Press Release

Embargoed for release at 7.00 a.m

FOR PUBLICATION IN THE UNITED KINGDOM ONLY.  NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTION WHERE THE EXTENSION OR AVAILABILITY OF THE PLACING OR THE NEW ORDINARY SHARES WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

AGCERT INTERNATIONAL PLC

Proposed placing to raise £20.5m and capitalisation of £10.0m of debt to finance revised business strategy

AgCert International plc (“AgCert” or the “Company”) announces that it proposes to raise approximately £20.5 million (€30.0 million), gross of expenses, by way of a fully underwritten placing of new Ordinary Shares and, at the same time, the Company announces that it proposes to capitalise approximately £10.0 million (€14.6 million) of debt owed to three major shareholders into new Ordinary Shares.

The proceeds of the proposed fundraising are to be used to fund the Company’s revised, lower capital investment business strategy.

Financing

• Placing to raise proceeds of approximately £20.5 million (before expenses)

• Placing of 51,177,072 new Ordinary Shares at a price of 40 pence per new Ordinary Share subject to Shareholder approval

• Placing Price represents a discount of 15.8 per cent to the average middle market closing price on 26 April 2007

• £10.0 million of debt owed to three major shareholders to be capitalised into 24,948,337 new Ordinary Shares at the same time as the Placing at a price of 40 pence per Ordinary Share

• Placing and Capitalisation of Debt will result in a total of 76,125,409 new Ordinary Shares being issued, representing approximately 45.1 per cent of the issued share capital of the Company

• The Placing has been fully underwritten by Nomura Code Securities Limited and Hoare Govett Limited

• Proposed entry into convertible loan of €5 million to be provided by XLTG

• Capitalisation of Debt and XLTG Loan Facility are related party transactions for the purposes of the Listing Rules and are subject to Shareholder approval

• A document comprising a circular to Shareholders and a Prospectus relating to the Placing, the Capitalisation of Debt and the XLTG Loan Facility is expected to be posted to Shareholders on 30 April 2007

Revised strategy

• Group business strategy to be substantially revised from being a business developer/operator to a partnership/consultative model leveraging the Group’s technical expertise, regulatory and market knowledge and experience

• Revised strategy will focus on new sources of CERs including strategic accounts, joint ventures and agency agreements

• Shift in business strategy will significantly reduce capital requirements

• Annualised operating expenses for existing business expected to be cut from €31m to €20m with additional €5m and €9m of operating expenses to be incurred for the new strategy in 2007 and 2008 respectively

Commenting on the proposed Placing and Capitalisation of Debt and the revised strategy, Merrick Andlinger, Chairman, said:

“Over the last two years, whilst the Company has made significant progress with regard to its planned business roll out, we have fallen short of the targets that we set ourselves and which our shareholders expected.  A number of factors, internal and external, technical and regulatory, have held back progress and led the Board to examine alternative means of creating value.

We have learnt much along the way and are now putting in place a strategy which will enable AgCert to exploit our full compliment of skills to best advantage.  The refinancing will enable us to complete the Group’s current roll-out of Biodigesters and to fund the operating expenses of the Group while it moves to being cash flow positive under the revised strategy.”

This summary should be read in conjunction with the full text of this announcement.

Appendix I sets out the risk factors.

Appendix II sets the terms and conditions of the Placing.

Enquiries:

AgCert International plc

Bill Haskell, Chief Executive

Paul D’Alton, Finance Director

Nomura Code Securities Limited

Richard Potts 

Gerard Harper

Hoare Govett Limited

Justin Jones  

Hugo Fisher

John Garrad-Cole

College Hill

Anthony Parker

General

This announcement has been issued by, and is the sole responsibility of, AgCert International plc.

Hoare Govett Limited and Nomura Code Securities Limited, which are authorised in the United Kingdom under FSMA and which are regulated by the Financial Services Authority, are acting jointly as AgCert International plc’s sponsors, financial advisers, brokers, bookrunners, lead managers and underwriters in connection with the Placing. Neither Nomura Code Securities Limited nor Hoare Govett Limited will regard any other person as their client or be responsible to any other person for providing the protections afforded to their respective clients nor for providing advice in relation to the Placing, the contents of this announcement or any transaction, document or arrangement referred to herein.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR AN INVITATION TO SUBSCRIBE FOR, OR THE SOLICITATION OF AN OFFER TO BUY OR SUBSCRIBE FOR, ANY NEW ORDINARY SHARES BY OR ON BEHALF OF THE COMPANY, NOMURA CODE SECURITIES LIMITED OR HOARE GOVETT IN ANY JURISDICTION OR IN ANY CIRCUMSTANCES WHERE IT IS NOT AUTHORISED OR LAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

The distribution of this announcement and/or the New Ordinary Shares and/or existing Ordinary Shares may be restricted by law and therefore persons into whose possession this announcement and/or any accompanying announcements come should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdictions. In particular, subject to certain exceptions, this announcement should not be distributed, forwarded to or transmitted in or into the United States, Australia, Canada, Japan or South Africa, or in or into any other jurisdiction where to do so would breach any applicable law or regulation.

This announcement is not a prospectus but an advertisement.  A combined circular to Shareholders and prospectus relating to the Placing, the Capitalisation of Debt and the XLTG Loan Facility (the “Prospectus”) is expected to be despatched on 30 April 2007.  The Prospectus will contain a notice of an Extraordinary General Meeting of the Company to approve the Placing, the Capitalisation of Debt and the XLTG Loan Facility and certain matters relating to the implementation of the Placing, which is expected to be held at 11.30 a.m. on  24 May 2007 at Airfield Trust, Upper Kitmacud Road, Dundrun, Dublin 14. The Prospectus will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) from the date of its publication until Admission at the offices of the Company, Apex Business Centre, Blackthorn Road, Sandyford, Dublin 18, Ireland and at the offices of Nomura Code Securities Limited, 1 Carey Lane, London, EC2V 8AE.

No offer, invitation or inducement to acquire shares or other securities in the Company pursuant to the proposed Placing is being made by or in connection with this announcement in any jurisdiction whatsoever (including without limitation, the United States).

No representation or warranty, express or implied, is made by Nomura Code Securities Limited or Hoare Govett Limited as to any of the contents of this announcement. This announcement contains statements that are, or may be deemed to be, forward-looking statements, including, without limitation, statements containing the words “believes”, “anticipates”, “intends”, “plans”, “estimates”, “aims”, “expects” or, in each case, their negative or other variations or comparable terminology or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company’s intentions, beliefs or current expectations concerning, amongst other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which the Company operates. Such forward-looking statements involve unknown risks, uncertainties and other factors that may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements. Subject to any legal and regulatory requirements, the Company disclaims any obligation to update any such forward-looking statements in this announcement to reflect future events or developments.

Neither the Existing Ordinary Shares nor the New Ordinary Shares have been, or will be, registered under the US Securities Act of 1933, as amended (“Securities Act”) or under the securities legislation of any state of the United States, and may not be offered, sold, pledged or otherwise transferred except if such transfer is effected (1) in a transaction meeting the requirements of Regulation S under the Securities Act, (2) pursuant to an effective registration statement under the Securities Act, or (3) pursuant to an available exemption from the registration requirements of the Securities Act, in each case in accordance with all applicable securities laws, including applicable state securities laws of the United States. Some of the Existing Ordinary Shares are “restricted securities” under US securities laws. Please see the Company’s press release dated 6 October 2006 for further details. The relevant clearances have not been, and will not be, obtained from the Securities Commission of any province or territory of Canada. No document in relation to the Placing has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance in relation to the Placing or the Placing Shares. Accordingly, subject to certain exceptions, the Placing Shares may not, directly or indirectly, be offered, sold, re-sold, taken up or delivered in or into the United States, Canada, Australia, Japan or South Africa or offered to, sold to, taken up or delivered in favour of, or to, a person within the United States or a resident of Canada, Australia, Japan or South Africa.

No statement in this announcement is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company.

The contents of this announcement are not to be construed as legal, financial or tax advice. If necessary, each recipient of this announcement should consult his, her or its own legal adviser, financial adviser or tax adviser for legal, financial or tax advice.

Embargoed for release at 7.00 a.m

FOR PUBLICATION IN THE UNITED KINGDOM ONLY.  NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO ANY OTHER JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA, OR IN OR INTO ANY OTHER JURISDICTION WHERE THE EXTENSION OR AVAILABILITY OF THE PLACING OR THE NEW ORDINARY SHARES WOULD BREACH ANY APPLICABLE LAW OR REGULATION.

AGCERT INTERNATIONAL PLC

Proposed placing to raise £20.5m and capitalisation of £10.0m of debt to finance revised business strategy

1. Introduction

The Company announces that it proposes to raise approximately £20.5 million, gross of expenses, by way of a placing of 51,177,072 new Ordinary Shares representing in aggregate approximately 30.3 per cent of the issued share capital of the Company, at 40 pence per new Ordinary Share. The Placing has been fully underwritten by Hoare Govett and Nomura Code Securities.

At the same time, the Company announces that it proposes to capitalise approximately €14.6 million of debt owed to three major shareholders into 24,948,337 new Ordinary Shares representing approximately 14.8 per cent ofthe issued share capital of the Company at a price of 40 pence per new Ordinary Share.

If the Placing and the Capitalisation of Debt proceed, a total of 76,125,409 new Ordinary Shares, representing approximately 45.1 per cent of the issued share capital of the Company, will be issued.  The net proceeds of the Placing are required to fund the operational and capital expenditure required for the revised, lower capital investment business strategy that the Company intends to pursue and that is described in paragraph 3 below.

The Placing Price represents a 15.8 per cent discount to the average middle market closing price of an Ordinary Share of 47.5 pence on 26 April 2007, being the day before the announcement of the Placing and the Capitalisation of Debt. This level of discount requires the approval of Shareholders pursuant to the Listing Rules.  In addition, the Placing Shares and the Capitalisation Shares constitute equity securities for the purposes of the Acts and are not being offered to existing Shareholders on a pre-emptive basis. It is therefore necessary to disapply statutory pre-emption rights in relation to their issue, which also requires the approval of Shareholders.  Further, it is proposed that (a) €14.6 million of debt owed to ACIII (whose portion of the debt has been novated to Mr. Gerhard Andlinger), XLTG and ANX LLC, who are interested in 24.7 per cent, 23.2 per cent and 2.1 per cent respectively of the issued share capital of the Company, be converted into New Ordinary Shares at the Placing Price at the same time as the Placing; and (b) the Company receives a convertible loan facility of up to €5 million from XLTG.  As these are related party transactions for the purposes of the Listing Rules, the approval of the Shareholders (excluding those Shareholders who are each a related party to the transactions) is required. Such approvals are being sought at the Extraordinary General Meeting to be held on 24 May 2007. The Capitalisation of Debt and the XLTG Loan Facility are conditional on the Placing becoming unconditional.

The amount that will be received by the Company upon the issue of the Placing Shares is £18.7 million (net of expenses).  The Directors believe that the amount receivable by the Company in respect of the Placing Shares and the Capitalisation Shares represents a fair and reasonable price for such shares, and believe that the terms of the XLTG Loan Facility are fair and reasonable. 

As the Placing, the Capitalisation of Debt and the XLTG Loan Facility are conditional, inter alia, upon the passing by Shareholders of the Resolutions at the EGM, Shareholders should be aware that, if the Resolutions are not passed and Admission does not take place, the net proceeds of the Placing will not be received by the Company, the Capitalisation of Debt will not take place, and the XLTG Loan Facility will not be available.  The proceeds of the Placing are required to fund future expenditure which the Directors consider to be necessary in order to fund the Company’s business plan and meet the Company’s existing delivery obligations of CERs.

In the event of the Placing and the Capitalisation of Debt not taking place and the XLTG Loan Facility not being available, other sources of funding would have to be pursued. Alternative sources of funding, if they are available at all, are likely to be expensive and onerous for the Company.  Based on the Company’s experience to date in seeking alternative funding, the Directors doubt that other sources of funding will be available in the required amounts and timeframe. Should the Placing and the Capitalisation of Debt not proceed, and the XLTG Loan Facility not be available, the Company would face a working capital shortfall, and operational expenditure would have to be curtailed and capital expenditure stopped completely until such time as new additional committed funds were available.  This would have a material adverse effect on the Group’s operations and ability to meet customer delivery obligations, and potentially result in material penalties for non-delivery being incurred.  If no additional funds become available, the Company would, at its current rate of use of cash, run out of working capital and may be forced to cease operations with effect from early June 2007.

The Board (other than Gregory Haskell who is interested in XLTG) having been so advised by Hoare Govett and Nomura Code Securities, consider that the terms of the XLTG Loan Facility are fair and reasonable so far as Shareholders are concerned.  In giving its advice, each of Nomura Code Securities and Hoare Govett has taken into account the commercial assessments of the Directors.  Gregory Haskell has not taken part in the Board’s consideration of the XLTG Loan Facility.

The Board (other than Merrick Andlinger and Gregory Haskell who have interests in ACIII and XLTG respectively), having been so advised by Hoare Govett and Nomura Code Securities, considers that the terms of the Capitalisation of Debt, are fair and reasonable so far as Shareholders are concerned. In giving its advice, each of Nomura Code Securities and Hoare Govett has taken into account the commercial assessments of the Directors. Merrick Andlinger and Gregory Haskell have not taken part in the Board’s consideration of the Capitalisation of Debt.

The Board is of the opinion that the Placing, the Capitalisation of Debt, the XLTG Loan Facility, and the Resolutions are in the best interests of the Shareholders as a whole. The Board unanimously recommends that Shareholders vote in favour of the Resolutions.

2. Background to and reasons for the Proposals

At the time of the IPO, the Company’s business model was focused on the construction of modified animal waste management systems utilising Biodigesters for the capture and combustion of methane (a potent Greenhouse Gas) on farms, for which the Company incurred all or most of the capital expenditure and regulatory risk, but was entitled to receive the majority of the Offsets generated.

Since then, the Company has experienced a number of challenges in the implementation of its original business model that have led to its operational and financial performance being below expectations at the time of the IPO. These can be broadly divided into categories of yield, timing, costs, and design and construction.

Yield

At the time of the IPO, the Company calculated the Offsets it expected to receive from CDM Projects using a methodology that calculated, by reference to a formula, the Offsets that could potentially be produced from constructed Biodigesters. However, during December 2005 the basis for calculating Offsets was changed, which meant that the lesser of actual metered levels and the purely mathematical calculations had to be used which in turn, significantly reduced the yield of Offsets from the Company’s projects. This reduction in yields was compounded by Biodigesters being constructed on farms with smaller Offset yields than anticipated in the Company’s original business model.

Timing

The challenges experienced with the regulatory framework caused delays in the issuance to the Group of CERs in large quantities as well as reducing the number of CERs that could be generated from each CDM Project as discussed in the paragraph above. The Company also encountered logistical challenges with the procurement of key components, notably flares and mixers, which delayed the production of Offsets.

Costs

The Company experienced unexpected increases in the cost of vinyl used in the construction of modified AWMSs and additional cost increases associated with excavation and labour. Monitoring and maintenance costs were also underestimated in the original business model. These factors, together with the reduced yields discussed above, increased the cost to the Company of each Offset generated.

In light of the delays and reduced yields of Offsets, the Company renegotiated its delivery obligations to third party buyers. This resulted in a reduction in delivery obligations from 28.6 million CERs to 18.6 million CERs, with approximately 70 per cent of the reduction occurring in 2007. As the contracts with third party buyers were at fixed prices below the then prevailing market price, payments had to be made for the renegotiation of these delivery obligations, the cost to the Company being €50 million.

Design and construction

Some construction work undertaken by contractors was below standard and not to the Company’s specifications.  Although the Company took action to remedy this, including using alternative contractors and replacing its entire construction team in Brazil, these problems caused substantial additional costs and delay in the production of Offsets.

In addition, because of the rapid roll out of the Biodigester construction programme, the Company did not have sufficient time to undertake the necessary analysis of the design of operational Biodigesters in the field which may have allowed it to make the necessary improvements to remedy defects and increase efficiency in the Biodigesters it was building.  This meant that the Company has had to make subsequent adjustments to a larger number of the Biodigesters than it would have, had it undertaken a building programme that allowed it time to analyse the field data before additional Biodigesters were built.

Additional funding

The Company has obtained additional funding since the IPO as follows:

• approximately €40 million by way of an equity placing to AES CC&T in May 2006;

• drawdown of €40 million (€20 million in April 2006 and €20 million in October 2006) as an advanced payment against the future delivery of CERs under an agreement with AES Corporation for the forward sale of Offsets, in connection with which options over 3,246,295 Ordinary Shares were granted to AES Corporation;

• a loan of €13.6 million from ACIII (whose portion has been novated to Mr. Gerhard Andlinger), XLTG and ANX LLC in December 2006, which is proposed to be converted (along with accrued interest of €1.0 million) into Ordinary Shares at the Placing Price simultaneously with the Placing being completed, conditional upon Shareholder approval; and

• a secured term loan of €11.4 million and a secured convertible loan of €7.6 million from Laurus in December 2006, in connection with which options over 4,228,872 Ordinary Shares were granted to Laurus.

In addition, the Company has, conditional on Shareholder approval at the Extraordinary General Meeting, been granted a facility of up to €5 million by XLTG, which can be used solely towards the repayment of the facility granted by Laurus described above. Any loans drawn down under this facility are convertible at the option of XLTG into Ordinary Shares at a conversion price of 56 pence per Ordinary Share.

As announced in December 2006 and January 2007, the Company entered into discussions with lenders with the intention of raising approximately €70 million in additional debt funding. The Company raised €19 million from Laurus but was unable to raise the remaining €51 million of such debt finance on acceptable terms and these negotiations have now terminated. Negotiations are continuing in relation to up to €10 million of funding from a development bank.  An application by the Company for €6.2 million of this funding has been made, and is currently under consideration from the credit committee of the development bank (which is the body within the bank that approves proposed loans for recommendation to the main board of the bank).

Given the lack of availability of sufficient additional debt capital, and the increased costs and reduced yields of Offsets resulting from continued capital expenditure on the basis of the Company’s original business model, the Company has revised its business model going forward to reduce both its capital and operating expenditure by exploring alternative sources of CERs, putting on hold the construction of Biodigesters on new sites (except where third party funding is available) and by reducing operational expenditure, including by reducing its staff levels.

Therefore the Company is proposing to raise new funds through the Placing to finance the expenditure required for its new lower cost strategy, set out in paragraph 3 below. The Company has decided to raise this finance through the Placing to specific institutional investors rather than through an open offer to reduce underwriting costs and provide the certainty required by potential placees.

3. Strategy

As described above, the Company has undertaken a review of its existing business plan and has formulated a revised business strategy. The strategy is intended to consolidate the Company’s position in relation to its existing business while moving into additional areas of Offset and revenue generation.

Current position

As at 31 March 2007, the Group had completed 661 Biodigesters (compared with 26 at IPO), had received 84 Letters of Approval from host countries (compared with 1 at IPO), had 63 CDM Projects registered by the UNFCCC (compared with none at IPO), and had increased the average selling price per Offset under its forward sales contracts from €4.74 at IPO to €8.79 currently1. These prices are calculated on the basis of (a) the fixed prices set out in the forward sales contracts where such contracts are at a fixed price, and (b) a market price of €15 (the 20 day rolling average price of a 2008 EUA as at 30 March 20072) on the date of delivery where the prices in the forward sales contracts are based on the market price at the date of delivery. On the same basis, the total contracted forward sales of the Company are approximately €163 million¹. If a market price of €17.50 (the closing price of a 2008 EUA as at 30 March 2007²) is used for those contracts that depend on the market price at the date of delivery, the average selling price per CER under the forward contracts increases to €9.751 and the total contracted forward sales represent some €181 million1. A number of these forward sales contracts (representing approximately 30 per cent of the Company’s existing forward sales) were procured using a broker, who may be entitled to receive a five per cent commission on the revenues received by the Company on delivery under these contracts. The total commission payable in respect of such arrangements is €1.1 million over the period 2007 to 2009.

The Monitored Run Rate of the Group’s existing Biodigester portfolio was estimated to be 1,080,000 per annum as at 31 March 2007. The Company expects this run rate to increase to approximately 1,756,000 CERs per annum for 2008 as a result of increased efficiency as existing Biodigesters mature, the completion of the current roll-out of new Biodigesters where construction commenced in the first quarter of 2007 and the Company’s share of the CERs produced by its joint venture with AES.  Set against this run rate from its existing operations, the Company has delivery obligations of 1,192,000, 7,233,000 and 4,058,000 CERs in 2007, 2008 and 2009, respectively (as well as obligations to deliver a total of 6.1 million CERs in the period 2010 to 2012) following its rescheduling of delivery obligations.  The Company intends to fulfil its delivery obligations partly from its existing business as follows:

CER source

Number of CERs expected to be obtained as at 31 March 2007

2007

2008

2009

1       Inventory (as at 31 December 2006)

586,000

—

—

2       Existing Biodigesters (as at 31 March 2007) at current Monitored Run Rate

1,078,000

1,080,000

1,080,000

3       Completion of construction and hysteresis period of new Biodigesters (including joint venture Biodigesters)

136,000

720,000

1,566,000

4       Less: deduction for the adaptation fund

(42,000)

(44,000)

(60,000)

Total

1,758,000

1,756,000

2,586,000

Delivery obligations

1,192,000

7,233,000

4,058,000

Total excess/(deficit)

566,000

(5,477,000)

(1,472,000)

Including prior year carry forward of excess

566,000

(4,911,000)

(1,472,000)

Percentage of deliveries covered

171%

32%

64%

Note: The information in this table is unaudited and is based on Monitored Run Rates. It does not include the potential loss of CERs through “leakage”.

1. This represents Offsets that were generated during 2006 but which are available for delivery in 2007. It includes Offsets; for which (as at 31 December 2006) issuance had been requested from the CDM Executive Board (131,000); or which had been measured by the Group and were awaiting verification (455,000) (Source: Company’s unaudited internal operations report).
2. The Offsets that the Directors expect to be generated by the existing Biodigesters assuming that the existing Monitored Run Rate is maintained. This includes 262,191 Offsets metered in the period 1 January to 31 March 2007 (Source: Company’s unaudited internal reports).
3. Additional Offsets that the Directors expect to be generated:
• from Biodigesters which are currently in the initial hysteresis period. This is the initial (approximately 3-6 month) period where construction has been completed and the Biodigester filled with effluent but production is very low due to the new Biodigesters’ environment becoming established.  This number is calculated by taking the Constructed Capacity for the Biodigesters which were completed in the period 31 December 2006 — 31 March 2007 and multiplying this Constructed Capacity by the current efficiency rate.  The number is then reduced for 2007 to take account of the fact that any Offsets which these digesters did produce in the period to 31 March 2007 will already have been accounted for in the Monitored Run Rate;
• from Biodigesters which are currently under construction. This is calculated by taking the Constructed Capacity for the 101 Biodigesters which were under construction as at 31 March 2007 (Source: Company’s unaudited operations report) and multiplying it by the current efficiency rate. The number is then reduced for 2007 to take account of the fact that they were not producing Offsets in the period to 31 March 2007 and also to take account of the 3 month hysteresis period during which production will be very low; and
• from the Biodigester projects operated and to be operated by the AgriVerde joint venture, assuming that the Company does not make any capital investment into the joint venture. (Source: Company’s unaudited projections).
4. This is a 2 per cent deduction made by the UNFCCC from all CER issuances, the proceeds of which go into a fund to support the least developed countries participating in the Kyoto Protocol.

AgCert previously announced an “annual run rate capacity” of approximately 3 million CERs as at the end of November 2006.  This was based on the Constructed Capacity which was the scientific calculation of the CERs which could be produced.  Following the CDMEB’s deliberations and an analysis of the information obtained from fully operational sites, the Directors have determined that the Monitored Run Rate, which reflects the Offsets which are measured as being produced would be a more accurate reflection of the emission reductions which could be obtained. This run rate at the end of March 2007 was 1 .08 million³. The numbers in the table above reflect the actual or projected Monitored Run Rate rather than the Constructed Capacity.

Strategic initiatives

The Company has three main objectives under its new strategy: (a) to create sufficient CERs to meet its current delivery obligations; (b) to reduce its current operating expenditure; and (c) to explore additional revenue streams and markets.

(a)        Additional sources of CERs to fulfil 2008 and 2009 delivery obligations:

(i) Strategic accounts and joint ventures

Through its experience of dealing with the UNFCCC and its successful registration (as at 31 March 2007) of 63 CDM Projects under both large and small scale methodologies, the Company has developed an extensive knowledge base and pool of resources in relation to the complex regulatory environment surrounding the generation of CERs. This can be valuable to other potential project developers and the Company intends to use this knowledge resource on a consultancy basis to penetrate other market segments and thereby obtain CERs in lieu of monetary fees without incurring capital expenditure. The Directors’ intention is to target those projects which have the potential to produce in the region of 5-20 million Offsets per annum. The Company is currently in negotiations with several large industrial emitters to receive a proportion of the Offsets to be generated by projects at their sites in return for the Company providing the expertise required to design and register projects to generate Offsets.

In 2006, the Company entered into a joint venture with AES CC&T under which the Company receives 20 per cent of the Offsets generated by the joint venture company by providing its expertise and without having to contribute any capital. The number of CERs which are projected to be obtained by the Company on this basis are included in the table above.  The Company has the option to purchase a further 30 per cent of the Offsets generated by contributing capital to the joint venture. The Company is actively discussing several other joint venture projects with interested third parties. The Company believes such ventures are a practical and cost efficient way of expanding its business by leveraging its expertise without committing capital resources.

The Company is also actively pursuing opportunities with strategic partners in the biomass combustion sector.  Combustion of waste biomass in generators to produce electricity generates Offsets through the avoidance of methane production and, in many cases, by reducing fossil fuel use through electricity generation.  The Company has entered into non-binding letters of intent in relation to six potential projects which it estimates could potentially generate approximately 246,000 Offsets for the Company from 2009, and is actively seeking further projects.  The Company is helping the owners of the project sites secure third party financing on a project-by-project basis, avoiding the need for the Company to expend capital on the projects or for the site owner to have to seek financing independently.  The Company expects to receive up to 90 per cent of the Offsets generated from such projects as its payment for arranging the development and financing of the projects and the creation of Offsets.  The Company may also enter into an agreement with the site owners to purchase some or all of the remaining Offsets at a discount to market prices as described in the paragraph below.

(ii) Agency/forward purchase

The Company intends to purchase CERs from projects which are already underway at a price lower than the prevailing market price at the time of contracting in return for providing consultancy services.  As payment for these CERs would not be required until delivery, no capital investment would be required.  The Company has already entered into a forward purchase agreement to acquire approximately 160,000 CERs⁴ per annum (depending on the number of CERs generated by the project) to be generated by a CDM Project in China for deliveries between 2008 and 2012, and is working with two other companies to source further similar opportunities. Where these opportunities are sourced through a third party, the Company might have to pay a commission to such third party of up to 7-10 per cent of the sales revenue received by the Company upon the sale of the CERs by the Company to a third party buyer.

The Company is investigating and pursuing a large number of potential agency and strategic account projects in various sectors and locations. The Offsets which could potentially be obtained by the Company from these projects during 2008 and 2009 substantially exceed the deficits in the delivery obligations shown in the table above. The Directors believe that a sufficient number of these potential projects can be converted into contractual arrangements during 2007 to cover its forward sales commitments.

In combination with implementing the strategy outlined above, the Company aims to reduce its operating expenses for the existing business from approximately €31 million per annum currently to approximately €20 million per annum by the end of 2007, including significant reductions in the total number of employees of the Group (at an estimated one-off cost of €1.6 million). The reduction in employee numbers is expected to save the Company over €6 million per annum due to savings in payroll, payroll taxes and employee benefits. Other major expense reduction targets are €2 million in fees paid to DOEs and to the UNFCCC; €1 million in travel costs; and €0.65 million in repair and maintenance costs.  Additional smaller reductions give a total expense reduction target of €12 million. These operating expenses for the existing business include, in addition to the direct costs of operating and maintaining Biodigesters, certain corporate, regulatory and compliance costs associated with being a listed company as well as some scientific expertise which will be necessary to develop and maintain the proposed new business lines.  The Company intends to assemble a team of approximately 30 employees to be engaged exclusively on the new business prospects, divided equally between strategic accounts, agency and afforestation projects.  The Directors anticipate that the additional operating expenses for the new strategies will be approximately €5 million in 2007 and approximately €9 million in 2008.

(c)   Additional revenue opportunities

(i) AWMS projects

The Company is also exploring less capital intensive technologies that may be used to produce CERs within the AWMS sector in which the Company currently operates. These include solid separation technologies which involve the avoidance of methane production. The Company has submitted a methodology for the generation of CERs through solid separation technology to the CDMEB which is currently undergoing regulatory review.

(ii) Forestry

Afforestation and reforestation projects can be used to produce non-permanent CERs (as the emission reductions from such projects only exist while the land remains forested). These projects are implemented on a longer term basis than other CDM Projects. The Company has entered into a consultancy agreement with one company and is in discussions relating to a joint venture with a second company that has expertise and experience in this sector. The Company is investigating development of an insurance product to cover the risk of the non-permanent CER being cancelled due to deforestation which would, in theory, increase the price it would receive from the sales of non-permanent CERs. The Company’s forward sales contracts require it to deliver permanent CERs only and consequently obtaining non-permanent CERs will not assist the Company with achieving its forward sales obligations. However, non-permanent CERs may be sold in the market to provide the Company with additional revenue. In addition, forestry-based Offsets are not eligible for the EU-ETS at present. This means that the Company’s market for these Offsets will not include Europe.

4. Outlook

AgCert is today also announcing its preliminary results for the year ended 31 December 2006. The announcement includes the following statement:

"In response to its experiences during 2006, the Company has developed a revised business strategy to lower its Offset costs and to accelerate the accumulation of Offsets. By lowering its operating expenses, generating its first material revenues and seeking new "low to no" capital cost Offset projects, AgCert has reduced the amount of new funding it will require in 2007 and to reach cash positive operations. AgCert faces key challenges in reaching its 2007 operational objectives, which include securing sufficient Offsets and Offset production capacity to meet its contractual deliveries in 2008.  The Board believes that AgCert can achieve its objectives by continuing to improve its core AWMS operations, by leveraging its significant experience in the CDM creation process to collaborate with others on new and existing CDM projects, and by supplementing its core business with new methodologies in agriculture and adopting existing methodologies in agriculture and beyond. The Board and two major shareholders look to AgCert's future with renewed vigour and cautious optimism".

The Board remains confident of the future prospects of the Group.

5. Use of Proceeds

Approximately €7 million of the proceeds of the Placing will be used to fund outstanding capital expenditure commitments for the completion of Biodigesters on the Group’s existing sites under the existing business strategy. In addition, the terms of the Group’s arrangement with Laurus require the Company to use 20 per cent of the proceeds of the Placing to repay part of the Laurus debt facility described above. The Company will therefore be required to apply €6.0 million of the proceeds of the Placing towards repayment of the Laurus debt facility.  The remainder of the proceeds will be used to fund the operational expenditure under the revised strategy during 2007 and until such time as the Company achieves a cash positive status.

6. Details of the Proposals

The 51,177,072 new Ordinary Shares, which are the subject of the Placing, will represent approximately 30.3 per cent of the enlarged issued share capital of the Company following Admission. The 24,948,337 new Ordinary Shares that will be issued in connection with the Capitalisation of Debt will represent approximately 14.8 per cent of the enlarged issued share capital following Admission. All of the Placing Shares and the Capitalisation Shares will be issued or converted, as applicable at the Placing Price.

The gross proceeds of the Placing will be approximately £20.5 million (€30.0 million).  After deducting underwriting commissions and the other estimated fees and expenses of the Placing, the Company expects to receive net proceeds of approximately £18.7 million (€27.4 million).

The Placing Price represents a 15.8 per cent discount to the average middle market closing price of 47.5 pence per Ordinary Share on 26 April 2007, being the day before the announcement of the Placing. This level of discount requires the approval of Shareholders pursuant to the Listing Rules. In addition, the Placing Shares and the Capitalisation Shares constitute equity securities for the purposes of the Acts and are not being offered to existing Shareholders on a pre-emptive basis. It is therefore necessary to disapply statutory pre-emption rights, which also requires the approval of Shareholders. Further, it is proposed that: (a) pursuant to the Capitalisation of Debt, €14.6 million of debt owed to ACIII (whose portion of the debt has been novated to Gerhard Andlinger), XLTG and ANX LLC, major shareholders in the Company, is converted into new Ordinary Shares at the Placing Price; and (b) pursuant to the XLTG Loan Facility, a loan agreement under which XLTG grants a €5 million facility to the Company convertible into Ordinary Shares at 56 pence per Ordinary Share be approved. As these are related party transactions for the purposes of the Listing Rules, the approval of the Shareholders (excluding those Shareholders listed above who are related parties to the relevant transactions) is required. Such approvals will be sought at the Extraordinary General Meeting.

The Placing Shares and the Capitalisation Shares will be allotted by the Directors pursuant to the authorities to be granted by the Resolutions and the resolution of the Board to be passed post the EGM and will, on Admission, rank pari passu in all respects with the Existing Ordinary Shares, including the right to vote and receive all dividends and other distributions declared, made or paid on the Ordinary Shares after Admission.

The Capitalisation of Debt and the XLTG Loan Facility are conditional upon the Placing becoming unconditional.

The Placing is conditional upon the Placing Agreement becoming unconditional in all respects by 8.00 a.m. on 25 May 2007 or such later time and/or date (not being later than 3.00 p.m. on 15 June 2007) as may be agreed by the Company, Nomura Code Securities and Hoare Govett and it not having been terminated in accordance with its terms before Admission. The Placing Agreement is conditional upon, inter alia, the passing of the Resolutions at the Extraordinary General Meeting (or, with the consent of Nomura Code Securities and Hoare Govett, at any adjournment thereof) and on Admission occurring by 8.00 a.m. on 25 May 2007 or such later time and/or date (not being later than 3.00 p.m. on 15 June 2007) as may be agreed by the Company, Nomura Code Securities and Hoare Govett.

The Placing Agreement may be terminated by Nomura Code Securities or Hoare Govett prior to Admission upon the occurrence of certain specified events that are customary for an agreement of this nature, including certain force majeure events arising before Admission, in which event the Placing will not proceed. The Placing Agreement is not capable of termination following Admission and therefore the Placing may not be withdrawn after Admission has occurred.

Following the Placing and the Capitalisation of Debt the Directors will, in aggregate, be interested in approximately 22.7 per cent of the enlarged issued share capital of the Company.

7. Admission, settlement and dealings

Applications have been made to the UK Listing Authority and to the London Stock Exchange for the Placing Shares and the Capitalisation Shares to be admitted to the Official List and to trading on the London Stock Exchange’s main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on 25 May 2007. Following the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms, the New Ordinary Shares will be registered, free from stamp duty, in the names of the persons acquiring them.

CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by certificate and transferred otherwise than by written instrument. The Existing Ordinary Shares are already admitted to CREST. The Directors have applied for the Placing Shares to be admitted to CREST and it is expected that the Placing Shares will be so admitted and accordingly enabled for settlement through CREST as soon as practicable following the Placing. CREST is a voluntary system and holders of Ordinary Shares who wish to receive and retain share certificates will be able to do so. Persons applying for Placing Shares may, however, elect to receive their Placing Shares in uncertificated form, but only if that person is a system-member in relation to CREST. The Capitalisation Shares will be issued in certificated form.

Potential investors who are in any doubt as to their tax position should consult a professional adviser.

8. Related party transactions

The Capitalisation of Debt and the XLTG Loan Facility will constitute related party transactions under the Listing Rules. ACIII, XLTG and ANX LLC are related parties by virtue of their shareholdings in the Company. The Board (other than Merrick Andlinger and Gregory Haskell who have interests in ACIII and XLTG respectively), having been so advised by Hoare Govett and Nomura Code Securities, consider that the terms of the Capitalisation of Debt are fair and reasonable so far as Shareholders are concerned. In giving its advice, each of Nomura Code Securities and Hoare Govett has taken into account the commercial assessments of the Directors. Gregory Haskell and Merrick Andlinger have not taken part in the Board’s consideration of the Capitalisation of Debt. ACIII, XLTG and ANX LLC will not vote on the resolution to approve the Capitalisation of Debt and have undertaken to take all reasonable steps to ensure that their associates will not vote on this resolution.

The XLTG Loan Facility will constitute a related party transaction under the Listing Rules. As described above, XLTG is a related party by virtue of its shareholding in the Company. The Board (other than Gregory Haskell who has an interest in XLTG), having been so advised by Hoare Govett and Nomura Code Securities, consider that the terms of the XLTG Loan Facility are fair and reasonable so far as Shareholders are concerned. In giving its advice, each of Nomura Code Securities and Hoare Govett has taken into account the commercial assessments of the Directors. Gregory Haskell has not taken part in the Board’s consideration of the XLTG Loan Facility. XLTG will not vote on the resolution to approve the XLTG Loan Facility and has undertaken to use reasonable endeavours to ensure that its associates will not vote on this resolution.

9. Irrevocable Undertakings

ACIII holds 24.7 per cent, XLTG holds 23.2 per cent andANX LLC holds 2.1 per cent of the equity in the Company. These Shareholders, representing in aggregate 50 per cent of the Company’s current issued share capital, have irrevocably committed to vote in favour of the Resolutions to be proposed at the EGM (other than where they have agreed to refrain from voting as described in paragraph 8 above).

As the Placing, the Capitalisation of Debt and the XLTG Loan Facility are conditional, inter alia, upon the passing by Shareholders of the Resolutions at the EGM, Shareholders should be aware that, if the Resolutions to be proposed at the EGM are not passed and Admission does not take place, the net proceeds of the Placing will not be received by the Company, the Capitalisation of Debt will not take place and the XLTG Loan Facility will not be available. The proceeds of the Placing are required to fund future expenditure that the Directors consider to be necessary in order to fund the Company’s business plan and meet the Company’s existing delivery obligations of CERs.

In the event of the Placing and the Capitalisation of Debt not taking place and the XLTG Loan Facility not being available, other sources of funding would have to be pursued. Alternative sources of funding, if they are available at all, are likely to be expensive and onerous for the Company. Based on the Company’s experience to date in seeking alternative funding, the Directors doubt that other sources of funding will be available in the required amounts and timeframe. Should the Placing and the Capitalisation of Debt not proceed and the XLTG Loan Facility not be available, the Company would face a working capital shortfall, operational expenditure would have to be curtailed and capital expenditure stopped completely until such time as new additional committed funds were available. This would have a material adverse effect on the Group’s operations and ability to meet customer delivery obligations, and potentially result in material penalties for non-delivery being incurred. If no additional funds became available, the Company would, at its current rate of use of cash, run out of working capital and may be forced to cease operations with effect from early June 2007.

Any investment in Ordinary Shares is subject to a number of risks. Before making any investment decision, prospective investors should consider carefully the factors and risks attaching to an investment in the Ordinary Shares, the Group’s business and the industries in which it operates, together with all other information contained in this announcement and the information incorporated by reference including, in particular, the risk factors described below. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that it currently deems immaterial, may also have an adverse effect on the Group’s business. Investors should consider carefully whether an investment in the Ordinary Shares is suitable for them in light of the information in this announcement and their personal circumstances.

OPERATIONAL RISKS RELATED TO THE BUSINESS

The Group’s failure to achieve its business plan could have a material adverse effect on its future revenues and operating results

The Group’s business is the production or sourcing and sale of Offsets, for which little historical trading information exists, and the information which does exist shows significant volatility in prices. For example, prices of EUAs for delivery in 2008 (and, by implication, CERs) have fluctuated between €5 and €32 during 2006, with frequent movements in price of several Euro. As a consequence, the Group’s future revenue is difficult to project. If the Group does not achieve its expected Offset production levels, sourcing levels or sales prices and/or does not manage to contain expenses at reasonable levels, the Group’s results of operations will fall below expectations. As a result of the rapidly evolving nature of the Group’s business and the emissions trading market in which it operates, together with the Group’s limited operating history and new business strategy, the Directors believe that any period to period comparisons of financial results are not necessarily meaningful and should not be relied upon as an indication of future performance. The Group does not expect to pay dividends for the foreseeable future. The Group’s results of operations may not meet the future expectations of public market analysts or investors and the market price of the Ordinary Shares could be materially adversely affected.

The Group does not have a track record in sourcing Offsets from agency and strategic relationships and may not be able to enter into a sufficient number or size of agency and strategic relationships to generate the CERs required to meet its delivery obligations

Until the beginning of 2007, the Company’s business plan was focused on producing Offsets from the construction of modified animal waste management systems using Biodigesters for the capture and combustion of methane. Due to a number of setbacks, including regulatory challenges and increased costs, leading to a substantial shortfall in the number of Offsets it is projected to generate from its existing operations as against the amount required to fulfil its contractual obligations, and the Company’s increased knowledge of the carbon market, the Company has recently decided to pursue a new business strategy of acquiring Offsets through entering into agency and strategic relationships which involve a much lower capital investment by AgCert. There is a risk that, as the Company has only been pursuing its revised strategy for a few months and has little experience and no substantial track record in sourcing and entering into agency and strategic relationships with third parties, it will not be able to enter into sufficient relationships to procure the required number of Offsets to meet its contracted delivery obligations.

A key component of the Company’s new strategy involves it leveraging its regulatory knowledge base and experience in the carbon market to assist large industrial emitters and other potential project developers in return for a share of the Offsets generated by emission reductions. While the Company is in discussions with a number of parties to establish strategic accounts, there is a risk that these negotiations may not lead to any satisfactory agreement or that there will be a delay in signing up these and other accounts or that the Company will not be able to sign up sufficient numbers or size of accounts to generate the expected contribution from these accounts towards its CER delivery obligations.

A further component of the Company’s new strategy involves the purchase of Offsets from projects that are already underway where, in return for providing consultancy services, it will acquire CERs at a lower price than that at which it has agreed to deliver CERs to its third party buyers. While the Company is in discussions with a number of parties to establish agency agreements, there is a risk that these negotiations may not lead to any satisfactory agreements or that there will be a delay in signing up these and other agency agreements or that the Company will not be able to obtain a sufficient number of CERs through agency arrangements within the applicable time period. In this case, it may not be able to buy sufficient CERs to fulfil its forward sales to clients which could have material adverse financial consequences. In addition, the Company may not be able to negotiate a sufficiently low purchase price for these Offsets under the agency agreement to generate the anticipated margins which could have a material adverse effect on the profitability of the Company.

Given the Company’s lack of track record in these areas, there can be no guarantee that it will successfully execute its strategy relating to agency and strategic relationships and any failure to do so would have a material adverse effect on its financial condition, trading performance and/or prospects.

Competition from entities engaging in the sale of Offsets, in particular from established companies providing agency and consultancy services, could have a material adverse effect on the Group’s business, financial condition, trading performance and prospects

There are various other entities that compete with the Group in the sourcing and sale of Offsets. The emissions trading market is new and is evolving rapidly. As such, the Group expects this competition to intensify and the number of competitors to increase in the future. The Group’s competitors may increase their market share by forming strategic alliances or acquiring competing companies.

In addition to competitors in the Offset market generally, there are a number of established companies/organisations who provide consultancy services and/or acquire Offsets in the carbon credit market who have an established track record. By adopting its new business strategy, the Company will be competing with these organisations which are more experienced in these new areas and have greater financial resources than the Company. There is no guarantee that the Company will successfully attract the agency and strategic relationships with third parties it requires in order to source Offsets to fulfil its contracted delivery obligations when competing with these more experienced organisations.

The Group’s present or future competitors may be able to generate or obtain a greater number of Offsets at a lower cost and/or introduce other advantages over the Group’s operations. Furthermore, the Group expects competition from as yet unknown sources, which may be start-up organisations or established companies or countries entering into the emissions trading market, any of which may have greater financial, marketing or other resources than those available to the Group. This may place other competitive pressures on the Group by driving price reductions or causing reduced margins and/or loss of the Group’s market share. There can be no guarantee that the Group will be able to compete successfully against current or future competitors or that increased competitive pressures on the Group will not have a materially adverse effect on the Group’s business, financial condition, trading performance and/or prospects.

The Group may not meet its contractual obligations for delivery of CERs

The Group has contracted under forward sales contracts to deliver CERs to the value of approximately €163 million assuming a market price of €15 at the date of delivery (some of this production has been forward sold at fixed prices and the balance is dependent upon the market price at the date of delivery) to various third party buyers in the period up to 2012. In order to fulfil its obligations under these contracts, the Group needs to continue to generate Offsets from its existing Biodigesters while meeting the regulatory requirements necessary for the production of CERs, as well as obtaining Offsets from other sources such as agency projects, strategic accounts, joint ventures and hedging arrangements. The Group needs to ensure that it is engaged in an adequate number of Offset generation projects to enable it to obtain sufficient Offsets to fulfil its contractual obligations under the Group’s forward sales contracts. Obtaining these Offsets may be affected by factors outside the control of the Group including, but not limited to, any of the other risks set out in this section occurring. In addition, if any of the assumptions used by the Group to calculate how many Offsets will be obtained from a project prove to be inaccurate, there is a risk that the Group may be unable to deliver the contracted amounts of CERs to the various third party buyers. In addition, if adequate hedging arrangements are not secured by the Group, its ability to meet its contractual obligations will be further jeopardised.

The Group has experienced difficulties with its ability to generate the level of Offsets required to make its contracted deliveries and, as announced in September 2006 and December 2006 and set out in the above announcement, this resulted in the Group having to reduce and reschedule its delivery obligations to customers. Total delivery obligations were reduced from 28.6 million CERs to 18.6 million CERs. As the customer contracts were at fixed prices below the market price, the Company had to make payments in return for release from these obligations, and the incremental cost to the Company of this release totalled €50 million. There can be no guarantee that, if a similar situation were to arise in the future, the Group would be able to negotiate a further acceptable rescheduling or reduction of its delivery obligations. Difficulties or setbacks to the Company’s ability to generate the necessary level of Offsets, in addition to those identified by the Company, may subsequently arise.

If the Group fails to deliver any CERs that it has contracted to deliver to the various third party buyers, and such failure to deliver is the fault of the Group, it may be required by the third party buyers to purchase CERs representing the delivery shortfall in the open market. The prevailing market price and availability for purchase in the market of such number of CERs cannot be predicted and may be at a price materially higher than the contracted sale price for the CERs. In addition, the international rules governing the transfer of CERs, together with incomplete infrastructure for transferring CERs, may not allow the Group to deliver replacement CERs by the contracted delivery date. In such event, the Group could incur substantial costs and its financial condition, trading performance and prospects could be materially adversely affected.

In addition, under certain of the forward sales contracts, the Company has drawn down advanced payments against future delivery of CERs and granted security over its assets in favour of the party that made the advance. The occurrence of an event of default (including a material adverse effect) or failure to deliver the CERs in a timely manner may trigger repayment of these advanced payments which would have a materially adverse effect on the financial situation of the Company.

Failure to implement the Group’s Offset hedging strategy could materially adversely affect its financial condition, trading performance and/or prospects

The market for Offsets is at a relatively early stage of development and can suffer from low levels of liquidity. In order to manage the timing of its CER flow, the Group intends to seek to hedge part of its delivery obligations by entering into swap or similar arrangements under which it would source CERs from a third party to meet any shortfall in its delivery obligations in consideration for an obligation to deliver CERs to this third party at a future date. However, there is no guarantee that hedging instruments will be available to the Group or, if available, that such steps will successfully mitigate the risk of non-delivery of CERs to the Group’s customers. As stated above, any failure to deliver CERs in accordance with the Group’s contractual obligations could have a material adverse effect on its financial condition, trading performance and/or prospects.

The Group’s limited operating history and track record of operating losses means that there can be no guarantee that the Group will achieve profitability in the future

The business currently operated by AgCert was established in 2002 and is operating in a new, emerging industry. To date the Group has not generated any significant revenue and accordingly reported operating losses before tax of approximately €93.4 million for the year ended 31 December 2006. Although the Group has made its first deliveries of CERs, the first significant deliveries of CERs are not expected to occur until the second half of 2007. There can be no guarantee that AgCert International will achieve profitability in the future.

The Group’s inability to manage or fund its business plan may have a material adverse effect on the Group’s business, financial condition, trading performance and prospects

The Group has experienced a period of rapid growth since its IPO which has placed significant pressure on its management, operational and financial resources. During the transition period required to implement the new business strategy, considerable additional time and resources will be devoted to the operational and management changes required by the new business strategy and the workforce reductions required to achieve the proposed savings in operating expenditure. This may have a materially disruptive effect on management and the workforce as a whole and may divert valuable management and employee resource from their primary work during the transition period. The Group’s execution of its business plan and its future success will depend in part on the Group’s ability to implement and improve its operational, financial and management information systems and the Group’s ability to attract, train, motivate and manage its employees. Positive cash flow is dependent on the success of the revised business strategy. Any failure to manage the Group’s current and planned new strategy will have a material adverse effect on the Group’s business, financial condition, trading performance and/or prospects.

The Group’s international operations may expose it to substantial costs, greater regulatory burdens and may have a material adverse effect on the Group’s business, financial condition, trading performance and/or prospects

The Group’s current international operations, and those of counterparties to any agency or strategic account arrangements entered into by the Group in the future, in developing countries may be subject to various risks beyond the Group’s or counterparties’ control including possible unexpected changes in regulatory requirements, possible difficulties in staffing and managing foreign operations, possible difficulties relating to the enforcement of contracts, possible political change or instability, potentially adverse tax consequences, changes in laws and policies affecting trade and investment in jurisdictions where it operates, and language and cultural difficulties. If it is unsuccessful in increasing its revenue in proportion, or in increasing proportion, relative to its costs, the Group may not be able to achieve profitability and its business, financial condition and results of operations may suffer. Any such circumstances may have a material adverse effect on the Group’s business, financial condition, trading performance and/or prospects.

Loss of producer countries’ comparative and competitive advantage may have a material adverse effect on the Group’s ability to deliver its contractual obligations

The Group’s ability to produce or source Offsets would be reduced if the countries from which it sources Offsets were to lose their comparative and competitive advantages as a result of trade policy, tax, production economies or other factors. In such circumstances, if alternative sources of Offsets are not obtained in the time available, the Group may be unable to deliver its contractual obligations to various third party buyers of CERs and this may have a material adverse effect on the Group’s business, financial position, trading performance and/or prospects.

The sourcing of Offsets from certain developing countries carries a higher political and economic risk than in developed countries and exposes the Group to certain unacceptable business practices

The developing countries in which the Group currently sources Offsets carry a higher political and/or economic risk than some developed countries. In addition, some of the business practices in such countries fall below those expected in more developed countries. The Group has already experienced some difficulties with third parties carrying on unacceptable business practices, including cartel and bribery practices, particularly in Brazil, which it addressed by changing its construction team and by using different third party contractors. The Group may also be exposed to political and economical upheaval or may be subject to unforeseen administrative or fiscal burdens. At present the Group is not insured against political risk as such insurance is not available at an acceptable level of premium. Any such circumstances may have a material adverse effect on the Group’s business, financial condition, trading performance and/or prospects.

The Group may not be able to implement its existing or future technologies to operate on a large commercial scale or to full capacity

The historical business of the Group of managing animal waste management systems depends upon the ability of the Group to be able to effectively implement its technologies on a large commercial scale at an acceptable level of efficiency and capacity. As the Group is deploying its Biodigester technology, the operation of which can be affected by the complex interactions of a number of natural factors (such as temperature) and human factors (such as the operation of the agriculture feeding the Biodigester) on a large scale, there can be no guarantee that the technologies will operate at the required levels of efficiency and capacity. If the Biodigesters cannot be operated at a high enough capacity or efficiency, this will affect the number of Offsets that are issued to the Group and that are available for delivery to third party buyers.

The Group is dependent on certain key personnel

The loss of the services of a significant number of the Group’s Executive Directors, senior management and/or technical staff would be disruptive to the Group’s development plans, business relationships and research and development capabilities. While the Group’s Executive Directors, senior management and technical staff have entered into assignment of invention, non-compete and non-solicitation agreements, these key personnel may still leave or compete with the Group in the future. There can be no guarantee that a court would enforce the provisions of these contracts if the Group were to try to enforce them. As such, the loss of key personnel may have a material adverse effect on the Group’s business, trading performance and/or prospects.

The Group may not be able to attract and retain personnel with appropriate training and industry experience

The Group’s execution of its business plan, in particular its new strategy, and its future success is dependent upon its ability to identify, attract, train, motivate and retain professional staff with the requisite educational background and industry experience. There is a limited number of persons with appropriate knowledge and experience within the sphere of activity covered by the Group. Consequently, the replacement of any key personnel who were to leave the Group could be difficult and time consuming and the Group’s trading performance and prospects could be materially adversely affected if it fails to employ appropriate personnel with industry experience in a timely manner.

The Group is subject to existing and potential future litigation which may have a material adverse effect in the medium to long term on the Group’s business, financial condition, trading performance and/or prospects

The Company has been threatened with litigation by one of its suppliers in Brazil in relation to a patent application which has been made by that supplier. This patent application purports to cover technology used by the Group in its Biodigesters. The Company has filed opposition to this and to another patent application in Brazil which covers similar technology as it has been advised that the majority of the patents consist of prior art.

Save as disclosed above, the Group is not aware of any pending or threatened litigation against it. However, questions of infringement of intellectual property rights in this field involve highly technical and subjective analyses. Litigation may be necessary in the future to enforce any contracts to which the Group is a party or to enforce any other right afforded to the Group. There can be no assurance that adversaries to any litigation proceedings would not be able to devote substantially greater financial resources to any litigation proceedings or that the Group would prevail in any future litigation. Any such litigation, whether or not determined in the Group’s favour or settled by the Group, could be costly and may divert the efforts and attention of the Group’s management and other personnel from normal business operations. This may have a material adverse effect in the medium to long term on the Group’s business, financial condition, trading performance and/or prospects.

The Group will be dependent on a number of third parties for the execution of its new strategy as well as for certain continuing elements of its current business plan

The Group expects that a considerable proportion of the CERs required to fulfil its delivery obligations will be produced by strategic accounts, joint ventures and agency arrangements. Under these arrangements the Company will buy, or receive in exchange for the provision of its advisory services, CERs from the developers of existing projects. The Group has limited control of the management and execution of these projects and there is no guarantee that these projects will provide sufficient CERs (if any) or that they will be provided on a timely basis to allow the Group’s delivery obligations to be fulfilled. Any failure by such third parties to implement their projects as planned which results in a failure to generate sufficient CERs or to provide them within the agreed time scale, would impact the Group’s ability to fulfil its delivery obligations and would materially adversely affect the Group’s business, financial condition, trading performance and/or prospects.

In relation to its own projects, the Group is dependent on third-party contractors to construct the Biodigesters and related infrastructure and any other infrastructure required for the future generation of Offsets and to supply the materials required to do so. The Group has already experienced problems with the supply of materials and with the quality of construction work provided by certain contractors. There can be no guarantee that the Group will be able to secure the services of sufficient skilled contractors or supplies of sufficient materials in order to construct or maintain the Biodigesters as envisaged by the Group’s business plan.

The Group does not have formal contracts with all of the farms in Mexico where it has built Biodigesters

The Group is reliant upon the enforceability of its existing contracts with farmers, and upon formalising both initial non-binding letters of intent which have been entered into with Mexican farmers prior to formal contracts being executed and its Form As into formal contracts. There can be no guarantee that the Group will be able to consistently and uniformly enforce its arrangements with farmers, particularly where no binding contract has been entered into. Such inability to enforce its arrangements with farmers may materially adversely affect revenue.

There is also a risk that the Group would be unable to deliver contracted amounts of CERs in circumstances where the legal ownership of farms, which have had Biodigesters installed, transfers to entities that decline to contract with the Group to allow the collection by the Group of the data required for the production of Offsets. In such circumstances the Group may be unable to perform its contractual obligations to third parties to deliver CERs and this may materially adversely affect the Group’s business, financial condition, trading performance and/or prospects.

In addition, the Group’s existing contracts with farmers are for a fixed period of ten years which expire in the period from 2014 to 2017. Under the Kyoto Protocol, the Group is not permitted to renew these contracts or put new contracts in place following the expiration of the initial contract period. This means that the Group will not obtain further CERs following such expiration. The Group will therefore need to find alternative sources of Offset supply following the expiration of these contracts. The Group is currently investigating using a seven year contract, renewable for two further seven year periods (which is the only alternative permitted under the Kyoto Protocol) for future CDM Project contracts.

Economic factors such as increases in the costs of or falling demand for relevant animal products could reduce the availability of resulting waste for use by the Group

The Group’s ability to produce Offsets could be materially adversely affected if it becomes uneco