Interim Results - Replacement

Keller Group PLC 30 August 2001 The issuer has made the following amendment to the Interim Results announcement released on 29 August 2001 at 07:00 under RNS No 1175J. The record date for the dividend should read 5 October 2001, and not 4 October 2001 as previously stated. All other details remain unchanged. The full corrected version is shown below. ------------------------------------------------------------------- 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 5 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 5 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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