News
AgCert International plc AGM Statement
Dublin, Ireland – 05 March 2006
At AgCert International plc (AGC LSE) held in Dublin today the Chairman, Rick Andlinger, made the following remarks.
AgCert listed on the main market of the London Stock Exchange in June 2005 and the past year was one filled with accomplishments, challenges and opportunities.
AgCert’s business is the large scale production and sale of greenhouse gas emission reductions (referred to as "Offsets") from agricultural sources. Its methods involve the capture and combustion of biogas containing greenhouse gases, primarily methane, emitted from animal waste management systems, including those for swine, dairy and poultry.
Market development
The European Union Emission Trading Scheme (“EU ETS”) was launched in January 2005 and created the main market for AgCert’s business. The Kyoto Protocol came into force in February of 2005 establishing a global system to reduce greenhouse gases. Companies producing more than their target greenhouse gas emissions under the terms of the Kyoto protocol will need to buy Offsets or Credits to cover the excess or face heavy fines. Trading of European Union Allowances (“EUAs”) the benchmark for carbon value began with prices in the €7 to €9 per tonne range and have since been volatile (peaking at over €30) on increasing volume. The EUA market today is in contango showing near term prices in the low teens and longer term prices in the higher teens. After much anticipation the World’s first Certified Emission Reductions (“CERs”) were issued in October 2005, and at the end of March AgCert was issued its first CERs, and now has CERs from both Brazil and Mexico.
Operational performance
Against this market background AgCert has developed rapidly, expanding its initial operations in Brazil and Mexico, establishing operations in new geographies, namely Chile and Argentina, and extending its activities to new agricultural sectors, such as dairy and poultry.
From an initial base at 8 December 2004 of 20 employees and 8 completed biodigesters, AgCert now has over 220 employees and more than 450 completed biodigesters. On a steady state basis, these sites should produce over 2 million CERs per year. We have nearly 200 sites under construction and continue to secure new farms in Latin America. Alone and with partners, we are exploring how best and where best to expand our footprint beyond Latin America.
AgCert is a pioneer in the Carbon market and has achieved rapid growth. In this new industry the CDM process creates necessary checks and balances, but remains commercially challenging as regulators and market participants seek to gain experience. By growing rapidly, the Company has secured a significant market presence in Brazil and Mexico, but at the cost of an organizational restructuring during Autumn 2005 and higher than expected construction expenditures as some sites, mostly in Brazil, were below our current minimum size and others needed remedial work to meet the Company’s construction standards. This resulted in a delay in execution of the Company’s business plan, however, we believe that this is primarily a matter of timing and, taking account of the positive market environment for trading in carbon credits, we remain positive about the long-term outlook for the business.
AgCert has secured advance sales contracts of approximately €94 million (excluding the AES pre-pay), and sees an abundance of potential future customers. As a consequence of the delayed execution of the business plan, the Company has been working with its customers to match its revised and updated regulatory and production schedule with the customers’ delivery requirements.
AES relationship
Since the year end, AgCert has formalized a strategic relationship with The AES Corporation, a global power company with businesses in 25 countries, whereby:
- AES will prepay up to €60 million to secure the future delivery of CERs,
- AES will purchase a 9.9% equity position, raising approximately €40 million, and
- AES and AgCert will jointly pursue opportunities to create new emission reductions in new countries of mutual interest.
Employees
Under Bill Haskell’s leadership, the Company has made substantial progress and I am pleased that Bill has accepted the role of permanent CEO. I wish to thank Bill and the employees of AgCert for their hard work and achievements during this period.
Outlook
For 2006 and beyond, the Company intends to concentrate on identifying and securing sources of CER supply, constructing biodigesters on time and within budget and operating and maintaining facilities for the long term, all the while satisfying the significant regulatory requirements.
AgCert operates under the scrutiny of the Clean Development process and embodies the ideals of the Clean Development Mechanism – bringing new investment capital and technology to developing countries and fostering sustainable economic development while improving the environment. The Company works according to the World Bank Group’s environment and social standards policies.
The signs of global climate change were abundantly evident in 2005, with unusual local temperatures, extreme storms and shrinking ice in glaciers and at the poles. The problem is clear, as is the opportunity. Against this background, the rapid growth of the Carbon market and the Company’s achievements to date, the Board takes a positive view of the future.
For further information:
| AgCert International | |
| Bill Haskell, CEO | Tel: +353 1 245 7400 |
| Paul D'Alton, CFO | www.agcert.com |
AgCert media inquiries:
| Maitland | |
| Liz Morley / Brian Hudspith | Tel: + 44 (0) 20 7379 5151 |