5 Jan 2009 07:00
5 January 2009
Camco International Limited (the Company)
Trading update
Camco International Limited (Camco), a leading climate change business in the growing carbon and sustainable development markets provides the following trading update for the year to 31 December 2008, and announces that it intends to release its results for the year to 31 December 2008 on 5 March 2009.
In the year to 31 December 2008, Camco has broadened its business offering from being a developer and aggregator of project-based carbon credits to being a full-service climate change business with new and innovative services to our clients.
The Camco carbon portfolio has matured allowing the Company to disclose a fully risked delivery forecast based on current contracted projects. This forecast shows Camco's progress towards its target of 127m tonnes for the first Kyoto compliance period.
Consequently in this trading update both adjusted Project Design Document (PDD) volumes and the Company's risked estimate of delivery (Risked tonnes) are disclosed with the intention of providing further transparency and guidance on the Company's assets.
Highlights for the year to 31 December 2008
Camco's has made significant progress towards its target of delivering 127m tonnes for the first Kyoto compliance period. The current portfolio is a fully risked delivery of 100.1m tonnes towards the target of 127m. The adjusted PDD amount for these projects is 155.3m versus 155.9m at the interim results as at 31 August 2008;
As at 31 December 2008 Camco holds a risked "in specie" portfolio of 30.7m tonnes and cash share contracts of 17.2m from which Camco receives an average 20% commission from proceeds;
During the year Camco has completed a structured forward sale of 5.8m tonnes with an upfront payment of €15m. The company has deferred the second carbon asset portfolio sale previously planned for 2008;
59% of CER portfolio now registered (8.7m tonnes since 31 Aug 08);
Issuance of 5.5m tonnes to date (1.4m CERs issued since 31 Aug 08);
Sale of Dallas Clean Energy landfill gas recovery facility in Dallas Texas for total cash consideration of US$19.1 million;
Acquisition of Clearworld Energy Ventures and 49% minority interest of ESD Sinosphere in China; and
Granting of planning approval for the Maerdy windfarm in South Wales, United Kingdom.
Jeff Kenna Camco CEO said
"Camco has made good progress this year on our carbon portfolio with a further 31.9 m tonnes by PDD volume registered. In 2009 we will focus our efforts on origination and registration of our portfolio to ensure delivery of our target of 127m tonnes."
In the announcement of 28 August 2008 regarding the successful auction of a portfolio of 5.8m CERs, the Company indicated that it also intended to place a second smaller portfolio to a group of preferred buyers. It had been originally intended that this would have been completed by 31 December 2008. Given the quality of the Camco carbon credits portfolio and the strong interest from buyers, the company considered that a second portfolio sale late in 2008 was not the best course of action. We will continue to pursue the portfolio sale early in 2009.
As a result of this delay and the lower than anticipated issuance of carbon credits for 2008 this has reduced Camco's expected carbon revenues for the period to 31 December 2008.
In addition, as anticipated in the interims, market conditions for the Consulting services business have deteriorated during the second half, particularly from the property sector, and this is expected to lead to a small loss for the Consulting services business for the full year period.
The changes from both the Carbon and Consulting businesses will result in a reduction of €6 million in expected revenues and an associated reduction in expected net income.
Notwithstanding the above, Camco as a whole does still anticipate achieving an overall maiden pre tax profit for the full year to 31 December 2008.
The Company's approximate cash balance at 26th December 2008 was €26.5 million.
Carbon Portfolio for the period to 31 December 2008
Camco intends to deliver 127m tonnes during the first Kyoto compliance period ending 31 December 2012. The 127m tonnes portfolio target refers to projects under management from which Camco receives either cash share or carbon share. Developments in the portfolio during 2008 include:
Registrations of a further 31.9m tonnes by PDD volume (8.7m tonnes since 31 August 08);
Issuance of a further 2.8m tonnes of credits (1.4m CERs issued since 31 August 08);
Development of a strong commercialisation division resulting in the execution of a structured forward sale of 5.8m tonnes with an upfront payment of €15m. The commercialisation division has subsequently completed successful auctions of specific projects based in Russia and China;
Conversion of some cash share to carbon share;
Adoption of a more prudent risked approach to our portfolio forecasts which is appropriate given the maturity of the portfolio and conditions prevailing in key markets; and
Camco again voted "Best Project Developer 2008" by Point Carbon.
In this trading update both adjusted Project Design Document (Adjusted PDD) volumes and the Company's own estimates of delivery (Risked tonnes) are disclosed with the intention of providing further transparency and guidance on the Company's assets. The Company has applied the following definitions to the portfolio numbers provided in the tables below:
Adjusted PDD - This has been the methodology previously adopted by Camco in RNS disclosures. These estimates are PDD forecasts with adjustments downwards for known operational variances for some projects that had undergone a first verification. Projects contracted but assessed by Camco as currently unlikely to become operational are not included.
Risked - Fully risked delivery estimate reflecting known and anticipated regulatory, registration, verification, delay, operating and commercial risks across all projects in Camco's portfolio.
Table 1 - Overview of Camco's carbon credit revenue
| Risked | Adjusted PDD | Adjusted PDD | |
| Contract structure | 31 Dec 08 | 31 Dec 08 | 31 Aug 08 |
| (m tonnes) | (m tonnes)2 | (m tonnes) | |
| Carbon share | 76.3 | 122.6 | 107.5 |
| Carbon share held in specie 1 | 30.7 | 48.4 | 41.7 |
| Cash share | 17.2 | 26.0 | 37.5 |
| VERs | 6.6 | 6.7 | 8.2 |
1. Carbon share held in specie refers to the portion of the carbon credit portfolio over which Camco has an interest.
2. For projects prior to validation or determination which don't have official PDD forecasts, PDD numbers reflect Camco's anticipated PDD numbers
Table 2 - Summary of Camco's managed portfolio
| Risked | Adjusted PDD | Adjusted PDD | |
| Progress through stage1 | 31 Dec 08 | 31 Dec 08 | 31 Aug 08 |
| (m tonnes) | (m tonnes)3 | (m tonnes) | |
| Contracted | 100.1 | 155.3 | 155.9 |
| PDD complete | 77.4 | 123.2 | 109.3 |
| Host LoA | 56.9 | 94.6 | 82.1 |
| Validated | 50.8 | 83.4 | 77.1 |
| Submitted for registration | 46.1 | 76.6 | 72.0 |
| Registered | 40.4 | 67.7 | 41.7 |
| 1st verification2 | 16.1 | 22.1 | 16.4 |
| Issued | 5.5 | na | 4.1 |
| Financed | 81.9 | 122.2 | 127.8 |
| Under construction | 78.6 | 117.4 | 120.5 |
| Operational | 64.9 | 97.5 | 86.1 |
1. CDM stage or equivalent for JI and VER projects
2. Projects that have been through at least 1 verification process or equivalent
3. For projects prior to validation or determination which don't have official PDD forecasts, PDD numbers reflect Camco's anticipated PDD numbers
Table 3 - Additional information on Camco's portfolio
| Risked | % | |
| 31 Dec 08 | ||
| (m tonnes) | ||
| Gross portfolio breakdown (m tonnes) | ||
| CERs | 68.2 | 68% |
| ERUs | 25.3 | 25% |
| VERs | 6.6 | 7% |
| Total | 100.1 | 100% |
| Camco Portfolio and forward sales1 | ||
| Carbon share | 30.7 | |
| Carbon share forward sold | 4.4 | |
| VERs | 6.6 | |
| VERs forward sold | 2.1 | |
| Pricing Information | ||
| Average purchase price - in specie total (€) | 8.06 | |
| Average purchase price - in specie forward sold only (€) | 8.58 | |
| Net development margin - forward sales only(€m) 1, 2 | 48.6 |
1. For a small number of forward sales some percentage of Camco's sale price remain linked to market prices. For example, Camco may receive a percentage of the market price in addition to a guaranteed floor price
2. Based on a carbon credit price of €15 per tonne for those contracts which are linked to market prices. Refer footnote 1 above.
Consulting
Our consulting business has grown in 2008 but revenue is less than anticipated partly due to a downturn in services to the property sector. Carbon foot printing and carbon management has continued to grow with over 1000 carbon footprints completed now. Contracts for carbon management with 51 clients were awarded in 2008 with a gross profit of £1m.
Ventures
Our ventures division is creating new services for climate change mitigation that gives us the flexibility to grow and adapt to the dynamic, policy and regulation-driven markets.
Sales of Energy Desktop from our Bradshaw software business which provides consulting services to industrial clients have increased with 150 licences sold in 2008. We have now signed a reseller agreement for this product in the USA
In September 2008, Camco launched EPLabel Online as a government-approved online software tool to provide a low-cost, total-solution for Public Authorities who must comply with Display Energy Certificate (DEC) Regulations and for early-movers in the private sector.
Our focus has also been on low carbon project development and funds management. Developments in 2008. Successes included sale of Dallas Clean Energy for $19.1m cash and planning approval for Maerdy Wind farm
Outlook for 2009
We will originate further low carbon projects to meet our 127 m tonne target and focus on registration of our JI and CDM carbon portfolios. With an established team in the USA and a good pipeline, we anticipate progress on a building a portfolio of projects to meet compliance requirements under the planned cap and trade scheme. For the consultancy business, 2009 will be a year of consolidation due to the economic environment and focus will be on cost containment and revenue generation together with exploitation of synergies between divisions across the Group. Finally, for ventures we will focus on growing the fund management business in China and making small strategic investments in projects to support the carbon business.
Enquiries:
| The Camco Group | +44 (0)20 7121 6100 | ||
| Jeff Kenna, Chief Executive Officer | |||
| Scott McGregor, Chief Financial Officer | |||
| KBC Peel Hunt Ltd (Nominated Adviser and Broker) | +44 (0)20 7418 8900 | ||
| Jonathan Marren | |||
| David Anderson | |||
| Gavin Anderson | +44 (0)20 7554 1400 | ||
| Ken Cronin | |||
| Kate Hill | |||
| Janine Brewis | |||
| Daniela Stawinoga |
Notes to editors:
About Camco
The Camco Group is a leading climate change business in the growing carbon and sustainable energy markets. We offer a full range of carbon-related services to public and private organisations worldwide. The Group has a 20-year track record and manages one of the world's largest carbon credit portfolios.
The Group consists of three business segments:
The Camco carbon business is a leading project developer with one of the world's largest carbon credit portfolios. We partner with companies to identify, develop manage and commercialise projects that reduce greenhouse gas emissions, and then arrange the sale and delivery of carbon credits to international compliance buyers and into the voluntary market.
The consulting business consists of Bradshaw, ECCM, ESD and ESD Sinosphere. It combines specialist technical, strategic and financial expertise and experience accrued over two decades to deliver a sustainable low carbon society. We are positioned to work with our clients to turn climate change liabilities into economic, social and environmental assets.
Camco Ventures works with project and technology developers, early stage businesses and investor Groups to invest and commercialise climate change mitigation technologies, projects and services.