KBC.L Regulatory News (KBC)

13 May 2009 12:53

13 May 2009

KBC Advanced Technologies plc 

("KBC" or "the Group")

Trading Update

In March this year we referred to the challenges ahead of us in 2009 as the oil refining industry in which most of our clients operate saw rapidly declining margins. This has led to capital projects being reconsidered or scaled back and companies are deferring decisions and looking to cut costs. These market conditions have provided the many consulting opportunities that we expected, but the process of converting these into contract awards has been slower than hoped. Thus, although our pipeline still looks very healthy for the second half of 2009, our second quarter consultant utilisation is likely to be lower than expected.

Revenue for the first four months of this year is running ahead of 2008 but our higher cost base resulting from the investment made last year in our capacity and capability, as well as unfavourable changes in the Euro/Sterling exchange rate, have reduced profitability. Software revenue has been strong, as anticipated, but insufficient to outweigh the lower than expected consulting performance. As a result we expect the first half results for 2009 to fall short of those delivered in the same period of 2008. Although we expect the second half of the year to improve, we do not believe this will be sufficient to compensate for the first half shortfall.

We are taking steps to reduce costs in some areas of our business to better fit our current revenue streams. However, as we continue to expect consulting workload to increase over the next few months as the timing issues on some of our project opportunities are resolved, we will maintain the ability to service this work when it is confirmed.

Over the last couple of years we have reviewed a number of potential acquisition opportunities in related service areas but have been unable to justify the prices sought and therefore concluded that better returns were available from internal investment. We are pleased to announce the recent successful extension of our strategic consulting capability in Houston through the recruitment of former employees of Jacobs Consulting and the establishment of a new service offering in the UK through the recruitment of former AMEC employees with experience in environmental consulting and assessment. Whilst this investment through the profit and loss account will cause some additional short-term pressure on our expected first half results, we expect positive returns to come through as these parts of our business are developed. We continue to monitor opportunities to strengthen the business through selective acquisition and recruitment.

-Ends-

Notes to Editors:

KBC Advanced Technologies plc, a leading independent consulting, process engineering and software group, delivers improved operating performance to the oil refining, petrochemical, and other process industries worldwide. We provide process consulting, strategic planning advice, energy price forecasting and market analysis, economic studies, capital project services, and training to help clients achieve their business objectives and improve their competitive position. The KBC human performance improvement division provides organisational effectiveness services, training programmes, operations manuals, and personnel development services. Our consultants recommend changes for material and measurable improvements in profitability. To assist clients in realising such improvements, KBC provides implementation services and software solutions, including the KBC SIM models and Petro-SIM™ for process optimisation, and energy optimisation software packages. Formed in 1979, KBC has offices in the UK, USA, Canada, Singapore, the Netherlands, Russia, China and Japan. For more information, visit www.kbcat.com.