Interim Results
Keller Group PLC
29 August 2001
KELLER GROUP PLC
INTERIM RESULTS FOR THE SIX MONTHS
TO JUNE 30 2001
Keller Group plc, the worldwide leader in foundation
services for the Construction and Property sectors
operating in 30 countries, today announced its interim
results:
Highlights:
* TURNOVER £189.2m up from £147.1m +29%
* OPERATING PROFIT * rose to £9.0m from £6.5m +38%
* PROFIT BEFORE TAX increased to £8.2m from £6.3m +30%
* EARNINGS PER SHARE 8.8p up from 7.2p +22%
* Recommended INTERIM DIVIDEND raised to
3.15p from 2.85p +11%
* UNITED STATES BUSINESSES up sharply
- Turnover £81.2m from £47.5m +71%
- Operating profit * £6.0m from £3.2m +88%
* OVERALL OPERATING MARGIN * of 4.7% with US
margin at 7.4%
Tom Dobson, Keller Group plc Chief Executive, said:
'The results reflect a very strong performance in North
America where we have not experienced any slowdown. The
strength of our order book, which now stands at around
£150m, is further evidence that our strategy of
maintaining global leadership in the core foundation
business is successful.
Together with expansion of our range of specialist
services, we believe our strategy will provide
sustainable increases in value for our shareholders.'
* Before amortisation of goodwill
For further information:
Tom Dobson, Chief Executive Keller Group 020 8341 6424
Justin Atkinson, Finance Director Keller Group 020 8341 6424
Peter Gaze Golin/Harris Ludgate 020 7324 8888
Laurence Read Golin/Harris Ludgate 020 7324 8888
Chairman's Statement
Introduction
Keller Group has returned to its impressive track record of
growth with an excellent set of results for the six months to
30 June 2001. These results reflect a very strong performance
in North America where our business has not experienced any
slowdown, combined with a good performance in Europe and a
return to profitability in Australia.
Results
For the six months to 30 June 2001, operating profit before
the amortisation of goodwill at £9.0m (2000: £6.5m) was 38%
ahead of last year on sales up 29% at £189.2m (2000:
£147.1m). Profit before tax increased 30% to £8.2m (2000:
£6.3m). The Group has maintained its progressive dividend
policy and the directors have declared an interim dividend of
3.15p (2000: 2.85p), which represents an increase of 11% over
last year. This will be paid on 31 October 2001 to
shareholders on the register at the close of business on 4
October 2001. Earnings per share before the amortisation of
goodwill increased to 9.3p (2000: 7.3p) with a healthy
dividend cover of almost three times. Gearing increased to
24% (2000: 11%), reflecting the acquisitions made in the
latter half of 2000 and the increased activity levels in the
first half, while interest cover was nineteen times.
Market Leadership
We are an international market leader in Ground Engineering
services to the construction industry. In accordance with our
stated strategic objective of strengthening global leadership
in the core foundations market, we completed four bolt-on
acquisitions at a total cost of £9.0m in this sector last
year, the benefits of which have helped fuel our growth during
the first half of 2001. Our track record of successful
acquisitions together with the continuing organic development
of our existing businesses, enable us to continue to widen our
range of specialised services to the construction and property
sectors, working in partnership with our customers.
In Continental Europe we have continued to grow organically,
particularly in France where we are now one of the leading
foundation services companies. Poland is becoming more
significant and we are now well established at the forefront
in this growing geotechnical market. In 2000, we acquired a
Swiss business, and as envisaged at the time of the
acquisition, we are now making good progress towards securing
future work on tunnelling projects in the Alps. We are already
seeing benefits from the investment in LCM which brings lime
column technology to the Group. A recent order for a
substantial contract in the UK and the expected award of work
in Malaysia, both of which are incremental to the core LCM
markets in Scandinavia, are indicative of the potential of
this business.
In North America our strengthened regional presence not only
allows us to win work at both regional and national level but
also gives us a unique position in the US market place. Close
relationships are maintained with our customers who benefit at
all levels from access to our innovative technologies. We will
continue to seek opportunities to add to our regional presence
whether by organic growth or through further selective
regional acquisitions.
Through our Makers and AMS businesses we have a strong
position in the UK refurbishment market. We have seen
continued growth in our non-Ground Engineering services
through promotion of close relationships and partnerships with
boroughs in London and the Midlands, and with key clients such
as BAA.
The Americas
Results in North America recovered very strongly from the
slowdown we experienced last year with sales in the period up
71% to £81.2m (2000: £47.5m) and operating profit before
goodwill amortisation ahead by 88% to £6.0m (2000: £3.2m).
Both Case Foundation and Hayward Baker saw increases in sales
and operating profit. These excellent results benefited from
strong activity carried over from the closing months of last
year and the acquisitions completed in the second half of
2000, in addition to very good operating conditions in our
segments of the US market.
All regions in Hayward Baker were on or ahead of budget with
the Central and Western regions showing particularly strong
results. In the Western region, two contracts for the
densification of dredged spoil for a land reclamation project
at the Port of Los Angeles made significant contributions to
sales revenue, while the Central region completed a large lime
injection contract for the stabilisation of a river embankment
in Arkansas. Work is also underway on a jet grout contract
for the extension of the American Airlines facilities at JFK
Airport in New York, and the Northern Region is also currently
carrying out grouting work at the Fort Point Channel crossing
on the Central Artery project in Boston. Both of last year's
acquisitions are performing well on a variety of small to
medium sized contracts whilst our Tampa branch is flourishing
in the Florida market.
Case Foundation also performed very well in the first half
with the Western and Piling Divisions and Case Atlantic
returning particularly good results both in revenues and gross
margins. Major contracts undertaken included the completion
of foundation work to bridges over the Mississippi in
Pascagula and Missouri while work has just commenced on a road
bridge in Charleston, South Carolina. Large diameter bored
piles were completed on the Millennium building project in
downtown Chicago while the Piling Division finalised work on a
new bus terminal, also in Chicago. The Eastern Division
returned excellent gross margins with good contracts in
Connecticut and New Jersey for rail and bridge projects.
Continental Europe and Overseas
Taking into account the difficult economic background in some
of these markets, Keller performed extremely well in
Continental Europe and Overseas, and contributed 28% of Group
sales and 28% of Group operating profit. Sales for the six
months were slightly ahead of last year at £52.1m (2000:
£47.2m) while operating profit before goodwill amortisation
but after a loss on disposal of £0.3m on our Hammers business,
fell marginally to £2.5m (2000: £2.7m).
Although market conditions in Germany remain difficult we have
benefited from last year's restructuring and, with improved
margins, operating profit in Germany has strengthened. This
has been offset by weaker performances in Portugal where the
wet spring affected sales and in Austria where sales were also
weak during the first quarter, however, we are now seeing
signs of improvement in both countries. In both France and
Poland we were ahead of expectations with strong performances
from our operations which continue to show good organic growth
and offer further potential for the future.
Major contracts during the year included completion of the
piling for Expo 2002 site in Switzerland and a major soil
investigation project in Bremerhaven, Germany, for the
development of additional harbour facilities. In Poland, we
carried out grouting works for the rehabilitation of a dam
near Krakow, whilst in France, we utilised our vibro stone
column system for ground improvement at Nice airport. The
vibro system was also used in Spain for a project in
Barcelona.
Outside Europe our business was stable with a good performance
from our operations in the Far East particularly Malaysia and
Singapore. Important contracts undertaken included a vibro
stone column job for a new chemical plant in Taiwan, work on a
new port facility at Jurong in Singapore, and the
stabilisation of soil beneath the realignment of a railway
line in Malaysia.
United Kingdom
In the UK, sales for the six month period were some 6% ahead
of last year at £48.1m (2000: £45.4m) with operating profit
before goodwill amortisation falling slightly behind last year
at £1.2m (2000: £1.3m). All of the shortfall in profit can be
attributed to the Ground Engineering business where the very
wet weather, combined with delayed contract starts as a result
of the foot and mouth outbreak, led to a drop of 9% in sales.
The situation improved in June and the Ground Engineering
business enters the second half of the year with a healthy
order book.
Major contributions to the first half result included a
compaction and void filling grouting job in Reading where
sinkhole activity had threatened to cause severe settlement to
local authority housing units. In ground improvement we were
awarded a large vibro concrete column job related to the
Channel Tunnel Rail Link project, and together with a wide
variety of other contracts where our strong relationships with
some of the major UK housebuilders are important, produced a
good performance from the business. At the end of the period
we were awarded a slurry cut-off wall for DEFRA in Cumbria and
this work will be carried out during August and September.
Makers results benefited from the inclusion of AMS for the
full period and showed continued growth, with sales and
operating profit growing by some 20% over the same period last
year. The refurbishment market in which Makers operates
remains strong with good opportunities for work in major
metropolitan areas where local borough councils continue to
upgrade their housing stock. Two such projects which have
contributed to the first half result are in the London area,
one for the Borough of Waltham Forest where the refurbishment
of two tower blocks is nearing completion, and the other for
the Borough of Camden where we have been working on both the
Saint Silas and Maitland Park estates. We continue to
specialise in the repair of car parks and our partnering
agreement with BAA has led to further work at both Heathrow
and Gatwick airports.
Australia
The restructuring carried out last year has resulted in a more
focused approach to the market and a reduced cost base.
Sales increased to £7.7m (2000: £7.0m) and an operating
profit of £0.2m (2000: £0.1m) was achieved. In addition to
the steps we have taken, the market is showing signs of
recovery with the number of opportunities growing. The
Southern region has produced the best performance so far this
year with only the Northern region falling below budget.
Recent strong order intake offers encouragement for a much
improved result for the full year.
Prospects and Strategy
With order books at the end of June strong and with a record
order intake totalling £65m in July, we anticipate a good
third quarter. With the strength of our US performance
continuing and an anticipated improvement in our UK results,
allied to a stable performance in Europe, we believe that the
prospects for the full year are good.
The strength of our order book, which now stands at around
£150m, is further evidence that our strategy of maintaining
global leadership in the core foundation business is
successful. Together with expansion of our range of specialist
services, we believe our strategy will provide sustainable
increases in value for our shareholders.
Dr J M West
Chairman
Consolidated profit and loss account
for the half year ended 30 June 2001
Restated Restated
Half year to Half year to Year to
Note 30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
------------------------------------------------------------------------
Turnover from continuing
operations 189,204 147,102 312,954
Operating costs (180,525) (140,634) (296,747)
-------- -------- --------
Operating profit before
amortisation of goodwill
and restructuring costs 8,977 6,511 17,706
Restructuring costs - - (1,177)
Amortisation of goodwill (298) (43) (322)
Operating profit from
continuing operations 3 8,679 6,468 16,207
Net interest payable (464) (194) (760)
-------- -------- --------
Profit on ordinary
activities before taxation 8,215 6,274 15,447
Taxation 4 (3,168) (2,264) (5,791)
-------- -------- --------
Profit on ordinary
activities after taxation 5,047 4,010 9,656
Equity minority interests (92) 80 140
-------- -------- --------
Profit for the period 4,955 4,090 9,796
Dividends proposed 5 (1,790) (1,619) (4,829)
-------- -------- --------
Retained profit for the
period 3,165 2,471 4,967
======== ======== ========
Earnings per share 6 8.8p 7.2p 17.3p
Earnings per share before
amortisation of goodwill 9.3p 7.3p 17.9p
Diluted earnings per share 6 8.7p 7.2p 17.2p
Diluted earnings per share
before amortisation of
goodwill 9.2p 7.3p 17.8p
Dividend per share 5 3.15p 2.85p 8.5p
-------- -------- --------
Consolidated statement of total recognised gains and losses
for the half year ended 30 June 2001
Half year Restated Restated
to Half year to Year to
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
----------------------------------------------------------------------------
Profit for the period 4,955 4,090 9,796
Currency translation
differences on overseas
investments 1,010 1,778 1,617
Tax effect of currency
translation differences - (46) 39
-------- -------- --------
Total recognised gains and
losses 5,965 5,822 11,452
======== ======== ========
Consolidated balance sheet
as at 30 June 2001
Restated Restated
As at As at As at
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
--------------------------------------------------------------------
Fixed assets
Positive goodwill 12,160 7,804 12,510
Negative goodwill (157) (262) (209)
-------- -------- --------
12,003 7,542 12,301
Other intangible assets 417 295 395
-------- -------- --------
Intangible assets 12,420 7,837 12,696
Tangible assets 52,625 48,553 50,788
-------- -------- --------
65,045 56,390 63,484
-------- -------- --------
Current assets
Stocks 6,541 6,312 7,026
Debtors 105,900 83,211 91,111
Cash at bank and in hand 8,720 15,065 13,568
-------- -------- --------
121,161 104,588 111,705
Creditors: amounts falling
due within one year (103,530) (77,871) (92,740)
-------- ------- --------
Net current assets 17,631 26,717 18,965
-------- -------- --------
Total assets less current
liabilities 82,676 83,107 82,449
Creditors: amounts falling
due after more than one year (14,718) (20,997) (17,242)
Provisions for liabilities
and charges (6,081) (6,998) (7,579)
-------- -------- --------
Net assets 61,877 55,112 57,628
======== ======== ========
Capital and reserves
Called up share capital 5,683 5,681 5,681
Share premium account 14,558 14,545 14,545
Capital redemption reserve 7,629 7,629 7,629
Profit and loss account 33,236 26,641 29,061
-------- -------- --------
Equity shareholders' funds 61,106 54,496 56,916
Equity minority interests 771 616 712
-------- -------- --------
61,877 55,112 57,628
======== ======== ========
Consolidated cash flow statement
for the half year ended 30 June 2001
Half year to Half year to Year to
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
--------------------------------------------------------------------
Net cash inflow from
operating activities 7,788 7,079 19,558
Returns on investment and
servicing of finance (536) (475) (998)
Taxation (3,392) (2,101) (5,835)
Capital expenditure (4,914) (5,155) (8,858)
Acquisition and disposals (548) (3,108) (8,787)
Equity dividends paid (3,210) (2,954) (4,571)
-------- -------- --------
Net cash outflow before
use of liquid resources
and financing (4,812) (6,714) (9,491)
Management of liquid
resources 2,176 2,360 2,978
Financing (2,230) 4,534 5,391
-------- -------- --------
(Decrease)/increase in
cash in the period (4,866) 180 (1,122)
Exchange differences on
cash balances 10 170 146
(Decrease) in short term
deposits (2,182) (2,390) (2,978)
Decrease/(increase) in
bank loans 1,670 (5,412) (7,187)
Decrease/(increase) in
loan notes 57 (3,919) (3,872)
Decrease in finance leases 82 45 138
-------- -------- --------
Increase in net debt (5,229) (11,326) (14,875)
Opening net (debt) / funds (9,611) 5,264 5,264
-------- -------- --------
Closing net debt (14,840) (6,062) (9,611)
======== ======== ========
Analysis of closing net debt
Cash in hand 7,798 11,383 10,464
Bank overdrafts (2,991) (384) (801)
-------- -------- --------
Net cash 4,807 10,999 9,663
Short term bank deposits 922 3,682 3,104
Bank loans (11,936) (11,831) (13,606)
Loan notes (7,011) (7,115) (7,068)
Finance leases (1,622) (1,797) (1,704)
-------- -------- --------
Closing net debt (14,840) (6,062) (9,611)
======== ======== ========
Notes to the interim report:
1. Basis of preparation
This interim report, which is unaudited, was approved by the board of
directors on 28 August 2001 and has been prepared following the
accounting policies set out in the Group's 2000 Annual Report and
Accounts. The Group has implemented FRS 19 - Deferred Tax which
has given rise to a prior year adjustment, details of which are set
out in note 8. The figures for the year to 31 December 2000 have
been extracted from the 2000 Annual Report and Accounts which
received an unqualified auditors' report and which has been filed
with the Registrar of Companies.
2. Exchange rates
The exchange rates used in respect of principal currencies are
Half year to Half year to Year to
30 June 30 June 31 December
2001 2000 2000
------------------------------------------------------------------------
Euro: average for period 1.60 1.63 1.64
period end 1.66 1.58 1.59
US Dollar: average for period 1.44 1.57 1.52
period end 1.41 1.51 1.49
Australian
Dollar: average for
period 2.76 2.57 2.61
period end 2.77 2.52 2.67
-------- -------- --------
3. Geographical analysis
Turnover and operating profit
may be analysed as follows:
Half year to Half year to Year to
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
----------------------------------------------------------------------
Turnover from continuing
operations
United Kingdom 48,128 45,429 91,021
The Americas 81,187 47,512 110,063
Continental Europe and
overseas 52,159 47,163 97,689
Australia 7,730 6,998 14,181
-------- -------- --------
189,204 147,102 312,954
======== ======== ========
Operating profit from
continuing operations
United Kingdom 1,074 1,255 3,411
The Americas 5,848 3,118 9,692
Continental Europe and
overseas 2,426 2,709 4,886
Australia 230 68 (184)
Unallocated central costs (899) (682) (1,598)
-------- -------- --------
8,679 6,468 16,207
======== ======== ========
4. Taxation
Taxation based on the profit on ordinary
activities is:
Restated Restated
Half year to Half year to Year to
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
----------------------------------------------------------------------
UK corporation tax at 30%
(2000:30%) 227 283 579
Overseas tax 4,570 1,691 4,988
Deferred tax (1,685) 194 252
Under/(over) provisions in
respect of prior periods 56 96 (28)
-------- -------- --------
3,168 2,264 5,791
======== ======== ========
5. Dividends proposed
Ordinary dividends on
equity shares 1,790 1,619 4,829
-------- -------- --------
The interim ordinary dividend of 3.15p per share (2000: 2.85p)
will be paid on 31 October 2001 to shareholders on the
register at close of business on 4 October 2001.
6. Earnings per share
Earnings per share is calculated as follows:
Restated
2001 2000
Basic Diluted Basic Diluted
----------------------------------------------------------------------------
Profit after tax and
minority interests £4,955,000 £4,955,000 £4,090,000 £4,090,000
----------------------------------------------------------------------------
Earnings before amortisation
of goodwill £5,253,000 £5,253,000 £4,133,000 £4,133,000
----------------------------------------------------------------------------
No of Shares No of Shares
----------------------------------------------------------------------------
Weighted average of
ordinary shares
in issue 56,499,561 56,499,561 56,561,720 56,561,720
Weighted average of
ordinary shares
under option - 177,439 - 196,873
Weighted average of own
shares held - 318,000 - 236,407
Number of shares assumed
issued (at fair value) - (89,906) - (86,631)
----------------------------------------------------------------------------
Adjusted weighted average
of ordinary Shares
in issue 56,499,561 56,905,094 56,561,720 56,908,369
----------------------------------------------------------------------------
Earnings per share 8.8p 8.7p 7.2p 7.2p
----------------------------------------------------------------------------
Earnings per share before
amortisation of goodwill 9.3p 9.2p 7.3p 7.3p
----------------------------------------------------------------------------
7. Reconciliation of movement in shareholders' funds
Restated Restated
As at As at As at
30 June 30 June 31 December
2001 2000 2000
£'000 £'000 £'000
---------------------------------------------------------------------
Profit for the period 4,955 4,090 9,796
Dividends (1,790) (1,619) (4,829)
Exchange differences net of
taxation 1,010 1,732 1,656
Issue of new shares** 15 41 41
-------- -------- --------
Net addition to
shareholders' funds 4,190 4,244 6,664
Shareholders' funds at
start of period
As previously reported 57,997 51,044 51,044
Prior year adjustment (1,081) (792) (792)
As restated 56,916 50,252 50,252
-------- -------- --------
Shareholders' funds at end
of period 61,106 54,496 56,916
======== ======== ========
** Shares include share premium
8. Prior year adjustment - deferred tax
The Group has implemented FRS 19 - Deferred Tax. The change
requires provision for taxation in respect of all timing
differences. This represents a change in accounting policy
and therefore results in a prior year adjustment. The charge
to reserves brought forward at 31 December 2000 amounted to
£1,081,000 (1999: 792,000). The comparative for the six
months to 30 June 2000 and for the year ended 31 December 2000
have been restated in accordance with the new accounting
policy.
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