TIDMKBC
RNS Number : 2057Z
KBC Advanced Technologies plc
13 March 2012
Embargoed until 07.00 13 March 2012
KBC Advanced Technologies plc ("KBC" or "the Group")
Preliminary results for the year ended 31 December 2011
KBC Advanced Technologies plc, a leading consultant to the
energy industry, today announces its preliminary results for the
year to 31 December 2011.
Highlights
-- Excellent year against a difficult economic backdrop
-- Good financial performance
- Group revenue increased by 5% to GBP55.7m
- Underlying profit before tax* increased by 20% to GBP5.9m,
reported profit before tax up 35% to GBP4.9m
- Underlying earnings per share up 27% to 7.1p, basic earnings per share up 48% to 5.9p
- Strong cash generation, year-end cash balances increased by 29% to GBP5.8m
-- Total dividend of 2.25p, an increase of 22%
-- Group benefiting from
- World oil price volatility
- Increasing oil demand in developing world
- Pressure on refining margins in North America and Europe
-- Increasing demand from adjacent sectors of the energy
industry, such as petrochemicals, gas/LNG, upstream oil and gas
-- New version of Petro-SIM(TM) software released
-- Further growth expected in 2012
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 arbitration
costs, one-off redundancy costs and bad debt provisions. See note 3
to this statement.
Ian Godden, Chairman of KBC, commented:
"The main factors impacting our clients' businesses during 2011
have persisted into 2012. Oil price volatility, increasing oil
demand in the developing world and pressure on oil refining margins
in markets where demand is declining are all contributing. Refining
assets are still changing hands and there is a lack of experienced
engineers in the areas where they are most needed.
We expect these drivers will lead to the maintenance of our
current activity levels and continue to stimulate demand from our
clients in both the traditional refining market and the new sectors
in which we are becoming established. With the software arbitration
now behind us, we expect new licence sales to grow again in 2012.
We therefore look forward to another good year for the Group in
2012."
- Ends -
For further information, please contact:
KBC Advanced Technologies plc
George Bright, Chief Executive On 13 March: 020 7067 0700
Nicholas Stone, Operations and Finance Director thereafter: 01932 236314
Cenkos Securities plc
Jon Fitzpatrick 020 7397 8900
Neil McDonald 0131 220 9771
Weber Shandwick Financial
Nick Oborne/Stephanie Badjonat/Robert Cook 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
Chairman's statement
SUMMARY
2011 was a very successful year for KBC with strong growth in
earnings and profits driven by consulting revenue growth and cost
management. Consulting revenues, which remained steady in the first
half of the year, grew strongly in the second half to a total of
GBP42.7m (2010: GBP39.2m) with overall revenue growing by 5% to
GBP55.7m. With utilisation increasing in the second half, margins
improved accordingly and underlying earnings increased by 27%.
Sales awards for the year were strong at GBP45.0m, although less
than the prior year figure of GBP68.0m which included the US$42.0m,
three-year Profit Improvement Program awarded by PEMEX in Mexico.
Consequent workload backlog was GBP49.0m at 31 December 2011, down
from GBP59.0m the year before, but still at a much higher level
than seen in previous years.
In Europe and North America the difficult operating environment
for many of our clients in the refining industry has meant that we
have continued to be successful in working with clients in these
regions to improve the performance of their assets. In other parts
of the world client investment in downstream assets continued and
has driven demand for our services and technology. We have also
seen increasing demand in adjacent sectors of the energy
industry.
RESULTS
Revenue for the year increased by 5% to GBP55.7m (2010:
GBP53.1m). Underlying profit before tax increased by 20% to GBP5.9m
(2010: GBP4.9m) and underlying earnings per share were up 27% to
7.1p (2010: 5.6p) due to a lower tax rate and reduction in
exceptional bad debt provisions. On a statutory basis, profit
before tax was up 35% at GBP4.9m (2010: GBP3.6m) and basic earnings
per share were 5.9p (2010: 4.0p).
Year-end cash balances increased by 29%, with a net cash balance
of GBP5.8m compared to GBP4.5m at 31 December 2010. This is a
significant increase from the GBP2.7m at 30 June 2011 as a result
of strong second half cash flow.
DIVIDEND
The Board recommends a final dividend of 1.55p per share. This
gives a total for the year of 2.25p per share when combined with
the interim dividend paid in October 2011 of 0.7p, an increase of
22% over the 2010 total of 1.85p. This recommendation reflects the
strength of the results and the growth shown in earnings in 2011.
Subject to approval at the annual general meeting, the dividend
will be paid on 15 May 2012 to shareholders on the register at
close of business on 4 May 2012.
CURRENT TRADING AND OUTLOOK
We expect the current high levels of demand for work to continue
since the main factors impacting our clients' businesses during
2011 have persisted into 2012. Oil price volatility, increasing oil
demand in the developing world and pressure on oil refining margins
in markets where demand is declining are all contributing. Refining
assets are still changing hands and there is a lack of experienced
engineers in the areas where they are most needed. We expect these
drivers will lead to the maintenance of our current activity levels
and continue to stimulate demand from our clients in both the
traditional refining market and the new sectors in which we are
becoming established. With the software arbitration now behind us,
we expect new licence sales to grow again in 2012. We therefore
look forward to another good year for the Group in 2012.
Ian Godden
Chairman
Business review
OUR MARKET AND ITS IMPACT ON KBC
In 2011 the downstream energy sector continued to be our primary
market. The five key drivers for this business are:
-- Oil and gas demand growth -- Pressure on refining margins --
Oil price volatility --
Sector M&A activity -- Availability of qualified engineering staff
All of these drivers were positive for KBC throughout 2011.
The market for downstream oil and gas processing continues to be
in a state of flux. The divide between the old and new economies
remains, with a continuing contraction of capacity in the Atlantic
basin and expansion of refining and petrochemicals in Asia, the
Middle East and Latin America, particularly in China, India, Saudi
Arabia and Brazil.
Global demand for refined oil products continues to rise, mostly
fuelled by population growth and increased industrialisation in the
emerging economies. We expect this trend to continue for the next
few years and demand for our strategic, capital and organisational
services to remain robust.
In 2011 we commenced a project in Australia associated with
production of coal bed methane and transmission to a new LNG plant.
This work has been focused on non-traditional KBC services that
enable clients to implement cultural change and organisational
development. We anticipate more of this type of work, as well as
technical consulting, as gas becomes more significant in the global
energy mix.
In contrast, capacity rationalisation in Europe and North
America continues at an accelerated pace, epitomised by the
announcement of recent closures at three of Petroplus's European
refineries and the Hovensa refinery in the Caribbean. We expect
this trend to continue for the next few years as the industry
continues to shed capacity. We also anticipate further M&A
activity as traditional refiners reduce their exposure to refining
and newer players seek market access. This industry uncertainty is
good for KBC. In a low utilisation/low margin environment, our
clients are able to utilise our software and skills in margin
optimisation and we continue to see demand for technical,
commercial and environmental due diligence studies. The increased
level of M&A activity in the industry has also allowed us to
expand beyond our traditional asset owner client base, and we now
regularly handle project work for financial institutions.
The oil price continues to be high at over US$100 per barrel and
subject to geopolitical volatility. We see no reason why this
should change over the next few years. High energy prices, combined
with ever-increasing environmental restrictions, generate high
demand for our energy optimisation services. We anticipate
therefore that this will continue to be one of our busiest
areas.
KBC'S STRATEGY AND RANGE OF SERVICES
KBC's strategy is to position itself as the preferred
independent provider of consulting and software services in the oil
and gas sector. We have built our worldwide presence through
organic development and selective acquisitions. We work for a wide
range of clients (majors, national entities, independents and
smaller companies), providing impartial and objective advice.
Our services are determined by anticipating changes in the
market and then providing our clients with relevant solutions. The
breadth and scope of our strategic solutions increased in 2011 in
response to an increase in M&A activities in our markets during
the second half year. We expect this trend to continue in 2012 and
beyond.
Looking forward, our plan is to leverage our existing IP in
different adjacent vertical markets, such as petrochemicals and gas
processing, through a combination of organic growth and
acquisitions.
CONSULTING OPERATIONS
In 2011 our key objective was the successful execution of the
backlog built during 2010, particularly the PEMEX Profit
Improvement Program.
A key feature of the year was the execution of projects across
multiple client sites. The Profit Improvement Program at Mexico's
PEMEX, which started in 2010, expanded to include all six
refineries, and has been the cornerstone of our 2011 consulting
revenues. Joint stewardship of the project with PEMEX management
has confirmed identified efficiency opportunities that have met or
exceeded project commitments.
In Asia we were contracted by Reliance Industries Limited
("Reliance") to perform energy management and manufacturing
excellence projects across all of their major refinery and
petrochemical sites. At 1.2m barrels per day, Reliance's refinery
complex at Jamnagar is the world's largest and includes some of the
largest aromatics and polypropylene plants. Reliance has four other
integrated petrochemical complexes, plus numerous polyester and
other petrochemical plants, and KBC's projects are focused on the
six largest of these sites.
France's international oil major, Total, has engaged KBC to
assist with its drive to reduce energy consumption. This project is
being carried out in conjunction with Alexander Proudfoot, a US
management consulting firm, which is responsible for the change
management aspects of the project. To date we have started work at
four of Total's nine sites, in France, Germany and the USA.
Significant improvements in energy performance have been achieved
through operational changes, a better defined energy management
system and a clear plan for future investments. We expect Total to
continue this programme through 2012 and into 2013.
Other significant projects undertaken include:
-- Organisational project for Santos, Australia -- Feasibility studies for a new refining/petrochemical complex for Petronas, Malaysia -- Energy efficiency study for Bashneft, FSU -- Investment study for Gazpromneft, FSU -- Excellence Partnership with Grupa Lotos, Poland -- Training Manuals for Irving Oil, Canada -- Process Safety project for Flint Hills Resources, USA -- Valero
Energy refinery energy studies, USA -- Training Systems for Delek Refining, USA
In order to improve our bidding competitiveness in Asia and the
Middle East we have established an engineering resource centre in
Mumbai, India. Recruitment and training are under way and the
office will be fully operational in 2012. In response to increasing
orders from the FSU we will be establishing a small, local language
based consulting centre in Moscow in 2012.
SOFTWARE REVIEW
Development of KBC's software continued at a strong pace in
2011. Our software has grown into the number one reactor based
modelling system for the worldwide downstream energy sector.
2011 marked the successful culmination of a five year programme
to deliver and deploy a new version of our Petro-SIM(TM) software
that provides customers with a significantly improved refinery-wide
modelling capability. Based on user and market feedback, KBC is
considered the "gold standard" of refinery process modelling and
client retention rate on maintenance contracts for our software is
over 95%, one of the highest in the industry.
We achieved record revenues from our energy software in 2011 as
clients in both the upstream and downstream energy sectors sought
to reduce overall energy consumption.
Usage of KBC's software increased both across our client base
and on consulting projects undertaken by KBC. User group meetings
during 2011 in Brazil, Singapore and the United Kingdom attracted
record numbers of customers producing a healthy dialogue between
users. This opened an extremely efficient feedback channel to our
software research and development to help accelerate
innovation.
The negotiation of several software licence sales extended into
2012 from the last quarter of 2011 and we therefore expect a
healthy level of software sales in the first half of 2012.
SOFTWARE ARBITRATION
We were pleased to report in September that the allegations made
by a software competitor concerning the infringement of its rights
in certain software code had all been dismissed through an
arbitration process as unfounded. The financial statements contain
a charge of costs of GBP0.6m associated with this process. An award
of costs has been made in our favour and we are seeking to recover
those costs through the arbitration process. No accrual has been
made for this in the financial statements.
OPERATING RESULTS
Group revenue increased by 5% in 2011 to GBP55.7m compared with
GBP53.1m in 2010. There is no material impact from foreign exchange
rates movement in these results.
Consulting revenue increased by 9% from GBP39.2m in 2010 to
GBP42.7m but software revenues declined by 6% from GBP13.8m in 2010
to GBP13.0m in 2011. This overall performance should be viewed
against a challenging environment, especially in the first half
year, when business was impacted by the Arab Spring, the war in
Libya and the tsunami in Japan. The software revenue includes
GBP6.7m of maintenance and support revenue, up from GBP6.5m last
year, with the balance being new license revenue. As previously
stated, the level of new licence sales reflected several large
sales slipping into 2012.
Group costs decreased by 3% compared to the previous year. Staff
and associate consultant costs increased by around 4% partly due to
the increased use of associates and sub-contractors in the second
half of the year and partly because the level of development costs
carried forward was much reduced. Direct costs increased by 15%
largely due to the ongoing trend of increased consultant time on
site and a higher number of projects outside our home countries
leading to higher travel and subsistence costs. Other operating
charges decreased by 7% due to a reduction in the level of bad debt
charges.
Operating profit calculated on an underlying basis increased by
19% from GBP5.0m in 2010, to GBP6.0m in 2011. This measure ignores
the carry forward of software development costs, their
amortisation, the amortisation of acquired intangible fixed assets,
arbitration costs, redundancy costs and the exceptional bad debt
provision. In 2010 a charge of GBP1.5m was made in respect of
business in Iran and Libya and in 2011 a charge of GBP0.4m was made
in respect of receivable balances from subsidiaries of Petroplus
following commencement of bankruptcy proceedings in January this
year. The impact of software development costs carried forward was
reduced from a net credit of GBP0.7m in 2010 to a net credit of
GBP0.1m in 2011 reflecting the reduction in development activity in
2011 following the release of version 4 of the Petro-SIM software.
Statutory operating profit increased by 33% to GBP5.0m (2010:
GBP3.8m).
The finance cost of GBP0.1m, unchanged from 2010, mainly
reflects the ongoing cost of providing letters of credit and bank
guarantees to clients in parts of the world where such instruments
are essential to doing business.
PROFIT BEFORE TAX
The profit before tax of GBP4.9m shows an increase of 35% from
GBP3.6m in 2010.
TAX
The tax charge of GBP1.7m (2010: GBP1.4m) for the year is made
up of current tax expense of GBP1.4m and a deferred tax charge of
GBP0.3m. The current tax expense includes GBP0.8m of tax payable on
overseas operations and GBP0.7m of withheld tax that is not
expected to be recoverable against corporation tax as a result of
the continuing availability of losses brought forward in the UK and
low tax rates in Singapore. The deferred tax charge is principally
for short term timing differences expected to reverse in future
years.
The effective tax rate of 34% (2010: 39%) of pre-tax profits
remains higher than the current rate of UK corporation tax of 26.5%
but lower than the previous year. The main reason for the higher
rate is the non-recovery of tax withheld on payments totalling
GBP1.0m from overseas territories to our UK and Singapore
subsidiaries due to: (i) the tax losses in the UK and (ii) the low
tax rate in Singapore. The impact of this has been partially offset
by allowances claimable for research and development.
A net deferred tax asset of GBP1.6m (2010: GBP1.9m) 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 for 2011 of GBP3.3m, up by 47% from GBP2.2m
in 2010, equates to basic earnings per share of 5.9p, compared to
4.0p in 2010. Diluted earnings per share were 5.9p and 4.0p
respectively. Earnings per share calculated on the underlying
profit measure increased by 27% from to 5.6p to 7.1p.
A final dividend of 1.55p per share is proposed for the year,
following the interim dividend of 0.7p per share paid in October
2011.This leads to a total payment of 2.25p per share, making an
increase of 22% over 2010 (1.85p per share). Assuming it is
approved by shareholders at the annual general meeting, the
dividend will be paid on 15 May 2012 to shareholders on the
register at close of business on 4 May 2012.
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 determined that development costs incurred
in 2010 amounting to GBP1.1m should be carried forward over a five
year period from 2010 against future sales revenue. Amortisation of
GBP0.4m was charged during 2010 to the income statement, thus
giving an overall net credit of GBP0.7m compared with the situation
if development expenditure had not been carried forward. During
2011 development expenditure totalled GBP0.6m with an amortisation
charge of GBP0.5m giving a net credit of GBP0.1m for the year
compared with the situation if development expenditure had not been
carried forward. Therefore, net expenditure of GBP1.3m is held on
the balance sheet at 31 December 2011 against future revenue from
licence sales and support contracts.
Working capital
Trade and other receivables reduced during the year from
GBP23.2m to GBP22.9m. However trade and other payables decreased
from GBP8.9m to GBP7.9m due to a partial reversal of the sharp
increase in deferred revenue seen in 2010. When deferred revenue is
deducted from total receivables, the net receivable increased in
line with overall revenue. There was no material change in the
proportion of trade debtors to amounts recoverable on contracts but
not yet invoiced between the two years.
George Bright Nicholas Stone
Chief Executive Operations and Finance Director
Group Income Statement
For the year ended 31 December 2011
Note 2011 2010
GBP000 GBP000
------------------------------- ----- --------- ---------
Revenue 55,725 53,061
Direct costs (7,412) (6,472)
Staff and associate costs (30,822) (29,539)
Depreciation and amortisation (1,169) (1,173)
Other operating charges (11,311) (12,101)
------------------------------- ----- --------- ---------
Operating profit 5,011 3,776
Finance revenue 20 7
Finance cost (101) (135)
------------------------------- ----- --------- ---------
Profit before tax 4,930 3,648
Tax expense (1,673) (1,431)
------------------------------- ----- --------- ---------
Profit for the year 3,257 2,217
------------------------------- ----- --------- ---------
Earnings per share
Basic 4 5.9p 4.0p
Diluted 4 5.9p 4.0p
------------------------------- ----- --------- ---------
Group Statement of Comprehensive Income
For the year ended 31 December 2011
2011 2010
GBP000 GBP000
------------------------------------------------------- ------- -------
Profit for the year 3,257 2,217
Other comprehensive income:
* exchange differences on translation of foreign
operations recognised directly in equity 58 875
------------------------------------------------------- ------- -------
Total comprehensive income recognised in
the year 3,315 3,092
------------------------------------------------------- ------- -------
Group Statement of Changes in Equity
For the year ended 31 December 2011
Capital Share- Foreign
Share 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
2010 1,429 8,060 55 929 (452) 1,305 1,497 16,273 29,096
---------------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
Profit for the
year - - - - - - - 2,217 2,217
Other comprehensive
income - - - - - - 875 - 875
---------------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
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 1 January
2011 1,386 8,072 113 929 (245) 1,580 2,389 15,905 30,129
---------------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
Profit for the
year - - - - - - - 3,257 3,257
Other comprehensive
income - - - - - - 58 - 58
---------------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
Total comprehensive
income - - - - - - 58 3,257 3,315
Share-based payments - - - - - 300 - - 300
Exchange translation
adjustment - - - - - - 5 - 5
Shares issued 14 9 - - (13) - - - 10
Shares purchased - - - - (162) - - - (162)
Utilisation of
own shares - - - - 245 - - (245) -
Dividends - - - - - - - (1,100) (1,100)
At 31 December
2011 1,400 8,081 113 929 (175) 1,880 2,452 17,817 32,497
---------------------- -------- -------- ----------- -------- ------- --------- --------- --------- --------
The amount included in the foreign exchange reserve represents
other comprehensive income for each component net of tax.
Group Balance Sheet
As at 31 December 2011
2011 2010
GBP000 GBP000
--------------------------------------- -------- ---------
Non--current assets
Property, plant and equipment 1,255 1,299
Goodwill 7,505 7,479
Other intangible assets 1,367 1,413
Deferred tax assets 2,764 3,233
--------------------------------------- -------- ---------
12,891 13,424
--------------------------------------- -------- ---------
Current assets
Trade and other receivables 22,860 23,219
Current tax receivable 568 314
Cash and cash equivalents 5,815 4,506
Other financial assets 54 -
29,297 28,039
--------------------------------------- -------- ---------
Total assets 42,188 41,463
--------------------------------------- -------- ---------
Non--current liabilities
Deferred tax liabilities (1,197) (1,337)
--------------------------------------- -------- ---------
(1,197) (1,337)
--------------------------------------- -------- ---------
Current liabilities
Trade and other payables (7,850) (8,858)
Current tax payable (644) (1,132)
Other financial liabilities - (7)
--------------------------------------- -------- ---------
(8,494) (9,997)
--------------------------------------- -------- ---------
Total liabilities (9,691) (11,334)
--------------------------------------- -------- ---------
Net assets 32,497 30,129
--------------------------------------- -------- ---------
Equity attributable to equity holders
of parent
Share capital 1,400 1,386
Share premium 8,081 8,072
Other reserves 1,042 1,042
Own shares (175) (245)
Retained earnings 22,149 19,874
--------------------------------------- -------- ---------
Total equity 32,497 30,129
--------------------------------------- -------- ---------
Total equity and liabilities 42,188 41,463
--------------------------------------- -------- ---------
Group Cash Flow Statement
For the year ended 31 December 2011
2011 2010
GBP000 GBP000
----------------------------------------- -------- -----------------------
Cash flows from operating activities
Profit before tax 4,930 3,648
Finance revenue (20) (7)
Finance cost 101 135
----------------------------------------- -------- -----------------------
Operating profit 5,011 3,776
Depreciation and amortisation 1,169 1,173
Share-based payment expense 300 275
Movement in working capital (766) 642
Cash generated from operations 5,714 5,866
Finance revenue received 20 7
Finance costs paid (101) (135)
Income taxes paid (2,086) (1,557)
----------------------------------------- -------- -----------------------
Net cash flows from operating
activities 3,547 4,181
----------------------------------------- -------- -----------------------
Investing activities
Purchase of tangible non-current
assets (443) (269)
Purchase of intangible non-current
assets (635) (1,068)
Payment of deferred consideration
for purchase of subsidiary undertaking - (156)
----------------------------------------- -------- -----------------------
Net cash used in investing activities (1,078) (1,493)
----------------------------------------- -------- -----------------------
Financing activities
Dividends paid to equity holders
of parent (1,100) (916)
Purchase of own shares (175) (1,462)
Issue of shares 23 27
----------------------------------------- -------- -----------------------
Net cash used in financing activities (1,252) (2,351)
----------------------------------------- -------- -----------------------
Net increase in cash and cash
equivalents 1,217 337
Cash and cash equivalents at
1 January 4,506 3,975
Exchange adjustments 92 194
----------------------------------------- -------- -----------------------
Cash and cash equivalents at
31 December 5,815 4,506
----------------------------------------- -------- -----------------------
1. Basis of preparation
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2011
or 2010. Statutory accounts for the years ended 31 December 2011
and 31 December 2010 have been reported on by the independent
auditors. The independent auditors' reports on the annual reports
and financial statements for 2011 and 2010 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 2010 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2011 will be delivered to the Registrar
in due course.
The financial information set out in this preliminary results
release has been prepared using the recognition and measurement
principles of International Accounting Standards, International
Financial Reporting Standards and Interpretations adopted for use
in the European Union (collectively Adopted IFRSs). The accounting
policies adopted in these preliminary results have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the period ended 31 December 2010.
2. Segment 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 7% of total trade receivables were
concentrated with one of the Group's customers (2010: 8%). The
balance was spread over 132 (2010: 134) customers, none of whom
comprised more than 6% (2010: 7%) of the total.
Year ended 31 December 2011 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Rendering of services
(Consulting) 18,516 12,786 11,431 - 42,733
Sale of goods (Software) 3,879 4,695 4,418 - 12,992
Inter-segment revenue 1,134 246 671 - 2,051
----------------------------- --------- ------- ------- ------------ --------
Total revenue 23,529 17,727 16,520 - 57,776
Revenues carried out by
other segments (1,134) (246) (671) - (2,051)
----------------------------- --------- ------- ------- ------------ --------
Revenue from external
customers 22,395 17,481 15,849 - 55,725
----------------------------- --------- ------- ------- ------------ --------
Contribution 9,819 7,567 5,768 - 23,154
Operating profit/(loss)
before amortisation 4,534 3,348 688 (2,880) 5,690
Amortisation - - - (679) (679)
----------------------------- --------- ------- ------- ------------ --------
Operating profit/(loss) 4,534 3,348 688 (3,559) 5,011
Finance revenue - - - 20 20
Finance cost - - - (101) (101)
----------------------------- --------- ------- ------- ------------ --------
Profit/(loss) before tax 4,534 3,348 688 (3,640) 4,930
Tax expense - - - (1,673) (1,673)
----------------------------- --------- ------- ------- ------------ --------
Profit/(loss) for the
year 4,534 3,348 688 (5,313) 3,257
----------------------------- --------- ------- ------- ------------ --------
As at 31 December 2011 Americas Asia EMEA Unallocated Total
GBP000 GBP000 GBP000 GBP000 GBP000
Trade receivables 2,592 3,088 5,114 - 10,794
Provisions - - (1,767) - (1,767)
------------------------ --------- ------- -------- ------------ --------
Net carrying amount 2,592 3,088 3,347 - 9,027
------------------------ --------- ------- -------- ------------ --------
Amounts recoverable
on contracts 2,311 4,560 5,491 - 12,362
------------------------ --------- ------- -------- ------------ --------
Deferred revenue 2,197 1,176 1,243 - 4,616
------------------------ --------- ------- -------- ------------ --------
Year ended 31 December Americas Asia EMEA Unallocated Total
2010
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
Inter-segment revenue 1,574 228 1,011 - 2,813
-------------------------- --------- ------- -------- ------------ --------
Total revenue 22,286 17,121 16,467 - 55,874
Revenues carried out by
other segments (1,574) (228) (1,011) - (2,813)
-------------------------- --------- ------- -------- ------------ --------
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
-------------------------- --------- ------- -------- ------------ --------
Revenue from Non-current
external customers assets
2011 2010 2011 2010
GBP000 GBP000 GBP000 GBP000
-------------------------- ---------- ---------- ------- -------
United Kingdom 1,384 969 6,030 6,083
Mexico 10,722 2,994 - -
United States of America 8,246 9,434 3,835 3,936
India 3,543 1,421 - -
Malaysia 2,750 1,719 - -
South Korea 2,504 7,365 - -
China 2,294 3,645 - -
Canada 2,092 3,047 - -
Other 22,190 22,467 262 172
-------------------------- ---------- ---------- ------- -------
55,725 53,061 10,127 10,191
-------------------------- ---------- ---------- ------- -------
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:
2011 2010
GBP000 GBP000
---------------------------------------------- ------- -------
Depreciation and amortisation:
Depreciation 490 568
Amortisation of intellectual property rights
- existing intellectual property rights 119 247
- development costs carried forward 560 358
---------------------------------------------- ------- -------
Total 1,169 1,173
Included in other operating charges:
Operating lease rentals
- minimum lease payments 2,566 2,438
- sublease rentals received (163) (233)
Share-based payments 300 275
Net foreign exchange differences (32) 415
---------------------------------------------- ------- -------
a) Research and development costs
During 2011 the Group incurred research and development costs of
GBP2.0m (2010: GBP2.4m). Of this amount GBP635,000 (2010:
GBP1,068,000) 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
Americas Asia EMEA Unallocated Total
Year ended 31 December 2011 GBP000 GBP000 GBP000 GBP000 GBP000
Operating profit/(loss) 4,534 3,348 688 (3,559) 5,011
Amortisation of acquisition
intangibles - - - 119 119
Development costs carried
forward (223) (185) (227) - (635)
Amortisation of development
costs carried forward - - - 560 560
Exceptional bad debt provision - - 357 - 357
Arbitration costs - - - 557 557
Underlying operating profit 4,311 3,163 818 (2,323) 5,969
Finance revenue - - - 20 20
Finance cost - - - (101) (101)
----------------------------------- ----------- ------- ------- ------------ --------
Underlying profit before
tax 4,311 3,163 818 (2,404) 5,888
Tax expense - - - (1,958) (1,958)
----------------------------------- ----------- ------- ------- ------------ --------
Underlying profit after
tax 4,311 3,163 818 (4,362) 3,930
----------------------------------- ----------- ------- ------- ------------ --------
Americas Asia EMEA Unallocated Total
Year ended 31 December 2010 GBP000 GBP000 GBP000 GBP000 GBP000
Operating profit/(loss) 3,833 3,911 (752) (3,216) 3,776
Amortisation of acquisition
intangibles - - - 247 247
Development costs carried
forward (344) (269) (455) - (1,068)
Amortisation of development
costs carried forward - - - 358 358
Exceptional bad debt provision - - 1,478 - 1,478
Redundancy costs 103 17 105 - 225
----------------------------------- ----------- ------- ------- ------------ --------
Underlying operating profit 3,592 3,659 376 (2,611) 5,016
Finance revenue - - - 7 7
Finance cost - - - (135) (135)
----------------------------------- ----------- ------- ------- ------------ --------
Underlying profit before
tax 3,592 3,659 376 (2,739) 4,888
Tax expense - - - (1,818) (1,818)
----------------------------------- ----------- ------- ------- ------------ --------
Underlying profit after
tax 3,592 3,659 376 (4,557) 3,070
----------------------------------- ----------- ------- ------- ------------ --------
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.
2011 2010
GBP000 GBP000
--------------------- ------- -------
Profit for the year 3,257 2,217
--------------------- ------- -------
Number Number
000s 000s
------------------------------------------------ ------- -------
Weighted average number of Ordinary shares in
issue 55,027 55,281
Number of shares used for basic and underlying
earnings per share 55,027 55,281
Dilution 425 772
------------------------------------------------ ------- -------
Number of shares used for diluted and diluted
underlying earnings per share 55,452 56,053
------------------------------------------------ ------- -------
Pence Pence
------------------------------------------------ ------- -------
Basic earnings per share 5.9p 4.0p
Diluted earnings per share 5.9p 4.0p
Basic underlying earnings per share 7.1p 5.6p
Diluted underlying earnings per share 7.1p 5.5p
------------------------------------------------ ------- -------
The earnings per share based upon the basic and diluted IIMR EPS
are 5.9p and 5.9p (2010: 4.0p and 4.0p).
Basic underlying earnings per share are based upon an underlying
after tax profit as defined in note 3b of GBP3.93m (2010: GBP3.07m)
and on 55,027,000 (2010: 55,281,000) 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:
2011 2010
Number Number
000s 000s
Total share options outstanding 4,053 4,435
Share options excluded (see below) (3,493) (3,455)
--------------------------------------- -------- --------
Potentially exercisable share options 560 980
Fair value shares (135) (208)
--------------------------------------- -------- --------
Dilution 425 772
--------------------------------------- -------- --------
Share options excluded are those where the exercise price is
greater than the share price at 31 December 2011, 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
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