TIDMKLR
RNS Number : 8279F
Keller Group PLC
26 February 2018
For immediate release Monday, 26 February 2018
Keller Group plc
Results for the year ended 31 December 2017
Keller Group plc ("Keller" or "the group"), the world's largest
geotechnical contractor, announces its results for the year ended
31 December 2017.
Constant currency
2017 2016 % change
GBPm GBPm % change
---------------------------------- -------- -------- ----------- ------------------
Revenue 2,070.6 1,780.0 +16% +10%
Underlying EBITDA(1) 177.2 158.6 +12% +7%
Underlying operating profit(1) 108.7 95.3 +14% +10%
Underlying profit before tax(1) 98.7 85.1 +16% +12%
Underlying earnings per share(1) 102.2p 75.9p +35% +30%
Total dividend per share 34.2p 28.5p +20% n/a
Statutory operating profit 121.3 85.2 +42% +39%
Statutory profit before tax 110.6 73.9 +50% +46%
Statutory earnings per share 121.0p 65.7p +84% +82%
---------------------------------- -------- -------- ----------- ------------------
(1) Before pre-tax non-underlying credits of GBP11.9m (2016:
costs of GBP11.2m). Details of the non-underlying items are set out
in note 5 of the consolidated financial information.
2017 summary:
-- Record revenue of GBP2,070.6m, up 16%, driven by strong organic growth
-- Underlying profit before tax up 16% to GBP98.7m
-- Divisional performance
-- EMEA: very strong profit growth (over 70% up to GBP53.3m)
with excellent execution of large contracts
-- North America: underlying profit decline of 14% to GBP78.7m,
reflecting some ongoing regional softness and the negative impact
of the hurricanes in the third quarter
-- APAC: GBP16.5m operating loss, reduced slightly year on year,
with progress held back by two contract losses
-- Net debt decreased to GBP229.5m (2016: GBP305.6m), representing 1.3x EBITDA
-- Year-end order book, excluding the Caspian project, up 5% giving confidence for 2018
-- Good progress against target of GBP50m gross benefits from
strategic initiatives - one third achieved in first of four
years
-- Underlying earnings per share increased 35% to 102.2p, in
part due to a one-off tax credit of GBP9.7m
-- Total dividend per share of 34.2p, up 20%, reflecting
confidence in the group's prospects and higher expected future
earnings following the recent US tax reforms
Alain Michaelis, Chief Executive, said:
"Overall Keller has had a positive year with good growth in
group revenue and profits. The results were extremely strong in
EMEA and solid in North America, but disappointing in APAC. Ongoing
operational improvements, strengthened leadership and market
recovery should lead to APAC returning to profitability in 2018.
Our confidence in group fundamentals and the recent US tax changes
have allowed us to significantly raise the dividend to
shareholders.
The order book of over GBP1bn gives us confidence as we start
2018. Most of our markets remain robust and bidding activity is at
a healthy level. Overall, despite the completion of our excellent
Caspian project, we expect 2018 to be another year of underlying
progress".
Basis of preparation
The group's results as reported under International Financial
Reporting Standards (IFRS) and presented in the financial
statements (the "statutory results") are significantly impacted by
movements in exchange rates relative to sterling, as well as by
exceptional items and non-trading amounts relating to
acquisitions.
As a result, adjusted performance measures have been used
throughout this report to describe the group's underlying
performance. The Board and Executive Committee use these adjusted
measures to assess the performance of the business because they
consider them more representative of the underlying ongoing trading
result and allow more meaningful comparison to prior year. Where
not presented on the face of the consolidated income statement or
cash flow statement, the adjusted measures are defined and
reconciled to the amounts reported under IFRS in the Adjusted
performance measures section at the end of this statement.
The constant currency basis ("constant currency") adjusts the
comparative to exclude the impact of movements in exchange rates
relative to sterling on the translation of the results of overseas
operations. Retranslating at 2017 average exchange rates increases
2016 revenue and underlying operating profit by GBP106.0m and
GBP3.5m respectively.
The term 'underlying' excludes the impact of exceptional items,
amortisation of acquired intangible assets and other non-trading
amounts relating to acquisitions (collectively 'non-underlying
items'), net of any associated tax. Non-underlying items mainly
comprise a GBP21.0m exceptional credit relating to a historic
contract dispute on a project in Avonmouth, in the UK, and GBP9.0m
of amortisation of acquired intangible assets.
Group overview
Financial results
Group revenue for the year was GBP2,070.6m, up 16% on 2016.
Constant currency revenue was up 10%, primarily as a result of
strong organic growth in the EMEA and APAC regions. Constant
currency revenue in North America was down 4% year on year.
Underlying operating profit was GBP108.7m, an increase of 14% on
the GBP95.3m generated in 2016. On a constant currency basis
underlying operating profit was up 10%. The group underlying
operating margin decreased from 5.4% to 5.2%, mainly due to lower
margins in North America offset by improved profitability in EMEA.
Pre-tax return on capital employed was stable at 15.1% (2016:
15.3%).
After taking account of GBP9.0m of amortisation of acquired
intangible assets, a GBP21.0m exceptional credit relating to a
historical contract dispute and other non-underlying items,
totalling a net GBP0.6m credit, the statutory operating profit was
GBP121.3m (2016: GBP85.2m). Further details on non-underlying items
are given after the discussion of divisional results.
On an underlying basis, after net finance costs of GBP10.0m
(2016: GBP10.2m), the profit before tax was GBP98.7m, up 16% on the
previous year's GBP85.1m. The underlying effective tax rate
decreased from 35.0% in 2016 to 25.0% in 2017, mainly due to a
GBP9.7m credit for the revaluation of US deferred tax liabilities
following the recent US tax reforms.
Underlying earnings per share for the year were 102.2p (2016:
75.9p), an increase of 35%. On a constant currency basis,
underlying earnings per share were up 30%.
The statutory profit before tax was up 50% at GBP110.6m (2016:
GBP73.9m). After the statutory tax charge of GBP23.1m (2016:
GBP25.9m), statutory profit after tax was GBP87.5m (2016: GBP48.0m)
and statutory earnings per share were 121.0p, compared with 65.7p
in 2016.
Net debt at the year-end was GBP229.5m (2016: GBP305.6m),
representing 1.3x underlying EBITDA. The financial position of the
group remains strong with undrawn borrowing facilities totalling
GBP194.9m. The group continues to operate well within all of its
financial covenants.
Cash generated from operations before non-underlying items was
GBP136.1m, which represents 77% of EBITDA. This cash conversion
rate is lower than previous years due to a GBP28.8m increase in
working capital mainly as a result of the fourth quarter's
like-for-like revenue being 16% ahead of the same period in
2016.
The group continues to invest in growing and upgrading its
equipment capability, with net capital expenditure of GBP74.5m in
2017, representing 1.1x depreciation.
Dividends
As noted above, the group's underlying earnings per share
increased by 35% from 75.9p in 2016 to 102.2p in 2017. About 12p of
this increase was due to the one-off revaluation of US deferred tax
liabilities as a result of the recently enacted US tax reforms. As
previously announced, these changes are expected to reduce the
group's future effective tax rate from a percentage number in the
mid-thirties to a number in the high twenties, resulting in an
ongoing earnings per share enhancement of between 5p and 10p per
share each year.
As a result, and reflecting confidence in the group's prospects,
the Board has decided to rebase future dividends and accordingly
recommends a 20% increase in the 2017 full year dividend to 34.2p
(2016: 28.5p). Full year 2017 dividend cover, before non-underlying
items, is 3.0x (2016: 2.7x).
This recommendation results in a proposed 2017 final dividend of
24.5p per share (2016: 19.25p per share), a 27% increase, to be
paid on 22 June 2018 to shareholders on the register as at the
close of business on 1 June 2018.
The group intends to maintain a progressive dividend policy in
the future.
Outlook
Our group order book of over GBP1bn gives us confidence as we
start 2018. Most of our markets remain robust, bidding activity is
at a healthy level and Keller is well positioned to address the
market trends of urbanisation and infrastructure growth. Two
significant loss-making contracts in APAC in 2017 masked some good
progress in the region and we continue to expect the division to
return to profit in 2018. Overall, despite the completion of our
excellent Caspian project, we expect 2018 to be another year of
underlying progress, albeit with recent currency movements expected
to result in translational headwinds on reported profits.
We are now seeing tangible results from a number of the
strategic initiatives launched in the last two years. We are
confident that a combination of these improvement initiatives, our
technical leadership, wide product portfolio, broad branch network
and operational strength will continue to drive our business
forward.
Strategic progress
In 2017 we consolidated our positions in our key markets by
extending our branch network, as well as extending our product
range. Examples include new branches in Hamburg and Charlotte,
bringing our soil mixing capability into Singapore and Malaysia,
our first diaphragm wall jobs in India and introducing new ground
improvement techniques into South Africa. We also invested in a new
Keller Marine team to leverage our experience in Australia in
near-shore marine construction into new geographies. This team is
already actively bidding work in India and Africa.
We completed two small acquisitions: Geo Instruments in North
America to enhance our instrumentation and monitoring capability
and, via our Finnish joint venture, Sotkamon Porapaalu, expanding
our regional footprint in Finland and gaining capability in a
specific type of drilled piling. In January, we announced our
intention to acquire Moretrench, a geotechnical contractor in the
US. If completed, this acquisition will further strengthen our US
East Coast presence and add new specialist technical capabilities
to the group.
During the year we completed the roll-out of our standard
strategic planning model to all 21 business units. All business
units now have detailed strategic plans in a common structure,
incorporating specific action plans which are being implemented. In
addition, we continue to strengthen our business units through
functional engagement and active benchmarking of our key KPIs.
Our procurement capability continues to gain strength and
traction, with teams now established in each division. Significant
benefits from this investment are already being realised. We have
also created one global IT organisation. This pulls together our
efforts on infrastructure and applications, reducing the burden on
local teams as well as creating economies of scale.
Our Global Product Teams are helping us focus on R&D
opportunities, developing product strategies and continuing to
share best practice and innovations. We also continued to make
progress on operational productivity, with our 5S roll-out
implemented across Keller and starting to become part of the
cultural norm. We will continue to build our "lean" capabilities in
2018.
We executed 6,300 projects throughout the world in 2017. These
continue to set the standard in the industry and enhance Keller's
strong reputation for providing innovative solutions, combined with
excellent execution focused on our customers' needs. Average
project size is still comparatively small at GBP300k per project.
Local and smaller projects remain the foundation of Keller,
supported by our extensive branch network (around 180 locations)
and our skilled local teams who know their markets and customers
well. We also had significant success in the large project domain
with many market leading projects across all regions. Most notably,
the Caspian project has set the benchmark internally for a very
well-conceived and executed effort in a challenging
environment.
The vast majority of our projects were executed well and,
between them, they generated around GBP370m of gross profit in
2017. In APAC, however, where the difficult pricing and contractual
environment of the 2015/16 downturn left little project
contingency, we have underperformed our expectations notably on two
major Australian projects. Risk and opportunity management remain
an enduring focus area and we are confident that lessons learned
from all loss-making projects are being shared and absorbed around
the group.
Throughout the year we have continued to strengthen our business
unit leadership. We have appointed new leaders in a number of our
business units: Canada, Middle East, North East Europe, Case and
Brazil. We also launched our global Project Manager Academy. The
Academy will take our younger project managers to the next level in
their careers, focusing on people, commercial and technical
leadership skills.
We continued to make progress in our safety accident frequency
rate (AFR) performance, with another significant decline in the
frequency rate from 0.34 in 2016 to 0.23 in 2017. We have cut our
AFR by around 80% since the introduction of our Think Safe
programme in 2013. We received many safety accolades from customers
around the world, with one of our Australian business units winning
the Rio Tinto worldwide safety award. However, we take nothing for
granted in this domain, sadly illustrated by the tragic road
traffic accident in South Africa where 18 of our colleagues lost
their lives. We thank our whole community in South Africa for the
support and humanity they showed to all the bereaved and their
relatives in the difficult time last summer.
We said in our 2016 preliminary results announcement that we
expected to realise GBP50m of annualised total gross benefits from
the group's strategic initiatives by 2020, around half of which was
expected to be reflected as improved profitability. We broke this
down as GBP20m to come from procurement, GBP20m from operational
improvements and GBP10m from growth. Progress against this target
at the end of 2017 is set out below:
GBPm Gross benefits
-------------------------- -----------------------
2020 target Progress
to date
-------------------------- ------------ ---------
Procurement 20.0 11.3
-------------------------- ------------ ---------
Operational improvements 20.0 1.3
-------------------------- ------------ ---------
Growth 10.0 4.6
-------------------------- ------------ ---------
50.0 17.2
-------------------------- ------------ ---------
In the first year of a four year programme we have achieved
around one-third of the targeted gross benefits. We estimate that
between GBP5m and GBP7m of the benefits realised to date have
directly impacted profit and are sustainable. Of the rest, either
their sustainability is as yet unproven or they have been leveraged
to win more work, or offset by incremental investment in strategic
initiatives.
Meaningful procurement savings have been achieved from national
and regional agreements on categories as diverse as equipment
rental, IT, haulage, spares/consumables and lodging. The benefits
from operational improvements to date mainly relate to equipment
management and maintenance, as the programme to introduce lean
techniques to project sites is in its infancy. Benefits under
growth include both those from new offices and from a more
structured approach to the transfer of technology.
Divisional results - underlying
North America
2017 2016 Constant
currency
----------
GBPm GBPm
---------------------- ------ ------ ----------
Revenue 968.7 952.9 -4%
Underlying operating
profit 78.7 86.9 -14%
Underlying operating
margin 8.1% 9.1%
---------------------- ------ ------ ----------
In North America, which accounts for around half the group's
revenue, reported revenue increased by 2%, although constant
currency revenue was down 4%. Underlying operating profit was
GBP78.7m, down 14% on a constant currency basis and the underlying
operating margin decreased from 9.1% to 8.1%.
After first half 2017 constant currency revenue decreased 10%
year-on-year, the division returned to year-on-year revenue growth
in the second half. Whilst the second half profitability was lower
than in 2016, this was largely due to the impact of hurricanes
Harvey and Irma in the third quarter, which together had an
estimated negative one-off profit impact of GBP3m.
Looking forward, the year-end North American order book of work
to be undertaken over the next twelve months was 5% above last
year. This, together with the improving trend in underlying
trading, gives us confidence for 2018.
US
The US construction market as a whole remains solid, but with
significant regional and sectoral variations. Total construction
spend in the US in 2017 was up 4% on 2016, driven by residential
construction which grew by 10%. Residential construction has the
most impact on the group's Suncoast business. Elsewhere, public
expenditure on construction was down 3% year-on-year whilst private
non-residential spend was flat.
Keller's US business had a mixed year, with varying performances
across the business units. Our largest North American business,
Hayward Baker, had a very strong year, producing record results.
Its business model of undertaking a wide variety of small to medium
sized contracts across a broad range of products and geographies
across the US continues to produce good results. Following some
management changes early in 2017, there was a significant
improvement in Hayward Baker's Western region, an area which has
disappointed in the last two years.
This strong performance however was more than offset by lower
profits at both Case and HJ Foundation which, between them,
reported 2017 underlying operating profits around GBP16m down on
2016 and account for the margin decrease in North America. For HJ
Foundation, the reduction reflects a return to more normal levels
of profitability after the boom period in its home city of Miami in
2015 and 2016, which attracted a major competitor to enter the
south Florida market. Case had a very disappointing year with
revenue well down as a result of fewer large projects than in
previous years, particularly in its Chicago base, as well as some
difficult projects. Case starts 2018 with a strong order book and
performance is expected to improve in 2018.
Bencor, acquired in 2015 to give the group access to diaphragm
wall technology and expertise, had a steady 2017, continuing work
on the major remediation project at East Branch Dam. The business
is actively helping the group to bid and execute diaphragm wall
jobs outside North America. McKinney, which had a disappointing
2016, reported an improved result in 2017.
Suncoast, the group's post-tension business which mainly serves
the residential construction market, had healthy revenue growth in
2017, benefitting from the continued increase in housing starts
where it operates, particularly in its home state of Texas.
However, having benefitted from raw material price decreases in
2016, in 2017 the business faced some significant raw material
price increases which it was unable to recover from customers in
full. As a result, profits were significantly down
year-on-year.
We announced in January that the group was in discussions to
acquire Moretrench, a geotechnical contracting company operating
predominantly along the east coast of the US. Moretrench has a
strong heritage of complex geotechnical projects and, in 2016, had
revenue of US$170m, normalised operating profit of US$9.3m and
EBITDA of US$13.9m. Due diligence is ongoing and the acquisition is
expected to complete before the end of March.
Canada
Keller Canada continues to operate in a difficult market and in
June we announced changes in leadership and some further cost
saving measures. These, together with good progress on the major
C$43m subway contract in Toronto and the refocusing of the business
towards urban areas, have resulted in the business returning to
profit in the second half and for 2017 as a whole.
Europe, Middle East & Africa (EMEA)
2017 2016 Constant
currency
----------
GBPm GBPm
---------------------- ------ ------ ----------
Revenue 737.2 552.6 +26%
Underlying operating
profit 53.3 30.2 +74%
Underlying operating
margin 7.2% 5.5%
---------------------- ------ ------ ----------
In EMEA, constant currency revenue increased by 26% and
underlying constant currency operating profit increased by 74%. As
a result, the underlying operating margin improved from 5.5% to
7.2%.
This significantly higher result is largely the result of two
large projects, both of which were substantially complete at the
year-end; the Caspian project and Zayed City in Abu Dhabi. Between
them, these projects accounted for around GBP100m of revenue and
GBP30m of operating profit in 2017, and together account for most
of the year-on-year profit increase. As these are now essentially
complete, EMEA's 2018 revenue and profitability will be well down
on that achieved in 2017. The 2018 result however is still expected
to be better than that achieved in 2016, which also benefitted
significantly from the Caspian project, as a result of a healthy
order book and actual and further expected improvements in the
underlying business.
Our core businesses in central Europe all performed well,
reflecting strong project disciplines and growing construction
markets in Germany, Austria and Poland. Our South East Europe
business unit, centred around Austria, had its best ever year with
record revenue, operating profit and operating margin. These
business units have good momentum and are all also leading the way
in helping business units elsewhere in the world to expand their
product ranges, offering them significant expertise, resources and
training.
The UK had a solid year in 2017, working on a wide variety of
commercial and infrastructure projects. We have seen a notable
slowdown in orders in recent months and expect 2018 to be a
challenging year. However, the major infrastructure projects coming
up in the UK, most notably HS2, should mean that the market for
geotechnical work picks up noticeably in 2019 and 2020.
The excellent execution of the major project in the Caspian
region, currently the group's largest project, continued throughout
2017. At the year-end however, the project, which is now expected
to exceed US$200m in total, was over 90% complete.
The group had a very busy year in the Middle East, largely due
to working on two major projects; an urban development project in
Zayed City, Abu Dhabi, which is now complete, and the East Port
Said Development Complex in Egypt, which will complete in the first
half of 2018. As a result, revenue in 2017 was more than double
that in 2016 and the operating margin was healthy. There are a
number of good prospects in the region and the current challenge
for the business unit is to replenish the order book.
We have now fully integrated Tecnogeo, the business we acquired
in Brazil in 2016, with Keller's existing Brazilian operation. The
business continues to struggle in what remains a very difficult
market.
Franki Africa performed well in 2017, increasing both revenue
and profitability. The GBP40m design and build contract for a
foundation solution at the Clairwood Logistics Park development
near Durban has been an excellent example of knowledge and skill
transfer within Keller, with the project using a technique new to
the South African market. Performance is exceeding original
expectations.
The EMEA division's order book at the end of 2017, while at a
healthy level, was around 20% down on this time last year
reflecting the run off of the large projects. Excluding these,
however, the year-end order book of work to be undertaken over the
next twelve months was around 10% up year-on-year.
Asia-Pacific (APAC)
2017 2016 Constant
currency
----------
GBPm GBPm
---------------------- ------- ------- ----------
Revenue 364.7 274.5 +25%
Underlying operating
loss (16.5) (18.0) +15%
Underlying operating
margin (4.5)% (6.6)%
----------------------- ------- ------- ----------
In APAC, constant currency revenue was up 25% with significant
increases in both Asia and Australia. However the operating loss
was only slightly less than in 2016, largely as a result of two
major contracts in Australia, where adverse ground conditions,
technical issues and a contractual dispute resulted in a total loss
on these contracts of GBP14m.
We are changing our leadership of the APAC division. Peter Wyton
joined the business from AECOM in mid-February 2018 and will take
over from Mark Kliner as President of APAC with effect from 1 April
2018.
Our difficult markets in APAC are slowly recovering, with
encouraging signs of new Australian mining and infrastructure
projects. The year-end APAC order book was more than 20% above last
year which, combined with our ongoing internal improvements, means
we remain confident of a return to divisional profitability in
2018.
Australia
The Group's geotechnical business in Australia had an improved
year, with revenue significantly up on 2016. Losses were materially
reduced despite the loss making joint venture mentioned in the 2017
interim results announcement. Pricing remains challenging, but
investment in infrastructure in Australia is robust, the business
has a good order book and we are hopeful of winning some major work
on the A$11bn Melbourne Metro extension project. As a result, we
are confident that this business will return to profit in 2018.
It was a very mixed year for the near-shore marine businesses.
Waterway was already having a difficult year in a tough east coast
market, before being hit by a surprisingly negative arbitration
outcome in December in connection with a contractual dispute on a
project in New South Wales. We have subsequently negotiated a
settlement with the customer and are undertaking remedial
works.
Austral, which was acquired in 2015 and operates mainly in the
west leveraging good relationships with major mining groups, had an
improved year and has been very busy bidding work in recent months
as investment in the resources industry returns. The business has
an excellent order book and is poised for a strong 2018.
Asia
Revenue in ASEAN was broadly flat year-on-year, with a
significant increase in Malaysia as a result of an improving market
and our introduction of new products, offset by a significant
decrease in Singapore following the substantial downsizing of the
piling business.
The ASEAN business was still loss-making in 2017, but at a lower
level than in 2016. The business continued to be challenged by a
very difficult pricing environment for heavy foundations projects,
some legacy Resource Piling contracts and additional costs and
teething problems associated with introducing new products. On the
positive side, project execution improved significantly in the
second half. The ground improvement side of the business was
profitable, helped by the successful large vibro-compaction
contract at Changi airport.
Keller India performed well in 2017. Revenue doubled, the
operating margin increased and the business continues to build its
structure and capabilities to enable it to grow further and
continue to introduce new products.
Other financial items
Non-underlying items
Non-underlying items before taxation totalled a credit of
GBP11.9m in 2017. These comprise:
Amortisation: GBP9.0m of amortisation of acquired intangible
assets (2016: GBP9.7m).
Exceptional contract dispute: A GBP21.0.m credit as a further
part reversal of a GBP54.0m exceptional charge taken in 2014 for a
contract dispute relating to a UK project completed in 2008. The
project was in connection with the construction of a major
warehouse and processing facility in Avonmouth, near Bristol.
As previously announced, the group acquired the relevant
property in May 2016 pursuant to the dispute settlement agreement
for GBP62.0m and subsequently sold it for the same amount in 2017.
The property was held on the group's 2016 balance sheet as a
non-current asset held for sale at a value of GBP54.0m. The sale
therefore realised an exceptional profit before costs of
GBP8.0m.
In addition, the group received GBP11.7m of insurance proceeds
in respect of this dispute in 2017.
As noted at the time, the original provision was expected to be
reduced by future insurance recoveries and the sale of the
property. Taking account of credits in both 2016 and 2017, the
group has recovered GBP35.3m of the original GBP54.0m provision. No
significant further recoveries are expected.
Other: A net credit of GBP0.6m (2016: GBP0.3m) relating to
changes in estimated contingent consideration payable in respect of
recent acquisitions, offset by finance charges of GBP0.7m.
Interest
Underlying net finance costs were GBP10.0m (2016: GBP10.2m).
Although net debt has declined over the course of 2017, average net
borrowings during the year were consistent with 2016. Statutory net
finance costs reduced from GBP11.3m in 2016 to GBP10.7m in
2017.
Tax
The group's underlying effective tax rate was 25.0%, a
significant reduction on the 2016 effective rate of 35.0%. This is
mainly attributable to a GBP9.7m non-cash credit as a result of the
revaluation of US deferred tax liabilities following the recent US
tax reforms, as well as, to a lesser extent, a lower proportion of
the group's profit before tax being earned in the US.
A non-underlying tax credit of GBP1.6m has been recognised,
representing the net tax impact of the 2017 non-underlying
items.
Cash flow and financing
In 2017, underlying cash generated from operations was GBP136.1m
(2016: GBP135.7m), representing 77% (2016: 86%) of EBITDA. The 2017
cash conversion is below that of previous years as a result of
constant currency fourth quarter revenue being 16% up on the
equivalent period in 2016, leading to higher levels of working
capital at the year-end, and an increased value of inventory at
Suncoast following steel price increases in the year. Historically,
the group has an excellent record of converting profits into cash,
with the aggregate of the last 10 years' of cash generated from
operations representing 96% of EBITDA (2016: 98%).
Net underlying capital expenditure totalled GBP74.5m (2016:
GBP73.0m), compared to depreciation and amortisation of GBP68.5m.
The group continues to invest in transferring technologies into new
geographies and to upgrade the equipment fleet.
At 31 December 2017, net debt amounted to GBP229.5m (2016:
GBP305.6m). The decrease in net debt is explained as follows:
GBPm
---------------------------- --------
Net debt at 1 January
2017 (305.6)
---------------------------- --------
Free cash flow 23.4
---------------------------- --------
Dividends (21.2)
---------------------------- --------
Foreign exchange movements 7.8
---------------------------- --------
Non-underlying items 72.6
---------------------------- --------
Acquisitions (6.5)
---------------------------- --------
Net debt at 31 December
2017 (229.5)
---------------------------- --------
Net debt represents 1.3x underlying EBITDA on a headline basis
or 1.5x calculated on a covenant basis, well within the covenant
limit of 3.0x.
Consolidated income statement
For the year ended 31 December 2017
2017 2016
--------------- --------------- ----------- --------------- --------------- -----------
Before Non-underlying Before Non-underlying
non-underlying items non-underlying items
items (note Statutory items (note Statutory
Note GBPm 5) GBPm GBPm 5) GBPm
GBPm GBPm
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Revenue 3 2,070.6 - 2,070.6 1,780.0 - 1,780.0
Operating costs (1,961.9) (1.6) (1,963.5) (1,684.7) (18.9) (1,703.6)
Amortisation of
acquired
intangible
assets - (9.0) (9.0) - (9.7) (9.7)
Other operating
income - 23.2 23.2 - 18.5 18.5
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Operating profit 3 108.7 12.6 121.3 95.3 (10.1) 85.2
Finance income 3.8 - 3.8 1.6 - 1.6
Finance costs (13.8) (0.7) (14.5) (11.8) (1.1) (12.9)
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Profit before
taxation 98.7 11.9 110.6 85.1 (11.2) 73.9
Taxation (24.7) 1.6 (23.1) (29.8) 3.9 (25.9)
----------------- -----------
Profit for the
period 74.0 13.5 87.5 55.3 (7.3) 48.0
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Attributable to:
Equity holders
of the parent 73.6 13.5 87.1 54.5 (7.3) 47.2
Non-controlling
interests 0.4 - 0.4 0.8 - 0.8
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
74.0 13.5 87.5 55.3 (7.3) 48.0
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Earnings per
share
Basic 7 102.2p 121.0p 75.9p 65.7p
Diluted 7 101.8p 120.5p 74.8p 64.7p
----------------- ------- --------------- --------------- ----------- --------------- --------------- -----------
Consolidated statement of comprehensive income
For the year ended 31 December 2017
2017 2016
GBPm GBPm
------------------------------------------------- ------ -----
Profit for the period 87.5 48.0
-------------------------------------------------- ------ -----
Other comprehensive income
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation of
foreign operations (27.0) 77.0
Net investment hedge losses (0.7) (3.8)
Cash flow hedge (losses)/gains taken to
equity (3.3) 1.9
Cash flow hedge transfers to income statement 3.4 (1.9)
Items that will not be reclassified subsequently
to profit or loss:
Remeasurements of defined benefit pension
schemes 1.4 (7.4)
Tax on remeasurements of defined benefit
pension schemes (0.3) 1.3
-------------------------------------------------- ------ -----
Other comprehensive (loss)/income for
the period, net of tax (26.5) 67.1
-------------------------------------------------- ------ -----
Total comprehensive income for the period 61.0 115.1
-------------------------------------------------- ------ -----
Attributable to:
Equity holders of the parent 61.0 113.7
Non-controlling interests - 1.4
-------------------------------------------------- ------ -----
61.0 115.1
------------------------------------------------- ------ -----
Consolidated balance sheet
As at 31 December 2017
2017 2016
Note GBPm GBPm
-------------------------------------- ---- ------- -------
Assets
Non-current assets
Intangible assets 170.9 188.0
Property, plant and equipment 399.2 405.6
Deferred tax assets 39.3 21.6
Other assets 27.4 30.2
-------------------------------------- ---- ------- -------
636.8 645.4
Current assets
Inventories 72.6 59.4
Trade and other receivables 589.2 528.5
Current tax assets 18.7 18.2
Cash and cash equivalents 67.7 84.4
-------------------------------------- ---- ------- -------
748.2 690.5
Non-current assets held for sale 9 - 54.0
Total assets 3 1,385.0 1,389.9
-------------------------------------- ---- ------- -------
Liabilities
Current liabilities
Loans and borrowings (48.3) (54.0)
Current tax liabilities (19.1) (16.4)
Trade and other payables (480.5) (435.4)
Provisions (10.3) (9.9)
-------------------------------------- ---- ------- -------
(558.2) (515.7)
-------------------------------------- ---- ------- -------
Non-current liabilities
Loans and borrowings (248.9) (336.0)
Retirement benefit liabilities (29.2) (31.4)
Deferred tax liabilities (45.5) (33.5)
Provisions (13.0) (14.7)
Other liabilities (18.0) (29.0)
-------------------------------------- ---- ------- -------
(354.6) (444.6)
-------------------------------------- ---- ------- -------
Total liabilities 3 (912.8) (960.3)
-------------------------------------- ---- ------- -------
Net assets 3 472.2 429.6
-------------------------------------- ---- ------- -------
Equity
Share capital 8 7.3 7.3
Share premium account 38.1 38.1
Capital redemption reserve 8 7.6 7.6
Translation reserve 32.5 59.8
Other reserve 8 56.9 56.9
Hedging reserve - (0.1)
Retained earnings 326.0 255.8
-------------------------------------- ---- ------- -------
Equity attributable to equity holders
of the parent 468.4 425.4
Non-controlling interests 3.8 4.2
-------------------------------------- ---- ------- -------
Total equity 472.2 429.6
-------------------------------------- ---- ------- -------
Consolidated statement of changes in equity
For the year ended 31 December 2017
Attributable
to equity
holders
Share Capital of Non-
Share premium redemption Translation Other Hedging Retained the controlling Total
capital account reserve reserve reserve reserve earnings parent interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
At 1 January
2016 7.3 38.1 7.6 (12.8) 56.9 (0.1) 233.5 330.5 3.5 334.0
Profit for the
period - - - - - - 47.2 47.2 0.8 48.0
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Other
comprehensive
income
Exchange
differences
on translation
of foreign
operations - - - 76.4 - - - 76.4 0.6 77.0
Net investment
hedge losses - - - (3.8) - - - (3.8) - (3.8)
Cash flow hedge
gains taken to
equity - - - - - 1.9 - 1.9 - 1.9
Cash flow hedge
transfers to
income
statement - - - - - (1.9) - (1.9) - (1.9)
Remeasurements
of defined
benefit
pension
schemes - - - - - - (7.4) (7.4) - (7.4)
Tax on
remeasurements
of defined
benefit
pension
schemes - - - - - - 1.3 1.3 - 1.3
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Other
comprehensive
income/(loss)
for the
period,
net of tax - - - 72.6 - - (6.1) 66.5 0.6 67.1
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Total
comprehensive
income for the
period - - - 72.6 - - 41.1 113.7 1.4 115.1
Dividends - - - - - - (19.8) (19.8) (0.7) (20.5)
Share-based
payments - - - - - - 1.0 1.0 - 1.0
At 31 December
2016 and 1
January
2017 7.3 38.1 7.6 59.8 56.9 (0.1) 255.8 425.4 4.2 429.6
Profit for the
period - - - - - - 87.1 87.1 0.4 87.5
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Other
comprehensive
income
Exchange
differences
on translation
of foreign
operations - - - (26.6) - - - (26.6) (0.4) (27.0)
Net investment
hedge losses - - - (0.7) - - - (0.7) - (0.7)
Cash flow hedge
losses taken
to
equity - - - - - (3.3) - (3.3) - (3.3)
Cash flow hedge
transfers to
income
statement - - - - - 3.4 - 3.4 - 3.4
Remeasurements
of defined
benefit
pension
schemes - - - - - - 1.4 1.4 - 1.4
Tax on
remeasurements
of defined
benefit
pension
schemes - - - - - - (0.3) (0.3) - (0.3)
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Other
comprehensive
(loss)/income
for the
period,
net of tax - - - (27.3) - 0.1 1.1 (26.1) (0.4) (26.5)
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Total
comprehensive
(loss)/income
for the period - - - (27.3) - 0.1 88.2 61.0 - 61.0
Dividends - - - - - - (20.8) (20.8) (0.4) (21.2)
Share-based
payments - - - - - - 2.8 2.8 - 2.8
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
At 31 December
2017 7.3 38.1 7.6 32.5 56.9 - 326.0 468.4 3.8 472.2
--------------- ------- ------- ---------- ----------- ------- ------- -------- ------------ ----------- -------
Consolidated cash flow statement
For the year ended 31 December 2017
2017 2016
Note GBPm GBPm
---------------------------------------------- ---- ------- -------
Cash flows from operating activities
Operating profit before non-underlying
items 108.7 95.3
Depreciation of property, plant and equipment 67.3 62.0
Amortisation of intangible assets 1.2 1.3
(Profit)/loss on sale of property, plant
and equipment (4.0) 2.3
Other non-cash movements 9.5 (5.2)
Foreign exchange losses 0.2 0.3
---------------------------------------------- ---- ------- -------
Operating cash flows before movements
in working capital 182.9 156.0
Increase in inventories (15.7) (3.1)
Increase in trade and other receivables (79.1) (7.4)
Increase/(decrease) in trade and other
payables 53.9 (2.7)
Change in provisions, retirement benefit
and other non-current liabilities (5.9) (7.1)
---------------------------------------------- ---- ------- -------
Cash generated from operations before
non-underlying items 136.1 135.7
Cash inflows from non-underlying items 12.7 9.0
Cash outflows from non-underlying items (2.1) (4.1)
---------------------------------------------- ---- ------- -------
Cash generated from operations 146.7 140.6
Interest paid (12.9) (12.3)
Income tax paid (26.0) (25.3)
---------------------------------------------- ---- ------- -------
Net cash inflow from operating activities 107.8 103.0
---------------------------------------------- ---- ------- -------
Cash flows from investing activities
Interest received 0.7 0.7
Proceeds from sale of property, plant
and equipment 10.5 5.8
Acquisition of subsidiaries, net of cash
acquired (6.5) (14.6)
Acquisition of property, plant and equipment (84.2) (78.2)
Disposal/(acquisition) of non-current
assets held for sale 9 62.0 (62.0)
Acquisition of intangible assets (0.8) (0.6)
---------------------------------------------- ---- ------- -------
Net cash outflow from investing activities (18.3) (148.9)
---------------------------------------------- ---- ------- -------
Cash flows from financing activities
New borrowings 41.6 103.1
Repayment of borrowings (135.7) (4.2)
Cash flows from derivative instruments 0.2 (28.0)
Payment of finance lease liabilities (1.5) (2.9)
Dividends paid (21.2) (20.5)
---------------------------------------------- ---- ------- -------
Net cash (outflow)/inflow from financing
activities (116.6) 47.5
---------------------------------------------- ---- ------- -------
Net (decrease)/increase in cash and cash
equivalents (27.1) 1.6
Cash and cash equivalents at beginning
of period 84.0 62.9
Effect of exchange rate fluctuations (5.6) 19.5
---------------------------------------------- ---- ------- -------
Cash and cash equivalents at end of period 51.3 84.0
---------------------------------------------- ---- ------- -------
1. Basis of preparation
The group's 2017 results have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the EU.
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 2016, except for the adoption of:
- Amendments to IAS 12 - Recognition of Deferred Tax Assets for Unrealised Losses
- Amendments to IAS 7 - Disclosure Initiative
There is no significant impact on the group financial statements
as a result of adopting these amendments.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2017
or 2016 but is derived from the 2017 accounts. Statutory accounts
for 2016 have been delivered to the Registrar of Companies. Those
for 2017, 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.com in March 2018. 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 Period
for period end
------------------- -------------- ------------
2017 2016 2017 2016
------------------- ------ ------ ----- -----
US dollar 1.29 1.36 1.35 1.23
Canadian dollar 1.67 1.80 1.69 1.66
Euro 1.14 1.22 1.13 1.17
Singapore dollar 1.78 1.87 1.80 1.78
Australian dollar 1.68 1.82 1.73 1.71
------------------- ------ ------ ----- -----
3. Segmental analysis
The group is managed as three 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.
2017 2017 2016 2016
Operating Operating
Revenue profit Revenue profit
GBPm GBPm GBPm GBPm
-------------------------------- --------- ----------- --------- -----------
North America 968.7 78.7 952.9 86.9
EMEA(1) 737.2 53.3 552.6 30.2
APAC(2) 364.7 (16.5) 274.5 (18.0)
2,070.6 115.5 1,780.0 99.1
Central items and eliminations - (6.8) - (3.8)
-------------------------------- --------- ----------- --------- -----------
Before non-underlying items 2,070.6 108.7 1,780.0 95.3
Non-underlying items (note 5) - 12.6 - (10.1)
-------------------------------- --------- ----------- --------- -----------
2,070.6 121.3 1,780.0 85.2
-------------------------------- --------- ----------- --------- -----------
2017 2017 2017 2017 2017 2017
Tangible
Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
North America 582.0 (185.3) 396.7 24.0 27.8 263.6
EMEA(1) 408.6 (249.7) 158.9 45.7 23.9 185.3
APAC(2) 261.7 (97.5) 164.2 15.3 16.7 120.7
1,252.3 (532.5) 719.8 85.0 68.4 569.6
Central items and eliminations(3) 132.7 (380.3) (247.6) - 0.1 0.5
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
1,385.0 (912.8) 472.2 85.0 68.5 570.1
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
2016 2016 2016 2016 2016 2016
Tangible
Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
North America 612.1 (206.1) 406.0 33.3 24.7 294.8
EMEA(1) 413.7 (213.3) 200.4 33.0 20.7 174.6
APAC(2) 229.3 (85.2) 144.1 12.3 17.8 123.6
1,255.1 (504.6) 750.5 78.6 63.2 593.0
Central items and eliminations(3) 134.8 (455.7) (320.9) 0.2 0.1 0.6
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
1,389.9 (960.3) 429.6 78.8 63.3 593.6
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
(1 Europe, Middle East and Africa.)
(2 Asia-Pacific.)
(3 Central items include net debt and tax balances.)
Revenue and non-current non-financial assets are analysed by
country below:
Non-current
non-financial
Revenue assets(4)
------------------ -----------------
2017 2016 2017 2016
GBPm GBPm GBPm GBPm
-------------------------------------- -------- -------- -------- -------
United States 886.6 870.3 225.7 245.8
Australia 238.7 171.0 73.7 73.5
Germany 95.9 82.7 32.1 42.7
Canada 80.2 80.1 59.4 69.3
United Kingdom (country of domicile) 61.2 64.7 22.4 23.7
Other 708.0 511.2 181.8 158.9
-------------------------------------- -------- -------- -------- ---------
2,070.6 1,780.0 595.1 613.9
-------------------------------------- -------- -------- -------- ---------
(4 Non-current non-financial assets comprise intangible assets,
property, plant and equipment and other non-current non-financial
assets.)
4. Acquisitions
2017 acquisitions
On 6 March 2017, the group acquired the assets and liabilities
of Geo Instruments, an instrumentation and monitoring company based
in North America, for cash consideration of GBP2.8m ($3.6m). The
purchase price is a premium of GBP0.5m ($0.7m) to the fair value of
the net assets acquired. This goodwill is attributable to the
knowledge and expertise of the assembled workforce, the expectation
of future contracts and customer relationships and the operating
synergies that arise from the group's strengthened market
position.
In the period to 31 December 2017, Geo Instruments contributed
GBP3.4m to revenue and a profit for the period of GBP0.4m. Had the
acquisition taken place on 1 January 2017, total group turnover
would have been GBP2,071.3m and total profit for the period before
non-underlying items would have been GBP74.1m.
The adjustments made in respect of acquisitions in the year to
31 December 2017 are provisional and will be finalised within 12
months of the acquisition date.
2016 acquisitions
Tecnogeo
--------------------------------
Carrying Fair Fair
amount value value
adjustment
GBPm GBPm GBPm
------------------------------- --------- ------------ -------
Net assets acquired
Intangible assets - 0.8 0.8
Property, plant and equipment 6.8 - 6.8
Cash and cash equivalents 1.2 - 1.2
Receivables 4.2 (0.7) 3.5
Other assets 0.3 - 0.3
Loans and borrowings (1.8) - (1.8)
Deferred tax - (0.3) (0.3)
Other liabilities (1.5) (2.2) (3.7)
------------------------------- --------- ------------ -------
9.2 (2.4) 6.8
Goodwill 6.6
------------------------------- --------- ------------ -------
Total consideration 13.4
------------------------------- --------- ------------ -------
Satisfied by
Initial cash consideration 12.8
Contingent consideration 0.6
------------------------------- --------- ------------ -------
13.4
------------------------------- --------- ------------ -------
On 29 February 2016, the group acquired 100% of the share
capital of the Tecnogeo group of companies, a business based in Sao
Paulo, Brazil, for an initial cash consideration of GBP12.8m (BRL
60.8m). The fair value of the intangible assets acquired represents
the fair value of customer contracts at the date of acquisition and
the trade name. 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
operating synergies that arise from the group's strengthened market
position.
On 4 April 2016, the group acquired assets and certain
liabilities of Smithbridge Group Pty Limited, a business based in
Brisbane, Australia, for an initial cash consideration of GBP1.8m
(A$3.4m). The purchase price reflects the fair value of the assets
and liabilities acquired.
5. Non-underlying items
Non-underlying items include items which are exceptional by
their size or are non-trading in nature and comprise the
following:
2017 2016
GBPm GBPm
----------------------------------------------- -------- ---------
Amortisation of acquired intangible assets (9.0) (9.7)
Exceptional restructuring costs - (14.3)
Contingent consideration: additional amounts
provided (1.6) (3.9)
Acquisition costs - (0.7)
Non-underlying items in operating costs (1.6) (18.9)
Exceptional contract dispute 21.0 14.3
Contingent consideration: provision released 2.2 4.2
----------------------------------------------- -------- ---------
Non-underlying items in other operating income 23.2 18.5
Total non-underlying items in operating profit 12.6 (10.1)
Non-underlying finance costs (0.7) (1.1)
----------------------------------------------- -------- ---------
Total non-underlying items before taxation 11.9 (11.2)
----------------------------------------------- -------- ---------
Amortisation of acquired intangible assets primarily relate to
Keller Canada, Austral, Bencor and Franki Africa.
Additional contingent consideration provided relates to the
Geo-Foundations and Ellington Cross acquisitions.
The GBP21.0m exceptional profit relating to the contract dispute
represents the gain on disposal of the freehold of the processing
and warehousing facility at Avonmouth, near Bristol, acquired in
2016 (note 9), rental income less operating costs to the date of
disposal and insurance recoveries in the period. The GBP14.3m
exceptional profit in 2016 relating to the contract dispute is
attributable to insurance proceeds received after an initial
settlement with insurers, rental income less operating costs from
the acquired processing and warehousing facility and the reversal
of impairment of the valuation of the property following an
external valuation at 31 December 2016.
Contingent consideration released relates to adjustments to
estimated amounts payable for the Austral and Ansah
acquisitions.
The GBP14.3m exceptional restructuring charge in 2016 relates to
asset write downs, redundancy costs and other reorganisation
charges in markets experiencing significantly depressed trading
conditions (Singapore, Australia, Canada and South Africa). This
includes the write-down of surplus equipment to current market
values where it is not being relocated to more active parts of the
group.
6. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
2017 2016
GBPm GBPm
------------------------------------------------- ----- -----
Amounts recognised as distributions to equity
holders in the period:
Final dividend for the year ended 31 December
2016 of 19.25p (2015: 18.3p) per share 13.8 13.1
Interim dividend for the year ended 31 December
2017 of 9.7p (2016: 9.25p) per share 7.0 6.7
20.8 19.8
------------------------------------------------- ----- -----
The Board has recommended a final dividend for the year ended 31
December 2017 of GBP17.6m, representing 24.5p (2016: 19.25p) per
share. The proposed dividend is subject to approval by shareholders
at the AGM on 23 May 2018 and has not been included as a liability
in these financial statements.
7. Earnings per share
Basic and diluted earnings per share are calculated as
follows:
Earnings attributable Earnings attributable
to equity to equity
holders of holders of
the parent the parent
before non-underlying
items
---------------------------------- ------------------------- ------------------------
2017 2016 2017 2016
---------------------------------- ------------- ---------- ------------ ----------
Basic and diluted earnings
(GBPm) 73.6 54.5 87.1 47.2
---------------------------------- ------------- ---------- ------------ ----------
Weighted average number of
shares (million)
Basic number of ordinary shares
outstanding 72.0 71.8 72.0 71.8
Effect of dilutive potential
ordinary shares:
Share options and awards 0.3 1.1 0.3 1.1
---------------------------------- ------------- ---------- ------------ ----------
Diluted number of ordinary
shares outstanding 72.3 72.9 72.3 72.9
---------------------------------- ------------- ---------- ------------ ----------
Earnings per share
Basic earnings per share (pence) 102.2 75.9 121.0 65.7
Diluted earnings per share
(pence) 101.8 74.8 120.5 64.7
---------------------------------- ------------- ---------- ------------ ----------
8. Share capital and reserves
2017 2016
GBPm GBPm
------------------------------------------------- ------ ------
Allotted, called up and fully paid
Equity share capital:
73,099,735 ordinary shares of 10p each (2016:
73,099,735) 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 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.
The other reserve is a non-distributable reserve created when
merger relief was applied to an issue of shares under section 612
of the Companies Act 2006 to part fund the acquisition of Keller
Canada. The reserve becomes distributable should Keller Canada be
disposed of.
The total number of shares held in Treasury was 1.1m (2016:
1.1m).
9. Non-current assets held for sale
On 12 May 2016, the group acquired the freehold of a processing
and warehousing facility at Avonmouth, near Bristol, for a
consideration of GBP62m. As set out in the 2015 Annual Report and
Accounts, the group's final liability with regards to the historic
contract dispute involving the property was in part dependent on
the value of the property. In order to maximise this value, the
group decided to acquire the property with a view to marketing it
to third parties.
In accordance with IFRS 5, the property was being held at the
lower of carrying amount and fair value less costs to sell. At 30
June 2016, the fair value of the property was GBP48m, based on an
external valuation. The property was impaired by GBP14m at 30 June
2016, however the group previously held a GBP14m provision for the
diminution in value of the property as part of the overall contract
dispute provision, and therefore no additional impairment charge
was recognised. At 31 December 2016, the fair value of the property
based on an external valuation was GBP54m. The GBP6m reversal of
impairment was recognised in 2016 as exceptional other operating
income (note 5).
On 11 May 2017, the group disposed of the property for a
consideration of GBP62m. The GBP8m gain on disposal has been
recognised as an exceptional item within other operating income in
the period (note 5).
10. Related party transactions
Transactions between the parent, its subsidiaries and joint
operations, which are related parties, have been eliminated on
consolidation.
11. Post balance sheet events
There were no material post balance sheet events between the
balance sheet date and the date of this report.
Adjusted performance measures
The group's results as reported under International Financial
Reporting Standards (IFRS) and presented in the financial
statements (the "statutory results") are significantly impacted by
movements in exchange rates relative to sterling, as well as by
exceptional items and non-trading amounts relating to
acquisitions.
As a result, adjusted performance measures have been used
throughout this report to describe the group's underlying
performance. The Board and Executive Committee use these adjusted
measures to assess the performance of the business because they
consider them more representative of the underlying ongoing trading
result and allow more meaningful comparison to prior year.
Underlying measures
The term "underlying" excludes the impact of items which are
exceptional by their size or are non-trading in nature, including
amortisation of acquired intangible assets and other non-trading
amounts relating to acquisitions (collectively "non-underlying
items"), net of any associated tax. Underlying measures allow
management and investors to compare performance without the
potentially distorting effects of one-off items or non-trading
items. Non-underlying 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.
Constant currency measures
The constant currency basis ("constant currency") adjusts the
comparative to exclude the impact of movements in exchange rates
relative to sterling. This is achieved by retranslating the 2016
results of overseas operations into sterling at the 2017 average
exchange rates.
A reconciliation between the underlying results and the reported
statutory results is shown on the face of the consolidated income
statement, with non-underlying items detailed in note 5. A
reconciliation between the 2016 underlying result to the 2016
constant currency result is shown below and compared to the
underlying 2017 performance:
Revenue by segment
Impact
of exchange Constant Constant
Statutory Statutory movements currency Statutory currency
2017 2016 2016 2016 change change
GBPm GBPm GBPm GBPm % %
--------------- ---------- ---------- ------------- ---------- ---------- ----------
North America 968.7 952.9 53.7 1,006.6 +2% -4%
EMEA 737.2 552.6 34.2 586.8 +33% +26%
APAC 364.7 274.5 18.1 292.6 +33% +25%
--------------- ---------- ---------- ------------- ---------- ---------- ----------
Group 2,070.6 1,780.0 106.0 1,886.0 +16% +10%
--------------- ---------- ---------- ------------- ---------- ---------- ----------
Underlying operating profit by segment
Impact
of exchange Constant Constant
Underlying Underlying movements currency Underlying currency
2017 2016 2016 2016 change change
GBPm GBPm GBPm GBPm % %
------------------- ----------- ----------- ------------- ---------- ----------- ----------
North America 78.7 86.9 4.3 91.2 -9% -14%
EMEA 53.3 30.2 0.5 30.7 +76% +74%
APAC (16.5) (18.0) (1.3) (19.3) +8% +15%
Central items
and eliminations (6.8) (3.8) - (3.8) -79% -79%
------------------- ----------- ----------- ------------- ---------- ----------- ----------
Group 108.7 95.3 3.5 98.8 +14% +10%
------------------- ----------- ----------- ------------- ---------- ----------- ----------
Underlying operating margin
Underlying operating margin is underlying operating profit as a
percentage of revenue.
Other adjusted measures
Where not presented and reconciled on the face of the
consolidated income statement, consolidated balance sheet or
consolidated cash flow statement, the adjusted measures are
reconciled to the IFRS statutory numbers below:
EBITDA
2017 2016
GBPm GBPm
----------------------------------------- ------ -------
Operating profit before non-underlying
items 108.7 95.3
Depreciation of property, plant and
equipment 67.3 62.0
Amortisation of intangible assets 1.2 1.3
----------------------------------------- ------ -------
Underlying EBITDA 177.2 158.6
Non-underlying items in operating
costs (1.6) (18.9)
Non-underlying items in other operating
income 23.2 18.5
----------------------------------------- ------ -------
EBITDA 198.8 158.2
----------------------------------------- ------ -------
Net finance costs
2017 2016
GBPm GBPm
------------------------------------- ------ ------
Finance income (3.8) (1.6)
Finance costs before non-underlying
items 13.8 11.8
------------------------------------- ------ ------
Underlying net finance costs 10.0 10.2
Non-underlying finance costs 0.7 1.1
------------------------------------- ------ ------
Net finance costs 10.7 11.3
------------------------------------- ------ ------
Net capital expenditure
2017 2016
GBPm GBPm
--------------------------------------- ------- ------
Acquisition of property, plant and
equipment 84.2 78.2
Acquisition of intangible assets 0.8 0.6
Proceeds from sale of property, plant
and equipment (10.5) (5.8)
--------------------------------------- ------- ------
Net capital expenditure 74.5 73.0
--------------------------------------- ------- ------
Net debt
2017 2016
GBPm GBPm
---------------------------------- ------- -------
Current loans and borrowings 48.3 54.0
Non-current loans and borrowings 248.9 336.0
Cash and cash equivalents (67.7) (84.4)
---------------------------------- ------- -------
Net debt 229.5 305.6
---------------------------------- ------- -------
Order book
The group's disclosure of its order book is aimed to provide
insight into its backlog of work and future performance. The
group's order book is not a measure of past performance and
therefore cannot be derived from its financial statements. The
group's order book comprises the unexecuted elements of orders on
contracts that have been awarded. Where a contract is subject to
variations, only secured variations are included in the reported
order book.
For further information, please contact:
Keller Group plc www.keller.com
James Hind, Finance Director
Victoria Huxster, Head of
Investor Relations 020 7616 7575
Finsbury
Gordon Simpson
James Kavanagh 020 7251 3801
A presentation for analysts will be held at 9.30am at
The Great Hall, One Moorgate Place - Chartered Accountants
Hall,
1 Moorgate Place, London EC2R 6EA
A live webcast will be available from 9.30am and, on demand,
from 2.00pm at
http://www.investis-live.com/keller/5a61ec8f4799cb1300a0a374/yrhy
Notes to editors:
Keller is the world's largest geotechnical contractor, providing
technically advanced geotechnical solutions to the construction
industry. With annual revenue of around GBP2.0bn, Keller has
approximately 10,000 staff world-wide.
Keller is the clear market leader in the US, Canada, Australia
and South Africa; it has prime positions in most established
European markets and a strong profile in many developing
markets.
Cautionary statements:
This document contains certain 'forward looking statements' with
respect to Keller's financial condition, results of operations and
business and certain of Keller's plans and objectives with respect
to these items.
Forward looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects',
'believes', 'intends', 'plans', 'potential', 'reasonably possible',
'targets', 'goal' or 'estimates'. By their very nature
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the
future.
There are a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by these forward-looking statements. These factors include,
but are not limited to, changes in the economies and markets in
which the group operates; changes in the regulatory and competition
frameworks in which the group operates; the impact of legal or
other proceedings against or which affect the group; and changes in
interest and exchange rates.
All written or verbal forward looking statements, made in this
document or made subsequently, which are attributable to Keller or
any other member of the group or persons acting on their behalf are
expressly qualified in their entirety by the factors referred to
above. Keller does not intend to update these forward looking
statements.
Nothing in this document should be regarded as a profits
forecast.
This document is not an offer to sell, exchange or transfer any
securities of Keller Group plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
LEI number: 549300QO4MBL43UHSN10
Classification: 1.1 (Annual financial and audit reports)
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EALADASEPEFF
(END) Dow Jones Newswires
February 26, 2018 02:00 ET (07:00 GMT)
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