Green group’s fresh fields give rich yield
Sep 3 2008 by Karen Dent, The Journal
INCREASED diversification has helped environmental services company eaga’s revenue rocket by almost a third to £639m in its first full year as a listed company.
The Newcastle business, best known for delivering the Government’s Warm Front heating and energy efficiency scheme, floated in June 2006 and posted a 22% increase in earnings of £38m in the year to May 31.
The UK’s largest energy efficiency provider, which employs 4,500 people in Britain, the Republic of Ireland, India and Canada, is benefiting from Government policies to tackle climate change and its own decision to seek other types of contracts.
Chief executive John Clough said: “We will continue to seek to have more eggs in the basket. About three years ago, 70-80% depended on Warm Front; that’s now close to 40% on a looking-forward basis.
“We will be seeking to further diversify. The key market drivers will continue to be climate change and social inclusion. There are big-ticket developments yet to happen.”
The business, which remains co-owned by its employees, known as partners, won the £500m BBC contract for the Digital Switchover Help Scheme last February.
It involves contacting vulnerable people and equipping them with the gear they need to continue receiving TV when the plug is pulled on the analogue signal.
“That demonstrates our transferable skills,” said Mr Clough.
“We are in the first year of our digital switchover, which is the smallest. We’ll see further uplifts in activity in years to come.”
Eaga is also benefiting from the Government’s Carbon Emissions Reduction Target (Cert) scheme after securing the £200m contract to run Scottish Power’s complete Cert programme.
“Scottish Power is a pretty groundbreaking contract – we have their whole Cert commitment.
“That could be replicated, we do have framework agreements in place with all six utilities, but the Scottish Power deal gave us the whole contract,” he said.
Cert, launched on April 1 and running until 2011, requires all UK energy companies to reduce carbon emissions by a combined 150 million tonnes in the next three years. Eaga says the programme is worth an estimated £2.8m over the lifetime of the scheme.
Mr Clough said: “We are a significant provider in that marketplace. There is regular and significant speculation that the target might be increased.”
The majority of eaga’s increased revenue – 63% – was due to organic growth and 37% was through acquisitions. It has bought four businesses since flotation – Horrocks Group plc in Liverpool for £10.6m, George Howe Ltd at Durham for £4m, AF Ring, Hertfordshire, for £3m and Essex company RG Francis Ltd for £11m.
New contracts and acquisitions helped to increase staff numbers by 1,069. Although it is a plc, more than 37% of the company’s shares are held in trust on behalf of employees.
Mr Clough said: “There are a number of factors here that should all grow confidence. Eaga will continue to grow and make significant progress.”
