Half Yearly Report

Embargoed until 0700 hrs 23 September 2014

KBC Advanced Technologies plc

("KBC", the "Company" or the "Group")

Half year results for the six months ended 30 June 2014

KBC Advanced Technologies plc, a leading consultancy and software provider to the upstream and downstream hydrocarbon industries, today announces its half year results for the six months ended 30 June 2014.

HIGHLIGHTS

- Strong operational and financial performance

- Revenue up 9% to £34.4m (H1 2013: £31.7m)

- Profit before tax of £2.9m (H1 2013: £2.9m)

- Adjusted for exchange rate movements, profit before tax grew 64% to £3.6m (H1 2013: £2.2m)

- Consulting margin increased to 5% in first half year (2013: 0%), a benefit realised from the earlier reorganisation and revised focus

- Placing in May raised £24.0m (gross) to fund software acquisitions and support larger and broader contracts

- Significant strategic acquisition post period end enables KBC now to offer programmes across the full hydrocarbon chain

- Continuing good level of contract awards since period end

- Board remains confident of meeting its full year expectations

Ian Godden, Executive Chairman of KBC, commented:

"KBC has continued to deliver on its strategy during the first half of 2014. The Company has focused on growing its Technology business, particularly in the upstream sector, improving its Consulting business in terms of both profitability and growth, expansion in the Middle East, South America and Asia, and keeping strong control of costs and overheads. This focus has led to a significant increase in Group profit before tax and foreign exchange movements.

The second half of 2014 has started well and the Group has been awarded a number of significant software contracts since June. The Consulting pipeline for larger projects is growing and recent contract wins in South America, the Middle East and Asia provide good prospects for the future. We expect full year results to be in line with the Board's expectations."

- Ends -

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Notes to Editors

KBC is a leading consultancy and software provider to the upstream and downstream hydrocarbon industries. 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.

KBC Advanced Technologies plc

("KBC", the "Company" or the "Group")

Half year results for the six months ended 30 June 2014

Chairman's Statement

The Group has continued its strategy of focusing on improving margins and growth in its Consulting business, on investing further in niche software acquisitions that broaden our technology offering and on creating a larger position in the upstream production sector within the hydrocarbon industry.

Consulting is experiencing profitable growth, partly from the resumption of growth in North America in 2014 but also from KBC's continuing success in South America and its expansion in the Middle East and parts of Asia. Investment in senior staff in high growth geomarkets during late 2013 and the first half of 2014 is starting to deliver considerable potential work for the rest of 2014 and 2015. In Technology, clients are demonstrating their commitment to KBC's products with a good level of further software orders and considerable interest in KBC's growing upstream software portfolio. Our Technology order book has increased, with a reduction in the consulting order book which reflects the focus on higher margin jobs and progress in the delivery of the very large Latin American contract.

The Group's performance is responding to our strategic shift in resources, with the establishment of new offices in Abu Dhabi (UAE), Bangkok (Thailand), and Perth (Australia) alongside the expansion of Kuala Lumpur and Moscow to be closer to key customers and to increase KBC's local presence in these growth regions. Office costs in mature and traditional regions have been reduced to reflect the shift in the market, with a consequent reduction in overheads. The award of new business in Saudi Arabia, Kuwait, Jordan and Thailand is testimony to the success of this longer term movement in focus and resources.

In June, the Company concluded a successful placing of new equity totalling £24.0m gross (£23.1m net) with both existing and new investors. £11.2m (£10m cash, £1.2m equity) has already been put to good use with the acquisition in July 2014 of FEESA, an upstream software and consultancy specialist.

CONSULTING

Consulting revenue in the period was up by 17% to £26.0m (H1 2013: £22.2m). During the first half the Group continued to deliver successfully on its major South American project and the first phase of a major organisational development project in South East Asia. Renewed client interest in North America has resulted in growth in that market. We are experiencing some modest growth in the European market, which remains difficult.

Stronger control of the three levers of a successful consulting business (pricing, utilisation and leverage) are starting to have the intended positive impact on the profitability of that business, although there is still further work to do in this regard.

External recruitment has improved global leadership and helps us seek larger consulting projects based on our broader offering, particularly in the Middle East and Asia regions and in the upstream production sector.

TECHNOLOGY

Technology returned a solid first half revenue of £8.4m (H1 2013: £9.6m). The first half of 2013 was an exceptional period for Technology and included an unusually strong weighting of full year revenues. Whilst KBC has not matched that record achievement in the first six months of the current year, the results demonstrate good progress towards the full year goal. Several multi-year Petro-SIM™ licences have been concluded during the first half, including a US$5.2m contract in South America. Further, a major software renewal which was expected in the first half was signed in early July and the prospects for software for the rest of the year remain positive.

In the first half year KBC continued its search for opportunities to invest in well-proven software and IP that will enhance our client offerings and broaden our market. That effort resulted in the acquisition in July of FEESA, a UK based world class upstream hydraulics specialist company. The combination of KBC's process simulation technology, its simulation of the chemistry of oil and gas in the Infochem products, and the new hydraulics offering creates a unique platform for clients in the upstream oil and gas market. The combination, which enables KBC now to offer profit improvement and business transformation programmes, underpinned by technology, across the full hydrocarbon value chain, has been well received by the market and integration of the business into the Group is proceeding well. Further acquisition opportunities have been identified and are being pursued.

SHARE PLACING

In May 2014 the Company sought to increase its capital to fund acquisitions of specialist software and deep IP and to increase its working capital to fund larger and wider consulting contracts. Investor interest in KBC's strategy and positioning was considerable with the result that almost all of the existing major investors and several new investors took advantage of the opportunity to participate in the placing. A total of £24.0m gross (£23.1m net) was raised at a share price of 115p, a small discount from the prevailing share price of 118p.

RESULTS

Group revenue increased by 9% in the first half year to £34.4m (H1 2013: £31.7m).  Consulting revenue was up by 17% to £26.0m (H1 2013: £22.2m). Technology revenue was down 13% to £8.4m (H1 2013: £9.6m), of which 51% was from royalties and maintenance, support and upgrade revenue (H1 2013: 43%).

We have continued to monitor and manage our cost base prudently, resulting in a 2% increase in direct, staff and associate costs to £21.6m (H1 2013: £21.1m) compared to an increase in revenue of 9%. Other operating charges increased significantly to £7.1m (H1 2013: £5.2m) largely due to a £0.7m adverse movement in the US dollar/sterling exchange rate peaking at $1.71 on 30 June 2014 compared to a favourable foreign exchange impact last year. Depreciation and amortisation charges were slightly higher at £2.5m (H1 2013: £2.3m).

Operating profit in the first half year was £3.2m (9% operating margin) compared with £3.2m (10% operating margin) in the prior year period. This margin reduction was mainly due to the lower proportion of Technology revenue, which reflected the timing of contracts.

Profit before tax was similar to the prior year period at £2.9m (H1 2013: £2.9m). However, after adjusting for foreign exchange movements, profit before tax would have shown a 64% increase at £3.6m (H1 2013: £2.2m). Profit before tax, as detailed in note 7, adjusted for acquisitions, capitalisation of R&D, amortisation, exceptional and other items which do not reflect underlying operations, was £4.0m in the current period (H1 2013: £4.3m) which represented a 12% adjusted profit before tax margin (H1 2013: 13%).

The tax expense in the first half was £1.1m (H1 2013: £0.1m) reflecting an estimated effective year-end tax rate of 39%, driven by the Group's geographic mix of business. The 2013 first half tax charge was significantly lower due to a number of one-off items following the restructuring of the Group's operations.

Profit after tax in the first half of 2014 was £1.8m (H1 2013: £2.9m). Basic earnings per share in the period was 2.9p, down from 4.9p in the first half of 2013 due to the one-off tax credit in 2013. On an adjusted basis, earnings per share increased by 2% to 4.5p (H1 2013: 4.4p).

During the period the Group incurred research and development costs of £1.7m (H1 2013: £1.3m). Of this amount, £0.7m (H1 2013: £0.5m) related to development expenditure and has been carried forward as an intangible asset. Amortisation of development costs in the period was £0.7m (H1 2013: £0.6m).

Net cash at 30 June 2014 was £24.4m (31 December 2013: £6.9m) with no outstanding bank loans (31 December 2013: £3.0m). This increase in net cash is largely due to the raising of £24m, before expenses, from the placing of 20.9m Ordinary shares in May 2014. Net cash outflow from operations was £2.2m, largely as a result of additional working capital associated with large contracts.

DIVIDEND

A final dividend for the year to 31 December 2013 of 1.0p per share was paid to shareholders on 12 August 2014.

As last year, the Board does not intend to pay a dividend with respect to the first half and intends to propose a final dividend following its full year results.

BOARD

The Board appointed two new directors in April 2014, the Managing Director of Technology, Andrew Howell, and the Managing Partner of the Consulting business, Kevin Smith, to strengthen its executive representation. An experienced interim Chief Financial Officer (CFO), Andrew Hebb, was also appointed in April 2014 and a search for a permanent CFO has been initiated. Paul Taylor continues to serve as Deputy Chairman and our new Non-Executive Director, Paul McCloskey, brings considerable expertise for KBC's growth in the upstream oil and gas sector.

OUTLOOK

The second half of 2014 has started well and the Group has been awarded a number of significant software contracts since June, including a major five-year renewal of Petro-SIM for a South American oil and gas major. The combination of Petro-SIM V6, to be launched in late 2014, the continued success of the Infochem Multiflash™ software and the new product, Maximus™, developed by FEESA puts KBC in a very strong position to exploit the market's need for operational improvement in upstream production. The Consulting pipeline for larger projects is growing and recent contract wins in South America, the Middle East and Asia provide good prospects for the future. Our North American business has returned to growth and is looking forward with renewed optimism.

The business overall continues to improve significantly and a more solid base has been established in the last 12 months from which to make further gains across all areas of operation. We remain confident that the full year results will be in line with the Board's expectations.

Ian Godden

Executive Chairman

23 September 2014

Group income statement

for the six months ended 30 June 2014

Group statement of comprehensive income

for the six months ended 30 June 2014

Group statement of changes in equity

for the six months ended 30 June 2014

Group balance sheet

as at 30 June 2014

Group cash flow statement

for the six months ended 30 June 2014

Notes to the financial statements

1. General information

KBC Advanced Technologies plc (the "Company") is a company domiciled in England. The Group's financial statements for the six months ended 30 June 2014 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 2013 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, 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 2013 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 International Accounting Standards Board ("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

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 32% (December 2013: 7%) of total trade receivables were concentrated with one (December 2013: one) of the Group's customers. The balance was spread over 154 (December 2013: 172) customers, four of whom (December 2013: none) comprised more than 5% of the total.

3. Segment information (continued)

Revenues above are based on the location of the customer and non-current assets on the location of the Group's assets. The countries listed represent those where the total revenue or assets are greater than 5% of the Group total on an annualised basis.

The following customers account for more than 10% of the Group's revenues:

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

The adjusted profit before tax (note 7) also forms part of the internal reporting.

4. Tax

Tax is charged at 39% for the six months ended 30 June 2014 (30 June 2013: 50% and 31 December 2013: 42%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, when applied to the pre-tax income in the six month period.

5. Dividends

A final dividend for the year to 31 December 2013 of 1.0p per share was paid to shareholders on 12 August 2014.

6. Earnings per share

7. Adjusted profit before tax

8. Cash and cash equivalents