Interim Results

RNS Number : 1897D

EcoSecurities Group plc

11 September 2008

 



Press release for the interim statement 11 September 2008

ECOSECURITIES GROUP PLC

Interim Results for the six months ended 30 June 2008

Dublin, Ireland - EcoSecurities Group plc ('EcoSecurities', or the 'Company'), one of the world's leading companies in the business of sourcing, developing and trading carbon credits from greenhouse gas emission reduction projects, today announces its interim results for the six months ended 30 June 2008.

Highlights

• First period of significant issuance from the Group's portfolio with 595,000 CERs issued to EcoSecurities during the first half of 2008 (72,000 CERs for H1 2007).

• Consolidated revenue rose to €13.4m for the first half of 2008, an increase of 140% over the same period last year.

• Revenue recognised in respect of 825,000 CERs and 346,000 VERs in the period (283,000 CERs and 38,000 VERs for H1 2007).  

• CER deliveries and cash collection in the period were not affected by the lack of a connection between the CITL and the ITL as management took steps to deliver via connected registries. 

• Inventory on hand or contracted of over 2.86 million CERs at 30 June 2008 with an average acquisition cost of €13.50 per CER (837,000 CERs at 31 December 2007).  

• Enhanced focus on implementation activities resulted in 103 viable projects registered with the CDM EB at 30 June 2008.  On a net basis to EcoSecurities, these 103 projects are capable of producing 29 million CERs (72 projects and 13 million CERs at 31 December 2007), representing 24% (10% at 31 December 2007) of the Group's portfolio.  Of the registered projects, projects capable of producing 24 million CERs for EcoSecurities are already operational.

• Increased average size of projects - projects registered during the first half of 2008 averaged 597,000 CERs per project.  72% of the portfolio comprised projects capable of producing more than 300,000 CERs to 2012 each.

• Post-2012 CER portfolio increased to 115 million at 30 June 2008 (103 million at 31 December 2007). 

• VER contracted portfolio amounted to 14 million (11 million at 31 December 2007), including 6 million VERs from projects in the US.  Inventory at 30 June 2008 included 1.7 million VERs.

• Continued control of costs - operating expenses held at €14.9m for the period (€14.7m for H1 2007) despite an increase in average headcount to 298 (230 for H1 2007).

• Loss for the period of €11.1m (€(13.2)m for H1 2007).

Current trading and outlook 

• On a net basis, the CER portfolio at 29 August 2008 comprised 408 projects capable of producing more than 118 million CERs to 2012 (388 projects and 121 million CERs at 30 June 2008).

• 155 projects validated by 29 August 2008 and these projects are capable of producing 46 million CERs on a net basis (125 projects and 38 million CERs at 30 June 2008), representing 39% of the portfolio (31% at 30 June 2008).  Of the registered projects, projects capable of producing 22 million CERs for EcoSecurities are already operational.

• EcoSecurities' emission reduction inventory continues to grow with 1.4 million CERs and 1.8 million VERs at 29 August 2008).

• The Group continues to originate both post-2012 CERs and VERs. At 29 August 2008 EcoSecurities' portfolio included 126 million post-2012 CERs and 16 million contracted VERs.

• Over the next 12 months EcoSecurities anticipates a rapid increase in the generation of emission reductions from its pre-2012 CDM portfolio projects. However, as a result of delays in the verification and issuance process, EcoSecurities currently anticipates CER issuances for the next 12 months are likely to be markedly below previous expectations.

• EcoSecurities' cash balance at 29 August 2008 was €58m, including €15m of restricted cash, €11m of which was released in September 2008.

The Group's contracted projects and portfolio of pre-2012 CERs on a net basis can be analysed as follows:

	29 August 2008		30 June 2008
Project cycle landmark (cumulative values)	No. of projects	Million CERs	No. of projects	Million CERs
Contracted	496	156	491	155
Due diligence	88	38	103	34
Portfolio	408	118	388	121
Operational stage:
Financed	355	102	335	104
Construction started	334	90	310	95
Operation started	190	50	185	56
CDM stage:
PDD complete	276	76	255	77
Submitted to validation	248	71	235	73
HNA obtained	216	67	206	71
Validated	155	46	125	38
Submitted to registration	152	46	121	37
Registered	107	28	103	29
Verified	24	4	23	4
Issuing	23	4	22	4

Mark Nicholls, Chairman, commented: 

"Now that the first commitment period of the Kyoto protocol has commenced, it is pleasing that the first half of 2008 for EcoSecurities has been marked by the first significant issuances from the portfolio and deliveries of CERs to customers. The Group has also enhanced the quality of its pre-2012 CDM portfolio by advancing projects through the CDM stages, in particular, the increased volume of CERs generated from projects validated and submitted to registration.  Despite the difficulties which are reducing CER issuances in the short term, EcoSecurities remains well placed to realise the long term value of its portfolio."

Analyst Meeting

The Group is holding a meeting/conference call for analysts today at 09:00 BST.  Analysts wishing to participate should contact Ged Brumby at Citigate Dewe Rogerson on [phone] ([e-mail]) for further details.

For further information please contact:

EcoSecurities Group plc Bruce Usher, CEO Pedro Moura Costa, President Adrian Fernando, COO James Thompson, CFO	[phone]
Citigate Dewe Rogerson Kevin Smith / Ged Brumby	[phone]

Notes to Editors

CDM = Clean Development Mechanism, the provision of the Kyoto Protocol that governs project level carbon credit transactions between developed and developing countries.

CDM EB = CDM Executive Board, supervisor of the CDM under the authority and guidance of, and fully accountable to, the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol.

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, the electronic settlement system for all trading of carbon credits carried out under the EU ETS.

DOE = Designated Operational Entity, 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, a component of the trading infrastructure that forms the central hub of the settlement system which delivers carbon credits from buyers to sellers.

Net trading margin = The net spread on principal sales over the portfolio average direct acquisition cost, net of commission to third parties and excluding other direct costs and fixed cost allocations.

VER = Voluntary or Verified Emission Reduction, carbon credits created by emission reduction projects. One VER corresponds to 1 tonne of CO2e emission reductions.

EcoSecurities is a world leading company 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 has been at the forefront of all significant policy and scientific developments in this field.

EcoSecurities Group plc is listed on the London Stock Exchange AIM (ticker ECO).

Additional information is available at www.ecosecurities.com.

Chairman's statement 

In January 2008, the first commitment period of the Kyoto Protocol commenced and the industrialised countries listed in Annex 1 of the UN Framework Convention on Climate Change have to comply with the emission reduction targets stipulated by the Protocol.  The issuance and delivery of the carbon credits that have been created over the recent preparatory years can be used by Governments and companies to comply with the Protocol.  

In the first half of 2008 EcoSecurities continued to make, in line with its strategy, significant progress with the monetisation of its pre-2012 CER portfolio and its implementation activities.  The half year period provided the first significant production and sales of CERs.  

The delay in the CITL / ITL link up had a limited impact on the business, largely due to the fact that EcoSecurities had developed contingency plans in the form of registry accounts in Switzerland, Japan and New Zealand, through which the Group's delivery obligations could be met. 

EcoSecurities achieved several milestones in terms of its portfolio advancement through the CDM cycle, having significantly increased the number of registered projects (excluding projects not anticipated to be commissioned in the foreseeable future) from 72 at 31 December 2007 to 103 by the 30 June 2008, representing projects capable of producing 29 million pre-2012 CERs net to EcoSecurities.  This increase in project registration shows that EcoSecurities' focus on its core implementation activities is delivering results. 

EcoSecurities' portfolio continues to evolve with the addition of new projects and to advance through the CDM stages. The size of projects registered during the period averaged 597,000 CERs per project and the portfolio remains well diversified with respect to both geography and technology.  However, the market and EcoSecurities are still experiencing delays related to the CDM project cycle, due in part to the complex and bureaucratic nature of the approval process. 

In line with its views of the future of emission reduction markets, EcoSecurities continued to make progress in other areas including secondary CER trading, VERs, the US market and post-2012 markets.  The Group had its first issuance of VERs from a US based project and continued to capitalise on attractive CER prices within the secondary market and built a position of over 2.86 million CERs at an average acquisition cost of €13.50.  In parallel to this, the Group continued to grow its post-2012 portfolio with 115 million CERs originated by 30 June 2008. 

The Group continued to control costs and manage its cash reserves to withstand the uncertainties related to this market and this will remain a key focus for the future. 

With a strong balance sheet and a clear and focused strategy, EcoSecurities is well placed to not only realise the long term value of its assets, but also to capitalise on additional growth opportunities offered in the rapidly developing carbon market. 

Executive directors' review 

2008 is the beginning of the first commitment period of the Kyoto Protocol and during the period the policy framework continued to develop in a manner that is positive for the long-term prospects of emissions trading. The first half was notable as being the first period of significant issuances of CERs to EcoSecurities from its portfolio projects and also of deliveries of CERs by the Group to its customers under the forward sales contracts. During the period EcoSecurities has also further developed the quality of its portfolio in respect of its progress through the CDM cycle, operational status and technology mix. 

Strategy 

EcoSecurities' strategy continues to be:

• Focus on the issuance and monetisation of the existing pre-2012 CER portfolio 

• Develop the post-2012 CER portfolio and retain the capacity to maintain leadership post-2012 in what we believe will be a project-based carbon market similar to the CDM

• Develop the activities relating to our core emission reduction work which are not 2012-dependent, including secondary CER trading, the voluntary sector and the US

This is based on the Group's view that the carbon markets will continue to operate and grow post-2012.

EcoSecurities will continue to originate CERs for its pre-2012 portfolio but it is the Group's expectation that this opportunity will decline as the end of Kyoto's first commitment period approaches.  

While the Group will continue to take a prudent approach to capital investments and corporate development, EcoSecurities is also exploring further innovative ways of pursuing these strategic activities. 

Revenue and production

The first half of 2008 marked the first period of significant issuance from the EcoSecurities' portfolio. 595,000 CERs were issued to EcoSecurities from its portfolio projects. This represented an eightfold increase over the level for the first half of 2007. The gross number of CERs issued by projects managed by EcoSecurities amounted to 705,000. This increase in portfolio production corresponded with an increase in the level of sales of CERs, which amounted to €8.9m, plus revenue from VERs, agency revenue, sales of other emission reduction types and consultancy services. Sales of CERs were principally directed at fulfilling existing forward sales but in addition spot sales of 102,000 CERs were made, taking advantage of attractive CER prices.

Despite this growth, as announced at the AGM, the level of portfolio production was below expectations at the start of the year as registrations and project operation were delayed and many projects underwent their first verification.

In addition to the rapid increase in the production of CERs, the performance of the secondary trading business and VERs was particularly pleasing. The secondary trading operation was able to contract a significant number of CERs at attractive prices, while VER sales for the first half of 2008 were more than double the level for the whole of 2007. Activity in the US started to gain further momentum marked by the first issuance of VERs from a US based project.

Gross profit for the first half of 2008 amounted to €4.8m, an increase of nearly 561% over the full year 2007 figure.

The activities of the Group in the first half of the year have built up inventory and contracted purchases amounting to 2.86 million CERs at 30 June 2008, with an average acquisition price of €13.5, which are available, along with future portfolio production, to meet the Group's future net delivery obligations.

The continued delay in connecting the CITL to the ITL has had less impact than originally expected.  At the beginning of the year the possibility of a delay in the connection continuing until April 2009 or beyond appeared possible and EcoSecurities took appropriate steps to manage the situation including the opening of registry accounts in Switzerland, Japan and New Zealand.  Consequently none of the CER sales in the first half of 2008 and consequent receipt of cash has been affected by the lack of a connection.  

Portfolio advances

The net portfolio of pre-2012 CERs (which excludes agency contracts and only includes EcoSecurities' share of principal contracts) can be analysed as follows: 

	30 June 2008		31 December 2007
Project cycle landmark (cumulative values)	No. of projects (Note 1)	Million CERs	No. of projects (Note 1)	Million CERs
Contracted	491	155	405	150
Due diligence	103	34	37	20
Portfolio	388	121	368	130
Operational stage:
Financed	335	104	328	104
Construction started	310	95	285	88
Operation started	185	56	135	39
CDM stage:
PDD complete	255	77	234	73
Submitted to validation	235	73	217	66
HNA obtained	206	71	176	55
Validated	125	38	111	24
Submitted to registration	121	37	104	23
Registered	103	29	72	13
Verified	23	4	16	3
Issuing (Note 2)	22	4	12	2

Note 1 The "No. of projects" figures above exclude projects for which, although they are still under contract with the Group, no pre-2012 CERs are currently expected and hence no CERs are included in the figures above. At 30 June 2008 there were 60 such excluded projects, of which 26 are PDD complete and validated projects and 23 are registered projects.

Note 2 The issuing amounts represent the total number of pre-2012 CERs that are capable of being issued by projects that have already issued some CERs.

The emphasis on originating large sized projects has continued to yield results. At 30 June 2008 72% of the net pre-2012 portfolio was represented by projects of more than 300,000 CERs.

As a result of the progress on signing of larger projects, the prioritisation of the portfolio and the recruitment of implementation specialists last year, at 30 June 2008 the proportion of registered projects had risen to 24% of the portfolio, up from 10% at 31 December 2007, and the proportion of validated projects had risen to 31% of the portfolio, up from 18% at 31 December 2007.  

At 29 August 2008 the registered pre-2012 net portfolio had declined slightly to 28 million CERs. As a proportion of the portfolio, the registered projects remained stable at 24% and the validated proportion had increased to 39% showing further benefits of the rapid PDD production last year.  This progress continued with 40 PDDs completed in the first half of 2008.  

The operational stage of the projects continued to advance with the registered and operating portfolio at 30 June 2008 growing to 24 million pre-2012 CERs net to EcoSecurities. This represents an increase of 167% since 31 December 2007. At 29 August 2008 the registered and operating net portfolio of pre-2012 CERs had declined slightly to 22 million.

The portfolio is concentrated in high yielding sectors with over 80% of the registered portfolio by technology type being in N2O abatement, hydroelectricity, wind or geothermal.  The portfolio also includes a number of small projects with high sustainable development attributes, some of which will be delivered to governmental funds in Japan and Austria.

The focus in the field of N2O abatement since 2006 has also proved successful, resulting in the first registrations.  During the first half of 2008 12 N2O projects capable of generating 11 million pre-2012 CERs net to EcoSecurities were registered. An additional 3 million CERs are included in the portfolio from projects that are submitted to registration.  The net portfolio of pre-2012 CERs of this high yielding methodology amounted to 37% of the registered portfolio.

EcoSecurities continues to work with Credit Suisse on the joint origination of pre-2012 CER projects. In the first half the collaboration resulted in EcoSecurities signing, with Credit Suisse, four emission reduction purchase agreements with a large operator of wind power facilities in China, for the development and purchase of 1.6 million CERs. These were the first transactions under the carbon purchase facility agreed between EcoSecurities and Credit Suisse in 2007 for the origination of emission reduction projects on a worldwide basis.

Consistent with EcoSecurities' expectation of an active market beyond 2012, the Group's post-2012 CER portfolio grew to 115 million CERs at 30 June 2008 from 103 million CERs at 31 December 2007. The Group's VER contracted portfolio amounted to 14 million VERs at 30 June 2008 (11 million at 31 December 2007). 

Overheads

Following a significant expansion during 2007, EcoSecurities had largely achieved its desired staff resource level and was able to rationalise costs in certain areas in order to maintain business efficiencies.  This rationalisation affected neither capacity for project registration, verification and issuance nor key geographical regions where further expansion in resources may be needed. As a result administration expenses for the first half of 2008 have remained below budget and represent a decrease of 32% from the second half of 2007.  

Outlook

During the period there was an increase in net delivery obligations of 1.7 million CERs (of which 1.3 million are for delivery in 2010 or later) and a reduction of 0.8 million CERs as a result of deliveries. At 30 June 2008 net delivery obligations amounted to 29.7 million CERs.  The total future expected revenue in respect of forward sales at 30 June 2008 amounted to €572m (€558m at 31 December 2007) and represents a net trading margin of €254m (€282m at 31 December 2007).

Following positive comments from the European Commission and successful software testing, it is now expected that the connection of the CITL to the ITL will be made before the end of 2008.  Furthermore, the majority of the Group's deliveries for the second half of 2008 are via ITL connected registries so the impact associated with a further delay would be limited.  

Following the success in containing the level of administrative expenses in the first half of 2008, the Board anticipates that the administrative expenses for the whole of 2008 will be below that of 2007.

EcoSecurities' cash balance remained healthy, comprising €59m at 30 June 2008, including €18m of restricted cash. The balance at 29 August 2008 declined slightly to €58m. In addition, in September 2008 €11m of restricted cash was released, further enhancing EcoSecurities' free cash levels.

Over the next 12 months EcoSecurities anticipates a rapid increase in the generation of emission reductions from its pre-2012 CDM portfolio projects. However, many projects are undergoing their first verification and the time taken by the CDM process and DOEs to complete verification and issuance has increased.  As a result of this, the Group currently anticipates that CER issuances from its portfolio for the next 12 months are likely to be markedly below previous expectations.

Although the process remains complex and slow, the Group is pleased with the pace of registrations of its projects during the first half of 2008.  EcoSecurities is confident of its ability to optimally manage the CDM registration, verification and issuance processes.  Given the level of portfolio production, high inventory levels at 30 June 2008 and contracted future purchases, EcoSecurities believes that it is well placed to meet its ongoing net delivery schedule.

Financial review

Income statement

EcoSecurities' consolidated revenue rose to €13.4m for the first half of 2008, an increase of 140% over the same period last year. €12.7m was derived from the sale of 825,000 CERs and 346,000 VERs.  Sales of 68,000 mtCO2e of other emission reduction types have been recognised as other income.  Of the sales of CERs, 724,000 were in fulfilment of existing delivery obligations of the Group and 102,000 were spot sales.  All sales of CERs during the first half of 2008 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.  Consulting revenue amounted to €0.5m. The gross margin on CER sales was 42% during the period, reflecting the mix of acquisition costs and sales prices for CERs.  

Administrative expenses for the first half of 2008 were broadly in line with the same period last year at €14.9m despite a 30% increase in the average headcount from 230 to 298, reflecting a strategy of cost containment whilst continuing to support and invest in the Group's key departments and local offices.  The principal component of administrative expenses continues to be staff costs and associated expenditure. 

Finance income for the first half of 2008 increased to €2.9m from €1.2m in the same period last year as a result of cash levels on hand and market rate movements earned on short-term bank deposits.  Finance expense amounted to €2.8m and comprised mainly unrealised and realised foreign exchange differences on the Group's financial assets and liabilities (principally receivables, payables and bank deposits) and mark to market adjustments on derivative contracts. 

The tax charge of €1.2m during the first half of 2008 is due to foreign tax on profitable overseas subsidiaries.  The net loss declined to €11.1m for the first half of 2008 from €13.2m in the same period last year due to a combination of higher revenues and cost containment measures.

Balance sheet

Intangible assets increased by €1.8m over the first half of 2008 reflecting the greater maturity of the CER portfolio to 2012 and an increased number of projects in the portfolio now in the CDM process.  The Group's policy is to capitalise identifiable costs of CDM project implementation and project investments and then amortise these costs based on CER flows from the projects to which they relate.

Inventory comprised 1,384,000 CERs and 1,702,000 VERs at 30 June 2008 and increased significantly over the prior year due primarily to CER and VER issuances and secondary purchases.  The derivative financial asset of €1.5m relates to mark to market adjustments on unrealised forward foreign currency contracts.  Current trade receivables include €4.2m of receivables due from sales of CERs pending the linking of the CITL to the ITL.  Of the current assets, €5.9m relates to trade receivables from CER sales in the first half of 2008 for which payment was received in July 2008.

During the first half of 2008 the Group committed to an investment of €7.9m over three years in future rights to CERs from a CDM project in China.  A further €0.2m was invested in project-related transactions to secure the rights to CERs.

Cash flow

The net cash outflow from operations of €(28.5)m over the period (€(21.6)m for H1 2007) was mainly due to the losses for the period and the increase on working capital, comprising principally inventory which increased by €13.9m. Included in the cash flow from operations was a net outflow of €2.7m from the settlement of the contract and related transactions described in note 6. 

The net cash outflow from investing activities amounted to €(1.5)m (€(1.2)m for H1 2007) and comprised the investment in intangible assets less interest received on the Group's cash deposits. The net cash generated from financing activities amounted to €3.8m (€33.6m for H1 2007) and comprised €2.4m as a result of the exercise in full by Cargill Inc. of a warrant granted in 2005 to subscribe for ordinary shares and the releases of restricted cash to EcoSecurities.

The cash balance amounted to €59.0m at 30 June 2008, a reduction of €29.1m over the first half of 2008. 

Consolidated income Statement
as at June 30 2008
		6 months to 30 June 2008	6 months to 30 June 2007	Year ended 31 Dec 2007
		Unaudited	Unaudited	Audited
	Note	€000	€000	€000
Revenue		13,401	5,593	7,222
Cost of sales		(8,621)	(3,491)	(6,499)
Gross profit		4,780	2,102	723
Other Income		37	-	-
Administrative expenses
General		(14,875)	(14,656)	(36,633)
Total		(14,875)	(14,656)	(36,633)
Loss before financing costs		(10,058)	(12,554)	(35,910)
Financing costs		(2,778)	(713)	(14,464)
Finance income		2,884	1,238	7,043
Loss before tax		(9,952)	(12,029)	(43,331)
Income tax expense		(1,187)	(1,157)	(1,748)
Loss for the period		(11,139)	(13,186)	(45,079)
Loss all attributable to:
Equity holders of the Company		(11,139)	(13,186)	(45,079)
		(11,139)	(13,186)	(45,079)
Earnings per share (expressed in cents per share)
Basic and fully diluted earnings per share		(9.79)	(14.16)	(44.00)
Consolidated Statement of recognised income and expense
		6 months to 30 June 2008	6 months to 30 June 2007	Year ended 31 Dec 2007
		Unaudited	Unaudited	Audited
	Note	€000	€000	€000
Loss for the period		(11,139)	(13,186)	(45,079)
Currency translation reserve movement	4	(470)	(163)	(432)
Total recognised income and expense for the period		(11,609)	(13,349)	(45,511)
All attributable to:
Equity holders of the Company		(11,609)	(13,349)	(45,511)
		(11,609)	(13,349)	(45,511)

Consolidated balance sheet
At June 30 2008
		30 June 2008	30 June 2007	31 Dec 2007
		Unaudited	Unaudited	Audited
	Note	€000	€000	€000
Assets
Non-current assets
Intangible assets		5,855	4,550	4,039
Property, plant and equipment		4,824	3,450	4,712
Deferred tax assets		220	-	229
Trade and other receivables		1,817	5,031	834
Total non-current assets		12,716	13,031	9,814
Current assets
Inventory		24,817	2,670	10,916
Derivative financial assets		1,472	-	2,641
Trade and other receivables		13,578	5,808	20,973
Cash and cash equivalents	5	58,951	79,902	88,076
Total current assets		98,818	88,380	122,606
Total assets		111,534	101,411	132,420
Shareholders' equity
Issued capital	3	(292)	(256)	(282)
Share premium		(175,597)	(118,908)	(173,127)
Share based payment reserve	4	(1,115)	(1,058)	(902)
Currency translation reserve	4	976	237	506
Other reserves	4	573	573	573
Retained loss	4	81,129	38,195	70,019
Total shareholders' equity attributable to shareholders of the parent		(94,326)	(81,217)	(103,213)
Liabilities
Non-current liabilities
Trade and other payables		(3,041)	(3,409)	(3,040)
Deferred tax liabilities		(178)	(58)	(186)
Total non-current liabilities		(3,219)	(3,467)	(3,226)
Current liabilities
Interest bearing loans and borrowings		-	(7,559)	-
Trade and other payables		(9,556)	(7,685)	(12,137)
Derivative financial liabilities		(3,346)	-	(1,505)
Current tax payable		(941)	(1,483)	(1,411)
Provisions		(146)	-	(10,928)
Total current liabilities		(13,989)	(16,727)	(25,981)
Total liabilities		(17,208)	(20,194)	(29,207)
Total equity and liabilities		(111,534)	(101,411)	(132,420)

CONSOLIDATED CASH FLOW STATEMENT
		6 months to 30 June 2008	6 months to 30 June 2007		Year ended 31 Dec 2007
		Unaudited	Unaudited		Audited
		€000	€000		€000
Cash flows from operating activites
Loss for the financial period/year		(11,139)	(13,186)		(45,079)
Income tax expense		1,187	1,157		1,748
Finance income		(2,884)	(1,239)		(7,043)
Finance expense		2,778	713		14,464
Settlement in cash of CER delivery obligation		(2,710)	-		-
Depreciation and amortisation		618	374		724
Impairment of intangible assets		218	-		1,323
Write-down of inventory		-	-		429
Share-based payment expense		243	394		307
Foreign exchange movement		2,698	(244)		(994)
Change in inventory		(13,902)	(2,399)		(11,345)
Change in trade and other receivables		(988)	(5,558)		(8,773)
Change in trade and other payables		(2,223)	(923)		3,610
Change in provisions		(670)	-		816
Interest paid		(66)	(404)		(334)
Tax paid		(1,656)	(302)		(974)
Net cash out flow from operating activities		(28,496)	(21,617)		(51,121)
Cash flows from investing activities
Interest received		1,414	1,016		3,262
Acquisition of businesses		-	(185)		(170)
Purchase of property, plant and equipment		(787)	(1,213)		(2,849)
Investment in intangible assets		(2,126)	(798)		(8,214)
Net cash used in investing activities		(1,499)	(1,180)		(7,971)
Cash flows from financing activities
Gross proceeds from the issue of ordinary share capital		2,440	43,618		100,045
Payment of share issue transaction costs		-	(1,319)		(3,502)
Repayment of borrowings		-	-		(7,866)
Movement in restricted cash deposits		1,381	(8,722)		(13,136)
Net cash generated from financing activities		3,821	33,577		75,541
Net increase/(decrease) in cash and cash equivalents		(26,174)	10,780		16,449
Cash and cash equivalents at start of period		68,629	54,045		54,045
Effect of foreign exchange rate fluctuations on cash and cash equivalents		(1,570)	(52)		(1,865)
Cash and cash equivalents at end of period		40,885	64,773		68,629

Notes to the financial information

1. General information

EcoSecurities Group plc and its subsidiaries (together the Group) source, develop and trade carbon credits. The Group also offers consulting services. It operates through a global network of subsidiaries, branch offices and representatives.

2. Basis of preparation

The information in this document does not include all the disclosures required by International Financial Reporting Standards in full annual statutory accounts and it should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2007.

 The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2007.

3. Share capital

In the first half of 2008 the number of ordinary shares of €0.0025 in issue increased by 3,717,731 to 116,686,665 reflecting the exercise in full by Cargill Inc. of a warrant granted in 2005 to subscribe for up to 3,248,720 ordinary shares, the exercise of employee share options and the issuance of ordinary shares as part of the deferred consideration for the purchase of Trexler Climate + Energy Services Incorporated.

4. Reserves

				Currency Translation reserve	Share based Payment reserve	Other reserves	Retained earnings
				€000	€000	€000	€000
At 1 January 2008				506	(902)	573	70,019
Loss for the period				-	-	-	11,139
Foreign exchange translation differences				470	-	-	-
Employee share option scheme -
value of services provided				-	(242)	-	-
Transfer on exercise of share options				-	29	-	(29)
At 30 June 2008				976	(1,115)	573	81,129

5. Cash and cash equivalents

					30 June 2008	30 June 2007	31 Dec 2007
					€000	€000	€000
Cash at bank and in hand					21,392	9,940	33,875
Short-term deposits					19,493	54,833	34,754
Cash and cash equivalents for the purposes
of the cash flow statement					40,885	64,773	68,629
Restricted cash					18,066	15,129	19,447
Cash and cash equivalents					58,951	79,902	88,076

6. Provisions

During the first half of 2008 the Group settled the transactions which gave rise to the net financial loss 

of €9.2m described in note 21 of the audited financial statements for the year ended 31 December 2007.

The net effect on the consolidated income statement in the first half of 2008 as a result of differences 

between the estimates used in determining the charge for the year ended 31 December 2007 and the 

actual outcome was a net credit of €0.1m to financial income.

 

END

 

 

IR ILFLAALIILIT