Trading Update
EcoSecurities Group plc
13 July 2006
EcoSecurities Group plc
Trading Update
First CER Revenues Recognised
EcoSecurities Group plc (the "Group" or "EcoSecurities"), one of the world's
leading originators of projects which generate carbon credits, today issues a
trading update relating to it's half year period ended 30 June 2006.
Highlights of the period include recognition of the Group's first revenues
relating 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 contract
volume of the Group's carbon credit portfolio growing to 130 million CERs at 30
June 2006. Since the IPO last autumn which referenced the portfolio as at 31
October 2005, the Group has added 59 million tonnes of CERs to its portfolio
which is in line with the Board's expectations. The highlight of the growth in
the portfolio during this period was the increase in principal contracts, with
over 95% of the additions relating to principal agreements, which significantly
exceeded our expectations.
(Note: Gross contract volume includes all expected CER production from projects
through 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 and
developers. Gross contract volume excludes projects where the probability of
either the development of a relevant methodology or the underlying development
of the project is still uncertain.)
Other highlights of the Group's origination activities include the contracting
of several development projects which reduce emissions of nitrous oxide, a major
greenhouse gas, 310 times more potent than CO2. These projects represent
EcoSecurities first involvement in emissions abatement of industrial gases and
represent a substantial growth opportunity for the Group going forward. As
announced on 12 July 2006 the Group signed 8 agreements for the development of
such projects in China.
The Group continues to make progress related to its joint development agreement
with Cargill. MOU's for seven projects were signed in June relating to projects
in 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, over
150 are now financed, while 108 are either under construction or already in
operation. At present, 17 projects have been fully registered with the CDM
Executive Board. Once full registration is completed and the projects become
operational, they will begin to accumulate emissions reductions that will be
subsequently verified and sold as CERs by the Group. To date 66 of the Group's
projects are in operation and are expected to generate 2.5 million tonnes per
year of emissions reductions.
While both the Group's CDM process submissions and the underlying progress in
construction and operation of the contracted projects is progressing in line
with our expectations, the rate of both Host Country and CDM registration
approval 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 first
principal trading revenues which resulted from the sale of CERs produced by a
landfill gas project in China, where carbon credits are created through the
capture of methane gas. The CERs, the first ever to be produced from a project
in China, were sold to a major market participant in Europe and the transaction
sets the precedent for sale of the Group's future non-committed production into
the spot market. Future Group revenues will be generated through a combination
of deliveries against committed forward transactions as well as through spot
market 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 31
May 2006. Highlights of transactions in June included completion of a
transaction with a European government as well as a large Japanese corporate.
The Net Trading Margin (NTM) locked in from the future delivery of 21 million
tonnes of CERs related to these transactions is €100 million. The NTM is
calculated as total revenue less costs based on the contract terms that
EcoSecurities 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 a
number of factors including a stronger balance sheet, continued strong market
prices 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 portfolio
has now begun to produce CERs and generate revenues for the Group which is a key
milestone achievement.
The progress the Group has achieved is based on its strength in origination, via
amassing a large and diversified portfolio of projects, and commercialisation
via the successful structuring of forward sales to meet the specific needs of
Kyoto related compliance buyers. The Group's geographic spread and depth of
expertise enables it to add value to the entire spectrum of the carbon credit
development process and this is demonstrated by the attractive margins the Group
continues to achieve. The larger our portfolio becomes, the more attractive
the Group's value proposition becomes to both project developers and Kyoto
compliance buyers.
We continue to focus on our core strengths in origination, implementation and
commercialisation of carbon credit projects. Given current market prices and
attractive margins we plan to maintain this focus as a market leader and will
continue to build shareholder value."
Analyst Seminar
The Group is holding a seminar for analysts in London on the morning of
Wednesday 19 July 2006. Analysts wishing to attend should contact Ged Brumby at
Citigate Dewe Rogerson on 020 7638 9571 for further details.
- Ends -
For further information please contact:
EcoSecurities Group plc
Bruce Usher, CEO +44 (0) 1865 202 635
Pedro Moura Costa, COO +44 (0) 1865 202 635
Citigate Dewe Rogerson +44 (0) 20 7638 9571
Kevin Smith
Ged Brumby
About EcoSecurities:
EcoSecurities is one of the world's leading companies in the business of
originating, developing and trading carbon credits. EcoSecurities structures and
guides greenhouse gas emission reduction projects through the Kyoto Protocol,
acting as principal intermediary between the projects and the buyers of carbon
credits.
EcoSecurities works with companies in developing and industrialising countries
to create carbon credits from projects that reduce emissions of greenhouse
gases. 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 20 countries on five
continents, EcoSecurities has amassed one of the industry's largest and most
diversified portfolios of carbon projects. Today, the company is working on 213
projects in 26 countries using 17 different technologies, with the potential to
generate more than 130 million carbon credits.
EcoSecurities also works with companies in the developed world to assist them in
meeting their greenhouse gas emission compliance targets. Utilising its highly
diversified carbon credit portfolio, EcoSecurities is able to structure carbon
credit transactions to fit compliance buyer's 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' consultancy division has been at the
forefront of all the significant policy and scientific developments in this
field. EcoSecurities Consult has been recognised as the world's leading
greenhouse gas advisory firm over the last five 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.
This information is provided by RNS
The company news service from the London Stock Exchange