Eco (atlantic) Regulatory News (ECO)

19 Jan 2007 09:23

EcoSecurities Group plc (the "Group" or "EcoSecurities")(LSE:ECO),one of the world's leading companies in the business of originating,implementing and commercialising carbon credits from greenhouse gasemission reduction projects, today issues a trading update for the sixmonth period ended 31 December 2006. £ Origination £ The Group continued its strong project origination performanceduring the period, with projects and tonnage added ahead ofexpectations. The total gross Certified Emission Reduction ("CER")portfolio grew by 26 million tonnes to 156 million CERs at 31 December2006. In line with the Group's policy of continually assessing theprojects within the portfolio for expected operating and regulatoryperformance, this total takes into account volume adjustmentsprincipally relating to several biodiesel projects in Indonesia. Thetotal number of projects with which the Company has contracted grew to353. In addition, the Group has a further 21 million CERs fromprojects that had yet to complete the full contracting and duediligence process at year end and which have not yet been added to theportfolio. £ Adjusting for the relative proportions of Agency, Principal andProject Development contracts in the gross portfolio, the Group's netownership position totals 127 million CERs at 31 December 2006. TheGroup's net ownership expanded by a considerable amount during theperiod, primarily due to the restructuring of its EcoMethane jointventure whereby the Group will now acquire all the CERs generated fromthese landfill gas projects. £ Other highlights of the Group's origination activities includedcontinued geographic expansion with the opening of additionalrepresentative offices in Kenya and Singapore, bringing the totalnumber of offices and representative offices to 23 at year end (2005:14). EcoSecurities also signed strategic agreements with StandardBank, the largest retail bank in South Africa, and UOB Kay Hian, adivision of the second largest bank in Singapore, to maximise businessdevelopment activities in Africa and Southeast Asia, respectively. £ Implementation £ Implementation of the Group's contracted projects - the process ofguiding Clean Development Mechanism ("CDM") projects through theUnited Nations registration process - made further progress in thesecond half of 2006. Notwithstanding the well publicised delaysexperienced in external validation and verification of projects andwith the CDM Executive Board ("EB") in the processing of projects, thepace of registrations increased in the latter part of 2006. The numberof projects registered with the EB by the Group increased from 17 at30 June 2006 to 53 at the end of December 2006. These registeredprojects are expected to produce 16 million CERs through to 2012. Atotal of 84 projects in EcoSecurities portfolio are now operating, andare expected to produce 39 million CERs through to 2012. £ Commercialisation £ The Group executed a number of new sales transactions in thesecond half of 2006 with counterparties in Europe and Japan,significantly increasing the amount of contracted forward sales overthe 2008 to 2012 period. The total gross contract volume of CERs soldforward during the period was 8 million tonnes, increasing the totalforward sale contract volume to 29 million tonnes. The total NetTrading Margin on contracted forward sales at 31 December 2006increased to EUR 151 million, up from EUR 100 million as at 30 June2006. £ For the year ended 31 December 2006 the Group will recogniserevenue from the sale of verified CERs from a number of Principal,Agency and Project Development projects. A total gross number of451,442 CERs were verified in relation to the Group's projects duringthe year. At year end 67,954 of these CERs had not yet been sold. £ Operations and Finance £ Despite significant expansion in 2006, costs were withinexpectations. Furthermore, the Group's cash position at year end waslarger than anticipated, placing EcoSecurities in a comfortableposition going into 2007. £ Bruce Usher, Chief Executive Officer, commented: £ "Throughout 2006 the Group placed significant emphasis on buildingits carbon credit portfolio, which grew to a gross total of 156million CERs and a net total of 127 million CERs at the end of 2006.Despite experiencing the industry-wide delays in the processing of ourprojects by the CDM Executive Board, we have continued to progress asignificant number of projects through the CDM process. £ "During 2006, there have been many developments raising not onlythe awareness of climate change, but also examining the likelyeconomic impacts. In particular the publication of the Stern Report inthe UK has helped focus attention on this ongoing problem and need foremissions trading and project offsets. In addition, tighter EUemissions targets brought about by recent EU ETS National AllocationPlans and accelerating policy momentum in the United States,especially in California, will contribute to further development ofthe global carbon market and provide additional opportunities forEcoSecurities in 2007." £ + Note: Gross and net contract volume measures expected CERproduction from projects through to the end of 2012 and does notadjust for operating or regulatory risk. Gross and net contract volumeexcludes projects where the probability of either the development of arelevant methodology or the underlying development of the project isstill uncertain. £ CDM = Clean Development Mechanism, the provision of the KyotoProtocol that governs project level carbon credit transactions betweendeveloped and developing countries £ CER = Certified Emission Reduction, carbon credits created byClean Development Mechanism projects. One CER corresponds to 1 tonneof CO2e emission reductions £ EU ETS = European Union Emissions Trading Scheme, a market based"cap and trade" system for green house gases adopted by the EuropeanUnion member states £ About EcoSecurities: £ EcoSecurities is one of the world's leading companies in thebusiness of originating, implementing and commercialising carboncredits. EcoSecurities structures and guides greenhouse gas emissionreduction projects through the Kyoto Protocol, acting as a principalbetween the projects and the buyers of carbon credits. £ EcoSecurities works with companies in developing andindustrialising countries to create carbon credits from projects thatreduce emissions of greenhouse gases. EcoSecurities has experiencewith projects in the areas of renewable energy, agriculture and urbanwaste management, industrial efficiency, and forestry. With a networkof offices and representatives in 21 countries on five continents,EcoSecurities has amassed one of the industry's largest and mostdiversified portfolios of carbon projects. Today, the company isworking on 353 projects in 36 countries using 17 differenttechnologies, with the potential to generate more than 156 millioncarbon credits. £ EcoSecurities also works with companies in the developed world toassist them in meeting their greenhouse gas emission compliancetargets. Utilising its highly diversified carbon credit portfolio,EcoSecurities is able to structure carbon credit transactions to fitcompliance buyer's needs, and has executed transactions with bothprivate and public sector buyers in Europe, North America and Japan. £ Working at the forefront of carbon market development,EcoSecurities has been involved in the development of many of theglobal carbon market's most important milestones, including developingthe world's first CDM project to be registered under the KyotoProtocol. In 2006, EcoSecurities won the Point Carbon Award for 'BestCDM/JI Project Developer'. EcoSecurities' consultancy division hasbeen at the forefront of all the significant policy and scientificdevelopments in this field, and has been voted the world's leadinggreenhouse gas advisory firm over the last five years through readersurveys conducted by Environmental Finance Magazine. £ EcoSecurities Group plc is listed on the London Stock Exchange AIM(ticker ECO.L). Additional information is available atwww.ecosecurities.com. Copyright Business Wire 2007