KBC ADVANCED TECHNOLOGIES PLC 
ANNUAL REPORT AND ACCOUNTS 2006
_1_cover.indd   1 29/03/2007   12:28:17 CORPORATE STATEMENT 
KBC Advanced Technologies plc is a leading independent consulting, process engineering 
and software group, which optimises operating efficiency and improves financial 
performance for clients in the oil refining, petrochemical, and other process 
industries worldwide.
KBC provides 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. 
KBC analyses plant operations and management systems, recommends changes 
for material and measurable improvements in profitability, and provides implementation 
services and solutions to assist clients in realising these improvements.
To support its consulting services and to supply its clients with the leading refinery-wide 
simulation capability, KBC also provides state-of-the-art proprietary software and related 
support services to help clients implement and monitor their optimal operating strategies.
Formed in 1979, KBC has offices in the UK, USA, Canada, Singapore, the Netherlands, 
Russia, China, and Japan.
 I F C  CORPORATE STATEMENT 
 0 1  HIGHLIGHTS
 0 2  WHERE WE ARE AT A GLANCE
 0 3  KBC SERVICES
 0 4  CHAIRMAN’S STATEMENT
 0 6  CHIEF EXECUTIVE’S REPORT
 1 0 OPERATIONAL AND FINANCIAL REVIEW
 1 4  DIRECTORS AND ADVISORS
 1 6  CORPORATE GOVERNANCE
 1 9  DIRECTORS’ REMUNERATION REPORT
 2 4  DIRECTORS’ REPORT
 2 7  DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
 2 8  INDEPENDENT AUDITORS’ REPORT
 3 0  GROUP INCOME STATEMENT
 3 1  GROUP BALANCE SHEET 
 3 2  GROUP CASH FLOW STATEMENT 
 3 3  GROUP STATEMENT OF RECOGNISED INCOME AND EXPENDITURE
 3 4  NOTES TO THE ACCOUNTS
 5 4  COMPANY BALANCE SHEET
 6 1  NOTICE OF ANNUAL GENERAL MEETING
 6 3  GLOSSARY
 6 4  TIMETABLE
 I B C  CapX AND OpX OVERVIEW
KBC offers a comprehensive range of consulting, implementation, and training 
solutions to provide sustainable competitive advantage to our process industry  
clients worldwide. Our services include:
_1_cover.indd   2 29/03/2007   12:28:17 REVIEW OF THE YEAR
01
HEADING 
01
REVIEW OF THE YEAR
HIGHLIGHTS 
   Achieved turnaround in ﬁnancial performance
   Continued growth in trading and contract 
awards expected
   Increased revenues in all three regions – EMEA, 
Americas, Asia
  Increased presence in Asia with Beijing ofﬁce 
opened in May 2006
   Collaborated with EPC contractors to enhance 
market reach in all regions
   Launched Petro-SIM Express in June 2006 
providing additional market opportunities
  Acquired TTS Performance Systems, Inc. 
to add new capability – human performance 
improvement and training
   Acquired Veritech, Inc. to increase market 
presence in Energy services throughout 
the Americas
 
£1.9m
Operating proﬁt up from loss of £2.0m
+24%
Revenues of £35.4m up 24% on prior year
+16%
Organic growth in software revenues 
to £5.8m
+10%
Growth in contract awards to £35.4m
+43%
Growth in workload backlog to £26.7m
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
04
29.3
28.5
35.4
REVENUE £m
05 06 04
4.2
5.0
5.8
SOFTWARE REVENUE £m
05 06
CONTRACT AWARDS £m WORKLOAD BACKLOG £m
04
16.6
32.2
35.4
05 06 04
10.3
18.6
26.7
05 06
_0_KBC_ar06_front.indd   1 29/03/2007   12:25:55 02
WHERE WE ARE AT A GLANCE 
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
AMERICAS 
KBC ADVANCED TECHNOLOGIES, INC.
HOUSTON TX
USA 
KBC ADVANCED TECHNOLOGIES, INC.
PARSIPPANY NJ 
USA
TTS PERFORMANCE SYSTEMS, INC.
AURORA CO
USA
VERITECH, INC.
STERLING VA
USA
KBC ADVANCED TECHNOLOGIES CANADA LTD
CALGARY AB
CANADA
EUROPE 
KBC ADVANCED TECHNOLOGIES PLC
WALTON ON THAMES
SURREY 
UK
KBC PROCESS TECHNOLOGY LTD
WALTON ON THAMES
SURREY 
UK
KBC PROCESS TECHNOLOGY LTD
NORTHWICH
CHESHIRE 
UK
KBC PROCESS TECHNOLOGY LTD
BREDA
NETHERLANDS
KBC PROCESS TECHNOLOGY LTD
MOSCOW
RUSSIAN FEDERATION 
ASIA 
KBC ADVANCED TECHNOLOGY PTE LTD
SINGAPORE 
KBC PROCESS TECHNOLOGY LTD
TOKYO
JAPAN
KBC ADVANCED TECHNOLOGIES (BEIJING) CO LTD
BEIJING 
CHINA
KBC ofﬁce addresses can be found on the outside back cover 
of this report or at www.kbcat.com
_0_KBC_ar06_front.indd   2 29/03/2007   12:25:56 03
KBC SERVICES 
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
REVIEW OF THE YEAR
KBC has developed a suite of products and services to address all key areas of 
managing a profitable process industry business through our Capital Excellence 
(CapX) and Operational Excellence (OpX) services for business performance and 
asset utilisation
OpX 
KBC assists clients in their progress towards Operational 
Excellence through: 
  Core offerings of Operational Planning, Process Optimisation, Energy, 
HSE, and RAM
  An OpX Model describing Best Practices for Production-Centred 
Manufacturing
  Assessments, Strategy Development and Deployment, and Process 
and Proﬁ t Improvement 
  Other unique offerings including Simulation and Energy software 
packages, Market Analyses, Technical Services, and more 
CapX 
KBC enhances client growth strategies and capital utilisation through 
Capital Excellence consulting:
  Core offerings of Market Analysis and Forecasting, Business 
Strategy Development, Merger, Acquisition and Integration 
Studies, Feasibility Studies, and Capital Project Support
  Services support acquisition activities, disposals, revamps, 
and construction of new facilities
  Unique offerings include Owners’ Representative Services, 
which allows ﬂ exible combinations of the above activities
_0_KBC_ar06_front.indd   3 29/03/2007   12:26:07 04
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
CHAIRMAN’S STATEMENT
SUMMARY OF STATEMENT 
Turnaround achieved with return to profitability
Strong growth in revenue and workload backlog
Board recommending first and final dividend
SUMMARY 
I am pleased to report that, as we anticipated, 
2006 proved to be a year of continued progress 
for KBC and saw a return to profitability. 
Growth in proﬁts, turnover and workload 
backlog conﬁrmed the signiﬁcant turnaround 
in the business that started in the last quarter 
of 2005. This turnaround demonstrates a 
material and sustained improvement in business 
performance and reﬂects the alignment of 
our services and products with changing 
market requirements.
Revenue has grown by more than 24% year on 
year and signiﬁcant losses in previous years have 
been turned into the ﬁrst reported full year proﬁt 
for KBC since 2001. Sales awards also continued 
to grow in 2006 (exceeding 2005 by more than 
10%) and we ended the year with a conﬁrmed 
backlog of work of £27m compared to £18m 
a year earlier. This backlog includes an increase 
of around £2m on a like for like basis (growth 
of approximately 10%) as well as £7m from 
the acquisition of TTS Performance Systems Inc 
(“TTS”) and Veritech Inc (“Veritech”).
The economic environment for our reﬁning clients 
was the strongest for many years and we expect 
it to remain favourable for several years to come. 
This environment still provides our clients with 
many new challenges and we believe that KBC 
is in an unrivalled position to help them address 
these challenges and therefore beneﬁt from the 
_0_KBC_ar06_front.indd   4 29/03/2007   12:26:08 REVIEW OF THE YEAR
05
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
“ THE MARKETS IN WHICH KBC OPERATES REMAIN 
STRONG AND OPPORTUNITIES FOR MAJOR CONTRACT 
AWARDS CONTINUE TO BE POSITIVE. THIS MARKET 
ENVIRONMENT , COUPLED WITH THE TURNAROUND IN 
PERFORMANCE, PROVIDES THE BOARD WITH INCREASING 
CONFIDENCE IN THE OUTLOOK FOR THE BUSINESS.”
higher level of activity that we anticipate in 2007 
and beyond. We started 2007 with a healthy 
order book and, as we near the end of the ﬁrst 
quarter, progress is being maintained and we 
remain conﬁdent that this will continue.
RESULTS
Revenue for the year was up on 2005 by 24%, 
from £28.5m to £35.4m. The operating proﬁt 
of £1.9m in 2006 compares with a loss of £2.0m 
in 2005. This strong performance has been 
delivered despite a sharp reduction in the sterling 
value of US dollar revenues as a result of the 
£/$ exchange rate moving by 14% during the 
year. On a constant exchange rate basis, revenue 
would have been £35.9m and operating proﬁt 
£2.0m. These results include revenue of £2.1m 
and operating proﬁt of £0.2m from the acquisition 
of TTS in February 2006, and £0.14m of revenue 
and £0.05m of operating proﬁt from the acquisition 
of Veritech in November 2006. After net ﬁnance 
costs the Group realised a proﬁt before tax of £1.7m 
(2005: loss before tax of £2.0m). Basic earnings 
per share were 2.1p (2005: loss of 4.2p). 
DIVIDEND
In the light of the ﬁnancial performance of the Group 
in the last year the Board is pleased to recommend 
a ﬁrst and ﬁnal dividend for 2006 of 0.5p per share. 
The dividend will be payable on 22 May 2007 to 
shareholders on the register at close of business on 
11 May 2007. No dividend was paid in respect 
of 2005.
ACQUISITION OF TTS AND VERITECH
The acquisitions of TTS and Veritech are fully in line 
with our strategy to increase the breadth and 
depth of KBC’s services and strengthen relationships 
with our clients. With KBC’s high operational 
gearing, the increase in scale of our business 
has had a positive impact on proﬁtability and we 
continue to look for opportunities to accelerate 
this process.
BOARD CHANGES
As previously announced, on 25 May 2006 
Peter Close informed the Board of his intention 
to retire and George Bright was appointed as 
Chief Executive. At the same time Nick Stone 
assumed overall responsibility for Operations 
as well as Finance. I would like to thank Peter 
for his contribution to KBC following his return 
to the Company in 2003, and to wish him well 
for the future.
The Board is pleased to see the progress made 
under the new executive team and is conﬁdent 
in the future development of the Company 
under their management.
CURRENT TRADING AND OUTLOOK
We have seen signiﬁcant revenue growth and 
return to proﬁtability over the last 18 months 
and the level of contract awards continues to 
rise. 2007 has started well and we remain very 
busy. The Board expects this to continue. The 
markets in which KBC operates remain strong 
and opportunities for major contract awards 
continue to be positive. This market environment, 
coupled with the turnaround in performance, 
provides the Board with increasing conﬁdence 
in the outlook for the business.
CHRISTOPHER B POWELL-SMITH
CHAIRMAN
_0_KBC_ar06_front.indd   5 29/03/2007   12:26:09 06
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
CHIEF EXECUTIVE’S REPORT
THE REFINER’S CHALLENGE
2006 saw continued volatility in crude oil prices 
and reﬁning margins, with oil prices peaking 
at over US$70 per barrel during the summer, 
before falling back by around 25% by the end 
of the year. This fall in prices was driven by the 
short-term effects of stockpiling and a mild 
northern hemisphere winter, with the long-term 
trend expected to remain positive during 2007. 
Economic growth is forecast to be robust in 2007, 
albeit with regional variations. Hence we believe 
that 2007 will be another good year for reﬁners 
with margins remaining buoyant as inventory 
levels fall and growth in demand continues.
In this environment we anticipate that strong 
reﬁning margins will continue to drive the growth 
of both new and revamp projects as reﬁners 
increase or protect market share. Over the next 
two to three years, as new reﬁning capacity comes 
on stream, we expect to see the current shortage 
in capacity reduce and current high reﬁning 
margins decline to lower levels.
SUMMARY OF REPORT
Favourable market environment for client businesses
Increasing contribution from software revenue
Acquisitions successfully integrated and already delivering
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REFINERY CAPACITY VS OIL DEMAND
_0_KBC_ar06_front.indd   6 29/03/2007   12:26:31 OpX: OPERATIONAL EXCELLENCE  
PROGRAMME IMPLEMENTATION
ST CROIX, USVI
HOVENSA, LLC (HOVENSA) has appointed TTS Performance 
Systems, Inc., KBC’s Human Performance Improvement 
division, to assist them in becoming a Production-Centered 
Organisation (PCO) through the implementation of a 
full-scale Operational Excellence (OpX) programme across 
the entire reﬁnery. We are currently working with HOVENSA 
management and staff on all aspects of this organisational 
change from conceptual design and strategy development, 
programme management and design of speciﬁc systems, 
through to point-of-manufacture implementation.
_0_KBC_ar06_tipins.indd   1 29/03/2007   12:27:01 One key element of this change is to increase the 
organisation’s investment in its human assets and upgrade 
its approach to training, performance management, and 
performance support. As part of this effort, HOVENSA had 
engaged TTS in April 2005 to assess its operations practices 
and behaviours against industry best practices. To address 
the assessment ﬁndings and continue its move towards 
becoming a PCO, HOVENSA asked us to assist in the 
development and implementation of the next phase of the 
performance improvement process. 
Three high-priority areas were identiﬁed for initial focus:
  Reﬁnery Operating Vision, Philosophy, and Improvement 
Strategies
 Job Performance Proﬁle Development
 Training System Design and Development
REFINERY OPERATING VISION, PHILOSOPHY AND 
IMPROVEMENT STRATEGIES
KBC and TTS consultants worked with the reﬁnery leadership 
team to facilitate the design of a reﬁnery operating philosophy, 
in alignment with the reﬁnery’s vision. This will assist in 
the transition to becoming a PCO. In addition, we have 
assisted in deﬁning key improvement strategies and 
tactical improvement plans. 
JOB PERFORMANCE PROFILE DEVELOPMENT
Job performance proﬁles are currently being developed for 
all point-of-manufacturing positions based on the reﬁnery’s 
operating vision and philosophy. The proﬁles will provide the 
basis for the redesign of point-of-manufacturing training 
and an ongoing performance management initiative.
TRAINING SYSTEM DESIGN AND DEVELOPMENT
The Training System Design will provide the structure for 
managing the training function and will identify the course 
curriculum for the identiﬁed Operations positions. The 
design is formally captured in the Training System Design 
Document, which consists of two sections: Training 
Management Guide and a Training Master Plan. 
While assisting HOVENSA in preparing for the future, we 
have provided ongoing training development and 
deployment for HOVENSA’s Low Sulfur Gasoline project as 
well as training for reﬁnery operations. This includes: Process 
Systems, Equipment Care and Condition Monitoring, Process 
Control, Abnormal Situations Management, and Training 
of Trainers.
TTS and HOVENSA personnel will work collaboratively over 
the next few years to design, develop, and implement targeted, 
holistic improvement projects in pursuit of the achievement 
of OpX. Examples of key OpX implementation activities that 
will be completed over the next several years are:
  Operator and Maintenance Training Programme 
Development and Delivery
 On-going Organisational Alignment Activities
_0_KBC_ar06_tipins.indd   2 29/03/2007   12:27:17 REVIEW OF THE YEAR
07
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
Whilst refiners will continue to face the 
challenge of operating their facilities in a safe 
and environmentally acceptable way, it is the 
increase in capital project related work that will 
present them with signiﬁ cant issues in 2007. 
The industry continues to suffer from a skills 
shortage. Engineering professionals are currently 
in demand but the focus is likely to shift to 
operations staff over the next few years as 
new plants come on stream.
KBC’S RESPONSE
A core element of KBC’s strategy during 
the turnaround in our business has been to 
align our services and products to changing 
market requirements. 
  In the new investment segment, a programme 
supporting both owners and operators was 
launched: Capital Excellence (“CapX”). This 
service covers strategy, market analysis, 
reﬁ nery conﬁ guration studies, design and 
project management support from concept 
through to start-up. We have entered into 
several relationships with both engineering 
and operating companies, including Fluor 
and SK Corporation. More than half the 
process engineering work carried out in 
the UK in 2006 was related to CapX 
programmes for our clients.
  KBC has offered services related to plant 
operations for many years. The acquisition 
of TTS in February 2006, however, provided 
us with a framework to match our services 
with clients’ operational needs. Operational 
Excellence (“OpX”) is a programme that helps 
clients to ensure that their facilities are 
operated in a safe, environmentally acceptable 
and proﬁ table manner. The service covers 
planning and scheduling, reliability and 
maintenance, safety, health and environment, 
leadership, human performance and continuous 
improvement. During 2006 our R&D efforts 
included the documentation of best practice 
in this area. In 2007 we anticipate a growing 
need for this service as clients strive to meet 
increasing operational challenges driven by 
tightening of safety and environmental 
standards and capacity expansion.
To help ensure an agile response to client needs, we 
have consolidated and simpliﬁ ed our organisational 
structure. At each of our main operational centres 
in London, Houston and Singapore, the senior 
management team comprises the head of 
Operations and the head of Business Development. 
The three regions operate on a semi autonomous 
basis to ensure they are responsive to local market 
developments. The Executive Committee, which 
includes these regional executives, together with 
other senior managers and the Executive Directors, 
ensures that common standards are applied and 
optimises the use of resources across all regions.
SALES
Contract awards in 2006 amounted to £35.4m, 
an increase of 10% over 2005. The Europe, 
Middle East and Africa region returned it’s 
strongest ever performance with sales of 
£14.1m. Sales in the Americas were healthy 
at £11.6m, with particularly strong demand in 
Central America. Sales awards in Asia of £9.7m 
showed a satisfactory increase on the underlying 
2005 ﬁ gure, excluding the effect of the £6.5m 
Sinopec contract awarded in 2005. Key contracts 
awarded include:
   Multi year Technical Services alliance 
with PETRONAS
  Reﬁ nery Reconﬁ guration/Clean Fuel Studies 
for ﬁ ve PEMEX reﬁ neries
  Multi year Technical Services alliance 
with Nerefco
  Central America Grass Roots Reﬁ nery Study 
for the Inter-American Development Bank
  Development of operating procedure manuals 
for Valero Reﬁ ning Company in the US
Since the year-end, the Group has been awarded 
an extension of its Technical Services contract 
with Irving Oil.
_0_KBC_ar06_front.indd   7 29/03/2007   12:26:32 08
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
CHIEF EXECUTIVE’S REPORT CONTINUED
SOFTWARE
2006 showed an increasing contribution from 
software, with revenues growing by 16%. KBC’s 
ﬂagship product, Petro-SIM, is now licensed by 
more than 50 sites in all regions of the world. 
Major new software licenses were signed with 
Saudi Aramco, Reliance and PEMEX during 
the year. Version 3 of Petro-SIM was released, 
extending our technology lead with the addition 
of two new reactor models, together with 
enhanced integration with desktop and plant 
software. We also released Petro-SIM Express, 
a reduced capability version priced to compete 
with basic ﬂowsheeting tools. The ﬁrst license 
for Petro-SIM E x p r e s s was to OMV, as a 
replacement and upgrade for their existing tools. 
During the year we announced an agreement 
with ABB Lummus to integrate their ethylene 
cracking furnace model into Petro-SIM. This 
arrangement allows us to identify opportunities 
for improvement in the interface between reﬁning 
and basic petrochemical facilities, and is part 
of our continuing development of Petro-SIM. 
Version 4 of Petro-SIM, due for release in 2008, 
will include full integration of the ethylene model 
as well as support for the latest versions of 
Microsoft products (Vista and Ofﬁce 2007). 
ACQUISITIONS
TTS, acquired in February 2006, operates in process 
industry management consulting, training, and 
organisational development, and has substantially 
expanded KBC’s range of services. It provides 
a hub for further development of our OpX 
consulting model. Human performance is often 
a limiting factor in process plant optimisation and 
our combined offering has been well received 
by the market. We are delighted with the rapid 
progress made in integrating TTS and in expanding 
its reach outside its historic North American 
market using KBC’s existing infrastructure.
In November 2006 we acquired Veritech Inc, 
a leading energy consultant in the US market. 
Veritech provides services and software in the 
ﬁeld of energy optimisation and management 
for clients in the process industries. Through KBC’s 
acquisition of the Linnhoff March group in 2002, 
KBC’s energy optimisation services business has 
been very successful in Europe, the Middle East 
and Asia. Veritech’s track record in the Americas 
is a signiﬁcant addition to KBC’s coverage of 
this important sector of our market. Veritech 
was itself initially part of the former Linnhoff 
March group and therefore uses methodology 
and tools common to those used by KBC’s 
consultants. As a result we have already seen 
rapid progress in assimilating and developing 
this business.
INDUSTRY OUTLOOK
The shortfall in skilled engineering resource 
in the industry is both an opportunity and a 
challenge for KBC. In 2006 we moved from 
being sales constrained to resource constrained, 
and recruitment in a very tough labour market 
suggests that we will remain a resource 
constrained operation in 2007. Our plan 
for 2007 requires a signiﬁcant increase 
_0_KBC_ar06_front.indd   8 29/03/2007   12:26:32 The combined effect of the increase in the demand for oil 
derivatives in Central America (CA) and the Dominican Republic 
coupled with the sustained increase in international prices 
of crude oil and its derivatives has negatively impacted CA 
countries. As a result, the Inter-American Development Bank 
(IADB) contracted KBC to deﬁne the location and conﬁguration 
within Mesoamérica for a possible reﬁnery. 
PHASE I
In Phase I KBC conducted a review of the Mesoamerican 
hydrocarbon markets, selected the reﬁnery location, deﬁned 
the basic reﬁnery conﬁguration, performed the economic 
evaluation, and deﬁned the business plan for implementation 
of the reﬁnery.
CapX: KBC CONSULTS ON POSSIBLE 
MESOAMERICAN REFINERY
_0_KBC_ar06_tipins.indd   3 29/03/2007   12:27:19 MARKET ASSESSMENT
KBC’s PEL division (Petroleum Economics Limited) reviewed 
the Mesoamerican hydrocarbon market product demand. 
We concluded that this region’s product demand for 2005 
was approximately 378 MBPD, and that it would grow to 
470 MBPD. With the existing reﬁneries’ local production at 
less than 100 MBPD, a strong incentive exists to build a high 
conversion reﬁnery in the region. 
SITE SELECTION
KBC’s approach was to develop a multi-variable evaluation 
process to determine which of 12 possible reﬁnery sites was 
most feasible. This evaluation was based on two analyses. 
The first was a site assessment of the attributes of each 
potential site, and the second was a transportation cost 
assessment of the oil logistics costs.
KBC site specialists visited the top eight sites. The site assessment 
included the key attributes of the potential sites such as the land 
availability, port capabilities, infrastructure, environment, and 
local business environment. On a parallel path, the transportation 
cost assessment was conducted using a linear programming (LP) 
model, “Central America Distribution Model” (CADM). This 
model evaluated the costs of transporting crude and products 
to the respective demand centres. The model included 23 key 
ports and demand centres, three transportation modes (ships, 
pipeline, truck), ﬁve existing reﬁneries, and seven product types. 
The combined results of these assessments identiﬁed Puerto 
Quetzal in Guatemala and Puerto Armuelles in Panama as the 
two most attractive sites for a new reﬁnery. Both sites were 
found feasible as part of a preliminary environmental assessment 
regarding legal structure and proximity to populated areas.
REFINERY DEFINITION AND ECONOMIC EVALUATION
KBC developed several models to deﬁne the basic conﬁguration 
of the new reﬁnery based on an economic evaluation of each 
option using KBC’s tools. These included KBC’s Petro-SIM 
process simulation package to provide the reﬁnery process 
unit sub-models for the LP that assembled these process units, 
demand centres, and product speciﬁcations and prices. The 
product revenues were based on netback prices (market less 
transportation costs). These prices were based on the lowest 
cost supplier’s delivered price to the CA markets. Crude cost 
was based on the reﬁnery gate price for each crude (supply 
terminal plus transportation). The maximum product sales 
volume in each CA market equalled the full demand possible. 
The LP model permitted evaluation of alternative reﬁnery 
conﬁgurations, unit severities, and export to alternative 
markets. This LP solution optimised the delivery of reﬁnery 
products to the most proﬁtable markets.
The reﬁnery conﬁguration includes a hydrocracker, coker, VGO 
hydrotreater, FCC, alkylation, naphtha reforming, hydrogen 
plant, and associated product hydrotreating. All reﬁned 
products will be capable of complying with international 
product standards to permit export considerations.
The study results are based on a 2015 project start-up as follows:
  A large investment will be required to build the CA 
reﬁnery (US$7-8B)
  Project economics do not support an attractive rate of return 
for investors if all products are sold in CA at alternative 
product import prices
  Exporting to product-short US West Coast (USWC) and 
Mexico, and including a power plant option, provides an 
attractive project for investors seeking a presence in the 
USWC and unable to build in that market (13.7-14.5% IRR)
 –  Almost half (46%) of the reﬁnery products will 
economically go to CA and Mexico (31% and 
15% respectively)
 – The reﬁnery will supply 39% of the CA demand in 2015
  Debit ﬁnancing improves the IRR to 17-24% depending 
on the leveraging option (30-70%). 
  This IRR range provides a cushion for economic downside 
risks associated with investment and margin
The conclusion of Phase I suggests that there were enough 
positive elements to continue exploring the potential interest of 
private investors for a reﬁnery with the described conﬁguration. 
PHASE II
The second phase of the work (currently ongoing) involves 
promoting the project, obtaining investor feedback, and 
preparing bid bases and regulatory framework for the 
development of the project. 
_0_KBC_ar06_tipins.indd   4 29/03/2007   12:27:26 REVIEW OF THE YEAR
09
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
in consultant resources and we will be meeting 
this through more efficient use of existing 
resources, training and recruitment. In the 
current tight labour market this is an area 
on which we will need to focus throughout 
the year.
In the short term we will continue to execute 
contracts associated with a signiﬁcant increase 
in capital spending in the industry, as well as 
traditional KBC optimisation work. As stated 
earlier, we anticipate that a number of large 
new reﬁneries will come on stream within two 
to three years. As a consequence the current 
shortage of reﬁning capacity will be signiﬁcantly 
relieved and reﬁnery margins will once again be 
under pressure. KBC will be well placed to meet 
the demands of this environment through 
its optimisation and human performance 
improvement services.
W GEORGE BRIGHT
CHIEF EXECUTIVE
“ WE BELIEVE THAT 2007 WILL BE ANOTHER GOOD 
YEAR FOR REFINERS WITH MARGINS REMAINING 
BUOYANT AS INVENTORY LEVELS FALL AND GROWTH 
IN DEMAND CONTINUES.”
_0_KBC_ar06_front.indd   9 29/03/2007   12:26:33 10
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
OPERATIONAL AND FINANCIAL REVIEW
CONSULTING ACTIVITIES
2006 saw KBC executing a balance of long-term 
consulting contracts (either through the traditional 
Proﬁt Improvement Programs (“PIP”) structure 
or through long-term Technical Service type 
arrangements) and shorter-term engagements 
with more sharply focused objectives. As the 
year progressed, this allowed us to manage 
resources in a more efﬁcient manner and deliver 
a consistently high level of manpower utilisation 
in the second half of the year. Our effort during 
the year was aimed at delivering an improved 
ﬁnancial performance from the workload backlog 
and improving the operating efﬁciency of the 
business. Our new management structure has 
enabled the consulting operations to concentrate 
on delivering the results required by our clients 
at an acceptable margin to KBC. The ﬁnancial 
performance shows that in the second half 
of the year these efforts have delivered the 
desired result.
The PIPs at Sinopec, which commenced at the end 
of 2005, progressed satisfactorily during the year 
and the ﬁrst major contractual milestones were met 
in September. These projects have now reached 
the implementation phase requiring full time KBC 
employees on site to ensure that opportunities 
identiﬁed by KBC are progressed. The project 
has involved implementation of Petro-SIM at 
each site to analyse and create opportunities 
for improvement.
SUMMARY OF REVIEW
Focus on improved financial performance
Good progress on Sinopec PIPs
Increase in use of T echnical Services arrangements
Development of OpX model
_0_KBC_ar06_front.indd   10 29/03/2007   12:26:34 The use of KBC’s Petro-SIM software continued to grow around 
the globe in 2006. Petro-SIM models the complex operations 
in plants, helping clients run reﬁneries more efﬁciently and 
effectively, both now and in the future. Our clients use Petro-SIM 
in many ways and differing types of KBC services.
A major European reﬁning company uses Petro-SIM to model 
their reﬁnery operations in several countries. The central 
engineering group at the company’s headquarters has a long 
history of using KBC software, and they were among the ﬁrst 
clients to license Petro-SIM. In 2006, the reﬁner expanded its 
use of KBC software by licensing multiple commercial software 
packages. Petro-SIM E x p r e s s allows more reﬁnery personnel to 
OpX: PETRO-SIM MEETS  
CLIENT NEEDS WORLDWIDE
_0_KBC_ar06_tipins.indd   5 29/03/2007   12:27:27 access the software, and it gives the client an opportunity 
to extend their use of KBC software to other reﬁneries. 
This client anticipates using the software to monitor unit 
performance and help select crude oils for processing.
A client in Asia has been using KBC models that were set 
up several years ago. These Petro-SIM models simulate their 
crude separation units, their Reformer unit (which increases 
gasoline octane) and their Fluid Catalytic Cracking (FCC) unit 
(which converts low-value gasoils to high-value gasoline and 
diesel products). One key use of the models here is to improve 
the reﬁnery planning process. KBC visits this client on an 
annual basis. On these visits we provide training sessions and 
demonstrate new features in the latest release. In 2006, a new 
tool was added to Petro-SIM which allows the client to keep 
their reﬁnery planning process up to date more easily.
A North American client chose to take full advantage of KBC’s 
modelling and consulting expertise in 2006 by asking us to 
create several reﬁnery-wide Petro-SIM simulations. KBC created 
rigorous, reﬁnery-wide models of several reﬁneries representing 
their current operations. These models were then used to 
examine how to add or modify the client’s plants to produce 
reﬁnery products with reduced sulphur that burn more cleanly. 
The client licensed Petro-SIM with all the associated reactor 
models, and they received extensive training on Petro-SIM 
use and the underlying technology. This client plans to use 
the models for their own studies to improve current and 
future reﬁnery operations.
_0_KBC_ar06_tipins.indd   6 29/03/2007   12:27:36 REVIEW OF THE YEAR
11
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
A project conducted for PEMEX including reﬁnery 
reconﬁguration and clean fuels studies was executed 
during the second half of 2006 with the ﬁnal report 
delivered during January 2007. This was the second 
of two major projects for KBC in Central America 
during the year. The ﬁrst was a study for the 
Inter-American Development Bank to identify the 
best location and conﬁguration of a proposed 
new reﬁnery in Central America where existing 
reﬁning resources produce less than a quarter 
of the oil product demand for the region. 
The proposed project is now undergoing review 
by potential investors with continued support 
from KBC.
A feature of the changing relationship between 
KBC and its clients in the current environment is 
the increase in the use of the Technical Service 
arrangement where we agree a framework that 
governs how we work together without deﬁning 
in advance the actual work to be undertaken. 
This can then be agreed on a regular basis as 
priorities change without having to execute 
contractual amendments. This type of arrangement 
is common in the upstream oil and gas industry. 
Examples include the projects for Nerefco in Holland 
and Irving Oil in Canada, both of which have been 
renewed for 2007 with an increased level of activity. 
A contract conﬁrmed with PETRONAS in Malaysia 
towards the end of 2006, which is expected 
to last for two years, demonstrates that we 
are meeting client requirements for a more 
ﬂexible approach in each of our regions.
Following the acquisition of TTS in February, 
there has been a strong focus on the delivery 
of Human Performance Improvement (“HPI”) 
services in addition to the technical excellence 
of KBC’s consulting services. A number of KBC 
employees have supported and been involved 
in HPI projects, thus broadening the range 
of experience and skills throughout KBC that 
will be necessary to support the needs of 
the industry over the coming years. The 
development of the OpX model combining 
both technical and human aspects of the work 
needed in process plants provides a framework 
in which to facilitate this joint approach.
KBC has continued to be a provider of strategic 
commercial services, including market and 
engineering expertise for both purchasers 
and sellers of reﬁning assets and advice to 
the investment community handling these 
transactions. The Petroleum Economics market 
analysis division has also been a key factor in 
winning this type of project work and continues 
to provide economic reporting and forecasting 
services to the industry on a subscription basis. 
The increase in capital activity in the industry 
during 2006 and the nature of this type of 
work has led to some intense periods of 
activity on tight deadlines in order to meet 
client expectations. It has also led to developing 
relationships with new industry investors such 
as Citadel Capital.
OPERATING RESULTS
Group revenue increased during 2006 by 24% 
from £28.5m to £35.4m. If measured at constant 
exchange rates the reported value would be £35.9m. 
The year saw a continued increase in software 
revenue from licence sales and maintenance 
and support agreements which totalled £5.8m 
in 2006, up from £5.0m in 2005: growth of 
16%. Consulting revenues increased by 26% 
from £23.5m to £29.6m. There was notably 
strong growth from the Energy product line, 
which now incorporates the acquisitions of 
Linnhoff March in 2002 and Veritech in 2006. 
Without the acquisitions made in 2006 revenue 
would have increased by 16% to £33.2m.
Contribution from the software revenue was 
69% after the carry forward of development 
costs, or 59% if they are included (2005: 40%). 
Contribution from the consulting revenue was 
33% (2005: 25%). Group costs increased overall 
by 10% before acquisition costs but by only 3% 
if these are excluded. The weak US dollar lowered 
costs by £0.4m giving an increase on a constant 
exchange rate basis of £3.3m, or 11%, over 2005. 
Staff costs increased by only 2%, direct costs 
by 20% and other operating charges by 24%.
“ GROUP REVENUE INCREASED DURING 2006 BY 
24% FROM £28.5M TO £35.4M. OPERATING PROFIT 
OF £1.9M WAS UP BY £3.9M WHEN COMPARED 
TO 2005.”
_0_KBC_ar06_front.indd   11 29/03/2007   12:26:34 12
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
The resultant operating proﬁt of £1.9m before net 
ﬁnance costs was up by £3.9m when compared 
to the loss of £2.0m reported for 2005. A measure 
of underlying operating proﬁt for the year has 
been calculated and reconciled in note 5d. 
It excludes the impact of the carry forward of 
software development costs and provision for 
an onerous lease mentioned below, as well as 
the amortisation of intangible assets. This measure 
shows a proﬁt of £2.0m (2005: loss of £1.8m).
The ﬁnance cost of £0.185m includes £0.082m 
representing the unwinding of the discount 
applied to the deferred consideration for the 
year’s acquisitions in order to record on the 
balance sheet the net present value of those 
future payments.
PROFIT BEFORE TAX
The proﬁt before tax of £1.7m compares with 
a loss of £2.0m in 2005.
TAX 
The tax charge of £0.7m for the year is a 
combination of a charge of £0.6m for foreign 
taxes incurred that are not expected to be 
recoverable in the near future, a charge of £0.9m 
on taxable proﬁts made during the year and 
a credit for tax losses and foreign tax credits 
expected to be recovered against future proﬁts. 
The tax charge of £0.015m for 2005 reﬂected 
a charge of £0.3m for foreign taxes incurred 
in that year offset by a credit for UK tax losses 
expected to be utilised in future years.
EARNINGS AND DIVIDENDS
The proﬁt after tax of £1.1m (2005: loss of £2.0m) 
equates to earnings per share of 2.1p, compared 
to a loss per share of 4.2p in 2005. Earnings per 
share on the underlying proﬁt measure are 2.3p 
(2005: loss of 3.8p).
A ﬁrst and ﬁnal dividend of 0.5p per share is 
proposed for 2006 in line with the Board’s stated 
intention of resuming dividend payments with 
the recovery of the business. No dividend was 
paid for 2005.
PROVISION FOR ONEROUS LEASE
The Company holds a lease for an ofﬁce property 
originally occupied by the business until May 2001 
and recently vacated by a subtenant. The rental 
market has weakened since 2001 and the Board, 
having re-assessed the probable cash outﬂow 
from the lease, has determined that an addition 
of £0.55m to the current onerous lease provision 
is required to cover the expected cost over its 
remaining life.
CARRY FORWARD OF SOFTWARE DEVELOPMENT COSTS
The Group has previously written off all software 
development costs to the Income Statement each 
year. Under UK GAAP there was discretion for 
Directors to write off expenditure as incurred, 
irrespective of the stage of development of 
the software product. However, under IAS, 
that discretion is no longer available and, under 
the accounting policy adopted last year on 
conversion to IAS, development expenditure is 
carried forward when “its future recoverability 
can be reasonably regarded as assured and 
technical feasibility and commercial viability 
can be demonstrated”. In the Board’s view 
the Petro-SIM development has now reached 
this stage. Hence, after a charge for the current 
year’s amortisation, net expenditure of £0.61m 
has been carried forward against expected 
future sales. Development expenditure is likely 
to continue at a similar level in 2007 and 2008 
and consideration of the same issues will be 
required at the end of 2007 to determine 
the appropriate accounting treatment.
WORKING CAPITAL
Trade and other receivables increased during the 
year from £10.7m to £13.4m, broadly in line with 
turnover growth but also reﬂecting the high level 
of work in progress balances on the PEMEX 
contract that were invoiced in January 2007. 
Trade and other payables increased during the 
period by around £3.2m, largely due to deferred 
payments due on the acquisitions of TTS and 
Veritech. Cash balances fell during the period 
by £0.6m.
OPERATIONAL AND FINANCIAL REVIEW CONTINUED
04
29.3
28.5
35.4
REVENUE £m
05 06
_0_KBC_ar06_front.indd   12 29/03/2007   12:26:34 REVIEW OF THE YEAR
13
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
FINANCIAL RISK MANAGEMENT
The Group’s principal ﬁnancial instruments 
comprise trade debtors, trade creditors, cash 
and short-term deposits used to ﬁnance the 
Group’s operations and future growth. The 
major ﬁnancial risks faced by the Group are 
interest rates, currency risk and contract risks.
INTEREST RATES
At 31 December 2006 the Group held cash balances 
of £1.5m and overdraft balances of £0.3m giving 
a net cash position of £1.2m (2005: £1.8m). 
Cash balances in excess of immediate needs 
are either placed on short-term deposit in the 
money markets or managed by a third-party 
fund manager. Externally managed funds are 
invested in deposits with, or certiﬁcates of deposits 
issued by, approved banks or building societies. 
No investments exceed one year’s maturity. 
The Group’s present policy is to place no more 
than £1m for maturity in excess of six months. 
Overdraft facilities are available to the Group 
for use in managing the timing of cash ﬂow 
in different countries and currencies and 
were used periodically during the year.
CONTRACT RISKS 
Some of the Group’s commercial contracts 
include terms where revenues are related 
to performance in the form of bonuses or 
penalties. The Group’s exposure under such 
contracts is reviewed regularly by the Executive 
Committee and the Board.
CREDIT RISK
The main credit risk faced is attributable to trade 
receivables. The majority of the Group’s clients 
are state owned or very large oil companies and 
therefore the recoverability risk tends to be less 
of the traditional credit nature and more to 
do with client satisfaction. Provision is made 
for doubtful receivables when there are 
circumstances pointing towards a likely 
reduction in the recoverable amount.
During 2006 we provided in full for £0.23m 
of unrecovered debtor and work in progress 
balances in connection with an optimisation 
project conducted for Indian Oil Corporation. 
The project was halted mid-way through due 
to external events at the refinery and we do 
not now expect to complete it. We are currently 
considering our position regarding future 
action  to recover this outstanding amount. 
LIQUIDITY RISK
Client payment terms can vary from contract 
to contract and can involve extended periods 
of time before invoices are raised. The liquidity 
risk is managed through use of the overdraft 
facilities described in note 17.
FOREIGN CURRENCIES
Most transactions continue to be in US dollars, 
Euro or sterling. The proportion of revenue in 
each currency was:
  2006 2005
US dollars 55% 64%
Euro 30% 20%
Sterling 15% 13%
Other 0% 3%
Where a revenue currency differs to that in which 
costs are incurred, a proportion of the foreign 
exchange exposure is hedged using forward 
exchange contracts in the currency markets. 
Contracts were in place at the balance sheet date 
for the sale of US$2m (2005: US$4m) during 2007 
at an average rate of US$1.87 (2005: US$1.75) 
and €1.5m (2005: nil) at an average rate of 
€1.47 (2005: n/a).
The Group has a number of overseas subsidiaries 
and branches where revenues and costs are 
denominated in currencies other than sterling, 
the most signiﬁcant of which are in the US. The 
foreign currency translation exposure arising on 
their results is not hedged (notes 17 and 24).
NICHOLAS P STONE
OPERATIONS AND FINANCE DIRECTOR
04
4.2
5.0
5.8
SOFTWARE REVENUE £m
05 06 04
16.6
32.2
35.4
05 06
CONTRACT AWARDS £m
04
10.3
18.6
26.7
05 06
WORKLOAD BACKLOG £m
_0_KBC_ar06_front.indd   13 29/03/2007   12:26:35 14
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
BOARD OF DIRECTORS
CHRISTOPHER B POWELL-SMITH
CHAIRMAN, 70
Mr Powell-Smith qualiﬁed as a solicitor in 1959. 
He was previously the Senior Partner of McKenna 
& Co and had responsibility for their international 
practice. He is currently Non-Executive Chairman 
of the European holding company of the Black & 
Decker Group and a Non-Executive Director of 
MPG Group Ltd. Mr Powell-Smith joined KBC as a 
Non-Executive Director in 1997 and was appointed 
Chairman in March 2004. He is Chairman of the 
Nomination Committee and a member of the 
Audit and Remuneration Committees.
W GEORGE BRIGHT
CHIEF EXECUTIVE, 56
Mr Bright is a Chemical Engineer and graduated 
from the University of Edinburgh. He is a Fellow 
of the Institution of Chemical Engineers. Prior to 
joining KBC, Mr Bright worked for IBM and Esso 
Petroleum plc. During his 20-year career with Esso 
he gained broad experience of the reﬁning industry, 
working in both technical and management roles. 
Mr Bright joined KBC in 1997 and was appointed 
Chief Operating Ofﬁcer in September 2003. 
He joined the Board of KBC in March 2004 
and was appointed Chief Executive in May 2006.
MICHAEL P KIRK
INDEPENDENT NON-EXECUTIVE DIRECTOR, 46
Mr Kirk was Managing Director of Weber 
Shandwick Financial, a financial 
communications consultancy, until July 2005. 
He joined Weber Shandwick from Cazenove, 
the UK investment bank, where he worked 
in Corporate Finance for over 13 years, four 
of those as a partner in the ﬁrm. Whilst at 
Cazenove Mr Kirk advised companies on a 
wide range of corporate issues including the 
demerger of Centrica from British Gas, the Lattice 
demerger from BG and the UK listings of John 
Wood Group and KBC. His early experience is in 
the energy and insurance sectors, having started 
his career at British Nuclear Fuels. Mr Kirk is also 
a member of the Primary Markets Group of the 
London Stock Exchange. A chartered engineer, 
Mr Kirk has an MBA in Finance and degrees in 
Chemical Engineering and Nuclear Fuels Technology. 
Mr Kirk was appointed a Non-Executive Director 
of KBC in October 2004 and is Chairman of the 
Remuneration Committee. He is a member of 
the Audit and Nomination Committees.
NICHOLAS P STONE
OPERATIONS AND FINANCE DIRECTOR, 43
Mr Stone has a degree in Mathematics and 
Economics from Bristol University and is a 
member of the Institute of Chartered Accountants 
in England and Wales. He qualiﬁed with Coopers 
and Lybrand where he gained experience in audit, 
tax and corporate ﬁnance before undertaking 
various ﬁnancial roles with Mobil in the UK. 
Subsequent to that Mr Stone was Company 
Secretary and UK Finance Director of the Lambert 
Fenchurch Group. Mr Stone joined KBC in 2001 
as Finance Director and was appointed Operations 
and Finance Director in May 2006.
IAN K MILLER
INDEPENDENT NON-EXECUTIVE DIRECTOR, 59
Mr Miller is a Chartered Accountant and 
Management Consultant. He was previously the 
Chief Executive Ofﬁcer of Parity Group plc, an IT 
services company, for which he led a complete 
restructuring and re-capitalisation process through 
the period from 2001 to 2004. Before joining 
Parity, Mr Miller was President of the Energy Global 
Industry Group of EDS, helping major oil, gas and 
chemicals corporations succeed in the digital 
economy. Prior to joining EDS in 1994, he spent 
16 years at PA Consulting Group, the last six as 
Partner responsible for the Global Energy practice. 
He qualiﬁed as a chartered accountant with a 
member ﬁrm of KPMG. He also holds the post of 
Commandant of the City of London Police Special 
Constabulary and is a Non-Executive Director of 
Sheltered Housing Management (Scotland) Ltd. 
Mr Miller was appointed a Non-Executive Director 
of KBC in October 2004. He is Chairman of the 
Audit Committee and a member of the Nomination 
and Remuneration Committees. He is also the 
Senior Independent Director.
_0_KBC_ar06_front.indd   14 29/03/2007   12:26:40 REVIEW OF THE YEAR
15
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
ADVISORS
EXECUTIVE COMMITTEE
SECRETARY
Janet M Ireland
REGISTERED OFFICE
KBC House
42–50 Hersham Road
Walton on Thames KT12 1RZ
REGISTERED NUMBER
01357958
AUDITORS
BDO Stoy Hayward LLP
Connaught House
Alexandra Terrace
Guildford GU1 3DA
PRINCIPAL BANKERS
Barclays Bank plc
Pall Mall Corporate Group 
50 Pall Mall
London SW1A 1QA
PRINCIPAL SOLICITORS
Shoosmiths
Russell House
1550 Parkway
Solent Business Park
Whiteley
Fareham PO15 7AG
STOCKBROKERS
Arden Partners Limited
Nicholas House
3 Laurence Pountney Hill
London EC4R 0EU
REGISTRARS
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road 
Bristol BS99 7NH
A
B
C
D
E
F
G
H
I
J
K
A Kevin Clarke
B Bill Tetreault 
C Jon Hedges 
D Simon Rogers 
E George Bright 
F John Young 
G Nick Stone 
H Paul Kennedy
I David Turner 
J Kirk Novak 
K Ramon Loureiro
_0_KBC_ar06_front.indd   15 29/03/2007   12:26:42 16
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
CORPORATE GOVERNANCE 
The Board of Directors is accountable to the Company’s shareholders for good corporate governance and this statement describes how this has been applied.
Although not required by AIM, the Directors have given full consideration to the Combined Code on Corporate Governance 2006 (the “Combined Code”) 
in deciding the extent to which such recommendations should be implemented. The size of the Group has been taken into account, together with the 
cost of implementation. On that basis the Directors have decided that it is not appropriate to adopt all the provisions of the Combined Code and the 
exceptions are commented on below. Nevertheless, the Directors have wherever possible conducted the Group’s business in accordance with the spirit 
of the Combined Code commensurate with its size.
An explanation of how the Group has applied the principles and the extent to which the provisions in the Combined Code have been complied with 
throughout the year appears below.
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE PROVISIONS OF THE COMBINED CODE
The Company has been in full compliance with the provisions set out in Section 1 of the Combined Code throughout the year except as explained below.
THE WORKINGS OF THE BOARD AND ITS COMMITTEES
THE BOARD
The Board comprises three Executive Directors, two Non-Executive Directors and the Chairman. Their details are set out on page 14. The Board considers 
this to be the appropriate size and balance for the Company at present. C B Powell-Smith was considered independent at the time of his appointment 
as Chairman but is no longer considered to be so under the Combined Code. Of the two Non-Executive Directors, M J Kirk and I K Miller are considered 
independent. M J Kirk was until July 2005 a director of Weber Shandwick Financial which provides ﬁnancial public relations services to the Company. 
He is nevertheless considered by the other Directors to be independent since he was not Weber Shandwick’s main contact with KBC and fees derived 
by Weber Shandwick from KBC are immaterial to their business. I K Miller is the Senior Independent Director. In this role Mr Miller has made himself 
available for meetings with shareholders, led the assessment of the Chairman’s performance and handled other responsibilities as determined by the Board.
The Board meets at least six times per year to deal with matters speciﬁcally reserved for its decision. These matters include agreeing and monitoring 
strategic plans and ﬁnancial targets, major decisions on resource, overseeing management of the Company in the interest of shareholders, ensuring 
processes are in place to manage major risks, treasury matters, changes in accounting policies, corporate governance issues, litigation and reporting 
to shareholders. The executive managers of the business make day-to-day operating decisions to ensure proper management of the Company’s business 
and implement the Board’s approved strategy to deliver operational performance. They recommend strategy and plans to the Board, make routine 
decisions on resources and ensure that adequate operational and ﬁnancial controls are in place.
During 2006 the Board and its subcommittees met as follows:
Date       Meeting Attendance
11 January       Board of Directors All Directors
19 January       Board of Directors All Directors
24 January       Board of Directors All Directors
21 February       Remuneration Committee All members
21 March       Audit, Nomination and All members 
        Remuneration Committees 
21 March       Board of Directors All Directors
25 May       Nomination and All members 
        Remuneration Committees 
25 May       Board of Directors All Directors
13 July       Board of Directors All Directors
5 September       Audit Committee All members
5 September       Board of Directors All Directors
2 November       Remuneration Committee All members
2 November       Board of Directors All Directors
14 December       Remuneration Committee All members
14 December       Board of Directors All Directors
To enable the Board to discharge its duties all Directors receive appropriate and timely information. Brieﬁng papers are distributed by the Company Secretary 
to all Directors in advance of Board meetings. The Chairman ensures that all Directors are properly briefed on issues arising at Board meetings.
The Chairman ensures that Directors, in the furtherance of their duties, have access to independent professional advice as required and at the Company’s 
expense. All Directors are encouraged to bring an independent judgement to bear on issues of strategy, performance, resources (including key appointments) 
and standards of conduct. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors 
are fully considered.
All Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures are followed and that 
the Board complies with applicable rules and regulations. The appointment and removal of the Company Secretary is a matter for the Board as a whole.
Relevant and appropriate training is made available to every Director on the ﬁrst occasion he or she is appointed to the Board of the Company. 
There is a Board appraisal system in place which includes the assessment of training needs for all Directors.
_1_KBC_ar06_back.indd   1 29/03/2007   12:32:36 CORPORATE GOVERNANCE
17
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
THE WORKINGS OF THE BOARD AND ITS COMMITTEES CONTINUED
THE BOARD CONTINUED
To ensure that no single person has unfettered powers of decision over the Company there is a clear division of responsibility between the running 
of the Board and the running of the Group’s business. The Chairman is responsible for the running of the Board and for ensuring effective communication 
with shareholders, with the Chief Executive running the Group’s business.
The Board undertakes a rigorous and formal evaluation of its own performance and that of its committees and individual members, in compliance with 
the Combined Code provision A.6.
The Committees shown below report to the Board to enable it to meet its responsibilities. The terms of reference of these Committees are available 
on the Company’s website.
NOMINATION COMMITTEE
The Company’s Nomination Committee is chaired by C B Powell-Smith and consists of the Chairman of the Board and the two Non-Executive Directors. 
The Committee meets as required and is responsible for proposing candidates for appointment to the Board, having regard to the balance and structure 
of the Board, and monitors the composition of the Board. To meet this responsibility the Committee met on 21 March and 25 May 2006. In appropriate 
cases recruitment consultants are used to assist the process.
All Directors are subject to election by shareholders at the ﬁrst opportunity after their appointment and to re-election thereafter by the shareholders 
at least every three years. The Chairman of the Board, C B Powell-Smith, was ﬁrst appointed to the Board in February 1997. In addition, he reached 
the age of 70 years in 2006. The other Directors believe that Mr Powell-Smith’s skills and experience continue to be of value to the Company. In accordance 
with the articles of association of the Company, therefore, a proposal will be put to the Annual General Meeting in 2007 to re-elect Mr Powell-Smith 
as a Director of the Company.
REMUNERATION COMMITTEE
The Company’s Remuneration Committee is chaired by M P Kirk and consists of the two Non-Executive Directors and the Chairman of the Board.
The Committee meets at least twice a year, with the Chief Executive in attendance by invitation, to determine the remuneration of the Executive Directors 
and senior executives of the Group. The Committee is responsible for determining policy, within agreed terms of reference, of the Group’s framework 
of executive remuneration and its cost. The Committee sets the contract terms, remuneration and other beneﬁts for each of the Executive Directors, 
including performance related bonus schemes, pension rights and compensation payments. Further details of the Group’s policies on remuneration, 
service contracts and compensation payments are given on pages 19 to 23.
AUDIT COMMITTEE
The Audit Committee is chaired by I K Miller and comprises the two Non-Executive Directors and the Chairman of the Board. C B Powell-Smith, as Chairman 
of the Board, is not considered independent under the Combined Code. Hence throughout 2005 the membership of the Audit Committee has not been 
in compliance with the Combined Code provision C.3.1. The decision that Mr Powell-Smith should be a member of the Audit Committee was taken 
in view of the size of the Company and to ensure a breadth of views.
The Committee, which meets at least twice a year, provides a forum for reporting by the Group’s external auditors. Meetings are also attended, by invitation, 
by the Chief Executive and the Operations and Finance Director. The Audit Committee follows written terms of reference and is responsible for reviewing 
a wide range of matters including adequacy of the Group’s accounting systems and control environment, the integrity of the Group’s ﬁnancial 
statements, together with its reporting procedures to shareholders.
The Audit Committee advises the Board on the appointment of external auditors and their remuneration, and discusses with the external auditors the 
nature, scope and results of the audit. The Audit Committee keeps under review the cost effectiveness, independence and objectivity of the external 
auditors, including the level of non-audit fees charged. Auditor objectivity and independence is safeguarded by ensuring that non-audit services 
provided by the external auditors are kept to a minimum and are restricted to matters concerning tax compliance and associated advisory services.
The Committee considers annually whether it is appropriate to introduce a separate internal audit function. To date it has concluded that this is not 
necessary given the structure of the Group’s accounting function and the size of the Group.
EXECUTIVE COMMITTEE
This comprises the Executive Directors and other senior managers and meets regularly to direct, control and monitor the Group’s operations on a 
day-to-day basis.
 
_1_KBC_ar06_back.indd   2 29/03/2007   12:32:36 18
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
PERFORMANCE EVALUATION
Performance of the Board and of the committees of the Board is reviewed at a meeting of all the Directors. Individual performance evaluation 
of Executive Directors other than the Chief Executive is carried out by the Chief Executive and the results reviewed with the Chairman and the 
Remuneration Committee. Evaluation of the Chief Executive’s performance is carried out by the Chairman and the results reviewed with the 
Non-Executive Directors. Non-Executive Directors are appraised by the Chairman. The Chairman is appraised by the Non-Executive Directors in 
consultation with the Chief Executive. An evaluation of the performance during 2006 of the Board as a whole, the Committees and individual 
Directors took place in early 2007. The Chairman reviewed these matters with each Director individually and the conclusions of the overall reviews 
were discussed at a meeting of all the Directors.
INTERNAL CONTROL
The Board has overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. The system of internal control is designed 
to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable 
and not absolute assurance against material misstatement or loss.
A continuous process has been in place throughout the year and up to the date the ﬁnancial statements were approved for identifying, evaluating 
and managing the signiﬁcant risks faced by the Group. This is regularly reviewed by the Board and is in line with the Turnbull guidance.
The Board has performed a review of the effectiveness of the system of internal control and has taken actions necessary to remedy any signiﬁcant failings 
or weaknesses identiﬁed in the review. The processes used by the Board to review the effectiveness of the system of internal control include the following:
  The Audit Committee reviews the effectiveness of the risk management process and signiﬁcant risk issues are referred to the Board for consideration.
  The Chairman of the Audit Committee reports the result of Audit Committee meetings to the Board and the Board receives minutes of all such meetings.
  The Audit Committee maintains close contact with the Finance Director and periodically instigates investigations into the effectiveness and other 
aspects of internal control.
  The Board receives the results of risk self-assessment reports from business line managers covering the risks faced by the Group together with 
compensating internal controls. A record of such risks is maintained and reviewed on a regular basis, with risk weightings assigned to ensure 
priority is given to the major risks faced by the Group.
  The Board receives regular reports concerning the speciﬁc contract risks faced by the Group.
The Board regularly considers social, ethical and safety issues relating to the Group.
Given the size of the Group, the Board does not believe that it is appropriate to have a separate internal audit function but reviews the position annually.
RELATIONS WITH SHAREHOLDERS
KBC values and maintains an active two way dialogue with its shareholders through a planned programme of investor relations. The Chief Executive 
and Finance Director meet frequently with representatives of institutional shareholders to discuss their views and review corporate governance issues. 
Feedback from these meetings is discussed at meetings of the Board. The largest shareholders are invited to meet any other Directors at any time. 
The Chairman and the Non-Executive Directors have the opportunity to meet shareholders if they so wish. Major shareholders are consulted on 
signiﬁcant issues concerning the Company’s corporate governance. Information is also made available to shareholders via the Annual and Interim 
Reports and the Group’s website (www.kbcat.com).
The Annual General Meeting provides an opportunity to communicate with private and institutional shareholders and the Company welcomes their 
participation. The Chairman ensures that the members of the Audit, Remuneration and Nomination Committees are available at Annual General Meetings 
to answer questions. Details of resolutions to be proposed at the Annual General Meeting in 2007 can be found in the Notice of Meeting on page 61 
of this report.
GOING CONCERN
The report and accounts are prepared on a going concern basis. The Directors are satisﬁed that the Group has sufﬁcient resources and borrowing facilities 
to meet its requirements for a period of at least 12 months from the date of this report.
COMPLIANCE STATEMENT
With the exception of the items mentioned above, the Group has complied throughout the accounting period ended 31 December 2006 with the provisions 
set out in Section 1 of the Combined Code.
After consideration by both the Audit Committee and the Board, it was agreed that in view of the size of the Company it would be inappropriate 
to comply with the provisions of the Combined Code noted as exceptions above.
CORPORATE GOVERNANCE CONTINUED
_1_KBC_ar06_back.indd   3 29/03/2007   12:32:36 CORPORATE GOVERNANCE
19
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
The Company has complied with Principle B2, the supporting principles and the underlying speciﬁc provisions of the Combined Code. This remuneration 
report has been prepared in accordance with Schedule 7A of the Companies Act 1985. The Company has also complied with Principle B1, the supporting 
principles and the underlying speciﬁc provisions of the Combined Code in determining the policy on remuneration for its Executive Directors, including 
service contracts and compensation. Details of each Director’s remuneration are set out on pages 22 and 23.
REMUNERATION COMMITTEE COMPOSITION, RESPONSIBILITIES AND OPERATION
The Company’s Remuneration Committee (the “Committee”) consists of the two Non-Executive Directors, M P Kirk (who chairs the Committee) and I K Miller, 
and the Chairman of the Board, C B Powell-Smith. M P Kirk and I K Miller are considered independent. 
The Chief Executive is invited to attend meetings other than when his own remuneration is being considered. The Committee determines the policy, 
within agreed terms of reference, of the overall remuneration package for Executive Directors and other senior executives. The Group and the Committee 
seek advice from time to time from external remuneration consultants. In 2006 New Bridge Street Consultants advised the Committee on new remuneration 
proposals and other remuneration-related matters.
REMUNERATION POLICY
The Group’s policy is to attract, retain and motivate high-quality executives capable of achieving the Group’s objectives and to offer a remuneration 
package (consisting of basic salary, beneﬁts, incentive share schemes, pension and a performance-related bonus) which is competitive with the sector 
in which the Group operates. The details of individual components of the remuneration package and service contracts are discussed below.
In 2006 the Committee introduced revised annual bonus arrangements (details of which can be found below) and shareholders approved a new 
Long Term Incentive Plan (“LTIP 2006”) which operates alongside the annual bonus arrangements. Details of the LTIP 2006 can be found below.
BASIC SALARY AND BENEFITS
The basic salaries and beneﬁts of all employees are reviewed annually and adjustments made with effect from 1 April. In reviewing salaries, consideration 
is taken of personal performance, the Group’s performance and external comparative information. Beneﬁts principally relate to cars and car allowances, 
pensions, life and disability insurance, and private healthcare.
PERFORMANCE BONUSES
A performance bonus is payable to Executive Directors on the achievement of performance conditions established by the Remuneration Committee. 
A cash-based annual bonus plan was introduced for 2006 and onwards, under which the pre-tax trading proﬁts of the Group (after making any IFRS 
charge relating to share incentives) are split between retained earnings, dividends and a cash bonus pool. It is intended that the split will be one third 
towards the bonus pool and two thirds for retained earnings and dividends in order that the business can invest in future growth and operate a progressive 
dividend policy. The Committee has regard to the Group’s ﬁnancial performance and the market’s expectations when determining the awards to be made 
from the pool to Executive Directors and other employees.
The bonus pool is available to pay cash bonuses to all employees. For Executive Directors the maximum potential annual bonus is 75% of base salary. 
The criteria for making the awards to Executive Directors for 2006 were meeting or exceeding Group ﬁnancial performance measures, including 
operating margin. 
For all other employees the bonus pool is allocated between the various grades, with a maximum at each grade for the proportion of base salary that may 
be awarded as bonus to that group of employees in aggregate. As noted above, for the Executive Directors there is an absolute limit of 75% of base 
salary. These limits provide an upper cap on the bonus as a proportion of the Company’s staff costs. The criteria for making the awards to employees 
other than the Executive Directors includes individual performance measures.
Up to 50% of any Executive Director’s annual bonus is compulsorily deferred into the Company’s shares for three years, with these shares “matched” 
on a 1:1 basis (gross of tax) with an award of performance-linked matching shares being granted under the LTIP 2006. Other employees may voluntarily 
elect for part of their bonus (up to a maximum of 50%) to be deferred into the Company’s shares which are also subject to a similar award of performance 
linked matching shares under the LTIP 2006.
PENSIONS
The Group operates deﬁned contribution pension schemes. Contributions are calculated as a percentage of basic salary.
The Chairman and Non-Executive Directors are not eligible for membership of Group pension schemes.
FEES
The fees for Non-Executive Directors are determined by the Executive Directors. The Non-Executive Directors are not involved in any discussions or decisions 
about their own remuneration. The remuneration of the Chairman is determined by the Remuneration Committee members other than the Chairman.
DIRECTORS’ REMUNERATION REPORT
_1_KBC_ar06_back.indd   4 29/03/2007   12:32:36 20
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
DIRECTORS’ CONTRACTS
Details of the contracts of Directors serving during the year are shown below:
      Unexpired term at 
    Nature of Effective date of 31 December Notice 
    agreement agreement 2006 period
W G Bright, Executive Director   Service agreement 2 March 2004 — 12 months
P J Close, Executive Director 
(1)
   Service agreement 26 September 2003 — —
N P Stone, Executive Director   Service agreement 20 August 2001 — 12 months
M P Kirk, Non-Executive Director   Letter of appointment 7 October 2004 1.76 years 6 months
I K Miller, Non-Executive Director   Letter of appointment 7 October 2004 1.76 years 6 months
C B Powell-Smith, Chairman   Agreement for services 1 January 2005 
(2)
 None 
(3)
 —
(1) resigned as a Director on 30 September 2006
(2) replaces earlier agreement
(3) the appointment was renewed on 1 January 2006 for a further 12 months
Under the service agreements of Mr Close, Mr Bright and Mr Stone the Company has, or had, the right, but is, or was, not obliged, to pay salary in lieu 
of notice of termination. There are no other express provisions in any of the Directors’ contracts relating to termination payments.
REVIEW OF PAST PERFORMANCE
The following charts look at the value at 31 December 2006 of £100 invested in the Company on 1 January 2002 compared with the value of £100 invested 
in the FTSE Fledgling and FTSE AIM All-Share stocks over the same period. The Company’s shares were included in the FTSE Fledging index until the shares 
were admitted to AIM on 26 June 2006. Since admission to AIM the Company’s shares have been included in the FTSE AIM All-Share index.
 
DIRECTORS’ INTERESTS IN SHARES
The beneﬁcial interests of the Directors in the Ordinary share capital of the Company are shown on page 24.
SHARE OPTIONS AND INCENTIVE PLANS
The Group has in the past operated share option schemes and Long Term Incentive Plans, as described below.
DIRECTORS’ REMUNERATION REPORT CONTINUED
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_1_KBC_ar06_back.indd   5 29/03/2007   12:32:59 CORPORATE GOVERNANCE
21
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
SHARE OPTIONS AND INCENTIVE PLANS CONTINUED
FORMER SHARE OPTION PLANS
The Company established a discretionary share option scheme which was adopted at a general meeting on 12 March 1997 (the “Executive Scheme”). 
Options granted under the Executive Scheme prior to 12 May 2000 fall into two parts: those exercisable between three and 10 years from the award 
date and those exercisable between ﬁve and 10 years from the award date. Both are subject to performance conditions. The three-year options will 
not normally be exercisable unless earnings per share as deﬁned by the IIMR, (“EPS”) increase over any three-year period prior to expiry by at least the 
change in the Retail Prices Index over such period plus 15%. The ﬁve-year options (“super options”) will not normally be exercisable unless EPS increase 
over any ﬁve-year period prior to expiry by at least the change in the Retail Prices Index over such period plus 90%.
Options granted under the Executive Scheme on or after 12 May 2000 are exercisable between three and 10 years from the award date and are subject to 
performance conditions. Options granted to employees other than Directors will not normally be exercisable unless EPS increase by 5% per annum above inﬂation 
over a period of three or more years always beginning with the ﬁnancial year of the Company in which the option was granted. For options granted to Directors 
the performance condition is that over a period of three or more years always beginning with the ﬁnancial year of the Company in which the option was granted, 
the Group’s EPS must grow by between 5% and 9% per annum above inﬂation. If the EPS increase is exactly 5% per annum above inﬂation, the Director may 
exercise the option over 60% of the shares. If the EPS increase is 9% per annum or more above inﬂation, the Director may exercise the option over 100% of the 
shares. If the EPS increase is between 5% and 9% per annum above inﬂation, a proportionate percentage of the option may be exercised on a sliding scale.
The KBC Advanced Technologies plc Employee Trust has been available to transfer existing issued shares in the Company upon exercise of share options 
and a committee determines the extent to which the Trust is used for this purpose. In line with the policy the Committee from time to time recommends 
that the Group lends funds to the Trust to enable it to purchase shares in the open market for this purpose.
A former share option scheme was in existence during 2006, the KBC Executive Share Option Scheme. This share option scheme has expired and there are 
no subsisting options under this scheme.
Share options outstanding over new shares at 31 December 2006 are summarised in note 42 to the accounts. These are included in the details of options 
held by the Directors during the year shown on page 22.
FORMER LONG TERM INCENTIVE PLAN
The Long Term Incentive Plan (the “LTIP”) provided for the award of rights to acquire shares at nil cost or, in the case of new issue shares, at not less than 
par value, subject to various conditions. The proportion of those shares which will vest is related to the performance of the Group over a three-year period.
Awards under the LTIP to Executive Directors and senior staff were made on 8 March 2005. These are included in the details of options held by the 
Directors during the year shown on page 22. No awards were made in 2006 as the LTIP expired in 2005.
For awards which remain outstanding, vesting is determined by the LTIP’s performance conditions that compare the Group’s EPS growth over a three-year 
period to the percentage change in the Retail Prices Index (“RPI”) over the same period. No shares will be earned if the Group’s EPS growth is less than 
15% plus RPI. 50% of the shares will be earned if the Group’s EPS growth is 15% plus RPI and 100% of the shares will be earned if the Group’s EPS growth 
is 30% plus RPI. A proportionate number of shares will be earned for performance between 15% plus RPI and 30% plus RPI.
When determining the extent to which the LTIP’s EPS-based performance conditions are satisﬁed under the Group’s share incentive arrangements, 
the Committee will seek external advice where necessary. The Committee will ensure that appropriate adjustments are made as a result of the transition 
to International Accounting Standards, so as to achieve a consistent measurement of performance over the relevant period.
LONG TERM INCENTIVE PLAN 2006
New share incentive arrangements for the Executive Directors and all employees were approved by shareholders at the Annual General Meeting in 2006.
In summary, two types of award can be granted under the LTIP 2006:
1.  Awards of shares in the Company (“Matching Shares”), linked to and ‘‘matching’’ on a maximum 1:1 on a gross of tax basis shares acquired by participants 
following compulsory or voluntary investment of part of their annual bonus in shares (‘‘Deferred Shares’’). Executive directors are currently required 
to invest up to 50% of any post tax annual bonus into Deferred Shares. Participation for other employees is voluntary. These Matching Shares will 
ordinarily vest three years after the date of the award, subject to continued employment of the individual concerned within the Group and to the 
satisfaction of challenging performance conditions and retention of the Deferred Shares over the performance measurement period.
2.  Awards of Performance Shares to executive directors and selected senior managers, which again ordinarily vest three years after the date of the award 
subject to continued employment of the individual concerned within the Group and to the satisfaction of challenging performance conditions. 
The maximum value of Performance Shares that may be granted each year to an individual is equal to 75% of that person’s basic salary.
Currently all employees are invited (compelled in the case of executive directors) to participate in awards of Matching Shares, with awards of Performance 
Shares ordinarily restricted to executive directors and selected senior managers.
No Matching Shares were awarded in 2006. Awards of Performance Shares were made to Executive Directors and senior staff on 15 June 2006. These are 
included in the details of options held by the Directors during the year shown on page 22. For awards of Performance Shares made in 2006, absolute 
EPS performance targets were used. This approach takes account of the fact that the Company disclosed a loss for the year to 31 December 2005 which 
would have been the ‘‘base year’’ for measuring EPS growth if the typical approach of measuring the Company’s real EPS growth over a three year period 
was used. For the awards made in 2006 the lower threshold target is to be an EPS of 2.56p for the ﬁnancial year ending 31 December 2008 and the 
upper threshold target is an EPS of 2.90p for the same year. Such awards will vest on a sliding scale between these EPS targets.
Following a return to positive EPS, the Committee anticipates employing more typical EPS growth in excess of inﬂation targets. It is currently envisaged 
that the threshold for such targets would be set at EPS growth of no less than an average of RPI + 3% per annum, with vesting on a sliding scale up to a 
higher target which would be set at a level considered appropriate in the circumstances at the time. The Committee will also keep the continued sole 
use of EPS as a measure of performance under review.
The Committee has introduced a shareholding guideline for the Executive Directors. Under this guideline, it is currently intended that each Executive Director 
will be required to retain no less than 50% of shares vesting under the LTIP 2006 (net of those sold to meet tax liabilities) until such time as a shareholding 
equal to 75% of basic salary is achieved (with pre-existing shareholdings taken into account).
_1_KBC_ar06_back.indd   6 29/03/2007   12:33:00 22
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
DIRECTORS’ INTERESTS IN SHARE OPTIONS AND LONG TERM INCENTIVE PLAN AWARDS
The interests of the Directors in options to purchase or subscribe for shares of the Company, which includes options granted by the KBC Advanced Technologies plc 
Employee Trust (the “Trust”), are set out below. Awards under the Group’s Long Term Incentive Plans (“LTIP”) are also included. Performance conditions for all 
options and awards are shown above.
         Mid-market Period Net value at 
   At 1    At 31 Exercise closing price during which 31 December 
   January    December price (if higher) 
(2)
 options are 2006 
(3)
 
   2006 
(1)
 Exercised Granted Lapsed 2006 Pence Pence exercisable £
W G Bright
Executive Scheme 
(4)
  6,666 — — — 6,666 350.0 — 2001–2008 —
Executive Scheme 
(4)
  3,334 — — — 3,334 350.0 — 2003–2008 —
Executive Scheme 
(4)
 (via trust)  4,266 — — — 4,266 199.5 — 2002–2008 —
Executive Scheme 
(4)
  2,134 — — — 2,134 199.5 — 2004–2008 —
Executive Scheme 
(5)
 (via trust)  10,000 — — — 10,000 100.0 — 2003–2010 —
Executive Scheme 
(5)
  15,000 — — — 15,000 127.5 — 2004–2011 —
Executive Scheme 
(5)
  10,500 — — — 10,500 110.0 — 2005–2012 —
Executive Scheme 
(5)
  100,000 — — — 100,000 33.5 — 2006–2013 500
LTIP  115,221 — — — 115,221 2.5 32.5 2007–2014 36,295
LTIP (via trust)  37,792 — — — 37,792 2.5 37.5 2008–2015 11,904
LTIP (via trust)  — — 105,800 — 105,800 — 41.0 2009–2010 35,972
P J Close
Executive Scheme 
(5)
  500,000 — — — 500,000 37.0 — 2006–2007 —
LTIP  192,308 — — — 192,308 2.5 32.5 2007–2008 60,577
LTIP (via trust)  66,667 — — — 66,667 2.5 37.5 2007–2008 21,000
N P Stone
Executive Scheme 
(5)
  100,000 — — — 100,000 146.5 — 2004–2011 —
LTIP  257,463 — — 257,463 —  2.5 33.5 n/a —
LTIP  103,846 — — — 103,846 2.5 32.5 2007–2014 32,711
LTIP (via trust)  36,000 — — — 36,000 2.5 37.5 2008–2015 11,340
LTIP (via trust)  — — 87,200 — 87,200 — 41.0 2009–2010  29,648 
(1) Or on appointment if later
(2) On day immediately prior to date of the award
(3) Net value of options are calculated using mid-market price of the Company’s shares at the end of the year, less exercise price 
 Net values are before performance criteria, which will determine the extent to which exercise is permitted
(4) Subject to the performance criteria for grants made prior to 12 May 2000
(5) Subject to the performance criteria for grants made on or after 12 May 2000
No options were exercised by Directors during the years ended 31 December 2006 and 31 December 2005.
The interests of the Directors to subscribe for or acquire ordinary shares have not changed to the date of this report.
The mid-market price of the Company’s shares at the end of the year was 34.0p and the range of mid-market prices during the year was between 27.5p and 60.0p.
DIRECTORS’ REMUNERATION
Directors’ remuneration comprised:
          2006 2005 
          £000 £000
Emoluments:
– basic salaries         575 585
– bonus         133 —
– expense of share based payments         49 49
– beneﬁts         57 68
          814 682
– fees         73 80
          887 762
– pension contributions         44 48
          931 810
DIRECTORS’ REMUNERATION REPORT CONTINUED
_1_KBC_ar06_back.indd   7 29/03/2007   12:33:00 CORPORATE GOVERNANCE
23
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
DIRECTORS’ REMUNERATION CONTINUED
The remuneration of individual Directors was as follows:
     Salary  Bonus 2006 2005 2006 2005 
     and fees Beneﬁts 
(1)
 payment Total Total Pension Pension 
      £000 £000 £000 £000 £000 £000 £000
Executive Directors
W G Bright 
(2)
    182 27 71 280 179 9 9
P J Close 
(3)
    195 25 — 220 294 19 25
N P Stone    170 5 62 237 153 16 14
Non-Executive Directors
M P Kirk    28 — — 28 27 — —
I K Miller    28 — — 28 27 — —
C B Powell-Smith    45 — — 45 44 — —
P B Plant 
(4)
    — — — — 9 — —
     648 57 133 838 733 44 48
(1) Beneﬁts are made up primarily of private health care, life assurance beneﬁts, disability insurance beneﬁts and provision of cars or car allowance
(2) Remuneration was paid in US dollars and has been translated at an average rate of $1.8571 for 2006
(3) Resigned as a Director 30 September 2006
(4) Resigned as a Director 28 April 2005
Mr Bright participates in the Group’s Proﬁt Sharing/401(k) Plan, a deﬁned contribution employee beneﬁt plan in the United States. The employer’s contribution 
in Mr Bright’s case is 8% of aggregate basic salary in a full year up to a maximum salary of US $205,000 per annum.
Mr Close operated a personal pension plan with deﬁned contributions. The employer’s normal contributions amounted to 10% of aggregate basic salary 
in a year.
Mr Stone is a member of the Group Personal Pension Plan (a deﬁned contribution scheme) operated by the Group in the UK. The employer’s normal 
contributions amount to 10% of aggregate basic salary in the year.
No payments were made, or beneﬁts accrued, under any other pension arrangements.
The charges to the Income Statement in the year for share based incentives in respect of the Directors were: W G Bright £21,000 (2005: £8,000), 
N P Stone £13,000 (2005: £7,000) and P J Close £15,000 (2005: £14,000).
Payments were made to former Directors who continued to provide technical and sales support services to the Group as follows:
         2006 2005 Year retired 
         £000 £000 from Board
J C Brice        13 86 1999
P J Close        32 — 2006
P B Plant        2  2005
By order of the Board
JANET M IRELAND
SECRETARY
15 MARCH 2007
_1_KBC_ar06_back.indd   8 29/03/2007   12:33:00 24
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
The Directors present their report and audited ﬁnancial statements for the year ended 31 December 2006.
BUSINESS REVIEW AND PRINCIPAL ACTIVITIES
The principal activity of the Group is the provision of consultancy and software to the hydrocarbon and energy industries worldwide. In addition 
to subsidiary undertakings, the Group operates through branches present in the Netherlands, Japan and the Russian Federation.
A more detailed review of the development and performance of the business is given in the Chairman’s Statement on pages 4 and 5, the Chief Executive’s 
Report on pages 6 to 9 and in the Operational and Financial Review on pages 10 to 13. Principal risks and uncertainties facing the company and its subsidiary 
undertakings and how they are controlled are also described in the Operational and Financial Review on pages 10 to 13. Information relating to the 
environment and staff matters is given below.
RESULTS AND DIVIDENDS
The results for the year are set out in the Group Income Statement on page 30.
No interim dividend has been paid to shareholders in respect of 2006. The Board recommends a ﬁrst and ﬁnal dividend of 0.5p per 2½p Ordinary 
share. The dividend, if approved, will be paid on 22 May 2007 to shareholders on the register at close of business on 11 May 2007.
DIRECTORS AND THEIR INTERESTS
The Directors during the year are shown below. The interests of the Directors in the share capital of the Company (all beneﬁcially held) at 31 December 2006 
(or at date of resignation, if earlier) are as follows:
 2½p ordinary shares
          At 1 At 31 
          January December 
          2006 
(1)
 2006 
(2)
W G Bright         14,425 14,425 
(3)
P J Close         2,802,233 2,802,233
M P Kirk          — 10,000 
(4)
I K Miller         — —
C B Powell-Smith         10,000 10,000 
(5)
N P Stone         22,000 22,000 
(6)
(1) or at date of appointment if later
(2)  or at date of resignation if earlier
(3) increased to 26,425 on 12 January 2007
(4) increased to 20,000 on 12 January 2007
(5) increased to 20,000 on 12 January 2007
(6) increased to 27,000 on 12 January 2007
There have been no other changes in the shareholdings of current Directors detailed above to the date of these ﬁnancial statements.
The interests of the Directors in options to purchase or subscribe for shares of the Company, which includes options granted by the KBC Advanced 
Technologies plc Employee Trust and awards under the Company’s Long Term Incentive Plans, are shown on page 22.
The Directors do not have any other interests required to be disclosed under Schedule 7, Section 2, of the Companies Act 1985.
EMPLOYEES
The Group continues to place a high emphasis on attracting, retaining and developing employees to achieve the Group’s business plan objectives. The Group 
pursues an active policy of employee involvement and development, including communication through staff meetings, written communications to all 
staff and use of the Group’s intranet. Employees are provided with information on matters affecting them as employees, on developments within the 
business and on the various factors affecting the Group’s performance. Group policies and practices are continually reviewed and improved as required 
to meet the needs of employees and the business.
The Group is committed to providing equality of opportunity for all employees and in particular ensures that fair selection and development procedures 
apply. The aim of the Group’s policy is to ensure that no job applicant or employee receives less favourable treatment than any other on the grounds 
of age, sex, sexual orientation, disability, marital status, colour, religion, race or ethnic origin.
The Group encourages the involvement of the employees in the Group’s success through share incentive schemes, as well as a bonus scheme which 
emphasises performance and delivery of business plan objectives.
There is a formal reward and recognition programme to encourage and reward outstanding employee and team performance. The programme provides 
cash awards, which are separate and distinct from salary, and formally recognises employees who make a speciﬁc, extraordinary and measurable 
contribution to the proﬁtability, productivity or efﬁciency of the Group.
DIRECTORS’ REPORT
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25
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
ETHICS
The Group has well-established policies on business ethics. Employees are given a copy of the policies on joining the Group and all employees are 
required to review the policies regularly and to report any non-compliance or suspicion of non-compliance. A regular review emphasises understanding 
of the policies, consultation where required, and sound judgement. The results of reviews are reported to the Board, via the Audit Committee.
SUBSTANTIAL SHAREHOLDINGS
As at 15 March 2007 the Company had been notiﬁed of the following interests, excluding Directors, in 3% or more of its issued share capital.
           Percentage 
           of issued 
Name          share capital
AXA Investment Management, UK          13.99
Prudential, UK          13.97
Gartmore Investment Management, UK         13.20
P J Close          6.57
J C Brice          5.96
Blackrock Investment Management, UK         5.06
HEALTH, SAFETY AND ENVIRONMENTAL (“HSE”) ISSUES
The Group is committed to upholding the highest standards of HSE protection for the beneﬁt of its employees, the public at large and the environment. 
The Group’s commitment to the health and safety of its staff is set out in its health and safety policy issued by the Chief Executive, the Director responsible 
for health and safety management. The Group’s policy for employees working on clients’ sites is that industry best practice is observed as a minimum 
even when local requirements fall short of these standards. Safety issues, together with the control measures in place, form part of the Group’s risk 
based internal control system. The Board receives regular reports on health and safety issues.
The Group’s premises are composed entirely of ofﬁces since it has no manufacturing capability. Its operations have a limited direct impact on the environment, 
involving neither hazardous substances nor complex waste emissions. However, the Group is conscious of the need for best practice wherever possible 
in such matters as recycling and general conservation of resources as may be relevant.
PAYMENT OF SUPPLIERS
It is the Group’s policy to agree terms of payment with suppliers and to adhere to the terms agreed. At 31 December 2006 the Group had an average 
of 36 days’ purchases outstanding in trade creditors.
CHARITABLE DONATIONS
During the year the Group made charitable donations of £1,056 (2005: £250). There were no political contributions (2005: nil).
LITIGATION
The Company was involved in no litigation proceedings during 2006.
FINANCIAL INSTRUMENTS
An explanation of the Group’s ﬁnancial risk management objectives, policies and strategies is set out in the Operational and Financial Review on pages 
10 to 13 and in note 24.
OUTSTANDING SHAREHOLDERS’ AUTHORITY
The authority granted on 25 May 2006 by the shareholders for the Company to make market purchases, within the meaning of Section 163 of the 
Companies Act 1985, of up to 8,101,197 ordinary shares of 2½p each in the capital of the Company remains outstanding until the earlier of the conclusion 
of the annual general meeting of the Company in 2007 and 30 June 2007.
SHARE PLACING AND OTHER SHARES ISSUED
The Company issued 2,403,320 shares in an institutional placing on 27 January 2006 which was within the authorities granted on 28 April 2005 
by the shareholders for the Directors to:
a) allot relevant securities up to an aggregate nominal amount of £400,513; and
b)  allot equity securities for cash up to up to an aggregate nominal value of £60,083 as if Section 89(1) of the Companies Act 1985 did not apply.
The Company issued 1,121,849 shares as vendor consideration shares on 2 February 2006 following completion of the acquisition of TTS Performance 
Systems Inc and its sister company, Center for Process Plant Management LLC, details of which were announced by the Company on 25 January 2006. 
This was within the authority granted on 28 April 2005 by the shareholders for the Directors to allot relevant securities up to an aggregate nominal 
amount of £400,513. See note 23 for further details of this acquisition.
The Company issued 791,847 shares as vendor consideration shares on 7 November 2006 following completion of the acquisition of Veritech Inc, 
details of which were announced by the Company on 7 November 2006. This was within the authority granted on 25 May 2006 by the shareholders 
for the Directors to allot relevant securities up to an aggregate nominal amount of £450,021. See note 23 for further details of this acquisition.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
REGISTERED AUDITOR
BDO Stoy Hayward LLP were appointed by the Directors as auditor on 18 July 2006 to ﬁll the vacancy arising as a result of the resignation of Ernst & Young 
LLP on 13 July 2006.
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company’s 
auditors for the purposes of their audit and to establish that the auditors are aware of that information. The directors are not aware of any relevant 
audit information of which the auditors are unaware.
A resolution to re-appoint BDO Stoy Hayward LLP as auditor and to authorise the Directors to ﬁx their remuneration will be put to the members at the 
Annual General Meeting.
By order of the Board
JANET M IRELAND
SECRETARY
15 MARCH 2007 
DIRECTORS’ REPORT CONTINUED
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27
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
Company law requires the Directors to prepare group and parent company ﬁnancial statements for each ﬁnancial year. Under that law, the Directors have 
prepared group ﬁnancial statements in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the EU and have elected 
to prepare the parent company ﬁnancial statements in accordance with UK accounting standards.
The Group ﬁnancial statements are required by law and IFRSs as adopted by the EU to present fairly the ﬁnancial position and the performance of the Group. 
The Companies Act 1985 provides in relation to such ﬁnancial statements that references in the relevant part of that Act to ﬁnancial statements giving 
a “true and fair view” can be taken to mean a “fair presentation” in ﬁnancial statements such as these.
The parent company ﬁnancial statements are required by law to give a true and fair view of the state of affairs of the parent company.
The Directors conﬁrm that in preparing the group and parent company ﬁnancial statements they have complied with the requirements set out below.
  to select suitable accounting policies and then apply them consistently;
  to make judgements and estimates that are reasonable and prudent;
  for the Group ﬁnancial statements, to state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
  for the parent company ﬁnancial statements, to state whether applicable UK accounting standards have been followed, subject to any material 
departures disclosed and explained in the parent company ﬁnancial statements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the ﬁnancial position of the Group 
and enable them to ensure that the ﬁnancial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets 
of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
By order of the Board
JANET M IRELAND
SECRETARY
15 MARCH 2007 
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
We have audited the group and parent company ﬁnancial statements (the ‘’ﬁnancial statements’’) of KBC Advanced Technologies plc for the year ended 
31 December 2006 which comprise the Group Income Statement, the Group and Parent Company Balance Sheets, the Group Cash Flow Statement, 
the Group Statement of Recognised Income and Expenditure and the related notes. These ﬁnancial statements have been prepared under the accounting 
policies set out therein.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors’ responsibilities for preparing the Annual Report and the group ﬁnancial statements in accordance with applicable law and International 
Financial Reporting Standards (IFRSs) as adopted by the European Union, and for preparing the parent company ﬁnancial statements in accordance with 
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of 
Directors’ Responsibilities.
Our responsibility is to audit the ﬁnancial statements in accordance with relevant legal and regulatory requirements and International Standards on 
Auditing (UK and Ireland).
We report to you our opinion as to whether the ﬁnancial statements give a true and fair view and have been properly prepared in accordance with the 
Companies Act 1985 and whether the information given in the Directors’ Report is consistent with those ﬁnancial statements. We also report to you if, 
in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our 
audit, or if information speciﬁed by law regarding directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited ﬁnancial statements. The other 
information comprises only the Directors’ Report, Chairman’s Statement, Chief Executive’s Report, Operational and Financial Review, Corporate Governance 
Statement and Directors’ Remuneration Report. We consider the implications for our report if we become aware of any apparent misstatements 
or material inconsistencies with the ﬁnancial statements. Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose. No person is entitled to rely on this 
report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of the Companies Act 1985 or has been expressly 
authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose 
and we hereby expressly disclaim any and all such liability.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes 
examination, on a test basis, of evidence relevant to the amounts and disclosures in the ﬁnancial statements. It also includes an assessment of the signiﬁcant 
estimates and judgments made by the directors in the preparation of the ﬁnancial statements, and of whether the accounting policies are appropriate 
to the group’s and company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with 
sufﬁcient evidence to give reasonable assurance that the ﬁnancial statements are free from material misstatement, whether caused by fraud or other 
irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the ﬁnancial statements.
INDEPENDENT AUDITORS’ REPORT 
TO THE SHAREHOLDERS OF KBC ADVANCED TECHNOLOGIES PLC
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29
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
OPINION
In our opinion:
  the group ﬁnancial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union, of the state of the group’s affairs 
as at 31 December 2006 and of its proﬁt for the year then ended;
  the parent company ﬁnancial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the 
state of the parent company’s affairs as at 31 December 2006;
  the ﬁnancial statements have been properly prepared in accordance with the Companies Act 1985; and
  the information given in the Directors’ Report is consistent with the ﬁnancial statements.
BDO STOY HAYWARD LLP
CHARTERED ACCOUNTANTS AND REGISTERED AUDITORS
GUILDFORD
15 MARCH 2007
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
        December December 
        2006 2005 
       Notes £000 £000
Revenue      3 35,378 28,493
Direct costs       (6,342) (5,272)
Staff and associate costs       (18,698) (18,326)
Depreciation and amortisation       (742) (738)
Other operating charges       (7,702) (6,194)
Operating proﬁt/(loss)      5 1,894 (2,037)
Finance revenue       6 28 32
Finance cost       6 (185) (29)
Proﬁt/(loss) before tax       1,737 (2,034)
Tax expense       9 (663) (15)
Proﬁt/(loss) for the year       1,074 (2,049)
Earnings/(loss) per share
Basic      10 2.1p (4.2)p
Diluted       10 2.0p (4.2)p
GROUP INCOME STATEMENT 
YEAR ENDED 31 DECEMBER 2006
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31
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
        2006 2005 
       Notes £000 £000
Non-current assets
Property, plant and equipment      12 1,314 1,591
Goodwill      13 6,714 3,952
Intangible assets      13 1,665 417
Deferred tax asset      9 2,603 1,947
        12,296 7,907
Current assets
Trade and other receivables      16 13,423 10,657
Income tax asset       326 149
Cash and short-term deposits      17 1,178 1,802
Other ﬁnancial assets      18 56 —
        14,983 12,608
Total assets       27,279 20,515
Non-current liabilities
Trade and other payables       (1,376) —
Provisions       22 — (113)
Deferred tax liabilities      9 (868) (59)
        (2,244) (172)
Current liabilities
Trade and other payables      19 (5,752) (3,951)
Income tax payable       (6) (84)
Provisions      22 (663) (24)
Other ﬁnancial liabilities      20 — (51)
        (6,421) (4,110)
Total liabilities       (8,665) (4,282)
Net assets       18,614 16,233
Equity attributable to equity holders of parent        
Issued capital      26 1,370 1,262
Share premium      28 7,782 6,740
Other reserves      28 984 202
Own shares      28 (2,136) (2,136)
Retained earnings      28 10,614 10,165
Total equity       18,614 16,233
Total equity and liabilities       27,279 20,515
W G BRIGHT N P STONE
DIRECTOR DIRECTOR
15 MARCH 2007 
GROUP BALANCE SHEET 
AT 31 DECEMBER 2006
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
        2006 2005 
       Notes £000 £000
Net cash ﬂow from operating activities
Proﬁt/(loss) before tax        1,737 (2,034)
Finance revenue       (28) (32)
Finance cost       185 29
Operating proﬁt/(loss)       1,894 (2,037)
Depreciation and amortisation       742 738
Share based payment expense       210 144
Movement in working capital:        
– trade and other receivables       (2,144) 606
– trade and other payables        1,332 481
– exchange differences       (775) 229
– ﬁnancial assets and liabilities       (107) 153
Cash generated from operations       1,152 314
Finance revenue received       28 32
Finance costs paid       (103) (29)
Income taxes paid       (766) (726)
Net cash ﬂow from operating activities       311 (409)
Cash ﬂow from investing activities
Purchase of tangible non-current assets       (171) (270)
Purchase of intangible non-current assets       (730) —
Purchase of subsidiary undertaking including costs       (1,168) —
Net funds acquired with subsidiary undertakings       6 —
Repayment of deposits       — 300
Net cash ﬂow from investing activities       (2,063) 30
Cash ﬂow from ﬁnancing activities
Payment of loan notes       — (300)
Issue of shares       1,159 762
Net cash ﬂow used in ﬁnancing activities       1,159 462
Net (decrease)/increase in cash and cash equivalents       (593) 83
Cash and cash equivalents at 1 January       1,802 1,696
Exchange adjustments       (31) 23
Cash and cash equivalents at 31 December      17 1,178 1,802
 
GROUP CASH FLOW STATEMENT 
YEAR ENDED 31 DECEMBER 2006
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33
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
        2006 2005 
        £000 £000
Attributable proﬁt/(loss) for the period       1,074 (2,049)
Foreign currency translation       (835) 284
Total recognised income and expenditure for the year       239 (1,765)
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENDITURE
YEAR ENDED 31 DECEMBER 2006
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
1 AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRSs
The Group’s and Company’s ﬁnancial statements of KBC Advanced Technologies plc for the year ended 31 December 2006 were authorised for issue 
by the Board of Directors on 15 March 2007 and the balance sheets were signed on the Board’s behalf by W G Bright and N P Stone. KBC Advanced 
Technologies plc is a public limited company incorporated and domiciled in England and Wales. The Company’s ordinary shares are traded on the 
Alternative Investment Market (“AIM”) of the London Stock Exchange.
The Group’s ﬁnancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”s) as adopted by the European Union 
and as applied in accordance with the provisions of the Companies Act 1985. The principal accounting policies adopted by the Group are set out in note 2.
2 ACCOUNTING POLICIES
BASIS OF PREPARATION
The ﬁnancial statements are prepared under the historical cost convention, except for certain ﬁnancial instruments which are measured at fair value.
The preparation of ﬁnancial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect 
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ﬁnancial statements, and the reported 
amounts of revenues and expenses during the reporting period. Although these estimates are based on the Directors’ best knowledge of current events 
and actions, actual results ultimately may differ from those estimates.
The following is a list of the accounting policies which cover areas that the Directors consider require estimates and judgements which have a signiﬁcant 
risk of causing a material adjustment to the carrying amount of assets and liabilities within the next ﬁnancial year:
 Goodwill
 Long-term contracts
 Assessment of useful economic lives of property, plant and equipment
 Research and development
 Financial assets
 Borrowings
 Impairment of assets
 Share based payments and equity settled transactions
The Group ﬁnancial statements are presented in Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated. 
CONSOLIDATION
The Group’s ﬁnancial statements include the ﬁnancial statements of the Company and all the subsidiaries drawn up to 31 December each year during 
the years reported for the periods during which they were members of the Group. On acquisition, assets and liabilities of subsidiaries are measured 
at their fair values at the date of acquisition with any excess of the cost of acquisition over this value being capitalised as goodwill.
GOODWILL
Goodwill on acquisition is initially measured at cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value 
of the identiﬁable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment 
losses. Goodwill on acquisitions made after 31 December 2003 is not amortised and goodwill already carried in the balance sheet is not amortised 
after 1 January 2004. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying 
value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management at business line level or statutory 
company level as the case may be. Where the recoverable amount of the cash-generating unit is less than its carrying amount, including goodwill, an 
impairment loss is recognised in the income statement.
Goodwill arising on acquisitions prior to 31 December 1997 remains set off directly against reserves even if the related investment becomes impaired 
or the business is disposed of.
IFRS 3 Business Combinations has not been retrospectively applied to combinations before the transition date for the adoption of IFRS.
TRADE AND OTHER RECEIVABLES
Trade receivables, which generally have 30-90 day terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. 
Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability 
of recovery is assessed as being remote.
PROVISIONS
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it is probable that an outﬂow of economic 
beneﬁts will be required to settle the obligation. If the effect is material, expected future cash ﬂows are discounted using a current pre-tax rate that 
reﬂects, where appropriate, the risks speciﬁc to the liability.
NOTES TO THE ACCOUNTS
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35
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
2 ACCOUNTING POLICIES CONTINUED
INCOME TAX
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws 
that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the 
ﬁnancial statements, with the following exceptions:
  where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination 
that at the time of the transaction affects neither accounting nor taxable proﬁt or loss;
  in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences 
can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future and taxable proﬁt will be available 
against which the temporary differences can be utilised; and 
  deferred income tax assets are recognised only to the extent that it is probable that taxable proﬁt will be available against which the deductible 
temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset 
is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that 
sufﬁcient taxable proﬁt will be available to allow all or part of the deferred income tax asset to be utilised.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the 
income statement.
REVENUE
LONG-TERM CONTRACTS
Revenue on long-term contracts is recognised using the percentage-of-completion method. Under this method revenues recorded represent the aggregate 
of costs incurred during the year and a portion of estimated proﬁt on individual contracts based on the relationship of costs incurred to total estimated 
costs for each contract. Revisions in estimates are reﬂected in the accounting period when the revision becomes known. Anticipated losses on contracts 
are charged to income in their entirety when the losses become evident.
Amounts received in excess of revenue recognised are shown as payments on account.
SERVICE CONSULTING AND SOFTWARE SUPPORT
Revenue from service consulting and software support is recognised over the period in which services are provided.
SOFTWARE LICENCES
Revenue from licence sales is recognised when no signiﬁcant contractual obligations remain.
BONUSES AND PENALTIES
Where some or all of a contract’s revenues are dependent on the impact of KBC’s performance (e.g. in identifying beneﬁts of changes in a client’s operations), 
that element of revenue is only recognised once the contract is sufﬁciently advanced that it is probable that the performance will be met and the bonus 
can be measured reliably. Penalties on contracts are provided for when a penalty becomes probable.
DIRECT COSTS AND OPERATING CHARGES
Direct costs include costs of subcontractors. Operating charges include administrative overheads.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
2 ACCOUNTING POLICIES CONTINUED
PROPERTY , PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes costs directly 
attributable to making the asset capable of operating as intended.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost, less estimated residual value, of each asset over 
its expected useful life as follows:
Leasehold improvements  The lease term or useful life if shorter 
Furniture, ﬁxtures and ﬁttings  Five years 
Ofﬁce equipment   Five years 
Computer hardware   Three years
Useful lives and residual values are assessed annually.
Purchased intangibles, including purchased patents, know-how, trademarks, licences and distribution rights, are capitalised at cost and amortised on a 
straight lines basis over their estimated useful economic lives.
Property, plant and equipment and intangible assets are reviewed for impairment if events or changes in circumstances indicate that the carrying value 
may not be recoverable.
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss.
Amortisation is provided on all intangibles at rates calculated to write off the cost of each asset over its expected useful life for a period of up to 10 years.
RESEARCH AND DEVELOPMENT
Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability 
can reasonably be regarded as assured and technical feasibility and commercial viability can be demonstrated. Where these criteria are not met the 
expenditure is expensed to the income statement.
Following the initial recognition of development expenditure the cost model is applied requiring the asset to be carried at cost less any accumulated 
amortisation and accumulated impairment losses. Any expenditure carried forward is amortised over the period of expected future sales from the related 
project. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator 
of impairment arises during the reporting year indicating that the carrying value may not be recoverable.
The technical and market uncertainties inherent in the development of new products mean that internal development costs will not be capitalised as 
intangible ﬁxed assets until commercial viability of a project is demonstrable and there is probable economic beneﬁt. Expenditure on product maintenance 
and support is expensed as incurred.
FINANCIAL ASSETS
IAS 39 has been adopted in the current and comparative period. Financial assets within the scope of IAS 39 are classiﬁed as ﬁnancial assets at fair value 
through proﬁt or loss, or loans and receivables, as appropriate. The Group determines the classiﬁcation of its ﬁnancial assets at initial recognition and 
re-evaluates this designation at each ﬁnancial year-end. When ﬁnancial assets are initially recognised they are measured at fair value, being the transaction 
price plus, in the case of ﬁnancial assets not at fair value through proﬁt or loss, directly attributable transaction costs. 
All regular way purchases and sales of ﬁnancial assets are recognised on the trade date, being the date that the Group commits to purchase or sell the 
asset. Regular way transactions require delivery of assets within the timeframe generally established by regulation or convention in the market place. 
The subsequent measurement of ﬁnancial assets depends on their classiﬁcation, as shown below.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets classiﬁed as held for trading and other assets designated as such on inception are included in this category. Financial assets are classiﬁed 
as held for trading if they are acquired for sale in the short term. Derivatives are also classiﬁed as held for trading unless they are designated as hedging 
instruments. Assets are carried in the balance sheet at fair value while gains or losses on ﬁnancial assets at fair value through proﬁt or loss are recognised 
in the income statement.
Where there is no active market, fair value is determined using discounted cash ﬂow and pricing models. Otherwise assets will be carried at cost.
RECEIVABLES
Receivables are non-derivative ﬁnancial assets with ﬁxed or determinable payments that are not quoted in an active market, do not qualify as trading 
assets and have not been designated as either fair value through proﬁt and loss or available for sale. Such assets are carried at amortised cost.
NOTES TO THE ACCOUNTS CONTINUED
_1_KBC_ar06_back.indd   21 29/03/2007   12:33:03 ACCOUNTS 
37
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
2 ACCOUNTING POLICIES CONTINUED
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded in the functional currency at the rate ruling at the date of the transaction. All monetary assets and liabilities 
denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. Forward exchange contracts taken to hedge 
the value of future revenue streams do not qualify for hedge accounting under IAS 39 and the changes in fair value are recognised in each period. 
All differences are taken to the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the 
initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the dates when the fair 
values are determined.
Proﬁts, losses and cash ﬂows of overseas branches and subsidiary undertakings are translated at the average rate of exchange ruling during the period 
as it is a reasonable approximation of the actual transaction rate. The balance sheets of overseas branches and subsidiaries are translated at the rate of 
exchange ruling at the balance sheet date.
The exchange differences arising on the retranslation of opening net assets are taken directly to reserves until the disposal of the net investments, 
at which time they are recognised in the income statement. The cumulative translation differences for foreign subsidiaries are deemed to be zero at 
the transition date for the adoption of IFRS. All other translation differences are taken to the income statement.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months 
or less.
For the purpose of the consolidated cash ﬂow statement, cash and cash equivalents consist of cash and cash equivalents as deﬁned above, net of outstanding 
bank overdrafts.
BORROWINGS
All borrowings are recognised at fair value less directly attributable transaction costs and subsequently at amortised cost using the effective interest method. 
LEASING COMMITMENTS – LESSEE
Leases where the lessor retains substantially all the risks and beneﬁts of ownership of the asset are classiﬁed as operating leases and are charged to the 
income statement on a straight-line basis over the lease term.
PENSIONS
The Group operates contributory pension schemes covering the majority of its permanent employees. The schemes’ funds are administered by trustees 
and are independent of the Group’s ﬁnances. The schemes are deﬁned contribution schemes and there are no commitments other than the regular 
contributions which are charged against the income statement in the year in which they become payable.
IMPAIRMENT OF ASSETS
The Group assesses at each reporting date whether there is an indication that goodwill, intangibles or property, plant and equipment may be impaired. 
If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. 
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for 
an individual asset, unless the asset does not generate cash inﬂows that are largely independent of those from other assets or groups of assets. Where 
the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In 
assessing value in use, the estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current market 
assessments of the time value of money and the risks speciﬁc to the asset. Impairment losses of continuing operations are recognised in the income 
statement in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or 
may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has 
been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the 
carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been 
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement. 
After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a 
systematic basis over its remaining useful life.
SHARE BASED PAYMENTS
The Group operates a number of executive and employee share schemes. For all grants of share options and awards, the fair value as at the date of grant 
is calculated by using an option model.
The cumulative expense recognised at each reporting date reﬂects the extent to which the vesting period has expired and the number of awards that, 
in the opinion of the Directors of the Group at that date, will vest and for which the performance conditions will be met.
_1_KBC_ar06_back.indd   22 29/03/2007   12:33:04 38
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
2 ACCOUNTING POLICIES CONTINUED
EQUITY-SETTLED TRANSACTIONS
The Group has taken advantage of the transitional provisions of IFRS 2 in respect of equity-settled awards so as to apply IFRS 2 only to those awards 
granted after 7 November 2002 that had not vested before 1 January 2005.
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted and is recognised 
as an expense over the vesting period, which ends on the date on which the relevant employee becomes fully entitled to the award. Fair value is determined 
by an external valuer using an appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions other 
than conditions linked to the price of the shares of the Company (market conditions).
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are 
treated as vesting irrespective of whether or not the market condition is satisﬁed, provided that all other performance conditions are satisﬁed.
At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and 
management’s best estimate of the achievement or otherwise of non-market conditions, number of equity instruments that will ultimately vest or, 
in the case of an instrument subject to a market condition, be treated as vesting as described above. The movement in cumulative expense since the 
previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet recognised in the income 
statement for the award is expensed immediately. Any compensation paid up to the fair value of the award at the cancellation or settlement date is 
deducted from equity, with any excess over fair value being treated as an expense in the income statement.
BORROWING COSTS
Borrowing costs are recognised as an expense when incurred.
NEW STANDARDS AND INTERPRETATIONS NOT APPLIED
During the year the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”) 
have issued the following standards and interpretations with an effective date after the date of these ﬁnancial statements:
International Accounting Standards (“IAS”/”IFRS”s)        Effective date
IFRS 7 Financial Instruments: Disclosures        1 January 2007
IFRS 8 Operating Segments        1 January 2009
IAS 1 Amendment – Presentation of Financial Statements: Capital Disclosures     1 January 2007
International Financial Reporting Interpretations Committee (“IFRIC”)
IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinﬂationary Economies  1 March 2006
IFRIC 8  Scope of IFRS 2        1 May 2006
IFRIC 9 Re-assessment of Embedded Derivatives       1 June 2006
IFRIC 10 Interim Financial Reporting and Impairment       1 November 2006
IFRIC 11 IFRS 2 – Group and Treasury Share Transactions       1 March 2007
IFRIC 12 Service Concession Arrangements        1 January 2008
The following had not been endorsed by the EU as at 15 March 2007: IFRS 8 Operating Segments, IFRIC 10 Interim Financial Reporting and Impairment, 
IFRIC 11 IFRS 2 Group and Treasury Share Transactions, IFRIC 12 Service Concession Arrangements. These are expected to be endorsed in June or July 2007.
The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group’s ﬁnancial statements 
in the period of initial application. 
Upon adoption of IFRS 7, the Group will have to disclose additional information about its ﬁnancial instruments, their signiﬁcance and the nature and extent 
of risks to which they give rise. More speciﬁcally the Group will need to disclose the fair value of its ﬁnancial instruments and its risk exposure in greater 
detail. There will be no effect on reported income or net assets.
3 REVENUE 
Revenue disclosed in the income statement is analysed as follows:
         2006 2005 
         £000 £000
Rendering of services        29,611 23,479
Sale of goods        5,767 5,014
         35,378 28,493
Finance revenue         28 32
Total revenue        35,406 28,525
NOTES TO THE ACCOUNTS CONTINUED
_1_KBC_ar06_back.indd   23 29/03/2007   12:33:04 ACCOUNTS 
39
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
4 SEGMENTAL INFORMATION
The primary segment reporting format is determined to be business segments as the Group’s risks and rates of return are affected predominantly by differences 
in the products and services provided. Secondary segment information is reported geographically by client location. The operating businesses are organised 
and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that 
offers different products and serves different markets.
The consultancy segment delivers improved operational efﬁciency and ﬁnancial performance through consulting services to owners and operators of oil 
reﬁneries and process industries worldwide.
The software segment produces and maintains process modelling and reﬁnery wide simulation technology for the oil industry and other process industries.
Transfer prices between geographic segments are set on an arm’s length basis in a manner similar to transactions with third parties.
PRIMARY SEGMENT IS STRATEGIC BUSINESS UNIT
       Consultancy Software Unallocated Group 
       £000 £000 £000 £000
2006
Income statement
External sales      29,611 5,767 — 35,378
Direct project costs      (19,973) (1,571) — (21,544)
Depreciation and amortisation        (189) (553) (742)
Sales and marketing          (3,736) (3,736)
Facilities and communications          (4,231) (4,231)
Management and support services          (3,231) (3,231)
Trading proﬁt/(loss) (segment result)      9,638 4,007 (11,751) 1,894
Finance revenue          28 28
Finance cost          (185) (185)
Proﬁt before tax            1,737
Tax expense            (663)
Proﬁt for the year            1,074
Balance sheet         
Operating assets        958 23,336 24,294
Financial and tax assets          2,985 2,985
Operating liabilities          (7,791) (7,791)
Financial and tax liabilities          (874) (874)
Purchase of tangible non-current assets          171 171
       Consultancy Software Unallocated Group 
       £000 £000 £000 £000
2005
Income statement
External sales      23,479 5,014 — 28,493
Direct project costs      (17,508) (2,784) — (20,292)
Depreciation and amortisation       (200) (538) (738)
Sales and marketing        (3,454) (3,454)
Facilities and communications        (2,961) (2,961)
Management and support services        (3,085) (3,085)
Trading proﬁt/(loss) (segment result)      5,971 2,030 (10,038) (2,037)
Finance revenue        32 32
Finance cost        (29) (29)
Loss before tax         (2,034)
Tax expense         (15)
Loss for the year         (2,049)
Balance sheet
Operating assets       417 18,002 18,419
Financial and tax assets        2,096 2,096
Operating liabilities        (4,088) (4,088)
Financial and tax liabilities        (194) (194)
Capital expenditure         466 466
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
4 SEGMENTAL INFORMATION
SECONDARY SEGMENT (INCOME STATEMENT) IS GEOGRAPHICAL AREA BY CLIENT LOCATION
       Europe, Africa 
       & Middle East Americas Asia Group 
       £000 £000 £000 £000
2006
External sales      11,741 12,969 10,668 35,378
2005
External sales      10,475 8,273 9,745 28,493
SECONDARY SEGMENT (BALANCE SHEET) IS GEOGRAPHICAL AREA BY OPERATING ENTITY LOCATION
       Europe, Africa 
       & Middle East Americas Asia Group 
       £000 £000 £000 £000
2006
Operating assets      14,807 8,787 700 24,294
Financial and tax assets      1,723 1,005 257 2,985
Operating liabilities      (4,187) (3,361) (243) (7,791)
Financial and tax liabilities      (2) (872) — (874)
Purchase of tangible non-current assets      70 55 46 171
2005
Operating assets      14,269 3,331 819 18,419
Financial and tax assets      1,910 186 — 2,096
Operating liabilities      (3,176) (744) (168) (4,088)
Financial and tax liabilities      (53) (141) — (194)
Purchase of tangible non-current assets      291 154 21 466
5 GROUP OPERATING PROFIT/(LOSS)
This is stated after charging/(crediting) the following:
         2006 2005 
         £000 £000
Depreciation and amortisation         
– Depreciation        463 538
– Amortisation of intellectual property rights         
– Acquisitions        90 —
– Existing intellectual property rights        67 200
– Development costs        122 —
Total        742 738
Included in other operating charges
– Operating lease rentals
– Minimum lease payments        1,747 1,647
– Sublease rentals received        (425) (545)
– Net foreign exchange differences        80 (235)
– Onerous lease provision        550 —
A) RESEARCH AND DEVELOPMENT COSTS
During 2006, the Group incurred research and development costs of £1.7m (2005: £2.6m). Of this amount £730,000 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) INTANGIBLE ASSETS
During the year the expected useful economic life of the Group’s existing intellectual property rights was assessed and their useful life extended to reﬂect the 
value that these rights have in the Group’s business. This has resulted in amortisation for these existing rights being £133,000 lower than the previous year.
C) NON-TRADING ITEMS
PROVISIONS
A provision of £550,000 has been made in relation to a property formerly occupied by the business. This provision reﬂects the Directors’ best estimate 
of what would be required by way of exit premium to terminate the lease during 2007.
NOTES TO THE ACCOUNTS CONTINUED
_1_KBC_ar06_back.indd   25 29/03/2007   12:33:04 ACCOUNTS 
41
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
5 GROUP OPERATING PROFIT/(LOSS) CONTINUED
D) UNDERLYING OPERATING PROFIT/(LOSS)
         2006 2005 
         £000 £000
Operating proﬁt/(loss)        1,894 (2,037)
Amortisation of acquisition intangibles        157 200
Research and development costs carried forward       (730) —
Amortisation of research and development costs carried forward      122 —
Onerous lease provision        550 —
Underlying operating proﬁt/(loss)        1,993 (1,837)
6 FINANCE REVENUE/COSTS
         2006 2005 
         £000 £000
Bank interest receivable        28 32
Bank interest payable        103 29
Other ﬁnance costs        82 —
7 AUDITORS’ REMUNERATION
CURRENT AUDITORS
         2006 2005 
         £000 £000
Audit of the ﬁnancial statements        70 —
Audit of IFRS transition        — —
Remuneration for audit services         70 —
Other fees to auditors
– Taxation services        6 —
– Other services        5 —
         81 —
FORMER AUDITORS
         2006 2005 
         £000 £000
Audit of the ﬁnancial statements        — 61
Audit of IFRS transition        — 30
Remuneration for audit services         — 91
Other fees to auditors
– Taxation services        25 53
– Other services        7 14
         32 158
8 STAFF COSTS AND DIRECTORS’ EMOLUMENTS
A) STAFF COSTS (INCLUDING DIRECTORS)
         2006 2005 
         £000 £000
Wages and salaries        13,779 13,301
Social security costs        1,073 1,063
Other pension costs        1,026 1,049
Medical costs        907 654
Expense of share based payments         210 144
         16,995 16,211
The average monthly number of employees during the year was as follows:
         2006 2005 
         Number Number
Management, technical and administrative staff        222 207
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
8 STAFF COSTS AND DIRECTORS’ EMOLUMENTS CONTINUED
B) DIRECTORS’ EMOLUMENTS
         2006 2005 
         £000 £000
Basic salaries         575 585 
Bonus        133 —
Beneﬁts        57 68
Fees        73 80
Other pension costs         44 48
Expense of share based payments        49 29
         931 810
         2006 2005 
         number number
Number of Directors in deﬁned contribution pension schemes       3 3
Full details of Directors’ emoluments are given in the Directors’ remuneration report on page 19.
9 TAXATION
A) TAX ON PROFIT CHARGED IN THE INCOME STATEMENT
        2006 2006 2006 
        £000 £000 £000 
        UK Foreign Total
Current income tax
Current income tax charge       — 608 608
Adjustment in respect of prior periods       (250) 52 (198)
Total Group current tax       (250) 660 410
Deferred income tax
Origination and reversal of other temporary differences      — 666 666
Unrelieved tax losses carried forward against proﬁts of future years     — (595) (595)
Tax losses brought forward set against current proﬁts      218 — 218
Asset amortisation temporary differences       (18) (18) (36)
Total Group deferred tax       200 53 253
Income tax expense reported in Group Income Statement      (50) 713 663
        2005 2005 2005 
        £000 £000 £000 
        UK Foreign Total
Current income tax
Current income tax charge       — 767 767
Adjustment in respect of prior periods       — (284) (284)
Total Group current tax       — 483 483
Deferred income tax
Origination and reversal of other temporary differences      — (164) (164)
Unrelieved tax losses carried forward against proﬁts of future years     (193) — (193)
Asset amortisation temporary differences       (93) (18) (111)
Total Group deferred tax       (286) (182) (468)
Income tax expense reported in Group Income Statement      (286) 301 15
NOTES TO THE ACCOUNTS CONTINUED
_1_KBC_ar06_back.indd   27 29/03/2007   12:33:04 ACCOUNTS 
43
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
9 TAXATION CONTINUED
B) RECONCILIATION OF THE TOTAL TAX CHARGE
The tax assessed on the loss for the year is lower than the standard rate of corporation tax in the UK of 30% (2005: 30%).
The differences are reconciled below:
         2006 2005 
         £000 £000
Accounting proﬁt/(loss) before tax        1,737 (2,034)
Taxation at UK statutory income tax rate of 30% (2005: 30%)      521 (610)
Expenses not deductible for tax purposes        56 35
Foreign tax costs deductible for tax purposes        (176) (56)
Foreign subsidiary unrelieved tax losses        147 147
Holding company unrelieved tax losses        — 176
Higher taxes on overseas earnings        694 497
Tax overprovided in previous years        (525) (109)
Other        (54) (65)
Tax on proﬁt/(loss)        663 15
C) DEFERRED TAX
Recognised deferred tax asset/(liabilities):
         Total Total 
       Asset Liability 2006 2005 
       £000 £000 £000 £000
Depreciation in advance of capital allowances      585 — 585 566
Unrelieved tax losses carried forward against proﬁts of future years    1,868 — 1,868 1,381
Other temporary differences      150 (868) (718) (59)
       2,603 (868) 1,735 1,888
The recognised deferred tax asset comprises £1,568,000 relating to UK tax and £1,035,000 relating to foreign taxes. The recognised deferred tax liability 
of £868,000 relates to foreign taxes.
Unrecognised deferred tax assets:
         2006 2005 
         £000 £000
Amortisation in advance of capital allowances        — 110
Double taxation relief carried forward against proﬁts of future years      811 685
Other temporary differences        303 394
         1,114 1,189
A deferred tax asset of £1.2m (2005: £1.4m) in respect of carry forward trading losses within the UK subsidiary continues to be recognised. The Directors 
believe that it is more likely than not that the UK subsidiary will earn sufﬁcient taxable proﬁts as a result of improved trading conditions and reduced 
exceptional charges within the next eighteen months, allowing realisation of this deferred tax asset.
A deferred tax asset of £0.3m (2005: £nil) in respect of carry forward trading losses within the Singaporean subsidiary has been recognised in 2006. 
The Directors believe that it is more likely than not that this subsidiary will earn sufﬁcient taxable proﬁts as a result of improved trading conditions 
and reduced exceptional charges within the next eighteen months, allowing realisation of this deferred tax asset.
A deferred tax asset of £0.5m (2005: £nil) in respect of carry forward trading losses and withholding tax credits within the US subsidiary has been recognised 
in 2006. These balances have arisen as the result of a signiﬁcant timing difference in US taxable proﬁts caused by increased work in progress balances 
at the year-end. The Directors believe that this timing difference will reverse in 2007 and it is therefore more likely than not that this subsidiary will 
have a sufﬁciently high corporation tax liability in the year to allow the realisation of this deferred tax asset.
A deferred tax asset of £0.3m (2005: £0.3m) in respect of carry forward trading losses within the Canadian and Chinese subsidiaries has not been recognised 
as the Directors do not believe that the timing of future taxable proﬁts of these subsidiaries can be estimated with sufﬁcient accuracy. Losses carried 
forward in Canada have to be utilised within seven years.
A deferred tax asset of £0.8m (2005: £0.7m) for unrelieved foreign tax credits in the UK company has not been recognised due to uncertainty regarding 
the timing and extent to which these amounts will be relieved against future overseas proﬁts.
No deferred tax is recognised on unremitted earnings of overseas subsidiaries as the Group considers that no temporary differences exist on which 
a liability needs to be provided. The temporary differences associated with the investments in subsidiaries for which a deferred tax liability has not 
been recognised aggregate to £3.9m (2005: £3.0m).
There are no income tax consequences attaching to the payment of dividends by the Group to its shareholders.
_1_KBC_ar06_back.indd   28 29/03/2007   12:33:04 44
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
10 EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share is calculated by dividing after tax net proﬁt/(loss) for the year attributable to ordinary shareholders of the parent company 
by the weighted average number of ordinary shares in issue during the year.
         2006 2005 
         £000 £000
Proﬁt/(loss) for the year         1,074 (2,049)
         Number Number 
         000s 000s
Weighted average number of ordinary shares in issue        53,826 50,056
Shares owned by the KBC employee trust         (1,575) (1,575)
         52,251 48,481
         Pence Pence
Basic earnings/(loss) per share        2.1p (4.2)p
Underlying earnings/(loss) per share        2.3p (3.8)p
Diluted earnings/(loss) per share         2.0p (4.2)p
The Long Term Incentive Plans as detailed in the Directors’ remuneration report on page 19 refer to performance criteria related to EPS growth. 
The earnings ﬁgure used for this purpose is calculated based upon the deﬁnition established by the IIMR (Institute of Investment Management and 
Research) in its Statement of Investment Practice No. 1. The calculation of basic IIMR earnings/(loss) per share is based upon a proﬁt/(loss) of £1.07m 
(2005: loss of £2.05m) and on 52,251,000 (2005: 48,481,000) 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 earnings/(loss) per share based upon the basic and diluted IIMR loss per share is 2.1p (2005: loss of 4.2p).
Basic earnings/(loss) per share for underlying proﬁt/(loss) as deﬁned in note 5d is based upon an after tax proﬁt/(loss) of £1.19m (2005: loss £1.85m) 
and on 52,251,000 (2005: 48,481,000) 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. 
11 DIVIDENDS
         2006 2005 
         £000 £000
Equity dividend paid per share        — —
Equity dividend proposed per share 0.5p (2005: nil)       266 —
NOTES TO THE ACCOUNTS CONTINUED
_1_KBC_ar06_back.indd   29 29/03/2007   12:33:05 ACCOUNTS 
45
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
12 PROPERTY , PLANT AND EQUIPMENT
        Fixtures, ﬁttings 
       Leasehold and ofﬁce Computer 
       improvements equipment hardware Total 
       £000 £000 £000 £000
Cost
At 1 January 2005      1,486 505 1,833 3,824
Foreign currency adjustment      — 19 83 102
Additions      8 50 235 293
Disposals      — (75) (705) (780)
At 31 December 2005      1,494 499 1,446 3,439
Foreign currency adjustment      — (22) (93) (115)
Additions      — 25 146 171
Business combinations      — 4 37 41
Disposals      — (51) (159) (210)
At 31 December 2006      1,494 455 1,377 3,326
Depreciation
At 1 January 2005      367 361 1,287 2,015
Foreign currency adjustment      — 10 61 71
Provided in year      114 76 348 538
Disposals      — (71) (705) (776)
At 31 December 2005      481 376 991 1,848
Foreign currency adjustment      — (16) (73) (89)
Provided in year      114 63 286 463
Disposals      — (51) (159) (210)
At 31 December 2006      595 372 1,045 2,012
Net book value at 31 December 2006      899 83 332 1,314
Net book value at 31 December 2005      1,013 123 455 1,591
Net book value at 1 January 2005      1,119 144 546 1,809
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
13 INTANGIBLE ASSETS
       Intellectual Research and Other  
      Goodwill property rights development intangibles Total 
      £000 £000 £000 £000 £000
Cost         
At 1 January 2005     3,952 1,851 — — 5,803
Foreign currency adjustment     — 1 — — 1
Additions     — — — — —
Disposals     — (17) — — (17)
At 31 December 2005     3,952 1,835 — — 5,787
Foreign currency adjustment     (304) — — — (304)
Additions     — — 730 — 730
Business combinations     3,066 — — 797 3,863
Disposals     — — — — —
At 31 December 2006     6,714 1,835 730 797 10,076
Depreciation:         
At 1 January 2005     — 1,218 — — 1,218
Foreign currency adjustment     — — — — —
Provided in year     — 200 — — 200
Disposals     — — — — —
At 31 December 2005     — 1,418 — — 1,418
Foreign currency adjustment     — — — — —
Provided in year     — 67 122 90 279
Disposals     — — — — —
At 31 December 2006     — 1,485 122 90 1,697
Net book value at 31 December 2006     6,714 350 608 707 8,379
Net book value at 31 December 2005     3,952 417 — — 4,369
Net book value at 1 January 2005     3,952 633 — — 4,585
As at 1 January 2005 goodwill was no longer amortised and is tested annually for impairment (see note 14).
During the year the expected useful economic life of the Group’s existing intellectual property rights was assessed and their useful life extended to six years 
to reﬂect the value that these rights have in the Group’s business.
The remaining useful life of the intellectual property rights is ﬁve years (2005: two years).
14 IMPAIRMENT TESTING OF GOODWILL
The acquired goodwill arose from two acquisitions that were made in 2002, Linnhoff March and Petroleum Economics, and the two acquisitions made 
in 2006, TTS Performance Systems and Veritech. Each business acquired constitutes a single cash generating unit. The carrying amount of the goodwill at 
31 December 2006 of £6,714,000 (2005: £3,952,000) can be analysed between the acquisitions as follows:
         2006 2005 
         £000 £000
Linnhoff March        2,450 2,450
Petroleum Economics        1,502 1,502
TTS Performance Systems        2,147 —
Veritech        615 —
Total        6,714 3,952
The Group tests annually for impairment of goodwill or more frequently if there are indications that it might be impaired. The carrying amount was 
measured in each case against the net present value of future cash ﬂows expected to be generated over 10 years by each of these units. This net present 
value was calculated on a value in use basis using a range of discount factors and using the conservative assumption of no future revenue growth and 
constant contribution from each unit. The Group has used 10% as its discount rate when assessing acquisition opportunities and has therefore used 
this rate as the core calculation with sensitivities at lower and higher rates. The net present value is in each case higher than the net carrying value and 
therefore the conclusion was reached that no impairment has taken place.
NOTES TO THE ACCOUNTS CONTINUED
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47
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
15 SUBSIDIARIES
The consolidated ﬁnancial statements include the ﬁnancial statements of KBC Advanced Technologies plc and the following trading subsidiaries:
 Proportion of voting rights 
 and of equity interest
Name Country of incorporation      2006 2005
KBC Process Technology Limited England      100% 100%
KBC Advanced Technologies Inc USA      100% 100%
KBC Advanced Technologies Pte Limited Singapore      100% 100%
KBC Advanced Technologies Canada Limited Canada      100% 100%
KBC Advanced Technologies (Beijing) Limited China      100% —
TTS Performance Systems Inc USA      100% —
Veritech Inc USA      100% —
KBC Advanced Technologies plc is the ultimate parent of the Group.
16 TRADE AND OTHER RECEIVABLES (CURRENT)
         2006 2005 
         £000 £000
Trade receivables        6,084 7,053
Prepayments        1,078 763
Other receivables        — 85
Amounts recoverable on contracts        6,261 2,756
         13,423 10,657
Amounts recoverable on contracts represents the revenue earned on client contracts not yet invoiced.
17 CASH AND SHORT-TERM DEPOSITS
         2006 2005 
         £000 £000
Cash at bank and in hand        485 339
Short-term deposits         693 1,463
         1,178 1,802
Fair value of cash and cash equivalents        1,178 1,802
Cash at bank earns interest at ﬂoating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day 
and 12 months depending upon the cash requirements of the Group, and earn interest at the prevailing short-term deposit rates.
Included in short-term deposits are cash deposits securing performance guarantees (see note 29).
At 31 December 2006 the Group had undrawn committed facilities of £4,635,000 (2005: £3,206,000) which expire in March 2007.
18 OTHER FINANCIAL ASSETS (CURRENT)
         2006 2005 
         £000 £000
Forward currency contracts (held for trading)        56 —
19 TRADE AND OTHER PAYABLES (CURRENT)
         2006 2005 
         £000 £000
Trade payables        1,094 505
Other taxes and social security costs        217 172
Other payables and accruals        2,545 1,557
Payments on account        1,896 1,717
         5,752 3,951
Trade payables are generally non-interest bearing and are normally settled within a 45 day period. Other taxes and social security costs payable are non-interest 
bearing and are remitted to the appropriate taxation authorities on a monthly or quarterly basis.
Loan notes payable, other payables and accruals are non-interest bearing.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
20 OTHER FINANCIAL LIABILITIES (CURRENT)
         2006 2005 
         £000 £000
Forward currency contracts (held for trading)        — 51
21 OBLIGATIONS UNDER LEASES 
The Group has entered into commercial leases on properties, motor vehicles and items of ofﬁce equipment. These leases have average durations of between 
three and 10 years.
       Land and  Land and  
       buildings Other buildings Other 
       2006 2006 2005 2005 
       £000 £000 £000 £000
Future minimum rentals payable under non-cancellable operating leases      
– within one year      1,566 90 1,616 52
– after one year but not more than ﬁve years      4,702 90 5,609 50
– after ﬁve years      5,091 3 5,818 —
       11,359 183 13,043 102
Certain Group companies have sublet ofﬁce space within properties. The future minimum sublease payments expected to be received under non-cancellable 
sublease agreements as at 31 December 2006 is £80,000 (2005: £404,000).
22 PROVISIONS
         2006 2005 
         £000 £000
Onerous lease provision
At 1 January 2006        137 182
Arising during the year        550 —
Utilised         (24) (45)
At 31 December 2006        663 137
As a result of ofﬁce rationalisations during 2000 a provision for future lease obligations was made based on the Directors’ best estimate of unavoidable 
costs associated with exit from the properties concerned. In 2005 and 2006 the provision has been utilised to absorb the costs incurred in relation to ofﬁces 
not occupied by the Company’s employees, offset by any subtenant income received.
Further provision was made during 2006 to provide for the expected lease exit premium.
The maturity of the onerous lease provision is set out below.
         2006 2005 
         £000 £000
In one year or less        663 24
In more than one year, but not more than two        — 16
In more than two years, but not more than ﬁve        — 97
In more than ﬁve years        — —
         663 137
23 BUSINESS COMBINATIONS
A) TTS PERFORMANCE SYSTEMS INC
On 1 February 2006 the Group acquired 100% of the issued share capital of TTS Performance Systems Inc and its sister company, Center for Process 
Plant Management LLC, (together “TTS”) for an aggregate consideration of US$6.0m. Funding for the initial consideration payable in connection with 
the acquisition was obtained through a placing of 2,403,320 new ordinary shares in KBC with institutional investors and the issue of further ordinary 
shares in KBC to the vendors.
As part of the acquisition, intangible assets of £522,000 were acquired with a useful economic life of ﬁve years.
The remaining excess of purchase consideration over fair value has been capitalised as goodwill.
The deferred consideration is expected to be funded out of the future cash ﬂows of KBC. In order to secure these payments KBC on completion entered 
into a pledge agreement with the vendors of TTS over the shares it acquired in TTS. The deferred consideration is payable in three equal annual 
instalments on the anniversary of the completion of the acquisition.
NOTES TO THE ACCOUNTS CONTINUED
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
23 BUSINESS COMBINATIONS CONTINUED
A) TTS PERFORMANCE SYSTEMS INC CONTINUED
Book and fair values of the assets acquired at the date of acquisition were as follows:
          Fair value 
         Book value to Group 
         £000 £000
Intellectual property rights        522 522
Net assets acquired        268 268
Goodwill arising on acquisition         2,451
Total consideration         3,241
Total consideration comprised:         
Cash          1,127
Issue of 2½p ordinary shares to vendors         564
Directly attributable costs         43
Deferred cash consideration         1,507
Total consideration         3,241
B) VERITECH INC
On 7 November 2006 the Group acquired 100% of the issued share capital of Veritech Inc for an aggregate consideration of US$1.7m. 
As part of the acquisition, intangible assets of £275,000 were acquired with a useful economic life of ﬁve years.
The remaining excess of purchase consideration over fair value has been capitalised as goodwill.
The deferred consideration is expected to be funded out of the future cash ﬂows of KBC and is payable in four equal annual instalments on the 
anniversary of the completion of the acquisition.
Book and fair values of the assets acquired at the date of acquisition were as follows:
          Fair value 
         Book value to Group 
         £000 £000
Intangible assets        275 275
Net assets acquired        2 2
Goodwill arising on acquisition         615
Total consideration         892
Total consideration comprised:         
Cash          104
Issue of 2½p ordinary shares to vendors         262
Directly attributable costs         2
Deferred cash consideration         524
Total consideration         892
24 FINANCIAL INSTRUMENTS
The Group’s principal ﬁnancial instruments are trade receivables, trade payables, cash and short-term deposits. The main purpose of these ﬁnancial 
instruments is to ﬁnance the Group’s ongoing operational requirements. The Group also enters into forward currency contracts to manage currency 
risks arising from its operations and sources of ﬁnance.
The major ﬁnancial risks faced by the Group are interest rate risk, foreign currency risk and contract risk. The Group does not consider that it has any 
signiﬁcant credit risk due to the proﬁle of its customers.
The Group does not trade in ﬁnancial instruments.
Policies for the management of these risks are shown below.
A) INTEREST RATE RISK
Cash balances in excess of immediate needs are placed on short-term deposits in the money markets or managed by a third-party fund manager. 
Externally managed funds are invested in deposits with, or certiﬁcates of deposits issued by, approved banks or building societies. No investment 
exceeds one year’s maturity. The Group’s present policy is to place not more than £1m for maturity in excess of six months.
B) FOREIGN CURRENCY RISK
The majority of transactions continue to be in US dollars, sterling and an increasing number in euro-denominated contracts. Where a revenue currency 
differs from that in which costs are incurred, a proportion of the foreign exchange exposure is offset using forward exchange contracts in the currency 
markets. The Group has a number of overseas subsidiaries and branches whose revenues and costs are denominated in currencies other than sterling, 
the most signiﬁcant of which are in the US. 
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
24 FINANCIAL INSTRUMENTS CONTINUED
C) CONTRACT RISK
Some of the Group’s commercial contracts include terms where revenues are related to performance in the form of bonuses or penalties. The Group’s 
exposure under such contracts is reviewed regularly by the Executive Committee and the Board.
D) CREDIT RISK
The Group’s principal ﬁnancial assets are trade receivables, bank balances and cash. The main credit risk faced is attributable to the trade receivables. 
The amounts presented in the balance sheet are net of allowances for doubtful receivables which are made where there are circumstances which based 
on experience are evidence of a likely reduction in the recoverability of the receivable. 
As the majority of the Group’s customers are state owned or very large oil companies, the risk of non-payment tends to be less of the traditional credit 
nature and more related to customer satisfaction. At the balance sheet date 13% of total trade receivables were concentrated with one of the Group’s 
customers, Petrobras. The balance was spread over 128 customers, none of whom comprised more than 4% of the total.
E) LIQUIDITY RISK
Customer payment terms can vary from contract to contract and can involve extended periods of time before invoices are raised. The liquidity risk is managed 
through use of the overdraft facilities described in note 17.
F) FINANCIAL RISK
Group management has responsibility for reducing exposure to ﬁnancial risk and for ensuring that adequate funds are available to meet anticipated 
requirements. It operates according to the policies and guidelines established by the Board. Cash management is carried out centrally. Where necessary, 
borrowings are raised centrally to provide adequate funds for the operating subsidiaries.
FAIR VALUES
 Carrying amount Fair value
         
       2006 2005 2006 2005 
       £000 £000 £000 £000
Financial assets     
– Cash and bank      1,178 1,802 1,178 1,802
– Trade and other receivables (current)      6,084 7,138 6,084 7,138
– Forward currency contracts      56 — 56 —
Financial liabilities         
– Trade and other payables (current)      (3,639) (2,062) (3,639) (2,062)
– Trade and other liabilities (non current)      — — — —
– Forward currency contracts      — (51) — (51)
Within trade and other receivables is £1,464,000 denominated in euros (2005: £1,180,000) and £1,438,000 denominated in US dollars (2005: £2,537,000) 
that are not in the functional currency of the operating unit involved.
The Directors believe that as they are short-term, the fair values for all items equate to their book value, other than forward currency contracts which 
are stated at market value.
INTEREST RATE RISK
         Within  
         one year Total 
         £000 £000
Year ended 31 December 2006         
Floating rate          
– Cash and bank        1,178 1,178
Year ended 31 December 2005         
Floating rate          
– Cash and bank        1,802 1,802
FOREIGN CURRENCY RISK
At 31 December 2006 forward exchange contracts were in place as follows:
   Value Value  Exchange Fair value 
   000 £000 Maturity rate £000
At 31 December 2006     
Sell US dollars 2,000 1,066 8 January 2007 – 4 May 2007 1.8697 – 1.8886 56
At 31 December 2005     
Sell US dollars 4,000 2,283 4 January 2006 – 4 August 2006 1.7139 – 1.7707 (47)
Sell euros 1,500 1,027 24 January 2006 – 25 May 2006 1.4530 – 1.4745 (4)
NOTES TO THE ACCOUNTS CONTINUED
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51
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
25 AUTHORISED AND ISSUED CAPITAL
      2006 2005 2006 2005 
      Number Number £000 £000
Authorised:        
Ordinary shares of 2½p each      100,000,000 100,000,000 2,500 2,500
Issued and fully paid:        
Ordinary shares of 2½p each        
– At 1 January     50,469,712 48,066,394 1,262 1,202
– Issued on 4 March 2005 on placing of shares for cash    — 2,403,318 — 60
– Issued on 27 January 2006 on placing of shares for cash    2,403,320 — 60 —
– Issued on 1 February 2006 on acquisition of TTS    1,121,849 — 28 —
– Issued on 23 February 2006 on exercise of share options    13,100 — — —
– Issued on 7 November 2006 on acquisition of Veritech    791,847 — 20 —
At 31 December     54,799,828 50,469,712 1,370 1,262
26 SHARE BASED PAYMENTS
DISCRETIONARY SHARE OPTION SCHEME
Options have been granted to Executive Directors and all other employees at prices not less than the market price of the shares on the date of grant. 
The options are exercisable between three/ﬁve and 10 years from the award date, subject to EPS-related performance conditions. Further details of the 
performance conditions and vesting periods may be found in the Director’s remuneration report on page 19. No options have been granted under the 
Executive Scheme since 2003 and it is not intended to make any further awards under this scheme before its expiry in 2007.
LONG TERM INCENTIVE PLAN
Executive Directors and senior staff have been granted rights to acquire shares at par value. Vesting is subject to performance criteria related to the 
Group’s EPS growth over a three year period. Failure to meet the performance criteria causes the awards to lapse. Further details of the performance 
conditions may be found in the Director’s remuneration report on page 19. The plan expired in May 2005.
LONG TERM INCENTIVE PLAN 2006
Executive Directors and senior staff have been granted rights to acquire shares at nil cost under this plan introduced in 2006. Vesting is subject to 
performance criteria related to the Group’s EPS growth over a three year period. Failure to meet the performance criteria causes the awards to lapse. 
Further details of the performance conditions may be found in the Director’s remuneration report on page 19.
The expense recognised for equity-settled share based payments in respect of employee services received during the year to 31 December 2006 is 
£210,000 (2005: £144,000). 
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options and LTIP awards (“options”) 
during the year.
      2006 2006 2005 2005 
      Number WAEP Number WAEP
Outstanding at 1 January     5,872,840 47.7p 5,671,252 53.6p
Granted during year     539,600 — 997,459 2.5p
Exercised during year     (13,100) 41.0p — —
Lapsed during year     (777,725) 55.6p (686,347) 37.6p
Forfeit during year      (257,463) 2.5p (109,524) 2.5p
Outstanding at 31 December     5,364,152 42.0p 5,872,840 47.7p
Potentially exercisable at 31 December     682,950 33.5p nil —
For the options outstanding at 31 December 2006 the weighted average remaining contractual life is 5.99 years (2005: 7.19 years). 
The weighted average fair value of options granted during the year was £216,000 (2005: £332,000). The range of exercise prices for options 
outstanding at the end of the year was nil – 350.0p (2005: 2.5p – 350.0p). 
The fair value of equity-settled options granted is estimated as at the date of grant using a Black-Scholes model, taking into account the terms and 
conditions upon which the options were granted. The following table lists the inputs to the model used for the years ended 31 December 2006 and 
31 December 2005.
        8 March 29 April 17 September 
Date       2005 2004 2004
Dividend yield (%)       0.5% 13.4% 8.7%
Expected share price volatility (%)       57.9% 58.3% 57.6%
Risk-free interest rate (%)       4.8% 4.8% 4.8%
Expected life of option (years)       3.0 3.0 3.0
Share price at date of grant (pence)       38.5p 30.5p 34.5p
Exercise price (pence)       2.5p 2.5p 2.5p
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
26 SHARE BASED PAYMENTS CONTINUED
LONG TERM INCENTIVE PLAN 2006 CONTINUED
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility 
reﬂects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
No other features of option grants were incorporated into the measurement of fair value.
27 RECONCILIATION OF MOVEMENTS IN EQUITY
 Other reserves Retained earnings
      
    Capital   Share    
  Issued Share redemption Merger Own based Translation Retained  
  capital premium reserve reserve shares payments differences earnings Total 
  £000 £000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2005 1,202 6,038 55 147 (2,136) 81 (383) 12,088 17,092
Loss for year — — — — — — — (2,049) (2,049)
Shares issued 60 745 — — — — — — 805
Share issue costs — (43) — — — — — — (43)
Share based payments — — — — — 144 — — 144
Exchange translation adjustment — — — — — — 284 — 284
At 1 January 2006 1,262 6,740 55 147 (2,136) 225 (99) 10,039 16,233
Proﬁt for year —  —  —  —  —  —  —  1,074 1,074
Shares issued 108 1,098 —  782  —  —  —  —  1,988
Share issue costs —  (56) —  —  —  —  —  —  (56)
Share based payments —  —  —  —  —  210 —  —  210
Exchange translation adjustment —  —  —  —  —  —  (835) —  (835)
At 31 December 2006 1,370 7,782 55 929 (2,136) 435 (934) 11,113 18,614
The cumulative amount of goodwill written off in relation to acquisitions in previous years is £1,731,000 (2005: £1,731,000).
SHARE CAPITAL
The balance classiﬁed as share capital comprises the nominal value received on issue of the Company’s equity share capital, comprising 2½p ordinary shares.
SHARE PREMIUM
The balance classiﬁed as share premium comprises the premium received on issue of the Company’s equity share capital, less expenses relating to the 
cost of the issue of shares, included in “retained earnings” on the face of the balance sheet.
CAPITAL REDEMPTION RESERVE
The balance classiﬁed as capital redemption reserve comprises an historic statutory reserve arising on the redemption of shares and is included in “other reserves” 
on the face of the balance sheet.
MERGER RESERVE
The balance classiﬁed as merger reserve results from the Company having secured share premium relief under Section 131 of the Companies Act 1985.
OWN SHARES
Own shares comprise 1,575,481 (2005: 1,575,481) 2½p ordinary shares in the Company acquired at a weighted average cost of £1.36 each held by 
KBC Advanced Technologies plc Employee Trust. The market value of these shares at 31 December 2006 was £536,000 (2005: £709,000). Options over 
these shares have been granted to employees, exercisable at prices ranging from £0.025 to £1.995 per share. The 1,575,481 (2005: 1,264,427) shares 
over which options remain exercisable relate to three-year options which may not be exercised unless the performance criteria are met. These criteria 
are set out in the Director’s remuneration report on page 19.
Dividends on the shares owned by the Trust, the purchase of which was funded by interest-free loans to the Trust from KBC Advanced Technologies plc, 
are waived. All expenses incurred by the Trust are settled directly by KBC Advanced Technologies plc and are charged in the accounts as incurred.
SHARE BASED PAYMENTS
The balance classiﬁed as share based payments comprises the accumulated IFRS 2 fair value charge.
TRANSLATION DIFFERENCES
The foreign currency translation reserve is used to record exchange differences arising from the translation of the ﬁnancial statements of foreign subsidiaries.
28 CAPITAL COMMITMENTS 
At 31 December 2006 and 2005 the Group had no capital commitments.
NOTES TO THE ACCOUNTS CONTINUED
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53
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
29 CONTINGENT LIABILITIES
A) PERFORMANCE GUARANTEES
Bank-backed performance guarantees given to third parties as at 31 December 2006 in respect of Group companies amounted to £729,000 (2005: £400,000). 
These guarantees are in part secured by cash deposits of £4,000 (2005: £341,000), the use of which is restricted by the terms of the guarantees.
B) BANK CROSS GUARANTEE 
The Group’s bankers hold a cross guarantee and debenture over all assets of KBC Advanced Technologies plc, KBC Process Technology Limited and 
Linnhoff March Limited. This is in place as security for the overdraft, guarantee and forward exchange facilities.
The amount of the overdraft drawn at 31 December 2006 was nil (2005: nil).
30 PENSIONS
PENSIONS
The Group contributes to deﬁned contribution pension schemes for its Directors and employees. The assets of the schemes are held separately from those 
of the Group in independently administered funds.
         2006 2005 
         £000 £000
Amount recognised as an expense        1,026 1,049
31 OTHER RELATED PARTY TRANSACTIONS
During the year the Group and Company entered into transactions in the ordinary course of business with other related parties. Those transactions with 
Directors of the Company are disclosed in note 32.
Compensation of key management personnel of the Group (deﬁned as the Board of Directors):
         2006 2005 
         £000 £000
Short-term employee beneﬁts        838 733
Post-employment beneﬁts        44 48
Share based payments        49 29
Total        931 810
32 DIRECTORS’ INTERESTS
M P Kirk was a director of Weber Shandwick Financial, a ﬁnancial communications consultancy, until 21 July 2005. In the ordinary course of business from 
1 January 2005 until 21 July 2005 the Company incurred fees and expenses for ﬁnancial consultancy from Weber Shandwick Financial totalling £19,737. 
Included within trade payables at 31 December 2005 is an amount of £1,435 which was due to Weber Shandwick Financial.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
COMPANY BALANCE SHEET AT 31 DECEMBER 2006
        2006 2005 
       Notes £000 £000
Fixed assets        
Intangible assets      37 350 417
Investments      38 3,152 3,152
        3,502 3,569
Current assets        
Debtors      39 8,910 6,682
Cash and short-term deposits       50 64
        8,960 6,746
Creditors: amounts falling due within one year      40 (20) (281)
Net current assets       8,940 6,465
Total assets less current liabilities       12,442 10,034
Capital and reserves        
Called up share capital      42 1,370 1,262
Share premium account      43 7,782 6,740
Capital redemption account      43 55 55
Merger reserve      43 929 147
Reserve for own shares      43 (2,136) (2,136)
Proﬁt and loss account      43 4,442 3,966
Shareholders’ funds       12,442 10,034
W G BRIGHT N P STONE
DIRECTOR DIRECTOR
15 MARCH 2007
NOTES TO THE ACCOUNTS CONTINUED
THE FOLLOWING NOTES RELATE TO THE COMPANY ONLY
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55
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
33 ACCOUNTING POLICIES
BASIS OF PREPARATION
The accounts are prepared under the historical cost convention as modiﬁed for certain items which have been measured at fair value, namely ﬁnancial 
instruments, and in accordance with UK applicable accounting standards.
In these ﬁnancial statements the following new standards have been adopted for the ﬁrst time:
  FRS 20 Share Based Payments. In line with IFRIC draft interpretation D17 IFRS 2 Group and Treasury Share Transactions an investment of £210,000 
(2005: £144,000) has been recognised in relation to the capital contribution made by the Company to its subsidiaries;
  FRS 21 Events after the Balance Sheet Date. This has had no material effect on the income statement for either the current or previous period;
  FRS 23 The Effect of Changes in Foreign Exchange Rates. This has had no material effect on either the current or previous period;
  FRS 25 Financial Instruments: Presentation and Disclosure; and
  FRS 26 Financial Instruments: Measurement. Forward currency contracts are recognised at fair value resulting in a £56,000 asset at 31 December 2006 
(2005: liability of £51,000).
No proﬁt and loss account is presented for KBC Advanced Technologies plc, as permitted by Section 230 of the Companies Act 1985.
DEFERRED TAX
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events 
have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the following exceptions:
  Provision is made for tax on gains arising from gains on disposal of ﬁxed assets that have been rolled over into replacement assets, only to the 
extent that at the balance sheet date there is a binding agreement to dispose of the assets concerned. However, no provision is made where, on 
the basis of all available evidence at the balance sheet date, it is more likely than not that the taxable gain will be rolled over into replacement 
assets and charged to tax only if the replacement assets are sold;
  Provision is made for deferred tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent that at the 
balance sheet date dividends have been accrued as receivable; and
  Deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable 
proﬁts from which the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based 
on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that 
sufﬁcient taxable proﬁt will be available to allow all or part of the deferred income tax asset to be utilised.
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign 
currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the proﬁt and loss account.
FINANCIAL ASSETS
FRS 26 has been adopted in the current and comparative period. Financial assets within the scope of FRS 26 are classiﬁed as ﬁnancial assets at fair 
value through proﬁt or loss or loans and receivables, as appropriate. The Group determines the classiﬁcation of its ﬁnancial assets at initial recognition 
and re-evaluates this designation at each ﬁnancial year-end. When ﬁnancial assets are initially recognised they are measured at fair value, being the 
transaction price plus, in the case of ﬁnancial assets not at fair value through proﬁt or loss, directly attributable transaction costs. 
All regular way purchases and sales of ﬁnancial assets are recognised on the trade date, being the date that the Group commits to purchase or sell the 
asset. Regular way transactions require delivery of assets within the timeframe generally established by regulation or convention in the market place. 
The subsequent measurement of ﬁnancial assets depends on their classiﬁcation, as shown below.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets classiﬁed as held for trading and other assets designated as such on inception are included in this category. Financial assets are classiﬁed 
as held for trading if they are acquired for sale in the short term. Derivatives are also classiﬁed as held for trading unless they are designated as hedging 
instruments. Assets are carried in the balance sheet at fair value while gains or losses on ﬁnancial assets at fair value through proﬁt or loss are recognised 
in the income statement.
Where there is no active market, fair value is determined using discounted cash ﬂow and pricing models. Otherwise assets will be carried at cost.
RECEIVABLES
Receivables are non-derivative ﬁnancial assets with ﬁxed or determinable payments that are not quoted in an active market, do not qualify as trading 
assets and have not been designated as either fair value through proﬁt and loss or available for sale. Such assets are carried at amortised cost.
RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption granted by FRS 8 from disclosing related party transactions with entities that are part of the KBC Group.
INVESTMENTS
Investments are recorded at cost.
INTANGIBLE ASSETS
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss. Intangible assets are amortised over the 10 year 
period in which revenues associated with the asset are generated.
OWN SHARES
Own shares are recorded at cost. Options over some of these shares have been granted to employees of Group subsidiaries.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
34 PROFIT/(LOSS) ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY
The proﬁt/(loss) dealt with in the ﬁnancial statements of the parent company is £266,000 (2005: loss £648,000).
35 AUDITORS’ REMUNERATION
         2006 2005 
         £000 £000
Audit of the Company’s ﬁnancial statements        10 10
36 DIRECTORS’ EMOLUMENTS
         2006 2005 
         £000 £000
Basic salaries         575 585 
Bonus        133 —
Beneﬁts        57 68
Fees        73 80
Other pension costs         44 48
Expense of share based payments        49 29
         931 810
         Number Number
Number of Directors in deﬁned contribution pension schemes       3 3
Full details of Directors’ emoluments are given in the Directors’ remuneration report on page 19.
37 INTANGIBLE FIXED ASSETS
          Intellectual 
          property rights 
          £000
Cost:         
At 1 January 2006         1,835
Additions         —
At 31 December 2006         1,835
Amortisation:         
At 1 January 2006         1,418
Provided in year         67
At 31 December 2006         1,485
Net book value at 31 December 2006         350
Net book value at 31 December 2005         417
38 INVESTMENTS
          Subsidiary 
          undertakings 
          £000
Cost and net book value at 31 December 2005         3,152
At 31 December 2006         3,152
The Company holds equity in the following principal subsidiary undertakings:
  Country of  Proportion  
  registration  of voting  
  (or incorporation)  rights and  
Name of company and operation Holding equity interest Nature of business
KBC Process Technology Limited England Ordinary shares 100% Consulting and
KBC Advanced Technologies Inc USA Common stock 100% software services
KBC Advanced Technology Pte Limited Singapore Ordinary shares 100% to the oil industry
NOTES TO THE ACCOUNTS CONTINUED
THE FOLLOWING NOTES RELATE TO THE COMPANY ONLY
}
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57
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
39 DEBTORS
         2006 2005 
         £000 £000
Amounts owed by subsidiary undertakings        8,844 6,658
Other debtors        — 24
Currency taxation        9 —
Forward currency contracts        56 —
         8,909 6,682
40 CREDITORS
         2006 2005 
         £000 £000
Trade creditors        20 18
Other creditors and accruals        — 212
Forward currency contracts        — 51
         20 281
41 FOREIGN CURRENCY RISK
The treasury function for the Group is carried out by the Company.
At 31 December 2006 forward exchange contracts were in place as follows:
   Value Value  Exchange Fair value 
   000 £000 Maturity rate £000
At 31 December 2006     
Sell US dollars 2,000 1,066 8 January 2007 – 4 May 2007 1.8697 – 1.8886 56
At 31 December 2005     
Sell US dollars 4,000 2,283 4 January 2006 – 4 August 2006 1.7139 – 1.7707 (47)
Sell euros 1,500 1,027 24 January 2006 – 25 May 2006 1.4530 – 1.4745 (4)
Policies for the management of major ﬁnancial risks are shown below:
A) INTEREST RATE RISK
Cash balances in excess of immediate needs are placed on short-term deposits in the money markets or managed by a third-party fund manager. 
Externally managed funds are invested in deposits with, or certiﬁcates of deposits issued by, approved banks or building societies. No investment 
exceeds one year’s maturity. The Group’s present policy is to place not more than £1m for maturity in excess of six months.
B) FOREIGN CURRENCY RISK
The majority of transactions continue to be in US dollars, sterling and an increasing number in euro-denominated contracts. Where a revenue currency 
differs from that in which costs are incurred, a proportion of the foreign exchange exposure is offset using forward exchange contracts in the currency 
markets. The Group has a number of overseas subsidiaries and branches whose revenues and costs are denominated in currencies other than sterling, 
the most signiﬁcant of which are in the US. 
C) LIQUIDITY RISK
Customer payment terms can vary from contract to contract and can involve extended periods of time before invoices are raised. The liquidity risk is managed 
through use of the overdraft facilities described in note 17.
FAIR VALUES
 Carrying amount Fair value
       
       2006 2005 2006 2005 
       £000 £000 £000 £000
Financial assets         
– Other debtors      — 24 — 24
– Cash and bank      50 64 50 64
– Forward currency contracts      56 — 56 —
Financial liabilities         
– Other liabilities (current)      (20) (230) (20) (230)
– Forward currency contracts      — (51) — (51)
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
42 SHARE CAPITAL
      2006 2005 2006 2005 
      Number Number £000 £000
Authorised:
Ordinary shares of 2½p each      100,000,000 100,000,000 2,500 2,500
Issued and fully paid:
Ordinary shares of 2½p each
– At 1 January     50,469,712 48,066,394 1,262 1,202
– Issued on 4 March 2005 on placing of shares for cash    — 2,403,318 — 60
– Issued on 27 January 2006 on placing of shares for cash    2,403,320 — 60 —
– Issued on 1 February 2006 on acquisition of TTS    1,121,849 — 28 —
– Issued on 23 February 2006 on exercise of share options    13,100 — — —
– Issued on 7 November 2006 on acquisition of Veritech    791,847 — 20 —
 At 31 December      54,799,828 50,469,712 1,370 1,262
Options to subscribe for new ordinary shares of 2½p each, including LTIP awards and those noted in the Directors’ remuneration report, are as follows:
   Options Exercise price 
Date granted outstanding pence Exercise period
January 1997 66,500 41.0 January 2000 – January 2007
March 1998 135,230 350.0 March 2001 – March 2008
September 1998 54,469 199.5 March 2004 – September 2008
March 1999 10,000 203.5 March 2002 – March 2009
March 2001 242,245 127.5 March 2004 – March 2011
August 2001 125,000 146.5 August 2004 – August 2011
March 2002 314,200 110.0 March 2005 – March 2012
August 2002 15,000 49.0 August 2005 – August 2012
April 2003 682,950 33.5 April 2006 – April 2013
December 2003 500,000 37.0 December 2006 – September 2007
March 2004 1,638,118 2.5 March 2007 – March 2014
   3,783,712  
43 RECONCILIATION OF SHAREHOLDERS’ FUNDS AND MOVEMENTS ON RESERVES
      Capital   Proﬁt 
    Share Share redemption Merger Own and loss  
    capital premium reserve reserve shares account Total 
    £000 £000 £000 £000 £000 £000 £000
At 1 January 2005   1,202 6,038 55 147 (2,136) 4,470 9,776
Loss for year   — — — — — (648) (648)
Shares issued   60 745 — — — — 805
Share issue costs   — (43) — — — — (43)
Share based payments   — — — — — 144 144
At 1 January 2006   1,262 6,740 55 147 (2,136) 3,966 10,034
Proﬁt for year   — — — — — 266 266
Shares issued   108 1,098 — 782 — — 1,988
Share issue costs   — (56) — — — — (56)
Share based payments   — — — — — 210 210
At 31 December 2006   1,370 7,782 55 929 (2,136) 4,442 12,442
SHARE CAPITAL
The balance classiﬁed as share capital comprises the nominal value received on issue of the Company’s equity share capital, comprising 2½p ordinary shares.
SHARE PREMIUM
The balance classiﬁed as share premium comprises the premium received on issue of the Company’s equity share capital, less expenses relating to the 
cost of the issue of shares, included in “retained earnings” on the face of the balance sheet.
NOTES TO THE ACCOUNTS CONTINUED
THE FOLLOWING NOTES RELATE TO THE COMPANY ONLY
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
44 RECONCILIATION OF SHAREHOLDERS’ FUNDS AND MOVEMENTS ON RESERVES CONTINUED
CAPITAL REDEMPTION RESERVE
The balance classiﬁed as capital redemption reserve comprises historic statutory reserves arising on the redemption of shares and is included in “other reserves” 
on the face of the balance sheet.
MERGER RESERVE
The balance classiﬁed as merger reserve results from the Company having secured share premium relief under Section 131 Companies Act 1985.
OWN SHARES
Own shares comprise 1,575,481 (2005: 1,575,481) 2½p ordinary shares in the Company acquired at a weighted average cost of £1.36 each held by 
KBC Advanced Technologies plc Employee Trust. The market value of these shares at 31 December 2006 was £536,000 (2005: £709,000). Options over 
these shares have been granted to employees, exercisable at prices ranging from £0.025 to £1.995 per share. The 1,575,481 (2005: 1,264,427) shares 
over which options remain exercisable relate to three-year options which may not be exercised unless the performance criteria are met. These criteria are 
set out in the Directors’ remuneration report on page 19.
Dividends on the shares owned by the Trust, the purchase of which was funded by interest-free loans to the Trust from KBC Advanced Technologies plc, 
are waived. All expenses incurred by the Trust are settled directly by KBC Advanced Technologies plc and are charged in the accounts as incurred.
SHARE BASED PAYMENTS
The balance classiﬁed as share based payments comprises the accumulated IFRS 2 fair value charge. The charge for the Group, which all relates to subsidiaries, 
is shown in note 26.
45 CONTINGENT LIABILITIES
The Group’s bankers hold a cross guarantee and debenture over all assets of KBC Advanced Technologies plc, KBC Process Technology Limited and 
Linnhoff March Ltd. This is in place as security over the overdraft, guarantee and forward exchange facilities.
46 CAPITAL COMMITMENTS
At 31 December 2006 and 2005 the Company had no capital commitments.
47 DIRECTORS’ INTEREST
M P Kirk was a director of Weber Shandwick Financial, a ﬁnancial communications consultancy, until 21 July 2005. In the ordinary course of business 
from 1 January 2005 until 21 July 2005 the Company incurred fees and expenses for ﬁnancial consultancy from Weber Shandwick Financial totalling 
£19,737. Included within trade payables at 31 December 2005 is an amount of £1,435 which was due to Weber Shandwick Financial.
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
48 BUSINESS COMBINATIONS
A) TTS PERFORMANCE SYSTEMS INC
On 1 February 2006 the Group acquired 100% of the issued share capital of TTS Performance Systems Inc and its sister company, Center for Process 
Plant Management LLC, (together “TTS”) for an aggregate consideration of US$6.0m. Funding for the initial consideration payable in connection with 
the acquisition was obtained through a placing of 2,403,320 new ordinary shares in KBC with institutional investors and the issue of further ordinary 
shares in KBC to the vendors.
As part of the acquisition, intangible assets of £522,000 were acquired with a useful economic life of ﬁve years.
The remaining excess of purchase consideration over fair value has been capitalised as goodwill.
The deferred consideration is expected to be funded out of the future cash ﬂows of KBC. In order to secure these payments KBC on completion entered 
into a pledge agreement with the vendors of TTS over the shares it acquired in TTS. The deferred consideration is payable in three equal annual 
instalments on the anniversary of the completion of the acquisition.
Book and fair values of the assets acquired at the date of acquisition were as follows:
          Fair value 
         Book value to Group 
         £000 £000
Intellectual property rights        522 522
Net assets acquired        268 268
Goodwill arising on acquisition         2,451
Total consideration         3,241
Total consideration comprised:         
Cash          1,127
Issue of 2½p ordinary shares to vendors         564
Directly attributable costs         43
Deferred cash consideration         1,507
Total consideration         3,241
B) VERITECH INC
On 7 November 2006 the Group acquired 100% of the issued share capital of Veritech Inc for an aggregate consideration of US$1.7m. 
As part of the acquisition, intellectual property rights of £267,000 were acquired with a useful economic life of ﬁve years. The remaining excess of 
purchase consideration over fair value has been capitalised as goodwill. The deferred consideration is expected to be funded out of the future cash 
ﬂows of KBC and is payable in four equal annual instalments on the anniversary of the completion of the acquisition.
Book and fair values of the assets acquired at the date of acquisition were as follows:
          Fair value 
         Book value to Group 
         £000 £000
Intellectual property rights        275 275
Net assets acquired        2 2
Goodwill arising on acquisition         615
Total consideration         892
Total consideration comprised:         
Cash          104
Issue of 2½p ordinary shares to vendors         262
Directly attributable costs         2
Deferred cash consideration         524
Total consideration         892
NOTES TO THE ACCOUNTS CONTINUED
THE FOLLOWING NOTES RELATE TO THE COMPANY ONLY
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61
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
(incorporated and registered in England with registered No 01357958)
Notice is hereby given that the Annual General Meeting of KBC Advanced Technologies plc (the ‘‘Company’’) will be held at KBC House,  
42–50 Hersham Road, Walton on Thames, Surrey KT12 1RZ at 3.00 pm on 17 May 2007 for the purpose of transacting the following business:
ORDINARY BUSINESS
1.  To receive and adopt the audited accounts of the Company for the year ended 31 December 2006 and to receive the Directors’ and auditors’ 
reports thereon;
2. To receive and approve the Directors’ remuneration report for the year ended 31 December 2006;
3.   To ratify the appointment during the year, and to re-appoint, BDO Stoy Hayward LLP as the Company’s auditors and to authorise the Directors to ﬁx 
their remuneration;
4.  To re-elect C B Powell-Smith as a Director of the Company; and
5.  To declare a ﬁnal dividend of 0.5p per Ordinary share payable on 22 May 2007 to the holders of Ordinary shares of the Company whose names 
appear on the register of members of the Company at the close of business on 11 May 2007.
SPECIAL BUSINESS
To consider and, if thought ﬁt, to pass the following resolutions which will be proposed, in the case of Resolution 6, as an ordinary resolution and, 
in the case of Resolutions 7 and 8, as special resolutions of the Company:
6.  That the Directors be generally and unconditionally authorised pursuant to Section 80 of the Companies Act 1985 (the “Act”) to allot relevant 
securities (within the meaning of that Section) up to an aggregate nominal amount of £456,619 representing a number of Ordinary shares of  
2½p each (the “Shares”) equivalent to approximately one third of the issued share capital of the Company at the date of this notice. The authority 
referred to in this resolution shall be in substitution for all other existing authorities dealing with the subject matter of this resolution and shall 
expire (unless previously renewed, varied or revoked by the Company in general meeting) at the earlier of the conclusion of the annual general 
meeting of the Company to be held in 2008 and 30 June 2008. The Company may at any time prior to the expiry of the authority referred to in 
this resolution make offers or agreements which would or might require relevant securities to be allotted after the expiry of the authority and the 
Directors are hereby authorised to allot relevant securities in pursuance of such offers or agreements as if the authority conferred hereby had 
not expired.
7.  That the Directors, pursuant to Section 95 of the Act, be empowered to allot equity securities (within the meaning of Section 94(2) of the Act) 
for cash pursuant to the authority conferred by Resolution 6 as if Section 89(1) of the Act did not apply to any such allotment, provided that this 
power shall be limited to:
 (a)  the allotment of equity securities where such securities have been offered (whether by way of a rights issue, open offer or otherwise) to 
holders of Shares in proportion (as nearly as may be) to their holdings of such Shares but subject to such exclusions or other arrangements 
as the Directors may deem necessary or expedient to deal with equity securities representing fractional entitlements and with legal or 
practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise; and
 (b)  the allotment (other than pursuant to (a) above) of equity securities (i) arising from the exercise of options outstanding at the date of this 
resolution and (ii) up to an aggregate nominal value of £68,499 or 5 per cent of the issued share capital of the Company, whichever is 
the higher;
  and this power shall, unless previously revoked or varied by special resolution of the Company in general meeting, expire at the earlier of the 
conclusion of the annual general meeting of the Company to be held in 2008 and 30 June 2008. The Company may before such expiry make offers 
or agreements which would or might require equity securities to be allotted after such expiry and the Directors are hereby empowered to allot 
equity securities in pursuance of such offers or agreements as if the power conferred hereby had not expired.
8.  That the Company be and is generally and unconditionally authorised to make market purchases, within the meaning of Section 163 of the Act, 
of Shares provided that:
 (a) the maximum aggregate number of Shares which may be purchased under this authority is 8,219,974 Shares;
 (b) the minimum price, exclusive of expenses, which may be paid for each Share is 2½p;
 (c)  the maximum price, exclusive of expenses, which may be paid for each Share shall be an amount equal to 105 per cent of the average of the 
middle market quotations for the Shares taken from the listing of the Alternative Investment Market of London Stock Exchange plc over the 
ﬁve business days immediately preceding the day on which the Shares are contracted to be purchased;
 (d)  the authority to purchase conferred by this resolution shall expire at the earlier of the conclusion of the annual general meeting of the 
Company to be held in 2008 and 30 June 2008, unless the authority is extended before then; and
 (e)  the Company may make a contract to purchase Shares in the capital of the Company under this authority before its expiry which would or 
might be executed wholly or partly after such expiry and in any such case the Company may make such a purchase under the contract after 
the expiry of this authority.
By order of the Board
JANET M IRELAND Registered Ofﬁce:
SECRETARY KBC House
15 MARCH 2007 42-50 Hersham Road
Walton on Thames
KT12 1RZ
NOTICE OF ANNUAL GENERAL MEETING
KBC ADVANCED TECHNOLOGIES PLC 
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
NOTES:
(1)  A member entitled to attend and vote at the annual general meeting (“AGM”) convened by the Notice above is entitled to appoint a proxy to 
attend and, on a poll, vote in his place. A proxy need not be a member of the Company.
(2)  To be valid, forms of proxy must be lodged with Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8FB not later 
than 3.00 pm on Tuesday 15 May 2007. A form of proxy is enclosed. If the AGM is adjourned, or in the case of a poll taken subsequent to the date 
of the AGM or the adjourned AGM, the proxy must be received at the above address not less than 24 hours before the time of the adjourned AGM 
or the time appointed for the taking of the poll.
(3) Completion of a form of proxy does not prevent a holder of Shares from attending and voting at the AGM should he or she so wish.
(4)  In order to have the right to attend and/or vote at the AGM, a person must be registered on the register of members of the Company not later 
than close of business on Tuesday 15 May 2007 or, in the case of an adjournment of the AGM, at the time which is 48 hours before the time 
appointed for the adjourned meeting. Changes to entries in the register of members of the Company after close of business on 15 May 2007 
shall be disregarded in determining the rights of any person to attend and/or vote at the AGM.
(5)  Copies of the contracts of the Directors with the Company and/or its subsidiaries are available for inspection at the registered ofﬁce of the Company 
during normal business hours on any weekday (except Saturdays and public holidays).
(6)  The Register of Directors’ interests will also be available for inspection at the registered ofﬁce of the Company for at least 15 minutes prior to and 
during the AGM.
EXPLANATION OF RESOLUTION 3
BDO Stoy Hayward LLP (“BDO”) were appointed by the Directors as the Company’s auditors on 18 July 2006 to ﬁll the vacancy arising as a result of 
the resignation of Ernst & Young LLP on 13 July 2006. Resolution 3 will ratify the appointment of BDO during the year and re-appoint them as the 
Company’s auditors.
EXPLANATION OF RESOLUTION 4
As noted in the Corporate Governance report on page 16 of the annual report, Mr Powell-Smith has served on the Board since February 1997 and 
reached the age of 70 years in 2006. The other Directors believe that Mr Powell-Smith’s skills and experience continue to be of value to the Company 
and have therefore proposed that he be re-elected as a Director of the Company.
EXPLANATION OF RESOLUTION 6
The Directors wish to renew at the forthcoming AGM the authority and power which were granted to them at the AGM held on 25 May 2006. Such 
authority and power are normally given to the Directors of a listed company on an annual basis. The Act provides that the Directors may not issue new 
Shares unless authorised to do so by the shareholders. In Resolution 6 an authority is being sought to issue new Shares up to a maximum aggregate 
nominal amount of £456,619, representing a number of shares equivalent to approximately one-third of the issued share capital of the Company at 
the date of this notice. Such authority will (except in relation to commitments which have been made but not fulﬁlled) lapse on 30 June 2008 or, if 
earlier, at the conclusion of the AGM of the Company to be held in 2008. The granting of this authority will ensure that the Board is able to maintain 
a degree of ﬂexibility for the issue of Shares without the need to obtain shareholders’ consent on each occasion. The Directors have no present 
intention to exercise this authority except in connection with the Company’s employee share incentive schemes.
EXPLANATION OF RESOLUTION 7
If new Shares are to be allotted for cash, Section 89(1) of the Act requires the new Shares to be offered ﬁrst to the existing holders of Shares on 
a proportionate basis. Resolution 7, which will be proposed as a special resolution, is in accordance with normal practice and, if passed, will give 
the Directors the power to allot Shares for cash without ﬁrst offering those Shares to existing shareholders. This power will allow the Directors to 
implement rights issues, open offers or other similar such issues of Shares without complying fully with the pre-emption requirements of the Act 
which can prove unduly burdensome in certain circumstances (for example, in the case of Shareholders resident in certain overseas countries). Power 
is also being sought to enable the Directors to issue Shares for cash otherwise than on a pre-emptive basis in relation to outstanding share options 
and otherwise for new Shares up to an aggregate nominal amount of £68,499, which represents a number of Shares approximately equal to 5 per 
cent of the Company’s issued share capital at the date of this notice. If given, the power contained in this special resolution will (except in relation to 
commitments which have been made but not fulﬁlled) lapse on 30 June 2008 or, if earlier, at the conclusion of the AGM of the Company to be held 
in 2008.
EXPLANATION OF RESOLUTION 8
This resolution, which will be proposed as a special resolution, will grant authority to the Company to purchase its Shares in the market up to a limit 
of 8,219,974 Shares, representing approximately 15 per cent of the issued Shares at the date of this notice. The minimum and maximum prices to 
be paid for the Shares are detailed in the resolution and the authority will (except in relation to commitments which have been made but not fulﬁlled) 
lapse on 30 June 2008 or, if earlier, at the conclusion of the AGM of the Company to be held in 2008. Although the Directors do not currently intend 
to exercise the authority being sought to make speciﬁc purchases of any Shares, they consider it to be beneﬁcial to have the ﬂexibility of such an authority 
to make purchases within the terms of the resolution. The Directors would carefully consider any exercise of the authority being sought and would only 
make purchases provided that due consideration had been given to the overall ﬁnancial position of the Company and if it was in the best interests of 
shareholders generally. Shareholders would be advised immediately after any repurchase of Shares as to whether such Shares had been cancelled or 
were held in treasury. As at 5 March 2007 options over 5,297,652 Shares were outstanding under the Company’s share option schemes representing 
9.67 per cent of the Company’s issued share capital at that date. If the authority being sought by the Company to purchase its Shares were to be 
exercised in full, such options would represent 11.37 per cent of the Company’s issued share capital at 5 March 2007. The performance targets of 
the share option schemes would be adjusted automatically in the event of any change in the Company’s capital structure.
NOTICE OF ANNUAL GENERAL MEETING
KBC ADVANCED TECHNOLOGIES PLC 
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63
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
GLOSSARY
alkylation  a process to convert LPG (produced from FCC) into gasoline
aromatics  family of petrochemical feedstocks
b/d   barrels per day
CapX  Capital Excellence (see page 3)
catalytic reforming process to upgrade naphtha to gasoline
coking/coker thermal process to upgrade heavy fuel oil with a solid waste product
EMEA  Europe, Middle East and Asia (one of KBC’s operating regions)
FCC  ﬂuid catalytic cracking process
HSE  health, safety and environment
hydrocracking 
/hydrocracker catalytic process to increase diesel production from VGO
hydrotreater 
/hydrotreating catalytic process to remove sulphur from petroleum products
isomerization catalytic process to upgrade light naphtha to gasoline
LPG  liquiﬁed petroleum gas(es)
MBPD  million barrels per day
Mesoamérica  The region comprising the countries of Central America and nine southeastern states of Mexico: Campeche, Chiapas, Guerrero, 
Oaxaca, Puebla, Quintana Roo, Tabasco, Veracruz, and Yucatán. In addition to historical linguistic and cultural similarities, the 
territories within this region exhibit increasing socioeconomic integration.
naphtha reforming process to improve naphtha octane rating
OpX  Operational Excellence (see page 3)
Petro-SIM   KBC’s full-featured process simulator that can accurately model entire reﬁneries and complex petrochemical processes, including 
ﬂuid catalytic cracking, catalytic reforming, hydrocracking, hydrotreating, delayed coking, visbreaking and thermal cracking, 
alkylation, residue hydrotreating, distillation, aromatics, isomerization, and product blending.
Petro-SIM Express  KBC’s process simulator for modelling standard unit operations and single reﬁnery or petrochemical unit modelling. A simpliﬁed 
version of Petro-SIM which provides an entry level platform.
RAM  reliability, availability and maintenance
thermal cracking thermal process to upgrade VGO/heavy fuel oil with a liquid waste product
VGO  vacuum gas oil
visbreaking mild thermal process to upgrade heavy fuel oil with a liquid waste product
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KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
TIMETABLE
Preliminary announcement of results 15 March 2007
Annual General Meeting  17 May 2007
First and ﬁnal dividend proposed 
to be paid with respect to 2006 22 May 2007
Interim results   September 2007
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CapX – Capital Excellence
 Market Analysis & Forecasting
 Business Strategy Review
 Merger, Acquisition, & Integration Studies
 Feasibility Studies
 Capital Project Support
OpX – Operational Excellence
 Operational Planning
 Process Optimisation
 Energy 
 HSE
 Reliability, Availability, & Maintenance
 Human Performance Improvement
 Software Solutions
KBC offers a comprehensive range of consulting, implementation, and training 
solutions to provide sustainable competitive advantage to our process industry  
clients worldwide. Our services include:
_1_cover.indd   2 29/03/2007   12:28:17 KBC ADVANCED TECHNOLOGIES PLC 
KBC House 
42–50 Hersham Road 
Walton on Thames 
KT12 1RZ UK 
Tel:  +44 (0)1932 242424 
Fax:  +44 (0)1932 236514 
email: info@kbcat.com 
website: www.kbcat.com
EUROPE 
KBC PROCESS TECHNOLOGY LTD
KBC House
42-50 Hersham Road
Walton on Thames
KT12 1RZ, UK
Tel:  + 44 (0)1932 242424
KBC PROCESS TECHNOLOGY LTD
(formerly Linnhoff March)
Targeting House
Gadbrook Park
Northwich
CW9 7UZ, UK
Tel:  +44 (0)1606 815100
KBC PROCESS TECHNOLOGY LTD
Netherlands Branch
Kloosterplein 21
4811 GP Breda, Netherlands
Tel: +31 (0)76 531 6131
KBC PROCESS TECHNOLOGY LTD
Russian Representative Ofﬁce
Room 106
Building 5/10
Chistoprudny Boulevard, Moscow
Russian Federation 101000
Tel:  +7 495 980 8449
AMERICAS 
KBC ADVANCED TECHNOLOGIES, INC.
14701 St Mary’s Lane
Suite 300 
Houston TX 77079
USA 
Tel:  + 1 281 293 8200
KBC ADVANCED TECHNOLOGIES, INC.
4 Campus Drive
2nd Floor – South 
Parsippany NJ 07054
USA
Tel:  +1 973 889 8922
TTS PERFORMANCE SYSTEMS, INC.
3131 South Vaughn Way
Suite 300
Aurora, CO 80014
USA
Tel:  +1 303 368 0300
VERITECH, INC.
22960 Shaw Road
Suite 620
Sterling, VA 20166
USA
Tel:  +1 703 435 7880
KBC ADVANCED TECHNOLOGIES CANADA LTD
1015 4th Street SW
Suite 260
Calgary AB, T2R 1J4
Canada
Tel:  +1 403 206 1533
ASIA 
KBC ADVANCED TECHNOLOGY PTE LTD
435 Orchard Road #16-02/03
Wisma Atria
Singapore 238877
Tel: + 65 6735 5488
KBC PROCESS TECHNOLOGY LTD
Japan Branch
Nishi-Shimbashi YS Bldg 5F
2-19-2 Nishi-Shimbashi
Minato-ku
Tokyo 105-0003
Japan
Tel: +81 (0)3 5777 6560
KBC ADVANCED TECHNOLOGIES (BEIJING) CO LTD
1903 Tower A
China International Science & Technology Convention Center
No 12 Yumin Road
Chaoyang District
Beijing 100029
People’s Republic of China 
Tel: +86 (0)10 8225 3838
KBC ADVANCED TECHNOLOGIES PLC ANNUAL REPORT AND ACCOUNTS 2006
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