Keller Group Plc · LSE:KLR
Keller — FY2007 Earnings Presentation
35 slides from Keller's earnings presentation, March 2008
Slide 1: Keller Group plc Preliminary Results 2007
Keller Group plc Preliminary Results 2007 March 2008
Slide 2: Highlights
Highlights • Revenue* of £955.1m (2006: £857.7m), up 11% • Strong organic growth, particularly from outside of US, and good contribution from acquisitions • Record operating margin* of 11.2% (2006: 10.4%) • Profit before tax* up 23% to £103.2m (2006: £83.7m) • Earnings per share* up 24% to 97.6p (20
Slide 3: Group Income Statement
Group Income Statement Continuing operations £m 2007 2006 % change Average US rate $2.00 (2006: $1.84) Revenue 955.1 857.7 +11% Constant currency growth Operating profit 107.4 89.3 +20% - revenue up 16% Interest (4.2) (5.6) - operating profit up 27% Profit before tax 103.2 83.7 +23% Good contributio
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) % Discontinued operation £m 2007 2006 change (Makers) Profit after tax 67.3 56.8 - substantially all sold Discontinued operation (post tax) (10.5) - - full year pre-tax cost of £14.2m (H2: £8.9m) 56.8 56.8 Minority interests (2.8) (1.1) Dividend policy Attributable
Slide 5: Operating Profit & Margin
Operating Profit & Margin* 2007 2006 Another record Op Op operating margin £m Revenue Profit Margin Revenue Profit Margin UK 78.0 3.8 4.9% 60.7 3.4 5.6% US revenue up 8% in USA 473.2 61.6 13.0% 476.9 64.1 13.4% dollar terms CEMEA 296.8 30.4 10.2% 255.0 17.9 7.0% - profits up 4% Australia 107.1 14.7
Slide 6: Operating Profit Margins
Operating Profit Margins* Operating margin Industry-leading margins 12% 10% Changes since 2004 leading to increased Group margins 8% - generally strong markets - economies of scale 6% - shift in revenue mix to higher margin countries 4% 2% Spread of businesses and end markets helps smooth margins th
Slide 7: Group Balance Sheet
Group Balance Sheet £m 2007 2006 Minimal exchange Goodwill / intangibles 80.8 57.5 rate impact Property, plant & 155.8 114.6 equipment Other non-current assets 13.7 8.8 Working capital ratios 250.3 180.9 improved again Inventories 26.9 25.5 Debtors 273.6 221.7 Creditors (244.8) (192.4) Gearing of 26
Slide 8: Group Cash Flow Statement
Group Cash Flow Statement £m 2007 2006 Cash from continuing Cash from continuing operating activities 127.4 98.3 operations 101% of EBITDA (2006:94%) Discontinued operation (10.2) - Capex – net (47.1) (27.4) Tax (32.0) (30.7) Interest (4.0) (5.1) Capex: investing for growth Free cash flow 34.1 35.1
Slide 9: Cash Flow History
Cash Flow History Profits = cash Investing for growth £m £m 140 120 120 100 100 80 80 60 60 40 40 20 20 0 98 99 00 01 02 03 04 05 06 07 0 03 04 05 06 07 EBITDA* Group operating cash flow* Capex Acquisitions *from continuing operations in 2007 only 8
Slide 10: 2008 Guidance
2008 Guidance • Encouraging start to 2008 – New orders, tendering and trading • US medium term outlook unclear – Suncoast 2008 budgeted profit $13m down on 2007 actual – No signs yet of general downturn in non-residential construction • Revenue and profits growth expected outside US • Likely effecti
Slide 11: Business Model
Business Model Profit by Geography* • A very broadly based business by 2007 £m – Geographies and products 3.8 – Customers and end markets 14.7 US – Individual contracts (circa 8,500 in 2007) CEMEA Australia • Strong control framework but with local empowerment 30.4 61.6 UK – Global and local benefit
Slide 12: 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 13: North America Analysis of Revenue
North America Analysis of Revenue 2007 Revenue by End User 2007 Revenue by Product Growing exposure to Total revenue £473.2m Total revenue £473.2m public expenditure - circa 25% versus 17% in 2006 21% 25% 32% 39% Circa 10 - 15% of the 21% 10% workload is refurbishment- 26% 15% 11% related Residentia
Slide 14: North America Highlights
North America Highlights Excellent results from the foundation contracting businesses -very good first full year for Anderson - improved geographic penetration with several new offices opened - continued product innovation - increasing synergies between companies Reduced sales & profitability at Sun
Slide 15: North America Case Studies
North America Case Studies The Spire, Chicago, Illinois I35W, Minneapolis, Minnesota 610m residential tower Bridge replacement Large diameter piles/sheet pile wall Large diameter piles Case & Hayward Baker Joint venture Case & Anderson 14
Slide 16: North America HJ Foundation Acquisition
North America HJ Foundation Acquisition Acquired in October 2007 for an initial cash consideration of $47m Market leader in continuous flight auger piling (CFA) in southern Florida CFA is a growing piling method in the US - will enable Keller to expand CFA elsewhere in US Foundations for a new hotel
Slide 17: US Non-residential Construction Growth
US Non-residential Construction Growth Consensus forecasts for $bn Total US Private Non-residential Construction private non-residential 400 2007/2006 growth + 16% ¹ ³ expenditure for 2008 Total US Public Construction broadly flat² 350 2007/2006 growth + 13%¹ 300 250 Public expenditure has increased
Slide 18: CEMEA Analysis of Revenue
CEMEA¹ Analysis of Revenue 2007 Revenue by End User 2007 Revenue by Product 44% of workload public- Total revenue £296.8m Total revenue £296.8m related 8% 12% Less than 10% exposure 9% 24% to the residential market 9% 39% 16% 48% Expansion of product 35% offering reduces reliance on ground improveme
Slide 19: CEMEA Highlights
CEMEA Highlights 2007 Revenue by Country Excellent performance from CEMEA Total revenue £296.8m - record operating margin of 10.2% Fast-growing areas now around one third 4% 9% 19% of revenue - Eastern Europe, Middle East & Asia 10% 16% Continuing investment into piling 12% diversifies product offer
Slide 20: Sales Growth Eastern Europe
Sales Growth Eastern Europe €m Record year for Eastern Europe with revenue of circa €70m 80 - trebled in three years Poland represents more than half of this 60 revenue 40 Now have a presence in eight countries in total 20 Continued strong growth expected from Eastern Europe 0 2003 2004 2005 2006 20
Slide 21: Sales Growth Middle East
Sales Growth Middle East Record revenue of circa €50m for the €m region 60 - trebled in three years Order book in the region at a record high with multi-million € contracts in 40 Dubai Saudi Arabia Abu Dhabi Bahrain 20 Continued strong growth expected from the Middle East Continued strategic focus a
Slide 22: CEMEA Case Studies
CEMEA Case Studies Sentosa Island, Singapore A2 Motorway, Austria New resort complex Slope protection Wet soil mixing Anchors 21
Slide 23: Australia Highlights
Australia Highlights Construction market growth in 2007 of 9% Record results - revenue almost trebled in two years Gateway upgrade project now expected to provide circa A$100m of revenue (A$40m completed in 2007) Gateway upgrade project, Brisbane, Queensland Other large infrastructure projects in th
Slide 24: UK Highlights
UK Highlights Continued good progress from Phi (acquired April 2006) Systems Geotechnique acquired in April 2007 for an initial consideration of £9.1m 30% exposure to the housing market, particularly ground improvement products New supermarket, Maesteg, Wales First 2012 Olympics-related projects Ret
Slide 25: Outlook
Outlook • Increased size and geographic reach gives better balance • US, excluding Suncoast, well positioned for 2008 • Middle East & Eastern Europe to remain strong in the medium term • No significant changes in our other main businesses • Current record order book with all four regions ahead of th
Slide 26: Appendix
Appendix KELLER
Slide 27: 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 Geotechnique marking Acquired (UK) Acquired Phi internation
Slide 28: Ground engineering worldwide
Ground engineering worldwide % of 2007 Activities revenue Regions of use Applications Piling 35 % US/UK Foundation support Eastern Europe Earth retention Middle East Australia Ground improvement 22 % US/UK Foundation support Continental Europe Seismic risk protection Middle East & Asia Australia Anc
Slide 29: 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 30: 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 29
Slide 31: Ten Year Track Record
Ten Year Track Record Revenue 1998 – 2007 (£m) Compound (Continuing Operations) annual growth 955.1 rate of 17% 857.7 107.1 65.1 78.0 685.2 60.7 37.1 43.4 526.2 505.4 32.4 473.2 447.5 27.9 476.9 41.9 38.6 347.5 26.1 43.3 399.9 277.1 265.3 18.3 240.0 45.9 270.4 280.2 20.8 14.2 242.5 12.3 44.5 43.4 40
Slide 32: Ten Year Track Record
Ten Year Track Record Operating Profit 1998 – 2007 (£m) Compound (Continuing Operations) 107.4 annual growth 89.3 14.7 rate of 24% 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 33: Financial Performance
Financial Performance Operating margin* Dividend per share Industry-leading 12% 20 margins 18 10% 16 14 Uninterrupted 8% 12 dividend growth 6% 10 8 4% Dividend policy 6 4 - 15% growth 2% 2 subject to 3x 0% 0 cover 98 99 00 01 02 03 04 05 06 07 98 99 00 01 02 03 04 05 06 07 *from continuing operation
Slide 34: Recent Acquisitions > £5m
Recent Acquisitions > £5m Revenue in Excellent Date Total year of Revenue organic Company acquired investment acquisiton in 2007 CAGR growth Suncoast Oct 2001 $90m $134m $241m 10% achieved Keller-Terra* Dec 2002 €14m €22m €83m 30% post acquisition McKinney Dec 2002 $30m $60m $110m 13% Donaldson Sep
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