kbc advanced technologies plc investor presentation half-year results 30 june 2004
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KBC Advanced Technologies plc
Investor Presentation
Half-Year Results
30 June 2004
2
Agenda
1. Review of 1st half 2004 slides 3 – 4
2. Strategy update slides 5 – 9
3. Financial summary slides 10 – 18
4. Customer market conditions and outlook slides 19 – 20
Appendix: Background on KBC slides 21 – 24
3
Overview – First half 2004
Business is in transition
Realignment of KBC services to client needs in progress
Strengthening client relationships and key account management
Investment in developing software applications and best practices
Strong growth in software revenue
Repositioning for growth in 2005
4
Operational highlights – First half 2004
Launch of ProfitManager applications and best practices in May
Improved sales performance in UK office with good contract wins in FSU, Middle East and South Africa
Sales remain strong in Japan and Korea
Revenue in the Americas reduced from previous years
Process and other consulting revenues remain under pressure during the transition
Growth in Software, Planning, Upstream and Petrochemicals
5
Refocus on client relationships and regional business strategies
Implement strategy for growth for 2005 and beyond
Restructure core business to deliver competitive advantage through
continuous profit improvement built on sustainable partnerships
Evolve scope and functionality of Petro-SIM and ProfitManager to
support industry best practice
Broaden consulting into Strategic Planning and Risk Management
Diversify and expand into Petrochemical and Upstream markets
Align internal work processes and implement new MIS
Strategy
6
Sustain
MonitorOptimizeAdjust
Implement
Refinery performanceProcess operationsBase case simulation
Evaluate
Identify
BenchmarkPetro-SIMSoftware
Interview and observeApply engineering fundamentalsChallenge constraints
Technical feasibilityOperating feasibility Economics
MonitoringTools
Profit TrackerManagement Tools
Continuous Improvement PlanDemonstrate Report
ProfitManager - Continuous Improvement Process
7
8
Petro-SIM
Development team recruited in August comprised of ex-Hyprotech employees
Petro-Sim release announced on 8 September 2004
Initial release in October 2004
First update scheduled for first quarter 2005
Discussions with customers under way
Demonstration in September at annual NPRA conference
9
Petro-SIM
Naphtha Hydrotreater
CDU
Reformer
Visbreaker
FCC
HF Alky Unit
Blend optimizerKero Hydro treater
DieselHydro treater
10
Summarised profit and loss account
Turnover 15,907 16,69932,274Operating profit 487 39704Goodwill amortisation (245) (280)(490)Other operating exceptional items (496) (1,020)(2,397)Net Interest 26 74 200Loss before tax (228) (1,187)(1,983)Taxation 79 171 499Loss after tax (149) (1,016)(1,484)Dividends (93) (605)(1,906)Retained loss (242) (1,621)(3,390)
Earnings/(loss) per share - basic (0.32p) (2.18p) (3.19p) - fully diluted (0.32p) (2.15p) (3.17p) - basic before goodwill
and exceptional items 0.91p (0.02p) 1.37p Average number of shares in issue 46.5m 46.5m 46.5m
6 months to 6 months to 12 months to30 Jun 2004 30 Jun 2003 31 Dec 2003
£000 £000 £000
11
Foreign exchange impact
Turnover 15,907 16,878 16,699
Operating costs 15,420 16,303 16,660
_____ _____ _____
Operating profit before
goodwill and exceptional 487 575 39
items _____ _____ _____
6 months to 6 months to 6 months to30 Jun 2004 30 Jun 2004 30 Jun 2003
£000 £000 £000at constant
exchange rate
12
Exceptional costs
Software dispute, legal fees, etc 496 1,325
Reorganisation - 878
Strategic review - 194
___ _____
Total 496 2,397
6 months to Year ended30 Jun 2004 31 Dec 2003
£000 £000
13
Summarised group cash flow statement6 months to
30 Jun 2004
£000
6 months to
30 Jun 2003
£000
12 months to 31 Dec 2003
£000
Net cash from operations 1,243 (892) 275
Operating exceptional items (282) (1,021) (1,846)
Net interest received 26 74 200
Tax (paid) refunded (214) 352 769
Capital expenditure (259) (112) (257)
Dividends paid (1,302) (1,302) (1,906)
Translation difference (33) (19) (173)
Net cash outflow from acquisitions - - (410)
(821) (2,920) (3,348)
14
Summarised group balance sheet
Fixed assets 6,353 7,630 7,071
Net current assets (excl cash) 8,879 9,208 8,032
Cash 3,454 4,294 4,275
Creditors due after 1 year - (300) (300)
Provisions (1,132) (704) (1,180)
Net assets 17,554 20,128 17,898
Share capital and reserves 6,781 6,781 6,781
Profit and loss 10,773 13,347 11,117
17,554 20,128 17,898
Note: 2003 comparatives restated for UITF38 reclassification of ESOP investment in own shares
At 30 Jun At 30 JunAt 31 Dec
2004 20032003£000 £000£000
15
Revenues by region
2003 12 mths - £m
8.6
17
6.6
Europe/Middle East/Africa Americas Asia
2004 6 mths - £m
5.6
5
4.6
Europe/Middle East/Africa Americas Asia
20% 27%
53%
37%
33%
30%
2003 6 mths - £m
4.2
10.3
2.2
Europe/Middle East/Africa Americas Asia
13% 25%
62%
16
Revenues by business area
12.4
1.9 1.7
12.0
2.1
13.3
2.82.2
14.5
5.3
1.8
5.0
9.0
6.2
8.0
6.2
1.6
5.5
2.2
6.8
4.9
2.62.4
12.1
1.9 1.8
7.2
Process Consulting Other Consulting Software
H1'00 H2'00 H1'01 H2'01 H1'02 H2'02 H1'03 H2'03 H1'04
17
Consultant utilisation
74 73 7275 74
78
65
0
10
20
30
40
50
60
70
80
90
%
18
Order book value
0
5
10
15
20
25
30
Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04
£ M
illio
n
within next 12 mths - base fees within next 12 mths - fees @ risk
> 12 mths ahead - base fees > 12 mths ahead - fees @ risk
19
Market observations
Refinery utilisation and margins at an all-time high
Plans/projects for increased capex for expansion/upgrade
Renewed emphasis on energy conservation
Efficiency improvements increasingly driven by best practices
Recognition of shortage of key skills and experience
20
Outlook for 2004
Revenues expected to remain flat in second half
Additional costs of Petro-SIM development in second half estimated
to be annual cost of £1m with £400k impacting 2004
Operating profit before exceptionals and goodwill for full year
expected to remain flat compared with 2003
Year of transitionClient relationship buildingWork on strategic initiativesInvestment in software development
Activity level high
Consultant morale and enthusiasm restored
21
KBC – “The preferred partner to deliver sustainable competitive advantage”
Leading independent consultants to the downstream oil industry
Serves the refining, petrochemical and process industries
Proprietary software tools and methodology, together with
unrivalled experience of consultants are key differentiators
Global operations serving over 200 clients worldwide
APPENDIX
22
KBC evolution
1979KBC founded as independent consulting company, specialised in energy improvement in refineries
1983 First yield & energy study applied to petrochemicals (ethylene plant)
1986 Development of Petrofine simulation software leads to first refinery-wide Yield & Energy Survey
1993 Yield & Energy Survey develops into comprehensive Profit Improvement Program (PIP)
1995 On-site Implementation Services takes KBC profit improvement deliverable to a new dimension
1996 Development of new business area in Reliability, Availability & Maintenance
1997
2000 KBC extends its operations to include a comprehensive risk management program with the acquisition of Risk Solutions
2000
2004
KBC extends into oil and gas market analysis with PEL acquisition and enhance energy services with Linnhoff March acquisition
2002
Core skills and competencies extrapolated into Petrochemicals, Gas Processing and Energy industries
KBC Office Locations
KBC establishes Moscow office to serve FSU clients
KBC Listed on the London Stock Exchange
23
Global Track Record
24
Delivering competitive advantage
Technology
& Tools
Methodology
People
Technology
& Tools
Technology
& Tools
Methodology
PeoplePeople
Mission and Strengths
in partnership with our clients
Independence
Proven track record
Methodology
Unique toolsets
Breadth & depth of experience
Change management experience
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