Keller Group Plc · LSE:KLR
Keller — H1 2008 Earnings Presentation
33 slides from Keller's earnings presentation, June 2008
Slide 1: Keller Group plc Interim Results 2008
Keller Group plc Interim Results 2008 Half year ended June 2008
Slide 2: Highlights
Highlights • Revenue* of £568.7m (2007: £443.9m) up 28%, dri ven by excellent organic growth outside the US • Operating profit* of £56.1m (2007: £47.4m) up 18% • Group now much more broadly based, with less exposure to individual market cycles • Profit before tax* of £54.2m (2007: £45.4m) up 19% • B
Slide 3: Group Income Statement
Group Income Statement Continuing operations £m June June % Full Year Constant currency basis 2008 2007 change 2007 - revenue up 20% - operating profit up 9% Revenue 568.7 443.9 +28% 955.1 107.4 Average euro rate of Operating profit 56.1 47.4 +18% €1.29 (2007 H1: €1.48) Interest (1.9) (2.0) (4.2) Pr
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) June June % Full Year Discontinued losses £m 2008 2007 change 2007 relate to Makers legacy Profit after tax* 36.3 29.3 67.3 issues Discontinued operation (1.2) (3.7) (10.5) Minority interests (post tax) mainly Spain and Saudi 35.1 25.6 56.8 Arabia Minority interest
Slide 5: Operating Profit & Margin
Operating Profit & Margin* June 2008 June 2007 Underlying organic revenue Op Op growth of 17% £m Revenue Profit Margin Revenue Profit Margin UK 44.8 2.2 4.9% 35.4 1.7 4.8% Suncoast USA 245.5 22.1 9.0% 232.7 29.4 12.6% represents vast CEMEA 204.4 23.8 11.6% 136.2 13.7 10.1% majority of US profit decr
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2008 June 2007 Dec 2007 Net debt Goodwill / intangibles 83.3 63.9 80.8 represents 0.5x Plant & equipment 181.3 130.8 155.8 annualised 264 .6 194.7 236.6 EBITDA Inventories 41.9 27.4 26.9 Debtors 320.2 260.5 273.6 Gearing of 32% Creditors (289.1) (222.2) (244.8) (June 2007
Slide 7: Group Cash Flow Statement
Group Cash Fl ow Statement £m June 2008 June 2007 Dec 2007 Last 12 months ’ Cash from operating activities* 46.0 45.0 127.4 cash from Discontinued operation (2.4) (4.8) (10.2) continuing operations 93% of Capex – net (29.5) (21.8) (47.1) EBITDA (June Tax (11.9) (14.0) (32.0) 2007: 94%) Interest (1.9
Slide 8: 2008 Guidance
2008 Guidance • Group results expected to be broadly in line with 2007 • Regional full year trends similar to H1 – US profits will be less than in 2007 – significant increase elsewhere • Expected effective tax rate of circa 33% • Full year capex around £55m • Continuation of share buy-back programme
Slide 9: US Construction Market Analysis
US Construction Market Analysis $BN $BN US non-residential remains the largest end market for Keller at circa 45% of revenue Keller has a good presence in the public sector market Suncoast with an 80% exposure to the residential market had a yoy revenue Up 17% yoy (May 08 /May 07) Up 5% yoy Down 27%
Slide 10: US Private Non-residential Construction
US Private Non-residential Construction $BN Two sub-sectors currently represent about two-thirds of this market – Office and Commercial 36% + 7% yoy growth – Power and Industrial 27% + 37% yoy growth Techniques, people and equipment not sector- specific Source: US Census, US Department of Commerce,
Slide 11: North America Analysis of Revenue
North America Analysis of Revenue H1 2008 Revenue by Region H1 2008 Revenue by Product Well balanced Total revenue £245.5m Total revenue £245.5m geographi cal presence within the US ac ross our six separate companies Product exposure weighted towards piling reflects the make up of the market 10
Slide 12: North America – Highlights
North America – Highlights Very solid result from our US bellweather Hayward Baker Good overall performance from the four piling businesses – further progress in extending synergies between the businesses Good progress in integrating HJ, the Florida based CFA piling specialist acquired in 2007 – int
Slide 13: North America Case Studies
North America Case Studi es Piling at power plant, West Virginia Emergency repair on road embankment, Colorado McKinney & Case working together Anchors, soil nails and minipiles 12
Slide 14: CEMEA Analysis of Revenue
CEMEA Analysis of Revenue H1 2008 Revenue by Country H1 2008 Revenue by Product Fast growing areas now Total revenue £204.4m Total revenue £204.4m around 40% of revenue – Eastern Europe – Middle East – Asia Piling products now represent nearly 20% of revenue following recent investments 13
Slide 15: CEMEA Highlights
CEMEA Highlights Another record result from this diversified business unit – operating margin of 11.6% Good exposure to infrastructure projects; limited exposure to residential housing Continued improvement from our German business Steady performance in France Excellent result from Eastern Europe &
Slide 16: CEMEA Case Studies
CEMEA Case Studies City tunnel project, Leipzig, Germany Al Raha Beach Resort, Abu Dhabi, UAE Compensation grouting to protect buildings Onshore & offshore ground improvement 15
Slide 17: Middle East Sales Growth
Middle East Sales Growth Outstanding results across the region in €m H1 with revenue more than doubl e last year – recent investment in equipment has brought strong growth – piling operations have now started in UAE – good progress on large contracts in Saudi Arabia, Saudi Kayan Dubai, Palm Deira Ab
Slide 18: Eastern Europe Sales Growth
Eastern Europe Sales Growth €m An excellent performanc e in H1 with revenue more than 50% up on l ast year – another record result for the period – full range of services now being offered – Poland represents circa 60% of the revenue in this business unit – further growth expected after rec ent inve
Slide 19: Australia Sales Growth
Australia Sales Growth $m Significant increase in the scale of this business in the last three years helped by – acquisition of Piling Contrac tors in August 2006 – infrastructure & resources boom – extension of product range through growth of KGE 18
Slide 20: Australia Highlights
Australia Highlights Excellent revenue growth and record margin Gateway contract now circa 90% complete – very good performanc e on this landmark project Infrastructure and resources-related work still strong – Ballina bypass work in Northern NSW – coal handling facility in NSW Caboolture bypass, Br
Slide 21: UK Highlights
UK Highlights Good performanc e in difficult market conditions 30% exposure to the res idential sector has held back performanc e in the Ground Improvement division Geotechnical division returned to profitability Excellent contribution from Phi Artist’s impression of 2012 Olympic Main Stadium System
Slide 22: Outlook
Outlook • US non-residential market remains resilient – medium term outlook for the US mark ets remains unclear • Continued momentum in our high growth markets expected • Moderate tightening expected in certain of our Western European markets • Strong order book around last year’s record level • Rob
Slide 23: Appendix
Appendix KELLER + SYoOee
Slide 24: Keller's History
Keller’s History 1958 1960’s 1974 1984 1990 1994 1996 2001 2002 2005 2006 2007 NOW Est. 1958 Acquired Management Acquired Acquired Acquired Ground test Johann Keller buyout from Makers (UK) Donaldson (US) Systems services in Germany, GKN plc Geotechni que marking Acquired (UK) Acquired Phi internati
Slide 25: Ground engineering worldwide
Ground engineering worldwide % of H1 2008 Activities revenue Regions of use Applications Piling 38 % US Foundati on support UK & Eastern Europe Earth retention Middle East Australia Ground improvement 25 % US Foundati on support Europe Seismic risk protection Middle East & Asia Australia Anchors, Na
Slide 26: Business Model
Business Model Profit by Geography* • A very broadl y based business by 2008 H1 £m – Geographies and products 2.2 – Customers and end markets 10.7 US – Individual contracts (circa 8,500 in 2007) CEMEA 22.1 Australia • Strong control framework but with local empowerment UK – Global and local benefits
Slide 27: Strategy
Strategy Keller is the world’s largest and most profitable independent ground engineering contractor with leading market positions in many countries • Market Drivers – More pressure to build on brownfield/marginal land – More ambitious development and infrastructure projects • Our Objective – To ext
Slide 28: US Geographic Coverage
US Geographic Coverage MAINE WASHINGTON NORTH VERMONT MONTANA DAKOTA NEW HAMPSHIRE MINNESOTA OREGON WISCONSIN MASSACHUSETTS IDAHO NEW YORK SOUTH RHODE ISLAND DAKOTA MICHIGAN CONNECTICUT WYOMING PENNSYLVANIA NEW JERSEY IOWA NEBRASKA OHIO WASHINGTON D.C. DELAWARE NEVADA ILLINOIS INDIANA MARYLAND WEST
Slide 29: Europe Geographic Coverage
Europe Geographic Coverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY ROMANIA SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 28
Slide 30: Ten Year Track Record
Ten Year Track Record Revenue 1998 – 2007 (£m) Compound (Continuing Operations) annual growth 955.1 rate of 17% 857.7 685.2 526.2 505.4 447.5 368.5 277.1 265.3 240.0 29
Slide 31: Ten Year Track Record
Ten Year Track Record Operating Profit 1998 – 2007 (£m) Compound (Continuing Operations) 107.4 annual growth 14.7 rate of 24% 89.3 3.8 7.0 3.4 55.3 1.8 61.6 1.9 64.1 33.8 * 33.4 31.5 22.7 2.0 1.7 1.8 1.5 1.4 42.1 15.7 16.5 0.5 1.5 14.9 0.7 19.3 0.7 21.0 0.9 0.1 22.3 2.1 1.6 17.4 30.4 9.7 12.0 9.9 13
Slide 32: Financial Performance
Financial Performance Operating margin* Dividend per share Industry-leading 20 margins 18 16 14 Uninterrupted 12 dividend growth 10 8 Dividend policy 6 4 - 15% growth 2 subject to 3x 0 cover 98 99 00 01 02 03 04 05 06 07 *from continuing operations 31
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