Final Results

Embargoed until 0700 hrs 17 March 2015

KBC Advanced Technologies plc ("KBC", "the Company" or "the Group")

Preliminary results for the year ended 31 December 2014

KBC Advanced Technologies plc, a leading consultancy and software provider to the global hydrocarbon processing industry, today announces its preliminary results for the year to 31 December 2014.

Highlights

· Another year of good strategic, operational and financial performance

· Revenues up 17% to £76.0m (2013: £65.1m)

· Adjusted profit before tax1 up 13% to £9.5m (2013: £8.4m);

· Reported profit before tax of £6.7m (2013: £7.1m)

· Recommended final dividend up 10% to 1.1p per share (2013: 1.0p)

· Equity fund raising of £23.1m, net of expenses, to fund acquisitions and provide working capital for larger contracts

· Acquisition and integration of FEESA Limited, improving KBC's product and service offerings across the full breadth of the hydrocarbon processing industry

· Consulting revenue increased by 17%, with strong performance in South America, further growth in Asia and the Middle East, and continued improvement in Consulting operating margin

· Another record year for Technology, with revenues up 17% and key contract awards in Asia, South America, the Middle East and Europe

· Strong year end pipeline of contracted work, up by 13% to a record £88.0m (2013: £78.2m)

· Strengthened executive leadership, with appointment of a new CEO

· KBC's medium and long term market prospects continue to offer encouraging international growth opportunities

1 Adjusted for development costs carried forward, amortisation of development costs carried forward, amortisation of acquisition intangibles, share based payment charges and other items which do not reflect underlying operations (see note 3b)

Ian Godden, Chairman of KBC, commented:

"2014 was another good year for KBC, with strong financial performance and continued progress across the Group in all aspects of our strategy: to grow our Technology business, expand our upstream offering, improve Consulting margins and invest for success in growth regions.

We enter 2015 with a record pipeline of contracted work and a healthy balance sheet to support the Group and its continued growth. At the same time we are not complacent in the face of continuing uncertainty in the oil and gas markets, and we are taking sensible action to reshape and reposition our business in response to these conditions and to drive profit and quality of earnings. Together these give the Board confidence for 2015."

-Ends-

Notes to Editors:

KBC is a leading consultancy and software provider to the global hydrocarbon processing industry. With over 30 years of experience, KBC combines industry-leading technology with experienced engineers and operations personnel using robust methodologies to create personalised, sustainable solutions for its clients. For more information, visit www.kbcat.com. To contact any of KBC's offices, please visit http://www.kbcat.com/locations.

CHAIRMAN'S STATEMENT

Summary

2014 was another good year for KBC. The Group performed in line with expectations, raised equity for acquisitions and working capital and completed an important strategic acquisition. The Company also implemented a successful executive succession, appointing a new Chief Executive Officer from within the Group and appointing a new independent non-executive director to the Board.

Following a strong finish to 2014, KBC has started 2015 well and, although there are many new industry challenges, we remain well positioned to continue our long term strategy of increasing and strengthening the Technology business, improving the margins of the Consulting business and continuing our long term expansion in the upstream oil and gas industry, together with growth in hotspots such as the Middle East, Southeast Asia and South America.

Results

Group revenue for the year increased by 17% to £76.0m (2013: £65.1m). Profit before tax calculated on an adjusted basis, as detailed in note 5b, was 13% higher than the previous year at £9.5m (2013: £8.4m). This reflected an adjusted profit margin of 13%. Adjusted profit after tax increased by 20% from £5.5m to £6.6m.

The company raised £23.1m net of expenses from an equity placing in June 2014. £10m of the placing monies was used to fund the acquisition of FEESA Limited ("FEESA") in July 2014 and a further £4m was used for working capital, particularly for large projects in South America and the Middle East.

Despite an improved performance, the net result of this fund raising, coupled with prior period one-off tax credits, meant that basic earnings per share reduced to 5.7p (2013: 9.5p) and earnings per share calculated on an adjusted basis remained broadly steady at 9.3p per share in 2014, from 9.5p in 2013. Diluted earnings per share was 5.5p in 2014, compared to 9.2p in 2013.

Dividend

The Board proposes to pay a final dividend for the 2014 financial year of 1.1p per share (2013: 1.0p). The total cost of the proposed dividend amounts to £0.9m for the 2014 full year (2013 full year: £0.8m).

Board and management

During 2014 we strengthened the Board and executive leadership of KBC with major external hires and internal promotions. In November we announced the appointment of a new Chief Executive Officer effective 1 January 2015, a succession we committed to when I took over the executive leadership of KBC. Andrew Howell was appointed to drive the next phase of KBC's strategy, with particular emphasis on developing its position in the upstream oil and gas industry and the Technology business. Andrew was previously the Managing Director of KBC's Technology business and had gained wide oil and gas experience with BP, Hyprotech and Schlumberger before joining KBC in 2011. I remain Chairman of the Company. We also strengthened the composition of the Board with the addition in February 2014 of a new independent non-executive director, Paul McCloskey, and with the appointment of Andrew Howell and Kevin Smith to the Board in April 2014.

A new and effective executive team was established at the end of the year in order to deliver clear leadership across all aspects of our business. Kevin Smith was promoted to Chief Commercial Officer (CCO), a new client-facing position which spans both Consulting and Technology, to drive the commercial performance of KBC. Mike Aylott has been promoted to Chief Technology Officer (CTO) from his role of managing all the engineering software development. The CTO position has been created to drive the realisation of the strategic direction of the Group towards commercial technology platforms underpinning all KBC's activities. This includes expanding the range of our engineering software as well as delivering the full range of KBC knowledge and intellectual property through technology. Ramon Loureiro, our most senior Partner, remains a key member of the executive team, ensuring the tradition and success of KBC's profit improvement programmes is captured and further developed within the Group's strategy. In addition, the business development resources of the Group have been strengthened with a number of external recruits as part of a sales transformation strategy to improve commercial performance.

Current trading and outlook

During the second half of 2014 the oil and gas industry experienced a major upheaval, with a significant increase in production in North America and Iraq, an unexpected slowdown in growth regions such as China and a subsequent oil price fall as a result of OPEC choosing not to control the market price. The longer term implications for the market are still not fully clear, but KBC is assuming a scenario of low oil prices for at least 18 months and some further belt-tightening by our clients. KBC is not affected directly by the US domestic oil exploration downturn since a large proportion of its business is in the downstream part of that market which will be less adversely affected.

Despite this backdrop, KBC achieved solid results in 2014 and so far in 2015 the market for KBC's services, while shifting, has remained steady. It is difficult to predict the full effect of the oil price on KBC's performance in 2015. Some aspects are positive: more clients need to optimise their existing assets; Operational Excellence practices are in high demand; KBC's Technology solutions are helping clients optimise production rates at lower energy costs; there is strategic rechecking of the economic viability of large capital expenditure projects; as oil companies reduce their work forces, they will need consultants to fill the gaps; downstream refining profitability is now returning to higher margins than have been seen for several years; and upstream operators are looking to drive more efficient production.

At the same time there are potential challenges for KBC: pricing pressure from a general focus on the oil and gas supply chain; cash collection and conversion; revenue from upstream oil exports sometimes being needed by national oil companies ("NOCs") in order to fund downstream modernisation projects; and upstream capital projects delayed and postponed. Therefore, KBC is not being complacent and is taking action to reshape and refocus its business and organisation and has additional contingency plans should the market for our services deteriorate.

We enter 2015 with a healthy pipeline of contracted work of £88.0m (2013: £78.2m), a record for the Group. Together with a number of key Consulting contract wins in the first two months of 2015, this leaves KBC well positioned to meet its objectives for the coming year. As always, the exact timing of contract awards will continue to affect results within any year. However, the strength of the pipeline of contracted work, an enhanced range of products and services and major internal progress in 2014 give the Board confidence for 2015.

Ian Godden

Chairman

BUSINESS REVIEW

Delivering on our strategy

2014 saw significant strategic contract wins for KBC in both our targeted upstream market and our core downstream business. Consulting continued to deliver successfully in South America, winning a $48.6 million contract extension with a South American oil and gas company. This was complemented by strong Consulting performance in the Middle East as well as further growth in Asia and Europe. Our Technology offering in upstream oil and gas continued to grow and we were particularly pleased to see the products from our newest acquisition (FEESA) having an immediate impact when bundled with our existing offerings. The contract award from a European oil field services company in the fourth quarter of 2014 followed a number of other Technology contract awards of note in the United States, the Middle East, China, Thailand and Vietnam. It is very encouraging to see the strong demand for KBC's Technology products supporting KBC's focus as a key software player in the hydrocarbon industry.

2014 was another good year for KBC on several fronts and it was particularly pleasing to see the measures put into place by the management team over recent years resulting in improved performance and growth by the Company. The Partner organisation in Consulting has driven personal ambition and a focus on commercial targets for margin realisation and quality of work delivered. The continued expansion of Technology sales through the Consulting business and newly expanded direct sales channels led to a record level of revenue . Consulting and Technology, working closely together, each delivered 17% growth in top line revenue for the year. KBC further penetrated the upstream oil and gas market, assisted by the important acquisition of FEESA which enables the Group to offer software and consulting in the production flow assurance area, anchoring wells and pipelines to KBC's established business in gas processing, refining and petrochemicals. KBC is now very well positioned to offer technical engineering and people performance solutions across the full breadth of the hydrocarbon processing industry and is able to move quickly in this chain to support the developing segments.

Innovation and information

During 2014 KBC embarked on an ambitious project to align all our software releases to a common release schedule with shared infrastructure and integration. Version 6 of Petro-SIM™ (process facility simulator), the SIM™ models (refinery reactors), Maximus™ (wellbore and pipeline hydraulics simulator), Multiflash™ (reservoir PVT chemistry) and Energy-SIM™ (energy optimisation) have all now been aligned, with significant advances in the interoperability of our technology. Clients will now benefit from the full integration of well, pipeline, offshore platform, gas plants, refineries and petrochemicals models with the ability to execute time-based scenarios including use of their own workflows and plug-ins to increase production and reduce costs. 2014 also saw the expansion of KBC's alliances with the addition of Flaretot™, a third party process plant flare safety simulator, to the KBC software suite and the announcement of a plug-in to Petro‑SIM for transient pipeline modelling from BPT, a Norway‑based technology company. KBC will continue to expand the "ecosystem" in which hydrocarbon process industry clients can embed technology that furthers the value of our platforms and provides another high quality revenue stream and will seek further alliances with oil field services and industrial automation players.

In line with our corporate strategy, we have continued to productise parts of our Consulting knowledge, experience and information into our software and digital technologies to enhance Technology revenue, allow for intellectual property charges in Consulting fees and support the scale and leverage of the Consulting organisation around technology platforms. The appointment of a Chief Technology Officer for KBC will drive this technology strategy throughout the Group and our alliance partners.

Our people

The KBC team includes a diverse set of consulting and software experts in more than 11 countries, delivering high quality project work and software technology. In 2014 the enhancement of both Consulting and software resources as well as corporate shared services has driven results for KBC. KBC began a reorganisation in the last quarter of 2014 to promote the new company strategy with a defined commercial sales group covering sales, business analysis, product management and marketing, all targeted at achieving high quality, recurring revenue. A new delivery organisation has been built that concentrates on delivering all aspects of quality in client projects to achieve target margins. KBC's focus on software technology platforms and productising Consulting knowledge, to drive higher margin sales and increased scale in Consulting, has been further enhanced by the establishment of a Chief Technology Officer role with a remit to expand technology development and adoption by KBC. The Company has been reorganised into a clear structure that provides focus on commercial, operational, innovation and back office disciplines appropriate for a technology based consulting firm.

KBC's Market

For the five years to 2014 high energy prices drove strong capital investment and strong profit margins throughout the oil industry. Those same economics also encouraged technical innovations that led to a rapid oil production increase and an increasingly oversupplied energy market. The oil market responded rapidly to the decision by OPEC at the end of November 2014 to renounce its traditional market-balancing role, with oil prices plunging more than 50%. These lower prices turned the industry on its head and for oil companies the key to both survival and success is to control their positions in the market, rather than being controlled by it. To achieve this, KBC believes that the operators will need access to many of KBC's products and services to enhance their performance.

In the near term, companies in our industry need to focus on revenue generation and capital investment to safeguard their balance sheets, generate cash flow and service debt. In the medium term, success requires companies to focus on sound operational fundamentals and ongoing evaluation of their market position to ensure performance is optimised against a changing market environment. In the long term, companies will be best served by revisiting and revalidating their investments against the market potential and their own corporate strategy. KBC can assist in all these areas and has a strong reputation for delivering value on all these horizons.

Consulting

Consulting revenue in 2014 increased by 17% to £55.0m (2013: £47.2m) with an operating margin of 4% (2013: 3%). Out of the Consulting pipeline of work of £57.3m (2013: £52.7m), £31.2m (2013: £30.6m) is expected to convert into revenue in 2015. Through our focus on high quality Consulting revenue, our target is to deliver Consulting margins of 9%-10% over the next two years.

Major consulting achievements in 2014 included:

· Continued quality execution of the South American business transformation project

· A large (US$48M) extension to the same South American project

· First profit improvement and strategy project in Kuwait in many years

· Repeat business for a second gas plant optimisation project in Saudi Arabia

· An award for the establishment of an Operational Excellence Academy in Malaysia

· A significant sustainable profit improvement programme in Thailand

· A major technical capability development project award in Saudi Arabia

Many other promising developments in the Middle East and North Africa have resulted from a focused investment in the region that will add further value for KBC.

2014 saw a return to growth for Consulting solutions in the North America market, strong growth in Southeast Asia and good growth in Russia.

The large South American business transformation project continues to deliver on time and on budget, with clear recognition by the client of KBC's quality consulting, methodologies, project management and technology in delivering value in many aspects of the refinery transformation.

The focus on the Consulting partner model with its sales, solution, execution and mentoring accountability has continued to prove valuable in the quest to raise Consulting margins and build strength in KBC's key geographical markets. Senior leadership has been strengthened and the Group is in a good position to take advantage of growth areas in the South America, Middle East and South East Asia markets.

The Consulting business functions have been grouped into four key areas for delivery of services to clients - Production Optimisation, Operations Management, Strategic Business Transformation and Human Performance Improvement. These are the core value areas of KBC's Consulting offering and are being re-packaged to achieve bigger contract engagements with clients to improve leverage, utilisation and margins for KBC.

Technology

2014 was a record year for KBC's Technology business, reflecting the focus and determination of the organisation to be a key engineering software provider to the industry. Revenue for the year was up 17% on 2013 at £21.0m (2013: £17.9m), representing good year on year progress.

The increase in Technology revenue reflects our drive and determination to raise the proportion of Technology revenue in the long term with Technology representing 28% of 2014 revenue (2013: 27%). Recurring revenue for 2014 was a record £9.0m (2013: £7.8m). Out of the total Technology contracted pipeline of work of £30.7m (2013: £25.5m), £9.3m (2013: £6.7m) is expected to convert into revenue in 2015. FEESA and Infochem technology revenue has exceeded our initial expectations with both acquisitions being accretive in 2014 and enabling the pull-through of Petro-SIM into the upstream market space. The Technology margin decreased from 34% in 2013 to 24% in 2014 due to much higher amortisation from the recent acquisitions and a focused investment in sales and marketing for Technology

As part of the successful equity placing in June 2014, undertaken primarily to raise funds for acquiring technology assets, Norway's Kongsberg Gruppen ASA acquired a 5% stake in KBC and has since engaged in an upstream technology and services alliance to add higher value solutions to their oil company clients and accelerate KBC's penetration into this market. This alliance is seen as giving KBC an accelerated critical mass in upstream to position, sell and deliver significant expansion in upstream technology revenue.

FEESA was acquired in July 2014 and has been successfully integrated, with the two founders of that company now holding senior executive positions on KBC's Operating Committee. Work continues, as planned, to ensure that the acquired company standardises on KBC's product lifecycle management processes and quality assurance.

Significant Technology achievements in 2014 included:

· Two major South American software contracts with greater than US$5m total contract value each

· A £3.3m contract with a European oil field services company

· Large software licence expansion projects in Thailand, Vietnam and China

· Large renewals and licence expansions in the Middle East

· New upstream licence agreements in Australasia

· Agreement signed with Flaretot Limited of London, UK, early in 2014 to market its flare system design and rating tool, integrated with Petro-SIM

Of particular importance in the year was the seven-year contract with a major oil field services company for the licensing of KBC's upstream full simulation portfolio including Multiflash, Maximus and Petro-SIM. This is the first significant sale combining the technology of our two recent upstream technology acquisitions with KBC's heritage software and demonstrates the value of KBC's integrated upstream technology strategy.

KBC's traditional refining technology business continued to strengthen in 2014 with key contract awards in Asia, South America and the Middle East. Our Japanese market saw a marked reduction in Technology revenue in 2014 due to one unusually high contract award in 2013. The refinery reactor and process simulation technology, supported by energy simulation, forms a high value, rigorous picture of refinery wide profitability and, when delivered with KBC's consulting services, is a world class solution.

KBC continues to look for value-adding acquisitions that will expand the Technology portfolio and contribute to revenue and profit growth.

OUR BUSINESS MODEL AND STRATEGY

In late 2014 KBC launched a revised strategy, building on the success of the 2011 to 2014 period, to grow revenues, further improve the Group's profitability and drive shareholder value. It is clear, bold, aggressive and will transform KBC into a technology company supported by expert consulting. All our activity supports or underpins the technology drive of the Group, with all Consulting offerings to be delivered on a technology platform, either our own or licensed from third parties and customised for resale. Productising Consulting knowledge will also enable KBC to improve both leverage from resources and increase the lower grade to higher grade ratio of employees, which in turn will contribute to the scalability and focus on delivered profit margin for the Consulting business. The Group also has a strong focus on working with selective alliance partners in the industry to deliver our technology and services deeper into our markets.

The KBC's growth strategy comprises six simple areas of focus:

· Be a technology leader for engineering and operations software, increasing the high quality software revenue mix and anchoring all Consulting solutions to a technology platform

· Position in our market sectors with differentiated advanced technology

· Secure revenue, profit and cash flow from Consulting activity and the move into upstream Profit Improvement Programmes with key industry alliances that reduce client costs and increase their production

· Modernise KBC's own systems; be operationally excellent ourselves with efficiency and scale

· Ensure KBC is a great place to work that develops leaders, with robust succession plans

· Ensure a high quality image and brand that commands premium prices and repeat business throughout the market

Progress was made on all six fronts in 2014 with a step up in the strategy execution planned for the current year.

In 2015 KBC is focused on market penetration to increase our Technology footprint in second tier independent refiners, on the conversion of more national oil company refiners and on supporting Engineering, Procurement, Construction and Management ("EPCM") companies as key strategic partners. In the upstream sector, the new combination of Maximus, Multiflash and Petro-SIM enables our continued expansion into oil field services companies. We will also launch upstream operational excellence and Profit Improvement Programmes, bringing KBC's downstream margin capture experience into the upstream area. We will continue to invest in the growth markets of South America, Southeast Asia and the Middle East as hotspots for technology platform sales and business transformation projects. Our overall drive is to accelerate technology revenues, increase consulting margins, drive cash conversion and productise Consulting intellectual property as a foundation for KBC's transformation to a technology-led group. This will involve establishing key alliances in the hydrocarbon industry with new technology and consulting channels to market. During the transformation to a technology company KBC will ensure strong financial discipline, tight cost control and cost reduction programmes matching current oil market dynamics, as well as seeking to pay a progressive dividend from increased profit and cash flows.

FINANCIAL REVIEW

Results

Group revenue increased by 17% in 2014 to £76.0m (2013: £65.1m). Consulting revenue was up by 17% to £55.0m (2013: £47.2m). Technology revenue was also up 17% to £21.0m (2013: £17.9m) and included £9.0m of royalty, maintenance, support and upgrade revenue (2013: £7.8m).

Direct costs increased by 41% (£3.8m) to £13.1m in 2014 (2013: £9.3m), mainly due to an increase in subcontractor costs (£2.0m) and the provision of one-off software for a South American Consulting project. The use of sub-contractors is dependent on the types of contract we work on during the year and can therefore fluctuate year on year. The 11% increase in staff and associate costs to £35.9m (2013: £32.4m) was proportionally less than the increase in revenue, reflecting average headcount 9% higher than 2013 and an increase in short term employee costs relating wholly to medical insurance and claims. Indirect operating costs increased by 22% to £14.1m (2013: £11.6m) reflecting increased investment in IT systems, people and sales training. In addition the costs incurred in acquiring FEESA of £0.4m (2013: nil) are included here. Depreciation and amortisation charges were significantly higher at £5.7m (2013: £4.4m) due to increased amortisation relating to the acquisition of FEESA in mid 2014, the Group's continuing investment in intellectual property and contract based intangibles.

Profit before tax, adjusted for items which do not reflect underlying operations, rose by 13% to £9.5m (2013: £8.4m). This measure adjusts for development costs carried forward of £1.6m (2013: £1.3m), amortisation of development costs carried forward of £1.3m (2013: £1.1m), amortisation of acquisition intangibles of £2.1m (2013: £1.4m), share based payment charge of £0.7m (2013: £0.5m) and other items which do not reflect underlying operations.

Profit before tax was £6.7m (2013: £7.1m), a 6% reduction on 2013.

Tax

The tax charge of £2.6m (2013: £1.6m) is made up of a current tax expense of £3.1m and a deferred tax credit of £0.5m.

The current tax expense includes £2.5m (2013: £2.5m) of tax payable on overseas operations and £1.6m (2013: £1.0m) of withholding tax. £0.6m of the withholding tax is expected to be recovered against overseas tax payable by way of double tax relief. As in prior periods, the balance is not expected to be fully recoverable as a result of there being no creditable tax liability in the UK.

The 2014 tax charge is higher than last year, with an increase in the overall effective tax rate from 22% to 39%. Following revision of the Group's transfer pricing framework last year, the 2013 effective tax rate benefited significantly from a one-off tax credit. The 2013 effective tax rate before the prior period tax credit was 42% which would correspond to an overall reduction in the comparable group effective tax rate over the period.

The group effective tax rate continues to benefit from enhanced tax deductions for qualifying research and development expenditure. The Group is continuing to review the location of its assets and resources globally to further reduce its effective tax rate in subsequent periods.

Earnings and dividends

The profit after tax for 2014 of £4.1m (2013: £5.5m) equates to basic earnings per share of 5.7p (2013: 9.5p) and diluted earnings per share of 5.5p in 2014 (2013: 9.2p). The decrease in basic earnings per share is a result of the share placing in June 2014 and the prior period one-off tax credits.

The earnings per share calculated on the adjusted measure was 9.3p (2013: 9.5p). See note 5 for more details.

The Board has decided to continue the payment of dividends with a proposal to pay a dividend in respect of the 2014 financial year. Assuming it is approved by shareholders at the annual general meeting, the dividend will be paid on 22 July 2015 to shareholders on the register at close of business on 10 July 2015.

Carry forward of software development costs

During 2014 the Group incurred research and development costs of £3.7m (2013: £2.7m). This increase largely reflects additional research and development costs of Infochem and FEESA following the acquisition. Of this amount £1.6m (2013: £1.3m) related to development expenditure for the Group's software suite and has been carried forward as an intangible asset to be amortised against expected future sales. The balance was charged directly to staff and associate costs and direct costs in the Income statement. The amortisation of previously capitalised software development costs amounted to £1.3m (2013: £1.1m).

Net cash and working capital

Net cash at 31 December 2014 was £11.0m (2013: £6.9m). The increase is due to the addition of the net placing funds (£23.1m), offset by the acquisition of FEESA (£10.0m) and an increase in working capital requirements. At the year end the Group had no outstanding bank loans (2013: £3.0m).

Trade and other receivables increased during the year from £23.2m to £42.3m. The increase in trade receivables of £5.3m to £15.0m reflects a timing difference on the receipt of cash. This had substantially reduced by the end of January 2015, when trade receivables had fallen to £9.2m and net cash had increased to £15.0m. Amounts recoverable under contracts increased by £13.8m, reflecting higher Technology accrued revenue of £6.1m and higher Consulting amounts recoverable of £7.7m. This is expected to be billed in the first half of 2015. Trade and other payables also increased during the year from £12.2m to £17.5m due largely to a significant multi-year contract.

Going concern

The Group's financial statements are prepared on a going concern basis. The Directors are satisfied that the Group has sufficient resources and borrowing facilities to meet its requirements for a period of at least 12 months from the date of this statement.

Andrew Howell Andrew Hebb

Chief Executive Officer Interim Chief Financial Officer

Group income statementFor the year ended 31 December 2014

Group statement of comprehensive income

For the year ended 31 December 2014

Group statement of changes in equity

For the year ended 31 December 2014

Group balance sheet

As at 31 December 2014

Group cash flow statement

For the year ended 31 December 2014

1. Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2014 or 2013. Statutory accounts for the years ended 31 December 2014 and 31 December 2013 have been reported on by the independent auditors. The independent auditors' reports on the annual reports and financial statements for 2014 and 2013 were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar in due course.

The financial information set out in this preliminary results release has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 December 2013.

2. Segmental analysis

With regard to the Balance sheet, those elements of the Balance sheet where segmental reporting is prepared have been disclosed. Those elements are trade receivables and provisions, amounts recoverable on contracts and deferred revenue.

At the Balance sheet date 39% of total trade receivables were concentrated with one of the Group's customers (2013: 7%). The balance was spread over 123 (2013: 172) customers, none of whom comprised more than 5% (2013: 5%) of the total.

2. Segmental analysis continued

Revenues above are based on the location of the customer and non-current assets on the location of the assets. The countries listed represent those where the total revenue or assets are greater than 4% of the Group total.

The following customer accounts for more than 10% of the Group's revenue:

The revenue generated from the major customer is derived from both Consulting and Technology.

3. Group operating profit

a) Research and development costs

During 2014 the Group incurred research and development costs of £3.7m (2013: £2.7m). Of this amount, £1.6m (2013: £1.3m) related to development expenditure for Petro‑SIM and has been carried forward as an intangible asset to be amortised against expected future sales. The balance was charged directly to staff and associate costs and direct costs in the Income statement.

b) Adjusted profit before tax

4. Tax expense

Tax on profit charged in the Income statement

5. Earnings per share

Basic earnings per share are calculated by dividing after tax net profit for the year attributable to Ordinary shareholders of the parent company by the weighted average number of Ordinary shares in issue during the year.

Basic adjusted earnings per share are based upon an after tax profit as shown in note 3b.

5. Earnings per share continued

The dilution referred to above is shown below:

Share options excluded are those where the exercise price is greater than the share price at 31 December 2014, those with performance conditions that have not yet been met and those to be settled by the employee trusts.