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KBC Advanced Technologies plc Annual Results Year ended 31 December 2002

KBC Advanced Technologies plc Annual Results Year ended 31 December 2002. KBC - Leading consultants in the downstream oil industry. Formed in 1979 as an independent consulting business Global operation = USA/UK/Holland/Singapore/Japan Serves the hydrocarbon = Over 200 clients worldwide

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KBC Advanced Technologies plc Annual Results Year ended 31 December 2002

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  1. KBC Advanced Technologies plcAnnual ResultsYear ended 31 December 2002

  2. KBC - Leading consultants in the downstream oil industry 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 March 2003

  3. KBC - Service Offering 1. 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 2nd and 3rd year of programme 2. Reliability, Availability & Maintenance (RAM) • Turnaround and shut down optimisation • Inspection and preventative maintenance best practice March 2003

  4. 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 March 2003

  5. 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 March 2003

  6. Operational Highlights – 2002 • Slow start to 2002 with low utilisation • Six new PIPs started during 2nd 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 2nd half-year with falling sales awards and revenue March 2003

  7. Summarised profit and loss account Summarised profit and loss account 12 months to 12 months to 31 Dec 2002 31 Dec 2001 £000 £000 Turnover 38,193 42,000 Operating profit 1,487 4,158 Goodwill amortisation (467) - Other operating exceptional items (3,011) 7,414 Amounts written-off fixed asset investments (1,451) - Net Interest 318 713 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 3.33p 6.46p Average number of shares in issue 48.2m 48.3m March 2003

  8. Summarised group cash flow statement 12 months to 12 months to 31 Dec 2002 31 Dec 2001 £000 £000 Net cash from operations 1,257 5,435 Operating exceptional items (2,022) 7,414 Net interest received 318 713 Tax paid (1,847) (3,176) Capital expenditure (799) (2,166) Dividends paid (1,994) (1,893) New shares issued 36 127 Purchase of own shares (683) - Translation difference (123) - Net cash outflow from acquisitions (4,738) - Net cash generated (10,595) 6,454 March 2003

  9. Summarised group balance sheet At 31 Dec At 31 Dec 2002 2001 £000 £000 Fixed assets 9,288 5,937 Net current assets (excl cash) 7,221 4,786 Cash 7,623 18,218 Creditors due after 1 year (600) - Provisions (965) (775) Net assets 22,567 28,166 Share capital and reserves 7,466 7,430 Profit and loss 15,10120,736 22,567 28,166 March 2003

  10. Exceptional Costs 12 months to 31 Dec 2002 £000 Software dispute, legal fees etc 1,565 Acquisition integration 399 Reorganisation 1,047 ESOP share write down 1,451 Total 4,462 March 2003

  11. Estimated Cost Savings Annualised 2002 2003 2004 v 2002 v 2003 £m £m £m £m Staff savings 3.0 0.7 2.0 0.3 Property savings 0.4 0.1 0.1 0.2 Other cost 0.40.20.10.1 Total 3.81.02.20.6 March 2003

  12. Analysis of Tax Charge Tax £000 £000 Operating profit and interest 1,805 (197) 11% Goodwill amortisation (467) - - ESOP share write down (1,451) - - Other exceptional charges (3,011)870 29% Profit before tax (3,124)673 12 months to 31 Dec 2002 March 2003

  13. Revenues by region 20% 19% 32% 58% 22% 49% March 2003

  14. Revenues by business area £m March 2003

  15. Order book value £21M £35M £40M £28M £29M £24M March 2003

  16. Consultant utilisation March 2003

  17. 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 • Model’s business integrated into Houston office March 2003

  18. 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 March 2003

  19. 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 KBC’s services March 2003

  20. Penetration of Available PIP Market at 31 December 2002 Number of refineries March 2003

  21. 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 March 2003

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