REG - Keller Group PLC - Final Results <Origin Href="QuoteRef">KLR.L</Origin> - Part 2
29/02/2016 07:10
- Part 2: For the preceding part double click ID:nRSc3500Qa
- - - - - - (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
£m £m
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 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 for period 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 Revenue£m 2015Operating profit£m 2014 Revenue£m 2014Operating profit£m
North America 851.2 76.4 775.6 59.9
EMEA1 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 Segment assets£m 2015 Segment liabilities£m 2015 Capital employed£m 2015 Capital additions£m 2015 Depreciation and amortisation£m 2015Tangible and intangible assets£m
North America 508.7 (165.5) 343.2 30.5 19.8 245.6
EMEA1 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 eliminations2 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 Segment assets£m 2014 Segment liabilities£m 2014 Capital employed£m 2014 Capital additions£m 2014 Depreciation and amortisation£m 2014Tangible and intangible assets£m
North America 499.4 (159.9) 339.5 23.3 17.2 251.6
EMEA1 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 eliminations2 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:
Revenue Non-currentnon-financial assets3
2015£m 2014£m 2015£m 2014£m
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
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 Cross Total
Carrying amount Fair value adjust-ment Fair value Carrying amount Fair value adjust-ment Fair value Carrying amount Fair value adjust-ment Fair value Carrying amount Fair value adjust-ment Fair value
£m £m £m £m £m £m £m £m £m £m £m £m
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 £9.9m
(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 £35.1m to turnover and £0.5m 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 £1,606.4m and total net
profit before exceptional items would have been £65.0m.
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 £3.5m (RM19.0m). £1.4m (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 £1.5m (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 £2.8m
(R$10.7m) at a premium of £1.0m (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£m 2014£m
Goodwill impairment 31.2 -
Contract disputeAmortisation of acquired intangible assets -7.3 54.06.6
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 £27.5m 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.
The prior year credit for contingent consideration and payments mainly relates
to the release of previously provided contingent consideration for the
acquisition of Keller Canada which the Group no longer expects to pay.
Exceptional finance costs relate to the unwind of discounted contingent
consideration to present value.
6. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
2015 2014
£m £m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2014 of 16.8p (2013: 16.0p) per share 12.0 11.4
Interim dividend for the year ended 31 December 2015 of 8.8p (2014: 8.4p) per share 6.3 6.0
18.3 17.4
The Board has recommended a final dividend for the year ended 31 December 2015
of £13.1m, representing 18.3p (2014: 16.8p) per share. The proposed dividend
is subject to approval by shareholders at the AGM on 24 May 2016 and has not
been included as a liability in these financial statements.
7. Earnings per share
Basic and diluted earnings/(loss) per share are calculated as follows:
2015Basic before exceptional items£m 2015Diluted before exceptional items£m 2015 Basic£m 2015 Diluted£m 2014 Basic before exceptional items£m 2014Diluted before exceptional items£m 2014 Basic£m 2014 Diluted£m
Earnings/(loss) (after tax and non-controlling interests), being net profits/(losses) attributable to equity holders of the parent 61.9 61.9 25.5 25.5 53.6 53.6 (3.0) (3.0)
No. ofsharesMillion No. of shares Million No. of shares Million No. ofshares Million No. ofshares Million No. ofshares Million No. ofshares Million No. of shares Million
Weighted average of ordinary shares in issue during the year 71.7 71.7 71.7 71.7 71.2 71.2 71.2 71.2
Add: weighted average of shares under option during the year - 0.8 - 0.8 - 1.0 - 1.0
Adjusted weighted average of ordinary shares in issue 71.7 72.5 71.7 72.5 71.2 72.2 71.2 72.2
Pence Pence Pence Pence Pence Pence Pence Pence
Earnings/(loss) per share 86.4 85.4 35.5 35.1 75.3 74.2 (4.2) (4.2)
8. Share capital and reserves
2015 2014
£m £m
Allotted, called up and fully paid
Equity share capital:73,099,735 ordinary shares of 10p each (2014: 73,099,735) 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 capital redemption reserve is a non-distributable reserve created when the
Company's shares were redeemed or purchased other than from the proceeds of a
fresh issue of shares.
The other reserve is a non-distributable reserve created when merger relief
was applied to an issue of shares under section 612 of the Companies Act 2006
to part fund the acquisition of Keller Canada. The reserve becomes
distributable should Keller Canada be disposed of.
The total number of shares held in Treasury was 1.3m (2014: 1.8m).
9. Related party transactions
Transactions between the parent, its subsidiaries and joint operations, which
are related parties, have been eliminated on consolidation.
The remuneration of the Directors, who are the key management personnel and
related parties of the Group, is set out below:
2015 2014
Key management personnel compensation comprised: £m £m
Short-term employee benefits 2.7 2.0
Post-employment benefits 0.1 0.1
Share-based payments 0.9 0.9
3.7 3.0
1 before pre-tax exceptional items of £39.4m (2014: £56.9m). £31.2m 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 £27.5m cash outflow in 2015 relating to the 2014 exceptional contract
provision.
This information is provided by RNS
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