Last checked at 10 Jul 2008 07:00
EcoSecurities Group plc
Trading Update
First half sales amount to 825,000 CERs
Dublin, Ireland - EcoSecurities Group plc ('EcoSecurities' or the 'Group'), one of the world's leading companies in the business of originating, implementing and commercialising carbon credits from greenhouse gas emission reduction projects, today issues a trading update relating to its half year period ended 30 June 2008.
From the portfolio during the first half of 2008, the Group issued 595,000 CERs and verified 327,000 CERs.
Revenue was recognised in respect of 825,000 CERs and 344,000 VERs in addition to revenue from trading of other emissions reductions and from consulting services. Of the sales of CERs, 724,000 were in fulfilment of existing delivery obligations of the Group. All were for delivery via an ITL linked registry and for which payment is not dependent on the timing of the link of the CITL to the ITL.
At 30 June 2008 the Group had inventory of 1,384,000 CERs and 1,704,000 VERs.
The enhanced focus on implementation initiated in late 2007 continues to deliver results with 31 new registrations being achieved in the first half of 2008 of which 7 were achieved in May and June 2008. The average size of registered projects continued to increase with the average size of the projects registered during the first half of 2008 being 597,000 CERs per project.
At 30 June 2008, 126 projects had been registered with the CDM Executive Board, up from 119 projects at the end of April. On a net basis to EcoSecurities, these 126 projects are capable of producing 29 million CERs, representing 24% of the Group portfolio (an increase from 21% at the end of April). At 30 June 2008, 151 projects had been validated and these projects are capable of producing 38 million CERs on a net basis, representing 31% of the portfolio. Of the registered projects, projects capable of producing 24 million CERs for EcoSecurities are already operational.
The Group's contracted projects and portfolio of CERs on a net basis can be analysed as follows:
|
| 30 June 2008 | 30 April 2008 | ||
| Project cycle landmark (cumulative values) | No. of projects (Note 1) | Million CERs | No. of projects | Million CERs |
| Contracted | 551 | 155 | 517 | 143 |
| Due diligence | 103 | 34 | 83 | 23 |
| Portfolio | 448 | 121 | 434 | 120 |
| Operational stage: | ||||
| Financed | 384 | 104 | 373 | 104 |
| Construction started | 335 | 95 | 314 | 90 |
| Operation started | 203 | 56 | 177 | 50 |
| CDM stage: | ||||
| PDD complete | 281 | 77 | 273 | 77 |
| Submitted to validation | 261 | 73 | 251 | 73 |
| HNA obtained | 232 | 71 | 229 | 73 |
| Validated | 151 | 38 | 147 | 37 |
| Submitted to registration | 145 | 37 | 145 | 36 |
| Registered | 126 | 29 | 119 | 25 |
(Note 1. The "No. of projects" figures above include projects for which no pre-2012 CERs are currently expected and hence no CERs are included in the figures above. At 30 June 2008 this includes 60 contracted projects, 26 PDD complete projects, 26 validated projects and 23 registered projects.)
The diversification of the registered portfolio by technology type is as follows:
| % of registered portfolio CERs | 30 June 2008 | 30 April 2008 |
| Landfill Gas | 11 | 13 |
| Hydroelectricity | 34 | 35 |
| Anaerobic Digestion - Swine | 1 | 1 |
| Wind | 5 | 2 |
| Geothermal | 5 | 5 |
| N20 | 37 | 34 |
| Other | 7 | 10 |
| Total | 100 | 100 |
The portfolio at 30 June 2008 has been adjusted for the anticipated reduction in CER issuance as a result of anticipated delays suffered by five projects (including the Miyaluo small hydro project) in Sichuan following the earthquake there in May 2008. No strong aftershocks in the region have been observed since May 2008 and the Group's Chengdu office is operating normally.
The Company anticipates verifications for the second half of 2008 will be concentrated in the final quarter. Given the continuing uncertainties surrounding the time taken by the CDM process and DOEs, EcoSecurities has scheduled verifications carefully to allow more time for the issuance process while also contracting an additional 2,860,000 CERs through secondary trading activities at an average acquisition cost of €13.50 per CER to ensure that the Company is well placed to meet its ongoing net delivery schedule.
Recognising the Group's expectations of an active market beyond 2012, in addition to the above portfolio the Group's post-2012 CER portfolio amounted to 115 million CERs at 30 June 2008. The Group's VER portfolio at 30 June 2008 was 14 million VERs representing an increase of 1 million VERs since 30 April 2008.
EcoSecurities cash balance at 30 June 2008 comprised €59m, including €18m of restricted cash.
Bruce Usher, CEO of EcoSecurities, commented on performance in the first half of 2008:
"The Group is pleased with the pace of registrations of its projects during the first half of 2008. I have confidence in the ability of EcoSecurities to optimally manage the CDM registration, verification and issuance process although the process remains complex and slow. Most of the CERs anticipated to be issued in the second half of 2008 will be concentrated in the final quarter of the year and will be from projects undergoing their first verification. As such, precise projections of CER production from the portfolio for the full year are difficult to make. However, we anticipate any shortfall in gross profit that may arise as a result of this is likely to be offset by prudent control of costs, leaving the outturn for the year broadly in line with management expectations."
Glossary:
CDM = Clean Development Mechanism, the provision of the Kyoto Protocol that governs project level carbon credit transactions between developed and developing countries.
CER = Certified Emission Reduction, carbon credits created by Clean Development Mechanism projects. One CER corresponds to 1 tonne of CO2e emission reductions.
CITL = Community Independent Transaction Log - Electronic settlement system for all trading of carbon credits carried out under the EU ETS.
DOE = Designated Operational Entity is an organisation accredited by the CDM Executive Board. A DOE has two key functions, to validate and subsequently request registration of a proposed CDM project and to verify Emission Reductions from a registered CDM project activity.
EU ETS = European Union Emissions Trading Scheme, a market based 'cap and trade' system for greenhouse gases adopted by the European Union member states.
ITL = International Transaction Log - An essential component of the trading infrastructure in that it forms the central hub of the settlement system which delivers carbon credits from buyers to sellers.
VER = Voluntary or Verified Emission Reduction, carbon credits created by emission reduction projects. One VER corresponds to 1 tonne of CO2e emission reductions.
- Ends -
For further information please contact:
| EcoSecurities Group plc Bruce Usher, CEO Pedro Moura Costa, President Adrian Fernando, COO James Thompson, CFO PJ Browne, Company Secretary | +353 1613 9814 |
| Citigate Dewe Rogerson Kevin Smith Ged Brumby | +44 (0) 20 7638 9571 |
About EcoSecurities:
EcoSecurities is one of the world's leading companies in the business of sourcing, developing and trading carbon credits. EcoSecurities structures and guides greenhouse gas emission reduction projects through the project cycle, working with both project developers and buyers of carbon credits.
EcoSecurities has experience with projects in the areas of renewable energy, agriculture and urban waste management, industrial efficiency and forestry. With a network of offices and representatives in over 25 countries on five continents, EcoSecurities has amassed one of the industry's largest and most diversified portfolios of carbon projects.
Utilising its highly diversified portfolio, EcoSecurities is able to structure carbon credit transactions to fit any buyers' needs, and has executed transactions with both private 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 the global carbon market's most important milestones, including developing the world's first CDM project to be registered under the Kyoto Protocol. EcoSecurities Global Consulting Services has been at the forefront of all significant policy and scientific developments in this field. EcoSecurities has been voted 'Best Advisory Firm - Kyoto Project Credits' over the last seven years by reader surveys conducted 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.