G
iven the trauma it went through last year which included a flip into the red, and cash reserves running low, resulting in the departure of the CEO and a major restructuring operation, energy software and services supplier KBC Technology Group was not in too bad a shape as of H113 (to June 30 2013).
The bottom line was a real issue last year (see here) but this has improved. Having plummeted nearly 70% in H112 to £725k (3% operating margin) operating profit came in at £3.2m for H113 (10% operating margin). PBT was higher at £2.9 vs. £0.7m. However, net cash is still an issue and was down from £13.3m to £5.1m. The company cites a change in advance contract payments from one its Latin America customers for much of the cash drain. Latin America bore much of the responsibility for the crash last year yet this is one of the regions KBC is looking to for growth, along with the Middle East, the former Soviet Union and Asia. The problem is these are all large markets requiring significant investment, which will be a struggle for a company of KBC’s size.
Dogged determination, during a time of ongoing restructuring, is driving the business so revenue was up a more than creditable 15% to £31.7m. Technology revenue, which includes software sales, was up 77% to £9.6m (30% of group revenue vs. 20%), reflecting the strategic shift to increase software revenue. Consulting revenue flat at £22.1m. KBC reflects the broader market trend whereby services providers are looking to software IP to expand revenue and margins. – see ESAS Market Trends and Forecast 2013, Part One.
