Keller Group Plc · LSE:KLR

Keller — Investor Day (September 2017)

117 slides from Keller's investor day presentation, Sep 18, 2017

  1. Slide 1: Capital Markets Day

    Capital Markets Day Spirit, Iluka, 18 September 2017 Queensland Keller Australia

  2. Slide 2: Today's presenters

    Today’s presenters Alain Michaelis Thorsten Holl Chief Executive President EMEA Venu Raju Mark Kliner Engineering and President APAC Operations Director John Rubright James Hind President North America Finance Director 2

  3. Slide 3: Presenter biographies

    Presenter biographies Alain Michaelis Venu Raju Chief Executive Engineering and Operations Director Alain was appointed Chief Executive of Keller in May 2015 Venu was appointed Engineering and Operations Director and is a member of the Board of Directors. on 1 January 2017 and is a member of the Boa

  4. Slide 4: Presenter biographies

    Presenter biographies John Rubright Thorsten Holl President of North America President of EMEA (Europe, Middle East and Africa) John was appointed as President of North America in Thorsten was appointed President of EMEA in November January 2013. 2015. John joined the group in 1986 and was appointed

  5. Slide 5: Presenter biographies

    Presenter biographies Mark Kliner James Hind President of APAC (Asia-Pacific) Finance Director Mark was appointed President of APAC in January 2016, James was appointed Finance Director of Keller in 2003 and following the merger of Keller Australia and Keller Asia. is a member of the Board of Direct

  6. Slide 6: Other leaders with us today

    Other leaders with us today Peter Hill Paul Withers Chairman Senior Independent Director Graeme Cook Victoria Huxster HR Director Head of Investor Relations Katie Deeble Kerry Porritt Head of Company Secretary Communications Joseph Hubback Michael Sinclair- Williams Strategy Director HSEQ Director 6

  7. Slide 7: Agenda

    Agenda 14:00-14:20 Keller overview Alain Michaelis 14:20-14:45 Engineering and Operations Venu Raju 14:45-15:15 North America Division John Rubright 15:15-15:25 Q&A 1 15:25-15:35 Break 15:35-16:05 EMEA Division Thorsten Holl 16:05-16:35 APAC Division Mark Kliner 16:35-16:45 Financial and investment

  8. Slide 8: Keller investment case

    Keller investment case We operate in the large and growing global construction and infrastructure market The specialist geotechnical sub-sector has higher margins and favourable market trends We are the number 1 business worldwide given our size, profitability and capabilities (wide product portfoli

  9. Slide 9: Keller today

    Keller today Every day millions of people around the world live, work and play on ground prepared by Keller Three divisions Our purpose Our vision Our values 21 business units To help create To be the world’s •Integrity infrastructure that improves leading geotechnical •Collaboration £ the world’s c

  10. Slide 10: Revenue breakdown

    Revenue breakdown We are well balanced in terms of geography and sector Our industry leading product range allows us to bring substantial value to our customers Geographic Sectoral Product Instrumentation and monitoring 1% Post- tension 15% systems Ground APAC Residential 10% improvement Infrastruct

  11. Slide 11: Geotechnical market size and share

    Geotechnical market size and share Market size Share of addressable market Global ground engineering market $50Bbn Ground engineering markets where Keller operates today $25bn Keller today $2.5bn Keller Trevi (contracting) Non-addressable market Soletanche / General contractor- mainly China, Korea,

  12. Slide 12: How do we engage

    How do we engage Typical Investors Architects and Contractors Construction project develop project engineers appointed flow idea appointed Keller Local As a project Typically we We’re normally role relationships with becomes more are employed one of the first to consultants mean definite we by the g

  13. Slide 13: Our operating model

    Our operating model The model is common to all of our business units, allowing us to share best practice across the group Opportunity Proposal Contract Project execution Feedback and identification preparation agreement learning Enabling capabilities and resources – equipment, branch network, techni

  14. Slide 14: Strong financial track record

    Strong financial track record Revenue (£m) Operating profit (£m) 2,400 140 2,000 120 100 1,600 CAGR = 10% CAGR = 11% 80 1,200 60 800 40 400 20 0 0 Dividend per share (pence) Share price (pence) 35 1,250 30 1,000 25 CAGR = 8% CAGR = 9% 750 20 15 500 10 250 5 0 0 TSR of 12% CAGR vs 7% FTSE-all-share C

  15. Slide 15: Market demand trends play to our strengths

    Market demand trends play to our strengths Urbanisation and more large-scale 1 development projects 200,000 people are added daily to urban areas Increasing land shortage, driving a need Most inner city sites 2 to use more brownfield and marginal land are 2nd or 3rd generation Infrastructure renewal

  16. Slide 16: Market structure is stable and evolving favourably

    Market structure is stable and evolving favourably Current threat: Medium Current rivalry: Medium / high Trend: Favourable Trend: Neutral Threat of Barriers to entry becoming new entry Competitive landscape will remain more onerous fragmented but will professionalise Current power: Medium Trend: Fav

  17. Slide 17: Key progress areas since 2015

    Key progress areas since 2015 Strategy review Strategic framework rolled out to all units • Focus on geotechnical and near adjacencies • Prioritised market ‘depth over breadth’ • More emphasis on leveraging group scale and skills • Extend our technical leadership 17

  18. Slide 18: Key progress areas since 2015 (continued)

    Key progress areas since 2015 (continued) Leadership • Built on existing Keller strengths • Key new positions and outside hires Governance and structure • Organisation changes – consolidation and functional reinforcement • More collaboration and benchmarking • Improved performance management system

  19. Slide 19: Organised to support projects and customers locally

    Organised to support projects and customers at local level and share knowledge globally Leadership HR Finance Business Global product Engineering Development teams and Operations Strategy HSEQ Standards Processes Best practices Legal Procurement Communications IT Business unit Region / Region / Regi

  20. Slide 20: Key progress areas since 2015 (continued)

    Key progress areas since 2015 (continued) Operational • Steering APAC though a tough market period • Returning EMEA to better margins • Building a strong order book • Four good quality acquisitions – Bencor, Austral, Tecnogeo and Geo-Instruments • Dealt with Avonmouth legacy issue Functional • Set u

  21. Slide 21: Key focus areas in the next phase

    Key focus areas in the next phase Operational • Returning APAC to profitability and managing the growth • Maintaining the underlying EMEA momentum • Resuming NA growth whilst maintaining profit discipline • Site operations – making progress via lean and digital tools • Deliver at least £50m of incre

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  23. Slide 23: Engineering and Operations

    Engineering and Operations Venu Raju Feinberg School of Medicine, Chicago Hayward Baker

  24. Slide 24: Contents

    Contents Our strengths Industry trends Looking ahead 24

  25. Slide 25: Factors to consider in geotechnical engineering

    Factors to consider in geotechnical engineering Site conditions Requirements Loading conditions Constraints • Sand, silt, clay, • Performance • Spread, low intensity • Neighbouring rock, organic (allowable buildings • Slender, high • Loose, soft, stiff, settlements) intensity, sensitive • Noise, vib

  26. Slide 26: Full product range

    Full product range • Allows us to make the right choice for the given soil and structure type • Right combination of products leads to optimal solutions • Special equipment available for our products 26

  27. Slide 27: Leading product positions

    Leading product positions • Inventor of vibro ground improvement method in 1930s • Inventor of compensation grouting technique to compensate building settlements • Licensed jet grouting technology from Japan to Europe and North America in 1970s 27

  28. Slide 28: Leading product positions (continued)

    Leading product positions (continued) • Offer complete range of heavy foundation techniques for tall structures • Executed some of the world’s largest foundation contracts (Australia and the Caspian region) • Executed some of the world’s largest and deepest pile foundations • New products such as di

  29. Slide 29: The global network: Global product teams

    The global network Global product teams • 10 global teams for the top product families • Members from each of the three divisions and engineering and operations • Immediate sharing of knowledge • Effective transfer of technology • Lead product development and strategy 29

  30. Slide 30: Value engineering

    Value engineering • Employ more than 1,000 geotechnical engineers worldwide; over 200 focused purely on design • 50% of our projects are ‘design and build’ where value engineering can reduce cost by up to 35% and save time Maiden Lane, New York • 57-storey tower, lower Manhattan • Congested site whe

  31. Slide 31: Value engineering (continued)

    Value engineering (continued) Chelsea Barracks project • Water and wayleave limitations on one side • Future Crossrail tunnels below • Innovative design and equipment built by Keller provided the solution Retaining wall Made ground/alluvium Wayleave Ground Sand and gravel boundary anchors London cla

  32. Slide 32: The equipment advantage

    The equipment advantage Large fleet and design and manufacture capability Keller total fleet • Total equipment fleet is 1,300 rigs − The largest equipment fleet in the world with net book value of £350m Keller manufactured fleet • We manufacture specialist equipment in Germany • Available only to Ke

  33. Slide 33: Operational excellence: Safety, quality, productivity

    Operational excellence Safety, quality, productivity • Strong reputation for operational excellence • Strong safety record − Accident Frequency Ratio < 0.3 (industry average c0.8) − Numerous safety awards • High level of training for frontline crews • Strong network of global resources we can rely o

  34. Slide 34: Market demand trend: Urbanisation and large scale development

    Market demand trend Urbanisation and large scale development • Urbanisation is creating demand • Large developments need huge for inner city construction, resources and multiple infrastructure and deep technologies basements • Capital District, Abu Dhabi £45m, 13 rigs working 24 hours a day • Changi

  35. Slide 35: Market demand trend: Demand for complete solutions

    Market demand trend Demand for complete solutions • We can carry out complete solutions: − Soil investigation − Design calculation − Solution optimisation − Procurement and execution of foundation works − Execution of associated civil works • One contractor rather than multiple suppliers 35

  36. Slide 36: Market demand trend: Increasing technical complexity

    Market demand trend Increasing technical complexity • Highly congested inner city areas • Need multiple techniques and precision • Working below or beside existing • Instrumentation and monitoring critical infrastructure Victoria Station upgrade, London 36

  37. Slide 37: Looking ahead: Enhancing engineering design

    Looking ahead Enhancing engineering design • Systematic development of engineering design competencies • Algorithms find optimal solutions with the right balance between allowable Cost factor settlement and cost • Use of improved data before, during and after construction helps find better solutions

  38. Slide 38: Looking ahead: Using data and digitisation

    Looking ahead Using data and digitisation Process Data Building Information Instrumentation and Acquisition Modelling (BIM) Monitoring • Measure, display and • Significant investment to • Primarily supports Keller store all process align with external BIM projects with real-time parameters during de

  39. Slide 39: Looking ahead: Emphasising R&D and innovation

    Looking ahead Emphasising R&D and innovation Techniques Equipment Materials • Faster drilling methods • Safety and quality • Environmentally-friendly leading to increased through intelligent grout materials productivity sensoring and process • Chemical additives for monitoring • New quality control

  40. Slide 40: Looking ahead: Operational excellence

    Looking ahead Operational excellence Performance and Quality tools Reliability operations tracking eg 5S, Lean • Standard performance • Well organised yards and • Site staff training reports, KPIs and sites for safety and better programme – standards dashboards performance for operational/technical

  41. Slide 41: Summary

    Summary • Our engineering and operational expertise are at the core of Keller − Full range of products and leading product positions − Leading engineering design − Leading equipment fleet • Market trends play to our strengths • We continue to improve and innovate to stay ahead − Research and develop

  42. Slide 42: North America Division

    North America Division John Rubright, President Bridgeport Harbor Connecticut, US

  43. Slide 43: North America Division

    Valdez Alaska North America Division Where we are today • Strong and diversified division • Clear market leader • Increasingly connected business units • Broad base with great engineering, technical and operational skills Where we are going • Our markets remain healthy • Acquisitions will continue t

  44. Slide 44: At a glance: North America Division

    At a glance North America Division Business units Hayward Baker Bencor Case Foundation Canada McKinney Suncoast HJ Foundation £ 70 953m branches revenue 3,800 2,500 employees contracts pa 44

  45. Slide 45: Financial performance

    Financial performance Revenue ($m) • The largest division in Keller 1400 • Excellent growth, profit and ROCE 1200 performance over time 1000 • Canadian market difficult in recent 800 600 years 400 • Order book is near record levels, 200 volume and quality of bidding is good 0 2012 2013 2014 2015 201

  46. Slide 46: 2016 revenue breakdown

    2016 revenue breakdown Canada • Well diversified 9% US – Southeast • Geography: good presence in major 22% population centres US- Central US – By geography 37% Northeast • Product: offer a full range of solutions 19% US – • Sector: strong experience in all areas West 13% I&M 1% Post- Office/ tension

  47. Slide 47: Keller is the market leader in North America

    Keller is the market leader in North America • North American 2016 North American market geotechnical market is circa $7.5bn • Keller is the largest, at c17% share, more than three times largest competitor • Next top 25 companies represent ~ 40% • Our scale gives us unique advantages 47

  48. Slide 48: Connecting the Keller companies

    Connecting the Keller companies • ‘Connected’ campaign maintained strong individual brands whilst leveraging Keller brand • Customers are seeing more clearly: − A consistent, high level of service including quality, safety, engineering and on time performance − The ability to tackle the most complex

  49. Slide 49: North American film

    3 KELLER » North American film

  50. Slide 50: HJ Hayward Baker soil mix and walling joint venture

    HJ Hayward Baker soil mix and walling joint venture $60m in additional revenue since 2014

  51. Slide 51: Strong base business presence is our foundation

    Strong base business presence is our foundation • Network of repeat customers • Customers count on Keller’s full product range, competitive pricing, on time execution and high quality Toronto • Momentum is created by New England reducing learning curve, Chicago moving site to site and perfecting the

  52. Slide 52: Creating opportunities with engineering, technology and operations

    Creating opportunities with engineering, technology and operational advancements • >450 geotechnical engineers in North America • Strong design build capabilities using latest methods of analysis • Geo-Instruments, our latest acquisition, improves design parameters with instrumentation and monitorin

  53. Slide 53: Special project opportunities

    Special project opportunities – Diamond mine, Northwest Territories Canada • Multi-million dollar proposal effort from connected Keller companies - Canada, Bencor, Hayward Baker, includes: − Dyke construction: others − Densification of the dyke materials: Keller − Soil cement water cutoff barrier wa

  54. Slide 54: Key challenges

    Key challenges Challenges Mitigations Maintaining • Base business development to build competitive further customer network differentiation • Operational improvement to maintain market leading productivity • Design engineering capability to maintain technical leadership Canadian • Overhead cost redu

  55. Slide 55: North America: Where we are going

    North America Where we are going • Our markets remain healthy • Acquisitions will continue to be a source of growth • Our improvement programme will deliver enhanced performance San Francisco central 55 subway, Bencor

  56. Slide 56: NA market drivers are favourable, growth expected

    NA market drivers are favourable, growth expected Urban construction Large projects Energy, LNG, transmission • Attraction to city centres • Public Private Partnerships • US to be net energy increasing with some exporter by 2026 • Population growth, bundling of smaller projects especially in souther

  57. Slide 57: Acquisitions have been a formula for success since 1984

    Acquisitions have been a formula for success since 1984 • North America’s growth started in 1984 when GKN Keller acquired Hayward Baker • We will continue to implement our strategy of acquiring good companies and helping them grow organically 57

  58. Slide 58: We'll target acquisitions in specific markets

    We’ll target acquisitions in specific markets Category Potential targets Displacement piling Product Barrier walls Gulf coast Geographic West coast Quebec Sector Transmission lines Infrastructure Adjacent Remediation Micro-tunneling Bencor’s East Branch Dam project 58

  59. Slide 59: East Branch Dam

    East Branch Dam A $150m project and growing • Project specifics: − Phase 1: Foundation rock grouting, 800 holes and 2,000 tons of cement − Phase 2: Permanent concrete cutoff wall consisting of:  52,000 cubic yards of concrete  2,100 feet long  250 feet deep • Broader Keller North America impact:

  60. Slide 60: East Branch Dam: Advanced monitoring

    East Branch Dam Advanced monitoring One of the first dam rehabilitation projects in the US to use a complete Data Management System (DMS) 60

  61. Slide 61: Employees are our number one asset

    To drive organic growth, Keller’s employees are our number one asset • Creating a high performing culture in and across all business units • Dedicated to living our Think Safe programme • Training and continuous improvement for all levels • Leadership Academy for project and field management • Field

  62. Slide 62: Internal opportunities for improvement

    Internal opportunities for improvement Strengthening Implementing Product and Keller branding and business units many functional equipment continued • Canada business development collaboration among improvements through Global business units • US West coast Product Teams • Procurement • McKinney • S

  63. Slide 63: Summary

    Entergy power project, Louisiana, US Hayward Baker Summary Wick Drains Division • North America is a large and growing market • Keller is clear market leader and well placed to take advantage of favourable industry trends • We have executed a proven growth strategy • Active programme of improvement

  64. Slide 64: EMEA Division

    EMEA Division Thorsten Holl, President Picture? EMEA Thorsten Holl, President EMEA Wembley Stadium, London

  65. Slide 65: EMEA Division

    Hotel Annapurna, Les Gets Keller France EMEA Division Where we are today • Well established European business leveraging into growth markets • Strong local positions, especially in design-led markets • Responsive organisation model • Flexibility to take on any project • Challenges we are mitigating

  66. Slide 66: Where it all began

    Where it all began 1860 Renchen (Black Forest, Germany) • Johann Keller founded a water drilling company • The cornerstone of the leading geotechnical specialist in the world • Today, the home of Keller’s in-house manufacturing plant 66

  67. Slide 67: At a glance: EMEA Division

    At a glance EMEA Division Business units Central Europe Iberia & LatAm South East Europe Brazil North West Europe Middle East North East Europe Franki Africa French Speaking Countries £ 90 553m branches revenue 4,400 2,700 employees contracts pa 67

  68. Slide 68: Financial performance

    Financial performance Revenue (€m) • Steady growth trajectory driven 800 by strengthening markets, 700 600 management actions and 500 recently by Caspian project 400 300 • H1 2017 operating profit 47% 200 higher than H1 2016 100 0 2012 2013 2014 2015 2016 H1 2016 H1 2017 Operating profit (€m) ROCE (

  69. Slide 69: Revenue breakdown

    Revenue breakdown 2016 Germany Other 13% • Revenue well balanced between 21% Brazil UK sectors and products 3% 13% Office / Middle East • Country level revenues Commercial By country 7% Austria 12% concentrated in developed 19% South Africa markets, with some strong 6% Poland 10% France 7% positions

  70. Slide 70: Market leadership positions in EMEA

    Market leadership positions in EMEA Central Europe: Ground improvement North West Europe: Ground North East Europe: improvement and piling Market leader French Speaking Countries: South East Europe: Ground improvement Market leader Middle East: Ground improvement Iberia and LatAm: Franki Africa: Gro

  71. Slide 71: Europe is a source of knowledge and skills for the group

    Europe is a source of knowledge and skills for the wider Keller group From France to Johannesburg Design, Operations, People From Germany to Sao Paolo People, Equipment From UK to Scandinavia Business Development From Poland to Middle East People, Equipment From Poland to Asia D-Wall Design and Exec

  72. Slide 72: Clairwood Logistics Park, Durban

    Clairwood Logistics Park Durban, South Africa Ground improvement for seven large warehouses Success factors: • Innovation: new technology in South Africa (rigid inclusions) • Design approach: European and local team worked together to help client accept our design • Reputable Franki brand • Establis

  73. Slide 73: Broad strength in both core market types

    We have broad strength in both of our core market types Design and build Construct only Keller creates markets Keller is competitive (70% of EMEA) (30% of EMEA) Key competencies: Key competencies: • Soil knowledge • Operational excellence • Consultant relationships • Production speed • Interactive p

  74. Slide 74: Port of Gdansk, Poland

    Port of Gdansk Poland Ground improvement for the container terminal area Foundations for the rails of the heavy bridge cranes Success factor: Optimisation of client’s design €8 million 74 74

  75. Slide 75: Flexibility to handle all types of project, profitably

    We have the flexibility to handle all types of project, profitably Number of projects by size >5m 2% 500k€- • We start >10 sites 5m€ < 150k€ 21% 34% every day • Average site 150k€- 500k€ duration 3-4 weeks 43% Revenues by project size < €150k 15% • Large projects up >€5m 25% to €100m volume €150k- €

  76. Slide 76: Successful risk management across the project portfolio

    Successful risk management across the project portfolio Project lifecycle risk touch-points Sanctions Tender Project Go- Bid Project and and identification No-go approval reviews credits costing Delegation and approval model Comprehensive scrutiny of projects Schedule and Soil and Customer High Risk

  77. Slide 77: Performance management in Keller

    Performance management in Keller • A common model throughout Keller • Business and functional dashboards • Benchmarking • Standardised weekly contract reporting • A culture of transparency and support means we‘re open about what we need to improve Business dashboard Business unit comparison 77

  78. Slide 78: Caspian Region project

    Caspian Region project Extension of on-shore oil field in Kazakhstan Success factors: • Commitment to build local unit with Kazakh content requirements • Successful reference from Wheatstone, Australia • Convincing operational concept based on Polish resources • Excellent project execution €150 mill

  79. Slide 79: Folloline, Oslo, Norway

    Folloline Oslo, Norway Soil stabilisation works for new inner-city high speed railway tunnel Success factors: • Geotechnical solution: combination of various individual techniques • Collaboration between three business units • Intensive contact with Italian contractor and Norwegian client Start: €10

  80. Slide 80: Key challenges

    Key challenges Challenges Mitigations Complexity and • Common operating model fragmentation • Strategic alignment • Constant communication • Experienced seasoned leadership team Need for constant • Market and customer portfolio intelligence adjustments • Regular portfolio reviews • Organisational fl

  81. Slide 81: EMEA: Where we are going

    EMEA Where we are going • Our markets are reasonably healthy • We will drive additional growth • We have lots of internal improvement opportunities 81

  82. Slide 82: Developed and emerging markets both expected to grow

    Developed and emerging markets both expected to grow Total construction market (€bn) Regional drivers • Infrastructure renewal in Central and 1,600 Northern Europe (despite Brexit) +28% 1,400 • Growth in Eastern Europe 1,200 • Oil price stabilisation in Middle East 1,000 +17% • South America recover

  83. Slide 83: Some key sectors driving growth

    Some key sectors driving growth Ports Utility tunnels > 150 > 50 projects projects identified identified Eg Dubai port extension, Port Said (Suez Canal) For water, sewage and electricity networks Wind Oil and energy gas > 20,000 > 250 power new plants and turbines refinery (on shore) projects Around

  84. Slide 84: Lean in construction

    Lean in construction • 5S introduced • Total Productive Maintenance on the basis of equipment data acquisition system • Process mapping to identify waste and non-value activities • Continuous Improvement culture through empowerment • Safety improvement 84

  85. Slide 85: In summary

    In summary • A well established European business • Strong local positions • A responsive organisation model • Flexibility to take on any project • Developed and emerging markets expected to grow • Additional growth through product transfer, more wins on large projects and selective acquisitions • A

  86. Slide 86: Asia-Pacific Division

    Asia-Pacific Division Mark Kliner, President IVS1 Kuala Lumpur

  87. Slide 87: APAC Division

    Cattle Creek Keller Australia APAC Division Where we are today • A well connected and improving division • Core markets have been tough • Significant restructuring leaves us in a stronger position and we have broad capability across the division Where we are going • Our region has strong growth pros

  88. Slide 88: At a glance: APAC Division

    At a glance APAC Division Business units Australia India Waterway ASEAN Constructions Austral Construction £ 20 275m branches revenue 1,800 800 employees contracts pa 88

  89. Slide 89: Financial performance

    Financial performance Revenue (SGDm) • 2016 performance impacted by very 900 difficult markets 800 700 600 • H1 2017 loss significantly reduced 500 400 • Order book and revenue up around 30% 300 200 • Continued improvement expected in 2018 100 0 2012 2013 2014 2015 2016 H1 2016 H1 2017 Operating pro

  90. Slide 90: Revenue breakdown

    Revenue breakdown 2016 India Indonesia 2% 6% • Broadening regional focus • Regional leader in niche ground By country Malaysia improvement products 18% Australia 62% • Emerging heavy foundation Power / Singapore capability outside Australia 12% Industrial 22% • Capability to address all sectors Grou

  91. Slide 91: Core markets have been tough: Australia

    Core markets have been tough Australia • Engineering construction decrease driven by resource sector capex decline • Heavy foundation unit prices (A$/m3) decreased by 17% 2014-16 • Indications are that the market has stabilised with moderate growth forecast Australia construction: (A$bn) Source: ACI

  92. Slide 92: Core markets have been tough: Singapore

    Core markets have been tough Singapore • Private residential sector construction down 52% 2014-16 • Heavy foundation unit prices (SGD$/m3) decreased by 32% 2014-16 • Civil sector expected to recover on back of public works expenditure Singapore construction: Contracts awarded (SGD$bn) Source: Singst

  93. Slide 93: Significant restructuring leaves us in a stronger position

    Significant restructuring leaves us in a stronger position Equipment cost Leadership New consolidated executive team, added functional roles, high performance culture programme -15% Organisation Reduced divisions from two to one Business units from 11 to 5 Equipment utilisation Closed 15 workshops/o

  94. Slide 94: Broad capability across the region

    We now have a broad capability across the region ASEAN • Singapore and Malaysia geotech market share: 10% • Niche, market leading ground improvement • Restructured heavy foundations on regional basis • Broadened product range India Australia • Geotech market share: 5% • Geotech market share: 25% • G

  95. Slide 95: Key challenges

    Key challenges Challenges Mitigations Managing growth • Targeted talent recruitment • Project Manager Academy • Mobility programme • Focus on tender and delivery risk • Process and control systems Creating new • Engaging with Chinese general relationships with contractors and developers China • Tria

  96. Slide 96: Health, safety and environmental risk management

    Health, safety and environmental risk management fundamental to success Developing risk understanding Putting in common systems Aligning culture & goals Assuring systems 2011 2012 2013 2014 2015 2016 2017 • New Director HSE • Five-year strategy • Integration of • Introduction of 5S • ‘Think Safe’ la

  97. Slide 97: Safety performance

    Safety performance • Accident Frequency Rate at all time low • Benchmarking shows our group • Since 2013, our Think Safe programme performance is around 50% better than has helped reduce accidents in our UK construction and specialist business by around 77% construction sectors Accident Frequency Ra

  98. Slide 98: APAC: Where we are going

    Dee Why, Sydney Keller Australia APAC Where we are going • Our region has strong growth prospects − We continue to grow and strengthen our core markets − We will grow carefully in emerging markets, targeting profitable areas • Product transfer will continue to drive growth • We will win in the marke

  99. Slide 99: Our region has strong growth prospects

    Our region has strong growth prospects Real GDP growth comparison (CAGR 2016-2021) Source: IHS • Urbanisation and population growth 8% are driving our key sectors 7% • 50% of the world’s infrastructure 6% construction in next 20 years will be in Asia*, eg 5% − North South Corridor, Singapore 4% (S$7

  100. Slide 100: We continue to grow and strengthen our core

    We continue to grow and strengthen our core Australia Singapore Malaysia • “Excluding oil and gas, the • Stable political and • Anticipate political stability engineering market economic conditions • Robust pipeline of expected to stabilise in • Robust pipeline of major engineering projects and 2017

  101. Slide 101: Grow carefully in emerging markets

    And grow carefully in emerging markets, targeting profitable areas India Vietnam • Stable macro political environment • 3rd largest population in ASEAN ~90m • Strong GDP and construction growth • Construction growth 7% forecast • After China, 2nd largest spenders of infrastructure • Infrastructure/U

  102. Slide 102: Continuing to drive growth through product transfer

    Continuing to drive growth through product transfer • Diaphragm walls • Secant piles • Deep soil mixing • Marine construction • Diaphragm walls • Jet grouting • Complex diaphragm wall 102

  103. Slide 103: Polavaram Dam, India

    Polavaram Dam, India Product transfer: jet grouting Initiation Construction of 3km long, • Local team made aware of opportunity for 30m deep groundwater barrier new technology • Global capability demonstrated to customer • Potential solution promoted Negotiation • Project planning and pricing led by

  104. Slide 104: We will win with operational capability and scale

    We will win in the market with our operational capability and scale • We have leading design and construct capability eg 88 storey ‘Spirit’ Tower, Gold Coast, Australia* • We can operate as a solution provider and deliver multi-product projects eg IVS1, Klang Valley Metro, Kuala Lumpur, Malaysia* •

  105. Slide 105: Confident in continued improvement in our performance

    We are confident in continued improvement in our performance APAC macroeconomic market size forecast (indexed) • Positive macro economic trends 200% and robust opportunity pipeline 180% 160% 140% 120% 100% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Construction Growth (real) GDP Growth (

  106. Slide 106: In summary

    Lucknow, India In summary • Foundation for profitable growth − Executive and functional leadership in place − Competitive cost structure − Broadening product portfolio − Managing APAC regionally • Core markets continue to improve − Steady levels of growth forecast in Australia and Singapore − Improv

  107. Slide 107: Financial and investment view

    Financial and investment view James Hind

  108. Slide 108: Strong financial track record

    Strong financial track record Revenue (£m) Operating profit (£m) 2,400 140 2,000 120 100 1,600 CAGR = 10% CAGR = 11% 80 1,200 60 800 40 400 20 0 0 Dividend per share (pence) Share price (pence) 35 1,250 30 1,000 25 CAGR = 8% CAGR = 9% 750 20 15 500 10 250 5 0 0 TSR of 12% CAGR vs 7% FTSE-all-share C

  109. Slide 109: Through the cycle financial targets

    Through the cycle financial targets • Revenue − Organic growth ahead of market  Last five years: Keller 5.2%; relevant construction markets 0.8% − Double digit CAGR including acquisitions  Continuation of long term trend • Profitability − ROCE in excess of 20% − £50m of gross benefits from improve

  110. Slide 110: Capital allocation priorities

    Capital allocation priorities 1. Profitable organic growth opportunities 2. Bolt-on acquisitions meeting Keller’s investment criteria 3. Ordinary dividends • At a level allowing dividend growth through the cycle 4. Return capital to shareholders • Only where the balance sheet allows • Unlikely to be

  111. Slide 111: Acquisitions remain a source of value

    Acquisitions remain a source of value Historical returns • Keller has spent nearly £500m on over 20 acquisitions since 2000 − Generated value of over £150m in excess of WACC, mainly due to top-line synergies Future opportunities • Markets still very fragmented; plenty of potential targets • Acquisit

  112. Slide 112: Targeted £50m gross benefits

    Targeted £50m gross benefits • Targeting £50m of annualised Indicative realisation of £50m of gross benefits gross benefits by 2020 50 − Half to be incremental profit; half 40 invested to enhance competitive positioning 30 • Benefits expected to accumulate over time 20 − Many are slow burn 10 − Upfr

  113. Slide 113: Cost and efficiency: Where will they come from?

    Cost and efficiency Where will they come from? Cost* Procurement Operational £m % improvement • Volume rebates 650 34% • Less waste Materials • Quality/reliability • Innovation • Major projects • Higher productivity Site employees 400 21% • Agency labour • Less waste • Better quality work • Capital

  114. Slide 114: Keller investment case

    Keller investment case We operate in the large and growing global construction and infrastructure market The specialist geotechnical sub-sector has higher margins and favourable market trends We are the number 1 business worldwide given our size, profitability and capabilities (wide product portfoli

  115. Slide 115: Cautionary statements

    Cautionary statements This document contains certain ‘forward looking statements’ with Nothing in this document should be regarded as a respect to Keller’s financial condition, results of operations and profits forecast. business and certain of Keller’s plans and objectives with respect to This docu

  116. Slide 116: Keller fact sheet

    Keller fact sheet • Established 1860, now number 1 geotechnical • About 50% of our contracts are design and build, 50% are contractor globally build only • Revenue by division (FY16): 54% North America, 31% • Contracts over £5m revenue make up under 1% of the EMEA, 15% APAC (only c4% of business in

  117. Slide 117: Investor Relations contact

    Investor Relations contact Victoria Huxster Head of Investor Relations +44 20 7616 7575 [email protected] Victoria Huxster joined Keller in August 2017 and brings 15 years’ of stock market experience – she started her career in Equity Sales at Cazenove and subsequently joined Liberum Cap

Keller Group — Investor Day (September 2017) on 6ix