Eco (atlantic) Regulatory News (ECO)

13 Jul 2006 07:01

EcoSecurities Group plc13 July 2006 EcoSecurities Group plc Trading Update First CER Revenues Recognised EcoSecurities Group plc (the "Group" or "EcoSecurities"), one of the world'sleading originators of projects which generate carbon credits, today issues atrading update relating to it's half year period ended 30 June 2006. Highlights of the period include recognition of the Group's first revenuesrelating to the sale as a principal of Certified Emission Reductions ("CERs");and the growth of the Group's portfolio of CERs to over 130 million tonnes. Origination - Performance Excels Origination performance has continued to be strong with the gross contractvolume of the Group's carbon credit portfolio growing to 130 million CERs at 30June 2006. Since the IPO last autumn which referenced the portfolio as at 31October 2005, the Group has added 59 million tonnes of CERs to its portfoliowhich is in line with the Board's expectations. The highlight of the growth inthe portfolio during this period was the increase in principal contracts, withover 95% of the additions relating to principal agreements, which significantlyexceeded our expectations. (Note: Gross contract volume includes all expected CER production from projectsthrough to the end of 2012 and does not adjust for operating or regulatory risk,nor does it account for splitting of volumes with project partners anddevelopers. Gross contract volume excludes projects where the probability ofeither the development of a relevant methodology or the underlying developmentof the project is still uncertain.) Other highlights of the Group's origination activities include the contractingof several development projects which reduce emissions of nitrous oxide, a majorgreenhouse gas, 310 times more potent than CO2. These projects representEcoSecurities first involvement in emissions abatement of industrial gases andrepresent a substantial growth opportunity for the Group going forward. Asannounced on 12 July 2006 the Group signed 8 agreements for the development ofsuch projects in China. The Group continues to make progress related to its joint development agreementwith Cargill. MOU's for seven projects were signed in June relating to projectsin Latin America, South Africa and Eastern Europe. Implementation - 17 Registered Projects Underlying project development and Clean Development Mechanism ("CDM")accreditation continues to progress. Of the 213 projects in the portfolio, over150 are now financed, while 108 are either under construction or already inoperation. At present, 17 projects have been fully registered with the CDMExecutive Board. Once full registration is completed and the projects becomeoperational, they will begin to accumulate emissions reductions that will besubsequently verified and sold as CERs by the Group. To date 66 of the Group'sprojects are in operation and are expected to generate 2.5 million tonnes peryear of emissions reductions. While both the Group's CDM process submissions and the underlying progress inconstruction and operation of the contracted projects is progressing in linewith our expectations, the rate of both Host Country and CDM registrationapproval has continued to be slow, albeit at an improving pace. Commercialisation - Initial Principal Revenues in the First Half of 2006 The highlight of the first half was the recognition of the Group's firstprincipal trading revenues which resulted from the sale of CERs produced by alandfill gas project in China, where carbon credits are created through thecapture of methane gas. The CERs, the first ever to be produced from a projectin China, were sold to a major market participant in Europe and the transactionsets the precedent for sale of the Group's future non-committed production intothe spot market. Future Group revenues will be generated through a combinationof deliveries against committed forward transactions as well as through spotmarket sales. Furthermore, the Group made particularly strong progress in June with a total€220 million of CERs now having been sold forward, up from €140 million as at 31May 2006. Highlights of transactions in June included completion of atransaction with a European government as well as a large Japanese corporate.The Net Trading Margin (NTM) locked in from the future delivery of 21 milliontonnes of CERs related to these transactions is €100 million. The NTM iscalculated as total revenue less costs based on the contract terms thatEcoSecurities has with each project (i.e., agency fees, price paid for CERs,etc.). The Group's margins have continued to grow during the year due to anumber of factors including a stronger balance sheet, continued strong marketprices and the growth of the Group's portfolio. Bruce Usher, CEO of EcoSecurities, commented on performance in the first half "I am very pleased with the progress we have made over the first half of 2006,which was our first reporting period as a public company. The project portfoliohas now begun to produce CERs and generate revenues for the Group which is a keymilestone achievement. The progress the Group has achieved is based on its strength in origination, viaamassing a large and diversified portfolio of projects, and commercialisationvia the successful structuring of forward sales to meet the specific needs ofKyoto related compliance buyers. The Group's geographic spread and depth ofexpertise enables it to add value to the entire spectrum of the carbon creditdevelopment process and this is demonstrated by the attractive margins the Groupcontinues to achieve. The larger our portfolio becomes, the more attractivethe Group's value proposition becomes to both project developers and Kyotocompliance buyers. We continue to focus on our core strengths in origination, implementation andcommercialisation of carbon credit projects. Given current market prices andattractive margins we plan to maintain this focus as a market leader and willcontinue to build shareholder value." Analyst Seminar The Group is holding a seminar for analysts in London on the morning ofWednesday 19 July 2006. Analysts wishing to attend should contact Ged Brumby atCitigate Dewe Rogerson on 020 7638 9571 for further details. - Ends - For further information please contact: EcoSecurities Group plc Bruce Usher, CEO +44 (0) 1865 202 635Pedro Moura Costa, COO +44 (0) 1865 202 635 Citigate Dewe Rogerson +44 (0) 20 7638 9571 Kevin SmithGed Brumby About EcoSecurities: EcoSecurities is one of the world's leading companies in the business oforiginating, developing and trading carbon credits. EcoSecurities structures andguides greenhouse gas emission reduction projects through the Kyoto Protocol,acting as principal intermediary between the projects and the buyers of carboncredits. EcoSecurities works with companies in developing and industrialising countriesto create carbon credits from projects that reduce emissions of greenhousegases. EcoSecurities has experience with projects in the areas of renewableenergy, agriculture and urban waste management, industrial efficiency, andforestry. With a network of offices and representatives in 20 countries on fivecontinents, EcoSecurities has amassed one of the industry's largest and mostdiversified portfolios of carbon projects. Today, the company is working on 213projects in 26 countries using 17 different technologies, with the potential togenerate more than 130 million carbon credits. EcoSecurities also works with companies in the developed world to assist them inmeeting their greenhouse gas emission compliance targets. Utilising its highlydiversified carbon credit portfolio, EcoSecurities is able to structure carboncredit transactions to fit compliance buyer's needs, and has executedtransactions with both private and public sector buyers in Europe, North Americaand Japan. Working at the forefront of carbon market development, EcoSecurities has beeninvolved in the development of many of the global carbon market's most importantmilestones, including developing the world's first CDM project to be registeredunder the Kyoto Protocol. EcoSecurities' consultancy division has been at theforefront of all the significant policy and scientific developments in thisfield. EcoSecurities Consult has been recognised as the world's leadinggreenhouse gas advisory firm over the last five years by reader surveysconducted by Environmental Finance Magazine. EcoSecurities Group plc is listed on the London Stock Exchange AIM (ticker ECO). Additional information is available at www.ecosecurities.com. This information is provided by RNS The company news service from the London Stock Exchange