Keller Group Plc · LSE:KLR
Keller — FY2004 Earnings Presentation
29 slides from Keller's earnings presentation, March 2005
Slide 1: Keller Group plc Preliminary Results 2004
Keller Group plc Preliminary Results 2004 March 2005
Slide 2: Highlights
Highlights z Turnover of £595.9m up 11% on a constant currency basis z Strong organic growth across our international markets z Profit before tax* up 3% to £29.6m, despite adverse currency fluctuations of £2.3m z Strong US performance on the back of restored Suncoast margins z Improved UK performanc
Slide 3: Profit and Loss Account
Profit and Loss Account £m 2004 2003 % change Turnover 595.9 567.5 + 5% Operating profit* 33.7 32.8 + 3% Interest (4.1) (4.1) Profit before tax* 29.6 28.7 + 3% Exceptional items - (3.1) Amortisation (3.0) (10.8) 26.6 14.8 Taxation (11.1) (10.7) Profit after tax 15.5 4.1 Minority interests (2.1) (1.8
Slide 4: Operating Profit and Margin
Operating Profit and Margin ( before amortisation of intangibles and 2003 exceptionals) 2004 2003 Operating Operating £m profit Margin profit Margin UK 1.7 1.6% 0.5 0.5% USA 21.0 7.5% 19.3 7.1% Europe/Overseas 11.9 6.8% 13.8 8.4% Australia 1.7 5.2% 2.0 7.2% 36.3 6.1% 35.6 6.3% Central costs (2.6) (2
Slide 5: Group Balance Sheet
Group Balance Sheet £m 2004 2003 Goodwill/intangibles 57.9 57.0 Tangible assets 80.9 82.2 138.8 139.2 Stocks 24.3 16.9 Debtors 144.5 137.9 Creditors (118.4) (113.0) Working capital 50.4 41.8 Provisions/long-term creditors (9.3) (8.7) Capital employed 179.9 172.3 Tax/dividends (16.3) (11.9) Deferred
Slide 6: Group Cash Flow Statement
Group Cash Flow Statement £m 2004 2003 Cash from operating activities 33.6 40.0 Capex – net (11.8) (13.4) Tax (7.4) (12.8) Interest/Financing (6.5) (5.0) Free Cash Flow 7.9 8.8 Dividends (6.9) (6.5) Acquisitions (3.4) 0.4 Net cash flow (2.4) 2.7 Share issues - 0.1 Exchange differences 3.1 4.5 Openin
Slide 7: 2005 Guidance
2005 Guidance z US $ translation impact: 5c change in average rate = £0.5m z 2005 budget at £1 = $1.90 (2004 actual: $1.83) z Euro translation impact: 5c change in average rate = £0.4m z 2005 budget at £1 = €1.45 (2004 actual: €1.47) z US interest rate increases offset refinancing benefits z Typical
Slide 8: IFRS – Estimated Impact on 2004
IFRS – Estimated Impact on 2004 Profit before tax Net assets £m £m As reported under UK GAAP (post amortisation) 26.6 101.4 Adjustments to comply with IFRS: Goodwill 2.9 (7.6) Pensions 0.1 (6.5) Dividends - 4.8 Share based payments 0.1 - Restated to comply with IFRS 29.7 92.1 7
Slide 9: North America
North America Results % % £m 2004 2003 Change Change £ $ Sales 280.2 270.4 + 4% + 16% Operating profit 21.0 19.3 + 9% + 22% Operating margin 7.5% 7.1% $ Exchange Rate 1.83 1.64 z Record result from North America 2004 Sales 13% Suncoast 14% 41% Hayward Baker Case McKinney 32% 8
Slide 10: North America Trading Highlights
North America Trading Highlights z Suncoast margins restored z Revenues up by more than 30% z Excellent growth in California and Arizona z Raw material costs stabilising in the fourth quarter z Hayward Baker improved after a sluggish start z Stable volumes and margins from Case z McKinney business s
Slide 11: Suncoast–Average Cost of Extruded Strand
Suncoast–Average Cost of Extruded Strand 27 26 cents per foot of Extruded Strand 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Cost of Extruded Strand Source: Suncoast z Stable cost prior to 2003 z Cost doubled
Slide 12: Suncoast - Growth Opportunities
Suncoast - Growth Opportunities WASHINGTON MAINE MONTANA NORTH DAKOTA MICHIGAN VERMONT MINNESOTA OREGON WISCONSIN NEW MASS IDAHO SOUTH DAKOTA MICHIGAN YORK CONNECTICUT WYOMING PENNYSYLVANIA IOWA NEBRASKA NEW JERSEY NEVADA OHIO ILLINOIS WEST UTAH INDIANA VIRGINIA MARYLAND COLORADO CALIFORNIA KANSAS V
Slide 13: Case & McKinney / Hayward Baker projects
Case & McKinney Piling New Leisure Facility Hayward Baker New York State Soil Mixing & Vibro Replacement Waterfront Condominium Development Los Angeles 12
Slide 14: Continental Europe & Overseas
Continental Europe & Overseas Results % % £m 2004 2003 Change Change £ € Sales 175.0 165.2 +6% + 8% Operating profit 11.9 13.8 - 14% - 12% Operating margin 6.8% 8.4% € Exchange Rate 1.47 1.45 z German sales now only 25% of divisional total (1995: 65%) z Margin erosion due to Germany & Portuguese res
Slide 15: Continental Europe & Overseas Trading Highlights
Continental Europe & Overseas Trading Highlights z Another very strong result from Keller-Terra z Excellent progress made in last two years in Spain z Portuguese business returned to profitability in H2 after cost cuts z Construction market in Germany declined further in 2004 z Our volumes maintaine
Slide 16: Croatia and Germany projects
Croatia Ground Improvement New Motorway Germany Grouting and Anchors New underground rail link, Cologne 15
Slide 17: United Kingdom
United Kingdom Results % £m 2004 2003 Change £ Sales 108.3 104.0 +4% O perating profit 1.7 0.5 + 240% O perating m argin 1.6% 0.5% 2004 Sales 36% Makers KGE 64% 16
Slide 18: United Kingdom Trading Highlights
United Kingdom Trading Highlights z Makers returned to profitability in 2004 z Good result from Social Housing in the South East z Social Housing management further strengthened z Car Parks Division performed well z Losses from old contracts now stemmed z KGE result satisfactory on lower sales 17
Slide 19: Australia
Australia Results % % £m 2004 2003 Change Change £ AU$ Sales 32.4 27.9 + 16% + 15% Operating profit 1.7 2.0 - 17% - 18% Operating margin 5.2% 7.2% $ Exchange Rate 2.49 2.52 z Lower margins on some bigger contracts z Geotechnical subsidiary expected to move into profit z Opportunities still good 18
Slide 20: Strategy
Strategy z To continue our long term track record of growth within specialist ground engineering Organic Growth z Existing and new territories z New products and technologies z Growth of Suncoast in West Coast of U.S. z Growth into North Africa z Growth of geotechnical products in Australia Acquisit
Slide 21: Keller’s Share of the US Foundation Market
Keller’s Share of the US Foundation Market Diaphragm walls Other Micropiles Geotechnical/grd improvement Augercast piles Precast/driven piles Excavation support Drilled shafts 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 By Keller Companies Total $m Source: Keller US estimates z Conclusion:
Slide 22: Outlook
Outlook z Good prospects for Suncoast on the West Coast of the U.S. z Office & Commercial market in the U.S is improving z European markets ex-Germany remain broadly stable z Record order book, over four months’ sales z Recent order intake has remained good 21
Slide 23: Appendix
Appendix KELLER
Slide 24: Ground Engineering Worldwide
Ground Engineering Worldwide Activities Applications z Specialty grouting z Control of building settlement z Groundwater control z Ground improvement z Seismic risk protection z Foundation support z Caissons & piling z Foundation support z Earth retention z Post-tension concrete z Slab-on-grade foun
Slide 25: Competitive Positioning
Competitive Positioning z Competition z Global z National z Local z No UK or US quoted peer z Specialist contractor (people and equipment) z Balanced contract portfolio z Size of contract z Type of work z End customer z Geographic spread 24
Slide 26: Business Model
Business Model Specialist with a tight focus Experienced people with deep industry knowledge Global business, but with strong local knowledge Well balanced with broad markets and customer base Broad range of industry–leading technologies and processes Good long-term growth record and prospects 25
Slide 27: Ten Year Track Record: Turnover
Ten Year Track Record Turnover 1995 - 2004 595.9 567.5 600 32.4 511.0 27.9 108.3 500 422.2 26.1 104 106.7 18.3 400 314.9 313.0 100.1 266.9 280.2 20.8 14.2 300 225.0 239.0 244.60 270.4 12.3 82.3 91 242.6 41.7 65.1 67.7 188.8 35.8 200 69.1 87.2 107.4 110.1 85.1 98.5 100 165.2 175 120.1 115 135.6 110.1
Slide 28: Ten Year Track Record: Operating Profit
Ten Year Track Record Operating Profit 1995 - 2004 34.3 32.8* 33.7 40 1.8 1.7 2 1.7 4.3 0.5 25.4 30 0.5 19.4 3.4 17.7* 19.3 17.0 21 0.7 20 12.8 14.3 3 22.3 0.9 4.3 11.5 3.4 17.4 4.3 1.9 3.4 12 10 9.7 9.9 5 6.1 7.7 13.8 11.9 8.1 5.4 3.9 4.1 5.5 5.1 5.9 3 0 -0.8 -0.6 -0.7 -1.1 -1.8 -1.6 -1.8 -2.2 -2.8
Slide 29: Results History
Results History Operating margin Dividend per share 7% 12 11 6% 10 9 5% 8 4% 7 6 3% 5 4 2% 3 2 1% 1 0% 0 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2000 2001 2002 2003 2004 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2000* 2001 2002 2003 2004 z Industry leading margins z Uninterrupted dividend growth 28