Keltbray Annual Report and Consolidated Financial statements 2021 by Keltbray

KELTBRAY HOLDINGS LIMITED

Annual report and consolidated financial statements

2021 For the year ended 31 October 2021

Redefining sustainable development

KELTBRAY AT A GLANCE Leading engineering and construction specialists, valued by our stakeholders and trusted by the nation to deliver

Keltbray turnover (£millions)

Keltbray Group is a single ultimate beneficial owner business which has developed into one of the UK’s leading specialist engineering and construction solutions providers. It operates through two divisions that reflect our principle routes to market for services across targeted built environment and infrastructure sectors.

390.0

The owner, Mr. Brendan Kerr, is an outstanding entrepreneur and the group has grown both organically and by acquisition over the last nineteen years since he became the sole shareholder. Keltbray’s history of corporate development is outlined below.

OUR HISTORY OF GROWTH 2021-Present 2016-2020 2011-2015 2006-2010 2000-2005 1976 1976

Keltbray is founded and opens for business

2003

Brendan Kerr becomes sole owner and CEO of Keltbray Group

2008

Keltbray acquires asbestos remediation company – Pectel

2009

Keltbray acquires track maintenance and renewal company – Gamble Rail

2009

Keltbray Piling established

2010

Keltbray acquires Aspire Rail Consultants

OUR SERVICES AND SECTORS

2012

2021

2016

Keltbray launches 2025 growth strategy and new business structure

Keltbray Structures launched

2021

Keltbray establishes Wentworth House Rail Systems

2018

Keltbray Distribution & Transmission established

Keltbray acquires Electricityworx Limited

2013

2018

Keltbray acquires nmcn highways infrastructure assets

Keltbray Remediation launched

Keltbray International Ltd. formed to target rail work in Canada and Australia

2020

Keltbray appoints Darren James as Group CEO

2020

Keltbray adopts Wates code and launches new organisation and governance structure

2021

Keltbray is a specialist engineering and construction solutions group The Keltbray Group is committed to achieving corporate governance standards and sustainable business practices that meet the highest levels of integrity and scrutiny for a privately-owned enterprise. This is why we are early adopters of ‘The Wates Corporate Governance Principles for Large, Private Companies’ to continuously benchmark our performance in pursuit of resilient long-term growth and success. THE SHAREHOLDER HAS A CLEAR BUSINESS OBJECTIVE

Building long-term shareholder value by responsibly improving people's lives THE GROUP IS DRIVEN BY A DISTINCTIVE CORPORATE PURPOSE

To redefine the way sustainable development is delivered THIS PURPOSE IS REALISED IN A WAY THAT RESPECTS AND UPHOLDS THE GROUP'S VALUES AND CODE OF CONDUCT

Health, safety and wellbeing We will never compromise

People

Relationships

Innovation

Can-do attitude

They are the heart of our business

They ultimately determine our success

It guarantees a sustainable future

We deliver on our promises

THE STRATEGY OF THE GROUP SEEKS TO DELIVER A SUSTAINABLE FUTURE FOR THE BUSINESS

‘Unleashing our potential’ – the Keltbray strategy for sustained growth Our strategic priorities: – Enhance our capabilities and strengthen the core of the business – Deepen relationships with existing customers through more integrated service solutions – Broaden the customer base in rail, energy and the built environment – Extend into attractive adjacent infrastructure sectors including highways, social infrastructure and aviation – Expand internationally in a risk controlled way, primarily within the rail sector

OUR STAKEHOLDERS – – – –

Our customers Our people Our host communities UK government, local authorities and regulators – Our shareholder – Our finance partners – Our supply chain partners

Keltbray is a specialist engineering and construction solutions group Our purpose is to redefine the way sustainable development is delivered. Based on our collective experience, we collaborate at the earliest stage to design and self-deliver innovative customer solutions across technically demanding built environment and infrastructure sectors. Working in partnership with our stakeholders, we are actively contributing to economic growth, social advancement and environmental protection.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Contents

OVERVIEW

Performance highlights Group overview Our services and sectors

4 6 8

STRATEGIC REPORT

Executive Chairman’s statement Chief Executive’s strategic review How we create value Our strategy Group operating review Sustainable development report – Sustainability framework – Environment review – Social Value review – Economic review Section 172 statement

12 16 20 22 24 38 44 46 52 60 65

GOVERNANCE REPORT

Governance report Governance principles Governance framework Board leadership – Main Board – Executive Board Governance review

70 72 74 80 80 84 86

FINANCE REPORT AND ACCOUNTS Chief Financial Officer’s review Group risk management framework Principal risks and uncertainties Auditor’s report and consolidated financial statements Streamlined energy and carbon reporting compliance statement

92 94 98 102 110 148

Overview 2

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Overview

Performance highlights FINANCIAL PERFORMANCE

ANNUAL TURNOVER

GROSS MARGIN PRE-EXCEPTIONAL ITEMS

£390.0m

13.6%

9% decrease on previous year, shielded by sector diversity in less-cyclical markets, with Infrastructure trading generally at pre-COVID levels

2021

£390.0m

2019

£563.0m

as at 31/3/2022

£530.0m

£5.7m

Strong growth in the Group’s order book with a robust sales opportunity pipeline of addressable work of £4.0bn providing good line of sight to future earnings

£11.7m positive delta on previous year with good underlying performances across our business units despite prevailing conditions

Current

£5.7m

£530.0m

2021

2020 £6m 2019

12.7%

ORDER BOOK

PROFIT BEFORE INTEREST, TAX AND EXCEPTIONAL ITEMS

2021

9.4%

£10.5m

£310.0m £224.0m

2020

£257.0m

2019

Costs associated with employee furlough, disposal of non-core activities and the projected settlement of a regulatory industry inquiry relating to historic activities of a previous management team

— OTHE R2 % — 2%

23%

Group revenue split — 1%

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

18%

8% 17% BU

Built environment Demolition and civil engineering Structures Piling Environmental services WHP

17%

14%

£8.7m

GROUP REVENUE SPLIT

EXCEPTIONAL ITEMS

E N T 61%

2019

13.6%

2020

£429.0m

2020

2021

Disciplined tendering approvals process and enhanced project controls reporting contributed to margin recovery

We are pleased to report that the Group has posted a solid performance, ending the year with good growth in operating profit, the order book and sales opportunity pipeline, while maintaining a lean overhead, providing the necessary resilience to continue to enhance the effectiveness of our operating model and position ourselves to meet the challenges of an industry that is undergoing unprecedented transformation.

Solid financial performance, delivering strong order book growth despite the continuing uncertainties posed by the global challenges to create a more sustainable modern society.

INFRASTRUCT UR E

Despite another year of trading challenges, Keltbray continued the implementation of its strategy for sustainable growth – ‘Unleashing our potential’, to diversify and strengthen the business. We are aligning our capabilities with attractive UK growth sectors, where we see increasing demand for our sustainably engineered solutions.

T IL

Infrastructure Rail and highways Energy and renewables

Other Property development

SUSTAINABILITY PERFORMANCE

Strong progress in line with UN Sustainable Development Goals, ScienceBased Targets initiative (SBTi), UK Government industrial strategy targets and our stakeholders’ environmental and social value ambitions

SAFETY AND WELLBEING

SOCIAL

ECONOMIC

22%

36,000

£92.0m

reduction in Lost Time Incidents Rates and Reportable Injuries (RIDDORs) – from nine to seven

ENVIRONMENT

100%

of fixed locations and new projects use energy from renewable sources

Training hours delivered

£288,000 to charitable and sponsorship causes through Keltbray Foundation

Apprenticeships supported

99.7%

74%

2,368

diversion of non-hazardous waste from landfill

of all non-timber key construction materials from recycled and certified sustainable sources

paid in annual salaries and related expenditure to PAYE employees

+30

industry and community bodies supported by Keltbray

£16.5m

innovation investment deemed applicable for HMRC R&D Tax Credits in last analysed year (FY2020)

Graduates supported

Young people engaged through community outreach programmes

£4.0bn

targeted short to medium term sales opportunity pipeline

The world is set to remain an increasingly unpredictable and challenging place for some time to come, and smart companies will have to build greater resilience and agility into their strategies to ensure they can anticipate and respond effectively to seize the opportunities as they present themselves – Keltbray is just such an enterprise. Darren James Chief Executive Officer Overview

Group overview A SUSTAINABLE BUSINESS MODEL

WHO WE ARE

We are focusing our integrated services on solving customers’ engineering challenges in a rapidly changing world.

Keltbray is a UK-leading specialist engineering and construction business, offering a range of self-delivered solutions for blue-chip public and private sector customers.

The resilience of the Keltbray model and the commitment of everyone in the business has shown the resourcefulness, agility and above all else, the dedication to the customers we serve and the communities in which we operate.

WHAT WE DO Operating in highly-regulated sectors, we are a key player in developing and maintaining Britain’s economic infrastructure and built environment, and in selective overseas markets. Our customers trust us to deliver certainty on their projects – to specification, safely, on programme, within budget and with care for the environment and the communities that host us. Our integrated delivery approach is underpinned by the significant investments we are making in the development of our people, our specialist delivery capabilities and our research and development agenda. It focuses our business on engineering innovation and delivery excellence to provide greater value for all our stakeholders.

WHY WE DO IT

SCAN TO WATCH OUR FILM Watch our corporate film to find out what we do and how we are redefining the way sustainable development is delivered

Our purpose is to redefine the way sustainable development is delivered. Our deep expertise means that we offer standalone and holistic services, to meet our clients’ complex and changing engineering demands to enhance, upgrade and decarbonise their capital assets.

HOW WE DO IT Keltbray’s distinctive delivery model is based around a set of complementary capabilities that together constitute the way we go to work to deliver certainty through the smart solutions we provide for our customers.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Our progressive approach seeks to break down the barriers to success inherent in traditional contracting models. Clients need to feel confident entrusting their investments with a delivery partner capable of turning vision into reality. They need to be certain the end result will meet their expectations – and will be completed to the agreed programme, budget and specifications. We believe that our unique delivery model has the potential to address these challenges – and the key to unlocking its benefits lies in deep and trusting client relationships that allow us to engage early on projects as a prerequisite to delivering greater value. It is only when clients and delivery partners – along with designers and others with vested interests – collaborate from the outset, as part of an integrated team, that opportunities for innovation in engineering can be fully exploited.

“Our sustainable business model provides progressive, long-term environmental, social and economic value to the stakeholders we serve”

STRATEGIC CUSTOMER RELATIONSHIP MANAGEMENT Inherent in the way we go to work is a different kind of client/delivery partner relationship management approach – one based on establishing and maintaining longterm strategic relationships where both parties’ interests are aligned to deliver mutual benefit.

INNOVATIVE ENGINEERING EXCELLENCE We work collaboratively with our clients, supply chain and industry partners to de-risk project delivery and engineer solutions with a high degree of outcome certainty. Our multi-disciplined network of professional engineers can design, contract and supervise sustainable, high performance engineering and construction services in the public and private sectors.

Innovative engineering excellence

Strategic customer relationship management

C R E AT E V A

Integrated self-delivery model

Delivery certainty Talented people

KEY ENABLE

Future-proofed digital technologies, processes and equipment

Financial resilience

INTEGRATED SELFDELIVERY MODEL By drawing on our specialist in-house delivery businesses and directly employed workforce, we have greater control over quality and productivity. It enables us to be more responsive, rectify issues and interface clashes quicker and achieve greater integration across the project phases. This brings an operational focus and intensity to project delivery that is very different to the traditional subcontracting model.

Overview

Our services and sectors STRONG OPPORTUNITY PIPELINE

Keltbray is positioned strongly in its chosen sectors to take advantage of the visible opportunities and deliver stakeholder value. MACRO-TRENDS

Built Environment In the short term, the buildings markets have been most impacted by COVID-19, although this has been less severe in Keltbray’s focus area of the first half of the client value chain. The completion of the UK’s trade agreement with the European Union creates greater certainty in the market and enables the government to focus on its broader agenda, including build back better, driving opportunities for Keltbray.

Infrastructure Outlook is positive and has been boosted by the government’s £640 billion National Infrastructure strategy, providing the highest levels of economic investment in our industry for decades. This has been further boosted by the Government's commitments to nuclear and renewable energy infrastructure investment to decarbonise the UK generation fleet and increase security of supply in an increasingly uncertain world.

Our chosen sectors show strong underlying drivers and continue to deliver significant opportunities to the Group Commercial building markets to remain resilient

Investment in high speed rail and network maintenance

Although the volumes of new-build development in the commercial office and mixed-use residential sectors are set to remain muted in the short term, the drive towards sustainable development and the increasing importance of refurbishment will continue to see demand tick upwards in Keltbray’s core built environment sectors. This pent-up demand will be released from a number of sources, including those who see the sector as a safe investment haven against the cyclicality of capital markets.

As the UK rail industry transitions from one Network Rail control period to the next (CP5 to CP6), the work focus is shifting, with maintenance and renewals receiving an extra £10 billion of funding over the latest five-year period. Further, the formation of the Project Speed taskforce, to pull forward and accelerate infrastructure investment, and the ramp up of Transport for Wales’ £700m Core Valley Lines programme will create a strong pipeline of construction work. As an agile operator offering a range of rail capabilities, Keltbray is well placed to deliver both maintenance and core upgrade work.

Environmental services sectors are poised for strong growth As ageing social, industrial and energy infrastructure is upgraded or replaced with more sustainable, low carbon alternatives like New Nuclear, this is driving demand for specialist decommissioning and waste management capabilities over the next five-year period, where Keltbray is already playing a pivotal role on schemes like The Ferrybridge Power Station decommissioning for SSE.

Strong underlying growth in National Highways Funding for the second Road Investment Strategy (RIS2) has been increased to deliver additional projects such as the Lower Thames Crossing. The total spend of £27 billion over the 2020-2025 period is a significant increase over the £15 billion spent in RIS1 between 2015 and 2020.

Buoyant local roads market The local highways maintenance market is forecast to see significant investment with the announcement of an additional £2.5 billion in funding, increasing local council budgets by 45% over the next five years. Further, over £700 million of outsourced contracts are up for renewal between 2021 and 2025. Keltbray is now well positioned to capitalise, win new work and achieve sustainable growth.

The confirmation of HS2 Phases 1 and 2A has reaffirmed the government’s commitment to rail, with this project set to transform connectivity in the UK. The authorisation of further phases and the proposed Northern Powerhouse Rail programme will continue this trend of generational investment in this sector for years to come. Keltbray is already playing a critical part in this transformation.

Strong energy pipeline The power transmission and distribution industry is expected to see a wave of new demand as the UK plans for a green industrial revolution. Investments in renewable energy to become a wind power ‘house’ and new nuclear generation capacity are key pillars of these plans. Trusted and safe specialist contractors like Keltbray are well placed to deliver these works and the associated infrastructure to enable the networks to support this greener power generation.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Industry-leading business services Smarter procurement The implementation of the UK Government’s Construction Playbook aims to make both public, and through association, private sectors, more responsible and sustainable buyers, emphasising the importance of creating value, both socially and in terms of work delivered. This new focus matches well with Keltbray’s core purpose to redefine the way sustainable development is delivered.

Growth of frameworks Construction procurement in the UK continues to evolve, presenting opportunities for progressive and collaborative contractors. This trend is set to continue and Keltbray is well positioned through its collaboration-based delivery model to help drive this transition.

Long-term strategic alliances Public bodies charged with operating and maintaining infrastructure assets are increasingly embracing longer-term alliances, which encourage industry collaboration to drive sustainable innovation, higher efficiency and customer service standards. Keltbray already has a strong track-record working with organisations like Network Rail and National Highways in this regard.

Transformational green infrastructure agenda The UK Government has prioritised the decarbonisation of many of the construction sectors in order to meet the target of net zero carbon emissions by 2050. This agenda sits at the heart of the Group’s core purpose, and Keltbray is well positioned to capitalise and transform the UK’s social and economic infrastructure for the future.

Keltbray operates an integrated engineering and construction business model. This is proving highly effective in diversifying our income streams across targeted sectors, locations and different phases of the value chain, helping to deliver a sustainable performance over the longer term.

Specialist engineering and environmental services – Demolition – Geotechnical engineering – Environment – Contaminated soil / ground water – Asbestos removal – Site remediation – Decommissioning

Construction services – Engineering design – Wentworth House Partnership – Civil engineering – Piling – Sub and super structures – Transport piling – Transport structures

Infrastructure services – Rail systems design – Wentworth House Rail Systems – Rail civil engineering – Rail overhead line electrification and distribution – Power transmission – Energy network distribution – Renewables – Highways civil engineering

Support services – Preconstruction and commercial management – BIM & digital engineering – Civil engineering plant, lifting and haulage equipment – Project delivery support services: – Recruitment – Operational safety training – Occupational health and wellbeing

Dynamic growth sectors

Through our UK business network, Keltbray has a strong and growing presence in built environment and infrastructure sectors. Our business activities are shaped by the product innovation and delivery certainty of the services we provide to meet clients’ sustainable development challenges.

Building • Residential / Commercial • Manufacturing • Industrial

Energy • Civil / Nuclear • Power Networks • Renewables

Rail • UK Network • Mass Transit • High Speed 2

Transport • Highways • Aviation • Marine

Government infrastructure • Defence • Health • Flood protection

Utilities • Infrastructure networks • Waste treatment

Overview

Strategic report 10

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Strategic report

Executive Chairman’s statement

Our financial performance, although pleasing given the prevailing economic conditions, masks the resilient operational performance we posted during the year.

BUILD BACK BETTER This has been another challenging year for the whole industry, once again dominated by COVID-19, with the associated restrictions disrupting the activities of many businesses across the entire economy. Of course, Keltbray has not been completely unaffected. I am, however, pleased to report that the collective resilience of our project delivery teams has ensured that Keltbray has met those challenges head on, making strong strategic and operational progress during the year in review.

We continued to mitigate the ongoing impacts of the pandemic on our business activities through continuous improvement in our COVID-safe smart working practices and the adoption of hybrid-working technologies. As a result, we have driven productivity improvements across all aspects of our operations and made material progress in the implementation of our strategy for sustainable growth, by securing and delivering our customers’ critical investment programmes of work. I am extremely proud of the significant efforts of my executive leadership team and all my colleagues across Keltbray as they continually demonstrated the agility and commitment necessary to deliver the essential services our customers require and that protect our business for the future. I am also grateful for our sustained focus on the health, safety and wellbeing of all stakeholders who interact with our operations – it is of paramount importance, particularly in the current climate, and defines us as an ethical and responsible employer and business partner. Reflecting on the good progress the Group has made over the last 12 months, Keltbray is today focusing on carefully targeted

existing and new growth sectors and customers, with improved corporate governance and risk management frameworks now in place and working effectively. We have also driven substantial progress in our new sustainability approach, working collaboratively with customers, employees and the supply chain to ensure that we have stretching but achievable environmental and social value targets and ambitions in this increasingly important arena for business. By continuing to decarbonise our activities and reduce waste in line with UK Government and customers’ commitments to achieve Net Zero by 2050 or earlier, we are making clear progress in fulfilling our long-term purpose to redefine the way sustainable development is delivered. Our chosen markets show strong underlying growth drivers and continue to deliver significant opportunities to the Group. In both the short and long term, the UK infrastructure market outlook is positive, boosted in the year by the government’s £640 billion National Infrastructure strategy announced in November 2020, providing the highest levels of investment seen in decades.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

In the short term, our traditional built environment markets have been more severely impacted by COVID-19, although Keltbray’s delivery focus in the areas of demolition, remediation, enabling and structural works within the first half of the construction value chain have been less affected, as stalled schemes have been quickly rebooted with shorter delivery lead times. The final ratification of the UK’s trade agreement with the European Union during the year

also creates greater certainty in the market and enables the government to focus on its broader agenda, driving opportunities for Keltbray in key economic infrastructure markets across the UK. With this in mind, we made a number of small but important strategic 'in-fill' acquisitions during the year to add experience, capability and work pipeline to bolster our ambitions in the energy, renewables, highways and civil infrastructure sectors in particular.

FY21 RESULTS I am pleased to report that the Group’s financial performance for FY21 is in line with the management expectations forecast throughout the review period. The Group posted a creditable performance, achieving operating profit before interest, tax and exceptional items of £5.7m, representing a solid £11.7m upswing on revenues of £390m, compared to FY20. We also continued with our cost containment measures to preserve cash in the business, which has resulted in another acceptable retained cash performance at the Group level despite the increase in bank borrowings at the year-end. There is still more to do in this area as we leverage the efficiencies of being an integrated self-delivery business. At 31 October 2021, the Group order book stood at £310.0m, up 38% on the previous year. This clearly demonstrates our ability to perform in spite of the market volatility and bodes well for the future where I firmly believe the best growth opportunities are still ahead of us.

Strategic report

GOOD GOVERNANCE I want to start by thanking my colleagues on the Main Board for their commitment and counsel over the course of a testing twelve months. This was the first full year of the new executive and non-executive team, and I have been pleased by the levels of engagement, challenge and most of all, support during this time, in ensuring we have steered the Keltbray ship through the worst storms of the past year, while making strong progress in our operational and strategic performance. I was pleased to welcome Neil Thompson to our Executive Board during the year, as Managing Director of our Rail Infrastructure business. Neil is a seasoned leader in the UK rail industry and will be instrumental to our growth plans with major clients like Network Rail and HS2. I believe we now have the right balance of expertise and experience at board level, and we are firmly focussing on the right priorities. In the year ahead we will be building further resilience into our board composition and effectiveness with the phased roll-out of our first Main Board competency assessment exercise, which recognises the balance of strengths across the Board members, identifying and recommending specific gaps and development areas. I firmly believe the quality of leadership within our Board levels is to FTSE-standard, and well in excess of what is considered suitable for a large, privately-owned Group. I am therefore happy to report corporate governance standards and associated control systems increasingly align with those required by the Wates Corporate Governance Principles for large private companies, and are present across all our business operations. We will continue to monitor and enhance our controls – overseen by the Main Board, and led by our CEO and the Executive Board – to ensure they uphold our purpose, values and Code of Conduct.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

INDUSTRY REGULATORY INQUIRY

STRONG STRATEGY PROGRESS

At the time of publication, an industry regulatory body was concluding its civil investigation into historic practices within the industry. It is critically important to the Main Board and to me, that all our stakeholders have a full understanding of how we have responded.

The executive leadership team has been driving strong progress against a comprehensive range of priorities within our five-year strategic plan, entitled “Unleashing our potential”, supported by my colleagues and I on the Main Board.

Firstly, Keltbray cooperated fully with the regulatory body and can confirm that the matters under investigation were of a small and isolated nature by a previous management team. As I write today, I am proud to report that we have taken very significant actions to draw a line under these historic practices and put in place the necessary governance framework and controls to eradicate this risk from the Group. I commend to you our Governance report (pages 68-91), which showcases the extensive work we have undertaken in this area with regards to new board structures, senior leadership appointments, tendering gateway committees, Code of Conduct training and Delegations of Authority compliance. As a result, Keltbray today is a very different business with a new executive leadership team and strategy in place, having undergone a comprehensive business restructure to strengthen our compliance and governance regimes. I can say with absolute certainty that such practices will never be allowed to occur in the future.

The Board confidently believes that with the execution of our plan, the future of the company is a secure and exciting one. Our executive team has a proven record of delivering business growth and transformation within large, complex organisations. And we are confident that the strategic clarity, simple and more integrated operating model, new sustainability strategy and revised governance framework will result in improved financial transparency and control, a stronger balance sheet and the capability to create and capture future opportunities. The UK Government has continued to place construction at the very heart of its economic recovery plans, with substantial investment commitments in infrastructure. These will also stimulate private sector growth over the medium to long term through the multiplier effect they have on jobs and spending. Keltbray is well positioned to capitalise on these levels of fiscal stimuli over the next decade, helping ignite the country’s economy to ‘build back better’.

As always, I want to close by extending my sincere thanks to all of my colleagues who share our purpose, values and strategic ambitions. It has been particularly rewarding to see the commitment of our people and our partners – investors, suppliers, communities, and of course, our customers – who share our resolve to create sustainable value through the exciting programmes of work we deliver on their behalf. Thank you.

Brendan Kerr Owner and Executive Chairman

In ending, although 2021 was another unsettling year, it was also one which demonstrated the immense resilience Keltbray has developed over four decades, in creating a business able to maintain its ‘can do’ focus and financial discipline, in a period of challenge, arguably unprecedented in our lifetimes.

Strategic report

Chief Executive’s strategic review

I believe Keltbray has a differentiated value proposition that few others can replicate, with strong barriers to entry.

WELL POSITIONED FOR THE FUTURE

CORPORATE DEVELOPMENT

In recent years, we have all faced the uncertainties caused by political and economic volatility, accelerated technology disruption and greater actions to address climate change, among the many other global trends that affect our daily lives. The pandemic has accelerated many of these shifts, dictating the increase in pace with which we need to act to remain highly relevant to society.

One of the keys to our agility and resilience is the robust governance and risk management framework we have embedded during the year, which has been instrumental in staying ahead of the impacts of the pandemic through early preparations to maintain our project delivery operations.

Two years into my role, I am pleased with the strategic progress the Group is making to transition itself into the UK’s leading specialist engineering and construction services provider, redefining the way sustainable development is delivered, particularly given the extraordinary circumstances we have all had to endure.

This resilience also stems directly from our fully integrated operations – from offering preconstruction advice right through to asset decommissioning – enabling us to deliver our superior value proposition with absolute certainty.

It has also positively influenced our risk appetite for building our future work pipeline, with much greater leadership focus given to securing work within priority sectors that meet our strict risk and earnings criteria. This renewed market and customer focus is reaping clear dividends with an increased order book, and much stronger diversification in project types and revenue cycles.

A large majority of the contracts we fulfil are in highly controlled and regulated market sectors, requiring levels of technical accreditation not normally demanded of general contractors. It is this level of professional engineering competence, coupled with the self-delivery processes and plant, which truly sets Keltbray apart in the market place. Overlay this with our capabilities in sustainable innovation and social value enhancement, and I believe Keltbray has a differentiated value proposition that few others can replicate, with strong barriers to entry. Moreover, it is for these reasons that customers, both Tier 1 contractors requiring the certainty of our Tier 2 self-delivery capabilities, and investment clients in the public and private sector who want to engage with us directly, are increasingly recognising the benefits of our multi-disciplinary approach. It puts us in a unique position in the industry as what I like to refer to as a “Tier 1½ contractor”, able to move seamlessly between sectors and contract types, while staying true to our clients’ investment objectives.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

This strategic imperative has particular value in sectors like large urban development, rail, energy, highways and nuclear, where complex design and build contracts and framework arrangements can realise greater benefits from contracting with delivery partners who span more of the client value chain. We are also investing continuously in process efficiency and stateof-the-art equipment and technologies, with a relentless focus on sustainable innovation (see pages 62-63) to ensure we elevate customer experience to 'best in industry' status.

These are all strong signs that our strategy is working.

Similarly, the non-organic corporate development moves Keltbray have made over the last year has given it the additional structural and financial strength to capture the opportunities that we see going forward, while ensuring its resilience in the face of economic uncertainties and a highly competitive operating environment. One such move was the addition of the infrastructure assets from nmcn Plc, following its move into administration, to create Keltbray’s new Highways business and confirm our position on a number of valuable national and regional frameworks. The acquisition also protected valuable jobs and skills, while also safeguarding the delivery of critical road and related-infrastructure framework contracts for important public sector clients. This business has undergone a seamless integration into the Group’s portfolio bringing additional capability and pipeline opportunity into the Group. I want to thank the project team for completing this exciting transaction so effectively at pace, while formally welcoming 115 new colleagues into Keltbray.

Underpinning all of this activity is, of course, the quality and professionalism of our directly employed delivery and support teams. Our strategy to build technical capabilities, while offering rewarding careers within an inclusive environment is a major part of our strategy to create the engineering workforce for the future, by positioning Keltbray as one of the most vibrant, dynamic and professionally advanced employers in the industry.

PERFORMANCE During the financial full year 2021, Keltbray delivered a solid financial performance, posting strong order book growth, and positive operating profit before interest, tax and exceptional items. This was achieved against a predicted reduction in revenue due in main to the ongoing social and economic impacts of the global pandemic. The Group reported turnover of £390.0m, reflecting planned completions on major contracts and the proactive leadership discipline in the management of 'live' contract profitability to avoid taking on liabilities outside our risk appetite. Cost control and productivity improvements are a continuous focus for the Group, and measures such as supply chain streamlining and project delivery reviews all contributed to a mitigation in margin pressure.

More pleasing in the context of the challenging economic environment has been our work to develop a sales order pipeline that meets our client, sector and financial criteria. As a result, the Group’s order book has increased from £224.0m in FY20 to £310.0m in FY21, a 38% year-on-year increase representing strong progress towards our target of secured work that is double the value of our annual revenues, with longer delivery horizons producing growth certainty of future earnings. This trend is expected to accelerate with secured work at the time of publication standing at £530.0m. The positive impact of the UK Government’s commitment to infrastructure investment totalling over £640 billion over the next 10-year period, and the wider economic stimulus this will trigger, gives us the confidence that our work-winning approach will deliver the forward order book volumes we are seeking, with identified medium-term opportunities with a higher probability of success now standing at £4.0bn. The overall quality of our order book and underlying order book margins have also increased in the year, as a result of the special ‘unwinding’ measures we have taken on several legacy contracts, and a company-wide approach to selective bidding based on the application of the key elements of our delivery model, that avoids low-margin work in a pricecompetitive market.

I am therefore pleased to report that all these efforts have resulted in a return to Operating Profit Before Interest, Tax and Exceptional Items of £5.7m, representing an impressive £11.7m positive swing on the previous year.

Group sales order pipeline £3,947m of identiﬁed medium-term opportunities (as at 31/03/2022) £0.0

£1.0bn

Group Built Environment Decommissioning Environmental Solutions Rail

Energy Highways

£2.0bn

£3.0bn

£4.0bn

£3,947m £937m (23.7%) £287m (7.3%) £215m (5.5%) £1,634m (41.4%) £249m (6.3%) £625m (15.8%)

Strategic report

Chief Executive’s strategic review cont.

SAFETY AND WELLBEING Our safety and wellbeing teams and experienced project leaders are to be commended for their agility in adapting to constantly evolving working policies and methodologies during the year, while also deploying mental health and wellbeing support where it was most needed. Our Annual Frequency Rate (AFR) safety performance metric is more than a binary measurement – is a strong indicator of our overall operational performance and our status as a responsible employer, and is therefore central to our business improvement. This past year, the Group improved both its Lost Time Incident Frequency Rates and its Reportable Injuries Rates. However, as I covered in my statement from last year, it was with great sadness that we had to report very early in FY21 that a colleague lost their life in a workplace incident. We have learnt the lessons from this fatal incident, which has served to strengthen our resolve to send our people, and all those impacted by our activities, home safely at the end of every day. Underscoring this caring culture, we commenced the roll-out of our new safety and wellbeing programme – Promote Health, Prevent Harm or PH², as it is commonly referenced, which is a more progressive commitment to protecting people and supporting their ongoing development to achieve sustainable high performance.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

SUSTAINABLE DEVELOPMENT

OUTLOOK AND SUMMARY

By hardwiring our purpose and strategy to the United Nations Sustainable Development Goals, and pursuing a prudent approach to capital allocation to create environmental and social as well as financial value, we are also starting to make significant progress in all aspects of our approach to sustainability.

More recent developments in Eastern Europe have only served to remind us that the world is set to remain an increasingly unpredictable and challenging place for some time to come, and smart companies will have to build greater resilience and agility into their strategy to ensure they can anticipate and respond effectively to seize the opportunities as they present themselves – Keltbray is just such an engineering company.

Our differentiation strategy has been designed with this in mind, and is positioning us well to capitalise on the opportunities of the coming decade. We will strive to be a leader in this transition to a greener economy, by aiming to create growth and value for our stakeholders based on a ‘circular economy’ delivery ethos, recycling and reusing the energy and materials we consume. This is the challenge ahead of us – encapsulated in our core purpose. For me, this represents an exciting new horizon for our industry to play an important leadership role in protecting the planet. We work collaboratively with our clients, supply chain and industry partners to de-risk project delivery and engineer innovative solutions with a high degree of outcome certainty. In this regard, we continued to invest in commercially viable research and development to meet the sustainability challenges within our industry, committing £16.5m of tax relief-qualifying, innovationspecific expenditure to the application of low-carbon concrete products like our revolutionary HIPER® Pile. As a large and increasingly diverse engineering specialist, with a strong UK-wide brand and delivery footprint, we are well positioned for this industry leadership role. I will be the first to say that we have a long journey ahead of us. Nevertheless, we are clear as a business that this is the right journey we must undertake, and have begun with pushing our own targets and ambitions forward to reflect this challenge.

The UK economy continues to recover from the global pandemic, with construction at the very heart of the UK Government’s recovery plans through recently announced planning reform measures and forward-looking investment programmes, such as the UK Infrastructure Investment Plan. The engineering and construction industry is also entering a phase, which will see greater focus on advancements in sustainable development driven by robust client demand and global geopolitical factors. Taken together we believe these market drivers provide the potential to boost our growth trajectory by identifying and exploiting a gap in the market for specialist engineering and self-delivery services, and Keltbray’s strategy for sustained growth – Unleashing our potential – is completely aligned with this objective, and has three clear objectives: – Build business resilience – Deliver profitable growth – Unite as 'one Keltbray' – more agile, connected and customer responsive

It has a clear strategic roadmap and the delivery capabilities to navigate its way through the current challenges, while transforming its approach and securing significant new work that meet the stringent financial and sustainability goals of our customers and our stakeholders. We are further evolving our customer relationship management approach to align our activities with their changing needs, supporting a step change in our project delivery performance and a greater focus on higher margin activities that can drive investments in technology and talent development, opening us up to exciting new opportunities. Before I end, I would like to thank our shareholder for his continued trust, confidence and support in Keltbray’s growth and development. I want to close by extending my sincere thanks to all my colleagues who share our purpose and strategic ambitions. It has been particularly rewarding to see the resilience and momentum of our people and our partners – investors, suppliers, communities, and of course, our customers – who share our resolve to redefine the way sustainable development is delivered. Thank you.

Darren James Chief Executive Officer

Strategic report

How we create value What differentiates Keltbray? The unique combination of highly experienced teams; innovative self-delivery capabilities; financial resilience; strong, enduring partnerships and our 'can do' reputation across all elements of our business are what we believe sets us apart from our industry peers. VERTICALLY INTEGRATED DELIVERY MODEL The coordination of our commercial, procurement, engineering and project delivery processes enable us to capture and maintain margin through all stages of the consumer value chain. Our recycling capabilities help lower material costs, improve product stability and contribute to a sustainable circular economy.

SCALE AND EXPERIENCE We are the UK’s largest specialist engineering and construction services provider, operating wellinvested, state-of-the-art plant and equipment. Our extensive UK network is a strong driver of sales growth and market share. We also operate in highly regulated sectors where strong barriers to entry exist.

SUSTAINABLE INNOVATION We are committed to a purpose and strategy of continually developing new and existing products and services to drive sustainable development. We support the use of digital engineering technologies that drive greater collaboration, resource efficiency and operational productivity, making it easier to do business with Keltbray.

OUR BRAND STRENGTH We have a strong brand image and reputation which has been developed and nurtured over 40 years by keeping our promises to our stakeholders. Our marketing and business development activities seek to maximise our brand awareness and build brand loyalty with new and prospective customers.

UK FOOTPRINT Our operational divisions are strategically located to optimise our reach into target sectors. They facilitate access to readily available labour, plant and inventory, thereby providing excellent service to both local and national customers.

OUR CORPORATE GOVERNANCE We are committed to doing the right thing for our stakeholders. Achieving corporate governance standards and sustainable business practices that meet the highest levels of integrity and scrutiny for a privately owned enterprise. This is why we are early adopters of The Wates Corporate Governance Principles for Large, Private Companies. We believe this is the best way of ensuring resilient long-term growth and the success of the Group.

PEOPLE AND CULTURE Our highly experienced and skilled leadership team have a proven track record of achieving profitable growth. Our corporate culture and values promote openness, trust and a ‘can do’ ethos. This clarity of purpose, coupled with our investments in training and development ensure all of our people have the necessary skills to solve our customers’ challenges. 20

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

WHAT WE DO

We demolish and recycle

LE YC

RE D

CE U

RE C

We remediate and enable

We design and manufacture

Our circular ecosystem R

We engineer and construct

We deconstruct and decommission

We renew, upgrade and maintain

Strategic report

Our strategy

Through the delivery certainty of our operational assets, our balance sheet resilience, and our highly skilled and experienced teams, we are targeting attractive growth sectors, while at all times remaining true to our corporate values and maintaining a resolute commitment to the highest standards of safe and sustainable delivery for blue-chip customers who share our belief in doing the right thing.

"By uniting core purpose and profit to grow responsibly, we aim to lead the way in engineering and constructing a greener, more socially sustainable future for the UK."

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

OUR PURPOSE

UNLEASHING OUR POTENTIAL A strategy for sustained growth

To redefine the way sustainable development is delivered

People

Relationships

Innovation

OUR VALUES

Health, safety & wellbeing

‘Can-do’ attitude

Deliver engineering excellence in all that we do to lead our industry in terms of safety, innovative thinking and sustainable delivery methods Develop an agile, customer-centric business that is collaborative and easy to do business with; quickly and effectively responding to our customers changing needs

RE D

LE YC

CE U

RE C

Grow the scale and proﬁtability of our business to achieve a net margin of +5%, securing orders with our customers on their largest and most complex programmes

UK Government investment commitments in economic and social infrastructure post- Election, COVID and Brexit: “Build Back Better” investment programme

Broaden the customer base in rail, energy, and buildings sectors

Extend into attractive adjacent infrastructure sectors including, highways, social infrastructure and defence

Expand internationally, incrementally and in a riskmanaged way, primarily within the rail sector

Strategic report

OUR ACTION AGENDA

Deepen relationships with existing customers through more integrated service solutions

Enhance our capabilities and strengthen the core of the business

MARKET DRIVERS

Greater customer demand for integrated services, deploying innovative engineering solutions and self-delivery certainty to achieve sustainable development goals in the delivery and operation of their capital assets

OUR STRATEGY

Develop a high-performance culture where our people thrive and are proud of their work and their contribution to our business and the community

Increase business resilience by broadening the range of sectors and customers that we serve and ensure we systematically assess our business and project risk before pursuing opportunities

Group operating review Keltbray’s strategy to focus on attractive, stable market sectors, where our engineering expertise and integrated delivery capabilities create greater certainty for customers, has underpinned our solid performance over the last 12 months. Our ‘can do’ approach, exemplified by the dedication and hard work of our highly-skilled project-based delivery teams throughout the pandemic, coupled with investments in our delivery platform, augmented by strategic acquisitions and operational discipline have positioned the Group well to benefit from increased economic and social building and infrastructure investments over the next five-year period.

integrated into the Keltbray Group, demonstrating Keltbray’s ability to identify and assimilate non-organic business opportunities that are value-creating at the earliest stages of acquisition.

Major corporate development activity during the year included the ‘on-strategy’ acquisition of the highways and related infrastructure assets from the administrators handling the sale of the nmcn business assets following its entry into administration. The acquisition was earnings accretive, adding valuable capability and framework contracts into our infrastructure division. The sale process was completed rapidly, and the business was swiftly

The Group purpose...

In May, following a strategic review of our energy markets, the Group took the decision to divest its controlling interest in Lagan Power, the Northern Irish high voltage electrical engineering business, selling its majority stake back to the founding partners.

‘To redefine the way sustainable development is delivered’ was showcased during the year through advancements in how we are applying real-world innovations to meet today’s engineering challenges. Our investments

in carbon neutral concrete technologies took significant steps forward as we committed to its use in material volumes on our temporary works packages. We also made strong progress in the development of the HIPER® Pile, with its first commercial application on our Euston Station project for HS2. This is a potential ‘game changer’ for the industry as it has the potential to transform structural piling into a valuable capital asset that has applications in the industrial, energy and waste sectors, while reducing the amount of materials required to produce them, allowing customers to benefit from a significant reduction in embedded carbon. We continued to maintain our focus on driving greater performance and control into all our delivery activities during the year. Recognising the ongoing pressure on gross margins in a ‘lowest cost’ dominated building market environment, we took

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

decisive steps to retain cash in the business, while ensuring customer focus remained at the heart of everything we do. The Group continued its sector diversification approach to provide greater protection from market cyclicality, introducing greater selectivity into our opportunity pipeline through the mandating of our capital allocation forum, The Executive Investment Panel, to ensure we seek to only pursue work that is ‘on strategy’ and therefore meets our strict financial criteria. During the year, we delivered a strong performance in identifying and securing a stable pipeline of work within our core and target adjacent sectors. The Group invested considerable senior time in developing its data analytics and management information systems to create a fact-driven approach to opportunity tracking and tendering. This has included a new Customer Relationship Management platform to identify, track and report on

work to be obtained from the sales opportunity pipeline (SOP). This work was augmented by a review and refresh of the Group’s Delegations of Authority matrix to bring greater oversight and decision-making control to our tendering and proposals activities. The Group kept its cost-to-serve activities under continuous review to ensure we were sizing our overhead in line with newlyintroduced COVID-safe and hybrid working practices, productivity initiatives and the good quality opportunities we have identified, thereby optimising the use of our resources, and allocating capital where it generated the greatest returns for the Group. We introduced site-based smart operating procedures, and streamlined operational support activities across our business units, while continuing to scale up our systems integration efforts to achieve better internal economies of scale in areas like financial, human resources, information

technology and supply chain management. Implementation of the Group’s people strategy continued our long-standing commitment to invest in our employees’ skills and capabilities through training and development – once again delivering over 36,000 hours of training during the financial year – as well as the technologies and equipment they rely on to be effective in their roles. We are broadening their access to online learning tools and development programmes through our innovative training platform – Flex. This digital training tool provides our people with the specific training they need to extend their skill sets and increase their productivity, directly at their place of work – this helps cement our reputation as a ‘can do’ organisation. In the year, one in 12 of our directly employed people were on internship, apprenticeship or graduate development programmes with us. Strategic report

Safety, health and wellbeing are at the very heart of our operations and we were pleased to see a continuing decline of 22% in reportable injury and incident rates across both Built Environment and Infrastructure divisions. An increasingly important focus is now being placed on safety, wellbeing and inclusion across our entire industry. Keltbray has responded swiftly to these changes in people and social value management, launching the Group’s Inclusion Council during the year, chaired by the Group Chief Executive, and tasked in the initial stages with building employee understanding and engagement with the concepts of diversity and inclusion, that will become so important to our future as a sustainable employer. We also commenced the rollout of our innovative ‘Promote Health, Prevent Harm’ or ‘PH²’ safety and wellbeing strategy across the business, recognising the important cognitive link between these two subjects, and empowering our people at all levels to take accountability, underpinned by industryleading support and advice. This programme has swiftly gained real momentum and we are confident it will deliver the step change in our project delivery activities, as part of our overall purpose to redefine the way sustainable development is delivered.

Engineering and construction activities are, by their very nature, inherently dangerous and expose our project-based employees in particular to higher levels of physical and cognitive risk. Our Strategic Safety, Health, Environment Leadership Team (Strategic SHELT) governance process became fully embedded across all our business operations during the year, creating a direct link to the Executive Board. Through the support of the parallel-created Tactical SHELT subgroup, projects are operationally managed to ensure decision-making is escalated to the appropriate level and is accompanied by rapid mitigation action. This operating framework has been and remains fundamental in steering the projects successfully through the pandemic and beyond, swiftly implementing COVID-secure working practices that meet or exceed the standards set by UK Government through the Construction Leadership Council. Keltbray once again received strong industry recognition for the safe and sustainable delivery of its high-quality engineering services during the year.

By paying particular attention to our employees’ health and wellbeing during the year, we were able to quickly amend and mandate our smart-working practices supported by mental wellbeing resources to ensure our people remained healthy and motivated during the toughest of times. By way of example of our serious commitment in this arena, one in eight of our directlyemployed rail employees is a professionally-accredited mental health first aider. 26

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Amongst the many external awards, standout recognition included:

ACAD 2021 Certificate of Excellence (Keltbray Environmental Services)

BRITISH SAFETY COUNCIL – 2021 International Safety Award (Merit)

CONSTRUCTION FEDERATION 2021 Considerate Constructors Scheme – – – –

Certificate of Excellence: Canada Water Plot C1 PFS Performance Beyond Compliance: Winnington Road Project Certificate of Excellence: Purfleet Regeneration Phase 1A Certificate of Excellence: Ferrybridge C Power Station

GREEN ORGANISATION 2021 Silver Green Apple Awards – Keltbray Group – Canada Water project – UCL Institute of Neurology project

2021 Green Apple Awards – Keltbray Fuel Saving Tournament – Keltbray Group – National Green Champion

ROYAL SOCIETY FOR THE PREVENTION OF ACCIDENTS (RoSPA) – President’s Award (10 consecutive golds awards) – Keltbray Ltd – Fleet Safety Gold Medal Award (5 consecutive gold awards) – President’s Award (10 consecutive golds awards) – Keltbray Environmental – Gold Wards – Keltbray’s Structures Business – President’s Award (10 consecutive golds awards) – Keltbray Remediation – Gold Medal (7 consecutive gold awards) – Keltbray Environmental Services Strategic report

Operating review cont.

Built Environment The Built Environment (BE) division provides market-leading design, demolition, ground remediation, environmental services, piling and structures, developing and delivering an integrated suite of innovative and sustainable engineering solutions for customers. The business differentiates its offering through the provision of a highly specialised self-delivery business model, adopting an innovative approach that delivers certainty for customers on some of the most complex and challenging engineering projects across the UK. Through establishing long-term, value-based relationships from the earliest possible opportunity, we are better able to deploy the benefits of our approach and internal supply chain, delivering increased certainty for customers. The business division won a number of prestigious projects in key sectors, many with existing customers, illustrating the strength of focus on forming long-term, mutually beneficial partnerships across building markets, alongside infrastructure clients seeking bestin-class construction services. Notable amongst many significant wins during the year was the award of the prestigious contract by the Museum of London to deliver demolition and enabling works on the iconic new museum within the listed site of the old Smithfield meat and poultry market in the City of London. We also continued to secure valuable repeat business with longstanding customers on complex development schemes, including enabling works for the major mixed-use development scheme in Canada Water for Mace and British Land, which includes bulk excavation and site remediation on their Masterplan partnership with Southwark Council, to create an outstanding new town centre for the local area. The Group was also awarded a number of packages as part of the ongoing modernisation of the University College London 28

campus, including the worldleading Institute of Neurology, demonstrating the value our clients are increasingly placing on an integrated ‘one stop’ delivery capability. This approach was also instrumental in Keltbray securing the deconstruction, enabling, basement and concrete frame packages for Great Portland Estate’s '2 Aldermanbury Square' scheme, removing the existing City Place House structure and redeveloping the site to ground level in preparation for the construction of a 13-storey 43,000m² office building. Other notable Built Environment contract awards included the project to redevelop the former Bermondsey Biscuit Factory for Grosvenor Great Britain and Ireland. Keltbray’s piling business also secured the complex pile engineering package for the Silvertown Tunnel with client Riverlinx. Likewise, Keltbray’s structures business was awarded the sub and superstructure frame package on a number of prestigious urban regeneration schemes, including 100 Fetter Lane, a vibrant new sustainable workspace in the heart of London. The strategic drive to secure engineering and construction work with key infrastructure clients as part of the Group’s diversification also progressed well during the year, with the securing of 14 offsite precast bridge structures on the Chiverton to Carland Cross scheme as part of Costain’s work to widen the A30 main artery road into and out of Cornwall on behalf of National Highways. This was followed later in the year with the award of the construction contract to deliver the C1 ventilation shafts and head houses for the High Speed 2 running tunnels under the

complex Chilterns section of the route for the ALIGN Joint Venture. During the financial year our project delivery teams maintained their focus on driving up productivity levels, and hitting key project milestones for clients. Operational highlights during the year included the ongoing delivery of major civils and structural packages at the 50-storey tower in the heart of the City of London’s Square Mile, at 6-8 Bishopsgate for strategic client, Stanhope, on which a new concrete structures package is now nearing completion. Once complete, this site will provide an office-led, mixed-use building with flexible retail space at ground and mezzanine floor levels, and a public viewing gallery at Level 50. Work progressed on The UK Government’s High Speed 2 enabling works programme at Euston Station, as preparations continued for the construction of the new station’s concrete sub and super structures. High Speed 2 represents an ongoing opportunity for the Group to work across both the enabling and core construction phases of the project, and we are currently prioritising a number of opportunities that we believe will benefit from the certainty of our integrated ‘one Keltbray’ delivery model. BE’s piling services continued development of its sustainable piling delivery approach using carbon efficient concrete solutions – ultra-low carbon alternatives to traditional cement concrete which have a number of performance advantages when used for key structural elements. A notable achievement was the saving of 240 tonnes of carbon emissions by installing permanent works piles using Earth

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Friendly Concrete® at Canada Water. Keltbray also became the first major engineering and construction company to use Earth Friendly Concrete (EFC) in all of its temporary works solutions. Most significantly, given the ongoing social and economic turmoil of the past 12 months, BE demonstrated Keltbray’s ‘can-do’ attitude by continuing to support its clients and the wider UK economy in delivering projects adopting industryrecognised COVID-safe smart working practices. This was a strong showcase of Keltbray’s and our clients’ ability to respond quickly with innovative solutions to deliver essential GDP-generating services, to support the national effort to combat the effects of the pandemic by building back better. In fact, during the year, the UK Government recognised the importance of the construction industry to the economic recovery with the announcement of its national infrastructure investment plan. Thankfully, the business has not experienced a significant impact following the UK’s exit from the European Union, although with continuing price escalation and challenges with availability, particularly in the steel market, the BE leadership team continues to closely monitor the situation and activate mitigation measures during contract and supply chain negotiations where necessary, including a number of advance purchase agreements. Our integrated self-delivery model also serves to shield us from some of the impacts, particularly in the provision of plant and labour.

Strategic report

Operating review cont.

ENVIRONMENTAL SERVICES BE’s decommissioning business continued work as principal designer and delivery partner on a range of complex projects in the highly regulated industrial sectors, including the complex deconstruction of Ferrybridge Power Station for key client, SSE. With a 200-strong team of specialist demolition and decommissioning engineers and operatives, and working in close cooperation with other Keltbray business units, including Environmental Solutions, Remediation and Lifting Services – an extensive works scope was safely delivered during the year, including a second major controlled blowdown event of the turbine hall and associated infrastructure. Our turnkey approach is ideally suited to the forward programme of fossil fuel plant decommissioning in the UK and Europe over the next 5-10 years. The UK’s nuclear decommissioning programme is also an area of particular focus, with major works scheduled to continue for the 30

foreseeable future on the Atomic Weapons Establishment, Sellafield and Magnox sites. Keltbray's decommissioning business has extensive experience in this field and is currently bidding for inclusion on a number of frameworks. BE’s remediation business continued to develop its innovative geotechnical approach, which was instrumental in securing the ground engineering package for the new Glen Parva Super Prison project with Lendlease, as part of the Government’s ongoing investment to upgrade the UK prison estate. The business also continued to deliver ground engineering services at Worthy Down in Winchester, where it has been working since 2015, as part of its largest contract for Tier 1 contractor, Skanska, at the £280.0m Wellesley development, which will provide a new training college for the Ministry of Defence. BE’s asbestos removal and treatment business continues to provide services to Royal Mail as a preferred delivery partner for all asbestos removal throughout the South of England and Northern Ireland. The scope of works

includes all planned asbestos removal projects, as well as UKwide responsibility for immediate response, reactive removal and treatment contracts. The business also continued to work on multiple High Speed 2 sites, where our accredited technicians are performing essential ‘watching brief’ asbestos duties for customer Skanska Costain Strabag JV (SCS JV). During the year, BE’s asbestos business also secured a large predemolition asbestos project at the Elephant and Castle residential mixed-use development in East London. The project commenced in early January 2021 and ran 24 hours a day through until late May. At the peak of the works, there were 80 asbestos removal operatives working on the site to ensure programme targets were met. The environmental services business’s ongoing delivery of its construction waste removal and treatment contract with the FLO Joint Venture to treat contaminated material arising from several shaft sites constructed for the new Thames Tideway Super Sewer made significant progress during the year. By using its own wharf facility to accept

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

hazardous and non-hazardous waste soils from the Tideway construction sites, Keltbray used leading sustainable technological practices to ensure the material was recovered. To minimise environmental impact and cost, Keltbray applied a range of treatment techniques that reduced the need to landfill large volumes of waste material for this contract. This involved large-scale material management of the excavated soils so that they can be beneficially re-used.

INDUSTRY RECOGNITION Delivering projects with certainty was recognised during the year, with the British Demolition Awards 2021 naming Aaron Davis, Keltbray’s Learning and Development Manager, the recipient of the prestigious National Federation of Demolition Contractors Award for his contribution to the professional development of the industry. Also during the year, Keltbray’s Ferrybridge Power Station decommissioning project received the Certificate of Excellence

following a site inspection by the Considerate Constructors Scheme for exceptional levels of excellence in the five sections of the scheme’s Code of Considerate Practice. This represented the fourth consecutive certificate of excellence awarded to the Ferrybridge team. Keltbray once again place highly (second) as a top European demolition specialist in the Demolition and Recycling International (D&Ri) 100 list for 2021. The D&Ri Top 100 is a prestigious international contractor’s league table that looks at the leading contractors by turnover. Keltbray also ranked second in Construction News’ most recent annual Top 10 UK demolition contractors league table by revenue.

Wentworth House Partnership, Keltbray’s in-house design engineering consultancy won the BCIA temporary works initiative 2020 for its work at Bank Building, Belfast. The listed Bank Building was badly damaged by a fire in August 2018, which left the perimeter walls standing and the

inside largely destroyed. WHP was involved in providing a innovative temporary works solution making the remaining structure safe to allow the surrounding area to reopen and to start the rebuilding works on the retained façade. After review by the panel of judges, WHP won in recognition of demonstrating the marriage of a simple imaginative and sustainable solution with the benefits of modern analysis, overcoming a challenging problem in a complex environment and our innovative modular system, which can be reusable in the wider façade retention market. During the year, Keltbray’s asbestos treatment, remediation, demolition and civil engineering businesses all received the prestigious 2021 President’s Award from the Royal Society for the Prevention of Accidents (RoSPA), in recognition of winning over 10 RoSPA Gold awards in consecutive years. Keltbray’s structures business was awarded a RoSPA Gold having achieved a very high level of performance, demonstrating well developed occupational health and safety management systems and culture, outstanding control of risk and very low levels of error, harm and loss. Strategic report

Operating review cont.

Infrastructure The Infrastructure services division operates primarily on key rail and power networks infrastructure projects and frameworks across the UK. It is diversifying its presence into adjacent sectors, including highways, government infrastructure and energy renewables, where our design and delivery capabilities provide greater cost and programme certainty. The Infrastructure business division continued on its trajectory of responsible growth, driven by a ‘Business as Usual’ approach to serving customers throughout the pandemic to ensure essential transport and energy services were maintained to support the wider economy, achievement of targeted operating efficiencies, and high quality contract wins based on the strong demand for Keltbray’s integrated self-delivery capabilities.

RAIL Keltbray’s large-scale and multidisciplinary rail services are instrumental in enhancing, maintaining, and renewing the rail infrastructure including civil engineering, property, permanent way, signalling and electrification assets. These works are helping in enhancing safety, improving reliability, increasing capacity, driving decarbonisation of the industry, providing a better passenger experience, improving maintainability, and delivering a more sustainable rail network for the UK. Work continued in the year to develop the Keltbray Rail business to compete for the delivery of multidisciplinary work programmes and establishing a broader portfolio of longer-term framework contracts. This forms part of the Rail business plan that supports the Group strategy to deepen client relationships and penetrate new customer markets, with a holistic rail ‘design, construct and maintain’ offering. 32

The Rail business is founded upon a national rail multidisciplinary systems capability working either directly or indirectly for infrastructure owners and train operators on both renewals and enhancement programmes. The predominant client is Network Rail although the Welsh Government and Transport for Wales, having become responsible for the Core Valley Lines Infrastructure in 2020, are also a key client. There are also several rolling stock manufacturers and train operating companies with franchise funded enhancement programmes to facilitate the introduction of new rolling stock, which requires new maintenance depots, stabling facilities, and platform gauging alterations, representing a strong opportunity pipeline for the business. Network Rail are funded via the Department for Transport in a 5-year control cycle with the current Control Period (CP) 6 which commenced on the 01 April 2019 and concluding on 31 March 2024. The core to this Control Period plan is a national yet devolved organisation with five regions (Scotland, NorthWest & Central, Eastern, Wales & Western, and Southern) sub-divided into 14 routes. This geographical empowerment was planned to engender localised decision-making and integrated transport planning aligned to local communities. Keltbray Rail have contracts within four of these five regions, with strategically placed offices to cater for the requisite

local knowledge requirement, and passenger focus. The Network Rail Enhancement Programme is funded to enable passenger improvements in terms of a faster, more reliable, increased capacity (more seats), more frequent, and an overall better service (cleaner, air conditioned, Wi-Fi enabled and electric operated doors). This is further dovetailed to the sustainability agenda and the increased desire to decarbonise rail travel by replacing diesel traction with electrified trains, powered by 25,000-volt overhead line infrastructure. The electrification of the existing network infrastructure is a key capability of Keltbray Rail, having developed a national pedigree over the last seven years across England and Wales on the majority of major programmes delivered. These include the Great Western Electrification Programme (from London Paddington to Cardiff and Bristol), the Crossrail East ‘On Network’ works (from London Liverpool Street to Sheffield), the Midland Mainline Upgrade (from Bedford to Kettering and Corby), the North West Electrification

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

(from Manchester to Liverpool and Blackpool), and the Welsh Valleys Upgrade programme within the Cardiff area. Keltbray Rail continued to secure and successfully deliver multidisciplinary projects across the UK’s live rail network, throughout the coronavirus pandemic. Strong performances on major frameworks in the South East on behalf of Network Rail, were made possible following the introduction of COVID-secure working practices that proved instrumental in keeping essential rail work, including maintenance services operational throughout the crisis. Whilst post-COVID travel behaviours and patterns may impact upon the necessity for future capacity schemes, the decarbonisation commitment is flourishing, and is further supported by the Department for Transport’s Integrated Rail Plan for the North and Midlands published November 2021, and Network Rail’s traction decarbonisation strategy published in July 2020 which will be a foundation stone to CP7 commitments (2024 to 2029) and beyond.

It is widely anticipated that CP7 will have a significantly larger electrification programme than was committed to during CP6. Therefore, the opportunity pipeline for Keltbray Rail will increase as the CP7 enhancement opportunities on the live operational railway are all within scope, as are three major rail systems tenders with HS2, which are being delivered in joint venture with European partners. Success on these schemes will evolve into participation on the overall £3bn HS2 Rail Systems Alliance. Whilst the enhancement commitments may vary between Control Periods the Network Rail Maintenance and Renewal work bank is consistent and very much driven by the volume of infrastructure assets, their condition, and the planned asset renewal cycle. Fluctuations in work volumes can occur because of weather-related incidents where the largely Victorian constructed earthworks asset is impacted by climatic conditions caused largely by localised and excessive rain and drought conditions.

Keltbray Rail has several renewal frameworks contracts, which are generally 3-5 years in duration. The frameworks are delivered by our southern business unit serving Network Rail’s routes in Kent and Sussex managing the specification, design, and construction of the works delivery annual work bank of minor works. This unit delivers track renewal upgrades, long timber replacements, drainage improvements, earthwork embankment and cutting stabilisations, and ancillary civil engineering/structures work including piled retaining walls, culverts, and bridges. Whilst the frameworks are zero value contracts, they have good visibility over future workflow horizons linked to the Control Period maintenance and renewals plans, and with mini tenders for larger maintenance works. Keltbray Rail also assists Network Rail in the upfront planning of their property renewal and maintenance work bank with contracts being awarded in 2021 within both the Eastern and North-West & Central regions to deliver a programme of visual and detailed inspections of Strategic report

Operating review cont.

Network Rail’s property portfolio, which includes operational buildings, depots, and passenger railway stations. Other non-delivery framework contracts include the Isolation management in the Western Region where Keltbray Rail’s electrification expertise supports Network Rail and other contractors in delivering works within non-operational planned working windows on the Great Western route between London Paddington and Reading. Keltbray Rail are able to support customers in providing a more resilient, resourceful, and robust railway by delivering better value for rail passengers and the taxpayer by demonstrating market competitiveness and a continuous improvement culture. This is enabled with a ‘self-delivery’ model with the ownership of critical resources in particular a highly skilled workforce and a specialised plant capability being the key to safe and efficient productivity. Several pieces of plant have been specifically manufactured, licensed, and commissioned by the Keltbray Rail Plant unit to work efficiently on Network Rail’s infrastructure. This equipment has been developed in-house with strategic plant manufacturers to maximise productivity whilst at the same time minimising operative exposure to site hazards. These innovative ideas will continue to provide competitive advantages and have been informed by the Group’s commitment to invest in plant in direct response to our client’s continuing calls for improved safety and productivity. Training of people continues to be a high priority, and whilst their technical competencies are a given to the business, it is the core values and behaviours that are becoming increasingly important to our clients as social value factors including EDI (ethnicity, diversity, and inclusion) now being critical strategic goals to UK Clients with expectations on the market to likewise embrace. Our in-house design office Wentworth House Rail Systems is also an exemplar of our self34

delivery model providing our clients early concept design support whilst at the same time supporting our construction teams in pragmatic design solutions. In addition to UK based works, there was further expansion within Australia, with a New South Wales designer accreditation being achieved in November 2021. Keltbray's rail business also continued to invest in safety and innovation and is currently developing digital sensor equipment for road-rail plant, which recognises and differentiates between obstructions and track operatives. The software creates an exclusion zone that if encroached by anyone, automatically stops the machine, significantly reducing risk of injury to the workforce and damage to the rail infrastructure. Having received the Royal Society for the Prevention of Accidents (RoSPA) Gold Award five times previously, the rail business achieved another gold award win in the 2021 RoSPA Health and Safety Awards. Wentworth House Rail Systems and Keltbray International continued to support each other in expanding Keltbray Rail’s footprint internationally, in both Australia and Canada, through the delivery of high-value rail system design services in partnership with Tier 1 rail infrastructure providers in these adjacent markets. In 2018, Keltbray International was established in Ontario, Canada to investigate the possibility of developing an imported overhead lines capability demanded from the sizeable Canadian rail infrastructure upgrade programme in the greater Toronto area, with Metrolinx as the ultimate client. To date this team has successfully delivered a single project through an ‘alliance relationship’ with a local Canadian engineering partner.

ENERGY DISTRIBUTION & TRANSMISSION The Energy business continues to grow its distribution and transmission offering with a strong forward orderbook of works for the next financial year. During the financial year, the business secured a place on the five-year distribution framework for Scottish Power Energy Networks. This represents the third regulatory period in succession where we have secured this contract and demonstrates that our offering, service levels and customer focus helps us to maintain long-term relationships as by the end of this framework, we will have 14 consecutive years of a frameworks with Scottish Power. Energy was also awarded a number of prestigious, highvalue works packages in the transmission sector including the 132 KV Tower Works framework for UK Power Networks, the transmission framework for Scottish and Southern Energy in Scotland and a number of individual projects for Scottish Power transmission. Our newly established renewables business unit also went from strength to strength during the period, targeting the significant renewable energy market opportunity pipeline for wind farms, battery storage, electric vehicle charging and solar farms, working with ‘high investment’ customers. Whilst this new service offering is still in its infancy, initial business development activities are very encouraging, with the award of the 132kV contract for the Limekiln Windfarm, with existing Keltbray customer, SSE, the scope of work involves overhead line, substation and civils activities and demonstrates the opportunities that Keltbray has to offer its multidisciplinary services into this market. The opportunities in this area will continue to accelerate due to the Government’s commitment to carbon neutrality by 2050. Keltbray is well placed to take advantage of this growth area with the certainty

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

of its direct delivery model, emergency response capability and collaborative culture. This business unit works for all seven of the nation’s DNO’s (Electricity Distribution Network Owners) via a mixture of multiyear frameworks and single-action major projects. The market is regulated by OFGEM and as such there are clear investment plans agreed with each DNO for every regulatory period, which are for five years. The key advantage in this is that our clients are in a position to guarantee a level of activity over the period of the contract which makes it a very attractive proposition for the supply chain. With regards to the framework contracts, they are generally awarded for periods of 4-6 years and in the main on a geographic basis i.e. the framework holder will get all the works in particular voltages for that region. The usual voltage level for frameworks is low voltage up to 33kv and the works are to maintain, reinforce and extend the network for the DNO. Keltbray are the largest distribution overhead line contractor in the UK, this is in both value terms and in the scale of our in-house directly employed qualified linesmen. In addition to these frameworks, the DNOs regularly offer single

action tenders for higher margin transmission works, i.e. the pylons which operate from 132kV to 400kV. There are instances where the DNO will issue the transmission works on a framework and Keltbray have such a contract with UKPN which was secured in 2021. We have seen significant growth in our transmission capability over the last three years and today are regarded as a significant operator in this specialist area. The overhead line market is a very specialised operational area and one of the key drivers for Keltbray entering the market is the high barrier to entry that exists, along with the skills and training required there is also significant investment in equipment required to be able to operate in the market in any meaningful way. As part of the Energy five-year business plan, Keltbray is bringing to market a new substation service capability up to 275kV, for both distribution and transmission customers. The addition of this capability, in tandem with our key specialisms in the business and the wider group, will allow us to offer turnkey energy solutions into our existing DNO customers, the renewables sector, rail customers as well as business critical, noncore infrastructure customers

such as Data Centre Operators and Pharmaceutical companies. To accelerate this strategic goal, during 2021, Keltbray Group acquired Electricityworx Limited. This business is an independent connection provider serving both Ireland and the UK. The Group sees this area as being an arena where we can add real value to our clients and is in line with the strategic direction of the Group. We have a very clear strategy in place to address the significant growth market of renewables, given the zero carbon agenda the requirement to invest in the electricity network to be able to handle this transition is considerable. Keltbray have the skills in house to contribute in a significant way to this market and the investment and acquisitions to date form part of that plan to offer something unique to our clients. When the work opportunities are considered be it wind farms, battery storage, sub stations for onshore and offshore wind farms and the whole EV charging requirement then Keltbray is uniquely positioned to be able to offer a turnkey solution or any of the component parts to the clients as they require.

Strategic report

Operating review cont.

HIGHWAYS

the largest interconnector project in the world.

This newly established business unit carries out civil and structural engineering projects, specialising in the highways, power and industrial sectors. With self-delivery capabilities backed by a strong national supply chain, we deliver a wide portfolio of schemes from s278 works, structural repair and maintenance through to complex design and build schemes, flood alleviation, National Highway works and major substation and green energy infrastructure for developments across the UK. We also have expertise in logistics, traffic management, earthworks and roadworks as part of a series of frameworks at both national and local government level as well as standalone projects.

Work continues on the diverse portfolio of schemes novated as part of the acquisition in highways, flood alleviation, energy and structures. Notable schemes include Barnsley Market Gate Footbridge scheme, a £7.5m project to replace the footbridge stretching across the railway line in Barnsley town centre; the groundworks and civil engineering for Dogger Bank A Wind Farm, providing the converter station infrastructure for the offshore wind farm; Upper Don Flood Alleviation scheme, an innovative design and build system of flood walls and alleviation for Sheffield City Council; and M621 Junction Improvement Works, a £50m scheme on behalf of National Highways.

The business has been significantly bolstered during the year by the acquisition of the highways, power and industrial infrastructure assets of nmcn, following its entry into administration in September 2021, bringing the divisions’ established relationships with National Highways, Siemens, Hitachi Energy and numerous local authorities (such as East Riding of Yorkshire, Sheffield City Council, Barnsley MBC and Lincolnshire Council).

The acquisition of nmcn also brought with it a high-performing and skilled team with recently completed projects having won multiple awards in 2021, including:

Highways continue to grow into these areas and have started to diversify, turning to national projects and large and complex infrastructure schemes. For both our power and industrial, and highways arms, we have a proven record of delivery, which provides a strong pipeline for future work. In the last three years, the division has delivered £85.5m of highway construction including 34 projects across motorway, trunk road and local authority networks, £6.8m of works to structures, £22.1m of urban realm regeneration across eight towns and cities, and £27.6m of flood defence works, consisting of 7.4km of interventions over seven projects. We have also delivered a major development for key client Siemens Energy, constructing the Viking Link enabling works and platform for

– CIHT Creating Better Places Award – Grey to Green Phase 2 – British Construction Industry Awards (BCIA) – (Finalist) Upgrade & Renewal Project of the Year – A6195 Corridor Improvement Works – International Green Apple – A6195 Corridor Improvement Works (Awarded) – Construction News – (Finalist) Project of the Year under £20m – Grey to Green Phase 2 – Highways Awards – (Highly Commended) Steve Berry (innovation & sustainability) for Grey to Green Phase 2 – Constructing Excellence (Yorkshire & Humber) (awarded) – Bridlington Sea Front redevelopment – Value Award – Constructing Excellence (Yorkshire & Humber) (finalist) – Bridlington Sea Front redevelopment – Collaboration Award – Constructing Excellence (Yorkshire & Humber) (finalist) – A6195 Corridor Improvement Works – Project of the Year

Our clear growth plan prioritises cultivating and growing relationships with existing clients, such as Geminor, Siemens and Hitachi, who have an extensive pipeline of future work. With an eye to the future, the preconstruction team operate a detailed 3-5 year pipeline to develop into target areas. Through the efforts of our business development team, in conjunction with our commercial team’s development of robust supply chains in targeted areas of growth, we are in a strong tendering position for the exciting pipeline of works to come through funding streams such as the Active Travel Fund, the Future High Streets Fund and Building Back Better Fund. We utilise our extensive contact client relationship management system, cultivated through a history of successful project delivery to hone relationships and drive future pipelines of works offering ‘Unique Super Value’ to our clients. We conduct substantial market research and align our business with the Government commitments based on the industrial strategy and more detailed reports such as the Energy White Paper and Levelling Up White Paper. Our strategy retains the utmost focus on markets of strength (as highlighted above), whilst developing and growing through close collaboration with key clients for future developments across the country. Recent projects secured include a £6m contract to deliver the design and construction of a brand new Waste Processing Facility in Hull for Geminor, and £7.4m Dogger Bank B Substation (groundworks & civils), the next phase of recently completed Dogger Bank A for Hitachi Energy. Links to local authorities have also been strengthened through our appointment to the Lincolnshire Highways Select List Framework and the novation of our places on the YORcivil Major Works framework, and National Highways Delivery Integration Partnership (DIP) framework securing a strong

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

pipeline of works nationally, across 22 local authorities and other regionally-based public sector bodies.

of public highways upgrade and enhancement works over the last five years on the National Highways network.

Focus is also turning to wider national reach, with tender opportunities being pursued across the country, focusing on areas of growth outside our stronghold in Yorkshire and the Midlands. In our growth plan, we actively target and maintain our place on some of the most significant public sector frameworks in the UK.

With a history of public sector work, Highways have also dedicated time and resource into enhancing social value outputs and leaving a lasting legacy. Sustainability and creating social value are at the heart of our strategy. A key aspect of our approach is ensuring we understand the impact of our works to stakeholders, clients, local economies and the environment. Both site and support office teams regularly dedicate time to delivering schools programmes, work experience, apprenticeships, volunteering and community projects and we use our lean methodology to explore innovative ways to reduce waste and carbon emissions during scheme delivery.

Frameworks help mitigate risk by generating a high level of secure pipeline with clients we know and have established commercial relationships. Our site teams continue to deliver excellent live projects. Our College Street scheme involved major redevelopment of Rotherham’s town centre, enhancing the public realm and opening up movement and connectivity throughout the wider town centre. The Area 7 Construction Works framework is also ending, with the framework teams having delivered circa £10m

Our recently completed A6195 Corridor Improvement Works in Barnsley saw us collaborating with local Ferrybridge Power Station to use their by-product of recycled 'incinerator bottom

ash aggregate' to reduce carbon emissions. Through our place on two major National Highways frameworks, the Construction Works Framework (CWF) and Delivery Integration Partnership (DIP), our division is at the forefront of industry progression. Our team take an active role in working groups and the Supply Chain Sustainability School. Divisional focus is also on delivering high-quality projects safely and sustainably with the business unit acquiring a thirteenth consecutive ROSPA Gold Award and third Presidents Award. Highways also continues to embed lean methodologies into how we deliver our work, bringing not just innovation to our delivery approach but also efficiency and enhanced collaboration between site teams and clients, challenging the status quo and progressing our processes and procedures to drive improved outcomes for the division commercially as well as for clients.

Strategic report

Sustainable development report

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Engineering a better world Strategic report

Sustainability sits at the heart of our core purpose and influences everything we do. This allows Keltbray to deliver solutions that are more valuable for customers, attract the best people, drive productivity improvements, manage risks and seize opportunities, and support local communities and society as a whole. We believe sustainability is not just an obligation; it is a source of competitive advantage. We made good progress during the year aligning our business and sustainability strategies with the universally recognised United Nations Development Goals and our customers’ sustainability targets. We have reported on our Group sustainability achievements since 2013, highlighting the important work taking place across the business to reduce carbon, support greener practices, and encourage good health and wellbeing whilst driving safety, innovation and economic growth.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Why is sustainability important to Keltbray?

1 ENSURE A LONGTERM FUTURE Keltbray believes it has a moral and ethical obligation to its stakeholders, future generations and the planet to be more sustainable. Sustainability is also critical to the ongoing success of our business. Companies that want to survive and thrive need to plan for that longterm success today. Having a sustainable business model puts an organisation ahead in its industry – providing a competitive advantage. The companies who prioritise long-term sustainability in addition to short-term success are the ones who will succeed tomorrow.

2 REDEFINE A SUSTAINABLE DELIVERY APPROACH There is no more elegant or efficient designer than nature – there is no waste, everything fuels something else – an continual cycle of regeneration. Business needs to emulate this with a ‘circular economy’ approach. Sustainable services achieve quality in resource health and reutilisation, renewable energy and carbon management, water stewardship, and social fairness. In short, these innovative service providers seek to make things in a way that leaves the world a better place for future generations.

BUILD BUSINESS RESILIENCE

BUSINESS AS A ‘FORCE FOR GOOD’

Every hedge against a potential future problem increases a company’s resilience. Incredible opportunities exist for collaboration among business, government and wider society to plan for the unpredictable. We can also build internal organisational resilience through more sustainable decision making. This helps ensure the future availability of raw materials, and onsite waste management eliminates current and future landfill or waste diversion costs. These are the business models that are going to win in the marketplace of the future.

When businesses like Keltbray care about the environment, their accomplishments can have an exponentially positive impact on the world. Many of our customers are also committed to sustainability as a business value, and are some of the most successful companies in their sectors. They are seeking to collaborate with like-minded organisations who genuinely share their sustainable goals and desire to create a world that is in better shape because of their activities, not in spite of them.

Strategic report

Bringing sustainability to life To redefine the way sustainable development is delivered. Keltbray’s clear and guiding purpose closely aligns with our long-standing reputation for innovation and delivery certainty, and with the millions of people who rely on our services every day. At Keltbray we are working to create a sustainable future by combining integrity and smart innovation to meet, to the greatest extent possible, the balanced needs of all our stakeholders.

As a self-delivery engineering business operating at the ‘doing’-end of the construction value chain, the direct and indirect impacts of our activities at every level are much more tangible and quantifiable to the stakeholders we engage with every day. Keltbray brings the four core aims, outlined previously, to life by inculcating the decisionmaking, risk mitigation and action planning directly associated with their achievement throughout the entire fabric of the business. This process starts at the very top with our core purpose – ‘Redefining the way sustainable development is delivered’. This preemptive, proactive approach defines every element of our operations from medium to long term capital allocation, people development, asset optimisation and resource usage and management, to ensure we can measure progress, continually learn and apply lessons and justify our sustainability claims with all our stakeholder classes.

We are focused on enhancing the quality and value of our business through the disciplined allocation of our resources to meet the demands and expectations of our changing world, so that we grow our business safely, sustainably and responsibly, for the benefit of all. Darren James Chief Executive Officer

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS In 2020, Keltbray aligned its sustainability commitments with the UN Sustainable Development Goals, recognising the significant impact our industry has on the environment, economy and society. We therefore believe sustainability can be a real and positive differentiator for the business, and our company purpose reflects this ambition – To redefine the way sustainable development is delivered – with the view that sustainability runs through everything we do. The United Nations Sustainable Development Goals (SDGs) are an important framework for Keltbray,

given we operate largely in complex environments utilising substantial amounts of materials and resources, and we need to monitor and improve the extent to which our business makes a positive contribution to society’s wider goals. The 2030 Agenda for Sustainable Development is a global agreement to eradicate poverty and fight inequality and injustice. It was agreed by world leaders at the UN in 2015, with a focus on the 17 SDGs which the UK has committed to deliver domestically.

UN SDGs that are of particular importance to us and our stakeholders, where we believe we can make the greatest positive and lasting difference, based on the strategic beliefs and assumptions that inform our Group strategy for sustained growth to 2025 – “Unleashing our potential”. While we are concentrating on the goals where we have the most influence, our environmental, economic and social performance has a positive impact across many of the SDGs.

The nature of Keltbray’s business guides which goals to focus on. We have identified seven of these

KELTBRAY'S SUSTAINABILITY FOCUS

The Seven We have identified seven of the 17 United Nations Sustainable Development Goals that are of particular importance to us and our stakeholders, where we believe we can make the greatest positive and lasting difference.

Environmental sustainability objectives

Social sustainability objectives

Economic sustainability objectives

11. Sustainable cities and communities Make cities and human settlements inclusive, safe, resilient and sustainable

3. Good health Ensure healthy lives and promote well-being for all at all ages

8. Decent work and economic growth Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

13. Climate action Take urgent action to combat climate change and its impacts

4. Quality education Ensure inclusive and equitable education and promote lifelong learning opportunities for all 8. Decent work and economic growth Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

9. Industry, innovation and infrastructure Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation

10. Reduced Inequalities Reduce inequality in and among countries Strategic report

Sustainability framework Sustainability runs through everything we do. From the people we support, the company we sustain, the local communities we work in, the industry we represent and the planet we live on.

Keltbray's sustainability pledge is to provide innovative building and infrastructure engineering solutions that generate value to our customers and support their own sustainability commitments, whilst playing our own part in addressing the global challenges determined by the UN Sustainable Development Goals.

The built environment and infrastructure industry is materials and resource intensive, with huge pressures exerted on the natural environment at every stage of a project’s life-cycle. Sustainability is therefore mutually beneficial to both the natural environment and our business, aiding us to use resources efficiently to create long-term sustainable value, build resilience to environmental and social pressures, as well as minimise risks throughout our supply chain to drive economic growth. Managing the environmental, social and economic pillars holistically is key to protecting our environment, supporting local communities, serving our customers, sustaining the economy and helping wider society thrive. The areas of focus opposite have been identified as being integral to Keltbray, based on a materiality assessment of their impact on our business, and they therefore set the framework for the Group’s sustainability approach and programmes of work.

The UK construction industry annually accounts for:

45%

of the UK’s total carbon emissions

60% Holly Price Group Sustainability Director

of all UK material usage

120m tonnes

construction and demolition waste generated equivalent to 60% of all generated waste in the UK

3.1m

UK employment opportunities created

£370bn

construction spend equivalent to 9% of the UK's total economy as defined by gross domestic product (GDP)

2.6 Afr

UK construction all industry Accident Frequency Rate (AFR) * Sources: The Office for National Statistics; Health and Safety Executive

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Environment review

Social Value review

Economic review

OBJECTIVES AND SMART KPIs Decarbonise our operations to achieve Net Zero and assist our clients in meeting their individual pledges – Set science based target 2021 – Achieve Net Zero by 2040 – Assist our clients in meeting their own net zero timeline

Our people are having ‘good days at work’ – Measure success using the Robertson Cooper ‘good day at work’ framework – Improve health, safety and environmental conditions and reduce accidents/incidents

Protect the environment and enhance biodiversity to ensure we leave a better environment than the one we found – Zero major environmental incidents – Our business and projects to have a zero net biodiversity loss and identify opportunities for biodiversity net gain

Our people feel valued and have a sense of purpose – Establish Inclusion Council – Implement the Fairness, Inclusion and Respect training framework – Provide quality training and development fairly and inclusively – Be an equal opportunities employer with fair and transparent recruitment, pay and employment processes

Use resources more efficiently, maximising their life-cycle to drive circular economy – Zero non-hazardous waste to landfill – Define scope of water and material usage and set reduction targets for all divisions of Keltbray Group

Support local communities through engagement, support and engineering solutions – Deliver on Social Value outcome for every £2m of Group turnover

Invest in our growth – Achieve circa £1bn profitable turnover by 2027 – Achieve higher levels of economic growth through diversification, innovation and supporting key clients Generating value by supporting local jobs, businesses and economies – All business units to comply with local spend and employment obligations – Only work with contractors that satisfy the minimum sustainability requirements PQQ and common assessment standard Our clients want to work with Keltbray above others helping us to secure continual, good quality work – Put a client feedback Net Promoter Score in place by end of financial year 2022

ACTION AGENDA Environmental management – Climate action – Carbon footprint and energy efficiency – Biodiversity – Waste and the circular economy – Water usage – Materials and responsible sourcing

Safety, health and wellbeing decent work for employees – Employee engagement – Reward and recognition – Learning and development Reduced inequalities – Equality/Diversity and Inclusion Council – Community partnership initiatives – school liaison – Employment and skills – including forces/exoffenders recruitment – Working with the socially disadvantaged – Volunteering and charitable giving

Economic growth – Customer relationship management – repeat business – Financial performance – Tax contributions Industry, innovations and infrastructure – Supply chain collaboration – Engineering innovation – Employability and skills development – Industry partnerships

Strategic report

Environment review 1 With our customers placing increasing emphasis on the sustainability of their assets, opportunities for innovations to create increased environmental value are expanding. To this end, Keltbray is committed to developing climate-smart project solutions that improve resource efficiency in delivery and operation through the innovations in sustainability they deploy. Our environmental pledge therefore affects and influences all the Group’s operations and processes at every level.

CLIMATE ACTION AND CARBON REDUCTION

2040

Targeted year for net zero carbon emissions One of the most pressing sustainability issues of present time is climate change; we recognise that our operations form part of the problem and bold change is needed. We have therefore set Net Zero as our own organisational goal to realise the benefits for ourselves, and importantly, our customers. Our pledge to reach Net Zero by 2040 underpins all five capitals of sustainability (manufactured, financial, social, human, natural). We recognise the need to move ‘beyond zero’ – building a resilient business that puts the wellbeing of our teams, the natural environment and our stakeholders requirements at the heart of everything we do.

Keltbray has identified a series of actions to reduce emissions from its operational activities. These include decarbonising our fleet and plant/equipment by investing in new powertrains and fuels. We are not just investing in new equipment, but we are also assessing and changing the way we operate. A perfect example of this is the use of river barges instead of Heavy Good Vehicles (HGVs) to move material from projects using the UK’s extensive waterways to reach our own remediation processing facilities.

Kiro Tamer Head of Environmental Sustainability 46

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

ENERGY Keltbray aims to improve energy efficiency in both its project delivery operations and its fixed buildings and depots. Fossil fuels are being replaced increasingly by renewable energy sources. Increased energy efficiency is vital to reducing our carbon footprint and the associated costs both within our own operations, as well as benefiting our customers, the end-users and the local communities who host us when we deliver projects. The emissions in tonnes of carbon dioxide equivalent related to Keltbray’s energy demand FY2021 was 18,510 tCO2e, an increase of 7% on the previous year (see Streamlined Energy and Carbon Reporting (SECR) compliance statement on pages 148-149), due to the first COVID-19 pandemic lockdown in April 2020, resulting in all projects in the Built Environment division being paused for a specific period of the lockdown, hence reducing the annual carbon footprint in the prior year FY2020.

100%

renewable power powering all fixed locations and new projects

BIODIVERSITY – Within the Energy division, the business carried out a trial using welfare cabins powered solely from solar and hydrogen, saving more than 800kg of CO2. We have since standardised all welfare cabins to be powered by hybrid power sources, which is actively reducing fuel demand by 90%. – The success of the trial with Imperial College London, allowed Keltbray to support the industry to quantify the local air quality benefits of HVO for the first time. This biodiesel usage (Hydrotreated Vegetable Oil) can reduce emissions by as much as 90% in off-road vehicles. In 2021 we used 374,000L of HVO fuel, which resulted in a carbon reduction of 1,019 tCO2e by our off-road fleet. – Following evaluation of required power levels on our project sites, the business is in the process of replacing old 350kVa gen-sets with state-of-the-art 100kVa generators, reducing hire and running costs, saving the business circa 2.6tCO2e per week.

Keltbray seeks to understand, avoid and respond to any potential impacts its operational activities may have on biodiversity and sensitive ecosystem areas. Our projects and operations aim to minimise our impact on the environment to the greatest extent possible with an initial annual net gain target of 10%. We also look for opportunities where we operate to make a positive contribution to conservation and to support local society through initiatives such as volunteering, to support community-based environmental improvement projects. The biodiversity of a site is assessed when impact assessments are conducted for any new major project or expansions to existing operations. We carefully consider the potential environmental impact of our activities and how local communities may be affected before, during and after operations. Before we commence works in sensitive environments, biodiversity action plans are developed. This helps us to identify and minimise any impacts during planning, operations and at decommissioning. Measures are taken to restore habitats or ecosystems that are close to our operations and our standards are designed in line with relevant environmental standards.

During the year under review, Keltbray’s energy sustainability initiatives included the following: – In June 2021, Keltbray launched the Fuel Saving Tournament on live projects, with the target to reduce idling performance of excavators on site. This brought a general reduction of idling time from a starting average of 40% down to 25%, saving £14,000 worth of diesel and 5,000 hours of engine life, reducing CO2 emissions by 30tCO2e.

Strategic report

Environment review cont.

WASTE REDUCTION AND THE CIRCULAR ECONOMY Resource efficiency, reduction in usage and circular use of materials, alongside minimising waste generation, all directly influence operational efficiency and reduced environmental impact, particularly climate change. Since reporting on key sustainability performance indicators, Keltbray has an overall target for reduction of waste, aiming to achieve zero nonhazardous waste to landfill. In the FY2021, non-hazardous waste that went to landfill across the Group marginally improved to 0.03% (FY20: 0.50%), with projects going even further in an aim to send zero hazardous waste to landfill, maximising reuse or recycling for circular economy purposes. Our main sources of nonhazardous waste include soil from excavations and drill cuttings (materials removed from the ground during piling such as rock and soil) followed by concrete and hardcore. Where possible, these wastes are prioritised for reuse for ground engineering purposes on site, negating the need to source new materials through the supply chain and minimising energy/fuel usage. Some hazardous waste streams, such as process water from our demolition and decommissioning activities, are treated on site, or removed for special treatment and safe disposal.

HS2 Euston Keltbray achieved a notable milestone at HS2’s Euston site with the first ever successful installation of the precast, prestressed HIPER® Pile on a live project in London. This is the first time the full suite of innovations which comprise the HIPER® Pile have been installed together providing the following benefits: – A circa 80% reduction in embodied carbon – A fully reusable and extendible pile – An increase in shaft friction capacity of 40% – Incorporation of geothermal energy component giving a 60% increase in thermal conductivity – Elimination of 90% of the reinforcement volume – Improved health and safety through the elimination of pile breaking activity – Introduction of DfMA principles into deep foundation construction – Engagement with local charities such as the Community Wood Recycling scheme to donate timber for charitable community usage and more recently, utilisation of Globechain, finding avenues for all of our reusable materials.

WATER PRESERVATION We are taking steps to manage our use of water responsibly – including looking for beneficial ways to recycle and reuse this valuable resource. Few natural resources are as essential in life as fresh water. We drink it, wash in it, grow food with it and use it in industry. Demand for water is set to increase as the world’s population rises and economies around the world continue to develop. For these reasons, it is imperative we take steps to reduce our fresh water consumption. This includes looking for innovative ways to reuse and recycle this valuable resource. As a specialist engineering and project delivery business, Keltbray has a considerable impact on water use, both during the construction phases, and the end use of the built environment and infrastructure assets we deliver. We are therefore constantly seeking new ways to reduce the use of fresh water by substituting grey water as an alternative, increasing availability for local communities. We design and operate our fixed facilities to help reduce their fresh water use, using the latest technology to help us improve water efficiency.

Currently achieving

99.7%

diversion of non-hazardous waste from landfill, and aiming for 100%

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Case study

A utilitarian approach to decarbonising projects Keltbray identified that to decarbonise construction projects, it is key that a mains utility connections are made available at the earliest possible scope. To ensure we are able to support our clients to decarbonise project sites and work towards a Net Zero outcome, while reducing our own emissions, a dedicated 'site utilities' team was created during the review year.

to optimise existing supplies and then move onto the new supply with minimal disruption. Poor timing can result in a reliance on generators and transported water supply, which is costly and inefficient.

The scope of this team is to coordinate the projects’ electricity, gas and water disconnection and connection requirements with the relevant STATS in order to run and power the project in the most timely and efficient manner.

Where electricity supply is not available and we have to rely on generators, the utilities team is responsible for designing the most efficient system specific to the requirements of the project. This can vary from load-ondemand generators to hybrid systems where we rely on battery technology to power the baseload and only use the generators at peak demand.

Timing the utilities disconnection and connections right is critical to a projects sustainability and programme performance as it allows the project delivery team

The utilities team is also responsible for organising GPR surveys at the start of a project to ensure the programme can be achieved without any delays and

also the project delivery teams are well informed regarding the location of the different utilities. This is a very important aspect of the team’s responsibilities as it directly supports the sites to identify the requisite isolations requirements before a site is safe to be operated. Temporary supply of water and trade effluent licences are also managed centrally through the utilities team for all Keltbray projects. This ensures that all projects are compliant on the discharge requirements for the process water generated. We have gained a strong knowledge base of the practical requirements, and have developed mutually beneficial relationships with the local water authorities, which speeds up the process for gaining the relevant trade effluent licences. Strategic report

Environment review cont.

6 SUPPLY CHAIN AND RESPONSIBLE SOURCING The engineering and construction industry is dominated by heavily populated, complex supply chain networks. Keltbray’s own supply chain consists of suppliers of goods, materials and equipment, together with a variety of service providers including professional services firms like design consultants, and specialist subcontractors to deliver work on project sites. A secure supply of high-quality construction materials and related products and equipment is essential to ensuring the long-term sustainability of our business. Our responsible sourcing approach plays a key role toward achieving this, with a significant focus on procuring key construction materials from certified sustainable sources. It helps us to know where our materials come from and how they are produced, and to address environmental and social issues such as climate change, deforestation, human rights, and animal welfare. Through responsible sourcing practices, we can have a positive social and environmental impact on the communities where we work.

Keltbray works with circa 1,400 fully vetted vendors across the Group, which requires that business processes are robust to uphold laws and regulations, as well as our own business standards. Driving transformational change requires collaborative, industrywide and multi-stakeholder engagement, to share expertise and learning, and to scale up what works. We therefore actively participate in several industry associations to further our vision to redefine the way sustainable development is delivered.

Responsible sourcing requires transparent and collaborative engagement with our suppliers. We expect all our raw material suppliers to conform to our specified requirements. It is therefore important that Keltbray’s ethical standards and Code of Conduct extend to the supply chain to ensure they are adhering to our policies and we are meeting our sustainable procurement targets.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

7,923m³

of timber from sustainable sources, equating to 74% of all timber usage

101,605m³ of non-timber key construction materials, or 99.62% from recycled and certified sustainable sources

Keltbray offers Earth Friendly Concrete as a standard product for all temporary works

Winning five Green Apple awards for 2020 and 2021. Congratulations to all project teams involved: – UCL Institute of Neurology – Best Practice National Silver Winner – Canada Water – National Silver Winner Building & Best Practice Champion Silver Winner – 40 Leadenhall – Building & Construction National Gold Winners Environmental Best Practice – Ferrybridge Power Station – two-time 2020 National Silver Winner Environmental Best Practice

Case study

The fuel saving tournament 2021 In May 2021 Keltbray commenced trialling a fuel saving tournament at the ‘UCL University of Neurology’ project in London. The target of the initiative was to reduce the idling time of excavators on site, saving fuel cost and most importantly reducing carbon emissions, by recognising and rewarding the best driver on a monthly basis. In the first month, the project reduced the idling time by half and all drivers actively engaged with the competition. The first winning machine driver reduced the idling of his machine by 62%. In the following month, the competition was opened to all live projects which have an excavator with a telemetry installed. The projects showed great interest and enthusiasm for this environmental initiative and improved general working performance, bringing the idling time below the target of 25% across our deployed project fleet. At the end of the year, two drivers who showed the greatest improvements were awarded a major prize and the drivers’ team at Bermondsey Biscuit Factory received a prize for the most improved project in the tournament. The initiative was recognised in the year by the green organisation with a Green Apple Environment Award.

Strategic report

Social Value review 1 At Keltbray, social value is created when our people and businesses make a conscious and concerted effort, and where the effect of their actions generates social change by contributing to the long-term wellbeing and resilience of individuals, the company and wider society. Keltbray’s business model means we take direct responsibility for delivering on our promises to consult, improve and leave a positive legacy in the communities in which we work. Through our skills and communities team, we develop and deliver tailored local community development programmes through a partnership approach, working extremely hard to ensure that the communities benefit from the Built Environment and Infrastructure solutions we deliver, not only during the construction phase but also throughout their operational life.

HEALTH, SAFETY AND WELLBEING Keltbray’s primary focus, above all others, is to maintain a safe environment and healthy working conditions for all employees and supply chain partners wherever they are working. However, we believe our obligations extend further than just safety, and includes responsibility for people’s health and wellbeing. To this end, we have created an inclusive culture where everyone has the ability to thrive and contribute to our sustained growth and success. This focused approach manifests itself in our new Group health, safety and wellbeing strategy, summarily captured by:

Promote Health, Prevent Harm PH2 – A linked strategy for health, safety and wellbeing PH² combines the conventional Health & Safety, and Health & Wellbeing approaches, intrinsically linking them under a shared PH² vision. Our philosophy, culture and processes are mirrored wherever possible, and only when we reach delivery specifics and their supporting narratives do we distinguish between our approaches to achieve maximum operational effectiveness. This approach will enable Keltbray to: Support our core purpose – to redefine the way sustainable development is delivered, and business strategy – ‘Unleashing our potential’ to achieve sustained growth. – Maximise continuous improvement opportunities and minimise risks – Align both strategies to ensure operational success – Create an industry standard of parity between Health & Safety and Health & Wellbeing – Utilise one singular module and common language

Highly-engaged and informed people drive health and safety improvement. As part of our people development activities, Keltbray’s health, safety and wellbeing training and educational programmes are both interpersonal and/or technical based. In 2021, Keltbray fully implemented the Safety, Health and Environment Leadership Team (SHELT) framework to develop our safety performance through the inclusion of our operational teams, focusing on two-way communications and empowering leadership at all levels. The Strategic SHELT, with the support of the Tactical SHELT, undertakes a continuous review of health and safety performance, identifying trends, innovations and opportunities, setting a clear plan of focused activities. This approach corresponds to the Decent Work element of UN Sustainable Goal 8. Keltbray self-delivers occupational health for its people through its in-house occupational health and wellbeing practice – KML. This not only provides the capability to promote health, but also the capability to respond in an agile and effective manner. This approach has proved an invaluable asset during our management of the COVID-19 outbreak, offering physical and mental wellbeing to support our people. During FY2021 KML performed 2,757 employee assessments across the range of medical priorities it manages on behalf of the Group. Our health, safety and wellbeing performance determines our viability as a business – it is a prerequisite of our ability to grow and develop the business and constitutes our licence to operate. Keltbray measures performance using a series of metrics, including leading and lagging indicators. One of our leading indicators is the number of leadership safety audits

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

to promote a clear, visible, engaged safety leadership approach under the terms of reference of the Strategic SHELT. Despite the restrictions imposed by the ongoing COVID-19 pandemic, 293 HSW-orientated audit engagements with predominantly site-based delivery teams took place during the year, at an average of 24 per month, demonstrating the focus placed on safety performance by our executive.

At the Group aggregate level, Keltbray experienced seven reportable injury accidents during the review year, down from nine in the previous year, equating to an annual improvement of 22%. Under The Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR), revised in 2013, Accident Frequency Rate (AFR) is an industry standard ‘leading’ measure defined as the number of injuries sustained by an employee under the RIDDOR regulations per 100,000 employee hours worked. However it was with great sadness that Keltbray had to report very early in FY21 that an employee lost their life in a workplace incident. We have learnt the lessons from this fatal incident, which has served to strengthen our resolve to send our people, and all those impacted by our activities, home safely at the end of every day. Given the markedly different working practices and processes employed by our Built Environment and Infrastructure businesses, we do not aggregate AFR at the Group level, and instead report these divisions separately to give a ‘true’ safety performance for the Group’s specific operational delivery approaches.

Built Environment

AFR

0.13

improvement from 0.15 in the 2020 calendar year

Infrastructure AFR

0.11

increase from 0.09 in the 2020 calendar year

HS&W strategy overview Unveiling our vision and redefining sustainable health, safety and wellbeing CONCEPT PH² demonstrates a new approach, an evolution of our thinking and an alignment of our health, safety and wellbeing aspirations. Conceptually, PH² combines two distinct strategies that work in unison to deliver improvements in our overall performance. Both facets are intrinsically linked, sharing the same vision, process, culture and philosophy; in essence, this demonstrates how we will redefine health safety and wellbeing.

STRATEGY PRINCIPLES – Creates equivalence between health, safety and wellbeing – as a mutually reinforcing cycle – Utilises a single delivery model and common language – Directly complements and supports our business strategy – Embodies our ‘one Keltbray’ delivery ethos

Strategic report

Social Value review cont.

Quality education Attracting, developing and retaining talented people is central to Keltbray’s long-term prosperity. We must create a working environment where our people can thrive by having consistently good days at work. Therefore, we continue to prioritise this as a strategic objective and drive positive progress. Recent employee surveys undertaken specifically to track employee engagement through the COVID-19 period have confirmed that they believe the Group takes its ‘Duty of Care’ with regard to employee welfare incredibly seriously. Important advantages for Keltbray are that it has a strongly embedded set of values that inculcate everything it does, many professional development opportunities across a range of different businesses, customers and sectors, and a strong purpose – all factors increasingly sought and highly valued by potential and current employees. Externally focused learning often involves direct contact with local community agencies, schools and social enterprises, as well as hard-to-reach social groups, to offer routes into formal training, self-improvement and curriculum activities. These include employability workshops, training frameworks, STEM ambassadors, bespoke training for customers and socially disadvantaged groups, including ex-offenders.

154

professionally chartered engineering professionals employed by Keltbray

113 employees on full-time training internships, apprenticeships and graduate development programmes 54

Flex highlights

In Spring 2021 we launched a new learning management system known as Flex (Focused learning experiences). Since then, our library of content has grown significantly, the majority of which has been created in collaboration with subject matter experts within the business. Flex is available on all smartphone handsets, PCs and tablets. Flex provides us with the ability to effectively plan or efficiently react to identified learning needs and make relevant and engaging content available to access at any time, from any device, anywhere. Over 7,000 learning modules have been successfully completed by colleagues covering topics such as wellbeing, personal effectiveness, environmental sustainability, health & safety, fairness, inclusion & respect and regulatory compliance.

1. Built Environment Operational Leadership Programme and Forum The aim of the programme and forum is to ensure that all project-based operational leadership carry out their individual roles in accordance with HSQEW responsibilities, work place practices and a commitment to delivering on our behavioural culture. 2. Health and Wellbeing Programme Monthly releases of awareness-raising modules aligned with our Health and Wellbeing calendar. 3. Code of Conduct The Flex platform facilitated a group-wide roll-out of an existing document portraying Keltbray standards for our behaviour as a business. The original document was converted into an interactive experience. 4. Lifting Competency assessments Efficient competency assessments have been produced and assigned to Slinger/Signallers, Crane/Lifting Operations Supervisors and Tower Crane Operators.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

CITB approved training organisation

Energy and Utility Skills Register approved provider

NVQ Centre

Keltbray Training delivers a variety of construction training courses, which are designed to place emphasis on practical strategies for real working environments to a defined and industry-agreed training standard

Keltbray is an approved provider for the Level 3 Trailblazer overhead line apprenticeships. This enables us to bring new recruits into the business through an industryrecognised apprenticeship, while upskilling and multi-skilling our existing workforce

Keltbray is a fully-accredited NVQ Centre covering over 60 qualifications from Level 2 to Level 7 supporting the construction industry’s aim of a fully-qualified workforce

CITB Site Safety Plus Centre

National Demolition Training Group (NDTG)

NPORS

Site Safety Plus (SSP) provides the construction industry with a suite of courses to enhance career development helping to maintain a safe workforce

Keltbray is a NDTG-approved centre to deliver training specific to the demolition industry

Keltbray Training is accredited by the National Plant Operators Scheme to deliver training and carrying out testing on a range of construction plant, small tools and other health and safety related activities

Railway safety critical training

ACAD

JAUPT Driver CPC Centre

Keltbray is supported and approved by ACAD, the UKbased trade association, through quality training and best practice, ensuring we maintain a highlyskilled workforce and industryrecognised approach which is fully equipped to manage and safely eradicate the UK Asbestos legacy

Keltbray is an approved provider of Driver CPC allowing us to ensure full compliance of not only our own fleet drivers but also our subcontractors

Accredited to deliver Track Safety and Engineering courses, our team of professional trainers and assessors has a wealth of knowledge in all aspects of railway engineering to help deliver a high-quality learning experience to our learners

Strategic report

Social Value review cont.

2 DECENT WORK Our operational delivery culture is driven by a comprehensive behavioural engagement programme of training and development modules entitled: Operational effectiveness strategy – ‘smart thinking, delivered’. This transformation agenda is aligning behaviours and providing clarity on important issues such as safety management, skills competency and role accountability, while providing our people with relevant information to be more effective in their roles, and to seek their views on matters of common concern through their representatives and through line managers. Priority is given to ensuring that employees are aware of significant matters affecting the Group's safety performance, issues of inclusion and diversity, and wider standards of ethical business conduct. Our policies and practices are aligned with the Group's purpose and values, and in particular our single Code of Conduct. The Code is designed to hold in one place the business ethics we value, and how we are to behave, and over time will empower employees, customers, suppliers and other stakeholders to raise any issues or concerns, either directly or anonymously. This is a key element as we continue on our strategic growth journey. The exchange of views with leadership is facilitated through targeted employee surveys Like ‘good days at work’, leadership briefings, the Intranet, team away days, and site stand-downs. Directors also visit project sites on a regular basis. This engagement has assisted in the creation of employee value for the workforce in a number of ways, including the addition of relevant employee benefits, availability of Mental Health Champions, initiatives

driven by the Strategic and Tactical SHELTs, and the creation of the Inclusion Committee. We also publish a Gender Pay Gap report annually. This report outlines the outcome of our gender pay analysis for our UK employees as of April 2022 and our areas of focus in relation to equality, diversity and inclusion within our business to ensure a level playing field for all. Although we acknowledge we still have a great deal of work to do to improve in this area, we have a determination to reduce our gender pay gap and the effect it has on our colleagues over time. We continued to develop our strategic training and development programmes to help shield the Group from the growing skills shortage in the industry. Our sustainable approach covers entry-level trade apprenticeships through to graduate development, management training, and leadership enhancement, alongside accredited technical and professional development courses to ensure our trade skills remain at the forefront of the industry.

dedicated in-house professional training providers

36,000

Diversity and inclusion At Keltbray we are proactively striving towards a more tolerant and inclusive environment. Our people are at the heart of our business with health, safety and wellbeing one of our core values. We know that in order for the workplace to be a safe environment, physically, mentally and emotionally, our employees need to be able to bring their whole self to work. To achieve this the Inclusion Committee was formed to support the Group’s sustainability strategy, demonstrating our commitment to The UN’s Global Goals for Sustainable Development. Our goal is to ensure our people thrive because Keltbray is a great place to work where everyone is valued. We will do this by working together to build a diverse business which represents the communities in which we operate and our ever-evolving society. We advocate for difference and champion diversity to foster an inclusive environment that allows our people to bring their true selves to their work every day, and enable our people to thrive by promoting health and preventing harm.

hours of skills and development training delivered during FY2021

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Nina Fairfowl Group Manager, Diversity and Inclusion

Our people strategy Keltbray has always had a strong and genuine commitment to its people because we know that they are what makes us successful. This is a core part of who we are as a business and as we have grown this thread continues to run through our cultural DNA and defines everything we do. Following the ratification of our growth strategy and business plan in 2020, the Group has reviewed its people infrastructure, processes and employee offer to ensure they directly align with and support our business ambitions. Therefore, in 2020 we created a new people strategy designed to enable and support the overall strategy for sustainable growth – ‘Unleashing our potential’, whilst retaining our core people ethos and values. The core purpose of the people strategy is ‘To make Keltbray a place where our people thrive and the business succeeds as ‘one Keltbray’’. This five-year action plan has three strategic outcomes and three key enablers:

Strategic outcomes – People thrive because Keltbray is a great place to work where everyone is valued – The best people want to join the 'one Keltbray' team because we develop them to achieve their goals – Our people are agile, customerfocused and easy for our clients and partners to do business with

Key enablers – The People function is industry leading, agile and easy to do business with – The People function helps the business to be lean and efficient – The People function contributes to business growth and delivery

These are underpinned by a comprehensive action agenda specifically designed to support the achievement of both the outcomes and the enablers. Given the background context of operating in a pandemic, we have made strong progress against all these priorities. During the review period we made great strides forward in the transformation of our people journey. Highlights include: – We launched our new Grow, Perform, Succeed or GPS performance review process – We launched Flex, a digital learning management system which has revolutionised the way we approach training in the business – We continued to directly recruit, retain and develop 48 apprentices into operational and functional roles across all areas of the Group – We created a job levels framework to provide a better structure for how we group, manage, develop and reward our people – We conducted a full benefits review and launched a new benefits brochure to help our people get the most out of working at Keltbray – As part of the benefits review we have been able to significantly enhance family leave – We have launched ‘We Care’ which is a comprehensive health and wellbeing support service, giving all our people to 24/7 support, counselling sessions, financial advice, legal advice and a virtual GP service – We introduced a number of digital and online processes – for example including moving all employee offers and contracts online which is more efficient and more sustainable – We launched a new time and attendance system across our operational business to digitise how we manage and record working hours

– We streamlined our people systems to make us more efficient and easier to do business with – We commenced a structured manpower planning process to enable us to more accurately forecast our labour needs in the short, medium and long term – We extended our talent database even further so our resourcing team have access to the best talent in the industry as we grow and expand – Even whilst still facing the financial challenges of COVID in 2021 we conducted a group-wide pay review because we wanted to assist our people with the increased cost of living that we are all facing – We have launched a bespoke assessment tool for our Main Board Directors in line with the Wates Principles of Good Governance for Large, Private Companies – We have taken significant steps to achieve best in class people compliance processes and procedures – We have embedded the Inclusion Council within our Corporate Governance framework which is made up of representatives from across the business to set and drive the inclusion strategy for Keltbray

A PLACE WHERE OUR PEOPLE THRIVE AND THE BUSINESS SUCCEEDS

Strategic report

3 SUPPORTING LOCAL COMMUNITIES Community engagement helps Keltbray to get to know, and ultimately bring benefit to, its project neighbours and local businesses. This comes in the form of ‘meet the buyer’ events, school engagements for safety and careers, employer forums including job fairs, Curriculum Vitae (CV) workshops and local mentoring. This can also include neighbourhood and stakeholder engagement to reduce environmental impact. Support is offered locally to ensure the impact of our works on the neighbours and local businesses is positive, and goes beyond compliance with contractual terms to leave a sustainable legacy, based on the principle that we take every opportunity to leave a community in better shape – socially, environmentally and economically – than when we arrived in it. We drive this approach through dedicated community liaison teams who possess the relevant local and project knowledge to formulate and implement a bespoke programme of social value initiatives. This approach is underpinned by formal tracking and reporting systems to manage our relationships. Our projects are designed and engineered with people in mind, both at Keltbray and in the community. This comes in many forms and requires a bespoke approach to traffic management, localised economic interfaces and community partnerships. Ultimately, we aim to improve communities through the quality and effectiveness of the engineering solutions we deliver in the physical environment.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

During the year in review, our social sustainability programmes helped achieve the following:

local people employed and sustained on our projects including those redeployed due to COVID-19

159

hours of curriculum support activities organised to promote STEM learning and construction as a career option

687

hours delivering and participating in community Investment events

apprentices recruited in FY2021, with four new apprenticeship schemes added to Keltbray curriculum including two Level 7 Master Degree apprenticeships

800+

young people engaged through our outreach work, including educational and community stakeholders

There are five key goals generally covered in any Keltbray Social Value project liaison plan:

Jobs

Promote local skills and employment To promote growth and development opportunities for all within a community and ensure that they have access to opportunities to develop new skills and gain meaningful employment

Growth

Supporting growth of responsible regional business To provide local businesses with the skills to compete and the opportunity to work as part of public sector and big business supply chain

Social

Healthier, safer and more resilient communities To build stronger and deeper relationships with the voluntary and social enterprise sectors whilst continuing to engage and empower citizens

£288,000

donated to worthy charitable causes and sponsorships, including the Teenage Cancer Trust – our selected corporate charity partner, through the Keltbray Foundation

graduates employed on development schemes, plus 10 people on internships and work placements from other organisations

Environment

Decarbonising and safeguarding our world To ensure the places where people live and work are cleaner and greener, to promote sustainable procurement and secure the longterm future of our planet

Innovation

Promoting social innovation To promote new ideas and find innovative solutions to existing community issues and problems Strategic report

Economic review 1 Keltbray contributes to the economy and society both directly and indirectly, through the taxes it contributes, the jobs it creates, the local people it upskills, the resources it procures, the local business opportunities it generates and the education and community health initiatives it supports. The people we employ, taxes they and we pay, and money that we spend with suppliers represent our most significant positive contribution to the UK economy and the local communities that host us. The majority of this expenditure is in urban areas, and the multiplier effect means that our total economic contribution extends far beyond the value that we add directly. In the FY2021, by way of example, we contributed the following economic value:

ECONOMIC GROWTH Keltbray’s five-year strategy is predicated on creating sustained growth that benefits our customers, the company, our supply chain partners and the communities where we go to work. Primarily, by being successful, we deliver economic growth through: – Procurement of products and services – Provision of valuable employment, in highly-skilled and technical professions and trades through our self-delivery model, generating income tax, contributions to the public purse and increased consumer spending – Improved industry skills and employability allowing a greater societal contribution by our people – Corporation taxes and levies we pay as a large, private enterprise – The built environment and infrastructure we build, which drives economic growth and development across all sectors of the economy Our customers and wider society face increasingly complex challenges, which are driving

greater demand for Keltbray’s expertise in delivering functional, cost-effective solutions through its integrated self-delivery model. Customers are seeking sustainable solutions that go beyond our contractual commitments, and help improve society for the long term. We see this as a powerful opportunity to deliver new, more resilient and low carbon solutions that help customers achieve their own sustainability goals. Reciprocally, this also reduces Keltbray’s carbon footprint and makes us a more attractive business partner, enhancing our growth prospects. Underpinning this approach is the Group’s commitment to continuous improvement through consistent project level feedback across the project portfolio. Routine, formal and informal engagement with customers facilitates process improvements across all areas of the company from the contract win through all phases to project handover. Strategic supplier partnerships are supported through carefully planned and coordinated communications. These highlight how partnerships bring benefits to the delivery of projects and drive innovation throughout the industry.

£268.7m spent through the construction supply chain

£92.0m

paid to our PAYE employees through wages, pensions and related expenditure

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

BUSINESS INTEGRITY

INDUSTRY, INNOVATIONS AND INFRASTRUCTURE

Keltbray’s Code of Conduct is based on the Group’s purpose and values, and sets the minimum standard of behaviour expected of our people, and how Keltbray conducts its business. Approved by the Main Board and reviewed on an annual basis, , it seeks to define, in one source, Keltbray’s commitments in the workplace, the marketplace and to wider society. It covers important topics like health and safety, anti-bribery and corruption, data security, conflicts of interest, and drugs and alcohol usage.

Innovative methods, materials and technologies are becoming increasingly important tools for meeting the social, environmental and economic challenges faced by the construction sector. The industry is pushed by public and private sector customers to transform outdated models of delivery using greater systems integration and process efficiency to drive up productivity and reduce waste of all forms. At Keltbray, we are pushing the boundaries in all three areas of Project Delivery, Product Development, and Process Optimisation. A wide range of initiatives has led to large qualifying expenditure for the purposes of HMRC Research and Development Tax Credit with expenditure of £16.5m deemed applicable for the scheme in FY2020.

All employees, as well as subcontractors and agencies working on Keltbray’s behalf, are required to uphold the ethical principles and responsibilities outlined in the Code at all times – nobody is exempt.

Increasingly key to cost, quality and programme certainty is the use of leading-edge digital engineering technologies. By building virtually in a digital environment we can offer smarter engineering solutions that generate greater value outcomes for our clients. We are increasing the use of Building Information Modelling (BIM) technologies that are supported through augmented and mixed reality applications, implemented by Keltbray Extended Reality (KXR), drones and other forms of automation to improve critical construction process efficiencies.

Key to our approach is the Innovation Steering Group, a groupwide forum of individuals with diversified skills who are tasked with capitalising on the expertise, crosssector innovations, research and development, and best practices that are being developed and implemented across the company. We acknowledge that complex development challenges can only be tackled in close collaboration with key suppliers and leading technology, academic, and industry partners. This forum directly supports the achievement of our core purpose – to redefine the way sustainable development is delivered. The initiatives over the following pages exemplify the market leading outcomes of our innovation workstreams. It is our firm belief that our commitment to meaningful investment in research and development is also starting to reap benefits in terms of improving and advancing the products and services, we are able to offer our customers, as evidenced by the following innovation case studies:

Strategic report

Economic review cont.

Case study 1

‘Customer first’ approach to Modern Methods of Construction (MMC) Keltbray’s differentiated approach to Modern Methods of Construction (MMC) and offsite manufacturing of products is not dependent on the limited capabilities and capacity of a fixedfactory location. This removes the restrictions of a ‘uniform’ product suite and instead provides a much wider range of factory-based solutions from both our internal and external supply chains. This allows us to provide clients with the optimum precast DfMA product set from the range of ‘offsite’ manufacturing technologies and facilities at our disposal. This includes our in-house centre for smart engineering, based in Bathgate, Scotland, working alongside our unique capability to deploy ‘nearsite’ manufacturing. This optimises our design and selfdelivery skills and resources in the adjacent manufacture of precast products much closer to a project site, particularly in highly regulated sectors like rail, and challenging site conditions like urban development, so overcoming many of the logistical challenges of gaining permissions to work. The third prong of our approach is utilising the extensive DfMA supply chain that exists across the UK, which leverages the

knowledge, experience and innovations of the SME market, to deliver more ‘bespoke’ solutions for clients, while retaining all the financial and operational benefits of an offsite approach. In this way, Keltbray is supporting the wider UK economy while building its own knowledge and capabilities to provide a template for the future of sustainable development. We call this ‘custom’ manufacturing, where the diversity of need of each client dictates the manufacturing approach. In this way we are not imposing on them a single location, single specification product approach, but offering them outcome value in its widest sense. This ‘customisation’ approach to product standardisation and production is fundamental to overcoming many of the psychological, behavioural and technical hurdles that can restrict the value of a DfMA approach, by providing impartial design advice as to the best solution, based on the full spectrum of MMC technologies we are able to access from right across the supply chain, providing valuable support to SMEs in the process.

Keltbray’s centre for sustainable engineering Keltbray has been investing in Modern Methods of Construction (MMC) and project delivery over many years, and owns one of the UK’s largest specialist structural precast manufacturing facilities. Our precast facility is part of our unique twelve-acre ‘centre for sustainable engineering’ based in Bathgate, Scotland – a modern manufacturing hub that signals our commitment to quality and excellence. Established in 2016, and wholly owned by the Keltbray Group, it is founded on the principles of engineering excellence and innovative construction expertise. Through our ability to accurately determine and design our clients’ needs and wants, we can customise our products to overcome many of the commonly-held issues that can stifle the wider adoption of DfMA in favour of pursuing traditional construction techniques. The potential gains from investing in design for manufacture and assembly can be huge – driving productivity by reducing spend on repeat design and reallocating it to drive further project efficiencies, continual improvement and future research and development.

“Purposeful, earlystage collaboration with our clients and the wider supply chain will create more meaningful partnerships that promote the adoption and application of Modern Methods of Construction (MMC) delivery to their fullest extent possible.”

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Case study 2

Case study 3

Earth Friendly Concrete (EFC)

HIPER® Pile

During the year, Keltbray became the first major engineering and construction company in the UK to offer customers Earth Friendly Concrete (EFC) in its marketleading temporary works solutions. Through its in-house design consultancy Wentworth House Partnership (WHP), winner of the Consulting Firm of the Year award at the 2019 Ground Engineering Awards and winner of the BCIA temporary works initiative 2020, Keltbray tested and proved the applications of Wagners EFC®, alongside other low carbon concrete mixes, across a diverse range of project types. The success of this initiative in achieving proof of concept led to the decision to make EFC a core service offering on all WHP’s customers’ temporary works projects and is now being deployed in permanent works within our piling services. EFC has all the performance characteristics of Portland cementbased traditional concrete but uses a geopolymer binder system made from the chemical activation of two industrial waste by-products – blast furnace slag (waste from iron production) and fly ash (waste from coal fired power generation). This alternative eco-friendly binder technology reduces the carbon emissions associated with normal Portland cement and has a much lower embodied energy.

Hollow, monitored piles can be re-used and are capable of incorporating essential additional services. This groundbreaking development work, funded through the Innovate UK – Transforming construction challenge programme with project values of £1.1m, delivers new, world leading integrated foundation systems by meeting a range of significant short, mid and long term sustainability objectives. A consortium led by Keltbray’s piling business has re-imagined the way we look at deep foundations. In collaboration with Converge, DB Group, and City, University of London, with Arup as peer reviewer, we are turning passive, static piles that only load bear, into hollow and impression piles that offer greater value to a building throughout its life-cycle. HIPER® Pile uses a hollow and impression enhanced pile design and lightweight cement-free concrete to provide the same shaftbearing capacity with fewer piles or narrower piles. HIPER® Energy piles significantly outperform existing comparable solutions while balancing on-off peak demands. The pile incorporates smart technology to monitor

performance and the void can be used to integrate renewable energy technologies. With up to 80% reduction in materials and emissions possible, and greater onsite productivity, HIPER® Pile helps achieve embedded carbon reduction and circular economy aims/Construction 2025 objectives. The project is set to deliver unprecedented efficiencies with up to 40% increase in shaft friction reducing the overall pile length, an increase of over 60% in thermal conductivity resulting in highlyefficient heat transfer, 50-70% material savings from hollow and impression enhanced construction modes, and over 80% in carbon reduction using ultra-low carbon concrete. It will offer a range of possible functions at building and district levels coupled with an extended use as water collector, thermal heat sink, and inter-seasonal storage. The pile reuse at end of the building life-cycle is optional, or to install new deep bores. It fully considers Whole Life Cycle assessment performance and cost targets compared to the typical construction only valuation. Keltbray has three patents pending for novel HIPER® Pile technologies.

Importantly, the engineering and construction properties of this environmentally friendly concrete are as good, and in some areas better, than normal concrete. Significant performance advantages include improved durability, lower shrinkage, earlier strength gain, higher flexural tensile strength and increased fire resistance.

Strategic report

Some examples of our industry participation include:

4 INDUSTRY PARTNERSHIPS Collaboration and strategic partnerships are fundamental to improving business outcomes. Strategic partnerships benefit everyone: businesses, employees and customers. Businesses can broaden their relevance and increase their addressable market; customers benefit from the strengths and offerings each organization brings to the table; and employees can expand their development opportunities by being exposed to new perspectives and expertise. Plus, deepening ties between complementary businesses fosters collaboration and longevity, and allows companies to offer services and solutions that help their customers and other businesses become more successful. Keltbray is a recognised collaborative innovator within the construction industry ecosystem and takes its role in supporting the transformation of the wider construction industry very seriously. With a long established, multiaward-winning innovation culture, we are constantly rethinking our service offerings, to create smarter ways for the industry to operate. As part of our five-year strategy for sustainable growth – ‘Unleashing our potential’ – we are leveraging a range of distinct, proprietary approaches in key areas of project deliver, product development and process optimisation that will allow us to meet ambitious market and client expectations. To achieve this, we will continue to establish strategic collaborations across the industry and outside, including supply chain, technology and academic partners. As an industry change agent, we are also active members on a number of governmental and industry bodies that are challenging and changing the reputation of the construction industry, as a sector known for operational excellence and innovation. 64

Major Projects Association

Supply Chain Sustainability School

UK Cabinet Office – The Construction Playbook

The Nuclear Institute

IET – Institution of Engineering and Technology

Build UK – Industry Leadership

Construction Leadership Council

High Speed Rail Group

Railway Industry Association

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Section 172 statement

ACTIVITIES OF THE MAIN BOARD IN FY2021 Section 172 of the Companies Act 2006 requires a director of a company to act in the way they consider, in good faith, would most likely promote the success of the company for the benefit of its members as a whole. In doing this, Section 172 requires a director to have regard, among other matters, to the: 1. likely consequences of any decisions in the long term 2. interests of the Company’s employees 3. need to foster the Company’s business relationships with suppliers, customers and others 4. impact of the Company’s operations on the community and environment 5. desirability of the company maintaining a reputation for high standards of business conduct 6. need to act fairly as between members of the company In discharging our Section 172 duties, we have regard to the factors set out above. We also have regard to other factors that we consider relevant to the decision being made by providing guidance on the following areas: – – – – – –

Purpose and leadership Board composition Director responsibilities Opportunity and risk Succession and remuneration Stakeholders

clear governance process in place for decision-making, we do however, aim to make sure that our decisions are consistent and predictable. As is normal for large private companies, we delegate authority for day-to-day management of the Company to executives and then engage management in setting, approving and overseeing execution of the business strategy and related policies. We regularly review health, safety and environmental matters, financial and operational performance as well as other areas over the course of the financial year including the Company’s business strategy, key risks, employee-related matters, diversity and inclusivity, corporate responsibility, governance, compliance and legal matters. As a result of this we have had an overview of engagement with stakeholders and other relevant factors which allows us to understand the nature of the stakeholders’ concerns and to comply with our Section 172 duty to promote the success of the Company. The following tables provide examples of how the Directors have satisfied their duty under Section 172 of the Companies Act 2006 to engage with our stakeholders in 2021.

We acknowledge that every decision we make will not necessarily result in a positive outcome for all of our stakeholders. By considering the Company’s purpose, and values together with its strategic priorities and having a

Strategic report

How the Main and Executive Boards fulfil their Section 172 Duties

Board development and assessment Every director is aware of their statutory duties, and they are assessed. Identiﬁed gaps in understanding are addressed through speciﬁc training

All board submission papers take account of stakeholder interests in line with their main duties under S172

Board information Our board engages directly with all our stakeholders through planned programmes of engagement and speciﬁc interventions.

S172 factors are considered in board strategy discussions to ensure all strategic actions balance stakeholder interests to underpin longterm success

The Keltbray culture, values and Code of Conduct help ensure proper consideration of stakeholder interests in Board decisions

Board strategic discussions

The outcomes from board decisions are assessed and further engagement takes place with stakeholders if required

Using the board intelligence platform, the board applies continuous improvement principles to assure xthe quality of information

Board decisions

As a result of the board’s engagement, the necessary S172 actions are fulﬁlled

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Duty to promote the success of the Group, with regard to: The likely consequences of any decision in the long term OVERVIEW

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCE REPORT AND ACCOUNTS

The need to foster the Company’s business relationships with suppliers, customers and others OVERVIEW

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCE REPORT AND ACCOUNTS

The desirability of the Company maintaining a reputation for high standards of business conduct STRATEGIC REPORT

GOVERNANCE REPORT

FINANCE REPORT AND ACCOUNTS

The interests of the Company’s employees OVERVIEW

STRATEGIC REPORT

GOVERNANCE REPORT

The impact of the Company’s operations on the community and the environment OVERVIEW

STRATEGIC REPORT

GOVERNANCE REPORT

FINANCE REPORT AND ACCOUNTS

The need to act fairly as between members of the Company STRATEGIC REPORT

GOVERNANCE REPORT

Strategic report

Governance report 68

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Governance report

The Keltbray Group is committed to achieving corporate governance standards and sustainable business practices that meet the highest levels of integrity and scrutiny for a privately-owned enterprise. We are early adopters of The Wates Corporate Governance Principles for Large, Private Companies. We believe this is the best way of providing a strong framework within which to benchmark our corporate governance activities in our pursuit of resilient longterm growth and success.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Doing the right thing is integral to the Main Board’s objective to sustain a corporate culture aligned with our Group values, drive a level of organisational effectiveness commensurate with the achievement of the Group’s purpose and vision – To redefine the way sustainable development is delivered – while at all times upholding the highest standards of business ethics and conduct across all the Group’s stakeholder groups. This approach is encompassed in the Group’s Code of Conduct, which provides more granular guidance on a range of standards, including the UK Bribery Act and Modern Slavery Act. The Code of Conduct is available on the Group's website: keltbray.com

ACHIEVING BEST PRACTICE IN PRIVATE COMPANY GOVERNANCE The framework is reviewed annually to ensure that the committee structure and delegations of authority continue to meet the needs of the business and provide the Main Board and Group senior management with the necessary oversight of Keltbray’s business affairs. During the year, the Governance structure was implemented and operated in line with The Wates Corporate Governance Principles for Large Private Companies, in order to align more closely with the Group’s customer-centric strategy and fiveyear business plan, and to ensure Keltbray was an early adopter of best practice in private enterprise governance and reporting. This framework includes the Main Board and Executive Board operating as two separate, but highly interconnected governance forums, whose members meet at least twelve times a year. The principle behind the creation of this two-tier senior governance structure is to facilitate improved cooperation and coordination between executive management members and to create more informed challenge and effective decision-making, facilitated by high-quality management information, with the aim of ensuring an approach that is much more ‘fleet of foot’ in implementing strategy. The current terms of reference of the Board and its various committees and subcommittees are set out on pages 72-85.

Governance report

Governance principles

The company’s governance framework applies the Wates Corporate Governance Principles for Large Private Companies, published in December 2018. The core activities of the Main Board and its subcommittees are planned and documented on an annual basis, and this constitutes the framework within which the Main Board and its subcommittees operate, spanning the entire Group.

The Main Board has clear terms of reference that follow the Wates principles and cover the following: 1

Purpose and leadership Develop and promote the purpose of a company, and ensure that its values, strategy and culture align with that purpose 2

Board composition The right balance of skills, backgrounds, experience and knowledge to make a valuable contribution 3

Director responsibilities Clear understanding of directors’ accountabilities and responsibilities in ensuring effective decision making and independent challenge 4

Opportunity and risk Promote the long-term sustainable success of the company by identifying opportunities to create value, and establish oversight for the identification and mitigation of risk 5

Remuneration Promote executive remuneration structures aligned to the long-term sustainable success of the Group 6

Stakeholder relationships and engagement Foster effective stakeholder relationships aligned to the Company’s purpose to inform effective decision making

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

A key function of Keltbray’s corporate governance framework is the identification, management and mitigation of operational and financial risks. At every governance level, we ensure the necessary decisionmaking processes are functioning correctly, in line with developments in company laws, industry requirements, corporate governance and best practice.

MAIN BOARD ATTENDANCE Details of individual director’s attendance at Main Board sessions in the 2021 reporting period are shown in the following table: Maximum number of Main Board meetings Director could attend

Number of Main Board meetings Director attended

Percentage

Executive Chairman Brendan Kerr

100%

Executive Directors Darren James

100%

Name of Director

Vince Corrigan

100%

Peter Burnside

100%

Non-executive Directors – independent Tony Douglas

100%

John Keehan

100%

Ashley Muldoon (appointed November 2020)

100%

Phil Wilbraham (appointed November 2020)

100%

MAIN BOARD TIME ALLOCATION

How the Main Board allotted its time in FY2021 Group strategy Business performance Finance and risk management People and inclusion Corporate governance and regulatory compliance Group strategy Business performance Finance and risk management People and inclusion Corporate governance and regulatory compliance

Governance report

Governance framework 1

Main Board

Safety, Health, Environment Leadership Team (SHELT)

Built Environment divisional management committee

Audit Committee

Inclusion Council

Remunerations and Nominations Committee

Executive Investment Panel

Infrastructure divisional management committee

Project level

Business Unit level

Risk Committee

Executive Board

Corporate level

Project governance

Independent assurance 1

MAIN BOARD The Main Board determines the strategic direction of the Group and allocation of necessary resources to ensure the implementation of the Group’s strategy. It retains oversight of operations through regular reports by the Group Chief Executive Officer and his direct reports. It has overall responsibility for the management of risk and reviews the effectiveness of internal controls and risk management procedures at Group level through reports by the Risk Committee Chairman. Certain key decisions are the preserve of the Main Board, and are identified in a schedule of reserved matters for its prior approval. These include changes to the Group’s capital structure; approval of material mergers, acquisitions and disposals; significant investments, capital expenditure, and debt facilities. Authority for the day-to-day running of the Group is delegated to the Executive Board. The Main Board is responsible for ensuring that the Group’s

accounts give a true and fair view of the business using suitable accounting standards and judgements and determining whether the Group is a going concern. It also has responsibility for approving the Annual Strategic Report and ensuring compliance with UK company law (where the company is registered) and other applicable legislation. The Board is composed of directors providing an appropriate balance of skills, experience, independence and diverse backgrounds. In addition to Brendan Kerr, the current members of the Board are Tony Douglas, Phil Wilbraham, Ashley Muldoon, John Keehan, Darren James, Vince Corrigan and Peter Burnside. Their biographies can be found on pages 80-82. The Board acknowledges a relative lack of diversity in its membership, which is a common challenge across the engineering and construction industry, and one it has a determination about tackling.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Main duties – Strategy stress-testing and ratification – Approving Group strategy and business plan, including EBIT targets – Operational performance oversight – Overseeing the Group’s succession planning – Overseeing the Group’s corporate governance and compliance arrangements – Reviewing Executive Board performance and effectiveness – Drive and promote diversity and inclusion

Governance report

Governance framework cont.

EXECUTIVE BOARD

RISK COMMITTEE

The Executive Board is responsible to the Main Board for the dayto-day management of the Group’s operations and creating sustainable stakeholder value through the management of the customer service divisions – Built Environment and Infrastructure. Its role includes recommending to the Main Board the Group’s overall business strategy and driving its implementation, driving the Group’s people strategy, driving safety and sustainability performance across the Group, reviewing and monitoring the performance of management, and setting, and ensuring compliance with, the Group’s internal controls and risk management procedures. The members of the Executive Board are set out on pages 84-85.

The Group operates a Risk Committee, as a subcommittee of the Main Board, to ensure that inherent and emerging risks are identified and managed in a timely manner and at an appropriate level. The Committee reviews the organisation’s response to specific areas of risk and approves standards and processes where control weaknesses are considered to exist.

The Executive Board has further delegated authority to a series of subcommittees, which focus on particular Group-wide matters.

Main duties

Main duties – Implementing Group strategy – Driving operational performance in line with business plan targets – Recommending to the Main Board for approval, material acquisitions and disposals, material contracts and bids, major capital expenditure projects and budgets – Recommending the Group’s Code of Conduct and corporate policies to the Main Board for approval – Providing overall health, safety and wellbeing leadership – Sustainability strategy execution

To support the Committee’s work and to enhance the cohesion of the Group’s risk management approach, including the cascade of Group-wide messages and lessons learnt, business unit commercial leads and function heads attend meetings on a rotational basis to discuss their respective risk management and mitigation plans. – Review and advise regarding the strategic risk management at the Group level and ensure there is a framework for risk management in the business units – Identify, assess and advise the management of and monitor risks to the Keltbray Group of companies. Pay specific attention to: – Strategic level risks – focus on those risks which have the potential to deliver a strategic impact on the efficacy of the Group

– Review controls, management responsibilities and resources to manage the risks arising from the strategic plans and objectives – Oversee and advise the Main Board on the current risk exposures of the Group and make recommendations for the future risk strategy – Develop and refine appropriate reporting mechanisms for the Group Executive Board in order to: – Raise awareness of risk management – Enable the Main Board to focus on the key potential threats and opportunities at the strategic level – Communicate those risks which sit across the divisions and business units within the Group – Develop a risk management culture and vision which is communicated across the business

Keltbray's Board governance reporting portal 76

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

AUDIT COMMITTEE The Audit Committee is a subcommittee of the Main Board and provides independent assurance to the Main and Executive Boards regarding the management of the Group’s affairs and oversees the Group’s financial reporting, capital management and internal controls. It also provides a formal reporting link with the external auditors, BDO.

Main duties – Monitoring the integrity of the financial statements and formal communications relating to the Group’s financial performance – Reviewing significant financial reporting issues and accounting policies and disclosures in financial reports – Reviewing the effectiveness of the Group’s internal control procedures and financial management systems – Considering how the Group’s internal audit requirements shall be satisfied and making recommendations to the Main Board – Making recommendations to the Main Board on the appointment or reappointment of the Group’s external auditors

REMUNERATION AND NOMINATIONS COMMITTEE A subcommittee of the Main Board, this forum’s primary objective is to set remuneration at a level that will enhance the Group’s resources by attracting, retaining and motivating quality senior management who can deliver the Group’s strategic ambitions within a framework that is aligned with the majority shareholder’s interests. The Committee firmly believes that the best people on the right remuneration, with an emphasis on a balanced performance-related pay structure, strengthens the Group’s ability to face challenges emanating from economic and market change, and to deliver sustained growth for all stakeholders. The secondary objective is to ensure that the Main Board remains balanced and effective, that succession plans are in place, and that its structure, composition and skills remain aligned to the Group’s strategic objectives. The Committee’s primary objective, when necessary, is to identify and evaluate candidates for future appointments and, in doing so, it takes advice from independent external recruitment consultants.

Main duties – To endorse for approval by the Main Board all Main Board, Executive Board and Senior Leadership Team (SLT) appointments and associated remuneration packages – To endorse all profit share payments for approval by the Main Board – To assist the Main Board in ensuring that the Main Board and Executive Board retain an appropriate structure, size and balance of skills to support the strategic objectives and values of the Group – To make recommendations to the Main Board on Group wide reward and benefit frameworks – To oversee the succession planning process for all Main Board, Executive Board and Senior Leadership Team positions

SAFETY, HEALTH, ENVIRONMENT LEADERSHIP TEAM (SHELT) A subcommittee of the Executive Board, this forum ensures risks and opportunities associated with health, safety, wellbeing and sustainability are given the highest priority within the Group. It also directly supports the delivery of business strategy through the management of sustainable development issues covering social, economic and environmental matters.

Main duties – Reviewing the development of policies and guidelines for managing safety and sustainable development issues – Reviewing the implementation of these policies and guidelines and measuring the performance of the Group across these areas – Monitoring and acting on reports covering matters relating to significant safety and sustainable development risks and liabilities – Monitoring incidents, including key impacts and mitigation actions and, where appropriate, ensuring these are communicated group-wide – Oversight of the work of its Health and Wellbeing subcommittee – Considering domestic and international regulatory and technical developments affecting safety and sustainable development management

Governance report

Governance framework cont.

INCLUSION COMMITTEE A subcommittee of the Executive Board, the Inclusion Committee is chaired by the Group Chief Executive, with members drawn from the extended leadership team and relevant functional disciplines. The main purpose of the committee is to lead the formulation and endorsement of the Group’s people and organisation inclusion agenda, and ensure total alignment with Group business strategy.

Main duties – Setting guidelines for the types of skills, capability and diversity of human capital necessary to achieve the Group’s strategic goals – Ensuring the human resources function works with management to carry out regular reviews of talent diversity and integrity of recruitment, reward and succession plans – Managing the necessary investment in development and education activities, including development programmes and education networks, to meet current and future inclusive talent requirements – Overseeing the Group’s recruitment and resource mobilisation plans to meet operational inclusion and diversity demands at all levels in the Group – Establishing and developing the Group’s general policy on employee equality and diversity – Considering legal and regulatory developments in equality and diversity affecting people management – Developing and maintaining effective people management systems and processes

EXECUTIVE INVESTMENT PANEL A subcommittee of the Executive Board, it is chaired by the Group Chief Executive officer and Environmental Services, and is responsible for investment policy decisions. It oversees the commercial prioritisation and capital allocation for strategic work-winning opportunities, development of public sector framework opportunities, and the Group’s broader capital allocation programme for sanction by the Executive Board and Main Board. Investment funding for acquisition, disposal, partnering and joint venturing transactions, and related commercial decisions are also overseen by this committee.

Main duties – Managing ‘permission to bid’ gateway for Group strategic bids – Proposing the Group’s investment strategy to the Executive Board and monitoring the implementation of the investment policy and procedures – Monitoring compliance with legislation, rules and regulations affecting the Group’s investment activities – Considering and recommending to the Executive Board for approval the appointment of external investment advisers, including agreeing remuneration, approving engagement terms, and monitoring performance – Considering all investment and divestment proposals

BUILT ENVIRONMENT/ INFRASTRUCTURE DIVISIONAL MANAGEMENT COMMITTEES These division-level management committees have primary accountability for the day-today management of business and project operations across the key customer sectors within agreed limits set by the Executive Board. Members are drawn from senior management in our Built Environment and Infrastructure businesses and key supporting functions. The committees are also responsible for driving the implementation of health, safety, wellbeing and sustainable development policies and monitoring the performance of related activities.

Main duties – Coordinating the implementation of the relevant sector strategies and customer plans, and monitoring performance – Driving operational performance to ensure the right people are in the right place, doing the rights things at the right time to meet pre-determined performance targets – Coordinating the division’s budget and business plan process – Allocating capital across the division within Main Board and Executive Board approved limits – Coordinating the development and implementation of divisional policies, processes and standards – Maximising divisional alignment, including practices, resources and procurement – Driving cross pollination of operational efficiencies and learnings as appropriate across the two divisions – Driving senior talent management and development (in liaison with the Main and Executive Boards, the Inclusion Committee and the Group people strategy)

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

PROJECT GOVERNANCE Project delivery reviews are governed by the standardised processes and practices of Keltbray’s Business Management System (BMS) – a systematic approach to risk management and quality assurance in the setup and delivery stages of all projects, whatever their scale and complexity. Through Keltbray’s approved business quality management system, the project leadership teams ensure project activities are performed in line with commercial targets, legislation, regulations, codes of practice and the requirements of specific quality management assurance accreditations relative to the project. Continual improvement is achieved through the implementation of business objectives, audits, data analysis, corrective and preventive actions and management

Board effectiveness All directors are advised regularly of likely time commitments and are asked to seek approval from the Board if they wish to take on additional external appointments. The ability of individual directors to allocate sufficient time to the discharge of their responsibilities is considered as part of the directors’ annual performance review process overseen by the Executive Chairman. Any issues concerning the Chairman’s time commitments are dealt with by the Main Board. An induction programme is agreed with all new directors aimed at ensuring that they are quickly able to develop an understanding and awareness of the Company’s governance structure and core processes, its people and businesses. In addition to the above, as part of the induction process, new directors will typically visit the Group’s principal operations in order to meet employees and gain an understanding of the Group’s projects and services.

tablet-based information in a timely manner that is in a form and of a quality appropriate to enable them to discharge their duties. In the normal course of business, such information is provided in a regular report to the Main Board that includes information on operational matters, strategic developments, reports on the performance of Group operations, financial performance relative to the business plan, business development, corporate responsibility and customer/ stakeholder relations.

Independent assurance and accreditation Keltbray is independently audited to ensure governance and compliance against internal, ISO and industry standards through alignment with the Considerate Constructors and Local Authority Considerate Contractor schemes. This governance structure ensures that in addition to a sound financial performance, Keltbray operates safely, ethically, sustainably and responsibly, with qualified professionals in all areas of the business. The Group acknowledges responsibility to the Modern Slavery Act 2015 within its business and supply chain. Our Company Directors and senior management take responsibility for implementing this policy, as well as providing adequate resources and investment to ensure that slavery and human trafficking are not taking place within the organisation or our supply chain. A copy of our Modern Slavery and Human Trafficking policy can be viewed on our website: keltbray.com

Ongoing training and development is provided for individual directors as required. Directors are supplied with mobile

Governance report

Main Board The Main Board comprises the Executive Chairman; Chief Executive Officer; Group Finance Director; Chief Operating Officer and four independent Nonexecutive Directors. Its primary responsibility is to promote the long-term success of Keltbray by creating and delivering sustainable value. The Main Board seeks to achieve this in part by being clear about the company’s vision and purpose, and ensuring that its values, strategy and culture align with and fully support that purpose.

EXECUTIVE CHAIRMAN Committee membership 1, 5 Brendan contributes to Keltbray significant leadership, customer relationship building and private company governance experience across the specialist engineering and construction sectors. Brendan joined Keltbray in 1989 and became sole equity owner and Chief Executive in 2003, expanding the service portfolio through business development and acquisition. Keltbray’s success has been built on Brendan’s focus on business development, innovation and technical leadership, commitment to health and safety, and consideration for quality and the environment. His focus on customer service and bespoke solutions has established long-term repeat business customer relationships. Current external appointments • Chairman of Build UK • Honorary Fellow of RICS • Honorary Doctorate of Ulster University, Belfast

GOVERNANCE COMMITTEE 1. 2. 3. 4. 5. 6. 7. 8. 9.

Main Board Executive Board Risk Committee Audit Committee Remuneration and Nominations Committee Safety, Health, Environment Leadership Team (SHELT) Inclusion Council Executive Investment Panel Divisional Management Committee

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Tony Douglas

The Keltbray Main and Executive Boards are comprised of 17 members, all of whom possess the necessary experience and expertise to deliver our strategic priorities, while upholding the highest standards of business conduct.

Brendan Kerr

Board leadership NON-EXECUTIVE CHAIRMAN Committee membership 1, 5 Tony joined the Keltbray Group Board as a Nonexecutive Director in 2010, and was appointed Nonexecutive Chairman in 2015. Tony is currently Chief Executive Officer of Etihad Aviation Group. He has nearly 20 years of international leadership experience in transportation, infrastructure, and government sectors. He joined Etihad Aviation Group in 2018 from the UK’s Ministry of Defence, where he served as CEO of the Defence Equipment and Support department, responsible for procuring and supporting all the equipment and services for the British Armed Forces, managing a budget of US$20 billion a year. Previously, he held senior leadership positions in the UAE, most notably as CEO of Abu Dhabi Airports Company and Abu Dhabi Ports Company, where he was responsible for the successful delivery of Khalifa Port. In the UK, he held senior positions with airport operator British Airports Authority (BAA), and Chief Operating Officer and Group Chief Executive designate of Laing O’Rourke. His roles under BAA included Managing Director of Heathrow Terminal 5 project, Group Supply Chain Director, Group Technical Director, and CEO of Heathrow Airport. Current external appointments • Chief Executive Officer, Etihad Aviation Group

Phil Wilbraham has spent his career in major programme and project leadership, design management and civil engineering design, latterly specialising in airport development. He has delivered complex private and public sector programmes from strategy stage, through design, to construction and operation. Over the last ten years, he has demonstrated strong leadership delivering mega projects at Heathrow Airport: he led the Expansion (third runway) Programme; the Terminal 2 Programme; and was integral to the success of the Terminal 5 Programme. External appointments • Trustee of the Building Research Establishment • Non-executive Director of Epsom and St Helier NHS Trust

NON-EXECUTIVE DIRECTOR Committee membership 1 Ashley is the Chief Operating Officer of Global Switch, the leading owner, operator and developer of large-scale network dense, carrier and cloud neutral multi-tenanted data centres in Europe and Asia-Pacific. Prior to joining Global Switch, Ashley was CEO of Multiplex, a global construction business, where he was responsible for overseeing Multiplex’s UK, Middle East and Canadian portfolios. He has over 27 years of experience delivering outstanding high quality projects within the construction industry. External appointments

John Keehan

Committee membership 1, 3, 4

Ashley Muldoon

Phil Wilbraham

NON-EXECUTIVE DIRECTOR BSc, CEng, MICE, MIHT

NON-EXECUTIVE DIRECTOR Committee membership 1, 3, 4 John has over 30 years’ experience in the construction industry, holding senior roles within Skanska and latterly, Keltbray. John joined Keltbray in 2005 when the business had achieved annual revenues of circa £40.0m. He has been instrumental in the Group’s corporate development through the introduction of new management controls and reporting, to ensure controlled organic growth. He has also overseen and supported the Group’s diversification strategy, playing a key role in accessing funding for a number of Group acquisitions.

• Chief Operating Officer, Global Switch • Trustee for The Chickenshed Theatre Foundation • Development Board member of the Willow Foundation

Governance report

Darren joined Keltbray as Chief Executive Officer in March 2020. Previously he worked for Costain Group PLC for over 30 years, most recently as Group Chief Operating Officer. He has a wealth of experience in leading high-profile programmes for both public and private sector customers, often in highly regulated infrastructure sectors, both in the UK and internationally. A civil engineering graduate of the University of Surrey, Darren joined Costain as an industrial placement student progressing through the organisation to the Executive Board. He has held a number of senior positions with significant profit and loss responsibility, including Managing Director of the £1 billion turnover Infrastructure division, and an executive director for 12 years. External appointments

CHIEF OPERATING OFFICER Committee membership 1, 2, 3, 4, 6, 8, 9 Vince joined Keltbray as a Group Board Director in 2015 with executive responsibility for commercial management and strategic development of Keltbray. He had previously spent over 30 years at Sir Robert McAlpine Ltd as a Main Board Director for the latter nine years, combined with operational responsibility for its London and South East delivery business from 2008. He was promoted to the role of Keltbray’s Chief Operating Officer in November 2019. Vince has extensive experience in the development and delivery of a number of the UK’s largest schemes in both the public and private sectors. Highlights include The Jubilee Line Extension, New Colchester Garrison, Arsenal’s Emirates Stadium, London 2012 Olympic Stadium, ExCel Docklands, The London O2 Arena and the new Bullring in central Birmingham.

• Board member of The Port of London Authority • Director of the Rail Industry Association

GOVERNANCE COMMITTEE 1. 2. 3. 4. 5. 6. 7. 8. 9.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Peter Burnside

Committee membership 1, 2, 3, 4, 5, 6, 7, 8

Vince Corrigan

Darren James

CHIEF EXECUTIVE OFFICER BEng, CEng, FICE, FCIHT, FIoD

CHIEF FINANCIAL OFFICER FCAI Committee membership 1, 2, 3, 4, 5, 8 Peter began his accounting career at KPMG, before moving to BDO (then Stoy Hayward) where he spent the next 28 years. During that time, he held the positions of Head of Tax and later Managing Partner of the Northern Ireland firm, where he worked on a number of large corporate finance transactions and tax assignments for both local and international groups. While at the company, Peter was introduced to Keltbray, and worked as an external advisor to the Group and its shareholder for 12 years, prior to joining full time as Chief Financial Officer in February 2018.

Main and Executive Board statistics

MAIN BOARD DIRECTORS TENURE 2003 2004 2005 2006 2007 2008 2009 2010

2011

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Brendan Kerr Tony Douglas Darren James Peter Burnside Vince Corrigan John Keehan Phil Wilbraham Ashley Muldoon Executive Chairman

Non-Executive Director

Executive Director

Non-Executive Chairman

Gender Male (16)

BOARD COMPOSITION AND DIVERSITY

Female (1) Age >57 (9) 51-56 (6) 45-50 (2) Ethnicity White (17) Board balance

Executive Chairman (1)

Non-executive Chaiman (1) Independent Non-executive Director (3) Executive Director (12)

Governance report

Committee membership 2, 6, 8, 9

CHIEF EXECUTIVE OFFICER Committee membership 1, 2, 3, 4, 5, 6, 7, 8

Peter Burnside

MANAGING DIRECTOR, ENVIRONMENTAL SERVICES CEng (Hons), MICE, MSc, MBA, FRICS, MIoD

Craig Moorfield

Darren James

The Executive Board is comprised of 12 senior leaders, all of whom are experts in their professional field. Collectively they are responsible for the management of the Group under the leadership of the Chief Executive Officer. This includes formulating strategy proposals for Main Board approval and ensuring that the agreed business plans are implemented in a timely, safe and effective manner.

Tim Bowen

Executive Board

CHIEF FINANCIAL OFFICER FCAI Committee membership 1, 2, 3, 4, 5, 8

GROUP TECHNICAL DIRECTOR BEng (Hons), MIE (Aust) Committee membership 2, 6, 8, 9

6. 7. 8. 9.

MANAGING DIRECTOR, ENERGY AND RENEWABLES Committee membership 2, 6, 8, 9

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Peter Suchy

1. 2. 3. 4. 5.

Mike Snee

GOVERNANCE COMMITTEE

GROUP COMMERCIAL DIRECTOR Committee membership 2, 3, 4, 8

MANAGING DIRECTOR, BUILT ENVIRONMENT SERVICES Committee membership 2, 6, 8, 9

MANAGING DIRECTOR, DEMOLITION AND CIVILS Committee membership 2, 6, 8, 9

Kyla Farmer

Paul Deacy

Committee membership 1, 2, 3, 4, 6, 8, 9

Phill Price

Vince Corrigan Michael O'Hagan Neil Thompson

CHIEF OPERATING OFFICER

GROUP PEOPLE DIRECTOR MA, FCIPD Committee membership 2, 5, 7, 8

MANAGING DIRECTOR, INFRASTRUCTURE BEng (Hons), MBA, FIoD, MIET Committee membership 2, 3, 4, 6, 8, 9

NEIL THOMPSON

MANAGING DIRECTOR, RAIL BSc, FRICS Committee membership 2, 6, 8, 9

Governance report

Governance review The Main Board manages a forward agenda of standing items appropriate to the Group’s operating and reporting cycles. Items requiring Main Board approval or endorsement are defined clearly. Other items are for monitoring or reviewing progress against strategic priorities, risk management or the adequacy of internal controls.

GOVERNANCE PRINCIPLES 1

Purpose and leadership As a specialist engineering and construction group, Keltbray has a clear purpose – To redefine the way sustainable development is delivered. The Group is actively developing a culture based on fulfilling this purpose through compliance with our core values. This purpose is clear, powerful, and relevant to the business challenges of today and tomorrow, and forms a compelling guide to the overall strategic goals of the Group and how they will be achieved. The Group’s strategy for sustained growth – ‘Unleashing our potential’ is driven by leadership focus on innovation and self-delivery excellence. Engineering expertise, coupled with adoption of new technologies and equipment, and a progressive people strategy develops talent, attracts the very best people available externally and improves the safety and overall wellbeing of all those who are affected by our business activities. This focus allows the Group to create a clear and sustainable competitive advantage in the demanding markets in which the business operates. Delivering social value is also intrinsic to our core purpose and to our goal of being a progressive and responsible employer. By considering social value in its business decisions, including the way it employs staff, engages with

communities and buys products and services, Keltbray can cultivate a more sustainable and inclusive society, and demonstrate that business done well can be a force for good. This social value strategy underpins the Group’s belief that how it does business is as important as what it does – constituting its licence to operate. The Board acknowledges the importance of engagement and dialogue with its employees and key stakeholders. If the purpose and strategy are to be achieved, they must be communicated to employees, and this is achieved through periodic CEO conversations with employee groups, supported by regular updates on the Group’s Intranet. Where safe and practical during COVID, members of the Main and Executive Boards have visited projects in order to explain the strategic agenda to all concerned. The Board sets and leads behaviours and culture to support the delivery of the strategy. The Group’s Code of Conduct, which sets out behaviours acceptable to Keltbray, defines Keltbray’s commitment to operating at all times in accordance with ethical standards and the behaviours that are expected of employees, supply chain partners and other stakeholders.

ACTIONS TAKEN – Launched social value strategy which will guide next five years of community investment and engagement – New Diversity and Inclusion plan launched to raise understanding and awareness of the everyday actions that can help and hinder the development of a fully inclusive culture – Launched new Safety, Health and Wellbeing action plan – Promote Health, Prevent Harm), acknowledging the link between psychological and physical wellbeing – Reviewed progress in execution of our strategy: ‘Unleashing our potential’: to promote profitable, sustainable growth by crossselling more integrated services to core customers and targeting this existing expertise into adjacent sectors – Set clear environmental sustainability targets as part of environmental goal to achieve ‘Net Zero’ carbon status. – Approved the Group strategic report and financial statements reports 2021 – Set the Group’s 2022 budget and revised five-year business plan – Reviewed and approved the Group’s Delegations of Authority matrix – Reviewed and approved the annual statements and the Group’s policies on anti-slavery and human trafficking, antibribery and corruption, the Group’s tax strategy and the company supply chain payment terms, which can all be found on the Group’s website keltbray.com – Approved Group people strategy, including overhead of employee benefits

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Board composition Keltbray has appointed a number of independent Non-executive Directors to the Main Board. They bring experience from different perspectives and challenge from outside the sectors in which the business operates. The Main Board is chaired by Tony Douglas, independent Non-executive Director, as Non-executive Chairman of the Group. The Main Board further comprises the Chief Executive Officer, Chief Operating Officer, Group Finance Director and three further Independent Nonexecutive Directors. The size and composition of the Board is considered to be appropriate for a business of this scale and complexity, as well as bringing the necessary skills and experience to fulfil the Board’s responsibilities. The Board operates through a number of executive committees the structure of which can be found on pages 74-79. The Risk, Audit and Remuneration and Nominations Committees are all chaired by Non-executive Directors in order to ensure independent challenge and influence across the broad range of issues for which these Committees are responsible. Board members have equal voting rights when making decisions. The specific modus operandi of the Board is set out in the Company's Articles of Association, a copy of which can be requested from the Group General Counsel or UK Companies House. The Group is confident that the Board has the right skills and experience to discharge its duties effectively. This will be continuously reviewed going forward with the introduction of the Keltbray Main Board Statutory Directors Competency Assessment Framework, based on the Wates Principles to ensure all members are able to discharge their duties effectively. The expectation is that our Main Board Directors role model these competencies the

majority of the time. However, it is accepted that the varying roles of the directors (and whether they are executive or non-executive) will impact their ability to demonstrate all of the competencies all of the time. The annual assessment is designed to recognise their strengths and experience, but also to highlight any development areas. Development actions will then be agreed accordingly. The process is owned by the Remuneration and Nominations Committee (REMNOM) and interviews will be conducted by the Group People Director on an annual basis. These will then be presented to the CEO and Chairman for assessment and the outcomes shared with REMNOM. Individual assessment feedback will also be shared with the directors concerned.

ACTIONS TAKEN – Completed the statutory reorganisation of the Keltbray company structure, to streamline the organisation and better support Group strategy implementation and financial reporting – Reviewed and approved the Group Delegations of Authority matrix – Formally mandated the Executive Investment Panel to review all strategic bids in line with the limits agreed in the Delegations of Authority matrix – Received regular reports from the Chairs of the Main and Executive Board subcommittees on activities and recommendations of the Committees

Formal training for Main and Executive Board directors is currently being developed as part of the Group’s clear commitment to professional development at every level of the organisation. The Executive Chairman and Chief Executive Officer undertake a programme of discussion and evaluation with each member of the Main and Executive Boards respectively outside the forum of formal meetings. This evaluation includes a focus upon succession, which is under regular review both at Board and operational level and is of particular relevance to the strategy implementation over the next three year budget period. The Group will also be implementing an Executive Development Programme, with specialist coaching designed to identify and address development goals. The Board calendar also includes regular visits to major projects to build understanding of our operational delivery capabilities to inform Board level discussions and considerations. Directors are free to request such information as they may wish on any aspect of the Group's operations.

Governance report

Governance review cont.

Director responsibilities During the financial year, the Main Board actively operated the new Group governance framework as part of its early adoption of the Wates Corporate Governance Principles for Large, Private Companies. This sets out the responsibilities, accountability and obligations of Board members, the collective Main and Executive Boards and their subcommittees. The aim is to provide a clear understanding of roles and responsibilities, linking to purpose, values, Code of Conduct, policies and procedures as well as delegations of authority, supporting effective decisionmaking and independent challenge, in turn delivering long-term value to the Group and to stakeholders. The Main Board delegates dayto-day management of the Group to the Executive Board and the Built Environment and Infrastructure Management Committees report directly into this forum. The Main Board further delegates detailed and specific matters to the other committees (see pages 76-79) whose role it is to consider specific issues of relevance to Group governance and to recommend a course of action to the Main or Executive Board depending on relevance.

At a subsidiary level, appointments to the boards of operating subsidiary companies are reviewed and aligned with membership of the Group's Executive Committees and our business unit and functional leadership structure. Business Unit leaders are at the heart of operations, enabling direct engagement with the relevant business unit employees and other stakeholders, most important of whom are our customers. The Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement. Main and Executive Board and Subcommittee papers and supporting information are provided through a secure digital portal and must be timely, accurate, clear, comprehensive and up to date, with a clear accountabilities for any resulting action.

ACTIONS TAKEN – Considered the allocation of capital to support the rolling five-year business plan – Analysed detailed reports on the Group’s operating and financial performance – Received updates on progress against strategic programmes and tested the overall strategy against the delivery of the shareholder’s long-term objectives – Agreed acceptable levels of balance sheet resilience and liquidity required to support growth plans – Reviewed the Group’s forecast funding requirements, debt capacity and potential financing options that would enable achievement of the desired resilience targets – Reviewed cash forecasts, cash management and status reports on the Group’s investments – Regularly reviewed key risks, together with the adequacy of mitigation controls – Reviewed senior appointments, promotions and salary changes

Directors are aware of their statutory and ethical duties in relation to potential conflicts of interest which may compromise objective decision-making. If a perceived conflict of interest arises, the Main Board (or one of its subcommittees if appropriate) will manage the matter as appropriate.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

ACTIONS TAKEN 4

Opportunity and risk The Main and Executive Boards, and the Risk Committee undertake a continuous assessment of risks affecting the Group’s operations and has the necessary oversight for the identification and mitigation of risk, or promotion of opportunity. Further details of the management of key financial and operational risk set out on page 103 under Summary of principal risks and uncertainties. Regular reporting to the Main and Executive Boards across a range of compliance requirements and risks has been formalised through a refreshed Risk Committee terms of reference, chaired by a non-executive director. The aim is to build on that momentum over the next year to review and identify where there may be further opportunities to strengthen the Group's management of risk. Risk reporting at the operational business unit and project levels is guided by the Group’s quality-assured business management system – the 'one Keltbray' way. It is structured so that key risks can be escalated rapidly through the management team, and ultimately to the Board where necessary. The individual businesses and projects are able to tailor and adapt standard risk management processes to suit the specific circumstances of their respective operating environments. The operational risk framework is outlined in greater detail on pages 104-109.

– The introduction of the Wates Corporate Governance Principles for Large Private Companies has highlighted a need for the Executive Committee to focus on opportunities as well as risks, and this has now been incorporated into the monthly Committee meetings. Some of the opportunities that have been considered include leveraging the Group’s extensive frameworks, additional investment opportunities, maximising the integration of the Group’s delivery capabilities, cost rationalisation, and the potential impact of the Group’s diversity and inclusion, social value and carbon reduction plan – Continually reviewed and updated operational smart working practices to ensure business continuity across the Group’s operational delivery entities – Reviewed and recommended remediation measures to mitigate the impact of Brexit on the Group’s activities – Reviewed and recommended improvements to the Group’s behavioural safety governance and control framework to improve performance – Assessed all project delivery commercial contracts and frameworks to ensure alignment with Quarterly budget forecasts

Governance report

Governance review cont.

ACTIONS TAKEN 5

Remuneration The Remuneration and Nominations Committee, chaired by an independent Non-executive Director has clearly defined terms of reference and its main function is to make recommendations to the Main Board considering the Group's remuneration structure and to align senior leadership remuneration to the long-term sustainable success of the Group. The Directors’ remuneration is disclosed in note 11 to the financial statements. The ability to attract and retain people in the business is of critical importance and is therefore included in the strategic objectives led by the Group Inclusion Council. The Group is confident that the recruitment programmes, pay bandings and salary review processes that are in place ensure equal pay for the same role. The Group seeks to set fair and reasonable policies for remuneration both at senior level and at the project operational level. A primary responsibility of the Remuneration and Nominations Committee is attracting, developing and retaining executive management of the quality required to run the business successfully.

– Considered the continued personal development of the Executive Board, including senior management succession planning – Reviewed the Group’s remuneration of senior management incentive arrangements to ensure alignment with shareholder returns – Considered the data and narrative relevant to the Group’s gender pay reporting and payment practices and performance reporting in preparation for external publication, including proposed improvement plans to enhance performance – Reviewed the Group’s employee job levels hierarchy and proposed a simpler, more holistic role and salary level structure to drive greater equality, diversity and progression across all our business and functional activities. Once implemented this will increase confidence that are people are paid in the same salary bands for the same roles, and performance will differentiate reward through a meritocratic reward scheme

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Stakeholder relationships and engagement The Board is clear that good governance and effective communication are essential to deliver our purpose and to protect the company’s brand, reputation and relationships with all our stakeholders, including shareholders, customers, employees, suppliers and the local communities in which we work. The Group communicates to its employees through presentations, internal groupwide emails and online newsletters, social media channels and blogs on our Intranet. An annual employee ‘roadshow’, delivered in a number of locations around the country, provides a briefing on the Company’s performance, gives an update on strategy and allows individuals to raise questions and concerns. Due to the extraordinary circumstances created by the pandemic once again, this year’s roadshow was postponed, although engagement was achieved through the extensive use of Microsoft Teams conferencing facilities. Social media channels and the blogs on our Intranet, give our employees the opportunity to interact with members of the Main Board and senior management. An annual employee engagement survey will be introduced in 2022 in order to highlight areas of improvement in communication of the Group’s purpose. The result of an all employee engagement survey will be a good barometer

of the workforce’s confidence in the Group’s strategic direction, optimism in the future and career opportunities. The Group performs customer relationship interviews, and the findings are used to improve customer engagement with knowledge being shared across all of our business. In 2022 we will be introducing a Net Promoter Score customer satisfaction programme to gauge the value of our service offering and the loyalty it engenders in securing future pipelines of work. The outputs of this exercise will establish a Key Performance Indicator for the Group going forward, and we will report on progress in future annual reports. On all large contracts, the Group hosts local community events including ‘Meet the Buyer’ to engage with local stakeholders. The Group has also developed environmental and social value targets, as part of its sustainability strategy with respect to waste, energy and community engagement that. The Group’s website (keltbray. com), Intranet and social media channels provide up-to-date news and features on our activities. Additional activities oriented towards ensuring strong relationships with stakeholders are detailed in the Section 172 report.

ACTIONS TAKEN – Held virtual CEO conversations with the Top 200 Key Influencers Group to discuss business development opportunities, strategy implementation and engage them in all employee face-toface team briefing system – Carried out second COVIDspecific survey with all employees to determine effectiveness of smart working practices, gauge levels of employee trust and engagement, and support a cycle of continuous improvement – Analysed competitor behaviour, including the impact of potential supply chain ‘ruptures’ caused by company closures, and the resulting impact on the industry – Continually considered the evolving economic, political, social and environmental conditions relative to the Group’s operations – Endorsed actions to promote the construction industry as part of a broader focus on diversity and inclusion – Evaluated the short and long term trends in sustainability that would help to inform the wider business strategy and the Group’s long-term planning process – Reviewed and endorsed the Group’s charitable partners through The Keltbray Foundation

Governance report

Finance report and accounts 92

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Chief Financial Officer’s review GROUP FINANCIAL PERFORMANCE The Group delivered a solid performance in the FY2021 reporting period, despite the ongoing volatility caused by the global pandemic and the UK’s exit from the European Union on construction sector customer confidence. Managed revenue decreased 9% to £390.0m, delivering an operating profit before interest, tax and exceptional items (PBITEI) of £5.7m.

GLOBAL UNCERTAINTY The financial performance of the Keltbray Group in 2021 was once more impacted by the global COVID pandemic and the aftermath of the signing of the BREXIT agreement ratifying the exit of the UK from the European Union. Forward-looking commentary will also need to take into consideration the escalating situation in Ukraine, as the potential economic impact of hostilities and resulting international sanctions on global energy and capital markets intensify further. Against this backdrop of macroeconomic and social uncertainty, Keltbray maintained absolute focus on its key priorities – maintaining strong cash-generating revenues, controlling costs, and securing marginenhancing work in attractive target markets. These key priorities make a significant contribution to the way we deliver greater certainty and value to all our stakeholders.

This is a highly creditable earnings performance, especially when the decrease in turnover is taken into consideration, equating to a £11.7m positive profit delta during the year. The performance was the reward for maintaining our focus on project delivery control, selective tendering, cash management and disciplined cost containment. In the context of the current market conditions, the positive PBITEI can be considered a resilient outturn. A major contributor to this performance was the Infrastructure Rail and Energy divisions, which have performed throughout the pandemic on a ‘business as usual’ basis, supporting the maintenance and development of the nation’s transport and energy networks. The resilience of the Infrastructure divisions was further bolstered during the year with the addition of the Highways and related infrastructure assets from nmcn Plc, following its entry into administration. This is a further endorsement of the Group’s diversification strategy to create a range of income drivers that are not impacted by the same economic cycles. The differential performance of these sectors during this current period of uncertainty is testament to the validity of this strategic aim. The gross margin was up from 9.3% in FY2020 to 13.6%. The rise in margin was caused primarily by an increase in the quality of earnings in the Built Environment division, as clients schemes came back on

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Government’s Construction Supply Chain Payment Charter which has been agreed by the Construction Leadership Council (CLC), the body set up to deliver the government’s

— 2%

23%

17%

14%

Group revenue split — 1%

18%

8% 17% BU

Built environment Demolition and civil engineering Structures Piling Environmental services WHP

E N T 61%

Having started out as a small business enterprise, Keltbray supports prompt payments to suppliers, particularly SMEs, and continually monitors its standard payments terms with its circa 1,400 vendors to support supply chain liquidity. As such we continue to support the UK.

— OTHE R2 %

The Group’s Top 20 customers by revenue continue to be ranked amongst the most prestigious blue-chip public and private sector organisations. As a consequence our Debtor Days ratio remains low and our credit risk exposure is very low. These provide the liquidity levels allowing us to act responsibly in our payment terms with our supply chain, which we have improved during the financial year – details of which can be found on our website: keltbray.com

As a result, a highly-selective and rigorous approvals process continues to be applied to our sales opportunity pipeline of work in bid overseen by the Executive Investment Panel. Although this does put greater pressure on order book growth, we believe that this disciplined approach to opportunity tracking and workwinning will protect the Group in future years – we will not follow the market in chasing low margin, price-sensitive work.

At the year-end 31 October 2021, the Group’s balance sheet total stood at £27.7m, representing a solid capital base, positioning Keltbray firmly alongside its peer group in terms of balance sheet strength and resilience, and well within the liquidity level required by the Group’s banking covenants.

As previously stated, gross margin, pre-exceptional items, rose from 9.4% to 13.6% as the economic recovery commenced. While the outlook in the UK economy is increasingly optimistic and activity levels are recovering, market conditions will remain challenging and pricing levels very competitive for some time to come, particularly in light of the global uncertainty caused by recent hostilities in Eastern Europe.

This can be considered a solid performance in the context of the challenges faced. It is also a great reflection of the enormous amount of work that was delivered in all areas of the business to maintain our resilience.

GROSS MARGIN

The work volume and associated revenue, combined with protracted contract schedules, has resulted in an actual gross profit outturn in 2021 of £53.0m, an increase of £13.0m on the previous year.

industrial strategy for construction.

INFRASTRUCT UR E

line following a period of delay due to investment hesitancy caused by the economic uncertainties. Further margin growth was, to an extent, restricted by the rising costs of raw materials and labour in a highly competitive marketplace for construction services.

T IL

Infrastructure Rail and highways Energy and renewables

Other Property development

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Financial review cont.

Alongside our core markets, we are also targeting growth in profitable adjacent sectors including highways, renewables, defence estates and residential-led mixed use, to drive more stable returns moving forward. The acquisition of the infrastructure assets of nmcn, together with infill acquisitions in our energy business in the year will benefit the business by strategically rebalancing the project portfolio away from an over-reliance on more cyclical private building sectors, and towards longer term funding projects and frameworks in economic and social infrastructure. Our focus on generating diversified sources of revenue both from a sector and customer perspective further reinforces the diversification strategy and will help us return to a more profitable performance in 2022 and beyond, notwithstanding the pressure currently imposed on global capital markets from the hostilities in Ukraine.

NET AVAILABLE FUNDING The group ended the financial year with a closing cash position of £12.58m (2020: £25.4m) and a closing bank borrowing position of £22.5m (2020: Nil). The directors are confident there are sufficient additional facilities in place to meet the group’s financial obligations as they fall due. Cash will continue to come under pressure, however, through the continuation of our customer and sector diversification strategy, disposal of non-core assets and right-sizing of our Group overhead, these measures will help mitigate any negative impact on cash. Our cash collection processes have improved during the period and are robust with strong average month-end cash balances.

ORDER BOOK The Group order book increased to its highest ever recorded level of £310.0m, at the 2021 year-end compared to £224.0m at the 2020 year-end. This level has since climbed further to £530.0m as at 31/03/2022. This outstanding achievement is testament to the 96

increased focus and rigour placed on our work-winning activities, and the quality of our technical and commercial tender submissions. This performance was a step beyond our initial ambition for the year, where we had factored in the anticipated investment hesitancy and project delays. In volume of activity terms, we remain confident that the UK economy will continue to recover strongly, and we have an identifiable pipeline of short to medium-term opportunities in front of us totalling £4.0bn which we are actively pursuing. We will continue to be extremely selective in our opportunity selection and tendering processes.

COST MANAGEMENT Recognising that infill acquisitions and rapid organic expansion over the last five-year strategic period, the Group overhead has grown disproportionately to work volumes, we have continued with our priority to integrate support activities under our ‘one Keltbray’ approach to achieve best-in-class cost efficiency. We believe future investment spend can be more effectively targeted at high value-add activities, while reducing duplication and removing wasteful activities together with the associated cost of their resources. We remain confident that taken together these measures will deliver the targeted cost savings we are seeking and act as one of the main catalysts in the implementation of our five-year business plan as we strive for industry-leading productivity. We will continue to review the overhead run-rate to ensure we meet our targets as markets stabilise.

TAXATION The Group takes its social and economic citizenship responsibilities very seriously and pays the appropriate amount of tax due on its business activities. The Group’s effective tax rate is, to a degree, offset by Keltbray’s continuing investments in innovation, where we receive material tax credits during the review period.

PENSIONS The Group operates a number of pension schemes with leading industry providers in the UK. These are defined contribution schemes and, as such, there are no outstanding pension liabilities.

INSURANCE Insurance broking globally is consolidated with Marsh JLT Speciality and Clear Insurance Management, given their respective technical expertise in underwriting Directors’ and Senior Officers’ corporate liabilities, professional indemnity, property, fleet, heavy plant and commercial engineering-based projects, combined with their international market coverage. During FY2021, the Group continued to experience low levels of claims. Our insurance profile closely tracks and correlates with our safety performance.

EXCEPTIONAL PROVISION Total exceptional costs before tax of £8.7m have been recognised in the year. This reflects the costs associated with employee furlough, disposal of non-core activities, and projected settlement of an industry investigation relating to historic activities of a previous management team.

DIVIDEND The directors do not recommend the payment of a dividend (2020: £nil), and there are no plans to reinstate a dividend payment for the current financial period.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

FINANCE AND TREASURY The Group maintains sufficient financial capacity to support its long-term contracting commitments and accommodate future economic and operational challenges. The directors are of the opinion that the quantum of the cash and committed credit lines to which the Group has access are sufficient to satisfy current and future funding requirements of the overall business plan. The Group continues to review its credit support requirement and base of key financial stakeholders, including key banking relationships and surety bonding providers who support our longterm strategic growth agenda.

Summary and outlook The Group has continued to work hard to face up to the prevailing social and economic challenges, while continuing to focus on successfully executing strategy. Extensive senior management time and resource has been given to achieving operational excellence during the year. Steps have been taken to strengthen the business through corporate acquisition, adoption of the robust corporate governance controls in key areas of investment, tendering, project commercial management, safety and wellbeing, and broader risk management.

We will continue to ensure our treasury policy is appropriate for the scale, complexity and operating environment of our business. We will further develop our credit support capacity in line with the requirements of our Group strategy and the core sectors we are targeting, to ensure we are optimising the Group’s cash position.

RISK AND ACCOUNTING POLICIES The Group’s risk management framework and processes have been further enhanced during the review period. The Board continuously assesses and monitors risks affecting the Group and the Chief Executive’s statement, Director’s report and risks and uncertainties section of this report include consideration of the relevant uncertainties affecting the business. Further details of how the Group has managed key strategic, financial, operational, reputational, people, regulatory and governance risks are set out on pages 102-109.

By building internal capability in our ‘specialist’ businesses whilst continuing to invest in our proven service offering to clients, we remain confident that our growth plans are realistic and achievable. Our 2022 forecast and the longerterm delivery of our business plan is predicated on continuing to win sufficient opportunities within our pipeline, the continued implementation of our successful business model and project delivery excellence. Whilst the Board remains confident that its forecast and strategic plan can be delivered, it will retain a riskorientated approach to decision making based on the probability that ongoing macroeconomic uncertainties could continue. Our continued determination to be agile and innovative has ensured that our future pipeline of prospects is strong, and our purpose will ensure we continue to push the industry to be more collaborative, pioneering and customer service focused.

Our Executive Board continues to review our capital structure and we will always consider more efficient options that are aligned to our operating model. At present we are satisfied that we have an appropriate structure, well balanced cash flows, acceptable risk exposure to the supply chain, and a strong and growing order book which we believe we can increase significantly over the next fiveyear business plan period. Taken together we are generating sufficient financial resources to meet today’s requirements and fund future growth. The Main Board remains confident in the resilience of the business and its leadership due to its proven track record against a challenging market backdrop. As a result, the Main Board has considered the Group’s financial requirements, based on current commitments and its secured order book as well as the latest projections of future opportunities, against its banking and surety bonding arrangements and has concluded that Keltbray is well placed to manage its business risks and meet its strategic and financial targets.

Peter Burnside, FCAI Chief Financial Officer

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Group risk management framework The effective management of risks and opportunities is fundamental to the delivery of the Group’s strategic objectives, achievement of sustainable growth, protection and enhancement of its reputation, and upholding the required standards of corporate governance.

How Keltbray manages risk The Group’s structured approach to risk management is based on the principle of prevention through early identification. Detailed analysis and decisive action planning are carried out to remove or mitigate the potential for and impact of key risks before they actually occur. As risks and uncertainties do materialise, this structured approach also ensures actual issues are effectively dealt with. The Main and Executive Board members, and business division senior leadership teams, are committed to the proactive protection and optimisation of Keltbray’s assets, which include human, financial and strategic resources, through the consistent application of an effective risk management process, augmented where necessary by insurance. The Group is equally committed to the effective management of material operational risks, covering important non-financial and reputational risks arising in connection with health, safety and wellbeing, environmental impact and business conduct.

The Risk Committee reviews the effectiveness of the Group’s risk management systems and reports regularly to the Board on the key sources of risk, the monitoring of their status and the corresponding mitigation plans. Risk reporting at the operational business unit level is structured so that key risks can be escalated rapidly through the management team, and ultimately to the Board where necessary. The individual businesses are able to tailor and adapt standard risk management processes to suit the specific circumstances of their respective operating environments. Project risks are monitored and reported by our project leadership teams, which are reviewed by business unit operational management at scheduled contract review meetings. This process covers the health, safety, wellbeing, financial and schedule performance of projects and is overseen by the chief operating officer and commercial function.

The Main Board has overall responsibility for ensuring that risk is managed effectively across the Group to guarantee full compliance with the legislative and regulatory requirements in the markets where it operates, and to ensure the Group’s long-term sustainable business platform is not threatened or compromised. The Main Board delegates certain risk management activities to designated subcommittees, including the Risk Committee chaired by our Non-executive Director, Phil Wilbraham. The Main Board considers Keltbray’s internal control system to be effective and robust; and all identified risk elements are placed under continuous review and improvement.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Main Board

Audit

Remuneration & Nominations

Executive Board

Strategic Safety, Health and Environment Leadership Team

Investment

Inclusion

1 Keltbray’s assessment of strategic, financial, operational and project delivery risks

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an iﬁ d c on ed ke trols to yr isk s

Risk

ks ris nt g in de lys ei g Ana na ma

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Group risk management cont.

Operational risk management Business Code of Conduct Keltbray believes laws and regulations act as our minimum integrity standards, and we constantly seek to go beyond this level. Our Code of Conduct articulates our approved set of ethical principles covering key business issues that we expect every employee and contracted supply chain partner to uphold in every activity, every day, wherever we operate. All relevant stakeholders undertake mandatory training to ensure we maintain acceptable business standards and ethics. By setting the expected minimum standards of business conduct in different areas of our work, the Code is integral to the way we do business at Keltbray and is underpinned by our Group purpose and values (see page 23). Compliance with the Code provides heightened assurance of our business affairs, which in turn supports the long-term sustainability of the Group by encouraging more ethical and effective relationships and stimulating deeper economic, social and environmental contributions where we work. The Code applies across the entire Group and its development and application are the responsibility of the Main Board.

Group policies Our Group policies underpin the Code of Conduct and are based on government laws and regulations as they impact upon Keltbray’s business activities. The policies establish and define the internal rules that everyone must comply with to conduct business effectively.

100

Business Management System – The 'one Keltbray' way Keltbray’s Business Management System (BMS) is a set of standards and procedures that guide and direct Keltbray in identifying, securing and delivering projects. This proven quality assurance framework enables us to achieve maximum performance and control across the entire life-cycle of a project. The BMS is subject to continuous improvement to reflect the evolving organisation. A frequent and formal feedback process is in place to await and capture key information to enable us continually to assimilate the best and most current ways of working.

Divisional / functional guidelines and procedures Division – and function-specific guidelines ensure that the different operating hubs and their constituent parts can effectively adapt their business practices and processes to suit the markets and sectors in which they operate. They are designed to align with, and complement, Group policies and stem directly from Keltbray’s BMS – the 'one Keltbray' way. In addition, they remain true to both the spirit and the letter of the Code of Conduct, and comply with applicable laws and regulations.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

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Principal risks and uncertainties The Keltbray Group’s principal risks and uncertainties are identified over the following pages, together with a description of how we manage and mitigate them. This list is not intended to be exhaustive, and some risks and uncertainties have not been included in this list on the basis that they are not considered to be material, to affect or be likely to affect businesses in general, or are not presently known by the Board and various subcommittees. However, we have established controls and systems in place to manage these risks. RISK COMMITTEE Overall oversight of risk management and internal control framework – Full annual review of effectiveness of risk management and internal control systems, principal risk register, and risk appetite undertaken by the Risk Committee with assessment delivered to Main Board for approval – Update on changes to risk and internal control environment presented by internal finance and to the Risk Committee at each meeting

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Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

LINK TO STRATEGIC PIORITIES

PRINCIPAL RISK 1. Innovation

Strategic

2. Political, economic and regulatory compliance 3. System security and data protection 4. Talent pipeline 5. Work-winning/market risk 6. Acts of force majeure (inc. COVID-19)

Operational

7. Health, safety and wellbeing 8. Conduct and compliance 9. Operational risk management/project delivery 10. Supply chain and joint venture partners 11. Sustainability and climate change

Financial

12. Financial (liquidity) 13. Materials pricing and supply 14. UK economic outlook/future turnover

RISK MOVEMENT IN FY2021

CURRENT RISK LEVEL

5 4

Strategic priorities

Risk movement

Risk probability

Enhance out capabilities and strengthen the core of the business

Increasing

Low

Deepen relationships with existing customers through more integrated service solutions

Stable

Medium

Broaden the customer base in rail, energy and the built environment

Decreasing

High

Extend into attractive adjacent infrastructure sectors including highways, social infrastructure and defence

Expand internationally in a risk-controlled way, primarily within the rail sector

Very high

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Principal risks and uncertainties cont.

INNOVATION

POLITICAL, ECONOMIC AND REGULATORY COMPLIANCE

SYSTEMS SECURITY AND DATA PROTECTION

Risk/impact

The Group’s failure to innovate could reduce our growth potential, render existing products and approaches obsolete, and cause a reduction in market share. The launch of new products and services, or new variants of existing products is an inherently time and cost consuming process, and the outcomes of such research and development can be extremely uncertain.

Keltbray operates in a cyclical industry and changes in the economic environment, government policy and regulatory developments, including how the UK economy responds and adapts to the impact of global events like military conflicts or regional economic 'fractures,' can have a significant impact on the number of new projects, thus affecting the Group’s profitability.

A loss of our key systems through a lack of resilience or an information security breach or attack, could impact the successful delivery of our projects and lead to a loss of confidential data, damaging our reputation and brand.

Management

Keltbray has an industry reputation for innovation within the engineering and construction disciplines where it works. The Executive team is highly focused on new ways to develop existing products and be innovative with new ones.

The Group seeks to maintain a diverse portfolio of projects for both private and public customers and a broad but targeted exposure to a number of resilient sectors and geographic markets. Keltbray also maintains a focus on sustainable relationships with key customers, government departments and related regulatory authorities.

We invest continuously in research and development through our in-house design and engineering business development and procurement teams, and coordinate this activity at the Group Level through the Group Technical Director, and an appointed Innovation Director, who is accountable for identifying, tracking and reporting on innovation initiatives to the Executive Board and the Risk Committee, and ensuring we receive the legal and regulatory clearances necessary for an innovation to be appropriately copyrighted/trademarked, and compliant with all necessary industry standards before being launched into the market for sale. Recent successes in this area have included the development of the HIPER® Pile which transforms a traditional pile into a sustainable client asset that has future usability (see page 63).

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The Group is also actively rebalancing its portfolio of secured work by developing a more significant proportion of longer term contracting frameworks, as part of its forward order book; as well as focusing on customers and contracting mechanisms where alliances and collaboration are valued as opposed to traditional, purely transactional arrangements. Keltbray takes a forward-looking view of these risk categories, closely monitoring future impacts of the UK Government’s exit from the EU, particularly with regard to the availability of labour and material resources. To date, there has been no adverse impact on our operational performance and we do not deliver services to any country within the EU, although we do procure them from these regions.

Management Robust controls and procedures are in place to monitor the performance of our systems and to identify and mitigate external threats. The Group is continually developing and upgrading its IT infrastructure, software and assessment capabilities. We continue to develop and enhance our data protection procedures in line with market regulations. The controls and procedures are subject to regular independent internal and external review. During the year there was an attempt by cyber-criminals to gain unauthorised access to our IT network, with the objective of extorting money from Keltbray for the return of compromised data. Although this was a sophisticated operation by organised cyber criminals, seeking to exploit the well-publicised Microsoft breach, to encrypt data and hold Keltbray to ransom, the company has extensive protocols and procedures in place for such an event and had rehearsed for this risk. Our cyber defences rapidly identified the security breach, and our immediate response and backup procedures prevented effective encryption of data. There was no impact on our business operations as a consequence. Keltbray takes its data protection obligations very seriously and will continue to uphold the highest standards of integrity and security relating to all information it holds.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

TALENT PIPELINE

WORK-WINNING / MARKET RISK

Risk/impact

Inability to recruit, develop and retain appropriately skilled people could impact the Group’s ability to meet current commitments, deliver projects and grow the business as planned.

Market uncertainties, exacerbated by global socio-political and economic events, could put pressure on the business to secure projects with inappropriate price/ risk profiles or with onerous contractual arrangements, which could impact the Group’s future profitability and potentially its reputation.

Management People development and talent management is a primary component of Keltbray’s strategy, and is overseen by The Main and Executive Boards. The Group aims to be a progressive employer of choice and offers attractive reward packages, training and development, and a broad range of career opportunities. Succession planning is undertaken for all key roles. Innovative partnerships with universities and industry training bodies also helps position Keltbray as a destination employer, attracting leading talent from entry-level graduates and apprenticeships right through to seasoned industry professionals. During the year, the Group launched a new performance and development management framework called GPS (Group, Perform, Succeed) to ensure training and career opportunities are available to all employees. The Group also reviewed and relaunched a new employee benefits programme to enhance our employee proposition to remain competitive in the 'war' for talent across our industry.

Management Keltbray’s strategic focus is on those market sectors where competitive advantage is maintained and the most potential to generate profitable returns. The Group has diversified its product and service offering across different market sectors. Members of our senior leadership team participate in governmental, economic and regulatory forums to maintain effective working relationships with the government and regulatory authorities. Our targeted approach to project selection is guided by a detailed set of protocols overseen by the Group’s Executive Investment Panel (EIP), a subcommittee of the Executive Board, which determines capital allocation against a strict set of financial and operational risk criteria. There are defined delegated authority levels for approving all tenders depending on the size and complexity of the project under consideration. Our integrated self-delivery capability results in greater certainty of the construction programme, cost and risk profile pre-contract. Regular review meetings are held to check progress, understand the win strategy and test the contract risk profile providing recommendations where necessary.

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Principal risks and uncertainties cont.

ACTS OF FORCE MAJEURE

HEALTH, SAFETY AND WELLBEING

Risk/impact

Acts of force majeure, including the COVID-19 pandemic, global conflicts and major weather events, could have a significant financial and operational impact on our business.

The nature of our activities present threats that could cause harm to employees, suppliers, customers, members of the public or the environment, which could lead to injuries, health implications, financial loss/penalties or damage to the Group’s reputation.

Management The Group continually monitors and evolves its processes and practices in all areas of operation. The health, safety and wellbeing of all our people and stakeholders is and will always be our primary focus. We continue to follow Government guidance and operate only where it is safe to do so, in consultation with customers and relevant stakeholders. The Group's crisis management process to consider and mitigate the impact of the COVID-19 pandemic and the agility of our decision-making has a major effect on our ability to maintain safe operational performance. During the FY2021 we appropriately and effectively responded to the global pandemic crisis, continuously reviewing and refining our programme of COVID-safe working practices across all our project sites and fixed operations to ensure compliance with Governmentissued guidance via the CLC and Build UK. We continue to monitor developments in relation to global events and the potential impact on our business activities, and will take the necessary actions in line with UK Government guidance to protect our stakeholders and our business. We have also captured all of the lessons learned from recent events and embedded them into our business continuity planning regimes to ensure we are equipped to deal effectively with any future ‘Force Majeure’ events and protect our business and stakeholder interests.

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PH² demonstrates a new approach, an evolution of our thinking and an alignment of our health, safety and wellbeing aspirations. By intrinsically linking two previously separate strategies under one shared vision, our philosophy, culture and processes are mirrored wherever practical to do so.

Management Health and safety is Keltbray’s primary area of focus and mitigation occurs at every level of the Group’s governance framework. Our industry-leading ‘Promote Health, Prevent Harm’ strategy was rolled-out during the year and is an integrated programme designed to eradicate serious accidents by driving continuous improvement through our culture and leadership. Every project is subject to regular reviews and audits and changes implemented where necessary. The Safety, Health and Environment Leadership Team (SHELT) meets monthly to review policy against any industry changes, identify best practice and continue to develop a consistent approach to health, safety and environmental best practice. Our documented HSQE Management System, clearly details compulsory procedural behavioural and training requirements are implemented on every project and are continually reviewed and updated. During FY2021 the Group undertook a comprehensive review of its health and safety management system. As a result of this work, Keltbray launched its new health, safety and wellbeing strategy titled PH², signifying our vision to Promote Health, Prevent Harm. The creation of our new strategy was coordinated and produced by the SHELT, in conjunction with the Wellbeing Committee.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

CONDUCT AND COMPLIANCE

OPERATIONAL RISK MANAGEMENT / PROJECT DELIVERY

SUPPLY CHAIN AND JOINT VENTURE PARTNERS

Risk/impact

Damage to the Group’s reputation through poor conduct or acts of fraud, bribery, corruption or anticompetitive behaviour can all adversely impact corporate reputation and result in financial loss.

The Group continues to deliver innovative, yet complex, construction and engineering projects across a range of sectors. Any inability to deliver on time, to budget and to the required quality could result in financial loss or reputational damage.

Non-delivery by our supply chain or joint venture partners – through poor performance, financial failure, or reduced capacity/capability – could impact the Group’s ability to deliver projects on time, on budget and to the right quality, and result in financial loss or reputational damage.

At the time of publication, an industry regulatory body was concluding its civil investigation into historic practices in the UK industry.

Management The Group has very clear principles governing the way in which it conducts its business and expects all employees and partners to act in accordance with its established systems, policies and processes. Continuous awareness and training programmes ensure high levels of understanding of the Group’s expectations and each individual’s obligations. In recent years, the Group has adapted and continued to implement the Wates Principles of Corporate Governance for Large Private Companies and instigated a programme of changes to streamline and simplify the statutory company structure, senior decision making forums, and embed the Group purpose, Code of Business Conduct and Delegations of Authority matrix to bring greater control and oversight to the Group’s activities from a financial, legal, regulatory and behavioural perspective. With specific regard to the industry inquiry, Keltbray is a very different business with a new executive leadership team and strategy in place, having undergone a comprehensive business restructure to strengthen our compliance and governance regimes. The measures taken will ensure such practices will never be allowed to occur in the future.

Management Once a project has gone through our rigorous work-winning and project selection, Keltbray’s approach is guided by our Business Management System to ensure a standardised approach to tendering and delivery based on robust project controls and a continuous improvement process. Keltbray’s integrated capabilities result in greater surety of delivery. Building Information Modelling (BIM) and digital engineering technologies are increasingly being deployed to achieve time and cost certainty through a full visualisation of the build sequence on strategic, multidisciplinary projects. During FY2021, the Group implemented a new project-level reporting process to ensure any operational or financial variances to target performance are identified and understood early, and mitigation actions are taken rapidly to return to critical path.

Management Our integrated self-delivery capability allows the Group to actively work independently wherever possible reducing our reliance on third parties. Joint ventures are only established when the Group’s interests are complementary to those of its partners. Keltbray undertakes a thorough evaluation process to determine the financial, operational and reputational integrity of potential partners before committing to any formal arrangement. Once established, implementation of robust governance procedures ensures compliance with all contractual terms and practices within the joint venture. During the period, the business has further centralised its procurement activities with an emphasis on strategic procurement and continued to undertake a rationalisation of our supply chain to strengthen relationships with key supply chain partners, based on their financial viability (‘going concern’ status) market access, and carbon credentials.

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Principal risks and uncertainties cont.

SUSTAINABILITY AND CLIMATE CHANGE

11 Risk/impact There is increased focus from stakeholders on sustainability and climate change, greenhouse gas emissions and the pursuit of carbon neutrality, and for this reason it was agreed that this would be identified as a separate principal risk in 2021, given its potential materiality to the Group over the medium to long term. Poor sustainability performance in areas of social and environmental value management, which could impact on the company’s industry ‘rating’ and reputation, resulting in an adverse impact on health and welfare, costs, the ability to win work, attract talent and access capital.

Management Our success is judged not only by commercial performance, but also by our contribution to society and how we act responsibly for the common good and the long term. We believe that we can, and should, make a positive difference for society and our planet, both globally and locally. We do that through the choices we make about how we run our business, and through the commitments we make to support our communities. We respect sustainability, and recognise our role to play in leaving things better than we found them. We cannot be successful in the long term without recognising that we are at our very best when our clients, suppliers, communities, and colleagues all progress. The impact of under-performance in these increasingly important client areas is likely to lead to regulation infringements and reputational ‘fallout’ which could impact ultimately on financial performance. For these reasons Keltbray has placed sustainability at the very epicentre of its core purpose

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and business strategy, to ensure it inculcates every strand of our activities – we want as many people as possible to benefit from what we do. Given the nature of Keltbray’s primary activities, which involve high-volume consumption of materials like energy, fuel, concrete, steel and timber, the Group takes it’s sustainability obligations very seriously, and has, over the past three years, increased its investment in these key areas of focus for clients and other key business influencers. Our Environmental and Social Value teams contain leading sustainability experts, including Kiro Tamer, who was recently recognised as an ICE Carbon Champion for his many contributions to carbon reduction within the industry.

of diversity and inclusion, climate change (carbon emissions reduction) and modern slavery. Further information on our management approach to sustainability and climate change risk can be found in our sustainable development report (pp 38-65). Following ratification by the Main and Executive Boards in full year 2020, the Group’s global sustainability strategy underwent a phased implementation during full year 2021 and is being embedded across all aspects of our operations. Further details can be found in Keltbray’s 2021 sustainable development report on pages 38-65.

During the review period the Group launched its new sustainability strategy, including monitoring and reporting systems and policies, and regularly reports progress against this action plan to the Group’s Main and Executive Boards. Our Social Value team, led by Holly Price, one of the industry’s leading champions on social sustainability, is directly responsible for ensuring the communities that host our activities also receive value from our project delivery operations in the forms of community support, employment and training opportunities and investment in the local economy via environmental and educational programmes of activity. Our engagement with suppliers is important and we engage with them regularly to ensure adherence to the Keltbray’s Code of Conduct and Supply Control obligations. As part of the Group’s sustainability strategy, we are focused on environmental and social responsibility in our supply chain, initially across three pillars

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

FINANCIAL (LIQUIDITY)

MATERIALS PRICING AND SUPPLY

UK ECONOMIC OUTLOOK / FUTURE TURNOVER

Risk/impact

Inability to secure funding – in the form of cash and/or bonding facilities – could impact the Group’s ability to bid work, make investments or meet its ongoing liquidity needs, which could adversely impact profitability, cash flow and future growth. The unique circumstances of the COVID-19 pandemic caused interruption to the Construction industry’s normal flow.

The Group’s engineering and construction operations depend on the supply of significant volumes of concrete, steel, timber, energy and fuel. The commodity price of these construction staples therefore can be subject to fluctuations based on demand and supply pressures across global markets.

Market uncertainties could put pressure on the business to secure projects with inappropriate price/ risk profiles or with onerous contractual arrangements, which could impact the Group’s future profitability and its reputation.

There are only a limited number of raw material suppliers and we operate with limited material storage capacity. Failure to receive raw materials on a timely basis could impact on our ability to deliver projects to time, cost and specification and meet our customers’ demands.

Keltbray’s strategic focus is on those market sectors where competitive advantage is maintained and have the most potential to generate profitable returns. The Group has diversified its product and service offering across different market sectors. Members of our senior leadership team participate in political, economic and regulatory forums to maintain effective working relationships with the government and regulatory authorities.

Management Our experienced in-house financial management team takes a prudent approach to liquidity and constantly monitors and stress-tests cash reserves and available bank facilities to meet liabilities and financing needs as they fall due. Procedures are in place to monitor and forecast cash usage and other highly liquid current assets. This, together with committed credit facilities, ensures that we have adequate availability of cash when required. The Group positively managed and limited the impact of its exposure to COVID-19, both from an operational delivery and financial stress perspective. During 2022 the Group will be conducting a re-financing round to replace the existing five-year facility which expires in November 2022.

Management Where appropriate, we pass through raw material price increases transparently to our customers, with their full knowledge. We are also increasingly seeking ways to increase the use of recycled materials in our construction activities, through our drive to create a circular project delivery economy. Our central procurement team also use a number of strategic suppliers to provide competitive pricing. Also raw material supply contracts contain mechanisms to help mitigate some variations in price, and we exercise these wherever it is right and prudent to do so. As was widely reported, raw material prices increased significantly in 2020 and 2021, primarily due to supply chain fractures and investment hesitancy caused by the global pandemic and the uncertainties still surrounding the UK’s exit from the EU. Keltbray managed to partially mitigate these impacts with selling price uplifts, increased use of recycled materials and operational productivity efficiencies. There may be further raw material pricing pressure in 2022.

Management

Our targeted approach to project selection is guided by a detailed set of protocols overseen by The Executive Investment Panel, a subcommittee of the Executive Board, which determines capital allocation against a strict set of financial and operational risk criteria. There are defined delegated authority levels for approving all tenders depending on the size and complexity of the project under consideration. Our integrated self-delivery capability results in greater certainty of the construction programme, cost and risk profile pre-contract. Regular review meetings are held to check progress, understand the win strategy and test the contract risk profile providing recommendations where necessary.

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Auditor’s report and consolidated financial statements KELTBRAY HOLDINGS LIMITED Company No. 12543807 Year ended 31 October 2021

Contents

Page

Officers and professional advisers

111

Directors' report

112

Independent auditor's report to the members

116

Consolidated statement of comprehensive income

120

Consolidated statement of financial position

121

Company statement of financial position

122

Consolidated statement of changes in equity

123

Company statement of changes in equity

124

Consolidated statement of cash flows

125

Notes to the financial statements

126

Streamlined Energy and Carbon Reporting compliance statement

148

110

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Officers and Professional Advisors

THE BOARD OF DIRECTORS B Kerr J P Keehan P Wilbraham A Douglas V Corrigan P Burnside D James A Muldoon

REGISTERED OFFICE St Andrew's House Portsmouth Road Esher Surrey KT10 9TA

AUDITOR BDO Northern Ireland Chartered accountants and statutory auditor Lindsay House 10 Callender Street Belfast BT1 5BN

BANKERS Santander UK plc 2 Triton Square Regent's Place London NW1 3AN

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Directors’ report The directors present their report and the financial statements of the Group for the year ended 31 October 2021

Directors The directors who served the company during the year were as follows: B Kerr J P Keehan P Wilbraham A Douglas V Corrigan P Burnside D James A Muldoon

DIVIDENDS The directors do not recommend the payment of a dividend.

EMPLOYMENT OF DISABLED PERSONS The Group gives full consideration to applications for employment from disabled persons where the requirements of the job can be adequately fulfilled by a handicapped or disabled person. Where an existing employee becomes disabled, it is the Group's policy wherever practicable to provide continuing employment under normal terms and conditions and to provide training and career development and promotion to disabled employees wherever appropriate.

EMPLOYEE INVOLVEMENT During the year, the policy of providing employees with information about the Group has been continued through internal media methods in which employees have also been encouraged to present their suggestions and views on the Group's performance. Regular meetings are held between local management and employees to allow a free flow of information and ideas.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group's operations expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risk, liquidity risk, foreign exchange risk and interest rate risk. The Group has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the related finance costs. Given the size of the Group, the directors have not delegated the responsibility of monitoring financial risk management to a subcommittee of the Board. The policies set by the board of directors are implemented by the Group's finance department.

PRICE RISK The Group is exposed to some commodity price risk as a result of its operations. However, costs of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the Group's operations change in size or nature.

FOREIGN EXCHANGE RISK While the greater part of the Group's revenues and expenses are denominated in sterling, the Group is exposed to some foreign exchange risk in the normal course of business. While the Group has not used financial instruments to date to hedge foreign exchange exposure, this position is kept constantly under review.

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Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

CREDIT RISK The Group has implemented policies that require appropriate credit checks on potential customers before sales are made. The amount of exposure to individual customers is monitored by the board.

LIQUIDITY RISK The Group actively maintains a mixture of long-term and shortterm debt finance that is designed to ensure the Group has sufficient available funds for operations and planned expansions.

INTEREST RATE CASH FLOW RISK The Group has both interestbearing assets and interestbearing liabilities, both of which bear interest at variable rates. The future cashflows of the Group's operations are not sufficiently at risk due to interest rate changes to require funding at fixed rate. The appropriateness of this policy will be revisited should the Group's operations change in size or nature.

DISCLOSURE OF INFORMATION IN THE STRATEGIC REPORT Please refer to the strategic report regarding financial overview, key performance indicators, principal risks and uncertainties, corporate social responsibilities, SECR and business relationships.

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Directors’ report cont.

Directors’ responsibilities statement The directors are responsible for preparing the strategic report, directors’ report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the company and the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to: – Select suitable accounting policies and then apply them consistently

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The auditors, BDO Northern Ireland, have expressed their willingness to continue in office and a resolution to reappoint them will be proposed at the annual general meeting in accordance with section 485 of the Companies Act 2006. This report was approved by the board of directors on 19 May 2022 and signed on behalf of the board by:

Each of the persons who is a director at the date of approval of this report confirms that: – So far as they are aware, there is no relevant audit information of which the Group and the company’s auditor is unaware – They have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Group and the company’s auditor is aware of that information

– Make judgments and accounting estimates that are reasonable and prudent – State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements – Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business

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AUDITOR

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Peter Burnside, FCAI Chief Financial Officer

Registered office: St Andrew’s House Portsmouth Road Esher Surrey KT10 9TA

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Independent auditor's report to the members of Keltbray Holdings Limited

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

OPINION ON THE FINANCIAL STATEMENTS In our opinion: – The financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 31 October 2021 and of the Group's loss for the year then ended – The financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice – The financial statements have been prepared in accordance with the requirements of the Companies Act 2006 We have audited the financial statements of Keltbray Holdings Limited (the 'parent company') and its subsidiaries (the 'Group') for the year ended 31 October 2021 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

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BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.

Independence

We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

OTHER INFORMATION The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Independent auditor's report to the members of Keltbray Holdings Limited cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

OTHER COMPANIES ACT 2006

RESPONSIBILITIES OF DIRECTORS

In our opinion, based on the work undertaken in the course of the audit:

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

– the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements – the strategic report and the directors' report have been prepared in accordance with applicable legal requirements In the light of the knowledge and understanding of the Group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

In preparing the financial statements, the directors are responsible for assessing the Group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or – the parent company financial statements are not in agreement with the accounting records and returns; or – certain disclosures of directors' remuneration specified by law are not made; or – we have not received all the information and explanations we require for our audit

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Independent auditor's report to the members of Keltbray Holdings Limited cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

EXTENT TO WHICH THE AUDIT WAS CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: We gained an understanding of the legal and the regulatory framework applicable to the Group and the industry in which it operates and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance with Companies Act 2006, FRS 102, “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. We focused on laws and regulations that could give rise to material misstatement in the financial statements. Our tests included but were not limited to: – agreement of the financial statement disclosures to underlying supporting documentation – enquiries of management – review of minutes of board meetings throughout the period – considering the effectiveness of the control environment and monitoring compliance with laws and regulations

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We also communicated relevant identified laws and regulations and potential fraud risk to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from events and transaction reflected in the financial statements, the less likely we would become aware of it. As in all of our audits we addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/ auditorsresponsibilities

USE OF OUR REPORT This report is made solely to the parent company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Nigel V W Harra Senior Statutory Auditor For and on behalf of BDO Northern Ireland, statutory auditor Lindsay House 10 Callender Street Belfast BT1 5BN

This description forms part of our auditor's report.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

119

Consolidated statement of comprehensive income

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

Note

Turnover

Cost of sales

2021 £

2020 £

389,515,609

428,639,342

(336,438,511)

(388,644,030)

Gross profit

53,077,098

39,995,312

Administrative expenses

(50,473,974)

(49,065,637)

Other operating income

4,914,871

9,461,398

Exceptional costs

(2,298,480)

(8,730,975)

Regulatory costs

(7,000,000)

–

Operating loss

(1,780,485)

(8,339,902)

Loss on disposal of operations Gain/(loss) on financial assets at fair value through profit or loss Interest payable and similar expenses

Loss before taxation Tax on loss

Loss for the financial year and total comprehensive income

(1,265,199)

–

28,982

(125,336)

(1,205,533)

(979,344)

(4,222,235)

(9,444,582)

(30,178)

114,972

(4,252,413)

(9,329,610)

(5,209,257)

(9,479,722)

956,844

150,112

(4,252,413)

(9,329,610)

Loss for the financial year attributable to: The owners of the parent company Non-controlling interests

All the activities of the Group are from continuing operations.

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Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Consolidated statement of financial position

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

Note

2021 £

2020 £

Intangible assets

3,257,796

2,928,019

Tangible assets

31,412,603

38,634,394

Investments

Fixed assets

1,169,298

2,295,329

35,839,697

43,857,742

3,046,733

3,261,868

Debtors: due within one year

117,444,168

108,898,758

Debtors: due after more than one year

16,218,112

13,390,126

Current assets Stocks

Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets Total assets less current liabilities Creditors: amounts falling due after more than one year

Provisions

Net assets

12,589,019

25,399,264

149,298,032

150,950,016

130,715,825

144,494,720

18,582,207

6,455,296

54,421,904

50,313,038

20,218,801

18,175,467

6,500,000

–

27,703,103

32,137,571

Capital and reserves Called up share capital

100

Share premium account

99,900

–

99,999

27,066,234

32,275,491

27,166,234

32,375,491

Merger reserve Profit and loss account Equity attributable to the owners of the parent company Non-controlling interests

536,869

(237,920)

27,703,103

32,137,571

These financial statements were approved by the board of directors and authorised for issue on 19 May 2022 and are signed on behalf of the board by:

P J Burnside, FCAI Chief Financial Officer Company registration number: 12543807

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

121

Company statement of financial position

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

Note

2021 £

2020 £

7,116,124

–

Debtors: due within one year

397,618

Creditors: amounts falling due within one year

–

397,614

7,513,738

Fixed assets Investments Current assets

Net current assets Total assets less current liabilities Capital and reserves Called up share capital

100

Share premium account

99,900

–

Profit and loss account

7,413,738

–

7,513,738

Shareholders funds

The profit for the financial year of the parent company was £7,413,738 (2020: £nil). These financial statements were approved by the board of directors and authorised for issue on 19 May 2022 and are signed on behalf of the board by:

P J Burnside, FCAI Chief Financial Officer Company registration number: 12543807

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Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Consolidated statement of changes in equity

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

At 01 November 2019

Called up share capital £

Share premium account £

Merger reserve £

–

99,999

Loss for the year

Profit and loss account £

Equity attributable to owners of the parent company £

Noncontrolling interests £

Total £

41,755,213

41,855,213

(77,615)

41,777,598

(9,479,722)

150,112

(9,329,610)

Total comprehensive loss for the year

–

(9,479,722)

150,112

(9,329,610)

Dividends paid and payable

–

(310,417)

Total investments by and distributions to owners

–

(310,417)

At 31 October 2020

–

99,999

Loss for the year Total comprehensive loss for the year Issues of shares Acquisition of subsidiary with minority interest

32,275,491

32,375,491

(237,920)

32,137,571

(5,209,257)

956,844

(4,252,413)

(5,209,257)

–

956,844

(4,252,413)

99,900

–

99,999

–

99,999

–

(114,321)

Disposal of subsidiary with minority interest

–

(67,734)

Other movements

–

(99,999)

–

(99,999)

–

(99,999)

99,900

(99,999)

–

(182,055)

100

99,900

–

27,066,234

27,166,234

536,869

27,703,103

Total investments by and distributions to owners At 31 October 2021

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

123

Company statement of changes in equity

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

At 01 November 2019

Called up share capital £

Share premium account £

Profit and loss account £

Total £

–

Profit for the year Issue of shares

–

Total investments by and distribution to owners

–

At 31 October 2020

–

Profit for the year Total comprehensive income for the year

–

7,413,738

–

7,413,738

Issue of shares

99,900

–

99,999

Total investments by and distributions to owners

99,900

–

99,999

100

99,900

7,413,738

7,513,738

At 31 October 2021

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Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Consolidated statement of cash flows

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021 The notes on pages 126 to 147 form part of these financial statements

2021 £

2020 £

(4,252,413)

(9,329,610)

11,724,183

11,237,789

195,282

487,025

Cash flows from operating activities Loss for the financial year Adjustments for: Depreciation of tangible assets Amortisation of intangible assets (Gain)/Loss on financial assets at fair value through profit or loss Interest payable and similar expenses Gains on disposal of tangible assets Tax on loss

(28,982)

125,336

1,205,533

979,344

(1,150,927)

(1,076,026)

30,178

(114,972)

Changes in accruals and deferred income

(9,285,355)

(15,758,816)

Research & Development tax credit

(2,085,267)

(2,315,024)

Profit on disposal of investments Release of deferred profit on sale & leaseback of fixed assets Regulatory provision

(208,089)

(559,973)

(831,973)

(520,009)

6,500,000

–

Changes in: Stocks Trade and other debtors

215,135

(287,117)

(1,751,028)

27,110,372

Trade and other creditors

(22,096,355)

(1,601,925)

Cash generated from operations

(21,820,078)

8,376,394

(1,205,533)

(979,344)

Interest paid Tax received/(paid)

818,975

(59,635)

(22,206,636)

7,337,415

(3,116,737)

(3,732,283)

Proceeds from sale of tangible assets

4,974,127

7,489,049

Acquisition of subsidiaries

(1,119,669)

–

300,000

–

Net cash (used in)/from operating activities Cash flows from investing activities Purchase of tangible assets

Proceeds from sale of subsidiaries Purchases of other investments

(650,234)

(563)

Proceeds from sale of other investments

2,013,336

1,674,332

2,400,823

5,430,535

Proceeds from borrowings

29,500,000

–

Repayments of borrowings

(7,000,000)

–

Payments of finance lease liabilities

(7,875,988)

(6,167,568)

Net cash from investing activities Cash flows from financing activities

Dividends paid

–

(310,417)

Payments to related parties

(2,827,896)

(2,004,782)

Payments to directors

(10,949,210)

(14,171,925)

Repayments from directors

6,148,662

14,336,631

6,995,568

(8,318,061)

Net (decrease)/increase in cash and cash equivalents

(12,810,245)

4,449,889

Cash and cash equivalents at beginning of year

25,399,264

20,949,375

Cash and cash equivalents at end of year

12,589,019

25,399,264

Net cash from/(used in) financing activities

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

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Notes to the financial statements

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

1. GENERAL INFORMATION The company is a private company limited by shares, registered in England and Wales. The address of the registered office is St Andrew's House, Portsmouth Road, Esher, Surrey, KT10 9TA. The Group and its subsidiaries principal activities during the year were demolition, structural and geotechnical engineering, design of permanent and temporary works, reinforced concrete structures, piling, rail overhead line electrification and design, engineering and civils works on the railway infrastructure, asbestos removal, remediation and waste treatment and supply of plant and haulage services. 2. STATEMENT OF COMPLIANCE These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'. 3. ACCOUNTING POLICIES Basis of preparation The consolidated financial statements have been prepared on the going concern basis and in accordance with the historical cost convention. The financial reporting framework that has been applied in their preparation is the Companies Act 2006 and FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland issued by the Financial Reporting Council. The consolidated financial statements have been prepared in Sterling, which is the functional currency of the entity. Going concern The activities of the Keltbray Group along with the factors that may affect its future performance

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and position are set out in the director's report. The Group recognises the economic and trading uncertainties resulting from macro-economic issues within the UK and further afield which during 2021 lead to aggressive pricing by some of the Group's competitors in the London based Built Environment marketplace and resulted in the Group stepping away from a number of bids which were deemed to be below the minimum margin requirement for that business. The Group's significant infrastructure workload provides a more resilient base for the business and allows the directors to take a longer-term view of the markets in which the Group chooses to operate. The directors regularly review the working capital requirements of the Group in terms of budget scenarios, quarterly re-forecasting and monthly cashflow forecasting. Forecasts have been prepared up to 31 October 2024. These forecasts, whilst subject to inherent uncertainties, note an expected increase in turnover and a return to profitable trading. Margins are forecast to remain flat or slightly lower than budget which reflects the business impact of increasing material costs in the construction sector. As a consequence of this inflationary pressure, the Group are only taking on new contracts where the risk of cost price inflation in its major materials such as reinforced steel and concrete are hedged for the duration of the contract. The Group has prepared a cash flow forecast for the period from the 31 October 2021 until 31 October 2024 and the directors consider that the Group has sufficient cash reserves and banking facilities meet its financial obligations

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

as they fall due and maintain compliance with the financial covenants set within its Revolving Credit Facility, CLBILS and Recovery Loan facilities. The Group's core financing facilities comprising of Revolving Credit Facility of £15m and overdraft facility of £5m are due for renewal in November 2022. Whilst the renewal process is ongoing, given the Group’s long-standing relationship with Santander, the directors are confident that the facilities will be successfully renewed on similar terms. The CLBILS and Recovery Loan facilities are not co-terminus and provide sufficient committed facilities for the Group's needs until the re-financing is completed. The re-financing is targeted to be complete by the end of September 2022. The Group's banking covenants were re-drawn in December 2021 to better reflect the budget for 2022 and the Group are currently operating within those covenants and continue to forecast compliance with the covenants for the remainder of the forecast period. As outlined in Note 22, the Group is addressing a civil regulatory matter and having received advice, the directors have made a provision of £6.5m in respect of a regulatory penalty and associated legal fees. This is based on the directors' best estimate of the potential liability however the timing and outcome of the matter remains uncertain. The range of potential liability is between £3.9m and £16.0m. The directors have assessed the impact of this matter in making their going concern assessment and whilst it is expected to take a number of months to conclude this matter, they have incorporated their best estimate of timing of payments into their cash flow forecasts.

After making enquiries and considering the factors and sensitivities outlined above for a range of scenarios and taking into account the diversified customer base and extensive body of awarded work, the directors are confident that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt a going concern basis of accounting in preparing the annual financial statements. Disclosure exemptions The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102: a. Disclosures in respect of each class of share capital have not been presented b. No cash flow statement or net debt reconciliation has been presented for the company c. No disclosure has been given for the aggregate remuneration of key management personnel Consolidation The financial statements consolidate the financial statements of the Group and all of its subsidiary undertakings. The results of subsidiaries acquired or disposed of by the Group during the year are included from or to the date that control passes. The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not included its individual statement of comprehensive income.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

127

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

On 1 November 2020, the Group undertook a group reorganisation which involved the insertion of Keltbray Holdings Limited as a new holding company of Keltbray Group (Holdings) Limited and its subsidiaries. In accordance with the provisions contained within Section 19.27 of FRS 102, the Group has applied the principals of merger accounting in preparing the consolidation. Accordingly, the consolidated financial statements are prepared as though the company had controlled the Group throughout the current and prior year. Non-controlling interests Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling interest's share of changes in equity since the date of the combination. The proportions of profit or loss and changes in equity allocated to the owners of the parent and to the non-controlling interests are determined on the basis of existing ownership interests and do not reflect the possible exercise or conversion of options or convertible instruments. Judgements and key sources of estimation uncertainty The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

128

Significant judgements The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows: To determine whether there are indicators of impairment of the Group's tangible and intangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: – Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, production life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. – Contract revenue and costs are recognised when the outcome of a construction contract

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

can be reliably estimated. The percentage of completion method is used to value revenue and costs at year end; these are included in the profit or loss account. At year end, the Group reviews the recoverability of amounts already recognised as contract revenue. If, on the review of market conditions and conversations with the client, the debtor is not considered to be recoverable, the unrecoverable amount will be expensed in the year. When, on review of programmes and costs to complete, it is deemed probable that total contract costs will exceed total contract revenue the expected loss is recognised as an expense immediately, which a corresponding provision for an onerous contract. – Impairment of trade debtors is reviewed on an ongoing basis. The company trades with a large and varied number of customers on credit terms. Some debts due will not be paid through the default of a small number of customers. The company uses estimates based on historical experience and current information in determining the level of debts for which an impairment charge is required. – As outlined in Note 22, the group is addressing a civil regulatory matter. Whilst the timing and outcome of this matter is uncertain, having received advice, the directors have made a best estimate provision of £6m in relation to the potential liability. Revenue recognition Turnover represents net invoiced sales of services, excluding value added tax.

The majority of turnover is on longterm contracts. These contracts are assessed on a contract by contract basis and are reflected in the profit and loss account by recording turnover and related costs by reference to the stage of completion at the reporting date. Where the outcome of each longterm contract can be assessed with reasonable certainty before its conclusion, the attributable profit is recognised in the profit and loss accounts as the difference between the reported turnover and related costs for that contract. Provision is made for all known or expected losses. For the waste remediation and recycling businesses, turnover is recognised on receipt of waste and for sites that involve restoration and landscaping, turnover is recognised on importation of soils. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered. Income tax The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

129

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference. Operating leases Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis. Exceptional items Exceptional items are disclosed separately in the financial statements in order to provide further understanding of the financial performance of the entity. They are material items of income or expense that have been shown separately because of their nature or amount. Defined contribution plans Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Goodwill Goodwill arising on an acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired. Positive goodwill is

130

capitalised and amortised through the profit and loss accounts over the directors' estimate of its useful economic life which ranges from five to ten years. Impairment tests on the carrying value of goodwill are undertaken: – at the end of the first full financial year following acquisition – in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable Where the fair value of assets and liabilities acquired exceed the fair value of consideration, the excess is recorded as negative goodwill. Negative goodwill is attributed to the fair value of both nonmonetary and monetary assets acquired and is released to profit and loss in the periods in which the non-monetary assets are recovered and in the periods monetary assets are expected to be benefited. Intangible assets Intangible assets are initially recorded at cost and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at revalued amounts, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses. Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

Amortisation Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows: – Goodwill Over 5-10 years – Negative goodwill Over the period that the benefit is expected to be realised If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates. Tangible assets Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Depreciation Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows: – Leasehold Improvements In accordance with the lease – Plant and machinery 3-7 years – Fixtures and fittings 7 years – Motor vehicles 4 years – Computer Equipment 3 years

Investments Fixed asset investments are initially recorded at cost and subsequently stated at cost less any accumulated impairment losses. Listed investments are measured at fair value with changes in fair value being recognised in profit or loss. Investments in subsidiaries are valued at cost less provision for impairment. Impairment of fixed assets A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. Stocks Stocks are measured at the lower of cost and net realisable value. Finance leases and hire purchase contracts Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

131

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

Government grants Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.

132

Sale & leaseback When a sale and leaseback transaction results in a finance lease, no lease is immediately recognised for any excess of sales proceeds over the carrying amount of the asset. Instead, the proceeds are deferred and presented as a liability and subsequently measured at amortised cost using the effective interest method. Cash and cash equivalents Cash consists of cash on hand and demand deposits. There are no cash equivalents included in the financial statements. Provisions Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

Other financial assets Other financial assets comprise of trade debtors, amounts recoverable on contracts, amounts due from Group and related undertakings and other debtors. Other financial assets are initially measured at the undiscounted amount of cash receivable and are subsequently measured at amortised cost less impairment, where there is objective evidence of an impairment. Other financial liabilities Other financial liabilities include trade creditors, amounts owed to Group and related undertakings and other creditors. Other financial liabilities are measured at invoice price, unless payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. In this case the arrangement constitutes a financing transaction, and the financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Loans with no stated interest rate and repayable within one year or on demand are not amortised. Ordinary share capital The ordinary share capital of the Group is presented as equity. Dividends Equity dividends are recognised when they become fully legally payable. Interim dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Loans & borrowings All borrowings by the company are initially recorded at the amount of cash received less separately incurred transaction costs, unless the arrangement constitutes, in effect, a financing transaction, in which case it is measured at the present value of future payments discounted at a market rate of interest for a similar debt instrument. Subsequently, borrowings are stated at amortised cost using the effective interest rate method. The computation of amortised cost includes any issue costs, transaction costs and fees, and any discount or premium on settlement, and the effect of this is to amortise these amounts over the expected borrowing period.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

133

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

4. TURNOVER Turnover arises from:

Construction contracts Sale of goods and services

2021 £

2020 £

359,381,782

400,631,147

30,133,827

28,008,195

389,515,609

428,639,342

The whole of the turnover is derived from the United Kingdom. An analysis of turnover by business operation is given below:

Built Environment services Infrastructure services

2021 £

2020 £

243,437,985

260,673,489

146,077,624

167,965,853

389,515,609

428,639,342

2021 £

2020 £

1,813,160

6,355,772

5. OTHER OPERATING INCOME

CJRS Furlough Income

2,085,267

2,315,024

Release of deferred profit on sale & leaseback of fixed assets

Research & Development tax credit

831,973

550,009

Other operating income

184,471

240,593

4,914,871

9,461,398

Government grant income relates to CJRS Furlough Income. 6. EXCEPTIONAL COSTS Exceptional costs in the current year relate to payroll costs paid to employees whilst on furlough totalling £2,298,480. Exceptional costs in the prior year related to payroll costs paid to employees whilst on furlough totalling £7,194,737 and redundancy costs totalling £1,536,238. 7. REGULATORY COSTS Regulatory costs relate to a provision for a regulatory penalty of £6m, legal costs incurred during the year of £0.5m and a provision for further legal costs of £0.5m. Details of the provision held at the year-end is outlined as per Note 22 to the financial statements.

134

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

8. OPERATING LOSS Operating profit or loss is stated after charging/crediting: 2021 £

Amortisation of intangible assets

2020 £

195,282

487,025

Depreciation of tangible assets

11,724,183

11,237,789

Gains on disposal of tangible assets

(1,150,927)

(1,076,026)

3,177,285

2,928,943

(28,982)

125,336

(208,089)

(559,973)

Lease payments (Gain)/Loss on financial assets at fair value through profit or loss Profit on disposal of investment

Operating loss includes exceptional costs and regulatory costs as outlined in Note 6 and 7. 9. AUDITOR'S REMUNERATION

Fees payable for the audit of the financial statements Fees payable to the company's auditor and its associates for other services: Taxation compliance services

2021 £

2020 £

175,000

145,000

20,500

18,500

Taxation advisory services

12,500

27,111

Corporate finance services

50,000

10,500

9,600

–

92,600

56,111

Other non-audit services

10. STAFF COSTS The average number of persons employed by the Group during the year, including the directors, amounted to: 2021 No.

2020 No.

Production staff

784

998

Administrative staff

760

804

–

1,544

1,809

Sales staff

The aggregate payroll costs incurred during the year, relating to above, were: 2021 £

2020 £

Wages and salaries

80,591,313

88,385,930

Social security costs

9,420,459

10,028,425

Other pension costs

1,907,262

2,066,218

91,919,034

100,480,573

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

135

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

11. DIRECTORS' REMUNERATION The directors' aggregate remuneration in respect of qualifying services was:

Remuneration Company contributions to defined contribution pension plans

2021 £

2020 £

2,786,093

2,282,104

1,317

2,628

2,787,410

2,284,732

The number of directors who accrued benefits under company pension plans was as follows:

Defined contribution plans

2021 No.

2020 No.

Remuneration of the highest paid director in respect of qualifying services:

Aggregate remuneration

2021 £

2020 £

1,581,366

1,272,388

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. All key management are directors and their remuneration for the year has been disclosed above.

12. INTEREST PAYABLE AND SIMILAR EXPENSES 2021 £

Interest on banks loans and overdrafts Interest on obligations under finance leases and hire purchase contracts Other interest payable and similar charges

136

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

2020 £

386,313

393,791

598,786

585,553

220,434

–

1,205,533

979,344

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

13. TAX ON LOSS Major components of tax

Current tax: UK current tax

2021 £

2020 £

190,430

35,043

Adjustments in respect of prior periods

(484,829)

(218,150)

Total current tax

(294,399)

(183,107)

Deferred tax: Origination and reversal of timing differences

267,819

68,135

Adjustments in respect to prior periods

62,108

–

Impact of changes in rates

(5,350)

–

Total deferred tax Tax on loss

324,577

68,135

30,178

(114,972)

Reconciliation of tax expense/(income) The tax assessed on the loss on ordinary activities for the year is higher than (2020: higher than) the standard rate of corporation tax in the UK of 19% (2020: 19%).

Loss on ordinary activities before taxation

2021 £

2020 £

(4,222,235)

(9,444,582)

Loss on ordinary activities by rate of tax

(802,225)

(1,794,471)

Adjustment to tax charge in respect of prior periods

(422,721)

(218,150)

1,440,729

314,332

(31,653)

644,154

(513,666)

(547,225)

65,592

(164,168)

Effect of expenses not deductible for tax purposes Effect of capital allowances and depreciation Effect of revenue exempt from tax Other reconciling items Deferred tax adjustments

294,122

1,650,556

Tax on loss

30,178

(114,972)

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

137

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

14. INTANGIBLE ASSETS Group

Cost At 01 November 2020

Goodwill £

Negative goodwill £

Total £

12,553,462

(9,552,499)

3,000,963

Acquisitions

1,233,990

–

1,233,990

Disposals

(1,261,163)

–

(1,261,163)

–

300,000

12,526,289

(9,252,499)

3,273,790

9,022,280

(8,949,336)

72,944

Other movements At 31 October 2021 Amortisation At 01 November 2020 Charge for the year

295,947

(100,665)

195,282

(252,232)

–

(252,232)

At 31 October 2021

9,065,995

(9,050,001)

15,994

Carrying amount At 31 October 2021

3,460,294

(202,498)

3,257,796

At 31 October 2020

3,531,182

(603,163)

2,928,019

Disposals

The company has no intangible assets. During the year, the Group acquired 50% of the issued share capital in Electricityworx Limited and 100% of the issued capital in Keltbray Highways Limited. The Group also disposed of its entire issued share capital in Keltbray Lagan Power Limited.

138

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

15. TANGIBLE ASSETS Group

Cost At 01 November 2020

Leasehold improvements £

Plant and machinery £

Fixtures and fittings £

Motor vehicles £

Computer equipment £

Total £

6,714,250

71,636,533

2,095,197

2,259,724

2,802,471

85,508,175

Additions

440,898

6,710,296

20,247

605,038

549,113

8,325,592

Disposals

(3,215,735)

(5,672,767)

–

(347,846)

(62,685)

(9,299,033)

At 31 Oct 2021

3,939,413

72,674,062

2,115,444

2,516,916

3,288,899

84,534,734

1,986,165

40,542,373

1,324,945

1,122,526

1,897,772

46,873,781

279,157

10,414,457

245,451

437,374

347,744

11,724,183

Depreciation At 01 November 2020 Charge for the year Disposals

(318,571)

(4,923,228)

–

(197,896)

(36,138)

(5,475,833)

1,946,751

46,033,602

1,570,396

1,362,004

2,209,378

53,122,131

Carrying amount At 31 October 2021

1,992,662

26,640,460

545,048

1,154,912

1,079,521

31,412,603

At 31 October 2020

4,728,085

31,094,160

770,252

1,137,198

904,699

38,634,394

At 31 October 2021

The company has no tangible assets. Finance leases and hire purchase contracts Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements: Group

Plant and machinery £

At 31 October 2021

22,514,260

At 31 October 2020

22,742,450

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

139

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

16. INVESTMENTS Listed investments £

Other investments £

Total £

Cost At 01 November 2020

2,411,302

1,625,000

4,036,302

Additions

650,234

39,630

689,864

Group

Disposals At 31 October 2021 Impairment At 01 November 2020

(857,268)

(1,400,000)

(2,257,268)

2,204,268

264,630

2,468,898

1,740,973

–

1,740,973

(412,391)

–

(412,391)

Disposals Impairment losses

(28,982)

–

(28,982)

At 31 October 2021

1,299,600

–

1,299,600

Carrying amount At 31 October 2021

904,668

264,630

1,169,298

At 31 October 2020

670,329

1,625,000

2,295,329

Listed investments At 31 October 2021, the market value of listed investments was £904,668. Company

Cost At 01 November 2020

–

Additions

7,116,124

At 31 October 2021

7,116,124

Impairment At 01 November 2020 and 31 October 2021

140

Shares in group undertakings £

––

Carrying amount At 31 October 2021

7,116,124

At 31 October 2020

–

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

On 01 November 2020, the group undertook a group reorganisation which involved the insertion of Keltbray Holdings Limited as a new holding company of Keltbray Group (Holdings) Limited and its subsidiaries. The company holds directly or indirectly ordinary share capital in the following companies:

Keltbray Group (Holdings) Limited

Country of incorporation

Nature of business

England & Wales

100%

Holding Company

Keltbray Limited

England & Wales

100%

Demolition and civil engineering

Keltbray Built Environment Limited

England & Wales

100%

Demolition and civil engineering

Keltbray Rail Limited

England & Wales

100%

Overhead line engineering for the rail network

Keltbray Plant Limited

England & Wales

100%

Supply of plant to the construction industry

Keltbray Environmental Materials Management Limited

England & Wales

100%

Ground remediation

Keltbray Environmental Ltd

England & Wales

84%

Waste recycling

Wentworth House Rail Systems Limited

England & Wales

100%

Designers of rail overhead electrification

Wentworth House Partnership Limited

England & Wales

65%

Civil engineering design

KML Occupational Health Limited

England & Wales

50%

Undertaking of occupational health services

Keltbray Structures Limited

England & Wales

100%

Construction of commercial buildings

Australia

100%

Overhead line engineering for the rail network

Canada

100%

Overhead line engineering for the rail network

Northern Ireland

50%

Electrical installation

Keltbray International Ltd Keltbray International PTY Limited Electricityworx Limited Keltbray Highways Limited

England & Wales

100%

Infrastructure services

Keltbray Management Services Limited

England & Wales

100%

Group Services

Keltbray Property Investment Limited

England & Wales

100%

Property investment

Kerr Property Holdings Limited

England & Wales

88%

Property investment

Cedarr Properties Limited

England & Wales

88%

Property investment

Kerr Prop One Limited

England & Wales

88%

Property investment

Kerr Prop Two Limited

England & Wales

88%

Property investment

Qualified Recruitment Limited

England & Wales

75%

Dormant

Keltbray Demolition Limited

England & Wales

100%

Dormant

Keltbray Building Services Limited

England & Wales

100%

Dormant

Saturn Land Limited

England & Wales

70%

Dormant

Keltbray AWS Limited

England & Wales

50%

Dormant

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

141

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

17. STOCKS

Raw materials and consumables

Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

3,046,733

3,261,868

–

18. DEBTORS Debtors falling due within one year are as follows:

Trade debtors

Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

38,789,196

41,327,873

–

397,618

–

3,315,148

2,791,617

–

717,792

1,036,364

–

Amounts owed by Group undertakings Amounts owed by related parties Deferred tax asset Called up share capital not paid Prepayments and accrued income

–

6,432,252

4,556,467

–

910,485

–

Corporation tax repayable Directors loan account Amounts recoverable on contracts Other debtors

4,554,091

–

57,797,746

55,179,795

–

5,837,943

3,096,157

–

117,444,168 108,898,758

397,618

Debtors falling due after one year are as follows:

Amounts owed by related parties

Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

16,218,112

13,390,126

–

19. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

Bank loans

15,250,000

–

Trade creditors

31,955,638

42,804,735

–

65,494,756

74,580,111

–

691,712

–

6,085,409

14,103,429

–

6,174,817

7,341,190

–

246,457

–

831,973

831,793

–

4,231,520

4,587,005

–

130,715,825 144,494,720

–

Accruals and deferred income Corporation tax Social security and other taxes Obligations under finance leases and hire purchase contracts Director loan accounts Deferred income Other creditors

142

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

Bank loans Security for bank loans comprises of cross company guarantees and debentures over certain group companies (as outlined in the Contingencies Note) and a personal guarantee by the Group's ultimate controlling party. Secured and other loans Other creditors include secured loans totalling £2,187,370 (2020: £910,460) which are secured and repayable within 12 months at an average interest rate of nil. Accruals Included within accruals and deferred income is £38,861,912 (2020: £46,207,524) of contract accruals. Assets held under finance lease The assets held under finance leases are secured upon the assets to which they relate. Deferred income Deferred income relates to the excess of proceeds over the carrying value of certain items of plant and machinery which were subject to a sale and leaseback transaction during the prior year. In accordance with the provisions in Section 20 of FRS 102, this excess has been deferred and is being amortised over the term of the lease. 20. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Group 2021 £

Bank loans Deferred income Obligations under finance leases and hire purchase contracts Other taxation & social security Other creditors

Group 2020 £

Company 2021 £

Company 2020 £

7,250,000

–

724,950

1,556,923

–

12,243,851

13,744,611

–

2,371,858

–

502,075

–

20,218,801

18,175,467

–

Bank loans Security for bank loans comprises of cross company guarantees and debentures over certain group companies (as outlined in the Contingencies Note) and a personal guarantee by the Group's ultimate controlling party. Assets held under finance lease The assets held under finance leases are secured upon the assets to which they relate. Deferred income Deferred income relates to the excess of proceeds over the carrying value of certain items of plant and machinery which were subject to a sale and leaseback transaction during the prior year. In accordance with the provisions in Section 20 of FRS 102, this excess has been deferred and is being amortised over the term of the lease.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

143

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

21. FINANCE LEASES AND HIRE PURCHASE CONTRACTS The total future minimum lease payments under finance leases and hire purchase contracts are as follows: Group 2021 £

Not later than 1 year Later than 1 year and not later than 5 years

Group 2020 £

Company 2021 £

Company 2020 £

6,174,817

7,341,190

–

12,243,851

13,744,611

–

18,418,668

21,085,801

–

22. PROVISIONS Regulatory provision £

Group

At 01 November 2020

–

Provision for regulatory penalty

6,000,000

Estimated legal fees

500,000

At 31 October 2021

6,500,000

Keltbray Limited is addressing a civil regulatory matter relating to historical issues which arose under a previous management team. The directors are fully engaged with this matter and are cooperating in full with the relevant parties. The timing and outcome of this matter is uncertain, however the range of potential liability is between £3.9m and £16m. Having received advice, a best estimate provision of £6m in relation to potential liability has been considered by the Directors to be appropriate. The company does not have any provisions. 23. REGULATORY PROVISION The deferred tax included in the statement of financial position is as follows:

Included in debtors (note 18)

Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

717,792

1,036,364

–

The deferred tax account consists of the tax effect of timing differences in respect of: Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

Accelerated capital allowances

306,228

392,563

–

Unused tax losses

332,529

–

Provisions Other

144

–

643,801

–

79,035

–

717,792

1,036,364

–

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

24. EMPLOYEE BENEFITS Defined contribution plans The amount recognised in profit or loss as an expense in relation to defined contribution plans was £1,907,262 (2020: £2,066,218). 25. GOVERNMENT GRANTS The amounts recognised in the financial statements for government grants are as follows:

Recognised in other operating income Government grants recognised directly in income

Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

1,813,160

6,355,772

–

Government grant income relates to CJRS Furlough Income.

26. CALLED UP SHARE CAPITAL Issued, called up and fully paid 2021 No.

2021 £

2020 No.

2020 £

A Ordinary shares of £1 each

B Ordinary shares of £1 each

–

100

On 01 November 2020, as part of a wider group reorganisation, the company issued 74 A Ordinary and 25 B Ordinary shares at a premium of £99,900. 27. RESERVES Profit and loss account – This reserve records retained earnings and accumulated losses. Share premium account – This reserve records the amount above the nominal value received for shares sold, less transaction costs. 28. ANALYSIS OF CHANGES IN NET DEBT At 01 Nov 2020 £

Cash flows £

New finance leases £

At 31 Oct 2021 £

Cash at bank and in hand

25,399,264

(12,810,245)

–

12,589,019

Debt due within one year

(7,341,190)

(12,364,704)

(1,718,923)

(21,424,817)

(13,744,611)

(2,259,308)

(3,489,932)

(19,493,851)

Debt due after one year

4,313,463 (27,434,257) (5,208,855) (28,329,649)

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

145

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

29. OPERATING LEASES The total future minimum lease payments under non-cancellable operating leases are as follows: Group 2021 £

Group 2020 £

Company 2021 £

Company 2020 £

Not later than 1 year

3,177,285

2,928,943

–

Later than 1 year and not later than 5 years

7,553,832

6,903,757

–

4,987,998

1,838,673

–

15,719,115

11,671,373

–

Later than 5 years

30. CONTINGENCIES Group bank borrowings are held with Santander UK Plc. There is a cross-company guarantee in place between Keltbray Group (Holdings) Limited, Keltbray Holdings Limited, Keltbray Plant Limited, Keltbray Rail Limited, Keltbray Environmental Ltd, Keltbray Environmental Materials Management Limited, Keltbray Structures Limited, Keltbray Consulting & Engineering Limited, Wentworth House Rail Systems Limited, Keltbray Energy Limited, Keltbray Built Environment Limited, Keltbray Management Services Limited and Keltbray Highways Limited. In addition, the bank holds a debenture over all of the assets and undertakings of each of the aforementioned companies. 31. DIRECTORS' ADVANCES, CREDITS AND GUARANTEES At 01 November 2020, the Group owed £246,457 to directors. During the year the Group made payments on behalf of or to directors totalling £10,949,210 and received amounts from directors totalling £6,148,662. At 31 October 2021, the amount owed by directors was £4,554,091.

146

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

Notes to the financial statements cont.

KELTBRAY HOLDINGS LIMITED Year ended 31 October 2021

32. RELATED PARTY TRANSACTIONS Group The Group has taken advantage of the exemption contained in paragraph 33.1A of FRS 102 not to disclose any transactions with its 100% owned subsidiary undertakings on the grounds that the consolidated financial statements are publicly available. At the year end, the Group was owed £19,533,260 (2020: £16,181,743) by related parties. During the year, the Group undertook the following transactions with related parties:

Sales to related parties Purchases from related parties

2021 £

2020 £

10,730,943

7,587,324

1,025,000

–

The related parties involved in the aforementioned transaction are related by virtue of ultimate common shareholders and directors. No further transactions with related parties were undertaken such as are required to be disclosed under FRS 102 Section 33. Company The Company has taken advantage of the exemption contained in paragraph 33.1A of FRS 102 not to disclose any transactions with its 100% owned subsidiary undertakings on the grounds that the consolidated financial statements are publicly available. No transactions with related parties were undertaken such as are required to be disclosed under FRS 102 Section 33. 33. CONTROLLING PARTY At 31 October 2021 the Company was a 75% owned subsidiary of ultimate parent company Keltbray Group Limited, a company registered in England and Wales. The Group's ultimate controlling party is B Kerr who is the majority shareholder of the ultimate parent company Keltbray Group Limited.

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

147

Streamlined energy and carbon reporting compliance statement

Mandatory requirement

Keltbray's consumption used to calculate emissions (kWh) Keltbray's Scope 1 emissions from combustion of fuel for plant and machinery tCO2e) Keltbray's Scope 1 emissions from combustion of fuel for on-road vehicles (tCO2e)

Current reporting year 2021 – 2022

Previous reporting year 2020 – 2021

61,756,916

61,546,895

8,151

6,566

8,641

10,032

Keltbray's Scope 1 emissions from gas combustion (tCO2e)

138

105

UK & offshore Scope 2 emissions from purchased electricity (tCO2e)

419

587

1,461

1,399

18,810

18,689

47.4

44.6

UK & offshore Scope 3 emissions from business travel in rental/employee-owned vehicles (tCO2e) Total gross emissions (tCO2e) Intensity ratio (gross Scope 1 & 2 emissions tCO2e/£1m)

148

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

METHODOLOGY USED The methodology used to calculate Keltbray's total energy (kWh) emissions and carbon dioxide equivalent emissions (tCO2e) involves breaking down the energy portfolio: – The energy (kWh) used in buildings was gained directly from our suppliers as we manage all contracts centrally. Where this is not applicable, i.e. in a managed building, we take meter readings on a monthly basis and log them on our reporting tool. Using official converting factors the energy used to power our facilities was converted to tCO2e – The energy (kWh) used to power the plant and machinery was recorded directly from the fuel suppliers and using official converting factors it was converted from litres of fuel to kWh and tCO2e – The energy (kWh) used to power the on-road vehicles was recorded directly from the fuel suppliers and using official converting factors it was converted from litres of fuel to kWh and tCO2e – The emissions (tCO2e) from business travel are logged on Keltbray facilities via the SmartWaste tool which is used to report environmental performance

ENERGY EFFICIENCY ACTIONS TAKEN In 2021/22 Keltbray Group made significant steps towards tackling and reducing the energy demand of its operations. Some key projects which were rolled included: – We have created a database to host and standardise the telemetry data for all excavators above 8T which enables us to create fuel efficiency reports for our projects – With this data, we have launched a fuel efficiency competition between all of our applicable projects where we award the driver who reduces idling time the most. This has reduced our average idling across 17 projects by 26% – 95% of Keltbray’s key fixed locations now have electric vehicle charging points and we are swapping 5% company cars for electric cars on a yearly basis – Between November 2021 and March 2022, 80% of our onsite fuel usage was HVO which reduced local air quality emission by upto 8% – We have gained the Carbon Trust Standard certification which certifies we have reduced our absolute emissions by 9% since 2019 – We have changed our energy supplier to Ecotricity and are now receiving 100% renewable electricity and the UK’s greenest gas – We have standardised our generator supplier and all of our generators are now supported by telemetry data which enables us to review the load in order to identify and reduce inefficient processes

Carbon statement

149

This report was written, designed and produced by Keltbray Proposals and Corporate Communications Team. No part of it may be reproduced without the prior permission of Keltbray Holdings Limited.

150

Keltbray Holdings Limited | Annual report and consolidated financial statements | 2021

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