TIDMKLR
RNS Number : 0864Z
Keller Group PLC
04 March 2013
For immediate release Monday, 4 March 2013
Keller Group plc
Full Year Results for the year ended 31 December 2012
Keller Group plc ("Keller" or "the Group"), the international
ground engineering specialist, is pleased to announce its full-year
results for the year ended 31 December 2012.
Results summary:
-------------------------------- ------------ ------------
2012 2011
-------------------------------- ------------ ------------
Revenue GBP1,317.5m GBP1,154.3m
-------------------------------- ------------ ------------
EBITDA GBP91.9m GBP71.4m
-------------------------------- ------------ ------------
Operating profit GBP48.3m GBP28.9m
-------------------------------- ------------ ------------
Profit before tax GBP43.5m GBP21.9m
-------------------------------- ------------ ------------
Earnings per share 45.9p 24.8p
-------------------------------- ------------ ------------
Cash generated from operations GBP108.4m GBP54.8m
-------------------------------- ------------ ------------
Total dividend per share 22.8p 22.8p
-------------------------------- ------------ ------------
Highlights include:
-- Record revenue of GBP1,317.5m (2011: GBP1,154.3m), up 14%
-- Profit before tax doubled to GBP43.5m (2011: GBP21.9m)
-- Business improvement initiatives yielding good results
-- Earnings per share of 45.9p (2011: 24.8p)
-- Strong cash generation reduces year-end net debt to GBP51.2m (2011: GBP102.5m), representing
0.6x EBITDA (2011: 1.4x)
-- Total dividend maintained at 22.8p, with dividend cover of 2.0x (2011: 1.1x)
Justin Atkinson, Keller Chief Executive said:
"These results reflect an improved performance in three of our
four divisions, driven by a combination of the self-help measures
taken across the Group and a strong performance by our business in
North America, where market conditions continue to improve. Whilst
our EMEA division faced very challenging markets across most of
Europe, resulting in a first-half loss, its performance improved as
the year progressed and it made a profit for the year as a
whole.
"Overall, we are confident that 2013 will be another year of
progress and that the measures we have taken, and continue to take,
will further improve and develop our business."
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, Rowley Hudson 020 7251 3801
A presentation for analysts will be held at 9.30am at The London
Stock Exchange,
10 Paternoster Square, London, EC4M 7LS
A live audio webcast will be available from 9.30 am and, on
demand, from 2.00 pm at
http://www.keller.co.uk/keller/investor/result-centre/latest-results/
Print resolution images are available for the media to download
from www.vismedia.co.uk
Notes to Editors:
Keller is the world's largest independent ground engineering
specialist, providing technically advanced and cost-effective
foundation solutions to the construction industry. With annual
revenue of GBP1.3bn, Keller has approximately 7,000 staff
world-wide.
Keller is the clear market leader in the US and Australia; it
has prime positions in most established European markets; and a
strong profile in many developing markets.
Chairman's Statement
Results
Group revenue rose by 14% to GBP1,317.5m (2011: GBP1,154.3m) and
the operating profit increased to GBP48.3m, compared with the
previous year's GBP28.9m, resulting in an improved operating margin
of 3.7% (2011: 2.5%). Profit before tax increased to GBP43.5m
(2011: GBP21.9m) and earnings per share were 45.9p (2011:
24.8p).
These results reflect an improved performance in three of our
four divisions, driven by a combination of the self-help measures
taken across the Group and a strong performance by our business in
North America, where market conditions continue to improve. Whilst
our EMEA division faced very challenging markets across most of
Europe, resulting in a first-half loss, its performance improved as
the year progressed and it made a profit for the year as a
whole.
Cash flow and net debt[1]
The Group's continued focus on maximising cash flow yielded an
excellent result, with GBP108.4m of cash generated from operations
(2011: GBP54.8m), representing 118% of EBITDA (2011: 77%).
After net capital expenditure of GBP32.7m (2011: GBP37.4m), net
debt at the end of the year was GBP51.2m (2011: GBP102.5m), which
represents 0.6x EBITDA (2011: 1.4x).
The financial position of the Group remains very strong. There
is comfortable headroom in the Group's main financing facilities,
which run to 2015, and we continue to operate well within all of
our financial covenants.
Dividends
The Board has recommended a final dividend of 15.2p per share
(2011: 15.2p per share), to be paid on 31 May 2013 to shareholders
on the register at 5 April 2013. Together with the interim dividend
paid of 7.6p, this brings the total dividend per share for the year
to 22.8p (2011: 22.8p). Dividend cover for the full year was 2.0x
(2011: 1.1x).
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 and we
remain committed to this strategy.
Throughout 2012, as well as pursuing our long-term strategic
goals, we have concentrated on maximising the value from our
existing operations, by restructuring and cutting costs in our most
challenging markets and driving through the Group-wide business
improvement initiatives on which we embarked last year. We have
targeted large and complex projects and those contracts with a high
element of value added; heightened our focus on risk management;
and improved our use of plant and equipment. These initiatives,
together with others undertaken at a local level, have all
contributed towards the improved results.
Employees
Over the past 12 months, I have been impressed by our employees
and their capacity for continuous improvement. They have also been
highly supportive of our efforts to enhance our safety performance
and I am particularly pleased that we are able to report an
improvement in our accident record. I would like to thank all of
our employees for contributing to this result and I wish them a
safe and successful year in 2013.
Board
During the year, we have continued the process of refreshing the
Board. In May 2012, Pedro López Jiménez stepped down as a
Non-executive Director, having served for more than nine years on
the Board. Paul Withers joined the Board in December and took over
as Senior Independent Director from Gerry Brown. Gerry will be
stepping down at the 2013 AGM and, on behalf of the whole Board, I
thank him for the significant contribution that he has made since
joining Keller in 2001.
Outlook
Looking ahead, we expect to encounter varied economic conditions
across our global construction markets in 2013. Assuming no
deterioration in the wider US fiscal position, we are optimistic
about a continued steady strengthening of the North American
construction markets, building on the recovery in the residential
sector. We anticipate that the significant and ongoing economic
uncertainty in Europe will continue to impede a recovery in its
construction markets in the near term. In general, we expect to
find good opportunities in Australia and Asia, although in some
regions, following a very strong 2012, we may see a period of
consolidation in 2013, before strong growth resumes.
For the Group as a whole, contract awards remain at a healthy
level. Excluding work to be undertaken in more than twelve months'
time, the order book at the end of January 2013 was similar to its
value one year earlier.
Overall, we are confident that 2013 will be another year of
progress and that the measures we have taken, and continue to take,
will further improve and develop our business.
Operating Review
Conditions in our major markets
Taken as a whole, US construction expenditure in 2012 was 9%
ahead of 2011, although there were significant variations between
regions and sectors. The US residential market ended 2012 on a
positive note, with housing starts at a level not seen since June
2008 and a significant strengthening of the Housing Market
Index[2]. Private non-residential construction was up 15%, whereas
publicly-funded construction was down by 3%, marking the third
consecutive year of decline. Within private non-residential
construction, the power and manufacturing segments remained
particularly strong.
In Europe, conditions remained very challenging in most of our
markets, particularly those in Southern Europe. Within the Middle
East, Saudi Arabia remained steady and there were signs of
increased activity in other parts of the region.
Elsewhere, in Australia the 'two-speed' construction market
continued to mirror the underlying economy, offering good
opportunities for projects related to the resources sector, but
weaker demand across the infrastructure, commercial and residential
sectors. Our Asian markets remained strong overall, helped by
several sizeable, government-funded infrastructure projects in
Singapore and Malaysia.
Operations
North America
Results summary:
------------------ ---------- ----------
2012 2011
------------------ ---------- ----------
Revenue GBP581.9m GBP471.1m
------------------ ---------- ----------
Operating profit GBP32.0m GBP12.0m
------------------ ---------- ----------
Operating margin 5.5% 2.5%
------------------ ---------- ----------
Our total revenue from North America was up by 22% in local
currency, well ahead of the growth in the overall market. Although
the trading environment remains competitive in many regions and
sectors, the overall improvement in market conditions, together
with the success of two of our regional strategic initiatives - to
increase our exposure to Canada and the US transmission-line
segment - helped to lift the operating margin to 5.5% from the
previous year's 2.5%.
The full-year operating profit of GBP32.0m (2011: GBP12.0m)
reflects improvements across the board, with all five businesses
well ahead of the previous year.
Throughout the year, our North American business has been
implementing a new enterprise resource planning (ERP)
system which is being progressively rolled-out across this division. The ERP system requires the standardisation of certain procedures and will facilitate further co-operation between our foundation companies in the region.
Hayward Baker
Following the leadership changes last year in Hayward Baker,
management has continued to streamline and refocus the business,
enabling it to make the most of the improving market conditions. In
particular, the company has made good progress in those regions
which can take advantage of strong demand in the energy, health
care and industrial markets.
One of the local strategic initiatives which contributed towards
the improved North American result was the increased penetration of
Canada, which we consider to be a market with good, long-term
potential. Having steadily built up its Canadian business over the
past two years, Hayward Baker completed some sizeable jobs there in
2012, including a soil mixing contract for a tank expansion project
in Alberta.
At the start of 2013, the Group acquired Geo-Foundations
Contractors, Inc. ('Geo-Foundations'), a Toronto-based specialist
geotechnical contractor. Geo-Foundations principally serves eastern
Canada, where it offers design-build solutions across the
construction industry. The business specialises in micro-piling,
ground anchors, and specialty grouting services which, whilst well
established in the US, are still relatively new to the Canadian
market. A combination of increasing market acceptance of these
techniques in Canada, along with the introduction of ground
improvement techniques and assistance from Hayward Baker, is
expected to fuel significant growth over time.
North American Piling Companies
Despite continuing overcapacity in some regions and market
segments, margins in the Group's North American piling companies
have benefited from the refocusing of our business and our emphasis
on growing market segments.
One such segment has been the vibrant transmission-line market.
In 2012 we undertook around $75m (GBP47m) of transmission line
related work, compared with less than $10m (GBP6m) in the previous
year. The largest of these projects was a $41m (GBP25m) contract
for Public Service Electric and Gas in New Jersey, for which we are
installing drilled shafts to support new monopole towers. The
contract is being undertaken jointly by Case and McKinney, who are
now also working together on a smaller transmission-line project
for NStar in Massachusetts. Whilst we expect this market segment to
remain strong for the next few years, the supply base is expanding
and it is therefore unlikely that the volume of our work associated
with transmission-line projects will repeat to the same degree in
2013.
In the latter part of 2012, after a long and deep decline, we
started to see signs of recovery in the Miami construction market,
one of the first regions to go into recession. This will benefit in
particular HJ, whose base business in Miami is also beginning to
recover.
Suncoast
2012 brought a much improved outcome at Suncoast, after a
breakeven result in 2011. Throughout the year, Suncoast steadily
increased its production to take full advantage of the upturn in
residential construction. With the housing market beginning to
recover, the business is now able to reap the rewards of a
significantly lower cost base and improved operational efficiency,
following a number of years of restructuring and downsizing.
Suncoast's revenue was up by 35% compared to the previous year and
the business reported a profit for the first time in five
years.
Europe, Middle East & Africa (EMEA)
Results summary:
------------------ ---------- ----------
2012 2011
------------------ ---------- ----------
Revenue GBP358.6m GBP384.8m
------------------ ---------- ----------
Operating profit GBP2.2m GBP8.4m
------------------ ---------- ----------
Operating margin 0.6% 2.2%
------------------ ---------- ----------
After a loss of GBP2.8m in the first half of the year, the EMEA
division made a sound recovery to end the year in profit. In local
currency, full-year revenue was broadly flat whilst operating
profit was well down.
Europe
In general, conditions in our more mature European markets
remained very challenging, with many public works still on hold
under government austerity programmes and the number of
privately-funded projects constrained by continued economic
uncertainty.
These market conditions were reflected in a very slow start to
the year. Accordingly, across the division, we reduced costs and
streamlined businesses to a size and structure commensurate with
their reduced markets. Proactive co-ordination between companies in
the division led to increased sharing of equipment and movements of
well-trained and experienced staff to cope with the fluctuations of
demand across the region. These and other measures helped to
improve operational efficiency and to return the division to
profit.
The improved second-half performance was also helped by the
contributions from our large infrastructure projects in Poland and
London.
In Poland, we have been working on a GBP30m contract to
construct access ramps and Tunnel Boring Machine ('TBM')
launching/receiving chambers for a new road tunnel under the Dead
Vistula river in Gdańsk. We are constructing diaphragm walls along
the access ramps and TBM chambers and using advanced jet grouting
technology to install large diameter soilcrete columns. Despite the
technical complexity of the project, our work was around 70%
complete by the end of the year and the excavation was prepared in
time for the installation of the TBM.
In London, the works at Victoria Station comprise the
installation of around 2,400 jet grout columns to allow
approximately 400 metres of new tunnels to be excavated to connect
the new and existing ticket halls. The interlocking jet grout
columns are being used to form a two-metre annulus around the line
of the tunnel excavation which will both stabilise the ground and
act as a barrier to water ingress. By the end of the year, around
1,000 grout columns had been installed and our work is set to meet
the targeted completion date in spring 2014.
Our second major London project is at Crossrail, where we are
currently undertaking two contracts with a combined value to Keller
of around GBP30m: the first for compensation grouting works around
Tottenham Court Road and Bond Street underground stations; and the
other to carry out structural monitoring, geotechnical
instrumentation and surveying works, employing the Getec monitoring
system which was originally developed by
Keller in Germany. Our works are expected to continue through to spring 2014.
We continue to look for opportunities in different geographies
and in the second half of 2012 we completed our first job in
Turkey, where we installed bored piles and stone columns for a new
power plant in Erzin. Having established a strong reference
project, we are now exploring opportunities to build on our initial
success in this new market with good long-term potential.
Middle East
Although trading in the Middle East remained relatively subdued,
there were signs of revival in some of our Middle Eastern markets,
with an increasing number of large projects reaching execution.
This, together with the increased marketing focus led by new
management in our Middle East business, has been reflected in a
recent improvement in contract awards and we anticipate having a
busier year in the region in 2013.
Brazil
Our investment in piling equipment in 2012 has enabled us to
expand the range of technologies that we offer to this market, with
the inclusion of precast and driven cast in situ piling. We
completed our first major piling job in the second half of the year
with the support of experienced managers and operators from the UK.
Although the expansion of our product range in the region has not
been without its challenges, the business has got off to a good
start in 2013 and we expect to penetrate this growing market
further this year.
Asia
Results summary:
------------------ ---------- ---------
2012 2011
------------------ ---------- ---------
Revenue GBP118.6m GBP76.7m
------------------ ---------- ---------
Operating profit GBP9.5m GBP6.0m
------------------ ---------- ---------
Operating margin 8.0% 7.8%
------------------ ---------- ---------
Overall, our key markets in Asia remained strong throughout the
year and our companies there performed well.
Asean Region
An excellent result from our Malaysian business was helped by
the contribution from our major design and build contract to
install the foundations for a large iron ore distribution facility
in Lumut, for Vale. The full package included ground improvement,
heavy foundations and foundations-related civil works. Our piling
works are now complete, with earthworks, drainage and stone columns
continuing through to the end of April 2013.
The introduction of piling services in Malaysia was enabled by
the deployment of equipment and key people from other parts of the
Group, most notably from Resource Piling in Singapore, whilst the
Malaysian team gained the requisite knowledge and experience. Since
completing the piling project in Lumut, we have been awarded our
second large piling contract in Malaysia, which is now
underway.
In Singapore we had a good year, helped by a much-improved
result from Resource Piling which benefited from a strengthened
management team, together with the upturn in public housing
construction. Increasingly, our two subsidiaries in Singapore are
working closely to identify opportunities for combining their
products in a single, packaged foundation solution.
The Singapore business has also been instrumental in winning a
significant contract in Hong Kong, the Group's first for many
years. The project involves installing around 200,000 linear metres
of stone columns for the Hong Kong Link Road project.
India
As we reported at the half year, economic growth in India slowed
down considerably in 2012, reaching a recent low of 5.5%. In
addition, the construction market continues to face project
financing challenges due to growing levels of debt and high
interest rates. Accordingly, some large infrastructure projects
have been put on hold and collecting cash on those which do proceed
has required increased focus. Nonetheless, our subsidiary in India
has continued to trade profitably and has remained cash positive in
these difficult trading conditions.
Australia
Results summary:
------------------ ---------- ----------
2012 2011
------------------ ---------- ----------
Revenue GBP258.4m GBP221.7m
------------------ ---------- ----------
Operating profit GBP8.7m GBP6.7m
------------------ ---------- ----------
Operating margin 3.4% 3.0%
------------------ ---------- ----------
The improved Australian result was helped by a return to
profitability at Piling Contractors and the best-ever year at
Waterways.
The Waterways result was boosted by an excellent performance on
the Australia Pacific LNG project, where we were responsible for
the design and construction of the materials offloading facility.
The total value of the contract, undertaken in a 50:50 joint
venture with a local civil construction company, rose significantly
from A$86m (GBP55m) to A$150m (GBP96m) with a number of scope
increases. The team achieved early completion, three months ahead
of the original schedule and completed 380,000 man hours without a
lost-time incident. In addition to our ability to execute large
projects with effective risk management, this successful contract
demonstrates the value of the Waterways acquisition, which is now
well integrated into the Group.
Other parts of Keller Australia faced tougher market conditions,
particularly KGE which suffered from the cancellation of
resource-related contracts valued at A$40m (GBP26m), following a
fall in the price of iron ore. Accordingly, KGE has taken decisive
measures to reduce overheads in order to remain profitable. Iron
ore prices have since largely recovered and the progress of coal-
and LNG-related projects has been maintained.
In November, we successfully completed our test piling programme
for the major Wheatstone on-shore piling project and all major
supply and services contracts have now been awarded. However, full
mobilisation is not now expected before June, due to delays in our
customer's preparatory works in this extremely remote region of
Western Australia.
Business Improvement
This time last year, we outlined a programme of initiatives,
together with some internal changes, which were designed to deliver
improvements to the Group's business and profitability. These were
principally focussed on: increasing our revenue and profit from
large projects; further improvement of the Group's risk management;
and accelerating our global transfer of technologies. We also said
that we would be redoubling our efforts on a number of regional
initiatives which were already in progress, including an increased
sector focus on US transmission lines; and expansion in Brazil,
Canada and India.
We have made good progress in most of these areas, including the
following notable successes:
-- in 2012, we earned more revenue and profit from large projects than ever before;
-- all divisions or regions improved their risk management
diligence and processes, which resulted in fewer poorly-performing
contracts and contributed towards an improvement in the Group's
operating margin;
-- we successfully introduced piling into Brazil and Malaysia,
with support from other parts of the Group;
-- we transferred more plant and equipment between regions,
reducing our capital expenditure requirement;
-- we significantly increased our market share in
transmission-line related work in the US and did so profitably;
and
-- we developed our business in the strong Canadian market, by
organically growing our existing Canadian subsidiary and by the
acquisition, at the start of 2013, of Geo-Foundations.
We will continue to build on these successes in 2013 as part of
our continuous improvement programme.
Financial review
Results
Trading results
The Group's total revenue in 2012 was GBP1,317.5m, an increase
of 14% on 2011. Stripping out the effects of foreign exchange
movements, 2012 revenue was 16% up on 2011, with significant
increases in all regions apart from EMEA.
EBITDA was GBP91.9m, compared to GBP71.4m in 2011 and operating
profit was GBP48.3m, a significant increase on the GBP28.9m in
2011. The Group operating margin increased from 2.5% to 3.7%, in
part reflecting the benefits of the cost reductions and the
business improvement initiatives announced in February 2012. The
2012 results have also benefitted from a good performance on
several large projects.
In North America, which represented 44% of Group revenue,
operating profit increased from GBP12.0m in 2011 to GBP32.0m in
2012. This was largely attributable to the much improved
profitability of the Group's North American foundation contracting
businesses, which are benefitting from an improvement in the US
private non-residential construction sector. In addition, Suncoast,
which broke even in 2011, returned to profitability in 2012 and is
now showing the benefits of many years of operational improvements
as the US residential market continues its steady recovery from
all-time low levels of activity.
In EMEA, many of our European markets remain very challenging.
However, there have been some recent signs of increased activity
levels in the Middle East. Across our EMEA division, we have cut
costs and restructured businesses to a size and structure
commensurate with current market conditions.
Operating profit in Asia has increased from GBP6.0m in 2011 to
GBP9.5m in 2012, helped by an excellent performance on the major
contract for Vale in Malaysia. In Australia, operating profit
increased from GBP6.7m in 2011 to GBP8.7m in 2012. This improved
performance is largely attributable to an excellent performance by
Waterways and Piling Contractors being restored to profitability in
2012.
The Group's trading results are discussed more fully in the
Chairman's statement and the operating review.
Net finance costs
Net finance costs decreased from GBP7.0m in 2011 to GBP4.8m in
2012. This decrease mainly reflects the lower average levels of
debt during 2012, as well as the lower non-cash items required to
be included in net finance costs under IFRS.
Tax
The Group's underlying effective tax rate was 31%, up from 25%
in 2011, primarily as a result of a much larger proportion of the
Group's profit being derived from higher tax countries, notably the
United States.
Earnings and dividends
Earnings per share (EPS) increased to 45.9p (2011: 24.8p). The
Board has recommended a final dividend of 15.2p per share, which
brings the total dividend to be paid out of 2012 profits to 22.8p,
the same as last year. The 2012 dividend is covered 2.0 times by
earnings.
Cash flow
The Group has always placed a high priority on cash generation
and the active management of working capital. In 2012, cash
generated from operations was GBP108.4m, representing 118% of
EBITDA. Year-end working capital was GBP97.6m, GBP22.2m less than
at the end of 2011 despite the higher 2012 revenue. Capital
expenditure totalled GBP33.7m, which compares to depreciation of
GBP42.1m.
Financing
At 31 December 2012, net debt amounted to GBP51.2m (2011:
GBP102.5m). Based on net assets of GBP335.7m, year-end gearing was
15%, down from 31% at the beginning of the year.
The Group's term debt and committed facilities mainly comprise
US$110m of US private placements, US$70m of which is repayable in
October 2014 and US$40m of which is repayable in August 2018, and a
GBP170m multi-currency syndicated revolving credit facility
expiring in April 2015. At the year end, the Group had undrawn
committed and uncommitted borrowing facilities totalling
GBP153.2m.
The most significant covenants in respect of our main borrowing
facilities relate to the ratio of net debt to EBITDA, EBITDA
interest cover and the Group's net worth. The Group is operating
well within its covenant limits.
Capital structure
The Group's capital structure is kept under constant review,
taking account of the need for, availability and cost of various
sources of finance.
Pensions
The Group has defined benefit pension arrangements in the UK,
Germany and Austria. The Group closed its UK defined benefit scheme
for future benefit accrual with effect from 31 March 2006 and
existing active members transferred to a new defined contribution
arrangement. The last actuarial valuation of the UK scheme was as
at 5 April 2011, when the market value of the scheme's assets was
GBP31.8m and the scheme was 82% funded on an ongoing basis.
Following the valuation, the level of contributions remained at
GBP1.5m a year, a level which will be reviewed following the
finalisation of the next triennial actuarial valuation.
The 2012 year-end IAS 19 valuation of the UK scheme showed
assets of GBP34.4m, liabilities of GBP41.1m and a pre-tax deficit
of GBP6.7m.
In Germany and Austria, the defined benefit arrangements only
apply to certain employees who joined the Group prior to 1998.
There are no segregated funds to cover these defined benefit
obligations and the respective liabilities are included on the
Group balance sheet. These totalled GBP11.5m at 31 December
2012.
All other pension arrangements in the Group are of a defined
contribution nature.
Management of financial risks
Currency risk
The Group faces currency risk principally on its net assets,
most of which are in currencies other than sterling. The Group aims
to reduce the impact that retranslation of these assets might have
on the balance sheet by matching the currency of its borrowings,
where possible, with the currency of its assets. The majority of
the Group's borrowings are held in US dollars, euros and Australian
dollars, in order to provide a hedge against these currency net
assets.
The Group manages its currency flows to minimise currency
transaction exchange risk. Forward contracts and other derivative
financial instruments are used to hedge significant individual
transactions. The majority of such currency flows within the Group
relate to repatriation of profits and intra-Group loan repayments.
The Group's foreign exchange cover is executed primarily in the
UK.
The Group does not trade in financial instruments, nor does it
engage in speculative derivative transactions.
Interest rate risk
Interest rate risk is managed by mixing fixed and floating rate
borrowings depending upon the purpose and term of the financing. As
at 31 December 2012, 77% of the Group's third-party borrowings bore
interest at floating rates.
Credit risk
The Group's principal financial assets are trade and other
receivables, bank and cash balances and a limited number of
investments and derivatives held to hedge certain of the Group's
liabilities. These represent the Group's maximum exposure to credit
risk in relation to financial assets.
The Group has stringent procedures to manage counterparty risk
and the assessment of customer credit risk is embedded in the
contract tendering processes. Customer credit risk is mitigated by
the Group's relatively small average contract size, its diversity,
both geographically and in terms of end markets, and by taking out
credit insurance in
many of the countries in which the Group operates. No individual
customer represented more than 5% of revenue in 2012.
The counterparty risk on bank and cash balances is managed by
limiting the aggregate amount of exposure to any one institution by
reference to their credit rating and by regular reviews of these
ratings.
Consolidated income statement
For the year ended 31 December 2012
2012 2011
Note GBPm GBPm
------------------------------ ------- ---------- ----------
Revenue 3 1,317.5 1,154.3
Operating costs (1,269.2) (1,125.4)
------------------------------ ------- ---------- ----------
Operating profit 3 48.3 28.9
Finance income 3.3 2.1
Finance costs (8.1) (9.1)
------------------------------ ------- ---------- ----------
Profit before taxation 43.5 21.9
Taxation (13.5) (5.5)
------------------------------ ----------
Profit for the period 30.0 16.4
------------------------------ ------- ---------- ----------
Attributable to:
Equity holders of the parent 29.5 15.9
Minority interests 0.5 0.5
------------------------------ ------- ---------- ----------
30.0 16.4
------------------------------ ------- ---------- ----------
Earnings per share
Basic earnings per share 4 45.9p 24.8p
Diluted earnings per share 4 45.0p 24.4p
Consolidated statement of comprehensive income
For the year ended 31 December 2012
2012 2011
GBPm GBPm
--------------------------------------------- ------- -------
Profit for the period 30.0 16.4
--------------------------------------------- ------- -------
Other comprehensive income
Exchange differences on translation
of foreign operations (5.9) (6.3)
Net investment hedge (losses)/gains (0.5) 0.3
Cash flow hedge gains taken to equity 4.4 -
Cash flow hedge transfers to income (4.4) -
statement
Actuarial (losses)/gains on defined
benefit pension schemes (2.8) 1.1
Tax on actuarial losses/(gains) on
defined benefit pension schemes 0.7 (0.3)
--------------------------------------------- ------- -------
Other comprehensive income for the
period, net of tax (8.5) (5.2)
--------------------------------------------- ------- -------
Total comprehensive income for the
period 21.5 11.2
--------------------------------------------- ------- -------
Attributable to:
Equity holders of the parent 21.4 10.9
Minority interests 0.1 0.3
--------------------------------------------- ------- -------
21.5 11.2
--------------------------------------------- ------- -------
Consolidated balance sheet
As at 31 December 2012
2012 2011
Note GBPm GBPm
------------------------------------------ ----- -------- --------
Assets
Non-current assets
Intangible assets 97.2 100.6
Property, plant and equipment 248.5 266.1
Deferred tax assets 9.3 6.7
Other assets 14.9 15.8
------------------------------------------ ----- -------- --------
369.9 389.2
------------------------------------------ ----- -------- --------
Current assets
Inventories 41.3 37.3
Trade and other receivables 347.1 334.7
Current tax assets 6.9 10.5
Cash and cash equivalents 57.0 50.0
------------------------------------------ ----- -------- --------
452.3 432.5
------------------------------------------ ----- -------- --------
Total assets 3 822.2 821.7
------------------------------------------ ----- -------- --------
Liabilities
Current liabilities
Loans and borrowings (3.5) (8.4)
Current tax liabilities (11.2) (6.8)
Trade and other payables (290.8) (252.2)
Provisions (8.1) (9.7)
------------------------------------------ ----- -------- --------
(313.6) (277.1)
------------------------------------------ ----- -------- --------
Non-current liabilities
Loans and borrowings (104.7) (144.1)
Retirement benefit liabilities (18.2) (17.7)
Deferred tax liabilities (18.5) (22.5)
Provisions (4.4) (4.0)
Other liabilities (27.1) (29.5)
------------------------------------------ ----- -------- --------
(172.9) (217.8)
------------------------------------------ ----- -------- --------
Total liabilities 3 (486.5) (494.9)
------------------------------------------ ----- -------- --------
Net assets 335.7 326.8
------------------------------------------ ----- -------- --------
Equity
Share capital 6.6 6.6
Share premium account 38.1 38.1
Capital redemption reserve 7.6 7.6
Translation reserve 36.6 42.6
Retained earnings 236.7 222.7
------------------------------------------ ----- -------- --------
Equity attributable to equity holders of
the parent 325.6 317.6
Minority interests 10.1 9.2
------------------------------------------ ----- -------- --------
Total equity 335.7 326.8
------------------------------------------ ----- -------- --------
Consolidated statement of changes in equity
For the year ended 31 December 2012
Share Share Capital Translation Hedging Retained Attributable Minority Total
capital premium redemption reserve reserve earnings to interests equity
account reserve equity
holders
of
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
At 1 January
2011 6.6 38.0 7.6 48.4 - 220.1 320.7 10.1 330.8
Profit for the
period - - - - - 15.9 15.9 0.5 16.4
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income
Exchange
differences
on
translation
of foreign
operations - - - (6.1) - - (6.1) (0.2) (6.3)
Net investment
hedge
gains - - - 0.3 - - 0.3 - 0.3
Actuarial
gains on
defined
benefit
pension
schemes - - - - - 1.1 1.1 - 1.1
Tax on
actuarial
gains
on defined
benefit
pension
schemes - - - - - (0.3) (0.3) - (0.3)
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income for
the period,
net of tax - - - (5.8) - 0.8 (5.0) (0.2) (5.2)
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Total
comprehensive
income for
the period - - - (5.8) - 16.7 10.9 0.3 11.2
Dividends - - - - - (14.7) (14.7) (1.1) (15.8)
Share-based
payments - - - - - 0.6 0.6 - 0.6
Share capital
issued - 0.1 - - - - 0.1 - 0.1
Acquisition of
minority
interest - - - - - - - (0.1) (0.1)
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
At 31 December
2011
and 1 January
2012 6.6 38.1 7.6 42.6 - 222.7 317.6 9.2 326.8
Profit for the
period - - - - - 29.5 29.5 0.5 30.0
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income
Exchange
differences
on
translation
of foreign
operations - - - (5.5) - - (5.5) (0.4) (5.9)
Net investment
hedge
losses - - - (0.5) - - (0.5) - (0.5)
Cash flow
hedge gains
taken to
equity - - - - 4.4 - 4.4 - 4.4
Cash flow
hedge
transfers
to income
statement - - - - (4.4) - (4.4) - (4.4)
Actuarial
losses on
defined
benefit
pension
schemes - - - - - (2.8) (2.8) - (2.8)
Tax on
actuarial
losses
on defined
benefit
pension
schemes - - - - - 0.7 0.7 - 0.7
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Other
comprehensive
income for
the period,
net of tax - - - (6.0) - (2.1) (8.1) (0.4) (8.5)
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Total
comprehensive
income for
the period - - - (6.0) - 27.4 21.4 0.1 21.5
Dividends - - - - - (14.7) (14.7) (0.7) (15.4)
Share-based
payments - - - - - 1.3 1.3 - 1.3
Capital
contribution
from minority
shareholder - - - - - - - 1.7 1.7
Acquisition of
minority
interest - - - - - - - (0.2) (0.2)
At 31 December
2012 6.6 38.1 7.6 36.6 - 236.7 325.6 10.1 335.7
--------------- -------- -------- ----------- ------------ -------- --------- ------------- ---------- -------
Consolidated cash flow statement
For the year ended 31 December 2012
2012 2011
GBPm GBPm
----------------------------------------------------- ------- -------
Cash flows from operating activities
Operating profit 48.3 28.9
Depreciation of property, plant and equipment 42.1 41.0
Amortisation of intangible assets 1.5 1.5
Loss/(profit) on sale of property, plant and
equipment 0.8 (0.3)
Other non-cash movements 2.5 3.2
Foreign exchange losses (1.0) -
----------------------------------------------------- ------- -------
Operating cash flows before movements in working
capital 94.2 74.3
Increase in inventories (5.2) (5.0)
Increase in trade and other receivables (21.3) (5.2)
Increase/(decrease) in trade and other payables 44.2 (5.1)
Change in provisions, retirement benefit and
other non-current liabilities (3.5) (4.2)
----------------------------------------------------- ------- -------
Cash generated from operations 108.4 54.8
Interest paid (4.6) (5.7)
Income tax paid (10.7) (3.8)
----------------------------------------------------- ------- -------
Net cash inflow from operating activities 93.1 45.3
----------------------------------------------------- ------- -------
Cash flows from investing activities
Interest received 0.5 0.6
Proceeds from sale of property, plant and equipment 1.9 1.9
Acquisition of subsidiaries, net of cash acquired - (0.2)
Acquisition of property, plant and equipment (33.7) (37.7)
Acquisition of intangible assets (0.9) (1.6)
Acquisition of other non-current assets - (0.1)
----------------------------------------------------- ------- -------
Net cash outflow from investing activities (32.2) (37.1)
----------------------------------------------------- ------- -------
Cash flows from financing activities
Proceeds from the issue of share capital - 0.1
Capital contribution from minority shareholder 1.7 -
New borrowings 20.5 54.1
Repayment of borrowings (60.0) (40.3)
Payment of finance lease liabilities (0.7) (0.7)
Dividends paid (15.4) (15.8)
----------------------------------------------------- ------- -------
Net cash outflow from financing activities (53.9) (2.6)
----------------------------------------------------- ------- -------
Net increase in cash and cash equivalents 7.0 5.6
Cash and cash equivalents at beginning of period 43.3 39.1
Effect of exchange rate fluctuations 4.5 (1.4)
----------------------------------------------------- ------- -------
Cash and cash equivalents at end of period 54.8 43.3
----------------------------------------------------- ------- -------
1. Basis of preparation
The Group's 2012 results have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the EU.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2012
or 2011 but is derived from the 2012 accounts. Statutory accounts
for 2011 have been delivered to the Registrar of Companies. Those
for 2012, prepared under IFRS as adopted by the EU, will be
delivered to the Registrar of Companies and made available on the
Company's website at www.keller.co.uk in April 2013. The auditors
have reported on those accounts; their reports were (i)
unqualified, (ii) did not include references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their reports and (iii) did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
2. Foreign currencies
The exchange rates used in respect of principal currencies
are:
Average for Period end
period
------------------- -------------- -------------
2012 2011 2012 2011
------------------- ------ ------ ------ -----
US dollar 1.58 1.60 1.62 1.55
Euro 1.23 1.15 1.22 1.19
Singapore dollar 1.98 2.01 1.98 2.00
Australian dollar 1.53 1.55 1.56 1.52
------------------- ------ ------ ------ -----
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.
The Group changed its divisional management structure from 1
January 2012. This has resulted in identifying a new reportable
segment, Asia. This was previously reported within Continental
Europe, Middle East and Asia ('CEMEA'). In addition the UK segment
has been merged with the CEMEA segment, which has now been renamed
as Europe, Middle East and Africa ('EMEA'). The 2011 segmental
analysis was presented under the new management structure in the
2011 annual report and accounts.
2012 2012 2011 2011
Operating Operating
Revenue profit Revenue profit
GBPm GBPm GBPm GBPm
-------------------------------- --------- ----------- --------- -----------
North America 581.9 32.0 471.1 12.0
EMEA (1) 358.6 2.2 384.8 8.4
Asia 118.6 9.5 76.7 6.0
Australia 258.4 8.7 221.7 6.7
-------------------------------- --------- ----------- --------- -----------
1,317.5 52.4 1,154.3 33.1
Central items and eliminations - (4.1) - (4.2)
-------------------------------- --------- ----------- --------- -----------
1,317.5 48.3 1,154.3 28.9
-------------------------------- --------- ----------- --------- -----------
2012 2012 2012 2012
2012 2012
Tangible
Segment Segment Capital Capital Depreciation and intangible
assets liabilities employed additions and amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
North America 307.1 (113.2) 193.9 9.4 13.2 123.5
EMEA (1) 246.3 (119.5) 126.8 14.2 16.4 114.5
Asia 74.2 (22.7) 51.5 3.4 4.5 40.4
Australia 118.6 (54.4) 64.2 7.6 9.2 67.1
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
746.2 (309.8) 436.4 34.6 43.3 345.5
Central items and
eliminations
(2) 76.0 (176.7) (100.7) - 0.3 0.2
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
822.2 (486.5) 335.7 34.6 43.6 345.7
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
2011 2011 2011 2011 2011
2011 Tangible
Segment Segment Capital Capital Depreciation and intangible
assets liabilities employed additions and amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
North America 306.0 (101.5) 204.5 8.9 12.5 133.7
EMEA (1) 252.9 (113.3) 139.6 13.6 17.3 122.0
Asia 66.7 (14.0) 52.7 7.2 4.3 39.6
Australia 124.5 (41.0) 83.5 9.9 8.2 71.1
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
750.1 (269.8) 480.3 39.6 42.3 366.4
Central items and
eliminations
(2) 71.6 (225.1) (153.5) (0.3) 0.2 0.3
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
821.7 (494.9) 326.8 39.3 42.5 366.7
----------------------------- --------- ------------- ---------- ----------- ------------------ ----------------
(1 Europe, Middle East and Africa.)
(2 Central items include net debt and tax balances.)
4. Earnings per share
Basic and diluted earnings per share are calculated as
follows:
2012 2012 2011 2011
Basic Diluted Basic Diluted
GBPm GBPm GBPm GBPm
--------------------------------------------------- ----------- ----------- ----------- -----------
Earnings (after tax and minority interests),
being net profits attributable to equity holders
of the parent 29.5 29.5 15.9 15.9
No. No. No. No.
of shares of shares of shares of shares
Million Million Million Million
Weighted average of ordinary shares in issue
during the year 64.3 64.3 64.3 64.3
Add: weighted average of shares under option
during the year - 1.2 - 1.0
Adjusted weighted average of ordinary shares
in issue 64.3 65.5 64.3 65.3
--------------------------------------------------- ----------- ----------- ----------- -----------
Pence Pence Pence Pence
--------------------------------------------------- ----------- ----------- ----------- -----------
Earnings per share 45.9p 45.0p 24.8p 24.4p
--------------------------------------------------- ----------- ----------- ----------- -----------
5. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
2012 2011
GBPm GBPm
---------------------------------------------------------------- ----- -----
Amounts recognised as distributions to equity holders in
the period:
Final dividend for the year ended 31 December 2011 of 15.2p
(2010: 15.2p) per share 9.8 9.8
Interim dividend for the year ended 31 December 2012 of
7.6p (2011: 7.6p) per share 4.9 4.9
14.7 14.7
---------------------------------------------------------------- ----- -----
The Board have recommended a final dividend for the year ended
31 December 2012 of GBP9.8m, representing 15.2p (2011: 15.2p) per
share. The proposed dividend is subject to approval by shareholders
at the AGM and has not been included as a liability in these
financial statements.
6. Capital and reserves
The capital redemption reserve is a non-distributable reserve
created when the Company's shares were redeemed or purchased other
than from the proceeds of a fresh issue of shares.
The total number of shares held in Treasury was 2.2m (2011:
2.2m). All shares issued related to share options exercised.
7. Related party transactions
Transactions between the parent, jointly controlled operations
and its subsidiaries, which are related parties, have been
eliminated on consolidation and are not disclosed in this note.
During the year the Group undertook various contracts with a
total value of GBP3.9m (2011: GBP2.3m) for GTCEISU Construcción,
S.A., a connected person of Mr López Jiménez, who retired as a
Director of the Company during the year. An amount of GBP5.6m
(2011: GBP1.8m) is included in trade and other receivables in
respect of amounts outstanding as at 31 December 2012.
During the year the Group made purchases from GTCEISU
Construcción, S.A. with a total value of GBP2.0m (2011: GBP3.5m).
An amount of GBP1.0m (2011: GBP1.0m) is included in trade and other
payables in respect of amounts outstanding as at 31 December
2012.
Related party transactions were made on an arms-length basis.
All amounts outstanding from related parties are unsecured and will
be settled in cash. No guarantees have been given or received. No
provisions have been made for doubtful debts in respect of the
amounts owed by related parties.
The remuneration of the Directors, who are the key management
personnel and related parties of the Group, is set out below in
aggregate for each of the relevant categories specified in IAS 24 -
Related Party Disclosures.
2012 2011
GBPm GBPm
------------------------------ ----- -----
Short-term employee benefits 3.4 2.1
Post-employment benefits 0.3 0.2
------------------------------ ----- -----
3.7 2.3
------------------------------ ----- -----
8. Post balance sheet events
On 2 January 2013, the Group acquired Geo-Foundations
Contractors Inc ('Geo-Foundations'), a specialist geotechnical
contractor based in Toronto, Canada, for a cash consideration of
GBP5.7m. For the year ended 31 December 2012, Geo-Foundations
generated revenues of GBP12.4m.
[1] Net debt represents total loans and borrowings less cash and
short-term deposits.
[2] The Housing Market Index compiled by the National
Association of Home Builders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SSAFWFFDSELD
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