Keller Group Plc · LSE:KLR
Keller — H1 2003 Earnings Presentation
28 slides from Keller's earnings presentation, August 2003
Slide 1: Interim results
Interim results
Slide 2: Introduction
Introduction Tom Dobson, Chief Executive Justin Atkinson, Chief Operating Officer James Hind, Finance Director 1
Slide 3: Highlights
Highlights Turnover and profit up Interim dividend raised 4.5% to 3.45p (2002: 3.3p) Strong performance from Foundation Services Encouraging first contributions from Keller-Terra and McKinney Good volume from Suncoast Action taken to restore margins in the UK Board succession plans completed 2
Slide 4: Profit and Loss Account
Profit and Loss Account Half Year Half Year % Full Year £millions 2003 2002 Change 2002 Turnover 278.7 250.5 +11% 511.0 Operating profit* 14.9 13.8 +8% 34.3 Interest (2.1) (1.8) (3.9) Profit before tax* 12.8 12.0 +7% 30.4 Exceptional items (0.7) - - Amortisation (1.9) (1.6) (3.1) 10.2 10.4 27.3 Taxa
Slide 5: Group Balance Sheet
Group Balance Sheet £millions At June 2003 At June 2002 At Dec 2002 Fixed assets Goodwill 66.3 58.4 66.3 Other intangibles 0.3 0.3 0.3 Associates - 1.4 - Tangible assets 83.6 61.6 79.8 150.2 121.7 146.4 Current assets Stocks 17.4 12.1 15.1 Debtors 152.7 124.8 143.9 Cash 12.4 7.9 16.2 182.5 144.8 175
Slide 6: Group Cash Flow Statement
Group Cash Flow Statement £millions Half Year 2003 Half Year 2002 Full Year 2002 Net cash inflow from operating activities 9.9 18.3 43.2 Interest (2.3) (2.2) (4.4) Taxation (5.8) (5.8) (9.0) Capital expenditure - net (7.5) (6.3) (12.7) Acquisitions 0.2 (0.6) (32.0) Dividends (4.4) (3.6) (5.6) Net ca
Slide 7: Geographical Analysis - Turnover
Geographical Analysis - Turnover Half year 2003 Half year 2002 Australia Australia 4% 3% Continental Continental Europe and Europe and Overseas Overseas 28% 26% USA USA 47% 51% UK UK 21% 20% Dollar sales up 14% 6
Slide 8: Geographical Analysis – Operating Profit
Geographical Analysis – Operating Profit Half year 2003 Half year 2002 Australia Australia 5% Continental 1% Europe and Overseas Continental 22% Europe and Overseas USA USA 33% UK 56% 65% 12% UK 6% Dollar profit up 2% 7
Slide 9: UK Restructuring - Issues
UK Restructuring - Issues KGE Weak margins from heavy piling Good performance from high value-added specialty grouting and ground improvement businesses Operational inefficiencies Makers Poor productivity in highways division Disappointing spend under social housing partnering agreements Cancellatio
Slide 10: UK Restructuring - Actions
UK Restructuring - Actions KGE Withdrawal from heavy piling Continued offering of mixed product packages Business processes streamlined and headcount reduced Makers Concentration on direct work for highway agencies Sale of reactive maintenance joint venture and closure of Makers’ own reactive mainte
Slide 11: Foundation Services
Foundation Services Half Half % Full Year £millions Year Year Change 2002 2003 2002 Sales 198.8 173.8 +14% 361.4 Operating profit 13.2 10.8 +22% 27.7 Operating margin 6.6% 6.2% 7.7% 10
Slide 12: Foundation Services
Foundation Services Trading Highlights Strong performance from Continental Europe & Overseas despite challenging markets Good performance from geotechnical and ground improvement businesses in the UK Australia performing in line with expectations Q2 improvements at Hayward Baker and McKinney after a
Slide 13: Cooper River Bridge
Cooper River Bridge
Slide 14: Slide 14
Slide 15: Slide 15
Slide 16: Slide 16
Slide 17: Foundation Services
Foundation Services Acquisitions McKinney: performance improvement in Q2, good prospects Keller-Terra: strong start, particularly geotechnical products Combined turnover of £27m in H1 2003, with an operating margin of 11% Integration of both businesses on plan Re-location of McKinney finance functio
Slide 18: Specialist Services
Specialist Services Half Half % Full Year £millions Year Year Change 2002 2003 2002 Sales 79.9 76.7 +4% 149.5 Operating profit 3.1 4.2 -28% 8.8 Operating margin 3.8% 5.5% 5.9% 17
Slide 19: Specialist Services
Specialist Services Suncoast Suncoast’s residential markets remain strong; increase in high-rise market share Geographic expansion outside Texas Q2 recovery in slab-on-grade volumes after weather impact in Q1 Introduction of import duties on steel strand Price increases announced with effect from 1
Slide 20: Current Trading and Prospects
Current Trading and Prospects Overall, little change anticipated in major markets in second half Good performance from Foundation Services expected to continue Anticipated margin improvement in Specialist Services Tender levels continue to be high Current order book at 4 months’ sales 19
Slide 21: Interim results Half year ended 30 June 2003
Interim results Half year ended 30 June 2003 August 2003
Slide 22: Appendix
Appendix 21
Slide 23: Ten Year Track Record
Ten Year Track Record Turnover 1993 - 2002 600 511.0 500 26.1 422.2 10 6 . 7 18 . 3 400 10 0 . 1 314.9 313.0 £m 300 266.9 20.8 14 . 2 239.0 244.6 12 . 3 82.3 9 1. 0 242.6 225.0 202.0 4 1. 7 65.1 67.7 18 8 . 8 200 33.3 35.8 148.4 69.1 87.2 10 7 . 4 110 . 1 24.1 58.7 85.1 98.5 29.6 100 12 0 . 1 13 5 .
Slide 24: Ten Year Track Record
Ten Year Track Record Operating Profit 1993 - 2002 40 34.3 1. 8 35 4 .3 30 25.4 0 .5 25 3 .4 19.4 0 .7 17.7* 20 17.0 3 .0 2 2 .3 £m 14.3 0 .9 4 .3 3 .4 15 11.5 12.8 17 . 4 4 .3 10.2 1. 9 3 .4 12 . 0 10 8.3 1. 2 9 .7 9 .9 0 .7 5.0 3 .8 6 .1 2 .2 7.7 5 8 .1 5.6 5.6 5.4 5.5 5.1 5.9 3 .9 4 .1 3 .0 0 - 0
Slide 25: Results History
Results History Operating margin Dividend per share 7.0% 12 6.0% 10 5.0% 8 4.0% GBp 6 3.0% 4 2.0% 1.0% 2 0.0% 0 1994 1995 1996 1997 1998 1999 2000* 2001 2002 1994 1995 1996 1997 1998 1999 2000 2001 2002 *pre restructuring costs Industry leading margins Dividend per share more than doubled since flot
Slide 26: Foundation Services
Foundation Services Strategy Consolidate our global leadership in Foundation Services Market growth Increase in use of marginal land including brownfield sites Land reclamation Seismic design Environmental considerations 25
Slide 27: Specialist Services
Specialist Services Strategy Strengthen and broaden our offering of technical services and products to the construction industry Makers – market growth Social housing – UK’s “Decent Homes” initiative: £19bn over 10 years Move to partnering Increased infrastructure and utilities spend Increased requi
Slide 28: Business Model
Business Model Lean head office Autonomous and well incentivised business units Specialized equipment and people support niche positions Regionalisation offers clients a local presence Contract mix spreads risk and enhances margins Acquisitions sourced and integrated on a local basis 27