TIDMKLR
RNS Number : 9249B
Keller Group PLC
28 February 2011
For immediate release Monday, 28 February 2011
Keller Group plc
Full Year Results for the year ended 31 December 2010
Keller Group plc ("Keller" or "the Group"), the international
ground engineering specialist, is pleased to announce its full year
results for the year ended 31 December 2010.
Results summary:
-------------------------------- ------------ ------------
2010 2009
-------------------------------- ------------ ------------
Revenue GBP1,068.9m GBP1,037.9m
-------------------------------- ------------ ------------
Operating profit* GBP43.3m GBP77.3m
-------------------------------- ------------ ------------
Profit before tax* GBP39.6m GBP74.7m
-------------------------------- ------------ ------------
Earnings per share* 44.0p 78.8p
-------------------------------- ------------ ------------
Cash generated from operations GBP70.3m GBP123.2m
-------------------------------- ------------ ------------
Total dividend per share 22.8p 21.75p
-------------------------------- ------------ ------------
* stated before a GBP21.8m goodwill impairment charge, but after
redundancy and other reorganisation charges of GBP3.8m
Highlights include:
-- Further delivery on our strategy of geographic
diversification, with 38% of 2010 revenue from Australia and
developing markets, up from 13% five years ago
-- Total revenue from Australia and developing markets of
GBP404m (2009: GBP276m), with record revenue from Australia, Poland
and all of our Asian businesses
-- Acquisitions in Australia and the US mark further progress in
the Group's long-term growth strategy
-- GBP70.3m of cash generated from operations, reflecting strong
focus on cash collection and working capital
-- Year-end net debt of GBP94.0m (1.1x EBITDA); following
refinancing in December, committed facilities now GBP240m, with
substantial covenant headroom
-- Total dividend of 22.8p per share (2009: 21.75p), a 5%
increase, maintaining Keller's track record of increasing the
dividend every year since flotation
-- Order book up 13% on last year
Justin Atkinson, Keller Chief Executive said:
"Keller faced many challenges in 2010, particularly in the US
and much of Western Europe, where construction markets remained
depressed. However, our combination of strengths, including the
breadth of our product offering, excellent operational capabilities
and a strong balance sheet to support our ambitions, have served us
well in the past and will underpin our delivery of sustained
long-term growth in the future."
For further information, please contact:
Keller Group plc www.keller.co.uk
Justin Atkinson, Chief Executive 020 7616 7575
James Hind, Finance Director
Finsbury
James Leviton, Clare Hunt 020 7251 3801
A presentation for analysts will be held at 9.30am at The London
Stock Exchange,
10 Paternoster Square, London, EC4M 7LS
A live audio webcast will be available from 9.30 am and, on
demand, from 2.00 pm at
http://www.keller.co.uk/keller/investor/result-centre/latest-results/
Print resolution images are available for the media to download
from www.vismedia.co.uk
Notes to Editors:
Keller is the world's largest independent ground engineering
specialist, providing technically advanced and cost-effective
foundation solutions to the construction industry. With 2010
revenue of GBP1.1 billion, Keller is a member of the FTSE-250. It
has around 6,000 staff world-wide, with offices in around 40
countries on five continents.
Keller is the market leader in the US and Australia; it has
prime positions in most established European markets; and a strong
and growing profile in many developing markets.
Chairman's Statement
Keller faced many challenges in 2010, particularly in the US and
much of Western Europe, where construction markets remained
depressed. This solidset of results is therefore testament to the
Group's strategy and to the strong operational capability of our
businesses.
The Group's geographic profile has long been a key strength and
we have continued to pursue a strategy of geographic
diversification in recent years. The success of this strategy is
reflected in these results, which show further progress in
Australia and our developing markets(1) , partially offsetting the
impact of the severe market and trading conditions in the US and
Western Europe. Overall, GBP404m (38%) of our 2010 revenue came
from Australia and our developing markets, up from GBP90m (13%)
five years ago.
Results(2)
Group revenue increased by 3% to GBP1,068.9m (2009:
GBP1,037.9m). The operating margin at this low point in the cycle
was 4.1%, compared with the previous year's 7.4%, resulting in an
operating profit of GBP43.3m (2009: GBP77.3m). Profit before tax
was GBP39.6m (2009: GBP74.7m) and earnings per share were 44.0p
(2009: 78.8p).
Cash flow and net debt(3)
Cash generated from operations was GBP70.3m (2009: GBP123.2m),
which represented 83% of EBITDA (2009: 109%). This continued the
Group's consistent track record of converting profits into cash and
reflects our strong focus on cash collection and the minimisation
of working capital.
Despite current market conditions, we have not lost sight of the
long term, and continue to invest organically in our growth markets
and in acquisitions. After net capital expenditure of GBP28.6m
(2009: GBP35.5m) and expenditure on acquisitions of GBP23.4m (2009:
GBP34.7m), net debt at the end of the year stood at GBP94.0m (2009:
GBP78.8m), which represents 1.1x EBITDA.
Towards the end of the year, the Group completed the refinancing
of its main central banking facilities, replacing GBP145m of
committed facilities due to expire in the summer of 2011 with a new
GBP170m revolving credit facility, expiring in April 2015. With
these extended facilities, the financial position of the Group
remains very healthy and we continue to operate well within the
associated financial covenants.
1 Our markets in Eastern Europe, North Africa, the Middle East,
Asia and Brazil.
2 2010 results are stated before a GBP21.8m goodwill impairment
charge, but after redundancy and other
reorganisation charges of GBP3.8m.
3 Net debt is cash and short-term deposits less total loans and
borrowings.
Dividends
The Board has recommended a final dividend of 15.2p per share
(2009 second interim: 14.5p per share). This, together with the
interim dividend paid of 7.6p, brings the total dividend for the
year to 22.8p, an increase of 5% on the previous year's 21.75p.
Dividend cover for the year is 1.9x2 (2009: 3.6x). The final
dividend will be paid on 27 May 2011 to shareholders on the
register at 6 May 2011.
This maintains our record of increasing the dividend each year
since the Company's flotation in 1994, through market cycles.
Strategy
We remain focused on our strategy: to extend further our global
leadership in specialist ground engineering through both organic
growth and targeted acquisitions. There are three key elements to
our strategy:
-- expansion into new, higher growth geographic regions;
-- acquisition and development of new technologies and methods;
and
-- transfer of technologies and methods within our current
geographic regions.
Good strategic progress was made in the year, including:
-- the strengthening of our businesses through the deployment of
more resources in regions which offer good growth opportunities,
such as India and Brazil;
-- completion of two acquisitions: Waterway Constructions
(Waterway), a Sydney-based near-shore marine piling contractor; and
Nilex, the leading wick drain contractor in the US, both of which
add to the Group's wide range of technologies; and
-- the extension of our range of technologies in some of our
more established regions, such as the transfer of Getec monitoring
systems from Germany to the UK and the introduction of grouted
stone columns in Singapore.
Employees
2010 was a challenging year for management and employees alike.
In the face of these challenges, our employees once again showed
tremendous resolve, commitment and goodwill. I would like to thank
them for their contribution and wish all of them personal success
in 2011.
Board
After nine years on the Board, Richard Scholes will be stepping
down at the Annual General Meeting in May. As a Non-executive
Director and, since 2008, as Chairman of the Audit Committee,
Richard has consistently given us the benefit of his experience and
wisdom. We have valued his contribution to Keller and offer him our
best wishes for the future.
I am very pleased to welcome our most recent appointee to the
Board: Chris Girling, whose appointment was announced on 14
February and is effective from today. Chris brings very relevant
construction experience which, together with his financial
expertise, complements the strengths of other Board members and I
am confident that he will make a strong contribution. Chris will
become Chairman of the Audit Committee when Richard stands down at
the Annual General Meeting.
Ruth Cairnie joined the Board on 1 June and in a short space of
time has demonstrated commitment to the role, sound judgement and a
good understanding of the key drivers of this business.
Outlook
For the Group as a whole, contract awards in the second half of
2010 continued to be ahead of the same period in 2009. As a result,
at the end of January 2011 our order book was 13% ahead of the
previous year.
In the US and Western Europe, our markets most severely impacted
by the global recession, most construction markets have stabilised
and in some we are beginning to see early signs of moderate growth.
However, the medium term looks set to remain challenging, as the
full impact of government austerity programmes is felt. Therefore,
whilst we expect 2011 to be a year of modest but steady recovery,
we do not anticipate a rapid return to pre-recession levels of
construction spend. Overcapacity remains an issue, particularly in
the US, and it will therefore take time for any revenue growth to
feed through into higher margins.
The current unrest in the Middle East and North Africa will
inevitably impact on our businesses in these markets, albeit that
they are relatively small. Looking to Australia and our other
developing markets, however, the fundamentals remain strong and we
will continue to expand our position in these markets in order to
take full advantage of the growth opportunities which they
offer.
Our combination of strengths, including the breadth of our
product offering, excellent operational capabilities and a strong
balance sheet to support our ambitions, have served us well in the
past and will underpin our delivery of sustained long-term growth
in the future.
Operating Review
The Group's 2010 results reflect the sharpest decline in global
construction in decades, which persisted throughout most of last
year. Trading conditions in our mature markets remained very tough,
although good overall contract performance, firm cost control and
an increased contribution from our developing markets all helped to
lessen the impact.
Conditions in our major markets
Generally, across our mature markets we witnessed further
weakness in privately-financed construction, compounded by a
decline in investment in public infrastructure, as many governments
started to rein in their spending.
In the US, non-residential construction expenditure was down by
14% on the previous year(4) , with a marked slowdown in investment
across most sectors. As anticipated, there was further significant
shrinkage in the office, commercial and leisure sector, where
construction spend was more than 50% down on the 2008 peak. 2010
also saw the first decline in US public infrastructure spending in
at least 20 years, with a year on year reduction of 3%, mainly
reflecting reductions in spending at the state level. Residential
construction benefited temporarily from tax credits for first-time
home buyers, but following their removal at the end of April,
housing starts reverted to historic lows. Overall, US construction
expenditure reduced in the year by a further 10%.
Within our principal European markets, Poland and Germany saw
reasonable growth across most sectors, whereas the more modest
growth in the UK was mainly civil engineering related. In France
and Spain, construction expenditure continued to decline.
Elsewhere, demand in Australia and our Asian markets remained
strong, whilst we saw no significant improvement in construction
activity in our markets in the Middle East.
4 The US Census Bureau of the Department of Commerce, 1 February
2010.
Operations
US
Results summary: *
-------------------- ---------- ----------
2010 2009
-------------------- ---------- ----------
Revenue GBP425.2m GBP467.0m
-------------------- ---------- ----------
Operating profit GBP6.9m GBP32.2m
-------------------- ---------- ----------
Operating margin 1.6% 6.9%
-------------------- ---------- ----------
*2010 results are stated before goodwill impairment
In local currency, total revenue from our US operations as a
whole was down by 10% on 2009, although the second-half revenue was
slightly ahead year-on-year. The operating margin for the full year
decreased from 6.9% to 1.6%. These results reflect a combination of
the impact of the adverse weather conditions in the first quarter,
severe pressure on margins across the US foundation businesses and,
as anticipated, a loss at Suncoast. Excluding the loss at Suncoast,
the operating margin was 3.3% (2009: 9.1%). In sterling terms,
overall revenue was 9% lower, whilst operating profit was down by
79%.
Hayward Baker
Despite the severity of the market decline, it has been
surprising that so little capacity has exited the US market. For
Hayward Baker, as for the Group's other US foundation contracting
businesses, this has contributed to further downward pressure on
its historically strong margins. However, the selective targeting
of contracts and a tight control of costs resulted in a solid
performance in 2010, albeit well below that of previous years.
Hayward Baker remains the largest and most geographically
diverse of our six US businesses. Importantly, throughout this
challenging period, Hayward Baker's market leading position and its
reputation for innovative and creative designs have not been
impaired. These strengths are reflected in some of the technically
challenging projects worked on during the year, including a large
tunnelling project in New York City, where deep jet grouting is
being undertaken in preparation for the construction of four new
rail tunnels.
In the second half, work began on a soil mixing contract at the
Louisiana Offshore Oil Port (LOOP) - a deepwater port in the Gulf
of Mexico, where Hayward Baker has worked several times over the
past eight years. The company's ability to design an alternative
solution with a reduced programme time was key to winning this
contract, in the face of strong competition.
Work also got underway at Thornton Quarry, a grouting project in
the Chicago area associated with a package of reservoir and related
tunnel upgrades, which involves installing a 3,000 metre double row
grout curtain. As with the LOOP project, work at Thornton Quarry is
expected to continue throughout much of 2011.
Good progress was made in the second half in integrating the
wick drain business of Nilex, which Hayward Baker bought in June
2010. Prior to the acquisition, Nilex had worked on numerous
Hayward Baker projects and this successful past relationship helped
to ensure a smooth transition into the Group.
Case, McKinney, Anderson and HJ
Amongst our US piling businesses, McKinney and Case stood out
for their very strong performance last year. Anderson and HJ both
struggled to counteract the very tough conditions prevailing in
California and Florida, their respective home markets. One of the
key contributors to McKinney's good result was its work on the
Hemlock Semiconductor project in Tennessee, where it was one of
several foundation contractors who together installed over 3,000
caissons for a large solar panel facility. Whilst contracts such as
this can make the difference between a good and an excellent result
for McKinney, the sound execution of many smaller contracts which
make up their base workload, together with careful management of
their costs, is key to their success.
Case and McKinney worked together on a contract at the site for
the new United States Homeland Security Headquarters complex in
Washington DC, installing concrete shear pins to stabilise the
hillside and protect the site from a potential future slide.
Through excellent project management, they succeeded in meeting the
customer's challenging deadline, completing the job by the end of
the year.
Suncoast
A temporary uplift in the residential market in the early months
of the year was not sustained, as housing starts fell off again
following the withdrawal of tax credits for first-time home buyers
at the end of April. Furthermore, 2010 brought no improvement in
demand for Suncoast's high-rise products. With volume and prices
already under pressure, the situation was exacerbated by increases
in the cost of steel strand. The continuous process of adapting the
business to its very tough trading environment included a further
25% reduction in headcount in the year, resulting in redundancy and
other reorganisation costs of GBP1.2m and an agreement with the
remaining workforce to cut wages and salaries by 10%.
The 2011 results will benefit from these and other actions taken
to reduce costs in the second half of last year. The business now
has an extremely tight overhead structure, but has nevertheless
maintained the capability to take advantage of any market
improvement. With the current level of annual housing starts at
less than 600,000 running so far below the long-term average of
around 1,500,000, some market improvement remains a realistic
prospect in the short to medium term.
Continental Europe, Middle East & Asia (CEMEA)
Results summary: *
-------------------- ---------- ----------
2010 2009
-------------------- ---------- ----------
Revenue GBP400.3m GBP386.4m
-------------------- ---------- ----------
Operating profit GBP22.4m GBP33.6m
-------------------- ---------- ----------
Operating margin 5.6% 8.7%
-------------------- ---------- ----------
*2010 results are stated before goodwill impairment
In local currency, revenue was up by approximately 8% whilst
operating profit was 30% below the previous year. Translated into
sterling, revenue was 4% higher than the previous year and
operating profit was down by 33%.
Continental Europe
Overall, our businesses within the more mature Continental
European markets showed resilience, despite challenging market
conditions and extremely adverse weather in the first few months of
the year.
Germany was one of the few construction markets in the region to
experience growth in 2010, although major public infrastructure
projects continued to suffer delays and, in the private sector,
where the available work mainly comprised smaller contracts, prices
continued to be driven down by intense competition, as was our
experience elsewhere on the continent. Against this backdrop, our
German, and indeed our Austrian, businesses held up well, often
using the wide range of technologies at their disposal to submit
winning alternative design proposals. For example, a redesign of
works at Austria's Klagenfurt railway station resulted in the
execution of a packaged solution using sheet piles, jet grouting,
anchors and a grouted slab.
France and Spain saw further deterioration in their markets - in
the case of Spain, for the third consecutive year, resulting in
total construction expenditure almost halving since the end of
2007. In both countries, our businesses were subject to
restructuring, which resulted in around GBP1.3m of redundancy and
other reorganisation costs in the final quarter of last year. With
planned public spending cuts, these markets will remain difficult
for some time and management will continue to adapt the businesses
as necessary.
Our Polish business was once again the best performer in Europe.
It continued to benefit from the country's programme of major road
and rail infrastructure upgrades, which accounted for around 65% of
its 2010 revenue. An important contributor was a contract to
install vibro stone columns and jet grouting for a new section of
the A4 motorway. The business also worked on the A1 and A2
motorways, where it provided a range of different techniques
including ground improvement, piling and soil nails, reflecting its
ability to offer the full range of ground engineering
solutions.
Middle East
Activity in our Middle Eastern businesses remained fairly
subdued. However, we continued to trade profitably, despite the
delayed start of several major projects causing us to rely on much
smaller contracts than we have become accustomed to in this region
in recent years. During the year, plans were laid for extending our
operations into Oman and Qatar, where construction activity is set
to ramp up in the coming years.
As well as its operations in the UAE and Saudi Arabia, the Group
has small businesses in Egypt and Bahrain. It is too soon to
predict the impact on our businesses of the current unrest in this
region.
Asia
An excellent result was delivered by our Asian business, with a
particularly pleasing contribution from India, where revenue and
profit both increased almost three-fold in the year, albeit from a
small base. Good progress was made on extending our product range
and building up our capacity in India, where the headcount at the
end of the year stood at over 300, compared with around 150 a year
earlier. We were also able to deploy a substantially larger plant
and equipment fleet by focusing our investment in this region, as
well as transferring under-utilised equipment from the Middle
East.
One of the largest contracts undertaken by our Indian business
last year was for a new fuel refinery at Paradip, in the State of
Orissa, which is being constructed on reclaimed land and where we
undertook over 500,000 linear metres of vibro replacement over a
six-month period. Mid-year, we also successfully completed a
contract for a new petrochemical terminal in Chennai, with a
complete solution comprising both the piling and the foundation
slab. A second contract for the same client is now well
underway.
In this rapidly developing market, we are targeting those
contracts where we have a particular competitive advantage: either
our design and build capability or advanced techniques and
specialist equipment which are not generally available in the local
market. As in our other high-growth regions, we are concentrating
on strengthening our business infrastructure in line with the
growth in revenue, to ensure that our best practice approaches to
safety, risk control and quality, which our clients value highly,
are not compromised as activity levels step up.
2010 was a busy year in Singapore for both Keller Singapore and
Resource Piling, our October 2009 acquisition. Good co-operation
has developed between the two companies, as reflected in an
upcoming joint venture project to install foundations for a new
power plant on Jurong Island. This is a region where Keller has
done much work in the past, including vibro compaction to densify
reclamation sandfill for roads, tank farms and a hydrogen plant
extension. A deep soil mixing contract to stabilise excavation
slopes for the construction of Singapore's Punggol Waterway was
another important contributor to the Asian result.
Our Malaysian business also performed well, with the ongoing
Ipoh to Padang Besar railway project making up a significant part
of our workload there. This business was also instrumental in
supporting our new subsidiary in Vietnam, which undertook its first
contract, installing stone columns in very soft clay to provide a
stable platform for a new petrochemical complex at Vung Tau. After
a successful start, a further package of work was awarded by the
same client and is progressing well.
Brazil
Good progress was made in building up our Brazilian business,
where we established our credentials with a major ground
improvement contract for an international customer. Since then, the
Group has set up a joint venture with a local partner in the Rio de
Janeiro area, where we expect to see ample opportunities in ground
improvement as the development of this region accelerates.
In August, a large contract got underway at Porto do Sudeste,
one of several major port systems being developed in this region of
Brazil. We are installing around 250,000 linear metres of stone
columns to create the foundations for new iron ore storage
facilities, with completion expected in the first half of 2011.
With Keller employees from Germany, Austria and Portugal on site,
this is a good example of how international co-operation benefits
individual companies within the Group.
Australia
Results summary:
------------------ ---------- ----------
2010 2009
------------------ ---------- ----------
Revenue GBP193.8m GBP126.9m
------------------ ---------- ----------
Operating profit GBP19.1m GBP16.6m
------------------ ---------- ----------
Operating margin 9.9% 13.1%
------------------ ---------- ----------
Whilst the Australian construction market continued to grow in
2010, the rate of growth was below that of the two previous years,
with demand softening particularly in the second half. Although we
believe that 2011 will see a temporary lull in this market, the
fundamentals remain good, with several large resource-related
projects scheduled for commencement in 2012.
Our Australian business had another very strong year, despite
operations being hampered towards the end of the year by extreme
weather on the east coast, which continued into January of this
year. In local currency, revenue was up by 29% and operating profit
was broadly flat. In sterling terms, revenue and operating profit
were up by 53% and 15% respectively. The operating margin at 9.9%
was very strong, albeit below the previous year's exceptional
level.
Good progress was made in the integration of Waterway, the
near-shore marine piling contractor acquired by the Group in June
2010. Opportunities to work with one or more of the Group's other
Australian companies to provide combined packages of land and
near-shore marine foundation solutions continue to be identified
and developed.
An important contributor to the year's result was the Ipswich
Mine Fill project in Queensland, involving the in-filling of
abandoned coal mines beneath the widened Ipswich motorway, most of
which was performed in 2010. This A$56m project harnessed the
Group's capabilities and experience worldwide. Building on this
success, the business has since been awarded a contract for
similar, but smaller, works in a former mining area in the Hunter
Valley, which will be performed in 2011.
Another example of one successful job leading to another was a
ground improvement contract for a coal export terminal to
facilitate its coal handling facility upgrade. With the first stage
of the terminal now operational, last year we conducted trials
using dynamic replacement and mass dry soil mixing solutions for
the second stage works, for which we have since received an order.
Keller Australia worked closely on the designs for this work with
colleagues in Asia, where considerable experience in deep soil
mixing techniques has been acquired in recent years.
UK
Results summary:
------------------------- ---------- ---------
2010 2009
------------------------- ---------- ---------
Revenue GBP49.6m GBP57.6m
------------------------- ---------- ---------
Operating (loss)/profit (GBP2.5m) GBP0.5m
------------------------- ---------- ---------
Operating margin (5.0%) 0.9%
------------------------- ---------- ---------
Market conditions in the UK continued to be very challenging,
particularly in the housing and commercial sectors, which together
have historically accounted for much of the revenue of our UK
business and where we continue to await signs of recovery.
Despite actions taken in the first half to reduce overheads and
operating costs, these were not sufficient to offset the impact on
the full-year results of a significant reduction in volume in the
second half. Accordingly, the business reported an operating loss
of GBP2.5m (2009: profit GBP0.5m) on revenue of GBP49.6m (2009:
GBP57.6m). Further restructuring was undertaken in the second half,
resulting in a total restructuring cost of GBP1.0m for the full
year.
Over the last year, management has focused on re-positioning the
business in order to increase its participation in major civil
engineering work, thereby reducing its reliance on the depressed
housing and commercial sectors.
This strategy is now starting to yield benefits. During the
year, the business was involved in a major piling contract at
London's Tottenham Court Road tube station, which is a precursor to
the wider Crossrail development. The project is running smoothly
and continues into 2011. The business has also commenced its early
involvement in the provision of specialist geotechnical and
monitoring services for sections of the tunnelling works for the
Crossrail project, which will employ the Getec monitoring systems
developed by Keller in Germany and recently introduced into the UK.
This, together with substantial work as part of the upgrade of
London's Victoria Railway Station, which will also involve support
from our German business, is due to start in the second half of
2011.
Keller - more than the sum of its parts
This review of our 2010 performance reflects our key strengths,
the combination of which sets us apart as a business.
We have a fundamental belief that we can best serve our
construction markets with a regional structure through which we are
fully aligned with our customers. Overlaying this structure are
common goals, shared interests and working relationships which
drive the pooling of expertise and resources and the transfer of
technologies. These things, in turn, create synergies, making
Keller Group more than the sum of its parts.
Financial Review
2010 was another challenging year for Keller with very difficult
market conditions in the US and Western Europe, markets which still
represent about 60% of the Group's revenue.
Results
Trading results(5)
The Group's total revenue in 2010 was GBP1,068.9m, an increase
of 3% on 2009. Stripping out the effects of acquisitions and
foreign exchange movements, however, 2010 revenue was 6% down on
2009. This reflects significant reductions from the US and Western
Europe, partly offset by good growth in Australia and the Group's
developing markets.
EBITDA was GBP85.0m, compared to GBP113.2m in 2009 and operating
profit was GBP43.3m, down from GBP77.3m in 2009. Adjusting for the
effects of acquisitions and currency movements, the Group's
operating profit was down 54%. This reflects a reduction in the
Group operating margin from 7.4% to 4.1%, mainly as a result of the
depressed state of the Group's more established markets. The
reported 2010 profit is stated after GBP3.8m of one-off redundancy
and other reorganisation costs, incurred mainly at Suncoast in the
US, in the UK and in Spain and France.
In the US, which represented 40% of Group revenue, the US
dollar-denominated operating profit was down nearly 80%
year-on-year, reflecting a further significant contraction in the
US non-residential construction market and the residential market
remaining depressed. The decline in CEMEA's constant-currency
results was less marked, as the improved results from the Group's
developing markets mitigated a significant reduction in CEMEA's
profits earned in Western Europe. Reported profits from Australia
increased by 15%, helped by a stronger Australian dollar and the
acquisition of Waterway in June 2010. The UK reported a loss,
stated after GBP1.0m of reorganisation costs.
The Group's trading results are discussed more fully in the
Chairman's Statement and the Operating Review.
5 Before goodwill impairment.
Impairment of goodwill
The 2010 results include a GBP21.8m non-cash exceptional charge
in respect of the impairment of goodwill. Virtually all of this
relates to the Group's investments in Suncoast in the US and
Keller-Terra in Spain. Suncoast sells mainly to the US residential
market and this market and the construction market in Spain are, of
all the Group's markets, the two which have been most severely
impacted by the global recession. The impairment charge includes
all of the GBP7.6m goodwill in respect of Keller-Terra and
GBP13.5m, or about one-third, of the total Suncoast goodwill.
Net finance costs
Net finance costs increased to GBP3.7m in 2010 from GBP2.6m in
2009. This increase is due to non-cash items included in net
finance costs under IFRS. The net interest payable on the Group's
net debt increased marginally to GBP3.1m, with the benefit of lower
average interest rates being offset by higher average
borrowings.
Tax
The Group's underlying effective tax rate was 28%, down from 30%
in 2009, as a higher proportion of the Group's profit was derived
from lower tax countries. This lower rate is expected to be
maintained in the short term.
Earnings and dividends
Earnings per share (EPS) before goodwill impairment decreased by
44% to 44.0p (2009: 78.8p). Basic EPS, stated after goodwill
impairment, was 17.3p (2009: 78.8p) The Board has recommended a
final dividend of 15.2p per share, which brings the total dividend
to be paid out of 2010 profits to 22.8p, a 5% increase on last
year. The 2010 dividend is covered 1.9 times by earnings before
goodwill impairment.
Cash flow
The Group has always placed a high priority on cash generation.
The current economic environment is inevitably putting pressure on
working capital in certain locations and we continue to focus on
maximising cash generation and minimising the Group's investment in
working capital. Net cash inflow from operations was GBP70.3m,
representing 83% of EBITDA. Year-end working capital was GBP106.7m,
GBP21.7m more than at the end of 2009. Stripping out the impact of
currency movements and acquisitions, year-end working capital
increased by GBP14.9m or 18%, as a result of the fourth quarter's
revenue being significantly higher than the fourth quarter in 2009.
As expected, capital expenditure, net of disposals, was reduced by
around 20% to GBP28.6m, which compares to depreciation of
GBP40.0m.
The Group spent GBP23.4m in cash on acquisitions in the year,
including net debt assumed. Of this amount, GBP16.8m was the
initial consideration for Waterway, a near-shore marine piling
business based in Australia and GBP4.6m was spent on acquiring
Nilex, a US wick drain business, both of which were acquired in
June 2010.The remaining GBP2.0m was deferred consideration. At the
year end, a total of GBP7.1m was accrued as deferred consideration,
mainly payable in 2013 in respect of Resource Piling, a business
based in Singapore which was acquired in 2009.
Financing
As at 31 December 2010, year-end net debt amounted to GBP94.0m
(2009: GBP78.8m). Based on net assets of GBP330.8m, year-end
gearing was 28%, up slightly from 24% at the beginning of the
year.
In December 2010, the Group completed the refinancing of its
main banking facilities. The Group's debt and committed facilities
now mainly comprise a US$100m private placement, repayable US$30m
in October 2011 and US$70m in October 2014, and a new GBP170m
syndicated revolving credit facility expiring in April 2015. At the
year end, the Group also had other committed and uncommitted
borrowing facilities totalling around GBP43m. The Group therefore
has sufficient available financing to support its strategy of
growth, both through organic means and targeted, bolt-on
acquisitions.
The most significant covenants in respect of our main borrowing
facilities relate to the ratio of net debt to EBITDA, EBITDA
interest cover and the Group's net worth. The Group is operating
very comfortably within its covenant limits, as is illustrated in
the table below:
Test Covenant limit Current position
---------------------- --------------- -----------------
Net debt:EBITDA < 3x 1.5x*
EBITDA interest cover > 4x 23x
Net worth > GBP200m GBP331m
---------------------- --------------- -----------------
*Calculated in accordance with the covenant, with letters of
credit included as net debt
Capital structure
The Group's capital structure is kept under constant review,
taking account of the need for, availability and cost of various
sources of finance.
Pensions
The Group has defined benefit pension arrangements in the UK,
Germany and Austria. The Group closed its UK defined benefit scheme
for future benefit accrual with effect from 31 March 2006 and
existing active members transferred to a new defined contribution
arrangement. The last actuarial valuation of the UK scheme was as
at 5 April 2008, when the market value of the scheme's assets was
GBP26.9m and the scheme was 77% funded on an ongoing basis. The
level of contributions, currently set at GBP1.5m a year, will be
reviewed at the next actuarial valuation, which will be as at April
2011.
The 2010 year-end IAS 19 valuation of the UK scheme showed
assets of GBP30.6m, liabilities of GBP38.0m and a pre-tax deficit
of GBP7.4m.
In Germany and Austria, the defined benefit arrangements only
apply to certain employees who joined the Group prior to 1998.
There are no segregated funds to cover these defined benefit
obligations and the respective liabilities are included on the
Group balance sheet. These totalled GBP12.7m at 31 December 2010.
All other pension arrangements in the Group are of a defined
contribution nature.
Management of financial risks
Currency risk
The Group faces currency risk principally on its net assets,
most of which are in currencies other than sterling. The Group aims
to reduce the impact that retranslation of these assets might have
on the balance sheet by matching the currency of its borrowings,
where possible, with the currency of its assets. The majority of
the Group's borrowings are held in US dollars, euros and Australian
dollars, in order to provide a hedge against these currency net
assets.
The Group manages its currency flows to minimise currency
transaction exchange risk. Forward contracts and other derivative
financial instruments are used to hedge significant individual
transactions. The majority of such currency flows within the Group
relate to repatriation of profits and intra-Group loan repayments.
The Group's foreign exchange cover is executed primarily in the
UK.
The Group does not trade in financial instruments, nor does it
engage in speculative derivative transactions.
Interest rate risk
Interest rate risk is managed by mixing fixed and floating rate
borrowings depending upon the purpose and term of the financing. As
at 31 December 2010, virtually all the Group's third-party
borrowings bore interest at floating rates.
Credit risk
The Group's principal financial assets are trade and other
receivables, bank and cash balances and a limited number of
investments and derivatives held to hedge certain of the Group's
liabilities. These represent the Group's maximum exposure to credit
risk in relation to financial assets. The Group has stringent
procedures to manage counterparty risk and the assessment of
customer credit risk is embedded in the contract tendering
processes. Customer credit risk is mitigated by the Group's
relatively small average contract size and its diversity, both
geographically and in terms of end markets.
As a result, no customer represented more than 5% of revenue in
2010. The counterparty risk on bank and cash balances is managed by
limiting the aggregate amount of exposure to any one institution by
reference to their credit rating and by regular reviews of these
ratings.
Principal risks and uncertainties
The main areas of uncertainty facing the Group relate to market
cycles, acquisitions, technical risk and people. These also
represent the Group's greatest opportunities.
Market cycles
Whilst our business will always be subject to economic cycles,
market risk is reduced by the diversity of our markets, both in
terms of geography and market segment. It is also partially offset
by opportunities for consolidation in our highly fragmented
markets. Typically, even where we are the clear leader, we still
have a relatively small share of the market. Our ability to exploit
these opportunities through bolt-on acquisitions is reflected in
our track record of growing sales, and doing so profitably, across
market cycles.
Acquisitions
We recognise the risks associated with acquisitions and our
approach to buying businesses aims to manage these to acceptable
levels. First, we try to get to know a target company, often
working in joint venture, to understand the operational and
cultural differences and potential synergies. This is followed by a
robust due diligence process, most of which is undertaken by our
own managers, and we then develop a clear integration plan which
takes account of the unique character of the target company.
Technical risk
It is in the nature of our business that we continually assess
and manage technical, and other operational, risks. The controls we
have in place, particularly at the crucial stage of bidding for
contracts, are set out in the Internal Control section of our
Corporate Governance Report in the Annual Report and Accounts.
Given the Group's relatively small average contract value (less
than GBP200,000), it is unlikely that any one contract is able to
materially affect the financial position of the Group.
People
The risk of losing, or not being able to attract, good people is
key. We pride ourselves in having some of the best professional and
skilled people in the industry, who are motivated by our culture
and the opportunities for career growth. The approach to training
and developing employees is discussed in our Social Responsibility
Report in the Annual Report and Accounts.
Forward-looking statements
This announcement contains forward-looking statements. These
have been made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report. The Directors can give no assurance that these
expectations will prove to have been correct. Due to the inherent
uncertainties, including both economic and business risk factors
underlying such forward-looking information, actual results may
differ materially from those expressed or implied by these
forward-looking statements. Except as required by law or
regulation, the Directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
Directors' responsibilities in respect of the financial
statements
(a) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the
Group; and
(b) the management report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of its principal risks and
uncertainties.
Signed on behalf of the Board
J R Atkinson Chief Executive
J W G Hind Finance Director
Consolidated income statement
For the year ended 31 December 2010
2010 2010 2010 2009
Before
goodwill Goodwill
impairment impairment Total
Note GBPm GBPm GBPm GBPm
--------------------- ----- ------------ ------------ ---------- --------
Revenue 3 1,068.9 - 1,068.9 1,037.9
Operating costs (1,025.6) (21.8) (1,047.4) (960.6)
--------------------- ----- ------------ ------------ ---------- --------
Operating profit 43.3 (21.8) 21.5 77.3
Finance income 3.3 - 3.3 3.7
Finance costs (7.0) - (7.0) (6.3)
--------------------- ----- ------------ ------------ ---------- --------
Profit before
taxation 39.6 (21.8) 17.8 74.7
Taxation (11.0) 4.7 (6.3) (22.6)
--------------------- --------
Profit for the
period 28.6 (17.1) 11.5 52.1
--------------------- ----- ------------ ------------ ---------- --------
Attributable to:
Equity holders of
the parent 28.3 (17.1) 11.2 50.4
Minority interests 0.3 - 0.3 1.7
--------------------- ----- ------------ ------------ ---------- --------
28.6 (17.1) 11.5 52.1
--------------------- ----- ------------ ------------ ---------- --------
Earnings per share
before goodwill
impairment
Basic earnings per 5 44.0p 78.8p
share
Diluted earnings per 5 43.2p 77.4p
share
Earnings per share
Basic earnings per 5 17.3p 78.8p
share
Diluted earnings per 5 17.0p 77.4p
share
Consolidated statement of comprehensive income
For the year ended 31 December 2010
2010 2010 2010 2009
Before
goodwill Goodwill
impairment impairment Total
Note GBPm GBPm GBPm GBPm
-------------------------------- ------------ ------------ ------ -------
Profit for the period 28.6 (17.1) 11.5 52.1
--------------------------------- ------------ ------------ ------ -------
Other comprehensive income
Exchange differences on
translation of foreign
operations 12.0 - 12.0 (14.5)
Net investment hedge
(losses)/gains (0.3) - (0.3) 6.1
Cash flow hedge (losses) /gains
taken to equity (3.0) - (3.0) 11.3
Cash flow hedge transfers to
income statement 3.0 - 3.0 (11.3)
Actuarial losses on defined
benefit pension schemes (1.3) - (1.3) (7.9)
Tax on actuarial losses on
defined benefit pension
schemes 0.3 - 0.3 2.2
--------------------------------- ------------ ------------ ------ -------
Other comprehensive income for
the period, net of tax 10.7 - 10.7 (14.1)
--------------------------------- ------------ ------------ ------ -------
Total comprehensive income for
the period 39.3 (17.1) 22.2 38.0
--------------------------------- ------------ ------------ ------ -------
Attributable to:
Equity holders of the parent 39.3 (17.1) 22.2 37.2
Minority interests - - - 0.8
--------------------------------- ------------ ------------ ------ -------
39.3 (17.1) 22.2 38.0
-------------------------------- ------------ ------------ ------ -------
Consolidated balance sheet
As at 31 December 2010
2010 2009
Note GBPm GBPm
---------------------------------------------- ----- -------- --------
Assets
Non-current assets
Intangible assets 106.8 119.1
Property, plant and equipment 275.0 264.4
Deferred tax assets 10.0 8.1
Other assets 16.1 12.7
---------------------------------------------- ----- -------- --------
407.9 404.3
---------------------------------------------- ----- -------- --------
Current assets
Inventories 32.9 37.4
Trade and other receivables 334.6 299.9
Current tax assets 6.2 5.9
Cash and cash equivalents 41.4 35.3
---------------------------------------------- ----- -------- --------
415.1 378.5
---------------------------------------------- ----- -------- --------
Total assets 3 823.0 782.8
---------------------------------------------- ----- -------- --------
Liabilities
Current liabilities
Loans and borrowings (25.9) (7.9)
Current tax liabilities (7.1) (9.0)
Trade and other payables (260.8) (252.3)
Provisions (9.1) (6.3)
---------------------------------------------- ----- -------- --------
(302.9) (275.5)
---------------------------------------------- ----- -------- --------
Non-current liabilities
Loans and borrowings (109.5) (106.2)
Retirement benefit liabilities (20.1) (20.2)
Deferred tax liabilities (18.4) (19.6)
Provisions (4.5) (4.2)
Other liabilities (36.8) (33.8)
---------------------------------------------- ----- -------- --------
(189.3) (184.0)
---------------------------------------------- ----- -------- --------
Total liabilities 3 (492.2) (459.5)
---------------------------------------------- ----- -------- --------
Net Assets 330.8 323.3
---------------------------------------------- ----- -------- --------
Equity
Share capital 6.6 6.6
Share premium account 38.0 38.0
Capital redemption reserve 7.6 7.6
Translation reserve 48.4 36.4
Retained earnings 220.1 224.1
---------------------------------------------- ----- -------- --------
Equity attributable to equity holders of the
parent 320.7 312.7
Minority interests 10.1 10.6
---------------------------------------------- ----- -------- --------
Total equity 330.8 323.3
---------------------------------------------- ----- -------- --------
Consolidated statement of changes in equity
For the year ended 31 December 2010
Attributable
to
equity
Share Capital holders
Share premium redemption Translation Hedging Retained of Minority Total
capital account reserve reserve reserve earnings parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
At 1 January
2009 6.6 37.6 7.6 43.9 - 194.0 289.7 12.9 302.6
Profit for the
period - - - - - 50.4 50.4 1.7 52.1
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income
Exchange
differences
on
translation
of foreign
operations - - - (13.6) - - (13.6) (0.9) (14.5)
Net investment
hedge gains - - - 6.1 - - 6.1 - 6.1
Cash flow
hedge gains
taken to
equity - - - - 11.3 - 11.3 - 11.3
Cash flow
hedge
transfers to
income
statement - - - - (11.3) - (11.3) - (11.3)
Actuarial
losses on
defined
benefit
pension
schemes - - - - - (7.9) (7.9) - (7.9)
Tax on
actuarial
losses on
defined
benefit
pension
schemes - - - - - 2.2 2.2 - 2.2
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income for the
period, net of
tax - - - (7.5) - (5.7) (13.2) (0.9) (14.1)
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Total
comprehensive
income for
the period - - - (7.5) - 44.7 37.2 0.8 38.0
Dividends - - - - - (13.5) (13.5) (3.1) (16.6)
Share-based
payments - - - - - 0.5 0.5 - 0.5
Share capital
issued - 0.4 - - - - 0.4 - 0.4
Shares
repurchased - - - - - (1.6) (1.6) - (1.6)
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
At 31 December
2009 and 1
January 2010 6.6 38.0 7.6 36.4 - 224.1 312.7 10.6 323.3
Profit for the
period - - - - - 11.2 11.2 0.3 11.5
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income
Exchange
differences
on
translation
of foreign
operations - - - 12.3 - - 12.3 (0.3) 12.0
Net investment
hedge losses - - - (0.3) - - (0.3) - (0.3)
Cash flow
hedge losses
taken to
equity - - - - (3.0) - (3.0) - (3.0)
Cash flow
hedge
transfers to
income
statement - - - - 3.0 - 3.0 - 3.0
Actuarial
losses on
defined
benefit
pension
schemes - - - - - (1.3) (1.3) - (1.3)
Tax on
actuarial
losses on
defined
benefit
pension
schemes - - - - - 0.3 0.3 - 0.3
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income for the
period, net of
tax - - - 12.0 - (1.0) 11.0 (0.3) 10.7
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Total
comprehensive
income for
the period - - - 12.0 - 10.2 22.2 - 22.2
Dividends - - - - - (14.2) (14.2) (0.7) (14.9)
Share capital
issued - - - - - - - 0.2 0.2
At 31 December
2010 6.6 38.0 7.6 48.4 - 220.1 320.7 10.1 330.8
---------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Consolidated cash flow statement
For the year ended 31 December 2010
2010 2009
GBPm GBPm
------------------------------------------------------ ------- -------
Cash flows from operating activities
Operating profit 21.5 77.3
Goodwill impairment 21.8 -
------------------------------------------------------ ------- -------
Operating profit before goodwill impairment 43.3 77.3
Depreciation of property, plant and equipment 40.0 34.4
Amortisation of intangible assets 1.7 1.5
Profit on sale of property, plant and equipment (0.5) (1.2)
Other non-cash movements 5.8 0.5
Foreign exchange losses/(gains) 0.2 (0.1)
------------------------------------------------------ ------- -------
Operating cash flows before movements in working
capital 90.5 112.4
Decrease in inventories 5.2 10.2
(Increase)/decrease in trade and other receivables (23.8) 50.2
Increase/(decrease) in trade and other payables 2.2 (52.5)
Change in provisions, retirement benefit and
other non-current liabilities (3.8) 2.9
------------------------------------------------------ ------- -------
Cash generated from operations 70.3 123.2
Interest paid (4.5) (4.8)
Income tax paid (10.2) (30.0)
------------------------------------------------------ ------- -------
Net cash inflow from operating activities 55.6 88.4
------------------------------------------------------ ------- -------
Cash flows from investing activities
Interest received 0.5 0.3
Proceeds from sale of property, plant and equipment 1.0 4.5
Acquisition of subsidiaries, net of cash acquired (23.4) (34.7)
Acquisition of property, plant and equipment (28.2) (39.3)
Acquisition of intangible assets (1.4) (0.7)
Acquisition of other non-current assets (0.3) (0.8)
------------------------------------------------------ ------- -------
Net cash outflow from investing activities (51.8) (70.7)
------------------------------------------------------ ------- -------
Cash flows from financing activities
Proceeds from the issue of share capital 0.2 0.4
Repurchase of own shares - (1.6)
New borrowings 99.5 7.0
Repayment of borrowings (76.8) (12.7)
Payment of finance lease liabilities (1.3) (5.6)
Dividends paid (14.9) (17.4)
------------------------------------------------------ ------- -------
Net cash inflow/(outflow) from financing activities 6.7 (29.9)
------------------------------------------------------ ------- -------
Net increase/(decrease) in cash and cash equivalents 10.5 (12.2)
Cash and cash equivalents at beginning of period 29.3 46.5
Effect of exchange rate fluctuations (0.7) (5.0)
------------------------------------------------------ ------- -------
Cash and cash equivalents at end of period 39.1 29.3
------------------------------------------------------ ------- -------
1. Basis of preparation
The Group's 2010 results have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the EU.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2010
or 2009 but is derived from the 2010 accounts. Statutory accounts
for 2009 have been delivered to the Registrar of Companies. Those
for 2010, prepared under IFRS as adopted by the EU, will be
delivered to the Registrar of Companies and made available on the
Company's website at www.keller.co.uk in April 2011. The auditors
have reported on those accounts; their reports were (i)
unqualified, (ii) did not include references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their reports and (iii) did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
2. Foreign currencies
The exchange rates used in respect of principal currencies
are:
Average for
period Period end
------------------- -------------- -------------
2010 2009 2010 2009
------------------- ------ ------ ------ -----
US dollar 1.55 1.57 1.55 1.59
Euro 1.17 1.12 1.17 1.11
Australian dollar 1.68 1.99 1.52 1.78
------------------- ------ ------ ------ -----
3. Segmental analysis
The Group is managed as four geographical divisions and has only
one major product or service: specialist ground engineering
services. This is reflected in the Group's management structure and
in the segment information reviewed by the Chief Operating Decision
Maker.
2010
Operating
profit 2010
before 2010 Operating 2009
2010 goodwill Goodwill profit 2009 Operating
Revenue impairment impairment Total Revenue profit
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- ----------- ----------- ---------- -------- ----------
UK 49.6 (2.5) - (2.5) 57.6 0.5
US 425.2 6.9 (13.5) (6.6) 467.0 32.2
CEMEA(1) 400.3 22.4 (8.3) 14.1 386.4 33.6
Australia 193.8 19.1 - 19.1 126.9 16.6
-------------- -------- ----------- ----------- ---------- -------- ----------
1,068.9 45.9 (21.8) 24.1 1,037.9 82.9
Central items
and
eliminations - (2.6) - (2.6) - (5.6)
-------------- -------- ----------- ----------- ---------- -------- ----------
1,068.9 43.3 (21.8) 21.5 1,037.9 77.3
-------------- -------- ----------- ----------- ---------- -------- ----------
2010
2010 Tangible
2010 2010 2010 2010 Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- ------------ --------- ---------- ------------- -----------
UK 37.0 (14.1) 22.9 0.3 1.9 21.8
US 291.8 (98.2) 193.6 6.0 13.1 137.9
CEMEA(1) 309.1 (130.7) 178.4 15.9 20.1 151.6
Australia 122.3 (45.2) 77.1 24.5 6.6 70.0
----------------- -------- ------------ --------- ---------- ------------- -----------
760.2 (288.2) 472.0 46.7 41.7 381.3
Central items
and
eliminations(2) 62.8 (204.0) (141.2) 0.3 - 0.5
----------------- -------- ------------ --------- ---------- ------------- -----------
823.0 (492.2) 330.8 47.0 41.7 381.8
----------------- -------- ------------ --------- ---------- ------------- -----------
2009
2009 Tangible
2009 2009 2009 2009 Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- ------------ --------- ---------- ------------- -----------
UK 38.3 (17.6) 20.7 0.4 1.8 23.5
US 290.7 (85.8) 204.9 7.6 13.3 154.8
CEMEA(1) 330.3 (144.5) 185.8 58.5 16.3 162.7
Australia 69.7 (25.6) 44.1 7.8 4.5 42.3
----------------- -------- ------------ --------- ---------- ------------- -----------
729.0 (273.5) 455.5 74.3 35.9 383.3
Central items
and
eliminations(2) 53.8 (186.0) (132.2) - - 0.2
----------------- -------- ------------ --------- ---------- ------------- -----------
782.8 (459.5) 323.3 74.3 35.9 383.5
----------------- -------- ------------ --------- ---------- ------------- -----------
(1 Continental Europe, Middle East and Asia. )
(2 Central items includes net debt and tax balances.)
The impact of acquisitions is detailed in note 4.
4. Acquisitions
Waterway Nilex Total
Acquisition in Carrying Fair value Fair Carrying Fair value Fair Carrying Fair value Fair
2010 amount adjustment value amount adjustment value amount adjustment value
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
Net assets
acquired
Intangible
assets - 0.5 0.5 - 0.2 0.2 - 0.7 0.7
Property,
plant and
equipment 7.9 2.8 10.7 1.3 - 1.3 9.2 2.8 12.0
Cash and cash
equivalents 9.1 - 9.1 - - - 9.1 - 9.1
Receivables 2.3 - 2.3 3.6 - 3.6 5.9 - 5.9
Other assets 0.5 - 0.5 0.6 - 0.6 1.1 - 1.1
Loans and
borrowings (4.8) - (4.8) - - - (4.8) - (4.8)
Other
liabilities (4.5) - (4.5) (1.1) - (1.1) (5.6) - (5.6)
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
10.5 3.3 13.8 4.4 0.2 4.6 14.9 3.5 18.4
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
Goodwill 7.9 - 7.9
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
Total
consideration 21.7 4.6 26.3
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
Satisfied by:
Initial cash
consideration 21.1 4.6 25.7
Contingent
consideration 0.6 - 0.6
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
21.7 4.6 26.3
-------------- -------- ---------- ------ -------- ---------- ----- -------- ---------- -----
On 10 June 2010 the Group acquired 100% of the share capital of
Waterfront Services Pty Limited, Australia, with subsidiaries,
trading as Waterway Constructions ('Waterway'). The provisional
fair value of the intangible assets acquired represents the fair
value of customer contracts at the date of acquisition. The
goodwill arising on acquisition is attributable to the knowledge
and expertise of the assembled workforce and the operating
synergies that arise from the Group's strengthened market position.
Contingent consideration of up to GBP10.9m (A$16.5m) is payable
based on total earnings before interest and tax in the three
year-period to 30 June 2013.
On 14 June 2010 the Group acquired selected assets and
businesses of Nilex Construction LLC and other entities
(collectively 'Nilex'), the leading wick drain contractor in the
United States. Contingent consideration of up to GBP0.6m ($1.0m) is
payable based on total earnings before interest and tax in the two
year-period to 30 June 2012.
The fair value of the total receivables in both acquisitions is
not materially different from the gross contractual amounts
receivable and is expected to be recovered in full. In the period
to 31 December 2010 Waterway and Nilex contributed GBP24.1m to
turnover and GBP1.0m to the net profit of the Group. Had both
acquisitions taken place on 1 January 2010, total Group revenue
would have been GBP1,090.1m and total net profit would have been
GBP13.1m.
Resource Piling Total
Acquisition in Carrying Fair value Fair Carrying Fair value Fair
2009 amount adjustment value amount adjustment value
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- -------- ---------- -------- -------- ---------- --------
Net assets
acquired
Intangible
assets - 2.7 2.7 - 2.7 2.7
Property,
plant and
equipment 13.3 5.5 18.8 13.3 5.5 18.8
Cash and cash
equivalents 5.8 - 5.8 5.8 - 5.8
Other assets 10.0 3.8 13.8 10.0 3.8 13.8
Loans and
borrowings (3.8) - (3.8) (3.8) - (3.8)
Other
liabilities (9.8) (2.0) (11.8) (9.8) (2.0) (11.8)
-------------- -------- ---------- -------- -------- ---------- --------
15.5 10.0 25.5 15.5 10.0 25.5
-------------- -------- ---------- -------- -------- ---------- --------
Goodwill 13.6 13.6
-------------- -------- ---------- -------- -------- ---------- --------
Total
consideration 39.1 39.1
-------------- -------- ---------- -------- -------- ---------- --------
Satisfied by:
Initial cash
consideration 29.1 29.1
Deferred
consideration 10.0 10.0
-------------- -------- ---------- -------- -------- ---------- --------
39.1 39.1
-------------- -------- ---------- -------- -------- ---------- --------
On 11 October 2009 the Group acquired 100% of the share capital
of Resource Holdings Limited with subsidiaries, collectively
'Resource Piling'. The fair value of the intangible assets acquired
represents the fair value of customer contracts at the date of
acquisition. The goodwill arising on acquisition is attributable to
the knowledge and expertise of the assembled workforce and the
operating synergies that arise from the Group's strengthened market
position. In the period to 31 December 2009 Resource Piling
contributed (GBP0.4m) (SGD 1.0m) to the net profit of the Group.
Had this acquisition taken place on 1 January 2009, total Group
revenue in the period to 31 December 2009 would have been
GBP1,072.5m and total net profit in the period to 31 December 2009
would have been GBP58.7m.
5. Earnings per share
Basic and diluted earnings per share are calculated as
follows:
2010 2010 2009 2009
Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm
-------------------------- ----------- ----------- ----------- -----------
Earnings (after tax and
minority interests),
being net profits
attributable to equity
holders of the parent 11.2 11.2 50.4 50.4
No. No. No. No.
of shares of shares of shares of shares
Million Million Million Million
Weighted average of
ordinary shares in issue
during the year 64.2 64.2 64.0 64.0
Add: weighted average of
shares under option
during the year - 1.0 - 1.1
Add: weighted average of
own shares held
(excluding treasury
shares) - 0.1 - 0.1
Subtract: number of
shares assumed issued at
fair value during the
year - - - (0.1)
Adjusted weighted average
of ordinary shares in
issue 64.2 65.3 64.0 65.1
-------------------------- ----------- ----------- ----------- -----------
2010 2009
-------------------------- ------------------------ ------------------------
Pence Pence Pence Pence
-------------------------- ----------- ----------- ----------- -----------
Earnings per share 17.3p 17.0p 78.8p 77.4p
-------------------------- ----------- ----------- ----------- -----------
Earnings per share of 17.3p (2009: 78.8p) was calculated based
on earnings of GBP11.2m (2009: GBP50.4m) and the weighted average
number of ordinary shares in issue during the year of 64.2 million
(2009: 64.0 million).
Diluted earnings per share of 17.0p (2009: 77.4p) was calculated
based on earnings of GBP11.2m (2009: GBP50.4m) and the adjusted
weighted average number of ordinary shares in issue during the year
of 65.3 million (2009: 65.1 million).
Earnings per share before goodwill impairment of 44.0p (2009:
78.8p) was calculated based on earnings of GBP28.3m (2009:
GBP50.4m) and the weighted average number of ordinary shares in
issue during the year of 64.2 million (2009: 64.0 million).
Diluted earnings per share before goodwill impairment of 43.2p
(2009: 77.4p) was calculated based on earnings of GBP28.3m (2009:
GBP50.4m) and the adjusted weighted average number of ordinary
shares in issue during the year of 65.3 million (2009: 65.1
million).
6. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
2010 2009
GBPm GBPm
------------------------------------------------------------- ----- -----
Amounts recognised as distributions to equity holders in
the period:
Final dividend for the year ended 31 December 2008 of 13.8p
per share - 8.8
Second interim dividend for the year ended 31 December 2009
of 14.5p (2008: nil) per share in lieu of a final dividend 9.3 -
Interim dividend for the year ended 31 December 2010 of
7.6p (2009: 7.25p) per share 4.9 4.7
14.2 13.5
------------------------------------------------------------- ----- -----
The Board have recommended a final dividend for the year ended
31 December 2010 of GBP10.1m, representing 15.2p (2009: a second
interim dividend of 14.5p) per share. The proposed dividend is
subject to approval by shareholders at the Annual General Meeting
on 17 May 2011 and has not been included as a liability in these
financial statements.
7. Capital and reserves
The capital redemption reserve is a non-distributable reserve
created when the Company's shares were redeemed or purchased other
than from the proceeds of a fresh issue of shares.
During 2009, the Company repurchased 330,000 shares specifically
to satisfy Performance Share Plan awards, all of which are held in
Treasury. The average cost of purchased shares in 2009 was GBP4.81.
All shares issued in 2010 related to share options exercised in
that period.
8. Related party transactions
Transactions between the parent, jointly controlled operations
and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
During the year the Group undertook various contracts with a
total value of GBP3.3m (2009: GBP9.0m) for GTCEISU Construccion,
S.A., a connected person of Mr Lopez Jimenez, a Director of the
Company. An amount of GBP2.3m (2009: GBP6.9m) is included in trade
and other receivables in respect of amounts outstanding as at 31
December 2010.
During the year the Group made purchases from GTCEISU
Construccion, S.A. with a total value of GBP3.6m (2009: GBP6.0m).
An amount of GBP2.8m (2009: GBP3.8m) is included in trade and other
payables in respect of amounts outstanding as at 31 December
2010.
Related party transactions were made on an arms-length basis.
All amounts outstanding from related parties are unsecured and will
be settled in cash. No guarantees have been given or received. No
provisions have been made for doubtful debts in respect of the
amounts owed by related parties.
The remuneration of the Directors, who are the key management
personnel and related parties of the Group, will be set out in the
audited part of the Directors' Remuneration Report of the Annual
Report and Accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAPASAFLFEFF
Keller (LSE:KLR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Keller (LSE:KLR)
Historical Stock Chart
From Jul 2023 to Jul 2024
