Eaga Announcement

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Eaga announces intention to seek adminission to trading on the official list of The London Stock Exchange

Eaga (the Company), the UK market leader in the delivery of residential energy efficiency solutions, today announces its intention to seek admission to trading on the main market of the London Stock Exchange in 2007.

Eaga has a proven track record in delivering outsourced programmes aimed at eradicating fuel poverty in vulnerable households. In recent years eaga has diversified its offering to become a significant provider of household energy efficiency measures under the Energy Efficiency Commitment (EEC), and is a significant player in the local authority and social housing sector. eaga has developed a scalable infrastructure upon which it intends to capitalise on the substantial opportunities that management expects to exist in government and outsourcing, domestic energy efficiency, and social housing markets going forward.

Brewin Dolphin Securities has been appointed as Sponsor and Broker to the Company. The flotation is intended to be achieved by means of placing of shares to institutional investors.

Eaga has delivered energy efficiency measures to over 5 million UK homes, lifted several million vulnerable people out of fuel poverty. Every day eaga improves insulation in over 500 homes. The company also fits or repairs a central heating system every minute of every working day.

Management, led by Chief Executive John Clough, has an excellent track record which has seen revenues increase from inception in 1990 to a current year forecast of £500m. Excellent profit growth and cash generation has enabled eaga to achieve impressive organic growth. In recent years this has been supplemented by key acquisitions that have increased eaga’s delivery capability, broadened its market exposure, and further enhanced eaga’s profitability.

Commenting on the announcement, John Clough, Chief Executive, said:

“We are pleased to announce the intended flotation of eaga. Over the last sixteen years we have built a very successful business and are now the UK’s largest provider of residential energy efficiency solutions. We have been providing end-to-end solutions to serious environmental and social issues such as the elimination of fuel poverty for many years. We are now an emerging force in providing solutions to climate change challenges. The proposed flotation will provide the company with the financial flexibility required to fund the next phase of growth. It will also enable some of the existing shareholders (principally the Employee Benefit Trust) to realise a proportion of their respective investments.”

eaga’s future revenue prospects are strongly supported by the Government’s environmental, energy and social policy commitments. eaga plans to extend its services to become a leading residential infrastructure service provider by broadening its local authority and social housing offering, extending its aftercare services and able to pay central heating offering and capturing further government and outsourcing delivery opportunities.

Enquiries:

Eaga

John Clough, Eaga Chief Executive James Grugeon, Eaga Communications Director

0191 350 6531

Brewin Dolphin

Graeme Summers Andrew Kitchingman

0191 279 7531 0113 241 0187

Tulchan Communications

Dominic Fry

020 7353 4200

Notes to editors:

1. Introduction

Eaga is a UK market leader in the delivery of residential improvements in the environmental, energy efficiency and social justice arenas. eaga’s core focus is working with government, local authorities and utility companies to lower carbon emissions, combat fuel poverty and reduce energy consumption. The work undertaken is principally focussed on the housing and social needs of low income and vulnerable households.
eaga is based on a partnership structure and is 100% employee owned by two employee trusts (eaga has two Employee Benefits Trusts (EBT) which sit at the head of the employee owned partnership, holding shares in trust for the benefit of all partners). The company has grown rapidly in recent years, building strong relationships with its customers by:

• developing a leading position as a significant deliverer of UK governments’ fuel poverty programmes, underpinned by over 15 years’ experience of dealing with the most vulnerable groups in society;
• working closely with utility companies to support delivery of their Energy Efficiency Commitment (under the Energy Efficiency Commitment electricity and gas suppliers are required to achieve targets for the promotion of improvements in domestic energy efficiency);and
• undertaking key strategic actions to broaden activities throughout the energy efficiency and home services supply chain, further embedding eaga as an integrated supplier in its chosen markets, in particular the social housing sector.

eaga’s portfolio of products and services covers the provision of energy surveys and advice, allocation and administration of energy efficiency funding, installation of central heating systems, cavity wall and loft insulation, renewable energy and a number of other ancillary products and services, including insurance-backed aftercare provision.

2. Key Strengths

The Directors believe that eaga is in an excellent position to pursue the significant opportunities developing in the environmental, energy efficiency and social justice arenas, principally due to the following:

• eaga has a strong and trusted reputation in both the public and private sectors as an established and successful operator;
• eaga is led by a highly experienced management team;
• eaga has a strong visibility of earnings, with an order book currently standing at £1.5 billion, arising from a number of significant contracts in both the fuel poverty and social housing sectors;
• eaga’s leading position in a largely fragmented installation marketplace makes the Company well-positioned to take advantage of attractive consolidation opportunities;
• eaga’s national delivery infrastructure is well established and provides a barrier to potential new market entrants;
• over £7.2 million has been invested in developing eaga’s industry leading IT systems and infrastructure over the last 2 years. This IT platform has not only provided the business with scalability it has also been recognised by the National Audit Office as an example of best practice and would therefore allow scope for diversification into new business areas; and
• eaga has a strong financial track record of growth with excellent profits and significant cash generation.

3. Proposed Placing

The proposed placing will raise proceeds on behalf of existing shareholders, principally the Employee Benefit Trusts.

4. History

eaga was established in 1990 as a privately-owned company, the Energy Action Grants Agency Limited, to lead Government funded efforts to improve the living conditions of vulnerable people living in cold, damp and energy inefficient homes. John Clough has been Chief Executive of eaga since 1990.

Until 2004, the business developed largely organically through focus on market penetration and diversification as new market opportunities were identified. Late 2004 and early 2005 saw a change in the development of eaga, marked in particular by the successful re-tender for Warm Front.

This was followed by the acquisition in April 2005 of Mico Group, a leading insulation services provider, which complemented eaga’s existing business, enabling it to become integrated into the supply chain and gain a foothold in the EEC market as a leading UK installer of residential insulation products.

The business continued to expand and in May 2006 acquired Everwarm Group, Scotland’s largest installer of domestic insulation and an installer of central heating systems.

eaga started a pilot scheme in 2003 to develop an in-house central heating installation business, which was further developed to deliver heating systems under the most recent Warm Front contract from early 2005. Since the beginning of 2005, eaga has developed its central heating installation capacity organically from a zero base to around 300 installation engineers generating turnover of approximately £36 million.

In December 2006, eaga sought to build on its internal skills base and build its position as a major player in the social housing heating sector through the acquisitions of; White Horse Group, whose major trading arm is HEAT, and of JD Heating. HEAT specialises in the design, installation and maintenance of domestic central heating in the social housing market sector within Great Britain, Northern Ireland and the Republic of Ireland. JD Heating specialises in servicing and installing domestic central heating systems in the West Midlands. These two acquisitions together have doubled the size of eaga’s heating operation.

In addition to these key strategic acquisitions, eaga has also completed a number of smaller complementary acquisitions and strategic alliances with the aim of driving profitability and further strengthening market position. This has included the acquisition in November 2005 of an insurance intermediary business authorised by the Financial Services Authority.

It is intended in due course that the Company will review its brand strategy across the UK with a view to streamlining the range of identities under which it currently trades.
eaga is now structured into three core sectors, Government Contracts, Installation Services and Specialist Support Services, comprising six divisions: Government Contracts, Heating, Home Services, Specialist Business Services, Shared Services and Insurance.

5. Board of Directors

Executive Directors

John Clough MBE, Chief Executive (aged 47)

John has been Chief Executive of eaga since the business was established in 1990 having previously worked in strategic management positions with British Coal. Under his direction, the Company has grown to become a leader in providing services to environmental, energy efficiency and social justice challenges. eaga has become a trusted supply partner to local and national governments and energy utilities throughout the UK.

John has led the strategic development of eaga, broadening its core service and installation offerings, transforming its financial performance and provoking significant sustainable growth in both the public and private sectors. John’s vision has led to a culture which engages with its employees and drives performance and service commitment. He is a member of the government’s ‘Fuel Poverty Advisory Group’, the CBI’s national ‘Public Service Strategy Board’, the Government’s panel on ‘Transformational Government for Older People’ and a founder trustee of the independent eaga Charitable Trust.

Ian McLeod, Finance Director (aged 38)

Ian joined eaga in 2004, joining the Board in early 2005. He is responsible for all aspects of financial management and reporting across eaga and works closely with Drew Johnson in delivering eaga’s inorganic growth strategy.
Ian spent 14 years with PricewaterhouseCoopers prior to joining eaga, during which time he gained extensive experience in advising many different companies across a broad range of market sectors. Latterly during his career with PricewaterhouseCoopers, Ian supported blue chip organisations in undertaking complex M&A transactions, working closely with a major plc in effecting inorganic restructuring of its retail arm from 2002 onwards.

Drew Johnson, Commercial Director (aged 47)

Drew joined eaga in 1991, having previously been with British Coal in supply chain management and logistics. He was appointed to eaga’s Board in 1999 and has subsequently held a number of executive positions in operations and in business and commercial development.
Drew has responsibility for eaga’s commercial strategy, focussing on the identification, development and delivery of opportunities for both organic and inorganic growth. He has been instrumental in diversifying eaga’s operations and transforming profitability.

Dave Routledge, Organisational Development Director (aged 47)

Dave joined eaga in 2002 and was appointed to the Board in 2004. He is responsible for strategic organisational development, HR, IT, service excellence, corporate and government affairs.

Prior to joining eaga, Dave acquired his own strategic consultancy business working with blue chip clients. In that capacity, Dave worked as advisor to the eaga Board and developed the strategy for corporate restructure. Dave previously held main Board level responsibilities for human resources and operations within the pharmaceutical sector. He has experience of company restructuring in the UK, USA and Europe and was part of a management buy-out team backed by HSBC (Montague Private Equity). He then worked with Credit Suisse First Boston to deliver the successful IPO of the business on NASDAQ .

Non Executive Directors

Charles Berry, Non Executive Chairman (aged 54)

Charles joined eaga’s Board in 2005 as a Non Executive Director and was appointed Chairman in June 2006. He is also Chairman of the Nomination Committee.

He has extensive experience within the UK power sector; he was appointed to the Board of Scottish Power in 1999 and was Chief Executive of the company’s UK operations with responsibility for power generation as well as trading business, energy retailing and strategic transactions such as renewables and development. Charles is currently a Non Executive Director of Securities Trust of Scotland plc and Drax Group plc. Prior to joining Scottish Power, he was Group Development Director of Norwest Holst, a subsidiary of Compagnie Générale des Eaux, and has held executive management positions with responsibility for technical, business development and marketing within subsidiaries of Pilkington plc.

Michael Roberts OBE, Non Executive Director and Deputy Chairman (aged 69)

Michael joined eaga’s Board in 1999 as a Non Executive Director, and served as Chairman until 2006 becoming Deputy Chairman in June 2006.

Michael is a past president of the Institute of Energy and is both well known and respected in the energy efficiency world. Michael has broad ranging senior executive experience, having served in PA Consulting and Shell.

Michael runs his own energy management consultancy business and has particular experience in setting up energy management services for the government estate, local authorities, public service bodies and private sector companies.
During the period of Michael’s chairmanship, he has overseen the transition of eaga in terms of growth of revenue, people and profits. Michael chairs the Remuneration Committee and also sits on the Audit Committee.

Richard Burns, Senior Independent Non Executive Director (aged 48)

Richard is senior partner in the corporate practice of international law firm, Hammonds. During his 25 years with the firm, he has developed particular expertise advising on national and international mergers and acquisitions, flotations and the raising of equity finance. Within Hammonds, Richard has responsibility for the firm’s corporate governance practice globally and has advised companies and addressed conferences on the various codes of governance which apply in the UK, Europe and in the US.

Richard is Senior Independent Non Executive Director and sits on the Audit Committee, the Remuneration Committee and the Nomination Committee.

Quintin Oliver, Non Executive Director (aged 50)

Quintin lives and works in Belfast, Northern Ireland. He leads Stratagem, the first dedicated lobbying and public affairs company to emerge after the peace process development around Good Friday 1998; he ran the successful cross-party ‘YES’ Campaign for the subsequent referendum.

Quintin has worked in the public sector (as Welfare Rights Adviser to Strathclyde Regional Council, 1977-1984), in the voluntary sector (as CEO of the N. Ireland Council for Voluntary Action, 1985-1998) and now in the private sector leading Strategem. He has wide European experience (founder of the European, Youth Forum, 1976 and first President of the European Anti-Poverty Network, 1991-1995). He is also experienced in the development of social inclusion policies, and works extensively on the Middle East peace process.

Quintin is a member of the Remuneration and Nomination Committees.

Malcolm Simpson, Non Executive Director (aged 65)

Malcolm joined Greggs plc in 1973, becoming Finance Director in 1975. In this capacity, Malcolm oversaw a period of strong growth as the company expanded both organically and by acquisition and achieved flotation on the London Stock Exchange. Malcolm was also responsible for the company’s compliance with corporate governance regulations and risk management. Prior to joining Greggs, Malcolm trained as a chartered accountant with Peat Marwick Mitchell and spent time at Procter and Gamble. Malcolm handed over the finance role in 2006 and is currently Executive Director with responsibility for IT.

Malcolm is Chairman of the Audit Committee.

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