News blog
KBC Advanced Technologies
- BY: Andrew Hore |
- POSTED: 03/09/2009 |
Oil refinery consultancy and software provider KBC Advanced Technologies had a tough first half but the order book has improved and the second half will be better.
Although total revenues improved from £24.4m to £27.1m in the six months to June 2009 there was a change in mix. Consulting revenues fell and lower consultant utilisation levels hit margins. Software sales more than made up for that revenue and profit shortfall. However, there was a negative swing of £1m on exchange rate costs. Excluding £794,000 of redundancy costs, underlying profits fell from £3.1m to £2.44m. The exchange rate costs are not excluded from this figure because management says they will be an ongoing part of the business.
Net cash was £1.8m at the end of June 2009 – which is always a weak period for cash. The year end net cash figure should be back around the £5.7m reported at the end of 2008. The software division has £4m of annualised maintenance and support revenues.
Demand for capital investment consulting (CapX) increased in Asia, Africa and South America, where new capacity is being planned, helping to offset the decline in North America and Europe. Spending on operational efficiencies (OpX) was delayed so this work did not replace the shortfall on CapX revenues.
Consultant utilisation rates are improving from below 70% and more than £18m of orders were taken in June and July. The order book is worth around £39m with the majority coming through in the next 12 months. Cost cutting implemented in the second quarter will cut £1.3m off second half costs – an annualised saving of £2.6m.
Longer-term, KBC feels that the refinery sector will continue to restructure and consolidate, which will generate increasing strategic work for the company. An environmental business has been launched offering consultancy on emissions and remediation of old sites.
KBC has indicated its optimism by increasing the interim dividend from 0.35p to 0.45p a share. The final dividend was 1p a share last year and some of the rise reflects a rebalancing between the two dividends. The prospective yield is more than 3% even if the final dividend is left unchanged.
In spite of the positive outlook painted by the company, shares in KBC fell 3p to 43p each, which values the company at £24.6m. Full year profits of £5.1m are forecast by Arbuthnot for 2009, which puts the shares on just over seven times prospective earnings.
Although the profit forecast equates to a fall of more than 10% compared to last year that is mainly down to the redundancy costs – which Arbuthnot excludes from its forecast. If the figure is achieved it represents an improved second half.
© 2024 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
- Browse by issue
- All issues
- Popular tags
- All tags
- AIM Micro feeds
Keep up to date with articles published at AIMMicro.com. Subscribe to AIM Micro RSS Feeds
|