EcoSecurities Group plc (the "Group" or "EcoSecurities")(LSE:ECO),
one of the world's leading companies in the business of originating,
implementing and commercialising carbon credits from greenhouse gas
emission reduction projects, today issues a trading update for the six
month period ended 31 December 2006.
Origination
The Group continued its strong project origination performance
during the period, with projects and tonnage added ahead of
expectations. The total gross Certified Emission Reduction ("CER")
portfolio grew by 26 million tonnes to 156 million CERs at 31 December
2006. In line with the Group's policy of continually assessing the
projects within the portfolio for expected operating and regulatory
performance, this total takes into account volume adjustments
principally relating to several biodiesel projects in Indonesia. The
total number of projects with which the Company has contracted grew to
353. In addition, the Group has a further 21 million CERs from
projects that had yet to complete the full contracting and due
diligence process at year end and which have not yet been added to the
portfolio.
Adjusting for the relative proportions of Agency, Principal and
Project Development contracts in the gross portfolio, the Group's net
ownership position totals 127 million CERs at 31 December 2006. The
Group's net ownership expanded by a considerable amount during the
period, primarily due to the restructuring of its EcoMethane joint
venture whereby the Group will now acquire all the CERs generated from
these landfill gas projects.
Other highlights of the Group's origination activities included
continued geographic expansion with the opening of additional
representative offices in Kenya and Singapore, bringing the total
number of offices and representative offices to 23 at year end (2005:
14). EcoSecurities also signed strategic agreements with Standard
Bank, the largest retail bank in South Africa, and UOB Kay Hian, a
division of the second largest bank in Singapore, to maximise business
development activities in Africa and Southeast Asia, respectively.
Implementation
Implementation of the Group's contracted projects - the process of
guiding Clean Development Mechanism ("CDM") projects through the
United Nations registration process - made further progress in the
second half of 2006. Notwithstanding the well publicised delays
experienced in external validation and verification of projects and
with the CDM Executive Board ("EB") in the processing of projects, the
pace of registrations increased in the latter part of 2006. The number
of projects registered with the EB by the Group increased from 17 at
30 June 2006 to 53 at the end of December 2006. These registered
projects are expected to produce 16 million CERs through to 2012. A
total of 84 projects in EcoSecurities portfolio are now operating, and
are expected to produce 39 million CERs through to 2012.
Commercialisation
The Group executed a number of new sales transactions in the
second half of 2006 with counterparties in Europe and Japan,
significantly increasing the amount of contracted forward sales over
the 2008 to 2012 period. The total gross contract volume of CERs sold
forward during the period was 8 million tonnes, increasing the total
forward sale contract volume to 29 million tonnes. The total Net
Trading Margin on contracted forward sales at 31 December 2006
increased to EUR 151 million, up from EUR 100 million as at 30 June
2006.
For the year ended 31 December 2006 the Group will recognise
revenue from the sale of verified CERs from a number of Principal,
Agency and Project Development projects. A total gross number of
451,442 CERs were verified in relation to the Group's projects during
the year. At year end 67,954 of these CERs had not yet been sold.
Operations and Finance
Despite significant expansion in 2006, costs were within
expectations. Furthermore, the Group's cash position at year end was
larger than anticipated, placing EcoSecurities in a comfortable
position going into 2007.
Bruce Usher, Chief Executive Officer, commented:
"Throughout 2006 the Group placed significant emphasis on building
its carbon credit portfolio, which grew to a gross total of 156
million CERs and a net total of 127 million CERs at the end of 2006.
Despite experiencing the industry-wide delays in the processing of our
projects by the CDM Executive Board, we have continued to progress a
significant number of projects through the CDM process.
"During 2006, there have been many developments raising not only
the awareness of climate change, but also examining the likely
economic impacts. In particular the publication of the Stern Report in
the UK has helped focus attention on this ongoing problem and need for
emissions trading and project offsets. In addition, tighter EU
emissions targets brought about by recent EU ETS National Allocation
Plans and accelerating policy momentum in the United States,
especially in California, will contribute to further development of
the global carbon market and provide additional opportunities for
EcoSecurities in 2007."
+ Note: Gross and net contract volume measures expected CER
production from projects through to the end of 2012 and does not
adjust for operating or regulatory risk. Gross and net 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.
CDM = Clean Development Mechanism, the provision of the Kyoto
Protocol that governs project level carbon credit transactions between
developed and developing countries
CER = Certified Emission Reduction, carbon credits created by
Clean Development Mechanism projects. One CER corresponds to 1 tonne
of CO2e emission reductions
EU ETS = European Union Emissions Trading Scheme, a market based
"cap and trade" system for green house gases adopted by the European
Union member states
About EcoSecurities:
EcoSecurities is one of the world's leading companies in the
business of originating, implementing and commercialising carbon
credits. EcoSecurities structures and guides greenhouse gas emission
reduction projects through the Kyoto Protocol, acting as a principal
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 21 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 353 projects in 36 countries using 17 different
technologies, with the potential to generate more than 156 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. In 2006, EcoSecurities won the Point Carbon Award for 'Best
CDM/JI Project Developer'. EcoSecurities' consultancy division has
been at the forefront of all the significant policy and scientific
developments in this field, and has been voted the world's leading
greenhouse gas advisory firm over the last five years through reader
surveys conducted by Environmental Finance Magazine.
EcoSecurities Group plc is listed on the London Stock Exchange AIM
(ticker ECO.L). Additional information is available at
www.ecosecurities.com.
