It remains a cardinal rule in the City that a newly listed company should not miss its profit forecasts within the first year of floating.

So it should come as no surprise that shares in Eaga, the FTSE 250 home energy efficiency specialist, sit at a discount to last year’s issue price. They fell more than 30 per cent in April after the Tyneside company said that current-year earnings would be below expectations. Ironically, one of the causes of that alert was higher fuel prices – the very pressure from which Eaga, as the company charged with administering the Government’s Warm Front initiative, is well placed to benefit.

There was considerable relief that June’s pre-close trading update contained no further setbacks and yesterday’s full-year results continued that trend. Revenues were up 32 per cent to £639 million and adjusted pretax profits rose 23 per cent to £38.4 million, in line with revised estimates. Further, the two other problems behind April’s upset – delays in work for energy utilities relating to carbon emissions reduction targets (CERT) and poor profits from a newly acquired installation business – appear firmly behind it. Eaga has since picked up a £200 million three-year contract from ScottishPower, the first of its kind, under which it will handle the utility’s CERT obligations – notably, installing loft and cavity wall insulation for its domestic customers.

In addition, Eaga has seen off competition from Capita and Vertex to secure the £500 million contract to oversee the digital television switchover for the BBC and that deal, which provided proof of Eaga’s ability to apply its energy expertise in a related niche, should contribute strongly to current-year sales.

Yet the shares’ rally by nearly 70 per cent from their June low owes more to the expectation that the Government will have to put more work its way in order to meet its self-imposed fuel poverty targets. With pressure from Labour backbenchers growing after the summer’s surge in gas bills, ministers are expected to unveil a package of remedies this week: either a windfall tax on utilities, or a commitment to inject more cash into Warm Front, whose funding was due to fall from £350 million in the last fiscal year to about £270 million a year over the next three years. Either way, the immediate prospects of Eaga’s government contracts division – still by far its biggest – appear assured.

While Eaga is an excellent short-term play on energy policy, its longer-term prospects require faith that it can turn itself into a door-to-door version of Capita, including the ability to hang on to the Warm Front contract into the next decade. Since Tempus advised buy in January at 151p, the shares gained 31 per cent at their peak and, even yesterday, at 12 times current-year earnings, offer a modest profit. Those without the stomach for further volatility would do best to take it.

Mattioli Woods

Being named AIM entrepreneur of the year is commonly considered a curse. Not so, thus far anyway, for last year’s winners, Ian Mattioli and Bob Woods, the founders of the pensions consultancy that bears their name.

Yesterday’s full-year results show Mattioli Woods (MW) performing to plan: revenues were up 20 per cent and earnings per share were ahead 16 per cent. Perhaps more impressive in a year in which it has made two bolt-on acquisitions, the number of Self-Invested Personal Pension (Sipp) schemes it administers rose 18 per cent on a like-for-like basis. That is encouraging, given that the projected growth of the Sipp market – which has trebled in size over the past three years – is the biggest reason to buy the shares. It also usefully illustrates MW’s allure at a time when falling stock markets have undermined the profitability of traditional wealth managers. To what extent MW can continue to prosper is a moot point.

It claims that tougher times prompt its clients – whose average Sipp value is £550,000 – to pay more attention to their pension arrangements. However, it is hard to see how revenues from the property syndicates it arranges can do anything but fall in the current year.

At 276½p, MW, which boasts modest net cash, trades at 16 times current-year earnings. However, the illiquidity of the shares (the founders retain 48 per cent) and potential short-term pressures on Sipps suggest there will be better times to put MW in your pension. Avoid.

Smallbone

A company reliant on selling £40,000 luxury kitchens may not be the obvious bet in the present climate, but Smallbone remains upbeat. At a time when Aga Foodservice is feeling the pinch, Smallbone delivered half-year pre-tax profits nearly three times higher than a year ago. It has also taken a step towards extending its reach in America by snapping up Christopher Peacock Cabinetry, the Connecticut-based business founded by one of its former employees that counts the Clintons among its clients. At £8.3 million the transaction hands Smallbone an additional £7.8 million of sales and £450,000 of profit and reflects the company’s belief that the US economy will pull out of the current downturn before a similar recovery in the UK. The problem comes when looking at 2009. Yesterday Landsbanki trimmed its profit forecasts for next year from £4 million to £2.6 million, before taking Peacock into account. The lower forecast means that the shares, at 81p, are trading at eight times next year’s earnings, a discount to the retail sector average.

That may seem harsh, given how luxury brands have proved relatively unscathed by the credit crunch to date and the support provided by Toscafield, which has built a 23 per cent stake. However, more wary investors may want to await full-year figures before buying in.

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