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Share Name | Share Symbol | Market | Type |
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KBC Groep NV | EU:KBC | Euronext | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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-0.50 | -0.72% | 68.96 | 68.94 | 68.98 | 69.80 | 68.86 | 69.24 | 50,446 | 13:47:40 |
RNS Number:6586O KBC Advanced Technologies PLC 14 August 2003 Embargoed until 07.00 14 August 2003 KBC Advanced Technologies plc ("KBC" or the "Group", or the "Company") Interim results for the six months ended 30 June 2003 Chairman's Statement On 24 April 2003, the Board of KBC announced that it would undertake a review of the strategic options for the business in the light of what, at the time, was a challenging trading environment. The purpose of the strategic review was to consider all options available to maximise the full potential of the business to provide value for shareholders. The Board has concluded this review and believes that at this stage, given the expectation of an upturn in current trading, shareholder value will be maximised by the business continuing to pursue its strategy as an independent company, while at the same time restructuring the balance sheet and examining dividend policy and employee incentivisation. As part of the strategic review the Board held discussions with interested parties in relation to a possible offer for the Company, as announced on 11 June 2003. Whilst approaches were received from a number of parties, the Board believes that the level of interest did not attribute sufficient value to the prospects of the Company and, therefore, would not achieve full value for shareholders. Accordingly, the Board has now terminated all such discussions. The Board is now examining its alternative plan to maximise the value of the Group to shareholders as an independent company. This alternative will not only yield value to shareholders but will also incentivise and retain the Group's key business asset, its people. At the present time a significant proportion of the market value of KBC is represented by cash and the Group is largely free from debt. In an improving environment for the business the Board is in the early stages of formulating proposals to establish a capital structure appropriate for the Company and in the interests of all shareholders in the form of either a share buy-back or a special dividend. Concurrently, the Board will examine the Company's dividend policy such that it more closely relates to the earnings capacity of the business in the short to medium term. As part of this review, and in consultation with shareholders, the Board also intends through more appropriate incentivisation to align the interests of management and employees across the business more directly with those of shareholders. As a package of measures, the Board believes that these steps, combined with the medium term prospects for the business as described below, will provide a solid platform from which to rebuild shareholder value in the business. Results Turnover fell from the same period last year by #2.0m, or 10% at constant exchange rates, with the impact of the weak sales performance in 2002 felt across most areas of the business. Turnover was hit by a further #1.5m, or 7%, from the weakening US dollar, making a total fall of #3.5m, or 17%. Operating costs before exceptional items and goodwill amortisation fell by 7%, or #1.3m at constant exchange rates, due to the benefits of the 2002 cost reduction programme. Staff costs in particular were reduced by 11% and comprised #1.1m of this total. Operating costs for the period have also benefited by #0.9m from the weak US dollar when compared to the average rates in 2002, making a total reduction of #2.2m, or 12%. Operating profit before exceptional charges and goodwill amortisation fell by #1.2m to #0.04m for the period, #0.5m of which was a result of the foreign exchange impact described above. Operating exceptional charges totalling #1.0m have been incurred relating to the costs of the ongoing legal proceedings with AEA Technology PLC ("AEA") and Aspen Technology Inc ("Aspen") (#0.8m) and to the costs of the continuing office rationalisation and redundancy programme started last year (#0.2m). Net funds fell by #2.9m overall with the major factors being a net cash outflow from operations of #0.9m, exceptional operating costs of #1.0m and the 2002 final dividend of #1.3m. Dividend The Board has decided to maintain the interim dividend at 1.3p per share (2002: 1.3p), which will be paid on 26 September 2003 to shareholders on the register at the close of business on 5 September 2003. This reflects the Board's confidence that the second half of 2003 will show an improvement on the first half as the workload and utilisation improves. Operational review KBC started 2003 with a low backlog of work following disappointing contract awards in the previous year. The order book deteriorated further in the first quarter of 2003 as contract awards remained low, particularly in the Middle East where awards of new work were delayed before and during the Iraq war. Manpower utilisation in the first quarter was low and, despite the cost reduction programme implemented in 2002, operating margin was negative. Contract awards steadily improved during the second quarter. The order book has grown from a low point at the end of April, with utilisation for the last two months being close to optimum. The operating margin subsequently turned positive and ensured results somewhat better than forecast in our trading statement of 24 April 2003 so that the first half-year as a whole broke even at the operating level before exceptional costs. As part of the re-organisation implemented last year Process Consulting and Implementation Services were merged on a regional basis. This reflects the growing trend for Profit Improvement Program (PIP) contracts to include early implementation. This area suffered particularly during the first quarter although it improved considerably after the April low point, with material awards in Japan, the Far East and the Middle East. Reliability and Maintenance has continued to grow, albeit at a slower pace than in 2002. Growth has also come in the Planning area with notable success from strategic planning work in Latin America. Turnover from software sales was maintained at constant exchange rates as demand for model sales continued. Although Process Consulting has suffered an overall fall in revenue, the Americas region has seen stronger sales awards and has benefited from the stability of sales and operations resources working closer together and the success of a customer re-engagement programme. The main impact of 2002's re- organisation was felt outside the Americas where the new structure has taken longer to become effective. The model being followed outside the Americas region is that which has become successful in the Americas after several lean years in the late 1990s and is expected to improve future sales performance once established. The re-organisation programme and the office moves in the last 12 months have been highly unsettling for KBC's employees. Further uncertainties have been created by the strategic review announced in April. Despite this, staff turnover has remained low and a period of stability following the completion of the strategic review will be welcomed. The contribution of all staff to the improvement in trading and results over recent months is recognised. Software Dispute The legal proceedings with AEA and Aspen continue. The costs incurred came mainly in the first quarter (when arbitration hearings were held) and have reduced since then. Following the partial arbitration award made in March, KBC gave notice of termination of the Master Agreement with AEA in June. AEA has contested the validity of the notice and has itself issued notice of termination. In either event KBC is now free of the onerous non-compete conditions of the Master Agreement which will allow KBC greater freedom to develop and market its own software. Discussions have been held with both Aspen and AEA in an attempt to resolve all matters without recourse to further legal proceedings. 2003 Outlook Although the first half of 2003 as a whole has been disappointing, there were clear signs of recovery during the second quarter which have continued since the end of the period. The cost reduction programme is complete and the consulting staff have been at optimal utilisation in recent months. Following the low point marked by the Trading Statement issued on 24 April 2003 and the end of the Iraq war, trading has picked up and indicators are for a much improved performance in the second half of the year. The sales pipeline has increased considerably during this period and the value of realistic prospects stands at a two-year high point. The conclusion of the first part of the strategic review referred to above will allow focus to return to business performance. Further contract awards are needed in the short term to maintain the improved performance of recent months and opportunities in strategic planning, software and long term technical services are being developed to stand alongside the traditional process consulting work. -ends- Enquiries: KBC Advanced Technologies plc am: 020 7067 0700 Nicholas Stone, Finance Director pm: 01932 236314 Weber Shandwick Square Mile 020 7067 0745 Christian Taylor-Wilkinson Notes to Editors: KBC Advanced Technologies plc is a leading independent process engineering group which provides consulting services and implemented solutions worldwide to owners and operators of oil refineries and other clients in the process industries. KBC analyses plant operations and management systems, recommends changes that deliver material and measurable improvements in profitability and offers implementation services to assist clients in realising measurable financial improvements. It also offers economic and pricing studies focused on the future outlook for the oil industry. KBC works with its clients both to implement its recommendations and to realise and monitor the resulting improvements in profits on a continuing basis. In carrying out this work its consultants make extensive use of the process simulation software tools which KBC has developed. Group profit and loss account for the six months ended 30 June 2003 Unaudited 6 months to 30 June 2003 ------------------------------------------------ Before Unaudited Audited Exceptional 6 months to 12 months to charges & Exceptional 30 June 31 December goodwill operating Goodwill 2002 2002 amortisation charges amortisation Total Total Total Notes #000 #000 #000 #000 #000 #000 --------------------------------------------------------------------------------------------------------- Turnover 16,699 - - 16,699 20,186 38,193 Staff costs 4 (8,476) (108) - (8,584) (9,708) (20,028) Depreciation and amortisation (489) - (280) (769) (732) (1,533) Other operating charges 4 (7,695) (912) - (8,607) (9,548) (18,623) --------------------------------------------------------------------------------------------------------- Operating (loss) / profit 39 (1,020) (280) (1,261) 198 (1,991) Interest receivable 74 - - 74 204 318 Amounts written off fixed asset investments - - - - - (1,451) --------------------------------------------------------------------------------------------------------- (Loss) / profit on ordinary activities before taxation 113 (1,020) (280) (1,187) 402 (3,124) Taxation on (loss) / profit on ordinary activities (125) 296 - 171 (140) 673 --------------------------------------------------------------------------------------------------------- (Loss) / profit on ordinary activities after taxation (12) (724) (280) (1,016) 262 (2,451) Dividends - equity interests (605) (636) (1,938) --------------------------------------------------------------------------------------------------------- Retained loss (1,621) (374) (4,389) --------------------------------------------------------------------------------------------------------- (Loss)/earnings per share (pence) - basic 2 (2.18) 0.54 (5.08) - diluted 2 (2.15) 0.54 (5.08) Basic (loss) / earnings per share (pence) before exceptional items and goodwill amortisation 2 (0.02) 2.19 3.33 --------------------------------------------------------------------------------------------------------- Group balance sheet at 30 June 2003 Unaudited Unaudited Audited at 30 June at 30 June at 31 December 2003 2002 2002 ----------------------------------------------------------------- #000 #000 #000 #000 #000 #000 ------------------------------------------------------------------------------------------------- Fixed assets Intangible assets 5,082 5,797 5,464 Tangible assets 2,246 2,619 2,537 Investments 987 2,738 1,287 ------------------------------------------------------------------------------------------------- 8,315 11,154 9,288 Current assets Debtors 13,843 12,008 12,745 Investments 300 4,236 300 Cash at bank and in hand 4,294 10,744 7,623 ------------------------------------------------------------------------------------------------- 18,437 26,988 20,668 Creditors: amounts falling due within one year (4,935) (9,250) (5,825) ------------------------------------------------------------------------------------------------- Net current assets 13,502 17,738 14,843 ------------------------------------------------------------------------------------------------- Total assets less current liabilities 21,817 28,892 24,131 Creditors: amounts falling due after one year (300) (600) (600) Provision for liabilities and charges (704) (719) (964) ------------------------------------------------------------------------------------------------- 20,813 27,573 22,567 ------------------------------------------------------------------------------------------------- Capital and reserves Called up share capital 1,202 1,258 1,202 Share premium account 6,038 6,038 6,038 Capital reserve 79 23 79 Merger reserve 147 147 147 Profit and loss account 13,347 20,107 15,101 ------------------------------------------------------------------------------------------------- Shareholders' funds: equity interests 20,813 27,573 22,567 ------------------------------------------------------------------------------------------------- Group statement of cash flows for the six months to 30 June 2003 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2003 2002 2002 Notes #000 #000 #000 -------------------------------------------------------------------------------------------------- Net cash (outflows) / inflow from operating activities 3 (1,912) 817 (765) -------------------------------------------------------------------------------------------------- Returns on investments and servicing of finance Interest received 74 204 318 -------------------------------------------------------------------------------------------------- Taxation 352 (1,586) (1,847) -------------------------------------------------------------------------------------------------- Capital expenditure and financial investment Payments to acquire tangible fixed assets (112) (397) (799) -------------------------------------------------------------------------------------------------- Acquisitions Purchase of subsidiary undertakings including costs - (769) (4,290) Payment of loan notes (710) - - Cash returned from / (placed on deposit) in respect of acquisition loan notes 300 (4,836) (900) Net funds acquired with subsidiary undertakings - 426 452 -------------------------------------------------------------------------------------------------- Net cash outflow from acquisitions (410) (5,179) (4,738) -------------------------------------------------------------------------------------------------- Equity dividends paid (1,302) (1,361) (1,994) -------------------------------------------------------------------------------------------------- Management of liquid resources Decrease in short term deposits 3,316 2,418 9,867 -------------------------------------------------------------------------------------------------- Financing Shares issued - 36 36 Redemption of shares - - (683) -------------------------------------------------------------------------------------------------- Net cash inflow / (outflow) from financing - 36 (647) -------------------------------------------------------------------------------------------------- Increase/(decrease) in cash in the period 6 (5,048) (605) -------------------------------------------------------------------------------------------------- Reconciliation of net cash flows to movements in net funds Increase/(decrease) in cash in the period 6 (5,048) (605) Cash used to decrease liquid resources (3,316) (2,418) (9,867) -------------------------------------------------------------------------------------------------- Change in net funds resulting from cash flow (3,310) (7,466) (10,472) Loan notes 710 - (1,310) Cash (returned from) / placed on deposit in respect of loan notes (300) - 900 Translation difference (19) (8) (123) -------------------------------------------------------------------------------------------------- Movement in net funds in the period (2,919) (7,474) (11,005) Net funds at start of period 7,213 18,218 18,218 Net funds at end of period 4,294 10,744 7,213 Notes 1 Basis of preparation These unaudited interim financial statements, which do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985, have been prepared using the accounting policies set out in the Group's 2002 statutory accounts. The statutory accounts for the year ended 31 December 2002 received an unqualified auditor's report and have been delivered to the Registrar of Companies. The interim report will be sent to shareholders. Further copies may be obtained from the Company Secretary, KBC Advanced Technologies plc, KBC House, 42-50 Hersham Road, Walton on Thames, Surrey, KT12 1RZ. 2 Loss per share The calculation of basic loss per share is based upon a loss of #1,016,000 (2002: profit of #262,000) and on 46,490,913 (2002: 48,531,504) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period after excluding the shares owned by the KBC Advanced Technologies plc Employee Trust. The diluted loss per share is based upon 47,184,755 (2002: 48,609,214) Ordinary Shares, allowing for the full exercise of outstanding purchase options, and a loss of #1,016,000 (2002: profit of #262,000). The calculation of basic earnings per share before exceptional items and goodwill amortisation is based upon a loss of #12,000 (2002: #1,062,000 being profit on ordinary activities after taxation of #262,000 less exceptional charges of #851,000 less tax thereon of #255,000 and less goodwill amortisation of #204,000) and on 46,490,913 (2002: 48,531,504) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period after excluding the shares owned by the KBC Advanced Technologies plc Employee Trust. 3 Reconciliation of operating profit to net cash inflow from operations Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 December 2003 2002 2002 #000 #000 #000 Operating (loss)/profit (1,261) 198 (1,991) Depreciation and amortisation 769 732 1,533 Exchange differences (101) (227) (373) Decrease / (increase) in debtors (1,225) 1,181 1,600 (Decrease) / increase in creditors (41) (1,011) (1,723) (Decrease) / increase in provisions (53) (56) 189 -------------- -------------- --------------- (1,912) 817 (765) -------------- -------------- --------------- 4 Exceptional operating items a) Staff related reorganisation costs The exceptional staff costs of #0.1m represent the costs incurred as a result of the re-organisation and redundancy programme commenced last year. These costs decreased profit after tax by #0.1m, with a cash outflow of #0.1m. b) Other operating charges Other operating charges comprise the following items: - Legal costs Legal costs of #0.8m have been incurred in respect the ongoing arbitration process concerning a joint development agreement and in respect of legal proceedings initiated by the Company in the United States. These costs decreased profit after tax by #0.6m, with a cash outflow of #0.8m. - Office move The ongoing costs of an office rationalisation programme initiated during the second half of the year 2002 resulted in a non-recurring charge of #0.1m related to office relocation. These costs decreased profit after tax by #0.1m, with a cash outflow of #0.1m. This information is provided by RNS The company news service from the London Stock Exchange END IR NKNKDKBKBAFD
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