TIDMKLR
RNS Number : 1008O
Keller Group PLC
04 August 2014
For immediate release Monday, 4 August 2014
Keller Group plc
Interim Results for the six months ended 30 June 2014
Keller Group plc ("Keller" or "the Group"), the international
ground engineering specialist, announces its interim results for
the six months ended 30 June 2014.
Results summary:
-------------------------- ---------- ---------- ------
2014 2013
-------------------------- ---------- ---------- ------
Revenue GBP788.2m GBP644.6m + 22%
-------------------------- ---------- ---------- ------
Operating profit* GBP35.5m GBP28.6m + 24%
-------------------------- ---------- ---------- ------
Profit before tax* GBP32.5m GBP26.8m + 21%
-------------------------- ---------- ---------- ------
Earnings per share* 29.5p 28.1p + 5%
-------------------------- ---------- ---------- ------
Total dividend per share 8.4p 8.0p + 5%
-------------------------- ---------- ---------- ------
* before exceptional items, including the charge of GBP30
million in respect of a contract
dispute announced on 30 July 2014
Highlights include:
-- Constant currency revenue is up 33%
-- Excluding acquisitions, constant currency revenue increased by 22%
-- Operating margin* of 4.5% (2013: 4.4%)
-- Cash generated from operations GBP31.9m (2013: GBP30.2m)
-- EPS* growth of 5%
-- Interim dividend increased by 5% to 8.4p per share (2013: 8.0p)
-- Net debt of GBP161.9m (1.2x annualised EBITDA)
Justin Atkinson, Keller Chief Executive said:
"We have seen an improved first-half performance, with all four
of the Group's divisions achieving strong revenue growth compared
to the same period last year, despite the adverse currency
translation impact."
"We expect the Group's results for the full year to be in line
with current market expectations and, looking further ahead, we
remain optimistic about our long-term prospects. Keller continues
to make positive progress against its strategy and is well
positioned to take full advantage of future opportunities."
For further information, please contact:
Keller Group plc www.keller.co.uk
Justin Atkinson, Chief Executive 020 7616 7575
James Hind, Finance Director
Finsbury
Gordon Simpson 020 7251 3801
Rowley Hudson
A presentation for analysts will be held at 9.15am for 9.30am at
The London Stock Exchange, 10 Paternoster Square, London, EC4M
7LS
A live audio webcast will be held at 9.30am, and available on
demand from 2.00pm, on our website at:
http://www.keller.co.uk/keller/investor/result-centre/latest-results/
Cautionary Statement
This announcement contains forward looking statements which are
made in good faith based on the information available at the time
of its approval. It is believed that the expectations reflected in
these statements are reasonable but they may be affected by a
number of risks and uncertainties that are inherent in any forward
looking statement which could cause actual results to differ
materially from those currently anticipated. Nothing in this
document should be regarded as a profits forecast.
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 annual
revenue of around GBP1.6bn, Keller has approximately 9,000 staff
world-wide.
Keller is the clear market leader in North America, Australia
and Southern Africa; it has prime positions in most established
European markets; and a strong profile in many developing
markets.
Chairman's Statement
Financial overview([1])
Our results for the six months ended 30 June 2014 reflect an
improved first-half performance.
Group revenue was up 22% at GBP788.2m (2013: GBP644.6m) and
operating profit increased 24% to GBP35.5m (2013: GBP28.6m) despite
an adverse currency translation impact of GBP3.5m. At constant
currency, and including the benefit of acquisitions, Group revenue
increased by 33%. The underlying increase in revenue was mainly
driven by strong performances from our businesses in the US and
Australia. The Group operating margin was 4.5%, up slightly on last
year's 4.4%.
Profit before tax was GBP32.5m (2013: GBP26.8m) and earnings per
share were 29.5p (2013: 28.1p).
In light of these improved results and the Board's confidence in
the future prospects of the business, the Board has decided to
increase the interim dividend by 5% to 8.4p per share (2013: 8.0p).
The dividend will be paid on 5 September 2014 to shareholders on
the register at the close of business on 15 August 2014.
Cash generated from operations was GBP31.9m, up 6% on last
year's GBP30.2m. Net debt at 30 June 2014 was GBP161.9m,
representing 1.2 times annualised EBITDA. Capital expenditure in
the first half totalled GBP28.6m (2013: GBP19.5m), which compares
to depreciation of GBP23.6m (2013: GBP21.9m).
Post Balance Sheet Event - Refinancing
On 4 July 2014, the Group completed the refinancing of its
syndicated revolving credit facilities. A GBP250m revolving credit
facility expiring in September 2019 was agreed, replacing both the
GBP170m facility expiring in April 2015 and the US$150m facility
expiring in July 2017.
Exceptional Items - contract dispute
On 30 July 2014, we announced that the Board had decided to make
an exceptional provision of GBP30m in respect of a contract dispute
on a project that the Group's UK subsidiary, Keller Limited,
completed in 2008. The claims intimated against Keller Limited,
which are currently the subject of litigation, are denied and being
vigorously defended. The amount is stated before taking account of
recoveries under applicable insurances which are yet to be agreed,
as these cannot be recognised under IFRS.
Strategy and Business Improvement
For many years, our strategy - to extend further our global
leadership in specialist ground engineering through both organic
growth and targeted acquisitions - has served the Group well.
As well as pursuing our long-term strategic goals, we have
implemented a programme driving through Group-wide business
improvement initiatives to: target large and complex projects and
those contracts with a high element of value added; heighten our
focus on risk management; and improve our use of plant and
equipment. These initiatives are on-going and, as a result, we are
seeing a better performance in our business.
Board
In June 2014, we announced the appointment of Nancy Tuor Moore
as an independent Non-executive Director to the Board and Chairman
of our Health, Safety and Environment Committee. Nancy's extensive
international business experience, together with her proven record
in winning and safely delivering both global and local contracts,
will enable her to make a significant contribution to the Keller
Board.
Health and Safety
We deeply regret that a Franki Africa employee lost his life
whilst working on a jobsite in Ghana in June. This was the first
fatality at Franki Africa since 1999 and following the incident,
the Group Chief Executive and the Group's Health and Safety
Director visited the site where a thorough safety review was
carried out to ensure that the cause of the incident was fully
understood and that appropriate measures were implemented to
prevent a recurrence.
Operational overview
North America
In the US, which remains by far our single biggest market, the
value of total construction expenditure in the year to date was up
8% compared with the same period last year([2]) . Private
expenditure on construction, both residential and non-residential,
increased by more than 10%. Public expenditure on construction,
however, was broadly flat year on year.
Investment in the Canadian resources markets, particularly the
oils sands market, has declined very materially in recent months:
this has had a knock-on effect on the competitive landscape in
other construction markets in Canada.
Against this market backdrop, our North American operations
reported revenue of GBP373.0m (2013: GBP308.0m), with underlying US
dollar revenue, excluding the benefit of acquisitions, 14% ahead of
last year. Operating profit increased to GBP20.7m (2013:
GBP16.5m).
US
Our market leading positions, coast to coast national coverage
and on-going refocusing work have enabled our US businesses to take
advantage of the improved market conditions. US dollar revenue and
profits are ahead of this time last year despite the adverse
weather conditions in the first quarter of 2014 and the results in
the first half of 2013 benefitting from some profitable large
contracts.
Our US piling companies have had a steady first half, seeing an
increase in the supply of work over the period but with markets
remaining competitive. During the first half of the year we have
won a number of large projects, including the NE Grid Transmission
Line and the AMTRAK High Speed Rail in the north-east of the US.
Our US piling companies continue to work jointly or with Hayward
Baker on larger projects to deliver multi-product solutions. The
Oceana Bal Harbour and One Ocean projects in Miami are examples of
current joint ventures between HJ and Hayward Baker providing
augercast, wet soil mixing, sheet piling and tieback anchor
technology.
Hayward Baker reported a strong first-half performance although
results varied across its diverse regions and sectors, reflecting
differences in local market conditions. Overall progress was
encouraging and results are improved year on year with a strong
performance in its targeted large projects drive, as seen with the
Seattle Elliott Bay seawall project and the new International
Market Place in Waikiki, O'ahu in Hawaii.
At Suncoast, both revenue and profit were ahead of last year as
the business continues to take full advantage of the steady growth
in US housing starts and continued buoyancy in the Houston
high-rise market. The challenge as the business grows remains in
recruiting sufficient people to supplement the workforce.
Canada
The integration of Keller Canada continues to progress but
against the previously mentioned market backdrop we are seeing
revenue from projects in the Alberta oil sands and other resource
markets replaced in part by lower margin commercial work. As a
result, Keller Canada's profits are below those expected at the
time of acquisition. Consequently, we do not expect to pay any
deferred consideration in respect of this acquisition and the
C$13.6m previously accrued has therefore been released in
accordance with IFRS and credited to the income statement as an
exceptional item in the first half.
We expect to see a recovery in the Canadian oil sands in the
medium term with a return to strong investment in this cyclical
market.
Elsewhere in Canada, Geo-Foundations, which operates primarily
in infrastructure in Ontario, continues to perform well.
Europe, Middle East & Africa (EMEA)
Europe
In general, conditions in our more mature European markets were
stable but still challenging. Our response has been to continue
with the programme of cost controls and business improvements which
have made an important contribution in these difficult markets.
Revenue from our EMEA division increased to GBP214.4m (2013:
GBP185.5m) and it reported an operating profit of GBP2.7m (2013:
GBP1.8m). On a constant currency basis, and after adjusting for
acquisitions, revenue was up 4% on the previous year.
Once again, our German subsidiary produced a relatively good
result and after a quieter period, our business in Poland is
performing well having picked up work in the infrastructure market.
Careful selection and execution of work in French-speaking
territories overseas offset ongoing weakness in our French
business' home market. Our southern European businesses had a
disappointing first half.
The overall divisional result was also helped by good
contributions from a number of prestigious projects, several of
which have recently completed or are nearing completion. These
include the Berlin State Opera House in Germany where we are
operating a joint venture with Bauer and the Nowy Swiat Financial
Centre in Warsaw, Poland.
Middle East and Africa
Whilst we continue to see good opportunities in the Middle East,
competition remains intense. We have, encouragingly, secured our
first jobs in Qatar on the new metro system. Our local team is
being supported by colleagues elsewhere in EMEA in transferring
specialty jet grouting to the region.
The South African market has picked up since the acquisition of
Franki Africa. Franki Africa is performing well and its integration
progresses as planned. The transfer of a number of technologies to
this business is proceeding ahead of plan.
Latin America
Brazil reported an improved result and the development of this
business continues. We continue to work on a large project in São
Luís, Maranhão installing 530,000m of stone columns as part of a
new road upgrade, Motorway BR-135. We continue to approach
expansion in this region prudently.
Asia
In the first six months, we experienced mixed conditions in our
markets in Asia, with construction in some parts of the region
seemingly in a holding pattern whilst wider economic and political
issues are being addressed. Reported revenue improved to GBP56.6m
(2013: GBP44.4m) in the first half of the year; however operating
profit fell to GBP3.6m, compared to GBP4.8m in 2013. The fall in
profitability is due to both the strength of sterling and some very
profitable contracts ending in early 2013. The division's operating
margin was 6.4% (2013: 10.8%).
ASEAN region
Our businesses in Malaysia continue to perform well, with good
performances on a number of projects including the Melawati Mall in
Kuala Lumpar, a 13 storey shopping mall.
The Puteri Harbour project, a new waterfront development
comprising housing, office and retail space, is the Group's first
major project in the south of Johor, an area where we expect
significant growth and opportunities in the medium term. Here, we
have combined our bored piling expertise from both Malaysia and
Singapore with the driven piling expertise of a local contractor,
Ansah Sdn Bhd, to deliver a large and complex foundations package.
Last week, we agreed to acquire the Ansah business for an initial
consideration of GBP3.5m which will give us much greater access to
packaged jobs in the petrochemical and infrastructure sectors in
both Singapore and Malaysia.
The foundations for Sengkang Hospital, a S$66m project announced
in 2013, which will be one of Singapore's largest hospitals and
comprise an integrated general hospital, community hospital and
specialist outpatient facilities, have been completed four months
ahead of schedule.
Whilst the Singapore market remains busy we have seen increased
competition from Korean and Chinese contractors attracted by major
infrastructure projects.
India
In India, expectations are high that the new government will
kick start a number of stalled large infrastructure projects. After
a slow start, Keller India is now extremely busy and we have
recently secured a S$6m contract for vibro compaction and vibro
stone column work at the LNG Regas facility in Mundra, where we are
also carrying out tank foundations for a repeat customer.
Across the region as a whole, the outlook remains positive.
Australia
The resources sector of Australia's construction market remains
subdued but we are seeing some signs of recovery in the commercial
and infrastructure sectors: Australian State and Federal
governments have made large infrastructure commitments in New South
Wales and there are also good prospects for infrastructure works in
Victoria.
The first-half performance of our Australian business has been
very good, with reported revenue of GBP144.2m (2013: GBP106.7m) and
operating profit of GBP10.6m, compared to GBP8.8m in the first half
last year. On a constant currency basis, revenue was more than 60%
up on last year. The on-shore LNG processing plant at Wheatstone in
Western Australia, the Group's largest ever contract, is
progressing well and has been a key contributor to revenue and
profit in the first half. The project will substantially complete
in September of this year.
Piling Contractors, working in conjunction with Vibropile and
KGE, is making good progress installing the foundations for the
Darling Harbour Live project in Sydney, where the New South Wales
government has committed A$2.5billion to the harbour's
redevelopment, whilst Waterways commenced work in May 2014 on a
major upgrade to the Overseas Passenger Terminal, a project due to
complete in September 2014.
Outlook
Looking into the second half, we believe that the US
construction markets will continue their gradual improvement. In
Canada, however, we do not see any imminent signs of a pick-up in
the key oil sands markets. Taken as a whole, we do not expect any
material change in market conditions within Europe which remain
challenging. Further afield, the Asian markets will continue to
offer good opportunities and whilst the Wheatstone project will
shortly come to an end there are signs that other construction
markets in Australia are slowly picking up.
The recent intake of orders, including an increased number of
large contracts, has been at a good level although some of this
work in Canada and Australia is at lower margins. The like-for-like
period end order book for work to be executed over the next 12
months is 9% ahead of the start of the same time last year.
Overall, the Group's results for the full year are expected to
be in line with current market expectations.
Roy A Franklin
Chairman
4 August 2014
Consolidated income statement
For the half year ended 30 June 2014
Half year to 30 June Half year to 30 June Year to 31 December
2014 2013 2013
---------------------------------------- -------------------------------------- ------------------------------------------
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional items exceptional items
items (Note Total items (Note Total items (Note Total
Note GBPm 5) GBPm GBPm 5) GBPm GBPm 5) GBPm
GBPm GBPm GBPm
-------------- ------ ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
Revenue 3 788.2 - 788.2 644.6 - 644.6 1,438.2 - 1,438.2
Operating
costs (752.7) (27.5) (780.2) (616.0) (9.4) (625.4) (1,360.4) (21.7) (1,382.1)
-------------- ------ ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
Operating
profit 3 35.5 (27.5) 8.0 28.6 (9.4) 19.2 77.8 (21.7) 56.1
Finance
income 1.0 - 1.0 0.9 - 0.9 3.1 - 3.1
Finance
costs (4.0) (0.1) (4.1) (2.7) - (2.7) (6.8) (0.4) (7.2)
-------------- ------ ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
Profit before
taxation 32.5 (27.6) 4.9 26.8 (9.4) 17.4 74.1 (22.1) 52.0
Taxation 6 (10.7) 0.7 (10.0) (8.3) - (8.3) (23.8) 1.9 (21.9)
-------------- ----------
Profit/(loss)
for the period 21.8 (26.9) (5.1) 18.5 (9.4) 9.1 50.3 (20.2) 30.1
---------------------- ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
Attributable
to:
Equity holders
of the parent 21.0 (26.9) (5.9) 18.2 (9.4) 8.8 49.5 (20.2) 29.3
Non-controlling
interests 0.8 - 0.8 0.3 - 0.3 0.8 - 0.8
---------------------- ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
21.8 (26.9) (5.1) 18.5 (9.4) 9.1 50.3 (20.2) 30.1
-------------- ------ ------------ -------------- ---------- ------------ -------------- -------- -------------- -------------- ----------
Earnings/(loss) per share
Basic 8 29.5p (8.3)p 28.1p 13.6p 73.0p 43.2p
Diluted 8 29.0p (8.2)p 27.7p 13.4p 71.9p 42.6p
Consolidated statement of comprehensive income
For the half year ended 30 June 2014
Half Half Year to
year year 31 December
to 30 to 30 2013
June June
2014 2013
GBPm GBPm GBPm
----------------------------------------------------------- ------- ------- -------------
(Loss)/profit for the period (5.1) 9.1 30.1
----------------------------------------------------------- ------- ------- -------------
Other comprehensive (expense)/income
Items that may be reclassified subsequently to the income
statement:
Exchange differences on translation
of foreign operations (6.8) 3.0 (23.9)
Net investment hedge gains/(losses) 1.4 (2.5) (3.0)
Cash flow hedge gains/(losses) taken
to equity 2.7 (5.9) 1.8
Cash flow hedge transfers to income
statement (2.7) 5.9 (1.8)
Items that will not be reclassified subsequently to the
income statement:
Remeasurements of defined benefit pension
schemes (0.4) (1.8) (5.7)
Tax on remeasurements of defined benefit
pension schemes 0.1 0.4 1.1
Other comprehensive (expense)/income for the period,
net of tax (5.7) (0.9) (31.5)
----------------------------------------------------------- ------- ------- -------------
Total comprehensive (expense)/income
for the period (10.8) 8.2 (1.4)
----------------------------------------------------------- ------- ------- -------------
Attributable to:
Equity holders of the parent (11.5) 7.8 (1.9)
Non-controlling interests 0.7 0.4 0.5
----------------------------------------------------------- ------- ------- -------------
(10.8) 8.2 (1.4)
----------------------------------------------------------- ------- ------- -------------
Consolidated balance sheet
As at 30 June 2014
As at As at As at
30 June 30 June 31 December
2014 2013 2013
Note GBPm GBPm GBPm
------------------------------------------ ------ --------- --------- -------------
Assets
Non-current assets
Intangible assets 178.1 100.2 187.9
Property, plant and equipment 281.7 251.9 281.9
Deferred tax assets 9.9 8.7 7.9
Other assets 15.2 16.6 14.9
------------------------------------------ ------ --------- --------- -------------
484.9 377.4 492.6
------------------------------------------ ------ --------- --------- -------------
Current assets
Inventories 62.1 65.6 62.0
Trade and other receivables 455.1 390.0 414.5
Current tax assets 9.8 11.1 5.4
Cash and cash equivalents 9 53.3 90.8 53.3
------------------------------------------ ------ --------- --------- -------------
580.3 557.5 535.2
------------------------------------------ ------ --------- --------- -------------
Total assets 1,065.2 934.9 1,027.8
------------------------------------------ ------ --------- --------- -------------
Liabilities
Current liabilities
Loans and borrowings (107.5) (8.6) (48.7)
Current tax liabilities (12.9) (8.3) (8.8)
Trade and other payables (368.5) (327.3) (352.4)
Provisions (45.1) (11.4) (11.3)
------------------------------------------ ------ --------- --------- -------------
(534.0) (355.6) (421.2)
------------------------------------------ ------ --------- --------- -------------
Non-current liabilities
Loans and borrowings (107.7) (106.7) (148.3)
Retirement benefit liabilities (22.9) (20.2) (23.1)
Deferred tax liabilities (20.8) (19.8) (21.9)
Provisions (6.0) (5.8) (4.8)
Other liabilities (25.3) (39.9) (35.9)
------------------------------------------ ------ --------- --------- -------------
(182.7) (192.4) (234.0)
------------------------------------------ ------ --------- --------- -------------
Total liabilities (716.7) (548.0) (655.2)
------------------------------------------ ------ --------- --------- -------------
Net assets 348.5 386.9 372.6
------------------------------------------ ------ --------- --------- -------------
Equity
Share capital 10 7.3 7.3 7.3
Share premium account 38.1 38.1 38.1
Capital redemption reserve 7.6 7.6 7.6
Translation reserve 4.7 37.0 10.0
Other reserve 56.9 56.9 56.9
Retained earnings 230.5 235.3 247.9
------------------------------------------ ------ --------- --------- -------------
Equity attributable to equity holders of
the parent 345.1 382.2 367.8
Non-controlling interests 3.4 4.7 4.8
------------------------------------------ ------ --------- --------- -------------
Total equity 348.5 386.9 372.6
------------------------------------------ ------ --------- --------- -------------
Condensed consolidated statement of changes in equity
For the half year ended 30 June 2014
Share Capital Non-controlling
Share premium redemption Translation Other Retained interests Total
capital account reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- --------- -------- ----------- ------------- --------- ---------- ---------------- ---------
At 30 June 2013 7.3 38.1 7.6 37.0 56.9 235.3 4.7 386.9
----------------- --------- -------- ----------- ------------- --------- ---------- ---------------- ---------
At 31 December
2013 7.3 38.1 7.6 10.0 56.9 247.9 4.8 372.6
Total
comprehensive
(expense)/
income for
the period - - - (5.3) - (6.2) 0.7 (10.8)
Dividends - - - - - (11.4) (0.3) (11.7)
Share-based
payments - - - - - 1.2 - 1.2
Acquisition of
non-controlling
interest - - - - - (1.0) (1.8) (2.8)
At 30 June 2014 7.3 38.1 7.6 4.7 56.9 230.5 3.4 348.5
----------------- --------- -------- ----------- ------------- --------- ---------- ---------------- ---------
Consolidated cash flow statement
For the half year ended 30 June 2014
Half Half Year to
year year 31 December
to 30 to 30 2013
June June
2014 2013
Note GBPm GBPm GBPm
----------------------------------------------- ----- ------- ------- -------------
Cash flows from operating activities
Operating profit before exceptional items 35.5 28.6 77.8
Depreciation of property, plant and equipment 23.6 21.9 45.0
Amortisation of intangible assets 0.7 0.9 1.4
(Profit)/loss on sale of property, plant
and equipment (0.2) 0.9 (0.3)
Other non-cash movements 1.7 1.7 7.1
Foreign exchange gains/(losses) 0.4 (0.6) -
----------------------------------------------- ----- ------- ------- -------------
Operating cash flows before movements in
working capital 61.7 53.4 131.0
Increase in inventories (1.2) (24.5) (22.5)
Increase in trade and other receivables (51.3) (30.4) (37.4)
Increase in trade and other payables 23.1 28.3 65.5
Change in provisions, retirement benefit and
other non-current liabilities (0.4) 3.4 (4.6)
----------------------------------------------- ----- ------- ------- -------------
Cash generated from operations 31.9 30.2 132.0
Interest paid (3.6) (2.3) (5.4)
Income tax paid (11.6) (14.7) (21.5)
----------------------------------------------- ----- ------- ------- -------------
Net cash inflow from operating activities 16.7 13.2 105.1
----------------------------------------------- ----- ------- ------- -------------
Cash flows from investing activities
Interest received 0.2 0.4 0.4
Proceeds from sale of property, plant and
equipment 0.9 0.5 3.6
Acquisition of subsidiaries, net of cash
acquired (1.1) (11.5) (200.4)
Acquisition of property, plant and equipment (28.6) (19.5) (44.8)
Acquisition of intangible assets (0.1) - (1.4)
Net cash outflow from investing activities (28.7) (30.1) (242.6)
----------------------------------------------- ----- ------- ------- -------------
Cash flows from financing activities
Proceeds from the issue of share capital - 57.6 57.6
New borrowings 30.8 - 118.5
Repayment of borrowings (4.5) (2.9) (24.2)
Payment of finance lease liabilities (0.5) (0.2) (0.7)
Dividends paid (11.7) (10.0) (15.6)
----------------------------------------------- ----- ------- ------- -------------
Net cash inflow from financing activities 14.1 44.5 135.6
----------------------------------------------- ----- ------- ------- -------------
Net increase/(decrease) in cash and cash
equivalents 2.1 27.6 (1.9)
Cash and cash equivalents at beginning of
period 50.7 54.8 54.8
Effect of exchange rate fluctuations (1.7) 0.9 (2.2)
----------------------------------------------- ----- ------- ------- -------------
Cash and cash equivalents at end of period 9 51.1 83.3 50.7
----------------------------------------------- ----- ------- ------- -------------
1. Basis of preparation
The condensed financial statements included in this interim
financial report have been prepared in accordance with IAS 34,
'Interim Financial Reporting', as adopted by the European Union.
They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 December 2013. The same accounting policies and
presentation are followed in the financial statements that were
applied in the preparation of the Company's published consolidated
financial statements for the year ended 31 December 2013, except
for the adoption of the following:
- IFRS 10, 'Consolidated financial statements'
- IFRS 11, 'Joint arrangements'
- IFRS 12, 'Disclosure of interests in other entities'
- Amendments to IAS 27, 'Separate financial statements'
- Amendments to IAS 28, 'Investments in associates and joint
ventures'
- Amendments to IAS 32, 'Financial instruments:
Presentation'
- Amendments to IAS 36, 'Impairment of assets'
- Amendments to IAS 39, 'Financial instruments: Recognition and
measurement'.
There is no material impact on this interim financial report as
a result of adopting these new standards.
The figures for the year ended 31 December 2013 are not
statutory accounts but have been extracted from the Group's
statutory accounts for that financial year. The auditor's report on
those accounts was not qualified and did not contain statements
under section 498(2) or (3) of the Companies Act 2006. A copy of
the statutory accounts for that year has been delivered to the
Registrar of Companies and has been made available on the Company's
website at www.keller.co.uk. The financial information in this
interim financial report for the half years ended 30 June 2014 and
30 June 2013 has neither been reviewed, nor audited.
The key risks and uncertainties facing the Group, as explained
in the Group's Annual Report for the year ended 31 December 2013,
continue to be: market cycles, tendering and management of
contracts, expansion, safety and people.
2. Foreign currencies
The exchange rates used in respect of principal currencies
are:
Average for period Period end
------------------------------------- -----------------------------------
Half year Half year Year to As at As at As at
to to 31 December 30 June 30 June 31 December
30 June 30 June 2013 2014 2013 2013
2014 2013
------------------- ---------- ---------- ------------- --------- --------- -------------
US dollar 1.67 1.54 1.56 1.70 1.52 1.65
Canadian dollar 1.83 1.57 1.61 1.82 1.60 1.76
Euro 1.22 1.18 1.18 1.25 1.17 1.20
Singapore dollar 2.10 1.92 1.96 2.13 1.93 2.09
Australian dollar 1.82 1.52 1.62 1.80 1.66 1.86
------------------- ---------- ---------- ------------- --------- --------- -------------
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. There have been no material changes to the assets and
liabilities of these segments since the year end. Revenue and
operating profit of the four reportable segments is given
below:
Revenue Operating profit
------------------------------------- -------------------------------------
Half year Half year Year to Half year Half year Year to
to to 31 December to to 31 December
30 June 30 June 2013 30 June 30 June 2013
2014 2013 GBPm 2014 2013 GBPm
GBPm GBPm GBPm GBPm
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
North America 373.0 308.0 699.4 20.7 16.5 51.6
EMEA(1) 214.4 185.5 399.2 2.7 1.8 6.8
Asia 56.6 44.4 96.2 3.6 4.8 9.0
Australia 144.2 106.7 243.4 10.6 8.8 15.6
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
788.2 644.6 1,438.2 37.6 31.9 83.0
Central items and
eliminations - - - (2.1) (3.3) (5.2)
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
Before exceptional
items 788.2 644.6 1,438.2 35.5 28.6 77.8
Exceptional items
(Note 5) - - - (27.5) (9.4) (21.7)
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
788.2 644.6 1,438.2 8.0 19.2 56.1
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
(1) Europe, Middle East and Africa.
4. Acquisitions
Keller Canada Franki Africa Geo-Foundations Total
Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair
amount value value amount value value amount value value amount value value
adjust-ment adjust-ment adjust-ment adjust-ment
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
Net assets
acquired
Intangible
assets - 31.5 31.5 2.2 3.2 5.4 - 0.4 0.4 2.2 35.1 37.3
Property,
plant
and equipment 32.9 1.3 34.2 19.0 - 19.0 1.9 1.3 3.2 53.8 2.6 56.4
Cash and cash
equivalents - - - 4.2 - 4.2 0.2 - 0.2 4.4 - 4.4
Receivables 19.7 (0.4) 19.3 14.3 - 14.3 4.0 - 4.0 38.0 (0.4) 37.6
Other assets 9.6 - 9.6 5.0 - 5.0 0.4 - 0.4 15.0 - 15.0
Loans and
borrowings (3.8) - (3.8) (2.4) - (2.4) (0.5) - (0.5) (6.7) - (6.7)
Deferred tax - (2.0) (2.0) (0.7) (0.8) (1.5) (0.4) (0.4) (0.8) (1.1) (3.2) (4.3)
Other
liabilities (4.2) - (4.2) (13.0) (0.9) (13.9) (0.9) - (0.9) (18.1) (0.9) (19.0)
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
54.2 30.4 84.6 28.6 1.5 30.1 4.7 1.3 6.0 87.5 33.2 120.7
Goodwill 74.8 2.5 - 77.3
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
Total
consideration 159.4 32.6 6.0 198.0
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
Satisfied by
Initial cash
consideration 151.2 31.8 6.0 189.0
Contingent
consideration 8.2 0.8 - 9.0
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
159.4 32.6 6.0 198.0
--------------- --------- -------------- -------- --------- ------------ ------- --------- ------------ ------- ---------------- ------------ -------
2014 acquisitions
On 15 May 2014, the Group acquired the remaining 45% minority
shareholding of Keller Engenharia Geotecnica Ltda in Brazil for a
cash consideration of GBP2.8m at a premium of GBP1.0m to net book
value, which has been taken directly to reserves.
2013 acquisitions
On 1 January 2013, the Group acquired 100% of the share capital
of Geo-Foundations Contractors, Inc. ('Geo-Foundations'), a
business based in Toronto, Canada. The fair value of the intangible
assets acquired represents the fair value of customer contracts at
the date of acquisition. A further amount of up to GBP4.4m (CDN$8m)
is payable based on total earnings before interest, tax,
depreciation and amortisation in the five-year period following
acquisition. As the payment is contingent on continued employment
of the vendors until the entitlement date, this arrangement is
treated as remuneration for post-acquisition services and amounts
expected to be paid are accrued over the five-year period.
On 12 July 2013, the Group acquired selected assets and
businesses that comprised the piling division of North American
Energy Partners, Inc. (collectively 'Keller Canada'), a business
based in Edmonton, Canada. The fair value of the intangible assets
acquired represents the fair value of customer relationships,
customer contracts at the date of acquisition, patents and trade
names. Goodwill arising on acquisition is attributable to the
knowledge and expertise of the assembled workforce, the expectation
of future contracts and customer relationships and the opportunity
to expand the use of more advanced Group technologies into a growth
market. Contingent consideration of up to GBP50.8m (CDN$92.5m) is
payable based on total earnings before interest, tax, depreciation
and amortisation in the three-year period following
acquisition.
On 21 November 2013, the Group acquired selected assets and
businesses that comprised the geotechnical division of Esorfranki
Limited (collectively 'Franki Africa'), a business based in
Johannesburg, South Africa. The fair value of the intangible assets
acquired represents the fair value of customer contracts at the
date of acquisition and trade names. Goodwill arising on
acquisition is attributable to the knowledge and expertise of the
assembled workforce, operating synergies that arise from the
Group's strengthened market position and the opportunity for the
Group to accelerate its expansion in Africa using an established
business. Contingent consideration of up to GBP8.3m (R150m) is
payable based on total earnings before interest, tax, depreciation
and amortisation in the three-year period following
acquisition.
On 3 April 2013, the Group acquired the remaining 49% minority
shareholding of Keller Terra S.L. in Spain for a cash consideration
of GBP5.6m (EUR6.7m) which was equal to the net book value of the
assets and liabilities at the acquisition date.
The adjustments made in respect of Franki Africa are provisional
and will be finalised within 12 months of the acquisition date.
5. Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
items which are exceptional by their size or are non-trading in
nature, including those relating to acquisitions.
Exceptional items comprise the following:
Half year Half year
to 30 to Year to
June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- -------------
Contract dispute 30.0 - -
Amortisation of acquired intangible assets 3.9 - 6.7
Acquisition costs 0.2 4.9 5.9
Contingent consideration and payments (6.9) 4.5 6.0
Goodwill impairments - - 3.1
Other 0.3 - -
-------------------------------------------- ---------- ---------- -------------
Exceptional items in operating costs 27.5 9.4 21.7
Exceptional finance costs 0.1 - 0.4
-------------------------------------------- ---------- ---------- -------------
27.6 9.4 22.1
-------------------------------------------- ---------- ---------- -------------
The contract dispute relates to a project that the Group's UK
subsidiary, Keller Limited, completed in 2008. The claims intimated
against Keller Limited, which are currently the subject of
litigation, are denied and being vigorously defended. The amount is
stated before taking account of recoveries under applicable
insurances which are yet to be agreed, as these cannot be
recognised under IFRS.
Amortisation of acquired intangible assets and acquisition costs
relate to the acquisitions set out in note 4.
Contingent consideration and payments in the current period
mainly relates to the release of previously provided contingent
consideration for the acquisition of Keller Canada which is not now
expected to be paid. In the prior year, contingent consideration
and payments primarily related to GBP4.8m (A$7.8m) of previously
unprovided contingent consideration paid in respect of the
acquisition of Waterway Constructions Group Pty Ltd due to its
better than expected performance during the period.
Goodwill impairments in the year to 31 December 2013 mainly
relate to Keller Specialni Zakladani, spol. s.r.o. (Czech
Republic).
Exceptional finance costs relate to the unwind of the discounted
contingent consideration to present value for the acquisitions set
out in note 4.
6. Taxation
Taxation, representing management's best estimate of the average
annual effective income tax rate expected for the full year, based
on the profit before tax and exceptional items is 33% (half year
ended 30 June 2013: 31%; year ended 31 December 2013: 32%).
7. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
Half year Half year
to 30 to Year to
June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Amounts recognised as distributions to equity holders
in the period:
Interim dividend for the year ended 31 December 2013
of 8.0p (2012: 7.6p) per share - - 5.6
Final dividend for the year ended 31 December 2013
of 16.0p (2012: 15.2p) per share 11.4 9.8 9.8
11.4 9.8 15.4
------------------------------------------------------- ---------- ---------- -------------
In addition to the above, an interim ordinary dividend of 8.4p
per share (2013: 8.0p) will be paid on 5 September 2014 to
shareholders on the register at 15 August 2014. This proposed
dividend has not been included as a liability in these financial
statements and will be accounted for in the period in which it is
paid.
8. Earnings per share
Earnings per share before exceptional items of 29.5p (half year
ended 30 June 2013: 28.1p; year ended 31 December 2013: 73.0p) was
calculated based on earnings of GBP21.0m (half year ended 30 June
2013: GBP18.2m; year ended 31 December 2013: GBP49.5m) and the
weighted average number of ordinary shares in issue during the half
year of 71.1m (half year ended 30 June 2013: 64.7m; year ended 31
December 2013: 67.8m).
(Loss)/earnings per share of (8.3)p (half year ended 30 June
2013: 13.6p; year ended 31 December 2013: 43.2p) was calculated
based on earnings of GBP(5.9)m (half year ended 30 June 2013:
GBP8.8m; year ended 31 December 2013: GBP29.3m) and the weighted
average number of ordinary shares in issue during the half year of
71.1m (half year ended 30 June 2013: 64.7m; year ended 31 December
2013: 67.8m).
Diluted earnings per share before exceptional items of 29.0p
(half year ended 30 June 2013: 27.7p; year ended 31 December 2013:
71.9p) was calculated based on earnings of GBP21.0m (half year
ended 30 June 2013: GBP18.2m; year ended 31 December 2013:
GBP49.5m) and the adjusted weighted average number of ordinary
shares in issue during the half year of 72.2m (half year ended 30
June 2013: 65.6m; year ended 31 December 2013: 68.9m).
Diluted (loss)/earnings per share of (8.2)p (half year ended 30
June 2013: 13.4p; year ended 31 December 2013: 42.6p) was
calculated based on earnings of GBP(5.9)m (half year ended 30 June
2013: GBP8.8m; year ended 31 December 2013: GBP29.3m) and the
adjusted weighted average number of ordinary shares in issue during
the half year of 72.2m (half year ended 30 June 2013: 65.6m; year
ended 31 December 2013: 68.9m).
9. Analysis of closing net debt
As at As at As at
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
------------------------------------------ --------- --------- -------------
Bank balances 52.6 90.2 50.5
Short-term deposits 0.7 0.6 2.8
------------------------------------------ --------- --------- -------------
Cash and cash equivalents in the balance
sheet 53.3 90.8 53.3
Bank overdrafts (2.2) (7.5) (2.6)
------------------------------------------ --------- --------- -------------
Cash and cash equivalents in the cash
flow statement 51.1 83.3 50.7
Bank and other loans (208.3) (107.4) (189.0)
Finance leases (4.7) (0.4) (5.4)
------------------------------------------ --------- --------- -------------
Closing net debt (161.9) (24.5) (143.7)
------------------------------------------ --------- --------- -------------
10. Share capital and reserves
As at As at As at
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Allotted, called up and fully paid
Equity share capital:
73,099,735 ordinary shares of 10p each
(30 June 2013: 73,099,735; 31 December
2013: 73,099,735) 7.3 7.3 7.3
------------------------------------------ --------- --------- -------------
The Company has one class of ordinary shares, which carries no
rights to fixed income. There are no restrictions on the transfer
of these shares. The total number of shares held in Treasury was
1.8m (2013: 2.2m). Treasury shares issued in the year related to
share options that were exercised.
11. Related party transactions
Transactions between the parent, its subsidiaries and jointly
controlled operations, which are related parties, have been
eliminated on consolidation.
12. Post balance sheet events
On 4 July 2014, the Group completed the refinancing of its
syndicated revolving credit facilities. A GBP250m revolving credit
facility expiring in September 2019 was agreed, replacing both the
GBP170m facility expiring in April 2015 and the US$150m facility
expiring in July 2017.
There were no other material post balance sheet events between
the balance sheet date and the date of this report.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with IAS34 - Interim Financial Reporting;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R - indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of related party
transactions and changes therein.
By order of the Board
J R Atkinson
Chief Executive
J W G Hind
Finance Director
[1] All figures are stated before net exceptional items of
GBP27.6m before tax. Exceptional items mainly comprise a GBP30m
provision for a contract dispute, GBP3.9m of amortisation of
acquired intangible assets, offset by a credit of GBP6.9m for
contingent consideration no longer expected to be paid.
[2] The US Census Bureau of the Department of Commerce, 1 July
2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UARBRSRAWRAR
Keller (LSE:KLR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Keller (LSE:KLR)
Historical Stock Chart
From Jul 2023 to Jul 2024
