Keller Group Plc · LSE:KLR
Keller — H1 2009 Earnings Presentation
36 slides from Keller's earnings presentation, June 2009
Slide 1: Keller Group plc Interim Results
Keller Group plc Interim Results Half year ended June 2009
Slide 2: Highlights
Highlights • Revenue* of £552.6m (2008: £568.7m) down 3% • Profit before tax* of £41.0m (2008: £54.2m) • Cash flow from operations £40.1m (2008: £43.6m) • Net debt of £95.3m, 0.7 times annualised EBITDA • Over £100m of unutilised bank facilities • Basic earnings per share* down 18% to 42.1p (2008: 5
Slide 3: Group Income Statement
Group Income Statement Continuing operations June June % Full Year Constant currency basis £m 2009 2008 change 2008 - revenue down 19% - operating profit down 36% Revenue 552.6 568.7 - 3% 1,196.6 EBITDA £60.1m (2008 H1: £65.8m) Operating profit 42.8 56.1 -24% 119.4 Interest (1.8) (1.9) (6.2) Average
Slide 4: Group Income Statement (continued)
Group Income Statement (continued) £m June June % Full Year 2008 discontinued 2009 2008 change 2008 losses relate to Profit after tax* 27.9 36.3 77.3 Makers Discontinued operation - (1.2) (1.7) (post tax) 27.9 35.1 75.6 Minority interests Minority interests (1.0) (2.2) (4.8) mainly Saudi Arabia Attr
Slide 5: Operating Profit & Margin
Operating Profit & Margin June 2009 June 2008* Like-for-like organic revenue Op Op down 21% £m Revenue Profit Margin Revenue Profit Margin - UK 31% - US 21% UK 30.7 (0.4) (1.3)% 44.8 2.2 4.9% - CEMEA 20% - Australia 17% US 268.0 18.6 6.9% 245.5 22.1 9.0% Further CEMEA 191.1 20.4 10.7% 204.4 23.8 11.
Slide 6: Group Balance Sheet
Group Balance Sheet £m June 2009 June 2008 Dec 2008 Comparisons Goodwill/intangibles 99.9 83.3 111.8 impacted by Property/plant/equipment 237.5 181.3 254.7 exchange rates Other non-current assets 12.0 14.7 12.5 349.4 279.3 379.0 Extra focus on Inventories 41.8 41.9 50.9 working capital Debtors 328.6
Slide 7: Group Cash Flow Statement
Group Cash Flow Statement £m June 2009 June 2008 Dec 2008 Last 12 months’ cash Cash from operating activities* 40.1 46.0 143.5 from continuing operations 101% of Discontinued operation - (2.4) (5.1) EBITDA Capex – net (23.1) (29.5) (65.2) (2008 H1: 93%) Tax (14.5) (11.9) (27.9) Interest (2.2) (1.9)
Slide 8: Group Financing Position
Group Financing Position • Over £200m of committed Group facilities, Key Financial Covenants mainly: Test Status – £65m and £80m revolving credit facilities, expiring July 2010 and June 2011 respectively – to date, £65m facility not used Net debt < 3x EBITDA 0.7x – US$100m private placement – US$30m
Slide 9: Group Orders
Group Orders Last six months’ orders Monthly orders (rolling 3 month average at constant currency*) down 22% on H1 2008 £m 140 120 Current order book 12% 100 below last year in 80 constant currency 60 - 8% below Dec 2008 40 20 Order intake expected to - remain at current levels *at current exchange
Slide 10: 2009 Guidance
2009 Guidance • Order intake expected to remain at current levels – a few encouraging signs in markets – commercial construction further to fall in many markets, particularly the US • Pricing to come under further pressure in most geographies – effect on margins offset to some extent by cost reducti
Slide 11: Group Analysis of Revenue
Group Analysis of Revenue Revenue by Geography Revenue by Product Revenue by End Market Total Revenue £553.6m Total Revenue £553.6m Total Revenue £553.6m • Broadly based business by geographies, products and end markets 10
Slide 12: US Construction Market Analysis
US Construction Market Analysis $bn $bn Total US construction market 300 600 down 12% year on year 550 − Infrastructure/Public Buildings 250 500 (37% of total ) – 1% 450 200 400 − Residential (26%) – 33% 350 −may be levelling out 150 300 250 − Power/Industrial/Manufacturing 100 200 (19%) + 30% 150 −
Slide 13: North America Analysis of Revenue
North America Analysis of Revenue H1 2009 Revenue 2008 FY Revenue Infrastructure/Public Buildings Total revenue £268m Total revenue £532m exposure now nearly 50% up from circa one third in 2008 Power/Industrial/Manufacturing share increased again to 25% of revenue Residential and Office/Commercial /
Slide 14: North America Highlights
North America Highlights Continued successful strategy of pooling resources to undertake large and complex projects Focus on value-engineered and cost- effective solutions to clients’ problems Continuing to target the buoyant power sector has led to further growth in this sector Continued expansion
Slide 15: North America Case Studies
North America Case Studies Remedial work at the Wolf Creek Dam, Kentucky New power line near Salt Lake City Drilling and grouting to cut off water seepage Piling for the tower foundations 14
Slide 16: CEMEA Analysis of Revenue
CEMEA¹ Analysis of Revenue H1 2009 Revenue by End Market H1 2009 Revenue by Region Strong performance in the Total Revenue £191.1m Total Revenue £191.1m Infrastructure/Public Buildings sector Residential exposure just 10% As expected, Eastern Europe now largest revenue generating area ¹CEMEA = Conti
Slide 17: CEMEA Highlights
CEMEA Highlights Operating margins held up well at 10.7% (2008: 11.6%) In Germany and Austria our regional network protected market share and profits A decline in the domestic market in France offset by growth in its Algerian operations Our Spanish business remains profitable despite further volume
Slide 18: CEMEA Case Studies
CEMEA Case Studies New railway tunnel, Southern Austria New Delhi Metro, India Bored piles, anchors, nails & shotcrete Removable anchors as part of retaining wall system 17
Slide 19: Eastern Europe
Eastern Europe Revenue Order Book Revenue down circa 13% after weak first €m €m quarter 100 50 − > 60% of revenue generated in Poland 80 40 − > 50% of Polish revenue relates to Infrastructure/Public Buildings 60 30 − increased competition has put more pressure on margins 40 20 Order book maintained
Slide 20: Middle East
Middle East Revenue Order Book Region has been particularly badly hit by the economic slowdown €m €m 120 60 − tendering remains high but contract awards scarce 100 50 − revenues down by circa 45% 80 40 − majority of the work in Abu Dhabi 60 30 − operating margins remain very good 40 20 − margin pres
Slide 21: Australia
Australia Revenue Order Book Revenue down 17% but A$50m of Gateway project revenue in 2008 H1 A$m A$m 350 175 300 150 Order book 16% ahead of December 2008 underpinned by large drilling and grouting 250 125 bulk infill contract 200 100 − 8km motorway upgrade in Queensland 150 75 − J.V. between Pilin
Slide 22: Australia Highlights
Australia Highlights Investment in public infrastructure remains high but the commercial sector has continued to deteriorate In H1 56% of revenue was in the Infrastructure/Public Buildings sector with 23% in Power/Industrial/Manufacturing Typical projects include Rapid Growth Project, Western Austra
Slide 23: UK Highlights
UK Highlights Market showed few signs of improvement in H1 − recession particularly impacting smaller schemes −too early to report a sustained recovery in the housing sector − further actions reduced overheads by £2m p.a. at a cost of £0.5m − notable successes in infrastructure Widening of the M1 to
Slide 24: Outlook
Outlook • Conditions in most of our markets remain tough – nothing to indicate an increase in privately-financed construction project starts – expect to see further deterioration in the US commercial sector – further margin pressure expected • Order intake down 22% on a like-for-like basis • Expecta
Slide 25: Appendix
Appendix
Slide 26: Introduction to Keller
Introduction to Keller • The world’s largest independent ground engineering contractor – ground engineering is a small, niche sub-sector of construction • Unrivalled geographic coverage, working in around 40 countries • Works as a subcontractor for main contractors or sometimes for end clients • Typ
Slide 27: Ground Engineering Worldwide
Ground Engineering Worldwide % of 2008 Activities revenue Regions of use Applications Piling 36 % US/UK Foundation support Eastern Europe Earth retention Middle East Australia Ground improvement 26 % US/UK Foundation support Continental Europe Seismic risk protection Middle East & Asia Australia Spe
Slide 28: History of Keller
History of Keller 1974 1994 NOW 1958 1960’s 1984 1990 2001 2002 2005 2006 2007 2008 Acquired Management Acquired Est. 1958 Acquired Acquired Johann Keller buyout from Systems Ground test Suncoast (US) Donaldson (US) in Germany GKN plc Geotechnique services leading post- marking (UK) tension cable Ac
Slide 29: Business Model
Business Model Profit by Geography* 2009 H1 • A very broadly based business by – geographies and products – customers and end markets – individual contracts (circa 8,500 in 2008) • Strong control framework but with local empowerment – global and local benefits • Continuous innovation Profit by Geogr
Slide 30: Strategy
Strategy Keller is the world’s largest independent ground engineering contractor with leading market positions in many countries • Market Drivers – more pressure to build on brownfield/marginal land – more ambitious development and infrastructure projects • Our Objective – to extend our global leade
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 SLOVENIA CROATIA PORTUGAL SERBIA SPAIN ITALY 31
Slide 33: Ten Year Track Record: Revenue
Ten Year Track Record Revenue 1999 – 2008 (£m) Compound (Continuing Operations) annual growth 1,196.6 rate of 18% 137.1 955.1 85.2 857.7 107.1 65.1 78.0 685.2 60.7 532.1 37.1 526.2 43.4 505.4 447.5 32.4 473.2 27.9 38.6 476.9 347.5 26.1 41.9 43.3 399.9 277.1 265.3 18.3 45.9 270.4 280.2 20.8 14.2 242.
Slide 34: Ten Year Track Record: Operating Profit
Ten Year Track Record Operating Profit 1999 – 2008 (£m) Compound (Continuing Operations) annual growth 119.4 rate of 25% 107.4 19.4 14.7 2.7 89.3 3.4 7.0 3.4 52.1 55.3 1.8 61.6 1.9 33.4 64.1 31.5 33.8 * 22.7 1.8 2.0 1.7 1.5 1.5 1.4 42.1 16.5 0.5 14.9 0.7 19.3 21.0 49.9 0.7 22.3 0.1 1.6 17.4 30.4 12.
Slide 35: Operating Margins and Dividends
Operating Margins and Dividends Operating margin* Dividends per share Average 12% 22 margins 20 through the 10% cycle increasing 18 over time 16 8% 14 12 6% Progressive 10 dividend policy 4% 8 maintained 6 2% 4 2 0% 0 99 00 01 02 03 04 05 06 07 08 99 00 01 02 03 04 05 06 07 08 *from continuing opera
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