Growth through integration
Kier Group plc
Annual Report and Accounts
for the year ended 30 June 2005 Contents
01 Group highlights
02 An integrated approach
The partner of choice
Building on success
Kier people
10 Chairman’s statement
12 Chief executive’s review
18 Operating review
34 Financial review
38 Board members
Financial statements
41 Directors’ report
42 Corporate governance statement
45 Directors’ remuneration report
50 Statement of directors’
responsibilities
51 Report of the independent auditors
52 Consolidated profit and 
loss account
53 Consolidated balance sheet
54 Company balance sheet
55 Consolidated cash flow statement
56 Consolidated statement of total
recognised gains and losses
56 Reconciliation of movements 
in shareholders’ funds
57 Notes to the financial statements
76 Transition to International
Financial Reporting Standards
(IFRS)
77 Consolidated income statement
and statement of changes in equity
– restated in accordance with IFRS
78 Consolidated balance sheet 
– restated in accordance with IFRS
79 Selected notes to the IFRS
statements
84 Principal operating subsidiaries
85 Principal joint arrangements,
joint ventures and associated
undertakings
86 Group principal businesses
88 Financial record
IBC Corporate information
Kier Group plc is a leading construction,
development and services group specialising 
in building and civil engineering, support services,
private housebuilding, property development and 
the Private Finance Initiative. The Group employs
8,300 people worldwide and has an annual
turnover in excess of £1.6bn. 01
Kier Group plc 
Annual Report and Accounts 2005
Group highlights
Thirteenth successive year of growth
For the thirteenth year in succession, Kier
Group is pleased to report further growth 
in turnover, profit and earnings per share.
The Group is well placed going forward 
and has high quality, well motivated
management teams in place to ensure 
that this success continues.
+24.3% +20.9% +1 6.8%
Pre-tax profit
Pre-tax profit up 24.3% to £53.7m*
(2004: £43.2m)
£1 .03bn 43%
Construction 
order books
Construction order books at £1.03bn with
improving quality and higher proportion
of negotiated and partnered contracts
Homes order book plus
completions to 31 August 2005
Homes order book plus completions to 
31 August 2005 together secure 43% of
budgeted full-year sales
Earnings per share
Earnings per share up 20.9% to 105.4p*
(2004: 87.2p)
* Results are shown before exceptional 
profits of £6.7m and after adding back 
£2.5m (2004: £2.6m) relating to 
goodwill amortisation.
Dividend per share
Dividend per share up 16.8% to 22.2p
(2004: 19.0p) Kier Group plc 
Annual Report and Accounts 2005
02
An integrated approach
By combining the skills of our businesses, 
Kier has a winning formula for the delivery 
of development schemes through a single
source. These include property developments,
mixed-use schemes and Private Finance
Initiative projects where Kier draws together
the necessary skills to provide a total solution
to clients.
Property
Commercial property development with
capacity to maximise potential across a
broad range of schemes.
Support Services
Comprehensive facilities management, reactive
and planned building maintenance, M&E 
design & installation, plant hire and other
outsourced services for both private and 
public sectors.
Project Investment
Promoting and managing the Group’s interests 
in the Private Finance Initiative, bringing together
Kier’s expertise and resources in worldwide
construction, property development, 
housing and facilities management.
Residential
High quality private housebuilding
through well respected and locally
established brands.
Construction
A comprehensive building service delivered 
through a nationwide network of locally managed
businesses complemented by a major projects 
and social housing capability. Civil engineering 
and mining in the UK and overseas. 03
Kier Group plc 
Annual Report and Accounts 2005
The benefits of the partnering process have
long been recognised at Kier Group. While
intra-Group teams are finding success using
their combined resources and skills, other
businesses within the Group are playing
significant roles in innovative partnerships
and alliances, lending their support and
expertise to a wide range of schemes across
all market sectors. 
Partnering and joint venturing with Kier
brings access to a raft of specialist resources
including design engineering, plant hire
services, planning, land remediation,
brownfield regeneration, PFI initiatives,
facilities management and more. As well 
as adding value to these kinds of projects
through years of experience, Kier also
brings a wealth of local knowledge 
through its strategic network of UK offices. 
The partner of choice  Kier Group plc 
Annual Report and Accounts 2005
04
Building on success 
Beyond its financial performance, a good
measure of the Group’s success is the high
degree of work undertaken for repeat
clients, evident across all divisions. Great
emphasis is placed on the development of
long-term client relationships and a strong
focus on continuous improvement is
maintained to ensure these highly-valued
relationships remain firmly in place.
Increased levels of cross-divisional activity
have added a further dimension to the
Group’s capability, providing greater
opportunity for the sharing of best practice
both within the Group and with its supply
chain, clients and professional partners.  05
Kier Group plc 
Annual Report and Accounts 2005
Kier people 
The key to Kier’s success lies in the talent,
commitment and professionalism of its
employees. As an organisation that seeks to
be innovative and to set high standards of
excellence, recruiting and retaining the right
people is paramount. Substantial investment
in training and development remains a high
priority to ensure that Kier employees are
developed to their greatest potential and
that the Group continues to attract talented
individuals seeking a progressive career.
The content, structure and breadth of Kier
Group’s training modules mean they are
amongst the best in the industry offering 
all employees from school leavers to board
members continuous development within 
a Group focused on being the best in class.  Kier Group plc 
Annual Report and Accounts 2005
06 07
Kier Group plc 
Annual Report and Accounts 2005 Kier Group plc 
Annual Report and Accounts 2005
08 09
Kier Group plc 
Annual Report and Accounts 2005
Growth through integration
Project: Hinchingbrooke Treatment Centre
In 2004, Kier Project Investment and Innisfree
joined forces to form Prospect Healthcare
(Hinchingbrooke), a concession company to 
fund the construction of a new state-of-the-art
treatment centre at Hinchingbrooke Hospital,
providing a full range of diagnostic and clinical
support services.
As part of the integrated service that Kier is able 
to offer, Kier Eastern built the centre, and Kier
Managed Services is providing a full range of 
non-clinical services including cleaning, catering
and portering, which will be delivered over 
a 28-year concessionary period.
The new two-storey centre will provide 8,500sq m
of advanced diagnosis and treatment facilities for
elective care, including audiology, dental,
endoscopy and ophthalmology. 
Completed in August 2005, the centre is expected
to cater for up to 18,000 patients per year within
the next five years, enabling the treatment of an
additional 8,000 patients each year. Kier Group plc 
Annual Report and Accounts 2005
10
Chairman’s statement
This is the first set of full-year results under my
chairmanship and I am pleased that we have continued
the pattern that was established under Colin Busby’s
stewardship with yet another record level of turnover
and profit for the year to 30 June 2005, the 13th
successive year of profits growth.
(continued opposite)
Turnover (£m)
2005
2004
2003
2002
2001
1,621
1,477
1,446
1,383
1,251 11
Kier Group plc 
Annual Report and Accounts 2005
Pre-tax profits before exceptional items and
goodwill have increased by 24.3% on 2004;
construction awards were the highest ever
at £1,372m (2004: £931m) and, once
again, cash generation has been excellent
with £86.4m produced from operations. 
Financial performance
A strong performance was achieved 
in all the divisions. Turnover grew by 
9.8% to £1,621.4m (2004: £1,476.5m), 
operating profit after deducting goodwill
amortisation rose 25.4% to £53.4m 
(2004: £42.6m) and profit before tax 
(before exceptional profits) increased by
26.1% to £51.2m. The year-end net cash
balance was £58.1m (2004: £7.6m). 
Exceptional profits of £6.7m (2004: £nil)
comprise £2.1m arising on the sale of our
investment in the Neath Port Talbot Hospital
concession, £3.8m on the sale of a fixed
asset property and £0.8m arising on the 
sale of our remaining interest in Kier Hong
Kong. Tax of £1.8m has been charged on
the combined profit. In addition, whilst no
profit has been recognised, an exceptional
tax charge of £2.5m has arisen following
refinancing and subsequent £8.1m cash
extraction from the PFI investment vehicle
for Hairmyres Hospital. Basic earnings per
share, after all exceptional items, increased
by 31.0% to 106.8p (2004: 81.5p). 
Adjusted earnings per share before 
goodwill amortisation and exceptional 
items increased by 20.9% to 105.4p 
(2004: 87.2p).
The Board proposes a final dividend for the
year ended 30 June 2005 of 15.2p (2004:
13.0p) making 22.2p for the year (2004:
19.0p) an increase of 16.8% and covered
4.7 times by earnings per share before
goodwill amortisation and exceptional
items. The dividend will be paid on 
6 December 2005 to shareholders on the
register on 30 September 2005 and there
will be a scrip alternative.
Shareholders’ funds increased by £31.0m 
to £147.4m (2004: £116.4m). Pre-tax return
on shareholders’ funds was 43.9%, having
been sustained at around this level for the
last eight years.
International Financial 
Reporting Standards (IFRS)
This is the last set of results reported upon
under UK Generally Accepted Accounting
Practice. The interim results to 31
December 2005 and those that follow will
be reported upon under IFRS. The results 
for the year to 30 June 2005 have also been
restated under IFRS and, together with 
the restated balance sheet at 30 June 2005 
and selective notes are disclosed on pages 
76 to 83. The key points relating to the
restatement are:
• The transition to IFRS has no impact on
business operations, cash, financing or
our ability to pay dividends;
• There is no impact on the profit
recognition policy for Construction or
Support Services and only minor impact
on profit recognition for Housebuilding
and Property; and
• The most significant effect of IFRS is in
accounting for pensions which reduces
stated net assets.
Appointments
I am pleased to announce that, with effect
from 1 October 2005, Ian Lawson, managing
director of Kier Support Services, and Paul
Sheffield, deputy managing director of 
Kier Regional, will be joining the Board. 
Ian returned to the Group five years ago 
as managing director of our Infrastructure
Investment business, having previously
worked for Kier International. He joined 
the Regional board in 2003 and the Support
Services board in 2004. Paul joined the
Group as a graduate engineer 22 years ago.
He has worked in the UK and overseas and
was appointed managing director of Kier
Construction in 2001, chairman of Kier 
Construction in 2003 and joined the
Regional board in 2004. I am looking
forward to working with Ian and Paul and
am confident that they will both contribute
strongly to the Board and to the future
direction of the Group.
Following the restructuring of the
Residential board we have appointed
Michael O’Farrell, previously managing
director of our subsidiary Allison Homes, 
as managing director of Kier Residential
reporting to the Kier Group Board through
the chief executive, John Dodds. With
Mick’s broad experience in housebuilding 
I am confident that he will make a
significant contribution to the future 
growth of the Residential business.
Prospects and markets
We enter the year with record levels of
work in hand in Construction and Support
Services and a satisfactory order book in
Homes. Our integrated business model
continues to provide competitive advantage.
I therefore anticipate further profitable
growth in the current year.
Peter Warry
Chairman
£1 .37bn
Construction awards 
during year
£86.4m
Cash generation 
from operations Kier Group plc 
Annual Report and Accounts 2005
12
Chief executive’s review
The year has been an extremely busy one for Kier 
with record turnover and profit levels achieved 
by all the divisions. A growing proportion of our
work has been secured from repeat business and
negotiated contracts and an increasing amount 
is being generated from development schemes 
where two or more of the divisions within the 
Group are working together.
(continued opposite) 13
Kier Group plc 
Annual Report and Accounts 2005
An example of this is at Whitehall where 
the office development for Defra was
completed during the year by Kier Build,
working for developer Kier Property, with
Kier Managed Services carrying out the
facilities management function. Further
examples include PFI projects and other
schemes involving Kier Residential and 
Kier Partnership Homes. This rare offering 
of a total solution to clients’ increasingly
complex requirements is providing us 
with some unique opportunities and an
ability to attract new clients. I am confident
that further value can be achieved from
these markets.
Construction
The full-year results for the Construction
segment have been analysed separately from
those of Support Services for the first time.
Our Construction segment includes Kier
Regional, comprising Regional Contracting,
Affordable Housing and Major Building
Projects, and Kier Construction our
Infrastructure and Overseas operation.
Turnover from the Construction segment
reached £1,096.2m, 8.8% up on 2004’s
£1,007.3m, fuelled by a good market and 
a strong supply of public sector work.
Operating profit, before goodwill
amortisation, increased by 35.7% to 
£15.6m (2004: £11.5m) and the operating
margin increased from 1.1% to 1.4%. Cash
generation has been exceptionally strong
with cash balances at 30 June 2005 over
£50m higher than the previous year end 
and average cash balances for the year
£34m ahead. Contract awards were at a
record £1,372m (2004: £931m) including a
number of long-term framework contracts,
providing a record order book of £1,030m
at 30 June 2005 (2004: £662m).
The year to 30 June 2005 saw a number 
of records for Kier Regional: turnover at
£954.6m was 10.0% ahead of 2004; 
year-end cash balances of £205m were
£36m ahead; and contract awards at
£1,018m compare favourably with the
previous record set in 2004 of £845m.
The strength of Kier Regional lies in its 
wide network of UK construction businesses
which combine local knowledge with
national presence enabling it to respond to a
wide range of markets and sectors. Through
strategic alliances and frameworks with
public sector clients it delivers a co-
ordinated service through Kier Health, for
ProCure21; Kier Custodial, for prisons; and
Kier Education, for ‘Building Schools for the
Future’. Other local authority and housing
association frameworks have also been
established including those to deliver
affordable housing. These frameworks and
strategic alliances have contributed to an
increase in public sector awards to 41% of
the total, compared with 36% in 2004. In
the private sector, where commercial and
retail awards dominate, similar frameworks
exist, for example, through Kier Retail, for
clients such as Tesco, Waitrose and Morrisons.
The proportion of total awards from
negotiated and two-stage bids has increased
to 59% in 2005 from 52% in 2004. 
Kier Regional has started the new financial
year with an order book of £647m (2004:
£511m) comprising largely shorter-term
contracts at an average value of £2.6m
which provides protection against building
cost inflation and maintains a low risk
profile, a strategy that has been key to the
success of this business. With this type and
value of work in hand and a large volume of
contracts pending award we anticipate
further growth in the business during this
financial year.
In the UK, the civil engineering arm of Kier
Construction successfully completed a major
section of the Channel Tunnel Rail Link and
secured a Network Rail Structures Framework
contract for the East Anglia region which is
expected to provide £100m of work over
five years. The water sector has provided
further work through our second five-year
framework agreement with United Utilities,
in joint venture, which will provide £130m
of work for Kier over the period. Our private
opencast coal mine at Greenburn has now
completed its first full year of production. So
far 750,000 tonnes have been mined and
over 60% of that remaining in the ground
has been forward sold at favourable, fixed
prices. Possible extensions to the mine are
being explored which could extend the
period of activity beyond the current
anticipated completion date of 2009.
Overseas, our activities in the Caribbean are
thriving with the award of a new hotel
contract for Sandals in Antigua and a
transportation centre in Kingston, Jamaica.
Our long-term alliance with Alcoa continues
on projects at alumina refineries in Suriname
and Jamaica and we are set to play a further
major role in Alcoa’s worldwide capital
expansion plans. During the year we sold
our remaining shares in Kier Hong Kong
which provided an exceptional profit of
£0.8m. We maintain our relationships 
with local Hong Kong contractors which
may, in time, lead to future joint venture
opportunities in the Far East.
Support Services
Our Support Services business continues 
to prosper. Overall turnover increased by
15.1% to £227.5m (2004: £197.7m) and
operating profit, after goodwill amortisation,
rose to £3.2m; before goodwill it was 
£5.1m (2004: £4.7m) representing a 
margin of 2.2%. A number of contracts 
were awarded during the year resulting 
in a record order book of £1.2bn at 
30 June 2005 (2004: £1.1bn).
Building Maintenance successfully
implemented the Leeds North West and
Leeds South repair and maintenance
contracts with a combined value of over
£10m per annum for the next five years,
extendable for a further five. Kier Sheffield
added to its, already successful, building
maintenance contract by securing a share 
of the Sheffield Decent Homes framework
contract which will provide us with around
£160m of work over seven years. Other
Decent Homes framework contracts were
awarded at Islington for £40m and
Greenwich for £7.5m, both over five years.
New work is plentiful in this sector and we
are hopeful of further awards in the current
financial year.
In Managed Services the portfolio of services
provided under the Private Finance Initiative
continues to grow with the start of services 
(continued on page 15) Kier Group plc 
Annual Report and Accounts 2005
14
Growth through integration
Project: Waltham Forest Schools
Academy Services, a partnership between Kier
Project Investment and Dexia Public Finance Bank,
is providing eight new schools for the London
Borough of Waltham Forest. Three of Kier’s regional
construction businesses, Kier London, Kier Southern
and Kier Eastern, are between them building one
secondary and seven primary and infant schools in
and around Waltham Forest under a £50m contract.
Kier Group’s M&E arm, IEI, is undertaking all M&E
work for the eight schools. Kier Managed Services
will be maintaining the new schools for a 30-year
term when they open in summer 2006. Kier Group plc 
Annual Report and Accounts 2005
15
Chief executive’s review
Continued
at Essex, Harrow, Waltham Forest and
Bexley Schools. We were pleased to have
won ‘Best Operational Health Scheme’ in
the UK for Neath Port Talbot Hospital in the
Public Private Finance Awards for the standard
of service provided to clients and the award
for Best Operational Education Project for
Pembroke Dock Community School.
Homes
Kier Residential came forward at 1 July 2004
with an exceptionally strong order book
which provided a high level of unit sales 
for the six months to 31 December 2004. 
As predicted the number of unit sales was
lower in the second half of the year. Full-
year completions of 1,215 were 4.9% ahead
of 2004’s 1,158 at an average selling price of
£181,700 (2004: £186,300) which provided
turnover of £220.8m (2004: £215.7m) from
housing sales. A land disposal, planned as
part of a larger site, generated a further
£4.7m of turnover at no profit or loss. The
reduction in average selling prices year on
year reflects both a 7% reduction in average
unit size and an increase in the proportion
of affordable housing sales from 5% of total
sales in 2004 to 12% in 2005.
Operating profit increased by 7.2% to £34.1m
(2004: £31.8m) at a margin of 15.4% on
housing turnover (2004: 14.7%), benefiting
during the period from a large strategic site
at Royston which is now complete. Our
Scottish-based business contributed strongly
to the growth following the restructuring and
strengthening of the local management team
and assisted by a sound market.
During the year £69m was spent on
selective land purchases and in June 2005
we acquired the land and work in progress
of Ashwood Homes, in an off-market deal,
for £23.5m of which £8.5m is deferred.
Nine sites, located in Lincolnshire and
Cambridgeshire, were acquired in the
transaction comprising 389 units with
planning consent. At 30 June 2005 the 
land-bank contained 5,178 units with
planning consent (2004: 4,961) representing
slightly more than our target holding of four
years’ unit sales. At 30 June 2005 we held
approximately 12,000 units of strategic land,
mostly under option, after achieving planning
consent during the year for 550 units on a
former Anglian Water site near the centre of
Peterborough. Significant planning progress
has also been made in delivering a site at
Aylesbury, part of a mixed-use development
area, which should provide us with 400
units for development. Strategic land is
proving a valuable route for land acquisition.
Historically approximately 18% of our annual
unit sales have originated from this process. 
Kier Residential is making good progress at
Poole Harbour where contracts have been
exchanged with Network Rail on a six-acre
mixed-use development site. Work is about
to commence, in conjunction with Kier
Construction and Kier Property, to deliver 
a new hotel, 250 apartments and a new
railway station. Other mixed-use projects
include the former Shippams paste factory
site in Chichester where planning consent
has been granted for 165 apartments and
50,000sq ft of retail units for redevelopment
in conjunction with Kier Property and 
Kier Regional.
The holiday period has, as always, resulted
in fewer visitors to our sites, however, the
ratio of visitors to sales has improved.
Although purchasers are taking longer to
make their decision, we have taken more
reservations in the two months to 31 August
2005 than in the same period last year.
Taken together the order book and
completions to date are at a marginally
lower level than last year reflecting the
strong brought forward position at 1 July
2004. We will be selling from around 18%
more outlets during the year compared with
the year to 30 June 2005 and therefore we
anticipate growth in unit sales for the full
year of which 43% are already secure. The
balance of unit sales is expected to be more
heavily skewed towards the second half of
the year than 2005. 
Property
Kier Property continues to establish itself as
one of the UK’s leading commercial property
developers. It has a development pipeline
totalling 4m sq ft of space including offices,
industrial, retail and mixed-use schemes 
£1 ,030m
Record construction order 
book at 30 June 2005
1 ,215
Unit sales from 
housebuilding Kier Group plc 
Annual Report and Accounts 2005
16
with a future sales value of nearly £700m
developed directly and through joint venture.
In the year to 30 June 2005 Kier Property
achieved a 29.6% increase in turnover to
£60.4m (2004: £46.6m) and a 51.5%
increase in operating profit to £10.0m
(2004: £6.6m). The completion, by
contractors Kier Regional, of the office
developments at Whitehall for Defra and 
at Swindon for the National Trust during 
the year contributed strongly to the results.
Also in the offices sector the 100,000sq ft
head office for BAE subsidiary AMS was
completed at Frimley Business Park 
and plans are in preparation for a 
further 300,000sq ft office scheme in 
the same location. 
Under the Trade City industrial brand 
we acquired a site at Enfield for up to
50,000sq ft of industrial space and
completed our sites at Bicester, Exeter 
and Romford.
In the retail sector we completed a further
75,000sq ft resource recovery unit at
Waltham Park for J Sainsbury adjacent to the
700,000sq ft distribution centre completed
for the same client some time ago. Further
investment in retail included the acquisition
of the 100,000sq ft Mannington Retail Park
in Swindon which is let to national occupiers
and includes valuable redevelopment and
refurbishment opportunities.
In Reading town centre a 22-storey
residential and retail development has been
given the go-ahead and at Sunbury consent
has been granted for a new hotel and 90 flats
near to Kempton racecourse. More mixed-use
opportunities are being bid for in conjunction
with Kier Residential as well as other office,
retail and industrial sites. In order to fund
further expansion the bank facilities within
the joint venture with the Bank of Scotland
have been increased to £162m. 
Infrastructure Investment
Our Infrastructure Investment business 
has continued to successfully bid and win
work by drawing together the Group’s PFI,
construction and services activities under
the banner of Kier. This formula has been 
a key factor in much of our success to date. 
Financial close was reached on a £50m
scheme for Sheffield City Council in May
2005, our third schools project. Kier
Regional has started construction on the four
new schools and on completion Kier
Managed Services will provide the services
for the 25-year term. Our fourth schools
project achieved preferred bidder status 
in July 2005 for five new schools and the
refurbishment of one school in Norfolk. 
In health our fifth project was awarded
preferred bidder status in February 2005 
for a treatment centre in Ipswich. Upon
financial close, expected in the New Year,
Kier Regional will carry out the £26m
construction project and Kier Managed
Services will maintain it for 30 years after
completion. Our response to the ‘Building
Schools for the Future’ initiative is brought
together under the Kier Education banner
which achieved its first short-listing, in July
2005, as one of three bidding to Sheffield
City Council.
As well as investing in new projects this year
we have been developing the returns from
our current portfolio. In August 2004 we
refinanced our first PFI project, Hairmyres
Hospital which provided us with £8.1m of
cash after contributing 30% of the gain to
the Lanarkshire Health Board. No profit can
be recognised on the gain unless we dispose
of the investment but tax is payable resulting
in an exceptional tax charge of £2.5m in the
accounts. In December 2004 we disposed 
of our 25.5% investment in the Neath Port
Talbot Hospital concession to Secondary
Market Infrastructure Fund UK LP . We received
a cash consideration of £5.0m on the sale
and generated an exceptional profit of £2.1m.
Following this disposal our portfolio of
investments comprises 12 projects with a
committed investment of £20.3m. As the
secondary market for these investments
develops there may be opportunity to realise
future value from the portfolio. 
Pensions
The FRS 17 deficit in the Kier Group
Pension Scheme, after accounting for
deferred tax, has increased during the year 
Chief executive’s review 
Continued
01 Kier Sheffield LLP was joint winner in the 
Local Government Chronical annual awards, 
private partnership category in recognition of its
performance as part of a public/private partnership
with Sheffield City Council.
02 The Group’s ‘Don’t Walk By’ campaign
encourages employees to remain vigilant and point
out any potential health & safety hazards. Prize draws
are held at regular intervals giving participants the
chance to win a Red Letter Day experience voucher.
03 Apprentices on the Twigden Homes’
apprenticeship scheme, now in its fourth year. 
The scheme offers training in building trades
including plumbing, bricklaying, carpentry,
scaffolding, groundwork and dry lining.
01
02
03 17
Kier Group plc 
Annual Report and Accounts 2005
from a net £67.2m to £82.6m at 30 June
2005. The market value of the scheme’s
assets rose by 21% whilst the present value
of liabilities increased by 21%, largely
resulting from a 0.9% reduction in the
discount rate compared with the previous
year. The assumptions for longevity have
also changed contributing to an increase in
the deficit. The Group has continued to take
a responsible approach to the funding
requirements of the pension fund and in
March 2005, using the cash proceeds from
refinancing the Hairmyres PFI investment
and the sale of the investment in the Neath
Port Talbot Hospital concession, the Group
made a £12.0m special cash contribution to
the pension fund, without which the deficit
in the fund would have been greater. Under
current accounting standards this contribution
has no impact on operating profits and is
treated as a prepayment in the accounts.
Other changes have been made to the way
in which pension contributions are made
which will result in savings to the Group
and which are being contributed to the
pension fund in addition to normal
requirements.
Health & Safety
In an industry where incidents and accidents
still occur, Kier Group health & safety
standards are an integral part of the
management process. The Group remains
focused on the continuous improvement 
of health & safety standards throughout all
parts of the business and supply chain and 
is determined to play its part in creating an
industry that presents a healthy and safe
working environment and is an attractive
prospect for the employment of future
generations. The Group’s Accident 
Incidence Rate is 598 per 100,000 staff 
and subcontractors, comparing favourably
with the Health & Safety Executive
benchmark of 1,023.
The positive attitude displayed toward 
health & safety by Kier companies led to 
the award of one bronze, one silver and 
17 gold RoSPA awards and 13 British 
Safety Council awards. We were also
delighted that Kier Building Maintenance
won the RoSPA ‘Behavioural Safety and 
Best Practice’ award which is a great
achievement.
Kier people
I should like to thank each and every one 
of our employees for their contribution to
the advancement of the Group. It is the
continuing commitment, innovation,
professionalism and integrity of our people
that has made the Group the success it is
today and I am confident that the high quality
of our teams will take the Group forward to
achieve further growth in the future.
Summary and prospects
Kier has had a very successful year, with
strong performances achieved in all the
divisions. Looking forward the Group is in
excellent shape to continue its advancement.
The Construction order book is at record
levels containing a high proportion of good
quality negotiated work and framework
contracts. The local authority building
maintenance outsourcing sector continues to
provide our Support Services division with
good opportunities. In Homes our land-bank
consists of sites capable of delivering the
right product in the right location which
should provide further growth in unit sales
this year. In Property our portfolio of office,
retail and industrial developments continues
to enhance value and we are investing
further in new schemes; and in Infrastructure
Investment we have developed a good
pipeline of projects and remain committed
to the Government’s Private Finance
Initiative. More opportunities are being
presented to us where we are able to
involve the many disciplines in the Group to
provide mixed-use solutions to clients and a
total in-house service.
Ours is a long-term business with firm
foundations in place and I am confident that
the Group will continue to deliver further
growth in 2006 and beyond.
John Dodds
Chief Executive
+51 .5%
Increase in Property 
operating profit
£20.3m
Committed investment 
in the PFI portfolio Kier Group plc 
Annual Report and Accounts 2005
18
Operating review
Construction
The Construction division comprises Kier
Regional and Kier Construction. Kier Regional
includes the Group’s regional contracting
businesses with probably the best
comprehensive UK coverage of any
contractor, operating through 32 offices;
affordable housing, operating through Kier
Partnership Homes; and major building
projects, operating through Kier Build. 
Kier Construction includes the Group’s
infrastructure and overseas business. 
The Group also has an in-house 
engineering design capability in Kier
Engineering Services.
Kier Regional
Kier Regional’s strategically located network
of UK construction businesses continues 
to bring a wealth of talent, diversity and
local knowledge to all sectors of the UK
construction market while adding value to a
host of partnerships and frameworks across
the Group. Locally established construction
expertise is being brought to a series of PFI
and PPP schemes and innovative projects
around the UK to complement our integrated
delivery capability that few can match. 
The pattern of repeat business from long-
standing clients, frameworks and negotiated
and two-stage tenders has continued within
Kier Regional and this year accounted for
59% of work secured. Whether delivering 
a standalone project or bringing strength 
as part of an all-Kier team, the Regional
businesses have consistently demonstrated
their flexibility, creativity and ability to
deliver a standard of service and quality 
of product that underpins the longevity of
their customer relationships and ability to
attract new clients.
Regional contracting
In January, over 100 clients, consultants 
and subcontractors attended Kier Eastern’s
one-day conference, ‘Greening the Supply
Chain: Attainable? Sustainable?’ covering
topics such as the specification of ‘green’
materials and energy-efficient building
design. This was followed up by a series 
of workshops to help members develop
their own environmental management
systems and to date 14 companies are
participating. 
Kier Eastern also completed several
prestigious projects during the year
including a bowling centre at RAF
Mildenhall, offices for Liebherr (GB) in
Biggleswade, Bedfordshire, a retail
development in Dereham, Norfolk for
Dencora and offices in Chelmsford for
Countryside Properties.
Kier London had a very successful year 
in which it gained ‘Investor in People’
accreditation. Renewed confidence in the
central London office market was evident
with awards for schemes at Chiswell Street
and Dorset Square being secured. A
commercial scheme for Store Properties 
at Eastcheap was successfully handed over,
and the recently completed UCL Molecular
Science Building was highly commended in
the London Borough of Camden Building
Quality Awards 2005. 
Kier London is working as part of an all-Kier
team to deliver seven new schools for the
London Borough of Waltham Forest and,
together with Kier Eastern, is lined up to
build the £26m PFI Garrett Anderson hospital
in Ipswich for which Kier has been named
preferred bidder. The business is also main
contractor for the Barnet Mental Health
Unit, a ProCure21 scheme, one of many
framework contracts that now account for
25% of turnover. 
Activity in the social housing sector was
high and £36m of projects with Newlon
Housing Association, as part of the ‘Arsenal
on the Move’ development in north
London, have been secured to date. 
Notable projects completed by Kier
Northern include a 498-bedroom student
accommodation block for Unite in Leeds
City Centre, a landmark 6th form college 
in Sheffield for the Learning and Skills
Council, a hotel extension for Marriott
Hotels in York which was completed to a
challenging programme, and a series of
rebadging projects for Morrisons following
its acquisition of Safeway. Further
ProCure21 and prison framework contracts
have been secured and, as part of the East
Durham Homes framework, the business is
to undertake social housing refurbishment
for East Durham Council. Kier Northern 
is working with Kier Project Investment, 
Kier Build and Kier Support Services in 
the delivery of the Sheffield Schools PFI
scheme. The project to build a new sports
centre in Carlisle was hit by devastating
floods during the year, but is now back 
on target to meet the revised programme. 
Both the Liverpool and Manchester offices
of Kier North West had another year of
successful operations across all the main
construction sectors for both repeat and
new clients with the potential to provide
long-term business opportunities. A series 
of fast-track conversions of 14 former
Safeway stores throughout the region
continued the long-standing relationship
with Morrisons Supermarkets. 
The Southport Eco Centre, built during the
year, won the ‘Regeneration Award’ in the
North West Business Environment Awards
2005. The project is almost entirely self-
sufficient, was built using low energy
construction techniques, uses recycled
rainwater and produces virtually no CO2
emissions. Kier North West continues to
work successfully with the Group’s PFI
company and Support Services division on
the construction of the energy efficient PFI
Library and Lifelong Leaning Centre in
Oldham. The building was topped out by
the Mayor of Oldham in June 2005 and will
form a striking and sustainable contribution
to the town for generations to come.
Kier Scotland continues its focus on
providing main contracting services across
the central belt of Scotland within all the
principal market sectors on projects valued
between £1m and £15m. The business
completed construction of Robin House, a
new special care hospice at Balloch for the
Children’s Hospice Association Scotland
after the original contractor went into
receivership. The client, design team and
Kier Scotland worked closely together to
deliver an exclusive, sustainable building,
During the year to 30 June 2005 Kier Group businesses
continued to demonstrate consistency in producing award
winning schemes. A robust attitude towards teamwork is
strongly in evidence as is the ability to add value as an
inbuilt part of ongoing operations. Driven by the need 
to stay ahead in today’s markets, Kier businesses are
focused on continuous improvement which is reflected 
in outstanding performances across all divisions. 19
Kier Group plc 
Annual Report and Accounts 2005
Growth through integration
Project: Oldham Library and 
Lifelong Learning Centre
Information Resources, a Kier-led consortium,
provided a high-technology library and lifelong
learning centre under the Private Finance
Initiative. Kier North West is building the library
which incorporates a sedum-covered green roof
and a unique copper-clad performance hall in a
prominent location in Oldham town centre. The
library facilities are operated and maintained by
Kier Managed Services. Kier Group plc 
Annual Report and Accounts 2005
20
Operating review 
Continued
Growth through integration
Project: Oxfam, Oxford
Built by Moss Construction, this project involved
the creation of a new three-storey office block
with associated parking for 300 cars and 200
cycles for the Oxford-based charity Oxfam.
Signing up to Oxfam‘s ’Ethical Purchasing
Policy’, all Kier companies involved with the
project ensured that all labour on site or those
involved in the manufacture of components on
site were properly employed. The building was
constructed to eliminate PVC-based products
and special measures were taken to ensure 
that all timber was FSC certificated or from
sustainable sources. IEI installed the M&E
services and Moss Joinery produced door sets
and a bin store for the project.  21
Kier Group plc 
Annual Report and Accounts 2005
within budget, to a high specification. 
This unique project is the largest to have
been built within Scotland’s biggest
National Park at Loch Lomond where
creativity, imagination and flair were used
to overcome strict planning constraints. 
Kier Southern completed construction of
the Elmsleigh Shopping Centre in Staines, 
a project which used an innovative sliding
temporary roof system to enable stores 
to trade while work progressed above. 
In recognition of his performance on a 
project to redevelop Staines Football 
Club, Kier Southern project manager 
Tony Mingoia won a gold medal in the
leisure category of the Construction 
Manager of the Year awards.
The Henry Jones division ensured that 
a Waitrose Store in Havant was up and
running just eight weeks after a devastating
fire and is now completing renewal works
while the store continues trading. A new
diagnostics and treatment centre for St.
Richard’s Hospital in Chichester was also
completed, described by Health Minister
John Hutton as: “An excellent example 
of a well-planned modern facility,” while
offering congratulations to the team for
opening on time and to budget. Brazier
Construction completed a new store for
Waitrose in Ringwood on behalf of John
Lewis Partnership which was delighted with
the finished building and the high standards
of planning and organisation in its delivery.
Work to build a new wing at St. Joseph’s
School Pastoral Hall was also successfully
concluded and good progress is now being
made on the 166-bed De Vere Village Hotel
in Bournemouth. The partnered project with
Hampshire County Council to build a new
performing arts centre at Thornden School
was highly commended in the Civic 
Trust Awards.
The year was a record one for Kier Western.
Major strides were taken in the region in 
the expansion of relationships with the
public sector on non-traditional forms of
procurement such as frameworks and
partnering agreements. This collaborative
approach has delivered a broad mix of
schemes in the education, health,
commercial industrial and secure
accommodation sectors. 
Kier Western was awarded the region’s
largest single project, a £21m commercial
scheme, under a PFI property outsourcing
arrangement between the DVLA and Land
Securities Trillium, to refurbish the DVLA
headquarters building in Swansea in a
multi-phased operation.
Marriott Construction completed the
Shillington Slow Stream High Dependency
unit at Bedford with the Kier Health team
on time, within budget and defect-free and
is in direct negotiations with the client
regarding further phases at the site. Four
respite care facilities for Shaw Homes in
Northamptonshire totalling £14m were
handed over and further discussions are
taking place regarding further similar PFI
and partnering projects. 
The education sector has been fruitful 
for Marriott, contributing to record levels 
of turnover. Current projects include
DeMontfort University, the University 
of Cambridge, Leicester University,
Loughborough University and Nottingham
Bluecoats School.
Moss Construction continued to build 
on its impressive track record in the
construction of buildings with notable
environmental and sustainable credentials.
The striking new headquarters building 
on the Oxford Business Park for Oxfam 
was built in line with the charity’s ethical
purchasing policy. Red Kite House,
Wallingford, provides new offices for the
Environment Agency and has a BREEAM
rating of ‘excellent’ as does the new central
office for the National Trust at Swindon,
another successful collaboration with Kier
Property. In Cheltenham, new offices for 
the Chelsea Building Society are currently
being constructed incorporating extensive
geothermal heating.
Moss has partnered with Solihull
Metropolitan Borough Council from
conceptual design stage on a new special-
needs school, one of several education
projects carried out in the year. In addition,
the company is one of several Kier Regional
businesses delivering construction services
throughout the UK as part of BT’s 21st
Century Network Programme. All of these
projects have benefited extensively from
Moss’s ability to embrace innovation and 
to lead the design and construction teams 
in implementing buildable solutions to 
meet clients’ needs. 
Bromley and Maidstone-based Wallis had
an excellent year with a large proportion 
of its work being negotiated or executed
through partnering relationships. The
business secured a framework agreement
with Imperial College, London and the
Maidstone office has been awarded its 
third framework job with Pillar Holdings 
at Orpington. Solid client relationships
continue; a third contract has now 
been completed for the Manhattan Loft
Corporation which involved construction 
of high specification flats on top of their
existing building in west London and
following the high quality refurbishment 
of Christ Church in Spitalfields, Wallis 
has secured another church restoration at
Bloomsbury. 
The Longley division of Wallis is working
alongside Kier Southern on two schemes 
on the south coast to refurbish two fire-
damaged stores for Tesco and Waitrose. 
In addition, the business has carried out 
a series of successful projects throughout
Sussex and Surrey, predominately in the
retail, care home and education sectors.
Affordable housing
Kier Partnership Homes continued to 
apply its expertise to many brownfield
schemes in the affordable housing market
and remains focused on the regeneration 
of run-down areas to create sustainable
communities. The company’s status as 
a valued partner, both in-house and
externally, has strengthened further 
as the benefits of bringing together 
expertise from around the Group are 
now being recognised on a number of
innovative schemes. 
Growth through integration
Project: Bristol Harbourside Development
At Crest Nicholson’s Bristol Harbourside
Development, Kier Build is working on two projects:
a mixed-use retail and leisure scheme and a
commercial office development while Kier Western 
is constructing a 182-bedroom hotel. Kier Plant is
supplying the craneage. Kier Group plc 
Annual Report and Accounts 2005
22
Growth through integration
Project: CTRL 103
Kier Construction’s Channel Tunnel Rail Link 
(CTRL) 103 contract is the third undertaken for
Union Railways. This Kier Construction and Nuttall
joint venture comprises civil works to bring the 
high speed CTRL across the East Coast Main Line
railway, over the A5200 York Way (an important
central London highway), across Kings Cross
Railway Lands and linking in with the Midland
Mainline Railway works at St. Pancras station.
In keeping with previous CTRL contracts, under 
a partnering agreement this project benefits from
collaborative working. Open book accounting, 
joint problem solving and full integration of the
team generates a co-operative approach and a
working environment which promotes success 
and achievement under difficult working 
conditions. Kier Plant supplied plant and 
machinery on this project. 23
Kier Group plc 
Annual Report and Accounts 2005
Operating review 
Continued
The West Malling team has risen to a 
variety of construction challenges during 
the year at schemes in Dagenham, Enfield,
Maidstone and Tottenham and has forged
strong relationships with leading employers’
agents and housing associations.
The Basingstoke team successfully
concluded an award-winning project at
Elvetham Heath in Fleet and another at
Hanworth which involved a significant 
land remediation element. 
The Aldridge team worked on a series of
successful projects, secured a framework
contract with the Metropolitan Housing
Trust and are hopeful of further framework
opportunities. Strong relationships were
developed with Bromford Housing 
Group, West Mercian Housing Group 
and Waterloo Housing Association.
Building major projects
The division’s major projects arm, Kier
Build is making good progress on two
commercial schemes in Bristol for Crest
Nicholson which were recently topped 
out and two secondary schools in Sheffield
under a £45m PFI scheme are well 
under way. 
In Manchester, a £20m design & build
residential scheme is progressing on 
behalf of Redrow Homes to build 207 
one and two-bedroomed apartments. 
A major commercial scheme at 3-8
Whitehall Place, completed during 
the last year for Kier Property, has 
continued to receive recognition, picking 
up a bronze Considerate Constructors
award and a sustainability award in the
RICS London Region. Project manager
Louisa Finlay has been short-listed in 
the CIOB Construction Manager of the 
Year awards. 
Kier Construction
Infrastructure & Overseas
In a year that saw Kier Construction secure 
a significant amount of repeat business,
demonstrate an excellent safety performance
and successfully complete a major section of
the Channel Tunnel Rail Link, the company
provided further evidence of its status as 
a ‘business partner of choice’. 
In the UK, a second contract to create 
a waste treatment station for Shanks 
Waste Services was secured. The Rail
division secured a £100m Network Rail
Structures Framework contract for the 
East Anglia region and will be lending 
its expertise, alongside other Kier
companies, in the major redevelopment 
of Poole Harbour. 
The company’s involvement with the
Channel Tunnel Rail Link continues;
tunnelling under the existing Thameslink
section is now complete and the 
Midland Mainline Bridge has won a
Structural Steelwork award. As part of 
KMI Water, the company’s bid to deliver
water and waste water process work in 
the north west of England until 2010 on
behalf of United Utilities under Asset
Management Programme 4 framework 
was successful, providing Kier with 
around £130m of work over five years. 
In joint venture with Besix, a major 
contract was secured for refurbishment 
and reinforcement of the South Hook 
LNG jetty in South Wales.
The mining division successfully completed
its first full year of coal extraction at its
opencast coal mine, Greenburn, in East
Ayrshire. 750,000 tonnes have been mined
and forward sales contracts secured to 
sell over 60% of the remaining tonnage 
at sensible fixed prices over the next four 
to five years.
Overseas, the Kier Mivan water supply
contract in Romania has been extended 
and in Antigua, a contract was negotiated 
to extend the Sandals Hotel. In joint venture
with Besix a contract to build a new
transportation centre in Kingston, Jamaica
was secured. A nine-year alliance with
Alcoa on projects at alumina refineries in
Suriname and Jamaica continues and the
company is set to play a major role in
Alcoa’s capital expansion plans. Excellent
safety performances have been achieved 
at both Alcoa sites.
Kier Engineering Services (KES)
KES, the Group’s dedicated in-house
engineering design team, provides
temporary and permanent design solutions
for Kier companies and joint venture
projects. These highly qualified engineers
specialise in the delivery of innovative
solutions to add value and save cost 
without compromising safety or quality.
The department has continued to make a
significant contribution to the Channel
Tunnel Rail Link contract for the complex
works near Kings Cross. Here demolition of
the brick arch York Way Viaduct made way
for construction of KES-designed temporary
cofferdams and permanent retaining walls,
and a difficult tunnelling operation below
Regents Canal also benefited from KES
advice. Kier Regional has applied KES
expertise in overcoming difficult technical
issues in the design of a special cofferdam
to stick to the dock wall at Bristol, held on
by the water pressure while men worked in
the dry six metres below the surface to
install pipework through the wall. 
Permanent work design included structural
alterations to Hinchingbrooke Hospital for
Kier Regional and redesign of substructures
for two waste processing plants for Kier
Construction. 
KES also provides advice on construction
materials, a surveying service, in-house
training courses to share their knowledge
around the Group and design training
within the department for Kier graduates.
Growth through integration
Project: Bristol Harbourside Development
Designed by Kier Engineering Services (KES) for 
Kier Regional, a limpet cofferdam being lowered
into position in Bristol Harbour. Kier Group plc 
Annual Report and Accounts 2005
24
Operating review 
Continued 25
Kier Group plc 
Annual Report and Accounts 2005
Growth through integration
Project: Robin House
Robin House, a new special care hospice at
Balloch for the Children’s Hospice Association
Scotland built by Kier Scotland.  Kier Group plc 
Annual Report and Accounts 2005
26
Growth through integration
Project: Uxbridge Business Park, Plot 2
A 60,000sq ft three-storey high-specification
office development on the Uxbridge Business
Park built by Moss Construction for Arlington
Business Parks GP Ltd. The sophisticated and
complex mechanical & electrical services were
designed and installed by IEI. 27
Kier Group plc 
Annual Report and Accounts 2005
Operating review 
Continued
Support Services
Kier’s Support Services division operates
through four business streams: IEI, a
specialist mechanical and electrical 
design & installation business; Kier 
Building Maintenance, providing reactive
and planned maintenance largely to 
local authority clients; Kier Managed
Services (formerly Caxton) which provides
facility management services to public 
and private clients; and Kier Plant,
specialising in plant hire to Kier Group
companies and external clients.
IEI
IEI has worked alongside several of its sister
construction companies during the year to
bring its expertise in the field of mechanical
and electrical design & installation to a
wide range of projects including the
National Trust headquarters at Swindon,
Oxfam’s new Oxford headquarters and the
Uxbridge Business Park. 
The company secured a project to design &
install a second phase of work for National
Air Traffic Service’s new facility on the south
coast. M&E design & installation works
were completed for LG Electronics in Slough
on behalf of Slough Estates and a planned
preventative and reactive maintenance
contract with Sussex Police was renewed 
for a further five years. 
The company’s relationship within the
public sector continued to expand during
the year following appointments by Enfield
Borough Council and Portsmouth City
Council to carry out mechanical and
electrical maintenance work.
Kier Building Maintenance (KBM)
The year saw the successful implementation
of the Leeds North West and Leeds South
repair and maintenance contracts valued at
over £10m per year for the next five years
extendable for a further five. As a company
that takes pride in its contribution to
Sheffield, KBM was delighted when Kier
Sheffield, which is carrying out a £50m per
annum repairs and maintenance contract
for Sheffield City Council, was awarded
joint winner of the prestigious Public Private
Partnership of the Year award in the Local
Government Chronicle annual awards.
As one of five partners, the company
secured the Sheffield Decent Homes
framework contract to deliver Decent
Homes work providing KBM with around
£160m over seven years. 
Along with its supply chain partners, the
company has made a significant investment
in re-equipping its window and kitchen unit
factory (Sharrow) in readiness for the
provision of new kitchens and windows 
for over 40,000 homes. The company
recognises the value of strengthening
already strong, links with the local
community through the development of
training schemes such as JobMatch, City
Stewardship and Modern Apprenticeships,
which offer good career prospects to many
youngsters in the area. 
A string of awards and commendations
gained during the year underline a solid
performance by the Kier Islington team
including an ISO 9001 accreditation for
Quality Assurance and Investor in People
status. The company played a key role in
the division’s success in winning the Allan
Poole Trophy for outstanding achievement
in ‘Behavioural Safety’, a national RoSPA
award. Kier Islington’s award-winning 
First Start Scheme for 14 to 19-year-old
students ran for the second time which 
saw 21 trainees graduate and the Duke 
of Gloucester visit the Islington depot to
meet participants and trainers. 
The Ealing contract completed its first full
year in March and the award of a five-year
rolling maintenance contract valued at
£4.5m per annum is now expected.
Greenwich is now in its second successful
year and a second extension has been
confirmed, giving a further five years’
business which now includes an additional
£1.5m per annum of Decent Homes work.
The company supported Homes for
Islington, Islington Council’s ALMO, to
achieve a two-star rating, thus releasing
much-needed funding to bring Islington
housing stock up to the Decent Homes
standard. The first tranche of the £40m
Decent Homes framework agreement is
now under way. 
Every opportunity is taken to involve the
local community and the fourth fun day
attracted 2,000 tenants and leaseholders 
for a street party and a chance to provide
feedback on the repairs service.
Kier Managed Services (KMS)
Caxton Facilities Management was
rebranded in September 2005 to Kier
Managed Services. KMS has continued to
develop its PFI portfolio particularly in the
healthcare, education and other public
sectors. This year saw the start of services at
Essex, Harrow, Waltham Forest and Bexley
Schools as well as at Brighton Library,
which opened during the year. All of these
key PFI contracts include a combination of
direct and managed services, life-cycle
modelling and management. 
During the year, KMS achieved recognition
in the Public Private Finance Awards for the
standard of services provided to clients,
winning ‘Best Operational Health Scheme
in the UK’ for Neath Port Talbot Hospital.
KMS also won the award for the ‘Best
Operational Education Project’ for Pembroke
Dock Community School where extremely
high levels of user satisfaction were recorded.
This year, the street services division began
street cleaning in the London Borough of
Bromley, complementing services already
provided at Corby and the London Borough
of Bexley. In the facilities management field,
KMS saw turnover increase with client
retention and sustained growth achieved in
both public and private sectors. 
Kier Plant
Kier Plant had another successful year
supporting Kier Group companies and
expanding its external client base. The fleet
was strengthened by the addition of 17
tower cranes and a further £6m was
invested in new equipment. 
The site accommodation fleet was further
strengthened and now numbers 3,200 units.
Kier Islington’s award-winning First Start Scheme,
for students between 14 and 19 years old, ran for
the second time which saw 21 trainees graduate
and the Duke of Gloucester visit the Islington 
depot to meet participants and trainers. Kier Islington
managing director Jane Nelson and First Start trainee
Juliannah Fawehinmi are pictured with the Duke. Kier Group plc 
Annual Report and Accounts 2005
28
Operating review 
Continued
A new 1.5-acre storage depot with workshops
was opened in West Horndon, Essex and at
the main depot at Setch in Norfolk, a new
environmentally sound paint shop facility
was installed to repaint cranes and site
accommodation more efficiently.
During the year, a new framework
agreement with Taylor Woodrow was
established for the supply of tower cranes
for the next five years and a new supply
agreement was negotiated with European
crane company Arcomet for the supply 
of rental cranes from its 1,000-strong 
fleet. A total of 215 tower crane 
installations and deinstallations have 
been completed on site during the past 
year, all without incident. 
Residential
Kier Residential operates through four
housebuilding companies and a strategic land
business: Allison Homes operating throughout
Lincolnshire and north Cambridgeshire;
Bellwinch Homes operating in the south 
and south east; Kier Homes, operating across
the central belt of Scotland; and Twigden
Homes, operating in East Anglia and the West
Midlands. Kier Land identifies brownfield 
and greenfield strategic opportunities, mostly
under option, and progresses them through
the planning process.
Kier Residential completed 1,215 units for
the full year, 5% up on 2004’s 1,158 units.
The division has been selective in replacing
and growing its land-bank including the
acquisition in June 2005 of 389 units with
planning consent from the Ashwood Homes
business. At 30 June 2005 the land-bank
increased to 5,178 units with planning
consent (2004: 4,961) representing just over
four years’ unit sales. Of this, 47% is from
brownfield sites (2004: 34%). Kier has been
selected by English Partnerships as one of
12 developers for the National Brownfield
Strategy – Pilot Project National Developers
Panel. This panel will assess the potential 
of brownfield sites in 14 pilot project areas,
submit development proposals, work up full
feasibility studies and secure sites for
implementation.
Allison Homes enjoyed an eventful year in
which planning permission was obtained 
for 550 units at Fengate, a former Anglian
Water sewage site close to Peterborough
City Centre. The company was the first
housebuilder in the UK to receive
recognition by the Health & Safety
Executive in the recently launched ‘worker
engagement’ initiative and was cited as an
excellent example of how its commitment
delivered improved performance in safety,
defects, staff retention and competence. The
company received a record number of NHBC
‘Pride in the Job’ awards and the Allison
name appeared on two prestigious short
lists: the ‘Housebuilding Innovation Award’
for its scheme at Elsea Park, Bourne; and the
‘Health & Safety Initiative for Housebuilding’
in the 2005 Health & Safety Awards. 
In June the company, jointly with Twigden
Homes, purchased the name and assets of
Ashwood Homes which extends the
company’s operational area within
Lincolnshire and north Cambridgeshire.
The year has been an exciting one for
Bellwinch Homes which has been working
alongside other parts of the Group to deliver
a total solution for regeneration projects.
With Kier Rail (Kier Construction), an
exciting development at Poole Harbour is
under way where a new hotel, car park and
apartments are being built. Kier Rail is to
move existing railway sidings to make way
for the new scheme which also includes 
the provision of a new railway station. 
In partnership with Kier Property, the
company is working on an innovative
mixed-use scheme in Chichester. 
The company picked up two NHBC Pride 
in the Job Awards and was runner-up in 
the Building Quality Awards in the ‘best
sustainability’ category.
This year Kier Homes has undergone a
strengthening and restructuring of the
management team to accommodate its
plans for future growth. The geographic
spread has been expanded during the 
year and now encompasses the east and
west of the central belt of Scotland. 
The quality of product has received
favourable recognition and Kier Homes
showhouses at Smithstone Gate in
Cumbernauld were awarded ‘Showhome 
of the Season’ in New Homes Locations, 
in conjunction with The Scotsman
Newspaper Group. 
Final legal completions were achieved at
the company’s successful development at
Hairmyres in East Kilbride, the site upon
which Kier Homes was founded.
At Twigden Homes the quality of 
product and design has attracted 
widespread acclaim during the year. 
Its development at The Fairways in
Brampton, Cambridgeshire won a 2005
Greenleaf Award and its project at 
Fairfield Park in Bedfordshire was highly
commended in the 2005 Evening 
Standard New Homes Awards for the 
‘Best New Development’ category. 
The Gatehouse, the showhome at 
Fairfield Park, was runner-up in the 
‘Best Showhouse’ category as voted by
visitors to the Channel4.4homes website.
The Fairfield Park scheme was designed 
and built to an exacting Victorian design
code and involved specialist construction
techniques such as ornate dog-tooth
brickwork, intricate stonemasonry and
decorative chimney stacks. In contrast,
another exciting development was the 
new 60-apartment landmark building,
‘Magnon Court’ in Leighton Buzzard,
Bedfordshire that features a striking glass
elevator at the main entrance and which
illustrates the company’s ability to create
sympathetically-designed developments 
of outstanding quality.
Kier Land, in conjunction with Twigden
Homes, has purchased land interests at 
Sandy and Bedford which will deliver 
139 units for development. Substantial
planning progress has been made in
delivering a further site at Aylesbury 
which is part of a major mixed-use
development area comprising 3,000 units 
of which 400 will be developed by 
Bellwinch Homes from 2006 onwards.
Growth through integration
A ‘Penbury’ house type at ‘The Grange’ Langton
Green in Royal Tunbridge Wells. This select
development by Bellwinch Homes consists of 
just 18 apartments and houses. 29
Kier Group plc 
Annual Report and Accounts 2005
Property
Kier Property, the commercial property arm
of the Group, continues to establish itself as
one of the UK’s leading commercial
property developers. In barely three years, 
it has built up a portfolio – at various stages
of the development pipeline – totalling
around 4m sq ft of schemes including offices,
industrial, retail and mixed-use projects, with
a final sales value of nearly £700m.
During the year, growth continued with
operating profits up 51%. The company’s
two key components, Kier Developments
and Kier Ventures, have distinct
shareholdings but are run simultaneously
under the Kier Property umbrella and by 
the Kier Property team.
Kier Developments is the joint venture
between Kier Group plc and Bank of
Scotland, created to acquire Laing Property
Developments in 2002. Since its inception,
the relationship with Bank of Scotland has
gone from strength to strength, culminating
in an extension of the funding facility to
£162m to accommodate the continual
expansion of the business. 
During the year, this expansion included
the £17m acquisition of the Mannington
Retail Park in Swindon. The 100,000sq ft
park is let to major national occupiers
including TK Maxx, Carpetright, Matalan
and Allied Carpets. It includes 40,000sq ft
of retail warehousing and stores of between
8,000sq ft and 16,000sq ft and with several
leases due to expire shortly, plans are 
being drawn up to significantly refurbish
and increase the value of the scheme. 
Also on the retail side, Kier continued to
extract further value from the J Sainsbury’s
portfolio; during the year, work reached a
conclusion on an 80,000sq ft retail park in
Maidenhead, while planning permission
was gained for a town centre development
of 165 flats and 50,000sq ft of retail within
the Roman Walls at Chichester. 
The Trade City industrial brand had another
highly successful year. Boosted by the success
and occupier demand for Crown Road in
Enfield, in January 2005 Kier purchased an
adjacent site known as Carlton House, for
another Trade City development. Plans for
the 3.2-acre site include up to 100,000sq ft
of Trade City space, with work expected to
be completed by summer 2006. Other sites
at Bicester, Exeter and Romford have all
reached completion. Such has been their
popularity, 1m sq ft of Trade City schemes
have been developed or are under
construction, of which over 50% have been
pre-sold. Demand continues to intensify as
the brand grows.
In the offices sector, the 100,000sq ft head
office for BAE Subsidiary AMS was completed
at the Frimley Business Park and plans are
under way for a 300,000sq ft office scheme
for future development at the site.
Looking ahead, many developments are set
to come forward in the coming year and
plans are being worked up for a number 
of projects, including a major mixed-use
scheme close to Ashford town centre 
which will include over 700 new homes.
Kier Ventures, the Group’s wholly owned
subsidiary, continued to grow. At the flagship
Waltham Point development a further
75,000 sq ft resource recovery unit was
completed during the year for J Sainsbury’s.
Kier has already developed a 700,000sq ft
regional distribution centre, one of the
largest in the UK, for J Sainsbury’s at the
site. The investment was pre-sold to Morley
Fund Management. 
During the year, Kier Ventures completed
two major public sector head office
projects. The new 125,000sq ft Whitehall
Place head office for Defra in London and
90,000sq ft National Trust HQ in Swindon
have reached completion, to high acclaim.
They were delivered on time and within
budget, further demonstrating Kier’s strength
at working hand-in-hand with occupiers to
deliver bespoke solutions to their property
requirements. The one-stop-shop solution
offered by Kier, saw Kier Build and Moss 
act as contractor on Whitehall Place and
the National Trust respectively, with Kier
Managed Services providing the facilities
management. Both schemes received a
BREEAM ‘excellent’ rating and Whitehall
Place received an RICS sustainability award. 
At Warth Park in Northamptonshire, over
250,000sq ft of additional deals were
secured in early 2005 including new
distribution depots for Robert Wiseman
Dairies and Avery Dennison and a
150,000sq ft extension to Indesit’s existing
320,000sq ft unit. 
Kier Property has formed closer links with
the residential companies within the Group
and has identified a number of opportunities
to work together in the coming year, adding
value to the Group. 
Infrastructure Investment
Kier Project Investment (KPI) manages the
Group’s interests in projects procured under
the Private Finance Initiative. It continues to
develop a portfolio of infrastructure
projects, investing to yield long-term
income stream returns while maintaining 
a flow of negotiated construction and
operational support services contracts for
the Group’s other operating divisions.
Financial close was reached on the £50m
Sheffield Schools scheme with preferred
bidder status being achieved on two others
at Ipswich Hospital and Kent Police. The
refinancing of Hairmyres Hospital in East
Kilbride was completed during the year and
the Group’s investment in the Neath Port
Talbot Hospital was sold. During the year
two schools were constructed in Tendring,
seven in Waltham Forest (of which two have
been handed over) and work on four
schools started in Sheffield. All are being
built by Kier Regional businesses. Facilities
management for all schools is being
provided by Kier Managed Services as an
integral part of the bid team. 
Short-listed bids were submitted for two
schools in Oldham and five schools in
Norfolk; Kier has since been named
preferred bidder for the latter, and the
Group achieved its first short-listing for a
Building Schools for the Future (BSF) project
as one of three bidding to Sheffield City
Council. A joint approach has been adopted Kier Group plc 
Annual Report and Accounts 2005
30
Growth through integration
Project: National Trust Headquarters
Moss Construction partnered with Kier Property 
(the developer) to secure a £14m design & build
contract to provide a new headquarters building 
for the National Trust in Swindon for client Kier
Ventures. The 80,000sq ft two-storey building
constructed on a brownfield site previously
occupied by Great Western Railway, is a model of
crisp, functional architecture wedded to sustainable
design. Moss played an active role in the design
development from the outset, influencing
buildability and playing a fundamental role in 
establishing systems to monitor the sustainability, 
achieving an ‘Excellent’ BREEAM rating that 
influenced all decisions in respect of material 
selection and sourcing. As part of the contract, 
IEI and Kier Managed Services were enlisted to
provide a full M&E and building cleaning service,
with an ongoing maintenance contract for 
the building being awarded. This high profile,
unique project, was completed on time enabling
occupation by the National Trust as programmed.  31
Kier Group plc 
Annual Report and Accounts 2005
Operating review 
Continued
for BSF involving KPI, Kier Regional and
Kier Support Services under the Kier
Education banner. 
Oldham Library and Lifelong Learning
Centre was recently topped out and is on
programme to complete in early 2006. The
new facility, which includes a copper-clad
performance hall and a ‘green’ roof, has
been acclaimed by the council as a great
focal point for the Borough and an instantly
recognisable part of the local landscape. 
Oldham’s interim director for children’s
services Paul Makin, said: “The centre will
become a hive of activity, a hub of creativity
and an excellent place in which to learn
and relax. I am pleased and proud that
Oldham has embarked on such an initiative,
taking the education and the development
of the town into the 21st century.” 
The delivery of care services continues to
improve the quality of life for the elderly of
Greenwich. Speaking at the formal opening
in June Councillor Jagir Sekhon OBE,
Greenwich Cabinet Member for Health,
Adults and Older People said: “The
Neighbourhood Resource Centres (NRCs)
mean older people in Greenwich can avail
themselves of the highest quality services
that put their needs first. The NRCs are able
to tailor the level of support for each
resident, enabling everyone to have a full,
active and independent life. This is part of
the Council’s commitment to ensuring that
we provide first class services for our
elderly people who deserve no less.” 
In the healthcare sector, the company is
preferred bidder for the Ipswich Garrett
Anderson Centre, and is looking to financial
close in the New Year. Trust chairman
Christine Smart said: “We are delighted to
have reached this stage after many months
of careful and detailed assessment. The
Garrett Anderson Centre will transform
healthcare for local people and is the
biggest development at our hospital for
more than thirty years.”
Kier Eastern will undertake construction 
and Kier Managed Services the facilities
management. At Hinchingbrooke,
construction of the diagnostic and treatment
centre by Kier Eastern is now complete 
with handover achieved on time in August.
Kier Managed Services is now providing
non-clinical services for a 28-year term. 
Key policies and services
Training and people development
The Group is committed to the lifelong
development of all its employees. Its
approach involves recruiting talented
people into the industry, backed by a career
development framework that supports
people from entry level to senior leadership,
preparing them to meet and exceed clients’
requirements. The career development
framework incorporates a series of
programmes, integral to which are 
the themes of customer focus, safety,
professionalism, performance, teamwork
and continual improvement. 
Kier is committed to its equal opportunities
policy that encourages job applications
from all sectors of the community. This is
demonstrated by the diversity of the people
recruited. At the introductory part of its
career development programme, Kier
recruited its target of 55 new graduates 
and 57 students to start their professional
careers with Kier. Kier offers an enviable
graduate scheme with elements of technical
and managerial training that help to motivate
people in the Group to achieve their career
goals and to attract high levels of new
recruits. The Group continues to work with
schools, colleges, universities and careers
advisors to promote the construction industry
as a career choice and has over 125 people
currently studying for technical qualifications
on various training schemes, having joined
the Group as school leavers. Kier also has
over 175 craft apprentices in construction
skills. Over 10% of its workforce is on new
entry training programmes, helping us to
maintain and improve the talent of the
workforce. This balanced approach will be
enhanced further over the next year. 
The Group actively encourages all
employees to achieve full professional
membership in their relevant discipline. To
support this, the Group has in place a
graduate development programme taking
graduates to full membership in over 10
recognised professional institutions. During
2004 Kier introduced a supervisors
programme for front-line managers from
craft and non-academic backgrounds to
achieve their professional standards and 80
front-line managers have been through this
programme to date. In addition Kier has
become a National Vocational Qualification
(NVQ) centre and is recognised by the Joint
Awarding Body as a model of best practice
for the delivery of NVQs in construction
management. As part of its commitment to
achieve a fully qualified workforce Kier is
rolling out NVQs for its professional and
technical staff, leading the industry in the
provision of such qualifications. 
Safety training for all staff is a priority. Kier
has introduced a comprehensive accredited
safety training system covering all staff over
the last year, with over 268 people
attending the management section in the
last six months. Technical training is based
around the findings of various best practice
groups and disseminates knowledge around
the Group.
Kier has been running an Executive
Leadership Programme based around
defined competencies giving structured
development to senior management and
directors. This is also linked to the strategy
of sharing best practice around the Group.
At 30 June 2005 over half of Kier businesses
were recognised as ‘Investors in People’.
Over this year the Group will continue to
invest in the skills, competence and long-
term potential of its workforce. It will
continue to concentrate on all aspects of
training and development provision in order
to further improve its reputation as a
leading employer and developer of people.
Health & Safety 
As would be expected from a business
whose diversity is one of its main strengths,
Kier Group health & safety standards are an
integral part of the management process.
The Group remains focused on continuous
improvement of health & safety standards Kier Group plc 
Annual Report and Accounts 2005
32
Operating review 
Continued
throughout all parts of the business and
supply chain. Although an enviable health
& safety record has been maintained over
the years, the Group’s resolve to continue 
to raise standards remains as strong as ever.
In an industry where incidents and
accidents do still happen, Kier Group 
is determined to ensure that lessons are
learned from mistakes made. The Group’s
current Accident Incident Rate per 100,000
staff and subcontractors at 30 June 2005
was 598 comparing favourably with the
HSE benchmark of 1,023. Through its
ongoing commitment to raising health &
safety standards the Group will continue 
to contribute strongly to the creation of an
industry that not only presents a healthy 
and safe working environment but is also
one that is an attractive prospect for the
employment of future generations.
Following a re-evaluation of future health 
& safety training needs, a purpose-built
health & safety training centre was opened
at the Kier Plant depot in Chawston,
Bedfordshire and work is under way on 
a similar centre in Sheffield. Kier Group’s
review of health & safety training has paid
dividends and a newly structured training
policy is now starting to deliver higher
standards than ever before.
In conjunction with the revised training
programme, this year saw the re-launch of
the ‘Don’t Walk By’ campaign encouraging
all members of the Group and its supply
chain to take steps to ensure safer sites.
Following documented reporting of potential
near miss and dangerous situations report
forms are entered into regular prize draws.
As well as providing valuable information
for the health & safety teams feedback from
the reports is shared with all employees and
supply chain members through a series of
newsletters designed to keep the initiative
fresh and most importantly, effective.
The positive attitude displayed toward
health & safety throughout the Group has
led to the receipt of 17 gold, one silver and
one bronze RoSPA award and 13 British
Safety Council Awards. 
More recently Kier Building Maintenance
was announced UK winner of the RoSPA
‘Behavioural Safety and Best Practice’ award
and Kier Group’s Construction division has
been short-listed in the Silver Helmet Award
for Health & Safety 2005.
One of the company’s projects in Dubai
recently achieved two million man hours
without a lost time accident, the Kier/CCC
joint venture for Alcoa at Jamalco achieved
four million man hours while in Suriname
over six million man hours was reached
without a lost time accident.
Sustainability
The sustainability steering group plays a
major part in guiding all Kier employees 
to remain strongly focused on the need to
conduct their everyday operations with a
sustainable future in mind. During the 
year, Kier businesses have demonstrated 
a strong commitment towards continuous
improvement, including supply chain
members. Kier Eastern’s one-day, ‘Greening
the Supply Chain’ conference attracted over
100 clients, consultants and subcontractors.
ISO 14001 environmental management
standard has been achieved by the majority
of Kier businesses with those not accredited
making significant strides towards achieving
the Group’s goal of full accreditation.
Participation in schemes such as Considerate
Constructors is actively encouraged with
various companies receiving recognition.
Each year, Kier Group companies compete
for the hotly-contested Allam Award, an in-
house initiative to recognise exceptional
environmental performance. Last year this
was awarded to Kier Eastern in recognition
of its proactive approach to sharing best
practice, with Bellwinch Homes a close
second; the number and calibre of entries
demonstrating that businesses throughout
the Group have actively embraced the 
ethos of sustainable working.
A major commercial scheme at Whitehall
Place, completed during the year by Kier
Property, received a RICS London Region
Sustainability Award and is a good example
of the Group’s ability to deliver excellence
in BREEAM rated buildings. Other projects
receiving recognition included Twigden
Homes’ ‘Hunslet Mews’ development in
Northampton which received a Bronze
prize for ‘Best Sustainable Development’ in
the What House? Awards and the Southport
Eco Centre, completed by Kier North West
during the year won the ‘Regeneration
Award’ in the North West Business
Environment Awards 2005. Bellwinch
Homes was runner-up in the sustainability
category of the Building Quality Awards 
and Twigden Homes’ development at The
Fairways in Brampton, Cambridgeshire 
won a 2005 Greenleaf Award.
Kier’s contribution to local communities has
been active. Kier Sheffield offered good
career prospects for many local youngsters
through comprehensive training schemes
such as JobMatch, City Stewardship and
Modern Apprenticeships and Kier Islington’s
award-winning First Start Scheme for 14 to
19-year-old students ran for the second time
in Islington which saw 21 trainees from the
local community graduate.
Kier’s deeply rooted and long-term
commitment to the communities within
which it operates, creates a unique set of
circumstances that enables it to employ,
train and develop local people to help all
parties reach their mutual goals and
contribute to the creation of thriving
communities.
Having measured and monitored its
environmental performance for the 
last three years, the Group is currently
undertaking an independent review of its
activities and will be reviewing these key
performance indicators in due course.
Kier Group’s Key performance indicators are
summarised in the table above.
Actual Actual Target
03/04 04/05 05/06
Waste as % of construction turnover: 0.30 0.26 0.23
Energy use £/m
2
(including Support Services) 10.29 9.91 9.44
CO 2 emissions (t) (including Support Services) 8,972 8,412 8,010
Environmental training days per person/year 0.13 0.19 0.25
Infringements 2 0 0
These figures now incorporate data from Construction, Support Services and Residential divisions
Environmental key performance indicators Kier Group plc 
Annual Report and Accounts 2005
33
Growth through integration
Main picture: ‘The Croft’ three-storey 
showhome at Twigden Homes’ Park Vale
development at Hampton Vale in Peterborough, 
a development comprising one, two, three and
four-bedroom homes.
Inset picture: Twigden’s ‘Nicholas’ showhome at
St. Barnabas Court in Cambridge City Centre, an
exclusive development of just 19 luxury homes. Kier Group plc 
Annual Report and Accounts 2005
34
Financial review
Once again the Group has reported record results for
the year. Profit before tax, excluding exceptional items
and after deducting goodwill amortisation, increased 
by 26.1% to £51.2m (2004: £40.6m), earnings per
share, on the same basis, increased by 22.7% to 
100.0p (2004: 81.5p) and cash balances have been 
at healthy levels, ending the year at £58.1m net of
borrowings (2004: £7.6m).
(continued opposite)
Kier integrated business model
Financially – cash generated from
construction activities provides investment
for homes and property operations.
Operationally – skills can be combined 
from various divisions to provide a 
totally integrated solution to clients’
increasingly complex requirements.
Regeneration & 
mixed-use projects
Earnings growth
Cash-generating 
activities
Cash-investing 
activities
Working capital
IntegrateIntegrate
Cash 
>
Construction
>Low Margin
>High Volume
Homes and Property
>High Margin
>Low Volume
Cash  35
Kier Group plc 
Annual Report and Accounts 2005
This is the last set of results to be 
published under UK Generally Accepted
Accounting Practice (UK GAAP). The 
Group has adopted International Financial
Reporting Standards (IFRS) from 1 July 2005
and results published for periods after that 
date will be accounted for under IFRS. 
In order to provide an indication of the
effects of IFRS on the Group’s results, a
restated income statement for the year
ended 30 June 2005, balance sheets at 
30 June 2005 and 2004 together with
reconciliations from UK GAAP to IFRS 
are disclosed on pages 76 to 83. An
explanation of the major differences is 
also given.
There have been no changes to accounting
policies in drawing up the results and 
balance sheet and notes for the year ended
30 June 2005. The results for Construction
and Support Services have been analysed
separately for the first time with 2004 figures
restated accordingly.
Profit before tax 
A strong contribution from all the divisions
resulted in profit before tax for the year of
£57.9m (2004: £40.6m), arrived at after
including exceptional profits of £6.7m 
(2004: £nil) and after deducting goodwill
amortisation of £2.5m (2004: £2.6m). The
exceptional profits include: £0.8m on the
sale of the Group’s remaining interest in 
Kier Hong Kong Limited; £3.8m on the 
sale of a property fixed asset; and £2.1m 
on the sale of the Group’s interest in a PFI
concession. Before exceptional profits 
and goodwill amortisation, profit for the 
year was £53.7m, 24.3% ahead of the result
for 2004 of £43.2m.
Turnover, orders and land-bank
Group turnover increased by 9.8% to
£1,621.4m (2004: £1,476.5m) with 
growth across all reporting segments. 
The Construction segment saw an 8.8%
growth in turnover during the year to
£1,096.2m (2004: £1,007.3m) due to an
increase in both public and private sector
awards. A record level of awards was
experienced during the year at £1,372m
(2004: £931m) and at 30 June 2005
confirmed orders in hand were £1,030m
(2004: £662m) supporting our growth 
plans for 2006.
In Support Services turnover exceeded the
level beyond which we committed to
providing a separate analysis of its results.
Turnover was £227.5m (2004: £197.7m)
with growth largely driven by the Building
Maintenance division benefiting from new
contracts including two for Leeds City
Council. The order book at 30 June 2005 of
£1,204m (2004: £1,168m) includes a number
of long-term contracts awarded under PFI.
Turnover in the Homes division increased 
by 4.5% to £225.5m (2004: £215.7m)
including a land sale of £4.7m. A combination
of a 4.9% increase in unit sales to 1,215
(2004: 1,158) and a 2.5% reduction in
average selling price to £181,700 (2004:
£186,300) resulted in a 2.4% increase in
turnover from housing sales. The reduction
in average selling price during the year is 
the result of a combination of sales inflation
offset by an increase in the proportion of
lower value social housing sales (from 5% 
to 12%) and a reduction in average unit
size. The land-bank at 30 June 2005
included 5,178 units with planning 
consent (2004: 4,961). £69m was spent 
on land during the year. In addition the
acquisition of the business and assets of
Ashwood Homes in mid June 2005 brought
389 units in to the land-bank at a cost 
of £23.5m of which £8.5m is deferred. 
In addition to the consented land-bank, 
the Group owns or controls 12,000 plots 
of strategic land, mostly under option 
which will provide good land acquisition
opportunities for the future. Looking 
forward to 2006, the key issue will be 
the health of the housing market. At 
31 August 2005 the order book (reservations
and exchanged contracts) and completions
to that date together secured 43% of our 
full-year budgeted unit sales.
+42.6%
Increase in profit before tax
including exceptional profits 
and after deducting goodwill
amortisation
+31.0%
Increase in undiluted, unadjusted
earnings per share Kier Group plc 
Annual Report and Accounts 2005
36
Financial review 
Continued
In Property turnover arose from the sale of a
number of joint venture developments and
the sale of two office developments by our
wholly owned business which is being
recognised as construction progresses.
In Infrastructure Investment turnover relates
to Kier’s share of joint venture turnover on
Private Finance Initiative projects which
have become operational.
Operating profit, margins and 
return on capital
Group operating profit of £53.4m, after
deducting goodwill amortisation, was 
25.4% ahead of 2004’s £42.6m with all
divisions contributing. 
Construction achieved a 37.6% increase in
operating profit to £15.0m (2004: £10.9m).
The Construction margin of 1.4% (2004:
1.1%), before goodwill amortisation, reflects
a strong performance both across the
Regional contracting division and in
Infrastructure and Overseas both benefiting
from a reduction in risk profiles resulting
from an increase in framework agreements
and negotiated and two-stage tendered work.
Support Services achieved an operating
profit for the year of £3.2m (2004: £2.7m)
after deducting goodwill amortisation of
£1.9m (2004: £2.0m). Pre-goodwill the
margin for the year was 2.2%, approaching
the 3% target set for the medium term.
The Homes division saw a 7.2% increase in
operating profit to £34.1m (2004: £31.8m).
Operating margins on housing increased
from 14.7% to 15.4% benefiting from one 
of our strategic sites, now completed, and
management changes in Scotland. Return on
capital was 15.2% (2004: 16.7%) reflecting
higher levels of investment in the land-bank.
In Property operating profit increased
strongly by 51.5% to £10.0m (2004: £6.6m)
reflecting good profitable development sales
in both our wholly owned subsidiaries and
in the joint venture with Bank of Scotland.
Infrastructure Investment made an operating
loss of £0.9m (2004: loss of £1.9m) after
charging bidding and overhead costs of
£2.7m (2004: £1.9m). Last year’s result 
also included £1.5m of costs relating to
refinancing Hairmyres Hospital.
Centre costs of £8.0m (2004: £7.5m) include
a provision for the estimated applicable
annual costs of the Long-Term Incentive 
Plan of £2.5m (2004: £2.0m).
Taxation
The tax charge of £20.1m includes £15.8m
relating to profits before exceptional items
and £4.3m relating to exceptional items. 
The charge on profits before exceptional
items represents an effective tax rate of
30.9% (2004: 29.5%). The increase above
the standard tax rate of 30% includes
permanent differences such as entertaining
and disallowable goodwill amortisation as
well as higher tax rates payable in the PFI
joint ventures. The exceptional tax of £4.3m
includes £2.5m relating to refinancing one of
the Group’s PFI concessions which provided
us with cash of £8.1m. No profit can be
recognised in respect of the cash extracted
but tax is payable.
Earnings per share and dividend
Undiluted, unadjusted earnings per share 
of 106.8p represent a 31.0% increase on
2004’s 81.5p. Earnings per share adjusted 
to exclude exceptional items and goodwill
amortisation of 105.4p represent a 20.9%
increase on 2004’s 87.2p.
The proposed final dividend of 15.2p 
(2004: 13.0p) makes 22.2p (2004: 19.0p) 
for the year, an increase of 16.8%; the
eighth year in succession that the dividend 
has increased by at least 15%. The dividend
is covered 4.7 times by adjusted earnings
per share before exceptional items and
goodwill.
Balance sheet and shareholders’ funds
The balance sheet at 30 June 2005 includes
goodwill of £16.1m (2004: £18.6m) relating
to the acquisition of Partnerships First
Limited and the outsourcing contract at
Sheffield. This is being amortised over
periods of up to 10 years, with £2.5m
charged to profits in 2005 (2004: £2.6m).  37
Kier Group plc 
Annual Report and Accounts 2005
Shareholders’ funds have increased by
£31.0m to £147.4m (2004: £116.4m) arising
from retained profits of £29.9m, currency
translation of £0.1m, movement in the share
scheme reserve of £0.2m and the proceeds
of the issue of 161,090 new shares of which
77,421 were issued in lieu of dividends and
83,669 to satisfy options maturing under the
Performance Related Option Schemes.
Cash flow, facilities and foreign 
currency exposure
Net cash inflow from operating activities
was £86.4m (2004: outflow of £3.7m).
At 30 June 2005 net Group funds were
£58.1m. The principal items reconciling 
the opening cash position to that at 30 June
2005 are summarised below:
£m
Opening net funds at 30 June 2004 7.6
Net cash inflow from operating activities 86.4
Non-operating inflows:
Refinancing Hairmyres Hospital 8.1
Sale of a fixed asset property 4.7
Sale of investment in PFI concession 5.0
Sale of investment in Kier Hong Kong 0.8
Significant outflows:
Acquisition of Ashwood (15.0) 
Other investments (3.0) 
Tax, dividends and financing (17.9)
Capital expenditure (net) (18.6)
Closing net funds at 30 June 2005 58.1
In August 2004 we refinanced one of our
PFI projects, Hairmyres Hospital, which
contributed £8.1m to Group funds, after
sharing 30% with the Lanarkshire Health
Board. In March 2005, using the proceeds 
of the refinancing and the proceeds arising
from the sale of our investment in a PFI
concession, we made an additional £12.0m
contribution to the Kier Group Pension
Scheme (this is included within cash inflow
from operating activities).
Cash, net of debt, at 30 June 2005 includes
£22.8m (2004: £23.8m) of cash which is 
not generally available for Group purposes,
including that held by joint arrangements,
overseas and by the captive insurance
company . The liquid cash position is affected
by seasonal, monthly and contract specific
cycles. In order to accommodate these flows
the Group maintains a range of bank facilities
comprising £12.5m of overdraft facilities
and £67.5m of committed, revolving credit
facilities all on an unsecured basis.
Pensions
The financial statements reflect the
transitional provisions of FRS 17 ’Retirement
Benefits’. The pension charge has been
calculated in accordance with SSAP 24,
and, as in previous years, it corresponds to
the normal contributions paid by the Group
during the year. The additional £12.0m
contribution referred to above has been
treated as an early settlement of future
liabilities. Under FRS 17 calculations there
is a net deficit in the Kier Group Pension
Scheme of £82.6m (2004: £67.2m). 
The market value of the scheme’s assets and
the present value of liabilities both increased
by 21% causing an increase in the overall
gross deficit in the Kier Group Pension
Scheme of £22m. Liabilities increased
largely as a result of a 0.9% reduction in the
discount rate applied to long-term liabilities. 
The Group also participates in another
defined benefit scheme on behalf of its
employees in Kier Sheffield LLP. At 30 June
2005 this scheme showed a net surplus of
£1.8m (2004: £6.4m).
Deena Mattar
Finance Director
Earnings per share (pence)
(Before exceptional items)
Dividend per share (pence)
Profit before tax (£m)
(Before exceptional items)
2005
2004
2003
2002
2001
100.0
81.5
69.5
58.3
48.0
2005
2004
2003
2002
2001
22.2
19.0
16.4
14.2
12.3
2005
2004
2003
2002
2001
51.2
40.6
33.3
27.3
21.9 Kier Group plc 
Annual Report and Accounts 2005
38
Board members
01 Peter Warry* 
Aged 56, was appointed as non-executive
chairman of the Group in November 2004,
having joined as non-executive director in
1998, and is chairman of the Nomination
Committee. He is also chairman of Victrex
PLC and BSS Group PLC. Previously he
was an executive director of British Energy
plc and chief executive of its English
generating company. 
02 John Dodds 
Aged 60, was appointed chief executive 
in May 2003 and has been with the Group
since 1970. He has spent time overseas
working particularly in Africa and Hong
Kong returning to the UK to lead the civil
engineering business. Following the buy-
out he was responsible for major projects,
mining and international operations and
was chairman of Kier Project Investment.
He holds the position of director with
overall responsibility for health & safety
and environmental matters and is a
member of the Nomination Committee.
03 Deena Mattar 
Aged 40, was appointed to the Board as 
an executive director in September 2001.
She joined Kier in 1998 from KPMG where
she developed an in-depth knowledge of
construction. She held the role of finance
director of Kier National, the Group’s major
building and civil engineering projects arm,
until July 2001 and was appointed Group
finance director in November 2001. She is
also chairman of Kier Project Investment.
02
01 03 39
Kier Group plc 
Annual Report and Accounts 2005
04
05
07
06 08
04 Dick Side 
Aged 58, joined Wallis in 1983 as
managing director of its Construction
Division. His 22-year career with the
Group has been spent in regional
contracting and he was appointed
managing director of Kier Regional 
in 2001. In January 2003 he became 
main board director responsible for the
Group’s Regional construction division.
05 Dick Simkin 
Aged 57, joined the Group in 1989 and
has made a significant contribution to
strengthening Kier’s presence in the property
sector. He played a key part in the Group’s
acquisition of Laing Property and was
appointed to the Board in January 2003 
as director responsible for the Group’s
Property division.
06 Peter Berry* 
Aged 61, is chairman of The Crown 
Agents for Oversea Governments and
Administrations. He is also chairman of
Martin Currie Portfolio Investment Trust plc,
a non-executive director of Henderson TR
Pacific Investment Trust PLC and an 
advisor to the Corporation of London on
international and economic development.
He was appointed to the Board in 1997
and is senior independent director,
chairman of the Remuneration Committee
and a member of the Audit and
Nomination Committees.
07 Simon Leathes* 
Aged 57, is vice chairman for support
services at Barclays Capital, the investment
banking division of Barclays PLC. 
He previously held senior appointments at
Lend Lease Corporation, Hambros PLC and
SG Warburg Group plc. He was appointed
to the Board in March 2001 and is chairman
of the Audit Committee and a member 
of the Nomination and Remuneration
Committees.
08 Matthew Barton
Aged 31, was appointed company 
secretary in July 2005. He joined the
Group in September 2004 as corporate
counsel from lawyers Cleary, Gottlieb,
Steen and Hamilton, where he advised 
the Group on a variety of issues. At Cleary
Gottlieb he had a wide-ranging commercial
practice including advising both public 
and private clients on major domestic and
cross-border transactions. He is responsible
for corporate governance within the Group
and, as corporate counsel, has oversight of
corporate legal affairs.
*Non-executive directors Kier Group plc 
Annual Report and Accounts 2005
40
41 Directors’ report
42 Corporate governance statement
45 Directors’ remuneration report
50 Statement of directors’
responsibilities
51 Report of the independent auditors
52 Consolidated profit and loss account
53 Consolidated balance sheet
54 Company balance sheet
55 Consolidated cash flow statement
56 Consolidated statement of total
recognised gains and losses
56 Reconciliation of movements in
shareholders’ funds
57 Notes to the financial statements
76 Transition to International Financial
Reporting Standards (IFRS)
77 Consolidated income statement 
and statement of changes in equity
restated in accordance with IFRS
78 Consolidated balance sheet 
restated in accordance with IFRS
79 Selected notes to the IFRS
statements
84 Principal operating subsidiaries
85 Principal joint arrangements, 
joint ventures and associated
undertakings
86 Group principal businesses
88 Financial record
Financial statements The directors present their annual report and audited financial
statements for the year ended 30 June 2005.
Principal activities and business review
The Group’s principal activities are construction, support
services, residential and commercial development and
infrastructure project investment.
A review of the Group’s business and progress is given within
the chairman’s statement, chief executive’s review, operating
review and financial review on pages 10 to 37.
Results and dividends
The Group profit for the year after taxation was £37.8m 
(2004: £28.6m).
An interim dividend of 7.0p per share (2004: 6.0p) amounting
to £2.5m (2004: £2.2m) was paid on 19 May 2005. The
directors propose a final dividend of 15.2p per share 
(2004: 13.0p per share) amounting to £5.4m (2004: £4.6m)
payable on 6 December 2005 to shareholders on the Register
of Members at the close of business on 30 September 2005.
Share capital
Details of shares allotted by the Company during the year
appear in note 20 to the financial statements.
Directors
The directors of the Company during the year are shown on
pages 38 and 39. Mr C R W Busby retired as a director 
on 13 December 2004, and Mr R W G Gregory resigned as a
director on 27 April 2005.
At the forthcoming Annual General Meeting resolutions will be
proposed for the re-election of Mr J Dodds, Mr R W Side and
Mr R W Simkin. At that date, the unexpired term of the contract
of employment with the Company of each of these directors
will be 12 months.
Details of directors’ interests are disclosed in the directors’
remuneration report on page 48.
The Articles of Association of the Company provide for the
indemnification of its directors out of the assets of the
Company in the event that they suffer any loss or liability in 
the execution of their duties as directors. The ability of the
Company to make any such indemnity is restricted in certain
respects by statute.
In common with many other companies, the Company has
insurance in favour of its directors and officers in respect of
certain losses or liabilities to which they may be exposed 
due to their office.
Substantial shareholdings
At 14 September 2005 the Company had been notified 
of the following interests in the Ordinary Share Capital of 
the Company:
Legal & General plc 4.20%
Employees
The companies in the Group are equal opportunity employers.
The Group provides relevant information on matters of concern
to employees through newsletters and formal and informal
meetings with local management. The Group encourages and 
assists, whenever practicable, the recruitment, training, and
career development of disabled people and the retention of
those who become disabled during the course of their
employment and who can be employed in a safe working
environment. The Company operates a sharesave scheme for 
all eligible employees and makes available a dealing service to
enable employees to buy and sell its shares with a minimum 
of formality and on attractive commission terms. The Group
also operates an AESOP scheme for all employees.
Combined Code
A statement on corporate governance is set out on pages 42 
to 44.
Going concern basis
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason they continue to adopt the going concern basis in
preparing the financial statements.
Donations
Group donations to charity in the United Kingdom were
£73,000 (2004: £41,000). No political donations were made
(2004: nil).
Policy on payment of creditors
The Group agrees payments with its suppliers and
subcontractors on an individual contract basis rather than
following a standard code. The policy is to abide by these
agreed terms whenever it is satisfied that the suppliers or
subcontractors have provided the goods or services in
accordance with the contract terms and conditions. The
aggregate amount owed to trade creditors by the Company 
at the end of the year was nil.
Subsidiary trading companies within the Group, acting 
in accordance with the above policy, exhibit creditor 
days averaging 32 (2004: 39) in respect of suppliers of 
invoiced goods and services and 20 (2004: 26) in respect 
of certified amounts due to subcontractors. These figures
exclude amounts not currently due for payment but included
within trade creditors.
Auditors
A resolution for the reappointment of the auditors, KPMG 
Audit Plc, will be proposed at the Annual General Meeting.
The directors have satisfied themselves, after making all
reasonable enquiries, that there is no relevant information
which has not been disclosed to the auditors.
Signed on behalf of the Board.
M D Barton
Secretary
14 September 2005
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
41
Kier Group plc 
Annual Report and Accounts 2005
Directors’ report The Code
The Board recognises the importance of high standards of
corporate conduct and is committed to managing the Group’s
operations in accordance with the best principles of corporate
governance as contained within Section 1 of the Combined
Code on Corporate Governance (the Code) issued in July 2003
and has complied with the Code throughout the year except as
explained below.
Upon the retirement of Mr C R W Busby in November 2004, 
Mr J Dodds was appointed to the Nomination Committee. 
Mr P T Warry was appointed chairman of the Board and
therefore ceased to be considered independent (in terms of 
the Code). Consequently, the Nomination Committee no longer
comprised a majority of independent non-executive directors 
as required by the Code. The Nomination Committee has
identified the need to appoint an additional independent 
non-executive director to the Board and is taking steps to
complete this appointment in a timely manner. The new
independent non-executive director will also be appointed to 
the Audit, Remuneration and Nomination Committees, thereby
meeting Code requirements.
Board of directors
The Board of Kier Group plc currently comprises four executive
and three non-executive directors, of whom Mr P F Berry and 
Mr S W Leathes are classed as independent under the Code, 
and operates both formally through the Board and Board
committees and informally through regular contact between
directors as required.
The chairman of the Board is Mr P T Warry, following the
retirement of Mr C R W Busby as chairman on 27 November
2004, and the chief executive is Mr J Dodds. The senior
independent director nominated by the Board for the purposes 
of Provision A.3.3 of the Combined Code is Mr P F Berry. Details
of the directors are given on pages 38 and 39. All the directors,
with the exception of Mr C R W Busby and Mr R W Gregory,
served throughout the year. The Board has a strong and
independent non-executive element, including a recognised
senior member, and a well established and experienced
executive element. This, coupled with clear Board procedures 
for decision making, ensures that there is no undue
concentration of power in any one individual.
With effect from 1 July 2005, Mr M D Barton was appointed
company secretary. This is a reflection of the desire of the 
Board to commit sufficient resources to corporate governance
issues especially in light of the growth of the Group and 
will allow Miss D E Mattar to fully devote her time to her
executive function.
The Board met 11 times during the year and has a formal
schedule of matters specifically reserved to it or Board
committees for decision including strategy, approval of financial
statements, risk management, major capital expenditure, major
project approval, acquisitions and disposals. A table showing
attendance at these meetings and at meetings of the Audit
Committee, the Remuneration Committee and Nomination
Committee is set out on page 43.
The Board has responsibility for the strategic and financial
policies of the Group including monitoring and reviewing
business performance. The Board is provided with regular 
and timely information on the financial and operational
performance of businesses within the Group. The Board’s
authority and delegation of its authority are set out in the 
Group standing orders.
All directors have access to the advice and services of 
the company secretary and the directors are able to seek
independent professional advice if necessary at the Company’s
expense. Training is available for new directors and subsequently
as necessary. All directors are subject to election by shareholders
at the first Annual General Meeting following their appointment,
and to re-election thereafter at intervals of no more than three
years. Executive directors are required to seek approval from the
Board before accepting any external non-executive positions,
although none is currently held.
Audit Committee
The Audit Committee comprises the two independent non-
executive directors under the chairmanship of Mr S W Leathes, 
a chartered accountant. Mr P T Warry ceased to be a member 
of the Committee on becoming chairman of the Board. The
Committee met three times during the year in September, March
and June prior to the Board meetings. These committee meetings
were also attended by the finance director and the head of
internal audit. The KPMG Audit plc (KPMG) audit engagement
director attended the September and March meetings. The
chairman and executive directors were also invited to attend 
the meetings. The Committee also met with KPMG without the
presence of the management.
The Committee has clearly defined terms of reference which
outline its objectives and responsibilities relating to financial
reporting, internal controls, risk management and the application
of appropriate accounting policies and procedures. Specific
responsibilities include reviewing and recommending for
approval the annual and interim financial statements, reviewing
the Group’s accounting policies, reviewing the effectiveness of
internal controls and risk management and reviewing the scope
and results of the external audit.
The Audit Committee also has responsibility for overseeing 
the Group internal audit function including approval of 
the annual risk-based audit plan and monitoring the work,
recommendations and effectiveness of the function. The head 
of internal audit reports directly to the chairman of the 
Audit Committee.
At each of its meetings the Committee received and reviewed 
a report from the head of internal audit which highlighted the
status of the Group risk management processes and audit 
activity against the approved plan together with the findings 
from internal audits. The chairman of the Audit Committee also
met regularly with the head of internal audit and the Committee
has met with the head of internal audit without the presence 
of management. The Committee carried out a review of the
effectiveness of the internal audit function at the June meeting.
The Committee is responsible for monitoring the independence
and objectivity of KPMG, the external auditor, and agreeing the
level of remuneration and extent of non-audit services. The
Committee received a presentation from KPMG on its audit
strategy and the scope of work at the March meeting which it
agreed. It also discussed the firm’s professional ethical standards.
Kier Group plc 
Annual Report and Accounts 2005
42
Corporate governance statement The Committee reviewed the performance of KPMG and the level
of non-audit fees paid to them during the year which are set out
in note 2 on page 59. The provision of non-audit services, other
than tax compliance and routine taxation advice, must be
referred to and agreed by the Committee over a pre-determined
cost threshold and any work costed below that threshold must 
be pre-approved by the Group finance director. No consultancy
related work has been carried out by the auditors during the year.
The Committee was satisfied, following its review, that KPMG’s
objectivity and independence had not been impaired.
The Committee agreed and approved the audit fee at the June
meeting following discussions between divisional management
and the divisional KPMG audit teams.
The Committee’s terms of reference are reviewed annually 
and were updated in 2004 in line with the guidance and
recommendations of the revised Combined Code. The terms of
reference are available on request and on the Company’s website.
Remuneration Committee
The Remuneration Committee comprises the two independent
non-executive directors, under the chairmanship of Mr P F Berry.
Information about the workings of this Committee is contained 
in the directors’ remuneration report beginning on page 45. 
The Committee makes recommendations to the Board on 
the Company’s framework of executive remuneration and
determines, on its behalf, specific remuneration packages for
each of the executive directors. In doing so it takes the advice 
of independent external consultants. The terms of reference are
available on the Company’s website.
Nomination Committee
The Nomination Committee presently comprises the chairman,
the chief executive and the non-executive directors. It is
responsible for monitoring the composition and balance of 
the Board and making recommendations to the Board on new
Board appointments. The Committee met twice during the year,
including a meeting on the appointment of Mr P T Warry as
chairman of the Board, which he did not attend. The Committee’s
preference was for an internal candidate as it believes that the
complexities of the Group are such that the learning process for
an external candidate would be longer than is desirable. This 
is also consistent with the Group’s general desire to promote
individuals from within. Hence the Committee, and the Board,
saw no requirement to appoint recruitment consultants or to
recruit externally in the case of the chairman. Recruitment
consultants have been retained for the new non-executive
director mentioned above. Given Mr P T Warry’s experience 
and knowledge of the Group it was felt by the Nomination
Committee that his two other chairmanships were not
inconsistent with the performance of his responsibilities to 
the Group to which he devotes significant time and energy. 
Mr C R W Busby did not participate in the process of considering
Mr P T Warry’s appointment. The Committee’s terms of reference
are available on the Company’s website.
Board and Committee Meetings
Details of the number of meetings of, and attendances at, the
Board, the Audit, Remuneration and Nomination Committees are
set out in the table below.
Name of Director Board – (11) Audit – (3) Remuneration – (3) Nomination – (2)
C R W Busby
(i)
5– – –
P T Warry 11 1 1 1
J Dodds 11 – – –
D E Mattar 11 – – –
R W Side 11 – – –
R W Simkin 11 – – –
R W Gregory
(ii)
9– – –
P F Berry 11 3 3 2
S W Leathes 10 3 3 2
Note (i) Mr C R W Busby retired as a director on 13 December 2004
(ii) Mr R W Gregory resigned as a director on 27 April 2005
Board evaluation
The chairman carried out an evaluation of the Board in the spring
of 2005 by way of an externally developed objective based
questionnaire. This included all the committees of the Board. 
The directors were asked to individually score the performance
and effectiveness of the Board against a number of criteria which
were then discussed by the Board. A number of actions have
been agreed, particularly in relation to executive director training
and performance evaluations of the executive directors which are
to be carried out by the chief executive. The independent non-
executives separately reviewed the performance of the chairman.
Internal control
The Combined Code introduced a requirement that the directors
review the effectiveness of the Group’s system of internal control.
This extends the directors’ review to cover all material controls,
including operational, compliance and financial controls and risk
management systems. The directors are satisfied that procedures
are in place to ensure that the Group complies with the Turnbull
Committee guidance published by the Institute of Chartered
Accountants in England and Wales and that the procedures have
been applied during the year.
The Board of directors has overall responsibility for the Group’s
system of internal control and for reviewing its effectiveness. 
The Board considers that the Group’s systems and controls are
appropriately designed to ensure that the Group’s exposure to
significant risks is properly managed. However, such a system 
is designed to manage rather than eliminate the risks of failure 
to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement. 
In reviewing the effectiveness of internal controls, which have
been developed and refined over many years, the directors 
have considered the key risks and exposures within the Group.
43
Kier Group plc 
Annual Report and Accounts 2005 The key features of the Group’s system of internal controls and
principal controls are:
• an established management structure operating throughout 
the Group with clearly defined levels of responsibility and
delegation of authorities;
• clearly defined operating guidelines and procedures with
authorisation limits set at appropriate levels. These are set 
out in the Group and divisional standing orders;
• a comprehensive budgeting and forecasting system in place
which is regularly reviewed and updated;
• a formal quarterly review of each division’s year-end forecast,
business performance, risk and internal control matters is
carried out by the directors of each division with the chief
executive and finance director in attendance;
• monthly management reporting including regular 
comparison of actual results against latest forecasts;
• established policies and procedures governing the Group’s
investment in land, property and other significant assets,
including acquisitions and disposals. These include detailed
appraisals, appropriate authorisation levels and Board
approval depending on value or perceived exposure;
• investment decisions, including Private Finance Initiative
projects and tenders for contracts are subject to approval 
by the Board, the chief executive and finance director or
divisional directors depending on the value and nature of 
the investment or contract. Individual tender and project
review procedures are in place prior to bidding and before
contract award;
• internal audits are carried out to assess the adequacy and
effectiveness of internal controls. The scope of the internal
audit work is planned to cover the key risks faced by the
business and supplemented by cyclical reviews of the 
core financial process. Internal audit findings are reported 
to the Audit Committee and the executive directors on a
regular basis;
• risk registers are in place for each business unit which
highlight the key risks facing that business together with 
an assessment of the effectiveness of controls to mitigate 
those risks. The risk registers are updated regularly and at 
31 March;
• an annual process of risk and control self assessment is used
in the Group whereby all operating companies are required 
to review and confirm that appropriate internal controls are 
in place and operating effectively across the key risk areas
identified in individual company risk registers. This assessment
was carried out on 31 March 2005 and the findings reviewed
by the Audit Committee;
• regular monitoring, review and reporting of health, safety 
and environmental matters; and
• the provision of a confidential method of reporting any
suspected fraud or other misfeasance to the head of 
internal audit.
The Board receives regular reports from all operating units to
monitor their performance and all directors are properly briefed
on issues arising at Board meetings.
During the course of the year members of the Board visit all
companies and monitor the control framework of each business.
The Audit Committee reviews the appropriateness and
effectiveness of internal controls.
Relations with shareholders
The Board uses the Annual General Meeting to communicate
with shareholders and encourages their attendance and
participation. The chairmen of the Audit Committee and the
Remuneration Committee are available to answer questions 
from shareholders. The Group also maintains a regular dialogue
with institutional investors to assist in the understanding of the
Group’s objectives and the company has a programme of regular
communication with investors, analysts and brokers which
includes the non-executive directors. Presentations are made to
investors, analysts and press at the time of the announcement of
the final and half-year results and there are regular meetings with
analysts and investors which are arranged through the Company’s
brokers so that the investment community can be kept informed.
The Board is provided with independent feedback from analysts
and institutional shareholders periodically.
The Kier website (www.kier.co.uk) is also maintained to aid
communication with investors, employees, customers, suppliers
and the general public.
Kier Group plc 
Annual Report and Accounts 2005
44
Corporate governance statement
continued The Remuneration Committee
The Remuneration Committee is a Board committee consisting
entirely of independent non-executive directors. The following
directors were members of the Committee for the year ended 
30 June 2005:
P F Berry (chairman)
S W Leathes
P T Warry (until 27 November 2004)
The secretary of the Committee is Mrs A Sale, the head of
personnel.
The terms of reference of the Committee are available on the
Group’s website and on request from the company secretary. 
The Committee meets when necessary, but not less than once 
a year. The Committee consults the Group chairman and chief
executive concerning its proposals (except in relation to their
own remuneration) and takes external professional advice as
appropriate. In respect of the year ended 30 June 2005 the
Committee appointed New Bridge Street Consultants LLP as 
its independent remuneration advisors. New Bridge Street
Consultants LLP provides no other service to the Company.
Where necessary, or appropriate, the Committee instigates
consultation with major institutional shareholders on
remuneration matters.
Remuneration policy
The Committee makes recommendations to the Board on
executive remuneration policy for adoption by the Board and
determines specific remuneration packages for each of the
executive directors on behalf of the Board. The Committee 
also monitors remuneration packages of other senior executives
throughout the Group. Remuneration and benefits are set 
at market levels comparable with companies of similar size 
and scope of activity in order to be able to attract, retain and
motivate high calibre individuals. The Committee’s policy is to
maintain an appropriate balance between fixed elements of
remuneration (basic salary, benefits in kind and pension) and
performance-related elements (annual bonus and long-term
incentives) and to place much greater emphasis on rewarding
executives by reference to the Group’s long-term performance
rather than its short-term results. The Committee and Board
encourage directors and staff at all levels to acquire shares in 
the Company and to hold them for the longer term. This sense 
of ownership is an important element of Kier’s culture and of its
focus on long-term performance. As far as possible the Group
prefers to promote individuals from within. The remuneration
received by each of the directors, together with details of share
interests and pension benefits, are set out on pages 47 to 49.
Executive directors’ remuneration consists of a basic salary
together with an annual bonus, benefits in kind, awards under 
a Long-Term Incentive Plan (LTIP), and membership of a pension
scheme. The remuneration components are set out below:
Basic salary
Salaries for executive directors take account of external 
market data, the individual’s responsibilities, experience 
and performance. Salaries are reviewed annually.
Benefits in kind
Benefits in kind comprise membership of private health
insurance, provision of a fuel card and the provision of a
company car or a car allowance.
Annual bonus arrangements
A bonus is paid to all executive directors at a percentage of
annualised basic salary (not exceeding 20% for the years to
30 June 2005 and 30 June 2006) if Group pre-tax profit attains
targets pre-set each year. These targets are agreed by the
Committee; they are not published externally for reasons of
commercial confidentiality.
Retirement benefits
Executive directors participate in the final salary section of the
Kier Group Pension Scheme. In cases where the executive
directors’ pensionable pay is limited by the earnings cap
provisions of the Finance Act 1989, the director is paid a 
salary supplement above the earnings cap to reflect the loss of
pension coverage. This supplement is recorded in the directors’
emoluments table and is not taken into account in determining
bonuses or any other form of remuneration. Only the basic salary
of directors is pensionable. Details of individual directors’
pension arrangements are shown in a separate table on page 47.
In the light of impending changes to pensions legislation, the
Committee will be reviewing the present arrangements 
during the current year to ensure they remain cost effective 
for the Group.
Long-term incentives
The Kier Group 1999 LTIP was approved by shareholders on 
27 November 1999 under which directors can receive awards 
of shares worth up to 100% of salary per annum. Awards granted
in the year to 30 June 2005 are subject to the Group achieving
the following adjusted earnings per share growth targets:
• the directors will receive 100% of the award if earnings 
per share increase by at least 20% per annum in excess of
inflation (the maximum target) over the relevant three-year
performance period;
• no awards will vest unless earnings per share over the same
period increase by at least 5% per annum in excess of
inflation (the base target) at which point 25% of the award
will vest; and
• the proportion of the awards which will vest for performance
between the base target and the maximum target will be
calculated on a straight line basis.
45
Kier Group plc 
Annual Report and Accounts 2005
Directors’ remuneration report These targets were selected by the Committee to ensure that 
the Group would have to attain a substantial improvement in
underlying financial performance before the awards could vest.
The attainment of the performance targets is verified by the
Remuneration Committee and reviewed by the Company’s
auditors. The calculation for earnings per share will be carried
out on a consistent basis such that the opening and closing
earnings per share will both be calculated under UK GAAP or
both under International Financial Reporting Standards.
17.9% of executive directors’ remuneration for the year to 
30 June 2005 was represented by the award under the LTIP on
the basis of the share values at the time of the award. This
calculation includes lower levels of award for directors within
three years of their appointment to the board.
The Remuneration Committee has set a policy whereby it
encourages executive directors to build up a shareholding in the
Company equal to at least one year’s salary over a period of up
to five years.
Prior to the introduction of the LTIP, the Company granted
Performance Related Options to the executive directors. It is not
the Committee’s current intention to make any further grants of
these options.
Service contracts
The Company has service agreements with its executive directors
dated 14 November 1996 for Mr J Dodds, 1 October 2001 for
Miss D E Mattar, 27 June 2003 for Mr R W Side and 30 June
2003 for Mr R W Simkin. The notice period is one year for each
of the executive directors. In the event of early termination of
their service agreements, the executive directors are entitled to
compensation of up to one year’s salary.
Non-executive directors
The remuneration of the non-executive directors is determined 
by the Board and reflects the anticipated time commitment to
fulfil their duties. Non-executive directors do not receive
bonuses, long-term incentive awards, pension provision or
compensation on termination of their appointment. The Company
has agreements for services with each of Mr P T Warry dated 
29 November 2004, Mr P F Berry dated 24 March 1997 and 
Mr S W Leathes dated 12 March 2001. All are terminable on 
12 months’ notice by either party.
Total shareholder return
The following graph charts total cumulative shareholder return of
the Company over the last five financial years. The index selected
was the FTSE All-Share Index as the Company has been a
constituent throughout the period.
The graph shows the value, by 30 June 2005, of £100 invested 
in Kier Group plc on 30 June 2000 compared with the value
of £100 invested in the FTSE All-Share Index. The other points
plotted are the values at intervening financial year-ends.
Audited information
Except for the disclosure on directors’ interests the following
information on pages 47 to 49 has been audited by the
Company’s auditors, KPMG Audit Plc.
Kier Group plc 
Annual Report and Accounts 2005
46
Directors’ remuneration report
continued
Value (£) 
Kier Group
30-Jun-00 30-Jun-01 30-Jun-02 30-Jun-03 30-Jun-04 30-Jun-05
FTSE All-Share Index
0
50
100
150
200
250
300
350
400
Source: Thomson Financial Directors’ emoluments
The value of all emoluments receivable by each director in respect of the year ended 30 June 2005 was as follows:
Total
Salary
& fees Benefits Bonus 2005 2004
£000 £000 £000 £000 £000
C R W Busby
1
45 3 – 48 411
P T Warry
2
74–– 74 31
J Dodds 301 15 63 379 338
P F Berry 30–– 30 28
R W Gregory
3 & 4
192 11 – 203 238
S W Leathes 30–– 30 28
D E Mattar
4
244 19 45 308 294
R W Side 214 11 45 270 242
R W Simkin
4
226 11 43 280 248
1,356 70 196 1,622 1,858
1 Mr C R W Busby retired on 13 December 2004.
2 Mr P T Warry was appointed chairman on 27 November 2004.
3 Mr R W Gregory resigned from the Board on 27 April 2005 and, in addition to the above, he received a settlement of £276,140, consequently his emoluments for the year ended 30 June 2005
were £479,140.
4 Salary includes a pension-related salary supplement explained in the pensions section below. The supplement included above was £16,723 for Mr R W Gregory, £23,670 for Miss D E Mattar
and £20,369 for Mr R W Simkin.
Directors’ pensions
Pension benefits earned by the directors during the year are disclosed below.
Accumulated Transfer Transfer
Increase Increase Transfer total value of value of
in accrued in accrued value of accrued accrued accrued
pension pension increase pension at pension at Increase pension at
over the over the in accrued 30 June 30 June in transfer 30 June
year year
1
pension
2
2005 2004 value
2
2005
£000 £000 £000 £000 £000 £000 £000
C R W Busby 13 7 124 238 4,082 420 4,502
J Dodds 30 24 428 202 2,870 825 3,716
R W Gregory
3
5 4 33 48 453 66 525
D E Mattar
3
4 4 4 25 130 28 165
R W Side 20 17 249 118 1,534 464 2,012
R W Simkin
3
5 4 46 55 701 127 835
Members of the Scheme have the option to pay Additional Voluntary Contributions; neither the contributions nor the resulting benefits are included in the above table.
1 The increase in a member’s accrued pension over the year shown above is the adjusted figure after allowing for inflation during the year.
2 Transfer values have been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11 less directors’ contributions.
3 As Mr R W Gregory, Miss D E Mattar and Mr R W Simkin joined the Company after 1 June 1989, their benefits from the Kier Group Pension Scheme are capped at an annual salary set in
accordance with Inland Revenue requirements, currently £105,600. Included within the salary and fees of Mr R W Gregory, Miss D E Mattar and Mr R W Simkin in the emoluments table 
is an allowance representing 20% of salary in excess of the earnings cap.
47
Kier Group plc 
Annual Report and Accounts 2005 Directors’ interests
The directors of the Company at 30 June 2005 had the following beneficial interest (including interests of dependent family members) in
the Ordinary Shares of the Company:
30 June 2005 1 July 2004
P T Warry (chairman) 7,595 7,403
J Dodds (chief executive) 576,566 566,718
P F Berry (non-executive) 6,650 6,650
S W Leathes (non-executive) 10,000 10,000
D E Mattar 57,946 34,149
R W Side 162,286 150,010
R W Simkin 281,909 265,990
Mr R W Side had a non-beneficial interest in 5,770 Ordinary Shares at 30 June 2005 (1 July 2004: 3,813).
In addition, the executive directors, as potential beneficiaries of the Kier Group 1999 Employee Benefit Trust, are deemed along with
all other UK employees to have an interest in 256,331 (2004: 267,414) Ordinary Shares with a nominal value of £2,563 (2004: £2,674)
representing 0.72% of the called up share capital of the Company, held by the Trust.
At 14 September 2005 the following directors had acquired beneficial interests in further Ordinary Shares: Mr J Dodds, 40 shares; 
Miss D E Mattar, 40 shares and Mr R W Side, 39 shares. There had been no changes in the interests of the other directors since 
30 June 2005.
Directors’ share options
Mr J Dodds and Miss D E Mattar each held 590 Sharesave Scheme Options granted on 29 October 2003 at an exercise price of 625p.
The Sharesave Scheme Options are, as for all company employees under the scheme, not subject to a performance condition. The
options are exercisable from 1 January 2007 until 1 July 2007.
The directors held the following Performance Related Options over the Ordinary Shares of the Company:
Market
Date of Exercise 1 July price at date 30 June
grant price 2004 Exercised of exercise 2005
R W Gregory 5 December 1996 170.0p 5,882 5,882 729.5p –
14 October 1998 189.5p 2,000 2,000 729.5p –
D E Mattar 9 July 1998 250.0p 12,000 12,000 903.0p –
R W Side 5 Dec 1996 170.0p 17,647 17,647 895.0p –
R W Simkin 5 Dec 1996 170.0p 11,764 11,764 751.5p –
14 Oct 1998 189.5p 2,000 2,000 751.5p –
No grants of Performance Related Options have been made since the introduction of the LTIP. No Performance Related Options held
by directors were cancelled or lapsed during the year.
All Performance Related Options become exercisable in full after three years and lapse 10 years after the date they were granted, 
subject to satisfaction of a pre-set performance condition based on the Company’s total shareholder return. As disclosed in previous
remuneration reports, this condition was satisfied in 2001 for the options outlined above.
The market price of the shares at 30 June 2005 was 916p and the range during the year was 643p to 940p. The aggregate gain on the
exercise of the share options in the year was £329,658 (2004: £6,822).
Kier Group plc 
Annual Report and Accounts 2005
48
Directors’ remuneration report
continued LTIP
Outstanding awards made to executive directors of the Company under the LTIP are in the form of a deferred right to acquire, at no cost,
the following maximum number of Ordinary Shares in the Company:
Cumulative Total
2003 award 2004 award 2005 award 30 June 2005 30 June 2004
J Dodds 23,930 21,912 33,798 79,640 68,188
R W Gregory
1
5,000 14,342 23,068 42,410 24,342
D E Mattar 22,148 16,733 24,141 63,022 57,875
R W Side 10,000 15,537 24,141 49,678 33,037
R W Simkin 5,000 14,342 23,068 42,410 24,342
Date of award 1 October 2002 1 October 2003 1 December 2004
Share price 451.5p 627.5p 699.0p
End of performance period 30 June 2005 30 June 2006 30 June 2007
1 Mr R W Gregory is entitled to 34/36ths of the entitlement in respect of the 2003 award relating to this period of employment. He will also be entitled to 22/36ths of any entitlement in respect
of the 2004 award. His 2005 award lapsed on his resignation.
For the 2002, 2003 and 2004 awards, 25% of the award vests if earnings per share grows by at least 7.5% per annum compound 
over the performance period, increasing on a sliding scale to 100% vesting if growth is at least 25% per annum compound. For the 
2005 award, 25% of the award vests if earnings per share grows by at least 5% per annum in excess of inflation over the performance
period, increasing on a sliding scale to 100% vesting if growth is at least 20% per annum in excess of inflation.
For the three-year period ended 30 June 2004 earnings per share increased by 19.30% per annum compound. Accordingly the 
directors received 73.07% of the 2002 award (granted on 2 October 2001 when the share price was 447.5p) and were entitled to
receive a combination of shares, at no cost, and cash. Shares vested during the year in executive directors of the Company under 
the 2002 award of the LTIP, together with the cash element received, were:
2002 Shares Shares Received Market Received Total LTIP
award lapsed vested as shares price as cash award
number number number number pence £ £
C R W Busby 33,519 9,027 24,492 – 728.25 178,363 178,363
J Dodds 22,346 6,018 16,328 9,633 728.25 48,756 118,909
R W Gregory 5,000 1,346 3,654 2,155 728.25 10,916 26,610
D E Mattar 18,994 5,115 13,879 11,582 728.25 16,728 101,074
R W Side 7,500 2,020 5,480 3,233 728.25 16,364 39,908
R W Simkin 5,000 1,346 3,654 2,155 728.25 10,916 26,610
491,474
2004: 634,635
For the three-year period ended 30 June 2005 earnings per share increased by 19.68% per annum compound. Accordingly the 
directors will receive 74.77% of the 2003 award and will be entitled to receive the number of shares set out below, at no cost, on 
30 September 2005 on which income tax and national insurance will be payable.
Number of shares
J Dodds 17,892
R W Gregory 3,530
D E Mattar 16,560
R W Side 7,477
R W Simkin 3,738
Approval of report
As in previous years, Mr P F Berry, chairman of the Remuneration Committee, intends to attend the forthcoming Annual General 
Meeting and will be available to answer any questions shareholders may have concerning the Group’s policy on directors’ remuneration.
The directors’ remuneration report will be submitted for approval by the Company at the forthcoming Annual General Meeting.
Signed on behalf of the Board
P F Berry
Chairman Remuneration Committee
49
Kier Group plc 
Annual Report and Accounts 2005 Company law requires the directors to prepare financial
statements for each financial year which give a true and fair 
view of the state of affairs of the Company and the Group and 
of the profit or loss for that period. In preparing those financial
statements the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent;
• state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Group will
continue in business.
The directors are responsible for the maintenance of proper
accounting records which disclose with reasonable accuracy 
at any time the financial position of the Company and to 
enable them to ensure that the financial statements comply with
the Companies Act 1985. They have general responsibility for
taking such steps as are reasonably open to them to safeguard 
the assets of the Group and to prevent and detect fraud and 
other irregularities.
Kier Group plc 
Annual Report and Accounts 2005
50
Statement of directors’ responsibilities We have audited the financial statements on pages 52 to 75. We
have also audited the information in the directors’ remuneration
report that is described as having been audited.
This report is made solely to the Company’s members, as a body,
in accordance with section 235 of the Companies Act 1985. 
Our audit work has been undertaken so that we might state to
the Company’s members those matters we are required to state 
to them in an auditor’s 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 and the
Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the Annual Report and
the directors’ remuneration report. As described on page 50, this
includes responsibility for preparing the financial statements in
accordance with applicable United Kingdom law and accounting
standards. Our responsibilities, as independent auditors, are
established in the United Kingdom by statute, the Auditing
Practices Board, the Listing Rules of the Financial Services
Authority, and by our profession’s ethical guidance.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the directors’ remuneration report 
to be audited have been properly prepared in accordance 
with the Companies Act 1985. We also report to you if, in 
our opinion, the directors’ report is not consistent with the
financial statements, if the Company has not kept proper
accounting records, if we have not received all the information
and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and
transactions with the Group is not disclosed.
We review whether the corporate governance statement on pages
42 to 44 reflects the Company’s compliance with the nine
provisions of the 2003 FRC Code specified for our review by the
Listing Rules, and we report if it does not. We are not required to
consider whether the Board’s statements on internal control cover
all risks and controls, or form an opinion on the effectiveness of
the Group’s corporate governance procedures or its risk and
control procedures.
We read the other information contained in the Annual Report,
including the corporate governance statement and the unaudited
part of the directors’ remuneration report, and consider whether
it is consistent with the audited financial statements. We consider
the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the
financial statements.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards
issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts
and disclosures in the financial statements and the part of the
directors’ remuneration report to be audited. It also includes an
assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and 
of whether the accounting policies are appropriate to the Group’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give reasonable
assurance that the financial statements and the part of the
directors’ remuneration report to be audited are free from
material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated 
the overall adequacy of the presentation of information in the
financial statements and the part of the directors’ remuneration
report to be audited.
Opinion
In our opinion:
• the financial statements give a true and fair view of the state
of affairs of the Company and the Group as at 30 June 2005
and of the profit of the Group for the year then ended; and
• the financial statements and the part of the directors’
remuneration report to be audited have been properly
prepared in accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
London
14 September 2005
51
Kier Group plc 
Annual Report and Accounts 2005
Report of the independent auditors 
to the members of Kier Group plc 2005 2004
Notes £m £m
Turnover – Continuing operations
Group and share of joint ventures 2 1,621.4 1,476.5
Less share of joint ventures’ turnover (48.4) (32.4)
Group turnover 1,573.0 1,444.1
Cost of sales (1,430.7) (1,315.1)
Gross profit 142.3 129.0
Administrative expenses (93.7) (89.6)
Group operating profit – Continuing operations 48.6 39.4
Share of operating profit – joint ventures 4.8 3.2
Operating profit: Group and share of joint ventures 2 53.4 42.6
Exceptional items 3 6.7 –
Profit on ordinary activities before interest and taxation 60.1 42.6
Net interest receivable/(payable) – Group 4 0.9 (0.2)
Net interest payable – joint ventures (3.1) (1.8)
Profit on ordinary activities before taxation 2 57.9 40.6
Taxation on profit before exceptional items 8 (15.8) (12.0)
Taxation on exceptional items 3 (4.3) –
(20.1) (12.0)
Profit for the year 37.8 28.6
Dividends 9 (7.9) (6.8)
Retained profit for the Group and its share of joint ventures 29.9 21.8
Earnings per Ordinary Share 10
– basic 106.8p 81.5p
– diluted 105.9p 80.8p
Adjusted Earnings per Ordinary Share (before exceptional items and goodwill amortisation) 10
– basic 105.4p 87.2p
– diluted 104.5p 86.4p
All items in the profit and loss account relate to operations continuing as at 30 June 2005.
Group operating profit – includes a charge of £2.5m for the amortisation of goodwill (2004: £2.6m).
Kier Group plc 
Annual Report and Accounts 2005
52
Consolidated profit and loss account
for the year ended 30 June 2005 2005 2004
Notes £m £m
Fixed assets
Intangible assets – goodwill 11 16.1 18.6
Tangible assets 12 75.8 68.9
Investments
Investment in joint ventures
Share of gross assets 13 218.3 194.8
Share of gross liabilities 13 (221.8) (190.7)
Loans provided to joint ventures 13 27.3 28.1
Investment in joint ventures 13 23.8 32.2
115.7 119.7
Current assets
Stock 14 334.2 328.6
Debtors 15 259.9 231.2
Cash at bank and in hand 19 93.5 41.4
687.6 601.2
Current liabilities
Creditors – amounts falling due within one year 16 (587.3) (530.7)
Net current assets 100.3 70.5
Total assets less current liabilities 216.0 190.2
Creditors – amounts falling due after more than one year 16 (48.3) (58.5)
Provisions for liabilities and charges 17 (20.3) (15.3)
Net assets 2 147.4 116.4
Capital and reserves
Called up share capital 20 0.4 0.4
Share premium account 21 17.9 17.1
Capital redemption reserve 21 2.7 2.7
Share scheme reserve 21 (0.2) (0.4)
Profit and loss account 21 126.6 96.6
Equity shareholders’ funds 147.4 116.4
53
Kier Group plc 
Annual Report and Accounts 2005
Consolidated balance sheet
at 30 June 2005 2005 2004
Notes £m £m
Fixed assets
Investment in subsidiary undertakings 13 55.3 55.3
Current assets
Debtors 15 22.0 24.0
Cash at bank and in hand 195.2 75.8
217.2 99.8
Current liabilities
Creditors – amounts falling due within one year 16 (203.4) (84.1)
Net current assets 13.8 15.7
Total assets less current liabilities 69.1 71.0
Creditors – amounts falling due after more than one year 16 (37.6) (40.1)
Net assets 31.5 30.9
Capital and reserves
Called up share capital 20 0.4 0.4
Share premium account 21 17.9 17.1
Merger relief reserve 21 1.2 1.2
Capital redemption reserve 21 2.7 2.7
Share scheme reserve 21 (1.0) (0.8)
Profit and loss account 21 10.3 10.3
Equity shareholders’ funds 31.5 30.9
The financial statements were approved by the board of directors on 14 September 2005 and were signed on its behalf by:
J Dodds
D E Mattar
Directors
Kier Group plc 
Annual Report and Accounts 2005
54
Company balance sheet
at 30 June 2005 2005 2004
Notes £m £m
Net cash inflow/(outflow) from operating activities 22 (a) 86.4 (3.7)
Dividends received from joint ventures 0.4 0.3
Returns on investments and servicing of finance
Interest received 2.5 1.4
Interest paid (2.6) (2.8)
Interest on loans to joint ventures 1.2 2.0
1.1 0.6
Taxation paid (12.8) (11.5)
Capital expenditure and financial investment
Purchase of tangible fixed assets (19.9) (21.5)
Sale of tangible fixed assets 6.0 2.8
(13.9) (18.7)
Acquisitions and disposals 22 (c) (4.1) (17.2)
Equity dividends paid (6.4) (5.5)
Cash inflow/(outflow) before use of liquid resources and financing 50.7 (55.7)
Management of liquid resources
Net decrease in short-term bank deposits 16.1 20.7
Financing
Issue of ordinary share capital 0.2 1.4
Purchase of own shares (0.4) (0.1)
(0.2) 1.3
Increase/(decrease) in cash during the year 66.6 (33.7)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash 66.6 (33.7)
Decrease in liquid resources (16.1) (20.7)
Movement in net funds in the year 50.5 (54.4)
Cash, net of debt on 1 July 7.6 62.0
Cash, net of debt at 30 June 22 (b) 58.1 7.6
55
Kier Group plc 
Annual Report and Accounts 2005
Consolidated cash flow statement
for the year ended 30 June 2005 2005 2004
£m £m
Group profit for the year excluding joint ventures 37.1 27.0
Share of joint ventures’ profit for the year 0.7 1.6
Profit for the year 37.8 28.6
Currency translation 0.1 (0.4)
Total recognised gains and losses for the year 37.9 28.2
Reconciliation of movements in shareholders’ funds
for the year ended 30 June 2005
Group Company
2005 2004 2005 2004
£m £m £m £m
Profit for the year 37.8 28.6 7.9 8.0
Dividends (7.9) (6.8) (7.9) (6.8)
Retained profit for the year 29.9 21.8 – 1.2
Currency translation 0.1 (0.4) – –
Issue of shares 0.8 2.0 0.8 2.0
Movement in share scheme reserve 0.2 0.3 (0.2) 0.2
Net additions to shareholders’ funds 31.0 23.7 0.6 3.4
Opening shareholders’ funds 116.4 92.7 30.9 27.5
Closing shareholders’ funds 147.4 116.4 31.5 30.9
Kier Group plc 
Annual Report and Accounts 2005
56
Consolidated statement of total recognised gains and losses
for the year ended 30 June 2005 1 Accounting policies
Convention
The financial statements are prepared under the historical cost
convention and in accordance with UK Generally Accepted
Accounting Practice (GAAP). The following accounting policies
have been applied consistently in dealing with items which 
are considered material in relation to the Group’s financial
statements. The Group has followed the transitional arrangements
of FRS 17 ‘Retirement Benefits’ in these financial statements.
Consolidation
The Group financial statements consolidate the financial
statements of the Company and its subsidiary undertakings. 
The results of subsidiary undertakings acquired or disposed of
during the year are included from or up to the date of acquisition
or disposal. On the acquisition of a subsidiary undertaking fair
values are attributed to the net assets acquired. Purchased
goodwill arising on acquisition is capitalised and amortised over
its useful economic life in accordance with FRS 10 ‘Goodwill
and Intangible Assets’. Purchased goodwill arising on acquisitions
before the implementation of FRS 10 was written off to reserves
in the year of acquisition. On subsequent disposal any related
goodwill previously written off to reserves is written back through
the profit and loss account as part of the profit or loss on
disposal.
As permitted by section 230 of the Companies Act 1985, a
separate profit and loss account dealing with the results of the
Company has not been presented.
Turnover
Turnover arises from increases in valuations on contracts, the sale
of houses, land, commercial property and goods and services
provided, and excludes intra-Group trading and value added tax.
Profits
Profit on contracts is calculated in accordance with accounting
standards and industry practice and may not relate to turnover.
The principal estimation technique used by the Group in
attributing profit on contracts to a particular accounting period 
is the preparation of forecasts on a contract-by-contract basis.
These focus on costs to complete and enable an assessment to be
made of the final outturn on each contract. Consistent contract
review procedures are in place in respect of contract forecasting.
The general principles for profit recognition are:
• profit in respect of short-term contracts is recognised when 
the contract is completed;
• profit in respect of long-term contracts is recognised on 
a percentage of completion basis when the contract’s ultimate
outcome can be foreseen with reasonable certainty;
• provision is made for losses incurred or foreseen in 
bringing the contract to completion as soon as they become
apparent; and
• claims receivable are recognised as income when 
received or certified for payment except that, in preparing
contract forecasts to completion, a prudent and reasonable
evaluation of claims receivable may be included to mitigate
foreseeable losses.
Profit in respect of house sales is taken at the time of legal
completion of the sale. Profit in respect of land sales and land
exchanges is taken on the unconditional exchange of contracts.
Profit in respect of property developments is taken on
unconditional exchange of contracts on disposals of finished
developments. Profit taken is subject to any amounts necessary 
to cover residual commitments relating to development
performance. Provision is made for any losses foreseen in
completing a development as soon as they become apparent.
Where construction of pre-sold developments is undertaken
directly by the Group, for contracts of more than one year in
duration, turnover and profit are recognised in accordance with
SSAP 9 ‘Stocks and Long-Term Contracts’. Profit in these
circumstances is calculated by reference to the degree of
completion of the contract at the end of each period.
Employee share schemes (LTIP)
The cost to the Group of awards to employees under the Kier
Group LTIP is spread on a straight line basis over the relevant
performance criteria period. The scheme awards to senior
employees a number of shares which will vest after three years 
if particular criteria are met. The award may be taken either as
shares or as a combination of shares and cash based on the share
price prevailing when the shares vest. The cost of the share based
payment element of the scheme is based on the market value of
the shares at the date the options are granted, and the cost of the
cash based payment element is based on the market value of the
share options at the balance sheet date. Amounts charged to the
profit and loss account for share based payments are added to
the share scheme reserve.
Shares purchased and held in trust in connection with the
Group’s share schemes are deducted from the share scheme
reserve. No gain or loss is recognised within the profit and loss
account on the market value of these shares compared to the
original cost.
The net balance on the share scheme reserve is included as a
separate item in the balance sheet within shareholders’ funds.
57
Kier Group plc 
Annual Report and Accounts 2005
Notes to the financial statements Pre-contract costs
Costs associated with bidding for contracts are written off as
incurred (pre-contract costs). When it is virtually certain that 
a contract will be awarded, usually when the Group has 
secured preferred bidder status, external costs incurred from 
that date to the date of financial close are carried forward in 
the balance sheet.
When financial close is achieved on Private Finance Initiative
(PFI) or Public Private Partnership (PPP) contracts, external costs
are recovered from the special purpose vehicle and pre-contract
costs are credited to the profit and loss account, except to the
extent that the Group retains a share in the special purpose
vehicle. The amount not credited is deferred and recognised 
over the life of the construction contract to which the costs
relate. Success fees and financing arrangements, which are 
not generally material amounts, are deferred in full and
recognised over the life of the financing in place for the 
special purpose vehicle.
Tangible fixed assets
Land is not depreciated. In accordance with FRS 15 
‘Tangible Fixed Assets’, for freehold buildings and other 
assets, depreciation is provided in order to write off the cost 
less residual value over the estimated lives of the assets. The 
rates of depreciation are as follows:
Freehold property 2% to 4% per annum
Leasehold property over the term of the lease
Plant, vehicles and fixtures 10% to 33% per annum
Mining assets
Opencast expenditure incurred prior to the commencement 
of operating opencast sites is capitalised and the cost less the
residual value is depreciated over the coaling life of the site on 
a coal extraction basis.
The total cost of restoration is recognised as a provision as 
soon as the mine becomes operational. The amount provided
represents the present value of the anticipated costs. Costs are
charged against the provision as incurred and the unwinding 
of the discount is included within interest payable. A tangible
fixed asset is created for an amount equivalent to the initial
provision and depreciated on a coal extraction basis over the 
life of the asset.
Leased assets
Operating lease rentals are charged to the profit and loss 
account on a straight line basis over the period of the lease.
Stock
Stock and work in progress is stated at the lower of cost, which
includes attributable overheads, and net realisable value.
Property stock, 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 profit and loss account.
Deferred taxation
In accordance with FRS 19 ‘Deferred Tax’, deferred taxation is
provided fully and on a non-discounted basis at expected future
corporation tax rates in respect of timing differences between
profits computed for taxation and accounts purposes.
No provision is made in respect of tax liabilities which would
arise if fixed asset properties were sold in their existing state at
their book values unless it is intended to dispose of those assets.
Joint arrangements and joint ventures
Interests in joint arrangements are accounted for by recognising
the Group’s share of assets and liabilities, profits, losses and
cash flows, measured according to the terms of the arrangement.
Investments in joint ventures are accounted for under the gross
equity method.
Foreign currencies
Transactions denominated in foreign currencies are recorded 
at the exchange rates in effect when they take place. Resulting
foreign currency denominated assets and liabilities are translated
at the exchange rates ruling at the balance sheet date unless they
are covered by forward foreign exchange contracts, in which
case the contract rates are used. Exchange differences arising
from foreign currency transactions are reflected in the profit 
and loss account.
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
taken directly to reserves. All other translation differences are
reflected in the profit and loss account.
Pension costs
The pension costs charged against profits are based on an
actuarial method and actuarial assumptions designed to spread
the anticipated pension costs over the service lives of the
employees in the pension schemes, in a way that seeks to ensure
that the regular pension cost represents a substantially level
percentage of the current and expected future pensionable 
salary roll in the light of current actuarial assumptions. Variations
from regular costs are spread over the average remaining service
lives of current employees in the pension schemes.
Kier Group plc 
Annual Report and Accounts 2005
58
Notes to the financial statements
continued 2 Turnover, profit and segmental information
Segmental analysis of the results is shown below:
Turnover Operating profit Profit before tax
2005 2004 2005 2004 2005 2004
£m £m £m £m £m £m
Construction 1,096.2 1,007.3 15.0 10.9 26.4 19.0
Support Services 227.5 197.7 3.2 2.7 3.0 2.2
Homes 225.5 215.7 34.1 31.8 24.7 24.5
Property 60.4 46.6 10.0 6.6 7.2 5.0
Infrastructure Investment 11.8 9.2 (0.9) (1.9) 1.4 (1.3)
Corporate overhead/finance – – (8.0) (7.5) (4.8) (8.8)
1,621.4 1,476.5 53.4 42.6 57.9 40.6
Operating profit and profit before tax is after deducting the amortisation of goodwill in Construction of £0.6m (2004: £0.6m) and in
Support Services of £1.9m (2004: £2.0m).
Net operating assets Net assets
2005 2004 2005 2004
£m £m £m £m
Construction (175.1) (132.6) 66.6 59.0
Support Services (6.3) 10.6 8.1 7.3
Homes 248.4 201.3 62.9 53.6
Property 24.3 24.8 11.7 8.1
Infrastructure Investment (1.7) 9.0 (3.7) (1.8)
Corporate overhead/finance (0.3) (4.3) 1.8 (9.8)
89.3 108.8 147.4 116.4
Net operating assets represent assets excluding cash, bank overdrafts, long-term borrowings and interest-bearing inter-company loans
(see note 16).
Operating profit and profit before tax for Support Services and corporate overhead/finance have been adjusted to reallocate costs of
bidding for Support Services contracts from corporate overhead/finance to Support Services. The adjustment is £2.0m in the year to 
June 2004. Profit before tax for the year to 30 June 2005 includes: an exceptional profit of £0.8m relating to the sale of an investment 
in Construction; an exceptional profit of £2.1m relating to the sale of an investment in a PFI joint venture in Infrastructure Investment;
and an exceptional profit of £3.8m relating to the sale of a fixed asset property in corporate overhead/finance.
Profit on ordinary activities before taxation is stated after charging/(crediting):
2005 2004
£m £m
Remuneration of auditors – audit fees 0.6 0.6
– other fees – 0.1
Hire of plant and machinery 16.3 23.1
Operating lease rentals:
Land and buildings 2.8 2.4
Plant and machinery 9.6 9.0
Goodwill amortisation 2.5 2.6
Depreciation of tangible fixed assets 12.3 8.1
Remuneration of the auditors in respect of the Company for audit amounted to £4,450 (2004: £4,300). Other fees payable to auditors
relate to taxation advisory work. No consultancy related work has been carried out by the auditors in either of the two years ended 
30 June 2005.
59
Kier Group plc 
Annual Report and Accounts 2005 3 Exceptional items
Exceptional items for the year to 30 June 2005 arise from the following:
Profit before tax Tax Net profit/(loss)
£m £m £m
Disposal of investment in Kier Hong Kong Limited 0.8 – 0.8
Disposal of investment in a PFI joint venture 2.1 (0.6) 1.5
Refinancing of a PFI joint venture – (2.5) (2.5)
Disposal of a fixed asset property 3.8 (1.2) 2.6
6.7 (4.3) 2.4
4 Net interest receivable/(payable) – Group
2005 2004
£m £m
Interest receivable 4.0 3.0
Interest payable on bank loans and overdrafts (0.5) (0.9)
Unwinding of discount (0.6) (0.3)
Interest payable on long-term borrowings (2.0) (2.0)
0.9 (0.2)
5 Information relating to employees
2005 2004
No No
Average number of persons employed during the year including executive directors was:
United Kingdom 7,026 6,978
Rest of World 1,273 1,351
8,299 8,329
£m £m
Group staff costs are as follows:
United Kingdom 231.6 220.5
Rest of World 9.2 11.3
240.8 231.8
Wages and salaries 204.0 197.4
Social security costs 18.3 17.1
Other pension costs (note 7) 18.5 17.3
240.8 231.8
Kier Group plc 
Annual Report and Accounts 2005
60
Notes to the financial statements
continued 6 Information relating to directors
Information relating to directors’ emoluments, pension
entitlements, share options and LTIP interests appears in the
directors’ remuneration report on pages 45 to 49.
7 Pensions
a) SSAP 24 ‘Pension Costs’
The principal UK pension scheme is the Kier Group Pension
Scheme which includes a defined benefit section and a defined
contribution plan. The assets of the Scheme are held under trust
separately from those of the Group; the Trustees are responsible
for investing the assets and delegate day-to-day decisions to
independent professional investment managers. Pension costs are
assessed on the advice of an independent qualified actuary using
the projected unit method and the following main assumptions
for the financial year ended 30 June 2005:
• pension liabilities will be discounted at the rates of 7.25%
pre-retirement and 6.25% post-retirement per annum;
• salary increases will be 4.3% per annum; and
• present and future pensions will increase at either 2.7% 
per annum or at rates set in the Scheme rules.
The same method and assumptions were used for the last formal
actuarial valuation of the Scheme as at 1 April 2002 which
showed that the market value of the Scheme’s assets was
£307.2m and that this represented 94% of the value of the
benefits which had accrued to members, after allowing for
projected future increases in salaries.
The results of the above valuation were rolled forward to 
30 June 2002 to determine the pension costs for the financial
years to 30 June 2004 and 30 June 2005 with allowance for
actual investment performance to 30 June 2002 and for the 
new early retirement terms which were introduced in 2003. 
At 30 June 2002, the market value of the Scheme’s assets was
£296.8m which represented 93% of members’ accrued benefits
after allowing for projected increases in salaries.
The Group’s pension charge of £12.5m (2004: £12.3m) to the
defined benefit section of the Scheme has been calculated on 
the basis of the above review. Contributions paid during the 
year amounted to £24.5m (2004: £12.3m) and the excess of
contributions over the pension charge has been included within
prepayments and will be spread over the remaining service lives
of participating employees.
The above pension cost is in respect of the defined benefit
section of the Scheme. This section was closed to new entrants
on 1 January 2002 with most new employees after that date
being offered membership of the Retirement Savings Plan, a
defined contribution arrangement. The Group is required to 
pay contributions in respect of those employees in accordance
with the rates specified in the Plan. The contributions paid to 
the Retirement Savings Plan during the year, and the pension
charge, amounted to £1.8m (2004: £1.2m).
The Group also participates in another defined benefit scheme
through its subsidiary Kier Sheffield LLP which has participated
as an admitted body in the South Yorkshire Pension Fund since 
1 April 2003. As an admitted body, it was granted a fully funded 
past service position at that date and has paid contributions at
the rate of 12.5% of pensionable pay which the Fund’s actuary
has determined is sufficient to meet ongoing benefits. In addition,
it has paid additional contributions to fund certain pension
benefits payable upon redundancy.
Kier Sheffield LLP’s pension costs are assessed on the advice 
of an independent qualified actuary using the projected unit
method and the following main assumptions for the financial
year ended 30 June 2005:
• Pension liabilities will be discounted at the rate of 6.5% 
per annum;
• Salary increases will be 4.0% per annum; and
• Present and future pensions will increase at 2.5% per annum.
The same method and assumptions were used for the 2001
actuarial valuation of the Fund and the determination of Kier
Sheffield LLP’s contributions. As noted above, Kier Sheffield LLP
was granted a fully funded past service position as at 1 April
2003 with assets and ongoing past service liabilities of £65.0m.
Kier Sheffield’s pension charge for the financial year ended 
30 June 2005 has been calculated on the basis of the above 
and, given the fully funded past service position, is equal 
to the contributions paid during the year which amount to 
£2.9m (2004: £2.9m).
The above pension cost is in respect of those employees who
transferred from Sheffield Council’s employment to Kier Sheffield
upon the start of the contract. New employees are offered
membership of the Retirement Savings Plan section of the Kier
Group Pension Scheme. Kier Sheffield LLP is required to pay
contributions in respect of these employees in accordance with
the rates specified in the rules of the Plan.
Contributions are also made in respect of former members of 
the Kier Group Retirement Benefit Scheme and hourly paid
operatives, to an industry-wide stakeholder scheme, and in
respect of employees who are members of a local government
pension scheme. The pension costs for these have been taken 
as the actual contributions paid over the year.
b) FRS 17 ‘Retirement Benefits’
Details of the Kier Group Pension Scheme and the pension
arrangements for Kier Sheffield LLP under FRS 17 are given below:
The valuation used for the FRS 17 disclosure for the Kier Group
Pension Scheme has been based on the most recent actuarial
valuation at 1 April 2002 updated by an independent qualified
actuary to take account of the requirements of FRS 17 in order to
assess the liabilities of the Scheme at 30 June 2005. The Scheme’s
assets are stated at their market values at 30 June 2005.
The numbers disclosed for the Kier Sheffield LLP pension
arrangements have been based on an assessment of Kier Sheffield
LLP’s assets and liabilities in the South Yorkshire Pension Fund
(SYPF) which has been carried out by an independent qualified
actuary to take account of the requirements of FRS 17. Kier
Sheffield LLP was granted a fully funded past service position 
in the SYPF in respect of 1,146 transferring employees who were
active members of the Fund at 31 March 2003.
61
Kier Group plc 
Annual Report and Accounts 2005 7 Pensions continued
The financial assumptions used to calculate the disclosure for the Kier Group Pension Scheme of scheme liabilities under FRS 17 are:
2005 2004 2003
% %%
Rate of general increases in salaries 4.0 4.3 3.8
Rate of increase to pensions in payment liable for Limited Price Indexation 2.5 2.8 2.5
Discount rate 5.0 5.9 5.5
Inflation rate 2.5 3.0 2.5
The assets in the Kier Group Pension Scheme and the expected rate of return were:
Long-term rate of return expected Value
2005 2004 2003 2005 2004 2003
% %% £m £m £m
Equities 7.5 8.5 8.0 195.4 158.8 162.3
Corporate bonds 4.8 5.5 5.0 144.5 100.8 58.0
Government bonds 4.3 5.0 4.5 54.0 66.2 72.4
Total market value of assets 393.9 325.8 292.7
Present value of liabilities (511.9) (421.8) (406.5)
Deficit (118.0) (96.0) (113.8)
Related deferred tax asset 35.4 28.8 34.1
Net pension liability (82.6) (67.2) (79.7)
The financial assumptions used to calculate the disclosure for the Kier Sheffield LLP pension liabilities under FRS 17 are:
2005 2004 2003
% %%
Rate of general increases in salaries 4.0 4.3 3.8
Rate of increase to pensions in payment liable for Limited Price Indexation 2.5 3.1 2.6
Discount rate 5.0 5.9 5.5
Inflation rate 2.5 3.0 2.5
The assets attributable to the Kier Sheffield LLP pension arrangements and the expected rate of return were:
Long-term rate of return expected Value
2005 2004 2003 2005 2004 2003
% %% £m £m £m
Equities 7.5 8.5 8.0 75.8 60.9 52.2
Corporate bonds 4.8 5.5 5.0 7.2 5.0 5.2
Government bonds 4.3 5.0 4.5 19.5 17.2 15.4
Total market value of assets 102.5 83.1 72.8
Present value of liabilities (99.9) (74.0) (65.5)
Surplus 2.6 9.1 7.3
Related deferred tax liability (0.8) (2.7) (2.2)
Net pension asset 1.8 6.4 5.1
Kier Group plc 
Annual Report and Accounts 2005
62
Notes to the financial statements
continued 7 Pensions continued
2005 2004
Kier Group Kier Kier Group Kier
Pension Sheffield Pension Sheffield
Scheme LLP Total Scheme LLP Total
£m £m £m £m £m £m
Analysis of the amount which would be charged to 
operating profit under FRS 17
Current service cost (12.8) (2.9) (15.7) (14.2) (2.7) (16.9)
Curtailment cost – (0.2) (0.2) – (0.8) (0.8)
Total operating charge (12.8) (3.1) (15.9) (14.2) (3.5) (17.7)
Analysis of net return on pension scheme assets
Expected return on pension scheme assets 22.7 6.4 29.1 19.1 5.2 24.3
Interest on pension liabilities (24.4) (4.3) (28.7) (21.9) (3.6) (25.5)
Net return (1.7) 2.1 0.4 (2.8) 1.6 (1.2)
Analysis of amount to be recognised in Statement of 
Total Recognised Gains and Losses (STRGL) had 
FRS 17 been operative
Actual return less expected return on assets 32.0 9.7 41.7 12.8 2.3 15.1
Experience gains and losses arising on liabilities – (8.2) (8.2) –––
Changes in assumptions underlying the present value 
of liabilities (64.0) (9.9) (73.9) 9.7 (1.5) 8.2
Actuarial (loss)/gain recognised in STRGL (32.0) (8.4) (40.4) 22.5 0.8 23.3
Movement in deficit during the year
(Deficit)/surplus at 1 July (96.0) 9.1 (86.9) (113.8) 7.3 (106.5)
Movement in year
Current service cost (12.8) (2.9) (15.7) (14.2) (2.7) (16.9)
Contributions 24.5 2.9 27.4 12.3 2.9 15.2
Past service costs – (0.2) (0.2) – (0.8) (0.8)
Other finance (cost)/income (1.7) 2.1 0.4 (2.8) 1.6 (1.2)
Actuarial (loss)/gain (32.0) (8.4) (40.4) 22.5 0.8 23.3
(Deficit)/surplus at 30 June (118.0) 2.6 (115.4) (96.0) 9.1 (86.9)
History of experience gains and losses
Difference between expected and actual return on assets 32.0 9.7 41.7 12.8 2.3 15.1
% of assets 8% 9% 8% 4% 3% 4%
Experience gains and losses arising on liabilities – (8.2) (8.2) –––
% of liabilities – (8%) (1%) –––
Changes in assumptions underlying the present value 
of liabilities (64.0) (9.9) (73.9) 9.7 (1.5) 8.2
% of liabilities (13%) (10%) (12%) 2% (2%) 2%
Total amount recognised in STRGL (32.0) (8.4) (40.4) 22.5 0.8 23.3
63
Kier Group plc 
Annual Report and Accounts 2005 8 Taxation
a) Analysis of the charge for the year
2005 2004
£m £m
Taxation on profit before exceptional items 15.8 12.0
Taxation on exceptional items 4.3 –
Total taxation charge 20.1 12.0
Current tax
UK corporation tax on profit before exceptional items at 30% 11.7 10.8
UK corporation tax on exceptional items 4.3 –
Joint venture tax 0.6 0.1
Overseas tax 0.3 0.5
Adjustments in respect of previous years 0.4 0.6
Total current tax (note 8b) 17.3 12.0
Deferred tax
Origination and reversal of timing differences 2.8 0.3
Joint venture tax 0.4 (0.3)
Adjustments in respect of previous years (0.4) –
Total deferred tax 2.8 –
Total tax on profit on ordinary activities 20.1 12.0
b) Factors affecting the tax charge for the year
The current tax charge for the year is marginally lower than the standard rate of corporation tax in the UK (30%). The differences are
explained below:
2005 2004
£m £m
Profit on ordinary activities before taxation 57.9 40.6
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% 17.4 12.2
Effects of:
Expenses not deductible for tax purposes 0.5 0.5
Utilisation of tax losses (0.2) (0.2)
Capital gains not taxable (0.4) (0.3)
Tax on refinancing gain 2.5 –
Tax relief on special pension contribution (3.6) –
Movement in tax provisions 0.5 0.3
Capital allowances in excess of depreciation – (1.1)
Overseas tax in excess of UK tax relief 0.1 0.1
Joint venture tax 0.1 0.3
Other – (0.4)
Adjustments to tax charge in respect of previous years – current tax 0.4 0.6
Current tax charge for the year (note 8a) 17.3 12.0
c) Factors that may affect future tax charges
The Group is not aware of any significant factors that may affect future tax charges.
Kier Group plc 
Annual Report and Accounts 2005
64
Notes to the financial statements
continued 9 Dividends
2005 2004
£m £m
Ordinary Shares
Paid 7.0 pence (2004: 6.0 pence) 2.5 2.2
Proposed 15.2 pence (2004: 13.0 pence) 5.4 4.6
7.9 6.8
10 Earnings per share
Earnings per share is calculated as follows:
2005 2004
Basic Diluted Basic Diluted
£m £m £m £m
Profit after tax 37.8 37.8 28.6 28.6
Less: exceptional items (6.7) (6.7) ––
Add: tax on exceptional items 4.3 4.3 ––
Profit after tax before exceptional items 35.4 35.4 28.6 28.6
Add: goodwill amortisation 2.5 2.5 2.6 2.6
Less: tax on goodwill amortisation (0.6) (0.6) (0.6) (0.6)
Adjusted profit after tax 37.3 37.3 30.6 30.6
million million million million
Weighted average number of shares 35.4 35.4 35.1 35.1
Weighted average number of unexercised options – dilutive effect – 0.1 – 0.1
Weighted average impact of LTIP – 0.2 – 0.2
Weighted average number of shares used for EPS 35.4 35.7 35.1 35.4
pence pence pence pence
Earnings per share 106.8 105.9 81.5 80.8
Adjusted earnings per share (before exceptional items) 100.0 99.2 81.5 80.8
Adjusted earnings per share (before exceptional items and goodwill amortisation) 105.4 104.5 87.2 86.4
65
Kier Group plc 
Annual Report and Accounts 2005 11 Intangible assets
Goodwill
Group £m
Cost
At 1 July 2004 and 30 June 2005 22.1
Amortisation
At 1 July 2004 3.5
Charge for the year 2.5
At 30 June 2005 6.0
Net book value
At 30 June 2005 16.1
At 30 June 2004 18.6
Intangible assets comprise goodwill arising on the acquisition of Partnerships First Limited in 2002, which is being amortised over a
period of 10 years, and on the acquisition by the Group of the business and assets of the construction and building services operation 
of Sheffield City Council in 2003, which is being amortised over a period of between 7 and 10 years.
12 Tangible fixed assets
Plant,
Land and vehicles Mining
buildings & fixtures assets Total
Group £m £m £m £m
Cost
At 1 July 2004 23.2 68.9 17.7 109.8
Additions 5.2 14.0 1.3 20.5
Acquisitions – 0.3 – 0.3
Disposals (0.9) (6.4) – (7.3)
Currency realignments – 0.1 – 0.1
At 30 June 2005 27.5 76.9 19.0 123.4
Accumulated depreciation
At 1 July 2004 0.9 39.7 0.3 40.9
Charge for the year 0.1 8.6 3.6 12.3
Disposals – (5.7) – (5.7)
Currency realignments – 0.1 – 0.1
At 30 June 2005 1.0 42.7 3.9 47.6
Net book value
At 30 June 2005 26.5 34.2 15.1 75.8
At 30 June 2004 22.3 29.2 17.4 68.9
The net book value of land and buildings comprises freeholds of £25.2m (2004: £21.1m), long leaseholds of £0.8m (2004: £1.0m) and
short leaseholds of £0.5m (2004: £0.2m).
Kier Group plc 
Annual Report and Accounts 2005
66
Notes to the financial statements
continued 13 Investments
a) Movements in year
Group Company
£m £m
Interest in subsidiary undertakings
At 1 July 2004 and 30 June 2005 – 55.3
Investment in joint ventures
At 1 July 2004 32.2 –
Additions 1.5 –
Disposals/refinancing (10.3) –
Share of retained profit 0.7 –
Dividends received (0.4) –
Currency realignments 0.1 –
At 30 June 2005 23.8 –
Total investments 23.8 55.3
b) Analysis of investment in joint ventures
Group
2005 2005 2005 2005 2004
Prospect
Kier Healthcare Other
Developments (Hairmyres) joint
Limited Limited ventures Total Total
£m £m £m £m £m
Investment in joint ventures
Fixed assets 4.8 – 0.2 5.0 0.1
Current assets 76.8 45.0 91.5 213.3 194.7
Gross assets 81.6 45.0 91.7 218.3 194.8
Creditors – amounts falling due within one year (16.7) (2.6) (11.2) (30.5) (25.3)
Creditors – amounts falling due after more than one year (62.8) (50.2) (78.3) (191.3) (165.4)
Net external assets 2.1 (7.8) 2.2 (3.5) 4.1
Loans provided to joint ventures 18.8 4.3 4.2 27.3 28.1
Total investment in joint ventures 20.9 (3.5) 6.4 23.8 32.2
Details of the Group’s principal operating subsidiaries are given on page 84. Details of the Group’s interest in joint ventures are given on
page 85.
14 Stock
Group
2005 2004
£m £m
Raw materials and consumables 2.4 2.5
Long-term contract balances 6.0 18.3
Land and work in progress held for development 311.4 297.9
Other work in progress 14.4 9.9
334.2 328.6
67
Kier Group plc 
Annual Report and Accounts 2005 15 Debtors
Group Company
2005 2004 2005 2004
£m £m £m £m
Amounts falling due within one year:
Trade debtors 185.5 175.8 – –
Amounts recoverable on contracts 28.5 24.5 – –
Amounts due from subsidiary undertakings – – 18.7 21.2
Amounts receivable from joint ventures 1.1 2.5 – –
Other debtors 3.7 6.2 2.7 2.2
Prepayments and accrued income 21.7 6.3 – –
Corporation tax – – 0.6 0.6
Other taxation 4.8 9.7 – –
245.3 225.0 22.0 24.0
Amounts falling due after more than one year:
Amounts recoverable on contracts 8.5 6.2 – –
Other debtors 6.1 – – –
14.6 6.2 – –
Total debtors 259.9 231.2 22.0 24.0
16 Creditors
Group Company
2005 2004 2005 2004
£m £m £m £m
Amounts falling due within one year:
Bank loans and overdrafts 5.3 3.7 174.4 57.5
Payments received on account 3.8 1.7 – –
Trade creditors 374.7 360.0 – –
Amounts due to subsidiary undertakings – – 21.7 19.4
Proposed dividend 5.4 4.6 5.4 4.6
Corporation tax 9.5 5.1 – –
Other taxation and social security costs 18.1 13.5 – –
Other creditors 17.2 18.6 1.9 2.6
Accruals and deferred income 153.3 123.5 – –
587.3 530.7 203.4 84.1
Amounts falling due after more than one year:
Long-term borrowings 30.1 30.1 30.1 30.1
Trade creditors 14.4 26.6 – –
Amounts due to subsidiary undertakings – – 7.5 10.0
Accruals and deferred income 3.8 1.8 – –
48.3 58.5 37.6 40.1
Long-term borrowings due after more than one year comprises borrowings in respect of a 10-year private placement of loan notes made
in February 2003. The borrowings are unsecured and fixed at an interest rate of 6.4% per annum for 10 years.
The amount of £7.5m (2004: £10.0m) due to subsidiary undertakings relates to loans which were made to the Company in accordance
with the provisions of Sections 151 to 158 of the Companies Act 1985. The loans bear interest at 1% over bank base rate and are fully
repayable by 3 July 2006.
Kier Group plc 
Annual Report and Accounts 2005
68
Notes to the financial statements
continued 17 Provisions for liabilities and charges
Restoration of Deferred Contract
mining sites tax provisions Total
Group £m £m £m £m
At 1 July 2004 4.0 0.4 10.9 15.3
Utilised – – (9.0) (9.0)
Unwinding of discount 0.3 – – 0.3
Additions 0.4 2.4 10.9 13.7
At 30 June 2005 4.7 2.8 12.8 20.3
Deferred taxation is fully provided as follows:
2005 2004
£m £m
Accelerated capital allowances 2.0 2.3
Short-term timing differences 2.0 (0.7)
Unrelieved tax losses (1.2) (1.2)
Provision for deferred tax 2.8 0.4
18 Obligations under leasing agreements
The annual instalments under non-cancellable operating leases entered into by the Group are set out below:
Land and buildings Plant and machinery
2005 2004 2005 2004
£m £m £m £m
Operating leases expiring:
Within one year 0.3 0.1 1.9 1.3
Between one and five years 0.4 0.6 7.3 6.7
In five years or more 2.2 2.1 0.7 0.5
2.9 2.8 9.9 8.5
69
Kier Group plc 
Annual Report and Accounts 2005 19 Financial instruments
At 30 June 2005, the Group had cash, overdrafts and long-term borrowings denominated in the following currencies:
2005 2004
Financial Financial Financial Financial
assets liabilities Aggregate assets liabilities Aggregate
£m £m £m £m £m £m
Currency
Sterling 89.4 (21.9) 67.5 35.6 (16.7) 18.9
US dollar 2.2 (13.4) (11.2) 2.1 (16.9) (14.8)
Hong Kong dollar 0.5 – 0.5 2.5 – 2.5
Other 1.4 (0.1) 1.3 1.2 (0.2) 1.0
Total 93.5 (35.4) 58.1 41.4 (33.8) 7.6
There is no material difference between the carrying value and fair value of the Group’s aggregate financial assets and liabilities, 
except as disclosed below. The maturity of the Group’s financial liabilities is shown in the table below:
2005 2004
£m £m
Due in one year or less (5.3) (3.7)
Due in more than five years (30.1) (30.1)
(35.4) (33.8)
Amounts due in more than five years represent a £17.0m UK sterling loan and a £13.4m US dollar loan, net of £0.3m of capitalised
finance costs, from the private placement of loan notes made in February 2003. The loans are repayable in one payment in February
2013. The UK sterling loan is at a fixed interest rate of 6.4%. The Group has entered into interest payment and repayment swaps for 
the US dollar loan, which give an effective 6.4% fixed interest rate.
The remaining financial assets and liabilities are cash, short-term deposits and overdrafts at floating rates based on LIBOR.
In addition to the financial assets and liabilities stated above, the Group had trade creditors due after more than one year which
comprise the following:
2005 2004
£m £m
Land creditors 6.6 14.8
Deferred consideration for acquisition 3.4 4.6
Others 4.4 7.2
14.4 26.6
The weighted average period to maturity of the land creditors is 21 months (2004: 22 months). The fair value of these liabilities is 
£6.0m (2004: £13.3m). The discount rate applied is equivalent to the Group’s current incremental borrowing rate.
The deferred consideration for acquisition relates to the balance of consideration payable on the Sheffield acquisition (see note 22c). 
In accordance with FRS 7 ‘Fair Values in Acquisition Accounting’ the deferred consideration has been discounted to reflect the fair 
value of the Group’s liability.
Kier Group plc 
Annual Report and Accounts 2005
70
Notes to the financial statements
continued 19 Financial instruments continued
Other long-term liabilities principally include outstanding sub-contract retentions. There are no other material differences between book
value and fair value of the Group’s other long-term trade creditors.
Forward contracts are entered into to hedge part of the Group’s exposure to foreign currency and fuel price fluctuations.
Book value Fair value
£m £m
Currency swaps ––
Fuel forward contracts – 1.1
The Group has £67.5m of unsecured committed borrowing facilities due for renewal as follows:
Undrawn facility
£m
2006 15.0
2007 52.5
67.5
In addition the Group has £12.5m of unsecured overdraft facilities repayable on demand.
The Group has taken advantage of the exemption in FRS 13 ‘Derivatives and other Financial Instruments’ to exclude short-term debtors
and creditors from the above analysis. Further information on the Group’s cash flow, facilities and foreign currency exposure is
contained in the financial review.
20 Share capital
The share capital of the Company comprises:
2005 2004
Number £m Number £m
Ordinary Shares of 1p each
Authorised 45,000,000 0.5 45,000,000 0.5
Issued and fully paid 35,686,844 0.4 35,525,754 0.4
During the year 161,090 Ordinary Shares were issued at a total premium of £0.8m, of which 77,421 were issued as a scrip dividend
alternative at a premium of £0.6m and 83,669 were issued under Performance Options and the Sharesave Scheme at a premium of £0.2m.
At 30 June 2005 there were options outstanding to subscribe for Ordinary Shares as follows:
Period Option
Number exercisable price
Sharesave 558,427 2007 625p
Performance related 11,764 1999-2006 170p
Performance related 2,000 2001-2008 189.5p
71
Kier Group plc 
Annual Report and Accounts 2005 21 Reserves
a) The movement on reserves is as follows:
Merger Capital Share
Share relief redemption scheme Profit &
premium reserve reserve reserve loss
Group £m £m £m £m £m
At 1 July 2004 17.1 – 2.7 (0.4) 96.6
Issue of shares 0.8––––
Movement during the year (note 21b) – – – 0.2 –
Profit for the year –––– 37.8
Currency translation –––– 0.1
Dividends –––– (7.9)
At 30 June 2005 17.9 – 2.7 (0.2) 126.6
The cumulative amount charged direct to profit and loss reserve in respect of goodwill is £9.1m (2004: £9.1m).
Merger Capital Share
Share relief redemption scheme Profit &
premium reserve reserve reserve loss
Company £m £m £m £m £m
At 1 July 2004 17.1 1.2 2.7 (0.8) 10.3
Issue of shares 0.8––––
Movement during the year (note 21b) – – – (0.2) –
Profit for the year –––– 7.9
Dividends –––– (7.9)
At 30 June 2005 17.9 1.2 2.7 (1.0) 10.3
b) Share scheme reserve
This reserve comprises own shares purchased to satisfy awards under the LTIP, net of amounts charged to the profit and loss account for
these share based payments.
Group Company
2005 2004 2005 2004
£m £m £m £m
Own shares held by Kier Group 1999 Employee Benefit Trust
At 1 July (1.2) (1.5) (1.2) (1.5)
Purchases (0.4) (0.1) (0.4) (0.1)
Awards under LTIP 0.2 0.4 0.2 0.4
At 30 June (1.4) (1.2) (1.4) (1.2)
Accrued share based payments
At 1 July 0.8 0.8 0.4 0.5
Awards under LTIP (0.2) (0.4) (0.1) (0.3)
Charge for the year 0.6 0.4 0.1 0.2
At 30 June 1.2 0.8 0.4 0.4
Net reserve (0.2) (0.4) (1.0) (0.8)
At 30 June 2005 the Kier Group 1999 Employee Benefit Trust held 256,331 Ordinary Shares in Kier Group plc at a cost of £1.4m
(2004: 267,414 at a cost of £1.2m). The market value of these shares at 30 June 2005 was £2.3m. The dividends on these shares
have been waived.
All of the above shares have been conditionally awarded to employees through the LTIP, subject to the Group achieving prescribed
earnings per share growth targets. The cost of the LTIP is based on the market value of the shares at the date on which the award was
made. The cost is recognised based on a reasonable expectation of the extent to which performance criteria will be met and is
accounted for over the three year period to which the performance targets relate.
During the year the Kier Group 1999 Employee Benefit Trust acquired a further 50,000 Ordinary Shares in Kier Group plc at a cost of
£0.4m (2004: 20,000 Ordinary Shares at a cost of £0.1m) and issued 61,083 shares to directors in satisfaction of the 2001 LTIP award 
at a cost of £0.2m.
Kier Group plc 
Annual Report and Accounts 2005
72
Notes to the financial statements
continued 22 Cash flow notes
a) Reconciliation of operating profit to operating cash flows
2005 2004
£m £m
Group operating profit 48.6 39.4
Amortisation of goodwill 2.5 2.6
Depreciation charges 12.3 8.1
Profit on sale of fixed assets (0.5) (1.3)
Decrease/(increase) in stocks 18.5 (52.1)
Increase in debtors (28.7) (26.2)
Increase in creditors 31.9 27.9
Increase/(decrease) in provisions 1.8 (2.1)
Net cash inflow/(outflow) from operating activities 86.4 (3.7)
b) Analysis of changes in net funds
1 July Cash 30 June
2004 flows 2005
£m £m £m
Cash at bank and in hand 11.1 68.2 79.3
Bank overdrafts (3.7) (1.6) (5.3)
Short-term bank deposits 30.3 (16.1) 14.2
Long-term borrowings (30.1) – (30.1)
Cash, net of debt 7.6 50.5 58.1
Cash, net of debt includes £6.2m (2004: £10.2m) being the Group’s share of cash and liquid resources held by joint arrangements and
£16.6m (2004: £13.6m) of cash not readily available to the Group.
c) Acquisitions and disposals
2005 2004
£m £m
Investment in subsidiary undertakings (16.5) (17.0)
Disposal of investment in Kier Hong Kong 0.8 –
Disposal of investment in PFI joint venture 5.0 –
Refinancing of PFI joint venture 8.1 –
Investment in joint ventures (1.5) (0.2)
(4.1) (17.2)
73
Kier Group plc 
Annual Report and Accounts 2005 22 Cash flow notes continued
Acquisition of the business and assets of the construction and building services operation of Sheffield City Council
On 31 March 2003 the Group, through its subsidiary Kier Sheffield LLP, acquired the business and assets of the construction and
building services operation of Sheffield City Council. The consideration, payable wholly in cash was £16.7m, representing £0.9m for 
the value of net assets acquired and £15.8m for goodwill.
The consideration is payable as follows:
£m
Total consideration payable 16.7
Paid at 30 June 2004 (11.1)
Paid during the year ended 30 June 2005 (1.5)
Unwinding of discount 0.6
Deferred at 30 June 2005 4.7
Due in one year or less 1.3
Due between one and five years 3.4
4.7
Acquisition of Ashwood Homes
On 10 June 2005 the Group acquired the business of Ashwood Homes. The consideration payable was £23.5m representing the value 
of the net assets acquired; £15.0m was paid immediately in cash with £8.5m deferred until March 2006.
The following table sets out the book and fair values of the identifiable assets and liabilities acquired:
Book and 
fair value
£m
Tangible fixed assets 0.3
Stock and work in progress 24.1
Creditors (0.9)
Consideration payable 23.5
The effect of the acquisition on the results for the year ended 30 June 2005 is not material.
23 Capital commitments
2005 2004
Group £m £m
Contracted for but not provided in the accounts 2.1 2.3
Kier Group plc 
Annual Report and Accounts 2005
74
Notes to the financial statements
continued 24 Transactions with related parties
Sales of goods and services to joint arrangements, joint ventures and associates
2005 2004
£m £m
Construction services and materials 37.7 36.7
Staff and associated costs 9.4 13.4
Management services 2.0 4.1
49.1 54.2
Amounts due from related parties are analysed below:
2005 2004
£m £m
Academy Services (Tendring) Limited 0.4 0.4
Academy Services (Waltham Forest) Limited 0.2 –
ASK (Greenwich) Limited 0.8 –
Baglan Moor Healthcare PLC – 3.4
Information Resources (Bournemouth) Limited 0.7 0.8
Prospect Healthcare (Hairmyres) Limited 4.5 5.3
Prospect Healthcare (Hinchingbrooke) Limited 0.8 –
Prospect Healthcare (Reading) Limited 1.7 1.9
Kier Developments Limited 18.8 18.8
27.9 30.6
25 Contingent liabilities
There are contingent liabilities in respect of performance bonds, guarantees and claims under contracting and other agreements,
including joint arrangements and joint ventures, entered into in the normal course of business, and commitments to support subsidiaries.
75
Kier Group plc 
Annual Report and Accounts 2005 Kier Group plc has adopted International Financial Reporting
Standards (IFRS) with effect from 1 July 2005, in accordance 
with European Union (EU) regulations. Kier Group will therefore
publish its results for the six months to 31 December 2005 and
its Annual Report and Accounts for the year to 30 June 2006 in
accordance with IFRS.
The results for the year to 30 June 2005 under UK Generally
Accepted Accounting Practice (GAAP) are set out on pages 
52 to 75. This statement on pages 76 to 83 sets out an unaudited
restatement of those results and net assets under IFRS. The
resulting balance sheets and income statement must be regarded
as preliminary and will only be determined with certainty when
the Group issues its annual financial statements under IFRS for
the year to 30 June 2006.
The key points relating to the restatement are:
• The transition to IFRS has no impact on business 
operations, cash, financing or the ability to pay dividends;
• There is no impact on the profit recognition policy for
Construction or Support Services and only minor impact 
on profit recognition for Housebuilding and Property;
• The most significant effect of IFRS is in accounting for
pensions which reduces stated net assets; and
• No account has been taken of IAS 32 and IAS 39 
‘Financial Instruments’. This will apply to Kier from 
1 July 2005 with there being no requirement to 
restate comparatives.
This statement sets out the following, restated in accordance 
with IFRS.
• A consolidated income statement for the year to 30 June 2005;
• A consolidated statement of changes in equity for the year 
to 30 June 2005; and
• Consolidated balance sheets at 30 June 2004 and 2005.
An explanation of the principal differences between UK GAAP
and IFRS affecting Kier Group plc is set out in note 2 on pages
79 and 80 and reconciliations of the statements from UK GAAP
to IFRS are set out in note 4 on pages 81 to 83. Note 3 on page
80 sets out an explanation relating to two areas (largely affecting
PFI concessions) where there is no requirement to apply IAS to
the balance sheet at 30 June 2005 but where there is likely to be
an impact in the future.
Kier Group plc 
Annual Report and Accounts 2005
76
Transition to International Financial Reporting Standards
Restatement of financial information for the year ended 30 June 2005 2005
£m
Continuing operations
Total revenue 1,623.2
Revenue – joint ventures (50.2)
Group revenue 1,573.0
Cost of sales (1,433.8)
Gross profit 139.2
Administrative expenses (91.1)
Share of post tax profits from joint ventures 0.9
Profit from operations 49.0
Other income
1
6.7
Finance cost (net) – Group (1.2)
Profit before tax 54.5
Taxation (17.9)
Profit for the year 36.6
Earnings per Ordinary Share
– basic 103.4p
– diluted 102.5p
Adjusted earnings per Ordinary Share (excluding other income)
2
– basic 96.6p
– diluted 95.8p
1 Other income represents the exceptional items disclosed under UK GAAP.
2 Adjusted earnings per Ordinary Share under IFRS has been calculated after deducting the amortisation of the intangible asset relating to the Sheffield contract (£1.9m pre-tax; £1.3m net of tax).
Consolidated statement of changes in equity – 
restated in accordance with IFRS
for the year ended 30 June 2005 (unaudited)
Capital Share
Share Share redemption scheme Retained
capital premium reserve reserve earnings Total
£m £m £m £m £m £m
Balance at 1 July 2004 0.4 17.2 2.7 (0.3) 31.2 51.2
Foreign exchange translation differences 0.1 0.1
Actuarial gains and losses in pension scheme (41.5) (41.5)
Deferred tax on actuarial gains and losses in pension scheme 12.5 12.5
Net income recognised directly in equity (28.9) (28.9)
Profit for the year 36.6 36.6
Total recognised income for the year 7.7 7.7
Dividends (7.1) (7.1)
Issue of shares 0.8 0.8
Share based payments 0.2 0.2
Balance at 30 June 2005 0.4 18.2 2.7 (0.3) 31.8 52.8
77
Kier Group plc 
Annual Report and Accounts 2005
Consolidated income statement – restated in accordance with IFRS
for the year ended 30 June 2005 (unaudited) 2005 2004
£m £m
Non current assets
Intangible assets 16.7 18.6
Property, plant and equipment 75.8 68.9
Investment in joint ventures 23.6 31.8
Deferred tax assets 37.6 27.7
Trade and other receivables 14.6 6.2
Non current assets 168.3 153.2
Current assets
Inventories 325.7 321.8
Trade and other receivables 233.3 225.0
Cash and cash equivalents 93.5 41.4
Current assets 652.5 588.2
Total assets 820.8 741.4
Current liabilities
Bank overdrafts and loans (5.3) (3.7)
Trade and other payables (566.5) (516.4)
Tax liabilities (9.5) (5.1)
Current liabilities (581.3) (525.2)
Non current liabilities
Interest-bearing loans and borrowings (30.1) (30.1)
Trade and other payables (17.2) (26.1)
Retirement benefit obligations (121.9) (92.5)
Long-term provisions (17.5) (14.9)
Deferred tax liabilities – (1.4)
Non current liabilities (186.7) (165.0)
Total liabilities (768.0) (690.2)
Net assets 52.8 51.2
Equity
Share capital 0.4 0.4
Share premium 18.2 17.2
Capital redemption reserve 2.7 2.7
Share scheme reserve (0.3) (0.3)
Retained earnings 31.8 31.2
Total equity 52.8 51.2
Kier Group plc 
Annual Report and Accounts 2005
78
Consolidated balance sheet – restated in accordance with IFRS
(unaudited)
at 30 June 2005 1 Basis of preparation
The restated financial statements have been prepared in
accordance with IFRS for illustrative purposes. The transition 
to IFRS is governed by the requirements of IFRS 1 ‘First-time
adoption of IFRS’. The opening balance sheet on 1 July 2004 
(the date of transition to IFRS) has been prepared using
accounting policies which the directors expect to be applicable
for the year to 30 June 2006 except for the requirement to 
apply IAS 32 and IAS 39 ‘Financial Instruments’. The Group 
has taken advantage of the exemption in IFRS 1 that enables the
application of IAS 32 and IAS 39 to be delayed to 1 July 2005
without the requirement to restate comparative figures. 
The principal differences between UK GAAP and IFRS for the
Group are set out in note 2. Note 3 sets out the potential effect 
of IAS 32 and IAS 39 ‘Financial Instruments’ on Kier Group as 
at 1 July 2005 and includes details on the draft standard on
accounting for service concessions. The disclosures required 
by IFRS 1 concerning the transition from UK GAAP to IFRS are
given in the reconciliation schedules in note 4.
2 Principal differences between UK GAAP and IFRS
There are eight principal differences which give rise to changes
in the Group’s reported profit for the year to 30 June 2005 and
net assets at 30 June 2005. These are categorised as follows:
i ) Retirement benefit costs
ii) Sales and marketing costs
iii) Deferred land payments
iv) Property transactions
v) Other adjustments including:
– proposed dividends
– deferred tax
– share-based payments
– goodwill
In addition there is a change to the way in which joint ventures
are disclosed having no impact on net assets or net profits.
i) Retirement benefit costs
Under UK GAAP the Group accounted for its defined benefit
schemes in accordance with SSAP 24 ‘Accounting for Pension
Costs’. The cost of providing the defined benefit pensions was
charged against ‘operating profit’ with surpluses and deficits
arising in the funds amortised to ‘operating profit’ over the
remaining service lives of participating employees. Under IAS 19
‘Employee Benefits’ the cost of providing pension benefits
(current service cost) for defined benefit pensions schemes is
recognised in the income statement, together with the interest
cost arising on the projected obligations and returns on scheme
assets. The defined benefit obligation is determined annually by
independent actuaries and recognised on the balance sheet.
Actuarial gains and losses are recognised in full in the statement
of recognised income and expense in the period in which they
occur.
The financial impacts arising from these changes are:
– a reduction of £93.7m will be reported on the restated 
30 June 2005 balance sheet to reflect the pension 
liability; and
– the charge to the income statement will reduce by £0.1m
before tax.
This impact is similar to that arising under the UK GAAP
standard FRS 17 ‘Retirement Benefits’, details of which are
disclosed in note 7 on pages 61 to 63.
ii) Sales and marketing costs
Under current Group accounting policies adopted in accordance
with UK GAAP sales and marketing costs for the Homes and
Property divisions are capitalised in site work in progress and
written off through cost of sales as the site progresses. Under IAS
2 ‘Inventories’ costs relating to sales and marketing activities are
required to be written off as incurred.
The financial impact of this on the restated 30 June 2005 results
and balance sheet are:
– a reduction in net assets of £3.9m (after tax); and
– a £1.8m increase in the charge to the income statement
(£1.3m after tax).
iii) Deferred land payments
Under UK GAAP deferred land payments (land creditors) are
included in ‘creditors’ at their gross value. Under IAS 2
‘Inventories’ imputed interest is recognised on deferred land
payments with the result that the land creditors are carried in 
the balance sheet at net present value and the value of land held
on the balance sheet in inventories is reduced. The unwinding 
of the imputed interest (or discount) on land creditors is charged
to finance cost and the reduction in land values in inventories
will result in an eventual reduction in cost of sales as the land 
is traded out. The effect of this is to increase the charge to the
2005 income statement by £1.6m (£1.1m after tax) with a
consequential effect on net assets at 30 June 2005. The increased
charge represents the ‘interest cost’ of the deferred payments of
£2.1m less the increase in operating profit brought about by a
reduction in the land value written off through cost of sales
amounting to £0.5m.
iv) Property transactions
Under current Group accounting policies where Group property
developments are sold with construction being undertaken
directly by the Group, turnover and profit are recognised over 
the life of the contract in accordance with SSAP 9 ‘Stocks and
Long-Term Contracts.’
Under IAS 18 ‘Revenue’, where such developments are sold 
in advance of the construction contract being signed, then the
sale can be considered to be a construction contract. As such,
revenue and profit should be recognised in accordance with 
IAS 11 ‘Construction Contracts’ over the term of the construction
contract (as for SSAP 9). However, if the sale is agreed after the
construction contract is signed, revenue and profits can only be
recognised when construction has been completed.
The impact of this is to defer revenue of £1.8m and profit before
tax of £0.5m (£0.3m after tax) taken in the year to June 2004
under UK GAAP until the year to June 2005.
79
Kier Group plc 
Annual Report and Accounts 2005
Selected notes to the IFRS statements 2 Principal differences between UK GAAP and IFRS continued
v) Other adjustments
Other changes to accounting policies that will have an impact on
restated net assets and the profit for the year to June 2005 under
IFRS are as follows:
Profit after tax for 
the year to Net assets
June 2005 June 2005
£m £m
a) Proposed dividends – 5.4
b) Deferred taxation 0.2 (2.0)
c) Share-based payments – 0.1
d) Goodwill 0.6 0.6
Net impact 0.8 4.1
a) Proposed dividends
Under UK GAAP , proposed dividends are 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 a liability 
until they are declared. As a result the provision for the final
dividend is eliminated, increasing net assets at June 2005 by £5.4m.
b) Deferred taxation
IAS 12 ‘Income Taxes’ requires deferred tax to be recognised 
on all temporary differences and not just timing differences as
previously under UK GAAP. Deferred tax liabilities are
recognised in full but deferred tax assets are only recognised 
if future taxable profits are available to cover the assets.
As a result the provision for deferred tax liabilities will increase 
at June 2005 by £2.0m which reduces restated net assets.
c) Share-based payments
IFRS 2 ‘Share-based Payments’ requires that share-based
payments granted after 7 November 2002, but not vested, 
should be valued at the fair value of the shares at the date of
grant. This affects the Sharesave and Long-Term Incentive Plan
schemes. The fair value of these shares at date of award has 
been calculated using the Black Scholes model. The impact on
profits and net assets is not significant.
d) Goodwill and intangible assets
Under UK GAAP, goodwill is amortised on a straight line basis
over its useful economic life (in the case of Kier for up to 10 years)
tested for impairment and provided for as necessary. Under IFRS 3
‘Business Combinations’ goodwill is no longer amortised but is
carried at cost and subject to annual review for impairment at 
30 June. It is effectively frozen at June 2004 with amounts
amortised subsequently under UK GAAP being reinstated. At June
2004 the Group balance sheet contained £18.6m of goodwill.
£13.4m of this relates to the business and assets of the construction
and building services operation of Sheffield City Council. This 
has been reclassified from goodwill to intangible assets in respect
of contract rights under IFRS and will continue to be amortised 
on a straight line basis over the remaining life of the contract. 
The balance of £5.2m relates to the acquisition of Partnerships 
First in 2002. This balance has been maintained at the 30 June
2004 carrying value. As a result goodwill amortisation of £0.6m
under UK GAAP for the year ended 30 June 2005 has been added
back increasing profits and net assets by £0.6m at June 2005.
vi) Joint ventures (disclosure item)
Under IFRS the results of joint ventures may be accounted for
either under the net equity method or proportional consolidation.
The Group currently reports its joint ventures under UK GAAP
using the net equity method and has opted to continue to follow
this method. Under the net equity method trading results from
joint ventures are shown net of tax within profit before tax. This
has no impact on net assets or on profit after tax.
3 Other differences between UK GAAP and IAS largely relating
to PFI concessions
i) Financial instruments
The accounting for, and presentation of, financial instruments 
is dealt with under IAS 39 ‘Financial instruments: Recognition
and measurement’ and IAS 32 ‘Financial instruments: Disclosure
and presentation’. Under UK GAAP there is no comprehensive
standard which addresses the accounting for financial
instruments. FRS 13 ‘Derivatives and other financial instruments’
in the UK requires disclosures to be made in respect of financial
instruments but these are less comprehensive than IAS 32.
As permitted by IFRS 1, the Group has elected not to restate
comparative information in accordance with IAS 39 and IAS 32.
The significant changes in accounting polices that will arise when
IAS 39 and IAS 32 are applied from 1 July 2005 are in relation 
to the accounting treatment of derivative financial instruments.
The Group does not enter into significant derivative transactions.
However a number of the Group’s joint ventures (including PFI
joint ventures) enter into interest rate swap derivatives. IAS 39
requires the fair value of derivative financial instruments to be
included on balance sheet. Under UK GAAP they are not
recognised. IAS 39 requires interest rate swap derivatives to be
accounted for as cash flow hedges and movements in fair value
are recognised in equity provided the hedge is effective. The
Group’s share of the fair value of these interest rate swaps together
with other minor Group derivatives, at 1 July 2005 results in a
liability of £10.4m (excluding the Group’s share of the related
deferred tax). The application of IAS 39 at that date will reduce
the net assets of the Group by £7.3m (£10.4m less tax).
ii) Accounting for service concessions
In March 2005, the International Financial Reporting
Interpretations Committee (IFRIC) issued draft guidance on
accounting for service concession arrangements (drafts D12 to
D14). IFRIC is currently considering the comments received on
this draft guidance, with final guidance expected to be issued 
by the end of 2005.
Until the final guidance is issued and endorsed by the EU and 
in the absence of specific guidance within IFRS, the Group has
recognised the FRS 5 ‘Reporting the substance of transactions’
finance debtors relating to concession arrangements held by 
PFI jointly controlled entities at amortised cost. The effect of
adopting this policy is to maintain the accounting within PFI 
joint ventures in line with existing UK GAAP whilst ensuring that
the accounting treatment remains consistent with existing IFRS.
The draft guidance from IFRIC, if it were issued in final form,
would potentially require a number of changes to the accounting
treatment of service concession arrangements. One of the more
significant aspects would be the requirement to recognise the
assets associated with concession arrangements at fair value. This
requirement could potentially produce an increase in the Group’s
share of the net carrying value of the PFI jointly controlled entities
affected which would offset the effects of IAS 39 set out above.
Kier Group plc 
Annual Report and Accounts 2005
80
Selected notes to the IFRS statements
continued 4 Reconciliation of UK GAAP to IFRS
The effects of the differences between UK GAAP and IFRS, as set out in note 2, are shown below in the consolidated income statement
for the year to 30 June 2005, the consolidated statement of recognised income and expense for the year to 30 June 2005 and the
consolidated balance sheets at 30 June 2004 and 2005.
a) Consolidated income statement for the year ended 30 June 2005 – reconciliation UK GAAP to IFRS
Adjustments
UK GAAP (i) (ii) (iii) (iv) (v) (vi)
Balances in Retirement Sales & Deferred land Property Joint
IAS format benefits marketing payments transactions Other ventures IFRS
Notes £m £m £m £m £m £m £m £m
Continuing operations
Total revenue 1,621.4 1.8 1,623.2
Revenue – joint ventures (48.4) (1.8) (50.2)
Group revenue 1,573.0 – 1,573.0
Cost of sales (1,430.7) (1.7) 0.5 (1.9) (1,433.8)
Gross profit 142.3 (1.7) 0.5 – (1.9) 139.2
Administrative 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 ventures – 0.9 0.9
Profit from operations 53.4 0.1 (1.8) 0.5 0.5 0.6 (4.3) 49.0
Other income 6.7 6.7
Finance income/cost (net) – group 0.9 (2.1) (1.2)
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) 54.5
Taxation (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 – 36.6
Earnings per Ordinary Share 106.8p 103.4p
Adjusted earnings per Ordinary Share
(excluding other income and
goodwill amortisation) 105.4p 96.6p
b) Consolidated statement of recognised income and expense for the year ended 30 June 2005 – reconciliation UK GAAP to IFRS
IFRS Adjustments
UK GAAP (i) (ii) (iii) (iv) (v) (vi)
Balances in Retirement Sales & Deferred land Property Joint
IAS format benefits marketing payments transactions Other ventures IFRS
Notes £m £m £m £m £m £m £m £m
Foreign exchange translation differences 0.1 0.1
Actuarial gains and losses in pension scheme (41.5) (41.5)
Deferred tax on actuarial gains and losses in 
pension scheme – 12.5 12.5
Net income recognised directly in equity 0.1 (29.0) (28.9)
Profit for the year 37.8 0.1 (1.3) (1.1) 0.3 0.8 36.6
Dividends (7.9) 0.8 (7.1)
Retained earnings for the year 30.0 (28.9) (1.3) (1.1) 0.3 1.6 – 0.6
Retained earnings at 30 June 2004 96.6 (64.8) (2.6) – (0.3) 2.3 – 31.2
Retained earnings at 30 June 2005 126.6 (93.7) (3.9) (1.1) – 3.9 – 31.8
81
Kier Group plc 
Annual Report and Accounts 2005 c) Consolidated balance sheet at 30 June 2005 – reconciliation UK GAAP to IFRS
IFRS Adjustments
UK GAAP (i) (ii) (iii) (iv) (v)
Balances in Retirement Sales & Deferred land Property
IAS format benefits marketing payments transactions Other IFRS
Notes £m £m £m £m £m £m £m
Non current assets
Intangible assets 16.1 0.6 16.7
Property, plant and equipment 75.8 75.8
Investment in joint ventures 23.8 (0.2) 23.6
Deferred tax assets – 36.6 1.0 37.6
Trade and other receivables 14.6 14.6
Non current assets 130.3 36.6 (0.2) 1.6 168.3
Current assets
Inventories 334.2 (5.3) (3.2) 325.7
Trade and other receivables 245.3 (12.0) 233.3
Cash and cash equivalents 93.5 93.5
Current assets 673.0 (12.0) (5.3) (3.2) 652.5
Total assets 803.3 24.6 (5.5) (3.2) 1.6 820.8
Current liabilities
Bank 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)
Current liabilities (587.3) 0.6 5.4 (581.3)
Non current liabilities
Interest-bearing loans and borrowings (30.1) (30.1)
Trade and other payables (18.2) 1.0 (17.2)
Retirement benefit obligations – (121.9) (121.9)
Long-term provisions (17.5) (17.5)
Deferred tax liabilities (2.8) 3.6 1.6 0.5 (2.9) –
Non current liabilities (68.6) (118.3) 1.6 1.5 (2.9) (186.7)
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 52.8
Equity
Share capital 0.4 0.4
Share premium 17.9 0.3 18.2
Capital redemption reserve 2.7 2.7
Share scheme reserve (0.2) (0.1) (0.3)
Retained earnings 126.6 (93.7) (3.9) (1.1) 3.9 31.8
Total equity 147.4 (93.7) (3.9) (1.1) 4.1 52.8
Kier Group plc 
Annual Report and Accounts 2005
82
Selected notes to the IFRS statements
continued d) Opening consolidated balance sheet at 30 June 2004 – reconciliation UK GAAP to IFRS
IFRS Adjustments
UK GAAP (i) (ii) (iii) (iv) (v)
Balances in Retirement Sales & Deferred land Property
IAS format benefits marketing payments transactions Other IFRS
Notes £m £m £m £m £m £m £m
Non current assets
Intangible assets 18.6 18.6
Property, plant and equipment 68.9 68.9
Investment in joint ventures 32.2 (0.1) (0.3) 31.8
Deferred tax assets – 27.7 27.7
Trade and other receivables 6.2 6.2
Non current assets 125.9 27.7 (0.1) (0.3) 153.2
Current assets
Inventories 328.6 (3.6) (3.2) 321.8
Trade and other receivables 225.0 225.0
Cash and cash equivalents 41.4 41.4
Current assets 595.0 (3.6) (3.2) 588.2
Total assets 720.9 27.7 (3.7) (3.2) (0.3) 741.4
Current liabilities
Bank 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)
Current liabilities (530.7) 0.9 4.6 (525.2)
Non current liabilities
Interest-bearing loans and borrowings (30.1) (30.1)
Trade and other payables (28.4) 2.3 (26.1)
Retirement benefit obligations – (92.5) (92.5)
Long-term provisions (14.9) (14.9)
Deferred tax liabilities (0.4) 1.1 (2.1) (1.4)
Non current liabilities (73.8) (92.5) 1.1 2.3 (2.1) (165.0)
Total liabilities (604.5) (92.5) 1.1 3.2 2.5 (690.2)
Net assets 116.4 (64.8) (2.6) – (0.3) 2.5 51.2
Equity
Share capital 0.4 0.4
Share premium 17.1 0.1 17.2
Capital redemption reserve 2.7 2.7
Share scheme reserve (0.4) 0.1 (0.3)
Retained earnings 96.6 (64.8) (2.6) – (0.3) 2.3 31.2
Total equity 116.4 (64.8) (2.6) – (0.3) 2.5 51.2
83
Kier Group plc 
Annual Report and Accounts 2005 Construction Kier Regional Limited
Kier Build
Kier Eastern
Kier London
Kier Northern
Kier North West
Kier Partnership Homes Limited
Kier Scotland
Kier Southern
Kier Western
Marriott Construction
Moss Construction
Wallis
Kier Construction Limited
Kier Plant Limited
Support Services Kier Support Services Limited
IEI Building Services Engineers
Kier Building Maintenance
Kier Islington Limited
Kier Sheffield LLP
Kier Managed Services Limited
Homes Kier Residential Limited
Allison Homes Eastern Limited
Bellwinch Homes Limited
Kier Homes Limited
Kier Land Limited
Twigden Homes Limited
Property Kier Property Limited
Kier Developments Limited 
(50% owned)
Kier Ventures Limited
Infrastructure Investment Kier Project Investment Limited
Group Services Kier Limited
Kier Engineering Services
Notes:
i Each company is registered in England and Wales and
operates principally within the United Kingdom. Kier
Construction Limited also operates in the Far East, Middle
East, the Caribbean, the Americas and Romania.
ii The ordinary share capital of each company is wholly owned.
Kier Group plc holds directly all the shares of Kier Limited
and Kier Residential Limited. The shares of the other
companies are held by subsidiary undertakings.
iii A full list of the Group’s subsidiaries is included in the
Company’s Annual Return.
Kier Group plc 
Annual Report and Accounts 2005
84
Principal operating subsidiaries Joint arrangements
Building and/or civil engineering construction
The following joint arrangements, in which the Group
participation is between 33% and 50%, operate in England:
Kier/Nuttall a joint arrangement between Kier
Construction and Edmund Nuttall Limited
Nuttall/Wayss a joint arrangement between Edmund Nuttall
& Freytag/Kier Limited, Wayss & Freytag Ingenieurbau and
Kier Construction
Kier/Murphy/ a joint arrangement between Kier Construction,
Interserve J Murphy & Sons Limited and Interserve
Project Services Limited
The following joint arrangements, in which the Group
participation is between 40% and 50%, operate overseas,
in the territory indicated:
Hong Kong
Kier/Zen a joint arrangement between Kier
Construction and Zen Pacific Limited
Suriname
Kier/CCC a joint arrangement between Kier
Construction and Commercial Contracting
Company of San Antonio, Inc.
Jamaica
Kier/CCC a joint arrangement between Kier
Construction and Commercial Contracting
Company of San Antonio, Inc.
Romania
Mivan/Kier a joint arrangement between Mivan Limited
and Kier Construction
United States
Kier/CCC a joint arrangement between Kier
Construction and CCC Group, Inc.
Commercial Property Development
The Group has a 25% participation in a joint arrangement in
England between Kier Property and Norwich Union Life and
Pensions Limited.
Joint ventures
Interest held
Long-term concession holding under 
the Private Finance Initiative
Academy Services (Holdings) Limited 50%
Academy Services (Sheffield) Holdings Limited 50%
Academy Services (Waltham Forest) (Holdings) Limited 50%
ASK (Holdings) Limited 50%
Information Resources (Holdings) Limited 50%
Information Resources (Oldham) Holdings Limited 50%
Prospect Healthcare (Hairmyres) Group Limited 50%
Prospect Healthcare (Hinchingbrooke) Holdings Limited 50%
Prospect Healthcare (Reading) Holdings Limited 50%
International construction and contract mining
Incorporated and operating in the Hashemite Kingdom of Jordan
The Jordan Economic Development and 
Trading Company Limited 50%
Commercial property development
Kier Developments Limited 50%
Kier Warth Limited 50%
Notes:
i The terms ‘joint arrangement’ and ‘joint venture’ are defined
by FRS 9 ‘Associates and Joint Ventures’. Joint arrangements
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.
ii Except where otherwise stated the companies are
incorporated and operate in the United Kingdom.
85
Kier Group plc 
Annual Report and Accounts 2005
Principal joint arrangements, joint ventures 
and associated undertakings Kier Regional
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
J Dodds Chairman
R W Side MD
M P Sheffield Deputy MD
R H Bush
P P J Cullen
M J Desmond
I M Lawson
A D Mullins
R W Murphy
S A Tilley
Kier Build
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
R W Side Chairman
M Dobson MD
T P Davies
J H Fozzard
A J Greenhalgh
N R Sheppard
M R Whiteley
Kier Eastern
53 South Brink
Wisbech
Cambridgeshire
PE14 0RQ
S A Tilley Chairman
N W Meixner MD
NJBache
I P Greenly
G C Howe
R W Kidger
M M Rooke
Kier London
188 High Road
Loughton
Essex
IG10 1DH
M P Sheffield Chairman
P J Everard MD
J W Abbott
D R Avery
G C Garvie
M Pengelly
C J Riley
Kier Northern
Lyndon House
198 High Street
Boston Spa
West Y orkshire
LS23 6BT
S A Tilley Chairman
W G Kay MD
M A Ashton
S Flint
J M Gray
C McNeil
J O’Callaghan
Kier North West
Yardley Road
Knowsley Industrial Park
Liverpool
L33 7ST
S A Tilley Chairman
L Wilkinson MD
M A Ashton
I Entwistle
D Jenkins
P Vickers
Kier Partnership Homes
Beecham Business Park
Northgate
Aldridge
Walsall
West Midlands
WS9 8TZ
I M Lawson Chairman
D L Seal MD
D A Burgher
D B Hodson
Kier Scotland
Campsie House
Buchanan Business Park
Cumbernauld Road
Glasgow
G33 6HZ
P P J Cullen Chairman
J McMenamin MD
A Clark
M M Rooke
Kier Southern
Maple Lodge Close
Maple Cross
Rickmansworth
Hertfordshire
WD3 9SN
R W Murphy Chairman
P H Durigan MD
D M Brown
S A Byford
N E Elliott
S Mason
M W Orr
G D Willoughby
Kier Western
The Old Mill
Chapel Lane
Warmley
Bristol
BS15 4WW
P P J Cullen Chairman
P R Young MD
J L Alton
J S Edmonds
K Payne
J Prosper
D J Snell
Marriott Construction
Marriott House
Brindley Close
Rushden
Northamptonshire
NN10 6EN
R W Murphy Chairman
C F Murphy MD
P Hawes
J S Henke
A Purvey
M M Rooke
Moss Construction
96 Leckhampton Road
Cheltenham
Gloucestershire
GL53 0BP
P P J Cullen Chairman
R C Butler MD
B D Clarke
J S Edmonds
J C Mackman
S Pratt
G J Salmon
P J Turner
Wallis
47 Homesdale Road
Bromley
Kent
BR2 9TN
R H Bush Chairman
F Hill MD
D Evans
J R Gilbert
J L Hunter
P Kitchener
Kier Construction
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
M P Sheffield Chairman
P J Cave MD
D J Myers MD Caribbean &
Industrial
K D Cottam
T P Davies
D J Durey
R A Haller
D Rainford
A W Saul
T W Tagg
Kier Group plc 
Annual Report and Accounts 2005
86
Group principal businesses Kier Support Services
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
J Dodds Chairman
I M Lawson MD
J R Bradley
N J Chidgey
R P Manning
C S Porton
IEI Building Services
Engineers
Southern Cross
Basing View
Basingstoke
Hampshire
RG21 4HG
I M Lawson Chairman
R P Manning MD
R A Baker
R J Duxfield
D W Stiff
Kier Building Maintenance
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
I M Lawson Chairman
J R Bradley MD
P Brynes
J Nelson
D A Sheridan
T C Tatham
C Thomas
Kier Building Maintenance
Leeds
The Ground Floor
Navigation House
8 George Mann Road
Leeds 
LS10 1DJ
J R Bradley Chairman
D A Sheridan MD
C Thomas
Kier Building Maintenance
London
Unit 2a Pacific Wharf
Hertford Road
Barking
Essex
IG11 8BL
J R Bradley Chairman
J Nelson MD
P P J Quinn
T C Tatham
C Thomas
Kier Islington
33-37 Brewery Road
Islington
London
N7 7QH
J R Bradley Chairman
J Nelson MD
A Gibbons
R M Jackson
T C Tatham
C Thomas
Kier Sheffield
Manor Lane Depot
Manor Lane
Sheffield
S2 1TR
J R Bradley Chairman
D A Sheridan MD
C M Boath
S M Bullen
D Evans
M I Furze
A R Gamage
J Roney
C Thomas
L F Weaver
Kier Managed Services
Conway House
St Mellons Business Park
Fortran Road
St Mellons
Cardiff
CF3 0LT
I M Lawson Chairman
C S Porton MD
N J Chidgey
M Davies
M Hill
P C Owen
G S Waugh
Kier Plant
The Lane
Chawston
Bedfordshire
MK44 3BH
I M Lawson Chairman
I D Gordon MD
N J Chidgey
P J Glynn
D E Salter
N P Thorpe
Kier Residential
The Shrubbery
Church Street
St Neots
Cambridgeshire
PE19 2BY
J Dodds Chairman
M O’Farrell MD
A W Aitchison
T J Barke
K Dixon
L E Garner
D E Mattar
R P Page
Allison Homes Eastern
Holland Place
Wardentree Park
Pinchbeck
Spalding
Lincolnshire
PE11 3ZN
M O’Farrell Chairman
P Adams Acting MD
M J Chandler
L E Garner
M Jessop
M Smith
Bellwinch Homes
Malcolm House
Empire Way
Wembley
Middlesex
HA9 0LW
M O’Farrell Chairman
R P Page MD
M C Davies
L E Garner
D F Lomas
J McCormack
J M Nowak
S P White
S J Whitehead
Kier Homes
Merlin House
Mossland Road
Hillington Park
Glasgow
G52 4XZ
M O’Farrell Chairman
A W Aitchison MD
D Cope
L E Garner
S A McDonagh
M T McGleish
Kier Land
The Shrubbery
Church Street
St Neots
Cambridgeshire
PE19 2BY
M O’Farrell Chairman
K Dixon MD
A W Aitchison
T J Barke
L E Garner
I J Mitchell
R P Page
Twigden Homes
The Shrubbery
Church Street
St Neots
Cambridgeshire
PE19 2BY
M O’Farrell Chairman
T J Barke MD
L E Garner
M C Gregory
A E Page
D P Seth
A P Walkerdine
Kier Property
6 Cavendish Place
London
W1G 9NB
J Dodds Chairman
R W Simkin MD
R Duncombe
N A Turner
I P Woods
Kier Project Investment
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
D E Mattar Chairman
J A J Byrne MD
J Dodds
P R P George
J A N Tibbitts
P J Whiscombe
J A Young
Kier Engineering Services
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
J Dodds Chairman
R A Haller MD
87
Kier Group plc 
Annual Report and Accounts 2005 2005 2004 2003 2002 2001
Year ended 30 June £m £m £m £m £m
Turnover: Group and share of joint ventures 1,621.4 1,476.5 1,445.6 1,382.7 1,251.1
Group operating profit 48.6 39.4 33.1 24.8 19.9
Joint ventures – share of operating profit 4.8 3.2 3.1 1.4 1.4
Total net interest (2.2) (2.0) (0.6) 1.1 0.6
Other 6.7 – (2.3) 0.7 –
Profit before tax 57.9 40.6 33.3 28.0 21.9
Taxation (20.1) (12.0) (9.5) (7.7) (5.9)
Profit after tax 37.8 28.6 23.8 20.3 16.0
Dividends (7.9) (6.8) (5.6) (4.8) (4.1)
Retained profit for the year 29.9 21.8 18.2 15.5 11.9
Earnings per Ordinary Share
– undiluted 106.8p 81.5p 69.5p 60.4p 48.0p
Dividend per Ordinary Share 22.2p 19.0p 16.4p 14.2p 12.3p
At 30 June £m £m £m £m £m
Shareholders’ funds 147.4 116.4 92.7 73.8 57.8
Net assets per Ordinary Share 413.0p 327.7p 265.9p 214.2p 170.3p
Kier Group plc 
Annual Report and Accounts 2005
88
Financial record Directors
P T Warry MA CEng FIEE FIMechE Chairman
J Dodds Chief Executive
D E Mattar BSc FCA
R W Side FCIOB FFB MCMI
R W Simkin BSc MRTPI
P F Berry CMG MA
S W Leathes MA FCA
I M Lawson FCIOB (appointed 1 October 2005)
M P Sheffield BSc CEng MICE (appointed 1 October 2005)
M D Barton LLB Secretary
Headquarters and Registered Office
Kier Group plc
Tempsford Hall
Sandy
Bedfordshire
SG19 2BD
Tel 01767 640111
www.kier.co.uk
Registered Number
England 2708030
Auditors
KPMG Audit Plc
8 Salisbury Square
London
EC4Y 8BB
Bankers
Bank of Scotland
New Uberior House
11 Earl Grey Street
Edinburgh
EH3 9BN
Barclays Bank PLC
1 Churchill Place
London
E14 5HP
Royal Bank of Scotland PLC
135 Bishopsgate
London
EC2M 3UR
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Stockbrokers
Bridgewell Limited
128 Queen Victoria Street
London
EC4V 4BJ
Financial calendar
26 November 2005
Annual General Meeting
6 December 2005
Payment of final dividend for 2004/05
March 2006
Announcement of half-year results 
and interim dividend for 2005/06
May 2006
Payment of interim dividend
September 2006
Announcement of preliminary full-year 
results and final dividend for 2005/06
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Kier Group plc 
Annual Report and Accounts 2005
Corporate information Kier Group plc
Tempsford Hall
Sandy
Bedfordshire SG12 2BD
Telephone: 01767 640111
Fax: 01767 640002
www.kier.co.uk