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The directors present their annual report, together
with the audited accounts for the year ended 31 December 2002.
Principal activities
Keller Group plc is a holding company. Its principal subsidiary undertakings
are engaged in specialised ground engineering, structural renovation
and post-tension systems, providing the construction industry around
the world with an extensive range of problem solving techniques and
services.
Business review
A review of the Group’s progress and prospects may be found
in Operating Review.
Results and
dividends
The results for the year, showing a profit before taxation of £27,330,000
(2001: £22,393,000), are set out in Consolidated
profit and loss account. The directors recommend a final dividend
of 6.6p per share to be paid on 30 May 2003, to members on the register
at the close of business on 2 May 2003. An interim dividend of 3.3p
per share was paid on 31 October 2002. The total dividend for the
year of 9.9p (2001: 9.2p) will amount to £6,284,000 (2001: £5,401,000).
Directors
The names and biographical details of the directors who hold office
at the date of this report are given in Board
of Directors. All served throughout the year, with the exception
of Mr Scholes, who was appointed on 7 February 2002, Mr Lopez Jimenez,
who was appointed on 14 January 2003 and Mr Ewen and Mr Rubright,
who were appointed on 6 March 2003.
Dr Bond and Dr Peipers retired on 9 May 2002.
Retirement
and re-election
Mr Dobson and Mr Atkinson retire by rotation at the Annual General
Meeting and, being eligible, will offer themselves for re-election.
Mr Lopez Jimenez, Mr Rubright and Mr Ewen, who have been appointed
since the last Annual General Meeting, retire in accordance with the
Articles of Association and, being eligible, will offer themselves
for election. Details of the service contracts of directors who served
during the year are contained in the remuneration report, together
with details of their remuneration and benefits and their interests
in the shares of the Company.
Substantial
shareholdings
At 6 March 2003, the Company had been informed of the following interests
in the Company’s issued ordinary share capital: |
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|
Number of shares held |
Percentage
of issued
share
capital |
|
| Schroder Investment Management Ltd |
10,308,378 |
15.86 |
| Deutsche Bank AG |
6,530,225 |
10.05 |
| Standard Life Investments Limited |
3,309,715 |
5.09 |
| Terratest Tecnicas Especiales S.A. |
3,029,000 |
4.66 |
| Legal & General Investment Management
Ltd |
2,776,336 |
4.27 |
| Prudential Corporation |
2,182,333 |
3.36 |
| Dr J M West |
1,948,000 |
3.00 |
|
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Apart from the above interests, the Company has
not been notified, and is not aware, of any other person who is directly
or indirectly materially interested in 3% or more, or who has a non-material
interest in 10% or more, of the issued ordinary share capital of the
Company.
Research and development
Keller has a reputation for engineering excellence and innovation.
The Group has in-house design, development and manufacturing facilities
where staff work closely with site engineers continually to develop
new and more effective methods of solving problems of ground behaviour.
Most of the specialised equipment we use is designed and built by
Keller.
Management of financial
risks
Currency risk
The Group faces currency risk principally on its net assets, of which
a large proportion are in currencies other than Sterling. In order
to reduce the impact that retranslation of these assets might have
on the balance sheet, the Group manages its borrowings, to the extent
possible, to hedge its foreign currency assets. Where possible, hedging
is carried out by borrowing in the same currency as the assets being
hedged.
The Group manages its currency flows to minimise currency transaction
exchange risk and forward contracts are used to hedge significant
individual transactions. The majority of such currency flows within
the Group relate to repatriation of profits and intra Group loan repayments.
The Group’s foreign exchange cover is executed primarily in
the UK and at 31 December 2002 the principal value of forward exchange
contracts amounted to £602,000 (2001: £1,700,000).
The Group does not trade in financial instruments nor does it engage
in speculative derivative transactions.
Interest rate risk
Interest rate risk is managed by mixing fixed and floating rate borrowings
depending upon the purpose of the financing.
All drawdowns against the Group’s central borrowing facility
are reviewed and the interest rate adopted depends upon the interest
rate outlook for the subsequent six months. The facility affords the
Group the ability to choose from one, three or six month interest
rates for its drawdowns.
In addition, interest rates have been fixed on approximately 50% of
central banking facility borrowings until 5 September 2004 by the
use of swaps.
Credit risk
Amounts deposited with banks and other financial institutions give
rise to credit risk. This risk is managed by limiting the aggregate
amount of exposure to any such institution by reference to their credit
rating and by regular review of these ratings. The possibility of
material loss in this way is considered unlikely. |
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| Corporate governance
This is the subject of a separate report in Corporate
governance which details the Company’s compliance with
the Combined Code on Corporate Governance, incorporated into the
Financial Services Authority’s Listing Rules. The remuneration
report is set out in Remuneration
report.
Going concern
The accounts have been prepared on the going concern basis as the
directors, having made appropriate enquiries, consider that the
Group has adequate resources to continue in operational existence
for the foreseeable future.
Payments to suppliers
The Group’s policy, in relation to all of its suppliers, is
to settle the terms of payment when agreeing the terms of the transaction
and to abide by those terms, providing that it is satisfied that
the supplier has provided the goods or services in accordance with
the agreed terms and conditions. The Group does not follow any code
or statement on payment practice.
At 31 December 2002 the Group had 67 days’ (2001:
69 days’) purchases outstanding.
Political and charitable contributions
No contributions were made to any political party during the year.
Donations made by the Group in the UK for charitable purposes were
£6,000 (2001: £2,000).
Social responsibility
The Group’s approach to employee involvement, disabled persons,
health and safety and the environment are discussed in the social
responsibility report in Social
responsibility.
Special business at the Annual General
Meeting
The full wording of the resolutions to be tabled at the forthcoming
Annual General Meeting is set out in the Notice
of Annual General Meeting.
Resolution number 10 – Scrip dividends
Article 162 of the Company’s Articles of Association permits
the directors, subject to the authority of the Company in general
meeting, to offer to shareholders the right to elect to receive
ordinary shares, credited as fully paid, instead of cash in respect
of dividends declared by the Company or by the directors. The board
recommends that by an ordinary resolution it be given authority
to make such offers until the conclusion of the next Annual General
Meeting.
Resolutions numbered 11 and 12 – Authority to allot shares
Under the Companies Act 1985 (the “Act”), the directors
of the Company may only allot unissued shares if authorised to do
so under Section 80 of the Act. Section 89 of the Act also prevents
allotments for cash, other than to existing shareholders in proportion
to their existing holdings, unless the directors are specifically
authorised. This gives existing shareholders what are known as “pre-emption
rights”. The Articles of Association give a general authority
to the directors to allot unissued shares and disapply these pre-emption
rights. Passing resolutions 11 and 12 will extend the directors’
flexibility to act in the best interests of shareholders, when opportunities
arise, to issue new shares.
The directors will be able to issue new shares up to a nominal value
of £2,166,035 which is equal to approximately 33.3% of the
issued ordinary share capital at 6 March 2003.
The directors will also be able either to issue shares for cash,
other than to existing shareholders in proportion to their existing
holdings, up to a maximum nominal amount of £324,905, representing
about 5% of the issued ordinary share capital at 6 March 2003 or,
other than for cash, in a rights issue.
These arrangements are intended to ensure that the interests of
existing shareholders are protected so that, for example, in the
event of a share issue which is not a rights issue, the proportionate
interests of existing shareholders could not, without their agreement,
be reduced by more than 5% by the issue of new shares for cash to
new shareholders.
The board has no current plans to allot ordinary shares except in
connection with the executive share option arrangements.
The authority sought by resolutions 11 and 12 will expire at
the conclusion of the next Annual General Meeting, but could be
varied or withdrawn by agreement of shareholders at an intervening
general meeting.
Resolution number 13 – Purchase of the Company’s
own shares This resolution grants a limited authority to the
Company to purchase through the market up to 10% of the issued ordinary
share capital. The resolution specifies the maximum and minimum
prices at which the shares may be bought at the date of the notice.
The authority sought will expire at the conclusion of the next Annual
General Meeting. The directors have no immediate intention of exercising
the proposed authority when it becomes effective. Any purchases
will only be made when, in the opinion of the directors, an improvement
in earnings per share of the remaining shares is anticipated and
it is in the best interests of shareholders generally. Any shares
so purchased will be cancelled and the number of shares in issue
will be reduced accordingly.
Auditors
In accordance with Section 384 of the Companies Act 1985, a resolution
for the reappointment of KPMG Audit Plc as auditors to the Company
is to be proposed at the forthcoming Annual General Meeting.
On behalf of the board
J F Holman Secretary
6 March 2003
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