TIDMKLR
RNS Number : 0240Q
Keller Group PLC
16 June 2020
For immediate release 16 June 2020
Keller Group plc
Trading update and the Board's dividend recommendation
Keller Group plc ("Keller" or "the group"), the world's largest
geotechnical specialist contractor, today provides an update on
trading for the year to date and the 2019 final dividend, ahead of
its Annual General Meeting to be held on 30 June 2020.
Health and Safety
Our priority, as always, remains the health and safety of our
employees and we have continued to make progress in this area. In
respect of the additional operational challenges posed by COVID-19,
the guidance and support we are providing to our employees
continues to follow World Health Organisation guidelines,
supplemented by local authority guidance in the regions in which we
operate. This approach has enabled us to work in a safe and
productive manner on sites wherever the local regulatory regime
allows, using applicable personal protective equipment and social
distancing.
Trading Update
As announced on 23 April 2020, overall trading for the first
quarter was better than our expectations, and materially better
than the prior year. This was despite a deterioration in activity
during the second half of March as the impacts of COVID-19 were
felt across the group.
Trading during the second quarter to date has been resilient,
with the impact of COVID-19 being less significant on the group
overall than first anticipated. The impact has varied across the
group's geographic markets. In North America whilst some states
have imposed tight restrictions, other states have not, and overall
the vast majority of sites on which we are working have remained
open. In EMEA, there has been a variation by country, with an
earlier and more significant impact overall. In APAC, India and
Singapore have experienced countrywide lock downs whereas Australia
has largely remained operational throughout. Markets in APAC and
EMEA are now emerging more decisively from the lock down
restrictions than North America, which in contrast remains
regionally variable.
The measures that we have put in place since the start of the
COVID-19 pandemic have strengthened our resilience and minimised
both the human and financial impact of the crisis. These measures
include enhanced safety protocols, operating cost reductions,
cancellation of discretionary projects, reduced capital expenditure
and an even greater focus on working capital. We have selectively
accessed relevant governmental support schemes across our major
markets. In the UK, the level of support has not been material in
the overall group context. To date we have not seen a deterioration
in our receivables profile and have actively managed our investment
in capital and revenue projects. As a result we have maintained our
characteristically strong cashflow performance during the
period.
The group order book remains steady at c.GBP1bn. Recent project
wins include the award of a $90m two-year contract for the Hampton
Roads Bridge Tunnel Expansion Project in Virginia, USA. During the
second quarter we have experienced some increase in the level of
contract deferrals and cancellations across the group, whilst in
North America we have seen increased pricing pressure in some
areas. We continue to closely monitor the level of tendering
activity and both the pace and margin at which the order book is
replenished.
Financing and Liquidity
As reported in our full year results announcement on 3 March
2020, at 31 December 2019 our net debt was GBP213m, on a bank
covenant IAS 17 basis, equating to a net debt to EBITDA ratio of
1.2x compared to our covenant limit of 3.0x. We have successfully
maintained the leverage ratio within our target range during the
year to date. At the end of May net debt was GBP195m, on the same
bank covenant IAS 17 basis, equating to a net debt to EBITDA ratio
of 1.0x.
The group has substantial borrowing facilities available to it.
As at the end of May 2020, the group had undrawn committed and
uncommitted borrowing facilities totalling GBP293m, comprising
GBP223m of the unutilised portion of the group's GBP375m revolving
credit facility (which expires in November 2024 and has an option
to extend by one further year), GBP18m of other undrawn committed
borrowing facilities and undrawn uncommitted borrowing facilities
of GBP52m, as well as cash and cash equivalents of GBP88m.
In addition to the strong operational cash performance, we are
able to announce that as a company considered to be investment
grade for the purposes of the Covid Corporate Financing Facility
(CCFF), we have recently had confirmation of funding of up to
GBP300m from the Bank of England, which becomes committed at point
of drawing. We have not drawn on the CCFF and nor do we expect to.
To be explicitly clear, the CCFF facility has only been secured to
provide additional protection, in extremis, should there be an
unexpected and significant deterioration in future market
conditions and client payment behaviours resulting in a very
material deterioration in cash flow performance.
Strategic Development
At the beginning of 2020 we announced that we intended to
complete a strategic review of our Franki Africa business by the
end of the first half of 2020. This review is now complete. The
business has faced challenging market, economic and political
conditions in a number of the countries in which it operates, and
despite the significant cost reductions carried out in 2018 and
2019, the business in its current form is unable to deliver the
required margins and returns. The business will therefore be
rationalised, retaining a small number of profitable operations
which will be integrated into our Middle East-based operations,
which share similar market dynamics and conditions. There remain
major contract opportunities in the region, particularly in the oil
and gas sector where we were recently awarded a $23m LNG contract
in Mozambique. Our ability to compete for and execute such
contracts will not be diminished by this action.
Dividend
Following the trading update announced on 23 April 2020, the
Board has kept under review whether to recommend the 2019 final
dividend of 27.4 pence per share as announced in conjunction with
the 2019 full year results on 3 March 2020.
The Board fully recognises the importance of dividends to
shareholders and has now decided that it would be both prudent and
appropriate to maintain the full year dividend at the prior year's
level, representing a full year total 2019 dividend of 35.9p. This
reflects the continued financial strength of the group, its
significant liquidity position, trading during the first half of
the year and the longer-term confidence in the performance of the
business. This continues the group's track record of maintaining or
increasing the dividend every year since its flotation in 1994. The
Board has also decided that the consideration of the declaration
and payment of a 2020 interim dividend will not be made at the time
of the interim results announcement in August but will be reviewed
later in the year.
Accordingly, Resolution 3 of the Notice of Meeting issued to
shareholders on 3 March 2020, to declare a final 2019 dividend of
27.4p per Ordinary Share of 10p in the capital of the group is
amended to a final dividend of 23.3p per Ordinary Share. If
approved, this dividend would be paid on 21 August 2020 to
shareholders on the register at the close of business on 31 July
2020.
Shareholders are reminded that the group's Annual General
Meeting will be held at 9am on 30 June 2020 at the offices of DLA
Piper UK LLP, 160 Aldersgate Street, London EC1A 4HT. As a result
of the requirements of the UK with regard to social distancing, and
in order to protect the health and safety of our shareholders and
employees, it will not be possible to allow shareholders to attend
the Annual General Meeting. Shareholders are strongly encouraged to
exercise their vote on the matters of business at the AGM by
submitting a proxy appointment and giving voting instructions.
Questions from shareholders can be sent by email to
secretariat@keller.com, or by post to the group's head office at
5(th) Floor, 1 Sheldon Square, London W2 6TT for the attention of
the Company Secretary. Answers will not be provided at the AGM, but
as soon as possible thereafter.
Board Development
As announced at our 2019 full year results on 3 March 2020, Paul
Withers, Senior Independent Director and recent Chairman of the
Remuneration Committee, having served on the Board for over eight
years, gave us notice in December 2019 of his intention to retire
from the Board at the conclusion of the Company's 2020 Annual
General Meeting. Paul stepped down as Senior Independent Director
and Chairman of the Remuneration Committee with effect from 1
January 2020. Baroness Kate Rock, Non-executive Director and
Chairman of the Workforce Engagement Committee, was appointed
Senior Independent Director and Eva Lindqvist, Non-executive
Director, was appointed as Chairman of the Remuneration Committee,
both effective from 1 January 2020.
We also announced that concurrent with the retirement of Paul
Withers, we had collectively agreed that it is the right time to
move to a more conventional plc board structure, by reducing the
number of executive directors. Accordingly James Hind and Venu Raju
will not stand for re-election as Executive Directors at the
Company's upcoming Annual General Meeting. James and Venu will
remain as members of Keller's Executive Committee, retaining their
current executive responsibilities as President of North America
and Engineering and Operations Director, respectively, and will
continue to be available to the Board.
Outlook
Whilst the performance for the year to date has been ahead of
our expectations and the current order book remains steady at
c.GBP1bn, we are cognisant of the potential impact of an economic
slowdown on construction markets as well as the volume and quality
of our order book as we look ahead to the important fourth quarter
and beyond. It therefore remains too early to provide earnings
guidance for the current financial year. We will continue to
monitor external events, manage the situation closely and update
the market as appropriate.
We remain confident in the medium term prospects for our key
markets and that our strategy, to be the preferred international
geotechnical specialist contractor focused on sustainable markets
and attractive projects, will enable us to continue to generate
shareholder value.
For further information, please contact:
Keller Group plc 020 7616 7575
www.keller.com
Michael Speakman, Chief Executive Officer
Mark Hooper, Interim Chief Financial Officer
Victoria Huxster, Co-Head of Investor Relations
Caroline Crampton, Co-Head of Investor Relations
Finsbury 020 7251 3801
Gordon Simpson
James Kavanagh
Notes to editors:
Keller is the world's largest geotechnical specialist contractor
providing a wide portfolio of advanced foundation and ground
improvement techniques used across the entire construction sector.
With around 10,000 staff and operations across six continents,
Keller tackles an unrivalled 7,000 projects every year, generating
annual revenue of more than GBP2bn.
For more information, please go to:
http://www.keller.com/investors.aspx and http://www.keller.com
.
LEI: 549300QO4MBL43UHSN10
Classification: 2.2 Inside information (DTR Annex 1)
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations. On the publication of this
announcement via a Regulatory Information Service ("RIS"), this
information is considered to be in the public domain. The person
responsible for making this announcement is Kerry Porritt, Group
Company Secretary and Legal Adviso r.
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END
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