Trading Update

RNS Number : 5910W

Keller Group PLC

12 December 2019

 

For immediate release                                                                                       12 December 2019

Keller Group plc

Appointment of CEO, pre-close trading and strategy update

Keller Group plc (LSE: KLR) ("Keller", or "the group"), the world's largest geotechnical specialist contractor, today provides a pre-close statement for the year ending 31 December 2019.

Highlights

·  Michael Speakman, interim CEO and formerly CFO, has been appointed permanent CEO with immediate effect

·    The Board continues to expect performance for 2019 to be in line with market expectations

·    APAC will return to profit in 2019 following its successful restructuring

·    As anticipated 2019 net debt/EBITDA is expected to be at or below 1.5x (on an IAS17 basis) and the Board expects the group's strong cash flow to result in further deleveraging

·   Following a review by the Board, the group now has a more focused strategy which defines more clearly the core activities of the group and will drive the withdrawal from non-core markets

·  North America reorganisation is now anticipated to deliver a materially improved financial performance by 2022 in addition to the cost and efficiency savings previously announced

·  The Board announces it will return excess cash to shareholders in the form of supplementary dividends for the financial years 2019 and 2020

As announced separately today, Michael Speakman, Interim Chief Executive Officer and formerly Chief Financial Officer, has been appointed permanent Chief Executive Officer with immediate effect.

The Board expects the group's performance for 2019 to be in line with market expectations. All of the significant claims required to deliver this result have now been resolved. The scope adjustment to the Bencor long-term contract has been agreed satisfactorily subject to signed documentation and will be settled in early 2020. Fourth quarter cash flows have continued strongly and, with continued momentum through December, year-end net debt/EBITDA is expected to be at or below 1.5x (on an IAS17 basis) in accordance with the target we set in March of this year.

The Board also announces that it has undertaken a review of the group's strategy and as a consequence has defined more clearly the core activities of its business. Keller will concentrate on being the preferred international geotechnical specialist contractor operating in selected sustainable markets where we enjoy leading positions, and large attractive projects. Local businesses will leverage the group's scale and expertise to deliver engineered solutions and operational excellence, driving market share leadership in our selected segments. Our objective is for Keller to become a more focused, higher quality business with industry leading margins, achieving both sustainable operational delivery and cash generation.

This enhancement and greater focus of Keller's strategy will result in the group rationalising its geographic presence and exiting certain non-core services. We will concentrate our resources on those markets and activities where customers value our skills and expertise to achieve mutual benefits including an appropriate level of financial return.

During 2019 we have very successfully re-focused and restructured our APAC division, which will return to profit for the full year. In order to concentrate more heavily on our higher quality European businesses within our EMEA division, we will make a phased withdrawal from South America, where market conditions remain challenging. We have also commenced a strategic review of our Franki Africa activities, which we expect to be completed by the end of the first quarter of 2020. In North America, the reorganisation and rebranding of our foundation businesses is progressing well, with the new structure becoming effective from 1 January 2020 as planned. We have now refined our initial assessment of the incremental benefit of being able to offer all products and services across North America and anticipate generating materially improved financial performance by 2022 in addition to the cost and efficiency savings previously announced.

The Board recognises the importance of returns to our shareholders. Keller has consistently and materially grown its dividend in the 25 years since listing. Keller has strong cash generation and a robust balance sheet, which together support our ability to continue to increase the dividend sustainably through the market cycle.

This strong cash flow has again been demonstrated by our deleveraging in the second half of 2019. Net debt/EBITDA is expected to be at or below 1.5x (on an IAS17 basis).

The Board is committed to maintaining an efficient balance sheet and regularly reviews the group's capital resources in light of the medium-term investment requirements of the business and will return excess capital to shareholders if and when appropriate. The Board confirms today that it intends to maintain the current progressive dividend policy. In addition to the normal 5% increase to the annual ordinary dividend of recent years, the Board now intends to declare a non-recurring supplementary dividend of 2.3 pence per share for 2019 and of 4.4 pence per share for 2020, to bring the total full year dividend to 40 pence per share and 44 pence per share for 2019 and 2020 respectively.

Michael Speakman, Chief Executive Officer, said: "The Board expects the group's performance for 2019 to be in line with market expectations. I am delighted that following the focused restructuring actions delivered by local management in APAC, the division will return to full year profit in 2019. We are also on track to deliver our net debt/EBITDA target of at or below 1.5x.

The newly enhanced strategy provides greater clarity and creates exciting opportunities to grow shareholder value significantly in the coming years. The Board's decision to return excess capital to shareholders in the form of supplementary dividends for the financial years 2019 and 2020 evidences the Board's confidence in the group's prospects."

 

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

Caroline Crampton, Interim Head of Investor Relations

Finsbury

Gordon Simpson                                                                     020 7251 3801

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 £2bn.

For more information, please go to:

http://www.keller.com/investors.aspx and http://www.keller.com.

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 Risk Management approach and Principal Risks 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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