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12 Jan 2011 07:00
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12 January 2011
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KBC Advanced Technologies plc
("KBC" or "the Group")
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Pre-close Trading Update
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The last quarter of 2010 was a strong one for KBC, as we expected, with the highest man-hour utilisation for the year and what has now become a regular seasonal trend of high software awards. As a result we are pleased to confirm that results for the year ended 31 December 2010 are expected to be in line with market expectations.
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Sales awards for the year were Β£68m, an increase of 22% on 2009, and the consequent workload backlog at the year end is expected to be around Β£58m. This is up 42% on the Β£41m at 31 December 2009 and 45% on the Β£40m at 30 June 2010. The Group's net cash position is expected to be around Β£4.5m at the year end up from the Β£1.7m held at 30 June 2010 as a result of strong cash generation in the second half of the year. The comparable figure at 31 December 2009 was Β£4m.
The largest single item contributing to the awards and backlog growth is the six site US$42m Profit Improvement Program awarded to us, subject to final contract, by Pemex RefinaciΓ³n in Mexico in October 2010. Contracts have been executed for the first two sites and the program is successfully underway, with the first payments received in December 2010. The next two sites will commence in April 2011 and contracts are expected to be executed shortly.
As noted above, software sales were strong in the last quarter of 2010, with further large licence sales to existing clients, Sinopec in China and Reliance Industries in India. We are pleased to report that for the first time since 2008 material operational improvement projects commenced in Europe, including an onsite operational improvement programme with Petroplus and an energy management programme with Total. Significant organisational improvement work continued elsewhere, which included a number of clients in the Middle East and BP in North America.
The EU sanctions relating to the refining industry in Iran that we referred to in our half-year results in September 2010 have been published. As a result, and as we anticipated, we can no longer commence new projects in Iran and we have therefore been winding up the existing contracted work during the second half of 2010. No new work is included in our plans for 2011. We believe it is unlikely that we will be able to collect all outstanding payments and that it would therefore be prudent to make a one-off provision in our 2010 accounts against receivables of up to Β£1m.
In the September 2010 results statement, we referred to allegations made by a software competitor concerning the infringement of its rights in certain software code. All of the allegations have been refuted absolutely but certain of them are now subject to a UK arbitration process that is expected to be concluded by the middle of this year. As is evident from the software sales made in the last quarter of 2010, this process is not having any adverse impact on our business, either externally or internally.
As we start 2011 our consulting resources are highly utilised in each of our three operating regions. The refining industry is still in a state of transition with markedly varying economic drivers in different parts of the world, the interaction of which is generating consulting opportunities. Other markets in which we operate, such as petrochemicals and gas processing, are buoyant and will also provide additional opportunities in 2011. The backlog as we start the year is the highest we have ever seen and provides greater visibility than in recent years. As a result we now expect that the improved trading we experienced in the last quarter will continue into the current year and deliver an operating performance in 2011 ahead of management's previous expectations.
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-Ends-
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Β KBC Advanced Technologies plc | |
George Bright, Chief Executive Nicholas Stone, Operations and Finance Director | 01932 236314 Β |
Β Β Β | |
Weber Shandwick Financial | |
Nick Oborne/Clare Thomas | 020 7067 0700 |
Cenkos Securities plc | |
Jon Fitzpatrick Beth McKiernan | 020 7397 8900 0131 220 6939 |
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About KBC:
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
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