Climate Exchange PLC - Preliminary results

RNS Number:8878P
Climate Exchange PLC
12 March 2008

Press release
For immediate release
12 March 2008

Climate Exchange plc

Preliminary results for the year ended 31 December 2007

Climate Exchange plc ("the Group" or "the Company"), the world's leading
specialist exchange for trading emissions and environmental products, announces
its preliminary results for the year ending 31 December 2007.

Strategic Highlights

• Continued exceptional growth of existing core business
• Launch of a range of new futures and options contracts on the Chicago
Climate Futures Exchange
• The successful launch of ECX EU ETS options
• Launch of Insurance Futures Services Ltd ("IFEX") to trade U.S.
hurricane catastrophe risk
• International developments in Canada, India and China
• Agreed launch of ECX CER futures on Friday 14th March 2008

Operational Highlights

• Chicago Climate Futures Exchange (CCFE) average daily volume increased
from 114 contracts in 2006 to 1,117 contracts in 2007 representing an
881% increase.

• European Climate Exchange (ECX) average daily volumes increased by 128%
to 4.04 million tonnes

• ECX open interest increased by 171%

• ECX membership increased to 84 members (2006 : 71)

• Chicago Climate Exchange (CCX) average daily volumes increased from 404
contracts in 2006 to 903 contracts in 2007 representing an 123% increase

• CCX membership increased to 401 (2006: 238)

Unaudited Pro-Forma Financial Highlights for the year ended 31 December 2007

• Pro-forma pre-tax profit of £0.85 million from £5 million
loss (2006)

• Revenues from core businesses up 249% to £13.6 million
(2006: £3.9 million)

• Core Group EBITDA £3.4 million (2006: £3.6 million loss)

• Cash balances including short term investments were £13.7
million at 31 December 2007 compared with £13.6 million at 31 December 2006

• Audited IFRS loss before tax £8.3 million(2006: loss of
£10.5million)

Richard Sandor, Chairman of Climate Exchange plc, said: "These results represent
further substantial progress for our business. The growth in both volumes and
revenue have been outstanding and the first two months of 2008 have been even
more exciting. The political landscape is becoming more and more favourable in
North America but even more encouraging is the recognition in other major
industrial nations around the world of the need to tackle climate change. 2008
could well be a pivotal year for the development of environmental markets."

Neil Eckert, Chief Executive of Climate Exchange plc, said: "We are proud of the
operational progress achieved during 2007 evidenced by the growth in volumes and
membership and the continuing launch of new contracts. We especially look
forward to the launch of our CER contract in Europe on 14 March 2008 which is
another important development for our business."

--ENDS--

There will be a live presentation and conference call for analysts at 3.00 p.m.
(UK), 4.00 p.m. (Europe), 11.00 a.m. (U.S. Eastern Time)

To register for the presentation and conference call, please go to the below URL

http://mediazone.brighttalk.com/event/EventConnect/93fb9d4b16-1317-intro

The presentation will become available via the same link for those who have
registered in advance at the times above. Please dial into the Telephone
conference in order to listen to the presentation with an opportunity to ask
questions live.

UK Free phone 0800 6940 257
USA Free phone 1866 966 9439
International Dial In +44 (0)1452 555 566

Quote Conference ID 38666146

If you are unable to attend the presentation, you will still be able to access
the telephone conference. Alternatively, following the presentation, there will
be a link on our website to take you to the archive of the presentation.

Contacts
Climate Exchange plc
Neil Eckert, CEO, 0207 382 7801
Helene Crook, Head of Investor Relations 0207 382 7807

Haggie Financial
Peter Rigby / Alexandra Parry 0207 417 8989

Cenkos Securities plc
Ivonne Cantu / Nicholas Wells 0207 397 8980

Notes to Editors:

About Climate Exchange plc

Climate Exchange plc is a holding company whose subsidiaries are principally
engaged in owning, operating and developing exchanges to facilitate trading in
environmental financial instruments including emissions reduction credits in
both voluntary and mandatory markets. The three core businesses are the Chicago
Climate Exchange (CCX) which operates a voluntary but legally binding cap and
trade system including an exchange for CO2 emissions as well as SOx and NOx
contracts in the US and internationally, Chicago Climate Futures Exchange (CCFE)
which is a CFTC regulated futures and options exchange focused on emission
allowances and other environmental products and the European Climate Exchange
(ECX) which operates an exchange focussed on compliance certificates for the
mandatory European Emissions Trading Scheme.

www.climateexchange.com

About Chicago Climate Exchange, Inc. and Chicago Climate Futures Exchange

Chicago Climate Exchange is a financial institution whose objectives are to
apply financial innovation and incentives to advance social, environmental and
economic goals. CCX is the world's first and North America's only legally
binding rules-based greenhouse gas emissions allowance trading system, as well
as the world's only global system for emissions trading based on all six
greenhouse gases. CCX members are leaders in greenhouse gas management and
represent all sectors of the global economy, as well as public sector
innovators. Reductions achieved through CCX are the only reductions in North
America being achieved through a legally binding compliance regime, providing
independent third party verification provided by NASD and price transparency.
The founder, Chairman and CEO of CCX is economist and financial innovator Dr.
Richard L. Sandor, who was named a Hero of the Planet by Time magazine for his
founding of CCX. For a full list of CCX members, daily prices and other
Exchange information, see the Company website below. The Chicago Climate
Futures Exchange (CCFE), a wholly owned subsidiary of the Chicago Climate
Exchange, is a CFTC designated contract market which offers standardized and
cleared futures contracts on emission allowances and other environmental
products. Clearing services are provided by The Clearing Corporation, the only
active independent futures clearing house in the world. Market surveillance
services are provided by the National Futures Association, the industry wide,
self-regulatory organization for the U.S. futures industry.

www.chicagoclimateexchange.com

www.ccfe.com

About European Climate Exchange

The European Climate Exchange (ECX) manages product development and marketing of
Carbon Financial Instruments (CFI) futures and options contracts on CO2 EU
allowances traded under the EU Emissions Trading Scheme.

ECX CFI contracts are listed and traded on the ICE Futures electronic platform,
offering a central marketplace for emissions trading in Europe with standard
contracts and clearing guarantees provided by LCH.Clearnet. ECX/ ICE Futures is
the most liquid, pan-European Exchange for carbon emissions trading. More than
80 leading global businesses have signed up for membership to trade ECX
products. In addition, several hundred clients can access the market via banks
and brokers.

www.ecxeurope.com

EXECUTIVE CHAIRMAN'S STATEMENT

As we review your company's performance over the past year and lay out our
objectives for the coming year, I thought it would be helpful to share the
history of the company and its origins over the last 15 years to illustrate our
objectives for 2008 and beyond.

The origins of your Company

We were asked by the United Nations to deliver a paper on the feasibility of a
market-based solution to global warming at the Earth Summit in Rio De Janeiro in
1992. Climate change was a subject of interest to a few scientists and
economists. Although the United States had passed legislation that enabled a cap
and trade system to deal with acid rain, scepticism of the role of emissions
trading in environmental property rights remained high across a wide spectrum of
the public and private sectors. In the next nine years my colleagues and I wrote
articles in the academic and popular press, testified in hearings at the U.S.
Senate and White House as well as before representatives of cities and
departments of European governments. CCX was a principal to the first SO2
allowance trade recorded in the Environmental Protection Agency's Registry, and
a broker of the first cross-border trade in CO2 offsets by a U.S. company. The
stage was set.

In the year 2000 the pace accelerated. We received a grant from the
Chicago-based Joyce Foundation to explore the feasibility of developing a cap
and trade market in the Upper Midwest of the U.S. for CO2 allowances and
offsets. After three years of intensive research and consensus building a
framework for a voluntary but legally binding cap and trade program was
completed. It was called the Chicago Accord.

During that period, we suffered from a series of material and disruptive events
which had the potential to damage our business model. The U.S. refused to
participate in the Kyoto Protocol eliminating all likelihood that the U.S. would
pass legislation which would require companies to reduce their emissions anytime
in the foreseeable future. Without that, the probability of corporations joining
a voluntary but legally binding cap and trade program appeared negligible. Soon
after that there was the terrorist event of 9/11, a war in Afghanistan, a crash
in the U.S. stock market, the implosion of Enron blamed on energy trading, a
recession and ultimately the Iraq war. In spite of that series of events, in
2003, l4 courageous entities (thirteen corporations and the City of Chicago)
became the founding members of the Chicago Climate Exchange ("CCX").

Ultimately that company sold 25% of its equity to Climate Exchange plc which
raised £15 million through an Initial Public Offering on the AIM Division of the
London Stock Exchange. A second round of equity finance followed a year later to
finance the European Climate Exchange ("ECX") and the Chicago Climate Futures
Exchange ("CCFE"). Both new exchanges faced enormous scepticism and competition.
In 2006 the ownership of all exchanges were merged and your company Climate
Exchange plc became the holding company.

A record performance for Climate Exchange plc in 2007

In 2007 your company unambiguously became the global leader in environmental
exchange traded markets in both volume and profits. I am proud to report that
all three core businesses in the group were profitable at the pro-forma
operating level, and group pro-forma profits in total exceeded £2.7 million.

ECX saw trading volume increase 128% over the same period in 2006 and had a
market share of 85% among nine competing exchanges. Both membership and open
interest reached record levels. Options on futures were successfully introduced
and exhibited significant growth. We also licensed a mini ECFI (European Carbon
Financial Instrument) and trading began with a rupee-based 200 ton contract on
the Multi-Commodity Exchange of India. In July, we welcomed Patrick Birley as
ECX's new Chief Executive.

CCX volumes increased by 123% over the same period in 2006. Membership increased
from 238 in 2006 to 401 in 2007. The baseline of our emitting members exceeds
576 million tonnes and constitutes 16% of the United States large stationary
source emissions. By comparison the entire EU ETS baseline is approximately 2
billion tonnes.

CCX members constitute 11% of the Fortune top 102 companies, 17% of the Dow
Jones Industrial Average and 20% of the largest emitting power companies in the
U.S. CCX expanded its membership internationally. Members now include 8
Brazilian companies, 1 Chilean company, 5 Indian and 5 Chinese companies.

In China, we were retained by the Ministry of Science and Technology and the UN
Development Programme to advise them on carbon trading. In December, CCX signed
a Memorandum of Understanding with the Chinese National Petroleum Corporation
(CNPC) to explore an emissions trading platform in China.

CCFE exhibited the greatest rate of growth in the group with a trading volume
increase of 719 % over 2006. SO2 allowance futures and options on futures lead
the way. A NOX annual contract was listed in advance of the 2009 mandated
program. Other new products included ECO futures, a renewable energy stock index
based on the PBW ETF.

We launched the Insurance Futures Exchange Services Ltd (IFEX) in 2007. IFEX
lists binary options on U.S. hurricane losses ranging from ten to fifty billion
dollars. This product fits with our mission to provide risk management tools
related to the environment and weather and serve our members in the energy
sector.

At Group Board level we are also delighted to announce that Sir Brian Williamson
joined the main Board as a non-executive Director. Sir Brian brings a wealth of
experience in the exchange space and we are privileged that he accepted our
invitation to join us.

The Outlook For 2008 And Beyond

The trends that were established in 2007 continued into 2008. In January ECX had
both a record day and record month. The record for daily trading volume was
surpassed twice with the new record standing at almost 15 million tonnes. The
monthly record was also set in January with 171 million tonnes traded (up from
the prior monthly record of 133 million tonnes set in July 2007). Furthermore,
obstacles that existed regarding the launch of a CER (Certified Emissions
Reduction) futures contract were eliminated and a launch of that contract should
now take place in the first quarter of the year rather than in the third
quarter.

CCX had similar experiences with both single day and monthly records. On 11
February, a record 2.4 million tonnes were traded in one day (the previous
one-day record was nearly 1.3 million tonnes set on February 6, 2008).
February's monthly volume exceeded the previous monthly trading record of 3.7
million tonnes by more than 6 million tonnes. CCFE also began with a spectacular
start. January's trading volume reached 55,350 contracts, surpassing the
previous monthly record of 36,098 contracts set in October 2007.

The current political climate in the U.S. also appears to have shifted
dramatically toward a prevalent belief that there will be a cap and trade law
sometime in the near future. The current bipartisan Warner-Lieberman bill is
calling for dramatic reductions and a baseline of over 6 billion tonnes. This
would represent a market three times the size of Europe. Your company is well
positioned to emerge as the leading exchange in this sector.

We believe that both the current growth and future potential of our chosen
markets has prompted announcements by major exchanges around the world to
participate in environmental markets. We welcome all followers and the
competition they will bring to this sector. We thrive on competition and expect
this to make your company even more prominent in our sector.

At the outset of this statement, I stressed the history of your company. I did
that to emphasize our ability to develop markets in the absence of national
legislation and to invent markets where there have been none before. We are
about to operationalize national policy in Canada with a 2008 launch of the
first Canadian carbon futures contract on the Montreal Climate Exchange, our
joint venture with the TMX Group (formerly the Montreal Bourse). We continue to
pursue the development of voluntary markets in places like China and India where
we are, again, having a humble but promising start. Given the magnitude of the
issue and the initial corporate and public responses, we hope that these
voluntary systems will, at some point in the future, match or exceed our success
in the U.S.

We are very hopeful and believe that the suite of products on IFEX will enable
it to expand and become a major exchange in weather derivatives. There are also
opportunities in the longer run in water quality and quantity issues which we
continue to research.

In conclusion, 2007 has been a remarkable year for Climate Exchange plc. Its
success is ultimately due to our members and customers. Your management team in
both Europe and North America has been outstanding. On a personal note, special
thanks are due to Neil Eckert the CEO of Climate Exchange plc. And of course my
greatest debt of gratitude goes to my fellow shareholders who have been so
supportive in helping us achieve our financial objectives and personal dreams.

Richard L. Sandor
Executive Chairman
12 March 2008

CHIEF EXECUTIVE'S REVIEW

Last year we set out our Group strategy as follows:

"Our intention is to generate the world's leading exchanges specialising in
trading the asset classes of emissions, water, weather and insurance related
products and other environmental asset classes. To achieve this, our immediate
strategy to increase shareholder value is:

• to deepen our existing markets, encouraging the move from Over The
Counter (OTC) to on-exchange trading and the development of hedging and
other financial instruments;
• to engage in the development of new products in our specialist areas;
and
• to broaden our geographic reach through expansion into new industrial
and emerging territories.

Our financial strategy is to operate a classic exchange revenue model deriving
fees from trading, membership, marketing information and index licensing which
are detailed in the Operating and Financial Review below. Exchanges are
scaleable and our cost base can be kept under control as our revenue
opportunities expand. We currently have a headcount of 54 and we outsource
functions wherever possible. Our opportunities for growth and the areas that
will require investment as we expand will be membership, recruitment and
marketing, as well as new product research. Our corporate overhead will increase
but we will ensure this is always in proportion to the investment opportunity."

It is satisfying that this strategy holds true today and is virtually unaltered
in any aspect. We now set out a review which measures our progress against our
stated goals. It is a process which demonstrates a substantial amount of real
and tangible progress over the last 12 months.

In particular, we are confident that we have delivered and will continue to
deliver:

• markets that are deeper;
• successful and focused new product development; and
• tangible progress in new geographic areas.

ECX

In July, we were delighted to announce that Patrick Birley was joining ECX to
take up the role of Chief Executive. Patrick was previously CEO of LCH.Clearnet
Limited and has had a long and successful career in the exchange arena. Patrick
took over the CEO role from Peter Koster, who made an important contribution to
the development of the company.

ECX has continued to build on its position at the centre of trading in European
Union Allowances ("EUAs"), with substantial increases in trading volumes. In
addition to a healthy increase in futures activity, we also started to see the
development of liquidity in the options contracts that we had introduced late in
2006. Average daily volumes for the entire year exceeded 4,000 contracts per
day, representing a combined total of over 1 billion tonnes of underlying
emissions permits.

It is evident that the market is becoming increasingly commoditised, and that
the liquidity seen on ECX is in itself bringing new participants to the market.
We are seeing this through tightening bid/offer spreads and deeper quotes
available throughout each trading day. It is clear that the market is starting
to attract new trading participants who are not only interested in hedging
opportunities, but are also looking at the possibilities of arbitrage,
investment and speculation. Inevitably, this success is also attracting interest
from major exchanges - we welcome this competition and are grateful that both
our absolute volumes and our market share have continued to grow strongly
despite headline grabbing announcements regarding new initiatives.

We had been expecting to launch CER futures and options (our second major
product set) on ECX in September, which would have further boosted volumes in
2007. While we are disappointed that this launch had to be delayed, we are
delighted that CER futures will begin trading on 14 March 2008. We believe that
these contracts will add substantially to the market activity, both individually
and through swap transactions with the existing EUA's.

ECX has started 2008 with a string of new trading records and the signs for the
rest of the year are extremely positive.

ECX Volumes for 12 months to 31 December 2007 (1,000 Tonnes CO2 EU Allowances /
Contract)

Month Total Volume Open Interest Total Volume Open Interest
Futures Futures Options Options
Contract Contracts Contract Contract

January 59,892 72,141 1,265 1,465
February 60,786 80,312 2,050 3,015
March 71,879 83,474 1,950 4,965
April 57,826 92,417 1,450 5,935
May 75,803 107,212 1,910 7,675
June 88,866 113,930 2,515 9,215
July 119,268 138,114 6,790 12,820
August 94,369 149,590 8,750 19,485
September 88,561 160,540 10,900 26,030
October 102,008 183,347 5,735 28,550
November 88,930 188,631 9,475 34,930
December 72,592 139,741 4,751 36,645

YTD Total 980,780 57,541

Jan - Dec 2006 452,774 560

CCX

U.S. carbon appears to be coming of age. We are still the only exchange
operating a U.S. emissions reduction and trading, or cap and trade system. We
are likely to remain so until the implementation of a mandatory U.S. system. Our
hope is that legislation will be passed in 2009, but even then, actual
implementation will probably only occur 3 years thereafter. This gives us a
clear run at the market during that period. In the meantime, our membership is
expanding at a remarkable rate. The notable fact is that the baseline of our
members that is, the total of their CO2 tonnage output, is now some 576 million
tonnes. This now represents some 27% of the entire European traded system. What
is also heartening is that there is a likelihood that a mandatory U.S. system
could well include up to 6 billion tonnes of carbon dioxide emissions and treble
the European system. The political news is excellent in so far as all the
presidential front runners have declared their support for cap and trade
legislation.

CCX Volumes for 12 months to 31 December 2007 (100 Tonnes/Contract)

Month Contracts Tonnes (CO2e)

January 15,942 1,594,200
February 37,121 3,712,100
March 17,271 1,727,100
April 8,739 873,900
May 18,007 1,800,700
June 21,423 2,142,300
July 33,042 3,304,200
August 9,124 912,400
September 5,359 535,900
October 18,414 1,841,400
November 24,781 2,478,100
December 20,152 2,015,200

Total 229,375 22,937,500

Jan - Dec 2006 102,724 10,272,400

CCFE

CCFE showed the highest rate of growth of any part of the company. Average daily
volume increased from 114 contracts in 2006 to 1,117 contracts in 2007
representing an 881% increase This progress was also accompanied by the launch
of a series of complementary products in the emissions and environmental arena;
these include nitrogen oxide, CFI Futures, CER Futures and Options and a
European Mini Contract.

Another key development is the launch of the Insurance Futures Exchange ("IFEX")
which trades U.S. hurricane derivatives, a business that our Chairman and I
worked on in the early '90s. The trading of insurance risk on an electronic
platform is potentially a huge development. Early signs are good. We have
launched the contracts, have market makers putting prices on the screens and are
attracting substantial interest from the financial and insurance communities.

Volume growth on CCFE has been remarkable and we look forward to the continued
development of this business.

CCFE Volumes for 12 months to 31 December 2007 (Contracts)

Month SFI Futures SFI Options NFI Futures Other Total

January 14,511 - - 14,511
February 4,837 - 52 4,889
March 12,017 - 219 12,236
April 7,697 5,750 279 13,726
May 12,869 4,365 481 17,715
June 23,555 6,115 344 30,014
July 14,753 7,152 578 131 22,614
August 16,569 16,491 506 703 34,269
September 16,950 14,930 563 680 33,123
October 19,991 13,565 340 2,302 36,198
November 16,302 13,210 73 1,147 30,732
December 20,979 10,280 30 2,442 33,731

Total 181,030 91,858 3,465 7,405 283,758

Jan - Dec 2006 28,924 - - - 28,924

CCFE End of Month Open Interest for 12 months to 31 December 2007 (Contracts)

Month SFI Futures SFI Options NFI Futures Other Total

January 10,881 - - 10,881
February 11,300 - 45 11,345
March 13,183 125 13,308
April 15,067 4,570 305 19,942
May 15,569 6,265 504 22,338
June 17,092 9,015 753 26,860
July 16,978 11,147 535 56 28,716
August 17,440 19,157 695 429 37,721
September 18,749 24,420 120 864 44,153
October 19,956 20,200 0 2,522 42,678
November 21,083 28,610 70 3,039 52,802
December 9,793 17,130 40 4,327 31,290

TOTAL 187,091 140,514 3,192 11,237 342,034

December 2006 3,822 - - 3,822

In the above tables "other" products, include ECO-Index Futures, NFI-annual
Futures, CFI Futures, IFEX Futures, CER Futures & Options, and ECFI Futures.

International Developments

The strategic aim is clear, which is to be the leading global, dedicated
environmental asset and weather trading platform. We have already concluded
initiatives in Canada with the joint creation of the Montreal Climate Exchange
with the TMX Group (formerly the Montreal Exchange) and The Multi Commodity
Exchange in India who are trading a European mini contract with the same
specification as the ECX contract but only 200 tonnes size. We have concluded a
Memorandum of Understanding with the Chinese National Petroleum Corporation
Assets Management Co. Ltd. with a view to setting up an environmental market in
China. We are in detailed discussions with several other regions and continue to
drive to secure our franchise in those other regions.

In the early days, there was perceived value in our European business model with
optionality over North America. Europe continues to deliver and the U.S.
business is now maturing into a substantial and profitable model. The
optionality is now in markets such as China, India, Canada, Australia and Japan.

Our mission is to convert these opportunities to the benefit of our shareholders
and reinforce our track record in the development of new contracts in new
markets.

Neil Eckert
Chief Executive Officer
12 March 2008

About Climate Exchange plc

Milestones

1995 First ever cap & trade program launched in North
America to reduce sulphur dioxide emissions

December 1997 Kyoto Protocol unanimously adopted. Text
provides for "flexible mechanisms", including
emissions trading

1999 Kyoto Treaty was finally negotiated with
commitment from the European Union to develop a
cap & trade system for carbon dioxide

2002 Founder member group established in Chicago in
order to launch the world's first voluntary but
contractually binding cap & trade emissions
system

2003 Chicago Environmental Plc established as a fund.
£15 million raised in London on the AIM market
to back the trading launch of CCX

December 2003 CCX launches trading of the Carbon Financial
Instrument, a CO2 spot contract

2004 Further £15 million raised to back the launch of
the Chicago Climate Futures Exchange ("CCFE") in
the U.S. and the European Climate Exchange
("ECX") in Europe

Name changed to Climate Exchange plc

October 2004 The Commodity Futures Trading Commission
approved CCFE's application to operate as a
Designated Contract Market in the U.S.

December 2004 CCFE launches the Sulphur Financial Instrument,
a futures contract on the US EPA SO2 emissions
allowance

April 2005 The European Emissions Trading System ("EU ETS")
futures contracts are launched on ECX under a
revenue sharing agreement with the ICE Futures
in London

September 2006 Acquisition of 100% of CCX and ECX. Founder
interests in the subsidiary companies are
exchanged for shares in the publicly quoted
holding company

10% of the Company's issued share capital placed
with Goldman Sachs

October 2006 First option contract launched on the European carbon
future

February 2007 CCFE launches the Nitrogen Financial Instrument,
a futures contract on the US EPA NOx emission
allowance

April 2007 CCFE launches an options contract on Sulphur
Financial Instrument futures contract

May 2007 CCX announces formation of the California
Climate Exchange to develop and trade financial
instruments relevant to the California Global
Warming Solutions Act, AB 32

June 2007 CCFE launches futures contract on Wilderhill
Clean Energy Index (ECO index)
United States House of Representatives votes by 216 to
176 to offset its CO2 emissions through CCX

September 2007 Climate Exchange plc and Deutsche Bank launch
trading in catastrophe event-linked futures on
CCFE (IFEX)

December 2007 CCX announced the signing of a memorandum of
understanding with the Chinese National
Petroleum Corporation Assets Management
("CNPCAM") to create a joint venture company to
explore the feasibility and implementation of an
emissions trading platform in China

OPERATING AND FINANCIAL REVIEW

Unaudited Pro-Forma Financial Highlights for the year ended 31 December 2007

• Pro-forma pre-tax profit of £0.85 million from £5 million
loss (2006)

• Revenues from core businesses up 249% to £13.6 million
(2006: £3.9 million)

• Core Group EBITDA £3.4 million (2006: £3.6 million loss)

• Cash balances including short term investments were £13.7
million at 31 December 2007 compared with £13.6 million at 31 December 2006

• Audited IFRS loss before tax £8.3 million (2006: loss of
£10.5million)

The figures above and in the pro-forma financial summary table below are
extracted from unaudited management accounts of the Group. These have been
prepared on a pro-forma basis assuming that the Group consolidated 100% of the
businesses of both CCX and ECX for the relevant periods. The consolidated
results of the Group for 2007 and for the 2006 comparative year contained in
this report have been prepared in accordance with International Financial
Reporting Standards. The operational results for the businesses of both CCX and
ECX as set out in the comparative figures in the results are consolidated only
from the date of the acquisition of 100% of CCX and ECX on 19 September 2006.

Pro-forma financial summary

In order to set out a comparable summary of the operating performance of the
Group's core businesses, the following table of key financial data has been
prepared assuming that the Group consolidated 100% of the businesses of both CCX
and ECX for the three full financial periods to 31 December 2007. These figures
have not been audited and do not form part of the audited financial statements
of the Group.

ECX trading revenues grew 141% from £1.48 million to £3.56 million and have a
compound annual growth rate (CAGR) over the three years to 31 December 2007 of
243%. ECX expenses increased by 8% from £3.25 million to £3.51 million chiefly
as a result of the increase in trading volumes, since IT costs for ECX largely
comprise the cost of our revenue share agreement with ICE Futures. Excluding the
impact of higher trading volumes, ECX's expenses were broadly unchanged year on
year. ECX's expenses include an internal management charge of €1 million (£0.74
million) payable annually to CCX.

CCX trading revenues grew 180% from £0.40 million to £1.12 million and have a
compound annual growth rate (CAGR) over the three years to 31 December 2007 of
309%. CCX membership revenues grew by a factor of over 10x from £0.26 million to
£2.82 million. CCX expenses increased by 54% from £3.66 million to £5.68 million
chiefly as a consequence of both increased personnel costs as well as the FINRA
verification costs associated with increasing membership.

CCFE trading revenues grew from £0.06 million to £0.78 million and membership
fees grew 238% from £0.98 million to £3.31 million. CCFE membership revenues are
largely due to the sale of Trading Privileges which are limited in number as
well as annual membership dues. CCFE expenses increased by 38% from £1.31
million to £1.81 million.

2007 2006 2005
£'000 £'000 £'000
Core Business Revenues
ECX
Trading Fees 3,558 1,479 302
Membership Fees 187 148 40
Other 0 83 1
3,745 1,710 343
CCX
Trading Fees 1,120 396 62
Membership Fees 2,828 258 174
Other 1,789 460 101
Management fee Transfer from ECX 735 687 683
6,472 1,801 1,020
CCFE
Trading Fees 776 60 1
Membership Fees 3,310 979 94
Other 0 0 0
4,086 1,039 95

Total Core Business Revenues (excluding management
fee) 13,568 3,863 775
Core Business Operating Expenses
ECX
Personnel 982 1,036 1,151
IT 1,291 736 414
Other 501 791 1,161
Management fee Transfer to CCX 735 687 683
3,509 3,250 3,409
CCX
Personnel 2,091 1,448 1,529
IT 537 658 738
Other 3,052 1,538 1,257
5,680 3,644 3,524
CCFE
Personnel 697 474 336
IT 661 442 381
Other 450 389 356
1,808 1,305 1,073

Total Core Business Operating Expenses (excluding
management fee) 10,262 7,512 7,322
Core Business Operating Profit
ECX 201 (1,540) (3,066)
CCX 945 (1,843) (2,503)
CCFE 2,280 (266) (978)
Total Core Business Operating Profit 3,426 (3,649) (6,547)

R&D overhead (710) (986) (59)
Net Corporate Overhead (2,452) (922) (301)
Net Group Interest 585 585 395
Group pre-tax Profit * 849 (4,972) (6,512)

Cash and cash equivalents including short-term 13,739 13,569 13,174
investments at year end

*The figures above have been adjusted to exclude the investment advisors'
termination payment of £5.5 million in 2006, investment advisors' fees in 2006
and the deemed expense of share-based payments of £9.2 million in 2007 (2006:
£3.7 million).

All three core group businesses are profitable at the operating level. In
addition to our core businesses, a significant feature of our long term strategy
for growth continues to be our investment in new business ventures which are not
profitable in their initial activity. This annual investment expense has been
shown separately as a Research and Development overhead and includes the costs
of our new businesses in insurance (IFEX) and in China and India.

The central overhead of Climate Exchange is shown separately. This expense has
increased by 166% from £0.92 million to £2.45 million mainly as a result of
greater personnel expenses and professional costs.

The number of shares in issue at 31 December 2007 was 44,856,810. In addition, a
further 1,515,152 shares may be issued under the contingent payment terms of our
acquisition of 19 September 2006 and options over 6,276,500 shares may be issued
under the terms of the share option plans approved by shareholders at our EGM on
29 December 2006. Finally, a variable number of shares may be issued under the
terms of contracts entered into in connection with the launch of IFEX, depending
on the performance of the IFEX business. The number of shares estimated to be
issued under these contracts is 973,945.

Operational Highlights

Volumes Traded (In metric tonnes unless otherwise stated)

2007 2006 2005

ECX CO2 total traded volume 1,037,821,000 452,774,000 94,348,000
ECX CO2 total Open Interest 176,385,000 64,617,000 15,002,000

CCX CO2 total traded volume 22,937,500 10,272,400 1,446,800

CCFE SO2 total traded volume# 272,888 28,924 171
CCFE SO2 total Open Interest 26,923 5,089 0
CCFE SO2 Options traded volume# 91,858 - -
CCFE Other contracts traded volume 10,998 - -

* April 22 2005 (first day of trading) to 31 December 2005
# Number of Contracts

Membership as at year end

2007 2006 2005
ECX membership 84 71 54
CCX membership 401 238 131
CCFE membership 239 154 58

Climate Exchange plc

Consolidated Income Statement

For the year ended 31 December 2007
2007 2006
Notes £'000 £'000

1 Revenue 13,775 1,090

Expenses:
Investment advisory fees - (375)
Investment advisory compensation payment - (5,500)
2 Personnel costs:
- equity-settled share based payment expense (5,361) (3,791)
- other personnel costs (5,586) (1,355)
3 Other expenses (7,850) (1,185)
- equity-settled share based transaction cost (3,819) -
--------- ---------

Total expenses (22,616) (12,206)
--------- ---------

Results from operating activities (8,841) (11,116)

Net gain on disposal of investment securities - 1,008
Movement in unrealised gain on revaluation of investments at fair value through - (1,284)
profit or loss
4 Interest income 510 883
--------- ---------
Net finance income 510 607
--------- ---------
--------- ---------
Loss before income tax (8,331) (10,509)
--------- ---------

5 Income tax credit 4,238 -
========= =========
Loss for the period (4,093) (10,509)
========= =========

13 Basic and diluted loss per ordinary share (pence) (9.53) (31.68)

Climate Exchange plc

Consolidated Balance Sheet

As at 31 December 2007

2007 2006
Notes £'000 £'000

Assets
Cash and cash equivalents 12,695 13,569
7 Trade and other receivables 2,159 1,465
8 Investments 1,054 -
9 Intangible assets 47,439 51,616
10 Property, plant and equipment 397 111
5 Deferred tax asset 4,238 -
--------- ---------
Total assets 67,982 66,761
========= =========

Liabilities
11 Trade and other payables 7,034 6,923
--------- ---------
Total liabilities 7,034 6,923
--------- ---------

Equity
12 Share capital 448 413
Share premium 67,192 60,998
Reserves (6,692) (1,573)
--------- ---------
Total equity 60,948 59,838
--------- ---------
Total equity and liabilities 67,982 66,761
========= =========

Climate Exchange plc

Consolidated Statement of Changes in Equity

For the year ended 31 December 2007

Share capital Share premium Shares to Retained Foreign Total 2006
be issued reserves exchange
reserve reserves
£'000 £'000 £'000 £'000 £'000 £'000 £'000

Net assets at
beginning of
year 413 60,998 10,655 (11,576) (652) 59,838 29,342

Share issue
proceeds 14 - - - - 14 32,488

Contingent
consideration 21 6,194 (6,215) - - - 10,655

On acquisition - - - - - - (5,277)

Loss for the
year - - - (4,093) - (4,093) (10,509)

Share option
expense - - - 9,180 - 9,180 3,791

Exchange
difference on
translation
of foreign
subsidiaries - - - - (3,991) (3,991) (652)
------- -------- --------- --------- --------- --------- ---------
Net assets at
end of year 448 67,192 4,440 (6,489) (4,643) 60,948 59,838
------- -------- --------- --------- --------- --------- ---------

A transfer has been made in the year from shares to be issued reserves in
respect of shares issued in connection with the first contingent payment (note
12).

Climate Exchange plc

Consolidated Statement of Cash flows

For the year ended 31 December 2007

2007 2006
Notes £ £
Cash flows from operating activities
Loss before income tax (8,331) (10,509)
Profit on disposal of investment securities 277
Depreciation 63 9
Equity - settled share based payment expenses 9,180 3,791
Foreign currency movement on acquisition - (2,535)
--------- ----------
Operating cash flows before movements in working 912 (8,967)
capital --------- ----------

Changes in operating assets and liabilities
Increase in trade and other receivables (694) (463)
Increase in trade and other payables 111 4,309
--------- ----------
Net cash inflow /(outflow) from operating 329 (5,121)
activities --------- ----------

Cash flow from investing activities
Acquisition of subsidiaries, net cash acquired - (3,540)
Investment in joint venture (10) -
Purchase of investment securities (1,044) -
Sale of investment securities - 2,058
Purchase of property, plant and equipment (339) (31)
--------- ----------
Cash outflow from investing activities (1,393) (1,513)
--------- ----------

Cash flow from financing activities
Cash proceeds from issue of shares - 12,231
--------- ----------
Cash inflows from financing activities - 12,231
--------- ----------

(Decrease)/Increase in cash and cash equivalents (1,064) 5,597

Cash and cash equivalents at beginning of year 13,569 8,136
Foreign exchange movement on cash and cash 190 (164)
equivalents --------- ----------
Cash and cash equivalents at end of year 12,695 13,569
========= ==========

1 Revenue

2007 2006
£'000 £'000
Membership fee income 6,325 313
Transaction fee income 5,454 647
Registration fee income 1,464 24
Grant income 371 46
Other 161 60
---------- ----------
13,775 1,090
========== ==========

2 Personnel expenses

2007 2006
£'000 £'000
Wages and salaries 4,464 908
Directors' fees and emoluments 150 293
Compulsory social security contributions 588 64
Contributions to defined contributions plans 384 20
Equity-settled share-based payment expenses 5,361 3,791
---------- ----------
Total 10,947 5,076
========== ==========

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2007

3 Other expenses
2007 2006
£'000 £'000
Auditors' fees 161 33
Administration fees 205 51
Marketing fees 552 -
Occupancy fees 450 139
Directors' insurance costs 55 98
Travel expenses 979 245
Professional fees 2,554 16
Information technology costs 1,265 498
Broker fees 1,261 32
Other expenses 354 40
Equity-settled share based transaction cost 3,819 -
Foreign currency loss 14 33
---------- ----------
11,669 1,185
========== ==========

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2006

4 Interest income
2007 2006
£'000 £'000
Interest receivable:
- Bank interest 510 443
- European Climate Exchange Limited bond interest - 440
---------- ---------
Net finance income 510 883
========== =========

5 Taxation

There is no provision for current taxation and no related liability for the year
due to tax losses incurred or brought forward.

The tax credit in the Income Statement and the deferred tax asset in the balance
sheet relates to deferred tax which has been provided for in respect of tax
losses of certain Group companies.

The Company is resident in the Isle of Man where it is subject to tax at zero
percent.

6 Dividends proposed

As at 31 December 2007 no dividend had been declared or proposed for (2006:
£nil).

7 Trade and other receivables
2007 2006
£'000 £'000

Trade receivables 1,674 597
Other receivables 485 868
---------- ---------
2,159 1,465
========== =========

8 Investments
2007 2006
£'000 £'000
Investment in government securities 1,044 -
Investment in joint venture 10 -
---------- ---------
1,054 -
========== =========

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2007

8 Investments (continued)

Investments in government securities have been categorised as available-for-sale
and stated at fair value. All had an orignal maturity of less than one year from
the date of purchase.

Investment in joint ventures comprises a 50% interest in Climate Spot Markets
Limited, stated at cost. This Company has not commenced to trade and has
incurred minimal expenditure to date.

9 Intangible assets

Goodwill
£'000
Cost
Balance at 1 January 2007 51,616
Revaluation to foreign currency (4,177)
-----------
Balance at 31 December 2007 47,439
-----------

Amortisation and impairment losses
Balance at 1 January 2007 and 31 December 2007 -
-----------

Carrying amounts
-----------
-----------
At 31 December 2007 47,439
-----------
At 1 January 2007 51,616
-----------

The goodwill relates to the acquisition of Chicago Climate Exchange, Inc in
2006. It is denominated in US$ and retranslated each period-end.

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2007

10 Property, plant and equipment

Equipment Fixtures and Total
fixings
£'000 £'000 £'000
Cost
Balance at 1 January 2007 150 59 209
Foreign exchange translation 14 6 20
Additions 32 307 339
---------- ----------- -----------
Balance at 31 December 2007 196 372 568
---------- ----------- -----------

Deprecation
Balance at 1 January 2007 84 14 98
Foreign exchange translation 8 1 9
Deprecation for the year 35 29 64
---------- ----------- -----------
Balance at 31 December 2006 127 44 171
---------- ----------- -----------

Carrying amounts
---------- ----------- -----------
At 31 December 2007 69 328 397
========== =========== ===========
At 1 January 2007 66 45 111
---------- ----------- -----------

11 Trade and other payables

2007 2006
£'000 £'000

Trade payables 1,918 1,014
Non-trade payables and accrued expenses 5,116 5,909
---------- ---------
7,034 6,923
========== =========

Non-trade payables and accrued expenses in 2006 included £3.7million due to EEA
Fund Management.

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2007

12 Share Capital

2007 2006 2007 2006
Number Number £ £
-------- -------- ---------- -------
Authorised 45,000,000 45,000,000 450,000 450,000
Ordinary shares of 1p each
--------- --------- ---------- -------
========= ========= ========== =======
Called up, allotted and fully
paid Ordinary shares of 1p each 45,000,000 44,856,810 448,568 413,297
========= ========= ========== ========

Under the terms of the purchase agreement dated 19 September 2006, up to
3,636,363 ordinary shares may be issued to the selling shareholders of CCX
("Sellers") subject to CCX achieving certain EBITDA thresholds. If CCX achieves
EBITDA of at least US$500,000 for any 12 month period prior to 31 December 2008,
the Sellers are entitled to a "First Contingent Payment"; if CCX achieves EBITDA
of at least US$4,000,000 for any 12 month period prior to 31 December 2009, the
Sellers are entitled to a Second Contingent Payment. In either case, the payment
is to be satisfied by the issue of shares in Climate Exchange Plc at 330p per
share.

The First Contingent Payment was up to £7,000,000, the amount payable being
dependent on the level of EBITDA achieved between a lower limit of US$500,000
and an upper limit of US$2,000,000. The First Contingent Payment was payable in
full if EBITDA achieved for any 12 month period prior to 31 December 2008 was at
least the upper limit, and 25% of the maximum First Contingent Payment was
payable if the EBITDA was at least the lower limit. Between these limits, a
straight-line apportionment would be applied. This first contingent payment was
made in the year, with 2,121,204 shares issued.

The Second Contingent Payment is up to £5,000,000, the amount payable being
dependent on the level of EBITDA achieved between a lower limit of US$4,000,000
and an upper limit of US$6,500,000. The Second Contingent Payment is payable in
full if EBITDA is achieved for any 12 month period prior to 31 December 2009 is
at least the upper limit, and 25% of the maximum Second Contingent Payment is
payable if the EBITDA is at least the lower limited.

Between these limits, straight-line apportionment will be applied for EBITDA up
to US$5,000,000, for which a Second Contingent Payment of £2,500,000 is payable,
and between EBITDA of US$5,000,000 and the upper limit.

For the purpose of determining the value of the deferred consideration, a price
of 295p per share was used, being market value at the date of acquisition.

Climate Exchange plc

Notes to the financial statements (continued)

For the year ended 31 December 2007

13 Basic and Diluted Loss per share

Basic earnings/(loss) per share is calculated by dividing the loss for the year
attributable to ordinary shareholders of £4,093,312 (2006: £10,509,069 loss) by
the weighted average number of shares outstanding during the year, being
42,942,114 (2006: 33,173,802).

14 Operating leases

Non-cancellable operating lease rentals are payable as follows:

2007 2006
£'000 £'000
Less than one year -
Between one and five years 296 240
More than five years 1,697 449
------------- ------------
Total 1,993 689
============= ============

The Group in 2007 committed for two office spaces, which expire in September
2017 at a total cost of £1.25million

This information is provided by RNS
The company news service from the London Stock Exchange

END
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