Interim Results
Camco International Ltd
24 September 2007
Camco International Limited
Interim Financial Report
The Camco Group, a pioneering business in the sustainable energy and low carbon
markets, is pleased to announce its Interim Financial results for the 6 months
to 30 June 2007.
Highlights as at 30 June 2007
Financial highlights:
•Revenue of €1.97m (30 June 2006, nil)
•Net loss after tax €5.02m including a non cash charge of €1.3m in respect
of share compensation (30 June 2006, net loss after tax was €1.89m)
•Lower than expected net cash outflow from operating activities of €4.78m
(30 June 2006, €1.65m)
•Net Cash position of €20.94m (30 June 2006, €28.59m)
The Camco Group:
•Camco International acquired ESD on 30 April 2007 for €13.78m. Bradshaw
Consulting was acquired and integrated into the ESD business shortly after.
•These acquisitions position the Camco Group to take advantage of
opportunities that arise across the whole low carbon market from strategic
planning through project development and carbon credit sales
•In July 2007, the Group placed 15m shares, raising €16.8m to fund
expansion into North America, the organic development of several new
business areas and the development of a carbon asset pool to maximise carbon
sales revenue.
The Camco carbon assets business as at 30 June 2007:
The table below highlights the progress Camco has made this year in developing
the contracted project portfolio.
Overall growth 30 June 2007 31 Dec 2006 Increase
(tonnes)
Gross contracted portfolio 127.1m 102.9m 24%
Camco tonnes in specie 34.4m 22.1m 56%
(contracted to Camco)
Operational performance 30 June 2007 31 Dec 2006 Increase
PDD complete 105.8m 77.9m 36%
LoA from Host Country 84.4m 43.0m 96%
Registered 35.0m 2.8m 1150%
First verification completed 16.0m 2.3m 596%
Construction progress 30 June 2007
Financed 117.0m
Under construction 47.3m
Constructed but not yet 12.4m
operational
Operational 33.8m
Commercial progress 30 June 2007 31 Dec 2006 Increase
ERPA 46.0m 35.8m 28%
Termsheet 43.6m 8.7m 401%
•The portfolio is one of the largest and most mature in the carbon market,
with credits scheduled for delivery from early in the Kyoto period.
•There has been a 24% increase in contracted portfolio since year end.
Registered projects have increased to 35.0m tonnes.
•Projects with financing in place now total 117.0m tonnes (92% of the
contracted portfolio). Projects operational, under construction or
constructed total 93.5 (73.6%).
•Camco holds the right or the option to acquire 34.4m carbon credits 'in
specie'. The average purchase price of these tonnes is €6-7.
•Camco secured the registration of the largest coal mine methane project.
This project also won the prestigious Environmental Finance 'Carbon Finance
Transaction of the Year' award.
•Camco was voted as 'Carbon Developer of the Year' by the carbon industry
The consultancy practice
•The consultancy practice continues to expand. Up to 30 June, new
contracts signed this year total €4.6m, including €0.9m for consultancy
support to the Carbon Trust's local authority carbon management programme.
This represents a 37% increase on the first 6 months of the previous year
•Half year turnover was €4.4m (only 2 months post acquisition from 30
April €1.5m contributes to the Camco group)
•Q2 saw the expansion of consulting services into China through ESD
Sinosphere. We are seeing good integration benefits with carbon asset
development and consulting teams working closely together in China, Africa
and North America.
Camco Ventures
•Camco and Tudor Investment Corporation are working together to create the
Climate Leaders' Joint Venture with an initial committed investment of
$100m, an equity investment joint venture to finance projects that reduce
greenhouse gas emissions and generate carbon credits.
•Camco Ventures is developing several new services including voluntary
credits from land use projects and carbon labelling of buildings
Business progress highlights from 30 June to 21 September 2007
Post 30 June 2007, the portfolio has continued to grow.
•The gross contracted portfolio is now 138.5m tonnes, up from 127.1m at 30
June 2007.
•Camco's tonnes in specie have also increased from 34.4m to 36.4m.
•Submitted for registration has increased by 8.6m tonnes, resulting in
registration and submitted for registration at 21 September totaling 43.9m
Consultancy sales have also increased with contracts signed totalling €7.4m.
Jeff Kenna, Chief Executive, commenting on the company's performance, said:
'This has been a good half-year where we have seen strong growth in our
portfolio. We have ensured that our portfolio remains of the highest quality, as
evidenced by the registration this year of two of the largest clean energy
projects.
The carbon market continues to mature. Industry pioneers such as Camco and
risk-seeking financial institutions are now being joined by traditional
investment banks - a sure sign that carbon is now firmly on the radar of large
corporates globally.'
- ENDS -
Contact details
For further information please contact:
Camco International Limited +44 (0) 20 7256 7979
Jeff Kenna, Chief Executive Officer
Scott McGregor, Chief Financial Officer
Press
Gavin Anderson
Ken Cronin/Kate Hill +44 (0) 20 7554 1400
NOMAD
KBC Peel Hunt Ltd +44 (0) 20 7418 8900
Jonathan Marren
David Anderson
Notes to editors
The Camco Group is a pioneering business with an outstanding track record in the
sustainable energy and low carbon markets. The Group consists of three business
segments:
The Camco carbon assets business is a leading project developer with one of the
world's largest carbon credit portfolios. We partner with companies to identify,
develop and manage 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 consultancy practice includes ESD, The Edinburgh Centre for Carbon
Management (ECCM), Bradshaw Consulting and ESD Sinosphere. The businesses
combine specialist technical, strategic and financial expertise and experience
accrued over two decades.
Camco Ventures works with project and technology developers, early stage
businesses and investor groups to commercialise climate change mitigation
technologies, projects and services Part of this business is the recently
announced Climate Leaders' Joint Venture.
Chairman and Chief Executive's statement
Strategy
As indicated in our report at the end of 2006 the Board felt that the business
had too narrow a focus on carbon development and monetisation and in too
focussed an arena (namely China and Russia). Whilst this business will bring
great value over the next few years as the projects mature and the carbon value
is realised in cash there is no clarity as to what will happen post 2012.
Accordingly we embarked on a horizontal development of the business resulting in
the acquisitions mentioned above. We believe that this now positions us to be
active in all aspects of carbon and other climate change activity on a global
basis. It diversifies our earnings base geographically, by product and service
and gives greater recurring income streams.
The ESD acquisition also deepens our historic involvement with the environment
by 20 years and brings to us one of the most experienced groups of people in
this field in the world. It clearly positions us for a more global business and
this is underlined by our two US initiatives, the opening of Camco offices in
Denver and Aspen, and the establishment (with one of our major shareholders
Tudor) of the Climate leaders' Joint Venture. The development of the ESD
Sinosphere business in China underlines our commitment to growing our already
large Chinese business.
We shall continue to look for appropriate acquisitions on a world wide basis
especially where they leverage our existing business and client base, as was the
case with Bradshaw Consulting
The key to acquisitions is successful integration and we would like to commend
the efforts made from top to bottom of the company to achieve this. It has added
many further burdens to our hard working and dedicated staff for which the board
is most grateful
Operational review
We have seen strong growth in our portfolio, from 103m tonnes at 2006 year end
to 127m tonnes by the end of June 2007. We have ensured that our portfolio
remains of the highest quality, as evidenced by the registration this year of
several CDM-funded investments, including two of the largest clean energy
projects.
We are also pleased that the Yangquan coal mine methane recovery and power
generation project has been voted Carbon Finance Transaction of the Year by
Environmental Finance Magazine. Camco has strong local presence in carbon
origination markets and proven expertise in managing the delivery of carbon cred
its. This has been critical to moving the projects through the regulatory
process, and in securing maximum value for investors. This has also been
recognised by our peers; Camco was voted Project Developer of the Year 2007 in
the Point Carbon Awards.'
Camco has secured the world's first successful validation of a Bio-diesel
project. This project is expected to produce 0.75m carbon credits and uses a
methodology developed by KWI - one of our founding partners.
The Group expanded operations by opening offices in North America and Malaysia.
At the same time we have increased our resources in China, Russia and South
Africa. China and Russia remain the principal source of business for the carbon
asset division.
Our carbon advisory business continues to expand and allows us to provide
additional value to our clients including the identification of greenhouse gas
mitigation projects. In South Africa, ESD is working for the National Energy
Regulator to look at policies to promote renewable electricity. Similar policy
projects are underway in Hungary, Bulgaria, Uganda and Tanzania. In the UK, our
work on carbon management and low carbon property developments continues to grow
and with it the potential for the origination of voluntary carbon credits.
The last quarter has seen the expansion of consulting services into China. In
China, Camco is working with the China Energy Research Institute to look at
market-based mechanisms to reduce energy consumption in buildings.
Camco, Tudor Investment Corporation and Gaian Capital have been working together
over the summer to develop the Climate Leaders' Joint Venture with an initial
committed investment of $100m, an equity investment joint venture to finance
projects that reduce greenhouse gas emissions and generate carbon credits. Split
between offices in London and New York, and with linkages to Camco and ESD teams
worldwide, the joint venture will be led by a dedicated team of experienced
professionals with expertise in low carbon clean energy project development,
investment and finance. The formation of the Climate Leaders' Joint Venture is
expected to be finalised this year.
In May ESD launched EPLABEL Online, a web site that allows the public sector to
measure their building's C02 performance. From April 2008, all large public
buildings in the EU must display an energy certificate to comply with the Energy
Performance in Buildings Directive. In the UK, buildings are responsible for
half of C02 emissions. Camco's joint venture EPES will offer an online
certification service to comply with the directive & help identify C02 reduction
projects.
Our work on VERs from land use projects using the Plan Vivo methodology is
expanding with contracts in Tanzania and Rwanda to look at the feasibility of
greenhouse gas abatement from land use changes. In Tanzania, the potential from
one region alone is 80m tonnes.
We continue to grow our presence in existing markets whilst expanding into new
key markets. Camco now has 21 offices across the world, and staff of around 200.
With JI regulations coming into effect in Russia, our Russian portfolio is
growing and we have contracted 27 projects, which are expected to produce in
excess of 22m tonnes. We now have 17 staff in our Russian offices in Moscow and
Arkhangelsk.
Our team in China now totals 43 and with over 60 projects in China, we
anticipate continued growth in the monitoring and verifications team. We have
also commenced operations in Kuala Lumpur, Malaysia. The Group has opened
offices in Denver and Aspen, Colorado. Our North America growth plan envisages
at least 1 additional office to be operational before year end.
Financial results
Revenue for the period was €1.97m. €1.46m derived from the consultancy business
and €0.16m from the Ventures business in the 2 months since they were acquired,
in addition to €0.35m from the carbon assets business. Camco takes a
conservative approach to revenue recognition and carbon revenue is from
contracts which have verified credits. The forecast revenues for the carbon
asset business in 2007 are weighted to the 2nd half of the year as more of our
CDM projects are constructed
Operating loss (excluding non-cash share compensation charge) is in line with
expectations for 30 June at €3.72m. Non-cash charges relating to share
compensation totalled €1.3m. Net Loss after Tax for 30 June was €5.02m. Camco
operates a project development business which requires an outlay of
administrative costs and working capital in the initial years of a project's
development, followed by revenues during the First Commitment Period of the
Kyoto Protocol, between 2008-2012.
Net cash outflows from operating activities to 30 June were €4.78m. This is
significantly less that forecast due to tighter Group cash flow management and
through performing more project development work internally rather than
outsourcing (a major synergy following the ESD acquisition).
Carbon Development Contract ('CDC') assets of €11.9m include €9.2m of assets
capitalised following acquisitions. Camco reassessed the carrying values of CDCs
and deferred consideration from the acquisition of MCF Finance and Consulting
and reduced them both by €1.5m. Camco maintains a conservative policy on cost
capitalisation and only capitalises costs directly attributable to its projects.
Camco had cash reserves of €20.94m at 30 June 2007. On 23 July 2007 Camco raised
funds through a placing of new shares, the proceeds of which were approximately
€16.8m. The Group is currently highly liquid, with significant cash resources
available to develop the business. Our treasury policy is to hold this reserve
in low risk cash deposits. The Group implemented a foreign exchange policy
during 2007 to hold cash reserves in currencies matching operating expenditure
in USD, EUR and GBP. The Group is funded almost entirely by equity which is
considered appropriate given the status of the market and political risks faced
by the business.
Outlook
The Group is well positioned to deliver revenues from the carbon credit
portfolio in 2008 and beyond.
Clarity surrounding the post 2012 Kyoto regulatory framework is still
developing, and we would of course welcome increased certainty on this. We are
seeing a strong political will to take action to develop a sustainable low
carbon society. This gives us confidence that the market will continue to
develop, and that the multi-disciplinary Camco Group will be well placed to take
advantage of the broad range of commercial opportunity that growth will offer.
Finally, we would like to thank our management team and staff across the world
for their continued hard work and dedication, to our founders for their support
and co-operation and finally to our clients and business partners.
David Potter Jeff Kenna
Chairman CEO
Camco International
24th September 2007
Consolidated income statement
for the 6 months to 30 June 2007
Acquisitions Continuing Total Continuing Continuing
6 months operations 6 months operations operations
6 months
Period from Period from
incorporation incorporation
to 30 June to 30 June to 30 June to 30 June
2007 2007 2007 2006 to 31 December 2006
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
Notes €'000 €'000 €'000 €'000 €'000
------------------------------------------------------------------------------------------------
Revenue 1,619 349 1,968 - 830
Cost of sales (197) (371) (568) - (673)
Gross
profit/(loss) 1,422 (22) 1,400 - 157
Administration
expenses (1,192) (4,285) (5,477) (1,818) (4,945)
Share-based
payments 3 (39) (1,260) (1,299) (313) (577)
Total
administration
expenses 2 (1,231) (5,545) (6,776) (2,131) (5,522)
Profit/(loss)
from
operations 191 (5,567) (5,376) (2,131) (5,365)
Finance income 4 - 605 605 238 1,450
Finance 4 (12) (164) (176) - (58)
expense
Loss from
equity accounted
investments (22) - (22) - -
Profit/(loss)
before tax 157 (5,126) (4,969) (1,893) (3,973)
Taxation - (52) (52) - (2)
Profit/(loss)
after tax 157 (5,178) (5,021) (1,893) (3,975)
Attributable
to:
Equity holders
of the Company 119 (5,178) (5,059) (1,893) (3,975)
Minority
interest 38 - 38 - -
157 (5,178) (5,021) (1,893) (3,975)
Basic and
diluted loss
per share in €
cents 5 0.09 (3.85) (3.76) (1.76) (3.42)
-----------------------------------------------------------------------------------------------
Consolidated statement of recognised income and expense
for the 6 months to 30 June 2007
6 months Period from Period from
incorporation incorporation
to 30 June 2007 to 30 June to 31 December
2006 2006
(unaudited) (unaudited) (audited)
Notes €'000 €'000 €'000
Loss for the
period (5,021) (1,893) (3,975)
Exchange differences on
translation of foreign
operations (4) - (22)
Total
recognised income and
expense for the period (5,025) (1,893) (3,997)
Analysed to:
Equity holders of the Company (5,063) (1,893) (3,997)
Minority
interest 38 - -
(5,025) (1,893) (3,997)
--------------------------------------------------------------------------------------------
Consolidated balance sheets
as at 30 June 2007
30 June 30 June 31 December
2007 2006 2006 *
(unaudited) (unaudited) (audited)
Notes €'000 €'000 €'000
Assets
Non-current assets
Property, plant and equipment 569 119 304
Goodwill on acquisition 6 14,957 - 1,156
Other intangible assets 6 1,646 - -
Carbon development contracts 7 11,929 8,823 10,751
Investments in equity
accounted 118 - -
investees and joint ventures
Total non-current assets 29,219 8,942 12,211
Current assets
Work in progress 1,693 - -
Trade and other receivables 4,660 360 1,608
Cash and cash equivalents 22,126 28,593 24,719
Total current assets 28,479 28,953 26,327
Total assets 57,698 37,895 38,538
--------------------------------------------------------------------------------
Liabilities
Current liabilities
Bank overdraft (1,185) - -
Trade and other payables (5,482) (1,448) (2,117)
Deferred consideration 9 (141) - -
Total current liabilities (6,808) (1,448) (2,117)
Non-current liabilities
Provisions (207) - (1,814)
Deferred tax liabilities (472) -
Deferred consideration 9 (2,388) -
Total non-current liabilities (3,067) - (1,814)
Total liabilities (9,875) (1,448) (3,931)
Net assets 47,823 36,447 34,607
------------------------------------------------------------------------------
Equity
Share capital 10 1,511 1,299 1,299
Share premium 11 54,747 36,909 36,909
Share-based payment reserve 11 1,838 313 577
Retained earnings 11 (9,034) (1,893) (3,975)
Translation reserve 11 (26) - (22)
Own shares 11 (1,281) (181) (181)
Total equity attributable to
shareholders of the Company 47,755 36,447 34,607
Minority interest 11 68 - -
Total equity 11 47,823 36,447 34,607
--------------------------------------------------------------------------------
* As restated (see note 7). The restatement is unaudited.
Consolidated cash flow statements
for the 6 months to 30 June 2007
----------------------------------------------
Continuing Continuing Continuing
operations operations operations
6 months Period from Period from
incorporation incorporation
30 June 30 June 2006 31 December
2007 2006
(unaudited) (unaudited) (audited)
Notes €'000 €'000 €'000
Cash flow from
operating activities
Revenue and
deferred income
received 2,626 - 313
Cash paid to
suppliers and
employees (7,939) (1,652) (6,231)
Interest
received 591 1 565
Interest paid (12) - -
Income tax paid (44) - (1)
Net cash flow
from operating
activities (4,778) (1,651) (5,354)
-------------------------------------------------------------------------------
Cash flow from
investing activities
Payment for
acquisition of
subsidiaries 8 (5,295) - (366)
Repayment of
loan notes
issued for
acquisition of
subsidiary - (3,150) (3,150)
Net
(overdraft)/ca
sh acquired
with
subsidiaries 8 (985) 247 248
Payment for
purchase of
carbon development
contracts - (896) (896)
Payment for
purchase of
property, plant and
equipment (126) (23) (330)
Net cash flow
from investing
activities (6,406) (3,822) (4,494)
------------------------------------------------------------------------------
Cash flow from
financing activities
Proceeds from
the issue of
loan notes - 5,000 5,000
Repayment of
loan notes - (5,000) (5,000)
Proceeds from
issuance of
shares 7,522 37,074 37,074
Costs of
raising
capital - (2,931) (3,069)
Net cash flow
from financing
activities 7,522 34,143 34,005
-------------------------------------------------------------------------------
Change in cash
and cash
equivalents
and bank
overdraft (3,662) 28,670 24,157
Opening cash
and cash
equivalents 24,719 - -
Effect of
exchange rate
fluctuations (116) (77) 562
Closing cash
and cash
equivalents
and bank
overdraft 20,941 28,593 24,719
-------------------------------------------------------------------------------
Notes to the financial statements
Significant accounting policies
Camco International Limited (the 'Company') is a public company incorporated in
Jersey under Companies (Jersey) Law. The address of its registered office is
Channel House, Green Street, St Helier, Jersey JE2 4UH. The consolidated interim
financial report of the Company for the period from 1 January 2007 to 30 June
2007 comprises the Company and its subsidiaries, associates and joint ventures
(together the 'Group').
Basis of preparation
The consolidated interim financial report for the six months ended 30 June 2007
have been prepared under applicable International Financial Reporting Standards
adopted by the European Union ('IFRS') which include International Accounting
Standards and interpretations issued by the International Accounting Standards
Board and its committees, which are expected to be endorsed by the European
Union. They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the consolidated
financial statements of the Group as at and for the year ended 31 December 2006.
This interim financial information has been prepared on the historical cost
basis, except for financial assets available for sale which are held at fair
value. The accounting policies applied are consistent with those adopted and
disclosed in the annual financial statements for the period ended 31 December
2006. The accounting polices have been consistently applied across all Group
entities for the purpose of producing this interim financial report.
The financial information included in this document does not comprise statutory
accounts within the meaning of Companies (Jersey) Law 1991. The comparative
figures, before the restatement (note 7), for the financial period ended 31
December 2006 are extracted from the statutory financial statements for that
period which have been filed with the Jersey Financial Services Commission and
on which the auditor gave an unqualified report.
Estimates
The preparation of the interim financial report in conformity with 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 estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
1 Segmental reporting
Business segments
Consulting Ventures Carbon Total Continuing Continuing
operations operations
6 months * 6 months * 6 months 6 months Period from Period from
incorporation incorporation
to 30 June to 30 June to 30 June to 30 June to 30 June to 31
2007 2007 2007 2007 2006 December 2006
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (audited)
€'000 €'000 €'000 €'000 €'000 €'000
Revenue 1,461 158 349 1,968 - 830
Cost of sales (197) - (371) (568) - (673)
Gross
profit/(loss) 1,264 158 (22) 1,400 - 157
Administration
expenses (852) (340) (4,285) (5,477) (1,818) (4,945)
Share-based
payments (39) - (1,260) (1,299) (313) (577)
Total
administration
expenses (891) (340) (5,545) (6,776) (2,131) (5,522)
Profit/(loss)
from
operations 373 (182) (5,567) (5,376) (2,131) (5,365)
-----------------------------------------------------------------------------------------------------------------------
Finance income - - 605 605 238 1,450
Finance expense (12) - (164) (176) - (58)
Loss from
equity
accounted
investments - (22) - (22) - -
Profit/(loss)
before tax 361 (204) (5,126) (4,969) (1,893) (3,973)
Taxation - - (52) (52) - (2)
Profit/(loss)
after tax 361 (204) (5,178) (5,021) (1,893) (3,975)
----------------------------------------------------------------------------------------------------------------------
Attributable to:
Equity holders
of the Company 323 (204) (5,178) (5,059) (1,893) (3,975)
Minority
interest 38 - - 38 - -
361 (204) (5,178) (5,021) (1,893) (3,975)
Basic and
diluted loss
per share in €
cents 0.24 (0.15) (3.84) (3.75) (1.76) (3.42)
* Consulting and Ventures businesses contributed income and expense for only 2
months of the period post acquisition of 30 April.
Segment information is presented in respect of the Group's business segments.
2 Administration expenses
Administration expenses are 30 June 30 June 31 December
analysed below.
2007 2006 2006
(unaudited) (unaudited) (audited)
€'000 €'000 €'000
Depreciation of property, plant and
equipment - owned assets 72 - 27
Share-based payments 1,299 313 577
Exceptional item - discretionary M&A - - 439
expense
Other administration expenses 5,405 1,818 4,479
Total administration expenses 6,776 2,131 5,522
Share Based Payments
The Group operates two share-based incentive plans for its employees, the Camco
International Limited 2006 Executive Share Plan (the 'Plan') and the Long-Term
Incentive Plan (the 'LTIP'). The charge for each scheme for the period is as
follows:
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
€'000 €'000 €'000
Camco International Limited 2006
Executive Share Plan 309 313 552
Long-Term Incentive Plan 282 - 25
Ordinary shares issued (note 12) 708 - -
1,299 313 577
Camco International Limited 2006 Executive Share Plan
Under the Plan the Company, or the trustee of the Camco International Limited
Employee Benefit Trust ('EBT'), can make awards of share options or conditional
rights to receive shares to selected Directors or key employees of the Company
or its subsidiaries.
Purpose The purpose of the Plan is to reward Directors and key employees for
services provided pre-admission to AIM and to retain their services over the
vesting period. The past services resulted in the successful flotation of the
Company on the AIM market.
Service condition The service condition stipulates that the Director or key
employee must provide continuous service over the vesting period.
The number of awards made to Directors and key employees of the Company and
amounts payable per share are set out below.
31 December 2006 30 June 2007
Awards Vesting in Awards Price
outstanding period outstanding payable
(per
share)
Number Number Number €
Directors 642,858 (450,001) 192,857 0.05
Key employees 3,015,000 (955,000) 2,060,000 0.01
3,657,858 (1,405,001) 2,252,857
Options were granted to individual Directors and key employees at various dates
between 10 February and 14 March 2006. No new options were granted in the period
and no options lapsed in the period. The options have an expiry date 10 years
following date of grant. All outstanding options will vest within 12 months.
The fair value of each share option at grant was determined based on the
Black-Scholes formula. The inputs to this model are the same as outlined in the
Group's last financial statements.
The Board has approved the LTIP under which Directors and employees are entitled
to equity-settled payment following vesting periods after 31 December 2008 and
2009 and upon certain market and non-market performance conditions being met for
the reporting periods ending 31 December 2008 and 2009.
Purpose The purpose of the LTIP is to incentivise Directors and employees to
ensure profit and share price performance targets are met over the vesting
periods, the first of which ends on 31 December 2008. The LTIP will align
management's objectives with those of the shareholders.
Market-based performance condition The LTIP will vest at different levels
depending on the Company's share price performance as compared with comparator
groups over the vesting period. The comparator groups consist of a basket of
SmallCap companies at the grant date (adjusted for mergers, demergers and
delistings during the performance period). The Company's percentage rank is its
rank in a comparator group divided by the number of companies in the group at
the end of the performance period expressed as a percentage. If the Company's
percentage rank is less than 50% none of the shares vest. At a percentage rank
of 50-70% half of the shares will vest, 70-85% three quarters of the shares will
vest and 85-100% all the shares will vest.
Non-market performance conditions The LTIP will vest at differing levels
depending on the achievement of profit targets over the vesting period.
Number of shares
Outstanding at
start of the
period 6,506,759
Granted 4,155,000
Forfeited (2,206,974)
Outstanding at end
of the period 8,454,785
2007
Weighted average
share price at
grant (€ cents) 82.9
Weighted average
fair value of
option (€ cents) 58.6
Exercise price
(€ cents) 1.0
Weighted average
life at grant
(years) 2.3
---------------------------------------------------------------
4 Net finance income 30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
€'000 €'000 €'000
Finance income
Interest on bank
deposits 605 238 860
Exchange movements - - 590
605 238 1,450
-
Finance expense
Unwinding of
discount (31) - (58)
Interest on
overdraft and
borrowings (12) - -
Exchange movements (133) - -
(176) - (58)
Net finance income 429 238 1,392
----------------------------------------------------------------
5 Loss per share
30 June 30 June 31 December
Loss per share 2007 2006 2006
attributable to
equity holders of (unaudited) (unaudited) (audited)
the Company is
calculated as
follows.
Cents Cents Cents
per share per share per share
Basic and diluted
loss per share (3.76) (1.76) (3.42)
€'000
Loss used in
calculation of
basic and diluted
loss per share (5,059) (1,893) (3,975)
Weighted average
number of shares
used in
calculation 134,381,030 107,603,000 116,307,918
--------------------------------------------------------------------------------
6 Goodwill on acquisition and other intangible assets
Goodwill on Other intangible Total
acquisition assets
2007 2007 2007
€'000 €'000 €'000
Cost at 31
December 2006 1,156 - 1,156
Acquisitions 13,801 1,685 15,486
Cost at 30 June 2007 14,957 1,685 16,642
Impairment & amortisation - - -
at 31 December 2006
Impairment &
amortisation
charge - (39) (39)
Impairment &
amortisation at 30
June 2007 - (39) (39)
Net book value at
31 December 2006 1,156 - 1,156
Net book value at
30 June 2007 14,957 1,646 16,603
----------------------------------------------------------------------------------------------
Goodwill in the period arose on the acquisition of ESD Partners Limited and its
subsidiaries and Bradshaw Consulting Limited (note 8).
7 Carbon development contracts
Total
2007
€'000
Cost at 31 December 2006 as previously state 12,389
Revision to provisional fair values at acquisition (1,498)
Cost at 31 December 2006 as restated 10,891
Carbon development contract costs capitalised 1,331
Cost at 30 June 2007 12,222
Utilisation and write-down at 31 December 2006 (140)
Write-down of CDC costs previously capitalised (153)
Utilisation and write-down at 30 June 2007 (293)
Net book value at 31 December 2006 as restated 10,751
Net book value at 30 June 2007 11,929
------------------------------------------------------------------------------
The write-down was recognised following a review of the carrying amounts of
CDCs. Where the discounted future cash flows on the contract were deemed
insufficient to support the recoverability of the asset a write-down to the
lower value was made.
8 Business combinations
On 30 April 2007, the Group acquired 100% of the share capital of ESD Partners
Ltd the holding company for the Energy for Sustainable Development Group of
companies (together 'ESD'). The group is primarily engaged in the provision of
consulting services in the field of climate change science and technology. The
total purchase consideration was €13,775,000.
Acquiree's book Provisional Provisional
values
fair value acquisition
adjustments amounts
Fair value of
identifiable net assets
of ESD at date of
acquisition €'000 €'000 €'000
Customer relationships
and contracts - 443 443
Property, plant and
equipment 201 - 201
Investments in equity
accounted investees and
joint ventures 138 - 138
Trade and other
receivables and other
assets 2,987 - 2,987
Overdraft (997) - (997)
Trade and other payables (1,750) - (1,750)
Provisions - (207) (207)
Deferred tax liability - (124) (124)
Minority interest reserve (30) - (30)
Net identifiable
assets/(liabilities)
acquired 549 112 661
-------------------------------------------------------------------------------
Net cash out flow to
acquire ESD €'000
Cash consideration 4,414
Acquisition costs 296
Overdraft acquired 997
Net cash out flow 5,707
Goodwill recognised on
acquisition €'000
Cash consideration 4,414
Shares issued 9,065
Deferred consideration at 30 -
April 2007
Acquisition costs 296
Total purchase
consideration 13,775
Less fair value of
identifiable net assets
acquired (661)
Goodwill recognised on
acquisition 13,114
The value placed by the Directors on ESD's personnel, history, reputation and
synergies gave rise to the goodwill on acquisition. ESD's personnel are the most
experienced and technically astute in the business. ESD's history dates back to
1989 when ESD commenced trading as one of the original environmental consultancy
firms. During this time, a reputation has been built that means ESD is now a
global market leader in the provision of low carbon energy and sustainable
development solutions. The main synergy identified is the access of the carbon
project development business to new clients and early access to new projects.
In the period from date of acquisition on 30 April to 30 June 2007, ESD recorded
a retained profit of €138,000. If ESD had been part of the Group from 1 January
2007 the recorded retained profit would have been €284,000 with additional
revenue of €2,976,000.
The total purchase consideration does not include any deferred consideration. At
this stage the Directors are of the opinion it is not possible to calculate a
reliable estimate of any deferred consideration which is dependant on the future
performance of the ESD Ventures business.
On 10 May 2007, the Group acquired 100% of the share capital of Bradshaw
Consulting Limited ('BCL'), a company engaged in the development of software to
monitor and analyse carbon usage in industrial processes, for a total purchase
consideration of €2,025,000.
Acquiree's book Fair value Acquisition
values adjustments amounts
Fair value of
identifiable
net assets of
BCL at date of
acquisition €'000 €'000 €'000
Software
products - 1,134 1,134
Customer
relationships
and contracts - 108 108
Property,
plant and
equipment 22 - 22
Cash and cash
equivalents 12 - 12
Trade and
other
receivables 212 - 212
Loan note 475 - 475
Trade and
other payables (277) - (277)
Deferred tax
liability - (348) (348)
Net
identifiable
assets/(liabil
ities)
acquired 444 894 1,338
Net cash out
flow to
acquire BCL €'000
Cash
consideration
paid 585
Cash and cash
equivalents
acquired (12)
Net cash out
flow 573
Goodwill
recognised on
acquisition €'000
Cash
consideration
paid 585
Shares issued 293
Foregiveness
of loan note 475
Deferred
consideration
at 10 May 2007 672
Total purchase
consideration 2,025
Less fair
value of
identifiable
net assets
acquired (1,338)
Goodwill
recognised on
acquisition 687
The value placed by the Directors on BCL's personnel and reputation gave rise to
the goodwill on acquisition. BCL's personnel designed and developed the software
products identified above. They have also built a strong reputation for
providing IT and engineering based cost reduction solutions for operational
integration in a wide range of industrial, manufacturing and commercial
businesses.
In the period from date of acquisition on 10 May to 30 June 2007, BCL recorded a
profit of €19,000. If BCL had been part of the Group from 1 January 2007 the
recorded profit would have been €152,000 with additional revenue of €382,000.
9 Deferred consideration
2007
€'000
Balance at 31 December 2006 as previously stated 3,312
Revision to original purchase consideration of MCF (1,498)
Balance at 31 December 2006 as restated * 1,814
Arising from acquisition in the period of BCL 672
Unwinding of discount 31
Exchange movements 12
Balance at 30 June 2007 2,529
* The restatement is unaudited.
During the period, the Directors revised the deferred consideration on the MCF
Finance and Consulting Co. Ltd ('MCF') acquisition following new information
related to the projects on which the deferred consideration is contingent. The
reassessment equates to a €1,498,000 reduction in the deferred consideration
amount. The unwinding of the discount has been charged within net finance income
(note 4). The deferred amount can be settled, at the Group's option, in cash or
by issuing shares in the Company. Settlement will occur after more than 1 year.
On 10 May 2007, the Group acquired 100% of the share capital of Bradshaw
Consulting Limited (note 8). The total purchase consideration included deferred
consideration with a discounted value of €672,000 at date of acquisition. The
unwinding of the discount has been charged within net finance income (note 4).
The deferred amount can be settled, at the Group's option, in cash or by issuing
shares in the Company. €141,000 is due for settlement within 1 year.
10 Issued capital
2007 2007
Number €'000
'000
Authorised
Ordinary shares of €0.01 1,250,000 12,500
Issued and fully paid
Ordinary shares of €0.01 (all classified in
shareholders' 151,073 1,511
funds)
11 Equity
2007 2007 2007 2007 2007 2007 2007 2007 2007
Share Share Share-based Retained Translation Own shares Total equity Minority Total equity
capital premium payment earnings reserve attributable interest
reserve to shareholders
of the Company
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at 31
December 2006 1,299 36,909 577 (3,975) (22) (181) 34,607 - 34,607
Total
recognised
income and
expense - - - (5,059) (4) - (5,063) 38 (5,025)
Share-based
payments - - 1,299 - - - 1,299 - 1,299
Issuance of
shares 212 17,838 32 - - (1,170) 16,912 - 16,912
Own shares - - (70) - - 70 - - -
Acquisition of
minority
interest - - - - - - - 30 30
Balance at 30
June 2007 1,511 54,747 1,838 (9,034) (26) (1,281) 47,755 68 47,823
-------------------------------------------------------------------------------------------------------------------
Interim financial
2006 2006 2006 2006 2006 2006 2006 2006 2006
Share Share Share-based Retained Translation Own shares Total equity Minority Total equity
capital premium payment earnings reserve attributable interest
reserve to shareholders
of the Company
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at
8 February 2006
- - - - - - - - -
Total
recognised
income and
expense - - - (1,893) - - (1,893) - (1,893)
Share-based
payments - - 313 - - - 313 - 313
Issuance
of shares 1,299 39,978 - - - - 41,277 - 41,277
Costs incurred
in the raising
of capital - (3,069) - - - - (3,069) - (3,069)
Own shares - - - - - (181) (181) - (181)
Balance at 30
June 2006 1,299 36,90 313 (1,893) - (181) 36,447 - 36,447
-------------------------------------------------------------------------------------------------------------------
2006 2006 2006 2006 2006 2006 2006 2006 2006
Share capital Share premium Share-based Retained Translation Own shares Total equity Minority Total
payment reserve earnings reserve attributable interest equity
to shareholders
of the company
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Balance at 8
February 2006
- - - - - - - - -
Total
recognised
income and
expense
- - - (3,975) (22) - (3,997) - (3,997)
Share-based
payments - - 577 - - - 577 - 577
Issuance of
shares 1,299 39,978 - - - - 41,277 - 41,277
Costs incurred
in the raising
of capital - (3,069) - - - - (3,069) - (3,069)
own shares - - - - - (181) (181) - (181)
Balance at 31
December 2006
1,299 36,909 577 (3,975) (22) (181) 34,607 - 34,607
-----------------------------------------------------------------------------------------------------------------
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. During the period the Company issued 21,174,629 ordinary shares for a
consideration of €18,050,000 settled in cash (€7,522,000), shares in
subsidiaries (€9,358,000) and shares transferred to the EBT (€1,170,000). This
transfer was made as part of the ESD acquisition to fund future and current
share schemes.
The shares held by the EBT had a market value of €4,630,000 at 30 June 2007.
12 Related parties
The Group has various related parties stemming from relationships with
shareholders, related business partners and key management personnel.
Acquisition of Energy for Sustainable Development Limited ('ESD')
Jeff Kenna is currently the Chief Executive Officer of the Company and was
formerly both a non-Executive Director of Company and CEO of ESD. As a result,
the acquisition was regarded as a related party transaction. The directors of
Company (with the exception of Jeff Kenna) consider, having consulted with KBC
Peel Hunt Ltd in its capacity as the Company's nominated adviser, that the terms
of the acquisition are fair and reasonable insofar as the Company's shareholders
are concerned.
Shareholders and related business partners
The founding shareholders who continue to hold a significant interest in the
Company and who provide services to the Group are ClearWorld Energy Limited
('CWE') and the shareholders of KWI Consulting AG ('KWI'). Energy for
Sustainable Development Limited ('ESD') had a significant shareholding prior to
the ESD acquisition (note 8).
CWE and ESD both provide support, management and environmental services to the
Group under a number of separate agreements. KWI provide environmental and
accountancy services to the Group. The amounts charged to administration
expenses in respect of these services is shown in the table below.
The related business partner is Consortia Partnership Limited ('Consortia') who
has been appointed Company Secretary. Michael Farrow, a non-executive Director
of the Company, is a Director of Consortia. Consortia also provide accounting
services to the Company. The amounts charged to administration expenses in
respect of these services is shown in the table below.
Income statement 30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Administration expenses €'000 €'000 €'000
Clearworld Energy Limited 54 201 435
Energy for Sustainable Development
Limited 238 235 559
Consortia
Partnership
Limited 74 29 63
KWI Consulting AG 23 15 33
Balance sheet 30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
Trade and other payables €'000 €'000 €'000
Clearworld Energy Limited 9 - -
Consortia Consulting 22 - 22
KWI Consulting AG - - 3
The Group's key management personnel comprises the Board of Directors whose
remuneration is shown below.
Income statement 30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (audited)
€'000 €'000 €'000
Salaries, benefits, bonuses and fees 550 323 698
Share-based payments - ordinary
shares 708 - -
issued
Share-based payments - share options
under Executive Share Plan 73 40 91
Share-based payments - share options
under LTIP 31 - 12
Total remuneration 1,362 363 801
On 2 April 2007, a compromise agreement was signed with Tristan Fischer, the
former Chief Executive Officer of the Company. The agreement outlined a
compensation package following the termination of his employment contract. The
charges, all of which are included in this interim report and the table above,
are as follows.
Income statement 30 June
2007
(unaudited)
€'000
Salaries, benefits, bonuses and fees 124
Share-based payments - ordinary shares issued (700,000 shares) 708
Share-based payments - share options under Executive Share Plan
(192,857 shares) 38
Share-based payments - share options under LTIP (up to maximum
of 750,000 shares) 22
Total compensation charge 892
------------------------------------------------------------------------------
* subject to vesting conditions of Camco Group LTIP scheme (see note 3)
There was a timing difference between the Group's payment of personal tax and
national insurance obligations resulting from the vesting of shares in its
restricted stock scheme (note 3) and the reimbursement by members of the scheme
(the sale of shares to enable reimbursement was delayed due to the Director
being in a close period hence restricted from trading). This resulted in an
amount receivable from a Director at 30 June 2007. The amount was fully
reimbursed in July 2007.
Balance sheet 30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (unaudited)
Trade and other
receivables €'000 €'000 €'000
Receivable from key management
personnel 43 - -
13 Post balance sheet events
Significant post balance sheet events relate to an additional placing of shares
and new business developments as outlined below.
Climate Leaders' Joint Venture
On 13 July 2007 the Company, together with Tudor Investment Corporation,
announced that they have entered into a letter of intent to launch the Climate
Leaders' Joint Venture, an equity investment joint venture to finance projects
that reduce greenhouse gas emissions and generate emissions reduction credits.
Placing
On 23 July 2007 the Company placed 15,077,706 million new ordinary shares of
0.01 € cents each at a price of 75 pence per share. The amount raised was
approximately €16.8m before expenses. The new funds, along with existing funds,
will be used for growth opportunities such as US expansion, investment in the
Climate Leaders' Joint Venture (see above) and development of new ventures.
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