Keller Group Plc · LSE:KLR
Keller — H1 2011 Earnings Presentation
36 slides from Keller's earnings presentation, August 2011
Slide 1: Keller Group plc Interim Results
Keller Group plc Interim Results Half year ended June 2011
Slide 2: Highlights
Highlights • Results in line with expectations at the time of the IMS in May • Revenue up by 10% • Profitability impacted by floods in Australia and geopolitical issues in the Middle East and North Africa • Revenue from Australia and developing markets up by 23% to £216.0m, continuing the success of
Slide 3: Group Income Statement
Group Income Statement Revenue up 10% on a £m H1 2011 H1 2010 % change FY 2010 constant currency basis - up 7% ex acquisitions Revenue 545.5 496.9 +10% 1,068.9 EBITDA 27.9 33.4 -16% 85.0 Average exchange rates Operating profit* 6.4 13.7 43.3 − US$1.62 (H1 2010: $1.53) - 53% − €1.15 (H1 2010: €1.15)
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) £m H1 2011 H1 2010 % change FY 2010 Profit after tax* 2.5 8.1 -69% 28.6 Minority interest mainly Spain, Saudi Goodwill impairment Arabia and Algeria (post tax) - - (17.1) 2.5 8.1 11.5 Minority interests 0.5 (0.1) (0.3) Attributable to shareholders 3.0 8.0 11.2 Earn
Slide 5: Operating Profit and Margin
Operating Profit and Margin H1 2011 H1 2010 Constant currency Op Op revenue up 10% £m Revenue Profit Margin Revenue Profit Margin − UK: - 20% − US: + 11% UK 22.7 (2.0) (8.7)% 28.1 (0.1) (0.4)% − CEMEA: + 8% − Australia + 22% US 207.9 (1.8) (0.9)% 198.0 (1.0) (0.5)% CEMEA 207.2 8.5 4.1% 190.1 9.3 4.9
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2011 June 2010 Dec 2010 Comparisons Goodwill/intangibles 107.2 128.0 106.8 impacted by Property/plant/equipment 270.2 261.3 275.0 exchange rates 377.4 389.3 381.8 Inventories 39.2 37.8 32.9 Continued Receivables 360.5 313.6 334.6 focus on cash Payables (263.7) (248.5) (26
Slide 7: Group Cash Flow Statement
Group Cash Flow Statement £m H1 2011 H1 2010 FY 2010 Cash from operations Cash from operating activities 0.2 15.0 70.3 includes normal Capex – net (15.5) (12.4) (28.6) seasonal working capital outflow Tax (6.2) (7.3) (10.2) Interest (2.4) (1.0) (4.0) Free cash flow (23.9) (5.7) 27.5 Last 12 months’
Slide 8: Group Financing Position
Group Financing Position • Over £230m of committed facilities Key Financial Covenants – £170m bank facility expiring April 2015 – $100m US private placement Test Status* • $30m of US private placement expires in Net debt < 3x EBITDA 1.9x October 2011 – $70m in 2014 EBITDA interest cover > 18x 4x • C
Slide 9: Group Order Intake
Group Order Intake Monthly orders 2011 orders averaging £m (rolling 3 month average at constant currency*) £90m per month until 160 June 140 − June boosted by two very large orders 120 100 80 Order book 14% up on 60 last June at constant 40 currency 20 *at current exchange rates 8
Slide 10: 2011 Guidance
2011 Guidance Trading • Mature markets of US & Western Europe remain difficult with no easing of pressure on margins • Better H2 prospects in developing markets and Australia • H1 result materially impacted by external events – means 2011 profit much more second half weighted than normal Financial •
Slide 11: Group Revenue by End Market
Group Revenue by End Market H1 2011 H1 2010 Keller operates across Total revenue £546m Total revenue £497m all sectors of the construction industry 16% 16% 14% 13% 51% 52% Infrastructure/Public 19% 19% Buildings remains by far the largest sector Infrastructure/Public Buildings Infrastructure/Public
Slide 12: US Non-residential Construction Market
US Non-residential Construction Market $bn US Construction Put-in-Place Total US non-residential 400 construction market down 6% year to date 350 300 Infrastructure/Public Buildings 250 down 6% - further fall following first annual 200 decline in >20 years in 2010 150 100 Office/Commercial/Leisure d
Slide 13: US Revenue by End Market
US Revenue by End Market H1 2011 H1 2010 Infrastructure/Public Total revenue $337m Total revenue $303m Buildings the most important sector 22% 23% 48% 48% 11% 10% Significant mix change in recent years 19% 19% − Infrastructure/Public Buildings only 22% in 2007 Infrastructure/Public Buildings Infrast
Slide 14: US Foundations Highlights
US Foundations Highlights Good revenue growth in H1 − mainly attributable to Hayward Baker − Texas market performing strongly Over capacity remains an issue − margins remain under pressure Actions taken at Hayward Baker & McKinney − change of management at underperforming HB western region − review
Slide 15: US Foundations Case Studies
US Foundations Case Studies Bored piling at nuclear power plant CFA piling at oil refinery Augusta, Georgia Whiting, Indiana 14
Slide 16: US Suncoast
US Suncoast US Housing Starts (000s) US housing starts appear to have 1200 stabilised − 500k – 600k range for 30 months 1000 − April 2010 peak due to first time buyer tax credit 800 − June 2011 starts at 629k 600 400 Overhang of foreclosed properties remains an issue 200 0 Significant reduction in l
Slide 17: CEMEA Revenue by End Market
CEMEA¹ Revenue by End Market H1 2011 H1 2010 No major movements in Total revenue €238m Total revenue €219m revenue by end markets 12% 13% 19% 19% 50% 51% Infrastructure/Public Buildings segment 19% 17% remains the largest sector − up from 41% in H1 2009 Infrastructure/Public Buildings Infrastructure
Slide 18: CEMEA Revenue by Geography
CEMEA Revenue by Geography H1 2011 H1 2010 CEMEA covers a wide Total revenue €238m Total revenue €219m range of geographies 3% 3% 3% 8% 19% 20% Significant increase in 48% 50% Eastern Europe revenue 27% 19% Western Europe now less than half of CEMEA Western Europe Western Europe revenue Eastern Euro
Slide 19: CEMEA Highlights
CEMEA Highlights Record first-half revenue and operating profit from Poland − infrastructure market remains strong Good performance from our Asian operations − careful targeting of jobs in India Markets in Western Europe remain challenging − France & Spain both profitable after actions taken in H2 2
Slide 20: Developing Markets Highlights
Developing Markets Highlights 250 Continued progress in developing markets Revenue (£m) − revenue up 4x to 2010 − revenue up 13% in H1 200 150 Poland represents over 75% of Eastern Europe 100 Further progress made in Asia − opened up office in Hyderabad to extend 50 geographical reach in India 0 200
Slide 21: Developing Markets Case Studies
Developing Markets Case Studies Ground improvement for iron ore stockyard facility Anchors for new metro Close to Rio de Janeiro, Brazil Bangalore, India 20
Slide 22: Australia Highlights
Australia Highlights Australian construction market moving at two speeds − resource and related infrastructure market remains strong − underlying market is relatively slow Q1 results adversely affected by the flooding in Queensland − Q2 results much better Ferry terminal reconstruction Benefits now
Slide 23: Australia Highlights
Australia Highlights • Geographical expansion from Australia – relevelling structures in Christchurch, New Zealand – Mobilising for LNG project in Papua New Guinea • Excellent order book • Several sizeable projects in the pipeline 22
Slide 24: UK Highlights
UK Highlights Underlying market remains very difficult Further restructuring undertaken combining yard facilities − Q2 result showed an improvement on Q1 result Award of significant grouting job for Artist impression of new Victoria Station concourse Victoria Station upgrade Victoria Station, London
Slide 25: Outlook
Outlook • Little change in key construction markets since May IMS – US and Western Europe markets challenging but stable – Australia and developing markets offer good opportunities • Intense competition in mature markets keeps pressure on margins • Recent contract awards have increased order book by
Slide 26: Appendix
Appendix KELLER
Slide 27: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction – sector growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious development and in
Slide 28: Ground Engineering Worldwide
Ground Engineering Worldwide % of 2010 Activities revenue Regions of use Applications Piling 41% US/UK Foundation support Eastern Europe Earth retention Middle East & Asia Australia Ground improvement 20% US/UK Foundation support Continental Europe Seismic risk protection Middle East & Asia Australi
Slide 29: History of Keller
History of Keller 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2008 2009 2010 NOW Acquired Phi Acquired Acquired Est. 1958 Acquired Management (UK) Resource Acquired Systems Ground test Johann Keller buyout from Piling Suncoast Geotechnique services in Germany GKN plc (Singapore) (UK) marking
Slide 30: Strategy
Strategy •Our Objective – to extend our global leadership in specialist ground engineering through: – organic growth, particularly in developing markets – targeted acquisitions • Our Execution – transfer of technologies and techniques within our current geographic regions – offering design and build
Slide 31: 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 32: Europe Geographic Coverage
Europe Geographic Coverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY HUNGARY ROMANIA PORTUGAL SERBIA SPAIN ITALY GREECE 31
Slide 33: Ten Year Track Record: Revenue
Ten Year Track Record £m Revenue 2001 – 2010 Compound (Continuing Operations) 1400 annual growth 1,196.6 rate of 13% 1200 1,037.9 1,068.9 1000 955.1 857.7 800 685.2 600 505.4 526.2 447.5 400 347.5 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CEMEA North America UK Australia 32
Slide 34: Ten Year Track Record: Operating Profit
Ten Year Track Record £m Operating Profit 2001 – 2010 Compound (Continuing Operations) 140 annual growth 119.4 of 8% 120 107.4 100 89.3 77.3 80 55.3 60 43.3 40 33.8 * 33.4 31.5 22.7 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 -20 Head Office Costs CEMEA US UK Australia *pre-exceptionals 3
Slide 35: Financial Performance
Financial Performance Operating margin* Dividend per share (pence) Operating 12% 24 margin at 22 historic low 10% 20 18 8% 16 14 6% 12 10 Interim dividend 4% 8 maintained in 6 2011 2% 4 2 0% 0 01 02 03 04 05 06 07 08 09 10 01 02 03 04 05 06 07 08 09 10 *from continuing operations 34
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