Keller Group plc

Good morning everybody and welcome to the presentation of Keller's half year results for 2026. I'm James Roath and I'm the Chief Executive. Before I get on to the main business of the day, very sadly since our full year results, you'll know that my predecessor Michael Speakman sadly passed away at Easter and I wanted to take this opportunity to pay a final tribute to him. The results that you see today and many of the themes that come out in terms of just how great a business Keller is lead directly from Mike's work with the management team and the changes that were made in the last five or six years have been fundamental in my belief to how Keller has performed. Very sad that business will always remember Mike, but he did an absolutely superb job with Keller. So on with the presentation for today. Firstly, the cautionary statements, which I'm sure is a slide that you're all very familiar with. For our agenda this morning, I'm going to take you through a 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 some greater colour around our divisions a view of the outlook and a reminder of our strategy as I think you all know we're going to be holding a capital markets day on the 14th of October and there we'll cover our strategy and growth plans in a lot more detail and then finally we're going to finish with a Q&A so a very brief results summary the Keller Group continues to deliver record financial performance with H1 2026 being no exception in fact 2026 is on course to be the group's fourth record year in a row revenues are up 11% overall due to significant increases in both North America and APAC EME is holding steady despite the Middle East conflict and a tough Q1 due to the winter weather Operating margin was also up on 2025 leading to an impressive 17% increase in underlying operating profit. Overall, H1 is a good demonstration of our geographic and sector agnosticism where we pivoted to key growth markets and high demand sub-sectors to drive top line growth whilst continuing to maintain our margin discipline. I'm now going to hand over to David for a more comprehensive overview of this excellent financial performance.

Thank you James and good morning everybody. Welcome to another excellent reporting period. The key highlight for the first six months is again the power of our portfolio. North America, after going backwards in 2025, is powering forwards. Whilst EME is down on revenue, it is picking up on profit and APAC is up on revenue but flat on profit. This slide shows nine of our most prominent financial KPIs and the performance of H1 2026 compared to H1 2025. Included in the finish is a slide in a similar format that tracks these KPIs over the last four full years to 2025. For H1 2026 the picture remains very healthy with the underlying fundamentals of the business continuing the upward trajectory we've demonstrated over recent years. The most striking feature is the level of growth momentum with all KPIs improving against last year at quite a healthy clip. So let's look at some detail. This slide sets out the underlying P&L for the half year. Looking at revenue, we have excellent revenue growth of 11% on a constant currency basis against a market backdrop that hasn't exactly been stable. In the box on the right you can see North America is the driver, albeit APAC is also growing from a smaller base given the buoyant foundations market in Australia. EMI is down, but driven particularly by bad weather in Q1, fewer major projects and less revenue coming through from the Trojina project in 2026. Our underlying operating profit increased by 17.1% on a constant currency basis. and we increased the margin rate to 7.3%. This again demonstrates the resilience of our portfolio where weaker pockets are offset by areas of strength. I will bridge that operating profit performance in the next slide. Net finance costs are slightly reduced given we have been net cash for most of H1 and the USPP cost is static. Taxation is at an effective rate of 23%, similar to last year. The underlying earnings per share has increased by 22%, driven by the improved underlying profitability and the impact of the share buyback. The Board has agreed an interim dividend of 28.7 pence, an increase of 57%. This increase is driven by our revised policy announced in March to be in the range of 2.5 to 3.5 times for the full year dividend and assumes we will be at three times cover for the full year with 35% paid at the interim. We'll now move on to the operating profit bridge slide. Moving from left to right, starting with half year 2025, underlying operating profit of 102.6 million. There is an FX impact of 1.9 million due to the dollar weakness against sterling compared to half year 2025 Coming to the North America division first which is up 14.1 million versus H1 last year This is an 18% increase in a market where not everything is trending in an upward direction The principal driver is the foundations business with data center and infrastructure sectors driving this phenomenal growth however within foundations block we've had challenges with the miami residential market seeing weakness with projects shifting to the right this miami business within foundations have been defying the broader residential trend for a number of years however concern over interest rates and broader macro uncertainties seem to have made developers more tentative we hope this is a pause rather than a downward trend Suncoast is up on a low 2025 base. This is the local team squeezing profitability out of what continues to be a sluggish residential market generally. The combined Moortrench Recon business is down after a strong last year. Recon has performed well executing a sizeable LNG project but the main client for Moortrench continues to limit investment given the impact the Iran war is having on its input costs. Now turning to Europe and Middle East where operating profit was up 4.2 million despite the reduction in revenue. The Middle East defied the market backdrop with improved volumes and profitability despite a temporary pause due to the Iran war. This is predominantly driven by the UAE with strong volumes and a change order on the Trajina project also helping. Elsewhere the market sluggishness of Europe continues, however the team continue to execute well, increasing profitability and retaining a decent margin level. The exited businesses delta relates to the Mauritius and Seychelles business we exited and represents losses not repeating. We call out the UK separately given the challenges in the market with high levels of competition and a low level of opportunities giving rise to pricing pressure. In the APAC division, Austro continues to perform strongly, offset by the Australia Foundation business which is up on revenue with reduced profitability due to Queensland weather, the impact of project settlements in 2025 not repeating, and price pressure as the business transitions between transport and new opportunities in energy, data centres and defence. Moving to the next slide, I'll cover off non-underlying items. The analysis box shows the items that make up the 5.4 million split between cash and non-cash items. We continue to invest in the ERP program and are getting close with the final build. We are entering into a phase of extensive acceptance testing that will lead to the pilot in Canada in early 2027, followed by the subsequent rollout across the board. restructuring costs relates to the group's finance transformation program which is now focused on north america i'll now move on to talk about cash cash generation does tend to skew towards the second half of the year with historic h1 levels being much lower and 2026 will be no exception Whilst free cash flow has marginally increased, the conversion rate has reduced, driven by increased working capital and capex levels as the business grows. This is offset by a lower tax spend due to the change in the rules in respect of US R&D deductions in 2025. Below free cash flow, the major increases are driven by the return of cash to shareholders, with the increased dividend and the increased level of share buybacks at the half year At the half year we are at 32.4 million through the 100 million buyback with the balance being what was left of 50 million buyback in 2025 being purchased in 2026. In the bottom right we highlight the reconciliation to net debt on an IS 17 covenant basis to 15.9 million. This slide shows the monthly profile of net cash stroke debt. You can see for the majority of H1 2026 we were net cash with the final dividend payout in June pushing us to net debt. We expect the profile for the remainder of this year to be pretty similar to 2025 and hitting circa 30 million net cash level after the impact of the share buyback by the year end. our funding facilities are in a comfortable position from a quantum and tenor perspective we have headroom of circa 655 million this is a very resilient position and along with our cash generating capacity gives us confidence as we look to the future at organic and inorganic opportunities it is worth reiterating our margin performance and our confidence in sustaining margins above 7% This is underpinned by the portfolio resilience referred to earlier and our continued focus on discipline and control in our bidding and execution activities. This is a snapshot of our order book with growth in North America including the I40 project driving the 20% increase. We have called out the I40 project separately due to its scale and multi-year duration. which will underpin future years revenue rather than the current year. James will talk more about the divisional movement later. Finally for me, a slide on capital allocation. We remain committed to this framework that we laid out in March so no change here other than the value of numbers for H1 2026. We continue to prioritise the business first through working capital and capex then continuing the dividends and finally the balance between capital spent on M&A and further shareholder returns through share buybacks. That's it for me. Thank you for your attention. I'll now pass you back to James who will take you through the operational review section.

Thanks David. our h1 2026 results demonstrate perfectly some of the key strengths of the group keller continues to showcase the power of our portfolio and these are a record set of results driven particularly by volumes of infrastructure and data center work alongside superb austral performance but they do also come in the context of a slow south florida market one of our normally strongest performers They come in the context of challenging volumes for more trench who had an excellent 2025. And they come in the context of a thriving but highly competitive Australia foundations market. Keller's geographic portfolio aligned to our market leading portfolio of products and techniques that enable us to win both small and large jobs is proving again to be a winning combination. On top of this, the quality of our people is ensuring that margins are maintained despite teams being very busy. Much of this is possible because the business has the scale to support itself where required and advancements in the last few years have transformed internal collaboration. I'm going to cover our US i40 product shortly, which is a perfect example of how all this comes together to deliver fantastic results for customers and for Keller. safety also remains a strength and as market leader keller sets the standard in our industry however we're not complacent and our forthcoming annual safety week is our opportunity to remind each other of this now i'd like to cover a bit of sub-sector analysis we're going to cover more of this at the capital markets day but i wanted to give a bit more color at these results because i think it really illustrates the power of keller's portfolio our sector agnosticism and our ability to pivot to the latest megatrends. This slide illustrates the top five subsectors for the group and for each of our three regions. The arrow denotes the trend versus H1 2025. Importantly, the top five represent less than 40% of group revenue and I think that illustrates the breadth of our subsector coverage. Aside from this, I'm sure nobody is surprised by the surge in data centres. They now represent the largest subsector for the whole group, with 9% of group revenue compared with 3% in 2025. Excluding Suncoast from the revenue numbers, they're more than 15% of our US revenue year to date. Data centres are also in second place in the APAC division, driven by new buildings in Australia. While we do expect the data centre trend to continue, I also have great confidence in Keller's ability to pivot to whichever construction megatrends exist in our market. Another notable trend on this slide relates to the decline in multi-family residential. Largely because of Miami, this held up in 2025, despite an overall tough US residential market. however in 2026 as David just said we've seen major developments delayed and the revenue in this subsector declining by approximately a third all other top five group sectors were up with mining in APAC particularly impressive due to Austral's strong performance now look at the regions in a little bit more detail as David has already said North America delivered a record first half performance with revenue up 16.7% to 984.4 million and operating profit up 17.7% to 93.8 million both at constant currency levels and margin steady at 9.5%. Growth has been driven by underlying volumes across our foundation's business. especially within data centers as we've just heard but also in high value major infrastructure projects such as i-40 the hudson river tunnels and the second avenue subway extension data center demand is a true mega trend we've done more of these projects in h1 of 2026 than we did in the whole of 2025 again keller's ability to pivot fast to growth subsectors remains a key differentiator The resultant standout contributions from our Southeast, our Central, our North and our Canada business units through strong project execution and commercial management of the increased volumes more than offset Q1 weather disruption and the softer South Florida residential market. Again, as David said, Recon delivered a strong performance on a major Gulf Coast LNG project offsetting the softer, more trenched trading. The order book is also up strongly to 1.367.9 million, reflecting our major infrastructure awards and in particular the I-40 highway remediation expansion. The data centre megatrend continues representing just over £100 million of our work in hand. And finally, Suncoast stayed resilient despite weaker residential markets through diversification and disciplined cost management. We are confident on the outlook for the remainder of 2026 in North America with that record work in hand and a healthy pipeline Leaving us well positioned for continued profitable growth and strong cash generation in h2 And now a little more in depth look at i40 so i40 is the largest project by quite a distance in Keller's history and The job is to reconstruct the highway from the Tennessee state line to North Carolina following significant damage caused by Hurricane Helene in 2024. The multiple complex techniques required illustrate both the enormous technical expertise that exists in our business and the ability to marshal the resources required to deliver at scale. I think Keller has been transformed in this respect over the past few years with the One Keller initiative a major factor in bringing the full power of the business to opportunities. This is a multi-year project involving a range of techniques critical to restoring to full operation a vital piece of American infrastructure. Moving on then to EME. Revenue in EME was down 5.2% to $396.1 million and at constant currency level. Strong Scandinavia volumes due to the Lulia project that we talked about a full year were offset by Q1 weather disruption and fewer large projects than in H1 of 2025. Underlying operating profit was up 28% to 19.2 million with margin improved to 4.8% from 3.6% driven by Middle East profit growth. plc plc plc plc As we look ahead, Western Europe remains subdued, with government infrastructure and defence spend yet to materialise. The UK market remains particularly challenging with volume and profits down. The order book is very healthy though, and it's supported by smaller jobs such as the two residential projects I saw recently on a trip to Warsaw. These are very much the bread and butter of Keller, particularly in Europe. overall the order book is up 16.5% to 396.7 million and we therefore expect continued improved trading in H2 supported by higher Q3 volumes and a very healthy tendering pipeline finally in APAC APAC revenue was up 22.8% 227.5 million driven by excellent momentum in austral and record volumes at keller australia underlying operating profit was broadly flat at 13.6 13.8 million sorry due to margin pressures in keller australia and the non-repeat of prior year project closure settlements austral continues to thrive with revenue and profit both up I witnessed first hand earlier this year the impressive civil works this business does in the mining sector and tendering volumes for complex high value civil and near shore marine projects for late 26 and 27 remain high indeed we will be announcing today that Austral has won a project at Parker Point worth circa 90 million Australian dollars which will go into our order book at the full year. Keller Australia has record revenues on the back of strong public spending demand in areas such as hospitals and data centres but profit has been impacted by pricing pressure as well as unusually severe Queensland weather. In Keller Asia revenue and profit were broadly flat with India expected to see volume growth in H2 after a slow start and with investment expected in the market our Singapore business is benefiting from growing construction demand such as the new terminal 5 at Changi airport that I and our executive team visited back in March the team is confident of maintaining recent momentum despite the order book being 18.9% lower at 174.6 million This is mainly due to a strong comparable period in 2025 where Ostril won several major marine contracts. We still have solid work in hand, good pipeline visibility and supportive market conditions and we expect the order book to pick up in H2 and it certainly helps with that recent win from Ostril. So the summary and outlook, beginning with our strategy for long term value. clearly will be using the capital markets day to outline our strategic plans in much greater detail. The structure we will use is the same as I described for our 2025 four-year results. I believe passionately that the power of Keller's geographic and product portfolio multiplied by the excellence of our people and their performance can deliver a highly attractive pipeline of opportunities. During the event, we'll use both Keller and market data to illustrate why this is the case and to be clear on our growth ambitions. We continue to make progress on all of our 2026 priorities. As David said, as an example, our new ERP will be ready for rollout at the start of 2027, beginning with Canada. And I've hired a new chief people officer, Matt Stripe, to bring real impetus to our talent agenda. clearly much more to follow in october hope to see you all there for the summary and our outlook the record results i think largely speak for themselves we've continued our focus on commercial discipline and operational execution and volumes clearly particularly in the us have been really strong the h1 2026 results are a testament to this We've got strong momentum entering H2 with performance as ever weighted to the second half. We remain confident in achieving our recently upgraded FY26 market expectations. Data centres prove that the business can pivot to growth sectors and we remain confident that this trend is going to continue for some time. But even more so, we remain confident in Keller's ability to pivot to whichever construction megatrends exist in our markets. at any given time. Our balance sheet remains very strong with optionality to grow both organically and inorganically through bolt-on acquisitions and I look forward to sharing much more of these plans with you in October at our Capital Markets Day. And with that I'll pass to a Q&A. Thank you.