Trading Statement

Keller Group PLC 01 December 2003 For immediate release 1 December 2003 Trading Update Board and Organisational Changes Keller Group plc ('Keller') today announces the following developments: •The second half performance has been below expectations, with a particularly disappointing performance from Makers, leading the Board to expect a full year result slightly below last year at constant exchange rates and before exceptional items and amortisation of intangibles. •The Board is considering the best way to realise shareholder value from Makers. •Following a strategic review, the Group will concentrate on its core specialist ground engineering activities and its management will be structured along geographic, rather than product, lines. •Board and management changes have been made in light of this change in strategic focus: •Rob Ewen steps down from the Board and as managing director of the Specialist Services division with immediate effect; and •Dr Wolfgang Sondermann, managing director of the European & Overseas business, is appointed as a director. •Order intake and tender levels remain good, resulting in a current order book representing around four months' sales. Tom Dobson, Keller's Chief Executive, said: 'It is disappointing to report that our performance for the year will be below expectations. However, we believe that the actions we are taking will strengthen the Group and enable it to consolidate its performance in 2004.' Enquiries: Keller Group plc www.keller.co.uk Tom Dobson, Chief Executive 020 8341 6424 Justin Atkinson, Chief Operating Officer James Hind, Finance Director Weber Shandwick / Square Mile 020 7067 0700 Reg Hoare/Josh Royston Refocusing on Core Activities After a strategic review, the Board has concluded that going forward it should concentrate on enhancing Keller's international leadership in specialist ground engineering. This will be achieved by continuing its successful record of organic growth combined with complementary bolt-on acquisitions, accelerating its push into new regions and further extending the geographic reach of its Suncoast operations. As a result of this decision to focus on its core activities, the Board has decided to: • structure the management and reporting of its business along geographic, rather than product, lines; and • consider the best way to realise value for shareholders from its Makers business. Board Changes Given the decision to concentrate on the Group's core ground engineering activities, Rob Ewen has agreed that he should step down from the Board and as managing director of the Specialist Services division with immediate effect. Justin Atkinson, Chief Operating Officer, will assume direct responsibility for Makers during the process of reviewing this business. Following his successful direction of Keller's European & Overseas business over the past three years, Dr Wolfgang Sondermann, aged 53, has been appointed to the Board. He will continue to have executive responsibility for the ground engineering business in Europe & Overseas. To ensure the success of the new business structure, Bob Rubright, who was appointed to the Board in March 2003, will now focus on managing all of the Group's activities, including Suncoast, in the US. Current Trading Notwithstanding the underlying strength of the core ground engineering businesses, the Group's overall second half performance has been below expectations. The dollar has continued to weaken against Sterling and, overall, currency movements are expected to have an adverse impact on operating profit before exceptional items and amortisation of intangibles of around £1m for the year as a whole. The European & Overseas business has maintained the strong performance seen in the first half, including a very good first year contribution from Keller-Terra. The ground engineering business in the UK has responded well to the performance improvement initiatives carried out at the start of the second half. The results of the US ground engineering businesses have recently been held back by a weak performance from the Western Region of Hayward Baker. However, the second quarter improvement in the performance of McKinney, acquired in December 2002, has been maintained in the second half of the year. Suncoast continues to suffer from increased costs and reduced margins as a result of the tariffs on steel strand introduced early in the second half, despite increasing its prices. Overall, the results of the US businesses are expected to fall slightly below last year in dollar terms. Despite the actions taken earlier in the year, the weak first-half trading at Makers, reported at the time of our interim results on 22 August, has continued into the second half of the year. For the year as a whole, Makers is now expected to break even, before exceptional items. As a result of this disappointing performance, the Group's full year results will include an exceptional goodwill impairment charge of approximately £7m relating to the Makers' businesses. Prospects In light of these developments, the Board expects that the Group's results for the year ended 31 December 2003, before amortisation and exceptional items, will be slightly below last year at constant exchange rates. Despite these results, order intake and tender levels remain good, resulting in a current order book representing around four months' sales. We believe that the actions we are taking, as indicated above, will strengthen the Group and enable it to consolidate its performance in 2004. A further update on trading and progress in the review of Makers will be given with the preliminary results announcement in early March 2004. Ends Enquiries: Keller Group plc www.keller.co.uk Tom Dobson, Chief Executive 020 8341 6424 Justin Atkinson, Chief Operating Officer James Hind, Finance Director Weber Shandwick / Square Mile 020 7067 0700 Reg Hoare/ Josh Royston Appendix Dr Wolfgang Sondermann does not hold, and has not held in the past five years, any directorships in publicly quoted companies. There is no information to be disclosed pursuant to the requirements of paragraph 6.F.2(b) to (g) of the UK Listing Authority Listing Rules. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Keller Group (KLR)
UK 100