Keller Group plc

Okay, good morning everybody and thank you for coming. Welcome to the presentation of Keller's 2025 full year results. For those of you who don't know, I'm James Wraith and I was appointed Chief Executive last August. Moving to the cautionary statements, which is a slide that I'm sure you're all very familiar with. Our agenda this morning, I'm going to take you through a brief snapshot of our results before handing over to David Burke, our CFO, who will take you through the financials in more detail. I'm then going to return to give you my initial reflections after six months in the business, followed by a summary and an outlook. And then finally, we'll finish with a Q&A. So let's have a look at the results summary. The group has delivered an outstanding set of record financial results for 2025. This reflects operational and commercial improvements that are embedded across the business. Importantly, this has also been achieved despite a mixed market backdrop and a translational FX headwind. I'm going to expand later upon the strengths I believe Keller has in its business model but geographic diversity, sector agility and resilience are definitely at the heart of the company's success. Keller North America outperformed the wider US construction market, growing revenues by 5% versus a 2% decline in the market. As expected, profitability in this division was lower versus an exceptional 2024, but nevertheless, this is a resilient result, particularly considering the softness of the US residential market. Again, as forecast, EME continues its outstanding turnaround. This was driven mainly by improvement in the performance of a previously challenging project in the Middle East in 2024, but was also supported by strong operational improvement across the businesses in Europe. I'd just like to turn to the Middle East for a moment and acknowledge the current conflict within the region. Our priority of course remains the safety of our colleagues and their families and we're in regular dialogue with our teams in the region. All our people are accounted for and are safe. Just to put the Middle East into context for the business, it's less than 5% in terms of our revenue and profit contribution within the group. Finally then moving to APAC, APAC has sustained its recent improvements with more revenue and profit growth thanks to Austral and India in particular. The result of all this is an even stronger balance sheet with robust free cash flow generation accelerating leverage reduction to a net cash position for the first time in 25 years. These consistent returns lead us to be able to increase the dividend by 41.6% in 2025 continuing our track record of maintaining or growing the dividend since IPO. We're also able to supplement this return via the multi-year share buyback programme launched last year. In 2025, we announced two tranches of £25 million, and today we've announced a further £100 million. I'm now going to hand over to David for a more comprehensive overview of our financial performance. David.

Thank you James and good morning everybody. What can I say? Another record year despite the market backdrop and the currency headwinds. In the financial results section, the key highlights that I'll bring out are the power of the portfolio, North America down as expected for market reasons, with Europe and Middle East and APAC more than making up for that. Another year of strong free cash flow generation, We are now net cash, even after share buybacks. So I'll give guidance following our review of capital allocation. Okay, let's start with the P&L and look at underlying first. Looking at revenue, we have solid revenue growth of 5.9% on a constant currency basis against the market backdrop that hasn't been stable. You can see the breakdown by divisions with all increasing. I will talk more about divisions in future slides. Our underlying operating profit increased by 6.5% on a constant currency basis. And we held margin rate at 7.1% despite a strong prior year. This is a very pleasing result for us and one that demonstrates the resilience of our portfolio. With North America resi market challenged, the other divisions have more to make up the shortfall. I'll bridge that operating profits performance in the next slide. Net finance costs are broadly flat and pretty much represent the outlay on the USPP fixed debt. Taxation at 45.2 million is at an effective rate of 23%, similar to last year. And the underlying earnings per share has increased by 5.7% to 211.3 pence. driven by improved underlying profitability and the impact of the share buyback. The board has proposed a final dividend of 52.1 pence, bringing the total dividend for the year to 70.4 pence, a 41.6% increase on 2024. I will talk more about the rationale for this when discussing capital allocation later. We'll now move on to the operating profits bridge slide. So moving from left to right, starting with 2024, underlying operating profit of $212.6 million. There's an FX impact of $7.8 million due to the dollar weakness against sterling compared to 2024. So coming to North America first, which is down $17.7 million versus last year. The reduction is driven by Suncoast, which is largely exposed to the residential market in the US. The price differential is predominantly driven by the great first half we had in 2024, not repeating in 2025. And the volume variance reflects the trough in resi in 25 versus 24 in the US. Moving on to the block on foundations, down on last year given the strong year we had in 2024. However, I must say that that differential is a lot less than what we envisaged at the outset of the year. The foundations business has proved itself to be quite resilient with margins holding up as the competitive environment has tightened. The combined mortar and shriek on business has had an excellent year with favorable weather conditions ensuring more volume was worked through and with recon undertaking a sizable LNG project in the Gulf Coast. The balancing order does include some legal settlements that came through better than our expectations in the year. Now turning to Europe and Middle East, where operating profit was up 30.7 million compared to 2024. 2024 was a low base for the division, but they have performed remarkably well in 2025. In Middle East, contract issues not repeating has helped along with the growth in the underlying businesses. All other businesses other than the UK have performed very well as evidenced by the green 14.6 million block in what is still a tough market. The 3.3 million relates to Mauritius and Seychelles which we are winding out of from the beginning of this year. The APAC division continues to perform solidly as evidenced by the consistent year-on-year performance from all the businesses. the Austral business continues to flourish and is building a sizeable order book. So moving to the next slide, I'll cover off non-underlying items. The analysis box shows the items that make up to 10.9 million split between cash and non-cash items. We continue to invest in the ERP program and we are currently in the testing phase and expect to launch the pilot in the second half of 2026. The restructuring cost relates to the group's finance transformation program, which is now focused on North America, following the setups in APAC and EME. I'll now move on to talk about cash. The group continues to deliver very healthy free cash flow levels, with $175.9 million achieved in 2025. We continue to invest in CapEx with gross CapEx levels continuing to hover around our depreciation level. Movement in working capital is predominantly driven by a higher level of advance payments on a couple of contracts in 2024 compared to 2025. Other callouts, cash tax payments have reduced given the change in tax treatment for R&D tax credits in the US allowing a full in-year deduction. And you can see the impact of the share buyback in 2025 with the $38.9 million of an outlay by the 31st of December. In the bottom right, we highlight the reconciliation to net cash on an IAS 17 covenant basis to $59.7 million. The cash generation from operations has driven the reduction to net cash on an IS17 basis despite the outlay on the share buybacks of 38.9 million to the end of December. The improvement in December is predominantly driven by collections as the industry tends to pay up at year ends. Given this trend, we are well within our covenant limits. Our funding facilities are in a comfortable position from our quantum and tenor perspective. We have headroom of circa 730 million. This is a very resilient position and along with our cash generation capacity gives us a confidence as we look to the future at organic and inorganic opportunities. I'll talk more on capital allocation later. We are pleased with the level and quality of the order book. Whilst there is a reporting period drop, this has pretty much come back in the month of January as it always tends to do. I'll pick up on the divisional commentary in the following slides. Coming to North America first, I've talked about the moving parts earlier. The team have done very well to grow the revenue given the residential decline and performed the rest of the market. Looking at margin, the division has achieved a margin greater than 9% despite Suncoast's performance and the broader market backdrop. Looking at margin through the cycle, Cali North America is beginning to look comfortable at 9%, at circa 9%. Even though the order book has reduced slightly, its quality and the visible pipeline gives us confidence for 2026. The team expect to continue to outperform the market and deliver resilient margins by focusing on key segments that support growth.

the cycle margins between 5 and 6%.