Annual Report 2025

Main Board time allocation

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 decision-making processes are functioning correctly, in line with developments in company laws, industry requirements, corporate governance and best practice.

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.

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

Group financial performance

Despite a reduction in scale, the Group delivered a robust financial performance during the year, with gross operating margins increasing from 11.3% in 2024 to 13.1% in 2025. This improvement reflects the strength of the integrated operating model across the retained businesses.

Turnover reduced from £624m in 2024 to £344m in 2025, reflecting the smaller scale of the Group following the divestment in the prior financial year.

Reported results for the year include a non recurring gain of £14.4m recognised within Other Operating Income, arising from the release of intercompany debt as part of the corporate restructuring completed during the year. Excluding this item, the Group returned this year to both an operating profit and profit before tax position, delivering operating profit of £5.3m and an operating margin of 1.5%.

This compares to an operating margin of 1.7% in the prior year, excluding regulatory costs incurred in connection with the CMA fine. Excluding £1.0m of one off exceptional costs relating to a redundancy process, the Group would have delivered an underlying operating profit margin this year of 1.8%, representing a marginal improvement on 2024.

At a profit before tax level, excluding regulatory and redundancy related exceptional items, performance improved year on year, with margins increasing from 0.7% to 1.6%, supported by the Group operating on a debt free basis.

EBITDA for the year was £14.6m, representing 4.2% of revenue, compared to an EBITDA margin of 3.5% in 2024. This margin improvement demonstrates a continued upward trend and reflects the Group's focus on the quality of earnings.

Net funds

The Group closed the year with net funds of £19.4m and no external debt. During the year, a new £30m working capital facility was secured with Metro Bank on a three year term, comprising a £10m overdraft and a £20m revolving credit facility. This increased total liquidity headroom to £49.4m at the year end, compared to £20.6m in 2024 when no working capital facility was in place, providing the Group with a strong platform of financial resilience as it enters the next phase of its strategic growth.

Balance sheet strength

During the year, the Group completed a corporate restructuring as the final step in the post divestment simplification of the Group. As part of this process, Keltbray Holdings Limited, together with a number of legacy, non trading entities previously consolidated within it, was transferred outside of the Group. This restructuring resulted in a material improvement in the Group's net asset position, which increased from £38.9m at the end of 2024 to £53.9m at the close of 2025.

Order book

The Group continues to benefit from a strong forward order book, which stood at £250m at the year end. This level of secured work provides good visibility of future activity and underpins the growing financial resilience of the business.

A strong forward order book supports disciplined selectivity in contract bidding and enables the Group to maintain an appropriate balance of risk and reward across its portfolio of work.

As the Group's sectoral view of the market continues to develop, the Board is targeting opportunities to further extend the order book across additional sectors, supporting increased diversification and resilience within the business.

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.

Underlying margins exclude regulatory costs and one off redundancy costs.

Taxation

The Group takes its responsibilities as a responsible corporate citizen seriously and is committed to paying the appropriate amount of tax arising from its business activities. The Group's Tax Strategy is published on its website and is available for public inspection.

This represents the first full year in which the Group has benefited from having a dedicated Head of Tax. This role continues to lead the oversight of the Group's tax affairs, ensuring that they are conducted appropriately, with due consideration given to risk management and compliance. This has resulted in a more structured, risk based approach to tax reporting across the Group.

The Group continues to invest significantly in research and development activities, reflecting the complex engineering challenges encountered in the delivery of its projects. Expenditure on qualifying R&D activities continues to provide a benefit in mitigating the Group's effective tax rate.

Insurance

The Group's global insurance broking arrangements are consolidated with Clear Insurance Management, whose technical expertise in underwriting across the Group's principal insurance programmes, including Directors' and Officers' insurance, corporate liabilities, property, fleet, heavy plant and commercial combined supports access to both national and international insurance markets and has assisted the Group in securing competitive terms. Where specialist cover is required, including cyber insurance and health and life cover, the Group engages specialist brokers as appropriate.

During 2024/25, the Group continued to experience low levels of claims, consistent with prior years. The Group's insurance profile closely aligns with its strong safety performance. As a result of this favourable claims experience, the Group benefits from market leading levels of insurance cover, particularly in respect of Professional Indemnity and Liability insurance.

Other operating income

Other operating income for the year includes £2.9m relating to the profit on the disposal of elements of the Group's plant fleet. This reflects the ongoing realignment of the fleet to meet future operational requirements, with proceeds reinvested in new and more appropriate equipment.

As in prior years, other operating income also includes a credit arising from the Group's Research and Development claim. For the year, this amounted to £3.6m and reflects the scale of the Group's continued investment in innovation to support the delivery of complex engineering solutions for its clients.

In addition, other operating income includes £14.4m arising from the corporate restructuring completed during the year. This restructuring represented the final step in the post divestment simplification of the Group following the disposal of the Infrastructure business in the prior financial year. The £14.4m relates to the gain recognised on the release of intercompany debt associated with legacy, non trading entities transferred outside of the Group. This includes the residual transfer of the remaining liability in respect of the CMA fine, which resides within Keltbray Limited, an entity no longer consolidated within the Group, with a firm commitment from the shareholder to fund the remaining amount payable to the CMA via an alternative route.

Exceptional items

During the financial year, the Group incurred exceptional one off costs of £1.0m in relation to redundancies arising from a rightsizing initiative following the divestment of the Infrastructure business in the prior financial year. This reflected the reduced requirement for Group level roles within a business operating at a smaller scale.

Finance and treasury

The Group maintains sufficient financial capacity to support its long term contracting commitments and to accommodate future economic and operational challenges.

During the year, the Group secured a £30m working capital facility with Metro Bank on a three year term, providing appropriate funding capacity to support the delivery of the Group's profitable growth strategy.

At present, the Group maintains a significant bonding line with substantial unused capacity. Recent developments in the construction sector have placed pressure on the bonding market, and the Group remains well positioned, in part due to regular communication between the finance team and bonding underwriters.

In addition, the Group continues to benefit from significant credit insurance facilities. While this cover is held by members of the Group's supply chain, its availability is supported by regular briefings provided by the Group to the main credit insurance underwriters.

The Group continues to review its credit support requirements and engagement with key financial stakeholders, including banking, bonding and credit insurance providers, who support the Group's long term strategic growth agenda. The Group will continue to ensure that its treasury policy remains appropriate for the scale, complexity and operating environment of the business.

Outlook

The Group has responded proactively to prevailing trading challenges and will continue to focus on its core business, investing in its proven service offering and striving to deliver excellence for clients.

The Board remains confident that the Group's growth plans are realistic and achievable. Increasing diversification in revenue streams is delivering a more balanced profit profile, and the Group continues to target opportunities to extend sector coverage into growth oriented markets.

The Executive Board continues to review the Group's capital structure and will consider opportunities to improve efficiency within the current operating model.

The Group is satisfied that it has an appropriate organisational structure, well balanced cash flows, an acceptable level of risk exposure across the supply chain, and a strong order book.

The Group believes it is well positioned to deliver sustained growth over the next five year business planning period, supported by its shareholder and, where appropriate, augmented by external banking facilities. The Group will continue to deepen and strengthen relationships with key clients and supply chain partners across higher value sectors and markets.

Scott Bennett
Chief Financial Officer