8.6 (17.6)Cash flows from financing activitiesProceeds from the issue of share capital - 0.1 0.2Purchase of own shares (1.5) (0.4) (0.4)Interest paid (1.3) (1.0) (2.6)Dividends paid (3.7) (4.3) (6.4)Net cash used in financing activities (6.5) (5.6) (9.2)Net increase in cash and cash equivalents 29.5 62.6 50.5Opening net cash and cash equivalents 88.2 37.7 37.7Closing net cash and cash equivalents 117.7 100.3 88.2Reconciliation of net cash flow to movement in net fundsNet increase in cash and cash equivalents 29.5 62.6 50.5Opening net funds 58.1 7.6 7.6Closing net funds 87.6 70.2 58.1Net funds consist of:Cash and cash equivalents 117.8 100.3 93.5Overdrafts (0.1) - (5.3)Net cash and cash equivalents 117.7 100.3 88.2Long-term borrowings (30.1) (30.1) (30.1)Net funds 87.6 70.2 58.1 Notes to the financial statements 1 Basis of preparation EU law requires that the next annual financial statements of the Group, for theyear ending 30 June 2006, be prepared in accordance with International FinancialReporting Standards (IFRS) as adopted by the EU (adopted IFRS). This interim financial information has been prepared on the basis of therecognition and measurement requirements of IFRS in issue that are eitherendorsed by the EU and effective (or available for early adoption) at 30 June2006 or are expected to be endorsed and effective (or available for earlyadoption) at 30 June 2006. Based on these adopted and unadopted IFRS, the directors have made assumptionsabout the accounting policies expected to be applied which are as set out below,for the year ending 30 June 2006. In addition, the adopted IFRS that will be effective (or available for earlyadoption) in the financial statements for the year ending 30 June 2006 are stillsubject to change and to additional interpretations and therefore cannot bedetermined with certainty. Accordingly, the accounting policies for that annualperiod will be determined finally only when the financial statements areprepared for the year ending 30 June 2006. The results for the six months to 31 December 2005 and the comparative figuresfor the six months to 31 December 2004 are unaudited but have been reviewed bythe auditors KPMG Audit Plc. The scope of the review was substantially less thanan audit in accordance with Auditing Standards. The comparative figures for the year ended 30 June 2005 are not the Company'sstatutory accounts for that financial year. Those accounts, which were preparedunder UK Generally Accepted Accounting Practice (GAAP), have been reported on bythe Company's auditors and delivered to the Registrar of Companies. The reportof the auditors was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The comparative figures for the six months ended 31 December 2004 and for theyear ended 30 June 2005 have been restated for the adoption of IFRS. Theprincipal differences between UK GAAP and IFRS for the Group are set out in note9. Note 10 sets out the effect of IAS 32 and IAS 39 on Kier Group at 1 July 2005and includes details on the draft interpretation on accounting for serviceconcessions. As permitted by the exemption from retrospective application inIFRS 1 'First-time Adoption of IFRS', IAS 32 and IAS 39 have been applied from 1July 2005 with no restatement for prior periods. IFRS transitional informationis shown in note 11. 2 Accounting policies Details of significant amendments to the Group's accounting policies (as set outin the 2005 annual accounts) resulting from the adoption of IFRS are included innotes 9 and 10. With the exception of those changes detailed therein, theaccounting policies used are consistent with those disclosed in the 2005 annualaccounts. 3 Segmental analysis For management purposes the Group is currently organised into five operatingdivisions, Construction, Support Services, Homes, Property and InfrastructureInvestment. These divisions are the basis on which the Group reports its primarysegmental information. Support Infrastructure Construction Services Homes Property Investment Centre Group £m £m £m £m £m £m £mSix months to 31 December 2005RevenueGroup and share of joint ventures 603.7 139.1 134.8 38.3 6.7 - 922.6Less share of joint ventures (2.7) - - (32.1) (6.5) - (41.3)Group revenue 601.0 139.1 134.8 6.2 0.2 - 881.3ProfitGroup operating profit 8.0 2.9 19.8 2.9 (0.9) (5.4) 27.3Share of joint ventures' operating profit 0.2 - - 2.5 0.7 - 3.4Group and share of joint ventures 8.2 2.9 19.8 5.4 (0.2) (5.4) 30.7Share of joint ventures - finance cost - - - (1.0) (0.3) - (1.3)- tax - - - (0.6) (0.2) - (0.8)Profit from operations 8.2 2.9 19.8 3.8 (0.7) (5.4) 28.6Finance income/(cost) 6.8 (0.5) (6.4) (0.3) 0.5 (0.3) (0.2)Profit before tax 15.0 2.4 13.4 3.5 (0.2) (5.7) 28.4Balance sheetTotal assets 252.2 77.7 357.7 41.8 (3.1) 57.3 783.6Total liabilities (452.6) (76.5) (103.9) (8.1) (2.6) (172.1) (815.8)Net operating assets/(liabilities) (200.4) 1.2 253.8 33.7 (5.7) (114.8) (32.2)Cash, net of debt 278.3 8.6 (187.7) (19.0) (4.5) 11.9 87.6Net assets 77.9 9.8 66.1 14.7 (10.2) (102.9) 55.4 Notes to the financial statements continued 3 Segmental analysis continued Support Infrastructure Construction Services Homes Property Investment Centre Group £m £m £m £m £m £m £mSix months to 31 December 2004RevenueGroup and share of joint ventures 524.5 113.9 134.5 27.2 5.5 - 805.6Less share of joint ventures (3.2) - - (6.4) (4.9) - (14.5)Group revenue 521.3 113.9 134.5 20.8 0.6 - 791.1ProfitGroup operating profit 5.5 2.2 19.6 2.3 (0.6) (4.4) 24.6Share of joint ventures' operating profit 0.3 - - 1.4 0.2 - 1.9Group and share of joint ventures 5.8 2.2 19.6 3.7 (0.4) (4.4) 26.5Share of joint ventures - finance cost - - - (0.9) (0.7) - (1.6)- tax - - - (0.3) - - (0.3)Profit from operations 5.8 2.2 19.6 2.5 (1.1) (4.4) 24.6Exceptional items (other non-operating - - - - 2.1 3.8 5.9income)Finance income/(cost) 5.4 (0.7) (5.6) (0.2) 0.7 (0.5) (0.9)Profit before tax 11.2 1.5 14.0 2.3 1.7 (1.1) 29.6Balance sheetTotal assets 200.4 75.2 288.3 28.5 1.0 44.6 638.0Total liabilities (370.7) (55.6) (68.2) (15.3) (7.4) (141.0) (658.2)Net operating assets/(liabilities) (170.3) 19.6 220.1 13.2 (6.4) (96.4) (20.2)Cash, net of debt 237.0 (11.7) (160.3) (4.5) 3.2 6.5 70.2Net assets 66.7 7.9 59.8 8.7 (3.2) (89.9) 50.0 The segmental information for Construction and Support Services has beenrestated to reflect the reclassification of Kier Plant from Construction toSupport Services. This has increased revenue by £5.6m and operating profit by£1.0m in Support Services with a corresponding reduction in Construction. Year to 30 June 2005 RevenueGroup and share of joint ventures 1,086.3 237.4 225.5 62.2 11.8 - 1,623.2Less share of joint ventures (7.3) - - (32.0) (10.9) - (50.2)Group revenue 1,079.0 237.4 225.5 30.2 0.9 - 1,573.0ProfitGroup operating profit 14.2 5.0 32.9 5.6 (1.7) (7.9) 48.1Share of joint ventures' operating profit (0.4) - - 4.8 0.8 - 5.2Group and share of joint ventures 13.8 5.0 32.9 10.4 (0.9) (7.9) 53.3Share of joint ventures - finance cost - - - (2.2) (0.9) - (3.1)- tax 0.1 - - (0.8) (0.5) - (1.2)Profit from operations 13.9 5.0 32.9 7.4 (2.3) (7.9) 49.0Exceptional items (other non-operating 0.8 - - - 2.1 3.8 6.7income)Finance income/(cost) 11.5 (1.1) (11.5) (0.6) 1.1 (0.6) (1.2)Profit before tax 26.2 3.9 21.4 6.8 0.9 (4.7) 54.5Balance sheetTotal assets 245.1 77.3 320.2 31.6 1.8 51.3 727.3Total liabilities (431.2) (66.2) (74.6) (7.2) (3.5) (149.9) (732.6)Net operating assets/(liabilities) (186.1) 11.1 245.6 24.4 (1.7) (98.6) (5.3)Cash, net of debt 258.2 (2.1) (185.5) (12.6) (2.0) 2.1 58.1Net assets 72.1 9.0 60.1 11.8 (3.7) (96.5) 52.8 The segmental information for Construction and Support Services has beenrestated to reflect the reclassification of Kier Plant from Construction toSupport Services. This has increased revenue by £9.9m and operating profit by£1.8m in Support Services with a corresponding reduction in Construction. Notes to the financial statements continued 4 Exceptional items (other non-operating income) Other non-operating income for the year to 30 June 2005 arose from thefollowing: Unaudited 31 December 30 June 2004 2005 £m £mDisposal of investment in a PFI joint venture 2.1 2.1Disposal of a property held in property, plant and equipment 3.8 3.8Disposal of investment in Kier Hong Kong Limited - 0.8 5.9 6.7 5 Taxation The taxation charge for the six months ended 31 December 2005 has beencalculated at 29.5% (June 2005 30.2%, December 2004 30.4%) of underlying profitbefore tax, being profits adjusted for other non-operating income and theGroup's share of tax in equity accounted joint ventures. This represents theestimated effective rate of tax for the year. Unaudited Unaudited 31 31 December December 30 June 2005 2004 2005 £m £m £mProfit before tax 28.4 29.6 54.5Less: exceptional items - (5.9) (6.7)Add: tax on joint ventures 0.8 0.3 1.2Underlying profit before tax 29.2 24.0 49.0Tax charge 7.8 11.3 17.9Less: tax on exceptional items - (4.3) (4.3)Add: tax on joint ventures 0.8 0.3 1.2Underlying tax charge 8.6 7.3 14.8Rate 29.5% 30.4% 30.2% 6 Dividends Amounts recognised as distributions to equity holders in the period. Unaudited Unaudited 31 31 December December 30 June 2005 2004 2005 £m £m £mFinal dividend for the year ended 30 June 2005 of 15.2 pence (2004: 13.0 pence) 5.4 4.6 4.6Interim dividend for the year ended 30 June 2005 of 7.0 pence - - 2.5 5.4 4.6 7.1 The proposed interim dividend of 8.2 pence (2005: 7.0 pence) had not beenapproved at the balance sheet date and so has not been included as a liabilityin these financial statements. The dividend totalling £2.9m will be paid on 18May 2006 to shareholders on the register at the close of business on 24 March2006. A scrip dividend alternative will be offered. Notes to the financial statements continued 7 Earnings per share Unaudited Unaudited 31 31 December December 30 June 2005 2004 2005 £m £m £mProfit after tax 20.6 18.3 36.6Less: exceptional items - (5.9) (6.7)Add: tax on exceptional items - 4.3 4.3Underlying profit after tax 20.6 16.7 34.2Add: amortisation of intangible assets 1.0 1.0 1.9Less: tax on amortisation of intangible assets (0.3) (0.3) (0.6)Adjusted profit after tax 21.3 17.4 35.5 million million millionWeighted average number of shares used for EPS- basic 35.5 35.3 35.4- diluted 35.8 35.5 35.7 pence pence penceEarnings per share- basic 58.0 51.8 103.4- diluted 57.5 51.5 102.5Underlying earnings per share after excluding exceptional items- basic 58.0 47.3 96.6- diluted 57.5 47.0 95.8Adjusted earnings per share after excluding exceptional items and amortisation ofintangible assets- basic 60.0 49.3 100.3- diluted 59.5 49.0 99.4 8 Reconciliation of changes in total equity Unaudited Unaudited 31 31 December December 30 June 2005 2004 2005 £m £m £mOpening shareholders' equity 52.8 51.2 51.2Adjustments on adoption of IAS 32 and IAS 39 on 1 July 2005 (net of tax) (5.3) - -Restated opening shareholders' equity 47.5 51.2 51.2Recognised income and expense for the period 12.7 3.0 7.7Dividends paid (5.4) (4.6) (7.1)Issue of own shares 1.8 0.5 0.8Share-based payments (1.2) (0.1) 0.2Closing shareholders' equity 55.4 50.0 52.8 Notes to the financial statements continued 9 Principal differences between UK GAAP and IFRS There are eight principal differences which give rise to changes in the Group'sreported profits and net assets as set out in the 2005 annual accounts. Theseare categorised as follows:i ) Retirement benefit costsii) Sales and marketing costsiii) Deferred land paymentsiv) Property transactionsv) Other including: - proposed dividends - deferred tax - share-based payments - goodwill In addition there is a change to the way in which joint ventures are disclosedhaving no impact on net assets or net profits. i) Retirement benefit costsUnder UK GAAP the Group accounted for its defined benefit schemes in accordancewith SSAP 24 'Accounting for Pension Costs'. The cost of providing the definedbenefit pensions was charged against 'operating profit' with surpluses anddeficits arising in the funds amortised to 'operating profit' over the remainingservice lives of participating employees. Under IAS 19 (Revised) 'EmployeeBenefits' the cost of providing pension benefits (current service cost) fordefined benefit pensions schemes is recognised in profit or loss, together withthe interest cost arising on the projected obligations, returns on scheme assetsand past service costs. The defined benefit obligation is determined bi-annuallyby independent actuaries and recognised on the balance sheet. Actuarial gainsand losses are recognised in full in the statement of recognised income andexpense in the period in which they occur. The impact is similar to that arising under the UK GAAP standard FRS 17 'Retirement Benefits', details of which are disclosed in the notes to the Group's2005 annual accounts. ii) Sales and marketing costsUnder UK GAAP sales and marketing costs for the Residential and Propertydivisions are capitalised in site work in progress and written off through costof sales as the site progresses. Under IAS 2 'Inventories' costs relating tosales and marketing activities are required to be written off as incurred. iii) Deferred land paymentsUnder UK GAAP deferred land payments (land creditors) are included in 'creditors' at their gross value. Under IAS 2 'Inventories' imputed interest isrecognised on deferred land payments with the result that the land creditors arecarried in the balance sheet at net present value and the value of land held onthe balance sheet in inventories is reduced. The unwinding of the imputedinterest (or discount) on land creditors is charged to finance cost and thereduction in land values in inventories will result in an eventual reduction incost of sales as the land is traded out. iv) Property transactionsUnder UK GAAP where property developments are sold in advance of construction,turnover and profit are recognised over the life of the contract in accordancewith SSAP 9 'Stocks and Long-Term Contracts.' Under IAS 18 'Revenue', whereproperty developments are sold in advance of construction being completed,revenue and profit are recognised from the point of sale, and as the significantoutstanding acts of construction and development are completed. v) Other adjustmentsOther changes to accounting policies that have an impact on restated net assetsand profit under IFRS are as follows: a) Proposed dividendsUnder UK GAAP as applicable for the year ended 30 June 2005, proposed dividendswere recognised as a liability in the period to which they relate. Under IAS 10'Events after the Balance Sheet Date' dividends are not recognised as aliability until they are appropriately authorised and no longer at thediscretion of the Company. b) Deferred taxationIAS 12 'Income Taxes' requires deferred tax to be recognised on all temporarydifferences and not just timing differences as previously under UK GAAP.Deferred tax liabilities are recognised in full but deferred tax assets are onlyrecognised if future taxable profits are available to cover the assets. c) Share-based paymentsAs permitted by the exemption from retrospective application in IFRS 1, theGroup has adopted IFRS 2 'Share-based Payments' for all payments granted after 7November 2002. This requires that share-based payments granted after that date,but not vested, should be valued at the fair value of the shares at the date ofgrant. This affects the Sharesave and Long-Term Incentive Plan schemes. The fairvalue of these shares at date of award is calculated using the Black Scholesmodel. d) Goodwill and intangible assetsUnder UK GAAP, goodwill is amortised on a straight line basis over its usefuleconomic life (in the case of Kier for up to ten years) tested for impairmentand provided for as necessary. Under IFRS 3 'Business Combinations' goodwill isno longer amortised but is carried at cost and subject to annual review forimpairment at 30 June. It is effectively frozen at June 2004 with amountsamortised subsequently under UK GAAP being reinstated. At June 2004 the Group balance sheet contained £18.6m of goodwill. £13.4m ofthis relates to the business and assets of the Construction and BuildingServices operation of Sheffield City Council. This has been reclassified fromgoodwill to intangible assets in respect of contract rights under IFRS and willcontinue to be amortised on a straight line basis over the remaining life of thecontract. The balance of £5.2m relates to the acquisition of Partnerships Firstin 2002. This balance has been maintained at the 30 June 2004 carrying value. vi) Joint ventures (disclosure item)Under IFRS the results of joint ventures may either be accounted for under thenet equity method or proportional consolidation. The Group reported its jointventures under UK GAAP using the net equity method and has opted to continue tofollow this method. Under the net equity method trading results from jointventures are shown net of tax within profit before tax. This has no impact onnet assets or on profit after tax. Notes to the financial statements continued 10 Other differences between UK GAAP and IFRS largely relating to PFIconcessions i) Financial instrumentsThe recognition, measurement and presentation of financial instruments is dealtwith under IAS 39 and IAS 32. Under UK GAAP there was no comprehensive standardwhich addressed the accounting for financial instruments as applicable for theyear ended 30 June 2005. FRS 13 'Derivatives and other financial instruments' inthe UK required disclosures to be made in respect of financial instruments butthese were less comprehensive than IAS 32. As permitted by IFRS 1, the Group has elected not to restate comparativeinformation in accordance with IAS 39 and IAS 32. The significant changes inaccounting polices are in relation to the accounting treatment of derivativefinancial instruments. The Group's IFRS accounting policies under IAS 32 and IAS 39 are as follows: • Derivatives are initially recognised at fair value on the date that thecontract is entered into and subsequently re-measured in future periods at theirfair value. The method of recognising the resulting change in fair value isdependent on whether the derivative is designated as an effective hedginginstrument. • A number of the Group's PFI joint ventures have entered into interest ratederivatives as a means of hedging interest rate risk under cash flow hedges,which are initially recognised at fair value. The effective part of the changein fair value of these derivatives is recognised directly in equity. Anyineffective portion is recognised immediately in the income statement. Amountsaccumulated in equity are recycled to the income statement in the periods whenthe hedged items will affect profit or loss. The fair value of interest ratederivatives is the estimated amount that the Group would receive or pay toterminate the derivative at the balance sheet date. • The Group also enters into forward contracts in order to hedge againsttransactional foreign currency exposures. In cases where these derivativeinstruments are significant, hedge accounting is applied as described above.Where hedge accounting is not applied, changes in fair value of derivatives arerecognised in the income statement. Fair values are based on quoted marketprices at the balance sheet date. The Group's share of the fair value of these interest rate swaps together withother minor Group derivatives, at 1 July 2005 results in a liability of £7.5m(excluding the Group's share of the related deferred tax). The application ofIAS 39 at that date reduces the net assets of the Group by £5.3m (£7.5m lesstax). ii) Accounting for service concessionsIn determining an appropriate accounting policy for the Group's interests in PFIprojects under adopted IFRS, the Group has considered the current status of theproject by the International Financial Reporting Interpretations Committee(IFRIC) on accounting for service concession arrangements. IFRIC published threedraft interpretations on accounting for service concessions in 2005. However,the final form of the interpretations, and the timetable for IFRIC to finaliseand the EU to adopt the interpretations, remain uncertain. In light of this uncertainty, the Group considers that until such time as finalguidance is issued by IFRIC and adopted by the EU it remains appropriate toaccount for PFI assets in the same way as previously accounted for under UKGAAP. A consequence of this approach is that PFI contract assets (i.e. property, plantand equipment, and finance debtors) are measured on the basis of historicalcost, whereas the interest rate swaps held by the PFI joint ventures for thepurpose of hedging floating rate liabilities are measured at fair value bothinitially and subsequently. If the IFRIC draft interpretations are finalised inthe current form, to the extent that PFI contract assets are recognised asfinancial assets (finance debtors) they also may be measured initially andsubsequently at fair value. The carrying value of the Group's investments in PFI joint ventures as at 31December 2005 on an IFRS basis was a liability of £4.4m, after deducting netlosses on interest rate swaps of £6.3m and including an £8.1m unrealisedrefinancing gain. This reflects the accounting model the Group has applied toits PFI interests under IFRS, in which contract assets are measured on anhistorical cost basis but derivatives held for hedging purposes are measured atfair value. If the Group had applied a different accounting model to its PFIfinance debtors and measured them at fair value, the recognition of fair valuenet gains would have mitigated the effects of the interest rate swaps set outabove and increased the net assets of the Group accordingly. Notes to the financial statements continued 11 Reconciliation of UK GAAP to IFRS The effects of the differences between UK GAAP and IFRS as set out in note 9, onthe 31 December 2004 and 30 June 2005 results as published under UK GAAP areshown below. a) Consolidated income statement for the six months ended 31 December 2004 -reconciliation UK GAAP to IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) (vi) IFRS balances £m in adopted Retirement Sales & Deferred Property Other Joint IFRS benefits marketing land transactions £m ventures format £m £m payments £m £m £m £m Revenue - continuing operationsGroup and share of joint ventures 816.1 (10.5) 805.6Less share of joint ventures (25.0) 10.5 (14.5)Group revenue 791.1 - 791.1Cost of sales (722.2) 0.1 0.3 (1.0) (722.8)Gross profit 68.9 0.1 0.3 - (1.0) 68.3Administrative expenses (43.7) (43.7)Goodwill amortisation (1.3) 1.3 -Operating profit - joint ventures 2.8 (0.9) (1.9) -Share of post tax profits from joint - -venturesProfit from operations 26.7 0.1 0.3 (0.9) 0.3 (1.9) 24.6Exceptional items 5.9 5.9Finance income - Group 1.8 1.8Finance cost - Group (1.3) (1.4) (2.7)Finance cost - joint ventures (1.6) 1.6 -Profit before tax 31.5 0.1 (1.1) (0.9) 0.3 (0.3) 29.6Taxation (12.2) 0.3 0.3 0.3 (11.3)Profit for the period 19.3 - 0.1 (0.8) (0.6) 0.3 - 18.3Earnings per ordinary share 54.7p 51.8pAdjusted earnings per ordinary share(excluding exceptional items andamortisation of intangible assets) 53.0p 49.3p b) Consolidated statement of changes in equity for the six months ended 31December 2004 - reconciliation UK GAAP to IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) (vi) IFRS balances £m in adopted Retirement Sales & Deferred Property Other Joint IFRS benefits marketing land transactions £m ventures format £m £m payments £m £m £m £m Opening shareholders' equity 116.4 (64.8) (2.6) - (0.3) 2.5 - 51.2Foreign exchange translation (0.3) (0.3)differencesActuarial gains and losses in - (21.5) (21.5)pension schemeDeferred tax on actuarial gains andlossesin pension scheme - 6.5 6.5Net losses recognised directly in (0.3) (15.0) (15.3)equityProfit for the period 19.3 - 0.1 (0.8) (0.6) 0.3 - 18.3Total recognised income for the 19.0 (15.0) 0.1 (0.8) (0.6) 0.3 - 3.0periodDividends paid (2.5) (2.1) (4.6)Issue of own shares 0.4 0.1 0.5Share-based payments (0.1) (0.1)Closing shareholders' equity 133.2 (79.8) (2.5) (0.8) (0.9) 0.8 - 50.0 Notes to the financial statements continued 11 Reconciliation of UK GAAP to IFRS continued c) Consolidated income statement for the year ended 30 June 2005 -reconciliation UK GAAP to IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) (vi) IFRS balances £m in adopted Retirement Sales & Deferred Property Other Joint IFRS benefits marketing land transactions £m ventures format £m £m payments £m £m £m £m Revenue - continuing operationsGroup and share of joint ventures 1,621.4 1.8 1,623.2Less share of joint ventures (48.4) (1.8) (50.2)Group revenue 1,573.0 - 1,573.0Cost of sales (1,430.7) (1.7) 0.5 (1.9) (1,433.8)Gross profit 142.3 (1.7) 0.5 - (1.9) 139.2Administrative expenses (91.2) 0.1 (91.1)Goodwill amortisation (2.5) 2.5 -Operating profit - joint ventures 4.8 (0.1) 0.5 (5.2) -Share of post tax profits from joint - 0.9 0.9venturesProfit from operations 53.4 0.1 (1.8) 0.5 0.5 0.6 (4.3) 49.0Exceptional items 6.7 6.7Finance income - Group 4.0 4.0Finance cost - Group (3.1) (2.1) (5.2)Finance cost - joint ventures (3.1) 3.1 -Profit before tax 57.9 0.1 (1.8) (1.6) 0.5 0.6 (1.2) 54.5Taxation (20.1) 0.5 0.5 (0.2) 0.2 1.2 (17.9)Profit for the year 37.8 0.1 (1.3) (1.1) 0.3 0.8 - 36.6Earnings per ordinary share 106.8p 103.4pAdjusted earnings per ordinary share(excluding exceptional items andamortisation of intangible assets) 105.4p 100.3p d) Consolidated statement of changes in equity for the year ended 30 June 2005 -reconciliation UK GAAP to IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) (vi) IFRS balances £m in adopted Retirement Sales & Deferred Property Other Joint IFRS benefits marketing land transactions £m ventures format £m £m payments £m £m £m £m Opening shareholders' equity 116.4 (64.8) (2.6) - (0.3) 2.5 - 51.2Foreign exchange translation 0.1 0.1differencesActuarial gains and losses in - (41.5) (41.5)pension schemeDeferred tax on actuarial gains andlossesin pension scheme - 12.5 12.5Net income/(losses) recognised 0.1 (29.0) (28.9)directly in equityProfit for the year 37.8 0.1 (1.3) (1.1) 0.3 0.8 - 36.6Total recognised income for the year 37.9 (28.9) (1.3) (1.1) 0.3 0.8 - 7.7Dividends paid (7.9) 0.8 (7.1)Issue of own shares 0.8 0.8Share-based payments 0.2 0.2Closing shareholders' equity 147.4 (93.7) (3.9) (1.1) - 4.1 - 52.8 Notes to the financial statements continued 11 Reconciliation of UK GAAP to IFRS continued e) Opening consolidated balance sheet at 30 June 2004 - reconciliation UK GAAPto IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) IFRS balances £m in adopted Retirement Sales & Deferred Property Other IFRS benefits marketing land transactions £m format £m £m payments £m £m £m Non-current assetsIntangible assets 18.6 18.6Property, plant and equipment 68.9 68.9Investment in joint ventures 32.2 (0.1) (0.3) (0.9) 30.9Deferred tax assets - 27.7 27.7Trade and other receivables 6.2 6.2Non-current assets 125.9 27.7 (0.1) (0.3) (0.9) 152.3Current assetsInventories 328.6 (3.6) (3.2) 321.8Trade and other receivables 225.0 225.0Cash and cash equivalents 41.4 41.4Current assets 595.0 (3.6) (3.2) 588.2Total assets 720.9 27.7 (3.7) (3.2) (0.3) (0.9) 740.5Current liabilitiesBank overdrafts and loans (3.7) (3.7)Trade and other payables (521.9) 0.9 4.6 (516.4)Tax liabilities (5.1) (5.1)Provisions (2.3) (2.3)Current liabilities (533.0) 0.9 4.6 (527.5)Non-current liabilitiesInterest-bearing loans and borrowings (30.1) (30.1)Other payables (28.4) 2.3 (26.1)Retirement benefit obligations - (92.5) (92.5)Provisions (12.6) (12.6)Deferred tax liabilities (0.4) 1.1 (1.2) (0.5)Non-current liabilities (71.5) (92.5) 1.1 2.3 (1.2) (161.8)Total liabilities (604.5) (92.5) 1.1 3.2 3.4 (689.3)Net assets 116.4 (64.8) (2.6) - (0.3) 2.5 51.2EquityShare capital 0.4 0.4Share premium 17.1 0.1 17.2Capital redemption reserve 2.7 2.7Share scheme reserve (0.4) 0.1 (0.3)Retained earnings 96.6 (64.8) (2.6) - (0.3) 2.3 31.2Total equity 116.4 (64.8) (2.6) - (0.3) 2.5 51.2 Notes to the financial statements continued 11 Reconciliation of UK GAAP to IFRS continued f) Consolidated balance sheet at 31 December 2004 - reconciliation UK GAAP toIFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) IFRS balances £m in adopted Retirement Sales & Deferred Property Other IFRS benefits marketing land transactions £m format £m £m payments £m £m £m Non-current assetsIntangible assets 17.3 0.3 17.6Property, plant and equipment 69.8 69.8Investment in joint ventures 22.7 (0.1) (0.9) (0.9) 20.8Deferred tax assets - 34.2 34.2Trade and other receivables 5.8 5.8Non-current assets 115.6 34.2 (0.1) (0.9) (0.6) 148.2Current assetsInventories 303.1 (3.4) (2.9) 296.8Trade and other receivables 193.0 193.0Cash and cash equivalents 100.3 100.3Current assets 596.4 (3.4) (2.9) 590.1Total assets 712.0 34.2 (3.5) (2.9) (0.9) (0.6) 738.3Current liabilitiesBank overdrafts and loans - -Trade and other payables (494.2) 1.0 2.6 (490.6)Tax liabilities (12.0) (12.0)Provisions (1.9) (1.9)Current liabilities (508.1) 1.0 2.6 (504.5)Non-current liabilitiesInterest-bearing loans and borrowings (30.1) (30.1)Other payables (23.6) 0.8 (22.8)Retirement benefit obligations - (114.0) (114.0)Provisions (16.5) (16.5)Deferred tax liabilities (0.5) 1.0 0.3 (1.2) (0.4)Non-current liabilities (70.7) (114.0) 1.0 1.1 (1.2) (183.8)Total liabilities (578.8) (114.0) 1.0 2.1 1.4 (688.3)Net assets 133.2 (79.8) (2.5) (0.8) (0.9) 0.8 50.0EquityShare capital 0.4 0.4Share premium 17.5 0.2 17.7Capital redemption reserve 2.7 2.7Share scheme reserve (0.5) 0.1 (0.4)Retained earnings 113.1 (79.8) (2.5) (0.8) (0.9) 0.5 29.6Total equity 133.2 (79.8) (2.5) (0.8) (0.9) 0.8 50.0 Notes to the financial statements continued 11 Reconciliation of UK GAAP to IFRS continued g) Consolidated balance sheet at 30 June 2005 - reconciliation UK GAAP to IFRS IFRS adjustments UK GAAP (i) (ii) (iii) (iv) (v) IFRS balances £m in adopted Retirement Sales & Deferred Property Other IFRS benefits marketing land transactions £m format £m £m payments £m £m £m Non-current assetsIntangible assets 16.1 0.6 16.7Property, plant and equipment 75.8 75.8Investment in joint ventures 23.8 (0.2) (0.7) 22.9Deferred tax assets - 36.6 1.7 38.3Trade and other receivables 14.6 14.6Non-current assets 130.3 36.6 (0.2) 1.6 168.3Current assetsInventories 334.2 (5.3) (3.2) 325.7Trade and other receivables 245.3 (12.0) 233.3Cash and cash equivalents 93.5 93.5Current assets 673.0 (12.0) (5.3) (3.2) 652.5Total assets 803.3 24.6 (5.5) (3.2) 1.6 820.8Current liabilitiesBank overdrafts and loans (5.3) (5.3)Trade and other payables (572.5) 0.6 5.4 (566.5)Tax liabilities (9.5) (9.5)Provisions (1.2) (1.2)Current liabilities (588.5) 0.6 5.4 (582.5)Non-current liabilitiesInterest-bearing loans and borrowings (30.1) (30.1)Other payables (18.2) 1.0 (17.2)Retirement benefit obligations - (121.9) (121.9)Provisions (16.3) (16.3)Deferred tax liabilities (2.8) 3.6 1.6 0.5 (2.9) -Non-current liabilities (67.4) (118.3) 1.6 1.5 (2.9) (185.5)Total liabilities (655.9) (118.3) 1.6 2.1 2.5 (768.0)Net assets 147.4 (93.7) (3.9) (1.1) 4.1 52.8EquityShare capital 0.4 0.4Share premium 17.9 0.3 18.2Capital redemption reserve 2.7 2.7Share scheme reserve (0.2) (0.1) (0.3)Retained earnings 126.6 (93.7) (3.9) (1.1) 3.9 31.8Total equity 147.4 (93.7) (3.9) (1.1) 4.1 52.8 Independent review report to Kier Group plc Introduction We have been engaged by the Company to review the financial information set outon pages 9 to 22 and we have read the other information contained in the interimreport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the Company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of the Group will be prepared in accordance with IFRS adopted by theEuropean Union. The accounting policies that have been adopted in preparing thefinancial information are consistent with those that the directors currentlyintend to use in the next annual financial statements. There is, however, a possibility that the directors may determine that somechanges to these policies are necessary when preparing the full annual financialstatements for the first time in accordance with those IFRS adopted for use bythe European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof Group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2005. KPMG Audit PlcChartered AccountantsRegistered AuditorLondon 15 March 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kier