 
DJ Leaf Clean Energy Co Final Results
TIDMLEAF
RNS Number : 8113Y
Leaf Clean Energy Company
10 September 2009
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Leaf Clean Energy Company
("Leaf" or "the Company"),
Annual Results for the year ended 30 June 2009
Leaf, a company incorporated for the purpose of acquiring interests in, owning,
operating and managing clean energy companies and projects predominantly in
North America, is pleased to announce its annual results for the period from 1
July 2008 to 30 June 2009.
Highlights:
* Since the year end, the Company has invested in a further eight new
investments representing an aggregate amount of $188 million. These investments
were made across several subsectors including wind, biomass, landfill gas and
waste-to-energy, taking the total aggregate amount of investment to US$ 243
million across eleven separate transactions. The current portfolio is shown
below:
+---------------+-----------------+
| Name of | Principal |
| investment | activity |
+---------------+-----------------+
| Invenergy | Wind |
| Wind, LLC | electricity |
| | generation |
| | |
+---------------+-----------------+
| Johnstown | Landfill |
| Regional | gas |
| Energy, | projects |
| LLC | |
+---------------+-----------------+
| Multitrade | Biomass |
| Rabun Gap, | power |
| LLC | generation |
| | |
+---------------+-----------------+
| Miasolé, | Development |
| Inc | of thin |
| | film solar |
| | products |
| | |
+---------------+-----------------+
| SkyFuel, | Design |
| Inc | and |
| | deployment |
| | of |
| | concentrating |
| | solar power |
| | systems |
| | |
+---------------+-----------------+
| Multitrade | Biomass |
| Telogia, | power |
| LLC | generation |
| | |
+---------------+-----------------+
| MaxWest | Waste-to-energy |
| Environmental | gasification |
| Systems, Inc | facilities |
| | |
+---------------+-----------------+
| Range | Cellulosic |
| Fuels, | ethanol |
| Inc | production |
| | facility |
| | |
+---------------+-----------------+
| Vital | Brazilian |
| Renewable | ethanol |
| Energy | plantation |
| Company, | assets |
| LLC | |
| | |
+---------------+-----------------+
| Energía | Run-of-river |
| Escalona | hydro plant |
| I, S.A | |
| de C.V | |
| | |
+---------------+-----------------+
| Greenline | Biodiesel |
| Industries, | technology |
| Inc | and |
| | equipment |
| | provider |
+---------------+-----------------+
* The Company's net asset value increased by 5 pence from 99 pence to 104 pence
per share compared with 30 June 2008.
* The Company is now substantially invested, including funds committed to
developing the existing portfolio
* 16,366,227 shares purchased for cancellation over the period at an average
price of 95 pence per share
* Several of the Company's portfolio investments have achieved prominent
milestones:
* The successful completion of the 14 MW Multitrade Telogia biomass plant in the
south-eastern US. Telogia was completed on budget and on schedule and is now
generating electricity and revenues.
* The 20MW Multitrade Rabun Gap biomass plant has commenced final stages of
construction and is expected to be operating shortly.
* MaxWest Environmental Systems inaugurated a first of its kind biosolids
gasification facility in Sanford, Florida. The plant provides a cost-effective
means of disposing municipal biosolids as well as providing a supply of thermal
energy.
* SkyFuel, Inc unveiled its parabolic trough assembly
(SkyTrough(TM)) demonstration unit near Denver, Colorado, but more importantly,
signed a contract for a commercial scale installation at the Cogentrix SEGS
facility in California.
* Miasolé completed construction of its first solar module production facility and
is well on its way to transitioning from a development stage company to a
commercial vendor of cost competitive thin-film solar products.
* Johnstown Regional Energy ("JRE") continues to increase landfill gas volumes
produced at the three Pennsylvanian landfill sites it controls through the
drilling of additional wells. JRE has completed drilling 78 of 104 planned wells
for this calendar year.
For further information, please contact:
Simon Shaw
Director, Energy & Climate Advisors
+44 (0) 20 7553 2361
Daniel Shapiro
Director, Energy & Climate Advisors
+1 225 987 7408
Ivonne Cantu / Oliver Goad
Cenkos Securities plc
+44 (0) 20 7397 8900
Chairman's Statement
I am delighted to report the significant progress made by Leaf Clean Energy
Company during our last fiscal year. Our aggregate investments and commitments
now total $243 million spread across 11 different portfolio companies. While
there have been challenges stemming from the current market environment, our
results since inception reflect a valuable and well diversified clean energy
portfolio.
To put the Company's performance into proper perspective, over the course of the
last year the AIM 100 Index was down 52% while the WilderHill New Energy Global
Innovation Index, which tracks publicly traded clean tech and renewable
businesses, was down 43%. Meanwhile over the same period, the Company's share
price remained stable. Our net asset value at 30 June 2009 was GBP1.04 sterling
per share (GBP0.99 sterling per share at 30 June 2008). Given these sobering
economic times, we are proud of our progress.
We believe our steady performance is the result of many factors, including the
diversity of our portfolio across clean energy sectors and the balance between
project- and technology-oriented investments. The Company continues to make
progress on its business plan while also focusing more resources and attention
on ensuring the success of our existing investments.
Over the last year, many of our portfolio companies made progress on achieving
important milestones and executing key elements of their business plans. Some of
the highlights include:
* The successful completion of the Multitrade Telogia, LLC 14 MW biomass plant in
the south-eastern US. The plant was completed on budget and on schedule and is
now generating electricity.
* Similarly, the Company's other biomass plant holding, Multitrade Rabun Gap, LLC,
has advanced to the final stages of construction and is expected to be operating
shortly.
* MaxWest Environmental Systems, Inc, inaugurated its first proprietary biosolids
gasification facility in Sanford, Florida. This is a significant milestone for
the company, demonstrating its ability to successfully develop and commercialize
its waste-to-energy gasifiers.
* SkyFuel, Inc unveiled its initial demonstration unit near Denver, Colorado, but
more importantly, signed a contract for a commercial scale installation at the
Cogentrix SEGS facility in California.
* Miasolé completed construction of its first solar module production facility and
is well on its way to transitioning from a development stage company to a
commercial vendor of cost competitive thin-film solar products.
In addition to these specific accomplishments at the portfolio level, there are
positive macroeconomic factors at work. We see growing discussion and support
for Federal clean energy legislation coming out of the US Congress at the urging
of the Obama administration. Illustratively, the US economic stimulus bill was
recently enacted and its effects are reverberating through the economy, helping
many companies, including our own, meet their near-term objectives. The
legislation provides for a loan guarantee programme and a cash grant scheme in
lieu of tax credits. These incentives are breathing new life into the clean
energy sector and making operations more efficient for our portfolio companies.
Other important energy legislative initiatives are also working their way
through Congress. The debate on capping greenhouse gas emissions is progressing
along with bills establishing renewable energy and renewable fuel standards.
Each one of these legislative initiatives has the ability to propel many of our
investments in the coming years.
This past year has also seen the Company carry out a limited share buyback
program. As at the end of 30 June 2009, we had purchased for cancellation
16,366,227 ordinary shares at an average price of 95 pence per share for a total
value of GBP15.64 million.
Taken together, the progress at the portfolio level combined with the rising
tide of favourable US clean energy legislation puts the Company in an enviable
position. Looking ahead, your Board is confident that the investment outlook is
positive for generating long-term capital appreciation for our shareholders.
Jointly with our management company, Energy and Climate Advisors (a joint
venture between EEA Fund Management and Shaw Capital), we remain committed to
ensuring the success of the Company's portfolio companies and look forward to
compelling new investment opportunities in the burgeoning clean energy space.
Peter Tom
Chairman
10 September 2009
Management Company Report
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Leaf Clean Energy Company's ("Leaf" or "Company") second Annual Report and
Financial Statement encompasses a period marked by a global economic downturn
and the collapse of credit markets. Although these circumstances posed some
challenges, Energy and Climate Advisors ("E&CA"), the Appointed Representative
(acting on behalf of EEA Fund Management in its role as Asset Advisor of Leaf),
continued to make significant progress in identifying, developing and executing
on investment opportunities for the Company. Since the period covered by the
previous Leaf Annual Report, which ended 30 June 2008, the Company closed on
eight new investments representing an aggregate amount of $188 million. These
investments were made across several subsectors including wind, biomass,
landfill gas and waste-to-energy. The new investments broadened Leaf's already
diverse clean energy footprint which included solar and biofuels assets acquired
in the Company's first year of operation. The current portfolio made up of the
following 11 discreet investments:
+---------------+----------------+------------+-----------------+
| Name of | Place of | Investment | Principal |
| investment | incorporation | type | activity |
+---------------+----------------+------------+-----------------+
| Invenergy | US | Preferred | Wind |
| Wind, LLC | (Delaware) | units | electricity |
| | | | generation |
| | | | |
+---------------+----------------+------------+-----------------+
| Johnstown | US | Ordinary | Landfill |
| Regional | (Pennsylvania) | equity + | gas |
| Energy, | | loan | projects |
| LLC | | | |
+---------------+----------------+------------+-----------------+
| Multitrade | US | Ordinary | Biomass |
| Rabun Gap, | (Delaware) | equity + | power |
| LLC | | loan | generation |
| | | | |
+---------------+----------------+------------+-----------------+
| Miasolé, | US | Preferred | Development |
| Inc | (California) | units | of thin |
| | | | film solar |
| | | | products |
| | | | |
+---------------+----------------+------------+-----------------+
| SkyFuel, | US | Preferred | Design |
| Inc | (Delaware) | units | and |
| | | | deployment |
| | | | of |
| | | | concentrating |
| | | | solar power |
| | | | systems |
| | | | |
+---------------+----------------+------------+-----------------+
| Multitrade | US | Ordinary | Biomass |
| Telogia, | (Virginia) | equity + | power |
| LLC | | loan | generation |
+---------------+----------------+------------+-----------------+
| MaxWest | US | Preferred | Waste-to-energy |
| Environmental | (Nevada) | units | gasification |
| Systems, Inc | | | facilities |
| | | | |
+---------------+----------------+------------+-----------------+
| Range | US | Preferred | Cellulosic |
| Fuels, | (Delaware) | units | ethanol |
| Inc | | | production |
| | | | facility |
| | | | |
+---------------+----------------+------------+-----------------+
| Vital | US | Preferred | Brazilian |
| Renewable | (Delaware) | units | ethanol |
| Energy | | | plantation |
| Company, | | | assets |
| LLC | | | |
| | | | |
+---------------+----------------+------------+-----------------+
| Energía | Mexico | Ordinary | Run-of-river |
| Escalona | | equity | hydro plant |
| I, S.A | | | |
| de C.V | | | |
| (Energía | | | |
| Escalona) | | | |
| | | | |
+---------------+----------------+------------+-----------------+
| Greenline | US | Preferred | Biodiesel |
| Industries, | (Delaware) | units | technology |
| Inc | | | and |
| | | | equipment |
| | | | provider |
+---------------+----------------+------------+-----------------+
The Company's assets reflect a balanced and diverse portfolio of clean energy
investments principally in North America. There is both sectoral diversity as
well as of investment type. The Company invests in active operational assets
along with more growth oriented corporate equity. It is the Management Company's
view that the Company's portfolio is well positioned to generate shareholder
value as the global economy normalizes and the drivers behind the growth in
clean energy and climate change continue apace.
E&CA has been cognizant of the potential challenges to our portfolio from the
current economic slowdown. The market downturn has clearly exacerbated the
financing gap for capital intensive technology companies in the clean energy
arena which traditionally require an infusion of outside funding to cross the
"valley of death" to full commercialization. This has made our management
approach over the past two quarters more introspective in nature as we have
focused on ensuring that the Company's existing portfolio companies are properly
capitalized and operating in a cost-effective manner. Yet, crisis is always a
handmaiden to opportunity, and the current market is no exception. The general
constraints on credit and liquidity have given an edge to well-financed
investors. The Company is well positioned to take advantage of this opportunity
and E&CA continues to actively originate and review potential investments.
The long-term drivers for clean energy in the US remain strong. The on-going
consolidation of public and political support for action on the twin problems of
energy supply and climate change has only improved the opportunity set.
Certainly the US federal government under President Obama has made investing in
the clean energy economy in the United States a top priority and has followed up
with the enactment of the American Recovery and Reinvestment Act of 2009
("ARRA"). The ARRA is a stimulus package that provides significant support for
clean technologies, energy efficiency and transmission. The Leaf portfolio
companies stand to benefit from ARRA and its progeny of increased incentives for
renewable energy and clean fuels. As a result, E&CA has worked closely with the
senior management teams of Leaf's portfolio companies to ensure that each is
positioned properly to take advantage of relevant government grants, guarantees,
and incentives.
The developing US response to climate change is another source of momentum
around renewable energy. The next twelve months will be instrumental in
clarifying the legislative debate around US carbon legislation as well as the
international discussions regarding a successor scheme to the Kyoto Protocol.
The United Nations Climate Change Conference in Copenhagen later this year will
be an important bell-weather for whether the world's largest consumer of fossil
fuels (US) and the world's largest emitter of greenhouse gases (China) can reach
agreement on global carbon policies beyond 2012. E&CA has worked to position the
portfolio companies to take advantage of the growth in the carbon markets when
they emerge in the United States.
1. Closed Investments
As of 30 June 2009, the Company is not actively negotiating nor has it entered
into any Heads of Terms for investment. As noted, E&CA's short term focus has
been on managing the Company's existing portfolio of investments although E&CA
has continued to assess and review investment opportunities. Consequently, E&CA
does envisage subsequent investments into a number of current portfolio
companies to ensure each is appropriately capitalised to execute their
respective business plans. Nevertheless, E&CA will continue to seek investment
opportunities for Leaf including in new areas such as efficiency technologies,
especially in the smart grid and green buildings sectors.
On the whole, Leaf's investments are performing generally as planned and
accordingly, the majority of the Company's portfolio investments have been
accounted for "at cost" in the present financial statements. In fact, since 30
June, the Multitrade Telogia biomass project and the Multitrade Rabun Gap
biomass project are now entering or nearing commercial operation, which is
expected to increase their overall market value. However, the Company has not
been immune to the effects of the economic downturn, which has resulted in a
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markdown of the Company's portfolio Fair Value estimate by US$16.4 million. This
represents a 4.9% negative change to the Company's net asset value as of the
December 2008 Interim Report.
Some selected noteworthy events from the Company's portfolio over the reporting
period, are as follows:
- SkyFuel successfully unveiled its parabolic trough assembly (SkyTrough(TM)) at
its research and development facility in Arvada, Colorado. Since then the
company has executed a contract for a commercial scale project to be installed
at the Cogentrix SEGS facility in California.
- The nominal 14 MW Multitrade Telogia biomass facility has been completed on
time and under budget. The plant began generating power as of 27 July 2009.
- Construction of the 20 MW Multitrade Rabun Gap biomass facility is nearing
completion and initial power generation is expected to commence sometime in
September 2009.
- A preliminary Notice to Proceed has been issued to the EPC contractor
developing the Energia Escalona run-of-river hydro facility in Mexico, and
scenarios to add power capacity at the site are being evaluated. Escalona has
also met an important milestone in obtaining both host country approval and UK
DNA approval as part of its efforts to register the plant as a Clean Development
Mechanism project capable of generating valuable Kyoto Protocol quality carbon
credits.
- Johnstown Regional Energy continues to increase landfill gas volumes produced
at the three Pennsylvanian landfill sites it controls through the drilling of
additional wells. JRE has completed drilling 78 of 104 planned wells for this
calendar year.
- MaxWest Environmental Systems inaugurated this past May a first of its kind
biosolids gasification facility in Sanford, Florida. The plant provides a
cost-effective means of disposing municipal biosolids as well as providing a
supply of thermal energy.
- Greenline Industries Greenline Industries' customers faced a lack of available
credit to finance construction of biodiesel plants since August 2008. Along with
the downward pressure on margins in the worldwide biodiesel markets due to high
feedstock prices coupled with lower wholesale pricing for biodiesel, Greenline's
sales were materially affected. As a result, Greenline incurred large operating
losses and filed for Chapter 7 bankruptcy proceedings on 7 August 2009. This
investment has now been written down to US$nil.
2. Note on Currency Exchange Rates
The initial share capital raised from the public offering in June 2007 was
GBP200 million. This was at a time when the US dollar was depreciating against
pounds sterling. Between 28 June 2007, when the first allotment of shares took
place, and the period ending 30 June 2009, the US dollar has appreciated against
pounds sterling by about 17%. The total assets of the Company ($315 million) are
predominately US dollar denominated with the remainder held in UK pound
sterling. The US dollar to UK pound sterling ratio for the net assets of the
Company is 84%/16%. The cash portion of the Company's net assets ($168 million)
is held 70% in US dollars and 30% UK pound sterling The aim has been to maintain
an average rate that would generally result in lower losses from the
appreciation in the US dollar.
Our net asset value at 30 June 2009 increased by 5 pence from 99 pence to 104
pence per share compared to 30 June 2008.
+--------------------+--------------------+--------------------+--------------------+
| NAV | GBP (pence) | USD (cents) | Exchange rate |
+--------------------+--------------------+--------------------+--------------------+
| 30 June 2008 | 98.91 | 196.86 | 1.9902 |
+--------------------+--------------------+--------------------+--------------------+
| 31 December 2008 | 123.68 | 177.82 | 1.4378 |
+--------------------+--------------------+--------------------+--------------------+
| 30 June 2009 | 103.81 | 170.97 | 1.6469 |
+--------------------+--------------------+--------------------+--------------------+
Energy and Climate Advisors
Appointed Representative
10 September 2009
Consolidated and Company Income Statements
for the year ended 30 June 2009
+---------------------------+------+------------+-----------+------------+------------+
| | | Group | Company |
+---------------------------+------+------------------------+-------------------------+
| |Note | Year ended | Period | Year ended | Period |
| | | 30 June | ended 30 | 30 June | ended |
| | | 2009 | June 2008 | 2009 | 30 June |
| | | | | | 2008 |
+---------------------------+------+------------+-----------+------------+------------+
| | | US$'000 | US$'000 | US$'000 | US$'000 |
+---------------------------+------+------------+-----------+------------+------------+
| Income | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Interest income on cash | 7 | 4,430 | 18,647 | 4,430 | 18,647 |
| balances | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Interest income on | | 557 | - | - | - |
| investments at fair value | | | | | |
| through profit or loss | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Unrealised losses on | | (30,400) | - | (30,400) | - |
| revaluation of | | | | | |
| investments at fair value | | | | | |
| through profit or loss | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Net foreign exchange loss | | (16,818) | (1,958) | (16,818) | (1,958) |
+---------------------------+------+------------+-----------+------------+------------+
| Net investment | | (42,231) | 16,689 | (42,788) | 16,689 |
| (expense)/income | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Management fees | 8.1 | (6,902) | (7,762) | (6,902) | (7,762) |
+---------------------------+------+------------+-----------+------------+------------+
| Legal and professional | 8.2 | (2,674) | (488) | (2,674) | (488) |
| fees | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Directors' remuneration | 16 | (370) | (366) | (370) | (366) |
+---------------------------+------+------------+-----------+------------+------------+
| Administration fees | 8.3 | (270) | (262) | (270) | (262) |
+---------------------------+------+------------+-----------+------------+------------+
| Other expenses | 8.4 | (855) | (193) | (855) | (193) |
+---------------------------+------+------------+-----------+------------+------------+
| Operating expenses | | (11,071) | (9,071) | (11,071) | (9,071) |
+---------------------------+------+------------+-----------+------------+------------+
| | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| (Loss)/profit before tax | | (53,302) | 7,618 | (53,859) | 7,618 |
+---------------------------+------+------------+-----------+------------+------------+
| | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Income tax expense |3.12 | - | - | - | - |
+---------------------------+------+------------+-----------+------------+------------+
| (Loss)/profit for the | | (53,302) | 7,618 | (53,859) | 7,618 |
| year/period | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
| Basic and diluted | 15 | (28.09) | 3.81 | (28.38) | 3.81 |
| (loss)/earnings per share | | | | | |
| (cents) | | | | | |
+---------------------------+------+------------+-----------+------------+------------+
The Directors consider that all results derived from continuing activities.
Consolidated and Company Balance Sheet
as at 30 June 2009
+-------------------------+------+------------+-------------+-------------+------------+
| | | Group | Company |
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+-------------------------+------+--------------------------+--------------------------+
| |Note | 30 June | 30 June | 30 June | 30 June |
| | | 2009 | 2008 | 2009 | 2008 |
+-------------------------+------+------------+-------------+-------------+------------+
| | | US$'000 | US$'000 | US$'000 | US$'000 |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Investments at fair | 9.1 | 146,722 | 55,000 | - | - |
| value through profit or | | | | | |
| loss | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Investments in | 9.2 | - | - | 168,868 | 55,000 |
| subsidiaries at fair | | | | | |
| value through profit or | | | | | |
| loss | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total non-current | | 146,722 | 55,000 | 168,868 | 55,000 |
| assets | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Trade and other | 10 | 121 | 315 | 121 | 315 |
| receivables | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Cash and cash | 11 | 167,957 | 340,752 | 167,075 | 340,752 |
| equivalents | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total current assets | | 168,078 | 341,067 | 167,196 | 341,067 |
+-------------------------+------+------------+-------------+-------------+------------+
| Total assets | | 314,800 | 396,067 | 336,064 | 396,067 |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Issued share capital | 12 | 37 | 40 | 37 | 40 |
+-------------------------+------+------------+-------------+-------------+------------+
| Share premium | 12 | 359,603 | 386,067 | 359,603 | 386,067 |
+-------------------------+------+------------+-------------+-------------+------------+
| Retained | | (45,684) | 7,618 | (46,241) | 7,618 |
| (losses)/earnings | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total equity | | 313,956 | 393,725 | 313,399 | 393,725 |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Unpaid capital | 13 | - | - | 14,745 | - |
| contributions to | | | | | |
| subsidiaries | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total non-current | | - | - | 14,745 | - |
| liabilities | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Trade and other | 14 | 844 | 2,342 | 844 | 2,342 |
| payables | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Unpaid capital | 13 | - | - | 7,076 | - |
| contributions to | | | | | |
| subsidiaries | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total current | | 844 | 2,342 | 7,920 | 2,342 |
| liabilities | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Total liabilities | | 844 | 2,342 | 22,665 | 2,342 |
+-------------------------+------+------------+-------------+-------------+------------+
| Total equity and | | 314,800 | 396,067 | 336,064 | 396,067 |
| liabilities | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| Net asset Value per | | 171.0 | 196.9 | 170.6 | 196.9 |
| share (cents) | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
| | | | | | |
+-------------------------+------+------------+-------------+-------------+------------+
Statements of Changes in Equity
for the year ended 30 June 2009
+------------------------------+-----------+--------------+---------------+----------+
| Group | Share | Share | Retained | Total |
| | capital | premium | earnings | |
+------------------------------+-----------+--------------+---------------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 |
+------------------------------+-----------+--------------+---------------+----------+
| | | | | |
+------------------------------+-----------+--------------+---------------+----------+
| Balance at beginning of | - | - | - | - |
| period | | | | |
+------------------------------+-----------+--------------+---------------+----------+
| Shares issued in the period | 40 | 399,873 | - | 399,913 |
+------------------------------+-----------+--------------+---------------+----------+
| Share issue costs | - | (13,806) | - | (13,806) |
+------------------------------+-----------+--------------+---------------+----------+
| Profit for the period | - | - | 7,618 | 7,618 |
+------------------------------+-----------+--------------+---------------+----------+
| Balance as at 30 June 2008 | 40 | 386,067 | 7,618 | 393,725 |
+------------------------------+-----------+--------------+---------------+----------+
| | | | | |
+------------------------------+-----------+--------------+---------------+----------+
| Balance at 1 July 2008 | 40 | 386,067 | 7,618 | 393,725 |
+------------------------------+-----------+--------------+---------------+----------+
| Share repurchases | (3) | (26,464) | - | (26,467) |
+------------------------------+-----------+--------------+---------------+----------+
| Loss for the year | - | - | (53,302) | (53,302) |
+------------------------------+-----------+--------------+---------------+----------+
| Balance as at 30 June 2009 | 37 | 359,603 | (45,684) | 313,956 |
+------------------------------+-----------+--------------+---------------+----------+
+------------------------------+-----------+--------------+---------------+----------+
| Company | Share | Share | Retained | Total |
| | capital | premium | earnings | |
+------------------------------+-----------+--------------+---------------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 |
+------------------------------+-----------+--------------+---------------+----------+
| | | | | |
+------------------------------+-----------+--------------+---------------+----------+
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| Balance at beginning of | - | - | - | - |
| period | | | | |
+------------------------------+-----------+--------------+---------------+----------+
| Shares issued in the period | 40 | 399,873 | - | 399,913 |
+------------------------------+-----------+--------------+---------------+----------+
| Share issue costs | - | (13,806) | - | (13,806) |
+------------------------------+-----------+--------------+---------------+----------+
| Profit for the period | - | - | 7,618 | 7,618 |
+------------------------------+-----------+--------------+---------------+----------+
| Balance as at 30 June 2008 | 40 | 386,067 | 7,618 | 393,725 |
+------------------------------+-----------+--------------+---------------+----------+
| | | | | |
+------------------------------+-----------+--------------+---------------+----------+
| Balance at 1 July 2008 | 40 | 386,067 | 7,618 | 393,725 |
+------------------------------+-----------+--------------+---------------+----------+
| Share repurchases | (3) | (26,464) | - | (26,467) |
+------------------------------+-----------+--------------+---------------+----------+
| Loss for the year | - | - | (53,859) | (53,859) |
+------------------------------+-----------+--------------+---------------+----------+
| Balance as at 30 June 2009 | 37 | 359,603 | (46,241) | 313,399 |
+------------------------------+-----------+--------------+---------------+----------+
Consolidated and Company Cash Flow Statements
for the year ended 30 June 2009
+------------------------------------+-----------+-----------+------------+------------+
| | Group | Company |
+ +-----------------------+-------------------------+
| | Year ended | Period | Year | Period |
| | 30 June 2009 | ended 30 | ended | ended 30 |
| | | June 2008 | 30 June | June 2008 |
| | | | 2009 | |
+------------------------------------+------------------------------------+-----------+-----------+------------+
| | US$'000 | US$'000 | US$'000 | US$'000 |
+------------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Cash flows from operating | | | | |
| activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Interest received on cash balances | 4,599 | 18,449 | 4,599 | 18,449 |
+------------------------------------+-----------+-----------+------------+------------+
| Operating expenses paid | (12,907) | (6,900) | (12,907) | (6,900) |
+------------------------------------+-----------+-----------+------------+------------+
| Net cash (used in)/generated from | (8,308) | 11,549 | (8,308) | 11,549 |
| operating activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Cash flows from investing | | | | |
| activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Interest income received on | 557 | - | - | - |
| investment loan | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Purchase of investments at fair | (122,089) | (54,950) | (122,089) | (54,950) |
| value through profit or loss | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Capital repayment on investment | 325 | - | - | - |
| loan | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Net cash used in investing | (121,207) | (54,950) | (122,089) | (54,950) |
| activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Cash flows financing activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Proceeds from the issue of shares | - | 399,913 | - | 399,913 |
+------------------------------------+-----------+-----------+------------+------------+
| Share issue costs | - | (13,806) | - | (13,806) |
+------------------------------------+-----------+-----------+------------+------------+
| Repurchase of shares in the period | (26,467) | - | (26,467) | - |
+------------------------------------+-----------+-----------+------------+------------+
| Net cash (used in)/generated from | (26,467) | 386,107 | (26,467) | 386,107 |
| financing activities | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| (Decrease)/increase in cash and | (155,982) | 342,706 | (156,864) | 342,706 |
| cash equivalents | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Cash and cash equivalents at start | 340,752 | - | 340,752 | - |
| of year/period | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Effect of exchange rate | (16,813) | (1,954) | (16,813) | (1,954) |
| fluctuations on cash and cash | | | | |
| equivalents | | | | |
+------------------------------------+-----------+-----------+------------+------------+
| Cash and cash equivalents at end | 167,957 | 340,752 | 167,075 | 340,752 |
| of year/period | | | | |
+------------------------------------+-----------+-----------+------------+------------+
Consolidated and Company Cash Flow Statements
for the year ended 30 June 2009 (continued)
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Reconciliation of (loss)/profit | Group | Company |
| for the year/period to net cash | | |
| (used in)/generated from operating | | |
| activities | | |
+ +------------------------------------------------+-----------------------+
| | Year ended 30 June 2009 | Period | Year | Period |
| | | ended 30 | ended 30 | ended 30 |
| | | June 2008 | June 2009 | June 2008 |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| | US$'000 | US$'000 | US$'000 | US$'000 |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| (Loss)/profit for the year/period | (53,302) | 7,618 | (53,859) | 7,618 |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Adjustments: | | | | |
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+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Interest income on cash balances | (4,431) | (18,647) | (4,431) | (18,647) |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Interest income on | (557) | - | - | - |
| investments at | | | | |
| fair value through | | | | |
| profit or loss | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Unrealised losses on revaluation | 30,400 | - | 30,400 | - |
| of investments | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Net foreign exchange loss | 16,818 | 1,954 | 16,818 | 1,954 |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Operating loss before changes in | (11,072) | (9,071) | (11,072) | (9,071) |
| working capital | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Decrease/(increase) | 26 | (116) | 26 | (116) |
| in trade and other | | | | |
| receivables | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| (Decrease)/increase in trade and | (1,861) | 2,287 | (1,861) | 2,287 |
| other payables | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| | (12,907) | (6,900) | (12,907) | (6,900) |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Interest received on cash balances | 4,599 | 18,449 | 4,599 | 18,449 |
| | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
| Net cash (used in)/generated from | (8,308) | 11,549 | (8,308) | 11,549 |
| operating activities | | | | |
+-------------------------------------+------------------------------------+-----------+-----------+-----------+
Notes to the Consolidated Financial Statements
1 The Company
Leaf Clean Energy Company (the "Company") was incorporated and registered in the
Cayman Islands on 14 May 2007. The Company was established to invest in clean
energy projects, predominantly in North America. Clean energy includes
activities such as the production of alternative fuels, renewable power
generation and the use of technologies to reduce the environmental impact of
traditional energy. The Company seeks to achieve long term capital appreciation
primarily through making privately negotiated acquisitions of interest
(principally equity but also equity-related and subordinated or mezzanine debt
securities) in both projects and companies which own assets or which participate
in the clean energy sector and through the generation and commercialisation of
carbon credits derived from these projects.
Pursuant to an Admission Document dated 22 June 2007 there was an original
placing of up to 200,000,000 Ordinary Shares of GBGBP0.0001 each for GBGBP1
each.
The Shares of the Company were admitted to trading on the AIM market of the
London Stock Exchange ("AIM") on 28 June 2007 when dealings also commenced.
The Company's agents and the Asset Advisor perform all significant functions.
Accordingly, the Company itself has no employees.
2 The Subsidiaries
At the year end the Company had the following subsidiary companies:
+--------------+---------------+------------+
| | Country | Percentage |
| | of | of |
| | incorporation | shares |
| | | held |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Bioenergy | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Biomass | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | USA | 100% |
| Biomass | (Delaware) | |
| Investments, | | |
| Inc.* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Escalona | Islands | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Finance | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Greenline | Islands | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Hydro | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Invenergy | Islands | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | USA | 100% |
| Invenergy | (Delaware) | |
| US | | |
| Investments, | | |
| Inc* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| LFG | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | USA | 100% |
| LFG US | (Delaware) | |
| Investments, | | |
| Inc.* | | |
+--------------+---------------+------------+
| Leaf | USA | 100% |
| MaxWest | (Delaware) | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Miasolé* | Islands | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Range | Islands | |
| Fuels | | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Skyfuels | Islands | |
| Company* | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Solar | Islands | |
| Company | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| VREC* | Islands | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Waste | Islands | |
| Energy | | |
+--------------+---------------+------------+
| Leaf | Cayman | 100% |
| Wind | Islands | |
| Company | | |
+--------------+---------------+------------+
*Indirect subsidiaries
3 Significant Accounting Policies
The principal accounting policies adopted in the preparation of the consolidated
financial statements are set out below.
The annual report of the Company for the year ended 30 June 2009 comprises the
Company and its subsidiaries (together referred to as the "Group").
3.1 Basis of presentation
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") promulgated by the International
Accounting Standards Board ("IASB") except for the non-consolidation of investee
entities - see note 3.4. Management has concluded that the report fairly
represents the entity's financial position, financial performance and cash
flows.
These consolidated financial statements are presented in United States Dollars
("US$"), which is the Company's functional currency. All financial information
presented in US$ has been rounded to the nearest thousand.
3.2 Use of estimates and judgements
The preparation of financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and
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the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
The most significant area requiring estimation and judgement by the Directors is
the valuation of unquoted investments, see note 9.
3.3Foreign currency translation
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the exchange rate
at that date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit
or loss.
Assets and liabilities of the Group's overseas operations are measured using
their functional currency, being the currency of the primary economic
environment in which they operate.
On consolidation, the assets and liabilities of the Group's overseas operations
are translated into US Dollars, the presentation currency, at exchange rates
prevailing on the balance sheet date. Income and expense items are translated at
the average exchange rates for the period unless exchange rates fluctuate
significantly. Exchange differences arising, if any, are classified as equity
and transferred to the group's foreign exchange translation reserve. Such
exchange differences are recognised in the income statement in the period in
which the operation is sold.
3.4Investments
The Group designated its investments, including equity, loan and similar
instruments, as at fair value through profit or loss on initial recognition.
Gains and losses arising from changes in fair value of investments, including
foreign exchange movements, are recognised in the profit or loss for the year.
Unquoted investments are valued using recognised valuation methodologies, based
on the International Private Equity and Venture Capital Guidelines, which
reflect the amount for which an asset could be exchanged between knowledgeable,
willing parties on an arm's length basis. The portfolio valuation methodology is
detailed on page 33.
Investee entities over which the Group has the power to exercise control are not
consolidated as the Directors consider that consolidation would render the
consolidated financial statements misleading, as such investments are held for
capital gain as part of an investment portfolio that is measured and its
performance evaluated on a fair value basis. They are instead stated at fair
value. This is a departure from IAS 27 Consolidated and Separate Financial
Statements, which requires all entities over which the Group has the power to
exercise control to be consolidated.
The Group holds a number of investments in entities over which it has
significant influence which meet the definition of associates in IAS 28
Investment in Associates. The Company has taken advantage of the exemption from
applying IAS 28 as these investments are held as part of the Group's portfolio
with a view to the ultimate realisation of capital gains. These investments are
accounted for at fair value through profit and loss.
Investments in subsidiaries in the Parent Company financial statements are
stated fair value through profit or loss. Fair value for this purpose is
determined with reference to the valuation of the underlying investee entities.
3.5 Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term
highly liquid investments that are readily converted to known amounts of cash
and which are subject to an insignificant risk of changes in value.
3.6Revenue and expense recognition
Interest income is recognised on a time-proportionate basis using the effective
interest rate method.
Dividends receivable on equity and non-equity shares, which carry significant
equity rights, are recognised as revenue when the shareholders' right to receive
payment has been established, normally ex-dividend date. When no ex-dividend
date is available, dividends receivable on or before the period end are treated
as revenue for the period. Provision is made for any dividends not expected to
be received.
Fixed returns on debt securities and loans are recognised on an effective
interest rate basis, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to that asset's
net carrying amount.
Expenses are accounted for on an accrual basis. Expenses are charged to the
income statement. This includes expenses directly related to making an
investment which is held at fair value through profit or loss.
3.7Share issue costs
Costs directly related to the issue of shares are deducted from equity.
3.8 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Group but excluding
entities which are considered investments (see note 3.4). Control exists where
the Group has the power, directly or indirectly, to govern the financial and
operating policies of an enterprise so as to obtain benefits from its
activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control effectively
commences until the date that control effectively ceases.
Associates
An associate is an entity over which the Group is in a position to exercise
significant influence but not control or joint control, through the financial
and operating policy decisions of the investee entity. As the Company is an
investment company, and its investments held in associates are designated as
held at fair value through profit or loss, the provisions of IAS 28 'Investments
in Associates' do not apply. Such investments are measured at fair value, with
changes in fair value recognised in profit or loss in the period in which they
occur.
Joint ventures
A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control. As the Company
is an investment company, and its interests held in joint ventures are
designated as held at fair value through profit or loss, the provisions of IAS
31 'Interests in Joint Ventures' do not apply. Such interests are measured at
fair value, with changes in fair value recognised in profit or loss in the
period in which they occur.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised gains arising from
intra-group transactions, are eliminated in preparing the consolidated financial
statements.
3.9 Dividends payable
Dividends payable are recognised as a liability in the period in which they are
declared and approved.
3.10 Other receivables
Trade and other receivables are stated at their recoverable amount.
3.11 Trade and other payables
Trade and other payables are stated at their cost.
3.12 Income tax expense
Cayman Islands taxation
The Company received from the Governor-in-Cabinet of the Cayman Islands, an
undertaking that, for a period of 20 years from 5 June 2007 no laws of the
Cayman Islands imposing any tax on profits, income, gains or appreciation shall
apply to the Company and that no such tax or any tax in the nature of estate
duty or inheritance tax shall be payable on the shares, debentures or other
obligations of the Company. Under the current Cayman Islands law, no tax will be
charged on profits or gains of the Company and dividends of the Company would be
payable to Shareholders resident in or outside the Cayman Islands without
deduction of tax.
3.13 Future changes in accounting policies
IASB and IFRIC have issued the following standards and interpretations with an
effective date after the date of these financial statements:
+------------------------------------------------------------+------------------+
| New/Revised International Financial Reporting Standards | Effective date |
| (IAS/IFRS) | (accounting |
| | periods |
| | commencing |
| | after) |
+------------------------------------------------------------+------------------+
| | |
+------------------------------------------------------------+------------------+
| IAS 1 Presentation of Financial Statements - Comprehensive | 1 January 2009 |
| revision including requiring a statement of comprehensive | |
| income (Revised 2007) | |
+------------------------------------------------------------+------------------+
| IAS 1 Presentation of Financial Statements (Revised May | 1 January 2009 |
| 2008)* | |
+------------------------------------------------------------+------------------+
| IAS 1 Presentation of Financial Statements - Amendments | 1 January 2009 |
| relating to disclosure of puttable instruments and | |
| obligations arising on liquidation (2008) | |
+------------------------------------------------------------+------------------+
| IAS 1 Presentation of Financial Statements (Revised April | 1 January 2010 |
| 2009)** | |
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+------------------------------------------------------------+------------------+
| IAS 7 Statement of Cash Flows (Revised April 2009)** | 1 January 2010 |
+------------------------------------------------------------+------------------+
| IAS 23 Borrowing Costs - Comprehensive revision to | 1 January 2009 |
| prohibit intermediate expensing (Amended 2007) | |
+------------------------------------------------------------+------------------+
| IAS 23 Borrowing costs (Revised May 2008)* | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IAS 27 Consolidated and Separate Financial Statements - | 1 July 2009 |
| Consequential amendments resulting from amendments to IFRS | |
| 3 (2008) | |
+------------------------------------------------------------+------------------+
| IAS 27 Consolidated and Separate Financial Statements - | 1 January 2009 |
| Amendment relating to cost of an investment on first-time | |
| adoption (Revised 2008) | |
+------------------------------------------------------------+------------------+
| IAS 27 Consolidated and Separate Financial Statements | 1 January 2009 |
| (Revised May 2008)* | |
+------------------------------------------------------------+------------------+
| IAS 28 Investments in Associates - Consequential | 1 July 2009 |
| amendments resulting from amendments to IFRS 3 (2008) | |
+------------------------------------------------------------+------------------+
| IAS 28 Investments in Associates* | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IAS 31 Interests in Joint Ventures - Consequential | 1 July 2009 |
| amendments resulting from amendments to IFRS 3 (2008) | |
+------------------------------------------------------------+------------------+
| IAS 31 Interests in Joint Ventures (Revised May 2008)* | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IAS 32 Financial instruments: Presentation - Amendments | 1 January 2009 |
| relating to puttable instruments and obligations arising | |
| on liquidation | |
+------------------------------------------------------------+------------------+
| IAS 36 Impairment of Assets (Revised May 2008)* | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IAS 36 Impairment of Assets** | 1 January 2010 |
+------------------------------------------------------------+------------------+
| IAS 39 Financial Instruments: Recognition and Measurement | 1 January 2009 |
| (Revised May 2008)* | |
+------------------------------------------------------------+------------------+
| IAS 39 Financial Instruments: Recognition and Measurement | 30 June 2009 |
| - Amendments for embedded derivatives when reclassifying | |
| financial instruments | |
+------------------------------------------------------------+------------------+
| IAS 39 Financial Instruments: Recognition and Measurement | 1 July 2009 |
| - Amendments for eligible hedged items | |
+------------------------------------------------------------+------------------+
| IAS 39 Financial Instruments: Recognition and Measurement | 1 January 2010 |
| (Revised April 2009)** | |
+------------------------------------------------------------+------------------+
| 3.13 Future changes in accounting policies |
+-------------------------------------------------------------------------------+
| IFRS 3 Business Combinations - Comprehensive revision on | 1 July 2009 |
| applying the acquisition method | |
+------------------------------------------------------------+------------------+
| IFRS 8 Operating Segments (Revised April 2009)** | 1 January 2010 |
+------------------------------------------------------------+------------------+
| IFRS 5 Non-current Assets Held for Sale and Discontinued | 1 July 2009 |
| Operations (Revised May 2008)* | |
+------------------------------------------------------------+------------------+
| IFRS 5 Non-current Assets Held for Sale and Discontinued | 1 January 2010 |
| Operations** | |
+------------------------------------------------------------+------------------+
| IFRS 7 Financial Instruments: Disclosures - Amendments | 1 January 2009 |
| enhancing disclosures about fair value and liquidity risk | |
| (Revised March 2009) | |
+------------------------------------------------------------+------------------+
| IFRS 8 Operating Segments (Original issuance 2006) | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IFRS 8 Operating Segments (Revised April 2009)** | 1 January 2010 |
+------------------------------------------------------------+------------------+
| | |
+------------------------------------------------------------+------------------+
| IFRIC Interpretation | |
+------------------------------------------------------------+------------------+
| IFRIC13 Customer loyalty programmes | 1 July 2008 |
+------------------------------------------------------------+------------------+
| IFRIC 15 Agreement for Construction of Real Estate | 1 January 2009 |
+------------------------------------------------------------+------------------+
| IFRIC 16 Hedges of a Net Investment in a Foreign Operation | 1 October 2008 |
+------------------------------------------------------------+------------------+
| IFRIC 17 Distributions of Non-Cash Assets to Owners | 1 July 2009 |
+------------------------------------------------------------+------------------+
| IFRIC 18 Transfers of Assets from Customers | 1 July 2009 |
+------------------------------------------------------------+------------------+
*Amendments resulting from May 2008 Annual Improvements to IFRSs
**Amendments resulting from April 2009 Annual Improvements to IFRSs
IFRS 8 introduces the "management approach" to segment reporting, with
information based on internal reports. Management are currently assessing the
impact of these on the disclosures to be presented regarding segmental
reporting.
The Directors do not expect the adoption of the other standards and
interpretations to have a material impact on the Group's financial statements in
the period of initial application.
4Segment Reporting
The Group operates in one business and geographic segment, being investment in
clean energy projects predominantly in North America.
5 Net Asset Value per Share
Group
The net asset value per share as at 30 June 2009 is 170.97 cents based on
consolidated net assets of US$313,956,017 and 183,633,733 ordinary shares in
issue as at that date (2008: 196.9 cents based on net assets of US$393,724,686
and 200,000,000 ordinary shares).
Company
The net asset value per share as at 30 June 2009 is 170.67 cents based on net
assets of US$313,399,017 and 183,633,733 ordinary shares in issue as at that
date (2008: 196.9 cents based on net assets of US$393,724,686 and 200,000,000
ordinary shares).
6 Related Party Transactions
Parties are considered to be related if one party has the ability to control the
other party or to exercise significant influence over the other party in making
financial or operational decisions.
The Asset Advisor, Management Company, and the Administrator are considered
related parties due to the significance of the contracts with these parties.
Details of the fee arrangements with these parties are given in note 8.
The Directors are considered related parties as they have authority and
responsibility for planning, directing and controlling the activities of the
Group. Total Directors' fees and expenses during the year amounted to US$369,515
(period ended 30 June 2008: US$366,000) of which US$135,000 was outstanding at
30 June 2009 (2008: US$87,070)
The Group used the services of companies that are owned by or significantly
influenced by shareholders of the Management Company. Total re-charges amounting
to US$122,100 were charged by Shaw Capital, Inc to the Company (period ended 30
June 2008: US$50,868) and US$122,100 was outstanding as at 30 June 2009 (2008:
US$nil). Total re-charges billed by EEA Fund Management Limited were GBGBP23,543
(US$38,774 based on 30 June exchange rate) (period ended 30 June 2008: US$nil)
and the amount was outstanding at 30 June 2009 (2008: US$nil). Affiliates of
Shaw Capital, Inc. billed the Company
6 Related Party Transactions
US$168,278 for professional fees related to specific investment due diligence or
engineering and construction support. The amounts were billed based on normal
market rates for such services and were due and payable under normal payment
terms.
Curtis Moffatt, the Chairman of the Audit Committee and one of the Board
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members, is a partner at Van Ness Feldman. The Group engaged Van Ness Feldman
for providing services in US energy and environmental laws consultations. Total
fees for the year ended 30 June 2009 amounted to US$54,044 (period ended 30 June
2008: US$17,800) and the amount accrued but not paid at the year end was US$ nil
(2008: US$17,800).
At the time Van Ness Feldman was engaged to assist in the due diligence matter
on behalf of Leaf, Mr. Moffatt recused himself from any consideration of the
proposed investment by Leaf since such consideration would rely, in part, upon
the advice and counsel of Van Ness Feldman.
7Interest Income on Cash Balances
+------------+---------+---------+
| Group | Year | Period |
| and | ended | ended |
| Company | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+------------+---------+---------+
| | US$'000 | US$'000 |
+------------+---------+---------+
| | | |
+------------+---------+---------+
| Interest | 2,090 | 16,279 |
| income | | |
| receivable | | |
| on | | |
| Sterling | | |
| cash | | |
| balances | | |
+------------+---------+---------+
| Interest | 2,340 | 2,368 |
| income | | |
| receivable | | |
| on US | | |
| Dollar | | |
| cash | | |
| balances | | |
+------------+---------+---------+
| | 4,430 | 18,647 |
+------------+---------+---------+
8 Charges and Fees
8.1 Management fees
Annual fees
Under the Asset Advisory Agreement, the Management Company receives an annual
management fee from the Company, payable quarterly in advance, equating to 0.5%
per quarter of the Net Asset Value of the Company as determined in accordance
with such agreement, as at the quarter end dates (being 31 March, 30 June, 30
September and 31 December).
Management fees for the year ended 30 June 2009 amounted to US$6,902,416 (period
ended 30 June 2008: US$7,762,180) and the amount accrued but not paid at the
year end was US$ nil. (2008: US$1,970,256)
Performance fees
The Management Company may also, pursuant to the Asset Advisory Agreement,
become entitled to receive from the Company an annual performance fee calculated
by reference to Total Shareholder Return over the course of a performance
period, starting on Admission.
Any performance fee will become payable once annualised Total Shareholder Return
in any performance period exceeds an annual rate of 9% ("the Hurdle"). Once the
Hurdle is exceeded, the performance fee will become payable in an amount equal
to 20% of any aggregate return over and above the Hurdle subject to a high
watermark. Total Shareholder Return is calculated on the basis of the increase
in market capitalization of the Company, allowing for dividend and other
distributions paid to Shareholders in the relevant performance period.
There were no performance fees payable for the year ended 30 June 2009 (period
ended 30 June 2008: US$nil).
8.2 Legal and professional fees
Legal and professional fees represent legal, advisory and consultancy fees
incurred during and after the implementation of investment acquisitions, as well
as work on group and portfolio structuring.
Legal and professional fees for the year amounted to US$2,674,431 (period ended
30 June 2008: US$488,051) and US$233,712 were outstanding as at 30 June 09
(2008: US$181,000).
8.3 Administration fees
EHM International Limited was appointed Administrator of the Company with effect
from 1 June 2008. The Administrator is entitled to an administration fee,
payable quarterly in arrears and calculated in respect of each quarter or other
period, with a minimum fee of GBP25,000 per quarter at the rate of 0.08% per
annum where the total assets of the Company less borrowings is less than
US$100,000,000; 0.07% where the total assets of the Company less borrowings at
the end of the relevant quarter is greater than or equal to US$100,000,000 but
less than US$200,000,000; and at the rate of 0.06% per annum where the total
assets of the Company less borrowings at the end of the relevant quarter is
greater than or equal to US$200,000,000.
EHM International Limited administration fees for the year amounted to
US$239,046 (period ended 30 June 2008: US$22,300) and US$52,906 outstanding as
at 30 June 2009 (2008: US$22,300). US$30,671 was paid to the previous
administrator, Equity Trust Fund Services (Luxembourg) S.A in relation to
professional services rendered 1 July to 30 September 2008.
8.4 Other expenses
+-------------+---------+---------+
| Group | Year | Period |
| and | ended | ended |
| Company | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+-------------+---------+---------+
| | US$'000 | US$'000 |
+-------------+---------+---------+
| Recharges | 160 | - |
| fees from | | |
| related | | |
| parties | | |
| (see note | | |
| 6) | | |
+-------------+---------+---------+
| Nomad | 131 | - |
| retainer | | |
| fees | | |
+-------------+---------+---------+
| Sponsorship | 75 | - |
| fees | | |
+-------------+---------+---------+
| Audit | 66 | 50 |
| fees | | |
+-------------+---------+---------+
| Directors' | 59 | 60 |
| and | | |
| Officers' | | |
| insurance | | |
| expense | | |
+-------------+---------+---------+
| Printing | 47 | 12 |
| and | | |
| stationery | | |
| expenses | | |
+-------------+---------+---------+
| Travel | 27 | 14 |
| and | | |
| subsistence | | |
| expenses | | |
+-------------+---------+---------+
| Registrar | 25 | 18 |
| fees and | | |
| costs | | |
+-------------+---------+---------+
| Stock | 17 | 3 |
| exchange | | |
| fees | | |
+-------------+---------+---------+
| Bank | 14 | 7 |
| charges | | |
+-------------+---------+---------+
| Other | 234 | 29 |
| expenses | | |
+-------------+---------+---------+
| Total | 855 | 193 |
+-------------+---------+---------+
Other expenses include US$129,000 contribution for the winding costs of
Greenline Industries Inc an investee company.
9 Investments
9.1 Investments at fair value through profit or loss
Investments comprise ordinary stock, loans and preferred stock carrying a
cumulative preferred dividend, preferential return of capital and capped rights
to share in profits. The Directors, with advice from the Management Company,
have reviewed the carrying value of each investment and calculated the aggregate
value of the Company's portfolio. Investments are measured at the Directors'
estimate of fair value at the reporting date, in accordance with IAS 39
'Financial Instruments: Recognition and measurement'.
+-------------+--------+----------+---------+
| | | Year | Period |
| | | ended | ended |
| | | 30 | 30 |
| | | June | June |
| | | 2009 | 2008 |
+-------------+--------+----------+---------+
| Group | | US$'000 | US$'000 |
+-------------+--------+----------+---------+
| Balance | | 55,000 | - |
| brought | | | |
| forward | | | |
+-------------+--------+----------+---------+
| Purchases | | 122,448 | 55,000 |
| at cost | | | |
+-------------+--------+----------+---------+
| Capital | | (326) | - |
| refunded | | | |
+-------------+--------+----------+---------+
| Losses | | (30,400) | - |
| on | | | |
| investments | | | |
+-------------+--------+----------+---------+
| Balance | | 146,722 | 55,000 |
| carried | | | |
| forward | | | |
+-------------+--------+----------+---------+
Investments are stated at fair value through profit or loss on initial
recognition. Loans are stated at fair value in conjunction with the related
equity investment in the investee company. All investee companies are unquoted.
9.2 Investments in subsidiaries at fair value through profit or loss
+--------------+--------+----------+---------+
| | | Year | Period |
| | | ended | ended |
| | | 30 | 30 |
| | | June | June |
| | | 2009 | 2008 |
+--------------+--------+----------+---------+
| Company | | US$'000 | US$'000 |
+--------------+--------+----------+---------+
| Balance | | 55,000 | - |
| brought | | | |
| forward | | | |
+--------------+--------+----------+---------+
| Additional | | 144,268 | 55,000 |
| investments | | | |
| in | | | |
| subsidiaries | | | |
+--------------+--------+----------+---------+
(MORE TO FOLLOW) Dow Jones Newswires
10-09-09 0600GMT
| Losses | | (30,400) | - |
| on | | | |
| investments | | | |
| in | | | |
| subsidiaries | | | |
+--------------+--------+----------+---------+
| Balance | | 168,868 | 55,000 |
| carried | | | |
| forward | | | |
+--------------+--------+----------+---------+
9.3 Portfolio valuation methodology
Unquoted investments are valued by applying an appropriate valuation technique,
which makes maximum use of market-based information, is consistent with models
generally used by market participants and is applied consistently from period to
period, except where a change would result in a better estimation of fair value.
The Company primarily invests in unquoted direct investments. Unquoted direct
investments have characteristics similar to private equity investments, in that
the value is generally determined through the sale or flotation of the entire
business, rather than the sale of an individual instrument. Valuations of such
investments are based upon the "International Private Equity and Venture Capital
Valuation Guidelines."
The Management Company conducted a valuation analysis of the Company's
investment portfolio based upon standard valuation approaches compatible with
the "International Private Equity and Venture Capital Valuation Guidelines."
Given the uncertainties inherent in estimating the fair value of unquoted direct
investments, a degree of caution was applied by the Management Company in
exercising judgements and making the necessary estimates.
10 Trade and Other Receivables
+-------------+---------+---------+
| | | |
+-------------+---------+---------+
| Group | 30 | 30 |
| and | June | June |
| Company | 2009 | 2008 |
+-------------+---------+---------+
| | US$'000 | US$'000 |
+-------------+---------+---------+
| Interest | 29 | 197 |
| receivable | | |
+-------------+---------+---------+
| Prepayments | 92 | 118 |
+-------------+---------+---------+
| Total | 121 | 315 |
+-------------+---------+---------+
11 Cash and Cash Equivalents
+----------+---------+---------+
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+----------+---------+---------+
| Group | US$'000 | US$'000 |
+----------+---------+---------+
| Short | 105,154 | 340,752 |
| term | | |
| fixed | | |
| deposits | | |
+----------+---------+---------+
| Bank | 62,803 | - |
| current | | |
| account | | |
| balances | | |
+----------+---------+---------+
| Total | 167,957 | 340,752 |
+----------+---------+---------+
+----------+---------+---------+
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+----------+---------+---------+
| Company | US$'000 | US$'000 |
+----------+---------+---------+
| Short | 105,154 | 340,752 |
| term | | |
| fixed | | |
| deposits | | |
+----------+---------+---------+
| Bank | 61,921 | - |
| current | | |
| account | | |
| balances | | |
+----------+---------+---------+
| Total | 167,075 | 340,752 |
+----------+---------+---------+
The short-term deposits are subject to interest rates between 0.09% and 0.80%
per annum and are fixed for periods ranging up to 3 months from the balance
sheet date.
12 Share Capital
+-----------------------------+-----------------+-----------------+-----------------+
| Ordinary shares of | Number of | Share capital | Share premium |
| GBGBP0.0001 each | shares | | |
+-----------------------------+-----------------+-----------------+-----------------+
| | | $'000 | $'000 |
+-----------------------------+-----------------+-----------------+-----------------+
| In issue at 1 July 2008 | 200,000,000 | 40 | 386,067 |
+-----------------------------+-----------------+-----------------+-----------------+
| Repurchased during the year | (16,366,227) | (3) | (26,464) |
+-----------------------------+-----------------+-----------------+-----------------+
| At 30 June 2009 | 183,633,773 | 37 | 359,603 |
+-----------------------------+-----------------+-----------------+-----------------+
The authorised share capital of the Company is GBP25,000 divided into 250
million Ordinary Shares of GBP0.0001 each
Under the terms of the placement on 22 June 2007, the Company issued 200,000,000
shares of GBGBP0.0001 each par value at a price of GBGBP1 each. The difference
between the issue price and the par value was transferred to share premium
account, net of share issue expenses.
Share capital and premium received was translated to US Dollars at the exchange
rate prevailing at the date of receipt of the proceeds.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regards to the Company's assets.
During the year 16,366,227 shares were repurchased by the Company leaving
183,633,773 shares in issue as at 30 June 2009. The shares were repurchased in 7
tranches during the year at prices of between 90 pence and 95 pence per share
for a total of consideration GBP15,640,355 (US$26,467,128). The Company's share
price has averaged 96.5 pence during the year.
The repurchases of the Company's shares are in line with its capital management
philosophy whereby the Board manages the Company's affairs to achieve
shareholder returns through capital growth rather than income, and monitors the
achievement of this through growth in net asset value per share.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board manages the Company's affairs to achieve shareholder
returns through capital growth rather than income, and monitors the achievement
of this through growth in net asset value per share.
Company capital comprises share capital, share premium and reserves. The Company
is not subject to externally imposed capital requirements.
13 Unpaid capital contributions to subsidiaries
+---------+---------+---------+---------+
| | Issued | Paid | Unpaid |
| | share | up | share |
| | capital | share | capital |
| | | capital | |
+---------+---------+---------+---------+
| | $'000 | $'000 | $'000 |
+---------+---------+---------+---------+
| Leaf | 27,000 | 19,924 | 7,076 |
| Finance | | | |
| Company | | | |
+---------+---------+---------+---------+
| Leaf | 20,900 | 6,155 | 14,745 |
| Hydro | | | |
| Company | | | |
+---------+---------+---------+---------+
| Total | 47,900 | 26,079 | 21,821 |
+---------+---------+---------+---------+
+-------------+---------+---------+---------+
| | Issued | Paid | Unpaid |
| | share | up | share |
| | capital | share | capital |
| | | capital | |
+-------------+---------+---------+---------+
| | $'000 | $'000 | $'000 |
+-------------+---------+---------+---------+
| Current | 27,000 | 19,924 | 7,076 |
| liabilities | | | |
+-------------+---------+---------+---------+
| Non-current | 20,900 | 6,155 | 14,745 |
| liabilities | | | |
+-------------+---------+---------+---------+
| Total | 47,900 | 26,079 | 21,821 |
+-------------+---------+---------+---------+
14 Trade and Other Payables
+----------------+---------+---------+
| | | |
+----------------+---------+---------+
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+----------------+---------+---------+
| Group | US$'000 | US$'000 |
| and | | |
| Company | | |
+----------------+---------+---------+
| Investment | 409 | 50 |
| call | | |
| payable | | |
+----------------+---------+---------+
| Amounts | 160 | - |
| due to | | |
| related | | |
| parties | | |
| (note | | |
| 6) | | |
+----------------+---------+---------+
| Directors' | 135 | 87 |
| fees | | |
| payable | | |
+----------------+---------+---------+
| Administration | 55 | 141 |
| fees payable | | |
+----------------+---------+---------+
| Audit | 44 | 50 |
| fees | | |
| payable | | |
+----------------+---------+---------+
| Other | 41 | 44 |
| creditors | | |
+----------------+---------+---------+
| Management | - | 1,970 |
| fees | | |
| payable | | |
+----------------+---------+---------+
| Total | 844 | 2,342 |
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10-09-09 0600GMT
+----------------+---------+---------+
Amounts due to related parties are unsecured, interest free and payable on
demand.
15 Basic and Diluted (Loss)/Earnings per Share
Basic and diluted loss per share is calculated by dividing the loss attributable
to equity holders of the Company by the weighted average number of ordinary
shares in issue during the year:
+-----------------+----------+---------+
| Group | Year | Period |
| | ended | ended |
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+-----------------+----------+---------+
| | $'000 | $'000 |
+-----------------+----------+---------+
| | | |
+-----------------+----------+---------+
| (Loss)/profit | (53,302) | 7,618 |
| attributable | | |
| to equity | | |
| holders of | | |
| the Company | | |
| (US$'000) | | |
+-----------------+----------+---------+
| Weighted | 189,760 | 200,000 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
| (thousands) | | |
+-----------------+----------+---------+
| Basic | (28.09) | 3.81 |
| and | | |
| fully | | |
| diluted | | |
| (loss)/earnings | | |
| per share | | |
| (cents per | | |
| share) | | |
+-----------------+----------+---------+
There is no difference between the basic and diluted earnings per share for the
year as there are no potential dilutive ordinary shares.
+-----------------+----------+---------+
| Company | Year | Period |
| | ended | ended |
| | 30 | 30 |
| | June | June |
| | 2009 | 2008 |
+-----------------+----------+---------+
| | $'000 | $'000 |
+-----------------+----------+---------+
| | | |
+-----------------+----------+---------+
| (Loss)/profit | (53,859) | 7,618 |
| attributable | | |
| to equity | | |
| holders of | | |
| the Company | | |
| (US$'000) | | |
+-----------------+----------+---------+
| Weighted | 189,760 | 200,000 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
| (thousands) | | |
+-----------------+----------+---------+
| Basic | (28.38) | 3.81 |
| and | | |
| fully | | |
| diluted | | |
| (loss)/earnings | | |
| per share | | |
| (cents per | | |
| share) | | |
+-----------------+----------+---------+
There is no difference between the basic and diluted earnings per share for the
year as there are no potential dilutive ordinary shares.
16 Directors' Remuneration
The Directors' annual remuneration was reviewed and recommended to be increased
from 1 April 2009 to US$100,000 for the Directors and US$140,000 for the
Chairman of the Board per annum. The Director fees are paid quarterly in
arrears.
Details of the Directors' remuneration from 1 July 2008 to 31 March 2009 were as
follows:
+------------------------------------------------------------------+----------------+
| | Remuneration |
| | for period 1 |
| | July to 31 |
| | March 2009 |
+------------------------------------------------------------------+----------------+
| | GBGBP |
+------------------------------------------------------------------+----------------+
| Peter Tom (Chairman) | 45,000 |
+------------------------------------------------------------------+----------------+
| Bran Keogh | 18,750 |
+------------------------------------------------------------------+----------------+
| J. Curtis Moffatt | 22,500 |
+------------------------------------------------------------------+----------------+
| Peter O'Keefe | 22,500 |
+------------------------------------------------------------------+----------------+
| Nora Brownell | 22,500 |
+------------------------------------------------------------------+----------------+
Details of the Directors' annual remuneration effective from 1 April 2009 are as
follows:
+------------------------------------------------------------------+----------------+
| | Basic annual |
| | remuneration |
+------------------------------------------------------------------+----------------+
| | US$ |
+------------------------------------------------------------------+----------------+
| Peter Tom (Chairman) | 140,000 |
+------------------------------------------------------------------+----------------+
| Bran Keogh | 100,000 |
+------------------------------------------------------------------+----------------+
| J. Curtis Moffatt | 105,000 |
+------------------------------------------------------------------+----------------+
| Peter O'Keefe | 105,000 |
+------------------------------------------------------------------+----------------+
| Nora Brownell | 105,000 |
+------------------------------------------------------------------+----------------+
The Directors are also entitled to receive reimbursement of any expenses in
relation to their appointment. Total fees and expenses paid to the Directors for
the year ended 30 June 2009 amounted to US$369,515 (period ended 30 June 2008:
US$366,125) of which US$135,000 was outstanding at 30 June 2009 (2008:
US$87,070).
17 Financial Instruments
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, market price risk and interest rate risk), credit risk
and liquidity risk.
Market price risk
The project companies in which the Group invests operate in sectors that may be
affected by the prevailing prices of electricity, oil, natural gas and other
commodities. As energy and fuels derived from non-renewable sources become more
expensive or
scarce, renewable energy and alternative fuels become more valuable. Conversely,
if non-renewable energy and fuels become more abundant or, for other reasons
become less expensive, the value of renewable or alternative fuels may be
negatively affected. As a result, the performance of the project companies is
likely to be dependent upon prevailing prices for these commodities, which have
been historically, and may continue to be, volatile and subject to wide
variations for a variety of reasons beyond the control of the Group or the Asset
Advisor. These factors include the level of consumer product demand, weather
conditions, governmental regulations in producing and consuming countries, the
price and availability of alternative fuels, the supply of oil and natural gas,
and overall geo-political and economic conditions. Therefore, volatility of
commodity prices may adversely affect the value of the Group's investments.
Market price risk is managed by the Asset Advisor, in accordance with parameters
set by the Board.
All of the Group's investments comprise interests in companies which are not
publicly traded or freely marketable. The Group's may also be restricted from
selling certain securities by contract or regulatory considerations. Such
investments may therefore be difficult to value or realise. Any such realisation
may involve significant time and expense.
If the value of the Group's investment portfolio increased/decreased by 5%, the
net assets of the Group would increase/decrease by US$7,336,100 (2008:
US$2,747,450)
Foreign exchange risk
The Group is exposed to foreign exchange risk with regard to transactions made
in Sterling and balances held in Sterling.
An analysis of net assets by currency exposure as at 30 June 2009 is as follows:
+---------------------------------------------+-------------------+-----------------+
| | Net Assets | Net Assets |
| | US$'000s | US$'000s |
+---------------------------------------------+-------------------+-----------------+
| | 30 June 2009 | 30 June 2008 |
(MORE TO FOLLOW) Dow Jones Newswires
10-09-09 0600GMT
+---------------------------------------------+-------------------+-----------------+
| | | |
+---------------------------------------------+-------------------+-----------------+
| US Dollars | 264,118 | 284,207 |
+---------------------------------------------+-------------------+-----------------+
| Sterling | 49,838 | 109,518 |
+---------------------------------------------+-------------------+-----------------+
| Total | 313,956 | 393,725 |
+---------------------------------------------+-------------------+-----------------+
An appreciation of the Sterling against the US Dollar of 5% would have increased
net assets by US$2,500,000 (2008: US$5,500,000). A decrease of 5% would have an
equal and opposite effect.
Interest rate risk
The Group is exposed to cash flow interest rate risk on cash balances which are
all short term fixed deposits. The weighted average interest rates on short term
fixed deposits as at 30 June 2009 were:
+-----------------------------------------------+------------------+-----------------+
| | 30 June 2009 | 30 June 2008 |
+-----------------------------------------------+------------------+-----------------+
| | % | % |
+-----------------------------------------------+------------------+-----------------+
| Cash balances | | |
+-----------------------------------------------+------------------+-----------------+
| US Dollars | 2.29 | 2.41 |
+-----------------------------------------------+------------------+-----------------+
| Sterling | 4.41 | 5.44 |
+-----------------------------------------------+------------------+-----------------+
The table below summarises the Group's exposure to interest rate risks. It
includes the Groups' financial assets and liabilities at the earlier of
contractual re-pricing or maturity date, measured by the carrying values of
assets and liabilities:
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| 30 June 2009 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total |
| | than | months | months | years | years | bearing | |
| | 1month | | to 1 | | | | |
| | | | year | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial Assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial assets | - | - | - | - | 28,074 | 118,648 | 146,722 |
| at fair value | | | | | | | |
| through profit or | | | | | | | |
| loss | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Trade and other | - | - | - | - | - | 121 | 121 |
| receivables | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Cash and cash | 96,826 | 71,131 | - | - | - | - | 167,957 |
| equivalents | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total financial | 96,826 | 71,131 | - | - | 28,074 | 118,769 | 314,800 |
| assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Trade and other | - | - | - | - | - | (844) | (844) |
| payables | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total financial | - | - | - | - | - | (844) | (844) |
| liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total interest | 96,826 | 71,131 | - | - | 28,074 | | |
| rate sensitivity | | | | | | | |
| gap | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| 30 June 2008 | Less | 1-3 | 3 | 1-5 | Over 5 | Non-interest | Total |
| | than | months | months | years | years | bearing | |
| | 1month | | to 1 | | | | |
| | | | year | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial Assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial assets | - | - | - | - | - | 55,000 | 55,000 |
| at fair value | | | | | | | |
| through profit or | | | | | | | |
| loss | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Trade and other | - | - | - | - | - | 315 | 315 |
| receivables | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Cash and cash | 149,461 | 191,291 | - | - | - | - | 340,752 |
| equivalents | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total financial |149,461 | 191,291 | - | - | - | 55,315 | 396,067 |
| assets | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Financial | | | | | | | |
| Liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Trade and other | - | - | - | - | - | 2,342 | 2,342 |
| payables | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| Total financial | - | - | - | - | - | 2,342 | 2,342 |
| liabilities | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
| | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
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10-09-09 0600GMT
| Total interest | 149,461 | 191,291 | - | - | - | | |
| rate sensitivity | | | | | | | |
| gap | | | | | | | |
+--------------------+---------+---------+---------+---------+---------+--------------+---------+
No fair value interest rate sensitivity analysis has been provided as no
financial assets or liabilities are subject to fair value interest rate risk. If
interest rates have been 1% higher/lower for the year, interest receivable would
have been US$44,000 higher/lower.
Credit risk
Credit risk is the risk that counterparty to a financial instrument will fail to
discharge an obligation or commitment that it has entered into with the Group.
The carrying amounts of financial assets best represent the maximum credit risk
exposure at the balance sheet date. This relates also to financial assets
carried at amortised cost, as they have a short term maturity.
At the reporting date, the Group's financial assets exposed to credit risk
amounted to the following:
+--------------------------------------------------------+--------------+-------------+
| | 30 June 2009 | 30 June |
| | | 2008 |
+--------------------------------------------------------+--------------+-------------+
| | US$'000 | US$'000 |
+--------------------------------------------------------+--------------+-------------+
| Financial assets at fair value through profit or loss | 146,722 | 55,000 |
+--------------------------------------------------------+--------------+-------------+
| Trade and other receivables | 121 | 315 |
+--------------------------------------------------------+--------------+-------------+
| Cash and cash equivalents | 167,957 | 340,752 |
+--------------------------------------------------------+--------------+-------------+
| | 314,800 | 396,067 |
+--------------------------------------------------------+--------------+-------------+
The maximum exposure to credit risk is represented by the carrying amount of
each financial asset in the balance sheet. Management does not expect any
counterparty to fail to meet its obligations. No impairment provisions had been
made as at the year end and no debtors were past their due date.
Cash balances are held with P-1* financial institutions.
*- A Moody's rating of Prime-1 (P-1) means that the issuer has a superior
ability to repay short-term debt for the obligations.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial
obligations as they fall due. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity to meet its
liabilities when they fall due, under both normal and stressed conditions,
without incurring unacceptable losses. The Group's liquidity position is
monitored by the Asset Advisor and the Board of Directors.
Residual undiscounted contractual maturities of financial liabilities:
+---------------------------+----------+---------+----------+---------+---------+----------+
| 30 June 2009 | Less | 1-3 | 3 months | 1-5 | Over 5 | No |
| | than | months | to 1 | years | years | stated |
| | 1 month | | year | | | maturity |
+---------------------------+----------+---------+----------+---------+---------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+---------------------------+----------+---------+----------+---------+---------+----------+
| Financial liabilities | | | | | | |
+---------------------------+----------+---------+----------+---------+---------+----------+
| Trade and other payables | 844 | - | - | - | - | - |
+---------------------------+----------+---------+----------+---------+---------+----------+
| | 844 | - | - | - | - | - |
+---------------------------+----------+---------+----------+---------+---------+----------+
+---------------------------+----------+---------+----------+---------+---------+----------+
| 30 June 2008 | Less | 1-3 | 3 months | 1-5 | Over 5 | No |
| | than | months | to 1 | years | years | stated |
| | 1 month | | year | | | maturity |
+---------------------------+----------+---------+----------+---------+---------+----------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+---------------------------+----------+---------+----------+---------+---------+----------+
| Financial liabilities | | | | | | |
+---------------------------+----------+---------+----------+---------+---------+----------+
| Trade and other payables | 2,342 | - | - | - | - | - |
+---------------------------+----------+---------+----------+---------+---------+----------+
| | 2,342 | - | - | - | - | - |
+---------------------------+----------+---------+----------+---------+---------+----------+
Fair values
All assets and liabilities at 30 June 2009 are considered to be stated at fair
value.
18 Capital Commitments
As at 30 June 2009 capital commitments in respect of investments were as
follows:
+------------+------------+------------+------------+
| Investment | Initial | Drawn | Remaining |
| | commitment | down | commitment |
+------------+------------+------------+------------+
| | US$'000 | US$'000 | US$'000 |
+------------+------------+------------+------------+
| | | | |
+------------+------------+------------+------------+
| Vital | 50,000 | (6,226) | 43,774 |
| Renewable | | | |
| Energy, | | | |
| LLC | | | |
+------------+------------+------------+------------+
| Multitrade | 21,593 | (16,500) | 5,093 |
| Rabun Gap, | | | |
| LLC | | | |
+------------+------------+------------+------------+
| Multitrade | 12,150 | (10,167) | 1,983 |
| Telogia, | | | |
| LLC | | | |
+------------+------------+------------+------------+
| Energía | 20,900 | (6,155) | 14,745 |
| Escalona | | | |
| SV | | | |
+------------+------------+------------+------------+
| | 104,643 | (39,048) | 65,595 |
+------------+------------+------------+------------+
19 Comparatives
The comparatives are for the period from 14 May 2007 (date of incorporation) to
30 June 2008.
20 Exchange Rates
The following exchange rates were used to translate assets and liabilities into
the reporting currency at 30 June 2009:
GBP Sterling to US$ 1.6469 (2008: 1.9902)
21 Post Balance Sheet Events
Greenline Industries, Inc. filed for US bankruptcy protection on 7 August 2009
in the Northern District of California (Santa Rosa). As a result the bankruptcy
filing, the Company wrote down its Greenline Industries investment to nil.
On 26 August 2009, the Company has extended $600,000 in interim funding to
MaxWest Environmental Systems in the form of a convertible promissory note.
Portfolio valuation methodology
Investments are measured at the Directors' estimate of fair value at the
reporting date, in accordance with IAS 39 'Financial Instruments: Recognition
and measurement'. Fair value is the amount for which an asset could be exchanged
between knowledgeable, willing parties in an arm's length transaction.
Unquoted investments
Unquoted investments are valued by applying an appropriate valuation technique,
which makes maximum use of market-based information, is consistent with models
generally used by market participants and is applied consistently from period to
period, except where a change would result in a better estimation of fair value.
The Company primarily invests in unquoted direct investments.
Unquoted direct investments
Unquoted direct investments have characteristics similar to private equity
investments, in that the value is generally crystallised through the sale or
flotation of the entire business, rather than the sale of an individual
instrument. Valuations of such investments are based upon the "International
Private Equity and Venture Capital Valuation Guidelines," using the following
model:
* Determine the enterprise value using an appropriate valuation methodology and
adjust for surplus assets, excess or unrecorded liabilities and other relevant
factors.
* Deduct any financial instruments ranking ahead of the highest ranking instrument
held by the company.
* Apply a marketability discount where appropriate to give the net attributable
enterprise value. Such a marketability discount relates to the investment rather
than the underlying business and reflects the compensation that willing buyers
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will demand for the risk arising from the lack of marketability. Factors that
will be considered in determining the marketability discount are the closeness
to a realisation event, the investors' influence over the timing of realisation
and the difficulty and risk of actions required to put the business into a
saleable condition. It is a rebutted presumption that a 30% discount is to be
applicable to all unquoted direct investments. This presumption may be rebutted
if the available evidence and consideration of the foregoing factors indicate
that a different marketability discount would be appropriate or that no
marketability discount should be applied. Where a discount is applied, it will
normally fall in the range of 10% to 30%.
* Apportion the net attributable enterprise value between the relevant financial
instruments according to their rankings and allocate to the company's holding in
each of these financial instruments.
Given the uncertainties inherent in estimating the fair value of unquoted direct
investments, a degree of caution is applied in exercising judgements and making
the necessary estimates.
Enterprise value is normally determined using one of the following valuation
methodologies:
Price of recent investment
Where the investment being valued was made recently, its cost will generally
provide a good indication of fair value. Where there has been any recent
investment in the investee company, the price of that investment will provide a
basis of the valuation. Where the price at which a third party has invested is
being considered as the basis of valuation, the background to the transaction
will be taken into account to indicate whether or not the price was
representative of the fair value at the time. This methodology is likely to be
appropriate only for a limited period after the date of the relevant
transaction. The period will depend on the specific circumstances of each
investment, but one year is usually applied.
Earnings multiple
This methodology involves the application of an earnings multiple to the
maintainable earnings of the business being valued. This methodology is likely
to be appropriate for an investment in an established business with an
identifiable stream of continuing earnings that can be considered to be
maintainable.
Maintainable earnings are taxed at the standard tax rate. Generally, the latest
historical accounts are used unless reliable forecast results for the current
year are available. The earnings multiple used is determined by reference to
market-based multiples appropriate for the business and correlate to the period
and calculation of earnings of the company being valued. In determining an
appropriate earnings multiple, reference may be made to a single comparator
company, or a number of companies, or the earnings multiple of a quoted stock
market sector or sub-sector where there are similar business activities,
markets, served, size, geography and applicable tax rate.
Net assets
The net asset methodology involves deriving the value of a business by reference
to the fair value of its net assets. This is likely to be appropriate for a
business whose value derives mainly from the underlying value of its assets
rather than its earnings, such as property holding companies and investment
businesses. It may also be appropriate for a business that is not making an
adequate return on assets and for which a greater value can be realised by
liquidating the business and selling its assets. Third party valuations may be
used to give the fair value of a certain asset or group of assets.
This information is provided by RNS
The company news service from the London Stock Exchange
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