• Revenue of £465.2m up 3% (9% on a constant currency basis)
• Record first-half operating margin of 9.0% (2006: 7.9%)
• Profit before tax of £40.1m up 20% (28% on a constant currency basis)
• Basic earnings per share up 23% to 37.2p (2006: 30.3p)
• Recent major contract wins contribute to a record order book
• Interim dividend per share increased to 6.0p (2006: 4.2p)
This, from a company where Brokers' consensus was for 72p earnings for the year - that is, DOWN from 77p in 2006. These interim results blasted that fiction away. These were the magic words from the Chief Executive:
'In these favourable conditions, and with an all-time high order book, the BoardThe above had, in fact, been presaged by an optimistic trading statement on the 21st June 2007 (nine days before the end of the first half). But in the July/August turmoils Keller had been badly buffetted. From a peak of 1135p on 10 July, it got as low as 770p on 10 August. At the Friday close on 17 August it was 918p.
now expects that the full-year results of the Group's continuing operations
will significantly exceed last year's outstanding results.'
How did the market react to these results? By marking Keller down to 899p (it got as low as 873p that day). Here is how the market has reacted since to the magic words:
| 29-Aug-07 | 1,060.00 |
| 28-Aug-07 | 1,029.00 | |||||
| 24-Aug-07 | 1,001.00 | |||||
| 23-Aug-07 | 1,020.00 | |||||
| 22-Aug-07 | 987.00 | |||||
| 21-Aug-07 | 923.50 |
The point I have attempted to demonstrate here is (1) the potent effect of results exceeding market expectations, and, more important, (2) the opportunities available to the private investor to make money, given that the market often reacts rather slowly to the change in expectations. I have seen this happen so many times. Of course, there were great opportunities also in the market panics of late July and August.
Keller is now one of my largest holdings.
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