TIDMKBC
RNS Number : 5329O
KBC Advanced Technologies plc
20 September 2011
Embargoed until 07.00 20 September 2011
KBC Advanced Technologies plc
("KBC" or "the Group")
Half year results for the six months ended 30 June 2011
KBC Advanced Technologies plc, a leading consultant to the
energy industry, today announces its half year results for the six
months ended 30 June 2011.
Highlights
-- Strong performance as pressures in the oil and gas and
petrochemical industries provide good opportunities for KBC
-- Underlying profit before tax* increased by 87% to GBP2.6m
(GBP1.4m in 2010). Profit before tax increased by 22% to
GBP2.2m
-- Underlying earnings per share* increased by 100% to 3.3p;
basic earnings per share increased by 47% to 2.8p
-- Interim dividend per share increased by 27% to 0.7p,
reflecting the Board's confidence in the continued improvement in
business performance and its stated aim to increase the proportion
of full year profits paid by way of dividend
-- Consultant utilisation higher than in the first half of
either 2010 or 2009
-- Good level of new consulting contract wins, including major
projects in India and the former Soviet Union; first sizeable
environmental solutions contract won for a mine development in West
Africa
-- Strong software sales in H1 and normal uplift anticipated in
the second half
-- KBC is confident it will meet its current expectations for
2011
* excludes the impact of the arbitration costs, the carry
forward of software development costs and the amortisation of
acquired intangible assets
Ian Godden, Chairman of KBC, commented:
"The five key drivers most relevant to our business are: oil
demand growth, the pressure on refining margins as a result of
price differentials in oil products and crude, oil price
volatility, customer M&A activity, and the availability of
experienced engineering staff. These drivers were all positive
during the period, offering continuing opportunities for KBC to
grow its business.
As previously reported, the arbitration process commenced by a
competitor alleging unauthorised use of certain software code,
which has been fully refuted by KBC, is largely complete with the
arbitrator's award expected between now and the end of
September.
We expect to be very busy for the rest of the year and to
increase our consulting resourcesfurther to provide capacity to
execute the future work. We also anticipate the usual increase in
software licence revenue in the second half year. We are confident
that this combination of factors will allow us to deliver our
current expectations for the year as a whole."
For further information, please contact:
KBC Advanced Technologies plc
George Bright, Chief Executive
Nicholas Stone, Operations and Finance Director 01932 236314
Cenkos Securities plc
Jon Fitzpatrick 020 7397 8900
Neil McDonald 0131 220 9771
Weber Shandwick Financial
Nick Oborne/Stephanie Badjonat 020 7067 0700
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.
KBC Advanced Technologies plc
("KBC" or "the Group")
Half year results for the six months ended 30 June 2011
Chairman's Statement
The first half of 2011 finished well for KBC with June the
highest month of the period for both new sales awards and
consultant utilisation.
Revenues for the period were GBP26.0m (2010: GBP25.6m) with
contract awards of GBP23.5m against GBP23.1m in the first half of
2010. The resulting workload backlog at 30 June 2011 was GBP55.8m,
compared to GBP39.8m reported at 30 June 2010 and GBP58.7m at 31
December 2010.
Underlying profit before tax (which excludes the creation and
amortisation of intangible assets and one-off arbitration costs -
see note 3 to this statement) increased by 87% to GBP2.6m compared
to GBP1.4m in the first half of 2010. Profit before tax increased
by 22% to GBP2.2m (2010: GBP1.8m).
Although the global macroeconomic environment remains mixed,
KBC's leading positions in the growth markets of Asia, Central and
South America and Russia are providing healthy momentum.
Underpinning this, in the major western economies we continue to
help our clients to meet the challenges of the difficult operating
environments and improve their competitive position.
INDUSTRY OVERVIEW
Our clients remain under financial pressure in the parts of the
oil and gas and petrochemical industries that we serve, providing
opportunities for KBC as those sectors continue to evolve
operationally and strategically.
As we have previously stated, the five key drivers most relevant
to our business are: oil demand growth, the pressure on refining
margins as a result of price differentials in oil products and
crude, oil price volatility, customer M&A activity, and the
availability of experienced engineering staff. These drivers were
all positive during the period, offering continuing opportunities
for KBC to grow its business.
Global refined product demand is expected to continue to grow in
the BRIC economies and the Middle East in 2011 but to decline
slightly in North America and Europe. This is exacerbating the
refining industry overcapacity, margin weakness and closures in the
declining economies and leading to demand for additional capacity
in the developing world. Furthermore, there is increasing
investment in capacity to cope with products derived from gas, coal
and other unconventional sources often in regions without a history
of developing such projects.
Oil prices stayed at relatively high levels and remained
susceptible to political factors, particularly in the Middle East
and North Africa at the beginning of the year. M&A activity
continued during the period as "traditional" refiners reduce their
exposure to the declining markets and are replaced by cash rich
investors from the developing world seeking exposure to global
markets and access to technology and know-how.
With oil prices remaining high, the pressure for energy
reduction and operational improvements continued. As a consequence
our energy management services are in particularly strong demand as
part of our operational solutions focused on optimising existing
facilities where margins are under pressure. Furthermore, the
squeeze on refining margins has driven considerable demand for
external assistance in both consulting and software. We have seen
particular demand from state oil companies in developing economies
where the experienced resources may be lacking to meet these
challenges themselves.
CONSULTING OPERATIONS
Contract awards were marginally higher in the first six months
of 2011 than in the same period in 2010. Consultant utilisation was
higher than in the first half of both 2010 and 2009, reflecting the
increased workload this year.
The earthquake and tsunami in Japan and the impact of the Arab
Spring in North Africa and the Middle East did have some impact on
new business in those regions. However, the effect was relatively
short lived, with Japanese orders returning by the second quarter
and substitute work received to replace a cancelled project in
Libya.
As in the last couple of years, our consulting work during the
period comprised a mixture of operational improvement and capital
projects. Demand for energy consumption optimisation has been very
strong in the first half of 2011, outstripping available resources.
Major projects were won in both India, for Reliance Industries, and
the former Soviet Union, for Bashneft. With crude oil prices
remaining high, we expect continued demand for this type of service
for the foreseeable future.
We are also pleased to report that we won the first sizeable
contract in our environmental solutions segment: a full
environmental, social and health impact assessment for Gryphon
Minerals, Australia, for a mine development in West Africa.
Other key consulting contracts concluded in the first half were
a Refining Excellence partnership with Grupa Lotos in Poland, an
Operational Excellence programme agreement for Irving Oil in
Canada, a detailed feasibility study for a major new petrochemical
complex in south-east Asia and an organisational development
programme for a major new unconventional gas production development
in Australia.
The second phase of the PEMEX Profit Improvement Projects (PIPs)
in Mexico started on schedule in April 2011. The PEMEX projects
form a cornerstone of our consulting operations in 2011/12; both
current phases are progressing well and the third phase will
commence in October 2011. We will then be executing PIPs at all six
of the PEMEX refineries. This peak in activity is scheduled to last
until the end of the third quarter of 2012 and has necessitated an
increase in consulting resources to execute this and other work
that is keeping our consultants in all regions fully utilised. We
do not expect this to change in the foreseeable future.
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