(AAT.L) AEA Technology PLC Buy/Sell

(expense)/income for the period - net of tax

(30.0) 4.9 (43.8)

Total comprehensive (expense)/income for the period entirely attributable to the equity holders of the Company

Consolidated balance sheet
Notes (Unaudited) (Unaudited) (Audited)
At At At
30 September 30 September 31 March

£m £m £m

Non-current assets
Goodwill 31.0 27.9 34.6
Other intangible assets 4.6 5.2 5.8
Property, plant and equipment 3.5 3.4 4.0
Available for sale investments - 2.0 2.0
Deferred income tax assets 6.1 7.1 6.5
45.2 45.6 52.9

Current assets
Contract work in progress 0.4 0.4 0.3
Trade and other receivables 24.8 26.7 28.5
Derivative financial 1.1 - -

instruments
Current income tax assets - - 0.1
Available for sale investments 2.0 - -
Cash and cash equivalents 2.3 2.4 3.0
30.6 29.5 31.9
Total assets 4 75.8 75.1 84.8

Capital and reserves attributable to the Company's equity shareholders
Share capital and premium 6 95.3 94.3 95.3
Capital redemption reserve 0.7 0.7 0.7
Currency translation reserve 1.5 0.4 2.6
Fair value and other reserves (47.2) 36.7 (18.3)
Retained deficit (184.6) (187.6) (184.7)
Total equity (134.3) (55.5) (104.4)

Non-current liabilities
Trade and other payables 2.5 0.4 2.6
Borrowings 32.2 0.2 0.4
Retirement benefit liabilities 7 137.6 56.0 108.2
Provisions for liabilities and 10.7 17.1 12.0

charges
Deferred income tax 1.7 2.0 2.1

liabilities
184.7 75.7 125.3

Current liabilities
Trade and other payables 23.1 26.8 31.3
Borrowings 2.1 27.8 29.9
Derivative financial 0.1 0.3 2.6

instruments
Current income tax liabilities 0.1 - 0.1
25.4 54.9 63.9
Total liabilities 210.1 130.6 189.2
Total equity and liabilities 75.8 75.1 84.8

On 18 November 2009 the Board of Directors approved the financial statements and authorised them for issue. The notes are an integral part of these financial statements. Signed on behalf of the Board of Directors.

Andrew McCree Alice Cummings

CEO CFO Consolidated statement of changes in equity
Attributable to equity holders of the Company
Share Share Fair value Capital Cumulative Retained Total
capital premium and other redemption translation deficit equity
(note 6) (note 6) reserves reserves adjustment £m £m
£m £m £m £m £m
Balance as at 1 April 2008 15.2 40.4 35.0 0.7 - (190.5) (99.2)
Profit for the period - - - - - 2.9 2.9
Currency translation - - - - 0.4 - 0.4

differences
Actuarial gains on defined - - 1.6 - - - 1.6

benefit pension schemes
Total comprehensive income for - - 1.6 - 0.4 2.9 4.9

the period ended 30 September

Issue of shares 12.7 26.0 - - - - 38.7
Fair value of share option - - 0.1 - - - 0.1

schemes
Balance as at 30 September 27.9 66.4 36.7 0.7 0.4 (187.6) (55.5)

Profit for the period - - - - - 4.1 4.1
Currency translation - - - - 2.2 - 2.2

differences
Actuarial losses on defined - - (55.0) - - - (55.0)

benefit pension schemes
Total comprehensive (expense)/ - - (55.0) - 2.2 4.1 (48.7)

income for the period ended 31 March 2009
Issue of shares - 1.0 - - - - 1.0
Loss on issue of shares - - - - - (1.2) (1.2)

between Group companies
Balance as at 31 March 2009 27.9 67.4 (18.3) 0.7 2.6 (184.7) (104.4)
Profit for the period - - - - - 0.1 0.1
Currency translation - - - - (1.1) - (1.1)

differences
Actuarial losses on defined - - (29.0) - - - (29.0)

benefit pension schemes
Total comprehensive (expense)/ - - (29.0) - (1.1) 0.1 (30.0)

income for the period ended 30 September 2009
Fair value of share option - - 0.1 - - - 0.1

schemes
Balance as at 30 September 27.9 67.4 (47.2) 0.7 1.5 (184.6) (134.3)

Consolidated statement of cash flows
Notes (Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m

Cash flows from operating activities
Cash (used in)/from operations 11 (3.7) (4.7) 1.1
Interest paid (0.4) (0.8) (1.5)
Interest received - 0.2 0.2
Taxes paid - - (0.2)
Net cash used in operating (4.1) (5.3) (0.4)

activities Cash flows from investing activities
Acquisition of subsidiary, net - (35.8) (36.4)

of cash acquired
Purchases of property, plant (0.3) (0.2) (1.0)

and equipment
Net cash used in investing activities (0.3) (36.0) (37.4)

Cash flows from financing activities
Repayment of borrowings (2.5) (20.4) (34.4)
Draw-down of bank facilities 9.5 26.9 37.9
Proceeds from new equity - 36.2 36.2

issues
Settlement of forward (2.5) - -

contracts
Net cash generated from financing 4.5 42.7 39.7

activities
Net increase in cash 0.1 1.4 1.9
Cash at beginning of period 3.0 1.0 1.0
Exchange (losses)/gains on (0.8) - 0.1

cash and cash equivalents
Cash at end of period 2.3 2.4 3.0

Consolidated statement of cash flows - alternative performance measures (note 3)

Movement in net debt for the period ended:
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Cash (used in)/from business (0.6) 0.9 16.2

operations
Acquisition and integration (0.6) - (1.3)

costs
Legacy cash flows (1.4) (2.8) (7.8)
Funding of pension deficit (1.1) (2.8) (6.0)
Cash (used in)/from operations (3.7) (4.7) 1.1
Net interest and tax paid (0.4) (0.6) (1.5)
Net cash used in investing (0.3) (36.0) (37.4)

activities
Proceeds from new equity - 36.2 36.2

issues
Exchange losses (0.3) (1.1) (6.3)
Net increase in net debt (4.7) (6.2) (7.9)
Net debt at beginning of (27.3) (19.4) (19.4)

period
Net debt at end of period (32.0) (25.6) (27.3)

Closing net debt comprises:
Cash at bank and in hand 2.3 2.4 3.0
Current borrowings (2.1) (27.8) (29.9)
Non-current borrowings (32.2) (0.2) (0.4)
Net debt at end of period (32.0) (25.6) (27.3)

These supplementary disclosures do not form part of the Consolidated statement of cash flows and these tables are not included in the notes to the financial statements.

Notes to the financial statements

1 GENERAL INFORMATION

AEA is one of the world's leading consultancies in Energy and Climate Change. The Group employs many of the world's experts in air quality, energy policy, knowledge transfer and behaviour change. The Group's mission is to help its customers make decisions based on good science and data, choose the optimum strategy or policy, be clear about the priorities and payback of programmes and investment and utilise technology to enable simpler, more effective, real-time networking and reporting.

The Company is a public limited company, incorporated and domiciled in the United Kingdom. The address of the registered office is 329 Harwell, Didcot, Oxfordshire, OX11 0QJ. The Company is listed on the London Stock Exchange.

These financial statements are presented in pounds sterling, the currency of the primary economic environment in which the Group operates. Foreign operations are included in accordance with the policies described in the annual financial statements for the year ended 31 March 2009.

On 18 November 2009 the consolidated Half-Year Financial Report was authorised for issue by the Board of Directors.

These half-year results do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2009 were approved by the Board of Directors on 10 June 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an `emphasis of matter' paragraph and did not contain any statement under section 237 of the Companies Act 1985.

2 BASIS OF PREPARATION

The consolidated financial information for the half-year ended 30 September 2009 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The Half-Year Financial Report should be read in conjunction with the annual financial statements for the year ended 31 March 2009, which were prepared in accordance with IFRSs as adopted by the European Union.

3 ACCOUNTING POLICIES

Except as described below the accounting policies are consistent with those of the annual financial statements for the year ended 31 March 2009, as described in pages 29 to 35 of those annual financial statements.

The following new standards, amendments to existing standards or interpretations are mandatory for the first time for the financial year ending 31 March 2010:

The impact of this change on the half-year results was immaterial. The prior year impact of these changes was immaterial and therefore no prior period adjustment has been made.

The following new standards, amendments to existing standards or interpretations are mandatory for the first time for the financial year ending 31 March 2010, but are not currently relevant for the Group:

The following new standards, amendments to existing standards or interpretations have been issued, but are not effective for the financial year ending 31 March 2010 and have not been adopted early:

IFRS 3 (revised) may have an impact on the Group's financial statements when implemented, depending upon future acquisition activity by the Group. It is not expected that the other statements will have a significant impact on the Group's financial statements when they are adopted.

Alternative performance measures

AEA uses a number of alternative (non-Generally Accepted Accounting Practice (non-GAAP)) financial measures, which are not defined by IFRS. The Directors use these measures in order to assess the underlying operational performance of the Group and as such these measures are important and should be considered alongside the IFRS measures. The following non-GAAP measures are referred to in this Half-Year Financial Report:

a) Adjusted operating profit and adjusted profit before taxation

Adjusted operating profit and adjusted profit before taxation are reported beneath the Consolidated income statement. Adjusted operating profit is defined as operating profit before amortisation of acquired intangibles and certain non-recurring expenditure and income. Profit before taxation is also adjusted in the same way with the additional adjustment to exclude net pension finance costs.

b) Movement in net debt

Beneath the Consolidated statement of cash flows a statement of movement in net debt is shown being the movement between opening and closing net debt. An analysis of net debt by Balance sheet heading is also shown.

c) Adjusted earnings per share

Adjusted earnings per share, as shown in note 10, is calculated by dividing the adjusted profit after taxation by the weighted average number of shares in issue during the year.

d) Cash used in/from business operations

On the face of the Consolidated statement of cash flows the cash used in/from operations is split into component parts, representing cash used in/from business operations; acquisition and integration costs; legacy cash flows and cash outflow from funding the pension deficit.

4 SEGMENTAL INFORMATION

The Group has only one product or service, being that of consultancy, policy support, programme management and data management. The measure of reported segment profit or loss used by the chief operating decision maker (see note 3, IFRS 8) to assess the performance of the segments is adjusted operating profit. This measurement excludes the effect of certain non-recurring expenditure and income, such as restructuring and integration costs and the amortisation of acquired intangibles.

The revenues and adjusted operating profit generated by each of the Group's segments, together with the total assets measure for each segment, are summarised as follows:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Europe 33.4 32.0 70.6
United States 17.6 3.6 23.1
Total revenue 51.0 35.6 93.7
Europe 2.2 3.6 8.5
United States 2.0 0.3 3.5
Total adjusted operating 4.2 3.9 12.0

profit

Europe 24.2 26.6 24.4
United States 51.6 48.5 60.4
Total assets 75.8 75.1 84.8

A reconciliation of adjusted operating profit to profit before taxation is provided as follows:

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Adjusted operating profit for 4.2 3.9 12.0

reportable segments
Amortisation of acquired (0.6) (0.1) (0.7)

intangibles
Integration costs (0.6) - (0.9)
Net pension credit from Scheme 0.2 - -

closure
One-off exchange gain - 0.4 -
Operating profit 3.2 4.2 10.4
Finance income 7.6 9.5 19.2
Finance costs (10.6) (10.8) (22.1)
Profit before taxation 0.2 2.9 7.5

5 SEASONALITY

European revenues are subject to seasonal fluctuations, with the peak demand in the fourth quarter of the financial year. This reflects the pattern of purchasing/procurement by the UK Government, Europe's most significant customer type. US revenues are not subject to seasonal fluctuations.

6 SHARE CAPITAL AND SHARE PREMIUM

Number of Nominal Share Total
ordinary value of premium share capital
shares ordinary £m and premium
(millions) shares £m
£m
At 1 April 2008 124.1 15.2 40.4 55.6
Rights issue 99.3 12.1 24.1 36.2
Consideration shares issued on 5.3 0.6 1.9 2.5

acquisition of subsidiary
At 30 September 2008 228.7 27.9 66.4 94.3
Adjustment to the value of - - 1.0 1.0

consideration shares
At 30 September 2009 and 31 228.7 27.9 67.4 95.3

March 2009

The total authorised number of ordinary shares is 315,000,000 shares (March 2009 and September 2008: 315,000,000 shares) with a par value of 12.2 pence per share. All issued shares are fully paid.

Warrants

The Company has in issue 5,633,252 warrants (March 2009: 8,047,502 warrants, September 2008: 4,366,799 warrants) giving the holders the right to subscribe in cash for shares in the Company.

Holders of these warrants may subscribe for one ordinary share in the Company at a price of 65.0 pence per share and these warrants may be exercised at any time prior to 8 July 2010. The fair value of these warrants as at 30 September 2009, calculated by reference to a closing market price of 28.0 pence per share, is £nil (31 March 2009: £nil, calculated by reference to a closing market price of 12.75 pence per share, 30 September 2008: £nil, calculated by reference to a closing market price of 38.5 pence per share).

7 RETIREMENT BENEFIT LIABILITIES

The amounts recognised in the Consolidated balance sheet are determined as follows:
(Unaudited) (Audited)
(Unaudited) At At
At 30 September 31 March
30 September 2008 2009
2009 £m £m
£m
Present value of funded 394.8 285.4 310.3

obligations
Fair value of plan assets (261.0) (232.6) (205.5)
133.8 52.8 104.8
Present value of unfunded 3.8 3.2 3.4

benefits
Net retirement benefit 137.6 56.0 108.2

liability

The net retirement benefit liability has increased to £137.6 million (March 2009: £108.2 million, September 2008: £56.0 million). This increase has occurred through changes to the financial assumptions used in calculating the present value of funded obligations partially offset by increases in the market value of plan assets.

As at 31 March 2009 a discount rate of 6.6% was used to discount the gross liabilities of the Scheme to a present value. Due to changes in market conditions this assumption, which is based on corporate bond yields at the Consolidated balance sheet date, has been updated to 5.6% as at 30 September 2009, with the resultant effect of significantly increasing the present value of the obligations. This has partially been offset by an increase in the value of plan assets. There have been no other significant changes to the assumptions used and disclosed in note 29 of the 2009 Annual Financial Report.

The defined benefit pension scheme ("the Scheme") was closed to future accrual and no further benefits will be built up after 31 July 2009. From 1 August 2009 employees can build up benefits in relation to employment with AEA on a defined contribution basis.

The Scheme's past service funding deficit is expected to be cleared over approximately 20 years under a schedule of contributions agreed by the Company and the Trustees in June 2009, which is subject to review by the Pension Regulator.

The amounts recognised in respect of pension benefits in the Consolidated income statement are as follows:

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Past service credit (0.7) - -
Curtailment loss 0.5 - -
Net credit due to Scheme (0.2) - -

closure
Current service cost 0.4 0.6 1.2
Accretion of discount on 10.0 10.1 20.5

defined benefit scheme obligations
Expected return on defined (7.5) (9.3) (19.0)

benefit pension scheme assets
Total expense in the income 2.7 1.4 2.7

statement

The past service credit and curtailment loss arise from closing the funded defined benefit pension scheme to future accrual and amending the entitlements of certain members of the Scheme.

8 FINANCE INCOME

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Interest income 0.1 0.1 0.1
Fair value gains on financial - 0.1 0.1

instruments
Expected return on defined 7.5 9.3 19.0

benefit pension scheme assets
Finance income 7.6 9.5 19.2

9 FINANCE COSTS

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Interest on bank overdrafts 0.5 0.7 1.4

and loans
Interest on finance leases - - 0.1
Fair value losses on financial 0.1 - 0.1

instruments
Accretion of discount on 10.0 10.1 20.5

defined benefit pension scheme obligations
Finance costs 10.6 10.8 22.1

10 EARNINGS PER SHARE

Details of basic, diluted and adjusted earnings per share are set out below:

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

Profit attributable to equity 0.1 2.9 7.0

holders of the Company (£ millions)
Weighted average number of 228.7 173.3 200.9

ordinary shares in issue (millions)
Basic earnings per share - 1.7p 3.5p

(pence)

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares. The Company has two categories of potential dilutive ordinary shares; share options and warrants. The calculation is performed for the share options and warrants to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options and warrants. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options and warrants to give the number of shares deemed to be issued at nil consideration. These dilutive shares are added to the weighted average number of ordinary shares in issue.

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

Profit attributable to equity 0.1 2.9 7.0

holders of the Company (£ millions)
Weighted average number of 228.7 173.3 200.9

ordinary shares in issue (millions)
Adjustment for share options 2.7 - 0.6

and warrants (millions)
Weighted average number of 231.4 173.3 201.5

ordinary shares for diluted earnings per share (millions)
Diluted earnings per share - 1.7p 3.5p

(pence)

(c) Adjusted earnings - alternative performance measures (note 3)

The adjusted earnings per share is calculated as follows:

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

Profit attributable to equity 0.1 2.9 7.0

holders of the Company (£ millions)
Amortisation of acquired 0.6 0.1 0.7

intangibles (£ millions)
Integration costs (£ millions) 0.6 - 0.9
Net pension credit from Scheme (0.2) - -

closure (£ millions)
One-off exchange gain (£ - (0.4) -

millions)
Net pension finance cost (£ 2.5 0.8 1.5

millions)
Adjusted earnings attributable 3.6 3.4 10.1

to equity holders of the Company (£ millions)
Weighted average number of 228.7 173.3 200.9

ordinary shares in issue (millions)
Adjusted earnings per share 1.6p 2.0p 5.0p

(pence)

(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March

£m £m £m
Profit for the period 0.1 2.9 7.0

Adjustments for:
tax 0.1 - 0.5
depreciation and 1.2 0.5 1.8

amortisation
share option charge 0.1 0.1 0.1
finance costs 10.6 10.8 22.1
finance income (7.6) (9.5) (19.2)
other 0.5 (0.1) -

Changes in working capital:
increase in work in progress (0.1) (0.2) (0.1)
decrease in trade and other 2.3 0.7 1.5

receivables
(decrease)/increase in trade (7.5) (3.9) 2.0

and other payables

Changes in retirement (2.1) (3.2) (6.7)

benefit liabilities

Changes in provisions for (1.3) (2.8) (7.9)

liabilities and charges
Cash (used in)/from operations (3.7) (4.7) 1.1

12 CONTINGENT LIABILITIES

The Group has contingent liabilities in respect of contracts entered into in the normal course of business and in respect of the disposal of businesses and subsidiaries. Other than those items provided for, it is not expected that these will have a material effect on the financial position of the Group.

13 POST BALANCE SHEET EVENTS

There were no post balance sheet events.

Independent review report to AEA Technology plc

Introduction

We have been engaged by the Company to review the set of consolidated financial statements in the half-year financial report for the six months ended 30 September 2009, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows and related notes. We have read the other information contained in the half-year financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the set of consolidated financial statements.

Directors' responsibilities

The half-year financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-year financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The set of consolidated financial statements included in this half-year financial report has been prepared in accordance with International Accounting Standard 34, 'Interim financial reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the set of consolidated financial statements in the half-year financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of interim financial information performed by the independent auditor of the entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the set of consolidated financial statements in the half-year financial report for the six months ended 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP Chartered Accountants 18 November 2009

Reading

Notes:

a) The maintenance and integrity of the AEA Technology plc website is the responsibility of the Directors; the work carried out by the Auditors does not involve consideration of these matters and, accordingly, the Auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

This information is provided by RNS The company news service from the London Stock Exchange

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