TIDMKBC
RNS Number : 9546O
KBC Advanced Technologies plc
17 March 2009
Embargoed until 07.00
17 March 2009
KBC Advanced Technologies plc
("KBC" or "the Group")
Preliminary results for the year ended 31 December 2008
KBC Advanced Technologies plc, a leading consultant to the energy industry,
today announces its preliminary results to 31 December 2008.
+--------------------------------+---------------+-------------+------------+
| | 12 months to | 12 months | |
| | 31 December | to | |
| | 2008 | 31 December | |
| | | 2007 | |
+--------------------------------+---------------+-------------+------------+
| Revenue | GBP52.8m | GBP38.1m | +38% |
+--------------------------------+---------------+-------------+------------+
| Profit before tax | GBP5.4m | GBP2.9m | +86% |
+--------------------------------+---------------+-------------+------------+
| Basic earnings per share | 6.4p | 3.5p | +82% |
+--------------------------------+---------------+-------------+------------+
| Underlying profit before tax | GBP5.7m | GBP3.0m | +93% |
| (i) | | | |
+--------------------------------+---------------+-------------+------------+
| Underlying earnings per share | 6.9p | 3.7p | +86% |
| (i) | | | |
+--------------------------------+---------------+-------------+------------+
| Full year Dividend per share | 1.35p | 0.75p | +80% |
+--------------------------------+---------------+-------------+------------+
Highlights
* Impressive operational and financial performance
* Year end cash balances grew fourfold to GBP5.7 million (2007: GBP1.3 million)
* Dividend up by 80% to 1.35p
* Realignment of service offering has ensured that Group is able to add value to
clients at all stages of economic cycle
* Shift expected in 2009 from CapX (capital budget) to OpX (operating budget)
services as clients look to maximise margins in competitive markets
* Strong growth in order backlog (to 75% of 2008 revenue) provides firm foundation
for 2009
Note (i) Underlying profit and earnings per share exclude the impact of the
carry forward of software development costs, their amortisation and the
amortisation of acquired intangible assets. See note 3.
Ian Miller, Chairman of KBC, commented:
"The first months of 2009 have seen continued progress in sales awards. The
strong growth in backlog in 2008 provides a firm foundation for revenue growth
in 2009. Although consulting utilisation has not been as high as in the same
period in 2008, the higher proportion of software backlog at the year end will
be converted to higher software revenues during the first half of 2009, more
than compensating for any potential decline in consulting revenue. The current
weakness of sterling will also contribute to an increase in our operating
margins.
Although forecasting is very difficult in this environment, with careful control
of costs we remain cautiously optimistic and expect the business to deliver
growth in both scope and scale during 2009, albeit, as we have previously
indicated, at a lower rate than in 2008."
- Ends -
For further information, please contact:
+---------------+---------------+
| KBC | |
| Advanced | |
| Technologies | |
| plc | |
+---------------+---------------+
| George | On 17 |
| Bright, | March: |
| Chief | 020 7067 0700 |
| Executive | thereafter: |
| Nicholas | 01932 236314 |
| Stone, | |
| Operations | |
| and | |
| Finance | |
| Director | |
+---------------+---------------+
| | |
+---------------+---------------+
| Arbuthnot | 020 7012 2000 |
| Securities | |
+---------------+---------------+
| James | |
| Steel/Antonio | |
| Bossi/Katie | |
| Shelton | |
+---------------+---------------+
| Weber | |
| Shandwick | |
| Financial | |
+---------------+---------------+
| Nick | 020 7067 0700 |
| Oborne/Clare | |
| Perks | |
+---------------+---------------+
Notes to Editors:
KBC Advanced Technologies plc, a leading independent consulting, process
engineering and software group, delivers improved operating performance to the
oil refining, petrochemical, and other process industries worldwide. We provide
process consulting, strategic planning advice, energy price forecasting and
market analysis, economic studies, capital project services, and training to
help clients achieve their business objectives and improve their competitive
position. The KBC human performance improvement division provides organisational
effectiveness services, training programmes, operations manuals, and personnel
development services. Our consultants recommend changes for material and
measurable improvements in profitability. To assist clients in realising such
improvements, KBC provides implementation services and software solutions,
including the KBC SIM models and Petro-SIM(TM) for process optimisation, and
energy optimisation software packages. Formed in 1979, KBC has offices in the
UK, USA, Canada, Singapore, the Netherlands, Russia, China, and Japan. For more
information, visit www.kbcat.com.
CHAIRMAN'S STATEMENT
SUMMARY
2008 was an excellent year for KBC, with pre-tax profits growing by 86%, revenue
by 38%, contract awards by 20% and workload backlog by 29%. At the year end
workload was close to GBP40m, representing 75% of 2008 revenue. Within this
total, software backlog has grown by 35% from GBP5.3m to GBP7.1m. Whilst there
has been some benefit from the weakness of sterling compared to last year, at
constant exchange rates there was still substantial growth in revenues and
profits.
The impressive operational and financial performance has led to year end cash
balances growing by a factor of four to GBP5.7m. In addition, the Group has bank
facilities of around GBP4.2m, ensuring that we are in a strong position both to
manage our growth organically and to respond to any changes in market
conditions.
The business grew during the year in both scale and capability and executed a
volume of work well in excess of previous years, as a result of the continued
hard work of our skilled employees.
The oil refining and process industries saw a rapid change in market conditions
during 2008. The year started with a global shortage of processing capacity,
but the significant fall in oil product demand in the summer months meant that
the year ended with thin or negative operating margins in many parts of the
world. The pace of this change has challenged the industry and has continued to
create opportunities for KBC to help its clients. The re-alignment of our
services over the last few years has ensured that we are able to add value to
our clients at all stages of the economic cycle. As a result so far we have not
seen the material impact of the downturn faced by many other businesses.
RESULTS
Revenue for the year was up by 38%, from GBP38.1m to GBP52.8m, operating profit
increased by 75% to GBP5.5m and profit before tax by 86% to GBP5.4m. On a
constant exchange rate basis, revenue would have been GBP49.0m and operating
profit GBP4.7m, growth of 29% and 52% respectively. On an underlying basis
operating profit grew by 81% to GBP5.8m (2007: GBP3.2m). The improvement of the
cash position has led to a reduction in finance cost to GBP0.1m from GBP0.3m in
2007 which contributed to an 86% increase in profit before tax to GBP5.4m from
GBP2.9m. Basic earnings per share were 6.4p, an increase of 82% over 2007
(3.5p).
DIVIDEND
In view of the very strong results for the year and the significantly improved
cash position of the Group, the Board is pleased to recommend a final dividend
of 1.0p per share. With an interim dividend of 0.35p per share paid in October
2008, this leads to a total payment of 1.35p per share, an increase of 0.6p per
share over 2007 (0.75p per share). Upon recommencing payment of dividends in
2007, the Board initially took a cautious approach to dividend payments. Having
now delivered growth over a two year period, the Board believes that it is an
appropriate time to establish a long term dividend policy which will offer
shareholders a progressive dividend payment whilst maintaining a dividend cover
of between three and five times with cover initially at the upper end of the
range.The dividend will be payable on 19 May 2009 to shareholders on the
register at close of business on 8 May 2009.
CURRENT TRADING AND OUTLOOK
Although we have yet to see any material impact of the current economic climate
on our business, there is no doubt that 2009 will be a more challenging year
than 2008. Whilst our Market Services group has been forecasting a reduction in
refining industry margins for some time, the scale and speed of the reduction
have been much greater than expected as a result of the rapid deterioration of
economic conditions in all major economies. In these circumstances there is a
natural tendency for companies to defer decisions and cut costs, making our
sales process more challenging. Nevertheless, the issues faced by our clients
provide many opportunities for us to help them through these difficult times.
Our service offerings are designed to focus on both the operating and capital
budgets (OpX and CapX) of our clients and we expect a shift towards OpX work
during 2009 as capital spending is delayed or constrained.
The first months of 2009 have seen continued progress in sales awards. The
strong growth in backlog in 2008 provides a firm foundation for revenue growth
in 2009. Although consulting utilisation has not been as high as in the same
period in 2008, the higher proportion of software backlog at the year end will
be converted to higher software revenues during the first half of 2009, more
than compensating for any potential decline in consulting revenue. The current
weakness of sterling will also contribute to an increase in our operating
margins.
Although forecasting is very difficult in this environment, with careful control
of costs we remain cautiously optimistic and expect the business to deliver
growth in both scope and scale during 2009, albeit, as we have previously
indicated, at a lower rate than in 2008.
Ian K Miller
CHAIRMAN
BUSINESS REVIEW
THE REFINING MARKET
2008 has seen a dramatic swing in oil prices. In the first half of the year the
consensus was that global GDP and oil demand were growing satisfactorily, and
that there were strains on oil and product supply. The resultant increases in
oil prices led to a reduction in oil product demand in most western economies
and a slowing of the rapid growth in the developing countries, particularly
China and India. The response of the US market was akin to the oil price shocks
of the 1970s, with gasoline consumption falling by 6% compared to 2007.
The spreading of the economic crisis to most major economies by the end of the
fourth quarter further exacerbated the impact on the oil markets and led to
significant demand destruction and oil prices falling by more than US$100 per
barrel during the year. Attention switched from concern over future supply to
concern over disappearing product demand. Eventually OPEC, in a rare show of
unity, cut supplies of oil in order to stabilise the market.
This type of turbulent market offers many opportunities for consulting
companies.
KBC'S RESPONSE
During 2008 KBC has delivered strong growth in all financial measures. Our
expanded range of services gives KBC an exposure to a broader spectrum of the
refining and other process industries' planning, investment and operating
activities: from strategic review of capital investment opportunities to
day-to-day operational improvements, and many other aspects in between. With
the addition of a strategic consulting capability to our portfolio, our range of
services now covers:
* Strategic Consulting - providing strategy support to our clients, comprising
market forecasting, business analysis (including bankruptcy support, project
financing support and expert witness), M&A support (due diligence on behalf of
buyers/sellers and rationalisation studies), and feasibility and definition
studies.
* Operational Excellence ("OpX") - helping clients to ensure that their facilities
are operated in a safe, environmentally acceptable and profitable manner. The
service covers planning and scheduling, reliability and maintenance, safety,
health and environment, leadership development, human performance and continuous
improvement. The addition in 2007 of CarbonManager(TM) to our range of software
allows us to take advantage of the foreseeable increase in activity in the
carbon reduction area.
* Capital Excellence ("CapX") - providing design and project management support
for new and brown field projects from concept through to start-up. These
services are executed either on behalf of asset owners directly, or through the
several alliances we have developed with key engineering and construction
companies.
An important element of our growth was our continued ability in a tight employee
market to recruit well qualified consultants, including the hiring of a
leadership team for the strategic consulting business. As KBC is a people
business, training is a vital investment and the programme that commenced in
2007 continued during 2008 and has contributed to these results. This
investment will continue during 2009 but at a rate commensurate with the lower
rate of growth of our consultant base.
STRATEGY
Our strategy is to anticipate movements in the market, and then provide relevant
solutions in a timely fashion. We expect that the strong demand for our CapX
services seen over the last few years will decline in the near term due to the
current shortage of project financing. Many projects will require a
re-evaluation and we expect to see an increase in locally managed small capital
projects. Conversely, we expect demand for our OpX programme to increase as
owners strive to maximize margins in very competitive markets. We see 2009 as a
year of "asset sweating", an area where KBC has considerable capability and
track record. Finally, in the light of the current economic difficulties we
anticipate an increase in asset transfers, both as a result of non-performing
assets and as the strongest asset owners attempt to consolidate and rationalise
their market position. We look forward to high growth in our strategic
consulting work as a result of the inevitable activity in this area.
Although no acquisitions were concluded in 2008, we will continue to search for
acquisition opportunities. We will, however, also focus on investing for
organic growth, fuelled by the recruitment of established teams rather than
individuals.
CONTRACT AWARDS
2008 was a record year with contract awards exceeding GBP52m, an increase of
more than 20% over 2007.
Key contracts awarded include:
* The renewal of our 6-site Petro-SIM(TM) software lease with Pemex in Mexico
* A multi million dollar HPI "Learning and Development" program for Chevron
* Four multi million pound contracts for refinery design projects in the Middle
East region
* Continued and expanding Technical Services partnership with Irving Oil in Canada
* Extension of the Strategic Alliance with PETRONAS in Malaysia
* Appointment as Technical Advisor to PetroSA for their new Mthombo refinery in
South Africa
* Continuing Technical Services for the new Colombian Reficar refinery
* A 9-site Middle East Petro-SIM software licence for implementation in 2009
All of these contracts contributed to 2008 results and will continue to deliver
material revenues during 2009.
CONSULTING ACTIVITIES
Demand for our process engineering optimisation expertise remained high
throughout the year across all regions. The Profit Improvement Programs at
Sinopec, which commenced at the end of 2005, are now drawing to a close.
Several other similar but smaller projects were undertaken in the Middle East,
the US and Malaysia, where we are increasingly working outside the refining
sector in gas processing, petrochemicals and, most recently, LNG plants.
Demand for our Energy Services during 2008 outstripped our capacity. Energy
costs can comprise 50% or more of a refinery's non-feedstock costs and the
current narrowing of margins has resulted in energy efficiency being a
significant competitive advantage. The correlation between energy consumption
and carbon emissions has also led to an increase in demand for these services.
Our HPI (Human Performance Improvement) business has once again shown
significant growth, particularly in the US. Amongst other achievements, KBC's
largest contract by value for 2008 was for HPI services. The strong US demand
has constrained our ability to expand this service outside of North America.
However, during 2008 some limited capability in both our London and Singapore
offices was established. We anticipate continued high growth in this area and
we are planning to fully establish this key service in both the EMEA and
Asia regions at the earliest opportunity.
During 2008 we saw CapX revenue grow to a peak of 30% of total revenue in the
middle of the year. However, we expect our CapX work to decline in the short
term as a result of the difficulty of securing project finance for private
sector companies. Nevertheless there are still a significant number of new
refinery projects, especially in the Middle East, South America, and the
developing Asian economies. Most of these projects are owned by the
increasingly influential national oil companies. The drivers behind such
developments are nationally strategic as well as economic and they are therefore
less susceptible to delay or change due to economic conditions.
In the strategic consulting area we continue to work for asset owners,
engineering and construction companies, and investment banks. In spite of
difficulties in project financing in the latter part of the year, a significant
amount of transaction-related work was undertaken in all our operating
regions. A notable success was the role played by KBC in the sale of the
national Albanian refining assets, for which we received a material success
fee. We were successful in strengthening our capability in this area during
2008.
SOFTWARE
Software sales and revenues showed continued strong growth in 2008. The
licensing of Petro-SIM by nine refineries in the Middle East at the year end led
to the milestone of 100 licences sold since the launch of Petro-SIM in 2004. Our
SIM series standalone reactor models continue to lead the market, with
additional sales generated by the increased functionality of Petro-SIM. Software
innovation continues at a fast pace with the release of version 3.2 of Petro-SIM
at the end of 2008, followed by testing of version 4 prior to release in 2009.
These improvements are designed to make it easier to use Petro-SIM to optimise
existing facilities and to maximise the return on future capital investments. We
also made significant improvements to SuperTarget(TM) (our utilities
optimisation software) and to OptiSteam(TM), Persimmon(TM) and CarbonManager(TM)
which help our clients reduce energy consumption and emissions.
INDUSTRY OUTLOOK
Volatility in crude oil and product prices, increasing product inventories and
demand destruction associated with the global economic slowdown are expected to
exert increasing pressure on refiners to generate adequate margins. There is
also likely to be an increasing focus associated with emissions control that
will add further pressure, especially now that the new US administration appears
to be taking this issue seriously. There will also be start-ups of new refining
capacity that has been under construction over the last few years that will tend
to be more efficient than some of the existing plant. We expect a focus on cost
reduction, including selection of crude, and believe that we could see closures
of smaller less efficient refineries that struggle to compete. Although there
will be a slowdown in construction of new facilities after 2009, the management
of risk of those projects that do proceed will become a critical factor in
achieving expected project returns.
The change in fortunes in this industry is nothing new: it is part of the normal
business cycle, although one that has accelerated rapidly over the last six
months. KBC is well positioned to assist in this time of change through
maximising efficiency and margins. Our OpX program has a proven pedigree and is
ideally suited to the short and longer term needs of our clients. KBC's CapX
services will continue to be used on those new projects which proceed to
completion, and our new Strategic Consulting capability will add client value at
the decision making stages, providing KBC with a new entry point into the oil
and gas industry.
2009 will be a year of significant transformation for our clients. The
demographics of the industry are unchanged and there remains a shortage of
experienced managers to meet the challenges. There will be no lack of
consulting opportunities and KBC has the proven solutions required by the
industry. In an uncertain world, we are cautiously optimistic that we will
continue to meet our clients' and shareholders' expectations.
OPERATING RESULTS
Group revenue increased by 38%, growing from GBP38.1m in 2007 to GBP52.8m in
2008. Whilst exchange rates movements have had a material impact, it is
important to recognise the significant achievement in delivering these record
results in market conditions that became extremely challenging towards the end
of the year. The revenue for the year would have been GBP49m without the
significant fall in value of sterling relative to the US dollar and Euro
which constitute respectively 47% and 37% of our revenues. Software revenue
increased by 11% to GBP7.9m and consulting revenue increased by 45% to GBP44.9m.
Now included in the software revenue is an annualised total of GBP4.1m of
ongoing maintenance and support revenue with the balance being new licence
sales.
Group costs increased by 35% compared to the previous year as the scale and
capacity of the business was increased to match the demand for our services.
Direct costs, staff and associate consultant costs increased by around 40%,
although approximately GBP8m, or 27% of the total, represents variable costs of
associate consultants and subcontractors, as well as performance related
bonuses. By contrast depreciation and amortisation increased by only 6%. This
differential reflects the investment made during the year in our employee base
and the fact that the business is not capital intensive and so requires a
relatively low level of investment in fixed and other assets.
Other operating charges increased by 20%, although this includes a significant
benefit from foreign exchange gains. A realised gain of GBP0.55m was made on
the value of cash received in foreign currencies when measured against the
sterling value of the revenue originally booked. In addition a net unrealised
gain of GBP0.54m was recorded on the value of working capital balances and
associated forward exchange contracts as measured at year end against the
original booked value of the transactions. If their impact were ignored, other
operating charges would have increased by 28% in the year.
The consulting operating margin has been maintained in comparison to 2007 at
around 34%. However, the software margin has declined to just over 50% due to
the reduction in development costs that are carried forward and an increase in
costs written off during the year related to the development of version 4 of
Petro-SIM. Unallocated sales and overhead costs have fallen as a proportion of
revenue from 31% in 2007 to 26% in 2008. The resulting operating profit has
grown by 75% to GBP5.5m (2007: GBP3.1m). Our measure of underlying profit that
ignores the carry forward of software development costs, their amortisation and
the amortisation of acquired intangible fixed assets was GBP5.8m: growth of 81%
from GBP3.2m in 2007.
During 2008 we provided in full for GBP0.3m of debtor and work in progress
balances in connection with an optimisation and software project conducted for
Houston Refining LP, part of the Lyondell Basell group that petitioned for
'Chapter 11' creditor protection in the US in January 2009. The project is still
ongoing with GBP0.2m of future revenue in year end backlog and the terms of the
Chapter 11 process have secured funding for work conducted after the petition
date to be paid for. The process for resolving the historic balances is likely
to be long and complex, and there is no way of forecasting currently when or if
any of those balances are likely to be paid. No material bad debt provisions
were deemed necessary during 2007.
Finance cost of GBP0.1m (2007: GBP0.3m) reflects a significant fall in bank
interest payable as the cash position of the Group has improved. Also included
in the charge is the unwinding of the discount applied to deferred consideration
for the acquisitions made in 2006 in order to record on the balance sheet the
net present value of those future payments.
PROFIT BEFORE TAX
The profit before tax of GBP5.4m shows an increase of 86% from GBP2.9m in 2007.
TAX
The tax charge of GBP1.8m (2007: GBP1.0m) for the year is made up of current tax
expense of GBP1.0m and deferred tax of GBP0.8m. Within the current tax expense
is GBP0.7m of tax payable on overseas operations and GBP0.4m of withheld tax
that is not expected to be recoverable against UK corporation tax as a result of
the continuing availability of losses brought forward. The deferred tax charge
is the usage of tax losses brought forward against current profits and the
consequent reduction of the deferred tax asset held on the balance sheet.
The tax rate of around 33% (2007: 34%) of pre-tax profits remains higher than
the current rate of UK corporation tax of 28%. The main reasons for the higher
rate are the non-recovery of withheld tax on payments from overseas territories
of GBP0.3m (5%), higher taxes on earnings in overseas subsidiaries GBP0.1m (2%)
and expenses not deductible for tax purposes of GBP0.2m (3%). The impact of
these factors has been partially offset by non-taxable income of GBP0.3m (5%)
derived from foreign exchange movements on intercompany balances.
A net deferred tax asset of GBP1.2m (2007: GBP2.1m) remains on the balance sheet
representing prior year tax losses that have not yet been utilised and are
expected to be utilised in future years.
EARNINGS AND DIVIDENDS
The profit after tax of GBP3.6m (2007: GBP1.9m) equates to basic earnings per
share of 6.4p, compared to 3.5p in 2007, an increase of 82%. Diluted earnings
per share were 6.3p and 3.5p respectively. Earnings per share calculated on the
underlying profit measure increased by 86% from 3.7p to 6.9p. A final dividend
of 1.0p per share is proposed for the year, following the interim dividend of
0.35p per share paid in October 2008. This leads to a total payment of 1.35p per
share, making an increase of 0.6p per share over 2007 (0.75p per share). The
dividend will be payable on 19 May 2009 to shareholders on the register at close
of business on 8 May 2009.
PROVISION FOR ONEROUS LEASE
The Company holds a lease for an office property occupied by the business until
May 2001 and vacated by a subtenant in 2006. The rental market weakened between
2001 and 2006 and during that year the Board re-assessed the probable cash
outflow from the lease and determined that an addition of GBP0.55m to the
current onerous lease provision was required to cover the expected cost over its
remaining life. This was provided in full in the 2006 financial statements. The
property is now fully tenanted until the end of its lease. Having re-assessed
the probable cash outflow from this lease following the conclusion of the new
subleases, the Board has determined that no further provision is required.
CARRY FORWARD OF SOFTWARE DEVELOPMENT COSTS
Prior to 2006 the Group had written off all software development costs to the
Income Statement each year. Under UK GAAP there was discretion for Directors to
write off expenditure as incurred, irrespective of the stage of development of
the software product. However, under IAS that discretion is no longer available
and, under the accounting policy adopted in 2005 on conversion to IAS,
development expenditure is carried forward when "its future recoverability can
be reasonably regarded as assured and technical feasibility and commercial
viability can be demonstrated". During 2006 the Board took the view that the
Petro-SIM development had reached this stage. Hence, after a charge for each
year's amortisation, in the accounts for 2006 and 2007 net expenditure of
GBP0.76m was carried forward against expected future sales.
Although the development of the current version of Petro-SIM is now all but
complete, the revenues and contribution from the software business have grown
further in 2008, as noted previously. Development expenditure incurred during
the year of GBP0.1m has been carried forward and is amortised against expected
future revenue. The net impact in these financial statements of this is a
charge of GBP0.1m after charging amortisation for the year of GBP0.3m.
WORKING CAPITAL
Trade and other receivables increased during the year from GBP16.3m to GBP24.2m,
an increase of 49% compared to the revenue increase of 38%. However a
significant element of this increase is matched by growth in deferred revenue
included within trade and other payables where an improvement in terms of trade
has seen invoices raised before the work has been executed. If deferred revenue
is excluded, the net increase in receivables is in line with revenue at 38%.
There is however also an impact from the very significant sterling/Euro
exchange rate movements in the last month of the year. If the receivables
balances are measured at constant currency, the increase is 9% compared to the
like for like revenue increase of 29%.
FINANCIAL RISK MANAGEMENT
The Group's principal financial instruments comprise trade debtors, trade
creditors, cash, short term deposits and short term lines of credit used to
finance the Group's operations and future growth. The major financial risks
faced by the Group are interest rates, currency risk, contract risks, and the
continued availability of equity and debt finance.
INTEREST RATES
At 31 December 2008 the Group held cash balances of GBP5.7m and no overdraft
balances, compared to cash balances of GBP1.3m at 31 December 2007. Cash
balances in excess of immediate needs are placed on short term deposit in the
money markets. Overdraft facilities available to the Group for use in managing
the timing of cash flow in different countries and currencies were used
periodically during the year. Current overdraft facilities available to the
Group total GBP2.2m. In addition a three year revolving credit facility of
GBP2.0m was negotiated in early 2008 to provide additional liquidity and
possible acquisition funds. Interest charges on this facility are linked to the
LIBOR rate appropriate to the duration and currency of any draw down.
W George BrightNicholas P Stone
CHIEF EXECUTIVEOPERATIONS AND FINANCE DIRECTOR
Group Income Statement
Year ended 31 December 2008
+--------------------------------------+---------------+------------+------------+
| | | | |
+--------------------------------------+---------------+------------+------------+
| | | 2008 | 2007 |
+--------------------------------------+---------------+------------+------------+
| | Notes | GBP000 | GBP000 |
+--------------------------------------+---------------+------------+------------+
| Revenue | 3 | 52,769 | 38,115 |
+--------------------------------------+---------------+------------+------------+
| Direct costs | | (7,913) | (5,619) |
+--------------------------------------+---------------+------------+------------+
| Staff and associate costs | | (29,620) | (21,171) |
+--------------------------------------+---------------+------------+------------+
| Depreciation and amortisation | | (812) | (762) |
+--------------------------------------+---------------+------------+------------+
| Other operating charges | | (8,935) | (7,422) |
+--------------------------------------+---------------+------------+------------+
| Operating profit | | 5,489 | 3,141 |
+--------------------------------------+---------------+------------+------------+
| Finance revenue | | 14 | 35 |
+--------------------------------------+---------------+------------+------------+
| Finance cost | | (112) | (279) |
+--------------------------------------+---------------+------------+------------+
| Profit before tax | | 5,391 | 2,897 |
+--------------------------------------+---------------+------------+------------+
| Tax expense | | (1,803) | (988) |
+--------------------------------------+---------------+------------+------------+
| Profit for the year | | 3,588 | 1,909 |
+--------------------------------------+---------------+------------+------------+
| Earnings per share | | | |
+--------------------------------------+---------------+------------+------------+
| Basic | | 6.4p | 3.5p |
+--------------------------------------+---------------+------------+------------+
| Diluted | | 6.3p | 3.5p |
+--------------------------------------+---------------+------------+------------+
Group Balance Sheet
At 31 December 2008
+----------------------------------------------+------------+----------+---------+
| | | 2008 | 2007 |
+----------------------------------------------+------------+----------+---------+
| | | GBP000 | GBP000 |
+----------------------------------------------+------------+----------+---------+
| Non-current assets | | | |
+----------------------------------------------+------------+----------+---------+
| Property, plant and equipment | | 1,690 | 1,456 |
+----------------------------------------------+------------+----------+---------+
| Goodwill | | 7,670 | 6,628 |
+----------------------------------------------+------------+----------+---------+
| Other intangible assets | | 1,296 | 1,604 |
+----------------------------------------------+------------+----------+---------+
| Deferred tax asset | | 1,637 | 2,600 |
+----------------------------------------------+------------+----------+---------+
| | | 12,293 | 12,288 |
+----------------------------------------------+------------+----------+---------+
| Current assets | | | |
+----------------------------------------------+------------+----------+---------+
| Trade and other receivables | | 24,192 | 16,257 |
+----------------------------------------------+------------+----------+---------+
| Cash and short term deposits | | 5,691 | 1,349 |
+----------------------------------------------+------------+----------+---------+
| | | 29,883 | 17,606 |
+----------------------------------------------+------------+----------+---------+
| Total assets | | 42,176 | 29,894 |
+----------------------------------------------+------------+----------+---------+
| Non-current liabilities | | | |
+----------------------------------------------+------------+----------+---------+
| Trade and other payables | | (172) | (753) |
+----------------------------------------------+------------+----------+---------+
| Provisions | | (203) | (356) |
+----------------------------------------------+------------+----------+---------+
| Deferred tax liabilities | | (463) | (543) |
+----------------------------------------------+------------+----------+---------+
| | | (838) | (1,652) |
+----------------------------------------------+------------+----------+---------+
| Current liabilities | | | |
+----------------------------------------------+------------+----------+---------+
| Trade and other payables | | (12,380) | (7,012) |
+----------------------------------------------+------------+----------+---------+
| Current tax payable | | (552) | (455) |
+----------------------------------------------+------------+----------+---------+
| Provisions | | (153) | (153) |
+----------------------------------------------+------------+----------+---------+
| Other financial liabilities | | (522) | (35) |
+----------------------------------------------+------------+----------+---------+
| | | (13,607) | (7,655) |
+----------------------------------------------+------------+----------+---------+
| Total liabilities | | (14,445) | (9,307) |
+----------------------------------------------+------------+----------+---------+
| Net assets | | 27,731 | 20,587 |
+----------------------------------------------+------------+----------+---------+
| Equity attributable to equity holders of | | | |
| parent | | | |
+----------------------------------------------+------------+----------+---------+
| Issued capital | | 1,427 | 1,420 |
+----------------------------------------------+------------+----------+---------+
| Share premium | | 8,039 | 8,013 |
+----------------------------------------------+------------+----------+---------+
| Other reserves | | 984 | 984 |
+----------------------------------------------+------------+----------+---------+
| Own shares | | (998) | (2,136) |
+----------------------------------------------+------------+----------+---------+
| Retained earnings | | 18,279 | 12,306 |
+----------------------------------------------+------------+----------+---------+
| Total equity | | 27,731 | 20,587 |
+----------------------------------------------+------------+----------+---------+
| Total equity and liabilities | | 42,176 | 29,894 |
+----------------------------------------------+------------+----------+---------+
Group Cash Flow Statement
Year ended 31 December 2008
+----------------------------------------+--------------+------------+------------+
| | | 2008 | 2007 |
+----------------------------------------+--------------+------------+------------+
| | | GBP000 | GBP000 |
+----------------------------------------+--------------+------------+------------+
| Net cash flow from operating | | | |
| activities | | | |
+----------------------------------------+--------------+------------+------------+
| Profit before tax | | 5,391 | 2,897 |
+----------------------------------------+--------------+------------+------------+
| Finance revenue | | (14) | (35) |
+----------------------------------------+--------------+------------+------------+
| Finance cost | | 112 | 279 |
+----------------------------------------+--------------+------------+------------+
| Operating profit | | 5,489 | 3,141 |
+----------------------------------------+--------------+------------+------------+
| Depreciation and amortisation | | 812 | 762 |
+----------------------------------------+--------------+------------+------------+
| Share based payment expense | | 295 | 260 |
+----------------------------------------+--------------+------------+------------+
| Movement in working capital | | 185 | (1,681) |
+----------------------------------------+--------------+------------+------------+
| Cash generated from operations | | 6,781 | 2,482 |
+----------------------------------------+--------------+------------+------------+
| Finance revenue received | | 14 | 35 |
+----------------------------------------+--------------+------------+------------+
| Finance costs paid | | (112) | (251) |
+----------------------------------------+--------------+------------+------------+
| Income taxes paid | | (836) | (524) |
+----------------------------------------+--------------+------------+------------+
| Net cash flow from operating | | 5,847 | 1,742 |
| activities | | | |
+----------------------------------------+--------------+------------+------------+
| | | | |
+----------------------------------------+--------------+------------+------------+
| Cash flow from investing activities | | | |
+----------------------------------------+--------------+------------+------------+
| Purchase of tangible non-current | | (474) | (522) |
| assets | | | |
+----------------------------------------+--------------+------------+------------+
| Purchase of intangible non-current | | (127) | (316) |
| assets | | | |
+----------------------------------------+--------------+------------+------------+
| Purchase of subsidiary undertaking | | (581) | (623) |
| including costs | | | |
+----------------------------------------+--------------+------------+------------+
| Net funds acquired with subsidiary | | - | - |
| undertakings | | | |
+----------------------------------------+--------------+------------+------------+
| Net cash flow from investing | | (1,182) | (1,461) |
| activities | | | |
+----------------------------------------+--------------+------------+------------+
| Cash flow from financing activities | | | |
+----------------------------------------+--------------+------------+------------+
| Dividends paid to equity holders of | | (475) | (409) |
| parent | | | |
+----------------------------------------+--------------+------------+------------+
| Issue of shares | | 46 | 281 |
+----------------------------------------+--------------+------------+------------+
| Net cash flow used in financing | | (429) | (128) |
| activities | | | |
+----------------------------------------+--------------+------------+------------+
| Net increase in cash and cash | | 4,236 | 153 |
| equivalents | | | |
+----------------------------------------+--------------+------------+------------+
| Cash and cash equivalents at 1 January | | 1,349 | 1,178 |
+----------------------------------------+--------------+------------+------------+
| Exchange adjustments | | 106 | 18 |
+----------------------------------------+--------------+------------+------------+
| Cash and cash equivalents at 31 | | 5,691 | 1,349 |
| December | | | |
+----------------------------------------+--------------+------------+------------+
Group Statement of Recognised Income and Expenditure
Year ended 31 December 2008
+--------------------------------------------------------+----------+----------+
| | 2008 | 2007 |
+--------------------------------------------------------+----------+----------+
| | GBP000 | GBP000 |
+--------------------------------------------------------+----------+----------+
| Attributable profit for the period | 3,588 | 1,909 |
+--------------------------------------------------------+----------+----------+
| Foreign currency translation | 3,702 | (73) |
+--------------------------------------------------------+----------+----------+
| Total recognised income and expenditure for the year | 7,290 | 1,836 |
+--------------------------------------------------------+----------+----------+
Notes to the financial information
1 Basis of preparation
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2008 or 2007 but is derived
from those accounts. Statutory accounts for 2007 have been delivered to the
Registrar of Companies and those for 2008 will be delivered following the
company's annual general meeting. The auditors have reported on those accounts;
their reports were unqualified, did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
reports and did not contain statements under the Companies Act 1985, s237(2) or
(3).
The financial statements are prepared under the historical cost convention,
except for certain financial instruments which are measured at fair value.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on the Directors' best knowledge of current events and
actions, actual results ultimately may differ from those estimates.
2 Segmental information
The primary segment reporting format is determined to be business segments as
the Group's risks and rates of return are affected predominantly by differences
in the services and products provided.
Secondary segment information is reported geographically by client location for
the income statement and by operating business location for the balance sheet as
this best reflects the way the business is organised. This difference in
analysis is because the assets of the business are not located in the same
geographical areas as its customers and therefore the balance sheet analysis is
based on office location.
The operating businesses are organised and managed separately according to the
nature of the products and services provided, with each segment representing a
strategic business unit that offers different products and serves different
markets.
The consultancy segment delivers improved operational efficiency and financial
performance through consulting services to owners and operators of oil
refineries and to process industries worldwide.
The software segment produces and maintains process modelling and refinery wide
simulation software for the oil industry and other process industries worldwide.
Transfer prices between geographical segments are set on an arm's length basis
in a manner similar to transactions with third parties.
2 Segmental information continued
Primary segment is strategic business unit
+-------------------------------------+-------------+----------+-------------+----------+
| | Consultancy | Software | Unallocated | Group |
+-------------------------------------+-------------+----------+-------------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------------+-------------+----------+-------------+----------+
| 2008 | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| Income statement | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| External sales | 44,864 | 7,905 | - | 52,769 |
+-------------------------------------+-------------+----------+-------------+----------+
| Direct project costs | (29,431) | (3,573) | - | (33,004) |
+-------------------------------------+-------------+----------+-------------+----------+
| Depreciation and amortisation | | (275) | (537) | (812) |
+-------------------------------------+-------------+----------+-------------+----------+
| Sales and marketing | | | (4,580) | (4,580) |
+-------------------------------------+-------------+----------+-------------+----------+
| Facilities and communications | | | (5,068) | (5,068) |
+-------------------------------------+-------------+----------+-------------+----------+
| Management and support services | | | (3,816) | (3,816) |
+-------------------------------------+-------------+----------+-------------+----------+
| Trading profit/(loss) (segment | 15,433 | 4,057 | (14,001) | 5,489 |
| result) | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| Finance revenue | | | 14 | 14 |
+-------------------------------------+-------------+----------+-------------+----------+
| Finance cost | | | (112) | (112) |
+-------------------------------------+-------------+----------+-------------+----------+
| Profit before tax | | | | 5,391 |
+-------------------------------------+-------------+----------+-------------+----------+
| Tax expense | | | | (1,803) |
+-------------------------------------+-------------+----------+-------------+----------+
| Profit for the year | | | | 3,588 |
+-------------------------------------+-------------+----------+-------------+----------+
+-------------------------------------+-------------+----------+-------------+----------+
| | Consultancy | Software | Unallocated | Group |
+-------------------------------------+-------------+----------+-------------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------------+-------------+----------+-------------+----------+
| 2007 | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| Income statement | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| External sales | 30,999 | 7,116 | - | 38,115 |
+-------------------------------------+-------------+----------+-------------+----------+
| Direct project costs | (20,332) | (2,355) | - | (22,687) |
+-------------------------------------+-------------+----------+-------------+----------+
| Depreciation and amortisation | | (223) | (539) | (762) |
+-------------------------------------+-------------+----------+-------------+----------+
| Sales and marketing | | | (3,456) | (3,456) |
+-------------------------------------+-------------+----------+-------------+----------+
| Facilities and communications | | | (4,463) | (4,463) |
+-------------------------------------+-------------+----------+-------------+----------+
| Management and support services | | | (3,606) | (3,606) |
+-------------------------------------+-------------+----------+-------------+----------+
| Trading profit/(loss) (segment | 10,667 | 4,538 | (12,064) | 3,141 |
| result) | | | | |
+-------------------------------------+-------------+----------+-------------+----------+
| Finance revenue | | | 35 | 35 |
+-------------------------------------+-------------+----------+-------------+----------+
| Finance cost | | | (279) | (279) |
+-------------------------------------+-------------+----------+-------------+----------+
| Profit before tax | | | | 2,897 |
+-------------------------------------+-------------+----------+-------------+----------+
| Tax expense | | | | (988) |
+-------------------------------------+-------------+----------+-------------+----------+
| Profit for the year | | | | 1,909 |
+-------------------------------------+-------------+----------+-------------+----------+
3 Group operating profit
This is stated after charging/(crediting) the following:
+--------------------------------------------------------+----------+----------+
| | 2008 | 2007 |
+--------------------------------------------------------+----------+----------+
| | GBP000 | GBP000 |
+--------------------------------------------------------+----------+----------+
| Depreciation and amortisation | | |
+--------------------------------------------------------+----------+----------+
| - Depreciation | 377 | 385 |
+--------------------------------------------------------+----------+----------+
| - Amortisation of intellectual property rights | | |
+--------------------------------------------------------+----------+----------+
| - Existing intellectual property rights | 219 | 208 |
+--------------------------------------------------------+----------+----------+
| - Development costs carried forward | 216 | 169 |
+--------------------------------------------------------+----------+----------+
| Total | 812 | 762 |
+--------------------------------------------------------+----------+----------+
| Included in other operating charges | | |
+--------------------------------------------------------+----------+----------+
| - Operating lease rentals | | |
+--------------------------------------------------------+----------+----------+
| - Minimum lease payments | 1,804 | 1,690 |
+--------------------------------------------------------+----------+----------+
| - Sublease rentals received | (235) | (161) |
+--------------------------------------------------------+----------+----------+
| - Share based payments | 295 | 260 |
+--------------------------------------------------------+----------+----------+
| - Net foreign exchange differences | (1,092) | (417) |
+--------------------------------------------------------+----------+----------+
a) Research and development costs
During 2008 the Group incurred research and development costs of GBP1.8m (2007:
GBP1.8m). Of this amount GBP127,000 (2007: GBP316,000) related to development
expenditure for Petro-SIM and has been carried forward as an intangible asset to
be amortised against expected future sales. The balance was charged directly to
staff and associate costs and direct costs in the Income Statement.
b) Underlying operating profit
+-----------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+-----------------------------------------------------+------------+------------+
| | GBP000 | GBP000 |
+-----------------------------------------------------+------------+------------+
| Operating profit | 5,489 | 3,141 |
+-----------------------------------------------------+------------+------------+
| Amortisation of acquisition intangibles | 219 | 208 |
+-----------------------------------------------------+------------+------------+
| Development costs carried forward | (127) | (316) |
+-----------------------------------------------------+------------+------------+
| Amortisation of development costs carried forward | 216 | 169 |
+-----------------------------------------------------+------------+------------+
| Underlying operating profit | 5,797 | 3,202 |
+-----------------------------------------------------+------------+------------+
| Finance revenue | 14 | 35 |
+-----------------------------------------------------+------------+------------+
| Finance cost | (112) | (279) |
+-----------------------------------------------------+------------+------------+
| Underlying profit before tax | 5,699 | 2,958 |
+-----------------------------------------------------+------------+------------+
The analysis of underlying profit is given to illustrate the effect of non
trading items on the results of the Group.
4 Earnings per share
Basic earnings per share are calculated by dividing after tax net profit for the
year attributable to ordinary shareholders of the parent company by the weighted
average number of ordinary shares in issue during the year.
+----------------------------------------------------------+--------+------------+
| | 2008 | 2007 |
+----------------------------------------------------------+--------+------------+
| | GBP000 | GBP000 |
+----------------------------------------------------------+--------+------------+
| Profit for the year | 3,588 | 1,909 |
+----------------------------------------------------------+--------+------------+
+----------------------------------------------------------+---------+------------+
| | Number | Number |
+----------------------------------------------------------+---------+------------+
| | 000s | 000s |
+----------------------------------------------------------+---------+------------+
| Weighted average number of ordinary shares in issue | 57,013 | 55,758 |
+----------------------------------------------------------+---------+------------+
| Shares owned by the KBC Employee Trust | (1,043) | (1,575) |
+----------------------------------------------------------+---------+------------+
| Number of shares used for basic and underlying earnings | 55,970 | 54,183 |
| per share | | |
+----------------------------------------------------------+---------+------------+
| Dilution | 1,090 | 494 |
+----------------------------------------------------------+---------+------------+
| Number of shares used for diluted basis and diluted | 57,060 | 54,677 |
| underlying earnings per share | | |
+----------------------------------------------------------+---------+------------+
| | | |
+----------------------------------------------------------+---------+------------+
| | Pence | Pence |
+----------------------------------------------------------+---------+------------+
| Basic earnings per share | 6.4p | 3.5p |
+----------------------------------------------------------+---------+------------+
| Diluted earnings per share | 6.3p | 3.5p |
+----------------------------------------------------------+---------+------------+
| Basic underlying earnings per share | 6.9p | 3.7p |
+----------------------------------------------------------+---------+------------+
| Diluted underlying earnings per share | 6.8p | 3.7p |
+----------------------------------------------------------+---------+------------+
Basic underlying earnings per share as defined in note 3b is based upon an after
tax profit of GBP3.87m (2007: profit GBP2.02m) and on 55,970,000 (2007:
54,183,000) 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDXDUBGGCL
Kbc Adv.Tech. (LSE:KBC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kbc Adv.Tech. (LSE:KBC)
Historical Stock Chart
From Jul 2023 to Jul 2024
