TIDMKLR
RNS Number : 3500Q
Keller Group PLC
29 February 2016
For immediate release Monday, 29 February 2016
Keller Group plc
Results for the year ended 31 December 2015
Keller Group plc ("Keller" or "the Group"), the international
ground engineering specialist, is pleased to announce its results
for the year ended 31 December 2015.
Results summary:
----------------------------------- ------------ ------------ --------- ------------------
2015 2014 % change Constant currency
% change
----------------------------------- ------------ ------------ --------- ------------------
Revenue GBP1,562.4m GBP1,599.7m (2)% (2)%
----------------------------------- ------------ ------------ --------- ------------------
EBITDA(1) GBP155.5m GBP141.9m 10% 8%
----------------------------------- ------------ ------------ --------- ------------------
Operating profit(1) GBP103.4m GBP92.0m 12% 8%
----------------------------------- ------------ ------------ --------- ------------------
Profit before tax(1) GBP95.7m GBP85.1m 12% 8%
----------------------------------- ------------ ------------ --------- ------------------
Earnings per share(1) 86.4p 75.3p 15% 10%
----------------------------------- ------------ ------------ --------- ------------------
Cash generated from operations(2) GBP142.3m GBP165.4m (14)% (15)%
----------------------------------- ------------ ------------ --------- ------------------
Total dividend per share 27.1p 25.2p 7.5% n/a
----------------------------------- ------------ ------------ --------- ------------------
Highlights include:
-- Revenue of GBP1,562.4m (2014: GBP1,599.7m)
-- Operating profit(1) increased by 12% to GBP103.4m
-- Operating margin(1) raised to 6.6% (2014: 5.8%)
-- Return on average capital employed(1) 20.5% (2014: 18.3%)
-- Earnings per share(1) of 86.4p (2014: 75.3p)
-- Total dividend per share of 27.1p (2014: 25.2p), an increase of 7.5%
-- Order book up 15%, with increases in all Divisions
Alain Michaelis, Keller Chief Executive said:
"The Group has performed well in 2015. We have been pleased to
record another year of profit growth despite sales being lower as a
result of less revenue from large projects. At the end of January,
the Group order book of work to be undertaken over the next twelve
months, including that of 2015 acquisitions, was 15% higher than at
the same time last year, with increases in all Divisions.
Whilst conditions in our markets are varied, the ongoing
strength in the US, our largest market, continuing improvements in
underlying operating performance, and our strong order book mean
that the Group is set for another year of progress in 2016.
Overall, 2016 results are expected to be in line with the
Board's expectations."
(1) before pre-tax exceptional items of GBP39.4m (2014:
GBP56.9m). GBP31.2m of this relates to a partial impairment of the
Keller Canada goodwill balance. The balance relates primarily to
the amortisation of acquired intangible assets.
(2) before GBP27.5m cash outflow in 2015 relating to the 2014
exceptional contract provision.
For further information, please contact:
Keller Group plc www.keller.co.uk
James Hind, Finance Director 020 7616 7575
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 webcast will be available from 9.30am and, on demand,
from 2.00pm at
http://www.investis-live.com/keller/56b865224731d00800e2b7c6/pr15
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 GBP1.6bn, Keller has approximately 10,000 staff
world-wide.
Keller is the clear market leader in North America, Australia
and Southern Africa; it has prime positions in most established
European markets; and a strong profile in many developing
markets.
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).
Chairman's statement
Results([1])
I am pleased to report another year of good progress in 2015.
Whilst Group revenue fell by 2% to GBP1,562.4m (2014: GBP1,599.7m),
primarily due to the completion of the Group's largest ever
contract, Wheatstone in Australia, towards the end of 2014,
operating profit increased by 12% to GBP103.4m (2014: GBP92.0m),
and profit before tax increased to GBP95.7m, up 12% on the previous
year's GBP85.1m. Earnings per share were 86.4p (2014: 75.3p).
The Group's operating margin improved to 6.6% (2014: 5.8%),
achieving our through-the-cycle target of 6.5%. Return on average
capital employed increased from 18.3% to 20.5%. The margin uplift
reflects a combination of improving conditions in certain markets,
most notably the US from where Keller derives almost 50% of its
revenue, further success in our drive for improvements in all
aspects of the business and some good final project
settlements.
Cash generated from operations(2) was GBP142.3m, which
represents 92% of EBITDA. The Group remains focused on improving
working capital ratios across the business and ensuring profits
turn into cash.
Year-end net debt was GBP183.0m (2014: GBP102.2m), representing
1.2x EBITDA. This increase reflects GBP52.5m spent on acquisitions
during the year and a GBP27.5m cash outflow relating to the
exceptional contract provision recognised in 2014. In addition, net
capital expenditure of GBP69.9m was up on last year's GBP61.0m and
GBP17.8m in excess of depreciation and amortisation. This increase
in capital expenditure results from the Group's ongoing investment
in higher growth markets.
The financial position of the Group remains very strong. There
is comfortable headroom in the Group's main financing facilities
and we continue to operate well within all of our financial
covenants.
Exceptional items
The 2015 result includes an exceptional non-cash charge of
GBP31.2m relating to an impairment of the goodwill arising on the
2013 acquisition of Keller Canada. After taking account of tax and
exceptional items, the Group's post-tax result for the year was a
profit of GBP26.3m (2014: loss of GBP1.2m).
Dividends
As a result of these improved results, the Board's confidence in
the business going forward and its commitment to a progressive
dividend policy, the Board has decided to recommend a final
dividend of 18.3p per share (2014: 16.8p per share), to be paid on
10 June 2016 to shareholders on the register at 20 May 2016.
Together with the interim dividend paid of 8.8p, this brings the
total dividend per share for the year to 27.1p (2014: 25.2p), an
increase of 7.5% for the year. Dividend cover, before exceptional
items, for the full year was 3.2x (2014: 3.0x).
Board
On 26 September 2014, we announced that Justin Atkinson had
decided to retire as Chief Executive. Justin retired on 14 May 2015
and was succeeded by Alain Michaelis.
With a new Chief Executive now in place, I have decided that
2016 is the right time for me to retire as Chairman of the Board of
Keller Group plc.
I was appointed to the Board as a non-executive director in July
2007 and appointed Chairman of the Board in July 2009. I have led
Keller through some challenging times since my appointment and am
pleased to be leaving at a time when the Group is positioned for
solid growth under a new executive leadership team.
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
Paul Withers, Senior Independent Director, is leading the
selection process for the new Chairman which is underway and making
good progress. We will make an announcement on my successor in due
course.
Employees
Over 10,000 employees have contributed to the strong performance
of the Group during 2015. On behalf of the directors, I would like
to thank them for their hard work and efforts. The Board believes
our people are a key component of our success and remains focused
on providing leadership and oversight to engender the strength of
the Keller culture, creating an environment in which our employees
can thrive.
Outlook
The 2015 results demonstrate the continued strength of the
Group's business. I am confident that the measures currently being
implemented to improve operating performance, together with the
organisational changes made under the new management team, will
build on this strength.
The Group has performed well in 2015. We have been pleased to
record another year of profit growth despite sales being lower as a
result of less revenue from large projects. At the end of January,
the Group order book of work to be undertaken over the next twelve
months, including that of acquisitions, was 15% higher than at the
same time last year, with increases in all Divisions.
Whilst conditions in our markets are varied, the ongoing
strength in the US, our largest market, continuing improvements in
underlying operating performance, and our strong order book mean
that the Group is set for another year of progress in 2016.
Chief Executive Officer's review
As Chief Executive for eight months of 2015, I'm pleased to
report a year of good progress for Keller. I also wish to thank my
predecessor, Justin Atkinson, for his leadership in shaping much of
the results we are able to report.
Financial performance in the year has been good, but I have been
similarly encouraged by progress in other areas reflecting the
improving health of the company on a number of fronts.
We executed an impressive array of projects around the world for
our customers and can point to improving customer focus and
operational discipline.
We have continued to evolve the organisation, adding some
significant talent to the Group and strengthening our leadership
team.
We have also taken some good strategic steps, notably with two
important acquisitions, Bencor in the US and Austral in
Australia.
With regard to safety we can report mixed news - we have
continued to improve our safety performance around the world and
our accident frequency rate has been cut by over two thirds in
three years, which is excellent. However, this was sadly offset by
two fatalities in Malaysia due to a sinkhole accident in February
2015.
We remain in an attractive market and have many industry leading
advantages. We also have a very healthy list of opportunities to
enhance the success of the Group. We are taking a significant step
forward in connecting the company more deliberately and instilling
a stronger common ethos and operating model. I am confident this
will bring better knowledge sharing and higher performance for our
customers, employees and shareholders.
Our Strategy
Growth
We will continue to grow. We estimate the global ground
engineering market to be worth US$50bn, so our global market share
is 5%. Even if we consider our addressable market share, this
figure only rises to 10%. This is a fragmented industry which we
believe will continue to consolidate. As the leading independent
player and with a strong balance sheet, Keller is best placed to
gain market share both organically and through further
acquisitions.
Strong, customer focused businesses
To ensure we build strong, local relationships and stay
responsive and competitive in local markets, we are organised by
business unit. These are fully capable Profit and Loss units with
distinct market strategies and full operational capabilities.
Clearly the health of the Group as a whole relies on these business
units continuing to evolve and strengthen. We ensure this through a
robust management framework, functional expertise and Group-wide
benchmarking. Typical revenue for a business unit is GBP40m to
GBP100m and we currently have 22 around the world.
Leveraging scale and expertise
We also aim to be stronger than the sum of the individual
business units by sensibly leveraging the scale of our Group.
Keller's brand and reputation is strong across the globe and
customers are attracted to the depth of knowledge, professionalism
and financial security we offer. Internally, where we find
"economies of scale" or "economies of skill", we leverage the
opportunity across multiple business units. Good examples are
shared back office functions or a common legal team across a
Division. We also believe we have good opportunities to purchase
direct and indirect material across multiple business units.
Engineering and Operations
Engineering and Operations are the core of Keller. We are very
active in design of solutions with our customers (for 45% of our
revenue) where we are able to reduce content and cost of the
project. This is a clear differentiator and we aim to nurture this
capability.
In areas of construct only, operational efficiency is key and we
have a number of business units who perform at excellent levels.
Good market share is important so that efficiencies, and therefore
higher margins, can be maintained. We can share information and
improve productivity further. Lean techniques from other industries
are applicable to Keller given the repetitive nature of much of our
operations.
We have set up formal Global Product Teams in 2015 to better
share and leverage knowledge on specific products e.g. Grouting or
Bored Piling. We are confident that these will be a strong driver
of improvement.
We continue to invest in new facilities and equipment. In
Renchen, where Keller in Germany started 155 years ago, we have
added a new manufacturing hall to enable us to raise output and
build the vibro and grouting machines of the future. We also made
significant capital investments well above depreciation rates in
2015.
People
I would like to echo the Chairman's thanks to the people of
Keller. I have been very impressed by the level of loyalty and
expertise around the Group. Although all companies will say people
are their foundation, this is doubly important to Keller given the
high level of specific ground engineering expertise required,
coupled with a very fragmented geographic and project structure. We
rely on our project teams to perform far from their base. Therefore
skills and training, supported by practical procedures and
technological support, are vital and we will continue to invest in
this domain.
We also made changes at the Executive Committee level in 2015.
We hired three new executives - Thorsten Holl - President EMEA,
Serge Zimmerlin - Human Resources Director and Joe Hubback -
Strategy Director. This is a significant influx of talent to the
Group. We also announced that Venu Raju would succeed Wolfgang
Sondermann, who is retiring after a distinguished Keller career, as
Engineering and Operations Director in the fourth quarter of
2016.
We combined two divisions to form Asia Pacific (APAC) under the
leadership of Mark Kliner. This has a number of natural advantages
- scale effects, sharing relative strengths on products, reducing
costs and an increased ability to grow in Asia. The integration is
progressing well.
Keller is well placed, and I am confident this strategy will
fulfil our goal of being the best geotechnical solutions company in
the world.
Operating review
Conditions in our major markets
In the US, expenditure on construction increased significantly
for the fourth consecutive year, with good growth in most segments
of the market. Private non-residential construction grew by 12%,
whilst in the residential market housing starts were up 11% year on
year, with strong growth in both single-family and multi-family
homes. Growth in public expenditure on construction continued, up
6% on 2014.
In Canada, construction activity in the resources markets
remains very subdued although demand in the commercial and
infrastructure segments fared somewhat better.
Conditions in our European markets as a whole remain mixed, with
Southern Europe, in particular, remaining challenging. There are
some positive signs in the central European markets of Germany,
Poland and Austria, as well as in the UK.
Elsewhere, there are good opportunities in the Middle East where
our construction markets have been relatively unaffected by the low
oil price. The construction market in South Africa is slowing and
whilst there are some exciting opportunities elsewhere in Africa, a
number are in the oil and gas sector and their timing is therefore
uncertain. Globally, Keller's direct exposure to oil and gas
projects was 6% of revenue in 2015.
Construction expenditure in the Group's Asian markets remains
varied. In India we are continuing to see signs of increasing
business confidence, but the Singapore and Malaysian markets are
relatively quiet.
In Australia, construction expenditure across most segments has
been subdued for some time and is showing few signs of improving.
An exception is the near-shore marine segment where there remain a
number of projects to upgrade or expand ports and harbours.
Operations
North America
Results summary*:
------------------- ---------- ----------
2015 2014
------------------- ---------- ----------
Revenue GBP851.2m GBP775.6m
------------------- ---------- ----------
Operating profit GBP76.4m GBP59.9m
------------------- ---------- ----------
Operating margin 9.0% 7.7%
------------------- ---------- ----------
* before exceptional items
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
In North America our total revenue increased by 10%. Adjusting
for acquisitions and translation differences, like-for-like revenue
was up 2%. The full year operating profit of GBP76.4m (2014:
GBP59.9m) reflects a much improved result from our US businesses,
partly offset by lower profits in Canada.
US
Our US business had a very strong second half, building on the
good progress made in the first half as construction activity
continues to improve across the country.
Our largest North American business, Hayward Baker, had another
good year in 2015. The business improved its results in the year,
despite having fewer major projects, proving the strength of its
business model of performing a wide range of small to medium sized
contracts across a broad range of products and geographies.
Our US piling companies performed very well, particularly Case
and HJ Foundation which had record years on the back of strong
regional markets and an excellent performance on a number of large
projects. Highlights for Case included major projects working on
the installation of catenary poles on rail lines and at a
hydroelectric plant at Red Rock Dam in Iowa. HJ Foundation
benefitted from buoyant conditions in its domestic south Florida
market, successfully completing the foundations for a number of
landmark projects in Miami, often working with other Keller
companies to provide multi-product solutions.
Bencor, the diaphragm wall company acquired in August, has been
successfully integrated into the Group. Work on its US$135m project
to repair and upgrade the East Branch Dam in Pennsylvania is
progressing to plan.
Suncoast, the Group's post-tension business which mainly serves
the residential construction market, recorded a strong performance,
taking full advantage of the increase in housing starts in the
year.
Canada
Keller Canada has struggled in very difficult market conditions
but managed to record a small profit helped by further reductions
in overhead. Despite much reduced revenue, gross margins held up
well and the business successfully performed the only major piling
project in the year in the Alberta oil sands. On a positive note,
we have just been awarded a C$43m multi-product, technically
demanding project in downtown Toronto in connection with the
expansion of the city's metro system.
Europe, Middle East & Africa (EMEA)
Results summary*:
------------------- ---------- ----------
2015 2014
------------------- ---------- ----------
Revenue GBP441.5m GBP451.5m
------------------- ---------- ----------
Operating profit GBP21.3m GBP12.9m
------------------- ---------- ----------
Operating margin 4.8% 2.9%
------------------- ---------- ----------
* before exceptional items
In sterling terms, revenue in EMEA as a whole decreased by 2% in
2015. On a constant currency basis however revenue was 5% up on
2014. Operating profit grew significantly and the operating margin
increased by nearly 2% to 4.8%, the highest level for six years,
reflecting the benefit of continuing business improvement
initiatives and a good performance on our major contract in the
Caspian region.
Europe
Despite the mixed market conditions in Europe, our businesses
improved their results through a focus on cost control, risk
management and careful contract selection.
Our businesses in central Europe underpinned this improvement.
Keller Poland benefitted from the infrastructure investment in the
country and was recently awarded a EUR17m ground improvement
contract in connection with the upgrade of the S7 motorway in
northern Poland. Germany once again reported an excellent result
and the Group's Austrian business performed well in a competitive
market. The business is making good progress on the EUR31m St
Kanzian contract, the major grouting project on the Koralm railway
line between Graz and Klagenfurt.
The UK business also had a better year in 2015, working on a
wide variety of commercial and infrastructure projects. Much effort
is currently being devoted to ensure Keller secures significant
work on the major infrastructure projects scheduled for the next
few years in the UK.
Conditions in our larger markets in Southern Europe remain very
challenging. The French construction market remains subdued whilst
volumes in Spain are still at very low levels.
The European business has continued to move people and equipment
around the region to those areas where there is more work and to
support major projects elsewhere in the world. A good example of
this was in reallocating resources from Eastern Europe to the
Caspian region to undertake the major project in that area.
Middle East and Africa
Competition in the Middle East remains tough but the Group
increased its profit from the region. This performance was aided by
a good result in Saudi Arabia and a number of contract wins in
Qatar where, within two years of starting a business, we have
already built a reputation for reliability and quality.
Franki Africa had a good year, significantly increasing both
revenue and profit on the back of a strong performance in South
Africa and the successful completion of Ada Phase 2, a major jetty
project off the coast of Ghana.
Asia
Results summary:
------------------ ---------- ----------
2015 2014
------------------ ---------- ----------
Revenue GBP108.2m GBP111.3m
------------------ ---------- ----------
Operating profit GBP4.5m GBP8.3m
------------------ ---------- ----------
Operating margin 4.2% 7.5%
------------------ ---------- ----------
After a very disappointing first half, both revenue and profit
picked up significantly in Asia in the second half of the year. For
the year as a whole, revenue was broadly flat but profit was down
significantly, reflecting the break-even performance in the first
half. The operating margin was 4.2%, down from 7.5%.
ASEAN
Despite a much improved second half, Keller's ASEAN businesses
as a whole had a disappointing year, with revenue broadly flat and
profit much reduced.
In Singapore, the market was quiet with no growth in commercial
construction and a virtual stop in projects for the oil and gas
industry. In addition, we suffered from significant delays on our
major vibro-compaction contract at Changi airport for reasons
beyond the Group's control.
The Malaysian construction market slowed significantly in the
year as a result of the fall in the oil price. This slowdown,
combined with a delay on one of our larger projects, meant that our
traditional Malaysian business had a disappointing 2015.
Encouragingly, however, Ansah, the small driven piling business
acquired in 2014, far exceeded our expectations winning some
substantial work on the RAPID petrochemical complex being
constructed by Petronas in south eastern Malaysia. In total,
Keller's work on RAPID will total nearly US$50m.
Towards the end of 2015, we won our first major ground
improvement project in Indonesia. This is a US$25m contract to
provide vibro-compaction works at Pluit City, a newly created group
of islands near Jakarta.
India
Keller India performed well in 2015, helped by an improving
construction market. The business has entered the near-shore marine
construction market, leveraging off existing Keller expertise in
Australia.
Australia
Results summary*:
------------------- ---------- ----------
2015 2014
------------------- ---------- ----------
Revenue GBP161.5m GBP261.3m
------------------- ---------- ----------
Operating profit GBP7.2m GBP15.7m
------------------- ---------- ----------
Operating margin 4.5% 6.0%
------------------- ---------- ----------
* before exceptional items
Australian dollar revenue decreased by around 30% and operating
profit by nearly 50%, despite a good final settlement on the
Wheatstone contract. This reflects a very difficult market for our
traditional foundation businesses and having no replacement
contract of near equivalent size for Wheatstone. The operating
margin also declined following the conclusion of that project.
In response to the difficult market conditions, we announced in
November a merger of the Group's three piling businesses into one,
to be branded Keller Foundations. This merger is proceeding to plan
and has been well received by both customers and employees. As a
result of this and other cost saving measures implemented during
the year, we have reduced our Australian overheads by A$7m on an
annualised basis.
In contrast to the construction market as a whole, the
near-shore marine segment has remained robust and our businesses
focusing on this segment performed well. Waterway had an excellent
year and Austral, which was acquired in July 2015, has had an
encouraging start as part of Keller.
In the last two months, Keller Australia has won two large
projects; the construction of Mayfield No7 Wharf (A$43m) in
Newcastle, New South Wales and the foundations for the next phase
of a major commercial development in Sydney (A$37m). As a result of
these, other contract awards and the acquisition of Austral, the
Australian order book is now 20% higher than this time last
year.
Organisational changes
With effect from 1 January 2016, the Asia and Australia
divisions were merged to create a new Asia-Pacific ("APAC")
division, under one leadership team, headquartered in Singapore.
The new division provides much needed resource and capability to
ensure we take advantage of the opportunities within the fast
growing Asia area and a number of scale efficiencies. The new
division makes up around 20% of the Group's revenue (North America
being over 50% and EMEA around 30%) providing a better balanced
portfolio. Going forward, we will report the Group's results in
three geographic divisions; North America, EMEA (Europe, Middle
East and Africa) and APAC.
Financial review
Results
Trading results(1)
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
Group revenue for the year was GBP1,562.4, down 2% on 2014 and
down 4% after stripping out the effects of acquisitions and foreign
exchange movements. This decrease was entirely due to Australia,
where revenue fell by almost GBP100m in the year as a result of the
completion of the Wheatstone contract, the Group's largest ever
project, and a continuing decline in the Australian construction
market. On a constant currency basis, the Group's other three
divisions all reported increases in revenue.
EBITDA was GBP155.5m, compared to GBP141.9m in 2014, and
operating profit was GBP103.4m, an increase of 12% on the GBP92.0m
generated in 2014. The Group operating margin increased from 5.8%
to 6.6%. This increase is due to a combination of operational
improvements, some good final project settlements and improving
market conditions in some countries, most notably the US from where
Keller derives almost 50% of its revenue.
In North America as a whole, which represented 54% of Group
revenue, operating profit increased by 28% from GBP59.9m in 2014 to
GBP76.4m in 2015. In constant currency, revenue was up 3% and
operating profit increased by 19%, reflecting an improved
performance across virtually all the Group's US businesses, in part
due to the continuing steady improvement in the US construction
market. Our business in Canada continues to experience very
challenging market conditions, but still made a small profit in the
year.
In EMEA, conditions in our key markets remained mixed, but
across the region as a whole there were signs of improvement,
particularly in Northern Europe and the Middle East. While reported
revenue decreased slightly, it was up 5% on a constant currency
basis and operating profit increased from GBP12.9m to GBP21.3m.
This improvement in profitability was mainly due to excellent
performances from our businesses in Central and Eastern Europe,
good progress on the major project in the Caspian region and a
strong result from Franki Africa.
Revenue in Asia was broadly flat and operating profit decreased
from GBP8.3m in 2014 to GBP4.5m in 2015. This reduction was almost
wholly in the first half of the year due to delays in the timing of
some large projects and challenging market conditions in
Malaysia.
In Australia, revenue was down by nearly 40% and around 30% on a
constant currency basis. Operating profit was GBP7.2m, down from
GBP15.7m in 2014. This reflects the substantially reduced
contribution from Wheatstone and the very difficult market
conditions faced by our foundation businesses.
Net finance costs(1)
Net finance costs increased from GBP6.9m in 2014 to GBP7.7m in
2015. This increase is attributable to lower non-cash income from
financial assets. Net interest payable on the Group's net debt was
GBP6.5m, a similar level to 2014.
Exceptional items
Exceptional items in 2015 totalled GBP39.4m, all of which are
non-trading items relating to acquisitions. GBP31.2m of this
relates to a partial impairment of the goodwill which arose on the
acquisition of Keller Canada in 2013. This business is heavily
exposed to construction in the Canadian oil sands region, which has
reduced dramatically following the substantial fall in the price of
oil. The remaining goodwill relating to Keller Canada amounts to
GBP27.6m. The other 2015 exceptional items primarily relate to the
amortisation of other intangible assets arising on the acquisition
of businesses.
Tax
The Group's effective tax rate before exceptional items was
34.5%, slightly below the 2014 effective rate of 34.9%. The
effective tax rate appears high compared to the UK statutory rate
because of the geographic mix of profits, with around 70% of the
Group's 2015 pre-exceptional profit before tax being earned in the
US, where the combined federal and state corporate tax rates total
nearly 40%.
An exceptional tax credit of GBP3.0m has been reflected on the
2015 exceptional items. This comprises GBP7.7m of credits on the
exceptional charges, partly offset by a GBP4.7m write-down of the
deferred tax asset in Canada as a result of the Keller Canada
goodwill impairment.
Profit for the period
Profit for the period attributable to shareholders before
exceptional items was GBP62.7m, a 13% increase on 2014. Profit for
the period after exceptional items totalled GBP26.3m (2014: loss of
GBP1.2m).
Earnings and dividends
Earnings per share (EPS) before exceptional items increased to
86.4p (2014: 75.3p), an increase of 15%, in line with the increase
in the Group's profit after tax.
EPS after exceptional items was 35.5p (2014: loss per share of
4.2p).
The Board has recommended a final dividend of 18.3p per share,
which brings the total dividend for the year to 27.1p, a 7.5%
increase on 2014. The 2015 dividend is covered 3.2x times by
earnings before exceptional items.
Cash flow and financing(1)
The Group has always placed a high priority on cash generation
and the active management of working capital. In 2015, cash
generated from operations before exceptional items was GBP142.3m,
representing 92% (2014: 117%) of EBITDA before exceptional items.
This continues the Group's excellent record of converting profits
into cash, with the aggregate of the last ten years' of cash
generated from operations representing 99% of EBITDA. Year-end
working capital was GBP97.1m, which is below the level at the end
of 2014, despite making two acquisitions during the year. Net
capital expenditure totalled GBP69.9m, compared to depreciation and
amortisation of GBP52.1m.
At 31 December 2015, net debt amounted to GBP183.0m (2014:
GBP102.2m). The increase is mainly due to expenditure of GBP52.5m
on acquisitions during the year and an exceptional cash outflow of
GBP27.5m relating to the exceptional contract provision announced
in 2014. Based on net assets of GBP334.0m, year-end gearing was
55%.
The Group's term debt and committed facilities comprise US$165m
of US private placements maturing between 2018 and 2024 and a
GBP250m multi-currency syndicated revolving credit facility
expiring in September 2019. At the year end, the Group had undrawn
committed and uncommitted borrowing facilities totalling
GBP153.5m.
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 all of its covenant limits.
Capital structure and allocation
The Group's capital structure is kept under constant review,
taking account of the need for and availability and cost of various
sources of finance.
The Group's objective is to deliver long-term value to its
shareholders whilst maintaining a balance sheet structure that
safeguards the Group's financial position through economic cycles.
In this context, the Board has established clear priorities for the
use of capital. In order of priority these are:
i To fund profitable organic growth opportunities
ii To finance bolt-on acquisitions that meet the Group's investment criteria
iii To pay ordinary dividends at a level which allows dividend growth through the cycle
iv Where the balance sheet allows, to deploy funds for the
benefit of shareholders in the most appropriate manner
The deployment of funds to shareholders other than through
ordinary dividends is unlikely to be considered where it might
result in the Group's net debt exceeding 1.5x EBITDA, after taking
account of other investment opportunities and the seasonality of
cash flows. Such deployment could include using the existing
authority to buy back the Company's shares.
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
2014, when the market value of the scheme's assets was GBP35.8m and
the scheme was 77% funded on an ongoing basis.
Following the valuation, the level of contributions increased
marginally to GBP1.6m a year, a level which will be reviewed
following the next triennial actuarial valuation.
The 2015 year-end IAS 19 valuation of the UK scheme showed
assets of GBP38.2m, liabilities of GBP48.5m and a pre-tax deficit
of GBP10.3m.
In Germany and Austria, the defined benefit arrangements only
apply to certain employees who joined the Group prior to 1991. The
IAS19 valuation of the defined benefit obligation totalled GBP12.8m
at 31 December 2015. There are no segregated funds to cover these
defined benefit obligations and the respective liabilities are
included on the Group balance sheet.
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 other net assets. The
majority of the Group's borrowings are held in US dollars, Canadian
dollars, Euros, Australian dollars, Singapore dollars and South
African rand, 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, intra-Group loan repayments and
any foreign currency cash flows associated with acquisitions. 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
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
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 2015, 87% 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 2015.
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.
(1) before pre-tax exceptional items of GBP39.4m (2014:
GBP56.9m). GBP31.2m of this relates to a partial impairment of the
Keller Canada goodwill balance. The balance relates primarily to
the amortisation of acquired intangible assets.
(2) before GBP27.5m cash outflow in 2015 relating to the 2014
exceptional contract provision.
Consolidated income statement
For the year ended 31 December 2015
2015 2015 2014 2014
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 2015 items (note 2014
Note GBPm 5) GBPm GBPm 5) GBPm
GBPm GBPm
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
Revenue 3 1,562.4 - 1,562.4 1,599.7 - 1,599.7
Operating costs (1,459.0) (38.7) (1,497.7) (1,507.7) (56.7) (1,564.4)
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
Operating profit 3 103.4 (38.7) 64.7 92.0 (56.7) 35.3
Finance income 0.8 - 0.8 1.5 - 1.5
Finance costs (8.5) (0.7) (9.2) (8.4) (0.2) (8.6)
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
Profit before
taxation 95.7 (39.4) 56.3 85.1 (56.9) 28.2
Taxation (33.0) 3.0 (30.0) (29.7) 0.3 (29.4)
----------------- ----------
Profit/(loss)
for
the period 62.7 (36.4) 26.3 55.4 (56.6) (1.2)
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
Attributable to:
Equity holders
of the parent 61.9 (36.4) 25.5 53.6 (56.6) (3.0)
Non-controlling
interests 0.8 - 0.8 1.8 - 1.8
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
62.7 (36.4) 26.3 55.4 (56.6) (1.2)
----------------- ------- ------------ ------------ ---------- ------------ ------------ ----------
Earnings/(loss)
per share
Basic 7 86.4p 35.5p 75.3p (4.2)p
Diluted 7 85.4p 35.1p 74.2p (4.2)p
Consolidated statement of comprehensive income
For the year ended 31 December 2015
2015 2014
GBPm GBPm
------------------------------------- ------- ------
Profit/(loss) for the period 26.3 (1.2)
-------------------------------------- ------- ------
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translation
of foreign operations (22.9) (3.8)
Net investment hedge gains 1.7 2.0
Cash flow hedge losses taken
to equity (4.2) (6.1)
Cash flow hedge transfers to
income statement 4.1 6.1
Items that will not be reclassified
subsequently to profit or loss:
Remeasurements of defined benefit
pension schemes 0.3 (4.1)
Tax on remeasurements of defined
benefit pension schemes (0.3) 0.2
-------------------------------------- ------- ------
Other comprehensive income
for the period, net of tax (21.3) (5.7)
-------------------------------------- ------- ------
Total comprehensive income
for the period 5.0 (6.9)
-------------------------------------- ------- ------
Attributable to:
Equity holders of the parent 4.3 (8.6)
Non-controlling interests 0.7 1.7
-------------------------------------- ------- ------
5.0 (6.9)
------------------------------------- ------- ------
Consolidated balance sheet
As at 31 December 2015
2015 2014
Note GBPm GBPm
-------------------------------- --------- -------- --------
Assets
Non-current assets
Intangible assets 160.1 183.5
Property, plant and equipment 331.8 295.6
Deferred tax assets 13.4 10.0
Other assets 22.9 19.9
-------------------------------- --------- -------- --------
528.2 509.0
-------------------------------- --------- -------- --------
Current assets
Inventories 47.3 48.6
Trade and other receivables 423.2 408.7
Current tax assets 12.6 4.0
Cash and cash equivalents 63.1 85.6
-------------------------------- --------- -------- --------
546.2 546.9
-------------------------------- --------- -------- --------
Total assets 3 1,074.4 1,055.9
-------------------------------- --------- -------- --------
Liabilities
Current liabilities
Loans and borrowings (3.5) (2.7)
Current tax liabilities (6.7) (13.9)
Trade and other payables (373.4) (353.2)
Provisions (34.7) (50.0)
-------------------------------- --------- -------- --------
(418.3) (419.8)
-------------------------------- --------- -------- --------
Non-current liabilities
Loans and borrowings (242.6) (185.1)
Retirement benefit liabilities (23.1) (25.4)
Deferred tax liabilities (26.7) (19.7)
Provisions (7.1) (23.3)
Other liabilities (22.6) (36.3)
-------------------------------- --------- -------- --------
(322.1) (289.8)
-------------------------------- --------- -------- --------
Total liabilities 3 (740.4) (709.6)
-------------------------------- --------- -------- --------
Net assets 3 334.0 346.3
-------------------------------- --------- -------- --------
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 (12.8) 8.3
Other reserve 8 56.9 56.9
Hedging reserve (0.1) -
Retained earnings 233.5 224.5
-------------------------------- --------- -------- --------
Equity attributable to equity
holders of the parent 330.5 342.7
Non-controlling interests 3.5 3.6
-------------------------------- --------- -------- --------
Total equity 334.0 346.3
-------------------------------- --------- -------- --------
Consolidated statement of changes in equity
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
For the year ended 31 December 2015
Share Share Capital Translation Other Hedging Retained Attributable Non-controlling Total
capital premium redemption reserve reserve reserve earnings to equity interests equity
account reserve holders
of the
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
At 1 January
2014 7.3 38.1 7.6 10.0 56.9 - 247.9 367.8 4.8 372.6
(Loss)/profit
for the period - - - - - - (3.0) (3.0) 1.8 (1.2)
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Other
comprehensive
income
Exchange
differences
on translation
of foreign
operations - - - (3.7) - - - (3.7) (0.1) (3.8)
Net investment
hedge gains - - - 2.0 - - - 2.0 - 2.0
Cash flow hedge
losses taken to
equity - - - - - (6.1) - (6.1) - (6.1)
Cash flow hedge
transfers to
income
statement - - - - - 6.1 - 6.1 - 6.1
Remeasurements
of defined
benefit
pension schemes - - - - - - (4.1) (4.1) - (4.1)
Tax on
remeasurements
of defined
benefit
pension schemes - - - - - - 0.2 0.2 - 0.2
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Other
comprehensive
income for the
period, net of
tax - - - (1.7) - - (3.9) (5.6) (0.1) (5.7)
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Total
comprehensive
income for the
period - - - (1.7) - - (6.9) (8.6) 1.7 (6.9)
Dividends - - - - - - (17.4) (17.4) (0.6) (18.0)
Share-based
payments - - - - - - 1.9 1.9 - 1.9
Acquisition of
non-controlling
interest - - - - - - (1.0) (1.0) (2.3) (3.3)
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
At 31 December
2014 and 1
January
2015 7.3 38.1 7.6 8.3 56.9 - 224.5 342.7 3.6 346.3
Profit for the
period - - - - - - 25.5 25.5 0.8 26.3
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Other
comprehensive
income
Exchange
differences
on translation
of foreign
operations - - - (22.8) - - - (22.8) (0.1) (22.9)
Net investment
hedge gains - - - 1.7 - - - 1.7 - 1.7
Cash flow hedge
losses taken to
equity - - - - - (4.2) - (4.2) - (4.2)
Cash flow hedge
transfers to
income
statement - - - - - 4.1 - 4.1 - 4.1
Remeasurements
of defined
benefit
pension schemes - - - - - - 0.3 0.3 - 0.3
Tax on
remeasurements
of defined
benefit
pension schemes - - - - - - (0.3) (0.3) - (0.3)
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Other
comprehensive
income for the
period, net of
tax - - - (21.1) - (0.1) - (21.2) (0.1) (21.3)
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Total
comprehensive
income for the
period - - - (21.1) - (0.1) 25.5 4.3 0.7 5.0
Dividends - - - - - - (18.3) (18.3) (0.8) (19.1)
Share-based
payments - - - - - - 1.8 1.8 - 1.8
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
At 31 December
2015 7.3 38.1 7.6 (12.8) 56.9 (0.1) 233.5 330.5 3.5 334.0
----------------- -------- -------- ----------- ------------ -------- -------- --------- ------------- ---------------- -------
Consolidated cash flow statement
For the year ended 31 December 2015
2015 2014
GBPm GBPm
-------------------------------------------- -------- --------
Cash flows from operating activities
Operating profit before exceptional
items 103.4 92.0
Depreciation of property, plant and
equipment 50.9 48.0
Amortisation of intangible assets 1.2 1.9
Profit on sale of property, plant
and equipment (0.3) (0.3)
Other non-cash movements 6.4 8.9
Foreign exchange losses 0.1 0.1
---------------------------------------------- -------- --------
Operating cash flows before movements
in working capital 161.7 150.6
Decrease in inventories 0.5 13.9
(Increase)/decrease in trade and
other receivables (11.1) 11.2
Decrease in trade and other payables (1.4) (0.1)
Change in provisions, retirement
benefit and other non-current liabilities (7.4) (10.2)
---------------------------------------------- -------- --------
Cash generated from operations before
exceptional items 142.3 165.4
Cash flows from exceptional items (27.5) -
-------------------------------------------- -------- --------
Cash generated from operations 114.8 165.4
Interest paid (6.6) (10.1)
Income tax paid (44.3) (28.4)
---------------------------------------------- -------- --------
Net cash inflow from operating activities 63.9 126.9
---------------------------------------------- -------- --------
Cash flows from investing activities
Interest received 0.5 0.5
Proceeds from sale of property, plant
and equipment 5.1 3.5
Acquisition of subsidiaries, net
of cash acquired (52.5) (5.0)
Acquisition of property, plant and
equipment (74.2) (63.6)
Acquisition of intangible assets (0.8) (0.9)
Net cash outflow from investing activities (121.9) (65.5)
---------------------------------------------- -------- --------
Cash flows from financing activities
New borrowings 71.2 95.3
Repayment of borrowings (9.3) (103.6)
Payment of finance lease liabilities (1.4) (1.2)
Dividends paid (19.1) (18.0)
---------------------------------------------- -------- --------
Net cash inflow/(outflow) from financing
activities 41.4 (27.5)
---------------------------------------------- -------- --------
Net (decrease)/increase in cash and
cash equivalents (16.6) 33.9
Cash and cash equivalents at beginning
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
of period 85.6 50.7
Effect of exchange rate fluctuations (6.1) 1.0
---------------------------------------------- -------- --------
Cash and cash equivalents at end
of period 62.9 85.6
---------------------------------------------- -------- --------
1. Basis of preparation
The Group's 2015 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 2014, except for the adoption of:
-- Amendments to IAS 19, 'Defined benefit plans: Employee
contributions'
-- Annual improvements to IFRSs 2010-2012 cycle
-- Annual improvements to IFRSs 2011-2013 cycle
-- IFRIC interpretation 21 Levies
There is no significant financial impact on the Group financial
statements as a result of adopting these new and amended standards.
There are no standards, amendments or interpretations adopted by
the EU that are in issue but not yet effective that are expected to
have a significant impact on the Group financial statements. The
Group is considering the impact on the Group financial statements
of adopting standards, amendments or interpretations not yet
adopted by the EU, including IFRS 9, 'Financial instruments'; IFRS
15, 'Revenue from contracts with customers';
and IFRS 16, 'Leases'.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2015
or 2014 but is derived from the 2015 accounts. Statutory accounts
for 2014 have been delivered to the Registrar of Companies. Those
for 2015, 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 March 2016. 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
------------------- ---------------- ---------------
2015 2014 2015 2014
------------------- ------- ------- ------- ------
US dollar 1.53 1.65 1.48 1.55
Canadian dollar 1.95 1.82 2.05 1.81
Euro 1.38 1.24 1.36 1.28
Singapore dollar 2.10 2.09 2.09 2.05
Australian dollar 2.03 1.83 2.03 1.90
------------------- ------- ------- ------- ------
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.
2015 2015 2014 2014
Operating Operating
Revenue profit Revenue profit
GBPm GBPm GBPm GBPm
-------------------------------- --------- ----------- --------- -----------
North America 851.2 76.4 775.6 59.9
EMEA(1) 441.5 21.3 451.5 12.9
Asia 108.2 4.5 111.3 8.3
Australia 161.5 7.2 261.3 15.7
-------------------------------- --------- ----------- --------- -----------
1,562.4 109.4 1,599.7 96.8
Central items and eliminations - (6.0) - (4.8)
-------------------------------- --------- ----------- --------- -----------
Before exceptional items 1,562.4 103.4 1,599.7 92.0
Exceptional items (note 5) - (38.7) - (56.7)
-------------------------------- --------- ----------- --------- -----------
1,562.4 64.7 1,599.7 35.3
-------------------------------- --------- ----------- --------- -----------
2015 2015 2015 2015 2015 2015
Tangible
Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
North America 508.7 (165.5) 343.2 30.5 19.8 245.6
EMEA(1) 269.9 (183.2) 86.7 31.4 17.4 130.9
Asia 97.4 (32.3) 65.1 6.8 6.5 45.2
Australia 101.9 (38.8) 63.1 5.7 8.3 69.6
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
977.9 (419.8) 558.1 74.4 52.0 491.3
Central items and eliminations(2) 96.5 (320.6) (224.1) 0.6 0.1 0.6
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
1,074.4 (740.4) 334.0 75.0 52.1 491.9
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
2014 2014 2014 2014 2014 2014
Tangible
Depreciation and
Segment Segment Capital Capital and intangible
assets liabilities employed additions amortisation assets
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
North America 499.4 (159.9) 339.5 23.3 17.2 251.6
EMEA(1) 283.3 (215.2) 68.1 23.1 18.9 127.4
Asia 84.7 (29.4) 55.3 10.8 5.5 47.4
Australia 85.1 (44.2) 40.9 7.3 8.2 52.6
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
952.5 (448.7) 503.8 64.5 49.8 479.0
Central items and eliminations(2) 103.4 (260.9) (157.5) - 0.1 0.1
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
1,055.9 (709.6) 346.3 64.5 49.9 479.1
----------------------------------- --------- ------------- ---------- ----------- -------------- ------------
(1) (Europe, Middle East and Africa.)
(2 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(3)
------------------ -----------------
2015 2014 2015 2014
GBPm GBPm GBPm GBPm
-------------------------------------- -------- -------- -------- -------
United States 773.4 666.5 196.7 155.9
Australia 161.5 261.3 69.6 52.6
Canada 77.7 108.2 64.9 122.2
United Kingdom (country of domicile) 61.8 67.5 19.2 19.2
Other 488.0 496.2 157.5 145.0
-------------------------------------- -------- -------- -------- -------
1,562.4 1,599.7 507.9 494.9
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
-------------------------------------- -------- -------- -------- -------
(3 Non-current non-financial assets comprise intangible assets,
property, plant and equipment and other non-current non-financial
assets.)
4. Acquisitions
2015 acquisitions
Bencor Austral Ellington Total
Cross
Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair
amount value value amount value value amount value value amount value value
adjust-ment adjust-ment adjust-ment adjust-ment
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
Net assets
acquired
Intangible
assets - 3.8 3.8 - 8.7 8.7 - 0.4 0.4 - 12.9 12.9
Property,
plant
and equipment 16.7 - 16.7 9.6 1.5 11.1 0.6 - 0.6 26.9 1.5 28.4
Cash and cash
equivalents - - - 1.1 - 1.1 - - - 1.1 - 1.1
Receivables 10.0 - 10.0 3.9 - 3.9 1.2 - 1.2 15.1 - 15.1
Other assets 0.1 - 0.1 1.6 - 1.6 - - - 1.7 - 1.7
Loans and
borrowings - - - (1.0) - (1.0) - - - (1.0) - (1.0)
Deferred tax - - - 0.3 - 0.3 - - - 0.3 - 0.3
Other
liabilities (4.8) - (4.8) (5.9) - (5.9) (0.5) - (0.5) (11.2) - (11.2)
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
22.0 3.8 25.8 9.6 10.2 19.8 1.3 0.4 1.7 32.9 14.4 47.3
Goodwill 3.2 6.7 0.2 10.1
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
Total
consideration 29.0 26.5 1.9 57.4
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
Satisfied by
Initial cash
consideration 29.0 19.9 1.9 50.8
Contingent
consideration - 6.6 - 6.6
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
29.0 26.5 1.9 57.4
--------------- --------- ------------ ------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
On 17 August 2015, the Group acquired the trade and selected
assets of the GeoConstruction group ('Bencor') of Layne Christensen
Company, a business based in Dallas, USA. 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 opportunity to expand
Bencor's diaphragm wall technology around the Group.
On 2 July 2015, the Group acquired 100% of the share capital of
Austral Construction Pty Limited ('Austral'), a business based in
Melbourne, Australia. The fair value of the intangible assets
acquired represents the fair value of customer relationships and
customer contracts at the date of acquisition. 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. Contingent consideration
of up to GBP9.9m (A$20.0m) is payable based on total earnings
before interest, tax, depreciation and amortisation in the three
year period following acquisition. The full amount of contingent
consideration is currently provided for.
On 17 August 2015, the Group acquired the trade and selected
assets of Ellington Cross, LLC ('Ellington Cross'), a business
based in Charleston, USA.
The fair value of the total receivables in all acquisitions is
not materially different from the gross contractual amounts
receivable and is expected to be recovered in full. In the period
to 31 December 2015, Austral, Bencor and Ellington Cross
contributed GBP35.1m to turnover and GBP0.5m to the net profit
before exceptional items of the Group. Had the acquisitions all
taken place on 1 January 2015, total Group revenue would have been
GBP1,606.4m and total net profit before exceptional items would
have been GBP65.0m.
The adjustments made in respect of acquisitions in the year to
31 December 2015 are provisional and will be finalised within 12
months of the acquisition date.
2014 acquisitions
On 14 August 2014, the Group acquired the trade and selected
assets of Ansah Sdn Bhd, a business based in Kuantan, Malaysia, for
an initial cash consideration of GBP3.5m (RM19.0m). GBP1.4m
(RM7.6m) of the purchase price relates to property, plant and
equipment, with the remaining purchase price allocated to goodwill.
Contingent consideration of up to GBP1.5m (RM8.0m) is payable based
on total earnings before interest and tax in the three-year period
following acquisition. The full amount of contingent consideration
is currently provided for.
On 15 May 2014, the Group acquired the remaining 45% minority
shareholding of Keller Engenharia Geotecnica Ltda in Brazil for a
cash consideration of GBP2.8m (R$10.7m) at a premium of GBP1.0m
(R$4.1m) to net book value, which has been taken directly to
reserves.
5. Exceptional items
Exceptional items are items which are exceptional by their size
or are non-trading in nature, including those relating to
acquisitions. Exceptional items comprise the following:
2015 2014
GBPm GBPm
--------------------------------------- ---- ---- ------ ------
Goodwill impairment 31.2 -
Contract dispute - 54.0
Amortisation of acquired intangible 7.3 6.6
assets
Acquisition costs 0.2 0.5
Contingent consideration and payments - (4.7)
Other - 0.3
--------------------------------------------------- ------ ------
Exceptional items in operating costs 38.7 56.7
Exceptional finance costs 0.7 0.2
--------------------------------------------------- ------ ------
39.4 56.9
------------------------------------------------- ------ ------
The goodwill impairment relates to Keller Canada. The results
for Keller Canada have been below those expected at the time of the
acquisition, primarily due to a severe slowdown in investment in
the Canadian oil sands following the very significant reduction in
the oil price since the time of acquisition.
The prior year charge for a contract dispute relates to a
project that the Group's UK subsidiary, Keller Limited, completed
in 2008. The dispute was subject to litigation proceedings
involving a number of parties, but these were settled in February
2015. The final cost to Keller is subject to a number of remedial
and other actions to be undertaken as part of the settlement
agreement and the value of the property following these remedial
actions. The exceptional charge represents management's best
estimate of the net cost to Keller before taking account of future
recoveries under applicable insurances, as these cannot be
recognised under IFRS until they are "virtually certain". Given the
uncertainty associated with any future insurance recoveries, it is
not currently practicable to estimate the value of these
recoveries. During 2015, the Group paid net GBP27.5m relating to
this contract dispute. The remainder of these costs are largely
expected to be incurred within the next year.
Amortisation of acquired intangible assets primarily relate to
Keller Canada, Franki Africa and the acquisitions set out in note
4.
(MORE TO FOLLOW) Dow Jones Newswires
February 29, 2016 02:00 ET (07:00 GMT)
Keller (LSE:KLR)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Keller (LSE:KLR)
Historical Stock Chart
Von Jul 2023 bis Jul 2024