REG-Kentz Corp Ltd Final Results - Part 2
Released: 31/03/2008
RNS Number:1106R
Kentz Corp Ltd
Part 2 : For preceding part double-click [nRNSe1106R]
Selling, General & Administrative Expenses (SG&A)
While SG&A expenses in 2007 increased by US$6.7m to US$39.7m in absolute terms
(2006: US$33m), in relative terms as a percentage of sales the number has fallen
to 7.3% (2006: 8.9%) as better efficiency has been achieved from the higher
level of activity in 2007.
Other operating income
Other operating income for the year of US$1.5m primarily relates to the recovery
of a doubtful debt previously provided for, which has now been written back.
Net finance income
Net finance income for the year was US$3.2m and relates mainly to positive
project cash flows and Group cash balances and as such is considered to be an
integral part of the operating performance of the Group.
Profit before tax
Profit before tax for 2007 is US$34.3m or 6.3% of sales. This represents an
increase of 36.9% on the 2006 figure (US$25.1m or 6.8% of sales). However, as
explained under gross profit (above) , a more representative figure to gauge the
underlying trend from prior periods is the average for 2005/6 (which was 4.8%).
Taxation
The tax charge for the year is US$8.0m which is an effective tax rate of 23.4%.
This compares with an average effective rate of 22.1% for the 2005/6 years. The
slightly higher percentage in 2007 reflects the fact that the group has expanded
its business into new regions which have higher average tax rates.
Net Profit for the year
Profit for the year from continuing operations was US$26.3m, up 22.6% on 2006.
Net profit represents 4.8% of revenue, compared to an average of 3.7% for 2005/
6.
Discontinued operation
The discontinued operation refers to a non-core Telecommunications business
which traded mainly in West Africa. Following an internal review the board
decided not to continue with this business and it sold its interest in the
business in June 2007 for a consideration of US$1.0m. This resulted in a gain on
disposal of US$0.8m.
Earnings per share (Basic)
Basic earnings per share for the year were 26.19 US cents, up 37.8% (2006 19.01
US cents). This calculation is based on 100,000,000 ordinary shares in issue in
each year.
Dividend
The group intends to adopt a progressive dividend policy, paying out
approximately 20% to 25% of profits after tax, paid on an interim (one third)
and final (two thirds) basis with the interim payout expected to take place
around September 2008, based on the interim results to June 2008. The final
payout is expected to take place around mid 2009 and will be based on the final
results to December 2008.
Summary of Group Balance Sheet Highlights
Working Capital
Working capital at year end was US$55.2m, up 29.8% on 2006 year end (US$42.5m).
Current assets at year end were US$253.7m, up 58.9%. This growth is mainly due
to increased cash (up by US$61.9m) and trade and other receivables (up by
US$23.1m) reflecting the growth in the business coupled with the strong trading
performance achieved.
Current liabilities at year-end were US$198.6m, up 69.4% on 2006. The rise was
mainly due to increased levels of trade and other payables, advance payments
received and accruals and deferred income, reflecting the growth achieved during
the year.
Equity
Shareholders' equity at year-end was US$62.3m, up 21.9% on 2006 (US$51.1m). The
growth is mainly due to an increase of US$11.2m in retained earnings and
reserves, after payment of dividends totalling US$12.7m.
Total Assets
Total Assets at the end of the year were US$273.6m, up 46.1% or US$86.3m on
2006. The increase was mainly due to higher cash balances and trade receivables
coupled with the purchase of some additional plant and equipment, less the
disposal of the discontinued operation.
Summary of Group Cash Flow Highlights
Cash flow from operations
Net cash flow from operating activities for the year was US$87.5m, up 68% or US
$35.4m on 2006 levels, reflecting strong cash generation throughout the business
coupled with an increased level of advance payments received.
Cash flow used in investing activities
Net cash used in investing activities was US$6.1m, up 5% on the 2006 year-end
level and primarily related to the purchase of plant and equipment.
Cash flow used in financing activities
Net cash used in financing activities for the year was US$14.9m, up 128% on
prior year and primarily related to the payment of dividends amounting to US
$12.7m and the repayment of US$3.2m of short term borrowings.
Net cash and equivalents.
Net cash and cash equivalents amounted to US$123.7m at year end, up US$66.4m or
116% on the 2006 figure of US$57.3m reflecting both a strong trading performance
and an improved cash flow across our operations generally.
Kentz Corporation plc
Unaudited consolidated income statements
Year ended 31 December
In thousands of USD Notes 2007 2006
Continuing Operations
-----------------------
Revenue 2 544,650 370,111
Cost of sales (476,490) (314,153)
-------- ---------
Gross profit 68,160 55,958
-------- ---------
Administration expenses (38,104) (31,631)
Distribution & selling costs (1,654) (1,351)
Other operating income 1,512 299
-------- ---------
Operating profit before finance costs 29,914 23,275
-------- ---------
Net finance income 3,234 367
Share of joint venture's profit 1,163 1,418
-------- ---------
Profit before tax 34,311 25,060
-------- ---------
Income tax expense (8,033) (3,618)
-------- ---------
Profit for the year 26,278 21,442
-------- ---------
Loss on discontinued operations (524) (2,402)
Gain on disposal of discontinued operations 761 -
-------- ---------
Profit for the year 26,515 19,040
======== =========
Attributable to:
Equity holders of the parent 26,186 19,012
Minority interest 329 28
-------- ---------
Profit for the year 26,515 19,040
======== =========
Basic earnings per share 3 26.19c 19.01c
Kentz Corporation plc
Unaudited Consolidated statement of total recognised income and expenses
Year ended 31 December
In thousands of USD 2007 2006
Profit for the financial year 26,515 19,040
Exchange translation differences
- on employee benefits (946) (1,053)
- on foreign currency net investments 536 (514)
- on discontinued operations (219) -
Actuarial (losses)/gains on
defined benefit plan (1,655) 2,231
======== =========
Total recognised income and expenses 24,231 19,704
for the year
======== =========
Attributable to:
Equity holders of the parent 23,902 19,676
Minority interest 329 28
======== =========
Total recognised income and expenses 24,231 19,704
for the year
======== =========
Kentz Corporation plc
Unaudited consolidated balance sheets
At 31 December
In thousands of USD 2007 2006
ASSETS
Non-current assets
Property, plant & equipment 12,565 7,358
Intangible assets 760 -
Other investments 3,929 3,594
Trade and other receivables 1,596 2,667
Deferred tax asset 1,045 626
--------- ---------
19,895 14,245
--------- ---------
Current assets
Inventories 18,194 9,400
Trade and other receivables 108,055 84,913
Amounts owed by related parties 3,436 3,257
Cash and cash equivalents 124,041 62,108
--------- ---------
253,726 159,678
Assets classified as held for sale - 13,372
--------- ---------
253,726 173,050
--------- ---------
Total assets 273,621 187,295
========= =========
EQUITY
Share capital 14 14
Share premium 7,796 7,796
Reserves 578 234
Retained earnings 53,930 43,072
--------- ---------
Total equity attributable to equity
holders of the parent 62,318 51,116
Minority interests 339 108
--------- ---------
Total equity 62,657 51,224
--------- ---------
LIABILITIES
Non-current liabilities
Interest bearing loans and borrowings 117 176
Employee benefit obligations 9,801 8,588
Amounts owed to related parties 92 92
Trade and other payables 2,327 1,048
Deferred tax liabilities 59 -
--------- ---------
12,396 9,904
--------- ---------
Current liabilities
Trade and other payables 196,058 110,393
Interest bearing loans and borrowings 1,121 4,569
Amounts owed to related parties 1,389 2,227
--------- ---------
198,568 117,189
Liabilities directly associated with
assets classified as held for sale - 8,978
--------- ---------
198,568 126,167
--------- ---------
Total liabilities 210,964 136,071
--------- ---------
Total equity and liabilities 273,621 187,295
========= =========
Kentz Corporation plc
Unaudited consolidated cash flow statements
Year ended 31 December
In thousands of USD 2007 2006
Cash flows from operating activities
Profit before taxation 34,306 24,556
Adjustments for:
Depreciation 4,185 3,192
Net finance (income)/cost (2,941) 664
Loss/(gain) on sale of Property, plant & equipment 20 (33)
Share of profit from joint ventures (1,163) (1,418)
Current service cost 644 778
(Increase)/decrease in trade and other (17,882) 2,349
receivables
(Increase)/decrease in inventories (5,372) 7,506
Increase in trade and other 80,680 23,900
payables
------- ----------
Cash generated from operations 92,477 61,494
------- ----------
Interest paid (515) (1,452)
Income taxes paid (4,464) (7,908)
------- ----------
Net cash from operating activities 87,498 52,134
------- ----------
Cash flows from investing activities
Net return from/(investment in) joint venture 910 (1,408)
Acquisition of minority interest (246) -
Disposal of subsidiary (net of cash) 856 -
Purchase of property, plant and equipment (9,235) (4,627)
Proceeds from sale of equipment 224 396
Interest received 3,212 859
Pension contribution (1,848) (1,063)
------- ----------
Net cash used in investing activities (6,127) (5,843)
------- ----------
Cash flows from financing activities
Payment of finance lease liabilities (126) (100)
Proceeds of long-term borrowings 171 125
Payment of short-term borrowings (3,247) (3,187)
Proceeds from short-term borrowings 1,046 -
Dividends paid (12,700) (3,350)
------- ----------
Net cash used in financing activities (14,856) (6,512)
------- ----------
Net increase in cash and cash equivalents 66,515 39,779
Cash and cash equivalents at beginning of period 57,282 17,886
Exchange difference (146) (383)
------- ----------
Cash and cash equivalents at end of period 123,651 57,282
======= =========
Kentz Corporation plc
Notes to the preliminary statement for the year ended 31 December 2007
1. Basis of Preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and its interpretations
adopted by the International Accounting Standards Board (IASB) and Jersey
Company law.
The Group's date of transition to IFRS is 1 January 2004, the comparative
figures have been restated to reflect IFRS, except where otherwise required or
permitted by IFRS 1, First Time Adoption of International Financial Reporting
Standards.
The currency used in these accounts is the US Dollar.
2. Segment reporting
Segment information is presented in respect of the group's geographical and
business segments. The primary format, geographical segments, is based on the
group's management and internal reporting structure.
(i) Geographical segments
The group manages its business on a worldwide basis by organising its activities
into four distinct regions. The geographical areas are the Middle East, Africa,
Australasia, Europe and Caribbean; and the Arctic region and new areas.
In presenting the information on the basis of geographical segments, segment
revenue is based on the geographical location of assets.
(ii) Business segments
The group's activity comprises of the following main business segments:
- Engineering, procurement, and construction (EPC)
- Construction and
- Technical support services
Primary segment information by location of assets
Geographical segments
Year ended 31 December
In thousands of USD 2007 2006
Revenue by location of assets
Middle East 379,568 246,470
Africa 94,902 63,392
Australasia, Europe and Caribbean 24,858 16,411
Arctic region and new areas 45,322 43,838
---------- ---------
Continuing operations 544,650 370,111
========== =========
Discontinued operations 9,618 28,561
---------- ---------
Total revenue 554,268 398,672
========== =========
Secondary segment information by business
Business segments
Year ended 31 December
In thousands of USD 2007 2006
Revenue by business
EPC 263,695 145,101
Construction 147,412 169,111
Technical Support Services 133,543 55,899
--------- ---------
Continuing operations 544,650 370,111
========= =========
3. Earnings per ordinary share
Year ended 31 December
2007 2006
Earnings per share (US cents) 26.19 19.01
========= ==========
In thousands of USD
Earnings after tax, minority
Interests and preference dividends 26,186 19,012
========= ==========
The number of shares used for the earnings
per share calculation is as follows:
No. '000 No. '000
Basic number of shares (No. '000) 100,000 100,000
========= ==========
The calculation is based on 100,000,000 ordinary shares of 1 pence each which
reflects the restructuring of the shares in January 2008 as part of the
preparation for admission to AIM. The actual number of shares in issue at 31
December 2007 was 1,000,000 shares of 1 pence each and, subsequent to the year
end, a bonus issue of 99,000,000 was made.
This information is provided by RNS
The company news service from the London Stock Exchange
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