Aecon reports improved results for 2005 Q4

• Revenues grow to $1.1 billion
• Net loss cut to $1.1 million (net income of $1.9 million before foreign exchange)
• Fourth quarter net income of $3.5 million is largest quarterly profit since 2001
• Improved results in all three segments drove a $38.4 million year-over-year improvement in EBIT
• Backlog remains strong
• Improved margins and positive net income projected for 2006 on similar revenues to 2005

Toronto , Ontario  – March 8, 2006: Aecon Group Inc. (TSX: ARE) today reported improved operating results for 2005 as compared to last year.

Revenue, Operating Results and Net Income

Revenues from continuing operations in 2005 totaled $1.12 billion, an increase of $118 million or 11.7% over last year. This growth in revenues occurred in all segments, with the largest increase ($81 million) coming from the Industrial segment.

Operating profit from continuing operations (representing income from operations before interest, income taxes, discontinued operations and extraordinary items) amounted to $7.2 million, compared to a loss of $27.1 million last year.

Earnings before interest, income taxes and discontinued operations were $11.3 million, an improvement of $38.4 million from the loss reported in 2004. All segments reported improved earnings, with the largest improvement ($15.3 million) coming from the Buildings segment which returned to profitability in 2005 after a difficult year in 2004.

Net loss was reduced to $1.1 million in 2005 from the $41.6 million loss reported in 2004. The 2004 results included a valuation allowance of $32.7 million against net accumulated future tax assets.

Financial Highlights
$ millions		2005		2004		% Change
Revenues	$	1,120	$	1,003		11.7%
Operating profit (loss)		7.2		(27.1)		n/a
Extraordinary gain before income taxes		4.1		-		n/a
Income/(loss) before interest and income taxes		11.3		(27.1)		n/a
Income/(loss) before income taxes		2.0		(31.4)		n/a
Net loss		(1.1)		(41.6)		n/a
Net income (loss) before foreign exchange		1.9		(43.7)		n/a
Backlog - December 31	$	577	$	565		2.2%

Outlook

“Aecon's core markets in Canada continue to strengthen and further improvement is expected throughout 2006,” said John M. Beck, Chairman and CEO, Aecon Group Inc. “This market strength and the operational improvements now in place are expected to drive increased margins and a positive net income for Aecon in 2006”.

“Improved returns are expected in 2006 despite the fact that neither the construction profits nor the increasing economic value of Aecon's concession investments will be reflected in earnings,” said Scott Balfour, President and CFO, Aecon Group Inc. “While both the Cross Israel Highway and the Quito Airport are performing well and adding shareholder value, the increasing value of these investments will be reflected in earnings only when certain milestones are reached”.

Under Aecon's accounting policy for large multi-year contracts, construction profit is recognized only when the contract is 20% complete. This milestone is likely to be reached on the Quito Airport construction project in 2007.

The Cross Israel Highway is functioning well and traffic is ramping up as anticipated, with average traffic of over 70,000 trips per business day recorded in December 2005. Aecon's after tax return on its equity investment is expected to be approximately 16% per year. These earnings will begin to be reflected in Aecon's financial statements in 2009 when dividend payments begin.

The Quito Airport concession took full effect in January, 2006. Traffic growth at the airport was 12.3% in 2005 and over the past five years has averaged 10.9 % per year. Aecon expects an after tax return on its equity investment of over 20% per year during the life of the concession. These earnings will be more fully reflected in Aecon's financial statements in 2010 when the new airport opens.

Subsequent Event

On February 27, 2006, Aecon entered into an agreement to issue 4,500,000 common shares on a bought deal basis to a syndicate of underwriters led by National Bank Financial Inc. and GMP Securities L.P. and including Paradigm Capital Inc. and Raymond James Ltd. The common shares will be publicly offered in Canada under a short-form prospectus at a price of $6.25 per share, representing gross proceeds of $28,125,000. The underwriters were also granted an Over-Allotment Option to purchase an additional 15% of the Offering at any time until 30 days after Closing at a price of $6.25 per share for total gross proceeds including the Over-Allotment Option of up to $32,343,750.

Backlog and Contract Awards

Backlog at December 31, 2005, was $577 million or $12 million higher than the same time last year as a backlog increase in the Industrial segment more than offset declines in the Infrastructure and Buildings segments.

New contract awards of $1,133 million were booked in the current year, an 11% increase from the $1,021 million awarded in 2004. The increase in awards was due to higher awards in the Infrastructure and Industrial segments, which exceeded a decline in awards in the Buildings segment.

Not included in backlog but important to Aecon's prospects are the expected revenues from Aecon's growing alliances and supplier-of-choice arrangements such as those in place with Expertech, Union Gas, Ontario Power Generation and Suncor.

Fourth Quarter Business Highlights

Aecon Industrial and a 50% partner were awarded a $204 million contract at the Bruce Power ‘Bruce A' nuclear generating station in Ontario. The contract is part of Bruce Power's refurbishment and restart of units 1 and 2. The work will take approximately 3½ years to complete.

Aecon Buildings in Seattle was awarded the General Contracting/Construction Management contract for a US$15 million affordable housing project in the historic area of Seattle. Work includes demolition of the existing building and construction is expected to be finished in spring 2007.

Aecon Atlantic was awarded a $13.5 million Construction Management contract by Amalthea Holdings Ltd. for the construction of the South Street Apartment Building in Halifax, Nova Scotia. Work on the ten-storey building is expected to be completed in July 2007.

Innovative Steam Technologies was awarded a contract by the Puerto Rico Electric Power Authority to design, supply and install three steam injected gas turbine Once Through Steam Generators. The units are scheduled for completion in 2006.

The Civil and Utilities Group took advantage of unusually good weather in Ontario to increase revenues by 20% over the same quarter in 2004. This longer work period allowed for 50% completion of the Western Beaches breakwater wall in Toronto and earlier start-up of the large Redhill Expressway-QEW project near Hamilton.

Aecon Buildings continues to strengthen its relationship with Oxford Properties Group. Awarded in November 2005, the $12 million contract for the renovation of the Stone Road Mall in Guelph, Ontario is the latest project Aecon and Oxford are doing together. Work involves the revitalization of 120,000 square feet under an aggressive 10-month schedule.

Segmented Results

Aecon reports its results in three segments: Infrastructure, Buildings and Industrial.

Infrastructure

The Infrastructure segment includes all aspects of civil construction from roads, highways, bridges and tunnels to airports, marine facilities, transit and power projects as well as utilities construction and infrastructure development.

Financial Highlights
$ millions		2005		2004		% Change
Revenues	$	457	$	449		1.7%
Segment operating profit (loss)		7.4		(3.0)		n/a
Extraordinary gain before income taxes		4.1		-		n/a
Income (loss) before interest and income taxes		11.5		(3.0)		n/a
Backlog – December 31		117		152		(22.8%)

Revenues from the Infrastructure segment increased from $449 million in 2004 to $457 million in 2005, as revenue gains of $36 million from roadbuilding operations and $35 million from utilities operations offset revenue declines of $44 million from the Quebec operations and $19 million from other heavy civil operations.

Income before interest and income taxes from the Infrastructure segment was $11.5 million in 2005, a $14.5 million improvement over last year. Increased earnings of $5.8 million from roadbuilding operations, $4.8 million from utilities operations and $10.0 million from Quebec operations more than offset a $6.1 million decline in earnings from other heavy civil operations.

Backlog of $117 million at the end of December 2005 declined by $35 million from the same time last year with most of the reduction related to the near completion of the Toulnustouc and Eastmain projects in Quebec. The financial close of the Quito Airport project in Ecuador is expected to add approximately $250 million to backlog in 2006. New contract awards of $422 million were booked in 2005, which compares with $382 million in 2004.

Buildings
The Buildings segment includes all aspects of Aecon's commercial, institutional and multi-unit residential building construction and renovation activities.

Financial Highlights
$ millions		2005		2004		% Change
Revenues	$	395	$	367		7.4%
Segment operating profit (loss)		2.1		(13.2)		n/a
Backlog – December 31		289		345		(16.4)%

Revenues in the Buildings segment increased by $27 million or 7.4% over 2004. The increased revenue is comprised mainly of increases in the Greater Toronto Area operations of $48 million and Montreal operations of $31 million. The principal offset to these increases was a decline in revenues of $47 million from the segment's Seattle operations, reflecting a combination of delays in awards for casino projects and less new work generally.
Operating results improved significantly in the segment, with an operating profit of $2.1 million in 2005 as compared to an operating loss of $13.2 million in 2004. Consistent with the increase in revenues, operating profits from the Greater Toronto Area and Montreal operations were $3.0 million and $5.7 million higher respectively than last year. Another $6.2 million of the improvement relates to the Ottawa operations, which incurred significant losses in 2004.
Backlog of $289 million at the end of 2005 is $57 million or 16.4% lower than last year. New contract awards of $338 million were booked in the current year, which compares with $470 million in 2004. The decline in awards occurred primarily in Toronto and Ottawa ($136 million combined) and resulted from a combination of competitive pressures in these markets, a lack of suitable lump sum opportunities, and a strategy to pursue more negotiated contract management and design build work rather than higher risk lump sum work.

Industrial
Industrial operations include all of Aecon's industrial manufacturing and construction activities from in-plant construction to the fabrication of specialty pipe and the design and manufacture of Once Through Steam Generators.

Financial Highlights
$ millions		2005		2004		% Change
Revenues	$	273	$	193		42.0%
Segment operating profit		8.8		1.0		756.6%
Backlog – December 31		172		68		152.6%

Revenues of $273 million in the Industrial segment were 42.0% higher than 2004 as revenues from the segment's Western Canada operations grew by $81 million. The increased revenues in Western Canada were primarily due to work resulting from a major fire that damaged an oil sands facility in Fort McMurray, Alberta. Revenues from construction operations in Ontario were down $12 million from the unusually high levels seen in 2004, while fabrication revenues in Ontario and Eastern Canada were $13 million higher than 2004. Revenues of $31 million from Innovative Steam Technologies (“IST”), which sells and licenses the technology for once through steam generators (“OTSG”), were down $2.0 million from the prior year.
Operating income of $8.8 million from the Industrial segment represents a $7.8 million increase from 2004. Consistent with the increase in revenues noted above, operating profits from Western Canadian operations grew by $3.4 million to $4.5 million. Despite the revenue decline in Ontario construction operations, operating profit in this business grew to $5.5 million from $3.7 million in 2004. Fabrication operations incurred a loss of $2.6 million in 2005 representing a net improvement of $2.7 million over 2004. Operating profits at IST were $1.4 million or $0.4 million higher than last year.
Backlog at December 31, 2005 of $172 million was $104 million higher than last year. Similarly, new contract awards of $377 million in 2005 were $201 million higher than in 2004. The increase in current year awards occurred primarily in Western Canada and in Ontario construction operations. IST backlog of $5 million at the end of 2005 was down $14 million from last year as a result of fewer bookings for boiler units. As of February 24, 2006, IST had added $7 million to its backlog as a result of an award for the manufacture of two OTSGs. It also had received letters of intent for another seven OTSG units which will be included in backlog when formally awarded.

Corporate and Other
Net corporate expenses in 2005 totaled $11.1 million compared to $11.9 million in 2004. After removing the effect of foreign exchange (a loss of $0.4 million in 2005 versus a gain of $1.0 million in 2004) and the impact on 2004 expenses of $3.9 million in one-time relocation costs, corporate expenses grew by $1.8 million. The new long-term incentive plan adopted to ensure Aecon can retain and attract key executives accounted for a majority of this increase.


Consolidated Results
The Consolidated Results for 2005 and 2004 are available at the end of this News Release.

Balance Sheet Highlights
(thousands of dollars)
		Dec. 31, 2005		Dec. 31, 2004
Cash, cash equivalents, restricted cash and restricted term deposits and marketable securities	$	49,820	$	65,722
Other current assets		292,595		249,674
Property, plant and equipment		56,116		58,983
Other long-term assets		105,891		80,948
Total Assets		504,422		455,327
Current liabilities	$	286,659	$	260,137
Long-term debt		35,671		40,352
Other long-term liabilities		75,764		51,882
Shareholders' equity		106,328		102,956
Total Liabilities and Shareholders' Equity		504,422		455,327

Conference Call

A conference call has been scheduled for Wednesday, March 8, 2006 at 10:30 a.m. ET to discuss Aecon's 2005 financial results. Participants should dial 416-641-6450 or 1-800-215-0816 at least 10 minutes prior to the conference time of 10:30 a.m.

For those unable to attend the call, a replay will be available after 12:30 p.m. at 1-800-558-5253 or 416-626-4100 until midnight, March 15, 2006. The pass code is 21285289#.

About Aecon

Aecon Group Inc. is Canada's largest publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and internationally.

Consolidated Statements of Operations for the years ended December 31, 2005 and 2004
(thousands of dollars, except per share amounts)		2005		2004
Revenues	$	1,120,244	$	1,002,480
Costs and expenses		1,053,413		969,965
Marketing, general and administrative expenses		49,648		52,809
Depreciation and amortization		7,626		7,933
Impairment of goodwill and other intangible assets		-		1,130
Foreign exchange losses (gains)		2,996		(2,043)
Gain on sale of assets		(629)		(228)
Interest expense, net		9,307		4,309
		1,122,361		1,033,875
Loss before income taxes, discontinued operations and extraordinary items		(2,117)		(31,395)
Income taxes (recovery)
Current		(1,335)		5,453
Future		3,802		17,832
		2,467		23,285
Loss before discontinued operations and extraordinary items		(4,584)		(54,680)
Income from discontinued operations		-		13,054
Loss before extraordinary items		(4,584)		(41,626)
Extraordinary gain, net of income taxes		3,444		-
Net loss for the year	$	(1,140)	$	(41,626)
Loss per share before discontinued operations and extraordinary items
Basic	$	(0.16)	$	(1.98)
Diluted	$	(0.16)	$	(1.98)
Net loss per share
Basic	$	(0.04)	$	(1.51)
Diluted	$	(0.04)	$	(1.51)
Average number of shares outstanding
Basic		29,444,844		27,567,476
Diluted		33,136,178		31,530,935

Consolidated Statements of Operations for the three months ended December 31, 2005 and 2004
(thousands of dollars except per share amounts) (unaudited)		2005		2004
Revenues	$	323,601	$	258,712
Costs and expenses		299,934		260,869
Marketing, general and administrative expenses		13,683		14,836
Depreciation and amortization		1,938		2,135
Impairment of goodwill and other intangible assets		-		1,130
Foreign exchange losses (gains)		799		(594)
Loss on sale of assets		177		108
Interest expense, net		2,605		1,487
		319,136		279,971
Income (loss) before income taxes and discontinued operations		4,465		(21,259)
Income taxes (recovery)
Current		(2,827)		594
Future		3,802		25,253
		975		25,847
Income (loss) before discontinued operations		3,490		(47,106)
Income from discontinued operations		-		6,358
Net income (loss) for the period	$	3,490	$	(40,748)
Earnings (loss) per share before discontinued operations
Basic	$	0.12	$	(1.64)
Diluted	$	0.11	$	(1.64)
Net earnings (loss) per share
Basic	$	0.12	$	(1.42)
Diluted	$	0.11	$	(1.42)
Average number of shares outstanding
Basic		29,595,646		28,714,796
Diluted		33,233,682		32,622,068