Half Yearly Report

Embargoed until 0700 hrs 23 September 2013

KBC Advanced Technologies plc

("KBC" or "the Group")

Half year results for the six months ended 30 June 2013

KBC Advanced Technologies plc, a leading supplier of consulting and software solutions to the hydrocarbon processing industry, today announces its half year results for the six months ended 30 June 2013.

HIGHLIGHTS

- Good operational and financial performance

- Revenues up 15% to £31.7m

- Technology revenues up 77% to £9.6m

- Strong first half profit before tax of £2.9m (H1 2012: £0.7m)

- Earnings per share 4.9p (H1 2012: 1.6p loss)

- £32.4m contract awards in first half (H1 2012: £17.8m)

- Record pipeline of contracted work at £84.7m

Ian Godden, Chairman of KBC, commented:

"The restructuring of the business continues and, whilst there is still much work to do before we achieve our target step-change in profitability, we are pleased with the progress made over the past year. Investments are being made in the Middle East, Former Soviet Union ("FSU"), Latin America and Asia to secure KBC's growth into the medium term. Our strong profit in the first half is a testament to the hard work and dedication of our partners and staff and bodes well for the future. In view of our strong pipeline of contracted work, and good start to the second half of the year, we expect full year results to be slightly ahead of market expectations."

- Ends -

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Notes to Editors

KBC is a leading consultancy and software provider to the hydrocarbon processing industry. With over 30 years of experience, operating out of 14 global locations, KBC combines industry-leading technology with experienced engineers and operations personnel using robust methodologies to create personalized, sustainable solutions for its clients. 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 2013

Chairman's Statement

The Group has made significant progress over the past six months in terms of winning and executing business, restructuring its operations and delivering strong first half profits after tax of£2.9m.

Contract awards in the first half were £32.4m, significantly ahead of the £17.8m achieved in the same period in 2012. Multi-year consulting and software contracts, managed services contracts and high renewal rates from existing customers are providing the Group with improving visibility of future revenues. The pipeline of future contracted work at the half year was £84.7m (December 2012: £82.9m).

The top ten customers accounted for just under half of the Group's revenue in the first half. Our Technology business has continued to grow strongly, through new customer wins, renewals from existing customers and sales of newly acquired upstream software products. Technology revenues accounted for 30% of the Group total in the first half, up from 20% in the prior year period.

Restructuring initiatives have progressed well and will continue as we optimise the locations of our assets and resources globally and increase the efficiency and effectiveness of the Group's operations. Existing offices are being right-sized, systems upgraded and process re-engineering is ongoing. New entities have been established and investment in the Group's intellectual property is being increased. Our businesses in some growing markets are not well positioned to take advantage of opportunities and this is being addressed through investments in new sales channels and additional professional resources.

CONSULTING

Consulting revenue in the period was £22.2m (H1 2012: £22.1m). During the first half the Group successfully delivered the first consulting milestones associated with our new multi-year best practices project in Latin America. Other significant projects in the period were a large organisational development project in Canada, a profit improvement programme and an energy project in India, a best practice technology project in China, technical and energy consulting projects in the FSU, an organisational development project in SE Asia and profit improvement programmes in Latin America.

Balancing the needs for scarce resources globally continues to be a challenge for the Group. A number of new initiatives have been launched to increase the efficiency of project resourcing, business development and utilisation. A partnership structure has been implemented throughout the Consulting business, based on a seller-doer model, together with a new performance management and incentive system. The benefits from these initiatives have started to be realised but full implementation is likely to extend beyond the current financial period.

TECHNOLOGY

Technology revenue in the period was up 77% at £9.6m (H1 2012: £5.4m) and approximately £4.1m (H1 2012: £3.6m) was from royalty, maintenance, support and upgrade ("MSU") revenues. Sales of Multiflash to upstream customers have contributed to increasing the proportion of software in the Group's revenue mix.

Several multi-year Petro-SIMTM licenses have been concluded during the first half, including a £1.7m five year license with a Japanese refiner and a £1.8m five year software license and maintenance, service and upgrade contract with a US refiner. We also successfully concluded a £10m managed services contract for Multiflash with a large oil and gas services company. The Group intends to continue to increase the proportion of recurring revenue, including managed services revenue, within its technology product portfolio.

In the first half KBC invested in developing unique functionality for its Petro-SIM process simulation platform, particularly in the areas of workflow customisation, time scenario management plus fluid characterisation and analysis. Petro-SIM 5.0 is expected to be launched in the fourth quarter of 2013 as a landmark in KBC's software history to better differentiate KBC's offerings and enable our products to address a larger user market throughout the upstream and downstream hydrocarbon industries.

RESULTS

Group revenue increased by 15% in the first half to £31.7m (H1 2012: £27.5m).  Technology revenues, from software royalties, licenses, MSU and related services,increased by 77% to £9.6m (H1 2012: £5.4m) and accounted for 30% of the Group total. Revenues from Consulting were flat at £22.2m (H1 2012: £22.1m).

Direct costs increased by 7% to £4.2m(H1 2012: £3.9m) and staff and associate costs increased by 6% to £16.9m (H1 2012: £15.9m). Depreciation and amortisation charges were significantly higher at £2.3m (H1 2012: £0.7m), reflecting increased amortisation due to the Infochem acquisition in mid 2012. Other operating charges declined by 18%to £5.2m (H1 2012: £6.3m) largely due to currency gains and other savings.

Operating profit in the first half was £3.2m (10% operating margin) compared with £0.7m (3% operating margin) in the prior year period. Profit before tax was significantly higher than in the prior year period at £2.9m (H1 2012: £0.7m). Profit before tax, adjusted for acquisitions, capitalisation of R&D, amortisation, exceptionals and other items which do not reflect underlying operations, was £4.1m (13%adjusted profit before tax margin) in the current period (H1 2012: £0.1m loss).

The tax expense in the first half was £0.1m. In the prior year period the reported tax expense of £1.6m included a one-off tax charge of £1.4m in respect of deferred tax on the UK trading losses. The estimated effective tax rate for the full year is 50% before adjustments, reflecting the Group's mix of business.

Profit after tax in the first half was £2.9m (H1 2012: £0.9m loss). Basic earnings per share in the period were 4.9p, up from basic loss per share of 1.6p in the first half of 2012and on the adjusted basis 4.2p (H1 2012: 0.1p loss per share).

During the period the Group incurred research and development costs of £1.3m (H1 2012: £1.4m). Of this amount £0.5m (H1 2012: £1.6m) related to development expenditure and has been carried forward as an intangible asset. Amortisation of development costs carried forward in the period was £0.6m (H1 2012: £0.4m).

Net cash at 30 June 2013 was £5.1m. At 31 December 2012 net cash was £13.3m. This reduction was largely caused by a movement in advance contract payments of £10.8m from one of the Groups' Latin American customers. Net cash flow from operations, after this adjustment, was £7.4m in the first half (H1 2012: £4.1m).

DIVIDEND

No dividend is payable with respect to the first half of 2013 and the Board continues to review the position with the intention of returning to a progressive dividend policy in respect of the current financial year.

BOARD

The Board has asked me as Chairman, supported by the CFO and other senior management, to continue to lead the company to provide stability, deliver the restructuring of the Consulting business and allow for a planned CEO succession. The appointment of Paul Taylor as an independent Non-Executive Director during the first half, and the on-going search for another independent Non-Executive Director, will further strengthen the Board.

OUTLOOK

The second half of the year has started well and since the start of July the Group has been awarded consulting and software contracts valued at over £8m. These include a six year software maintenance renewal from a European refiner, an Australian upstream organisational consulting contract, a process consulting assignment in SE Asia, an integrated modelling assignment for a European oil company, a reliability, availability and maintenance contract in Canada and technical process consulting contracts in the Middle East.

The restructuring of the business, which commenced towards the end of 2012, is still ongoing and much work remains to be done to achieve our aims. However, we are pleased with the progress so far and with our performance in the first half.  As a result, we expect full year results to be slightly ahead of market expectations.

Ian A Godden

Chairman

23 September 2013

Group income statement

for the six months ended 30 June 2013

Group statement of comprehensive income

for the six months ended 30 June 2013

Group statement of changes in equity

for the six months ended 30 June 2013

Group balance sheet

as at 30 June 2013

Group cash flow statement

for the six months ended 30 June 2013

Notes to the half year financial statements

1. General information

KBC Advanced Technologies plc (the "Company") is a company domiciled in England. The Group financial statements of the Company for the six months ended 30 June 2013 comprise the Company and its subsidiaries (together referred to as the "Group").

2. Accounting policies

Basis of preparation

The Group prepares its Group 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 2012 financial statements 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 financial statements as defined in Section 435 of the Companies Act 2006.

The comparatives for the full year ended 31 December 2012 are not the Group's full financial statements for that year. A copy of the financial statements for that year has been delivered to the Registrar of Companies. The Auditors' report on those financial statements 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 Sections 498(2)-(3) of the Companies Act 2006.

In addition, the IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last Annual Report was published. It is not expected that any of these will have a material impact on the Group.

3. Segment information

Under IFRS 8 Operating Segments the Group uses a "management approach", under which information is presented on the same basis as that used for internal reporting purposes. Following a restructuring of the business, the Group revised their internal reporting structure from a regional management structure to a product based structure as presented below.

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.

At the balance sheet date 16% (December 2012: 7%) of total trade receivables were concentrated with two (December 2012: one) of the Group's customers. The balance was spread over 146 (December 2012: 162) customers, none of whom comprised more than 6% (December 2012: 5%) of the total.

4. Tax

Tax is charged at 50% for the six months ended 30 June 2013 (30 June 2012: 49% and 31 December 2012: 107%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six month period.

There is a one-off tax credit/(charge) of £1.4m (December 2012: £(1.4mm)) in respect of adjustment for over provision in prior periods.

5. Dividends

6. Earnings/(loss) per share

1 The effect of the dilutive share options is to increase/(decrease) the earnings/(loss) per share and therefore the share options are anti-dilutive and are not included in the diluted earnings per share calculation.

7. Adjusted profit before tax

8. Cash and cash equivalents

Of the £12,151,000 held as cash and cash equivalents in the balance sheet £1,537,000 (December 2012: £12,287,000) comprises advance contract payments within restricted accounts that the Group does not have full access to. The Director's consider that the advance contract payments meet the definition of cash and cash equivalents for balance sheet purposes. However, they do not regard the cash amounts as being readily available for short term cash management purposes and have therefore excluded the balance from cash and cash equivalents within the cash flow statement.