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Building the
foundations for a
sustainable future
Annual Report and Accounts 2023
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Building the foundations
for a sustainable future
Keller is the world’s largest geotechnical
specialist contractor; we prepare ground for
construction and excel in tackling geotechnical
challenges across the globe. We are equipped
to respond swiftly to projects of any scale,
delivering innovative, sustainable solutions.
The Keller model empowers us to deliver
on our purpose by building the foundations
for a sustainable future.
Find out how we do this
Specialist
Driven by our purpose, vision and values,
we are a specialist contractor dedicated
to designing and delivering sustainable
geotechnical solutions with an industry-
leading portfolio of techniques.
Read more on
page 02
Resilient
Our unparalleled global strength and
local focus, commitment to safety
and sustainability, and a systematic
approach to value creation set us apart in
providing optimal geotechnical solutions
worldwide.
Read more on
page 04
Differentiated
We leverage our global workforce,
extensive network of branches, leading
technology and strong financial
foundation to provide geotechnical
solutions across diverse market
sectors, ensuring long-term value for
stakeholders.
Delivering
Creating long-term sustainable value,
we offer cost-effective geotechnical
solutions for customers, prioritise
employee wellbeing, provide stable
returns for shareholders, and actively
contribute to local communities.
Read more on
page 06
Read more on
page 08
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Strategic report
Highlights
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Highlights
Revenue
£2,966.0m +1%
Underlying operating profit1
£180.9m +67%
2023
2022
£2,966.0m
£2,944.6m
2023
2022
£108.6m
£180.9m
Underlying operating
margin1
6.1% +240bps
Diluted underlying
earnings per share1
153.9p +53%
2023
2022
3.7%
6.1%
2023
2022
153.9p
100.7p
Statutory operating profit
£153.1m +126%
2023
£153.1m
2022
£67.8m
Statutory profit after tax
£89.8m +100%
2023
2022
£45.0m
£89.8m
Net debt2
£146.2m -33%
Dividend
45.2p +20%
2023
2022
£146.2m
£218.8m
2023
2022
45.2p
37.7p
Order book
£1.5bn +6%
Underlying ROCE
22.8% +53%
2023
2022
£1.5bn
£1.4bn
2023
2022
14.9%
22.8%
Free cash flow
Net debt/Underlying EBITDA1
£103.2m +405%
0.6x -50%
2023
£103.2m
£(33.8)m
2022
2023
2022
0.6x
1.2x
1 Adjusted performance measure defined on page 215.
2
Net debt is on a covenant basis. Reconciliation to statutory numbers is set out in the adjusted performance measures section on
page 212.
For further information visit us online:
keller.com/investors
Navigating this Annual Report
Strategic report
01 Highlights
02
The Keller model
02 Who we are
03 What we do
04 How we do it
06 Competitive strengths
08 The value we create
Chairman’s statement
10
14 Our market
16
20 Our strategy
22 Divisional reviews
Chief Executive Officer ’s statement
24 North America
26 Europe
28 Asia-Pacific, Middle East
and Africa (AMEA)
30
36
48
Chief Financial Officer’s review
Principal risks and uncertainties
Task Force on Climate-related
Financial Disclosures
ESG and sustainability
59
82 Non-financial and sustainability
information statement
84 GRI Index
Governance
Chairman’s introduction
86
Board of Directors
88
Executive Committee
90
Board leadership
92
94
Section 172 statement
97 Governance framework
100 Division of responsibilities
101 Board composition, succession
and evaluation
105 Sustainability Committee report
109 Nomination and Governance
Committee report
111 A conversation with Annette Kelleher
112 Audit and Risk Committee report
120 Annual statement from the Chair
of the Remuneration Committee
122 Remuneration in context
124 Remuneration at a glance
126 Remuneration Policy report
135 Annual remuneration report
143 Directors’ report
146 Statement of Directors’ responsibilities
Independent auditor’s report
Financial statements
148
159 Consolidated income statement
160 Consolidated statement of
comprehensive income
161 Consolidated balance sheet
162 Consolidated statement of
changes in equity
163 Consolidated cash flow statement
164 Notes to the consolidated
financial statements
206 Company balance sheet
207 Company statement of
changes in equity
208 Notes to the company
financial statements
Other information
215 Adjusted performance measures
218 Financial record
219 Contacts
220 Cautionary statement
Previous pageContentsReturn to previous viewNext pageContents Generation – Sub Page
The Keller model
Who we are
Keller Group plc Annual Report and Accounts 2023
02
The Keller model
Who we are
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.
Our purpose
Building the foundations
for a sustainable future.
Our vision
To be the leading provider of
specialist geotechnical solutions.
Our 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.
• A balanced portfolio
• Engineered solutions
• Operational excellence
• Expertise and scale
For more information see pages 20 and 21
Our values
Our values are what we have judged as most
important to how we work with colleagues
and customers across the globe.
Excellence
In all we do we target
excellence; whether it’s
geotechnical engineering,
project management,
safety or people
development, we strive
to deliver to the highest
standards.
Integrity
We always behave with
integrity towards our
customers, colleagues
and the communities
within which we work.
Collaboration
Our teams collaborate
across borders and
disciplines to bring our
customers the best of
Keller and to build a stronger
business for the future.
For more information see pages 60 and 81
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Keller Group plc Annual Report and Accounts 2023
What we do
Specialist contractor
We design and deliver geotechnical solutions for all types of
structures that reduce material usage, carbon, cost and time.
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Deep foundations
Grouting
Earth retention
Ground improvement
Marine
Instrumentation
and monitoring
Post-tension systems
Industrial services
What we do in the project lifecycle
We are involved at the beginning of the
construction cycle.
We work with designers and we are contracted
to deliver groundworks.
We are one of the first contractors on site.
We leave site once groundworks are complete.
Contracts executed per year
5,500
Design and build
40%
Engineers
1,600
Rigs
1,200
Client
Designer
General contractor
Enabling
works
Ground
works
Above ground
Fit out
Sub contractor
For more information see pages 06 and 07
Supply network
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The Keller model
How we do it
How we do it
Keller Group plc Annual Report and Accounts 2023
Our business is resilient
• Operating globally in different sectors
with a diverse product mix gives us
resiliency through national cyclicality.
• Balanced exposure to our chosen markets.
• We operate in markets with relatively
low geopolitical risk.
We are diversified
By geography:
North
America
Established
1860
Europe
AMEA
Percentage
of revenue
60%
23%
17%
For more information see pages 173 and 174
By market sector:
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60
80
100
Infrastructure/public buildings
Power/industrial
Residential
Office/commercial
By product:
0
20
40
60
80
100
Deep foundations
Ground improvement
Post-tensioning
Industrial services
Specialty grouting
Earth retention
Marine
Instrumentation and monitoring
By contract value:
0
20
40
60
80
100
Below £250k
£250k to £1m
£1m to £5m
Above £5m
By the number of contracts (by value):
0
20
40
60
80
100
Below £250k
£250k to £1m
£1m to £5m
Above £5m
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Keller Group plc Annual Report and Accounts 2023
Our key resources and relationships
What we need to make our business model work
Our people and specialist skills
Our track record of successful projects is only
possible because of the passion, commitment
and enthusiasm of the 9,500 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 equipment and 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.
People
9,500
Engineers
1,600
Employee satisfaction
84%
Rigs
1,200
Revenue generated from
equipment manufactured in-house
16%
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 market focus
Targeting profitable markets that value
geotechnical solutions generates long-term
value for our stakeholders.
Market share
16%
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.
Underlying operating
profit growth
67%
93%
Operating cash conversion1
Net debt/EBITDA Leverage2
0.6x
Total dividend payment
£27.7m
1
10-year underlying cash conversion rate
2 On an IAS 17 covenant basis.
Business units
17
Branches
160
For more information see pages 06 and 07
For more information see
pages 159 to 215
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The Keller model
Competitive strengths
We bring the best of
Keller to create value
across the project
lifecycle.
Competitive strengths
Keller Group plc Annual Report and Accounts 2023
What differentiates us?
Local focus
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.
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How we create
and capture
value
Opportunity
management
• Our local businesses 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).
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Keller Group plc Annual Report and Accounts 2023
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Global strength
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.
Best solutions
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.
Safety and sustainability
Our experience of project
contracting built over many
decades, combined with our
Group scale, makes 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.
Assets and specialist skills
We invest in our equipment and
people to ensure that we have
the capability to respond to all
client needs. Our engineering
skills and experience combined
with our equipment fleet enables
us to offer and deliver value
engineered solutions to our
clients for all projects regardless
of complexity.
Our people and assets are mobile
which means that we can bring
together people and equipment
from all parts of Keller to be a
single provider of solutions for
all groundwork challenges.
Proposal preparation
• Design engineers 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.
Contract agreement
• Commercial teams trained
in relevant local laws set-up
contracts.
Project execution
• Product-specific
operations teams. Often
using specialist equipment,
deliver efficiently and
effectively (to quality and
schedule) and respond to
any issues that arise.
Feedback & learning
• Project leadership
secures client sign-off
and payment.
• Lessons learnt are retained
and transferred to the rest
of the Group.
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The value we create
Keller Group plc Annual Report and Accounts 2023
Delivering long-term
sustainable value
For our
Customers
For our
Employees
For our
Communities
For our
Shareholders
08
The Keller model
The value we create
We are delivering on our
strategy to create long-term
sustainable value for all of
our stakeholders.
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We continuously engage and build
our relationships with customers
• 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.
Contracts
5,500
For more information see pages 06 and 07
Employee satisfaction*
84%
For more information see pages 69 to 78
CDP score
B
Taking co-ordinated action
on climate issues
For more information see pages 62 to 68
Total shareholder return
16.0%
Our people are our most valuable
asset and are critical to our success
• 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.
Our people come from the
communities in which we work
• 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.
Delivering for our stakeholders
drives our ongoing success, enabling
us to deliver for all stakeholders in
the long term
• Stable business with a robust balance sheet.
•
Inherently strong cash flow characteristics.
• A quality lender base and substantial facilities.
• A 30-year history of uninterrupted dividends.
• Continued growth opportunities.
For more information see pages 159 to 215
*
Based on the results of employee engagement surveys undertaken in five business units.
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Chairman’s statement
10
Chairman’s statement
Keller Group plc Annual Report and Accounts 2023
The efforts of our people
around the world are
the foundation of our
success, and for that, we
are profoundly thankful.
Peter Hill CBE
Chairman
We have recorded
unprecedented profits,
marking a significant
milestone in our journey.”
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Keller has had a truly excellent year, delivering
a record performance in terms of revenue and
underlying profit, return on capital is the highest
it’s been in 15 years, along with high levels of cash
generation driving a strong, resilient balance
sheet, all in a year of continued geopolitical and
economic uncertainty.
The underlying operating profit achieved
this year surpassed all previous records by a
substantial margin, and was c. 80% higher than
the average for the last five years; underlying
operating profit margin was over 6% for the first
time in eight years, furthermore, our return on
capital employed reached 23% and stands as the
highest in our company’s history. These results
have lifted Keller to a new level and provide a
new foundation for the Group to progress in
the future.
The Group benefits from strong customer
demand across a cyclical construction industry.
Our ability to manage the cycle is enabled by our
geographic footprint, selective market sectors
and the widest customer product offering in the
industry. These important characteristics mean
that, as an organisation, we are able to withstand
challenging conditions in certain markets at any
given time. The Group’s excellent performance
overall in the year is a clear reflection of this and
was achieved despite challenges in some of
our businesses.
Our biggest contributor and main growth driver,
the North America division, saw underlying
operating profit more than double in the
year, reflecting a material and sustainable
improvement in operational performance in the
core foundations business, as well as better than
expected resilient pricing in the high-rise sector
at Suncoast, together with the contribution from
three large projects in the foundations business.
Whilst the latter two drivers made a material
contribution to performance in the year, they
are not expected to repeat at these levels and
these gains were partially offset by losses from
legacy contracts, legal claims and a reduced
performance in Canada.
We saw a disappointing performance in Europe,
driven by a challenging market backdrop and
some difficult projects in the Nordic region
and actions have been taken to improve the
business’s performance. The performance in
AMEA (Asia, Middle East and Africa) was mixed,
with excellent results from Keller Australia
partially offset by material losses in the first half
at Austral on legacy contracts.
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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 2023.
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 on how we deliver for our stakeholders see pages 8 and 9.
Our compliance statements can be found on pages 86 and 94.
Keller continued to make good strategic
progress during the year in implementing the
Group’s strategy of more sharply focusing
Keller’s geographic footprint to drive a more
profitable, resilient and higher quality portfolio
of businesses. The Group continues to refine
and restructure as well as withdraw from several
geographic markets where we are unable to
provide sustainable returns.
Our markets benefit from underlying demand
for construction and, notwithstanding some
specific short-term market conditions, we
continue to see good levels of work in our robust
order book and are confident that the medium-
term to long-term fundamentals of our business
remain highly attractive.
Sustainability and ESG
(Environmental, Social
and Governance)
I am the Director responsible for ESG on
the Board and I believe strongly in Keller’s
commitment to the best achievable standards
covering sustainability and ESG and I have a
strong desire to make a positive change.
Climate change is the defining issue of our time
and against this backdrop both Keller and the
wider construction industry must make strides
on the journey to net zero. As the world’s largest
geotechnical specialist contractor, we have
the responsibility and opportunity to make a
difference to our customers and society and to
help drive a low carbon future. We are committed
to reducing the carbon intensity of our work and
have set out clear targets and action plans for
our journey to net zero. We have met our short-
term carbon targets and are well on track to
achieve our longer-term net zero commitments.
You can learn more about our journey to net zero
from page 59 onwards.
Our diversity, equity and inclusion (DEI)
commitments bring together what we are doing
across Keller to build a more inclusive workplace.
While gender equality and empowerment
remains a priority, we recognise and embrace the
broadest definitions of diversity. This is important
because our employees represent the broadest
range of backgrounds, cultures, experiences
and insights. We believe this is fundamental to
the successful delivery of our business strategy
and to best serve our customers around the
globe. You can learn more about our Inclusion
Commitments and the progress we made in
2023 on page 70.
Everything we achieve as a business is through
our people. Their safety, health and wellbeing
is at the heart of everything we do. At Keller we
view safety as our bedrock, something on which
we do not compromise. We have made good
progress in improving the scores in our leading
indicators, targeting continuous improvement
in our Accident Frequency Rate (AFR) and Total
Recordable Incident Rate (TRIR). In 2023, AFR
remained at 0.10, and TRIR improved to 0.60.
Despite achieving industry-leading figures in
this area, we recognise the need to continually
improve and we will not be satisfied until we
eradicate harm in the workplace.
Our business can only be resilient and
achieve sustainable success if built on strong
foundations of health and wellbeing. During 2023
we have continued our focus on all aspects of
our people’s health and wellbeing. You can learn
more about Our Foundations of Wellbeing on
page 75.
I would like to thank and pay tribute to Keller’s
people around the globe, often operating under
difficult conditions. Their commitment to safety,
innovation, quality, sustainability and to the
protection of the environment was a result of
their collective efforts and has allowed Keller to
uphold the highest standards in the industry. On
behalf of the Board, I thank them all.
Keller has a notable 30-year history of a maintained
or growing dividend with a CAGR of just under
9% since flotation in 1994, and is only one of a few
FTSE listed companies to have consistently paid
a dividend over such a period.”
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Keller Group plc Annual Report and Accounts 2023
Chairman’s statement continued
In recognition of the excellent performance in the
year and Keller’s future prospects, the Board is
recommending a rebasing of the dividend with an
increase in the total dividend for 2023 of 20%.”
Board composition and
development
The Board welcomed Annette Kelleher as a
Non-executive Director and Chair Designate
of the Remuneration Committee, joining on
1 December 2023. Annette brings a diversity
of experience and a fresh perspective, and is
already making a valuable contribution. Annette’s
biography is set out on page 89 as well as a
conversation with Annette on page 111.
Eva Lindqvist has announced her intention to
retire from the Board and will stand down at the
end of this year’s Annual General Meeting, having
served seven years as an independent Non-
executive Director and five years as the Chair of
the Remuneration Committee. Eva leaves the
Board with our thanks and very best wishes.
We review the Board’s composition regularly and
are committed to ensuring we have the best
balance of skills and experience within the Board.
We have made meaningful progress in achieving
diversity, with 50% female Board members at
year end (2022: 50%). We recognise that there is
more to do in the Executive leadership team and
below. Further information on the Board and the
Executive leadership team can be found from
pages 86 onwards.
Growing the dividend
Keller has a notable 30-year history of a
maintained or growing dividend with a CAGR
of just under 9% since flotation in 1994, and is
only one of a few FTSE listed companies to have
consistently paid a dividend over such a period.
The Group has a dividend policy to pay a dividend
that is sustainable and grows over time which
we have managed to do through both the global
financial crisis and the COVID-19 pandemic.
In recognition of the excellent performance
in the year and Keller’s future prospects, the
Board is recommending a rebasing of the
dividend with an increase in the total dividend
for 2023 of 20%. This follows the 5% increase
in the interim dividend and would bring the
total amount of dividends for the year to 45.2p
(2022: 37.7p). If approved, the proposed 2023
final dividend of 31.3p (2022: 24.5p) will be
paid on 28 June 2024 to shareholders on the
register as at the close of business on 31 May
2024. Following this rebasing, it is expected that
there will be a resumption of more typical levels
of dividend growth thereafter. with the overall
objective of maintaining a progressive dividend
over the cycle.
Outlook
While the uncertain macroenvironment is
set to continue in 2024, the Board remains
confident that Keller’s business model and risk
management approach will ensure we remain
highly resilient. Our strategy will support us
in delivering future underlying growth, as we
continue to improve on project execution for
our customers by way of our technical expertise
and secure new customers through our diverse
product offering across varied market sectors
and into a focused geographic footprint.
Peter Hill CBE
Chairman
Approved by the Board of Directors
and authorised for issue on 4 March 2024.
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Electric rigs show glimpse of a greener future
Partnering with leading
manufacturers
As well as developing our own rigs, we’ve also
used some of the latest third-party electrical
equipment available, such as Liebherr’s LB 30
and LRH 200 ‘unplugged’ deep-foundation
machines – both of which can be connected to
a conventional electric supply or powered by
battery. The LB 30 was successfully used by
Keller on a secant pile project in Norway in late
2023, while the LRH 200 was impressive on a
site in Sweden.
“While the industry moves towards more
electric vehicles, we believe that a solely
electric option won’t necessarily be the only
solution,” Marcel adds. “For example, we’re now
looking to develop hybrid machines that have
the flexibility to run on battery, but which can
also run on fuel cell, hydrogen or diesel fuelled
with hydro-treated vegetable oil (HVO). We’re
exploring all options to reduce our footprint,
meet our targets and help shape the market.”
Although the industry
is still some years
away from a market
where electric rigs
are the norm, Keller is
committed to steering
the sector towards
greener technology.”
Marcel Riedl
Operations (Equipment) Director
At Keller, we’re committed to
reducing our carbon emissions as
part of our wider efforts to build a
more sustainable future.
For decarbonising our equipment, this means
improving efficiency, using alternative fuels
and, when rigs come to the end of their life,
exploring alternatively powered equipment.
Although the industry is still some years away
from a market where electric rigs are the norm,
Keller is committed to steering the sector
towards greener technology.
In 2023, KGS – Keller’s in-house equipment
manufacturer – launched the KB0-E drilling rig
with an electrical drive.
“We’ve had electrically driven rigs for the past
30 years, but these have been smaller drilling
machines with a niche market,” explains Marcel
Riedl, Operations (Equipment) Director. “The
KB0-E is a new-generation, small-diameter
rig that’s as powerful as its traditional diesel
counterpart and can match it for performance.”
The KB0-E has been trialled on a handful of
projects in Austria, receiving positive feedback
from our site teams. Electric rigs not only
produce zero tailpipe emissions, but they’re
also quiet, have lower running costs, can
run in low-emission zones and require less
maintenance.
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Our market
14
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 size
A strong position but plenty of room to grow
£39.5bn
1. Global geotechnical
contracting market
Keller Group plc Annual Report and Accounts 2023
Favourable
market trends
The long-term trends in the global
construction market remain
positive. Our Group strategy
is designed to capitalise on
these trends.
£23bn
2. Addressable markets
£18.5bn
3. Core markets where
we choose to operate
Market potential
£3bn
4. Keller today
Market share
Share of addressable market £23bn1
Non-addressable markets are
mainly China, North and South
Korea, Japan and Russia.
1 USD = 0.81 GBP
Global construction market
£10,000bn 2023.
Share of our 2023 revenue
Keller
Soletanche/Bachy/Menard
Bauer (contracting)
Trevi (contracting)
General contractor owned
Country/regional specific, small players
1
Sources: Keller accounts, IHS Global Insight,
GlobalData and other local sources.
Our sectors
Infrastructure/public buildings
Power/industrial
Office/commercial
Residential
30%
29%
18%
23%
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Keller Group plc Annual Report and Accounts 2023
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.
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.
Demand for complete solutions
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.
Variety of projects and sectors
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 £500,000.
Niche subsector
Geotechnical specialist contracting is an
important but niche subsector that commands
higher margins than general construction.
Typically geotechnical contracting is around
0.5% of the construction market.
Projects per year
5,500
Keller’s underlying operating
margin (2022: 3.7%)
6.1%
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.
Diverse customer base
We have a large client spread which means
we’re not overly reliant on a few customers. We
have many repeat customers and our largest
customer in 2023 represented circa 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.
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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.
Diverse global market
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 £39.5bn 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 £18.5bn. 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 close to £3bn, we have a 16% share
of those core markets today, and plenty of
opportunity to secure greater market share.
Addressable markets
£23bn
Revenue from largest customer
Market share in core markets
3%
16%
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Chief Executive Officer ’s statement
16
Keller Group plc Annual Report and Accounts 2023
Chief Executive Officer ’s statement
In 2023, the Group’s significant
improvement in business performance
delivered a record set of financial
results, fulfilling our purpose
of building the foundations
for a sustainable future.
Michael Speakman
Chief Executive Officer
We have made considerable
progress in recent years,
rationalising, restructuring and
refining the Group’s geographic
and service offering to create a
more focused and higher quality
portfolio of businesses.”
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Overview
Keller has delivered an outstanding performance
in 2023, with consecutive upgrades to market
expectations during the year, culminating in
significant advancements in key measures of
financial performance. Revenue and underlying
operating profit set new records for the Group
whilst ROCE was the highest in 15 years and all
evidence our improved project execution.
The management actions taken in the second
half of 2022, to improve project performance
in North America generated a significant and
sustainable improvement in performance in
2023 and was the main driver of the Group’s very
strong results. In addition, better than expected
pricing resilience at Suncoast and a strong
performance on infrastructure projects at Keller
Australia more than offset a very disappointing
project and business performance in Europe,
particularly in the Nordic region.
The increased profitability, on a consistent level
of revenue and working capital, generated a
strong cashflow performance and a continued
reduction in leverage, which is now at the lower
end of our target range of 0.5x-1.5x.
In recognition of the excellent performance
in the year and the Group’s future growth
prospects, the Board is recommending a
rebasing of the dividend with an increase in the
total dividend for 2023 of 20%, which would
bring the total dividends for the year to 45.2p
(2022: 37.7p).
Financial performance
Group revenue at £2,966.0m (2022: £2,944.6m)
was similar to the prior year, while underlying
operating profit was up 67%, to £180.9m (2022:
£108.6m), some 80% higher than the average
underlying operating profit over the last five
years. Underlying operating margin increased to
6.1% (2022: 3.7%), the highest for eight years.
Cashflow generation also saw a significant
improvement, compared to the prior year, as a
result of stable working capital performance,
generating increased free cashflow of £103.2m
and a significant reduction in net debt (IAS
17 lender covenant basis) to £146.2m (2022:
£218.8m). This equated to a net debt/EBITDA
ratio of 0.6x (2022: 1.2x), at the lower end of our
leverage target range of 0.5x–1.5x.
Operational performance
In North America, revenue declined by 6% (on
a constant currency basis) largely as a result
of the completion of the large LNG project at
RECON at the start of the period, and a slow-
down in residential housing, impacting volume at
Suncoast where revenues were down by c.14%.
Our foundations business increased revenues
by c.6%, notwithstanding an increase in our
bidding discipline. Underlying operating profit in
North America more than doubled to £169.6m
driven primarily by a material and sustainable
improvement in operational performance in the
foundations business, following the management
actions taken in the second half of 2022.
These included the introduction of standard
operating procedures, an upgraded project
performance review process, a new variation
order tracking system and new management
across some of the business units. The
foundations business experienced higher than
normal returns on three large projects, also
benefitted profitability. These one-off gains were
partially offset by losses from legacy contracts,
legal claims and a reduced performance in
Canada. The division also benefited from better
than expected resilient pricing at Suncoast,
which is now unwinding as expected. The
increase in profitability saw underlying operating
margin increase to 9.6% (2022: 4.3%).
In Europe, although revenue increased modestly
by 4.2% on a constant currency basis, this
reflected a very mixed backdrop with widespread
weak demand in the residential and commercial
sectors offset by revenue from larger projects in
the infrastructure sector. Underlying operating
profit reduced significantly, down 94.0%
on a constant currency basis, primarily as a
result of poor project performance and cost
management in the Nordic region and also an
increasingly competitive environment across
Europe in a declining market. The adverse mix
of contracts in the UK and the increasingly
competitive market conditions, particularly
in North East Europe, also contributed to the
underlying operating margin reducing to 0.3%
(2022: 4.5%). The adverse project performance
in the Nordics is not expected to continue into
2024 and management actions have been
taken to drive improvement there and the region
more generally.
In AMEA, revenues increased by 34.1% on
a constant currency basis, driven by record
volumes in Keller Australia as a result of a strong
infrastructure market, delivery of the first works
order at the NEOM project in Saudi Arabia and
robust trading in India. Underlying operating
profit increased significantly to £22.6m driven
primarily by the increased volume and much
improved operational execution and profitability
in Keller Australia. The Middle East, including
NEOM, showed a modest uplift compared with
prior year. While Austral returned to a sustainable
profit in the second half of the year, this was
insufficient to offset the significant loss on
legacy contracts experienced in the first half of
the year. The overall operating margin for the
division increased to 4.4% (2022:1.7%).
Strategy
In 2023, we were effective in executing 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.
The benefit of our strategy has been evidenced
by our improved performance compared
with recent years, with the Group delivering a
significant increase in both its operational and
financial performance.
Progress on strategic priorities
in 2023
We have made considerable progress in recent
years, rationalising, restructuring and refining
the Group’s geographic and service offering
to create a more focused and higher quality
portfolio of businesses. During 2023 we made
the strategic decision to exit Cyntech Tanks,
Egypt, South Africa and Kazakhstan, all small
non-core, economically uncertain markets
which do not align with our strategy. We continue
to evaluate our portfolio and potential further
incremental rationalisation. In Saudi Arabia
we obtained full control over our joint-venture
business in the country to enable us to take
advantage of future opportunities in the region.
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Keller Group plc Annual Report and Accounts 2023
Chief Executive’s statement continued
In North America, we restructured three related
business units into one; the Central, Southeast
and Florida business units were combined to
become South Central. This consolidation
provided the opportunity to increase both the
effectiveness and efficiency of expertise and
key resources, and exemplifies the pursuit of
operational leverage and economies of scale
which is a key aspect of our strategy.
We continued to focus our efforts on our
operational execution across all our businesses,
as evidenced by recent results, and we made
further progress implementing the enterprise
resource planning (ERP) system, Project
Performance Management (PPM) and several
other initiatives that will incrementally improve
operational execution in the medium term.
Strategic priorities for 2024
Having established a refreshed and more
resilient base for our business, we are looking to
grow market share within our existing geographic
footprint, through both organic investment and
targeted bolt-on M&A. We will be customer
focused locally through our branch structure
and obtain the benefit of operational leverage by
gaining high quality, leading market share in our
chosen markets. Organic investment will include
initiatives to increase the cross selling of existing
services into established branches that don’t
currently provide those services, and investing
in our people to build on our technical expertise
and influence. The Group’s disciplined approach
to M&A activity will be focused on expanding the
service offering and building critical mass in key
markets, and will be biased towards markets with
higher rates of growth.
We will offer our customers alternative designs
and engineered solutions that meet their
specifications whilst reducing the total cost to
the client and, wherever possible, also reducing
the environmental impact of project.
We will continue evaluating our portfolio of
assets to identify opportunities for divestment
or consolidation.
We remain committed to investing in key growth
areas that align with our long-term strategic
objectives to focus on sustainable markets and
attractive projects, generating long-term value
for our stakeholders.
Sustainability and Environmental,
Social and Governance (ESG)
We base our ESG and sustainability approach on
the UN Sustainable Development Goals (SDGs).
We particularly focus on those SDGs that are
most closely aligned to Keller’s core business
and where we can have the greatest impact. We
divide these SDGs into global initiatives, which
we target across the Group, and local initiatives
that are more relevant to our local business units
and markets.
We are progressing well against the carbon
reduction targets we set out two years ago to
achieve net zero 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). The short, medium and long-
term actions required to achieve these goals are
in progress and in some instances we are ahead
of target, particularly around our Scope 2 carbon
reduction. The Group reduced emissions by 48%
from our 2019 baseline, significantly ahead of our
target of 38%.
Scope 1 emissions covers our direct emissions
from fuel use. We successfully deployed our new
KB0-E electric rig, which together with a number
of hired electric third party rigs have enabled
us to begin to reduce life cycle emissions in
areas where decarbonised electricity grids
are available.
We remain committed to investing in key
growth areas that align with our long-term
strategic objectives to focus on sustainable
markets and attractive projects, generating
long-term value for our stakeholders.”
Scope 3 emissions, covering all other indirect
emissions, mostly arise from our supply chain.
In 2023, we trained our engineers to calculate
and reduce the emissions from our use of
cement and steel and we have started to develop
an action plan to decarbonise our cement
design mixes.
On climate risks and opportunities, we continue
to model and mitigate both our transition
and physical risks. In terms of more local
environmental initiatives, we led a project to
highlight how the geotechnical sector can help
contribute to the circular economy and on water
reduction at site in our MEA business.
The Group’s safety focus remains relentless,
and our key safety metric, the accident
frequency rate (AFR), was flat year on year, with
a small increase in injuries in AMEA offset by
an improvement in Europe. There have been
a number of important initiatives in the year
including a Group-wide assurance programme
to ensure safety policies, procedures and
culture are truly embedded in operations. The
second Global Safety Week was successful and
a recently refreshed management safety visit
process has been launched with encouraging
results. The employee traction and general
progress on almost all the safety programmes in
the year have been encouraging.
Our Inclusion Commitments serve as the
blueprint for setting priorities and fostering
alignment and progress across the entire
Group. In 2023, these commitments became
more deeply ingrained within the fabric of our
company. This is crucial as we endeavour to
cultivate a workplace that is increasingly diverse,
equitable, and inclusive.
Regarding partnerships, we remain committed
to collaborating with organisations dedicated
to driving positive change and those that align
with our focus on the UN SDGs. In pursuit of this
objective, we have a three-year partnership with
UNICEF UK, providing a funding contribution of
£250,000 in 2023 towards its Core Resources
for Children initiative. Keller’s unrestricted
funding enables UNICEF to swiftly respond to
emergencies worldwide. Additionally, throughout
Europe and across the Group, our employees
continue to show support for ‘Fundacja KELLER’,
a charitable foundation established by Keller.
This foundation specifically aids our Ukrainian
employees and their families who have been
impacted by the ongoing conflict.
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People
Paul Leonard has been appointed President
North America, and will join the Group shortly.
Paul, a highly experienced industry professional
with a long tenure at Exxon, was most recently
at Wood Group PLC in the role of President
of Transformation for the Global Consulting
business. He is a seasoned expert in energy
and construction, with a proven track record
in project delivery, and will build on the recent
improved performance in the division.
Outlook
In 2023 the Group delivered a record set of
financial results, establishing a new foundation
for future long-term growth and supporting a
material rebasing of the dividend with a full-year
increase of 20%. Whilst political and macro-
economic uncertainties will undoubtedly remain
and impact our markets in the short term, our
current level of trading together with our robust
order book mean that we enter the new year
with confidence.
The strong momentum of the business is
encouraging and whilst inevitably there will
be fluctuations across the Group, our diverse
revenues and improved operational delivery
underpin our expectation that 2024 will be
another year of underlying progress.
The significant improvement in business
performance and continued disciplined
execution of our strategy will provide both
resilience in the short term and drive growth
in the long term, through both organic and
targeted M&A opportunities. Accordingly,
we view the Group’s prospects with
increased confidence.
Michael Speakman
Chief Executive Officer
Approved by the Board of Directors and
authorised for issue on 4 March 2024.
We constantly review the way in which we
manage and structure the Group in order
to respond most effectively to our evolving
markets, and maximise the potential benefits
of our strategy. Recently we have made the
decision to restructure two of our divisions,
Europe and AMEA (Asia-Pacific, Middle East
and Africa). The responsibility of the Middle East
Business Unit (including NEOM) will transfer to
Europe to create the Europe and Middle East
Division (EME). Peter Wyton, who has 33 years of
industry experience and has most recently and
successfully led the AMEA Division, will become
the President of EME. The balance of the former
AMEA Division will form a newly created Asia-
Pacific (APAC) Division and will be led by Deepak
Raj. Deepak has been with Keller for 20 years and
most recently led the turnaround of the Austral
business in Australia. There is no impact of this
restructuring on our North America Division.
In our ongoing commitment to excellence and
growth, we remain steadfast in developing
our most valuable asset, our people. Through
structured programmes like the Project
Manager Academy, Field Leadership Academy,
and several other leadership initiatives, we are
dedicated to nurturing and advancing the skills
of our people, and have made several internal
promotions to important roles within the Group.
This focus on in-role development, coupled with
the right opportunities for exposure within the
organisation, has created many opportunities for
internal advancement.
At the core of our operations and achievements
lies our diverse and talented team; our people
are at the heart of everything we do. This
past year, which was both challenging and
successful, showcased the tremendous
dedication, hard work and expertise of our
teams. As we reflect on the year’s journey, we
extend our gratitude to all our people around
the world for their unwavering commitment
and exceptional performance.
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Our strategy
20
Our strategy
Keller Group plc Annual Report and Accounts 2023
Delivering our strategy
Keller’s strategy is to be the preferred international geotechnical specialist
contractor focused on sustainable markets and attractive projects.
Strategic lever
Strategic lever
A 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.
What we achieved in 2023
• Focused on the quality of our existing portfolio.
• Created South Central Business Unit in North America to
simplify governance and improve sharing of knowledge and
resources.
What we achieved in 2023
• Executed an impressive 5,500 projects around the world.
• Won and delivered high-value and complex projects in multiple
markets, including the US, Germany and Australia.
• Developed first fully electric grouting rig in our manufacturing
• Made the decision to exit Cyntech Tanks, Egypt, Kazakhstan
subsidiary KGS. Trialled it on projects in Austria.
and South Africa. All small, non-core markets.
• Further developed and deployed our field app InSite to give us
• Obtained full control over our operating business in
greater visibility over productivity at our sites.
Saudi Arabia, to enable us to take full advantage of future
opportunities in the region.
Outlook
We will
• Optimised techniques to deliver a range of products and shared
this knowledge across the Group. These have provided a range
of benefits, including efficiency and quality improvements,
reduced carbon impact, reduced spoils and reduced water
waste on our sites.
• Remain customer focused through our branch structure and
drive for a leading share in our chosen markets.
• Continue to pursue both organic and M&A growth
Outlook
We will
opportunities.
• Aim to be profitable through trading cycles as we sustain our
revenue streams.
• Continue to introduce new products where we are already
established and to continue to focus on industry sectors
with greatest growth.
• Continue to offer our customers alternative designs and
engineered solutions that meet their specifications whilst
reducing costs and, where required, carbon.
• Retain our technical advantage by investing in our people
and continuing to influence across our sector.
• Continue to secure complex, high-value projects.
Performance
Market share in core markets
Share of our core markets
2023
2022
+0%
Performance
Operating margins1
Underlying operating profit expressed
as a percentage of revenue
16.0%
16.0%
2023
2022
3.7%
+65%
6.1%
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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 2023, 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
Strategic lever
Operational excellence
Expertise and scale
We are the operational leader providing safe,
efficient, on-time and high-quality delivery,
and relentlessly strive to improve our
operational capability.
We develop our people, processes and assets
and leverage the global strength of our technical,
operational, commercial and financial resources.
What we achieved in 2023
• Near completion of our Project Performance Management
standard to ensure that our common working practices contain
the latest best practice from across the Group.
• Developed and delivered training to our people in all divisions
on a range of commercial and technical matters to improve
performance and quality standards.
• Consolidated and improved performance in 5S in our yards.
Achieved overall score of 70% in North America, 81% in AMEA
and 80% in Europe (target: 60%) – first time assessment
completed in all yards across Keller.
Initiated rollout of 5S on site in all divisions.
•
• Further developed Lean expertise throughout the Group.
Certified 18 Local Lean Leaders across the Group; over 2,000
people have been trained to date in Lean. Achieved overall Lean
Maturity scores of 76% in North America, 74% in Europe and
69% in AMEA.
• Standardised equipment tooling across all divisions for more
efficient sharing of resources between business units and projects.
• Completed the design of the template for our new enterprise
resource planning (ERP) system. Development activity
near completion.
What we achieved in 2023
• Developed the focus of and size of our global product teams
to improve sharing of best practice knowledge and product
delivery techniques.
• Continued to develop our future talent pipeline of people at all
levels of the organisation from senior leaders to engineering
graduates; upskilling and providing learning opportunities.
• Continued implementation of employee surveys and team
action planning in our business units to continually improve
employee experience and drive better business performance.
• Developed our diversity, equity and inclusion framework,
focusing on strengthening the culture and team cohesion of
our site workers.
• Continued our wellbeing training programme focusing on
upskilling our leaders across the Group on how to create a work
environment that prioritises the wellbeing of our people.
• Continued delivery of our plan to develop our financial controls
over financial reporting to ensure complete and accurate
reporting and to be able to comply with a future controls
attestation regime for UK listed businesses.
Outlook
We will
Outlook
We will
• Make continuous, incremental improvements to remain
competitive in our chosen markets.
• Deploy and train our people on our new Project Performance
Management standard.
• Deliver the pilot and first stage of deployment of our ERP system.
• Continue to pay relentless attention to safety and the wellbeing
of our people as an enabler of performance.
• Continue to share best practice in operations, technical
knowledge, governance and compliance.
Performance
Return on capital employed1
Underlying operating profit as a net return on
capital employed
2023
2022
14.9%
+53%
22.8%
Performance
Accident frequency rate
Accident frequency per 100,000 hours; lost time
injuries are calculated as any incident over one day
+0%
2023
2022
0.10
0.10
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 215.
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Divisional reviews
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Divisional reviews
Keller Group plc Annual Report and Accounts 2023
Global reach.
Local expertise.
With diverse products, sectors and
customers across five continents, we
are the largest geotechnical specialist
contractor in the world. Our unrivalled
branch network, and knowledge of local
markets and ground conditions, mean we’re
ideally placed to understand and respond
to a particular engineering challenge.
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North America
Northeast
South Central
West
Canada
Specialty Services
Moretrench and RECON
Suncoast
Read more on
page 24
Europe
Central Europe
North-East Europe
South-East Europe and Nordics
South-West Europe
UK
Read more on
page 26
Mexico
AMEA
(Asia-Pacific, Middle East and Africa)
ASEAN
Austral
India
Keller Australia
Middle East and Africa/NEOM
Read more on
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North America
Keller Group plc Annual Report and Accounts 2023
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Divisional reviews continued
Management actions taken in the second
half of 2022 have resulted in a sustainable
improvement in operational performance
in the foundations business
Business units
KPIs
Northeast
Specialty Services
Revenue (£m)
Order book (£m)
South Central
Moretrench and RECON
West
Canada
Suncoast
2023
2022
1,770.0
1,896.1
2023
2022
Underlying operating profit (£m)
Accident frequency rate
904.6
761.3
0.09
0.09
2023
2022
82.0
Underlying operating margin (%)
2023
2022
4.3%
2023
2022
169.6
9.6%
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In North America, revenue was down by 6.4%
(on a constant currency basis) largely driven
by the completion of the large LNG project at
RECON at the start of the period, and a slow-
down in residential housing affecting Suncoast,
where revenues were down by c.14%. Our
foundations business increased revenues
by c. 6%, with an increase in our bidding
discipline. Underlying operating profit more
than doubled to £169.6m, driven by a material
and sustainable improvement in operational
performance in the foundations business,
better than expected pricing resilience at
Suncoast and the strong contribution from
three large projects in the foundations
business. However, these one-off gains were
partially offset by losses from legacy contracts,
legal claims and a reduced performance in
Canada. This resulted in underlying operating
margin increasing to 9.6%. The accident
frequency rate, our key safety metric, remained
flat versus the prior period at 0.09.
The foundations business had an outstanding
year. Management actions taken in the second
half of 2022 have resulted in a sustainable
improvement in operational performance. These
include the introduction of standard operating
procedures, an upgraded project performance
review process, a new variation order tracking
system and new management across some of
the business units. The supply chain disruption
that had previously impacted productivity across
the market in the prior period abated, also
bolstering performance in the year. In addition,
the business benefitted from the contribution
from three large projects that were particularly
well executed, and delivered materially higher
than normal levels of contract profitability
which are considered one-off in nature and
not expected to repeat at these levels in 2024.
Overall the foundations business is expected
to sustain its improved underlying operational
performance in 2024.
Revenue
Underlying operating profit
Underlying operating margin
Order book
2023
£m
1,770.0
169.6
9.6%
904.6
2022
£m
1,896.1
82.0
4.3%
761.3
Constant
currency
-6.4%
+107.8%
+530bps
+24.6%
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Keller Group plc Annual Report and Accounts 2023
The order book for North America at the
period end was at £904.6m, up 24.6% (on
a constant currency basis) from the closing
position at the end of 2022. The increase year
on year is predominantly driven by several high
value contracts.
NA order book up
25%
on a constant currency basis
Suncoast had a very strong year, despite the
macro headwinds contributing to lower volumes
in the residential sector. Whilst revenue was
down versus the prior year, profitability increased
due to resilient pricing in the high rise sector. This
large, non-recurring benefit is unwinding in 2024
as expected.
Moretrench Industrial, our business which
operates in the highly regulated industrial,
environmental and power segments, delivered
revenue and profit in line with expectations and
the prior year. At RECON, the geoenvironmental
and industrial services company, revenue
and profit declined as expected following the
completion of the large LNG contract in the
Gulf of Mexico.
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Helping Hyundai
accelerate to the future
The continued rise in demand for
electric vehicles has led to car
manufacturers in the US racing to
build new production facilities.
In recent months, Keller has been a
trusted partner on several of these critical
construction projects, for brands including
Ford in Tennessee, Volkswagen in South
Carolina and, as Keller Project Executive Ryan
Smith explains, Hyundai in Georgia.
Hyundai is looking to get its $7.6 billion,
3,000-acre ‘metaplant’ built and producing
cars in just two years. It’s an ambitious target
– a project of this size would normally take
twice as long to construct.
“We first met with Hyundai in August 2022
when the project was an idea and the site
was forest,” says Ryan Smith. “By January
we were on site and hard at work.”
Fast forward a year and Keller has installed over
15,000 rigid inclusions and approximately 8,000
augercast piles (over 1.5 million linear feet of
piles) to support eight key buildings, including
the site’s main plant.
The highest levels of quality
Installing such a large amount of piles in such a
short space of time hasn’t been easy, but Keller
has maintained a relentless production pace
while ensuring the highest quality.
“Because of the incredibly fast pace, plans
were sometimes changing on an almost daily
basis, so our brilliant team has had to be very
flexible, reactive and proactive to ensure we
can deliver what the client needs within a
demanding timeframe.” he adds. “And when
things do change, you have to make sure that
the quality doesn’t slip – otherwise problems
creep in and it can snowball quickly.”
This has been a hugely successful
project and we’re proud to be
involved in a booming sector that
will have a positive impact on
the economy.”
Ryan Smith
Project Executive
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Europe
Keller Group plc Annual Report and Accounts 2023
26
Divisional reviews continued
Across the Europe Division, operations
continued to be affected by ongoing
weak demand in the residential and
commercial sectors
Business units
KPIs
Central Europe
North-East Europe
South-East Europe and Nordics
South-West Europe
UK
Revenue (£m)
Order book (£m)
2023
2022
686.0
649.3
2023
2022
317.6
347.5
Underlying operating profit (£m)
Accident frequency rate
2023
1.8
2022
Underlying operating margin (%)
2023
0.3
2022
29.1
4.5
In Europe, revenue increased modestly by 4.2%
on a constant currency basis, while underlying
operating profit reduced significantly, down 94%
on a constant currency basis, reflecting tough
markets and some challenging projects.
In general, across the division, operations
continued to be affected by ongoing weak
demand in the residential and commercial
sectors which has resulted in lower volumes in
these sectors. However, revenue from larger
projects in the infrastructure sector has more
than offset these shortfalls. Underlying operating
margin reduced to 0.3% (2022: 4.5%) as a result
of the ongoing competitive market environment
and reduced margin performance on some
particularly challenging contracts. The accident
frequency rate reduced from 0.26 to 0.20.
Our North-East Europe business, which
comprises Poland and the Baltic countries,
was affected by both economic and political
uncertainty impacting investor confidence and
project spend in the run up to the Polish election.
2023
2022
0.20
0.26
As a consequence revenue was significantly
behind a strong prior year comparable. Profit
was down on the prior year on the lower volume
and the tightening of margins in the challenging
market. Towards the end of the year volumes
increased, in part driven by work relating to CPK in
Poland, a large government funded project that
will include the construction of a new highspeed
rail and road network across Poland, and may also
include a new airport.
South-East Europe and Nordics delivered further
revenue growth in 2023. The largest gains were
reported in Norway, Sweden and Switzerland
largely from rail and road infrastructure projects,
and in Hungary, where a number of industrial
sector projects were successfully completed.
In the Nordic countries, work has progressed
on the two substantial multi-year infrastructure
contracts, though both projects encountered
challenges which created a drag on margins.
Performance in the Nordics region generally was
significantly below expectations, impacted by
contract performance and cost management
issues, and as a result we have made changes
to the management team and restructured the
cost base.
Revenue
Underlying operating profit
Underlying operating margin
Order book
2023
£m
686.0
1.8
0.3%
317.6
2022
£m
649.3
29.1
4.5%
347.5
Constant
currency
+4.2%
-93.9%
-420bps
-7.3%
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The continuing focus on the infrastructure sector
provides ongoing project opportunities until we
see a recovery in the residential and commercial
sectors. In 2024 we expect market conditions
to remain challenging, however we anticipate an
improvement in operating margin.
The Europe order book at the end of the period
was £317.6m, -7.3% lower than the prior year
on a constant currency basis, as a result of the
completion of work on some large multi-year
infrastructure projects.
Our UK business continued to make good
progress in the year on the High Speed 2 rail
contract with lower levels of project revenue
against the prior period reflecting the phasing of
work. Increased volumes were achieved in the
core UK foundations business, which benefitted
from the completion of a large industrial project
in the North East of England, albeit business
unit margins were affected by the mix of
work performed.
In Central Europe, revenue increased in the
period, helped by work delivered on a large
rail project in Germany that commenced in
the fourth quarter. Margins were adversely
affected by market pressure in the residential
and commercial sector and the associated
weighting towards infrastructure work.
South West Europe delivered growth in both
revenue and operating profit. The Iberian markets
were affected by lower levels of revenue, with
the uncertainty of Spanish elections in the
year affecting local decision making on project
investments. France performed well and the
strategic cross selling of products across the
South Western Europe markets continues to be
a key driver of growth.
As part of our continuing strategic review of our
asset portfolio, we took the decision to exit the
Kazakhstan market.
Despite various actions taken in response to
the prevailing macro-economic conditions,
financial performance for the division, as a whole,
during 2023 was disappointing. Specifically, we
have taken action in the Nordics businesses to
address contract performance and cost issues.
Expanding Poland’s
largest port
This year saw Keller successfully
complete complex works on a
new terminal at Poland’s largest,
fastest-growing shipping
container facility.
Baltic Hub in Gdansk is the only deep-water
port in the Baltic Sea capable of welcoming
ocean vessels from the Far East. Once it
becomes operational, the new terminal will
expand the Hub’s handling capacity by 1.5m
containers to 4.5m a year.
Having earned a strong reputation working
on the Hub’s first two terminals, Keller
was selected by the Budimex and DEME
Group consortium to design and build a new
18m-deep, 720m-long main terminal quay wall,
as well as a 550m-long northern wall, including
all steel anchoring elements.
The scope also included compacting part of 36
hectares of reclaimed land using vibroflotation,
alongside jet grouting and reinforced CFA piles
to support the huge ship-to-shore cranes.
Challenging conditions
“This was an extremely challenging project
that involved our teams working night and
day for well over a year, often in challenging
weather conditions,” says Leszek Adamczyk,
Project Director.
“Although we’d worked on the other terminals,
this was the first time we’d designed and
executed the steel structures for the quay, so
all the responsibility was on us to deliver a high-
quality, sustainable solution.”
Much of the work had to be carried out from
barge-mounted cranes on the sea, and our
team placed great emphasis on safety, quality
and the environment – making sure no spoils
entered the ocean and that marine life was
well protected.
With the work successfully completed on
this third terminal, Keller is now hoping to be
involved in the forthcoming fourth and fifth
terminal projects.
Near-shore marine work is a
growing market here in Poland
and with this latest project Keller
has shown we’re the trusted
strategic partner of choice.”
Leszek Adamczyk
Project Director
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Divisional reviews continued
Asia-Pacific, Middle East
and Africa (AMEA)
Keller Group plc Annual Report and Accounts 2023
Underlying operating profit increased significantly to £22.6m
driven by higher volumes as well as improved operational
execution in Keller Australia, the NEOM project and the
return to profit in the second half at Austral
Business units
KPIs
ASEAN
Austral
India
Keller Australia
Middle East and Africa/NEOM
Revenue (£m)
Order book (£m)
2023
2022
510.0
399.2
2023
2022
Underlying operating profit (£m)
Accident frequency rate
266.9
298.4
0.04
2023
2022
0.02
2023
2022
6.6
Underlying operating margin (%)
2023
2022
1.7
22.6
4.4
In AMEA (Asia-Pacific, Middle East and Africa),
revenues increased by 34.1% on a constant
currency basis, driven by record volumes in
Keller Australia, delivery of the first works order
at NEOM and robust trading in India. Underlying
operating profit increased significantly to
£22.6m driven by higher volumes as well as
improved operational execution in Keller
Australia, the NEOM project and the return to
profit in the second half at Austral. The accident
frequency rate increased slightly to 0.04.
Keller Australia delivered a record performance
with high levels of volume driven by federal and
state government spending, particularly in the
infrastructure sector, combined with improved
operational execution. It is expected the federal
and state government spending will begin to
ease through 2024.
Austral, as anticipated, returned to a sustainable
profit in the second half, this was insufficient to
offset the significant loss on legacy contracts
experienced in the first half of the year. The new
management team has done an excellent job
in turning the business around and resetting
the business for future growth.
The leadership team has been restructured and
strengthened. New processes were introduced,
increasing the level of scrutiny of project reviews,
improving the reliability of forecasts and driving
improved profitability. In 2024, a full year profit
is expected.
In ASEAN, the market recovery has been slower
than expected, with continued market softness
and low levels of activity, particularly in Malaysia
and Indonesia. Volumes were broadly in line with
prior year with lower levels of profitability due
to high levels of competition and project mix. It
is expected that trading will improve in 2024 as
previously delayed projects come on stream.
Keller India performed well, delivering
revenue and profit growth in the period. New
contract wins in the industrial, manufacturing
and commercial sectors supported the
business’s continued leading position in the
petrochemical sector.
Revenue
Underlying operating profit
Underlying operating margin
Order book
2023
£m
510.0
22.6
4.4%
266.9
2022
£m
399.2
6.6
1.7%
298.4
Constant
currency
34.1%
+253.2%
+270bps
-5.1%
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We continually review our portfolio and have
taken the strategic decision to exit Egypt and
our remaining businesses in Sub-Sahara Africa.
The AMEA order book at the end of the period
was at £266.9m, down 5.1% (on a constant
currency basis) on the prior year. The decrease
is predominantly driven by the depletion in
the order book at Keller Australia as major
projects progressed.
After a soft first half, our MEA business
performed ahead of expectations with a strong
end to the period particularly in UAE and Saudi
Arabia. At NEOM, following the signing of the
overall Framework Agreement in 2022, we
completed the first Works Order in relation to
The Line, in the first quarter of 2023, worth
c.£40m. While we await further work orders
in relation to The Line we have redeployed
resources elsewhere. At Trojena, the winter
resort development at NEOM, we have recently
been awarded a work package worth c.US$80m
and we have mobilised to site with work
expected to be completed by the end of 2024.
We continue to take a measured and disciplined
approach to the opportunities provided by
the project.
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Breathing new life into a Sydney landmark
Detailed planning beforehand and
constant communication on site
showed how Keller can add value
to even the biggest most complex
projects.”
Gabriel Miler
Project Manager
Performing to the highest standard
Constructing the wall wasn’t just a challenge
because of what was in the ground; the site
itself is just a small strip of reclaimed land with
Blackwattle Bay on one side and a main road
on the other. The wall also needed to perform
to the highest standard, with a deflection
tolerance of less than 30mm and a water
ingress of less than 10 litres a second.
Once the preliminary works were completed,
the team was able to finish the main task of
constructing the retaining wall, installing CFA
piles, jet grout columns and ground anchors.
“We had a lot of constraints on this project,”
adds Gabriel, “but the detailed planning
beforehand and constant communication on
site showed how Keller can add value to even
the biggest, most complex projects.”
Sydney Fish Market is one of
the city’s most popular tourist
destinations and the lifeblood of
Australia’s seafood industry.
The landmark is undergoing a massive
transformation that will see operations move
to a sleek new 35,000m2 complex, creating
a world-class waterfront destination with
restaurants, promenade and public spaces.
Keller was chosen by long-time client Multiplex
to design and construct the land-side shoring
wall that will support the site’s basement car
park – a project made more difficult due to a
spatially and environmentally challenging site.
While the original proposal called for the wall
to be built using cased bored piles, Keller
recommended a combination of continuous
flight auger (CFA) piles and jet grouting.
“The reason for this was multiple obstructions
in the ground, including old concrete structures
and steel beams,” says Gabriel Miler, Project
Manager. “CFA and jet grouting allowed us to
work around them rather than spend valuable
time trying to dig them out.”
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Chief Financial Officer’s review
30
Keller Group plc Annual Report and Accounts 2023
Chief Financial Officer’s review
Underlying ROCE reached
23% and stands as the
highest for 15 years.
David Burke
Chief Financial Officer
The top 10 customers represent
15% of the Group’s revenue.
The Group worked on c.5,500
projects in the year with 51%
of contracts having a value
between £25,000 and £250,000,
demonstrating a low customer
concentration and a wide
project portfolio.
EPS up 53% to
153.9p
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This report comments on the key financial aspects of the Group’s 2023 results.
Revenue
Underlying operating profit1
Underlying operating profit %1
Non-underlying items in operating profit
Statutory operating profit
Statutory operating profit %
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180.9
6.1%
(27.8)
153.1
5.2%
2022
£m
2,944.6
108.6
3.7%
(40.8)
67.8
2.3%
1
Details of non-underlying items are set out in note 9 to the consolidated financial statements. Reconciliations to statutory numbers are set out in the adjusted performance measures
section on page 215.
Revenue and underlying operating profit split by geography
Year ended
Division
North America
Europe
AMEA
Central
Group
Revenue
£m
Underlying operating profit1
£m
Underlying operating profit margin1
%
2023
2022
2023
2022
2023
2022
1,770.0
1,896.1
686.0
510.0
–
649.3
399.2
–
2,966.0
2,944.6
169.6
1.8
22.6
(13.1)
180.9
82.0
29.1
6.6
(9.1)
108.6
9.6%
0.3%
4.4%
–
6.1%
4.3%
4.5%
1.7%
–
3.7%
1
Details of non-underlying items are set out in note 9 to the consolidated financial statements. Reconciliations to statutory numbers are set out in the adjusted performance measures
section on page 215.
Underlying operating profit
The underlying operating profit of £180.9m
was 67% up on prior year (2022: £108.6m) on
an actual and constant currency basis. In North
America, underlying operating profit more than
doubled to £169.6m (2022: £82.0m), due to
a sustainable improvement in the operational
performance in the foundations business,
better than expected pricing resilience at
Suncoast and the contribution from three large
projects in the foundations business. In Europe,
underlying operating profit reduced significantly
to £1.8m (2022: £29.1m) as a result of reduced
margin performance on some particularly
challenging contracts in the Nordics region
and the increasingly competitive environment
across Europe in a declining market. In
AMEA, underlying operating profit increased
significantly to £22.6m (2022: £6.6m), driven by
higher volumes as well as improved operational
execution and profitability in Keller Australia,
uplift in the Middle East (including NEOM) and the
return to profit in the second half at Austral.
Share of post-tax results from joint
ventures
The Group recognised an underlying post-tax
profit of £0.8m in the year (2022: £1.5m) from
its share of the post-tax results from joint
ventures. The share of the post-tax amortisation
charge of £0.6m (2022: £1.2m) arising from the
acquisition of NordPile by our joint venture KFS
Oy in 2021 is included as a non-underlying item.
No dividends (2022: nil) were received from joint
ventures in the year.
Statutory operating profit
Statutory operating profit comprising underlying
operating profit of £180.9m (2022: £108.6m)
and non-underlying items comprising net costs
of £27.8m (2022: £40.8m), increased by 126%
to £153.1m (2022: £67.8m). The increase in
statutory operating profit is a reflection of the
increase in underlying operating profit in 2023,
combined with a decrease in non-underlying
operating costs. The non-underlying costs are
set out in further detail overleaf.
Revenue
Revenue of £2,966.0m (2022: £2,944.6m) was
up 1% at actual foreign exchange rates and at
constant currency, driven by increased trading
volumes in AMEA and to a lesser extent Europe,
offset by a reduction in North America. In North
America, revenue reduced by 6.4% on a constant
currency basis driven by the completion of the
large LNG project at RECON at the start of the
period. In AMEA, revenues increased by 34.1%
on a constant currency basis, driven by record
volumes in Keller Australia, delivery of the first
works order at NEOM and robust trading in Keller
India. In Europe, revenue increased modestly by
4.2%, on a constant currency basis, reflecting
widespread weak demand in the residential and
commercial sectors offset by revenue from
larger projects in the infrastructure sector.
We have a 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 4% of the Group’s revenue. The top 10
customers represent 15% of the Group’s
revenue (2022: 17%). The Group worked on
c.5,500 projects in the year with 51% (2022:
54%) of contracts having a value between
£25,000 and £250,000, demonstrating a
low customer concentration and a wide
project portfolio.
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Chief Financial Officer’s review continued
Net finance costs
Net underlying finance costs increased by
82% to £27.5m (2022: £15.1m). The increase
was driven predominantly by the increase in
underlying interest rates, despite a decrease in
the average net debt levels through the year. In
August, the Group received the proceeds from
a new $300m private placement of loan notes,
which were used to repay existing borrowings.
The Group’s borrowings are now largely at fixed
interest rates. The average net borrowings,
excluding IFRS 16 lease liabilities, during the
year were £224.8m (2022: £252.1m).
Taxation
The Group’s underlying effective tax rate
increased to 25% (2022: 22%), largely due
to the change in the profit mix of where the
Group is subject to tax. Cash tax paid in the year
increased from £5.9m to £72.7m. The significant
increase in tax paid is driven by the increased
profitability in the US, resulting in tax paid of
c£46m (2002: £1m). In addition, Keller delayed
the payment of its FY22 tax bill (c£24m) to 2023
as it was expecting a law change to materialise
before the payment became due. As the law did
not change, the tax payable for FY22 was settled
in 2023. Further details on tax are set out in note
12 of the consolidated financial statements.
Non-underlying items
The items below have been excluded from the
underlying results and further details of non-
underlying items are included in note 9 to the
financial statements. The total non-underlying
items in operating profit in the year decreased
to £27.8m (2022: £40.8m), due to the reduction
in amortisation of acquired intangible assets
and the non-repeat of historic contract costs
in the year.
Non-underlying items
ERP implementation costs
Goodwill impairment
Exceptional restructuring costs
Impairment of trade receivables related to restructuring
Loss on disposal of operations
Exceptional historic contract dispute
Claims related to closed business
Contingent consideration: additional amounts provided
Change in fair value of contingent consideration
Acquisition costs
Amortisation of acquired intangible assets
Amortisation of joint venture acquired intangibles
Gain on sale of assets held for sale
Contingent consideration received
Total non-underlying items in operating profit
Non-underlying items in finance income
Total non-underlying items before taxation
Non-underlying taxation
Total non-underlying items
2023
£m
7.5
12.1
2.8
0.4
0.1
–
–
–
–
–
5.1
0.6
(0.8)
–
27.8
–
27.8
(3.0)
24.8
2022
£m
6.3
12.5
5.3
0.3
–
3.5
2.5
0.1
(0.7)
0.2
10.3
1.2
–
(0.7)
40.8
(3.6)
37.2
(9.0)
28.2
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Non-underlying items in operating profit
The Group is continuing the strategic project to
implement a new cloud computing enterprise
resource planning (ERP) system across the
Group. As this is a complex implementation,
project costs are expected to be incurred over
a total period of five years. Non-underlying ERP
costs of £7.5m (2022: £6.3m) include only costs
relating directly to the implementation, including
external consultancy costs and the cost of
the dedicated implementation team. Non-
underlying costs does not include operational
post-deployment costs such as licence costs for
businesses that have transitioned.
The goodwill impairment of £12.1m (2022:
£12.5m) relates to the UK business where a
downward revision to the medium-term forecast
has resulted in the full impairment of the goodwill
as the forward projections did not fully support
the carrying value of the goodwill. Goodwill
impairment in the prior year of £12.5m related to
Austral and the Swedish business.
Exceptional restructuring costs of £2.8m (2022:
£5.3m) in the year comprises £0.5m (2022:
£1.9m) in the Europe Division and £2.3m (2022:
credit of £0.6m) in AMEA. In Europe, the costs
related to the scheduled exit of the Kazakhstan
business and in AMEA, costs arose from the
mothballing of the Egypt business. In 2022,
we also incurred restructuring costs in North
America (£3.4m) and in the centre (£0.6m). In
addition, the exit from Kazakhstan resulted in a
£0.4m impairment of trade receivables, in 2022
we incurred a £0.3m impairment in respect of
trade receivables in Ukraine.
A loss on disposal of £0.1m was realised on
the disposal of the Cyntech Tanks business in
Canada in October 2023.
The £0.8m gain on disposal of assets held
for sale relates primarily to the sale of assets
owned by the now closed Waterway business in
Australia. Impairment charges for these assets
had previously been charged to non-underlying
items in prior periods and therefore the
corresponding profit on disposal of the assets is
also recognised as a non-underlying item.
The classification of costs as non-underlying is
a management judgement and is reviewed on a
regular basis.
Amortisation of acquired intangibles
The £5.1m (2022: £10.3m) charge for
amortisation of acquired intangible
assets relates to the RECON, Nordwest
Fundamentering, GKM Consultants and
Moretrench acquisitions. In addition, we have
incurred £0.6m (2022: £1.2m) of amortisation
of joint venture intangibles which relates to
NordPile, an acquisition by the Group’s joint
venture interest KFS Finland Oy.
Non-underlying taxation
A non-underlying tax credit of £3.0m (2022:
£9.0m) relates entirely to the tax impact of the
non-underlying loss for the year. In 2022, £4.7m
of the credit related to the tax impact of the non-
underlying loss and the £4.3m remainder arose
from the reversal of the valuation allowance
against deferred tax assets in Canada that was
recognised through the non-underlying tax
charge in prior years.
Earnings per share
Underlying diluted earnings per share increased
by 53% to 153.9p (2022: 100.7p) driven by higher
operating profit partially offset by the increase
in finance costs and a higher effective tax rate in
the year. Statutory diluted earnings per share was
120.5p (2022: 62.4p) which includes the impact
of the non-underlying items.
Dividend
The Board has recommended a final dividend of
31.3p per share (2022: 24.5p per share) which,
following the interim dividend for 2023 of 13.9p
(2022: 13.2p), brings the total dividend for the
year to 45.2p (2022: 37.7p), an increase of
20%. The 2023 dividend earnings cover, before
non-underlying items, was 3.4x (2022: 2.7x). If
approved, the proposed final dividend of 31.3p
(2022: 24.5p) will be paid on 28 June 2024 to
shareholders on the register as at the close of
business on 31 May 2024.
Keller Group plc has distributable reserves of
£190.8m at 31 December 2023 (2022: £122.1m)
that are available to support the dividend policy,
which comfortably covers the proposed final
dividend for 2023 of £22.7m. 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.
Free cash flow
The Group’s free cash flow was an inflow of
£103.2m (2022: outflow of £33.8m) and the
improvement was driven by the reversal of the
increased working capital demands in the prior
year. Free cash flow has also been impacted
by the timing of US tax payments. The basis of
deriving free cash flow is set out overleaf.
Working capital
Net working capital decreased by £2.7m (2022:
increase of £110.5m) reflecting a significant
reduction in inventory levels at Suncoast, partially
offset by a decrease in trade and other payables.
The net movement comprises a £26.8m
decrease in inventories and a £1.5m decrease in
trade and other receivables, offset by a decrease
in trade and other payables of £25.6m.
An increase in provisions and retirement benefit
liabilities improved the working capital by £12.1m
(2022: decrease of £13.4m). This reflects an
increase in provisions, as the amounts provided
for contract and legal disputes exceeded
the amounts settled, with fewer large legal
or contract disputes settled in the year. This
excludes the cash outflow on restructuring
provisions and other items included in non-
underlying costs which are presented within non-
underlying items in the free cash flow calculation.
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
£73.6m (2022: £73.5m) was net of proceeds
from the sale of equipment of £20.9m (2022:
£8.2m). 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 115% (2022: 115%).
Acquisitions and transactions
with non-controlling interests
The Group purchased a 35% interest in
the shares of our Saudi Arabian subsidiary,
Keller Turki Company Limited, increasing our
ownership interest to 100%. An initial cash
consideration of £6.4m was paid to the non-
controlling shareholders and a contingent
consideration has been agreed which is valued
at £9.3m at the balance sheet date.
The accounting for the acquisition of Nordwest
Fundamentering in 2022 was finalised in the
year, giving rise to prior period measurement
adjustments which are set out in note 5 to the
consolidated financial statements. In 2022,
outflows for acquisitions, net of cash and debt
acquired, included £3.2m for GKM Consultants
Inc and £6.8m for Nordwest Fundamentering.
Deferred and contingent consideration in
respect of prior period acquisitions of £0.2m
(2022: £12.4m) was paid in the year.
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Keller Group plc Annual Report and Accounts 2023
Chief Financial Officer’s review continued
Free cash flow
Underlying operating profit
Depreciation, amortisation and impairment
Underlying EBITDA
Non-cash items
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
Transactions with non-controlling interests
Non-underlying items
Cash flows from derivative instruments
Fair value movements in net debt
Right-of-use assets/lease liability modifications
Foreign exchange movements
Movement in net debt
Opening statutory net debt
Closing statutory net debt
2023
£m
180.9
112.2
293.1
(4.0)
2.7
12.1
(73.6)
(33.9)
196.4
109%
(20.5)
(72.7)
103.2
(27.7)
(3.4)
(0.2)
1.3
(6.4)
(12.4)
2.0
–
(8.7)
13.9
61.6
(298.9)
(237.3)
2022
£m
108.6
97.0
205.6
(1.1)
(110.5)
(13.4)
(73.5)
(24.8)
(17.7)
(16%)
(10.2)
(5.9)
(33.8)
(26.4)
(1.2)
(22.4)
0.7
–
(6.2)
–
2.6
(1.6)
(17.3)
(105.6)
(193.3)
(298.9)
Financing facilities and net debt
The Group’s total net debt of £237.3m (2022:
£298.9m) comprises loans and borrowings of
£297.1m (2022: £319.0m), lease liabilities of
£91.6m (2022: £81.0m) net of cash and cash
equivalents of £151.4m (2022: £101.1m). The
Group’s term debt and committed facilities
principally comprises US private placement
notes repayable in December 2024 ($75m),
in August 2030 ($120m) and in August
2033 ($180m) and a £375m multi-currency
syndicated revolving credit facility, which matures
in November 2025. At the year end, the Group
had undrawn committed and uncommitted
borrowing facilities totalling £425.2m (2022:
£273.7m).
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
0.6x (2022: 1.2x), well within the covenant limit
of 3.0x and within the Group’s 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 0.8x at 31 December 2023 (2022: 1.5x).
Underlying EBITDA, excluding the impact of
IFRS 16, to net finance charges was 12.3x (2022:
15.7x), well above the limit of 4.0x.
On an IFRS 16 basis, year-end gearing, defined
as statutory net debt divided by net assets, was
46% (2022: 60%).
The average month-end net debt during 2023,
excluding IFRS 16 lease liabilities, was £224.8m
(2022: £252.1m). 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, although we have negotiated
advance payments on larger projects such
as NEOM.
At 31 December 2023, the Group had drawn
upon uncommitted overdraft facilities of £2.4m
(2022: £6.9m) and had drawn £199.7m of bank
guarantee facilities (2022: £190.6m).
Provision for pension
The Group has defined benefit pension
arrangements in the UK, Germany and Austria.
The Group’s UK defined benefit scheme is
closed to future benefit accrual. The most recent
actuarial valuation of the UK scheme was as at 5
April 2023, which recorded the market value of
the scheme’s assets at £45.2m and the scheme
being 98% funded on an ongoing basis. Given
the funding level, contributions will cease from
August 2024, with a total of £1.7m to be paid in
2024. Contributions will be reviewed following
the next triennial actuarial valuation
to be prepared as at 5 April 2026. The 2023
year-end IAS 19 valuation of the UK scheme
showed assets of £46.0m, liabilities of £41.8m
and a pre-tax surplus of £4.2m before an IFRIC
14 adjustment to reflect the minimum funding
requirement for the scheme, which adjusts the
closing position to a deficit of £1.5m.
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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 £12.6m at 31 December 2023 (2022:
£13.2m). 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.
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 £3.6m at 31 December 2023 (2022:
£3.5m).
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
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 impacts 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:
USD
CAD
EUR
AUD
2023
2022
Closing
Average
Closing
Average
1.27
1.69
1.15
1.87
1.24
1.68
1.15
1.87
1.21
1.63
1.12
1.76
1.24
1.61
1.17
1.78
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 US dollars.
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. At
31 December 2023 the majority of borrowings
were fixed rate.
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
liabilities. These represent the Group’s
maximum exposure to credit risk in relation
to financial assets.
The Group recognises impairment losses on
trade receivables where there is uncertainty over
the amount we can recover from customers.
The amount recognised in underlying costs
of £21.3m (2022:£2.9m) has increased as
a result of specific impairments relating to
customers in financial difficulty or amounts
where cash receipts have been delayed due
to customer disputes.
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
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 2023 was 22.8% (2022: 14.9%).
David Burke
Chief Financial Officer
Approved by the Board of Directors and
authorised for issue on 4 March 2024.
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Keller Group plc Annual Report and Accounts 2023
Principal risks and uncertainties
Principal risks
and uncertainties
Our business is subject to risks and uncertainties and as such we have a risk management
governance framework to identify, evaluate, analyse and mitigate significant risks, including
climate-related risks and opportunities (CRROs), 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.
Risk management governance framework
The risk management process within Keller follows industry best practice,
incorporating many of the applicable principles of the risk management
standard ISO 31000:2018 and ways of working from leading risk management
organisations. The adoption of a consistent risk management process within a
comprehensive framework can help to ensure that risk is managed effectively,
efficiently and coherently across Keller.
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Keller Group plc Annual Report and Accounts 2023
Keller’s strategic objectives
Risk assessment
Risk reporting
Decision
Risk treatment
Residual risk reporting
Monitoring
37
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Effective risk management protects and
adds value to Keller and its stakeholders
and supports Keller’s objectives by:
• providing a framework that enables future risk
•
management activity to take place in a consistent
and controlled manner;
improving decision making, planning and
prioritisation by comprehensive and structured
understanding of the business activity, volatility
and project opportunity/threat;
• contributing to a more efficient use/allocation of
capital and resources within the organisation;
• reducing volatility in the non-essential areas of
the business;
• protecting and enhancing assets and company
image;
• developing and supporting Keller’s people and
knowledge base; and
• optimising operational efficiency.
Important developments in 2023
Key areas of focus for 2024
• We will continue to focus on deepening the understanding and use
of our risk management data consistently across the Group through
the use of our new risk management platform, targeted training and
business unit level risk workshops.
• We will provide dedicated, targeted training on the use of the new
GRC tool in the first half of 2024 to ensure a consistent methodology
is used when identifying, assessing, managing and reporting on risks.
These changes will lead to continued improvement and consistency of
risk reporting and in turn support knowledge sharing across business
units and a timely and robust decision-making process.
• We will perform a review of our risk appetite aligned to the key risk
categories against which we identify, assess, manage and report on.
Any agreed changes will be updated in the new GRC tool.
• We will continue to focus on strengthening our assurance activity,
especially in the second line of defence, which will be adequately
resourced to ensure our first line internal control environment is
operating effectively.
• We will continue to further develop and widen the scope of the CRROs
scenario analysis tools, in line with the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD).
The continued strengthening of our risk management framework remained
a key priority for 2023, as understanding current and emerging risks is
central to effective decision making in Keller, aligned to our four strategic
levers and in line with the Group’s risk appetite. Risks that the Group
remains exposed to from day-to-day delivery of projects and the longer-
term pursuit of its strategic objectives continue to be assessed, managed
and monitored as depicted in the process above.
During the year we undertook several initiatives to support 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,
operational management, taxation and treasury, reinforcing a
culture of strong governance and risk management. This has been
independently validated through both management review and the
internal audit programme.
• Following the financial reporting fraud in the Austral Business
Unit discovered in December 2022, a controls response plan was
developed and executed that covered both the control failings in
Austral that enabled this fraud to occur and also a wider review of
controls across Keller. Enhancing our assurance capability in the
second line of defence will remain a key area of focus in 2024, along
with further improvements in project performance management.
• Successfully deployed our new Governance, Risk and Compliance
(GRC) tool in Q4 2023, which will further enhance our capability
to manage, monitor and report on our internal control and risk
management environment.
• Continued to improve the quality of data on risk reporting across the
Group, including climate-related risks and opportunities, through
regular robust and engaging management reviews of risk throughout
the organisation.
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Keller Group plc Annual Report and Accounts 2023
Principal risks and uncertainties continued
Our risk governance framework
Board
Sets tone on risk
management culture
Approval of Group’s risk
appetite
Audit and Risk
Committee (ARC)
Reviews the effectiveness of our
risk management and internal
controls systems
Monitors risk exposures
against risk appetite
Top-down
Oversight, identification,
assessment and
mitigation of risks
at Group level
Bottom-up
Oversight, identification,
assessment and
mitigation of risks
at operational and
business unit 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
Implementation of internal controls
Internal
Audit (IA)
Provision of assurance
on the key risks
mitigating controls
Execution of
risk-based audit plan
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
Regular review of divisional
risk registers
Divisions, business units and functions
Identification and management of risks, including climate-related risks
and opportunities, at a business unit level
Internal controls monitoring
Risk awareness and safety culture in day-to-day operations
Development and execution of appropriate mitigating actions
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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 fully 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.
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 we identified and impact-assessed over the short term
(ie the next year), medium term (ie two to five years) and long term (ie six
to 30 years). As such, horizon scanning and reviewing emerging potential
legislation forms key elements of the risk review process.
These elements are 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 2023 and December 2023.
Keller’s operational and financial performance in a tougher macroeconomic
environment during 2023 was very encouraging and our principal risks and
uncertainties have not changed materially since the publication of last year’s
annual report. However, macroeconomic challenges continue to impact our
markets, including the continued expectation of increased inflation, higher
interests rates and continued political instability in key regions where Keller
operates. The following principal risks will continue to be closely monitored
throughout 2024:
• supply chain;
• a rapid downturn in our markets; and
•
failure to procure new contracts on satisfactory terms.
Information on these and the Group’s other principal risks is set out from
page 40 onwards.
Developing the viability statement
In developing the viability statement, it was determined that a three-
year period should be used, consistent with the period of the Group’s
business planning processes and reflecting a reasonable approximation
of the maximum time taken from procuring a project to completion.
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 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.
Viability statement
In accordance with provision 31 of the UK Corporate Governance Code,
the Directors have assessed the prospects of the Group over a three-
year period.
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.
The Group’s term debt and committed facilities principally comprises US
private placement notes repayable in December 2024 ($75m), in August
2030 ($120m) and in August 2033 ($180m).
The Group also has a £375m syndicated revolving credit facility which
is due to expire in November 2025. The assessment assumes that
the Group will continue to have access to this funding throughout the
viability period on the basis that the Group will either renew the facility
or have sufficient time to agree an alternative source of finance on
comparable terms.
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 in 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
2025 and 2026 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. 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 period through to 31 March 2025. For this
reason, they continue to adopt the going concern basis of accounting in
preparing the financial statements.
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Principal risks and uncertainties continued
We list on the following pages the principal risks and uncertainties as determined by the Board that may affect
the Group and highlights the mitigating actions that are being taken. The content of the table, however, is not
intended to be an exhaustive list of all the risks and uncertainties that may arise.
Financial risk
1 Inability to finance our business
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
• Failure to accurately
forecast material
exposures and/or
manage the financial
resources of the
Group.
Failure to sufficiently and
effectively manage the financial
strength of the Group could lead
it to:
• Fail to meet required tests
that allow it to continue to use
the going concern basis in
preparing its financial
statements.
• Fail to meet financial covenant
tests, potentially leading to a
default event.
• Have a lack of available funds,
restricting investment in
growth opportunities,
whether through acquisition
or innovation.
• Be unable to meet dividend
payment requirements.
• Centralised Treasury function that is responsible
for managing key financial risks, including liquidity
and credit capacity.
• 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 new US private
placement debt of $300m, with $120m maturing
in 2030 and $180m maturing in 2033. There is
$75m of US private placement maturing in 2024.
• The Group maintains significant undrawn
facilities within a high-quality RCF bank
syndicate, which underpin the liquidity
requirements of the Group.
• Strong free cash flow profile – flexibility on capital
expenditure and ability to 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 and monitoring external factors
that may affect funding availability.
New $300m US private
placement secured, along
with strong operational
performance throughout
2023, demonstrate clear
ability to manage both
existing and future risks.
Negotiations to refinance
the existing revolving
credit facility will
commence in Q1 2024.
Link to strategy
Link to viability
Timeframe
Market risk
2 A rapid downturn in our markets
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Inability to maintain a
sustainable level of financial
performance throughout the
construction industry market
cycle, which grows more than
many other industries during
periods of economic expansion
and falls more harder than many
other industries when the
economy contracts. Any
significant, sustained reduction
in the level of customer activity
could adversely affect the
Group’s strategy, reducing
revenue and profitability in the
short and medium term, and
negatively impact the longer-
term viability of the Group.
• Customers
• The diverse markets in which the Group
postponing or
reducing investment
in ongoing and new
projects.
Impact of increasing
inflation, especially
in steel, cement and
energy.
•
• Political instability
leading to disruption
in supply chains
impacting both
availability and price.
operates, both in terms of geography and market
segment, provide protection to individual
geographic or segment slowdowns.
• Leveraging the global scale of the Group, talent
and resources can be redeployed to other parts
of the company during individual market
slowdowns.
• Having strong local businesses with in-depth
knowledge of the local markets enables early
detection and response to market trends.
• The diverse customer base, with no single
customer accounting for more than 4% of Group
revenue, reduces the potential impact of
individual customer failure caused by an
economic downturn.
The Group continues to
maintain a very strong
order book across all
divisions at near record
levels. However, due to
increasing inflation,
higher interest rates and,
geopolitical uncertainty,
we are seeing some early
signs of customers
delaying project starts
and investment.
Link to strategy
Link to viability
Timeframe
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Link to strategy
Risk movement since 2022 and link to viability
Timeframe
Balanced portfolio
Engineered solutions
Increased risk
Constant risk
Short term
Medium term
Operational excellence
Expertise and scale
Reduced risk
Link to viability
Long term
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Strategic risks
3 Failure to procure new contracts while maintaining appropriate margins
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Failure to negotiate satisfactory
and appropriate contractual
terms may result in:
• Delays and disputes during
project delivery, negatively
impacting our relationships
with our customers and the
Group’s reputation for
delivering quality products
and solutions.
• Adverse impact on the
Group’s strategy leading to
reduced revenue and
profitability and negatively
impacting the Group’s ability
to fund its strategic
objectives.
Increased cost of insurance
and deductible.
•
•
Increased
competition
especially in tight or
contracting markets.
• Failure to fully
understand and/or
ability to meet
customer
requirements.
Inadequate
resources in place
(physical assets and
people).
• Failure to
•
understand and
engage with
customer on
balanced approach
to allocation or
sharing of risk in the
contract.
• A focus on understanding customer
requirements and competitor 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 – focus on contractual and
commercial terms.
• Continuous monitoring of market trends and
their potential impact.
• Continuous monitoring of order book wins and
losses.
We continue to maintain a
strong order book with
improving margins during
2023. We are also seeing
increased competition on
contracts within our
markets with increased
pressure on bid pricing
from our customers that
along with inflationary
pressures could
potentially erode contract
margins. Significant
increase in the cost of
insurance along with
increased self-insured and
deductible limits will
require a renewed
communication across
Keller with a focus on
minimising our exposure
to unnecessary risk and
contractually limiting our
liability wherever possible.
Work to refresh and
refocus the PLM Standard
focusing on project
performance
management, hence
renaming it PPM (Project
Performance
Management), is almost
complete.
Link to strategy
Link to viability
Timeframe
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Keller Group plc Annual Report and Accounts 2023
Principal risks and uncertainties continued
Strategic risks
4 Losing our market share
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Inability to achieve sustainable
growth, whether through
acquisition, new products, new
geographies or industry-specific
solutions, may:
•
Increased
competitor activity
especially in tight or
contracting markets.
• Failure to adjust to
changing customer
demands or fully
understand and
meet their
requirements.
Inability to identify
changes in market
demands, including
changes to promote
sustainability.
•
• Jeopardise our position as the
preferred international
geotechnical specialist
contractor.
• Lead to inefficiencies and
increased operating costs,
which in turn could impact our
ability to deliver balanced
profitable growth, which 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.
• Minimising the risk of acquisitions, including
getting to know a target company in advance,
often working in 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.
We continued to see very
strong improvement
across the US in 2023,
where we are providing a
wider range of our
products across more
locations following the
successful execution of
the One Keller project in
2021. This focus is also
showing success in the
other divisions as they
diversify their available
product range to maintain
and grow our market share.
Link to strategy
Link to viability
Timeframe
5 Ethical misconduct and non-compliance with regulations
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Keller operates in many different
jurisdictions and is subject to
various rules, regulations and
other legal requirements
including those related to
anti-bribery and anti-corruption.
Failure to comply with the Code
of Business Conduct or other
regulations could leave the
Group exposed to:
•
Instances of bribery and
corruption.
• Fraud and deception.
• Human rights abuses, such as
modern slavery, child labour
abuses and human trafficking.
• Unfair competition practices.
• Unethical treatment within
our supply chain.
These failures could result in
legal investigations, leading to
fines and penalties, reputational
damage and business losses.
Failure to comply with
the Code of Business
Conduct or related
policies and procedures
could stem from:
• Failure to establish
robust corporate
culture.
• Failure to adopt a
compliance risk
approach.
• Failure to embed the
Group’s values and
behaviours across
the entire
organisation,
including any joint
ventures.
• Failure to have a
robust training and
monitoring
programme in place.
• Deliberate non-
compliance.
• A Code of Business Conduct that sets out
minimum expectations for all colleagues in
respect of ethics, integrity and regulatory
requirements, that is updated annually and is
backed by a training programme to ensure that it
is fully embedded across the Group.
• Ethics and Compliance Officers in every business
unit who support the ethics and compliance
culture and ensure 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.
• Ethics and compliance updates to the Audit and
Risk Committee semi-annually.
• An independent third-party whistleblowing
helpline that is actively promoted. Complaints
are independently investigated by the
Compliance and Internal Audit teams and
appropriate action taken where necessary.
Following on from the
financial reporting fraud
in the Austral business
discovered in late 2022, a
specific controls
response plan was
developed and executed
in 2023. This plan covered
the specific control
failings in Austral and a
wider review across Keller.
All elements of the plan
are either completed or
progressing well and
owned by a senior leader
in the business.
Link to strategy
Link to viability
Timeframe
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Strategic risks
6 Inability to maintain our technological product advantage
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Keller has a history of innovation
that has given us a technological
advantage which is recognised
by our clients and competitors.
Failure to maintain this
advantage through the
continued technological
advancements in our
equipment, products and
solutions may:
•
Impact our position in the
market.
• Result in us not being
selected for key complex,
high-value projects that
support the Group strategy.
• Make it more difficult to
attract and retain the best
talent.
• Result in the loss of
reputation for delivering the
best engineered solutions.
• Failure to maintain
investment in
innovation and
digitisation.
Increased
competitor
investment in
innovative solutions.
•
• Failure to continue
to invest in our
people.
•
•
Innovation initiatives developed at both Group
and divisional level to ensure a structured
approach to innovation is in place across the
Group.
Innovation in low carbon materials (cement,
concrete, cement-free binders), by carrying out
field trials and collaborating with cement
suppliers and other companies innovating in
this space.
• Digitisation initiatives focusing on strategy of
facilitating equipment and operational data
capture.
• 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.
• Global product teams set standards, provide
guidance and disseminate best practice across
the Group.
• Continued investment in both external and
internal equipment manufacture.
Link to strategy
Link to viability
Timeframe
7 Climate change
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
• Failure to update
product offerings in
line with both
legislation and
customer demand.
Sustainability Steering Committee that is
responsible for integrating sustainability targets
and measures into the Group business plan to
successfully drive changes important to the
company.
• Collaboration with the University of Surrey’s
Centre for Environment and Sustainability to
apply sustainability best practice to all business
functions.
• 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 and embed
processes to meet TCFD requirements.
We are starting to win
project opportunities
related to climate impact.
This is tempered by the
introduction of more
legislation relating to
climate impact, eg
proposed new restriction
for federal construction
projects in the US.
We continue to focus on
delivering against our
sustainability targets and
meeting TCFD reporting
requirements.
Climate change is a global threat
and failure to manage and
mitigate it could lead to:
• An inability to achieve Keller’s
commitment to deliver
solutions in an
environmentally conscious
manner, which may in turn
have a negative impact on our
reputation, affect employee
morale and lead to a loss of
confidence from our
customers, suppliers and
investors.
• Product offerings becoming
obsolete because they are no
longer compliant with
environmental standards.
• Remediation of non-
compliant work at our own
expense to maintain
compliance.
Link to strategy
Link to viability
Timeframe
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Keller Group plc Annual Report and Accounts 2023
Principal risks and uncertainties continued
Operational risks
8 Service or solutions failure
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
• Misinterpretation of
client requirements or
miscommunication of
requirements by the
client may lead to a
poorly designed
solution and
consequently failure.
• 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.
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.
• Failure to meet quality
standards, damaging our
reputation, giving rise to
regulatory action and legal
liability, and ultimately
impacting financial
performance.
• A negative impact on
long-term profitability from
poorly designed product/
solution as they are generally
covered by a liability limitation
period of 12 years.
Link to strategy
Link to viability
Timeframe
9 Ineffective execution of our projects
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Inability to successfully deliver
projects in line with the agreed
customer requirements may
result in:
•
• 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.
• 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.
• Lack of
comprehensive
understanding of
contract obligations.
Inadequate resources
(people, physical
assets and materials).
•
• 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.
• 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. This is currently being
updated and will be renamed PPM (project
performance management). Alongside the
updated standard will be an app to support the
efficient and effective execution of projects.
• 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.
The number of projects
not executed to
expectation in 2022 was
above the long-term
average, adversely
impacted by persistently
high inflation across
North America and
Europe.
This trend has improved
throughout 2023 along
with the work under way
to update the PLM
Standard focusing on
project performance
management. This will
put in place better
controls to ensure
continued effective
execution of projects
across Keller.
Link to strategy
Link to viability
Timeframe
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10 Supply chain – partners fail to meet the Group’s operational expectation and contractual obligations (including
capacity, competency, quality, financial stability, safety, environmental, social and ethical)
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
• The Group has developed long-term
partnerships with key suppliers, working closely
with them to understand their operations, but is
not over-reliant on any single one, with an
extensive network of approved suppliers in place
across the organisation to support its strategic
ambitions.
• A Supply Chain Code of Business Conduct that
sets out minimum expectations for all suppliers
in respect of ethics, integrity and regulatory
requirements, that is updated annually.
• Working group established, reporting to the
Group Company Secretary and Legal Advisor, to
drive minimum standards, both contractually and
behaviourally, across key labour suppliers.
Failure to manage suppliers
effectively could lead to:
• Delays to executing projects
waiting for materials and
ongoing business disruption.
• Additional costs to find
alternative suppliers.
• Becoming involved in legal
disputes and potentially fines
and penalties.
• Damaging our reputation and
potentially being barred from
bidding on future contracts.
• Human rights abuses, such as
modern slavery, child labour
abuses and human trafficking.
•
• Failure to embed the
Group’s expectation
within the
procurement process.
Inadequate
assessment of supply
chain partner
capabilities during
bidding phase.
• Lack of supplier
resilience due to rising
costs of energy as a
result of geopolitical
uncertainty.
• Lack of supply
availability due to
increased demand
from and too little
supply.
Inflation driving up
prices.
•
• Logistical impact
causing delays due to
lack of HGV drivers.
Supply chain issues,
especially availability of
certain materials (steel,
cement and energy)
continue to show signs of
easing. Pricing is still
adversely impacted by the
persistently high inflation,
but this too is beginning to
show signs of abating.
While pressure remains as
a result of the geopolitical
uncertainty, it is being
better managed as
demand cools slightly as
interest rate increases
take effect on some
investment decisions.
In 2023 we carried out an
independent legal
assessment of our human
rights and modern slavery
standards and processes.
Consequently, we have
introduced a Human
Rights Policy, updated our
Supply Chain Code of
Business Conduct and
supplier contractual
clauses and put in place
more rigorous due
diligence processes
across our supply chain.
Link to strategy
Link to viability
Timeframe
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Principal risks and uncertainties continued
Operational risks
11 Causing a serious injury or fatality to an employee or a member of the public
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Failure to maintain high
standards of health and safety,
and an increase in serious
injuries or fatalities leading to:
• An erosion of trust of
employees and potential
clients.
• Damage to staff morale, an
increase in employee turnover
rates and a decrease in
productivity.
• Threat of potential criminal
prosecutions, fines, disbarring
from future contract bidding
and reputational damage.
•
Inadequate risk
identification,
assessment and
management.
• Lack of clear
leadership driving the
safety culture.
• Lack of employee
competency.
• Poorly designed
• 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
processes that do not
eliminate or mitigate
risk.
•
• Lack of focus on the
wellbeing and mental
health of employees
and JV partners.
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.
Link to strategy
Link to viability
Timeframe
12 Not having the right skills to deliver
Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Failure to attract and develop
excellent people to create a
high-quality, vibrant, diverse and
flexible workforce could:
• Harm the Group’s ability to
win or execute specific
high-value, complex projects.
• Fail to meet strategic
objectives to grow the
business and lose key
stakeholder confidence
within the market.
•
Inability to recruit
and retain strong
performers.
• Lack of a diverse
workforce.
• Failure to maintain
and promote the
Keller culture.
• Overheating of
market causing
significant increase in
demand or
competition for
people.
• Lack of visibility of
long-term pipeline for
career progression
resulting in existing
employees leaving
the business.
• Post COVID-19
recovery driving
increase in attrition or
people leaving sector.
• Pressure from wage
inflation and
increased offers from
competition.
• 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 still witnessing
inflationary pressure on
pay across many
locations where Keller
operates and thus the
pressure on competition
for skilled personnel is still
an issue in some parts of
the Group. However, job
markets are just
beginning to show signs
of a slowdown, which
should ease this issue.
Focus remains on
retaining staff with the
right skills to deliver.
Link to strategy
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Description and impact
Causes
Mitigation and internal controls
Movement since 2022
Risk of potential disruption
in the business operations,
reputational damage and/or
loss or corruption of data could
lead to:
• Loss of intellectual property
and competitive advantage.
• Loss of personal data.
• Operational impact
restricting the ability to carry
out business critical activities.
• Potential fines and penalties.
• Reputational damage leading
to loss of market and
customer confidence.
• Failure to meet client security
requirements to win or
maintain contracts.
• 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 and further controls limit access to
only Keller-approved devices.
• 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.
• Proactive threat hunting throughout the
environment.
• Failure to maintain
appropriate threat
prevention,
identification and
resolution
mechanisms either
technically or through
processes.
• Poor internal
governance.
• Failure to embed
preventative culture.
• Lack of or inadequate
•
training and
awareness leading to
mistakes and errors.
Inconsistent
approach to data
security, especially
with JV partners and
external third parties.
• Cyber attacks.
• Failure to obtain or
maintain external
security certifications
that are required by
clients.
Link to strategy
Link to viability
Timeframe
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Task Force on
Climate-related
Financial Disclosures
Keller has considered the risks and opportunities posed to the business by climate change,
and the impacts it may face over several time horizons. The following statement discloses
Keller’s climate-related financial information and actions the business is taking to respond
to climate change. It is consistent with the recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD) in compliance with Listing Rule 9.8.6R, with areas where
disclosures are only partially consistent included at the end of the statement on page 58.
Governance
Board oversight of climate-related risks and opportunities
The Board is ultimately responsible for the oversight of climate-related
risks and responsibilities, and for ensuring that the Group’s approach
to sustainability is implemented across the business. The Group’s
governance framework is structured to provide regular and relevant
updates to the Board in order to support informed decisions on climate-
related matters. The governance framework is outlined in full on page 36,
and the organisational and reporting structure for climate governance is
depicted on page 49.
ESG, including the management of climate-related issues, was a
listed topic on the agenda at four Board meetings in the last year,
corresponding to the ESG Board Report which is delivered to the Board
on a quarterly basis. The report is coordinated by the Group Company
Secretary and Legal Advisor’s team, and ensures a clear reporting line
on all ESG matters, including climate risk, to the Board and the Group
Chairman, who is the designated Director for ESG and sustainability
matters. Additional discussions on sustainability-related matters also
take place as required.
The Sustainability Committee, a Main Board Committee, has oversight
of the Board’s responsibilities in relation to environmental matters,
including climate-related matters. In line with its terms of reference,
this committee convenes a minimum of three times a year and is
comprised of the CEO, the Group Chairman and the independent
Non-executive Directors (NEDs). Its report for 2023 can be found
on page 105. The Sustainability Committee was formed in May
2023 following the merger of the Environment and the Social and
Community Committees. It is chaired by Juan G. Hernández Abrams,
an independent NED on the Board.
The Sustainability Steering Committee, the Main Management
Committee responsible for climate-related and environmental matters
alongside other ESG topics, is composed of representatives from each
division – North America, Europe, and AMEA – and the Group’s relevant
functions, as listed on the organisational and reporting structure for
climate governance on page 49. The Committee convenes quarterly
and reports to the Sustainability Committee and to the Executive
Committee, which is also Main Management Committee. As part
of the risk management process for climate risks, the Sustainability
Steering Committee is responsible for identifying climate-related risks
and reporting these to the Audit and Risk Committee, a Main Board
Committee, which in turn reports to the Board. The Sustainability
Steering Committee is chaired by the Engineering and Operations
Director, who is head of sustainability and responsible for having
oversight on sustainability matters. More detail on the risk management
process for climate-related risks is given in the Risk Management section
of this statement and in the Principal Risks and Uncertainties section
(page 36).
As part of the risk management process for climate risks, the
Sustainability Steering Committee is responsible for identifying climate-
related risks and reporting these to the Audit and Risk Committee, a Main
Board Committee, which in turn reports to the Board. The Sustainability
Steering Committee is chaired by the Engineering and Operations
Director, who is head of sustainability and responsible for having
oversight on sustainability matters. More detail on the risk management
process is given in the Risk management section of this statement and
in the Principal risks and uncertainties section (page 36).
ESG matters, including climate-related issues, are taken into account
in core strategic decisions by the Board and management via a formal
Project Review process. This process incorporates assessment of the
viability of projects on the grounds of safety and legal compliance. The
Group is continuing to develop a stage of this process which would also
incorporate assessment of project viability on the grounds of climate-
related impact. Currently, we incorporate an assessment of projects
based on the financial impact that would be had as a consequence of
an adverse reputational event.
As a result of this process of incorporating climate-related issues into
core strategic decisions, during 2023 we adapted our rig procurement
and development strategy to protect our equipment from future
transition risks. We set aside a £100,000 budget to help business units
trial biofuels, including hydrotreated vegetable oil (HVO), so that these
fuels can be offered to clients with sustainability requirements. As part of
this strategy, we also invested in our first large electric rig as part of our
rolling rig development programme. Electric rigs are safeguarded against
future air quality legislation, meaning they can continue to be used
without risk of becoming stranded assets.
The Board monitors and oversees progress against goals and targets for
addressing climate-related issues principally through the Sustainability
Committee, and also through the Remuneration Committee where
there is an impact on executive remuneration. More detail on ESG-linked
remuneration can be found on page 120.
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Management’s role in assessing and managing climate-related risks and opportunities
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The Sustainability Steering Committee allows divisions and functions
to raise sustainability challenges, including on climate-related topics,
to the Executive Committee and to the Board and its committees.
It also acts as a forum for different areas of the business to convene
and discuss sustainability strategy, and for sharing sustainability best
practice between divisions. The Committee is responsible for integrating
sustainability targets and measures into the Group business plan, in
order to successfully drive changes important to the company.
Each division of the business has a ‘Team Planet’, a group responsible
for climate-related issues. These teams are composed of multiple
representatives from diverse roles across each division, from design
and procurement through to operations, and each includes at least
one representative from each business unit.
Each Team Planet works alongside the Group’s HSEQ teams and
those responsible for local climate risk registers to help bring climate-
related risks and opportunities (CRROs) and associated issues to the
attention of management so that they can be acted on. For example,
Team Planet are critical in grounding our climate scenario modelling in
the actual contractual and practical landscape of our projects. We used
multiple Team Planet North America members to both create and then
sense-check the days’ delay from various extreme weather events in our
scenario analysis.
Organisational and reporting structure for climate governance
The Sustainability Committee provides oversight of TCFD activities on
behalf of the Board. The committee is supported by the TCFD working
group on TCFD matters.
The Sustainability Steering Committee has a wider remit than the TCFD
working group and feeds through sustainability matters to the Executive
Committee, the Sustainability Committee and the Board.
TCFD
working
group
Board of Directors
Chairman is designated Director for ESG and sustainability matters
Sustainability Committee
Executive Committee
Sustainability Steering Committee
Divisional and Group representatives
CSRD
working
group
Group functions:
Sustainability, HSEQ, Engineering and Operations, Finance, Risk, Communications, Investor Relations, People, Company Secretariat.
North America
Divisional representative
Europe
Divisional representative
AMEA
Divisional representative
Business unit managers
Business unit managers
Business unit managers
Function heads
Function heads
Function heads
Team Planet
Team Planet
Team Planet
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Keller Group plc Annual Report and Accounts 2023
Strategy
The long-term success of the Group’s business depends on actively
assessing, analysing and managing the potential impacts of climate-
related risks, and adapting our operations to take advantage of
opportunities, in order to create a strong position in the transition to a
low-carbon economy.
As a business which provides a wide variety of services across multiple
geographies, Keller is exposed to a variety of impacts from climate
change across the short, medium and long term. Across different
potential climate scenarios, different areas of the business face more
pronounced physical risks as a consequence of global temperature rise
and extreme weather events, increased transition risks from regulation,
and transition opportunities afforded by the requirement for lower-
carbon solutions and climate adaptation.
To navigate our CRROs, and to ensure that business units are best
equipped to lead and deliver appropriate climate mitigation, we have
developed an internal climate-related risk register owned at the business
unit level. CRROs are evaluated at the business unit level and fed back
to the Group, where a consolidated view on their relative severity is
produced. Details on each of these CRROs and Keller’s management
of them is provided in detail in the table on pages 54 to 56. In 2023, we
expanded the scope and depth of our quantitative climate scenario
analysis, which produced more advanced insights into the impacts of
climate change on our business. Details on how we conducted scenario
analysis are provided overleaf.
Based on the outputs of our climate-related risk register, and from
scenario analysis, even the climate-related risks which are judged to pose
the greatest risk are not deemed material to the business. However,
taken together, climate-related risks are judged to represent a significant
risk, and climate change is therefore considered a principal risk to the
business. In order to reflect this in our financial planning, climate-related
risk is built into the viability statement sensitivity analysis, which looks
out over a three-year period. The full viability statement can be found
on page 39.
Time horizons for the impacts of CRROs have been defined as follows:
• Short term:
• Medium term:
• Long term:
1 year
2–5 years
6–30 years
These divisions take into consideration both business cycles and the
long-term time horizons relevant to physical climate risk. The short-
term risk is defined as one year in recognition of the short-term nature
of the majority of our projects, which are typically bid for, won and
executed within one year. The medium term aligns with the business
planning horizons used for the viability statement. The long term
aligns to publicly available climate projections, which extend to 2050,
and which provided the time range for our scenario analysis. These
timeframes are also recognised by CDP as consistent with current
best practices for TCFD disclosures.
Scenario analysis
In 2023, we advanced our quantitative scenario analysis in order to
better evaluate the Group’s CRROs. We built on our analysis from
2022, and included new CRROs, a wider geographical scope, and more
sophisticated modelling of our risks.
As the impact on the Group from CRROs varies greatly across our
different geographies, we have focused analysis on areas where the
relevant risks were most severe, as determined by our qualitative
assessment. Physical risk was modelled for our North America (NA)
and Australian divisions, and transition risk was modelled for our
Europe Division.
As we currently face more impacts from weather events in NA and
Australia than we do in Europe, we chose to focus our physical analysis
initially on these regions. Conversely, since regulations on carbon and
emissions are currently at a more advanced stage in Europe than in NA
and AMEA, we chose to focus our transition analysis initially on Europe.
Our scenario analysis modelling has been established in a way that is
replicable annually, so that the Group can see how impacts are changing
on an ongoing basis. As the sophistication of climate science, availability
of data, and clarity around regulation all increase, we expect to enhance
the completeness and accuracy of our scenario analysis. We also expect
future analysis to be able to inform in greater detail our strategies for
mitigating risk and capturing opportunity, and to help us know where our
efforts should be focused when addressing CRROs.
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Scenario analysis continued
In 2022, we assessed the risk of the increased cost of raw materials, and the accompanying opportunity for low-carbon solutions, in the pilot location
of Austria. This year, a new transition risk has been addressed, regulation of existing products and services, which has been addressed by modelling the
risk of stranded rig assets in Europe as a result of incoming regulation. Physical risk modelling was expanded to the entire North America (NA) Division
and Australia, with the scope of weather perils expanded from hurricanes to also include precipitation, extreme heat and wildfires.
The table below gives details on the CRROs which have been subject to scenario analysis, including the scenarios used for each.
Physical risk
Division
NA (US and Canada)
Australia
Transition risk
Europe
Risks and
opportunities
modelled
Hurricanes, precipitation, extreme
heat and wildfires
Low-carbon solutions
Cost of raw materials
Regulation of existing products and services
Time period
2022–2050
2022–2050
Warming
scenarios
Physical scenarios informed by the IPCC:
Transition scenarios informed by the IEA. London Electrification
Scenario is a scenario created for the modelling, which follows London’s
Non-Road Mobile Machinery (NRMM) decarbonisation rules.
SSP2-4.5
Average 2.7°C rise by 2100
Net Zero Emissions (NZE)
Average 1.5°C
SSP5-8.5
Average 4.4°C rise by 2100
Announced Pledges Scenario (APS) Average 1.7°C
Stated Policies Scenario (STEPS)
Average 2.5°C
London Electrification Scenario
Only zero emission machinery
is allowed in operation from
2040 onwards.
Financial impacts
2030
2050
SSP2-4.5
SSP5-8.5
SSP2-4.5
SSP5-8.5
Impact of physical risk on operations in NA and
Australia (% impact to total global revenue)
Impact of physical risk on operations in NA
(% impact to total global revenue)
Impact of physical risk on operations in
Australia (% impact to total global revenue)
1.7%
1.5%
0.2%
4.3%
3.9%
0.3%
2.6%
2.4%
0.2%
6.4%
6.0%
0.4%
Total value of rigs which become stranded
assets in the year (% of total net book value
of the rig fleet in Europe)
2030
2040
London
London
Electrification NZE
APS
STEPS
Electrification NZE
APS
STEPS
10.3%
0%
0%
0%
2.8%
0%
0%
0%
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TCFD statement continued
Strategy
Scenario analysis: Physical risk
NA and Australia
Risk: Impact on projects from hurricanes, precipitation, heat and wildfires
Selection
Impact from acute weather risks is identified as a medium risk across our
three divisions, with chronic risks being identified as a high risk for our NA
and AMEA divisions. The Group already experiences impacts to projects
as a result of extreme weather in these locations.
Approach
We are impacted by weather through disruptions to our projects, which
cause days of delay and repair costs. We made assumptions around
the days of operational disruption and associated costs from each
event type, and then used these figures to model revenue impact. For
hurricanes, we used existing hurricane models applied to an earth climate
model, and then assumed a radius of impact from forecasted hurricanes.
For extreme heat, we modelled disrupted days at 35–40°C and 40°C+.
For precipitation, 20–50mm days and >50mm days. For wildfire, we
modelled high fire weather index (FWI) days as representative of an
average likelihood of wildfires.
Climate scenarios were informed by the IPCC’s Representative
Concentration Pathways (RCPs). Both scenarios were assessed out
to 2050.
Assumptions
•
Impacts to future projects were modelled using current project
locations. This assumes that the general locations of our operations
will not change greatly.
• The financial impact from lost workdays was modelled using an
average days’ delay from each weather event, and average repair
costs following events.
Results
The Group faces limited exposure to climate-related physical risk. The
total potential financial impact of all combined physical risks is set to
be c5% of projected total revenue in 2050, on average between the
modelled scenarios. This is an unabated figure, which assumes that the
Group takes no action to address these risks. Extreme heat has emerged
as the greatest risk of the four modelled, accounting for 46% of the total
predicted revenue impact, and Florida stands out as the state facing
the greatest impact, given its high revenue generation and its current
exposure to climate risks.
Response
In order to better quantify and control our impacts from extreme
weather, we will aim to track actual days’ delay across operational sites,
and improve our systems for collecting costs from delays and mitigating
activities. We will be reassessing our health and safety policies for heat,
particularly in more highly affected regions such as Florida, in order to
set clearer limits on when work can continue and when to delay, and
to provide greater understanding of what potential future financial
impacts are.
We will reassess our contracting terms in order to implement
greater consistency around the liability which the Group takes for
weather impacts.
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Scenario analysis: Transition risk
Europe
Risk: Stranded rig assets as a result of regulations
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Selection
As our rigs, which are defined as NRMMs, emit greenhouse gases and
particulates, they may in future be subject to regulation which prevents
their usage unless they are below a certain requirement for emissions, or
are zero emissions (ie electric). The Group already faces some limitations
on higher-emissions rigs being used in certain projects in cities in Europe.
Therefore, a fourth scenario was created, titled ‘London Electrification’,
which was based on London’s more stringent rules for NRMMs. London
is one of the few cities in Europe with a specific policy around the
phasing-out of high-emission NRMMs. In accordance with London policy,
this scenario assumed that only zero emission machinery (ie electric rigs)
will be allowed by 2040.
Impacts from this risk are identified as medium in Europe and NA, and low
in AMEA.
Approach
IEA scenarios were each taken to represent a different speed of phase-
out of rigs, which were informed by emissions reduction trajectories from
the IEA’s World Energy Outlook 2023, using the ‘Heavy duty vehicles’
pathway as an approximation for NRMMs. The EU has also instated
regulation which defines emission limits for NRMM engines which can be
sold in the EU. While this does not directly affect rigs which can be used,
this regulation informed our approach.
These scenarios (NZE, APS, and STEPS) were used to define when rigs
of different emission stages in our fleet would become stranded assets.
Assumptions were also applied to each scenario about the rate at which
Keller would transition its fleet to lower-emission and electric rigs. The
speed of the assumed transition was correlated to the stringency of the
scenario, with less rapid fleet transitions assumed for warmer scenarios
with less stringent regulation.
However, as the IEA’s pathways take a global perspective, they were
ultimately less ambitious than what we expect for Europe. We found
that no financial impacts were observed for even the most stringent
scenario, NZE.
Assumptions
• An average lifespan was assumed for rigs, after which they would be
replaced with a newly purchased rig. Depending on the scenario, the
new rigs purchased were categorised as electric and/or the most
efficient engine type.
• The IEA’s heavy-duty transport emissions reductions trajectory was
used to inform emissions reductions for NRMMs.
Results
The Group is unlikely to face stranded rig assets in Europe in any of the
IEA scenarios. In these scenarios, the rate at which older rigs in the fleet
are replaced with lower and zero-emissions rigs means that by the time
regulations come into force, Keller’s fleet is already compliant.
However, in the London Electrification scenario, Keller will have to impair
rigs in its fleet equivalent to 2.8% of the net book value of the fleet,
by 2040. This is the strictest scenario, and we believe it is unlikely that
regulations equivalent to the strictness of London’s NRMM regulations
will be applied across Europe. We therefore consider the likelihood of the
London Electrification scenario to be low, and for the risk of it occurring
to therefore be minimal. However, it may be the case that similar
restrictions are applied in urban areas in Europe, where many of our
projects are located.
Response
We will incorporate emissions and regulation considerations into our
capex plan for future rig purchases, informed by potential timelines for
regulation. This plan will aim to support the replacement of older rigs with
lower and zero-emissions rigs, so that these have been replaced by when
regulations come into effect.
Our rig decarbonisation strategy, which involves us trialling and
implementing alternative equipment in our projects, helps us to address
potential future requirements. In 2023, we trialled electric rigs for the
first time, and aim to expand our use of this zero-emission equipment
in the future. Already, all the rigs we produced in 2022 were electric,
electrohydraulic, or had ‘stage 5’ engines, the lowest emissions tier.
Further information on our actions can be found in the table of our
CRROs on page 54. More detail on our decarbonisation strategy can
be found on page 63.
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TCFD statement continued
Strategy
Keller’s CRROs and strategic responses
Austria
Risk: Cost of raw materials
Opportunity: Low-carbon solutions
For details on these CRROs and the approach taken, please refer to Keller’s 2022 Annual Report and Accounts.
Results
The risk associated with the cost of raw materials, and the accompanying opportunity of the potential for low carbon solutions, are likely to impact
the Group most significantly in the NZE scenario. This is mainly driven by greater stringency of climate regulation, including carbon pricing. Outputs
showed that exposure to elevated carbon pricing is not entirely offset by the decarbonisation rate of materials, even in an NZE scenario. However, the
direct financial impact arising from this is likely to be minimal, given that the cost of materials is embedded into the contracting process. In addition to
risk, opportunities were also highlighted, including Keller’s ability to offer lower carbon solutions to clients for equivalent services. The findings around
indirect financial impacts and opportunities will apply to all other European locations since the regulatory frameworks are the same. For other business
units such as the UK, the impacts will be very similar to Europe’s, due to legislative equivalences.
Response
We will continue to test where low-carbon product lines are feasible within our service offerings, and continue to test the use of low-carbon materials
within existing product lines.
We are training all engineers in the use of the sector standard carbon calculator to enable them to determine and offer low-carbon solutions. This
carbon calculator has been embedded into our estimating spreadsheets in key markets, enabling us to demonstrate the carbon savings of different
solutions to clients.
In 2023, we held a low-carbon cement workshop with representatives from across the Group. As an outcome, we outlined short, medium and long-
term actions needed to help decarbonise our project designs and supply chain emissions. These factored in the need for many different functions to
get involved, from tailoring our communication about the embodied carbon of our materials to different stakeholders, through to specific materials for
future research and development and the engagement of key suppliers. The short-term initiatives were written in to personal and Group-wide leading
targets to achieve in 2024.
Resilience of strategy
The ‘Results’ and ‘Response’ parts of the above scenario analysis section provide assessments of the likely impact on our business, and our responses
to improve resilience. Overall, we consider the business’ strategy to be resilient to the impacts of the CRROs which were subject to scenario analysis,
taking into account the availability of activities we can take and are currently taking to respond to risks and capture opportunities, along with the
relatively low financial impacts modelled. Ongoing assessment of climate related risks and successive scenario analysis exercises will be used to
continually evaluate the resilience of our strategy going forward.
The table below describes the potential impact of the CRROs judged to be most significant for the Group, and our strategic response to these CRROs.
This prioritisation has been based on our exposure to the risk or opportunity, which is given by business division, and the time horizon we anticipate
impacts to take effect over. It also provides Keller’s strategic response to either mitigate risk or capture opportunity.
The strategic responses detailed in the table below intend to build operational and regulatory resilience to climate change, to support the continued
resilience of our strategy.
The risk categories (Low/Medium/High) given in this statement for CRROs refer to residual risk rather than raw risk, and factor in mitigations, as
described in the table below. As this is a different presentation of risk to last year’s TCFD statement, the risk categories for each CRRO have changed
and are lower in most instances as they now factor in mitigations.
Projected impacts expected to not be significant
Impacts judged not to be significant once mitigating actions are considered
Impacts judged to be significant even with mitigating actions considered
Low-carbon solutions
CRRO type
TCFD category
Transition opportunity
Products and services
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Capture and retain market share as carbon intensity of products grows in importance as a market differentiator.
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Strategic response
• Training our employees on the sector standard carbon calculator, to understand the current emissions of our solutions.
• Offering carbon comparisons when tendering large alternative solutions, to upsell the low carbon solution.
• Created a sustainability brochure and various case studies to share with customers, highlighting our lower carbon solutions.
Climate adaptation solutions
CRRO type
TCFD category
Transition opportunity
Products and services
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
The Group could see rising demand for geotechnical expertise to ensure robustness of new and existing structures to climate-related
extreme weather events, in addition to infrastructure specifically designed to reduce climate-related impacts.
Strategic response
• The breadth of expertise across the Group means we are already well positioned for many existing resilience and retrofit projects.
• The short-term nature of most projects means we can pivot easily to new markets.
• We already have the ability to treat desertification or work on adaptation, resilience and mitigation projects, such as dams and flood defences.
Regulation of existing products and services1
CRRO type
TCFD category
Transition risk
Policy and legal
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Potential for indirect impact should costs rise for clients to a prohibitive level. Potential capex investment required to meet regulatory
requirements, and potential for stranded assets if regulation makes higher-emitting rigs unusable in certain markets.
Strategic response
• Our rig decarbonisation strategy sets out our response to this risk. This has three main steps to decarbonisation: efficiency, alternative
fuels and alternative equipment.
• On alternative equipment, 2023 saw us trial electric rigs for the first time. Based on the lessons learnt from these trials, we aim to expand
our use of electric equipment in the future. All the rigs we produced in 2022 were electric, electrohydraulic or fitted with the latest
anti-idling software and low emission tier 5 engines. For more information, please see page 66.
• On alternative fuels, in 2023 we allocated a £100,000 budget to encourage the use of HVO biofuel from certified waste stocks. After
successful trials in multiple business units, we can now offer biofuels to our clients as a way to decarbonise our existing site equipment.
• On efficiency improvements, we have collated case studies from around the group on how to save carbon on site. These range from
right-sizing equipment through to site set-up changes. For more information, please see page 66.
• We continue to Collaborate with our trade associations to understand upcoming legislation and support engagement with legislators.
1 This CRRO has been renamed this year from ‘carbon or air pollution regulation on fuel for operational projects’, but addresses the same risk.
Cost of carbon-intensive materials
CRRO type
TCFD category
Transition risk
Policy and legal
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Pricing remains embedded within contracting process; however, there is potential for reduced overall demand because of cost increases.
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Strategy
Keller’s CRROs and strategic responses continued
Cost of carbon-intensive materials continued
Strategic response
• Upsell our existing low carbon solutions, particularly our cement and steel-free ground improvement solutions.
•
Innovation focused on decarbonising our most carbon intensive solutions. Recent innovations include reusing spoil in jet grouting
solutions and reducing spoil volumes with the use of filter chamber presses and centrifuges.
• Short project lead-in times mean we have generally been successful at passing on material price inflation to our customers.
Lack of monitoring/transparency of Scope 3 emissions and enhanced carbon reporting
CRRO type
TCFD category
Transition risk
Reputation
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Potential for loss of market share if clients require transparency in, and associated reductions of, Scope 3 emissions, although most clients have
not yet enquired about Scope 3 emissions. In addition, potential for loss of suppliers if requirements become too burdensome for SME operators.
Strategic response
• We are working to embed automatic Scope 3 calculations in our ERP programme development.
• We are conducting a business unit trial in Austria to calculate business unit-wide material Scope 3 emissions.
• Collaborate with industry trade associations to request emissions data from suppliers and set minimum carbon reporting standards.
Storms, flooding, wildfire, extreme heat and extreme precipitation delaying operational projects
CRRO type
TCFD category
Physical risk
Physical acute
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Delays to projects and accompanying impact to revenue from delay costs, opportunity costs, and repair costs for projects.
Strategic response
Integrate financial contingencies into project planning in areas with a higher risk of being impacted by extreme weather events.
•
• Continuously improve best practice guidance regarding preparation, shut down, and recovery from storm related events.
Hot weather and heavy precipitation delaying operational projects,
and rising sea levels increasing risk of coastal flooding
CRRO type
TCFD category
Physical risk
Physical chronic
Short
NA
AMEA
EU
Time horizons
Medium
NA
AMEA
EU
Long
NA
AMEA
EU
Description
Delays to projects and accompany impact to revenue from delay costs, opportunity costs, and repair costs for projects. For heat,
this includes costs for cooling solutions.
Strategic response
• Consider shifting work patterns to avoid high heat during the day, or during certain periods of the year (eg to avoid monsoon rains or
wildfire seasons).
Integrate financial contingencies into project planning.
•
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Risk Management
Our processes for identifying and assessing climate-related risks
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CRROs are assessed as part of the Group’s risk governance framework, which has been built to identify, evaluate, analyse and mitigate significant risks
CRROs are assessed as part of the Group’s risk governance framework, which has been built to identify, evaluate, analyse and mitigate significant risks
to the achievement of our strategy. The strategy for risk embeds processes that seek to identify risks from both a top-down strategic perspective at
to the achievement of our strategy. The strategy for risk embeds processes that seek to identify risks from both a top-down strategic perspective at
Group level and a bottom-up local operational and business unit level, in order to ensure a consolidated view of risk. This is all managed within our new
Group level and a bottom-up local operational and business unit level, in order to ensure a consolidated view of risk. This is all managed within our new
Governance, Risk and Compliance (GRC) tool, which was deployed in Q4 2023. Climate change has been established as a principal strategic risk, and
Governance, Risk and Compliance (GRC) tool, which was deployed in Q4 2023. Climate change has been established as a principal strategic risk, and
the Sustainability Steering Committee has been made responsible for integrating sustainability targets and measures into the Group business plan.
the Sustainability Steering Committee has been made responsible for integrating sustainability targets and measures into the Group business plan.
Our process for managing climate-related risks
The significance, size and scope of identified climate-related risks is determined through the same processes that are applied to other risks identified
by the Group. Risks are initially identified and assessed at business unit or functional level, and reported to the Group Head of Risk and Internal Audit
and the Executive Committee, and in turn to the Board and the Audit and Risk Committee. Business unit leads are then assigned CRROs relevant
to their own geography and services which they are made responsible for. CRROs are evaluated for their velocity, probability, potential financial and
reputational impact, and assigned an overall quantitative score of severity of risk, that is then consolidated at Group level to produce a qualitative view
of the relative severity of CRRO risk by geography. The CRROs are assessed in consideration of their associated mitigating activities, and the impacts
are then determined on a residual risk basis. This is reflected in the CRRO table above. The outputs of the scenario analysis are also used to inform our
risk assessment of how CRROs impact our business. As we increase the number of CRROs subject to scenario analysis, this exercise will more closely
inform our overall assessment of the impacts of climate risk.
Regular risk reviews are conducted within our business units and functions facilitated by our Group Head of Risk and Internal Audit. The methodology
used to identify the materiality of CRROs can be found in the Strategy section of this statement, including a full list of CRROs. Climate change-related
risks are assessed as part of the risk governance framework in the same way as other risks, including decisions on how to mitigate, accept, and manage
risks. The full risk governance framework, including an overview of our risk management processes, can be found on page 36 in the Principal Risks and
Uncertainties section.
Potential impacts from existing and emerging regulatory requirements relating to climate change in our divisions were addressed through our scenario
analysis work, which can be found in the Strategy section of this statement.
Metrics and Targets
Our metrics for assessing CRROs
This year, we have expanded the metrics we use to assess our CRROs.
Our newly implemented ERP assists us with collecting and reporting
these metrics at a Group level. We are aiming to continue to expand the
metrics we collect and report on, so that all of our CRROs are tied to
cross-industry metrics.
CDP score: B (2022: B)
CDP is a third-party disclosure system which assesses the quality of
our TCFD disclosure. This provides overarching metrics to help us
consider our progress against the risk of not being able to meet the
reporting standards of clients. This score can be compared with the
construction sector, and with all other companies reporting through CDP.
Percentage of revenue from water storage
and flood control projects, and from non-fossil
fuel based power generation: 3% (2022: 2%)
This metric can be used to track the project opportunities arising from
climate change and the transition to a low-carbon economy. In terms of
opportunities arising from the physical impacts of climate change, this
includes flood defence projects and projects that help to secure water
supplies. In terms of opportunities arising from a transitioning energy
system, this includes renewable energy generation projects.
Investment into sustainability-focused
research and development: £0.3m (2022: £0.2m)
This total includes our spend on HVO fuel trials, KGS KB0-E spend, and
other university projects in Europe, North America and AMEA.
The Remuneration Committee agreed a Scope 2 reduction target as one
of management’s corporate objectives linked to remuneration for 2023.
More detail on this objective and remuneration outcome is available in
the Directors’ remuneration report on page 136.
For quantitative disclosures concerning our energy usage, please see our
Streamlined Energy and Carbon Reporting (SECR) statement on page 65.
These metrics address some of our most material CRROs. We are
working to develop other metrics to address our remaining CRROs. We
are also working to develop quantitative metrics to address water and
waste management. Qualitative disclosures on water and waste, as well
as on other environmental topics, can be found on page 68 of this report.
We do not currently use an internal carbon price.
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Keller Group plc Annual Report and Accounts 2023
58
TCFD statement continued
Metrics and Targets continued
GHG emissions reporting
The Group discloses Scope 1 and Scope 2 carbon emissions to ISO
14064-3 Standard, and are calculated using the GHG protocol standard.
Independent verification is provided by Accenture. Our Scope 1 and 2
emissions are provided on page 65 as part of our Streamlined Energy
and Carbon Reporting (SECR). These emissions are recorded both in
absolute terms, as well as relative to revenue to show the carbon intensity
of our operations.
For Scope 3 emissions, to reflect where we believe we can have the
most near-term impact, we currently only have a net zero target set
for our Operational Scope 3 emissions. This covers business travel,
transportation of materials, and waste disposal. Scope 3 calculation and
reporting will be included as part of the new ERP program.
Calculating emissions for other Scope 3 categories, including for our
materials, poses challenges due to the complexity of our supply network
and our high number of small suppliers. Progress towards calculating
further Scope 3 categories was made in our European BU this year,
where initial work on calculating our Scope 3 emissions for materials was
expanded on a trial basis to the full BU, providing a guiding approaching
for this category and others as we build on the completeness of our
calculations. As part of the development of our ERP, we are working with
procurement teams to ensure Scope 3 data can be calculated at the
invoicing stage, rather than relying on manual data entry at site level.
Further details on our decarbonisation work and Scope 3 can be found
on page 67.
Details on our approach, including how we train engineers in calculating
and reducing carbon in our projects, can be found on page 67.
The Group has targets for all three scopes, which are calculated
according to the GHG protocol and are in compliance with SECR
requirements.
These absolute targets assist the Group in mitigating future climate
related risks and in recognising climate-related opportunities. All targets
use a 2019 baseline where available.
Scope 1 – Net zero by 2040
Scope 1 carbon intensity target of a 35% reduction in tCO2e/£m revenue
for 2024 (against 2019 baseline). This 2024 target would result in a 5%
reduction in our carbon intensity from 2023.
Scope 2 – Net zero by 2030
Interim target of 50% reduction in absolute market-based emissions
for 2024 (against 2019 baseline). This 2024 target would result in a 10%
reduction from 2023.
Operational Scope 3 – Net zero by 2050
Operational Scope 3 includes business travel, material transport and
waste disposal.
In order to achieve these targets, we have set multiple internal leading
targets built around our carbon hierarchy, which is detailed on page
64. Once we have worked through this hierarchy to eliminate, reduce
and substitute emissions, we may offset our remaining emissions as a
last resort.
We also specify multiple leading targets under each absolute target, to
help achieve each net zero target. These range from conducting energy
efficiency audits in our offices and yards, through to conducting specific
carbon reduction site trials and training our engineers on the sector
standard carbon calculator.
For more information on the Group’s emissions and associated targets,
please see pages 63 to 67.
Compliance Table
We consider disclosures in the above Statement to be consistent with TCFD recommendations, except in the following areas:
Disclosure not provided
Detail
Expected timeframe for compliance
Metrics and Targets a) Disclose the metrics
used by the organization to assess
climate-related risks and opportunities in
line with its strategy and risk management
process.
While we have published cross-industry
metrics as described in Table A2.1 of the
TCFD implementation guidance, we do not
have a complete list for all material CRROs.
Furthermore, we have qualitative
information available on water and waste,
but not quantitative metrics.
We also recognise that the TCFD
recommendations encourage the
disclosure of Scope 3 emissions and we
have published our operational Scope 3
emissions and target.
We expect to add additional metrics for our
CRROs next year.
For metrics and targets concerning water
and waste management, establishing these
will be subject to a materiality assessment
to determine if these topics are material to
us, which we will undertake in 2024. If
determined to be material, we would work
on developing appropriate metrics and
targets for these topics.
We are actively working on improving the
scope and quality of the Scope 3 categories
we calculate and disclose, with the aim of
publishing our full Scope 3 emissions in
future. Scope 3 calculation and reporting
will be included as part of our upcoming ERP
programme.
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ESG and sustainability
Keller Group plc Annual Report and Accounts 2023
ESG and sustainability
59
Peter Hill CBE
Chairman
We have met our short-term
carbon targets and are well on
track to achieve our longer-term
net zero commitments.”
Our corporate purpose, ‘Building the foundations for
a sustainable future’, is at the heart of everything
we do. I am the Director responsible for ESG and
sustainability on the Board and I believe strongly in
Keller’s commitment to the best achievable standards.
I have a strong desire to make a positive change.
As the world’s largest geotechnical specialist contractor, we have the
responsibility and opportunity to make a difference to our customers
and society and to help drive a low carbon future. We are committed to
reducing the carbon intensity of our work and have set out clear targets
and action plans for our journey to net zero. We set our first-ever net
zero targets during 2021, to be net zero by 2050, and I am able to report
good progress against this key priority. We have met our short-term
carbon targets and are well on track to achieve our longer-term net
zero commitments.
Our people’s safety, health and wellbeing is at the heart of everything
we do. At Keller we view safety as our bedrock, something on which
we do not compromise. We have made good progress in improving the
scores in our leading indicators, targeting continuous improvement in
our Accident Frequency Rate (AFR) and Total Recordable Incident Rate
(TRIR). In 2023, AFR remained at 0.10, with a total of 27 injuries reported
and TRIR improved to 0.60, with 26 fewer injuries recorded. Despite
achieving industry-leading figures in this area, we recognise the need to
continually improve and we will not be satisfied until we eradicate harm in
the workplace.
Keller’s Inclusion Commitments bring together what we are doing across
Keller to build a more diverse, equitable and inclusive workplace. During
2023, we introduced a new Inclusive Site Culture standard to enhance
our culture at site, ensuring employees are not only physically safe, but
feel psychologically safe, included and respected through measures
such as inclusive personal protective equipment, and making reasonable
accommodations for different cultural and religious identities.
Due to the breadth of our operations, including geographies and industry
sectors, we recognise that we need to be vigilant to the risk of slavery
in our supply chains. During 2023, the Board engaged outside legal
counsel to review its approach to managing the risks associated with
human rights in its operations and is taking proactive steps to drive
awareness and compliance with our standards through the business and
in our supply chain. For further information, please refer to our Modern
Slavery and Human Trafficking Statement for the financial year ended
31 December 2023, which is available on our website.
The Board continued to receive quarterly reports on all ESG initiatives
and deliverables from the Group Company Secretary and Legal Advisor,
assuring a clear reporting line on all ESG matters to me and to my fellow
Board members.
I would like to thank everyone at Keller for their continued commitment
to our ESG and sustainability agenda.
Peter Hill CBE
Chairman
Approved by the Board of Directors and authorised for issue on
4 March 2024
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Keller Group plc Annual Report and Accounts 2023
ESG and sustainability
Our role in building the foundations for a sustainable future
Keller’s four Ps
Planet
We are helping to build a sustainable future
by using less resources, reducing carbon
emissions and reducing waste across
our operations. We have a positive role in
supporting our local communities, improving
the environment and wider society.
Profitable projects
We 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.
For more information see page 62
People
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.
For more information see page 69
GLOBAL INITIATIVES
Carbon reduction
We are committed to reducing the
carbon intensity of our work and
increasing the quality and granularity
of our carbon reporting.
See page 63
KPI performance
CDP score
2023
2022
B
B
Absolute tonnes of
CO2e per £m revenue
2023
59
2022
74
GLOBAL INITIATIVES
Safety
We are committed to improving the
safety and lives of our workforce through
the implementation of highly effective,
usable programs. We take time to provide
assurance that our processes work;
for us it is a value, something that we
do not compromise.
See page 74
KPIs performance
Accident frequency
rate, per 100,000
hours worked
Total recordable incident
rate, per 200,000
hours worked
2023
0.10
2022
0.10
2023
0.60
2022
0.79
GLOBAL INITIATIVES
Principles
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 page 79
Good governance
We have 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.
See page 80
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Keller Group plc Annual Report and Accounts 2023
LOCAL INITIATIVES
Resource use and
waste reduction
We continue to develop
our solutions, processes
and innovations to improve
our impact on the circular
economy.
Tackling
pollution
We offer solutions to
remediate contaminated
ground and operate
in a way to mitigate
environmental incidences.
Clean water
and sanitation
We offer solutions to
reduce water use and
avoid pollution, with a
track record of working on
water-related projects.
See page 68
See page 68
See page 68
GLOBAL INITIATIVES
LOCAL INITIATIVES
Wider DEI
Our Inclusion
Commitments bring
together what we are
doing across Keller to build
a more diverse, equitable
and inclusive workplace.
While gender equality and
empowerment remains a
priority, we recognise and
embrace the broadest
definition of diversity.
See page 70
Gender equality
Gender equality and empowerment
is a UN Sustainable Development Goal
we have committed to progressing.
See page 70
Quality education
We are passionate about
investing in our people and
creating an environment
of continuous learning,
empowerment and
inclusivity.
Good health
and wellbeing
With strong wellbeing
foundations, we can keep
our business resilient
and achieve sustainable
success.
See page 77
See page 75
KPI performance
Women
in senior
leadership (%)
Women
engineers (%)
Women engineering
graduates and
apprenticeships (%)
2023
2022
2023
2022
2023
2022
20% 22%
17% 16%
25% 7%
LOCAL INITIATIVES
Partnerships
We partner with ‘like-minded’ organisations
to drive change in our organisation and the
wider geotechnical industry.
See page 81
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Keller Group plc Annual Report and Accounts 2023
Keller Group plc Annual Report and Accounts 2023
ESG and sustainability continued
Planet
We are helping to build a sustainable
future by using less resources, reducing
carbon emissions and reducing waste
across our operations. We have a positive
role in supporting our local communities,
improving the environment and
wider society.
t
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Global priorities
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Carbon reduction
Keller has net zero targets which
cover our direct emissions (Scope
1), our indirect emissions from
electricity use (Scope 2) and
emissions from business travel,
waste disposal and material
transport (Scope 3 Operational).
These targets represent Keller’s
commitment to the planet as
we build the foundations for a
sustainable future.
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. These targets and our current
performance are set out in the following section.
The timeframe and lagging targets we set for
each net zero commitment reflect the size and
the level of control we have over each emission
scope (see below). To achieve these targets, we
have set multiple internal leading targets, built
around the carbon hierarchy (see right).
This explains that, after we work through the
hierarchy to eliminate, reduce and substitute
emissions, we may offset our remaining
emissions as a last resort.
Scope
Net zero target
More information
1
2
31
Net zero by 2040
Page 66
Net zero by 2030
Page 67
Net zero by 2050
Page 67
1 Operational.
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
Protecting
NYC from
future floods
In the US, New York City was one of the places
worst hit. The devastation prompted the city
to urgently review its ability to cope with storm
surges and rising sea levels exacerbated by
climate change, leading to the launch of the
$1.2bn East Side Coastal Resiliency (ESCR)
project.
Keller has played an integral role in
a major project to raise part of New
York’s coastline and reduce the risk
of disastrous floods.
ESCR is the first step in the city’s plan to
protect Lower Manhattan and will create a 2.4-
mile flood-protection system with new walls
and gates, improved drainage and an elevated,
reconstructed East River Park.
Hurricane Sandy was the largest Atlantic
hurricane on record, killing over 230 people in
eight countries and causing $70bn in damage.
It’s this ambitious 10ft elevation where Keller
has played a key role, constructing around
2,500 aggregate piers to improve the soft
coastal soils and enable redevelopment – the
success of which led to us being awarded a
second phase of 500 micropiles.
Ready to play our part
“This has been a hugely significant project in
terms of its size, complexity and the impact
it will have on millions of people,” says David
Finocchio, Business Development Executive.
“Coastal resiliency is a massive, growing
market of strategic importance to Keller,
particularly here in the US Northeast.
“As leaders in our industry, we understand the
responsibility we have to use our expertise and
resources to support these kinds of projects.
“There’s no doubt that many more large
infrastructure programmes will be required in
the US as the threat from climate change and
extreme weather increases. And when they
are, Keller will be ready to play its part.”
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Keller Group plc Annual Report and Accounts 2023
ESG and sustainability continued
Planet
The carbon hierarchy
Eliminate emissions completely
eg eliminate concrete, cement and steel,
Teams instead of travel
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’)
First carbon-
neutral excavation
pit and foundations
in Germany
Eliminate
Reduce
Substitute
Compensate
We’re driving a greener
construction industry by
helping our clients reduce the
environmental impact of their
projects through optimised
designs, more sustainable materials
and alternative power sources.
One such project is Hafenpark Quartier Offices,
part of a landmark mixed-use development
close to the European Central Bank, featuring
luxury apartments, an office tower, hotels
and conference facilities. The client, B&L Real
Estate, wanted the project to have the first
carbon-neutral excavation pit and foundations
in Germany and so chose Keller in part because
of our sustainability commitments.
“We started by taking the client’s initial design
for a secant retaining wall with cased CFA piling
and ground anchors, along with micropiling and
large-diameter foundation piles – then using
our carbon calculator to demonstrate its carbon
footprint,” says Eva Reiners, Site Engineer.
The calculator is an app we use not only to work
out the embodied CO2e from materials, but
also from machinery fuel use, transportation
of equipment and people, waste disposal, site
electricity and more. It follows the sector-
standard approach of the European Federation
of Foundation Contractors and Deep
Foundations Institute.
The Keller team was able to make other
environmental improvements by changing
suppliers to reduce transport distances for
materials and waste, using an electric concrete
mixer and, at times, operating plant fuelled
with hydrotreated vegetable oil. A solar panel
was also set up to power the construction site
facilities.
“Taking the initial figures, our experts then
optimised and value engineered the design,”
she adds. “This meant we could reduce the
anchor layers required from three to two, by
using single bore multiple anchors (SBMA)
in the second layer, as well as switching to a
lower-carbon cement mix.”
Thanks to our efforts, we were able to reduce
emissions by 50% from B&L Real Estate’s
baseline. They can now build on those savings
to achieve full carbon neutrality through
investment in certified reforestation and other
compensation methods.”
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Keller Group plc Annual Report and Accounts 2023
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Overall performance
This year, Keller’s overall Scope 1 and 2 emissions decreased. This mostly
reflects a change in projects, with fewer carbon-intensive projects, like
bucket mixing environmental remediation. In terms of the carbon intensity
of our operations, emissions relative to revenue continued to fall and even
outpace inflation. This reflects the range of carbon reduction and efficiency
improvements implemented throughout the year (see pages 66 and 67),
as well as improvements in revenue. It also means that Keller’s total relative
emissions have either remained level or fallen every year since 2017.
Based on the data and information provided by Keller and the processes
and procedures conducted, Accenture 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.
Third-party assurance statement
At the request of the Director responsible for sustainability, Keller seeks
annual third-party verification of our emissions. This verification process is
compliant with the same consolidation rules as are applied to our financial
accounting. This is consistent with the approach used in the ISO 14040
series and reflects the impact we have on overall emissions in our entities.
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 Accenture. Their summary opinion is provided below (full
opinion and recommendations are available on request).
CDP
As in previous years, Keller disclosed our climate change 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 2023, we achieved a score of B. This is the same as in 2022, with Keller
remaining above the global average CDP score of a C. Since this CDP score
reflects our progress in 2022, the score does not include our progress
on quantitative climate scenario analysis and wider TCFD improvements.
These should be reflected in next year’s CDP score. For more on our climate
risks and opportunities and TCFD, see pages 48 to 58.
Overall performance and verification
Group
Energy use MWh
Scope 1 tonnes CO2e
Scope 2 (market-based) tonnes CO2e
Scope 2 (location-based) tonnes CO2e
Total Scope 1 and 2 (market-based) tonnes CO2e
Total Scope 1 and 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 and 2 (market-based) tonnes CO2e
Total Scope 1 and 2 (location-based) tonnes CO2e
Absolute tonnes of CO2e per £m revenue
Scope 3 business travel tonnes CO2e
2023
732,612
171,184
4,764
6,492
175,948
177,676
59
2023
18,022
4,202
0
105
4,202
4,307
34
974
2022
897,717
210,186
6,593
6,913
216,779
217,099
74
2022
20,673
4,790
0
117
4,790
4,907
38
721
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
691,074
169,216
7,091
7,094
176,307
176,310
85
2020
12,949
3,033
218
219
3,251
3,252
53
26
2019
811,881
198,289
9,159
207,448
90
2019
16,724
3,915
265
4,180
64
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 2023 and 2022 greenhouse gas emissions (tCO2e)
North America 2023
North America 2022
Europe 2023
Europe 2022
AMEA 2023
AMEA 2022
0
20,000
40,000
60,000
80,000
100,000
120,000
Equipment diesel consumption
Vehicle petrol consumption
Vehicle diesel consumption
Electricity consumption market-based
Oil consumption
Gas consumption
LPG consumption
Biofuels
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Keller Group plc Annual Report and Accounts 2023
ESG and sustainability continued
Planet
Scope 1: Direct emissions
Net zero by 2040
Scope 1 covers our direct emissions. These
mostly arise from the fuel use of our rigs and
Keller vehicles. Keller’s 2023 Scope 1 emissions
have decreased since 2022. Scope 1 fuel
emissions are highly dependent on the projects
completed annually. With fewer projects in the
US, as well as a drop off in our more carbon-
intensive bucket mixing projects, Keller’s overall
emissions have decreased.
More importantly, the carbon intensity of our
operations has decreased. This means we
have continually decreased or maintained our
Scope 1 emissions per £m revenue year on year
since 2017. This reduction in relative emissions
reflects a number of carbon reduction initiatives
that were introduced this year. All these initiatives
are needed to decouple our growing work from
absolute Scope 1 emissions. Our initiatives are
focused around the three stepping stones set
out in our equipment decarbonisation strategy:
efficiency improvements, alternative fuels and
alternative equipment.
In terms of efficiency, 2023 saw us collate
and share case studies on fuel savings from
across the Group. For example, ASEAN
conducted an initiative to compare actual
fuel use of generators with the expected
factory specification. This led to them
changing out the most fuel-intensive
generators for those that were more
efficient, saving fuel, carbon and money.
Other case studies focused on topics such
as right-sizing equipment for our projects, or
switching to smaller generators/grid electricity.
In terms of alternative fuels, in 2023 we set out a
specific budget to trial biofuels in more entities
across Europe and North America. This means
we can now offer certified biofuels to clients who
are willing to pay a premium for a lower carbon
project. These also represent a stepping stone
to decarbonise our existing equipment, before
we are able to switch to alternative equipment.
In terms of alternative equipment, at the half
year we announced the production of our first
electric rig, the KB0-E. This has successfully
been deployed in Austria. As well as decreased
emissions, the KB0-E has additional benefits to
being run off of mains power, including reduced
noise, fewer moving parts for maintenance and,
with no tailpipe emissions, an ability to use it in
confined spaces. We also hired two other plug-
in electric rigs for projects in Sweden, Norway
and Austria, for the same price as their diesel
equivalents. All the rigs we produced in 2023
were electrohydraulic or fitted with the latest
tier 5 engines.
Although most of our emissions come from
our rigs, our vehicle fleet is also a large source of
emissions. Therefore, in North America, where
vehicle emissions are largest, we introduced a
company car reward scheme for those choosing
electric and hybrid vehicles. In many of our
European business units, we continued to set
minimum car scheme requirements to improve
air quality and reduce emissions.
Absolute tonnes of CO2e
per £m revenue
e
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75
50
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2020
2021
2022
2023
Scope 1 tonnes CO2e
250,000
200,000
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100,000
50,000
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2019
2020
2021
2022
2023
Delivering
on our carbon
targets in India
Keller India has created its first net
zero Scope 2 yard after efficiency
improvements and solar panel
installation in Delhi.
In the first quarter after installation, the Delhi
system produced net-negative Scope 2
emissions. The success follows lessons learned
from the earlier installation of solar panels at
the Chennai yard.
When solar power generates more energy
than the yards need, the systems send the
excess to the grid.
Thanks to efficiency improvements reducing
their electricity demand, feed-in tariffs mean
Keller India saves thousands of pounds a year
on its energy bills, with a return on investment
forecast within a few years.
The maintenance yards contribute 30% of
the business unit’s Scope 2 emissions, which
includes all indirect emissions from purchased
energy. Combined, the solar panels in Keller
India’s Delhi and Chennai yards generate
74,000kW a year, saving around 51 tonnes of
CO2 equivalent (tCO2e) – the same as a petrol
car driving more than 200,000km.
Globally, Keller is committed to becoming net
zero for Scope 2 emissions by 2030. Keller
India is playing its part, reducing Scope 2
emissions from 246tCO2e in 2019 to 160tCO2e
in 2022. Together with other energy-saving
improvements, the solar panels will help bring
that figure down to zero by the end of the
decade.
Keller India has worked hard to
cut their emissions and create our
first net negative yard for Scope
2. Rather than simply switching
to a green energy tariff, they have
had to improve the efficiency of
their operations and invest in solar
panels for the future.”
Venu Raju
Engineering and Operations Director
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8,000
6,000
4,000
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2019
2020
2021
2022
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Keller Group plc Annual Report and Accounts 2023
Scope 2: Indirect emissions from electricity
Net zero by 2030
Scope 2 covers indirect emissions from the
electricity we use. These emissions are mostly
from office and maintenance yard operations,
although 2023 also saw our first large sites
run entirely from grid electricity. Nonetheless,
Scope 2 is still the smallest of Keller’s three
emission Scopes. Since these emissions do not
significantly vary with the number of projects
carried out, we only analyse absolute Scope
2 emissions. Location-based emissions are
dependent on the average carbon intensity
of energy generation in the countries in which
we operate. Market-based emissions use the
specific energy tariff for each of our offices and
maintenance yards and therefore captures green
energy tariffs.
This year, Keller linked leadership remuneration
to a 38% reduction in market-based Scope 2
emissions, based on our 2019 baseline year.
This target reflected a further 10% reduction on
2022. This was successfully achieved, with Keller
seeing a 48% reduction on our baseline.
This continued decrease demonstrates the
success of our Scope 2 decarbonisation
strategy. It also reflects the work of “Team
Planet” volunteers across Keller, taking steps to
improve their own offices, maintenance yards.
and sites.
Scope 3: All other indirect emissions
Most of these savings came from the work of
Suncoast, our specialist post-tension steel
specialist, which now represents approximately
a quarter of all the Group’s Scope 2 emissions.
Through efficiency improvements and switching
to green energy tariffs, they reduced their
emissions by nearly 1,000tCO2e in 2023. The
growing difference between location-based and
market-based Scope 2 emissions reflects how
some of our business units, particularly in North
America and Europe, are now procuring certified
renewable power electricity for the first time.
Where green tariffs are unavailable, such
as in much of AMEA, business units
focused on efficiency improvements and
generating their own electricity. For example,
in 2023, Keller India installed over 35kWh’s
worth of solar panels in their new Delhi yard;
when coupled with air conditioning and
lighting upgrades, this yard was net negative
for electricity use throughout the end of the
year, contributing more electricity to the local
grid than they consumed themselves. Austria,
Austral, Poland and the UK also all generated
their own renewable energy using solar panels.
Note all these efficiency initiatives come with
short or medium term payback periods.
Net zero for Operational Scope 3 by 2050
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 have set a net zero target for
Operational Scope 3. This covers business travel,
transportation of materials, and waste disposal.
UK Scope 3 business travel has continued to
increase since 2022, particularly as processes
have been centralised and Group Head Office
grows to incorporate the ERP team.
We do not currently calculate or disclose our
wider Scope 3 emissions. However, we continue
to develop our Scope 3 reporting to include the
rest of our Operational target, building these
transportation emissions into the upcoming
ERP system.
In the meantime though, we continue
to develop our Operational Scope 3
decarbonisation strategy. For our offices, this
means encouraging the use of video calls to
reduce the need to travel between offices.
For personal vehicles, we have introduced
air quality requirements, with North America
introducing financial incentives for employees
that choose electric or hybrid vehicles on the
company car scheme, On our sites, we also
have initiatives such as 5S and containerisation
to reduce the number of trucks needed to
mobilise and demobilise our equipment.
For Materials Scope 3, we used workshops
throughout 2023 to set out our short, medium
and long-term material decarbonisation
initiatives. Keller looks to reduce Materials Scope
3 emissions by designing ground improvement
solutions rather than heavy foundations
and optimising designs for less and lower-
carbon materials.
However, we are still dependent on our supply
network decarbonising their activities. Since
we work with local material suppliers on each
project, we have thousands of suppliers in our
value chain. Using many small suppliers for
individual projects means we lack leverage when
it comes to decarbonising our supply network.
Our approach to Materials Scope 3 is therefore
focused on creating the drivers to encourage
smaller suppliers to decarbonise, as well as
engaging with larger stakeholders to help drive
decarbonisation. For example, we are working
with our trade associations across Europe
and North America to collectively leverage our
supply network to drive decarbonisation. We
are also looking to form strategic partnerships
with larger suppliers to help decarbonise our
material emissions.
In terms of measuring all Scope 3 emissions,
we are integrating these into the upcoming ERP
project. This will also enable us to estimate a
range of other sustainability impacts from our
supply network. For now, as of 2023, we have
trained over 900 employees on the sector-
standard EFFC–DFI embodied carbon calculator.
This has enabled us to start proactively
monitoring our Scope 3 emissions on key
projects. More importantly, it also offers the
opportunity 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.
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Keller Group plc Annual Report and Accounts 2023
ESG and sustainability continued
Planet
Local priorities
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.
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.
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 been rolling out our
improved 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. More
details can be found in our biodiversity policy.
We recognise the large volumes of materials
used and produced on our sites, so we have a
number of projects to improve these impacts.
In 2023, we contributed to cross-sector
research and development of a circular
economy guide for geotechnical companies.
Critically, this shares good practices that all
geotechnical companies can adopt to improve
their impact on the circular economy. This will
help the whole sector understand their current
circular economy impacts and meet upcoming
legislation in this space.
Internally, 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.
More details on what we ask of our supply chain
in terms of waste reduction can be found in our
Supply Chain Code of Business Conduct.
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 and allow
the reuse of grout-filled spoil.
Whilst as subcontractors we have limited control
on biodiversity on site, multiple business units
continue to engage with local organisations
and wildlife trusts to promote local biodiversity.
Nonetheless, for our own operations on specific
projects, 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 are
engaging with our trade associations to highlight
upcoming legislation and best practices for the
geotechnical sector.
Water use
This year, we introduced a new local
initiative focused on water use. This
reflects both our work on water-
related projects, as well as our own
initiatives to reduce water use and
avoid water pollution.
In terms of our solutions, we work on a number
of water-related projects around the world. From
installing the foundations of flood defences to
grouting around dams, Keller is involved in many
projects to help mitigate the effects of drought
and sea level rise. This work will only increase
with the physical risks and opportunities arising
from climate change. We also offer solutions
to help remediate contaminated ground water.
This includes solutions such as slurry cut off
walls, as well as innovations like our Halocrete®
grouting solution.
When it comes to our own operations, we focus
on water reduction on key projects and countries
where water is less available. We have a Keller
employee in Keller Bahrain carrying out a PhD
focused on water reduction in our design and
site operations. Similarly, we are also contributing
to cross-sector trade association work on water
reduction, highlighting upcoming legislation and
best practices in our sector.
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Keller Group plc Annual Report and Accounts 2023
Keller Group plc Annual Report and Accounts 2023
“The right organisation, with great people,
delivering exceptional performance.”
Keller is proud to be the world’s largest
geotechnical specialist contractor and
we understand that our success is down
to our diverse and talented team, where
each individual contributes to our
collective achievements.
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.
l
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Keller Group plc Annual Report and Accounts 2023
ESG and sustainability continued
People
Diversity, equity and inclusion (DEI)
Our Inclusion Commitments bring together what we are
doing across Keller to build a more diverse, equitable
and inclusive workplace. While gender equality and
empowerment remains a priority, we recognise and
embrace the broadest definition of diversity.
This is important because our employees represent the
broadest range of backgrounds, cultures, experiences
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
01
Conscious
Leadership
Improve accountability
through inclusive and
conscious leadership.
By empowering and equipping our
leaders to excel in this space.
04
Evolve
Continue to evolve
as the employer of
choice in our industry.
To attract, inspire and retain a more
diverse group of talent.
02
05
Listen
Listen and engage
with our workforce.
Through employee-led affinity groups and
workforce engagement opportunities.
Partner
Partner with ‘like-minded’
organisations through
inclusivity.
To drive necessary change in the industry.
Progress in 2023
Our focus during 2023 has been
on enhancing site culture and
building equity into our workforce
policies and practices.
To ensure the positive effects of inclusion
and equity are felt on the ground, it was
agreed that we focus on enhancing site
culture. This means addressing the gender
inequities that exist on site and doing all
we can to ensure our people are not only
physically safe, but feel psychologically safe,
included and respected.
We continue to listen to our workforce
through employee engagement surveys
and focus groups to understand how we can
continue to evolve as the employer of choice
in our industry.
03
06
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.
Celebrate
Celebrate our differences
and all that unite us.
Through earmarking key global events that
represent the breadth of our workforce.
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Keller Group plc Annual Report and Accounts 2023
Diversity, equity and inclusion: Recent progress
Notable progress during the course of 2023 is summarised below under each of our Inclusion Commitments:
Conscious Leadership
Empower
Partner
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North America actively focused on
sponsorship and partnerships, such as:
• Sponsorship for Women in Deep
Foundations Institute events.
• Ambassador sponsorship for Construction
Inclusion Week.
• Partnership with Revolution Workshop
who support the pipeline of entry-
level field staff from underrepresented
backgrounds. The organisation provides
construction workforce development
opportunities through a 12-week pre-
apprentice programme for unemployed or
underemployed people.
• Partnered with Bridges to Prosperity to
raise funds for the work they undertake in
isolated communities which create access
to essential health care, education and
economic opportunities.
• Engaged with Girls in the Game interviews
to support underprivileged high school
women with mock interviews and to share
experiences in the professional world.
• Continued to engage and build strong
relationships with key universities and trade
schools to appeal to emerging talent.
Celebrate
• Keller Singapore received the prestigious
Workplace Safety & Health (WSH) Culture of
Acceptance, Respect and Empathy (CARE)
Award by the WSH Council and Ministry
of Manpower. The award recognises
companies with exemplary safety and
wellbeing initiatives and highlights them as
the employer of choice.
• We continued to celebrate some of the key
events, observances and causes important
to many of us across the Keller world,
including Lunar New Year, International
Women’s Day, International Men’s Day,
Ramadan, Eid ul-Fitr, Earth Day, Pride
Month, Global Day of Parents, International
Women in Engineering Day, Eid ul-Adha,
World Suicide Prevention Day and Rosh
Hashanah to name a few.
• As part of Global Safety Week, delivered
• A new Inclusive Site Culture standard with
suicide awareness and prevention training
to extended leadership team with toolbox
talks for field colleagues.
• Keller Australia strengthened relevant
policies and procedures on bullying,
harassment and discrimination with relevant
toolbox talks, and conducted remote
location risk assessments to ensure our
people continued to be safe on site.
• ASEAN delivered a training and awareness
programme on micro-inequities with the
aim of fostering inclusivity.
• North America delivered LGBTQ+ training to
the divisional leadership team.
• Europe continued to drive progress through
localised action plans to maximise impact
and cascaded wellbeing leadership training
to the broader European workforce.
Listen
As part of our commitment to continue
to understand what is important to our
underrepresented workforce, we actively
support the creation of employee-led
networks. Keller Women in Construction
(KWIC) brings together women and allies
from across the organisation to promote
inclusiveness, foster a supportive working
environment and boost career development.
• KWIC AMEA established a divisional
mentorship programme with relevant guides
and resources to navigate the mentoring
relationships. In addition, the committee
facilitated an allyship webcast across the
division which included participation from
the senior leadership team.
• KWIC North America have focused on four
key initiatives during the year, including:
promoting professional development (both
internally and industry-wide), creating
an internal women’s network to enhance
corporate culture, supporting efforts to
increase the recruitment and retention
of women, and engaging with local
communities through outreach efforts.
Focus groups with women on site were
conducted and action plans established to
address issues raised.
• KWIC Europe launched and promoted a
new intranet site to connect colleagues
and provide them with opportunities
to collaborate across the division. The
committee also continued to raise the profile
of KWIC at various divisional events and
spotlight inspirational female colleagues.
To inspire and empower colleagues, the
committee hosted two webcasts: ‘Imposter
Syndrome’, and ‘Personal Development
Unlocking Potential’.
related guidance was developed to address
specific gender inequities on site such as
inclusive personal protective equipment,
access to lockable toilet facilities for both
men and women, and lactation facilities
for mothers who return to work if needed.
The standard also highlights minimum
requirements for welfare and hygiene
facilities and how sites can make reasonable
accommodations for different cultural and
religious identities.
• Specialist development programmes were
initiated to support women in North-East
Europe and South-East Europe and Nordics.
• To promote health equity, colleagues in
UA and Oman attended Women’s Health
Awareness events and we introduced health
screening services for colleagues in UAE.
• Colleagues continued to support local
communities across the globe. For example,
Keller Malaysia refurbished facilities and
raised vital funds for Ahsana Welfare Centre,
a charity in Kuala Lumpur that provides
education, care and protection for women
with special needs, and delivered talks on
general health and safety as well as sexual
harassment and bullying. North America
engaged with several charities throughout
the year including US Marines’ Toys 4 Tots
to support families during the festive period
and the Susan G Komen Foundation in
support of breast cancer awareness.
• As part of Inspiring Women in Construction
and Engineering, our Group Head of
Talent and Diversity joined a mentoring
programme with Construction News and
New Civil Engineer to support women
entering the field of engineering.
Evolve
• Established a global PPE project team
with divisional representation to ensure
all colleagues have access to inclusive
PPE. Externally we have engaged with
manufacturers and providers, and together
with an external peer network, continue to
influence change in the industry.
• Established a Global Talent Task Force to
identify and address challenges on attracting
and retaining talent with an initial focus on our
emerging workforce (including engineering
graduates and apprentices).
• Keller Australia reviewed and updated their
parental leave policy to ensure inclusivity of
all parents.
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ESG and sustainability continued
People
Inclusive Site Culture standard
“We want everyone at Keller to feel empowered
to deliver their best work,” adds Sandy-lee.
“So, we are working hard to make sure everyone
feels safe, valued and respected regardless of
gender, abilities, culture, religion or stage of life.
We know those who feel included and listened to
perform better, creating a more productive and
safer workplace for all.”
A pan-global PPE project team has been set up
to understand which regions present the biggest
challenge. They are working with procurement,
manufacturers and suppliers to test safety gear,
give feedback and partner to continue driving
change in our industry.
The standard also highlights minimum
requirements for welfare and hygiene
facilities and how sites can make reasonable
accommodations for different cultural and
religious identities. And, to ensure collective
progress, we have embedded the standard
requirements into our HSEQ assurance plan, site
verification audits and leadership interactions.
Keller launched a new Inclusive
Site Culture standard in 2023 as
part of our ongoing commitment
to ensuring everyone feels safe,
included and respected when they
work on our project sites.
“Following feedback we received from women
on site focus groups, we identified a number of
areas of improvement,” says Sandy-lee Connolly,
Group Head of Talent and Diversity.
“Specific gender inequities we are addressing
relate to personal protective equipment (PPE),
access to lockable toilets for both men and
women, and a private, clean space for lactation
purposes for mothers when they return to work.”
One way Keller is making improvements is
by better supporting the growing number of
women working on our sites and ensuring PPE
is suitable. PPE is still largely designed with men
in mind, meaning it might not perform correctly,
and sourcing appropriate PPE is challenging in
our industry.
Our inclusion and
diversity data –
measuring and
evaluating our success
To hold us accountable in our progress to
achieving greater inclusivity and diversity in
the workplace, we believe transparency and
accountability are paramount.
At Keller, inclusion is primarily measured via
engagement surveys and focus groups and
we continue to check in with colleagues to
understand whether our working environment is
one where everyone feels respected, supported
and valued. The data points alongside relate to
inclusion and are based on surveys undertaken in
sixteen businesses to date.
In addition, we examine exit interviews to identify
common themes that may need addressing.
To boost retention rates, we will be piloting
stay interviews to gauge colleagues’ sense of
workplace satisfaction and motivation.
Keller respects
individual differences
82%
(2022: 78%)
I can voice a contrary
opinion without fear of
negative consequence
73%
(2022: 70%)
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Gender diversity
Representation matters and our ambition is
to build more balanced teams. We continue
to measure and monitor gender diversity
throughout our organisation to identify where
additional focus is needed to attract and retain a
more diverse group of talent.
Overall, female representation remains similar
to 2022 with the exception of the Board which
has achieved a 50/50 gender split with the
appointment of Annette Kelleher as Non-
executive Director in 2023. In addition, the intake
of engineering graduates and apprentices has
improved, with North America representing the
most significant year of growth. The division
developed new strategies to widen talent pools
which included the implementation of a diverse
and engaging recruitment platform, together
with the delivery of a successful employee
referral programme. Female representation
in the engineering population continues to
increase year on year due to accelerated efforts
to cultivate relationships with key universities
and schools and through relationships with
organisations such as Revolution Workshop
which has provided our North America Division
with diverse talent. Keller will continue to focus
on bringing people into geotechnics from a wide
range of backgrounds to ensure it has a healthy
pipeline of skills for the future.
Gender pay gap
Keller is committed to providing open and
detailed information about its gender pay gap.
The results below pertain to Keller Limited,
a UK subsidiary of Keller Group plc.
The main factors affecting the increase in the
mean gender pay gap primarily relate to the
significant increase in recruitment due to the
High Speed 2 mega-project. Specific emphasis
has been on strengthening the top of the
organisation with experienced project managers.
The industry suffers from a lack of female
representation with fewer women entering at
graduate level and even less so working on sites.
There are a number of actions Keller Limited are
taking to attract and retain more women in the
industry, including:
We recognise that there is still a lot of work to
do to increase the pace of change. With our DEI
strategy in place, we are targeting incremental
change over the longer term, which includes:
•
• Evolving the Keller culture where inclusion
and respect are key leadership behaviours.
Implementing a new global performance
development process to support the
progress and performance of our people,
allowing for more connected conversations
and enabling colleagues to perform at
their best.
• As part of our Unearthing Potential
programme, identifying female top talent
within the business and ensuring robust
development plans to support their growth.
• As part of our commitment to enhance
site culture, ensure business units are
making progress against our Inclusive Site
Culture standard which addresses specific
gender inequities.
Female representation
Board members
Executive Committee
Global leadership team
Engineers
Engineering graduates and apprentices
Total workforce
Notes:
• Launching a global Engineering Respect for
Safer Tomorrow campaign that equips our
field leadership teams and workforce with
the skills and knowledge to drive positive
behaviours and prevent harmful behaviours
on site including bullying, harassment and
discrimination.
• Formalising career paths so there is clarity
on career progression and which will also
provide fair opportunities for advancement
and compensation.
• Strengthen our employer brand through a
newly established global talent task force.
• Launching an ‘All-in’ allyship programme
to foster inclusion and create a more
welcoming, respectful and supportive
atmosphere that values diversity.
• Strengthen our reporting framework
through the delivery of a global HR
information system which would allow
us to capture wider diversity data.
2023
2022
No
%
4
2
7
280
35
1,099
50%
20%
15%
17%
25%
12%
No
3
2
7
274
8
1,130
%
43%
22%
13%
16%
7%
12%
• All data as at 31 December 2023.
• Global leadership team excludes Executive Committee members.
• Engineers includes Engineering, Project Management, Business Development and Estimating workforce.
• Working with several universities, particularly
those offering an MSc in Geotechnical
Engineering and Degree Apprenticeships
in Civil Engineering to attract young
professionals to the sector.
• Collaborating with Europe’s Keller Women in
Construction whose purpose is to support
our businesses with attracting, inspiring,
supporting and developing women.
• Partnering with Women in Construction to
attract younger generations to consider a
career in geotechnics.
Mean UK gender pay gap:
30.64%
(2021/22: 23.1%)
Median UK gender pay gap:
30.60%
(2021/22: 15.1%)
• Undertaking annual assessments to ensure
Mean bonus gender pay gap:
gender pay parity.
60.80%
(2021/22: 47%)
Median bonus gender pay gap:
47.81%
(2021/22: 37.9%)
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ESG and sustainability continued
People
Safety
At Keller we view safety as a value,
something we do not compromise.
We have made great strides
increasing participation in our
leading indicators with a view
to continuously improving our
Accident Frequency Rate (AFR)
and Total Recordable Incident
Rate (TRIR).
• Continued to make improvements to our
•
AFR (0.1) and TRIR (0.6).
Introduced new Group HSE standards
to the organisation.
• Undertook 11 week-long business unit
assurance assessments to understand
compliance to our standards.
Introduced a new method of reporting
hazardous conditions and behaviours at site.
•
• Further enhanced the functionality of our
field application InSite to accommodate
all aspects of the project safety
planning process.
• Began the process of introducing vehicle
telematics to Keller-owned vehicles.
Installed back-up and blind side cameras
on all Keller rigs with cabs.
•
• Safety week.
Keller Singapore
wins top
wellbeing award
The country’s Workplace Safety
and Health Council has recognised
Keller as an employer of choice for
its exemplary approach to mental
health and wellbeing.
While Singapore is renowned for its demanding
work culture, Keller has long recognised the
importance of promoting employee welfare.
A wellness committee was set up in 2015 and,
along with the safety team, has been very active
ever since, running a wide range of health, safety
and wellbeing activities.
Those efforts were recognised at the
government’s Workplace Safety and Health
Council Awards 2023, with Keller winning the
Culture of Acceptance, Respect and Empathy
(CARE) Award.
“Winning this prestigious national award
reaffirms that we’re on the right track and
helps to energise our passion and belief,”
says Seah Yeow Teck, General Manager.
“Keller Singapore believes in Keller’s own
wellbeing framework of Body, Mind, Community,
Growth and Financial Security. The journey is not
always smooth sailing but our team has been
pushing on, strongly believing in the positivity
that it brings.”
Over the years the wellness committee and
safety team have organised group exercise
sessions, lunchtime games and a wide range of
other activities. Employees also benefit from
educational sponsorship and wellness-focused
training, such as psychological first aid.
To win the award, Keller had to provide
evidence of the company’s safety, health and
mental wellbeing programmes and how they
increase the performance and awareness of
the workforce.
The Workplace Safety and Health Council
is a statutory body that works closely with
the industry, unions, professionals, trade
associations and other government agencies
to raise health and safety standards.
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Building on our strong foundation of keeping
our people physically safe, we have increased
our focus on all aspects of people’s health
and wellbeing.
Good health and wellbeing
Everything we achieve as a business
is through our people. Their safety,
health and wellbeing is at the heart
of everything we do. And with
strong wellbeing foundations, we
can keep our business resilient and
achieve sustainable success.
Our Foundations of Wellbeing
Community
“Being connected – building
positive relationships with each
other and our communities”
Body
“Being at your best physically
by keeping fit, eating and
sleeping well”
Financial security
“Being financially fit – managing
your money well for
greater security”
Our goal
To build a sense of belonging in
the workplace and create opportunities
for shared positive experiences
Our goal
To encourage balanced and
healthy lifestyles and the ability
to thrive in life
Our goal
To provide educational tools
and resources to help everyone
manage their day-to-day finances
and prepare for the future
Mind
“Being emotionally healthy
and resilient – positive attitudes
to life and its challenges”
Growth
“Being empowered and supported in your career –
positive work experiences that produce pride,
fulfilment, meaning and happiness”
Our goal
To create an environment to support
everyone’s mental health and
resilience to life’s events
Our goal
To encourage career conversations
and growth opportunities that help
everyone reach their full potential
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ESG and sustainability continued
People
Our priorities for 2023:
Building on our strong foundation of keeping our
people physically safe, we have increased our focus
on all aspects of people’s health and wellbeing.
Mental health and
resilience training
for leaders
As part of Suicide Prevention Day, we delivered
a training webcast to the extended leadership
team which emphasised the importance of
mental health and resilience. The training
offered practical tips on how to create the
right conditions to optimise personal and team
performance. It also focused on how to spot and
respond to warning signs relating to suicide.
Wellbeing as an enabler
of performance
Creating an environment that prioritises the
wellbeing of our entire workforce is fundamental
for successfully implementing performance
programmes throughout the organisation. An
essential element of this foundation involves
focusing on our leadership team, as they
play a pivotal role in establishing a common
understanding and direction for all business unit
leaders. To support this objective, the business
unit leadership received a presentation focused
on providing guidance tailored to enhance
performance. This presentation was centred on
internal quantitative data, aimed at equipping
leaders with the insights needed to enable and
optimise performance within their respective
businesses.
Global Health Challenge
Following the success of the initial launch in 2022, we re-engaged
with the Global Health Challenge during the year.
The challenge was an opportunity to support
colleagues, globally, in improving their physical
and mental health and wellbeing. As part of
the extended programme, participants could
also choose to take part in personal mini
challenges focused on reducing stress, acting
sustainably and building relationships.
We continue to listen to our people via
engagement surveys to understand whether
we are making an impact and adapt our
approach to support our people in the best
possible way.
Testimonials from colleagues:
“ The programme has helped me get back
to ME!”
“ It has made a difference to my lifestyle.
When it launched I started walking daily,
have joined the gym, have been doing
physical activity regularly, and maintained
a balanced diet.”
“ The support I have received from my team
has helped me to keep going and do more
every day. I have felt more energetic in my
work and able to concentrate better, so it
has clearly made a difference.”
My immediate
manager(s) genuinely
cares about my
wellbeing.”
75%
(2022: 75%)
The data points for 2023 are based on surveys
undertaken in five businesses units in 2023.
Generally, I believe my
workload is reasonable
for my role.”
75%
(2022: 75%)
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“Keller has a duty of care to all its employees and
this is one way we can help people recognise
the signs in themselves and their colleagues
that they might need some support,” he adds.
“Every time I wear my TradeMutt shirt someone
makes a comment or asks me about it. It
opens the door to a conversation that could
change, or even save, a life. That power can’t be
underestimated.”
The funky
shirts starting
a conversation
Keller Australia is helping
colleagues kickstart conversations
about mental health – and it’s
all down to some eye-catching
workwear…
Visit a Keller Australia project site and you
shouldn’t have a problem finding our people.
That’s because they’re now kitted out in some
vibrantly coloured, flamboyantly patterned
workwear.
Created by TradeMutt, the loud and funky shirts
and hi-vis vests are about more than just adding
a splash of fun to the work environment; they’re
designed to provoke discussions about mental
health and prompt those who need it to get
support. “We’ve been focusing on mental health
at a local level for some time now, but it’s not
easy,” explains Nigel Brockman, Queensland
State Manager. “People in our industry are often
reluctant to talk about this kind of stuff. And
until you’ve been there and experienced it, most
don’t fully appreciate the importance of having
conversations without judgement.
Breaking down barriers
Nigel and his leadership team thought the shirts
were an inspired way to break down those barriers,
so decided to provide the state’s site crews,
workshops and office teams with the shirts.
Not only are the shirt designs eye-catching, they
also come with the slogan ‘This is a conversation
starter’ on the back, along with a QR code linking
to TIACS, a mental health counselling service.
Quality education
We believe everyone has something
to contribute to the success at
Keller. That’s why we’re passionate
about investing in our people
and creating an environment of
continuous learning, empowerment
and inclusivity that helps people
reach their full potential. 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.
AMEA continued to focus on upskilling
leadership teams to achieve higher levels of
performance. In 2023, business unit leadership
training sessions were held which focused on
competencies for senior managers.
These were supplemented with modules
focused on specific skills including Conflict
Management, Conducting Performance
Appraisals and Having Difficult Conversations.
To build on the Conscious Leadership
programme which was deployed in 2022, the
division designed a new Courageous Leadership
programme to empower leaders to navigate
challenges, make tough decisions, and inspire
their teams in the face of adversity. Project
Manager Academy sessions and Project
Management workshops were provided
throughout the year to upskill teams and
equip them with the knowledge, skills and
tools necessary to effectively plan, execute
and oversee projects. Technical, safety and
operational training continued be delivered
for Operational teams. Sustainability, mental
health and wellbeing training programmes
and workshops were delivered to educate and
support colleagues across the division.
Our Europe Division delivered a range of Keller
Academy training programmes including
a two-week training session for senior
leaders, and an entry-level leadership training
programme. Keller’s Counsellor Sales Process,
which seeks to increase Keller’s capability in
winning higher quality work from clients, was
executed. A Geotechnical Construction Project
Management Training programme is under
development with a planned pilot mid-2024.
Work to enhance Commercial Training is being
developed and will be introduced in 2024.
Further training courses are provided through
the European Learning Management Platform
and the business units in local languages.
Evaluations show that all the offerings have been
well received by participants and have helped
improve their skills.
North America established a Learning and
Development Steering Committee, who have
supported efforts to identify high priority learning
requirements and to communicate availability
of targeted learning resources to meet those
needs. In partnership with Engineering and
Marketing, the Learning and Development
team launched the Technique Training Library,
designed to help technical talent learn more
about the various geotechnical techniques
that the organisation delivers on. In 2023, the
division delivered two Foundations of Leadership
programmes, launched one Project Manager
Academy and one Field Leader Academy. In
addition, we are continuing to enhance and
develop our Mentoring Program, investing time
and development with Power BI for reporting
on learning and development, engaged field
leaders to grow and develop our training for field
and field management, putting a large focus
on identifying and developing our upcoming
talent. North America has also developed an
orientation video, which has been added to their
onboarding programme.
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People
Emerging talent
We are committed to developing our future
talent pipeline of leaders and geotechnical
specialists and continue to invest and equip our
people with the skills and knowledge to drive
the organisation forward with an ever-changing
complex market.
Keller has continued to focus on bringing
people into geotechnics from a wide range
of backgrounds to ensure it has a healthy
pipeline of skills for the future. We continue
to cultivate relationships with key universities
through technology platforms that allow us to
engage with candidates earlier in the process;
relationships with organisations such as
Revolution Workshop have all provided us with
diverse talent. During 2023, North America
established a 6% increase overall for Asian hires
for entry-level full-time engineers, interns and
co-ops. The division also had a 3% increase
in Black hires in 2023. A major factor in the
increase is as a result of the division’s continued
success at targeting and following through on
DEI initiatives, having established employee
resource groups that partner with recruiting,
and enhancing our benefits to attract diverse
employees around North America.
Keller India developed a geotechnical
scholarship programme in partnership with
Bhumi, whose aim is to drive social change
through educational opportunities for young
adults. The scholarship will empower 15
students with their postgraduate studies in
geotechnical engineering.
Developing digital workflows and tools improved
production processes and enables us to
deliver work well and on time. With a strong
commitment to sustainability, we continued
to deploy electric rigs and source alternative
products and solutions which are more aligned
to our sustainability aspirations.
Global product teams
Keller’s global product teams focus on sharing
improvements, innovative solutions and
product-specific knowledge around the world
through the delivery of a monthly educational
webcast and in-person events. Regularly
collaborating with experts across Keller enables
us to discuss and progress specific technical
topics in detail, making sure our skills and offering
is safe, economical, sustainable and offers
market-leading technologies to our customers.
During 2023, we expanded our ways of working
and collaborating with local global product teams
and divisional product teams across all divisions.
This enabled us to leverage global expertise
to provide local solutions with excellence.
Geotechnical community
In addition to upskilling and providing learning
opportunities to our workforce, Keller
proactively supports the future skills agenda
for the geotechnical industry. Our businesses
take a leadership role by providing employees,
customers, suppliers and potential employees
with technical papers, seminars, field trips and
site visits.
Keller employees maintain close contact with
tier 1 universities to share best practice and
undertake research projects to develop new
and innovative products, materials and design
approaches. This enables us to be at the
forefront of technical advancements and allows
us to position ourselves as the employer of
choice in our industry.
An award-winning safety programme
Keller has won two prestigious
industry awards for its Step
Forward for Safety (SFfS)
programme, which has helped our
UK Business Unit achieve a year-
on-year reduction in incidents.
SFfS picked up a Gold award for Best Innovative
Health & Safety Campaign from the European
Federation of Foundation Contractors, as well as
being recognised by the UK’s Federation of Piling
Specialists in their Safety Innovation category.
Launched by Keller UK in 2018 in
partnership with Active Training Team (ATT),
SFfS is a behavioural-based and cooperative
programme that goes beyond corporate
policies and protocols to improve the
cultural approach to safety.
“It’s about encouraging individuals at every
level to take responsibility for safety and what
happens on site,” says Simon Jones, HSEQ
Director (Europe). “During an engaging day-long
event, away from the usual working environment,
SFfS gives our people a basic understanding of
human psychology, explores why we react the
way we do in certain situations and guides them
through example scenarios of how incidents
occur. Importantly, it also looks at where
opportunities are missed to intervene.”
Practical tools for improving safety
Each session, delivered by ATT, features no
more than 15 colleagues – all in different roles
and with varying levels of experience – and is
overseen by a Keller HSE facilitator and senior
leader. After the session, colleagues come
away with a common language for talking about
safety, practical tools they can deploy and the
confidence to speak up when they see things
that might not be right.
Over the past five years more than 1,000
individuals have taken part in SFfS, including
everyone at Keller UK, a number of colleagues in
other business units, key suppliers, joint venture
partners and even some clients. Plans are now in
place to roll out the programme in Germany.
“We’re delighted to win these awards, which
are recognition of the significant impact Step
Forward for Safety has had,” says Simon.
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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.
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ESG and sustainability continued
Principles
Good governance
Good governance is about balancing
the needs of stakeholders and
helping to run the company well
through efficient processes and
decision making. It involves being
satisfied that an effective and
rigorous internal framework of
systems and controls is in place
which clearly defines authority
and accountability and promotes
success whilst appropriately
managing risk.
Human rights
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, modern
slavery and human trafficking statement and
our new Human Rights Policy, 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 Supply Chain Code of Business Conduct
and policies.
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 anonymously any instances of poor
practice safely through an independent provider.
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 2023 identified any
systemic issues or breaches of our obligations
under the Bribery Act 2010. The Anti-Bribery
and Anti-Fraud Policy, which was reviewed and
updated during the year, 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 2023 our employees
completed mandatory training on competition
law compliance, data privacy, the Code of
Business Conduct, and prevention of facilitation
of tax evasion. You can read more about our risk
management framework and principal risks from
page 36 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’s ways of working
Our Code of Business Conduct (the ‘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 that 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, our tax strategy and our Supply Chain
Code of Business Conduct, all of which are available on our website.
Our ethics and compliance programme is now in its eighth year of
supporting our employees doing the right thing. The programme
comprises training of our employees across the business on
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’.
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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 such as 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.
Keller encourages its employees to support
a range of charities, and has long committed
to pledging to a charity the same value (up to
£2,000 per annum) of any funds raised by an
employee.
We again supported The Brilliant Breakfast
in 2023 with an increased donation of nearly
£15,000. 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 Sustainability
Committee on page 108.
Activity challenge raises
funds for Ukrainian colleagues
Our charitable arm – the KELLER
Foundation (Fundacja KELLER)
– continues to provide support
to colleagues and their families
affected by the war in Ukraine.
At the outbreak of the conflict, our team in
Poland acted quickly to help affected Keller
employees and their families. Since then, the
foundation has helped 29 families relocate to
Poland, Latvia and Estonia, and each month
helps them pay for housing, food, clothes,
heating and education.
To support the foundation and raise much-
needed funds, Keller ran an activity challenge for
colleagues and their friends and families.
Using the Virgin Pulse health and wellbeing
platform, teams from across the Keller world
tracked activities such as running, cycling and
gardening, for eight weeks. These were then
converted to steps and distance travelled.
22,000 miles and 44 million steps later, Keller
was delighted to donate £30,000 to the
foundation in recognition of our colleagues’
commendable achievements.
“This incredibly successful challenge is a
wonderful gesture by the Keller community,” says
Michał Nowakowski, HSEQ Director North-East
Europe, who sits on the foundation’s board. “The
money raised will provide valuable assistance to
these families for several more months.”
“Unfortunately, the war continues and while it
does, we want to be able to help the families. For
many, we are the last resort.”
More information on the foundation, including
how to donate and real stories from colleagues,
can be found on Keller Poland’s website.
I’d like to say a big thank you to
everyone for their support – I’m so
proud to be part of such a fantastic
and compassionate organisation.”
Michał Nowakowski
HSEQ Director North-East Europe
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statement
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Non-financial and sustainability information statement
Pursuant to the non-financial and sustainability reporting requirements, 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
2
3
4
Description of our business model
The Keller model – How we do it
Our strategy
The main trends and factors likely to affect
the future development, performance and
position of the Group’s business
Our market
Divisional reviews
See pages 4 and 5
See pages 20 and 21
See pages 14 and 15
See pages 22 to 29
Description of the principal risks and any
adverse impacts of business activity
Principal risks and uncertainties
See pages 36 to 47
Non-financial key performance indicators
Customer satisfaction
Safety, good health and wellbeing
Gender diversity
Greenhouse gas emissions and energy
See page 09
See pages 74 to 76
See page 73
See page 65
Reporting requirement
5
Environmental
matters
Policies, processes and standards
which govern our approach¹
Risk management
Embedding due diligence, outcomes of
our approach and additional information
ESG and sustainability
Climate change
Our market
See pages 59 to 84
See page 43
See pages 14 and 15
Ethical misconduct and non-
compliance with regulations
See page 42
Losing market share
See page 42
Divisional reviews
See pages 22 to 29
Greenhouse gas emissions and energy
data, trend analysis and assurance
See pages 65 to 67
Inability to maintain technological
product advantage
See page 43
Sustainability Committee report
See pages 105 to 108
Section 172 statement
See pages 94 to 96
6
Employees
Human Resources Policy
Code of Business Conduct
Causing a serious injury or fatality
to employees or a member
of the public
Diversity, equity and inclusion
See pages 70 to 73
Whistleblowing Policy
Wellbeing Foundations
Sustainability Policy
Biodiversity Policy
ESG and sustainability
See pages 59 to 84
See page 46
Ethical misconduct and
non-compliance with
regulations
See page 42
Not having the right skills
to deliver
See page 46
Climate change
See page 43
Training and development
See pages 77 and 78
Health and wellbeing
See pages 75 and 76
Employee engagement
See page 106
Section 172 statement
See pages 94 to 96
Sustainability Committee report
See pages 105 to 108
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Policies, processes and standards
which govern our approach¹
Risk management
Embedding due diligence, outcomes of
our approach and additional information
Reporting requirement
7
Social and
community
matters
Ethical misconduct and non-
compliance with regulations
See page 42
Climate change
See page 43
Code of Business Conduct
Wellbeing Foundations
Sustainability Policy
ESG and sustainability
See pages 59 to 84
Procurement Policy
Supply Chain Code of
Business Conduct
Human Rights Policy
Biodiversity Policy
The Keller Model – How we do it
See pages 4 and 5
Divisional reviews
See pages 22 to 29
Safety, good health and wellbeing
See pages 74 to 76
Sustainability Committee report
See pages 105 to 108
Section 172 statement
See pages 94 to 96
Safety, good health and wellbeing
See pages 74 to 76
Sustainability Committee report
See pages 105 to 108
Section 172 statement
See pages 94 to 96
8
Human rights
Code of Business Conduct
Supply Chain Code of
Business Conduct
Modern slavery and human
trafficking statement
Wellbeing Foundations
Sustainability Policy
Biodiversity Policy
Privacy Policy
Human Rights Policy
Ethical misconduct and non-
compliance with regulations
See page 42
Causing a serious injury or fatality
to employees or a member of the
public
See page 46
Climate change
See page 43
9
Anti-corruption
and anti-bribery
Anti-Bribery and
Anti-Fraud Policy
Competition Law
Compliance Policy
Conflicts of Interest Policy
Whistleblowing Policy
Human Rights Policy
Ethical misconduct and non-
compliance with regulations
See page 42
Principles
See page 79 to 81
Audit and Risk Committee report
See pages 112 to 119
10 Climate-related
financial disclosures
ESG and sustainability
Climate change
TCFD
See pages 59 to 84
See page 43
See pages 48 to 58
Sustainability Policy
Biodiversity Policy
Ethical misconduct and non-
compliance with regulations
See page 42
Losing market share
See page 42
Inability to maintain technological
product advantage
See page 43
Our market
See pages 14 and 15
Divisional reviews
See pages 22 to 29
Greenhouse gas emissions and energy
data, trend analysis and assurance
See pages 65 to 67
Sustainability Committee report
See pages 105 to 108
Section 172 statement
See pages 94 to 96
1
Some policies, processes and standards shown here are not published externally.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
GRI Index
84
GRI index
Keller Group plc Annual Report and Accounts 2023
To facilitate access to information for our stakeholders, the following table indexes the
information relevant to the GRI Standards’ General Disclosures, with which the Group aims
to align its activities. Further disclosures, including Group policies and standards referenced
below, can be located on our website at www.keller.com.
GRI 2: General Disclosures
Page/Policy1
Comments
Disclosure
2-1
2-2
2-3
2-4
2-5
Organisational details
Note 1 on page 164, 22–29
Entities included in sustainability reporting
Note 8 on page 210, 65
Reporting periods, frequency and contact point
Restatement of information
External assurance
84
84
65
2-6
Activities, products, services and markets served
2–3, 14–15, 22–29
Practice for seeking
assurance not disclosed
Entities up and downstream
not disclosed
2-9
2-10
2-11
2-12
Governance structure and composition
88–104
Nomination and selection of highest governance body
100, Nomination and Governance Committee
terms of reference, Board Diversity Policy
Chair of highest governance body
Role of highest governance body in overseeing
management of impacts
88
48, 93, 97–100
Management of impacts
not disclosed
2-13
Delegation of responsibility for managing impacts
48–49, Sustainability Committee terms of
reference
2-14
2-15
2-17
2-19
2-20
2-21
2-22
2-23
Role of the highest governance body in
sustainability reporting
Conflicts of interest
36–38, 48, 59, 97
88–89, 92
Collective knowledge of the highest governance body
102–103
Remuneration policies
124, 126–134, 135, 67 and 136 (for Scope 2
reduction objective)
Process to determine remuneration
122–123, 126–134
Annual total compensation ratio
Statement of sustainable development strategy
139–140
59–61
Policy commitments
80, 82–83 , supporting policies on Keller
website
2-26
Mechanisms for seeking advice and raising concerns
80, 82–83
2-27
2-28
Compliance with laws and regulations
Membership associations
104
81
2-29
Approach to stakeholder engagement
87, 94–96, 10–107
1
Some policies, processes and standards shown are not published externally.
Wider channels to report
concerns not disclosed
Select list of partnerships
disclosed
Sustainability reporting period
The collated information on sustainability was aligned to the financial
reporting period of 1 January to 31 December 2023, in correspondence
with GRI disclosure 2-3.
Restatements
Pursuant to GRI disclosure 2-4, there were no restatements of sustainability
information during the reporting period.
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
For further queries relating to the reported information on sustainability,
please contact secretariat@keller.com.
4 March 2024
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Governance
Keller Group plc Annual Report and Accounts 2023
Governance
Chairman’s introduction
86
Board of Directors
88
Executive Committee
90
Board leadership
92
94
Section 172 statement
97 Governance framework
100 Division of responsibilities
101 Board composition, succession and evaluation
105 Sustainability Committee report
109 Nomination and Governance Committee report
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111 A conversation with Annette Kelleher
112 Audit and Risk Committee report
120 Annual statement from the Chair
sof the Remuneration Committee
122 Remuneration in context
124 Remuneration at a glance
126 Remuneration Policy report
135 Annual remuneration report
143 Directors’ report
146 Statement of Directors’ responsibilities
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Chairman’s introduction
86
Keller Group plc Annual Report and Accounts 2023
Chairman’s introduction
Welcome to our Governance report
for the year ended 31 December 2023.
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.
What’s inside
Board leadership and
company purpose
p2 & 92
Division of responsibilities
p100
Composition, succession
and evaluation
p101
Audit, risk and
internal control
p118
Remuneration
p120
Compliance with the Code
The company was subject to the Code in respect of the
year ended 31 December 2023 (the full text of which
can be found at www.frc.org.uk). The Board is pleased
to confirm that the Group applied the principles and
complied with the provisions of the Code.
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.
Peter Hill CBE
Chairman
Contents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
Our purpose, values, strategy and culture
Delivery of the Group’s vision and purpose relies on
the successful implementation of our strategy and is
underpinned by the values and behaviours that shape
our culture and how we work.
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Dear shareholder
On behalf of the Board, I would like to introduce our Governance report for
the year ended 31 December 2023. 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
The Board welcomed Annette Keller as a Non-executive Director and
Chair Designate of the Remuneration Committee, joining on 1 December
2023. Annette brings a diversity of experience and a new perspective,
and is already making a valuable contribution. Annette’s biography is set
out on page 89, and on page 111 Annette shares her initial thoughts on
joining Keller.
Eva Lindqvist has announced her intention to retire from the Board and will
stand down at the end of this year’s AGM, having served seven years as
an independent Non-executive Director and five years as the Chair of the
Remuneration Committee. Eva leaves the Board with our thanks and very
best wishes.
We review the Board’s composition regularly and are committed to ensuring
we have the best balance of skills and experience within the Board. We have
made meaningful progress in achieving diversity, with 50% female Board
members at year end (2023: 50%). As a Board, we have met the targets set
out in our Board Diversity Policy and by the FTSE Women Leaders Review,
the Parker Review and the targets specified in recent updates to the FCA’s
Listing Rules, which we report against on page 73. The Board and the
Nomination and Governance Committee will continue to drive the agenda
of diversity, equity and inclusion across the Group.
Company purpose and culture
The Board is responsible for setting the tone from the top and promoting
a culture which creates a positive work environment where everyone feels
respected, motivated and able to thrive. Our employees are essential
for the delivery of our strategic objectives and our continued success.
Their feedback is critical to the Board and we continue to monitor our
culture through surveys, town-hall sessions and formal and informal
engagement activities.
Throughout 2023, we have
delivered an outstanding
performance. We remain
focused on generating
long-term value for our
shareholders.”
Engagement with our stakeholders
Stakeholder engagement is critical to the long-term success of our
business; the art of balancing different stakeholder views and needs in
Board discussions and decision-making is key. The role of our designated
workforce engagement director has been in place since 2017 and,
supported by the Sustainability 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.
Last October, the Board attended a conference where it engaged with our
Executive Committee and senior leadership team, and had the opportunity
to gain increased insight into their progress against their strategic plans and
local opportunities and challenges.
During 2023, we commissioned an independent perception audit of a
number of investment managers. We first initiated a perception audit in
2021, the outcome of which was invaluable in affording the Board a deeper
level of understanding of the views of our shareholders and potential
investors whilst giving the executive management additional input as they
formulate the strategy for the years ahead. The outcome of the 2023 audit
will build upon the detailed action plan we put in place in 2021.
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. In 2023, we carried out an internal review of
the effectiveness of the Board and its committees, facilitated by the Group
Company Secretary and Legal Advisor, further details of which can be found
on page 102.
Looking forward
We will continue as a Board to maintain the highest standards of
corporate governance across the Group, focus on delivery of our
strategy and evaluate and improve all that we do across the Group.
I encourage all our stakeholders to take every opportunity presented
to engage with the company and I would welcome you to attend,
and in any case vote at, the forthcoming AGM. 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.
As I look forward to the year ahead, I would like to take the
opportunity to thank my colleagues on the Board and across
the business for their continued hard work and dedication.
Yours faithfully
Peter Hill CBE
Chairman
Approved by the Board of Directors and authorised for issue on
4 March 2024
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Board of Directors
88
Board of Directors
Keller Group plc Annual Report and Accounts 2023
Peter Hill CBE
Non-executive Chairman and designated
Director for ESG and sustainability matters
Nationality: British
Appointed: 2016
Skills and experience: A mining engineer by background, Peter was
Non-executive Chairman of Petra Diamonds Limited until November
2023; 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 and 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.
Peter holds a BSc in Mining Engineering and an MBA from the London
Business School and is a Chartered Engineer.
Michael Speakman
Chief Executive Officer
Nationality: British
Appointed: 2018 and CEO in 2019
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 40 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.
NOM
SUS
EXC
SUS
Eva Lindqvist
Paula Bell
Non-executive Director
Non-executive Director
Nationality: Swedish Appointed: 2017
Nationality: British
Appointed: 2018
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 Tele2 AB,
Greencoat Renewables plc and CLS Holdings plc.
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.
REM
ARC
NOM
SUS
ARC
NOM
REM
SUS
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ARC
Audit
and Risk
NOM
Nomination
and Governance
REM
Remuneration
SUS Sustainability
EXC
Executive
Chair
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David Burke
Baroness Kate Rock
Chief Financial Officer
Nationality: Irish
Appointed: 2020
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.
Senior Independent Director and designated
Non-executive Director with responsibility
for workforce engagement
Nationality: British
Appointed: 2018
Skills and experience: Kate was a NED and Chair of the Remuneration
Committee of Imagination Technologies plc until November 2017. She
was, until January 2023, a Board member of the world’s first Centre for
Data Ethics and Innovation. Kate sat on the House of Lords Science and
Technology, and Artificial Intelligence Select Committees. Kate chaired
the independent Tenancy Working Group and published a review of
tenant farming in England (Rock Review). She was a partner at College Hill
for 12 years from 1996 and Vice-Chairman of the Conservative Party
with responsibility for business engagement until July 2016.
Kate holds a BA in Publishing and History.
Other appointments: Kate chairs the board of Costain Group Plc.
She is a Director and Trustee of The Royal Countryside Fund (formerly
The Prince’s Countryside Fund). She was appointed a Life Peer in 2015
and is also a Senior Adviser at Newton Europe.
EXC
ARC
NOM
REM
SUS
Juan G. Hernández Abrams
Annette Kelleher
Non-executive Director
Non-executive Director
Nationality: American Appointed: 2022
Nationality: Irish
Appointed: 2023
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, the USA, Asia, Australia and the Middle East. Juan
was the President of Fluor Corporation’s Advanced Technologies & Life
Sciences business until March 2023.
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.
Skills and experience: Annette has broad senior management
experience in the international industrials sector, including change
management, group development and transformation. She joined
Johnson Matthey plc in May 2013 from NSG Group, the Tokyo-listed
global performance glass group which acquired Pilkington Group plc in
2006. During Annette’s tenure firstly with Pilkington and then NSG, she
held a series of increasingly senior and global human resources roles,
spending considerable time in Asia.
From 2014 until 2023, Annette was a Non-executive Director at Hill &
Smith plc, where she chaired the Remuneration Committee from May
2016 to May 2023. From 2006 to 2009 Annette was an independent
Director of Tribunal Services, part of the UK’s Ministry of Justice.
Annette qualified with a BA in Business Studies and MSc in HR
Management and Training.
Other appointments: Annette is Chief Human Resources Director and a
member of the Group Management Committee of Johnson Matthey plc.
SUS
ARC
NOM
REM
ARC
NOM
REM
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Kerry Porritt
Group Company Secretary and Legal Advisor
For full biography see page 91
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90
Executive Committee
Keller Group plc Annual Report and Accounts 2023
Michael Speakman
Chief Executive Officer
For full biography see page 88
SLC
DIS
David Burke
Chief Financial Officer
For full biography see page 89
DIS
T
Eric Drooff
Jim De Waele
President, North America
Nationality: American
Member since: 2018
President, Europe
Nationality: British
Member since: 2018
Skills and experience: Eric has more than 30
years’ experience in the geotechnical
industry, initially with Hayward Baker, then as
Chief Operating Officer for Keller North
America and most recently as President.
Notable projects managed by Eric include
North America’s first compensation grouting
project in Ontario, compaction grouting for
seismic mitigation in Indonesia, and chemical
grout ground stabilisation in Boston.
Eric holds a BSCE from Bucknell University,
has authored numerous papers and
frequently presents on specialised
geotechnical construction. He is a member
of the ASCE Geo Institute, the Deep
Foundations Institute, and The Moles. He is
a past Chairman of the ASTM D1816
Grouting Committee.
Skills and experience: 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, a fellow of the
ICE and RICS. He is also an honorary
professor at the University of Birmingham.
Jim stepped down from the Executive Committee
on 1 March 2024.
SLC
SLC
John Raine
Craig Scott
Katrina Roche
Group HSEQ Director
Nationality: British
Member since: 2018
Group HR Director
Nationality: British
Member since: 2023
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.
Skills and experience: Prior to his
appointment as Group HR Director, Craig
was the HR Director for the AMEA Division.
He has over 16 years’ experience in the field
of HR and talent, having lived and worked in
the UK, Singapore and the Middle East.
Before joining Keller, Craig worked for a
FTSE-listed oil company, where he led the
HR function for their International Division,
responsible for operations in Asia-Pacific
and the Middle East.
Craig has an MA in Social Sciences.
SLC
SSC
Chief Information Officer
Nationality: British
Member since: 2020
Skills and experience: 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.
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Keller Group plc Annual Report and Accounts 2023
BGFC
Bank Guarantees
and Facilities
DIS
Disclosure
SLC
Safety Leadership
SP
Share Plans
SSC
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Steering
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Treasury
Chair
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Peter Wyton
President, AMEA
Nationality: Australian
Member since: 2018
Skills and experience: 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.
Venu Raju
Kerry Porritt
Engineering and
Operations Director
Nationality: Singaporean
Member since: 2012
Skills and experience: 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.
Venu stepped down from the Executive Committee on
31 December 2023.
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.
Kerry is a member of the European Corporate
Governance Council and the Chartered
Governance Institute’s Company Secretaries’
Forum, and 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.
SLC
SSC
BGFC
DIS
SLC
SP
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Keller Group plc Annual Report and Accounts 2023
92
Board leadership
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 the Directors’ attendance at all Board and
committee scheduled meetings throughout the year.
Meetings
Board 5
Audit and Risk
Committee
Remuneration
Committee
Nomination and
Governance Committee
Environment
Committee6
Social and
Community Committee6
Sustainability
Committee6
Paula
Bell
7/7
4/4
6/6
2/2
1/1
1/1
2/2
David
Burke
7/7
—
—
—
—
—
—
Juan G.
Hernández Abrams1
Peter
Hill CBE
Annette
Kelleher2
Eva
Lindqvist3
Baroness
Kate Rock4
Michael
Speakman
7/7
4/4
5/6
2/2
1/1
1/1
2/2
7/7
—
—
2/2
—
—
—
1/1
1/1
2/2
1/1
—
—
1/1
7/7
3/4
6/6
2/2
1/1
1/1
2/2
7/7
4/4
5/6
2/2
1/1
1/1
2/2
7/7
—
—
—
1/1
1/1
2/2
1
Juan G. Hernández Abrams was unable to attend one of the Remuneration Committee meetings held in December 2023 due to a family emergency. He was briefed by the Committee
Chair prior to the meeting and he also provided comments on the meeting materials to both the Committee Chair and the Group Company Secretary and Legal Advisor in advance.
2 Annette Kelleher was appointed to the Board on 1 December 2023.
3
4
Eva Lindqvist was unable to attend the Audit and Risk Committee meeting held in July 2023 due to unavoidable personal matters. She was briefed by the Committee Chair prior to the meeting
and she also provided comments on the meeting materials to both the Committee Chair and the Group Company Secretary and Legal Advisor in advance.
Kate Rock was unable to attend one of the Remuneration Committee meetings held in December 2023 due to due to a family bereavement. She was briefed by the Committee Chair prior to the
meeting and she also provided comments on the meeting materials to both the Committee Chair and the Group Company Secretary and Legal Advisor in advance.
5 A number of additional meetings were held during the year. These non-scheduled meetings are not reflected on this table.
6 The Environment and Social and Community Committees merged in May 2023 to form the Sustainability Committee. The first meeting of the Sustainability Committee took place in July 2023.
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 88 and 89.
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.
Keller continues to assess the independence of its Non-executive
Directors on an annual basis in accordance with the UK Corporate
Governance Code (the ‘Code’). This includes reviewing their tenure,
any potential conflicts of interest, as well as assessing their individual
circumstances to ensure that there are no relationships or matters
likely to affect the judgement of the Non-executive Directors. Paula
Bell, Annette Kelleher, Eva Lindqvist, Baroness Kate Rock and Juan G.
Hernández Abrams are all considered to be independent NEDs. Their
other professional commitments are as detailed on pages 88 and 89.
Peter Hill CBE was independent at the time of his appointment as
Chairman on 26 July 2016. Peter’s other professional commitments are
as detailed on page 88.
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.
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Board activities and principal decisions
Strategy and performance
Topics
• Project performance reviews
• Reviewed and considered the monthly performance of the divisions
and business units
• M&A opportunities
People and culture
Topics
• Board composition
• Executive Committee composition
•
• Wellbeing
Inclusion and diversity
Operational performance
For more information see page 16 to 21
Outcomes
• PPM standard development
• ERP
• Finance transformation
For more information see page 69 to 81
Outcomes
• Appointed Annette Kelleher as Non-executive Director
• Appointed Craig Scott as Group HR Director
• Launched VP Ignite initiative. See page 76 for further information
on this initiative.
For more information see page 22 to 29
Topics
Outcomes
• Contracts performance review and revenue over the year
• ESG and sustainability objectives
• Record performance in North America
• Progress on carbon reduction. See the ESG and sustainability
section of this report for further information on this topic.
Financial management
Topics
• Evaluated and approved the 2024 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
For more information see page 30 to 35
Outcomes
• US private placement of $300m
• Considered and agreed the recommendation to pay the 2023 final
dividend, as well as the payment of the 2023 interim dividend
Risk and control
Topics
For more information see page 36 to 47
Outcomes
• Considered the principal and emerging risks and uncertainties which
could impact the Group
• Audit assurance strategy with focus on second line of defence. See
also the Audit and Risk Committee report for further information.
• Reviewed the risk management framework with particular regard to
going concern and impact on the viability statement
Governance
Topics
• Group policies
• Legal and regulatory changes
• Provision of information to the Board and its committees
For more information see page 86 to 87
Outcomes
• New policies: Human Rights, Biodiversity, and Prevention of
Tax Evasion
• AI-powered management reporting for the Board and its
committees. See page 103 for further information.
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Section 172 statement
Keller Group plc Annual Report and Accounts 2023
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.
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.
For more information see page 102
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,
As part of their induction, our 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.
Our 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 should take into account
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 97 to 99. Details about the principal
decisions the Board made during the year
can be found on page 93.
Principle
Location of additional information
Likely consequences of
any decisions in the long
term
Interests of employees
• Chairman’s statement (pages 10 to 12)
• CEO’s statement (pages 16 to 19)
• The Keller model (pages 2 to 9)
• Our strategy (pages 20 and 21)
• The value we create (pages 8 and 9)
• Principal risks and uncertainties (pages 36 to 47)
• Board activities and principal decisions (page 93)
• Viability assessment and going concern (page 39)
• People (page 69 onwards)
• Sustainability Committee report (page 105 onwards)
• Nomination and Governance Committee report (page 109
onwards)
• Annual statement from the Chair of the Remuneration
Committee (page 120 onwards)
Need to foster business
relationships with
suppliers, customers
and others
• The Keller model (pages 2 to 9)
• Our strategy (pages 20 and 21)
• Principles (pages 79 to 81)
Impact of operations on
the community and the
environment
• ESG and sustainability (pages 59 to 68)
• TCFD statement (pages 48 to 58)
• Principles (pages 79 to 81)
Reputation for high
standards of business
conduct
• Principal risks and uncertainties (pages 36 to 47)
• Division of responsibilities (pages 100)
• Audit and Risk Committee report (page 112 onwards)
• Directors’ report (pages 143 to 145)
Need to act fairly
between members
• Chairman’s statement (pages 10 to 12)
• Chairman’s introduction to Governance section
(pages 86 and 87)
• Directors’ report (pages 143 to 145)
Our business can only be resilient and
achieve sustainable success if built on strong
foundations of stakeholder engagement.
Peter Hill CBE
Group Chairman
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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.
How we engage
• The Chief Executive Officer (CEO) and the Chief Financial Officer
(CFO) meet with major shareholders following the preliminary
results announcements to discuss a number of matters, including
progress against the Group’s strategy.
• The CEO and the CFO have calls with major shareholders following
the interim results announcements.
• The CEO and the CFO have calls with major shareholders following
the Group’s trading update announcements.
• Following these announcements, analysts’ notes are circulated to
the Board.
• The Chairman and the Senior Independent Director have calls with
shareholders to discuss Group performance and risk management
throughout the year.
• We have consistently either grown or maintained our dividend
since listing. We have strong cash generation and a robust balance
sheet which, together, support our ability to continue to sustainably
increase the dividend.
Outcome
• 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.
During the year, we enhanced the ESG and sustainability section of
the website to improve users’ access to information.
• 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 for the 2023 AGM can be found on our website.
• For the second year running, we carried out an investor perception
audit to obtain a deeper level of understanding of the views of
shareholders and potential investors.
• Keller is a stable business with a long-term track record.
• Continued growth opportunities.
• Consistent and sustainable dividend.
• Transparency and clear communication.
• Plan of action in place to address investor perception audit
results.
Employees
Our people are our most valuable asset. We appreciate that they remain a key factor in our success and
provide us with a competitive edge. We want them to be inspired and motivated, equipped with the right
skills, tools and standards to be successful.
How we engage
• During 2023, 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.
• Business unit leaders met in October 2023 at a company
conference. The Board attended a number of activities during the
conference.
• We communicate regularly with our employees through face-to-
face meetings, webcasts, our company intranet and newsletters
and site and office visits. Site visits allow NEDs to feel the
operational environment and enhance their understanding of
employees’ experience of their working environment.
• The Sustainability Committee considered feedback gathered
through employee engagement surveys during 2023, which were
conducted amongst five business units, the results of which can be
found on page 106.
Outcome
• Local and global development opportunities.
• Established development and training programme.
• Long-term employment.
Inclusive, diverse and supportive environment.
•
• Plan of action in place to address employee engagement
survey results.
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Section 172 statement continued
Customers
Our customers are central to our business – without them we would not exist. We want to continuously
improve on efficiently delivering a consistently high performance across all our strategic levers so as
to meet our customers’ needs.
How we engage
• The CEO 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.
• Business unit leaders and senior management conduct a range of
client research to better understand their expectations of us, and
how we can effectively address their needs.
Outcome
• Benefit from Keller’s global strength and local focus.
• Provision of cost-effective geotechnical solutions.
Suppliers
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.
How we engage
• Our procurement function continued to work hard to understand
our supply chain and how to develop deeper and more strategic
relationships with key suppliers.
•
Increased communications with our suppliers during the year
have assisted us in managing our resources and materials efficiently
on site.
• Our Supply Chain Code of Business Conduct sets out our
• We also introduced a Human Rights Policy to ensure that human
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.
rights’ infringements are not taking place in our business or any part
of its supply chain. Further information can be found on page 80.
Outcome
• A reliable local relationship with a financially strong global company.
• Support in meeting global supply chain standards.
Communities
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.
How we engage
• The Board is informed of, and the Sustainability Committee
monitors, our contributions to local communities through our
Partnerships programme which is managed by senior management.
Further details can be found on page 81.
• 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.
Outcome
• Local employment.
• Charitable partnerships.
• The Keller Foundation (Fundacja Keller) was established to raise
funds in response to the Ukrainian conflict. Further information
can be found on page 81.
• Charitable initiatives during 2023 included our continued
partnerships with UNICEF and The Brilliant Breakfast. Further
details can be found on page 108.
• Participation by our employees in community events.
• Global sustainable commitments.
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Governance framework
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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 on page 97.
Code of Business Conduct
Board of Directors
Board of Directors
Board Committees
Anti-Bribery and
Anti-Fraud Policy
Information
Policy
Procurement
Policy
Tax Strategy
Board Delegated
Authorities
Share Dealings
Code
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NOM
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Audit and Risk
Committee
Nomination and
Governance
Committee
Remuneration
Committee
Share Plans
Committee
DIS
SUS
Disclosure
Committee
Sustainability
Committee
Bank Guarantees
and Facilities
Committee
Management Committees
EXC
Executive
Committee
SLC
SSC
Think Safe
Safety Leadership
Committee
Sustainability Steering
Committee
Main committees
Treasury Committee
Data Protection Steering
Committee
Other committees
Treasury Policy
Data Protection Policy
Board Diversity
Policy
Charter of
Expectations
Remuneration
Policy
Health, Safety
and Wellbeing
Policy
Human
Resources Policy
Quality and
Continuous
Improvement
Policy
Sustainability
Policy
Whistleblowing
Policy
Supply Chain
Code of Business
Conduct
Modern Slavery
and Human
Trafficking
Statement
Charitable
Giving Policy
O
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Keller Group plc Annual Report and Accounts 2023
Governance framework continued
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 93.
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
Audit and Risk Committee
Remit: 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.
Nomination and Governance Committee
Remit: 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.
Membership
Quorum
Independent Non-executive
Directors (NEDs)
Two
Chairman and independent
NEDs
Two
Remuneration Committee
Remit: Framework, policy and levels of remuneration of the Executive Directors
and senior executives.
Independent NEDs
Two
Disclosure Committee
Remit: Inside information determination and advice on scope and content of disclosures
to the market.
Sustainability Committee
Remit: Oversight of the Board’s responsibilities in relation to environmental matters,
including climate-related matters and TCFD, and wider sustainability matters. Understanding
of the key concerns of the workforce and wider stakeholders, apart from shareholders.
Any two Directors (including
CEO or CFO) and the Group
Company Secretary and
Legal Advisor
Two
Independent NEDs, Group
Chairman 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.
Other Board Committees
Committees
Share Plans Committee
Remit: Consideration of administrative matters related to the provision of share-based
employee benefits for the company and its subsidiaries.
Membership
All Directors and the Group
Company Secretary and
Legal Advisor
Quorum
Two
Bank Guarantees and Facilities Committee
Remit: 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 (www.keller.com).
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Main Management Committees
Committees
Membership
Chair
Quorum
Executive Committee
Remit: Day-to-day management, executing strategy,
monitoring performance, promoting the Group’s culture
and driving the desired behaviours within the Group.
CEO, CFO, Group Company
Secretary and Legal Advisor and
any other officers as invited by
the CEO. Minimum of six.
CEO or CFO in
CEO’s absence
Four (including
CEO or CFO)
Safety Leadership Committee
Remit: Safety culture.
CEO
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.
Sustainability Steering Committee
Remit: Mostly climate-related and environmental matters, but
also people, community, governance and reputational matters.
A minimum of six
representatives of each division
and the Group’s relevant
functions.
Group
Engineering
and Operations
Director
Four (including
CEO or Group
HSEQ Director)
Four (including
Group
Engineering and
Operations
Director)
Other Management Committees
Committees
Membership
Chair
Quorum
Treasury Committee
Remit: Management of the company’s financial risks in
accordance with the objectives and policies approved
by the Board.
Data Protection Steering Committee
Remit: 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
(including CFO)
Legal representatives from each
division (Europe, North America,
AMEA), Group Company
Secretariat and Group
Information Security.
Rotational
n/a
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Keller Group plc Annual Report and Accounts 2023
Division of responsibilities
The Keller Charter of Expectations and Role Profiles 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 and the Group Company Secretary and Legal Advisor. The charter 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 role
Responsibilities
Chairman
Responsible for
leading the Board,
its effectiveness
and governance.
The Chairman is also
responsible for:
• Being the ultimate custodian of 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.
• Ensuring that Directors are 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:
• Formulating strategy proposals for the Board.
• Formulating annual and medium-term plans, charting how this strategy will be delivered.
•
Informing the Board of all matters which materially affect the Group and its
performance, including any significantly underperforming business activities.
• Leading executive management in 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
Chief Financial
Officer
• 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.
Responsible for financial
management and
control, budgeting
and forecasting, tax
and treasury and
investor relations.
The CFO is also
responsible for:
• Adherence within the company to all applicable accounting standards.
•
Internal financial controls within the company.
• Custodian of the Group’s financial resources.
• Oversight of the company’s financial functions and staffing including motivation,
development and succession.
• Maintaining adequate financial 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.
• All Directors have access to their advice and services.
• Responsible for ensuring that the Board operates
in accordance with the governance framework it
has adopted.
• Advises on evolving standards and supports the
Chairman on the continuing development of
the Board.
• Their appointment and resignation is a matter for
consideration by the Board as a whole.
Committee Chairs
Responsible for the effectiveness of each committee and individual member Directors.
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Keller Group plc Annual Report and Accounts 2023
Board composition, succession and evaluation
Board composition
The Board comprises the Non-executive Chairman, the Senior
Independent Director, five independent NEDs and two Executive
Directors. The Board appointed Annette Kelleher as independent NED on
1 December 2023 as part of the Board’s succession planning. The Board’s
individual biographies are detailed on pages 88 and 89.
Board diversity
Our Board Diversity Policy has been in place since January 2021.
In 2023, Keller’s Board of Directors had a 50% female share (2022: 43%).
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 and 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 FTSE Women Leaders Review and the 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 73.
Gender (%)
Nationality (%)
Length of tenure (%)
Female
Male
50%
50%
British
Other
50%
50%
<1 year
12.5%
1–3 years
4–6 years
25%
50%
7–9 years 12.5%
Number of Board members with
relevant international experience
Americas
Europe
Middle East
Africa
Asia Pacific
7
8
4
3
6
Number of Board members
with relevant experience
Overall, Keller’s Board Diversity Policy aligns
to the FTSE Women Leaders Review and the
Parker Review, and we report in line with the
UK Corporate Governance Code (via the Listing
Rules), the relevant Disclosure Guidance and
Transparency Rules, and the Companies Act
2006 on people matters.
Data as at 31 December 2023.
Oil and gas
Technology
Construction
Engineering
3
6
5
7
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Keller Group plc Annual Report and Accounts 2023
Board composition, succession and evaluation continued
Board and Committee performance review and
evaluation 2023
The annual Board evaluation provides the Board and its committees with
the opportunity to consider and reflect on the quality and effectiveness of
its decision-making, the range and level of discussion and for each member
to consider their own contribution and performance.
The Group Company Secretary and Legal Advisor collated the individual
responses, including analysis of themes and proposed actions. A detailed
report, setting out the findings of the evaluation, was provided to the
Chairman for consideration. The Group Company Secretary and Legal
Advisor and the Chairman met to discuss the findings, with the resulting
report being tabled to the Nomination and Governance Committee and
Board in December 2023.
In 2023, the review was facilitated internally by the Group Company
Secretary and Legal Advisor, who is well placed as an independent sounding
board to the process.
Questionnaires were issued and each Director was also asked to
complete an updated entry for the Board skills matrix, taking into
consideration skills that had been strengthened through training and
development over the previous year. Directors were also asked to
highlight any additional skills that they felt may be beneficial for the Board
to have amongst its members in order to discharge its duties effectively.
Board members participated in comprehensive one-to-one meetings
with the Chairman, to allow reflection on their personal responses to the
questionnaire and discussion of matters relevant to boardroom culture,
process and development. The Chairman’s performance evaluation was
led by the Senior Independent Director.
The findings of the evaluation exercise were fully considered when making
recommendations in respect of the appointment and reappointment of
individual Directors, and included an assessment of their independence,
time commitment and individual performance. The respective proposed
2023 AGM Resolutions were considered and agreed by the Board.
The Board will consider and agree the proposed actions arising from the
evaluation for implementation and monitoring at its meetings in 2024. The
Board will continue to oversee the progress made in relation to the agreed
actions to ensure their timely completion. The Nomination and Governance
Committee will also continue to play a key role in monitoring the actions
relating to Board succession, composition, recruitment and induction.
An externally facilitated evaluation was conducted in 2021 and in 2022,
and the next externally facilitated evaluation will be scheduled for 2024
in accordance with the 2018 Code provision that the company should
undertake an externally facilitated Board Effectiveness evaluation at least
every three years.
Key areas identified in the review
Succession planning and Board composition
Ensure process to enable the smooth succession of Non-executive
Directors, including the Chairman, commences well in advance of
scheduled retirements.
Succession planning continues to be a key focus of the Board and a
standing item on the agenda for Nomination and Governance Committee
meetings. Robust succession plans will be put in place for all roles.
Performance culture
The Board members identified an opportunity to focus on a culture of
delivery and accountability within the organisation.
The deployment of high performance culture will be a key focus for
the Board as it assesses Keller’s culture and engagement programme
during 2024.
2024 Priorities
Notwithstanding the well-structured agendas which comprise an
optimal mix of strategic and operational items, consideration should
be given to scheduling key strategic and complex topics earlier on the
Board agenda to ensure sufficient time for discussion and debate to
align with the wider business planning and budgeting process.
The Board forward agenda has been reviewed to ensure that:
• All matters are appropriately scheduled for discussion at future
Board meetings; and
• Sufficient time is devoted to the discussion of strategic and
innovative topics.
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. During 2023 the Board received externally
facilitated training on human rights, and attended the Business Unit
Leadership Conference in October.
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AI-powered management reporting for the Board
Feedback from our Board
evaluations in 2021 and
2022 highlighted the need
to improve how we frame
discussion topics and a
preference for more strategic
discussions.
As a result, during 2023 we partnered with Board
Intelligence to complete a review of Board and
committee materials with the objective of finding
opportunities to improve the quality of reporting.
Reports prepared for our Directors are vital for
helping them understand the daily workings of
the business and take the necessary strategic
actions for Keller’s continuous improvement.
Challenges identified during
the review
• Focus of board meetings
• Coverage of strategy and risk
• Clarity of papers
• Backward-looking reports
• Unclear drivers of performance
• Lack of operational and non-financial
information
Actions under way
To address the challenges identified,
we are now in the process of implementing
the following actions:
• Rebalance the areas of focus and
accompanying materials for the Board
and committees.
• Clarify and align expectations of Board
and committee materials between the
Non-executive Directors and the
management team.
• Establish the information that gives a clearer
view of underlying business performance.
We have also introduced an innovative report
writing tool called Lucia, by Board Intelligence.
Lucia uses AI nudges to help senior leaders
quickly craft crisp, easy-to-digest and
insightful report in a format that drives better
conversations and helps Directors make smarter,
better-informed decisions.
We are already seeing good results across a
number of reports and we expect to be able to
roll out the exercise further in the next year.
The Board and I
have found the new
reports to be clear,
well-balanced and of
high quality, giving
us the right level of
information we need
to shape our thinking
and actions.
Peter Hill CBE
Group Chairman
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Keller Group plc Annual Report and Accounts 2023
Board composition, succession and evaluation continued
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 operational detail.
For each Board and committee meeting, Directors are provided with a
tailored Board pack in advance of the meeting, and 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 includes carbon emissions reduction performance and progress on
sustainability initiatives. 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 CEO.
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 36 to 47. The key elements of the Group’s
system of internal controls are explained in the Audit and Risk Committee
report on page 118. The management of financial risks is described in the
Chief Financial Officer’s review on page 35.
Compliance with laws and regulations
Compliance with laws and regulations both local and global is of extreme
importance to the Board, including the minimisation of instances of
non-compliance. Throughout the reporting year, the Group Company
Secretary and Legal Advisor received reports from and met with members
of divisional management to assess and understand the key challenges and
opportunities faced in relation to legislative and regulatory developments
within each jurisdiction of operation, which were subsequently reported to
the Board for consideration.
No instances of non-compliance were identified throughout the year.
For more information on policy commitments in compliance with laws and
regulations, please see our Non-financial and sustainability information
statement on pages 82 and 83.
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 from the Financial Reporting Council.
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.
Keller Business Unit Leadership Conference October 2023 – family picture.
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Dear shareholder
On behalf of the Board, I am pleased to present the report of the
Sustainability Committee for the year ended 31 December 2023, the
first report since the merger of the previous Environment, and Social
and Community Committees. I have been impressed by the energy and
commitment of the Keller people during my first complete Board cycle
with the Group.
A new committee
During the year, the Environment and the Social and Community
Committees were merged into the Sustainability Committee to reflect the
growing importance of sustainability-led initiatives at Keller which the Board
considers of key importance in supporting the delivery of the Group’s long-
term strategic objectives.
The new committee combined the resources of the previous committees,
providing greater clarity and accountability on roles and responsibilities,
easing decision making, and renewing our commitment to drive the
sustainability agenda.
The Planet and People initiatives previously overseen by the Environment
and Social and Community Committees respectively were continued by
the new committee, although since its establishment, the committee has
focused on developing its working cycle and practices to support the Board
in its oversight of sustainability matters across the Group.
TCFD reporting
During the year, the committee continued its focus on increasing the scope
and quality of our disclosures under TCFD.
We are pleased to report that we have made further progress in our third
year of reporting under TCFD, having been able to broaden and quantify
the findings of our scenario analysis modelling. As you can see on pages
48 to 58, our disclosures have increased significantly to include scenario
modelling for Europe, North America and part of AMEA. This demonstrates
Keller’s ambition to better manage and mitigate our climate-related risks
and opportunities, and our commitment to increased reporting for the
benefit of our stakeholders. The committee is ideally placed to provide
Board-level governance and scrutiny over strategic, climate-related topics.
For more information on the specific climate-related risks and
opportunities, please see page 43 in the principal risks and uncertainties
section of this report.
We are committed to driving our
business in a sustainable way into
the future while supporting the
company’s overall strategy.”
Juan G. Hernández Abrams
Chair of the Sustainability Committee
Role of the committee
The role of the committee is to assist the Board of Directors in
fulfilling its oversight responsibilities in relation to sustainability
matters arising out of the activities of the Group.
Committee composition during 2023
Juan G. Hernández Abrams (Chair)
Meeting
attendance
Paula Bell
Peter Hill CBE
Annette Kelleher1
Eva Lindqvist
Baroness Kate Rock
Michael Speakman
1 Member from December 2023.
Committee highlights in 2023
• Recommended new terms of reference to the Board.
• Supported management to extend Keller’s culture and
engagement programme to more business units.
• Monitored progress against TCFD disclosures.
• Monitored progress against the year’s environmental
objectives.
• Monitored whistleblowing reports on HR and
compliance matters.
• Developed an annual programme of work for the
committee.
• Launched the CSRD working group.
• Reviewed the effectiveness of the committee.
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Carbon reduction targets
Scope 1 emissions per £m revenue have decreased, with small
improvements in the carbon efficiency of our operations.
Our culture
For Scope 1, we were excited to push several equipment decarbonisation
initiatives during 2023. This included the launch of Keller’s first plug-in
electric rig during the closing months of 2023. This enables us to work in low
emission zones, designated quiet areas and closed space work sites. Whilst
this new rig has not been deployed globally to Keller, it has nevertheless
marked a momentous step towards the Group’s fleet decarbonisation.
Additionally, the option of biofuels (HVO) as an alternative for clients was
rolled out across several business units. Read more about the electric rig
on page 13.
Keller has seen good engagement on Scope 2 activities, with the Group
achieving its Scope 2 emissions reduction target. In 2023 we focused on
implementing the findings from our previous energy audits across Keller’s
three divisions, highlighting opportunities to save energy and money going
forward. This saw the creation of Keller’s first net zero yard in the last
quarter of 2023. Read more about the net zero yard on page 66.
How we work, shaped by
our values and behaviours
Our track record of successful projects would not be possible
without the passion, commitment and enthusiasm of the 9,500
people who work for Keller worldwide.
We have an outstanding company spirit that makes Keller a great
place to work, and we aim to ensure that everyone feels respected,
accepted, supported and valued.
Keller’s culture and engagement programme provides a structured
way of getting and acting on employee feedback to continually
improve the employee experience and drive better business
performance.
Multiple initiatives are under way to quantify and reduce Scope 3
emissions. The new ERP system is also being designed to have the
capability to capture the necessary data for measuring Scope 3
emissions. Further detail is available on page 67.
78%
average engagement score1
Employee engagement
The committee continued the excellent work previously undertaken by the
Social and Community Committee by leading engagement by the Board
and its committees with our workforce, making sure that the Directors
understand and learn from the views of all our stakeholders. Opportunities
for the Directors to learn from the views of our workforce arose in particular
during the year when the Board met Divisional Presidents and Business
Unit Leaders from across the organisation during a conference in October,
where we learned about the progress they have been making and their
local challenges.
As part of Keller’s culture and engagement programme to drive better
business performance and improve employee engagement, the Group
invested in developing its own people to diversify the skills available
in the internal talent pipeline, the aim being to achieve this through
delivery of quality and consistent content across the Group via internally
developed programmes.
To actively monitor the culture of the business, the Board and the
committee, supported by the newly appointed Group HR Director and his
team, will regularly review the results of employee engagement surveys, as
well as insights from focus groups and site visits. Where consistent themes
emerge, actions will be fed into the appropriate strategies to further
strengthen our culture.
84%
of employees would recommend Keller
as a great place to work1
84%
of employees agree ‘Working at Keller
makes me want to do the best work I can’
86%
of employees are proud to work for Keller1
1
Based on results from five business units.
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Looking forward
As industry leaders, we are on the right path at Keller on
environmental and wider sustainability matters and will continue
to drive for a more sustainable future.
Our priorities for 2024 will revolve around:
• Embedding climate and social risks and opportunities in our
overall strategy.
• Horizon scanning on environmental and wider sustainability
matters, in particular the reporting implications of the
Corporate Sustainability Reporting Directive (CSRD). A multi-
functional CSRD working group has already been established,
reporting to the Executive and the Sustainability Committees,
and we intend to confirm our CSRD reporting approach in the
next annual report.
• Supporting the company in its progress towards net zero,
including Scope 3 emissions.
• Assisting the Remuneration Committee in monitoring the
impact of ESG targets on remuneration.
• Continuing to engage employees on sustainability matters.
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.
Juan G. Hernández Abrams
Chair of the Sustainability Committee
Approved by the Board of Directors and authorised for issue on
4 March 2024.
Keller Group plc Annual Report and Accounts 2023
Sustainability is about action
and at Keller this is in our DNA.”
Activities
Further detail on the committee’s activities can be found in the Planet,
People and Principles sections of our ESG and sustainability report, starting
on page 62, but I would like to highlight the following topics considered
during the year:
• Supported the Board in achieving its objective to continue the
•
reduction of Scope 1 and 2 emissions during the year.
Invested resources into developing a working programme to
understand and assess Keller’s Scope 3 emissions. This has included
bringing together leaders from across the Group from a variety of
backgrounds, investment into new platforms to capture data relating
to Scope 3 emissions, and awareness training across the organisation
on the challenges facing Keller on this initiative.
• Remained abreast of the development and implementation of the
Inclusion Commitments, which continued to guide the delivery
of people-related priorities across the Group. This included the
review of an HR operating model which promotes transparent
communication and project prioritisation to support Keller in achieving
its strategic objectives.
• Reviewed and promoted management’s proposal to invest towards
internal talent and skills development, including performance
management.
Corporate governance
The remit of the committee is set out in its terms of reference which are
available on the Group’s website (www.keller.com) and on request from the
Committee Secretary. During this financial year, the committee held formal
meetings in July and December, with attendance at the meetings shown on
pages 92 and 105.
The committee is comprised of the independent Non-executive Directors
of the company, the Group Chairman and the CEO. The committee may
invite members of the senior management team to attend meetings where
it is felt appropriate, and the CFO, the Group Company Secretary and Legal
Advisor, the Engineering and Operations Director, the Group HR Director
and members of their teams regularly attend meetings. The Group Head of
Secretariat is the Committee Secretary.
The Board delegates authority to the committee to manage, plan and
mitigate Keller’s environmental and social-related risks and opportunities,
and review relevant people, social and community policies and practices, but
the Board maintains ultimate accountability for these. The Group Chairman
is the Director responsible for ESG and sustainability matters. As such, the
Board continued to monitor the efficacy, expertise and knowledge of the
committee in executing the sustainability strategy throughout the year.
Our organisational and reporting structure for climate governance, and
how it fits within our governance framework, is set out in the TCFD section
from page 48 onwards.
In addition, the committee’s performance, and that of its members, was
evaluated internally in an exercise facilitated by the Group Company
Secretary and Legal Advisor and overseen by the Group Chairman.
More detail about this exercise can be found on page 102.
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Privileged to partner with The Brilliant Breakfast
We are delighted to have supported
The Brilliant Breakfast and The Prince’s
Trust once again as Official Partner.
These events were a great opportunity
to share the work of this important
cause, hear inspiring real-life stories,
and of course raise funds.”
Kerry Porritt
Group Company Secretary and Legal Advisor
Keller partnered with The Brilliant Breakfast again in
2023, hosting a number of events to raise funds for
The Prince’s Trust programmes.
The Brilliant Breakfast is an annual, nationwide event raising money to
support young women facing disadvantage and adversity live, learn and earn
through The Prince’s Trust. Since launching in 2020, it has raised over £2.3m
and helped over 1,900 young women participate in programmes run by
The Prince’s Trust.
This time, as Official Partner, Keller committed to raise £5,000 on top of an
existing £10,000 donation to the cause.
The first fundraising event saw the Group Head Office in the UK welcome
representatives from The Prince’s Trust for a panel and networking session
over breakfast. Hearing an inspiring young woman, Hannah Joseph, a
Young Ambassador for the charity, talk about her experiences with their
programmes was a particular highlight.
This was followed by a more musical effort, with two members of Group
Head Office taking part in a charity ‘battle of the bands’ called Construction
Rocks with their band ‘Zero Charm’. The event is an annual fundraiser for
amateur musicians working in the construction industry. The band’s ticket
sales and supportive donations were added to The Brilliant Breakfast fund.
Between the earlier company donation, the band’s commendable
fundraising efforts (including match-funding from Keller) and the
breakfast panel event, we raised nearly £15,000 for The Brilliant
Breakfast and The Prince’s Trust in 2023.
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Committee report
Keller Group plc Annual Report and Accounts 2023
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Nomination and Governance Committee report
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Dear shareholder
Welcome to the report of the Nomination and Governance Committee
for the year ended 31 December 2023.
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, one in May and
one in December. The attendance at both meetings is shown on pages 92
and 109.
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. In 2023, we actively progressed the areas of
focus identified in 2021 and 2022, further detail of which can be found on
page 102. We also conducted an internal review of the effectiveness of the
Board and its committees, facilitated by the Group Company Secretary and
Legal Advisor and overseen by the Group Chairman.
Board composition
The committee’s activities during the year included:
• Considering the number of Executive and Non-executive Directors
on the Board, and whether the balance was 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
remained independent.
We are confident that each Director remains committed to their role and
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. Having a good mix of skills plays an important
role in keeping the Board relevant and up to date with the market and
best practice.
Welcome to Annette Kelleher
In 2023 we were delighted to welcome Annette Kelleher as a
Non-executive Director and Chair Designate of the Remuneration
Committee. Annette has broad senior management experience in
the international industrials sector, including change management,
group development and transformation. The depth of experience
she has in the international industrial sector, together with her people
transformation skills, will bring a valuable and fresh perspective to our
Board. She shares her initial thoughts on joining the Board on page 111.
Board diversity
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 FTSE Women Leaders Review and the Parker Review.
We also considered the new requirements under the Listing Rules and our
disclosure is set out opposite.
Peter Hill CBE
Chair of the Nomination
and Governance Committee
Role of the committee
The role of the 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.
Committee composition during 2023
Meeting
attendance
Peter Hill CBE (Chair)
Paula Bell
Juan G. Hernández Abrams
Annette Kelleher1
Eva Lindqvist
Baroness Kate Rock
1 Member from December 2023.
Committee highlights in 2023
• Appointment of Annette Kelleher as a
Non-executive Director.
• Evaluation of the Board and its committees
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 the terms of reference of the committee.
• Reviewed the committee’s effectiveness during
the year.
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Sex representation
With the introduction of new Listing Rules which seek to increase transparency for investors on the diversity of boards and executive management
(LR9.8.6R (9) and LR 14.3.33R (1)), we have opted to report on sex, rather than gender identity, as the latter is a special characteristic under UK data
protection laws requiring enhanced safeguards and processes for collection and disclosure. In some countries, data protection laws do not allow us to
ask for gender identity. All data provided below is as at 31 December 2023.
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
4
4
50%
50%
3
1
8
2
80%
20%
Men
Women
Other categories
Not specified/prefer not to say
Ethnicity representation
Number of
Board members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (inc minority – white groups)
Mixed/Multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
7
1
87.5%
4
9
1
90%
10%
12.5%
Keller have met specific Board
diversity targets required by
the Financial Conduct
Authority which include:
Target:
At least 40% of the
Board are women
Target:
At least one of the senior
Board positions is a woman
Target:
At least one member of the Board is
from a minority ethnic background
Keller:
50% of our
Board are women
Keller:
Baroness Kate Rock
Senior Independent Director
Keller:
Juan G Hernández Abrams
(was born in Puerto Rico)
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 appointment and time commitment
When we make recommendations to the Board regarding Non-executive
Director appointments, we 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
discuss them with the Group Chairman, or, in the case of the Group
Chairman himself, 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.
Having a good mix of skills plays
an important role in keeping the
Board relevant and up to date
with the market.”
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, who is the Committee Secretary. The terms of reference
were reviewed during the year, with no material changes to report.
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, the CFO and the
Group HR Director, along with external advisers, attended some of the
meetings held during the year.
Our 2023 evaluation of the committee’s effectiveness concluded that,
consistent with the Code and our own terms of reference, the committee
was discharging its obligations in an effective manner.
In accordance with the requirements of the Code, all members of the
Board, excluding Eva Lindqvist, will seek re-election at the AGM in May 2024.
Annette Kelleher will seek election by shareholders as she joined the Board
on 1 December 2023.
Peter Hill CBE
Chair of the Nomination and Governance Committee
Approved by the Board of Directors and authorised for issue on
4 March 2024.
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A conversation with Annette Kelleher
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What are your first impressions?
I’ve had a very warm welcome to Keller by everybody I’ve met so far. It was
immediately clear to me that the health and safety of people is something
leaders take very seriously and in non-negotiable. I’m impressed with how
much Keller has achieved during 2023 as well as the opportunities that are
ahead. There’s a very strong sense of customer focus and doing the right
thing for our clients and people. I think the depth and breadth of technical
and engineering capabilities is striking. It’s great to see the diversity of
local teams, and I hope I can support leadership in attracting more women
into Keller engineering and technology where there are some fantastic
career opportunities.
Companies like ours that have been around a long time are clearly able to
adapt, and continuing to adapt, being agile and moving at pace is crucial
for long-term success. Being open-minded and open to change is a
real strength.
What does your role as NED involve?
I see myself firstly as a thought partner to management; someone who is
supportive but will also constructively challenge. I have a responsibility to
ensure alignment between our shareholders and management, to make
sure we’re governed appropriately and to hold management to account,
critiquing and contributing to strategy and its execution.
I’m also involved in four committees. Our Nomination and Governance
Committee is responsible for appointing the most senior roles, including
senior-level succession and also makes sure we have sight of talent across
the organisation and have a sustainable pipeline.
Our Sustainability Committee is fantastic as it’s all about doing what’s right
for people and the planet in a way that enhances our strategy and delivers
better outcomes for our customers.
Our Audit and Risk Committee ensures our finances and accounts are
correct and well governed, while our Remuneration Committee, which I’ll
chair from May, sets and manages pay for our most senior leaders, as well as
having oversight across our wider workforce policies.
How will your experience and expertise help Keller?
I’m fortunate to have much experience of working in the industrial
and technology sectors on a global scale. I believe my experiences in
developing leadership, navigating change and enabling teams to drive
transformation will all be relevant for Keller. My experience in change
management and helping people through cultural change can really
support Keller.
What are you looking forward to?
I’m looking forward to supporting management across Keller shape further
and implement its strategy to be an even more valuable company.
In particular I’m looking forward to helping leaders develop a high-
performance culture with a real focus on people. I’m excited about the
opportunities for people to develop their careers within Keller and go
on to achieve their aspirations. I want to ensure our people can see the
career paths ahead of them and we build even more on Keller’s culture and
outstanding reputation. I’d love to see more women enjoy a career in Keller,
especially with such interesting technical challenges on a global scale.
There’s a lot to build on – to do what we do even better, to grow our
leadership and to develop our people through the organisation. We’ll also
continue to embrace our sustainability agenda and our very strong focus
on health and safety.
For me personally, I hope to help evolve our culture, respecting Keller’s
strong heritage, and enabling it to adapt and out-perform for a
sustainable future.
Annette Kelleher
Annette Kelleher joined Keller as a Non-
executive Director (NED) in December 2023.
She’s also Chief Human Resources Director
at sustainable technologies company
Johnson Matthey, where she’s been since
2013. Annette’s full biography is available
on page 89.
What attracted you to Keller?
When I started my research into Keller, I was quickly impressed by the
technical aspects of what Keller does, particularly on a global scale. I was
struck by the company’s heritage and fascinated to understand more.
Once I met the Board and management team, I got an immediate sense
of the culture and the importance of people within the company and the
determination to do a great job for their customers. I found the management
team to be really open and passionate about the business.
It was important to me to join a company where I felt I could bring value and
make a difference. Having worked extensively on a global scale, I believe
with my experience I can really help Keller on the next stage of its journey.
I’m thrilled to have the opportunity to be here and I’m excited about the
opportunities I see for Keller.
How was your induction?
Soon after joining, I was straight in at the deep end, where my first Board
meeting focused on reviewing the proposed budget for 2024. This was a
fantastic opportunity for me to meet some of our key leaders and get some
great insights into the challenges and opportunities in each of our regions.
I’ve also had the chance to review some of our big projects and I’m starting
to understand even more why Keller is such a leader in its space. I’ll be
visiting sites in the UK and Germany soon, as well as Australia this year. I’m
very keen to meet and talk with colleagues at the coalface of the business
and really understand how our operations run.
I want to help enable a high-performance
culture.”
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Audit and Risk Committee report
Committee highlights in 2023
• Continued to oversee the development of the Group’s
financial control framework.
• Monitored the implementation of the Group’s risk
management framework.
• Developed and monitored the implementation of an
assurance programme for a number of change initiatives
including ERP, PPM and finance transformation.
• Concluded satisfactorily the follow up actions resulting
from the reporting fraud in the Austral business unit.
• Monitored and challenged management plans in
preparation for the audit and corporate governance reform
as well as the output of management’s assurance map to
assess controls maturity.
• Reviewed and approved policies within its remit: Anti-
bribery and anti-fraud and tax evasion facilitation
prevention and related training.
Paula Bell
Chair of the Audit and Risk Committee
• Reviewed the output of the evaluation of the external and
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.
Committee composition during 2023
Meeting
attendance
the internal auditors.
• 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 effectiveness during the year.
Paula Bell (Chair)
Juan G. Hernández Abrams
Annette Kelleher1
Eva Lindqvist
Baroness Kate Rock
1 Member from December 2023.
Given the fast-changing and uncertain corporate
governance landscape in the UK, our focus has
been on practical actions to enhance Keller’s
control environment.”
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Dear shareholder
On behalf of the Audit and Risk Committee, I am pleased to present our
report for the financial year ended 31 December 2023.
We are also in the process of designing a Second Line of Defence Model
across all key risk domains (including non-financial reporting, compliance
and operational risks) to support our future assurance requirements, which
includes the basis for the Board’s statement on internal controls.
We continue to monitor the ERP and finance transformation
implementations to ensure that all relevant risks are considered and
that the appropriate automated and manual controls are built into the
system design.
This has been another busy year for the committee and management has
worked hard to drive improvements in the areas of risk, internal controls and
financial reporting. We are proud of the progress that has been made during
the year and remain confident in the actions that the management team
has taken, and will continue to take, to ensure the maintenance of both
high ethical and professional standards and resilient and effective controls
throughout our organisation.
I hope that you find this report informative and can continue to take
assurance from the work undertaken by the committee this year. We seek
to respond to stakeholders’ expectations in our reporting and, as always,
welcome any feedback from shareholders or other stakeholders.
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 in advance 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
4 March 2024.
This report is intended to provide shareholders with an insight into key
areas considered, together with how the committee has discharged its
responsibilities and provided assurance on the integrity of the 2023 Annual
Report. This has included ensuring the 2023 Annual Report is aligned with
the latest requirements and guidance from regulators, that it is fair, balanced
and understandable and that all matters disclosed and reported upon meet
the rapidly evolving needs of our stakeholders. In addition, the committee’s
fundamental priorities include ensuring the quality and effectiveness of the
external and internal audit processes and monitoring the management of
the principal risks of the business.
My introduction sets out the key areas of focus for the committee during
2023 (since our 2022 report) and to the date of this report.
The Group operates within a large, global and fast-changing environment,
which requires an adaptive approach to assurance. Needless to say that the
macro environment during 2023 remained challenging so it was important
to ensure that the Group’s risk management and internal control systems
operated effectively. Throughout the year the committee received regular
updates from management on the strengthening of the financial control
environment and systems of internal control. The internal audit plan has
continued to be adjusted to adapt appropriately to the changing needs of
the business.
Both the external and the internal audit processes were deemed to be
effective. We are confident about the efficiency and quality of the process
in place for the external audit of the 2023 year-end accounts. With regards
to the internal audit, we conducted an independent external review of
effectiveness during 2023 in line with the Institute of Internal Auditors (IIA)
requirement to perform an independent assessment at least every five
years. The outcomes of this review are outlined on page 117.
We continue to execute our implementation plan in preparation for the
FRC’s proposed changes to the UK Corporate Governance Code and a
future Board declaration on the effectiveness of risk management and
internal control systems.
Given the fast-changing and uncertain corporate governance landscape
in the UK, our focus has been on practical actions that enhance the
Group’s control environment and especially the evidence maintained to
demonstrate that our controls are operating effectively. We successfully
implemented a number of initiatives following the fraud identified in the
Austral Business Unit in Australia, including significantly enhancing our fraud
risk identification and management programme. Progress against these
initiatives was reported back to the committee, with the item becoming
a standing item on the committee’s agenda during the year and in 2024.
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Audit and Risk Committee report continued
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 auditor 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 on pages 92 and 112, and considered the items of business
shown in the table below.
The committee also reviewed the information presented in the Group’s preliminary announcement, the company’s processes for the preparation of the
2023 Annual Report and the outcomes of those processes to ensure that we were able to recommend to the Board that the 2023 Annual Report 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.
•
• Comprehensive review by senior management and external advisers to ensure consistency and overall balance.
Internal challenge and verification process dealing with the factual content of the information within the Annual Report and Accounts.
2023
1 August – interim results
23 October – trading update
2024
17 Jan
– trading
update
5 March –
preliminary
results
9 April –
annual financial
report
15 May –
AGM
JULY MEETING
SEPTEMBER MEETING
DECEMBER MEETING
FEBRUARY MEETING
Half-yearly results
Audit assurance
strategy and external
audit planning
Audit assurance strategy
and internal audit planning
Final results
Key focus
Reviewed and challenged the key
accounting judgements applied in
the preparation of the half-yearly
results.
Received a report from EY
covering the accounting, financial
control and audit issues identified
during the half-yearly review.
Reviewed the letter of
representation issued to EY and
made a recommendation to the
Board to approve.
Approved the initial
design and scope of a
project to develop an
audit assurance
framework in line with
expected regulatory
developments in this
area.
Considered the external
audit strategy covering
the audit approach,
significant risks and
areas of audit focus,
scope and materiality
for 2023.
Committee activity
Received an update on the
audit assurance strategy plan,
with a focus on second line
defence.
Considered the findings from
EY’s controls report and
reviewed progress on delivery
of the audit strategy.
Agreed the external audit
engagement and estimated
audit fee for 2023.
Reviewed and approved the
programme of internal audit
reviews of the Group’s
operations and financial
controls for 2024.
Other focus area – External audit
Reviewed the independence and
objectivity of EY, including the level
of non-audit fees.
Reviewed the
effectiveness of EY and
the audit process.
Reviewed and challenged the
appropriateness of the accounting in
relation to the significant financial
judgements, estimates and exceptional
items in 2023.
Received a report from EY covering the
accounting, financial control and audit
issues identified during the full-year audit.
Reviewed the safeguards to the integrity,
objectivity and independence of EY.
Reviewed the preliminary results, the 2023
Annual Report and Accounts, the letter of
representation issued to EY and made a
recommendation to the Board to approve.
Reviewed the independence and objectivity
of EY, including the level of non-audit fees.
Recommended the reappointment of EY as
external auditor.
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2023
1 August – interim results
23 October – trading update
2024
17 Jan
– trading
update
5 March –
preliminary
results
9 April –
annual financial
report
15 May –
AGM
JULY MEETING
SEPTEMBER MEETING
DECEMBER MEETING
FEBRUARY MEETING
Other focus area – Internal controls and risk management
Reviewed liquidity and going
concern.
Received an update on progress
with the Group Risk programme
covering the assessment of
principal risks and assurance
frameworks to assess the
effectiveness of the system of
internal control.
Received an update on the ethics
and compliance programme.
Received an update on progress
with the project to further
strengthen the financial control
framework (Controls Response
Plan following Austral), in the
context of the Corporate
Governance and Audit Reform.
Approved a policy (and related
training) on prevention of
facilitation of tax evasion.
Received an update on
cyber risk and
information security
across the Group
including operational
technology, aligned with
the ERP.
Received an update and
monitored progress on
Controls Response Plan
following Austral.
Received an update on the
ethics and compliance
programme.
Considered scenarios aligned
to the Group’s principal risks to
stress test the viability
assessment.
Received an update on
progress with the Group risk
programme covering the
assessment of principal risks
and assurance frameworks to
assess the effectiveness of
the system of internal control.
Received an update and
monitored progress on
Controls Response Plan
following Austral.
Received a detailed plan on second line
defence operating model.
Received an update on the ethics and
compliance programme.
Reviewed the effectiveness of the system
of internal control.
Reviewed liquidity and going concern.
Reviewed the analysis to support the
viability statement.
Received an update and monitored progress
with the project to further strengthen the
financial control framework (Controls
Response Plan following Austral).
Reviewed the responses and key themes
arising from the Group’s annual Electronic
Internal Control Questionnaire.
Other focus area – Governance
Reviewed the effectiveness of
the committee, considering all
the governance-related activity
carried out during the year, in
line with its terms of reference.
Approved the committee’s
rolling agenda and areas of
focus for 2024.
Received an update on the
reporting themes for the 2023
Audit and Risk Committee
report.
Reviewed and approved the
Anti-Bribery and Anti-Fraud
Policy and the Procurement
Policy.
Approved the narrative of the 2023 Audit
and Risk Committee report and principal
risks related disclosures.
Received a report on the disclosure of
information to EY.
Received an update on governance covering
the committee’s terms of reference,
Non-Audit Services Policy, other
committee-related policies, and Executive
Directors’ expenses for the year.
Reviewed a report on the Group’s tax
position and approved the tax strategy.
Other focus area – Internal audit
Received an update on the work
undertaken by PwC, including audit
resource, progress with the 2023
internal audit plan, significant
findings and audit actions, in
addition to areas of focus included
in the three-year internal audit plan.
Received an update on
the work undertaken by
PwC, including progress
with the 2023 internal
audit plan, significant
findings and audit
actions.
Received an update on the
work undertaken by PwC,
including progress with the
2023 internal audit plan,
significant findings and audit
actions.
Received a report on the externally
facilitated review of effectiveness
of the internal audit function.
Other focus area – Financial reporting
Received an update on delivery of the 2023
internal audit plan, progress with the 2024
internal audit plan and approved the
three-year internal audit plan.
Key focus (as above).
Reviewed
correspondence with
the FRC and proposed
response.
Reviewed correspondence
with the FRC and proposed
response.
Key focus (as above).
Reviewed correspondence with the FRC
and proposed response.
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Audit and Risk Committee report continued
Significant audit risks and accounting judgements
In planning its agenda and reviewing the audit plans of the internal and external auditors, the committee has taken into account significant operational and
financial issues and risks which may have had an impact on the company’s financial statements, internal controls and/or the delivery and execution of the
company’s strategy (including changes in the nature and significance of some of the Group’s principal risks).
The committee focused on assessing whether management had made appropriate judgements and estimates in preparing the company’s financial
statements, particularly with regard to the significant issues listed below. These issues were subject to robust challenge and debate between management,
the external auditor and the committee.
The committee also reviewed detailed external auditor reports outlining work performed and any issues identified in respect of key judgements and
estimates – in the independent auditor’s report on pages 148 to 158. The committee concluded there was no significant disagreement or unresolved issue
that required referral to the Board.
Accounting for construction contracts
Significant issues considered
How the committee addressed these issues
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 2023
and we have seen consistent application of the revenue recognition
methodology applied in the businesses and across contract types.
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.
Significant judgements are still required to be made on contracts for
which a degree of uncertainty remains after application of the
methodology.
The committee considered these issues at all of its meetings during
the year and, in particular, in December 2023 and February 2024
when it agreed with management’s recommendations. The
reasonableness of the recommendations made by management
was also discussed with EY.
Carrying value of goodwill
Significant issues considered
How the committee addressed these issues
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 15 to the
financial statements.
Provisioning
The committee considered the results of impairment tests of
goodwill prepared by management at its meetings in December 2023
and February 2024. Following discussion, consultation with EY and
challenge, the committee agreed with the recommendations made
by management. This resulted in an impairment charge recognised
for the goodwill at Keller UK.
Significant issues considered
How the committee addressed these issues
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.
Recognition of liabilities for contract claims requires judgement and
coordination between different Group functions.
Expected credit losses
The committee received regular updates from the CFO and
information relating to 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.
Significant issues considered
How the committee addressed these issues
The recovery of trade receivables from customers in certain
jurisdictions and circumstances can be challenging and subject to
legal process, leading to uncertainty over the timing of cash inflows.
Recognition of expected credit loss impairments for trade receivables
and contract assets requires judgement.
The committee received regular updates from the CFO and
information relating to expected credit losses was provided by the
divisional finance teams who reviewed the open receivables balances,
with provisioning being assessed with input from Group finance.
Details of the allowance for expected credit loss are set out in note 20
to the statements.
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Non-underlying items
Significant issues considered
How the committee addressed these issues
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.
The committee considered management’s presentation of
non-underlying items at its meetings in July and December 2023,
and February 2024. The reasonableness of the assumptions made
by management was discussed with EY.
The committee agreed with the recommendations made by
management.
Going concern
Significant issues considered
How the committee addressed these issues
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 improved financial
performance in 2023 combined with securing new debt facilities
through issuing new notes in the US private placement market in
August 2023 provide a strong platform for considering the Group’s
ability to continue as a going concern. However, going concern
remains a key focus for the committee and judgements and
estimates have been made on prevailing market conditions in
order to complete this assessment.
Internal 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 14
operational entity audits and themed audits across 12 countries, which
together represented approximately 39% of the Group’s budgeted 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 2023 Annual
Report and Accounts.
The audits carried out during 2023 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 external effectiveness
assessment of the internal audit function, which was performed by Deloitte.
The work of the internal audit function was rated as fully conforming. It was,
however, noted that there was an opportunity to refresh Keller’s three lines
of defence model, with a plan for further improvement of the second line of
defence to be executed in 2024.
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 2025, a
period of at least 12 months from when the financial statements are
authorised for issue, at its meetings in July and December 2023, and
February 2024.
External audit
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, and
reappointed in subsequent years. The lead EY partner during the financial
year ended 31 December 2023 was Kevin Harkin, who had no previous
involvement with the Group in any capacity prior to appointment. The
lead EY partner from the financial year to 31 December 2024 will be
Kevin Weston.
The committee considered the effectiveness and quality 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.
By way of an example, please refer to the Independent auditor’s report on
pages 148 to 158 where EY’s actions to mitigate the risk arising out the
financial reporting fraud in Austral are explained.
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Audit and Risk Committee report continued
The Group aims to continuously strengthen its processes, with the
involvement of the committee, to ensure these processes are embedded
throughout the organisation. During 2023, we continued to support
management in their efforts to enhance the system of internal controls,
defining the following priorities and receiving updates on their progress:
• 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.
• Successfully implementing a governance, risk and compliance (GRC)
tool to support the assessment, monitoring and reporting on risks and
internal controls.
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 committee reviewed and challenged the output of management’s
assurance map to assess controls maturity in the context of the
various programme change initiatives under way such as ERP, finance
transformation and PPM.
Controls response plan
As reported last year and elsewhere in this report, following the financial
reporting fraud in the Austral Business Unit, a controls response plan was
developed that covered both the business unit and the Group. Deloitte was
engaged to assist in the initial review and plan implementation. The majority
of the actions have been completed and there are ongoing projects that will
continuously improve controls, including:
• Second line of defence assurance.
• Project management controls through the new PPM standard.
• Finance transformation.
Deloitte’s engagement, following the initial review, involved assessing
the maturity and robustness of the Group’s minimum control standards
across a sample of legal entities and performing an effectiveness review of
the internal audit function. Both reviews highlighted the need for Keller to
urgently review the organisation’s governance, risk and assurance design
across the three lines of defence, with priority focused on the second line of
defence, to help reduce the likelihood of control breakdowns.
This is an extensive piece of work which has already commenced and we will
report further next year.
External audit continued
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.
• 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. 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 2023, 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 breakdown is available in
note 6 of the accounts on page 177.
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 2024. The lead EY partner from the financial year to
31 December 2024 will be Kevin Weston.
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.
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.
Further information on the Group’s risks can be found on pages 36 to 47.
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.
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Corporate governance
The committee’s terms of reference, which were reviewed 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 relevant sector, financial and commercial
expertise to enable the committee to fulfil its terms of reference. They do
so by providing independent and robust challenge to management and
our internal and external auditors, and ensuring there are effective and high
quality controls in place and appropriate judgements are taken. 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 Group Chairman, the CEO, the CFO, the Group Financial
Controller, the 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. The Group Head of Secretariat
is the Committee Secretary.
On two occasions, the committee met privately with EY without
management being present and we also met twice during the year
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.
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 2024 our priorities will be:
• Monitoring improvement actions identified in 2023, in
particular the detailed action plan that will deliver continuous
improvement to our second line of defence processes in line
with our assurance strategy.
• Monitoring the progress of the finance transformation project.
• Further developing the approach to fraud risk assessment
utilising the GRC tool that was successfully deployed in 2023.
• Continued review of the cyber security risk mitigation plan.
• Monitoring the implementation of PPM, supported by both
internal and external independent assurance activity.
• Monitoring the delivery of the ERP system, supported by
independent assurance activity.
Keller Group plc Annual Report and Accounts 2023
Anti-bribery and anti-fraud
The committee is responsible for reviewing the Group’s procedures
for detecting fraud, and the systems and controls for preventing other
inappropriate behaviour with a financial impact. Any instances of fraud
or suspected fraud are reported directly to the Group Head of Risk and
Internal Audit and the Group Company Secretary and Legal Advisor, or
anonymously via the Group Whistleblowing hotline. All reports of suspected
or actual fraud are treated with confidentiality and thoroughly reviewed
and assessed.
During 2023 the Anti-Bribery and Anti-Fraud Policy was independently
reviewed and updated. We also ran a series of fraud risk workshops with key
members of management across the business to ensure material fraud
risks are identified and effective controls put in place to mitigate them.
During the year, the committee was kept fully apprised in regular updates on
the progress and findings of investigations of cases of alleged fraud and any
remedial actions taken. Nothing substantial was uncovered.
Our response to the UK Corporate Governance Reform
Our UK Corporate Governance Reform implementation plan continues to
be revised to ensure that it is fit for purpose and in line with emerging FRC
and Government requirements. In 2023, a major component of this plan
involved investment in key systems to facilitate effective risk management,
including the implementation and rollout of a Governance, Risk and
Compliance tool, to bring together all aspects of our risk management
and internal controls management processes. We also implemented a
segregation of duties monitoring tool to ensure that we maintain effective
segregation of duties within our current ERP landscape and to also assist
with appropriate role design within our future global ERP.
Following the fraud identified in the Austral Business Unit, the Group
implemented a number of initiatives, including reviewing and updating
the Anti-Bribery and Anti-Fraud Policy and running a series of fraud risk
workshops with key members of management to ensure that all material
fraud risks are identified and captured and effective controls are in place
to mitigate those risks. The Group Head Office team worked closely with
the new Austral CFO and her team to redesign and document the material
finance processes and controls and to implement remediation activities
identified from the various external reviews commissioned in response to
the fraud. These external reviews also identified the need to enhance our
second line of defence capabilities, especially around internal controls over
financial reporting and project performance management controls. Design
and rollout of a second line of defence model will be a key area of focus for
the Group throughout 2024 and other areas of risk, including non-financial
reporting, compliance and operations, will also be included to address the
FRC’s proposed requirement that the Board disclose the basis for their
statement on internal controls.
Interaction with the FRC
During the year, the FRC reviewed the company’s Annual Report and
Accounts for the year ended 31 December 2022 in accordance with Part
2 of the FRC Corporate Reporting Review Operating Procedures. This
resulted principally in requesting further information in respect of expected
credit losses for trade receivables and contract assets, as well as minor
observations on other areas of the accounts.
The Group responded fully to the matters raised in the correspondence
and as a result has restated the disclosure of the allowance for expected
credit losses in note 20 of this year’s accounts. The FRC’s enquiry did not
result in any restatement of the primary statements reported for the 2022
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 disclosures adopted in
this year’s Annual Report and Accounts.
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Annual statement from the Chair
of the Remuneration Committee
Keller Group plc Annual Report and Accounts 2023
Committee highlights in 2023
•
•
Consulted with major shareholders and shareholder bodies
on proposed changes to the Remuneration Policy.
Monitored developments in corporate governance and market
trends, including the challenges presented by increasing levels of
inflation, the impact of the ‘cost of living crisis’, and the impact
across our wider workforce.
• Benchmarked and assessed the remuneration packages of the
Executive Directors and the Executive Committee.
• Reviewed and approved a new bonus structure for senior leaders
•
below the Executive Committee.
Determined bonus outcomes for 2023 and the vesting outcome
of the 2021–23 Performance Share Plan (PSP) awards.
• Set base salaries and established bonus arrangements for 2024
for the Executive Directors and the Executive Committee.
• Approved 2024–26 LTIP awards to Executive Directors,
Executive Committee and other senior executives.
• Reviewed its terms of reference and the effectiveness
of the Committee.
Dear shareholder
On behalf of the committee, I am pleased to provide an overview of
Executive Director remuneration for the year ended 31 December 2023.
2023 business performance and incentive outcomes
Keller delivered a record performance in 2023. Underlying operating profit
increased to £180.9m, up 67% at constant currency. Underlying diluted
earnings per share increased by 53% to 153.9p per share (2022: 100.7p per
share). Net debt (on a bank covenant IAS 17 basis) decreased by 33% to
£146.2m, equating to a net debt/EBITDA leverage ratio of 0.6x (2022: 1.2x).
The targets for the 2023 annual bonus for executive management were
set by the committee in February of last year and remained unchanged
throughout the year. When determining the bonus outcome, the
committee considered overall company performance over the period,
weighing the successful execution of the strategy and continued growth of
the Group against the wider macroeconomic environment.
The annual bonus payments for 2023 reflect the very strong operational
and financial performance of the Group. The financial measures, Group
profit before tax and net debt, paid out in full. There was progress against
the corporate objectives and the Executive Directors achieved 9% out
of a possible 30% maximum. Overall, the annual bonus outturn was 79%
of maximum.
After considering all the relevant factors for the 2023 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 PSP granted under the company’s Long-Term
Incentive Plan 2018 (LTIP) to executives in 2021 and vesting in March 2024
was improved from the previous PSP cycle. The operating profit margin and
ROCE targets were almost fully met during the performance period, with
the EPS target being met in full and TSR vesting at maximum. Overall, the
2021 LTIP awards vested at 95.6% of maximum.
The committee carefully considered the vesting levels of the 2021 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.
Eva Lindqvist
Chair of the Remuneration Committee
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, ensuring compliance with legal and regulatory
requirements whilst enhancing Keller’s long-term development.
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.
Committee composition during 2023
Meeting
attendance
Eva Lindqvist (Chair)1
Paula Bell
Juan G. Hernández Abrams
Annette Kelleher1
Baroness Kate Rock
1. Eva will retire from the Board and as Chair of the Committee following the 2024 AGM.
Annette will be appointed Chair.
2. Annette joined the Board and the Committee in December 2023.
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2023 wider workforce
Salary increases awarded across the business in 2023 were weighted to the
company’s lower paid employees and a number of one-off payments were
made to support employees through the cost of living crisis.
Shareholder engagement and consultation
In October 2023, we engaged with our top 20 shareholders as well as the
Investment Association, ISS and Glass Lewis to explain our proposed
changes to the Policy as part of the normal three-year renewal cycle.
During 2023, the committee reviewed the annual bonus plan arrangements
in place for the extended leadership team, comprising our global senior
management teams at the level below the Executive Committee, and
approved a new structure proposed by management to provide general
alignment and consistency in the structure, performance measures
and weighting of performance pay across the Group. Employees now
have a profit and cash target one level up from their area of operation to
encourage collaboration and alignment, together with a number of shared
corporate and/or personal objectives.
The vast majority of our largest shareholders were supportive of the
proposals put forward. On that basis, the committee has decided to
proceed with the proposed changes in our 2024 Policy which will be put to a
binding shareholder vote at our AGM in May 2024 and we wrote to our major
shareholders and the main proxy voting bodies in January 2024 to follow up
with our final proposals.
The committee is grateful to shareholders for the time they have given to
the consultation process and the feedback provided, which has helped
facilitate a more robust decision-making process.
2024 salary review
Salary increases for UK-based employees across the Group were generally
around 6.5%, effective 1 January 2024. The committee has considered
the impacts of rising inflation and cost of living challenges with regard to
the wider workforce and has positively noted management’s efforts to
provide additional security and robustness of earnings to those particularly
impacted in the Group.
Michael Speakman, CEO, and David Burke, CFO, were awarded salary
increases of 4.5%. As additional context, the CEO and CFO are already
aligned with the wider workforce pension rate of 7% of salary.
Key changes to the Remuneration Policy (the ‘Policy’)
A number of changes were made to the Policy in 2021, bringing it in line with
the UK Corporate Governance Code and the wider business environment.
The 2021 Policy introduced a number of best practice governance features,
some of which were already in operation, as summarised below:
•
Introduction of a two-year post-employment shareholding
requirement for Executive Directors.
• Discretion for the committee to override formulaic outcomes in the PSP.
• Malus and clawback policy.
• Mitigation measures for Executive Director leavers written into current
service contracts.
• Settlement of deferred bonus and dividend equivalents in shares and
not cash.
• Alignment of Executive Director pensions to the general workforce.
We also took the opportunity to refresh the performance metrics in our
PSP. The 2021 Policy was approved by 90.2% of shareholders.
In the context of evolving market practice since the approval of Keller’s
2021 Policy, the committee has reviewed its policy and proposes the
following changes:
•
•
Increasing the maximum opportunity available under the PSP from
150% to 200% of salary. The committee believes this increase is
appropriate in the context of market practice and competitiveness
and to ensure the policy remains fit for purpose over the next three
years. In 2023, the CEO received an LTIP award of 150% of base salary
and the CFO received an LTIP award of 125% of base salary. The
committee intends to grant 2024 LTIP awards at the same level.
Introducing an additional trigger of ‘corporate failure’ under Keller’s
malus and clawback policy, for good governance and in line with
emerging market practice.
Year ahead: 2024 annual bonus plan and LTIP metrics
Management’s focus continues to 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 2022, 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, and a Scope 2 reduction target formed one of
management’s corporate objectives for 2022 and 2023. Recognising
the continued importance of achieving these goals, we have agreed a
Scope 1 reduction target and a further Scope 2 reduction target to be
included in management’s corporate objectives for 2024. Further detail
on the 2024 corporate objectives will be disclosed in the 2024 Annual
remuneration report.
The four LTIP measures agreed in 2021 continue to support the delivery of
the strategy and are therefore carried forward into 2024. Together with the
targets for the LTIP for the year ahead, the measures are disclosed in the
this Directors’ remuneration report. See page 141 for further details.
2024 Annual General Meeting (AGM)
We very much hope that you will support our 2024 Policy and 2023 Annual
remuneration report 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.
The 2024 AGM will be my last at Keller as I have decided to step down after
seven years on the Board. It has been a pleasure to serve on your Board
and I wish Annette Kelleher great success as she takes over as Chair of the
Remuneration Committee.
Eva Lindqvist
Chair of the Remuneration Committee
Approved by the Board of Directors and authorised for issue on
4 March 2024.
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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.
The committee:
• addresses the need to balance risk and reward;
• monitors the variable pay arrangements to take account of risk levels,
ensuring an emphasis on long-term and sustainable performance; and
• 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 on page 70) 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.
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
table below and 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. During 2024 we will work to align our policy with
the 2024 Code.
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
• The committee ensures that the overall
reward framework embeds our purpose
and values.
Simplicity, clarity and predictability
• 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
• 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.
Cultural alignment and risk
• The committee ensures that a significant
portion of reward is equity-based and
thereby linked to shareholder return.
• Executive Directors are required to build
significant personal shareholdings in the
company and this is regularly monitored
by the committee.
Clarity
• The committee ensures that the Executive Directors 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.
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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.
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Remuneration at a glance
Overview of Remuneration Policy – How Executive Directors will be paid in future years
We are seeking shareholder approval for a revised Policy at the 2024 AGM. The key elements of the Policy will remain unchanged.
An overview of our Policy and how it is proposed to apply in 2024 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 2024
Salary
CEO: £645,510 – 4.5% increase from 2023,
below average salary increases of 6.5%
awarded to UK-based employees
CFO: £423,810 – 4.5% increase from 2023,
below average salary increases of 6.5%
awarded to UK-based employees
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.
2024 bonus metrics:
• 50% PBT
• 20% Net debt
• 30% 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 200% of salary.
For 2024, CEO will receive 150% of salary and CFO
will receive 125% of salary.
Awards subject to malus and clawback.
2024 PSP metrics:
• 25% Cumulative EPS
• 25% ROCE
• 25% Relative TSR
• 25% Operating profit
margin
✓
✓
Aligned with our
evolving strategy
Aligned with
shareholders
✓
✓
Aligned with
strategic KPIs
Drive quality
and sustainable
performance
Shareholding guideline
Guideline applies in post,
and extends beyond
tenure.
Updates
to the Policy
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
The committee is proposing the following changes to the 2021 Policy:
•
•
Increasing the maximum opportunity available under Keller’s Long-Term Incentive Plan from 150% to
200% of salary. The committee believes this increase is appropriate in the context of market practice and
competitiveness and to ensure the policy remains fit for purpose over the next three years. In 2023, the
CEO received an award of 150% of base salary and the CFO received an award of 125% of base salary. The
committee intends to maintain the 2024 LTIP awards for the CEO and CFO at the 2023 levels.
Introducing an additional trigger of ‘corporate failure’ under Keller’s malus and clawback policy for good
governance and in line with emerging market practice.
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Remuneration for 2023 – What Executive Directors earned during 2023
The Executive Directors received salary increases of 5% in 2023, below the salary increases to UK-based employees of 8%. The CEO received £617,715 and
the CFO received £405,563 in base salary.
Annual bonus
Weighting
Threshold
Underlying operating profit, £m1
Net debt, £m
Corporate objectives
110.0
297.1
50%
20%
30%
Target
120.2
Max
Outcome (% of max)
130.0
100%
Performance outcome: 180.9
270.1
243.1
100%
Performance outcome: 146.2
Summary of objectives on page 136
Actual: 8.6% out of 30%
Overall
PSP
EPS
TSR
ROCE2
Operating profit margin
Overall
1 At 2023 budget exchange rates before non-underlying items.
2 Average of the three-year ROCE for 2021–2023.
Weighting
Threshold
25%
25%
25%
25%
245p
Actual: 338.8p
Max
310p
Median
Upper quartile
Actual: Above upper quartile
12%
5.2%
18%
6.2%
Actual: 17.2%
Actual: 6.1%
29%
78.6%
Outcome (% of max)
100%
100%
90.1%
92.5%
95.6%
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Remuneration Policy report
The Remuneration Policy (the ‘Policy’) is set out in this section
This Policy will be put to shareholders for approval at the AGM to be held on
15 May 2024. The Policy is intended to apply, subject to shareholder approval,
for three years from 1 January 2024. Where a material change to this Policy
is considered, the company will consult with major shareholders prior to
submitting to all shareholders for approval. The Policy will be displayed on
the company’s website (www.keller.com) following the 2024 AGM.
Summary of decision-making process
As described in the Annual statement from the Chair of the Remuneration
Committee, the committee engaged with its major shareholders in 2023
as part of its review of the executive remuneration policy. We wrote to
20 of our largest shareholders and the major shareholder representative
bodies in October 2023 to consult on the development of our executive
remuneration approach and, having considered the feedback, we wrote
to them again in January 2024 to explain the outcome of the review, the
changes proposed and associated rationale.
Shareholders were offered the opportunity to discuss the proposals with
the Committee Chair and the Group Company Secretary and Legal Advisor
on both occasions and overall we were encouraged by the number of
shareholders who took the time to respond and engage and are satisfied
that, having taken into account both supporting views and key concerns,
we have developed an appropriate way forward.
In addition to the specific feedback received from our consultation with
major shareholders, we also considered input from the management
team and our independent advisers, as well as latest market practice and
corporate governance developments. To manage any potential conflicts
of interest arising, the committee ensured that no individual was involved
in discussions on their own remuneration arrangements and all changes
proposed aligned to the business’ core strategy and values.
In reaching its decisions, the committee also considered the following principles as
recommended in the 2018 UK Corporate Governance Code.
Clarity
Predictability
The policy is designed to allow our remuneration arrangements
to be structured such that they clearly support, in a sustainable
way, the financial and strategic objectives of the company. The
committee remains committed to reporting on its remuneration
practices in a transparent, balanced and understandable way.
The committee considers the impact of various performance
outcomes on incentive levels when determining quantum. These
can be seen in the charts on page 130.
Simplicity
Proportionality
The Policy consists of three main elements: fixed pay (salary,
benefits and pension), an annual bonus and a long-term incentive
award. The metrics used in our incentive plans directly link back
to our key corporate objectives and provide a clear link to the
shareholder experience. The committee may change measures for
future years to ensure they continue to be aligned with our strategy
A substantial portion of the package comprises of performance-
based reward, which is linked to our strategic priorities and
underpinned by a robust target-setting process. This year, we have
also been particularly mindful of the alignment with our workforce
when considering the right and proportional approach to pay.
Risk
Alignment to culture
Remuneration policies are in line with our risk appetite. A robust
malus and clawback policy is in place, and the committee has the
discretion to reduce pay outcomes where these are not considered
to represent overall company performance or the shareholder
experience. Furthermore, our bonus deferral, post-cessation
shareholding requirement, and PSP holding period ensure
that Executive Directors are motivated to deliver sustainable
performance.
When developing the Policy, the committee reviewed our
approach to remuneration throughout the organisation to
ensure that arrangements are appropriate in the context of the
wider workforce. The themes considered include workforce
demographics, engagement levels and diversity to ensure that
executive remuneration is appropriate from a cultural perspective.
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Remuneration Policy main changes
A number of changes were made to the Policy in 2021, bringing it in line with
the UK Corporate Governance Code and the wider business environment.
The 2021 Policy introduced a number of best practice governance features,
some of which were already in operation, as summarised below:
We also took the opportunity to refresh the performance metrics in our
PSP. The 2021 Policy was approved by 90.2% of shareholders.
In the context of evolving market practice since the approval of Keller’s 2021
Remuneration Policy, the committee has reviewed its policy and proposes
the following changes:
•
Introduction of a two-year post-employment shareholding
requirement for Executive Directors.
• Discretion for the committee to override formulaic outcomes in the
Performance Share Plan (PSP).
• Malus and Clawback Policy.
• Mitigation measures for Executive Director leavers written into current
service contracts.
• Settlement of deferred bonus and dividend equivalents in shares and
not cash.
• Alignment of Executive Director pensions to the general workforce.
•
•
•
Increasing the maximum opportunity available under the PSP from
150% to 200% of salary. The committee believes this increase is
appropriate in the context of market practice and competitiveness and
to ensure the Policy remains fit for purpose over the next three years.
In 2023, the CEO received an LTIP award of 150% of base salary and the
CFO received an LTIP award of 125% of base salary. The committee will
not increase the quantum of award in 2024.
Introducing an additional trigger of ‘corporate failure’ under Keller’s
malus and clawback policy, for good governance and in line with
emerging market practice.
Summary of our Remuneration Policy
Base salary and
benefits
Competitive fixed remuneration.
Annual bonus
Maximum: 150% of base salary.
Reward for achievements against profit and working capital targets which are key financial metrics and individual
objectives linked to strategic objectives.
Performance
Share Plan
Shareholder
aligned
Maximum: 200% of base salary.
Metrics reward for achievements against EPS, ROCE and operating margin targets which are key financial metrics and
relative TSR which rewards outperformance of alternative investment.
Shareholding guideline: 200% of base salary.
Post-employment shareholding requirement: for two years following cessation of employment, with 100% of the
in-employment shareholding guideline of 2 x salary (or actual shareholding if lower) to be held in year 1 and at least 50%
in year 2.
25% of annual bonus deferred in shares for two years.
PSP vested shares to be retained for a further two years.
Malus and clawback policy applies to bonus, deferred bonus and PSP.
Internally
consistent
The Remuneration Committee oversees the pay structure for senior managers who are eligible to bonus and PSP awards.
The committee also receives information on broader employee pay and incentives across the Group.
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Remuneration principles
Our remuneration principles underpinning Directors’ remuneration and our Policy are:
• Support the delivery of Keller’s strategy.
• Align Executive Directors’ interests with those of our shareholders.
• Attract, retain and motivate high-calibre executives to lead and manage the business and ensure the long-term sustainable success of the company.
• Consider fairness and equity across the entirety of our workforce.
Directors’ Remuneration Policy table
There are five main elements of the remuneration package for Executive Directors: base salary, benefits, pension, performance-related annual bonus, and
Performance Share Plan. The table below summarises these elements, how they link to strategy and discourage excessive risk-taking and their operation
and performance measures. The Group aims to balance the need to attract, retain and motivate Executive Directors and other senior executives of an
appropriate calibre with the need to be cost effective, whilst at the same time rewarding exceptional performance. The Policy is designed to balance these
factors, taking account of prevailing best practice, investor expectations and the level of remuneration and pay made generally to employees of the Group.
Fixed remuneration – base salary, benefits and pension
Base salary
Purpose and
link to strategy
Operation
Reflects the individual’s role, experience and contribution to the company.
Set at sufficiently competitive levels to attract and retain high-calibre individuals needed to execute and
deliver on the Group’s strategic objectives.
Salaries are normally set in the home currency of the
Executive Director and reviewed annually. Any salary
increases are normally effective from 1 January.
In making salary decisions the committee takes
account of:
• changes in the scope or responsibility of the role;
• company and individual performance;
• periodically, salary levels for comparable roles at
relevant international comparators; and
• general increases across the Group.
Performance
None
Determined having considered market practice for
relevant roles in companies of a similar size and
complexity.
Whilst there is no prescribed maximum level of salary,
increases are typically not expected to exceed average
increases for the wider workforce taking into account
relevant geography.
Larger increases could be awarded in circumstances
where there is a significant increase in the complexity,
scope or responsibility of the role, an increase in the
size and complexity of the company, or in the case of
appointment at a level lower than a predecessor and/
or typical market level with a view to increase over
time as the Executive Director gains experience.
Opportunity
Benefits
Purpose and
link to strategy
To be market competitive for the purpose of attracting and retaining high-calibre
individuals needed to execute and deliver the strategic objectives.
Operation
Benefits typically include:
• a company car or a car allowance;
• private health care; and
•
life assurance, and long-term disability insurance.
Other benefits may be provided from time to time
if considered reasonable and appropriate by the
committee.
Where applicable, relocation costs may be provided,
which may include, but which are not limited to:
removal costs, housing allowance, immigration
assistance, relocation and cost of living allowance,
school fees and tax equalisation.
Executive Directors would also be eligible to
participate in any all-employee share plans on the
same basis as other eligible employees, should such
plans be implemented by the company.
Performance
None
Opportunity
There is no formal maximum as the cost of benefit provision can fluctuate
depending on changes in provider cost, location and individual circumstances.
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Fixed remuneration – base salary, benefits and pension continued
Pension
Purpose and
link to strategy
Operation
To provide a market-competitive level of retirement benefit.
Executive Directors participate in the company pension schemes that apply in their home country. Current UK
Directors can elect to receive either a contribution to a UK defined contribution (DC) scheme or a salary cash
supplement in lieu of pension benefits.
Performance
None
Opportunity
The maximum annual pension contribution/cash supplement is currently 7% of base salary unless the
contribution rates are determined by the rules of a specific country pension plan. The level of contribution for
Executive Directors will remain in line with the level of pension contribution received by the general workforce.
Short-term variable remuneration
Annual Bonus Plan
Purpose and
link to strategy
Operation
Performance
Rewards achievement of the short-term financial and strategic targets of the company.
At the start of each financial year, performance
measures and weightings are determined and annual
financial targets and personal strategic objectives are
set by the committee. Bonus outcomes are
determined based on performance against those
targets.
The company’s malus and clawback policy may
operate in respect of the Annual Bonus Plan (including
deferred bonuses). The policy could take effect in the
event of corporate failure, financial misstatement,
serious reputational damage, or material misconduct
in individual cases.
25% of any bonus earned is normally deferred into
company shares for two years.
Deferred bonus shares are eligible for dividend
equivalents over the period from the date the deferred
award is granted, to the date of its vesting.
Dividend equivalents are settled in shares.
The annual bonus is predominantly based on delivering
financial performance (majority weighting). This may
include, for example, financial measures such as profit
before tax (PBT) and working capital management. The
remainder of the bonus is based on personal strategic
objectives (minority weighting) which are linked to
Keller’s strategy and assessed by the committee.
The committee agrees targets annually for threshold,
target and maximum payouts, ensuring targets are
achievable but stretching. No more than 50% of
maximum is payable for target performance. Payouts
between threshold and target, and target and
maximum, are normally determined on a straight-line
basis.
The committee may apply judgement and shall have
discretion to make appropriate adjustments to an
individual’s annual bonus payout (including, if
appropriate, reduction to nil) or to recover the
relevant value.
Clawback will apply to the cash bonus and deferred
bonus for a period of two years following the end of
the performance period.
The measures are reviewed by the committee each
year and will be explained in the Annual report on
remuneration.
The committee retains full discretion to adjust the
performance measures/targets/weightings on an
annual basis for future years to reflect the prevailing
strategic objectives of the business.
The committee also has discretion to adjust the
bonus outcomes (cash bonus and deferred bonus) if it
determines this is needed to achieve an appropriate
outcome having considered the broader performance
of the company and/or the individual. This could, for
example, take into account factors such as a material
deterioration in safety performance, events
impacting the reputation of the company, or failure to
achieve a minimum level of financial performance
impacting the scope for payout under personal
strategic objectives.
Opportunity
The maximum annual bonus potential for Executive Directors is up to 150% of base salary.
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Long-term variable remuneration
Performance Share Plan (PSP)
Purpose and
link to strategy
Focuses on delivering value creation for shareholders and sustainable financial performance for the company
over the long term.
Operation
Performance
Typically subject to a performance period of at least
three years with a subsequent two-year holding period,
making it a five-year plan.
Awards are normally granted every year.
Award levels are determined annually by the committee
and set within the policy maximum. Subject to
stretching performance conditions.
The performance measures and targets are
determined at the start of each performance period
in line with the company’s financial and strategic
objectives.
Dividend equivalents may accrue over the five-year
period.
The performance measures and targets are
determined at the start of each performance period in
line with the company’s financial and strategic
objectives.
Vesting of PSP awards is subject to performance
against relevant financial and/or non-financial
performance measures as determined by the
committee.
Opportunity
The maximum award limit in each financial year is 200%
of base salary. Individual award levels may vary and will
be set out in the relevant Annual remuneration report.
For 2024, the CEO will receive an award of 150% of base
salary and the CFO will receive an award of 125% of base
salary.
The company’s malus and clawback policy may
operate in respect of the PSP (including deferred
bonuses). The policy could take effect in the event of
financial misstatement, serious reputational damage,
or material misconduct in individual cases.
The committee may apply judgement and shall have
discretion to make appropriate adjustments to an
individual’s annual bonus payout (including, if
appropriate, reduction to nil) or to recover the
relevant value.
Clawback will apply to the PSP for a period of two
years following the end of the performance period.
For 2024, the PSP awards are based on:
• earnings per share (EPS) with a weighting of 25%;
total shareholder return (TSR) with a weighting of
•
25%;
return on capital employed (ROCE) with a weighting
of 25%; and
•
• operating margin with a weighting of 25%.
The committee may amend performance measures
and weightings to reflect the prevailing strategic
objectives of the company. The committee will
engage with investors, to the extent it considers
necessary, if any significant changes are made to the
performance measures.
For threshold performance, typically 25% of the
award will vest. For maximum performance, 100% will
vest. Vesting will normally operate on a straight-line
basis.
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Shareholding guidelines
Purpose: aligns interests of Executive Directors with those of shareholders.
Executive Directors are expected to retain 50% net of tax of shares following the vesting of share awards until the guideline is attained. The committee
encourages the Directors to buy shares on the market.
Minimum shareholding guideline for Executive Directors is 200% of (pre-tax) base salary.
Post-employment shareholding requirement
Executive Directors are required to hold their shares in the company for a period of two years after they have ceased to be employed by the company with
100% of the in-employment shareholding guideline of 2 times salary (or actual shareholding if lower) to be held in year 1 and at least 50% in year 2.
Notes to the Policy table:
Annual Bonus and Deferred Bonus Plans
• Profit-related measures are chosen by the committee as they support the strategic objectives of 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; personal strategic objectives
allow Executive Directors to focus on strategic initiatives which support delivery of the annual business plan in any relevant year as well as laying
foundations for delivery of the longer-term Group strategy.
• To reinforce alignment with shareholder interests, 25% of any bonus will be deferred into the Deferred Bonus Plan (DBP). There are no further
performance conditions applicable to the deferred bonus and it is released in the form of shares after a deferral period of two years along with any
dividend shares accrued over the deferral period.
Performance Share Plan
• The committee believes that the measures for 2024 (TSR, EPS, ROCE and operating margin) provide a balance of performance measures aligned
with strategic delivery. The committee also has flexibility to adopt different measures if there are good reasons to do so and amend the weightings to
support the strategic focus in any award year.
• Relative TSR performance is measured by ranking against FTSE 250 companies (excluding investment trusts and financial services). Under a ranked
approach, threshold vesting will be for median performance against the comparator group; maximum vesting for upper quartile performance (or
above) against the comparator group. Vesting will be determined on a straight-line basis between these points. For relative TSR, we measure and rank
growth based on the data points at the end of the performance period compared with those at the beginning of the period.
• Underlying EPS is considered as an important indicator of revenue growth and profitability and is a simple and well-understood measure. Strong EPS
provides the foundation for maintaining our progressive dividend policy. Targets are set by the committee taking into account internal forecasts of
performance, any guidance provided to the market and market expectations, as well as historical performance.
• ROCE is one of our key performance indicators. It is well-understood by participants and used internally to drive profitability. Targets are set taking
into account our aspirations of ROCE improvement, as well as historical performance. ROCE remains an excellent measure of the efficiency of key
resources and directly drives responsible working capital and capital expenditure decisions.
• Operating margin reinforces management’s focus on the quality of earnings to ensure that value generated is sustainable and is aligned to the long-
term success of the business.
Awards under previous remuneration policies
The committee reserves the right to make any remuneration payments and/or payments for loss of office (including the exercise of any discretions available
to it in connection with such payments) notwithstanding that they are not in line with the Policy where the terms of the payment were (i) agreed before
the 2014 AGM (when the company’s first shareholder-approved Directors’ Remuneration Policy came into effect); (ii) before the Policy came into effect,
provided that the terms of the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were
agreed; (iii) at a time when the individual to whom the payment is made was not a Director of the company and, in the opinion of the committee, the payment
was not in consideration for the individual becoming a Director of the company.
For these purposes, ‘payments’ include the committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the
payment are agreed at the time the award is granted.
Any awards or remuneration-related commitments made to Directors under previous remuneration policies will continue to be honoured.
Committee’s discretion
•
If an event occurs which causes the committee to consider that an outstanding PSP award or bonus would not achieve its original purpose without
alteration, the committee has discretion to amend the targets, provided the new conditions are not materially less challenging than the original
conditions. The committee also has discretion, both upwards and downwards, to override formulaic outcomes in the LTIP.
• Such discretion could be used to adjust appropriately for the impact of material acquisitions or disposals, or for exceptional and unforeseen events
outside the control of the management team. The application of any such discretion would have regard to the committee’s practice of ensuring the
stability of measures and targets throughout the business cycle.
• Awards may also be adjusted in the event of any variation of the company’s share capital or any demerger, capital distribution or other event that may
materially impact the company’s share price.
The committee has discretion in several areas of policy as set out in this report. The committee may also exercise operational and administrative discretions
under relevant plan rules approved by shareholders as set out in those rules. In addition, the committee has the discretion to amend the Policy with regard to
minor or administrative matters where it would be, in the opinion of the committee, disproportionate to seek or await shareholder approval.
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Pay for performance scenarios
The charts below provide an illustration of the potential future reward opportunities for the Executive Directors and the potential split between the different
elements of remuneration under four performance scenarios: ‘Minimum’, ‘On-target’, ‘Maximum’ and ‘Maximum + share price growth’. Illustrations are
intended to provide further information to shareholders regarding the pay for performance relationship.
Potential reward opportunities are based on Keller’s Remuneration Policy, applied from 1 January 2024, excluding the impact of any share price movement
and dividend accrual during the performance period.
The ‘Minimum’ scenario reflects base salary, pension and benefits (ie fixed remuneration). Benefit levels are assumed to be the same as the last financial
year. No annual bonus payable and threshold performance under PSP is not achieved. The ‘On-target’ scenario reflects fixed remuneration as above, plus
bonus payout of 50% of maximum and PSP vesting at 50% of normal maximum award. The ‘Maximum’ scenario reflects fixed remuneration, plus full payout
of all incentives. The ‘Maximum + share price growth’ scenario reflects fixed remuneration plus full payout of all incentives, with a 50% increase in share price
applied to the PSP award.
Chief Executive Officer
Remuneration (£m)
Chief Financial Officer
Remuneration (£m)
Minimum
100%
£0.7m
Minimum
100%
£0.5m
In line with
expectations
42%
29%
29%
£1.7m
In line with
expectations
Maximum
27%
37%
Maximum +
share price growth
22%
31%
37%
31%
£2.6m
Maximum
16%
£3.1m
Maximum +
share price growth
25%
45%
29%
30%
25%
£1.1m
39%
33%
32%
28%
£1.6m
14%
£1.9m
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Fixed remuneration
Long-term variable remuneration
Annual variable remuneration
Share price growth
Approach to recruitment remuneration
The committee’s approach to remuneration for newly appointed Directors (both internal and external) is consistent with that for existing Directors. However,
where the company is considering an internal promotion to the Board, the committee may, at its discretion, decide that any remuneration commitment
agreed or entered into prior to the promotion will continue to be honoured even though that commitment may not be consistent with the prevailing policy.
In determining appropriate remuneration, the committee will take into consideration all relevant factors to ensure that arrangements are in the best interests
of both Keller and its shareholders and will seek not to pay more than is necessary for this purpose.
The table below summarises the committee’s approach on recruitment/promotion:
Component
Approach
Maximum
Base salary
Benefits
Pension
Annual bonus
The base salaries of new appointees will be determined by reference to relevant market data, experience
and skills of the individual, internal relativities and their current base salary. Where new appointees have
initial basic salaries set below market, phased increases may be awarded over a period of two to three
years subject to the individual’s development in the role.
New appointees may be eligible to receive benefits in line with the Policy.
New appointees may be eligible to receive pension contributions or an equivalent cash supplement in
lieu of pension in line with the Policy.
7% of salary
The structure described in the Policy table will apply to new appointees with the relevant maximum being
pro-rated to reflect the proportion of employment over the year. Targets for the individual element will
be tailored to each executive.
150% of salary
Performance
Share Plan
New appointees may be granted awards under the PSP on the same terms as other executives, as
described in the Policy table.
200% of salary
In addition, the committee may offer a ‘buyout’ payment where the committee considers it reasonable to do so in order to recruit a particular individual. The
committee may offer compensation on a like-for-like basis, for any amounts of variable remuneration being forfeited on leaving a previous employer. In doing
so, the committee will consider relevant factors such as expected values, any performance conditions attached to these awards and the likelihood of those
conditions being met, time horizons, delivery mechanism and the terms of the forfeited remuneration.
To facilitate such compensation, the committee may also rely on exemptions, procedures or provisions contained in the Listing Rules that permit awards
to be granted in exceptional circumstances. To ensure alignment from the outset with shareholders, malus and clawback provisions may also apply where
appropriate and the committee may require new Directors to acquire company shares up to a pre-agreed level. Shareholders will be informed of any buyout
arrangements at the time of appointment.
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In making any decision on the remuneration of a new Director, the committee would balance shareholder expectations, current best practice and the
circumstances of any new Director. It would strive not to pay more than is necessary to recruit the right candidate and would give details in the next
remuneration report.
The committee may offer to pay reasonable relocation expenses for the new Executive Director in line with the policies described in this report.
Service contracts
Executive Directors’ contracts are for an indefinite term with one year’s notice. Service contracts between the company (or other companies in the Group)
and current Executive Directors are summarised below. Executive Directors’ service contracts are available to view at the company’s registered office.
Director
Date of service contract
Notice period
Termination payment
Michael Speakman1
6 August 2018
David Burke
12 October 2020
12 months’ notice by either the
company or the Director
Maximum of basic annual salary plus pension and
benefits for the unexpired portion of the notice
period, subject to mitigation.
1 Michael Speakman was appointed Chief Financial Officer in August 2018, Interim Chief Executive Officer in October 2019 and Permanent Chief Executive Officer in December 2019.
Mitigation measures are written into current Executive Director service contracts and will be written into future Executive Director service contracts.
Payment for loss of office
When considering exit payments, the committee reviews all potential incentive outcomes to ensure they are fair to both shareholders and participants.
In a departure event, the committee will typically consider:
• Whether any element of annual bonus should be paid for the financial year. Any bonus paid will be limited to the period served during the financial year
in which the departure occurs. The default position is that a deferred bonus awarded in prior years will be preserved in full, unless the committee, in its
discretion, chooses to apply malus or clawback.
• Whether any awards under the PSP should be preserved either in full or in part.
The rules of the share plans set out the treatment of specific categories of leavers as set out below. In other cases where an executive leaves employment,
the committee will consider the specific details of each case before determining whether to award good leaver status.
Good leaver status (including ill-health, injury or disability): deferred bonus share awards will vest in full. To the extent that performance conditions are met,
PSP awards are pro-rated for service during the performance period and released at the normal vesting date.
Death, or sale of employing entity out of the Group: deferred bonus share awards vest in full on death or on sale. Performance conditions with regard to PSPs
may be waived, awards may be pro-rated for service during the performance period and awards may be released early.
The default position is that an unvested PSP award or entitlement lapses on cessation of employment, unless the committee applies discretion to
preserve some or all of the awards. This provides the committee with the maximum flexibility to review the facts and circumstances of each case, allowing
differentiation between good and bad leavers and avoiding ‘payment for failure’.
For good leavers, deferred bonus awards will normally vest in full at the normal vesting date and PSP awards will normally continue until the normal vesting
date or the end of the holding period although the committee may allow awards to vest (and be released from any holding period) as soon as practicable
after leaving where appropriate. The award will vest taking into account the extent to which performance conditions have been satisfied and, unless the
committee determines otherwise, the period of service during the performance period.
The committee maintains a discretionary approach to the treatment of leavers, on the basis that the facts and circumstances of each case are unique.
In an exit situation, the committee will consider: the individual circumstances; any mitigating factors that might be relevant; the appropriate statutory and
contractual position; the position under the relevant plan documentation; and the requirements of the business for speed of change.
The committee reserves the right to make any other payments in connection with a Director’s cessation of office or employment where the payments are
made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of settlement of any claim
arising in connection with the cessation of a Director’s office or employment or for any fees for outplacement assistance and/or the Director’s legal and/or
professional advice fees in connection with his cessation of office or employment.
In certain circumstances, the committee may approve new contractual arrangements with departing Executive Directors including (but not limited to)
settlement or consultancy arrangements. These will be used sparingly and are only entered into where the committee believes that it is in the best interests
of the company and its shareholders to do so.
Change of control
In the event of a change of control, the committee will determine the extent to which unvested awards will vest after taking into account all relevant factors at
the time including the extent to which any performance conditions have been achieved and the period of time that has elapsed from the award date to the
date of the relevant event.
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External appointments
The Board may allow Executive Directors to accept external appointments and retain the fees; however, in accordance with the Code, the Board will not
agree to a full-time executive taking on more than one Non-executive Directorship, or the chairmanship of any company. None of the Executive Directors
held external appointments during 2023.
Remuneration policy for other employees
Keller’s approach to remuneration is broadly consistent across the Group. Consideration is given to the experience, performance and responsibilities of
individuals. Senior managers are eligible to participate in the annual bonus scheme with similar performance measures to those used for the Executive
Directors. Maximum opportunities vary by seniority, with business-specific measures applied where appropriate.
Members of the Executive Committee are also eligible to participate in the PSP with the same performance conditions as Executive Directors. Senior
managers (approximately 60) are eligible to participate in the LTIP and receive shares conditional on continued employment with the company for two years.
The award sizes vary according to seniority. Pensions and benefits provision follows local country practice.
Considerations of conditions elsewhere in the Group
When reviewing and setting executive remuneration, the committee takes into account the relevant pay and employment conditions elsewhere in the
Group. Specifically, the level of salary increases across the Group are reviewed annually. In addition, the designated Non-executive Director with responsibility
for workforce engagement at Keller, is a member of the committee and invited to contribute to discussions in this regard.
All senior managers are set annual objectives at the beginning of each year which support the execution of our strategic levers through delivering specific
objectives relevant to their business unit. Annual bonuses payable to senior managers across the Group depend on the satisfactory completion of these
objectives as well as performance against local business unit financial targets.
It should be noted that the workforce employed across the Group’s geographically diverse businesses is not a homogeneous group and pay and conditions
are designed to be competitive in, and appropriate to, the local employment market.
Non-executive Director remuneration
The remuneration of the Non-executive Directors is determined by the Board annually within the limits set out in the Articles of Association. When setting
the fee levels consideration is given to market practice for companies of similar size and complexity. The Chairman receives an all-inclusive fee. Non-
executive Directors receive a basic fee and additional fees may be payable for chairing a committee or performing the role of Senior Independent Director.
The Non-executive Directors’ fees are non-pensionable and Non-executive Directors are not eligible to participate in any incentive plans.
The Chairman and Non-executive Directors will be reimbursed by the company for all reasonable expenses incurred in performing their duties. This may
include costs associated with travel where required and any tax liabilities payable.
All Non-executive Directors have specific terms of engagement, the dates of which are set out below. All appointments are for an initial three-year period,
and thereafter are subject to review by the Nomination and Governance Committee, unless terminated by either party on three months’ notice.
There are no provisions for compensation payable in the event of early termination.
Fees for a new Non-executive Director will be set according the principles set out above.
Fees paid to Non-executive Directors with effect from 1 January 2024 are set out in the table below.
Non-executive Director
Appointment date, renewal date, renewal due
Fees
Peter Hill CBE
Eva Lindqvist1
Paula Bell
24 May 2016 (and 26 July 2016 as Chairman)
(renewed 24 May 2019 and 24 May 2022)
£235,000 pa
1 June 2017 (renewed 1 June 2020
and 1 June 2023)
£60,000 pa
Plus £11,500 pa (Chair of Remuneration Committee)
1 September 2018 (renewed 1 September 2021)
Renewal due: 1 September 2024
£60,000 pa
Plus £11,500 pa (Chair of Audit and Risk Committee)
Baroness Kate Rock
1 September 2018 (renewed 1 September 2021)
Renewal due: 1 September 2024
Juan G. Hernández Abrams
1 February 2022
Renewal due: 1 February 2025
£60,000 pa
Plus £11,500 pa (Senior Independent Director)
Plus £5,500 pa (Workforce Engagement)
£60,000 pa
Plus £11,500 pa (Chair of Sustainability Committee)
Plus £11,000 pa (intercontinental travel)
Annette Kelleher
1 December 2023
Renewal due: 1 December 2026
£60,000 pa
1
Eva Lindqvist will retire from the Board and as Chair of the Remuneration Committee following the 2024 AGM. Annette Kelleher will be appointed Chair of the Remuneration Committee.
In recruiting a new Non-executive Director, the committee will utilise this Policy.
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The following section provides details of how Keller’s Remuneration Policy was implemented
during the financial year ended 31 December 2023.
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 2022
and 2023:
Salary
Taxable benefits1
Pension benefits2
Total fixed pay
Annual bonus3
PSP4
Total variable pay
Total pay
Executive Directors
Michael Speakman
David Burke
2023
£000
618
14
43
675
729
892
1,621
2,296
2022
£000
588
14
41
643
35
619
654
2023
£000
406
20
28
454
478
488
966
1,297
1,420
2022
£000
386
20
27
433
23
–
23
456
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 2023 reflects the final vesting outcome of the 2021 PSP award with performance measured over the three-year performance period 1 January 2021 to 31 December
2023. The final vesting outcome of the 2021 PSP award was 95.6% of maximum. The value of the award was calculated using a three-month average closing share price to 31 December 2023 of
786p. See page 136 for further details. The 2021 award will vest on 18 March 2024. Using the average closing share price to 31 December 2023, 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.
2023 annual bonus
The 2023 annual bonus was based 70% on the achievement of stretching profitability and net debt targets and 30% on individual corporate objectives
aligned to the delivery of key strategic and operational priorities. Overall, the bonus outcome for 2023 was 79% of the maximum payout, for each Executive
Director, based on performance as set out below:
2023 measurement ranges and outcome
Threshold
0%
110.0
297.1
Target
50%
120.2
270.1
Maximum
100%
Performance
outcome1
130.0
243.1
180.9
146.2
Measures
Group underlying operating profit, £m
Group net debt (IAS 17 basis), £m
Total Group measures
Corporate objectives assessment
Total bonus
Base salary
Bonus based on performance outcomes
1 At 2023 actual exchange rates, before non-underlying items.
Bonus as % of salary
Executive Directors
Michael Speakman
David Burke
Max %
Outcome %
Max %
Outcome %
75
30
105
45
150
75
30
105
13
118
75
30
105
45
150
75
30
105
13
118
£617,715
£405,562
118
£728,657
118
£478,401
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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. The categories of the corporate objectives have maximums from 5% to 10% 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.
Opportunity
(maximum)
Actual
performance
12.0% of base salary
Partially achieved
12.0% of base salary
6.0% of base salary
Not achieved
Fully achieved
8.6%
Corporate objective
Improved project performance
Reducing the number of loss-making
contracts (LMC)
Fixed and indirect cost management
An absolute 38% reduction in Scope 2
market-based emissions
Using the 2019 reported number as a baseline
Attainment as assessed by the committee
Discretion applied
Final outcome
2023 annual bonus outcomes
The financial targets for Keller were fully met in 2023.
Outcome
(maximum 30%)
2.6%
0.0%
6.0%
0% reduction
8.6% achieved
The objective scoring by the committee for performance in 2023 against corporate objectives resulted in an outcome of 8.6% of salary.
As described in the Chair’s letter, the committee considered all relevant factors when determining the level of bonus payout and concluded that the annual
bonus payments for 2023 reflects the very strong operational and financial performance of the Group. 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.
2021–23 Performance Share Plan (PSP) outcomes (audited)
Based on EPS and TSR performance over the three years ended 31 December 2023, the PSP awards made in 2021 will vest as follows:
Measures
25% weight
Cumulative 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 years3
25% weight
Operating profit margin
Total vesting
1
2
EPS and ROCE are before non-underlying items on an IFRS 16 basis.
Excluding investment trusts and financial services.
3 Average of the three-year ROCE for 2021–23.
Vesting schedule and outcome3
% of award that will vest
0%
25%
100%
Outcome
Vesting %
Less than
245p
Less than
median
Below 12%
Less than
5.2%
245p
310p
338.8p
25.0
Upper quartile
Median
or higher Upper quartile
12%
5.2%
18%
6.2%
17.2%
6.1%
25.0
22.5
23.1
95.6
The committee carefully considered the vesting levels of the 2021 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 2023.
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Scheme interests awarded in 2023 (audited) 2023–25 PSP
The three-year performance period over which performance will be measured began on 1 January 2023 and will end on 31 December 2025. Awards will vest
in March 2026, subject to meeting performance conditions. Awards were made as follows:
Executive Director
Michael Speakman
David Burke
Date of grant
15 March 23
15 March 23
Shares over which
awards granted
Market price
at award (£)
Face value of the
award at grant
Face value at
threshold (£)
Face value at
maximum (£)
Performance period
130,743
71,533
7.081
7.081
150% of salary
125% of salary
231,415
126,614
925,660
1 Jan 23–31 Dec 25
506,454
1 Jan 23–31 Dec 25
1 The average of the daily closing price on 9, 10 and 11 March 2023 of the company’s shares on the main market of the London Stock Exchange.
Vesting of the 2023–25 Performance Awards is subject to achieving the following performance conditions:
Measures
25% weight
Cumulative EPS over three years1
Vesting schedule
% of award that will vest
0%
Below 330p
25%
330p
100%
400p
25% weight
Keller’s relative TSR performance vs FTSE 2502 Index over three years
Below median
Median
Upper quartile
25% weight
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 5.5%
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 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 2023. 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 2023 and the date of this report.
Director
Michael Speakman
David Burke
Peter Hill CBE
Eva Lindqvist
Baroness Kate Rock
Paula Bell
Juan G. Hernández Abrams
Annette Kelleher1
Ordinary shares at
31 December 2023
Ordinary shares at
31 December 2022
120,299
21,921
53,000
–
2,500
1,581
–
–
63,008
4,872
53,000
–
2,500
1,581
–
–
1 Annette Kelleher was appointed to the Board on 1 December 2023.
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 2023.
Michael Speakman
David Burke
Shares held
Awards held1
Owned outright
or vested
Unvested and subject
to performance
conditions
Unvested without
performance
conditions2
120,299
21,921
381,715
208,842
28,661
18,817
Shareholding
guideline
% salary/fee
200%
200%
Current shareholding
%3 salary/fee
171%
48%
1 Dividend accruals are included in these numbers, totalling 21,040 shares for Michael Speakman and 11,662 shares for David Burke.
2 Deferred awards.
3 Reflects closing price on 31 December 2023 of 880p.
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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:
Michael Speakman
9 March 20203
9 March 2020
15 March 2021 (deferred award)
15 March 2021
15 March 2022 (deferred award)
15 March 2022
15 March 2023 (deferred award)
15 March 2023
David Burke
15 March 2021 (deferred award)
15 March 2021
15 March 2022 (deferred award)
15 March 2022
15 March 2023 (deferred award)
15 March 2023
At 1 January
20231,2
Granted
during the
year
Vested
in year2
Lapsed during
the year2
Dividend
equivalents
accrued during
the year
At 31 December
20232
Vesting date
1,850
121,399
25,767
112,640
25,948
118,778
–
–
–
–
–
–
–
–
1,245
130,743
3,856
61,625
17,036
64,986
–
–
–
–
–
–
817
71,533
1,850
75,144
25,767
–
–
–
–
–
3,856
–
–
–
–
–
–
46,255
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,082
1,401
6,431
67
7,059
–
3,327
920
3,509
44
3,862
–
–
–
15/03/23
15/03/23
15/03/23
118,722
15/03/24
27,349
15/03/24
125,191
15/03/25
1,312
15/03/25
137,802
15/03/26
–
15/03/23
64,952
17,956
68,495
15/03/24
15/03/24
15/03/25
861
15/03/25
75,395
15/03/26
1
2
3
For awards granted in 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 carries the same performance
measures as the 2019–21 PSP award and will vest in three years from the 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 with TSR performance
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.
200
175
150
125
100
75
50
25
0
Dec 2013
Dec 2014
Dec 2015
Dec 2016
Dec 2017
Dec 2018
Dec 2019
Dec 2020
Dec 2021
Dec 2022
Dec 2023
Keller
FTSE 250
FTSE All-Share
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The table below details the CEO single figure of remuneration over the same period.
CEO single figure of remuneration (£000)
1,630
1,420
Annual bonus as a % of maximum opportunity
PSP vesting as a % of maximum opportunity
22
100
85
67.3
2014
20151
2016
715
12
0
2017
1,427
59
33.9
20182
639
0
0
20193
921
38
26.5
2020
2021
2022
2023
1,433
1,6854
1,297
2,296
93
10.6
90
36.6
6
61.9
79
95.6
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.
4 Reflects the restatement of the PSP for 2021 to reflect the share price on the vesting date compared with the estimate published in the 2021 Annual Report. See page 134.
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
2019
2020
2021
Method
Option A
Option A
Option A
2021 (restated with actual bonuses) Option A
2022
Option A
2022 (restated with actual bonuses) Option A
2023
Option A
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
26:1
37:1
43:1
43:1
34:1
33:1
51:1
19:1
24:1
30:1
30:1
20:1
20:1
33:1
15:1
18:1
22:1
22:1
15:1
15:1
25:1
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 2023.
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 2023 performance year, we have used the bonus payout for 2023 for the CEO and the bonus payouts for the
comparison population that was paid in 2023, in respect of the 2022 performance year. We will update these figures with the actual amounts paid in 2022,
in respect of the 2023 performance year, in next year’s Annual remuneration report.
The following table provides salary and total remuneration information in respect of the employees at each quartile.
Financial year
Element of pay
25th percentile employee
Median employee
75th percentile employee
2022
2023
Salary
Total remuneration
Salary
Total remuneration
£31,576
£37,753
£35,169
£44,722
£46,662
£63,434
£50,531
£70,590
£62,567
£85,133
£67,267
£92,825
The Board has confirmed that the ratio is consistent with the company’s wider policies on employee pay, reward and progression.
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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 2022 and 2023 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.
% change 2022/23
% change 2021/22
% 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
%
change
in salary
or fees
%
change
in
benefits
%
change
in annual
bonus
%
change
in salary
or fees
%
change
in
benefits
%
change
in annual
bonus
Executive Directors
Michael Speakman1
David Burke1
Chairman and
Non-executive Directors2
Peter Hill CBE
Baroness Kate Rock
Paula Bell
Eva Lindqvist
Juan G. Hernández Abrams
Annette Kelleher3
Nancy Tuor Moore4
Paul Withers4
Keller UK based employees 5,6
5.1
5.2
3.6
2.3
1,983
1,978
5.0
5.0
5.0
5.0
32.3
n/a
n/a
n/a
6.0
n/a
n/a
n/a
n/a
15.0
27.0
3.0
3.0
5.0
2.1
2.4
2.4
100.0
n/a
(52.6)
n/a
4.5
1.90
2.00
0.0
0.0
0.0
0.0
0.0
n/a
0.0
n/a
(95.5)
2.0
(0.8)
(1.6)
39.3
(95.5)
364.4
300.0
332.5
n/a
0.0
n/a
412.4
n/a
0.0
0.0
0.0
0.0
0.0
n/a
0.0
n/a
2.6
1.4
1.6
1.6
n/a
n/a
(7.7)
n/a
5.3
0.0
0.0
0.0
0.0
n/a
n/a
0.0
n/a
0.0
0.0
0.0
0.0
n/a
n/a
0.0
n/a
8.3
26.3
8.8
26.5
n/a
n/a
6.0
(60.0)
0.0
0.0
0.0
0.0
n/a
n/a
0.0
0.0
0.0
0.0
0.0
0.0
n/a
n/a
0.0
0.0
22.8
23.4
15.5
16.7
146.4
44.6
(11.8)
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 2022 and 2023.
3 Annette Kelleher was appointed in December 2023.
4
5
6
Paul Withers and Nancy Tuor Moore retired in June 2020 and May 2022 respectively.
The comparator group comprises the population of Keller UK and group head office employees being professional/managerial employees based in the UK and employed on more readily comparable terms.
The change in components of the comparator group remuneration is on a per capita basis, the year-on-year increases, reflect large percentage increases in small value benefits such as travel allowances.
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 2022 and
31 December 2023, along with the percentage changes.
Distribution to shareholders1
Remuneration paid to all employees2
2023
£m
27.7
739.7
2022
£m
26.4
699.8
%
change
5.0%
5.7%
1 The Directors are proposing a final dividend in respect of the financial year ended 31 December 2023 of 31.3p per ordinary share.
2 Total remuneration reflects overall employee costs. See note 8 to the consolidated financial statements for further information.
Summary of implementation of the Remuneration Policy during 2023 and 2024
Overall, the committee considers that the Remuneration Policy has operated as it intended during 2023, with no deviations. A summary of how the
committee intends the Policy to be operated during 2024 can be found in the remuneration policy report on pages 126 to 134.
2024 base salary and benefits
The committee noted that salary increases for UK-based employees across the Group were generally around 6.5%, effective 1 January 2024. The Executive
Directors received salary increases of 4.5% for 2024.
Benefits for 2024 will remain broadly unchanged from prior years.
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2024 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.
2024 annual bonus
For 2024, 70% of Executive Directors’ bonus will be based on Group financial results and 30% will be based on shared corporate objectives. The performance
measures will be underlying operating profit, 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 2023 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.
2024–26 Performance Share Plan Awards (PSP)
The 2024–26 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 500p over the three-year period will enable full vesting of this performance condition, with a threshold vesting of 25% if 400p 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 20% (leading to 25% of that
portion of the award vesting) and a maximum of 25%. Straight-line vesting between these points.
Operating profit margin will be measured in year three (with a threshold vesting of 6.0% leading to 25% of that portion of the award vesting) and maximum of
7.0%. 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 and the challenging macroeconomic environment.
2024–26 Performance Share Awards
To reflect the impact of any changes in IFRS accounting standards, the committee will consider adjusting financial targets 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.
Measures
25% weight – Cumulative EPS over three years1
Vesting schedule
% of award that will vest
0%
Below 400p
25%
400p
100%
500p
25% weight – Keller’s relative TSR performance vs FTSE 2502 Index over three years
Below median
Median
Upper quartile
25% weight – Average ROCE over three years
25% weight – Operating profit margin in year three
1
2
EPS is before non-underlying items on an IFRS 16 basis.
Excluding investment trusts and financial services.
Below 20%
Below 6.0%
20%
6.0%
25%
7.0%
Chairman and Non-executive Director fees
Fees for the Non-executive Directors were reviewed with effect from 1 January 2024. The base fee was increased by 4.5%. Additional fees for chairing
a committee and for the Senior Independent Director were increased by 9.5%. A fee of £5,500 was agreed for the role of designated NED for workforce
engagement and the fee for intercontinental travel was increased by 4.8%. The Chairman’s fee was increased by 6.6%.
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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 2023 and the
prior year:
Non-executive Director
Peter Hill CBE
Eva Lindqvist1
Paula Bell2
Baroness Kate Rock3
Juan G. Hernández Abrams4
Annette Kelleher5
Nancy Tuor Moore6
Total fees
2023
£
220,500
67,725
67,725
78,235
78,235
4,769
–
517,189
2022
£
210,000
64,500
64,500
74,500
59,125
–
31,042
503,667
1
2
3
4
Eva Lindqvist received additional fees of £10,000 as Chair of the Remuneration Committee.
Paula Bell received additional fees of £10,000 as Chair of the Audit and Risk Committee.
Baroness Kate Rock received additional fees of £10,000 as Senior Independent Director and £10,000 as Chair of the Social and Community Committee.
Juan G. Hernández Abrams received additional fees of £10,000 as Chair of the Sustainability Committee and £10,000 for intercontinental travel.
5 Annette Kelleher joined the Board on 1 December 2023.
6 Nancy Tuor Moore retired in May 2022.
Statement of shareholder voting
The following table sets out the results of the vote on the Remuneration report at the 2023 AGM and the Remuneration Policy at the 2021 AGM:
Remuneration report
Remuneration Policy
Votes for
Votes against
Number
56,345,523
54,665,416
%
93.73
90.20
Number
3,769,367
5,942,286
%
6.27
9.80
Votes cast
Number
Votes withheld
Number
60,114,890
60,607,702
4,470
6,784
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 2024 were being considered:
• Eva Lindqvist
• Juan G. Hernández Abrams
• Paula Bell
• Baroness Kate Rock
• Annette Kelleher
During the year, the committee received assistance from Kerry Porritt (Group Company Secretary and Legal Advisor) 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 2023
financial performance and 2024 budget and the three-year plan for 2024–26. In determining the Executive Directors’ remuneration for 2023 and 2024, the
committee consulted the Chairman and the CEO about its proposals, except (in the case of the CEO) in relation to their own remuneration. No Director was
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.
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 and objectively. Their total fees for the provision of remuneration services to
the committee for 2023 were £43,250.
Eva Lindqvist
Chair of the Remuneration Committee
Approved by the Board of Directors and authorised for issue on 4 March 2024.
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Keller Group plc Annual Report and Accounts 2023
Directors’ report
Kerry Porritt
Group Company Secretary and Legal Advisor
The Directors present their report together with
the audited consolidated financial statements for
the year ended 31 December 2023.
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 84 and this Directors’ report
fulfil the requirement of Disclosure Guidance
and Transparency Rule 4.1.5R to provide a
Management report.
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Results and dividends
The results for the year, showing an underlying profit before taxation of
£153.4m (2022: £93.5m), are set out on pages 148 to 201. Statutory profit
before tax was £125.6m (2022: £56.3m). The Directors recommend a final
dividend of 31.3p per share to be paid on 28 June 2024, to members on
the register at the close of business on 31 May 2024. An interim dividend of
13.9p per share was paid on 8 September 2023. The total dividend for the
year of 45.2p (2022: 37.7p) will amount to £32.7m (2022: £27.3m).
Going concern and viability statements
Information relating to the going concern and viability statements is set out
on page 39 of the Strategic report and is incorporated by reference into this
report.
Financial instruments
Full details can be found in note 26 to the financial statements and in the
Chief Financial Officer’s review.
Post balance sheet events
Please see page 205 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 88 and 89. 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 137 and 138.
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.
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Keller Group plc Annual Report and Accounts 2023
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 9,500 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 59 to 84.
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 94 to 96.
Political donations
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 65 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 28 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 32 to the consolidated
financial statements. Treasury shares and shares held by the Keller Group
plc Employee Benefit Trust are not voted.
Repurchase of shares
The company obtained shareholder authority at the last AGM
(17 May 2023) to buy back up to 7,277,078 shares. The authority remains
outstanding until the conclusion of the 2024 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 given at the 2023 AGM for the Directors to
allot new shares (i) up to an aggregate nominal amount of £2,425,693,
approximately equivalent to one-third of the company’s issued share
capital (excluding treasury shares, as at 9 March 2023 and (ii) in connection
with a rights issue, a further aggregate nominal amount of £2,425,693,
approximately equivalent to an additional one-third of the company’s issued
share capital (excluding treasury shares, as at 9 March 2023. Shareholder
authority was also granted to disapply pre-emption rights: (i) up to an
aggregate nominal amount of £727,708, representing approximately
10% of the company’s issued share capital as at 9 March 2023, on an
unrestricted basis and (ii) up to a further aggregate nominal amount of
£727,708, representing approximately a further 10%. of the company’s
issued share capital for use in connection with an acquisition or specified
capital investment announced either contemporaneously with the issue,
or which has taken place in the preceding twelve-month period and is
disclosed in the announcement of the issue and (iii) in the case of both (i)
or (ii), up to an additional 2%. in connection with a follow-on offer to retail
investors or existing investors not allocated shares in the offer.
The Directors have not used, and have no current plans to use,
these authorities.
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Auditor
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
auditor for the year ending 31 December 2024 and a resolution to reappoint
EY will be put to shareholders at the 2024 AGM.
AGM
The full details of the 2024 AGM, which will take place on 15 May 2024,
are set out in the Notice of Meeting, together with the full wording of the
resolutions to be tabled at the meeting.
Substantial shareholdings
Other information
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 auditor is 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 auditor is aware of that information.
At 4 March 2024, 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:
Kerry Porritt
Group Company Secretary and Legal Advisor
Approved by the Board of Directors and authorised for issue on
4 March 2024.
Registered office:
2 Kingdom Street
London W2 6BD
Registered in England No. 2442580
Ordinary shares
FIL Limited
Schroders Plc
Old Mutual Plc
J O Hambro Capital
Management Limited
Franklin Templeton
Institutional, LLC
Aberforth Partners LLP
Artemis Investment
Management LLP
Standard Life Aberdeen plc
Baillie Gifford & Co
Number of
ordinary shares
Percentage of the
total voting rights
8,116,522
7,268,153
4,242,670
3,650,933
3,557,757
3,597,495
3,561,152
3,443,366
3,327,404
11.15
9.98
5.96
5.01
4.96
4.94
4.94
4.78
4.60
Source: TR1 notifications made by shareholders to the company.
Disclaimer
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.
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Keller Group plc Annual Report and Accounts 2023
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.
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 84) and the Directors’ report (pages 143 to
145) 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
4 March 2024
Registered office:
2 Kingdom Street
London W2 6BD
Registered in England No. 2442580
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
UK-adopted 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 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.
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Keller Group plc Annual Report and Accounts 2023
Keller Group plc Annual Report and Accounts 2023
Financial statements
Other information
218 Financial record
219 Contacts
220 Cautionary statement
Independent auditor’s report
148
159 Consolidated income statement
160 Consolidated statement of comprehensive income
161 Consolidated balance sheet
162 Consolidated statement of changes in equity
163 Consolidated cash flow statement
164 Notes to the consolidated financial statements
206 Company balance sheet
207 Company statement of changes in equity
208 Notes to the company financial statements
215 Adjusted performance measures
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Keller Group plc Annual Report and Accounts 2023
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 2023 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 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 2023
which comprise:
Group
Parent company
Consolidated balance sheet as at 31 December 2023
Company balance sheet as at 31 December 2023
Consolidated income statement for the year then ended 31 December 2023
Consolidated statement of comprehensive income for the year then ended
31 December 2023
Consolidated statement of changes in equity for the year then ended
31 December 2023
Consolidated statement of cash flows for the year then ended 31 December 2023
Related notes 1 to 35 to the financial statements, including a summary of significant
accounting policies
Company statement of changes in equity for the year
then ended 31 December 2023
Related notes 1 to 10 to the financial statements
including a summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the consolidated financial statements is applicable law and UK adopted
international accounting standards. The financial reporting framework that has been applied in the preparation of the parent company financial statements
is applicable law and United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted
Accounting Practice).
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.
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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
statements 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 the evaluation of the current economic
environment impacting the Group and our own independent
assessment of risk. This included macroeconomic factors such as
uncertainty over future interest rates, the price of steel, and continued
inflationary pressure over the cost of material, energy and labour.
• 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 2025. 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 considering actual post
year-end performance to date. We have assessed how management
considered the future profitability and cashflows assumed in the
base case forecast to take account of significant one-off margin
contributions during the current year for example windfall from steel
prices one-off items which are not expected to recur. 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 current and emerging climate-
related risks may affect the Group’s assessment, including
assumptions around the long-term reliance on concrete, steel and
related manufacturing processes, the use of heavy-duty combustion
machinery, ‘Environmental, Social and Governance’ related covenants
or levies, the cost of climate adaptation solutions, and the exposure
to extreme weather events which could delay project completion or
cause damage to physical assets. We have also considered the impact
of increased replacement cost for capex arising from stranded assets
which do not meet the required carbon emission standards.
• 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.
• 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
the new private placement of $300m entered into during the year,
including covenants, by examination of executed documentation, and
agreed the amounts drawn down at year end to external confirmations
from the banks.
• We extended our procedures (including inquiries of management,
considering the forward order book, and maturity of debt/availability
of access to future financing in the viability period) to consider
events beyond 31 March 2025, including the forecast for covenant
compliance at the next testing interval as at 30 June 2025. We have
also inquired with our debt advisory specialist over the availability and
prospects of Keller’s refinancing options based on the corporate
finance market for the sector, noting the maturity of facilities due
to expire after the going concern period, most notably the revolving
credit facility, due to expire in November 2025.
• We considered whether management’s disclosures in the financial
statements sufficiently and appropriately capture the impact of
the Group’s principal risks and uncertainties on the going concern
assessment and through consideration of relevant disclosure
standards.
• 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 downside events significantly greater than the financial effect of the
disruption caused in recent years (eg due to COVID-19 and Russia’s
invasion of Ukraine) throughout the going concern period in order to breach
its covenants or exhaust its available funding.
The Group has borrowing facilities available to it during the going concern
period. The undrawn committed facilities available as at 31 December 2023
amounted to £377.8m which comprises mainly of the Group’s £375m
revolving credit facility, expiring on 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 a period through to 31 March 2025.
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.
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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 63 components and audit procedures on
specific balances for a further 19 components.
• The components where we performed full or specific audit procedures accounted for 93% of profit before tax,
94% of revenue and 95% of total assets.
Key audit matters
Improper revenue recognition.
•
• Carrying value of goodwill.
• Quality of earnings including disclosure of non-underlying items.
Materiality
• Overall Group materiality of £7.0m which represents 4.6% 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 company
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, the potential impact of
climate change and other factors such as recent internal audit results when
assessing the level of work to be performed at each company.
The reporting components where we performed audit procedures
accounted for 93% (2022: 91%) of the Group’s profit before tax, 94%
(2022: 93%) of the Group’s revenue and 95% (2022: 96%) of the Group’s
total assets. For the current year, the full scope components contributed
78% (2022: 48%) of the Group’s profit before tax, 64% (2022: 67%) of
the Group’s revenue and 67% (2022: 70%) of the Group’s total assets.
The specific scope component contributed 15% (2022: 43%) of the
Group’s profit before tax, 30% (2022: 26%) of the Group’s revenue and
28% (2022: 27%) of the Group’s total assets. The audit scope of these
components may not have included testing of all significant accounts of
the component but will have contributed to the coverage of significant
accounts tested for the Group.
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 208 reporting
components of the Group, we selected 82 components covering entities
within AMEA, Europe and North America, which represent the principal
business units within the Group.
Of the 82 components selected, we performed an audit of the complete
financial information of 63 components (‘full scope components’) which
were selected based on their size or risk characteristics. This also reflects
inclusion of consolidation entities representing manual adjustments posted
in topside at the Group consolidated level, which we have treated as full
scope. For 19 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.
Of the remaining 126 components that together represent 7% of the
Group’s profit before tax, none are individually greater than 3% of the
Group’s profit before tax. For these components, we performed other
procedures, including analytical review and/or ‘review scope’ components,
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
78%
Full scope components
64%
Full scope components
67%
Specific scope components
15%
Specific scope components
30%
Specific scope components
28%
Other procedures
7%
Other procedures
6%
Other procedures
5%
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Changes from the prior year
For the current year, we evaluated the emerging increase in risk on revenue
recognition such as with Keller Arabia, which is servicing the work related to
the NEOM project in Saudi Arabia, where we applied specific risk-focused
procedures on the current year, compared with other procedures in the
prior year. The determination of our group scoping 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 scope for the current year continued
to focus on the key areas of audit focus and judgement, including, but not
limited to, revenue recognition and we increased the scope of procedures
performed across the Group in areas of emerging increases in risk. We
applied specific risk-focused procedures on these entities rather than
specified procedures on certain areas in the prior year. 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.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the
type of work that needed to be undertaken at each of the components
by us, as the primary audit engagement team, or by component auditors
from other EY global network firms operating under our instruction. Of
the 63 full scope components, audit procedures were performed on 61
of these directly by the primary audit teams. This included consolidation
entities representing manual adjustments posted topside at the Group
consolidated level, which we have treated as full scope. For the two
remaining full scope and 19 specific scope components, where the work
was performed by component auditors or centrally by the primary audit
team, 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 executed an oversight strategy
consisting of physical and virtual site visits for in-scope components, the
latter being enabled through the use of video conferencing. The Group
audit team (including the Senior Statutory Auditor) visited the principal
operating business of North America during the planning/interim phase of
the audit which involved discussing the audit approach with the component
team and any issues arising from their work, meetings with local and
divisional management to discuss key accounting judgements on revenue
and provisions, conducting contract site visits, and reviewing key audit
working papers in the high-risk areas. The virtual site visits, which occurred
throughout the key audit periods, 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 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.
Climate change
Stakeholders are increasingly interested in how climate change will impact
Keller Group plc. The Group has assessed the principal risks and impact
of climate change for the business in relation to (a) its inability to deliver
environmentally friendly and/or regulatory conforming solutions impacting
its clients and reputation, (b) disruptions to operations and damage/
impairment to assets or installed works from physical events, such as
storms, floods or wildfires, and (c) transition risks such as the cost of carbon
intensive materials, and the growing necessity to monitor and report
reduction of Scope 3 emissions.
These are explained on pages 48 to 58 in the Task Force on Climate-related
Financial Disclosures (TCFD) and on page 43 in the principal risks and
uncertainties. The Group has also explained its climate commitments on
pages 63 to 67. All of these disclosures form part of the ‘Other information’,
rather than the audited financial statements. Our procedures on these
unaudited 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, in line with our responsibilities on ‘Other information’.
In planning and performing our audit we assessed the potential impacts of
climate change on the Group’s business and any consequential material
impact on its financial statements.
The Group has explained in its basis of preparation in note 2 on how
they have considered the impact of climate change in their financial
statements, particularly in the context of the risks identified in the TCFD
disclosure on pages 48 to 58 this year. The basis of preparation also explains
management’s consideration of the impact of climate change in respect to
(a) estimates of future cash flows used in impairment assessments of the
carrying value of goodwill, (b) the useful economic life of plant, equipment
and other intangible assets, and (c) going concern and viability of the Group
over the next three years. Whilst management disclosed that there is
currently no material short-term impact expected from climate change,
they are aware of the variable risks arising from climate change and thus
they will regularly assess these risks against judgement and estimates
made in preparation of the Group’s financial statements.
Our audit effort in considering the impact of climate change on the
financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their
climate commitments, the effects of material climate risks disclosed on
pages 48 to 58 and the significant judgements and estimates disclosed
in note 2. We have assessed whether the impact of climate-related risks
has been appropriately reflected in future cash flows used to assess the
carrying value of goodwill, economic life of plant, equipment and other
intangible assets and the going concern and viability assessment (see
note 2) following the requirements of UK adopted international accounting
standards. As part of our audit testing and applying profession scepticism,
we performed our own risk assessment, supported by our climate change
internal specialists, to determine the risks of material misstatement in the
financial statements from climate change which needed to be considered in
our audit. Our audit testing included challenges to management with regard
to cost assumptions around climate adaptation solutions, and the exposure
to extreme weather events which could delay project completion or cause
damage/impairment to physical assets and the assumptions for capex
requirement in the forecasted going concern and viability period including
goodwill. We corroborated our analysis with market available information
for any change in climate-related regulations and discussion with our
component team. In determining the valuations and the timing of future
cash flows, we acknowledged that there is degree of certainty involved and
all climate-related risks or future outcome are not yet known.
We also challenged the Directors’ considerations of climate change risks
in their assessment of going concern, viability and associated disclosures.
Where considerations of climate change were relevant to our assessment
of going concern, these are described above.
Based on our work we have not identified the impact of climate change
on the financial statements to be a key audit matter. We considered the
impact of climate change on the future cash flows which have been used
to assess the carrying value of goodwill and going concern including
the viability assessment. Details of our procedures and findings on the
goodwill impairment assessment are included in the key audit matters
section overleaf.
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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
Our response to the risk
For all revenue recorded on the input method and output
method 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 and output methods.
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 2023. 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.
• We had meetings with the contract project managers to
understand the project status and outstanding works
remaining on the contracts, and to ensure that the financial
information recorded was consistent with their input.
• 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 of contracts where revenue was recognised
over time under the input method 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 tested the cost build up and the correct allocation across
contracts (e.g. to verify no manipulation of costs between
profitable and loss-making contracts and recognition
between periods (e.g. cut-off testing)) 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.
Improper revenue recognition
(management override of controls) (2023:
£2,966.0m, 2022: £2,944.6m)
Refer to the Audit and Risk Committee
report (page 112); Accounting policies (page
164); and note 4 of the consolidated financial
statements (page 174)
The Group recognises revenue over time
from contracts either through the output
method or the 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 the percentage of completion
achieved at the year end. Management may
use inappropriate measures or assumptions
to evaluate the Group’s progress towards
complete satisfaction of a performance
obligation, recognition of revenue relating to
variations/change orders and claims, and/or
inappropriately record manual, ‘topside’
journal entries to misstate revenues
recognised under the output method. Under
the input method management may use
inappropriate assumptions and judgements
when estimating forecast costs of contracts
at completion and/or the projected outcome
of additional claims made against the Group
or in respect of estimates of the Group’s
entitlement to variable consideration from
customers, resulting in inaccurate
recognition of revenue and profits.
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 the input and
output method bases.
The Group also provides fabricated,
unbonded post-tension materials to
customers in the residential and commercial
sectors, as well as geotechnical monitoring
solutions. 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.
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Risk
Our response to the risk
Improper revenue recognition
(management override of controls) (2023:
£2,966.0m, 2022: £2,944.6m) continued
For the sample of contracts where revenue is recognised on
the output method basis, we performed the following
procedures:
Key observations communicated
to the Audit and Risk Committee
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• Evaluated whether the assessment of output method
appropriately depicted outputs actually delivered and
progress towards satisfaction of performance obligations.
• We tested the cost build up and the correct allocation across
contracts (e.g. to verify no manipulation of costs between
profit-making and loss-making contracts) 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 (e.g. measured works certificates) that
demonstrates the period in which the work was performed.
For any loss-making contracts identified, for both input
method and output method 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 and
specific scope locations on a risk-based approach, including
focusing on entries which were posted manually or those which
could be made to overstate revenue and unbilled revenue.
We have performed enquiries of management to understand
all provisions held and management’s assessment under the
new amendment of IAS 37 for where provisions have been
recognised or not for the purpose of assessing whether a
contract is onerous and to assess the cost of fulfilling the
contract, for example allocations of indirect or general
overheads. All contract provisions have been discussed with
management and project managers.
We performed full and specific scope audit procedures over
revenue in 81 locations, which covered 94% of the risk amount.
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Risk
Our response to the risk
Carrying value of goodwill (2023: £107.6m;
2022: £125.3m)
Refer to the Audit and Risk Committee
report (page 112); Accounting policies (page
164); and note 15 of the consolidated
financial statements (pages 184–185)
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 (CGUs) 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.
We have performed the following:
• Performed a walkthrough to understand the impairment
analysis and calculation process (e.g. 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 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 recent 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 market uncertainties and increasing
costs of 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,
focusing 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 and capex 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.
Key observations communicated
to the Audit and Risk Committee
Our procedures focused on the
CGUs where the headroom was
either lower and/or sensitive to
changes in key assumptions,
including improved future
performance. Through our
process of challenging
management and
understanding their
assumptions, we concur with
their conclusion that the
goodwill recorded in Keller
Limited (£12.1m), is impaired.
Keller Norway and Keller
Canada were classified as
high-risk CGUs as part of our
risk assessment. We assessed
Keller Canada to be highly
sensitive to changes in cash
flows and the forecasts were
underpinned by future
successful execution of
business plans designed to
address the current year poor
performance in margins and
profitability. Management has a
business plan to turn around
the current year poor
performance for the Canada
CGU and the Norway CGU has
been restructured in 2023. We
have challenged
management’s plan and
assessed the sensitivity of
those plans to the forecasts.
We have ensured that
adequate disclosures have
been made in the annual report
to disclose the key sensitivities,
assumptions and available
headroom for the Canada CGU.
For the remaining CGUs, there
is sufficient headroom to
support the carrying value.
We concluded that
management have accounted
for the impairments calculated
appropriately and have included
sufficient disclosure over the
key assumptions and
sensitivities impacting the
remaining CGUs in note 15.
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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
Our response to the risk
Quality of earnings, including disclosure of
non-underlying items (2023: £27.9m
(pre-tax); 2022: £37.2m (pre-tax))
Refer to the Audit and Risk Committee
report (page 112); Accounting policies (page
164); and note 9 of the consolidated financial
statements (page 177)
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 pre-tax items totalling £27.9m 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.
We performed the following procedures:
• Obtained the breakdown of non-underlying items to
determine whether by their nature they meet the definition
of non-underlying items, in accordance with Group policy
and ESMA (European Securities and Markets Authority)
guidelines on Alternative Performance Measures.
• Tested that the amounts included as non-underlying items
are supported by appropriate evidence. We performed tests
of detail over costs classified as ERP costs and assessed
whether this is consistent with what other companies are
disclosing in the sector, the interpretation of the latest IFRIC
for cloud computing costs, and the Group’s policy for
non-underlying items. We also 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 or recurring expense,
and that the IAS 37 criteria have been correctly met. 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
performance measures (APMs) with the support of our EY
technical review team, we focused on:
– the clarity of definitions and explanations for the use of
APMs;
– adequacy of reconciliations to GAAP measures;
– equal prominence to GAAP measures; and
– consistency of application, including explanations for any
changes.
• Ensured that the disclosures in the financial statements
appropriately explain to the users the key elements of FY23
performance that are not expected to recur in future
periods.
• 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.
In the prior year, our auditor’s report included a key audit matter relating to the manipulation of contract performance in Keller Austral. Following the fraud
investigation performed by management’s appointed specialist, evaluation by our forensics team, as well as the incremental procedures included as part
of revenue recognition and fraud procedures, we deemed that the manipulation of contract performance in Keller Austral is no longer a separate key audit
matter. There have been no other changes in our assessment of key audit matters compared with the prior year.
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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 £7.0m (2022: £4.6m),
which is 4.6% (2022: 4.9%) of profit before tax adjusted for one-off,
non-underlying items. We believe that this measure 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 £5.3m (2022:
£4.7m), which is 1% (2022: 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
• £125.5m
• Profit before tax for the year
Adjustments
• £22.2m
• Non-underlying items for the year
• £5.7m
• Amortisation of intangibles on acquisition
Materiality
• Totals £153.4m
• Materiality of £7.0m (4.6% of profit
before tax adjusted for one-off, non-
underlying items)
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% (2022: 50%) of our planning materiality.
The performance materiality has been set at an underlying basis which is
consistent with prior year and includes consideration over the risk factors
relating to the financial reporting issue in Austral in 2022. The profitability
of the Group has meant that the financial quantum of our performance
materiality threshold (£3.5m, 2022: £2.3m) has increased compared with
prior year.
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 £0.7m to £3.15m
(2022: £0.5m to £1.6m).
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 £0.35m (2022: £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 218, including the Strategic
report on pages 1 to 84, and Corporate governance report set out on pages
85 to 146, other than the financial statements and our auditor’s report
thereon. The Directors are responsible for the other information contained
within the annual report.
During the course of our audit, we reassessed initial materiality noting that
there was an increase compared with the original assessment attributable
to the performance and profit before tax of the Group. The underlying basis
of materiality was not changed compared with the planning stage.
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.
Contents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
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Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set
out on page 146, 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.
Explanation as to what extent the audit was considered
capable of detecting irregularities, including fraud
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.
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, IFRS
adopted pursuant to FRS 101, United Kingdom Generally Accepted
Accounting Practice, the Companies Act 2006 and the 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. These are based on the nature
of the Group’s operations and the key geographies in which they
operate in, and include (but are not limited to): labour and employment
laws, health and safety, the Modern Slavery Act 2015, the Bribery Act
2010 and the Listing Rules of the London Stock Exchange.
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.
In our opinion, based on the work undertaken in the course of the audit:
•
•
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.
Matters on which we are required to report by exception
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 regard to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 39;
• 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 39;
• Directors’ statement on whether they have a reasonable expectation
that the Group will be able to continue in operation and meets its
liabilities set out on page 39;
• Directors’ statement on fair, balanced and understandable set out on
page 113;
• Board’s confirmation that it has carried out a robust assessment of
•
•
the emerging and principal risks set out on pages 40 to 47;
the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on pages 40 to 47; and
the section describing the work of the Audit and Risk Committee set
out on page 113.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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Keller Group plc Annual Report and Accounts 2023
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 27 February 2023 to audit
the financial statements for the year ending 31 December 2023 and
subsequent financial periods. We were appointed as auditors at the
Annual General Meeting of members and an engagement letter was
signed on 10 February 2024 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 five years, covering the years ending
31 December 2019 to 31 December 2023.
• 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
4 March 2024
• 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 covers
those procedures performed in areas where we have concluded the
risks of material misstatement are highest, including where we have
identified a risk of fraud. These procedures included testing manual
journal entries, a focus on the recoverability of unbilled revenue, and
considerations over information produced by the entity including work
over the authenticity of key evidence received during the audit.
• 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.
• We have performed enquires of internal and external legal counsel
to identify risks of material misstatement. We have made further
enquiries with project managers to investigate any inconsistencies in
data prepared by the finance team, including any transfers of costs
between projects and any unusual build-up of work in progress in
relation to construction income.
• We have reviewed the internal audit reports to identify major internal
control issues. We have discussed the impact of internal audit findings
with management to understand their plan to prevent any material
misstatement in addition to supplementing these areas with additional
audit procedures.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Contents Generation – Sub PageContents Generation - Section Consolidated income statement
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Keller Group plc Annual Report and Accounts 2023
159
Consolidated income statement
For the year ended 31 December 2023
Revenue
Operating costs
Net impairment loss on trade receivables and
contract assets
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
2023
Non-underlying
items (note 9)
£m
–
Statutory
£m
2,966.0
Underlying
£m
2,944.6
20221
Non-underlying
items (note 9)
£m
–
Statutory
£m
2,944.6
(22.5)
(2,787.1)
(2,834.6)
(29.7)
(2,864.3)
Underlying
£m
2,966.0
(2,764.6)
(21.3)
–
–
0.8
180.9
1.8
(29.3)
153.4
(38.8)
114.6
114.2
0.4
114.6
(0.4)
(5.1)
0.8
(0.6)
(27.8)
–
–
(27.8)
3.0
(24.8)
(24.8)
–
(24.8)
(21.7)
(5.1)
0.8
0.2
153.1
1.8
(29.3)
125.6
(35.8)
89.8
89.4
0.4
89.8
(2.9)
–
–
1.5
108.6
0.5
(15.6)
93.5
(20.3)
73.2
74.2
(1.0)
73.2
156.9p
153.9p
122.8p
120.5p
102.1p
100.7p
(0.3)
(10.3)
0.7
(1.2)
(40.8)
3.6
–
(37.2)
9.0
(28.2)
(28.2)
–
(28.2)
(3.2)
(10.3)
0.7
0.3
67.8
4.1
(15.6)
56.3
(11.3)
45.0
46.0
(1.0)
45.0
63.3p
62.4p
Note
3,4
6
7
17
3
10
11
12
34
14
14
1
The prior period columns have been reclassified to show net impairment loss on trade receivables and contract assets separate from operating costs, where they were reported in previous periods.
The inclusion of this information is considered useful for the users of the Annual Report and Accounts based on the material movements in the current period. Further details of the reclassified
amounts are outlined in note 7 to the consolidated financial statements.
Contents Generation – Sub PageContents Generation - Section
Consolidated statement of comprehensive income
160
Keller Group plc Annual Report and Accounts 2023
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Profit for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange movements on translation of foreign operations
Cash flow hedge gain taken to equity
Cash flow hedge transfers 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)/income for the year, net of tax
Total comprehensive income for the year
Attributable to:
Equity holders of the parent
Non-controlling interests
Note
33
12
2023
£m
89.8
(28.3)
1.9
(0.2)
(0.2)
(0.1)
(26.9)
62.9
62.7
0.2
62.9
2022
£m
45.0
46.3
–
–
2.8
(0.6)
48.5
93.5
94.0
(0.5)
93.5
Contents Generation – Sub PageContents Generation - Section Consolidated balance sheet
Keller Group plc Annual Report and Accounts 2023
Consolidated balance sheet
As at 31 December 2023
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
Hedging reserve
Retained earnings
Equity attributable to equity holders of the parent
Non-controlling interests
Total equity
161
2022
(Restated)1
£m
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m
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n
t
s
137.9
486.5
4.4
15.1
60.8
704.7
124.4
764.6
5.0
101.1
2.8
997.9
2023
£m
114.6
480.2
4.5
36.8
66.8
702.9
93.3
721.8
6.3
151.4
1.6
974.4
1,677.3
1,702.6
(86.8)
(35.5)
(553.6)
(59.1)
(735.0)
(301.9)
(17.7)
(7.8)
(73.7)
(23.2)
(424.3)
(1,159.3)
518.0
7.3
38.1
7.6
29.8
56.9
1.7
373.9
515.3
2.7
518.0
(34.2)
(53.2)
(585.6)
(52.7)
(725.7)
(365.8)
(20.8)
(5.3)
(66.9)
(21.3)
(480.1)
(1,205.8)
496.8
7.3
38.1
7.6
57.9
56.9
–
326.7
494.5
2.3
496.8
Note
15
16
17
12
18
19
20
21
22
3
26
23
24
26
33
12
24
25
3
3
28
28
28
34
1
The 31 December 2022 consolidated balance sheet has been restated in respect of prior period business combination measurement adjustments, as outlined in note 5 to the consolidated
financial statements.
These consolidated financial statements were approved by the Board of Directors and authorised for issue on 4 March 2024.
They were signed on its behalf by:
Michael Speakman
Chief Executive Officer
David Burke
Chief Financial Officer
Contents Generation – Sub PageContents Generation - Section
Consolidated statement of
changes in equity
162
Keller Group plc Annual Report and Accounts 2023
Consolidated statement of changes in equity
For the year ended 31 December 2023
Share
capital
(note 28)
£m
7.3
–
–
–
–
–
–
–
–
–
7.3
–
–
–
–
–
–
–
–
–
–
–
–
Share
premium
account
£m
38.1
–
–
–
–
–
–
–
–
–
38.1
–
–
–
–
–
–
–
–
–
–
–
–
Capital
redemption
reserve
(note 28)
£m
7.6
–
–
–
–
–
–
–
–
–
7.6
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2021
Profit/(loss) for the year
Other comprehensive income
Exchange movements on translation
of foreign operations
Remeasurements of defined benefit
pension schemes
Tax on remeasurements of defined
benefit pension schemes
Other comprehensive income
for the year, net of tax
Total comprehensive
income/(loss) for the year
Dividends
Purchase of own shares for ESOP trust
Share-based payments
At 31 December 2022
Profit for the year
Other comprehensive income
Exchange movements on translation
of foreign operations
Cash flow hedge gain taken to equity
Cash flow hedge transfers 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
Transactions with non-controlling
interests
Purchase of own shares for ESOP trust
Share-based payments
At 31 December 2023
Translation
reserve
£m
Other
reserve
(note 28)
£m
Hedging
reserve
(note 26)
£m
Attributable
to equity
holders of
the parent
£m
Non-
controlling
interests
(note 34)
£m
425.2
46.0
2.8
(1.0)
Total
equity
£m
428.0
45.0
Retained
earnings
£m
303.2
46.0
–
2.8
45.8
0.5
46.3
2.8
(0.6)
(0.6)
–
–
2.8
(0.6)
2.2
48.0
0.5
48.5
48.2
(26.4)
(1.2)
2.9
326.7
89.4
–
–
–
94.0
(26.4)
(1.2)
2.9
494.5
89.4
(28.1)
1.9
(0.2)
(0.2)
(0.2)
(0.1)
(0.1)
(0.5)
–
–
–
2.3
0.4
93.5
(26.4)
(1.2)
2.9
496.8
89.8
(0.2)
(28.3)
–
–
–
–
1.9
(0.2)
(0.2)
(0.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
1.9
(0.2)
–
–
1.7
(0.3)
(26.7)
(0.2)
(26.9)
1.7
–
–
–
–
89.1
(27.7)
(15.2)
(3.4)
4.4
62.7
(27.7)
(15.2)
(3.4)
4.4
515.3
0.2
–
62.9
(27.7)
0.2
(15.0)
–
–
(3.4)
4.4
2.7
518.0
12.1
56.9
–
45.8
–
–
45.8
45.8
–
–
–
–
–
–
–
–
–
–
–
–
57.9
56.9
–
(28.1)
–
–
–
–
(28.1)
(28.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.3
38.1
7.6
29.8
56.9
1.7
373.9
Contents Generation – Sub PageContents Generation - Section
Consolidated cash flow statement
Keller Group plc Annual Report and Accounts 2023
Consolidated cash flow statement
For the year ended 31 December 2023
Cash flows from operating activities
Profit before taxation
Non-underlying items
Finance income
Finance costs
Underlying operating profit
Depreciation/impairment 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 (including charge for share-based payments)
Foreign exchange gains
Operating cash flows before movements in working capital and other underlying items
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Increase/(decrease) in provisions, retirement benefit and other non-current liabilities
Cash generated from operations before non-underlying items
Cash outflows from non-underlying items: ERP costs
Cash outflows from non-underlying items: contract disputes
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
Net cash outflow from investing activities
Cash flows from financing activities
Increase in borrowings
Cash flows from derivative instruments
Repayment of borrowings
Payment of lease liabilities
Transactions with non-controlling interest
Purchase of own shares for ESOP trust
Dividends paid
Net cash (outflow)/inflow from financing activities
Net increase 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
9
10
11
3
16
15
17
5
5
16
15
13
21
2023
£m
125.6
27.8
(1.8)
29.3
180.9
111.8
0.4
(0.8)
(4.4)
3.3
(2.1)
289.1
26.8
1.5
(25.6)
12.1
303.9
(7.5)
(3.7)
(1.2)
–
291.5
(16.2)
(5.6)
(72.7)
197.0
1.8
20.9
1.3
(0.2)
(94.3)
(0.2)
(70.7)
241.2
2.0
(245.1)
(28.3)
(6.4)
(3.4)
(27.7)
(67.7)
58.6
94.2
(3.8)
149.0
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s
163
2022
£m
56.3
40.8
(4.1)
15.6
108.6
96.6
0.4
(1.5)
(3.3)
3.7
–
204.5
(44.2)
(110.0)
43.7
(13.4)
80.6
(5.4)
–
(0.6)
(0.2)
74.4
(10.1)
(3.6)
(5.9)
54.8
4.0
8.2
0.7
(20.2)
(81.6)
(0.1)
(89.0)
99.3
0.2
(1.4)
(29.5)
–
(1.2)
(26.4)
41.0
6.8
81.8
5.6
94.2
Contents Generation – Sub PageContents Generation - Section
Notes to the consolidated
financial statements
164
Keller Group plc Annual Report and Accounts 2023
Notes to the consolidated financial statements
1 Corporate information
The consolidated financial statements of Keller Group plc and its
subsidiaries (collectively, the ‘Group’) for the year ended 31 December 2023
were authorised for issue in accordance with the resolution of the Directors
on 4 March 2024.
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 10 of the company financial statements.
2 Material accounting policy information
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.
Prior period business combination measurement adjustment
Under IFRS 3 ‘Business Combinations’ there is a measurement period of
no longer than 12 months in which to finalise the valuation of the acquired
assets and liabilities. During the measurement period, the acquirer shall
retrospectively adjust the provisional amounts recognised at the acquisition
date to reflect new information obtained about facts and circumstances
that existed as of the acquisition date and, if known, would have affected
the measurement of the amounts recognised as of that date. During the
measurement period, the acquirer shall also recognise additional assets or
liabilities if new information is obtained about facts and circumstances that
existed as of the acquisition date and, if known, would have resulted in the
recognition of those assets and liabilities as of that date.
In the year to 31 December 2022, the Group acquired Nordwest
Fundamentering AS. Adjustments to the provisional fair values were made
during the measurement period, as set out in note 5. The impact of the
measurement period adjustments has been applied retrospectively,
meaning that the results and financial position for the year to 31 December
2022 have been restated.
Going concern
In August 2023, the Group received proceeds from a new $300m private
placement of loan notes. These were used to repay existing borrowings. At
31 December 2023, the Group had undrawn committed and uncommitted
borrowing facilities totalling £425.2m, comprising £375m of the unutilised
portion of the revolving credit facility, £2.8m of other undrawn committed
borrowing facilities and undrawn uncommitted borrowing facilities of
£47.4m, as well as cash and cash equivalents of £149.0m. At 31 December
2023, the Group’s net debt to underlying EBITDA ratio (calculated on an IAS
17 covenant basis) was 0.6x, well within the limit of 3.0x.
The Group has prepared a forecast of financial projections for the three-
year period to 31 December 2026. The forecast underpins the going
concern assessment which has been made for the period through to
31 March 2025, 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. The base case reflects the
assumptions made by the Group with respect to key project wins, organic
growth and a focus on cost reduction. The forecast shows significant
headroom and supports the position that the Group can operate within its
available banking facilities and covenants throughout this period.
The Group’s revolving credit facility falls due in November 2025, eight
months after the going concern period assessed by management.
Management assumed the Group will continue to have access to
this funding throughout the going concern period and the three year
viability period, on the basis that the Group will either renew the facility
or have sufficient time to agree an alternative source of finance on
comparable terms.
For the going concern assessment, management ran a series of downside
scenarios over the base case forecast to assess covenant headroom
against available funding facilities. 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.
The following severe but plausible downside assumptions were modelled:
• Rapid downturn in the Group’s markets resulting in up to a 10% decline
in revenues;
• Failure to procure new contracts whilst maintaining appropriate
margins reducing profits by 0.5% of revenue;
•
Ineffective execution of projects reducing profits by 1% of revenue;
• A combination of other principal risks and trading risks materialising
together reducing profits by up to £20.1m over the period to 31 March
2025. 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 and the cost of a product or solution failure; and
• 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 incorporating an aggregation
of all risks considered, which showed a decrease in operating profit of 26.4%
and an increase in net debt of 26.7% against the Group’s latest forecast
profit and cash flow projections for the review period up to 31 March 2025,
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 2025, 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.
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Climate change
In preparing the consolidated financial statements, management has
considered the impact of climate change, particularly in the context of
the risks identified in the TCFD disclosure on pages 48 to 58. The output
from the scenario analysis has been considered, particularly the financial
reporting judgements and estimates in respect of the following areas:
• Estimates of future cash flows used in impairment assessments of the
carrying value of goodwill;
• The useful economic life of plant, equipment and other intangible
assets; and
• Going concern and viability of the Group over the next three years.
Although the scenario analysis identified a risk of stranded assets as a
result of increased emission standards, this was in one extreme downside
scenario and we have not adjusted the useful economic life of any plant or
equipment as a result. Whilst there is currently no change, management
are aware of the variable risks arising from climate change and will regularly
assess these risks against judgement and estimates made in preparation of
the Group’s financial statements.
Changes in accounting policies and disclosures
New and amended standards and interpretations
The following applicable amendments became effective during the year to
31 December 2023:
• Amendments to IAS 8 ‘Definition of Accounting Estimates’.
• Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of
Accounting Policies’.
• Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities
arising from a Single Transaction’.
• Amendments to IAS 12 ‘International Tax Reform – Pillar Two Model
Rules’.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but are not yet effective.
IFRS 17 Insurance Contracts
IFRS 17 Insurance Contracts is a new accounting standard for insurance
contracts covering recognition and measurement, presentation and
disclosure, replacing IFRS 4 Insurance Contracts. The Group has identified
that the Standard will impact the results of its captive insurance company
as it issues re-insurance contracts, however since the contracts insure
other group companies and there are therefore no insurance contracts
on a consolidated basis and no transfer of significant insurance risk to the
group, there is therefore no impact on the Group’s consolidated financial
statements.
Amendments to IAS 8 ‘Definition of Accounting Estimates’
The amendments to IAS 8 clarify the distinction between changes in
accounting estimates, changes in accounting policies and the correction
of errors. They also clarify how entities use measurement techniques and
inputs to develop accounting estimates. The amendments had no impact
on the Group’s consolidated financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2 ‘Disclosure of
Accounting Policies’
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements provide guidance and examples to help entities apply
materiality judgements to accounting policy disclosures. The amendments
have had no material impact on the Group’s consolidated financial
statements.
Amendments to IAS 12 ‘Deferred Tax related to Assets and Liabilities
arising from a Single Transaction’
The amendments to IAS 12 ‘Income Tax’ narrow the scope of the initial
recognition exception, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences such as leases
and decommissioning liabilities. The amendments had no impact on the
Group’s consolidated financial statements.
Amendments to IAS 12 ‘International Tax Reform – Pillar Two Model Rules’
The amendments to IAS 12 have been introduced in response to the
OECD’s BEPS Pillar Two rules and include:
• A mandatory temporary exception to the recognition and disclosure
of deferred taxes arising from the jurisdictional implementation of the
Pillar Two model rules; and
• Disclosure requirements for affected entities to help users of the
financial statements better understand an entity’s exposure to Pillar
Two income taxes arising from that legislation, particularly before its
effective date.
The UK Government enacted Finance (No 2) Act 2023 on 11 July 2023,
which includes the Pillar Two legislation introducing a multinational top
up tax and a domestic minimum top up tax in line with the minimum 15%
rate in the OECD’s Pillar Two rules. The rules will apply to the Group for the
financial year commencing on 1 January 2024. The Group has applied the
exemption in the amendments to IAS 12 (issued in May 2023) and has
neither recognised nor disclosed information about deferred tax assets and
liabilities related to Pillar Two income taxes.
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.
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.
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2 Material accounting policy information continued
Summary of material accounting policy information
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.
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
2023
1.24
1.68
1.15
1.67
1.87
2023
1.27
1.69
1.15
1.68
1.87
2022
1.24
1.61
1.17
1.70
1.78
2022
1.21
1.63
1.12
1.62
1.76
Revenue from construction contracts
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, including claims to customers, are
recognised only when the Group considers there is an enforceable right to
consideration, therefore no revenue is recognised until this point. Operating
expenses in relation to customer modifications are recognised as incurred.
Factors indicating an enforceable right to consideration will vary from county
to country but usually includes written confirmation from the customer. 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.
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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 12.
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.
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. 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.
Property, plant and equipment
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 16 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.
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.
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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.
2 Material accounting policy information continued
Summary of material accounting policy information continued
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’.
Lease liabilities
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
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 1.07% to 15.05%.
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.
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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
Software-as-a-service arrangements
The Group’s current SaaS arrangements are arrangements in which the
Group does not control the underlying software used in the arrangement.
Software development costs incurred to configure or customise application
software provided under a cloud computing arrangement and associated
fees are recognised as operating expenses as and when the services are
received where the costs represent a distinct service provided to the Group.
When such costs incurred do not provide a distinct service, the costs
are recognised as expenses over the duration of the SaaS contract. The
Group capitalises other software costs when the requirements of IAS 38
‘Intangible Assets’ are satisfied, including configuration and customisation
costs which are distinct and within the control of the Group. Such software
costs are capitalised and carried at cost less any accumulated amortisation
and impairment, and amortised on a straight-line basis over the period
which the developed software is expected to be used.
Amortisation commences when the development is complete and the
asset is available for use and is included in the operating costs item of the
consolidated income statement. The amortisation is reviewed at least at
the end of each reporting period and any changes are treated as changes in
accounting estimates.
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
indication 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.
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). At each reporting date, the Group evaluates the estimated
recoverability of trade receivables and contract assets and records
allowances for ECLs based on experience.
The Group applies the simplified approach to measurement of ECLs in
respect of trade receivables, which requires expected lifetime losses to be
recognised from initial recognition of the receivable. Immediately after an
individual trade receivable or contract asset is assessed to be unlikely to
be recovered, an impairment is recognised as the difference between the
carrying amount of the receivable and the present value of estimated future
cash flows. Customer specific factors are considered when identifying
impairments, which can include the geographic location and credit rating of
a customer.
Where there are no specific concerns over recovery, other than the
increasing age of a trade receivable or contract asset balance past payment
terms, the Group uses a provision matrix, where provision rates are based
on days past due. The provision matrix used reflects estimates based on
past experience, current economic factors and consideration of forward-
looking estimates of economic conditions. Generally, trade receivables are
written-off completely if past due for more than 180 days. Default is defined
as the point where there is no further legal address available for the Group
to recover the receivable amount.
The information about the ECLs on the Group’s trade receivables and
contract assets is disclosed in note 20.
Trade payables that are not interest bearing are initially recognised at fair
value and carried at amortised cost.
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2 Material accounting policy information continued
Summary of material accounting policy information continued
Financial instruments continued
(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 the recognition of a non-financial asset or liability, the amount
accumulated in equity is included in the initial cost or carrying amount of the
hedged 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.
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 24.
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.
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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.
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.
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.
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, goodwill impairment, 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.
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 24). 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.
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2 Material accounting policy information continued
Significant accounting judgements, estimates
and assumptions continued
Construction contracts continued
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 5,500
contracts during 2023, at an average revenue of approximately £540,000
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 and revenue is recognised on the input method, 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. Total contract assets
are £90.9m and contract liabilities are £90.9m at 31 December 2023.
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. The amount included within provisions in
respect of contract provisions is £41.2m (2022: £37.8m).
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.
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, goodwill impairment, 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.
The Group exercises judgement in assessing whether restructuring items
and the ERP implementation costs should be classified as non-underlying.
This assessment covers the nature of the item, cause of the occurrence
and scale of impact of that item on the reported performance. Typically,
management will categorise restructuring costs incurred to exit a specific
geography as non-underlying, in addition restructuring programmes which
are incremental to normal operations undertaken to add value to the
business are included in non-underlying items. The value of exceptional
restructuring costs in 2023 (£2.8m) is lower than in 2022 (£5.3m). ERP
implementation costs are categorised as non-underlying due to the scale
and length of the project. The nature of the project and costs incurred
are reviewed on a regular basis to assess the appropriateness of the
classification as a non-underlying cost.
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.
In 2023, management noted sensitivity in the headroom available for
Keller Canada. The DCF for this CGU is sensitive to the future successful
execution of the CGU’s business plans to consistently meet forecasted
margins (which assumes a significant improvement in operating
performance compared with 2023) by improving project delivery
and revenue growth. Refer to note 15 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. A 10% shortfall
in expected profits would have a proportional impact on the value of the
deferred tax assets recoverable. Deferred tax assets recognised on unused
tax losses were £10.7m at 31 December 2023 (2022: £14.5m). Refer to
note 12 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 24
for further information.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
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.
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North America
Europe
Asia-Pacific, Middle East and Africa
Central items
Underlying
Non-underlying items (note 9)
North America
Europe
Asia-Pacific, Middle East and Africa
Central items1
North America
Europe
Asia-Pacific, Middle East and Africa
Central items1
2023
2022
Revenue
£m
Operating profit
£m
Revenue
£m
Operating profit
£m
1,770.0
686.0
510.0
2,966.0
–
2,966.0
–
2,966.0
2023
Capital
employed
£m
627.0
93.0
97.6
817.6
(299.6)
518.0
20224
Capital
employed
£m
667.2
130.9
87.7
885.8
(389.0)
496.8
169.6
1.8
22.6
194.0
(13.1)
180.9
(27.8)
153.1
1,896.1
649.3
399.2
2,944.6
–
2,944.6
–
2,944.6
82.0
29.1
6.6
117.7
(9.1)
108.6
(40.8)
67.8
Capital
additions
£m
Depreciation2 and
amortisation
£m
Tangible3 and
intangible assets
£m
42.1
22.1
30.3
94.5
–
94.5
56.5
30.7
23.9
111.1
1.1
112.2
347.3
141.1
105.6
594.0
0.8
594.8
Capital
additions
£m
Depreciation2 and
amortisation
£m
Tangible3 and
intangible assets
£m
33.8
23.2
24.7
81.7
–
81.7
54.6
27.8
13.7
96.1
0.9
97.0
352.5
159.6
109.6
621.7
2.7
624.4
Segment
assets
£m
929.9
317.1
235.8
1,482.8
194.5
1,677.3
Segment
assets
£m
1,016.3
338.9
251.1
1,606.3
96.3
1,702.6
Segment
liabilities
£m
(302.9)
(224.1)
(138.2)
(665.2)
(494.1)
(1,159.3)
Segment
liabilities
£m
(349.1)
(208.0)
(163.4)
(720.5)
(485.3)
(1,205.8)
1 Central items include net debt and tax balances, which are managed by the Group.
2 Depreciation and amortisation excludes amortisation of acquired intangible assets.
3 Tangible and intangible assets comprise goodwill, intangible assets and property, plant and equipment.
4
The 31 December 2022 consolidated balance sheet has been restated in respect of the prior year business combination measurement adjustments, as outlined in note 5 to the consolidated
financial statements.
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3 Segmental analysis continued
Revenue analysed by country:
United States
Australia
Germany
Canada
United Kingdom
Other
Non-current assets1 analysed by country:
United States
Australia
Germany
Canada
Austria
Other
1
Excluding deferred tax assets.
2023
£m
2022
£m
1,644.0
1,758.0
279.4
146.3
125.2
125.1
646.0
228.4
115.9
137.9
127.4
577.0
2,966.0
2,944.6
2023
£m
342.6
62.3
52.4
44.5
33.2
131.1
666.1
2022
£m
343.5
67.0
54.3
46.6
34.9
143.3
689.6
4 Revenue
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:
North America
Europe
Asia-Pacific, Middle East and Africa
Revenue
recognised on
performance
obligations
satisfied
over time
£m
1,355.0
686.0
510.0
2,551.0
2023
Revenue
recognised on
performance
obligations
satisfied at a
point in time
£m
Total
revenue
£m
415.0
1,770.0
–
–
686.0
510.0
415.0
2,966.0
Revenue
recognised on
performance
obligations
satisfied
over time
£m
1,434.7
649.3
399.2
2,483.2
2022
Revenue
recognised on
performance
obligations
satisfied at
a point in time
£m
461.4
–
–
Total
revenue
£m
1,896.1
649.3
399.2
461.4
2,944.6
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 2023 from
performance obligations satisfied in previous periods is £12.4m (2022: £15.7m).
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 2023, the total order book is £1,489.1m (2022: £1,407.1m).
The order book for contracts with a total duration over one year is £463.1m (2022: £384.5m). Revenue on these contracts is expected to be recognised
as follows:
Less than one year
One to two years
More than two years
2023
£m
363.4
93.3
5.8
462.5
2022
£m
289.3
87.1
8.1
384.5
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175
The following table provides information about trade receivables, contract assets and contract liabilities arising from contracts with customers:
Trade receivables
Contract assets
Contract liabilities
2023
£m
583.1
90.9
(90.9)
2022
£m
615.5
105.3
(85.6)
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 £156.9m (2022:
£121.3m) in respect of retentions anticipated to be receivable within one year. Included in non-current other assets is £22.7m (2022: £16.3m) anticipated to
be receivable in more than one year. All contract assets and liabilities are current.
Significant changes in the contract assets and liabilities during the year are as follows:
As at 1 January
Revenue recognised in the current year
(Disposed)/acquired with 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
Current year
There were no material acquisitions during the year to 31 December 2023.
2023
2022
Contract assets
£m
Contract liabilities
£m
Contract assets
£m
Contract liabilities
£m
105.3
985.8
(0.8)
(995.3)
–
(4.1)
90.9
(85.6)
299.7
–
–
(309.1)
4.1
(90.9)
99.2
911.2
0.6
(914.1)
–
8.4
105.3
(46.5)
824.2
–
–
(858.9)
(4.4)
(85.6)
Prior year acquisitions
GKM Consultants Inc.
On 1 May 2022, the Group acquired 100% of the issued share capital of GKM Consultants Inc., an instrumentation and monitoring provider in Quebec,
Canada, for an initial cash consideration of £3.3m (CAD$5.3m). In addition, contingent consideration is payable dependent on the cumulative EBITDA in the
three-year period post acquisition.
At the acquisition date, the fair value of the contingent consideration was £1.2m (CAD $2.0m), based on expected cashflows generated by the business over
a three year period at that point in time. At 31 December 2022, the fair value of the contingent consideration was revised to £0.9m with the reduction in the
amount payable recognised in the income statement as a non-underlying item in that year. The maximum value of the contingent consideration is £1.2m,
the minimum payable would be zero.
The fair value of 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. The goodwill is not expected to be
deductible for tax purposes.
Nordwest Fundamentering AS
On 15 November 2022, the Group acquired 100% of the issued share capital of Nordwest Fundamentering AS, a small specialist geotechnical contractor
provider in Norway, for an initial cash consideration of £5.5m (NOK65m). In addition, deferred consideration of £0.5m (NOK6m) is payable. Due to the timing
of the acquisition, the review of the fair value of net assets acquired was performed in H1 2023. The provisional value of net assets acquired was £1.0m at
acquisition date, resulting in a goodwill and other intangibles value of £5.3m.
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5 Acquisitions and disposals continued
Acquisitions continued
Prior period business combination measurements adjustments
Under IFRS 3 ‘Business Combinations’ there is a measurement period of no longer than 12 months in which to finalise the valuation of the acquired assets
and liabilities. During the measurement period, the acquirer retrospectively adjusts the provisional amounts recognised at the acquisition date to reflect any
new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the
amounts recognised as of that date.
The valuation of Nordwest Fundamentering AS acquired assets is now final and the adjustments to the provisional fair values that were made during the
measurement period are set out in the table below:
Provisional fair value
recognised on
acquisition
£m
Adjustments during
measurement period
£m
Revised provisional
fair value recognised
on acquisition
£m
Assets
Intangible assets1
Property, plant and equipment
Property, plant and equipment – right-of-use asset
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Current tax liabilities2
Loans and borrowings, including lease liabilities
Deferred tax liabilities
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Initial cash consideration
Initial valuation of contingent consideration
Purchase price adjustment
–
0.3
2.1
1.5
1.1
5.0
(1.5)
–
(2.2)
(0.3)
(4.0)
1.0
5.3
6.3
5.5
0.5
0.3
6.3
0.9
–
–
–
–
0.9
–
(0.7)
–
–
(0.7)
0.2
(0.2)
–
–
–
–
–
0.9
0.3
2.1
1.5
1.1
5.9
(1.5)
(0.7)
(2.2)
(0.3)
(4.7)
1.2
5.1
6.3
5.5
0.5
0.3
6.3
1 The adjustment to intangible assets relates to the revised valuation of the trade name and customer relationships acquired.
2 The adjustment to current tax liabilities relates to the updated tax liability due from pre-acquisition profits.
The impact of these adjustments has been applied retrospectively, meaning that the financial position for the year to 31 December 2022 has been
restated. The adjustments did not result in any impact on the income statement for the year ended 31 December 2022. A summary of the purchase price
adjustments made for the 2022 acquisitions are set out in the table below.
Acquisition
Nordwest Fundamentering AS
Goodwill
£m
5.1
Acquired
intangible
assets
£m
Acquired
deferred tax
liabilities
£m
Fair value
of other
identifiable
assets and
liabilities
£m
Consideration
paid
£m
Cash acquired
£m
Non-cash
elements
£m
0.9
(0.3)
0.6
6.3
1.1
0.8
Net cash
outflow
£m
4.4
Disposals
On 10 November 2023, the Group disposed of its Cyntech Tanks operation in Canada, a part of Cyntech Construction Ltd, for a total consideration of
£1.5m (CAD$2.6m), consisting of the sale price of £1.3m (CAD$2.2m) and further sale price adjustments to be paid from the Escrow amount of £0.2m
(CAD$0.4m). A non-underlying loss on disposal of £0.1m (CAD$0.2m) was recognised.
In 2022, a contingent consideration of £0.7m was received in accordance with the terms of the sale and purchase agreement of Wannenwetsch GmbH,
which was disposed of in 2020.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
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
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20221
£m
1,054.3
699.8
777.5
0.5
201.7
71.1
29.7
2,834.6
29.7
2,864.3
–
1.4
2.0
0.1
Note
8
15
16a
16b
9
2023
£m
954.0
739.7
774.6
0.4
184.7
81.8
29.4
2,764.6
22.5
2,787.1
–
1.4
2.1
0.1
1
The net impairment loss on trade receivables and contract assets has been reclassified and separated from operating costs, where it was reported in previous periods. Further details of the
reclassified amounts are outlined in note 7 to the consolidated financial statements. The restatement explained in note 20 has caused a consequential increase of £12.8m in the amount reported
above for Other operating charges for the prior period.
7 Net impairment loss on trade receivables and contract assets
The net impairment loss on trade receivables and contract assets is made up of movements in the allowance for expected credit losses of trade receivables
and contract assets as follows:
Additional provisions
Unused amounts reversed
Net impairment loss2
2023
£m
29.4
(7.7)
21.7
2022 1
£m
13.8
(10.6)
3.2
1
The net impairment loss on trade receivables and contract assets has been reclassified and separated from operating costs, where it was reported in previous periods.
2 Of this amount £16.8m (2022: £11.5m) is subject to enforcement activity.
Further information on the Group’s allowance for expected credit losses of trade receivables and contract assets and on the Group’s expected credit loss
rates for the 2022 and 2023 financial years can be found in note 20 Trade and other receivables.
8 Employees
The aggregate staff costs of the Group were:
Wages and salaries
Social security costs
Other pension costs
Share-based payments
2023
£m
643.5
66.2
25.6
4.4
739.7
2022
£m
606.7
66.7
23.1
3.3
699.8
These costs include Directors’ remuneration. Fees payable to Non-executive Directors totalled £0.5m (2022: £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 was paid on 3 January 2023.
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8 Employees continued
The average number of staff, including Directors, employed by the Group during the year was:
North America
Europe
Asia-Pacific, Middle East and Africa
2023
Number
4,413
2,924
2,152
9,489
2022
Number
4,604
3,043
2,174
9,821
9 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, goodwill
impairment, 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 in the table below.
As underlying results include the benefits of restructuring programmes and acquisitions but exclude significant costs (such as major restructuring costs and
the amortisation of acquired intangible assets) they should not be regarded as a complete picture of the Group’s financial performance, which is presented
in its total statutory results. The exclusion of non-underlying items may result in underlying earnings being materially higher or lower than total statutory
earnings. In particular, when significant impairments and restructuring charges are excluded, underlying earnings will be higher than total statutory earnings.
ERP implementation costs
Goodwill impairment
Exceptional restructuring costs
Impairment of trade receivables related to restructuring
Loss on disposal of operations
Exceptional historic contract dispute
Claims related to closed business
Contingent consideration: additional amounts provided
Change in fair value of contingent consideration
Acquisition costs
Non-underlying items in operating costs (including net impairment loss
on trade receivables and contract assets)
Amortisation of acquired intangible assets
Gain on sale of assets held for sale
Contingent consideration received
Non-underlying items in other operating income
Amortisation of joint venture acquired intangibles
Total non-underlying items in operating profit
Non-underlying items in finance income
Total non-underlying items before taxation
Taxation
Total non-underlying items after taxation
2023
£m
7.5
12.1
2.8
0.4
0.1
–
–
–
–
–
22.9
5.1
(0.8)
–
(0.8)
0.6
27.8
–
27.8
(3.0)
24.8
2022
£m
6.3
12.5
5.3
0.3
–
3.5
2.5
0.1
(0.7)
0.2
30.0
10.3
–
(0.7)
(0.7)
1.2
40.8
(3.6)
37.2
(9.0)
28.2
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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Non-underlying items in operating costs
ERP implementation costs
The Group is continuing the strategic project to implement a new cloud computing enterprise resource planning (ERP) system across the Group. Due to
the size, nature and incidence of the relevant costs expected to be incurred, the costs are presented as a non-underlying item, as they are not reflective of
the underlying performance of the Group. As this is a complex implementation, project costs are expected to be incurred over a total period of five years, of
which 2023 was the third year. Non-underlying ERP costs of £7.5m (2022: £6.3m) include only costs relating directly to the implementation including external
consultancy costs and the cost of the dedicated implementation team. Non-underlying costs does not include operational post-deployment costs such as
licence costs for businesses that have transitioned.
Goodwill impairment
The goodwill impairment of £12.1m relates to Keller Limited, the UK Foundations business following uncertainty over the future profitability of the cash-
generating unit after the completion of a substantial customer contract. Refer to note 15 for further information.
In 2022, the goodwill impairment of £12.5m was related to Austral (£7.7m) due to uncertainty over the future profitability of the cash-generating unit
following the discovery of the financial reporting fraud; and Sweden (£4.8m) due to a downward revision to the medium-term forecast as forward projections
did not fully support the carrying value of the goodwill.
Exceptional restructuring costs
Exceptional restructuring costs of £2.8m. comprise £0.5m in the Europe division, and £2.3m in the Asia-Pacific, Middle East and Africa (AMEA) division. In
Europe, the costs relate to the exit from Kazakhstan, in AMEA the costs relate to the closure of the Egypt business. In addition, the exit from Kazakhstan
resulted in a £0.4m impairment of trade receivables.
The Group exercises judgement in assessing whether restructuring items should be classified as non-underlying. This assessment covers the nature of
the item, cause of the occurrence and scale of impact of that item on the reported performance. Typically, management will categorise restructuring costs
incurred to exit a specific geography as non-underlying, in addition restructuring programmes which are incremental to normal operations undertaken to
add value to the business are included in non-underlying items. The value of exceptional restructuring costs in 2023 (£2.8m) is lower than in 2022 (£5.3m).
In 2022, exceptional restructuring costs of £5.3m comprised £3.4m in the North America Division, £1.8m in the Europe Division, a credit of £0.6m in AMEA
and £0.7m incurred centrally. In North America, the costs arose as a result of a management and property reorganisation within the parts of the business
located in Texas. Costs include redundancy costs and property duplication costs. In Europe, the costs related to the scheduled exit of the Ivory Coast and
Morocco businesses, including asset impairments and redundancy costs. In AMEA, the credit arose from restructuring costs provided for in prior years as
costs incurred were lower than originally anticipated. In 2022, an impairment charge of £0.3m by the North-East Europe Business Unit was in respect of
trade receivables in Ukraine that were not expected to be recovered due to the ongoing conflict.
Loss on disposal of operations
On 10 November 2023, the Group disposed of its Cyntech Tanks operation in Canada, a part of Cyntech Construction Ltd, for a total consideration of
£1.5m, consisting of the sale price of £1.3m and further sale price adjustments to be paid from the Escrow amount of £0.2m. A loss on disposal of £0.1m
was recognised.
Exceptional historic contract dispute and claims related to closed business
In 2022, the £3.5m exceptional charge was related to a provision made for additional legal costs relating to the historical Avonmouth contract dispute
following a negotiation with insurers during that year. In addition, a £2.5m provision for a legal claim in respect of a closed business was recognised.
Contingent consideration
In 2022, additional contingent consideration payable of £0.1m related to the acquisition of the Geo Instruments US business in 2017.
Acquisition costs
Acquisition costs of £0.2m in 2022 comprised professional fees relating to the NWF acquisition in Norway and centrally incurred project costs.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets of £5.1m relates to the amortisation charge on assets acquired in the RECON, GKM, Moretrench and NWF
acquisitions. The amortisation in 2022 of £10.3m relates to the RECON, GKM, Moretrench and Voges acquisitions.
Non-underlying items in other operating income
The gain on disposal of assets held for sale of £0.8m relates primarily to the sale of assets owned by the now closed Waterway business in Australia as
mentioned in note 22. Impairment charges for these assets had previously been charged to non-underlying items in prior periods and therefore the
corresponding profit on disposal of the assets is also recognised as a non-underlying item.
During 2022, the second and final instalment of contingent consideration was received in relation to the Wannenwetsch disposal in September 2020, in
accordance with the terms of the sale and purchase agreement. The first instalment was received during 2021.
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9 Non-underlying items continued
Amortisation of joint venture acquired intangibles
Amortisation of joint venture intangibles relates to NordPile, an acquisition by the Group’s joint venture interest KFS Finland Oy on 8 September 2021.
Non-underlying finance income
In 2022, the Group entered into an interest rate derivative with the purpose of hedging a highly probable forecast transaction. The forecast transaction did
not take place and as a result the amount arising from the hedging instrument was recognised in the income statement. This resulted in the recognition of
£3.6m of finance income which was included in non-underlying as it was material in size and was not reflective of the underlying finance income and costs of
the Group.
Non-underlying taxation
Refer to note 12 for details of the non-underlying tax items.
10 Finance income
Bank and other interest receivable
Net pension interest income
Other finance income
Underlying finance income
Non-underlying finance income
Total finance income
11 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 on provisions
Total finance costs
12 Taxation
Current tax expense:
Current year
Prior years
Total current tax
Deferred tax expense:
Current year
Prior years
Total deferred tax
2023
£m
1.6
–
0.2
1.8
–
1.8
2023
£m
12.6
8.6
5.6
0.3
1.8
28.9
0.4
29.3
2023
£m
54.6
0.4
55.0
(18.7)
(0.5)
(19.2)
35.8
2022
£m
0.3
0.1
0.1
0.5
3.6
4.1
2022
£m
7.8
2.4
3.6
0.1
1.5
15.4
0.2
15.6
2022
£m
46.6
(2.5)
44.1
(32.0)
(0.8)
(32.8)
11.3
UK corporation tax is calculated at 23.5% (2022: 19%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the
rates prevailing in the respective jurisdictions.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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181
The effective tax rate can be reconciled to the UK corporation tax rate of 23.5% (2022: 19%) as follows:
Profit/(loss) before tax
UK corporation tax charge/(credit) at 23.5% (2022: 19%)
Tax charged at rates other than 23.5% (2022: 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
2023
Underlying
£m
Non-underlying
items (note 9)
£m
Statutory
£m
Underlying
£m
2022
Non-underlying
items (note 9)
£m
Statutory
£m
153.4
36.0
4.3
10.1
(7.4)
(4.3)
(0.1)
0.2
38.8
25.3%
(27.8)
(6.5)
(0.2)
0.6
-
3.1
-
-
(3.0)
10.6%
125.6
29.5
4.1
10.7
(7.4)
(1.2)
(0.1)
0.2
35.8
28.5%
93.5
17.8
3.1
6.6
(0.7)
(2.8)
(3.3)
(0.4)
(37.2)
(7.1)
(1.0)
0.8
(4.3)
2.6
–
–
56.3
10.7
2.1
7.4
(5.0)
(0.2)
(3.3)
(0.4)
20.3
21.7%
(9.0)
24.2%
11.3
20.1%
The increase in the effective tax rate on underlying profits of 25% from the 2022 rate of 22% is largely due to increased profits in the US (which are taxed at
a higher combined federal and state tax rate), non-deductible accounting provisions in Saudi Arabia and material accounting losses in Sweden, Norway and
Poland where no deferred tax asset is recognised.
The tax credit of £3.0m on non-underlying items has been calculated by assessing the tax impact of each component of the charge to the income
statement and applying the jurisdictional tax rate that applies to that item. The effective tax rate in 2023 on non-underlying items is lower than the effective
tax rate on underlying items due to the inclusion of costs for which there is no corresponding tax credit. In 2022, £4.7m of the non-underlying tax credit
related to the tax impact of the non-underlying loss for the year. The remainder of the FY22 credit arose from the reversal of the valuation allowance against
deferred tax assets in Canada that was recognised through the non-underlying tax charge in prior years.
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, provisions are 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 UK government enacted Finance (No 2) Act 2023 on 11 July 2023, which includes the Pillar Two legislation introducing a multinational top up tax and
a domestic minimum top up tax in line with the minimum 15% rate in the OECD’s Pillar Two rules. The rules will apply to the Group for the financial year
commencing on 1 January 2024. The UK legislation has also adopted the OECD’s transitional Pillar Two safe harbour rules which, if applicable, will deem the
top up tax for a jurisdiction to be nil based on available Country-by-Country Reporting data.
The Group has performed an assessment of the potential exposure to Pillar Two top up taxes, based on the most recent Country-by-Country Reporting,
and FY24 country specific PBT forecasts for the constituent entities in the Group. Based on the assessment, the Pillar Two effective tax rates in most of the
jurisdictions in which the Group operates are above 15%. There are however a limited number of jurisdictions where the transitional safe harbour relief may
not apply and the Pillar Two effective tax rate is close to the 15% threshold. The Group does not expect a material exposure to Pillar Two top up taxes for
these jurisdictions.
The Group has applied the exemption in the amendments to IAS 12 (issued in May 2023) and has neither recognised nor disclosed information about
deferred tax assets or liabilities relating to Pillar Two income taxes.
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12 Taxation continued
The following are the major deferred tax liabilities and assets recognised by the Group and the movements during the current and prior reporting periods:
Unused tax
losses
£m
Accelerated
capital
allowances
£m
Retirement
benefit
obligations
£m
Other
employee-
related
liabilities
£m
Bad debts
£m
Other1
temporary
differences
£m
At 1 January 2022
(Credit)/charge to the income statement
Charge to other comprehensive income
Acquisition and disposal of businesses
Exchange movements
Other reallocations/transfers
At 31 December 2022
Charge/(credit) to the income statement
Charge to other comprehensive income
Exchange movements
At 31 December 2023
(13.0)
(1.0)
–
–
(0.5)
–
(14.5)
3.1
–
0.7
38.2
(31.2)
–
–
3.9
–
10.9
(11.9)
–
–
(10.7)
(1.0)
1 Other temporary differences are mainly in respect of intangible assets and contract provisions.
(4.2)
0.3
0.6
–
0.1
–
(3.2)
0.7
0.1
0.1
(2.3)
(6.3)
0.9
–
–
(0.7)
–
(6.1)
(6.7)
–
0.4
(12.4)
(8.7)
(0.3)
–
–
(1.1)
–
(10.1)
2.8
–
0.3
(7.0)
13.5
(1.6)
–
0.8
0.6
(0.1)
13.2
(7.2)
–
(1.6)
4.4
Total
£m
19.5
(32.9)
0.6
0.8
2.3
(0.1)
(9.8)
(19.2)
0.1
(0.1)
(29.0)
The movement from a net deferred tax asset of £9.8m at 31 December 2022 to £29.0m at 31 December 2023 is largely as a result of the timing of the
deductibility of R&D expenditure for US tax purposes. R&D expenditure is capitalised for tax purposes and amortised over five years.
Deferred tax assets include amounts of £36.8m (2022: £15.1m) 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 the US (£29.3m) Australia (£3.7m),
Canada (£2.1m), India (£1.0m) and the UK (£0.7m). The amount of profits in each territory which are necessary to be realised over the forecast period to
support these assets are £115m, £12m, £7m, £4m and £3m. Canadian tax rules currently allow tax losses to be carried forward up to 20 years. Australia
and the UK 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
2023
£m
7.8
(36.8)
(29.0)
2022
£m
5.3
(15.1)
(9.8)
At the balance sheet date, the Group had unused tax losses of £137.6m (2022: £140.9m), 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, £84.0m (2022: £118.2m) may be carried forward
indefinitely. Of the remaining losses, £15.6m expire in 2025, £3.4m expire in 2028 and £34.6m expire in 2035.
At the balance sheet date, the aggregate of other deductible temporary differences for which no deferred tax asset has been recognised was £4.4m (2022:
£18.0m). 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 £373.9m (2022: £335.0m), 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 £10.0m (2022: £10.2m).
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
13 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 2022 of 24.5p (2021: 23.3p) per share
Interim dividend for the year ended 31 December 2023 of 13.9p (2022: 13.2p) per share
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2022
£m
16.8
9.6
26.4
2023
£m
17.7
10.0
27.7
The Board has recommended a final dividend for the year ended 31 December 2023 of £22.7m, representing 31.3p (2022: 24.5p) per share. The
proposed dividend is subject to approval by shareholders at the Annual General Meeting on 15 May 2024 and has not been included as a liability in
these financial statements.
14 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 adjusted for the dilutive impact
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.
There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of
these financial statements.
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
Earnings attributable to the equity
holders of the parent
2023
114.2
72.8
1.4
74.2
156.9
153.9
2022
74.2
72.7
1.0
73.7
2023
89.4
72.8
1.4
74.2
102.1
100.7
122.8
120.5
2022
46.0
72.7
1.0
73.7
63.3
62.4
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.
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15 Goodwill and intangible assets
Cost
At 1 January 2022
Additions
Acquired with businesses1,2
Exchange movements
At 31 December 2022 and 1 January 20231
Additions
Exchange movements
At 31 December 2023
Accumulated amortisation and impairment
At 1 January 2022
Impairment charge for the year
Amortisation charge for the year1
Exchange movements
At 31 December 2022 and 1 January 20231
Impairment charge for the year
Amortisation charge for the year
Exchange movements
At 31 December 2023
Carrying amount
At 1 January 2022
At 31 December 2022 and 1 January 20231
At 31 December 2023
Goodwill
£m
Trade
names
£m
Customer
contracts and
relationships
£m
Other
intangibles
£m
225.5
–
6.9
15.8
248.2
–
(9.6)
238.6
105.0
12.5
–
5.4
122.9
12.1
–
(4.0)
131.0
120.5
125.3
107.6
32.7
–
0.7
1.4
34.8
–
(2.0)
32.8
26.8
–
1.6
0.6
29.0
–
1.7
(1.8)
28.9
5.9
5.8
3.9
44.6
–
1.5
1.8
47.9
–
(2.7)
45.2
32.2
–
8.7
0.8
41.7
–
3.4
(2.5)
42.6
12.4
6.2
2.6
22.4
0.1
–
4.6
27.1
0.2
(0.2)
27.1
21.7
–
0.4
4.4
26.5
–
0.4
(0.3)
26.6
0.7
0.6
0.5
Total
£m
325.2
0.1
9.1
23.6
358.0
0.2
(14.5)
343.7
185.7
12.5
10.7
11.2
220.1
12.1
5.5
(8.6)
229.1
139.5
137.9
114.6
1
The 31 December 2022 consolidated balance sheet has been restated in respect of prior period business combination measurement adjustments, as outlined in note 5 to the consolidated financial
statements.
2
In the 2022 financial year, goodwill arising on the acquisition of business relates to Nordwest Fundamentering AS.
Other intangibles represent internally developed software and licences. There are no indicators of impairment for assets relating to trade names,
customer contracts and relationships or other intangibles at 31 December 2023.
For the purposes of impairment testing, goodwill has been allocated to seven (2022: ten) 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
99% of the total (2022: 95%). 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
Geographical segment
North America
North America
Keller Canada
North America
Keller Limited
Europe
Other
North America and Europe
1
Pre-tax discount rates and forecast growth rates are defined by market.
2023
2022
Carrying
value
£m
Pre-tax
discount rate1
%
Forecast
growth rate
%
Carrying
value
£m
Pre-tax
discount rate1
%
Forecast
growth rate
%
49.4
33.9
13.2
–
11.1
107.6
15.2
15.2
13.8
–
2.0
2.0
2.0
–
51.9
35.5
13.7
12.1
12.1
125.3
13.6
13.5
12.7
13.2
2.0
2.0
2.0
2.0
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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Keller Group plc Annual Report and Accounts 2023
185
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 2024 and financial projections for 2025 and 2026 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 2026 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’s assessment for Keller Canada is sensitive to the future successful execution of CGU’s business plans to consistently meet forecasted
margins (which assumes a significant improvement in operating performance compared with 2023) by improving project delivery and revenue growth.
The goodwill in Keller Limited, included in the table above, was impaired by £12.1m during 2023. The goodwill is impaired due to the uncertainty in the CGU’s
business plans to address the quantum of reduction in revenue volumes, margins and profits following scheduled completion of HS2 projects within the next
twelve months.
For the remaining CGUs, 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 each of the key assumptions that, in isolation, would give rise to an
impairment of the following goodwill balances.
CGU
Keller US
Suncoast
Geographical segment
North America
North America
Keller Canada
North America
1 The increase in discount rate and reduction in future growth rate are presented as gross movements.
16 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
Increase1 in
discount rate
%
Reduction1 in
future growth
rate
%
Reduction in
final year
cash flow
%
35.6
111.2
7.4
76.8
n/a
9.6
97.5
119.4
50.1
Note
16a
16b
2023
£m
394.9
85.3
480.2
2022
£m
409.5
77.0
486.5
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Keller Group plc Annual Report and Accounts 2023
16 Property, plant and equipment continued
16 a) Property, plant and equipment – owned assets
Land and
buildings
£m
Plant, machinery
and vehicles
£m
Capital work
in progress
£m
Cost
At 1 January 2022
Additions
Acquired with businesses
Disposals
Net transfers to held for sale
Reclassification
Exchange movements
At 31 December 2022 and 1 January 2023
Additions
Transfer from leased assets (note 16 b)
Disposals
Net transfers to held for sale1
Disposed with businesses2
Reclassification
Exchange movements
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Charge for the year
Disposals
Net transfers to held for sale
Exchange movements
At 31 December 2022 and 1 January 2023
Charge for the year
Disposals
Net transfers to held for sale1
Disposed with businesses2
Exchange movements
At 31 December 2023
Carrying amount
At 1 January 2022
At 31 December 2022 and 1 January 2023
At 31 December 2023
1 The carrying amount of assets held for sale at the balance sheet date are detailed in note 22.
2 Assets disposed with the Cyntech Tanks operation in Canada as detailed in note 5.
69.0
1.9
–
–
–
–
5.3
76.2
4.3
–
(0.6)
–
–
1.2
(2.5)
78.6
21.9
1.9
–
–
1.6
25.4
3.1
(0.2)
–
–
(0.8)
27.5
47.1
50.8
51.1
910.9
72.4
0.7
(34.8)
(1.5)
2.2
68.2
1,018.1
85.3
0.8
(69.8)
(1.7)
(0.8)
5.8
(37.3)
1,000.4
588.0
69.2
(30.1)
(1.2)
44.7
670.6
78.7
(57.3)
(0.2)
(0.4)
(26.6)
664.8
322.9
347.5
335.6
5.5
7.3
–
–
–
(2.2)
0.6
11.2
4.7
–
(0.1)
–
–
(7.0)
(0.6)
8.2
–
–
–
–
–
–
–
–
–
–
–
–
5.5
11.2
8.2
Total
£m
985.4
81.6
0.7
(34.8)
(1.5)
–
74.1
1,105.5
94.3
0.8
(70.5)
(1.7)
(0.8)
–
(40.4)
1087.2
609.9
71.1
(30.1)
(1.2)
46.3
696.0
81.8
(57.5)
(0.2)
(0.4)
(27.4)
692.3
375.5
409.5
394.9
The Group had contractual commitments for the acquisition of property, plant and equipment of £12.0m (2022: £17.6m) at the balance sheet date. These
amounts were not included in the balance sheet at the year end.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
187
16 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 sub-leasing 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:
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
At 1 January 2022
Additions
Acquired with businesses
Depreciation expense
Impairment renewal
Contract modifications
Exchange movements
At 31 December 2022 and 1 January 2023
Additions
Transfers to property, plant and equipment
Depreciation expense
Impairment expense
Contract modifications
Exchange movements
At 31 December 2023
Land and
buildings
£m
Plant, machinery
and vehicles
£m
42.9
5.9
–
(14.1)
–
6.0
3.4
44.1
18.0
–
(14.7)
(0.6)
7.3
(2.1)
52.0
25.0
18.9
2.1
(15.6)
4.2
(4.4)
2.7
32.9
15.9
(0.8)
(14.7)
–
1.4
(1.4)
33.3
Total
£m
67.9
24.8
2.1
(29.7)
4.2
1.6
6.1
77.0
33.9
(0.8)
(29.4)
(0.6)
8.7
(3.5)
85.3
The carrying amounts of lease liabilities (included within note 26 within loans and borrowings) and the movements during the year are set out in note 27.
17 Investments in joint ventures
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.
At 1 January 2023
Share of underlying post-tax results
Share of non-underlying post-tax results (note 9)
Exchange movements
At 31 December 2023
At 1 January 2022
Share of underlying post-tax results
Share of non-underlying post-tax results (note 9)
Exchange movements
At 31 December 2022
In 2023, KFS Finland Oy earned total revenue of £19.0m (2022: £20.7m) and a statutory profit after tax for the year of £0.2m (2022: £0.3m).
The joint venture had no contingent liabilities or commitments as at 31 December 2023 (2022: £nil).
2023
£m
4.4
0.8
(0.6)
(0.1)
4.5
2022
£m
4.0
1.5
(1.2)
0.1
4.4
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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17 Investments in joint ventures continued
Aggregate amounts relating to joint ventures:
Revenue
Operating costs1
Operating profit/(loss)
Finance costs
Profit/(loss) before taxation
Taxation
Share of post-tax results
2023
Non-underlying
items (note 9)
£m
Underlying
£m
Statutory
£m
Underlying
£m
2022
Non-underlying
items (note 9)
£m
19.0
(18.0)
1.0
(0.2)
0.8
(0.1)
0.7
–
(0.6)
(0.6)
–
(0.6)
0.1
(0.5)
19.0
(18.6)
0.4
(0.2)
0.2
–
0.2
20.7
(19.2)
1.5
(0.1)
1.4
0.1
1.5
–
(1.2)
(1.2)
–
(1.2)
–
(1.2)
Statutory
£m
20.7
(20.4)
0.3
(0.1)
0.2
0.1
0.3
1
Included within operating costs is depreciation on owned assets of £0.9m (2022: £1.1m).
KFS Finland Oy (100% of results)
Group’s portion of the joint venture
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
18 Other non-current assets
Non-qualifying deferred compensation plan assets
Customer retentions
Other assets
Insurance receivables
2023
£m
16.0
3.2
3.0
22.2
(3.8)
(9.0)
(0.4)
(13.2)
9.0
2022
£m
18.0
1.4
4.4
23.8
(3.4)
(10.8)
(0.8)
(15.0)
8.8
2023
£m
8.0
1.6
1.5
11.1
(1.9)
(4.5)
(0.2)
(6.6)
4.5
2023
£m
20.5
22.7
1.6
22.0
66.8
2022
£m
9.0
0.7
2.2
11.9
(1.7)
(5.4)
(0.4)
(7.5)
4.4
2022
£m
19.4
16.3
1.7
23.4
60.8
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 2023, non-current assets in relation to the investments held in the trust were £20.5m (2022: £19.4m). The fair value movement on these
assets was £2.2m (2022: £3.5m). During the period proceeds from the sale of NQ-related investments were £nil (2022: £nil). At 31 December 2023, non-
current liabilities in relation to the participant investments were £14.3m (2022: £14.7m). These are accounted for as financial liabilities at fair value through
profit or loss. The fair value movement on these liabilities was £2.6m (2022: £3.5m). During the year £0.6m (2022: £1.2m) of compensation was deferred
Further details on insurance receivables are given in note 24.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
19 Inventories
Raw materials and consumables
Work in progress
Finished goods
189
2022
£m
56.3
1.9
66.2
124.4
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
2023
£m
58.9
1.0
33.4
93.3
During 2023, £1.3m (2022: £2.0m) of inventory write-downs were recognised as an expense for inventories carried at net realisable value. This is recognised
within operating costs in the consolidated income statement.
During 2023, inventory balances decreased by £31.1m (2022: £52.3m increase), which was made up of cashflow movements of £26.8m (2022:£(44.2)m),
foreign exchange movements of £4.2m (2022: £(7.5)m) and other non-cash movements of £0.1m (2022: £(0.6)m).
20 Trade and other receivables
Trade receivables
Contract assets
Other receivables
Prepayments
2023
£m
583.1
90.9
21.7
26.1
721.8
2022
£m
615.5
105.3
20.7
23.1
764.6
During 2023, trade and other receivable balances decreased by £42.8m (2022: £179.1m increase), which was made up of cashflow movements of £1.5m
(2022: £(110.0)m), foreign exchange movements of £33.0m (2022: £(57.1)m) and other non-cash movements of £8.3m (2022: £(12.0)m).
Further details on insurance receivables included within other receivables are given in note 24.
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 allowance for expected credit losses of trade receivables and contract assets is as follows:
At 1 January
Used during the year
Additional provisions
Unused amounts reversed
Acquisition with businesses
Exchange movements
At 31 December
2023
£m
36.0
(10.8)
29.4
(7.7)
–
(1.8)
45.1
2022
(Restated)
£m
34.8
(4.4)
13.8
(10.6)
0.2
2.2
36.0
During the year, the Financial Reporting Council (“FRC”) reviewed the Group’s Annual Report and Accounts for the year ended 31 December 2022. The FRC’s
review was limited to the Group’s Annual Report and Accounts for the year ended 31 December 2022 and did not benefit from a detailed understanding of
underlying transactions and therefore provided no assurance that they are correct in all material respects. Following completion of the review, the Directors
have concluded to restate the opening trade and other receivables balance of the prior period by £18.9m and the amounts presented in the Unused
amounts reversed. The restatement has no impact on the value of the allowance as at 31 December 2022 and has no impact on the statement of financial
position at 31 December 2022. The restatement has caused a consequential increase of £12.8m in the amount reported in note 6 for Other operating
charges for the prior period.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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Keller Group plc Annual Report and Accounts 2023
20 Trade and other receivables continued
Set out below is information about the credit risk exposure on the Group’s trade receivables and contract assets, detailing past due but not impaired, based
on agreed terms and conditions with the customer:
Expected credit loss rate
Estimated total gross carrying amount at default
Allowance for expected credit loss
Carry amount as shown in the balance sheet
Expected credit loss rate
Estimated total gross carrying amount at default
Allowance for expected credit loss
Carry amount as shown in the balance sheet
Contract assets
Trade receivables and non-current customer retentions
2023
Total
£m
1%
92.2
(1.3)
90.9
Current
£m
1%
402.8
(5.9)
396.9
Days past due
<30 days
£m
31–90 days
£m
>90 days
£m
1%
57.9
(0.3)
57.6
46%
79.1
(36.6)
42.5
1%
109.8
(1.0)
108.8
2022
Contract assets
Trade receivables and non-current customer retentions
Total
£m
1%
106.4
(1.1)
105.3
Current
£m
1%
395.9
(5.3)
390.6
Days past due
<30 days
£m
31–90 days
£m
>90 days
£m
0%
112.3
(0.3)
112.0
0%
91.2
(0.4)
90.8
43%
67.3
(28.9)
38.4
Total
£m
7%
649.6
(43.8)
605.8
Total
£m
5%
666.7
(34.9)
631.8
The Group’s expected credit loss rate for trade receivables and non-current customer retentions that were more than 90 days past due increased from
43% in 2022 to 46% in 2023. This was as a result of specific provisions that were provided in relation to both customers struggling financially and contractual
disputes leading to failure of recovery. The other expected credit loss rates were in line with the prior year.
21 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
2023
£m
105.2
46.2
151.4
(2.4)
149.0
2022
£m
97.0
4.1
101.1
(6.9)
94.2
Cash and cash equivalents include £4.4m (2022: £8.5m) of the Group’s share of cash and cash equivalents held by joint operations, and £1.1m (2022: £1.4m)
of restricted cash which is subject to local country restrictions as it is held as collateral in support of bank guarantees.
22 Assets held for sale
Plant and machinery
2023
£m
1.6
1.6
2022
£m
2.8
2.8
During 2023, £1.1m (2022: £0.9m) of the North American assets, £1.4m of the Waterway assets and £0.1m of the South African assets were disposed of
for a total cash consideration of £4.2m resulting in a gain from the disposal of assets of £1.6m.
At 31 December 2023, assets held for sale comprises of an electric crane in Australia costing £1.5m which was added during the period and remaining
£0.1m of assets in North America.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
23 Trade and other payables
Trade payables
Other taxes and social security payable
Other payables
Contract liabilities
Accruals
Fair value of derivative financial instruments
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
191
2022
£m
229.4
21.5
139.4
85.6
109.7
–
585.6
2023
£m
155.5
16.8
153.0
90.9
137.1
0.3
553.6
Other payables includes contingent and deferred consideration of £1.7m (2022: £0.8m), interest payable of £6.1m (2022: £2.0m), non-qualifying
compensation plan liabilities of £3.3m (2022: £1.7m) and contract specific accruals of £119.1m (2022: £117.6m).
During 2023, trade and other payable balances decreased by £32.0m (2022: £77.6m increase), which was made up of cashflow movements of £25.6m
(2022: £(43.7)m), foreign exchange movements of £22.0m (2022: £(39.2)m) and other non-cash movements of £(15.6)m (2022: £5.3m).
24 Provisions
As at 31 December 2022
Charge for the year
Used during the year
Unused amounts reversed
Unwinding of discount
Exchange movements
At 31 December 2023
Current
Non-current
At 31 December 2023
Employee
provisions
£m
Restructuring
provisions
£m
Contract
provisions
£m
Insurance and
legal provisions
£m
Other
provisions
£m
10.4
2.5
(2.3)
(0.3)
–
(0.7)
9.6
3.2
6.4
9.6
4.1
5.9
(3.5)
(0.3)
–
(0.1)
6.1
6.1
–
6.1
37.8
31.1
(21.2)
(5.2)
–
(1.3)
41.2
29.5
11.7
41.2
65.0
16.6
(5.8)
(1.8)
0.4
(1.0)
73.4
17.9
55.5
73.4
2.3
0.6
(0.1)
–
–
(0.3)
2.5
2.4
0.1
2.5
Total
£m
119.6
56.7
(32.9)
(7.6)
0.4
(3.4)
132.8
59.1
73.7
132.8
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 2023, the provision in respect of workers’ compensation was £6.5m (2022: £7.1m). 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 2023, the provision in respect of long service leave was £2.0m (2022: £1.9m). 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 on an IAS 19 basis, at the present value of expected future benefit for services provided by employees up to the reporting
date. The actual costs that may be incurred are dependent on the length of service for employees and amended for any starters 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 £0.8m (2022: £0.8m) 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. The provision covers three years of open share options and will be utilised each
year as the options vest.
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24 Provisions continued
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 2023 include amounts provided in the year for the exit from the Egypt business, as well as amounts not yet settled from
restructuring projects provided in the prior year. 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 and provision for potential
remediation costs that we believe are probable to incur.
Provision for onerous contracts 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 actual loss incurred is
uncertain until the project has been completed, and the actual costs incurred to complete the contract could be higher or lower than estimated in the
calculation of the provision. The majority of this balance is expected to be utilised in the next 12 months, given the general short-term nature of contracts.
Provision for potential remediation costs typically arise after the completion of a project through a customer claim or dispute. The provision reflects our
estimate of costs to be incurred in relation to the dispute, some disputes can take a long period of time to resolve and the actual amount incurred could be
higher or lower than our provision, so there is uncertainty over both the amount and the timing of the expected cash outflows. The non-current element of
the provision relates to disputes we expect will take longer than a year to resolve.
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. They also include matters relating to separate legal issues which are not covered by the captive, including claims arising
from civil matters which could result in penalties and legal costs. By their nature the amounts and timings of any outflows are difficult to predict.
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 18) and trade and other receivables (refer to note 20). 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.
25 Other non-current liabilities
Non-qualifying compensation plan liabilities
Other liabilities
2023
£m
14.3
8.9
23.2
2022
£m
14.7
6.6
21.3
Other liabilities include deferred and contingent consideration of £8.9m (2022: £1.1m) and £nil (2022: £5.2m) in respect of US social security tax deferrals,
refer to note 8 for further information.
Refer to note 18 for further information on the non-qualifying deferred compensation plan.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
26 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.
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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 and US 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 2023, the fair value of outstanding foreign exchange forward contracts was £0.3m (2022: £nil) included in current liabilities.
Interest rate risk
Our objectives are to add stability to the interest expense and to manage our exposure to interest rate movements. To accomplish these objectives, we
primarily use external debt and have previously used interest rate swaps as part of our interest rate risk management strategy.
Interest rate risk is managed by either fixed or floating rate borrowings dependent upon the purpose and term of the financing.
As at 31 December 2023, approximately 99% (2022: 80%) of the Group’s third-party borrowings were at fixed interest rates.
Hedging currency risk and interest rate risk
The Group currently hedges currency risk and has previously hedged 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.
Interest rate swaps were in place at the beginning of 2022, to hedge the interest rate risk on the existing US Private placement notes. These interest rate
swaps were closed out during 2022. There are no derivatives or other hedging instruments in place at the balance sheet date held for the purpose of
hedging interest rate risk.
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 4% of revenue in 2023 (2022: 6%). The ageing of trade receivables that were past due but not impaired is
shown in note 20.
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.
The Group’s estimated exposure to credit risk for trade receivables and contract assets is disclosed in note 20. This amount is the accumulation of several
years of provisions for known or expected credit losses.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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26 Financial instruments continued
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, a US$120m private placement repayable in August 2030, a US$180m private placement repayable in August 2033 and a £375m syndicated revolving
credit facility expiring in November 2025.
The private placement debt and revolving credit facility are subject to certain covenants linked to the Group’s financing structure, specifically regarding
the ratios of net debt and interest to profit. The covenants are calculated on an IAS 17 basis, EBITDA to net debt leverage must be below three times and
EBITDA interest cover must be above four times. The Group has complied with these covenants throughout the year.
At the year end, the Group also had other borrowing facilities available of £50.2m (2022: £75.8m).
Private placements
In August 2023, $120m and $180m were raised through a private placement with US institutions. The proceeds of the issue of $120m Series A notes 6.38%
due 2030 and $180m Series B notes 6.42% due 2033 were used to repay a $115m bilateral term loan facility and to repay drawings from the revolving credit
facility. The US private placement notes are accounted for on an amortised cost basis and are retranslated at the exchange rate at each period end. The
carrying value of the $120m and $180m private placement liabilities at 31 December 2023 were £94.2m and £141.2m, respectively.
In December 2014, $75m was raised through a private placement with US institutions. The proceeds of the issue of $75m Series B notes 4.17% due 2024
was used to refinance maturing private placements. The US private placement note are accounted for on an amortised cost basis and are retranslated at the
exchange rate at each period end. The carrying value of the $75m private placement liability at 31 December 2023 was £58.5m (2022: £62.0m).
Hedging
The Group entered into a Treasury lock on 28 April 2023 designated as a cash flow hedge against the highly probable cash outflows for the US private
placement notes issued in August 2023. A Treasury lock is a synthetic forward sale of a US Treasury note, which is settled in cash based upon the difference
between an agreed-upon treasury rate and the prevailing treasury rate at settlement. Such Treasury locks are entered into to effectively fix the underlying
treasury rate component of an upcoming debt issuance. The Treasury lock was settled on 26 May 2023.
All hedges are tested for effectiveness every six months. All hedging relationships remained effective during the year while they were in place.
Accounting classifications
Financial assets measured at fair value through profit or loss
Non-qualifying deferred compensation plan
Financial assets measured at amortised cost
Trade receivables
Contract assets
Cash and cash equivalents
Financial liabilities at fair value through profit or loss
Contingent consideration payable
Forward contracts
Financial liabilities measured at amortised cost
Trade payables
Contract liabilities
Bank and other loans
Lease liabilities
Deferred consideration payable
2023
£m
20.5
583.1
90.9
151.4
(10.0)
(0.3)
(155.5)
(90.9)
(297.1)
(91.6)
(0.7)
2022
£m
19.4
615.5
105.3
101.1
(0.9)
–
(229.4)
(85.6)
(319.0)
(81.0)
(1.0)
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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195
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:
2023
Effective
interest rate
%
Due within
1 year
£m
Due within
1–2 years
£m
Due within
2–5 years
£m
Due after more
than 5 years
£m
2.5
6.0
–
–
–
–
(2.8)
(76.5)
(31.0)
(90.9)
(155.5)
(1.7)
(358.4)
(0.4)
(15.1)
(24.4)
–
–
(3.0)
(42.9)
–
(287.9)
(16.3)
–
–
–
(304.2)
(0.1)
(45.4)
(36.7)
–
–
(7.4)
(89.6)
2022
Effective
interest rate
%
Due within
1 year
£m
Due within
1–2 years
£m
Due within
2–5 years
£m
Due after more
than 5 years
£m
5.0
4.2
–
–
–
–
(10.4)
(3.2)
(28.3)
(85.6)
(229.4)
(0.8)
(357.7)
(0.4)
(64.6)
(21.4)
–
–
(1.1)
(87.5)
(245.7)
–
(32.9)
–
–
–
(0.1)
–
(7.1)
–
–
–
(278.6)
(7.2)
Bank loans and overdrafts
Other loans
Lease liabilities
Contract liabilities
Trade payables
Contingent and deferred 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)
$120m private placement (due August 2030)
$180m private placement (due August 2033)
£375m syndicated revolving credit facility (expiring November 2025)
Bank overdrafts
Other bank borrowings
Other loans
Lease liabilities (note 27)
Total loans and borrowings
Carrying
amount as
shown in the
balance sheet
£m
(3.2)
(293.9)
(91.6)
(90.9)
(155.5)
(10.7)
(645.8)
Total
£m
(3.3)
(424.9)
(108.4)
(90.9)
(155.5)
(12.1)
(795.1)
Carrying
amount as
shown in the
balance sheet
£m
Total
£m
(256.6)
(256.4)
(67.8)
(89.7)
(85.6)
(229.4)
(1.9)
(731.0)
2023
£m
(58.5)
(94.2)
(141.2)
–
(2.4)
(0.8)
–
(91.6)
(388.7)
(62.6)
(81.0)
(85.6)
(229.4)
(1.9)
(716.9)
2022
£m
(62.0)
–
–
(248.1)
(6.9)
(1.4)
(0.6)
(81.0)
(400.0)
The Group has substantial borrowing facilities available to it. The undrawn committed facilities available at 31 December 2023 amounted to £377.8m (2022:
£227.6m). This mainly comprised the Group’s unutilised £375m revolving credit facility, which expires on 23 November 2025. In addition, the Group had undrawn
uncommitted borrowing facilities totalling £47.4m at 31 December 2023 (2022: £46.1m). Other uncommitted bank borrowing facilities are normally reaffirmed
by the banks annually, although they can theoretically be withdrawn at any time. Facilities totalling £nil (2022: £1.5m) are secured against certain assets. Future
obligations under finance leases on a former IAS 17 basis totalled £0.5m (2022: £0.9m), including interest of £0.1m (2022: £0.1m).
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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26 Financial instruments continued
Changes in loans and borrowings were as follows:
Bank overdrafts
Bank loans
Private placements
Other loans
Lease liabilities (note 27)
Total loans and borrowings
2022
£m
(6.9)
(249.5)
(62.0)
(0.6)
(81.0)
(400.0)
Cash flows
£m
Other1
£m
New leases
£m
4.5
244.5
(241.2)
0.6
33.9
42.3
–
(1.1)
0.6
–
(14.3)
(14.8)
–
–
–
–
(33.9)
(33.9)
Foreign
exchange
movements
£m
Fair value
changes
£m
–
5.3
8.7
–
3.7
17.7
–
–
–
–
–
–
1 Other comprises disposals and contract modifications and interest accretion on lease liabilities and the amortisation of deferred financing costs on bank loans.
Changes in loans and borrowings in the prior year were as follows:
Bank overdrafts
Bank loans
Other loans
Lease liabilities (note 27)
Total loans and borrowings
Derivative financial instruments
Cash flows
£m
Other1
£m
New leases
£m
Acquisition of
businesses
£m
Foreign
exchange
movements
£m
Fair value
changes
£m
(5.9)
(98.2)
0.3
33.1
(70.7)
(0.2)
–
(0.5)
–
(5.2)
(5.7)
–
–
–
–
(24.8)
(24.8)
–
–
(0.1)
–
(2.1)
(2.2)
–
(0.1)
(9.8)
(6.5)
(6.6)
(23.0)
–
–
–
2.4
–
2.4
(2.4)
2021
£m
(0.9)
(140.9)
(58.8)
(75.4)
(276.0)
2.6
2023
£m
(2.4)
(0.8)
(293.9)
–
(91.6)
(388.7)
2022
£m
(6.9)
(249.5)
(62.6)
(81.0)
(400.0)
–
1 Other comprises disposals and contract modifications and interest accretion on lease liabilities and the amortisation of deferred financing costs on bank loans.
There was no impact of IBOR reform on the Group in the year.
Cash flow hedges
At 31 December 2023, the Group held foreign exchange forward contracts to hedge exposures to changes in foreign currency rates. The net value of
instruments held was £0.3m (2022:£nil).
Maturity
2023
Carrying amount
Forward exchange forwards
<1 year
£m
(0.3)
1–2 years
£m
2–5 years
£m
–
–
>5 years
£m
–
Asset
£m
–
Liability
£m
(0.3)
Maturity
2022
Carrying amount
Forward exchange forwards
<1 year
£m
–
1–2 years
£m
2–5 years
£m
–
–
>5 years
£m
–
Asset
£m
–
Liability
£m
–
Change in fair
value used for
calculating
hedge
ineffectiveness
£m
–
Change in fair
value used for
calculating
hedge
ineffectiveness
£m
–
Nominal
amount
$m
(0.3)
Nominal
amount
$m
–
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
Fair value hedges
At 31 December 2023, the Group held no instruments to hedge exposures to changes in interest rates (2022: £nil).
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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 contract assets, cash and cash equivalents.
Derivatives
The fair values of foreign currency forward contracts are calculated based on achieved contract rates compared to the prevailing market rates 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. The individually significant unobservable inputs used in the fair value measurement of the Group’s contingent consideration as at 31
December 2023 are the estimation of future profits at Keller Arabia and at GKM in order to determine the expected outcome of the earnout arrangement.
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)
Non-controlling interest (note 34)
Additional amounts provided (note 9)
Paid during the period
Fair value in the income statement during the period (note 9)
Exchange movements
At 31 December
2023
£m
1.9
–
9.3
–
(0.2)
–
(0.3)
10.7
2022
£m
12.7
1.7
–
0.1
(12.3)
(0.7)
0.4
1.9
On 29 August 2023, the Group acquired the 35% interest in the voting shares of Keller Turki Company Limited. A contingent consideration is payable
annually between the years 2023 and 2027, dependent on the qualifying revenue generated by the business for each of those years. The fair value of the
contingent consideration as at 31 December 2023 was £9.3m (SAR 43.2m).
On 1 May 2022, the Group acquired GKM Consultants Inc. Contingent consideration is payable dependent on the cumulative EBITDA in the three-year
period post acquisition. The fair value of the contingent consideration was recognised at the date of acquisition at £1.2m, but subsequently reduced
following movements in its fair value to £0.9m at 31 December 2022. On 15 November 2022, the Group acquired Nordwest Fundamentering AS and the
deferred contingent consideration payable relating to this acquisition is £0.5m.
Additional deferred consideration provided of £0.2m relates to the Voges Drilling acquisition in 2021.
Total contingent and deferred consideration of £0.2m was paid during the period in respect of the Voges Drilling acquisition in 2021.
There were no fair value movements during the year. In 2022, fair value movements of £0.7m related to a fair value adjustment of the RECON contingent
consideration on finalisation of the amount payable of £0.3m and the reduction in the GKM payable noted above of £0.4m.
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.
Non-qualifying deferred compensation plan assets and liabilities
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 of the assets and related liabilities are recorded within net finance costs in the consolidated income statement.
Refer to note 18 for further information on the non-qualifying deferred compensation plan.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
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26 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
Cash and cash equivalents
Net debt
Trade receivables
Trade payables
Weighted average fixed debt interest rate (%)
Weighted average fixed debt period (years)
Fixed rate financial liabilities
Floating rate financial liabilities
Lease liabilities
Cash and cash equivalents
Net debt
Trade receivables
Trade payables
GBP
–
–
£m
–
–
(2.1)
59.7
57.6
6.8
((4.6))
GBP
–
–
£m
–
(75.3)
(2.9)
7.1
USD
6.0
6.7
£m
(293.9)
(1.4)
(57.8)
14.6
(338.5)
375.7
(71.2)
USD
4.2
2.0
£m
(62.0)
(153.8)
(48.4)
4.4
(71.1)
(259.8)
7.2
(6.9)
409.5
(120.3)
EUR
1.4
1.3
£m
(0.8)
(1.0)
(10.2)
17.5
5.5
38.1
(24.4)
EUR
1.4
3.2
£m
(1.4)
(0.2)
(10.4)
14.9
2.9
39.8
(32.6)
2023
CAD
AUD
Other
–
–
£m
–
–
(5.6)
6.2
0.6
46.0
(3.3)
–
–
£m
–
–
(3.7)
6.7
3.0
26.0
(4.0)
–
–
£m
–
–
(12.2)
46.7
34.5
90.5
(48.0)
2022
CAD
AUD
Other
–
–
£m
–
–
(4.4)
4.7
0.3
58.1
(13.0)
–
–
£m
–
(25.6)
(4.6)
11.6
(18.6)
27.0
(9.2)
3.5
0.1
£m
(0.6)
(0.1)
(10.3)
58.4
47.4
73.9
(47.4)
Total
5.9
6.9
£m
(294.7)
(2.4)
(91.6)
151.4
(237.3)
583.1
(155.5)
Total
4.1
2.0
£m
(64.0)
(255.0)
(81.0)
101.1
(298.9)
615.5
(229.4)
Sensitivity analysis
At 31 December 2023, 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 £nil (2022: £1.5m).
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 £14m for the year ended 31 December 2023 (2022: £8.8m). The estimated
impact of a 10 percentage point decrease in the value of sterling is an increase of £17m (2022: £7.2m) 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.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
27 Lease liabilities
Set out below are the carrying amounts of lease liabilities (included within note 26 within loans and borrowings) and the movements during the year:
At 1 January
Additions
Acquired with businesses
Contract modifications
Interest expense
Payments
Exchange movements
At 31 December
Current
Non-current
28 Share capital and reserves
Allotted, called up and fully paid equity share capital:
73,099,735 ordinary shares of 10p each (2022: 73,099,735)
2023
£m
81.0
33.9
–
8.7
5.6
(33.9)
(3.7)
91.6
25.9
65.7
2023
£m
7.3
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2022
£m
75.4
24.9
2.1
1.6
3.6
(33.1)
6.5
81.0
24.5
56.5
2022
£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 2023, the total number of shares held in treasury was 323,133 (2022: 328,954).
During the year to 31 December 2023, 500,000 ordinary shares were purchased by the Keller Group Employee Benefit Trust (2022: 135,050 purchased),
to be used to satisfy future obligations of the company under the Keller Group plc Long-Term Incentive Plan and 515,119 shares were utilised to satisfy the
obligation in the year (2022: nil). This brings the total ordinary shares held by the Employee Benefit Trust to 537,171 (2022: 552,290). The cost of the market
purchases was £3.4m (2022: £1.2m).
There is a dividend waiver in place for both shares held in treasury and by the Keller Group Employee Benefit Trust.
29 Related party transactions
Transactions between the parent, its subsidiaries and joint operations, which are related parties, have been eliminated on consolidation. Other related party
transactions are disclosed below:
Compensation of key management personnel
The remuneration of the Board and Executive Committee, who are the key management personnel, comprised:
Short-term employee benefits
Post-employment benefits
Termination payments
2023
£m
8.2
0.3
–
8.5
2022
£m
4.5
0.3
0.4
5.2
Other related party transactions
As at 31 December 2023, there was a net balance of £0.1m (2022: £0.1m) owed by the joint venture. These amounts are unsecured, have no fixed date of
repayment and are repayable on demand.
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30 Commitments
Capital commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred was £12.0m (2022: £17.6m) and relates to property, plant and
equipment purchases.
31 Guarantees, contingent liabilities and contingent assets
Claims and disputes arise, both in the normal course of business and in relation to the historic construction activities of the Group, 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.
At 31 December 2023, the Group had outstanding standby letters of credit and surety bonds for the Group’s captive and other global insurance
arrangements totalling £24.5m (2022: £28.1m). The Group enters into performance and advance payment bonds and other undertakings in the ordinary
course of business, using guarantee facilities with financial institutions to provide these bonds to customers. At 31 December 2023, the Group has £182.7m
outstanding related to performance and advanced payment bonds (2022: £190.6m). These are treated as a contingent liability until such time it becomes
probable that payment will be required under the individual terms of each arrangement. It is judged to be a remote possibility that a payment will be required
under any of the current performance or advance payment bonds.
At 31 December 2023, the Group had no contingent assets (2022: £nil).
32 Share-based payments
The Group operates a Long Term Incentive Plan (the ‘Plan’). Under the Plan, Executive Directors and certain members of senior management are granted
nil-cost share options with a vesting period of three years. The awards are exercised automatically on vesting, in addition the Executive Directors are subject
to a two-year post-vesting holding period.
Performance share awards are granted to Executive Directors and key management personnel which are subject to performance conditions including
total shareholder return, earnings per share, return on capital employed and operating profit margin. Conditional awards are granted under which senior
management receive shares subject only to service conditions, ie the requirement for participants to remain in employment with the Group over the vesting
period. Participants are entitled to receive dividend equivalents on these awards.
Outstanding awards are as follows:
Outstanding at 1 January 2022
Granted during 2022
Lapsed during 2022
Exercised during 2022
Outstanding at 31 December 2022 and 1 January 2023
Granted during 2023
Lapsed during 2023
Exercised during 2023
Outstanding at 31 December 2023
Exercisable at 1 January 2022
Exercisable at 31 December 2022 and 1 January 2023
Exercisable at 31 December 2023
The average share price during the year was 756.5p (2022: 759.3p).
Number
1,974,436
817,381
(365,677)
(448,963)
1,977,177
840,572
(208,543)
(520,940)
2,088,266
–
–
–
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.
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
2023
660.0p
0.0p
39.6%
3 years
3.22%
0.00%
2022
800.0p
0.0p
41.2%
3 years
1.35%
0.00%
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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201
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 £4.5m (2022: £2.9m) related to equity-settled, share-based payment transactions.
The weighted average fair value of options granted in the year was 555.7p (2022: 724.2p). Options outstanding at the year-end have a weighted average
remaining contractual life of 1.2 years (2022: 1.2 years).
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 2023, 537,171
(2022: 552,290) ordinary shares were held by the Trust with a value of £3.9m (2022: £4.9m).
33 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 2023), the Group has agreed to pay a contribution
of £1.7m in total, paid in monthly instalments from January to August 2024. Contributions will then cease, subject to a review of the level of employer
contributions at the next actuarial review in 2026.
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 2022. The actual cost may differ when the GMP equalisation exercise is complete.
A potentially landmark judgement was handed down in the High Court case of Virgin Media vs NTL Trustees in June 2023. The judge in this case ruled that,
where benefit changes were made without a valid ‘section 37’ certificate from the scheme actuary, those changes could be considered void. It is anticipated
that the ruling will be appealed. The Keller Group Pension Scheme was contracted out of the additional state pension between 1997 and 2016 and made
scheme amendments during this period. The Scheme trustees have not yet investigated the scheme’s historic documentation to confirm whether they
hold the relevant s37 certificates, until this review has been completed we are unable to determine the impact of this judgement.
The Group has two UK defined contribution retirement benefit schemes. There were no contributions outstanding in respect of these schemes at
31 December 2023 (2022: £nil). The total UK defined contribution pension charge for the year was £1.8m (2022: £1.6m).
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.
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 £8.6m (2022: £8.1m).
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 11.0% (2022: 10.5%). The total Australian pension charge for the
year was £4.8m (2022: £4.6m).
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33 Retirement benefit liabilities continued
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)
2023
£m
The Keller Group
Pension Scheme
(UK)
2022
£m
German 1,
Austrian and
other schemes
2023
£m
German 1,
Austrian and
other schemes
2022
£m
(41.8)
46.0
4.2
(5.7)
(1.5)
(39.0)
42.2
3.2
(7.3)
(4.1)
(16.2)
–
(16.2)
–
(16.2)
(16.7)
–
(16.7)
–
(16.7)
1
Included in this balance is £3.6m (2022: £3.5m) 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 2023 and the committed payments under the Schedule
of Contributions agreed on 15 December 2023, there is a irrecoverable surplus of £5.7m (2022: £7.3m). 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 total remaining contribution of
£1.5m, contributions will cease from August 2024. The contributions will be reviewed following the next actuarial review to be prepared as at 5 April 2026.
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)
2023
%
The Keller Group
Pension Scheme
(UK)
2022
%
German
and Austrian
schemes
2023
%
German
and Austrian
schemes
2022
%
4.6
4.6
3.5
2.8
3.4
4.8
4.8
3.4
2.7
3.3
3.4
–
2.5
6.9
6.9
3.5
–
2.5
8.3
8.3
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
Bonds
Liability driven investing (LDI) portfolios2
Cash
The Keller Group
Pension Scheme
(UK)
2023
The Keller Group
Pension Scheme
(UK)
2022
German
and Austrian
schemes
2023
German
and Austrian
schemes
2022
21.2
24.0
21.0
23.4
22.4
25.3
19.9
23.3
The Keller Group
Pension Scheme
(UK)
2023
£m
The Keller Group
Pension Scheme
(UK)
2022
£m
German,
Austrian and
other schemes
2023
£m
German,
Austrian and
other schemes
2022
£m
6.6
6.0
18.7
14.0
0.7
46.0
7.8
5.0
13.6
12.9
2.9
42.2
–
–
–
–
–
–
–
–
–
–
–
–
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.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
203
The Keller Group
Pension Scheme
(UK)
2023
£m
The Keller Group
Pension Scheme
(UK)
2022
£m
German 1,
Austrian and
other schemes
2023
£m
German 1,
Austrian and
other schemes
2022
£m
i
F
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a
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c
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s
t
a
t
e
m
e
n
t
s
(39.0)
(58.3)
–
(1.8)
2.1
–
(1.0)
(0.7)
(1.4)
(41.8)
42.2
2.0
(0.3)
2.9
(2.1)
1.3
46.0
3.3
1.3
(1.0)
(0.7)
(1.4)
1.6
(0.2)
(25.8)
–
(0.3)
(0.3)
0.2
(0.1)
4.1
0.1
(2.9)
–
–
0.2
1.5
–
(1.1)
2.1
–
(0.5)
–
18.8
(39.0)
63.7
1.2
(0.2)
2.8
(2.1)
(23.2)
42.2
(22.0)
(23.2)
(0.5)
–
18.8
4.9
–
(25.6)
–
(0.2)
(0.2)
0.1
(0.1)
6.8
0.1
(2.8)
–
–
–
4.1
(16.7)
(1.2)
(0.5)
1.7
0.5
–
–
–
(16.2)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6.4)
(1.2)
–
(1.2)
(0.5)
(1.7)
16.7
1.7
–
(1.7)
(0.5)
–
16.2
(18.9)
(0.8)
–
1.0
(0.8)
–
–
2.8
(16.7)
–
–
–
–
–
–
–
–
–
–
–
2.8
–
2.8
(6.4)
(0.8)
–
(0.8)
–
(0.8)
18.9
0.8
–
(1.0)
0.8
(2.8)
16.7
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
1 Other comprises end of service schemes in the Middle East of £3.6m (2022: £3.5m).
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33 Retirement benefit liabilities continued
A reduction in the discount rate of 0.5% would increase the deficit in the schemes by £2.6m (2022: reduction in the discount rate of 0.5% would increase
the deficit in the scheme by £2.5m), whilst a reduction in the inflation assumption of 0.5%, including its impact on the revaluation in deferment and pension
increases in payment, would decrease the deficit by £1.3m (2022: reduction in the inflation assumption of 0.5% would decrease the deficit by £1.3m).
A decrease in the mortality rate by one year would decrease the deficit in the schemes by £1.8m. Note that these sensitivities do not include end of service
schemes in the Middle East as these are not material to the Group.
The weighted average duration of the defined benefit obligation is approximately 13 years for the UK scheme and 12 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
2023
£m
(58.0)
46.0
(12.0)
(5.7)
(17.7)
(3.1)
1.3
2022
£m
(55.7)
42.2
(13.5)
(7.3)
(20.8)
21.1
(23.2)
2021
£m
(77.2)
63.7
(13.5)
(12.2)
(25.7)
6.6
4.6
34 Non-controlling interests
Financial information of subsidiaries that have a material non-controlling interest is provided below:
Name
Country of incorporation
Keller Fondations Speciales SPA
Algeria
Keller Turki Company Limited
Saudi Arabia
(Loss)/profit 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
2020
£m
(86.9)
58.0
(28.9)
(2.2)
(31.1)
(7.9)
6.1
2023
49%
0%
2023
£m
(0.2)
0.4
0.2
0.4
2023
£m
2.4
–
0.3
2.7
2019
£m
(81.1)
52.2
(28.9)
(1.8)
(30.7)
(8.2)
5.4
2022
49%
35%
2022
£m
(0.5)
(0.3)
(0.2)
(1.0)
2022
£m
2.7
(0.6)
0.2
2.3
On 29 August 2023, the Group acquired the 35% interest in the voting shares of Keller Turki Company Limited, increasing its ownership interest to 100%.
An initial cash consideration of £6.4m (SAR 30m) was paid to the non-controlling shareholders. In addition, a contingent consideration has been agreed as
part of the purchase agreement and is payable annually between the years 2023 and 2027, dependent on the qualifying revenue generated by the business
for each of those years. The fair value of the contingent consideration was £9.3m (SAR 43.2m) based on expected revenue generated by the business over
that period, which is the maximum amount of contingent consideration payable.
Notes to the consolidated financial statements continuedContents Generation – PageContents Generation – Sub PageContents Generation - Section i
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The carrying value of the net assets of Keller Turki Company Limited was £0.2m (SAR 0.8m). Following is a schedule of additional interest acquired in Keller
Turki Company Limited.
Cash consideration paid to non-controlling shareholders
Contingent consideration
Group loan
Carrying value of the additional interest in Keller Turki Company Limited
Difference recognised in retained earnings
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)
£m
6.4
9.3
(0.7)
0.2
15.2
2023
£m
2022
£m
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
14.3
(13.9)
0.4
–
0.4
–
0.4
0.9
(1.0)
(0.1)
–
(0.1)
(0.1)
(0.2)
2023
£m
4.6
(4.9)
(0.3)
–
(0.3)
–
(0.3)
0.1
(0.6)
(0.5)
–
(0.5)
–
(0.5)
2022
£m
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
Keller
Fondations
Speciales SPA
Keller Turki
Company
Limited
0.6
2.4
(0.6)
–
2.4
–
–
–
–
–
0.8
2.8
(0.9)
–
2.7
0.7
6.0
(6.2)
(1.1)
(0.6)
35 Post balance sheet events
On 1 March we announced a change to the Group’s divisional structure. The Middle East and NEOM business units will move from the current Asia-Pacific,
Middle East and Africa (AMEA) division and combine with Europe to create a new Europe and Middle East Division (EME). The AMEA division will become the
Asia-Pacific division. This is a non-adjusting post balance sheet event and there is no impact to the balance sheet at 31 December 2023.
There were no other material post balance sheet events between the balance sheet date and the date of this report.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
Company balance sheet
206
Keller Group plc Annual Report and Accounts 2023
Company balance sheet
As at 31 December 2023
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
Trade and other creditors
Amounts owed to subsidiary undertakings
Loans and other borrowings
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Loans and other borrowings
Amounts owed to subsidiary undertakings
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 £95.7m (2022: £23.5m).
These financial statements were approved by the Board of Directors and authorised for issue on 4 March 2024.
They were signed on its behalf by:
Michael Speakman
Chief Executive Officer
David Burke
Chief Financial Officer
Note
2
3
4
4
5
6
8
8
9
2023
£m
515.9
–
0.2
516.1
74.5
–
4.6
5.0
17.6
101.7
(20.5)
(0.9)
(58.5)
(79.9)
21.8
537.9
–
–
(0.4)
(0.4)
537.5
7.3
38.1
7.6
56.9
427.6
537.5
2022
£m
513.9
0.5
0.2
514.6
6.1
62.0
4.3
4.6
4.1
81.1
(16.7)
(1.4)
–
(18.1)
63.0
577.6
(60.7)
(46.8)
(1.3)
(108.8)
468.8
7.3
38.1
7.6
56.9
358.9
468.8
Contents Generation – Sub PageContents Generation - Section
Company statement of
changes in equity
Keller Group plc Annual Report and Accounts 2023
Company statement of changes in equity
For the year ended 31 December 2023
At 1 January 2022
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
Share
capital
£m
7.3
Share
premium
account
£m
38.1
Capital
redemption
reserve
£m
7.6
Other
reserve
£m
56.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 31 December 2022 and 1 January 2023
7.3
38.1
7.6
56.9
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 2023
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.3
38.1
7.6
56.9
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Total
equity
£m
469.6
23.5
–
23.5
(26.4)
(1.2)
3.3
468.8
95.7
–
95.7
(27.7)
(3.4)
4.1
Hedging
reserve
£m
Retained
earnings
£m
359.7
23.5
–
23.5
(26.4)
(1.2)
3.3
358.9
95.7
–
95.7
(27.7)
(3.4)
4.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
427.6
537.5
Details of the capital redemption reserve and the other reserve are included in note 28 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 32 to the consolidated
financial statements.
Of the retained earnings, an amount of £236.8m (2022: £236.8m) attributable to profits arising on an intra-group reorganisation is not distributable.
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Notes to the company
financial statements
208
Keller Group plc Annual Report and Accounts 2023
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 28) and
dividends (note 13) 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
£95.7m (2022: £23.5m).
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 26 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 135 to 142. Fees payable to Non-executive Directors totalled £0.5m (2022: £0.5m).
Financial guarantees
Where the company provides guarantees relating to bank borrowings and other liabilities of other Group companies, under IFRS 9 such contracts are initially
recognised in the financial statements at fair value at the time the guarantee is issued. The company estimates the fair value of the financial guarantee
as being the difference between the net present value of the contractual cash flows required under a debt instrument and the net present value of the
contractual cash flows that would have been required without the guarantee. Subsequent to initial recognition, the company’s liability under each guarantee
is measured at the higher of the amount initially recognised less the cumulative amount of income recognised in accordance with the principals of IFRS 15
Revenue from Contracts with Customers and the loss allowance that would be recorded on the exposure. A financial guarantee liability is derecognised
when the liability underlying the guarantee is discharged or cancelled or expires if the guarantees withdrawn or cancelled.
2 Investments
Shares at cost
At 1 January
Additions
Allowances for impairment
At 31 December
2023
£m
513.9
3.0
(1.0)
515.9
2022
£m
513.9
–
–
513.9
Allowances for impairment are a result of annual investment impairment assessment, where carrying amount was higher than recoverable amount of the
investment. The company’s investments are included in note 10.
Contents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
3 Other assets
Rent deposit
4 Amounts owed by subsidiary undertakings
Amounts falling due within one year
Amounts falling due after one year
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£m
0.2
0.2
2022
£m
6.1
62.0
68.1
2023
£m
0.2
0.2
2023
£m
74.5
–
74.5
Out of overall balance, £59.1m (2022: 62.0m) relates to inter-company loan to Keller Foundations LLC that is unsecured, interest bearing and is repayable on
fixed contractual date (December 2024). Remaining amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and
are repayable on demand.
5 Trade and other debtors
Other receivables
Prepayments
6 Trade and other creditors
Trade creditors and accruals
Other creditors
Accrued interest
2023
£m
0.5
4.5
5.0
2023
£m
13.6
6.8
0.1
20.5
2022
£m
0.5
4.1
4.6
2022
£m
9.7
6.9
0.1
16.7
7 Contingent liabilities
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 2023, the company’s liability in
respect of the guarantees against bank borrowings amounted to £nil (2022: £246.4m). In respect of one subsidiary, which is dormant and does not have the
funds to pay its liabilities, the company has recognised a liability for the present value of the estimated cash shortfall that will arise if the subsidiary is wound
up which is presented as other creditors in note 6.
In addition, as set out in note 10, 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.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
210
Keller Group plc Annual Report and Accounts 2023
Notes to the company financial statements continued
8 Loans and other borrowings
$75m private placement (due December 2024)
2023
£m
(58.5)
(58.5)
2022
£m
(60.7)
(60.7)
9 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 33 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 2023 was £13.1m and the actuarial valuation showed a funding level of 98%.
Details of the actuarial methods and assumptions, as well as steps taken to address the deficit in the Scheme, are given in note 33 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.
During 2022, the company was party to a flexible apportionment arrangement (FAA) to transfer in the portion of the scheme previously attributed to a
dormant subsidiary entity. The Company previously accounted for a 14% share of the scheme assets and liabilities. During 2022, this then increased to 31%
of the scheme assets and liabilities and in 2023 decreased to 29%.
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 (2022: £2.3m), 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 33 to 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 in the Scheme
Irrecoverable surplus
Net defined benefit liability
The assets of the Scheme were as follows:
Equities
Target return funds1
Bonds
Liability driven investing (LDI) portfolios2
Cash
2023
£m
(12.0)
13.3
1.3
(1.7)
(0.4)
2023
£m
1.9
1.7
5.5
4.0
0.2
13.3
2022
£m
(12.0)
13.0
1.0
(2.3)
(1.3)
2022
£m
2.4
1.5
4.2
4.0
0.9
13.0
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 Scheme’s obligations.
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
Changes in scheme liabilities
Opening balance
FAA transfer
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
FAA transfer
Interest on assets
Administrative 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
Administration costs
Net pension interest costs
Expense recognised in the income statement
Movements in the balance sheet liability
Net liability at start of year
FAA transfer
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 2024 are £0.5m.
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
2023
£m
(12.0)
13.3
1.3
(1.7)
(0.4)
(0.1)
(0.5)
2022
£m
(12.0)
13.0
1.0
(2.3)
(1.3)
5.0
(4.4)
2021
£m
(8.1)
9.0
0.9
(1.7)
(0.8)
0.8
0.7
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2022
£m
(8.1)
(9.1)
(0.3)
0.5
–
(0.2)
5.2
2023
£m
(12.0)
–
(0.5)
0.6
(0.3)
0.6
(0.4)
(12.0)
(12.0)
13.0
–
0.6
(0.1)
0.9
(0.6)
(0.5)
13.3
0.1
(0.5)
(0.3)
0.6
(0.4)
0.6
–
(3.5)
(0.1)
0.1
–
(1.3)
–
–
0.9
–
(0.4)
2020
£m
(9.1)
8.2
(0.9)
(0.2)
(1.1)
(0.4)
0.3
9.0
8.1
0.3
(0.1)
0.6
(0.5)
(4.4)
13.0
(4.1)
(4.4)
–
(0.2)
5.2
(0.6)
–
(3.5)
(0.1)
–
(0.1)
(0.8)
(1.0)
(0.1)
0.6
–
(1.3)
2019
£m
(9.0)
7.9
(1.1)
(0.3)
(1.4)
(0.8)
0.8
The company contributes to a defined contribution scheme; there were no contributions outstanding in respect of the Scheme at 31 December 2023
(2022: £nil).
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
212
Keller Group plc Annual Report and Accounts 2023
Notes to the company financial statements continued
10 Group companies
In accordance with section 409 of the Companies Act 2006, a full list of subsidiaries and joint ventures as at 31 December 2023 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
A.C.N. 008 673 167 Pty Ltd
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
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
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Capital Insurance Limited
Case Foundation Company
Cyntech Construction Ltd.
1st Floor Goldie House, 1–4 Goldie Terrace, Upper Church Street, Douglas, IM1 1EB, Isle of Man
2405 York Road, Suite 201, Lutherville Timonium, Maryland, 21093, United States
Suite 2600, Three Bentall Centre, 595 Burrard Street, P.O. Box 49314, Vancouver, BC V7X 1L3
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, 19 Cybercity, Ebene, Mauritius
Frankipile Mauritius International
(Seychelles) Limited
Ocean Gate House, Ground Floor, Room 12, 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 Limited1
Sheraton Buildings-Plot 10, Block 1161, El Nozha, Cairo, Egypt
GEO Instruments Polska Sp. z o.o.
Lysakow Drugi nr 47, 28–300 Jedrzejow, Poland
Geo-Instruments Sarl
GEO-Instruments, Inc.
GKM Consultants Inc.
Keller (M) Sdn Bhd
8 Allee des Ginkgos, Parc d’Activites du Chene, Activillage, 69673 Bron Cedex, France
2405 York Road, Suite 201, Lutherville Timonium, Maryland, 21093, United States
101 – 2141 rue Nobel, Sainte-Julie, Québec, J3E1Z9, Canada
8A, Jalan Vivekananda, Off Jalan Tun Sambanthan, Brickfields, Kuala Lumpur, 50470, Malaysia
Keller AMEA Hub Investment L.L.C.
Unit 302, Level 103, Arenco Tower, Sheikh Zayed Road, Dubai Media City, Al Sufouh 2, Dubai,
United Arab Emirates
Keller Arabia Contracting Holdings Limited
KGAF6755, 6755 Prince Sultan Bin Abdulaziz road, 3357 Ulaia District, Tabuk 47911,
Kingdom of Saudi Arabia
Keller AsiaPacific Limited
Keller Australia Pty Limited2
Keller Canada Holdings Ltd.
Keller Canada Services 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
Suite 2600, Three Bentall Centre, P.O. Box 49314, 595 Burrard Street, Vancouver BC, V7X 1 L3,
Canada
Keller Central Asia LLP
Aiteke Bi Street 55, Atyrau City, 060011, Kazakhstan
Keller Cimentaciones Chile, SpA
Avenida De Apoquindo 3885, piso 18 la Comuna de las Condes, Santiago, 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
Keller Cimentaciones, S.L.U.
Keller Drilling, Inc.
Keller Egypt LLC
Keller EMEA Limited
Keller Engineering Inc.
Avenida Santo Toribio 143, Urbanizacion El Rosario, Departamento San Isidro, Lima, Peru
Calle de la Argentina, 15, 28806 Alcala de Henares, Madrid, Spain
330 North Brand Blvd., Suite 700, Glendale, California, United States
Sheraton Buildings, Plot 10, Block 1161, El Nozha, Cairo, Egypt
2 Kingdom Street, London, W2 6BD, United Kingdom
7550 Teague Road, Suite 300, Hanover, 21076, United States
Keller Finance Australia Limited
2 Kingdom Street, London, W2 6BD, United Kingdom
Contents Generation – PageContents Generation – Sub PageContents Generation - Section 213
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Keller Group plc Annual Report and Accounts 2023
Name
Keller Finance Limited
Keller Financing
Address
2 Kingdom Street, London, W2 6BD, United Kingdom
2 Kingdom Street, London, W2 6BD, United Kingdom
Keller Fondations Speciales SAS
2 rue Denis Papin, 67120, Duttlenheim, France
Keller Fondations Speciales SPA3
No. 35, Route de Khmiss El Khechna, Sbâat, 16012 Rouiba, w. Alger, Algeria
Keller Fondazioni S.r.l
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 Funderingstechnieken Belgie BV
17A, Ringlaan, 2960, Brecht, Belgium
Keller Funderingsteknik Danmark ApS
Lottenborgvej 24, 2800 Kongens Lyngby, Denmark
Keller Geotechnics ESC (Pty) Ltd
16 Industry Road, Clayville Industrial, Olifantsfontein, 1666, South Africa
Keller Geotechnics (Mauritius) Ltd
Geoffrey Road, Bambous, Mauritius
Keller Geotechnics Namibia (Pty) Limited
2nd floor, LA Chambers, Ausspann Plaza, Dr Agostinho Neto Road, Windhoek, Namibia
Keller Geotechnics SA (Pty) Ltd4
16 Industry Rd, Clayville Industrial, Olifantsfontein, 1666, Gauteng, South Africa
Keller Geotechnics Tanzania Ltd5
1127 Amverton Tower, Chole Road, Dar es Salaam, Tanzania
Keller Geotehnica Srl
Keller Geoteknikk AS
Bucuresti Sectorul 1, Str., Uruguay, Nr. 27, Etaj 1, Ap. 2, 011444 Bucuresti, Romania
Hovfaret 13, Oslo, 0275, Norway
Keller Ground Engineering Bangladesh Limited 661/3 Ashkona Bazar, Hazi Camp, Dhakinkhan, Dhaka-1230, Bangladesh, Dhaka, Bangladesh
Keller Ground Engineering India Private Limited 7th Floor, Eastern Wing, Centennial Square 6A, Dr Ambedkar Road, Kodambakkam, Chennai,
Keller Ground Engineering LLC6
Office # 14, Building # 700 Boushar Street 51, Oman
Keller Grundbau Ges.m.b.H.
Guglgasse 15, BT4a/3.OG, Vienna, 1110, Austria
600024, India
Keller Grundbau GmbH
Keller Grundlaggning AB
Keller Holding GmbH
Keller Holdings Limited
Keller Holdings, Inc.
Keller Industrial, Inc.
Keller Investments LLP
Keller Limited
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
Östra Lindomev 50, 437 34, Lindome, Sweden
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
2 Kingdom Street, London, W2 6BD, United Kingdom
The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801, United
States
820 Bear Tavern Road, West Trenton, New Jersey, 08628, United States
2 Kingdom Street, London, W2 6BD, United Kingdom
Oxford Road, Ryton-on-Dunsmore, Coventry, West Midlands, CV8 3EG, United Kingdom
Keller Management Services, LLC
The Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801, United States
Keller Mélyépítő Korlátolt Felelősségű Társaság 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
Keller North America, Inc.
Keller Polska Sp. z o.o.
Keller Pty Ltd
Keller Puerto Rico, LLC
Keller Qatar L.L.C7
Keller Resources Limited
C/-GazeBurt, 1 Nelson Street, Auckland, 1010, New Zealand
The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801, United
States
ul. Poznanska172, Ozarow Mazowiecki, PL-05850, Poland
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801, 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 1618/30, 14000 Praha 4, Czech Republic
Keller specialne zakladanie spol.s.r.o.
Galvaniho 15/A, Bratislava, 82701, Slovakia
Keller Turki Company Limited
PO Box 718, Dammam, 31421, Saudi Arabia
Keller Ukraine LLC
Keller West Africa S.A.
Keller-MTS AG
KFS Finland Oy8
30, Vasylkivska Street, Kiev, 03022, Ukraine
BP 1238 Abidjan-Marcory, Zone 4C, Rue Clement Ader, Côte d’Ivoire
Allmendstrasse 5, Regensdorf, 8105, Switzerland
Haarakaari 42, TUUSULA, 04360, Finland
KGS Keller Gerate & Service GmbH
Kaiserleistraße 8, Offenbach am Main, 63067, Germany
Contents Generation – PageContents Generation – Sub PageContents Generation - Section
214
Keller Group plc Annual Report and Accounts 2023
Notes to the company financial statements continued
10 Group companies continued
Name
Address
Makers Holdings Limited
2 Kingdom Street, London, W2 6BD, United Kingdom
Makers Management Services Limited
2 Kingdom Street, London, W2 6BD, United Kingdom
Makers Services Limited
Makers UK Limited
Moretrench Industrial Inc.
2 Kingdom Street, London, W2 6BD, United Kingdom
2 Kingdom Street, London, W2 6BD, United Kingdom
820, Bear Tavern Road, West Trenton, New Jersey, 08628, United States
North American Foundation Engineering Inc.
5393 Steels Ave West, Milton, Ontario, LPT 2Z1, Canada
PHI Group Limited
Oxford Road, Ryton-on-Dunsmore, Coventry, West Midlands, CV8 3EG, United Kingdom
Piling Contractors New Zealand Limited
C/-GazeBurt, 1 Nelson Street, Auckland, 1010, New Zealand
Piling Contractors Pty Limited
Suite G01, 2–4 Lyonpark Road, Macquarie Park, NSW, 2113, Australia
PT. Keller Ground Indonesia9
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, Delaware, 19808 United States
Recon GP, LLC
Recon Holdings II, Inc.
Recon Holdings III, Inc
251 Little Falls Drive, Wilmington, Delaware, 19808 United States
251 Little Falls Drive, Wilmington, Delaware, 19808 United States
251 Little Falls Drive, Wilmington, Delaware, 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, Delaware, 19808, United States
Remedial Construction Services, L.P
211 E. 7th Street, Suite 620, Austin, Texas, 78701, United States
Resource Piling (M) Sdn. Bhd.
8A, Jalan Vivekananda, Off Jalan Tun Sambanthan, Brickfields, Kuala Lumpur, 50470, Malaysia
Suncoast Post-Tension, Ltd.
The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware, 19801, United
States
Waterway Constructions Group Pty Limited
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
Waterway Constructions Pty Ltd
112–126 Hallam Valley Road, Dandenong, VIC, 3175, Australia
1
2
3
4
5
6
7
8
9
100% owned by two trustees.
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.
75.1% owned by Keller Holdings Limited.
99.7% owned by Keller Holdings Limited.
70% owned by Keller Holdings Limited.
49% owned by Keller Holdings Limited.
50% owned by Keller Holdings Limited.
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.
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 2023:
Company
Keller Financing
Keller EMEA Limited
Keller Resources Limited
Registered number
04592933
02427060
04592974
Keller Finance Australia Limited
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 2023:
Company
Registered number
Keller Holdings Limited
Keller Finance Limited
Keller Investments LLP
02499601
02922459
OC412294
Contents Generation – Sub PageContents Generation - Section Other information
Adjusted performance measures
Keller Group plc Annual Report and Accounts 2023
215
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 2022 results of overseas operations into sterling at the 2023 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 9 to the consolidated financial statements. A reconciliation between the 2022 underlying result and the 2022 constant
currency result is shown below and compared to the underlying 2023 performance:
Revenue by segment
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
2023
Statutory
£m
1,770.0
686.0
510.0
2,966.0
2023
Statutory
£m
1,896.1
649.3
399.2
2,944.6
Underlying
£m
Underlying
£m
169.6
1.8
22.6
(13.1)
180.9
82.0
29.1
6.6
(9.1)
108.6
2022
Impact of
exchange
movements
£m
(5.6)
8.9
(18.8)
(15.5)
2022
Impact of
exchange
movements
£m
(0.4)
0.5
(0.2)
0.1
–
Constant
currency
£m
1,890.5
658.2
380.4
2,929.1
Statutory
change
%
-7%
+6%
+28%
+1%
Constant
currency
£m
Underlying
change
%
81.6
29.6
6.4
(9.0)
108.6
+107%
-94%
+242%
n/a
+66%
Constant
currency
change
%
-6%
+4%
+34%
+1%
Constant
currency
change
%
+108%
-94%
+253%
n/a
+66%
Underlying operating margin
Underlying operating margin is underlying operating profit as a percentage of revenue.
Contents Generation – Sub Page 216
Keller Group plc Annual Report and Accounts 2023
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 (excluding goodwill impairment)
Non-underlying items in other operating income
EBITDA
EBITDA (IAS 17 covenant basis)
Underlying operating profit
Depreciation and impairment of owned property, 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 (excluding goodwill impairment)
Non-underlying items in other operating income
EBITDA
Net finance costs
Finance income
Underlying finance costs
Net finance costs (statutory)
Exclude: 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 expenditure
2023
£m
180.9
81.8
30.0
0.4
293.1
(10.8)
0.8
283.1
2023
£m
180.9
81.8
30.0
(33.8)
0.4
259.3
(10.8)
0.8
249.3
2023
£m
(1.8)
29.3
27.5
(5.6)
(0.8)
21.1
2023
£m
94.3
0.2
(20.9)
73.6
2022
£m
108.6
71.1
25.5
0.4
205.6
(17.6)
0.7
188.7
2022
£m
108.6
71.1
25.5
(27.9)
0.4
177.7
(17.6)
0.7
160.8
2022
£m
(0.5)
15.6
15.1
(3.6)
(0.2)
11.3
2022
£m
81.6
0.1
(8.2)
73.5
Contents Generation – PageContents Generation – Sub PageContents Generation - Section Keller Group plc Annual Report and Accounts 2023
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)
217
2022
£m
34.2
365.8
(101.1)
298.9
(80.1)
218.8
2022
£m
298.9
205.6
1.5
2022
£m
218.8
177.7
1.2
2023
£m
86.8
301.9
(151.4)
237.3
(91.1)
146.2
2023
£m
237.3
293.1
0.8
2023
£m
146.2
259.3
0.6
Order book
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.
Free cash flow
The calculation of free cash flow is set out in the CFO section of the Strategic report and is reconciled to movements in the consolidated cash flow
statement and other movements in net debt as set out below.
Net cash inflow from operating activities
Net cash outflow from investing activities
Exclude:
Cash inflows from non-underlying items – contract dispute
Cash inflows from non-underlying items – ERP costs
Cash inflows from non-underlying items – restructuring costs
Cash inflows from non-underlying items – acquisition costs
Acquisition of subsidiaries, net of cash acquired
Disposal of subsidiaries
Include:
Increase in net debt from new leases
Increase in net debt from amortisation of deferred finance costs
Free cash flow
2023
£m
197.0
(70.7)
3.7
7.5
1.2
–
0.2
(1.3)
(33.9)
(0.5)
103.2
2022
£m
54.8
(89.0)
–
5.4
0.6
0.2
20.2
(0.7)
(24.8)
(0.5)
(33.8)
Contents Generation – Sub PageContents Generation - Section Financial record
Keller Group plc Annual Report and Accounts 2023
2014
£m
2015
£m
2016
£m
2017
£m
2018
£m
2019
£m
2020
£m
2021
£m
20221
£m
2023
£m
1,599.7
1,562.4
1,780.0
2,070.6
2,224.5
2,300.5
2,062.5
2,222.5
2,944.6
2,966.0
141.9
92.0
(6.9)
85.1
(29.7)
55.4
(56.6)
(1.2)
155.5
103.4
(7.7)
95.7
(33.0)
62.7
(36.4)
26.3
158.6
95.3
(10.2)
85.1
(29.8)
55.3
(7.3)
48.0
177.2
108.7
(10.0)
98.7
(24.7)
74.0
13.5
87.5
167.5
96.6
(16.1)
80.5
(22.5)
58.0
(71.8)
(13.8)
198.4
103.8
(22.5)
81.3
(22.4)
58.9
(37.2)
21.7
205.0
110.1
(13.2)
96.9
(28.3)
68.6
(27.5)
41.1
185.9
88.5
(8.9)
79.6
(18.9)
60.7
(5.1)
55.6
205.6
108.6
(15.1)
93.5
(20.3)
73.2
(28.2)
45.0
293.1
180.9
(27.5)
153.4
(38.8)
114.6
(24.8)
89.8
141.9
155.5
158.6
177.2
167.5
170.8
175.0
153.2
177.7
259.3
218
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
104.1
295.6
Intangible and other non-current assets
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
149.6
443.4
232.0
303.4
486.5
203.1
261.5
480.2
185.9
Net debt (statutory)
Other net liabilities
Net assets
(102.2)
(183.0)
(305.6)
(229.5)
(286.2)
(289.8)
(192.5)
(193.3)
(298.9)
(237.3)
(154.6)
(94.9)
(41.1)
(77.1)
(114.2)
(166.5)
(196.2)
(203.7)
(197.3)
(172.3)
346.3
334.0
429.6
472.2
426.5
397.5
410.0
428.0
496.8
518.0
Net debt (IAS 17 covenant basis)
(102.2)
(183.0)
(305.6)
(229.5)
(286.2)
(213.1)
(120.9)
(119.4)
(218.8)
(146.2)
Underlying key performance indicators
Diluted earnings per share from
continuing operations (p)
Dividend per share (p)
Operating margin
74.2
25.2
5.8%
85.4
27.1
6.6%
74.8
28.5
5.4%
101.8
34.2
5.2%
79.1
35.9
4.3%
81.3
35.9
4.5%
96.3
35.9
5.3%
84.2
35.9
4.0%
100.7
37.7
3.7%
153.9
45.2
6.1%
Return on capital employed3
18.3%
20.5%
15.3%
15.1%
13.2%
14.4%
16.4%
13.9%
14.9%
22.8%
Net debt: EBITDA (statutory)
0.7x
1.2x
1.9x
1.3x
1.7x
1.5x
0.9x
1.0x
1.5x
0.8x
Net debt: EBITDA
(IAS 17 covenant basis)
0.7x
1.2x
1.9x
1.3x
1.7x
1.2x
0.7x
0.8x
1.2x
0.6x
1
2
3
Intangible and other non-current assets and other net liabilities presented here do not correspond to the published 2022 consolidated financial statements. The consolidated balance sheet has been
restated in respect of prior period measurement business combinations adjustments.
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 underlying 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.
Contents Generation – Sub PageContents Generation - Section Contacts
Keller Group plc Annual Report and Accounts 2023
219
Registered office
2 Kingdom Street
London W2 6BD
Registered number
2442580
Contacts
Our offices
Head office
2 Kingdom Street
London W2 6BD
Telephone: +44 20 7616 7575
www.keller.com
North America Division
7550 Teague Road
Suite 300, Hanover
Maryland 21076
Telephone: +1 410 551 1938
www.keller-na.com
Europe Division
Kaiserleistrasse 8
63067 Offenbach
Germany
Telephone: +49 69 80510
www.kellerholding.com
Asia-Pacific, Middle East
and Africa (AMEA) Division
Unit 302, Level 103 Arenco Tower,
Sheikh Zayed Road,
Dubai Media City, Al Sufouh 2,
Dubai, UAE
Telephone: +971 4213 58 00
www.kellerme.com
Secretary and advisers
Group Company Secretary
and Legal Advisor
Kerry Porritt FCG LLB (Hons)
Joint brokers
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Peel Hunt LLP
100 Liverpool Street
London, EC2M2AT
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
Financial public relations advisers
FTI Consulting
200 Aldersgate Street
London EC1A 4HD
Registrars
Equiniti Limited
Aspect House, Spencer Road
Lancing, West Sussex
BN99 6DA
Contents Generation – Sub PageContents Generation - Section Cautionary statement
220
Cautionary statement
Keller Group plc Annual Report and Accounts 2023
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 may 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.
Nothing in this document should be regarded as a profits forecast.
This document is not an offer to sell, exchange or transfer any securities
of Keller Group plc or any of its subsidiaries and is not soliciting an offer
to purchase, exchange or transfer such securities in any jurisdiction.
Securities may not be offered, sold or transferred in the United States
absent registration or an applicable exemption from the registration
requirements of the US Securities Act.
Keller Group plc
2 Kingdom Street
London W2 6BD
+44 20 7616 7575
info@keller.com
www.keller.com
Contents Generation – Sub PageContents Generation - Section Contents Generation – PageContents Generation – Sub PageContents Generation - Section K
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Contents Generation – PageContents Generation – Sub PageContents Generation - Section