Transcript KBC Advanced Technologies plc

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
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USA/UK/Holland/Singapore/Japan
Serves the hydrocarbon
process industry
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Over 200 clients worldwide
Independent consultant
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No conflict with contractors, process
licensors, catalyst and hardware
suppliers or operating oil companies
IMPROVING DOWNSTREAM PROFITS
March 2003
2
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
IMPROVING DOWNSTREAM PROFITS
March 2003
3
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

IMPROVING DOWNSTREAM PROFITS
March 2003
4
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
IMPROVING DOWNSTREAM PROFITS
March 2003
5
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
IMPROVING DOWNSTREAM PROFITS
March 2003
6
Summarised profit and loss account
Turnover
Operating profit
Goodwill amortisation
Other operating exceptional items
Amounts written-off fixed asset investments
Net Interest
Profit/(loss) before tax
Taxation
Profit/(loss) after tax
Dividends
Retained (loss)/profit
Earnings per share - basic
- fully diluted
- basic before goodwill
and expectional items
Average number of shares in issue
IMPROVING DOWNSTREAM PROFITS
March 2003
12 months to
31 Dec 2002
12 months to
31 Dec 2001
£000
£000
38,193
1,487
(467)
(3,011)
(1,451)
318
(3,124)
673
(2,451)
(1,938)
(4,389)
42,000
4,158
7,414
713
12,285
(3,972)
8,313
(2,002)
6,311
(5.08p)
(5.08p)
17.20p
17.09p
3.33p
48.2m
6.46p
48.3m
7
Summarised group cash flow statement
12 months to
31 Dec 2002
£000
Net cash from operations
Operating exceptional items
Net interest received
Tax paid
Capital expenditure
Dividends paid
New shares issued
Purchase of own shares
Translation difference
Net cash outflow from acquisitions
Net cash generated
IMPROVING DOWNSTREAM PROFITS
March 2003
12 months to
31 Dec 2001
£000
1,257
(2,022)
318
(1,847)
(799)
(1,994)
36
(683)
(123)
(4,738)
5,435
7,414
713
(3,176)
(2,166)
(1,893)
127
-
(10,595)
6,454
8
Summarised group balance sheet
At 31 Dec
2002
£000
At 31 Dec
2001
£000
Fixed assets
Net current assets (excl cash)
Cash
Creditors due after 1 year
Provisions
Net assets
9,288
7,221
7,623
(600)
(965)
22,567
5,937
4,786
18,218
(775)
28,166
Share capital and reserves
Profit and loss
7,466
15,101
22,567
7,430
20,736
28,166
IMPROVING DOWNSTREAM PROFITS
March 2003
9
Exceptional Costs
12 months to
31 Dec 2002
£000
Software dispute, legal fees etc
Acquisition integration
Reorganisation
ESOP share write down
1,565
399
1,047
1,451
Total
4,462
IMPROVING DOWNSTREAM PROFITS
March 2003
10
Estimated Cost Savings
Staff savings
Property savings
Other cost
Total
IMPROVING DOWNSTREAM PROFITS
Annualised
2002
£m
3.0
0.4
0.4
3.8
March 2003
£m
2003
v 2002
£m
2004
v 2003
£m
0.7
0.1
0.2
1.0
2.0
0.1
0.1
2.2
0.3
0.2
0.1
0.6
11
Analysis of Tax Charge
Operating profit and interest
Goodwill amortisation
ESOP share write down
Other exceptional charges
12 months to 31 Dec 2002
Tax
£000 £000
1,805 (197) 11%
(467)
(1,451)
(3,011)
870 29%
Profit before tax
IMPROVING DOWNSTREAM PROFITS
(3,124)
March 2003
673
12
Revenues by region
2002 12 mths - £m
2001 12 mths - £m
7.7
7.3
20%
22%
19%
58%
12.2
32%
49%
22.5
11.8
18.7
Europe/Middle East/Africa
Americas
Asia
IMPROVING DOWNSTREAM PROFITS
Europe/Middle East/Africa
March 2003
Americas
Asia
13
Revenues by business area
£m
10.1
8.5
6.9
6.5
5.9 6.1
6.2
5.9
4.8
5.3
5.2 5.1
4.5
5.0
3.9
1.9
PIP/Process
Consulting
Implementation
Services
H1'00
IMPROVING DOWNSTREAM PROFITS
H2'00
H1'01
2.4
2.8
1.7
Other Consulting
H2'01
March 2003
H1'02
2.12.2
1.8 1.91.8
Software
H2'02
14
Order book value
30
25
£ Millions
20
15
10
5
0
Dec-99
£21M
Dec-00
£35M
Jun-01
Dec-01
£40M
£28M
within next 12 mths - base fees
> 12 mths ahead - base fees
IMPROVING DOWNSTREAM PROFITS
Jun-02
£29M
Dec-02
£24M
within next 12 mths - fees @ risk
> 12 mths ahead - fees @ risk
March 2003
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Consultant utilisation
90
80
79
73
74
70
72
65
64
60
50
%
40
30
20
10
0
H1
-
00
H2
-
IMPROVING DOWNSTREAM PROFITS
00
H1
-
01
March 2003
H2
-
01
H1
-
02
H2
-0
2
16
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
IMPROVING DOWNSTREAM PROFITS
March 2003
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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
IMPROVING DOWNSTREAM PROFITS
March 2003
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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
IMPROVING DOWNSTREAM PROFITS
March 2003
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Penetration of Available PIP Market
at 31 December 2002
KBC Penetrated
Available Market
80
TOTAL AVAILABLE
MARKET
70
Excludes ref ineries
owned by Exxon orShell
Number of refineries
60
Excludes ref ineries under
50
30,000 barrels a day (bbl)
Includes:-
40
25%of ref ineries
30,000-50,000bbl
30
50%of ref ineries
20
50,000-70,000bbl
10
100%of ref ineries
over 70,000bbl
0
KBC experience has
N America
Tot al Ref ineries
Available Market
S America
W Europe
EE / FSU
Africa
Asia Pacific
Middle East
151
75
85
94
37
98
67
69
33
67
65
14
71
42
IMPROVING DOWNSTREAM PROFITS
March 2003
shown t hat prof it
opport unit ies are
great er f or more complex
ref ineries over 70,000bbl
20
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
IMPROVING DOWNSTREAM PROFITS
March 2003
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