Keller Group Plc · LSE:KLR
Keller — H1 2007 Earnings Presentation
33 slides from Keller's earnings presentation, July 2007
Slide 1: Keller Group plc Interim Results 2007
Keller Group plc Interim Results 2007 Half year ended June 2007
Slide 2: Highlights
Highlights • Revenue of £465.2m up 3% (9% on a constant currency basis) • Record first-half operating margin of 9.0% (2006: 7.9%) • Profit before tax of £40.1m up 20% (28% on a constant currency basis) • Basic earnings per share up 23% to 37.2p (2006: 30.3p) • Recent major contract wins contribute t
Slide 3: Group Income Statement
Group Income Statement June June % Full Year Average US$ rate of £m 2007 2006 change 2006 $1.97 (2006 H1: $1.79) Revenue 465.2 450.0 +3% 920.2 Operating profit 42.1 35.7 +18% 89.1 Interest (2.0) (2.3) (5.4) Good contributions from acquisitions Profit before tax 40.1 33.4 +20% 83.7 Tax - recurring (1
Slide 4: Revenue and Profit Reconciliation
Revenue and Profit Reconciliation Makers 2006 full year revenue of Operating £62.5m and operating loss of £0.2m £m Revenue Profit 2006 H1 – as reported 450.0 35.7 Underlying revenue growth of 7% Makers (32.0) 0.5 excluding Suncoast 2006 H1 – continuing operations 418.0 36.2 Acquisitions – incrementa
Slide 5: Operating Profit & Margin
Operating Profit & Margin June 2007 June 2006 Another record H1 margin Op Op £m Revenue Profit Margin Revenue Profit Margin Ex-Makers UK 56.7 (3.6) (6.3%) 60.0 0.9 1.5% margins: Group 10.7% USA 232.7 29.4 12.6% 241.1 27.8 11.5% UK 4.8% Europe/Overseas 136.2 13.7 10.1% 125.8 7.0 5.6% US revenue up 9%
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2007 June 2006 Dec 2006 Period-end Goodwill / intangibles 63.9 58.9 57.5 exchange rate Property, plant & equipment 130.8 93.5 114.6 £1 = $2.00 (June 2006: Other non-current assets 12.4 - 8.8 $1.82) 207.1 152.4 180.9 Inventories 27.4 25.7 25.5 Debtors 260.5 236.0 221.7 Gea
Slide 7: Group Cash Flow Statement
Group Cash Flow Statement £m June 2007 June 2006 Dec 2006 Usual H1 working capital outflow Cash from operating activities 40.2 28.8 98.3 Capex – net (21.8) (11.9) (27.4) Tax (14.0) (15.9) (30.7) Capex: investing for growth Interest (1.8) (2.2) (5.1) Free cash flow 2.6 (1.2) 35.1 Dividends (8.0) (6.2
Slide 8: 2007 Guidance
2007 Guidance • Excellent overall start to H2 in continuing operations – Suncoast result still trending down – full H2 benefit of recent acquisitions – full-year results of continuing operations expected to be significantly above 2006 • One-off H2 charge re Makers expected to be less than £10m – alm
Slide 9: North America Analysis of Revenue
North America Analysis of Revenue H1 2007 Revenue by Company H1 2007 Revenue by Product Overall, US construction Total revenue £232.7m Total revenue £232.7m expenditure in H1 3.5% down on 2006 H1* 7% 10% Total non-residential 11% expenditure in H1 15% above 12% 39% 2006 H1* 14% 49% 29% 29% Contracti
Slide 10: North America Highlights
North America Highlights • Excellent performance from foundation businesses – Hayward Baker regions all performed well – Case set to have a record year – McKinney average job size continues to grow – first-time contribution from Anderson beat expectations • Suncoast impacted by ongoing weakness in r
Slide 11: North America Case Studies
North America Case Studies Hayward Baker & Anderson Hayward Baker (including Donaldson division) Pacific Ethanol Plant, Stockton, CA Combined Sewer Overflow System, Providence, RI Vibro replacement and deep soil mixing Piling, excavation support and jet grouting Multi-company, multi-product site Ill
Slide 12: North America – The Chicago Spire
North America – The Chicago Spire 150-storey, 610-metre high residential tower overlooking Lake Michigan Expected to be the tallest building in US Case to install 34 x 36-metre steel- reinforced concrete caissons Hayward Baker to construct a 32-metre diameter sheet piled wall Our work is underway an
Slide 13: North America Suncoast Regional Analysis
North America Suncoast Regional Analysis $m Residential Texas 000 $m Residential West 000 $m High-rise National 100 100 50 100 50 80 80 40 80 40 60 60 30 60 30 40 40 20 40 20 20 20 10 20 10 0 0 0 0 0 '05 H1'05 H2'06 H1'06 H2'07 H1 '05 H1 '05 H2 '06 H1 '06 H2 '07 H1 '05 H1 '05 H2 '06 H1 '06 H2 '07 H1
Slide 14: Continental Europe & Overseas Revenue
Continental Europe & Overseas Revenue H1 2007 Revenue by Country H1 2007 Revenue by Product Very balanced split of Total revenue £136.2m Total revenue £136.2m revenue between geographic areas 13% 20% 24% 15% 52% Piling activity expected to 18% increase in H2 16% 24% Poland 18% Middle East Spain Grou
Slide 15: Continental Europe & Overseas Highlights
Continental Europe & Overseas Highlights • Excellent overall result with operating profit nearly doubled – record operating margin of 10.1% • Margin recovery in Spain, following measures taken to strengthen the business • Poland’s revenue boosted by investment in heavy foundations • Increased pace i
Slide 16: Continental Europe Case Study
Continental Europe Case Study Site of emergency works Canary Islands, Spain Emergency works to stabilise storm-damaged embankments Micropiles, anchors and soil nails 15
Slide 17: Middle East Sales Growth
Middle East Sales Growth Increased strategic focus and investment in €m heavy foundations 50 40 Record revenue for the region forecast in 2007 30 Order book boosted by recent major contract awards: 20 Saudi Kayan, S Arabia - c.€60m (£40m) 10 Al Raha Beach, UAE - c.€22m (£15m) 0 Bahrain also very bus
Slide 18: Middle East Case Studies
Middle East Case Studies Foundations for petrochemical complex, Al-Jubail, SA Sand compaction at Palm Deira (“Palm III”), Dubai Three contracts totalling c. €60m (£40m) Use of new S700 vibrators Piling underway with peak activity by September 17
Slide 19: UK - Makers
UK - Makers • Inconsistent performance in recent years, culminating in £5.3m H1 operating loss – issues on two large contracts and significant decline in volumes • Board decision to withdraw from Makers – will enable greater focus on strongly-performing core business • A sale of the business in its
Slide 20: UK - KGE
UK - KGE Good first half performance overall Strong contribution from Phi (acquired April 2006) Systems Geotechnique acquired for initial cost of £9.1m in April 2007: market leader in restricted access piling adds to KGE’s drilling and grouting capabilities integration on track performed well since
Slide 21: Australia Highlights
Australia Highlights • Excellent H1 trading, building on last year’s record result • Good market opportunities, particularly in infrastructure • Expected benefits of Piling Contractors acquisition (Aug 2006) being realised – improved access to civil engineering, infrastructure and mining sectors – i
Slide 22: Australia – Gateway Upgrade Project
Australia – Gateway Upgrade Project A$1.9bn project - largest road/bridge development in Queensland’s history Expected value to Keller A$72m (£30m) Our work scheduled to complete by September 2008 Bridge completion August 2010 21
Slide 23: Outlook
Outlook • Overall markets remain strong – US non residential continues to grow – US residential still weak – other principal markets very good • Prevalence of very large development projects plays to Keller’s strengths • Recent major contract wins contribute to record order book • Strong trading in
Slide 24: Appendix
Appendix KELLER &SAoOeLe
Slide 25: Keller’s History
Keller’s History 1958 1960’s 1974 1984 1990 1994 1996 2001 2002 2005 2006 2007 NOW Est. 1958 Acquired Management Acquired Acquired Acquired Ground test Johann Keller buyout from Makers (UK) Donaldson (US) Systems services in Germany, GKN plc Geotechnique marking Acquired (UK) Acquired Phi internatio
Slide 26: Ground engineering worldwide
Ground engineering worldwide % of 2006 Activities revenue Regions of use Applications Piling & earth retention 35 % Mainly: Foundation support US Walls and excavation support Australia Ground improvement 26 % US Foundation support UK Seismic risk protection Continental Europe & Overseas Australia Sp
Slide 27: Our Business Model
Our 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
Slide 28: Ten Year Track Record
Ten Year Track Record Revenue 1997 – 2006 (£m) Compound 920.2 annual growth 65.1 rate of 15% 123.2 731.0 37.1 89.2 595.9 567.5 32.4 511.0 27.9 26.1 108.3 476.9 104.0 422.2 106.7 18.3 399.9 314.9 313.0 100.1 266.9 20.8 14.2 270.4 280.2 244.6 12.3 82.3 91.0 242.6 65.1 67.7 188.8 98.5 107.4 110.1 85.1
Slide 29: Ten Year Track Record
Ten Year Track Record Operating Profit 1997 – 2006 (£m) Compound 89.1 annual growth 7.0 3.2 rate of 22% 53.1 1.8 -0.3 64.1 34.3 32.8* 33.9 1.8 2.0 1.9 25.4 4.3 0.5 1.7 42.1 19.4 0.5 17.0 3.4 0.7 17.7* 19.3 21.0 14.3 0.9 3.0 22.3 3.4 4.3 4.3 17.4 12.0 9.9 7.7 9.7 13.8 17.9 11.9 12.7 4.1 5.5 5.1 5.9 8
Slide 30: Financial Performance
Financial Performance Operating margin Dividend per share Industry-leading 10% 16 margins 9% 14 Uninterrupted 8% dividend growth 12 7% New dividend 10 6% policy 5% 8 – 15% growth 4% 6 subject to 3% 3x cover 4 2% 1% 2 0% 0 97 98 99 00 01 02 03 04 05 06 97 98 99 00 01 02 03 04 05 06 29
Slide 31: Strategy
Strategy • Our Objective – The further consolidation of our global leadership in specialist ground engineering services through: – Organic growth • Particularly in growing markets – Targeted acquisitions • Both in the US and Europe • Our Execution – Transfer of technologies within our current geogra
Slide 32: Recent Acquisitions > £5m
Recent Acquisitions > £5m Revenue in Excellent Date Total year of Revenue in organic Company acquired investment acquisiton 2006 CAGR growth Suncoast Oct 2001 $90m $134m $280m 16% achieved post Keller-Terra* Dec 2002 €14m €22m €72m 34% acquisition McKinney Dec 2002 $30m $60m $102m 14% Donaldson Sep
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