Half Yearly Report

Embargoed until 07.00 20 September 2011

KBC Advanced Technologies plc

("KBC" or "the Group")

Half year results for the six months ended 30 June 2011

KBC Advanced Technologies plc, a leading consultant to the energy industry, today announces its half year results for the six months ended 30 June 2011.

Highlights

·; Strong performance as pressures in the oil and gas and petrochemical industries provide good opportunities for KBC

·; Underlying profit before tax* increased by 87% to £2.6m (£1.4m in 2010). Profit before tax increased by 22% to £2.2m

·; Underlying earnings per share* increased by 100% to 3.3p; basic earnings per share increased by 47% to 2.8p

·; Interim dividend per share increased by 27% to 0.7p, reflecting the Board's confidence in the continued improvement in business performance and its stated aim to increase the proportion of full year profits paid by way of dividend

·; Consultant utilisation higher than in the first half of either 2010 or 2009

·; Good level of new consulting contract wins, including major projects in India and the former Soviet Union; first sizeable environmental solutions contract won for a mine development in West Africa

·; Strong software sales in H1 and normal uplift anticipated in the second half

·; KBC is confident it will meet its current expectations for 2011

* excludes the impact of the arbitration costs, the carry forward of software development costs and the amortisation of acquired intangible assets

Ian Godden, Chairman of KBC, commented:

"The five key drivers most relevant to our business are: oil demand growth, the pressure on refining margins as a result of price differentials in oil products and crude, oil price volatility, customer M&A activity, and the availability of experienced engineering staff. These drivers were all positive during the period, offering continuing opportunities for KBC to grow its business.

As previously reported, the arbitration process commenced by a competitor alleging unauthorised use of certain software code, which has been fully refuted by KBC, is largely complete with the arbitrator's award expected between now and the end of September.

We expect to be very busy for the rest of the year and to increase our consulting resourcesfurther to provide capacity to execute the future work. We also anticipate the usual increase in software licence revenue in the second half year. We are confident that this combination of factors will allow us to deliver our current expectations for the year as a whole."

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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.

KBC Advanced Technologies plc

("KBC" or "the Group")

Half year results for the six months ended 30 June 2011

Chairman's Statement

The first half of 2011 finished well for KBC with June the highest month of the period for both new sales awards and consultant utilisation.

Revenues for the period were £26.0m (2010: £25.6m) with contract awards of £23.5m against £23.1m in the first half of 2010. The resulting workload backlog at 30 June 2011 was £55.8m, compared to £39.8m reported at 30 June 2010 and £58.7m at 31 December 2010.

Underlying profit before tax (which excludes the creation and amortisation of intangible assets and one-off arbitration costs - see note 3 to this statement) increased by 87% to £2.6m compared to £1.4m in the first half of 2010. Profit before tax increased by 22% to £2.2m (2010: £1.8m).

Although the global macroeconomic environment remains mixed, KBC's leading positions in the growth markets of Asia, Central and South America and Russia are providing healthy momentum. Underpinning this, in the major western economies we continue to help our clients to meet the challenges of the difficult operating environments and improve their competitive position.

INDUSTRY OVERVIEW

Our clients remain under financial pressure in the parts of the oil and gas and petrochemical industries that we serve, providing opportunities for KBC as those sectors continue to evolve operationally and strategically.

As we have previously stated, the five key drivers most relevant to our business are: oil demand growth, the pressure on refining margins as a result of price differentials in oil products and crude, oil price volatility, customer M&A activity, and the availability of experienced engineering staff. These drivers were all positive during the period, offering continuing opportunities for KBC to grow its business.

Global refined product demand is expected to continue to grow in the BRIC economies and the Middle East in 2011 but to decline slightly in North America and Europe. This is exacerbating the refining industry overcapacity, margin weakness and closures in the declining economies and leading to demand for additional capacity in the developing world. Furthermore, there is increasing investment in capacity to cope with products derived from gas, coal and other unconventional sources often in regions without a history of developing such projects.

Oil prices stayed at relatively high levels and remained susceptible to political factors, particularly in the Middle East and North Africa at the beginning of the year. M&A activity continued during the period as "traditional" refiners reduce their exposure to the declining markets and are replaced by cash rich investors from the developing world seeking exposure to global markets and access to technology and know-how.

With oil prices remaining high, the pressure for energy reduction and operational improvements continued. As a consequence our energy management services are in particularly strong demand as part of our operational solutions focused on optimising existing facilities where margins are under pressure. Furthermore, the squeeze on refining margins has driven considerable demand for external assistance in both consulting and software. We have seen particular demand from state oil companies in developing economies where the experienced resources may be lacking to meet these challenges themselves.

CONSULTING OPERATIONS

Contract awards were marginally higher in the first six months of 2011 than in the same period in 2010. Consultant utilisation was higher than in the first half of both 2010 and 2009, reflecting the increased workload this year.

The earthquake and tsunami in Japan and the impact of the Arab Spring in North Africa and the Middle East did have some impact on new business in those regions. However, the effect was relatively short lived, with Japanese orders returning by the second quarter and substitute work received to replace a cancelled project in Libya.

As in the last couple of years, our consulting work during the period comprised a mixture of operational improvement and capital projects. Demand for energy consumption optimisation has been very strong in the first half of 2011, outstripping available resources. Major projects were won in both India, for Reliance Industries, and the former Soviet Union, for Bashneft. With crude oil prices remaining high, we expect continued demand for this type of service for the foreseeable future.

We are also pleased to report that we won the first sizeable contract in our environmental solutions segment: a full environmental, social and health impact assessment for Gryphon Minerals, Australia, for a mine development in West Africa.

Other key consulting contracts concluded in the first half were a Refining Excellence partnership with Grupa Lotos in Poland, an Operational Excellence programme agreement for Irving Oil in Canada, a detailed feasibility study for a major new petrochemical complex in south-east Asia and an organisational development programme for a major new unconventional gas production development in Australia.

The second phase of the PEMEX Profit Improvement Projects (PIPs) in Mexico started on schedule in April 2011. The PEMEX projects form a cornerstone of our consulting operations in 2011/12; both current phases are progressing well and the third phase will commence in October 2011. We will then be executing PIPs at all six of the PEMEX refineries. This peak in activity is scheduled to last until the end of the third quarter of 2012 and has necessitated an increase in consulting resources to execute this and other work that is keeping our consultants in all regions fully utilised. We do not expect this to change in the foreseeable future.

As part of an initiative to maximise consulting margins and cope with this increased demand, we are setting up an operations office in Mumbai, India. The operation's purpose is twofold: to support growing demand for our services in India and the Middle-East, and to support consulting operations globally with a lower cost structure. We anticipate that the office will be fully operational by year end and will also provide support for development and maintenance of our software products, as well as assisting in material development for our organisational solutions projects.

SOFTWARE

Software sales in the first half year were higher than in the same period of 2010 at £6.5m (2010: £5.8m), around 10% of which was from new licence awards. It was pleasing to see some large licence renewals, in particular one of our first Petro-SIM licensees, OMV in Austria. We anticipate that this growth will continue in the second half of 2011 when we expect to see the usual increase in sales towards the end of the year. Annualised maintenance and support revenue at 30 June 2011 stood at £6.5m compared to £5.4 at 30 June 2010.

Following the successful release of Petro-SIM Version 4 in October 2010, software development activity has continued and we anticipate releasing Version 4.1 during the second half of 2011.

As part of a planned development of our software business, during the second quarter we recruited a new Vice President of Software with considerable software simulation experience to lead this part of the business. To assist in delivering the growth opportunities in software, we are planning to enhance our sales effort by using dedicated regional software sales personnel and will be implementing changes in the development and quality assurance functions. This will ensure that we are able to maximise the value of our product portfolio in both current and new markets.

SOFTWARE ARBITRATION

As previously reported, the arbitration process commenced by a competitor alleging unauthorised use of certain software code, which has been fully refuted by KBC, is largely complete with the arbitrator's award expected between now and the end of September.

RESULTS

Revenue for the period was £26.0m, up from the £25.6m reported for the same period last year.

Direct costs were essentially the same as in the first half of 2010 at £3.4m. Reported staff costs were marginally higher at £14.6m compared to £14.4m in 2010. After taking capitalisation of development costs into account, costs overall showed a marginal decrease. Other operating charges decreased by 3% despite a charge of £0.4m for the costs of the software arbitration.

Underlying operating profit for the period of £2.7m compared to £1.4m in 2010, an increase of 86%. Note 3 to this statement shows the measure of underlying profit that excludes the impact of the arbitration costs, the carry forward of software development costs and the amortisation of acquired intangible assets. We continue to carry forward the development costs of the latest version of our Petro-SIM software which are being amortised over five years. This amortisation amounted to £0.3m in this period compared to £0.7m in the first half of 2010.  Operating profit increased by 24% to £2.3m (2010: £1.8m).

Profit before tax in the first half year after finance revenue and cost is £2.2m (2010: £1.8m). After the tax charge of £0.7m, at an effective rate of 32%, profit for the period was £1.5m (2010: £1.0m).

The tax charge reflects a forecast for the second half year and is materially lower than previous years as we expect a higher proportion of our profits to be generated in Asia in lower tax regimes and we expect to benefit from additional allowances claimed for R&D costs in both the US and UK. It also reflects the fact that there are insufficient profits in the UK company to allow us to recover taxes withheld on remittances from overseas clients, as in previous years. The benefit attributable to the one-off R&D allowances is estimated to be less than 2% of the charge and will not recur next year. More detail on this forecast charge can be seen in note 5.

Basic earnings per share in the period were 2.8p, up from 1.9p in the first half of 2010, with the underlying measure of 3.3p against 1.6p in the first half of 2010.

Net cash at 30 June 2011 was £2.7m, down from £4.5m at 31 December 2010 and up from £1.7m at 30 June 2010. The main reason for the decline in cash in the six month period was the working capital required for the PEMEX projects. Payments for these projects are largely milestone driven but revenue recognition is based on the proportion of work executed. However, it is only towards the end of the project that invoicing and cash collection will catch up with the work executed. There has been an improvement in working capital in July and August, with cash close to £4.0m at the end of August, and we expect further improvements by the year end. However, it is likely that the working capital increase from the PEMEX projects will not fully unwind until August 2012.

DIVIDEND

An interim dividend of 0.7p per share will be paid on 12 October 2011 to shareholders on the register at 30 September 2011. This compares to 0.55p per share interim dividend paid in 2010 and reflects the Board's confidence in the continued improvement in business performance, as well as our stated aim to increase the proportion of full year profits paid by way of dividend.

A final dividend for the year to 31 December 2010 of 1.3p per share was paid during the period, making a total of 1.85p for the whole of 2010.

OUTLOOK

The diverse conditions seen in the first half of 2011 in the oil and gas industry provide many opportunities for KBC to support its clients. We will continue to work with our clients in the growth regions to enable them to implement their ambitious capital programmes, whilst in the major western economies our services and software tools provide clients with solutions that enable them to improve their competitive position. We are also increasingly able to deploy the same skill sets in other parts of the oil and gas industry where there are higher levels of investment and better economic indicators for the future.

We expect to be very busy for the rest of the year and to increase our consulting resources further to provide capacity to execute the future work. We also anticipate the usual increase in software licence revenue in the second half year. We are confident that this combination of factors will allow us to deliver our current expectations for the year as a whole.

Ian A Godden

NOTES TO THE 2011 HALF YEAR RESULTS

1 BASIS OF PREPARATION

The Group prepares its condensed consolidated financial statements in accordance with IFRS as adopted by the European Union, and the statements have been prepared using the accounting policies set out in the Group's 2010 statutory accounts except as described below. For the purposes of this document the term IFRS includes International Accounting Standards and International Financial Reporting Interpretations (IFRIC).

This Half Year Report will be sent to shareholders and published on the Investor Relations section of the corporate website at www.kbcat.com. Further copies of this Half Year Report may be obtained from the Company Secretary, KBC Advanced Technologies plc, KBC House, 42-50 Hersham Road, Walton on Thames, Surrey, KT12 1RZ.

The financial information contained in this document does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006.

The comparatives for the full year ended 31 December 2010 are not the Group's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2011, but are not currently relevant for the Group:

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2011 and have not been adopted early:

The Directors are assessing whether the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application.

2 EARNINGS PER SHARE

The calculation of basic earnings per share is based upon earnings of £1.51m (30 Jun 2010: £1.05m, 31 Dec 2010: £2.22m) and on 54,777,000 (30 Jun 2010: 56,213,000, 31 Dec 2010: 55,281,000) ordinary shares, being the weighted average number of ordinary shares in issue during the period after excluding shares owned by the KBC Advanced Technologies plc Employee Trust.

The calculation of diluted earnings per share is based upon earnings of £1.51m (30 Jun 2010: £1.05m, 31 Dec 2010: £2.22m) and on 55,204,000 (30 Jun 2010: 57,096,000, 31 Dec 2010: 56,053,000) ordinary shares, being the weighted average number of ordinary shares in issue during the period after excluding shares owned by the KBC Advanced Technologies plc Employee Trust and adjusted for the weighted average effect of share options outstanding during the period.

The calculation of basic underlying earnings per share is based upon earnings of £1.81m (30 Jun 2010: £0.88m, 31 Dec 2010: £3.07m) and on 54,777,000 (30 Jun 2010: 56,213,000, 31 Dec 2010: 55,281,000) ordinary shares, being the weighted average number of ordinary shares in issue during the period after excluding shares owned by the KBC Advanced Technologies plc Employee Trust.

3 UNDERLYING OPERATING PROFIT

The basic underlying earnings per share calculated using this measure is 3.27p (30 Jun 2010: 1.56p, 31 Dec 2010: 5.56p).

4 SEGMENTAL 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.

5 TAX EXPENSE

The main factors affecting the forecast tax rate are as follows:

These factors are expressed as a percentage of the forecast profit before tax for 2011 and the actual profit before tax in 2010.