Final Results

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

Preliminary results for the year ended 31 December 2011

KBC Advanced Technologies plc, a leading consultant to the energy industry, today announces its preliminary results for the year to 31 December 2011.

Highlights

·; Excellent year against a difficult economic backdrop

·; Good financial performance

- Group revenue increased by 5% to £55.7m

- Underlying profit before tax* increased by 20% to £5.9m, reported profit before tax up 35% to £4.9m

- Underlying earnings per share up 27% to 7.1p, basic earnings per share up 48% to 5.9p

- Strong cash generation, year-end cash balances increased by 29% to £5.8m

·; Total dividend of 2.25p, an increase of 22%

·; Group benefiting from

- World oil price volatility

- Increasing oil demand in developing world

- Pressure on refining margins in North America and Europe

·; Increasing demand from adjacent sectors of the energy industry, such as petrochemicals, gas/LNG, upstream oil and gas

·; New version of Petro-SIM™ software released

·; Further growth expected in 2012

Note * Underlying profit before tax excludes the impact of the carry forward of software development costs, their amortisation, the amortisation of acquired intangible assets and arbitration costs, one-off redundancy costs and bad debt provisions. See note 3 to this statement.

Ian Godden, Chairman of KBC, commented:

"The main factors impacting our clients' businesses during 2011 have persisted into 2012. Oil price volatility, increasing oil demand in the developing world and pressure on oil refining margins in markets where demand is declining are all contributing. Refining assets are still changing hands and there is a lack of experienced engineers in the areas where they are most needed.

We expect these drivers will lead to the maintenance of our current activity levels and continue to stimulate demand from our clients in both the traditional refining market and the new sectors in which we are becoming established. With the software arbitration now behind us, we expect new licence sales to grow again in 2012. We therefore look forward to another good year for the Group in 2012."

- Ends -

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Notes to Editors:

For 30 years KBC's consultants have provided independent strategic and engineering expertise to enable leading companies in the global energy business and other process industries to manage risk while maximising value from their assets.

In times of economic uncertainty and increasing environmental pressure, KBC's proprietary methodologies and innovative tools guide its clients' key strategic decisions, enabling them to prioritise and implement initiatives that maximise return on investment, and improve operational performance. KBC offers Strategic and Market, Capital Investment, Operating, Organisational and Environmental Solutions.

For more information, visit www.kbcat.com

Chairman's statement

SUMMARY

2011 was a very successful year for KBC with strong growth in earnings and profits driven by consulting revenue growth and cost management. Consulting revenues, which remained steady in the first half of the year, grew strongly in the second half to a total of £42.7m (2010: £39.2m) with overall revenue growing by 5% to £55.7m. With utilisation increasing in the second half, margins improved accordingly and underlying earnings increased by 27%.

Sales awards for the year were strong at £45.0m, although less than the prior year figure of £68.0m which included the US$42.0m, three-year Profit Improvement Program awarded by PEMEX in Mexico. Consequent workload backlog was £49.0m at 31 December 2011, down from £59.0m the year before, but still at a much higher level than seen in previous years.

In Europe and North America the difficult operating environment for many of our clients in the refining industry has meant that we have continued to be successful in working with clients in these regions to improve the performance of their assets. In other parts of the world client investment in downstream assets continued and has driven demand for our services and technology. We have also seen increasing demand in adjacent sectors of the energy industry.

RESULTS

Revenue for the year increased by 5% to £55.7m (2010: £53.1m). Underlying profit before tax increased by 20% to £5.9m (2010: £4.9m) and underlying earnings per share were up 27% to 7.1p (2010: 5.6p) due to a lower tax rate and reduction in exceptional bad debt provisions. On a statutory basis, profit before tax was up 35% at £4.9m (2010: £3.6m) and basic earnings per share were 5.9p (2010: 4.0p).

Year-end cash balances increased by 29%, with a net cash balance of £5.8m compared to £4.5m at 31 December 2010. This is a significant increase from the £2.7m at 30 June 2011 as a result of strong second half cash flow.

DIVIDEND

The Board recommends a final dividend of 1.55p per share. This gives a total for the year of 2.25p per share when combined with the interim dividend paid in October 2011 of 0.7p, an increase of 22% over the 2010 total of 1.85p. This recommendation reflects the strength of the results and the growth shown in earnings in 2011. Subject to approval at the annual general meeting, the dividend will be paid on 15 May 2012 to shareholders on the register at close of business on 4 May 2012.

CURRENT TRADING AND OUTLOOK

We expect the current high levels of demand for work to continue since the main factors impacting our clients' businesses during 2011 have persisted into 2012. Oil price volatility, increasing oil demand in the developing world and pressure on oil refining margins in markets where demand is declining are all contributing. Refining assets are still changing hands and there is a lack of experienced engineers in the areas where they are most needed. We expect these drivers will lead to the maintenance of our current activity levels and continue to stimulate demand from our clients in both the traditional refining market and the new sectors in which we are becoming established. With the software arbitration now behind us, we expect new licence sales to grow again in 2012. We therefore look forward to another good year for the Group in 2012.

Ian Godden

Chairman

Business review

OUR MARKET AND ITS IMPACT ON KBC

In 2011 the downstream energy sector continued to be our primary market. The five key drivers for this business are:

·; Oil and gas demand growth

·; Pressure on refining margins

·; Oil price volatility

·; Sector M&A activity

·; Availability of qualified engineering staff

All of these drivers were positive for KBC throughout 2011.

The market for downstream oil and gas processing continues to be in a state of flux. The divide between the old and new economies remains, with a continuing contraction of capacity in the Atlantic basin and expansion of refining and petrochemicals in Asia, the Middle East and Latin America, particularly in China, India, Saudi Arabia and Brazil.

Global demand for refined oil products continues to rise, mostly fuelled by population growth and increased industrialisation in the emerging economies. We expect this trend to continue for the next few years and demand for our strategic, capital and organisational services to remain robust.

In 2011 we commenced a project in Australia associated with production of coal bed methane and transmission to a new LNG plant. This work has been focused on non-traditional KBC services that enable clients to implement cultural change and organisational development. We anticipate more of this type of work, as well as technical consulting, as gas becomes more significant in the global energy mix.

In contrast, capacity rationalisation in Europe and North America continues at an accelerated pace, epitomised by the announcement of recent closures at three of Petroplus's European refineries and the Hovensa refinery in the Caribbean. We expect this trend to continue for the next few years as the industry continues to shed capacity. We also anticipate further M&A activity as traditional refiners reduce their exposure to refining and newer players seek market access. This industry uncertainty is good for KBC. In a low utilisation/low margin environment, our clients are able to utilise our software and skills in margin optimisation and we continue to see demand for technical, commercial and environmental due diligence studies. The increased level of M&A activity in the industry has also allowed us to expand beyond our traditional asset owner client base, and we now regularly handle project work for financial institutions.

The oil price continues to be high at over US$100 per barrel and subject to geopolitical volatility. We see no reason why this should change over the next few years. High energy prices, combined with ever-increasing environmental restrictions, generate high demand for our energy optimisation services. We anticipate therefore that this will continue to be one of our busiest areas.

KBC'S STRATEGY AND RANGE OF SERVICES

KBC's strategy is to position itself as the preferred independent provider of consulting and software services in the oil and gas sector. We have built our worldwide presence through organic development and selective acquisitions. We work for a wide range of clients (majors, national entities, independents and smaller companies), providing impartial and objective advice.

Our services are determined by anticipating changes in the market and then providing our clients with relevant solutions. The breadth and scope of our strategic solutions increased in 2011 in response to an increase in M&A activities in our markets during the second half year. We expect this trend to continue in 2012 and beyond.

Looking forward, our plan is to leverage our existing IP in different adjacent vertical markets, such as petrochemicals and gas processing, through a combination of organic growth and acquisitions.

CONSULTING OPERATIONS

In 2011 our key objective was the successful execution of the backlog built during 2010, particularly the PEMEX Profit Improvement Program.

A key feature of the year was the execution of projects across multiple client sites. The Profit Improvement Program at Mexico's PEMEX, which started in 2010, expanded to include all six refineries, and has been the cornerstone of our 2011 consulting revenues. Joint stewardship of the project with PEMEX management has confirmed identified efficiency opportunities that have met or exceeded project commitments.

In Asia we were contracted by Reliance Industries Limited ("Reliance") to perform energy management and manufacturing excellence projects across all of their major refinery and petrochemical sites. At 1.2m barrels per day, Reliance's refinery complex at Jamnagar is the world's largest and includes some of the largest aromatics and polypropylene plants. Reliance has four other integrated petrochemical complexes, plus numerous polyester and other petrochemical plants, and KBC's projects are focused on the six largest of these sites.

France's international oil major, Total, has engaged KBC to assist with its drive to reduce energy consumption. This project is being carried out in conjunction with Alexander Proudfoot, a US management consulting firm, which is responsible for the change management aspects of the project. To date we have started work at four of Total's nine sites, in France, Germany and the USA. Significant improvements in energy performance have been achieved through operational changes, a better defined energy management system and a clear plan for future investments. We expect Total to continue this programme through 2012 and into 2013.

Other significant projects undertaken include:

·; Organisational project for Santos, Australia

·; Feasibility studies for a new refining/petrochemical complex for Petronas, Malaysia

·; Energy efficiency study for Bashneft, FSU

·; Investment study for Gazpromneft, FSU

·; Excellence Partnership with Grupa Lotos, Poland

·; Training Manuals for Irving Oil, Canada

·; Process Safety project for Flint Hills Resources, USA

·; Valero Energy refinery energy studies, USA

·; Training Systems for Delek Refining, USA

In order to improve our bidding competitiveness in Asia and the Middle East we have established an engineering resource centre in Mumbai, India. Recruitment and training are under way and the office will be fully operational in 2012. In response to increasing orders from the FSU we will be establishing a small, local language based consulting centre in Moscow in 2012.

SOFTWARE REVIEW

Development of KBC's software continued at a strong pace in 2011. Our software has grown into the number one reactor based modelling system for the worldwide downstream energy sector.

2011 marked the successful culmination of a five year programme to deliver and deploy a new version of our Petro-SIM™ software that provides customers with a significantly improved refinery-wide modelling capability. Based on user and market feedback, KBC is considered the "gold standard" of refinery process modelling and client retention rate on maintenance contracts for our software is over 95%, one of the highest in the industry.

We achieved record revenues from our energy software in 2011 as clients in both the upstream and downstream energy sectors sought to reduce overall energy consumption.

Usage of KBC's software increased both across our client base and on consulting projects undertaken by KBC. User group meetings during 2011 in Brazil, Singapore and the United Kingdom attracted record numbers of customers producing a healthy dialogue between users. This opened an extremely efficient feedback channel to our software research and development to help accelerate innovation.

The negotiation of several software licence sales extended into 2012 from the last quarter of 2011 and we therefore expect a healthy level of software sales in the first half of 2012.

SOFTWARE ARBITRATION

We were pleased to report in September that the allegations made by a software competitor concerning the infringement of its rights in certain software code had all been dismissed through an arbitration process as unfounded. The financial statements contain a charge of costs of £0.6m associated with this process. An award of costs has been made in our favour and we are seeking to recover those costs through the arbitration process. No accrual has been made for this in the financial statements.

OPERATING RESULTS

Group revenue increased by 5% in 2011 to £55.7m compared with £53.1m in 2010. There is no material impact from foreign exchange rates movement in these results.

Consulting revenue increased by 9% from £39.2m in 2010 to £42.7m but software revenues declined by 6% from £13.8m in 2010 to £13.0m in 2011. This overall performance should be viewed against a challenging environment, especially in the first half year, when business was impacted by the Arab Spring, the war in Libya and the tsunami in Japan. The software revenue includes £6.7m of maintenance and support revenue, up from £6.5m last year, with the balance being new license revenue. As previously stated, the level of new licence sales reflected several large sales slipping into 2012.

Group costs decreased by 3% compared to the previous year. Staff and associate consultant costs increased by around 4% partly due to the increased use of associates and sub-contractors in the second half of the year and partly because the level of development costs carried forward was much reduced. Direct costs increased by 15% largely due to the ongoing trend of increased consultant time on site and a higher number of projects outside our home countries leading to higher travel and subsistence costs. Other operating charges decreased by 7% due to a reduction in the level of bad debt charges.

Operating profit calculated on an underlying basis increased by 19% from £5.0m in 2010, to £6.0m in 2011. This measure ignores the carry forward of software development costs, their amortisation, the amortisation of acquired intangible fixed assets, arbitration costs, redundancy costs and the exceptional bad debt provision. In 2010 a charge of £1.5m was made in respect of business in Iran and Libya and in 2011 a charge of £0.4m was made in respect of receivable balances from subsidiaries of Petroplus following commencement of bankruptcy proceedings in January this year. The impact of software development costs carried forward was reduced from a net credit of £0.7m in 2010 to a net credit of £0.1m in 2011 reflecting the reduction in development activity in 2011 following the release of version 4 of the Petro-SIM software. Statutory operating profit increased by 33% to £5.0m (2010: £3.8m).

The finance cost of £0.1m, unchanged from 2010, mainly reflects the ongoing cost of providing letters of credit and bank guarantees to clients in parts of the world where such instruments are essential to doing business.

PROFIT BEFORE TAX

The profit before tax of £4.9m shows an increase of 35% from £3.6m in 2010.

TAX

The tax charge of £1.7m (2010: £1.4m) for the year is made up of current tax expense of £1.4m and a deferred tax charge of £0.3m. The current tax expense includes £0.8m of tax payable on overseas operations and £0.7m of withheld tax that is not expected to be recoverable against corporation tax as a result of the continuing availability of losses brought forward in the UK and low tax rates in Singapore. The deferred tax charge is principally for short term timing differences expected to reverse in future years.

The effective tax rate of 34% (2010: 39%) of pre-tax profits remains higher than the current rate of UK corporation tax of 26.5% but lower than the previous year. The main reason for the higher rate is the non-recovery of tax withheld on payments totalling £1.0m from overseas territories to our UK and Singapore subsidiaries due to: (i) the tax losses in the UK and (ii) the low tax rate in Singapore. The impact of this has been partially offset by allowances claimable for research and development.

A net deferred tax asset of £1.6m (2010: £1.9m) remains on the balance sheet representing mainly prior year tax losses that have not yet been utilised and other timing differences.

EARNINGS AND DIVIDENDS

The profit after tax for 2011 of £3.3m, up by 47% from £2.2m in 2010, equates to basic earnings per share of 5.9p, compared to 4.0p in 2010. Diluted earnings per share were 5.9p and 4.0p respectively. Earnings per share calculated on the underlying profit measure increased by 27% from to 5.6p to 7.1p.

A final dividend of 1.55p per share is proposed for the year, following the interim dividend of 0.7p per share paid in October 2011.This leads to a total payment of 2.25p per share, making an increase of 22% over 2010 (1.85p per share). Assuming it is approved by shareholders at the annual general meeting, the dividend will be paid on 15 May 2012 to shareholders on the register at close of business on 4 May 2012.

Carry forward of software development costs

The latest version of Petro-SIM, version 4, was released in 2010 and it was for the first time possible to determine that this version had reached the stage where development expenditure should be carried forward, based on the same test used with the previous version. Thus the Board determined that development costs incurred in 2010 amounting to £1.1m should be carried forward over a five year period from 2010 against future sales revenue. Amortisation of £0.4m was charged during 2010 to the income statement, thus giving an overall net credit of £0.7m compared with the situation if development expenditure had not been carried forward. During 2011 development expenditure totalled £0.6m with an amortisation charge of £0.5m giving a net credit of £0.1m for the year compared with the situation if development expenditure had not been carried forward. Therefore, net expenditure of £1.3m is held on the balance sheet at 31 December 2011 against future revenue from licence sales and support contracts.

Working capital

Trade and other receivables reduced during the year from £23.2m to £22.9m. However trade and other payables decreased from £8.9m to £7.9m due to a partial reversal of the sharp increase in deferred revenue seen in 2010. When deferred revenue is deducted from total receivables, the net receivable increased in line with overall revenue. There was no material change in the proportion of trade debtors to amounts recoverable on contracts but not yet invoiced between the two years.

George Bright Nicholas Stone

Chief Executive Operations and Finance Director

Group Income Statement

For the year ended 31 December 2011

Group Statement of Comprehensive Income

For the year ended 31 December 2011

Group Statement of Changes in Equity

For the year ended 31 December 2011

The amount included in the foreign exchange reserve represents other comprehensive income for each component net of tax.

Group Balance Sheet

As at 31 December 2011

Group Cash Flow Statement

For the year ended 31 December 2011

1. Basis of preparation

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2011 or 2010. Statutory accounts for the years ended 31 December 2011 and 31 December 2010 have been reported on by the independent auditors. The independent auditors' reports on the annual reports and financial statements for 2011 and 2010 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 2010 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2011 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 2010.

2. Segment information

The Group has adopted IFRS 8, Operating segments, which uses a "management approach", under which information is presented on the same basis as that used for internal reporting purposes.

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

Transactions between the reportable segments are carried out at internally agreed rates and are reflected in the performance of each segment.

At the balance sheet date 7% of total trade receivables were concentrated with one of the Group's customers (2010: 8%). The balance was spread over 132 (2010: 134) customers, none of whom comprised more than 6% (2010: 7%) of the total.

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 5% of the Group total.

3. Group operating profit

This is stated after charging/(crediting) the following:

a) Research and development costs

During 2011 the Group incurred research and development costs of £2.0m (2010: £2.4m). Of this amount £635,000 (2010: £1,068,000) 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) Underlying operating profit

4. 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.

The earnings per share based upon the basic and diluted IIMR EPS are 5.9p and 5.9p (2010: 4.0p and 4.0p).

Basic underlying earnings per share are based upon an underlying after tax profit as defined in note 3b of £3.93m (2010: £3.07m) and on 55,027,000 (2010: 55,281,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period after excluding the shares owned by the KBC Advanced Technologies plc Employee Trust.

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 2011, those with performance conditions that have not yet been met and those to be settled by the Employee Trust.