Keller Group H2 2024 Earnings Report

Keller Group EPS Results

• Actual EPS: GBX 204
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Keller Group Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Keller Group Announcement Details

• Quarter: H2 2024
• Date: 3/4/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 4, 2025
• Conference Call Time: 4:00AM ET

Keller Group (LON:KLR) provides specialist geotechnical services in North America, Europe, the Asia-Pacific, the Middle East, and Africa. The company offers ground improvement services, grouting, deep foundations, earth retention, marine, and instrumentation and monitoring services, as well as post-tension systems and industrial services. It also provides solutions, such as bearing capacity improvement, low carbon construction, containment, excavation support, stabilisation, marine structures, seepage control, slope stabilization, and monitoring. The company provides its services to the construction sector in commercial, industrial, infrastructure, institutional/public, power, and residential. Keller Group plc was founded in 1860 and is headquartered in London, the United Kingdom.

Keller Group H2 2024 Earnings Call Transcript

Presentation

[Michael Speakman, CEO at Keller Group]

Good morning, everybody, and welcome to Keller's preliminary results for 2024. First, some housekeeping. There are no programmed alarms for today, so if something does happen, it is for real. If we go out through the door, you'll find there's a fire exit just on the right hand side and stairwell going spiraling downwards. Could I ask the for everybody just to silent their mobiles?

[Michael Speakman, CEO at Keller Group]

And we'll end up to we will move on to the presentation itself. You'll see, as we go through the results today, we have another outstanding set of results for you today. A year ago, when we stood up here, we presented you a set of results which were a step up. The twenty twenty three results, you know, move forward compared to previous years. And the the question which was out there at the time was, you know, is this a one off or is this something which we can sustain?

[Michael Speakman, CEO at Keller Group]

You'll find as we go through the 2024 results, that question is very clearly answered. You know, this is a step up beyond what was already a step up, and you'll see that as you as we go through the results. We're gonna follow our normal agenda. I'm gonna carry a bit of a summary at the beginning. David is then going to go through the detail in terms of the financials and some of the, the details within there.

[Michael Speakman, CEO at Keller Group]

I will then come back and cover the divisional business summaries and some strategy before finishing off with a summary and outlook towards the end. Moving on to the summary. Really, the clue is in the banner line, much like last year. Another outstanding set of results ahead of expectations, with improved performance across all of our key performance indicators. You know, revenue 4% up, profit 22% up, margin increased by a hundred bps.

[Michael Speakman, CEO at Keller Group]

You know, the order book is at all time year end high. Leverage is at all time low. And particularly pleasing is the improvements in safety in our accident frequency rate, which is halved compared to last year, which is already a good result. And frankly, out of all of these things, that's going to be the most difficult to sustain, I suspect. In terms of a summary, firstly, you know, we've substantially improved in recent years.

[Michael Speakman, CEO at Keller Group]

And that is, you know, as you can see, it's been demonstrated in recent results and that is being sustained. Secondly, looking forward, if you look at the, the the structural resilience of the business and the disciplined execution of our strategy, you know, we we have the belief that we can continue to grow further in the future, despite the challenges which, you know, you face externally at the moment. And thirdly, you know, all that belief is evidenced by the board's decision to increase the dividend by 10%, and that's in addition to the step up last year, but also to initiate the share buyback program, which was announced today, which will begin by the end of the first quarter. And that's for the value of 25,000,000. And that will be a multi year program starting with this first tranche.

[Michael Speakman, CEO at Keller Group]

All of that is I hope we will take us an optimistic tone. And with that, I'm going to hand over to David.

[David Burke, CFO & Executive Director at Keller Group]

Thank you, Mike, and good morning, everybody. As Mike mentioned, 2024 was an outstanding year as we continue to build on the material step up in operational and financial performance delivered in 2023. We've delivered improved performance across all key financial metrics: profits, earnings, margin rates, return on capital, cash conversion and debt reduction. So in the financial results section, the key highlights to watch out for are the underlying operating profit growth. I will share with you an understanding of the year on year movement.

[David Burke, CFO & Executive Director at Keller Group]

Following from that, the very strong free cash flow generation, which is gravitating us to net cash, creating a very strong platform for the future. And finally, we'll go through some look ahead modeling considerations for 2025. Okay. Let's start with the P and L. This is the full P and L showing underlying operating profit of £212,600,000 The reduced level of non underlying of £7,500,000 gives us a bottom line statutory profit of $142,700,000 an impressive increase of 59% versus 2023.

[David Burke, CFO & Executive Director at Keller Group]

It's worth noting with the journey we have been on, this is a 6.5 times increase on the statutory profit from 2019. Let's look at underlying first. Looking at revenue, we have solid revenue growth of 4% on a constant currency basis. Volume was up in North America by 4.2 driven by foundations growth, partially offset by Suncoast as a result of the residential slowdown and recon due to lower levels of activity in the LNG projects. Europe and Middle East increased revenue by 5.5%, reflecting improved performance in Europe and the completion of a large infrastructure project in Central Europe.

[David Burke, CFO & Executive Director at Keller Group]

APAC revenue reduced by 2.1%, driven by a very strong prior year comparison in Australia, lower volumes at Austral, reflecting focus on margin over volume and steady performance in the other business units. It is very pleasing to report an underlying operating profit increase of 18% and our margin rate increasing 100 basis points to 7.1%. I'll bridge that operating profit in the next slide. Net finance costs have decreased by $6,300,000 driven by the lower average net borrowing levels due to the strong cash generation. And taxation at $43,900,000 is at an effective rate of 23%, reducing since last year, predominantly driven by profit mix.

[David Burke, CFO & Executive Director at Keller Group]

The underlying earnings per share has increased by 30% to 199.9p, driven by the improved underlying profitability, lower finance costs and a reduced tax rate contributing to the higher growth level compared to underlying operating profit. The Board has agreed to propose a final dividend of 33.1p, bringing the total dividend for the year to 49.7p, a 10% increase on 2023. We'll now move on to the operating profit bridge slide. Moving from left to right, starting with 2023, underlying operating profit of $180,900,000 There is an FX impact of 6,600,000 due to the dollar strength against sterling compared to 2023. So coming to the North America division force, which is up $26,300,000 versus last year.

[David Burke, CFO & Executive Director at Keller Group]

Foundation's volume relates to to growth in comparison with last year driven by busy markets in the South Central and Northeast business units in particular. The Foundation's margin block of $17,500,000 is made up of a few factors. Firstly, a storm in Q1 giving the business of the markets and with little or no impact from bad weather. Secondly, a buoyant market in South Central, where schedule and program were more important to clients than price. This resulted in robust pricing and tighter more effective utilization of resources.

[David Burke, CFO & Executive Director at Keller Group]

Finally, the continuing impact of sustained improvement in underlying contract performance as a result of better project execution and focus on commercial discipline that we saw coming through in the second half of twenty twenty three. The next box shows the impact of lower price and volume in Suncoast, driven by the reduced residential market activity, particularly in the second half. The combined more trench recon business was down year on year, driven by lower volumes in recon as a result of less LNG work. Now turning to Europe and Middle East, where operating profit was $1,700,000 down. The European businesses performed well, increasing profitability predominantly by large infrastructure project in Germany and the turnaround of performance in the Nordics region.

[David Burke, CFO & Executive Director at Keller Group]

The market conditions in Europe do, however, continue to be tough, particularly in the residential and commercial sectors. Middle East is negatively impacted by the prior year comparative benefiting from work on the line at NEOM. In addition, there is an ongoing challenging project in the region where we are currently in discussions with the client to remedy the commercial performance. The APAC division was up $14,600,000 predominantly driven by the turnaround in Austral with consistent profitability this year compared to losses in the first half of twenty twenty three. The rest of APAC has performed well with Australia and India maintaining strong levels of profitability.

[David Burke, CFO & Executive Director at Keller Group]

Moving to the next slide, I'll cover off non underlying items. Again, the income statement, but this time focusing on the middle column, non underlying. We continue to tighten the definition of non underlying across the business. The analysis box shows the items that make up the $7,500,000 dollars down from $27,800,000 in 2023, which we have split between cash and non cash items. We continue to invest in the ERP program, and the restructuring cost relates to the group's finance transformation program that was launched in H1

[David Burke, CFO & Executive Director at Keller Group]

with

[David Burke, CFO & Executive Director at Keller Group]

the setup of two finance shared service centers, one in Kuala Lumpur and the other in Warsaw servicing the APAC and EMI divisions respectively. We will be looking at North America in 2025. The loss on disposal relates to the sale of the South Africa business to local management. On the operating income line, there is a noncash credit of $6,400,000 arising from a change in the fair value of the contingent consideration related predominantly to the acquisition of a non controlling interest of an entity in Saudi Arabia in 2023. I'll now move on to talk about cash.

[David Burke, CFO & Executive Director at Keller Group]

This page shows the summary net debt from underlying operating profit down to net debt. Free cash flow generation of $192,600,000 after interest and tax has been exceptional. This is an 87% improvement in 2023, which in itself was a stellar year. Building on improved profitability, working capital was well managed by the team resulting in an inflow of $27,700,000 dollars This is mostly short term timing around the period end. Net CapEx levels are reduced driven by disposal proceeds, in particular, the sale of the Austral office in the yard in Melbourne.

[David Burke, CFO & Executive Director at Keller Group]

And cash taxes lower as part of the 2022 liability payments slipped into 2023 as previously noted. Other callouts, purchase of owned shares relates to our employee benefit trust acquiring to satisfy share award requirements and the $2,600,000 outflow on disposal of businesses relates to the South African sale. In the bottom box on the right, we highlight the reconciliation of net debt in an IAS 17 covenant basis to $29,500,000 Leverage on a lender covenant basis is 0.1 times, outside the lower end of our target range of 0.5 to 1.5. So more on net debt later. The next slide is the summary balance sheet.

[David Burke, CFO & Executive Director at Keller Group]

This slide shows a summary balance sheet with comparators for December 2023. For reference, we set out the movements in the boxes, which are pretty standard with no particular callouts, so we'll move on. The next slide provides some more detail on the net debt profile during the year. The cash generation from operations has driven the reduction in net debt. You can see the downward trend as we gravitate towards net cash.

[David Burke, CFO & Executive Director at Keller Group]

The group's multi currency syndicated revolving credit facility was refinanced in 2024, increasing the facility from three seventy five million dollars to $400,000,000 with no change in the related covenants. The revolving credit facility was undrawn and along with cash at period end gives us headroom of circa $650,000,000 This is a very resilient position and along with our cash generating capacity gives us confidence as we look to the future as organic and inorganic opportunities. We are well within all our key covenant metrics. Our leverage ratio is now at 0.1x, and we anticipate we will be in a net cash position during 2025, subject to M and A and the impact of the share buyback program, with an initial $25,000,000 we intend to launch in Q1. The next slide shows some look ahead modeling considerations for the coming year.

[David Burke, CFO & Executive Director at Keller Group]

A A few highlights to draw out. First, the divisions. In North America, in foundations, we do expect the buoyancy of 2024, particularly in H1 to normalize in 2025. At Suncoast, twenty twenty five will be a full year of normalized pricing with weak volumes stemming from the depressed residential market. Europe and Middle East division.

[David Burke, CFO & Executive Director at Keller Group]

For the European businesses, we expect the market to continue to be challenging with another year of good project delivery. In The Middle East, we expect trading to return to normal with no repeat of the one contract issue in 2024. In APAC, the division had a stellar year in 2024. We expect the same in 2025, albeit we expect the infrastructure market in Australia to come under pricing pressure as the level of spend reduces. Other items phasing.

[David Burke, CFO & Executive Director at Keller Group]

H1 '20 '20 '4 was exceptional. We expect a more normalized position waiting towards H2 for 2025. Tax, we are guiding towards a similar 23% rate for 2025. However, it's heavily caveated on the actions of the new administration in The U. S.

[David Burke, CFO & Executive Director at Keller Group]

On cash and net debt, we will be net cash subject to M and A and where we get to on the share buyback program in 2025. I want to show you another slide to demonstrate that those outstanding results in 2024 do represent consistent reliable delivery. Across all key metrics that we monitor and measure, in 2024, the group has performed remarkably well and those are highlighted here. With the last three years' comparatives, you can see that this has been a steady build with the group going from a circa $100,000,000 operating profit business to over $200,000,000 Following on from this, our cash generating capacity gives us strong platform to be agile and confident in the future despite the uncertain geopolitical environment. That's it for me, and thank you for your attention.

[David Burke, CFO & Executive Director at Keller Group]

And I'll now pass you back to Mike, who will take you through the business performance update.

[Michael Speakman, CEO at Keller Group]

Thank you, David. You would have seen there the KPIs I referred to earlier in terms of it's across the board, this great performance. Moving on to something which is close to everyone's heart in Kelleher, safety and well-being. Again, we've had a really good set of performance and inputs and outputs in this particular area. John Rain and indeed the whole of the operations group, I think this year has actually done a really, really good job.

[Michael Speakman, CEO at Keller Group]

Statistically, in terms of outputs, we've halved the accident frequency rate to 0.05. That represents 13 accidents across 10,000 employees for the whole of the year. And in terms of those thirteen, six of them we would classify as critical, which is the first time ever that that statistic has been in single digits. And that for us is a big, big, big achievement and will be very difficult to sustain over time. But nonetheless, we'll we'll give it our all.

[Michael Speakman, CEO at Keller Group]

In terms of total recordables, this hasn't this has reduced but not by quite so much, which is good in a sense that it means that, you know, people are not under reporting. It's actually the severity of the accidents and the incidents which is coming down, which is excellent because it means that, say, people are not under reporting. In terms of initiatives, things which are driving that performance, you'll see that, you know, we're improving the strength of our assurance program. We're getting senior leaders more visible, more often out on-site, making sure that the key message is being driven home. We're focusing on things which matter.

[Michael Speakman, CEO at Keller Group]

So for instance, North America, the telematics implementation there has had a, you know, very significant improvement in terms of automotive accidents and the severity of those, which is great. It's that's a very difficult one to actually manage oftentimes. Across the globe, you see there the the third Global Safety Week. That was a really great success. I had a lot of completely unsolicited feedback on that, And the people were engaged.

[Michael Speakman, CEO at Keller Group]

They were buzzed up about it. And it because we invest behind it, we draw attention to it, people realize it's important. And that becomes self fulfilling because all of a sudden, they take note, they take the key messages, they go and implement them. And yes, you have to reinforce it over time, but it's very important that people realize that it is important top to bottom in the organization. And that's a really good vehicle for doing that.

[Michael Speakman, CEO at Keller Group]

And then finally, you know, UNICEF and and the foundation, you know, it's not all about internal to the company. We also look to to support good initiatives, outside the company as well, be it, you know, the the UNICEF fund or indeed the support for our Ukrainian employees and their families. Moving on to to carbon, and I know there's lots of ebbs and flows into the way people are approaching the whole sustainability area at the moment. We will continue to do what we think is the right things in the right places in the right way. And this is a good example of that.

[Michael Speakman, CEO at Keller Group]

You see here the three scopes of of carbon, and they're reordered slightly because they're they're reordered in terms of the the the timescale in which we will take them to net zero. So scope two is by 2,030, scope one by 2,040, scope three by 2,050. They're also happen to be in the site in the order in which they they size the magnitude to us. So, you know, scope two is the smallest, scope three is the biggest, and is by far the biggest. It's the one which is the most difficult to have an impact on, but the one which will, when we get to it, have the most material impact on it.

[Michael Speakman, CEO at Keller Group]

You'll see from the slides there that, you know, in terms of our progress on the first two scopes, we we have formalized targets for in the short term. You know, we're making good progress. It's it's not plain sailing, and I'm sure it's gonna get harder over time. But nonetheless, you know, people are busy working away on those things and are chipping away every opportunity we possibly can in a sensible and economic and a proportionate way. Scope three, I think we are, you know, we're beginning the journey with that.

[Michael Speakman, CEO at Keller Group]

It's a lot more difficult. There's a lot more moving parts. You're a lot more dependent on third parties for information. And we're beginning to get to know what we don't know. And I think in successive presentations, you'll see us making more considered progress on that front.

[Michael Speakman, CEO at Keller Group]

But it is by far the most difficult to work our way through. Moving on to the order book. Record year end closing order book. What's not to like? In this in certain world, it gives us great comfort as we go through the first half of this year at least.

[Michael Speakman, CEO at Keller Group]

You know, we've got something to go out, which is solid and is quality and is evenly spread. There's nothing exotic in the order book that I wish to draw to your attention. This is a well balanced geographically, it's well balanced in tenure, and it's a good quality. In terms of the as we move forward, as we go through the division of things, I'll explore this a little bit more. But overall, it puts us in a very, very good shape as we go forward.

[Michael Speakman, CEO at Keller Group]

And I'd say at this point that in terms of tender levels, and the levels which we're pitching business at the moment, that's pretty solid at the moment too. That wherever you are in the globe, it hasn't changed much from the momentum earlier in the year. Moving on to North America. North America, as David talked to earlier, had a very, very good year. This division is now led by the newly appointed, Paul Leonard.

[Michael Speakman, CEO at Keller Group]

And, you know, he's slotted into that role very well. In terms of what's happened in the year, the first quarter, we had that great momentum as we came into the year. We had the first half where we benefited from the Suncoast pricing, the last bit of benefit from there. But all the way through the year, they've had a pretty reasonable momentum. As we go into 2025 though, I would urge you caution us to say, look, that we had a very strong H1 in 2024 because of the factors I've just mentioned.

[Michael Speakman, CEO at Keller Group]

2025, it will flip back to its normal second half bias. So that's something to watch out for. We do expect them to continue to perform well. And it certainly, whilst we're not banking on quite the level of buoyancy we had in 2024, the market's doing okay. You know, despite the change in administration, the momentum is absolutely being maintained.

[Michael Speakman, CEO at Keller Group]

And if you look at the the characteristics of the tenders and the bids which we're looking at the moment, and the quality and the competition for it, it's pretty much the same as we saw throughout 2024. And in some areas, perhaps even a little bit stronger. So, you know, from my point of view, I think North America is in a good place. May not be quite so frothy next year, but it's solid. It's absolutely solid.

[Michael Speakman, CEO at Keller Group]

Moving on to EMI. This division is now run by Peter Whiting, who moved across from EMIRA during last year and has got his arms around around this particular division. Frankly, in the year, somewhat disappointing. But I would caution you to say the headlines here don't really tell the full story. If you dig a bit deeper, and David did that a little bit earlier on, Europe, year on year, is actually improving.

[Michael Speakman, CEO at Keller Group]

Middle East, absent Saudi Arabia, has actually had an improvement. And it's really the performance of Middle East which has shrouded the performance of the division as a whole. And clearly, we're doing something about that. In terms of market conditions, Europe, frankly, is still pretty tight. It's pretty flat.

[Michael Speakman, CEO at Keller Group]

That doesn't mean to say there aren't opportunities out there. And, you know, there's going to be a thematic thing for us, I think, of remaining agile and taking those opportunities as they come. And if you look at the Nordics, you know, we had some very good results this year compared to previous year. You look at things like the Rauburg Tunnel in Germany, that was a technically demanding, commercially quite hard to negotiate project, which we've come out of very, very successfully indeed. And that's the sort of project which we were looking for, you know, further on course of.

[Michael Speakman, CEO at Keller Group]

It fits our our remit absolutely perfectly. There's not many people can do it and we get paid properly for what we do. And those are the sorts of things, those little nuggets which we'll have to pick out across the whole of Europe as we go forward. I would say though, the general market, is safe pretty tight and, you know, pricing and margin remains pretty squeezed. Moving on to Asia Pacific.

[Michael Speakman, CEO at Keller Group]

Asia Pacific is now run by the newly promoted Deepak Deepak Raj, who has come through the business. He's actually, you know, one of the one of the characters who actually shows the strength of the development that's beginning to happen in the company. He had previously been working with in India. He'd work running ASEAN, and more latterly, he'd actually been working in in Austral, and helping the recovery of the company there. Talking of Austral, I'm pleased to say we've now appointed a new Managing Director there.

[Michael Speakman, CEO at Keller Group]

And, you know, as you can see from the results, the company is now on a certain good path and is now out of special measures. Austral is the turnaround, the key step up year on year. It's fair to say that KELOR Australia and India have had good years, but it's Austral which has had the big turnaround and step up in the full year. Looking forward, as David mentioned earlier on, Austral is doing it will do fine as we move forward. There's plenty of demand there.

[Michael Speakman, CEO at Keller Group]

Keller Australia, as the infrastructure cycle weakens a little bit, it will become a little bit softer. And it will just have to be a little bit more selective about the things we engage in. And that's not unusual at this point in this particular evolution. India, I would say right now looking forward, tremendously busy, lots of opportunity, probably more than we can actually take on at this moment in time. And we just have to be very selective and very measured about what we do.

[Michael Speakman, CEO at Keller Group]

Talking about decisions, moving on to strategy. This is the strategy we developed in late December twenty nineteen, which seems like a long time ago. Since we developed this, this has really driven and fashioned all of the key management and strategic decisions which we've undertaken with the business ever since. And it just served us well, served us very well. Given the passage of time, it's, you know, we've we've thought it was a good time to actually revalidate the strategic process and the strategic statement and make sure that it was still fit for purpose, still appropriate as we move forward.

[Michael Speakman, CEO at Keller Group]

And we're nearing the end of that review. We've had some external help, so we weren't conscious of groupthink. And the board itself has been heavily involved in testing it and kicking it around. And where we've ended up is that, frankly, it largely remains absolutely valid for what we need going forward, which is pleasing. But it means that, you know, in terms of the next stage of our development, we're already pretty well set up to actually move forward.

[Michael Speakman, CEO at Keller Group]

If you actually look at where we've come from in the last five years, you'll see that, you know, really, we've concentrated in the top two blocks. We've we've under if you think about the shrink concentrate growth cycle you often see in strategic processes, You know, the the focusing of the portfolio is really that shrink aspect of it. You know, we actually pulled out of areas which were not good for us. And strategy is not difficult. You know, you look at the characteristics where you're profitable and you repeat it.

[Michael Speakman, CEO at Keller Group]

You look at the areas where you're not successful and you avoid it. That's exactly what that box is. It's saying, you know, these geographies aren't good for us. We don't make good cash out of it. Let's withdraw from it.

[Michael Speakman, CEO at Keller Group]

Let's focus on the areas which actually are good for us. And that's what that first box is all about. The second box is saying, alright. Okay. We're in those particular geographies, in those particular activities.

[Michael Speakman, CEO at Keller Group]

How do we do them to the best of our ability? How do we execute them as hard, as fast, as slick as we possibly can and get the best returns, the most repeatable returns we possibly can? That's what that improved performance is about. And it's it's a a mixture of hard things in terms of project management processes and procedures and all that kind of stuff. But importantly, vitally importantly, it's about this, culture, performance culture.

[Michael Speakman, CEO at Keller Group]

And that takes a little bit longer to instill in people. Some people get it, Some people don't. Some people stay. Some people don't. That's what this is about.

[Michael Speakman, CEO at Keller Group]

And it's a bit of a journey. And that's positioned us well. And they're they're they're the sorts of things which have fueled the results which David and I presented this morning. So what have you got to look forward to? Well, we're moving down to the bottom box.

[Michael Speakman, CEO at Keller Group]

We're now into a grow mode. You know, we've got ourselves in the right place. We're executing well. We now need to build on that. And that's where we are now.

[Michael Speakman, CEO at Keller Group]

And we'll do that through a process of both organic and in some cases inorganic, but it will be within the existing footprint, both geographically and from a technique point of view, and therefore will be low risk in relative terms. And what we'll be looking for is frankly, you know, using our brains, looking for the stuff which is easy to grow into, where we can actually get better returns. And that's what we'll be doing over the next five years. Moving on to the summary and outlook. First part of this is a repeat of where we started this morning.

[Michael Speakman, CEO at Keller Group]

We have had an outstanding set of results, slightly ahead of expectations. We've outperformed on all the KPIs. David demonstrated that at the end of his presentation. And in recognition of that, in terms of the history and also recognizing our future prospects, the board decided that we would increase the dividend up to 10% this year, building on the step up we had last year, and we'd also launch a multi year share buyback program starting with initial tranche of £25,000,000 And all of that just frankly evidences our commitment and our belief as we we move forward. Now why do we believe that?

[Michael Speakman, CEO at Keller Group]

Well, we've got ourselves a record order book. It's balanced. It's, you know, there to fuel fuel the company. And the momentum of the business at the moment is good, both in terms of the execution we're doing in front of us, but also the bids and tenders which we're coming in right now. However, we're not, you know, we're not living in a bubble and we recognize that there are some short term geopolitical ebbs and flows which we are we're gonna have to navigate.

[Michael Speakman, CEO at Keller Group]

And we're conscious of that. And that I mean, we said those gives us much opportunities as they do threats. So it's something we're alert to, but we're not frightened of. And we'll have to remain agile as the way we actually exploit that. That's fine.

[Michael Speakman, CEO at Keller Group]

And then finally, in the longer term, disciplined execution of our strategy will put us in a very good place as we go forward. If you think about it strategically, there are two key resources, finance and people. We're very fortunate. We've got a very strong balance sheet and we've got some very good people. So in terms of the medium term outlook for this business, we're in a very good place indeed.

[Michael Speakman, CEO at Keller Group]

And with that, I'm going to draw it to a close and to open up for questions and answers.

[Aynsley Lammin, Analyst at Investec]

Thanks. Ainsley Lemann from Investec. I think you've got two actually. Just on the share buyback, obviously, it's only initial 25,000,000, but how should we think about that in terms of the scope of that going forward? Is your target leverage range still 0.5 to 1.5?

[Aynsley Lammin, Analyst at Investec]

Would you aim to get into that range using share buybacks if there's no M and A? Just a bit more kind of color around that. And then second question, just on The U. S. Interested maybe hear a bit more color around the kind of residential market outlook and the private non residential.

[Aynsley Lammin, Analyst at Investec]

You said some bits are good, some bits are not so good. Just a bit more color would be helpful. Thanks.

[Michael Speakman, CEO at Keller Group]

If I do the share buyback, you can do the residential piece. In terms of the share buyback, as I mentioned earlier on, we're in the process of concluding a strategic review. And we've got a new Chairman that's just onboarding with the company at the moment. So I don't want to be premature about anything that the board as a whole will decide. What I would say is this, that we are committed to a multi year program.

[Michael Speakman, CEO at Keller Group]

This is not a flash in the pan. This is something which is actually be with us as a part of the armory going forward. And it is something which we will use to deploy genuinely surplus cash. And from my point of view, I think it makes perfect sense because if you think about it, if we're doing organic growth or acquisitive growth, you're growing the earnings the earnings per share by growing the earnings same number of shares. If you exhaust that, then you can still grow the EPS by reducing the number of shares effectively.

[Michael Speakman, CEO at Keller Group]

So to me, there's there's no conflict there. And that's what we will do. So this is a multi year commitment

[Michael Speakman, CEO at Keller Group]

and

[Michael Speakman, CEO at Keller Group]

it will be for genuinely surplus, whether that's at 0.5 or whether that's at zero, frankly, we will work through as we go forward. We will remain the conservative side of evens.

[David Burke, CFO & Executive Director at Keller Group]

I think with U. S. Residential market, that really for us is in the its impact for us is seen in the Suncoast business. And in terms of our outlook around that, we just think that's just going to be steady in 'twenty five. We're not expecting any the market to do anything great for us in 'twenty five in terms of turning that increasing that profile in 'twenty five.

[Robert Chantry, Head of UK Company Research at Berenberg]

Hi. Rob Chanchi at Berenberg. Thanks for the presentation. Just three questions. I suppose, firstly, on strategy, you kind of gone through a process of reviewing it.

[Robert Chantry, Head of UK Company Research at Berenberg]

What did you you generally learn about the business in that review that that maybe isn't obvious? Like, what sort of things did you you bat away during that process? Secondly, APAC margins at 7.8%. Had a look at the model this morning. I think that's the highest since 2010 or so, so very big step up.

[Robert Chantry, Head of UK Company Research at Berenberg]

Can you comment around the sustainability of that given it's really quite different to the past kind of decade? I suppose, we've seen in margins there. And then thirdly, also in APAC, you call that India. I suppose, can you just kind of remind us how big India is of that APAC division? And then what's changed?

[Robert Chantry, Head of UK Company Research at Berenberg]

Because I guess there might have been a historic perception of lots of local competition, tight margins, etcetera. And now you're talking about it in, I guess, more positive terms. The guy that ran it has been promoted to run APAC, slightly more points outlook. So just some more color on the Indian division would be helpful. Thanks.

[Michael Speakman, CEO at Keller Group]

Sure. Well, if I take the strategy one. Yes. So the APAC one, and I'll come back and we will both just cover in the room. Okay.

[Michael Speakman, CEO at Keller Group]

So in terms of the strategy, it's been a really great process, to tell you, it's Ruth. We had external help into to actually test it and test what we've been doing over time. And frankly, their first task was to try and rip it apart and see what we've got wrong. And after a number of weeks, they came back and actually said, well, you've got it pretty much right. And here's the evidence, the quantifiable evidence behind it in terms of the market we are positioning and the differences in margins.

[Michael Speakman, CEO at Keller Group]

And if you think about the business, there's lots of different axes that you can actually focus on and try and draw a differentiation. And that's what you have to do in terms of working out where you can apply the best levers. And they came back and actually proved we made the right decisions. I think that for me was great because you actually got external validation which reassessed and reaffirmed that what we've done in the first place. It also then you're going to get to looking more positively looking forward.

[Michael Speakman, CEO at Keller Group]

And it wasn't a question of throwing things out, but actually opening your eyes to actually how much opportunity that were out there. And I'll give you a good for instance. I've always made the assumption, and this is based off experience in automotive, that we were going to hit sort of 25% market share and clients would actually hold us to that and would start giving business to other people. And in fact, in certain of our markets, the threshold is much higher than that, which gives us more to go at, gives us more opportunity. And And if you think about it, it's more opportunity is something we know, something which is relatively safe.

[Michael Speakman, CEO at Keller Group]

We don't have to go to a new geography where we don't know it, where it's experimental, where it's difficult. It's within our own existing footprint, which has got to be the best stuff to go after. And also in terms of the way in which we're thinking about exploring both organic and indeed inorganic opportunities, it honed our thinking in those areas. So it's been a really good cathartic process.

[David Burke, CFO & Executive Director at Keller Group]

So on APAC margins,

[David Burke, CFO & Executive Director at Keller Group]

I think

[David Burke, CFO & Executive Director at Keller Group]

we haven't really moved our position in respect to the long term positioning around APAC margins. There is a few one offs in there in 'twenty four, which have driven that margin up. There was particularly a property sale where we sold the Austro office and yard in Melbourne, which did drop in a level of profit in there. So when we talked about it in the past, we said our view through the cycle in terms of margins for APAC is 6% to 7%. I'm not sure we're moving away from that even though they are up at 7.8%, seven point nine % for the full year 2024%.

[David Burke, CFO & Executive Director at Keller Group]

And in terms of India, I mean, as Mike said, India is a very well executed business. It is the smaller of the three major businesses, the two Australian businesses. India is smaller than that. But what's good about it is the fact that it is it does deliver very well. So there's good profit and actually good cash coming back from the Indian business.

[David Burke, CFO & Executive Director at Keller Group]

And I think there is a, as Mike said, a bit of a constraint on growth just in terms of having the capacity to do it. And we do need to be very selective in respect to the clients we choose in India as well.

[Michael Speakman, CEO at Keller Group]

I mean, India for me, Harry that runs it and his team are absolutely superb people. They do what they do and they do it really well. They do it very consciously. And it's quite interesting because historically, it's a place where you have to pick who you can work with because it is a challenging environment in some respects from a business conduct point of view, it can be. And they're very selective about that.

[Michael Speakman, CEO at Keller Group]

They're very selective about the safety and the environment, and they're often setting the benchmark for the site in terms of execution and organization in that regard. And it's interesting at the moment because there are so many opportunities out there, and yet Harry is consciously saying, look, I'm not going to take on more than I can me and my team can manage because we don't want to trip up, which to me shows great self awareness and from a management discipline point of view is exactly what you want. You don't want people to get greedy and overstretch themselves. And they're being very measured. And next in fact, this month, we're taking the EXCOM out there to actually go and share some of that because it's been the last three years have been a great success story.

[Michael Speakman, CEO at Keller Group]

And there's one or two clients there that frankly personally want to go out and press the flash with to see what else we can do in the future. It's good business.

[Clyde Lewis, Deputy Head - Research at Peel Hunt]

Thank you. Clive Lewis of PILOT. I think I might have four or even five. I'll do a couple of times. Can you update us with with regards to Saudi and NEOM?

[Clyde Lewis, Deputy Head - Research at Peel Hunt]

Is that still gone for now as far as you were concerned? That was the first one. Second one around plant machinery, are there any supply chain issues that would limit your ability to grow organically if you did want to step up, buy more kit, take more market share? So I'd just be not interested to hear where you are on that. If you are talking about market share, it sounds like you're not overly worried about competitors and what they're doing.

[Clyde Lewis, Deputy Head - Research at Peel Hunt]

But it would be useful again to get an update particularly probably in The U. S. And European markets as to how things are panning out on that front. And then probably last for now is on pricing. Just again, I think you talked about sort of Suncoast obviously sort of come off the top.

[Clyde Lewis, Deputy Head - Research at Peel Hunt]

You talked about then South Central, I think in The U. S, you talked about stronger pricing. But your perspective, I suppose, for where you think pricing will end up in 2025? And the flip side of that, obviously, whether any cost issues that are creeping up anywhere.

[Michael Speakman, CEO at Keller Group]

Okay.

[Michael Speakman, CEO at Keller Group]

Do you given that you've just come back from Saudi, do you want to pick up the line and it's Regina?

[David Burke, CFO & Executive Director at Keller Group]

Yes.

[Michael Speakman, CEO at Keller Group]

I'll

[Michael Speakman, CEO at Keller Group]

talk about market share and competitors. You can talk about plant.

[David Burke, CFO & Executive Director at Keller Group]

Okay.

[Michael Speakman, CEO at Keller Group]

And then I'll talk about pricing.

[David Burke, CFO & Executive Director at Keller Group]

Okay. Yes. So Saudi, I mean, you saw that red block in The Middle East in the bridge slide, and there's two aspects that do relate to Saudi. One is knee on the line in 'twenty three, a good project, not repeating in 'twenty four. And the other is the problem contract, a challenging project that we're still leaning into in terms of resolving.

[David Burke, CFO & Executive Director at Keller Group]

So we haven't done any more on knee on the line. And I think as we've said in previous updates, it's got to be right for us in terms of price. And if there is a as there has been a race to the bottom, then we're not going to get involved in that. So actually, we've got nothing in the pipeline in respect of the line. Georgina is a project that we just need to get through with the execution.

[David Burke, CFO & Executive Director at Keller Group]

As Mike said, I have been there. And actually, the team have done a great job from an operational perspective in a very challenging environment in terms of getting their arms around it, what we need to do. And we have a clear road and schedule in terms of what needs to be done. The issue is from a commercial perspective, and we're still in discussions with the client because the whole design associated with that, the scope of it changed radically after compared to the bid. We're still just walking through that.

[David Burke, CFO & Executive Director at Keller Group]

And Saudi, we do have other projects in Saudi, which we continue to walk our way through.

[Michael Speakman, CEO at Keller Group]

Market share on competitors, we are going to go after deeper market presence in the places where we're pitched. That doesn't mean to say that we're at all arrogant about the people we meet. We've got some very good competition at a local level. Some of the local competitors on individual techniques can be very, very good. Some of the global competitors, Solesence, Menard, you have to respect what they do.

[Michael Speakman, CEO at Keller Group]

Menard, in particular, they are very competent in terms of what they do. And then some days of the week, they'd be that much better than us. Not much, but a little bit. Other days, we will outperform them dramatically. So there's ebbs and flows.

[Michael Speakman, CEO at Keller Group]

And there's no arrogance about that because there's, let's say, there are certain techniques in certain locations other people will be better than us. What we have to do is to learn why and then up our game. And people are getting increasingly good at doing that. And also realizing, well, actually, if we are doing, for instance, vibro in Southern Germany, we've got the best crews, we've got the best kit. We can hit production rates which are 20% better than anybody else's.

[Michael Speakman, CEO at Keller Group]

So you need to know where you should be fighting your battles. What I would say is a generality is that North American competitors, I think, at the moment are doing very well. Some of the Europeans are struggling a bit. And in APAC, it's a mix. Some are doing okay, some are not.

[Michael Speakman, CEO at Keller Group]

And that depends upon which contracts they've signed up to, frankly. Do you want to talk about plans?

[David Burke, CFO & Executive Director at Keller Group]

Yes.

[David Burke, CFO & Executive Director at Keller Group]

I mean, we

[David Burke, CFO & Executive Director at Keller Group]

particularly don't see any supply chain issues. We don't consider that a constraint for us in terms of growth. I mean, we continue to invest in our CapEx and tend to keep that roughly around the one times the depreciation rate. And we continue to make the right decision around whether to lay stuff or buy stuff depending on the utilization in respect of that equipment. But it's definitely not coming popping up from the business as being a constraint on growth.

[Michael Speakman, CEO at Keller Group]

Interestingly enough, this year is the year for Bauma, which is the in Munich, and it's the big boys and toys exhibition show. So if you're interested in in groundworks and hardware, that's the place to be. And it's genuinely actually a very it's a very good show to actually see the emerging technology, which I think over time, will become increasingly important to us. I know a lot of people talk about AI and all of the data driven stuff. We're construction is a ways behind everybody else in that respect.

[Michael Speakman, CEO at Keller Group]

And there's a lot of building blocks which we have to put in place before you could get to that sort of exploitation in a broad way. There's opportunities there already, but it's not as good. In terms of pricing, I would say, certainly, North America pricing remains pretty robust, pretty strong. There are pockets in Europe where it's pretty tight. But there's also pockets we're beginning to emerge, especially where there is, there's a facet which we bring to the party, which others don't.

[Michael Speakman, CEO at Keller Group]

And it could be capacity, it could be certainty of execution. It could be a whole host of different things, where pricing is less important. I think what we'd say what I'd also say in North America, and this is a bit like the covenant light loan scenario, But it's not also always about the rate. It's about the risk you're prepared to take on and what our teams are getting increasingly alert to. And we've lost one or two bids recently where people have been prepared to take on more technical risk than we would be prepared to do.

[Michael Speakman, CEO at Keller Group]

And that's fine. We have to draw a line and if you have to stand by it. And that to me is important because it shows an increasing discipline about what we're prepared to do in terms of risk and reward.

[Analyst]

Johnny Huber, Deutsche Neils. Congratulations on another year of growth and also the halving of the accident frequency rate. Could I ask firstly on Rocky? You mentioned 28% in the year, which clearly an excellent level. Is that reflecting capacity utilization, change in mix?

[Analyst]

Or is it just top line inflation on a fixed asset base and it will naturally come down?

[David Burke, CFO & Executive Director at Keller Group]

I think the bottom line in terms of that growth in the ROCE is the operating is the profit number because the asset base is pretty similar. We haven't if you look at the top line of the business, we haven't grown essentially over the last couple of years. And we continue to invest in essentially maintenance CapEx to keep up with the size of the business. So depending on what we do from an investment perspective, if we don't do anything, I expect that rate to continue roughly at the same level.

[Analyst]

Thanks. And then just on Sand Coast. You had it in the bridge this year of operating profits having a negative $18,000,000 impact. I don't think it was in the bridge in the first half.

[David Burke, CFO & Executive Director at Keller Group]

No.

[Analyst]

Was that all H2?

[David Burke, CFO & Executive Director at Keller Group]

Yes, it was. And I think at the time when we did the half year, we said we would have expected it to have been in there. But because the pricing had held up to the extent that it had. And literally from July onwards, that just normalized in the second half, which is why you have that drop off.

[Analyst]

And last one is just an update on the ERP implementation.

[David Burke, CFO & Executive Director at Keller Group]

Yes. So as I said, we continue to invest in the ERP. We did have an issue this year with our strategic implementation partner, who chose to make a strategic decision, nothing to do with us, to get out of the market in respect of software in support of construction companies. So that has delayed us a bit. So we've had to go and find another partner.

[David Burke, CFO & Executive Director at Keller Group]

But we are a long way through that build. And really, we're just working with that partner now to walk through that schedule and program. But we do expect that by the first quarter of next year to have launched a pilot to test that from a process and system perspective. So we are making progress on that. Thanks.

[Michael Speakman, CEO at Keller Group]

Good morning.

[Michael Speakman, CEO at Keller Group]

Can you

[Michael Speakman, CEO at Keller Group]

follow Johnny's example and ask all the

[Michael Speakman, CEO at Keller Group]

questions to David?

[Analyst]

The first

[Analyst]

to one at a time. I can't believe we got this far and not talked about The U. S. Margin. Could you just give an indication of what you think is sustainable medium term margin for The U.

[Analyst]

S. Is?

[David Burke, CFO & Executive Director at Keller Group]

Yes. So I think when we've talked in the past about this, we've talked about 7% to 8%. But I think given the performance in 'twenty three and 'twenty four, percent, I think a sustainable target for us is 8% to 9%. And I think it will gravitate down to that in time because as we talked through there, there is buoyancy in the market. There is favorable pricing.

[David Burke, CFO & Executive Director at Keller Group]

I don't think that's sustainable in the longer term. So I think gravitation down to 8% to 9% is where we'll end up.

[Michael Speakman, CEO at Keller Group]

The counter to that in the medium term is as we get greater penetration in the markets, we'll get more operational leverage. And that will force it upwards, but you're talking about five years for that.

[Analyst]

Thank you. And as part of the strategic review, it seems that acquisitions are pretty important. Could you give us an indication of what sort of businesses you're looking to buy, where you're looking to buy them and what the pipeline looks like and what the market sort of looks like for acquisitions?

[Michael Speakman, CEO at Keller Group]

Sure. I will give you some insight and I'll give you more insight into the process we're going through rather than the specifics. We have developed over time and it's served us well a stage gated process for looking at acquisitions. And it's something which I've used elsewhere, but it's actually frankly been honed by the team inside of Keller to get it even better than it was. And we have been, over the last two years, been looking at lots of different opportunities.

[Michael Speakman, CEO at Keller Group]

And as you go through it and you look at the profile of it, does it fit our strategic purpose? Does it fulfill what we're after? And that's very easy decision to work your way through. There's a filter of about a dozen different criteria. And it's basically a reg process and the criteria quite specific as to whether it's red, green, or amber.

[Michael Speakman, CEO at Keller Group]

And you go through that and it's very quick to actually discern whether you should be pursuing it further. We then go through a bit of a dance and then just start into initial due diligence. And the intention with that is to say, well, right, are there any red flags with this? Are there things which run to value which need to be addressed in a sale and purchase agreement? Or most importantly, what should you be addressing in integration?

[Michael Speakman, CEO at Keller Group]

Because that's where acquisitions succeed or fail. And the earlier you prep for it, the earlier the more success you will have. We then work our way through four different cash models, projection over time between disaster case scenario, standalone stand alone with some cost synergies, stand alone with cost and revenue synergies, and we'll model that against the key risks in which we see for the business. And it's that which will drive what we're prepared to pay under what conditions. We have got very close on a couple of occasions in the last two years, but either because the seller had inflated views of value or we found something in the last knockings, we've pulled away, which is fine.

[Michael Speakman, CEO at Keller Group]

I'd rather not do a deal than do a bad one. In terms of where we're looking at the moment, the majority of the prospects we're looking at are in North America and Europe. And the premise on that is twofold. One is North America is a good market to be in, but multiple expectations there are very high. So I'm quite cautious on that in terms of the modeling.

[Michael Speakman, CEO at Keller Group]

And in Europe, I think it's fair to say there's some good assets out there that are quality enough that survived COVID, but perhaps the balance sheet is in the wrong place. And I'm not against actually acquiring some of those given that we can Europe, we can get more cost synergies more readily. And it's a much more certain execution process. And if we can do that at the bottom of the cycle, when the cycle recovers, market recovers, we'll be in a much better place. So I'm looking at you know, anything.

[Analyst]

Thank you. And then final question for me is that the Australia recovery is clearly quite a positive driver in 2024. And I think you say you can maintain profitability. Are we to take that to mean you can maintain at the exit rate, I. E.

[Analyst]

Still some improvement '25 over '24? Or are you going to maintain the profitability at the FY 2024 rate?

[David Burke, CFO & Executive Director at Keller Group]

Yes. So I think the block associated with Austria is about '23 to '24. So we have a consistent profitability of Austria throughout 2024. So I think it's kind of similar level for 2025.

[Michael Speakman, CEO at Keller Group]

I think we might get just a little bit more. And the reason why I say that is because certainly in the first two quarters they were quite cautious and actually had a lower level of activity on some of the nearshore marine work. They are being very cautious with that work because it's the work which has a higher risk profile with it. But there's a lot of assets there which actually need renewal. But we'll see.

[Michael Speakman, CEO at Keller Group]

That'll be market led in some respects.

[Analyst]

Thank you very much.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Thanks. Toby Thorington from Equity Development. I've got four, I think, a couple of which are supplementaries. One at a time or all at once, gents?

[Michael Speakman, CEO at Keller Group]

Pardon?

[Toby Thorrington, Analyst - Industrials at Equity Development]

Would you

[Toby Thorrington, Analyst - Industrials at Equity Development]

like them one at a time or all at once?

[Michael Speakman, CEO at Keller Group]

All all at once. That way it gives us time to mentally

[Michael Speakman, CEO at Keller Group]

use it.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Yes. Quite. Okay.

[Michael Speakman, CEO at Keller Group]

Thank you for being

[Michael Speakman, CEO at Keller Group]

so generous, unlike some people.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Okay. So a couple of market questions then. First of all, you mentioned India is very busy. Are there any sectors in particular you'd like to call out in there? In North America, in FY 2024, you said, I think, LNG was a quiet market for you.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Just wondering if the outlook for that is any better, '25 or '26. Coming back to supply chain, I guess it's a North American question, really. Is there anything either in materials or plant from a cross border point of view, given tariffs and all that kind of thing going on at the moment, which gives you any cause for concern. And lastly or firstly, whichever way you want to go about it, provisions is quite a big step up in net provisions, particularly in the second half in the year. And I think a lot of that was has gone to the short end as well.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Is there anything you can say on that or otherwise? Thanks.

[Michael Speakman, CEO at Keller Group]

Well, I'll talk about India. You can then talk about supply chain.

[David Burke, CFO & Executive Director at Keller Group]

Yes.

[Michael Speakman, CEO at Keller Group]

I'll talk about North American Energy and then you can finish off with this flurry on provisions. India, we've always in terms of clients and opportunities, we've always tended to be at the industrial prospect kind of level. And typically, we will work for international blue chips, oil and gas pharmaceuticals, and increasingly, it's the likes of microchip plants and the like. And there's a reasonable number of those about. And it's actually very good because it's one of the markets where actually people are in a hurry and they want to make sure it works.

[Michael Speakman, CEO at Keller Group]

And it's foundations on some of these things we've got very sensitive kit in it. So they can't afford to cut corners. The tolerance in terms of movement is much less. So those sorts of situations people puts us in a good place. And that is what at the moment Harry and his team are chasing after.

[Michael Speakman, CEO at Keller Group]

And the pleasing against them, say they've got enough in front of them that they can be sensible but selective.

[David Burke, CFO & Executive Director at Keller Group]

The supply chain on Materials and Plant, I mean, yes, we do have a Canadian business and a U. S. Business, but our business is actually very local. We don't cross border essentially in terms of plant and equipment. So I don't perceive that as an issue.

[David Burke, CFO & Executive Director at Keller Group]

I think on the material side, there will be some impact, I think, on tariffs in respect of the Suncoast business, particularly with the elevated structures part of that business, where we agree pricing for a job and it's many months before we actually execute. I think if the raw material cost goes up in the meantime, that's an issue for us. And that's something we had previously back in 2021, '20 '20 '2, but it's not going to be anything close to that level. It's just an increased raw material cost. And from the residential side, of the slab on grade side, which is the other part of that business, we'll be able to recover it pretty quickly because they are very short term turnaround contracts.

[Michael Speakman, CEO at Keller Group]

In terms of North American LNG, now that there has been a change in regime, there are there is a bigger push behind the building of some of the export facilities, especially around The Gulf, whichever Gulf it is, it's The Gulf. And that will come through in 2025 and 2026 and probably 2027. I think it's fair to say that people are, I wouldn't say slow, but they've been very measured about the speed at which they're doing at the moment. And it is actually having interesting ripples elsewhere because the LNG export around the globe, what happens over here will affect what happens over there. And we are seeing a little bit of that as well.

[Michael Speakman, CEO at Keller Group]

But we will have more business in North America, in Texas, and around the area as a result of that.

[David Burke, CFO & Executive Director at Keller Group]

And in terms of provisions, I think there is an element of timing around that with period end. I mean, we are by our very nature relatively prudent in respect of taking positions on stuff. It is at the end of the day, it is construction. And there's always a wide spectrum in terms of outcomes. So I think it's just us being trying to get ourselves on the right sides of evens in terms of the ultimate outcome in respect to those items.

[Toby Thorrington, Analyst - Industrials at Equity Development]

Okay. Thank you.

[Michael Speakman, CEO at Keller Group]

Anything else?

[Executive]

Thanks. A couple of questions on the webcast. Talking about our future growth likely split would be between inorganic and organic?

[Michael Speakman, CEO at Keller Group]

Interesting question, but not one which I've got an answer for at the moment. What I would say is this, normally when you do strategic plans, and this is actually really interesting because it's a sign of organizational maturity. Historically, when I've done strategic plans with the management team, there's been a little bit of organic and a big slug of very sexy M and A because they like that's the easy stuff. In reality, when we rolled it up this time around, it was the opposite way around. And people were doing the hard yards themselves, and there was a little bit of M and A.

[Michael Speakman, CEO at Keller Group]

Now how it actually works out in reality, yes, it's probably somewhere between the two and that's fine. But from an organizational maturity point of view, people actually think, well, actually we could do a lot of this ourselves. It's a good starting point.

[Executive]

Second question, should Ukraine and Russia achieve a peace deal in 'twenty five, how well positioned is Kelle to participate in any reconstruction effort?

[Michael Speakman, CEO at Keller Group]

We are working on that at the moment. What I'd say is this. Historically, we've had a presence in Ukraine. We had a representative office there. It is an area where historically it has been there have been challenges in working there, albeit that a lot of that I think is now sorted itself out.

[Michael Speakman, CEO at Keller Group]

We had at the start of the war something like 32 employees, half of whom roughly have had to go back and fight the war. There's roughly half of them that are still in our employ working out principally out of Poland. And all of those people and their families are the people who have been supported by the foundation. Now the fact we've got those people and the fact that some of the Polish management are well connected into Ukraine and have worked there before, does put us in a reasonable position to actually go in and actually sort out what's good opportunities and what's not and how to work there. And indeed, Peter Whiting has had a couple of his management team already working on the prospect of, right, okay, how would we approach this, how would we gear up, what assets do we need, which people do we take with us, and how do we backfill.

[Michael Speakman, CEO at Keller Group]

Because if we pick up all our 16 Ukrainians in Poland, sure, we can leverage that and I'm sure we can double or triple it, but we still have to backfill them in Poland, which is an incomplete answer. But just to say, it is and has been on the radar and it's something which we will gear up for. Right. Well, I'm going to finish off where I started and say, thank you very much for coming this morning. Some very good questions, some unexpected ones.

[Michael Speakman, CEO at Keller Group]

So this is always pleasing because it keeps us on our toes. But thank you very much for attending. It's been a pleasure. And what you've seen today is actually not us. We just get to give people the roar in all of this.

[Michael Speakman, CEO at Keller Group]

It's really the efforts of of everybody in Keller. So thank you to all of everybody in Keller.

Participants

Executives

• Michael Speakman, CEO
• David Burke, CFO & Executive Director

Analysts

• Aynsley Lammin, Analyst at Investec
• Robert Chantry, Head of UK Company Research at Berenberg
• Clyde Lewis, Deputy Head - Research at Peel Hunt
• Analyst
• Toby Thorrington, Analyst - Industrials at Equity Development
• Executive