KBC Kbc Adv.Tech.

RNS Number:6854D
KBC Advanced Technologies PLC
12 November 2002


Immediate release                                               12 November 2002


                         KBC Advanced Technologies plc
                             ("KBC" or the "Group")

                                 Trading Update


In our half-year results statement we referred to an improvement in KBC's sales
order cycle for the second quarter of the year and the need for this trend to be
maintained to improve our financial performance for 2002.

It is now clear that the sales needed to deliver the expected financial
performance have not been made.  The continuing software dispute with AEA
Technology plc ("AEA") and Aspen Technology Inc ("Aspen") has also had a
material impact on KBC's ability to sell its software and consultancy services
as a combined offering.  Any further contract awards this year will not be in
time to make a material impact on the year's revenue. Accordingly, it is
expected that sales in the second half will be slightly lower than in the first
half.

Although consultant utilisation has been on average higher in the second half of
the year than in the first, the timing of fee at risk revenue and a decrease in
the average selling rate of our services has combined to reduce the operating
margin.  As a consequence it is now expected that operating profit for the
second half of 2002 will be around one quarter of that delivered in the first
half and therefore significantly below current market expectations for the full
year.


Software Dispute

The final arbitration hearings on the software dispute with AEA will take place
in early December.  It is unlikely the outcome will have any impact on the
current year's results.  In addition, the legal action against Aspen in the US
continues and, unless agreement is reached as part of the outcome of the
arbitration, will run its natural course through most of 2003.  Costs of these
actions are also likely to exceed the previous estimate made before the US
action was launched and are now anticipated to be in excess of #1.2m.

Once the results of the arbitration are known, KBC should be better able to
determine how to take advantage of the undoubted opportunities for sales of
HYSYS.Refinery and the KBC Models in combination with KBC's consultancy
services. However the timing of this will also be dependent on the resolution of
the legal proceedings with Aspen.


Business Re-organisation

To address the challenges of securing contract awards in the current global
economic climate, KBC will re-organise to bring the sales and operations
resources under common management within the main geographic regions in which
KBC operates effective 1 January 2003.  This improved regional organisation
structure will help to leverage the business development opportunities available
to the consultant workforce and focus time and resources more effectively.


Board Changes

As a result of these changes, Wayne Hutchinson, President of Worldwide Sales and
Marketing, has chosen to leave KBC to pursue other opportunities with effect
from 1 January 2003, following the negotiation of a compensation package.


Cost savings

Since the trading update issued in May this year, steps have been taken to
address the level of costs within the business.  To date KBC has taken action to
reduce staff by 10% with further staff reductions planned by year-end to ensure
costs in 2003 are appropriate to the core revenue stream and do not rely on
sales and revenue growth to give an adequate return.  To save further costs and
improve organizational efficiency the US offices in Houston and Thousand Oaks,
California, have been relocated to one office in Houston.  Close control is
being maintained over other discretionary capital expenditure and expenses.

As a consequence of these cost reduction measures, savings totalling #3.7m on an
annualised basis will have been achieved by the first quarter 2003.  The results
for 2002 will have benefited by #0.9m of these savings at an estimated cost of
#1m.


Cash Position

KBC's cash position remains strong.  As announced last month, a program has
begun to buy back its shares in the market within the existing shareholder
authority granted at the last AGM.  The current level of dividend will not be
covered by this year's expected operating performance.  However, barring
unforeseen circumstances, it is intended that the dividend will be maintained at
its current level.


Outlook for 2003

KBC is taking measures designed to return the Group to acceptable levels of
financial performance in 2003 based on the revenues at the level now expected
for 2002.  The global economic and political outlook for our customer base
remains weak making it unlikely that there will be significant revenue growth in
the short term.  While we continue to look for ways to grow and diversify the
business, KBC's immediate focus will be to continue to manage costs to ensure
that an operating margin is achieved from revenues at around current levels,
broadly in line with that achieved in 2001.


                                     -ends-


For further information please contact:

KBC Advanced Technologies plc                                      01932 236 314
Don J Romano, Chief Executive Officer
Nicholas Stone, Finance Director

Weber Shandwick Square Mile                                        020 7950 2800
Tim Jackaman or Christian Taylor-Wilkinson


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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