Keller Group Plc · LSE:KLR
Keller — FY2010 Earnings Presentation
39 slides from Keller's earnings presentation, February 2011
Slide 1: Full Year Results 2010
Keller Group plc Full Year Results 2010 February 2011
Slide 2: Highlights
Hi hli ht Highlights • 38% of revenue from Australia and developing p g markets – compares to 13% five years ago – total of £404m up from £276m in 2009 • Acquisition A i iti off W Waterway t in i Australia A t li andd Nilex Nil ini th the US • £70.3m of cash generated from operations • Year end net
Slide 3: Group Income Statement
G Group Income I Statement St t t % Constant currency y basis £m 2010 2009 change − revenue down 1% Revenue 1,068.9 1,037.9 +3% − operating profit down 50% EBITDA 85.0 113.2 -33% Average exchange rates Operating profit* 43.3 77.3 -44% − US$1.55 (2009: $1.57) − €1.17 (2009: €1.12) N t finance Net fi
Slide 4: Group Income Statement (continued)
G Group Income I Statement St t t (continued) % Goodwill impairment £m 2010 2009 change relates to Suncoast and Profit after tax 28.6 52.1 -45% Keller-Terra Goodwill impairment − £21.8m before tax (post tax) (17 1) (17.1) - 11.5 52.1 Dividends up 5% Minority interests (0.3) (1.7) − 1.9x covered by u
Slide 5: Operating Profit & Margin
O Operating ti Profit P fit & Margin* M i * 2010 2009 Constant currency Op Op revenues down 1% £m Revenue Profit Margin Revenue Profit Margin − UK - 14% − US - 10% UK 49.6 (2.5) (5.0%) 57.6 0.5 0.9% − CEMEA + 3% USA 425.2 6.9 1.6% 467.0 32.2 6.9% − Australia + 29% CEMEA 400.3 22.4 5.6% 386.4 33.6 8.
Slide 6: Group Balance Sheet
G Group Balance B l Sh Sheett £m 2010 2009 Comparisons Goodwill/intangibles 106.8 119.1 impacted by different Property, plant & equipment 275.0 264.4 year-end exchange Other non-current assets 16.1 12.7 rates 397 9 397.9 396 2 396.2 − US$1.55 ((2009: $1.59)) − €1.17 (2009: €1.11) Inventories 32.9 37
Slide 7: Group Cash Flow Statement
G Group Cash C h Fl Flow St Statement t t £m 2010 2009 Cash from operations Cash from operating activities 70.3 123.2 83% of EBITDA (2009: 109%) Capex – net (28.6) (35.5) Interest (4.0) (4.5) Tax ((10.2)) ((30.0)) Capex concentrated on growth markets Free cash flow 27.5 53.2 Acquisitions (23.4) (34.
Slide 8: Group Financing Position
G Group Financing Fi i P Position iti • Bank refinancing completed in December Key Financial Covenants 2010 – new £170m facility expiring April 2015 Test Status* – extra 100bp margin – other key terms broadly unchanged Net debt < 3x EBITDA 1.5x • $30m of $100m US private placement EBITDA interest co
Slide 9: Group Orders
G Group Orders Od 2010 order intake Monthly orders consistently above 2009 £m (rolling 3 month average at constant currency*) from March onwards 160 − averaging just over 140 £90m/month 120 100 80 Cu e t o Current order de boo book 13% 3% 60 up from last year in constant currency 40 20 0 *at 2010 av
Slide 10: 2011 Guidance
2011 G Guidance id Trading • Expect steady revenue growth for the Group as a whole • Margins in the US and Western Europe will remain under pressure • Australia unlikely to repeat 2010 result • Uncertainty in Middle East and North Africa Financial • Underlying interest charge up by nearly £2m • Expe
Slide 11: Strategy
St t Strategy • Our Objective j – to extend our global leadership in specialist ground engineering • Our Execution – expansion into new higher growth geographic regions – acquisition and development of new technologies and techniques – transfer of technologies and techniques within our current geogr
Slide 12: Strategy – Geographic Diversification
St t Strategy – Geographic G hi Di Diversification ifi ti 2010 Revenue 2005 Revenue Revenue from Australia T t l revenue £1,069m Total £1 069 T t l revenue £685m Total £685 and developing markets up from £90m to £404m in five years £53m £210m £37m − circa 30% of growth from acquisitions, 70% organic
Slide 13: Group Analysis of Revenue
G Group Analysis A l i off Revenue R 2010 Revenue by End Market 2009 Revenue by End Market Keller operates across all Total revenue £1,069m T l revenue £1,038m Total £1 038 sectors t off the th construction industry In all four divisions: 16% 12% − Infrastructure/Public 13% Buildings revenue 14% 47%
Slide 14: 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 US non-residential 400 construction market down 14% 350 in 2010 300 Infrastructure/Public Buildings 250 down 7% 200 - first annual decline in >20 years 150 Office/Commercial/Leisure Offi /C i l/L i 10
Slide 15: US Analysis of Revenue
US A Analysis l i off R Revenue 2010 Revenue by End Market 2009 Revenue by End Market Infrastructure/Public Total revenue $659m T l revenue $733m Total $ 33 Buildings market the most important sector 20% 16% % 11% Significant change in 11% 50% 49% mix since recession 24% − 2007: Infrastructure/ 19%
Slide 16: US Foundations
US Foundations F d ti Moderate revenue growth in H2 − margins still under pressure − overcapacity remains Conditions vary by region − California and Florida most difficult − better conditions in the North East Keller companies continue to extract synergies − two largest 2010 jobs were internal JVs J
Slide 17: US Case Studies
US C Case St Studies di Slope protection for Government building Grouting at Thornton Composite Reservoir Washington DC Chicago, Illinois 16
Slide 18: US Suncoast
US Suncoast S t US Housing Starts (000’s) 2010 starts 72% off 2005 peak 2,500 − just over half the troughs of 1982 and 1991 2,000 Increase on 2009 due to first time 1,500 buyer tax credit offered until April − since May starts back down to 2009 1,000 levels 500 Suncoast recorded a loss − headcount r
Slide 19: CEMEA Analysis of Revenue
CEMEA¹ Analysis A l i off Revenue R 2010 Revenue by End Market 2009 Revenue by End Market Infrastructure/Public T l revenue €468m Total €468 T t l revenue €433m Total €433 Buildings revenue very robust 14% 8% 16% 17% 41% 50% 19% 35% Significant g decline in Power/Industrial/ Manufacturing revenue In
Slide 20: CEMEA Analysis of Revenue by Region
CEMEA¹ Analysis A l i off Revenue R 2010 Revenue by Region 2009 Revenue by Region Significant g decrease in T t l revenue €468m Total €468 T t l revenue €433m Total €433 major Western European countries, 6%2% 3% most notably France 9% 21% 19% 48% 62% Asian growth helped by 7% 23% f ll year off Resou
Slide 21: CEMEA Highlights
CEMEA Highlights Hi hli ht Excellent progress in Asia − Singapore, Malaysia and India all had record revenue and profit Poland continues to grow and expand its product offering Very y difficult markets in Western Europe − Germany the best market − significant restructuring/downsizing in F France and
Slide 22: CEMEA – Developing Markets
CEMEA – Developing D l i M Markets k t 250 Revenue quadrupled in five years Revenue (£m) − despite significant decline in the Middle 200 East 150 Excellent progress in Asia − comprises Singapore, India, Malaysia and Vietnam 100 50 Poland two thirds of Eastern Europe − current Polish order book at re
Slide 23: CEMEA Case Studies
CEMEA C Case St Studies di Ground improvement Foundations for fabrication yard A4 Motorway, Poland Pipavav Shipyard, India 22
Slide 24: Developing Markets Case Study - India
D Developing l i M Markets k t CCase St Study d - India I di Initial jobs used Keller’s ground i improvement t ttechnologies h l i − steadily extended product offering − now also offer piling, grouting & anchors Grew significantly in 2010 − revenue trebled to £16m at good margins − employees up from
Slide 25: Australia Highlights
A t li Hi Australia Highlights hli ht Australian businesses had another excellent year Public spending and resources sector remain strong − together > 70% of Keller’s revenue Integration of Waterway on plan 2011 activity likely to decrease − a lull in the market − some disruption from floods Various
Slide 26: Australia Case Studies
A t li – Case Australia C St Studies di Dynamic replacement & soil mixing Wharf upgrade Newcastle, NSW Sydney, NSW 25
Slide 27: UK Highlights
UK Highlights Hi hli ht Market remains very difficult Further redundancies and reorganisation g - cost of £1m H1 2011 will be challenging H2 2011 will benefit from Crossrail Retaining wall and Victoria Station upgrade Olympic Park, London 26
Slide 28: Outlook
O tl k Outlook • Contract C t t awards d in i H2 continued ti d tto b be ahead h d off 2009 – order book 13% up on last year • US and Western European p markets remain depressed p – overcapacity will keep pressure on margins • Impact of unrest in Middle East/North Africa uncertain • Australian funda
Slide 29: Appendix
Appendix
Slide 30: 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 31: Ground Engineering Worldwide
G Ground dEEngineering i i W Worldwide ld id % 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
Slide 32: History of Keller
Hi t History off K Keller ll 1958 1960’s 1974 1984 1990 1994 2001 2002 2006 2007 2008 2009 2010 NOW Acquired Phi Acquired Acquired Est. 1958 Acquired Management Acquired (UK) Resource Systems Ground test Johann Keller buyout y from Suncoast g Piling Geotechnique services in Germany GKN plc (US) (Sin
Slide 33: 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 34: 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 35: 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 34
Slide 36: Ten Year Track Record – Revenue
T Year Ten Y Track T k Record R d £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 1 955.1 857.7 800 685.2 600 505 4 505.4 526.2 5 6 447.5 400 347.5 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CEMEA North America
Slide 37: Ten Year Track Record – Operating Profit
T Year Ten Y Track T k Record R d £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 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 *p
Slide 38: Financial Performance
Fi Financial i lPPerformance f Operating margin* Dividend per share (pence) Operating 12% 24 margin at 22 historic low 10% 20 18 8% 16 Dividend 14 6% 12 increased every 10 year since 4% 8 flotation in 1994 6 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 ope
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