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UPDATE 2-Eaga upbeat on H2, seeks clarity on Warm Front

Published 10/15/2010, 04:53 AM

* Trading from June 1 to Oct. 14 in line

* H2 seen boosted by extension of CERT scheme

* TV digital switchover also seen lifting H2

* Shares up 0.9 percent

(Adds detail, profit estimate, analyst)

LONDON, Oct 15 (Reuters) - British energy efficiency specialist Eaga said it was confident of a solid full-year performance, with demand for carbon savings from energy suppliers expected to intensify in the second half.

The company, which installs energy-saving products such as insulation in homes under government schemes, said trading from June 1 to Oct. 14 was in line with guidance.

"We expect that the second half of the financial year will represent a significantly greater proportion of full year performance than has been the case in previous years," it said in an interim trading statement.

Analysts expect full-year pretax profit in a range of 46.2 million pounds to 53.6 million pounds ($74.05-$85.91 million), a Thomson Reuters I/B/E/S/ poll showed.

Eaga said its carbon services business was experiencing increased demand from energy suppliers following the extension of the government's Carbon Emissions Reduction Target (CERT) programme announced in June, which was expected to bring in higher levels of delivery during the second half of the year.

Its managed services business would also get a second-half boost from delivery of the television Digital Switchover Help Scheme, with switchovers weighted towards early 2011, Eaga said.

The company added it expected to get more clarity on future funding for the Warm Front programme, which provides a grant for insulation and heating improvements and is managed by Eaga, from the government's Comprehensive Spending Review next week.

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"Recent comments from Energy Minister Chris Huhne indicate that the intention is for the programme to be extended to 2013 at which point it will be integrated into the larger coalition government Green Deal," said stockbroker Brewin Dolphin in a note, adding it saw funding for the scheme falling to 250 million pounds in 2012 and 2013, from 300 million in 2011.

Eaga said it was confident of signing up more landlords to its scheme to install solar photovoltaic (PV) systems in roofs of homes across the UK. It said it would continue to fund the project from its balance sheet until external funding was secured. Brewin Dolphin, which is expecting Eaga to pump 15-20 million pounds into the project in the first half, described it as a "transformational opportunity" for the group.

The domestic central heating market remained challenging, with competitive pressures continuing to hit its Heating and Renewables unit. Trading is set to stabilise in the second half, but operating margins would remain lower than previous years.

The company confirmed that chief financial officer Ian McLeod had been replaced by Giles Sharp at its Annual General Meeting on Thursday.

Shares in Eaga were up 0.9 percent to 109 pence by 0841 GMT, valuing the company at 274 million pounds. ($1=.6239 Pound) (Reporting by Jon Loades-Carter; Editing by Golnar Motevalli)

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