Eco (atlantic) Regulatory News (ECO)

7 Sep 2007 17:49

EcoSecurities Group plc ("EcoSecurities", or the "Company")(LSE:ECO), one of the world's leading companies in the business ofsourcing, developing and trading carbon credits from greenhouse gasemission reduction projects, today announces its interim results forthe six months ended 30 June 2007. £ Highlights £ -- Further progress in origination - Clean Development Mechanism ("CDM") portfolio gross contract volume increased to 178 million CERs at 30 June 2007 a net increase of 22 million CERs or 14% since year end 2006. £ -- On a net entitlement basis, adjusting for contract type, the CER portfolio has grown by 29 million tonnes or 23% to 156 million tonnes at 30 June 2007. £ -- Significant project implementation progress - at 30 June 2007, 164 PDDs were completed, 164 projects had been submitted to validation, 97 had completed the validation process and 71 were registered with the CDM Executive Board. .These results were achieved despite the continuing challenges and delays related to the CDM project cycle. £ -- Of the 433 projects in the portfolio, 355 were financed, 127 were under construction and 149 were operational. £ -- 34 million CERs had been sold forward at 30 June 2007, representing expected total forward CER revenue of EUR 410m and net trading margin of EUR 181m through to 2013. £ -- During the period, the Group generated first half revenues of EUR 5.6m driven by sales of CERs and the Group's initial VER sales which, combined, totalled 90% of revenues. £ -- Strategic investment by Credit Suisse to underpin development of long term relationship with Credit Suisse's energy franchise. £ Current Trading and Outlook £ -- CDM portfolio gross contract volume increased to 185 million CERs at 5 September 2007 a net increase of 29 million CERs or 18.6% since year end 2006. In addition, the Group contracted projects expected to generate up to 6.8 million CERs, which have not yet been incorporated into the portfolio pending completion of a CDM due diligence process. £ -- On a net entitlement basis, the CER portfolio has grown to 163.3 million tonnes at 5 September 2007. £ -- At 5 September 2007, the number of projects submitted for validation had increased to 215. £ -- The post-2012 CDM portfolio gross contract volume increased to 109.6 million CERs at 5 September 2007 increased from 86 million CERs reported in May 2007. The post-2012 CDM portfolio volume relates to potential production of CERs from the Group's projects after 2012 and is incremental to the CDM portfolio. £ -- The Group has built its global VER portfolio at 5 September 2007 to 4.3 million tonnes, further adding to its carbon credit volumes. £ -- As the Group grows and expands operations into new markets, it is in the process of adding to its senior management team. £ -- The Group's cash balance as of 5 September 2007 was approximately EUR 130m, which reflects proceeds of the Credit Suisse subscription in June and an institutional placing in July. £ Mark Nicholls, Chairman, commented: "EcoSecurities continued tomake significant progress in the first half of 2007, and furtherstrengthened its leadership position in the carbon markets. The Groupcontinued to make progress in developing its CDM carbon creditportfolio and initiated new activities to expand into the voluntarycarbon markets, the US market, project investments and secondarytrading of CERs. The Group's achievements during the period wereenhanced by further development of the carbon markets andstrengthening prices for carbon credits." £ "The continued development of the carbon market and of the Group'soperations to date in 2007 gives the Board confidence for continuedgrowth this year and beyond." £ Analyst Meeting £ The Group is holding a meeting for analysts today at 0830 BST.Analysts wishing to attend should contact Ged Brumby at Citigate DeweRogerson on +44 (0)20 7638 9571 (ged.brumby@citigatedr.co.uk) forfurther details. £ Notes to Editors £ CDM = Clean Development Mechanism, the provision of the KyotoProtocol that governs project level carbon credit transactions betweendeveloped and developing countries £ CER = Certified Emission Reduction, carbon credits created byClean Development Mechanism projects. One CER corresponds to 1 tonneof CO2e emission reductions £ EU ETS = European Union Emissions Trading Scheme, a market based"cap and trade" system for green house gases adopted by the EuropeanUnion member states £ EcoSecurities is one of the world's leading companies in thebusiness of originating, developing and trading carbon credits.EcoSecurities structures and guides greenhouse gas emission reductionprojects through the Kyoto Protocol, working with both projectdevelopers and buyers of carbon credits. £ EcoSecurities works with companies in developing andindustrialising countries to create carbon credits from projects thatreduce emissions of greenhouse gases. EcoSecurities has experiencewith projects in the areas of renewable energy, agriculture and urbanwaste management, industrial efficiency, and forestry. With a networkof offices and representatives in 36 countries on five continents,EcoSecurities has amassed one of the industry's largest and mostdiversified portfolios of carbon projects. £ EcoSecurities also works with companies in the developed world toassist them in meeting their greenhouse gas emission compliancetargets. Utilising its highly diversified carbon credit portfolio,EcoSecurities is able to structure carbon credit transactions to fitcompliance buyers' needs, and has executed transactions with bothprivate 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 theglobal carbon market's most important milestones, including developingthe world's first CDM project to be registered under the KyotoProtocol. EcoSecurities' consultancy division has been at theforefront of significant policy and scientific developments in thisfield. EcoSecurities has been recognised as the world's leadinggreenhouse gas advisory firm over the last five years by readersurveys conducted by Environmental Finance Magazine. £ EcoSecurities Group plc is listed on the London Stock Exchange AIM(ticker ECO). Additional information is available atwww.EcoSecurities.com. Chairman's Statement £ EcoSecurities continued to make significant progress in the firsthalf of 2007, and further strengthened its leadership position in thecarbon markets. The Group continued to make progress in developing itsCDM carbon credit portfolio and initiated new activities to expandinto the voluntary carbon markets, the US market, project investmentsand secondary trading of CERs. The Group's achievements during theperiod were enhanced by further development of the carbon markets andstrengthening prices for carbon credits. £ To expand its core business and develop new markets, EcoSecuritiescompleted a EUR 100m equity financing with Credit Suisse andinstitutional investors in Europe and the United States during Juneand July. The strategic relationship with Credit Suisse is expected toprovide opportunities for the Company and Credit Suisse to globallyco-operate on a broad range of projects focusing on, but not limitedto, carbon credit and emission reduction origination and trading. Webelieve the relationship represents a significant endorsement of thestrength of EcoSecurities' business, strategy and track record. £ External developments helped maintain a high profile for theproblems of global warming and underline the opportunities in thecarbon markets. Substantially tighter National Allocation Plans("NAPS") proposed for Phase II of the EU ETS, discussions on climatechange at the G8 and pending legislation in the US, all bode well forcontinued attention to, and growth in, the carbon markets. £ Given the continued growth of the Group and its expansion plansboth organically and through acquisition, EcoSecurities intends to addto its senior management team. £ As part of this, announced today, Claire Heeley, formerly CompanySecretary of United Drug plc, assumes the role of Company Secretarybased in Dublin with immediate effect. Ms. Heeley is a CharteredAccountant and had previously served with United Drug since 2002, andprior to that was with KPMG for several years. £ Also, the Group intends to appoint a number of experiencednon-executive directors in due course to support the continuedexpansion of the business. £ The continued development of the carbon market and of the Group'soperations to date in 2007 gives the Board confidence for continuedgrowth this year and beyond. £ Executive Directors' Review for the six months ending 30 June 2007 £ The first half saw a further period of rapid growth and intensivedevelopment activity in the carbon market. The Group's geographicreach and depth of expertise enabled it to grow its CER portfolio by22 million tonnes during the first half, building on its industryleadership status. The Group's market share remained significant, with71 of the 722 projects registered by the CDM Executive Board ("CDMEB") at 30 June 2007 being implemented by EcoSecurities, despite thedelays and challenges related to the CDM registration process. TheGroup continued to commercialise its carbon credit portfolio, sellingforward a further 5 million CERs during the period, which is expectedto generate an additional EUR 28m in net trading margins for theGroup. Costs and cash controls remain a key focus for the Group. £ The Group began to expand into related markets, leveraging itsstrong reputation and track record. Progress was made in developingbusiness within the US and international voluntary carbon markets, inbuilding a post-2012 carbon credit portfolio, in secondary CERtrading, and project investments. £ Origination £ During the period, the Group brought 80 new projects into its CDMportfolio and by the end of June 2007, there were 433 projects capableof generating 178 million tonnes of CERs through 2012. In line withthe Group's policy of continually assessing the projects within theportfolio for expected CER generation, this total takes into accountvolume adjustments. As projects progress through the CDMimplementation cycle and begin operating, an increased amount ofinformation becomes available to support estimates of project volumesand individual project performance. The CDM project portfolio remainshighly diversified by geography, technology and CDM methodology.Projects were located in 36 countries and encompassed 18 differenttechnologies at period end. £ On a net basis to EcoSecurities, adjusting for contract type(principal, project development or agency), the portfolio grew from127 million tonnes to 156 million tonnes. £ Further progress was made in developing new markets during theperiod, particularly in the Middle East and Eastern Europe. The Groupestablished a presence in Kiev, Bern and Tokyo during the first half.After opening an office in the Middle East in late 2006, the Groupentered a strategic partnership with the Dubai Multi CommoditiesCentre ("DMCC") to develop CDM projects in the region. So far thisyear, the performance of Group offices in China, Africa and Mexico hasbeen particularly strong. £ The strategic relationship with Credit Suisse is expected tobolster origination efforts through Credit Suisse's extensive networkof clients, and provides a facility for the origination of emissionreduction projects of up to EUR 1.0bn, offering a credit supportstructure for EcoSecurities to contract projects which previously wereunattainable. £ The Group has (i) built upon its post-2012 CDM portfolio, (ii)entered the voluntary market and began to contract US andinternational VERs, and (iii) acquired (1) million CERs in thesecondary market, all of which are in addition to building the coreCDM portfolio to 178 million CERs. £ Implementation £ Despite numerous delays experienced in external validation ofprojects, obtaining host country approval and the processing ofprojects by the CDM EB, the number of projects registered by the Groupincreased from 53 to 71 during the first half of the year, making itthe largest portfolio of registered projects in the world. Theseregistered projects are capable of producing 22 million CERs by 2012which is up by 6 million CERs since year end. £ At period end, 164 projects had completed Project Design Documents("PDDs"), 97 had been validated and 128 had received Host NationApproval. A total of 149 projects in EcoSecurities portfolio wereoperating at 30 June 2007, 127 were in construction and a total of 355were financed. £ Key highlights of the CDM project implementation process for theGroup included the registration of Al-Shaheen, the first gas flaringcapture project in the Middle East, located offshore of Qatar, and theCompany's first project registrations in Thailand after the Thaigovernment issued its first project approvals. £ Furthermore, VERs from CDM projects yet to be registered wereverified during the first half for sale to voluntary market buyers.This opens a new window of market opportunity for the Company from itsexisting CDM portfolio and helps allay the problem of delays in theCDM registration process. £ Commercialisation £ The Group continued to make progress in the commercialisation ofCERs in the period. A total of 34 million CERs had been sold forwardat 30 June 2007, up from 29 million at the end of 2006. Thisrepresents expected total forward CER revenues of EUR 410m and nettrading margin of EUR 181m through 2013. The Group's sales of CERswere intentionally restricted earlier in the year due to lower CERprices, but sales increased along with higher CER prices later in theperiod. £ CER prices strengthened in the second quarter of 2007, after aweak start to the year. Substantially tighter EU ETS Phase II NAPswere largely completed in the second quarter, with only seven smallernations continuing to negotiate with the EU. These countries areproposing incremental emission allowance allocations representing 4%of the maximum annual amount of allowances that could be issued by theEU. £ Demand for both CERs and VERs from voluntary buyers has grown bothin Europe and the United States. The Group made its first VER salesduring the first half. Voluntary buyers are also purchasing CERs tooffset their carbon footprint, generating stronger pricing thancompliance related purchases in the EU and Japan. £ The UNFCCC's International Transaction Log (ITL), the central hubof the settlement system which will deliver traded allowances fromseller to buyers, is now expected to be launched in December 2007.When the ITL launches, and as the volume of issuance of CERs fromregistered projects increases, the growth of trading in the secondarymarket is expected to increase significantly with the improvedtransferability of CERs. The Group is well positioned to takeadvantage of this with its ability to trade with project operatorsquickly and efficiently in most CDM countries. £ Investment £ The Group's investment activities continued to expand in 2007 withcommitments for up to an additional EUR 3 million being agreed duringthe first half. The investments made primarily take the form ofsecured, advance payments for CERs which enable the Group to increaseits CER production as well as providing an attractive return oncapital. Investments in projects also continued to grow during theperiod, with the Group committing to fund further N2O projectsalongside landfill gas and small hydro projects. Additional resourcesare being deployed to increase the scope of emission reduction relatedinvestment and business development opportunities generated throughthe Group's worldwide market presence. £ Consulting £ As announced previously, the Group acquired the business ofTrexler Climate + Energy Services ("TC+ES"), an internationallyrecognised leader in the emerging field of climate change riskmanagement, which was merged with EcoSecurities' existing Consultinggroup to create EcoSecurities Global Consulting Services division.Simultaneously, the Consulting group is evolving from a business witha sole emphasis on CDM project documentation and methodologydevelopment for external clients, to one which will in the futurefocus much more intensively on: 1) participating in relevant publicpolicy debates; 2) using corporate strategy consulting to establishkey relationships for EcoSecurities going forward; and 3) serving asan internal intelligence management function. It will also continue tosupport the Group's other business units as it has in the past. £ Financial £ Income statement £ Group revenue rose to EUR 5.6m for the first half of 2007, EUR4.8m was derived by the sale of 283,200 CERs, acquired via the Group'sprimary and secondary CER portfolio, and 37,500 VERs. Consultingrevenue during the first half of 2007 was lower than expected due tothe focus on internal CDM project implementation and the change infocus of the consulting unit. Gross margins on carbon credit saleswere 33% during the period reflecting a mix of costs and pricing forCERs and VERs in relation to the Group's core CDM, secondary tradingand voluntary market activities. £ Administrative expenses during the period grew to EUR 14.7m fromEUR 9.1m in 2006 and were in line with management's expectations, andreflecting the costs and investments made in continuing to build andoperate the Group's worldwide network. The primary business expenserelated to staff and associated costs, as headcount increased 63% to260 at 30 June 2007 from 160 at 30 June 2006. £ Financing income totalled EUR 1.2m, which represented interestearned on short-term bank deposits. Financing costs totalled EUR 0.7m,which were comprised of interest on short term debt and unrealisedforeign exchange differences on the Group's financial assets andliabilities. While the Group as a whole operated at a loss, itincurred a tax charge of EUR 1.1m during the first half due to taxesat the subsidiary company level. The net loss increased to EUR 13.2min 2007 from EUR 8.7m in 2006 which resulted from higher costs ofcontinued growth and higher levels of activity. £ Balance sheet £ Intangible assets increased by EUR 1.1m during the year reflectingthe Group's policy of capitalising identifiable costs of CDM projectimplementation and project investments. These costs are then amortisedbased on expected future CER flows from the projects to which theyrelate. £ 229,000 CERs were either verified or verified and issued duringthe first half and remained in inventory at the end of the period.Current and non current trade receivables of EUR 7m reflect amountsrelating to sales of CERs in the current and prior period pending theestablishment of the International Transaction Log to completesettlement of these sales. The balance of trade receivables pertain toreceivables from the consulting business of EUR 0.2m, advance paymentfor the purchase of CERs of EUR 0.8m and other receivables related tobusiness operations of EUR 2.8m.. £ In total during the first half, 21 CDM project investments weremade in China, Mexico, Indonesia and Tunisia with commitmentsamounting to EUR 3m which increased both fixed assets and receivables.Completed investments in project related equipment totalled EUR 0.7m.A further EUR 1.2m was invested in project related transactions tosecure the rights to CERs. The number of projects and CERs which theGroup has secured without the need for upfront payments has beengreater than anticipated during the period which has conserved capitalresources. £ The cash balance at 30 June 2007 was EUR 79.9m, reflecting the EUR44m Credit Suisse subscription which closed at the end of the period.As previously noted, a further EUR 54m placement was completed inJuly, shortly after the period end. £ Cash flow £ The development of the Group's overseas operations resulted inoperating cash outflows of EUR 20.6m during the first half. A portionof CDM project implementation activities resulted in cash outflows ofEUR 0.9m which were capitalised. The remaining cash outflow frominvesting activities totalled EUR 1.3m which consisted of otherproject related investments, costs due to the expansion of the Group'sinfrastructure and the acquisition of TC+ES. In respect of financingcash flows, the Group raised new equity of EUR 44m from Credit Suisseduring the period, as discussed above. £ Current Trading £ CDM portfolio gross contract volume had increased to 185 millionCERs at 5 September 2007, a net increase of 29 million CERs or 18.6%since year end 2006. On a net entitlement basis, the CER portfolio hasgrown by 36 million tonnes or 28% to 163 million tonnes at 5 September2007. Project origination has been particularly successful in China,the Middle East and Africa in the renewable energy and fuel switchsectors over recent months. Also, a contract with PLN, the nationalutility company in Indonesia, for geothermal and hydro projects wasannounced in August. £ Despite increasing competition for larger projects, the Group hasmaintained its origination success and continues to build a goodorigination pipeline. £ As at 5 September 2007, 222 PDDs were completed, 215 projects hadbeen submitted for validation, 102 had completed the validationprocess and 74 were registered with the CDM Executive Board. Of the456 projects in the portfolio, 382 were financed, 294 were underconstruction and 145 were operational £ The Company's first N2O abatement project in China has commencedcarbon credit generation after the completion of baseline monitoring.This project is one of EcoSecurities' largest N2O projects and isexpected to produce 2.3 million CERs by the end of 2012. Several otherprojects are progressing through the baseline determination process atpresent. £ To date EcoSecurities has pre-sold 35 million CERs, predominantlyto large corporate and government buyers. The expected net tradingmargin on current forward CER sales of 35 million tonnes now totalsEUR 191m. While pricing has been strong over the summer at an averageof EUR 16 for the Company, volumes have been seasonally low. £ Recently, CER prices have been increasing in relation to EuropeanAllowance prices. Substantially tighter National Allocation Plansproposed for Phase II of the EU ETS, and the fact that many EU ETSregulated companies are considering swapping their capacity to utiliseCERs for compliance obligations in exchange for their EUA allocations,have contributed to this positive trend. £ The post-2012 CDM portfolio gross contract volume increased to109.6 million CERs at 5 September 2007, a net increase of 24 millionsince May 2007. This reflects efforts by the Group to contract forpost-2012 volumes from both existing and new projects. £ The Group had built its global VER portfolio at 5 September 2007to 4.3 million tonnes, further adding to its carbon credit volumes.The portfolio is comprised of pre-registration CDM projects and USprojects, predominantly in the methane capture and industrial gasabatement sectors. The voluntary market is also growing due tointerest on the part of non-regulated corporate buyers in Europe andthrough pre-compliance demand in the US. £ In view of growth in the market, and following the financing inJune and July, EcoSecurities has begun to devote additional resourcesto expansion into new markets for VERs, secondary CER trading and toexpand its investment and acquisition related activities the result ofwhich will be a small increase in the cost base for the year. £ Outlook £ Prospects for the remainder of 2007 are positive, given theGroup's leading position in the carbon market, strong financialresources and strategic relationships. The Group's core business model- the global origination, implementation and commercialisation ofcarbon credits under the CDM - continues to concentrate on theconsiderable opportunities available. The Group intends to continue togrow the volumes of carbon credits contracted and to consideracquisitions, which would add further scale to its diversifiedportfolio. Furthermore, as highlighted at the time of the recentfundraising, EcoSecurities intends to make further investments in USmarket expansion, secondary CER trading, voluntary markets andemission reduction and clean energy project investments. \* TCONSOLIDATED INCOME STATEMENT 6 months 6 months Year to to 30 to 30 31 Dec June 2007 June 2006 2006 (Unaudited) (Unaudited) (Audited) EUR EUR EUR 000 000 000Revenue 5,593 841 3,073 Cost of sales (3,491) (542) (1,374) ----------- ----------- -----------Gross profit 2,102 299 1,699 Administrative expensesGeneral (14,656) (9,359) (22,998)IPO preparation expenses - 277 277 ----------- ----------- -----------Total (14,656) (9,082) (22,721) ----------- ----------- ----------- ----------- ----------- -----------Loss before financing costs (12,554) (8,783) (21,022) Financing costs (713) (853) (856)Finance income 1,238 1,237 2,405 ----------- ----------- -----------Loss before tax (12,029) (8,399) (19,473) Income tax expense (1,157) (259) (573) ----------- ----------- -----------Loss for the period (13,186) (8,658) (20,046) =========== =========== =========== Loss all attributable to:Equity holders of the Company (13,186) (8,658) (20,046) ----------- ----------- ----------- (13,186) (8,658) (20,046) =========== =========== ===========Earnings per shareBasic and fully diluted (14.16) (9.40) (21.74)\* T \* TCONSOLIDATED STATEMENT OFRECOGNISED INCOME AND EXPENSE 6 months 6 months Year to to 30 to 30 June 31 Dec June 2007 2006 2006 (Unaudited) (Unaudited) (Audited) EUR EUR EUR '000 '000 '000Loss for the period (13,186) (8,658) (20,046) Currency translation reserve movement (163) 47 (22) ----------- ------------ ------------Total recognised income andexpense for the period (13,349) (8,611) (20,068) =========== ============ ============ Attributable to:Equity holders of the Company (13,349) (8,611) (20,068) ----------- ------------ ------------ (13,349) (8,611) (20,068) =========== ============ ============\* T \* TCONSOLIDATED BALANCE SHEET 6 months 6 months Year to to 30 to 30 31 Dec June 2007 June 2006 2006 (Unaudited) (Unaudited) (Audited)Assets EUR '000 EUR '000 EUR '000Non-current assetsIntangible fixed assets 4,550 450 3,412Property, plant and equipment 3,450 890 2,463Trade and other receivables 5,031 1,072 531 ------------ ------------ ----------Total non-current assets 13,031 2,412 6,406 ------------ ------------ ---------- Current assetsStock and work in progress 2,670 48 -Trade and other receivables 5,808 2,300 5,020Cash and cash equivalents 79,902 70,933 60,452 ------------ ------------ ----------Total current assets 88,380 73,281 65,472 ------------ ------------ ---------- Total assets 101,411 75,693 71,878 ============ ============ ==========Shareholders' equityIssued capital 256 231 232Share premium 118,908 76,410 76,446Share based payment reserve 1,058 426 663Currency translation reserve (237) (5) (74)Other reserves (573) (573) (573)Retained earnings (38,195) (13,631) (25,009) ------------ ------------ ----------Total equity 81,217 62,858 51,685 LiabilitiesNon-current liabilitiesInterest bearing loans andborrowings - 8,166 -Trade and other payables 3,409 - 3,040Deferred tax liabilities 58 4 58 ------------ ------------ ----------Total non-current liabilities 3,467 8,170 3,098 ------------ ------------ ---------- Current liabilitiesInterest bearing loans andborrowings 7,559 - 7,582Trade and other payables 7,685 4,420 8,885Current tax creditors 1,483 245 628 ------------ ------------ ----------Total current liabilities 16,727 4,665 17,095 ------------ ------------ ---------- ------------ ------------ ----------Total liabilities 20,194 12,835 20,193 ------------ ------------ ---------- ------------ ------------ ----------Total equity and liabilities 101,411 75,693 71,878 ============ ============ ==========\* T \* TCONSOLIDATED CASH FLOW STATEMENT 6 months 6 months Year to to 30 to 30 31 Dec June 2007 June 2006 2006 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Loss for the financial period/year (13,186) (8,658) (20,046)Income tax expense 1,157 259 573Finance income (1,239) (1,237) (2,405)Finance costs 713 853 856Depreciation and amortisation 374 71 252Project costs transferred toinventory - - 125Change in stock (2,399) (48) -Change in trade and otherreceivables (5,558) (1,157) (3,981)Change in trade and other payables (923) 2,045 9,626Profit on disposal of fixed assets - - 140Share based payment 394 138 385Foreign exchange differences (244) 59 (294)Interest paid (404) (209) (428)Interest received 1,016 1,231 2,170Tax (paid)/refunded (302) (128) - ----------- ----------- ---------Net cash outflow from operatingactivities (20,601) (6,781) (13,027) ----------- ----------- --------- Cash flows from investing activitiesAcquisition of businesses (185) - -Project advances and developmentexpenditure - (895) -Purchase of property, plant andequipment (1,213) (809) (2,673)Purchase of intangible fixed assets (798) (370) (3,487) ----------- ----------- ---------Net cash outflow from investing activities (2,196) (2,074) (6,160) ----------- ----------- --------- Cash flows from financing activitiesGross proceeds from the issue ofordinary share capital 43,618 48 85Share sale transaction costs (1,319) - -Admission costs paid - (2,200) (2,222)Repayment of borrowings - - (300)Net restricted cash deposits (8,722) (6,916) (5,824) ----------- ----------- ---------Net cash (used)/generated infinancing activities 33,577 (9,068) (8,261) ----------- ----------- --------- Net change in cash and cashequivalents 10,780 (17,923) (27,448) Cash and cash equivalents atstart of period 54,045 82,565 82,565 Foreign exchange on cash and cashequivalents (52) (1,208) (1,072) ----------- ----------- ---------Cash and cash equivalents at endof period 64,773 63,434 54,045 =========== =========== =========\* T £ NOTES TO THE FINANCIAL INFORMATION £ 1. General information £ EcoSecurities Group plc and its subsidiaries (together the Group)originate, trade, develop and invest in emission reduction projects.The Group also offers consulting and advisory services. It operatesthrough a global network of subsidiaries, branch offices andrepresentatives. £ 2. Basis of preparation £ The information in this document does not include all of thedisclosures required by International Financial Reporting Standards infull annual statutory accounts and it should be read in conjunctionwith the Group's annual financial statements for the year ended 31December 2006. £ The accounting policies adopted are consistent with those followedin the preparation of the Group's annual financial statements for theyear ended 31 December 2006. £ 3. Share capital £ In the period to 30 June 2007 the number of shares in issueincreased by 9,917,082 to 102,574,370, reflecting the purchase ofshares by Credit Suisse, the exercise of employee share options andthe issue of shares to the vendors of Trexler Climate + EnergyServices (note 6.). £ 4. Reserves \* T Currency Share Other Retained translation based reserves earnings reserve payment reserve EUR '000 EUR '000 EUR '000 EUR '000At 1 January 2007 73.9 (663.5) 572.6 25,009.2Loss for the period - - - 13,185.9Foreign exchangetranslation differences 163.2 - - -Employee share optionscheme - value ofservices provided - (394.0) - - ------------ --------- --------- ---------At 30 June 2007 237.1 (1,057.5) 572.6 38,195.1 ============ ========= ========= =========\* T £ ECOSECURITIES GROUP PLC £ NOTES TO THE FINANCIAL INFORMATION £ 5. Cash and cash equivalents \* T 6 months 6 months Year to to 30 to 30 31 Dec June 2007 June 2006 2006 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Cash at bank and in hand 9,940 2,210 4,410Short-term deposits 54,833 61,224 49,635 ----------- ----------- ---------Cash and cash equivalents for thepurposes of the cash flowstatement 64,773 63,434 54,045Restricted cash 15,129 7,499 6,407 ----------- ----------- ---------Cash and cash equivalents 79,902 70,933 60,452 =========== =========== =========\* T £ 6. Acquisition of Trexler Climate + Energy Services £ On 27 February 2007, a subsidiary company agreed to acquire thetrade and assets of Trexler Climate + Energy Services Incorporated, acompany incorporated in the United States, for a considerationcomprising cash and shares in EcoSecurities Group plc partiallyconditional on the future performance of the business. £ Assets valued at $625k were acquired for consideration of $250k incash and the balance in shares in EcoSecurities plc. Copyright Business Wire 2007