Preliminary results Year ended 31 December 2002
March 2003
1
Highlights• Sales break through £500m barrier
• Operating profit* up 35% to £34.3m; margins up to 6.7% (2001: 6.0%)
• Profits before tax* up 29% to £30.4m (2001: £23.6m)
• Earnings per share* increased 27% to 32.7p (2001: 25.8p)
• Strong cash flow with EBITDA interest cover of 11 times
• Five acquisitions completed during the year
• 2003 prospects enhanced by recent acquisitions
• Recommended total dividend up 8% at 9.9p (2001: 9.2p)
*Pre-goodwill amortisation of £3.1m
2
Management Changes
Bob RubrightFoundation Services MD
Rob EwenSpecialist Services MD
Tom DobsonChief Executive
Justin AtkinsonChief Operating Officer
TBAFinance Director
Foundation Services Specialist Services
USAHayward Baker
CaseMcKinney
Europe &Overseas
Keller
UKKeller
AustraliaFranki
Vibropile
USASuncoast
Europe & OverseasWannenwetsch
UKMakers
Allied/Accrete
3
• Organic profit growth of 14%, like-for-like• Operating margins increase from 6.0% to 6.7% • Interest cover to EBITDA 11.1 times• Acquisitions contribute £1.4m operating profit plus full year of Suncoast
Profit and Loss Account £millions 2002 2001 % Change Turnover 511.0 422.2 +21Operating profit pre-goodwill 34.3 25.4 +35Operating profit post goodwill 31.2 24.2 +29Interest (3.9) (1.8)
Profit before tax 27.3 22.4 +22Taxation (10.7) (8.7)
Profit after tax 16.6 13.7 +21 Profit before tax pre-goodwill amortisation 30.4 23.6 +29 Earnings per share pre-goodwill amortisation 32.7p 25.8p +27Dividend per share 9.9p 9.2p +8
4
Acquisitions in 2002
(1) Including costs, net debt/(cash) acquired and estimated deferred purchase consideration(2) Acquisitions in December 2002 – no profit taken in year
Company Month
acquiredTotal
Investment(1)
£m
2002 Contributionto Sales
£m
2002 Contributionto Operating Profit
£m Wannenwetsch Jan/Oct 2.7 1.7 0.4 Accrete August 4.0 2.0 0.2 Vibropile August 2.2 4.9 0.8 Keller-Terra(2) December 9.1 Nil Nil McKinney(2) December 17.7 Nil Nil Total 35.7 8.6 1.4
• 5 acquisitions; 5 different countries• Total net goodwill acquired of £8.7m
5
Balance Sheet£millions 2002 2001 Fixed assets Intangible assets 66.7 61.0 Tangible assets 79.8 59.2 146.5 120.2Current assets Stocks 15.1 12.5 Debtors 143.9 120.3 Cash 16.2 12.2 175.2 145.0Creditors: due within one year (141.4) (129.1)Net current assets 33.8 15.9Total assets less current liabilities 180.3 136.1Creditors: due after one year (72.3) (56.8)Provisions for liabilities and charges (7.9) (6.0)Net assets 100.1 73.3
• Net asset base up 37% on December 2001• Net tangible assets £33.4m (2001: £12.3m) • Net debt of £68.0m (2001: £63.2m)• Gearing down to 68% (2001: 86%)
6
Cash Flow Statement
• Operating cash flow 126% of operating profit• Capex remains circa 1.5 x depreciation• Good headroom in banking facilities
£millions 2002 2001Net cash inflow from operating activities 43.2 32.2Returns on investment and servicing of finance
(4.4) (3.3)
Taxation (9.0) (8.2)Capital expenditure (12.7) (10.3)Acquisitions and disposals (32.0) (67.3)Equity dividends paid (5.6) (5.0) Net cash outflow (20.5) (61.9) Share issue proceeds 13.6 7.9Other debt movements 2.1 0.4Net debt brought forward (63.2) (9.6)Net debt carried forward (68.0) (63.2)
7
Operating Cash Flow
-10
0
10
20
30
40
50
1994 1995 1996 1997 1998 1999 2000 2001 2002
£m
Operating profit Depreciation and amortisationWorking capital OtherGroup operating cash flow
• 16% compound growth in operating cash flow 1994 - 2002
8
Accounting Developments• FRS 17 impact on UK pension scheme
• Year end net deficit of £4.6m• Scheme closed to new members since 1999• Contributions into the scheme increased
• UITF 34 on pre contract costs
• All bid costs expensed to profit
• Captive insurance company set up during the year
• International financial reporting standards review in 2003
9
Results History
Operating profitTurnover
*pre restructuring costs
0
5
10
15
20
25
30
35
40
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000* 2001 2002
£m
0
100
200
300
400
500
600
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
£m
• Buy out in 1990• Flotation in 1994 • Benefits of McKinney and Keller-Terra in 2003
10
Results History
Dividend per shareOperating margin
0
2
4
6
8
10
12
1994 1995 1996 1997 1998 1999 2000 2001 2002
GBp
*pre restructuring costs
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1994 1995 1996 1997 1998 1999 2000* 2001 2002
• Industry leading margins• Dividend per share more than doubled since flotation
11
Geographical Analysis2002 turnover 2002 operating profit
USA61%UK
12%
Australia5%
Continental Europe and Overseas
22%USA47%
UK21%
Continental Europe and Overseas
27%
Australia5%
• Increased margins in all major foundation business units• German sales 8% of Group
12
Product / Customer Analysis2002 turnover
Piling22%
Refurbishment12%
Concrete post tension
17%
Geotech31%
Ground Improvement
Products18%
ProductsRefurbishment
private13%
New build public22%
New build private44%
Refurbishment public21%
Customers
• Foundation Services:Specialist Services split 71%:29% • Spread of work minimises Keller’s exposure to sector risks
13
£millions 2002 2001 % Change Sales 361.4 347.8 +4% Operating profit pre-goodwill 27.7 23.5 +18% Margin 7.7% 6.8% +13%
• Sales 71% of Group• Operating profit 76% of Group (pre-head office costs)• All major business units increased operating margins
Foundation Services
14
Foundation Services
0
10
20
30
40
50
60
Under $250k Between $250k and $1m Over $1m
Contract size
Sales($m)
Grossmargin
30%
Grossmargin
25%
Grossmargin
20%
• Average of 2000 - 2002 Hayward Baker contracts
15
Foundation ServicesTrading Highlights
• Another record year for US business
• Small and medium sized contracts predominate, but:
• Jet grouting at Wickiup Dam, Oregon
• Caissons at Cooper River, South Carolina
• German margins increased in difficult market
• Another successful year in France
• Excellent performance in the Far East
• Packaged solutions helped UK business improve on prior year
• Very strong result from Australia helped by Vibropile acquisition
16
Foundation Services
17
Foundation Services
18
Specialist Services £millions 2002 2001 % Change Sales 149.6 74.4 +101% Operating profit pre-goodwill 8.8 3.7 +138% Margin 5.9% 5.0% +18%
• Sales 29% of Group• Operating profit 24% of Group (pre-head office costs)• Full year impact of Suncoast
19
Specialist ServicesTrading HighlightsMakers
• Business structured around key markets
• Social housing now accounts for 50% of turnover
• First new build car park completed
Wannenwetsch
• Wannenwetsch returned double digit margins
Suncoast
• Push to grow sales outside of Texas market
• New offices opened in Atlanta, Denver, Las Vegas and Sacramento
• High rise activity declined post September 11
• Housing starts remain strong
• Better control systems in place; production efficiencies in Houston
20
Specialist Services
21
Specialist Services
22
Strategy• Further consolidate our global leadership in Foundation Services
• Strengthen and broaden our offering of Specialist Services
• Invest wisely in our existing businesses
• Take advantage of selective acquisition opportunities
• Continue successful business model
23
Business model• Lean head office
• Autonomous and well incentivised business units
• Specialized equipment and people support niche positions
• Regionalisation offers clients a local presence
• Contract mix spreads risk and enhances margins
• Acquisitions sourced and integrated on a local basis
24
Current Trading and Prospects• Year end order book at four months’ sales
• US infrastructure and housing markets remain good
• Continued growth in Europe; expansion of European Union
• Growth opportunities within Makers and Suncoast
• Clear market leader in Australia
• 2003 prospects enhanced by recent acquisitions
25
Summary• Record set of results continues impressive track record
• Industry leading margins increased to 6.7%
• Profit quickly converted to cash
• Increased dividend well covered
• Succession plans combine continuity with fresh perspective
Preliminary results Year ended 31 December 2002
March 2003
27
Appendix
28
Turnover 1993 - 2002
9 4 . 7 110 . 0 12 0 . 1 110 . 1 9 4 . 4 8 8 . 4 10 4 . 4 9 7 . 7 115 . 0 13 5 . 6
2 9 . 6
5 8 . 76 9 . 1 8 7 . 2
8 5 . 1 9 8 . 510 7 . 4 110 . 1
18 8 . 8
2 4 2 . 6
2 4 . 1
3 3 . 33 5 . 8
4 1. 7 6 5 . 1 6 7 . 7
8 2 . 3 9 1. 0
10 0 . 1
10 6 . 7
12 . 3
2 0 . 8
18 . 3
2 6 . 1
14 . 2
0
100
200
300
400
500
600
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
£m
Continental Europe & Overseas The Americas UK Australia
Ten year track record
148.4
202.0239.0225.0
244.6266.9
314.9 313.0
422.2
511.0
• 15% compound growth in turnover 1993 - 2002
29
Operating Profit 1993 - 2002
5 . 6 5 . 6 5 . 4 3 .9 3 . 0 4 . 1 5 . 5 5 . 1 5 . 98 .1
2 . 2 3 . 8 5 . 06 . 1 7 . 7
9 . 7
12 . 09 . 9
17 . 4
2 2 . 3
0 .71. 2
1.9 3 .44 . 3
3 .4
3 . 04 . 3
3 . 4
4 . 3
0 .9
0 .7
0 . 5
1. 8
- 0 . 2 - 0 .4 - 0 . 8 - 0 . 6 - 0 . 7 - 1. 1 - 1.8 - 1. 6 - 1. 8 - 2 . 2
-5
0
5
10
15
20
25
30
35
40
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
£m
Continental Europe & Overseas The Americas UK Australia Head Office Costs
• 17% compound growth in operating profit 1993 - 2002
Ten year track record
8.310.2
12.811.5
14.3
17.0
19.4
25.4
34.3
17.7*
*pre restructuring costs