REG - Keller Group PLC - Results for the year ended 31 December 2016 <Origin Href="QuoteRef">KLR.L</Origin> - Part 2
27/02/2017 07:06
- Part 2: For the preceding part double click ID:nRSa8544Xa
- (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 £11.7m
(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. Non-underlying items
Non-underlying items include items which are exceptional by their size or are
non-trading in nature and comprise the following:
Amortisation of acquired intangible assets (9.7) (7.3)
Restructuring costs (14.3) -
Contingent consideration: additional amounts provided (3.9) (0.9)
Acquisition costs (0.7) (0.2)
Goodwill impairment - (31.2)
Non-underlying items in operating costs (18.9) (32.3)
Contract dispute 14.3 -
Contingent consideration: provision released 4.2 0.9
Non-underlying items in other operating income 18.5 0.9
Total non-underlying items in operating profit (10.1) (38.7)
Non-underlying finance costs (1.1) (0.7)
Total non-underlying items (11.2) (39.4)
Total non-underlying items
(11.2)
(39.4)
Amortisation of acquired intangible assets primarily relate to Keller Canada,
Franki Africa and the acquisitions set out in note 4.
The £14.3m exceptional restructuring charge relates to asset write downs,
redundancy costs and other reorganisation charges in markets experiencing
significantly depressed trading conditions (Singapore, Australia, Canada and
South Africa). This includes the write-down of surplus equipment to current
market values where it is not being relocated to more active parts of the
Group.
Additional contingent consideration provided relates to the Bencor and
Ellington Cross acquisitions.
The goodwill impairment in 2015 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.
£14.3m of exceptional credits relate to the contract dispute settled in 2014.
These credits are attributable to insurance proceeds received after an initial
settlement with insurers, rental income less operating costs from the acquired
processing and warehousing facility (note 9) and the release of the portion of
the contract dispute provision that was dependent on the valuation of the
property.
Contingent consideration released relates to adjustments to estimated amounts
payable for the Austral, Franki Africa and Geo-Foundations acquisitions.
6. Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
2016 2015
£m £m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2015 of 18.3p (2014: 16.8p) per share 13.1 12.0
Interim dividend for the year ended 31 December 2016 of 9.25p (2015: 8.8p) per share 6.7 6.3
19.8 18.3
The Board has recommended a final dividend for the year ended 31 December 2016
of £13.8m, representing 19.25p (2015: 18.3p) per share. The proposed dividend
is subject to approval by shareholders at the AGM on 11 May 2017 and has not
been included as a liability in these financial statements.
7. Earnings per share
Basic and diluted earnings per share are calculated as follows:
Earnings attributable to equity holders of the parent before non-underlying items Earnings attributable to equity holders of the parent
2016 2015 2016 2015
Basic and diluted earnings (£m) 54.5 61.9 47.2 25.5
Weighted average number of shares (million)
Basic number of ordinary shares outstanding 71.8 71.7 71.8 71.7
Effect of dilutive potential ordinary shares:
Share options and awards 1.1 0.8 1.1 0.8
Diluted number of ordinary shares outstanding 72.9 72.5 72.9 72.5
Earnings per share
Basic earnings per share (pence) 75.9 86.4 65.7 35.5
Diluted earnings per share (pence) 74.8 85.4 64.7 35.1
8. Share capital and reserves
2016 2015
£m £m
Allotted, called up and fully paid
Equity share capital:73,099,735 ordinary shares of 10p each (2015: 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 1.1m (2015: 1.3m).
9. 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 £62m.
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. In order to maximise 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. At 30 June 2016, the fair value of
the property was £48m, based on an external valuation. The property was
impaired by £14m at 30 June 2016, however the Group previously held a £14m
provision for the diminution in value of the property as part of the overall
contract dispute provision, and therefore no additional impairment charge was
recognised.
At 31 December 2016, the fair value of the property based on an external
valuation was £54m. The £6m reversal of impairment has been recognised as
exceptional other operating income (note 5).
Rental income less operating costs for the period has been included within
exceptional other operating income (note 5).
10. Related party transactions
Transactions between the parent, its subsidiaries and joint operations, which
are related parties, have been eliminated on consolidation.
11. Post balance sheet events
A further £5.9m of insurance proceeds relating to the contract dispute settled
in 2014 was received in February 2017. This will be recognised as exceptional
other operating income in 2017 as the receipt of these insurance proceeds was
not considered virtually certain as at 31 December 2016.
Adjusted performance measures
The Group's results as reported under International Financial Reporting
Standards (IFRS) and presented in the financial statements (the "statutory
results") are significantly impacted by movements in exchange rates relative
to sterling, as well as by exceptional items and non-trading amounts relating
to acquisitions.
As a result, adjusted performance measures have been used throughout this
report to describe the Group's underlying performance. The Board and Executive
Committee use these adjusted measures to assess the performance of the
business because they consider them more representative of the underlying
ongoing trading result and allow more meaningful comparison to prior year.
Underlying measures
The term "underlying" excludes the impact of exceptional items, amortisation
of acquired intangible assets and other non-trading amounts relating to
acquisitions (collectively "non-underlying items"), net of any associated tax.
Underlying measures allow management and investors to compare performance
without the potentially distorting effects of one-off items or non-trading
items. Non-underlying 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.
Constant currency measures
The constant currency basis ("constant currency") adjusts the comparative to
exclude the impact of movements in exchange rates relative to sterling. This
is achieved by retranslating the 2015 results of overseas operations into
sterling at the 2016 average exchange rates.
A reconciliation between the underlying results and the reported statutory
results is shown on the face of the consolidated income statement, with
non-underlying items detailed in note 5. A reconciliation between the 2015
underlying result and the 2015 constant currency result is shown below and
compared to the underlying 2016 performance:
Revenue by segment
Statutory2016 Statutory2015 Impact of exchange movements2015 Constant currency 2015 Statutory change Constant currencychange
£m £m £m £m % %
North America 952.9 851.2 103.2 954.4 +12% -
EMEA 552.6 441.5 36.8 478.3 +25% +16%
APAC 274.5 269.7 28.2 297.9 +2% -8%
Group 1,780.0 1,562.4 168.2 1,730.6 +14% +3%
Underlying operating profit by segment
Underlying2016 Underlying2015 Impact of exchange movements2015 Constant currency 2015 Underlying change Constant currencychange
£m £m £m £m % %
North America 86.9 76.4 9.2 85.6 +14% +2%
EMEA 30.2 21.3 2.0 23.3 +42% +30%
APAC (18.0) 11.7 1.1 12.8 -254% -241%
Central items and eliminations (3.8) (6.0) - (6.0) +37% +37%
Group 95.3 103.4 12.3 115.7 -8% -18%
Underlying operating margin
Underlying operating margin is underlying operating profit as a percentage of
revenue.
Other adjusted measures
Where not presented and reconciled on the face of the consolidated income
statement, consolidated balance sheet or consolidated cash flow statement, the
adjusted measures are reconciled to the IFRS statutory numbers below:
EBITDA
2016 2015
£m £m
Operating profit before non-underlying items 95.3 103.4
Depreciation 62.0 50.9
Amortisation 1.3 1.2
Underlying EBITDA 158.6 155.5
Non-underlying items in operating costs (18.9) (1.1)
Non-underlying items in other operating income 18.5 0.9
EBITDA 158.2 155.3
Net finance costs
2016 2015
£m £m
Finance income (1.6) (0.8)
Finance costs before non-underlying items 11.8 8.5
Underlying net finance costs 10.2 7.7
Non-underlying finance costs 1.1 0.7
Net finance costs 11.3 8.4
Net capital expenditure
2016 2015
£m £m
Acquisition of property, plant and equipment 78.2 74.2
Acquisition of intangible assets 0.6 0.8
Proceeds from sale of property, plant and equipment (5.8) (5.1)
Net capital expenditure 73.0 69.9
Net debt
2016 2015
£m £m
Current loans and borrowings 54.0 3.5
Non-current loans and borrowings 336.0 242.6
Cash and cash equivalents (84.4) (63.1)
Net debt 305.6 183.0
For further information, please contact:
Keller Group plc www.keller.com
James Hind, Finance Director 020 7616 7575
Finsbury
Gordon Simpson, Theo Hildebrand 020 7251 3801
A presentation for analysts will be held at 9.30am at
One Moorgate Place - Chartered Accountants Hall,
1 Moorgate Place, London EC2R 6EA
A live webcast will be available from 9.30am and, on demand, from 2.00pm at
http://www.investis-live.com/keller/587362bf85d36716002de4c6/tj6f
Print resolution images are available for the media to download from
www.vismedia.co.uk
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 £1.8bn, 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).
This information is provided by RNS
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