Trading Emissions PLC Regulatory News (TRE)

26 March 2013

Trading Emissions PLC

Results for the six month period ended 31 December 2012

Trading Emissions PLC ("TEP" or "the Company"), a closed end investment company that

specialises in renewable energy projects and emissions instruments such as carbon credits,

today announces its results for the six month period ended 31 December 2012.

Financial Highlights

·; Net Asset Value of combined Cash, Private Equity Portfolio and Carbon Portfolio: £145m (58.12 pence per share);

·; Unrestricted cash and other: £54m (21.62 pence per share);

·; Carbon Portfolio: negative £14m (negative 5.67 pence per share);

·; Private Equity Portfolio: £105m (41.97 pence per share);

Operational Highlights

·; Three private equity investments were sold in the period. Steady progress is being made in respect of other private equity investments with formal sales processes underway at various stages of marketing, negotiation and/or due diligence.

·; More favourable, revised terms negotiated for 88% of all carbon contracts.

·; Distribution of £15m to shareholders in February 2013 by means of B share scheme.

·; Further distribution to shareholders expected to be announced in 2Q 2013.

For further information:

EEA Fund Management Limited +44 (0)20 7553 2361

Simon Shaw, Investment Adviser to TEP

Liberum +44 (0)20 3100 2222

Steve Pearce / Tom Fyson

Trading Emissions PLC

Consolidated Interim Financial Statements

For the period ended 31 December 2012

Carbon Prices and Currency Rates

Carbon: CER Prices

The following are the Certified Emissions Reduction ("CER") futures prices as quoted on the InterContinental Exchange ("ICE") which have been used to value the Emissions Reduction Purchase Agreements ("ERPAs") at 31 December 2012 and 28 February 2013:

Key foreign exchange rates:

The following are the key foreign exchange rates used in currency conversions at 31 December 2012 and 28 February 2013:

Chairman's Statement

Dear Shareholder

At the Annual General Meeting of Trading Emissions PLC ("TEP" or the "Company") held on 19 December 2012, Shareholders of TEP ("Shareholders") approved an amended Investing Policy. Steady progress is being made in the implementation of this policy. During the first half of the financial year, TEP completed the realisations of the investments in Chapel Street Environmental, Ecotraders and Energia Escalona, generating proceeds of GBP 2.7 million in the period.

During the first six months of the financial year, the Net Asset Value ("NAV") of the Company decreased to GBP 145.2 million (58.12p per share). This compares with GBP 157.3 million (62.98p per share) as at 30 June 2012. The NAV decreased largely because of the reduction in value of one private equity investment where progress on the sale has been slower than expected and the asset has been marked to a level that the Board, under advice from EEA Fund Management Limited ("EEA" or the "Investment Adviser") currently believes to be realisable. During the period there was also a reduction in liabilities under carbon contracts in China, where the Company benefited from the renegotiation of the terms of its Emissions Reduction Purchase Agreements ("ERPAs") although this was partly offset by continued weakness in the price of carbon.

The methodology for valuing private equity investments was unchanged from previous periods. TEP did not commission an independent review of the valuations as at 31 December 2012.

At 31 December 2012, TEP held unrestricted cash at the parent level of GBP 51.2 million (20.5p per share). On 21 February 2013, GBP 15.0 million was distributed to Shareholders by means of a B share scheme. The Board expects to make a further distribution to Shareholders in the second quarter of 2013 after cash requirements relating to the final deliveries of 2012 Certified Emissions Reductions ("CERs") are known. Further distributions will be made in due course as and when sufficient cash is available from the sale of investments less the amount required to meet expected future operating costs, liabilities and other commitments.

The Investment Adviser's Report provides details of the carbon portfolio and the status of the 44 long term ERPAs and the two World Bank Umbrella Carbon Fund ("UCF") projects. At 31 December 2012, the fair value of the carbon portfolio, gross of hedges, was a net liability of GBP 17.0 million (negative 6.81p per share) compared with a liability of GBP 17.1 million (negative 6.84p per share) at 30 June 2012. Most of the liability is related to the UCF projects. The Company is continuing to explore all options to mitigate its post-2012 liabilities. The net value of the hedges at 31 December 2012 was GBP 2.8 million, giving a net carbon portfolio liability of GBP 14.2 million (negative 5.67p per share) compared to a net carbon portfolio liability of GBP 17.0 million (negative 6.81p per share) as at 30 June 2012.

The European Union carbon regime entered a new phase at the beginning of 2013. The fixed price liabilities of the carbon portfolio going forward in this phase will be due to three contracts where the Company pays a fixed price on CERs to 2017, including the UCF contracts detailed in the Investment Advisers Report. Of 2.1 million CERs expected to be delivered at fixed prices from 28 February 2013, 1.7 million relate to the UCF. Carbon prices have continued to decline to very low levels given the lack of clarity from the European Union with regard to its future policy on emissions. Nevertheless, TEP continues to advance discussions with regard to the disposal of its carbon portfolio.

Formal sales processes underway in respect of individual private equity investments are at various stages of marketing, negotiation and/or due diligence. Commercial considerations prevent the Company from disclosing detailed information that could prejudice these processes. However, the Investment Adviser's Report provides updates in respect of the less sensitive information pertaining to the performance of the individual private equity holdings. As and when the terms of sale of any material investment conclude, the Company will announce the relevant details to Shareholders.

In addition to the Company's realisation activities, during the first half of the financial year, the Board reviewed TEP's operating structure and costs. The consolidation of the financial results of subsidiary companies into TEP's financial statements is required to comply with International Financial Reporting Standards ("IFRS"). This does not allow Shareholders to easily differentiate between the costs relating to operating investments and the expense of running the Company. As is customary for closed end funds, however, by far the largest costs of operating TEP are those relating to fees payable to adviser's, providers of administrative services and other consultants.

Following the conclusion of a selection process, effective from 1 January 2013, EEA was reappointed to provide investment advice in respect of TEP's carbon portfolio and private equity holdings. The new agreement provides for a significant reduction in the fixed costs of retaining EEA's services, while incentivising the maximisation of realisation proceeds. In 2012, EEA was paid an investment advisory fee fixed at GBP 6.0 million per annum. This has been replaced by a new arrangement whereby, if no investments are sold in 2013, EEA's investment advisory services will cost a maximum of GBP 1.3 million. EEA is now incentivised to maximise net disposal proceeds. EEA's reappointment is for an initial period of 12 months. A description of the main terms of the new arrangement is contained in Note 3 to the financial statements.

As part of the rationalisation of the Company's activities, the Board decided to consolidate all of the administrative services provided to TEP under one entity and to ensure that operating costs decline as investments are sold. TEP appointed IOMA Fund and Investment Management ("IOMAFIM") to provide all administration services to the Company and its subsidiaries with effect from 1 January 2013. Chamberlain Fund Services ("CFS") is co-operating with IOMAFIM during a handover period. The Board is grateful to CFS for the services it has provided to the Company and its subsidiaries over the years.

Last but not least, the Board is delighted to welcome Mark Lerdal, who became an independent non-executive director of the Company on 31 January 2013. Mark's experience in the renewables sector will help to ensure that we maximise value from the sale of our various assets.

Martin Adams

Chairman

26 March 2013

Investment Adviser's Report

Part 1: CER portfolio

For the purposes of this report, "Financial Period" means the period from 01 July 2012 to 31 December 2012 (inclusive).

This Investment Adviser's report ("Report") includes statements that are forward-looking and tables that include projections or statements that use terms such as "projects", "expects", "will" or "should". In each case, these statements and tables reflect the current expectations of the Company and/or the Investment Adviser based on risk-adjusted calculations, but actual deliveries of Certified Emission Reduction credits ("CERs") and/or other emission reduction credits may differ materially from those predicted by the projections or other forward-looking statements in this Report.

In the Report, we differentiate between commercialisation activities (secondary trading activities which result in the net sale of CERs and have the effect of reducing the size of the unsold portfolio, effectively hedging the Company's forward position) and trading activities (activities which do not alter the Company's overall CER position but generate cash or favourably adjust the composition of the portfolio).

The Company's rights to CERs have been acquired principally through ERPAs entered into by the Company (or one of its subsidiaries) with a seller for the purchase of CERs, with payment due on or after delivery to the Company. ERPAs representing 88% of the existing risk-adjusted fixed price carbon portfolio with Chinese counterparties (including UCF HFC projects) have been successfully renegotiated to date, with a number of additional projects still under renegotiation. For those projects not being renegotiated, the Company is exploring several options including the possible termination of a number of contracts.

The Company also receives, and projects that it will continue to receive, CERs related to its equity investment held in Asia Biogas. For these CERs, the Company pays for all verification fees and other costs related to the issuance of CERs but does not pay a purchase price.

The Company has provided debt finance to companies developing or operating CDM projects. These loans were repayable in CERs directly from the relevant projects and secured with project or company assets or guarantees. The Company does not expect to receive any further significant quantities of CERs from these arrangements.

The portfolio quantities set out below include CERs received or to be delivered as a result of the sort of CER delivery transactions described above.

A summary of notable operational and financial detail relating to the CER portfolio from the beginning of the Financial Period to 28 February 2013 is set out below:

- The price of CERs has continued to fall significantly since 30 June 2012. The December 2013 CER future price has fallen from EUR 4.44 on 30 June 2012 to EUR 0.35 as at 28 February 2013, having hit a market low of EUR 0.32 on 18 February 2013.

- Excluding HFC projects, as at 28 February 2013, the Investment Adviser had renegotiated 94% of the Company's fixed price risk adjusted CER volumes expected to be delivered under the Company's ERPAs. When the Investment Adviser previously reported at 31 October 2012 41% of the Company's fixed price risk adjusted volumes had been renegotiated. The Company is exploring several options in relation to the remaining ERPAs, including the possible termination of the contracts.

- The fair value of the Company's CER portfolio (excluding inventory and payables) has increased by GBP 5.4 million in the Financial Period due to the renegotiation of ERPAs referred to above, which has offset the effect of the continued fall in CER prices during the Financial Period.

- At the end of the Financial Period, the Company had hedges in place relating to the carbon portfolio valued at EUR 3.5 million (GBP 2.8 million). The Company's hedges were valued at EUR 3.3 million (GBP 2.8 million) at 28 February 2013. The hedges were valued atEUR 3.8 million (GBP 3.3 million) should CER prices fall to zero.

CER portfolio overview

The Company's CER portfolio was designed to provide a long exposure to the price of CERs. This was achieved principally by acquiring CERs issued from CDM projects on a fixed price basis under ERPAs. Prior to 01 July 2011, the average purchase price paid by the Company for CERs was consistently below the secondary market price, meaning that the CER portfolio was a net asset for the Company. However during the 2012 and 2013 financial years, CER prices have declined significantly, with a December 2013 CER valued at EUR 4.44 at 30 June 2012 and reaching a market low of EUR 0.32 on 18 February 2013.

Under these market conditions, the long position in CERs became a significant net liability for the Company. The Investment Adviser, on behalf of the Company, has substantially reduced these liabilities primarily through the renegotiation of ERPAs as well as through the execution of hedging activities in the secondary market.

This Report deals with CERs projected to be generated prior to the end of 2012 ("Pre-2012 CERs"); and CERs that are projected to be generated after 2012 ("Post-2012 CERs").

The details of the Company's risk adjusted CER portfolio (excluding inventory) as at 31 December 2012 are set out in Table 1.

The risk adjusted quantities have been valued using ICE CER prices as at 31 December 2012. Consistent with previous years, the estimated cash flows resulting from the Company's ERPAs are discounted to determine the net present value of the rights to CERs under each ERPA.

The average price per CER used for valuation purposes has declined significantly between the beginning and end of the Financial Period due to a combination of the renegotiation of ERPAs and declining market prices.

As at 31 December 2012, the Investment Adviser projects that the Company will receive approximately 10.0 million Pre-2012 CERs (including UCF HFC CERs) for which it will have to pay an average price of EUR 0.70 per CER. This can be split between fixed price quantities of 0.7 million CERs at a weighted average price of EUR 6.42 per CER, those purchased under renegotiated ERPAs of 8.1 million CERs at a weighted average price of EUR 0.32 per CER and 1.2 million CERs expected from the Asia Biogas projects for which TEP does not pay a purchase price.

The Investment Adviser also projects that 17.7 million Post-2012 CERs (including UCF HFC CERs) will be delivered from 2013 onwards. This is made up of 1.7 million fixed price CERs at a weighted average price of EUR 6.35, 15.8 million spot price CERs at a weighted average price of EUR 0.69 per CER, and 0.2 million CERs expected from Asia Biogas projects, for which the Company does not pay a purchase price. The increase of 12.4 million Post-2012 CERs is primarily due to the renegotiation of ERPAs, explained in more detail below.

During the Financial Period, 2.8 million CERs were delivered to the Company at an average price of EUR 6.34. Most of the CERs purchased by the Company in the Financial Period were then sold in the secondary market at an average price of EUR 3.50 per CER.

Details of the Company's risk adjusted CER portfolio (excluding inventory) as at 28 February 2013 are set out below in Table 2.

As at 28 February 2013, the Investment Adviser projects that the Company will receive 9.8 million Pre-2012 CERs (including UCF HFC CERs) for which it will have to pay an average price of EUR 0.53 per CER. This can be split between fixed price quantities of 0.4 million CERs at a weighted average price of EUR 7.14 per CER, 8.2 million CERs purchased under renegotiated ERPAs at a weighted average price of EUR 0.29 per CER and 1.2 million CERs expected to be delivered from Asia Biogas projects for which the Company does not pay a purchase price.

The Investment Adviser also projects that 20.0 million Post-2012 CERs will be delivered from 2013 onwards. This is made up of 1.7 million fixed price CERs (including UCF HFC CERs) at a weighted average price of EUR 6.35 per CER, 18.1 million spot price CERs at a weighted average price of EUR 0.56 per CER and 0.2 million CERs are expected to be delivered from Asia Biogas for which the Company does not pay a purchase price. There has been an increase of 2.8 million CERs in the two month period ending 28 February 2013 due to the renegotiation of two additional ERPA contracts following the end of the Financial Period.

Renegotiated ERPAs

The current market price of CERs is now substantially lower than when the original ERPAs were executed. Under the original ERPAs, the Company was obliged to purchase Pre-2012 CERs at a fixed price and in some instances had an option or a right of first refusal to buy Post-2012 CERs at a fixed price. The Company was also obliged to purchase Post-2012 CERs out to dates between 2015 and 2017, depending on the individual projects. If the price of CERs had remained stable after the ERPAs had been negotiated then the Company would have realised profits on each ERPA. However, after the price of CERs fell below the fixed price the Company had agreed to pay, the Board instructed the Investment Adviser to enter into ERPA renegotiations with project owners. The new structure for the majority of the renegotiated ERPAs has replaced the fixed price paid per CER with one where the Company pays a percentage of CER spot price on the date of delivery to the Company. In effect, the Company should earn a positive margin, provided the CER price remains at a level sufficient to cover costs and expenses. At the same time, the Company, where possible, has also offered to purchase Post-2012 CERs on the same floating price terms.

As at the date of this Report, 25 out of 44 previously fixed price ERPAs (excluding the UCF HFC projects) have been renegotiated, such that the price per CER has changed from a fixed price to a floating price basis. These 25 projects account for 94% of the Company's risk adjusted CER volumes expected to be delivered.

For many of the remaining 19 fixed price ERPAs, the Company projects that there will be no future issuances and is exploring several options relating to the remaining ERPAs, including the possible termination of the contracts. A summary of the impact of the renegotiations is set out in Table 3.

Table 3: Renegotiated ERPAs/ estimated maximum liability of fixed price contracts

* The CERs to be delivered has been calculated by taking the total expected volume Post-2012, divided by the number of years left in phase III of the EU ETS (8 years)

** Represent the total renegotiated projected risk adjusted volumes the Company has committed to purchase as a percentage of total risk adjusted volumes, excluding HFC projects.

*** Includes CER liabilities from HFC projects

Cash flows from purchases and sales of carbon

In the Financial Period, the Company sold approximately 3.9 million CERs with net proceeds of approximately GBP 7.3 million. The Company's average CER purchase price was EUR 6.34 for CERs received in the Financial Period (refer to Table 1) but only 2.0 million CERs were paid for in the period. A summary of the purchases and sales cash inflows and outflows in GBP from the CER portfolio has been included in Table 4 below, with June 2012 comparative movements.

Table 4: Cash flow from purchases and sales of carbon (GBP)

Inventory

As at 28 February 2013, the Company held inventory of approximately 1.7 million CERs, valued at EUR 0.6 million (GBP 0.5 million), and 0.1 million European Union Allowances ("EUAs") valued at EUR 0.4 million (GBP 0.3 million). As at 31 December 2012, the Company held inventory of approximately 0.9 million CERs and 0.1 million European Union Allowances ("EUAs"), valued at EUR 0.6 million (GBP 0.5 million).

Trading activities including hedging and swaps

A significant amount of CER sales activity has been carried out by the Company through physical delivery against exchange traded fund positions through a broker. This has been a key activity with regards to managing the CER portfolio as it serves as a hedging mechanism. This is especially significant in the light of falling CER prices. The hedges were valued at EUR 3.5 million (GBP 2.8 million) at 31 December 2012.

At 28 February 2013, the Company has forward sold approximately 2.0 million CERs for delivery in March 2013 providing aggregate proceeds (due on delivery) of approximately EUR 0.5 million. The value of these hedges as at 28 February 2013 was EUR 3.3 million.

The Investment Adviser and the Company expects that, given that the portfolio has substantially moved away from fixed price positions, future sales of CERs should be predominantly executed through brokers at prices approximating spot. Therefore the Company does not anticipate holding significant hedge positions for CERs going forward.

The Company no longer holds a position on any CER/EUA swaps.

Cash position for CER payments

The Investment Adviser and the Board closely monitor cash held by the Company in connection with management of the CER portfolio. The Investment Adviser and the Board believe the Company should be prudent in managing this exposure. Successful ERPA renegotiations have reduced this exposure. The following reconciliation shows the available cash projection on the basis of fixed price exposures as at 28 February 2013:

Should CER prices have fallen to zero at 28 February 2013, it is estimated that the Company would have had a cash exposure of GBP 12.7 million at that date. The Company held cash at 28 February 2013 of GBP 38.3 million of which GBP 8.8 million is restricted.

CDM project portfolio under UCF ERPAs

The Company has agreements with the World Bank UCF for two HFC-23 destruction projects. Delivery has generally taken place quarterly. However, there had been delays in issuance as the CDM Executive Board required clarification as to whether replacement or retro-fitted parts were impacting the historical waste generation rate. This issue has reached a resolution and issuances recommenced again in November 2012.

The European Union is not allowing the use of CERs generated from HFC-23 projects in Phase 3 of the EU ETS. This will apply to CERs generated from such projects from 01 January 2013. The Company's valuation methodology reflects the change, with CERs expected to be received from HFC-23 projects after March 2013 being valued at zero.

The Company has an obligation to purchase a projected 1.7 million CERs from the HFC projects with the final delivery projected to occur in early 2014. The Investment Adviser and the Board are examining all options to reduce the Company's exposure to Post-2012 CERs from these HFC projects. These projects represent 80% of fixed price volumes as at 28 February 2013.

The Company's outstanding bank guarantee in favour of the World Bank, secured by pledged deposits, currently stands at EUR 10.3 million (GBP 8.8 million).

Part 2: Private equity portfolio

Bionasa

Bionasa Combustivel Natural S.A. ("Bionasa") is a special purpose Brazilian biodiesel company. The Bionasa project was developed and implemented by Bionasa's original shareholders, Jaragua and Canabrava. The Company provided the bulk of the development capital through a convertible preferred equity investment. The Company became entitled to convert its 25% minority interest into 99.4% of Bionasa's ordinary share capital on 31 July 2010 as a result of Bionasa's non-payment of dividends, although this is the subject of an ongoing dispute resolution process before the arbitral chamber of the Sao Paulo Stock Exchange (BOVESPA).

On 25 January 2012, the Company,Jaragua and Canabrava agreed to suspend the arbitration process and pursue a joint capital raise intended to enable the Company to realise its investment in Bionasa. Under the agreement, the parties agreed to work jointly to raise capital at the Bionasa level for the purpose of buying back the Company's investment at a minimum price acceptable to the Board, whether in the form of debt, equity or a hybrid structure. A sale of the entire company is also possible under the right circumstances. To that end, the parties have retained a financial adviser to lead the capital raise. This process has been actively on-going through the latter part of 2012. Notwithstanding some interest in Bionasa from third parties, the Company decided in January 2013 to return to arbitration while the sales process continues in parallel.

The Bionasa plant became fully operational and licensed in 2011 and achieved social seal certification in 2012, which permits greater participation in the biodiesel auctions and premium pricing. Brazil's nascent biodiesel industry is small compared to its vast ethanol market, but it benefits from a mandated 5% blend in all commercial diesel. The current 5% blend requirement is projected to increase incrementally to meet the Brazilian authorities' expressed goal of 20% biodiesel admixture by 2020. The Investment Adviser believes that Bionasa is well positioned to take advantage of growth and consolidation opportunities in Brazil.

Surya - TEP Solar

Surya PLC ("Surya") is a wholly-owned subsidiary of the Company. Surya, through its subsidiary TEP (Solar Holdings) Limited ("TS"), has invested primarily in companies that own and operate solar PV projects located in Italy. Surya's strategy has been to build critical mass in solar PV assets to leverage economies of scale.

TS owns five special purpose vehicles ("SPVs" or "Project Companies") that in turn own and operate eight PV plants in southern and central Italy with a total installed capacity of approximately 24.6 MW. The five SPVs are all fully operational and generating cash flows from the sale of electricity and tariff eligibility. The aggregated production levels and sales of electricity to the Italian grid operator are in excess of expectations.

TS has refinanced three of the SPVs, representing 13.4 MW of its portfolio, via limited recourse bank project finance facilities. An additional SPV, representing 2 MW of TS' portfolio has been refinanced via a sale and leaseback structure. The refinancings represent approximately 80% of project capital costs incurred, and are repayable over the life of the projects. It is important to note that these facilities are ringfenced within the TS structure, and are with limited recourse to the Company.

One SPV, Librandello, owns and operates a single site PV plant in Sicily with a capacity of 9.2 MW. Librandello and TS have signed a mandate for the financing of Librandello with a major Italian bank. The parties are currently negotiating the relevant project financing documentation, with completion targeted for Q2 2013. The Investment Adviser believes that following completion of the re-financing of Librandello, TS' assets will represent an attractive fully-financed operating investment portfolio.

As at 31 December 2012, the Company had invested approximately EUR 36.0 million in Surya via equity, and a further EUR 21.1 million via debt instruments. An additional loan of EUR 2.0 million, plus accrued interest, remains outstanding to EEA Group Limited (parent company of the Investment Adviser) by way of a secured, repayable on-demand facility. Surya must repay the EEA Group loan on the earlier to occur of, amongst other things, any refinancing or termination of the investment advisory agreement between the Company and the Investment Adviser.

Element Markets

Element Markets ("EM"), founded in 2005, is a marketer of environmental commodities such as air emissions credits ("ERC"), greenhouse gas ("GHG") credits, Renewable Energy Certificates ("RECs") and Renewable Identification Numbers ("RINs"). Additionally, the Company has become a producer and marketer of biomethane in the US.

Element Markets has contracted rights to over 13,900 MMBtu/day of biomethane gas and has executed off-take agreements for approximately 9,150 MMBtu/day. EM is also currently in the process of developing several landfill gas-based biomethane projects to partially fulfil these off-take contracts, some of which require completion by April 2014, the current statutory deadline for inclusion into certain markets. In addition to developing landfill gas projects, EM owns the Huckabay Ridge Renewable Natural Gas Facility in Stephenville, Texas, one of the largest anaerobic digestion projects in the US. The facility is currently shut in as management is considering various options, including upgrading and/or selling the plant. In addition to its proprietary development efforts, Element Markets also provides biogas marketing services to third-party projects.

The Company has over the past eighteen months sought to exit its interest in Element Markets. While an outright purchase of the entire business has not, to date, materialized, interest has emerged for the sale and/or a joint venture related to Element Markets' biogas business and/or assets.

Discussions are ongoing with senior management regarding the future strategy and financing options of the business, taking into account the Company's desire for liquidity. To this end, Element Markets has entered into a non-binding indication of interest to sell one of its projects and is actively marketing other assets. In addition, the Company and Element Markets' management are now reviewing indications of interest that may provide liquidity to the Company. However, there can be no assurances that any of these transactions will take place.

EWG Slupsk

The project consists of 98 wind turbines across 8 wind farm clusters located in Northern Poland with an installed capacity of 245MW,assuming 2.5MW wind turbine generators ("WTGs"). The Company, through TEP (Renewables Holding) Limited, bought a 60% share in the project development company EWG Slupsk Sp. Z.o.o. ("EWGS") with the aim of taking the project to a fully permitted and ready for construction stage before managing a profitable exit.

The project has a grid connection agreement and has received all building permits and licences for construction of the WTGs. One building permit in relation to the reconstruction of roads is outstanding and is expected to be received shortly. Land rights have been acquired under leases. Whilst environmental decisions are already in place, EWGS reapplied for environmental permits under the new regulation (introduced in 2010) in case this is required by a potential investor. 37 WTGs have already been issued with these new permits with the balance expected to be received in Q2 2013. The project is expected to be fully permitted and ready for construction by the end of Q2 2013.

A new draft law on renewable energy was released by the Polish government in October 2012. The government has indicated that it will extend the current incentive scheme regime which provides for a support mechanism and an obligation to offtake electricity generated from renewable energy sources at a set price. Energy from renewable sources will also continue to benefit from priority of dispatch. The draft law has been well received by industry players, investors and financial institutions. However, the government failed to publish a final law for legislative approval, thereby creating a regulatory void and uncertainty. Whilst the legislation is currently expected to be finalised and to enter into force in 2013, the precise timing is unclear.

Discussions are taking place regarding the sale of EWGS. It is hoped to agree on a disposal of EWGS by the end of 2013.

Asia Biogas ("ABS")

ABS was formed in September 2010 to consolidate the interests of the Company and Silk Roads Limited (a holding company for the Asia Biogas founders) in a number of jointly owned companies in South East Asia. ABS and its subsidiaries (the "ABS Group") form a biogas systems design, engineering, construction and operating group with operations in Thailand, the Philippines and Indonesia.

When ABS was formed, the Company invested USD 5 million by way of a convertible loan note, which became due for repayment on 17 September 2012. The Company converted USD 250,000 of principal plus all accrued interest at that date to increase its shareholding to 95.1%. ABS repaid USD 350,000 to the Company in January 2013. The management of ABS has suggested a repayment schedule for the outstanding TEP loan including repaying a further USD 1.5 million in loan principal during 2013, with the remaining balance to be repaid in 2014.

The ABS Group has been cash flow positive on a month-to-month basis since March 2012. As at 31 December 2012, the ABS Group held cash balances of approximately USD 3.6 million.

ABS operates two starch facilities in Thailand and owns a minority interest in a third. The largest project is Korat Waste to Energy which is the principal generator of cash flow for the ABS Group. Revenues from this project will cease in May 2013. ABS Group also operates a number of waste to energy projects hosted on pig farms in the Philippines and Thailand which generally have performed poorly and are currently being restructured, closed or sold.

ABS is presently developing projects to replace these income streams, the most advanced being a 2MW gasification plus 1.9MW biogas electricity generating project in Krabi, Thailand. Most of the required investment to start up the projects would be sourced from third party debt and equity investors. ABS management continues to explore other possibilities for an exit and is reporting progress in relation to discussions with several third parties.

Carbon Capital Markets, ("CCM") provided investment management services to the Carbon Assets Fund ("CAF") and oversees the Zybranka project in the Ukraine. CCM has now managed-out its various OTC and on exchange positions.

In the previous financial year, CCM recovered GBP 1.2m in input tax arrears from HMRC and redeemed the Company's remaining outstanding preference shares, returning an additional GBP 800,000 to the Company.

The Company has received approaches concerning an acquisition of the business, but none of these came to fruition. CCM has now appointed a liquidator in preparation for completion of a members voluntary liquidation process, the proceeds of which are expected to be at or around CCMs current net asset value.

Private equity investments disposed of during the Financial Period

The Company has realised a number of private equity investments during the Financial Period.

·; Chapel Street Environmental LP ("Chapel Street")

The Company received USD 1.9 million on 27 April 2012 as a capital distribution from Chapel Street. The Company received a further USD 4.0 million on 29 November 2012 in return for the buy-back of its interest in Chapel Street. The Company no longer holds an interest in Chapel Street.

·; EcoTraders ("ET")

A management buyout of ET was completed during the Financial Period and TEP Investment Luxembourg S.a.r.l received EUR 100,000. The Company no longer holds an interest in ET.

·; Energia Escalona

The Company had provided a USD 500,000 loan for working capital purposes to Energia Escalona. The loan was due to be repaid in CERs generated before 2012. The project suffered delays to its development programme and was not operational. The Company terminated the loan and related agreements and received USD 300,000 as final settlement on 3 October 2012.

Private equity investments disposed of in prior Reporting Periods with contingent consideration

·; Environmental Credit Corp ("ECC")

The Company sold its interest in ECC to ECC's senior management in May 2012, with consideration taking the form of a nominal upfront cash payment to the Company of USD 15,000, a 12 month loan note for USD 130,000, and the right to an additional payment in the event of a future sale of ECC above a certain threshold. The additional payment is worth up to 80% of the excess over a payment of USD 300,000 in the event of a change of control of ECC outside the ordinary course of business or the transfer of the majority of ECC's assets. If this happens i) on or before 31 May 2013, 80% of the excess will be due to the Company, ii) after 31 May 2013 but on or before 31 May 2014, 50% of the excess will be due to the Company and iii) after 31 May 2014 but on or before 31 May 2015, 20% of the excess will be due to the Company.

·; Electricidad Andina

Through its participation in the Santa Rita Limited Partnership ("SRLP"), the Company owned 97.3% of Electricidad Andina S.A., a company incorporated in Peru. Electricidad Andina was sold in April 2012. SRLP received USD 100,000 upon the signing of the sale and purchase agreement. Additional amounts may become payable to SRLP if any of the following occur: i) USD 400,000 upon the project receiving a power purchase agreement, ii) USD 9.5 million upon the project's financial close and iii) an amount capped at USD 5.0 million in the event that certain performance targets are met.

The Investment Adviser estimates that the project may execute a power purchase agreement within six months from the date of this Report and that financial close may occur up to two years thereafter. It should be noted that there can be no assurance that any of these events will happen either within these timeframes or at all.

Private equity investment in liquidation

·; Sun Biofuels ("SBF")

The Company appointed an administrator of SBF in July 2011 and a creditors liquidation is currently in process. The Company expects to receive approximately GBP 300,000 once the liquidation process has been completed.

Carbon loans

·; Alto Tietê Biogás - Brazil

In October 2010, the Company provided a cash and CER facility to the Alto Tietê Biogás ("ATB") landfill gas capture and flaring project located in Itaquaquecetuba, State of São Paulo, Brazil. The cash facility was for up to EUR 1.0 million and the CER facility was for 40,000 CERs. It was intended that the facility would be repaid in CERs generated from the project. However, although the project registered with the UNFCCC and began operation in September 2008, issuances were rejected by the UNFCCC. As such, the Board reassessed the recoverability of the outstanding loan balance and recognised an impairment in the 2012 financial year. The Board is in consultation with local lawyers regarding the recovery of the loan.

·; Dairy farm finance facility - Mexico

In April 2009, the Company entered into a carbon loan facility with Environmental Credit Corp ("ECC") to finance the construction of biodigesters at a number of dairy farms in Mexico. A total of USD 875,000 was drawn down. In July 2011, the loan was settled by ECC by assigning its project lagoon covers to the Company and hence the Company became the beneficiary of the CERs expected to be generated by the project's bundle of biodigesters.

The project bundle was registered in October 2011 and is now operational. Whilst the Company is pursuing the sale of the projects and rights to the CERs, the Board re-assessed the recoverable amount of the lagoon covers, including the expected costs to be incurred in running the project, and recognised an impairment in the 2012 financial year.

EEA Fund Management Limited

Investment Adviser

26 March 2013

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

The consolidated interim financial statements were approved and authorised for issue by the Board of Directors on 26 March 2013 and signed on its behalf by:

Philip Scales Peter Vanderpump

Director Director

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Interim Financial Statements

1 Operations

Trading Emissions PLC ("the Company") and its subsidiaries (together "the Group") invest in environmental and emissions assets, companies providing products and services related to the reduction of greenhouse gas ("GHG") emissions and associated financial products. The Company is currently pursuing a realisation strategy which aims to optimise the cash value of the Company's assets through a controlled realisation process.

The Company is a closed-ended investment company domiciled in the Isle of Man and the address of its registered office is IOMA House, Hope Street, Douglas, Isle of Man. It was incorporated on 15 March 2005 in the Isle of Man as a public limited company and is quoted on the Alternative Investment Market ("AIM") operated and regulated by the London Stock Exchange.

2 Basis of Preparation

The unaudited consolidated interim financial statements have been prepared using the recognition measurement principles of International Accounting Standards ("IAS"), International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively "IFRSs").

The principal accounting policies applied in the preparation of the consolidated interim financial statements are those the Company expects to apply in its financial statements for the year ended 30 June 2013 and are unchanged from those disclosed in the annual audited financial statements for 30 June 2012. These policies have been consistently applied to each of the periods presented unless otherwise stated. The audited financial statements for the year ended 30 June 2012 are available at www.tradingemissionsplc.com.

While the financial information included in the consolidated interim financial statements has been prepared in accordance with the AIM Rules for Companies, the consolidated interim financial statements do not themselves contain sufficient information to comply fully with IFRSs. As permitted, the Company has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing its consolidated interim financial statements.

The consolidated interim financial statements for the six months ended 31 December 2012 should be read in conjunction with the annual financial statements for the year ended 30 June 2012 which have been prepared in accordance with IFRSs.

3 Investment Advisory and Performance fees

Investment Advisory fees for the 6 months to 31 December 2012 were GBP 3,000,000 (for the year ending 30 June 2012: GBP 6,000,000 and for the 6 months ending 31 Dec 2011: GBP 3,000,000).

The Company entered into a new agreement with its Investment Adviser, EEA Fund Management Limited ('EEA'), with effect from 1 January 2013. The agreement terminates on 31 December 2013 and may be extended subject to written notice served by the Company on the Investment Adviser prior to 1 October 2013, subject to 3 months written notice of termination thereafter to be given by the Company or 6 months written notice thereafter to be given by the Investment Adviser.

Under the new agreement, EEA is entitled to receive fixed fees, with the fee structure being split between carbon advisory and private equity advisory services. The fee in relation to carbon advisory services is GBP 120,000 per annum, payable monthly in advance. The fee in relation to private equity advisory services is GBP 1,200,000 per annum payable monthly in advance.

EEA is also entitled to an additional one off fee once the carbon portfolio is fully realised. Should the disposal take place before 30 April 2013 a fee of GBP 80,000 is payable. If the disposal takes place after 30 April 2013 a fee of GBP 20,000 is payable.

EEA is entitled to an Equity Transaction fee equal to 2.7 per cent of the net aggregate consideration received by the Group on any disposal of an investment from the private equity portfolio during the duration of the agreement and up to 6 months following the termination of the agreement.

4 Net foreign exchange (losses)/gains

Net foreign exchange (losses)/gains have arisen on the translation of EUR and USD denominated cash deposits and certain EUR and USD denominated loans to British pounds, the Company's functional and presentation currency.

5 Other expenses

6 Disposal groups classified as held for sale

Disposal groups are classified as held for sale in accordance with IFRS 5 when their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Disposal groups that are classified as held for sale are available for immediate sale in their present condition, and a sale is highly probable. The sale of disposal groups is considered highly probable by the Group when the Directors are committed to the plan, there is an active programme to locate a buyer and when the sale is expected to be completed within 12 months from classification, unless circumstances outside of the Company's control prevent the sale within that period.

Consistent with the Investing Policy, the Board is continuing with its strategy of selling the Company's individual private equity investments in the short to medium term to targeted strategic buyers, with the objective of maximising returns to Shareholders. All of the Company's private equity investments other than those accounted for as financial assets at fair value through profit or loss have been classified as held for sale in accordance with IFRS 5.

A number of the disposal groups have now been held for sale in excess of 12 months. The Board remains committed to the plan of selling these subsidiaries and are still actively approaching strategic buyers with the objective of selling these disposal groups.

Plant and equipment includes land, which is not depreciated of GBP 999,000. At 31 December 2012, net property, plant and equipment held under finance leases amounted to GBP 7,136,000 (30 June 2012: GBP 6,880,000). Net property plant and equipment of GBP 43,532,000 (30 June 2012: GBP 43,158,000) is pledged as security for financial liabilities.

7 Cash and cash equivalents, restricted cash and cash margin due from/payable to broker

(a) Cash and cash equivalents

For the purpose of the Consolidated Cash Flow Statement, cash and cash equivalents comprise the following balances:

*GBP 51,175,000 (30 June 2012: GBP 44,695,000) is held by TEP.

(b) Restricted cash

At 31 December 2012, restricted cash included GBP 9,616,000 (30 June 2012: GBP 16,327,000) of cash held in a pledge guarantee account which is used specifically for drawdown obligations under the UCF facility agreement and GBP 825,000 (30 June 2012: GBP 2,106,000) margin cash held at the Company's prime broker.

A group company held for sale also holds restricted cash of GBP 3,486,000 (30 June 2012: GBP 2,468,000). This primarily relates to margin requirements for positions held through brokers, as well as letters of credit held in relation to trading positions.

(c) Cash margin due from/payable to broker

In order to trade on ICE, the Company is required to place a margin for each contract traded. The margin calls for futures and options contracts take two forms - initial and variation margin. Initial margin is a returnable good faith deposit required whenever a futures position is opened. The cash is returned when the position is closed out or expires (is held to delivery). Variation margin represents the profit/loss in a position each day which is calculated by the clearing house. In the case of excess margin collateralised against the marked to market gains, the Group can withdraw the excess from the broker account. At 31 December 2012, margin cash deposited against the unrealised marked to market gain was GBP 825,000 (30 June 2012: GBP 2,106,000).

8 Leases

The Group holds a photovoltaic plant ("the Plant") under a finance lease. The lease runs for a period of 216 months. The rental amounts are indexed on the basis of monthly average of 3-month EURIBOR. Upon expiration of the agreement, Etuno S.r.l. shall choose one of the following options:

1. To purchase back the Plant without receiving any guarantee from the lessor for consideration equal to 1 per cent. of the consideration.

2. To deliver to the lessor the Plant, in good maintenance condition and free from any encumbrance within 15 business days from the expiration date. In case of delay, a penalty equal to the last monthly rent increased by one third would apply for each day of delay.

9 Borrowings

*Included within borrowings classified as held for sale (see note 6)

In 2010 the Group entered into a facility with EEA Group Limited for an amount of EUR 12,000,000. The interest rate is 3.81 per cent per annum. EEA Group Limited is a related party to the Group, as one of its subsidiaries is the Investment Adviser. Security has been provided in the form of a fixed charge over the proceeds due to Surya Plc from its subsidiary TEP (Solar Holdings) Limited under a total return swap between the two parties and a floating charge over the assets of Surya Plc. The value of this security at 31 December 2012 is GBP 30,403,000. At 31 December 2012 the principal loan balance outstanding was EUR 2,000,000 (GBP 1,625,000) and accrued interest of EUR 952,000 (GBP 773,000). The balance is due to be repaid on the earlier to occur of, amongst other things, any refinancing or termination of the investment advisory agreement between the Company and the Investment Adviser.

Other borrowings described in this note relate to disposal groups classified as held for sale.

Borrowings are represented by several external debt facilities detailed below.

EUR 36,800,000 facility

This comprises EUR 32,600,000 for a Senior Term Loan Facility, EUR 2,200,000 for a True Up Facility and EUR 2,000,000 for a VAT Facility.

For the Senior Term Loan Facility and the True Up Facility the termination date is 2028 and the interest rate is 2.46 per cent on 80% of the facility with the remaining 20% at a rate of six month EURIBOR plus a margin of 3.05 per cent for the first five years. For the VAT Facility the termination date is 2014 and the interest rate is six month EURIBOR plus a margin of 2 per cent.

Security has been established for this facility over the shares of Solar Energy Italia 1 S.r.l, property rights of land, and a pledge over other future receivables. The value of this security at 31 December 2012 is GBP 27,241,000.

As at 31 December 2012 the Group had drawn down EUR 31,335,000 under this facility. Related to this facility are two interest rate swap agreements. The swap agreements cover 80 per cent of the value of the facility and have a termination date in 2028.

EUR 10,998,000 facility

This comprises EUR 9,843,000 for a Term Loan Facility and EUR 1,155,000 for a VAT Facility. For the Senior Term Loan Facility the termination date is 2029 and the interest rate is 2.46 per cent on 80% of the facility with the remaining 20% at a rate of six month EURIBOR plus a margin of 3.05 per cent for the first five years. For the VAT Facility the termination date is 2014 and the interest rate is six month EURIBOR plus a margin of 1.8 per cent.

Security has been established for this facility over the shares of RGP Puglia S.r.l (Ravano), property rights of land and a pledge over other future receivables. The value of this security at 31 December 2012 is GBP 11,162,000.

As at 31 December 2012 the Group had drawn down EUR 10,299,000 under this facility. Related to this facility is an interest rate swap agreement. The swap agreement covers 80 per cent of the value of the facility and has a termination date of 2029.

EUR 8,273,000 facility

This comprises EUR 7,532,000 for a Senior Term Loan Facility and EUR 741,000 for a VAT facility. For the Term Loan Facility the termination date is 2029 and the interest rates are set at the same terms as for the EUR 10,998,000 facility.

Security has been established for this facility over the shares of Florasolar S.r.l property rights of land and a pledge over other future receivables. The value of this security at 31 December 2012 is GBP 8,429,200.

As at 31 December 2012 the Group had drawn down EUR 8,045,000 under this facility. Related to this facility is an interest rate swap agreement. The swap agreement covers 80 per cent of the value of the facility and has a termination date of 2029.

10 Profit / (loss) per share

(a) Basic

Basic profit or loss per share is calculated by dividing the profit or loss attributable to the ordinary Shareholders by the weighted average number of ordinary shares in issue during the period.

(b) Diluted

Diluted profit or loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company had no dilutive potential ordinary shares at 31 December 2012, 30 June 2012 or 31 December 2011.

11 Net asset value per share

The net asset value per share is calculated by dividing the net assets attributable to the equity holders of the Company by the number of ordinary shares in issue.

12 Share capital

The total number of authorised and issued ordinary shares of the Company is as follows.