BWT Balance Sheet Presentation – Highlights of 2002

15.04.2003

BWT 2002: Consolidated sales increased to EUR 431 million, strong market share gains on the European domestic market, cash flow at record level, full order book

BWT consolidated sales were increased 2.7% y.o.y. in 2002, which with stagnating or in some cases even declining markets means significant market share gains for BWT.

- Aqua Ecolife Technologies with sustained sales and profit growth, significant growth rates in Eastern Europe

The Aqua Ecolife Technologies segment attained growth in all major European markets. Sales of the Eastern European BWT subsidiaries rose by more than 60% in 2002. The EBIT margin was increased from 9.3% to 10.1%.

- Economic lull in semi-conductor and power plant industries

In the industry business, the Christ Group suffered from the economic lull in the semiconductor and energy industries, which in addition to the lack of incoming orders also led to an increased squeeze on margins in the projects completed. The capacities of the English subsidiary Christ-Kennicott were adjusted.

- Leap in sales in the beverage and food business and in the municipal business

Aqua Engineering, which is engaged in the municipal drinking water and sewage plant construction business, and the van der Molen Group, specialists in the beverage and food industry, compensated the sales declines of the semiconductor and energy segments with growth rates of 76% and 56% respectively.

- Record order book level at year-end of EUR 118.7 million (+3.1% y.o.y.)

- Consolidated net profit at previous-year level at EUR 15.2 million

The competitive market conditions in the Aqua Systems Technologies segment in particular led to lower gross margins, and structural measures required non-scheduled depreciation of EUR 1.2 million, as a result of which the operating result at EUR 24.4 million was 6.8% below the previous year figure.

Consolidated income at EUR 15.2 million reached the level of 2001.

- Cash flow reaches record value

The cash flow from business activities was increased from EUR 4.3 million in 2001 to EUR 31.6 million, while cash flow from earnings rose by 11.1% to EUR 32 million.

- Financial liabilities were reduced by 20%

The high cash flow allowed the reduction of interest-bearing financial liabilities from EUR 113 million to EUR 91 million and therefore an improvement in gearing to 73.8% (previous year: 101.8%).

- Dividend increased by 9% to EUR 0.24 per share

- Hygiene management as new market opportunity

The BWT Research department developed further products for hygiene management in drinking water systems. The government clearly regulated the area of responsibility from the water meter to the tap with the introduction of the new Drinking Water Regulations. This opens up new market opportunities for BWT.

The results in detail:

Consolidated sales: EUR 431.0 million, +2.7% on the previous year

In an environment beset by difficult economic conditions, the BWT Group increased consolidated sales by +2.7% in 2002 from EUR 419.5 million in the previous year to a total of EUR 431.0 million.

The Aqua Ecolife Technologies segment increased sales by +4.8% from EUR 246.4 million to EUR 258.1 million and now contributes approximately 60% of consolidated sales.

The Aqua Systems Technologies division suffered from sales declines in the semi-conductor and power plants industry, although these were more than compensated by growth in the food and beverage industries and the municipal drinking water and sewage plant construction business. Sales in the AST segment thus totalled EUR 172.1 million, corresponding to a slight increase in sales of +0.2% compared with 2001 (EUR 171.8 million).

The BWT subsidiary FuMA-Tech, which develops and sells high-quality special mem-branes for use in fuel cells in the Fuel Cell Membrane Technologies segment, un-dershot previous-year sales by EUR 0.5 million.

Division (values excluding domestic sales)20022001+/- %
Aqua Ecolife Technologies (AET)258,1246,4+4,8%
Aqua Systems Technologies (AST)172,1171,8+0,2%
Fuel Cell Membrane Technologies (FCMT)0,81,3-41,9%
Total431,0419,5+2,7%

Order book level: EUR 118.7 million, +3.1% on the previous year

Record order book levels had been achieved as of December 31, 2002: At EUR 118.7 million, the high order levels were again up 3.1% on the same period in the previous year.

EBITDA EUR 39.7 million, +0.3% on the previous year

EBIT EUR 24.4 million, -6.8% on the previous year

Profit after minorities EUR 15.2 million, +/-0.0% on the previous year

BWT Group operating earnings for 2002 were characterised by an increased squeeze on margins in the semiconductor business and non-scheduled depreciation and re-structuring costs at the UK subsidiary Kennicott. EBIT was therefore reduced from EUR 26.1 million to EUR 24.4 million. EBIT for individual divisions developed as follows:

Division20022001+/- %
Aqua Ecolife Technologies (AET)26,022,9+13,5%
Aqua Systems Technologie (AST)0,25,6-96,4%
Fuel Cell Membrane Technologies (FCMT)-1,9-2,5+24,0%
Aqua Finance (AFI)0,10,10,0%
Total24,426,1-6,8%

Financial results improved by 15.1% to EUR –4.0 million thanks to an optimised financial structure and successful cash management. Earnings before tax were therefore EUR 20.4 million , down –4.9% on the previous year’s level of EUR 21.4 million. A lower consolidated tax rate meant that at EUR 15.7 million, earnings after tax were down only slightly by –0.6% on the previous year of EUR 15.8 million. Dividends to minorities were also approximately at the level of the previous year. At EUR 15.2 million, consolidated income for the 2002 financial year was thus almost unchanged y.o.y.

Dividend up 9%

Despite the stagnating net income for the year, the Management Board still intends to propose a 9% dividend payment increase to EUR 0.24 per share (previous year: EUR 0.22) at the coming Annual General Meeting, as originally planned. A total of EUR 4,280,040 or 28.2% of the consolidated income for the year is therefore likely to be paid out to shareholders in June 2003.

Assets/financial situation significantly improved

Cash flow from business activities reaches record levels of EUR 31.6 million

The “cash positive programme” introduced at the BWT Group in Q4 2001 made significant progress in the 2002 financial year. Cash flow from earnings increased by 11.1% from EUR 28.8 million to EUR 32.0 million and cash flow from business activities increased from EUR 4.3 million in 2001 to EUR 31.6 million.

Group equity increased in 2002 by EUR 12.2 million to EUR 123.4 million and thus represented 34.0% of the balance sheet total (previous year: 29.1%). Overall, the balance sheet total fell by 4.9% to EUR 363.2 million. Gearing was improved from 101.8% to 73.8%.

Investment: EUR 10.1 million (previous year EUR 15.1 million)

EUR 9.6 million in intangible and tangible assets

The BWT Group invested EUR 10.1 million in fixed assets in 2002. This value is approximately one third below that of the previous year and related mainly to expenditure for rationalisations and replacements at production sites in France, Germany, Switzerland and Austria.

Staffing levels as of December 31, 2002: 2,466 employees

As of the 2002 balance sheet date, a total of 2,466 people were employed by the Group, a decline of 45 employees or 1.8% on the previous year (2,511). A significant share of personnel cutbacks was made at Kennicott UK, where the number of employees was cut from 65 to 41.

Outlook

Against the backdrop of a still weak global economy and a poor and unstable outlook, the Management Board anticipates a slight increase in sales in the Aqua Ecolife Technologies segment for the 2003 financial year, while a decrease in sales is expected in the industry business. The outlook in the food and beverage industries and in the municipal drinking water and sewage business is positive thanks to healthy order book levels. However, in the semiconductor segment, which is important for the Christ Group, an improvement is not likely until 2004. The omission of losses from the Kennicott participation makes an increased consolidated income possible. The aim of the BWT management is to push ahead with the cash positive programme and improve gearing to below 65%.

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