Thursday, 3 September 2009

KBC benefits from success in software

(By Philip Carnelley 3 Sep 09 09:20) KBC Advanced Technologies, provider of engineering services to the energy industry – particularly oil refineries – has announced its half year results to June 30. The company commented that while conditions in the energy industry have been “challenging” (like everywhere else), there are “clear signs that conditions are improving” with a £18m of sales in June and July, and an order backlog of £39m. In light of the conditions, the company did quite well with revenues up 11%, to £27m, though PBT halved to £1.47m, due to lower consultant utilisation. Headcount has been reduced 7% during the half.

What’s of particular interest to us is that software revenues shot up to almost three times last year’s figure - refinery simulation software is hitting the spot. At £8.1m, it accounted for 30% of revenues. This is good news for KBC on several fronts: software typically commands greater margins than consulting; new software sales tend to drive project work; and of course new licence sales pull a renewable revenue stream behind them. KBC now has a £4m of annualised revenue in maintenance and support contracts, a figure which should grow strongly in the wake of the licence sales. Like many successful UK software producers, KBC’s software is specialist, vertical-market specific. A new version is due for launch later in 2009 and so it should be able to keep up the software momentum.

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