Keller Group plc

Link to strategy:

2, 3

Timeframe:

MT LT

Link to viability:

Yes

Reduced facility headroom

• 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.

• Failure to accurately forecast material exposures and/or manage the financial resources of the Group.

• 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 £400m revolving credit facility maturing in 2031 and a US private placement debt of $300m, with $120m maturing in 2030 and $180m maturing in 2033.
• The Group maintains significant undrawn facilities within a high-quality RCF bank syndicate, which underpins 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.

Link to strategy:

1, 3

Timeframe:

MT LT

Link to viability:

Yes

Revenue decline

Description and impact

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 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 postponing or reducing investment in ongoing and new projects at short notice.
• Impact of increasing inflation, especially in steel, cement and energy.
• Political instability leading to disruption in supply chains impacting both availability and price.

• The diverse markets in which the Group 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.

Link to strategy:

1, 3

Timeframe:

ST MT

Link to viability:

Yes

Revenue decline

Description and impact

Inability to achieve sustainable growth, whether through organic growth acquisition, new products, new geographies or industry-specific solutions, may:

• 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.

• 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.

• An annual business strategy planning cycle from which we identify growth opportunities and actions to address market developments, which are monitored at local, divisional and Group level.
• Continued analysis of existing and target markets to ensure opportunities that they offer are understood.
• Business development and opportunities pipeline which is sector agile to growth segments of the construction market.
• A geographically diverse 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.
• Defined Group M&A Standard to ensure appropriate due diligence of target companies including operational and cultural differences, potential synergies and carefully managed integration plans.

Link to strategy:

2

Timeframe:

ST

Link to viability:

Yes

One-off costs

• 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.
• Personal data breaches.

• Failure to establish a robust corporate culture.
•    Failure to identify or adequately address compliance risks, including new laws and regulations.
•    Failure to embed the Group’s values and behaviours across the entire organisation.
•    Failure to have clear compliance policies and procedures.
•    Failure to have a robust training and monitoring programme in place.
•    Inadequate due diligence in M&A process.
•    Deliberate non-compliance.

• A Code of Business Conduct that sets out minimum expectations for all colleagues in respect of ethics, integrity and legal requirements, that is updated regularly and is backed by a training programme to ensure that it is fully embedded across the Group.
•    Compliance policies and procedures which underpin the Code of Business Conduct.
•    Ethics and Compliance Officers in every business unit who support the ethics and compliance culture and ensure best practice is communicated and embedded into local business practices.
•    Regular risk reviews across the Group to ensure compliance risks are identified and addressed.
•    Ethics and compliance updates to the Audit and Risk Committee semi-annually.
•    A Group M&A Standard that sets out the approach and process to be followed for any M&A activity.
•    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.
•    A Compliance Committee with representation from the divisions and functions.

Link to strategy:

1, 2, 3

Timeframe:

MT LT

Link to viability:

No

• Impact our position in the market.
• Result in us not being selected for key complex, high-value projects that support the Group strategy.
• 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:

1, 2, 3

Timeframe:

ST MT LT

Link to viability:

Yes

One-off costs

• 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 and equipment used becoming obsolete because they are no longer compliant with environmental standards.
• Remediation of non-compliant work at our own expense to maintain compliance.

• Failure to update product and equipment 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.
• Scope 1 and 2 carbon emissions verified by accredited external third party (Carbon Intelligence).
• Carbon calculator tool used to identify/improve carbon efficiency.
• Processes to meet TCFD requirements embedded into business-as-usual activities.
• Cross-functional working group created to understand and develop processes and procedures to meet the Corporate Sustainability Reporting Directive (CSRD) legislation.

Link to strategy:

1,2

Timeframe:

ST

Link to viability:

Yes

Contract

margin decline

• Cost overruns, contractual disputes and a failure to meet quality standards, damaging our reputation with the customer and giving rise to potential regulatory action and legal liability, ultimately impacting financial performance.
• Delays to executing projects waiting for materials and ongoing business disruption, along with additional costs to find alternative suppliers.
• Exposing the Group to long-term obligations including legal action and additional costs to remedy solution failure.

• Misinterpretation of client requirements or miscommunication of requirements by the client may lead to a poorly designed solution and consequently failure.
• Failure to understand and engage with the customer on a balanced approach to allocation or sharing of risk in the contract.
• Failure to identify and manage risks in our projects to ensure that they are delivered on time and to budget, eg 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 throughout the Project Performance Management process and applying rigorous policies and processes to manage and monitor risks and contract performance.
• The Group has professional commercial/contracts personnel and lawyers engaged when negotiating contracts.
• 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.
• Continuing to enhance our technological and operational capabilities through investment in our product teams, project managers and our engineering capabilities.
• High-quality safety standards for operations (eg platform, cage handling), equipment standards and fleet renewal.
• The Project Lifecycle Management (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 Project Performance Management (PPM). Alongside the updated standard will be an app to support the efficient and effective execution of projects.
• 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.

Link to strategy:

2

Timeframe:

ST

Link to viability:

Yes

One-off costs

• 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.
• Conscious decision taken by employee to shortcut approved process to benefit production.
• Poorly designed processes that do not eliminate or mitigate risk.
• Lack of focus on the wellbeing and mental health of employees and JV partners.

• Board-led commitment to drive health and safety programmes and performance with a vision of zero harm.
• An emphasis on safety leadership to ensure both HSEQ professionals and operational leaders drive implementation and sustainment of our safety standards through ongoing site presence, using safety tours, safety audits, safety action groups and mandatory employee training.
• Ongoing improvement of existing HSEQ systems to identify and control known and emerging HSEQ risks, which conform to internal standards.
• Incident Management Standard and incident management software driving a robust and consistent management process across the organisation that ensures the cause of the incident is identified and actions are put in place to prevent recurrence.

Link to strategy:

1, 2, 3

Timeframe:

ST MT LT

Link to viability:

No

• Capability to win and execute work safely and efficiently.
• Ability to stay ahead of our competition.
• Reputation and the confidence of our key stakeholders.

• 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.

Link to strategy:

1, 2, 3

Timeframe:

ST

Link to viability:

No

• 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 IT or security requirements to win or maintain contracts.

• 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.

• The Group has a cyber security and information assurance team and is utilising zero-trust layered technology.
• The Group has created 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.