AEA Annual Results 31 March 2007Andrew McCree and Alice Cummings

14th June, 2007

Linklaters, One Silk Street, London

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

Financial reviewAlice Cummings, CFO

14th June 2007

Financial summary

£m 2007 2006

Turnover 75.2 55.8

Adjusted Operating Profit 8.6 3.9

PBT 8.0 8.5

Cash flow used in operations

(4.8)(12.2)

Net Debt 21.4 29.3

Adjusted Operating Profit

£m 2007 2006

Environment 12.4 11.1

Central costs

(3.8)(7.2)

Adjusted Operating Profit 8.6 3.9

Central costs reduction programme achieved• Annualised run rate of £3.0m• 48 staff have left

PBT

£m 2007 2006

Adjusted Operating Profit 8.6 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 profit 9.4 11.6

Net finance costs (1.4) (3.1)

PBT 8.0 8.5

Cash flow

£m 2007 2006

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)

Cash flow from operations

£m 2007 2006

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

Legacy provisions

£m 2007 2006

Provisions 26.0 35.8

Current element 10.8 8.9

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

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

Business reviewAndrew McCree, CEO

14th June 2007

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%

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

Contract life cycle

Commoditised programme management

Technical committees

Policy

Policy implementation

Programmemanagement

Contract Life Cycle

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

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

Growth update

A growing market

EU• Enlargement

- Romania

Global drivers• Climate change

• Energy security

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

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

Summary

Good market

Focus on organic & acquisition growth

Management team strengthened

Performance is getting stronger

AEA Annual Results 31 March 2007Andrew McCree and Alice Cummings

14th June, 2007

Linklaters, One Silk Street, London