Trading Statement
Keller Group PLC
01 December 2003
For immediate release 1 December 2003
Trading Update
Board and Organisational Changes
Keller Group plc ('Keller') today announces the following developments:
•The second half performance has been below expectations, with a
particularly disappointing performance from Makers, leading the Board to
expect a full year result slightly below last year at constant exchange
rates and before exceptional items and amortisation of intangibles.
•The Board is considering the best way to realise shareholder value from
Makers.
•Following a strategic review, the Group will concentrate on its core
specialist ground engineering activities and its management will be
structured along geographic, rather than product, lines.
•Board and management changes have been made in light of this change in
strategic focus:
•Rob Ewen steps down from the Board and as managing director of the
Specialist Services division with immediate effect; and
•Dr Wolfgang Sondermann, managing director of the European & Overseas
business, is appointed as a director.
•Order intake and tender levels remain good, resulting in a current order
book representing around four months' sales.
Tom Dobson, Keller's Chief Executive, said:
'It is disappointing to report that our performance for the year will be below
expectations. However, we believe that the actions we are taking will strengthen
the Group and enable it to consolidate its performance in 2004.'
Enquiries:
Keller Group plc www.keller.co.uk
Tom Dobson, Chief Executive 020 8341 6424
Justin Atkinson, Chief Operating Officer
James Hind, Finance Director
Weber Shandwick / Square Mile 020 7067 0700
Reg Hoare/Josh Royston
Refocusing on Core Activities
After a strategic review, the Board has concluded that going forward it should
concentrate on enhancing Keller's international leadership in specialist ground
engineering. This will be achieved by continuing its successful record of
organic growth combined with complementary bolt-on acquisitions, accelerating
its push into new regions and further extending the geographic reach of its
Suncoast operations.
As a result of this decision to focus on its core activities, the Board has
decided to:
• structure the management and reporting of its business along geographic,
rather than product, lines; and
• consider the best way to realise value for shareholders from its Makers
business.
Board Changes
Given the decision to concentrate on the Group's core ground engineering
activities, Rob Ewen has agreed that he should step down from the Board and as
managing director of the Specialist Services division with immediate effect.
Justin Atkinson, Chief Operating Officer, will assume direct responsibility for
Makers during the process of reviewing this business.
Following his successful direction of Keller's European & Overseas business over
the past three years, Dr Wolfgang Sondermann, aged 53, has been appointed to the
Board. He will continue to have executive responsibility for the ground
engineering business in Europe & Overseas.
To ensure the success of the new business structure, Bob Rubright, who was
appointed to the Board in March 2003, will now focus on managing all of the
Group's activities, including Suncoast, in the US.
Current Trading
Notwithstanding the underlying strength of the core ground engineering
businesses, the Group's overall second half performance has been below
expectations. The dollar has continued to weaken against Sterling and, overall,
currency movements are expected to have an adverse impact on operating profit
before exceptional items and amortisation of intangibles of around £1m for the
year as a whole.
The European & Overseas business has maintained the strong performance seen in
the first half, including a very good first year contribution from Keller-Terra.
The ground engineering business in the UK has responded well to the performance
improvement initiatives carried out at the start of the second half.
The results of the US ground engineering businesses have recently been held back
by a weak performance from the Western Region of Hayward Baker. However, the
second quarter improvement in the performance of McKinney, acquired in December
2002, has been maintained in the second half of the year. Suncoast continues to
suffer from increased costs and reduced margins as a result of the tariffs on
steel strand introduced early in the second half, despite increasing its prices.
Overall, the results of the US businesses are expected to fall slightly below
last year in dollar terms.
Despite the actions taken earlier in the year, the weak first-half trading at
Makers, reported at the time of our interim results on 22 August, has continued
into the second half of the year. For the year as a whole, Makers is now
expected to break even, before exceptional items. As a result of this
disappointing performance, the Group's full year results will include an
exceptional goodwill impairment charge of approximately £7m relating to the
Makers' businesses.
Prospects
In light of these developments, the Board expects that the Group's results for
the year ended 31 December 2003, before amortisation and exceptional items, will
be slightly below last year at constant exchange rates.
Despite these results, order intake and tender levels remain good, resulting in
a current order book representing around four months' sales.
We believe that the actions we are taking, as indicated above, will strengthen
the Group and enable it to consolidate its performance in 2004.
A further update on trading and progress in the review of Makers will be given
with the preliminary results announcement in early March 2004.
Ends
Enquiries:
Keller Group plc www.keller.co.uk
Tom Dobson, Chief Executive 020 8341 6424
Justin Atkinson, Chief Operating Officer
James Hind, Finance Director
Weber Shandwick / Square Mile 020 7067 0700
Reg Hoare/ Josh Royston
Appendix
Dr Wolfgang Sondermann does not hold, and has not held in the past five years,
any directorships in publicly quoted companies.
There is no information to be disclosed pursuant to the requirements of
paragraph 6.F.2(b) to (g) of the UK Listing Authority Listing Rules.
This information is provided by RNS
The company news service from the London Stock Exchange