A central concern for investors in Eaga is the 'green support services' company's reliance on a few key government initiatives. However, these programmes are being extended alongside a broadening in demand for its services, which include installation and distribution of energy saving products and running citizens advice lines.
Eaga's contract to run the government's Warm Front Scheme, which is aimed at tackling fuel poverty, has recently been extended until March 2011. Meanwhile, the Carbon Emissions Reduction Target (CERT) programme - which requires utility companies to reduce their customers' energy consumption - has had a 21-month extension and an increase in energy saving targets. Six utilities currently use Eaga to create the necessary savings.
Despite the encouraging signs, Eaga has recognised that it needs to broaden its scope and has been working to break into new areas. Of considerable potential excitement this year is the domestic installation market, following the launch of the energy-generator-funded Community Energy Saving Programme (CESP). Eaga has also recently embarked on a joint venture with Newcastle City Council aimed at breaking into the lucrative local government business process outsourcing market, although first contract wins are not expected for some time.
Broker Panmure Gordon expects full-year profits before tax of £51.7m and EPS of 14.5p (£47.4m and 13.4p in 2009).
| EAGA (EAGA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 132p | MARKET VALUE: | £333m | |
| TOUCH: | 132-133p | 12-MONTH HIGH: | 161p | LOW: 97p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 51p* | NET CASH: | £32m | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 257 | 1.90 | na | nil |
| 2006 | 354 | 6.60 | 2.30 | nil |
| 2007 | 483 | -87.4 | -34.3 | nil |
| 2008 | 639 | 28.4 | 7.20 | 3.00 |
| 2009 | 739 | 37.7 | 10.7 | 3.50 |
| % change | +16 | +33 | +48 | +17 |
Ex-div: 14 Oct Payment: 13 Nov *Includes intangible assets of £67.2m, or 27p a share | ||||
