Building the foundations
for a sustainable future
Annual Report and Accounts 2021
Keller Group plc
Resilient delivery
Every day, people around
the world live, work and play on
ground prepared by Keller, the
world’s largest geotechnical
specialist contractor.
Whatever the size of the project,
we have the people, expertise,
experience and financial stability
to respond quickly with the
optimum solution, execute it
safely and see it through to a
successful conclusion.
keller.com/investors
Contents
Strategic report
Highlights
At a glance
Investment case
Chairman’s statement
1
2
4
6
10 Our market
12 Business model
14 Chief Executive Officer’s review
18 Our strategy
20 North America
22 Europe
24 Asia-Pacific, Middle East and Africa (AMEA)
26 Chief Financial Officer’s review
32 Principal risks and uncertainties
42 ESG and sustainability
66 Non-financial reporting statement
Governance
68 Chairman’s introduction
70 Board of Directors
72 Executive Committee
74 Board leadership and purpose
76 Section 172 statement
78 Governance framework
82 Board composition, succession
and evaluation
84 Environment Committee report
86 Social and Community Committee report
88 Nomination and Governance Committee
report
90 Audit and Risk Committee report
96 Annual statement from the Chair
of the Remuneration Committee
98 Remuneration in context
100 Remuneration at a glance
102 Annual remuneration report
112 Directors’ report
115 Statement of Directors’ responsibilities
Financial statements
116 Independent auditor’s report to
the members of Keller Group plc
127 Consolidated income statement
128 Consolidated statement of
comprehensive income
129 Consolidated balance sheet
130 Consolidated statement of
changes in equity
131 Consolidated cash flow statement
132 Notes to the consolidated financial
statements
175 Company balance sheet
176 Company statement of changes in equity
177 Notes to the company financial
statements
Other information
185 Adjusted performance measures
188 Financial record
189 Contacts
189 Cautionary Statement
Keller Group plc Annual Report and Accounts 2021
Strategic Report
01
Highlights
Group highlights
£2,224.4m
8%
£1.3bn
Revenue
(2020: £2,062.5m)
Order book
(2020: £1.0bn)
£92.8m
Underlying operating profit
16%
£62.1m
Statutory profit after tax
(2020: £110.1m)
(2020: £41.1m)
4.2%
110bps
£119.4m
Underlying operating margin
(2020: 5.3%)
Net debt1
(2020: £120.9m)
30%
51%
1%
88.4p
8%
35.9p
Diluted underlying earnings per share
Dividend
(2020: 96.3p)
(2020: 35.9p)
No change
Financial highlights
Operating profit (£m)
Operating margin (%)
Return on capital employed (%)
Profit after tax (£m)
Net debt (£m)
Underlying
Statutory
2021
92.8
4.2
14.4
63.8
119.4¹
2020
110.1
5.3
16.4
68.6
120.9¹
2021
80.5
3.6
12.5
62.1
193.3²
2020
77.0
3.7
11.5
41.1
192.5²
1
Net debt is on a covenant basis. Reconciliation to statutory numbers is set out in the adjusted performance measures section on page 185.
2 Net debt on a statutory basis is set out in the adjusted performance measures section on page 185.
02
Keller Group plc Annual Report and Accounts 2021
Strategic Report
At a glance
At its simplest, we get ground ready to build on, providing
solutions to geotechnical challenges across the entire
construction sector. We have the people, expertise,
experience and financial stability to respond quickly
and see projects through safely and successfully.
1860
established
c10,000
employees
25
acquisitions since 2000
Our purpose
Our vision
Building the foundations
for a sustainable future.
To be the leading provider of
specialist geotechnical solutions.
Strategy
To be the preferred international geotechnical
specialist contractor focused on sustainable
markets and attractive projects generating
sustained value for our stakeholders.
Our 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 values
Our values are what we have judged as most
important to how we work with colleagues
and customers across the globe.
A balanced portfolio
Operational excellence
Engineered solutions
Expertise and scale
For more information
See page 18
Integrity
Collaboration
Excellence
Keller Group plc Annual Report and Accounts 2021
Strategic Report
03
What we do
Our organisation
Using our industry-leading portfolio
of techniques, our engineers can
design the best solutions that
reduce materials, cost and time
for our clients.
For more information
See page 12
Deep
foundations
Grouting
Earth
retention
Ground
improvement
Marine
Instrumentation
and monitoring
North America
Europe
AMEA
Central Europe
North-East Europe
South-East Europe and
Nordics
South-West Europe
UK
For more information
See page 22
(Asia-Pacific, Middle East and Africa)
ASEAN
Austral
India
Keller Australia
Middle East and Africa
For more information
See page 24
North-East
South-East
Florida
Central
West
Canada
Specialty Services
Moretrench Industrial
Suncoast
For more information
See page 20
Post-tension
systems
Industrial
services
19
business units
6,000
contracts executed
a year
£25k to £10m
typical range in
project value
£375k
average project value
04
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Investment case
Firm foundations
Resilient
revenues
Sustainable
margins
Cash
generative
Specialist project profile
Inherently strong cash flow characteristics
• Operating globally in a number of
sectors gives us the resilience to trade
through national cyclicality
• Good access to all markets with no
overweight exposure
• Geopolitically secure
• Geotechnical solutions: niche
sub-sector with operating margins
of 5%+ (10-year average)
• Typically geotechnical contracting is
around 0.5% of the construction market
Diverse geographies (2021):
Operating margin
Keller has a higher margin versus
general contractors (10-year average)
0
20
40
60
80
100
8%
North America
Europe
AMEA
Diverse market sectors (2021):
0
20
40
60
80
100
Infrastructure/ Public buildings
Power / Industrial
Residential
Office / Commercial
Marine
Diverse products (2021):
0
20
40
60
80
100
Deep Foundations
Earth Retention
Marine
Post-tensioning
Specialty grouting
Ground improvement
Instrumentation and
monitoring
Diverse range of contract values (2021):
0
20
40
60
80
100
Below £250k
£1m to £5m
£250k to £1m
Above £5m
Diverse number of contracts
by value (2021):
0
20
40
60
80
100
Below £250k
£1m to £5m
£250k to £1m
Above £5m
0
-2%
Keller 5%
General contractors 0.9%
Keller versus general contractor –
business model
Keller ground
engineering
• Early stage
• Lower cyclicality
• Specialist design
capability
• A mix of contracts
• Higher margin
• Resource base
• Positive working
capital
General construction
• Longer, larger
projects
• National focus
• Higher cyclicality
• Integration
of multiple
suppliers and
subcontractors
• Low asset base
• Low to negative
working capital
Market Size – Room to grow
£35bn
£2bn
Global geotechnical
contracting market
Keller today
Proprietary equipment and specialist skills
• World’s largest equipment fleet with flexibility
to move between markets to match local
demand
• 1,500 geotechnical engineers; over 200
focused purely on design
• 50% of projects are ‘design and build’ where
value engineering can reduce cost by up to
40% and save time
• Manufacturing and servicing of our own
equipment where there is competitive
advantage to do so
£260m
140%
£0
2012
0%
2021
Net cash from operating activities
before non-underlying items
Underlying EBITDA
Cash conversion
• 10-year cash conversion rate of 100%
• 10-year aggregate underlying EBITDA
of £1,610m
• 10-year aggregate cash from operations
before non-underlying items of £1,618m
Robust asset backed balance sheet
with significant funding headroom
Balance sheet strength
• Strong working capital controls aligned to
performance targets
• Historically strong cash conversion
Comparison to general contractor
• Virtually no advance/prepayments received
from customers
• High volume short duration contracts
• Minimal inventory
Client risk management
• Large and geographically/industry diverse
client base
• Thorough credit review process and strong
customer relationships
• Credit insurance cover
Credit rating
• NAIC 2c rating (equivalent to Investment Grade)
Quality lender base and strong liquidity
• £375m RCF funding
• $75m US Private Placement
• £76m other borrowing facilities
27 years of uninterrupted dividend
payments since listing
Dividend per share (p)
CAGR 8%
40
0
1994
Dividend
CAGR
2021
Keller Group plc Annual Report and Accounts 2021
Strategic Report
05
Sustainable future
Favourable
market trends
Focused
strategy
•
•
•
•
•
Construction sector relevant
post-COVID
Growing urbanisation
Growing infrastructure spend
Increased focus on ESG
Urbanisation and renewal demand
more sophisticated solutions
– Population growth and aging infrastructure
– Larger, taller structures requiring
technically demanding foundations
– Cramped inner-city construction
requiring innovative and sustainability
techniques
– Geotechnical solutions key to
development potential of brownfield sites
We operate in nearly all major
metropolitan areas around the world
and have the resources and skills to
deliver to this scale and complexity.
To be the preferred international
geotechnical specialist contractor focused
on sustainable markets and attractive
projects, generating long term value for
our stakeholders
Our 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 objectives
Balanced portfolio
We select sustainable markets (geography,
sector and products) in which to set up base
businesses, and attractive projects
Engineered solutions
We offer the best solutions to our customers
by providing alternatives and value engineering,
and invest in innovation and digitisation
Operational excellence
We are the operational leader providing
safe, efficient, on-time and high quality
delivery and relentlessly strive to improve
our operational capability
Expertise and scale
We develop our people, processes and assets
and leverage the global strength of our
technical, operational, commercial and
financial resources
Strong
governance
Strong Board and experienced
management
Diverse and experienced teams in
place for next phase of growth
Board
• See pages 70, 71 and 82
for Board experience
• Four nationalities
• 57% female representation
Executive Committee
• See pages 72 and 73 for Executive
Committee experience
• Five nationalities
• 18% female representation
Industry leading health and safety
performance (See pages 58 to 61)
Accident frequency rate
1.2
0
2012
2021
Sustainability – our definition and focus
(See page 42 for our ESG and
sustainability report)
06
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chairman’s statement
Peter Hill CBE
2021 demonstrated the remarkable
resilience of our company, this
stands us in good stead for 2022
and the years ahead.
A resilient year
Keller undoubtedly proved its resilience in 2021,
overcoming the many challenges posed by
COVID-19 whilst further rationalising the
business portfolio, completing a number of
bolt-on acquisitions, delivering another strong
set of results which were ahead of market
expectations and maintaining the dividend.
This time last year, the world was gripped by the
challenges of the global pandemic, and we were
correct when we said that the late cycle nature
of our business made us cautious about the
associated short-term economic impact as
we went into 2021. Whilst the pandemic
continued to impact the Group during the year,
we successfully navigated our way through a
myriad of challenges across our geographies,
protecting our employees at the same time
as progressing our projects, large and small,
while still delivering on our strategy. We made
good progress during the year, delivering a
strong financial performance above market
expectations and demonstrating the resilience
of our operating model.
Led and executed by our leadership team, we
have made good progress delivering on our
strategy, to be the preferred international
geotechnical specialist contractor focused
on sustainable markets and attractive projects,
generating long-term value for our stakeholders.
We have made further strides in rationalising the
portfolio as well as a small number of attractive
bolt-on acquisitions that all help advance our
strategy. In what was operationally another
challenging year, our successes can be attributed
to our leaders globally and their focus of leading
by example and employing our core values of
integrity, collaboration, a drive for results and
overall excellence. I would like to thank our
exceptional people around the world, not only for
their hard work, but also for their resilience and
determination which have ensured that we are
emerging stronger from the pandemic.
Keller continued to generate healthy cash flows
that we have re-invested in our business as well
as delivering sustainable cash returns in the form
of dividends to our shareholders.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
07
Section 172 statement
and Code compliance
The Directors have acted to promote the
success of the company for the benefit of
shareholders, whilst having regard to the
matters listed in section 172 of the
Companies Act 2006 during 2021.
In addition, the Board and the company
fully applied the principles and complied
with the provisions of the UK Corporate
Governance Code.
For more information
See pages 69 and 76
Health, safety and wellbeing
The health, safety and wellbeing of our
employees is of utmost importance, and the
rigour that is deployed in this area is reflected
in our continued overall improving trends. The
Group’s accident frequency rate (AFR) reduced
by 42% compared with 2020, and our AMEA
Division had an outstanding year, achieving an
AFR of zero. We are very proud of our industry-
leading performance and improving track record.
However, at the beginning of the year, a tragic
fatality occurred following an accident on a site in
Austria in which we lost a long-serving and valued
employee. Whilst it has been determined Keller
was not at fault for the accident, the incident has
caused us to redouble our efforts and we have
continued to advance our safety programmes.
The global COVID-19 pandemic continued to
create operational challenges in 2021. The
Group has actively encouraged and supported
employees to become vaccinated against
COVID-19 wherever possible. However, I’m
greatly saddened that as a Group we have lost
eight colleagues due to COVID-19 related illness.
Whilst we believe none of these cases were
related to the workplace, we have taken great
care in supporting the families through their
bereavements. The vaccination status of those
that have died is consistent with the external
benchmark globally and supports our active
approach to encourage our workforce in
becoming vaccinated.
In recognition of the benefit of free vaccination
that many of the Group’s employees and their
families have received from their national
governments, the Board approved a funding
contribution of £300,000 to UNICEF’s COVID-19
Vaccines Appeal. This amount approximately
equates to the cost of vaccinating the Keller
workforce and their immediate families and is
helping UNICEF deliver 1.9 billion doses of
vaccines for frontline health workers, social
workers, teachers and those at highest risk.
In an ever-changing world, it has never been
more important to support employee health and
wellbeing. We recognise this and therefore
launched our first-ever Wellbeing Foundations,
which helps our business units support and
develop the body, mind, community, growth
and financial security wellbeing of our
employees worldwide.
Building on our Environmental,
Social and Governance (ESG) agenda
As the Director responsible for ESG and
sustainability on the Board, I am passionate and
committed to this topic. To reflect the growing
importance of ESG matters and to provide
greater focus and oversight, we announced in
July that the Board had established two new
Board Committees: the Environment Committee
and the Social and Community Committee.
In addition, the Audit and the Nomination
Committees were renamed the Audit and Risk
Committee and the Nomination and Governance
Committee respectively, to better reflect
their remits. Further detail with regard to the
membership and terms of reference for these
Committees can be found on page 78.
We define ESG and sustainability according to
our four Ps: Planet, People, Principles, and
Profitable projects. Beneath each P, we have a
number of global and local initiatives aligned to
the UN Sustainable Development Goals (SDGs).
These provide a common language for us to
communicate sustainability initiatives to our
stakeholders worldwide. In terms of global
initiatives, under Planet we focus on carbon
reduction (SDG 13), under People, we focus on
safety (SDG 3) and gender equality (SDG 5); and
under Principles we focus on good governance
(SDG 16). In addition there are a number of other
SDG initiatives that are being supported at local
business level that are relevant and appropriate
to their community context. Further detail can be
found on page 42.
Importantly, in respect of carbon reduction,
we have set ambitious and achievable net zero
targets by 2050. We believe that carbon targets
are essential to mitigate global climate-related
risks while we pursue climate-related
opportunities in our operations and contracts.
We divide our emission targets using the scopes
set out in the Greenhouse Gas Protocol. We will
be net zero across all three emission scopes by
2050; net zero on Scope 2 by 2030, net zero on
Scope 1 by 2040 and net zero by 2050 on
Operational Scope 3. We have begun
implementing the short, medium and long-term
actions required to achieve these goals, helping
the Group live up to its purpose of ‘building the
foundations for a sustainable future’. Our full
report on ESG and sustainability is set out on
pages 42 to 65.
08
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chairman’s statement continued
The continuation of dividend payments during
the challenging macro environment of 2020
and 2021 reflected the financial strength of the
Group, its significant liquidity position and the
longer-term confidence in the performance
of the business. As we advance through 2022
the Board will review recommencing a
progressive dividend.
The Board is recommending the payment of a
2021 final dividend of 23.3p per share (2020:
23.3p per share) to be paid on 1 July 2022 to
shareholders on the register as at the close of
business on 6 June 2022.
Peter Hill CBE
Chairman
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
We have many ongoing initiatives under our
People agenda. Having launched our Inclusion
Commitments, our focus in 2021 was on giving
our teams the understanding and the means to
contribute to our aspiration to become a diverse,
equitable and inclusive workplace.
An important part of good governance is
listening to and understanding the views of our
stakeholders. Towards the end of the year we
commissioned a third party to undertake an
independent audit of a number of investment
managers. The outcome has not only enabled
the Board to obtain a deeper level of
understanding of the views of our shareholders
and potential investors, but also gives the
Executive management additional input as they
formulate the strategy for the medium term.
We will repeat the exercise in the future so that
we can maintain a momentum of continuous
improvement and monitor our progress.
Developing our Board
When I arrived in 2016, I set out an ambition
to have a Board from multiple industries and
geographies that had varied and valuable
experiences as well as gender and ethnic diversity.
We have achieved that goal. I believe that different
viewpoints and experiences ensure that better
informed decisions are made when applying
judgements in challenging circumstances. We have
made great strides in achieving a diverse Board,
particularly in respect of female representation
which will stand at 43% following the AGM.
We have met or exceeded the diversity targets we
set ourselves in the Board’s Diversity Policy and as
recommended by the Hampton-Alexander and
Parker Reviews, which set targets of a 33% female
share of Board Directors by 2020 and a minimum
of one Board Director from an ethnic minority
background by 2022.
On 1 February, we announced the appointment
of Juan G. Hernández Abrams, who has joined
the Board as an independent Non-executive
Director and will be Chair of the Environment
Committee. His biography is set out on page 70.
Juan brings rich and diverse experience to the
Board and I warmly welcome him to Keller.
On behalf of the Board I would like to pay tribute
to Nancy Tuor Moore for her significant
contribution since joining the Board as a
Non-executive Director in 2014 and her valuable
input at various committees – the Audit,
Nomination, Remuneration and Workforce
Engagement and Chair of the Health, Safety,
Environment and Quality Committee. The Board
and the wider Group have benefitted greatly
from her extensive knowledge and experience,
particularly of the US engineering and
construction sector, and we wish her well.
Maintaining the dividend
We are all very proud of our dividend history
and recognise its importance to shareholders.
Even through very challenging times we have
consistently increased or maintained the
dividend over the last 27 years since first listing
on the London Stock Exchange, one of only a
few UK listed companies to have achieved this.
We are very proud of our dividend history,
we have consistently increased or
maintained the dividend over the last
27 years since first listing on the London
Stock Exchange, one of only a few UK
listed companies to have achieved this.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
09
Case study
Cutting carbon on Europe’s largest project
Keller is trialling carbon reduction measures
on HS2, the next phase of the UK’s
high-speed rail network and Europe’s
largest infrastructure project.
Improvements include running static plant
with electricity where possible rather than
diesel, and replacing diesel with hydrotreated
vegetable oil (HVO) in several drilling rigs.
HVO can be used in regular diesel engines
and reduces CO2 by a massive 90%.
Another carbon saving has come from
optimising the design of some of the
foundational elements to reduce the use of
cement, which has a large carbon footprint.
The team reduced the thickness of the
diaphragm wall panels from 1.2m to 1m,
without compromising quality. This also had
the direct benefit of reduced time and cost.
The team has also reduced cement
consumption when grouting rock fissures
ahead of bored pile and diaphragm wall
construction. Instead of using microfine
cement grout to reduce permeability, they
used a cement bentonite grout and only
targeted the largest fissures where leakage
of the bentonite support fluid was a risk. This
meant much less cement was used overall.
Where Keller is installing large-diameter bored
piles, the team has found ways to recycle and
reuse waste bentonite, drastically reducing the
amount going to landfill and the associated
carbon emissions of transportation.
All the lessons learnt from these trials have
been captured in a carbon reduction guide.
This will be shared with the wider organisation
to help drive Keller’s net zero carbon strategy.
As a large-scale, long-term project,
with a sustainability-focused client,
HS2 provides the perfect
opportunity to explore various
carbon-reduction methods.
Sharing the lessons learnt will
help inform our colleagues on
other projects around the world
what is possible.”
David De Sousa Neto
Deputy UK Managing Director
10
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Our market
Our purpose is to build the
foundations for a sustainable future.
While we are the world’s largest geotechnical specialist contractor,
we still have potential to grow our market share in our chosen
regions. Our business units are designed to understand their local
markets whilst leveraging the Group’s scale and expertise. This
combination delivers the engineered solutions and operational
excellence that drive market leadership.
Market potential
Variety of projects
and sectors
A strong position but
plenty of room to grow
£35bn
1. Global geotechnical
contracting market
£35bn
Our projects are spread across all
construction sectors and vary in scale,
location, end use and geotechnical
technique. Project value is typically
between £25k and £10m, usually short
duration and with an average value
of £375,000.
6,000
projects per year
Diverse global market
13%
market share in core markets
Operating globally in differing countries
and across the construction sectors,
from residential to infrastructure, gives
us the resilience to trade through
national cyclicality. The geotechnical
market is estimated1 to be around
£35bn worldwide, which includes China,
Japan, Korea and other regions of the
world where we are not present. In the
countries where we choose to operate
our core markets are around £16bn.
We choose to operate in sustainable
markets that appreciate the value of the
products and services Keller provides,
have a consistent material demand for
those services, and an acceptable level
of risk. With an annual turnover of more
than £2bn, we have a 13% share of
those core markets today, and plenty
of opportunity to secure greater
market share.
£22bn
£16bn
£2bn
2. Addressable markets
£22bn
3. Core markets where
we choose to operate
£16bn
4. Keller today
£2bn
Non-addressable markets are mainly China,
North and South Korea, Japan and Russia.
1 USD = 0.75 GBP
Global construction market £8,500bn 2020
Share of addressable market £22bn¹
Keller
Soletanche/Bachy/Menard
Bauer (contracting)
Trevi (contracting)
General contracting-owned
Country/regional specific,
smaller players
1
Sources: Keller accounts, IHS Global Insight, GlobalData and other local sources.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
11
Diverse customer base
3%
revenue from largest customer
Our sectors
Share of our 2021 revenue
We have a large client spread which
means we’re not overly reliant on a
few customers. We have many repeat
customers and, consistent with the
prior year, in 2021 our largest
customer represented 3% of the
Group’s revenue. We mostly serve as
a subcontractor working for a general
contractor; however, sometimes we
also contract directly with ultimate
client organisations.
Fragmented competition
We have three types of competitor.
Type one is the global geotechnical
contractor, of which there are three,
but not all are present in all markets.
Type two is general contracting-
owned. Type three is local
competition with low overheads
operating in a small region.
£22bn
addressable markets
Niche sub-sector
4.2%
Keller’s underlying operating
margin (2020: 5.3%)
Geotechnical specialist contracting
is an important but niche sub-sector
that commands higher margins than
general construction. Typically
geotechnical contracting is around
0.5% of the construction market.
Infrastructure/public buildings
Power/industrial
Residential
Office/commercial
Marine
36%
21%
21%
20%
2%
Favourable market trends
Despite the impact of the COVID-19 pandemic, the
long-term trends in the global construction market
remain positive. Our Group strategy is designed to
capitalise on these trends.
Infrastructure renewal
As populations grow and
infrastructure ages, there’s an
imperative to invest in new and greater
capacity. Geotechnical solutions are
often complex and sophisticated and
large-scale and cramped metropolitan
environments can present additional
technical challenges. We have the
resources and skills to deliver to this
scale and complexity, a reputation for
delivery and the proven ability to team
up successfully with our customers
and partners.
Demand for complete solutions
Geotechnical solutions increasingly
require multiple products. Our broad
product portfolio ensures we can
design an effective and efficient
solution while our project management
capabilities mean we can integrate
other subcontractors and deliver
‘turnkey’ contracts. This reduces
the number of interfaces for our
customers to manage and reduces risk.
Technical complexity
The construction market is becoming
more digital and sites are increasing in
sophistication and complexity. We
have a strong history of innovation.
We leverage our in-house equipment
manufacturing capacities and develop
market-leading data acquisition
systems to control and record our
processes, and share information
with our customers and the rest of
the supply chain. We can integrate
instrumentation and monitoring
solutions and are Building Information
Modelling (BIM) capable.
Urbanisation
As cities expand they require more
sophisticated solutions. Larger, taller
structures need more technically
demanding foundations to withstand
the building loads and provide
resilience against climate change and
acts of nature such as rising water
levels or earthquakes. We have a
comprehensive network of regional
offices located in major metropolitan
areas. This local presence keeps us
close to our customers and the
opportunities.
Development land shortage
There is a desire to convert more
brownfield and marginal land.
Geotechnical solutions are at the fore
in releasing the development potential
of otherwise sterile or derelict areas.
Our world-leading geotechnical
engineering team, broad portfolio and
near shore marine capability, mean we
can cope with the most complex
challenges when working on
brownfield or marginal sites.
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Keller Group plc Annual Report and Accounts 2021
Strategic Report
Business model
We are at the beginning of
the construction cycle and
often one of the first
contractors on site.
Getting the project ‘out of the ground’ is critical to our customers in controlling the
early phases of the project, managing risks, saving time and money, and providing
a sound platform for the remaining work.
We often assist in the design and development phase with our customers, providing
value engineering input and advising on construction processes.
Our products and services are not used just for foundations, they are also used for
other applications including earth retention, urban redevelopment and near shore
marine structures.
Our key resources
and relationships
What we need to make our business model work
How we create and capture value
What we do
Opportunity
identification
Proposal
preparation
Our people
Our track record of successful projects is only possible
because of the passion, commitment and enthusiasm of the
c10,000 people who work for Keller worldwide. With extensive
product knowledge and a deep understanding of their local
markets, customers and ground conditions, our teams are
empowered to make decisions ‘close to the ground’. This is
a significant motivator which enables us to attract and retain
some of the industry’s best talent. Once people choose
to join us, they generally choose to stay, many for their
entire career.
Our customers
Our network of branches ensures that we build strong, local
relationships with our customers that give us insight into
market developments and help us stay responsive and
competitive. We aim to engage from the earliest stage of a
project so we can apply our engineering expertise to drive for
high-value solutions that reduce the cost for clients, whilst
improving our own profitability.
Our technology
We have a market-leading portfolio of products and services
backed with full Computer Aided Design (CAD) and Building
Information Modelling (BIM) capability. We have a fleet
comprising more than 1,200 rigs and cranes and the flexibility
to move equipment between markets to match local
demand. We also manufacture and service our own specialist
equipment which provides us with a competitive advantage
in particular product streams.
Our market focus
Targeting profitable markets that value geotechnical
solutions generates long-term value for our stakeholders.
Our financial strength
Our strong balance sheet and cash generation allow us to
maintain key resources through the market cycle, reinvest
for growth and maintain shareholder distributions.
• Our local businesses
• Design engineers
close to their
markets and with
enduring customer
relationships identify
demand.
• A global network
supports cross-
border collaboration
on opportunities
(especially important
for major projects).
and cost estimators
with local ground
knowledge and
capacity create
optimum solutions.
• A significant portion
of work is won based
on design and build
tenders.
• Supported by a
global network who
assist with solution
development.
Our Project Lifecycle
Management (PLM)
Standard ensures that
we implement adequate
procedures, reviews and
controls at all phases of
the project lifecycle.
Project Lifecycle Management
What differentiates us?
Global strength and local focus
Local focus
Global strength
• Our unrivalled branch network and
knowledge of local markets and
ground conditions means we’re
ideally placed to understand and
respond to a particular local
engineering challenge.
• Our global knowledge base allows us
to tap into a wealth of experience, and
the brightest minds in the industry,
to find the optimum solution, often
combining multiple products. This
improves results for customers and
profitability for Keller.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
13
Contract
agreement
Project
execution
Feedback
and learning
• Commercial teams
trained in relevant
local laws set up
contracts.
• Product-specific
• Project leadership
operations teams,
often using
specialist
equipment, deliver
efficiently and
effectively (to
quality and
schedule) and
respond to any
issues that arise.
secures client
sign-off and
payment.
• Lessons learnt
are retained and
transferred to the
rest of the Group.
The best solutions
Safety and sustainability
• Through knowledge transfer,
development of existing and
acquisition of new techniques,
innovation and digitisation, our
engineers have access to the
widest range of solutions to
solve challenges across the
entire construction sector.
• We take a leadership role in the
geotechnical industry with many
of our team playing key roles in
professional associations and
industry activities around the world.
• Our experience of project contracting
built over many decades, combined
with our Group scale, make us a trusted
and reliable partner.
• We have a proven track record of one
of the lowest accident frequency rates
in our industry.
• We are committed to better understand
our contribution to sustainable
development and work collaboratively
with our customers and stakeholders
to reduce potential impacts.
The value created
Long-term sustainable value
Employees
c10,000
(employed globally)
• Commitment to provide a safe workplace and promote mental
health and wellbeing.
• A diverse, inclusive environment in which employees can thrive
regardless of background, identity and circumstances.
• Stable employment with opportunities to develop and progress,
including internationally.
Customers
6,000
(contracts)
• A ‘one-stop shop’ for cost-effective geotechnical solutions
reducing the interface risk for clients of dealing with multiple
suppliers.
•
In-depth knowledge of local markets and ground conditions
combined with a wealth of experience through our global
knowledge base.
• Leading health, safety and environmental performance.
Shareholders
£25.9m
(total proposed full-year dividend)
• Stable business with a robust balance sheet.
•
Inherently strong cash flow characteristics.
• A quality lender base and substantial facilities.
• A 27-year history of uninterrupted dividends.
• Continued growth opportunities.
Communities
B
(CDP score – above sector average)
• Local employment opportunities, directly and indirectly.
• A focus on the United Nations Sustainable Development Goals
where we can have the greatest impact.
• A commitment to reducing the carbon intensity of our work and
increasing the quality and granularity of our carbon reporting.
• Participation in many community and charitable events locally.
14
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chief Executive Officer’s review
Michael Speakman
In a year that has seen COVID-19 continue
to challenge our business in so many ways,
I am proud of how the Keller team have
worked together, demonstrating resilience
and agility in safeguarding our people, while
supporting the continuing performance and
development of our business.
Overview
In a year that has seen COVID-19 continue to
challenge our business in so many ways, I am
proud of how the Keller team have worked
together, demonstrating resilience and agility
in safeguarding our people, while supporting
the continuing performance and development
of our business. We have had a successful year,
delivering financial results ahead of market
expectations and successfully executing our
strategy in very challenging market conditions.
We also made further progress in operational
safety with a 42% improvement in our overall
accident frequency rate.
As we predicted in the summer of 2020, the
effect of the COVID-19 pandemic impacted
Keller most markedly in 2021, later than other
sectors, evidenced by reduced market demand
and an associated operating margin
compression. We anticipated correctly the timing
of the inflection point marking the upturn in
demand at around the half way point in the year.
We delivered a stronger volume growth than
anticipated, particularly in the second half, with
significant contract wins and helped by
acquisitions, both of which will benefit
performance in 2022. However, our 2021
operating profit was negatively impacted,
primarily by the COVID-19 adverse pressure
on market pricing and operational disruption.
Although the Group has suffered higher material
and wage inflation, our businesses have been
largely successful in passing the majority of these
increased costs to our customers, with the
exception of steel strand in the Suncoast
High-Rise business.
Notwithstanding the tougher market conditions,
the Group delivered a resilient performance and
further significant strategic progress in the year,
continuing to bring more focus to the portfolio by
exiting non-core businesses and executing
several acquisitions that build our market share in
our chosen markets. We have continued the
progressive transformation of
the Group into a more efficient, more focused,
higher-quality business, with industry-leading
margins, achieving sustainable operational
delivery and cash generation. We expect to see
further benefits from these in 2022. Our record
order book, now standing at £1.3bn, also gives
us confidence for the future.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
15
Financial performance
Operational performance
Group revenue was £2,224.4m, 13% up on the
prior year on a constant currency basis, driven
by increased activity as markets began to
recover, particularly during the second half,
with significant contract wins together with the
benefit of several bolt-on acquisitions that are
expected to benefit the bottom line in 2022.
Underlying operating profit decreased to
£92.8m, a reduction of 10% at constant
currency, impacted primarily by the COVID-19
adverse pressure on market pricing and
operational disruption across our businesses.
Although the Group has seen higher than
expected material and wage inflation, our
businesses have been largely successful in
passing the majority of these increased costs
to our customers, with the exception of steel
strand in the Suncoast High-Rise business.
In North America, disruption, supply chain issues
and labour availability caused adverse pressure
on profitability, and these are expected to ease
going forward. Our Europe Division recovered
in performance compared with 2020 and
benefitted particularly from large contract wins.
In AMEA, our Australia business was impacted
significantly by COVID-19 imposed travel
restrictions. Our Middle East and Africa business
also had an extremely tough year, largely due to
COVID-19, despite our successful claim on our
Mozambique LNG contract. We are taking action
to improve profitability in that business in 2022.
As a result of these factors, the underlying
operating margin was 4.2% compared with 5.3%
in 2020. We expect a recovery towards our
historical margin profile in 2022.
Underlying diluted earnings per share decreased
by 8% to 88.4p per share (2020: 96.3p per share),
reflecting a decrease in operating profit. This was
partially offset by lower financing costs and a
lower tax rate reflecting the recognition of a prior
year research and development tax credit
in North America.
Despite the increased working capital
requirement the growth in revenue demanded,
the Group continued to generate a strong cash
flow performance in the year. The free cash flow
funded all the acquisitions in the year and
marginally reduced the Group’s net debt (on a
bank covenant IAS 17 basis) to £119.4m (2020:
£120.9m). This resulted in a net debt/EBITDA
leverage ratio of 0.8x (2020: 0.7x) (on a bank
covenant IAS 17 basis), comfortably within our
target range of 0.5x-1.5x and compared to our
covenant limit of 3.0x.
The market effects of COVID-19 had a
significant impact on the business, particularly
early on in the year, with the macro uncertainty
driving customer behaviour to halt or delay a
large number of projects. We anticipated
correctly the timing of the inflection point
marking the upturn in demand at around the
halfway point in the year. This was reflected in
our record order book at the year end of £1.3bn.
Whilst we delivered a stronger volume growth
than anticipated, particularly in the second half,
our operating profit was negatively impacted by
adverse pressure on market pricing and
operational disruption. Although the business
has suffered higher than expected material and
wage inflation, our businesses have been largely
successful in passing the majority of these
increased costs to our customers, with the
exception of steel strand in the Suncoast
High-Rise business.
In North America, led by Eric Drooff, President
North America, revenue increased by 15% (at
constant currency) to £1,323.1m and underlying
operating profit decreased by 5.6% (at constant
currency) to £73.0m. The first half performance
benefitted strongly from the resolution of a
historical claim, whilst trading activity generally
was impacted by the COVID-19 slowdown in the
construction market. Business activity increased
as the year progressed following the success of
vaccination and lockdown containment
programmes. This led to increased business
confidence and improved market demand.
Suncoast was impacted by the continued higher
cost of steel strand, partially mitigated by strong
demand from the residential single family home
market. The higher cost of steel strand has been
unprecedented and directly impacted the
profitability of the High-Rise segment during
the year given the market practice of fixed price
contracts. We expect the adverse impact on
profitability to unwind during 2022. North
American performance benefitted from the
inclusion of several acquisitions in the second
half of the year, the largest being RECON
Services, Inc (RECON), a geotechnical and
industrial services company headquartered in
Houston, Texas. Similar to Keller’s existing
Florida-based Moretrench Industrial business,
RECON is focused on environmental
remediation activities.
In Europe, led by Jim De Waele, President Europe,
revenue increased by 5% (at constant currency)
to £549.2m and operating profit increased 38%
(at constant currency) to £24.3m. Its markets
recovered during the course of the year with the
easing of COVID-19 related shutdowns and
travel restrictions resulting in higher levels of
activity and contract performance. Performance
also benefitted from improved efficiencies on
site, cost savings following the restructuring
activity in the previous year, as well as the
advancement of the large High Speed 2 (HS2) rail
project in the UK and Sandbukta-Moss-Sastad
(SMS2) rail project in Norway. We completed
further restructuring with the formation of the
new South West Europe Business Unit, further
streamlining the Europe Division. In line with our
strategy, our joint venture in Finland, KFS Finland
Oy, acquired NordPile, a driven and drilling
piling contractor.
In AMEA (Asia-Pacific, Middle East and Africa),
led by Peter Wyton, President AMEA, revenue
increased by 20% (at constant currency) to
£352.1m, while operating profit decreased 77%
(at constant currency) to £3.4m. The division
was the most impacted by COVID-19 of all our
businesses during the year with countries and
regions, particularly Australia and the Middle
East and Africa, suffering lockdown restrictions
in advance of vaccination programmes.
Operational challenges caused by border
restrictions in Keller Australia, and a difficult
trading environment in the Middle East and
Africa, resulted in both business units reporting
a loss for the year. Notwithstanding the wider
issues in Australia, Austral had a strong
performance, driven by mining and port-related
projects in the Pilbara region. In the second half
of the year, a substantial settlement agreement
was signed with our client in Mozambique in
relation to the suspended liquefied natural gas
(LNG) project. This largely reversed the contract
loss incurred to date and protects the Group in
the event that the contract does not resume
in the short to medium term, justifying the
approach we took to this contract and the
risk assessment undertaken.
Strategy
The Group’s corporate purpose reflects both
the evolution of our strategy and the changing
environment in which we operate and ‘building
the foundations for a sustainable future’ will
be at the heart of everything we do in the future.
Our vision to be the leading provider of
specialist geotechnical solutions is
unchanged and, despite the disruptive impact of
the pandemic on change management activities,
we have made good progress with our objective
for Keller to become a more focused, higher-
quality business achieving both sustainable
operational delivery and cash generation
whilst building on our industry-leading margins.
16
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chief Executive Officer’s review continued
We have continued to successfully execute on
our strategy, to be the preferred international
geotechnical specialist contractor focused on
sustainable markets and attractive projects,
generating long-term value for our stakeholders.
Our local businesses leverage the Group’s scale
and expertise to deliver engineered solutions
and operational excellence, driving market
share leadership in our selected segments.
Our diversified model of operating in a number
of sectors, applications and geographies helps
to generate revenues that are resilient whilst
lessening the impacts that can arise from
business cycles and geopolitics. In line with
our strategy we have continued to focus
on increased market penetration and
cost reduction.
Progress on strategic
priorities for 2021
In North America, we furthered our drive to gain
market share in our chosen markets with the
acquisition in July of RECON Services, Inc
(RECON), a geotechnical and industrial services
company headquartered in Houston, Texas.
Similar to Keller’s existing Florida-based
Moretrench Industrial business, RECON is
focused on environmental remediation activities.
The geographic proximity of the two businesses
provides revenue synergies from cross-selling
opportunities, both between the two businesses
and also the Keller foundations businesses, and
some, primarily volume-based, cost synergies.
The additional revenue synergies provide the
opportunity to increase the Group’s overall
market share in the important Gulf Coast area
where Keller has historically been relatively
under-represented. The cash consideration on
an enterprise value basis was US$23m (£17m),
and an original maximum earn-out of US$15m
(£11m) relating to specific future contract wins.
As we anticipated, RECON was awarded one of
the specific contracts in December, worth
approximately US$160m (£120m) in revenue
over two years, in connection with the
development of an energy facility in the
Gulf Coast region of the USA.
In October, the North America Division acquired
Subterranean (Manitoba) Ltd, a small market-
leading geotechnical foundation business in
Manitoba, Canada. In November 2021, the
division acquired Voges Drilling, a geotechnical
foundation company based in Texas.
In Europe, as well as rightsizing the divisional
head office, we simplified the structure of the
division by reducing the number of business units
following the merger of French Speaking
Countries with Iberia and Latin America, by
forming one new South West Europe Business
Unit; this became effective on 1 July 2021. Early
wins from this strategic action include securing
work as a combined business unit that Keller
would not have won previously, and a reduction
in costs.
Our joint venture in Finland, KFS Finland Oy,
acquired NordPile, a driven and drilling piling
contractor, in September. This acquisition
reinforces KFS’s position as the largest
geotechnical specialist contractor in the
region offering the widest range of solutions.
Strategic priorities for 2022
Market-leading operational execution is
imperative in order to remain competitive and
therefore enhancing operational excellence is a
key focus for the Group. During 2021 we
established a multi-functional team of experts,
drawn from across the Group to identify and
develop best practice in project management
and site support business processes that are
currently deployed within Keller. This bank of
knowledge will be leveraged by implementing
best practice standard templates across the
Group using a proven, cloud-based enterprise
resource planning (ERP) system. In doing so the
initiative will embed operational excellence in
project execution across the whole Group,
together with the associated financial benefits.
It will allow the full integration of project
management, supply chain, human resources,
equipment, operations which will all seamlessly
feed through to financials, and provide a single,
standardised platform for robust, systemic,
pre-emptive management controls, and a
convenient solution to the emerging requirement
for UK SOX. The initiative will be implemented
progressively over five years by a project team
that consists of seasoned business leaders,
subject matter experts and experienced ERP
global system implementers. We will leverage our
risk management processes to help control the
challenges associated with implementing the
programme of work.
As we execute our strategy and further penetrate
our chosen local markets, we will continue to
pursue suitable bolt-on acquisition opportunities
and integrate them into the Group. RECON is
integrating well and during 2022 will, together with
Moretrench Industrial, be developed as we
establish and build our new environmental,
geotechnical and industrial services business that
will leverage our position in this large and growing
sector. We will continue to be focused and
disciplined in our acquisition process.
Environmental, Social and
Governance (ESG)
We define ESG and sustainability according
to our four Ps: Planet, People, Principles and
Profitable projects. Beneath each P, we have a
number of global and local initiatives aligned to
the UN Sustainable Development Goals (SDGs).
These provide a common language for us to
communicate sustainability initiatives to our
stakeholders worldwide. In terms of global
initiatives, under Planet we focus on carbon
reduction (SDG 13), under People, we focus on
safety (SDG 3) and gender equality (SDG 5); and
under Principles we focus on good governance
(SDG 16). In addition ,there are a number of other
SDG initiatives that are being supported at local
business level that are relevant and appropriate
to their community context.
The safety of every individual is our priority. While
our safety performance has improved, we are
not yet where we need to be. Making sure every
employee returns home safely at the end of each
day drives our thinking and behaviours across
the Group. It is with this approach that we have
reduced the Group’s accident frequency rate
(AFR) by 42% compared with 2020, and our
AMEA Division had an outstanding year achieving
an AFR of zero. Our total recordable incident rate
(TRIR) also improved by 32%.
Led by John Raine, Group HSEQ Director, we
have a number of safety initiatives underway to
leverage our experience and safety knowledge
across the Group. As our number of recordable
incidents decreases, it is more important than
ever to focus on proactive reporting measures
to identify and address hazardous situations
pre-emptively, before accidents occur with their
inherent potential for adverse consequences.
Year-on-year near miss reports are increasing as
a consequence of this increased emphasis and
leadership site interaction is strong, even with
the site access challenges created by COVID-19.
Overall the safety culture and awareness
continues to improve, and is clearly evidenced
in recent employee engagement surveys.
We are very proud of our industry-leading
performance and improving track record, and
were devastated to lose a long-serving and
valued employee early in 2021 following an
accident on a site in Austria. Whilst it has been
determined Keller was not at fault for the
accident, the incident has caused us to re-double
our efforts and we have continued to further
advance our safety programmes. We continue
to share our safety best practices with trade
associations, so that the whole sector can
continue to improve health and safety.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
17
The global COVID-19 pandemic continued
to create operational challenges in 2021. The
Group has actively encouraged and supported
employees to become vaccinated against
COVID-19 wherever possible. However, I’m
greatly saddened that across the Group we have
lost eight colleagues due to COVID-19 related
illness. Whilst we believe none of these cases
were related to the workplace, we have taken
great care in supporting the families through
their bereavements. The vaccination status of
those that have died is consistent with the
external benchmark globally and supports our
active approach to encourage our workforce in
becoming vaccinated.
At Keller, we recognise safety and wellbeing is
more than just avoiding accidents and this year
we launched our first-ever wellbeing framework.
This helps our business units support and
develop the aspects of wellbeing important
to our employees worldwide - body, mind,
community, growth and financial security
wellbeing.
Having launched our Inclusion Commitments,
our focus in 2021 was on giving our teams the
understanding and the means to contribute to
our aspiration to become a diverse, equitable
and inclusive workplace.
In respect of carbon reduction, the Group has
set ambitious but achievable net zero targets
by 2050. We will be net zero across all three
emission scopes by 2050; net zero on Scope 2
by 2030, net zero on Scope 1 by 2040 and net
zero by 2050 on Operational Scope 3 (covering
business travel, material transport and waste
disposal). We have already begun implementing
the substantive short-term actions to address
Scope 2 and are developing the medium and
long-term actions for Scope 1 and 3 that are
required to achieve these goals.
Good governance plays an essential role in how
we operate the business. During 2021, despite
the challenging backdrop, we continued to take
a number of steps to strengthen our leadership,
our management controls, and our
understanding of the needs of our stakeholders.
This included listening to the views of our past,
current and potential investors. At the end of the
year we completed an investor audit of a number
of key institutions, enabling us to deepen our
understanding of the views of investors.
Participation by those that took part was greatly
appreciated and we will actively use the feedback
as we move forward. We will repeat the exercise
in the future so that we can maintain a
momentum of continuous improvement
and monitor our progress.
People
Our people are the major differentiator of
our business and pivotal to everything we do.
I continue to be immensely impressed by the
dedication and tenacity of our team. Despite
the prolonged attrition of COVID-19, in terms
of social isolation and logistical challenges,
employees have continued to go to extraordinary
lengths to continue to safely deliver projects for
our customers. I would like to acknowledge this
endeavour and thank all Keller employees for
their commitment, hard work and expertise
during another very challenging year.
On the Executive team, James Hind, Divisional
President of Keller North America, retired at the
end of 2021, after 18 years’ service. James was
a highly effective member of the Executive team,
from his appointment in 2003 as Finance
Director of Keller Group plc and an Executive
Director on the Board until 2020, through to his
most recent appointment as Divisional President
of Keller North America, a post he held since
2018. Under his leadership and with the support
of a strong Executive team, Keller North America
has undergone significant transformation, with
greatly enhanced organisational capability and
accelerated collaboration. Eric Drooff, previously
Chief Operating Officer, Keller North America,
has succeeded James. Over the 29 years Eric
has been with Keller North America he has
demonstrated his strong leadership capabilities
across the organisation and his dedication,
passion and depth of geotechnical experience
made him the best person to lead Keller
North America.
We are deeply concerned about the military
invasion of Ukraine and the unfolding
humanitarian crisis. Whilst we have no projects in
the country, and therefore there is no material
impact on our business, we have two employees
based in Ukraine and over 20 Ukrainian nationals
working for us in our North East Europe Business
Unit. Furthermore, many colleagues across Keller
have connections with people in Ukraine. Our
first thoughts are with them and their families.
Our team in Poland has been providing practical
support including help at the border with
transport, accommodation and medical supplies.
Events are unfolding rapidly on the ground, and
accordingly we continue to evaluate where to
best deploy our Group support to most
effectively assist the humanitarian relief effort.
Dividend
The Board is recommending the payment of a
2021 final dividend of 23.3p per share (2020:
23.3p per share) to be paid on 1 July 2022 to
shareholders on the register as at the close
of business on 6 June 2022. We are very
proud of our dividend history and recognise
its importance to shareholders.
Even through very challenging times we have
consistently increased or maintained the
dividend over the last 27 years since first listing
on the London Stock Exchange, one of only a
few listed companies to have achieved this.
The continuation of dividend payments during
the challenging macro environment of 2020 and
2021 reflected the financial strength of the
Group, its significant liquidity position and the
longer-term confidence in the performance of
the business. As we advance through 2022 the
Board will review the progression of our dividend.
Outlook
We have had a successful year given the
extremely challenging business environment.
The year developed largely as we anticipated at
our 2020 interim results, and whilst inflationary
impacts were larger than expected, the resilience
of the Group has meant that the financial
performance for the year was still ahead of
market expectations. We have continued to
implement strategic actions to shape Keller’s
future, while delivering robust operational and
financial results built on a strong balance sheet.
We have a clear strategy and increasing
operational momentum with a record order book
of £1.3bn. This, together with the maintenance
of the dividend, evidences our confidence in the
medium term.
Whilst we are mindful of the recently increased
geopolitical and macroeconomic uncertainty and
inflationary pressures, our expectations for 2022
are unchanged. We remain strategically well
placed to benefit from the anticipated
macroeconomic recovery and increasing levels
of public infrastructure spending in our chosen
markets, although this recovery will naturally vary
by geography as countries progressively manage
COVID-19 as an endemic rather than pandemic
challenge.
Our leading market positions and the strategic
actions we have taken to improve the Group’s
performance, together with our financial
resilience, will allow us to benefit from the
longer-term structural growth drivers for global
infrastructure and urbanisation in the years
ahead. We therefore remain confident in our
ability to deliver increasing shareholder returns
through underlying profit growth and our
progressive dividend policy.
Michael Speakman
Chief Executive Officer
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
18
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Our strategy
Keller’s strategy is to be
the preferred international
geotechnical specialist contractor
focused on sustainable markets
and attractive projects.
Our 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.
In 2021, we continued to make progress in generating sustainable
long-term value for our stakeholders.
Sustainable markets are those markets that appreciate the value of
the products and services Keller provides, have a consistent, material
demand for those services, and an acceptable level of geopolitical risk.
Strategic lever
What we achieved in 2021
A balanced
portfolio
We select sustainable
markets (geography,
sector and products)
in which to set up base
businesses and
attractive projects.
• Established Europe and AMEA divisions to better reflect portfolio
of markets and major project opportunities in these regions.
• Acquired RECON in the US, adding to our existing remediation
environmental offering.
• Acquired Subterranean, strengthening our position in the
Canadian Prairies.
• Acquired Voges Drilling, a geotechnical foundation company
based in Texas.
• Our joint venture in Finland, KFS Finland Oy, acquired NordPile,
a driven and drilling piling contractor.
Engineered
solutions
Operational
excellence
Expertise
and scale
We offer the best
solutions to our
customers by providing
alternatives and value
engineering, and invest
in innovation and
digitisation.
• Executed an impressive 6,000 projects around the world despite
the challenge of COVID-19.
• Achieved significant milestones on HS2 in the UK.
• Delivering Cape Lambert major project.
•
• Launched our field app InSite across the Group.
Improved productivity through the Vibrocat double lock system.
We are the operational
leader providing safe,
efficient, on-time and
high-quality delivery,
and relentlessly strive
to improve our operational
capability.
• Reduced our accident frequency rate, achieving an all-time low
of 0.07.
•
Invested more than £45m in new plant and equipment with the
latest Tier 4 and Tier 5 engines.
• Continued to embed 5S and other lean manufacturing tools on
our sites and in our yards.
We develop our people,
processes and assets and
leverage the global
strength of our technical,
operational, commercial
and financial resources.
• Continued sharing product and safety knowledge and innovations
through our global product teams.
• Continued our efforts on workforce engagement, completing
engagement surveys and team action planning in multiple business units.
• Continued to embed our diversity, equity and inclusion strategy.
Started a reverse mentoring programme.
• Launched wellbeing framework and leadership toolkit.
• Delivered both face-to-face and online training programmes.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
19
Outlook
KPIs
We will
• Remain customer focused through our branch structure
and drive for a leading share in our chosen markets.
• Aim to be profitable through trading cycles as we sustain
our revenue streams.
• Continue to introduce new products where we are already
established.
Market share in core markets
Share of our core markets
13.3%
(2020: 13.7%)
• Continue to offer our customers alternative designs and
engineered solutions that meet their specifications whilst
reducing costs.
• Retain our technical advantage by investing in our people
and continuing to influence across our sector.
• Continue to secure complex, high-value projects.
Operating margins¹
Underlying operating profit expressed
as a percentage of revenue
4.2%
(2020: 5.3%)
• Make continuous, incremental improvements to remain
competitive in our chosen markets.
• Deliver Platform For Success as we migrate to one integrated
D365 solution across the Keller world.
Return on capital employed¹
Underlying operating profit as a net return
on capital employed
14.4%
(2020: 16.4%)
2.9%
21%
12%
• Continue to share best practice in operations, technical
knowledge, governance and compliance.
Accident frequency rate
Accident frequency per 100,000 hours; lost time
injuries are calculated as any incident over one day
42%
0.07
(2020: 0.12)
1
Underlying measures allow management and investors to compare performance without the potentially distorting effects of one-off items or non-trading items.
Definitions of underlying measures can be found under adjusted performance measures on page 185.
20
Keller Group plc Annual Report and Accounts 2021
Strategic Report
North America
In North America, revenue increased by 15.4%,
on a constant currency basis, with improved
momentum across all markets and the addition
of the recently acquired RECON Services, Inc
(RECON) business in Texas, which will contribute
to profits in 2022. Underlying operating profit
decreased by 5.6% on a constant currency basis
to £73.0m, driven by market pricing pressures and
the impact of higher costs of materials and labour.
These were partly offset by the benefit from the
resolution of a historical claim (c£7m) in H1 and
strong growth at Moretrench Industrial. The
underlying operating margin decreased to 5.5%
from 6.8% in the prior year primarily due to the
impact of the increased cost of steel strand in the
Suncoast High-Rise business and pressure on
profitability due to labour and material shortages
and the associated operational disruptions. Our
continued focus on safety saw our key metric,
accident frequency rate, fall from 0.08 in 2020 to
0.03 for 2021, a 63% improvement.
On a like-for-like basis, excluding acquisitions and
disposals on a constant currency basis, revenue
for the year increased by 11%, and operating
profit decreased by 14%.
In 2021 the construction industry in the US
grew 8%, driven by a 12% increase in residential
construction. Non-residential construction
grew 2%.
As anticipated, we had a slow start to the year
following the continued impact of the COVID-19
pandemic which curtailed sentiment and activity
in the second half of 2020 through to early 2021.
In March, trading accelerated and we began to
operate more normally given the combination
of increased vaccination rates across the North
American population and reduced restrictions
and lockdowns.
Business units
KPIs
Revenue (£m)
2021
2020
North-East
South-East
Florida
Central
West
Canada
Specialty Services
Moretrench Industrial
Suncoast
Underlying operating profit (£m)
1,323.1
1,227.5
2021
2020
73.0
83.2
Underlying operating margin (%)
Order book (£m)
2021
2020
Accident frequency rate
2021
2020
0.03
5.5
6.8
0.08
Revenue
Underlying operating profit
Underlying operating margin
Order book¹
1 Comparative order book stated at constant currency.
2021
2020
787.0
593.9
The foundations business demonstrated
its resilience with a flat year-on-year profit
performance with margins impacted by market
pricing pressure and higher input costs.
2021
£m
1,323.1
73.0
5.5%
787.0
2020
£m
1,227.5
83.2
6.8%
593.9
Constant
currency
+15.4%
-5.6%
+32.5%
Our Canadian business delivered a strong
performance in terms of revenue and profit,
benefitting from a restructuring and a
strengthening of the management team in
2020 as well as the acquisition of Subterranean
(Manitoba) Ltd, a small, market-leading
geotechnical foundations business, for
a cash consideration of £7.8m.
Suncoast, the Group’s post-tension business
serving mostly the residential construction market,
experienced high volumes with revenue ahead of
the prior year. The high-rise sector continued to be
challenged by the increased cost of imported, as
well as domestic, steel strand, Suncoast’s main raw
material, which negatively impacted operating
profit. The recent unprecedented increase in the
cost of steel is expected to continue to impact
margins in the near term. We expect the adverse
impact on profitability to unwind during 2022.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
21
Case study
Keller Canada: A clear plan for the future
Building collaboration
Keller Canada is also increasing collaboration
with other business units in North America
and looking at acquisitions where they make
sense. In October, it acquired Subterranean
(Manitoba) Ltd, another highly respected
geotechnical contractor with more than
50 years of experience.
We have a great team who are
proud to work for Keller and that’s
made it easier to move the business
forward. Combined with lower
overheads, a clear strategy that
everyone works to, and a larger
footprint in our target markets, we
have made a record profit this year.”
Curtis Cook
Senior Vice President
Canada
Keller’s Canadian business has seen a
remarkable turnaround over the last 18
months, moving from a struggling business
to a profitable, focused company.
We acquired our Canadian business in 2013
when the region was riding the crest of an oil
boom. Just a few years later, the price of oil
fell by half and, with a fraction of the work,
our revenues fell too.
The Prairie, Vancouver and Toronto
businesses were restructured and merged
with our Geo Foundations business. And, with
the retirement of the former president at
the end of 2019, Curtis Cook, who previously
oversaw Hayward Baker operations in Florida
and the Gulf Coast, took over.
A united team
“Getting all our offices and branches pushing
in the same direction was key,” says Curtis.
“We aligned key processes and developed
a national team that shares resources and
collaborates on key issues. This included
rightsizing our equipment fleet and offloading
under-used, unreliable equipment.
“With a focus on quality and safety, we’re now
making sure we’re bidding on the right kind of
work where we have a competitive advantage.
That means projects where we can play to our
strengths: more early-contract involvement
and value engineering to build strong client
partnerships.
Moretrench Industrial, which operates in the
highly regulated industrial and power segments,
performed well with increased revenue and
profit driven by the Florida industrial market.
The Hampton Roads Bridge Tunnel Expansion
Project in Virginia, USA, cUS$120m two-year
contract is c65% complete. Work on the South
Island has concluded and the team has
commenced work on the North Island.
In July 2021, we announced the acquisition of
RECON, an environmental, geotechnical and
industrial services company headquartered in
Houston, Texas. RECON is a specialist
geotechnical environmental remediation and
industrial services contractor working principally
for industrial clients, many in the petrochemical
sector, predominantly along the Gulf and East
coasts of the United States. Similar to Keller’s
existing Florida-based Moretrench Industrial
business, RECON is focused on environmental
remediation activities and the geographic
proximity of the two businesses provides
revenue synergies from cross-selling
opportunities, both between the two businesses
and also the Keller foundations businesses.
The additional revenue synergies provide the
opportunity to increase the Group’s overall
market share in the important Gulf Coast area
where Keller has historically been relatively
under-represented and where a significant
pipeline of new projects is projected by the
petrochemical sector. Cost synergies will also
be achieved through this acquisition. The cash
consideration on an enterprise value basis was
US$23m (£17m), and an original maximum
earn-out of US$15m (£11m) related to specific
future contract wins. As we anticipated, in
December 2021 RECON was awarded a contract
worth approximately US$160m (£120m) in
revenue over a two years, in connection with the
development of an energy facility in the Gulf
Coast region of the USA. RECON is integrating
well and, during 2022, will together with
Moretrench Industrial, be developed as we
establish and build our new environmental,
geotechnical and industrial services business
that will leverage our position in this large and
growing sector.
On 1 November 2021, the division acquired
Voges Drilling, a geotechnical foundation
company based in Texas, for cash consideration
of £1.4m and a further deferred consideration
of £0.8m is payable over three years.
The order book for North America at the period
end was at £787.0m, up 32.5% (on a constant
currency basis) from the closing position at the
end of 2020. The increase year-on-year is
predominantly driven by the newly signed
RECON contract worth £120m ($160m) over
two years.
22
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Europe1
In Europe, revenue increased by 5.2% on a
constant currency basis as markets recovered
with the COVID-19 related shutdowns and travel
restrictions easing as the year progressed.
Underlying operating profit was £24.3m, up
38.2% on a constant currency basis, reflecting
the higher level of activity, improved efficiencies
on site, enhanced contract profitability and cost
savings following the prior year restructuring
activity. As a result, the underlying operating
margin increased to 4.4% (2020: 3.4%).
In early 2021, a tragic fatality occurred following
an accident on a site in Austria in which we lost
a long-serving employee. Whilst a thorough
investigation has determined Keller was
not at fault for the accident, we have continued
to advance our safety programmes. The accident
frequency rate was up slightly at 0.24 from 0.18
in 2020.
Following a relatively slow start to the year due
to some harsh winter weather in some parts
of Europe and the continued impacts of the
pandemic, momentum built as markets opened
up with people and equipment permitted to
cross borders more easily and the year finished
more strongly. Whilst the division was impacted
by both material and labour shortages, which
were operationally challenging, and the
widely-publicised inflationary pressures
continued to be felt across the continent, the
division generated an exceptional performance
from several major projects.
South-East Europe and Nordics delivered record
revenue with significant increases in activity
levels in Austria and Italy. The Scandinavian
region also continued to grow, and benefitted
from the Sandbukta-Moss-Sastad rail project
(SMS2) in Norway. In September 2021, our joint
venture in Finland, KFS Finland Oy, acquired
NordPile, a driven and drilling piling contractor.
This acquisition reinforces KFS’s position as the
largest geotechnical specialist contractor in the
region offering the broadest range of solutions
and is consistent with our wider strategy of
building market-leading shares in the regions
that play to our strengths.
The UK business, which was adversely impacted
in 2020 by the hesitant investment climate
following the 2019 general election and
uncertainty around Brexit, reported good
revenue growth, including the benefit from
several contract awards on the High Speed 2 rail
project (HS2). Particularly noteworthy are the
C1 package at a value of c£84m, awarded in
February 2021, and the main packages of work
on C2/3 at a value of c£48m which were
secured in April.
Business units
Central Europe
South-West Europe
North-East Europe
UK
South-East Europe
and Nordics
KPIs
Revenue (£m)
2021
2020
Underlying operating profit (£m)
549.2
538.5
2021
2020
24.3
332.7
18.4
220.3
Underlying operating margin (%)
Order book (£m)
2021
2020
Accident frequency rate
2021
2020
0.18
2021
2020
3.4
4.4
0.24
Revenue
Underlying operating profit
Underlying operating margin
Order book²
2021
£m
549.2
24.3
4.4%
332.7
2020
£m
538.5
18.4
3.4%
220.3
Constant
currency
+5.2%
+38.2%
+51.0%
1
In November 2020 it was announced that from 1 January 2021 the MEA business would be transferred to the APAC division,
creating the Asia-Pacific, Middle East and Africa (AMEA) Division, and the remaining EMEA Division becoming Europe. The
comparative financials for 2020 are on a proforma basis, aligned with our new structure.
2 Comparative order book stated at constant currency.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
23
Our businesses in Central Europe and North East
Europe were impacted by lower volumes at the
start of the year due to the weather and project
delays related to COVID-19. However, both
businesses finished the year with improved
activity levels and strong order books. At the end
of 2021 North East Europe secured a €26m piling
contract for work at an oil refinery in Poland
which is expected to be delivered during 2022.
We are also exploring the Baltic region for
potential expansion with some attractive
future projects in the pipeline.
In July 2021, the new South West Europe
Business Unit was formed following the
successful merger of our French Speaking
Countries and Iberia and Latin America
businesses. South West Europe was our
business most affected by the impact of
COVID-19 in the period, with extended country
lockdowns and delays to contract starts. In
addition, the completion in early 2021 of an oil
refinery project in Mexico contributed to reduced
revenue and profits compared to the prior year.
The combined business unit is now being
integrated and is better positioned to benefit
from growth opportunities in its domestic and
overseas markets.
The European portfolio is more focused following
the exit from South America and the disposal of
non-core businesses during 2020. As a result of
these actions, we were also able to reduce the
divisional overhead. Moving forward, we will
continue to review our various European markets
to ensure that we focus only on sustainable
markets and attractive projects that generate
long-term returns.
The European core business continues to
recover steadily, and we have benefitted from
a number of larger projects across the region,
particularly in infrastructure. Looking forward,
our success in the region will require those larger
projects to be replaced. However, our strong
regional approach coupled with our divisional
support will ensure we are well placed to pursue
new contract opportunities.
The Europe order book at the end of the period
was £332.7m, up 51% (on a constant currency
basis) on the prior year, largely due to the HS2
contracts.
Case study
Keller brings RemediaClay® to Europe
As climate change increasingly
affects clays, causing more
problems in roads and structures,
its remediation is becoming more
important. RemediaClay® could
be significant for us in a market
dominated by micropiling and
soil substitution.”
Serge Lambert
Head of the Technical Department,
South-West Europe
A treatment developed by Keller in the US
to improve the stability of swelling clay soils
has been trialled in France. If successful,
it could open up a major new market in the
country – and tackle a growing problem.
Clay soils that swell and shrink due to moisture
are a major cause of structural foundation
damage. Although watertight membranes,
drainage and the removal of nearby vegetation
can provide initial protection, more drastic
underpinning methods are often needed.
One common answer to the problem is
micropiling, but a less well-known and
potentially cheaper alternative involves
injecting soils with a potassium and
ammonium ion solution. This reacts with the
clay, modifying its behaviour and making it less
sensitive to swelling and has passed rigorous
safety and environmental tests to satisfy
European regulators.
Keller has recently completed the first trial of
its newly patented RemediaClay® technology in
France on two 100m stretches of a
small road.
24
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Asia-Pacific, Middle East and Africa (AMEA)1
In AMEA, revenues increased by 20.4% on a
constant currency basis, driven predominantly by
Austral in Australia and India, partly offset by a
decline in the Middle East and Africa business
which was transferred into the division at the
beginning of 2021. Operating profit in the
division as a whole decreased by 77.1% on a
constant currency basis to £3.4m, driven by
operational disruption as a result of COVID-19,
particularly in Keller Australia and an extremely
challenging trading environment in the Middle
East and Africa. The division had a notable
achievement in its safety record with no
significant accidents reported in the period,
resulting in a zero accident frequency rate.
The effects of the COVID-19 pandemic were felt
across all our markets in the division to varying
degrees. The ASEAN business continued to feel
the impact of COVID-19 through the
postponement of contracts and border closures.
However, trading levels improved in the second
half and the business delivered revenue growth
for the year. The business continued to benefit
from the restructuring activity in 2019 and is well
placed for the future with a strong focus on
ground improvement projects across the region.
Austral in Australia had another strong
performance in terms of revenue and profit
growth as it nears completion of Rio Tinto’s
Cape Lambert Port in the Pilbara, Australia.
The business has secured a strong pipeline of
projects, including a number of other mining and
port-related projects in the Pilbara region, and
continues its diversification strategy with key
selected projects on Australia’s east coast.
Our Keller Australia business had a particularly
difficult year, making a loss in the period. The
challenges posed by the COVID-19 travel
restrictions and state border restrictions in
Australia had a very significant impact on
operations and profits, amid a continued
softness in some markets. The workforce model
relies on the fluid movement of employees and
equipment around the country and the travel
restrictions made movement impossible for long
periods of time. Many employees made huge
personal sacrifices including long periods away
from home due to the strict lockdown rules.
Tendering activity has substantially improved, the
management team has been strengthened and
the outlook is more positive as border
restrictions ease.
Business units
ASEAN
Austral
India
Keller Australia
Middle East and Africa
KPIs
Revenue (£m)
2021
2020
Underlying operating profit (£m)
352.1
296.5
3.4
2021
2020
Underlying operating margin (%)
Order book (£m)
2021
1.0
2020
Accident frequency rate
2021
0
2020
2021
2020
5.2
0.05
15.5
177.3
182.2
Revenue
Underlying operating profit
Underlying operating margin
Order book²
2021
£m
352.1
3.4
1.0%
177.3
2020
£m
296.5
15.5
5.2%
182.2
Constant
currency
+20.4%
-77.1%
-2.7%
1
In November 2020 it was announced that our newly formed Middle East and Africa Business Unit would combine with APAC, with
effect from 1 January 2021, to create an Asia-Pacific, Middle East and Africa (AMEA) division. This brings together under one
management team all of our businesses in developing geographies that have similar market characteristics and customers, with a
greater focus on large contracts, particularly in the resources sector. The comparative financials for 2020 are on a proforma basis,
aligned with our new structure.
2 Comparative order book stated at constant currency.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
25
Our India business performed strongly in terms
of revenue and profit growth with management
successfully managing the business in a country
that has been severely impacted by the effects
of COVID-19. Tendering levels improved and
there are a number of good prospects in the
pipeline.
The Middle East and Africa business has been
the most challenged region in terms of market
clarity and recovery from the impacts of
COVID-19, with many countries relying on
lockdowns and restrictions in advance of
vaccination programmes. At the end of the year,
we signed a substantial agreement with our
client in Mozambique in relation to the
suspended LNG project. This largely reversed
the contract loss incurred to date and protects
the Group in the event that the contract does
not resume. Despite the successful Mozambique
resolution, the Middle East and Africa business as
a whole recorded a loss in the year. The focus is
now on turning this business around post
COVID-19 and actions are being taken to deliver
this. Tendering activity in the region continues to
strengthen, though with more variability than
other areas of AMEA.
The AMEA order book strengthened strongly
through the second half and at the end of the
period was £177.3m, down 2.7% (on a constant
currency basis) on the prior year.
Case study
Keller ASEAN keeps busy
on infrastructure projects
Every day across the world, Keller helps
construct major infrastructure projects that
drive economies and improve millions of
lives. One region where Keller is bringing
its expertise to power plants, highways,
rail lines and more is ASEAN.
In neighbouring Malaysia, Keller worked on
a ground-improvement project for a large
petrochemical plant in the northwestern
state of Sarawak, installing 60,000m of
stone columns and 45,000m of hybrid
concrete columns.
In Indonesia, Keller already has huge
experience of high-profile infrastructure
projects, having contributed to the 1,000km-
long main Java highway and Jakarta airport
upgrade in recent years.
At the start of 2021, we finished a heavy
foundation project for a major high-speed
railway, and more recently, secured a
significant contract for a power plant in Java.
“This is a hugely important and complex
project of national importance,” says Yerikho
Purba, Deputy Project Manager. “Originally the
project was designed for piling, but by offering
stone columns as an alternative, we were able
to reduce the cost by a quarter and provide
greater earthquake mitigation.”
Also in 2021, on one of our biggest-ever
projects in Indonesia, we installed foundations
for a liquid natural gas plant in a remote area of
West Papua, using 6,000 bored piles and 700
corrugated sheet piles.
Another huge project involved providing
ground improvement for a mass rapid
transport system that will significantly upgrade
Malaysia’s public transport and generate huge
economic benefit. The team worked on the
first line between 2012 and 2014 and has been
involved in the second for the past five years.
We also helped support the embankments
for another rapid transit system project in
Singapore this year using deep soil mixing
for the first time.
We are very proud to be
participating in projects that make
so many people’s lives better…
It’s good to make a difference
in the world.”
KJ Tan
Business Development Manager
ASEAN
26
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chief Financial Officer’s review
David Burke
Revenue
Underlying operating profit1
Underlying operating profit %1
Non-underlying items
Statutory operating profit
Statutory operating profit %
2021
£m
2,224.4
92.8
4.2%
(12.3)
80.5
3.6%
2020
£m
2,062.5
110.1
5.3%
(33.1)
77.0
3.7%
1
Details of non-underlying items are set out in note 8 to the consolidated financial statements. Reconciliations
to statutory numbers are set out in the adjusted performance measures section on page 185.
Revenue
Revenue of £2,224.4m (2020: £2,062.5m) was
7.8% up on 2020, driven by increased activity
as markets began to recover, particularly in
the second half, with significant contract wins
together with the benefit of several bolt-on
acquisitions. At constant currency, revenue
increased by 13.4% and increased across all
three divisions.
North America reported an increase in revenue
of 15.4% (at constant currency), with improved
momentum across all markets and the addition
of several bolt-on acquisitions, the largest being
RECON Services, Inc (RECON). Of the 15.4%
increase in revenue, 4.1% was derived from
businesses acquired in 2021 and 11.3% from
the existing business. Europe revenue increased
by 5.2% (at constant currency) as markets
recovered with the COVID-19 related shutdowns
and travel restrictions easing as the year
progressed. AMEA revenue increased by 20.4%
(at constant currency) driven predominantly by
Austral in Australia and India, partly offset by a
decline in the Middle East and Africa business.
We have a consistently diversified spread of
revenues across geographies, product lines,
market segments and end customers.
Customers are generally market specific and,
consistent with the prior year, the largest
customer represented less than 3% of the
Group’s revenue. The top 10 customers
represent 15% of the Group’s revenue (2020:
11%). The Group worked on more than 6,000
projects in the year with 60% of contracts having
a value between £25,000 and £250,000,
demonstrating a low customer concentration
and a wide project portfolio.
Underlying operating profit
The underlying operating profit of £92.8m was
15.7% down on prior year (2020: £110.1m),
which on a constant currency basis was 9.7%
down, impacted primarily by the COVID-19
adverse pressure on market pricing and
operational disruption across our businesses.
North America underlying constant currency
operating profit decreased by 5.6% to £73.0m
driven by market pricing pressures and the
impact of higher costs of materials and labour.
In particular, operating profit at Suncoast
reduced by £15.3m, largely due to the increased
cost of steel strand in High-Rise. Europe
constant currency operating profit increased
38.2%, reflecting the higher level of activity,
improved efficiencies on site, enhanced contract
profitability and cost savings following the prior
year restructuring activity. AMEA constant
currency operating profit decreased by 77.1%
to £3.4m, driven by operational disruption
as a result of COVID-19, particularly in Keller
Australia, and an extremely challenging trading
environment in the Middle East and Africa.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
27
Share of post-tax results
from joint ventures
The Group recognised an underlying post-tax
profit of £0.4m in the year (2020: £0.8m) from its
share of the post-tax results from joint ventures.
The share of the post-tax amortisation charge
of £0.6m arising from the acquisition of NordPile
by our joint venture KFS Oy is included as a
non-underlying item. No dividends (2020: £0.4m)
were received from joint ventures in the year.
Statutory operating profit
Statutory operating profit comprising underlying
operating profit of £92.8m (2020: £110.1m) and
non-underlying items comprising net costs of
£12.3m (2020: £33.1m), increased by 4.5% to
£80.5m (2020: £77.0m).
Revenue split by geography
£m
2021
H1
H2
Total
2020
H1
H2
Total
Year ended
Division
North America
Europe2
AMEA2
Central
Group
North America
Europe2
AMEA2
Total
581.7
741.4
1,323.1
636.5
591.0
1,227.5
242.0
307.2
549.2
254.7
283.8
538.5
160.4
191.7
352.1
147.9
148.6
296.5
984.1
1,240.3
2,224.4
1,039.1
1,023.4
2,062.5
Revenue
£m
2021
1,323.1
549.2
352.1
–
2,224.4
2020
1,227.5
538.5
296.5
–
2,062.5
Underlying operating profit3
£m
Underlying operating profit margin3
%
2021
73.0
24.3
3.4
(7.9)
92.8
2020
83.2
18.4
15.5
(7.0)
110.1
2021
5.5%
4.4%
1.0%
–
4.2%
2020
6.8%
3.4%
5.3%
–
5.3%
2
From 1 January 2021 Middle East and Africa businesses transferred to APAC Division, to create the Asia-Pacific, Middle East and Africa (AMEA) Division. The remaining EMEA division became our
Europe Division. The comparative financials for 2020 are on a proforma basis, aligned with our new structure.
3 Details of non-underlying items are set out in note 8 of the consolidated financial statements.
Revenue increased to
£2,224.4m, up 13% (at
constant currency) as a
result of increased trading
activity, particularly during
the second half, and several
bolt-on acquisitions.
Net finance costs
Net finance costs decreased by 32.6% to £8.9m
(2020: £13.2m). The reduction has been driven
by the decrease in US LIBOR, which reduces the
cost of the Group’s private placement debt, and
a decrease in the average net debt levels through
the year. The average net borrowings, excluding
IFRS 16 lease liabilities, during the year were
£147.6m (2020: £183.5m).
Taxation
The Group’s underlying effective tax rate
decreased to 24% (2020: 29%), largely due
to a prior year benefit in North America from
research and development tax credits. Cash
tax paid in the year of £15.9m (2020: £24.9m)
was a decrease of £9.0m over the prior year
and was mainly attributable to the impact of the
additional research and development tax credits.
Other differences are mainly due to the timing
and phasing of tax payments which do not
necessarily relate to the period in which the
profits are earned. Further details on tax are
set out in note 11 of the consolidated
financial statements.
Non-underlying items
The items on page 28 have been excluded from
the underlying results and further details of
non-underlying items are included in note 8
to the financial statements. The total pre-tax
non-underlying items in the year decreased to
£12.3m (2020: £33.1m), due to the reduction
in restructuring activity during the year.
28
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chief Financial Officer’s review continued
Non-underlying items
Exceptional restructuring costs
Loss on disposal of operations
Acquisition costs
Contingent consideration: additional amounts provided
Goodwill impairment
Amortisation of acquired intangible assets
Amortisation of joint venture acquired intangibles
Contingent consideration received
Exceptional contract dispute
Total non-underlying items in operating profit
Non-underlying taxation
Total non-underlying items
2021
£m
7.3
0.5
0.5
1.3
–
2.8
0.6
(0.7)
–
12.3
(10.6)
1.7
2020
£m
16.6
11.6
0.3
0.8
0.3
4.2
–
–
(0.7)
33.1
(5.6)
27.5
Non-underlying items in operating profit
Total exceptional restructuring costs of £7.3m
have been incurred in AMEA and Europe as the
final costs on the project to rationalise the Middle
East and Africa businesses and the restructuring
costs incurred in KGS, the in-house equipment
manufacturer, following a review of overheads.
The loss on disposal of operations comprises
£0.5m loss on disposal arising from the disposal
of the non-core Cyntech Anchors business in
Canada and the finalisation of the sale price for
the disposal of the Brazil business in 2020.
Acquisition costs of £0.5m relate to professional
fees and other related costs incurred through
the acquisitions of RECON and Subterranean.
Additional contingent consideration payable
of £1.3m relates to the acquisition of the Geo
Construction Group (Bencor) in 2015, following
finalisation of items referenced in the sale and
purchase agreement.
The £2.8m charge for amortisation of acquired
intangible assets relates to the RECON,
Moretrench and Austral acquisitions.
Amortisation of joint venture intangibles of
£0.6m relates to the NordPile acquisition
undertaken by our joint venture investment
KFS Finland Oy during the year.
Contingent consideration of £0.7m was received
in respect of the 2020 Wannenwetsch disposal.
Non-underlying taxation
A non-underlying tax credit of £10.6m
(2020: £5.6m) included the £1.5m (2020: £3.7m)
tax impact of the non-underlying loss. The
remaining £9.1m (2020: £1.9m) tax credit
arose from the partial reversal of the valuation
allowance against deferred tax assets in Canada
and Australia that was recognised through the
non-underlying tax charge in prior years.
Earnings per share
Underlying diluted earnings per share decreased
by 8.2% to 88.4p (2020: 96.3p) driven by lower
operating profit partially offset by the reduction
in finance costs and the effective tax rate
reduction. Statutory diluted earnings per share
was 86.1p (2020: 58.5p) which reflects the
reduction in non-underlying items in
comparison to the prior year.
Dividend
The Board has recommended a final dividend of
23.3p per share (2020: 23.3p per share) which,
following the interim dividend for 2021 of 12.6p
(2020: 12.6p), brings the total dividend for the
year to 35.9p (2020: 35.9p). The 2021 dividend
earnings cover, before non-underlying items,
was 2.5x (2020: 2.7x).
The Group’s dividend policy is to increase the
dividend sustainably whilst allowing the Group
to be able to grow, or as a minimum, maintain,
the level of dividend through market cycles.
The continuation of dividend payments during
the challenging macro environment of 2020
and 2021 reflects the financial strength of the
Group, its significant liquidity position and the
longer-term confidence in the performance
of the business. As we advance through 2022
the Board will review recommencing the
progressive dividend.
Keller Group plc had distributable reserves of
£122.9m at 31 December 2021 that are available
to support the dividend policy, which comfortably
covers the proposed full-year dividend for 2021
of £16.8m. Keller Group plc is a non-trading
investment company that derives its profits
from dividends paid by subsidiary companies.
The dividend policy is therefore impacted by the
performance of the Group which is subject to the
Group’s principal risks and uncertainties as well
as the level of headroom on the Group’s
borrowing facilities and future cash
commitments and investment plans.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
29
Acquisitions
On 13 July 2021, the Group acquired RECON
Services Inc. for an initial cash consideration of
£20.2m and £9.5m of contingent consideration,
of which £1.5m had been paid at year-end.
The business is a geotechnical environmental
remediation and industrial services company
based in Texas, US and is included in the North
America Division.
On 29 September 2021, the Group acquired
the business of Subterranean (Manitoba) Ltd.
for cash consideration of £7.8m. Subterranean
is a geotechnical contractor in Manitoba, Canada.
On 1 November 2021, the Group acquired
the business of Voges Drilling, a geotechnical
foundation company based in Texas, for cash
consideration of £1.4m. Further deferred
consideration of £0.8m is payable over a
three-year period.
Prior-year balance sheet
reclassification
As noted in the Audit and Risk Committee report,
during 2021, the Financial Reporting Council (FRC)
included the Group’s annual report and accounts for
the year ended 31 December 2020 in their
thematic review of IAS 37, ‘Provisions, Contingent
Liabilities and Contingent Assets’, which resulted in
the FRC requesting further information in respect
of provisions for insurance and legal claims. The
Group responded fully to the matters raised in the
correspondence and have concluded that the
insurance reimbursement receivables of the Group
should be separately presented gross on the
consolidated balance sheet, rather than netted off
against the insurance and legal provision.
The Group has restated the relevant sections
of this year’s accounts to reflect this. The
restatement impacted the balance sheet
reported in the 2020 annual report and accounts
as detailed in the accounting policies note on
page 133. The restatement did not result in any
changes to reported profit, earnings per share,
net assets or the cash flows reported in the 2020
financial year.
Working capital
Net working capital increased by £3.1m
(2020: decrease of £38.2m) reflecting the
reversal of the working capital timing benefit
achieved in 2020 due to the impact of COVID-19
on business activity and cash collections. The
net movement comprised of an £18.3m increase
in inventories and a £104.4m increase in trade
and other receivables, offset by an increase in
trade and other payables of £119.6m.
A reduction in provisions and retirement benefit
liabilities increased the cash outflow in respect
of working capital by £7.8m (2020: increase of
£13.9m). This mainly comprises of payments in
respect of retirement benefits. The increase in
insurance provisions that offsets with an increase
in insurance receivables does not impact the
cash flow statement. The £7.8m outflow
excludes the cash outflow on restructuring
provisions which is presented within non-
underlying items in the free cash flow calculation.
Free cash flow
Underlying operating profit
Depreciation, amortisation and impairment
Underlying EBITDA
Non-cash items
Dividends from joint ventures
Decrease/(increase) in working capital
Increase/(decrease) in provisions and retirement benefit liabilities
Net capital expenditure
Additions to right-of-use assets
Free cash flow before interest and tax
Free cash flow before interest and tax to underlying operating profit
Net interest paid
Cash tax paid
Free cash flow
Dividends paid to shareholders
Purchase of own shares
Acquisitions
Business disposals
Non-underlying items
Right-of-use assets/lease liability modifications
Foreign exchange movements
Movement in net debt
Opening net debt
Closing net debt
2021
£m
92.8
97.4
190.2
–
–
(3.1)
(7.8)
(74.6)
(23.4)
81.3
88%
(5.3)
(15.9)
60.1
(25.9)
(3.7)
(31.3)
7.1
(2.0)
(4.0)
(1.1)
(0.8)
(192.5)
(193.3)
2020
£m
110.1
94.9
205.0
1.9
0.4
38.2
13.9
(65.6)
(22.7)
171.1
155%
(12.0)
(24.9)
134.2
(25.9)
–
–
2.2
(11.0)
(1.1)
(1.1)
97.3
(289.8)
(192.5)
30
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Chief Financial Officer’s review continued
The Group has a number of end of service
schemes in the Middle East as required by local
laws and regulations. The amount of benefit
payable depends on the current salary of the
employee and the number of years of service.
These retirement obligations are funded on the
Group’s balance sheet and obligations are met
as and when required by the Group. The IAS 19
valuation of the defined benefit obligation totalled
£3.0m at 31 December 2021 (2020: £2.9m).
Currencies
The Group is exposed to both translational and,
to a lesser extent, transactional foreign currency
gains and losses through movements in foreign
exchange rates as a result of its global
operations. The Group’s primary currency
exposures are US dollar, Canadian dollar,
euro, Singapore dollar and Australian dollar.
As the Group reports in sterling and conducts
the majority of its business in other currencies,
movements in exchange rates can result in
significant currency translation gains or losses.
This has an effect on the primary statements
and associated balance sheet metrics, such as
net debt and working capital.
A large proportion of the Group’s revenues are
matched with corresponding operating costs in
the same currency. The impact of transactional
foreign exchange gains or losses are
consequently mitigated and are recognised
in the period in which they arise.
The following exchange rates applied during
the current and prior year:
2021
2020
Closing
Average
Closing
Average
USD
CAD
EUR
SGD
AUD
1.35
1.71
1.19
1.82
1.86
1.38
1.72
1.16
1.85
1.83
1.37
1.74
1.12
1.81
1.78
1.28
1.72
1.12
1.77
1.86
On an IFRS 16 basis, year-end gearing was 44%
(2020: 47%).
The average month-end net debt during 2021,
excluding IFRS 16 lease liabilities, was £147.6m
(2020: £183.5m) and the minimum headroom
during the year on the Group’s main banking
facility was £164.2m (2020: £129.4m), in addition
to a cash balance at that time of £92.0m (2020:
£80.8m). The Group had no material discounting
or factoring in place during the year. Given the
relatively low value and short-term nature of the
majority of the Group’s projects, the level of
advance payments is typically not significant.
At 31 December 2021 the Group had drawn
upon uncommitted overdraft facilities of £0.9m
(2020: £4.7m) and had drawn £150.4m of bank
guarantee facilities (2020: £167.5m).
Provision for pension
The Group has defined benefit pension
arrangements in the UK, Germany and Austria.
The Group’s UK defined benefit schem e is
closed to future benefit accrual. The most recent
actuarial valuation of the UK scheme was as at
5 April 2020, which recorded the market value of
the scheme’s assets at £49.7m and the scheme
being 77% funded on an ongoing basis. The level
of contributions are £2.7m a year with effect
from 1 January 2021 and will increase by 3.6%
per annum on 1 January going forward to
5 August 2024. Contributions will be reviewed
following the next triennial actuarial valuation
to be prepared as at 5 April 2023. The 2021
year-end IAS 19 valuation of the UK scheme
showed assets of £63.7m, liabilities of £58.3m
and a pre-tax surplus of £5.4m before an IFRIC
14 adjustment to reflect the minimum funding
requirement for the scheme, which adjusts the
closing position to a deficit of £6.8m.
In Germany and Austria, the defined benefit
arrangements only apply to certain employees
who joined the Group before 1997. The IAS 19
valuation of the defined benefit obligation
totalled £15.9m at 31 December 2021 (2020:
£19.0m). There are no segregated funds to
cover these defined benefit obligations and the
respective liabilities are included on the Group
balance sheet.
All other pension arrangements in the Group
are of a defined contribution nature.
Capital expenditure
The Group manages capital expenditure tightly
whilst investing in the upgrade and replacement
of equipment where appropriate. Net capital
expenditure, excluding leased assets, of £74.6m
(2020: £65.6m) was net of proceeds from the
sale of equipment of £9.8m (2020: £7.4m). The
asset replacement ratio, which is calculated by
dividing gross capital expenditure, excluding sales
proceeds on disposal of items of property, plant
and equipment and those assets capitalised
under IFRS 16, by the depreciation charge on
owned property, plant and equipment, was 127%
(2020: 109%).
Free cash flow
The Group’s free cash flow of £60.1m (2020:
£134.2m) is more than sufficient to fund, in cash
terms, the full value of the payment in relation
to the total 2021 dividend of £25.9m (2020:
£25.9m). The basis of deriving free cash flow
is set out on page 29.
Financing facilities and net debt
The Group’s total net debt of £193.3m (2020:
£192.5m) comprises loans and borrowings and
related derivatives of £200.6m (2020: £185.0m),
lease liabilities of £75.4m (2020: £73.8m) net of
cash and cash equivalents of £82.7m (2020:
£66.3m). The Group’s term debt and committed
facilities principally comprise US private
placements of $75m (£58.1m) which mature in
2024 and a £375m multi-currency syndicated
revolving credit facility, which matures in
November 2025. During the year, $50m (£36.2m)
of US private placements matured and were
repaid and in March 2021 the Group’s unused
£300m Covid Corporate Financing Facility (CCFF)
was withdrawn. At the year end, the Group
had undrawn committed and uncommitted
borrowing facilities totalling £291.9m
(2020: £672.6m).
The most significant covenants in respect of the
main borrowing facilities relate to the ratio of net
debt to underlying EBITDA, underlying EBITDA
interest cover and the Group’s net worth. The
covenants are required to be tested at the half
year and the year end. The Group operates
comfortably within all of its covenant limits. Net
debt to underlying EBITDA leverage, calculated
excluding the impact of IFRS 16, was 0.8x (2020:
0.7x), well within the limit of 3.0x and at the lower
end of the leverage target of between 0.5x–1.5x.
Calculated on a statutory basis, including the
impact of IFRS 16, net debt to EBITDA leverage
was 1.0x at 31 December 2021 (2020: 0.9x).
Underlying EBITDA, excluding the impact of IFRS
16, to net finance charges was 30.5x (2020:
21.7x), well above the limit of 4.0x.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
31
Credit risk
Return on capital employed
The Group’s principal financial assets are trade
and other receivables, bank and cash balances
and a limited number of investments and
derivatives held to hedge certain Group
liabilities. These represent the Group’s
maximum exposure to credit risk in relation
to financial assets.
The Group has procedures to manage
counterparty risk and the assessment of
customer credit risk is embedded in the contract
tendering processes. The counterparty risk on
bank and cash balances is managed by limiting
the aggregate amount of exposure to any one
institution by reference to its credit rating and
by regular review of these ratings.
Return on capital employed is defined at Group
level as underlying operating profit divided by the
accounting value of equity attributable to equity
holders of the parent plus net debt plus
retirement benefit liabilities. Return on capital
employed in 2021 was 14.4% (2020: 16.4%).
David Burke
Chief Financial Officer
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Treasury policies
Currency risk
The Group faces currency risk principally on its
net assets, most of which are in currencies
other than sterling. The Group aims to reduce
the impact that retranslation of these net assets
might have on the consolidated balance sheet,
by matching the currency of its borrowings,
where possible, with the currency of its assets.
The majority of the Group’s borrowings are
held in sterling, US dollar, Canadian dollar,
euro, Australian dollar and Singapore dollar.
The Group manages its currency flows to
minimise transaction exchange risk. Forward
contracts and other derivative financial
instruments are used to hedge significant
individual transactions. The majority of such
currency flows within the Group relate to
repatriation of profits, intra-Group loan
repayments and any foreign currency cash
flows associated with acquisitions. The Group’s
treasury risk management is performed at
the Group’s head office.
The Group does not trade in financial
instruments, nor does it engage in speculative
derivative transactions.
Interest rate risk
Interest rate risk is managed by mixing fixed and
floating rate borrowings depending upon the
purpose and term of the financing.
32
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Principal risks and uncertainties
Our risk governance framework (see below) has been built to identify,
evaluate, analyse and mitigate significant risks, including climate-related risks
and opportunities, to the achievement of our strategy. We have processes that
seek to identify risks from both a top-down strategic perspective and a bottom-
up local operating company perspective.
Important developments in 2021
Continued strengthening of our risk
management framework was a key priority for
2021, adding functionality to accommodate the
new Task Force on Climate-related Financial
Disclosures (TCFD) risk reporting requirements.
During the year we undertook several initiatives
to achieve this:
• Continued to strengthen our internal
control environment, measured against
a comprehensive set of Group Finance
Standards across a number of disciplines
including financial reporting, accounting,
audit, taxation and treasury, reinforcing
a culture of strong governance and
risk management. This has been
independently validated through
the internal audit programme.
• Successfully developed a solution to capture
climate-related risks and opportunities in line
with the recommendations of TCFD.
• Continued to improve the quality of data on
risk reporting across the Group, including, as
mentioned above, the capture of climate-
related risks and opportunities data in line with
TCFD requirements leading to more robust
and engaging management reviews of risk
throughout the organisation.
Key areas of focus for 2022
• We will continue to focus on deepening the
understanding and use of our risk management
data consistently across the Group.
• We will further strengthen our Group risk
management framework, continuing to
benchmark against current best practice
Our risk governance framework
Board
Sets tone on risk management culture
Top-down
Approval of Group’s risk appetite
to support the organisation in effective
decision-making supporting delivery of the
Group strategy. This will include further refining
our risk process to fully incorporate all elements
of TCFD risk reporting requirements, including
aligning our risk reporting for all climate-related
risks to short, medium and long-term horizons,
as per TCFD recommendations.
• We will provide training on the updated Group
risk management framework to ensure a
consistent methodology is used when
assessing, managing and reporting on risks.
• We will assess the resilience of our business
strategy to climate change by developing a
climate-related scenario analysis in line with
TCFD requirements.
• These changes will lead to continued
improvement and consistency of risk reporting
and in turn support a timely and robust
decision-making process.
• There will also be considerable focus on both
the new ERP system and on the steps required
to address proposed UK SOX requirements.
Audit and Risk Committee (ARC)
Reviews the effectiveness of our risk
management and internal controls systems
Monitors risk exposures against risk appetite
Oversight,
identification,
assessment and
mitigation of risks
at Group level
Formal and transparent policies and procedures for risk management and internal controls
Determination of the nature and extent of the company’s principal and emerging risks, including climate-related risks and opportunities
Approval of interim and year end risk
disclosures, including climate-related risks
and opportunities and viability statement
Executive Committee
Identification, reporting and ongoing
management of risks, including climate-
related risks and opportunities
Operational executive responsibility for
the risk management approach
Bottom-up
Implementation of internal controls
Internal Audit (IA)
Provision of assurance on the
key risks mitigating controls
Robust assessment of the Group’s
principal and emerging risks, including
climate-related risks and opportunities
Recommendation of interim and year end
risk disclosures, including climate-related
risks and opportunities and viability
statement
Group Head of Risk
and Internal Audit
Supports the ARC in evaluating the
effectiveness of risk mitigation strategies
and internal controls implemented by
management
Management of outsourced IA function
Oversight,
identification,
assessment and
mitigation of risks at
operational and
business unit level
Execution of risk-based audit plan
Regular review of divisional risk registers
Identification and management of risks, including climate-related risks and opportunities, at a business unit level
Divisions, business units and functions
Internal controls monitoring
Risk awareness and safety culture in day-to-day operations
Development and execution of appropriate mitigating actions
Keller Group plc Annual Report and Accounts 2021
Strategic Report
33
Our risk appetite
The Group’s risk appetite drives high standards
of health, safety and environmental compliance,
and a focus on commercial risks and
opportunities. This approach is understood
across the organisation, allowing us to
collectively build a profitable and leading market
share whilst limiting the Group’s risk exposures to
an acceptable level. This level of risk is considered
appropriate for Keller to accept in achieving
strategic objectives.
process and presented to the Board for
discussion, further to review by the Audit and
Risk Committee. The Board discussed the
process undertaken by management, and also
reviewed the results of stress testing performed
to ensure that the sensitivity analysis was
sufficiently rigorous. The Board also carried out
a robust assessment of the principal risks facing
the Group, including those that would threaten
its business model, future performance, solvency
or liquidity.
Risk identification and impact
The Group’s principal risks are analysed on an
inherent (pre-mitigation) and residual (post-
mitigation) basis.
Risk trends
The ongoing review of the Group’s principal risks
focuses on how these risks may evolve as well as
a consideration of emerging and climate-related
risks, which under TCFD requirements we
identified and impact-assessed over the short,
medium and long term. As such, horizon
scanning and reviewing emerging potential
legislation will form key elements of the risk
review process. These elements will be adopted
and embedded within the Group’s day-to-day
management of risk and its current risk reporting
processes. The Audit and Risk Committee and
the Board reviewed the Group’s principal risks
and uncertainties at their meetings in July 2021
and December 2021. Following a robust
discussion, the Audit and Risk Committee
concluded that a number of our principal risks
and uncertainties have changed since the
publication of last year’s annual report.
These include increasing risk around:
• changing environmental factors;
• not having the right skills to deliver; and
• failure to procure new contracts on
satisfactory terms.
Information on these and the Group’s other
principal risks is set out on page 34 onwards.
Developing the viability statement
In developing the viability statement,
management reviewed the principal risks and
considered which of these risks might threaten
the Group’s viability. It was determined that none
of the individual risks would in isolation
compromise the Group’s viability, and so a
number of different severe but plausible principal
risk combinations were considered. A downside
sensitivity analysis, as well as a consideration of
any mitigating actions available to the Group,
was applied to the Group’s three-year cash flows
forecasted as part of the business planning
Viability statement
In accordance with the provisions of the UK
Corporate Governance Code, the Directors
have assessed the prospects of the Group
over a three-year period.
i) The Board selected the three-year period as:
• the Group’s business planning and budget
processes are carried out over a three-year
period which provides the relevant estimates;
and
• three years is a reasonable approximation of
the maximum time taken from procuring a
project to completion and therefore reflects
our current revenue earning cycle.
ii) The review included cash flows and other
key financial ratios over the three-year period.
These metrics were subject to sensitivity
analysis which involves flexing a number of the
main assumptions underlying the forecast both
individually and collectively. Downside sensitivity
analysis was carried out to evaluate the
potential impact on the Group of a global
downturn in the construction/geotechnical
market. Revenues in 2023 and 2024 were
assumed to decrease by 10% year on year with
an operating margin deterioration in proportion.
A number of other downside risks were also
modelled including worsening working capital
performance, inability to finance the Group’s
business and unforeseen settlements arising
from solution failures or rectifications. As well as
combining multiple scenarios and modelling the
downside, we also considered scenarios where
covenants would be breached.
The circumstances giving rise to these scenarios
were considered extreme and remote. Further
details of the assumptions can be found in note 2
to the consolidated financial statements.
The Directors’ assessment has been made with
reference to the Group’s current position and
prospects, the Group’s strategy, the Board’s risk
appetite and the Group’s principal risks and how
these are managed, as detailed in the
Strategic report.
On the basis of the above and other matters
considered and reviewed by the Board during the
year, the Board has reasonable expectations that
the Group will be able to continue in operation
and meet its liabilities as they fall due over the
next three years. In doing so, it is recognised that
such future assessments are subject to a level
of uncertainty that increases with time and,
therefore, future outcomes cannot be
guaranteed or predicted with certainty.
Going concern
The Group’s business activities, together with
the factors likely to affect its future development,
performance and position are set out in the
Strategic report. The financial position of the
Group, its cash flows and liquidity position are
described in the Chief Financial Officer’s review,
with details of the Group’s treasury activities,
long-term funding arrangements and exposure
to financial risk included in note 25 to the
consolidated financial statements.
The Group has sufficient financial resources
which, together with internally generated cash
flows, will continue to provide sufficient sources
of liquidity to fund its current operations,
including its contractual and commercial
commitments and any proposed dividends.
The Group is therefore well placed to manage
its business risks. After making enquiries, the
Directors have formed the judgement at the
time of approving the financial statements, that
there is a reasonable expectation that the
Group has adequate resources to continue in
operational existence for the 12 months from
the date of this Annual Report and Accounts.
For this reason, they continue to adopt the
going concern basis of accounting in preparing
the financial statements.
Principal risks and uncertainties
The table on the following pages lists 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.
The COVID-19 pandemic is having and will
continue to have an impact across the entire
organisation. We have incorporated commentary
into affected principal risks and we will continue
to manage mitigation centrally as well
as regionally. We have also taken account of the
impact of climate-related risks and opportunities
on our principal risks and uncertainties.
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Keller Group plc Annual Report and Accounts 2021
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Principal risks and uncertainties continued
Financial risk
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Inability to finance
our business
Insufficient levels of
funding, whether from
operating cash flow or
external financing facilities,
that are necessary to
support the business.
Link to strategic lever:
A lack of available funds
restricts investment in
growth opportunities,
whether through
acquisition or
innovation.
In an extreme
circumstance, the lack
of available funds could
lead to a failure of the
Group to continue as
a going concern.
Looking forward, as new
facilities are either required
or renewed, we will look at
ESG-linked funding,
alongside traditional
funding alternatives.
Mixture of long-term committed debt with varying
maturity dates which comprise a £375m revolving
credit facility with a maturity extended to November
2025 and a US private placement debt of $75m
maturing in 2024. The $50m note maturing in 2021
was redeemed from existing facilities.
Active and open communication with the revolving
credit facility banking group ensures that it
understands the Group’s financial performance
and is supportive of funding requirements.
Strong free cash flow profile with the ability to turn
off capital expenditure and reduce dividends.
Embedded procedures to monitor the effective
management of cash and debt, including weekly
cash reports and regular cash flow forecasting
to ensure compliance with borrowing limits and
lender covenants.
Culture focused on actively managing our working
capital; the annual bonus plan is linked to executive
remuneration through an operating cash flow metric.
Please see the Directors’ remuneration report for
further information on metrics.
Monitoring of and response to external factors that
may affect funding availability; as a result of the
continued strong cash management, even taking
account of the ongoing impact of COVID-19, the
Board announced in November 2021 that it expected
leverage to be at the bottom end of the 0.5x–1.5x
guided range at 31 December 2021.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
35
Key: Strategic lever
Balanced portfolio
Operational excellence
Engineered solutions
Expertise and scale
Key: Risk movement
Increased risk
Constant risk
Reduced risk
Link to viability
Market risk
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
A rapid downturn in
our markets
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.
Link to strategic lever:
Reduction in the
demand for our
products and services
may lead to a significant
deterioration in financial
performance, including
cash flow generation.
In an extreme
circumstance, reduced
cash flow generation
could lead to a failure of
the Group to continue
as a going concern.
The diverse markets in which the Group operates,
both in terms of geography and market segment,
provide protection to individual geographic or
segment slowdowns.
COVID-19 has continued to cause disruption in
economic activity in several of the markets in which we
operate. Whilst the Group has shown good resilience
to this change in 2021, it is likely that COVID-19 will
continue to depress the economies in affected
markets over the next 12 months. This may cause a
reduction in activity in the construction sector which
adversely affects the Group’s order book.
Having strong local businesses with in-depth
knowledge of the local markets enables early
detection and response to market trends.
Leveraging the global scale of the Group, talent and
resources can be redeployed to other parts of the
company during individual market slowdowns.
The diverse customer base, with no single customer
accounting for more than 3% of Group revenue,
reduces the potential impact of individual customer
failure caused by an economic downturn.
As expected, we saw a
slight shrinking of the
construction market in
2021, with recovery moving
at different speeds in each
geography. North America
was the most advanced in
recovery, with Europe in line
with expectations and
AMEA remaining the most
challenging. We will
continue to mitigate
through our market position
across a number of sectors
of the construction market
and are well placed to take
advantage of opportunities,
especially in infrastructure.
We will continue to monitor
this risk closely, paying close
attention to any impact on
the size of our order book,
which has recovered to a
record level, and take
appropriate mitigating
actions.
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Principal risks and uncertainties continued
Strategic risks
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Failure to procure
new contracts on
satisfactory terms
Increasing competition,
changing customer
requirements or a loss of
technological advantage
results in a failure to
continue to win and retain
contracts on satisfactory
terms and conditions in
our existing and new
target markets.
Link to strategic lever:
Failure to negotiate
satisfactory and
appropriate contractual
terms may result in
delays and disputes
during project delivery,
negatively impacting
our relationships with
our customers and the
Group’s reputation for
delivering quality
products and solutions.
Inability to enter into
commercially viable
contracts may have a
negative effect on the
profitability of our
projects and prevent
the Group from achieving
its targets.
A focus on understanding customers’ requirements
and competitors’ capabilities.
Structured bid review processes in operation
throughout the Group with well-defined selection
criteria that are designed to ensure we take on
contracts only where we understand and can manage
the risks involved.
The Project Lifecycle Management (PLM) Standard has
introduced more rigour into how risks are considered
during the opportunity, contract approval and project
execution phases.
Sales training, which includes a focus on contractual
and commercial terms.
Losing our
market share
Inability to achieve
sustainable growth,
whether through
acquisition, new products,
new geographies or
industry-specific solutions,
may jeopardise our position
as the preferred
international geotechnical
specialist contractor.
Link to strategic lever:
Delivering sustainable
growth is a key
component of our
strategy. Failure to
deliver on our key
strategic objective
may result in the loss
of confidence and trust
of our key stakeholders
including investors,
financial institutions
and customers.
A clear business strategy with defined short, medium
and long-term objectives, which is monitored at local,
divisional and Group level.
Continued analysis of existing and target markets to
ensure opportunities that they offer are understood.
An opportunities pipeline covering all sectors of the
construction market.
A wide-ranging local branch network which facilitates
customer relationships and helps secure repeat work.
Continually seeking to differentiate our offering
through service quality, value for money and
innovation.
North American businesses reorganisation delivering
on cross-selling opportunities. However, due to
COVID-19 there is an ongoing economic squeeze
globally, increasing pressure on volume/market share.
Minimising the risk of acquisitions, including getting to
know a target company in advance, often working in a
joint venture, to understand the operational and
cultural differences and potential synergies, as well as
undertaking these through due diligence and
structured and carefully managed integration plans.
Our business depends on
purchasing materials
efficiently and in a timely
manner, linked to project
execution. COVID-19
continues to disrupt supply
chains, putting pressure
both on the continuity of
supply and also on pricing.
Fluctuations in these costs
cannot always be passed on
in full to the customer,
especially with increased
competition for a reduced
number of contracts, which
puts pressure on bid pricing.
Our focus on maintaining
our supply chain and
managing material price risk
for our critical materials is
actively managed through
our business unit
procurement teams.
While we are seeing
improvement across the
US, selling a whole range
of services not previously
offered in regions before
One Keller was
implemented, due to
COVID-19 there is an
economic squeeze globally,
increasing pressure on
volume/market share. This
is being somewhat offset by
focused, targeted M&A
activity.
The focus on sustainability
continues to increase from
both government and
private clients and we are
well placed to take
advantage of opportunities
supported by our wide
product offering.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
37
Key: Strategic lever
Balanced portfolio
Operational excellence
Engineered solutions
Expertise and scale
Key: Risk movement
Increased risk
Constant risk
Reduced risk
Link to viability
Strategic risks continued
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Ethical misconduct
and non-compliance with
regulations
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.
There is a risk that the
Group fails to maintain
the required level of
compliance.
Link to strategic lever:
Inability to maintain our
technological product
advantage
Keller has a history of
innovation that has given us
a technological advantage
which is recognised by our
clients and competitors.
Inability to maintain this
advantage through the
continued technological
advancements in our
equipment, products and
solutions may impact our
position in the market.
Link to strategic lever:
Non-compliance with
relevant laws and
regulations could lead to
substantial damage to
Keller’s reputation and/
or large financial
penalties.
Losing the trust of our
customers, suppliers
and other stakeholders
would have an adverse
effect on our ability to
deliver against our
strategy and business
objectives.
A Code of Business Conduct that sets out minimum
expectations for all colleagues in respect of ethics,
integrity and regulatory requirements and is backed
by a training programme to ensure that it is fully
embedded across the Group.
A clear and confidential externally run ‘whistleblowing’
facility encouraging employees to report any
suspected misconduct.
An Ethics and Compliance Officer at every business
unit who supports the ethics and compliance culture
and ensures best practice developed by the Group is
communicated and embedded into local business
practices.
Regular workshops across the Group to ensure
compliance risks are identified and addressed.
Strengthened
communication of Keller’s
tone at the top and a
renewed focus on risk
management and internal
control have maintained the
exposure of this risk.
Refresher training on code
of conduct taking place
across the Group.
Without a structured
innovation approach,
including sufficient
investment, Keller may
lose its competitive
advantage.
Innovation initiatives developed at both Group and
divisional level to ensure a structured approach to
innovation is in place across the Group.
Keller’s continued investment in both external and
internal equipment manufacture.
Global product teams set standards, provide guidance
and disseminate best practice across the Group.
Digitisation initiatives focusing on strategy of
facilitating equipment and operational data capture,
bringing information together and making it accessible
on a single platform. It will include all technical
information from Keller and third-party sources at
each stage of delivery, including data analysis and
visualisations where possible, and it will also be
BIM-compatible.
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Keller Group plc Annual Report and Accounts 2021
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Principal risks and uncertainties continued
Strategic risks continued
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Changing environmental
factors
Changes in environmental
legislation and relevant
standards that impact
our product and service
offerings and an
increasingly active
public response to
environmental concerns
in the sectors in which
we operate.
Link to strategic lever:
Inability to achieve
Keller’s commitment
to deliver solutions in
an environmentally
conscious manner
may have a negative
impact on our
reputation, affect
employee morale
and lead to loss of
confidence from our
customers, suppliers
and investors.
Product offerings
become obsolete
because they are no
longer compliant
with environmental
standards. We may be
required to remediate
at our own cost to
maintain compliance.
Collaboration with the University of Surrey’s
Centre for Environment and Sustainability to
apply sustainability best practice to all
business functions.
The Sustainability Steering Committee
is responsible for integrating sustainability
targets and measures into the Group business
plan to successfully drive changes important
to the company.
Scope 1 and 2 carbon emissions verified
by accredited external third party
(Carbon Intelligence).
Carbon calculator tool used to identify/
improve carbon efficiency.
Project team created to develop processes to
meet Task Force on Climate-related Financial
Disclosures (TCFD) requirements.
Further details can be found in the ESG and
sustainability section on pages 42 to 67.
While the focus around environmental
legislation is increasing, we believe this
will also present opportunities to us
that we are well placed to exploit.
Our increasing activity to improve
sustainability will put us in a good
position to compete with our peers
as opportunities arise.
We have now put in place targets for
Scopes 1, 2 and 3. For Scope 3, the
target covers transportation of
materials, business travel and
waste disposal.
We have also developed a process
to capture climate-related risks and
opportunities in line with TCFD
reporting requirements and now
have a climate-related risk and
opportunity register.
Climate-related risks and opportunities
Climate change is a global threat and, as such, will continue to have many impacts across our business over the short (1 year), medium (2–5 years)
and long term (6–30 years). Nonetheless, we believe there are also many opportunities as we, and the rest of the world, look to decarbonise. We fully
support the aims of the TCFD and are using this framework to record and communicate the impacts of climate change on our business. We also use
this to improve our disclosure of climate-related financial information. Please see our TCFD dashboard on page 52 for further information. An update
on significant climate-related risks and opportunities is provided below:
Physical-Acute
Policy and Legal
Market
Transition
Flooding, drought, heavy precipitation and other extreme
weather events, which are expected to increase over the
medium and long term, can affect our ability to conduct
geotechnical projects. Forest fires have impacted our
Australian and Western North America business, directly
delaying projects in this area, which could lead to lost
revenue. Flooding in Europe also delayed projects in that
region. These events may also cause harm to our employees
as well as damage to our buildings, yards and equipment.
Our management and project teams take a view on the
risk factors that might adversely impact their ability to
successfully deliver any given project. These are formalised
within the Group-wide PLM Standard.
Keller continues to offer new and sustainable techniques for
working in our markets. See pages 47, 49 and 51 for more
details. Where these markets are exposed to acute or
chronic climate extremes, our design skills, global reach
and product range enable us to deliver some of the most
complex projects in the industry. We believe these factors
set us apart from our competitors and therefore
also present an opportunity.
We will look at these impacts, alongside chronic physical
impacts, in more detail with scenario analysis modelling
later in 2022.
Current and emerging
legislation could impact
our financial
performance over the
medium term. As
governments introduce
carbon taxes and other
legislation, operating
costs and the costs of
raw materials may
increase.
Keller is committed to
reducing the carbon
intensity of our work,
which will aid mitigation
of the impact of any laws
or regulations. For more
details on what Keller is
doing, please refer to
page 47.
There is a risk that our customer base contracts and
switches to our competitors over the medium or
long term as a result of not responding to client
demand for lower-carbon solutions. This could
prove more costly for projects related to the climate
transition, such as flood defence projects. More
carbon-intensive projects, such as those using jet
grouting, may see a decrease in client demand.
Keller has therefore developed a number of more
sustainable construction solutions which will help
mitigate these market risks. For example, Keller’s
vibro stone column solution can be used instead
of the traditional continuous-flight auger piling; this
technique can reduce the embodied carbon dioxide
produced by up to 90%. Most of this saving is
achieved by replacing the use of concrete and
reinforced steel, which have high embodied carbon,
with lower embodied carbon stone aggregate.
To highlight the benefits of these lower embodied
carbon techniques , we use the European
standardised EFFC-DFI carbon calculator
to demonstrate the carbon savings from
alternative solutions.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
39
Key: Strategic lever
Balanced portfolio
Operational excellence
Engineered solutions
Expertise and scale
Key: Risk movement
Increased risk
Constant risk
Reduced risk
Link to viability
Operational risks
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Failure to meet quality
standards could damage
our reputation, result in
regulatory action and
legal liability, and impact
financial performance.
The liability limitation
period of our products
is generally 12 years;
consequently, a poorly
designed product/
solution could have an
impact on our long-term
profitability.
Continuing to enhance our technological and
operational capabilities through investment in our
product teams, project managers and our engineering
capabilities.
Employing geotechnical engineers that are focused
purely on design.
Disaster Recovery/Business Continuity Plans in place
and reviewed across the Group.
The global product teams set standards, provide
guidance and disseminate best practice across
the organisation for our eight key products.
We seek to agree liability limits in our contracts
with customers.
Insurance solutions are in place to limit financial
exposure of a potential customer claim.
Service or
solutions failure
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 an inability
to achieve the required
standard.
Misinterpretation of client
requirements or
miscommunication of
requirements by the client
may lead to a poorly
designed solution and
consequently failure.
Link to strategic lever:
Ineffective execution
of our projects
Failure to manage our
projects to ensure that they
are delivered on time and to
budget due to unforeseen
ground and site conditions,
weather-related delays,
unavailability of key
materials, workforce
shortages or equipment
breakdowns.
Link to strategic lever:
Inability to successfully
deliver projects in line
with the agreed
customer requirements
may result in cost
overruns, contractual
disputes and
reputational damage.
Ineffective project
delivery may also expose
the Group to long-term
obligations including
legal action and
additional costs to
remedy solution failure.
Ensuring we understand all of our risks through the bid
appraisal process and applying rigorous policies and
processes to manage and monitor contract
performance.
Ensuring we have high-quality people delivering
projects. Keller’s Project Management Academy and
Field Leadership Academy are designed to create
project managers with a consistent skill set across the
entire organisation. The academies cover a broad
range of topics including contract management,
planning, risk assessment, change management,
decision-making and finance.
Keller Data Acquisition (KDAQ) system enabling
comparison of performance across sites using similar
products, identification of areas of best practice and
quickly raising awareness of where improvement is
needed.
Safety Standards for operations (eg platform, cage
handling), Equipment Standards and fleet renewal.
The PLM Standard aims to drive a consistent approach
to project delivery with robust controls at every
project phase.
A formal, structured approach to Lean and 5S is being
rolled out across the organisation, which is improving
processes and strengthening Keller’s working culture.
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Keller Group plc Annual Report and Accounts 2021
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Principal risks and uncertainties continued
Operational risks continued
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Causing a serious injury or
fatality to an employee or
a member of the public
Failure to maintain high
standards of health and
safety, and an increase in
serious injuries or fatalities
leading to an erosion of
trust of employees and
potential clients.
Link to strategic lever:
Inability to maintain a
positive health and
safety culture may lead
to damage to morale,
an increase in employee
turnover rates and a
decrease in productivity.
Deterioration in health
and safety performance
may lead to loss of
customer, supplier and
partner confidence
and damage to our
reputation in an area
that we regard as a
top priority.
Not having the right
skills to deliver
Inability to attract and
develop excellent people to
create a high-quality,
vibrant, diverse and flexible
workforce.
Failure to maintain
satisfactory
performance in respect
of our current projects
and failure to deliver our
strategy and business
targets for growth.
Link to strategic lever:
Board-led commitment to drive health and safety
programmes and performance with a vision of
zero harm.
An emphasis on safety leadership to ensure both
HSEQ professionals and operational leaders drive
implementation and sustainment of our safety
standards through ongoing site presence, using
safety tours, safety audits, safety action groups
and mandatory employee training.
Ongoing improvement of existing HSEQ systems to
identify and control known and emerging HSEQ risks,
which conform to internal standards.
Incident Management Standard and incident
management software driving a robust and consistent
management process across the organisation that
ensures the cause of the incident is identified and
actions are put in place to prevent recurrence.
Continuing to invest in our people and organisation in
line with the four pillars of the Keller People agenda as
noted below.
Ensuring that the ‘Right Organisation’ is in place
with people having clear accountabilities; each
organisational unit is properly configured with a
matrix of line management, functional support
and product expertise.
As an industry leader, that Keller is made up of ‘Great
People’ that are well trained, motivated and have
opportunities to develop to their full potential. Project
managers and field employees receive comprehensive
training programmes which cover a broad range of
topics including contract management, planning, risk
assessment, change management, decision-making
and finance.
A strong focus on the ‘Exceptional Performance’
of employees in delivering commercial outcomes
safely for Keller based upon project successes for
our customers. Business leaders are incentivised to
deliver their annual financial and safety commitments
to the Group.
The ‘Keller Way’ provides guidance to the company’s
employees and leaders to comply with local laws
and work within Keller’s values and Code of
Business Conduct.
We are seeing increased
competition for skilled
personnel as well as
inflationary pressure on pay
across many locations
where Keller operates. This
is leading to increased risk
around recruiting and
retaining staff with the right
skills to deliver.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
41
Key: Strategic lever
Balanced portfolio
Operational excellence
Engineered solutions
Expertise and scale
Key: Risk movement
Increased risk
Constant risk
Reduced risk
Link to viability
Operational risks continued
Risk
Potential impact
Demonstrable mitigation
Risk movement (since 2020)
Cyber security breach
could result in leakage of
proprietary information,
operational disruptions,
and loss of employee
and customer data.
Risk of potential
disruption in the business
operations, reputational
damage and/or loss or
corruption of data
through external or
internal technical threats
and malicious action
Information security and
cyber threats are a concern
across industries
worldwide. The introduction
of digital solutions such as
InSite and KDAQ increases
the Group’s reliance on IT
and its inherent cyber risk
exposure.
Link to strategic lever:
Building a cyber security and information assurance
team and services.
Building a zero trust layered technology capability.
Creation of an Information Security Management
System framework, referencing industry standards
to ensure appropriate governance, control and risk
management and then onward management for
compliance, maturity and development of service.
Introduction of technical capabilities and services to
further enable prevention, detection, prediction and
response services.
Multi-factor authentication for all users prevents
unauthorised access to Keller’s networks and
applications.
Advanced threat protection on all IT equipment
delivers comprehensive, ongoing and real-time
protection against viruses, malware and spyware.
Data protection framework to ensure compliance
with the General Data Protection Regulation (GDPR)
and other standards of data protection.
The threat landscape
continues to evolve each
year and so we continue
to adapt our monitoring,
detection, prevention and
education processes to
maintain a balanced risk
perspective.
We assess cyber risks and
determine appropriate
actions for our business.
Existing capabilities
continue to be deployed
and enhanced if needed.
As an example, having seen
over the last two years the
rise in the number of
ransomware attacks and
the increased number of
reported attacks that target
backup as well as
production environments
across all industries, we
have implemented a backup
solution for key services
that is immutable and
cannot be encrypted.
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Keller Group plc Annual Report and Accounts 2021
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ESG and sustainability
Our corporate purpose,
‘building the foundations
for a sustainable future’, is
at the heart of everything
we do. As the Director
responsible for ESG and
sustainability on the Board
I am passionate and
committed to this topic.
To reflect the growing importance of ESG
matters and to provide greater focus and
oversight, we announced in July 2021 that
the Board had established two new Board
Committees: the Environment Committee
and the Social and Community Committee.
In addition, the Audit and the Nomination
Committees were renamed the Audit and
Risk and the Nomination and Governance
Committees respectively, to better reflect
their remits.
Further detail with regard to the membership
and terms of reference for these Committees
can be found on page 78. This new Committee
structure allows for greater depth of
engagement and conversation and clear focus
in driving forward our ESG agenda; a quarterly
report on all ESG initiatives and deliverables by
the Group Company Secretary and Legal
Advisor, to the Board, assures a clear reporting
line on all ESG matters to me. In 2022 we have
put in place a number of measures and targets
to both reflect Keller’s ESG priorities and meet
increased reporting and compliance obligations
in this area.
We structure our approach to ESG and
sustainability according to the four Ps – Planet,
People, Principles and Profitable projects – and
align our sustainability strategy with the United
Nations Sustainable Development Goals (SDGs).
See page 44. These provide a holistic language to
communicate our sustainability framework with
all our stakeholders, regardless of size, complexity
or location. Of the 17 SDGs, we specifically focus
on those that are most closely aligned to Keller’s
core business and where we can have the
greatest impact. We actively target SDGs 3, 4, 5,
10, 11, 12, 13, 15, 16 and 17, spanning a range of
environmental, social and economic priorities.
Peter Hill CBE
Chairman
We have set our first net
zero targets by 2050.
Our key ESG and sustainability metrics
ESG and
sustainability
area
UN SDG
alignment
Objective
Planet
Carbon
reduction
People
Safety
We are committed to reducing the carbon intensity
of our work and increasing the quality and granularity
of our carbon reporting.
We want every person who works for us, or with us,
to go home safely at the end of each day.
Gender
equality
We are Keller recognises and embraces the broadest
definition of diversity. Gender equality and
empowerment is a UN sustainability development
goal we have committed to progressing.
Quality
education
We are committed to investing in our emerging talent
and building diverse capability for the future.
Principles
Good
governance
We want an effective internal framework of systems
and controls in place which clearly defines authority
and accountability and promotes success whilst
permitting the appropriate management of risk.
2021 KPI performance
CDP score, B
Further
reading
Page 47
Absolute tonnes of CO2e per £m revenue, 85
Page 48
Accident frequency rate,
0.07 per 100,000 hours worked
Total recordable incident rate,
0.63 per 100,000 hours worked
% of women in senior leadership, 18%
% of women engineers, 13%
% of women engineering graduates
and apprenticeships, 13%
Number of engineering graduates,
apprenticeships, intern and co-op
opportunities, 238
ESG Committee structure and reporting
framework in place
Page 58
Page 58
Page 56
Page 56
Page 56
Page 63
Page 64
Page 65
Partnerships We want to partner with ‘like-minded’ organisations
to drive change in our organisation and the wider
geotechnical industry.
Donation to UNICEF’s Vaccines Appeal,
£300,000
Global initiatives
Local initiatives
Keller Group plc Annual Report and Accounts 2021
Strategic Report
43
This year we saw continued progress against our
four global SDG initiatives, focused on carbon
reduction, gender DEI, safety, and good
governance. There are a number of additional
local initiatives, where our business units can
focus on areas of sustainability that are most
relevant to their local markets.
Importantly, in respect of carbon reduction,
we have set ambitious and achievable net zero
targets by 2050. We believe that carbon targets
are essential to mitigate global climate-related
risks while we pursue climate-related
opportunities in our operations and contracts.
We divide our emission targets using the scopes
set out in the Greenhouse Gas Protocol. We will
be net zero across all three emission scopes by
2050; net zero on Scope 2 by 2030, net zero
on Scope 1 by 2040 and net zero by 2050 on
Operational Scope 3. We have started the
journey to implement the short, medium and
long-term actions required to achieve these
goals. We have also started to report against
the requirements set out in the Task Force on
Climate-Related Financial Disclosures; however,
understanding the costs and opportunities of
climate change to our business will take some
time and we are actively progressing this
understanding in 2022. Further information
can be found on page 52.
I was pleased that our CDP score improved in
2021 to a B and would like to thank our workforce
for their efforts across the ESG agenda.
Our role in building the foundations
for a sustainable future
Sustainability is at the heart of Keller’s strategy for building the foundations
for a sustainable future. At Keller, we are committed to better understanding
our contribution to sustainable development and work collaboratively with
our customers and stakeholders to improve sustainability. We define what
sustainability means to Keller using the four Ps:
How we define ESG
Planet
People
Principles
We are helping to build a
sustainable future by using
less resources, reducing
carbon emissions and
reducing waste across our
operations, whilst playing
a positive role in our local
communities, the
environment and wider
society.
We operate in a way
that respects people and
their health, safety and
environment, always
striving for zero harm.
Our motivating and
inclusive culture makes
us a good employer
that people are proud
to work for.
An effective framework
of systems and controls
ensures we manage risk
and run our company well,
and we seek out partners
who understand our
principles and the
standards we operate by.
For more information
See pages 45 to 52
For more information
See pages 53 to 63
For more information
See pages 64 and 65
Profitable projects
We continually innovate to support more environmentally
sustainable construction, actively transforming our
product portfolio to help our customers use fewer
resources, reduce their carbon emissions and improve
their environmental impact. Making sustainability core to
our business helps differentiate us from our competitors
and helps us achieve long-term profitability and growth.
44
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ESG and sustainability continued
Beneath each of the
four Ps, we align our
initiatives to the
UN Sustainable
Development
Goals (SDGs).
These goals provide a common language for
us to communicate sustainability initiatives
globally, both to our internal and external
stakeholders. We have four global SDG
initiatives, with the whole Keller Group
focused on carbon, gender DEI, safety and
good governance. We then have a number of
other local initiatives, where our business units
can focus on areas of sustainability that are
most relevant to our local markets. To measure
progress on these SDGs, we use metrics from
GRI and the SDG compass.
Keller’s Chairman has ultimate responsibility for
ESG and sustainability on the Board, including
climate change topics. This reflects the
importance of these issues to our core
business, ensuring sustainability-related risks
and opportunities are viewed at the highest
level. We describe this further on page 64 and
in the Governance report.
Both the Executive Committee and Keller’s
divisions are represented on the Sustainability
Steering Committee. This Management
Committee allows divisions and functions
to raise sustainability challenges, including
climate-related topics, to the executive and
ultimately to the Board. It also acts as a place
to share sustainability best practices between
divisions and discuss sustainability strategy.
Meetings are held quarterly and are structured
around Keller’s four Ps, dedicating time to Planet,
People, Principles and Profitable projects.
Our framework
Improvement
imperative
Environment
Social
Governance
Driver
Keller’s four Ps
Profitable projects
Global
initiatives
Local
initiatives
Planet
People
Principles
See pages 45 to 52
See pages 53 to 63
See pages 64 and 65
Carbon reduction
See pages 45 to 48
Safety
See page 58
Good governance
See page 64
Gender DEI
See pages 53 to 57
Resilient cities
See page 50
Good health and wellbeing
See pages 59 to 61
Partnerships
See page 65
Resource use and
waste reduction
See page 49
Quality education
See pages 62 and 63
Tackling pollution
See page 51
Race DEI
See pages 54 and 55
Keller Group plc Annual Report and Accounts 2021
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45
Planet
Journey to net zero
These absolute targets will help us mitigate future climate-related risks and recognise
climate-related opportunities. We divide our emissions targets using the scopes set out
in the GHG Protocol.
This year, we set our first-ever
net zero carbon targets. These
targets represent Keller’s
commitment to the planet
as we build the foundations
for a sustainable future.
Emissions targets
Scope
1
2
3 Operational
Net zero target
Net zero by 2040
Net zero by 2030
Net zero by 2050
Acceleration
from rig engine
manufacturers
Offsetting
can control net
emissions
Scope 1
Net zero
by 2040
Scope 2
Net zero
by 2030
Some
clients
already
offset
projects
Client
offsetting
likely to
increase
Scope 3
Operational
Final 10% of all
countries’ emissions
slower to decarbonise
Dependent on supplier
innovation and active
partnerships
Collaborate and
offset to make
carbon neutral
solution
Scope 1
Scope 1 covers our direct emissions. These mostly arise from the
fuel use of our rigs and Keller vehicles. Already, we have continually
decreased or maintained our Scope 1 emissions per £m revenue
year on year since 2015. In terms of Scope 1 reduction, this year
we trialled hydrogenated vegetable oil biofuel in our rigs for the
first time. This initiative, alongside many others, represents
stepping stones in our fleet and machinery decarbonisation
strategy. We therefore aim to reach net zero for Scope 1
emissions by 2040.
Scope 2
Scope 2 covers indirect emissions from the electricity we use.
These emissions mostly occur as a result of electricity use in our
offices and maintenance yards. This makes Scope 2 the smallest
of Keller’s three emission Scopes. Scope 2 is dependent on the
carbon intensity of energy generation in the countries in which
we operate, but there are many opportunities to save electricity.
These savings have already included energy efficiency
improvements to our equipment and lighting, as well as
generating our own renewable energy. Therefore, we have
set a target to be net zero Scope 2 by 2030.
Scope 3
Scope 3 represents all other indirect emissions from Keller’s
supply network. This means Scope 3 is the largest proportion of
Keller’s emissions. To reflect where we believe we can have the
most impact, we are initially focusing on Operational Scope 3,
covering business travel, transportation of materials, and waste
disposal. Whilst Keller looks to reduce Scope 3 emissions by
changing resource and service demand, we are still dependent on
our supply network decarbonising their activities to achieve net
zero. Whilst we work with thousands of local suppliers worldwide,
we are looking to leverage our supply network and form strategic
partnerships to help decarbonise our overall operations. We have
set a net zero target for Operational Scope 3 to achieve by 2050.
2020
2030
2040
2050
Expected emissions and uncertainty relative to baseline
Stretch target
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Keller Group plc Annual Report and Accounts 2021
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ESG and sustainability continued
Planet continued
The time frame and leading targets we set for
each net zero commitment reflect the size and
the level of control we have over each emission
Scope (see below).
completely; this includes using Microsoft
Teams rather than travelling, or using ground
improvement to eliminate the need for
concrete and steel foundations.
these emissions. Additionally, multiple Keller
business units already offer clients the ability
to purchase carbon offsets for the embodied
carbon of their foundations.
To achieve our net zero targets, we have set a
number of leading targets. These are mostly
initially focused on improving our measurement
and innovation. To achieve these leading and net
zero targets, we apply the carbon hierarchy to
reduce the carbon intensity across all our
operations. This helps us decarbonise all our
functions, from procurement to our site
operations. First, we look to eliminate emissions
Next we look to reduce emissions, such as
through reducing the number of piles on a
project, reducing pile diameter and length, and
through using more energy-efficient equipment.
From there, we look to substitute emission
sources, such as using lower carbon cement,
recycled materials or lower carbon energy. Finally,
for those remaining emissions, we will ultimately
look to use accredited carbon schemes to offset
Many carbon savings, such as eliminating travel,
using ground improvement or reducing the size
of piles, offer financial savings. However, we
acknowledge that some innovations, such as
the use of biofuels or upgrading our rigs, will
represent an initial capital expenditure or cost
to the business. This will be captured in the
TCFD scenario analysis in next year’s annual
report disclosure.
Relative size of our emissions (approximate)
Net zero 2040
Net zero 2030
Net zero 2050
Directly within Keller
In supply network
On-site
diesel – rigs
Yard and office
electricity
Transport
and travel
Diesel –
other equipment
Site waste
Materials
Scope 1
Scope 2
Scope 3
The carbon hierarchy
Eliminate
Reduce
Substitute
Compensate
Eliminate emissions completely
eg Teams instead of travel, eliminate concrete,
cement and steel
Reduce emissions
eg reduce number of piles and pile diameter, improve the
efficiency of our processes
Substitute emission sources
eg low-carbon cements, recycled steel/aggregate, offices
powered by renewable power
Compensate
eg carbon-negative solutions, carbon offsetting
(‘carbon credits’)
Keller Group plc Annual Report and Accounts 2021
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47
Carbon reduction
As we highlight in our journey to
net zero, Keller is committed to
reducing the carbon intensity
of our work and increasing the
quality and granularity of our
carbon reporting. Throughout
2021, we continued to measure
our performance on carbon
reduction, and wider climate
change governance, in a
number of different ways.
As in previous years, Keller disclosed our
performance to CDP; CDP assesses the
carbon intensity of Keller’s operations, as well
as our ability to identify and mitigate climate-
related risks and opportunities. In 2021, we
achieved a score of B. This is an improvement
on our score in 2020, with improvements in all
disclosure categories. This means Keller remains
above the global average CDP score of a B-. Since
this CDP score reflects our progress in 2020, the
score does not include our progress on setting
net zero targets, nor our improvements on TCFD
climate risks and opportunities disclosures. These
should be reflected in next year’s CDP score.
Keller has a number of ongoing initiatives to
improve the energy efficiency of our operations.
In terms of Scope 1 reductions, all the rigs we
produced in 2021 were electrohydraulic or fitted
with the latest tier 5 engines. This reduces our
emissions on site, improves fuel efficiency and
reduces our fuel consumption. Through our
in-house rig manufacturers, we are constantly
innovating to develop the rigs of the future; this
includes developing more efficient machinery
and trialling biofuels in our rigs. Our vehicle fleet
is also a large source of emissions. Therefore,
in North America, where vehicle emissions are
largest, we are trialling hybrid trucks as a way to
reduce carbon emissions and improve air quality.
Our Scope 2 emissions are predominantly from
permanent operations in our offices and yards.
In particular, our rig manufacturing division, KGS,
has one of the largest individual yard emissions
in Keller Group. We have therefore placed
particular focus on decarbonising this yard, with
a specific carbon reduction strategy. This has
been funded from KGS’ existing rolling budget
for improving their yard and equipment. All our
European business units are implementing
recommendations from Energy Efficiency/
ESOS audits, with improvements including
installing LED lights, replacing old single-glazed
windows and educating employees about
saving energy. Certain offices, such as the UK
and Austria, generate their own renewable
energy using solar panels. Similarly, multiple
branches, such as Germany and the UK, have
switched to entirely green energy tariffs.
Both Keller’s Scope 1 and Scope 2 emissions
are independently third-party verified. This is an
important step that we take to properly monitor
progress on our carbon targets and mitigate key
climate-related risks.
In 2021, we started proactively monitoring our
Scope 3 emissions on key projects, training over
100 employees on the EFFC – DFI embodied
carbon calculator. This has enabled us to offer
lower-carbon solutions to our clients, as well
as helping identify carbon-intensive Scope 3
hotspots to target with future carbon
reduction initiatives.
Case study
Focusing engineering on sustainability
Kimberly Martin joined Keller in December
2020. As Senior Engineer for Innovation and
Sustainability, she is North America’s first
engineer focused on sustainability.
Kimberly is a leading light in the geotechnical
sector’s sustainability journey. She is an active
member of the Geo-Institute and Deep
Foundations Institute sustainability
committees. She has also been selected
to sit on the board for the Institute of Civil
Engineers’ Engineering Sustainability journal.
As part of this journey, Kimberly has begun to
roll out the sector’s standard carbon calculator
in Keller North America.
“To make it easy for project managers to
use, we’ve connected the calculator to our
estimation spreadsheet,” says Kimberly.
“This allows us to quickly compare techniques
and highlight low-carbon options to our
clients, putting us in a stronger position to
win work.”
Kimberly is also looking at how we can reduce
the carbon footprint of our techniques. In a
series of innovation projects, Kimberly is working
alongside the North America Soil Mixing Product
Team to investigate the use of lower-carbon
materials and mix designs. The team’s goals are
to decrease Portland cement consumption and,
in some cases, improve mixability which can lead
to a reduction in diesel use.
As well as being the right thing to
do, sustainability is becoming more
important for clients, particularly
those who want support in
reaching their own targets.”
Kimberly Martin
Senior Engineer for Innovation and
Sustainability, Keller North America
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ESG and sustainability continued
Planet continued
Third-party assurance statement
Group
Energy use MWh
Scope 1 tonnes CO2e
Scope 2 (market-based) tonnes CO2e
Scope 2 (location-based) tonnes CO2e
Total Scope 1 & 2 (market-based) tonnes CO2e
Total Scope 1 & 2 (location-based) tonnes CO2e
Absolute tonnes of CO2e per £m revenue
Keller UK
Energy use MWh
Scope 1 tonnes CO2e
Scope 2 (market-based) tonnes CO2e
Scope 2 (location-based) tonnes CO2e
Total Scope 1 & 2 (market-based) tonnes CO2e
Total Scope 1 & 2 (location-based) tonnes CO2e
Absolute tonnes of CO2e per £m revenue
Scope 3 business travel tonnes CO2e
2021
741,579
183,112
6,574
6,723
189,686
189,835
85
2021
19,699
4,961
0
69
4,961
5,030
50
97
2020
2019
2018
691,074
811,881
817,256
169,216
198,289
202,238
7,091
7,094
176,307
9,159
9,349
176,310
207,448
211,587
85
90
95
2020
2019
2018
12,949
16,724
16,496
3,033
3,915
3,850
218
219
3,251
3,252
53
26
265
295
4,180
64
4,145
66
Note that some of the fuel we use in our equipment is purchased by the main contractor and we are currently unable to report on these
emissions due to difficulties with collecting accurate data.
Keller Group 2021 and 2020 greenhouse gas emissions (tCO2e)
North America (‘000s)
Europe (‘000s)
2021
2020
2021
2020
0
15
30
45
60
75
90
0
15
30
45
60
AMEA (‘000s)
2021
2020
0
15
30
45
60
Equipment diesel
Petrol
Diesel
Natural gas
Electricity
Other fuels
Independent verification in accordance with best
practices required by ISO 14064-3 Standard on
the Scope 1 and Scope 2 GHG accounts has
been provided by Carbon Intelligence. Their
summary opinion is provided below (full opinion
and recommendations are available on request).
Based on the data and information provided by
Keller and the processes and procedures
conducted, Carbon Intelligence concludes with
limited assurance that the GHG assertion:
•
•
•
is materially correct;
is a fair representation of the GHG emissions
data and information; and
is prepared in accordance with the criteria
listed above.
It is our opinion that Keller has established
appropriate systems for the collection,
aggregation and analysis of quantitative data for
determination of these GHG emissions for the
stated period and boundaries.
Keller’s 2021 Scope 1 emissions increased since
2020. Scope 1 fuel emissions are highly
dependent on the projects completed annually.
Therefore, since we have completed more work
this year than during the COVID-19 restrictions
of 2020, our emissions have increased. However,
the carbon intensity of our operations per £m
revenue has remained level. Ongoing COVID-19
pressures on market pricing and operational
disruption across our business meant this
relative metric remained unchanged, despite a
number of carbon saving initiatives. Scope 2
electricity emissions are mostly from office and
yard operations. Therefore, the continued
decrease in Scope 2 location-based emissions
this year, even as some businesses returned to
hybrid or office working, reflects the improving
energy efficiency of our permanent site
operations. The growing difference between
location-based and market-based Scope 2
emissions also reflects how some of our
business units are now procuring renewable
electricity for the first time.
Since we work with local suppliers on each
project, we have thousands of suppliers in our
value chain. This complexity means that we have
initially focused our Scope 3 reporting disclosure
on business travel in key markets. Scope 3
business travel has increased since 2020 as
COVID travel restrictions were lifted. We
continue to develop our Scope 3 reporting to
include the rest of our Operational target.
Keller Group plc Annual Report and Accounts 2021
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49
Resource use and
waste reduction
This initiative reflects the
contribution Keller can make
towards the circular economy.
In particular, we look to reduce
raw material use, increase our
use of secondary materials,
reduce waste to landfill and
allow for pile reuse.
We recognise the large volumes of materials
used and produced on our sites, so have started
a number of projects to improve these impacts.
Keller routinely promotes ground improvement
solutions as a way to reduce raw material use
on site. Ground improvement uses natural or
recycled materials to improve ground load
carrying capacity. This reduces or completely
removes the need for heavy foundations. In turn,
this reduces the volume of cement and steel
used on site, saving primary resource use, and
potentially offering a financial saving to our
clients. The reduced need for heavy foundations
also reduces the carbon intensity of the
overall project.
As well as addressing our use of raw materials,
we are also keen to reduce waste. Of all the
geotechnical solutions we offer, our jet grouting
solutions have traditionally used the most water
and created the most waste spoil. Therefore, our
research and development teams have been
trialling ways to monitor and reduce these impacts.
Using a combination of filter chamber presses,
centrifuges and shale shakers, we are now able
to reduce the volumes of waste water and spoil
produced on jet grouting sites. As well as
reducing the cost of waste disposal, this has the
added benefit of reducing the number of trucks
required to transport materials off site. This
reduces congestion around our sites, improving
air quality and reducing our impact on the
local community.
We also have a number of ongoing research
projects looking to use alternative materials
for jet grouting. Building on the success of
our Halocrete® and Neutrogel® innovations
announced in the 2020 annual report, we are
now developing other, non-toxic, low-carbon
grouts for other geotechnical purposes.
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ESG and sustainability continued
Planet continued
Case study
Sustainable solution sets Keller apart
Resilient cities
With this SDG, we focus on
improving our impact on the
local communities in which we
operate. We also focus on
ensuring our solutions offer
resilience for cities and
communities facing the physical
risks of climate change.
Many of our business units work with local
organisations and wildlife trusts to improve
their local environment. For example, our Indian
Business Unit used remaining cement left over
from one project to make bricks for local
community construction projects.
As subcontractors and contractors on site in
urban areas, we make use of dust suppression
and baffling to minimise the impact of dust and
noise on the local environment. We also typically
use local material suppliers to support local
businesses, reduce transport distances and
reduce congestion around our sites.
We recognise that every community and city that
we operate in has different sustainability needs.
Therefore, alongside our Group-wide
commitments, each of our business units have
their own local sustainability priorities. We take
this same approach to our projects. For example,
on treating the physical effects of climate
change, Keller works on flood defence projects
and projects focused on ground remediation
treating desertification. We continue to develop
our product portfolio to meet these growing
markets. We promote these products both
directly to clients and through our existing
sustainability brochure.
We estimate that using stone columns on this
project, rather than a heavy foundation using
cement and steel, saved around 260 tonnes
of CO2e. This is equivalent to saving 56 cars
running for a whole year. Using recycled
materials also saved some 2,500 tonnes
of aggregate from being mined.
Solutions like this demonstrate our
commitment to a more sustainable
future. We look forward to offering
many more clients quality,
low-carbon solutions for both
infrastructure and residential
projects.”
Richard Looij
Project Manager
Central Europe
We are committed to improving our
environmental impact by offering clients
more environmentally sustainable
solutions wherever possible.
Strengthening weak soils with columns
of compacted crushed concrete, recycled
from other construction projects, is one
such solution.
Tudor Park is an upscale housing development
project in Hoofdorp, near Amsterdam. We
proposed vibro stone columns for a multi-
storey, 31-unit apartment block as the best
technical, economical and sustainable ground
improvement solution.
The technique involves penetrating the
ground using a depth vibrator, filling the void
with crushed recycled concrete and then
compacting it with the vibrator. Each column
is then checked for quality, and surveys are
carried out to ensure the soils in between
meet the required density.
The process is fast, easy to do and doesn’t
require any additives such as cement. The
method is also ideal for contaminated ground,
as it doesn’t create any spoil that would
otherwise have to be disposed of.
Keller Group plc Annual Report and Accounts 2021
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51
Case study
Keller brings expertise to hospital project
The government was looking for a
quality solution, but also one that
considered the environment. We
were able to design a complete
solution that reduced risk, noise
and waste, and worked in difficult
and low-headroom areas.”
Dominik Gächter
Regional Manager
South East Europe and Nordics
Combining a range of geotechnical
products and environmental innovation,
Keller is helping create a new future for
Norway’s leading cancer hospital.
The Radiumhospitalet in Oslo is undergoing
a major transformation, replacing outdated
buildings with a state-of-the-art treatment
centre.
Keller’s foundation solution combined bored
piles with a jet grout seal, and anchors. A
back-flow treatment plant for jet grouting
was also included. This filters the water in the
spoil, which can then be reused, reducing the
amount of spoil sent to landfill. To avoid
overconsumption of the concrete caused by
the soft clays, the ground was pre-stabilised
using deep soil mixing.
Noise reduction was a priority on the live
hospital site. Keller mitigated this through
reverse circulation drilling. This involved
water-powered, rather than air-powered,
machinery, which is quieter, and also reduces
vibration and the risk of settlement.
Tackling pollution
Keller is committed to delivering
its solutions in a socially and
environmentally conscious
manner. Over recent years
reporting processes have
improved and performance
is generally encouraging.
We did not have any environmental prosecutions
in 2021. The overall number of environmental
incidents remained in line with those reported
the previous year, with most incidents being
minor hydraulic leaks. We have therefore begun
implementing an updated equipment inspection
process using our site software prior to each shift
commencing, in an effort to reduce the number
of minor spills.
We continue to work on our preventative
maintenance programmes to ensure that we
address any issues before the event occurs. In
addition, we ensure that secondary containment
is in place for stored equipment and materials.
We continually seek to improve our processes
on site, specifically around job planning, to ensure
that we identify, mitigate and control our risks
and minimise our environmental impact.
Whilst as subcontractors we have minimal
control on biodiversity on site, multiple business
units continue to engage with wildlife trusts to
promote local biodiversity.
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ESG and sustainability continued
Planet continued
Planet continued
TCFD dashboard (Non-financial and sustainability information statement)
In meeting the requirements of Listing Rule
9.8.6.R we have concluded that:
• We comply with recommended disclosures
around Governance, Risk management, and
Metrics and targets.
• We partially comply with recommended
disclosures around Strategy.
In the table below we cross-refer to where the
disclosures are located or provide reason for
partial compliance. On assessing compliance
we took into consideration the guidance
documents referred to in the guidance
notes to the Listing Rules.
Status key
Complete
In progress
Not yet started
TCFD
elements
Governance
TCFD recommended disclosures
Board’s oversight of climate-related
risks and opportunities
Management’s role in assessing and
managing climate-related risks and
opportunities
Cross-
reference
See pages 44,
77, and 78
See pages 44,
77, and 78
Strategy
Climate-related risks and opportunities
Keller has identified over the short,
medium and long term
See pages 32
and 38
Impact of climate-related risks and
opportunities on Keller’s businesses,
strategy and financial planning
See pages 32
and 38
Resilience of Keller’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario
See page 32
Risk
management
Keller’s processes for identifying and
assessing climate-related risks
Keller’s processes for managing
climate-related risks
How processes for identifying, assessing
and managing climate-related risks are
integrated into Keller’s overall risk
management
Metrics used by Keller to assess
climate-related risks and opportunities
in line with strategy and risk
management process
Scope 1, Scope 2 and Scope 3
greenhouse gas (GHG) emissions and
related risks
Metrics
and targets
See pages 32
and 38
See pages 32
and 38
See pages 32
and 38
See pages 46
and 48
See page 48
Targets used by Keller to manage
climate-related risks and opportunities
and performance against targets
See pages 45
and 46
Status
Next steps and other comments
A quarterly report on all ESG initiatives and deliverables by
the Group Company Secretary and Legal Advisor, to the
Board, assures a clear reporting line on all ESG matters,
including climate change, to the Chairman and the Board.
The Sustainability Steering Committee oversees
environmental matters and climate-related risks and
opportunities.
As our maturity grows and we embark on scenario
planning, we will incorporate insight from the wider
business and across our value chain to identify and assess
climate-related risks and opportunities.
The impact of these risks and opportunities was
considered in the preparation of our sensitivity analysis
for the 2021 viability statement. The longer-term
impacts, including the costs of mitigation measures such
as reaching our net zero goals, will be considered in our
financial planning processes during 2022.
As above. In addition, some qualitative assessment has
been conducted to support our CDP disclosures. This is
our starting point to prepare for full disclosure next year.
We continually assess our overall risk management
process to ensure it remains fit for purpose and will review
the integration of TCFD requirements into our existing
process to ensure we continue to gain maximum benefit
through harmonising our risk management processes.
We will strive to improve our approach to identifying,
assessing and managing all risks and opportunities.
These metrics will continue to develop as we grow our
scenario analysis.
We will be net zero on Scope 2 by 2030, net zero on Scope
1 by 2040 and net zero by 2050 on Scope 3 Operational.
We have already started to implement the actions
required to measure progress and achieve these goals.
We continue to develop internal leading targets to
mitigate climate risks and realise opportunities.
Keller Group plc Annual Report and Accounts 2021
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53
People
Diversity, equity
and inclusion (DEI)
‘We are Keller’ sets out our
Inclusion Commitments and
brings together what we are
doing to build a more diverse,
equitable and inclusive
workplace. While gender
equality and empowerment
remains a priority, ‘We are Keller’
recognises and embraces the
broadest definition of diversity.
This is important because our
employees represent the
broadest range of backgrounds,
cultures, experiences,
perspectives and insights.
We believe this is fundamental
to the successful delivery of our
business strategy and to best
serve our customers around
the globe.
Our Inclusion Commitments
Conscious
Leadership
Improve accountability
through inclusive and
conscious leadership.
By empowering and
equipping our leaders
to excel in this space.
Listen
Listen and engage
with our workforce.
Through employee-led
affinity groups and
workforce engagement
opportunities.
Empower
Empower and invest
in our workforce.
By creating an environment
of continuous learning and
development to support
our people in reaching their
full potential.
Partner
Partner with
‘like-minded’ organisations
through inclusivity.
To drive necessary
change in the industry.
Evolve
Continue to evolve as
the employer of choice
in our industry.
To attract, inspire and
retain a more diverse
group of talent.
Celebrate
Celebrate our differences
and all that unite us.
Through earmarking key
global events that
represent the breadth
of our workforce.
Case study
New reverse mentoring programme
Keller introduced a reverse mentoring
programme this year to enable senior
executives to have in-depth conversations
with employees with different backgrounds
and life experiences to them.
Jose Martinez, Vice President Operations,
Keller North America mentored Kerry Porritt,
Group Company Secretary and Legal Advisor.
Jose says: “It was a little intimidating because
Kerry is on the Executive Committee, but with
a bit of training and time, I became more at
ease with the process.
Kerry about being treated differently because
of the colour of my skin and times when I hid
my culture to fit in.”
Kerry says: “I was really fortunate to be
partnered with Jose because he was so
committed to the process and so open about
sharing his life experiences.
“What the sessions highlighted is that,
although the challenges and opportunities
everyone has growing up can be so different, it
seems to me everyone is looking for a sense
of belonging – of being listened to and heard.”
“I was born and raised in Puerto Rico, left home
at 17 and didn’t speak good English, but I went
to college and got my degree. I talked with
Conscious leadership is one of our Inclusion
Commitments. It is a unique and critical
capability that will help us adapt to diverse
customers, markets, ideas and talent.
Kerry Porritt
Group Company
Secretary and
Legal Advisor
Jose Martinez
Branch Manager
(Texas)
54
Keller Group plc Annual Report and Accounts 2021
Strategic Report
ESG and sustainability continued
People continued
Progress in 2021
We developed ‘We are Keller’; our commitment
to making our sites and offices more inclusive
in 2020.
Following its launch, we spent a significant
amount of time delivering Inclusive Leadership
workshops to our global leadership team and
wider workforce.
This first step was critical to help our teams
understand the broader concept of DEI and how it
connects with our business, and to provide them
with the means to contribute to our aspiration of
becoming a diverse, equitable and inclusive workplace.
Diversity, equity and inclusion:
Recent progress
Delivered an extensive DEI
communications campaign across the
Group based on our Inclusion Commitments
to raise awareness.
Established Keller Women in
Construction (‘KWIC’) in Europe and
AMEA and celebrated the one-year
anniversary of KWIC North America.
Developed a best practice toolkit which
provided our global leadership teams with
tools and resources to identify activities and
initiatives that will help us deliver on our
strategy and drive change in the longer term.
Developed and launched our Foundations
of Wellbeing, an inclusive, people-led
approach to wellbeing (see page 57).
Launched the Pitcairn Geotechnical
Engineering Scholarship to attract the
best of the next generation of experts
with a particular focus on improving gender
and ethnic diversity.
January
April
July
Partnered with the 30% Club, a global
campaign committed to improving gender
and ethnicity representation at board
and senior management levels.
Partnered with conscious and inclusive
resourcing firms such as FDM Group, who
provide opportunities for ex-military,
returners to work and graduates.
Keller UK continued to partner with
SCS, Women in Construction and
Tideway on a six-month pilot programme
to develop their approach to gender
diversity and DEI.
Held listening sessions to understand the
benefits, barriers and opportunities of
working on site as an underrepresented
minority. The outcomes were shared with
local management to consider appropriate
actions to retain and attract diverse talent.
Established a Race Advisory Committee.
This has focused on outreach events with
underprivileged school kids in Chicago and
raised awareness through targeted
campaigns linked to key global events
including Black History Month, Asian Pacific
Islander Heritage Month and Juneteenth.
Mandated diverse candidate slates for
leadership vacancies and introduced an
internal recruitment process that advertises
vacancies globally to encourage mobility
and provider broader opportunities across
the business.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
55
Key
Conscious leadership
Improve accountability through
inclusive and conscious leadership
Evolve
Continue to evolve as the employer
of choice in our industry
Listen
Listen and engage with our workforce
Empower
Empower and invest in our workforce
Partner
Partner with ‘like-minded’ organisations
through inclusivity
Celebrate
Celebrate our differences and all that unites us
Took part in Construction Inclusion Week
which unites the industry in celebrating
diversity and building inclusivity. Keller crew
toolbox talks covered leadership
commitment and accountability, unconscious
bias, supplier diversity, jobsite culture and
community engagement.
Keller India partnered with Bhumi
to educate disadvantaged children,
including educational sessions at
schools for girls.
Continued to celebrate and recognise key
global events that represent the breadth of
our workforce. During the year we recognised
Lunar New Year, International Women’s Day,
Ramadan, Eid ul-Fitr, Earth Day, Pride month,
Global Day of Parents, International Women
in Engineering Day, World Suicide Prevention
Day, Global Diversity Month, World Mental
Health Day, Diwali, International Men’s Day,
Hanukkah and Christmas.
Started a reverse mentoring programme
for our executive team. Pairing them with
colleagues from different backgrounds to
broaden their understanding of DEI issues
affecting our workforce and helping them
develop additional inclusive leaderships skills.
July
September
December
Held diverse hiring webinars to share best
practice across the Group and some regions
adjusted their interview guides to
recommend mixed gender panels.
Built visibility of our female talent pipeline
through the delivery of our Unearthing
Potential talent development programme
and are looking at targeted interventions to
improve representation.
Developed/enhanced inclusive workforce
policies in some regions including improved
parental leave, flexible working, phased return
to work from maternity including advising
managers on pregnancy safety, PPE
requirements and arranging designated
nursing facilities, implementing paid domestic
violence leave for Keller employees and
emergency accommodation.
The National Centre for Diversity
awarded Keller UK Senior Leadership
Team of the Year. This celebrates
excellence in promoting fairness,
respect, equality, diversity, inclusion
and engagement. Keller UK was also
shortlisted for five categories at the
Ground Engineering Awards including
EDI Champion of the Year Award.
56
Keller Group plc Annual Report and Accounts 2021
Strategic Report
ESG and sustainability continued
People continued
Measuring and evaluating our success
Our inclusion and diversity data
Having an effective feedback culture is essential
to drive improvement and monitor progress. At
Keller, inclusion is primarily measured via
engagement surveys and focus groups and we
have spent a significant time during the year
checking in with colleagues to understand
whether our working environment is one where
everyone feels respected, accepted, supported
and valued. The following positive data points
relating to inclusion are based on the four
surveys undertaken during the year:
‘Keller respects individual differences’
Current Keller score:
81%
(Score above global construction and
heavy industry benchmark of 78%)
‘ I can voice a contrary opinion without
fear of negative consequences’
Current Keller score:
73%
(Score above global construction and
heavy industry benchmark of 70%)
We acknowledge that representation matters
and are committed to measuring and monitoring
gender diversity throughout the organisation.
Building Balanced Teams, a new robust reporting
framework, will enable us to measure
representation at every level of the organisation
and identify specific activities that will not only
attract and retain a more diverse group of talent,
but continue to enhance our culture of inclusion.
The framework includes tracking key metrics
relating to the talent cycle such as hiring,
promotion and turnover rates which will highlight
specific workforce processes that may need
addressing. In addition, the Executive team
provide quarterly updates on their divisional and
functional DEI priorities and progress updates
are shared with the Social and Community
Committee (see page 86).
Gender (female representation)
Board members
Executive Committee
Global leadership team
Engineers
Engineering graduates and apprentices
Total workforce
As at
31 December 2021
As at
31 December2020
No
4
2
5
200*
20
1,061
%
57%
18%
9%
13%
13%
11%
No
4
2
5
106
NR
955
%
57%
15%
9%
7%
NR
10%
Notes: All data as at 31 December 2021. Global leadership team excludes Executive Committee members. NR: Not reported.
*Engineers includes Engineering, Project Management, Business Development and Estimating workforce.
Our gender diversity statistics show an increase in female representation at Executive Committee
(3%), engineering roles (6%) and total workforce (1%). Whilst global leadership team remains
unchanged, we are committed to improving representation in this population.
Case study
Keller Women in Construction (KWIC)
KWIC (AMEA), established earlier this year,
are committed to understanding female
experiences in the workplace, career
development, recruitment and retention and
fostering a supportive environment. They have
predominantly focused on facilitating listening
sessions with a selection of women working
across the division to understand where to
focus their efforts. The outcomes of this
exercise, together with that of business unit
employee surveys, will give local management
concrete actions in terms of next steps.
KWIC (Europe) are committed to attracting,
inspiring, supporting and developing
women in Keller
Attract
Inspire
Support Develop
Education
engagement
Role
models
Talk
Communication
Community
engagement
Onboarding
and new
starter
support
Allyship
Listen
Coaching
Social
media
promotion
Tools and
resources
Mentoring
and reverse
mentoring
Survey and engagement
KWIC are committed to improving gender
representation and equality and continued
to raise the profile of women at Keller.
KWIC (North America) celebrated their first
anniversary in February and this was an
opportunity to celebrate ‘Girl Day Challenge’
where employees were encouraged to
engage with girls and younger women in
engineering. The team also featured in the
external publication Piledriver Magazine,
hosted a women’s heath webinar at Keller, and
successfully launched a female mentoring
programme pilot for North America. They
hosted three webinars and facilitated a
discussion on women’s health with the support
of the local HR community. For women in the
field, KWIC worked alongside providers to
develop PPE specifically for women.
KWIC (Europe), established in April, are
committed to attracting, inspiring, supporting
and developing women in Keller. They have
four working groups, each tasked with
addressing one of their key ‘pillars’. They are
currently undertaking a gender pay gap
assessment for Europe which will highlight
underlying causes that may need addressing.
In addition, they are collaborating with KWIC
(North America) to understand best practice
and lessons learnt in developing a mentoring
scheme for the division.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
57
Case study
Keller colleagues tell it like it is
All leading companies want to get better –
no matter how good they already are.
One of the best ways to do this is to ask
employees for their opinions and this is
something we’re now doing more of at
Keller.
Results across the board were broadly very
positive, with the majority saying they were
happy with the company and their position in it.
Attention to health and safety scored particularly
highly and people also said they believe the
company is heading in the right direction.
Wanting to better leverage that experience,
Moretrench is now implementing a mentor
scheme. Other improvements to come out of
the survey are a new employee-recognition
scheme, and the introduction of more formal
performance reviews for some colleagues.
“At the end of the day,” concludes Justin, “it’s
our employees who are getting the work done,
so giving them the chance to speak freely is
the only way we’re going to find out what they
need, and what we need to do to support
them and grow as a company.”
Our culture and engagement programme
encourages employees to share their
thoughts in an anonymous survey, and then
discuss the results and decide actions to
improve as a team. One of the first business
units to be involved was Moretrench Industrial.
“If we’re going to attract the best people and
get them to stay, we have to have the right
culture. That means having a better
understanding of what employees like, what
they don’t, and what’s on their mind. This helps
to address issues as they arise and keep
people happy,” says John Carpenter, President
Moretrench Industrial. “The new Keller
employee survey facilitates all of this.”
A critical part of the survey process is acting on
the results. John and his management team
discussed the findings, which in turn were
communicated to site teams as part of morning
briefing sessions.
“The survey is very much a starting point for
discussion; once you have that mechanism you
can dig deeper and people are much more likely
to open up,” he says.
The survey made Justin Schuman, Equipment
Manager, realise the value of talking to his team
more. “I have all these analytics telling me what
my equipment is doing, but you sometimes lose
sight of the fact that we have these incredibly
experienced operators who can give you so
much more information when you talk to them.”
93%
of employees are proud to work
for Moretrench Industrial
91%
would recommend Moretrench
as a great place to work
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Keller Group plc Annual Report and Accounts 2021
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ESG and sustainability continued
People continued
Safety
We want every person who
works for us, or with us, to go
home safely at the end of each
day. To achieve this, we are
committed to effective HSE
leadership and management,
continually developing a positive
safety ethos of understanding,
transparency and learning, and
the promotion of healthy
behaviours to help avoid illness
or injury arising from people’s
work or lifestyle.
Our safety performance continues to improve.
The Group’s overall accident frequency rate
(AFR) for 2021 improved by 42% to 0.07 per
100,000 hours worked, and our AMEA Division
had an excellent year, achieving an AFR of zero.
We held a Platform Safety day in May to keep
attention on the risks related to large plant and
equipment. Collective progress on this topic has
helped reduced rig topples from eight in 2018 to
one in 2021 (not platform related).
Our total recordable incident rate also improved
by 32% in 2021 to 0.63 per 100,000 hours
worked, meaning we had 37 fewer ‘recordable’
injuries.
We are very proud of our industry-leading
performance and improving track record. And,
holding safety as paramount, we continue to
push for further improvement in pursuit of our
goal of zero harm.
As our number of recordable incidents
decreases, it is ever more important to identify
and address near miss events that could have
caused damage or harm. Year-on-year near miss
reports are up and leadership site interaction is
strong, even with the site access challenges
created by COVID-19.
Keeping our people safe
Our AVA incident reporting and analysis
system helps us understand incidents and
root causes and use the lessons learned to
further mitigate risk.
This system is supplemented by our Incident
Review process that is jointly owned between
our functions and operations. This provides us
with a very healthy review of our incidents, an
opportunity for our leadership teams to role
model expectations and to share, learn and
grow our culture collectively.
A major focus area over the last few years
has been the education on our key health and
safety risks, known as our Work Safe 6, and the
subsequent Group standards relating to these.
At the beginning of the year, a tragic fatality
occurred following an accident on a site in Austria
in which we lost a long-serving and valued
employee. Whilst it has been determined Keller
was not at fault for the accident, the incident has
caused us to re double our efforts and we have
continued to advance our safety programmes.
Responding to COVID-19 challenges
The local ebbs and flows of the global COVID-19
pandemic created additional operational
challenges in 2021. We continued to provide
guidance and support to our employees in line
with World Health Organization guidelines,
supplemented by local authority guidance in the
regions in which we operate. This approach
enabled us to work in a safe and productive
manner on sites wherever the local regulatory
regime allowed, using applicable personal
protective equipment and social distancing.
The Group has actively encouraged and
supported employees to become vaccinated
against COVID-19 wherever possible. In
recognition of the benefit of free vaccination
that many of the Group’s employees and their
families have received from their national
governments, we donated £300,000 to
UNICEF’s COVID-19 Vaccines Appeal. This
amount approximately equates to the cost of
vaccinating the Keller workforce and their
immediate families and will help UNICEF to
deliver 1.9 billion doses of vaccines this year
for frontline health workers, social workers,
teachers and those at highest risk.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
59
Good health
and wellbeing
At Keller, we already have a
strong, established culture of
keeping our people physically
safe. To build on these strong
foundations, we have increased
our focus on all aspects of our
people’s wellbeing. We believe
that prioritising wellbeing not
only enhances our employees’
health and happiness, it makes
good business sense, improving
resilience, productivity and
performance.
This year we launched Our Foundations of
Wellbeing, a global framework, which explains
our overall approach to wellbeing at Keller. To
equip our leaders with the tools to carry out
wellbeing in a strategic way, we also created a
Wellbeing toolkit, based on best practice specific
in our industry.
Driving wellbeing means supporting our people’s
unique and individual needs. Our Foundations of
Wellbeing underpin everything we do and ensure
we give equal focus to each of them.
At Keller we define wellbeing as:
Being healthy and fulfilled – at work and at home, now and in the future
Community
Body
“Being connected – building positive
relationships with each other and our
communities”
Our goal – To build a sense of
belonging in the workplace and
create opportunities for shared
positive experiences
“Being at your best physically by
keeping fit, eating and sleeping well”
Our goal – To encourage balanced
and healthy lifestyles and the ability
to thrive in life
Financial security
“Being financially fit – managing your
money well for greater security”
Our goal – To provide educational
tools and resources to help everyone
manage their day-to-day finances
and prepare for the future
Mind
Growth
“Being emotionally healthy and resilient
– positive attitudes to life and its
challenges”
Our goal – To create an environment to
support everyone’s mental health and
resilience to life’s events
“Being empowered and supported in
your career – positive work experiences
that produce pride, fulfilment, meaning
and happiness”
Our goal – To encourage career
conversations and growth opportunities
that help everyone reach their full potential
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Keller Group plc Annual Report and Accounts 2021
Strategic Report
ESG and sustainability continued
People continued
We will continue to listen to our people via local
focus groups and engagement surveys to
understand whether we are making an impact
and adapt our approach to support our people in
the best possible way.
Earlier in the year, we also delivered on our
commitment to provide global coverage of
employee assistance programmes across Keller.
This was a key and timely milestone that enables
our colleagues and their families to obtain
additional support during COVID.
‘ My immediate manager(s) genuinely
cares about my wellbeing’
‘ Generally, I believe my workload is
reasonable for my role’
Current Keller score:
Current Keller score:
78%
Target: Score above global
construction and heavy industry
benchmark of 85%
80%
Target: Score above global
construction and heavy industry
benchmark of 72%
Wellbeing maturity model
Strategy
Leadership
Engagement
Ways of working
Measurement
Wellbeing requires long-term commitment,
consistency and regular engagement to be
effective. To help us stay focussed and measure
progress, we developed a wellbeing maturity
model. This enables us to understand what
excellence looks like and our progress towards it.
We believe we are at a Level 2 today, with an
ambition to reach Level 4 by 2025. Local
business units will use the maturity model to
establish action plans to fulfil each step so that
we ensure collective improvement over time.
COVID-19 vaccination approach
Keller’s response to the COVID-19 pandemic in
2021 began as a continuation of our activities in
2020 – protecting our people and protecting our
business. Our operations had become used to
the protocols we had established during 2020
and the closure of sites was less of an issue than
in preceding year. Our attention soon began to
establishing vaccination guidance which was
developed by the Heads of HSEQ, Legal and HR.
Local wellbeing activities but no
overarching strategy or focus.
Ad-hoc leadership of wellbeing.
Global focus – defined Global
Wellbeing Framework and
toolkit to empower local
strategic focus. Global
employee assistance
programme in place.
Active leadership sponsorship
with clear ownership globally
under People and HSEQ.
Leadership commitments
agreed and communicated.
Localised strategy and action
plans developed.
Visible role modelling on
wellbeing by Global Leadership
Team.
Global engagement with
workforce on wellbeing.
Limited engagement with
workforce on wellbeing.
Guidance, tools and resources
available.
Wellbeing rarely considered
in ways of working.
Limited employee feedback or
data collection on wellbeing and
its impact on the business.
Mental health and wellbeing
promoted as a focus for the
organisation.
Policies and practices
increasingly consider and
promote wellbeing.
Internal and external feedback
and data collected.
Wellbeing reflected in ways of
working and work environment.
Self-assessment against
maturity model. Measurement
of wellbeing via local focus
groups and engagement
surveys.
Wellbeing activity integrated
into business as usual activities
and budgeting in same way as
safety.
Leaders trained and skilled at
managing wellbeing.
Active sharing of knowledge
and collaboration on wellbeing
globally.
A culture of trust, openness
and empowerment where
conversations about mental
health are commonplace.
Wellbeing integrated into
people processes and
procedures including induction,
performance management,
career development,
recognition and reward.
Structured measurement and
regular, transparent reporting
on wellbeing.
Level 1
Level 2
Level 3
Level 4
Keller Group plc Annual Report and Accounts 2021
Strategic Report
61
Due to the multiple jurisdictions within the Keller
portfolio, and the matter of personal choice
around whether to be vaccinated or not, the
company determined that its approach would be
to strongly encourage and support our workforce
in becoming vaccinated.
Our approach to encouraging and supporting
vaccination has been led by management at all
levels of the organisation and tailored locally. In
some countries we have been able to achieve
a vaccination rate of 100% whilst others are
significantly lower than this. When we have
suffered the death-in-service of employees,
the vaccination status of those that have died is
consistent with the external benchmark globally.
The outbreak of the Delta variant in India during
2021, and the potential for significant health
implication for Keller and nationally, was of
concern for the company. The approach by the
management team of Keller India in terms of
responding to the crisis was, as ever, first class.
Keller worked closed with government medical
facilities to ensure 100% of all Keller India
employees (and contract employees) were
double vaccinated. In recognition of Keller India’s
efforts, the Construction Industry Development
Council (CIDC ) awarded the team a special
category Corona Warriors award.
Case study
Employee assistance programmes go global
We have extended our employee assistance
programmes so employees and their
families in every business unit can benefit.
From time to time, everyone experiences
situations that affect their general wellbeing.
Dealing with COVID-19 over the last year or
so has been particularly challenging for many
people. This came through in Keller’s COVID-19
employee survey, as well as its employee
focus groups.
As a result, we extended our employee
assistance programmes to ensure global
coverage this year. The programmes offer
practical information and free counselling on
a variety of topics for employees and their
direct family.
Help prevent suicide
One person dies from suicide every 40 seconds
Potential warning signs
Feelings of hopelessness or
worthlessness, depressed
mood, poor self-esteem,
or guilt
Not wanting to participate
in family or social activities
Feelings of anger, rage, need
for revenge
Feeling exhausted most of the time
Trouble concentrating
Frequent physical symptoms such as
headaches or stomach aches
Changes in sleeping and eating
patterns
Feeling listless, irritable
Regular and frequent crying
Not taking care of yourself
Reckless, impulsive behaviours
Six steps to respond
1
Reach out to the person:
Ask how they are doing.
2
3
4
Listen without judging.
Mention changes you have noticed
in the person’s behaviour and say
that you are concerned about their
wellbeing.
Suggest that they talk with someone
in HR, a dedicated helpline, a doctor or
our employee assistance programme.
5
Make it clear that you will
always be willing to listen.
6
Follow up where possible to ensure
that action has been taken.
If you or someone you know is struggling,
our employee assistance programme
provides round the clock, free, confidential
support for you and your family.
See how to contact the service via the QR
code below or go to the global intranet >
Knowledge base > Supporting activity >
People > Wellbeing > Employee assistance
programmes
These programmes provide more
support to our people. They help
them take the very best care of
themselves and their families and
to be more successful at meeting
their responsibilities at home and
at work. Wellbeing is a leadership
priority and we support our
people to be healthy and fulfilled
at work and at home, today and in
the future.”
Sandy-lee Connolly
Group Head of Talent and Diversity
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Keller Group plc Annual Report and Accounts 2021
Strategic Report
ESG and sustainability continued
People continued
Quality education
We invest in our people’s
professional and personal
development and provide a
challenging environment for
them to exercise their skills.
We also take a leadership
role in our industry and the
communities in which we
operate to encourage personal
and economic growth.
Learning and development
programmes
Keller’s ability to deliver its business strategy
depends on employees with relevant skills,
knowledge and experience. Our group-wide
learning and development programmes promote
a culture that empowers our people to drive
innovation and focus on Keller’s principal activities
of winning and executing work on behalf of clients.
From mid-2021, the North America division was
able to reactivate its learning and development
programmes with the workforce. These started
with some online refresher training for those that
had previously attended the Project Manager
academy prior to the pandemic to ensure that
the previous learning outcomes realised
remained relevant and current. In person
academies then followed for Project Managers
and Field Superintendents; as well as a cohort
of sales training.
A major focus for North America following the
One Keller reorganisation has been cross-
training our teams in new products offerings for
clients. An online offering has been developed
that supports our sales, engineering and project
management teams develop awareness of the
full catalogue of technical capabilities that Keller
has. This has been a valuable tool in upskilling our
teams to be able to offer multiple solutions for
our clients projects.
AMEA have prioritised leadership development
and introduced a new Conscious Leadership
Programme, developed an Emerging Leaders
Programme and delivered on an intensive
Inclusive Leadership workshop during the year.
Europe continued to adapt their approach to
deliver local programmes via digital platforms
due to mobility restrictions related to COVID.
Leadership on Site training as well as Leading
Teams Remotely were delivered during the
course of 2021. The Sales Counsellor
Programme is well established and seeks to
increase the company’s capabilities in winning
higher quality work from our clients.
We are committed to developing our future talent
pipeline of leaders and investing in our people to
ensure they are equipped with the skills to drive
the organisation forward within an ever changing
and complex market. Our Unearthing Potential
talent development programme enables us to
build this capability and to respond to the future
needs of the business. It also allows us to actively
engage a diverse range of talent as well as develop
future leader learning for all. We believe that every
employee should have the opportunity for regular
career conversations and development plans, and
during the year, included an additional module to
facilitate discussions that form part of the talent
development programme.
Case study
Keller teams up with children’s charity
We will also be sponsoring Bhumi educational
sessions at schools for girls and donating IT
equipment. And employees will be encouraged
to get involved in the charity’s Eco-Champs
programme, where children plant trees, learn
about recycling and take part in art workshops
with an environmental focus.
We really hope to be able to
make a positive difference
to people’s lives.”
J ‘Subbu’ Subramanian
Head of HR, Keller India
We are partnering with Bhumi, one of India’s
largest charities, to support and educate
disadvantaged children and encourage
future generations to protect the
environment.
Bhumi has over 30,000 mainly youth
volunteers and has helped educate more
than 25,000 children across India since its
formation in 2006. The new partnership will
see us supporting scholarships for young
people affected by COVID and terminal illness,
as well as sponsoring education for girls and
promoting eco workshops.
COVID has had a devastating impact on
families throughout India, so Keller will be
working with Bhumi to identify children who
have lost a breadwinner to the coronavirus or
terminal illness over the past two years. This
will include asking for nominations from
employees, subcontractors and others with
links to Keller. The selected children will then
receive a scholarship.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
63
Case study
Keller launches engineering scholarship
Keller has set up an annual scholarship to
attract the best geotechnical engineers and
strengthen ties with leading universities.
The Pitcairn Geotechnical Engineering
Scholarship commemorates Colin Pitcairn,
the architect of Keller’s global learning and
development programmes, who sadly died
in 2020.
Each year the scheme offers a grant of up to
£10,000 each to three promising engineering
undergraduates looking to take a master’s
degree in geotechnical engineering.
Jorge Malave is one of the first recipients
of the scholarship and recently began his
master’s programme in Structural and
Geotechnical Engineering at the University
of Central Florida.
“I find structural and geotechnical engineering
projects more interesting than any other area
of civil engineering and receiving this
scholarship means the world to me.”
In November 2021, we held our Project
Managers’ conference in Texas. This brought
together some 380 people from across North
America Division to learn, network and share
ideas and best practice. Attendees were able to
learn and grow their expertise through technical
and leadership presentations, workshops,
exhibitions and group activities.
Emerging talent
We are committed to investing in our emerging
talent and building diverse capability for the
future. This year we took on over 104
engineering graduates and provided 53
apprenticeship and 81 intern and co-op
opportunities across the group.
Over the last few years we’ve seen progress
with a diverse intake for entry-level engineering
roles and cultivating relationships with key
universities that have a higher proportion of
underrepresented minorities. For example, North
America, as part of a pilot, put more focus on
balanced representation with early career
recruitment during 2021 (5% increase of female
interns and co-ops and a 10% increase of black
engineers). The biggest contributing factors of
success have been leader sponsorship, targeted
recruitment focussed on DEI initiatives and the
adoptions of inclusive workforce policies such
as enhanced parental leave.
To fulfil our ambition to be the leading
provider of specialist geotechnical
solutions, we have to attract the
best engineers with potential to
become our future leaders.
Partnership is one of our Inclusion
Commitments. It recognises the
importance of collaborating and
partnering with like-minded
organisations through inclusivity
to drive change in the industry.”
Graeme Cook
Group People Director
Global product teams
Keller’s global product teams focus on sharing
product-specific knowledge around the world,
making sure we are best equipped to offer safe,
productive, market-leading technologies to our
customers. We have a team for each of our eight
major product lines. This year, we continued
monthly educational webcasts, each attended
by several hundred people from our global
engineering and operations communities.
Geotechnical community
Our businesses take a leadership role within their
industry by providing employees, customers,
suppliers and potential employees with technical
papers, seminars, field trips and site visits. Staff
from companies throughout the Group maintain
close contact with partner universities to share
best practice and provide examples of their
leading-edge engineering.
The progress achieved in North America will
serve as a blueprint for other divisions to consider.
The Pitcairn Geotechnical Engineering
Scholarship was launched during the year which
is designed to attract the best geotechnical
engineers and strengthen our ties with leading
universities. Each year the scheme will offer
a grant of up to £10,000 to each of three civil
engineering graduates considering a masters’
degree in geotechnical engineering. An
opportunity to not only strengthen our future
talent pipeline, but to improve diversity at Keller
by attracting more women and other individuals
from under-represented minority groups.
Workplace mentoring programme
We pride ourselves on creating a company
culture that values learning and development
and giving our colleagues the opportunity to
grow and thrive. During the year, a workplace
mentoring programme was launched in North
America for the purposes of accelerating
personal and professional development,
encourage and empower employees to
realise their potential and to strengthen
leadership capability.
64
Keller Group plc Annual Report and Accounts 2021
Strategic Report
ESG and sustainability continued
Principles
Principles
Good governance
Good governance is about
helping to run the company well.
It involves being satisfied that an
effective internal framework of
systems and controls is in place
which clearly defines authority
and accountability and
promotes success whilst
permitting the appropriate
management of risk.
Keller’s ways of working
Our Code of Business Conduct (‘Code’)
sets out clear and common standards of
behaviour for everyone who works in and
with Keller, as well as a framework to guide
decision-making when situations aren’t
clear-cut. It also ensures a positive culture
that keeps us successful, operating in a
way we can all be proud of. It is a public
statement of our commitment to high
standards that tells others they can rely
on our integrity.
The Code is supported by our Group
policies, our modern slavery and human
trafficking statement for 2022, our tax
strategy and our new Supply Chain Code
of Business Conduct. Our ethics and
compliance programme, which comprises
training of our employees across the
business, is now in its sixth year of
supporting our employees to do the right
thing – maintaining ethical and honest
behaviour, respecting employees’ rights
and diversity, and staying free from bribery
and corruption.
Keller’s Code of Business Conduct and
Group policies, can be found at:
www.keller.com under ‘How we work’
Committee structures
Human rights
To reflect the growing importance of
Environmental, Social and Governance (ESG)
matters and provide greater focus and oversight
on these issues, we announced on 30 July 2021
that the Board had established two new Board
Committees: the Environment Committee and
the Social and Community Committee. In
addition, the Audit and the Nomination
Committees were renamed the Audit and Risk
Committee and the Nomination and Governance
Committee respectively to better reflect their
remits. Further detail on the membership and
terms of reference for these Committees can be
found on our website and on pages 78 and 79 of
this report.
This new Committee structure allows for greater
depth of engagement and conversation and
clear focus in driving forward our ESG agenda.
ESG reporting framework
In addition to the new Committee structure,
the Board agreed a reporting framework on
ESG matters.
ESG is the responsibility of the Board as a whole,
with the Chairman as designated Director for
ESG matters, reporting through the Group
Company Secretary and Legal Advisor to the
Board. The Board receives quarterly reports
which summarise the activities, initiatives and
challenges on ESG during the period and track
progress. These quarterly reports inform the
content of this section of the annual report and
assures a clear reporting line on all ESG matters
to the Chairman.
Net zero targets
The company has identified safety, good
governance, gender DEI and carbon reduction as
the most important areas of sustainability that
the Group can focus on globally. These align with
UN Sustainable Development Goals 3, 5, 13 and
16. In respect of carbon reduction, the Executive
team has set ambitious but achievable net zero
targets by 2050. We will be net zero across all
three emission scopes by 2050; net zero on
Scope 2 by 2030, net zero on Scope 1 by 2040
and net zero by 2050 on operational Scope 3 (as
opposed to client-originated Scope 3). We have
started to implement the short, medium and
long-term actions required to achieve these
goals. More information on pages 45 and 46 –
Journey to net zero.
Keller expects all employees and suppliers to
adhere to international standards on human
rights, including with respect to child and forced
labour, land rights and freedom of association,
among other elements. We take a zero-tolerance
approach to slavery and human trafficking and
are strongly committed to ensuring that all
employees, as well as the people who work on
our behalf, are protected. Our full expectations
are included in our Supply Chain Code of
Business Conduct and modern slavery and
human trafficking statement, which are available
on our website. We conduct appropriate due
diligence on our partners, and all of our suppliers
are obliged to adhere to the principles set out in
the Code, including on human rights.
Anti-bribery and corruption
Keller’s Anti-Bribery and Anti-Fraud Policy and
whistleblowing procedures are designed to
ensure that employees and other parties
including contractors and third parties are able
to report any instances of poor practice safely
through an independent organisation.
All reports received via this or any other reporting
mechanism are thoroughly investigated and
reported to the Audit and Risk Committee, which
reviews each case and its outcomes. None of
our investigations during 2021 identified any
systemic issues or breaches of our obligations
under the Bribery Act 2010. The Anti-Bribery
and Anti-Fraud Policy is supported by periodic
audits and reminders.
Governance and oversight
We recognise that assurance over our business
activities and those of our partners and suppliers
is essential. In 2021 our employees completed
mandatory training on competition compliance
and data privacy and in 2022 will complete
mandatory Code of Business Conduct training.
You can read more about our risk management
and principal risks from page 32 onwards.
Tax strategy
We publish our tax strategy on our website
and are committed to managing our tax affairs
responsibly and in compliance with relevant
legislation. Our tax strategy is aligned to our
Code of Business Conduct and Keller’s values
and culture and is owned and approved by
the Audit and Risk Committee and the
Board annually.
Keller Group plc Annual Report and Accounts 2021
Strategic Report
65
Partnerships
At Keller, we recognise the
importance of collaborating with
organisations that understand
our values and commitments,
and the ways of working and the
standards by which we operate.
Partnering with these ‘like-
minded’ organisations helps us
drive change in our organisation
and the wider geotechnical
industry.
Industry partnerships
Many of our senior managers play key roles
in the geotechnical professional associations
and activities around the world.
In Europe, a number of employees are part of the
European Federation of Foundation Contractors
(EFFC), which is also chaired by Andreas Körbler
from Keller. In Keller North America, employees
are active participants in geotechnical
engineering and construction trade groups,
including the Deep Foundations Institute (DFI),
ASCE/Geo-Institute and ADSC International
Association of Foundation Drilling. Our North
American engineers also hold leadership
positions on multiple national technical
committees (including committees on
sustainability) and local and university chapters;
many have served as members of the board of
directors for these organisations.
Finally, in AMEA, Keller plays an important role
in the local professional societies, with Keller
employees holding leading positions in multiple
trade associations, including in ASEAN and India.
We also support trade conferences across our
divisions, including the combined American and
European trade conference.
Sustainability is an increasing focus in the
industry. We work with a number of universities
on sustainability initiatives, focusing on
whole-company innovation, specific
geotechnical products like grouting and vibro
stone columns, and key geotechnical projects.
We wrote the sustainability overview for the
European Federation of Foundation Contractors
and helped with the drafting of the American DFI
sustainability guide.
We are also helping to compile sustainability best
practice guides with the European and American
trade associations.
Charitable partnerships
Our business units support a broad range of
groups and charities, depending on what is most
important to them locally. This may involve
fundraising or donating money, time or skills.
In recognition of the benefit of free vaccinations
that many of the Group’s employees and their
families have received from their national
governments, following a recommendation
of the Social and Community Committee,
the Board approved a funding contribution
of £300,000 to UNICEF’s COVID-19
Vaccines Appeal.
We again supported The Brilliant Breakfast in
2021 with a donation of £5,000. Working with
The Prince’s Trust, this UK initiative aims to
change the lives of young women by helping
them gain the skills needed to live, learn and earn.
More information on this can be found in the
report of the Social and Community Committee
on page 86.
This year we more clearly defined the structure
and approach for charitable and community
giving in Keller in a new Charitable Giving Policy.
Case study
Keller donates £300,000 to Vaccines Appeal
Keller has donated £300,000 to UNICEF’s
COVID-19 Vaccines Appeal. This has helped
UNICEF deliver more than two billion doses
of vaccines for frontline health workers,
social workers, teachers and those at
highest risk.
This funding contribution recognises the
benefit of free vaccination that many Keller
employees and their families have received
from their national governments. It roughly
equates to the cost of vaccinating the Keller
workforce and their immediate families.
We have actively encouraged and
supported our employees to
become vaccinated against
COVID-19 wherever possible.”
Mike Speakman
Chief Executive Officer
66
Keller Group plc Annual Report and Accounts 2021
Strategic Report
Non-financial reporting statement
Introduction
Pursuant to the Non-financial Reporting Regulations, which apply to the Group, the tables below summarise where further information on each of the key
areas of disclosure can be found. Further disclosures, including our Group policies, can be found on our website at www.keller.com
Reporting requirement
Relevant section of this report
1. Description of our business model
2. The main trends and factors likely to affect the future
development, performance and position of the Group’s business
• Business model – pages 12 and 13
• Our strategy – pages 18 and 19
• Our market – pages 10 and 11
• Divisional reviews – pages 20 to 25
3. Description of the principal risks and any adverse impacts
of business activity
• Principal risks and uncertainties – pages 32 to 41
4. Non-financial key performance indicators
• Customer satisfaction – page 13
• Safety, good health and wellbeing – pages 58 to 61
• Gender diversity – pages 53 to 56
• Greenhouse gas emissions and energy – page 48
Reporting requirement
Policies, processes and standards
which govern our approach¹
Risk management
Embedding due diligence, outcomes of our
approach and additional information
5. Environmental
matters
• ESG and sustainability –
pages 42 to 67
• Changing environmental factors – page 38
• Ethical misconduct and non-compliance
with regulations – page 37
• Losing market share – page 36
•
Inability to maintain technological product
advantage – page 37
• Our market – pages 10 and 11
• Divisional reviews – pages 20 to 25
• Greenhouse gas emissions and
energy data, trend analysis and
assurance – pages 47 and 48
• Environment Committee report –
pages 84 and 85
• Section 172 statement – pages 76
and 77
• Serious injury or fatality to employees or public
• Diversity, equity and inclusion –
– page 40
pages 53 to 56
• Ethical misconduct and non-compliance with
• Training and development – pages 62
regulations – page 37
and 63
• Not having the right skills to deliver – page 40
• Changing environmental factors – page 38
• HR Policy
• Code of Business
Conduct
• Whistleblowing Policy
• Wellbeing Foundations
• Sustainability Policy
• ESG and sustainability –
pages 42 to 67
6. Employees
7. Social and
community
matters
• Health and wellbeing – pages 59 to
61
• Employee engagement – page 57
• Section 172 statement – pages 76
and 77
• Social and Community Committee
report – pages 86 and 87
• Business model – pages 12 and 13
• Divisional reviews – pages 20 to 25
• Safety, good health and wellbeing
– pages 58 to 61
• Social and Community Committee
report – pages 86 and 87
• Section 172 statement – pages 76
and 77
• Code of Business
• Ethical misconduct and non-compliance with
Conduct
regulations – page 37
• Changing environmental factors – page 38
• Wellbeing Foundations
• Sustainability Policy
• ESG and sustainability –
pages 42 to 67
• Procurement Policy
• Supply Chain Code of
Business Conduct
Keller Group plc Annual Report and Accounts 2021
Strategic Report
67
Reporting requirement
8. Human rights
Policies, processes and standards
which govern our approach¹
Risk management
Embedding due diligence, outcomes of our
approach and additional information
• Code of Business
• Ethical misconduct and non-compliance with
• Safety, good health and wellbeing
Conduct
regulations – page 37
– pages 58 to 61
• Supply Chain Code of
Business Conduct
• Modern slavery and
human trafficking
statement
• Wellbeing Foundations
• Sustainability Policy
• Privacy Policy
• Anti-Bribery and
Anti-Fraud Policy
• Competition Law
Compliance Policy
• Conflicts of Interest Policy
• Whistleblowing Policy
9. Anti-corruption
and anti-bribery
• Serious injury or fatality to employees or public
• Social and Community Committee
– page 40
report – pages 86 and 87
• Changing environmental factors – page 38
• Section 172 statement – pages 76
and 77
• Ethical misconduct and non-compliance with
• Audit and Risk Committee report –
regulations – page 37
pages 90 to 95
Some policies, processes and standards shown here are not published externally.
The Strategic report has been approved, authorised for issue
and signed by order of the Board by:
Kerry Porritt
Group Company Secretary and Legal Advisor
7 March 2022
68
Keller Group plc Annual Report and Accounts 2021
Governance
Chairman’s introduction
Peter Hill CBE
Chairman
We have met or
exceeded the diversity
targets we set
ourselves in the Board’s
Diversity Policy
approved in January
last year.
Planet, People and Principles
To reflect the growing importance of ESG
matters and to provide greater focus and
oversight, we announced in July 2021 that
the Board had established two new Board
Committees: the Environment Committee
and the Social and Community Committee.
In addition, the Audit and the Nomination
Committees were renamed the Audit and
Risk Committee and the Nomination and
Governance Committee respectively, to better
reflect their remits. Further detail with regard
to the membership and terms of reference for
these Committees can be found on pages 78
and 79. This new Committee structure allows
for greater depth of engagement and
conversation and clear focus in driving forward
our ESG agenda; a quarterly report on all ESG
initiatives and deliverables by the Group
Company Secretary and Legal Advisor, to the
Board, assures a clear reporting line on all ESG
matters to me. In 2022 we have put in place a
number of measures and targets to both reflect
Keller’s ESG priorities and meet increased
reporting and compliance obligations in this
area and I am proud that we have set ambitious
and achievable net zero carbon targets by 2050.
We believe that carbon targets are essential to
mitigate global climate-related risks while we
pursue climate-related opportunities in our
operations and contracts.
We will be net zero across all three emission
scopes by 2050; net zero on Scope 2 by 2030,
net zero on Scope 1 by 2040 and net zero by
2050 on operational Scope 3. More information
can be found in the ESG and sustainability report
on pages 42 to 67.
Company purpose and culture
The Board is cognisant that it has the ultimate
responsibility for ensuring an appropriate
company culture to act as a backdrop to the
way in which Keller behaves towards all its
stakeholders. Our culture provides the
foundation to drive our purpose and delivery of
our strategy. As a Board, we continue to spend
time focused on ensuring that our culture
enables us to build the organisational capability
required to deliver on our promises to our
stakeholders, customers, employees, society
and shareholders. More information on our
purpose and culture can be found on page 2.
Dear shareholder
On behalf of the Board, I am pleased to
introduce our Governance report for the
year ended 31 December 2021. This
report sets out our approach to effective
corporate governance and outlines key
areas of focus of the Board and its activities
undertaken during the year as we continue
to drive long-term value creation for all
our stakeholders.
Board succession and diversity
When I arrived in 2016, I set out an ambition
to have a Board from multiple industries and
geographies that had varied and valuable
experiences as well as gender and ethnic
diversity. I believe that different viewpoints
and different experiences ensure that better
informed decisions are made when applying
judgements in challenging business-related
circumstances. We have met or exceeded the
diversity targets we set ourselves in the Board’s
Diversity Policy approved in January last year and
as recommended by the Hampton-Alexander
and Parker Reviews, which set targets of a 33%
female share of Board Directors by 2020 and a
minimum of one Board Director from an ethnic
minority background by 2022.
On 1 February 2022, we announced the
appointment of Juan G. Hernández Abrams,
who has joined the Board as an independent
Non-executive Director and will be Chair of the
Environment Committee. Our Nomination and
Governance Committee, led by me, with support
from the whole Board and the Group Company
Secretary and Legal Advisor, oversaw the
appointment process. Juan’s biography is set
out on page 70. Juan brings rich and diverse
experience to the Board and I warmly welcome
him to Keller.
On behalf of the Board I would like to pay
tribute to Nancy Tuor Moore for her significant
contribution since joining the Board as a
Non-executive Director in 2014 and her valuable
input at various Committees – the Audit and Risk,
Nomination and Governance, Remuneration and
Social and Community - and as Chair of the
Environment Committee. The Board and the
wider Group have benefitted greatly from her
extensive knowledge and experience, particularly
of the US engineering and construction sector.
Nancy will retire from the Board following this
year’s AGM, and we wish her well.
The Board and the Nomination and Governance
Committee will continue to drive the agenda of
diversity, equity and inclusion across the Group.
Keller Group plc Annual Report and Accounts 2021
Governance
69
Engagement with our stakeholders
Balancing stakeholders’ needs and views is a
key part of Board decision-making. The Board
recognises the importance of two-way
communications with our employees. The role of
our designated workforce engagement director
has been in place since 2017 and, supported by
the Social and Community Committee, continues
to be a successful way of ensuring that the Board
appropriately considers the interests of
employees in its deliberations and, in doing so,
makes better decisions.
Towards the end of 2021 we commissioned
a third party to undertake an independent
perception audit of a number of investment
managers. The outcome has not only enabled
the Board to obtain a deeper level of
understanding of the views of our shareholders
and potential investors, but also gives the
executive management additional input as
they formulate the strategy for the years ahead.
Whilst for much of the year it has not been
possible to meet physically with employees
and other stakeholders, the Board has recently
resumed face-to-face Board meetings and
activities, and all Board members are looking
forward to meeting and connecting more
personally with stakeholders in a COVID-19
safe environment over the next year.
Board evaluation
It is extremely important that the Board, its
Committees and individual Directors rigorously
review their performance and embrace the
opportunity to develop, where necessary.
This year an external effectiveness review
was undertaken with support from the Group
Company Secretary and Legal Advisor.
Progress on last year’s areas of focus as well
as the outcome of this year’s effectiveness
review can be found on pages 82 and 83.
Looking forward
We continued to make good strides as a
business in 2021, with our performance
exceeding market expectations. As a Board we
are focused on further driving the delivery of our
strategy over 2022 and beyond, whilst
maintaining the highest standards of corporate
governance expected by our stakeholders. The
outcome of the BEIS consultation on audit and
corporate reform, and its impact on the way we
work, will be a key theme on our agenda as well.
I encourage all our stakeholders to take every
opportunity presented to engage with the
company and, subject to any COVID-19
restrictions in place at the time, I would
welcome you to attend, and in any case
vote at, the forthcoming AGM.
Needless to say that if we cannot meet in person
in May, if you wish to ask a question of the Board
relating to this report or the business of the
AGM, please feel free to do so by emailing the
Group Company Secretary and Legal Advisor
at secretariat@keller.com. We will consider
and respond to all questions received and, to
the extent practicable, publish the answers
on our website.
Yours faithfully,
Peter Hill CBE
Chairman
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Compliance with the Code
The company was subject to the Code in respect of the year ended 31 December 2021 (the
full text of which can be found at www.frc.org). The Board is pleased to confirm that the Group
applied the principles and complied with the provisions of the Code. The remainder of this
report contains the narrative reporting variously required by the Code, the Listing Rules and
the Disclosure, Guidance and Transparency Rules, setting out in greater detail the framework
and processes that Keller has in place to ensure the highest levels of corporate governance.
Board leadership
and company
purpose
Division of
responsibilities
Composition,
succession and
evaluation
Read more on
page 74
Read more on
page 80
Read more on
page 82
Audit, risk and
internal control
Remuneration
Read more on
page 83
Read more on
page 96
70
Keller Group plc Annual Report and Accounts 2021
Governance
Board of Directors
Peter Hill CBE
Non-executive Chairman
Nationality: British
Appointed:
2016
Paula Bell
Non-executive Director
Nationality: British
Appointed:
2018
David Burke
Chief Financial Officer
Nationality: Irish
Appointed:
2020
Keller Committees:
Keller Committees:
Keller Committees:
Juan G. Hernández
Abrams
Non-executive Director
Nationality: American
Appointed:
1 February 2022
Chairman of the Nomination and
Governance Committee
Skills and experience:
A mining engineer by background, Peter
was Non-executive Chairman of
Volution Group plc until January 2020;
Non-executive Chairman of
Imagination Technologies plc from
February 2017 until its sale to Canyon
Bridge Partners in September 2017;
Non-executive Chairman of Alent plc
from 2012 to the end of 2015; Chief
Executive of the electronics and
technology group Laird PLC from 2002
to late 2011; a Non-executive Director
on the boards of Cookson Group plc,
Meggitt plc and Oxford Instruments plc.
He has been a non-executive board
member of UK Trade and Investment,
and a Non-executive Director on the
board of the Royal Air Force, chaired by
the UK Secretary of State for Defence.
His early career was spent with natural
resources companies Anglo American,
Rio Tinto and BP; he was an Executive
Director on the board of the
engineering and construction company
Costain Group plc, and he has also held
management positions with BTR plc
and Invensys plc.
Other appointments:
Peter is the Non-executive Chairman
of Petra Diamonds Limited.
Chair of the Audit and Risk Committee
and member of the Nomination and
Governance, Remuneration,
Environment, and Social and
Community Committees
Skills and experience:
Paula has extensive FTSE 250 board
experience as both an Executive and
Non-executive Director. From 2013 to
2016 she was Chief Financial Officer
of support services group John
Menzies plc and between 2006 and
2013 was Group Finance Director of
the advanced engineering group
Ricardo plc. Prior to that Paula held
senior management positions at BAA
plc, AWG plc and Rolls-Royce plc.
Paula was a Non-executive Director
and Chairman of the Audit Committee
of the global engineering and
technology group Laird PLC from
2012 until its acquisition and delisting
in July 2018, including a period as
Senior Independent Director.
Paula is a Fellow of the Chartered
Institute of Management Accountants
and a Chartered Global Management
Accountant.
Other appointments:
Paula is the Chief Financial and
Operations Officer of Spirent
Communications plc.
Kerry Porritt
Group Company Secretary
and Legal Advisor
For full biography
See page 72
Member of the Executive Committee
Keller Committees:
Skills and experience:
David is a highly experienced finance
executive who has worked in a variety
of industries and geographies over the
last 30 years. Most recently he was
Chief Financial Officer of J. Murphy &
Sons Limited, a leading international
specialist engineering and
construction company. He has held
senior finance roles at Serco Group plc
and at Barclays plc.
David trained as an accountant with
KPMG in London and is a Fellow of the
Institute of Chartered Accountants in
England and Wales.
Member of the Environment, Audit
and Risk, Nomination and
Governance, Remuneration, and
Social and Community Committees
Skills and experience:
Juan has served in multiple senior roles
with Fluor Corporation, including
General Manager and Vice President
of the Mining and Metals business in
South America, as well as President
of the Industrial Services business
including the Operations and
Maintenance group. His responsibilities
included the strategic direction,
operations and financial performance
across a wide range of industries and
sites throughout Europe, USA, Asia,
Australia, and the Middle East.
Juan was born and raised in Puerto Rico
and holds a Bachelor’s degree in
Environmental Sciences from the
University of Maine. He is a graduate of
Thunderbird University International
Management Program, the INSEAD
International Competitive Strategy
Program, and the London Business
School’s International Business Program.
Other appointments:
Juan is President of Fluor
Corporation’s Advanced Technologies
& Life Sciences business. He is a
member of the Board of Directors for
the US National Association of
Manufacturers.
Keller Group plc Annual Report and Accounts 2021
Governance
71
Michael Speakman
Chief Executive Officer
Nationality: British
Nancy Tuor Moore
Non-executive Director
Nationality: American
Appointed:
2018 and CEO in 2019
Appointed:
2014
Keller Committees:
Keller Committees:
Chairman of the Executive Committee
and member of the Environment, and
Social and Community Committees
Skills and experience:
Michael joined Keller from Cape plc, a
leading international provider of
industrial services, where he was Chief
Financial Officer. He has over 30 years
of experience across a range of
industries, holding senior operational,
divisional and corporate roles within TI
Group plc and Smiths Group plc
between 1982 and 2004, before his
appointment as Chief Financial Officer
for the oilfield services company
Expro International Group plc. Michael
holds a BSc in Engineering and is a
Fellow of the Chartered Institute of
Management Accountants.
Chair of the Environment Committee
and member of the Audit and Risk,
Nomination and Governance,
Remuneration, and Social and
Community Committees
Skills and experience:
Nancy’s extensive international
business experience, together with a
proven record in winning and safely
delivering both global and local
contracts, was gained at CH2M Hill,
Inc., where she held the board position
of Group President and Corporate
Sponsor for Sustainability before
retiring in 2013.
Other appointments:
Nancy is a Non-executive Director of
Terracon, Inc. and IMA Financial Group,
Inc., and is a member of the Board of
Governors for Colorado State University.
Eva Lindqvist
Non-executive Director
Nationality: Swedish
Appointed:
2017
Keller Committees:
Chair of the Remuneration
Committee and member of the
Audit and Risk, Nomination and
Governance, Environment, and
Social and Community Committees
Skills and experience:
Eva graduated with a Master of Science
in Engineering and Applied Physics
from Linköping Institute of Technology
and holds an MBA from the University
of Melbourne. She is a member of the
Royal Swedish Academy of Engineering
Sciences. Eva began her career in
various positions with Ericsson working
in Continental Europe, North America
and Asia from 1981 to 1990 followed
by director roles with Ericsson from
1993 to 1999. She joined TeliaSonera in
2000 as Senior Vice President before
moving to Xelerated, initially as
Chairperson and later as Chief
Executive from 2007 to 2011.
Other appointments:
Eva is a Non-executive Director of
Bodycote plc and Tele2 AB.
Baroness Kate Rock
Senior Independent Director and
designated Non-executive Director
with responsibility for workforce
engagement
Nationality: British
Appointed:
2018
Keller Committees:
Chair of the Social and Community
Committee and member of the
Audit and Risk, Nomination and
Governance, Remuneration, and
Environment Committees
Skills and experience:
Kate was a Non-executive Director
and Chairman of the Remuneration
Committee of Imagination
Technologies plc, the former global
FTSE 250 high technology company,
until November 2017. She is a Board
member of the world’s first Centre for
Data Ethics and Innovation. She sits
on the House of Lords Science and
Technology Select Committee and
from 2017 to 2018 was a member of
the House of Lords Select Committee
on Artificial Intelligence. Kate was a
partner at College Hill for 12 years
from 1996 and was Vice-Chairman of
the Conservative Party with
responsibility for business
engagement until July 2016. She
holds a BA in Publishing and History.
Other appointments:
Kate is a Non-executive Director of
Unbound Group plc (formerly Electra
Private Equity plc). She is also a
Director and Trustee of The Prince’s
Countryside Fund. She was appointed
a Life Peer in 2015 and is also a Senior
Adviser at Instinctif Partners and at
Newton Europe.
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Keller Group plc Annual Report and Accounts 2021
Governance
Executive Committee
Graeme Cook
Group People Director
Nationality: British
Member since:
2017
Jim De Waele
President, Europe
Nationality: British
Member since:
2018
Eric Drooff
President, North America
Nationality: American
Member since:
2018
Skills and experience:
Skills and experience:
Skills and experience:
Graeme joined Keller from EnQuest, a
FTSE oil and gas production company,
where he was the Group HR Director.
He has significant international
experience having been assigned to
management roles in the UK, Africa
and the Middle East. Graeme has over
30 years’ experience in both finance
and HR leadership roles in a number of
blue-chip companies. Graeme was
Group Head of Talent and Leadership
for Legal & General, HR Director,
Mediterranean Basin and Africa region
for BG Group, and spent most of his
early career with Schlumberger in
various HR and financial controller
roles.
Graeme received an MA (Hons) in
Accountancy and Economics from the
University of Dundee.
Before his appointment as President,
Europe in January 2021, Jim was
Group Strategy and Business
Development Director from January
2019 until December 2020. Jim has
over 30 years’ experience in the
industry and has held various senior
positions, including 10 years as
Managing Director of Keller’s
North-West Europe business. He has
served the UK trade association, the
Federation of Piling Specialists, for
many years, including two as
Chairman.
Jim is a Chartered Engineer and a
fellow of the ICE and RICS.
Eric has been involved in the design
and construction of foundation and
ground stabilisation projects for over
35 years. He managed the successful
acquisition and integration of Catoh
Drilling, Inc. in New York; G. Donaldson
and Geo-Instruments in Rhode Island;
Geo-Foundations in Ontario, and
Moretrench American in New Jersey.
With a technical specialty in grouting,
notable projects managed by Eric
include North America’s first
compensation grouting project at the
St. Claire River Tunnel in Ontario;
compaction grouting for seismic
mitigation for the Paiton Power
Station in Indonesia, and chemical
grout ground stabilisation for the
CA/T, C11A1, Atlantic Avenue Tunnel.
Eric holds a BSCE from Bucknell
University and he is a member of the
ASCE Geo Institute, the Deep
Foundations Institute, and The Moles.
Kerry Porritt
Group Company Secretary
and Legal Advisor
Nationality: British
Member since:
2013
Skills and experience:
Kerry has over 25 years’ experience of
company secretarial roles within large,
complex FTSE listed companies across
a broad range of sectors. Kerry is a
Fellow of the Chartered Governance
Institute and holds an Honours degree
in Law. She is also a member of the
European Corporate Governance
Council and the Chartered Governance
Institute’s Company Secretaries’ Forum.
Kerry is an Ambassador for Women
Supporting Women, a group enabling
The Prince’s Trust to support more
young women through its programmes.
Kerry has been Keller’s Group Ethics and
Compliance Officer since 2015 and she
is also a member of the Disclosure
Committee.
Michael Speakman
Chief Executive Officer
For full biography
See page 71
David Burke
Chief Financial Officer
For full biography
See page 70
Keller Group plc Annual Report and Accounts 2021
Governance
73
John Raine
Group HSEQ Director
Nationality: British
Member since:
2018
Venu Raju
Engineering and Operations Director
Nationality: Singaporean
Katrina Roche
Chief Information Officer
Nationality: British
Member since:
2012
Member since:
2020
Peter Wyton
President, AMEA
Nationality: Australian
Member since:
2018
Skills and experience:
Skills and experience:
Skills and experience:
Skills and experience:
John is an experienced HSEQ
practitioner who has lived and worked
in Europe, Asia-Pacific and the US. He
was, most recently, at AMEC Foster
Wheeler, an international engineering
and project management company,
where he was Chief HSSE Officer.
Before that, he was Vice President
QHSSE for Weatherford International,
one of the world’s largest multinational
oil and gas service companies.
Venu began his career with Keller in
Germany in 1994 as a geotechnical
engineer. He has held the roles of
Managing Director Keller Singapore,
Malaysia and India; Business Unit
Manager, Keller Far East in 2009; and
Managing Director, Asia. Venu has
extensive operational and strategic
management experience. He served
as an Executive Director from January
2017 until June 2020.
Born in India, Venu studied civil
engineering in India and the USA, has
a PhD in structural engineering from
Duke University and a Doctorate in
geotechnical engineering from the
University of Karlsruhe in Germany.
Katrina has over 25 years of
experience in delivering technology-
driven change and business
transformation in multiple industries
such as Aerospace Defence,
Telecommunications, Transport and
Technology. She joined Keller from
Cobham Plc, where she held the
position of Executive Vice President
IT. Katrina has also held senior IT roles
in Raytheon, Systems Union and MCI
WorldCom as well as senior roles in
Product Development and
Transformation at Cable & Wireless
and Verizon.
Katrina has a BSc in Mathematics and
an MSc in Operational Research.
Peter joined Keller after 25 years at
AECOM, a leading global infrastructure
firm. He is an experienced business
leader and engineering professional
with extensive knowledge of the
Asia-Pacific region. He has supported
the delivery of major infrastructure
projects in transport, building, utilities,
mining and industrial markets across
APAC. Peter received a Bachelor of
Civil Engineering from the Queensland
University of Technology.
Former member:
James Hind
President, North America
Nationality: British
James served as an Executive Director from July 2003 until June 2020, and
was a member of the Executive Committee from its formation in 2012 until
December 2021. Prior to his appointment as President, North America,
James had been Group Finance Director of Keller Group plc for 15 years.
74
Keller Group plc Annual Report and Accounts 2021
Governance
Board leadership and company purpose
Leadership
Board and Committee meetings and attendance
All Directors are expected to attend each Board meeting and each Committee meeting for which they are members, unless there are exceptional
circumstances preventing them from participating. The table below shows that during the year the Directors attended all of the meetings they were eligible
to attend, except for Nancy Tuor Moore who missed the December Audit and Risk Committee meeting due to the last minute rescheduling of her flights as
a result of the Omicron variant of COVID-19 outbreak in the UK. On that occasion, she reviewed the supporting papers and provided comments to the
Chairman and the Committee Chair.
Paula Bell
David Burke
Peter Hill
Eva Lindqvist
Nancy Tuor Moore
Kate Rock
Michael Speakman
Graeme Cook
Kerry Porritt
Board
Audit and Risk
Committee
HSEQ
Committee
Environment
Committee
Nomination and
Governance
Committee
Remuneration
Committee
Workforce
Engagement
Committee
Social and
Community
Committee
9/9
9/9
9/9
9/9
9/9
9/9
9/9
–
–
4/4
–
–
4/4
3/4
4/4
–
–
–
1/1
–
–
1/1
1/1
1/1
–
–
–
1/1
–
–
1/1
1/1
1/1
1/1
–
–
2/2
–
2/2
2/2
2/2
2/2
–
–
–
3/3
–
–
3/3
3/3
3/3
–
–
–
–
–
–
–
1/1
1/1
1/1
1/1
1/1
1/1
–
–
1/1
1/1
1/1
1/1
–
–
The Environment and Social and Community Committees were established in July 2021 and assumed, where relevant, the responsibilities of the former Health, Safety, Environment and Quality (HSEQ)
and Workforce Engagement Committees respectively.
Effectiveness
Directors and Directors’ independence
The Board currently comprises the Chairman, five independent
Non-executive Directors (NEDs) and two Executive Directors. The
names of the Directors at the date of this report, together with their
biographical details, are set out on pages 70 and 71.
The NEDs constructively challenge and help to develop proposals on
strategy and bring strong independent judgement, knowledge and
experience to the Board’s deliberations. Periodically, the Chairman meets
with the NEDs without the Executive Directors present. Apart from formal
contact at Board meetings, there is regular informal contact between
the Directors.
Paula Bell, Eva Lindqvist, Baroness Kate Rock, Nancy Tuor Moore and
Juan G. Hernández Abrams are all considered to be independent NEDs.
Their other professional commitments are as detailed on pages 70 and 71.
Peter Hill was independent at the time of his appointment as Chairman on
26 July 2016. Peter’s other professional commitments are as detailed on
page 70.
All Directors are subject to election by shareholders at the first AGM
following their appointment and to annual re-election thereafter,
in accordance with the Code.
Directors’ conflicts of interests
Under the Companies Act 2006 (the ‘2006 Act’), a Director must avoid a
situation where they have, or could have, a direct or indirect interest that
conflicts, or possibly may conflict, with Keller’s interests. The 2006 Act
allows Directors of public companies to authorise conflicts and potential
conflicts, where appropriate, where the Articles of Association (the
‘Articles’) contain a provision to this effect. The Articles give the Directors
authority to approve such situations and to include other provisions to
allow conflicts of interest to be dealt with. To address this issue, at the
commencement of each Board meeting, the Board considers its register
of interests and gives, when appropriate, any necessary approvals.
There are safeguards which will apply when Directors decide whether to
authorise a conflict or potential conflict. Firstly, only Directors who have
no interest in the matter being considered will be able to take the relevant
decision and, secondly, in taking the decision, the Directors must act
in a way that they consider, in good faith, will be most likely to promote
Keller’s success. The Directors are able to impose limits or conditions when
giving authorisation if they think this is appropriate. These procedures on
conflicts have been followed throughout the year and the Board considers
the approach to operate effectively.
Keller Group plc Annual Report and Accounts 2021
Governance
75
Board activities and principal decisions
Business development and strategy
People
Operational performance
•
•
•
Evaluated and further focused the Group’s
strategy.
• Commenced the appointment of a new
Non-executive Director.
•
Reviewed and considered the monthly
operational performance of the divisions.
Restructured the Europe Division.
Reviewed divisional performance.
•
Considered the Executive Committee
succession plan.
• Reviewed the company’s contracts
performance and revenue over the year.
•
•
Revised the company’s delivery of
initiatives against its sustainability and ESG
objectives.
Initiated an investor perception audit and
received feedback.
• Participated in employee engagement
workshops.
Finance
Governance and risk
• Evaluated and approved the 2022 business
plan and budget, and the approach and
process for the viability and going concern
statements.
•
•
Reviewed the company’s forecast net debt
levels, facility headroom and covenants and
working capital.
Considered and agreed the
recommendation of the 2021 final dividend
and the payment of the 2021 interim
dividend.
•
•
•
Considered the principal and emerging
risks and uncertainties which could impact
the Group.
Reviewed the risk management framework
with particular regard to its going concern
and impact on making the viability
statement.
Implemented actions following the 2020
external Board and Committees’
performance evaluation.
• Received updates on legal and regulatory
changes.
Summary of Committees’ activities and initiatives
The table below summarises the activities carried out and initiatives promoted by the Main Board Committees following the restructuring put in place in
July 2021 to better reflect the growing importance of ESG matters and to provide greater focus and oversight.
What
Status When
Further
information What’s next
ESG reporting framework formalised, with terms of
reference in place for all new and rebranded Committees.
Stock Exchange announcement issued, along with
website disclosures
July 2021
Page 64
ESG website disclosures to be reviewed with an
aim to improve transparency.
Charitable Giving Policy approved
July 2021
Page 87
The Charitable Giving Policy will be communicated across
the Group and implemented fully during 2022.
To complement the policy, a standard setting out the
protocols and rules for applying and granting charitable
donations will be created and communicated.
Regular reporting of charitable giving will be made to both
the Executive and the Social and Community
Committees by the Group Company Secretary.
TCFD reporting framework agreed
July 2021
Page 52
Develop disclosures to ensure full compliance in 2022.
UK MAR refresher training for Executive Committee
members
June 2021
Reinforcement of subsidiary governance standard and
training of directors of the three divisions
November 2021
and February 2022
n/a
n/a
Session on the treatment of inside information
scheduled for later in 2022.
More jurisdiction-specific training is currently being
developed, to be delivered during 2022 along with
training on Directors and Officers’ liability insurance.
Review, relaunch and refreshed training –
Code of Business Conduct (Keller Ways of Working)
December 2021
Page 64
German, Spanish, French, Polish and Czech versions of the
training will be launched in March 2022.
Board Diversity Policy implementation
February 2022
Page 82
Work by the Nomination and Governance Committee
will continue throughout the year.
76
Keller Group plc Annual Report and Accounts 2021
Governance
Section 172 statement
As a Board, we have always taken decisions for
the long term. Collectively and individually, our
aim is always to uphold the highest standards of
conduct. We understand that our business can
only grow and be successful over the long term
if we understand and respect the views and
needs of our employees, customers and the
communities in which we operate, as well as our
suppliers, the environment and the shareholders
to whom we are accountable.
In summary, as required by section 172 of the 2006 Act, a
director of a company must act in the way they consider, in good
faith, would most likely promote the success of the company for
the benefit of its shareholders. In doing this, the director must
have regard, amongst other matters, to the:
likely consequences of any decisions in the long term;
interests of the company’s employees;
need to foster the company’s business relationships with
suppliers, customers and others;
impact of the company’s operations on the community and
environment;
company’s reputation for high standards of business conduct;
and
need to act fairly as between members of the company.
•
•
•
•
•
•
The Directors of Keller – and those of all UK companies – must act in
accordance with a set of general duties. These duties are detailed in the
2006 Act and include a duty to promote the success of the company,
which is summarised above. As part of their induction, the Directors are
briefed on their duties and they can access professional advice on these
– either through the company or, if they judge it necessary, from an
independent provider. The Directors fulfil their duties partly through a
governance framework that delegates day-to-day decision-making to
employees of the company. The Board recognises that such delegation
needs to be much more than simple financial authorities and, in this
section of the report, we have summarised our governance structure.
This covers: the values and behaviours expected of our employees; the
standards they must adhere to; how we engage with stakeholders; and
how the Board looks to ensure that we have a robust system of control
and assurance processes.
For more detail on our governance framework, see pages 78 and 79.
Details about the principal decisions the Board made during the year
and the activities of the Committees can be found on page 75.
Our stakeholders, why they are important
to us and the duties we perform
Shareholders
Delivering for our shareholders
ensures that the business
continues to be successful in
the long term and can therefore
continue to deliver for all our
stakeholders.
Strategy
The Chief Executive Officer and Chief Financial Officer met major
shareholders following the preliminary announcement of the Group’s 2020
results to discuss a number of matters, including progress against the
Group’s strategy. The Chief Executive Officer and the Chief Financial
Officer had calls with major shareholders following the announcement of
the Group’s 2021 interim results. Following these announcements,
analysts’ notes were circulated to the Board.
Performance
The Board initiated an investor perception audit and received feedback.
The Chief Executive Officer and the Chief Financial Officer had calls with
major shareholders following the Group’s trading update announcement in
November 2021. The Chairman and the Senior Independent Director had
calls with shareholders to discuss Group performance and risk
management throughout the year.
Website
The investor relations section of our website provides information on the
financial calendar, dividends, AGMs and other areas of interest to
shareholders. Copies of annual reports and investor presentations are
available to view and download. Shareholders can also register to receive
‘news alerts’ relating to the Group’s activities.
AGM
The Board uses the AGM as an opportunity to communicate with
shareholders, who are invited to attend, ask questions and meet Directors
prior to, and after, the formal proceedings. The Chairs of the Main Board
Committees are present at the AGM to answer questions on the work of
their Committees.
The results of the voting at the 2021 AGM can be found on our website.
Dividend
We have consistently either grown or maintained our dividend in the
27 years since listing. We have strong cash generation and a robust balance
sheet, which together support our ability to continue to increase the
dividend to shareholders sustainably through the market cycle.
Outcomes for our shareholders:
•
•
Keller is a stable business with a long-term track record.
Continued growth opportunities.
Keller Group plc Annual Report and Accounts 2021
Governance
77
Employees
Our people are our most valuable asset.
We want them to be inspired and motivated,
equipped with the right skills, tools and
standards to be successful.
Workforce engagement
Communications
During 2021, the Board continued its approach to
engagement with the workforce led by Baroness
Kate Rock, Keller’s designated Non-executive
Director for employee engagement matters.
We communicate regularly with our employees
through face-to-face meetings, webcasts, our
company intranet and newsletter and site and
office visits.
Our Non-executive Directors each led
engagement focus groups on topics ranging
from safety to innovation.
Also in 2021 we introduced our Diversity, Equity
and Inclusion commitments and implemented
our Wellbeing Foundations.
Outcomes for our employees:
•
•
•
Local and global opportunities.
Development and training.
Long-term employment.
Customers
Suppliers
Communities
Our customers are central to our business
– without them we would not exist. We want
to deliver a consistently high performance in
an efficient and continuously improving way
across all our strategic levers so as to meet
our customers’ needs.
Building strong relationships with our
suppliers enables us to obtain the best
value, service and quality. We want to work
with suppliers who understand us and
adhere to our ways of working.
What we do is an integral part of the
community and the community is ultimately
our customer. Poor relationships can
damage and even destroy our reputation.
Good relationships win us goodwill.
Contact
Procurement
Contributing to the community
The Chief Executive Officer and the Divisional
Presidents are in regular contact with our
customers, and they regularly brief the Board
on our performance in delivering on our
commitments to customers and the quality
of these critical relationships.
Research
We conduct a wide range of customer research
to better understand their expectations of us.
During the year, our local teams engaged with
our customer network to better understand
their requirements throughout the pandemic.
Outcomes for our customers:
•
•
Benefit from Keller’s global strength and
local focus.
Provision of cost-effective geotechnical
solutions.
Established in 2016, our procurement function
continued to work hard to understand our
supply chain and how to develop deeper and
more strategic relationships with key suppliers.
The Board recognises the importance of leading
a company that not only generates value for
shareholders but also contributes to wider
society.
Working together to do the right thing
Keller’s Supply Chain Code of Business Conduct
sets out our expectations that our supply
chain should respect the human rights of their
employees and contractors and treat them fairly,
in accordance with all applicable laws.
Increased communications with our suppliers
during the year has assisted us in managing our
resources and materials on site.
The Board adopted a Charitable Giving Policy in
2021 and approved a donation of £300,000 to
UNICEF in support of COVAX.
Our environmental impact
As a geotechnical engineering specialist, we
understand that environmental and climate risks
could impact us directly. We are committed to
protecting the environment, and aim to have a
positive impact on it – so we safeguard the future.
Outcomes for our suppliers:
Outcomes for our communities:
•
•
Local relationship with a financially strong
global company.
Support in meeting global supply chain
standards.
•
•
•
Local employment.
Charitable partnerships.
Participation by our employees in community
events.
•
Sustainable commitments.
78
Keller Group plc Annual Report and Accounts 2021
Governance
Governance framework
The Board is appointed by shareholders, who are the owners of the company.
The Board’s principal responsibility is to act in the best interests of shareholders
as a whole, within the legal framework of the 2006 Act and taking into account
the interests of all stakeholders, including employees, customers, suppliers
and communities. Ultimate responsibility for the management and long-term
success of the Group rests always with the Board, notwithstanding the
delegated authorities framework detailed below.
Board
Develops strategy,
grows shareholder
value, provides
oversight and corporate
governance, and sets
the tone from the top.
Provides entrepreneurial
leadership of the Group,
driving it forward for the
benefit, and having
regard to the views, of
its shareholders and
other stakeholders.
Governs the Group
within a framework of
prudent and effective
controls, which enable
risks to be assessed
and managed to an
appropriate level.
Approves the Group’s
strategic objectives.
Ensures that sufficient
resources are available
to the Group to enable
it to meet strategic
objectives.
The Board delegates authority to manage the business to the Chief Executive Officer (CEO) and also delegates other matters to its Committees and
management as appropriate. The Board has formally adopted a schedule of matters reserved to it for its decision, which is available on our website.
Details about the principal decisions the Board made during the year can be found on page 75.
The CEO in turn chairs the Executive Committee for day to day management matters and delegates other matters to various Management
Committees.
Main Board Committees
Committees
Remit
Membership
Audit and Risk Committee
Nomination and
Governance Committee
Oversight of the Group’s financial and non-financial
reporting, risk management (including TCFD) and
internal control procedures and the work of its
internal and external auditor.
Review of the composition of the Board and senior
management, and plans for its progressive
refreshing with regard to balance and structure as
well as succession planning, taking account of
evolving legal and regulatory requirements as well
as stakeholders’ expectations.
Responsibility for governance matters.
Independent Non-executive
Directors (NEDs)
Quorum
Two
Chairman and independent NEDs
Two
Remuneration Committee
Disclosure Committee
Environment Committee
Social and Community Committee
Framework, policy and levels of remuneration of
the Executive Directors and senior executives.
Independent NEDs
Inside information determination and advice on
scope and content of disclosures to the market.
Any two Directors (incl. CEO or Chief
Financial Officer) and the Group
Company Secretary and Legal Advisor
Two
Two
Oversight of the Board’s responsibilities in relation
to environmental matters, incl. climate-related
matters and TCFD.
Understanding of the key concerns of the
workforce and wider stakeholders, apart from
shareholders.
Independent NEDs and CEO
Two
Independent NEDs and CEO
Two
The terms of reference for each of the Main Board Committees are reviewed on an annual basis and can be found on our website.
Keller Group plc Annual Report and Accounts 2021
Governance
79
Other Board Committees
Committees
Summary
Membership
Quorum
Share Plans Committee
Bank Guarantees and
Facilities Committee
Consideration of administrative matters related to
the provision of share-based employee benefits for
the company and its subsidiaries.
All Directors and the Group Company
Secretary and Legal Advisor
Two
Consideration of matters related to the provision of
bank guarantees and facilities for the company and
its subsidiaries.
All Directors and the Group Company
Secretary and Legal Advisor
Two
The terms of reference for each of these Other Board Committees can be found on our website.
Main Management Committees
Committees
Remit
Membership
Chair
Quorum
Executive Committee
Day-to-day management
Safety Leadership
Committee
Safety culture
Sustainability Steering
Committee
Mostly climate-related and
environmental matters but
also people, community,
governance and
reputational matters.
Other Management Committees
CEO, CFO, Group Company Secretary and
Legal Advisor and any other officers as invited
by the CEO. Minimum of six.
CEO, Divisional Presidents of Europe, North
America and AMEA, Group HSEQ Director,
Group Company Secretary and Legal Advisor
and any other direct reports as required by
the CEO. Minimum of six.
A minimum of six representatives of each
division and Group’s relevant functions.
CEO or Chief
Financial Officer
(CFO) in CEO’s
absence
CEO
Four (incl.
CEO or CFO)
Four (incl. CEO
or Group HSEQ
Director)
Group Engineering
and Operations
Director
Four (incl. Group
Engineering
and Operations
Director)
Committees
Remit
Membership
Chair
Quorum
Treasury Committee
Data Protection Steering
Committee
Management of the
Company’s financial risks in
accordance with the
objectives and policies
approved by the Board.
Implementation of Keller’s
strategy for compliance
with data protection laws.
CFO, Group Financial Controller, Group Head
of Treasury, Group Head of Tax
Group Head of
Treasury
Two (incl. CFO)
Legal representatives from each division
(Europe, North America, AMEA) and Group
n/a
n/a
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Keller Group plc Annual Report and Accounts 2021
Governance
Governance framework continued
Keller Group Charter of
Expectations and Role Profiles
The Charter of Expectations and Role Profiles
document sets the role profiles for all of the key
positions on the Keller Group plc Board, and
states the expectations that are demanded of
each of the Directors.
It is available on our website so that there is
complete transparency of the standards we set
ourselves for all our stakeholders. The
performance of the Board and Board
Committees and of each of the Directors
individually is measured against these
expectations.
Key roles
Responsibilities
Chairman
Responsible for leading the Board, its effectiveness and governance.
The Chairman is also responsible for the following matters pertaining to the
leadership of the Board:
• Being the ultimate custodian of
• Ensuring that Directors are
shareholders’ interests.
• Ensuring appropriate Board
composition and succession.
• Ensuring effective Board processes.
• Setting the Board’s agenda.
• Attends meetings with major
shareholders to obtain an
understanding of their issues and
concerns, ensuring effective
communication with them.
properly briefed in order to take a
full and constructive part in Board
and Board Committee discussions.
• Ensuring constructive relations
between Executive and
Non-executive Directors.
• Being the designated Director for
ESG and sustainability matters, in
particular climate-related issues.
Chief
Executive
Officer
Responsible for the formulation of strategy, and the operational and financial
business of the Group.
The CEO is also responsible for the following matters:
• Formulating strategy proposals for
• Leading executive management in
the Board.
• Formulating annual and medium-
term plans, charting how
this strategy will be delivered.
• Apprising the Board of all matters
which materially affect the Group
and its performance, including any
significantly underperforming
business activities.
order to enable the Group’s
businesses to meet the
requirements of shareholders.
• Ensuring adequate, well-motivated
and incentivised management
resources.
• Ensuring appropriate succession
planning.
• Ensuring business processes for
long-term value creation.
The roles of the Chairman and the CEO are quite distinct from each other and are
clearly defined in written terms of reference. They do collaborate and have a close
working relationship.
Senior
Independent
Director
• Works closely with the Chairman,
acting as a sounding board and
providing support.
•
• Acts as an intermediary for other
Directors as and when necessary.
Is available to shareholders and other
NEDs to address any concerns or
issues they feel have not been
adequately dealt with through the
usual channels of communication.
• Meets at least annually with the
NEDs to review the Chairman’s
performance and carries out
succession planning for the
Chairman’s role.
• Attends sufficient meetings with
major shareholders to obtain a
balanced understanding of their
issues and concerns.
Keller Group plc Annual Report and Accounts 2021
Governance
81
Key roles
Responsibilities
Chief
Financial
Officer
Responsible for financial management and control, budgeting and forecasting,
tax and treasury and investor relations.
The CFO is also responsible for the following matters:
• Adherence within the company to all
applicable accounting standards.
Internal financial controls within the
company.
•
• Oversight of the company’s
financial functions and staffing
including motivation, development
and succession.
• Custodian of the Group’s financial
• Maintaining adequate financial
resources.
liquidity and ensuring the viability
and resilience of the Group.
Group
Company
Secretary and
Legal Advisor
• Ensures good information flows to
the Board and its Committees and
between senior management and
NEDs.
• Advises on evolving standards and
supports the Chairman on the
continuing development of the
Board.
• All Directors have access to their
advice and services.
• Responsible for ensuring that the
• Their appointment and resignation
is a matter for consideration by the
Board as a whole.
Board operates in accordance with
the governance framework it has
adopted and that there are effective
information flows to the Board and
its Committees and between senior
management and the NEDs.
Committee
Chairs
Responsible for the effectiveness of each Committee and individual member
Directors.
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Keller Group plc Annual Report and Accounts 2021
Governance
Board composition, succession and evaluation
Nationality (%)
Board composition
British
Other
57%
43%
Gender (%)
Female
Male
57%
43%
Length of tenure (%)
1–3 years
4–6 years
7–9 years
57%
29%
14%
Number of Board members
with relevant experience
Oil and Gas
Technology
Construction
Engineering
3
5
5
5
Number of Board members with
relevant international experience
Americas
Europe
Middle East
Africa
Asia Pacific
6
7
4
3
5
Data as at 31 December 2021
At the beginning of 2021, the structure of the
Board Committees and their operation were
considered by the Board and, in recognition of
the increased focus on Environmental, Social and
Governance (ESG) matters, were realigned and
reconstituted from May 2021 to allow more
focus on Keller’s ESG priorities.
More information can be found in the ESG and
sustainability section of this report.
Board diversity
Building on the work of our Group-wide Inclusion
Commitments, our Board Diversity Policy has
been in place since January 2021.
In 2021, Keller’s Board of Directors had a 57%
female share (2020: 44%), meeting the
Hampton-Alexander Review target of 33%
female share of Board Directors by 2020.
With the appointment of Juan G. Hernández
Abrams to the Board from 1 February 2022, we
also meet the Parker Review target with one
Board Director from an ethnic minority
background by 2022.
The selection of candidates to join the Board
continues to be made based on merit and the
individual appointee’s ability to contribute to the
effectiveness of the Board, which in turn is
dependent on the pool of candidates available.
All appointments and succession plans will seek
to promote diversity of gender, ethnicity, skills,
background, knowledge, international and
industry experience and other qualities.
Our commitment to equality, diversity and
inclusion aligns with our values of integrity,
collaboration and excellence and is underpinned
by our Inclusion Commitments.
The Board is committed to promoting equality,
diversity and inclusion in the boardroom, to
ensure all are able to contribute to Board
discussions, and aims to meet industry targets
and recommendations wherever possible. This
includes our objective of meeting the diversity
targets recommended by the Hampton-
Alexander Review and Parker Review.
The Board, supported by the Nomination and
Governance Committee, is also committed to:
•
•
ensuring that the Board is comprised of a
good balance of skills, experience, knowledge,
perspective and varied backgrounds;
only engaging search firms who are signed up
to the Voluntary Code of Conduct for
Executive Search Firms;
• ensuring that Board appointment ‘long lists’
will be inclusive according to the widest
definition of diversity;
•
•
considering candidates for Non-executive
Director Board appointments from a wide
pool, including those with no listed company
board-level experience; and
reporting annually on the diversity of the
executive pipeline as well as the diversity of the
Board.
The annual evaluation of the Board effectiveness
considers the composition and diversity of the
Board.
We also aim to develop a strong pipeline of
diverse candidates for executive Board roles and
for the Executive Committee with a goal of
ensuring that it is made up of an appropriate
balance of skills, experience and knowledge
required to effectively oversee the management
of the company in the delivery of its strategy.
Our gender diversity statistics across the Group
are shown on page 56.
Board evaluation and review of the
Chairman’s performance
The 2021 Board evaluation was conducted by
Donata Denny, Leadership Coach and
Professional Development Advisor.
Building on the 2020 Board evaluation, feedback
of the performance of the Board as a whole and
its Committees, the Board’s 2021 Strategy Day,
and the Chairman and individual Directors was
sought from the Board and, in the case of the
Chairman, also from key external advisers.
Feedback on the Board and its Committees and
the Board’s 2021 Strategy Day was reviewed at
the Board’s meeting in January 2022. Individual
feedback sessions for the Directors with the
Chairman, and feedback on the Chairman, will be
carried out in the first quarter of 2022.
The evaluation of the Chairman and his
performance in 2021 will be led by Baroness
Kate Rock, the Senior Independent Director.
Participants provided full and frank feedback
and reported that the dynamics of the Board
continued to improve and progress over the
year with recognition that this was an ongoing
process.
The new Board Committees’ structure,
membership and operation were felt to be
working well and, in particular, the Chair of each
Committee received praise from the members
for their role and effectiveness.
Whilst the 2021 Board Strategy Day was felt to be
the best for a number of years, suggestions for
further improvement of the event were fed back
to the Executive Directors and the Group
Company Secretary and Legal Advisor.
Keller Group plc Annual Report and Accounts 2021
Governance
83
The Company expects to update shareholders
on the progress made in relation to the matters
identified above in its 2022 annual report.
The Chairman has confirmed that the Directors
standing for election and re-election at this
year’s AGM continue to perform effectively and
to demonstrate commitment to their roles.
Board development
On appointment, Directors are provided with
induction training and information about the
Group, the role of the Board and the matters
reserved for its decision, the terms of reference
and membership of the Board Committees and
the latest financial information about the Group.
This is supplemented by meetings with the
company’s legal and other professional advisers,
and, where appropriate, visits to key locations
and meetings with certain senior executives to
develop the Directors’ understanding of the
business.
Throughout their period of office, Non-executive
Directors are continually updated on our
business, markets, social responsibility matters
and other changes affecting the Group and the
industry in which we operate, including changes
to the legal and governance environment and the
obligations on themselves as Directors. Specific
updates this year revolved around ESG and TCFD
and were provided by the Keller Sustainability,
Risk and Company Secretariat teams.
Information and support
The Board and Committees are satisfied that
they receive sufficient, reliable and timely
information in advance of meetings and are
provided with all necessary resources and
expertise to enable them to fulfil their
responsibilities and undertake their duties in
an effective manner.
The Chairman and the Group Company
Secretary and Legal Advisor keep under review
the forward agendas for the Board and the
content and construct of management papers to
allow for greater focus by the Board as a whole on
strategic matters and avoiding unnecessary
operation detail.
For each Board and Committee meeting,
Directors are provided with a tailored Board pack
in advance of the meeting. To improve the
delivery and security of meeting papers, we use
an electronic system that allows the Board to
easily access information, irrespective of
geographic location. Directors regularly receive
additional information between Board meetings,
including a monthly Group performance update
which from 2022 will include carbon reduction,
gender DEI and good governance performance.
If a Director is unable to attend a meeting, they
are provided with all the papers and information
relating to that meeting and have the opportunity
to discuss issues arising directly with the
Chairman and Chief Executive Officer.
Accountability
Internal controls
The Board is ultimately responsible for the
Group’s system of internal control and for
reviewing its effectiveness. However, such a
system is designed to manage, rather than
eliminate, the risk of failure to achieve business
objectives, and can provide only reasonable, not
absolute, assurance against material
misstatement or loss.
The Board confirms that there is an ongoing
process for identifying, evaluating and managing
the principal risks faced by the Group, which has
been in place for the year under review and up to
the date of approval of the Annual Report and
Accounts. This process is regularly reviewed by
the Board and accords with the guidance of the
Financial Reporting Council.
Details on the identification and evaluation of
risk, as well as on the management of project
risk, can be found in the section headed Principal
risks and uncertainties on pages 32 to 41.
The key elements of the Group’s system of
internal controls are explained in the Audit and
Risk Committee report on page 94.
The management of financial risks is described
in the Chief Financial Officer’s review on pages
26 to 31.
Board visit to HS2 site
In October 2021, the Board visited the site of
one of the ventilation shafts that services the
main tunnels running under London to and
from Euston Station.
Keller is carrying out grouting to seal off
fissures in the chalk and jet grouting to
stabilise the ground, working for the Principal
Contractor SCS (Skanska Costain Strabag
Joint Venture) as part of the S1/S2 section of
HS2. GEO-Instruments is also on the site
monitoring the adjacent infrastructure.
The picture below shows the Chairman, the
Non-executive Directors and the Chief
Executive Officer accompanied by the
President, Europe and Contracts Engineer
Kanan Garayev and Contracts Manager Sam
Cawthorne.
Information included in
the Directors’ report
Certain information that fulfils the
requirements of the Corporate governance
statement can be found in the Directors’
report in the sections headed ‘Substantial
shareholdings’, ‘Repurchase of shares’,
‘Amendment of the company’s Articles
of Association’, ‘Appointment and
replacement of Directors’ and ‘Powers
of the Directors’ and is incorporated
into this Corporate governance section
by reference.
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Keller Group plc Annual Report and Accounts 2021
Governance
Environment Committee report
Nancy Tuor Moore
Chair of the Environment Committee
The Committee will
work with management to
oversee ways of improving the
environmental performance of
the Group, and to agree priorities
that consider the needs of our
stakeholders and drive the right
behaviour.”
Composition of the Committee
Nancy Tuor Moore, Paula Bell, Eva Lindqvist,
Baroness Kate Rock, Michael Speakman, Juan
G. Hernández Abrams (from 1 February 2022)
For full biographies
See pages 70 and 71
Role of the Committee
The role of the Committee is to help the
Board of Directors fulfil its oversight
responsibilities in relation to environmental
and related sustainability matters arising out
of the activities of the Group.
Highlights of the Committee’s
activities in 2021
• Recommended new terms of reference of
the Committee to the Board.
• Approved the Group’s approach to TCFD
reporting.
• Recommended carbon targets.
• Monitored progress against the year’s
environment objectives.
• Monitored progress of the Group’s
sustainability initiatives.
• Reviewed the effectiveness of the
Committee.
• Reviewed the Committee’s priorities for
2022.
Dear shareholder
On behalf of the Board, I am pleased to present
the first report of the Environment Committee
for the year ended 31 December 2021.
A new Committee
The Committee was established in July 2021 and
assumed, where relevant, the responsibilities of
the former Health, Safety, Environment and
Quality Committee. Since then, the Board has
continued to oversee Safety and Quality via the
Chief Executive Officer and the Executive
Committee. Further information can be found in
the ESG and sustainability section of this report.
The purpose of the changes was to reflect the
growing emergence of Environmental, Social and
Governance matters and to provide greater
focus and oversight on these issues which the
Board considers of key importance.
Carbon targets and TCFD
At its first meeting in July, the Committee
approved Keller’s first net zero carbon targets for
recommendation to the Board.
These targets, covering Scopes 1 to 3, set out
Keller’s ambition to build the foundations for a
sustainable future. For more information on the
specific carbon targets and reduction initiatives,
please see the ESG and sustainability section of
this report.
The Committee also oversaw the strengthening
of Keller’s climate-related risks and opportunities
process, in line with TCFD guidance, to ensure
Keller is better equipped to manage and mitigate/
realise these key risks and opportunities.
The Committee is ideally placed to provide
Board-level governance and scrutiny of strategic,
climate-related topics.
For more information on the specific climate-
related risks and opportunities, please see page
38 in the Principal risks and uncertainties section
of this report.
Keller Group plc Annual Report and Accounts 2021
Governance
85
Public health and safety legal requirements
permitting, I look forward to meeting
shareholders who attend our AGM this year to
answer any questions on this report or on the
Committee’s activities. Shareholders are also
encouraged to email their questions to the
Committee Secretary at secretariat@keller.com.
This will be my last AGM and at that time Juan G.
Hernández Abrams will replace me as Chair of
this Committee. It has been a privilege to serve
at the Keller Board and to chair the HSEQ and the
Environment Committees.
Nancy Tuor Moore
Chair of the Environment Committee
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
CDP score
We were pleased to see that our CDP score went
up this year, from a C to a B, putting us in line with
the construction sector average and above the
global average.
This increase reflected the fact we:
• Planned to set net zero targets.
• Could account for a small proportion of our
Scope 3 emissions.
• Could explain more about our change in
emissions over 2020.
Corporate governance
The remit of the Committee is set out in its new
terms of reference which were approved during
the year and are available on the Group’s website
(www.keller.com) and on request, from the
Committee Secretary. During this financial year
we met once, with attendance at this meeting
shown on page 74. We had another meeting
scheduled for December but this had to be
rescheduled to January due to the Omicron
variant of COVID-19 outbreak in the UK.
The Committee is comprised of the independent
Non-executive Directors of the company and the
CEO. The Committee may invite members of the
senior management team to attend meetings
where it is felt appropriate and the Board
Chairman, the CFO, the Group Company
Secretary and Legal Advisor and the Engineering
and Operations Director regularly attend
meetings of the Committee.
The Committee conducted an effectiveness
review of the business covered during the year
against its terms of reference.
In addition, the Committee’s performance, and
that of its members, was evaluated in an exercise
facilitated by Donata Denny, a highly respected
Leadership Coach and Professional
Development Advisor. The Committee and its
members were found to be operating effectively.
The outcome of this exercise can be found on
pages 82 and 83.
The new Board Committees’ structure,
membership and operation, to respond to
ever-increasing ESG demands, were felt to be
working well and, in particular, the Chair of each
Committee received praise from the members
for their role and effectiveness.
Looking forward
We are a new Committee and we are still
developing our programme of work. Our
priorities for 2022 will revolve around:
• Horizon scanning on climate-related and
environmental matters, in particular the
implications of the Task Force on Nature-
related Financial Disclosures.
• Supporting the company in its progress
towards net zero.
• Assisting the Remuneration Committee in
monitoring the impact of ESG targets on
remuneration.
• Supporting the company in developing its
disclosures under TCFD, in line with the
framework we agreed this year, and working
closely with the Audit and Risk Committee
on scenario analysis.
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Keller Group plc Annual Report and Accounts 2021
Governance
Social and Community Committee report
Baroness Kate Rock
Chair of the Social and Community Committee
The Committee will continue
to ensure that our workforce
and wider stakeholders are
represented appropriately in
the Board’s decision-making
process.”
Composition of the Committee
Baroness Kate Rock, Paula Bell,
Michael Speakman, Nancy Tuor Moore, Juan G.
Hernández Abrams (from 1 February 2022)
For full biographies
See pages 70 and 71
Role of the Committee
The role of the Committee is to understand
key concerns of the workforce and wider
stakeholders, define the term ‘workforce’ in
the context of Keller, and review relevant
people, social and community policies and
practices.
We are also responsible, along with the Audit
and Risk Committee, for ensuring that the
company has policies in place to encourage,
understand and address employee concerns
and feedback.
Finally, we work closely with the
Remuneration Committee, making
recommendations to the Board on whether
Keller’s policies and practices are in line with
the purpose and values, and support the
desired culture.
Highlights of the Committee’s
activities in 2021
• Oversaw the implementation of DEI
initiatives.
• Reviewed and challenged management on
the delivery of the employee engagement
programme.
• Recommended a Charitable Giving Policy to
the Board.
• Recommended new terms of reference of
the Committee to the Board.
• Reviewed the effectiveness of the
Committee.
Dear shareholder
It is my pleasure as Chair, to present this, our first
report of the Social and Community Committee,
for the year ended 31 December 2021 on behalf
of the Board.
A new Committee
The Committee was established in July 2021 and
assumed, where relevant, the responsibilities of
the former Workforce Engagement Committee.
I continued in my role as Senior Independent
Director and designated Non-executive Director
for workforce engagement, with responsibility to
ensure that the Board engages effectively with
our workforce and understand and learns from
the views of all our stakeholders.
The purpose of the changes was to reflect the
growing emergence of environmental, social and
governance matters and provide greater focus
and oversight on these issues which the Board
considers of key importance in support of
delivering the Group’s long-term strategic
objectives and is committed to understanding and
learning from the views of all our stakeholders.
Our obligations are delivered by:
•
•
•
•
•
Ensuring that the ‘voice of the employee’
is considered within the boardroom.
Reviewing formal data and informal feedback
that has been obtained from the workforce
with management.
Regularly reviewing Keller’s HR strategy as
to its appropriateness in delivering the
strategy and supporting our values and
desired culture.
Identifying consistent themes received via
feedback from employees.
Ensuring that they are incorporated within
Keller’s updated HR strategy, along with the
introduction of any Board identified topics that
support the company’s business strategy and
desired culture.
Keller Group plc Annual Report and Accounts 2021
Governance
87
Supporting The
Brilliant Breakfast
2021
Keller supported The Brilliant Breakfast with
a donation of £5,000. Working with The
Prince’s Trust, this UK initiative aims to
change the lives of young women by
helping them gain the skills needed to
live, learn and earn.
The Julia and Hans Rausing Trust
has pledged to match fund all 2021
donations of £5,000 or over to
The Brilliant Breakfast, meaning
that Keller’s donation will allow
an incredible £10,000 of support
for young women in the UK.”
Kerry Porritt
Group Company Secretary
and Legal Advisor
In addition, the Committee’s performance,
and that of its members, was evaluated in an
exercise facilitated by Donata Denny, a highly
respected Leadership Coach and Professional
Development Advisor. The Committee and its
members were found to be operating effectively.
The outcome of this exercise can be found on
pages 82 and 83.
The new Board Committees’ structure,
membership and operation, to respond to
ever-increasing ESG demands, were felt to be
working well and, in particular, the Chair of each
Committee received praise from the members
for their role and effectiveness.
Looking forward
We are a new Committee and we are still
developing our programme of work.
As we evolve towards becoming a company that
is representative of the local communities in
which we operate, it’s essential to ensure that our
talent programmes and promotion practices
continue to be based on merit and are inclusive.
As such, one of our priorities for next year will be
talent and skills development.
I will continue to give the Board feedback on the
thoughts and ideas of our employees, ensuring
that our workforce and wider stakeholders are
represented appropriately in the Board’s
decision-making process.
Baroness Kate Rock
Chair of the Social and Community Committee
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Our Committee met once this year since
its establishment and I reported on the
Committee’s activities at the Board meeting
the following day. We had another meeting
scheduled for December but this had to be
rescheduled to January due to the Omicron
variant of COVID-19 outbreak in the UK.
The Committee’s new terms of reference can
be found on our Group website (www.keller.com)
and on request from the Committee Secretary.
Activities
Further detail on the Committee’s activities can
be found in the ESG and sustainability section of
this report, but I would like to highlight the
following topics considered during the year.
The Committee reviewed and challenged
management on the delivery of the employee
engagement programme, which comprised
focus groups led by each of the Non-executive
Directors. The themes were health, safety and
wellbeing; systems, processes and ways of
working; communications; and diversity, equity
and inclusion.
During 2021, management introduced Keller’s
Wellbeing Foundations, which focused on
equipping our workforce to be healthy and
fulfilled across five key pillars, including body,
mind, community, growth and financial security.
The Committee reviewed this framework prior
to launch.
We also designed and agreed a Charitable Giving
Policy for recommendation to the Board. Under
such policy we were proud to make a funding
contribution of £300,000 to UNICEF’s COVID-19
Vaccines Appeal. This helped UNICEF to deliver
two billion doses of vaccines by the start of 2022
for frontline health workers, social workers,
teachers and those at highest risk.
The Committee was kept abreast of the
implementation of our Diversity, Equity and
Inclusion Commitments, which continued at pace,
with a focus on investing in our workforce and
strengthening and diversifying our talent pipeline.
In line with best practice, the Committee
conducted an effectiveness review of the
business covered during the year against its
terms of reference.
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Keller Group plc Annual Report and Accounts 2021
Governance
Nomination and Governance
Committee report
Peter Hill CBE
Chairman of the Nomination
and Governance Committee
The Board is committed to
promoting equality, diversity and
inclusion in the boardroom, to
ensure all are able to contribute to
Board discussions.”
Composition of the Committee
Peter Hill CBE, Paula Bell, Eva Lindqvist,
Nancy Tuor Moore, Baroness Kate Rock, Juan
G. Hernández Abrams (from 1 February 2022)
For full biographies
See pages 70 and 71
Role of the Committee
The role of the Nomination and Governance
Committee is to recommend the structure,
size and composition of the Board and its
Committees. It is also responsible for
succession planning of the Board and
executive management, for promoting the
overall effectiveness of the Board and its
Committees, and for governance matters
in general.
Highlights of the Committee’s
activities in 2021
• Recruitment of Juan G. Hernández Abrams
as a Non-executive Director.
• Evaluation of the Board and its Committees,
the Board Strategy Day and the Chairman
and Directors.
• Continued to develop and monitor
succession plans for the Board and senior
management.
• Monitored the length of tenure of the
Non-executive Directors.
•
Reviewed and refreshed the terms of
reference of the Committee and changed
the Committee’s name to better reflect its
responsibility for governance matters.
Dear shareholder
Welcome to the report of the Nomination and
Governance Committee for the year ended
31 December 2021.
The Committee has continued to review the
balance of skills on the Board as well as the
knowledge, experience, length of service and
performance of the Directors. During the year,
we held two meetings. The attendance at the
meetings is shown on page 74.
Particular areas of focus this year included the
recruitment of a new Non-executive Director,
Juan G. Hernández Abrams, who joined the
Board with effect from 1 February 2022.
Nancy Tuor Moore, who has been on the Board
since 2014, will retire after the Annual General
Meeting in May 2022.
Board evaluation
The 2021 Board evaluation was conducted by
Donata Denny, Leadership Coach and
Professional Development Advisor. Building on
the 2020 Board evaluation, feedback of the
performance of the Board as a whole and its
Committees, the Board’s 2021 Strategy Day, and
the Chairman and individual Directors was
sought from the Board and, in the case of the
Chairman, also from key external advisers.
Feedback on the Board and its Committees and
the Board’s 2021 Strategy Day was reviewed at
the Board’s meeting in January 2022. Individual
feedback sessions for the Directors with the
Chairman, and feedback on the Chairman, will be
carried out in the first quarter of 2022.
Keller Group plc Annual Report and Accounts 2021
Governance
89
Corporate governance
The Committee’s terms of reference are
available on the Group’s website (www.keller.
com) and on request from the Group Company
Secretary and Legal Advisor. The terms of
reference were amended this year and the
name of the Committee changed to better
reflect its remit.
Only the Chairman and Non-executive Directors
are members of the Committee, and no other
person is entitled to be present at Committee
meetings. We may invite members of senior
management to attend meetings where we feel
it is appropriate, and the CEO and Group People
Director both attended certain meetings during
the year.
Our 2021 evaluation of the Committee
concluded that, consistent with the Code and
our own terms of reference, the Committee is
discharging its obligations in an effective manner.
In accordance with the requirements of the
Code, all members of the Board will seek
election/re-election at the AGM in May 2022,
with the exception of Nancy Tuor Moore, who
will retire after the AGM.
Peter Hill CBE
Chairman of the Nomination
and Governance Committee
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Our commitment to equality, diversity and
inclusion aligns with our values of integrity,
collaboration and excellence and is underpinned
by our Inclusion Commitments.
The Board is committed to promoting equality,
diversity and inclusion in the boardroom, to
ensure all are able to contribute to Board
discussions, and aim to meet industry targets
and recommendations wherever possible. This
includes our objective of meeting the diversity
targets recommended by the Hampton-
Alexander and the Parker Reviews.
In 2021, Keller’s Board of Directors had a 57%
female share (2020: 44%) meeting the
Hampton-Alexander Review target of 33%
female share of Board Directors by 2020. With
the appointment of Juan G. Hernández Abrams
to the Board from 1 February 2022, we also meet
the Parker Review target with one Board Director
from an ethnic minority background by 2022.
For further information on diversity at Board level,
as well as more generally at Keller, please see the
ESG and sustainability section of this report.
Non-executive appointments
and time commitments
When we make recommendations to the
Board regarding Non-executive Director
appointments, we will consider the expected
time commitment of the proposed candidate,
and any other existing commitments, to ensure
that they have sufficient time available to devote
to the company.
Before accepting any additional commitments,
Non-executive Directors will discuss them with
the Chairman of the Board, or in the case of
the Chairman, with the Senior Independent
Director and the CEO. Board agreement is
required to ensure that any conflicts of interest
are identified and that the individual will continue
to have sufficient time available to devote to
the company.
We welcomed the full and frank feedback
received from all participants, who reported that
Board dynamics continued to improve and
progress over the year with recognition that this
was an ongoing process. The Board Committees’
structure, membership and operation were felt
to be working well and, in particular, the Chair of
each Committee received praise from the
members for their role and effectiveness. Whilst
the 2021 Board Strategy Day was felt to be the
best for a number of years, suggestions for
further improvement of the event were fed back
to the Executive Directors and the Group
Company Secretary and Legal Advisor.
Board effectiveness and skills
As part of our work regarding Board
effectiveness, Committee activities included:
• Considering the number of Executive and
Non-executive Directors on the Board, and
whether the balance is appropriate to ensure
optimum effectiveness.
• Reviewing the balance of industry knowledge,
relevant experience, skills and diversity on the
Board.
• Assessing and confirming that all the
Non-executive Directors remain independent.
We are confident that each Director remains
committed to their role. In our view, the Board
continues to work well and benefits from an
appropriate and diverse mix of skills and industry
knowledge. Collectively, the Directors bring a
range of expertise and experience of different
business sectors to Board deliberations, and this
encourages constructive and challenging debate
around the boardroom table.
Our Committee continues to work to balance the
skills and experience of the Board members to
meet the changing needs of the business.
Having a good mix of skills plays an important role
in keeping the Board relevant and up to date with
the market.
Board diversity
In January 2021 the Board and the Nomination
Committee approved a Board Diversity Policy.
Keller’s Board Diversity Policy sets out the
approach to diversity both on the Board of
Directors of Keller Group plc and more widely
across the organisation.
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Keller Group plc Annual Report and Accounts 2021
Governance
Audit and Risk Committee report
Paula Bell
Chair of the Audit and Risk Committee
This has been another busy year
and we expect the momentum
gained will carry the progress
forward into 2022.”
Composition of the Committee
Paula Bell, Eva Lindqvist, Nancy Tuor Moore,
Baroness Kate Rock, Juan G. Hernández
Abrams (from 1 February 2022)
For full biographies
See pages 70 and 71
Role of the Committee
The Committee is responsible for overseeing
the internal risk management framework,
ensuring effective internal controls
are in place, financial and non-financial
reporting and appropriate external and
internal audit arrangements.
Highlights of the Committee’s
activities in 2021
• Continued to oversee the development of
the Group’s financial control framework.
• Monitored the implementation of the
Group’s risk management framework.
• Monitored the implementation of key business
change initiatives including Platform for
Success, new Group-wide operating model
and cyber risk review.
• Reviewed and challenged the output of
management’s assurance map to assess
controls maturity in the context of the
forthcoming audit and corporate governance
reform.
• Reviewed the company’s response to the
audit and corporate governance reform
proposals, and monitored and challenged
management plans in preparation.
• Reviewed the detailed output of the
evaluation of the external auditor, EY.
• Reviewed and challenged the
implementation of the internal audit
programme to ensure appropriate coverage
of matters of business risk.
• Reviewed and approved the results of the
Group’s annual Electronic Internal Control
Questionnaire.
• Reviewed its terms of reference and
recommended changes to the Board.
• Reviewed the effectiveness of the Committee.
Dear shareholder
On behalf of the Audit and Risk Committee, I am
pleased to present our report for the financial
year ended 31 December 2021.
The Group operates within a large, global and
fast-changing environment, which requires an
adaptive approach to assurance. The COVID-19
pandemic continued to pose challenges to
the Group so it was important to ensure that
the Group’s risk management and internal
control systems operated effectively. We
were pleased with the actions delivered by
management, in particular the focus on
working capital and cash management.
The Committee retained its focus on the
development of the risk management and
internal control systems. Being mindful of the
increasing depth of review and reporting required
of audit committees, we continued to follow a
detailed programme of work which ensured the
personnel and systems were in place to enable
the Board to perform a robust assessment of
principal and emerging risks and the Group’s
responses to them. The continued focus on risk
management activity, following the appointment
of the Group Head of Risk and Internal Audit in
2020, resulted in a more integrated and consistent
approach to risk identification, assessment and
management across the organisation.
Throughout the year the Committee received
regular updates from management on the
development of the financial control
environment and systems of internal control.
The Committee remains fully committed to
championing good financial and risk reporting
and to ensuring we have in place an effective
internal control framework. The internal and
external assurance programmes operated
effectively during 2021.
The Committee ensured that the internal audit
programme delivered appropriate coverage of all
areas of business risk and reviewed an
assessment of the internal auditor to ensure that
the services provided continued to provide
required assurance.
The Committee reviewed the output of a
detailed assessment of the external auditor. The
external auditor was deemed to be effective and
development points were noted that ensured a
more efficient process for the audit of the 2021
year-end accounts.
In addition, during the year we devoted a lot of
time to consider the BEIS consultation,
‘Restoring Trust in Audit and Corporate
Governance’, and reviewed the company’s
response and preparation plans. We also
supported management in addressing the
requirements of TCFD.
This has been another busy year for the
Committee and management has worked hard
to drive improvements in the areas of risk,
internal control, financial reporting and external
audit. We are confident in the progress that has
been made and expect the momentum gained
will carry this progress forward into 2022, when
our priorities will revolve around assessing the
impact of the audit and corporate governance
reform and ensuring the company is prepared
and compliant.
Public health and safety legal requirements
permitting, I look forward to meeting
shareholders who attend our AGM this year to
answer any questions on this report or on the
Committee’s activities. Shareholders are
encouraged to email their questions to the
Committee Secretary at secretariat@keller.com
Paula Bell
Chair of the Audit and Risk Committee
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Keller Group plc Annual Report and Accounts 2021
Governance
91
Activities of the Committee
The Committee has an extensive agenda of
items of business, aligned with the financial
reporting cycle, focusing on the audit,
assurance and risk processes within the
business which it deals with in conjunction with
senior management, the external auditor, the
internal audit function and the financial
reporting team.
The Committee’s role is to ensure that
management’s disclosures reflect the
supporting detail provided to the Committee
or challenge them to explain and justify their
interpretation and, if necessary, re-present
the information. The Committee reports its
findings and makes recommendations to the
Board accordingly.
The Committee is supported in this role by
using the expertise of EY. In doing so it ensures
that high standards of financial governance, in
line with the regulatory framework as well as
market practice for audit committees going
forward, are maintained.
Furthermore, PwC in their role as internal
auditors contribute to the assurance process
by reviewing compliance with internal processes.
The Committee met four times during the
year, with attendance at these meetings
shown in the table on page 74, and considered
the items of business shown on the table on
the right.
The Committee also reviewed the information
presented in the Group’s preliminary
announcement, the company’s processes for
the preparation of the Annual Report and
Accounts and the outcomes of those
processes to ensure that we were able to
recommend to the Board that the 2021
Annual Report and Accounts satisfied the
requirement of being fair, balanced and
understandable. The following processes
are in place to provide this assurance:
• Coordination and review of the Annual
Report and Accounts performed alongside
the formal audit process undertaken by EY.
•
•
•
Guidance issued to contributors at an
operational level.
Internal challenge and verification process
dealing with the factual content of the
information within the Annual Report
and Accounts.
Comprehensive review by senior
management and external advisers to
ensure consistency and overall balance.
Item of business
Regular updates on management plans to effectively manage risk
pertaining to the impact of COVID-19
Regular updates on the Group’s system of internal controls and its
effectiveness
Impact of audit and corporate governance reform and plan of action,
including review of response to consultation, alignment with work under
way under the Platform for Success programme, ERP implementation
and impact on principal risks
When
At every meeting
At every meeting
July, September
and December
Progress review of the work undertaken to strengthen the financial and
business control landscape across the Group
At every meeting
Review and challenge of the output of management’s assurance map to
assess controls maturity
At every meeting
Management reports on the status of remediation actions identified
from completed internal audit reviews
At every meeting
Responses and key themes arising from the Group’s annual Electronic
Internal Control Questionnaire
At every meeting
Review of the Board delegated authorities
February
Review of the Group’s principal and emerging risks and definition of the
Group’s risk appetite
December and February
Updates on the risk management framework including oversight of
work to develop a solution to ensure compliance with TCFD
At every meeting
Cyber risk review aligned with Platform for Success
February and September
Effectiveness and scope review of the internal audit function
December and July
Regular updates on key findings from the reviews performed as part of
the 2021 internal audit programme
At every meeting
Review and approval of the programme of internal audit reviews of the
Group’s operations and financial controls for 2022, building on the
learnings from the 2021 programme and findings, which resulted in a
more operationally focused programme for the year
December
Review and approval of areas of significant accounting judgements
December and February
Management report on the process for assessing the Group’s going
concern and viability
December and February
Basis of provisioning within the Group’s captive insurance vehicle
February
Review and approval of the EY engagement letter, audit fee and their
audit plan
December and February
Scope and results review of the external audit, its quality and
effectiveness, and the independence and objectivity of EY
December and July
Group’s tax strategy review and approval for recommendation to
the Board
February
Briefings on global tax developments which impact the Group
Review of finance function resourcing and talent
As necessary
September
Updates on matters relating to ethics, fraud and compliance
At every meeting
Review and approval of the Whistleblowing Policy
Review of the Executive Directors’ expenses
Review of the Committee’s effectiveness
Review and recommendation for changes to the Committee’s
terms of reference
Interaction with the regulator
Non-audit services policy review and amendment
February
February
December
July
December
September
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Audit and Risk Committee report continued
Significant issues
The significant issues that the Committee considered during the year included those identified in the independent auditor’s report on pages 120 to 123.
They related to the financial statements and focused on the Group’s approach to key estimates and judgements in connection with:
Significant issues and judgements
How the Committee addressed these issues
Accounting for construction contracts
There has been no change to the revenue accounting policy approved in
2019 and set out in the Group Finance Standard issued in 2019. The policy
has been in effect and operational throughout 2021 and we have seen
consistent application of the revenue recognition methodology applied in
the businesses and across contract types. Significant judgements are still
required to be made on contracts for which a degree of uncertainty remains
after application of the methodology.
Carrying value of goodwill
The Group tests goodwill annually, to assess whether any impairment has been
suffered. This test is carried out in accordance with the accounting policy set
out in note 2 to the financial statements. The Group estimates the recoverable
amount based on value-in-use calculations. These calculations require the use
of assumptions, the most important being the forecast operating profits,
forecast reliability and the discount rate applied. The key assumptions used for
the value-in-use calculations are set out in note 14 to the financial statements.
Provisioning
During the year the Committee monitored revenue recorded.
This included material revenue related to contracts that were
subject to settlement agreements and variation orders. The
treatment recommended by management was in line with the
approved policy and consistent with previous practice.
The Committee considered these issues at all of its meetings
during the year and, in particular, in December 2021 and February
2022 when it agreed with management’s recommendations. The
reasonableness of the recommendations made by management
was also discussed with EY.
The Committee considered the results of impairment tests of
goodwill prepared by management at its meetings in December
2021 and February 2022. Following discussion, consultation
with EY and challenge, the Committee agreed with the
recommendations made by management.
Given the nature of the contracts undertaken by the Group, there is an
inherent risk of claims being made against one or more of the Group’s
businesses in relation to performance on specific contracts. These claims can
include risks for which the Group has external insurance coverage.
The Committee received regular updates on legal claims and
assurance was provided by the divisional legal teams who
reviewed the claims, with provisioning being assessed with
input from divisional and Group finance.
Recognition of liabilities for these claims requires judgement and coordination
between different Group functions. In particular, following the Group’s
correspondence with the FRC noted on page 94, the presentation of liabilities
expected to be covered by external insurance and any related insurance
reimbursement assets has been an area of focus. In the year the Group
has standardised the methodology used to record claims and to make
judgements on the amount of liabilities to be recognised.
The Committee was involved in the response to the FRC
queries and reviewed the related prior year restatement
disclosure as well as the updated process for valuing the
estimated settlement value of claims subject to external
insurance coverage.
Details of provisions are set out in note 23 to the financial
statements.
Non-underlying items
The disclosure of non-underlying items requires significant judgement given
that no accounting standard defines specifically what items should or what
items should not be presented as non-underlying.
Going concern
Assessing the Group’s ability to meet its obligations as they fall due in the
near term requires estimates and judgements to be made about the likely
performance of the Group. The Group, like many businesses in 2021, continued
to operate within a global economy that faced significant uncertainty caused by
the COVID-19 pandemic. Through this period, going concern received
enhanced attention from external and internal stakeholders. On each occasion
that the Group has assessed its ability to continue as a going concern,
judgements and estimates have been made on prevailing market conditions.
The Committee considered management’s presentation of
non-underlying items at its meetings in July and December
2021, and February 2022. The reasonableness of the
assumptions made by management was discussed with EY.
The Committee agreed with the recommendations made by
management.
The Committee considered the judgements and estimates
made by management in their assessment of the Group’s ability
to continue as a going concern for the period through to the
end of March 2023, a period of at least 12 months from when
the financial statements are authorised for issue, at its
meetings in July and December 2021, and February 2022.
Keller Group plc Annual Report and Accounts 2021
Governance
93
•
•
•
The level of challenge the auditor has
discussed with the management team and
their confidence on the control landscape.
Whether the auditor has met the agreed audit
plan and how it has responded to any changes
that have been required.
Feedback from key people involved in the
audit.
• The content of the auditor’s management
letter.
A detailed assessment of the amounts and
relationship of audit and non-audit fees and
services is carried out each year and we have
developed and implemented a policy regulating
the placing of non-audit services to EY. This
should prevent any impairment of
independence and ensure compliance with the
updates to the Code and revised Auditing and
Ethical Standards with regard to non-audit fees.
The approval thresholds were amended in 2021
and now any work awarded to EY, other than
audit, with a value in excess of £50,000, requires
the specific pre-approval of the Board. In 2021,
non-audit related fees paid to EY were less than
5% of the total audit fee. These relate to the
half-year report review and are considered to be
permitted services.
The external audit contract is put out to tender
at least every 10 years. As part of the review of
the effectiveness and independence of the
external auditor, we recommend the
reappointment of EY for the year ending
31 December 2022.
We confirm compliance with the provisions of the
Statutory Audit Services for Large Companies
Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014.
Internal audit
External audit
The Keller internal audit programme is risk-
based, ensuring appropriate coverage
dependent upon the size of the entity and the
perceived risks associated with that operation.
It also includes theme-based audits to review
adherence to Group policies across the
organisation.
The programme carried out by PwC during the
year consisted of 18 operational entity audits
and themed audits across 16 countries, which
together represented approximately 16% of the
Group’s revenue for the year.
The Committee received and considered reports
from PwC which detailed the progress against
the agreed work programme and the findings. In
the majority of reviews, following the successful
update and deployment of the Group Finance
Standards, findings were limited to the need for
formalising maintenance of evidence of controls
performed. Where more significant control
issues were identified, we reviewed the findings,
discussed the remediation plans with
management and received updates on the
progress of remediating the control deficiencies.
None of the control deficiencies identified are
significant in relation to the preparation of
the 2021 Annual Report and Accounts.
The audits carried out during 2021 have been
performed against updated control standards
wherever they have been issued and any
improvement actions aligned to them. The
majority of control standards are now in place
and embedded across the Group, helping to
improve the control environment and enable
early identification of potential control
breakdowns.
Overall progress has been made across business
units and we have observed a demonstrably
stronger control environment.
During the year, the Committee completed an
internal effectiveness assessment of the internal
audit function, which measured its performance
against the quality assessment criteria provided
by the Institute of Internal Auditors. The work of
the internal audit function was rated as fully
conforming.
The Committee places great importance on
ensuring there are high standards of quality and
effectiveness.
EY was appointed by shareholders at the AGM
held in May 2019. The lead EY partner during the
financial year ended 31 December 2021 was
Kevin Harkin, who had no previous involvement
with the Group in any capacity prior to
appointment.
The Committee considered the effectiveness of
the external audit process and of EY as external
auditor. This review included consideration of
comprehensive papers from both management
and the external auditor, and meetings with
management in the absence of the external
auditor. It considered matters including: the
competence of the key senior members of the
team and their understanding of the business
and its environment; the planning process;
effectiveness in identifying key risks; technical
expertise displayed by the auditor over complex
accounting matters; communicating and
resolving audit issues; timeliness of the audit
process; cost; and communication of issues and
risks to management and the Committee.
There are a number of checks and controls
in place for safeguarding the objectivity and
independence of EY. These include open lines of
communication and reporting between EY and
the Committee and, when presenting their
‘independence letter’, EY discuss with the
Committee their internal process for ensuring
independence.
We assess the effectiveness of the external audit
process on an ongoing basis, paying particular
attention to the mindset and culture, skills,
character and knowledge, quality control and
judgement of the external audit firm in their
handling of key judgements, responsiveness to
the Committee and in their commentary where
appropriate on the systems of internal control.
We hold regular private meetings with the
external auditor, during which we discuss:
•
•
How the auditor has identified and addressed
potential risks to the audit quality.
The controls in place within the audit firm to
identify risks to audit quality.
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Keller Group plc Annual Report and Accounts 2021
Governance
Audit and Risk Committee report continued
Risk management and internal
control
The Committee has a key role, as delegated by
the Board, in ensuring appropriate governance
and challenge around risk management. We also
set the tone and culture within the organisation
regarding risk management and internal control.
The Committee’s name and terms of reference
were amended in 2021 to clearly define its remit
relating to risk.
Further information on the Group’s risks can be
found on pages 32 to 41.
The system of internal control is designed both
to safeguard shareholders’ investment and the
Group’s assets, and to facilitate the identification,
evaluation and management of the significant
risks facing the Group. Key elements of the
Group’s system of internal control include:
•
•
•
•
•
•
•
An experienced and qualified finance function
which regularly assesses the possible financial
impact of the risks facing the Group.
Monthly dashboard packs reviewed by the
Executive Committee and the Board.
Detailed business unit budget reviews with
updates provided to the Board.
Regular reports to the Board on health and
safety issues.
Regular visits to operating businesses by head
office and divisional directors.
Annual completion of internal control
questionnaires by business unit management.
Reports to the Committee by PwC on the
findings of their internal audit reviews of the
controls, processes and procedures in place at
each of the Group’s in-scope units.
The Group aims to continuously strengthen its
processes, with the involvement of the
Committee, to ensure these processes are
embedded throughout the organisation. In 2021,
we worked with management to continue to
enhance the system of internal controls, defining
the following priorities and receiving updates on
their progress:
In addition, the Committee reviewed and
challenged the output of management’s
assurance map to assess controls maturity in the
context of the forthcoming audit and corporate
governance reform. This will be an area of
considerable focus for the Committee next year,
along with the implementation of the new ERP
system and its impact on principal risks.
Interaction with the FRC
During the year, the FRC included the company’s
Annual Report and Accounts for the year ended
31 December 2020 in their thematic review of
IAS 37, ‘Provisions, Contingent Liabilities and
Contingent Assets’ which resulted principally in
requesting further information in respect of
provisions for insurance and legal claims, as well
as minor observations on other areas of the
accounts.
The Group responded fully to the matters raised
in the correspondence and has restated the
relevant sections of this year’s accounts to
reflect this. The restatement impacted the
balance sheet reported in the 2020 Annual
Report and Accounts as detailed in the
accounting policies note on page 133. The FRC’s
enquiry did not result in any changes to reported
profit, earnings per share, net assets or the cash
flows reported in the 2020 financial year.
The Chair of the Committee has been involved
in reviewing the Group’s response to the points
raised and is satisfied that the matters have
been addressed effectively, with additional or
amended disclosure adopted in this year’s
Annual Report and Accounts.
In addition, during the year the FRC’s Audit
Quality Review team selected for review the audit
of the Group’s financial statements for the year
ended 31 December 2020. At the conclusion of
the review, the Committee considered the
findings and the actions taken by EY to address
the matters raised.
•
•
•
•
Continued development of the Group’s
financial control framework and setting of
minimum control standards for all areas of
financial reporting and operational finance.
Monitoring of the implementation of the
monthly sign-off checklist at each business to
certify that accounting controls have been
performed/complied with for the month.
Review of internal control questionnaires, to
identify common areas for improvement as
well as to address specific risks and direct
assurance efforts.
Mapping of the Group’s control environment
to assess controls maturity across all
functions within the Group.
Although we review the Group’s system of
internal controls, any such system can only
provide reasonable and not absolute assurance
against any material misstatement or loss.
The effects of cash and profit containment
initiatives during the COVID-19 pandemic were
reported regularly, along with scenario analysis,
to ensure that management had near real-time
understanding of the impact.
Significant progress has been made during 2021
to enhance the Group’s enterprise risk
management framework, despite the continuing
restrictions placed on us due to COVID-19.
This has included developing a process to
identify, manage, review and report on climate-
related risks and opportunities in line with TCFD
risk reporting requirements. These risks and
opportunities were then incorporated into the
existing emerging risk register as, by their nature,
the vast majority of them are emerging risks and
opportunities. This allowed the business to
review all emerging risks and opportunities
together. More information about this work can
be found in the Principal risks and uncertainties
(pages 32 to 41) and the ESG and sustainability
(pages 42 to 67) sections of this report.
Keller Group plc Annual Report and Accounts 2021
Governance
95
Corporate governance
The Committee’s terms of reference, which were
reviewed and updated during the year, are
available on our website (www.keller.com) and on
request from the Committee Secretary.
It is intended that the Committee is comprised of
at least three members, all of whom are
independent Non-executive Directors of the
company with the necessary range of financial
and commercial expertise to challenge
management. The Code requires the inclusion of
one financially qualified member (as recognised
by the Consultative Committee of Accountancy
Bodies) with recent financial expertise. Currently,
the Committee Chair fulfils this requirement.
We invite the Chairman, Chief Executive Officer,
Chief Financial Officer, Group Financial Controller,
Group Head of Risk and Internal Audit, the Group
Company Secretary and Legal Advisor, the
company’s external auditor, EY, and PwC, in their
role as internal auditor, to all meetings. On three
occasions, the Committee met privately with EY
without management being present and we also
met with PwC and the Group Head of Risk and
Internal Audit without management present.
In line with best practice, the Committee
conducted an effectiveness review of the
business covered during the year against its
terms of reference.
In addition, the Committee’s performance,
and that of its members, was evaluated in an
exercise facilitated by Donata Denny, a highly
respected Leadership Coach and Professional
Development Advisor. The Committee and its
members were found to be operating
effectively. The outcome of this exercise can
be found on pages 82 and 83.
The new Board Committees’ structure,
membership and operation, to respond to ESG
requirements, were felt to be working well and,
in particular, the Chair of each Committee
received praise from the members for their
role and effectiveness.
Collectively, the Committee has the
competence relevant to the sector as required
by the provisions of the Code, as well as the
contracting and international skills and
experience required to fully discharge its
duties. The Committee is authorised by the
Board to seek any information necessary to
fulfil these duties and to obtain any necessary
independent legal, accounting or other
professional advice, at the company’s
expense.
Looking forward
In 2022 our priorities will be:
• Assessing the final BEIS reforms, when
published, along with the company’s
proposed response to meeting the
revised requirements.
• Supporting the company in developing
the disclosures requirements under
TCFD, in particular around risk
management and scenario analysis.
• Reviewing the process for identification
and reporting of risks and the
company’s control environment.
• Supporting the company in delivering
the Platform for Success programme
and implementing the ERP system.
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Annual statement from the Chair
of the Remuneration Committee
Highlights of the Committee’s
activities in 2021
• Monitored developments in corporate
governance and market trends, including
alignment of the impact of the COVID-19
pandemic on our employees, shareholders,
customers, suppliers and other
stakeholders with 2021 executive
remuneration.
•
•
•
Consulted with shareholders and
successfully renewed the company’s
remuneration policy.
Benchmarked and assessed the
remuneration packages of the Executive
Directors and the Executive Committee.
Determined bonus outcomes for 2021 and
the vesting outcome of the 2019–21
Performance Share Plan (PSP) awards.
• Set base salaries and established Executive
Director bonus arrangements for 2022;
reviewed base salaries and bonus
arrangements for the Executive Committee
for 2022; approved 2022–24 LTIP awards to
Executive Directors and senior executives.
•
•
Reviewed the arrangements for the wider
workforce.
Reviewed its terms of reference and the
effectiveness of the Committee.
Composition of the Committee
Eva Lindqvist, Paula Bell, Baroness Kate Rock,
Nancy Tuor Moore, Juan G. Hernández
Abrams (from 1 February 2022)
For full biographies
See pages 70 and 71
Role of the Committee
The role of the Committee is to determine
and agree with the Board the framework or
broad policy for the remuneration of the
Chairman, the Executive Directors, their
direct reports and such other members of
the executive management as it is
designated to consider. In addition, the
Committee is responsible for determining
the total individual remuneration packages of
the Chairman, the Executive Directors, the
Group Company Secretary and Legal Advisor
and other senior executives.
The Committee also:
• determines the measures and targets for
annual bonus plan objectives and
outcomes for the Executive Directors,
Executive Committee and other senior
executives;
• exercises the powers of the Board in
relation to share plans;
• sets and oversees the selection and
appointment process of its remuneration
advisers;
• monitors developments in corporate
governance and, particularly, any impacts
on remuneration practices; and
• reports on its activities to shareholders on
an annual basis.
The Chair of the Committee reports on the
Committee’s activities at the Board meeting
immediately following each meeting.
Eva Lindqvist
Chair of the Remuneration Committee
Keller delivered another set of
results in 2021 which were above
market expectations.”
Contents
96 Annual statement from the
Chair of the Remuneration
Committee
98 Remuneration in context
100 Remuneration at a glance
102 Annual remuneration report
Dear shareholder
On behalf of the Committee, I am pleased
to provide an overview of Executive
Director remuneration for the year ended
31 December 2021.
2021 business performance and
incentive outcomes
Keller delivered another strong set of results in
2021 which were above market expectations.
Revenue increased to £2,224.4m, up 13% (at
constant currency) as a result of increased trading
activity, particularly during the second half, and
several bolt-on acquisitions (up 9.7% on an
organic basis). Underlying operating profit
decreased to £92.8m, a reduction of 10% at
constant currency, impacted primarily by the
COVID-19 adverse pressure on market pricing
and operational disruption across our businesses,
whilst underlying diluted earnings per share
decreased by 8% to 88.4p per share
(2020: 96.3p per share), reflecting the decrease in
operating profit and somewhat offset by a lower
tax rate reflecting the recognition of a prior year
research and development tax credit in North
America. After funding acquisitions, net debt (on
a bank covenant IAS 17 basis) was down marginally
to £119.4m, equating to net debt/EBITDA
leverage ratio of 0.8x (2020: 0.7).
Keller Group plc Annual Report and Accounts 2021
Governance
97
The targets for the 2021 annual bonus for
executive management were set by the
Committee in February of last year and remained
unchanged throughout the year. The strong and
resilient financial performance of the Group in
2021 is reflected in the 2021 annual bonus
outcomes; the financial measures, Group profit
before tax and net debt, have paid out at
maximum. The Executive Directors made
progress against their corporate objectives,
achieving 15% out of a possible 30% maximum.
Project performance diluted the other good work
in the year and will be a continued focus for the
senior management team in 2022. Overall, the
annual bonus outturn was 90% of maximum.
When determining the bonus outcome, the
Committee considered overall company
performance over the period.
Considerations included the ongoing impact
of COVID-19 on our business and the broader
market. Whilst the pandemic has continued to
pose challenges for our business and our people
like for so many other companies, our profit
and net debt performance demonstrate the
resilience of the business. We did not take
any UK furlough monies in 2021 and we have
maintained our progressive dividend levels in
2020 and 2021 to the benefit of shareholders.
During 2021, management introduced Keller’s
Wellbeing Foundations, which focused on
equipping our workforce to be healthy and fulfilled
across five key pillars, including financial security.
We continued to train our workforce on the
importance of safety and continued to improve
our accident frequency and total recordable
incident rates. The Group’s accident frequency
rate (AFR) reduced by 42% compared with 2020,
and our total recordable incident rate (TRIR)
also improved by 32%, an industry-leading
performance. The Committee fully considered
a tragic fatality at the beginning of the year that
occurred following an accident on a site in Austria
in which we lost a long-serving and valued
employee. Whilst it has been determined Keller
was not at fault for the accident, management
has continued to advance our safety programmes.
Our Social and Community Committee agreed
a Charitable Giving Policy, under which we
were proud to make a funding contribution
of £300,000 to UNICEF’s COVID-19 Vaccines
Appeal. This helped UNICEF to deliver two billion
doses of vaccines by the start of 2022
for frontline health workers, social workers,
teachers and those at highest risk. The
implementation of our Diversity, Equity and
Inclusion Commitments continued, with a
focus on investing in our workforce as well as
strengthening and diversifying our talent pipeline.
As we evolve towards becoming a company that
is representative of the local communities in
which we operate, it’s essential to ensure that
our talent programmes and promotion practices
continue to be based on merit and are inclusive.
After considering all the relevant factors for the
2021 bonus, the Committee’s view was that the
outcome was fair and appropriate from both a
performance perspective and also taking into
account the wider stakeholder experience.
Therefore no discretion was exercised.
The performance of the LTIP granted to
executives in 2019 and vesting in March 2022
was improved from the previous LTIP cycle.
The continued impact of the weak financial
performance in 2018 on the company’s share
price in that year, driven primarily by poorly
performing contracts in the APAC Division,
meant that the EPS targets were not met
during the performance period. However, the
TSR element vested at near maximum and there
was partial vesting under the ROCE element.
Therefore, overall, the 2019 LTIP awards vested
at 36.6% of maximum.
Shareholders will recall that, prior to the
company’s 2019 AGM, ISS proxy advisers
highlighted that the number of shares awarded
to Executive Directors were not being scaled
back in recognition of the fall in the Company’s
share price during 2018. We engaged with a large
number of our major shareholders as a result and
the Committee undertook that, at the time of
vesting of the 2019 award, it would make a
determination as to whether to use its discretion
to reduce vesting levels as appropriate.
Against this background, the Committee
carefully considered the vesting levels of the
2019 award, with additional reference to both
the shareholder and wider workforce experience.
It also specifically considered share price
movements and was satisfied that there had
been no inappropriate windfall gains over the
period. The Committee determined that the LTIP
outcome fairly and appropriately reflected
performance over the three years and no
discretion was exercised.
2022 salary review
Salary increases for UK-based employees across
the Group were generally around 4%, effective 1
January 2022. Michael Speakman, CEO, and David
Burke, CFO, were awarded salary increases of 3%.
As additional context, the CEO and CFO are
already aligned with the wider workforce
pension rate of 7% of salary.
2021 policy and shareholder
consultation
The Committee was grateful to shareholders for
the time they gave to the 2021 policy consultation
which helped to facilitate a more robust decision-
making process. All of our major shareholders
were supportive of the proposals put forward with
over 90% of votes in favour of the new policy.
Year ahead: 2022 annual bonus plan
and LTIP metrics
As set out last year, management’s focus will be
on driving value by focusing on, and investing in,
our key markets and the sustainability of
operating profits and enhanced margins, whilst
maintaining a robust balance sheet.
In our half-year results for 2021, the company
committed to ambitious net zero targets for all
three of our emission scopes which will culminate
in carbon neutrality by 2050 at the latest. In
recognition of the importance of achieving these
goals, we have agreed a Scope 2 reduction target
as one of management’s corporate objectives
for 2022. Further detail on the 2022 corporate
objectives will be disclosed in the 2022 Annual
remuneration report.
Last year we agreed a refreshed set of four
measures for the 2021 LTIP that we believe
support the delivery of the strategy. These
measures have been carried forward into 2022
and, together with the targets for the LTIP for
the year ahead, are disclosed in the 2021
Directors’ remuneration report. See page 104
for further details.
2022 Annual General Meeting
We very much hope that you will support our
2021 Annual report on remuneration at the AGM
in May. I will be available at the AGM to answer any
questions you may have about our work. Please
also feel free to email your questions to the
Group Company Secretary and Legal Advisor
at secretariat@keller.com and we will respond
to them directly.
Eva Lindqvist
Chair of the Remuneration Committee
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
98
Keller Group plc Annual Report and Accounts 2021
Governance
Remuneration in context
The Committee sets the Remuneration Policy for
Executive Directors and other senior executives,
taking into account the company’s strategic
objectives over both the short and the long term
and the external market.
Shareholder views
The Committee engages proactively with the
Company’s major shareholders and is committed
to maintaining an open dialogue. The Committee
reviews any feedback received from shareholders
as a result of the AGM process. Committee
members are available to answer questions at
the AGM and throughout the rest of the year.
The Committee takes into consideration the
latest views of investor bodies and their
representatives, including the Investment
Association, the Pension and Lifetime Savings
Association and proxy advice agencies such as
Institutional Shareholder Services.
Remuneration principles
We strongly believe in fair and transparent reward
throughout the organisation and when making
decisions on executive remuneration the
Committee considers the context of wider
workforce remuneration. This section shows how
the 2018 Code is embedded in our remuneration
principles and how they are cascaded throughout
the organisation. The diagram on the following
page shows how the policy is aligned with the
factors set out in Provision 40, and how our
principles and policy are aligned with the
2018 Code.
The Committee addresses the need to balance
risk and reward. The Committee monitors the
variable pay arrangements to take account of risk
levels, ensuring an emphasis on long-term and
sustainable performance. The Committee
believes that the incentive plans are appropriately
managed and that the choice of performance
measures and targets does not encourage
undue risk-taking by the Executives so that the
long-term performance of the business is not
compromised by the pursuit of short-term value.
The plans incorporate a range of internal and
external performance metrics, measuring both
operational and financial performance over
differing and overlapping performance periods,
providing a rounded assessment of overall
company performance.
Linkage to all-employee pay
The Committee reviews changes in
remuneration arrangements in the workforce
generally as we recognise that all our people play
an important role in the success of the company.
Keller is committed to creating an inclusive
working environment and to rewarding our
employees throughout the organisation in a fair
manner. In making decisions on executive pay,
the Committee considers wider workforce
remuneration and conditions to ensure that
they are aligned on an ongoing basis.
As part of our commitment to fairness, we have a
section in this report (see ESG and sustainability)
which sets out more information on our wider
workforce and our diversity initiatives. We
recognise there is always an opportunity to
improve in relation to these issues.
Keller Group plc Annual Report and Accounts 2021
Governance
99
Our purpose: Building the foundations for a sustainable future
Embedding our purpose and
vision in our remuneration
guiding principles
• Support our purpose, values and our
wider business goals.
• Drive long-term sustainable performance
for the benefit of all our customers,
shareholders and wider stakeholders.
• Be simple, transparent and easily
understood by internal and external
stakeholders.
• Attract, motivate and retain all our
employees with diverse backgrounds,
skills and capabilities.
How we address the requirements under Provision 40
Cultural alignment and proportionality
Simplicity, clarity and predictability
• The Committee ensures that the overall
reward framework embeds our purpose
and values.
• The Committee ensures the highest
standards of disclosure to our internal
and external stakeholders.
• The Committee reviews the executive
reward framework regularly to ensure it
supports the company’s strategy.
• The Committee makes decisions on
executive pay in the context of all
employees and the external environment.
Proportionality and risk
Cultural alignment and risk
• A significant proportion of remuneration
is delivered in variable pay linked to
corporate performance.
• Performance measures/targets for
incentives are objectively determined.
• Outcomes under incentive plans are
based on holistic assessment of
performance.
• The Committee ensures that a significant
portion of reward is equity-based and
thereby linked to shareholder return.
• Executives are required to build significant
personal shareholdings in the Company
and this is regularly monitored by the
Committee.
Clarity
The Committee ensures that Executives are
provided with a remuneration opportunity
which is competitive against companies of a
similar size and complexity, with a strong
emphasis on the variable elements.
Alignment of the policy to the provisions of the 2018 Code
Clarity:
The company’s performance remuneration is based on supporting the implementation of the company’s strategy measured
through KPIs which are used for the annual bonus and LTIP. This provides clarity to all stakeholders on the relationship between the
successful implementation of the company’s strategy, including its sustainability framework, and the remuneration paid.
Simplicity:
The policy includes the following:
• setting defined limits on the maximum awards which can be earned;
• requiring the deferral of a substantial proportion of the incentives in shares for a material period of time, helping to
ensure that the performance earning the award was sustainable, and thereby discouraging short-term behaviours;
• aligning the performance conditions with the agreed strategy of the company as well as our sustainability and net zero
carbon ambitions;
• ensuring a focus on long-term sustainable performance through the LTIP; and
• ensuring there is sufficient flexibility to adjust payments through malus and clawback and an overriding discretion to
depart from formulaic outcomes, especially if it appears that the behaviours giving rise to the awards are inappropriate
or that the criteria on which the award was based do not reflect the underlying performance of the Company.
Predictability:
Shareholders are given full information on the potential values which can be earned under the annual bonus and LTIP plans on their
approval. In addition, all the checks and balances set out above under ‘Risk’ are disclosed at the time of shareholder approval.
Proportionality: The company’s incentive plans clearly reward the successful implementation of the strategy and our environmental ambitions, and
through deferral and measurement of performance over a number of years ensure that the Executives have a strong drive to ensure
that the performance is sustainable over the long term. Poor performance cannot be rewarded due to the Committee’s overriding
discretion to depart from the formulaic outcomes under the incentive plans if they do not reflect underlying business performance.
Alignment
to culture:
A key principle of the company’s culture is a focus on our stakeholders and their experience; this is reflected directly in the type of
performance conditions used for the bonus. The focus on long-term sustainable performance is also a key part of the company’s
culture. In addition, the measures used for the incentive plans are measures used to determine the success of the implementation
of the strategy.
100
Keller Group plc Annual Report and Accounts 2021
Governance
Remuneration at a glance
Overview of Remuneration Policy – How Executive Directors will be paid in future years
Shareholders approved a revised policy at the 2021 AGM, full details of which can be found in our 2020 annual report. An overview of our policy and how it
is proposed to apply in 2022 is set out below:
Fixed pay
Attract and retain high-calibre
individuals needed to execute
and deliver on the Group’s
strategic objectives.
Annual bonus
Rewards achievement of
short-term financial and
strategic targets.
Remuneration in 2022
Salary
CEO: £588,300 – 3% increase from 2021, below salary increases awarded to UK-based employees of 4%
CFO: £386,250 – 3% increase from 2021, below salary increases awarded to UK-based employees of 4%
Pension 7% of salary – aligned with the wider workforce rate
Benefits Includes car allowance, private health care and life assurance and long-term disability insurance
Cash
element
25% of bonus deferred into
shares for two years
Maximum opportunity – up to 150% of salary.
Awards subject to malus and clawback.
2022 bonus metrics:
• 60% PBT
• 20% Net debt
• 20% Corporate objectives
Performance share plan (PSP)
Focus on delivering value
creation for shareholders
and sustainable financial
performance for the company
over the long term.
3-year performance
period
2-year holding
period
Maximum opportunity – up to 150% of salary.
For 2022, CEO will receive 150% of salary and
CFO will receive 125% of salary.
Awards subject to malus and clawback
2022 PSP metrics:
Aligned with our strategy
• 25% Cumulative EPS
• 25% ROCE
• 25% Relative TSR
• 25% Operating margin
✓
✓
✓
Aligned with shareholders
Aligned with strategic KPIs
Drives quality and
sustainable performance
Shareholding guideline
Guideline applies in post,
and extends beyond tenure
In-post guideline: 200% of salary
Post-employment guideline: 100% of in-post
shareholding (or actual shareholding if lower) in
year 1 and at least 50% in year 2
Policy
Introduced
Formalised
The policy approved in 2021
introduced or formalised a
number of good governance
features in line with evolving best
practice.
• Post-employment shareholding requirement
• Discretion for the Committee to override
• Malus and clawback policy
• Alignment of Executive Directors’ pensions
formulaic outcomes
to the general workforce rate
• Mitigation measures in service contracts
• Settlement of deferred bonus and dividend
equivalents in shares
Keller Group plc Annual Report and Accounts 2021
Governance
101
Remuneration for 2021 – What Executive Directors earned during 2021
Overall our TSR performance over 2021 was 47%, compared to the FTSE 250 returning 18% and the FTSE All-Share also returning 18%.
150
140
130
120
110
100
90
31 Dec 20
31 Mar 21
30 June 21
30 Sep 21
31 Dec 21
Keller
FTSE 250
FTSE All -Share
Annual bonus
PBT, £m
Weighting
60%
Threshold
62.6
Target
69.5
Max
76.5
Performance outcome: 82.81
Net debt (IAS 17 basis), £m
20%
123.5
112.3
101.1
Performance outcome: 92.51
Corporate objectives
20%
Summary of objectives on page 103
Actual: 50% of max
Overall
PSP (2019–21)
EPS
TSR
ROCE
Overall
Weighting
50%
25%
25%
Threshold
300p
Max
345p
Actual: 270.6p
Median
Upper quartile
Actual: marginally below upper quartile
14%
20%
Actual: 16.2%2
1 At 2021 actual exchange rates, before non-underlying items, adjusted for acquisitions.
2 Average of the three-year ROCE for 2019–21.
Outcome
(% of max)
100%
100%
50%
90%
Outcome
(% of max)
0%
94%
52.5%
36.6%
102
Keller Group plc Annual Report and Accounts 2021
Governance
Annual remuneration report
The following section provides details of how Keller’s Remuneration Policy was implemented during the financial year ended 31 December 2021.
Single total figure of remuneration for Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Executive Director for the financial years ended 31 December 2020
and 2021:
Salary
Taxable benefits1
Pension benefits2
Total fixed pay
Annual bonus3
PSP4
Total variable pay
Total pay
Michael Speakman
David Burke
EXECUTIVE DIRECTORS
2021
£000
571
14
40
625
771
295
1,066
1,691
2020
£000
560
14
37
611
784
40
824
1,435
2021
£000
375
20
26
421
506
0
506
927
2020
£000
84
5
6
95
117
_
117
212
1 Taxable benefits consist primarily of a car allowance of £12,000 and £18,000 for Michael Speakman and David Burke respectively.
2
3
4
Pension benefits represent cash in lieu of pension for Michael Speakman. David Burke’s pension contribution is paid into a private SIPP.
The annual bonus represents the value of the bonus receivable in respect of the Group’s annual bonus plan for the relevant financial year. 25% of the bonus shown above will be deferred into Keller
shares for a period of two years.
For the PSP, the value shown for 2021 reflects the final vesting outcome of the 2019 PSP award with performance measured over the three-year performance period 1 January 2019 to 31 December
2021. The final vesting outcome of the 2019 PSP award was 36.6% of maximum. The value of the award was calculated using a three-month average closing share price to 31 December 2021 of 921.6p.
See page 104 for further details. The 2019 award will vest on 8 March 2022. Using the average closing share price to 31 December 2021, the price appreciated from the date of the award.
Total pension entitlements (audited)
Michael Speakman and David Burke’s pension rate has been set at 7% of base salary in line with the contribution rate provided to the majority of the UK
workforce. The Committee keeps the pension entitlement of the Executive Directors under review in the context of any changes in pension provision
across the Group.
2021 annual bonus
The 2021 annual bonus was based 80% on the achievement of stretching profitability and net debt targets and 20% on individual corporate objectives
aligned to the delivery of key strategic and operational priorities. Overall, the bonus outcome for 2021 was 90% of the maximum payout, for each
Executive Director, based on performance as set out below.
Measures
Group PBT, £m
Group net debt (IAS 17 basis), £m
Total Group measures
Corporate objectives assessment
Total bonus
Base salary
Bonus based on performance outcomes
2021 measurement ranges and outcome
Threshold
0%
62.6
123.5
Target
50%
69.5
112.3
Maximum
100%
Performance
outcome1
76.5
101.1
82.8
92.5
Bonus as % of salary
EXECUTIVE DIRECTORS
Michael Speakman
David Burke
Max
Outcome
Max
Outcome
90%
30%
120%
30%
150%
100%
20%
120%
15%
135%
100%
20%
120%
30%
150%
100%
20%
120%
15%
135%
£571,200
£375,000
135%
£771,120
135% £506,250
1 At 2021 actual exchange rates, before non-underlying items, after adjusting for acquisitions.
Keller Group plc Annual Report and Accounts 2021
Governance
103
Corporate objectives
Corporate objectives are measurable deliverables that are jointly shared by the Executive Directors and the Executive Committee and are focused on
supporting the delivery of Keller’s key strategic activities. The Committee determined that this was an appropriate basis to incentivise management to
increase collaboration on strategic activities. Each category of the corporate objectives has a maximum of 9% of base salary that can be attained, with an
overall maximum of 30% of base salary available (20% weighting of total annual bonus plan for Executive Directors). The Committee retains the right to
apply discretion to the overall evaluation of the attainment of corporate objectives.
2021 annual bonus outcomes
The financial targets for Keller were met in full in 2021.
The objective scoring by the Committee for performance in 2021 against corporate objectives resulted in an outcome of 15% of salary. Project
performance diluted the other good work in the year and will be a continued focus for the senior management team in 2022.
As described in the Chair’s letter, the Committee considered all relevant factors when determining the level of bonus payout and concluded that it was
appropriate for the financial targets to pay out in full and the corporate objectives to pay out at half of maximum.
Corporate objective
Margin enhancement
Maintaining the operating
margin of the North America
Foundations businesses during
the course of the pandemic
Loss making projects (LMP)
Portfolio
Strategic restructuring of the
European Division
Opportunity (maximum)
Actual performance
6.0% of base salary
Despite the impact of the pandemic on bidding and execution of work
in the North America Foundations business in 2021, margin improved
against that of 2020.
9.0% of base salary
LMP performance did not meet the target for the year.
6.0% of base salary
The divisional headquarters were successfully rationalised to meet
the requirements of the newly formed division. Further progress on
rationalisation of the portfolio was completed with the merger of two
business units; however, the full programme wasn’t fully completed in
the year.
A number of activities took place during 2021 to strengthen the
Group’s global governance standards and systems as the business
develops and prepares to implement a Group-wide operating model
and the enhancement of the Group’s policies and standards.
The InSite safety system, already deployed successfully across the
North America Division, successfully continued its global roll out
across Europe and AMEA, marking a cultural and behavioural shift
across the business.
Strengthening the Group’s
global governance standards
and systems
9.0% of base salary
Attainment as assessed
by the Committee
Discretion applied
Final outcome
Outcome
(maximum 30%)
4.0%
0.0%
4.0%
7.0%
15% achieved
0% reduction
15% achieved
104
Keller Group plc Annual Report and Accounts 2021
Governance
Annual remuneration report continued
2019–21 Performance Share Plan (PSP) outcomes (audited)
Based on EPS and TSR performance over the three years ended 31 December 2021, the PSP awards made in 2019 will vest as follows:
Measures
50% weight
Cumulative earnings per share (EPS) over three years1
25% weight
Keller’s TSR ranking relative to the constituents of the
FTSE 250 comparator index2
25% weight
ROCE over three years4
Total vesting
Vesting schedule and outcome3
% of award that will vest
0%
25%
100%
Outcome
Vesting %
Below 300p
300p
345p
270.6p
0%
Less than
median
Median
Upper quartile
or higher
Marginally below
upper quartile
Below 14%
14%
20%
16.2%
23.5%
13.1%
36.6%
1
2
3
EPS is before non-underlying items on an IAS 17 basis.
Excluding investment trusts and financial services.
The Group adopted IFRS 16 on 1 January 2019, as disclosed in note 2 to the consolidated financial statements, and comparative financial measures have not been restated. The outcomes have been
prepared on the basis of IAS 17, the previous leasing standard.
4 Average of the three-year ROCE for 2019–21.
Shareholders will recall that, prior to the company’s 2019 AGM, ISS proxy advisers highlighted that the number of shares awarded to Executive Directors
were not being scaled back in recognition of the fall in the Company’s share price during 2018. We engaged with a large number of our major shareholders
as a result and the Committee undertook that, at the time of vesting of the 2019 award, it would make a determination as to whether to use its discretion
to reduce vesting levels as appropriate. Against this background, the Committee carefully considered the vesting levels of the 2019 award, with additional
reference to both the shareholder and wider workforce experience. It also specifically considered share price movements and was satisfied that there had
been no inappropriate windfall gains over the period. The Committee determined that the LTIP outcome fairly and appropriately reflected performance
over the three years and no discretion was exercised.
In line with the policy, the Committee has the ability to exercise malus and clawback with regard to incentive awards in certain circumstances as outlined in
the policy. Overall, the Committee considers that the policy has operated as it was intended during 2021.
Scheme interests awarded in 2021 (audited) 2021–23 PSP
The three-year performance period over which performance will be measured began on 1 January 2021 and will end on 31 December 2023. Awards will
vest in March 2024, subject to meeting performance conditions. Awards were made as follows:
Executive Director
Michael Speakman
David Burke
Date of grant
15 Mar 21
15 Mar 21
Shares over which
awards granted
102,858
56,273
Market price
at award (£)
8.331
8.331
Face value of the
award at grant
Face value at
threshold (£)
Face value at
maximum (£)
150% of salary
214,202
125% of salary
117,189
856,807
468,754
Performance period
1 Jan 21–31 Dec 23
1 Jan 21–31 Dec 23
1 The average of the daily closing price on 10, 11 and 12 March 2021 of the company’s shares on the main market of the London Stock Exchange.
Keller Group plc Annual Report and Accounts 2021
Governance
105
Vesting of the 2021–23 Performance Share Awards is subject to achieving the following performance conditions:
Measures
25% weight
Cumulative EPS over three years1
25% weight
Vesting schedule
% of award that will vest
25%
245p
0%
Below 245p
100%
310p
Keller’s relative TSR performance vs FTSE 2502 Index over three years
25% weight
Below median
Median
Upper quartile
Average ROCE over three years
25% weight
Operating profit margin in year three
1
2
EPS and ROCE are before non-underlying items on an IFRS 16 basis.
Excluding investment trusts and financial services.
Below 12%
Below 5.2%
12%
5.2%
18%
6.2%
To reflect the impact of any changes in IFRS accounting standards, the Committee will consider adjusting financial targets appropriately for all subsisting
PSP awards, ensuring that they are not materially easier or harder to satisfy than the original targets. Any amended targets determined by the Committee
will be disclosed to shareholders in the next Directors’ remuneration report.
Directors’ interests (audited information)
The table below sets out the beneficial interests of the Directors and their families in the share capital of the company as at 31 December 2021. None of
the Directors has a beneficial interest in the shares of any other Group company. There have been no changes in the Directors’ interests in shares since
31 December 2021 and the date of this report.
Director
Michael Speakman
David Burke
Peter Hill
Nancy Tuor Moore
Eva Lindqvist
Kate Rock
Paula Bell
Ordinary shares at
31 December 2021
Ordinary shares at
31 December 2020
44,280
4,872
53,000
3,000
–
2,500
1,581
40,000
–
53,000
3,000
–
2,500
1,581
Executive Directors’ shareholding guideline (audited information)
The table below shows the shareholding of each Executive Director against their respective shareholding guideline as at 31 December 2021.
Shares held
Awards held1
Owned outright or vested
Unvested and subject to
performance conditions
Unvested without
performance conditions2
Shareholding guideline %
salary/fee
Current shareholding %3
salary/fee
Michael Speakman
David Burke
44,280
4,872
309,913
58,621
29,762
3,669
200%
200%
76%
13%
1 Dividend accruals are included in these numbers.
2 Deferred awards.
3 Reflects closing price on 31 December 2021 of 985p.
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Annual remuneration report continued
Supplementary information on Directors’ remuneration
Outstanding Performance Share options/awards
Details of current awards outstanding to the Executive Directors are detailed in the table below:
At 1 January
20211,2
Granted
during
the year
Vested
in year2
Lapsed during
the year2
Dividend
equivalents
accrued during
the year
At 31 December
20212
Vesting date
Michael Speakman
20 August 2018
8 March 2019
8 March 2019 (deferred award)
9 March 2020
9 March 20203
9 March 2020 (deferred award)
15 March 2021
15 March 2021 (deferred award)
David Burke
15 March 2021
15 March 2021 (deferred award)
58,258
79,163
1,596
110,856
4,619
5,040
–
–
–
–
–
–
–
–
–
–
102,858
23,530
56,273
3,522
6,447
52,069
–
1,596
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20/08/21
08/03/22
08/03/21
09/03/23
09/03/23
09/03/22
15/03/24
15/03/23
258
3,304
–
–
82,467
–
4,627
115,483
4,812
5,250
107,151
24,512
193
210
4,293
982
2,348
147
58,621
3,669
15/03/24
15/03/23
1
2
3
For awards granted in 2018 to 2020, performance conditions are measured 25% on TSR outperformance of the FTSE 250 excluding investment trusts and financial services, 50% on EPS over three
years of the performance period, and 25% on ROCE. Awards granted in 2021 are measured 25% on TSR outperformance of the FTSE 250 excluding investment trusts and financial services, 25% on
EPS over three years of the performance period, 25% on ROCE, and 25% on operating margin in year three. Each performance period ends on 31 December of the third year.
Includes dividend equivalents added as shares since the date of grant.
The Committee decided to make an additional PSP award to Michael Speakman to reflect his service as CEO from 1 September to 31 December 2019. This award will carry the same 2019 measures as
the 2019–21 PSP award and will vest in three years from date of grant. The award was made at the same time as the 2020 PSP awards in March 2020, albeit the Committee considers it to be
remuneration awarded in respect of 2019 and supplements his 2019 PSP award.
CEO pay for performance comparison
The graph below shows the company’s performance, measured by TSR, compared with the performance of the FTSE 250 Index (excluding investment
trusts and financial services) and the FTSE All-Share Index. These indices have been selected for consistency with the comparator groups used to
measure TSR performance for PSP awards.
This graph shows the growth in value of a hypothetical £100 holding in Keller Group plc ordinary shares over 10 years, relative to a hypothetical £100
holding in the FTSE 250 and FTSE All-Share Indices.
600
500
400
300
200
100
0
Dec 2011
Dec 2012
Dec 2013
Dec 2014
Dec 2015
Dec 2016
Dec 2017
Dec 2018
Dec 2019
Dec 2020
Dec 2021
Keller
FTSE 250
FTSE All-Share
Keller Group plc Annual Report and Accounts 2021
Governance
107
The table below details the CEO single figure of remuneration over the same period.
CEO single figure of remuneration (£000)
Annual bonus as a % of maximum opportunity
PSP vesting as a % of maximum opportunity
2012
951
57%
0%
2013
2014
1,870
84%
1,630
22%
20151
1,420
85%
2016
715
12%
2017
1,427
59%
100%
100% 67.3%
0% 33.9%
20182
639
20193
921
2020
1,433
2021
1,691
90%
0%
0% 26.5% 10.6% 36.6%
38%
93%
1
The CEO single figure of remuneration has been calculated using Justin Atkinson’s emoluments for the period from 1 January 2015 to 14 May 2015 and Alain Michaelis’ emoluments for the period 14
May 2015 to 31 December 2015.
2 The Committee exercised its discretion and applied 0% bonus in 2018.
3
The CEO single figure of remuneration has been calculated using Alain Michaelis’ emoluments for the period from 1 January 2019 to 30 September 2019 and Michael Speakman’s emoluments for the
period 1 October 2019 to 31 December 2019.
Percentage change in CEO remuneration
Comparing 2021 to 2020
% change in CEO remuneration
% change in comparator group remuneration1,2
Salary
2.0%
0.5%
Benefits
(0.8)%
(0.4)%
Bonus
(1.6)%
(11.7)%
1 The comparator group comprises the population of Keller UK employees being professional/managerial employees based in the UK and employed on more readily comparable terms.
2
The % change in comparator group remuneration is derived from a significant change in employee mix in the UK business. This change is due to the recruitment of a significant amount of site-based
employees during 2021 for the High Speed 2 mega-project. The effect of an increase in this category of employee has diluted the average change in remuneration of the comparator group between
2020 and 2021.
CEO pay ratio
The table below shows the comparison of the CEO’s single total figure of remuneration (STFR) to the 25th, median and 75th percentile STFR of full-time
equivalent UK employees on a Group-wide basis consistent with The Companies (Miscellaneous Reporting) Regulations 2018.
Financial year
2020
2020 (restated with actual bonuses)
2021
Method
Option A
Option A
Option A
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
38:1
37:1
43:1
25:1
24:1
30:1
19:1
18:1
22:1
The employees used for the purposes of the table above were identified as based in the UK and on a full-time equivalent basis as at 31 December 2021.
Option A was chosen as it is considered to be the most accurate way of identifying the relevant employees required by The Companies (Miscellaneous
Reporting) Regulations 2018.
The CEO pay ratio has been calculated to show the remuneration of the CEO Michael Speakman, who has been CEO on a permanent basis for the full
financial year.
Due to the timing of bonus payouts for the 2021 performance year, we have used the bonus payout for 2021 for the CEO and the bonus payouts for the
comparison population that was paid in 2021, in respect of the 2020 performance year. We will update these figures with the actual amounts paid in 2022,
in respect of the 2021 performance year, in next year’s Annual report on remuneration.
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Keller Group plc Annual Report and Accounts 2021
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Annual remuneration report continued
The following table provides salary and total remuneration information in respect of the employees at each quartile.
Element of pay
25th percentile employee
Median employee
75th percentile employee
Financial year
2020 reported
Salary
Total remuneration
2020 restated with actual bonus figures
Salary
2021
Total remuneration
Salary
Total remuneration
£32,789
£37,736
£30,345
£39,150
£31,823
£39,320
£37,724
£57,970
£50,575
£60,131
£44,986
£56,531
£63,762
£74,469
£42,8661
£79,567
£58,806
£76,235
1
The salary shown here is lower than the median due to the ranking being done on a total remuneration basis. The employee that ranked at the 75th percentile had significant operational-related
remuneration.
The Board has confirmed that the ratio is consistent with the company’s wider policies on employee pay, reward and progression.
Director percentage change versus employee group
The table below shows how the percentage increase in each Director’s salary/fees, taxable benefits and annual bonus between 2020 and 2021 compared
with the average percentage increase in each of those components of pay for the UK-based employees of the Group as a whole. The Committee has
previously monitored year-on-year changes between the movement in salary, benefits and annual bonus for the CEO between the current and previous
financial year compared with that of employees. As required under The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report)
Regulations 2019, the analysis has been expanded to cover each Executive Director and Non-executive Director and this information will build up to
display a five-year history.
Executive Directors
Michael Speakman1
David Burke1
Chairman and Non-executive Directors2
Peter Hill
Kate Rock
Paula Bell
Eva Lindqvist
Nancy Tuor Moore
Paul Withers3
Keller Group plc employees4,5
% change 2020/21
% change 2019/20
% change in
salary or fees
% change
in benefits
% change in
annual bonus
% change in
salary or fees
% change
in benefits
% change in
annual bonus
2.0
364.4
(0.8)
300.0
(1.6)
332.5
2.6
1.4
1.6
1.6
(7.7)
n/a
5.3
0.0
0.0
0.0
0.0
0.0
n/a
0.0
0.0
0.0
0.0
0.0
n/a
22.8
23.4
39.3
n/a
8.3
26.3
8.8
26.5
6.0
(60.0)
15.5
0.0
n/a
0.0
0.0
0.0
0.0
0.0
0.0
412.4
n/a
0.0
0.0
0.0
0.0
0.0
0.0
16.7
146.4
1
The substantial increase in all measures for David Burke between 2020 and 2021 reflects a full year of employment following his start date on 12 October 2020. In both 2020 and 2021 the financial
targets relating to profitability and cash-based performance were achieved in full. The Executive Directors and the comparator group of employees are incentivised on the same financial metrics.
2 The increases for Non-executive Directors reflect the changes made during 2021. The reduction in Nancy Tuor Moore’s fees relate to a reduction in international travel in 2021 compared to 2020.
3
4
5
Paul Withers retired in June 2020.
Keller’s Group head office is based in the UK and full-time equivalent employees of this organisation have been chosen as the comparator group.
The change in components of the comparator group remuneration is on a per capita basis and the year-on-year increases reflects the further strengthening of the Group head office leadership
during 2021 in key areas of strategic capability such as IT and ERP.
Relative importance of spend on pay
The table below shows shareholder distributions (ie dividends) and total employee pay expenditure for the financial years ended 31 December 2020 and
31 December 2021, along with the percentage changes.
Distribution to shareholders1
Remuneration paid to all employees2
2021
£m
25.9
580.7
2020
£m
25.9
572.4
%
change
0%
1.5%
1 The Directors are proposing a final dividend in respect of the financial year ended 31 December 2021 of 23.3p per ordinary share.
2 Total remuneration reflects overall employee costs. See note 7 to the consolidated financial statements for further information.
Keller Group plc Annual Report and Accounts 2021
Governance
109
Summary of implementation of the Remuneration Policy during 2021 and 2022
Overall, the Committee considers that the Remuneration Policy has operated as it intended during 2021, with no deviations. A summary of how
the Committee intends the policy to be operated during 2022 can be found in the remaining pages of this report.
2022 base salary and benefits
The Committee noted that salary increases for UK-based employees across the Group were generally around 4%, effective 1 January 2022. The
Executive Directors received salary increases below this amount for 2022.
Benefits for 2022 will remain broadly unchanged from prior years.
2022 pensions
Pension contributions for Michael Speakman and David Burke have been set at 7% of base salary in line with the rate provided to the majority of the
workforce in the UK and on a weighted average basis around Keller’s most populous locations.
2022 annual bonus
For 2022, 80% of Executive Directors’ bonus will be based on Group financial results and 20% will be based on shared corporate objectives.
The performance measures will be profit before tax (PBT), an important indicator of the company’s financial and operating performance, and a
cash-based target, a more operational measure. Targets for each measure are challenging but realistic and have been set in the context of the
business plan. Targets will be disclosed retrospectively in the 2022 Annual remuneration report to the extent that they are no longer considered
commercially sensitive.
25% of any bonus earned will be deferred into company shares for two years.
2022–24 Performance Share Plan Award (PSP)
The 2022–24 PSP performance conditions will be assessed over three years based on the following measures: relative TSR (25% weight), cumulative EPS
(25% weight), return on capital employed (ROCE) (25% weight) and operating profit margin (25% weight). These measures strongly align potential payout
under the PSP with Keller’s strategic priorities.
Relative TSR performance will be measured by ranking against FTSE 250 companies (excluding investment trusts and financial services). Under a ranked
approach, a threshold vesting (resulting in 25% of that portion of the award vesting) will be for median performance against the comparator group;
maximum vesting for upper quartile performance (or above) against the comparator group. Straight-line vesting between these points.
EPS will be measured on a cumulative basis enabling target setting to reflect business plans, market consensus and the position in the construction cycle.
Cumulative EPS of 400p over the three-year period will enable full vesting of this performance condition, with a threshold vesting of 25% if 330p is
achieved, calculated off the 2021 underlying EPS (at IFRS 16 basis) of 88.4p.
ROCE will be measured on an average basis over the three-year performance period, with a threshold level of performance of 12% (leading to 25% of that
portion of the award vesting) and a maximum of 18% straight-line vesting between these points.
Operating profit margin will be measured in year three (with a threshold vesting of 5.5% leading to 25% of that portion of the award vesting) and maximum
of 6.5% straight-line vesting between these points.
These targets have been carefully assessed and the Committee considers them to be appropriately stretching, given the company’s business plans,
opportunity set and investor expectations.
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Keller Group plc Annual Report and Accounts 2021
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Annual remuneration report continued
2022–24 Performance Share Award
Measures
25% weight
Cumulative EPS over three years1
25% weight
Vesting schedule
% of award that will vest
25%
330p
0%
Below 330p
100%
400p
Keller’s relative TSR performance vs FTSE 2502 Index over three years
25% weight
Below median
Median
Upper quartile
Average ROCE over three years
25% weight
Operating profit margin in year three
Below 12%
Below 5.5%
12%
5.5%
18%
6.5%
To reflect the impact of any changes in IFRS accounting standards, the Committee will consider adjusting financial targets appropriately for all subsisting PSPs, ensuring that they are not materially easier or
harder to satisfy than the original targets. Any amended targets determined by the Committee will be disclosed to shareholders in the next Directors’ remuneration report.
1
2
EPS is before non-underlying items on an IFRS 16 basis.
Excluding investment trusts and financial services.
Chairman and Non-executive Director fees
Fees for the Non-executive Directors were reviewed with effect from 1 January 2022 and it was decided that they would be increased by 3.5%.
The Chairman’s fee was increased by 3%.
Single total figure of remuneration for Non-executive Directors (audited information)
The table below sets out a single figure for the total remuneration received by each Non-executive Director for the year ended 31 December 2021
and the prior year:
Non-executive Director
Peter Hill
Eva Lindqvist1
Nancy Tuor Moore2
Paula Bell3
Kate Rock4
Paul Withers5
Total fees
2021
£
200,000
63,000
65,500
63,000
73,000
–
464,500
2020
£
195,000
62,000
71,063
62,000
72,000
26,000
488,063
1
Eva Lindqvist receives additional fees of £10,000 per annum as Chair of the Remuneration Committee.
2 Nancy Tuor Moore receives additional fees of £10,000 as Chair of the Environment Committee and £10,000 for international travel. The fee for international travel was reinstated in October 2021.
3
4
Paula Bell receives additional fees of £10,000 as Chair of the Audit and Risk Committee.
Kate Rock receives additional fees of £20,000 as Senior Independent Director and Chair of the Social and Community Committee.
5 Paul Withers retired from the Board on 30 June 2020.
Statement of shareholder voting
The following table sets out the results of the vote on the Remuneration report and the Remuneration Policy at the 2021 AGM:
Remuneration report
Remuneration Policy
Votes for
Votes against
Number
54,820,261
54,665,416
%
Number
91.15%
90.20%
5,324,060
5,942,286
%
8.85%
9.80%
Votes cast
Number
Votes withheld
Number
60,144,321
60,607,702
470,165
6,784
Keller Group plc Annual Report and Accounts 2021
Governance
111
Consideration by the Directors of matters relating to Directors’ remuneration
The following Directors were members of the Remuneration Committee when matters relating to the Directors’ remuneration for 2022 were being
considered:
• Eva Lindqvist
• Nancy Tuor Moore
• Paula Bell
• Baroness Kate Rock
• Juan G. Hernández Abrams (from 1 February 2022)
During the year, the Committee received assistance from Kerry Porritt (Group Company Secretary and Legal Advisor) and Graeme Cook (Group People
Director) on salary increases, bonus awards, share plan awards and vesting, and policy and governance matters. David Burke (Chief Financial Officer)
presented information with regard to 2021 financial performance and 2022 budget and the three-year plan for 2022–24. In determining the Executive
Directors’ remuneration for 2021 and 2022, the Committee has consulted the Chairman and the CEO about its proposals, except (in the case of the CEO)
in relation to their own remuneration. No Director is involved in determining their own remuneration.
No member of the Committee has any personal financial interest (other than as a shareholder), conflict of interest arising from cross-directorships or
day-to-day involvement in running the business. Given their diverse backgrounds, the Board believes that the members of the Committee are able to offer
an informed and balanced view on executive remuneration issues.
Corporate governance
The Committee’s terms of reference, which were reviewed during the year, are available on the Group’s website (www.keller.com) and on request from
the Group Company Secretary and Legal Advisor.
The Committee conducted an effectiveness review of the business covered during the year against its terms of reference. In addition, the Committee’s
performance, and that of its members, was evaluated in an exercise facilitated by Donata Denny, a highly respected Leadership Coach and Professional
Development Advisor. The Committee and its members were found to be operating effectively. The outcome of this exercise can be found on pages 82 and 83.
External advisers
During the year, the Committee received advice from Deloitte, an independent firm of remuneration consultants appointed by the Committee after
consultation with the Board. The Committee is satisfied that Deloitte is and remains independent of the company and that the advice provided is impartial
and objective. Deloitte is a founding member and signatory of the Code of Conduct for Remuneration Consultants, details of which can be found at
www.remunerationconsultantsgroup.com.
During the year, Deloitte also provided advice in relation to tax compliance and risk advisory services. The Committee is satisfied that the provision of
these services did not impair Deloitte’s ability to advise the Committee independently. Their total fees for the provision of remuneration services to the
Committee for 2021 were £30,250.
The Committee is satisfied that the advice they have received has been objective and independent.
Eva Lindqvist
Chair of the Remuneration Committee
Approved by the Board of Directors and authorised for issue on 7 March 2022.
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Keller Group plc Annual Report and Accounts 2021
Governance
Directors’ report
Kerry Porritt
Group Company Secretary and Legal Advisor
Overview
The Directors present their report together
with the audited consolidated financial
statements for the year ended
31 December 2021.
This report is required to be produced by law.
The Disclosure, Guidance and Transparency
Rules and the Listing Rules also require us to
make certain disclosures.
The Corporate governance statement,
including the Audit and Risk Committee
report, forms part of this Directors’ report
and is incorporated by reference. Disclosures
elsewhere in the Annual Report and
Accounts are cross-referenced where
appropriate. Taken together, the Strategic
report on pages 1 to 67 and this Directors’
report fulfil the requirement of Disclosure,
Guidance and Transparency Rule 4.1.5R to
provide a Management report.
Results and dividends
The results for the year, showing an underlying
profit before taxation of £83.9m (2020: £96.9m),
are set out on pages 127 to 185. Statutory profit
before tax was £71.6m (2020: £63.8m). The
Directors recommend a final dividend of 23.3p
per share to be paid on 1 July 2022, to members
on the register at the close of business on 6 June
2022. An interim dividend of 12.6p per share was
paid on 10 September 2021. The total dividend
for the year of 35.9p (2020: 35.9p) will amount to
£25.9m (2020: £25.9m).
Going concern and
viability statement
Information relating to the going concern and
viability statements is set out on page 33 of the
Strategic report and is incorporated by reference
into this report.
Financial instruments
Full details can be found in note 25 to the
financial statements and in the Chief Financial
Officer’s review.
Post balance sheet events
Please see page 174 for post balance
sheet events.
Change of control
The Group’s main banking facilities contain
provisions that, upon 15 days’ notice being given
to the Group, lenders may exercise their
discretion to require immediate repayment of
the loans on a change of control and cancel all
commitments under the agreement.
Certain other commercial agreements, entered
into in the normal course of business, include
change of control provisions. There are no
agreements providing for compensation for the
Directors or employees on a change of control.
Transactions with related parties
Apart from transactions between the company,
its subsidiaries and joint operations, which are
related parties, there have been no related party
transactions during the year.
Directors and their interests
The names of all persons who, at any time during
the year, were Directors of the company can be
found on pages 70 and 71. The interests of the
Directors holding office at the end of the year in
the issued ordinary share capital of the company
and any interests in its Performance Share Plan
are given in the Directors’ remuneration report
on pages 105 and 106.
No Director had a material interest in any
significant contract, other than a service
contract or a contract for services, with the
company or any of its operating companies
during the year.
The company’s Articles of Association indemnify
the Directors out of the assets of the company in
the event that they suffer any loss or liability in
the execution of their duties as Directors, subject
to the provisions of the 2006 Act. The company
maintains insurance for Directors and Officers in
respect of liabilities which could arise in the
discharge of their duties.
Powers of the Directors
The business of the company is overseen by the
Board, which may exercise all the powers of the
company subject to the provisions of the
company’s Articles of Association, the 2006 Act
and any ordinary resolution of the company.
Specific treatment of Directors’ powers
regarding allotment and repurchase of shares
is provided under separate headings in the
following pages.
Keller Group plc Annual Report and Accounts 2021
Governance
113
Amendment of the company’s
Articles of Association
Any amendments to the company’s Articles of
Association may be made in accordance with the
provisions of the 2006 Act by way of special
resolution. The company’s Articles of
Association were last amended in May 2017.
Appointment and replacement
of Directors
Directors shall be no fewer than two and no more
than 12 in number. Subject to applicable law, a
Director may be appointed by an ordinary
resolution of shareholders in a general meeting
following nomination by the Board or a member
(or members) entitled to vote at such a meeting,
or following retirement by rotation if the Director
chooses to seek re-election at a general
meeting. In addition, the Directors may appoint a
Director to fill a vacancy or as an additional
Director, provided that the individual retires at the
next AGM. A Director may be removed by the
company as provided for by applicable law, in
certain circumstances set out in the company’s
Articles of Association (for example bankruptcy,
or resignation), or by a special resolution of the
company. All Directors stand for re-election on
an annual basis, in line with the
recommendations of the Code.
Employees
The Group employed approximately 10,000
people at the end of the year.
Employment policy
The Group gives full and fair consideration to
applications for employment made by disabled
persons, having regard for their respective
aptitudes and abilities. The policy includes, where
practicable, the continued employment of those
who become disabled during their employment
and the provision of training and career
development and promotion, where appropriate.
Information on the Group’s approach to
employee involvement, equal opportunities and
health, safety and the environment can be found
in the ESG and sustainability section of this
report on pages 53 to 63.
Section 172 statement
During the financial year, the Directors have
considered the needs of the company’s
stakeholders as part of their decision-making
process. Details are set out in our section 172
statement on pages 76 and 77.
Political donations
Repurchase of shares
No political donations were made during the year.
Keller has an established policy of not making
donations to any political party, representative
or candidate in any part of the world.
Greenhouse gas emissions
Information relating to the greenhouse gas
emissions of the company is set out on page 48
and is incorporated by reference into this report.
Research and development
The Group continues to have in-house design,
development and manufacturing facilities, where
employees work closely with site engineers to
develop new and more effective methods of
solving problems of ground conditions and
behaviour. Most of the specialised ground
improvement equipment used in the business
is designed and built in-house and, where
applicable, the development costs are included
in the cost of the equipment.
Share capital
Details of the share capital, together with details
of the movements in the company’s issued share
capital during the year, are shown in note 27 to
the consolidated financial statements. The
company has one class of ordinary shares which
is listed on the London Stock Exchange (ordinary
shares). Ordinary shares carry no right to a fixed
income and each ordinary share carries the right
to one vote at general meetings of the company.
There are no specific restrictions on the size of a
shareholding, nor on the transfer of shares,
which are both governed by the Articles of
Association and the prevailing law. The Directors
are not aware of any agreements between
shareholders that may result in restrictions on
voting rights and the transfer of securities. No
person has any special rights of control over the
company’s share capital and all issued shares are
fully paid.
Details of employee share plans are set out
in note 31 to the consolidated financial
statements. Treasury shares and shares held
by the Keller Group plc Employee Benefit Trust
are not voted.
The company obtained shareholder authority at
the last AGM (19 May 2021) to buy back up to
7,221,000 ordinary shares. The authority
remains outstanding until the conclusion of the
2022 AGM but could be varied or withdrawn by
agreement of shareholders at an intervening
general meeting. The minimum price which must
be paid for each ordinary share is its nominal
value and the maximum price is the higher of an
amount equal to not more than 5% above the
average of the middle market quotations for an
ordinary share, as derived from the London Stock
Exchange Daily Official List for the five business
days immediately before the purchase is made,
and an amount equal to the higher of the price of
the last independent trade of an ordinary share
and the highest current independent bid for an
ordinary share on the trading venue where the
purchase is carried out.
The Directors have not used, and have no
current plans to use, this authority.
Allotment of shares and
pre-emption disapplication
Shareholder authority was also given at the last
AGM for the Directors to allot new shares up to a
nominal amount of £2,407,000, equivalent to
approximately one-third of the company’s issued
share capital (excluding treasury shares) as at
9 March 2021 and to disapply pre-emption rights
up to an aggregate nominal amount of £361,050,
representing approximately 5% of the company’s
issued share capital as at 9 March 2021.
The Directors have not used, and have no
current plans to use, these authorities.
Auditors
The Board, upon the recommendation of the
Audit and Risk Committee, has decided that
Ernst & Young LLP (EY) will be proposed as the
Group’s auditors for the year ending 31
December 2022 and a resolution to appoint EY
will be put to shareholders at the 2022 AGM.
AGM
The full details of the 2022 AGM, which will take
place on 18 May 2022, are set out in the Notice
of Meeting, together with the full wording of the
resolutions to be tabled at the meeting. We
continue to closely monitor health and safety
guidance and any changes to venue and logistics
as a result will be notified by way of a Stock
Exchange announcement.
114
Keller Group plc Annual Report and Accounts 2021
Governance
Directors’ report continued
Substantial shareholdings
At 7 March 2022, the company had been notified in accordance with chapter 5 of the Disclosure,
Guidance and Transparency Rules of the Financial Conduct Authority of the voting rights of
shareholders in the company as per the table below:
Ordinary shares
Schroders plc
Old Mutual Plc
FIL Limited
Aberforth Partners LLP
Franklin Templeton Institutional, LLC
Artemis Investment Management LLP
Standard Life Aberdeen plc
Baillie Gifford & Co
Norges Bank
Number of
ordinary shares
7,264,752
4,242,670
3,881,863
3,589,696
3,557,757
3,561,152
3,443,366
3,327,404
2,676,017
Percentage
of the total
voting rights
10.046%
5.96%
5.37%
5%
4.96%
4.94%
4.78%
4.6%
3.71%
Source: TR1 notifications made by shareholders to the company.
Disclaimer
Other information
The purpose of this Annual Report and Accounts
is to provide information to the members of the
company, as a body, and no other persons.
The company, its Directors and employees,
agents or advisers do not accept or assume
responsibility to any other person to whom this
document is shown or into whose hands it may
come and any such responsibility or liability is
expressly disclaimed.
The Annual Report and Accounts contains
certain forward-looking statements with respect
to the operations, performance and financial
condition of the Group. By their nature, these
statements involve uncertainty since future
events and circumstances can cause results and
developments to differ materially from those
anticipated. The forward-looking statements
reflect knowledge and information available at
the date of preparation of this Annual Report
and Accounts and the company undertakes
no obligation to update these forward-looking
statements. Nothing in this Annual Report
and Accounts should be construed as a
profit forecast.
The Directors who held office at the date of
approval of this Directors’ report confirm that, in
accordance with the provisions of section 418 of
the 2006 Act, so far as they are each aware, there
is no relevant audit information of which the
company’s auditors are unaware; and each
Director has taken all the steps that he or she
ought to have taken as a Director to make him or
herself aware of any relevant audit information
and to establish that the company’s auditors are
aware of that information.
Kerry Porritt
Group Company Secretary and Legal Advisor
Approved by the Board of Directors and
authorised for issue on 7 March 2022.
Registered office:
2 Kingdom Street
London W2 6BD
Registered in England No. 2442580
Keller Group plc Annual Report and Accounts 2021
Governance
115
Statement of Directors’ responsibilities
in respect of the Annual Report and the financial statements
The Directors are responsible for preparing
the Annual Report and the Group and company
financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare
Group and company financial statements for
each financial year. Under that law they have
elected to prepare the Group financial
statements in accordance with International
Accounting Standards in conformity with the
requirements of the Companies Act 2006, and
the parent company financial statements in
accordance with UK Accounting Standards,
including FRS 101 Reduced Disclosure
Framework. Under the Financial Conduct
Authority’s Disclosure Guidance and
Transparency Rules, Group financial statements
are required to be prepared in accordance with
UK-adopted International Accounting Standards.
Under company law the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and company and of
their profit or loss for that period. In preparing
each of the Group and company financial
statements, the Directors are required to:
•
•
•
•
select suitable accounting policies and
then apply them consistently;
make judgements and estimates that are
reasonable and prudent;
for the Group financial statements, state
whether they have been prepared in
accordance with UK-adopted International
Accounting Standards in conformity with the
requirements of the Companies Act 2006;
for the company financial statements,
state whether the applicable UK
Accounting Standards have been followed,
subject to any material departures
disclosed and explained in the company
financial statements;
•
•
assess the Group and company’s ability to
continue as a going concern, disclosing,
as applicable, matters relating to going
concern; and
use the going concern basis of accounting
unless they either intend to liquidate the
Group or the company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the company’s
transactions and disclose with reasonable
accuracy at any time the financial position of the
company and enable them to ensure that its
financial statements comply with the Companies
Act 2006. They are responsible for such internal
control as they determine is necessary to enable
the preparation of financial statements that are
free from material misstatement, whether due to
fraud or error, and have general responsibility for
taking such steps as are reasonably open to
them to safeguard the assets of the Group
and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic report, a Directors’ report, a Directors’
remuneration report and a Corporate
governance statement that comply with
that law and those regulations.
The Directors are responsible for the
maintenance and integrity of the corporate and
financial information included on the company’s
website. Legislation in the UK governing the
preparation and dissemination of financial
statements may differ from legislation in
other jurisdictions.
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.
The Strategic report (pages 1 to 67) and
the Directors’ report (pages 112 to 114) have
been approved by the Board of Directors and
authorised for issue on the date shown below.
Kerry Porritt
Group Company Secretary and Legal Advisor
7 March 2022
Registered office:
2 Kingdom Street
London W2 6BD
Registered in England No. 2442580
116
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report
to the members of Keller Group plc
Opinion
In our opinion:
•
Keller Group plc’s Group financial statements and parent company financial statements (the ‘financial statements’) give a true and fair view of the state
of the Group’s and of the parent company’s affairs as at 31 December 2021 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly prepared in accordance with FRS 101, United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Keller Group plc (the ‘parent company’) and its subsidiaries (the ‘Group’) for the year ended 31 December
2021 which comprise:
Group
Parent company
Consolidated balance sheet as at 31 December 2021
Balance sheet as at 31 December 2021
Consolidated income statement for the year ended 31 December 2021
Statement of changes in equity for the year ended 31 December 2021
Consolidated statement of comprehensive income for the year ended
31 December 2021
Related notes 1 to 9 to the company financial statements including a
summary of significant accounting policies
Consolidated statement of changes in equity for the year ended
31 December 2021
Consolidated cash flow statement for the year ended
31 December 2021
Related notes 1 to 34 to the consolidated financial statements,
including a summary of significant accounting policies
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as
regards the parent company financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company and we remain independent of the
Group and the parent company in conducting the audit.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
117
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors’
assessment of the Group and parent company’s ability to continue to
adopt the going concern basis of accounting included:
•
In conjunction with our walkthrough of the Group’s financial statement
close process, we confirmed our understanding of management’s going
concern assessment process and also engaged with management early
to ensure key factors were considered in their assessment, including
factors which we determined from our own independent risk
assessment and the evaluation of any continued operational and
economic impacts of COVID-19 on the Group.
• We obtained management’s Board-approved forecast cash flows and
covenant calculation covering the period of assessment from the date
of signing to 31 March 2023. As part of this assessment, the Group has
modelled a number of adverse scenarios in their cash forecasts and
covenant calculations in order to incorporate unexpected changes to
the forecasted liquidity of the Group.
•
We assessed the reasonableness of the cash flow forecast through
analysing management’s historical forecasting accuracy, challenging the
robustness of the group’s orderbook, and considered actual post year
end performance to date. We evaluated the key assumptions
underpinning the Group’s assessment by challenging the measurement
and completeness of downside scenarios modelled by management and
how these compare with principal risks and uncertainties of the Group.
• We considered the extent to which emerging climate-related risks may
affect the Group’s assessment, including assumptions around the
long-term reliance on concrete, steel and related manufacturing
processes, heavy duty combustion machinery, and the potential for
‘Environmental, Social and Governance’ related covenants or levies
which could impact the Group. Additionally, we considered other
macroeconomic factors such as the rising cost of materials, energy
and labour which are critical parts of the Group’s operations.
• We tested the clerical accuracy and logical integrity of the cash flow
forecast model, used to prepare the Group’s going concern and viability
assessments, as well as challenging the overall appropriateness of
management’s forecast in the context of future cash flows.
• We considered whether the Group’s forecasts and related key
assumptions in the going concern assessment were consistent with
other forecasts used by the Group in its accounting estimates, including
goodwill impairment and deferred tax asset recognition.
• We evaluated, based on our own independent analysis, what reverse
stress testing scenarios could lead either to a breach of the Group’s
banking covenants or a liquidity shortfall and whether these scenarios
were plausible.
• Our analysis also considered the mitigating actions that management
could undertake in an extreme downside scenario and whether these
were achievable and in control of management.
• We confirmed the continued availability of debt facilities through the
going concern period and reviewed their underlying terms, including
covenants, by examination of executed documentation.
• We considered whether management’s disclosures, in the financial
statements, sufficiently and appropriately capture the impact of
COVID-19, emerging climate-related risks and other principal risks and
uncertainties on the going concern assessment and through
consideration of relevant disclosure standards.
• Through our work performed on auditing management’s viability
assessment, we extended our procedures (including inquiries of
management and considering the forward order book and cash flow
forecasts) to challenge whether there were any events or conditions
beyond 31 March 2023 that may cast significant doubt over the Group’s
ability to continue as a going concern.
The audit procedures performed in evaluating the Directors’ assessment
were performed by the Group audit team, however we also considered the
financial and non-financial information communicated to us from our
component teams of key locations as sources of potential contrary
indicators which may cast doubt over the going concern assessment.
The results from both management's evaluation and our independent
reverse stress testing suggest that the Group would need to be exposed to
extreme downside events, significantly greater than the financial effect of
the disruption caused by COVID-19, emerging climate-related risks and
other principal risks and uncertainties, throughout the going concern
period in order to breach its covenants or exhaust its available funding.
The Group has substantial borrowing facilities available to it during the
going concern period. The undrawn committed facilities available as at
31 December 2021 amounted to £235.5m. These mainly comprised the
unutilised portion of the Group’s £375m revolving credit facility which
expires 23 November 2025.
Conclusion
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and parent company’s
ability to continue as a going concern for the period through to 31 March
2023, a period of at least 12 months from when the financial statements
are authorised for issue.
In relation to the Group and parent company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted,
this statement is not a guarantee as to the Group’s ability to continue
as a going concern.
118
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report continued
to the members of Keller Group plc
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 41 components and audit procedures on specific
balances for a further 16 components.
• The components where we performed full or specific audit procedures accounted for 91% of profit before tax, 94% of
Key audit matters
revenue and 88% of total assets.
Improper revenue recognition
•
• Carrying value of goodwill (Group)
• Quality of earnings including disclosure of non-underlying items
Materiality
• Overall Group materiality of £4.2m which represents 5% of profit before tax, adjusted for one-off, non-underlying items
An overview of the scope of the parent company and
Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for each
component within the Group. Taken together, this enables us to form an
opinion on the consolidated financial statements. We take into account
size, risk profile, the organisation of the Group and effectiveness of
Group-wide controls, changes in the business environment and other
factors such as recent internal audit results when assessing the level of
work to be performed at each entity.
In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, of the 163 reporting
components of the Group, we selected components covering entities
within AMEA, Europe, and North America, which represent the principal
business units within the Group.
Of the 57 components selected, we performed an audit of the complete
financial information of 41 components (‘full scope components’) which
were selected based on their size or risk characteristics. For another
16 components (‘specific scope components’), we performed audit
procedures on specific accounts within that component that we
considered had the potential for the greatest impact on the significant
accounts in the financial statements either because of the size of these
accounts or their risk profile.
The reporting components where we performed audit procedures
accounted for 94% (2020: 96%) of the Group’s profit before tax, 91% (2020:
91%) of the Group’s revenue and 88% (2020: 88%) of the Group’s total
assets. For the current year, the full scope components contributed 72%
(2020: 74%) of the Group’s profit before tax 70% (2020: 77%) of the Group’s
Revenue and 69% (2020: 73%) of the Group’s total assets. The specific
scope component contributed 22% (2020: 14%) of the Group’s profit before
tax, 21% (2020: 21%) of the Group’s revenue and 19% (2020: 15%) of the
Group’s total assets. The audit scope of these components may not have
include testing of all significant accounts but will have contributed to the
coverage of significant accounts tested for the Group. The primary team also
performed centralised procedures over four further entities which included
testing over material cash and cash equivalents balances for existence and
valuation purposes and/or selected revenue contract testing reflecting the
primary team’s central risk assessment performed.
Of the remaining 102 components that together represent 6% of the
Group’s adjusted profit before tax measure used to establish materiality,
none are individually greater than 1% of the Group’s profit before tax. For
these components, we performed other procedures, including analytical
review and/or ‘review scope’ procedures, testing of consolidation journals
and intercompany eliminations and foreign currency translation
recalculations to respond to any potential risks of material misstatement
to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Profit before tax
Revenue
Total assets
Full scope components
Specific scope components
Other procedures
72%
22%
6%
Full scope components
Specific scope components
Other procedures
70%
21%
9%
Full scope components
Specific scope components
Other procedures
69%
19%
12%
Keller Group plc Annual Report and Accounts 2021
Financial Statements
119
Changes from the prior year
Climate change
For the current year, we evaluated that the principal operating entities in
Germany and Austria to be specific scope locations, compared with full
scope in the prior year. This determination was made through our updated
risk assessment and a reflection of the low rate of misstatements identified
in the previous cycles, as well as the relative contribution of these entities to
the Group as a whole. The current year scope continued to focus on the key
areas of audit focus and judgement, including, but not limited, to revenue
recognition and retirement benefit obligations. There have been no other
significant changes in the scoping of our Group audit. Our scoping reflects
the inclusion of consolidation entities representing manual adjustments
posted topside at the Group consolidated level, which we have treated as full
scope. These entities do not reflect trading businesses.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the
audit procedures required at each of the components audited by us, as the
primary audit engagement team, or by component auditors from other EY
global network firms operating under our instruction. Of the 43 full scope
and 16 specific scope components, audit procedures were performed
directly by the primary audit team on 39 and two components, respectively.
For the remaining four full scope and 14 specific scope components, where
the work was performed by component auditors, we determined the
appropriate level of involvement to enable us to determine that sufficient
audit evidence had been obtained as a basis for our opinion on the
Group as a whole.
In addressing the appropriateness of oversight arrangements for
component teams, the Group audit team considered the ongoing impact
of travel restrictions and uncertainties, caused by the COVID-19 pandemic.
Consistent with the previous cycle, physical visits to component teams
were replaced by a series of virtual site visits for in-scope components
executed by the primary team, enabled through the use of video
conferencing.
The virtual site visits involved the primary team (including the Senior
Statutory Auditor) meeting with our component teams to discuss and
direct their audit approach, reviewing key working papers and
understanding the significant audit findings in response to the risk areas
including revenue recognition and areas of judgement and estimation such
as contract liabilities and provisions and provisions for legal claims (including
insured liabilities). We also attended virtual meetings with local
management, obtaining updates on reported financial performance and
significant risk areas for the audit, including the anticipated business
outlook during the going concern period.
The primary team interacted regularly with the component teams, during
various stages of the audit, reviewed key working papers and were
responsible for the scope and direction of the audit process. This, together
with the additional procedures performed at Group level, gave us
appropriate evidence for our opinion on the Group financial statements.
There has been increasing interest from stakeholders as to how climate
change will impact Keller Group plc. The Group has determined that the
most significant future impact from climate change on their operations will
be from physical acute or chronic climate weather events, emerging
legislation impacting operating costs and cost of raw materials, addressing,
and adapting to customer requirement in relation to climate risk, failure to
procure new contracts on satisfactory terms and not having the right skills
to deliver on projects contracted. These are explained on page 33 and page
38 in the strategic report under ‘Risk trends’ and ‘Strategic risks’, which form
part of the “Other information”, rather than the audited financial
statements. Our procedures on these disclosures therefore consisted
solely of considering whether they are materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit
or otherwise appear to be materially misstated.
As explained in the strategic report on page 43, Keller Group plc have
started the journey to implement the short, medium and long-term actions
required to achieve a number of global and local initiatives aligned to the UN
Sustainable Development Goals (SDGs). It is also stated that the Group
have also started to report against the requirements set out in the Task
Force for Climate-Related Financial Disclosures (TCFD); however,
understanding the costs and opportunities of climate change to their
business will take some time and they are actively progressing this
understanding in 2022 as reported in the TCFD dashboard on page 52. The
degree of uncertainty of these changes may also mean that they cannot be
taken into account when determining asset and liability valuations and the
timing of future cash flows under the requirements of UK adopted
international accounting standards.
Our audit effort in considering climate change was focused on ensuring
that the effects of material climate risks disclosed on pages 33, 38 and 52
have been appropriately reflected in going concern and viability of the
Group, useful economic life of plant and equipment and other intangible
assets and impairment of goodwill and associated disclosures where values
are determined through modelling future cash flows being the assumptions
around the long-term reliance on concrete, steel and related
manufacturing processes, heavy duty combustion machinery, and the
potential for ‘Environmental, Social and Governance’ related covenants or
levies which could impact the CGU cash flows. We have also considered the
assumptions made by management around the cost of investment in
technology in order to adapt to changing regulations related to climate
change and emissions. Details of our procedures and findings on
impairment of goodwill are included in our key audit matters below.
We also challenged the Directors’ considerations of climate change in their
assessment of going concern and viability and associated disclosures.
Whilst the Group have stated their commitment to the aspirations of the
Paris Agreement to achieve net zero emissions by 2050, the Group are
currently unable to determine the full future economic impact on their
business model, operational plans and customers to achieve this and
therefore the potential impacts are not fully incorporated in these
financial statements.
120
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report continued
to the members of Keller Group plc
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.
Key observations communicated
to the Audit and Risk Committee
From the audit
procedures performed,
we conclude that the
recognition of revenue
was appropriate, that the
judgements made by
management are
consistent with the
accounting policy to be
applied to all contracts
with customers, and that
the presentation and
disclosure of revenue is
materially correct.
Risk
Improper revenue recognition
(2021: £2,224.4m, 2020: £2,062.5m)
Refer to the Audit and Risk Committee
report (page 92); accounting policies (page
135); and note 4of the consolidated financial
statements (pages 142 and 143)
The Group recognises revenue over time
from contracts either as earned value
(output method) or on the percentage of
completion (input method) basis,
depending on the size and nature of the
contract (in accordance with the guidelines
provided in the Group revenue recognition
policy and IFRS 15). The judgements
involved in determining revenue
recognition under both recognition
methods present a significant fraud risk as
results are susceptible to manipulation,
particularly around the estimation in
determining the cost to complete and
percentage of completion at the year end.
Management may use inappropriate
measures and assumptions to evaluate the
Group’s progress towards satisfaction of
performance obligations.
There is also significant judgement
involved in estimating the impact of
factors such as rising cost pressures and
the availability of necessary skills and their
impact on the cost of satisfying
outstanding performance obligations and
the projected outcome of contract claims
and variations made both by and against
the Group and valuation of contract
provisions for both percentage of
completion and earned value bases.
The Group also provides fabricated,
unbonded post-tension materials to
customers in the residential and
commercial sectors. The revenue from
sales of these materials is recognised at a
point of time, based upon the satisfaction
of the performance obligations. We have
identified that there is a risk that such
revenues could be manipulated at or near
to the period end through inappropriate
‘cut-off’ to meet income statement
targets.
Our response to the risk
For all revenue recorded on the percentage of completion and earned
value bases, we:
• Performed walkthroughs of significant classes of revenue
transactions and assessed the design effectiveness of key controls.
• Performed a risk assessment of the population of contracts and
selected a sample of higher-risk (value and/or complexity) contracts
across the Group, representing both those accounted for using the
input method and those using the output method. For the sample
selected we obtained an understanding of the contract terms, key
operational or commercial/financial issues, significant judgements
that impact the contract position and the appropriateness of
revenue recognised at 31 December 2021.
• The factors that we considered when determining additional
higher-risk contracts to select included low margin, loss making and/
or contracts subject to delayed performance or commencement
and where the ability to continue work had been affected by
circumstances outside the Group’s control.
For the sample selected for testing we:
• Considered the appropriateness of supporting evidence and the
requirements of IFRS 15 and the Group’s accounting policies where
contracts included additional entitlements to variations and claims,
both for and against the Group.
• Challenged the level of unbilled revenues and the adequacy of the
evidence to prove recoverability through subsequent work
certifications and cash collections.
For the sample contracts where revenue was recognised over time
under the percentage of completion basis, we have performed the
following:
• Challenged the reasonableness of management’s calculations of
costs to complete, which included understanding the risks and
outstanding works remaining on the contract, the impact of any
delays or other delivery issues and the related cost assumptions and
contingencies.
• We had meetings with the contract project managers to understand
the project status and outstanding works remaining on the
contracts.
• We tested the cost build up and the correct allocation across
contracts (eg to verify no manipulation of costs between profitable
and loss-making contracts) through a combination of cost
verification and analytical procedures on contract margins.
• Evaluated the expected margin and revenue recognised to date
against latest contract progress.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
121
Risk
Improper revenue recognition
continued
Key observations communicated
to the Audit and Risk Committee
Our response to the risk
For the sample of contracts where revenue is recognised on the earned
value basis, we performed the following procedures:
• Evaluated whether the assessment of earned value appropriately
depicted outputs actually delivered and progress towards
satisfaction of performance obligations.
• We tested the cost build up and the correct allocation across
contracts (eg to verify no manipulation of costs between profit-
making and loss-making contracts and recognition between periods
(eg cut-off testing))through a combination of cost verification
against invoices and analytical procedures.
• Tested whether revenue has been recognised in the appropriate
period. This included checking whether revenue recognised at the
year end on open contracts is supported by evidence (eg measured
works certificates) that demonstrates the period in which the work
was performed.
For any loss-making contracts identified, for both percentage of
completion and earned value contracts, we tested whether
management’s assessment of the forecast loss included appropriate
estimates in respect of costs to completion.
For contracts where there was significant uncertainty over whether the
project would be completed, we assessed the appropriateness of the
accounting treatment of contract modifications, consideration
received and revenue recognised/deferred and the impact on the
carrying value of related assets.
For revenue recognised at a point in time, we performed revenue
cut-off procedures at the year end to determine whether transactions
are recorded in the appropriate period based on the recognition criteria
under IFRS 15 by vouching the transactions through to third-party
support (such as shipping, delivery or acceptance documents).
Data-driven journal entry testing was also performed in full scope
locations on a risk-based approach, including focussing on entries
which were posted manually or those which could be made to overstate
revenue.
We performed full and specific scope audit procedures over revenue in
21 locations, which covered 95% of the risk amount.
122
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report continued
to the members of Keller Group plc
Key observations communicated
to the Audit and Risk Committee
Based on the final
forecast cash flows and
assumptions used, there
is sufficient headroom
across all CGUs to
support the carrying
value.
Based on the procedures
performed,
management’s
assessments are
considered reasonable.
Risk
Carrying value of goodwill (Group)
(2021: £121.3m; 2020: £115.2m)
Refer to the Audit and Risk Committee
report (page 92); Accounting policies (page
137); and note 14 of the consolidated
financial statements (pages 152 and 153)
Under IAS 36, an entity must assess
intangible items with an indefinite useful
life annually, or whenever indicators of
impairment are present for all other
assets.
Due to the degree of estimation involved
in calculating the expected future cash
flows from cash generating units (CGU)
and determining appropriate long-term
growth rates and discount rates specific
to each CGU (including those arising from
acquisitions), we have identified a
significant risk regarding the assessment
of any impairment against goodwill
carrying values, as well as the
identification of any indicators of
impairment as an area of significant risk.
In the prior year, we included an
associated risk over the carrying value of
investments recorded in the parent
company. The risk has decreased in the
current year due to the actual and
projected financial performance of the
Group and thus the headroom between
the value-in-use of the CGU’s in totality
and the related carrying value of
investments in the parent company
balance sheet and also the growth in the
market capitalisation of the Group and
thus we do not consider this to represent
a key audit matter in the current year.
Our response to the risk
We have performed the following:
• Performed a walkthrough to understand the impairment analysis
and calculation process (eg. controls over the data and assumptions
used), level of review on the outlook data in future years and how key
inputs were derived.
•
• Evaluated the appropriateness of the CGUs identified given changes
in Group structure (including acquisitions and disposals) and the
allocation of assets and liabilities to the CGUs.
In respect of each CGU, we have challenged management over the
key inputs and on the achievability of the cash flow forecasts. We
have assessed the projected financial information against
performance and other market data to assess the robustness of
management’s forecasting process.
• Assessed the discount rates applied against cash flows for each CGU
by obtaining the underlying data used in the calculation and
benchmarking against comparable organisations with the support of
our EY valuation experts.
• Validated the revenue/margin growth rates assumed for the
projected financial information for each CGU by comparing them to
economic and industry forecasts.
• Given the uncertainty attached to forecasts presented by rising
costs, skills shortages and the potential for suspension or delay to
key projects, we have assessed management’s assumptions in
relation to these factors including the ongoing impact of COVID-19
and increasing costs of energy, materials and labour, in determining
the ability to achieve cash flow forecasts.
• Analysed the historical accuracy of budgets compared with actual
results to determine whether forecast cash flows are reliable based
on past experience.
• Challenged the assumptions in the approach taken to determine
working capital levels over the forecast period, focussing on the
principal reasons and timing of larger fluctuations and how this
compared with the historical trend.
• Performed an integrity review of the goodwill model to be able to
conclude that the formulae and construction of these models are
effective and accurate.
• Performed sensitivity analyses by testing key assumptions in the
model to recalculate a range of potential outcomes in relation to the
size of the headroom between carrying value and fair value.
• Considered the assumptions around the long-term reliance on
concrete, steel and related manufacturing processes, heavy duty
combustion machinery, and the potential for ‘Environmental, Social
and Governance’ related covenants or levies which could impact the
CGU cash flows. We have also considered the assumptions made by
management around the cost of investment in technology in order
to adapt to changing regulations related to climate change and
emissions.
• Considered the appropriateness of the related disclosures provided
in the notes to the Group financial statements.
The primary team centrally executed the work performed across all
locations, covering 100% of the balance. Component teams have
supported the primary team in assessing the growth rates and
achievability of the cash flows based on their understanding of the
business and local market and industry conditions.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
123
Our response to the risk
We performed the following procedures:
• Obtained the breakdown of non-underlying items to determine
whether by their nature they meet the definition of exceptional
items, in accordance with Group policy and ESMA (European
Securities and Markets Authority) guidance.
• Tested that the amounts included as non-underlying items are
supported by appropriate evidence. We performed tests of detail
over material restructuring costs to ensure that the underlying
expenditure recorded truly relates to a specified restructuring
project and not a general expense. We were assisted by our
component teams in locations where these material expenditures
have arisen.
• Assessed the appropriateness of the disclosures of non-underlying
items in light of IFRS (IAS 1) and the continued focus by the
accounting regulators on alternative profit measures (APMs) with
the support of our EY technical review team.
• The primary team performed centralised procedures over the
classification and disclosure of non-underlying items, and the related
risk of material misstatement, in the Group consolidated financial
statements as a whole.
Key observations communicated
to the Audit and Risk Committee
As a result of our audit
procedures performed,
no items were
inappropriately included
or excluded from
non-underlying items.
We have assessed that
the alternative
performance measures
(APMs) included in the
Group financial
statements are
appropriately defined,
reconciled to GAAP
measures and disclosed.
Risk
Quality of earnings, including
disclosure of non-underlying items
(2021: £12.3m (pre-tax)); 2020: £33.1m
(pre-tax))
Refer to the Audit and Risk Committee
Report (page 92); accounting policies (page
139); and note 8 of the consolidated
financial statements (pages 147 and 148)
The Group’s accounting policy is to
classify certain income statement items
as non-underlying, where they are
exceptional by their size and/or are
non-trading in nature, including
amortisation of acquired intangibles and
other non-trading amounts, including
those relating to acquisitions and
disposals.
As at the year end, management
identified certain items totalling £12.3m
which they believe are significant by either
size and/or nature, which warrant
separate disclosure in the consolidated
financial statements to better reflect
underlying business performance.
The classification of such items is
judgemental and there is a risk that
material items are misclassified as
‘non-underlying’ and are therefore
excluded from the results presented in
the form of adjusted profit measures,
which would mislead the users of the
financial statements in understanding
the performance of the Group.
Furthermore, there is a risk that the
financial statements give undue
prominence to adjusted performance
measures compared with their IFRS
equivalents.
In the prior year, our auditor’s report included a key audit matter in relation to going concern which reflected the uncertainties which had emerged as a
result of the COVID-19 pandemic in 2020. In the current year, this risk has reduced reflecting the opening-up of the global economy (including reduced
social distancing and travel restrictions), the enrolment of vaccinations, and the resilience of the Group exhibited in its financial performance and in
continuing to operate in accordance with expectations despite the emergence of new COVID-19 variants during 2021. Please refer to the ‘Conclusions
relating to going concern’ section above in respect of our work performed in this area.
124
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report continued
to the members of Keller Group plc
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in
evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions
of the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £4.2m (2020: £4.8m), which
is 5% (2020: 5%) of adjusted profit before tax. We believe that adjusted
profit before tax provides us with an appropriate materiality basis which
excludes non-underlying items, as these were identified as a key audit
matter which resulted in specific audit focus.
We determined materiality for the parent company to be £4.7m (2020:
£4.8m), which is 1% (2020: 1%) of equity. Equity is the most appropriate
measure given the parent company is an investment holding company with
no revenue. The materiality determined for the standalone parent
company financial statements exceeds the group materiality as it is
determined on a different basis given the nature of the operations. For the
purposes of the audit of the Group financial statements, our procedures,
including those on balances in the parent company that are consolidated,
are undertaken with reference to the group assigned materiality and
performance materiality set out in this report.
Starting
basis
• £71.6m
• Profit before tax for the year
Adjustments
• Add back – £12.3m
• Non-underlying items for the year
Materiality
• Totals £83.9m
• Materiality of £4.2m (5% of materiality basis)
During the course of our audit, we reassessed initial materiality, noting no
significant variations from the original assessment at planning.
Performance materiality
The application of materiality at the individual account or balance level. It is set
at an amount to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 50% (2020: 50%) of our planning materiality, namely £2.1m
(2020: £2.4m). We have set performance materiality at this percentage
based on our overall risk assessment at the audit planning stage, including
consideration for general risk factors such as the ongoing impact of
COVID-19.
Audit work at component locations for the purpose of obtaining audit
coverage over significant financial statement accounts is undertaken based
on a percentage of total performance materiality. The performance
materiality set for each component is based on the relative scale and risk of
the component to the Group as a whole and our assessment of the risk of
misstatement at that component. In the current year, the range of
performance materiality allocated to components was £0.3m to £1.5m
(2020: £0.2m to £1.8m).
Reporting threshold
An amount below which identified misstatements are considered as being
clearly trivial.
We agreed with the Audit and Risk Committee that we would report to
them all uncorrected audit differences in excess of £0.2m (2020: £0.2m),
which is set at 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual
Report and Accounts set out on pages 1 to 189, including the Strategic
report on pages 1 to 67, and Corporate governance report set out on
pages 68 to 115 other than the financial statements and our auditor’s
report thereon. The Directors are responsible for the other information
contained within the Annual Report and Accounts
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
125
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
• Directors’ statement on whether the Board has a reasonable
expectation that the Group will be able to continue in operation and
meets its liabilities set out on page 33;
• Directors’ statement on fair, balanced and understandable set out on
page 115;
In our opinion, based on the work undertaken in the course of the audit:
• Board’s confirmation that it has carried out a robust assessment of the
•
the information given in the Strategic report and the Directors’ report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
emerging and principal risks set out on page 33;
• the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out
on page 83; and;
• the section describing the work of the Audit and Risk Committee set out
on page 91.
Matters on which we are required to report by exception
Responsibilities of Directors
In the light of the knowledge and understanding of the Group and the
parent company and its environment obtained in the course of the audit,
we have not identified material misstatements in the Strategic report or the
Directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance
Statement relating to the Group and company’s compliance with the
provisions of the UK Corporate Governance Code specified for our
review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that
each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge
obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 33;
• Directors’ explanation as to their assessment of the company’s
prospects, the period this assessment covers and why the period is
appropriate set out on page 33;
As explained more fully in the Directors’ responsibilities statement set out
on page 115, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary
to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
126
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Independent auditor’s report continued
to the members of Keller Group plc
Other matters we are required to address
• Following the recommendation from the Audit and Risk Committee, we
were appointed by the company on 19 May 2021 to audit the financial
statements for the year ending 31 December 2021 and subsequent
financial periods. We were appointed as auditors at the Annual General
Meeting of members and an engagement letter was signed on 3 March
2022 which applies to all accounting periods from the date of the
engagement letter until it is replaced.
The period of total uninterrupted engagement including previous
renewals and reappointments is three years, covering the years ending
31 December 2019 to 31 December 2021.
• The audit opinion is consistent with the additional report to the Audit and
Risk Committee.
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might state to the company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the company
and the company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Kevin Harkin (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Reading
7 March 2022
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the company and
management.
• We obtained an understanding of the legal and regulatory frameworks
that are applicable to the Group and determined that the most
significant are those related to the reporting framework (IFRS adopted
pursuant to FRS 101, United Kingdom Generally Accepted Accounting
Practice, the Companies Act 2006 and Corporate Governance Code)
and the relevant tax compliance regulations in the countries of
operations of the reporting components. In addition, we concluded that
there are certain significant laws and regulations which may have an
effect on the determination of the amounts and disclosures in the
financial statements, being the Listing Rules of the London Stock
Exchange and the Bribery Act 2010.
• We understood how Keller Group plc is complying with those frameworks
by making enquiries of management, reviewing management
procedures for oversight by those charged with governance (ie
considering the potential for override of controls or other inappropriate
influence over the financial reporting process, such as efforts by
management to manage earnings in order to influence the perceptions
of analysts as to the Group’s performance and profitability), the culture
of honesty and ethical behaviour and whether a strong emphasis is
placed on fraud prevention, which may reduce opportunities for fraud to
take place, and fraud deterrence. We corroborated our enquiries through
our review of Board minutes, discussions with the Audit and Risk
Committee, any correspondence received from regulatory bodies and
those responsible for legal and compliance procedures and the
Company Secretary.
• We assessed the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur by meeting with
management to understand where they considered there was
susceptibility to fraud. We also considered performance targets and their
influence on efforts made by management to manage earnings or
influence the perceptions of analysts. Where this risk was considered to
be higher, we performed audit procedures to address each identified
fraud risk. The key audit matters section above addresses procedures
performed in areas where we have concluded the risks of material
misstatement are highest (including where due to the risk of fraud).
These procedures included testing manual journal entries.
• Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations. Our procedures
involved review of Board minutes to identify non-compliance with such
laws and regulations, review of reporting to the Audit and Risk
Committee on compliance with regulations and enquires of the
Company Secretary and management.
•
In the case of Keller Group plc, all full and specific scope components
were instructed to perform procedures in the identification of instances
of non-compliance with laws and regulations.
• Component teams did not identify any instances of non-compliance
with laws and regulations. In instances where we identified an increased
risk in this area, we performed additional audit procedures in order to
evaluate whether the risk could have a significant effect on the Group,
its stakeholders or the financial statements. There were no identified
significant instances of non-compliance with laws and regulations at
the Group level.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
127
Consolidated income statement
For the year ended 31 December 2021
Revenue
Operating costs
Amortisation of acquired intangible assets
Other operating income
Share of post-tax results of joint ventures
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before taxation
Taxation
Profit/(loss) for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Earnings per share
Basic
Diluted
2021
Non-underlying
items
(note 8)
£m
–
(9.6)
(2.8)
0.7
(0.6)
(12.3)
–
–
(12.3)
10.6
(1.7)
(1.7)
–
(1.7)
Statutory
£m
2,224.4
(2,141.6)
Underlying
£m
2,062.5
(1,953.2)
(2.8)
0.7
(0.2)
80.5
0.4
(9.3)
71.6
(9.5)
62.1
63.0
(0.9)
62.1
87.1p
86.1p
–
–
0.8
110.1
1.1
(14.3)
96.9
(28.3)
68.6
70.0
(1.4)
68.6
97.1p
96.3p
2020
Non-underlying
items
(note 8)
£m
Statutory
£m
–
2,062.5
(29.6)
(4.2)
0.7
–
(33.1)
–
–
(33.1)
5.6
(27.5)
(27.5)
–
(27.5)
(1,982.8)
(4.2)
0.7
0.8
77.0
1.1
(14.3)
63.8
(22.7)
41.1
42.5
(1.4)
41.1
58.9p
58.5p
Underlying
£m
2,224.4
(2,132.0)
Note
3,4
6
–
–
0.4
92.8
0.4
(9.3)
83.9
(20.1)
63.8
64.7
(0.9)
63.8
89.5p
88.4p
16
3
9
10
11
33
13
13
128
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange movements on translation of foreign operations
Transfer of translation reserve on disposal of subsidiaries
Cash flow hedge gains taken to equity
Cash flow hedge transferred to income statement
Items that will not be reclassified subsequently to profit or loss:
Remeasurements of defined benefit pension schemes
Tax on remeasurements of defined benefit pension schemes
Other comprehensive loss for the year, net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Note
25
25
32
11
2021
£m
62.1
(4.3)
(0.4)
–
–
1.2
(0.2)
(3.7)
58.4
59.3
(0.9)
58.4
2020
£m
41.1
(5.9)
2.9
0.5
(0.5)
(2.2)
0.4
(4.8)
36.3
37.9
(1.6)
36.3
Keller Group plc Annual Report and Accounts 2021
Financial Statements
129
Consolidated balance sheet
As at 31 December 2021
Assets
Non-current assets
Goodwill and intangible assets
Property, plant and equipment
Investments in joint ventures
Deferred tax assets
Other assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Assets held for sale
Total assets
Liabilities
Current liabilities
Loans and borrowings
Current tax liabilities
Trade and other payables
Provisions
Non-current liabilities
Loans and borrowings
Retirement benefit liabilities
Deferred tax liabilities
Provisions
Other liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Translation reserve
Other reserve
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
Note
14
15
16
11
17
18
19
20
21
3
25
22
23
25
32
11
23
24
3
3
27
27
27
33
2021
£m
141.5
443.4
4.0
13.0
88.5
690.4
72.1
592.0
8.9
82.7
3.4
759.1
1,449.5
(29.8)
(17.9)
(505.7)
(53.8)
(607.2)
(246.2)
(25.7)
(28.6)
(77.9)
(21.2)
(399.6)
(1,006.8)
442.7
7.3
38.1
7.6
11.6
56.9
318.4
439.9
2.8
442.7
20201
£m
118.8
434.9
4.4
10.3
60.3
628.7
60.1
501.9
2.1
66.3
8.7
639.1
1,267.8
(67.0)
(17.1)
(381.7)
(54.4)
(520.2)
(191.8)
(31.1)
(21.3)
(71.4)
(22.0)
(337.6)
(857.8)
410.0
7.3
38.1
7.6
16.3
56.9
280.1
406.3
3.7
410.0
1
Other assets, trade and other receivables and provisions presented here do not correspond to the published 2020 consolidated financial statements. The comparative balance sheet has been restated
to present gross insurance provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers and customer retentions receivable in more than one year to
other non-current assets, as outlined in note 2 to the financial statements.
These consolidated financial statements were approved by the Board of Directors and authorised for issue on 7 March 2022.
They were signed on its behalf by:
Michael Speakman
Chief Executive Officer
David Burke
Chief Financial Officer
130
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Consolidated statement of changes in equity
For the year ended 31 December 2021
At 1 January 2020
Profit/(loss) for the year
Other comprehensive income
Exchange movements on translation
of foreign operations
Transfer of reserves on disposal
of subsidiaries
Cash flow hedge gains taken to equity
Cash flow hedge transferred to
income statement
Remeasurements of defined
benefit pension schemes
Tax on remeasurements of defined
benefit pension schemes
Other comprehensive loss
for the year, net of tax
Total comprehensive (loss)/
income for the year
Dividends
Share-based payments
Share
capital
(note 27)
£m
7.3
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2020 and 1 January 2021
Profit/(loss) for the year
Other comprehensive income
7.3
–
Exchange movements on translation
of foreign operations
Transfer of reserves on disposal
of subsidiaries
Remeasurements of defined
benefit pension schemes
Tax on remeasurements of defined
benefit pension schemes
Other comprehensive (loss)/income
for the year, net of tax
Total comprehensive (loss)/
income for the year
Dividends
Purchase of own shares for ESOP trust
Share-based payments
At 31 December 2021
Share
premium
account
£m
38.1
–
–
–
–
–
–
–
–
–
–
–
38.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Capital
redemption
reserve
(note 27)
£m
7.6
–
Translation
reserve
£m
19.1
–
Other
reserve
(note 27)
£m
56.9
–
–
–
–
–
–
–
–
–
–
–
(5.7)
2.9
–
–
–
–
(2.8)
(2.8)
–
–
16.3
56.9
–
(4.3)
(0.4)
–
–
(4.7)
(4.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
Hedging
reserve
(note 25)
£m
–
–
–
–
0.5
(0.5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Attributable
to equity
holders of
the parent
£m
Non-
controlling
interests
(note 33)
£m
392.2
42.5
5.3
(1.4)
Total
equity
£m
397.5
41.1
Retained
earnings
£m
263.2
42.5
–
–
–
–
(2.2)
0.4
(1.8)
40.7
(25.9)
2.1
280.1
63.0
–
–
1.2
(0.2)
1.0
64.0
(25.9)
(3.7)
3.9
318.4
(5.7)
(0.2)
(5.9)
2.9
0.5
(0.5)
(2.2)
0.4
(4.6)
37.9
(25.9)
2.1
406.3
63.0
(4.3)
(0.4)
1.2
(0.2)
(3.7)
59.3
(25.9)
(3.7)
3.9
439.9
–
–
–
–
–
(0.2)
(1.6)
–
–
3.7
(0.9)
–
–
–
–
–
2.9
0.5
(0.5)
(2.2)
0.4
(4.8)
36.3
(25.9)
2.1
410.0
62.1
(4.3)
(0.4)
1.2
(0.2)
(3.7)
(0.9)
–
–
–
2.8
58.4
(25.9)
(3.7)
3.9
442.7
–
–
–
–
–
–
–
–
–
–
7.6
–
–
–
–
–
–
–
–
–
–
7.3
38.1
7.6
11.6
56.9
Keller Group plc Annual Report and Accounts 2021
Financial Statements
131
Consolidated cash flow statement
For the year ended 31 December 2021
Cash flows from operating activities
Profit before taxation
Non-underlying items
Finance income
Finance costs
Underlying operating profit
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share of underlying post-tax results of joint ventures
Profit on sale of property, plant and equipment
Other non-cash movements
Foreign exchange losses
Operating cash flows before movements in working capital and other underlying items
(Increase)/decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in provisions, retirement benefit and other non-current liabilities
Cash generated from operations before non-underlying items
Cash inflows from non-underlying items: contract disputes
Cash inflows from non-underlying items: assets held for sale
Cash outflows from non-underlying items: restructuring costs
Cash outflows from non-underlying items: acquisition costs
Cash generated from operations
Interest paid
Interest element of lease rental payments
Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of property, plant and equipment
Proceeds on disposal of businesses
Acquisition of businesses, net of cash acquired
Acquisition of property, plant and equipment
Acquisition of other intangible assets
Dividends received from joint ventures
Net cash outflow from investing activities
Cash flows from financing activities
Increase in borrowings
Repayment of borrowings
Payment of lease liabilities
Purchase of own shares for ESOP trust
Dividends paid
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate movements
Cash and cash equivalents at end of year
Note
8
9
10
3
15
14
16
5
5
15
14
16
12
20
2021
£m
71.6
12.3
(0.4)
9.3
92.8
90.6
0.6
(0.4)
(1.8)
8.3
0.1
190.2
(18.3)
(104.4)
119.0
(7.8)
178.7
–
2.4
(3.9)
(0.5)
176.7
(2.0)
(3.1)
(15.9)
155.7
0.4
9.8
7.1
(29.9)
(84.0)
(0.4)
–
(97.0)
91.2
(69.4)
(29.8)
(3.7)
(25.9)
(37.6)
21.1
61.6
(0.9)
81.8
2020
£m
63.8
33.1
(1.1)
14.3
110.1
94.3
0.6
(0.8)
(0.6)
1.8
1.5
206.9
7.1
111.1
(80.0)
13.9
259.0
0.7
–
(11.7)
–
248.0
(8.8)
(3.8)
(24.9)
210.5
0.6
7.4
2.2
–
(72.5)
(0.5)
0.4
(62.4)
10.4
(131.4)
(27.2)
–
(25.9)
(174.1)
(26.0)
87.5
0.1
61.6
132
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Notes to the consolidated financial statements
1 Corporate information
The following severe but plausible downside assumptions were modelled:
The consolidated financial statements of Keller Group plc and its
subsidiaries (collectively, the ‘Group’) for the year ended 31 December
2021 were authorised for issue in accordance with the resolution of the
Directors on 7 March 2022.
Keller Group plc (the ‘company’) is a public limited company, incorporated
and domiciled in the United Kingdom, whose shares are publicly traded on
the London Stock Exchange. The registered office is located at 2 Kingdom
Street, London W2 6BD. The Group is principally engaged in the provision
of specialist geotechnical services. Information on the Group’s structure is
provided in note 9 of the company financial statements.
2 Significant accounting policies
Basis of preparation
In accordance with the Companies Act 2006, these consolidated
financial statements have been prepared and approved by the Directors
in accordance with UK adopted international accounting standards.
The company prepares its parent company financial statements
in accordance with FRS 101.
The consolidated financial statements have been prepared on an historical
cost basis, except for derivative financial instruments that have been
measured at fair value. The carrying values of recognised assets and
liabilities that are designated as hedged items in fair value hedges that
would otherwise be carried at amortised cost are adjusted to recognise
changes in the fair values attributable to the risks that are being hedged
in effective hedge relationships. The consolidated financial statements
are presented in pounds sterling and all values are rounded to the nearest
hundred thousand, expressed in millions to one decimal point, except when
otherwise indicated.
Going concern
As part of the going concern and viability review, management ran a
series of downside scenarios on the latest forecast profit and cash flow
projections to assess covenant headroom against available funding
facilities for a three-year period to 31 December 2024. The going concern
review used the same downside scenarios and forecasts for the period
through to the end of March 2023, a period of at least 12 months from
when the financial statements are authorised for issue and aligning with
the period in which the Group’s banking covenants are tested. This process
involved constructing scenarios to reflect the Group’s current assessment
of its principal risks, including those that would threaten its business
model, future performance, solvency or liquidity. The principal risks and
uncertainties modelled by management align with those disclosed within
this Annual Report and Accounts.
• Rapid downturn in the Group’s markets resulting in up to a 10% decline in
revenues.
•
Ineffective execution of projects reducing profits by 1% of revenue.
• Not having the right skills to deliver reducing profits by 0.5% of revenue.
• A combination of other principal risks and trading risks materialising
together reducing profits by up to £84.6m over the period to
31 December 2024. These risks include changing environmental
factors, costs of ethical misconduct and regulatory non-compliance,
occurrence of an accident causing serious injury to an employee or
member of the public, the cost of a product or solution failure and the
impact of a previously unrecorded tax liability.
• Deterioration of working capital performance by 5% of six months’ sales.
The financial and cash effects of these scenarios were modelled individually
and in combination. The focus was on the ability to secure or retain future
work and potential downward pressure on margins. Management applied
sensitivities against projected revenue, margin and working capital metrics
reflecting a series of plausible downside scenarios. Against the most
negative scenario, mitigating actions were overlaid. These include a range
of cost-cutting measures and overhead savings designed to preserve cash
flows. Even in the most extreme downside scenario modelled, including an
aggregation of all risks considered, which showed a decrease in operating
profit of 42.9% and an increase in net debt of 47.9% against the Group’s
latest forecast profit and cash flow projections for the review period up to
31 March 2023. The adjusted projections do not show a breach of
covenants in respect of available funding facilities or any liquidity shortfall.
Consideration was given to scenarios where covenants would be breached
and the circumstances giving rise to these scenarios were considered
extreme and remote. This process allowed the Board to conclude that the
Group will continue to operate on a going concern basis for the period
through to the end of March 2023, a period of at least 12 months from
when the financial statements are authorised for issue. Accordingly, the
consolidated financial statements are prepared on a going concern basis.
At 31 December 2021, the Group had undrawn committed and
uncommitted borrowing facilities totalling £291.9m, comprising £219.8m
of the unutilised portion of the revolving credit facility, £15.7m of other
undrawn committed borrowing facilities and undrawn uncommitted
borrowing facilities of £56.4m, as well as cash and cash equivalents of
£82.7m. At 31 December 2021, the Group’s net debt to underlying EBITDA
ratio (calculated on an IAS 17 covenant basis) was 0.8x, well within the limit
of 3.0x.
Climate change
In preparing the consolidated financial statements, management has
considered the impact of climate change on a number of key estimates
within the financial statements, including estimates of future cash flows
used in impairment assessments of the carrying value of goodwill,
recoverability of deferred tax assets and the useful economic life of plant,
equipment and other intangible assets. These considerations did not have
a material impact on the financial reporting judgements and estimates,
consistent with the assessment that climate change is not expected to
have a significant impact on the Group’s going concern assessment to
March 2023 nor the viability of the Group over the next three years.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
133
Prior year restatement
Insurance restatement
In October 2021, the Group received a letter from the Financial Reporting
Council (FRC) as part of its regular review and assessment of the quality of
corporate reporting in the UK, following the Group’s inclusion in the
‘Thematic review on Provisions, Contingent Liabilities and Contingent
Assets.’ The letter included a request for further information on the
Group’s Annual Report and Accounts for the year ended 31 December
2020. The review conducted by the FRC was based solely on the Group’s
published Annual Report and Accounts and does not provide any assurance
that the Annual Report and Accounts are correct in all material respects.
Following finalisation of the correspondence with the FRC, the Directors
have concluded that the insurance reimbursement receivables of the
Group should be separately presented gross on the consolidated balance
sheet, rather than netted off against the insurance and legal provision.
Retentions restatement
Separately from the above, the element of trade receivables relating to
customer retentions expected to be received in more than one year was
disclosed separately in the revenue note (note 4 to the consolidated
financial statements) but classified incorrectly within the trade and other
receivables balance sheet line. The Group has amended this disclosure and
separately categorised this receivable within other non-current assets as
detailed below.
As a result of these items, the consolidated balance sheet as at
31 December 2020 has been restated as follows:
Consolidated balance sheet
2020
(as reported)
£m
Insurance
restatement
£m
Retentions
restatement
£m
25.9
24.2
10.2
Non-current assets
Other assets
Current assets
Trade and other receivables
503.9
8.2
(10.2)
Current liabilities
Provisions
(46.2)
(8.2)
Of which: Insurance and
legal provisions
Other provisions
Non-current liabilities
(12.6)
(33.6)
(8.2)
–
Provisions
(47.2)
(24.2)
Of which: Insurance and
legal provisions
Other provisions
(26.9)
(20.3)
(24.2)
–
–
–
–
–
–
–
2020
(restated)
£m
60.3
501.9
(54.4)
(20.8)
(33.6)
(71.4)
(51.1)
(20.3)
The restatement did not result in any change to reported profit, earnings
per share, net assets or cash flows reported in the 2020 financial year.
The impact on the opening consolidated balance sheet as at 31 December
2019 is as follows:
Consolidated balance sheet
2019
(as reported)
£m
Insurance
restatement
£m
Retentions
restatement
£m
22.3
9.1
32.4
Non-current assets
Other assets
Current assets
Trade and other receivables
626.7
2.5
(32.4)
Current liabilities
Provisions
(28.6)
(2.5)
Of which: Insurance and legal
provisions
Other provisions
Non-current liabilities
(6.9)
(21.7)
(2.5)
–
Provisions
(46.4)
(9.1)
Of which: Insurance and legal
provisions
Other provisions
(25.8)
(20.6)
(9.1)
–
–
–
–
–
–
–
2019
(restated)
£m
63.8
596.8
(31.1)
(9.4)
(21.7)
(55.5)
(34.9)
(20.6)
The restatement did not result in any change to reported profit, earnings
per share, net assets or cash flows reported in the 2019 financial year.
Further details of the impact of the restatement can be found in notes 17,
19 and 23 to the consolidated financial statements.
Basis of consolidation
The consolidated financial statements consolidate the accounts of the
parent and its subsidiary undertakings to 31 December each year.
Subsidiaries are entities controlled by the company. Control exists when
the company has power over an entity, exposure to variable returns from its
involvement with the entity and the ability to use its power over the entity
to affect its returns. Where subsidiary undertakings were acquired or sold
during the year, the accounts include the results for the part of the year for
which they were subsidiary undertakings using the acquisition method of
accounting. Intra-group balances, and any unrealised income and expense
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
Joint operations
Where the Group undertakes contracts jointly with other parties, these are
accounted for as joint operations as defined by IFRS 11. In accordance with
IFRS 11, the Group accounts for its own share of assets, liabilities, revenues
and expenses measured according to the terms of the joint operations
agreement.
134
Keller Group plc Annual Report and Accounts 2021
Financial Statements
2 Significant accounting policies continued
Joint ventures
A joint venture is a type of joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net assets of the
joint arrangement. The consolidated financial statements incorporate a
share of the results, assets and liabilities of joint ventures using the equity
method of accounting, whereby the investment is carried at cost plus
post-acquisition changes in the share of net assets of the joint venture,
less any provision for impairment. Losses in excess of the consolidated
interest in joint ventures are not recognised except where the Group has
a constructive commitment to make good those losses. The results of
joint ventures acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition or
up to the effective date of disposal, as appropriate.
Changes in accounting policies and disclosures
New and amended standards and interpretations
The following amendments became effective during the year to
31 December 2021:
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 ‘Interest Rate
Benchmark Reform Phase 2’ (effective 1 January 2021).
• Amendments to IFRS 16 ‘COVID-19 Related Rent Concessions beyond
30 June 2021’ (effective 1 April 2021).
These amendments have a limited impact on the consolidated financial
statements of the Group.
The Group has not early adopted any standards, interpretations or
amendments that have been issued but are not yet effective.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
‘Interest Rate Benchmark Reform Phase 2’ (IBOR)
In September 2019, the IASB issued the first accounting amendment to
IFRS 9, IAS 39 and IFRS 7 related to the IBOR reform, which addresses the
impact that the current uncertainty could have when applying specific
hedge accounting requirements on applicable hedge relationships. The
first phase of amendments to IFRS 9 provides temporary relief from
applying specific hedge accounting requirements to hedging relationships
directly affected by the IBOR reforms. In accordance with the transition
provisions, the amendments have been adopted retrospectively to hedging
relationships that existed at the start of the current reporting period. The
reliefs have meant that the uncertainty over the IBOR reforms has not
resulted in the discontinuation of hedge accounting for any of the Group’s
fair value hedges.
Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 were
issued by the IASB in August 2020 to provide practical expedients and
reliefs in relation to modifications of financial instruments and leases that
arise from the transition from IBORs to risk-free rates. Phase 2 also
provides further reliefs to hedge accounting requirements. These
amendments were effective for the Group from 1 January 2021.
The Group is monitoring and managing the transition to alternative
benchmark rates that are linked to existing interest rate benchmarks
related to borrowings, leases and derivative contracts. The impact of IBOR
reform on the Group is assessed as being limited. The changes only apply
to one hedge relationship associated with managing the fixed rate on the
US private placement expiring in December 2024 (refer to note 25), for
which the Group is exposed to a six-month USD LIBOR that will be available
until June 2023. In 2021, the Group amended and restated the £375m
syndicated revolving credit facility to replace any reference to IBOR with
reference to applicable risk-free rates. There is no impact on the
incremental borrowing rate for calculating leases liabilities.
Amendments to IFRS 16 ‘COVID-19 Related Rent Concessions
beyond 30 June 2021’
On 28 May 2020, the IASB issued COVID-19 Related Rent Concessions
amendments to IFRS 16 ‘Leases’. The amendments provide relief to
lessees from applying IFRS 16 guidance on lease modification accounting
for rent concessions arising as a direct consequence of the COVID-19
pandemic. As a practical expedient, a lessee may elect not to assess
whether a COVID-19 related rent concession from a lessor is a lease
modification. A lessee that makes this election accounts for any change in
lease payments resulting from the COVID-19 related rent concession the
same way it would account for the change under IFRS 16, if the change
were not a lease modification. The amendment was intended to apply until
30 June 2021, but as the impact of the COVID-19 pandemic is continuing,
on 31 March 2021, the IASB extended the period of application of the
practical expedient to 30 June 2022. The amendment applies to annual
reporting periods beginning on or after 1 April 2021.
The Group has not received COVID-19 related rent concessions during the
year, but plans to apply the practical expedient if it becomes applicable
within the allowed period of application.
Summary of significant accounting policies
Foreign currencies
The Group’s consolidated financial statements are presented in pounds
sterling, which is also the parent company’s functional currency. For each
entity, the Group determines the functional currency and items included in
the financial statements of each entity are measured using that functional
currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s
entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are
translated at the functional currency spot rates of exchange at the
reporting date. Differences arising on settlement or translation of
monetary items are recognised in the consolidated income statement.
Non-monetary items that are measured in terms of historical cost in a
foreign currency are translated using the exchange rates at the dates
of the initial transactions.
Group companies
On consolidation, the assets and liabilities of foreign operations are
translated into pounds sterling at the rate of exchange prevailing at the
reporting date and their income statements are translated at exchange
rates prevailing at the dates of the transactions. The exchange movements
arising on translation for consolidation are recognised in other
comprehensive income (OCI). On disposal of a foreign operation, the
component of the translation reserve relating to that particular foreign
operation is reclassified to profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair
value adjustments to the carrying amounts of assets and liabilities arising
on the acquisition are treated as assets and liabilities of the foreign
operation and translated at the average rate.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
135
The exchange rates used in respect of principal currencies are:
Average rates
US dollar
Canadian dollar
Euro
Singapore dollar
Australian dollar
Year end rates
US dollar
Canadian dollar
Euro
Singapore dollar
Australian dollar
2021
1.38
1.72
1.16
1.85
1.83
2021
1.35
1.71
1.19
1.82
1.86
2020
1.28
1.72
1.12
1.77
1.86
2020
1.37
1.74
1.12
1.81
1.78
Revenue from contracts with customers
The Group’s operations involve the provision of specialist geotechnical
services. The majority of the Group’s revenue is derived from construction
contracts. Typically, the Group’s construction contracts consist of one
performance obligation; however, for certain contracts (for example where
contracts involve separate phases or products that are not highly
interrelated) multiple performance obligations exist. Where multiple
performance obligations exist, total revenue is allocated to performance
obligations based on the relative standalone selling prices of each
performance obligation.
For each contract, revenue is the amount that is expected to be received
from the customer. Revenue is typically invoiced in stages during the
contracts, however smaller contracts are usually invoiced on completion.
Variable consideration and contract modifications are assessed on a
contract-by-contract basis, according to the terms, facts and
circumstances of the project. Variable consideration is recognised only to
the extent that it is highly probable that there will not be a significant
reversal. The effects of contract modifications are recognised only when
the Group considers there is an enforceable right to consideration. In
certain circumstances, uncertainty over whether a project will be
completed or not will mean that it is not appropriate to recognise
contracted revenues.
Revenue attributed to each performance obligation is recognised based on
either the input or the output method. The output method is the Group’s
default revenue recognition approach. The input method is generally used
for longer-term, more complex contracts. These methods best reflect the
transfer of benefits to the customer.
•
• Output method: revenue is recognised on the direct measurement of
progress based on output, such as units of production relative to the
total number of contracted production units.
Input method: revenue is recognised on the percentage of completion
with reference to cost. The percentage of completion is calculated
based on the costs incurred to date as a percentage of the total costs
expected to satisfy the performance obligation. Estimates of revenues,
costs or extent of progress towards completion are revised if
circumstances change. Any resulting increases or decreases in
estimated revenues or costs are reflected in the percentage of
completion calculation in the period in which the circumstances that
give rise to the revision become known.
Where the Group becomes aware that a loss may arise on a contract, and
that loss is probable, full provision is made in the consolidated balance
sheet; based on the estimated unavoidable costs of meeting the
obligations of the contract, where these exceed the economic benefits
expected to be received. The unavoidable costs under a contract reflect
the least net cost of exiting from the contract, which is the lower of the
cost of fulfilling it and any compensation or penalties arising from failure
to fulfil it.
Incremental bid/tender costs and fulfilment costs are not material to the
overall contract and are expensed as incurred.
Any revenues recognised in excess of billings are recognised as contract
assets within trade and other receivables. Any payments received in excess
of revenue recognised are recognised as contract liabilities within trade and
other payables.
Revenue from the sale of goods and services
The Group’s revenue recognised from the sale of goods and services
primarily relates to certain parts of the North America business. These
contracts typically have a single performance obligation, or a series of
distinct performance obligations that are substantially the same. There are
typically two types of contract:
• Delivery of goods: revenue for such contracts is recognised at a point in
time, on delivery of the goods to the customer.
• Delivery of goods with installation and/or post-delivery services:
revenue for these contracts is recognised at a point in time by reference
to the date on which the goods are installed and/or accepted by the
customer.
Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax
rates and tax laws used to compute the amount are those that are enacted or
substantively enacted at the reporting date in the countries where the Group
operates and generates taxable income. Current income tax relating to items
recognised directly in equity is recognised in equity and not in the
consolidated income statement.
The Group provides for future liabilities in respect of uncertain tax positions
where additional tax may become payable in future periods. Such
provisions are based on management’s best judgement of the probability
of the outcome in reaching agreement with the relevant tax authorities. For
further information refer to note 11.
Deferred tax
Deferred tax is provided using the liability method on temporary
differences between the tax bases of assets and liabilities, and their
carrying amounts for financial reporting purposes at the reporting date.
Deferred tax is recognised on temporary differences in line with IAS 12
‘Income Taxes’. Deferred tax assets are recognised when it is considered
likely that they will be utilised against future taxable profits or deferred
tax liabilities.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited to the income statement, except when it relates to
items charged or credited directly to equity or to OCI, in which case the
related deferred tax is also dealt with in equity or in OCI.
136
Keller Group plc Annual Report and Accounts 2021
Financial Statements
2 Significant accounting policies continued
The carrying amount of deferred tax assets is reviewed at each reporting
date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to
be recovered.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and liabilities on a
net basis.
Interest income and expense
All interest income and expense is recognised in the income statement on
an accruals basis, using the effective interest method.
Employee benefit costs
The Group operates a number of defined benefit pension schemes, and
also makes payments into defined contribution schemes.
The liability in respect of defined benefit schemes is the present value
of the defined benefit obligations at the balance sheet date, calculated
using the projected unit credit method, less the fair value of the schemes’
assets where applicable. As allowed by IAS 19, the Group recognises the
administration costs, current service cost and interest on scheme net
liabilities in the income statement, and remeasurements of defined benefit
plans in OCI in full in the period in which they occur. Any surplus resulting
from this calculation is limited to the present value of any economic
benefits available in the form of refunds from the plans or reductions
in future contributions to the plans. Where there is no legal right to a
refund from the plan, the liability is calculated as the minimum funding
requirement to the plan that exists at the balance sheet date.
The Group also has long service arrangements in certain overseas
countries. These are accounted for in accordance with IAS 19 ‘Employee
Benefits’ and accounting follows the same principles as for a defined
benefit scheme.
Payments to defined contribution schemes are accounted for on an
accruals basis.
Government subsidies
In an attempt to mitigate the impact of the COVID-19 pandemic, during
the year some government bodies continued to provide direct subsidies to
aid companies. Where the subsidy relates to an expense item, it has been
recognised in the consolidated income statement as an offset against the
expense for which it is was intended to compensate. In the prior year the
Group was eligible for deferral of the employer’s share of social security
taxes in the United States. No additional deferrals took place in 2021.
Further details are set out in notes 6 and 7.
Depreciation
Depreciation is provided to write off the cost less the estimated residual
value of property, plant and equipment using the straight-line method by
reference to their estimated useful lives as follows:
Buildings
Plant and equipment
Motor vehicles
Computers
50 years
3 to 12 years
4 years
3 years
Depreciation is not provided for on freehold land.
An item of property, plant and equipment is derecognised upon disposal (ie
at the date the recipient obtains control) or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted
where appropriate.
Leases
The Group assesses at contract inception whether a contract is, or
contains, a lease. That is, if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration.
Group as lessee
The Group applies a single recognition and measurement approach for all
leases, except for short-term leases and leases of low-value assets (less
than £3,000). The Group recognises lease liabilities to make payments and
right-of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of
the lease (ie the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease payments made at or
before the commencement date less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the
shorter of the lease term and estimated useful lives as follows:
Land and buildings
Plant and equipment
Motor vehicles
3 to 15 years
2 to 8 years
3 to 5 years
Right-of-use assets are tested for impairment in accordance with IAS 36
‘Impairment of Assets’.
Property, plant and equipment
Lease liabilities
Property, plant and equipment is stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Further details are
set out in note 15 for impairments recognised in the year. Subsequent
expenditure on property, plant and equipment is capitalised when it
enhances or improves the condition of the item of property, plant and
equipment beyond its original assessed standard of performance.
Maintenance expenditure is expensed as incurred.
At the commencement date of the lease, the Group recognises lease
liabilities measured at the present value of lease payments to be made over
the lease term. The lease payments include fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a
rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties
for terminating a lease, if the lease term reflects the Group exercising the
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
137
option to terminate. Variable lease payments that do not depend on an
index or a rate are recognised as an expense in the period in which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement date, if the
interest rate implicit in the lease is not readily determinable. The
incremental borrowing rate applied to each lease is determined by taking
into account the risk-free rate of the country where the asset under lease is
located, matched to the term of the lease and adjusted for factors such as
the credit risk profile of the lessee. Incremental borrowing rates applied to
individual leases range from 0.9% to 33.0%.
After the commencement date, the amount of lease liabilities is increased
to reflect the addition of interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in lease payments (eg
changes to future payments resulting from a change in an index or rate used
to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset. The Group’s lease liabilities are
included in interest-bearing loans and borrowings. Refer to note 26 for details.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its
short-term leases of plant, machinery and vehicles (ie those leases that
have a lease term of 12 months or less from the commencement date and
do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are
considered of low asset value (below £3,000). Lease payments on
short-term leases and leases of low-value assets are recognised as an
expense on a straight-line basis over the lease term.
Business combinations
Business combinations are accounted for using the acquisition method as
at the acquisition date, which is the date on which control is transferred to
the Group. Control is the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing
control, the Group takes into consideration potential voting rights that
currently are exercisable. The cost of an acquisition is measured as the
aggregate of the consideration transferred, which is measured at the fair
value at the acquisition date. Acquisition-related costs are expensed as
incurred and included in administrative expenses. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The excess of cost of an acquisition over the fair value of the Group’s
share of the identifiable net assets acquired, including assets identified as
intangibles on acquisition, is recorded as goodwill.
The results of subsidiaries which have been disposed are included up to the
effective date of disposal.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of
the consideration transferred. After initial recognition, goodwill is measured
at cost less any accumulated impairment losses. Goodwill is reviewed for
impairment annually and whenever there is an indication that the goodwill
may be impaired in accordance with IAS 36, any impairment losses are
recognised immediately in the income statement. Goodwill arising prior to
1 January 1998 was taken directly to equity in the year in which it arose.
Such goodwill has not been reinstated on the balance sheet. For the
purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group’s
cash-generating units (CGUs) that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units.
Where goodwill has been allocated to a CGU and part of the operation
within that unit is disposed of, the goodwill associated with the disposed
operation is included in the carrying amount of the operation when
determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposed
operation and the portion of the CGU retained.
Other intangible assets
Intangible assets, other than goodwill, include purchased licences, software
(including internally generated software), customer relationships, customer
contracts and trade names. Intangible assets are capitalised at cost and
amortised on a straight-line basis over their useful economic lives from the
date that they are available for use and are stated at cost less accumulated
amortisation and impairment losses. The estimated useful economic lives
are as follows:
Licences
Software
Patents
Customer relationships
Customer contracts
Trade names
1 to 4 years
3 to 7 years
2 to 7 years
5 to 7 years
1 to 2 years
5 to 7 years
Impairment of assets excluding goodwill
The carrying values of property, plant and equipment, right-of-use assets
and other intangibles are reviewed for impairment when events or changes
in circumstances indicate the carrying value may be impaired. If any such
indications exists, the recoverable amount, being the lower of their carrying
amount and fair value less costs to sell, of the asset is estimated in order to
determine the extent of impairment loss.
Capital work in progress
Capital work in progress represents expenditure on property, plant and
equipment in the course of construction. Transfers are made to other
property, plant and equipment categories when the assets are available for
use.
Inventories
Inventories are measured at the lower of cost and estimated net realisable
value with allowance made for obsolete or slow-moving items.
Cost comprises direct materials and, where applicable, direct labour costs
and those overheads that have been incurred in bringing the inventories to
their present location and condition.
Write-downs to net realisable value are made for slow-moving, damaged
or obsolete items based on evaluations made at the local level by
reference to frequency of stock turnover or specific factors affecting
the items concerned.
Assets held for sale
Assets are classified as held for sale if their carrying amount will be
recovered by sale rather than by continuing use in the business. Assets held
for sale are measured at the lower of their carrying amount and fair value
less costs to sell, with reference to comparable market transactions.
Assets that are classified as held for sale are not depreciated.
138
Keller Group plc Annual Report and Accounts 2021
Financial Statements
2 Significant accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s
balance sheet when the Group becomes a party to the contractual
provisions of the instrument. The principal financial assets and liabilities
of the Group are as follows:
(a) Trade receivables and trade payables
Trade receivables are initially recorded at fair value and subsequently
measured at cost and reduced by allowances for estimated irrecoverable
amounts.
Trade receivables and contract assets are stated net of expected
credit losses (ECLs). The initial ECLs are recognised on recognition of a
receivable. This provision is made for each category of receivables with
similar risks, based on historical experience and adjusted for the effects
of expected or actual changes in customer risk, economic risk and
performance expected in the next 12 months. For the lifetime ECL the
Group uses a provision matrix.
Trade payables that are not interest bearing, are initially recognised at fair
value and carried at amortised cost.
(b) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and
on hand and short-term deposits with a maturity of three months or less.
For the purpose of the consolidated statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits, as defined
above, net of outstanding bank overdrafts as they are considered an
integral part of the Group’s cash management. Bank overdrafts are
included within financial liabilities in current liabilities in the balance sheet.
(c) Bank and other borrowings
Interest-bearing bank and other borrowings are recorded at the fair value
of the proceeds received, net of direct issue costs. Subsequent to initial
recognition, borrowings are stated at amortised cost, where applicable.
Bank or other borrowings are derecognised when the obligation under the
liability is discharged, cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the consolidated income statement.
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated balance sheet if there is a currently
enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, ie to realise the assets and settle the
liabilities simultaneously.
(d) Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to manage interest rate
risk and to hedge fluctuations in foreign currencies in accordance with its
risk management policy. In cases where these derivative instruments are
significant, hedge accounting is applied as described below. The Group
does not use derivative financial instruments for speculative purposes.
Derivatives are initially recognised in the balance sheet at fair value on the
date the derivative contract is entered into and are subsequently
remeasured at reporting periods to their fair values. Derivatives are carried
as financial assets when the fair value is positive and as financial liabilities
when the fair value is negative.
Changes in the fair value of the effective portion of derivatives that are
designated and qualify as cash flow hedges are recognised in other
comprehensive income (OCI). Changes in the fair value of the ineffective
portion of cash flow hedges are recognised in the income statement.
Amounts originally recognised in OCI are transferred to the income
statement when the underlying transaction occurs or if the transaction
results in a non-financial asset or liability,
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the income statement as
they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging
instrument recognised in OCI is retained in equity until the hedged
transaction occurs. If a hedged transaction is no longer expected to occur,
the net cumulative gain or loss recognised in OCI is transferred to the
income statement in the period.
For the purpose of hedge accounting, hedges are classified as:
• Cash flow hedges when hedging the exposure or variability in cash flows
that is either attributable to a particular risk associated with a recognised
asset or liability or a highly probable transaction.
• Fair value hedges when hedging the exposure to changes in the fair value
of a recognised asset or liability.
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and
documents the hedge relationship to which it wishes to apply hedge
accounting and the risk management objective and strategy for
undertaking the hedge. The documentation includes identification of the
hedging instrument, the hedged item, the nature of the risk being hedged
and how the Group will assess whether the hedging relationship meets the
hedge effectiveness requirements (including the analysis of sources of
hedge ineffectiveness and how the hedge ratio is determined). A hedging
relationship qualifies for hedge accounting if it meets all of the following
effectiveness requirements:
• There is ‘an economic relationship’ between the hedged item and the
hedging instrument.
• The effect of credit risk does not ‘dominate the value changes’ that
result from that economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting
from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument that the Group actually uses
to hedge that quantity of hedged item.
Provisions
Provisions have been made for employee-related liabilities, restructuring
commitments, onerous contracts, insured liabilities and legal claims and
other property-related commitments. These are recognised as
management’s best estimate of the expenditure required to settle the
Group’s liability at the reporting date.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
139
Segmental reporting
During the year the Group comprised three geographical divisions which
have only one major product or service: specialist geotechnical services.
North America; Europe; and Asia-Pacific, Middle East and Africa continue to
be managed as separate geographical divisions. This is reflected in the
Group’s management structure and in the segment information reviewed by
the Chief Operating Decision Maker. The geographical divisions were revised
with effect from 1 January 2021; the Middle East and Africa (MEA) business
was combined with the Asia-Pacific Division, creating the Asia-Pacific, Middle
East and Africa Division, and the remaining Europe, Middle East and Africa
Division became the Europe Division. The comparative information has been
amended to reflect consistent basis of preparation.
Dividends
Interim dividends are recorded in the Group’s consolidated financial
statements when paid. Final dividends are recorded in the Group’s
consolidated financial statements in the period in which they receive
shareholder approval.
Non-underlying 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 and/or are non-trading in nature, including amortisation of
acquired intangibles, restructuring costs and other non-trading amounts,
including those relating to acquisitions and disposals. Tax arising on these
items, including movement in deferred tax assets arising from non-
underlying provisions, is also classified as a non-underlying item.
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements in
conformity with IFRS requires management to make judgements, estimates
and assumptions that affect the application of policies, reported amounts of
assets and liabilities, revenue and expenses and the accompanying
disclosures, and the disclosure of contingent liabilities. The estimates are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis
of making the judgements about carrying values of assets and liabilities that
are not readily apparent from other sources. Uncertainty about these
assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected in future
periods. Actual results may also differ from these estimates.
The estimates are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if
the revision affects only that and prior periods, or in the period of the
revision and future periods if the revision affects both current and
future periods.
A provision is recognised in the balance sheet when the Group has a
present legal or constructive obligation as a result of a past event and
where it is probable that an outflow will be required to settle the obligation
and the amount of the obligation can be estimated reliably. If the effect is
material, expected future cash flows are discounted using a current pre-tax
rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to unwinding the
discount is recognised as a finance cost. Details of provisions are set out in
note 23.
Provisions for insured liabilities and legal claims include the full estimated
value of the liability. Any related insurance reimbursement asset that is
virtually certain to be received is separately presented gross within trade
and other receivables or other non-current assets on the consolidated
balance sheet.
Contingent liabilities
Contingent liabilities are possible obligations of the Group of which the
timing and amount are subject to significant uncertainty. Contingent
liabilities are not recognised in the consolidated balance sheet, unless they
are assumed by the Group as part of a business combination. They are
however disclosed, unless they are considered to be remote. If a
contingent liability becomes probable and the amount can be reliably
measured it is no longer treated as contingent and recognised as a liability
on the balance sheet.
Contingent assets
Contingent assets are possible assets of the Group of which the timing
and amount are subject to significant uncertainty. Contingent assets are
not recognised in the consolidated balance sheet. They are however
disclosed, when they are considered to be probable. A contingent asset
is recognised in the financial statements when the inflow of economic
benefits is virtually certain.
Financial guarantees
Where Group companies enter into financial guarantee contracts to
guarantee the indebtedness or obligations of other companies within
the Group, these are considered to be insurance arrangements, and are
accounted for as such. In this respect, the guarantee contract is treated
as a contingent liability until such time as it becomes probable that the
guarantor will be required to make a payment under the guarantee.
Share-based payments
The Group operates a number of equity-settled executive and employee
share plans. For all grants of share options and awards, the fair value of the
employee services received in exchange for the grant of share options is
recognised as an expense, calculated using appropriate option pricing
models. The total amount to be expensed over the vesting period is
determined by reference to the fair value of the options granted, excluding
the impact of any non-market vesting conditions, with a corresponding
increase in retained earnings. The charge is adjusted to reflect expected
actual levels of options vesting due to non-market conditions.
Shares purchased and held in trust in connection with the Group’s
share schemes are deducted from retained earnings. No gain or loss is
recognised within the income statement on the market value of these
shares compared with the original cost.
140
Keller Group plc Annual Report and Accounts 2021
Financial Statements
As stated in the revenue recognition accounting policy, variable
consideration is assessed on a contract-by-contract basis, according to
the terms, facts and circumstances of the project. Variable consideration is
recognised only to the extent that it is highly probable that there will not be
a significant reversal; management judgement is required in order to
determine when variable consideration is highly probable. Uncertainty over
whether a project will be completed or not can mean that it is appropriate
to treat the contracted revenue as variable consideration.
Carrying value of goodwill
The Group tests annually whether goodwill has suffered any impairment in
accordance with the accounting policy set out above. Impairment exists
when the carrying value of an asset or cash-generating unit exceeds its
recoverable amount, which is the higher of its fair value less costs of
disposal and its value-in-use. The fair value less costs of disposal
calculation is based on available market data for transactions conducted
at arm’s length, for similar assets or observable market prices less
incremental costs of disposing of the asset. The Group estimates the
recoverable amount based on value-in-use calculations. The value-in-use
calculation is based on a discounted cash flow (DCF) model. The cash flows
are derived from the relevant budget and forecasts for the next three years,
including a terminal value assumption. The recoverable amount is sensitive
to the discount rate used for the DCF model as well as the expected future
cash inflows, growth rates and maintainable earnings assumed within the
calculation. Refer to note 14 for further information.
Deferred tax assets
Deferred tax assets are recognised for unused tax losses and other timing
differences to the extent that it is probable that future taxable profits will be
available against which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and the level of future
taxable profits (based on the same Board-approved information to support
the going concern and goodwill impairment assessments). The Group uses
judgement in assessing the recoverability of deferred tax assets, for which
the significant assumption is forecast taxable profits. Refer to note 11 for
further information.
Insurance and legal provisions
The recognition of provisions for insurance and legal disputes is subject to
a significant degree of estimation. In making its estimates, management
seek specialist input from legal advisers and the Group’s insurance claims
handler to estimate the most likely legal outcome. Provisions are reviewed
regularly and amounts updated where necessary to reflect developments
in the disputes. The ultimate liability may differ from the amount provided
depending on the outcome of court proceedings and settlement
negotiations or if investigations bring to light new facts. Refer to note 23
for further information.
2 Significant accounting policies continued
The key assumptions concerning the future and other key sources of
estimation uncertainty at the reporting date, that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The Group
based its assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing circumstances
and assumptions about future developments, however, may change due
to market changes or circumstances arising that are beyond the control
of the Group. Such changes are reflected in the assumptions when
they occur.
Construction contracts
The Group’s approach to key estimates and judgements relating to
construction contracts is set out in the revenue recognition policy. In the
Group consolidated balance sheet this impacts contract assets, contract
liabilities and contract provisions (refer to notes 4 and 23). As described in
the policy the default revenue recognition approach is the output method.
When revenue is recognised based on the output method there is little
judgement involved in accounting for construction contracts as the
amount of revenue that has not been certified/accepted by the client is
typically small and is usually based on volumes achieved at agreed rates.
These contracts can still be subject to claims and variations resulting in an
adjustment to the revenue recognised.
When revenue is recognised based on the input (cost) method, the main
factors considered when making estimates and judgements include the
cost of the work required to complete the contract in order to estimate the
percentage completion, and the outcome of claims raised against the
Group by customers or third parties. The Group performed around 6,000
contracts during 2021, at an average revenue of approximately £375,000
and a typical range of between £25,000 and £10m in value. The majority of
contracts were completed in the year and therefore there are no estimates
involved in accounting for these. For contracts that are not complete at
year end, the Group estimates the total costs to complete in order to
measure progress and therefore how much revenue to recognise, which
may impact the contract asset or liability recorded in the balance sheet.
The actual total costs incurred on these contracts will differ from the
estimate at 31 December and it is reasonably possible that outcomes on
these contracts within the next year could be materially different in
aggregate to those estimated. However, due to the level of uncertainty and
timing across a large portfolio of contracts, which will be at different stages
of their contract life, it is not practical to provide a quantitative analysis of
the aggregated judgements that are applied at a portfolio level. The
estimated costs to complete are management’s best estimate at this point
in time and no individual estimate or judgement is expected to have a
materially different outcome.
In the case of loss-making contracts, a full provision is made based on the
estimated unavoidable costs of meeting the obligations of the contract,
where these exceed the economic benefits expected to be received. The
process for estimating the total cost to complete is the same as for in
progress profitable contracts, and will include management’s best estimate
of all labour, equipment and materials costs required to complete the
contracted work. All cost to complete estimates involve judgement over
the likely future cost of labour, equipment and materials and the impact of
inflation is included if material.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
141
3 Segmental analysis
During the year the Group was managed as three geographical divisions and has only one major product or service: specialist geotechnical services.
This is reflected in the Group’s management structure and in the segment information reviewed by the Chief Operating Decision Maker.
2021
Revenue
£m
Operating profit
£m
North America
Europe
Asia-Pacific, Middle East and Africa
Central items
Underlying
Non-underlying items (note 8)
North America
Europe
Asia-Pacific, Middle East and Africa
Central items2
North America
Europe
Asia-Pacific, Middle East and Africa
Central items2
1,323.1
549.2
352.1
2,224.4
–
2,224,4
–
2,224.4
2021
Capital
employed
£m
477.1
89.2
118.1
684.4
(241.7)
442.7
20201,5
Capital
employed
£m
462.0
77.7
125.9
665.6
(255.6)
410.0
Segment
assets
£m
827.0
273.9
218.0
1,318.9
130.6
1,449.5
Segment
assets
£m
690.2
275.5
224.6
1,190.3
77.5
1,267.8
Segment
liabilities
£m
(349.9)
(184.7)
(99.9)
(634.5)
(372.3)
(1,006.8)
Segment
liabilities
£m
(228.2)
(197.8)
(98.7)
(524.7)
(333.1)
(857.8)
20201
Revenue
£m
1,227.5
538.5
296.5
2,062.5
–
2,062.5
–
2,062.5
Operating profit
£m
83.2
18.4
15.5
117.1
(7.0)
110.1
(33.1)
77.0
73.0
24.3
3.4
100.7
(7.9)
92.8
(12.3)
80.5
Capital
additions
£m
Depreciation3
and
amortisation
£m
Tangible and4
intangible
assets
£m
36.4
23.8
24.2
84.4
–
84.4
Capital
additions
£m
26.9
24.6
21.5
73.0
–
73.0
46.1
25.0
19.5
90.6
0.6
91.2
334.7
143.7
103.5
581.9
3.0
584.9
Depreciation3
and
amortisation
£m
Tangible and4
intangible
assets
£m
47.7
25.9
20.7
94.3
0.6
94.9
304.0
147.3
101.8
553.1
0.6
553.7
1
From 1 January 2021 the Middle East and Africa (MEA) business was transferred to the Asia-Pacific Division, creating the Asia-Pacific, Middle East and Africa Division, and the remaining Europe, Middle
East and Africa Division became the Europe Division. The 2020 comparative segmental information has been updated to reflect this change as it is consistent with the information reviewed by the Chief
Operating Decision Maker.
2 Central items include net debt and tax balances, which are managed by the Group.
3 Depreciation and amortisation excludes amortisation of acquired intangible assets.
4 Tangible and intangible assets comprise goodwill, intangible assets and property, plant and equipment.
5
Segment assets and liabilities presented here do not correspond to the published 2020 consolidated financial statements. The comparative balance sheet has been restated to present gross insurance
provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers, as outlined in note 2 to the financial statements.
142
Keller Group plc Annual Report and Accounts 2021
Financial Statements
3 Segmental analysis continued
Revenue analysed by country:
United States
Australia
Germany
Canada
United Kingdom
Other
4 Revenue
2021
£m
1,197.6
202.4
110.0
125.1
100.4
488.9
2,224.4
2020
£m
1,112.0
158.9
116.9
113.3
59.1
502.3
2,062.5
The Group’s revenue is derived from contracts with customers. In the following table, revenue is disaggregated by primary geographical market, being the
Group’s operating segments (see note 3) and timing of revenue recognition:
Year ended 31 December 2021
Year ended 31 December 2020
Revenue
recognised on
performance
obligations
satisfied over
time
£m
1,005.0
549.2
352.1
1,906.3
Revenue
recognised on
performance
obligations
satisfied at a
point in time
£m
318.1
–
–
Total
revenue
£m
1,323.1
549.2
352.1
318.1
2,224.4
Revenue
recognised on
performance
obligations
satisfied over
time
£m
944.0
538.5
296.5
1,779.0
Revenue
recognised on
performance
obligations
satisfied at a
point in time
£m
283.5
–
–
283.5
Total
revenue
£m
1,227.5
538.5
296.5
2,062.5
North America
Europe
Asia-Pacific, Middle East and Africa
The final contract value will not always have been agreed at the year end. The contract value, and therefore revenue allocated to a performance obligation,
may change subsequent to the year end as variations and claims are agreed with the customer. The amount of revenue recognised in 2021 from
performance obligations satisfied in previous periods is £28.0m (2020: £21.5m).
The Group’s order book comprises the unexecuted elements of orders on contracts that have been awarded. Where a contract is subject to variations,
only secured variations are included in the reported order book. As at 31 December 2021, the total order book is £1,296.7m (2020: £1,000.2m).
The order book for contracts with a total duration over one year is £402.0m (2020: £295.8m). Revenue on these contracts is expected to be recognised
as follows:
Less than one year
One to two years
More than two years
2021
£m
279.7
103.7
18.6
402.0
The following table provides information about trade receivables, contract assets and contract liabilities arising from contracts with customers:
Trade receivables
Contract assets
Contract liabilities
2021
£m
448.8
107.6
(46.5)
2020
£m
185.0
99.8
11.0
295.8
2020
£m
383.2
71.3
(43.9)
Trade receivables include invoiced amounts for retentions, which are balances typically payable at the end of a construction project, when all contractual
performance obligations have been met, and are therefore received over a longer period of time. Included in the trade receivables balance is £85.9m
(2020: £87.5m) in respect of retentions anticipated to be receivable within one year. Included in non-current other assets is £24.4m (2020: £10.2m)
anticipated to be receivable in more than one year. All contract assets and liabilities are current.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
143
Significant changes in the contract assets and liabilities during the year are as follows:
As at 1 January
Revenue recognised in the current year
Acquired with businesses
Disposal of businesses
Amounts transferred to trade receivables
Cash received/invoices raised for performance obligations not yet satisfied
Exchange movements
As at 31 December
5 Acquisitions and disposals
Acquisitions
2021
2020
Contract assets
£m
Contract liabilities
£m
Contract assets
£m
Contract liabilities
£m
71.3
654.2
2.0
–
(619.5)
–
(0.4)
107.6
(43.9)
516.0
(0.3)
–
–
(518.3)
–
(46.5)
102.1
597.1
–
(2.4)
(624.3)
–
(1.2)
71.3
(42.0)
619.2
–
0.5
–
(623.1)
1.5
(43.9)
On 13 July 2021, the Group acquired 100% of the issued share capital of RECON Services Inc., a geotechnical environmental remediation and industrial
services company based in Texas, US, for an initial cash consideration of £20.2m (US$27.8m). Following the finalisation of the acquired working capital, an
adjustment of £0.1m (US$0.2m) was agreed with the vendor, reducing the consideration paid. In addition, contingent consideration is payable in respect of
certain contract awards; the total fair value of the contingent consideration is £9.5m (US$13.1m) of which £1.5m has been paid and £8.0m is recognised as
contingent consideration payable at year end. This amount has been agreed in principle with the vendor (refer to note 34). The fair value of the intangible
assets acquired represents the fair value of customer contracts at the date of acquisition, customer relationships 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 operating synergies that arise from the Group’s strengthened market position. None of the goodwill is expected to be deductible for tax purposes.
Acquisition costs of £0.2m were expensed to the income statement as a non-underlying item.
On 29 September 2021, the Group acquired the trade and assets of Subterranean (Manitoba) Ltd., a geotechnical contractor in Canada, for an initial cash
consideration of £7.8m (CAD$13.4m). Following the finalisation of the acquisition, a working capital true-up of £0.2m (CAD$0.3m) is receivable, resulting
in a net consideration of £7.6m (CAD$13.1m). Goodwill arising on acquisition is attributable the expectation of future contracts and customer
relationships and the operating synergies that arise from the Group’s strengthened market position. The goodwill is expected to be deductible for tax
purposes. Acquisition costs of £0.3m were expensed to the income statement as a non-underlying item.
On 1 November 2021, the Group acquired the trade and assets of Voges Drilling, a geotechnical foundation company based in Texas, US, for an initial cash
consideration of £1.4m (US$2.0m) and a further £0.8m (US$1.0m) of deferred consideration to be paid over a three-year period.
For the Subterranean acquisition, £2.2m was provided for against contractual trade receivables acquired of £4.1m, resulting in a fair value of £1.9m. For
RECON and Voges, the fair value of the total trade receivables is not materially different from the gross contractual amounts receivable and is expected to
be recovered in full.
In the period to 31 December 2021, in total, acquisitions contributed £46.2m to revenue and a underlying profit before tax of £1.4m, as broken down below:
RECON
Subterranean
Voges
Revenue
£m
Underlying profit/
(loss) before tax
£m
42.8
3.3
0.1
46.2
1.5
(0.2)
0.1
1.4
144
Keller Group plc Annual Report and Accounts 2021
Financial Statements
5 Acquisitions and disposals continued
Had the acquisitions taken place on 1 January 2021, total Group revenue would have been £2,270.2m and underlying profit before tax for the period would
have been £82.5m, as broken down below:
Group balance for the year to 31 December 2021
RECON
Subterranean
Voges
Revenue
£m
2,224.4
28.9
16.3
0.6
2,270.2
Underlying profit/
(loss) before tax
£m
83.9
(2.4)
1.0
–
82.5
Adjustments made in respect of the acquisitions in the period to 31 December 2021 for intangible asset valuations, trade and other receivables and
contingent consideration are provisional pending completion of the valuation exercise and agreement of any contingent consideration and will be finalised
within 12 months of the acquisition date.
Carrying amount
£m
RECON
Fair value
adjustment
£m
Subterranean and Voges
Fair value
£m
Carrying amount
£m
Fair value
adjustment
£m
Fair value
£m
Total
Fair value
£m
–
4.3
0.1
–
20.5
1.4
0.9
27.2
(1.4)
(11.0)
(1.1)
–
(0.1)
(0.3)
(13.9)
13.3
18.9
0.4
–
–
(0.1)
–
–
19.2
–
(0.2)
–
(5.1)
(1.3)
–
(6.6)
12.6
Assets
Intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Liabilities
Lease liabilities
Trade and other payables
Current tax liabilities
Deferred tax liabilities
Provisions
Other non-current liabilities
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Initial cash consideration
Contingent consideration
Deferred consideration
Purchase price adjustment
Acquisition of businesses per
the cash flow statement:
Initial cash consideration
Contingent consideration paid
Purchase price adjustment received
Less cash acquired
18.9
4.7
0.1
–
20.4
1.4
0.9
46.4
(1.4)
(11.2)
(1.1)
(5.1)
(1.4)
(0.3)
(20.5)
25.9
3.7
29.6
20.2
9.5
–
(0.1)
29.6
20.2
1.5
(0.1)
(0.9)
20.7
0.3
7.9
–
1.4
4.9
–
–
14.5
–
(1.3)
–
–
–
–
(1.3)
13.2
0.1
(1.8)
–
(1.4)
(2.2)
–
–
(5.3)
–
–
–
–
–
–
–
(5.3)
0.4
6.1
–
–
2.7
–
–
9.2
–
(1.3)
–
–
–
–
(1.3)
7.9
1.9
9.8
9.2
–
0.8
(0.2)
9.8
9.2
–
–
–
9.2
19.3
10.8
0.1
–
23.1
1.4
0.9
55.6
(1.4)
(12.5)
(1.1)
(5.1)
(1.4)
(0.3)
(21.8)
33.8
5.6
39.4
29.4
9.5
0.8
(0.3)
39.4
29.4
1.5
(0.1)
(0.9)
29.9
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
145
Disposals
On 28 June 2021, the Group disposed of its Cyntech Anchors operation in Canada, being 100% of the issued share capital of Keller Cyntech U.S. and
Cyntech Anchors Ltd., for a total consideration of £6.0m (CAD$10.2m), consisting of the sale price of £3.1m (CAD$5.3m) and further sale price
adjustments in relation to working capital of £2.9m (CAD$4.9m).
Proceeds
Sale price adjustments
Net disposal proceeds
Net assets disposed (see below)
Currency translation gains transferred from translation reserve
Non-underlying loss on disposal
Property, plant and equipment
Inventories
Trade and other receivables
Trade and other payables
Other net liabilities
Net assets disposed
The results for the period are presented below. The 2021 results represent activity prior to the sale.
Revenue
Operating costs
Cyntech Anchors
£m
3.1
2.9
6.0
(6.6)
0.4
(0.2)
Cyntech Anchors
£m
1.4
3.9
13.1
(10.7)
(1.3)
6.6
2020
£m
19.1
(18.6)
0.5
Cyntech Anchors
2021
£m
11.1
(10.0)
1.1
On 8 January 2021, the Group disposed of its Colcrete business, being 100% of the issued share capital of Keller Colcrete Limited, for a cash
consideration of £0.4m. Property, plant and equipment of £0.2m and inventories of £0.2m were disposed of. These assets were classified as held for sale
at 31 December 2020. During the prior year a loss of £0.4m was recognised, relating to the write-down of Colcrete assets and restructuring costs
associated with the exit.
Prior year disposals
On 6 April 2020, the Group disposed of its Brazil operation, being 100% of the issued share capital of Keller Tecnogeo Fundacoes Ltda., for a cash
consideration of £0.5m (BRL3.0m). Additional consideration of £0.9m (BRL6.5m) was received in September 2020, resulting in a loss of disposal of £9.2m
at 31 December 2020. During 2021 there was a true-up to the sale price of £0.3m, increasing the non-underlying loss on disposal to £9.5m.
On 11 September 2020, the Group disposed of Wannenwetsch GmbH, a non-core business in Germany, for a cash consideration of £2.4m (EUR2.6m).
The loss on disposal at 31 December 2020 was £0.9m. During the current year contingent consideration of £0.7m was received in accordance with the
terms of the sale and purchase agreement, reducing the non-underlying loss on disposal to £0.2m.
Disposal of businesses per the cash flow statement:
Cyntech Anchors net proceeds
Colcrete proceeds
Wannenwetsch contingent consideration
£m
6.0
0.4
0.7
7.1
146
Keller Group plc Annual Report and Accounts 2021
Financial Statements
6 Operating costs
Raw materials and consumables
Staff costs
Other operating charges
Amortisation of intangible assets
Expenses relating to short-term leases and leases of low-value assets
Depreciation:
Owned property, plant and equipment
Right-of-use assets
Underlying operating costs
Non-underlying items
Statutory operating costs
Other operating charges include:
Redundancy and other reorganisation costs
Fees payable to the company’s auditor for the audit of the company’s Annual Report and Accounts
Fees payable to the company’s auditor for other services:
The audit of the company’s subsidiaries, pursuant to legislation
Other assurance services
Note
7
14
15a
15b
8
2021
£m
711.8
580.7
593.5
0.6
154.8
64.1
26.5
2,132.0
9.6
2,141.6
–
1.1
1.9
0.1
2020
£m
597.7
572.4
549.8
0.6
138.4
66.3
28.0
1,953.2
29.6
1,982.8
0.2
0.9
1.7
0.1
During the year, the Group received £2.4m (2020: £5.6m) of direct subsidies with respect to COVID-19 related aid measures introduced by government
bodies in various countries. These subsidies are recognised as an offset against the expense item which they are intended to compensate. During the year,
the amount received in 2020 in relation to the UK furlough scheme was repaid; this cost was provided for within operating costs at 31 December 2020.
7 Employees
The aggregate staff costs of the Group were:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2021
£m
505.6
57.5
13.7
3.9
580.7
2020
£m
498.1
59.7
12.2
2.4
572.4
These costs include Directors’ remuneration. Fees payable to Non-executive Directors totalled £0.5m (2020: £0.5m).
In the United States, the Coronavirus Aid, Relief, and Economic Security Act allowed employers to defer the payment of the employer's share of social
security taxes otherwise required to be paid between 27 March and 31 December 2020. The payment of the deferred taxes is required in two instalments;
the first half was paid on 3 January 2022 and the remainder is due by January 2023. At 31 December 2021, the amount deferred is £4.7m.
The average number of staff, including Directors, employed by the Group during the year was:
North America
Europe
Asia-Pacific, Middle East and Africa
2021
Number
4,722
2,922
2,080
9,724
20201
Number
4,305
3,034
1,970
9,309
1
From 1 January 2021 the Middle East and Africa (MEA) business was transferred to the Asia-Pacific Division, creating the Asia-Pacific, Middle East and Africa Division, and the remaining Europe,
Middle East and Africa Division became the Europe Division. The 2020 comparative information has been updated to reflect this change.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
147
8 Non-underlying items
Non-underlying items include items which are exceptional by their size and/or are non-trading in nature, including amortisation of acquired intangibles,
restructuring costs and other non-trading amounts, including those relating to acquisitions and disposals. Tax arising on these items, including movement
in deferred tax assets arising from non-underlying provisions, is also classified as a non-underlying item. These are detailed below:
Exceptional restructuring costs
Loss on disposal of operations
Acquisition costs
Contingent consideration: additional amounts provided
Goodwill impairment
Non-underlying items in operating costs
Amortisation of acquired intangible assets
Contingent consideration received
Exceptional contract dispute
Non-underlying items in other operating income
Amortisation of joint venture acquired intangibles
Total non-underlying items in operating profit
Non-underlying finance costs
Total non-underlying items before taxation
Taxation
Total non-underlying items after taxation
Non-underlying items in operating costs
Year ended 31 December 2021
2021
£m
7.3
0.5
0.5
1.3
–
9.6
2.8
(0.7)
–
(0.7)
0.6
12.3
–
12.3
(10.6)
1.7
2020
£m
16.6
11.6
0.3
0.8
0.3
29.6
4.2
–
(0.7)
(0.7)
–
33.1
–
33.1
(5.6)
27.5
Exceptional restructuring costs for the year of £7.3m comprised £4.4m in Europe, £2.5m in Asia-Pacific, Middle East and Africa, £1.6m of central items and
a credit of £1.2m in North America.
In Europe, these costs arose as a continuation of the strategic project to rationalise the Europe Division. The restructuring costs during the period
comprised redundancy costs, property costs, asset impairments and costs of market exit which include project termination costs. In Asia-Pacific, Middle
East and Africa these costs arose as part of the project to rationalise the Middle East and Africa business. The restructuring costs during the period
comprised mainly asset impairments and redundancy costs. Centrally, restructuring costs were incurred in KGS, the in-house equipment manufacturer, as
a result of a restructuring plan for this business. These costs comprised redundancy costs and asset impairments. In North America the credit arose from
the reduction in restructuring costs provided for in 2020 as costs incurred were lower than originally anticipated.
The Cyntech Anchors operation in Canada was disposed of on 28 June 2021, resulting in a net loss on disposal of £0.2m. During 2021 there was a true-up
of the sale price of the Brazil disposal reflected in 2020, resulting in an additional loss of £0.3m in the year. This increased the total non-underlying loss on
disposal for this transaction to £9.5m.
Acquisition costs of £0.5m in the year comprised professional fees relating to the RECON and Subterranean acquisitions.
Additional contingent consideration payable of £1.3m relates to the acquisition of the Geo Construction Group (Bencor) in 2015, following finalisation of
items referenced in the sale and purchase agreement.
Additional contingent consideration of £0.7m was received on the achievement of performance targets in relation to the Wannenwetsch disposal in 2020,
reducing the total loss on disposal to £0.2m.
148
Keller Group plc Annual Report and Accounts 2021
Financial Statements
8 Non-underlying items continued
Year ended 31 December 2020
In 2020, restructuring costs of £16.6m comprised £5.5m in North America, as a result of exiting the Prairies region in Canada and a specific market
rationalisation exercise in the US, £11.0m in Europe, Middle East and Africa (now Europe) was incurred as a result of the strategic project to rationalise the
division and a net charge of £0.1m in Asia-Pacific (now Asia-Pacific, Middle East and Africa) related to the cessation of the Waterway operation, offset by a
restructuring provision release in ASEAN in relation to the activities started in the second half of 2018.
In 2020, a net loss on disposal of £11.6m was recognised during the year; comprising a loss of £9.2m on the disposal of the Group’s Brazil operation, a
£1.5m loss in relation to the Colcrete Eurodrill business, a UK machinery manufacturer (which comprised £1.1m loss on sale of the Eurodrill assets and
£0.4m provisions in relation to the sale of the Colcrete business which completed in 2021), and a £0.9m loss on the disposal of Wannenwetsch GmbH, a
non-core business in Germany.
In 2020, acquisition costs of £0.3m related to professional fees associated with the wind-up of an employee share ownership plan at Moretrench, following
acquisition in March 2018.
In 2020, the contingent consideration payable of £0.8m related to the acquisition of the Geo Instruments US business in 2017. The goodwill impairment of
£0.3m related to the Genco business in Egypt.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets primarily relates to the Moretrench and RECON acquisitions. The prior year charge also includes amounts
related to the Austral acquisition.
Non-underlying items in other operating income
The proceeds of £0.7m in the previous year were received on final settlement of a contributory claim relating to an exceptional contract dispute.
Amortisation of joint venture acquired intangibles
Amortisation of joint venture intangibles relates to the acquisition of NordPile by the Group’s joint venture interest KFS Finland Oy during the year. Refer to
note 16 for further details.
Non-underlying taxation
Refer to note 11 for details of the non-underlying tax items.
9 Finance income
Bank and other interest receivable
Other finance income
10 Finance costs
Interest payable on bank loans and overdrafts
Interest payable on other loans
Interest on lease liabilities
Net pension interest cost
Other interest costs
Total interest costs
Unwinding of discount and effect of changes in discount rates on provisions
Total finance costs
2021
£m
0.2
0.2
0.4
2021
£m
3.1
1.3
3.1
0.2
1.0
8.7
0.6
9.3
2020
£m
0.3
0.8
1.1
2020
£m
4.9
2.4
3.8
0.3
1.6
13.0
1.3
14.3
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
149
11 Taxation
Current tax expense:
Current year
Prior years
Total current tax
Deferred tax expense:
Current year
Prior years
Total deferred tax
2021
£m
14.0
(3.0)
11.0
(1.7)
0.2
(1.5)
9.5
2020
£m
24.3
(0.8)
23.5
(1.2)
0.4
(0.8)
22.7
UK corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.
The effective tax rate can be reconciled to the UK corporation tax rate of 19% (2020: 19%) as follows:
Profit/(loss) before tax
UK corporation tax charge/(credit) at 19% (2020: 19%)
Tax charged at rates other than 19% (2020: 19%)
Tax losses and other deductible temporary differences not recognised
Utilisation of tax losses and other deductible temporary differences
previously unrecognised
Permanent differences
Adjustments to tax charge in respect of previous periods
Other
Tax charge/(credit)
Effective tax rate
2021
Non-
underlying
items
(note 8)
£m
(12.3)
(2.3)
(0.5)
1.2
(9.1)
0.1
–
–
(10.6)
Underlying
£m
83.9
15.9
5.5
3.3
(1.4)
(0.5)
(2.8)
0.1
20.1
2020
Non-
underlying
items
(note 8)
£m
(33.1)
(6.3)
(0.8)
1.6
(1.3)
2.3
(0.6)
(0.5)
(5.6)
Statutory
£m
63.8
12.1
4.8
8.1
(3.2)
2.1
(0.4)
(0.8)
22.7
16.9%
35.6%
Statutory
£m
Underlying
£m
71.6
13.6
5.0
4.5
(10.5)
(0.4)
(2.8)
0.1
9.5
96.9
18.4
5.6
6.5
(1.9)
(0.2)
0.2
(0.3)
28.3
29.2%
24.0%
86.2%
13.3%
The tax credit of £10.6m on non-underlying losses includes £1.5m as the tax benefit of amounts which are expected to be deductible for tax purposes
and £9.1m from the partial reduction in the valuation allowance made against deferred tax assets in Canada and Australia at 31 December 2020. As the
original valuation allowance was booked through the non-underlying tax charge the credit from the re-recognition of the deferred tax assets has also been
treated as a non-underlying item. The 2020 tax credit of £5.6m on non-underlying items includes a partial re-recognition of Australian deferred tax assets
of £1.9m as a result of the improved performance of the Australian business, and the benefit of a net tax credit on other non-underlying charges which are
expected to be deductible for tax purposes.
The Group is subject to taxation in over 40 countries worldwide and the risk of changes in tax legislation and interpretation from tax authorities in the
jurisdictions in which it operates. The assessment of uncertain positions is subjective and subject to management’s best judgement of the probability of
the outcome in reaching agreement with the relevant tax authorities. Where tax positions are uncertain, provision is made where necessary based on
interpretation of legislation, management experience and appropriate professional advice. Management do not expect the outcome of these estimates
to be materially different from the position taken.
The Group is monitoring developments in the OECD’s Pillar 2 proposals to agree minimum effective tax rates across jurisdictions participating in the
OECD programme. Although the Group’s activities are mainly in territories which will be unaffected by the Pillar 2 proposals it is possible that additional tax
will be charged in the future in countries where corporate tax rates are increased. Any changes are not expected to be introduced before 2024.
Under draft proposals introduced to the US Congress in 2021, the Group would potentially be subject to adverse changes in respect of measures intended
to limit the tax deductibility of intra-group financing costs. The proposed measures were unable to secure passage through Congress in 2021 and the
Group is awaiting developments to see if the measures, and whether they are in original or revised form, are reintroduced in 2022. At present there is
insufficient evidence to assess the probable financial impact on the Group’s future tax position.
150
Keller Group plc Annual Report and Accounts 2021
Financial Statements
11 Taxation continued
The Group has previously disclosed that it has been subject to enquiries from the UK tax authorities in relation to the recovery of tax benefits under EU
State Aid provisions. The Group has now received notification from HMRC that their enquiries have been resolved and the original filing position has been
accepted. Accordingly, the contingent liability of £4m previously disclosed has been extinguished.
The following are the major deferred tax liabilities and assets recognised by the Group and the movements during the current and prior reporting periods:
At 1 January 2020
Charge/(credit) to the income statement
Credit to other comprehensive income
Exchange movements
Other reallocations/transfers
At 31 December 2020 and 1 January 2021
(Credit)/charge to the income statement
Charge to other comprehensive income
Acquisition and disposal of businesses
Exchange movements
Other reallocations/transfers
At 31 December 2021
Unused tax
losses
£m
Accelerated
capital
allowances
£m
Retirement
benefit
obligations
£m
Other
employee-
related
liabilities
£m
Other1
temporary
differences
£m
Bad debts
£m
(14.6)
4.1
–
(0.2)
(0.2)
(10.9)
(6.4)
–
–
0.1
–
(17.2)
35.8
(0.8)
–
(0.6)
–
34.4
3.2
–
0.3
0.3
–
38.2
(2.6)
0.1
(0.4)
(0.1)
(1.0)
(4.0)
(0.7)
0.2
–
0.2
0.1
(4.2)
(5.9)
(0.8)
–
0.2
–
(6.5)
0.3
–
–
(0.1)
–
(6.3)
(4.7)
(1.9)
–
0.3
0.1
(6.2)
(2.4)
–
–
(0.1)
–
(8.7)
4.8
(1.5)
–
–
0.9
4.2
4.5
–
4.7
0.2
0.2
13.8
Total
£m
12.8
(0.8)
(0.4)
(0.4)
(0.2)
11.0
(1.5)
0.2
5.0
0.6
0.3
15.6
1 Other temporary differences are mainly in respect of intangible assets.
Deferred tax assets include amounts of £13.0m (2020: £10.4m) where recovery is based on forecasts of future taxable profits that are expected to be
available to offset the reversal of the associated temporary differences. The deferred tax assets arise predominantly in Canada (£6.7m), Australia
(£4.2m) and UK (£1.6m). The amount of profits in each territory which are necessary to be realised over the forecast period to support these assets
are £25m, £14m and £8m respectively. Canadian tax rules currently allow tax losses to be carried forward up to 20 years. UK and Australia allow losses
to be carried forward indefinitely. The recovery of deferred tax assets has been assessed by reviewing the likely timing and level of future taxable
profits. The period assessed for recovery of assets is appropriate for each territory having regard to the specific facts and circumstances and the
probability of achieving forecast profitability. A 10% shortfall in expected profits would have a proportional impact on the value of the deferred tax
assets recoverable.
The following is the analysis of the deferred tax balances:
Deferred tax liabilities
Deferred tax assets
2021
£m
28.6
(13.0)
15.6
2020
£m
21.3
(10.3)
11.0
At the balance sheet date, the Group had unused tax losses of £125.0m (2020: £146.4m), mainly arising in Canada, Australia, Malaysia and the UK, available
for offset against future profits, on which no deferred tax asset has been recognised. Of these losses, £74.3m (2020: £85.2m) may be carried forward
indefinitely.
At the balance sheet date, the aggregate of other deductible temporary differences for which no deferred tax asset has been recognised was £13.9m
(2020: £24.7m). These differences have no expiry term.
At the balance sheet date, the aggregate of temporary differences associated with investments in subsidiaries, branches and joint ventures for which no
deferred tax liability has been recognised is £124.9m (2020: £118.4m), on the basis that the Group can control the reversal of temporary differences and it
is probable that the temporary differences will not reverse in the foreseeable future. The unprovided deferred tax liability in respect of these timing
differences is £7.6m (2020: £7.4m).
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
151
12 Dividends payable to equity holders of the parent
Ordinary dividends on equity shares:
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2020 of 23.3p (2019: 23.3p) per share
Interim dividend for the year ended 31 December 2021 of 12.6p (2020: 12.6p) per share
2021
£m
16.8
9.1
25.9
2020
£m
16.8
9.1
25.9
The Board has recommended a final dividend for the year ended 31 December 2021 of £16.8m, representing 23.3p (2020: 23.3p) per share. The proposed
dividend is subject to approval by shareholders at the Annual General Meeting on 18 May 2022 and has not been included as a liability in these financial
statements.
13 Earnings per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
When the Group makes a profit, diluted earnings per share equals the profit attributable to equity holders of the parent divided by the weighted average
diluted number of shares. When the Group makes a loss, diluted earnings per share equals the loss attributable to the equity holders of the parent divided
by the basic average number of shares. This ensures that earnings per share on losses is shown in full and not diluted by unexercised share awards.
Basic and diluted earnings per share are calculated as follows:
Basic and diluted earnings (£m)
Weighted average number of ordinary shares (m)1
Basic number of ordinary shares outstanding
Effect of dilution from:
Share options and awards
Diluted number of ordinary shares outstanding
Earnings per share
Basic earnings per share (p)
Diluted earnings per share (p)
Underlying earnings attributable to the
equity holders of the parent
2021
64.7
72.3
0.9
73.2
89.5
88.4
2020
70.0
72.1
0.6
72.7
97.1
96.3
Earnings attributable to the equity holders
of the parent
2021
2020
63.0
72.3
0.9
73.2
87.1
86.1
42.5
72.1
0.6
72.7
58.9
58.5
1
The weighted average number of shares takes into account the weighted average effect of changes in treasury shares during the year. The weighted average number of shares excludes those held in
the Employee Share Ownership Plan Trust and those held in treasury, which for the purpose of this calculation are treated as cancelled.
152
Keller Group plc Annual Report and Accounts 2021
Financial Statements
14 Goodwill and intangible assets
Cost
At 1 January 2020
Additions
Disposal of businesses
Exchange movements
At 31 December 2020 and 1 January 2021
Additions
Acquired with businesses (note 5)1
Disposals
Exchange movements
At 31 December 2021
Accumulated amortisation and impairment
At 1 January 2020
Impairment charge for the year
Amortisation charge for the year
Disposal of businesses
Exchange movements
At 31 December 2020 and 1 January 2021
Amortisation charge for the year
Disposals
Exchange movements
At 31 December 2021
Carrying amount
At 1 January 2020
At 31 December 2020 and 1 January 2021
At 31 December 2021
Goodwill
£m
Arising on
acquisition
£m
228.6
–
(7.2)
(1.8)
219.6
–
5.6
–
1.1
226.3
111.8
0.3
–
(7.2)
(0.5)
104.4
–
–
0.6
105.0
116.8
115.2
121.3
59.0
–
–
(0.1)
58.9
–
19.3
–
0.5
78.7
52.4
–
4.2
–
(0.1)
56.5
2.8
–
(0.1)
59.2
6.6
2.4
19.5
Other
£m
23.4
0.5
–
(0.6)
23.3
0.4
–
(0.7)
(0.6)
22.4
22.1
–
0.6
–
(0.6)
22.1
0.6
(0.7)
(0.3)
21.7
1.3
1.2
0.7
Total
£m
311.0
0.5
(7.2)
(2.5)
301.8
0.4
24.9
(0.7)
1.0
327.4
186.3
0.3
4.8
(7.2)
(1.2)
183.0
3.4
(0.7)
0.2
185.9
124.7
118.8
141.5
1 Goodwill arising on acquisition relates to the acquisition of RECON and Subterranean. Refer to note 5 for further details.
Intangible assets arising on acquisition represent customer contracts and relationships with a carrying amount of £13.9m (2020: £0.3m) and trade names
with a carrying amount of £5.6m (2020: £2.1m). Other intangibles represent internally developed software and licences. There are no indicators of
impairment for these assets at 31 December 2021.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
153
For the purposes of impairment testing, goodwill has been allocated to nine separate cash-generating units (CGUs). The carrying amount of goodwill
allocated to the five CGUs with the largest goodwill balances is significant in comparison to the total carrying amount of goodwill and comprises 92% of
the total (2020: 94%). The relevant CGUs and the carrying amount of the goodwill allocated to each are as set out below, together with the pre-tax
discount rate and medium-term growth rate used in their value-in-use calculations:
CGU
Keller US
Suncoast
Keller Canada
Keller Limited
Austral
Other1
Geographical segment
North America
North America
North America
Europe
Asia-Pacific, Middle East and Africa
North America and Europe
1 Pre-tax discount rates and forecast growth rates are defined by market.
2021
2020
Carrying
value
£m
Pre-tax
discount rate
%
Forecast
growth rate
%
Carrying
value
£m
Pre-tax
discount rate
%
Forecast
growth rate
%
11.6
11.6
11.8
10.1
12.9
2.0
2.0
2.0
3.0
2.0
45.0
31.9
15.0
12.1
7.3
10.0
121.3
44.4
31.4
12.8
12.1
7.6
6.9
115.2
13.0
13.3
12.6
12.7
14.2
2.0
2.0
2.0
3.0
2.0
The recoverable amount of the goodwill allocated to each CGU has been calculated on a value-in-use basis. The calculations use cash flow projections
based on financial budgets and forecasts approved by management and cover a three-year period.
The Group’s businesses operate in a diverse geographical set of markets, some of which are expected to continue to face uncertain conditions in future
years. The most important factors in the value-in-use calculations are the forecast revenues and operating margins during the forecast period, the growth
rates and discount rates applied to future cash flows. The key assumptions underlying the cash flow forecasts are revenue and operating margins
assumed throughout the forecast period. Revenue and operating margins are prepared as part of the Group’s three-year forecast in line with the Group’s
annual business planning process. The Group’s budget for 2022 and financial projections for 2023 and 2024 were approved by the Board, and have been
used as the basis for input into the value-in-use calculation.
Management considers all the forecast revenues, margins and profits to be reasonably achievable given recent performance and the historic trading
results of the relevant CGUs. A margin for historical forecasting error has also been factored into the value-in-use model. Cash flows beyond 2024 which
are deemed to be on a continuing basis have been extrapolated using the forecast growth rates above and do not exceed the long-term average growth
rates for the markets in which the relevant CGUs operate. The growth rates used in the Group’s value-in-use calculation into perpetuity are based on
forecasted growth in the construction sector in each region where a CGU is located and adjusted for longer-term compound annual growth rates for each
CGU as estimated by management. The discount rates used in the value-in-use calculations are based on the weighted average cost of capital of
companies comparable to the relevant CGUs, adjusted as necessary to reflect the risk associated with the asset being tested.
Management believes that any reasonable possible change in the key assumptions on which the recoverable amounts of the CGUs are based would not
cause any of their carrying amounts to exceed their recoverable amounts.
A number of sensitivities were run on the projections to identify the changes required in the each of the key assumptions that, in isolation, would give rise
to an impairment of the following goodwill balances.
CGU
Keller US
Suncoast
Keller Canada
Keller Limited
Austral
Geographical segment
North America
North America
North America
Europe
Asia-Pacific, Middle East and Africa
1 The increase in discount rate and reduction in future growth rate are presented as gross movements.
Increase in1
discount
rate
Reduction in1
future growth
rate
Reduction in
final year cash
flow
%
24.5
63.7
9.5
5.0
21.4
39.3
740.0
11.9
6.0
35.8
85.9
108.0
60.0
48.9
84.8
154
Keller Group plc Annual Report and Accounts 2021
Financial Statements
15 Property, plant and equipment
Property, plant and equipment comprises owned and leased assets.
Property, plant and equipment – owned assets
Right-of-use assets – leased assets
At 31 December
15 a) Property, plant and equipment – owned assets
Cost
At 1 January 2020
Additions
Disposals
Transfers to held for sale1
Disposal of businesses
Reclassification
Exchange movements
At 31 December 2020 and 1 January 2021
Additions
Acquired with businesses (note 5)
Disposals
Net transfers to held for sale1
Disposal of businesses (note 5)
Reclassification
Exchange movements
At 31 December 2021
Accumulated depreciation and impairment
At 1 January 2020
Charge for the year
Disposals
Transfers to held for sale1
Disposal of businesses
Impairments
Exchange movements
At 31 December 2020 and 1 January 2021
Charge for the year
Disposals
Net transfers to held for sale1
Disposal of businesses (note 5)
Impairments
Exchange movements
At 31 December 2021
Carrying amount
At 1 January 2020
At 31 December 2020 and 1 January 2021
At 31 December 2021
1 The carrying amount of assets held for sale at the balance sheet date are detailed in note 21.
Note
15a
15b
2021
£m
375.5
67.9
443.4
Land and
buildings
£m
Plant, machinery
and vehicles
£m
Capital work
in progress
£m
70.7
2.2
(1.5)
(0.5)
(2.3)
–
0.3
68.9
3.4
0.7
(2.5)
–
–
–
(1.5)
69.0
20.9
2.2
(0.2)
(0.5)
(1.2)
0.1
0.1
21.4
1.7
(0.7)
–
–
–
(0.5)
21.9
49.8
47.5
47.1
880.4
67.9
(37.5)
(23.3)
(12.2)
4.3
(0.9)
878.7
79.3
8.7
(41.4)
1.3
(1.2)
2.4
(16.9)
910.9
555.1
64.1
(32.7)
(15.4)
(9.2)
6.5
(0.3)
568.1
62.4
(35.2)
0.9
(0.3)
3.4
(11.3)
588.0
325.3
310.6
322.9
9.6
2.4
(0.7)
–
–
(4.3)
0.3
7.3
1.3
–
–
–
(0.5)
(2.4)
(0.2)
5.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.6
7.3
5.5
2020
£m
365.4
69.5
434.9
Total
£m
960.7
72.5
(39.7)
(23.8)
(14.5)
–
(0.3)
954.9
84.0
9.4
(43.9)
1.3
(1.7)
–
(18.6)
985.4
576.0
66.3
(32.9)
(15.9)
(10.4)
6.6
(0.2)
589.5
64.1
(35.9)
0.9
(0.3)
3.4
(11.8)
609.9
384.7
365.4
375.5
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
155
The Group had contractual commitments for the acquisition of property, plant and equipment of £7.2m (2020: £7.5m) at the balance sheet date. These
amounts were not included in the balance sheet at the year end.
Impairments in the year include the write-down of surplus equipment to their value-in-use in the Middle East and Africa and KGS, the in-house equipment
manufacturer, where it is not being relocated to other more active parts of the Group. The carrying amount of these assets was £1.9m, compared to a
value-in-use of £0.3m, which resulted in a non-underlying impairment charge of £1.6m. Details of restructuring are set out in note 8. Also included are
impairments in the year relating to assets that are inaccessible due to a contract suspension. The carrying amount of these assets was £1.8m, compared
to a value-in-use of £nil, which resulted in an underlying impairment charge of £1.8m.
15 b) Right-of-use assets – leased assets
The Group has lease contracts for various items of land and buildings, plant, machinery and vehicles used in its operations. Leases of land and buildings
generally have lease terms between three and 15 years, while plant, machinery and vehicles generally have lease terms between two and eight years. The
Group’s obligations under its leases are secured by the lessor’s title to the lease assets. Generally, the Group is restricted from assigning and subleasing its
leased assets. There are several lease contracts that include extension and termination options.
The Group has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Group applies the
‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
Set out below are the carrying amounts of the right-of-use assets recognised and the movements during the year:
At 1 January 2020
Additions
Depreciation expense
Impairment expense
Contract modifications
Exchange movements
At 31 December 2020 and 1 January 2021
Additions
Acquired with businesses (note 5)
Depreciation expense
Impairment expense
Contract modifications
Exchange movements
At 31 December 2021
Land and
buildings
£m
Plant,
machinery
and vehicles
£m
47.4
8.4
(13.4)
(0.7)
1.3
(0.8)
42.2
11.3
0.4
(12.6)
–
1.7
(0.1)
42.9
28.5
14.3
(14.6)
–
(0.8)
(0.1)
27.3
12.1
1.0
(13.9)
(4.4)
3.1
(0.2)
25.0
Total
£m
75.9
22.7
(28.0)
(0.7)
0.5
(0.9)
69.5
23.4
1.4
(26.5)
(4.4)
4.8
(0.3)
67.9
The carrying amounts of lease liabilities (included within note 25 within loans and borrowings) and the movements during the year are set out in note 26.
Impairments in the year relate to assets that are inaccessible due to a contract suspension. The carrying amount of these assets was £4.4m, compared to
a value-in-use of £nil, which resulted in an underlying impairment charge of £4.4m.
156
Keller Group plc Annual Report and Accounts 2021
Financial Statements
16 Investments in joint ventures
At 1 January 2021
Share of underlying post-tax results
Share of non-underlying post-tax results (note 8)
Exchange movements
At 31 December 2021
At 1 January 2020
Share of underlying post-tax results
Dividends received
Exchange movements
At 31 December 2020
£m
4.4
0.4
(0.6)
(0.2)
4.0
£m
3.8
0.8
(0.4)
0.2
4.4
The Group’s investment in joint ventures relates to a 50% interest in the ordinary shares of KFS Finland Oy, an entity incorporated in Finland. Refer to note
9 of the company accounts for the registered address.
In 2021, KFS Finland Oy earned total revenue of £36.8m (2020: £34.6m) and a statutory loss after tax for the year of £0.4m (2020: statutory profit after tax
of £1.6m)
Aggregate amounts relating to joint ventures:
Revenue
Operating costs1
Operating profit/(loss)
Finance costs
Profit/(loss) before taxation
Taxation
Share of post-tax results
1
Included within operating costs is depreciation on owned assets of £0.8m (2020: £0.6m).
Non-current assets
Cash and cash equivalents
Other current assets
Total assets
Other current liabilities
Non-current loans and borrowings
Other non-current liabilities
Total liabilities
Share of net assets
2021
Non-underlying
items
(note 8)
£m
–
(0.6)
(0.6)
–
(0.6)
–
(0.6)
Underlying
£m
18.4
(17.9)
0.5
(0.1)
0.4
–
0.4
Statutory
£m
18.4
(18.5)
(0.1)
(0.1)
(0.2)
–
(0.2)
2020
Statutory
£m
17.3
(16.4)
0.9
–
0.9
(0.1)
0.8
KFS Finland Oy (100% of results)
Group portion of the joint venture
2021
£m
20.4
1.2
7.8
29.4
(8.4)
(11.2)
(1.8)
(21.4)
8.0
2020
£m
10.0
0.8
4.4
15.2
(3.6)
(2.8)
–
(6.4)
8.8
2021
£m
10.2
0.6
3.9
14.7
(4.2)
(5.6)
(0.9)
(10.7)
4.0
2020
£m
5.0
0.4
2.2
7.6
(1.8)
(1.4)
–
(3.2)
4.4
On 8 September 2021, KFS Finland Oy acquired NordPile, a driven and piling contractor, for £7.3m (EUR8.5m). The fair value of the Group’s share of
intangibles acquired was £2.1m (EUR2.4m), representing the fair value of customer contracts at the date of acquisition and customer relationships.
Amortisation of these assets is recognised as a non-underlying item.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
157
17 Other non-current assets
Fair value of derivative financial instruments
Non-qualifying deferred compensation plan assets
Other assets
Insurance receivables
2021
£m
2.6
20.6
26.5
38.8
88.5
20201
£m
5.4
18.3
12.4
24.2
60.3
1
The comparative balance sheet has been restated to present gross insurance provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers and
customer retentions receivable in more than one year to other non-current assets, as outlined in note 2 to the financial statements.
A non-qualifying deferred compensation plan (NQ) is available to US employees, whereby an element of eligible employee bonuses and salary is deferred
over a period of four to six years. The plan allows participants to receive tax relief for contributions beyond the limits of the tax-free amounts allowed per
the 401k defined contribution pension plan. The plan is administered by a professional investment provider with participants able to select their
investments from an approved listing. An amount equal to each participant’s compensation deferral is transferred into a trust and invested in various
marketable securities. The related trust assets are not identical to investments held on behalf of the employee but are invested in similar funds with the
objective that performance of the assets closely tracks the liabilities. The investments held in the trust are designated solely for the purpose of paying
benefits under the non-qualified deferred compensation plan. The investments in the trust would however be available to all unsecured general creditors
in the event of insolvency.
The value of both the employee investments and those held in trust by the company are measured using Level 1 inputs per IFRS 13 (‘quoted prices in
active markets for identical assets or liabilities that the entity can access at the measurement date’) based on published market prices at the end of the
period. Adjustments to the fair value are recorded within net finance costs in the consolidated income statement.
At 31 December 2021, non-current assets in relation to the investments held in the trust were £20.6m (2020: £18.3m). The fair value movement on
these assets was £1.1m (2020: £2.2m). During the period proceeds from the sale of NQ-related investments were £nil (2020: £nil). At 31 December
2021, non-current liabilities in relation to the participant investments were £15.8m (2020: £14.7m). These are accounted for as financial liabilities at
fair value through profit or loss. The fair value movement on these liabilities was £2.1m (2020: £2.7m). During the year £1.4m (2020: £1.2m) of
compensation was deferred.
Other assets include customer retentions receivable of £24.4m (2020: £10.2m). For further information refer to note 4. Note 2 highlights the restatement
required in the presentation of customer receivables.
18 Inventories
Raw materials and consumables
Work in progress
Finished goods
2021
£m
40.6
1.8
29.7
72.1
2020
£m
41.3
0.3
18.5
60.1
During 2021, £2.4m (2020: £3.8m) of inventory write-downs were recognised as an expense in the consolidated income statement.
158
Keller Group plc Annual Report and Accounts 2021
Financial Statements
19 Trade and other receivables
Trade receivables
Contract assets
Other receivables
Fair value of derivative financial instruments
Prepayments
Insurance receivables
2021
£m
448.8
107.6
15.9
–
19.6
0.1
592.0
20201
£m
383.2
71.3
21.2
0.8
17.2
8.2
501.9
1 The comparative balance sheet has been restated to present gross insurance provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers and
customer retentions receivable in more than one year to other non-current assets, as outlined in note 2 to the financial statements.
Trade receivables and contract assets included in the balance sheet are shown net of expected credit loss provisions as detailed in note 2.
The movement in the provision held against trade receivables and contract assets (including expected credit losses) is as follows:
At 1 January
Used during the year
Additional provisions
Unused amounts reversed
Acquired with businesses
Disposal of businesses
Exchange movements
At 31 December
2021
£m
42.9
(3.1)
24.6
(11.9)
2.4
–
(1.2)
53.7
2020
£m
38.1
(6.3)
23.6
(12.1)
–
(0.7)
0.3
42.9
Set out below is information about the credit risk exposure on the Group’s trade receivables, detailing past due but not impaired, based on agreed terms
and conditions with the customer:
Overdue by less than 30 days
Overdue by between 31 and 90 days
Overdue by more than 90 days
20 Cash and cash equivalents
Bank balances
Short-term deposits
Cash and cash equivalents in the balance sheet
Bank overdrafts
Cash and cash equivalents in the cash flow statement
2021
£m
125.2
59.6
20.2
205.0
2021
£m
77.9
4.8
82.7
(0.9)
81.8
2020
£m
65.9
31.0
25.9
122.8
2020
£m
64.2
2.1
66.3
(4.7)
61.6
Cash and cash equivalents include £2.7m (2020: £3.1m) of the Group’s share of cash and cash equivalents held by joint operations, and £1.7m
(2020: £0.5m) of restricted cash which is subject to local country restrictions.
Notes to the consolidated financial statements continued
Keller Group plc Annual Report and Accounts 2021
Financial Statements
159
21 Assets held for sale
Plant and machinery
Inventories
Trade receivables
2021
£m
3.1
0.3
–
3.4
2020
£m
7.9
0.3
0.5
8.7
Assets held for sale mainly comprise plant and machinery in Waterway, as a result of the wind-down of the business, and equipment in the North America
Division following a rationalisation exercise.
22 Trade and other payables
Trade payables
Other taxes and social security payable
Other payables
Contract liabilities
Accruals
Fair value of derivative financial instruments
2021
£m
268.8
25.2
117.2
46.5
48.0
–
505.7
Other payables include contingent and deferred consideration of £12.3m (2020: £0.8m).
23 Provisions
At 31 December 2020 (presented)
Restatement1
At 31 December 2020 (restated)
Charge for the year
Acquired with businesses (note 5)
Disposal of businesses (note 5)
Used during the year
Unused amounts reversed
Unwinding of discount and changes in the
discount rate
Exchange movements
At 31 December 2021
Current
Non-current
At 31 December 2021
Employee
provisions
£m
Restructuring
provisions
£m
Contract
provisions
£m
Insurance and legal
provisions
£m
Other
provisions
£m
9.3
–
9.3
4.7
–
(0.1)
(4.4)
(0.1)
0.4
0.1
9.9
3.2
6.7
9.9
5.6
–
5.6
5.2
–
–
(6.9)
(0.2)
–
(0.2)
3.5
3.5
–
3.5
35.3
–
35.3
22.8
0.5
–
(11.6)
(4.9)
–
(0.2)
41.9
34.1
7.8
41.9
39.5
32.4
71.9
12.3
–
–
(7.1)
(3.4)
(0.1)
(0.8)
72.8
9.4
63.4
72.8
3.7
–
3.7
0.8
0.9
–
(0.9)
(0.9)
–
–
3.6
3.6
–
3.6
2020
£m
169.3
23.0
97.3
43.9
47.7
0.5
381.7
Total
£m
93.4
32.4
125.8
45.8
1.4
(0.1)
(30.9)
(9.5)
0.3
(1.1)
131.7
53.8
77.9
131.7
1
The comparative balance sheet has been restated to present gross insurance provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers, as outlined
in note 2 to the financial statements.
160
Keller Group plc Annual Report and Accounts 2021
Financial Statements
23 Provisions continued
Employee provisions
Employee provisions relate to various liabilities in respect of employee rights and benefits, including the workers’ compensation scheme in North America
and long service leave benefits in Australia.
At 31 December 2021, the provision in respect of workers’ compensation was £6.5m (2020: £6.8m). A provision is recognised when an employee informs
the company of a workers’ compensation claim. The provision is measured based on information provided by the workers’ compensation insurer. The
actual costs that may be incurred in respect of these claims are dependent on the assessment of an employee’s claim and potential medical expenses,
with timing of outflows variable depending on the claim.
At 31 December 2021, the provision in respect of long service leave was £1.7m (2020: £1.6m). A provision is recognised at the point an employee joins the
company, with an adjustment made to factor the likelihood that the employee will remain in continuous service with the company to meet the threshold to
receive the benefits. It is measured at the present value of expected future payments for services provided by employees up to the reporting date. The
actual costs that may be incurred are dependent on the length of service of employees and amended for any joiners and leavers. The provision is utilised
when the leave is taken by the employee or when unused leave is paid on termination of employment.
Employee provisions also includes an amount of £1.4m (2020: £0.9m) in respect of social security contributions on share options. This provision is utilised
as the options are exercised by employees, which occurs when the awards vest.
Restructuring provisions
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring, has raised a valid expectation in those
individuals affected and liabilities have been identified. The measurement of a restructuring provision includes only the direct expenditures arising from the
restructuring.
The restructuring provisions in 2021 relate primarily to the relevant activities in the Europe and Asia-Pacific, Middle East and Africa Divisions. The
provisions comprise mainly amounts for redundancy costs. Estimates may differ from the actual charges depending on the finalisation of redundancy
amounts. These provisions are expected to be utilised within the next 12 months.
Contract provisions
Contract provisions include onerous contracts where the forecast costs of completing the contract exceed the revenue. Provision is made in full when
such losses are foreseen, based on the estimated unavoidable costs of meeting the obligations of the contract, where these exceed the economic
benefits expected to be received. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the
cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The majority of this balance is expected to be utilised in the next 12
months, given the general short-term nature of contracts. The non-current element of the provision relates to longer-term contracts and customer
claims and disputes.
Insurance and legal provisions
Insurance and legal provisions comprises the liability for legal claims against the Group, including those that are retained within the Group’s captive insurer
(the ‘captive’). The captive covers both public liability and professional indemnity claims for the Group. The captive covers liabilities below an upper limit
above which third-party insurance applies.
Following the identification of an error (refer to note 2 for further details) there was a change in accounting policy for the presentation of provisions for
legal claims and related insurance receivables. Provisions for insurance and legal claims are made based on the best estimate of the likely total settlement
value of a claim against the Group. Management seek specialist input from legal advisers and the Group’s insurance claims handler to estimate the most
likely legal outcome. The outcome of legal negotiations is inherently uncertain; as a result, there can be no guarantee that the assumptions used to
estimate the provision will result in an accurate prediction of the actual costs that may be incurred.
A provision is recognised when it is judged likely that a legal claim will result in a payment to the claimant and the amount of the claim can be reliably
estimated. Provisions are utilised as insurance claims are settled, which may take a number of years. A separate insurance receivable is recognised to the
extent that confirmed third-party insurance is expected to cover any element of an estimated claim value and is virtually certain to be recovered. The asset
is recognised within other non-current assets (refer to note 17) and trade and other receivables (refer to note 19). Management considers that there are
no instances of reimbursable assets which are probable in nature.
Other provisions
Other provisions are in respect of property dilapidation arising from lease obligations and other operational provisions. Where a lease includes a ‘make-
good’ requirement, provision for the cost is recognised as the obligation is incurred, either at the commencement of the lease or as a consequence of
using the asset, and the cost of the expected work required can be reliably estimated. These are expected to be utilised over the relevant lease term which
ranges from 3 to 15 years across the Group.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
161
24 Other non-current liabilities
Non-qualifying compensation plan liabilities
Other liabilities
2021
£m
15.8
5.4
21.2
2020
£m
14.8
7.2
22.0
Other liabilities include deferred consideration of £0.4m (2020: £2.2m). and £4.7m (2020: contingent consideration of £4.5m) in respect of US social
security tax deferrals, refer to note 7 for further information.
Refer to note 17 for further information on the non-qualifying deferred compensation plan.
25 Financial instruments
Exposure to credit, interest rate and currency risks arise in the normal course of the Group’s business and have been identified as risks for the Group.
Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange and interest rates.
The Group does not trade in financial instruments nor does it engage in speculative derivative transactions.
Currency risk
The Group faces currency risk principally on its net assets, most of which are in currencies other than sterling. The Group aims to reduce the impact that
retranslation of these net assets might have on the consolidated balance sheet by matching the currency of its borrowings, where possible, with the
currency of its assets. The majority of the Group’s borrowings are held in sterling, US dollars and Australian dollars.
The Group manages its currency flows to minimise transaction exchange risk. Forward contracts are used to hedge significant individual transactions.
The majority of such currency flows within the Group relate to the repatriation of profits, intra-group loan repayments and any foreign currency cash flows
associated with acquisitions. The Group’s treasury risk management is performed at the Group’s head office.
As at 31 December 2021, the fair value of outstanding foreign exchange forward contracts was £nil (2020: £0.5m, included in current liabilities).
Interest rate risk
Interest rate risk is managed by either fixed and floating rate borrowings dependent upon the purpose and term of the financing.
As at 31 December 2021, approximately 99% (2020: 97%) of the Group’s third-party borrowings were at floating interest rates.
Hedging currency risk and interest rate risk
The Group hedges currency risk and interest rate risk. Where hedging instruments are used to hedge significant individual transactions, the Group ensures
that the critical terms, including dates, currencies, nominal amounts, interest rates and lengths of interest periods, are matched. The Group uses both
qualitative and quantitative methods to confirm this and to assess the effectiveness of the hedge.
For currency hedging, the main source of hedge ineffectiveness is the relative movement of the forward points of the different currencies.
For interest rate hedging, the main sources of hedge ineffectiveness include changes in the US LIBOR rate and the movement in discount factors.
Credit risk
The Group’s principal financial assets are trade and other receivables, bank and cash balances and a limited number of investments and derivatives held to
hedge certain Group exposures. These represent the Group’s maximum exposure to credit risk in relation to financial assets.
The Group has procedures to manage counterparty risk and the assessment of customer credit risk is embedded in the contract tendering processes.
The counterparty risk on bank and cash balances is managed by limiting the aggregate amount of exposure to any one institution by reference to their
credit rating and by regular review of these ratings.
Customer credit risk is mitigated by the Group’s relatively small average contract size and diversity, both geographically and in terms of end markets.
No individual customer represented more than 3% of revenue in 2021. The ageing of trade receivables that were past due but not impaired is shown in
note 19.
The Group evaluates each new customer and assesses their creditworthiness before any contract is undertaken.
The Group reviews customer receivables (including contract assets) on an ageing basis and provides against expected unrecoverable amounts.
Experience has shown the level of historical provision required to be relatively low. Credit loss provisioning reflects past experience, economic factors
and specific conditions.
162
Keller Group plc Annual Report and Accounts 2021
Financial Statements
25 Financial instruments continued
The Group’s estimated exposure to credit risk for trade receivables and contract assets is disclosed in note 19. This amount is the accumulation of several
years of provisions for known or expected credit losses. Consideration of future events is generally taken into account when deciding when and how much
to provide for of the Group’s trade receivables and contract assets.
Liquidity risk and capital management
The Group’s capital structure is kept under constant review, taking into account the need for availability and cost of various sources of funding. The capital
structure of the Group consists of net debt and equity as shown in the consolidated balance sheet. The Group maintains a balance between the certainty
of funding and a flexible, cost-effective financing structure, with all main borrowings being from committed facilities. The Group’s policy ensures that its
capital structure is appropriate to support this balance and the Group’s operations.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt. The Group’s debt and committed facilities mainly comprise a $75m private placement repayable in
December 2024 and a £375m syndicated revolving credit facility expiring in November 2025. These facilities are subject to certain covenants linked to the
Group’s financing structure, specifically regarding the ratios of net debt and interest to profit. The Group has complied with these covenants throughout
the year.
At the year end, the Group also had other borrowing facilities available of £76.0m (2020: £385.3m). In 2020, facilities available included £300m available
under the Bank of England Covid Corporate Financing Facility, which expired on 23 March 2021.
Private placements
In October and December 2014, $50m and $75m respectively was raised through a private placement with US institutions. The proceeds of the issue of
$50m Series A notes 3.81% due 2021 and $75m Series B notes 4.17% due 2024 were used to refinance maturing private placements. In October 2021
the $50m private placement was repaid, in line with the agreed terms. The US private placement notes are accounted for on an amortised cost basis,
adjusted for the impact of hedge accounting (as described below), and are retranslated at the exchange rate at each period end. The carrying value of the
private placement liabilities at 31 December 2021 was £58.1m (2020: £97.3m).
Hedging
The 2014 $50m and $75m fixed rate private placement liabilities were swapped into floating rates by means of US dollar interest rate swaps (the ‘2014
swaps’). The 2014 swaps have the same maturity as the private placement liabilities and have been designated as fair value hedges. The objective is to
protect against the Group’s exposure to changes in the fair value of the US private placement debt and to protect related interest cash flows due to
changes in US dollar interest rates.
The fair value of the 2014 swaps at 31 December 2021 was £2.6m (2020: £6.2m); of this amount £2.6m (2020: £5.4m) is included in other non-current
assets. At 31 December 2020, £0.8m was included in trade and other receivables. The effective portion of the changes in the fair value of the 2014 swaps
gave rise to a loss of £3.6m (2020: gain of £2.8m), which has been taken to the income statement along with the equal and opposite movement in fair
value of the corresponding hedged items. In October 2021, the interest rate swap hedging the tranche of the private placement liability repaid in the year
was closed out in line with the agreed terms.
All hedges are tested for effectiveness every six months. All hedging relationships remained effective during the year.
Accounting classifications
Financial assets measured at fair value through profit or loss
Non-qualifying deferred compensation plan
Interest rate swaps
Financial assets measured at amortised cost
Trade receivables
Contract assets
Cash and cash equivalents
Financial liabilities at fair value through profit or loss
Forward exchange contracts
Contingent and deferred consideration
Financial liabilities measured at amortised cost
Trade payables
Contract liabilities
Loans and borrowings
Lease liabilities
2021
£m
20.6
2.6
448.8
107.6
82.7
–
(12.7)
(268.8)
(46.5)
(200.6)
(75.4)
2020
£m
18.3
6.2
383.2
71.3
66.3
(0.5)
(3.0)
(169.3)
(43.9)
(185.0)
(73.8)
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
163
Effective interest rates and maturity analysis
In respect of financial liabilities, the following table indicates their effective interest rates and undiscounted contractual cash flows at the balance sheet date:
Effective
interest rate
%
Due within
1 year
£m
Due within
1–2 years
£m
1.0
1.6
–
–
–
–
1.5
3.6
30.3
46.5
268.8
12.3
363.0
0.4
2.3
17.4
–
–
0.4
20.5
Effective
interest rate
%
Due within
1 year
£m
Due within
1–2 years
£m
2.1
1.6
–
–
–
–
4.9
40.6
27.4
43.9
169.2
0.8
286.8
–
4.5
18.7
–
–
2.2
25.4
2021
Due within
2–5 years
£m
139.3
57.8
27.3
–
–
–
224.4
2020
Due within
2–5 years
£m
80.1
59.3
24.7
–
–
–
Due after
more than
5 years
£m
0.1
–
7.6
–
–
–
7.7
Due after
more than
5 years
£m
0.5
–
11.1
–
–
–
164.1
11.6
Bank loans and overdrafts
Bonds and other loans
Lease liabilities
Contract liabilities
Trade payables
Contingent consideration
Bank loans and overdrafts
Bonds and other loans
Lease liabilities
Contract liabilities
Trade payables
Contingent consideration
Loans and borrowings analysis
$75m private placement (due December 2024)
$50m private placement (repaid October 2021)
£375m syndicated revolving credit facility (expiring November 2025)
Bank overdrafts
Other bank borrowings
Other loans
Lease liabilities (note 26)
Total loans and borrowings
Carrying amount
as shown in the
balance sheet
£m
141.8
58.8
75.4
46.5
268.8
12.7
604.0
Carrying amount
as shown in the
balance sheet
£m
85.3
99.7
73.8
43.9
169.3
3.0
475.0
2020
£m
60.0
37.3
78.3
4.7
2.3
2.4
73.8
258.8
Total
£m
141.3
63.7
82.6
46.5
268.8
12.7
615.6
Total
£m
85.5
104.4
81.9
43.9
169.3
3.0
488.0
2021
£m
58.1
–
138.5
0.9
2.4
0.7
75.4
276.0
The Group has substantial borrowing facilities available to it. The undrawn committed facilities available at 31 December 2021 amounted to £235.5m
(2020: £313.2m). This mainly comprised the unutilised portion of the Group’s £375m revolving credit facility, which expires on 23 November 2025. In
addition, the Group had undrawn uncommitted borrowing facilities totalling £56.4m at 31 December 2021 (2020: £359.4m). In 2020 this included £300m
available under the Bank of England Covid Corporate Financing Facility (CCFC) which expired 23 March 2021. No drawings were made on the CCFC. Other
uncommitted bank borrowing facilities are normally reaffirmed by the banks annually, although they can theoretically be withdrawn at any time. Facilities
totalling £3.2m (2020: £4.0m) are secured against certain assets. Future obligations under finance leases on a former IAS 17 basis totalled £1.5m (2020:
£2.2m), including interest of £0.1m (2020: £nil).
164
Keller Group plc Annual Report and Accounts 2021
Financial Statements
25 Financial instruments continued
Changes in loans and borrowings were as follows:
Bank overdrafts
Bank loans
Other loans
Lease liabilities (note 26)
Total loans and borrowings
Derivative financial instruments
2020
£m
Cash flows
£m
Other1
£m
New leases
£m
(4.7)
(80.6)
(99.7)
(73.8)
(258.8)
5.7
3.7
(59.0)
37.2
29.8
11.7
–
–
(1.2)
0.6
(7.1)
(7.7)
–
–
–
–
(23.4)
(23.4)
–
Acquisition of
businesses
£m
Foreign
exchange
movements
£m
Fair value
changes
£m
–
–
–
(1.4)
(1.4)
–
0.1
(0.1)
(0.5)
0.5
–
–
–
–
3.6
–
3.6
(3.1)
2021
£m
(0.9)
(140.9)
(58.8)
(75.4)
(276.0)
2.6
1 Other comprises disposals and contract modifications and interest accretion on lease liabilities.
Cash flow hedges
At 31 December 2021, the Group held no instruments to hedge exposures to changes in foreign currency rates. At 31 December 2020, the Group held
the following instruments:
Maturity
2020
Carrying amount
<1 year
£m
(0.5)
1–2 years
£m
2–5 years
£m
>5 years
£m
–
–
–
Asset
£m
–
Liability1
£m
(0.5)
Change in fair value used
for calculating hedge
ineffectiveness
£m
–
Nominal
amount
$m
25.0
Forward exchange contracts
1
Included within other liabilities.
Fair value hedges
The Group held the following instruments to hedge exposures to changes in interest rates:
Maturity
2021
Carrying amount
<1 year
£m
1–2 years
£m
2–5 years
£m
>5 years
£m
–
–
2.6
–
Asset1
£m
2.6
Liability
£m
–
Change in fair value used
for calculating hedge
ineffectiveness
£m
Nominal2
amount
$m
–
9.4
Maturity
2020
Carrying amount
<1 year
£m
0.8
1–2 years
£m
2–5 years
£m
>5 years
£m
–
5.4
–
Asset1
£m
6.2
Liability
£m
–
Change in fair value used
for calculating hedge
ineffectiveness
£m
Nominal2
amount
$m
–
14.4
Interest rate swaps
Interest rate swaps
1
Included within other assets.
2 The average fixed interest rate is 4.0%.
The Group had the following hedged items relating to the above instruments:
2021
Change in fair
value used for
calculating hedge
ineffectiveness
£m
Hedge2
ineffectiveness
in profit
or loss
£m
–
–
–
–
Carrying1
amount
liability
£m
(58.1)
3.6
2020
Change in fair
value used for
calculating hedge
ineffectiveness
£m
Hedge2
ineffectiveness in
profit or loss
£m
–
–
–
–
Carrying1
amount
liability
£m
(97.3)
2.8
$75m private placements (2020: $125m)
Fair value hedge adjustments
1
2
Included within loans and borrowings.
Included in operating profit for the year.
Non-interest-bearing financial liabilities comprise trade payables and contract liabilities of £315.3m (2020: £213.2m), payable within one year.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
165
Fair values
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values. The following summarises the major
methods and assumptions used in estimating the fair values of financial instruments; being derivatives, interest-bearing loans and borrowings, contingent
and deferred consideration and payables, receivables and construction assets.
Derivatives
The fair values of interest rate and cross-currency swaps are calculated based on expected future principal and interest cash flows, discounted using
market rates prevailing at the balance sheet date. The valuation methods of all of the Group’s derivative financial instruments carried at fair value are
categorised as Level 2. Level 2 assets are financial assets and liabilities that do not have regular market pricing, but whose fair value can be determined
based on other data values or market prices.
Interest-bearing loans and borrowings
Fair value is calculated based on expected future principal and interest cash flows discounted using appropriate discount rates prevailing at the balance
sheet date.
Contingent and deferred consideration
Fair value is calculated based on the amounts expected to be paid, determined by reference to forecasts of future performance of the acquired
businesses, discounted using appropriate discount rates prevailing at the balance sheet date and the probability of contingent events and targets being
achieved.
The valuation methods of the Group’s contingent consideration carried at fair value are categorised as Level 3. Level 3 assets are financial assets and
liabilities that are considered to be the most illiquid. Their values have been estimated using available management information including subjective
assumptions.
There are no individually significant unobservable inputs used in the fair value measurement of the Group’s contingent consideration as at 31 December 2021.
The following table shows a reconciliation from the opening to closing balances for contingent and deferred consideration:
At 1 January
Acquisition of businesses (note 5)
Additional amounts provided (note 8)
Paid during the period
Released during the period
Exchange movements
At 31 December
2021
£m
3.0
8.8
1.3
(0.4)
(0.1)
0.1
12.7
2020
£m
2.4
–
0.8
–
–
(0.2)
3.0
During the year, the Group acquired RECON Services Inc. Contingent consideration is payable in respect of certain contract awards; the total fair value of
the contingent consideration at 31 December 2021 is £8.0m. This amount has been agreed in with the vendor (refer to note 34). The Group also acquired
Voges Drilling. Deferred consideration of £0.8m is to be paid over a three-year period. Refer to note 5 for further details.
Additional contingent consideration payable of £1.3m relates to the acquisition of the Geo Construction Group (Bencor) in 2015, following the finalisation
of items referenced in the sale and purchase agreement. This now reflects the maximum value payable under the sale and purchase agreement.
Contingent consideration was paid during the period of £0.4m in respect of the Geo Instruments acquisition in 2017, with an additional £0.1m released in
the period. In the prior period, an additional £0.8m was provided.
At 31 December 2021, contingent consideration of £11.9m (2020: £2.4m) is payable between one and two years (2020: £0.8m for Geo Instruments
payable in one year).
At 31 December 2021, £0.4m deferred consideration, in respect of Voges Drilling, is payable in one year and £0.4m is payable between one and two years.
The fair value measurement of the contingent consideration could be affected if the forecast financial performance is different to that estimated. A better
than estimated performance may increase the value of the contingent consideration payable.
Payables, receivables and contract assets
For payables, receivables and contract assets with an expected maturity of one year or less, the carrying amount is deemed to reflect the fair value.
166
Keller Group plc Annual Report and Accounts 2021
Financial Statements
25 Financial instruments continued
Interest rate and currency profile
The profile of the Group’s financial assets and financial liabilities after taking account of the impact of hedging instruments was as follows:
Weighted average fixed debt interest rate (%)
Weighted average fixed debt period (years)
Fixed rate financial liabilities
Floating rate financial liabilities
Lease liabilities
Financial assets
Net debt
Weighted average fixed debt interest rate (%)
Weighted average fixed debt period (years)
Fixed rate financial liabilities
Floating rate financial liabilities
Lease liabilities
Financial assets
Net debt
GBP
–
–
£m
–
(63.3)
(3.5)
4.3
(62.5)
GBP
–
–
£m
–
(43.5)
(1.2)
3.7
(41.0)
USD
–
–
£m
–
(111.8)
(45.1)
14.7
(142.2)
USD
–
–
£m
–
(97.3)
(46.4)
9.7
(134.0)
2021
EUR
1.5
4.1
£m
(1.7)
(0.1)
(12.7)
6.9
(7.6)
2020
EUR
1.3
4.6
£m
(2.6)
(12.3)
(12.2)
10.1
(17.0)
CAD
Other1
Total
–
–
£m
–
–
(3.2)
8.4
5.2
CAD
–
–
£m
–
(5.2)
(3.5)
1.8
(6.9)
6.1
0.3
£m
(1.3)
(22.4)
(10.9)
48.4
13.8
Other1
8.4
1.4
£m
(2.1)
(22.0)
(10.5)
41.0
6.4
–
–
£m
(3.0)
(197.6)
(75.4)
82.7
(193.3)
Total
–
–
£m
(4.7)
(180.3)
(73.8)
66.3
(192.5)
1
Included within other floating rate financial liabilities are AUD revolver loans of £21.5m (2020: £5.8m). Included within other financial assets are AUD cash balances of £4.1m (2020: £1.5m), ZAR cash
balances of £5.6m (2020: £4.4m) and SGD cash balances of £4.3m (2020: £2.3m).
Sensitivity analysis
At 31 December 2021, it is estimated that a general movement of one percentage point in interest rates would increase or decrease the Group’s profit
before taxation by approximately £1.2m (2020: £1.1m).
It is estimated that a general increase of 10 percentage points in the value of sterling against other principal foreign currencies would have decreased the
Group’s profit before taxation and non-underlying items by approximately £5.0m for the year ended 31 December 2021 (2020: £12.0m). The estimated
impact of a 10 percentage point decrease in the value of sterling is an increase of £6.1m (2020: £14.6m) in the Group’s profit before taxation and
non-underlying items. This sensitivity relates to the impact of retranslation of foreign earnings only. The impact on the Group’s earnings of currency
transaction exchange risk is not significant. These sensitivities assume all other factors remain constant.
26 Lease liabilities
Set out below are the carrying amounts of lease liabilities (included within note 25 within loans and borrowings) and the movements during the year:
At 1 January
Additions
Contract modifications
Interest expense
Payments
Exchange movements
At 31 December
Current
Non-current
2021
£m
73.8
24.8
4.0
3.1
(29.8)
(0.5)
75.4
27.5
47.9
2020
£m
78.4
22.5
0.3
3.8
(30.2)
(1.0)
73.8
24.8
49.0
Notes to the consolidated financial statements continued
Keller Group plc Annual Report and Accounts 2021
Financial Statements
167
27 Share capital and reserves
Allotted, called up and fully paid equity share capital:
73,099,735 ordinary shares of 10p each (2020: 73,099,735)
2021
£m
7.3
2020
£m
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 of £7.6m 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 of £56.9m 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.
As at 31 December 2021, the total number of shares held in treasury was 777,917 (2020: 889,733).
During the year to 31 December 2021, 417,240 ordinary shares were purchased by the Keller Group Employee Benefit Trust (2020: nil), to be used to
satisfy future obligations of the company under the Keller Group plc Long Term Incentive Plan. The cost of the market purchases was £3.7m (2020: £nil).
There is a dividend waiver in place for both shares held in treasury and by the Keller Group Employee Benefit Trust.
28 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:
Short-term employee benefits
Post-employment benefits
Termination payments
Other related party transactions
2021
£m
8.2
0.3
0.4
8.9
2020
£m
8.3
0.4
0.4
9.1
As at the year end there was a net balance of £0.1m owed by (2020: £0.1m owed by) the joint venture. These amounts are unsecured, have no fixed date
of repayment and are repayable on demand.
29 Commitments
Capital commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred was £7.2m (2020: £7.5m) and relates to property, plant and
equipment purchases.
168
Keller Group plc Annual Report and Accounts 2021
Financial Statements
30 Guarantees, contingent liabilities and contingent assets
Claims against the Group arise in the normal course of business, some of which lead to litigation or arbitration procedures. Such claims are predominantly
covered by the Group’s insurance arrangements. The Group recognises provisions for liabilities when it is more likely than not that a settlement will be
required and the value of such a payment can be reliably estimated.
The company and certain of its subsidiary undertakings have entered into a number of guarantees in the ordinary course of business, the effects of which
are to guarantee or cross-guarantee certain bank borrowings and other liabilities of other Group companies. At 31 December 2021, the Group had
outstanding standby letters of credit and surety bonds for the Group’s captive insurance arrangements totalling £26.5m (2020: £25.4m). The Group
enters into performance and advance payment bonds and other undertakings in the ordinary course of business. At 31 December 2021, the Group had
£138.3m outstanding related to performance and advanced payment bonds (2020: £154.0m). These are treated as a contingent liability until such time it
becomes probable that payment will be required under the individual terms of each agreement.
The company has provided a guarantee of certain subsidiaries’ liabilities to take the exemption from having to prepare individual accounts under section
394A and section 394C of the Companies Act 2006 and exemption from having their financial statements audited under sections 479A to 479C of the
Companies Act 2006. These are listed in note 9 of the company accounts.
At 31 December 2021, the Group had no contingent assets (2020: £nil).
31 Share-based payments
The Group operates a Long Term Incentive Plan (the ‘Plan’).
Outstanding awards are as follows:
Outstanding at 1 January 2020
Granted during 2020
Lapsed during 2020
Exercised during 2020
Outstanding at 31 December 2020 and 1 January 2021
Granted during 2021
Lapsed during 2021
Exercised during 2021
Outstanding at 31 December 2021
Exercisable at 1 January 2020
Exercisable at 31 December 2020 and 1 January 2021
Exercisable at 31 December 2021
Number
2,090,277
788,062
(662,030)
(152,899)
2,063,410
805,367
(782,525)
(111,816)
1,974,436
–
–
–
The average share price during the year was 865.1p (2020: 651.0p).
Under IFRS 2, the fair value of services received in return for share awards granted is measured by reference to the fair value of share options granted. The
estimate of the fair value of share awards granted is measured based on a stochastic model. The contractual life of the award is used as an input into this
model, with expectations of early exercise being incorporated into the model.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
169
The inputs into the stochastic model are as follows:
Share price at grant
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield
2021
856.0p
0.0p
47.3%
3 years
0.14%
0.00%
2020
720.0p
0.0p
39.1%
3 years
0.11%
0.00%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years, adjusted for any expected
changes to future volatility due to publicly available information.
The Group recognised total expenses (included in operating costs) of £3.9m (2020: £2.4m) related to equity-settled, share-based payment transactions.
The weighted average fair value of options granted in the year was 827.6p (2020: 695.5p).
The awards, which are taken as shares, are intended to be satisfied from shares held under the Keller Group Employee Benefit Trust (the ‘Trust’) or from
treasury shares held. The shares held by the Trust are accounted for as a deduction from equity in retained earnings. At 31 December 2021, 417,240
ordinary shares were held by the Trust with a value of £3.7m. These shares were purchased during the year. At 31 December 2020, no shares were held in
the Trust.
32 Retirement benefit liabilities
The Group operates pension schemes in the UK and overseas.
In the UK, the Group operates the Keller Group Pension Scheme (the ‘Scheme’), a defined benefit scheme, which has been closed to new members since
1999 and was closed to all future benefit accrual with effect from 31 March 2006. Under the Scheme, employees are normally entitled to retirement
benefits on attainment of a retirement age of 65. The Scheme is subject to UK pensions legislation which, inter alia, provides for the regulation of
work-based pension schemes by The Pensions Regulator. The trustees are aware of and adhere to the Codes of Practice issued by The Pensions
Regulator. The Scheme trustees currently comprise one member-nominated trustee and two employer-nominated trustees. An employer-nominated
trustee is also the Chair of the trustees. The Scheme exposes the Group to actuarial risks, such as longevity risk, interest rate risk and market (investment)
risk, which are managed through the investment strategy to acceptable levels established by the trustees. The Scheme can invest in a wide range of asset
classes including equities, bonds, cash, property, alternatives (including private equity, commodities, hedge funds, infrastructure, currency, high yield debt
and derivatives) and annuity policies. Any investment in derivative instruments is only made to contribute to a reduction in the overall level of risk in the
portfolio or for the purposes of efficient portfolio management. With effect from the most recent actuarial valuation date (5 April 2020), the Group has
agreed to pay annual contributions of £2.7m, to increase by 3.6% per annum, until 5 August 2024, subject to a review of the level of employer
contributions at the next actuarial review in 2023.
Between 1990 and 1997, the Scheme members accrued a Guaranteed Minimum Pension (GMP). This amount differed between men and women in
accordance with the rules which were applicable at that time. On 26 October 2018, there was a court judgement (in the case of Lloyds Banking Group
Pensions Trustees Limited v Lloyds Bank PLC) that confirmed that GMP is to be made equal for men and women. In 2018, the estimated increase in the
Scheme’s liabilities was £1.3m, which was recognised as a past service cost in 2018 as a charge to non-underlying items. On 20 November 2020, there
was an updated judgement requiring an allowance to be made for past transfers. The estimated increase in the Scheme’s liability in respect of this is less
than £0.1m. These estimates remain appropriate for 2021. The actual cost may differ when the GMP equalisation exercise is complete.
The Group has two UK defined contribution retirement benefit schemes. There were no contributions outstanding in respect of these schemes at
31 December 2021 (2020: £nil). The total UK defined contribution pension charge for the year was £1.4m (2020: £1.2m).
The Group has defined benefit retirement obligations in Germany and Austria. Under these schemes, employees are entitled to retirement benefits on
attainment of a retirement age of 65, provided they have either five or ten years of employment with the Group, depending on the area or field they are
working in. The amount of benefit payable depends on the grade of the employee and the number of years of service. Benefits under these schemes only
apply to employees who joined the Group prior to 1997. These defined benefit retirement obligations are funded on the Group’s balance sheet and
obligations are met as and when required by the Group.
170
Keller Group plc Annual Report and Accounts 2021
Financial Statements
32 Retirement benefit liabilities continued
The Group has a number of end of service schemes in the Middle East as required by local laws and regulations. The amount of benefit payable depends
on the current salary of the employee and the number of years of service. These retirement obligations are funded on the Group’s balance sheet and
obligations are met as and when required by the Group.
The Group operates a defined contribution scheme for employees in North America, where the Group is required to match employee contributions up to
a certain level in accordance with the scheme rules. The total North America pension charge for the year was £6.4m (2020: £5.9m).
In Australia, there is a defined contribution scheme where the Group is required to ensure that a prescribed level of superannuation support of an
employee’s notional base earnings is made. This prescribed level of support is currently 10.0% (2020: 9.5%). The total Australian pension charge for the
year was £3.8m (2020: £3.1m).
Details of the Group’s defined benefit schemes are as follows:
Present value of the scheme liabilities
Fair value of assets
Surplus/(deficit) in the scheme
Irrecoverable surplus
Net defined benefit liability
The Keller
Group Pension
Scheme (UK)
2021
£m
The Keller
Group Pension
Scheme (UK)
2020
£m
German1,
Austrian and
other schemes
2021
£m
German 1,
Austrian and
other schemes
2020
£m
(58.3)
63.7
5.4
(12.2)
(6.8)
(65.0)
58.0
(7.0)
(2.2)
(9.2)
(18.9)
–
(18.9)
–
(18.9)
(21.9)
–
(21.9)
–
(21.9)
1
Included in this balance is £3.0m (2020: £2.9m) in relation to the end of service schemes in the Middle East.
For the Keller Group Pension Scheme, based on the net deficit of the Scheme as at 31 December 2021 and the committed payments under the Schedule
of Contributions agreed on 17 November 2020, there is a notional surplus of £12.2m (2020: £2.2m). Management is of the view that, based on the
Scheme rules, it does not have an unconditional right to a refund of a surplus under IFRIC 14, and therefore an additional balance sheet liability in respect of
a ‘minimum funding requirement’ has been recognised. The minimum funding requirement is calculated using the agreed contributions of £2.7m a year
with effect from 1 January 2021, increasing by 3.6% per annum on 1 January going forward to 5 August 2024. The contributions will be reviewed following
the next actuarial review to be prepared as at 5 April 2023.
The value of the Scheme liabilities has been determined by the actuary using the following assumptions:
Discount rate
Interest on assets
Rate of increase in pensions in payment
Rate of increase in pensions in deferment
Rate of inflation
The Keller
Group Pension
Scheme (UK)
2021
%
The Keller
Group Pension
Scheme (UK)
2020
%
German and
Austrian
schemes
2021
%
German and
Austrian
schemes
2020
%
2.0
2.0
3.5
2.9
3.5
1.2
1.2
3.4
2.7
3.3
0.8
–
2.0
3.2
3.2
0.3
–
2.0
1.6
1.6
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
171
The mortality rate assumptions are based on published statistics. The average remaining life expectancy, in years, of a pensioner retiring at the age of 65 at the
balance sheet date is:
Male currently aged 65
Female currently aged 65
The assets of the schemes were as follows:
Equities
Target return funds1
Gilts
Bonds
Liability driven investing (LDI) portfolios2
Cash
The Keller
Group Pension
Scheme (UK)
2021
21.0
23.3
The Keller
Group Pension
Scheme (UK)
2020
20.9
23.3
German and
Austrian
schemes
2021
19.5
22.8
German and
Austrian
schemes
2020
19.4
22.8
The Keller
Group Pension
Scheme (UK)
2021
£m
The Keller
Group Pension
Scheme (UK)
2020
£m
German,
Austrian and
other schemes
2021
£m
German,
Austrian and
other schemes
2020
£m
16.8
8.1
–
19.7
15.9
3.2
63.7
17.5
14.5
10.1
10.0
–
0.1
52.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 A diversified growth fund split between mainly UK listed equities, bonds and alternative investments which are capped at 20% of the total fund.
2 A portfolio of gilt and swap contracts, backed by investment-grade credit instruments, that is designed to hedge the majority of the interest rate and inflation risks associated with the Schemes’
obligations.
172
Keller Group plc Annual Report and Accounts 2021
Financial Statements
32 Retirement benefit liabilities continued
Changes in scheme liabilities
Opening balance
Current service cost
Interest cost
Benefits paid
Exchange movements
Experience loss on defined benefit obligation
Changes to demographic assumptions
Changes to financial assumptions
Closing balance
Changes in scheme assets
Opening balance
Interest on assets
Administration costs
Employer contributions
Benefits paid
Return on plan assets less interest
Closing balance
Actual return on scheme assets
Statement of comprehensive income
Return on plan assets less interest
Experience loss on defined benefit obligation
Changes to demographic assumptions
Changes to financial assumptions
Change in irrecoverable surplus
Remeasurements of defined benefit plans
Cumulative remeasurements of defined benefit plans
Expense recognised in the income statement
Current service cost
Administration costs
Operating costs
Net pension interest cost
Expense recognised in the income statement
Movements in the balance sheet liability
Net liability at start of year
Expense recognised in the income statement
Employer contributions
Benefits paid
Exchange movements
Remeasurements of defined benefit plans
Net liability at end of year
The Keller
Group Pension
Scheme (UK)
2021
£m
The Keller
Group Pension
Scheme (UK)
2020
£m
German1,
Austrian and
other schemes
2021
£m
German1,
Austrian and
other schemes
2020
£m
(65.0)
–
(0.8)
2.1
–
–
(0.6)
6.0
(58.3)
58.0
0.7
(0.2)
2.7
(2.1)
4.6
63.7
5.3
4.6
–
(0.6)
6.0
(10.0)
–
(25.6)
–
0.2
0.2
0.1
0.3
9.2
0.3
(2.7)
–
–
–
6.8
(60.4)
–
(1.2)
3.7
–
(0.4)
2.7
(9.4)
(65.0)
52.2
1.0
(0.2)
2.6
(3.7)
6.1
58.0
7.1
6.1
(0.4)
2.7
(9.4)
(0.4)
(1.4)
(25.6)
–
0.2
0.2
0.2
0.4
10.0
0.4
(2.6)
–
–
1.4
9.2
(21.9)
(0.6)
(0.1)
1.5
1.0
–
–
1.2
(18.9)
–
–
–
–
–
–
–
–
–
–
–
1.2
–
1.2
(9.2)
0.6
–
0.6
0.1
0.7
21.9
0.7
–
(1.5)
(1.0)
(1.2)
18.9
(20.7)
(0.7)
(0.1)
1.2
(0.8)
–
–
(0.8)
(21.9)
–
–
–
–
–
–
–
–
–
–
–
(0.8)
–
(0.8)
(10.4)
0.7
–
0.7
0.1
0.8
20.7
0.8
–
(1.2)
0.8
0.8
21.9
1 Other comprises end of service schemes in the Middle East of £3.0m (2020: £2.9m).
A reduction in the discount rate of 0.1% would increase the deficit in the schemes by £1.1m, whilst a reduction in the inflation assumption of 0.1%,
including its impact on the revaluation in deferment and pension increases in payment, would decrease the deficit by £0.7m. A decrease in the mortality
rate by one year would decrease the deficit in the schemes by £1.4m. Note that these sensitivities do not include end of service schemes in the Middle
East as these are not material to the Group.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
173
The weighted average duration of the defined benefit obligation is approximately 17 years for the UK scheme and 11 years for the German and Austrian
schemes. The history of experience adjustments on scheme assets and liabilities for all the Group’s defined benefit pension schemes, including the end of
service schemes in the Middle East, are as follows:
Present value of defined benefit obligation
Fair value of scheme assets
Deficit in the schemes
Irrecoverable surplus
Net defined benefit liability
Experience adjustments on scheme liabilities
Experience adjustments on scheme assets
33 Non-controlling interests
2021
£m
(77.2)
63.7
(13.5)
(12.2)
(25.7)
6.6
4.6
2020
£m
(86.9)
58.0
(28.9)
(2.2)
(31.1)
(7.9)
6.1
2019
£m
(81.1)
52.2
(28.9)
(1.8)
(30.7)
(8.2)
5.4
Financial information of subsidiaries that have a material non-controlling interest is provided below:
Name
Keller Fondations Speciales SPA
Keller Turki Company Limited
Country of incorporation
Algeria
Saudi Arabia
Please refer to note 9 of the company accounts for the registered addresses.
Loss attributable to non-controlling interests:
Keller Fondations Speciales SPA
Keller Turki Company Limited
Other interests
Share of net assets of non-controlling interests:
Keller Fondations Speciales SPA
Keller Turki Company Limited
Other interests
2018
£m
(71.7)
45.2
(26.5)
(1.4)
(27.9)
3.7
(1.5)
2021
49%
35%
2021
£m
(0.5)
(0.3)
(0.1)
(0.9)
2021
£m
2.9
(0.3)
0.2
2.8
2017
£m
(75.3)
46.1
(29.2)
–
(29.2)
(1.8)
3.2
2020
49%
35%
2020
£m
(0.6)
(1.0)
0.2
(1.4)
2020
£m
3.5
0.1
0.1
3.7
174
Keller Group plc Annual Report and Accounts 2021
Financial Statements
33 Non-controlling interests continued
Aggregate amounts relating to material non-controlling interests:
Revenue
Operating costs
Operating loss
Finance costs
Loss before taxation
Taxation
Loss attributable to non-controlling interests
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Share of net assets/(liabilities)
34 Post balance sheet events
2021
£m
2020
£m
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
4.2
(4.5)
(0.3)
–
(0.3)
–
(0.3)
0.9
(1.2)
(0.3)
–
(0.3)
(0.2)
(0.5)
2021
£m
1.5
(2.5)
(1.0)
–
(1.0)
–
(1.0)
0.8
(1.4)
(0.6)
–
(0.6)
–
(0.6)
2020
£m
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
0.9
2.8
(0.8)
–
2.9
0.7
2.4
(2.8)
(0.6)
(0.3)
1.2
4.0
(1.7)
–
3.5
0.9
1.0
(1.1)
(0.7)
0.1
On 15 February 2022, an agreement was reached with the vendor of RECON Services Inc. to finalise the amount of contingent consideration payable
in respect of the acquisition made in July 2021. A final settlement amount of £8.7m (US$11.7m) was agreed in respect of the remaining contingent
consideration payable and other liabilities arising from the sale and purchase agreement. This represents a non-adjusting post balance sheet event
under IFRS. The change in fair value of the contingent consideration between the 31 December 2021 balance sheet date and the agreement reached
on 15 February will be reflected in the income statement for the period ending 31 December 2022.
Notes to the consolidated financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
175
Company balance sheet
As at 31 December 2021
Assets
Investments
Deferred tax assets
Other assets
Non-current assets
Amounts owed by subsidiary undertakings:
– Amounts falling due within one year
– Amounts falling due after one year
Current tax assets
Trade and other debtors
Cash and bank balances
Current assets
Liabilities
Bank and other loans
Trade and other creditors
Amounts owed to subsidiary undertakings
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Bank and other loans
Amounts owed to subsidiary undertakings
Other creditors
Pension liabilities
Creditors: amounts falling due after one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Other reserve
Retained earnings
Shareholders’ funds
The company’s profit for the year was £12.9m (2020: £13.8m).
These financial statements were approved by the Board of Directors and authorised for issue on 7 March 2022.
They were signed on its behalf by:
Michael Speakman
Chief Executive Officer
David Burke
Chief Financial Officer
Note
2
3
4
5
6
8
2021
£m
513.9
0.3
2.8
517.0
0.2
55.6
3.6
0.8
10.9
71.1
–
(10.5)
(0.4)
(10.9)
60.2
577.2
(56.4)
(44.2)
(6.2)
(0.8)
(107.6)
469.6
7.3
38.1
7.6
56.9
359.7
469.6
2020
£m
513.9
0.6
5.4
519.9
0.5
130.5
–
1.1
0.8
132.9
(37.3)
(8.5)
(0.3)
(46.1)
86.8
606.7
(72.2)
(45.6)
(5.4)
(1.1)
(124.3)
482.4
7.3
38.1
7.6
56.9
372.5
482.4
176
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Company statement of changes in equity
For the year ended 31 December 2021
At 1 January 2020
Profit for the year
Cash flow gains taken to equity
Cash flow hedge transferred to income statement
Remeasurement of defined benefit pension schemes
Total comprehensive income for the year
Dividends
Share-based payments
At 31 December 2020 and 1 January 2021
Profit for the year
Remeasurement of defined benefit pension schemes
Total comprehensive income for the year
Dividends
Purchase of own shares for ESOP trust
Share-based payments
At 31 December 2021
Share
capital
£m
7.3
Share
premium
account
£m
38.1
Capital
redemption
reserve
£m
7.6
Other
reserve
£m
56.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.3
38.1
7.6
56.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.3
38.1
7.6
56.9
Hedging
reserve
£m
–
–
0.5
(0.5)
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£m
382.6
13.8
–
–
(0.1)
13.7
(25.9)
2.1
372.5
12.9
–
12.9
(25.9)
(3.7)
3.9
359.7
Total
equity
£m
492.5
13.8
0.5
(0.5)
(0.1)
13.7
(25.9)
2.1
482.4
12.9
–
12.9
(25.9)
(3.7)
3.9
469.6
Details of the capital redemption reserve and the other reserve are included in note 27 of the consolidated financial statements.
Details of the shares held by the Keller Group Employee Benefit Trust and the share-based payment scheme are included in note 31 to the consolidated
financial statements.
Of the retained earnings, an amount of £236.8m (2020: £236.8m) attributable to profits arising on an intra-group reorganisation is not distributable.
Keller Group plc Annual Report and Accounts 2021
Financial Statements
177
Notes to the company financial statements
1 Principal accounting policies
Basis of preparation
The separate financial statements of the company are presented as required by the Companies Act 2006 (the ‘Act’). The company meets the definition of
a qualifying entity under FRS 100 (‘Financial Reporting Standard 100’) issued by the Financial Reporting Council and reports under FRS 101.
Except as noted below, the company’s accounting policies are consistent with those described in the consolidated financial statements of Keller Group plc.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to share-based
payments, financial instruments, capital management, presentation of a cash flow statement, related party transactions and comparative information.
Where required, equivalent disclosures are given in the consolidated financial statements. In addition, disclosures in relation to share capital (note 27) and
dividends (note 12) have not been repeated here as there are no differences to those provided in the consolidated financial statements.
These company financial statements have been prepared on the going concern basis and under the historical cost convention. The financial statements
are presented in pounds sterling, which is the company’s functional currency, and all values are rounded to the nearest hundred thousand, expressed in
millions to one decimal point, except when otherwise indicated.
Profit of the parent company
The company has taken advantage of section 408 of the Act and consequently the statement of comprehensive income (including the profit and loss
account) of the parent company is not presented as part of these accounts. The profit after tax of the parent company for the financial year amounted to
£12.9m (2020: £13.8m).
Amounts owed by subsidiary undertakings
The company holds inter-company loans with subsidiary undertakings with repayment dates being a mixture of repayable on demand or repayable on a
fixed contractual date. These inter-company loans are disclosed on the face of the balance sheet. None are past due nor impaired. The carrying value of
these loans approximates their fair value. The expected credit loss on these loans with subsidiary undertakings is expected to be immaterial, both on initial
recognition and subsequently.
Financial instruments
Details of the company’s risk management processes and hedge accounting are included in the disclosures in note 25 to the consolidated financial
statements.
Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Audit fees
The company has taken the exemption granted under SI 2008/489 not to disclose non-audit fees paid to its auditors as these are disclosed in the
consolidated financial statements.
Employees
The company has no employees other than the Directors. The remuneration of the Executive Directors is disclosed in the audited section of the
Remuneration policy report on pages 102 to 111. Fees payable to Non-executive Directors totalled £0.5m (2020: £0.5m).
2 Investments
Shares at cost
At 1 January
Allowances for impairment
At 31 December
The company’s investments are included in note 9.
2021
£m
513.9
–
513.9
2020
£m
513.9
–
513.9
178
Keller Group plc Annual Report and Accounts 2021
Financial Statements
3 Other assets
Fair value of derivative financial instruments
Other assets
4 Trade and other debtors
Other receivables
Prepayments
Fair value of derivative financial instruments
5 Trade and other creditors
Trade creditors and accruals
Accrued interest
6 Other creditors
Other creditors
7 Contingent liabilities
2021
£m
2.6
0.2
2.8
2021
£m
0.2
0.6
–
0.8
2021
£m
10.5
–
10.5
2021
£m
6.2
6.2
2020
£m
5.4
–
5.4
2020
£m
0.2
0.1
0.8
1.1
2020
£m
8.3
0.2
8.5
2020
£m
5.4
5.4
The company and certain of its subsidiary undertakings have entered a number of guarantees in the ordinary course of business, the effects of which are
to guarantee or cross-guarantee certain bank borrowings and other liabilities of other Group companies. At 31 December 2021, the company’s liability in
respect of the guarantees against bank borrowings amounted to £140.2m (2020: £70.4m). In addition, outstanding standby letters of credit and surety
bonds for the Group’s captive insurance arrangements totalled £26.5m (2020: £25.4m).
In addition, as set out in note 9, the company has provided a guarantee of certain subsidiaries’ liabilities to take the exemption from having to prepare
individual accounts under section 394A and section 394C of the Companies Act 2006 and exemption from having their financial statements audited
under sections 479A to 479C of the Companies Act 2006.
Notes to the company financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
179
8 Pension liabilities
In the UK, the company participates in the Keller Group Pension Scheme (the ‘Scheme’), a defined benefit scheme, details of which are given in note 32 to
the consolidated financial statements. The company’s share of the present value of the assets of the Scheme at the date of the last actuarial valuation on
5 April 2020 was £7.0m and the actuarial valuation showed a funding level of 77%.
Details of the actuarial methods and assumptions, as well as steps taken to address the deficit in the Scheme, are given in note 32 to the consolidated
financial statements. The policy for determining the allocation of each participating company’s pension liability is based on where each Scheme member
was employed.
In respect of Guaranteed Minimum Pension the estimated increase in the Scheme’s liabilities was £0.2m. This was recognised as a past service cost in
2018. An allowance has been made for an irrecoverable surplus of £1.7m (2020: £0.2m), representing the company’s allocation as a result of the Group not
having an unconditional right to refund of a surplus under IFRIC 14. These items are explained further in note 32 of the consolidated financial statements.
Details of the company’s share of the Scheme are as follows:
Present value of the scheme liabilities
Present value of assets
Surplus/(deficit) in the scheme
Irrecoverable surplus
Net defined benefit liability
The assets of the Scheme were as follows:
Equities
Target return funds1
Gilts
Bonds
Liability driven investing (LDI) portfolios2
Cash
2021
£m
(8.1)
9.0
0.9
(1.7)
(0.8)
2021
£m
2.5
1.1
–
2.8
2.2
0.4
9.0
2020
£m
(9.1)
8.2
(0.9)
(0.2)
(1.1)
2020
£m
2.7
2.2
1.6
1.6
–
0.1
8.2
1 A diversified growth fund split between mainly UK listed equities, bonds and alternative investments which are capped at 20% of the total fund.
2 A portfolio of gilt and swap contracts, backed by investment-grade credit instruments, that is designed to hedge the majority of the interest rate and inflation risks associated with the Schemes’ obligations.
180
Keller Group plc Annual Report and Accounts 2021
Financial Statements
8 Pension liabilities continued
Changes in scheme liabilities
Opening balance
Interest cost
Benefits paid
Experience loss on defined benefit obligation
Changes to demographic assumptions
Changes to financial assumptions
Closing balance
Changes in scheme assets
Opening balance
Interest on assets
Employer contributions
Benefits paid
Return on plan assets less interest
Closing balance
Actual return on scheme assets
Statement of comprehensive income
Return on plan assets less interest
Experience loss on defined benefit obligation
Changes to demographic assumptions
Changes to financial assumptions
Change in irrecoverable surplus
Remeasurements of defined benefit plans
Cumulative remeasurements of defined benefit plans
Expense recognised in the income statement
Net pension interest costs
Expense recognised in the income statement
Movements in the balance sheet liability
Net liability at start of year
Expense recognised in the income statement
Employer contributions
Remeasurements of defined benefit plans
Net liability at end of year
The contributions expected to be paid during 2022 are £0.4m.
The history of experience adjustments on scheme assets and liabilities is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Surplus/(deficit) in the scheme
Irrecoverable surplus
Net defined benefit liability
Experience adjustments on scheme liabilities
Experience adjustments on scheme assets
2021
£m
(8.1)
9.0
0.9
(1.7)
(0.8)
0.8
0.7
2020
£m
(9.1)
8.2
(0.9)
(0.2)
(1.1)
(0.4)
0.3
2019
£m
(9.0)
7.9
(1.1)
(0.3)
(1.4)
(0.8)
0.8
2021
£m
(9.1)
(0.1)
0.3
–
(0.1)
0.9
(8.1)
8.2
0.1
0.3
(0.3)
0.7
9.0
0.8
0.7
–
(0.1)
0.9
(1.5)
–
(3.5)
–
–
1.1
–
(0.3)
–
0.8
2018
£m
(8.3)
6.8
(1.5)
(0.2)
(1.7)
0.7
(0.4)
2020
£m
(9.0)
(0.1)
0.5
(0.1)
1.0
(1.4)
(9.1)
7.9
0.1
0.4
(0.5)
0.3
8.2
0.4
0.3
(0.1)
1.0
(1.4)
0.1
(0.1)
(3.5)
–
–
1.4
–
(0.4)
0.1
1.1
2017
£m
(9.0)
7.0
(2.0)
–
(2.0)
(0.5)
0.6
The company contributes to a defined contribution scheme; there were no contributions outstanding in respect of the scheme at 31 December 2021
(2020: £nil).
Notes to the company financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
181
9 Group companies
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries and joint ventures as at 31 December 2021 is disclosed below. Unless
otherwise stated, each of the subsidiary undertakings is wholly owned through ordinary shares by intermediate subsidiary undertakings.
All of the subsidiary undertakings are included within the consolidated financial statements.
All trading companies are engaged in the principal activities of the Group, as defined in the Directors’ report.
Name
Address
A.C.N. 000 120 936 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
A.C.N. 000 842 240 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
A.C.N. 001 252 875 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
A.C.N. 006 103 135 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
A.C.N. 008 673 167 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
A.C.N. 099 793 852 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
Accrete Industrial Flooring Limited
2 Kingdom Street, London, W2 6BD, United Kingdom
Accrete Limited
Ansah Asia Sdn Bhd
2 Kingdom Street, London, W2 6BD, United Kingdom
8A, Jalan Vivekananda, Off Jalan Tun Sambanthan, Brickfields, Kuala Lumpur, 50470, Malaysia
Austral Construction Pty Ltd
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Austral Group Holdings Pty Ltd
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Austral Investors Pty Ltd
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Austral Plant Services Pty Ltd
Capital Insurance Limited1
Case Foundation Company
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
1st Floor Goldie House, 1–4 Goldie Terrace, Upper Church Street, Douglas, IM1 1EB, Isle of Man
The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, MD, 21201, United States
Cyntech Construction Ltd.
4529, Melrose Street, Port Alberni, BC, V9Y 1K7, Canada
Fondedile Foundations UK Ltd
Oxford Road, Ryton-on-Dunsmore, Coventry, West Midlands, CV8 3EG, United Kingdom
Frankipile Botswana (Pty) Limited
First floor, Plot 64518, Fairgrounds Office Park, Gaborone, Botswana
Frankipile Ghana Limited
Plot LI/13/86, Bethlehem Street, Thema, Ghana
Frankipile International Projects Limited C/O DTOS Ltd, 10th floor, Standard Chartered Tower, Ebene, Mauritius
Frankipile Mauritius International
(Seychelles) Limited
Maison La Rosiere, Palm Street, Victoria, Mahe, Seychelles
Frankipile Swaziland (Pty) Limited
Tenant Office 204, 2nd floor, Inyatsi House, 760 Dr David Hynd Road, Trelwany Park, Manzini, Eswatini
GENCO Geotechnical Engineering
Contractors Limited
Sheraton Buildings-Plot 10, Block 1161 Cairo, Cairo, Egypt
GEO Instruments Polska Sp. z o.o.
Lysakow Drugi nr 47, 28–300 Jedrzejow, Poland
Geo-Instruments GmbH
Mausegatt 45, 44866 Bochum, Germany
Geo-Instruments Sarl
GEO-Instruments, Inc.
Golden Triangle Construction
Materials, Inc.
8 Allee des Ginkgos Parc d'Activites du Chene,Activillage 69673 Bron Cedex, France
The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, MD, 21201, United States
9720 Derrington Road, Houston, TX 77064 United States
Keller (M) Sdn Bhd
8A, Jalan Vivekananda, Off Jalan Tun Sambanthan, Brickfields, Kuala Lumpur, 50470, Malaysia
Keller AsiaPacific Limited
Keller Australia Pty Limited2
Keller Canada Holdings Ltd.
72, Anson Road #11–03, Anson House, Singapore, 079911
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
Suite 2600, Three Bentall Centre, P.O. Box 49314, 595 Burrard Street, Vancouver BC, V7X 1 L3, Canada
Keller Canada Services Ltd
Suite 2600, Three Bentall Centre, P.O. Box 49314, 595 Burrard Street, Vancouver BC, V7X 1 L3, Canada
Keller Central Asia LLP
21B/4 Satpayev St., Atyrau, 060006, Kazakhstan
Keller Cimentaciones Chile, SpA
Avenida Providencia 185, Of-806 7500571 Providencia, Santiago de Chile, Chile
Keller Cimentaciones de
Latinoamerica SA de CV
Av. Presidente Masaryk 101, Int. 402, Bosque de Chapultepec I Seccion Delegacion Miguel Hidalgo,
11580 CDMX, Mexico
Keller Cimentaciones SAC
Avenida Santo Toribio 143, Urbanizacion El Rosario, Departamento San Isidro, Lima, Peru
Keller Cimentaciones, S.L.U.
Calle de la Argentina, 15, 28806 Alcala de Henares, Madrid, Spain
Keller Drilling, Inc.
CT Corporation System, 818 West Seventh Street, Suite 930, Los Angeles, CA, 90017, United States
Keller Egypt LLC
Keller EMEA Limited1
Keller Finance Australia Limited
Sheraton Buildings, Bld. 2, El Mosheer Ahmed Ismail Street, Nozha Square, 1159 Cairo, Egypt
2 Kingdom Street, London, W2 6BD, United Kingdom
2 Kingdom Street, London, W2 6BD, United Kingdom
182
Keller Group plc Annual Report and Accounts 2021
Financial Statements
9 Group companies continued
Name
Address
Keller Finance Limited
Keller Financing
Keller Fondations Speciales SAS
Keller Fondations Speciales SPA3
Keller Fondazioni S.r.l
2 Kingdom Street, London, W2 6BD, United Kingdom
2 Kingdom Street, London, W2 6BD, United Kingdom
2 rue Denis Papin, 67120, Duttlenheim, France
No. 35, Route de Khmiss El Khechna, Sbâat, 16012 Rouiba, w. Alger, Algeria
Via Isarco 1, Varna, I-39040, Italy
Keller Foundations (S E Asia) Pte Ltd
18 Boon Lay Way, #04–104, Tradehub 21, 609966, Singapore
Keller Foundations Ltd.
Suite 2600, Three Bentall Centre, P.O. Box 49314, 595 Burrard Street, Vancouver BC, V7X 1 L3, Canada
Keller Foundations Vietnam Company
Limited
24 Dang Thai Mai Street, Ward 7, Phu Nhuan District, Ho Chi Minh City, Vietnam
Keller Funderingstechnieken B.V.
Europalaan 16, 2408 BG, Alphen aan den Rijn, Netherlands
Keller Funderingsteknik Danmark ApS
Lottenborgvej 24, 2800 Kongens Lyngby, Denmark
Keller Geotechnics (Mauritius) Ltd
Geoffrey Road, Bambous, Mauritius
Keller Geotechnics Namibia (Pty)
Limited
Keller Geotechnics SA (Pty) Ltd4
Keller Geotechnics Tanzania Ltd
Keller Geotehnica Srl
Keller Geoteknikk AS
Keller Ground Engineering
Bangladesh Limited
Keller Ground Engineering India
Private Limited
Keller Ground Engineering LLC5
Keller Grundbau Ges.m.b.H.
Keller Grundbau GmbH
Keller Grundlaggning AB
Keller Hellas S.A.
Keller Holding GmbH
Keller Holdings Limited1
Keller Holdings, Inc.
Keller Investments LLP
Keller Limited1
Keller Management Services, LLC
Keller Mélyépítő Korlátolt
Felelősségű Társaság
2nd floor, LA Chambers, Ausspann Plaza, Dr Agostinho Neto Road, Windhoek, Namibia
16 Industry Rd, Clayville Industrial, Olifantsfontein, 1666, Gauteng, South Africa
1127 Amverton Tower, Chole Road, Dar es Salaam, Tanzania.
Bucuresti Sectorul 1, Str., Uruguay, Nr. 27, Etaj 1, Ap. 2, Romania
Hovfaret 13, Oslo, 0275, Norway
661/3 Ashkona Bazar, Hazi Camp, Dhakinkhan, Dhaka-1230, Bangladesh, Dhaka, Bangladesh
7th Floor, Eastern Wing, Centennial Square 6A, Dr Ambedkar Road, Kodambakkam, Chennai,
600024, India
Office # 14, Building # 700 Boushar Street 51, Oman
Guglgasse 15, BT4a/3.OG, Vienna, 1110, Austria
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
Östra Lindomev 50, 437 34, Lindome, Sweden
Keller Hellas S.A. Antheon 102, GR-57019 N. Epivates-Thessaloniki, Greece
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
2 Kingdom Street, London, W2 6BD, United Kingdom
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801, United States
2 Kingdom Street, London, W2 6BD, United Kingdom
Oxford Road, Ryton-on-Dunsmore, Coventry, West Midlands, CV8 3EG, United Kingdom
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801, United States
1124 Budapest, Csörsz utca 41. 6. em., Hungary
Keller Mocambique, Limitada
Bairro da Matola D, Estrada Nacional N4, Avenida Samora Machel nr. 393, Matola, Mozambique
Keller New Zealand Limited
C/-GazeBurt, 1 Nelson Street, Auckland, 1010, New Zealand
Keller North America, Inc.
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801, United States
Keller Polska Sp. z o.o.
ul. Poznanska172, Ozarow Mazowiecki, PL-05850, Poland
Keller Pty Ltd
Keller Puerto Rico, LLC
Keller Qatar L.L.C6
Keller Resources Limited
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
1875 Mayfield Road, Odenton, MD, 21113, United States
Office No 273 Al Jazeera Complex-B Satwa Road, Wholesale Market, Doha, Qatar
2 Kingdom Street, London, W2 6BD, United Kingdom
Keller speciálne zakladani spol. s r.o.
Na Pankraci 30, 14000 Praha 4, Czech Republic
Keller specialne zakladanie spol.s.r.o.
Keller Turki Company Limited7
Keller Ukraine LLC
Hranica 18 - AB 6, 82105 Bratislava, Slovakia
PO Box 718, Dammam, 31421, Saudi Arabia
30, Vasylkivska Street, Kiev, 03022, Ukraine
Keller West Africa S.A.
Autoroute du Nord, PK 22, Allokoi, district de Yopougon, 01 BP 7534 - Abidjan 01, Côte d'Ivoire
Keller-MTS AG
KFS Finland Oy8
KGS Keller Gerate & Service GmbH
Allmendstrasse 5, Regensdorf, 8105, Switzerland
Haarakaari 42, TUUSULA, 04360, Finland
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
Notes to the company financial statements continued Keller Group plc Annual Report and Accounts 2021
Financial Statements
183
Name
Address
Makers Holdings Limited1
2 Kingdom Street, London, W2 6BD, United Kingdom
Makers Management Services Limited1 2 Kingdom Street, London, W2 6BD, United Kingdom
2 Kingdom Street, London, W2 6BD, United Kingdom
Makers Services Limited
Makers UK Limited
2 Kingdom Street, London, W2 6BD, United Kingdom
Moretrench Industrial Inc.
820, Bear Tavern Road, West Trenton, NJ, 08628, United States
Nesur Tecnologia Servicios S.A.
Union Mercantil LA, Num.33, Portal 1, Planta 5, Puerta C, 29004 Malaga, Spain
North American Foundation
Engineering Inc.
PHI Group Limited1
Piling Contractors New Zealand Limited C/-GazeBurt, 1 Nelson Street, Auckland, 1010, New Zealand
Oxford Road, Ryton-on-Dunsmore, Coventry, West Midlands, CV8 3EG, United Kingdom
Suite 2600, Three Bentall Centre, P.O. Box 49314, 595 Burrard Street, Vancouver BC, V7X 1 L3, Canada
Piling Contractors Pty Limited
PT. Keller Franki Indonesia9
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
Gedung Graha Kencana Lantai 7 Unit B-I, Jalan Raya Perjuangan No. 88, Kebon Jeruk, Jakarta Barat,
11530, Indonesia
Recon Europe Holding, LLC
251 Little Falls Drive, Wilmington, DE 19808 United States
Recon GP, LLC
Recon Holdings II, Inc.
Recon Holdings III, Inc
251 Little Falls Drive, Wilmington, DE 19808, United States
251 Little Falls Drive, Wilmington, DE 19808, United States
251 Little Falls Drive, Wilmington, DE 19808, United States
Recon Services Inc. (Canada)
199 Bay Street, 5300 Commerce Court West, Toronto, ON M5L 1B9 Canada
Recon Services, Inc.
251 Little Falls Drive, Wilmington, DE 19808, United States
Recon Servicios Ambientales Puerto
Rico, LLC
c/o Fast Solutions, LLC, Citi Tower, 252 Ponce de Leon Avenue, Floor 20, San Juan, PR 00918, Puerto
Rico
Remedial Construction Services, L.P
211 E. 7th Street, Suite 620, Austin, TX 78701, United States
Resource Piling (M) Sdn. Bhd.
8A, Jalan Vivekananda, Off Jalan Tun Sambanthan, Brickfields, Kuala Lumpur, 50470, Malaysia
Resource Piling Pte Ltd
18 Boon Lay Way, #04–113, Tradehub 21, 609966, Singapore
Suncoast Post-Tension, Ltd.
Terratest-Keller J.V. SAPI de CV10
Waterway Constructions Group Pty
Limited
1209, Orange Street, Wilmington, DE, 19801, United States
Presidente Masarik 62, Oficina 110, Bosques de Chapultepec, Distrito Federal, 11580, Mexico
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Waterway Constructions Pty Ltd
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
1 Owned directly by the company.
2
3
4
Share capital consists of 99% ordinary shares. The remaining 1% consists of ordinary A, ordinary B and ordinary C shares.
51% owned by Keller Fondations Speciales SAS and other Keller companies.
75.1% owned by Keller Holdings Limited.
5 70% owned by Keller Holdings Limited.
6 49% owned by Keller Holdings Limited.
7
8
9
65% owned by Keller Grundbau GmbH.
Joint venture 50% owned by Keller Holdings Limited, based in Tuusula, Finland. The company is managed jointly by an equal number of directors from each of the two shareholder companies.
Share capital consists of 56% Class A Shares and 44% Class B Shares. Keller Foundations (SE Asia) Pte Limited owns 100% of the Class A Shares and 25% of the Class B Shares.
10 Joint venture 50% owned by Keller Cimentaciones de Latinoamerica SA de CV, based in Mexico DF. No longer trading and due to be dissolved.
184
Keller Group plc Annual Report and Accounts 2021
Financial Statements
Keller Group plc has guaranteed the liabilities of the following subsidiaries in order that they qualify for the exemption from having to prepare individual
accounts under section 394A and section 394C of the Companies Act 2006 in respect of the year ended 31 December 2021:
Company
Keller Financing
Keller EMEA Limited
Keller Resources Limited
Keller Finance Australia Limited
Registered number
04592933
02427060
04592974
06768174
Keller Group plc has guaranteed the liabilities of the following subsidiaries in order that they qualify for the exemption from audit under sections 479A to
479C of the Companies Act 2006 in respect of the year ended 31 December 2021:
Company
Keller Holdings Limited
Keller Finance Limited
Keller Investments LLP
Registered number
02499601
02922459
OC412294
Notes to the company financial statements continued Keller Group plc Annual Report and Accounts 2021
Other Information
185
Adjusted performance measures
The Group’s results as reported under International Financial Reporting Standards (IFRS) and presented in the consolidated 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 the Annual Report and Accounts 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 items which are exceptional by their size and/or are non-trading in nature, including amortisation of acquired
intangible assets and other non-trading amounts relating to acquisitions and disposals (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 consolidated financial statements where it is necessary to do so to provide further
understanding of the financial performance of the Group.
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 2020 results of overseas operations into sterling at the 2021 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 8 to the consolidated financial statements. A reconciliation between the 2020 underlying result and the 2020
constant currency result is shown below and compared to the underlying 2021 performance:
Revenue by segment
2021
Statutory
£m
1,323.1
549.2
352.1
2,224.4
2021
Statutory
£m
1,227.5
538.5
296.5
2,062.5
Underlying
£m
Underlying
£m
73.0
24.3
3.4
(7.9)
92.8
83.2
18.4
15.5
(7.0)
110.1
2020
Impact of
exchange
movements
£m
(80.7)
(16.3)
(4.0)
(101.0)
2020
Impact of
exchange
movements
£m
(5.9)
(0.8)
(0.7)
—
(7.4)
Constant
currency
£m
1,146.8
522.2
292.5
1,961.5
Constant
currency
£m
77.3
17.6
14.8
(7.0)
102.7
Statutory
change
%
+8%
+2%
+19%
+8%
Underlying
change
%
-12%
+32%
-78%
n/a
-16%
Constant
currency
change
%
+15%
+5%
+20%
+13%
Constant
currency
change
%
-6%
+38%
-77%
n/a
-10%
North America
Europe
Asia-Pacific, Middle East and Africa
Group
Underlying operating profit by segment
North America
Europe
Asia-Pacific, Middle East and Africa
Central items
Group
Underlying operating margin
Underlying operating margin is underlying operating profit as a percentage of revenue.
186
Keller Group plc Annual Report and Accounts 2021
Other Information
Adjusted performance measures continued
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 (statutory)
Underlying operating profit
Depreciation and impairment of owned property, plant and equipment
Depreciation and impairment of right-of-use assets
Amortisation of intangible assets
Underlying EBITDA
Non-underlying items in operating costs
Non-underlying items in other operating income
EBITDA
EBITDA (IAS 17 covenant basis)
Underlying operating profit
Depreciation and impairment of owned prwoperty, plant and equipment
Depreciation and impairment of right-of-use assets
Legacy IAS 17 operating lease charges
Amortisation of intangible assets
Underlying EBITDA
Non-underlying items in operating costs
Non-underlying items in other operating income
EBITDA
Net finance costs
Finance income
Underlying finance costs
Net finance costs (statutory)
Finance charge on lease liabilities1
Lender covenant adjustments
Net finance costs (IAS 17 covenant basis)
1
Excluding legacy IAS 17 finance leases.
Net capital expenditure
Acquisition of property, plant and equipment
Acquisition of other intangible assets
Proceeds from sale of property, plant and equipment
Net capital expenditure1
1 Net capital expenditure excludes right-of-use assets.
2021
£m
92.8
65.9
30.9
0.6
190.2
(9.6)
0.7
181.3
2021
£m
92.8
65.9
30.9
(32.7)
0.6
157.5
(9.6)
0.7
148.6
2021
£m
(0.4)
9.3
8.9
(3.0)
(0.7)
5.2
2021
£m
84.0
0.4
(9.8)
74.6
2020
£m
110.1
66.3
28.0
0.6
205.0
(29.6)
0.7
176.1
2020
£m
110.1
66.3
28.0
(30.0)
0.6
175.0
(29.6)
0.7
146.1
2020
£m
(1.1)
14.3
13.2
(3.6)
(1.5)
8.1
2020
£m
72.5
0.5
(7.4)
65.6
Keller Group plc Annual Report and Accounts 2021
Other Information
187
Net debt
Current loans and borrowings
Non-current loans and borrowings
Cash and cash equivalents
Net debt (statutory)
Lease liabilities1
Net debt (IAS 17 covenant basis)
1 Excluding legacy IAS 17 finance leases.
Leverage ratio
The leverage ratio is calculated as net debt to underlying EBITDA.
Statutory
Net debt
Underlying EBITDA
Leverage ratio (x)
IAS 17 covenant basis
Net debt
Underlying EBITDA
Leverage ratio (x)
Order book
2021
£m
29.8
246.2
(82.7)
193.3
(73.9)
119.4
2021
£m
193.3
190.2
1.0
2021
£m
119.4
157.5
0.8
2020
£m
67.0
191.8
(66.3)
192.5
(71.6)
120.9
2020
£m
192.5
205.0
0.9
2020
£m
120.9
175.0
0.7
The Group’s disclosure of its order book is aimed to provide insight into its backlog of work and future performance. The Group’s order book is not a
measure of past performance and therefore cannot be derived from its consolidated financial statements. The Group’s order book comprises the
unexecuted elements of orders on contracts that have been awarded. Where a contract is subject to variations, only secured variations are included in the
reported order book.
188
Keller Group plc Annual Report and Accounts 2021
Other Information
Financial record
Consolidated income statement
Continuing operations
Revenue
Underlying EBITDA
Underlying operating profit
Underlying net finance costs
Underlying profit before taxation
Underlying taxation
Underlying profit for the year
Non-underlying items2
Profit/(loss) for the year
Underlying EBITDA (IAS 17 covenant basis)
Consolidated balance sheet
Working capital
Property, plant and equipment
Intangible and other non-current assets
Net debt (statutory)
Other net liabilities
Net assets
Underlying key performance indicators
Diluted earnings per share from
continuing operations (p)
Dividend per share (p)
Operating margin
Return on capital employed3
Net debt: EBITDA (statutory)
2012
£m
2013
£m
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
20191
£m
20201
£m
2021
£m
1,317.5 1,438.2 1,599.7 1,562.4 1,780.0 2,070.6 2,224.5 2,300.5 2,062.5 2,224.4
190.2
91.9
124.2
141.9
155.5
158.6
167.5
198.4
205.0
177.2
48.3
(4.8)
43.5
77.8
(3.7)
74.1
92.0
(6.9)
85.1
103.4
(7.7)
95.7
95.3
(10.2)
85.1
(13.5)
(23.8)
(29.7)
(33.0)
(29.8)
50.3
55.4
62.7
(20.2)
(56.6)
(36.4)
(1.2)
26.3
55.3
(7.3)
48.0
30.1
124.2
108.7
96.6
103.8
110.1
(22.5)
(13.2)
(10.0)
98.7
(24.7)
74.0
13.5
87.5
(16.1)
80.5
(22.5)
58.0
(71.8)
(13.8)
81.3
(22.4)
58.9
(37.2)
21.7
96.9
(28.3)
68.6
(27.5)
41.1
175.0
141.9
155.5
158.6
177.2
167.5
170.8
124.1
281.9
202.8
104.1
295.6
203.4
97.1
331.8
183.0
152.5
405.6
218.2
181.3
399.2
198.3
225.4
422.0
179.5
200.9
460.6
192.3
180.3
434.9
183.5
(143.7)
(102.2)
(183.0)
(305.6)
(229.5)
(286.2)
(289.8)
(192.5)
(92.5)
(154.6)
(94.9)
(41.1)
(77.1)
(114.2)
(166.5)
(196.2)
335.7
372.6
346.3
334.0
429.6
472.2
426.5
397.5
410.0
30.0
—
30.0
91.9
97.6
248.5
112.1
(51.2)
(71.3)
92.8
(8.9)
83.9
(20.1)
63.8
(1.7)
62.1
157.5
158.4
443.4
234.0
(193.3)
(199.8)
442.7
(119.4)
88.4
35.9
Net debt (IAS 17 covenant basis)
(51.2)
(143.7)
(102.2)
(183.0)
(305.6)
(229.5)
(286.2)
(213.1)
(120.9)
45.0
22.8
71.9
24.0
74.2
25.2
85.4
27.1
74.8
28.5
101.8
34.2
79.1
35.9
81.3
35.9
96.3
35.9
5.4%
4.2%
3.7%
11.6% 16.7% 18.3% 20.5% 15.3% 15.1% 13.2% 14.4% 16.4% 14.4%
1.0x
5.2%
5.8%
4.3%
6.6%
4.5%
5.3%
5.4%
0.6x
1.2x
0.7x
1.2x
1.9x
1.3x
1.7x
1.5x
0.9x
Net debt: EBITDA (IAS 17 covenant basis)
0.6x
1.2x
0.7x
1.2x
1.9x
1.3x
1.7x
1.2x
0.7x
0.8x
1 Working capital, intangible and other non-current assets and other net liabilities presented here do not correspond to the published 2020 consolidated financial statements. The comparative
balance sheet has been restated to present gross insurance provisions with a separate reimbursement asset recognised for amounts recoverable from insurance providers and customer retentions
receivable in more than one year to other non-current assets, as outlined in note 2 to the consolidated financial statements.
2
3
Non-underlying items are items which are exceptional by their size and/or are non-trading in nature and are disclosed separately in the financial statements where it is necessary to do so to provide
further understanding of the financial position of the Group.
Calculated as operating profit expressed as a percentage of average capital employed. ‘Capital employed’ is net assets before non-controlling interests plus net debt and net defined benefit retirement
liabilities.
Keller Group plc Annual Report and Accounts 2021
Other Information
189
Contacts
Our offices
Head office
Keller Group plc
2 Kingdom Street
London W2 6BD
Telephone: +44 20 7616 7575
www.keller.com
North America Division
Keller Management Services, LLC
7550 Teague Road
Suite 300, Hanover
Maryland 21076
Telephone: +1 410 551 1938
www.keller-na.com
Europe Division
Keller Holding GmbH
Kaiserleistrasse 8
63067 Offenbach
Germany
Telephone: +49 69 80510
www.kellerholding.com
Asia-Pacific, Middle East and
Africa (AMEA) Division
Keller Middle East
Palace Towers 1
Dubai Silicon Oasis (DSO)
PO Box 111323
Dubai, UAE
Telephone: +971 4213 58 00
www.kellerme.com
Secretary and advisers
Group Company Secretary
and Legal Advisor
Kerry Porritt FCG LLB (Hons)
Registered office
2 Kingdom Street
London W2 6BD
Registered number
2442580
Joint brokers
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Peel Hunt LLP
Moor House, 120 London Wall
London EC2Y 5ET
Financial advisers
Rothschild & Co.
New Court, St. Swithin’s Lane
London EC4N 8AL
Legal advisers
DLA Piper UK LLP
160 Aldersgate Street
London EC1A 4HT
Cautionary statement
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’, ‘will’, ‘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.
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.
Financial public relations advisers
Nothing in this document should be regarded as a profits forecast.
FTI Consulting
200 Aldersgate Street
London EC1A 4HD
Registrars
Equiniti Limited
Aspect House, Spencer Road
Lancing, West Sussex
BN99 6DA
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.
Keller Group plc
2 Kingdom Street
London W2 6BD
+44 20 7616 7575
info@keller.com
www.keller.com
www.keller.com