TIDMKLR
RNS Number : 7480F
Keller Group PLC
01 August 2016
For immediate release 1 August 2016
Keller Group plc
Results for the six months ended 30 June 2016
Keller Group plc ("Keller"), the world's largest geotechnical
contractor, announces its results for the six months ended 30 June
2016.
Results summary table
H1 2016 H1 2015 % change Constant
currency
% change
Underlying results (before exceptional items)
Revenue GBP849.7m GBP755.8m +12% +9%
Operating profit(1) GBP35.6m GBP37.7m -6% -10%
Earnings per share(1) 27.4p 31.1p -12% -16%
Cash generated from operations(2) GBP41.9m GBP18.6m +125% +136%
Interim dividend per share 9.25p 8.8p +5% n/a
Results after exceptional items
Operating profit GBP30.9m GBP35.0m -12% -15%
Earnings per share 21.9p 27.9p -22% -26%
Cash generated/(utilised) from operations GBP39.8m (GBP6.4m) n/a n/a
Highlights
-- Record first half revenue of GBP850m, up 12%
-- Operating profit before exceptional items(1) down 6%
-- Underlying cash generated from operations up 125% to GBP41.9m
-- Strong performances from North America and EMEA
-- Disappointing result from APAC
-- Medium-term objectives on track to deliver
-- Order book to be executed in next 12 months up 10% on prior year
-- Interim dividend up 5% to 9.25p per share
(1) exceptional items before tax totals GBP5.2m (2015: GBP3.0m),
primarily relating to the amortisation of acquired intangible
assets
(2) exceptional cash outflows from operations total GBP2.1m
(2015: GBP25.0m), relating to the 2014 exceptional contract
provision
"We have seen an encouraging start to the year in North America
and EMEA, our two largest Divisions. APAC made a loss in the
period, due to market conditions and project delays, but we expect
a return to profitability in the second half of the year. Overall,
the Group continues to make good progress against our medium-term
objectives, building on our strong market positions and favourable
market trends."
Alain Michaelis
Chief Executive, Keller Group plc
Notes to Editors:
Keller is the world's largest geotechnical contractor, providing
technically advanced geotechnical solutions to the construction
industry. With annual revenue of around GBP1.6bn, Keller has
approximately 10,000 staff world-wide.
Keller is the clear market leader in the US, Canada, Australia
and South Africa; it has prime positions in most established
European markets and a strong profile in many developing
markets.
Cautionary statements:
This document contains certain 'forward looking statements' with
respect to Keller's financial condition, results of operations and
business and certain of Keller's plans and objectives with respect
to these items.
Forward looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects',
'believes', 'intends', 'plans', 'potential', 'reasonably possible',
'targets', 'goal' or 'estimates'. By their very nature
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the
future.
There are a number of factors that could cause actual results
and developments to differ materially from those expressed or
implied by these forward-looking statements. These factors include,
but are not limited to, changes in the economies and markets in
which the Group operates; changes in the regulatory and competition
frameworks in which the Group operates; the impact of legal or
other proceedings against or which affect the Group; and changes in
interest and exchange rates.
All written or verbal forward looking statements, made in this
document or made subsequently, which are attributable to Keller or
any other member of the Group or persons acting on their behalf are
expressly qualified in their entirety by the factors referred to
above. Keller does not intend to update these forward looking
statements.
Nothing in this document should be regarded as a profits
forecast.
This document is not an offer to sell, exchange or transfer any
securities of Keller Group plc or any of its subsidiaries and is
not soliciting an offer to purchase, exchange or transfer such
securities in any jurisdiction. Securities may not be offered, sold
or transferred in the United States absent registration or an
applicable exemption from the registration requirements of the US
Securities Act of 1933 (as amended).
For further information, please contact:
Keller Group plc
James Hind, Finance Director 020 7616 7575
Finsbury
Gordon Simpson/Rowley Hudson 020 7251 3801
A presentation will be held for analysts 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/577f735618e4af08000650c8/vfw3
Print resolution images are available for the media to download
from www.vismedia.co.uk
Group overview
Financial results
Our results for the six months ended 30 June 2016 reflect strong
revenue and profit growth in the Group's two largest divisions,
North America and EMEA, offset by a disappointing performance in
the Asia Pacific ("APAC") division which recorded a significant
loss in the period.
Group revenue increased by 12% to GBP849.7m (2015: GBP755.8m).
Excluding acquisitions and currency movements, revenue was up 4%.
The Group's operating profit before exceptional items(1) reduced by
6% or GBP2.1m to GBP35.6m and the Group's operating margin before
exceptional items(1) was 4.2%, down on last year's 5.0%.
Underlying profit before tax and exceptional items(1) was
GBP30.2m (2015: GBP34.6m) and earnings per share before exceptional
items(1) were 27.4p (2015: 31.1p).
Cash generated from operations before exceptional items(2) in
the first half of 2016 was GBP41.9m (2015: GBP18.6m). In the twelve
months ended 30 June 2016, the total cash generated from operations
before exceptional items was GBP165.6m, which equates to 104% of
the period's EBITDA.
Net debt at 30 June 2016 was GBP339.7m, representing 2.1 times
annualised EBITDA. The increase in net debt mainly reflects the
exceptional capital expenditure of GBP62m on the acquisition of the
freehold of a processing and warehousing facility at Avonmouth (as
announced on 13 May 2016) and the impact of currency translation
movements. Other capital expenditure in the first half totalled
GBP33.4m (2015: GBP33.8m), which compares to depreciation of
GBP30.2m (2015: GBP24.5m).
The financial position of the Group remains robust. 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 2016 half year results include GBP5.2m of exceptional items
before tax, primarily relating to the amortisation of acquired
intangible assets. After taking account of tax and exceptional
items, the Group's post-tax result for the period was a profit of
GBP16.0m (2015: GBP20.2m).
Acquisitions
The Group made two small acquisitions in the first half of the
year. In February, we acquired the Brazilian foundation contractor
Tecnogeo for an initial consideration of GBP11.8m and in April the
Group acquired the assets and certain liabilities of Smithbridge, a
marine construction business based in Brisbane, Australia, for
GBP1.8m. Early integration of both is proceeding well.
Interim dividend
The Board has decided to increase the interim dividend by 5% to
9.25p (2015: 8.8p), reflecting its confidence in the future
direction of the Group. The dividend will be paid on 30 September
2016 to shareholders on the register at the close of business on 2
September 2016.
Post balance sheet events
There were no material post balance sheet events between the
balance sheet date and the date of this report.
(1) exceptional items before tax totals GBP5.2m (2015: GBP3.0m),
primarily relating to the amortisation of acquired intangible
assets
(2) exceptional cash outflows from operations total GBP2.1m
(2015: GBP25.0m), relating to the 2014 exceptional contract
provision
Divisional overview
North America
Results summary(1)
:
-------------------- ---------- ----------
H1 2016 H1 2015
-------------------- ---------- ----------
Revenue GBP464.8m GBP415.8m
-------------------- ---------- ----------
Operating profit GBP33.6m GBP28.4m
-------------------- ---------- ----------
Operating margin 7.2% 6.8%
-------------------- ---------- ----------
(1) before exceptional items
In North America, which accounts for over half of the Group's
revenue, revenue increased by 12%. On a constant currency basis,
revenue was up 6%. The half year operating profit increased to
GBP33.6m (2015: GBP28.4m) and the operating margin from 6.8% to
7.2%.
US
The Group's US businesses had a good first half, with revenue
and profit both up on the same period in 2015, helped by the
on-going steady growth in US construction. Bidding activity remains
robust across the country and the Group's contract awards in the
period were above the same period last year. The US order book at
the end of June was about 10% higher year-on-year.
Hayward Baker, our largest and most broadly-based business in
the US, had a good first half across most sectors. Case and HJ
Foundation also performed well, although HJ's core Miami market is
slowing after a very strong couple of years. Bencor, the diaphragm
wall specialist acquired in August 2015, has integrated well and is
currently helping a number of Keller companies outside the US in
bidding D-wall work. Bencor's $135m East Branch Dam job is on track
and the business is just completing work on two major station boxes
in downtown San Francisco.
Suncoast, which is mainly focused on residential construction,
had an excellent first half, taking full advantage of the ongoing
increase in housing starts. While housing permits as a whole (a
lead indicator for housing starts) have flattened in recent months,
those for single family homes, which generate most of Suncoast's
revenue, continue to increase.
Canada
Keller Canada continues to operate in a very difficult market.
The business made a small loss in the seasonally weak first half,
not helped by the delayed start of our major subway contract in
Toronto. This $42m job was originally due to begin in April 2016,
but is now not expected to start until November 2016. Results will
improve in the seasonally better second half as revenues pick up,
operating conditions ease and the business benefits from cost
reductions made in the first half.
EMEA
Results summary(1)
:
-------------------- ---------- ----------
H1 2016 H1 2015
-------------------- ---------- ----------
Revenue GBP261.7m GBP210.3m
-------------------- ---------- ----------
Operating profit GBP13.6m GBP7.0m
-------------------- ---------- ----------
Operating margin 5.2% 3.3%
-------------------- ---------- ----------
(1) before exceptional items
Revenue in EMEA in the first half of the year was 24% up on the
same period for 2015. On a constant currency basis, revenue was up
23%. Operating profit nearly doubled to GBP13.6m and the operating
margin increased from 3.3% to 5.2%.
Whilst a number of markets remain challenging, the Group's most
significant European businesses (the UK, Germany, Poland and
Austria) have all had a good first half. Between them, these
businesses account for over half of the Division's revenue. All of
these geographies enter the second half with strong order books and
good prospects although, as mentioned later, the UK may be
adversely impacted by a BREXIT-related slowdown in the fourth
quarter.
Elsewhere, we continue to make excellent progress on the major
contract in the Caspian region. We have recently been awarded
further work on this contract and expect more to be awarded in the
second half which would extend the job well into 2017.
Whilst we have seen some projects delayed in the Middle East as
a result of the relatively low oil price, construction activity has
not abated and our order book is healthy.
As previously reported, the market continues to slow in South
Africa; however, there remain good opportunities in Sub-Saharan
Africa which we continue to pursue.
As noted earlier, the Group acquired Tecnogeo in Brazil during
the first half. The business had 2015 revenue of around GBP20m and
we are in the process of integrating the Group's existing business
in Brazil into Tecnogeo. The enlarged operation is the third
largest foundations business in Brazil. Whilst the political and
economic climate in Brazil is challenging at the moment, and is
expected to remain so for some time, we are pleased to have
acquired this high quality business.
APAC
Results summary(1)
:
-------------------- ---------- ----------
H1 2016 H1 2015
-------------------- ---------- ----------
Revenue GBP123.2m GBP129.7m
-------------------- ---------- ----------
Operating profit GBP(9.6)m GBP4.8m
-------------------- ---------- ----------
Operating margin (7.8%) 3.7%
-------------------- ---------- ----------
(1) before exceptional items
As previously indicated, the Group's APAC businesses in
Australia, Singapore and Malaysia have had a very difficult first
half, driven by market conditions and project delays. Reported
revenue for the division was 5% down on the first half of 2015. On
a constant currency basis and after adjusting for acquisitions,
like-for-like revenue was 13% down. The Division made a loss in the
first half of the year, totalling GBP9.6m compared to a profit of
GBP4.8m in the comparable period in 2015. Around two-thirds of this
decline occurred in Australia, due in large part to the
non-recurrence of Wheatstone profits.
As we announced in November 2015, we have restructured the Asia
and Australia Divisions with a view to taking advantage of scale
effects, sharing relative strengths on products, reducing costs and
increasing our ability to grow in Asia. We have, so far, realised
GBP3m of annualised cost savings through the rationalisation and
expect to deliver a further GBP3m in operational efficiencies over
the next twelve months.
In Australia, dollar revenue excluding acquisitions was 28% down
on the first half of 2015, in part due to delays to the start dates
of the business' two largest projects. Keller's Australian
businesses made a loss of around GBP6m in the first half of 2016 as
a result of the volume reduction and the deterioration in the
pricing environment.
In Asia, revenue was broadly flat year-on-year. However, taken
together, the Asian operations also recorded a loss in the first
half, largely as a result of the Group's piling business in
Singapore which suffered from very low volumes and some one-off
costs relating to prior years. The business is being restructured
under a new management team.
Elsewhere in Asia, the large ground improvement contract at
Changi airport has performed well and the Indian business has had a
good first half after a slow start to the year.
Looking forward, despite the cancellation of the major Pluit
City contract in Indonesia, which was due to start in September,
APAC's order book is over 10% ahead of June last year and revenue
will improve significantly in the second half, especially in
Australia as its major projects pick up speed. We expect the
division to return to profitability in the second half of 2016.
Board changes
As announced on 24 May 2016, Roy Franklin retired as Chairman
and from the Board on 26 July 2016 and Peter Hill was appointed
Chairman of Keller.
The Board would like to thank Roy for nine years of service to
Keller, first as an independent non-Executive Director and then as
a highly effective Chairman for the last seven years, and to wish
him well for the future. He has made a significant contribution to
the growth of Keller during this time and has always been a source
of wise counsel to both management and fellow directors.
Principal risks and uncertainties
The principal risks and uncertainties faced by Keller in the
remaining six months of the year remain largely unchanged from
those reported in the 2015 annual report and can be found, together
with the mitigating actions in place, in pages 26 to 27 of the
report.
In summary, these are:
Market risk: A rapid downturn in our markets
Strategic risk:
- Failure to procure new contracts
- Losing our market share
- Non-compliance with our Code of Business Conduct
Financial risk: Inability to finance our business
Operational risk:
- Product and/or solution failure
- Ineffective management of our contracts
- Causing a serious injury or fatality to an employee or member of the public
- Not having the right skills to deliver
Impact of BREXIT
The UK referendum vote to leave the European Union is expected
to lead to a period of prolonged economic and political uncertainty
in the country. Whilst this is likely to impact our operations in
the UK, Keller's UK business represents less than 4% of Group
revenue.
Since the BREXIT vote, sterling has weakened considerably
against most currencies. Virtually all Keller's earnings and most
of its debt are in foreign currencies, primarily the US dollar. As
a result, should sterling weakness persist, there will be a
beneficial effect on Keller's profits when translated into
sterling. Conversely, the weakening of sterling has increased the
reported level of the Group's net debt, adding nearly GBP40m to net
debt since the end of 2015.
Outlook
Whilst conditions in a number of our markets remain difficult,
the US and most of the Group's major European markets are healthy.
On a constant currency basis, at the end of June the Group's order
book of work to be undertaken over the next twelve months was up
10% year-on-year.
For 2016 as a whole, the Board expects the underlying combined
performance of the Group's two largest divisions, North America and
EMEA, to outperform its original expectation. APAC has had a very
difficult period but we expect it to return to profitability in the
second half of the year. Overall, we expect the full year Group
results to be at the lower end of the Board's expectations.
Consolidated income statement
For the half year ended 30 June 2016
Half year to 30 June Half year to 30 June Year to 31 December
2016 2015 2015
-------------------------------------- -------------------------------------- ------------------------------------------
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional items exceptional items
items (Note Total items (Note Total items (Note Total
Note GBPm 5) GBPm GBPm 5) GBPm GBPm 5) GBPm
GBPm GBPm GBPm
-------------- ------ ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
Revenue 3 849.7 - 849.7 755.8 - 755.8 1,562.4 - 1,562.4
Operating
costs (814.1) (4.7) (818.8) (718.1) (2.7) (720.8) (1,459.0) (38.7) (1,497.7)
-------------- ------ ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
Operating
profit 3 35.6 (4.7) 30.9 37.7 (2.7) 35.0 103.4 (38.7) 64.7
Finance
income 0.5 - 0.5 0.7 - 0.7 0.8 - 0.8
Finance costs (5.9) (0.5) (6.4) (3.8) (0.3) (4.1) (8.5) (0.7) (9.2)
-------------- ------ ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
Profit before
taxation 30.2 (5.2) 25.0 34.6 (3.0) 31.6 95.7 (39.4) 56.3
Taxation 6 (10.2) 1.2 (9.0) (12.1) 0.7 (11.4) (33.0) 3.0 (30.0)
-------------- ----------
Profit/(loss) for
the period 20.0 (4.0) 16.0 22.5 (2.3) 20.2 62.7 (36.4) 26.3
---------------------- ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
Attributable
to:
Equity holders
of the parent 19.7 (4.0) 15.7 22.3 (2.3) 20.0 61.9 (36.4) 25.5
Non-controlling
interests 0.3 - 0.3 0.2 - 0.2 0.8 - 0.8
---------------------- ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
20.0 (4.0) 16.0 22.5 (2.3) 20.2 62.7 (36.4) 26.3
-------------- ------ ------------ ------------ ---------- ------------ -------------- -------- ----- -------------- -------------- ----------
Earnings per share
Basic 8 27.4 21.9 31.1p 27.9p 86.4p 35.5p
Diluted 8 27.0 21.5 30.7p 27.6p 85.4p 35.1p
Consolidated statement of comprehensive income
For the half year ended 30 June 2016
Half Half Year to
year year 31 December
to 30 to 30 2015
June June
2016 2015
GBPm GBPm GBPm
------------------------------------------------------------ ------- ------- -------------
Profit for the period 16.0 20.2 26.3
------------------------------------------------------------- ------- ------- -------------
Other comprehensive income
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation
of foreign operations 48.1 (22.9) (22.9)
Net investment hedge (losses)/gains (2.9) 2.7 1.7
Cash flow hedge (losses)/gains taken
to equity (0.6) 1.5 (4.2)
Cash flow hedge transfers to income
statement 0.6 (1.5) 4.1
Items that will not be reclassified subsequently to profit
or loss:
Remeasurements of defined benefit pension
schemes (6.0) 0.6 0.3
Tax on remeasurements of defined benefit
pension schemes 0.8 (0.1) (0.3)
Other comprehensive income for the period, net of tax 40.0 (19.7) (21.3) (21.3)
------------------------------------------------------------- ------- ------- -------------
Total comprehensive income for the period 56.0 0.5 5.0
------------------------------------------------------------- ------- ------- -------------
Attributable to:
Equity holders of the parent 55.3 0.4 4.3
Non-controlling interests 0.7 0.1 0.7
------------------------------------------------------------- ------- ------- -------------
56.0 0.5 5.0
------------------------------------------------------------ ------- ------- -------------
Consolidated balance sheet
As at 30 June 2016
As at As at As at
30 June 30 June 31 December
2016 2015 2015
Note GBPm GBPm GBPm
------------------------------------------ ------ --------- --------- -------------
Assets
Non-current assets
Intangible assets 181.5 172.0 160.1
Property, plant and equipment 383.7 286.0 331.8
Deferred tax assets 17.4 10.2 13.4
Other assets 32.0 21.3 22.9
------------------------------------------- ------ --------- --------- -------------
614.6 489.5 528.2
------------------------------------------ ------ --------- --------- -------------
Current assets
Inventories 56.3 50.8 47.3
Trade and other receivables 534.6 445.2 423.2
Current tax assets 11.3 5.7 12.6
Cash and cash equivalents 9 75.3 55.3 63.1
------------------------------------------- ------ --------- --------- -------------
677.5 557.0 546.2
------------------------------------------ ------ --------- --------- -------------
Non-current assets held for sale 10 48.0 - -
------------------------------------------- ------ --------- --------- -------------
Total assets 1,340.1 1,046.5 1,074.4
------------------------------------------- ------ --------- --------- -------------
Liabilities
Current liabilities
Loans and borrowings (59.6) (4.3) (3.5)
Current tax liabilities (4.1) (10.7) (6.7)
Trade and other payables (423.9) (371.7) (373.4)
Provisions (18.5) (31.0) (34.7)
------------------------------------------- ------ --------- --------- -------------
(506.1) (417.7) (418.3)
------------------------------------------ ------ --------- --------- -------------
Non-current liabilities
Loans and borrowings (355.4) (222.5) (242.6)
Retirement benefit liabilities (30.5) (23.0) (23.1)
Deferred tax liabilities (32.0) (18.9) (26.7)
Provisions (10.5) (13.2) (7.1)
Other liabilities (28.8) (16.1) (22.6)
------------------------------------------- ------ --------- --------- -------------
(457.2) (293.7) (322.1)
------------------------------------------ ------ --------- --------- -------------
Total liabilities (963.3) (711.4) (740.4)
------------------------------------------- ------ --------- --------- -------------
Net assets 376.8 335.1 334.0
------------------------------------------- ------ --------- --------- -------------
Equity
Share capital 11 7.3 7.3 7.3
Share premium account 38.1 38.1 38.1
Capital redemption reserve 7.6 7.6 7.6
Translation reserve 32.0 (11.9) (12.8)
Other reserve 56.9 56.9 56.9
Hedging reserve (0.1) - (0.1)
Retained earnings 231.4 234.0 233.5
------------------------------------------- ------ --------- --------- -------------
Equity attributable to equity holders of
the parent 373.2 332.0 330.5
Non-controlling interests 3.6 3.1 3.5
------------------------------------------- ------ --------- --------- -------------
Total equity 376.8 335.1 334.0
------------------------------------------- ------ --------- --------- -------------
Condensed consolidated statement of changes in equity
For the half year ended 30 June 2016
Share Capital Non-controlling
Share premium redemption Translation Other Hedging Retained interests Total
capital account reserve reserve reserve Reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- -------- ----------- ------------- --------- --------- ---------- ---------------- --------
At 30 June
2015 7.3 38.1 7.6 (11.9) 56.9 - 234.0 3.1 335.1
--------------- --------- -------- ----------- ------------- --------- --------- ---------- ---------------- --------
At 31 December
2015 7.3 38.1 7.6 (12.8) 56.9 (0.1) 233.5 3.5 334.0
Total
comprehensive
income for
the
period - - - 44.8 - - 10.5 0.7 56.0
Dividends - - - - - - (13.1) (0.6) (13.7)
Share-based
payments - - - - - - 0.5 - 0.5
At 30 June
2016 7.3 38.1 7.6 32.0 56.9 (0.1) 231.4 3.6 376.8
--------------- --------- -------- ----------- ------------- --------- --------- ---------- ---------------- --------
Consolidated cash flow statement
For the half year ended 30 June 2016
Half Half Year
year year to
to 30 to 30 31 December
June June 2015
2016 2015
Note GBPm GBPm GBPm
------------------------------------------------------ ----- -------- ------- -------------
Cash flows from operating activities
Operating profit before exceptional items 35.6 37.7 103.4
Depreciation of property, plant and equipment 30.2 24.5 50.9
Amortisation of intangible assets 0.7 0.6 1.2
Loss/(profit) on sale of property, plant and
equipment 1.1 (0.3) (0.3)
Other non-cash movements 3.4 0.8 6.4
Foreign exchange (gains)/losses (0.3) 0.3 0.1
------------------------------------------------------- ----- -------- ------- -------------
Operating cash flows before movements in working
capital 70.7 63.6 161.7
(Increase)/decrease in inventories (3.3) (4.6) 0.5
(Increase)/decrease in trade and other receivables (44.3) (71.3) (11.1)
Increase/(decrease) in trade and other payables 18.9 30.5 (1.4)
Change in provisions, retirement benefit and
other non-current liabilities (0.1) 0.4 (7.4)
------------------------------------------------------- ----- -------- ------- -------------
Cash generated from operations before exceptional
items 41.9 `18.6 142.3
Cash flows from exceptional items (2.1) (25.0) (27.5)
Cash generated/(utilised) from operations 39.8 (6.4) 114.8
Interest paid (5.5) (3.3) (6.6)
Income tax paid (11.0) (17.0) (44.3)
------------------------------------------------------- ----- -------- ------- -------------
Net cash inflow/(outflow) from operating activities 23.3 (26.7) 63.9
------------------------------------------------------- ----- -------- ------- -------------
Cash flows from investing activities
Interest received 0.4 0.2 0.5
Proceeds from sale of property, plant and
equipment 2.8 3.1 5.1
Acquisition of property, plant and equipment (33.4) (33.8) (74.2)
Acquisition of intangible assets (0.2) (0.3) (0.8)
Acquisition of subsidiaries, net of cash acquired (12.2) (2.7) (52.5)
Acquisition of other non-current assets (62.0) - -
Net cash outflow from investing activities (104.6) (33.5) (121.9)
------------------------------------------------------- ----- -------- ------- -------------
Cash flows from financing activities
New borrowings 126.7 47.9 71.2
Repayment of borrowings - (1.8) (9.3)
Cash flows from derivative instruments (28.0) - -
Payment of finance lease liabilities (1.1) (0.8) (1.4)
Dividends paid (13.7) (12.6) (19.1)
------------------------------------------------------- ----- -------- ------- -------------
Net cash inflow from financing activities 83.9 32.7 41.4
------------------------------------------------------- ----- -------- ------- -------------
Net increase/(decrease) in cash and cash equivalents 2.6 (27.5) (16.6)
Cash and cash equivalents at beginning of
period 62.9 85.6 85.6
Effect of exchange rate fluctuations 8.3 (5.0) (6.1)
------------------------------------------------------- ----- -------- ------- -------------
Cash and cash equivalents at end of period 9 73.8 53.1 62.9
------------------------------------------------------- ----- -------- ------- -------------
1. Basis of preparation
The condensed financial statements included in this interim
financial report have been prepared in accordance with IAS 34,
'Interim Financial Reporting', as adopted by the European Union.
They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 December 2015. 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 2015, except
for the adoption of the following:
- Amendments to IAS 1, 'Disclosure Initiative'
- Amendments to IAS 16 and 38, 'Clarification of Acceptable
Methods of Depreciation and Amortisation'
- Amendments to IAS 27, 'Equity Method in Separate Financial Statements'
- Amendments to IFRS 11, 'Accounting for Acquisitions of Interests in Joint Operations'
- Annual Improvements to IFRSs 2012-2014 Cycle
There is no material impact on this interim financial report as
a result of adopting these amendments and annual improvements.
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 figures for the year ended 31 December 2015 are not
statutory accounts but have been extracted from the Group's
statutory accounts for that financial year. The auditor's report on
those accounts was not qualified and did not contain statements
under section 498(2) or (3) of the Companies Act 2006. A copy of
the statutory accounts for that year has been delivered to the
Registrar of Companies and has been made available on the Company's
website at www.keller.co.uk.
The financial information in this interim financial report for
the half years ended 30 June 2016 and 30 June 2015 has neither been
reviewed, nor audited.
The key risks and uncertainties facing the Group, as explained
in the Group's Annual Report for the year ended 31 December 2015,
continue to be: market risk, strategic risk, financial risk and
operational risk.
Going concern
The directors have satisfied themselves that the Group is in a
sound financial position, that it has access to sufficient
borrowing facilities and can reasonably expect sufficient
facilities to be available to meet the Group's foreseeable cash
requirements. As a consequence, the directors continue to adopt the
going concern basis in preparing the condensed financial
statements.
FRS 101
Following the publication of FRS100 Application of Financial
Reporting Requirements by the Financial Reporting Council, Keller
Group plc notified shareholders and changed its accounting
framework for the year ended 31 December 2015 by adopting FRS101
Reduced Disclosure Framework. It is the Board's intention to
continue to use FRS101 and the disclosure exemptions for the year
ending 31 December 2016 (unless we receive objection in writing to
the registered address from shareholders holding more than 5% of
the allotted share capital by 30 September 2016). Where required,
equivalent disclosures will be given in the consolidated group
accounts of Keller Group plc.
2. Foreign currencies
The exchange rates used in respect of principal currencies
are:
Average for period Period end
------------------------------------- -----------------------------------
Half year Half year Year to As at As at As at
to to 31 December 30 June 30 June 31 December
30 June 30 June 2015 2016 2015 2015
2016 2015
------------------- ---------- ---------- ------------- --------- --------- -------------
US dollar 1.43 1.52 1.53 1.34 1.57 1.48
Canadian dollar 1.90 1.88 1.95 1.73 1.94 2.05
Euro 1.28 1.36 1.38 1.21 1.42 1.36
Singapore dollar 1.98 2.05 2.10 1.80 2.12 2.09
Australian dollar 1.95 1.95 2.03 1.80 2.05 2.03
------------------- ---------- ---------- ------------- --------- --------- -------------
3. Segmental analysis
In accordance with IFRS 8, the Group has determined its
operating segments based upon the information reported to the Chief
Operating Decision Maker. With effect from 1 January 2016, the
Group has implemented a new organisation structure, compromising
three geographical divisions which have only one major product or
service: specialist ground engineering services. Australia and Asia
have been combined to form the new geographical division, APAC.
North America and EMEA continue to be managed as separate
geographical divisions. This is reflected in the Group's management
structure and in the segment information reviewed by the Chief
Operating Decision Maker. There have been no material changes to
the assets and liabilities of these segments since the year end.
Revenue and operating profit of the three reportable segments is
given below, with comparative information restated to reflect the
new geographic structure:
Revenue Operating profit
------------------------------------- -------------------------------------
Half year Half year Year to Half year Half year Year to
to to 31 December to to 31 December
30 June 30 June 2015 30 June 30 June 2015
2016 2015 GBPm 2016 2015 GBPm
GBPm GBPm GBPm GBPm
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
North America 464.8 415.8 851.2 33.6 28.4 76.4
EMEA(1) 261.7 210.3 441.5 13.6 7.0 21.3
APAC(2) 123.2 129.7 269.7 (9.6) 4.8 11.7
849.7 755.8 1,562.4 37.6 40.2 109.4
Central items and
eliminations - - - (2.0) (2.5) (6.0)
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
Before exceptional
items 849.7 755.8 1,562.4 35.6 37.7 103.4
Exceptional items
(Note 5) - - - (4.7) (2.7) (38.7)
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
849.7 755.8 1,562.4 30.9 35.0 64.7
-------------------- ---------- ---------- ------------- ---------- ---------- -------------
(1) Europe, Middle East and Africa.
(2) Asia-Pacific.
4. Acquisitions
2016 acquisitions
Tecnogeo
------------------------------------
Carrying Fair value Fair value
amount adjustment
GBPm GBPm GBPm
------------------------------- --------- ------------ -----------
Net assets acquired
Intangible assets - 0.7 0.7
Property, plant and equipment 6.1 - 6.1
Cash and cash equivalents 1.1 - 1.1
Receivables 3.8 - 3.8
Other assets 0.3 - 0.3
Loans and borrowings (1.6) - (1.6)
Deferred tax - (0.2) (0.2)
Other liabilities (1.4) (1.9) (3.3)
------------------------------- --------- ------------ -----------
8.3 (1.4) 6.9
Goodwill 5.4
------------------------------- --------- ------------ -----------
Total consideration 12.3
------------------------------- --------- ------------ -----------
Satisfied by
Initial cash consideration 11.8
Contingent consideration 0.5
------------------------------- --------- ------------ -----------
12.3
------------------------------- --------- ------------ -----------
On 29 February 2016, the Group acquired 100% of the share
capital of the Tecnogeo group of companies, a business based in Sao
Paulo, Brazil, for an initial cash consideration of GBP11.8m (BRL
62.1m). The fair value of the intangible assets acquired represents
the fair value of customer contracts at the date of acquisition and
the trade name. Goodwill arising on acquisition is attributable to
the knowledge and expertise of the assembled workforce, the
expectation of future contracts and customer relationships and the
operating synergies that arise from the Group's strengthened market
position. Contingent consideration of up to GBP12.3m (BRL 53m) is
payable based on total earnings before interest, tax, depreciation
and amortisation in the two year period following acquisition.
GBP0.5m of the contingent consideration is currently provided
for.
The fair value of the total trade receivables is not materially
different from the gross contractual amounts receivable and is
expected to be recovered in full. In the period to 30 June 2016,
Tecnogeo contributed GBP5.2m to revenue and GBP0.1m to the net
profit before exceptional items of the Group. Had the acquisition
taken place on 1 January 2016, total Group turnover would have been
GBP852.3m and total net profit before exceptional items would have
been GBP20.0m.
On 4 April 2016, the Group acquired assets and certain
liabilities of Smithbridge Group Pty Limited, a business based in
Brisbane, Australia, for an initial cash consideration of GBP1.8m
(AUD3.4m). The purchase price reflects the fair value of the assets
and liabilities acquired.
The adjustments made in respect of acquisitions in the period to
30 June 2016 are provisional and will be finalised within 12 months
of the acquisition date.
2015 acquisitions
Bencor Austral Ellington Cross Total
Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair Carrying Fair Fair
amount value value amount value value amount value value amount value value
adjust-ment adjust-ment adjust-ment adjust-ment
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- --------- ------------ -------- --------- ------------ ------- --------- ------------ ------- --------- ------------ -------
Net assets
acquired
Intangible
assets - 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 GBP11.1m (A$20.0m) is payable based on total earnings
before interest, tax, depreciation and amortisation in the three
year period following acquisition.
On 17 August 2015, the Group acquired the trade and selected
assets of Ellington Cross, LLC ('Ellington Cross'), a business
based in Charleston, USA.
5. Exceptional items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
items which are exceptional by their size or are non-trading in
nature, including those relating to acquisitions.
Exceptional items comprise the following:
Half year Half year
to 30 to Year to
June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- -------------
Goodwill impairment - - 31.2
Amortisation of acquired intangible assets 5.0 2.6 7.3
Acquisition costs 0.2 0.1 0.2
Other (0.5) - -
-------------------------------------------- ---------- ---------- -------------
Exceptional items in operating costs 4.7 2.7 38.7
Exceptional finance costs 0.5 0.3 0.7
--------------------------------------------- ---------- ---------- -------------
5.2 3.0 39.4
-------------------------------------------- ---------- ---------- -------------
Amortisation of acquired intangible assets primarily relate to
the acquisitions of Keller Canada, Franki Africa, Austral, Bencor
and Tecnogeo.
Other exceptional items relate to the rental income received for
the period following the acquisition of the freehold of a
processing and warehousing facility at Avonmouth, near Bristol on
12 May 2016 (Note 10).
Exceptional finance costs relate to the finance costs incurred
to fund the acquisition of the freehold of a processing and
warehousing facility at Avonmouth, near Bristol (Note 10) and the
unwinding of discounted contingent consideration for
acquisitions.
6. Taxation
Taxation, representing management's best estimate of the average
annual effective income tax rate expected for the full year, based
on the profit before tax and exceptional items, is 34.0% (half year
ended 30 June 2015: 35.0%; year ended 31 December 2015: 34.5%).
7. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
Half Half
year year
to 30 to Year to
June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Amounts recognised as distributions to equity
holders in the period:
Interim dividend for the year ended 31 December
2015 of 8.8p (2014: 8.4p) per share - - 6.3
Final dividend for the year ended 31 December
2015 of 18.3p (2014: 16.8p) per share 13.1 12.0 12.0
13.1 12.0 18.3
------------------------------------------------- ------- --------- -------------
In addition to the above, an interim ordinary dividend of 9.25p
per share (2015: 8.8p) will be paid on 30 September 2016 to
shareholders on the register at 2 September 2016. This proposed
dividend has not been included as a liability in these financial
statements and will be accounted for in the period in which it is
paid.
8. Earnings per share
Earnings attributable Earnings attributable
to equity holders of the to equity holders of the
parent before exceptional parent
items
------------------------------ -------------------------------- --------------------------------
30 June 30 June 31 December 30 June 30 June 31 December
2016 2015 2015 2016 2015 2015
------------------------------ -------- -------- ------------ -------- -------- ------------
Basic and diluted earnings
(GBPm) 19.7 22.3 61.9 15.7 20.0 25.5
------------------------------ -------- -------- ------------ -------- -------- ------------
Number of shares (million)
Basic number of ordinary
shares outstanding 71.8 71.6 71.7 71.8 71.6 71.7
Effect of dilutive potential
ordinary shares:
Share options and awards 1.1 0.8 0.8 1.1 0.8 0.8
------------------------------ -------- -------- ------------ -------- -------- ------------
Diluted number of ordinary
shares 72.9 72.4 72.5 72.9 72.4 72.5
------------------------------ -------- -------- ------------ -------- -------- ------------
Earnings per share
------------------------------ -------- -------- ------------ -------- -------- ------------
Basic earnings per share
(pence) 27.4 31.1 86.4 21.9 27.9 35.5
------------------------------ -------- -------- ------------ -------- -------- ------------
Diluted earnings per
share (pence) 27.0 30.7 85.4 21.5 27.6 35.1
------------------------------ -------- -------- ------------ -------- -------- ------------
9. Analysis of closing net debt
As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
------------------------------------------ --------- --------- -------------
Bank balances 73.9 53.1 56.3
Short-term deposits 1.4 2.2 6.8
------------------------------------------- --------- --------- -------------
Cash and cash equivalents in the balance
sheet 75.3 55.3 63.1
Bank overdrafts (1.5) (2.2) (0.2)
------------------------------------------- --------- --------- -------------
Cash and cash equivalents in the cash
flow statement 73.8 53.1 62.9
Bank and other loans (409.1) (221.5) (242.7)
Finance leases (4.4) (3.1) (3.2)
------------------------------------------- --------- --------- -------------
Closing net debt (339.7) (171.5) (183.0)
------------------------------------------- --------- --------- -------------
10. Non-current assets held for sale
On 12 May 2016, the Group acquired the freehold of a processing
and warehousing facility at Avonmouth, near Bristol, for a
consideration of GBP62m. As set out in the 2015 Annual Report &
Accounts, the Group's final liability with regards to the historic
contract dispute involving the property is in part dependent on the
value of the property after some remedial works. In order to
maximize this value, the Group decided to acquire the property with
a view to marketing it to third parties.
In accordance with IFRS 5, the property is being held at the
lower of carrying amount and fair value less costs to sell. As the
Group previously held a provision for the diminution in value of
the property as part of the overall contract dispute provision, no
additional impairment charge has been recognised.
11. Share capital and reserves
As at As at As at
30 June 30 June 31 December
2016 2015 2015
GBPm GBPm GBPm
Allotted, called up and fully paid
Equity share capital:
73,099,735 ordinary shares of 10p each
(30 June 2015: 73,099,735; 31 December
2015: 73,099,735) 7.3 7.3 7.3
------------------------------------------- --------- --------- -------------
The Company has one class of ordinary shares, which carries no
rights to fixed income. There are no restrictions on the transfer
of these shares. The total number of shares held in Treasury was
1.3m (30 June 2015: 1.3m; 31 December 2015: 1.3m).
12. Related party transactions
Transactions between the parent, its subsidiaries and jointly
controlled operations, which are related parties, have been
eliminated on consolidation.
13. Post balance sheet events
There were no material post balance sheet events between the
balance sheet date and the date of this report.
Responsibility Statement
The half yearly financial report is the responsibility of the
Directors who confirm that to the best of their knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with IAS34 - Interim Financial Reporting;
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R - indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year; and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R - disclosure of related party
transactions and changes therein.
The directors of Keller Group plc are listed in the Keller
annual report for 2015; however, since the publication of the
annual report, Roy Franklin has retired from the Board and Peter
Hill CBE has been appointed as Non-Executive Chairman.
Approved by the Board of Keller Group plc and signed on its
behalf by:
Alain Michaelis
Chief Executive
James Hind
Finance Director
1 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UKANRNUABUAR
(END) Dow Jones Newswires
August 01, 2016 02:00 ET (06:00 GMT)
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