KCQ's Annual Reports

Good afternoon people of accounting,

I have began to consider doing the KCQ's as part of the assessment requirements and am currently looking at Kier Group plc financial statements over the past 4 years (2010- 2013) and have come across several areas that I am finding difficult to understand:

1.       The 2013 Annual Reports Consolidated Statement of Comprehensive Income is extremely set out differently than the 2011 Annual Report. The 2011 Report shows cash flow hedge movements realised on sale of joint ventures, however the 2013 Report doesn’t show that. My difficulty in understanding this, is, does that mean there were no cash flow hedge movements realised on sale of joint ventures over 2013 and 2012?

2.       Under the Consolidated statement of comprehensive income for the year ended 30 June 2013, the profit for the year was significantly lower than the profit from the previous year (2012), is that a loss for the company, or does that mean the company didn’t meet its requirements as much as it did the previous year (2012). I don’t understand why there is such a significant drop.

3.       The Balance Sheet at 30 June 2012 states the number of borrowings over 2013 and 2012, however the Balance Sheet as at 30 June 2011 states the long-term borrowings over 2011 and 2010. I don’t understand why the recent Balance Sheet for 2012 would not state whether the borrowings are long-term or not.

Well, at this point in time, those are the areas of the report I don’t understand, but hopefully after doing some research, my concerns will become clear to me and I’ll be able to find answers.

Areas of its business that seem most important/critical 

I’ve been reading through my company Kier Group plc Annual Report for 2013 and they keep bringing up the name May Gurney, not too sure whether May Gurney is a name or a company, but throughout the report this “May Gurney” is mentioned as being a massive support for the company within the services division. As a result this “May Gurney” has doubled the size of their services offering therefore allowing the company to offer more services to more customers. The video below of Preliminary Results-September 2013 provides some insight on May Gurney.

Key Challenges Kier Group plc is facing 

• 5% reduction in Construction revenues, therefore revenue slightly decreased by 4%
• poor weather in the first quarter of the calendar year, causing delays and pushing revenues into the 2014 financial year
• units and land sales over the year resulted in a decrease that was offset by purchases of new housing land and further investment in work in progress
• challenging working capital environment 

Successful ways Kier Group plc can meet these challenges

• renewing existing contracts and securing new businesses
• maintain focus on the quality of work
• reduce cash locked up in land and work in progress for future investment in the group

Kier Group plc apparent strategies 

• to be both diverse and market-leading in the chosen businesses: Construction, Services and Property
• have strong stand-alone businesses, able both to excel in strong markets and to be resilient when markets are weak
• focus strategically on growth areas 
• secure work through tender processes 
• expanding their capabilities in a controlled and sustainable way

Similarities and differences between Kier Group plc and the firms of other people and in the way they present their financial statements?

Kier Group plc is a widely known large multinational company as opposed to other companies that students received which were quite small. When comparing financial statements, most of the companies revealed similar listings on their financial statements such as income statements, balance sheets and changes in equity, however most companies I compared Kier Group plc were only earning in the thousands, however mine was in the millions-billions. This showed that my company dealt with ALOT more customers, ALOT more assets and ALOT more liabilities that resulted in ALOT more profit. Another aspect of difference I found among Kier Group plc from other students companies, was that my company was divided into three divisions construction, services and property, which explains why the companies figures are in the millions and the company is so large. I also found that because Kier Group plc consisted of so much revenue and profit and was doing so well, they didn't have significant challenges compared to the smaller companies who seemed to be affected a lot more by thinngs like the capital environment etc.

Are you happy with the firm you have been given or would you have preferred to be given a different company?

I was pleased with the work ethics and orgnisation of Kier Group plc, which made me happy to research and investigate the company, revealing to me their strategies and how their company has performed well and delivered their profits in line with their expectations. I was happy to have had the opportunity to study and learn about Kier Group plc, as I have never before looked into construction, services and property. From this company I am interested to know more about the construction business in the near future.

What concerns do you have at this stage?

My company seems to be providing me with a lot of information especially within the Annual Reports, it is fairly easy to understand the financial statements as well. My excel spreadsheets are going great and all the figures seem to be matching up. At this stage I have no concerns as of yet.


What is Kier Group plc?

According to Kier Group plc Annual Report it is evident that the company is of a construction based nature. The business is split into three key operating divisions that consist of:

Kier Construction:

- encompasses the UK regional contracting, civil engineering and overseas businesses
- majority of the construction revenue for 2013 was as a result of UK Building

Kier Services:

-comprised of three businesses: housing maintenance, environmental and facilities management
- revenue for 2013 based on services mainly consisted of housing maintenance

Kier Property:

-consists of property development, structured project finance and private and affordable home businesses
-property revenue for 2013 was almost equally shared between property and PFI and Homes


Kier Group plc business model

Kier Group plc has leveraged their business model and has made the best use of their potential. Due to the fact that their group consists of wide-ranging capabilities the company has the opportunity to offer combined solutions and expertise from other business strands. Which a lot of other students companies could not offer. Kier Group plc business model is very well-balanced consisting of three core divisions supporting each other to create synergies. The company construction and services businesses result in cash and is then utilised by the property teams to deliver significantly enhance the current profits.

Kier Group plc strategy

The company strategy is made up of of four elements that combine our broad capabilities, providing some structure that paths the decision-making roles. These include:

1. staying focused
2. pushing boundaries 
3. optimising capabilities 
4. maximising profits