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Full year results 2016 27 February 2017 Caspian region North rth - PowerPoint PPT Presentation

Keller Group plc Full year results 2016 27 February 2017 Caspian region North rth Eas ast Euro rope pe Busines ness Unit Agenda Summary and business update Financial results Strategic progress Outlook Questions and


  1. Keller Group plc Full year results 2016 27 February 2017 Caspian region North rth Eas ast Euro rope pe Busines ness Unit

  2. Agenda • Summary and business update • Financial results • Strategic progress • Outlook • Questions and answers 2

  3. Entergy power project, Louisiana, US Hayward rd Baker er Wick k Drains ns Division Summary and business update

  4. 2016: Mixed performance • Trading in North America and EMEA remained strong with some areas of excellent performance • Asia-Pacific had a very poor year but we have taken the right steps to recover • Order book at all time high, 20% above last year, with some major recent contract wins • Progressing well against strategic objectives 4

  5. Results summary Revenue Earnings per share Operating margin 5.4% £1,780m 75.9p 2015: 6.6% 14% 2015: £1,562m 12% 2015: 86.4p ROCE Dividend Order book 15.3% 20% YOY 28.5p 2015: 20.5% 2015: 27.1p 5

  6. Markets in 2016 Europe, Middle East North America Asia-Pacific and Africa • Steady growth in • South East Asia difficult, • Steady growth in US Northern and Western especially Singapore, • Total construction spend Europe heavy foundation • Southern Europe steady demand and ground up 4% on 2015 improvement margins • Canada difficult, with some weak spots • Australia difficult • Middle East steady especially Western • Some pricing down 20% • South Africa challenging year-on-year • Brazil difficult • India continuing to grow 6

  7. Action taken in difficult markets • Appropriate response in each market • Base capabilities maintained so well positioned for market recovery 7

  8. A closer look at Asia-Pacific actions 8

  9. Ritz Carlton residences, Miami HJ Found ndat ation Financial results

  10. Group income statement* £m 2016 2015 % Change Revenue 1,780.0 1,562.4 +14% EBITDA 158.6 155.5 +2% Operating profit -8% 95.3 103.4 Net finance cost (10.2) (7.7) Profit before tax 85.1 95.7 -11% Tax (29.8) (33.0) Profit after tax 55.3 62.7 -12% EBITDA % 8.9% 10.0% -1.1bps Operating profit % 5.4% 6.6% -1.2bps Record revenue Strong performances from Effective tax rate 35% - 3% up on a constant North America and EMEA (2015: 34.5%) currency basis - Offset by APAC loss * Before non-underlying items 10 10

  11. Group income statement* (continued) £m 2016 2015 % Change Profit after tax* -12% 55.3 62.7 Non-underlying items Amortisation of acquired intangibles (9.7) (7.3) Exceptional restructuring charge (14.3) - Exceptional Avonmouth credit 14.3 - Goodwill impairment - (31.2) Other (1.5) (0.9) (11.2) (39.4) Tax on non-underlying items 3.9 3.0 Non-controlling interests (0.8) (0.8) Attributable to shareholders 47.2 25.5 Earnings per share* 75.9p 86.4p -12% Dividend per share 28.5p 27.1p +5% Restructuring charge relates to Avonmouth credit is Dividend 2.7x Australia, Singapore, Canada and mainly insurance covered by South Africa – largely non-cash proceeds and underlying earnings 11 11 valuation uplift 11 * Before non-underlying items

  12. Operating profit and margin* 2015 £m 2016 Revenue Op Margin Revenue Op Margin profit profit North America 952.9 86.9 9.1% 851.2 76.4 9.0% EMEA 552.6 30.2 5.5% 441.5 21.3 4.8% APAC 274.5 (18.0) -6.6% 269.7 11.7 4.3% 1,780.0 99.1 5.6% 1,562.4 109.4 7.0% Central costs - (3.8) - (6.0) 1,780.0 95.3 5.4% 1,562.4 103.4 6.6% Excellent margin in North APAC deterioration mainly due to: Constant currency – Non-recurrence of 2015 America revenues up 3%: − North America - flat Wheatstone profit – Some contract execution issues − EMEA +16% Strong performance and − APAC -8% – Very challenging markets improved margins at EMEA * Before non-underlying items 12 12

  13. 2016 Operating margin* and ROCE** progression Operating margin ROCE 8% 25% 7% 20% Group target 6% 15.3% 5% 15% 4% 10% WACC 3% 2% 5% 1% 0% 0% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2016 pre-tax ROCE of 15.3% (2015: 20.5%) compares to a pre-tax WACC of around 10% * Before non-underlying items **Underlying operating profit / average shareholder funds + net debt + retirement benefits 13 13

  14. Post-tension system Tempe Town Lake , Arizona Suncoast North America Summary • Another strong year in North America • Outstanding performance from Suncoast − Benefitted from strong residential market in its region and lower steel prices − New automated cut-lines will improve efficiency • Hayward Baker, Case and HJ Foundation all performed well • New organisation structure at McKinney • Canada continues to be challenging − £25m Toronto subway due to start spring 2017 − Annualised overheads reduced by £5m • Year-end order book stable 14 14

  15. St Kanzian Keller er Austria EMEA Summary • Strong growth in revenue and profit • Operating margin improved from 4.8% to 5.5% - highest since 2009 • Driven by main European businesses and project in Caspian region − Best result in Europe for many years • Other markets remain difficult − Middle East relatively quiet in 2016 − South Africa very challenging − Brazil: concentrating on integrating Tecnogeo • Excellent orders in H2 − Very large orders in Middle East, South Africa, Caspian region • Year-end order book up more than 50% - major projects should mean excellent result in 2017 15 15

  16. Mayfield Wharf, Newcastle, Australia Waterw terway ay Cons nstru ructi tions ns Asia-Pacific Summary • Division recorded an £18m loss − Split broadly equally between Asia and Australia • Very difficult conditions in Australia and Singapore − Some pricing down 20% year-on-year • Australian geotechnical businesses fully integrated; resources downsized significantly • Near-shore marine businesses also operating in difficult markets • Singapore piling business halved and merged with Malaysia • Divisional cost base reduced by £12m annualised; £3.3m realised in 2016 • India doing well, expanding product range • Year end order book up 25%, mainly Australia 16 16 16

  17. Group balance sheet £m 2016 2015 Goodwill/intangibles 188.0 160.1 Property, plant & equipment 405.6 331.8 Other non-current assets 30.2 22.9 623.8 514.8 Inventories 59.4 47.3 Receivables 528.5 423.2 Payables (435.4) (348.8) Working capital 152.5 121.7 776.3 636.5 Non-current assets held for sale 54.0 - Other liabilities/provisions (53.6) (89.0) Retirement benefits (31.4) (23.1) Tax (10.1) (7.4) Net debt (305.6) (183.0) Net assets 429.6 334.0 Non-current assets held Period end exchange rates: Working capital increase due – US$1.23 (2015: US$1.48) to FX and acquisition for sale is the UK – C$1.66 (2015: C$2.05) warehousing facility Net debt 1.9x EBITDA – € 1.17 (2015: € 1.36) purchased in May 2016 17 17 – – 2.1x on a covenant basis S$1.78 (2015: S$2.09) 17 – A$1.71 (2015: A$2.03)

  18. UK warehousing facility update • Property purchased in May 2016 for £62m − On balance sheet as ‘held for sale’ at £54m • Gross annual rental of £4.25m • Insurance recoveries progressing − £7.5m received in 2016, £5.9m in 2017 − Further discussions ongoing • £14.3m exceptional credit in 2016 18 18

  19. Group cash flow statement £m 2016 2015 Cash from operations before non-underlying items 135.7 142.3 Cash flows from non-underlying items 4.9 (27.5) Cash from operations 140.6 114.8 Capex – net (73.0) (69.9) Interest (11.6) (6.1) Tax (25.3) (44.3) Acquisitions (76.6) (52.5) Dividends (20.5) (19.1) Net cash flow (66.4) (77.1) Opening net debt (183.0) (102.2) Opening swap liability (24.6) - Exchange movements (31.6) (3.7) Closing net debt (305.6) (183.0) Cash from operations 2015 cash flows from 2016 acquisitions: – UK warehousing facility before non-underlying exceptional items relate to items 86% of EBITDA – Tecnogeo (Brazil) settlement of historic – Smithbridge (Australia) (2015: 92%) contract dispute 19 19

  20. Cash generation and dividend payments Cash from operations* Dividend per share £m Pence 30 180 160 25 140 20 120 100 15 80 10 60 40 5 20 0 0 EBITDA Cash from operations 10-year cash conversion rate of 98% Dividend increased or maintained every year since 1994 flotation 10-year EBITDA of £1,212m 10-year cash from operations of £1,188m * Before non-underlying items 20 20

  21. Strategic progress

  22. Positive industry trends 22 22

  23. Vision and strategy Vision To be the world leader in geotechnical solutions Growing our product range and entering new markets, organically and by acquisition Building strong, customer-focused businesses Strategy Leveraging the scale and expertise of the group Enhancing our engineering and operational capabilities Investing in our people 23 23

  24. Progressing well against strategy What has been changing? • Company is more connected and collaborative • Strategic alignment is much improved • Our capabilities are expanding − Larger projects − Knowledge sharing − Intra-company benchmarking − Product technology • Uncovering much more opportunity 24 24

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