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AEA Annual Results 31 March 2007 Andrew McCree and Alice Cummings 14 th June, 2007 Linklaters, One Silk Street, London
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Group highlights Financial performance Turnover up 35% Adjusted Operating Profit up 121% Good operating cash performance Net debt has reduced by £7.9m to £21.4m Good market Energy & climate change Orders up 26% to £91m Growth strategy Organic and acquisition Successful disposal of non-core businesses to Vision Capital Management Significant strengthening of the management team
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Financial review Alice Cummings, CFO 14 th June 2007
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Financial summary £m2007 2006 Turnover75.255.8 Adjusted Operating Profit 8.6 3.9 PBT 8.0 8.5 Cash flow used in operations (4.8)(12.2) Net Debt21.429.3
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Adjusted Operating Profit £m20072006 Environment 12.4 11.1 Central costs (3.8)(7.2) Adjusted Operating Profit 8.63.9 Central costs reduction programme achieved Annualised run rate of £3.0m 48 staff have left
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PBT £m 2007 2006 Adjusted Operating Profit8.6 3.9 Non-recurring items Pension gain 1.2 12.3 Re-financing costs(0.4)(3.0) Redundancy costs -(1.6) 0.8 7.7 Operating profit9.4 11.6 Net finance costs (1.4) (3.1) PBT 8.0 8.5
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Cash flow £m20072006 Cash flow from operations (4.8)(12.2) Net interest / tax (2.8)(6.2) Capital expenditure (1.7)(5.7) Disposal proceeds (net) 17.4 22.3 Share issue - 30.2 Other (0.2) 1.3 Movement in Net Debt 7.9 29.7 Opening Net Debt(29.3)(59.0) Closing Net Debt(21.4)(29.3)
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Cash flow from operations £m20072006 Cash flow from operations (4.8)(12.2) Disposed business outflow 6.0 13.1 Legacy outflow 6.9 3.1 Cash from continuing operations 8.1 4.0
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Legacy provisions £m20072006 Provisions26.035.8 Current element10.88.9
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Pension benefit liability £m 2007 2006 Liabilities (366.9) (546.2) Assets 274.7 430.0 (92.2) (116.2) Assets Funding Equity 217.3 340.4 Corporate Bonds 22.7 55.0 Government Bonds 21.5 23.0 Infrastructure 6.3 10.6 Other assets 6.9 1.0 274.7 430.0
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Summary Financial Performance Adjusted Operating Profit up Profit to cash conversion 94% Central cost reduction achieved Balance Sheet Good headroom on facilities Legacy provisions down to £26.0m Going Forward Continued cost control Increasing investment for growth
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Business review Andrew McCree, CEO 14 th June 2007
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Performance highlights Sales Sales up 35% from £55.8m to £75.2m Orders Orders up 26% from £72.5m to £91.0m Secured sales for the new year 57% (2006: 52%) Pipeline ~ £220m Utilisation 83% Half year 78%
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AEA – Markets and customers Markets Energy Air quality Resource efficiency – waste policy Transport Knowledge management Customer base 76% Government 5% Devolved Administrations 13% Private sector 6% International
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Contract life cycle Commoditised programme management Technical committees Policy Policy implementation Programme management Contract Life Cycle
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UK highlights Policy support Defra: Market transformation programme DfT: Transport environmental impacts TFL: London low emission zone scientific framework Policy implementation Carbon Trust:Applied research portfolio management Defra:Envirowise England Defra: National air emissions inventory Defra:Construction waste platform DfT: SAFED for vans DTI: Emerging energy technologies programme DTI: Knowledge transfer partnerships programme Scottish Executive:Air quality archive Scottish Executive:Envirowise Scotland Private sector Big Lottery Fund:Research grant programme
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EC and international highlights Policy support Sales to the EC rose by 34% from £3.5m to £4.7m Major energy security project Ten new environmental policy support contracts Policy implementation Energy and Environment Programme for Chinese Government UK-Russia Closed Cities Partnership Impacts of Climate Change on Chinese agriculture
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Growth update
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A growing market EU Enlargement - Romania Global drivers Climate change Energy security
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Growth - organic & acquisitions Organic – White Paper Energy efficiency & carbon management Carbon trading and reduction Government estate Resource efficiency Low carbon transport Organic – other Scotland & Wales EU expansion and aid Acquisitions Energy, environment, buildings & transport consultancies Policy, programme management & technical services Quality of earnings/clients – integration risk Good funnel – strong prospects in US, UK
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Strategic goals Double revenues Aggressive organic growth Focused acquisition programme Sustain mid-teen margins Increase utilisation Maintain cost control Enhance management Focus on commercial & marketing skills
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Summary Good market Focus on organic & acquisition growth Management team strengthened Performance is getting stronger
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AEA Annual Results 31 March 2007 Andrew McCree and Alice Cummings 14 th June, 2007 Linklaters, One Silk Street, London
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