TIDMKBC
RNS Number : 0600D
KBC Advanced Technologies plc
25 March 2014
Embargoed until 0700 hrs 25 March 2014
KBC Advanced Technologies plc ("KBC", "the Company" or "the
Group")
Preliminary results for the year ended 31 December 2013
KBC Advanced Technologies plc, a leading consultancy and
software provider to the global hydrocarbon processing industry,
today announces its preliminary results for the year to 31 December
2013.
Highlights
-- Year of major progress and significant change
-- Adjusted profit before tax(1) up 45% to GBP8.4m (2012:
GBP5.8m); reported profit before tax of GBP7.1m (2012: GBP3.7m)
-- Adjusted profit margin(1) increased to 12.9% (2012: 9.2%),
the highest for 5 years benefiting from early success of the
restructuring programme
-- Basic earnings per share improved to 9.5p (2012: loss per share of 2.9p)
-- Dividend reinstated; recommended final dividend of 1.0p per share
-- Good flow of contracts and healthy year end order book of GBP78.2m (2012: GBP82.9m)
-- Consulting division turnaround on track
-- Continued successful investment in Technology division - new
product development and integration of Infochem
-- Markets continue to offer exciting international growth opportunities
(1) Adjusted for development costs carried forward, amortisation
of development costs carried forward, amortisation of
acquisition
intangibles, share based payment charges and other items which
do not reflect underlying operations (see note 3b)
Ian Godden, Chairman of KBC, commented:
"2013 was a year of major progress and significant success. The
business delivered better than expected results and benefited in
particular from a number of major project wins, the first
significant benefits from the acquisition of Infochem and the
restructuring of the overall business to improve operational
efficiency and bring new talent in the Group."
"The demand for KBC's services remains buoyant throughout most
of the world and we are encouraged by the sustainable improvement
in prospects for the North American downstream sector, driven by
growth in light, tight oil and gas production. We see substantial
and continued opportunities for major work in the high growth
markets of the world where we have strengthened our presence."
"2014 has started well and, together with the substantial
changes made in 2013, we are confident that the Group is well
placed to continue to deliver growth in 2014 and beyond."
-Ends-
KBC Advanced Technologies plc +44 (0)1932 242424
Ian Godden, Chairman
Cenkos Securities plc
Bobbie Hilliam/Callum Davidson +44 (0)20 7397 8900
Weber Shandwick Financial
Nick Oborne/Stephanie Badjonat +44 (0)20 7067 0000
Notes to Editors:
KBC is a leading consultancy and software provider to the global
hydrocarbon processing industry. With over 30 years of experience,
KBC combines industry-leading technology with experienced engineers
and operations personnel using robust methodologies to create
personalised, sustainable solutions for its clients. For more
information, visit www.kbcat.com.
CHAIRMAN'S STATEMENT
Summary
2013 was a year of major progress and significant success. The
business delivered better than expected results and benefited in
particular from a number of major project wins, the first
significant benefits from the acquisition of Infochem Computer
Services Ltd ("Infochem"), and the restructuring of the overall
business to improve operational efficiency and bring new talent
into the Group.
The appointment of a Managing Director for Technology and a
Managing Partner of a simplified and consolidated Consulting
business has strengthened the executive team substantially. In
addition, new hires during 2013 in Finance and HR, combined with
the upgrading of Commercial Services, have provided the executive
team with a stronger set of functional skills and support to lead
and manage the business worldwide.
2014 has started well and, together with the substantial changes
made in 2013, we are confident that the Group is well placed to
continue to deliver growth in 2014 and beyond.
Results
Group revenue for the year increased by 3% to GBP65.1m (2012:
GBP63.1m). Profit before tax calculated on an adjusted basis in
2013, as detailed in note 3b, was 45% higher than the previous year
at GBP8.4m (2012: GBP5.8m). This reflected an adjusted profit
margin of 12.9%, the highest it has been for the last five years
and a substantial improvement on last year's adjusted profit margin
of 9.2%. The after tax position of the Group improved
substantially, recovering from a loss after tax of GBP1.6m in 2012
to a profit after tax of GBP5.5m.
As a result basic earnings per share rose to 9.5p (2012: loss
per share of 2.9p) and earnings per share calculated on an adjusted
basis rose to 9.5p per share in 2013 from a loss per share of 1.5p
in 2012. Diluted earnings per share was 9.2p in 2013, compared to
diluted loss per share of 2.9p in 2012.
Dividend
Following the improved performance and reflecting its confidence
in the Group's prospects, the Board has taken the decision to
resume payment of dividends and proposes to pay a final dividend
for the 2013 financial year of 1.0p per share. The total cost of
the proposed dividend amounts to GBP0.6m for the full year 2013
(2012 full year: GBPnil).
Board and management
During 2013 we strengthened the composition of the Board with
the addition of a new Non-Executive Director, Paul Taylor, formerly
Finance Director of AVEVA Group plc, whom we appointed as Deputy
Chairman, Senior Independent Director and Chairman of the Audit
Committee. Since the year end Paul McCloskey was appointed as a
Non-Executive Director, in February 2014. Paul recently retired
from a successful career as a senior international executive in the
upstream oil and gas industry. Along with the existing members,
myself as Chairman, and Oliver Scott, an experienced investor and
Chairman of the Remuneration Committee, this creates a very strong
Board to see KBC progress its ambitious growth plan over the next
few years.
Mike Kirk retired from the Board at the end of 2013, having
served KBC excellently as a Non-Executive Director for nine
years.
Caroline Brown, Director and Chief Financial Officer, appointed
in 2012 to assist with KBC's major drive to improve its commercial
and financial performance, has contributed substantially to that
objective. She will be leaving the Board and Group on 6 April 2014,
having achieved a major upgrade of the Finance and Commercial
Services functions and contributed to the much improved trading
performance since 2012. We are in the process of seeking a
replacement and in the meantime have appointed an interim Chief
Financial Officer, Andrew Hebb, to ensure cover during the
transition. Since 2009 Andrew has been a professional Interim CFO
for a number of companies in both the professional services and
software markets. Prior to that, as CFO, he helped build Hedra plc
into a major public sector consulting business which was sold to
Mouchel in 2008.Previously Andrew held CFO and operational roles in
major UK companies.
A new and effective Operating Board was established during the
year, delivering clear leadership across all aspects of our
business. The Operating Board now consists of Kevin Smith (Managing
Partner of Consulting), Andrew Howell (Managing Director of
Technology) and Ramón Loureiro (Senior Partner of Consulting),
alongside me as Chairman.
Current trading and outlook
The demand for KBC's services remains buoyant throughout most of
the world and we are encouraged by the sustainable improvement in
prospects for the North American downstream sector, driven by
growth in light, tight oil and gas production. We see substantial
and continued opportunities for major work in the high growth
markets of the world where we have strengthened our presence.
We enter 2014 with a healthy pipeline of contracted work of
GBP78.2m (2012: GBP82.9m). Together with a number of key consulting
contract wins in the first two months of 2014, this means that KBC
is well positioned to meet its objectives for the coming year. The
exact timing of contract awards will continue to affect results
within any year. However, given the strength of the order book, an
enhanced range of products and services and major internal progress
in 2013, the Board looks to the future with confidence.
Ian Godden
Chairman
BUSINESS REVIEW
KBC's market
The worldwide hydrocarbon sector continues to grow and remains
an important marketplace for KBC. There are opportunities to grow
both in KBC's traditional markets of downstream refineries and
petrochemicals and in KBC's more recently targeted upstream
production and midstream marketplaces. Significant change in the
geographical demand and supply mix favours KBC's expertise in
helping oil and gas companies to achieve operational excellence in
uncertain conditions.
The increase in US domestic crude oil and gas production from
shale and tight oil continues to influence the outlook for
hydrocarbon markets in the medium term, alongside large offshore
gas discoveries which are generating significant LNG investment
opportunities in East Africa and Australia. In upstream oil,
investment in production assets continues to provide growth
opportunities for current facilities. Upstream exploration, of less
direct relevance to KBC, shows some signs of a cyclical slowdown in
spending, especially for deep water exploration projects.
The major investments in downstream assets and new capacity are
mainly in the FSU (Former Soviet Union), Middle East, India and
parts of Asia, all target growth markets for KBC. In the FSU, there
is a major 10 year programme to upgrade refinery assets which KBC
is well positioned to support. In the Middle East, new world-scale
refinery and petrochemical facilities are being built which will
need a large number of skilled workforces, requiring services in
organisational and skill enhancements well suited to KBC's service
offerings.
India, China and South East Asia continue to generate demand for
new capacity and upgraded downstream assets, and remain determined
to improve their working practices and workforce skills. In
addition to the organisational development opportunities common to
the developing markets, the current market conditions place a focus
on maximising value extraction from existing facilities and
ensuring operational readiness for new facilities. Both of these
focus areas play to KBC's strengths in asset optimisation and
margin capture.
Despite some recent short term cutbacks in high cost exploration
regions, the upstream production sector will continue to provide
major new market opportunities for KBC in the next few years as the
oil and gas companies and oilfield service companies use
sophisticated software to reduce capital expenditure and apply
profit improvement techniques more typical for downstream
assets.
KBC's strategy
KBC's long term strategy is to broaden its Technology offering
and expand the business into the upstream sector in order to
increase significantly the proportion of Technology revenues within
the Group. The acquisition of Infochem, and our investment in the
Technology business and in upstream capability are significant
steps towards this objective.
The restructuring programme, although not expected to be
complete until the end of 2014, is largely implemented or well
under way. Oversized offices in the mature regions have been closed
or downsized and extra lean offices have been added in growth
regions; trading entities have been reorganised; an emphasis on
increased consulting utilisation and base consulting rates has
improved margins in the Consulting business; improvements in sales
and marketing have been implemented although the benefits for
business development will take time to filter through. Investment
in new direct software sales resource in 2013 is expected to
improve software sales in future years.
Performance targeting has been introduced throughout the Group
with new KPI measures established recently to drive extra
efficiency. Further work over the next few years will be targeted
on further improving business processes and back office systems.
The combination of these improvements will help support margin
improvements in Consulting in future years.
The simplification and reorganisation of the consulting business
is now complete, with the remaining tasks being to strengthen the
existing leadership with selective outside hires and re-align the
structure for the long term future.
We have also strengthened the quality control and software
development systems within the Technology business and made further
investment in direct sales channels.
Furthermore, the strengthened executive teams in Consulting and
Technology are working well together and are focused on building
greater capability to sell and execute larger programmes for
clients.
Operations - Consulting
Consulting revenue in 2013 increased by 7% to GBP47.2m (2012:
GBP44.3m) with an operating profit margin of 3% (2012: operating
loss margin of 8%).
Having implemented a major simplification and reorganisation of
the Consulting business in early 2013, the emphasis has been on
efficiency and effectiveness of the business. The Group has focused
on increasing the high impact consulting solutions that use all of
KBC's capabilities in profit improvement, including margin capture,
reliability and maintenance, energy efficiency, business
transformation, organisation upskilling and strategic
efficiency.
The new Consulting partnership model, combined with clearer
geographical performance targets and long term objectives for
increasing the skills of our own professionals, is beginning to
have a positive impact on performance.
The highlights of 2013, in addition to the first phase of the
major four year best practices project in Latin America,
include:
-- An Asset Health Check study for a leading Middle East upstream company
-- A number of energy efficiency studies and margin capture projects for clients in Japan
-- A series of reliability and maintenance improvement projects for a Canadian company
-- Completion of phase 1 and the securing of phase 2 of a
significant operational excellence project in Southeast Asia
-- Major energy efficiency studies for key Russian downstream clients
-- A significant workforce capability development programme for
a major upstream client in Australia
A two year investment in KBC's resources in high growth
geomarkets was started in 2013, with the appointment of new
leadership, extra staffing and transfer of skills to China and the
Middle East, to be followed by similar moves in 2014 and 2015 in
FSU, Latin America, Northeast Asia and India.
Operations - Technology
Reflecting the exceptional level of Technology sales in 2012,
due to a particularly large licence sale to a major Latin American
client, revenues for the year were 5% down on last year at GBP17.9m
(2012: GBP18.8m). Looking over the past 3 years, Technology
revenues have increased by 38%, or GBP4.9m, since 2011 when
Technology revenues were GBP13.0m.
The visibility of Technology revenue has been enhanced
significantly due to a substantial seven-year, circa GBP10m,
contract for Infochem's Multiflash(TM) , awarded in 2013, with
revenue recognised rateably. In addition, a major investment was
made in the year to upgrade and launch in December a new version of
KBC's core technology product, Petro-SIM(TM) , and to produce a
world leading new version for upstream production clients, called
Petro-SIM Production(TM) , which integrates the acquired Infochem
technology. The benefits from this are expected to flow in 2014 and
beyond, although KBC is conscious that the pace at which KBC is
able to penetrate the upstream market will be gradual, reflecting
the well known conservatism and slow pace of adoption of technology
in that sector.
Throughout 2013 KBC strengthened its Technology management team
and further improved the direct sales channel. The highlights of
2013 were:
-- The seven-year contract with a large oil and gas services
company for the Multiflash technology
-- A new contract with a Japanese refiner to provide a five-year
licence for Petro-SIM, selected SIM models and software
services
-- Expansion of Petro-SIM and SIM model deployment, plus model
calibration and training, in a US independent refiner
-- Major extension and growth of Petro-SIM and SIM models plus
implementation services with a premier Eastern European refiner
-- First sale of Petro-SIM Production to a midstream/upstream
oil and gas company based in Australia.
The Technology business has implemented a new and improved
organisation, implemented its Product Lifecycle Management Process
across all product development, launched an internal incentive plan
more suited to a software-led business and has increased investment
in direct business development and sales channels. A review of its
agent and reseller agreements identified a number of potential
changes, some already implemented and some to be introduced in
2014.
Results
Group revenue increased by 3% in 2013 to GBP65.1m (2012:
GBP63.1m). Consulting revenue was up by 7% to GBP47.2m. Technology
revenue in 2013, down 5% to GBP17.9m (2012: GBP18.8m), included
GBP7.6m of royalty, maintenance, support and upgrade revenue (2012:
GBP6.4m).
Direct costs increased by 7% to GBP9.3m in 2013 (2012: GBP8.7m),
reflecting an increase in Group revenue and in particular
Consulting revenue. Without the restructuring programme implemented
in 2012, oil sector inflation, particularly in USA, Russia, India
and China would have caused these increases to be much more
significant. Also as a result of the restructuring programme, staff
and associate costs decreased by 6% to GBP32.4m (2012: GBP34.3m)
and other indirect operating costs decreased by 15% to GBP11.6m
(2012: GBP13.6m). Depreciation and amortisation charges were
significantly higher at GBP4.4m (2012: GBP2.7m) due to increased
amortisation relating to the Infochem acquisition in mid 2012 and
contract based intangibles initially recognised in December
2012.
Profit before tax, adjusted for items which do not reflect
underlying operations, rose by 45% to GBP8.4m (2012: GBP5.8m). This
measure adjusts for development costs carried forward of GBP1.3m,
amortisation of development costs carried forward of GBP1.1m,
amortisation of acquisition intangibles of GBP1.4m, share based
payment charge of GBP0.5m and other items which do not reflect
underlying operations.
Profit before tax was GBP7.1m (2012: GBP3.7m) up 92% in
2013.
Tax
The tax charge of GBP1.6m (2012: GBP5.3m) is made up of a
current tax expense of GBP2.1m and a deferred tax credit of
GBP0.5m.
The current tax expense includes GBP2.5m (2012: GBP4.4m) of tax
payable on overseas operations in respect of the year and GBP1.0m
(2012: GBP0.7m) of withholding tax. Of this amount GBP0.6m is
expected to be recovered against overseas tax payable by way of
double tax relief. As in prior periods, the balance is not expected
to be recoverable as a result of tax losses in the UK.
The 2013 tax charge is significantly lower than last year,
showing a reduction in the effective tax rate from 145% to 22%. The
main reason for this is the revision of the Group's transfer
pricing framework for the sale of software and provision of
services and resources between group companies. The revision to the
policy was effective from 2012 and gives rise to a GBP1.4m tax
credit in these results which relates to the prior period. The 2013
effective tax rate before the prior period tax credit is 42%.
In addition, the prior year tax charge included a one-off charge
of GBP1.4m on the release of the deferred tax asset in respect of
UK trading losses. Finally, the group effective tax rate continues
to benefit from enhanced tax deductions for qualifying research and
development expenditure.
The Group is continuing to review the location of its assets and
resources globally to further reduce its effective tax rate in
subsequent periods.
Earnings and dividends
The profit after tax for 2013 of GBP5.5m (2012: GBP1.6m loss)
equates to a basic earnings per share of 9.5p (2012: loss per share
of 2.9p). The diluted earnings per share was 9.2p in 2013, compared
to a loss per share of 2.9p in 2012. The earnings per share
calculated on the adjusted measure was 9.5p (2012: loss per share
of 1.5p). See note 5 for more details.
The Board has decided to resume payment of dividends with a
proposal to pay a dividend in respect of the 2013 financial year.
Assuming it is approved by shareholders at the annual general
meeting, the dividend will be paid on 12 August 2014 to
shareholders on the register at close of business on 18 July
2014.
Carry forward of software development costs
During 2013 the Group incurred research and development costs of
GBP2.7m (2012: GBP2.4m). Of this amount GBP1.3m (2012: GBP2.1m)
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. The
amortisation of previously capitalised software development costs
amounted to GBP1.1m (2012: GBP0.8m).
Working capital and net cash
Trade and other receivables increased during the year from
GBP18.9m to GBP23.2m. Trade and other payables reduced by 45% from
GBP22.1m to GBP12.2m due largely to a significant multi-year
contract signed at the end of 2012.
Net cash at 31 December 2013 was GBP6.9m (2012: GBP13.3m). The
difference is due to a large advance payment being received at the
end of 2012 in connection with a contract. Net cash flow from
operations, after this adjustment, was GBP11.9m (2012: GBP12.0m).
At the year end the Group had outstanding bank loans totalling
GBP3.0m (2012: GBP5.4m).
Going concern
The Group's financial statements are prepared on a going concern
basis. The Directors are satisfied that the Group has sufficient
resources and borrowing facilities to meet its requirements for a
period of at least 12 months from the date of this statement.
Ian Godden Caroline Brown
Chairman Chief Financial Officer
Group Income Statement
For the year ended 31 December 2013
2013 2012
Note GBP000 GBP000
----------------------------------------- ------ ---------- ----------
Revenue 65,080 63,140
Direct costs (9,254) (8,741)
Staff and associate costs (32,383) (34,266)
Depreciation and amortisation 3 (4,414) (2,686)
Other operating charges (11,640) (13,587)
----------------------------------------- ------ ---------- ----------
Operating profit 3 7,389 3,860
Finance revenue 208 1
Finance cost (476) (198)
----------------------------------------- ------ ---------- ----------
Profit before tax 7,121 3,663
Tax expense 4 (1,584) (5,309)
----------------------------------------- ------ ---------- ----------
Profit/(loss) for the year 5,537 (1,646)
----------------------------------------- ------ ---------- ----------
Earnings/(loss) per share attributable
to the ordinary equity shareholders
of the parent company
Basic 5 9.5p (2.9)p
Diluted 5 9.2p (2.9)p
----------------------------------------- ------ ---------- ----------
Group Statement of Comprehensive Income
For the year ended 31 December 2013
2013 2012
GBP000 GBP000
------------------------------------------------------- --------- ---------
Profit/(loss) for the year 5,537 (1,646)
Other comprehensive loss:
* exchange differences on translation of foreign
operations recognised directly in equity (856) (247)
------------------------------------------------------- --------- ---------
Total comprehensive income/(loss) recognised
in the year 4,681 (1,893)
------------------------------------------------------- --------- ---------
Group Statement of Changes in Equity
For the year ended 31 December 2013
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
2012 1,400 8,081 113 929 (175) 1,880 2,452 17,817 32,497
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Loss for the
year - - - - - - - (1,646) (1,646)
Other
comprehensive
loss - - - - - - (247) - (247)
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Total
comprehensive
loss - - - - - - (247) (1,646) (1,893)
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Share-based
payments - - - - - 300 - - 300
Exchange
translation
adjustment - - - - - - (39) - (39)
Shares issued 70 1,289 - - - - - - 1,359
Utilisation
of own shares - - - - 3 - - (3) -
Dividends - - - - - - - (857) (857)
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
At 1 January
2013 1,470 9,370 113 929 (172) 2,180 2,166 15,311 31,367
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Profit for the
year - - - - - - - 5,537 5,537
Other
comprehensive
loss - - - - - - (856) - (856)
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Total
comprehensive
(loss)/ income - - - - - - (856) 5,537 4,681
Share-based
payments - - - - - 530 - - 530
Shares issued 9 67 - - (1) - - - 75
Purchase of
non-controlling
interest - - - - - - - (137) (137)
At 31 December
2013 1,479 9,437 113 929 (173) 2,710 1,310 20,711 36,516
------------------ --------- --------- ------------ --------- -------- ---------- ---------- ---------- ---------
Group Balance Sheet
As at 31 December 2013
2013 2012
GBP000 GBP000
----------------------------------------- ---------- ----------
Non--current assets
Property, plant and equipment 851 1,200
Goodwill 10,200 10,263
Other intangible assets 12,011 14,588
Deferred tax assets 447 1,813
----------------------------------------- ---------- ----------
23,509 27,864
----------------------------------------- ---------- ----------
Current assets
Trade and other receivables 23,178 18,893
Current tax receivable 1,647 110
Cash and cash equivalents 11,960 21,116
36,785 40,119
----------------------------------------- ---------- ----------
Total assets 60,294 67,983
----------------------------------------- ---------- ----------
Non--current liabilities
Long-term borrowings (600) (3,000)
Deferred tax liabilities (1,476) (3,320)
Provisions (69) (57)
----------------------------------------- ---------- ----------
(2,145) (6,377)
----------------------------------------- ---------- ----------
Current liabilities
Trade and other payables (12,201) (22,058)
Short-term borrowings (4,429) (4,845)
Current tax payable (4,745) (3,063)
Provisions (258) (273)
(21,633) (30,239)
----------------------------------------- ---------- ----------
Total liabilities (23,778) (36,616)
----------------------------------------- ---------- ----------
Net assets 36,516 31,367
----------------------------------------- ---------- ----------
Equity attributable to ordinary equity
shareholders of the parent company
Share capital 1,479 1,470
Share premium 9,437 9,370
Other reserves 1,042 1,042
Own shares (173) (172)
Retained earnings 24,731 19,657
----------------------------------------- ---------- ----------
Total equity 36,516 31,367
----------------------------------------- ---------- ----------
Total equity and liabilities 60,294 67,983
----------------------------------------- ---------- ----------
Group Cash Flow Statement
For the year ended 31 December 2013
2013 2012
GBP000 GBP000
-------------------------------------------- --------- ----------
Net cash inflow from operating
activities
Profit before tax 7,121 3,663
Adjustments for:
Depreciation and amortisation 4,414 2,686
Foreign exchange gains (439) (1,105)
Finance revenue (208) (1)
Finance cost 476 198
Share-based payment expense 530 300
-------------------------------------------- --------- ----------
11,894 5,741
(Increase)/decrease in trade and
other receivables (4,285) 3,994
(Decrease)/increase in trade and
other payables (7,960) 14,516
Decrease in financial assets and
liabilities - 54
Cash (used in)/generated from operations (351) 24,305
Income taxes paid (1,917) (1,434)
-------------------------------------------- --------- ----------
Net cash (used in)/generated from
operating activities (2,268) 22,871
-------------------------------------------- --------- ----------
Investing activities
Acquisition of subsidiary, net
of cash acquired (1,900) (7,771)
Purchase of tangible non-current
assets (195) (514)
Purchase of intangible non-current
assets (1,334) (6,669)
Decrease/(increase) in advance
contract payments 12,287 (12,287)
Finance revenue received 208 1
Net cash generated from/(used in)
investing activities 9,066 (27,240)
-------------------------------------------- --------- ----------
Financing activities
Issue of Ordinary shares 75 1,359
Purchase of non-controlling interest (137) -
Advances of bank borrowings - 6,000
Repayment of bank borrowings (2,400) (600)
Finance costs paid (476) (198)
Dividends paid to equity holders
of parent - (857)
Net cash (used in)/generated from
financing activities (2,938) 5,704
-------------------------------------------- --------- ----------
Net increase in cash and cash equivalents 3,860 1,335
Cash and cash equivalents at 1
January 6,384 5,815
Exchange adjustments (313) (766)
-------------------------------------------- --------- ----------
Cash and cash equivalents at 31
December 9,931 6,384
-------------------------------------------- --------- ----------
1. Basis of preparation
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2013
or 2012. Statutory accounts for the years ended 31 December 2013
and 31 December 2012 have been reported on by the independent
auditors. The independent auditors' reports on the annual reports
and financial statements for 2013 and 2012 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 2012 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2013 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 2012.
2. Segment information
Following a restructure of the business, the Group revised its
internal reporting structure from a regional management structure
to a product-based structure as presented below.
With regard to the Balance sheet, those elements of the Balance
sheet where segmental reporting is prepared have been disclosed.
Those elements are trade receivables and provisions, amounts
recoverable on contracts and deferred revenue.
At the Balance sheet date 7% of total trade receivables were
concentrated with one of the Group's customers (2012: 7%). The
balance was spread over 172 (2012: 162) customers, none of whom
comprised more than 5% (2012: 5%) of the total.
Consulting Technology Unallocated Total
Year ended 31 December GBP000 GBP000 GBP000 GBP000
2013
Revenue from external
customers 47,229 17,851 - 65,080
------------------------------ --------- ------------ ------------ ------------- ---------
Operating profit 1,251 6,138 - 7,389
Finance revenue - - 208 208
Finance cost - - (476) (476)
------------------------------ --------- ------------ ------------ ------------- ---------
Profit/(loss) before tax 1,251 6,138 (268) 7,121
Tax expense - - (1,584) (1,584)
------------------------------
Profit/(loss) for the
year 1,251 6,138 (1,852) 5,537
------------------------------ --------- ------------ ------------ ------------- ---------
Consulting Technology Unallocated Total
As at 31 December 2013 GBP000 GBP000 GBP000 GBP000
Trade receivables 5,863 3,918 (48) 9,733
Provisions (647) (249) (13) (909)
------------------------- ------------ ------------ ------------- --------
Net carrying amount 5,216 3,669 (61) 8,824
------------------------- ------------ ------------ ------------- --------
Amounts recoverable
on contracts 5,928 6,306 - 12,234
------------------------- ------------ ------------ ------------- --------
Deferred revenue 2,305 3,238 - 5,543
------------------------- ------------ ------------ ------------- --------
Consulting Technology Unallocated Total
Year ended 31 December GBP000 GBP000 GBP000 GBP000
2012
Revenue from external
customers 44,320 18,820 - 63,140
------------------------------ --------- ------------ ------------ ------------- ---------
Operating (loss)/ profit (3,724) 7,584 - 3,860
Finance revenue - - 1 1
Finance cost - - (198) (198)
------------------------------ --------- ------------ ------------ ------------- ---------
(Loss)/profit before tax (3,724) 7,584 (197) 3,663
Tax expense - - (5,309) (5,309)
------------------------------
(Loss)/profit for the
year (3,724) 7,584 (5,506) (1,646)
------------------------------ --------- ------------ ------------ ------------- ---------
Consulting Technology Unallocated Total
As at 31 December 2012 GBP000 GBP000 GBP000 GBP000
Trade receivables 5,532 3,418 73 9,023
Provisions (1,329) (809) - (2,138)
------------------------------------------ ------------ ------------ ------------- ---------
Net carrying amount 4,203 2,609 73 6,885
------------------------------------------ ------------ ------------ ------------- ---------
Amounts recoverable
on contracts 4,046 6,496 - 10,542
------------------------------------------ ------------ ------------ ------------- ---------
Deferred revenue 7,001 3,317 - 10,318
------------------------------------------ ------------ ------------ ------------- ---------
Revenue from Non-current
external customers assets
2013 2012 2013 2012
GBP000 GBP000 GBP000 GBP000
------------------------------------ ----------- ---------- -------- --------
United Kingdom 1,613 1,561 16,732 18,086
Ecuador 18,858 5,833 - -
United States of America 7,084 7,227 6,232 7,780
Japan 5,909 2,415 6 11
Canada 4,597 3,977 11 11
Mexico 2,722 13,147 - -
China 1,680 3,320 9 17
Australia 1,196 4,379 - -
Other 21,421 21,281 72 146
------------------------------------ ----------- ---------- -------- --------
65,080 63,140 23,062 26,051
------------------------------------ ----------- ---------- -------- --------
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.
The following customers account for more than 10% of the Group's
revenues:
Revenue Percentage
2013 2012 2013 2012
GBP000 GBP000 % %
------------------------------------ -------- -------- ------- ------
Customer 1 18,858 5,833 29% 9%
Customer 2 2,722 13,147 4% 21%
------------------------------------ -------- -------- ------- ------
The revenue generated from the major customers is derived from
both Consulting and Technology.
3. Group operating profit
This is stated after charging/(crediting) the 2013 2012
following:
GBP000 GBP000
------------------------------------------------ -------- --------
Depreciation and amortisation:
Depreciation 533 563
Amortisation of intangible assets
- intellectual property rights 1,042 750
- development costs carried forward 1,078 788
- contract based intangibles 1,379 438
- other intangibles 382 147
Total 4,414 2,686
Included in other operating charges:
Operating lease rentals
- minimum lease payments 2,597 2,511
- sublease rentals received (151) (172)
Arbitration costs (recoverable)/payable (521) 150
Share-based payments 530 300
Net foreign exchange differences 77 430
------------------------------------------------ -------- --------
a) Research and development costs
During 2013 the Group incurred research and development costs of
GBP2.7m (2012: GBP2.4m). Of this amount, GBP1.3m (2012: GBP2.1m)
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) Adjusted profit before tax
2013 2012
GBP000 GBP000
Operating profit 7,389 3,860
Amortisation of acquisition intangibles 1,424 897
Development costs carried forward (1,334) (2,055)
Amortisation of development costs carried forward 1,078 788
Exceptional amounts recoverable on contracts 136 -
provision
Arbitration costs (recoverable)/payable (521) 150
Acquisition costs - 316
Redundancy and reorganisation (income)/costs (28) 1,730
Share-based payments 530 300
----------------------------------------------------- --------- ---------
Adjusted operating profit 8,674 5,986
Finance revenue 208 1
Finance cost (476) (198)
----------------------------------------------------- --------- ---------
Adjusted profit before tax 8,406 5,789
Tax expense (2,876) (6,656)
----------------------------------------------------- --------- ---------
Adjusted profit/(loss) after tax 5,530 (867)
----------------------------------------------------- --------- ---------
4. Tax expense
Tax on profit charged in the income statement
2013 2012
GBP000 GBP000
Current tax expense
Income tax of overseas operations 2,485 4,386
Withholding taxes payable 975 735
Double tax relief (603) (412)
Adjustment for over provision in prior periods (778) (748)
---------------------------------------------------- -------- --------
2,079 3,961
---------------------------------------------------- -------- --------
Deferred tax expense
Origination and reversal of temporary differences (265) 398
Unrelieved tax losses carried forward against
profits of future years 330 1,092
Asset amortisation temporary differences (560) (142)
---------------------------------------------------- -------- --------
(495) 1,348
Total tax expense 1,584 5,309
---------------------------------------------------- -------- --------
5. Earnings/(loss) per share
Basic earnings/(loss) per share are calculated by dividing after
tax net profit/(loss) for the year attributable to Ordinary
shareholders of the parent company by the weighted average number
of Ordinary shares in issue during the year.
2013 2012
GBP000 GBP000
-------------------------------------------------- -------- ---------
Numerator - earnings
Earnings/(loss) for the purpose of basic EPS 5,537 (1,646)
Effect of dilutive potential Ordinary shares - -
-------------------------------------------------- -------- ---------
Earnings/(loss) for the purpose of diluted EPS 5,537 (1,646)
-------------------------------------------------- -------- ---------
Number Number
000s 000s
-------------------------------------------------- -------- ---------
Denominator - number of shares
Weighted average number of Ordinary shares used
in basic EPS 58,442 56,380
-------------------------------------------------- -------- ---------
Number of shares used for basic and adjusted
earnings per share 58,442 56,380
Effect of dilutive potential Ordinary shares 1,532 197
-------------------------------------------------- -------- ---------
Weighted average number of Ordinary shares for
the purposes of diluted EPS 59,974 56,577
-------------------------------------------------- -------- ---------
Pence Pence
-------------------------------------------------- -------- ---------
Basic earnings/(loss) per share 9.5p (2.9)p
Diluted earnings/(loss) per share 9.2p (2.9)p
Basic adjusted earnings/(loss) per share 9.5p (1.5)p
Diluted adjusted earnings/(loss) per share 9.2p (1.5)p
-------------------------------------------------- -------- ---------
The earnings/(loss) per share based upon the basic and diluted
EPS are 9.5p and 9.2p (2012: (2.9)p and (2.9)p).
Basic adjusted earnings/(loss) per share are based upon an after
tax profit/(loss) as shown in note 3b of GBP5.53m (2012:
GBP(0.87)m) and on 58,442,000 (2012: 56,380,000) Ordinary shares,
being the weighted average number of Ordinary shares in issue
during the period after excluding the shares owned by the employee
trusts.
The dilution referred to above is shown below:
2013 2012
Number Number
000s 000s
Total share options outstanding 3,066 2,182
Share options excluded (see below) (1,534) (1,871)
---------------------------------------- --------- ---------
Potentially exercisable share options 1,532 311
Fair value shares - (114)
---------------------------------------- --------- ---------
Dilution 1,532 197
---------------------------------------- --------- ---------
Share options excluded are those where the exercise price is
greater than the share price at 31 December 2013, those with
performance conditions that have not yet been met and those to be
settled by the employee trusts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JIMLTMBATBPI
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