TIDMLEAF
RNS Number : 1662A
Leaf Clean Energy Company
18 March 2013
18 March 2013
Leaf Clean Energy Company
Results for the period ended 31 December 2012
The board of Leaf Clean Energy Company ("Leaf" or "the Company")
are pleased to announce the Company's results for the period ended
31 December 2012.
Highlights of the period are:
-- NAV per share for the Leaf portfolio was 142.97 cents or
88.35 pence at US$1.6181 to the GBP1 (30 June 2012: 141.52
cents).
-- US$4.0 million gain on revaluation in the carrying value of the portfolio companies.
-- On 20 July 2012 Leaf made a US$5 million investment in
preferred stock of Lehigh Technologies, Inc.
-- Leaf made an additional US$11.9 million of direct equity and
debt investments into existing portfolio businesses.
For further information, please contact:
Bran Keogh +1-202-289-7881
Leaf Clean Energy Company
Ivonne Cantu +44 (0) 207 397 8900
Cenkos Securities plc
CHAIRMAN'S STATEMENT
July through December 2012 was a period of successful
consolidation for Leaf Clean Energy Company ("Leaf"). With the
market remaining weak, the board and management focused on
enhancing the value of our investees by providing the operational
and financial support they needed to help them advance their
business plans, while aggressively managing costs. As a result, we
believe our portfolio of companies is strongly positioned for
eventual realisations at optimal valuations once the acquisition
and IPO markets improve.
Current Market Conditions
A combination of adverse factors dampened 2012 global investment
in clean energy, resulting in an 11% decline from 2011. These
included: U.S. and European policy uncertainty; low U.S. power
prices due to abundant, low-cost shale gas; over-capacity and
under-pricing in the global solar PV market; and depressed pricing
for quoted clean energy stocks. However, there were signs late in
the interim period that clean energy markets may have been through
the worst with Q4 global clean energy investment up 20% as compared
to Q3. While the short-term outlook remains challenging, we see
brighter prospects on the horizon.
In the United States, where most of our portfolio is
concentrated, there was continued flight from clean energy among
venture capital and private equity during the reporting period, and
public markets remain depressed. However, we see conditions slowly
improving, aided by a more welcoming political climate. The
one-year extension of the production tax credit (PTC) passed in
late December by Congress is a welcome boost for the wind industry.
White House policy also seems headed in a favourable direction.
Portfolio Performance
Despite the market's on-going volatility, Leaf's portfolio
continues to perform in line with expectations. During the past six
months our companies strengthened their management teams, optimized
operations, increased intellectual property, and successfully
pursued commercial opportunities around the world.
Leaf's efforts in its prior fiscal year to evaluate strategic
high-quality investment opportunities resulted in one new
investment during the interim period. On 20 July 2012, we made a
new US$5 million investment in preferred stock of Lehigh
Technologies, Inc. ("Lehigh"), a promising international green
materials company.
Highlights of July-December 2012 included the following:
-- SkyFuel, Inc. ("SkyFuel") won the contract for Canada's first
concentrating solar power (CSP) project. SkyFuel will supply high
performance parabolic trough solar collectors to Medicine Hat in
Alberta, offsetting fuel consumption at the city's combined cycle
gas power plant and avoiding the equivalent of 600 metric tons of
carbon dioxide emissions per year.
-- MaxWest Environmental Systems, Inc. ("MaxWest") appointed
board member and interim CEO, Steven D. Winchester, as chief
executive officer. Under his leadership, MaxWest launched a
successful start-up of its innovative and proprietary
second-generation gasification technology, which delivers improved
performance for customers.
-- Invenergy Wind, LLC ("Invenergy") closed a US$500 million
investment by Caisse de dépôt et placement du Québec (CDPQ) in
operating wind farms in the United States and Canada that generate
a combined 1,500 megawatts of green power.
-- Lehigh announced two new strategic partnerships that will
help accelerate the company's expansion into the tire, consumer and
industrial plastics and coatings industries in Europe and Latin
America.
Market Outlook
The fundamental drivers of renewable energy and clean energy
technologies remain favourable, making a near term market rebound
likely. The world's governments recognize the need to address
climate change, promote energy independence, and find ways to help
emerging countries accommodate their pressing energy needs in
cleaner ways. All these imperatives point to clean energy as an
increasingly large part of the mix.
In the United States, 20% of aging coal generation capacity is
likely to be retired by 2015, which should provide an opening for
renewables in addition to shale gas. The new EPA regulations on
coal plants, due in summer 2013, could boost the renewables market
if stringent enough. Much will also depend on whether the White
House can work with Congress to further stimulate the market
conditions that would deliver the president's stated goal of
doubling generation from wind, solar, and geothermal power by
2020.
Clean energy markets are also picking up in Latin America, Asia,
and Africa, making the sector truly global. Wind, solar and hydro
power are making headway in Latin America, large scale solar
programs are in the pipeline in the Middle East, and activity in
Asia is spreading beyond China, with much solar power activity in
India in particular. In Africa, solar, wind and geothermal plants
are now getting financed and built. This globalization of renewable
energy technologies is creating tremendous opportunities for our
portfolio companies.
Net Assets
Leaf's Board of Directors approved these condensed interim
financial statements on 15 March 2013. During the interim period
ending 31 December 2012, Leaf's net asset value (NAV) per share
increased by 1.0 per cent, from 141.52 cents (90.23 pence) to
142.97 cents (88.35 pence). Of our US$184.1 million of net assets,
US$27.5 million was held in cash and US$156.8 million is invested
in portfolio companies. The Board believes that the cash balances
provide sufficient liquidity to meet the needs of the
portfolio.
Accounting for our subsidiaries: early adoption of IFRS 10
I am pleased to report the favourable conclusion of IASB deliberations
regarding amendments to IFRS 10 (Investment Entities), which
were issued in final form in October 2012. These amendments have
created an exception for investment companies such as Leaf to
the requirements under IAS 27 to fully consolidate subsidiaries
controlled by the reporting company.
In order to provide more useful and appropriate information to
investors, Leaf has decided to early adopt these amendments along
with the consolidation suite of standards, namely: IFRS 11 (Joint
Arrangements), IFRS 12 (Disclosure of Interests in Other Entities),
IAS 27 (revised) and IAS 28 (revised). The amendments to IFRS
10 require investment entities to state controlled portfolio
entities at fair value under IAS 39 instead of consolidating
such subsidiaries as previously required. The comparative figures
throughout this interim report have been restated to comply with
the new accounting policy.
The Company reports in accordance with IFRS as adopted by the
EU, as required by the AIM rules. While the EU has not yet endorsed
the amendments to IFRS 10, AIM have given Leaf a derogation allowing
early adoption.
------------------------------------------------------------------------
Peter Tom
Chairman
15 March 2013
(1) Based on US/GBP exchange rate of 1.6181 on 31 December
2012
MANAGEMENT REPORT
Overview
The clean energy sector remains in delicate health. The second
half of 2012 saw continuing poor market conditions, due to a
combination of factors described in the Market Environment section.
Overall, 2012 saw an 11% decline in global investment in clean
energy from its 2011 level. However, there were encouraging signs
late in the interim period that clean energy markets may have seen
the worst of bad investor sentiment and are now on a path to
recovery.
Several indicators make the board and management of Leaf
cautiously optimistic that investor confidence in the clean energy
sector may be slowly returning. Q4 2012 global clean energy
investment was 20% higher than the rather anaemic Q3 and flat with
the same quarter of 2011 and 2010. By 31 December 2012, the
WilderHill New Energy Global Innovation Index (NEX) had nearly
recovered to where it began the year after falling 19% to its 25
July 2012 low, and continued to build upon these gains during early
2013. Given these market factors, we have continued to focus on
providing operating and financial support to our investee companies
to ensure that their potential is optimised and that they are
strongly positioned for eventual realisations as market conditions
improve.
As previously reported in our 2012 annual report, Leaf's efforts
during the prior fiscal year to identify new, high-quality
investment opportunities resulted in one new investment for Leaf.
On 20 July 2012 Leaf invested in the preferred stock offering of
Lehigh Technologies, Inc. We also made additional investments in
several current investee companies. In summary:
-- On 20 July 2012 Leaf made a US$5 million investment in preferred stock of Lehigh.
-- Leaf made an additional US$11.9 million of direct equity and
debt investments in existing portfolio businesses.
-- The Company earned US$0.6 million of interest income from
debt investments in the portfolio companies.
Financial Performance
Leaf's total Net Asset Value (NAV) on 31 December 2012 was
US$184.1 million, US$1.8 million higher than on 30 June 2012. This
change resulted from the US$1.86 million comprehensive gain for the
period, which consisted primarily of a US$4.0 million gain on
revaluation in the carrying value of the portfolio companies, and
US$0.6 million of interest income on loans to portfolio companies,
less US$2.7 million of administration expenses. At the end of the
period, US$27.5 million of the Company's NAV was held in cash and
US$156.8 million in investments.
NAV per share for the Leaf portfolio was 142.97 cents or 88.35
pence at US$1.6181 to the GBP1. This was an increase of 1.0% for
the six-month period from 30 June 2012. The increase was primarily
due to the unrealized gain on revaluation of investments (+2.6%),
offset by administration expense (-1.5%).
Key performance milestones passed by Leaf and its portfolio
companies during the interim report period included the
following:
-- SkyFuel, Inc., the utility scale solar thermal power solution
company, was awarded a contract to supply high performance
parabolic trough solar collectors to the City of Medicine Hat in
Alberta, Canada. This will be the first concentrating solar power
(CSP) project to be built in Canada. SkyFuel's collectors will
offset fuel consumption at the City's combined cycle gas power
plant. Hybrid applications such as the one at Medicine Hat provide
an immediate and immense opportunity to cut carbon dioxide
emissions from existing power generation facilities. This 1.1
megawatt rated solar project will offset natural gas consumption
and will avoid 600 metric tons equivalent of carbon dioxide
emissions per year. Estimates of the potential demand for
integration of CSP into existing hybrid plants in North America
exceed 20 gigawatts.
-- MaxWest Environmental Systems, Inc. (MaxWest), the leader in
biogasification systems in the wastewater sector, announced the
appointment of independent board member and interim CEO, Steven D.
Winchester, as its new chief executive officer. Under his
leadership, MaxWest reached mechanical completion and successful
start-up of its second-generation gasification technology, which
employs a proprietary gasifier with an integrated energy recovery
process. The enhanced system configuration increases throughput and
achieves higher energy conversion rates, providing further benefits
to customers in the form of improved energy generation, increased
reliability and reduced operating costs.
-- Lehigh, the green materials company and newest investment in
the Leaf portfolio, announced several favourable developments
during the period. In particular, it announced partnerships with
HERA Holding, a Spanish waste-to-resource company and Andes
Chemical Corporation, a provider of specialty chemicals and
logistics solutions. Working with these partners will accelerate
Lehigh's expansion into the tire, industrial rubber, and plastics
industries in Europe, and Latin America, respectively, and will
bolster Lehigh's ability to meet growing global demand for its
micronized rubber powder (MRP).
In addition, the U.S. National Center for Asphalt Technology
(NCAT) released a study highlighting the opportunity for Lehigh's
MRP products to be used widely as a sustainable material for
highway construction.
-- Invenergy Wind LLC (Invenergy), the large scale renewable
generation company, closed a US$500 million investment by Caisse de
dépôt et placement du Québec ("CDPQ") in a portfolio of
approximately 1,500 megawatts of operating wind farms in the United
States and Canada that are owned by Invenergy. Invenergy has now
developed and put into service 35 wind farms in the US, Canada and
Europe totalling over 3,300 megawatts.
-- Energía Escalona, the hydroelectric project developer based
in Mexico City, completed a corporate restructuring that eliminated
all the company's existing debt. The company also made favourable
progress in the development of its flagship project, a 12 megawatt,
run-of-river hydroelectric facility located in Veracruz, Mexico.
Power markets in Mexico continue to be robust with growth in both
power and capacity prices.
Market Environment and Outlook
According to Bloomberg New Energy Finance (BNEF), global clean
energy investment by venture capital ("VC") and private equity
("PE") firms suffered its first annual decline in at least eight
years in 2012. Investment in clean energy shrank to US$5.8 billion
during the second half of calendar 2012, a 23% decline from the
first half and the lowest level since 2006. It appears that many of
the most risk-averse investors quit the sector last year, as
continued pricing pressure in the public markets and the anaemic
market for mergers and acquisitions reduced the near term prospect
for profitable exits.
Factors contributing to the overall 11% drop over calendar year
2011 were the same as those discussed in Leaf's 2012 annual report,
including:
- Global macroeconomic problems stemming from the subprime
mortgage crisis in the United States and the sovereign debt crisis
in Europe and corresponding political developments
- The recent, rapid proliferation of abundant and low-cost shale
gas, leading to low U.S. power prices
- Global over-capacity and fierce competition in the solar PV
segment, particularly from Asian manufacturers, some of whom have
been accused by U.S. and European players of pricing below
cost.
- U.S. and European policy uncertainty and depressed pricing for quoted clean energy stocks.
These adverse factors continued to dampen policy as well as
investor support for clean energy in Europe and the U.S. during the
reporting period. Their respective financial crises placed these
governments under considerable fiscal pressure, resulting in the
abandonment or curtailing of renewable energy subsidies. In the
United States, the clean energy industry has also had to cope with
the impact of newly abundant shale gas, which led to sharply
lowered power prices. This has made it more difficult for many
renewable energy sources and technologies to compete without
government subsidies. At the same time dramatic price decreases in
solar PV panels resulting from global competition and over-capacity
continues to drive accelerated use of solar PV, undercutting the
argument that government policy support is needed to increase solar
adoption.
Looking ahead, however, the market appears to be turning a
corner. As described above, global clean energy investment
recovered in Q4 2012. Also, while prices of quoted renewable energy
companies underperformed the broader public market in calendar year
2012, this performance took the shape of a "V" curve, with the NEX
index first falling more than 19% to its low point on 25 July 2012,
only to rally late and finish down by 5.5% on the year. The NEX has
continued to rally since 31 December 2012, and in another hopeful
sign SolarCity launched a successful Q4 IPO.
In the United States, the political and economic climate also
appears to be moving in favour of renewed clean energy investment.
President Obama has clearly signalled that addressing climate
change and promoting clean energy is high on his second-term
agenda.
Specifically, he has called for the U.S. Congress to set a
national clean energy standard, and to promote "market-based
solutions" to climate change, resulting in a doubling of renewable
generation from wind, solar and geothermal by 2020. Whether the
political will exists to pass energy legislation, particularly a
clean energy standard, is questionable. However, the president does
not require Congressional approval to use the U.S. Environmental
Protection Agency's (EPA) powers under the Clean Air Act to
regulate carbon dioxide emissions by imposing carbon limits on
existing coal-power plants. Such regulation is expected by summer
2013 and could significantly boost the U.S. renewables market,
depending on how strict the new rules are.
In an encouraging sign that the US Government is willing to
promote clean energy, Congress approved a one-year extension of the
production tax credit (PTC) for wind generation in December 2012,
and expanded it to include projects that begin construction in
2013. Late last year the State of California also launched a
cap-and-trade market for carbon dioxide, holding its first auction
of carbon allowances. That it did so despite a vocal opposition
concerned about the impact on the state's weak economy is a further
encouraging signal for the clean energy market.
Company Outlook
Leaf's board and management believe that the diversity and
balance of the Leaf portfolio, together with Leaf's focus on adding
value to existing investee companies, sets the company up well to
benefit as the clean energy markets improve. Our goal remains
positioning our investee companies for eventual realisation in
order to provide a competitive long-term return to Leaf's
shareholders.
15 March 2013
INDEPENDENT REVIEW REPORT TO LEAF CLEAN ENERGY COMPANY
Introduction
We have reviewed the accompanying interim condensed consolidated
financial statements of Leaf Clean Energy Company (the "Company"),
which comprise the condensed consolidated statement of financial
position as of 31 December 2012, the condensed consolidated
statements of comprehensive income, changes in equity and cash
flows for the six month period then ended, and notes, comprising a
summary of significant accounting policies and other explanatory
information. We have read the other information contained in the
interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim condensed consolidated financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The Directors are responsible for the preparation and fair
presentation of the interim condensed consolidated financial
statements in accordance with IAS 34, 'Interim Financial Reporting'
and the AIM Rules.
Our responsibility
Our responsibility is to express a conclusion on the interim
condensed consolidated financial statements based on our
review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. A
review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion in respect of condensed consolidated financial
statements
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying interim condensed
consolidated financial statements as of and for the six month
period ended 31 December 2012 are not prepared, in all material
respects, in accordance with IAS 34, 'Interim Financial Reporting'
and the AIM Rules.
KPMG
Century Yard, Cricket Square
Grand Cayman, KY1-1106
Cayman Islands
15 March 2013
Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2012
Note (Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 2012 31 December 2011
(As restated)
US$'000 US$'000
Interest income on cash balances 32 21
Interest income on investments
at fair value through profit
or loss 588 1,466
Unrealised gains/(losses) on
revaluation of investments at
fair value through profit or
loss 10.1 4,022 (8,615)
Net foreign exchange (loss)/gain (1) (8)
----------------------------------------- ------- ------------------ ------------------
Gross portfolio return 4,641 (7,136)
Administration expenses 6 (2,657) (3,030)
----------------------------------------- ------- ------------------ ------------------
Gain/(Loss) before taxation 1,984 (10,166)
Taxation (119) (106)
----------------------------------------- ------- ------------------ ------------------
Total gain/(Loss) for the period
and total comprehensive gain/(loss) 1,865 (10,272)
========================================= ======= ================== ==================
Gain/(Loss) for the period attributable
to equity holders 1,865 (10,272)
Basic and diluted earnings/(loss)
per share (cents) 9 1.45 (7.71)
========================================= ======= ================== ==================
The accompanying notes form an integral part of these interim
financial statements.
Condensed consolidated statement of financial position
as at 31 December 2012
(Unaudited) (Audited)
Note 31 December 2012 30 June 2012
(As restated)
US$'000 US$'000
Assets
Investments at fair value
through profit or loss 10.1 156,833 138,734
Property, plant and equipment 8 17
Total non-current assets 156,841 138,751
------------------------------- ----- ----------------- ---------------
Trade and other receivables 454 479
Restricted cash 7 3,171 96
Cash and cash equivalents 24,347 43,828
------------------------------- ----- ----------------- ---------------
Total current assets 27,972 44,403
------------------------------- ----- ----------------- ---------------
Total assets 184,813 183,154
=============================== ===== ================= ===============
Equity
Share capital 11 28 28
Share premium 11 306,809 306,809
Retained losses (122,773) (124,638)
------------------------------- ----- ----------------- ---------------
Total equity 184,064 182,199
------------------------------- ----- ----------------- ---------------
Liabilities
Trade and other payables 749 955
Total current liabilities 749 955
------------------------------- ----- ----------------- ---------------
Total liabilities 749 955
------------------------------- ----- ----------------- ---------------
Total equity and liabilities 184,813 183,154
=============================== ===== ================= ===============
Net asset value per share
(cents) 142.97 141.52
=============================== ===== ================= ===============
The accompanying notes form an integral part of these interim
financial statements.
The financial statements were approved by the Board of Directors
on 15 March 2013 and signed on their behalf by:
Peter Tom J. Curtis Moffatt
Non-Executive Chairman Non-Executive Director
Condensed consolidated statements of changes in equity
for the six months ended 31 December 2012
Share Share Foreign Retained Total Non-controlling Total
Capital Premium currency losses interests equity
translation
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------------------------------------- --------- ---------- ------------ ------------ ---------- ---------------- ----------
Balance at 30 June 2012 (audited)
(As previously stated) 28 306,809 (97) (132,756) 173,984 (804) 173,180
Adjustment to measure controlled investee companies at fair value
Balance at 1 July 2012 (as restated) - - 97 8,118 8,215 804 9,019
28 306,809 - (124,638) 182,199 - 182,199
Total comprehensive gain for the period
- - - 1,865 1,865 - 1,865
Balance at 31 December 2012 (unaudited) 28 306,809 - (122,773) 184,064 - 184,064
==================================================================== ========= ========== ============ ============ ========== ================ ==========
The accompanying notes form an integral part of these interim
financial statements.
Condensed consolidated statement of cash flows
For the six months ended 31 December 2012
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 31 December
2012 2011
(As restated)
US$'000 US$'000
Cash flows from operating activities
Interest received on cash balances 32 21
Interest received on loans 585 1,466
Operating expenses paid (2,972) 520
Income tax paid (137) (106)
------------------------------------------------ --------------- ---------------
Net cash (used in)/generated by in operating
activities (2,492) 1,901
------------------------------------------------ --------------- ---------------
Cash flows from investing activities
Purchase of financial assets at fair value
through profit or loss (16,769) (5,418)
Repayment of capital by investee companies 2,856 15,789
Net purchases of property, plant and equipment - (10)
Net cash (used in)/generated by investing
activities (13,913) 10,361
------------------------------------------------ --------------- ---------------
Cash flows from financing activities
Repurchase of shares during the year - (1,659)
Net cash contributed by financing activities - (1,659)
------------------------------------------------ --------------- ---------------
Net (decrease)/increase in cash and cash
equivalents (16,405) 10,603
Cash and cash equivalents at start of the
period 43,924 41,469
Effect of exchange rate fluctuations on
cash and cash equivalents (1) (8)
------------------------------------------------ --------------- ---------------
Cash and cash equivalents at end of the
period 27,518 52,064
------------------------------------------------ --------------- ---------------
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 31 December
2012 2011
(As restated)
Reconciliation of gain/(loss) for the period US$'000 US$'000
to net cash used in operating activities
Gain/(loss) for the period 1,865 (10,272)
Adjustments for:
Unrealised (gains)/losses on revaluation
of investments at fair value through profit
or loss (4,022) 8,615
Increase in unpaid capital (164) -
Depreciation expense 9 25
Foreign exchange loss/(gain) 1 8
Taxation 137 106
Operating loss before changes in working
capital (2,174) (1,518)
Movement in trade and other receivables 25 4,011
Movement in trade and other payables (206) (488)
Income taxes paid (137) (104)
Net cash used in operating activities (2,492) (1,901)
Condensed consolidated statement of cash flows
for the six months ended 31 December 2012
The accompanying notes form an integral part of these interim
financial statement
Notes to the consolidated financial statements
for the six months ended 31 December 2012
1 The Company
Leaf Clean Energy Company ("Leaf" or 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.
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 management teamperform all
significant functions. Accordingly, the Company itself has no
employees.
The consolidated financial statements of the Company as at and
for the year ended 30 June 2012 are available upon request from the
Company's registered office at PO Box 309, Ugland House, George
Town, Grand Cayman KY1-1104, Cayman Islands or at
www.leafcleanenergy.com.
2 Statement of compliance
These interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial
Reporting. They do not include all of the information required for
full annual financial statements, and should be read in conjunction
with the consolidated financial statements of the Company as at and
for the year ended 30 June 2012.
Leaf is an investment company. In previous periods, because it
holds majority stakes in certain portfolio entities and therefore
has the power to control, it was required to prepare group
financial statements that consolidated the results of such
investments. In order to present information that was comparable
with other investment companies, Leaf also published financial
statements of the Company, which included investments in
subsidiaries regarded as part of the Company's investing business
at fair value.
The Company has early adopted the amendments to IFRS 10:
Investment Entities (issued October 2012) along with the
consolidation suite of standards, namely: IFRS 11 Joint
Arrangements, IFRS 12 Disclosure of Interests in Other Entities,
IAS 27 (revised) and IAS 28 (revised). The amendments to IFRS 10
require investment entities to measure controlled portfolio
entities at fair value under IAS 39 instead of consolidating such
subsidiaries. The comparative figures have been restated to comply
with the new accounting policy. As a result of this change, the
consolidated net asset value previously reported as at 30 June 2012
has been restated from US$173,984,000 to US$182,199,000.
The Company reports in accordance with IFRS as adopted by the
EU, as required by the AIM rules. The amendments to IFRS 10 have
not yet been endorsed by the EU. However, the Company has received
a derogation from AIM to enable it to early adopt the
amendments.
These interim condensed consolidated financial statements were
approved by the Board of Directors on 15 March 2013.
3 Significant accounting policies
Save as for explained above, the accounting policies applied by
the Company in these interim condensed consolidated financial
statements are the same as those applied by the Company in its
consolidated financial statements as at and for the year ended 30
June 2012.
4 Use of estimates and judgements
The preparation of interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying the
Company's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the consolidated
financial statements as at and for the year ended 30 June 2012.
The key estimate included in the financial statements is the
valuation of unquoted investments (see note 10);
5 Financial risk management
The Group's financial risk management objectives and policies
are consistent with those disclosed in the consolidated financial
statements as at and for the year ended 30 June 2012.
6 Other administration expenses
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 2012 31 December 2011
US$'000 US$'000
Directors' remuneration (note 8) 598 647
Travel and subsistence expenses 224 264
Administration fees 113 104
Legal and professional fees 452 805
Directors' and Officers' insurance expense 49 49
Audit fees 44 25
Registrar fees and costs 18 22
Printing and stationery expenses 3 9
Other expenses 1,156 1,105
Total 2,657 3,030
============================================ ================== ==================
7 Restricted cash
Restricted cash balance consists primarily of restricted cash
collateral accounts securing two letters of credit with HSBC USA
totalling US$3,171,457 in aggregate, which are in relation to one
of the Company's investments. Both letters of credit are expected
to be released on or before November 30, 2014, at which time Leaf
expects the restrictions on the corresponding cash collateral
accounts to be released and the cash in the account to be made
available to Leaf again on an unrestricted basis.
8 Directors' remuneration
Details of the Directors' basic annual remuneration are as
follows:
Basic annual remuneration
US$'000
Peter Tom (Chairman) 200
Bran Keogh 400
J. Curtis Moffatt 150
Peter O'Keefe 150
900
====================== ============================
Directors' fees and expenses payable during the six month ended
31 December 2012 were:
31 December 2012 Directors' Annual bonus Reimbursements Total
fees
US$'000 US$'000 US$'000 US$'000
Peter Tom (Chairman) 100 - - 100
Bran Keogh 200 175 20 395
J. Curtis Moffatt 61 - - 61
Peter O'Keefe 62 - - 62
423 175 20 618
====================== =========== ============= =============== ========
31 December 2011 Directors' Annual bonus Reimbursements Total
fees
US$'000 US$'000 US$'000 US$'000
Peter Tom (Chairman) 100 - 25 125
Bran Keogh 200 175 35 410
J. Curtis Moffatt 69 - 2 71
Peter O'Keefe 103 - 7 110
472 175 69 716
====================== =========== ============= =============== ========
The Directors are also entitled to receive reimbursement of any
expenses in relation to their appointment. Total fees and expenses
payable to the Directors for the six months ended 31 December
2012amounted to US$618,248 (period ended 31 December 2011:
US$716,338) of which US$377,656 was outstanding at 31 December 2012
(December 2011: US$nil). The Directors engaged Mercer Limited to
review Leaf's remuneration for its Directors as compared to
companies similar to Leaf in the United States and the United
Kingdom.
9 Income/(loss) per share
Basic and Diluted
Basic and diluted income/(loss) per share is calculated by
dividing the loss attributable to equity holders of the Group by
the weighted average number of ordinary shares in issue during the
period:
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 2012 31 December 2011
(As restated)
Profit/(loss) attributable to equity holders of the parent (US$'000) 1,865 (10,272)
Weighted average number of ordinary shares in issue (thousands) 128,745 133,280
---------------------------------------------------------------------- ------------------ ------------------
Basic and fully diluted earnings/(loss) per share (cents) 1.45 (7.71)
====================================================================== ================== ==================
There is no difference between the basic and diluted
earnings/(loss) per share for the period.
10 Investments
Investments comprise ordinary stock, loans and preferred stock
carrying a cumulative preferred dividend, preferential return of
capital and capped rights to share in profits. The Directors, with
advice from the in-house management team, Leaf Clean Energy USA,
LLC, have reviewed the carrying value of each investment and
calculated the aggregate value of the Company's portfolio.
Investments are measured at the Directors' estimate of fair value
at the reporting date, in accordance with IAS 39 'Financial
Instruments: Recognition and measurement'.
10.1 Investments at fair value through profit or loss
(Unaudited) (Audited)
31 December 2012 30 June 2012
US$'000 (As restated)
US$'000
---------------------------------------- ----------------- ---------------
Balance brought forward 138,734 175,146
Additional investments in subsidiaries 16,933 8,788
Repayment of capital investment (2,856) (16,092)
Movement in fair value of investments 4,022 (29,108)
Balance carried forward 156,833 138,734
======================================== ================= ===============
Investments are stated at fair value through profit or loss on
initial recognition. Loans are reviewed for impairment in
conjunction with the related equity investment in the investee
company. All investee companies are unquoted.
10.2 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 in-house management team 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 in-house
management team in exercising judgements and making the necessary
estimates.
10.3 The subsidiaries
Since incorporation, for efficient portfolio management
purposes, the Company has established the following subsidiary
companies:
Country of Percentage of
incorporation shares held
------------------------------------- ---------------- --------------
Leaf Bioenergy Company Cayman Islands 100%
Leaf Biomass Company Cayman Islands 100%
Leaf Biomass Investments, Inc.* USA (Delaware) 100%
Leaf Clean Energy USA, LLC USA (Delaware) 100%
Leaf Escalona Company* Cayman Islands 100%
Leaf Hydro Company Cayman Islands 100%
Leaf Invenergy Company* Cayman Islands 100%
Leaf Invenergy US Investments, Inc* USA (Delaware) 100%
Leaf Lehigh Company Cayman Islands 100%
Leaf LFG Company Cayman Islands 100%
Leaf LFG US Investments, Inc.* USA (Delaware) 100%
Leaf MaxWest Company* USA (Delaware) 100%
Leaf Miasole Company Cayman Island 100%
Leaf Skyfuels Company* Cayman Islands 100%
Leaf Solar Company Cayman Islands 100%
Leaf Wind Company Cayman Islands 100%
Leaf VREC* Cayman Islands 100%
Leaf Waste Energy Cayman Islands 100%
*Indirect subsidiaries
The Company also has control over the following underlying
investee companies but these companies have not been consolidated
on the basis of the early adoption of the amendments to IFRS
10.
Country of Principal activity Effective interest held
incorporation
-------------------------------------- -------------------- -------------------- ------------------------
Energía Escalona Coopertief U.A Netherlands Hydro Energy 87.5%
Escalona B.V Netherlands Hydro Energy 87.5%
Energíia Escalona I S.A. de C.V Mexico Hydro Energy 87.5%
Energía Escalona s.r.l. Mexico Hydro Energy 87.5%
Energentum S.A. de C.V Mexico Hydro Energy 86.6%
Johnstown Regional Energy LLC USA (Pennsylvania) Landfill Gas 100%
Multitrade Rabun Gap LLC USA (Virginia) Biomass 75%(1)
Multitrade Telogia LLC USA (Virginia) Biomass 61.25%(2)
Telogia Power LLC USA (Virginia) Biomass 61.25%(2)
SkyFuel Inc USA (Delaware) Solar Energy 50.8%
(1) Voting rights 81.9%
(2) Voting rights 66.25%
11 Share capital
Ordinary shares of GBP0.0001 Number of shares Share capital Share premium
each
US$'000 US$'000
At 30 June 2012 and 31
December 2012 128,745,726 28 306,809
12 Subsequent Events
There have been no subsequent events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUQPWUPWGQA
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