Keller Group plc (“Keller”, or “the group”), the world’s largest geotechnical specialist contractor, today provides an update in relation to the impact of COVID-19, including measures it is taking to actively manage the risks to its employees and operations to support the business to withstand this period of uncertainty.
Our priority is the health and safety of our employees. Keller employs over 10,000 people globally, across 23 business units in 40 countries and six continents. The guidance and advice we are providing employees, follows World Health Organisation guidelines and is supplemented by local authority guidance in the regions in which we operate. We have also established an Executive Committee sub-committee to regularly review and update our advice to employees, establish business continuity planning, and to ensure divisional oversight is effective and properly coordinated.
Our business has a diverse revenue stream, our raw materials are generally commoditised and sourced locally to our operations, the workforce is dispersed and flexible by nature. The major impact to date of the COVID-19 pandemic for the group is travel and activity restrictions invoked by national and local governments as part of their virus containment initiatives, and in the longer term by an expected reduction in the global macroeconomic demand.
Trading in January and February was largely unaffected by COVID-19 and was marginally ahead of our expectations. In late March, market conditions deteriorated swiftly which have impacted trading, particularly in European countries within our EMEA division due to national and regional restrictions. However, we currently expect overall group performance in the first quarter to be broadly in line with our expectations.
Looking forward, the situation is now becoming more challenging in North America, where the ability to continue to operate is subject to increasingly onerous state specific restrictions and lockdowns, and we expect this deteriorating trend to continue. In our APAC division, which was the first to feel the effects of the virus at the start of the year, up until now trading has been only moderately impacted and we continue to monitor events closely. The benefit provided by our diversity in terms of geography and market segment is more limited by the global nature of this pandemic.
The COVID-19 situation is rapidly evolving and the trading outlook has become uncertain. We are putting in place a broad range of measures to significantly reduce costs and manage our liquidity through this period of uncertainty. Measures include operating cost reductions, cancellation of discretionary projects, capital expenditure freeze, and an even greater focus on working capital management. We are not limited to these actions and we will continue to review all options available to us that will preserve the strength of the group’s balance sheet, as we navigate our way through this unprecedented time, including the Board’s recommendation of the final 2019 dividend.
In terms of financing and liquidity, as reported at our full year results on 3 March 2020, at 31 December 2019, our net debt was £213m, on a bank covenant IAS 17 basis, equating to net debt to EBITDA ratio of 1.2x compared to our covenant limit of 3.0x. The group has substantial borrowing facilities available to it. At 31 December 2019 the group had undrawn committed and uncommitted borrowing facilities totalling £247m, comprising £183m of the unutilised portion of the group’s £375m revolving credit facility, which expires in November 2024 and has an option to extend by one further year, £22m of other undrawn committed borrowing facilities and undrawn uncommitted borrowing facilities of £42m. At that time cash and cash equivalents were £99m. As at the end of February 2020, the group had undrawn committed and uncommitted borrowing facilities totalling £230m, comprising £167m of the unutilised portion of revolving credit facility, £32m of other undrawn committed borrowing facilities and undrawn uncommitted borrowing facilities of £31m with cash and cash equivalents of £76m. Our liquidity position will remain under constant review during this uncertain time.
Given the evolving nature of the COVID-19 pandemic, it is too early to provide earnings guidance in relation to the remainder of the current financial year. We will continue to monitor external events, manage the situation closely and update the market as appropriate.