Keller Group Plc - Annual Financial Report
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Keller Group Plc - Annual Financial Report
PR Newswire
LONDON, United Kingdom, April 09
9 April 2024
Keller Group plc
Annual Report and Accounts for the year ended 31 December 2023 and Notice of 2024 Annual General Meeting
Keller Group plc (“Keller”, the “Company”) announces that its Annual General Meeting will be held at 10.00am on Wednesday 15 May 2024 (“AGM 2024”) at the offices of DLA Piper UK LLP, 160 Aldersgate Street, London EC1A 4HT.
In connection with this, the following documents have been posted or otherwise made available to shareholders:
· Annual Report and Accounts for the year ended 31 December 2023 ("Annual Report 2023")
· Notice of AGM 2024
· Proxy Form (for shareholders on the register of members)
· Form of Direction (for employee shareholders)
· Notice of Availability
In compliance with Listing Rule 9.6.1R, copies of these documents have been submitted, where appropriate, to the National Storage Mechanism via the FCA's Electronic Submission System and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
We have also submitted the Annual Report 2023 in the electronic reporting format required by Disclosure Guidance and Transparency Rule (“DGTR”) 4.1.14R; and the Annual Report 2023 and the Notice of AGM 2024 are now available to view on the Investors section of the Company's website at Investor centre | Keller Group plc.
The Board is keen to ensure that shareholders are able to exercise their right to participate in the meeting. Details on how to submit a proxy vote electronically, by post, online through CREST or Proxymity are set out in the Notice of AGM 2024.
Should shareholders wish to ask any questions of the Board relating to the business of the AGM 2024, they are encouraged to email their questions in advance to [email protected] or send them by post to the Company's registered office for the attention of the Group Company Secretary and Legal Advisor.
In accordance with DGTR 6.3.5R, this announcement contains information in the Appendix about the principal risks and uncertainties, the Directors’ responsibility statement and note 29 to the accounts on related party transactions. This information has been extracted in full unedited text from the Annual Report 2023. This material should be read in conjunction with and is not a substitute for reading the full Annual Report 2023. References to page numbers and notes in the Appendix refer to those in the Annual Report 2023. A condensed set of financial statements was appended to the Keller's preliminary results announcement issued on 5 March 2024.
For further information, please contact:
Keller Group plc | www.keller.com |
Silvana Glibota-Vigo, Group Head of Secretariat 020 7616 7575
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 9,500 staff and operations across five continents, Keller tackles an unrivalled 5,500 projects every year, generating annual revenue of c.£3bn.
LEI number: 549300QO4MBL43UHSN10
DGTR 6 Annex 1 Classification: 1.1 (Annual financial and audit reports)
Appendix
Principal risks and uncertainties
We list on the following pages the principal risks and uncertainties as determined by the Board that may affect the Group and highlights the mitigating actions that are being taken. The content of the table, however, is not intended to be an exhaustive list of all the risks and uncertainties that may arise.
Link to strategy
1 Balanced portfolio 2 Engineered solutions
3 Operational excellence 4 Expertise and scale
Risk movement since 2022 and link to viability
Increased risk Constant risk Reduced risk
Timeframe
Short term Medium term Long term
Financial risk
1 Inability to finance our business
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Failure to sufficiently and effectively manage the financial strength of the Group could lead it to:
|
|
| Reduced risk
New $300m US private placement secured, along with strong operational performance throughout 2023, demonstrate clear ability to manage both existing and future risks. Negotiations to refinance the existing revolving credit facility will commence in Q1 2024. |
Link to strategy 3 / 4
Link to viability Yes
Timeframe Medium / Long term
Market risk
2 A rapid downturn in our markets
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Inability to maintain a sustainable level of financial performance throughout the construction industry market cycle, which grows more than many other industries during periods of economic expansion and falls more harder than many other industries when the economy contracts. Any significant, sustained reduction in the level of customer activity could adversely affect the Group’s strategy, reducing revenue and profitability in the short and medium term, and negatively impact the longer-term viability of the Group. |
|
| Constant risk
The Group continues to maintain a very strong order book across all divisions at near record levels. However, due to increasing inflation, higher interest rates and, geopolitical uncertainty, we are seeing some early signs of customers delaying project starts and investment. |
Link to strategy 1 / 2
Link to viability Yes
Timeframe Medium / Long term
Strategic risks
3 Failure to procure new contracts while maintaining appropriate margins
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Failure to negotiate satisfactory and appropriate contractual terms may result in:
|
|
| Constant risk
We continue to maintain a strong order book with improving margins during 2023. We are also seeing increased competition on contracts within our markets with increased pressure on bid pricing from our customers that along with inflationary pressures could potentially erode contract margins. Significant increase in the cost of insurance along with increased self-insured and deductible limits will require a renewed communication across Keller with a focus on minimising our exposure to unnecessary risk and contractually limiting our liability wherever possible. Work to refresh and refocus the PLM Standard focusing on project performance management, hence renaming it PPM (Project Performance Management), is almost complete. |
Link to strategy 1 / 2 / 3 / 4
Link to viability No
Timeframe Short / Medium / Long term
4 Losing our market share
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Inability to achieve sustainable growth, whether through acquisition, new products, new geographies or industry-specific solutions, may:
|
|
| Constant risk
We continued to see very strong improvement across the US in 2023, where we are providing a wider range of our products across more locations following the successful execution of the One Keller project in 2021. This focus is also showing success in the other divisions as they diversify their available product range to maintain and grow our market share. |
Link to strategy 1 / 2
Link to viability Yes
Timeframe Short / Medium / Long term
5 Ethical misconduct and non-compliance with regulations
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Keller operates in many different jurisdictions and is subject to various rules, regulations and other legal requirements including those related to anti-bribery and anti-corruption. Failure to comply with the Code of Business Conduct or other regulations could leave the Group exposed to:
These failures could result in legal investigations, leading to fines and penalties, reputational damage and business losses. | Failure to comply with the Code of Business Conduct or related policies and procedures could stem from:
|
| Constant risk
Following on from the financial reporting fraud in the Austral business discovered in late 2022, a specific controls response plan was developed and executed in 2023. This plan covered the specific control failings in Austral and a wider review across Keller. All elements of the plan are either completed or progressing well and owned by a senior leader in the business. |
Link to strategy 3 / 4
Link to viability Yes
Timeframe Short term
6 Inability to maintain our technological product advantage
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Keller has a history of innovation that has given us a technological advantage which is recognised by our clients and competitors. Failure to maintain this advantage through the continued technological advancements in our equipment, products and solutions may:
|
|
| Constant risk |
Link to strategy 1 / 2
Link to viability No
Timeframe Medium / Long term
7 Climate change
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Climate change is a global threat and failure to manage and mitigate it could lead to:
|
| Sustainability Steering Committee that is responsible for integrating sustainability targets and measures into the Group business plan to successfully drive changes important to the company.
| Constant risk
We are starting to win project opportunities related to climate impact. This is tempered by the introduction of more legislation relating to climate impact, eg proposed new restriction for federal construction projects in the US. We continue to focus on delivering against our sustainability targets and meeting TCFD reporting requirements. |
Link to strategy 1 / 2 / 3 / 4
Link to viability Yes
Timeframe Short / Medium / Long term
Operational risks
8 Service or solutions failure
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
In designing a product or a solution for customers many factors need to be considered including client requirements, site and loading conditions and local constraints (eg neighbouring buildings, other underground structures). Inadequate design of a customer product and/or solution may lead to:
|
|
| Constant risk
|
Link to strategy 2 / 4
Link to viability Yes
Timeframe Short / Medium / Long term
9 Ineffective execution of our projects
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Inability to successfully deliver projects in line with the agreed customer requirements may result in:
|
|
| Constant risk
The number of projects not executed to expectation in 2022 was above the long-term average, adversely impacted by persistently high inflation across North America and Europe. This trend has improved throughout 2023 along with the work under way to update the PLM Standard focusing on project performance management. This will put in place better controls to ensure continued effective execution of projects across Keller. |
Link to strategy 3 / 4
Link to viability Yes
Timeframe Short term
10 Supply chain – partners fail to meet the Group’s operational expectation and contractual obligations (including capacity, competency, quality, financial stability, safety, environmental, social and ethical)
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Failure to manage suppliers effectively could lead to:
|
|
| Constant risk
Supply chain issues, especially availability of certain materials (steel, cement and energy) continue to show signs of easing. Pricing is still adversely impacted by the persistently high inflation, but this too is beginning to show signs of abating. While pressure remains as a result of the geopolitical uncertainty, it is being better managed as demand cools slightly as interest rate increases take effect on some investment decisions. In 2023 we carried out an independent legal assessment of our human rights and modern slavery standards and processes. Consequently, we have introduced a Human Rights Policy, updated our Supply Chain Code of Business Conduct and supplier contractual clauses and put in place more rigorous due diligence processes across our supply chain. |
Link to strategy 3 / 4
Link to viability Yes
Timeframe Short / Medium / Long term
11 Causing a serious injury or fatality to an employee or a member of the public
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Failure to maintain high standards of health and safety, and an increase in serious injuries or fatalities leading to:
|
|
| Constant risk |
Link to strategy 3
Link to viability Yes
Timeframe Short term
12 Not having the right skills to deliver
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Failure to attract and develop excellent people to create a high-quality, vibrant, diverse and flexible workforce could:
|
|
| Constant risk
We are still witnessing inflationary pressure on pay across many locations where Keller operates and thus the pressure on competition for skilled personnel is still an issue in some parts of the Group. However, job markets are just beginning to show signs of a slowdown, which should ease this issue. Focus remains on retaining staff with the right skills to deliver. |
Link to strategy 2 / 3 / 4
Link to viability No
Timeframe Short / Medium / Long term
13 Cyber security
Description and impact | Causes | Mitigation and internal controls | Movement since 2022 |
Risk of potential disruption
|
|
| Constant risk
|
Link to strategy 3 / 4
Link to viability No
Timeframe Short term
Responsibility statement of the Directors in respect of the Annual Report and the financial statements
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation as a whole; and
- the Strategic report and the Directors’ report, including content contained by reference, includes a fair review of the development and performance of the business and the position and performance of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
The Board confirms that the Annual Report and the financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.
29 Related party transactions
Transactions between the parent, its subsidiaries and joint operations, which are related parties, have been eliminated on consolidation. Other related party transactions are disclosed below:
Compensation of key management personnel
The remuneration of the Board and Executive Committee, who are the key management personnel, comprised:
| 2023 | 2022 |
Short-term employee benefits | 8.2 | 4.5 |
Post-employment benefits | 0.3 | 0.3 |
Termination payments | – | 0.4 |
| 8.5 | 5.2 |
Other related party transactions
As at 31 December 2023, there was a net balance of £0.1m (2022: £0.1m) owed by the joint venture. These amounts are unsecured, have no fixed date of repayment and are repayable on demand.
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