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Kalibrate Technologies PLC set to ride out oil price waves

Petrol retailing services group benefits from recurring software revenues
Kalibrate Technologies PLC set to ride out oil price waves
Kalibrate says diverse business should help it overcome any headwinds

Petrol forecourt technology provider Kalibrate Technologies PLC (LON:KLBT) reported lower half-year profits but said recurring revenues and its order book were increasing.

Underlying pre-tax earnings before interest and other items in the six months to December 31 fell to US$1.4mln from US$2.3mln a year ago.

It blamed delays in pricing deals that were due to be signed off in the first half, but moved into the second half and have now got the go-ahead.

A significant increase in revenue from market analysis and sales forecasting services drove a 2% rise in overall revenue to US$15.9mln.

Its order book at the end of December was US$42mln versus a total order book of US$41.4mln at the end of the 2014/2015 financial year.

Kalibrate acknowledged the sharp fall in oil prices, which it said could put integrated oil refiners and petrol retailers under capital pressures and lead to delays in capital spending.

But it said the diverse nature of its customers, ranging from oil companies to convenience stores and hyper-markets, had helped to protect the business from the full impact of the price drop.

It added that cheaper fuel was benefiting retailers and that its technology had long-term benefits and helped customers to manage periods of volatility in fuel prices.

Kalibrate said: "The group has not experienced any demonstrable effects on its business as a result of the lower crude prices; however, we continue to monitor the situation closely."


Outlook for the year...

Bob Stein said: "As we enter the second half, our deal pipeline is strong and the board remains confident that based upon our progress, the group is on track to meet expectations for the year as a whole."

Product evolution...

The group is benefiting from the continued move to software-as-a-service (SaaS) contracts which brings with it revenue visibility and secure, long-term recurring revenues."

"The addition of merchandise pricing and promotion to our offer is an important move and will let us service not only our existing client base that have convenience retail operations, but will also enable us to engage with convenience retail-only operators."


Kalibrate Technologies (LON:KLBT) is confident it can overcome any difficulties arising from low oil prices.

The company said the crude price, which has fallen to about US$38 a barrel for Brent crude and US$36 for US light crude, could put big oil refiners and retailers under pressure.

But it is not dependent on one type of customer or product and is rolling out new services that it hopes will help it ride out the storm.

One such new technology is software-as-a-service (SaaS) contracts, under which the company updates customers' systems on a continuous basis to ensure they stay ahead of the game.

Stein said: "The group is benefiting from the continued move to SaaS contracts, which brings with it revenue visibility and secure, long-term recurring revenues."

More companies in the fuel retailing business are looking for the latest analysis and data management tools to help them make better decisions.

Kalibrate believes this is where its two-part business model for fuel retailers comes into its own.

Firstly, it provides data to retail fuel forecourts, with analysis on local competitors’ prices, historic rates and even on whether the time of day has an impact on the fee it should charge for fuel.

In essence, it allows companies to adjust their prices based on data in almost real-time.

But it also has a planning services division, which helps retailers decide whether or not it is worthwhile opening a new site in a particular location.

Kalibrate hit delays with three pricing deals, which meant it was unable to book them in the first half, hitting its revenue from that business.

But it has since signed all three and also increased planning revenue by 20% to US$6.5mln in the half, against the same period a year ago.

Recurring revenues increased due to the take-up of SaaS deals and the company won new business in Mexico, Chile and India.

The group said it had a robust line-up of pricing deals in the second half, in addition to more planning deals, which could provide gross profit performance similar to prior periods.

Net cash at the period end was US$3.4mln against US$4.6mln at the end of June last year, due mainly to capital spending offsetting operational cash flow and about US$200,000 from financing activities.

Stein said: "The results demonstrate that Kalibrate is delivering on its strategy and we remain confident in our ability to meet market expectations for the full year."


Shares in Kalibrate fell 5.5p, or 5.4%, to 97p in lunchtime trading.


Analysts at N+1 Singer said: "Management continue to deliver on their strategy, with the move to SaaS continuing and now at US$22mln of recurring annualised revenue."

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Kalibrate Technologies PLC Timeline

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September 20 2016

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