com:20090128:Rnsb3281M
                                                                                                                       .
RNS Number : 3281M  
  
Kentz Corporation Ltd  
  
28 January 2009  
  
Kentz Corporation Limited  
  
Pre close trading statement  
  
London, 28th January 2009: Kentz Corporation Limited ("Kentz" the "Company"), 
the holding company of the Kentz engineering and construction group ("the 
Group"), releases the following trading statement ahead of its full year results 
for 2008, expected to be announced on March 30th 2009.  
  
Trading update  
  
Kentz is pleased to report a very solid performance in 2008 and expects to be 
marginally ahead of analysts' full year revenue and profit expectations. Backlog 
has increased to US$1,002.9m at the end of December 2008, up from US$596.4m at 
the end of December 2007.   
  
We have good visibility for our future contracts, and anticipate that US$520.2m 
of the backlog will fall into 2009 and US$482.7m into 2010 and beyond. In 
addition we have received letters of intent, which have not yet been converted 
to backlog, along with new orders received in 2009 from our clients together 
totalling US$224.0m.   
  
During 2008 our total order intake to backlog was US$1,048.9m. The second half 
of 2008 was highly successful, with new orders and natural growth from existing 
projects increasing by 43% (H1 US$430.9m and H2 $618.0m) over the first half of 
2008. An important part of Kentz's success has been its ability not just to win 
new business, but to achieve growth from its existing contracts. In excess of 
US$200.0m of new orders were generated from current contracts during 2008, most 
of which converts to backlog for 2009. The EBIT and PBT margin expectations for 
2009 from this backlog are expected to be generally inline with the margins we 
delivered in both 2007 and 2008.  
  
The Group's cash position remains strong and provides a sound financial base 
from which to support our growth plans. Net cash at the end of December 2008 was 
approximately US$150.0m, down from US$195.5m in June 2008 and up from US$123.7m 
at the end of December 2007. The reduction from the June 2008 position is due to 
a fall of $24.0m in the level of client advances from $61.0m at mid year to 
$37.0m at 2008 year end, combined with planned capital expenditure of 
approximately US$13.0m, which was financed from Kentz's cash reserves mainly 
related to requirements for the Medupi project. We also saw an increase in the 
working capital requirements associated with the mobilisation of a number of new 
projects, including the natural growth element of the increase in our backlog, 
which is very welcome but comes without advance payments.  
  
Operational activity  
  
The Kentz portfolio of projects and competencies across upstream oil and gas, 
downstream petrochemical, metals and mining, power and infrastructure provides 
the Group with continuous access to an expanded diversity of sectors.   
  
Kentz has a well established base of blue-chip clients, consisting of 
international oil, national oil and natural resource companies, along with 
leading engineering and project management companies. The current volatile 
global economic conditions have had some impact on our industry, but to date our 
clients have experienced very few cancellations in financing upcoming 
developments in the areas in which Kentz operates. In locations where, for 
example, hydrocarbon extraction costs are high, many clients are taking a 
strategic long term view for future developments in order to grow scarce 
reserves.   
  
Qatar  
  
Kentz's continued involvement on the prestigious Shell Pearl GTL project 
includes a number of specialist EPC and construction service packages in excess 
of US$320.0m. Our focus has now turned to delivering the construction of 
utilities packages during 2009 and 2010 which will enable the commencement of 
critically important process utilities commissioning, a precursor to plant-wide 
systems completion. In addition, Kentz has a general services contract to 
support project completion activities. In 2009 we will have in excess of 2,000 
specialist personnel working on the project.  
  
Engineering and procurement has commenced on the Sidra project, where Kentz is 
carrying out a US$208.0m contract for the design, supply and delivery of the 
main electrical systems on the Qatar Foundation and Qatar Petroleum supported 
Sidra Medical and Research Centre.  
  
Saudi Arabia  
  
Our participation in the Aramco Khurais project reached a peak at the end of 
2008 as we continue to support the completion of the plant-wide electrical, 
controls and automation systems to prepare for start-up. This gas processing 
plant and water injection facility will produce 1.2 mbpd of high-quality Arabian 
light crude for Saudi Arabia's export facility. The Khurais program will also 
increase the capacity of the Qurayyah seawater injection system by 4.5 million 
bpd of treated water for injection at Khurais and South Ghawar fields.   
  
We remain focused on the development of important infrastructure with the Royal 
Commission for Jubail and Yanbu. Our work involves the provision of engineering, 
consultancy, procurement and on-site construction support services for the 
development of approximately 2,000 hectares of land to the West of Jubail 2. 
When completed, Jubail Industrial City will be the largest of its kind in the 
world. Future scopes of work under discussion with the Royal Commission include 
security systems for the complete industrial area and the development of a 
railway system from the new industrial area to the Port. Furthermore, we have 
made additional proposals to the Royal Commission for 844,700 man-hours of 
engineering and consultancy services over a period of five years for housing, 
hospital, university and training centres.  
  
Southern Africa  
  
Kentz's work on the Medupi project, valued in excess of US$250.0m, is 
progressing well. Once completed it will be the biggest dry-cooled power station 
in the world. Kentz accomplished an important milestone during 2008 when site 
establishment was completed on time, including the mobilisation of heavy 
construction machinery and erection of steelwork fabrication facilities on-site. 
Offsite, both structural steelwork and ducting workshops are progressing well 
with completion at about 15% and 12% respectively for the first of six units.    
  
In Madagascar Kentz has played a leading role in supporting the recent start up 
and production on the Rio Tinto QMM ilmenite mineral sands plant in its role as 
structural, mechanical, electrical and instrumentation contractor. Kentz's 
contract for its scope is valued at circa US$70m. The plant will produce a 90% 
(TiO2) chloride slag, which is suitable for global titanium feedstock markets 
for use in the manufacturing of pigments for paint and the plastics industries. 
The floating dredge and wet plant, successfully launched in November, and the 
dry mill, launched in December, are both producing concentrate.   
  
Russia  
  
Kentz's participation continues, along with our partner SakhalinMorNetfeMontazh, 
on the ExxonNeftegas Odoptu second phase development. The project, which is 
being developed under original licence agreements, has provided continued 
activity for Kentz in Sakhalin to support the start up of the new well site. 
Infrastructure facilities for the US$40.0m contract to provide site development, 
piling and construction services and the relocation of the Yasreb drill rig at 
the Odoptu well site are nearing completion. Kentz has minor remaining work 
which includes the completion of drilling rig utility piping systems and 
services for the modular based interim production facility. Several of the 
Kentz's management resources have been deployed to the Sakhalin 2 project to 
further support commissioning and start up activities.  
  
Safety  
  
The safety and welfare of our workforce remains Kentz's key priority. During 
2008 we delivered 35,105,603 man-hours of work on projects in over 20 countries 
worldwide, with an LTI (lost time incident) ratio of 0.01; a total of 2 LTI's 
(LTI is calculated on the basis of one accident for every 200,000 man-hours 
worked). This has been achieved through a continuous focus on behavioural based 
safety, and we tirelessly promote safety leadership across all management and 
supervision in Kentz. Our workforce has grown from a 2007 average of 8,100 
employees to a full year 2008 average of approximately 10,800 employees 
worldwide.   
  
Outlook   
  
World demand for oil is set to contract this year and the continued weakening of 
the global economy may further decrease consumption.  However, the long term 
view on demand for oil and gas remains robust and, from what we are seeing, the 
capex plans of many of our core clients remain intact.  We also see potential 
for growth in replenishment and modernisation projects and downstream oil and 
gas developments due to the recent fall in the cost of raw materials.   
  
In focusing on new target projects we maintain a constant dialogue with our 
clients to understand the challenges they face in the current economic climate. 
We are continuously looking at innovative ways to increase our value added 
service to reduce capital costs and assist our clients in getting projects 
successfully off the ground. The outlook for 2009 and 2010 remains positive and 
the Board is confident for Kentz business prospects. At the 2008 year end the 
Kentz pipeline for new work prospects was in excess of US$2 billion.  
  
We remain receptive to and will carefully consider any strategic investment 
opportunities that may arise in our sector whether they are in the form of joint 
venture, investment or acquisition - despite the current market environment. We 
will continue to adopt a prudent approach to evaluating any such strategic 
prospects, always bearing in mind that any investment made must be value 
enhancing for our shareholders. We recently announced the formation of Kentz 
Global Oil and Gas Process Systems Ltd to deliver turnkey onshore early and 
interim production systems together with our partner GPS Inc. This new 
partnership provides an extremely cost effective entry into the provision of 
turnkey oil and gas process plants in the upstream market. The association with 
GPS also provides Kentz access to a number of new clients, specifically small to 
medium sized exploration and production companies.  
  
Commenting on today's statement Hugh O'Donnell, Chief Executive Officer of Kentz 
Group, said:   
  
"Despite the volatility in world markets we continue to see strong demand for 
Kentz services in the sectors and regions in which we operate.  We maintain a 
constant dialogue with our clients to understand the challenges they face and 
while there will inevitably be pressure to achieve the very best pricing for 
contracts in the year ahead, our pipeline of work continues to grow.   
  
"We were awarded some great projects in 2008 working with our broad base of 
blue-chip clients, which positions the Group well for 2009 and 2010. Given the 
diversity of sectors in which we are involved and our wide range of operations 
in over 20 countries, the Board of Kentz remains optimistic for the Company's 
future success."  
  
For more information about Kentz please refer to our website www.kentz.com or 
contact   
  
Evolution Securities Limited (Nomad)    
  
Tel: +44 (0)20 7071 4300Rob CollinsTim Redfern  
  
Powerscourt (PR advisors)     
  
Tel: +44 (0)20 7250 1446Elizabeth RousRob Greening  
  
About Kentz  
  
Kentz listed on AIM on 5 February 2008, raising a total of £66.7m (US$ 131.8m) 
before costs for the Company and its selling shareholders. The Kentz Group 
provides a wide range of engineering and construction services, principally in 
the oil services sector. Our core clients include international oil companies, 
national oil companies and leading engineering and project management companies 
with projects in over 20 countries. Kentz business lines are divided into three 
areas, providing specialist engineering, procurement and construction (EPC) 
services, construction and technical support services.  
  
Kentz currently have in excess of 10,000 employees' worldwide delivering 
projects for our core clients in the Middle East, Southern Africa, Australia, 
Far East Russia, the Caribbean, South East Asia, USA, Canada and Europe. For 
operational purposes the Group divides its operational management centres into 
four regions:  
  
*  Middle East;  
  
*  Africa;  
  
*  Arctic Region and New Areas (containing FSU/Russia, the Caspian region and 
Canada); and  
  
*     Australasia, Europe and the Caribbean.  
  
 
This information is provided by RNS  
  
The company news service from the London Stock Exchange  
  
  END  
  
TSTUBRVRKSRAUAR