Keller Group Plc · LSE:KLR
Keller — FY2009 Earnings Presentation
38 slides from Keller's earnings presentation, March 2010
Slide 1: Preliminary Results 2009
Keller K ll Group G plc l Preliminary Results 2009 M h 2010 March
Slide 2: Highlights
Hi hli ht Highlights • Good contract performance and firm cost control keeps operating margin high by historic standards • Further ggeographic g p diversification • Resource Holdings in Singapore acquired in October 2009 for an initial £27.1m • £123.2m of cash generated from operations, representing
Slide 3: Group Income Statement
G Group Income I Statement St t t % Constant currency basis £m 2009 2008* change − revenue down 24% − operating profit down 44% Revenue 1,037.9 1,196.6 -13% EBITDA 113.2 144.3 -22% Average exchange rates − US$1.57 (2008: $1.86) Operating profit 77.3 119.4 -35% − €1.12 (2008: €1.26) N t finance Net f
Slide 4: Group Income Statement (continued)
G Group Income I Statement St t t (continued) % 2008 discontinued losses £m 2009 2008 change relate to Makers Profit after tax 52.1 77.3 -33% Discontinued operation (post tax) - (1 7) (1.7) Minority interests mainly Saudi Arabia, Spain and 52.1 75.6 Algeria Minority interests (1.7) (4.8) Attributabl
Slide 5: Operating Profit & Margin
O Operating ti Profit P fit & Margin M i 2009 2008* Constant currency Op Op revenues down 24% £m Revenue Profit Margin Revenue Profit Margin − UK 33% − US 26% UK 57.6 0.5 0.9% 85.2 2.7 3.2% − CEMEA 22% USA 467.0 32.2 6.9% 532.1 52.1 9.8% − Australia 16% CEMEA 386.4 33.6 8.7% 442.2 49.9 11.3% US resu
Slide 6: Group Balance Sheet
G Group Balance B l Sh Sheett £m 2009 2008 Comparisons impacted Goodwill/intangibles 119.1 111.8 b diff by differentt year end d Property, plant & equipment 264.4 254.7 exchange rates − US$1.59 (2008: $1.45) Other non-current assets 12.7 12.5 − €1.11 (2008: €1.03) 396 2 396.2 379 0 379.0 Inventories
Slide 7: Group Cash Flow Statement
G Group Cash C h Fl Flow St Statement t t £m 2009 2008 Cash from continuing Cash from continuing operating activities 123.2 143.5 operations 109% of EBITDA (2008: 99%) Discontinued operation - (5.1) Capex – net (35.5) (65.2) Tax ((30.0)) ((27.9)) Like-for-like capex halved Interest (4.5) (4.1) Free
Slide 8: Group Financing Position
G Group Financing Fi i P Position iti • Over £200m of committed facilities, mainly Key Financial Covenants – £65m and £80m revolving credit facilities, expiring July 2010 and June 2011 Test Status respectively – £65m facility not used Net debt < 3x EBITDA 0.7x – US$100m private placement EBITDA inte
Slide 9: Group Orders
G Group Orders Od No sustained upturn in Monthly orders (rolling 3 month average at constant currency*) orders £m − weak Q4 2009 followed by stronger start to 140 2010 120 100 80 Current order book 14% 60 down from last year in 40 constant currency 20 - *at 2009 average exchange rates 8
Slide 10: Financial Summary
Fi Financial i lSSummary 2009 • Excellent cash flow • Strong balance sheet – net debt d b only l 00.7x EBITDA • Group operating margin still high by historic standards 2010 • Further downward pressure on margins expected • H1 result will be impacted by severe weather in northern hemisphere – greatly
Slide 11: Group Analysis of Revenue
G Group Analysis A l i off Revenue R 2009 Revenue by End Market 2008 Revenue by End Market Keller operates across Total Revenue £1,038m T l Revenue Total R £1 £1,197m 19 whole spectrum of the construction industry 12% Changes in absolute 18% revenues: 13% 35% 47% − Infrastructure/Public 24% Building
Slide 12: US Non-residential Construction Market
US N Non-residential id ti l CConstruction t ti M Market k t $bn US Construction Put-in-Place Total non-residential US construction put-in-place down 400 5% year on year 350 300 − Infrastructure/Public Buildings 250 flat − Power/Industrial/Manufacturing 200 up 16% 150 − Office/Commercial down 26% 10
Slide 13: US Housing Starts
US Housing H i StStarts t 2500 500 2009 starts 74% off 2006 p peak − around half the troughs of 1982 and 1991 2000 1500 Now stabilised, with H2 2009 better 1000 than H1 500 Most forecasts are for a slow, steady recovery 0 − consensus is circa 20% increase in 2010 Source: US Census Bureau, Housing St
Slide 14: US Analysis of Revenue
US A Analysis l i off R Revenue 2009 Revenue by End Market 2008 Revenue by End Market Performed well in Total revenue $733m T l revenue $990m Total $990 Infrastructure/Public Buildings and Power/Industrial/ Manufacturing 16% 22% 32% 11% 49% 24% 24% Office/Commercial Offi /C i l and d 22% Residential
Slide 15: US Highlights
US Highlights Hi hli ht Hayward Baker again extended product offering Further progress in integrating the Olden business Case now much more geographically diverse Important p p partnerships p undertaken between businesses on large jobs Continued expansion of HJ outside of Florida Remedial work at Wo
Slide 16: US Case Studies
US C Case St Studies di New solar power plant in Florida Route 303 Outer Loop Freeway, Arizona CFA piling for the solar panels Bored piling for nine new bridges 15
Slide 17: CEMEA Analysis of Revenue
CEMEA¹ Analysis A l i off Revenue R 2009 Revenue by End Market 2008 Revenue by End Market Infrastructure/Public T l Revenue Total R €433 €433m T t l Revenue Total R €557 €557m Buildings markets generally robust − absolute revenue flat 8% 13% 16% 31% 41% 20% Power/Industrial/ Manufacturing remains an
Slide 18: CEMEA Analysis of Revenue
CEMEA¹ Analysis A l i off Revenue R 2009 Revenue by Region 2008 Revenue by Region Eastern Europe the T t l Revenue Total R €433 €433m T t l Revenue Total R €557 €557m largest contributor in 2009 − Poland represents over 7% 7% 60% 20% 17% 9% 18% 10% 14% 17% Middle East revenues 11% 10% down from 18%
Slide 19: CEMEA Highlights
CEMEA Highlights Hi hli ht Solid performance from more mature markets k t − best margin for many years in Germany − cost cutting in Spain ensured business remained profitable Polish business continues to expand its product offering A much quieter year in the Middle East Excellent results from our As
Slide 20: CEMEA – Developing Markets
CEMEA – Developing D l i M Markets k t 250 Revenue from developing markets Revenue (£m) increased threefold since 2005 − despite substantial 2009 decrease in the 200 Middle East Together with Australia Australia, these markets 150 comprised 26% of Group 2009 revenue (2005: 13%) 100 − typically earne
Slide 21: Resource Holdings Acquisition
R Resource H Holdings ldi A Acquisition i iti Resource is a Singapore piling business − specialises in large diameter piling in deep soft clays − over 20 years’ experience Significantly strengthens existing operations in Singapore − introduction of piling enables packaged solutions to be offered Bri
Slide 22: CEMEA Case Studies
CEMEA C Case St Studies di Eastern Europe Western Europe New A1 motorway south of Gdansk, Poland New light underground tunnel, Linz, Austria Ground improvement Several products, including jet grouting and anchors 21
Slide 23: Australia Highlights
A t li Hi Australia Highlights hli ht Australian businesses had another excellent year − public infrastructure and the resources sector continued to be strong − commercial i l construction t ti remained i d weak k − Vibro-Pile diversified into infrastructure − substantial part of Frankipile’s revenu
Slide 24: Australia – Mine Bulk Infill Project
A t li – Mine Australia Mi Bulk B lk Infill I fill P Project j t Motorway upgrade over disused mine workings at Ipswich, Queensland − internal JV between Piling Contractors and KGE to fill the mines − significant technical inp inputt from other parts of Keller − disused mines either flooded or impac
Slide 25: UK Highlights
UK Highlights Hi hli ht Market conditions remained very challenging − housing and commercial sectors particularly weak − after significant cost reductions in H1, a profit of £0.9m reported in H2 − restructuring and refocusing of business enabling better positioning on larger projects − M1 and M74 pr
Slide 26: Strategy
St t 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
Slide 27: Outlook
O tl k Outlook • 2010 will be another challenging year – impacted by severe weather in the northern hemisphere in January/February – will continue to reduce costs to protect profitability • Commercial C i l markets k t iin th the d developed l d world ld tto contract t t ffurther th pressuring i mar
Slide 28: Appendix
Appendix
Slide 29: Introduction to Keller
I t d ti tto K Introduction Keller ll • The world’s largest g independent p ground g engineering g g contractor – ground engineering is a small, niche sub-sector of construction – growing faster than construction, reflecting: − more pressure to build on brownfield and marginal land − more ambitious
Slide 30: Ground Engineering Worldwide
G Ground dEEngineering i i W Worldwide ld id % of 2009 Activities revenue Regions of use Applications Piling 36% US/UK Foundation support Eastern Europe Earth retention Middle East & Asia Australia Ground improvement 21% US/UK Foundation support Continental Europe Seismic risk protection Middle East
Slide 31: Keller's History
K ll ’ Hi Keller’s History t NOW 1958 1960’s 1974 1984 1990 1994 2001 2002 2005 2006 2007 2008 2009 Acquired Management Acquired Est. 1958 Acquired Acquired Acquired Johann Keller buyout y from Systems Ground test Suncoast (US) Donaldson (US) Resource in Germany GKN plc G t h i Geotechnique services
Slide 32: 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 33: US Geographic Coverage
US G Geographic hi CCoverage 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
Slide 34: Europe Geographic Coverage
E Europe Geographic G hi CCoverage SWEDEN UK NETHERLANDS GERMANY POLAND UKRAINE CZECH REP. SLOVAKIA FRANCE SWITZERLAND AUSTRIA HUNGARY HUNGARY ROMANIA SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 33
Slide 35: Ten Year Track Record: Revenue
T Year Ten Y Track T k Record R d Revenue 2000 – 2009 (£m) Compound (C ti i Operations) (Continuing O ti ) annuall growth th 1,196.6 rate of 16% 137.1 1,037.9 955.1 85.2 857.7 126 9 126.9 107.1 57.6 65.1 78.0 685.2 60.7 532.1 37.1 505.4 526.2 43.4 467.0 447 5 447.5 32 4 32.4 473 2 473.2 27.9 38.6 47
Slide 36: Ten Year Track Record: Operating Profit
T Year Ten Y Track T k Record R d Operating Profit 2000 – 2009 (£m) Compound (Continuing Operations) annuall growth th rate of 20% 119.4 107.4 89.3 77.3 55.3 33.8 * 33.4 31.5 22.7 14.9 *pre-exceptionals 35
Slide 37: Financial Performance
Fi Financial i lPPerformance f Operating margin* Dividend per share Operating 12% 22 margin still 20 good by historic 10% 18 standards 16 8% 14 12 Dividend 6% 10 increased every 4% 8 year since 6 flotation in 1994 2% 4 2 0% 0 00 01 02 03 04 05 06 07 08 09 00 01 02 03 04 05 06 07 08 09 *from continui
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