UK climate change firm hoping for US boost

A leading climate change consultancy today entered the US market for the first time amid hopes of a business boost from a "greener" president.

Oxfordshire-based AEA Technology has agreed to buy consultant Project Performance Corporation (PPC) for £33.1m (€42m) as the candidates for the White House set out their environmental credentials.

Democrat hopeful Barack Obama has pledged to cut US carbon emissions 80% by 2050, with Republican candidate John McCain aiming for a 60% reduction in the same time-frame.

Talks have begun over replacing the Kyoto climate change treaty, which expires in 2012, and AEA is hopeful the US will sign up to a new agreement. Current President George W Bush never ratified the Kyoto treaty.

"AEA believes that the United States will be an active participant and that these discussions are likely to lead to even tougher targets for reductions in carbon emissions", the company said.

Chief executive Andrew McCree said PPC offered a "compelling" opportunity for growth. PPC's major client is the US government but AEA is also looking to target private sector companies.

The company is paying for the deal by asking shareholders for £39.7m (€50.4m) in a deeply-discounted rights issue, which initially hit AEA's share price.

However, Mr McCree said AEA's investors had backed the move, adding: "We have got very strong support for this deal for obvious strategic reasons."

The company admitted that the biggest risk to the business was the global downturn in financial markets which could delay the implementation of climate change initiatives, but said governments were continuing to set demanding climate change targets.

Underlying pre-tax profits rose 26% to £9.1m (€11.5m) in the year to March 31 after AEA landed several major deals.

These include advisory contracts for the UK's Committee on Climate Change, which will advise the Government on the level of legally-binding carbon-cutting targets.

The company has also advised other public sector clients including the Department for Transport, the Highways Agency and the Greater Manchester Passenger Transport Executive, although private sector consultancy also saw strong growth over the year. Overall sales rose 8% to £80.9m (€102.6m).

AEA raised £58.3m (€74m) in 2006 by selling off a string of businesses to focus on its climate change work. The disposals included its rail division, which made equipment to remove leaves from the line, a radioactive waste packaging division and a US engineering company.

Alongside its Didcot headquarters the group also has bases in Ayrshire, Warrington, Cardiff and London.