Keller Group plc
15 April 2014
Keller Group plc ("the Company") - Annual Financial Report
In accordance with Listing Rule 9.6.1, copies of the following documents have
been submitted to the National Storage Mechanism:
* Annual Report and Accounts for the year ended 31 December 2013 (the `Annual Report 2013')
* The notice of annual general meeting 2014
* Form of proxy for the annual general meeting
These documents will shortly be available for inspection at the National
Storage Mechanism at www.hemscott.com/nsm.do.
The Annual Report 2013 is also available on the Company's website at
www.keller.co.uk. Hard copies of all the documents have been sent to
shareholders.
The annual general meeting will be held at 11.00am on Thursday 22 May 2014 at
the offices of Investec, 2 Gresham Street, London, EC2V 7QP.
In accordance with DTR 6.3.5, this announcement contains information in the
attached Appendix of the principal risk factors, the directors' responsibility
statement and a note to the accounts on related party transactions. This
information has been extracted in full unedited text from the Annual Report
2013. References to page numbers and notes in the Appendix refer to those in
the Annual Report 2013. A condensed set of financial statements was appended
to Keller Group plc's preliminary results announcement issued on 3 March 2014.
For further information please contact:
Kerry Porritt
Company Secretary
Appendix
Unedited extract from Annual Report 2013
Principal risks and KPIs
Risk Description Controls and KPIs
mitigation
Market cycles Whilst our business • Strategy of Revenue growth
will always be geographic compared with
The Group's broad subject to economic diversification: market growth
base helps to cycles, market risk
mitigate against is reduced by the - operations in over Definition and
the risk of diversity of our 40 countries method of
downturn in our markets, both in calculation
markets terms of geography • Broad customer
and market segment. base. Year-on-year sales
growth (including
It is also partially • Services used acquisitions) in
offset by across all industry local currency
opportunities for segments: compared with
consolidation in our infrastructure, growth in the total
highly fragmented industrial, regional
markets. Typically, commercial, construction
even where we are residential and market.
the clear leader, we environmental.
still have a As our work occurs
relatively small at the start of the
share of the market. construction cycle,
Our ability to our revenue is a
exploit these leading indicator
opportunities for the
through bolt-on construction
acquisitions is market, whereas
reflected in our market comparators
track record of are based on the
growing sales, and lagging indicator
doing `construction put
so profitably, in place'.
across market
cycles.
Tendering and It is in the nature • Risk Management Operating margin
management of our business that Framework defines
of contracts we continually Minimum Standards in Definition and
assess and manage the control of method of
Project risk is technical, and other project risk. calculation
managed operational, risks.
throughout the • Risk-based tender Operating profit
life of a project Some of the controls approval process, before exceptional
from the we have in place, with clear items expressed as
tendering stage particularly at the delegations of a percentage of
to completion crucial stage of authority. revenue.
tendering of
contracts, are set • Independent review
out in the table of tenders.
opposite.
• Training for staff
in the typical risk
issues they may face
when tendering for
jobs, negotiating
contracts and
executing work.
• Legal review of
unusual or onerous
contract terms.
• Project staff
selected on the
basis of their
skills, experience
of a particular type
of project and their
workload.
• Establishment of
`centres of
excellence'.
• Formal handover
meetings at each
stage of the
contract.
• Formal daily
reports generated
and reviewed for
each contract in
progress. Weekly
cost reports
produced for
projects and
reviewed by next
level management.
• Periodic reviews
of poorly performing
contracts to
establish lessons
learned with the
results communicated
to all relevant
staff.
Expansion We recognise the • Moving into new Return on net
risks associated geographic markets operating assets
Our long-term with acquisitions often involves
growth track and expanding into following customers Definition and
record is built new regions and aim with whom we have method of
on a combination to manage these to previously worked. calculation
of organic growth acceptable
and acquisitions levels. • We deploy trusted Operating profit
and experienced before exceptional
These include personnel to items expressed as
various country establish and grow a percentage of
risks, including the our business in new average net
challenges of regions. operating assets
operating within (including goodwill
different business • Robust operating acquired through
and safety cultures. rules, including our acquisitions).
Think Safe framework
When considering an and Code of Conduct, `Net operating
acquisition, we try apply wherever in assets' excludes
to get to know a the world we are net debt, tax
target company, working. balances, deferred
often working in consideration and
joint venture, to • Cross-border net defined benefit
understand the support and sharing pension
operational and of expertise support liabilities.
cultural differences the transfer of
and potential technologies.
synergies.
• Acquisition
targets are usually
well known to
Keller.
• We have thorough
due diligence
processes, mostly
undertaken by our
own management.
• Individual
integration plans
reflect the unique
character of each
acquisition.
Safety Keller is made up of * Our safety Accident Frequency
businesses of framework, Rate (`AFR')
The construction varying sizes `Think Safe',
industry poses operating around the incorporates our Definition and
significant world, often in Safety Goal, method of
safety challenging Principles, calculation
challenges, but environments. Policy and
we do not view Minimum Accident frequency
injuries as being It is essential Standards. per 100,000 man
inevitable that, as we continue hours.
to grow and move * All business
into new regions, we units undertake
can be sure that our an annual safety
approach to safety assessment.
is equally rigorous,
no matter * From these,
whereabouts in the safety
world, or on which improvement
projects, we are plans
working. are developed
and implemented.
* Regular
directors' and
managers' safety
tours reinforce
the importance
of safety.
People The risk of losing, We aim to be a Staff turnover rate
or not being responsible employer
The accumulation able to attract, for whom our Definition and
of knowledge and good people employees are proud method of
experience is is key. to work. calculation
essential to
helping our We pride ourselves • We provide: Managerial,
customers to find in having some of professional and
the best the best - excellent training technical staff
solutions professional and and development leaving in the
skilled people in opportunities; period, other than
the industry, who through redundancy
are motivated by our - experience on or normal
culture and the challenging and retirement,
opportunities for high-profile expressed as a
career growth. projects; percentage of
employees in this
- opportunities for category.
international career
growth; and
- good engagement
and two-way
communications.
• We aim to treat
our employees with
fairness, dignity
and respect.
Responsibility statement of the Directors in respect of the annual report and
the financial statements
We confirm that to the best of our knowledge:
* the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation
as a whole; and
* the Directors' report, including content contained by reference, includes a
fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
The Board confirms that the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the performance, strategy and business model of the
Company.
26 Related party transactions
Transactions between the parent, its subsidiaries and jointly controlled
operations, which are related parties, have been eliminated on consolidation
and are not disclosed in this note.
On 3 April 2013, the Group acquired the remaining 49% minority shareholding of
Keller-Terra S.L. for a cash consideration of £5.6m (€6.7m) from GTCEISU
Construcción, S.A., a connected person of Mr López Jiménez, who retired as a
Director of the Company during 2012.
During the year, the Group undertook various contracts with a total value of £
nil (2012: £3.9m) for GTCEISU Construcción, S.A. An amount of £nil (2012: £
5.6m) is included in trade and other receivables in respect of amounts
outstanding as at 31 December 2013. During the year, the Group made purchases
from GTCEISU Construcción, S.A. with a total value of £nil (2012: £2.0m). An
amount of £nil (2012: £1.0m) is included in trade and other payables in respect
of amounts outstanding as at 31 December 2013.
Related party transactions were made on an arms-length basis and no guarantees
have been given or received.
The remuneration of the Directors, who are the key management personnel and
related parties of the Group, is set out in note 6 (extract below).
2013 2012
£m £m
Short-term employee benefits 3.4 3.4
Post-employment benefits 0.1 0.3
Share-based payments 1.0 0.8
4.5 4.5