RED.L Regulatory News (RED)

7 Jan 2008 07:01

Camco International Ltd07 January 2008 Camco International Limited Trading update Camco International Limited ("Camco"), a pioneering business in the sustainableenergy and low carbon markets, is pleased to provide a 31 December 2007 year-endtrading update, and announces that it intends to release its results for theyear to 31 December 2007 on 6 March 2008. The Board and Management of Camco are pleased with the strong performanceachieved in the second half of the year and expect the results to show aposition broadly in line with management expectations. Highlights •Created one of the world's largest vertically integrated climate change groups with the acquisition of ESD •Company has now issued/verified to date 2.7m tonnes, comprising 0.8m CERs and 1.9m VERs •As at 31 December 2007 reported gross portfolio was 149.3m tonnes, including new contracts for 9.8m since 31 October 2007 €38% of portfolio validated (+ 22% since 31 Oct 07) €30% of portfolio operational (+ 59% since 31 Oct 07) €47% of portfolio commercialised under sell-side ERPAs (+ 41% since Oct 07). •Camco's "in specie" tonnes now total 37.3m •Since admission to AIM, 35.3m tonnes has been removed from the reported gross portfolio (5.5m since 31 October 2007) due to Camco's prudent approach to portfolio management •This year, Camco has been awarded both "Best Project Developer 2007" (Point Carbon) and "Carbon Transaction of the Year" (Environmental Finance) •Consultancy revenue continues to grow with strong synergies for the carbon credits business •Acquisition of 17-year lease at the McCommas Bluff landfill site provides the anchor asset for the development of the Climate Leaders Joint Venture Jeff Kenna CEO said, "Business development during the last quarter of 2007 was strong and we areagain pleased with the headline growth in the reported contracted portfolio. Weare confident the company is on track with its current business plan (which isconsistent with its AIM Admission business plan) to deliver at least 127m carboncredits during the first Phase of the Kyoto commitment period. We are alsoseeing good synergies from the different parts of the business includingexcellent progress in North America. In 2008 we will progress our carbon portfolio through the registration process,sell forward our own credits and thereby secure revenues for the next 5 years.We will develop our carbon partnership business model under which we offer acomplete carbon management service for our clients ranging from carbonfoot-printing, carbon management, project development and creditcommercialisation. We are projecting strong growth in our consulting revenuesnext year and further strong synergies across the business." The carbon credit (emission reductions) business Progress since 31 December 2006 has been particularly strong. We are pleased toannounce a net 45% increase in the overall size of the portfolio from 102.9m to149.3m. Since admission to AIM, Camco has been reporting to the market prudently. Wetake a conservative position on projects based on their early performance - asthey mature delivery risk reduces and our confidence in the projections to 2012increases. As projects move towards operation and the end of the regulatoryprocess Camco adjusts its reported contracted portfolio as more certainty abouta project's potential delivery is gained (Camco has been doing so since October2006). The company's business plan is to contract 200m carbon credits and deliver 127mtonnes during the first Phase of the Kyoto commitment period. To date thecompany has contracted 184.6m carbon credits and made adjustments to theportfolio of 35.3m to provide a net reported gross portfolio as at 31 December2007 of 149.3m. The company is confident it is on track to deliver at least 127mduring the first Phase of the Kyoto period. The reported contracted portfolio of 149.3m tonnes comprises compliance credits(CERs and ERUs) and voluntary market offsets (VERs). The contracted portfolioincludes 8.3m VERs. The 141.0m compliance grade credits (i.e. excluding VERs)within the portfolio are contracted either on a "cash share" or "carbon share"basis. Carbon share contracts total 101.9m tonnes of which Camco's "in specie" amountis 37.3m 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€7.25/tonne. Cash share contracts total 39.1m tonnes. Under these contracts, Camco does notphysically receive any carbon credits but instead earns a commission or share ofthe revenue from carbon credit sales. Sell-side ERPAs are now in place for 69.7m tonnes. 53 m of these tonnes areunder ERPAs that Camco has negotiated between its clients and 3rd party buyers.16.7m tonnes are under direct ERPAs with Camco (and which form part of its "inspecie" tonnes). The progress of these projects through the regulatory and construction processis set out in the table below. Progress through stage* (cumulative): 31 Dec 07 31 Oct 07 31 Dec 06 Contracted 149.3m 145.0m 102.9mPDD complete 107.0m 103.1m 78.0mHost LoA 88.8m 78.2m 43.0mValidated 56.6m 46.3m** 34.1mSubmitted for registration 41.8m 41.7m 2.8mRegistered 30.2m 30.1m 2.8m1st verification*** 12.3m 11.8m 2.3m Financed 126.8m 118.5m 43.1mUnder construction 98.6m 94.8m 42.9mOperational 45.3m 28.5m 5.5m Sell-side ERPA 69.7m 49.4m 35.8m Issued/Verified 2.7m n/a 0.6m * Kyoto stage or for VERs equivalent stage ** 31 October 2007, Validated tonnes amended *** Projects that have been through at least 1 verification process orequivalent The Russia and China contracted portfolios have developed well during 2007, andwe have signed our first deals in North America, South East Asia and theUkraine. The Camco portfolio is split across the following geographies: Regional analysis 31 Dec 07 31 Dec 06 Asia 110.3m 79.0mERMEA* 37.6m 23.9mNorth America 1.4m - *Europe, Russia, Middle East and Africa The consulting practice With over 230 new consultancy contracts in the UK, USA, Africa and China, growthin 2007 was exceptionally strong. This included repeat business and a number ofnew corporate clients. Growth sectors were carbon management and sustainableproperty developments. ESD has undertaken carbon management reviews for over 150local authorities, NHS trusts and Universities in the UK. The Group continues to win innovating work in the sector; for example ESD iscurrently working for the Carbon Trust to develop a new publicly availablestandard for the carbon labeling of products (see www.carbon-label.co.uk). Theconsulting practice has strong synergies with the carbon credits business. Thisyear synergies include carbon foot-printing in the USA, VER projects in Africaand the Daxu stoves development project in China which has the potential togenerate 38m credits (not currently reported in Camco's contracted portfolio). Camco Ventures Progress was strong with Camco's strategy of a vertically integrated climatechange group offering services and products across the supply chain: Theacquisition of a 17-year lease at the McCommas Bluff landfill site provides theanchor asset for the development of the Climate Leaders Joint Venture; theVentures business is well positioned to contribute high quality land use creditsfrom "Earth Carbon" projects again demonstrating the synergies available acrossthe Group; Bradshaw's Energy Desktop software has now reached 140 installationsin the UK and USA. Enquiries: The Camco Group +44 (0)20 7121 6100Jeff Kenna, Chief Executive OfficerScott McGregor, Chief Financial Officer KBC Peel Hunt Ltd (Nominated Adviser and Broker) +44 (0)20 7418 8900Jonathan MarrenDavid Anderson Gavin Anderson +44 (0)20 7554 1400Ken CroninKate HillDaniela Stawinoga Notes to editors: The Camco Group is a pioneering business with an outstanding track record in thesustainable energy and low carbon markets. The Group consists of three businesssegments: 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 recentlyannounced Climate Leaders' Joint Venture. This information is provided by RNS The company news service from the London Stock Exchange