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29 January 2009 Half Year Results eaga plc (EAGAL), a “Green

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29 January 2009 Half Year Results eaga plc (EAGAL), a “Green Powered By Docstoc
					29 January 2009

                                                       Half Year Results

eaga plc (EAGA.L), a “Green” Support Services Company and the UK’s leading provider of residential energy
efficiency solutions, today announces its unaudited results for the half year ended 30 November 2008.

                                                           Highlights

Financial highlights

    •    Revenue up 10% to £339.4m (2008: £309.1m)
    •    EBITA1 up 13% to £21.4m (2008: £18.9m)
    •    Adjusted diluted earnings per share up 15% to 6.12p (2008: 5.30p)
    •    Interim dividend per share up 10% to 1.1p per share
    •    Net cash positive at period end

Operational highlights

    •    Ongoing growth in our Carbon Emissions Reduction Target (CERT) delivery, with record volumes during the
         period
    •    Increasing demand for the fuel poverty programmes we manage, particularly Warm Front
    •    Continued development and growth across a range of outsourced contracts, including the management of
         Scottish Power’s CERT obligation and the completion of the first phase of the Switchover Help Scheme on
         behalf of the BBC

Key Market Developments

    •    Announcement of a 20% increase in CERT, which represents an additional £560m investment2 in this market
         over the 2008-11 period
    •    Two separate rounds of additional funding announced for the Warm Front Scheme


Charles Berry, Chairman, commented:

“The six month period has seen eaga continue its sound progress and achieve strong financial results. The business is
focused on delivering continued growth against the backdrop of turbulent wider economic conditions and is
performing well in the attractive and sustainable markets in which it operates.

It is encouraging that the focus on the environmental agenda and the drive towards a low carbon economy has gathered
further momentum over the period. This has been borne out by a number of key developments which will enhance
eaga’s future growth opportunities.

The financial year continues to progress in line with our expectations, and we have confidence in the outlook for the
remainder of the financial year.”




1
  EBITA comprises profit on ordinary activities before interest, tax, amortisation of intangible fixed assets, exceptional costs and
ePT-funded charges
2
  Full details of the Home Energy Saving Programme can be found at
 http://www.number10.gov.uk/wp-content/uploads/energy-saving-programme110908.pdf



                                                                                                                                  1
There will be a presentation for analysts at the offices of Brewin Dolphin Investment Banking, 12 Smithfield Street,
London EC1A 9BD, at 9.30am on Thursday 29th January.

For further information please contact:

eaga plc                                                                                0191 247 3800
John Clough MBE, Chief Executive
Ian McLeod, Group Finance Director
Ross Armstrong, Director of Corporate and Government Affairs
Giles Sharp, Director of Investor Relations

Hogarth Partnership Limited                                                             020 7357 9477
Chris Matthews
Andrew Jaques
Ian Payne


Notes to Editors:

    1.   eaga is a green support services company, a leader in the provision of outsourced services, products and
         solutions that address the environmental and social objectives of Government and the private sector. eaga’s
         key market drivers are centred around climate change and social inclusion.

    2.   eaga is the UK’s largest residential energy efficiency provider. Working in partnership with central and local
         governments, energy suppliers and other utility customers, eaga operates across the UK and in the Republic
         of Ireland, India and Canada, employing around 4,500 people.

    3.   eaga was established in 1990 as a private limited company to lead Government-funded efforts to improve the
         living conditions of vulnerable people living in cold, damp and energy inefficient homes across England. In
         2000, the company was restructured to become a 100% employee owned business.

    4.   eaga floated on the main market of the London Stock Exchange on 7th June 2007. However, the company’s
         commitment to employee ownership remains resolute, with over 37% of shares in the business held in trust
         on behalf of its 4,500 employees.

    5.   Since 1993, eaga has invested substantially in the independent eaga Charitable Trust which funds research
         into solutions to eradicate fuel poverty. In addition, eaga works closely with the Community Foundation,
         donating over £100k last year to fund local projects that make a positive difference in the communities in
         which we live and serve.




                                                                                                                     2
                                                    Chairman’s Statement

I am pleased to present our interim results for the six month period ended 30 November 2008.

Overview

The six month period has seen eaga continue its sound progress and achieve strong financial results. The business is
focused on delivering continued growth against the backdrop of turbulent wider economic conditions and is
performing well in the attractive and sustainable markets in which it operates.

Demand for eaga’s products and services has remained strong. The period saw revenues increase by 10% to £339.4
million, and EBITA growth of 13% to £21.4 million. Solid performance over the half-year is reflected in the
announcement of an increased interim dividend of 1.1p per ordinary share. The Group’s balance sheet remained net
cash positive at the period end.

During what has proven to be a period of global economic uncertainty, eaga remains less exposed to the turbulence
witnessed in other sectors, with robust liquidity, strong revenue visibility and an established contract base. This is
evidenced in the strength of eaga’s five-year secured contract pipeline, which stands at £1.9bn.

In addition, expanded activity levels within a number of eaga’s core markets have been announced during the period,
which reflects the ongoing relevance of the Company’s underlying market drivers and highlights their long-term
nature. Management is focused on maintaining the strong progress made across the business to date and sees no
shortage of potential opportunities for further growth.

Key Market Developments

The environmental agenda and the drive towards a low carbon economy has gathered further momentum over the
period. This has been demonstrated by a number of key developments which will support eaga’s future growth,
including:

       •    In September 2008, the Prime Minister launched the Home Energy Saving Programme, a £1bn package of
            funding3 for residential energy efficiency over the 2008-11 period. It had three main components:

                o    A 20% increase in the Carbon Emissions Reduction Target (CERT), intended to further stimulate
                     demand for residential energy efficiency measures. This equates to an additional £560m investment
                     in CERT over the period. This expansion of the programme offers potential for further growth in our
                     market share
                o    The launch of the £350m Community Energy Saving Programme (CESP), which will deliver
                     innovative local solutions to householders on a community-wide basis
                o    Additional funding of some £74m for the Warm Front Scheme, spread over 2008/09 and 2009/10.
                     Warm Front remains the Government’s main policy instrument for tackling fuel poverty in England

       •    The announcement in the 2008 Pre-Budget Report that, as part of a ‘Green Stimulus’ in response to the
            current economic climate, Warm Front would receive an additional £100m over the 2008/11 period4.
            Additional measures were also announced as part of this ‘Green Stimulus’ which were intended to stimulate
            growth in green industries such as renewables. Again, this aligns well with eaga’s core markets.

Outlook

These developments have underlined the strength of eaga’s core markets and the Board continues to be confident in
the opportunities and potential they present. The financial year continues to progress in line with our expectations, and
we have confidence in the outlook for the remainder of the financial year.

Charles Berry
Chairman
29 January 2009


3
    Ibid.
4
    Details of the 2008 Pre-Budget Report can be found at http://www.hm-treasury.gov.uk/d/pbr08_completereport_1721.pdf



                                                                                                                          3
                                       Chief Executive’s Operational Review



eaga provides outsourced services and products that address a wide range of environmental and social challenges. Our
diverse customer base includes central Government, energy suppliers, the BBC and a significant number of local
authorities, as well as private individuals. In serving this customer base, we devise, develop and deliver outsourced
solutions that help households and families deal with many different aspects of social, technological, economic and
environmental change.

People and Culture

Our business is characterised both by our talented and committed people, who drive us forward in their pursuit of
excellent service; and our unique, values-driven culture, which permeates our actions, approach and strategic direction.

As a co-owned business, our employees are our biggest shareholder. For that reason we call our people our Partners,
and encourage them to take ownership of their role, whilst creating a culture that allows them to further their personal
and professional development. With more than 37% of the shares in the Company owned by the eaga Partnership Trust
(ePT) on behalf of our people, each Partner has a stake in the future of the business. In October 2008, ePT funded the
issue of shares in eaga to our Partners through a Share Incentive Plan (SIP), underlining the commitment to employee
share ownership.

Our overriding aim is to treat our Partners, customers and communities with integrity, respect and enthusiasm, and we
believe passionately that our commitment to employee share ownership will continue to provide us with an excellent
platform for future growth and success.

Segmental Performance

Managed Services

Managed Services provides the front-end management functions, including marketing, front office and back office
activities, that drive the outsourced programmes we manage for a range of central and local Government customers,
such as the Department for Energy and Climate Change (DECC), the BBC and the Legal Services Commission. This
segment also provides support for our internal infrastructure requirements. With an established delivery infrastructure
in place across a range of outsourced contracts, we are continuing to examine new opportunities for further
diversification.

In line with our expectations, revenue reduced by 11% over the period to £192.4 million (2007: £216.6 million), given
that lower funding levels for Warm Front were in place. The 2007/08 year had been set as a peak year for Warm Front
funding, and this had been factored into our forecasts. However, demand for Warm Front has continued to rise as
energy prices and wider economic difficulties have taken hold. Government has therefore recently responded with two
separate announcements, increasing the level of funding for the Scheme to beyond the previous peak level.

EBITA of £4.1 million over the period (2007: £4.4 million), reflects stable operating margins of 2.1% (2007: 2.1%).

Fuel Poverty Programmes

The Warm Front Scheme has been in extremely high demand over the period, driven by high energy prices and the
uncertainty of the wider economic climate. In response to both rising demand for the Scheme and the Government’s
drive to provide a fiscal stimulus to the wider economy, Warm Front has seen two injections of additional funding in
this period. The first, of an additional £74m for the 2008/09 and 2009/10 financial years, was announced on 11
September 2008 as part of the Home Energy Saving Programme. This was followed by the announcement in the Pre-
Budget Report on 24 November 2008 that the Scheme would benefit from an additional £100m over the period to
March 2011. This additional investment is welcome news for eaga, and for those households who will now be able to
benefit from the Government’s expansion of funding for the Scheme.

These measures were a key part of the ‘Green stimulus’ announced by the Chancellor, which clearly indicated that
investment in environmental measures was not only a current priority, but one matched with a long-term focus and
investment. However, the Chancellor also made clear that additional investment in public spending would be matched
with a renewed focus on value for money and prudence:



                                                                                                                      4
‘As businesses and families across the country carefully watch what they spend, it is only right that the Government
works even harder to make savings…the challenge is to continue to deliver these improved services while ensuring we
continue to get value for money’ 5.

In Wales, we were encouraged by the Welsh Assembly Government’s additional investment of £5.8m into the Home
Energy Efficiency Scheme over the period to December 2010; which will again help to deal with rising demand whilst
extending the Scheme to benefit more households this year. We are currently in a tender process for the next phase of
the Warm Homes Scheme in Northern Ireland, due to begin in May 2009.

eaga’s management of the programmes we deliver has been shown by a number of independent sources to provide
value for money, but we are continuing to examine ways in which we can drive increased efficiencies and improve
service delivery across our contract base.

Our performance in delivering fuel poverty programmes has never been stronger. It is pleasing that, in line with record
levels of demand, our customer satisfaction scores are extremely high and delivery times are continuing to fall.

Switchover Help Scheme

We have now completed the first area within the ITV Border region of the Switchover Help Scheme on behalf of the
BBC, with switchover finalised in the Selkirk transmitter region on 20 November 2008. All eligible households in the
Selkirk region were successfully contacted and offered help under the Help Scheme. We are now ramping up activity
as we extend our role to other areas of the ITV Border region and begin delivery in the West Country. Planning
commences for Switchover Help Scheme delivery in ITV Wales and ITV Granada regions later in 2009.

Advice Services

Our Advice Services business continues to grow, with over 40,000 benefit checks completed in the period and some
6,000 cases taken on as part of our Community Legal Advice contract. Again, the wider economic climate has created
conditions where demand for advice on debt, welfare benefits, housing and employment is high, and we see potential
for our market share in this area to grow still further.


Installation Services

The primary focus of eaga’s Installation Services segment is the supply of heating (including renewable sources) and
insulation products and services into people's homes through a nationwide network of installation specialists. Over
70% of our people are employed in this segment.

The major end markets for the Installation Services Segment are:

       •    work carried out under CERT
       •    the supply of installation services to Schemes delivered in Managed Services, particularly Warm Front
       •    heating installation and maintenance contracts in the social housing sector

Revenue (including inter segment revenues) increased by 47% to £167.4 million over the period (2007: £114.0
million) with EBITA rising by 24% to £12.7 million (2007: £10.2 million).

EBITA margins in the sector for the period were 8.0% (2007: 9.0%) before one-off restructuring costs of £0.7m (7.6%
after restructuring costs), which is in line with our expectations and slightly ahead of EBITA margin performance of
7.8% for the full year to May 2008. Acquisitions contributed approximately £17.2 million turnover growth and £1.0
million EBITA growth. Excluding the impact of acquisitions, organic EBITA growth of 13.6% was delivered by the
business.

Having built a robust platform for further progress, the period has seen eaga leverage this base to deliver strong
organic growth. We have made good progress in developing a cohesive brand strategy across our installation
companies, including those we have acquired. We anticipate that the process of moving towards a unified ‘eaga’ brand
will be largely complete over the course of 2009.

5
    Taken from the 2008 Pre-Budget Report, available at http://www.hm-treasury.gov.uk/d/pbr08_completereport_1721.pdf



                                                                                                                        5
CERT

The recent announcements that energy suppliers’ targets under CERT are set to increase by 20% over the 2008-11
period – which represents an additional £560m of investment6 – will provide further opportunity for our existing
insulation businesses. We continue to have contracts in place with all of the major energy suppliers to help them to
deliver significant elements of their challenging targets. In particular, we are now well into the delivery phase of our
unique agreement with Scottish Power, to outsource the entire end-to-end delivery of its CERT obligation.

Alongside CERT, the announcement of the Community Energy Saving Programme (CESP) will provide an
opportunity to increase take-up of more innovative carbon saving solutions including external wall insulation and
renewable technologies, as well as offering scope to develop new relationships with other interested parties on the
demand side of the energy market, particularly generators.

With a nationwide delivery platform, established buying power and strong commercial relationships with the key
players, eaga is well placed to take advantage of the opportunities that the developing CESP market will bring as new
contract development and related installation activity get underway towards the end of 2009.

Government contracting installations

The installation of heating and insulation to Government programmes has again continued to perform strongly during
the period. This area of the business is likely to benefit proportionately from the additional investment in schemes and
initiatives announced in recent months. However, we will also be working closely with central Government customers
to understand how this additional funding will be phased and delivered.

Social housing sector

The platform we have built in the social housing market is delivering recurring revenue. Currently eaga has
approximately 200,000 boilers under contract for annual service visits and 24/7 repair and maintenance, which we
estimate is a market share of approximately 4%. eaga’s offer of vertically-integrated solutions will continue to present
further opportunities for profitable expansion of Installation Services’ operations where the Company is well placed to
offer a sophisticated package of bundled measures.

We have effected some restructuring in this sector of the business and our underlying performance in this area is
recovering positively.

Despite a tightening of the public purse in many areas with regard to local authority spending, we have maintained a
strong position in the social housing market. External pressures driven by economic tightening are evident, but their
impact has not been material in the context of margins in this segment.

Specialist Support Services

Serving similar customer and market dynamics as the other segments through the development and delivery of
innovative environmental solutions, our Specialist Support Services segment leverages our intimate understanding of
the space in which we operate, and forms the basis of our unique market position.

Revenue (including inter segment revenues) increased by 11% to £35.8 million (2007: £32.2 million) and EBITA
increased by 12% to £4.7 million (2006: £4.2 million). EBITA margins in this sector were 13.1% for the period (2007:
13.0%). The primary growth drivers were:

     •   continued demand for carbon savings from energy suppliers to meet their CERT commitments
     •   the supply of low energy lighting
     •   eaga’s ShowerSmart device, distribution of which is increasing in scale across the country

We also expect Specialist Support Services to benefit from the additional investment in CERT announced in
September 2008 through increased demand for its products and services.


66
  Full details of the Home Energy Saving Programme can be found at
http://www.number10.gov.uk/wp-content/uploads/energy-saving-programme110908.pdf



                                                                                                                      6
Fulfilment

Our fulfilment business is focused on the procurement and delivery of environmental products. Most prominent in this
area is low-energy, compact fluorescent light bulbs (CFLs), supplied either as part of schemes delivered in Managed
Services or CERT-facing commitments. With the expansion of CERT and a continued focus on delivering cost-
effective energy saving measures, we anticipate that the market for CFLs will remain an attractive one at least until the
present CERT obligation ends in 2011.

This business has increased in scale over the last six months as we have commenced the rollout of the eaga
ShowerSmart device. We have distributed over 85,000 units in the period, and the device, which saves both water and
energy by limiting the flow of the shower, offers potential for further scale and volumes over the remainder of the
year.

This area of the business was strengthened by the acquisition of Protocol Communications Management Limited
(Protocol) on 14 October 2008. Protocol is an established supplier of fulfilment and distribution services. This niche
acquisition represents a positive step for eaga’s development as we seek to strengthen our capacity to deliver vertically
integrated solutions and to further bolster our fulfilment operation.

Clean Development Mechanism (CDM) Agreements

In addition to the four contracts that were in place at the beginning of the period, we have signed a further five CDM
agreements in India, and are continuing to grow what is a potentially significant market opportunity; one that allows us
to draw on our core skills and unique operating position to broker commercially attractive carbon trading propositions
between parties in this marketplace.

Summary

eaga has made encouraging progress in the first half of our 2009 financial year. We have delivered on our
expectations, and are well placed to develop and realise the market opportunites that will present themselves over the
remainder of the financial year.

The long-term drivers in the social and environmental markets in which eaga operates are continuing to prove
attractive, high-profile and sustainable over the long-term. Despite the wider global economic instability, our core
markets have continued to attract significant incremental investment and have therefore continued to deliver positive
outcomes. With this in mind, we remain committed to delivering further growth and diversification, and are positive as
to the outlook for the balance of the current year.




John Clough MBE
Chief Executive
29 January 2009




                                                                                                                       7
                                              Financial Performance

Results

In the six months ended 30 November 2008 Group revenue increased by 9.8% to £339.4 million (2007: £309.1
million). Group EBITA before exceptional costs and ePT-funded charges increased by 13.5% to £21.4 million (2007:
£18.9 million).

Profit before tax, amortisation of intangible assets, exceptional costs and ePT-funded charges increased by 13.0% to
£21.7 million (2007: £19.2 million). After deducting amortisation of intangible assets, exceptional costs and ePT-
funded charges profit before tax is £17.4 million (2007: £14.5 million).

The Board has declared an interim dividend of 1.1p per ordinary share, payable on 23 March 2009 to shareholders on
the register at 20 February 2009.

Taxation

The underlying effective tax rate of 28.6% (2007: 30.4%) is above the UK tax rate of 28.0% (2007: 29.7%), largely
due to disallowable expenditure incurred by the Group.

Earnings per Share

Basic earnings per share increased to 4.89p (2007: 3.60p). Underlying fully diluted earnings per share (adjusting for
amortisation of intangible assets, exceptional costs and ePT-funded charges) increased by 15.5% to 6.12p (2007:
5.30p).

Exceptional costs

Exceptional costs in the six months to 30 November 2008 relate to a share-based payments charge arising in respect of
the fair value of share options granted to certain key management under the IPO Key Management Plan by ePT.
These awards were made solely in relation to successful admission of the Company’s shares to the London Stock
Exchange.

ePT-funded charges

The Group operates a SIP under which qualifying employees may receive free shares. During the 6 month period
ended 30 November 2008 ePT waived its interim and final dividends amounting to £2.8 million in respect of the year
ended 31 May 2008, and these funds were used to fund the SIP. This funding was utilised by the SIP trustee in
October 2008 to acquire a number of shares in eaga plc to be held in order to meet the future commitment of the SIP.

Treasury

The Group generated £10.9 million (2007: £11.9 million) cash from operations. The Group remains net cash positive
at the balance sheet date, with cash balances having increased during the six months by £0.3 million to £15.7 million.

The Group has an existing £35 million revolving credit facility in place until 1 December 2009. Advanced discussions
are underway with a number of potential lenders with a view to establishing renewed facilities before the end of the
current financial year.

Acquisitions

The Group acquired Protocol Communications Management Limited (“Protocol”) on 14 October 2008. Protocol is a
fulfilment and distribution company based in Blackburn. The acquisition joined our Specialist Support Services
segment and offers a cost effective solution to print management, direct marketing activities and distribution.




                                                                                                                    8
Risks and uncertainties

The Group faces a number of risks and uncertainties across a range of commercial, operational and financial areas
which are monitored and evaluated by a risk review board. Those that the Board consider may impact on the Group’s
performance over the second half of the financial year are set out below:

•       The level of competition in the markets in which it operates which may affect the Group's revenue and market
        share
•       Decisions and changes in the Group's regulatory environment
•       Management of commercial relationships to avoid contractual loss/disputes
•       Restriction of the availability of banking facilities due to destabilisation in the financial markets
•       Significant change in Government’s policies in the area of fuel poverty and social inclusion
•       The non-achievement of expected benefits from business acquisitions
•       Non-supply of equipment or services by a major supplier

In addition to the above, the Group is exposed to financial risks arising from external factors including the movements
in foreign exchange rates, interest rates and other factors such as long term economic growth rates, all of which may
impact the Group's financial performance. Additionally, the level of borrowings and the related finance costs are
monitored through a central treasury function to mitigate the potential for credit and liquidity risk.

Any of the above and/or changes in assumptions underlying the carrying value of certain Group assets could result in
asset impairments.




Ian McLeod
Group Finance Director
29 January 2009




                                                                                                                     9
                                      Statement of Directors’ Responsibilities

The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34
“Interim Financial Reporting” as adopted by the European Union, and that the interim management report herein
includes a fair review of the information required by the Disclosure Rules and Transparency Rules of the Financial
Services Authority, paragraphs DTR 4.2.7 and DTR 4.2.8.

The directors of eaga plc are listed in the eaga Annual Report for the year ended 31 May 2008. A list of current
directors is maintained on the eaga plc website: www.eaga.com.

By order of the Board




John Clough                Ian McLeod
Chief Executive            Group Finance Director
29 January 2009




                                                                                                                     10
Unaudited Consolidated Income Statement
For the 6 months ended 30 November 2008

                                                        Notes         6 months            6 months          Audited
                                                                      ended 30            ended 30       Year ended
                                                                     November            November           31 May
                                                                          2008                2007             2008
                                                                          £000                £000             £000
 Continuing operations
 Revenue                                                   2            339,390             309,104           638,960
 Cost of Sales                                                        (263,330)           (251,024)         (518,508)

 Gross profit                                                            76,060              58,080          120,452

 Administrative expenses                                                (58,943)            (43,877)         (92,474)


 EBITA                                                                   21,420              18,874           38,044
 Amortisation of intangible fixed assets                                 (3,823)             (3,300)          (7,417)
 ePT-funded charges                                        3               (284)                   -                -
 Exceptional costs                                         4               (196)             (1,371)          (2,649)

 Operating profit                                                        17,117              14,203            27,978

 Finance income                                                              603                 954            1,759
 Finance expense                                                           (342)               (634)          (1,372)

 Profit before tax                                                       17,378              14,523            28,365

 Tax expense                                                             (4,975)             (4,422)          (8,945)
 Exceptional tax expense                                   4                   -             (1,045)          (1,189)

 Profit for the period                                                   12,403                9,056           18,231

 Profit for the period attributable to:
 Equity holders of the Company                                           12,262                8,927           17,945
 Minority interests                                                         141                  129              286
                                                                         12,403                9,056           18,231

 Earnings per share (pence)
 - basic                                                   6                4.89                3.60             7.20
 - diluted                                                 6                4.89                3.57             7.17



EBITA comprises profit on ordinary activities before interest, tax, amortisation of intangible fixed assets, ePT-funded
charges and exceptional costs.

Exceptional costs comprise items of expense that are material in amount and unlikely to recur and therefore merit
separate disclosure in order to provide an understanding of the Group’s underlying financial performance.




                                                                                                                   11
Unaudited Consolidated Statement of Recognised Income and Expense
For the 6 months ended 30 November 2008


                                                       6 months      6 months      Audited
                                                       ended 30      ended 30   Year ended
                                                      November      November       31 May
                                                           2008          2007         2008
                                                           £000          £000         £000

 Profit for the period                                   12,403         9,056       18,231
 Net exchange differences arising on consolidation          101          (57)           68

 Total recognised income for the period                  12,504         8,999       18,299

 Attributable to:
 Equity holders of the Company                           12,362         8,870       18,015
 Minority interests                                         142           129          284

                                                         12,504         8,999       18,299




                                                                                       12
Unaudited Consolidated Balance Sheet


                                               Notes                            Audited
                                                           At 30       At 30         At
                                                       November    November     31 May
                                                           2008        2007        2008
                                                           £000        £000        £000
Non-current assets
Goodwill                                                  59,051      59,894     57,029
Intangible assets                                         11,273      14,806     15,161
Property, plant and equipment                             13,992      13,230     11,633
Deferred tax assets                                       10,849      17,961     13,453
                                                          95,165     105,891     97,276

Current assets
Inventories                                               18,451       7,951      8,568
Trade and other receivables                               90,656      62,168     76,652
Derivative financial instruments                             578         538        559
Current tax assets                                             -         284        163
Current asset investments                                  6,188       5,883      4,938
Cash and cash equivalents                                 15,673      12,660     15,322
                                                         131,546      89,484    106,202

Current liabilities
Trade and other payables                                 108,709      94,932     95,051
Loans and borrowings                                         188       1,343        206
Current tax liabilities                                    2,068           -          -
                                                         110,965      96,275     95,257

Net current assets / (liabilities)                        20,581      (6,791)    10,945

Non-current liabilities
Other non-current liabilities                                963         443        608
Loans and borrowings                                         272         294        266
Provisions for other liabilities and charges                 586         586        586
                                                           1,821       1,323      1,460

Net assets                                               113,925      97,777    106,761

Equity
Share capital                                   7            251         251        251
Retained earnings                               7         83,462      65,154     73,882
Other reserves                                  7         29,708      32,131     32,266

Total shareholders’ equity                               113,421      97,536    106,399
Minority interest in equity                     7            504         241        362

Total equity                                             113,925      97,777    106,761




                                                                                          13
Unaudited Consolidated Cash Flow Statement
For the 6 months ended 30 November 2008

                                                                Notes    6 months      6 months       Audited
                                                                         ended 30      ended 30    Year ended
                                                                        November      November        31 May
                                                                             2008          2007          2008
                                                                             £000          £000          £000

 Operating profit                                                           17,117       14,203         27,978
 Depreciation of property, plant and equipment                               2,254         1,608         3,514
 Amortisation of intangible assets                                           3,823         3,300         7,417
 Increase in inventories                                                   (9,555)       (1,413)       (2,030)
 Increase in trade and other receivables                                  (15,129)       (1,691)      (15,167)
 Increase/(decrease) in trade and other payables                            11,860       (5,505)       (2,675)
 Loss on sale of property, plant and equipment                                  34            10           312
 Share-based costs credited directly to equity                                 460         1,371         2,649
 Decrease/(increase) in derivatives                                               8           10          (11)
 Exchange differences                                                           (3)         (31)          (57)

 Cash generated from operations                                            10,869        11,862        21,930

 Finance income                                                                497        1,115         1,759
 Finance expense                                                             (117)         (88)         (476)
 Taxation (paid)/received                                                    (140)          668         (523)

 Cash generated from operating activities                                  11,109        13,557        22,690

 Cash flows from investing activities
 Purchase of intangible assets                                                   -         (299)         (369)
 Purchase of property, plant and equipment                                 (2,628)       (2,189)       (3,999)
 Proceeds from sale of property, plant and equipment                           624            67           522
 Purchase of subsidiary undertakings net of cash/(overdrafts)
 acquired                                                                    (748)      (24,185)      (24,805)
 Payment of deferred consideration including finance costs
                                                                             (935)       (8,500)      (11,054)

 Net cash outflow from investing activities                                (3,687)      (35,106)      (39,705)

 Cash flows from financing activities
 Repayments of bank loans                                                      (6)          (10)           (6)
 Capital element of hire purchase agreements                                  (20)          (95)         (237)
 Dividends paid to minority shareholders of subsidiary                           -             -          (34)
 Dividends paid to equity holders of the Company                   5       (3,142)             -       (1,568)
 Increase in short term investments                                        (1,250)       (1,251)         (306)
 Purchase of own shares held in trust                              3       (2,658)             -             -
 Proceeds from issue of shares                                                   -       28,952        28,956

 Net cash (outflow)/inflow from financing activities                       (7,076)       27,596        26,805


 Net increase in cash and cash equivalents                                    346         6,047         9,790
 Cash and cash equivalents at start of period                              15,322         5,532         5,532

 Cash and cash equivalents at end of period                                15,668        11,579        15,322




                                                                                                        14
Notes

1.    Presentation of interim financial report

General

eaga plc is a public limited company incorporated in England and Wales under the Companies Act 1985. The address
of the Registered Office is eaga House, Archbold Terrace, Jesmond, Newcastle upon Tyne NE2 1DB. The Company
is listed on the London Stock Exchange.

Basis of preparation

The unaudited condensed half year financial statements for the period ended 30 November 2008 have been prepared in
accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, “Interim
Financial Reporting” as adopted by the European Union. The condensed consolidated interim financial report should
be read in conjunction with the annual financial statements for the year ended 31 May 2008 which have been prepared
in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Statutory Financial Statements

The financial information presented here does not represent statutory accounts as defined by the Companies Act 1985.
The Group’s statutory financial statements for the year ended 31 May 2008 were prepared under IFRS as adopted by
the European Union and filed with the Registrar of Companies. The auditors, PricewaterhouseCoopers LLP, reported
on those accounts and their report was unqualified and did not contain a statement under section 237(2) or (3) of the
Companies Act 1985.

These condensed half year financial statements have not been audited or reviewed by the independent auditors
pursuant to the Auditing Practices Board guidance on the “Review of Interim Financial Information”.


Accounting Policies

The accounting policies are consistent with those of the statutory financial statements for the year ended 31 May 2008
as described in those financial statements with the exception of a revision to the share-based payment policy as a result
of the inception of SIP and a new policy for ePT-funded charges, as noted below.

Share-based payments

The Group has applied the requirements of IFRS2 Share-based Payments.

The Group issues equity-settled payments to certain employees through share option schemes, details of which are in
the Remuneration Report in the Annual Report and Accounts to 31 May 2008. The fair value of share options granted
is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant
date, using an appropriate model, taking into account the terms and conditions upon which the share options were
granted, and is spread over the period during which the employees become unconditionally entitled to the options. The
amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except where
forfeiture is only due to market based performance criteria not being met.

The Group also operates a SIP under which qualifying employees may receive free shares. The free shares are
recognised as an expense evenly throughout the period over which the employees remain in the employment of the
Group in order to receive the free shares and, where applicable, associated beneficial tax treatment.




                                                                                                                     15
ePT-funded charges

To the extent that costs incurred by the Group are funded by ePT, whether by waiver of dividend or otherwise, the
associated charges are treated in accordance with the Group’s accounting policies with the exception that they are
separately disclosed on the face of the profit and loss account and excluded from EBITA.


New Standards and Interpretations

From 1 June 2008 the following interpretations became effective and were adopted by the Group:

IFRIC 12 Service Concession arrangements
IFRIC 14 The limit on a defined benefit asset, minimum funding requirement and their interaction

The adoption of these interpretations has not had a significant impact on the Group's profit for the period or equity.




                                                                                                                         16
2.    Segmental analysis


6 months ended 30 November 2008
                                            Managed       Installation     Specialist    Eliminations          Total
                                             Services        Services       Support
                                                                            Services
                                                £000             £000          £000              £000           £000
Revenue
Third party                                  192,409          113,622         33,359                 -    339,390
Intersegment                                       -           53,734          2,474          (56,208)          -
Total                                        192,409          167,356         35,833          (56,208)    339,390

Segmental operating profit                     3,995            8,938          4,664                          17,597
Unallocated ePT-funded charges (note 3)                                                                        (284)
Unallocated exceptional costs (note 4)                                                                         (196)

Operating profit                                                                                              17,117

Net finance income                                                                                                261
Total tax expense                                                                                             (4,975)

Profit for the period                                                                                         12,403

Other segment information
Amortisation of intangibles                       71            3,727             25                           3,823
EBITA                                          4,066           12,665          4,689                          21,420




6 months ended 30 November 2007
                                          Managed       Installation     Specialist     Eliminations       Total
                                           Services        Services       Support
                                                                          Services
                                              £000             £000          £000              £000           £000
Revenue
Third party                                216,605           61,681         30,818                 -     309,104
Intersegment                                     -           52,324          1,344          (53,668)           -
Total                                      216,605          114,005         32,162          (53,668)     309,104

Segmental operating profit                   4,402            6,986          4,186                       15,574
Unallocated exceptional costs (note 4)                                                                   (1,371)

Operating profit                                                                                          14,203

Net finance income                                                                                           320
Total tax expense                                                                                        (5,467)

Profit for the period                                                                                      9,056

Other segment information
Amortisation of intangibles                     40            3,251              9                         3,300
EBITA                                        4,442           10,237          4,195                        18,874




                                                                                                         17
2.    Segmental analysis (continued)

Year ended 31 May 2008
                                                Managed        Installation      Specialist   Eliminations            Total
                                                 Services         Services        Support
                                                                                  Services
                                                     £000               £000         £000             £000              £000
Revenue
Third party                                       420,262          144,314          74,384                -       638,960
Intersegment                                            -          104,808           2,641        (107,449)             -
Total                                             420,262          249,122          77,025        (107,449)       638,960

Segmental operating profit                           8,506          12,066          10,055                -          30,627
Unallocated exceptional costs (note 4)                                                                               (2,649)

Operating profit                                                                                                     27,978

Net finance income                                                                                                    387
Total tax expense                                                                                                (10,134)

Profit for the year                                                                                                  18,231

Other segment information
Amortisation of intangibles                            113           7,249              55                -           7,417
EBITA                                                8,619          19,315          10,110                -          38,044



3.   Share Incentive Plan


                                                     6 months ended            6 months ended         Year ended
                                                       30 November               30 November             31 May
                                                               2008                      2007               2008
                                                               £000                      £000               £000

ePT-funded charges                                                284                         -                  -


The Group operates a SIP under which qualifying employees may receive free shares. During the 6 month period
ended 30 November 2008 ePT waived its interim and final dividends amounting to £2.8 million in respect of the year
ended 31 May 2008, and these funds were used to fund the SIP. This funding was utilised by the SIP trustee in
October 2008 to acquire a number of shares in eaga plc to be held in order to meet the future commitment of the SIP.
.
The SIP has no commitment to make any awards to employees in excess of those funded to date by ePT. Because this
expense has been fully funded by ePT, there is no net impact on the Group’s profitability, cash or net assets against
that which would have occurred had ePT not waived its dividends. Accordingly, the associated share-based payment
charge incurred by the Company has been separately disclosed on the face of the profit and loss account and excluded
from EBITA.




                                                                                                                  18
4.    Exceptional costs

                                                      6 months ended          6 months ended           Year ended
                                                        30 November             30 November               31 May
                                                                2008                    2007                 2008
                                                                £000                    £000                 £000

Share-based payments                                               196                   1,371               2,649

Exceptional tax expense                                              -                   1,045               1,189

Share-based payments

Share-based payments comprise the IFRS2 charge arising in respect of the fair value of share options granted to
certain key management under the IPO Key Management Plan by ePT. These awards were made solely in relation to
successful admission of the Company’s shares to the London Stock Exchange.

There was no cash cost to the Group in respect of the IFRS2 charge for share-based payments. A credit of equal
quantum was made to reserves resulting in unchanged net assets.

Exceptional tax expense

The impact of the reduction in the UK corporation tax rate from 30% to 28%, with effect from 1 April 2008, on the
Group’s deferred tax assets at 30 November 2007 and at 31 May 2008 was included in the income statement as an
exceptional tax expense in respect of the relevant periods.


5.    Dividends


                                                      6 months ended          6 months ended           Year ended
                                                        30 November             30 November               31 May
                                                                2008                    2007                 2008
                                                                £000                    £000                 £000

Amounts recognised as distributions to equity
holders in the period:
Final dividend for the year ended 31 May
2008 of 2.0p per share (2007: nil)                               3,142                        -                   -
Interim dividend for the year ended 31 May
2008 of 1.0p per share (2007: nil)                                   -                        -              1,568
                                                                 3,142                        -              1,568



ePT waived its right to both interim and final dividends for the year ended 31 May 2008 reducing the charge to equity
by £2.8 million. The funds waived were used to fund the SIP (see note 3).

The proposed interim dividend for the year ended 31 May 2009 of 1.1p (2007: 1.0p) per share was approved by the
Directors on 28 January 2009. This interim dividend has not been included as a liability as at 30 November 2008. The
dividend will be payable on 23 March 2009 to shareholders on the register at 20 February 2009.




                                                                                                                   19
6.    Earnings per share

Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of Ordinary Shares in issue during the period.

                                                                              6 months          6 months          Year
                                                                              ended 30          ended 30         ended
                                                                             November          November         31 May
                                                                                  2008              2007           2008

 Profit attributable to equity shareholders of the Company £(thousands)
                                                                                 12,262            8,927        17,945
 Weighted average number of Ordinary Shares in issue (thousands)                250,561          248,067       249,330
 Basic earnings per share (pence)                                                  4.89             3.60          7.20


Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares outstanding to
assume conversion of all potentially dilutive ordinary shares. Potentially dilutive ordinary shares arise from share
options and any conversion of Preferred Ordinary shares into Ordinary Shares.

                                                                              6 months          6 months          Year
                                                                              ended 30          ended 30         ended
                                                                             November          November         31 May
                                                                                  2008              2007           2008

 Profit attributable to equity shareholders of the Company £(thousands)
                                                                                 12,262            8,927        17,945
 Weighted average number of Ordinary Shares in issue (thousands)                250,561          248,067       249,330
 Adjustments for dilutive effect of share options (thousands)                       121                -             -
 Adjustments for dilutive effect of Preferred Ordinary Shares
 (thousands)                                                                           -            1,654              827
 Weighted average number of Ordinary Shares for diluted earnings per
 share (thousands)                                                              250,682          249,721       250,157
 Diluted earnings per share (pence)                                                4.89             3.57          7.17




                                                                                                                 20
6.      Earnings per share (continued)
Adjusted earnings per share
Adjusted earnings per share is stated excluding exceptional costs, ePT-funded charges and amortisation of intangible
assets as follows:

                                                                              6 months          6 months          Year
                                                                              ended 30          ended 30         ended
                                                                             November          November         31 May
                                                                                  2008              2007           2008

 Profit attributable to equity shareholders of the Company
 £(thousands)                                                                    12,262             8,927        17,945
 - exceptional costs (note 4)                                                        196            1,371         2,649
 - ePT-funded charges (note 3)                                                       284                -             -
 - amortisation of intangible assets                                               3,823            3,300         7,417
 - tax effect of above adjustments                                               (1,227)          (1,401)       (2,629)
 - exceptional tax expense (note 4)                                                    -            1,045         1,189
 Adjusted profit £(thousands)                                                    15,338           13,242         26,571

 Adjusted basic earnings per share
 Weighted average number of ordinary shares in issue (thousands)
                                                                                250,561          248,067       249,330
 Adjusted basic earnings per share (pence)                                         6.12             5.34         10.66

 Adjusted diluted earnings per share
 Weighted average number of ordinary shares in issue (thousands)
                                                                                250,682          249,721       250,157
 Adjusted diluted earnings per share (pence)                                       6.12             5.30         10.62




                                                                                                                 21
7.    Consolidated statement of changes in equity


                                           Share        Other       Retained       Attributable    Minority         Total
                                          Capital     Reserves      Earnings      to the Equity     Interest       Equity
                                                                                      holders of
                                                                                 the Company
                                             £000          £000         £000               £000         £000          £000

 At 1 June 2007                                 50        3,648        54,856            58,554          112        58,666
 Profit for the period                           -            -         8,927             8,927          129         9,056
 Share-based payments                            -            -         1,371             1,371            -         1,371
 Bonus issue of shares                         182        (182)             -                 -            -             -
 Issue of share capital                         19       28,722             -            28,741            -        28,741
 Currency translation differences                -         (57)             -              (57)            -          (57)
 At 30 November 2007                           251       32,131        65,154            97,536          241        97,777
 Profit for the period                           -            -         9,018             9,018          157         9,175
 Share-based payments                            -            -         1,278             1,278            -         1,278
 Issue of share capital                          -            8             -                 8            -             8
 Dividends paid to minority
 shareholders of subsidiary                      -             -             -                 -         (34)          (34)
 Dividends paid to equity shareholders
 of the Company                                  -            -       (1,568)           (1,568)             -       (1,568)
 Currency translation differences                -          127             -               127           (2)           125
 At 31 May 2008                                251       32,266        73,882          106,399           362       106,761
 Profit for the period                           -            -       12,262            12,262           141         12,403
 Share-based payments                            -            -           460               460             -           460
 Dividends paid to equity shareholders
 of the Company                                  -             -      (3,142)           (3,142)            -        (3,142)
 Purchase of own shares held in trust            -       (2,658)            -           (2,658)            -        (2,658)
 Currency translation differences                -           100            -               100            1            101
 At 30 November 2008                           251        29,708       83,462          113,421           504       113,925




8.    Acquisitions

Protocol Communications Management Limited

On 14 October 2008, the Group acquired 100 per cent of the issued share capital of Protocol Communications
Management Limited (Protocol), a company registered in England and Wales. Protocol is a fulfilment and distribution
company. The consideration paid was £1,543,000 including acquisition expenses of £43,000. There is contingent
consideration of up to £1,500,000 payable depending on the post acquisition results of Protocol for the 14 month
period to 31 December 2009.

As the date of acquisition was near to the Group’s half-year reporting date, the consolidated assets acquired are
included at their carrying values which are deemed to be provisional fair values at 30 November 2008. The exercise to
value separately the intangible assets will be undertaken in advance of the year end. The goodwill recognised on
acquisition as at 30 November 2008 is £1,970,000.

9.    Related party disclosures
The Group’s significant related parties are its joint ventures as disclosed in the eaga Annual Report for the year ended
31 May 2008. There were no material differences in related parties or related party transactions in the period or prior
period.




                                                                                                                    22

				
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Description: 29 January 2009 Half Year Results eaga plc (EAGAL), a “Green