TIDMKBC
RNS Number : 9303C
KBC Advanced Technologies plc
15 March 2011
Embargoed until 07.00 15 March 2011
KBC Advanced Technologies plc
("KBC" or "the Group")
Preliminary results for the year ended 31 December 2010
KBC Advanced Technologies plc, a leading consultant to the
energy industry, today announces its preliminary results for the
year to 31 December 2010.
Highlights
-- Excellent year for new business development and sales awards
- sales awards increased by 22% to GBP67.8 million; sales awards in
H2 were a record for the Group
-- Workload backlog at year end was up 43% to GBP58.7 million,
the highest level in the Group's history
-- Results in line with expectations
- Revenues increased by 1% to GBP53.1 million
- Underlying profit before tax* declined to GBP4.9 million
(2009: GBP5.7 million), driven largely by unfavourable foreign
exchange rate movements; statutory profit before tax was GBP3.6
million (2009: GBP4.6 million)
-- Total dividend per share for the year up by 19%, reflecting
resilience of results, the Board's confidence in the future and
stated intention to adopt a more progressive dividend policy
-- Strong second half cash generation with year-end cash
balances increased by 13% to GBP4.5 million
-- All indications are that 2011 will be very positive for the
Group
Note * Underlying profit before tax excludes the impact of the
carry forward of software development costs, their amortisation,
the amortisation of acquired intangible assets and one-off
redundancy costs and bad debt provisions. See note 3 to this
statement.
Ian Godden, Chairman of KBC, commented:
"The second half of 2010 was a record in terms of sales awards,
with a total of GBP44.7m compared to GBP23.1m in the first half
year and GBP30.8m in the second half of 2009. The backlog grew from
GBP39.8m at the end of June to GBP58.7m at the year-end (Dec 2009:
GBP40.8m).
Despite the unfavourable foreign exchange movements, the fixed
cost base in early 2011 is marginally lower than in 2010 and the
savings programmes of the last two years will continue to show
benefit. All indications are that 2011 will be very positive for
KBC."
- Ends -
For further information, please contact:
KBC Advanced Technologies plc
George Bright, Chief Executive On 15 March: 020 7012 2000
Nicholas Stone, Operations and Finance Director thereafter: 01932 236314
Cenkos Securities plc
Jon Fitzpatrick 020 7397 8900
Beth McKiernan 0131 220 6939
Weber Shandwick Financial
Nick Oborne/Stephanie Badjonat 020 7067 0727
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
SUMMARY
2010 was an excellent year for KBC in terms of new business
development and sales awards, despite the backdrop of a challenging
economic environment. Sales awards for the year were GBP67.8m, up
by 22% on 2009's total of GBP55.3m. The consequent workload backlog
at 31 December 2010 was GBP58.7m, compared to GBP40.8m at the
previous year end, an increase of 43% to the highest level in the
Group's history. Revenue was essentially unchanged compared to
2009, although reported underlying operating profit declined by
around 14% due to higher costs driven largely byunfavourableforeign
exchange movements.
During the course of the year the economic environment for our
customers was mixed, according to their region, supply
arrangements, product mix and age of their respective facilities.
By the end of the year the need to optimise production processes
and minimize costs led to increasing work in KBC's traditional
markets. In the developing economies our clients' investment
programmes and need to enhance their skill base also led to a
steady stream of new business. The highlight of the year was
plainly the award of a six site performance improvement programme
in Mexico worth US$42m. This combination of the environment and
strong sales awards, although hampered by low utilisation in the
first half of the year, produced a much stronger second half
result.
RESULTS
Revenue for the year showed a 1% increase to GBP53.1m (2009:
GBP52.6m). Underlying profit before tax declined by 14% to GBP4.9m
in line with expectations (2009: GBP5.7m) and underlying earnings
per share were 5.6p (2009: 6.8p). On a statutory basis, operating
profit was GBP3.8m (2009: GBP4.8m), profit before tax was GBP3.6m
(2009: GBP4.6m) and basic earnings per share were 4.0p (2009:
5.4p).
Year-end cash balances increased by 13%, with a net cash balance
of GBP4.5m compared to GBP4.0m in the previous financial year. This
is a significant increase from the GBP1.7m at 30 June 2010 and is a
result of strong second half cash flows.
DIVIDEND
The Board recommends a final dividend of 1.3p per share.
Combined with an interim dividend of 0.55p per share paid in
October 2010, this leads to a total payment of 1.85p per share, an
increase of 19% over 2009 (1.55p per share). This recommendation
reflects the overall resilience of the results, our confidence in
the future and the previously stated intention to adopt a more
progressive dividend policy and to reduce the dividend cover.
Subject to approval at the Annual General Meeting, the dividend
will be payable on 17 May 2011 to shareholders on the register at
close of business on 6 May 2011.
CURRENT TRADING AND OUTLOOK
The second half of 2010 was a record in terms of sales awards,
with a total of GBP44.7m compared to GBP23.1m in the first half
year and GBP30.8m in the second half of 2009. The backlog grew from
GBP39.8m at the end of June to GBP58.7m at the year end (Dec 2009:
GBP40.8m). Accordingly we started 2011 with an increased workload
and we expect consultant utilisation to be higher than in 2010
despite the planned increase to our resource base as the year
progresses. The sales success of last year has continued into 2011
with significant contract awards in India and Canada. Energy
services are in particular demand with oil prices rising again and
there are several strong opportunities developing in the Former
Soviet Union (FSU). We have also seen unusually high demand for
software for this time of year.
We will continue to look for opportunities to create shareholder
value though the organic development of our services and products,
ongoing review of both strategic and opportunistic acquisition
targets and the use of the standing authority to repurchase our own
shares. Despite the unfavourable foreign exchange movements, the
fixed cost base in early 2011 is marginally lower than in 2010 and
the savings programmes of the last two years will continue to show
benefit. All indications are that 2011 will be very positive for
KBC.
Ian Godden
Chairman
Business review
OUR MARKET AND ITS IMPACT ON KBC
The majority of our work is in the oil-refining sector and the
trends that affect KBC the most are oil price volatility, customer
M&A activity, oil demand growth, the pressure on refining
margins as a result of the differential in prices of oil products
and crude, and the availability of experienced engineering
staff.
2010 was a relatively stable year for crude prices, with many
refiners able to secure a reasonable margin. As a result of this
stability much of our work in 2010 was focused on helping clients
with capital expenditure projects and the transfer of assets. It
remains highly likely that in 2011 the current refining expansion
plans in the BRIC economies will continue, either to meet demand
generated by their expanding economies or in a strategic drive to
export oil products. KBC is well placed to continue to serve its
clients' expansion plans in these markets. The current tensions in
the Middle East may impact the geographic distribution of capital
spending during 2011 as increasing focus is placed on countries'
domestic infrastructure projects rather than foreign investment
projects.
In addition, there was significant customer M&A activity in
2010 as new regional players sought to expand their portfolio and
as established players looked to exit or reduce their exposure to
the refining business. In the UK deals were announced with both the
Stanlow and Grangemouth refineries being sold to Essar and
PetroChina respectively and last week it was announced that US
refiner, Valero, is to purchase Chevron's Pembroke refinery. BP has
also recently announced that its Texas City and Carson refineries
in the US are to be sold. Overcapacity in both the US and Europe
continues to be a problem and at some stage further rationalisation
will be needed to restore both volume and economic balance.
This uncertainty, as well as low margins in the OECD countries
and continued expansion of capacity and capabilities in the
emerging economies, has been a good environment for KBC's
consulting and software solutions. The squeeze on margins
continues, with crude pricing not being matched by product price
rises. The current geopolitical situation unfolding across North
Africa and the Middle East has quashed any attempts by OPEC at
short to medium term stability on crude prices in 2011. Having
broken through the psychological US$100 ceiling, crude prices may
therefore remain high for a considerable time. This volatility and
uncertainty, a key driver for KBC's services, is already generating
extra demand in the operational area, especially in energy
reduction programmes. We expect this trend to continue during 2011.
We also recognise that under these circumstances the price pressure
we have experienced over the last 12 months in selling such
services will continue.
Continued expansion of refining capacity in the developing world
helped drive demand for our Capital Solutions in 2010 and we expect
this to be sustained during 2011. As many of these projects are
driven by national strategic as well as economic considerations, it
is likely that the current pace of consulting work associated with
new project builds will continue for the foreseeable future. As
these projects develop into operational plants, the relative lack
of operational expertise and experience in some of these countries
will also provide KBC with opportunities to support them through
the operating cycle.
Although the majority of our revenues are derived from work in
the oil refining industry, we also undertake work in related
sectors. In the emerging markets we executed a number of projects
in the petrochemicals area, particularly primary olefins, aromatics
and refinery/petrochemical plant integration. These areas offer
significant margin improvement opportunities for our clients.
Additionally, we have executed work on alternative energy sources
such as biofuels and LNG. Although these fuels today are a small
proportion of the total energy mix, we will continue to develop
further capabilities in this area as the contribution of
alternative fuels to the energy pool will inevitably increase over
time. Our environmental solutions provide exposure to other growth
markets including mining and minerals.
KBC's STRATEGY AND range of services
KBC's strategy is to position itself as the preferred
independent provider of consulting and software services for the
process industries. We have built our worldwide presence through
organic development and selective value-enhancing acquisitions. We
work for a wide range of clients (majors, national entities,
independents and smaller companies) and provide impartial and
objective advice to those clients.
We are at the leading edge of technology in our chosen fields
and we provide a full capability through the provision of both
consulting and software products and services. Our competitive
advantage is our ability to combine these two activities in a
focused part of the process industry, providing an attractive value
proposition for our clients throughout the asset life-cycle.
Our range of services is determined by anticipating changes in
the market and then providing our clients with relevant solutions.
2010 particularly has been a development period for increasing the
breadth and scope of our Strategic Solutions. We have seen an
increase in M&A activities in our markets over the last few
months and we expect this to continue in 2011.
KBC's solution sets have been developed in order to best meet
the evolving needs of our clients:
-- Strategic Solutions: A range of services including technical
due diligence for M&A activities, project configurations and
feasibility studies, contract strategy and negotiation support, and
expert witness services. These services are primarily targeted at
both the buy and sell side of asset transfers and are executed on
behalf of both asset owners and financial institutions.
-- Operating Solutions: Process engineering optimisation,
reliability and maintenance, operations planning, alternative fuels
and feedstocks, petrochemicals and improved safety performance.
These are core KBC capabilities focused on clients' margin
improvement.
-- Capital Solutions: Process design and design optimisation,
revamp studies, owner's engineer support and plant startup. These
are services aimed at optimisation of new plant designs.
-- Organisational Solutions: Organisational alignment,
leadership training, training systems optimisation, performance
management systems and operating manual development. This area
interacts with all three solution sets above, and has become
increasingly important as the demographic problems of both the old
and new economies play out. This service is aimed at ensuring the
human capital needed to run new facilities and operate existing
plants is both adequate and competent.
-- Environmental Solutions: A relatively new area of focus for
KBC, which includes emissions reduction, emissions compliance,
environmental impact assessments, contaminated land investigation
and environmental management systems. A key interaction in this
area is in the strategic and capital investment consulting
areas.
2010 review of CONSULTING
The drivers of success in our business, in common with most
consulting businesses, are the overall market demand, combined with
the quality of our services and the appropriate development and
utilisation of staff.
We started 2010, in common with 2009, with unexpectedly slow
demand for services, mainly as a result of slippage in contract
signature dates. However, market conditions improved over the third
and fourth quarters. The slow start to the year led in turn to
consultant utilisation at a lower level than anticipated and we
therefore implemented a redundancy programme during June 2010 which
allowed us to further reduce our annual costs, increase our
utilisation and streamline our management structure.
Sales success during the year was dominated by the US$42m award
covering the optimisation of all six refineries for PEMEX in
Mexico. We are now well into the execution of the first two sites
and we expect the second of the three phases to commence in April
2011.
Other significant awards included:
o BP Operational/margin improvements at Texas
City, Toledo, Whiting and Cherry Point
refineries
o TOTAL Energy management programme
o Oman Oil Revamp/new refineries study, operational
improvements and integration of refining
and petrochemical assets
o Irving Oil Continued support of the client's
Operational Excellence programme, in
particular training systems development
o Petroplus Margin improvement at the Petit Couronne
refinery
o Bangchak Petroleum Energy management programme
o PetroChina Profit improvement programme
We also took the opportunity during 2010 to continue to improve
our business processes in areas which include project management,
R&D and marketing. These activities will continue in 2011 to
assist KBC in maintaining its competitive advantage. In addition,
we established a Leadership Development Programme in association
with Rice University in Houston to prepare KBC's next generation of
managers and leaders.
2010 SOFTWARE REVIEW
KBC's software business has continued to build on the very
strong growth that was achieved in 2009. Business was strongest in
Asia but breakthrough deals were also closed with major clients in
the Americas, Middle East and former Soviet Union, which bodes well
for future continuation of this growth trend.
Our development programme reached the culmination of a five year
strategy to implement major improvements in the latest version of
Petro-SIM(TM). Version 4 represents a major leap forward in the
technology with tighter integration of our oil characterisation
methodology and our rigorous reactor models as well as other
improvements in user-friendliness. Following an extensive testing
programme, using both in-house resource and key client users, the
new version was released in October. The software has already been
in extensive use on a number of key consulting projects which
highlights the powerful differentiation that our consulting
business gains from our leading software technology. The new
version has already been deployed with several clients and was key
to at least one significant sale before year end.
We completed the first year of a reseller agreement for
Petro-SIM with Hyperion in Russia, with some key initial successes
and a good outlook for further growth in 2011. Based on experience
with this arrangement, it may be a model we will look to extend to
other areas in the future. Other significant software license
awards included sale of our energy management software to Reliance
Industries and Petro-SIM sales to both PetroChina and Sinopec's
design institutes.
There were also new releases of ProSteam(TM), KBC's proprietary
fuel/steam/power modelling and optimisation software, and
SuperTarget(TM), KBC's proprietary energy pinch modelling software.
Within our wider portfolio of software products, energy software
now represents approximately 10% of our total software revenue and
continues to grow year-on-year. As part of the roll-out of ProSteam
applications for the optimisation of utilities at two refineries
for Tupras in Turkey, KBC successfully completed the first
deployment of a BabelFish(TM) performance dashboard system,
following our announcement of a global collaboration agreement with
ISS at the end of 2009.
We also implemented a new web-based software support helpdesk in
line with our drive to continuously improve our response time to
clients' queries, working towards achieving 'world class' client
support.
With the achievement of our five year software development
strategy, the focus is currently on extracting further value from
our existing product portfolio. We are also reviewing other areas
where new software products could bring additional synergies to
further differentiate our consulting activities, as well as adding
bottom-line value in their own right.
SOFTWARE ARBITRATION
We have previously referred to allegations made by a software
competitor concerning the infringement of its rights in certain
software code. All of the allegations have been refuted absolutely
but certain of them are now subject to a UK arbitration process
that is expected to be concluded by the middle of this year. As is
evident from the software sales made in the last quarter of 2010,
this process is having no adverse impact on our business, either
externally or internally.
OPERATING RESULTS
Group revenue increased by 1% in 2010 to GBP53.1m compared with
GBP52.6m in 2009. At constant exchange rates revenue would have
been GBP51.6m.
Following the 88% increase in software revenues in 2009, 2010
was a year of consolidation at this higher level of annual revenue,
resulting in a modest decline of 7% to GBP13.8m from GBP14.8m in
2009. The total now includes GBP6.5m of maintenance and support
revenue, up from GBP4.7m last year, with the balance being new
license sales.
Consulting revenue increased by 4% from GBP37.8m to GBP39.2m
with the increase coming largely in the second half of the
year.
Group costs increased by 3% compared to the previous year,
although at constant exchange rates would have shown no increase.
Staff and associate consultant costs decreased by around 8% at
constant exchange rates, or a total of GBP2.7m. This follows the
cost saving actions of the last two years and reflects a GBP0.9m
increase in development costs carried forward. Direct costs
increased by 16% largely due to the increased level of onsite work
executed in 2010 and the travel and subsistence costs associated
with it. Other operating charges increased by 17% at constant
exchange rates, or GBP1.8m. However, GBP1.5m of this relates to the
bad debt charge excluded from our underlying profit measure.
Operating profit on an underlying basis was GBP5.0m, down from
GBP5.8m in 2009. This measure ignores the carry forward of software
development costs, their amortisation, the amortisation of acquired
intangible fixed assets, redundancy costs and the write off of
debtors judged to be irrecoverable from business in Iran and Libya.
The Iranian element follows the new sanctions regime introduced by
the EU in the second half of 2010 and its impact on current
projects and software licenses where there were debtor and work in
progress balances. In our January trading update we indicated we
would be making a provision for doubtful debts of up to GBP1.0m in
this regard. Since then the political turmoil in Libya has meant
that we have had to withdraw from a project underway there. As a
result we have increased the charge to GBP1.5m. Statutory operating
profit fell by 21% to GBP3.8m (2009: GBP4.8m).
The finance cost of GBP0.1m (2009: GBP0.2m) reflects a small
decrease in bank interest payable with higher average cash balances
held during the year. 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. With the final
payments made in 2010, this item will not appear in 2011.
PROFIT BEFORE TAX
The profit before tax of GBP3.7m shows a decrease of 21% from
GBP4.6m in 2009.
TAX
The tax charge of GBP1.4m (2009: GBP1.6m) for the year is made
up of current tax expense of GBP2.4m and a deferred tax credit of
GBP1.0m. The current tax expense includes GBP2.1m of tax payable on
overseas operations and GBP0.5m 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 credit is principally for short term timing
differences expected to reverse in future years.
The tax rate of around 39% (2009: 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 tax
withheld on payments from overseas territories of GBP0.3m and
expenses not deductible for tax purposes of GBP0.5m. The impact of
these factors has been partially offset by non-taxable income of
GBP0.1m and tax overprovided in earlier years of GBP0.1m.
A net deferred tax asset of GBP1.9m (2009: GBP1.0m) remains on
the balance sheet representing mainly prior year tax losses that
have not yet been utilised and other timing differences.
EARNINGS AND DIVIDENDS
The profit after tax of GBP2.2m (2009: GBP3.0m) equates to basic
earnings per share of 4.0p, compared to 5.4p in 2009. Diluted
earnings per share were 4.0p and 5.3p respectively. Earnings per
share calculated on the underlying profit measure decreased from
6.8p to 5.6p.
A final dividend of 1.3p per share is proposed for the year,
following the interim dividend of 0.55p per share paid in October
2010. This leads to a total payment of 1.85p per share, making an
increase of 19% over 2009 (1.55p per share). Assuming it is
approved by shareholders at the AGM, the dividend will be payable
on 17 May 2011 to shareholders on the register at close of business
on 6 May 2011.
Carry forward of software development costs
The latest version of Petro-SIM, version 4, was released in 2010
and it was for the first time possible to determine that this
version had reached the stage where development expenditure should
be carried forward, based on the same test used with the previous
version. Thus the Board has determined that development costs
incurred in 2010 amounting to GBP1.1m should be carried forward
against future sales revenue. Amortisation of GBP0.4m was charged
to the income statement in the year, thus giving an overall net
credit of GBP0.7m. Net expenditure of GBP0.3m on version 3 of
Petro-SIM is also held on the balance sheet at 31 December 2010
against future support revenue of historic sales of that
version.
Working capital
Trade and other receivables increased during the year from
GBP21.0m to GBP23.2m. However trade and other payables increased
from GBP6.4m to GBP8.9m with a sharp increase in deferred revenue.
When deferred revenue is deducted from total receivables to give a
net measure there was a marginal decrease from one year to the
next. It is also worth noting that net trade receivables decreased
in the year from GBP10.7m to GBP9.1m with a corresponding increase
in amounts recoverable on contracts but not yet invoiced from
GBP8.7m to GBP12.5m.
Financial risk management
The Group's principal financial instruments comprise trade
receivables, trade payables, 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 2010 the Group held net cash balances of GBP4.5m,
compared to cash balances of GBP4.0m as at 31 December 2009. 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 GBP5.6m.
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 drawdown.
CONTRACT RISKS
Some of the Group's commercial contracts include terms where
revenues are related to performance in the form of bonuses or
penalties. The Group's exposure under such contracts is reviewed
regularly by the Executive Committee and the Board.
CREDIT RISK
The main credit risk faced is related to trade receivables. The
majority of the Group's clients are state owned or very large oil
companies and therefore historically the recoverability risk tends
to be driven more by issues relating to client satisfaction and
clarification of deliverables than by traditional credit risks.
Provision is made for doubtful receivables when there are
circumstances indicating a likely reduction in the recoverable
amount such as historic late or non-payment of invoices or specific
customer or contractual issues.
LIQUIDITY RISK
Client payment terms can vary from contract to contract and can
involve extended periods of time before invoices are raised.
FOREIGN CURRENCIES
Most transactions continue to be in US dollars, Euro or
sterling. The proportion of revenue in each currency was:
2010 2009
----------- ---- ----
US dollars 60% 47%
Euro 21% 30%
Sterling 12% 14%
Other 7% 9%
----------- ---- ----
Where a revenue currency differs to that in which costs are
incurred, a proportion of the foreign exchange exposure is hedged
using forward exchange contracts in the currency markets. Contracts
were in place at the balance sheet date for the sale of US$4.0m
(2009: nil) at an average rate during 2010 of US$1.56 (2009: nil)
and EUR1.5m (2009: EUR5.0m) at an average rate of EUR1.19 (2009:
EUR1.11).
The Group has a number of overseas subsidiaries and branches
where revenues and costs are denominated in currencies other than
sterling, the most significant of which are in the US. The foreign
currency translation exposure arising on their results is not
hedged.
George Bright Nicholas Stone
Chief Executive Operations and Finance Director
Group income statement
For the year ended 31 December 2010
2010 2009
Notes GBP000 GBP000
------------------------------- ------- --------- ---------
Revenue 53,061 52,587
Direct costs (6,472) (5,587)
Staff and associate costs (29,539) (31,032)
Depreciation and amortisation (1,173) (1,042)
Other operating charges (12,101) (10,155)
---------------------------------------- --------- ---------
Operating profit 3,776 4,771
Finance revenue 7 5
Finance cost (135) (166)
---------------------------------------- --------- ---------
Profit before tax 3,648 4,610
Tax expense (1,431) (1,576)
---------------------------------------- --------- ---------
Profit for the year 2,217 3,034
---------------------------------------- --------- ---------
Earnings per share
Basic 4 4.0p 5.4p
Diluted 4 4.0p 5.3p
------------------------------- ------- --------- ---------
Group statement of comprehensive income
For the year ended 31 December 2010
2010 2009
GBP000 GBP000
------------------------------------------------- ------- --------
Profit for the period 2,217 3,034
Other comprehensive income:
- exchange differences on translation of
foreign operations recognised directly in
equity 875 (1,103)
------------------------------------------------- ------- --------
Total comprehensive income recognised in
year 3,092 1,931
------------------------------------------------- ------- --------
Group statement of changes in equity
For the year ended 31 December 2010
Capital Share Foreign
Issued Share redemption Merger Own based exchange Retained
capital premium reserve reserve shares payments reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
At 1 January
2009 1,427 8,039 55 929 (998) 1,078 2,600 14,601 27,731
Total
comprehensive
income - - - - - - (1,103) 3,034 1,931
Share-based
payments - - - - - 275 - - 275
Exchange
translation
adjustment - - - - - (48) - - (48)
Shares issued 2 21 - - - - - - 23
Utilisation
of own shares - - - - 546 - - (546) -
Dividends - - - - - - - (816) (816)
--------
At 1 January
2010 1,429 8,060 55 929 (452) 1,305 1,497 16,273 29,096
Total
comprehensive
income - - - - - - 875 2,217 3,092
Share-based
payments - - - - - 275 - - 275
Exchange
translation
adjustment - - - - - 17 - - 17
Shares issued 15 12 - - (13) - - - 14
Shares
purchased - - - - (267) - - - (267)
Shares
cancelled (58) - 58 - - - - (1,182) (1,182)
Utilisation
of own shares - - - - 487 - - (487) -
Dividends - - - - - - - (916) (916)
At 31 December
2010 1,386 8,072 113 929 (245) 1,597 2,372 15,905 30,129
--------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
The amount included in the foreign exchange reserve represents
other comprehensive income for each component net of tax.
Group balance sheet
At 31 December 2010
2010 2009
GBP000 GBP000
--------------------------------------- --------- --------
Non--current assets
Property, plant and equipment 1,299 1,584
Goodwill 7,479 7,372
Other intangible assets 1,413 939
Deferred tax asset 3,233 1,576
--------------------------------------- --------- --------
13,424 11,471
--------------------------------------- --------- --------
Current assets
Trade and other receivables 23,219 20,986
Current tax receivable 314 123
Cash and cash equivalents 4,506 3,975
Other financial assets - 48
28,039 25,132
--------------------------------------- --------- --------
Total assets 41,463 36,603
--------------------------------------- --------- --------
Non--current liabilities
Deferred tax liabilities (1,337) (616)
--------------------------------------- --------- --------
(1,337) (616)
--------------------------------------- --------- --------
Current liabilities
Trade and other payables (8,858) (6,380)
Current tax payable (1,132) (326)
Provisions - (185)
Other financial liabilities (7) -
--------------------------------------- --------- --------
(9,997) (6,891)
--------------------------------------- --------- --------
Total liabilities (11,334) (7,507)
--------------------------------------- --------- --------
Net assets 30,129 29,096
--------------------------------------- --------- --------
Equity attributable to equity holders
of parent
Issued capital 1,386 1,429
Share premium 8,072 8,060
Other reserves 1,042 984
Own shares (245) (452)
Retained earnings 19,874 19,075
--------------------------------------- --------- --------
Total equity 30,129 29,096
--------------------------------------- --------- --------
Total equity and liabilities 41,463 36,603
--------------------------------------- --------- --------
Group cash flow statement
For the year ended 31 December 2010
2010 2009
GBP000 GBP000
----------------------------------------- -------- --------
Net cash flow from operating activities
Profit before tax 3,648 4,610
Finance revenue (7) (5)
Finance cost 135 166
----------------------------------------- -------- --------
Operating profit 3,776 4,771
Depreciation and amortisation 1,173 1,042
Share-based payment expense 275 275
Movement in working capital 642 (3,524)
Cash generated from operations 5,866 2,564
Finance revenue received 7 5
Finance costs paid (135) (166)
Income taxes paid (1,557) (1,588)
----------------------------------------- -------- --------
Net cash flow from operating activities 4,181 815
----------------------------------------- -------- --------
Cash flow from investing activities
Purchase of tangible non-current
assets (269) (498)
Purchase of intangible non-current
assets (1,068) (105)
Purchase of subsidiary undertaking
including costs (156) (879)
Net cash flow from investing activities (1,493) (1,482)
----------------------------------------- -------- --------
Cash flow from financing activities
Dividends paid to equity holders
of parent (916) (816)
Purchase of own shares (1,462) -
Issue of shares 27 23
----------------------------------------- -------- --------
Net cash flow used in financing
activities (2,351) (793)
----------------------------------------- -------- --------
Net increase/(decrease) in cash
and cash equivalents 337 (1,460)
Cash and cash equivalents at 1
January 3,975 5,691
Exchange adjustments 194 (256)
----------------------------------------- -------- --------
Cash and cash equivalents at 31
December 4,506 3,975
----------------------------------------- -------- --------
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 2010
or 2009. Statutory accounts for the years ended 31 December 2010
and 31 December 2009 have been reported on by the independent
auditors. The independent auditors' reports on the annual reports
and financial statements for 2010 and 2009 were unqualified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Statutory accounts for the year ended 31 December 2009 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2010 will be delivered to the Registrar
in due course.
The Group financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and as applied in accordance with the
provisions of the Companies Act 2006.
The financial statements have been prepared under the historical
cost convention, except for certain financial instruments which
have been measured at fair value.
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and judgements 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 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.
With regard to the balance sheet, those elements of the balance
sheet where regional reporting is prepared have been disclosed.
Those elements are trade receivables and provisions, amounts
recoverable on contracts and deferred revenue.
Transactions between the reportable segments are carried out at
internally agreed rates and are reflected in the performance of
each segment.
At the balance sheet date 8% of total trade receivables were
concentrated with one of the Group's customers (2009: 8%). The
balance was spread over 134 (2009: 118) customers, none of whom
comprised more than 7% (2009: 8%) of the total.
Year ended 31
December 2010 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Rendering of services
(Consulting) 16,239 11,707 11,302 - 39,248
Sale of goods (Software) 4,473 5,186 4,154 - 13,813
-------------------------- --------- ------- ------- ------------ --------
Revenue from external
customers 20,712 16,893 15,456 - 53,061
-------------------------- --------- ------- ------- ------------ --------
Contribution 8,903 7,730 4,194 - 20,827
Operating profit/(loss)
before amortisation 3,833 3,911 (752) (2,611) 4,381
Amortisation - - - (605) (605)
-------------------------- --------- ------- ------- ------------ --------
Operating profit/(loss) 3,833 3,911 (752) (3,216) 3,776
Finance revenue - - - 7 7
Finance cost - - - (135) (135)
-------------------------- --------- ------- ------- ------------ --------
Profit/(loss) before tax 3,833 3,911 (752) (3,344) 3,648
Tax expense - - - (1,431) (1,431)
--------------------------
Profit/(loss) for the
year 3,833 3,911 (752) (4,775) 2,217
-------------------------- --------- ------- ------- ------------ --------
As at 31 December 2010 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Trade receivables 3,213 1,699 6,102 - 11,014
Provisions (232) - (1,689) - (1,921)
------------------------ --------- ------- -------- ------------ --------
Net carrying amount 2,981 1,699 4,413 - 9,093
------------------------ --------- ------- -------- ------------ --------
Amounts recoverable
on contracts 2,385 3,912 6,174 - 12,471
------------------------ --------- ------- -------- ------------ --------
Deferred revenue 2,932 1,362 1,340 - 5,634
------------------------ --------- ------- -------- ------------ --------
Year ended 31 December
2009 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Rendering of services
(Consulting) 15,463 9,774 12,514 - 37,751
Sale of goods (Software) 4,999 4,116 5,721 - 14,836
-------------------------- --------- ------- ------- ------------ --------
Revenue from external
customers 20,462 13,890 18,235 - 52,587
-------------------------- --------- ------- ------- ------------ --------
Contribution 9,113 6,898 7,514 - 23,525
Operating profit/(loss)
before amortisation 3,805 3,229 1,906 (3,672) 5,268
Amortisation - - - (497) (497)
-------------------------- --------- ------- ------- ------------ --------
Operating profit/(loss) 3,805 3,229 1,906 (4,169) 4,771
Finance revenue - - - 5 5
Finance cost - - - (166) (166)
-------------------------- --------- ------- ------- ------------ --------
Profit/(loss) before tax 3,805 3,229 1,906 (4,330) 4,610
Tax expense - - - (1,576) (1,576)
--------------------------
Profit/(loss) for the
year 3,805 3,229 1,906 (5,906) 3,034
-------------------------- --------- ------- ------- ------------ --------
As at 31 December
2009 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Trade receivables 2,293 3,950 5,029 118 11,390
Provisions (359) (95) (257) - (711)
------------------------------ --------- ------- ------- ------------ --------
Net carrying amount 1,934 3,855 4,772 118 10,679
------------------------------ --------- ------- ------- ------------ --------
Amounts recoverable
on contracts 2,452 3,233 3,005 - 8,690
------------------------------ --------- ------- ------- ------------ --------
Deferred revenue 1,006 1,151 776 - 2,933
------------------------------ --------- ------- ------- ------------ --------
Revenue from Non-current
external customers assets
2010 2009 2010 2009
GBP000 GBP000 GBP000 GBP000
------------------------------------ ---------- ---------- ------- -------
United Kingdom 969 1,364 6,083 5,567
United States of America 9,434 9,255 3,936 4,138
South Korea 7,365 5,661 - -
China 3,645 5,183 - -
Canada 3,047 1,998 - -
Mexico 2,994 2,051 - -
Iran 829 4,321 - -
Other 24,778 22,754 172 190
------------------------------------ ---------- ---------- ------- -------
53,061 52,587 10,191 9,895
------------------------------------ ---------- ---------- ------- -------
Revenues above are based on the location of the customer and
non-current assets on the location of the assets. The countries
listed represent those where the total revenue or assets are
greater than 5% of the Group total.
3. Group operating profit
This is stated after charging/(crediting) the following:
2010 2009
GBP000 GBP000
------------------------------------------------ ------- -------
Depreciation and amortisation:
- Depreciation 568 545
- Amortisation of intellectual property rights
- existing intellectual property rights 247 245
- development costs carried forward 358 252
------------------------------------------------ ------- -------
Total 1,173 1,042
Included in other operating charges:
- Operating lease rentals
- minimum lease payments 2,438 2,306
- sublease rentals received (233) (302)
- Share-based payments 275 275
- Net foreign exchange differences 415 682
------------------------------------------------ ------- -------
a) Research and development costs
During 2010 the Group incurred research and development costs of
GBP2.4m (2009: GBP2.8m). Of this amount GBP1,068,000 (2009:
GBP105,000) 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
2010 2009
GBP000 GBP000
--------------------------------------------------- -------- --------
Operating profit 3,776 4,771
Amortisation of acquisition intangibles 247 245
Development costs carried forward (1,068) (105)
Amortisation of development costs carried forward 358 252
Exceptional bad debt provision 1,478 -
Redundancy costs 225 667
--------------------------------------------------- -------- --------
Underlying operating profit 5,016 5,830
Finance revenue 7 5
Finance cost (135) (166)
Underlying profit before tax 4,888 5,669
Tax expense (1,818) (1,853)
Underlying profit after tax 3,070 3,816
--------------------------------------------------- -------- --------
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.
2010 2009
GBP000 GBP000
--------------------- ------- -------
Profit for the year 2,217 3,034
--------------------- ------- -------
Number Number
000s 000s
------------------------------------------------ ------- -------
Weighted average number of Ordinary shares in
issue 55,281 56,330
Number of shares used for basic and underlying
earnings per share 55,281 56,330
Dilution 772 1,294
------------------------------------------------ ------- -------
Number of shares used for diluted and diluted
underlying earnings per share 56,053 57,624
------------------------------------------------ ------- -------
Pence Pence
------------------------------------------------ ------- -------
Basic earnings per share 4.0p 5.4p
Diluted earnings per share 4.0p 5.3p
Basic underlying earnings per share 5.6p 6.8p
Diluted underlying earnings per share 5.5p 6.6p
------------------------------------------------ ------- -------
The earnings per share based upon the basic and diluted IIMR EPS
are 4.0p and 4.0p (2009: 5.4p and 5.3p).
Basic underlying earnings per share are based upon an after tax
profit as defined in note 3b of GBP3.07m (2009: GBP3.82m) and on
55,281,000 (2009: 56,330,000) 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.
The dilution referred to above is shown below:
2010 2009
Number Number
000s 000s
Total share options outstanding 4,435 4,849
Share options excluded (see below) (3,455) (3,246)
--------------------------------------- -------- --------
Potentially exercisable share options 980 1,603
Fair value shares (208) (309)
--------------------------------------- -------- --------
Dilution 772 1,294
--------------------------------------- -------- --------
Share options excluded are those where the exercise price is
greater than the share price at 31 December 2010, those with
performance conditions that have not yet been met and those to be
settled by the Employee Trust.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JIMMTMBJBTIB
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