3 Jan 2012 07:00
Camco International Limited
Carbon Project Development update for the six months to 31 December 2011
Camco International Limited ("Camco"), a global developer of clean energy projects and solutions to reduce greenhouse gas emissions, is pleased to provide the following carbon update for the six months to 31 December 2011.
Highlights:
·; Contracts signed to provide assessment and monitoring services for 37 energy efficiency projects with China's largest cement producer; structure provides Camco a share of revenue at any carbon price
·; Overall increase in post-2012 portfolio to 39.9 million in specie and 27.5 million revenue share tonnes (30 June 2011; 41.5 in specie and .4 revenue share)
·; Titles sold or delivered for 3.8 million in specie tonnes and 0.9 million cash share tonnes in H2 2011
·; Cash balance of approx. €11.3 million at 31 December 2011 (31 December 2010: €12.4 million)
·; 2011 carbon price decrease will require a year end accounting adjustment materially reducing accrued income balance to the value of accrued costs and payments on account received
·; EU committee vote passed to withhold 1.4 billion tonnes of EUAs from ETS Phase III and eliminate more than 8.5 billion tonnes by 2050 which would tighten the future market significantly
·; As separately announced today, Zainul Rahim, a Khazanah Nasional Berhad nominee joins the board of Camco International Limited as a non-executive director. Payar Investments Ltd (subsidiary of Khazanah Nasional Berhad) is a 23.14% shareholder in Camco
Scott McGregor, Camco CEO, said:
"This year we have seen an acceleration in signing of new contracts mainly in the energy efficiency sector and a growth in our post 2012 portfolio. We view a favourable future for the carbon market in the medium and long term, although depressed current prices in the EU market will impact the company's near term performance we finish the year with a solid cash balance. The innovative assessment and monitoring services contract signed recently is testament to Camco's ability to continue to leverage value from our business even in the toughest trading conditions, whilst the recent action by the European Parliament gives further indications following Durban that the market is set to turn around in the medium term."
| EU-ETS Eligible Portfolio as of 31 December 2011 | |||
Predicted Tonnes (m)
| 2008-2012 | 2013-2020(1) | ||
Delivered or Title Sold | To Deliver and Title Retained | Total | To Deliver | |
In specie | 12.8 | 9.5(2) | 22.3 | 39.9(3) |
Revenue Share | 9.5 | 13.6 | 23.1 | 27.5 |
Camco has signed new contracts with Anhui Conch Cement Company Limited (Conch), the largest cement producer in China. The contracts will see Camco provide assessment and monitoring services for 37 individual energy efficiency projects at cement production facilities owned by Conch.
As a result of the 2011 carbon price reduction at year end, a fair value revision of accrued income will be required in the Company's 2011 financial statements. 2010 accrued income not subject to a fixed price contact was fair valued at a carbon price range of €11.16-11.39 depending on the forecast year of delivery; the 2011 year end price range is expected to be €6.20-6.94(4). The written down value is expected to be sufficient to cover accrued costs and payments on account received. Improvements in the carbon price post year end would see this fair value accrued income adjustment reversed.
On 20 December 2011, an EU committee backed amendments to the EU draft energy efficiency directive significantly restricting the supply of allowances into later phases of its ETS. This move has been heralded as a signal that the need for urgent repair of the market has been recognised with carbon prices at a historic low, and further proposals, including setting a reserve price, are under discussion. Initial price increases in allowances of up to 30% were seen in response to this news.
Enquiries:
Camco | +44 (0) 207 121 6100 |
Scott McGregor, Chief Executive Officer | |
Shirona Partem, Investor Relations | |
Singer Capital Markets (Camco Nominated Adviser and Broker) |
+44 (0) 20 3205 7500 |
Jonathan Marren | |
Kreab Gavin Anderson (Investor Relations Advisor) | +44 (0) 20 7074 1842 |
Ken Cronin | |
Citigate Dewe Rogerson (PR Advisor) | +44 (0) 20 7638 9571 |
Chris Gardner / Malcolm Robertson |
Foot notes:
1) Camco's projects all generate "green CERs" and don't include industrial gas projects. Green CERs can be sold into the EU-ETS phase III from 2013, New Zealand and Australian emission trading schemes. For the post-2012 portfolio Camco receives mostly a percentage share of carbon or proceeds from the in-specie portfolio and cash share respectively, this structure provides value at a range of carbon prices. This post -2012 portfolio differs specifically when compared to the pre-2012 portfolio of which the company takes ownership of 100% of the in-specie tonnes for a purchase price.
2) Camco has agreed sales for a further 3.1 million of these credits but will transfer title and receive payment upon delivery.
3) A number of contracts were reclassified from in specie to revenue share due to contractual arrangements. In addition to contracts for risk adjusted 39.9 million tonnes, Camco holds contractual rights of up to a further risked 34.2 million tonnes (30 June 2011: 46.6 million). A number of these were also reclassified as revenue share contracts due to contractual arrangements.
4) These ranges are based on the ECX CER index 3 month simple moving average, used by Camco to fair value carbon contracts in its financial statements, and apply to emissions reductions generated before 31 December 2012.
Notes to editors:
About Camco
Camco International Limited (Camco, AIM: CAO) is a global developer of clean energy projects and solutions to reduce greenhouse gas emissions with operations in the US, the UK, China, Africa, Russia and SEA.
Camco has a 20-year track record in project development, technical delivery and policy development, working with local industry, multinational companies, governments and regulatory bodies.
The Carbon Project Development business has created one of the largest emission reductions portfolios and has structured ground breaking and innovative arrangements for the sale and delivery of emission reductions to compliance and voluntary buyers.
Camco's Clean Energy Project Development and Investment teams collaborate with industry, project developers, equipment providers and investor groups to create emissions-to-energy projects and maximise sustainable energy production across a range of industries; including agricultural methane, industrial energy efficiency, coal mine methane, municipal solid waste, biomass and landfill gas.
The Energy and Carbon Advisory teams provide strategic, commercial and technical expertise accrued over two decades to deliver low carbon energy and sustainable development solutions.
www.camcoglobal.com
Additional notes
Portfolio as of 31 December 2011
Please note this data has been adjusted to reflect projects transferred to the Camco Southeast Asia JV as at 30 Sept 10 of predicted Pre 2012 in specie 0.3 and revenue share 0.1 million tonnes, and Post 2012 in specie 0.9 and revenue share 2.8 million tonnes.
Progress through stage | 2008-2012 | |||
31-Dec-11 | 30-Jun-11 | 31-Dec-11 | 30-Jun-11 | |
PDD Volume | PDD Volume | Predicted Volume | Predicted Volume | |
(m tonnes) | (m tonnes) | (m tonnes) | (m tonnes) | |
Projects under management | ||||
Contracted | 121.8 | 126.8 | 73.0 | 77.8 |
Registered | 107.9 | 104.4 | 67.1 | 65.0 |
Issued | 29.8 | 22.1 | 29.8 | 22.1 |
In specie portfolio | ||||
Contracted | 44.9 | 48.2 | 22.3 | 26.6 |
Registered | 37.4 | 36.2 | 19.8 | 19.2 |
Issued | 5.7 | 4.1 | 5.7 | 4.1 |
Revenue share portfolio | ||||
Contracted | 33.6 | 33.7 | 23.1 | 22.5 |
Registered | 32.9 | 32.5 | 22.6 | 21.9 |
Issued | 9.2 | 8.5 | 9.2 | 8.5 |
Projects contracted | 2012-2020 | |||
31-Dec-11 | 30-Jun-11 | 31-Dec-11 | 30-Jun-11 | |
PDD Volume | PDD Volume | Predicted Volume | Predicted Volume | |
(m tonnes) | (m tonnes) | (m tonnes) | (m tonnes) | |
Projects under management | 159.9 | 156.6 | 119.9 | 120.5 |
In specie portfolio | 74.1 | 65.1 | 39.9 | 41.5 |
Revenue Share | 30.3 | 0.4 | 27.5 | 0.4 |
In this trading update, both Project Design Document (PDD) volumes and the Company's own estimates of delivery (risk adjusted tonnes) are disclosed with the intention of providing further transparency and guidance on the Company's assets. The following definitions apply to the portfolio numbers provided in the tables above:
PDD Volume - Prior to validation or determination, PDD numbers reflect Camco's anticipated project delivery.
Risk adjusted Volumes - Risk adjusted delivery estimates reflecting known and anticipated regulatory, registration, verification, delay, operating and commercial risks across projects in Camco's portfolio
Progress through stage -Represent CDM (Clean Development Mechanism) stage of development of the project or equivalent for JI (Joint Implementation) and VER (Voluntary Emission Reduction) projects
Registered - CERs, ERUs and VERs are registered under the different schemes.
Issued - CERs, ERUs and VERs delivered and issued
Projects Under Management - CERs, ERUs and VERs from all projects that Camco develops for its clients.
Tonnes to Camco's Account - CERs and ERUs Camco receives to its account for services performed or tonnes Camco earns commission revenue on.
In Specie - CERs and ERUs Camco receives to its account for services performed. Camco's in specie portfolio excludes VERs and includes only tonnes already delivered and to be delivered during the first Kyoto period which ends in 2012.
Revenue Share - Certified emission reductions Camco receives commission revenue for services when delivered.
CERs - Certified Emission Reduction Units that have been generated via the Clean Development Mechanism (CDM) under Article 12 of the Kyoto Protocol.
ERUs - Emission Reduction Units that have been generated via Joint Implementation (JI) under Article 6 of the Kyoto Protocol.
EU-ETS - European Emission Trading Scheme