RED.L Regulatory News (RED)

2 May 2008 07:00

Camco International Ltd02 May 2008 Camco International Limited AGM Trading update Camco International Limited ("Camco"), a leading climate change business in thegrowing carbon and sustainable development markets, will provide the followingtrading update at its AGM later today. HIGHLIGHTS •Contracted carbon portfolio stable at 150.3m tonnes •Camco voted "Best Project Developer 2008" €44.1m tonnes expected to be delivered from registered projects (+46% since 31 Dec 07) •An additional 29.1m tonnes submitted for registration, but not yet registered (+151%) •Over 50% of the portfolio validated (+40%), operational (+74%) and under ERPA (+8%) •Continued growth of the JI portfolio, now totaling 36.3m tonnes •Continued growth in consultancy with a high profile Local Authority contract win Jeff Kenna, Camco Chief Executive, said: "Our focus so far this year has been on the registration of the portfolio. Ofour CDM portfolio, 40% is now registered and a further 28% submitted forregistration. We anticipate that our JI projects will make similar progress thisyear, and look forward to commercialising the JI portfolio at similar margins tothe CDM portfolio. We remain confident that the Group will generate a profit from carbon sales thisyear, and meet our overall 127m-tonne delivery target during the first Phase ofthe Kyoto commitment period". The carbon credit (emissions reductions) business Camco is a leading carbon asset developer with one of the world's largest carboncredit portfolios. Camco works closely with companies to identify and developprojects that reduce greenhouse gas emissions and then arrange for the sale anddelivery of carbon credits to international compliance buyers and into thevoluntary market. Highlighting Camco's expertise in tackling climate change with its localpresence and global reach the company was voted "Best Project Developer 2008" bythe most active participants in the global carbon market surveyed by PointCarbon. Growth in the contracted portfolio includes new project wins of 3.7m and aconservative downward adjustment. Over time, as verification reports providegreater certainly around carbon credit production, we expect the portfolio tobecome increasingly de-risked. The reported contracted portfolio figure couldmove up or down depending on the new project wins in that period. Management remain confident that 127m tonnes will be delivered during Phase 1 ofthe Kyoto commitment period. This represents an additional internal risk factor(on top of conservative adjustments that have already been completed) of 16%. Wewould expect the reported contracted JI and CDM portfolio to move towards thefirm delivery commitment of 127m tonnes by the end of the year with a modestincrease in the VER portfolio. Regulatory progress Progress through stage* (cumulative): 30 April 08 28 Feb 08 31 Dec 07 Contracted 150.3m 150.1m 149.3m PDD complete 115.8m 113.3m 107.0m Host LoA 84.3m 87.8m 88.8m Validated 79.3m 80.0m 56.6m Submitted for registration 73.2m 60.1m 41.8m Registered 44.1m 37.7m 30.2m 1st verification** 12.8m 12.3m 12.3m Issued / verified 3.2m 2.7m 2.7m Financed 128.7m 125.8m 126.8m Under construction 108.2m 109.8m 98.6m Operational 78.8m 67.6m 45.3m Sell-side ERPA 75.6m 70.1m 69.7m * Clean development mechanism (CDM) stage or equivalent for JI and VER projects** Projects that have been through at least 1 verification process or equivalent Commercial structures and margins Carbon portfolio contract structures: 30 April 08 28 Feb 08 31 Dec 07 Contracted 150.3m 150.1m 149.3m Carbon share 102.7m 102.8m 101.9m (of which, held by Camco in specie) 40.8m 40.0m 37.3m Cash share 37.1m 39.7m 39.1m VERs 10.6m 7.7m 8.3m The reported contracted portfolio of 150.3m tonnes comprises compliance credits(CERs and ERUs) and voluntary market offsets (VERs). The contracted portfolio includes 10.6m VERs from which we expect to generate a margin of at least €1-2. The 139.7m compliance grade credits (i.e. excluding VERs) within the portfolioare contracted either on a "cash share" or "carbon share" basis. Carbon share contracts total 102.7m tonnes of which Camco's "in specie" amountis 40.8m tonnes. Under these contracts Camco works in partnership with clientsto qualify and commercialise the credits and receives a carbon share which iseither free or purchased at a discounted price. The average purchase price is€7.5/tonne. Cash share contracts total 37.1m tonnes. Under these contracts, Camco does notphysically receive any carbon credits but instead earns a commission or share ofthe revenue from carbon credit sales. Commissions range between 10% and 20%,calculated on an average forward sale completion price of approximately €12 pertonne. Sell-side ERPAs (or VERPAs for VERs) are now in place for 75.6m tonnes. 48.7m ofthese tonnes are under ERPAs that Camco has negotiated between its clients and 3rd party buyers. 26.8m tonnes are under direct ERPAs with Camco (and which form part of the "in specie" tonne figure). This year Camco expects to enter into contracts to place Camco's carbon creditswith compliance and financial buyers. This will lock in margins on approximatelyone third of our carbon in specie. Analysis of the portfolio by region and carbon credit type The Group is particularly pleased with the growth in the JI portfolio of ERUs,in particular the continued growth in Russia and the FSU. Once the regulatorysystem in Russia is established, we will be able to progress the ERU portfoliothrough the necessary approval process quickly. Carbon portfolio by region: 30 April 08 31 Dec 07 Contracted 150.3m 149.3m Asia 106.6m 101.9m ERMEA 42.2m 37.3m North America 1.4m 1.4m CDM (CERs) 103.6m 106.7m JI (ERUs) 36.1m 34.3m VERs 10.6m 8.3m North America The North American team continues to grow, and welcomes that addition of Dr JoelSwisher to the team as Chief Technology Officer, North America. Joel has 30years experience in research and consulting on many aspects of clean energytechnology. He is an internationally recognised expert in building energysystems, energy efficiency technology and policy, carbon offsets and climatechange mitigation. His broad international experience in both the private andpublic / academic sectors provides a background in theory and analysis butalso includes the practical realities of energy project implementation andfinance. The consultancy practice ESD, part of Camco's consultancy business, has secured a substantial contractfrom the Carbon Trust, the UK government's forward-thinking agency promotingemissions reduction across the economy. ESD, with a consultancy partner, willdeliver two public sector projects - the "Local Authority Carbon ManagementProgramme Phase 6" - delivering advice and support to over 60 Local Authoritiesin England and Wales to take on and deliver stretching emissions reductiontargets, and the "Scottish Public Sector Carbon Management Programme 2008",providing the same type of support, to 20 universities, Health Boards and LocalAuthorities. These wins, which will make a gross profit contribution of £525,000 over thenext 12 months, build on the team's successful record in delivering majorprogrammes for the UK government. ESD and its consortium partners have nowdelivered programmatic carbon management support to over 160 public sectororganisations across the UK. The most recent assignment, supporting 45 UK LocalAuthorities during 2007/8, helped Local Authorities adopt a stretching CO2reduction target of 25% over 5 years (average), and identify emission reductionsof over 295,000 tCO2 per year, with associated financial savings estimated atover £27M per year. Our carbon footprinting service continues to grow with the completion of our1000th emission assessment project in April 2008. Enquiries: The Camco Group +44 (0)20 7121 6100 Jeff Kenna, Chief Executive OfficerScott McGregor, Chief Financial Officer KBC Peel Hunt Ltd (Nominated Adviser and Broker) +44 (0)20 7418 8900 Jonathan MarrenDavid Anderson Gavin Anderson +44 (0)20 7554 1400 Ken CroninKate HillDaniela Stawinoga Group Investor Relations website www.camcoglobal.com Please note that the Group website address has been revised. Investor relationsinformation can now be found at www.camcoglobal.com/secure/investor.php Notes to editors: The Camco Group is a leading climate change business in the growing carbon andsustainable energy markets. We offer a full range of carbon-related services topublic and private organisations worldwide. The Group has a 20-year track recordand manages one of the world's largest carbon credit portfolios. The Group consists of three business segments: The Camco carbon assets business is a leading project developer with one of theworld's largest carbon credit portfolios. We partner with companies to identify,develop and manage projects that reduce greenhouse gas emissions, and thenarrange the sale and delivery of carbon credits to international compliancebuyers and into the voluntary market. The consulting practice consists of Bradshaw, ECCM, ESD and ESD Sinosphere. Itcombines specialist technical, strategic and financial expertise and experienceaccrued over two decades to deliver a sustainable low carbon society. We arepositioned to work with our clients to turn climate change liabilities intoeconomic, social and environmental assets. Camco Ventures works with project and technology developers, early stagebusinesses and investor Groups to commercialise climate change mitigationtechnologies, projects and services. Part of this business is the ClimateLeaders' asset management vehicle. This information is provided by RNS The company news service from the London Stock Exchange