RED.L Regulatory News (RED)

Camco Clean Energy plc

2012 Final Results

Camco Clean Energy plc ("Camco Clean Energy" or the "Company") today announces its final results for the 12 months ended 31 December 2012.

Financial

·; Loss for the year of €23.2m (2011: €28.5m) reflecting the full impact of writing off almost all carbon balances

·; Revenue for the year (before Carbon price fair value adjustment) of €15.9m (2011: €10.2m. Carbon price fair value downwards adjustment of €9.2m (2011: €21.7m) resulting in Revenue for the year (after Carbon price fair value adjustment) of €6.7m (2011: (€11.5m)

·; Adjusted Net Cash(1) of €7.1m (2011: €8.0m)

Operational

·; 4.5 MW dairy biogas project in Idaho is now fully operational, delivered ahead of schedule and under budget and cash generative. This project is 100% owned by Camco Clean Energy.

·; Continued investment and focus on clean energy business with mature pipeline across the US with opportunities ready to be exploited. The development of these was delayed due to company funding constraints impacted by the collapse in carbon revenues

·; Retained a leading position in the Californian carbon market with projects across the key protocols of Livestock Gas Capture/Combustion, Ozone Depleting Substances ("ODS") and forestry

·; In Africa, further expanded activities in clean energy project development, putting together local teams and partnerships to build a pipeline of projects for development in 2013 and beyond

·; African consulting operation has continued to deliver high quality work accelerating the growth of distributed renewable energy in Africa and providing us with an excellent base from which to develop new projects

·; China and London teams have delivered significant value by protecting the company and our partners' best interests during the collapse of the carbon market. This work has and will continue to be critical for the survival of the company

·; Hibernation of Clean Development Business ("CDM") business to avoid further operating expenditure downside

·; Renewable Energy Dynamics Holdings Ltd ("REDT"), a joint venture, flow battery business has successfully piloted its first vanadium redox demonstration system and is at the commercialisation phase. Energy storage is essential for the success of renewable energy and as a low cost long duration recyclable solution. REDT has great potential both for sale to third parties also and integrated in our new projects

·; Cost reduction programme implemented, the full benefits of which will be seen in 2014

·; Post year end, Camco Clean Energy disposed of its entire interest in Camco South East Asia Limited for $6.01m in cash

·; Post year end and as separately announced today, Camco Clean Energy has agreed to acquire its next biogas to power facility in the US for up to $3.2m in cash subject to the completion of certain conditions. This facility has an installed capacity of 2.1 MW and is situated on a 10,000 plus head dairy less than 30 miles from the Company's existing operating 4.5 MW biogas facility

Commenting, Scott McGregor Chief Executive Officer said:

"In the absence of CDM carbon revenues the Company now is fully focused on generating sustainable cash returns from our diversified activities as quickly as possible. Our team have the skills, experience and track record to deliver success and I would personally like to thank all our staff for their dedicated efforts to ensure the survival, success and growth of Camco Clean Energy over the past year as well as our clients and shareholders for their strong support through this transition period. The delivery of our next biogas asset in the USA, separately announced today, demonstrates our path to delivering long term value."

Note (1) - Adjusted net cash position

The adjusted net cash position includes cash held in a debt reserve in relation to the US Biogas project loan of €1.03m (2011: €0.95m) which is not available to the Group for general working capital purposes. It does not include net cash held by Camco South East Asia Limited ("CSEA") as at 31 December 2011 and 2012 which Camco Clean Energy accounted for as a joint venture. Camco Clean Energy disposed of its interest in CSEA on 7 May 2013.

Enquiries:

Camco Clean Energy plc

Scott McGregor, Chief Executive Officer +44 (0) 207121 6100

Jonathan Marren, Chief Financial Officer

N+1 Singer (Nominated Adviser and Broker) +44 (0) 207 496 3000

Andrew Craig

Ben Wright

About Camco Clean Energy

Camco Clean Energy plc (AIM: CCE) is an experienced project developer working to develop, construct and operate projects that contribute to building a sustainable future.

With more than 20 years of successful project delivery we help clients in Asia, North America, Africa and Europe to implement clean energy and emission reduction solutions, reducing costs and maximising financial and environmental benefits. We have an outstanding track record in technical delivery and commercial expertise, working with local industry, multinational companies, governments and regulatory bodies.

Camco Clean Energy 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.

Chairman's Report

Phase II of the EU Emissions Trading Scheme ("EU-ETS") drew to a pained close in 2012. When Camco was admitted to AIM in 2006 it was with a small portfolio of projects for which it would provide the necessary technical expertise to enable them to deliver into this scheme. These projects promised to be a cheaper way for European utilities to meet their emissions targets, allowing them to offset against reductions in emerging markets under the UN Clean Development Mechanism ("CDM"). The other end of the bargain was that this brought these markets new emission reduction technologies and solutions. The Camco that entered 2013 has expanded well beyond this initial focus on CDM projects to provide a wide variety of services and products all targeted at reducing emissions and producing clean energy. Our change of name to Camco Clean Energy plc reflects this. It is no secret that the speed of this change was forced by the collapse of the market created by the EU-ETS, CDM and around which the Company was built.

And yet, stepping back from the immediate disappointment, one sees that in its aim of attracting investment and developing projects in those regions most in need of resources and most in need of change, the CDM programme has been a resounding success. It has achieved what would have been impossible with public and non-profit funding. Camco's partners in China, South East Asia and Russia have been leaders within their regions. The result has been techniques and technologies we helped introduce becoming industry standards in sectors ranging from cement to coal mining to power. Similarly the EU-ETS was revolutionary in introducing a price on emissions to change the behaviour of organisations. This represents a quantum leap in disseminating processes to reduce emissions and creating new businesses to tackle what is a global problem.

However, as great as this success is, it has been met with a failure of equal proportions. So what hasn't worked? The key fault in these systems has been an inability to adequately constrain supply and stimulate demand. Scarcity is an essential economic attribute without which prices tend towards zero and so a market fails. Global recession and the deepening of the Eurozone crisis have resulted in lower emissions through lower economic output and not through the intended efficiency improvements. Despite this allowances under the EU-ETS continue to be issued well in excess of trending emissions in Europe, thus eroding demand. Whilst Phase II allowances are trading at record lows, the market for Certified Emission Reduction units ("CERs") generated under the CDM has fared even worse because of a further fault in the bridge between the two systems: import limits of CERs into the EU-ETS are proportional to emissions and have been far too low to accommodate the supply.

The reason why these systems stalled is due to the policymakers who failed to maintain the adequate balance of supply and demand required to create a functional carbon price that acts both as a deterrent to emitters and an incentive to investors. As a consequence private market participants, including our own shareholders, have been subject to a complete market collapse and loss of investment.

Design faults are to be expected in any new system, it is unfortunate they still await correction here. What is most promising for future schemes is that the key concerns at the outset of the EU-ETS and the CDM were the environmental integrity of projects and ability to implement them, the application of technology, the impact on long-term emissions in both Europe and emerging markets, and the ability to corral private sector finance. In all these respects they have exceeded well beyond expectations.

As one door closes, another opens, and when I look to California where the compliance market commenced at the start of 2013, it is with the hope that grave lessons have been learned. Certainly the setting of a floor price on allowances and rigorous restrictions on eligible protocols for producing offsets are steps in the right direction. Camco has already established itself here as a market leader and will now seek to monetise valuable contracts. Nevertheless our new clean energy project business will provide returns based on stable long-term annuities, from gas and electricity power purchase agreements that are not reliant on what have proved so far to be extremely volatile and unpredictable offset markets. This will give the Company a more secure future whilst broadening the positive impact we can have on emissions.

Jeffrey Kenna

Chairman

26 June 2013

Chief Executive Officer's Report

The external market collapse of the CER price by 96% in 2012 has dominated Camco's financial performance for the year, eliminating revenue from what had been our core business. Despite this the Company continued to service its clients and deliver value wherever possible, maintaining its reputation and relationships. We successfully submitted all our clients' CDM projects as scheduled before the year-end EU deadline and the majority have now passed through the UN bottleneck and are registered. Should the market revive itself this will provide our clients and the Company with good value.

The last couple of years have been turbulent times for project developers with the carbon market collapsing in two broad stages. The first from mid-2011 through to early 2012 led to a CER price that stabilised in the range of €3-€5 amid expectations of policy reform. To address this the Company restructured the majority of its portfolio of carbon projects from fixed price contracts, with a weighted average purchase price of greater than €8, to commission based contracts. (Fixed price contracts were entered into at historic market price levels of €15-€25 and were a regulatory necessity at the time.) In 2012 Camco was one of only a handful of companies that successfully restructured the majority of its contracts into a sustainable cash generative portfolio.

Given this commercial success and the operational success of registering our projects, 2012 feels very much a story of what might have been. After a brief period of relative stability, the final stage of the collapse commenced and saw the price approach zero towards the end of 2012 as reforms stagnated and sentiment evaporated. With the costs of bringing CERs to market in excess of their sales revenue, we took further action and reached new agreements with our clients to hibernate projects until such time as they may prove economic to deliver again.

However, restructuring the portfolio was not the only measure taken during the first stage of the collapse. The need to diversify away from a reliance on the CDM market was already apparent then and we acted early to develop alternative sources of revenue that would leverage our existing skills and resources. This transition of the business model has required creating new products and services, entering new markets, and heavily reducing operating costs. Thorough selection criteria have been applied to build a pipeline of projects with the right profile of scalability and returns for the Company. Many businesses have proved incapable of such a transformational change with their core activity disappearing so rapidly. To address the issues that have arisen in our contracts and operations as a result of the collapse in the carbon price whilst creating a new business has been a herculean task.

Although a write-down of the carbon business again overshadows our results and our investment in projects will take time to deliver, I am very proud of what the team at Camco has achieved in the past year for the future benefit of the Company and its staff, clients and shareholders. The story of the carbon market this year was all too similar to the last but our position is now very different to what it was at the end of 2011. First and foremost, the foundations laid back then to establish the clean energy business have been firmly built upon and projects are now ready to commence. Secondly, we have now moved to hibernate our CDM business to avoid further downside. Thirdly, we are making very good progress in our cost reduction programme, the full benefits of which will be seen in 2014. Most carbon developers have not been able to diversify fast enough to build sustainable businesses and face a very difficult future. With what the Company has achieved in 2012 and the post balance sheet events in 2013, it is now in a strong position to return to growth and rebuild shareholder value.

Operational Review

I present the major operational highlights of 2012 below:

·; Our 4.5 MW dairy biogas project in Idaho is now fully operational, delivered ahead of schedule and under budget and cash generative. This project is 100% owned by Camco.

·; We have further developed our pipeline of similar biogas projects in North America ready for phased deployment starting in 2013. The development of these was delayed due to company funding constraints impacted by the collapse in carbon revenues, but finance is now in place to deploy our next project.

·; We have retained a leading position in the US carbon market with projects across the key protocols of dairy biogas, Ozone Depleting Substances ("ODS") and forestry.

·; In Africa we have further expanded our activities in clean energy project development, putting together local teams and partnerships to build a pipeline of projects for development in 2013.

·; Our African consulting operation has continued to deliver high quality work accelerating the growth of distributed renewable energy in Africa and providing us with an excellent base from which to develop new projects.

·; In China and London our teams have delivered significant value by protecting the company and our partners' best interests during the collapse of the carbon market. This work has and will continue to be critical for the survival of the company.

·; Camco South East Asia ("CSEA"), a joint venture, commenced construction of the Havys project, the largest Palm Oil Biogas project in Southeast Asia, which provided good value for our post balance sheet sale for $6m.

·; Renewable Energy Dynamics Holdings Ltd ("REDT"), a joint venture, flow battery business has successfully piloted its first vanadium redox demonstration system and is at the commercialisation phase. Energy storage is essential for the success of renewable energy and as a low cost long duration recyclable solution. REDT has great potential both for sale to third parties also and integrated in our new projects.

I would personally like to thank all our staff for their dedicated efforts to ensure the survival, success and growth of Camco Clean Energy as well as our clients and shareholders for their strong support through this transition period.

Outlook

We will steadfastly pursue the development of our clean energy project business in North America and Africa. This was constrained by financial resources in the early part of 2013 but following the sale of CSEA we have started to implement our plans.

The first half of 2013 continued to be tough for our CDM carbon business as we continued with the hibernation programme as swiftly as possible whilst protecting the Company and our clients. In the USA we are poised to deliver our first offset projects into the Californian scheme with a focus on securing value and hedging price risk.

The Company is well positioned in Africa with local teams, six offices and 25 years' regional experience enabling it to play a major part in the clean energy revolution currently underway across the continent. In 2012 Africa had the fastest growing renewable sector in the world and rapidly rising energy demand - coupled with poor energy security and a weak grid infrastructure this creates an ideal landscape for our projects to make a difference.

In North America the Company has built a strong development and operations team over the past few years to position itself as the leading biogas developer. With a high profile success in our Idaho project we have the credibility in the market with partners and financiers to now deploy the project pipeline.

Our team have the skills, experience and track record to deliver success. In the absence of CDM carbon revenues the Company now is fully focused on generating sustainable cash returns from our diversified activities as quickly as possible.

Scott McGregor

Chief Executive Officer

26 June 2013

Chief Financial Officer's Report

In our 2011 results, we noted a significant fair value adjustment and capitalised cost write-down at the year end to reflect the carbon price reduction for floating or unsold carbon contracts. This was due to a substantial fall in carbon prices during the second half of 2011 which had significantly decreased the fair value of contracts held in accrued income and the Carbon Development Contract ("CDC") assets work in progress on the balance sheet at the year end.

During the first half of 2012 the carbon price remained comparatively stable compared to the close of 2011 and at the time of releasing our 2012 interim results we were able to report a Discounted Gross Cash Flow amount of €39.4 million for the CER portfolio based on the carbon price forward curve as at 30 June 2012.

However, as has been widely publicised, in the second half of 2012 the carbon price suffered an almost complete collapse to the extent that the spot CER price had fallen 96% from €4.13 at the end of 2011 to €0.18 at the end of 2012 and as at the end of May 2013 is no longer exchange traded. Whilst the futures prices historically trade above these levels, these prices have also suffered with the December 2013 delivery price having fallen from €5.00 at the end of 2011 (based on the newest December 2013 contract) to €0.39 at the end of 2012 and €0.28 as at the end of May 2013.

At such low prices, for a significant number of contracts it is not economic for the projects to produce the carbon credits when taking into account costs such as verification and the Director's believe there is significant uncertainty as to whether a viable market will exist to monetise the Company's remaining portfolio in the future.

The Directors have therefore taken the view that they cannot reliably recognise value for carbon credits in the balance sheet at the year-end and have therefore taken the decision to write off the majority of outstanding positive balances.

Overall Group result

The impact of the write-off in carbon balance has led to the Group reporting an overall loss for the year of €23.3m from continuing operations (2011: €29.6m loss).

Revenue for the year (before Carbon price fair value adjustment) was €15.9m (2011: €10.2m). Of this amount, €10.8m can be attributed to Carbon activities (including one material transaction amounting to revenue of €5.8m) (2011: €8.5m) and €5.1m can be attributed to Project activities (2011: €1.7m). The negative carbon price fair value adjustment was €9.2m (2011: €21.7m downward).

Administrative costs in the year were €12.4m (2011: €11.8m). These costs include personnel costs of €6.3m (2011: €7.3m) but this excludes any such costs capitalised as carbon project costs (€0.4m in 2012 and €1.6m in 2011) in accordance with recognised accounting treatment and which are subsequently booked as a cost of sale to the income statement as revenue on the relevant project falls due to be recognised. Including such capitalised costs, total personnel costs fell €2.2m to €6.7m in 2012 from €8.9m in 2011. Other items within administrative costs included an increase in depreciation to €0.6m (2011: €0.3m) as the US Biogas started to be depreciated in the second half of the year, an impairment of €0.5m on project equipment, a small increase in professional costs to €1.7m (2011: €1.3m) and a small reduction in travel, marketing and general office costs to €2.0m (2011: €2.2m).

At the year end, the board impaired historic development costs and other carrying values of €2.5m (2011: €1.6m).

Throughout the year, the Group focused on reducing cash operating expenditure, this process accelerated during the last three months of the year and into 2013 as it became clear that net cash flow being generated by the carbon business was likely to fall to negligible levels as a result of the carbon price reduction. This process continues into 2013 and the Board are confident of achieving a significant reduction in cash operating expenditure in 2013 although a full period impact of these reductions will only be seen in the 2014 financial year.

The projects segment achieved success with one of the largest biogas projects in North America commencing operation in early 2012 and reaching the required power output in July onwards to benefit from the power rate set out in its power purchase agreement with the local utility and therefore generate meaningful revenue. This asset contributed €1.3m in revenue during 2012 (2011: Nil)

At the beginning of 2012, the Company sold its UK Advisory business to focus on its core segments. The initial consideration anticipated of £3.25m was reduced towards the end of the year by £0.44m as a result of an adjustment to reflect the carrying value of net assets disposed.

Carbon segment

The Group recognises revenue based on the fair value of the carbon credits to be received from contracts, once the development work on these projects is completed by the Group and the project is deemed "CDC operational", typically meaning as a minimum they are fully commissioned and registered with the relevant regulatory body. CDC operational projects are only a proportion of Camco's carbon portfolio; projects still in the development phase where the Company has secured the rights to receive future revenue streams are not recognised in revenue.

Accrued income is recognised for CDC operational projects. The balance contains:

·; Accrued income for contracts with fixed sale prices

·; Accrued income for contracts with floating sales prices or that are unsold

Accrued income on floating and unsold contracts is re-valued at each balance sheet date according to carbon market prices.

However, as stated above the CER carbon price fell significantly during the latter half of 2012 to the extent that the CER spot price had fallen 96% based on the closing price on 31 December 2012 compared to 31 December 2011. The CER forward curve had also fallen very significantly over the period.

The Directors have therefore taken the view that CER carbon market is no longer liquid and revenue cannot be reliably measured and as a result not recognised value for carbon credits in the balance sheet at the year end and have therefore taken the decision to write off the majority of balances.

As a result, the benefit of the successful work to submit the majority of projects for registration prior to the end of 2012 to ensure eligibility for Phase III of the EU ETS and provide cash flows through to 2020 is not seen in these results as no value has been attributed to this work.

The following table sets out the value of the net carbon balances as at 2012 and for the 2011 and 2010 prior years and the effect between years as those balances have been reduced following falls in the carbon price.

As at the end of 2012, the Carbon business had an effective net liability position of €4.9m having reduced from a positive value of €5.7m in 2011 and €29.6m in 2010. This therefore reduces the carrying value of carbon by €10.6m in 2012 and by €23.9m in 2011. The Directors continue to work diligently to reduce the net liability position.

In addition, a number of fixed price carbon purchase agreements are held in various entities across the Group. With the significant decline in the carbon price over the last 18 months, these fixed price contracts result in a current potential un-provided exposure across the Group of €20.7 million. This exposure, which is being experienced across the industry, arises where entities are required to purchase carbon credits under fixed price purchase agreements at a price that is higher than the current market price at which those entities can sell the carbon credits.

The potential exposure quoted assumes no revenue from carbon credits sales. Along with other companies in the market the Group has been actively working with counterparties to resolve these contracts at terms that are mutually beneficial to both parties; some discussions are ongoing and uncertainties remain on the terms to be agreed. Since 31 December 2011 the Group has successfully resolved 93 of its 107 fixed price contracts.

These resolved contracts had a potential exposure to the Group of €71.8 million; 14 contracts remain to be agreed. The directors consider they have made adequate provision in these accounts for the costs that are likely to be borne, however at this stage there can be no certainty that further costs may not arise.

Projects segment

As referred to earlier, the US biogas asset started generating meaningful revenue at the beginning of July 2012 when as planned it reached the required power output. Revenue for the year from this asset totalled $1.7m (€1.3m), the majority of which was earned solely in the second half of the year. It should be noted that we do expect to see seasonality in the revenue going forward with the second half of the year benefiting from the higher prices set out in the power purchase agreement. Operation and maintenance expenses for the year were $0.8m (€0.6m) and depreciation expense was $0.5m (€0.4m) the majority of which was booked in the second half of the year.

As at the end of 2012, the assets and liabilities associated with the US biogas assets were: property, plant and equipment of $19.6m (€14.9m), deferred income of $6.3m (€4.8m) relating to the grant of $6.4m (€5.2m) received during the year and which is now being amortised over the life of the asset, and secured loans of $15.3m (€11.6m).

Other activities within Projects includes clean energy project development activities as well as the consulting operations in Africa and non-carbon related US operations.

Cash and cash equivalents

At 31 December 2012, the Group had cash and cash equivalents of €11.1m (2011: €14.4m) with unsecured loans of €4.0m (2011: €3.9m). Adjusting for certain other items in 2011 (as set out below) gives an adjusted net cash position at the year-end of €7.1m (2011: €8.0m) as follows:

The adjusted net cash position includes cash held in a debt reserve in relation to the US Biogas project loan of €1.03m (2011: €0.95m) which is not available to the Group for general working capital purposes. It does not include net cash held by Camco South East Asia Limited ("CSEA") which Camco Clean Energy accounts for as a joint venture.

The key movements in cash during 2012 were: carbon receivables on deliveries in 2012 (inflow €26.7m), carbon payables on deliveries in 2012 (outflow €14.5m), working capital prepayments for carbon (outflow €3.2m), operating expenditure for continuing operations (outflow €9.4m), proceeds from the sale of the advisory business (inflow €3.9m), loan proceeds (inflow €0.6m), loan repayment (outflow €5.1m) in relation to US biogas project, grant receipt (inflow €5.2m) and capex items (outflow €1.1m). The cash reduction from recurring operating activities was €6.3m in the year.

On 7 May 2013 the Group sold its entire 60.1% interest in Camco South East Asia Limited for consideration of $6.01m in cash. The Group's interest in Camco South East Asia Limited had a book value of $6.01m as at 31 December 2012.

On 13 May 2013 the Group announced that is has agreed to issue 18,449,073 new ordinary shares to Payar Investments Ltd (a subsidiary of Khazanah Nasional Berhad ("Khazanah) at 1.138 cents per share (1.183 pence) raising €254,875 (£218,252).

Jonathan Marren

Chief Financial Officer

26 June 2013

Consolidated Statement of Financial Position

at 31 December 2012

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2012

Consolidated Statement of Cash Flow

for year ended 31 December 2012

Notes

1 Accounting policies

Camco Clean Energy plc (the "Company") is a public company incorporated in Jersey under the Companies (Jersey) Law 1991. The Company changed its name from Camco International Limited on 5 November 2012. The address of its registered office is Channel House, Green Street, St Helier, Jersey JE2 4UH. The consolidated financial statements of the Company for the year ended 31 December 2012 comprise of the Company, its subsidiaries and associates and jointly controlled entities (together the "Group"). The Company is admitted to the AIM, a market operated by London Stock Exchange Plc.

A Statement of compliance

The consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the European Union ("adopted IFRS").

The consolidated financial statements have been prepared in accordance with and in compliance with the Companies (Jersey) Law 1991 an amendment to which means separate parent company financial statements are now not required.

These consolidated financial statements were approved by the Board on 26 June 2013.

B Basis of preparation

The financial statements are presented in Euros, the functional currency of the Company, rounded to the nearest thousand Euros.

The preparation of financial statements in conformity with adopted IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The accounting policies set out below have been applied consistently in the year and presented in these consolidated financial statements. The accounting policies have been consistently applied across all Group entities for the purposes of producing these consolidated financial statements.

The financial statements have been prepared on the historical cost basis and on a going concern basis.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Financial Review. The financial position of the Group, its cash flows and liquidity position are described in the same review.

The Group has sufficient financial resources together with long-term relationships with a number of customers across different geographical areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully.

The Directors are satisfied that the Group has adequate resources to continue to operate for the foreseeable future. For this reason, they consider it appropriate for the financial statements to be prepared on a going concern basis.

C Accounting for Carbon Development Contracts ("CDCs")

The Group enters into CDCs with clients from which carbon credits are received. Carbon credits under the Kyoto Protocol, also known as Certified Emission Reductions ("CERs") or Emission Reduction Units ("ERUs") are generated through the highly regulated Carbon Development Mechanism ("CDM") and Joint Implementation ("JI") processes respectively. These follow a number of steps including the approval of the project methodology and monitoring procedures, project design, project approval by the Designated National Authority ("DNA"), project validation by a Designated Operational Entity or equivalent ("DOE"), project acceptance by the host country, registration, verification and certification by a DOE. Verification of carbon credit production normally takes place at least once a year during the crediting period. The Group works with the client at all stages of the process using proprietary knowledge and experience to negotiate this complex process. Carbon credits are also generated outside the Kyoto Protocol under voluntary or regional emission reduction schemes.

Revenue recognition on CDC consultancy services

The Group derives revenue from the provision of consultancy services to carbon project clients under CDCs. The Group receives payment for the services by either cash commission or non-cash carbon credit. Revenue from CDCs is only recognised once the Group's services to secure the production of carbon credits are significantly complete and receipt of the consideration, be it cash or carbon credits, can be forecast reliably. Revenue is recognised once a CDC is registered by a DOE (where payment is due to Camco irrespective of a CDC's registration this criteria will not apply) and Camco has provided significantly all of its services.

The timing of revenue collection is uncertain as carbon credits may be generated over subsequent years as they are issued. The amount and timing of commission or carbon credits to be received may be dependent upon the number of carbon credits received by the customers, which is determined by assessing the specific technical, contract and economic risks identified on the project.

Revenue is recognised at the fair value of the consideration receivable from the contracts, at which point accrued income is recognised. If a CDC will result in a probable net outflow of economic benefit from the Group then this amount will be recognised in accrued expenses. The fair value is the estimated net value of the carbon credits to be received, which is dependent upon the expected number to be delivered and the intrinsic value. If the expected number or value of the carbon credits subsequently changes an adjustment is made to the accrued income balance with an associated credit or debit taken to revenue. The unwinding of any financing element of accrued income is recognised as finance income or expense.

The CDCs are scheduled to deliver of carbon credits under Clean Development Mechanism and other regional schemes until at least 2020. The Group and Company has taken advantage of the own use exemption in relation to carbon credits and as such does not account for the contract under IAS 39 and 32.

Treatment of CDC costs

CDC costs are presented under current assets as work in progress. CDCs acquired by the Group are recorded initially at cost (or fair value if through business combination).

Subsequently, the directly attributable costs are added to the carrying amount of CDCs. These costs are only carried forward to the extent that they are expected to be recouped through the successful completion of the contracts. The costs comprise consultancy fees, license costs, technical work and directly attributable administrative costs. All other costs are expensed as incurred. CDC costs carried as work in progress are stated at the lower of cost and net realisable value.

Once the revenue recognition criteria on these contracts are met the CDC costs incurred on them are expensed in full. Accrued income is derecognised when cash is received either as commission or in respect of sales of carbon credits or rights to carbon credits receivable under the CDC consultancy contracts.

D Revenue recognition on other consultancy services

Advisory revenue from consultancy services provided is recognised in the income statement in proportion to the stage of completion of the consultancy contract. The stage of completion is assessed by reference to the overall contract value.

Project revenue consists of development fees, management service fees and revenue derived directly from projects where Camco holds an ownership interest.

E Intangible assets

Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss when incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.

Other intangible assets Other intangible assets are considered to have a finite life and are stated at cost less accumulated amortisation. Amortisation is charged to the income statement on a straight line basis over the expected life of the asset.

Subsequent expenditureSubsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

Carbon in specieThe Group has a number of carbon credit registry accounts used to receive carbon credits from its projects. These carbon credits are either transferred to buyers under existing sales contracts or, in the case of in specie consideration to the Group, sold for cash. Carbon credits held at the balance sheet date are recognised as an intangible asset and valued at the relevant market price or contract price.

F Property, plant and equipment

Computer and office equipmentComputer and office equipment is held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight line basis over the estimated useful life of three years.

Leasehold improvementsLeasehold improvements are held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight line basis over the remaining life of the lease.

Construction in Progressitems are held at historical cost and are depreciated from the date the asset is completed and ready for use.

Project plant and equipment Project plant and equipment is held at historical cost less accumulated depreciation and impairment losses. Depreciation is charged to the income statement on a straight line basis over the estimated useful life of the asset.

G Investments in subsidiaries

Investments in subsidiaries are carried at cost less provision for impairment.

H Impairment

The carrying amounts of the Group's property, plant and equipment, goodwill and other intangibles are reviewed at least annually to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. For assets that have an indefinite useful life the recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised immediately in the income statement. The recoverable amount is the greater of the fair value less cost to sell and the value in use. Value in use is calculated as the present value of estimated future cash flows discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

An impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount, only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined net of depreciation and amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill on acquisition is not reversed.

I Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the cash flow statement, cash and cash equivalents comprise cash and short-term deposits as defined above and other short-term highly liquid investments that are readily convertible into cash and are subject to insignificant risk of changes in value, net of bank overdrafts.

J Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

K Government Grant

In August 2012, a federal grant was received from the United States in connection with a project asset. The grant was recognised as deferred income at fair value as there was reasonable assurance that all conditions associated with the grant would be complied with. The revenue is then recognised in the profit and loss as project revenue on a systematic basis over the useful life of the asset.

The grant is reimbursable to the United States Department of Treasury if the asset is disposed of to a disqualified person or ceases to qualify as a specified energy project within five years from the date the property is placed in service.

2 Segmental reporting

Operating segments

The Group comprises of the following main reporting segments:

1. Carbon: The Carbon Project Development teams provide CDC consultancy services on carbon asset development, commercialisation and portfolio management.

2. Projects:The Clean Energy Project Development 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 teams also provide consultancy services with respect to the clean energy sector.

Inter segment transactions are carried out at arm's length.

Group also views its business geographically: EMEA (including Europe, Middle East, Africa and Russia), ASIA (China and South East Asia), and USA (mainly North America)

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of its customers, segment assets are based on the geographical location of the asset.

Geographical information

The Group derives carbon revenue from the provision of consultancy services to carbon clients under CDCs. With respect to this carbon revenue, the geographic analysis has been prepared based on the geographic location of the project that will generate the carbon credits. This location is not the geographic location of the carbon credit buyer and not necessarily where the services were performed.

3. Revenue

Due to the carbon price fall in 2012 the accrued income balance was reduced by €9.2m (2011: €21.7m) for floating price and unsold contracts; see Prepayments and Accrued Income note for further details.

4. Expenses and auditor's remuneration

Included in comprehensive income are the following:

*Depreciation for leased assets is for discontinued operations in 2011

**Depreciation for owned assets in 2011 includes a charge of €21,000 for discontinued operations

5 Staff numbers and costs

The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:

The aggregate payroll costs of continuing operations (excluding Advisory) were as follows:

6 Loss per share

Loss per share attributable to equity holders of the Company is calculated as follows:

7 Property, plant and equipment

Construction in progress ("CIP") The Group has invested in a dairy biogas project in North America which is designed to produce biogas from cow manure which fuels the generation of renewable electricity. In 2011 CIP was classified as two biogas project assets. The US Biogas project became fully operational in 2012 and was transferred to Project Plant and Equipment.

The amount of the US Biogas project borrowing costs capitalised during the period was €607,000 (2011: €450,000).

The remaining CIP is in relation to project equipment purchased in 2011 at a cost of €1,774,000. During 2012, the project equipment was tested for impairment based on its market value. The carrying value of the engines was greater than their market value and therefore an impairment charge of €528,000 has been recognised in 2012.