Companies: MRG    OPT    SIT   

Interest in environmental technology has risen exponentially in recent months – spurred on by surging oil prices, extreme global weather and a media assault on public and political perceptions.

But, for all this attention, BT's recent signing of the single largest green energy contract in history could represent the most significant step of all. Over the coming years, the telecoms giant is looking to derive almost all of its energy requirements from environmentally friendly sources, in a move expected to reduce carbon dioxide emission by an equivalent to taking 100,000 cars off the road.

Unsurprisingly the move is being heralded as an important landmark. After all, should BT prove not only a social but also an economic case for going green, many other firms are likely to follow.

So where does this leave those highlighted in Growth Company Investor's June environmental technology feature?

Disappointingly, US-based duo Ocean Power Technologies (OPT) and Solar Integrated Technologies (SIT) have both struggled in share price terms of late, although there remains cause for long-term optimism.

Making waves

Take OPT. August saw the company announce its most significant agreement yet, a joint venture to construct and operate a wave power plant off the coast of northern Spain.

OPT will own ten per cent of the project, which is being led by Spanish energy giant Iberdrola. The initial plan is to operate a 1.25 megawatt station that will feed directly into the Spanish grid and, as Iberdrola plans to invest a staggering €3.1 billion (£2.15 billion) in doubling its renewable energy production by 2008, the project's success could have an enormous effect of OPT's future.

Around $40 million (£22.2 million) sits on the balance sheet and contracts with American defence giant Lockheed Martin and the US Navy have also been signed. Therefore, its current £42 million value leaves considerable scope for its potential.

SIT's promise

Much the same can be said of SIT. The manufacturer of photovoltaic roofing products – which enable users to harness the solar energy striking their buildings each day – has secured contracts from the likes of Coca-Cola and the US Air Force and yet its shares have fallen from an initial 171p to a current 137.5p.

September's disappointing interim statement is largely to blame for this, not least on account of management's comments that many of the contracts they had expected to sign this year seem destined to slip into 2005.

Despite the share price plunge, SIT retains a market cap of £45.8 million. This currently looks more than a little enthusiastic. But if you bought in on flotation, the company is worth sticking with.

Mercury on the up

By far and away the most successful company tipped in June's feature has been Mercury Recycling.

Originally priced at 17.75p when highlighted, shares in the fluorescent tube recycling business surged 72 per cent between early June and mid August, peaking at a price of 30.5p. Interest has since cooled and the shares have fallen back to 20p.

Interims to June were promising. Sales increased by 60 per cent to £783,000, though it should be noted that recently acquired rival Simister contributed £210,000 of this. After around £100,000 of goodwill, a loss of £5,000 was recorded.

Moreover, with the EU's long awaited directive on waste electrical and electronic equipment due to come in to force next year, the company's market is expected to expand rapidly.

For the full year, house broker Rowan Dartington forecasts a pre-goodwill profit of £150,000 from £1.6 million of sales, rising to £300,000 from £2 million in 2005. With a prospective p/e of 44.4, the shares are by no means cheap. However, they retain the potential to richly reward patient investors.