Client News > Release

22-03-2010

Kentz Corporation Limited Full Year Financial Results 2009

London, 22nd March 2010: Kentz Corporation Limited (the “Company”), the holding company of the Kentz engineering and construction Group, today announces its unaudited results for year ending 31st December 2009.

Financial Highlights

Revenue in 2009 increased by 9.5% to US$704.7m (2008: US$643.4m)* 

Profit before tax in 2009 increased by 9.2% to US$44.5m (2008: US$40.7m)** 

Profit before tax margin was maintained at 6.3%, in line with 2008** 

Gross cash balance*** at the end of 2009 increased by 16.7% to US$180.3m (2008: US$154.5m)  

EPS (basic) 26.46 US$ cents up 5.5% (2008: 25.09** US$ cents). EPS (diluted) 26.35 US$ cents up 5.0% (2008: 25.09** US$ cents) 

Backlog at the end of 2009 increased by 49.2% to US$1,497.4m (2008: US$1,003.8m) 

Proposed final dividend of 4.0 US$ cents per share 

* Excluding JV operations

**Before flotation costs of US$4.695m in 2008

***Gross cash represents total cash held at bank and in hand at year end

Current Trading and Prospects

· Backlog has increased further as at the end of January 2010 to US$1,564.8m

· Letters of intent and orders for new projects received since the end of January in excess of US$43m. These are expected to be converted to backlog within two months

· Strong visibility of current projects with approximately US$695m of backlog to be executed in 2010 and the remaining US$870m in the following years

· Awarded significant Specialist Engineering, Procurement and Construction (“EPC”) contracts on the Gorgon Liquefied National Gas (LNG) and Pluto LNG projects, valued in excess of US$358m

· Awarded Specialist EPC contract at the 30,000barrels per day bpd oil and gas central processing facility in Yemen, valued in excess of US$146m

· Signed a five year Global Framework Continuing Engineering Service Agreement with ExxonMobil Global Services Company, for the provision of engineering, design and technical support services to ExxonMobil projects around the world

· Awarded a contract for the Moatize Coal Project in Mozambique worth approximately US$69m 

· Future prospects for Kentz exceed US$2.95bn. Decisions on the award of these prospects expected within the next six months ……………………….

Current Trading and Outlook

Despite the volatility in world markets during 2008 and 2009, Kentz has reported a solid performance and remains well positioned to continue to deliver strong growth in the coming year.  Sales for 2009 have increased by 9.5% and we have achieved another record backlog, up 49.2% year-on-year, providing a strong basis to continue to perform.  The re-organisation of the company into three GBUs has also laid the foundation for continued growth, with each business unit increasing in geographic reach and sales through new awards, during the period.

At the end of January 2010 the backlog stood at US$1,564.8m, the largest in the Company’s history, and the pipeline of target prospects was in excess of US$2.95bn. Our strategy of focusing on oil and gas, petrochemicals and energy projects in developing regions has been highly successful, and we continue to build on the strong foundations in our core markets.  In addition, we have seen a significant increase in our metals and mining business in Southern Africa and Australia, which we expect to continue in the long term.

Kentz is encouraged by the fact that a large number of International Oil Companies (“IOCs”) and National Oil Companies (“NOCs”) have maintained their exploration and production capital spending during 2009. Whilst capital expenditure plans for these companies vary considerably for 2010, we are seeing positive capital investment sentiments for upstream exploration and production projects from important Kentz clients, such as Shell, ExxonMobil, Chevron, BP, Abu Dhabi National Oil Company and Saudi Aramco.

Oil prices have remained reasonably stable over the past six months, at between US$70 to US$80 per barrel. This provided the catalyst for some delayed projects to gain momentum and subsequently move into project execution. We remain comparatively insulated against the fluctuation in oil prices as our key regional market for oil production services, the Middle East, has production costs that are amongst the lowest in the world. 

The development of the Pacific Rim as a major LNG liquefaction centre gained strength during 2009. Kentz has been awarded significant LNG projects in this area and we expect investment to continue.  Kentz’s strength is in its ability to provide engineering, procurement and construction services to remote and logistically challenging projects, and is therefore well placed to service this demand. Our GBUs are enabling us to fully service our clients’ needs in these areas, as seen by the recent award of contracts for approximately US$107m on the Pluto LNG project and US$251m on the Gorgon LNG project.  

Power and infrastructure projects also gained momentum in 2009 and our work in this sector, in Southern Africa and the Middle East, has been particularly successful. We expect to increase revenues in this area during 2010 and beyond.

With the award of new Specialist EPC contracts, we have continued to expand our services in brown field projects, plant upgrades and expansion developments. The award of the Storex Control System Upgrade Project consists of the replacement of existing process control systems and associated electrical and instrumentation devices for Abu Dhabi Gas Liquefaction Company Ltd (“ADGAS”), an Abu Dhabi National Oil Company ("ADNOC") Group company, on Das Island, United Arab Emirates.  
 
Kentz’s maintenance and shutdown services group has been successful across all our regional operations. A good example of this is the recent award for the shutdown services and operations support contract with ExxonNeftegas Ltd, within the Sakhalin 1 development project. This contract includes all personnel, permits, equipment, transportation and front end execution planning, as well as the management of contractor and subcontractor resources for the shutdown during 2010.  A number of our clients have also indicated that they are assessing opportunities for “de-bottlenecking” plants as well as increasing the product quality, productivity and capacity on existing installations, which will create further opportunities for Kentz.

The central oil processing facilities in Yemen is representative of Kentz’s strategy for providing complete oil production facilities, both early and permanent, in marginal field developments. This Specialist EPC contract for the 30,000bpd facility will hopefully be the first of many similar type projects for Kentz on a global basis.

Chief Executive Officer’s (Hugh O’Donnell) Report

It has been another successful year for Kentz, with a strong performance across all business units and some significant new contract awards. Despite the ongoing challenges in the global economy, revenue increased 9.5% to US$704.7m, profit before tax increased 9.2% to US$44.5m and our profit before tax margin was maintained at 6.3%, in line with 2008.

Backlog has increased further to US$1,564.8m at the end of January 2010, up from US$1,003.8m at the end of December 2008 and US$1,100.9m at 30 June 2009. During 2009 the total order intake to backlog was US$1,039.4m, with a strong performance in the second half as new orders and natural growth from existing projects increased by 44.1% (H1 US$425.8m and H2 US$613.6m) over the first half of 2009. The Group’s cash position remains very strong. Gross Cash at the end of 2009 was US$180.3m, up 16.7% from US$154.5m at the end of 2008. Net cash* at the end of December 2009 was US$168.3m, up from US$152.5m at December 2008. Approximately US$134.1m of this is Kentz’s own cash, with the majority of the balance being customer prepayments on contracts.

The total dividend payment for 2009 will be 6.0 US$ cents per share. The final dividend payment of 4.0 US$ cents per share represents two-thirds of the total payment for 2009 and is scheduled to be paid in June 2010.

Kentz’s pipeline of prospects is currently in excess of US$2.95bn (Dec 2008: US$2.15bn) and continues to grow. In assessing prospects, in which bids have a period of up to six months before being awarded, Kentz focuses on projects that have a high probability of proceeding and where it has the greatest chance of success. 

* Net cash represents gross cash less bank overdraft, bank borrowings and finance lease obligations.

Kentz is currently involved in some of the largest and most prestigious projects in the world: the Gorgon LNG project in Australia; the Shell Pearl GTL in Qatar; the development of the Jubail II infrastructure in Saudi Arabia; the Sakhalin 1 and 2 developments in Far East Russia; and the 4800MW Eskom Medupi Power Station in South Africa.

Projects in remote global locations are those where Kentz’s experience can add real value to clients. The reorganisation of the Group into three Global Business Units, completed during the second half of 2009, has allowed us to leverage our well-established regional hubs to support work in remote locations, with the potential for greater profitability.

-Ends-

For more information about Kentz please refer to our website www.kentz.com