AEA Technology Group, a technical, energy and sustainability consultancy, which issued a profits warning in April, is still feeling cautious but is drawing comfort from a healthy bid pipeline.

The company said: "We continue to be cautious about market conditions in Europe. The actions taken to reduce the cost base in the last year combined with additional cost reductions this year are helping to underpin performance.

"Encouragingly there is a larger pipeline of opportunities compared to this time last year and as a result the number of bids being made by AEA in Europe has increased."

The outlook for government spending in the UK remains bleak but things are looking brighter in the US, where the group continues to "bid energetically". So far this year the group has submitted in excess of $500m of bids in the USA.

"The bid pipeline, which was $1.2bn at 30 June 2011, continues to be robust despite the political uncertainty in the US Federal Government. Most of the opportunities in this pipeline are below $60m in potential value. There are a small number of bids which are significantly larger than this."

The company has expressed confidence in securing additional work through the bid process currently under way.

The forward order book for the company is expected to grow significantly towards the end of this financial year which, the group believes, will provide a platform for accelerated growth in future years.

The share price was up 1.69% to 3.00p at 08:39.

NR

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