REG - Keller Group PLC - New Contract, Trading Update & Strategic Progress

KellerAnnouncement

27/06/2022 07:00

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RNS Number : 2053Q  Keller Group PLC  27 June 2022

27 June 2022

 

Keller Group plc

 

Major new contract, update on trading, strategic progress and interim dividend
increase

 

Keller Group plc ('Keller' or 'the Group'), the world's largest geotechnical
specialist contractor, today announces a trading update ahead of the
announcement of its interim results for the half year ended 26 June 2022
scheduled for 2 August 2022.

 

Major new contract

 

Keller is one of a small number of geotechnical contractors to have been
selected to undertake work on the prestigious NEOM Giga project in the Tabuk
Province of North West Saudi Arabia. The first element of the NEOM project is
'The Line', a 170-kilometre-long mega-city, starting in the west at the Gulf
of Aqaba, continuing through the Sharma Valley and terminating at the NEOM
International Airport within the upper valley region. The Line is subdivided
into approximately 135 modules, each containing 8 buildings founded on large
diameter bored piles. Keller has signed an umbrella Framework Agreement in
respect of the project, and is mobilising for an anticipated first works order
on a portion of Module 40 which has an expected value to Keller of around
£50m, with the work anticipated to be completed within the next twelve
months. Further works orders are expected to be awarded later in the year on
subsequent modules. We have a longstanding presence in Saudi Arabia and we are
delighted to have been invited to participate in NEOM, a world class
construction project. Following the signing of the Framework Agreement Keller
is very well positioned to participate in the future geotechnical work, with
the potential to generate contract revenues in the hundreds of million pounds
in future years.

 

Trading Update

 

The Group is trading as anticipated in the first half of the year and the
Board's expectations for the full year remain unchanged. As previously
indicated, we expect 2022 to be a year of growth, with full year performance
to have the customary second half weighting, and to reflect our usual increase
in trading momentum as the year progresses. As previously highlighted, across
the Group we have successfully passed on a significant portion of cost
increases in the form of higher prices, preserving the absolute level of
profitability, whilst the relative measure has been affected by materials
shortages, the residual unrecovered inflation and the dilution effect of the
material costs passed through to clients.

 

Our record order book continues to strengthen in terms of volume and quality
and is expected to be around £1.5bn at the half year, increasing our
confidence as we enter the second half of the year and illustrating the
Group's resilience in the current environment. As well as NEOM, there have
been a number of recent contract awards and current prospects in the energy
and infrastructure sectors across the Group are encouraging. In particular, as
a result of the political migration away from dependency on Russian
hydrocarbons, there is a resurgence globally in Liquified Natural Gas (LNG)
activity, where Keller has both a well-established presence and an excellent
reputation. With its focus on US Gulf Coast LNG projects, our recent RECON
acquisition continues to perform very well and ahead of our expectations, and
we are confident of both new LNG contract awards and the restart of currently
suspended projects.

 

Strategy Update

 

The Group continues to implement its strategy to be the preferred
international geotechnical specialist contractor focused on sustainable
markets and attractive projects, generating long term value for our
stakeholders. During 2020 and 2021 we made considerable progress rationalising
and restructuring the Group's geographic and service activities to create a
more focused, higher quality portfolio. We continue to refine our South West
Europe and our Middle East & Africa business units, both of which still
retain a legacy of geographically dispersed locations which will benefit from
further rationalisation and reorganisation.

 

Dividend increase

 

The Board recognises the importance of capital returns to our shareholders and
Keller has consistently and materially grown its dividend in the 27 years
since listing. This unbroken record of dividends clearly demonstrates the
Group's ability to continue to prosper through economic downturns, including
both the global financial crises and the pandemic. In the recent AGM trading
statement, the Board stated that it would be reviewing the progression of the
dividend. Accordingly, the Board is announcing a 5% increase in the interim
dividend to 13.2p (2021: 12.6p) as part of the Group's interim results. The
Board will also be reviewing a further increase to the final dividend in
respect of the current year as part of the Group's return to a progressive
dividend policy, as well as reviewing other options for capital returns.

 

Keller continues to deliver strong, resilient cash generation. The net debt to
EBITDA (IAS 17 basis) leverage ratio at the half year is expected to be around
1.2x, with an intention that this reduces to below 1.0x at the year end.

 

Commenting, Michael Speakman, CEO Keller Group plc said:

 

"Our delivery in line with our first half expectations and the Group's record
and growing £1.5bn orderbook provides confidence for our performance in the
second half and delivering on our expectations for the full year. Our
involvement in the prestigious NEOM project, together with a number of recent
infrastructure and LNG contract wins, evidences the diversity and inherent
resilience of the Group across the macroeconomic cycle. The underlying
strength of the Group's performance provides confidence in our longer-term
prospects and is reflected in the Board's decision to recommence the
progressive dividend policy with a 5% increase in the interim dividend for the
first half of 2022."

 

 

 

 For further information, please contact:

 Keller Group plc                               www.keller.com (http://www.keller.com)
 Michael Speakman, Chief Executive Officer      020 7616 7575
 David Burke, Chief Financial Officer
 Caroline Crampton, Head of Investor Relations

 FTI Consulting
 Nick Hasell                                    020 3727 1340
 Matthew O'Keeffe

 

 

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 five continents, Keller tackles an unrivalled 6,000 projects every
year, generating annual revenue of more than £2bn.

 

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. For a more detailed description of these risks, uncertainties
and other factors, please see the Principal risks and uncertainties section of
the Strategic report in the Annual Report and Accounts. 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).

 

LEI: 549300QO4MBL43UHSN10

Announcement classification: 2.2 Inside information.

The person responsible for making this announcement is Kerry Porritt, Group
Company Secretary and Legal Advisor

 

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