Corporate Social Responsibility (CSR) Report

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The Board recognises that its responsibilities extend beyond financial results and related matters. Effective management of social and environmental risk is important to our corporate reputation and profitability.

The Board’s role is to ensure that appropriate policies and systems are in place to identify, monitor and manage the social, environmental, ethical and health and safety risks which are material to the Group’s businesses and which are apposite to the geographies in which they operate. Each company within the Group is responsible for ensuring that it meets local statutory requirements as a minimum and is also encouraged to reflect identified best practice within the Group.

The Group does not have a single, ‘one size fits all’ approach to social responsibility (SR) issues and this largely reflects the Group’s diverse geographic profile and the different business cultures within which it operates. However, there is a common set of ethical values which is predominant throughout our business practices and which is encapsulated in a new Code of Business Conduct, which we propose to communicate to all our key stakeholders in 2008.

Due to the nature of our business, we have for many years had robust health and safety monitoring. This year, we plan to extend our SR key performance indicators (KPIs), beyond the safety KPIs which are currently monitored by the Board, to incorporate some common measures of our environmental management. Further progress will be reported on next year.

Environmental matters are assuming an ever-greater importance for the Group. For instance, in Continental Europe, our senior management has contributed to the preparation of the Sustainability Charter of the European Federation of Foundation Contractors and is intending to adopt the principles and commitments contained within the Charter, which cover the environment, stakeholders and marketplace relations, as the basis for its own sustainability programme.

We see four main areas in particular where our business impacts on others and where we recognise our responsibilities to society:

• Our workplace and people
• Our marketplace and relationships with industry colleagues
• Protecting our environment
• Community relations

Our Workplace and People
Health and Safety
The health and safety of all Keller Group employees is an important and integral part of our business activity. The Board is committed to providing a healthy and safe working environment for all our employees and contractors. Each divisional Managing Director is responsible for ensuring that health and safety policies and procedures are established and adhered to throughout their division. Managers and other employees also have a responsibility for implementing and complying with the health and safety policy of the business in which they work. Companies within the Group have procedures for accident investigation, in order to determine the causes of accidents, and to recommend and implement corrective actions.

Each business within the Group is committed to continual improvement in safe working practices and in health and safety training. Accidents are systematically reported and training procedures reviewed. Compliance with legal requirements is a minimum standard for all health and safety policies throughout the Group. The Board reviews health and safety on a quarterly basis and also monitors leading indicators such as accident rates, safety training hours and safety initiatives in place. The Board also reviews key indicators over a longer time horizon in order to identify any significant trends.

Safety Performance in 2007
Keller uses the accident frequency rate (AFR) and accident incident rate (AIR) to track the safety performance of its businesses, where AFR is the number of accidents per 100,000 hours worked and AIR is the number of accidents per 100,000 employees and where ‘accidents’ comprise fatalities, major injuries (as defined by the Health & Safety Executive in the UK) and injuries involving more than three days’ absence. The AFRs and AIRs for 2007 are shown in the table.

The key performance indicators show a significant improvement in safety performance in 2007 across all business units for which data is available.

Comparisons with Industry Standards
The common safety measure used in the North American construction industry is the experience modification rating (EMR). A low score indicates a good safety record. In 2007, the EMR for the US foundation businesses (together referred to as KFI) was 0.57 (2006: 0.59), against an industry standard rating of 1.00. It is pleasing to note that on this measure KFI’s safety performance has improved every year since 2001, when it stood at 0.73.

We continue to try to find industry average statistics for the territories in which Keller’s Continental Europe, Middle East and Asia (CEMEA) business operates. As yet, none are available.

In Australia, the closest industry comparators are the construction industry Frequency Rate and Incident Rate published by the National Occupational Health & Safety Commission (NOHSC).

Changes in the annual Accident Frequency Rate (AFR) and Accident Incident Rate (AIR)

Excludes Anderson, Phi and Piling Contractors, for which we do not have full data.

The rates for 2005, which are still the most recent available, show an Incident Rate of 2,860 and a Frequency Rate of 1.45, but these statistics only reflect occurrences resulting in absence of one week or more, whereas our rates shown in the above table include all occurrences resulting in absence of three days or more.

The 2007 average AIR for members of the Federation of Piling Specialists, the most appropriate comparator group in the UK, was 2,263, indicating that the safety performance in 2007 of Keller Ground Engineering (KGE) at 2,140 was slightly better than the average for its sector of the industry.

During the year, several Keller companies received safety awards. In Singapore, we won the title of Contractor of the Month under the Shell Houdini ECC Project safety incentive programme. In France, we received an award from the Regional Professional Health Insurance for Alsace- Moselle for Best Health & Safety at Work Policy. Keller France also received an award from the National Public Works Contractors’ Association for its employee health and safety survey and the resulting improvement in safety awareness and behaviour. Also, all of our US foundation businesses received safety awards from the International Association of Foundation Drilling.

Several companies within the Group are now adopting a behavioural approach to safety management, working with all employees on changing attitudes to safety issues in the workplace and placing an even greater emphasis on accident prevention. In the UK, this is being driven by the ‘Thinksafe’ initiative, which includes safety awareness training for everyone; the development of safety coaches and mentors on site and in offices; and the introduction of a safety element in the bonus programme.

Training and Communicating with Employees
Throughout the year, businesses within the Group communicate regularly with all their employees using a number of forums and media channels. These include company newsletters, consultative councils, suggestion schemes, electronic messaging as well as informal, company-wide social events. We encourage a two-way dialogue with all employees, and provide channels for feedback and comment on the Group’s activities. Companies within the Group provide employees with advice on technical developments within our sector, and also support membership of professional associations.

All companies in the Group undertake a wide range of technical training and typical examples of this can be found in our European business where, during 2007, we introduced a ‘Drivers’ Licence’ for machine operators. Having put some 100 operators through the course in Austria, the scheme is now being rolled out in other countries.

Our European business has also recently developed the Keller Academy, for the training of young engineers. The programme incorporates a significant element of practical training in specific geotechnical subjects. Around a dozen engineers from several countries attend the course which is held twice a year and their progress is followed up once they have returned to their own countries.

The Group continued to undertake significant non-technical management training throughout the year, using a number of different management development programmes. These included learning modules for local managers, strategic development programmes and executive programmes for the senior management teams.

Annual Innovation Award Scheme
During the year KGE introduced an Annual Innovation Awards Scheme to encourage employees to put forward ideas which will contribute towards increasing efficiency, quality, productivity or safety within the workplace. Three cash awards are made annually for the best ideas.

Our Marketplace and Relationships with Industry Colleagues
Group companies take a leadership role within their industry by providing employees, customers, suppliers and potential employees with technical papers, seminars, field trips and site visits. Staff from companies throughout the Group maintain close contact with certain universities in order to share best practice and provide examples of their leading edge engineering excellence.

For example, whilst working recently on a contract in Northern Ireland, KGE organised a special visit to the site for students from Queen’s University, Belfast in order to show its specialist rigs in action. The following day a seminar and site demonstration visit was held for 35 local engineers.

Many of our senior managers take a leading role in the geotechnical construction industry’s professional associations and activities around the world. They are involved in writing building codes, specifications, and guidelines, as well as making presentations at seminars, teaching short courses and researching new construction methods.

In September 2007, for example, the Western region of Hayward Baker ran two highly successful ground modification seminars focusing on the treatment options available for soft soils. Each seminar focused on the exchange of best practice and leading edge information and advice. This was followed by a problem-solving session in which the several groups of attendees worked to develop a solution to a real-life problem.

Protecting our Environment
Environmental management is an essential part of our approach to good business management, particularly as the Group’s construction-related activities can have direct environmental impacts. Costs of waste disposal, energy and construction materials are all increasing, so managing our environmental inputs and outputs is also integral to reducing site operational costs and increasing efficiency.

Going forward, we will be focusing environmental management actions in four key areas of our businesses:

• Reducing site waste
• Reducing the use of site fuel and company car/van fuel
• Reducing our operational energy consumption
• Reducing our paper usage and increasing our recycling

All four priority areas also mean we can make reductions in our Group Carbon Footprint. In the UK, our businesses are starting to develop systems for measuring and monitoring their output of carbon dioxide emissions (CO2) and setting targets to reduce this on an annual basis. In addition, these companies are establishing working groups in order to share ideas and best practice and to develop environmental KPIs, through which our progress in reducing our carbon footprint can be evaluated.

In the US, Hayward Baker, the largest of our US foundation businesses, is reviewing its equipment fleet and ensuring that new machines operate with increased efficiency, burning less fuel and emitting fewer emissions. An awareness campaign is helping to remind Hayward Baker’s staff of their ‘turn it off’ rule, which aims to spread best practice in waste avoidance and energy efficiency in operational procedures throughout the company.

In addition to trying to reduce their own operational environmental impacts, companies within the Keller Group are engaged in a variety of techniques which reduce the environmental impacts arising from the construction process. They include:

Stone Columns and Environmental Stone Columns
Stone columns, using only inert stone, are generally considered to be environmentally friendly alternatives to the steel or concrete products for which they are often substitutes. Not only are steel and concrete more expensive, but they also have additional environmental impacts in terms of higher carbon dioxide emissions. Increasingly, stone columns use recycled aggregates, which, for example, made up approximately 25% of our aggregate requirement in England in 2007.

Now, in addition, environmental stone columns have been developed in the UK by KGE for use in the treatment of contaminated land. The column’s unique design and material content prevent the seepage of contamination via rainwater into uncontaminated, underlying ground.

In Austria and Germany, Keller has been involved in a number of projects using geothermal power for heating systems. In such projects, Keller’s foundations have been designed to accommodate absorber tubes, which conduct heat from the earth into the buildings.

Driven Cast in Situ Piling, Dynamic Compaction and Soil Mixing
Like stone columns, some of the Group’s other most commonly used techniques – including driven cast in situ piling, dynamic compaction and soil mixing – avoid the creation of spoil from the ground. This in turn, eliminates transport movements to and from landfill sites. These systems are particularly relevant where toxic matter is contained within the ground and where materials can remain in situ, rather than be removed for treatment and disposal.

Soft-faced Reinforcing Systems
Phi’s soft facing reinforcing systems are often offered as an alternative to sheet piling. These systems also reduce the need to remove soil and replace with expensive filling. Instead, softwood type timber can be used to create steeper retaining walls, enabling a greater area of land to be used for building. All of our timber is from a renewable material resource, with a lower carbon footprint compared to more traditional piling systems.

Wafflemat System for Concrete Slab Foundation
Suncoast offers a foundation forming system which reduces the amount of concrete required for slab foundations. This in turn reduces climate change emissions by as much as 20% when compared to conventional foundation systems which have higher concrete input. Companies within the Keller Group also undertake projects which deliver environmentally beneficial solutions, and which complement the Group’s product offering. These projects include land reclamation schemes, soil erosion control, flood control, decontamination, brownfield land preparation and foundations for renewable energy facilities. Some examples from around the Group in 2007 include:

Snyder Wind Farm, Texas, US
We provided the foundation excavation for 21 highly efficient wind turbine generators which were erected in West Central Texas at a record setting pace. Each turbine required a minimum five-metre diameter and 12-metre deep shaft.

Ethanol Plant Construction, California, US
We provided stone and soil mix columns as foundation support for a new ethanol production plant in Stockton, California. The columns will also mitigate seismicinduced liquefaction as part of a tailor-made, foundation solution which will provide over 6,000 square metres of treated ground to support this plant.

Soil Decontamination Project at Port Everglades, Florida, US
We provided foundation support for 13 planned petroleum storage tanks at Port Everglades, where the ground was underlain by contaminated organic soil. Using the mass dry soil mixing method, we treated over 36,000 cubic yards of the contaminated soil, taking care not to disturb a troop of wild monkeys which had made their home in the area.

Land Reclamation at Sentosa Island, Singapore
We have worked on several land reclamation projects in the Far East, one of which, at Sentosa Island, is using excavated spoil, because of a shortage of sand in the region. We have developed a ground treatment solution which treats this fill in situ, using deep mixing methods.

For example, employees at KGE are providing financial support to the charity SIM UK, which works with deprived street children in Nairobi, Kenya. Keller has donated funds and helped plan a specific project for chicken farming at a site outside Nairobi. Here former street children will be able to raise poultry, thus enabling them to live self sufficiently in a safer and more comfortable environment.

Anderson are working with Rescue Task Force, a not for profit international organisation which is helping injured American troops returning from war. Anderson is providing backpacks containing personal items for wounded soldiers which aid recovery.

Similarly, much of the Group’s charitable giving is in conjunction with its employees, whether it is through matched giving schemes, and sponsorship of employees’ activities or giving time off to enable employees to participate in voluntary projects of their own choice.

Businesses within the Keller Group continue to work to ensure that they meet their corporate responsibility objectives across a diverse range of markets, and with many and varied stakeholders.