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 Wroath, 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 gonna 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 gonna return to give you my initial reflections after 6 months in the business, followed by a summary and an outlook. Finally, we'll finish with a Q&A. Let's have a look at this results, 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 gonna expand later upon the strengths I believe Keller has in its business model. 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. 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. 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 program launched last year. In 2025, we announced 2 tranches of GBP 25 million. Today we've announced a further GBP 100 million. I'm now gonna hand over to David for a more comprehensive overview of our financial performance. David?
Thank you, James. 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 a 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 than made 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 GBP 45.2 million is at an effective rate of 23%, similar to last year. 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 70.4p, 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. Moving from left to right, starting with 2024, underlying operating profit of GBP 212.6 million. There's an FX impact of GBP 7.8 million due to the dollar weakness against sterling compared to 2024. Coming to North America first, which is down GBP 17.7 million versus last year. The reduction is driven by Suncoast, which is largely exposed to the residential market in the U.S.
The price differential is predominantly driven by the great first half we had in 2024, not repeating in 2025. The volume variance reflects the trough in resi in 25 versus 24 in the U.S. 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 Moretrench RECON 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 GBP 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 U.K. have performed very well, as evidenced by the green GBP 14.6 million block in what is still a tough market. The GBP 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 sizable order book. Moving to the next slide, I'll cover off non-underlying items.
The analysis box shows the items that make up the GBP 10.9 million split between cash and non-cash items. We continue to invest in the ERP program. 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 GBP 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 advanced payments on a couple of contracts in 2024 compared to 2025.
Other call-outs, 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. You can see the impact of the share buyback in 2025 with the GBP 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 GBP 59.7 million. The cash generation from operations has driven the reduction to net cash on an IAS 17 basis, despite the outlay on the share buybacks of GBP 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 a quantum and tenor perspective.
We have headroom of circa GBP 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 in 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, outperform the rest of the market. Looking at margin, the division has achieved a margin greater than 9% despite Suncoast performance and the broader market backdrop.
Looking at margin through the cycle, Keller 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. Through the cycle margins between 5% and 6%. The order book has increased with some larger projects in the Nordics region. When the market turns, the team is very well-placed to benefit with increased revenue and profit growth. Another solid year for APAC, all businesses performing very well. The margin level achieved in 2025 is impressive, given 2024 was helped by a profit on a property sale.
The order book has reduced with some larger projects delivered in Austral and India, the pipeline looks good for all businesses with a bit of softness in Australia foundations. However, we do expect another solid year in 2026. A couple of trend slides before I talk about capital allocation. Firstly, operating margin. This shows the improving profile over the last seven years. 2025 wasn't the best market backdrop, but we still managed to achieve over 7%. This gives us confidence that the commercial mindset and contract discipline has really been embedded across the business, and this level of margin is sustainable through the cycle going forward, as reflected in consensus. Again, another trend slide which reflects strong performance across our metrics. I showed this for the first time last year, demonstrating the step change over the last few years.
This level has been sustained in 2025. These results and the movement to net cash has triggered a review of our capital allocation policy. A nice segue to the next slide. Given the sustained financial and operational performance, the board has reviewed our capital allocation, and whilst not changing the framework, has made some changes in emphasis. Our leverage target is 0.5-1.5. We see no reason to change this. We have confidence in our cash generation and believe the range provides the right balance between capital efficiency, the capital requirements of the business, and gives us significant financial flexibility and headroom. Our primary capital allocation to the business, working capital and CapEx remain paramount. No change there. In 2025, we spent gross CapEx of GBP 90.4 million. We are very proud of our dividend record.
The group has a 31-year track record of maintaining or growing its dividend since listing in the stock market. Reflecting on the evolving maturity of the business and the improved predictability of our cash flow, the board has adopted an enhanced dividend policy which will deliver a sustainable and progressively growing dividend with a target cover range of 2.5x to 3.5x. For 2025, we are at 3x covered compared to 4x in 2024, resulting in a dividend of GBP 0.704 and a total cash cost of GBP 49 million. We believe there is an opportunity to accelerate our strategic plans and enhance our market leadership positions through selective acquisitions. The value case for all potential acquisitions will be judged carefully based on clear financial and strategic criteria.
We do have a pipeline, but no imminent purchase, which brings us to surplus capital and the opportunity to execute further share buybacks. We launched two tranches of GBP 25 million in 2025, with the second tranche nearing completion. Today, we announce our intention to launch a further GBP 100 million buyback that we plan to undertake in 2026. The group's capital structure and the return of surplus capital will continue to be assessed on an ongoing basis in line with the wider capital allocation framework. That's it for me. Thank you for your attention. I'll now pass you back to James, who will take you through his reflections on the business.
Thanks, David. I think the most important thing to say right at the start is I'm absolutely delighted to be here at Keller. My number one priority since joining the business has been to do nothing to disrupt the positive momentum that the business has delivered over the past few years, and as you've just seen from David's slides. We deliver very locally, so I've focused on seeing as much of the business as I can firsthand. I've learned what we do, I've understood the culture, and formed a view on Keller's key strengths and the significant opportunity that we have ahead of us. This experience has been essential in preparing the ground for our strategy discussions. In APAC, I've been to Australia to see both of our businesses, Keller Australia and Austral, as well as a trip to India.
In Europe and Middle East, I visited both Dubai and Saudi Arabia in the Middle East, I've spent time with operations teams in France, as you can see from the fantastic photo, in -15 in Sweden, the UK and Germany, that has included our KGS manufacturing facility in Germany. As our biggest market, I've also made a number of trips to North America, visiting sites in Canada, Texas, New York and Florida, as well as our specific businesses of Moretrench RECON and Suncoast. If you pardon the pun, my key takeaway from all this travel is that this is a business with really strong foundations. It's built on highly engaged people with deep technical expertise and a genuine passion for adding value to projects, both big and small, and across a diverse range of sectors.
Keller is really well positioned to take advantage of positive market developments and to capitalize on pretty much any construction megatrends. Finally, the strength of the balance sheet and our market-leading position in key geographies make Keller a compelling proposition for both investors, colleagues, and customers. Let's have a little look at how I see Keller's strategic process. I think this is a business where it's really important to understand history and the significant progress Keller has made over recent years, because it very much informs where we are today and what our future strategic direction should look like. At this point, I must also pay tribute to the work that Mike and David have done in the past few years to deliver a truly impressive improvement in performance. They've reset the business through a relentless focus on fundamentals.
Various acquisitions over many years have been finally fully integrated, and a culture is embedded that prioritizes margin delivery and execution within a clear geographic strategy. They've invested in systems and processes that will firmly embed these disciplines systemically across the group. This means that Keller today is a disciplined organization, delivering consistent returns and a strong balance sheet. Our portfolio is diversified and sector agnostic with a commercially minded but risk-conscious culture of bidding and contracting. The 2025 results are absolutely testimony to this. The Group demonstrated strong top and bottom-line results delivery for a third year in succession, as evidenced by David earlier. Going forward, underpinned by a clearly defined strategy, I see a lot of opportunity ahead. Without losing any focus on the fundamentals of margin, profit, and cash delivery, I believe that Keller can evolve and continue to grow.
The board and team completed a strategic review exercise before I joined, which identified the criticality of local market share as the key driver of earnings in our business units. Whilst we're the leader in a number of our markets across the globe, the exciting prospect for me as CEO is the significant white space for Keller to continue to grow and turn established regional market presence into new market leadership positions. To achieve this, we must continue to invest to drive organic growth, particularly focusing on opportunities for deployment of our industry-leading portfolio of products and techniques. We can also further leverage the sector agnosticism of our offer by targeting customer segments where we are currently underrepresented, such as nearshore marine in India, mining in Canada, or federal government work in the U.S.
Bolt-on M&A in certain markets can also be a key tool to further accelerate organic growth. This growth will be supported by process-driven operational excellence, harnessing the power of the global group and its strong culture of engineering innovation with the latest developments in technology and AI. Finally, as David has outlined, our capital allocation priorities underpin our growth strategy and our ability to generate returns for shareholders. Just wanna pause for a moment to show you Keller's investment case. This is a slide that has been presented before. The significant strategic progress made over recent years, combined with our positioning for continued success, creates a compelling investment case for Keller. Although, as I say, this slide has been presented before, I wanted to repeat it because the essential elements remain true today.
Keller does have a proven strategy that delivers resilient revenues, sustainable margins, and strong cash generation. This is absolutely built on disciplined governance and sector agnosticism that means we can capitalize on favorable market trends around the world. As I look to develop this further over the coming months, we're gonna focus on Keller's growth potential, underpinned by the engineering excellence inherent in our business model. As I said previously, the central conclusion of the 2025 strategy work was the criticality of local market share. This slide illustrates our position across our areas of operation, but it also clearly shows the great work that's been achieved optimizing our geographic portfolio and making sure we are in the right places in the world. Keller has leading or established positions in our primary markets, but with room to grow either organically or inorganically or through a combination of both.
Our success today has been built on this strategy and the more recent disciplined integration of the group. We win with consistent high-quality delivery for customers in local markets, establishing Keller as a trusted partner and creating a virtuous circle that drives further market share over time. A little bit about how I see our strategy. Firstly, we anticipate holding a capital markets event in the second half of this year, where we will lay out our strategic plans in more detail. The focus of this is gonna be on three strategic levers. Firstly, as you've just seen, Keller's portfolio of businesses and our branch network is a real strength. Geographically, we are well-positioned to capitalize on favorable market trends, and we're in countries where we are confident that we can contract robustly and more importantly, collect the cash. Our portfolio of products is also impressive.
On our website, you can see 50 different techniques. Not every one of those 50 is appropriate everywhere, but the broad scope of capability is one of the key features that makes Keller a market leader. Given we are the largest geotechnical provider, we can leverage our rig capacity to get work done quicker. Performance is critical. The strategy work indicated that price and reputation are customers' 2 key buying priorities. We need to continue to be safe, efficient, and innovative to deliver solutions that continue to generate significant value for our customers.Finally, we're gonna focus on pipeline. This is where it all comes together. We have an optimal geographic footprint with the ability to deploy our portfolio of products globally. Growth in our pipeline will arise from more systematic and widespread deployment of techniques, allowing us to access new customer segments to drive market share.
I want to illustrate this through a couple of case studies, one of the reasons I wanna do that is because one of the main things I love about Keller is just how many inspiring projects we work on. You can see as you go through this presentation, there are a number of photos from real-life projects, I could talk for quite a long time about most of them. I know listening from previous feedback that this is something that shareholders wanna hear more about and this room wants to hear more about. The first one is a case study from Luleå in Sweden. It is where the lovely picture of me came from. This is an ongoing project. It's arisen out of an investment that the business made before I joined in Northern Sweden.
We opened a small office because we believed that there would be opportunities arising from an iron ore rich area. This proved to be a really shrewd move as shortly after SSAB announced the construction of a new fossil-free steel mill in Sweden. On receipt of some early requests for support, largely with the design for seeing concrete piles, our design team went to work and saw an opportunity to value engineer a much more cost-effective and lower carbon solution. The team brought together a range of Keller experts from around the world and deployed a wider range of techniques, including vibro compaction and vibro stone columns, dynamic compaction and wet soil mixing. In combination with the originally envisaged concrete piles for the heaviest load areas, this produced an optimal cost-effective design for the customer and was therefore chosen as the winning concept.
Furthermore, as we execute the project, Keller brings engineers from around the world into a relatively remote geography to ensure that we deliver on plan. Geotechnical engineering services are often bought from local contractors for local market delivery. However, this example illustrates perfectly how Keller can bring the strength of the group's collective expertise to win business and to deliver superior results for customers. The second case study I'd like to talk to you about briefly is data centers, which is another area that we get a significant amount of questions on. Has been a significant area of focus during investor meetings since I joined the business. Following on from warehouses post-COVID and then EV gigafactories, the data centers are a great illustration of how our sector-agnostic business model can pivot to the latest growth opportunities within our industry.
Growth in AI and demand for high-powered computing is clearly a global mega trend, and data centers present an attractive opportunity for Keller. We've got a strong pipeline of this work across the group, and we're well-positioned to meet demand. They're also, though, a good example of the importance to Keller of smaller jobs, as well as our higher profile big contracts. In terms of contract scale, in 2025, around 90% of Keller's global contracts were less than GBP 1 million in value, and these projects amounted to around 30% of our revenue. A steady flow of smaller jobs is hugely important in our revenue mix and provide both a reliable revenue stream and the opportunity to maximize our resource utilization.
The server farm development in Texas is one of the many data centers we've worked on in North America that fit this profile and had a revenue of less than half a million pounds. It was a design and build project where we redeveloped an existing site, and through our design solution and real-time adjustments, we completed the project in around 6 weeks, deploying 10 rigs and installing 1,475 piles. In 2025, we completed 120 data projects in North America that contributed more than GBP 100 million of revenue to the group. Finally, a summary and outlook. Looking ahead, while we remain mindful of macroeconomic uncertainty, the group enters the new financial year with a high-quality order book, healthy tendering activity, a strong balance sheet, and clear strategic direction.
The actions taken by management that led to the operational and financial improvements achieved in recent years have continued to be embedded across the group, giving me confidence that our operational performance is sustainable over the medium term. The majority of our markets are robust and bidding activity is at a healthy level. We're well-placed to address the demand for our services being fueled by long-term structural growth drivers, including infrastructure investment, population growth, energy transition, climate resilience, and the adoption of new technology. We have a clear growth strategy to enhance our position in our chosen markets by continuing to offer solutions backed by our product and engineering capability and by focusing on higher growth customer segments. As we grow, we will not lose the exceptional culture of margin discipline that has become a critical part of Keller's DNA.
As I said previously, we plan to share with you in more detail our growth strategy plans at a capital markets day in the second half. I am confident that the group is well-placed to build further on its momentum and to deliver further progress in 2026 and in the years ahead. Thank you very much. As I said, we'll now move to a Q&A, which I'll let David compare.
Hi, Rob Chantry at Berenberg. Thanks for the presentation, guys. Three questions. Firstly, just a bit more color, I guess, on the North American and European M&A backdrop. Can you just give us some context around how many companies are out there? How many are relevant? What are price expectations doing in both regions? Is there any kind of main reasons you've not executed any so far? Secondly, Germany. Can you just give us some more color on what you're seeing on the ground there with regards to infrastructure, fiscal spend? We're hearing quite a lot, but clearly it's quite early days. Is there any color you've got on key end markets or timing with that? Thirdly, Suncoast.
Clearly, the pricing dynamic was a huge factor in the 2025 results. Are there any remaining lags to consider going forward into 2026, 2027, or would you consider full year 2025 pricing normalized? Thank you.
Thanks, Rob. I'll leave Suncoast to you, David. Maybe I'll have a go at the first two, you can.
Yeah. Sure.
fill in any gaps. Firstly, M&A. Look, I mean, even before I joined, the business was doing a lot of scanning around M&A. It's fair to say that this is a very local business, as I said in the presentation, and that means it's highly fragmented, and that means there are a lot of potential M&A targets to look at. I think the strategy work identified a number of above 1,000 just in the U.S., the U.S. alone. Your last point, why haven't we done anything? I'll try not to say this too often, but I've only been here six months. I do wanna take time to understand where we might need organic help to accelerate inorganic help to accelerate organic growth.
I'm picking up the work that's been done, and we're looking at things in both Europe and North America. In terms of price, little difficult to say unless you get a lot further in terms of discussions. Clearly, David and Mike have talked in the past about there being a differential between the price in the U.S. and Europe. I would say that's anecdotally, that's probably narrowed a little bit. I think, maybe some of the very narrow businesses in the U.S. and the decline in the market and some of the market starts we're looking at means that some of the prices have perhaps cooled a little.
I don't think that puts us off, looking at acquisitions because for us it's more about the revenue synergies we can generate from bringing our techniques to any particular acquisition. We almost see that as an opportunity. In terms of Germany, sorry, David, is there anything you want to add on M&A?
No, no. That's fine.
In terms of Germany, I think we'd say at the moment we haven't seen anything. I think, we've heard the discussion that you've heard about potential future infrastructure spend. I mean, the business has done some big, big jobs in Germany from infrastructure. You'll have heard about the Rauheberg Tunnel that was talked about in 2024. We're well positioned for that, but at the moment we're not seeing it. I don't think it's a great time to make big political comments, but I would assume that a lot of it is hanging on whatever happens in terms of the Ukraine conflict and where public spending across Europe has to be, has to be prioritized. We're well positioned to capitalize. Suncoast.
Yeah. Yeah. On Suncoast, yeah, that red block that you saw in the waterfall diagram really is a representation of a pricing boom that was there in 2024. It was the first half of 2024 that we benefited from that. That's pretty much been gone since the second half of 2025, sorry, 2024, and wasn't really there at all in 2025. From a look-forward perspective, we do think that pricing has normalized, and really what will move the dial for us in terms of Suncoast will be volume going forward. In terms of our view of that, in our forecasting for 2026, we haven't put too much emphasis on that improving.
I think it will really be dependent on rate cuts in the U.S., in respect of that moving. I think it's in a trough at the moment, and it continues to be there. Hopefully, by the second half of the year, we should see it come out of there. We're not building a whole lot of profitability into the forecast on that basis.
Thanks. Aynsley Lammin from Investec. Just two from me, please. On the U.S. maybe, just a bit more color, you said the order looks still good tendering. Which end markets are better, which are slower? Just what are the people saying on the ground in terms of underlying trends of construction markets for this year? Secondly, I guess just on the M&A, any indication in terms of size? What's the level of market share that you'd like to get? I think you say 12% for the group, but, you know, when do margins really start to get support in terms of a market share level? Thanks.
Taking the first one, we obviously take a view on or look at the data around which major sectors we're seeing bidding activity. For our business at the moment, there's quite an uptick in the U.S. around infrastructure and public spend. We've got a couple of quite big projects ongoing at the moment around the Hudson River, which I think there was a photo on the Hudson River in there. Also on I-40, where there's a repair after one of the hurricanes. We're seeing a bit of a skewing towards infrastructure and public, obviously a bit of a downturn in terms of residential at the moment.
Again, you know, David and I must have used the phrase 10x in the presentation around sector agnosticism. That is the beauty of the Keller business model that we can pivot between the different opportunities that exist. From an M&A perspective, size, I don't wanna put a specific number on it, but David's always talked about bolt-on, and I'm absolutely with him in that. I think he talked about less sub... That meaning sub-GBP 100 million. I think it's probably a bit less than that, to be honest. Our focus would be, or my focus would be on opportunities that can drive either geographic revenue synergies, so filling in a bit of white space.
That's not about going to different countries, it's just some country, you know, big countries in particular, there'll be certain areas where we could have more local presence. It might be about buying somebody where they were particularly strong in a technique that we'll obviously do 'cause we have the 50 techniques around the world, but we're stronger in some places than others. It might be a customer subsector where we're not quite as strong. I think the greatest value for accelerating organic growth through inorganic comes from acquiring something that helps us with one of those three things, or preferably, more than one of them, the geography, the technique, and the subsector.
In terms of market share, market share is really interesting 'cause it's such a local market, and I think David said this a number of times. When we think about markets, we don't think about the U.S., we don't even think about Florida. We think about Miami. We think about Tampa. The 12% is interesting but sort of meaningless because it's more about what is our market share in Tampa, what is our market share in Florida. The work that was done and the work that informs the globe that I showed earlier is done at a very, very local level. That's where we'll be, that's where we'll absolutely be focusing.
Thank you. Joe Brent from Panmure Liberum. Three questions from me as well, if I may. Firstly, can you give us some indication of the legal settlement that you talked about in the profit bridge? Secondly, you talked about some of the faster growth areas you're focusing on. Would be interested to have a little bit more color on that. Probably related, you've said that data centers has been a good market. You know, do you see that as continuing to grow from this increased level going forward?
Okay. You gonna do legal settlement, David?
Yeah. I will. Yes. You, you would have seen the block in the waterfall and the value that's the value that's on that. These are our, you know, legal settlements. They happen quite often in the business, but I thought it was only right that in the interest of transparency, that we bring out the fact that in 2025, we had some good ones that did just come through, and they're embedded in that, they're embedded in that number.
Is that the full GBP 7 million?
Sorry?
Is that the full GBP 7 million I think?
GBP 7 million is a net number in terms of other things. I think it's pretty fair to say it's single-digit millions in terms of the overall impact.
Then on the other two, can I say faster growth areas, the first thing to say, and it comes back a little bit to Andy Murphy's question. We're seeing infrastructure, and public, across the globe about 7 percentage points higher in our forward order book than it was in 2025 actual. That, that's certainly coming through for us. If you'll allow me, we'll talk a bit more about the future faster growth areas when it comes to the capital market state, 'cause that's where I wanna bring more focus to that. Your third question, absolutely, data centers, we gave some stats around North America in the presentation, but we're doing data centers around the world.
They are very interesting and there's a lot of them. I would just underscore that they are smaller jobs. Right? They're not likely, even $100 million in North America, they're not likely to make a massive movement in terms of our revenue numbers. They are very good in terms of productivity and getting in and out. They are pretty critical. They are also quite often, they play to Keller's expertise 'cause they are technically reasonably difficult, because a data center has to be, as you'd expect, incredibly solid foundations. Therefore, Keller's reputation, Keller's expertise plays into that.
As I say, on both those questions, we'll dive deeper both from a geographical and from a segment perspective in the capital markets data.
Thank you.
Thanks. Morning. Ben Heelan from RBC. I'll do three as well, please. First one just on the U.S. Obviously, you've outperformed last year. Can you shed some light on your expectations for market growth this year and whether you think you can maintain the same level of outperformance? Coming, sorry, back to growth as well, on a sort of 3-5 year view, just to get your initial sense of the relevance of M&A versus organic in that growth mix. Within that, on organic growth, do you see
Yeah, many opportunities to accelerate organic growth without doing bolt-ons, or are bolt-ons really the unlock to drive organic growth?
Yep. Would you mind turning to U.S. performance?
Yeah. I think in terms of, in terms of 2026, you know, the order book as James has mentioned is strong. We're quite pleased with the quality of that. Bidding levels are still the teams are as busy as ever in terms of in terms of bidding. As we sit here today, we've no reason to believe that we shouldn't repeat what we've done in 2025, in 2026 in North America. There has been some weather issues in the early part of the year, but we don't see that as a challenge. We should be able to get that back as we go through the year.
If I could just take your other two questions together. I mean, firstly, they're really helpful questions in preparing for our capital markets day. Thank you. We'll, you know, we'll bring out some more numbers as part of that process. Look, there are certain areas of the world that it's clear to me we don't need, we don't need inorganic, right? There are some areas where, we can make investments. Luleå is a great example, right? That's completely organic. Setting up an office somewhere where Mike and David and our EME team suspected there might be an opportunity. Turned out the opportunity was completely different from... Not actually not completely different 'cause obviously a steel plant is connected to the iron ore area.
We actually thought there would be more work around the railways that are moving the iron ore around. We organically invested in an area and then a massive opportunity comes up and now our business in Keller Sweden is grown exponentially. There are definitely those opportunities around the world. In truth, Keller could choose to only grow organically, right? The reality is that's about investing in people and putting people into different geographies and different markets. In my view, though, some of that will be too slow. If you, if you're trying to crack into a new subsector, let's give an example. Federal in the U.S., right? Where we do quite a lot of work for public authorities in the U.S., but not so much for the federal government. You'd have to hire people.
We would have to hire people who are very experienced in federal bidding. Beyond that, you have to have the reputation that goes with it. Just hiring people doesn't bring Keller that reputation. A five-year-plus organic timeline could be much quicker to deliver within an inorganic timeframe. To your point about, well, where does that where's the proportion of growth between organic and inorganic? I think, as I say, we'll take that question and put it into our CMD preparation. I think the reality is that what inorganic can provide is the spark for the organic growth.
In that example, if I were to buy a business that was selling three, four, five techniques into the federal government in the U.S., and I bring our other 20 that we're doing in the U.S. for different customers to that customer relationship, I drive a lot of revenue synergy, in my view. Whether you then say that's organic or inorganic is kind of a moot point. The inorganic organic debate to me is all about speed, and there are certain areas where I think we'll want to grow with a pace and therefore the smaller bolt-on inorganic acquisition will really help us to accelerate that growth journey.
Yeah, wanna take the right amount of time to be clear on where we really need to make that investment versus a Luleå type opportunity where we can, you know, literally open an office with three or four people and organically grow.
Thanks. Toby Griver from Deutsche Numis. Firstly, in terms of capacity utilization, James, you mentioned that the smaller jobs are really important for, I think you said resource utilization. Being interested to hear where you think capacity utilization is across the North American Foundations business. Related to that, I know David, you're guiding to CapEx in line with depreciation, but presumably you're still depreciating a lot of kit that was bought seven years plus ago when. Well, since then, we've had a lot of increase in costs of machinery. Do you think you can maintain that through the cycle? The last one would be going back to the portfolio, and you had a slide in the presentation showing where you're market leader versus, perhaps not market leader.
I mean, it looks like in Europe, I appreciate that's white space to grow into, but do you feel there are some markets where you'd rather not be in them? Thanks.
Thanks. If you can take the middle one, David.
Yep, sure.
Capacity. Great, great question, and I'll be honest with you, I'm still trying to get my head around capacity utilization to a certain degree within Keller. It's quite easy to see with equipment. It's harder to see with people. I don't. Not so much the people who are doing the physical work, but the management, the amount we can cope with from a bidding perspective is an interesting question. There are a couple of reasons why the smaller jobs are important. One, as I said in the presentation, because it's easier to move rigs from one job, particularly in very tight geographies where we have a lot of strong market share.
It's easier to just move those rigs around rather than have them tied up for long periods of time. The other thing that's important that we keep doing the smaller jobs is that I don't, particularly in North America, don't want Keller to become a very lumpy business just doing major projects, right? Because that it becomes obviously everything's binary, you win or you don't win. But if you're binary around just major projects, you can end up with space and time where you're waiting for the next job, and that's not so good. The combination of the two allows us to have much greater utilization.
I think one of the questions I want to be able to answer is how much is this business, particularly in North America, capable of from a revenue perspective? Now, there's mix in there 'cause it, you know, you can distort that with one or two very, very big jobs. Understanding how much we're capable of and how much we need to grow the organization is one of the key questions before before that CMD and understanding the growth plans. I'll take your third question and then hand over to David for depreciation. I'm really pretty happy with the geographic footprint that I inherit.
I think, as I say, I think, Mike and David have done the hard yards in terms of getting us into the right places and out of, out of the wrong ones. I really see it all as opportunity. You're right to highlight Europe. All the markets are different in Keller, which makes it even more fascinating industry. In Europe, obviously, we've got some very, some of the very biggest, almost global competitors, there. What I like about what's been done in the last few years, though, is we sort of have a, some people in my business don't like me describing it this way, but a sort of hub and spoke management, right? We will support other countries from bigger countries, a bit like we did with Sweden, actually.
We didn't have a huge local presence in Sweden. We were supporting it from one of the other European regions. As it grew, we were able to then invest more resources, and now Sweden is much more. Well, Sweden is standalone within that unit. I think we have the right model with Europe, and I think, as eventually Europe turns on its spend, construction spend, I think we're really well positioned to capitalize on that, and I think we can grow share as that happens.
Yeah, on CapEx and depreciation, I mean, you look at constraints in terms of growth, and I think James is absolutely right that we don't consider equipment to be a constraint. It is more around people. I think a couple of features of what we've done over the last couple of years in the CapEx space, one is, we've brought the discipline in around making decisions in respect of acquiring equipment. There is a rental market for rigs. We get people to go through the process of asking themselves whether we should be renting or whether we should be buying.
I think as a result of that, I think we can, with the rental market, we can ramp up if as needs be. You've seen that with that server farm example where we were able to put six rigs on a job in the space of five, six weeks. I think the other feature from the last couple of years is we have actually reduced the lifespan of our fleet of rigs over the last number of years. We've probably knocked three or four years off the lifespan in terms of churning the rigs across the business.
We do look a whole lot more at a global level in terms of rigs than what we used to. It's still very much managed, it's still very much managed locally. You know, the one thing I always look out for as we start to churn through the rigs is when we do sell old rigs. Are we making profit on sale of the rigs or are we making losses? If we're making losses, that means our depreciation charge isn't right. Actually, we've been consistently making minor profits in terms of any sales. I'm very comfortable with the depreciation rate we've set in the business as well.
Thanks.
Hi, there, sir. I think I've got three, if I may. You've not said much today on costs. Do we take from that that everything's relatively in under control and pretty benign? Would it be useful to get an update on where you are there? I suppose a corollary to that would be whether the sort of pricing and the bidding that you're out there for new work, whether that is covering any cost pressures that might be there. The second and I suppose third ones would be useful to get more of an update on Canada and India as to how the operations are going there currently.
You take the costs.
The costs and pricing.
Yeah. Yeah. I mean, we are a relatively short-form business, so we do get the opportunity to reprice. Where we don't, if we are entering into longer term contracts, then we'll try to contractually protect ourselves. We'll either have price escalation embedded in the contract or we'll hand that risk over to the client, depending on what the client wants.
We are able to pass it on. I do think there is some investment which we are doing, and you can see that in the increase in the central costs. We have, as the business is growing, we are bringing in the right functional level of expertise. We've got new general counsel, which is a new cost for us, and we've invested a bit in HR in terms of some of our processes and people as well. I think that's all good stuff for us to be doing. We are covering it in terms of the margin.
Short order business, which means that link between pricing and cost is pretty well-used muscle within the business, I would say. Pretty. We're pretty reactive to it. Canada and India, so, it's really interesting markets. Canada was the first place I visited. So I know for those that are longer in the tooth with Keller, I think Canada has had a bit of a mixed reputation. I visited a business that's completely unified under one management, and everybody's got very clear focus. And a lot of really good young-ish talent, actually. A lot of really strong engineering talent. And the two pieces of work that I visited were both to do with the Toronto Metro extension.
I think we're pretty optimistic about our market positioning in Canada, but also what opportunities there might be. Without too far into our sort of commercial plans, there are a few areas, one of which I did reference in the script around Canada, where we might be able to make some organic investments and see more opportunities. India, yeah, it was my first ever trip to India. Actually, I've never, I've never run a part of a business that's had India in its portfolio, so it was a, it was a new experience for me and the whole, the whole country is just, you know, full of entrepreneurial energy and investment.
If anything with India, that we're cautious about those projects we do and don't work on within that market. We're quite selective. We have a very impressively local management team. I think, not all, but some global businesses, you know, perhaps bring quite a lot of people into markets like India. Ours is very much a local team, and they've grown up with the business, and in my view, have the potential to continue growing with it. The most interesting parts for us are the things outside of the cities. Marine is a particularly interesting one. When I went, I visited about an hour outside Chennai, which isn't very far.
An hour's drive outside Chennai at a port where they're sort of doubling capacity, and we're doing a load of work in terms of preparing what was beach into capacity for more cranes. Just on that one specific, you know, India is announcing more and more investments almost on a daily basis into their ports. We see a lot of opportunities in India. We wanna make sure that we capitalize on those, but we also wanna make sure that we're sensible about the projects that we take on. Very, very exciting. It's one of the, you know, great things about Keller that, you know, as I said in the presentation, there are some markets that are difficult, right, around the world.
The geographic diversity that we have means that, if you're ever feeling depressed about a market, you can always spend half an hour thinking about another one where there's much more, you know, optimism and much more opportunity for growth. India is definitely my go-to if I'm ever feeling like that.
Hi, Stephen Rawlinson from Applied Value. Really talked about today, is in and around your observations about Keller's involvement in early contractor involvement in projects, design work, which would be higher margin bill later observations on that. There's a huge amount of expertise within the company. If you talk to other contractors before we talked about much greater involvement in the earlier stages of a project in its design phase. You are obviously involved in the early stage of any project. Is there a scope do you see it now as an observation to get more involved in consultancy, design work, et cetera, rather than simply digging holes to other people's recipes?
Firstly, I'm sorry if I've underplayed it, right? The expertise within this business is enormous and profound, right? Very specialist and very much focused on our knitting, right? We know what we're good at. The level of education in the business through bachelor's, master's, and PhDs is really outstanding. Even when we're not paid for design. We're always pretty much, as far as I can see, we're almost pretty much asked for our opinion on design. Our engineers are, you know, first and foremost, they're passionate about being engineers, right? I mean, they love working for Keller. Keller is seen as a market leader of, as both as a business with customers, but also as an employee brand.
You know, fundamentally, they're engineers, and you can feel if you talk about a project, they light up around the details of it. There's no way that I or David could say to them, "Don't, you know, don't share your opinion unless we're getting paid for it," right? It doesn't, it isn't how the business works. What I would say is, you know, yeah, yes, people always drive for higher margins, but the reality is where our margins are versus the wider construction sector shows you the value that we bring, we bring to projects. Yeah, we're always better paid if it's design and build. I'd sort of characterize it as design and build. There's advise and build, and then there's just build.
Even the just build has a certain amount of advice in it. Yes, the margin will be higher at design and build level, but our margins are still pretty good at a build level as well. It's like consultancy. Consultants already exist in our space, to be honest. They phone engineers quite a lot when they're doing their consultancy work. I haven't sort of finally finished the thought on it, but I'm not convinced that's an avenue for us. I think the full service, I think, the integrated offer that we provide works pretty well. We just need to make sure that when we're giving that advice that we're getting our reward for it. You take the project like Luleå.
I mean, our team really did, and I don't think it wasn't design and build, right? That was a design done by the client, done by a consultant. Our team completely value-engineered, that design, brought the cost down significantly, lowered the carbon. Our reward for that was winning the project, right? Still a competitive market, very competitive market in some areas around execution. Sometimes we're trading that advice, we're trading that knowledge for making sure that we're the ones who win it, and then we win the project at a decent, executional margin, so. I take the feedback as well 'cause if I've underplayed that, I don't want to, right?
This is a business where if you go and visit any of our sites and talk to any of our people on the ground who are delivering or the bid managers, it's just the level of expertise is just really incredible.
Okay. We'll go to Caroline.
Yeah. I think that brings us to the end. Just one final thing I'd like to say before we finish, 'cause I know a number of you have been in and around Keller for a number of years. This is, sadly, but maybe not for her, Caroline Crampton's last day with Keller. She stayed with us until today's results day. I have only obviously worked with Caroline for six months, but I wanted to publicly say she is an outstanding IR professional. Keller has been very lucky to have her, and we wish her all the best wishes for her trip to Vietnam. She's not leaving us 'cause she doesn't like me, by the way. Maybe she is. I haven't asked her.
We wish her all the very best for her travels. Huge thank you, and, yeah, good luck.
Thank you.
Yeah. Yeah, now just to add to that in terms of the last five years, it's been a real pleasure. These days and the weeks that follow have been made a whole lot easier, and I'm sure, the guys who've been interacting with you will also agree. Thank you very much for your time. We'll miss you desperately, but we've got Nicola to take us forward. Yeah, it's a real shame, but good luck, and thank you very much.
Thank you, Caroline.
I think you should.
Thanks everyone for coming.