TIDMKBC
RNS Number : 6087S
KBC Advanced Technologies plc
14 September 2010
Embargoed until 07.00
14 September 2010
KBC Advanced Technologies plc
("KBC" or "the Group")
Interim Results for the six months ended 30 June 2010
KBC Advanced Technologies plc, a leading consultant to the energy industry,
today announces its half year results for the six months ended 30 June 2010.
+----------------------------+-----------------+-----------------+
| | 6 months to | 6 months to |
| | 30 June 2010 | 30 June 2009 |
+----------------------------+-----------------+-----------------+
| Revenue | GBP25.6m | GBP27.1m |
+----------------------------+-----------------+-----------------+
| Profit before tax | GBP1.8m | GBP1.5m |
+----------------------------+-----------------+-----------------+
| Underlying profit before | GBP1.4m | GBP2.4m |
| tax* | | |
+----------------------------+-----------------+-----------------+
| Basic earnings per share | 1.9p | 1.6p |
+----------------------------+-----------------+-----------------+
| Dividend per share | 0.55p | 0.45p |
+----------------------------+-----------------+-----------------+
*excludes the impact of the creation and amortization of intangible assets and
redundancy costs but includes foreign currency movements (see note 3 to this
statement)
Highlights
· Robust operational performance in challenging industry environment
· Improvement in trading conditions expected during second half
· Refining industry background of challenge and change offers KBC good
consulting opportunities
· Rebranding of services in 2009 is proving successful
· As in previous years, software sales are expected to be second half
weighted
· Workload backlog at GBP39.8m is in line with 31 December 2009 and up 14%
from GBP35.0m a year ago
· Interim dividend increased by 22%
· Results for the full year are anticipated to be in line with the Board's
expectations
Ian Miller, Chairman of KBC, commented:
"Despite the challenging conditions seen in the first half of 2010, the
opportunities identified to develop KBC's business continue to increase.
Although the refining industry appears relatively static at the moment, many
underlying changes are taking place across the different geographies in which we
operate. Our solutions and software tools enable our consultants to provide
clients with bespoke solutions that enable them to improve their competitive
position.
We expect to be very busy for the balance of the year and to again see the
seasonal increase in software license revenue. The final results for the year
will as usual depend on the precise timing of new contract awards but we are
confident that the pipeline is sufficiently robust to deliver our current
expectations."
- Ends -
For further information, please contact:
+------------------+---------------+
| KBC | |
| Advanced | |
| Technologies | |
| plc | |
+------------------+---------------+
| George | |
| Bright, | On 14 |
| Chief | September |
| Executive | 2010: 020 |
| Nicholas | 7067 0700 |
| Stone, | thereafter: |
| Operations | 01932 236314 |
| and | |
| Finance | |
| Director | |
+------------------+---------------+
| | |
+------------------+---------------+
| Cenkos | |
| Securities | |
+------------------+---------------+
| Jon | 020 7397 8900 |
| Fitzpatrick/Beth | |
| McKiernan | |
+------------------+---------------+
| | |
+------------------+---------------+
| Weber | |
| Shandwick | |
| Financial | |
+------------------+---------------+
| Nick | 020 7067 0700 |
| Oborne/Clare | |
| Thomas | |
+------------------+---------------+
Notes to Editors:
For 30 years KBC's consultants have provided independent strategic and
engineering expertise to enable leading companies in the global energy business
and other process industries to manage risk while maximising value from their
assets.
In times of economic uncertainty and increasing environmental pressure, KBC's
proprietary methodologies and innovative tools guide its clients' key strategic
decisions, enabling them to prioritise and implement initiatives that maximise
return on investment and improve operational performance. KBC offers Strategic
and Market, Capital Investment, Operating, Organisational and Environmental
Solutions.
For more information, visit www.kbcat.com.
Chairman's Statement
As noted in the pre-close statement, we have seen an improvement in trading
conditions during the latter part of the second quarter and we continue to
anticipate that the results for the full year will be in line with the Board's
expectations.
Against an initially challenging market backdrop, KBC has taken the opportunity
to further reduce its fixed cost base by an annualised GBP1.3m, delivering a net
current year benefit of GBP0.4m. At the same time our marketing messages have
been revised to ensure that our suite of services and products is effectively
targeted to address the different issues facing our clients in the developed and
developing economies. This has been effective and is helping the business to
regain momentum into what looks like being a strong second half year.
A robust operational performance saw revenues of GBP25.6m (2009: GBP27.1m) with
contract awards of GBP23.1m against GBP24.5m in 2009. The resulting workload
backlog at 30 June 2010 is GBP39.8m, in line with that at 31 December 2009, but
up from the GBP35.0m at 30 June 2009.
Profit before tax was GBP1.8m (2009: GBP1.5m). Underlying profit before tax (see
note 3 to this statement) was GBP1.4m compared to GBP2.4m in 2009. The
underlying measure excludes the creation and amortisation of intangible assets
and redundancy costs but not the foreign exchange movement.
REFINING INDUSTRY OVERVIEW
Global demand for oil products grew very slowly over the first six months of
2010. This overall picture includes areas of strong growth, such as China,
India, the Middle East and Latin America, and areas of low growth or contraction
including Europe where refining margins have been negative and where there is
significant overcapacity. Crude oil prices held up well in the $70-$85 per
barrel range, and reasonable discounts for heavy sour crude allowed some
refiners with complex refining capability to make margin, even in those regions
where demand was weak. Excess refining capacity in the US and Europe remains a
key area for concern within the industry as well as the new clean fuels
specifications and continuing uncertainty over carbon trading. Despite this,
investment in new refining assets remains high in the parts of the developing
world where demand is growing strongly.
This environment provides an imperative for increased M&A activity and for
rationalisation of refining assets. Although there has been a lot of due
diligence activity, in the short-term the gulf between buyers' and sellers'
valuations and the high cost of environmental clean up has resulted in few
transactions being closed. It therefore seems likely that refining margins will
continue to be very weak for the foreseeable future in an industry with mixed
fortunes in different parts of the world.
CONSULTING OPERATIONS
The industry background of challenge and change offers KBC good opportunities to
sell its consulting services and products. The rebranding of our services last
year into new solution sets focused on the strategic, operating, organisational,
capital and environmental sectors is proving successful.
In North America we are seeing more opportunities to assist asset owners to
maximise the returns from their existing assets through operational and
organisational support. Good examples are with BP at their Whiting refinery near
Chicago and Irving Oil in Canada. This work includes elements of operator
training and development of training manuals. We believe that demand for this
service will continue to grow as a result of the increased focus on the
enforcement of industry standards and the expected new US Government
operating/safety standards in the upstream and downstream oil and gas industry.
Whilst the need to address operating issues is actually greater in Europe, this
market is proving difficult as refiners have been slow to commit to what they
view as discretionary spend. However, we believe that the market will open as
competitive pressure increases over the next few months. Indications that our
organisational solutions message is being successful in the Middle East include
the contract with Takreer in the UAE. Separately, our first operations and
maintenance programme, at PetroVietnam's Binh Son refinery, has almost completed
one year of execution, and we are now well positioned to engage in further
operating improvement work at that site, as well as assisting in development of
future plants in that region.
Consulting on new capital projects has once again held up well as many emerging
countries develop infrastructure projects. Over the period we have conducted
several feasibility studies, provided design packages and represented asset
owners during the detailed engineering design phase of capital projects,
primarily in Asia, Latin America and the Middle East. Last year we announced
that we were investing in the development of a strategic consulting capability,
and that practice has developed strongly during the period. Currently some 5
million barrels per day of refining capacity is notionally for sale, mostly in
Europe, and we now provide a commercial, technical and environmental due
diligence service covering both sides of potential transactions.
Consultant utilisation in the first half year was below our expectations,
especially in Europe where our clients have been reluctant to spend money on
consultancy services. We therefore took further steps in July and August 2010
to reduce costs with a redundancy programme that will yield annualised cost
savings of GBP1.3m at a one off cost of GBP0.3m this year. The most significant
cuts were in the senior management team as a result of streamlining the
organisation structure.
In the third quarter we have already seen a return to higher utilisation levels
and the demand for proposals, normally reduced during the summer months, has
continued at a higher rate. Furthermore, we are in the final stages of
negotiating a very large multi site profit improvement project with one of our
long standing clients in Latin America. Following a competitive process we have
been selected to carry out this work, have agreed the value of the first phase
and are now in sole source discussions over detailed contractual terms. We
expect this process will be concluded later this month with the project starting
formally in October. Once concluded, the initial phase will be worth around $16m
over a two year period.
For several years KBC has undertaken work for clients in Iran. New EU sanctions
announced in July this year were for the first time aimed at the refining
industry and therefore may prevent us from doing any further work in that
country and, as a result of this, no new Iranian work has commenced recently.
The situation will be reviewed once the details of the new sanctions are known.
SOFTWARE
This year we expect to see the same seasonality in software sales as in 2008 and
2009 with the majority of sales in the second half of the year. Nevertheless, we
have concluded several corporate deals in the first half, mainly in Asia.
Petro-SIM V4 has undergone extensive testing during this period and is now being
supplied to clients. This version significantly improves functionality, fidelity
and end user operability. Petro-SIM is now in use at more than 180 sites and
this new release will allow us to increase market share through selling more
seats at existing sites in addition to further refinery penetration. We have a
number of significant new licence sales at an advanced stage of discussion that
we expect to close before the end of the year.
Our Petro-SIM software sales have gone from strength to strength over the last
few years and have started to make inroads into some areas of the market
previously dominated by other competitors. One of these competitors has recently
made allegations that KBC has infringed its rights in certain software code.
Having made a thorough investigation, we are confident that their claims have no
basis and we have refuted them in their entirety. KBC will defend its position
robustly in order to protect this important part of our business. There is no
indication at present that this is having any impact on our software sales.
RESULTS
Revenue for the period is GBP25.6m, down by 6% from the GBP27.1m reported for
the same period last year. Direct costs increased by 31%, mainly due to a higher
level of work carried out on client sites. Staff costs have decreased by 14% due
to the cost saving measures implemented over the last 12 months, although a cost
of GBP0.8m was incurred in 2009 for redundancy costs and we have carried forward
additional software development costs this year. Other operating charges have
decreased by 6%, reflecting a reduced impact of foreign exchange gains and
losses on the revaluation of working capital balances (mainly Euro) during the
period as sterling appreciated more slowly than in 2009.
Operating profit has increased by 22% to GBP1.8m (2009: GBP1.5m). Note 3 to
this statement shows the measure of underlying profit that excludes the impact
of the cost saving measures, the carry forward of software development costs and
the amortisation of acquired intangible assets. Along with the redundancy cost
mentioned earlier, the main impact on the increase in operating profit has been
the carry forward of development costs. Now that Version 4 of our Petro-SIM
software is complete and being used by clients for the first time, we have
carried forward development costs incurred in the current period totalling
GBP0.7m which will be amortised over a five year period. This measure shows
underlying operating profit for the period of GBP1.4m compared to GBP2.5m in
2009, a decline of 42%.
Profit before tax after finance revenue and cost is GBP1.8m (2009: GBP1.5m).
After the tax charge of GBP0.8m, at an effective rate of 42%, profit for the
period was GBP1.0m (2009: GBP0.9m). This tax charge is based on a forecast for
the current period and is higher than previously expected. The increase in tax
rate results from a significant proportion of our profits being made in our US
company taxed at 38%, leaving insufficient profits in the UK company to allow us
to recover taxes withheld on remittances from overseas clients. More detail on
this forecast charge can be seen in note 5.
Basic earnings per share are 1.9p, up from 1.6p in the first half of 2009, with
the underlying measure 1.6p against 2.8p in 2009.
Net cash at 30 June 2010 was GBP1.7m, down from the GBP4.0m at 31 December 2009
and from GBP1.8m at 30 June 2009. The main items contributing to this decrease
were share repurchases of GBP1.4m, a dividend of GBP0.6m and tax payments of
GBP1.0m. As in 2009, we expect cash resources to increase during the second half
of the year.
DIVIDEND
An interim dividend of 0.55p per share will be paid on 13 October 2010 to
shareholders on the register at 1 October 2010. This compares to 0.45p per
share paid at the interim last year and reflects the Board's confidence in the
forecast improvement in business performance in the second half of 2010 and
beyond, and our stated aim to increase the proportion of full year profits paid
by way of dividend.
A final dividend of 1.1p per share was paid during the period for the year to 31
December 2009, making a total of 1.55p for the whole year.
OUTLOOK
Despite the challenging conditions seen in the first half of 2010, the
opportunities identified to develop KBC's business continue to increase.
Although the refining industry appears relatively static at the moment, many
underlying changes are taking place across the different geographies in which we
operate. Our solutions and software tools enable our consultants to provide
clients with bespoke solutions that enable them to improve their competitive
position.
We expect to be very busy for the balance of the year and to again see the
seasonal increase in software license revenue. The final results for the year
will as usual depend on the precise timing of new contract awards but we are
confident that the pipeline is sufficiently robust to deliver our current
expectations.
Ian K Miller
+-------------------------------------------------------------------+
| |
| Condensed group income statement |
| for the six months ended 30 June 2010 |
+-------------------------------------------------------------------+
+---------------------------+-----------+-----------+-----------+----------+
| | Notes | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | 12 |
| | | to | to | months |
| | | 30 June | 30 June | to |
| | | 2010 | 2009 | 31 |
| | | GBP000 | GBP000 | December |
| | | | | 2009 |
| | | | | GBP000 |
+---------------------------+-----------+-----------+-----------+----------+
| | | | | |
+---------------------------+-----------+-----------+-----------+----------+
| Revenue | | 25,567 | 27,058 | 52,587 |
+---------------------------+-----------+-----------+-----------+----------+
| Direct costs | | (3,371) | (2,566) | (5,587) |
+---------------------------+-----------+-----------+-----------+----------+
| Staff and associate costs | | (14,417) | (16,783) | (31,032) |
+---------------------------+-----------+-----------+-----------+----------+
| Depreciation and | | (554) | (502) | (1,042) |
| amortisation | | | | |
+---------------------------+-----------+-----------+-----------+----------+
| Other operating charges | | (5,397) | (5,712) | (10,155) |
+---------------------------+-----------+-----------+-----------+----------+
| Operating profit | | 1,828 | 1,495 | 4,771 |
+---------------------------+-----------+-----------+-----------+----------+
| | | 3 | 2 | 5 |
| Finance revenue | | | | |
+---------------------------+-----------+-----------+-----------+----------+
| Finance cost | | (28) | (29) | (166) |
+---------------------------+-----------+-----------+-----------+----------+
| Profit before tax | | 1,803 | 1,468 | 4,610 |
+---------------------------+-----------+-----------+-----------+----------+
| Tax expense | | (757) | (558) | (1,576) |
+---------------------------+-----------+-----------+-----------+----------+
| Profit for the period | | 1,046 | 910 | 3,034 |
+---------------------------+-----------+-----------+-----------+----------+
| | | | | |
| Earnings per share | | | | |
+---------------------------+-----------+-----------+-----------+----------+
| Basic | 2 | 1.9p | 1.6p | 5.4p |
+---------------------------+-----------+-----------+-----------+----------+
| Diluted | 2 | 1.8p | 1.6p | 5.3p |
+---------------------------+-----------+-----------+-----------+----------+
+-------------------------------------------------------------------+
| |
| Condensed group statement of comprehensive income |
| for the six months ended 30 June 2010 |
+-------------------------------------------------------------------+
+-------------------------------------+-----------+-----------+----------+----------+
| | Unaudited | Unaudited | Audited | |
| | 6 months | 6 months | 12 | |
| | to | to | months | |
| | 30 June | 30 June | to | |
| | 2010 | 2009 | 31 | |
| | GBP000 | GBP000 | December | |
| | | | 2009 | |
| | | | GBP000 | |
+-------------------------------------+-----------+-----------+----------+----------+
| | | | | |
+-------------------------------------+-----------+-----------+----------+----------+
| Profit for the period | 1,046 | 910 | 3,034 | |
+-------------------------------------+-----------+-----------+----------+----------+
| Other comprehensive income: | | | | |
+-------------------------------------+-----------+-----------+----------+----------+
| Exchange differences on translation | 909 | (939) | (1,103) | |
| of foreign operations recognised | | | | |
| directly in equity | | | | |
+-------------------------------------+-----------+-----------+----------+----------+
| | 1,955 | (29) | 1,931 | |
| Total comprehensive income/(loss) | | | | |
| recognised in period | | | | |
+-------------------------------------+-----------+-----------+----------+----------+
| |
| Unaudited condensed group statement of changes in equity |
| for the six months ended 30 June 2010 |
+-------------------------------------+-----------+-----------+----------+----------+
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | Issued | Share | Capital | Merger | Own | Share | Foreign | Retained | Total |
| | capital | premium | redemption | reserve | shares | based | exchange | earnings | GBP000 |
| | GBP000 | GBP000 | reserve | GBP000 | GBP000 | payments | reserve | GBP000 | |
| | | | GBP000 | | | GBP000 | GBP000 | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| At 1 January | 1,427 | 8,039 | 55 | 929 | (998) | 1,078 | 2,600 | 14,601 | 27,731 |
| 2009 | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Total | - | - | - | - | - | - | (939) | 910 | (29) |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Share-based | - | - | - | - | - | 150 | - | - | 150 |
| payments | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Shares issued | 1 | 5 | - | - | 210 | - | - | (211) | 5 |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Dividends | - | - | - | - | - | - | - | (561) | (561) |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| At 30 June 2009 | 1,428 | 8,044 | 55 | 929 | (788) | 1,228 | 1,661 | 14,739 | 27,296 |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| At 1 January | 1,429 | 8,060 | 55 | 929 | (452) | 1,305 | 1,497 | 16,273 | 29,096 |
| 2010 | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Total | - | - | - | - | - | - | 909 | 1,046 | 1,955 |
| comprehensive | | | | | | | | | |
| income | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Share-based | - | - | - | - | - | 150 | - | - | 150 |
| payments | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Exchange | - | - | - | - | - | 44 | - | - | 44 |
| translation | | | | | | | | | |
| adjustment | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Shares issued | 11 | 4 | - | - | - | - | - | - | 15 |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Shares | (58) | - | 58 | - | (277) | - | - | (1,187) | (1,464) |
| cancelled | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Utilisation of | - | - | - | - | 431 | - | - | (431) | - |
| own shares | | | | | | | | | |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| Dividends | - | - | - | - | - | - | - | (613) | (613) |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
| At 30 June 2010 | 1,382 | 8,064 | 113 | 929 | (298) | 1,499 | 2,406 | 15,088 | 29,183 |
+-----------------+---------+---------+------------+---------+--------+----------+----------+----------+---------+
+------------------------------------------------------------------+
| |
| Condensed group balance sheet |
| at 30 June 2010 |
+------------------------------------------------------------------+
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | as at | as at | as at |
| | | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | GBP000 | GBP000 | 2009 |
| | | | | GBP000 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Non-current assets | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Property, plant and equipment | | 1,485 | 1,760 | 1,584 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Goodwill | | 7,524 | 8,049 | 7,372 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Other intangible assets | | 1,300 | 1,120 | 939 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Deferred tax asset | | 203 | 1,637 | 1,576 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | 10,512 | 12,566 | 11,471 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Current assets | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Trade and other receivables | | 23,869 | 21,026 | 20,986 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Current tax receivable | | 772 | 225 | 123 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Cash and short term deposits | | 1,662 | 1,794 | 3,975 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Other financial assets | | 93 | 150 | 48 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | 26,396 | 23,195 | 25,132 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Total assets | | 36,908 | 35,761 | 36,603 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Non-current liabilities | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Trade and other payables | | - | (167) | - |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Provisions | | - | (127) | - |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Deferred tax liabilities | | - | (463) | (616) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | - | (757) | (616) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Current liabilities | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Trade and other payables | | (7,560) | (7,502) | (6,380) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Current tax payable | | - | (53) | (326) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Provisions | | (165) | (153) | (185) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | (7,725) | (7,708) | (6,891) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Total liabilities | | (7,725) | (8,465) | (7,507) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Net assets | | 29,183 | 27,296 | 29,096 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Equity attributable to equity | | | | |
| holders of parent | | | | |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Issued capital | | 1,382 | 1,428 | 1,429 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Share premium | | 8,064 | 8,044 | 8,060 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Other reserves | | 1,042 | 984 | 984 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Own shares | | (298) | (788) | (452) |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Retained earnings | | 18,993 | 17,628 | 19,075 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Total equity | | 29,183 | 27,296 | 29,096 |
+-----------------------------------+-----+-----------------------+-----------+----------+
| Total equity and liabilities | | 36,908 | 35,761 | 36,603 |
+-----------------------------------+-----+-----------------------+-----------+----------+
+-------------------------------------------------------------------+
| |
| Condensed group cash flow statement |
| for the six months ended 30 June 2010 |
+-------------------------------------------------------------------+
+-----------------------------------+-----+-----------+-----------+
| | | Unaudited | Unaudited |
| | | 6 months | 6 months |
| | | to | to |
| | | 30 June | 30 June |
| | | 2010 | 2009 |
| | | GBP000 | GBP000 |
+-----------------------------------+-----+-----------+-----------+
| | | | |
+-----------------------------------+-----+-----------+-----------+
| Net cash flow from operating | | | |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| Profit before tax | | 1,803 | 1,468 |
+-----------------------------------+-----+-----------+-----------+
| Finance revenue | | (3) | (2) |
+-----------------------------------+-----+-----------+-----------+
| Finance cost | | 28 | 29 |
+-----------------------------------+-----+-----------+-----------+
| Operating profit | | 1,828 | 1,495 |
+-----------------------------------+-----+-----------+-----------+
| Depreciation and amortisation | | 554 | 502 |
+-----------------------------------+-----+-----------+-----------+
| Share based payment expense | | 150 | 150 |
+-----------------------------------+-----+-----------+-----------+
| Movement in working capital | | (1,561) | (2,891) |
+-----------------------------------+-----+-----------+-----------+
| Cash generated from operations | | 971 | (744) |
+-----------------------------------+-----+-----------+-----------+
| Finance revenue received | | 3 | 2 |
+-----------------------------------+-----+-----------+-----------+
| Finance costs paid | | (28) | (29) |
+-----------------------------------+-----+-----------+-----------+
| Income taxes paid | | (975) | (1,281) |
+-----------------------------------+-----+-----------+-----------+
| Net cash flow from operating | | (29) | (2,052) |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| | | | |
+-----------------------------------+-----+-----------+-----------+
| Cash flow from investing | | | |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| Purchase of tangible non-current | | (134) | (415) |
| assets | | | |
+-----------------------------------+-----+-----------+-----------+
| Purchase of intangible | | (659) | (69) |
| non-current assets | | | |
+-----------------------------------+-----+-----------+-----------+
| Purchase of subsidiary | | - | (689) |
| undertaking including costs | | | |
+-----------------------------------+-----+-----------+-----------+
| Net cash flow from investing | | (793) | (1,173) |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| | | | |
+-----------------------------------+-----+-----------+-----------+
| Cash flow from financing | | | |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| Dividends paid to equity holders | | (613) | (561) |
| of parent | | | |
+-----------------------------------+-----+-----------+-----------+
| Purchase of own shares | | (1,464) | - |
+-----------------------------------+-----+-----------+-----------+
| Issue of shares | | 15 | 6 |
+-----------------------------------+-----+-----------+-----------+
| Net cash flow used in financing | | (2,062) | (555) |
| activities | | | |
+-----------------------------------+-----+-----------+-----------+
| Net decrease in cash and cash | | (2,884) | (3,780) |
| equivalents | | | |
+-----------------------------------+-----+-----------+-----------+
| Cash and cash equivalents at 1 | | 3,975 | 5,691 |
| January | | | |
+-----------------------------------+-----+-----------+-----------+
| Exchange adjustments | | 571 | (117) |
+-----------------------------------+-----+-----------+-----------+
| Cash and cash equivalents at 30 | | 1,662 | 1,794 |
| June | | | |
+-----------------------------------+-----+-----------+-----------+
NOTES TO THE 2010 HALF YEAR RESULTS
1 BASIS OF PREPARATION
The Group prepares its condensed consolidated financial statements in accordance
with IFRS as adopted by the European Union, and the statements have been
prepared using the accounting policies set out in the Group's 2009 statutory
accounts except as described below. For the purposes of this document the term
IFRS includes International Accounting Standards and International Financial
Reporting Interpretations (IFRICs).
This Half Year Report will be sent to shareholders and published on the Investor
Relations section of the corporate website at www.kbcat.com. Further copies of
this Half Year Report may be obtained from the Company Secretary, KBC Advanced
Technologies plc, KBC House, 42-50 Hersham Road, Walton on Thames, Surrey, KT12
1RZ.
The financial information contained in this document does not constitute
statutory accounts as defined in Section 435 of the Companies Act 2006.
The comparatives for the full year ended 31 December 2009 are not the Group's
full statutory accounts for that year. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The auditors'
report on those accounts was unqualified, did not include references to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under section 498(2)-(3)
of the Companies Act 2006.
The following new standards, amendments to standards and interpretations are
mandatory for the first time for the financial year beginning 1 January 2010,
but are not currently relevant for the Group:
+----------------+-------------------------------------+-----------+
| Standard | Title | Effective |
| | | date |
+----------------+-------------------------------------+-----------+
| IFRS 3 | Business combinations | 1 July |
| (revised) | | 2009 |
+----------------+-------------------------------------+-----------+
| IAS 27 | Consolidated and separate financial | 1 July |
| (amendment) | statements | 2009 |
+----------------+-------------------------------------+-----------+
| IAS 39 | Financial instruments: Recognition | 1 July |
| (amendment) | and measurement | 2009 |
+----------------+-------------------------------------+-----------+
| IFRIC 17 | Distribution of non-cash assets to | 1 July |
| | owners | 2009 |
+----------------+-------------------------------------+-----------+
| IFRIC 18 | Transfer of assets from customers | 1 July |
| | | 2009 |
+----------------+-------------------------------------+-----------+
| IFRS | Improvements to IFRSs (2009) | 1 January |
| | | 2010 |
+----------------+-------------------------------------+-----------+
| IFRS 2 | Group cash settled share based | 1 January |
| (amendment) | payment transactions | 2010 |
+----------------+-------------------------------------+-----------+
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 January
2010 and have not been adopted early:
+----------------+-------------------------------------+-----------+
| Standard | Title | Effective |
| | | date |
+----------------+-------------------------------------+-----------+
| IAS 32 | Classification of rights issue | 1 |
| (amendment) | | February |
| | | 2010 |
+----------------+-------------------------------------+-----------+
| IFRIC 19 | Extinguishing financial liabilities | 1 July |
| | with equity instruments | 2010 |
+----------------+-------------------------------------+-----------+
| IAS 24 | Related party disclosures | 1 January |
| (revised) | | 2011 |
+----------------+-------------------------------------+-----------+
| IFRIC 14 | IAS 19 - The limit on a defined | 1 January |
| (amendment) | benefit asset, minimum funding | 2011 |
| | requirements and their interaction | |
+----------------+-------------------------------------+-----------+
| IFRS | Improvements to IFRSs (2010) | 1 January |
| | | 2011 |
+----------------+-------------------------------------+-----------+
| IFRS 9 | Financial instruments | 1 January |
| | | 2013 |
+----------------+-------------------------------------+-----------+
The Directors are assessing whether the adoption of these standards and
interpretations will have a material impact on the Group's financial statements
in the period of initial application.
2 EARNINGS PER SHARE
The calculation of basic earnings per share is based upon earnings of GBP1.05m
(Jun 2009: GBP0.91m, Dec 2009: GBP3.03m) and on 56,213,000 (Jun 2009:
56,281,000, Dec 2009: 56,330,000) ordinary shares, being the weighted average
number of ordinary shares in issue during the period after excluding shares
owned by the KBC Advanced Technologies plc Employee Trust.
The calculation of diluted earnings per share is based upon earnings of GBP1.05m
(Jun 2009: GBP0.91m, Dec 2009: GBP3.03m) and on 57,096,000 (Jun 2009:
57,580,000, Dec 2009: 57,624,000) ordinary shares, being the weighted average
number of ordinary shares in issue during the period after excluding shares
owned by the KBC Advanced Technologies plc Employee Trust and adjusted for the
weighted average effect of share options outstanding during the period.
The calculation of basic underlying earnings per share is based upon earnings of
GBP0.88m (Jun 2009: GBP1.56m, Dec 2009: GBP3.73m) and on 56,213,000 (Jun 2009:
56,281,000, Dec 2009: 56,330,000) ordinary shares, being the weighted average
number of ordinary shares in issue during the period after excluding shares
owned by the KBC Advanced Technologies plc Employee Trust.
3 UNDERLYING OPERATING PROFIT
+------------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | 12 |
| | to | to | months |
| | 30 June | 30 June | to |
| | 2010 | 2009 | 31 |
| | GBP000 | GBP000 | December |
| | | | 2009 |
| | | | GBP000 |
+------------------------------------+-----------+-----------+----------+
| Operating profit | 1,828 | 1,495 | 4,771 |
+------------------------------------+-----------+-----------+----------+
| Amortisation of acquisition | 138 | 126 | 245 |
| intangibles | | | |
+------------------------------------+-----------+-----------+----------+
| Development costs carried forward | (659) | (69) | (105) |
+------------------------------------+-----------+-----------+----------+
| Amortisation of development costs | 126 | 120 | 252 |
| carried forward | | | |
+------------------------------------+-----------+-----------+----------+
| Redundancy costs | - | 794 | 667 |
+------------------------------------+-----------+-----------+----------+
| Underlying operating profit | 1,433 | 2,466 | 5,830 |
+------------------------------------+-----------+-----------+----------+
| Finance revenue | 3 | 2 | 5 |
+------------------------------------+-----------+-----------+----------+
| Finance cost | (28) | (29) | (166) |
+------------------------------------+-----------+-----------+----------+
| Underlying profit before tax | 1,408 | 2,439 | 5,669 |
+------------------------------------+-----------+-----------+----------+
| Tax expense | (533) | (879) | (1,939) |
+------------------------------------+-----------+-----------+----------+
| Underlying profit after tax | 875 | 1,560 | 3,730 |
+------------------------------------+-----------+-----------+----------+
The basic underlying earnings per share calculated using this measure is 1.6p
(Jun 2009: 2.8p, Dec 2009: 6.8p).
4 SEGMENTAL INFORMATION
The Group has adopted IFRS 8, Operating segments, which uses a "management
approach", under which information is presented on the same basis as that used
for internal reporting purposes.
+-------------------------+----------+--------+--------+-------------+--------+
| Income statement | Americas | Asia | EMEA | Unallocated | Total |
| for the six months | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| ended 30 June 2010 | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Rendering of services | 8,521 | 5,658 | 5,576 | - | 19,755 |
| (Consulting) | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Sale of goods | 2,640 | 1,140 | 2,032 | - | 5,812 |
| (Software) | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Total revenue | 11,161 | 6,798 | 7,608 | - | 25,567 |
+-------------------------+----------+--------+--------+-------------+--------+
| Contribution | 5,310 | 2,571 | 2,631 | - | 10,512 |
+-------------------------+----------+--------+--------+-------------+--------+
| Operating profit before | 2,751 | 649 | (6) | (1,302) | 2,092 |
| amortisation | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Amortisation | - | - | - | (264) | (264) |
+-------------------------+----------+--------+--------+-------------+--------+
| Operating profit | 2,751 | 649 | (6) | (1,566) | 1,828 |
+-------------------------+----------+--------+--------+-------------+--------+
| Finance revenue | - | - | - | 3 | 3 |
+-------------------------+----------+--------+--------+-------------+--------+
| Finance cost | - | - | - | (28) | (28) |
+-------------------------+----------+--------+--------+-------------+--------+
| Profit before tax | 2,751 | 649 | (6) | (1,591) | 1,803 |
+-------------------------+----------+--------+--------+-------------+--------+
| Tax expense | - | - | - | (757) | (757) |
+-------------------------+----------+--------+--------+-------------+--------+
| Profit for the period | 2,751 | 649 | (6) | (2,348) | 1,046 |
+-------------------------+----------+--------+--------+-------------+--------+
+-------------------------+----------+--------+--------+-------------+--------+
| Income statement | Americas | Asia | EMEA | Unallocated | Total |
| for the six months | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
| ended 30 June 2009 | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Rendering of services | 7,331 | 5,019 | 6,602 | - | 18,952 |
| (Consulting) | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Sale of goods | 2,230 | 2,092 | 3,784 | - | 8,106 |
| (Software) | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Total revenue | 9,561 | 7,111 | 10,386 | - | 27,058 |
+-------------------------+----------+--------+--------+-------------+--------+
| Contribution | 3,234 | 3,843 | 4,831 | - | 11,908 |
+-------------------------+----------+--------+--------+-------------+--------+
| Operating profit before | 525 | 1,855 | 1,827 | (2,466) | 1,741 |
| amortisation | | | | | |
+-------------------------+----------+--------+--------+-------------+--------+
| Amortisation | - | - | - | (246) | (246) |
+-------------------------+----------+--------+--------+-------------+--------+
| Operating profit | 525 | 1,855 | 1,827 | (2,712) | 1,495 |
+-------------------------+----------+--------+--------+-------------+--------+
| Finance revenue | - | - | - | 2 | 2 |
+-------------------------+----------+--------+--------+-------------+--------+
| Finance cost | - | - | - | (29) | (29) |
+-------------------------+----------+--------+--------+-------------+--------+
| Profit before tax | 525 | 1,855 | 1,827 | (2,739) | 1,468 |
+-------------------------+----------+--------+--------+-------------+--------+
| Tax expense | - | - | - | (558) | (558) |
+-------------------------+----------+--------+--------+-------------+--------+
| Profit for the period | 525 | 1,855 | 1,827 | (3,297) | 910 |
+-------------------------+----------+--------+--------+-------------+--------+
5 TAX EXPENSE
The main factors affecting the forecast tax rate are as follows:
+-------------------------------+---------+--------------------+
| Higher income tax on overseas | | 6.5% (2009: 3.2%) |
| earnings | | |
+-------------------------------+---------+--------------------+
| Unrelieved foreign tax | | 5.7% (2009: 6.1%) |
| credits | | |
+-------------------------------+---------+--------------------+
| Expenses not deductible for | | 6.4% (2009: 3.6%) |
| tax purposes | | |
+-------------------------------+---------+--------------------+
These factors are expressed as a percentage of the forecast profit before tax
for 2010 and the actual profit before tax in 2009. The third item arises from
foreign exchange gains that have been made in the accounts of overseas
subsidiaries on intercompany loan balances that will be taxable in those
entities but which are eliminated on consolidation in the Group accounts. There
is therefore no reciprocal tax deduction in the holding company accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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