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KBC Advanced Technologies plc Annual Results Year ended 31 December 2002.

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Presentation on theme: "KBC Advanced Technologies plc Annual Results Year ended 31 December 2002."— Presentation transcript:

1 KBC Advanced Technologies plc Annual Results Year ended 31 December 2002

2 IMPROVING DOWNSTREAM PROFITS 2 March 2003 Formed in 1979 as an independent consulting business Global operation=USA/UK/Holland/Singapore/Japan Serves the hydrocarbon= Over 200 clients worldwide process industry Independent consultant =No conflict with contractors, process licensors, catalyst and hardware suppliers or operating oil companies KBC - Leading consultants in the downstream oil industry

3 IMPROVING DOWNSTREAM PROFITS 3 March Process Consulting Profit Improvement Program (PIP) 11 month program Development of refinery simulation base case Identification of profit improvement opportunities Implementation of opportunities from month 6 onwards Identification and implementation of further new opportunities during 2 nd and 3 rd year of programme 2.Reliability, Availability & Maintenance (RAM) Turnaround and shut down optimisation Inspection and preventative maintenance best practice KBC - Service Offering

4 IMPROVING DOWNSTREAM PROFITS 4 March 2003 KBC - Service Offering 3.Planning and Scheduling Management of crude and feedstock costs Reduction of inventories and internal movements World Class Planning product 4.Other Services Remote monitoring and technical outsourcing Energy conservation and clean fuel studies Project risk assessment and analysis Capital project design Economic and market evaluation 5.Software Petrofine – refinery wide simulation Refinery reactor models LM Software – Supertarget, Pinch Express

5 IMPROVING DOWNSTREAM PROFITS 5 March 2003 Overview – 2002 Global economic slowdown gives rise to difficult trading conditions Sales order cycle slow for majority of the year Successful integration of Petroleum Economics and Linnhoff March Sale of Hyprotech by AEA to Aspen Technology Inc delays commercialisation of HYSYS.Refinery Cost reduction program implements annualised savings of £3.8m

6 IMPROVING DOWNSTREAM PROFITS 6 March 2003 Operational Highlights – 2002 Slow start to 2002 with low utilisation Six new PIPs started during 2 nd quarter First PIP in Russia and second Petrochemical PIP completed Continued growth in South America with award of $15m multi– refinery, 30 month contract Strong growth in Reliability and Maintenance services Weak 2 nd half-year with falling sales awards and revenue

7 IMPROVING DOWNSTREAM PROFITS 7 March 2003 Summarised profit and loss account £000 Turnover38,19342,000 Operating profit1,4874,158 Goodwill amortisation(467) - Other operating exceptional items(3,011) 7,414 Amounts written-off fixed asset investments(1,451)- Net Interest Profit/(loss) before tax(3,124)12,285 Taxation 673 (3,972) Profit/(loss) after tax(2,451)8,313 Dividends(1,938) (2,002) Retained (loss)/profit (4,389) 6,311 Earnings per share - basic(5.08p)17.20p - fully diluted (5.08p) 17.09p - basic before goodwill and expectional items 3.33p6.46p Average number of shares in issue48.2m48.3m 12 months to12 months to 31 Dec Dec 2001

8 IMPROVING DOWNSTREAM PROFITS 8 March 2003 Summarised group cash flow statement £000 £000 Net cash from operations1,257 5,435 Operating exceptional items (2,022) 7,414 Net interest received Tax paid(1,847) (3,176) Capital expenditure (799) (2,166) Dividends paid(1,994) (1,893) New shares issued Purchase of own shares(683)- Translation difference(123)- Net cash outflow from acquisitions (4,738) - Net cash generated(10,595) 6, months to 31 Dec Dec 2001

9 IMPROVING DOWNSTREAM PROFITS 9 March 2003 Summarised group balance sheet £000£000 Fixed assets9,2885,937 Net current assets (excl cash)7,2214,786 Cash7,62318,218 Creditors due after 1 year(600)- Provisions (965) (775) Net assets22,567 28,166 Share capital and reserves7,4667,430 Profit and loss15,101 20,736 22,56728,166 At 31 Dec

10 IMPROVING DOWNSTREAM PROFITS 10 March 2003 Exceptional Costs 12 months to 31 Dec 2002 £000 Software dispute, legal fees etc1,565 Acquisition integration399 Reorganisation1,047 ESOP share write down1,451 Total4,462

11 IMPROVING DOWNSTREAM PROFITS 11 March 2003 Estimated Cost Savings Annualised v 2002v 2003 £m£m£m£m Staff savings Property savings Other cost Total

12 IMPROVING DOWNSTREAM PROFITS 12 March 2003 Analysis of Tax Charge Tax£000 Operating profit and interest1,805(197)11% Goodwill amortisation(467)-- ESOP share write down(1,451)-- Other exceptional charges(3,011)87029% Profit before tax(3,124) months to 31 Dec 2002

13 IMPROVING DOWNSTREAM PROFITS 13 March 2003 Revenues by region 58% 20% 22% 49% 19% 32%

14 IMPROVING DOWNSTREAM PROFITS 14 March 2003 Revenues by business area £m

15 IMPROVING DOWNSTREAM PROFITS 15 March 2003 Order book value £21M£35M£40M£28M£29M£24M

16 IMPROVING DOWNSTREAM PROFITS 16 March 2003 Consultant utilisation

17 IMPROVING DOWNSTREAM PROFITS 17 March 2003 Reorganisation Aim to improve sales focus and closer working between Sales and Operations Regional responsibility via a US and ROW Executive Consolidation of Process Consulting, Implementation Services, Design and Chemicals Learn from successes in RAM and Linnhoff March Models business integrated into Houston office

18 IMPROVING DOWNSTREAM PROFITS 18 March 2003 Software alliance Hyprotech sold by AEA to Aspen Technology Rights to HYSYS.Refinery remain with AEA for duration of agreement with KBC Legal proceedings served on Aspen Technology and Hyprotech in the US Partial award granted by Arbitrator in March 2003, leading to further discussions with Aspen/AEA in our attempt to resolve the issues Work towards release of H.R version 3.01 has restarted following Arbitration ruling

19 IMPROVING DOWNSTREAM PROFITS 19 March 2003 Industry outlook Fall in refinery margins in last 12 months and continued over-capacity leading to focus on costs and profitability Budgetary constraints reduce discretionary expenditure for consulting services in current economic downturn Competitive pressures of globalisation, deregulation and clean fuel specifications will continue to impact the oil industry Short term prospects of improvement in product demand limited Political pressures and threat of Middle East war reduces customers focus on consulting services in short term No significant change in the number of large complex sites – the key market for KBCs services

20 IMPROVING DOWNSTREAM PROFITS 20 March 2003 Penetration of Available PIP Market at 31 December 2002 Number of refineries

21 IMPROVING DOWNSTREAM PROFITS 21 March 2003 Strategy Resolve difficulties with Software partnership with AEA and Aspen Technology Develop a World Class Refining product to meet the vision and the needs of our clients, typically a 5 year program Expand RAM and Energy business lines across multiple industries Develop and/or acquire a broad range of services to address the expanded product requirements Seek to increase further the length of client engagements through evergreen technical support services Reduce vulnerability of KBC revenue streams to economic cycle

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