Eco (atlantic) Regulatory News (ECO)

31 May 2006 07:04

EcoSecurities Group plc31 May 2006 EcoSecurities Group plc AGM Statement EcoSecurities Group plc (the "Group" or "EcoSecurities"), one of the world'sleading originators of projects which have the potential to generate carboncredits, will hold its Annual General Meeting in Dublin, Ireland today at 10.00.At the meeting Mark Nicholls, Chairman, will make the following statements: "EcoSecurities made considerable progress in the 2005 financial year,culminating in its successful listing on AIM in December. Progress has beenmaintained in 2006, and the business remains on course to implement its businessplan, notwithstanding the recent, well publicised turbulence in the market forcarbon credits. The commercialisation of the Group's carbon credit portfolio and overallperformance of the business to date is in line with previous expectations.Furthermore, recent volatility in carbon prices has reinforced the strength ofthe Group's business model, based on early stage project origination whichenables the Group to acquire low cost Certified Emission Reductions (a CER beingequal to one metric tonne of CO2e emission reductions) and maintain attractivemargins at a wide range of sale prices. In addition, it is important tohighlight the fact that the Group's portfolio is valued in relation to the2008-2012 Kyoto Protocol commitment period and current prices for delivery inthat period are higher than our forecasts. Our business model has been designed to be extremely robust, being underpinnedby conservative assumptions about the prices at which the Group will be able tosell carbon credits in the First Commitment Period of the Kyoto Protocol andPhase 2 of the European Union Emissions Trading Scheme ("EU ETS"), which runsfrom 2008-2012. Prevailing prices in Phase 2 of the EU ETS have recentlystabilised around €20 per tonne, well above the price assumed by the Group atthe IPO. A number of significant milestones have been achieved since the financialyear-end, as follows: • Origination performance has been strong with grosscontract volume of the Group's projects increasing to over 121 million CER's atpresent - an increase of 70% since the IPO in 2005. However, it should be notedthat gross project volume does not adjust for the risks that any given projectfaces before the delivery of the estimated volume of CERs, nor does it accountfor any splitting of volumes with project partners and developers. Recent growthin the portfolio was based on principal contracts which now represent 64% of thetotal volume under contract or term sheet and over 80% of forecast net revenues. • The project portfolio remains highly diversified bygeography, technology and Clean Development Mechanism ("CDM") methodology, witha total of 195 projects today, up from 121 at the IPO. The Company has alsorecently added projects that reduce emissions of industrial gases, representingadditional technological diversification of its portfolio. We believe thatproject diversification, as well as our excellent track record in projectimplementation, significantly enhances our ability to generate consistentproduction of CER's from our growing project portfolio. • In order to continue expansion of the Company'sorigination efforts, the Group has established 6 new legal entities in China,the Philippines, Malaysia, India, Thailand and Mexico this year. Further newlegal entities will be formalized in Chile and Indonesia during the second halfof 2006. Additional representatives have been added this year in Morocco, SouthAfrica and Pakistan and further growth opportunities are under consideration. • Implementation continues to progress steadily. Of the 195projects at contract or term sheet stage, over 150 are now financed, over 70have completed Project Design Documents and 53 have been validated. At present,16 projects have been registered with the CDM Executive Board, up from 8 at theIPO. • Demand for CERs from corporate buyers with 2008-2012compliance obligations continues to grow, with the number of new corporatebuyers in Europe increasing significantly. To date the Group has pre-sold €140million of CERs to predominantly large highly rated corporate and governmentbuyers which represents a steady stream of revenues for the Group through to2012. A majority of transactions in the year to date have been completed above€15, which is significantly higher than transactions completed last year due inpart to our stronger balance sheet post IPO as well as strong market demand. Wecontinue to be active in the market and have a policy to pre-sell approximately50% of our portfolio by year end 2006, with the vast majority of the pre-soldvolume contracted for delivery from 2008 to 2012. • The Group had a net cash balance at 30 April 2006 of €66million which is in line with our expected cash flow forecasts. The Group hasmaintained a cost efficient structure despite rapid expansion and has sufficientcapital to sustain operations through the point at which positive cash flow isgenerated from operations. The Group's ongoing business performance, international expertise and successfultrack record mean that despite recent market volatility EcoSecurities is well ontrack to achieve its business objectives. The Board believes market volatilityhighlights EcoSecurities experience and capabilities to both project developersand carbon credit buyers, thereby enhancing our ability to execute the growthplan. EcoSecurities target for the balance of the year is to maintain our core focuson originating, implementing and commercialising our highly diversifiedportfolio of emissions reductions projects. Despite recent market events,prices for carbon credits in the Kyoto commitment period remain strong and theconservative forward price assumptions underpinning our strategy remainunchanged. The continued growth in the Group's contract volume, achieved whileretaining attractive margins, demonstrates the success of the business model andunderpins our confidence in the Group's future prospects." - Ends - For further information please contact: EcoSecurities Bruce Usher, CEO +1 212 356 0166 Pedro Moura Costa, COO +44 (0) 1865 202 635 Citigate Dewe Rogerson +44 (0) 20 7638 9571 Kevin Smith Sara Batchelor Clare Allison About EcoSecurities: EcoSecurities is a world leading originator, developer and trader of carboncredits. The company structures and guides projects through the CleanDevelopment Mechanism (CDM) process to the point when the client receivesmonetary value for the carbon credits generated. Under the Kyoto protocol, whichestablished the principle of 'Polluter pays', buyers include companies, carbonfunds, and governments in the so-called Annex 1 industrialised countries. EcoSecurities floated on the Alternative Investment Market of the London StockExchange (ticker Eco.L) on the 13th December 2005, raising £48.5 million poundsafter costs. The company has also established strategic partnerships withagricultural products and services provider Cargill and the American privateequity firm MSM Capital Partners, which invested in EcoSecurities during aprivate equity round prior to the IPO. As of the date of its IPO, the company had one of the largest carbon creditproject portfolios worldwide, consisting of 121 projects which have thepotential to generate up to 71.3 million CERs through to 2012. The portfoliobenefits from wide diversification with projects located in 26 countries anddeploying 15 technologies. EcoSecurities has negotiated transactions over Carbon Credits involving a seriesof buyers, including the World Bank, the International Finance Corporation,Shell, Toyota Tsusho and Essent, and currently manages carbon facilities tosource and contract Carbon Credits for the governments of Austria, Denmark andJapan. This information is provided by RNS The company news service from the London Stock Exchange