19/03/2008
KBC Advanced Technologies, the energy industry consultant backed here at 44.5p last year, illustrated the classic operational gearing inherent in its business model with figures for calendar year 2007.
Chief executive George Bright reported a 66% rise in operating profits to £3.1m, from sales increased by a modest 8% to £38.1m. Earnings per share gushed north by 67% to 3.5p, from which investors were furnished with a 50% hike in the total dividend to 0.75p.
‘KBC’ is a consulting, software and process engineering business that helps refinery owners improve levels of efficiency, safety and profitability from its network of offices spanning the UK, the US, Singapore, Russia, China and Japan. Recent stellar growth rates reflect high activity levels in the oil refining industry, where the economic environment for clients remains good, with demand for energy and oil products increasing despite the inexorable rise in the crude oil price and refinery owners keen to maximise profits. Clients are also clamouring for the group’s training and safety-related services, with demand driven by the consequences of high-profile safety-related incidents such as the BP Texas City explosion, which have increased the safety measures required by refinery owners, particularly in North America.
With last year’s contract awards amounting to more than £40m, up by 14% over 2006 and the contract backlog continuing to rise, KBC is sure to remain busy indeed. For 2008, analysts are looking for significant pre-tax profits growth from £3m to £3.5m, giving earnings of 3.9p and placing KBC on a prospective multiple of only 10.6. That’s inexpensive given growth based on a busy secured workload. If you bought on our advice, top up your holding.
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| Market cap: | £23.6m |
| PE Forecast: | 10.6 |
| Share price: | 41.5p |
| AIM | £37.11m |
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| Other company articles: |
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