Keller Group Plc · LSE:KLR
Keller — FY2008 Earnings Presentation
35 slides from Keller's earnings presentation, March 2009
Slide 1: Keller Group plc Preliminary Results 2008
Keller K ll Group G plc l Preliminary Results 2008 M h 2009 March
Slide 2: Highlights
Hi hli ht Highlights • Revenue Revenue* of £1,196.6m (2007: £955.1m), up 25% • Like-for-like organic revenue growth of 12% • Excellent operating margin* margin of 10% (2007: 1111.2%) 2%) • Earnings per share* up 14% to 111.1p (2007: 97.6p) • Total dividend for the year of 20.7p 20 7p (2007: 18 18.0p
Slide 3: Group Income Statement
Group Income Statement Continuing operations % Constant currency basis £m 2008 2007 change - revenue up 14% - operating profit flat Revenue 1,196.6 955.1 +25% O Operating ti profit fit 119 4 119.4 107 4 107.4 +11% Average exchange A h rates t Net finance costs (6.2) (4.2) - US$1.86 (2007: $2.00) - €
Slide 4: Group Income Statement (continued)
G Group Income I Statement St t t (continued) % Discontinued losses relate to £m 2008 2007 change Makers legacy issues Profit after tax 77.3 67.3 +15% Discontinued operation (1.7) (10.5) (post tax)) (p Minority interests mainly 75.6 56.8 Saudi Arabia and Spain Minority interests (4.8) (2.8) Dividend
Slide 5: Operating Profit & Margin
O Operating ti P Profit fit & M Margin* i * 2008 2007 Like-for-like organic Op Op revenue growth of £m Revenue Profit Margin Revenue Profit Margin 12% - UK 10% UK 85.2 2.7 3.2% 78.0 3.8 4.9% - USA 0% - CEMEA 28% USA 532.1 52.1 9.8% 473.2 61.6 13.0% - Australia 17% CEMEA 442.2 49.9 11.3% 296.8 30.4 1
Slide 6: Group Balance Sheet
G Group Balance B l Sh Sheett £m 2008 2007 Balance sheet carrying G d ill/i t Goodwill/intangibles ibl 111.8 111 8 80.8 80 8 values l iincreased dbby Property, plant & equipment 254.7 155.8 significant weakening of Other non-current assets 12.5 13.7 sterling over 2008 379.0 250.3 Inventories 50.9 26
Slide 7: Group Cash Flow Statement
G Group Cash C h Fl Flow St Statement t t £m 2008 2007 Cash from continuing Cash from continuing operating activities 143.5 127.4 operations 99% of EBITDA (2007: 101%) Discontinued operation (5.1) (10.2) Capex – net (65.2) (47.1) Tax (27.9) (32.0) Underlying capex increase of £11 £11.4m 4m Interest
Slide 8: Group Financing Position
G Group Financing Fi i Position P iti • £225m of committed Group facilities, mainly Key Financial Covenants – £65m and £80m revolving credit facilities, Test Status expiring July 2010 and June 2011 respectively Net debt < 3x EBITDA 0.6x – to date, £65m facility not used – US$100m private placement E
Slide 9: Group Orders
G Group Orders Od Last six months’ orders Monthly orders (rolling 3 month average at constant currency*) down around 20% from £m previous six months’ 140 120 100 80 Current order book down around 10% from last 60 year in constant 40 currency terms – slightly 20 up in sterling terms - *at current exc
Slide 10: 2009 Guidance
2009 G Guidance id • Local currency revenue expected to be significantly down in some countries – especially US, Middle East, UK • Currency C b benefits fit lik likely l tto b broadly dl offset ff t thi this d decrease ((att currentt rates) t ) • Lower volumes will lead to further pressure on margin
Slide 11: Group Analysis of Revenue
G Group Analysis A l i off R Revenue Revenue by Geography Revenue by Product Revenue by End Market Total Revenue £1,197m T t lR Total Revenue £1 £1,197m 197 T t lR Total Revenue £1 £1,197m 197 7% 9% 18% 12% 14% 35% 36% 44% 15% 23% 37% 26% 24% US Piling Infrastructure/Public Buildings CEMEA G Ground
Slide 12: North America Analysis of Revenue
N th America North A i A Analysis l i off R Revenue 2008 Revenue by End Market 2008 Revenue by Region Residential and Total revenue £532m T l revenue £ Total £532m 32 office/commercial exposure now 46%, down from 58% in 2007 10% 0% 22% 25% 32% 16% Strong growth in power, industrial and 22% manufactu
Slide 13: United States Market Analysis
U it d St United States t Market M k tA Analysis l i January 2009 housing starts down to 20% Housing Starts of 2006 monthly peak 000’s 1,600 1,400 , Housing now 34% of the construction market k (2006 (2006: 54%) 1,200 1,000 800 In 2008 private non residential market 600 grew by 15% (2007: 18%) 400 P
Slide 14: North America Highlights
N th A North America i HiHighlights hli ht Another excellent performance from Hayward Baker – continued expansion of product range – good mix between large and small contracts t t Solid performance from the piling businesses – continued synergies between companies – HJ’s CFA technique making progres
Slide 15: North America Olden Acquisition
N th A North America i Old Olden A Acquisition i iti Olden acquired in Q4 for US$13m – annualised revenue of circa $35m – leading earth retention contractor in Texas – preferred supplier of retention solutions to the Texas D of T – 75% of revenue comes from the public Dallas Area Rapid Transport Sys
Slide 16: North America Case Studies
N th A North America i C Case St Studies di Lake Okeechobee Okeechobee, Florida Extension at hospital, hospital New York Strengthening of dyke using TRD technology Compaction grouting to densify soils 15
Slide 17: CEMEA Analysis of Revenue
CEMEA¹ Analysis A l i off Revenue R 2008 Revenue by End Market 2008 Revenue by Country Strong growth within T l Revenue Total R £442 £442m T t lR Total Revenue £442 £442m industrial and manufacturing sector 13% 7% 9% 18% 36% Residential exposure 20% 10% 17% remains at circa 10% 11% 31% 14% 14% Very
Slide 18: CEMEA Highlights
CEMEA Hi Highlights hli ht Excellent organic growth with a record operating margin of 11.3% Good performance in Continental Europe from Germany, Germany France & Austria – Spanish revenue off circa 20% but the business remains profitable Strong growth in Eastern Europe and the Middle East D bli off
Slide 19: Eastern Europe
E t Eastern E Europe Revenue increased by more than 40% to €m Revenue €m Order Book nearly €100m 100 60 – circa 60% in Poland 50 – Polish zloty weakened against the euro by 80 20% in 2008 40 Boreta acquired in Q4 for €8m 60 – complements existing Czech operations 30 – another th step t ini building
Slide 20: Middle East
Middl E Middle Eastt Revenue almost doubled to circa €100m €m R Revenue €m Order Od B Book k 120 80 – circa 40% of revenue from Saudi Arabia and circa 35% from the UAE 70 100 – several large contracts in both countries 60 80 Shift in revenue from Dubai to Abu Dhabi 50 – Dubai one third of UAE revenu
Slide 21: CEMEA Case Studies
CEMEA C Case St Studies di Eastern Europe p Middle East New S8 Expressway, Warsaw Khalifa Bin Zayed National Stadium, Abu Dhabi Diaphragm walls and Jet grouting Piling and Ground improvement 20
Slide 22: Australia Highlights
A t li Hi Australia Highlights hli ht Another excellent performance with revenue and operating profit f both up by circa 20% – more than 50% of revenue from infrastructure projects – around A$60m of revenue from the Gateway project All four businesses contributed strongly – wide product offering in
Slide 23: UK Highlights
UK Hi Highlights hli ht Circa 80% of profit earned in H1 – significant deterioration in market conditions Recent acquisitions strengthened the product offering and management St Steps ttaken k tto cutt th the costt base b in i Q4 – £1.3m of annual costs taken out of the business Foundations for Olym
Slide 24: Capital Expenditure
C it l Expenditure Capital E dit Capex increased significantly in the last two years to continue growth − targeted at Eastern Europe, the Middle East and Australia £7m of 2008 increase is due to exchange rate movements Growing rapidly in heavy foundations which requires more expensive equipment Repl
Slide 25: Outlook
O tl k Outlook • Tougher conditions in most of our markets – experiencing a move to more publicly financed work – techniques, people and equipment not sector specific – actions taken to reduce cost base – further measures will be taken as necessary • Current order book down around 10% on a like-for-
Slide 26: Appendix
Appendix KELLER
Slide 27: Ground Engineering Worldwide
G Ground dEEngineering i i Worldwide W ld id % of 2008 Activities revenue Regions of use Applications Piling 36 % US/UK Foundation support Eastern Europe Earth retention Middle East Australia Ground improvement 26 % US/UK Foundation support Continental Europe Seismic risk protection Middle East & As
Slide 28: Keller's History
K ll ’ History Keller’s Hi t 1974 1994 NOW 1958 1960’s 1984 1990 2001 2002 2005 2006 2007 2008 Acquired Management Acquired Est. 1958 Acquired Acquired Johann Keller buyout y from Systems Ground test Suncoast (US) Donaldson (US) in Germany GKN plc G t h i Geotechnique services leading post- marking
Slide 29: Strategy
St t 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 M ambitious biti d development l t and d iinfrastructure f t t projec
Slide 30: US Geographic Coverage
US Geographic G hi CCoverage 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
Slide 31: Europe Geographic Coverage
E Europe Geographic G hi CCoverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY HUNGARY ROMANIA SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 30
Slide 32: Ten Year Track Record: Revenue
T Year Ten Y Track T kR Record d Revenue 1999 – 2008 (£m) Compound (C ti i O (Continuing Operations) ti ) annuall growth th 1,196.6 rate of 18% 137.1 955.1 85.2 857.7 107.1 65.1 78.0 685.2 60.7 532.1 37.1 526.2 43.4 505.4 447 5 447.5 32.4 32 4 473 2 473.2 27.9 38.6 476.9 347.5 26.1 41.9 43.3 399.9 2
Slide 33: Ten Year Track Record: Operating Profit
T Year Ten Y Track T kR Record d Operating Profit 1999 – 2008 (£m) Compound (Continuing Operations) annuall growth th 119.4 rate of 25% 107.4 19.4 14.7 2.7 89.3 3.4 7.0 3.4 52.1 55.3 1.8 61.6 1.9 33.8 * 33.4 64.1 31.5 22.7 1.8 2.0 1.7 1.5 1.5 1.4 42.1 16.5 0.5 14.9 0.7 19.3 21.0 49.9 0.7 22.3 0.1 1.
Slide 34: Financial Performance
Fi Financial i lPPerformance f Operating margin* Dividend per share Dividend policy 12% 22 - 15% annual 20 growth subject 10% 18 to 3x cover 16 8% 14 12 6% 10 8 4% 6 2% 4 2 0% 0 99 00 01 02 03 04 05 06 07 08 99 00 01 02 03 04 05 06 07 08 *from continuing operations 33
Slide 35: Keller logo