AIM-quoted KBC Advanced Technologies (KBC:AIM) – a provider of software and consultancy services to the energy sector – gains 1.8% to 85.5p on a strong set of interims. These reveal a record order book of £84.7 million, a 15% increase in sales to £31.7 million and pre-tax profits up 314% to £2.9 million.
The £50 million cap, which has separate Consulting and Technology divisions, has undergone a period of restructuring following a profit warning last September. A poor first half to 2012 – which saw pre-tax profits fall 68.2% year-on-year to £700,000 on higher operating and staff costs – led the group to warn of the impact on the overall performance for the year and to temporarily suspend its dividend.
In the interim it has managed to get things back on track and this is reflected in the year-to-date performance of the shares – up 46.2%.
Historically KBC, a running Shares Play of the Week, has been almost exclusively focused on the refining industry but last June's £9.5 million acquisition of software firm Infochem has created a more diversified model with increased exposure to the upstream oil and gas sector. This is reflected in a 77% year-on-year build to £9.6 million in first-half revenues from the Technology division – which now accounts for 30% of the group total.
In response to today's numbers house broker Cenkos reiterates its 'buy' recommendation and notes a comparison with quoted peers is supportive of the investment case. Based on its forecast 2014 earnings per share forecast of 7.8p, the shares trade on a price/earnings (PE) ratio of 10.9 which it compares with an average 2014 PE for sub-£100 million UK Software and Services firms of 14.9. The company is expected to resume dividend payments alongside its full year results – Cenkos is forecasting a payment of 1.6p.