17th Sep 2010 07:00
17 September 2010 Leaf Clean Energy Company
Results for the year ended 30 June 2010
The Board of Leaf Clean Energy Company ("Leaf" or "the Company") are pleased to announce the Company's audited results for the year ended 30 June 2010
Highlights of the year are:
·; The Company's NAV per share is 167.65 cents or 112.06 pence at US$1.4961 to the GB£1 (2009: 170.67 cents)
·; The net asset value of the Company as at 30 June 2010 is US$240 million of which US$90 million was held in cash, of this figure, US$22 million is committed to portfolio companies. The Board is of the view that the balance of US$68 million is sufficient to meet the Company's working capital requirements and any short term investment requirements in its portfolio companies for the foreseeable future
·; Leaf Clean made an additional US$39 million in direct equity and debt investments into existing portfolio businesses.
·; The Company earned US$4.6 million of interest income which was recorded in the intermediate holding companies and included in the assessment of valuations for the relevant subsidiaries. In addition, the Company and its intermediate holding companies received US$19.8 million of principal in respect of its outstanding construction and convertible loans to its portfolio companies (US$19 million direct to the Company).
·; In April 2010 the Company completed a reverse auction tender offer acquiring 31.05 million shares at an average price of 57.06p.
·; In May 2010, Leaf Clean Energy Company terminated its Asset Advisory Agreement with EEA Fund Management Limited, and established its own subsidiary, Leaf Clean Energy USA, LLC ("Leaf USA"), in Washington, DC, from which the Company's internal management team will operate going forward.
For further information, please contact:
Bran Keogh +1 (0) 202 289 7881 Director, Leaf Clean Energy Company
Jim Potochny +1 (0) 202 289 7881 CFO, Leaf Clean Energy Company
Ivonne Cantu / Elizabeth Bowman +44 (0) 207 397 8900
Cenkos Securities plc
CHAIRMAN'S STATEMENT
I am pleased to report to shareholders on the activities and performance of Leaf Clean Energy Company ("Leaf Clean" or the "Company") during our last fiscal year. This report coincides with a period of considerable activity for Leaf Clean which was marked by several significant events for our Company including: the unsuccessful proposed merger with Trading Emissions plc ("TEP") which was discussed in our most recent Interim Report, the termination of our Asset Advisory Agreement with EEA Fund Management Limited ("EEA") and certain organisational changes that culminated in the establishment of an office and management team based in Washington D.C. to solely focus on managing the Company's investment portfolio. As a consequence, we enter this period with renewed strength and confidence that your Company will be able to better manage its portfolio and maximise value for shareholders.
In May 2010, the Company agreed with EEA Fund Management Limited ("EEA") to terminate the current Asset Advisory Agreement and migrate to an internal management structure which the Board believes will result in operational and financial efficiencies for Leaf Clean. This reshaping was driven by the need of your Company to augment the depth of Leaf Clean's operational expertise in the management of its portfolio as well as to counteract certain shortcomings incurred under the previous management arrangements. It is expected that the capabilities that have been built will positively impact our business. As of the date of this report, the unwinding of the Asset Advisory Agreement has been substantially completed. Bran Keogh, who was appointed by the Board as executive director in February of this year, is overseeing this transition and the recruitment by Leaf Clean of a new management team that reports to the Board. The new management team has a proven track record and the requisite operational expertise to enable Leaf Clean to continue its progress towards the Company's long-term objective of driving Leaf Clean's assets to maturity and successful realisations.
During the year, our portfolio investments continued to display satisfactory progress across a number of different fronts. In particular, since the recent management transition, I am delighted to be able to share with you the progress that your Company has achieved in its core areas of activity:
§ Rabun Gap, one of our biomass holdings, completed its project financing in June 2010, returning US$17.5 million in capital to the Company. This was done through a favourable low-interest loan from the United States Department of Agriculture's Rural Utility Service.
§ Vital Renewable Energy Company ("VREC"), a biofuels production platform company focused on Brazil, is currently in the process of finalizing on an acquisition prospect. Upon the closing of the acquisition, Leaf Clean's capital commitment to VREC will be restructured and the Company will be released from US$29 million of its total US$50m commitment.
§ SkyFuel, our concentrated solar power investment, recruited a seasoned industry executive to run the company and has made significant progress in its efforts of commercializing its products.
§ New management contracts for our two biomass holdings were negotiated and an established operations, maintenance and asset management firm has been retained to run both businesses. The Company is confident this change will result in the best possible return on our investment.
Notwithstanding the aforementioned progress, our portfolio has not been immune to the uncertainty surrounding the broader macro-environment and subdued equity market conditions. Not surprisingly, this environment has had an impact on the value of your Company's portfolio. During the year to 30 June 2010, Leaf Clean's net asset value ("NAV") per share fell from 170.67 cents to 167.65 cents. This decline in our NAV per share is mainly the result of a reduction in valuation in our portfolio as the economic environment deteriorated combined with a reduction in cash from one off expenses incurred relating to the termination of the asset advisory agreement with EEA and the unsuccessful merger. However, these two factors were mostly offset by the buyback activity undertaken by the Company and the resulting uplift in our NAV per share. During the year the Company bought back 40.73 million shares at an average price of 58 pence per share.
Despite the challenging environment, we remain confident that our portfolio will be positioned to perform well as market fundamentals improve and will benefit from the new efficient management structure. The net asset value of your Company as at 30 June 2010 is US$240 million of which US$90 million was held in cash, of this figure, US$22 million is committed to portfolio companies. The Board is of the view that the balance of US$68million is sufficient to meet the Company's working capital requirements and any short term investment requirements in its portfolio companies for the foreseeable future.
Leaf Clean management is focused on the long-term development of its portfolio. Against that background, this period saw Leaf Clean investing an additional aggregate US$39 million in its existing portfolio companies. Your Company will continue to be very selective in undertaking new investment programs but remain active and diligent in its engagement with current portfolio companies.
As we look to the year ahead and our prospects, it is useful to consider the major policy developments of the past twelve months. As expected, there was no firm international agreement reached at Copenhagen. However, several key participants, including the U.S. and China, have made significant political and financial commitments towards implementing emissions reductions programs. The U.S. federal government continues to champion numerous initiatives by providing national tax incentives and grants for renewable energy development that have yielded positive developments across the sector. Leaf Clean has been the recipient of U.S. stimulus dollars through the American Recovery and Reinvestment Act (ARRA) Investment Tax Credit cash grant program. The additional funding our portfolio companies have received from these programs has been instrumental to our biomass projects and the creation of sustainable employment in economically challenged areas, a major part of the legislative intent. Hope runs high that the U.S. economy, in particular the clean energy sector, will continue to realise the benefits from favourable fiscal and monetary policy in the coming year. Your Board believes that Leaf Clean stands well positioned to take advantage of such developments.
In addition to changes on the regulatory front, we are also comforted by the emerging activity in the capital markets over the second half of this period. Although activity across capital markets was muted for much of the first half of this period, IPOs and merger and acquisition (M&A) activity in the renewable energy sector has picked up. Six U.S. cleantech IPOs have successfully commenced trading between January and June of 2010 and the U.S. cleantech IPO backlog appears to show signs of momentum and positive sentiment. This is certainly an encouraging trend for your Company.
Whilst there is no question that the last twelve months have been eventful for Leaf Clean, and the operating environment remains challenging, there are signs that confidence may slowly be returning to the economies and sectors on which Leaf Clean focuses. In addition, I am encouraged by the rebuilding and refocusing efforts undertaken by your Company and the steps that have been taken by your Board to develop the Company for the longer term and build further value for shareholders. Your Board and management remain fully committed to their ultimate objective of driving shareholder value.
The Annual Report and Accounts set out below incorporate both financial statements for the Company and consolidated financial statements for the wider Leaf Clean Group. References to NAV in my report and the Management Report reflect the Company's NAV. The audit opinions for both the Company and the Leaf Clean Group were unqualified.
Peter Tom
Chairman
17 September 2010
(1) Based on US$/£ exchange rate of 1.4961 on 30 June 2010
MANAGEMENT REPORT
The period under review has been a challenging one. A less than robust macro environment, limited availability of credit and liquidity and declining equity markets have imposed a difficult operating environment for Leaf Clean and its portfolio companies. During this period, Leaf has embarked upon a number of organisational initiatives in an effort to improve and build a platform to address Leaf Clean's needs particularly as it relates to operational capabilities and resources available to its portfolio. Management has made significant and positive progress towards this goal and remains confident that its organisational development objectives will be achieved.
Although numerous opportunities were carefully reviewed, Leaf Clean has remained focused on driving the performance of its existing investment portfolio to ensure that these businesses are well positioned to execute on their business plans. Performance across the portfolio has generally been positive. The Company's net asset value at 30 June 2010 was US$240 million, of which US$90 million was held in cash, and the NAV per share was 167.65cents or 112.06 pence. For the period under review, it's worth highlighting several noteworthy events;
·; Leaf Clean made an additional US$39 million in direct equity and debt investments into existing portfolio businesses.
·; The Company earned US$4.6 million of interest income which was recorded in the intermediate holding companies and included in the assessment of valuations for the relevant subsidiaries. In addition, the Company and its intermediate holding companies received US$19.8 million of principal in respect of its outstanding construction and convertible loans to its portfolio companies (US$19 million direct to the Company).
·; On 17 December 2009 the Company agreed to a merger with Trading Emissions plc, which was not finalized despite in excess of 90% of Leaf shareholders voting in favour.
·; In April 2010 the Company completed a reverse auction tender offer acquiring 31.05 million shares at an average price of 57.06p, taking advantage of the weakness in the Company's share price to deliver value to shareholders.
·; In May 2010, Leaf Clean Energy Company terminated its Asset Advisory Agreement with EEA, and established its own subsidiary, Leaf Clean Energy USA, LLC ("Leaf USA"), in Washington, DC, from which the Company's internal management team will operate going forward.
Market Environment
Leaf's fiscal year ending 30 June 2010 was marked by a partial rebound of the renewable energy industry from the severe decline experienced during the first calendar quarter of 2009. Global recession resulting from the banking crisis of late 2008 has been characterized by the drying up of credit markets, a swing towards much more conservative, risk-averse investor sentiment and the effective closing of public equity markets. In the US, renewable energy related stimulus from the American Recovery and Reinvestment Act (ARRA) began to flow in late 2009, providing clean energy companies with access to tax credits, grants in lieu of tax credits, government loans, and government loan guarantees, which in turn made it easier for some of these companies to access commercial debt and equity financing, and contributed greatly to the partial rebound experienced in late 2009 and early 2010.
In the public markets, prices of renewable energy companies, as measured by the NEX index, have recovered significantly from their Q1 2009 lows, but remain at only about half of their late 2007 highs. The decline in public market valuations for renewable energy companies has in turn put pressure on private company valuations, including the prices for many businesses comparable or related to Leaf Clean's portfolio companies.
Financial Performance
Leaf Clean's results for the year were negatively affected by write-downs with respect to certain portfolio companies and nonrecurring expenses associated with the termination of the asset advisory agreement with EEA and the unsuccessful merger. Performance was favourably impacted by Leaf Clean's share buyback programme which took advantage of the Company's weak share price over the last 9 months to deliver value to shareholders.
Overall, despite the decline in equity markets, the NAV per share of the Leaf Clean portfolio has remained largely unchanged, mainly due to the Company's buyback programme. The Company's total NAV is US$240 million, of which US$90 million was held in cash and US$159 million in investments. The Company's NAV per share is 167.65 cents or 112.06 pence at US$1.4961 to the GB£1 (2009:170.67 cents).
Against the backdrop of the recent economic and market environments the Company has sought to structure its investments in order to provide an income stream and to offer downside protection for the Company while reserving the opportunity to benefit from the equity upside. As a result, the Company earned US$ 4.6million in interest from investments in portfolio companies over the period. Throughout the past year, the Leaf Clean portfolio has benefited greatly from US government stimulus and other programs for renewable energy. For example:
·; Miasolé was allocated a US$102 million tax credit under the very competitive US federal Advanced Energy Manufacturing Tax Credit program, which awarded US$2.3 billion in tax credits to only 183 US clean energy companies. Miasole can use this credit to offset future federal income taxes.
·; Multitrade Rabun Gap and Multitrade Telogia received ITC Grants of US$8.5 million and US$3 million, respectively, under ARRA's Federal Business Energy Investment Tax Credit program.
·; Multitrade Rabun Gap received a US$20.7 million favourable fixed-rate loan under the USDA's Rural Utilities Services (RUS) loan program.
Other key performance milestones achieved by Leaf Clean Energy and its portfolio companies during the past year included:
·; Despite the difficulties of the current credit markets, Invenergy continued to advance the conversion of its project pipeline, closing three new project financings in 1H calendar 2010. Invenergy has become the largest independent wind developer in the United States, having placed 23 wind generating facilities with an aggregate generation capacity of over 2,000 MW into operation in North America and Europe. Another 450 MW of Invenergy projects are currently under construction and nearly 100 projects are in active development in the United States, Canada and Europe.
·; Miasolé announced that the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) had independently confirmed the 14.3% efficiency of its large area production modules. This world record for highest efficiency of commercial scale thin-film solar modules will allow MiaSolé to offer solar modules with the efficiency of polysilicon and the lower manufacturing costs of thin-film modules. Also, Miasolé's photovoltaic modules achieved Underwriters Laboratories, Inc (UL) and International Electrotechnical Commission (IEC) milestones, becoming the first CIGS thin-film producer to have its modules certified to the three most critical certification standards.
·; Upon the closing of an acquisition transaction currently in progress, Leaf Clean's investment in VREC will be restructured and Leaf Clean will be released from its commitment to provide US$29 million of additional capital to VREC.
·; SkyFuel hired a seasoned industry executive as its new CEO, who was formerly CEO of Chemrec AB and division president at Siemens Building Technologies. During the past year, SkyFuel also completed its commercial demonstration facility at the SEGS-II solar facility in Daggett, California.
·; Multitrade Rabun Gap achieved its Commercial Operations Date on January 28, 2010.
·; MaxWest's new management team completed the relocation and consolidation of its headquarters from Houston, Texas to Sanford, Florida.
During the period under review, Leaf Clean has not made any investments in new companies or projects. However, Leaf Clean management continues carefully to assess and consider new investment opportunities, while focusing in the short term on the management and appropriate financing of its existing portfolio, and on its transition from a third-party asset-advisory structure to reliance on an internal management team.
Leaf Clean's management believes that the diversity and balance of the Leaf Clean portfolio position the Company to benefit from eventual improvements in the current economic environment and the expected resurgence of the market forces driving growth in the renewable energy sector.
Portfolio Overview
A. Active Investments - Growth Companies
MaxWest Environmental Systems ("MaxWest") Waste-to-energy gasification
|
Investment: US$20mm
|
Ownership: Majority |
|
Company Summary
MaxWest designs, builds, owns and operates waste to energy gasification facilities specifically applied to wastewater solids.
MaxWest plants can be "bolt-on" to existing water treatment facilities providing municipalities and industrial sites with a cost effective, environmentally friendly alternative to traditional methods of waste disposal.
Its first project has been successfully constructed in Sanford, Florida for the local municipal water treatment plant and operates under a long term contract.
www.maxwestenergy.com |
Recent Highlights
§ New management team appointed led by Ross Patten as CEO to embark in commercial expansion.
§ Completed relocation and consolidation of headquarters and operations to Sanford, Florida
|
SkyFuel Inc. ("SkyFuel") Concentrated Solar Power
|
Investment: US$18.5mm
|
Ownership: Significant stake |
|
Company Summary
SkyFuel was founded in 2007 and is an emerging technology leader in the solar thermal power equipment sector.
SkyFuel is one of the few remaining stand-alone concentrated solar power ("CSP") technology providers.
SkyFuel possesses proprietary and patented technologies which provide a meaningful cost advantage relative to its competitors
§ SkyTrough® - an advanced, low-cost, accurate parabolic trough based on ReflecTech®, and
§ ReflecTech® Mirror Film - a shatterproof glass alternative
www.skyfuel.com |
Recent Highlights
§ Independent third-party validation of SkyFuel technology and performance received (August 2010)
§ Recruited a seasoned industry executive as CEO who was formerly CEO of Chemrec AB and division president at Siemens Building Technologies
§ Strong CSP market developments
§ Awarded US Department of Energy ("DOE") grant to develop advanced high-concentration parabolic trough collector (May 2010)
§ Commissioning completed on SkyTrough commercial installation at Sunray Energy plant (February 2010)
§ ReflecTech technology selected by the US DOE for a US$750,000 manufacturing tax credit (January 2010)
§ Construction completed on SkyTrough commercial installation at Sunray Energy plant (December 2009)
www.skyfuel.com/#/NEWS/ |
B. Active Investments - Projects
Johnstown Regional Energy, LLC ("JRE") Landfill Gas
|
Investment: US$28.4mm
|
Ownership: Wholly owned |
|
Company Summary
JRE owns and operates three high-Btu landfill gas-to-methane projects in Pennsylvania.
JRE extracts raw landfill gas that is subsequently cleaned in advanced technology processing plants and sold to utility gas providers via connecting pipelines as an alternative to fossil based natural gas.
The high quality "green" gas ultimately displaces the use of fossil fuel-based natural gas, making it eligible for renewable energy credits (RECs).
www.jreenergy.com |
Recent Highlights
§ Appointed an established operations, maintenance and asset management firm to manage the project
§ Adversely affected by significant drop in level of gas prices
|
Multitrade Rabun Gap ("Rabun Gap") Wood-fuelled biomass
|
Investment: US$13.0mm
|
Ownership: Majority |
|
Company Summary
Rabun Gap is a 20MW capacity wood-fuelled bio-mass facility in Georgia.
Rabun Gap utilises renewable fuel from the local forest industry and sells power to a Georgia co-operative under a long-term power purchase agreement. |
Recent Highlights
§ Achieved commercial operations in January 2010
§ Appointed an established operations, maintenance and asset management firm to manage the project
§ Received an ITC grant of US$8.5mm under ARRA's Federal Business Energy Investment Tax Credit Program in May 2010
§ Received a US$20.7mm favourable fixed-rate loan under the USDA's Rural Utilities Services (RUS) loan program in June/ July 2010
|
Multitrade Telogia ("Telogia") Wood-fuelled biomass
|
Investment: US$10.7mm
|
Ownership: Majority |
|
Company Summary
Telogia is a 14 MW capacity wood-fuelled bio-mass facility in Telogia, Florida.
Telogia utilises renewable fuel from the local forest industry and sells power to a local co-operative under a long-term power purchase agreement. |
Recent Highlights
§ Achieved commercial operations
§ Qualified for and received Federal ITC grant in the amount of approximately US$3.0 million, which was used to pay part of the Leaf construction loan
§ Appointed an established operations, maintenance and asset management firm to manage the project
|
Vital Renewable Energy Company ("VREC") Biofuels - Ethanol
|
Investment: US$20.9mm
|
Ownership: Significant stake |
|
Company Summary
VREC is a renewable energy company focused on the development of sugar cane based ethanol facilities and electricity generation in Brazil, as well as related infrastructure projects.
www.vrec.com.br |
Recent Highlights
§ VREC is currently in the process of finalizing on an acquisition prospect
§ Upon the closing of the acquisition prospect, Leaf Clean's investment commitment will be restructured down from US$50m to US$21m.
|
Energia Escalona ("Escalona") Hydro
|
Investment: US$20.9mm
|
Ownership: Majority |
|
Company Summary
Escalona is a run of the river 9.3MW hydroelectric project in Veracruz, Mexico.
|
Recent Highlights
§ The project suffered substantial delays as a result of difficulties with the EPC contractor and other vendors. These issues persist.
§ The project is on hold until receipt of an extension to the water concession.
|
C. Passive Investments
Invenergy Wind LLC ("Invenergy") Wind Power
|
Investment: US$40.0mm
|
Ownership: Minority |
|
Company Summary
One of the largest independently-owned wind energy operators and developers in North America, having placed nearly 2,000 MW into operation since 2004.
In addition to its large portfolio of operating assets, Invenergy also has a strong and diversified pipeline of wind power projects in advanced stages of development across North America and Europe.
www.invenergyllc.com |
Recent Highlights
§ Successfully completed several project financings for projects expected to be operational in 2010
§ Completed construction of Beech Ridge project, continues to augment size of its installed capacity
§ Secured PPA contracts with TVA for 600 MW of wind projects
www.invenergyllc.com/news.html |
Range Fuels Inc Biofuels - Cellulosic Ethanol
|
Investment: US$20.0mm
|
Ownership: Minority |
|
Company Summary
Range Fuels Inc is a cellulosic ethanol technology and production company, which utilises a proprietary two-step thermo-chemical conversion process to produce ethanol, methanol, and other fuels that are renewable, sustainable, and eco-friendly, from cellulose-based biomass, including waste materials and non-food sources.
Range Fuels' business model is to design, build, own and operate its plants.
www.rangefuels.com |
Recent Highlights
§ Soperton is commissioned and company commences production of cellulosic methanol
§ Range Fuels closes on US$80 mm loan from USDA
§ The U.S. ethanol sector remains under significant pressure
www.rangefuels.com/news-highlights.html |
Miasole Solar PV
|
Investment: US$15.0mm
|
Ownership: Minority |
|
Company Summary
Miasole develops and manufactures thin-film copper-indium-gallium-diselenide (CIGS) solar photovoltaic cells
Miasole's panels are designed to be used in residential, commercial and utility developments
Miasole utilises a differentiated vacuum deposition process that is highly efficient and is designed to apply CIGS material over large area substrates in a continuous fashion.
Miasole is leveraging expertise in semiconductor manufacturing and a deep understanding of CIGS material to manufacture new, versatile and low-cost solar products
www.miasole.com |
§ Achieves new record highs in module conversion efficiencies as confirmed by the U.S. National Renewable Energy Laboratory
§ Continues to make significant commercial progress
§ Announced multi-year 600 MW panel supply agreement with Juwi Solar in August 2010
§ Signed multi-year framework agreement with Phoenix Solar AG for delivery of panels
§ Announced receipt of UL certification becoming first CIGS thin-film module to be certified by UL, a critical milestone
www.miasole.com/pgs-news/overview.shtml |
17 September 2010
Parent company statement of comprehensive income
for the year ended 30 June 2010
|
|
Note |
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Interest income on cash balances |
7 |
168 |
4,430 |
|
Unrealised losses on revaluation of investments at fair value through profit or loss |
11.2 |
(16,481) |
(30,400) |
|
Net foreign exchange loss |
|
(3,200) |
(16,818) |
|
Gross portfolio return |
|
(19,513) |
(42,788) |
|
|
|
|
|
|
Investment management fees |
8.2 |
(5,263) |
(6,902) |
|
Termination of investment management agreement |
8.1 |
(7,000) |
- |
|
Other administration expenses |
9 |
(5,560) |
(4,169) |
|
Total expenses |
|
(17,823) |
(11,071) |
|
|
|
|
|
|
Loss before taxation |
|
(37,336) |
(53,859) |
|
Taxation |
3.9 |
- |
- |
|
Loss for the year and comprehensive loss for the year |
|
(37,336) |
(53,859) |
|
|
|
|
|
|
Basic and diluted loss per share (cents) |
17 |
(21.04) |
(28.38) |
The accompanying notes form an integral part of these financial statements
Parent company statement of financial position
as at 30 June 2010
|
|
Note |
30 June 2010 |
30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
Assets |
|
|
|
|
Investments in subsidiaries at fair value through profit or loss |
11.2 |
159,331 |
168,868 |
|
Total non-current assets |
|
159,331 |
168,868 |
|
Trade and other receivables |
12 |
358 |
121 |
|
Cash and cash equivalents |
13 |
89,609 |
167,075 |
|
Total current assets |
|
89,967 |
167,196 |
|
Total assets |
|
249,298 |
336,064 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
14 |
30 |
37 |
|
Share premium |
14 |
323,115 |
359,603 |
|
Retained losses |
|
(83,577) |
(46,241) |
|
Total equity |
|
239,568 |
313,399 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Unpaid capital contributions to subsidiaries |
15 |
- |
14,745 |
|
Total non-current liabilities |
|
- |
14,745 |
|
|
|
|
|
|
Trade and other payables |
16 |
2,774 |
844 |
|
Unpaid capital contributions to subsidiaries |
15 |
6,956 |
7,076 |
|
Total current liabilities |
|
9,730 |
7,920 |
|
Total liabilities |
|
9,730 |
22,665 |
|
Total equity and liabilities |
|
249,298 |
336,064 |
|
|
|
|
|
|
Net asset value per share (cents) |
6 |
167.65 |
170.67 |
The accompanying notes form an integral part of these financial statements
The financial statements were approved by the Board of Directors on 17 September 2010 and signed on their behalf by:
|
Peter Tom |
J. Curtis Moffatt |
|
Non-Executive Chairman |
Non-Executive Director |
Parent company statement of changes in equity
for the year ended 30 June 2010
|
|
Share Capital |
Share Premium |
Retained losses |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
|
Balance at 1 July 2009 |
37 |
359,603 |
(46,241) |
313,399 |
|
Total comprehensive loss |
- |
- |
(37,336) |
(37,336) |
|
|
|
|
|
|
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
Repurchase of shares |
(7) |
(36,488) |
- |
(36,495) |
|
Total contributions by and distributions to owners |
(7) |
(36,488) |
- |
(36,495) |
|
Balance at 30 June 2010 |
30 |
323,115 |
(83,577) |
239,568 |
|
|
|
|
|
|
|
Balance at 1 July 2008 |
40 |
386,067 |
7,618 |
393,725 |
|
Total comprehensive loss |
- |
- |
(53,859) |
(53,859) |
|
|
|
|
|
|
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
Repurchase of shares |
(3) |
(26,464) |
- |
(26,467) |
|
Total contributions by and distributions to owners |
(3) |
(26,464) |
- |
(26,467) |
|
Balance at 30 June 2009 |
37 |
359,603 |
(46,241) |
313,399 |
The accompanying notes form an integral part of these financial statements
Parent company statement of cash flows
For the year ended 30 June 2010
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Cash flows from operating activities |
|
|
|
Interest received on cash balances |
168 |
4,598 |
|
Operating expenses paid |
(16,130) |
(12,902) |
|
Net cash used in operating activities |
(15,962) |
(8,304) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Repayment of capital by subsidiaries at fair value through profit or loss |
19,000 |
- |
|
Additional investments in subsidiaries at fair value through profit or loss |
(32,444) |
(122,088) |
|
Payment of unpaid share capital to subsidiaries |
(8,366) |
- |
|
Net cash used in investing activities |
(21,810) |
(122,088) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Repurchase of shares |
(36,495) |
(26,467) |
|
Net cash used in financing activities |
(36,495) |
(26,467) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
(74,266) |
(156,859) |
|
Cash and cash equivalents at start of the year |
167,075 |
340,752 |
|
Effect of exchange rate fluctuations on cash and cash equivalents |
(3,200) |
(16,818) |
|
Cash and cash equivalents at end of year |
89,609 |
167,075 |
|
|
|
|
|
Reconciliation of loss before taxation to net cash used in operating activities |
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
|
|
|
|
Loss before taxation |
(37,336) |
(53,859) |
|
Adjustments for: |
|
|
|
Unrealised losses on revaluation of investments at fair value through profit or loss |
16,481 |
30,400 |
|
Foreign exchange loss |
3,200 |
16,818 |
|
Movement in trade and other receivables |
(237) |
194 |
|
Movement in trade and other payables |
1,930 |
(1,857) |
|
Net cash used in operating activities |
(15,962) |
(8,304) |
The accompanying notes form an integral part of these financial statements
Notes to the financial statements
for the year ended 30 June 2010
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.
Pursuant to the Company's Admission Document dated 22 June 2007 there was an original placing of up to 200,000,000 Ordinary Shares of GB£0.0001 each for GB£1 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 inhouse management team perform all significant functions.
2 Basis of preparation
2.1 Statement of compliance
The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). In order to present information that is comparable with other investment companies, Leaf publishes financial statements of the Company, which include investments in subsidiaries regarded as part of the Company's investing business at fair value.
The financial statements were authorised for issue by the Board of Directors on 17 September 2010.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except for the investments in subsidiaries that are measured at fair value in the statement of financial position.
2.3 Functional and presentation currency
The 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.
2.4 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 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 5 and 11.
Notes to the financial statements
for the year ended 30 June 2010
2 Basis of preparation (continued)
2.5 Change in accounting policy
Presentation of financial statements
The Company applied revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Company presents in the statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the statement of comprehensive income.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
2.6 Other accounting developments
Disclosures pertaining to fair values and liquidity of financial instruments
The Company has applied Improving Disclosures about Financial Instruments (Amendments to IFRS 7), issued in March 2009, that require enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments.
The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorised as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefore, are required to be disclosed for each class of financial instruments.
Disclosures in respect of fair values of financial instruments are included in notes 5 and 11.
Furthermore the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called.
Disclosures in respect of liquidity risk are included in note 4.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, except as explained in note 2.5 which addresses changes in accounting policies.
Certain comparative amounts have been reclassified to conform with the current year's presentation.
3.1 Investments in subsidiaries
The Company 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.
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.
Notes to the financial statements
for the year ended 30 June 2010
3.2 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.
3.3 Revenue 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 profit or loss. This includes expenses directly related to making an investment which is held at fair value through profit or loss.
3.4 Foreign currency translation
Transactions in foreign currencies are translated to the functional currency of the Company 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.
3.5 Share issue costs
Costs directly related to the issue of shares are deducted from equity.
3.6 Dividends payable
Dividends payable are recognised as a liability in the period in which they are declared and approved.
3.7 Trade and other receivables
Trade and other receivables are stated at amortised cost less provision for bad debts.
3.8 Trade and other payables
Trade and other payables are stated at amortised cost.
3.9 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.
Notes to the financial statements
for the year ended 30 June 2010
3.10 Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:
|
New/Revised International Financial Reporting Standards (IAS/IFRS) |
Effective date (accounting periods Commencing and or after) |
|
|
|
|
IAS 1 Presentation of Financial Statements (Revised April 2009)* |
1 January 2010 |
|
IAS 1 Presentation of Financial Statements (Revised May 2010)** |
1 January 2011 |
|
IAS 7 Statement of Cash Flows (Revised April 2009)* |
1 January 2010 |
|
IAS 17 Leases (Revised April 2009)* |
1 January 2010 |
|
IAS 24 Related Party Disclosures - Revised definition of related parties |
1 January 2011 |
|
IAS 27 Consolidated and Separate Financial Statements (Revised May 2010)** |
1 July 2010 |
|
IAS 32 Financial Instruments: Presentation - Amendments relating to classification of rights issues |
1 February 2010 |
|
IAS 34 Interim Financial Reporting (Revised May 2010)** |
1 January 2011 |
|
IAS 36 Impairment of Assets (Revised April 2009)* |
1 January 2010 |
|
IAS 39 Financial Instruments: Recognition and Measurement (Revised April 2009)* |
1 January 2010 |
|
IFRS 2 Share-based Payment - Amendments relating to group cash-settled share-based payment transactions |
1 January 2010 |
|
IFRS 3 Business Combinations - (Revised May 2010)** |
1 July 2010 |
|
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Revised April 2009)* |
1 January 2010 |
|
IFRS 7 Financial Instruments: Disclosures (Revised May 2010)** |
1 January 2011 |
|
IFRS 8 Operating Segments (Revised April 2009)* |
1 January 2010 |
|
IFRS 9 Financial Instruments - Classification and Measurement |
1 January 2013 |
|
IFRIC Interpretation |
|
|
|
|
|
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments |
1 July 2010 |
*Amendments resulting from April 2009 Annual Improvements to IFRSs
**Amendments resulting from May 2010 Annual Improvements to IFRSs
Notes to the financial statements
for the year ended 30 June 2010
4 Financial risk management
The Parent Company's investments 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 subsidiaries in which the Company 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 Company. 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 Company's investments.
Market price risk is managed by the management team of the Company, in accordance with parameters set by the Board.
All of the Company'sinvestments comprise interests in companies which are not publicly traded or freely marketable. The Company 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 Company'sinvestment portfolio increased/decreased by 5%, the net assets of the Company would increase/decrease by US$8,431,760 (2009: US$7,336,100)
Foreign exchange risk
The Company is exposed to foreign exchange risk with regard to transactions made in Sterling and balances held in Sterling.
An analysis of net assets by currency exposure as at 30 June 2010 is as follows:
|
|
Net Assets US$'000s |
Net Assets US$'000s |
|
|
30 June 2010 |
30 June 2009 |
|
|
|
|
|
US Dollars |
237,999 |
264,118 |
|
Sterling |
1,569 |
49,838 |
|
Total |
239,568 |
313,956 |
An appreciation of the Sterling against the US Dollar of 5% would have increased net assets by US$117,341 (2009: US$2,500,000). A decrease of 5% would have an equal and opposite effect.
Interest rate risk
The Company is exposed to cash flow interest rate risk on cash balances which are all short term fixed deposits. The weighted average interest rates on short term fixed deposits as at 30 June 2010 were:
|
|
30 June 2010 |
30 June 2009 |
|
|
% |
% |
|
Cash balances |
|
|
|
US Dollars |
0.37 |
0.43 |
|
Sterling |
0.14 |
0.38 |
Notes to the financial statements
for the year ended 30 June 2010
4 Financial risk management (continued)
Interest rate risk (continued)
The table below summarises the Company's exposure to interest rate risks. It includes the financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities:
|
30 June 2010 |
Less than 1month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 Years |
Non-interest bearing |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial Assets |
|
|
|
|
|
|
|
|
Investments in subsidiaries at fair value through profit or loss |
- |
- |
- |
- |
- |
159,331 |
159,331 |
|
Trade and other receivables |
- |
- |
- |
- |
- |
358 |
358 |
|
Cash and cash equivalents |
59,358 |
30,251 |
- |
- |
- |
- |
89,609 |
|
Total financial assets |
59,358 |
30,251 |
- |
- |
- |
159,689 |
249,298 |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
- |
- |
- |
- |
- |
(2,774) |
(2,774) |
|
Unpaid capital contributions to subsidiaries |
- |
- |
- |
- |
- |
(6,956) |
(6,956) |
|
Total financial liabilities |
- |
- |
- |
- |
- |
(9,730) |
(9,730) |
|
Total interest rate sensitivity gap |
59,358 |
30,251 |
- |
- |
- |
|
|
|
30 June 2009 |
Less than 1month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
Non-interest bearing |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial Assets |
|
|
|
|
|
|
|
|
Investments in subsidiaries at fair value through profit or loss |
- |
- |
- |
- |
- |
168,868 |
168,868 |
|
Trade and other receivables |
- |
- |
- |
- |
- |
121 |
121 |
|
Cash and cash equivalents |
61,921 |
105,154 |
- |
- |
- |
- |
167,075 |
|
Total financial assets |
61,921 |
105,154 |
- |
- |
- |
168,989 |
336,064 |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
- |
- |
- |
- |
- |
(844) |
(844) |
|
Unpaid capital contributions to subsidiaries |
- |
- |
- |
- |
- |
(21,821) |
(21,821) |
|
Total financial liabilities |
- |
- |
- |
- |
- |
(22,665) |
(22,665) |
|
Total interest rate sensitivity gap |
61,921 |
105,154 |
- |
- |
- |
|
|
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$896,090 (2009: US$1,670,750) higher/lower.
Notes to the financial statements
for the year ended 30 June 2010
4 Financial risk management (continued)
Credit risk
Credit risk is the risk that counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. This relates also to financial assets carried at amortised cost, as they have a short term maturity.
At the reporting date, the Company's financial assets exposed to credit risk amounted to the following:
|
|
30 June 2010 |
30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Investments in subsidiaries at fair value through profit or loss |
159,331 |
168,868 |
|
Trade and other receivables |
358 |
121 |
|
Cash and cash equivalents |
89,609 |
167,075 |
|
|
249,298 |
336,064 |
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Management does not expect any counterparty to fail to meet its obligations. No impairment provisions had been made as at the year end and no debtors were past their due date.
Cash balances are held with P-1* financial institutions.
*- A Moody's rating of Prime-1 (P-1) means that the issuer has a superior ability to repay short-term debt for the obligations.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses. The Company's liquidity position is monitored by the Board of Directors.
Residual undiscounted contractual maturities of financial liabilities:
|
30 June 2010
|
Less than 1 month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
No stated maturity |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial liabilities |
|
|
|
|
|
|
|
Trade and other payables |
(2,774) |
- |
- |
- |
- |
- |
|
Unpaid capital contributions to subsidiaries |
(6,956) |
|
|
|
|
|
|
|
(9,730) |
- |
- |
- |
- |
- |
|
30 June 2009
|
Less than 1 month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
No stated maturity |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial liabilities |
|
|
|
|
|
|
|
Trade and other payables |
(844) |
- |
- |
- |
- |
- |
|
Unpaid capital contributions to subsidiaries |
(21,821) |
|
|
|
|
|
|
|
(22,665) |
- |
- |
- |
- |
- |
Fair values
All assets and liabilities at 30 June 2010 are considered to be stated at fair value.
Notes to the financial statements
for the year ended 30 June 2010
5. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk management (see note 4).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which there is no observable market prices requires the use of valuation techniques as described in accounting policy 3.1. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. See also "Valuation of financial instruments" below.
Critical judgements in applying the Company's accounting policies
Critical judgements made in applying the Company's accounting policies include:
Valuation of financial instruments
The Company's accounting policy on fair value measurements is discussed in accounting policy 3.1. The Company measures fair value using the following hierarchy that reflects the significant of inputs used in making the measurements:
·; Level 1: Quoted market price (unadjusted) in an active market for and identical instrument.
·; Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category included instruments valued using: quoted market prices in active markets for similar instruments: quoted market prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
·; Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are basedon quoted market prices or dealer price quotations. For all other financial instruments the Company determines fair values using valuation techniques.
The Group holds full or partial ownership interests in a number of unquoted clean energy companies. The Company's investments are classified as level 3 in the fair value hierarchy. A reconciliation from the beginning balances to the ending balances is shown in note 11.
6 Net Asset Value per Share
The net asset value per share as at 30 June 2010 is 167.65 cents based on net assets of US$239,568,000 and 142,900,726ordinary shares in issue as at that date (2009: 170.67 cents based on net assets of US$313,399,017 and 183,633,773ordinary shares).
Notes to the financial statements
for the year ended 30 June 2010
7 Interest Income on Cash Balances
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Interest income receivable on Sterling cash balances |
72 |
2,090 |
|
Interest income receivable on US Dollar cash balances |
96 |
2,340 |
|
|
168 |
4,430 |
8 Management Fees
8.1 Termination of investment management agreement
On 25 September 2009, EEA Fund Management Limited ("EEA"), the Company's former asset advisor terminated the investment management agreement with Energy & Climate Advisors, formerly a joint venture between EEA and Shaw Capital Inc that was responsible for performing the asset advisor's obligations under the Asset Advisory Agreement.
In May 2010, the Board agreed with EEA to conclude the Asset Advisory Agreement. Leaf Clean Energy Company migrated to an internal management structure which the Board believes will result in operational and financials efficiencies for the Company.
The consideration payable by the Company to EEA comprises US$7 million and a payment of US$300,000 contingent upon realisation of a portfolio asset. EEA will retain its existing rights to any performance fee relating to the period up to 30 June 2013.
8.2 Investment management fees (prior to termination)
Under the former Asset Advisory Agreement, the former Asset Advisor 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 2010 amounted to US$5,262,702 (year ended 30 June 2009: US$6,902,416) and the amount accrued but not paid at the year end was US$ nil (2008: US$nil).
8.3 Performance fees
EEA may also, pursuant to the Asset Advisory Agreement, become entitled to receive from the Company an annual performance fee calculated by reference to Total Shareholder Return over the course of a performance period, starting on Admission.
Any performance fee will become payable once annualised Total Shareholder Return in any performance period exceeds an annual rate of 9% ("the Hurdle"). Once the Hurdle is exceeded, the performance fee will become payable in an amount equal to 20% of any aggregate return over and above the Hurdle subject to a high watermark. Total Shareholder Return is calculated on the basis of the increase in market capitalization of the Company, allowing for dividend and other distributions paid to Shareholders in the relevant performance period.
There were no performance fees payable for the year ended 30 June 2010 (year ended 30 June 2009: US$nil).
Notes to the financial statements
for the year ended 30 June 2010
9 Other administration expenses
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Legal and professional fees (note 9.1) |
3,331 |
2,674 |
|
Directors' remuneration (note 10) |
989 |
370 |
|
Re-charges fees from the former asset advisor (note 9.2) |
437 |
160 |
|
Administration fees (note 9.3) |
243 |
234 |
|
Takeover Panel fees |
164 |
- |
|
Audit fees |
99 |
66 |
|
Printing and stationery expenses |
79 |
47 |
|
Directors' and Officers' insurance expense |
62 |
59 |
|
Registrar fees and costs |
46 |
25 |
|
Travel and subsistence expenses |
30 |
27 |
|
Sponsorship fees |
- |
75 |
|
Other expenses |
80 |
432 |
|
Total |
5,560 |
4,169 |
9.1 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.
Costs incurred in relation to the proposed and aborted merger with Trading Emmissions PLC are included in professional fees above.
9.2 Recharges from former asset advisor
Re-charges from former asset advisor comprises re-imbursement of expenses to Shaw Capital Inc and EEA Fund Management Limited for expenses incurred on behalf of the Company and its subsidiaries.
US$88,817 was charged by Shaw Capital, Inc (2009: US$122,100) and US$nil was outstanding as at 30 June 2009 (30 June 2009: US$122,100).
GB£229,848 was charged by EEA Fund Management Limited (US$348,677 based on invoice date exchange rate) (2009: GB£23,543) and US$135,918 was outstanding at 30 June 2010 (2009: US$38,774). The amounts were billed mainly for the reimbursement of flights, accommodations and meals for the purpose of business meetings of the Company during the year.
9.3 Administration fees
Up to October 2009, the Administrator was 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.
With effect from November 2009, the Company 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 0.1% per annum where the total assets of the parent company less borrowings is less than US$100,000,000; 0.09% 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 0.08% 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.
Administration fees for the year amounted to US$243,173 (2009: US$233,712) and US$56,620 was outstanding as at 30 June 2010 (2009: US$54,906).
Notes to the financial statements
for the year ended 30 June 2010
10 Directors' remuneration
Due to the migration of the management structure to an in house management in which the new management team is led by the Directors, the Directors' annual remuneration was reviewed and recommended to be increased from 3 March 2010 to US$200,000 for the Chairman, US$150,000 for the independent Directors and US$400,000 for the Executive Director, Bran Keogh, who was appointed in February 2010 to oversee the migration transition and the new management team.
On 12 November 2009, Nora Mead Brownell resigned as a Director of the Company.
Details of the Directors' basic annual remuneration during the year were as follows:
|
|
Remuneration for the period from 1 July 2009 to 3 March 2010 |
Remuneration for the period from 4 March 2010 to 30 June 2010 |
|
|
US$ |
US$ |
|
Peter Tom (Chairman) |
140,000 |
200,000 |
|
Bran Keogh |
100,000 |
400,000 |
|
J. Curtis Moffatt |
105,000 |
150,000 |
|
Peter O'Keefe |
105,000 |
150,000 |
|
Nora Mead Brownell |
105,000 |
- |
|
|
555,000 |
900,000 |
Directors' fees and expenses paid during the year were:
|
30 June 2010 |
Directors' fees |
Other emoluments |
Total |
|
|
US$ |
US$ |
US$ |
|
Peter Tom (Chairman) |
153,724 |
99,167 |
252,891 |
|
Bran Keogh |
191,788 |
196,051 |
387,839 |
|
J. Curtis Moffatt |
115,095 |
20,861 |
135,956 |
|
Peter O'Keefe |
115,095 |
30,755 |
145,850 |
|
Nora Mead Brownell |
39,750 |
26,911 |
66,661 |
|
|
615,452 |
373,745 |
989,197 |
|
30 June 2009 |
Directors' fees |
Other emoluments |
Total |
|
|
US$ |
US$ |
US$ |
|
Peter Tom (Chairman) |
110,834 |
8,430 |
119,264 |
|
Bran Keogh |
54,468 |
13,980 |
68,448 |
|
J. Curtis Moffatt |
60,601 |
- |
60,601 |
|
Peter O'Keefe |
60,601 |
- |
60,601 |
|
Nora Mead Brownell |
60,601 |
- |
60,601 |
|
|
347,105 |
22,410 |
369,515 |
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 2010 amounted to US$989,197 (2009: US$369,515) of which US$225,000 was outstanding at 30June 2010 (June 2009: US$135,000).
Due to the disestablishment of Energy and Climate Advisors ("E&CA"), formerly the investment advisor for the Group, the Directors were paid a total of US$178,394 to monitor the disestablishment process. E&CA contributed US$23,000 towards the additional Directors' fees.
Bran Keogh received US$50,000 in additional compensation for his services on the aborted merger processes.
Mr J. Curtis Moffatt, the Chairman of the Audit Committee and one of the Board 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 to 30 June 2010 amounted to US$5,938 (2009: US$54,044) and the amount accrued but not paid at the period end was US$ nil (2009: US$nil).
Notes to the financial statements
for the year ended 30 June 2010
10 Directors' remuneration (continued)
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.
11 Investments
11.1 The Subsidiaries
Since incorporation, for efficient portfolio management purposes, the Company has established the following subsidiary companies:
|
|
Country of incorporation |
Percentage of shares held |
|
Leaf Bioenergy Company |
Cayman Islands |
100% |
|
Leaf Biomass Company |
Cayman Islands |
100% |
|
Leaf Biomass Investments, Inc.* |
USA (Delaware) |
100% |
|
Leaf Escalona Company* |
Cayman Islands |
100% |
|
Leaf Finance Company |
Cayman Islands |
100% |
|
Leaf Greenline 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 LFG Company |
Cayman Islands |
100% |
|
Leaf LFG US Investments, Inc.* |
USA (Delaware) |
100% |
|
Leaf MaxWest Company* |
USA (Delaware) |
100% |
|
Leaf Miasole* |
Cayman Islands |
100% |
|
Leaf Range Fuels Company* |
Cayman Islands |
100% |
|
Leaf Skyfuels Company* |
Cayman Islands |
100% |
|
Leaf Solar Company |
Cayman Islands |
100% |
|
Leaf VREC* |
Cayman Islands |
100% |
|
Leaf Waste Energy |
Cayman Islands |
100% |
|
Leaf Wind Company |
Cayman Islands |
100% |
|
Leaf Clean Energy USA, LLC |
USA (District of Columbia) |
100% |
*Indirect subsidiaries
The Company has also control over the following underlying investee companies:
|
|
Country of incorporation |
Principal activity |
Effective interest held |
|
Energia Escalona Coopertief U.A |
Netherlands |
Hydro Energy |
87.5% |
|
Escalona B.V |
Netherlands |
Hydro Energy |
87.5% |
|
Energia Escalona I S.A. de C.V |
Mexico |
Hydro Energy |
87.5% |
|
Energia 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 |
100% |
|
MaxWest Environmental Systems Inc |
USA (Nevada) |
Waste Energy |
51.39%(1) |
|
Multitrade Rabun Gap LLC |
USA (Virginia) |
Biomass |
75%(2) |
|
Multitrade Telogia LLC |
USA (Virginia) |
Biomass |
61.25%(3) |
|
Telogia Power LLC |
USA (Virginia) |
Biomass |
61.25%(3) |
(1) Voting rights 60.9%
(2) Voting rights 81.9%
(3) Voting rights 66.25%
11.2 Investments in subsidiaries at fair value through profit or loss
|
|
30 June 2010 |
30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Balance brought forward |
168,868 |
55,000 |
|
Additional investments in subsidiaries |
38,944 |
144,268 |
|
Repayment of capital investment |
(19,000) |
- |
|
Unpaid share capital reversed |
(13,000) |
- |
|
Unrealised losses on investments in subsidiaries |
(16,481) |
(30,400) |
|
Balance carried forward |
159,331 |
168,868 |
11.3 Portfolio valuation methodology
Unquoted investments are valued by applying an appropriate valuation technique, which makes maximum use of market-based information, is consistent with models generally used by market participants and is applied consistently from period to period, except where a change would result in a better estimation of fair value. The Company primarily invests in unquoted direct investments. Unquoted direct investments have characteristics similar to private equity investments, in that the value is generally determined through the sale or flotation of the entire business, rather than the sale of an individual instrument. Valuations of such investments are based upon the "International Private Equity and Venture Capital Valuation Guidelines."
The in house management conducted a valuation analysis of the Company's investment portfolio based upon standard valuation approaches compatible with the "International Private Equity and Venture Capital Valuation Guidelines." Given the uncertainties inherent in estimating the fair value of unquoted direct investments, a degree of caution was applied by the in house management in exercising judgements and making the necessary estimate.
12 Trade and Other Receivables
|
|
30 June 2010 |
30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Inter-company receivables |
232 |
- |
|
Prepayments |
105 |
92 |
|
Other receivables |
21 |
- |
|
Interest receivables |
- |
29 |
|
Total |
358 |
121 |
Amounts due from group companies are unsecured, interest free and receivable on demand.
13 Cash and Cash Equivalents
|
|
30 June 2010 |
30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Short term fixed deposits |
30,251 |
105,154 |
|
Bank current account balances |
59,358 |
61,921 |
|
Total |
89,609 |
167,075 |
The short-term deposits are subject to interest rates between 0.09% and 0.37% per annum and are fixed for periods ranging up to 3 months from the balance sheet date.
Notes to the financial statements
For the year ended 30 June 2010
14 Share Capital
|
Ordinary shares of GB£0.0001 each |
Number of shares |
Share capital |
Share premium |
|
|
|
US$'000 |
US$'000 |
|
At 30 June 2009 |
183,633,773 |
37 |
359,603 |
|
Repurchased during the year |
(40,733,047) |
(7) |
(36,488) |
|
At 30 June 2009 |
142,900,726 |
30 |
323,115 |
The authorised share capital of the Company is GB£25,000 divided into 250 million Ordinary Shares of GB£0.0001 each.
Under the terms of the placement on 22 June 2007, the Company issued 200,000,000 shares of GB£0.0001 each par value at a price of GB£1 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 40,733,047 shares were repurchased by the Company leaving 142,900,726 shares in issue as at 30 June 2010. The shares were repurchased in 11 tranches and a reverse auction tender during the year at an average price of 58 pence per share for a total consideration of GB£23,767,981 (US$36,494,586). The Company's share price has averaged 77 pence during the year.
The repurchases of the Company's shares are in line with its capital management philosophy whereby the Board manages the Company's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board manages the Company's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.
Company capital comprises share capital, share premium and reserves. The Company is not subject to externally imposed capital requirements.
15 Unpaid capital contributions to subsidiaries
|
|
30 June 2010 |
30 June 2009 |
|
|
|
|
|
|
US$'000 |
US$'000 |
|
Current liabilities |
6,956 |
7,076 |
|
Non-current liabilities |
- |
14,745 |
|
Total |
6,956 |
21,821 |
Notes to the financial statements
for the year ended 30 June 2010
16 Trade and Other Payables
|
|
|
|
|
|
30 June2010 |
30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Amounts due to subsidiaries |
2,090 |
- |
|
Other creditors |
350 |
41 |
|
Directors' fees payable |
225 |
135 |
|
Administration fees payable |
57 |
55 |
|
Audit fees payable |
52 |
44 |
|
Investment call payable |
- |
409 |
|
Amounts due to related parties * |
- |
160 |
|
Total |
2,774 |
844 |
*Amounts due to subsidiaries and other related parties are unsecured, interest free and payable on demand.
17 Basic and Diluted Loss per Share
Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year:
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
|
|
|
Loss attributable to equity holders of the Company (US$'000) |
(37,336) |
(53,859) |
|
Weighted average number of ordinary shares in issue (thousands) |
177,466 |
189,760 |
|
Basic and fully diluted loss per share (cents per share) |
(21.04) |
(28.38) |
There is no difference between the basic and diluted loss per share for the year as there are no potential dilutive ordinary shares.
18 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 former Asset Advisor, the Company administrator and the Directors 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 notes 8.2, 9.3 and 10.
19 Capital Commitments
As at 30 June 2010 capital commitments in respect of investments were as follows:
|
|
Initial commitment |
Drawn down |
Remaining commitment |
|
|
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
Investment in subsidiary |
21,000 |
(6,226) |
14,774 |
|
|
21,000 |
(6,226) |
14,774 |
Notes to the financial statements
for the year ended 30 June 2010
20 Exchange Rates
The following exchange rates were used to translate assets and liabilities into the reporting currency at 30 June 2010:
GBP Sterling to US$ 1.4961 (2009: 1.6469)
21 Subsequent events
There were no material subsequent events after the reporting date.
Consolidated statement of comprehensive income
For the year ended 30 June 2010
|
|
|
|
(Restated Note 2.5(ii)) |
|
|
Note |
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
|
|
|
|
|
Interest income on cash balances |
|
434 |
4,438 |
|
Interest income on investments at fair value through profit or loss |
9 |
793 |
- |
|
Unrealised losses on revaluation of investments at fair value through profit or loss |
14.1 |
(8,650) |
(30,400) |
|
Net foreign exchange loss |
|
(3,187) |
(16,818) |
|
Gross portfolio return |
|
(10,610) |
(42,780) |
|
Management fees |
7.2 |
(5,263) |
(6,902) |
|
Termination of investment management agreement |
7.1 |
(7,000) |
|
|
Other administration expenses |
8 |
(5,560) |
(4,169) |
|
Net portfolio return |
|
(28,433) |
(53,851) |
|
Sales revenue and other income |
|
13,271 |
2,782 |
|
Profit on disposal of assets |
|
31 |
57 |
|
Impairment of non-financial assets |
11 |
(4,391) |
- |
|
Operating expenses |
|
(23,838) |
(4,430) |
|
Loss before finance costs |
|
(43,360) |
(55,442) |
|
Finance costs |
|
(1,619) |
(119) |
|
Loss before taxation |
|
(44,979) |
(55,561) |
|
Taxation |
|
- |
- |
|
Loss for the year |
|
(44,979) |
(55,561) |
|
Other comprehensive income |
|
|
|
|
Exchange differences on translation of foreign operations |
|
(22) |
(123) |
|
Total comprehensive income |
|
(45,001) |
(55,684) |
|
Loss for the year attributable to |
|
|
|
|
Equity holders of the parent |
|
(41,034) |
(55,226) |
|
Non-controlling interests |
|
(3,945) |
(335) |
|
|
|
(44,979) |
(55,561) |
|
Total comprehensive income attributable to |
|
|
|
|
Equity holders of the parent |
|
(41,090) |
(55,338) |
|
Non-controlling interests |
|
(3,911) |
(346) |
|
|
|
(45,001) |
(55,684) |
|
|
|
|
|
|
Basic and diluted loss per share (cents) |
12 |
(23.12) |
(29.10) |
The accompanying notes form an integral part of these financial statements
Consolidated statement of financial position
as at 30June2010
|
|
|
|
(Restated Note 2.5(ii)) |
|
|
Note |
30 June 2010 |
30 June 2009 |
|
|
|
US$'000 |
US$'000 |
|
Assets |
|
|
|
|
Investments at fair value through profit or loss |
14.1 |
80,676 |
85,826 |
|
Property, plant and equipment |
17 |
57,470 |
53,257 |
|
Other non current assets |
|
513 |
- |
|
Intangible assets |
18 |
28,095 |
18,137 |
|
Total non-current assets |
|
166,754 |
157,220 |
|
Inventories |
|
406 |
128 |
|
Trade and other receivables |
15 |
3,355 |
2,982 |
|
Cash and cash equivalents |
16 |
98,978 |
171,852 |
|
Total current assets |
|
102,739 |
174,962 |
|
Total assets |
|
269,493 |
332,182 |
|
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
20 |
30 |
37 |
|
Share premium |
20 |
323,115 |
359,603 |
|
Foreign currency translation reserve |
|
(124) |
(112) |
|
Retained losses |
|
(88,642) |
(47,608) |
|
Total equity attributable to equity holders of the parent |
|
234,379 |
311,920 |
|
Non-controlling interests |
|
1,951 |
2,404 |
|
Total equity |
|
236,330 |
314,324 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Loans and borrowings |
22 |
21,908 |
7,689 |
|
Deferred infrastructure grants |
|
1,830 |
1,600 |
|
Deferred revenue |
|
1,381 |
1,381 |
|
Total non-current liabilities |
|
25,119 |
10,670 |
|
Loans and borrowings |
22 |
2,693 |
1,577 |
|
Trade and other payables |
21 |
5,351 |
5,611 |
|
Total current liabilities |
|
8,044 |
7,188 |
|
Total liabilities |
|
33,163 |
17,858 |
|
Total equity and liabilities |
|
269,493 |
332,182 |
|
|
|
|
|
The accompanying notes form an integral part of these financial statements
The financial statements were approved by the Board of Directors on 17 September 2010 and signed on their behalf by:
|
Peter Tom |
J. Curtis Moffatt |
|
Non-Executive Chairman |
Non-Executive Director |
Consolidated statements of changes in equity
for the year ended 30 June 2010
|
|
Share Capital |
Share Premium |
Foreign currency translation reserve |
Retained losses |
Total |
Non-controlling interests |
Total equity |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Balance at 1 July 2008 as reported previously |
40 |
386,067 |
- |
7,618 |
393,725 |
- |
393,725 |
|
Effect of change in accounting policy (note 2.5(ii)) |
- |
- |
- |
- |
- |
- |
- |
|
Balance at 1 July 2008 (restated) |
40 |
386,067 |
- |
7,618 |
393,725 |
- |
393,725 |
|
Total comprehensive loss |
- |
- |
(112) |
(55,226) |
(55,338) |
(346) |
(55,684) |
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
|
Repurchase of shares |
(3) |
(26,464) |
- |
- |
(26,467) |
- |
(26,467) |
|
Total contributions by and distributions to owners |
(3) |
(26,464) |
- |
- |
(26,467) |
- |
(26,467) |
|
Changes in ownership interest in subsidiaries |
|
|
|
|
|
|
|
|
Increase in non-controlling interest due to acquisition of subsidiaries |
- |
- |
- |
- |
- |
2,750 |
2,750 |
|
Total changes in ownership interest in subsidiaries |
- |
- |
- |
- |
- |
2,750 |
2,750 |
|
Total transactions with owners |
(3) |
(26,464) |
- |
- |
(26,467) |
2,750 |
(23,717) |
|
Balance at 30 June 2009 |
37 |
359,603 |
(112) |
(47,608) |
311,920 |
2,404 |
314,324 |
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2009 as reported previously |
37 |
359,603 |
- |
(45,684) |
313,956 |
- |
313,956 |
|
Effect of change in accounting policy (note 2.5(ii)) |
- |
- |
(112) |
(1,924) |
(2,036) |
2,404 |
368 |
|
Balance at 1 July 2009 (restated) |
37 |
359,603 |
(112) |
(47,608) |
311,920 |
2,404 |
314,324 |
|
Total comprehensive loss |
- |
- |
(12) |
(41,034) |
(41,046) |
(3,911) |
(44,957) |
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded directly in equity |
|
|
|
|
|
|
|
|
Contributions by and distributions to owners |
|
|
|
|
|
|
|
|
Repurchase of shares |
(7) |
(36,488) |
- |
- |
(36,495) |
- |
(36,495) |
|
Total contributions by and distributions to owners |
(7) |
(36,488) |
- |
- |
(36,495) |
- |
(36,495) |
|
Changes in ownership interest in subsidiaries |
|
|
|
|
|
|
|
|
Contributions by non-controlling interests |
- |
- |
- |
- |
- |
362 |
362 |
|
Increase in non-controlling interests due to purchase of subsidiaries |
- |
- |
- |
- |
- |
3,096 |
3,096 |
|
Total changes in ownership interests in subsidiaries |
- |
- |
- |
- |
- |
3,458 |
3,458 |
|
Balance at 30 June 2010 |
30 |
323,115 |
(124) |
(88,642) |
234,379 |
1,951 |
236,330 |
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these financial statements
Consolidated statement of cash flows
For the year ended 30 June 2010
|
|
|
(Restated Note 2.5(ii)) |
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Cash flows from operating activities |
|
|
|
Interest received on cash balances |
434 |
4,605 |
|
Cash received from customers |
13,302 |
2,834 |
|
Operating expenses paid |
(41,919) |
(16,511) |
|
Net cash used in operating activities |
(28,183) |
(9,072) |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
Purchase of financial assets at fair value through profit or loss |
(3,500) |
(61,226) |
|
Purchase of intangible asset |
- |
(2,000) |
|
Acquisition of subsidiaries net of cash acquired |
(10,139) |
(15,172) |
|
Net purchases of property, plant and equipment |
(7,067) |
(23,449) |
|
Payment of cash held in escrow account |
- |
(4,803) |
|
Net cash used in investing activities |
(20,706) |
(106,650) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
Repurchase of shares during the year |
(36,495) |
(26,467) |
|
Capital contributions from non-controlling interests |
362 |
- |
|
Net borrowings received/(paid) |
15,334 |
(11,181) |
|
Infrastructure grants received |
- |
1,445 |
|
Net cash used in financing activities |
(20,799) |
(36,203) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
(69,688) |
(151,925) |
|
Cash and cash equivalents at start of the year |
171,852 |
340,752 |
|
Effect of exchange rate fluctuations on cash and cash equivalents |
(3,186) |
(16,975) |
|
Cash and cash equivalents at end of the year |
98,978 |
171,852 |
The accompanying notes form an integral part of these financial statements
Consolidated statements of cash flows (continued)
For the year ended 30 June 2010
|
|
|
(Restated Note 2.5(ii)) |
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
Reconciliation of loss before taxation to net cash used in operating activities |
US$'000 |
US$'000 |
|
|
|
|
|
Loss before taxation |
(44,979) |
(55,561) |
|
Adjustments for: |
|
|
|
Unrealised losses on revaluation of investments at fair value through profit or loss |
8,650 |
30,400 |
|
Impairment of non-financial assets |
4,391 |
- |
|
Depreciation expense |
3,838 |
1,082 |
|
Foreign exchange loss |
3,187 |
16,818 |
|
Profit on disposal of assets |
(31) |
- |
|
Movement in trade and other receivables |
(1,545) |
944 |
|
Movement in trade and other payables |
(1,694) |
(2,755) |
|
Net cash used in operating activities |
(28,183) |
(9,072) |
The accompanying notes form an integral part of these financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 June 2010
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.
Pursuant to the Company's Admission Document dated 22 June 2007 there was an original placing of up to 200,000,000 Ordinary Shares of GB£0.0001 each for GB£1 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 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 2010 comprise the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities").
2 Basis of preparation
2.1 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).
The consolidated financial statements were authorised for issue by the Board of Directors on 17 September 2010.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss measured that are measured at fair value in the statement of financial position.
2.3 Functional and presentation currency
The 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.
2.4 Use of estimates and judgements
The preparation of consolidatedfinancial 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.
Except as described below, in preparing these consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are as follows:
During the year ended 30 June 2010 management reassessed its estimates in respect of:
·; the valuation of unquoted investments (see note 14); and
·; impairment of goodwill and other intangible assets (see note 11 and 18)
2 Basis of preparation (continued)
2.5 Changes in accounting policies
(i) Overview
Starting as of 1 July 2009, the Group has changed its accounting policies in the following areas:
·; Accounting for business combinations; and
·; Presentation of financial statements.
(ii) Accounting for business combinations
The Group did not previously include in the consolidated financial statements the results of investee companies over which the Group has control because the Directors were of the opinion that their inclusion would render the Group's 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. However, such non-inclusion constituted a departure from the requirements of International Accounting Standard 27 "Consolidated and Separate Financial Statements".
These consolidated financial statements now consolidate the results of the controlled investee companies and the acquisition method has been applied for business combinations that occurred during the yearended 30 June 2010, as disclosed in note 19. This change in accounting policy has been applied retrospectively and the comparative amounts have been accordingly restated.
The effect of the change in accounting policy is a decrease of US$2,036,000 in net assets attributable to equity holders of the parent and an increase of US$2,404,000 in non-controlling interest as at 1 July 2009.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer.
Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination (see below). If a business combination results in the termination of pre-existing relationships between the Group and the acquiree, then the lower of the termination amount, as contained in the agreement, and the value of the off-market element is deducted from the consideration transferred and recognised in other expenses.
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.
The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.
Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred. A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.
2 Basis of preparation (continued)
2.5 Changes in accounting policies (continued)
(iii) Presentation of financial statements
The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. This presentation has been applied in these consolidated financial statements as of and for the year period ended on 30June 2010. Comparative information has been re-presented so that it also is in conformity with the revised standard.
Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
2.6 Other accounting developments
Disclosures pertaining to fair values and liquidity of financial instruments
The Group applied Improving Disclosures about Financial Instruments (Amendments to IFRS 7), issued in March 2009, that require enhanced disclosures about fair value measurements and liquidity risk in respect of financial instruments.
The amendments require that fair value measurement disclosures use a three-level fair value hierarchy that reflects the significance of the inputs used in measuring fair values of financial instruments. Specific disclosures are required when fair value measurements are categorised as Level 3 (significant unobservable inputs) in the fair value hierarchy. The amendments require that any significant transfers between Level 1 and Level 2 of the fair value hierarchy be disclosed separately, distinguishing between transfers into and out of each level. Furthermore, changes in valuation techniques from one period to another, including the reasons therefore, are required to be disclosed for each class of financial instruments.
Disclosures in respect of fair values of financial instruments are included in notes 5 ,6 and 14.
Furthermore the definition of liquidity risk has been amended and it is now defined as the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The amendments require disclosure of a maturity analysis for non-derivative and derivative financial liabilities, but contractual maturities are required to be disclosed for derivative financial liabilities only when contractual maturities are essential for an understanding of the timing of cash flows. For issued financial guarantee contracts, the amendments require maximum amount of the guarantee to be disclosed in the earliest period in which the guarantee could be called.
Disclosures in respect of liquidity risk are included in note 5.
3 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities, except as explained in note 2.5 which addresses changes in accounting policies.
3.1 Basis of consolidation
(i) Business combinations
The Group has changed its accounting policy with respect to accounting for business combinations. See note 2.5 (ii) for further details.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
(iii) 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 Leaf 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.
(iv) 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.
(v) 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.
3.2 Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currencies of the Group's 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.
3.2 Foreign currency
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US Dollars at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to US Dollars at exchange rates at the dates of the transaction.
Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests.
3.3 Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.
Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
·; buildings 39 years
·; plant and equipment 5 to 20 years
·; fixtures and fittings 5-7 years
·; motor vehicles 5 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate
3. Significant accounting policies (continued)
3.4 Intangible assets
(i) Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For measurement of goodwill at initial recognition, see note 2.5 (ii).
Acquisitions of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses.
(ii) Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.
3.5 Impairment of non-financial assets
At each statement of financial position date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, an impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount if any. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, intangible assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
3.6 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
3.7 Trade and other receivables
Receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
3.8 Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.
3.9 Borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the profit or lossusing the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. The effective interest method allocates the interest expense over the life of the instrument so as to reflect a constant return on the carrying amount of the liability.
Borrowings include a component of the company's deferred ordinary shares and preference shares in subsidiaries held by third parties that fall under the definition of financial liabilities under IAS 32.
3.10 Government grants
Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised. Grants that compensate the Group for the cost of an asset are recognised in profit or loss on a systematic basis over the useful life of the asset.
3 Significant accounting policies (continued)
3.11 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.
3.12 Revenue 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.
Revenue from gas sales is recognised upon delivery and passage of title to the customer based on production as measured in cubic feet.
Expenses are accounted for on an accrual basis. Expenses are charged to the profit or loss. This includes expenses directly related to making an investment which is held at fair value through profit or loss.
3.13 Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
3.14 Investments at fair value through profit or loss
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 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 or loss.
3 Significant accounting policies (continued)
3.15 Future changes in accounting policies
IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations Committee) have issued the following standards and interpretations with an effective date after the date of these financial statements:
|
New/Revised International Financial Reporting Standards (IAS/IFRS) |
Effective date (accounting periods Commencing and or after) |
|
|
|
|
IAS 1 Presentation of Financial Statements (Revised April 2009)* |
1 January 2010 |
|
IAS 1 Presentation of Financial Statements (Revised May 2010)** |
1 January 2011 |
|
IAS 7 Statement of Cash Flows (Revised April 2009)* |
1 January 2010 |
|
IAS 17 Leases (Revised April 2009)* |
1 January 2010 |
|
IAS 24 Related Party Disclosures - Revised definition of related parties |
1 January 2011 |
|
IAS 27 Consolidated and Separate Financial Statements (Revised May 2010)** |
1 July 2010 |
|
IAS 32 Financial Instruments: Presentation - Amendments relating to classification of rights issues |
1 February 2010 |
|
IAS 34 Interim Financial Reporting (Revised May 2010)** |
1 January 2011 |
|
IAS 36 Impairment of Assets (Revised April 2009)* |
1 January 2010 |
|
IAS 39 Financial Instruments: Recognition and Measurement (Revised April 2009)* |
1 January 2010 |
|
IFRS 2 Share-based Payment - Amendments relating to group cash-settled share-based payment transactions |
1 January 2010 |
|
IFRS 3 Business Combinations - (Revised May 2010)** |
1 July 2010 |
|
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Revised April 2009)* |
1 January 2010 |
|
IFRS 7 Financial Instruments: Disclosures (Revised May 2010)** |
1 January 2011 |
|
IFRS 8 Operating Segments (Revised April 2009)* |
1 January 2010 |
|
IFRS 9 Financial Instruments - Classification and Measurement |
1 January 2013 |
|
IFRIC Interpretation |
|
|
|
|
|
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments |
1 July 2010 |
*Amendments resulting from April 2009 Annual Improvements to IFRSs
**Amendments resulting from May 2010 Annual Improvements to IFRSs
The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Company's financial statements in the period of initial application.
4 Segment information
The Group operates in one business and geographic segment, being investment in clean energy projects predominantly in North America.
5 Financial risk management
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
5 Financial risk management (continued)
Market price risk (continued)
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. 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 management team, 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$4,033,800 (2009: US$4,291,284)
Foreign exchange risk
The Group is exposed to foreign exchange risk with regard to transactions made in Sterling and balances held in Sterling.
An analysis of net assets by currency exposure as at 30 June 2010 is as follows:
|
|
Net Assets US$'000s |
(Restated) Net Assets US$'000s |
|
|
30 June 2010 |
30 June 2009 |
|
|
|
|
|
US Dollars |
233,983 |
264,486 |
|
Sterling |
2,347 |
49,838 |
|
Total |
236,330 |
314,324 |
An appreciation of the Sterling against the US Dollar of 5% would have increased net assets by US$117,342 (2009: US$2, 500,000). A decrease of 5% would have an equal and opposite effect.
Interest rate risk
The Group is exposed to cash flow interest rate risk on cash balances which are all short term fixed deposits. The weighted average interest rates on short term fixed deposits as at 30 June 2010 were:
|
|
30 June 2010 |
30 June 2009 |
|
|
% |
% |
|
Cash balances |
|
|
|
US Dollars |
0.37 |
0.43 |
|
Sterling |
0.14 |
0.38 |
5 Financial risk management (continued)
Interest rate risk (continued)
The table below summarises the Group's exposure to interest rate risks. It includes the Groups' financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities:
|
30 June 2010 |
Less than 1month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
Non-interest Bearing |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial Assets |
|
|
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
- |
- |
- |
- |
- |
80,676 |
80,676 |
|
Trade and other receivables |
- |
- |
- |
- |
- |
3,355 |
3,355 |
|
Cash and cash equivalents |
68,727 |
30,251 |
- |
- |
- |
- |
98,978 |
|
Total financial assets |
68,727 |
30,251 |
- |
- |
- |
84,031 |
183,009 |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
- |
- |
- |
- |
- |
(5,351) |
(5,351) |
|
Loans and borrowings |
- |
- |
(2,693) |
- |
(21,908) |
- |
(24,601) |
|
Deferred infrastructure grants |
- |
- |
- |
- |
- |
(1,830) |
(1,830) |
|
Deferred revenue |
- |
- |
- |
- |
- |
(1,381) |
(1,381) |
|
Total financial liabilities |
- |
- |
(2,693) |
- |
(21,908) |
(8,562) |
(33,163) |
|
Total interest rate sensitivity gap |
68,727 |
30,251 |
(2,693) |
- |
(21,908) |
|
|
|
30 June 2009 |
Less than 1month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 Years |
Non-interest Bearing |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial Assets |
|
|
|
|
|
|
|
|
Financial assets at fair value through profit or loss |
- |
- |
- |
- |
- |
85,826 |
85,826 |
|
Trade and other receivables |
- |
- |
- |
- |
- |
2,982 |
2,982 |
|
Cash and cash equivalents |
66,698 |
105,154 |
- |
- |
- |
- |
171,852 |
|
Total financial assets |
66,698 |
105,154 |
- |
- |
- |
88,808 |
260,660 |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
- |
- |
- |
- |
- |
(5,611) |
(5,611) |
|
Loans and borrowings |
- |
- |
(1,577) |
- |
(7,689) |
- |
(9,266) |
|
Deferred infrastructure grants |
- |
- |
- |
- |
- |
(1,600) |
(1,600) |
|
Deferred revenue |
- |
- |
- |
- |
- |
(1,381) |
(1,381) |
|
Total financial liabilities |
- |
- |
(1,577) |
- |
(7,689) |
(8,592) |
(17,858) |
|
Total interest rate sensitivity gap |
66,698 |
105,154 |
(1,577) |
- |
(7,689) |
|
|
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$743,770 (2009: US$1,625,860) higher/lower.
Credit risk
Credit risk is the risk that counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group.
5 Financial risk management (continued)
Credit risk (continued)
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost, as they have a short term maturity.
At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:
|
|
30 June 2010 |
(Restated ) 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Financial assets at fair value through profit or loss |
80,676 |
85,826 |
|
Trade and other receivables |
3,355 |
2,982 |
|
Cash and cash equivalents |
98,978 |
171,852 |
|
|
183,009 |
260,660 |
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. Management does not expect any counterparty to fail to meet its obligations. No impairment provisions had been made as at the year end and no debtors were past their due date.
Cash balances are held with P-1* financial institutions.
*- A Moody's rating of Prime-1 (P-1) means that the issuer has a superior ability to repay short-term debt for the obligations.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due, under both normal and stressed conditions, without incurring unacceptable losses. The Group's liquidity position is monitored by the management team and the Board of Directors.
Residual undiscounted contractual maturities of financial liabilities:
|
30 June 2010
|
Less than 1 month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
No stated maturity |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial liabilities |
|
|
|
|
|
|
|
Trade and other payables |
(5,351) |
- |
- |
- |
- |
- |
|
Loans and borrowings |
- |
- |
(2,693) |
- |
(21,908) |
- |
|
|
(5,351) |
- |
(2,693) |
- |
(21,908) |
- |
|
30 June 2009
|
Less than 1 month |
1-3 months |
3 months to 1 year |
1-5 years |
Over 5 years |
No stated maturity |
|
|
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
US$'000 |
|
Financial liabilities |
|
|
|
|
|
|
|
Trade and other payables |
(5,611) |
- |
- |
- |
- |
- |
|
Loans and borrowings |
- |
- |
(1,577) |
- |
(7,689) |
- |
|
|
(5,611) |
- |
(1,577) |
- |
(7,689) |
- |
5 Financial risk management (continued)
Fair values
All assets and liabilities at 30 June 2010 are considered to be stated at fair value.
6. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk management (see note [5]).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which there is no observable market prices requires the use of valuation techniques as described in accounting policy 3.14. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. See also "Valuation of financial instruments" below.
Critical judgements in applying the Company's accounting policies
Critical judgements made in applying the Group's accounting policies include:
Valuation of financial instruments
The Group's accounting policy on fair value measurements is discussed in accounting policy [3.1]. The Group measures fair value using the following hierarchy that reflects the significant of inputs used in making the measurements:
·; Level 1: Quoted market price (unadjusted) in an active market for and identical instrument.
·; Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category included instruments valued using: quoted market prices in active markets for similar instruments: quoted market prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
·; Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Group determines fair values using valuation techniques.
The Group holds full or partial ownership interests in a number of unquoted clean energy companies. The Group's investments are classified as level 3 in the fair value hierarchy. A reconciliation from the beginning balances to the ending balances is shown in note 14.1.
7 Management Fees
7.1 Termination of investment management agreement
On 25 September 2009, EEA Fund Management Limited ("EEA"), the former Company's asset advisor terminated the investment management agreement with Energy & Climate Advisors, formerly a joint venture between EEA and Shaw Capital Inc that was responsible for performing the asset advisor's obligations under the Asset Advisory Agreement.
In May 2010, the Board agreed with EEA to conclude the Asset Advisory Agreement. Leaf Clean Energy Company migrated to an internal management structure which the Board believes will result in operational and financials efficiencies for the Company.
The consideration payable by the Company to EEA comprises US$7 million and a payment of US$300,000 contingent upon realisation of a portfolio asset. EEA will retain its existing rights to any performance fee relating to the period up to 30 June 2013.
7.2 Investment management fees (prior to termination)
Under the former Asset Advisory Agreement, the former Asset Advisor 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 2010 amounted to US$5,262,702 (year ended 30 June 2009: US$6,902,416) and the amount accrued but not paid at the year end was US$ nil (2008: US$nil).
7.3 Performance fees
EEA may also, pursuant to the Asset Advisory Agreement, become entitled to receive from the Company an annual performance fee calculated by reference to Total Shareholder Return over the course of a performance period, starting on Admission.
Any performance fee will become payable once annualised Total Shareholder Return in any performance period exceeds an annual rate of 9% ("the Hurdle"). Once the Hurdle is exceeded, the performance fee will become payable in an amount equal to 20% of any aggregate return over and above the Hurdle subject to a high watermark. Total Shareholder Return is calculated on the basis of the increase in market capitalization of the Company, allowing for dividend and other distributions paid to Shareholders in the relevant performance period.
There were no performance fees payable for the year ended 30 June 2010 (year ended 30 June 2009: US$nil).
8 Other administration expenses
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Legal and professional fees (note 8.1) |
3,331 |
2,674 |
|
Directors' remuneration (note 10) |
989 |
370 |
|
Re-charges fees from the former asset advisor (note 8.2) |
437 |
160 |
|
Administration fees (note 8.3) |
243 |
234 |
|
Takeover Panel fees |
164 |
- |
|
Audit fees |
99 |
66 |
|
Printing and stationery expenses |
79 |
47 |
|
Directors' and Officers' insurance expense |
62 |
59 |
|
Registrar fees and costs |
46 |
25 |
|
Travel and subsistence expenses |
30 |
27 |
|
Sponsorship fees |
- |
75 |
|
Other expenses |
80 |
432 |
|
Total |
5,560 |
4,169 |
8.1 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.
Costs incurred in relation to the proposed and aborted merger with Trading Emissions PLC are included in professional fees above.
8.2 Recharges from former asset advisor
Re-charges from former asset advisor comprises re-imbursement of expenses to Shaw Capital Inc and EEA Fund Management Limited for expenses incurred on behalf of the Company and its subsidiaries.
US$88,817 was charged by Shaw Capital, Inc (2009: US$122,100) and US$nil was outstanding as at 30 June 2010 (30 June 2009: US$122,100).
GB£229,848 was charged by EEA Fund Management Limited (US$348,677 based on invoice date exchange rate) (2009: GB£23,543) and US$135,918 was outstanding at 30 June 2010 (2009: US$38,774). The amounts were billed mainly for the reimbursement of flights, accommodations and meals for the purpose of business meeting of the Company during the year.
8.3 Administration fees
Up to October 2009, the Administrator was entitled to an administration fee, payable quarterly in arrears and calculated in respect of each quarter or other period, with a minimum fee of GB£25,000 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.
With effect from November 2009, the Company 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 GB£25,000 per quarter at the rate of 0.1% per annum where the total assets of the parent company less borrowings is less than US$100,000,000; 0.09% 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 0.08% 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.
Administration fees for the year amounted to US$243,173 (2009: US$233,712) and US$56,620 was outstanding as at 30 June 2010 (2009: US$54,906).
9 Interest income on investments at fair value through profit or loss
The Group had US$4,553,218 of interest income from loans made by the parent company to its portfolio companies. Of this, US$792,680 was from non-subsidiaries and is recognised in profit or loss. US$3,760,537 was from Leaf's investment in subsidiaries and was eliminated on consolidation.
10 Directors' remuneration
Due to the migration of the management structure to an inhouse management in which the new management team is led by the Directors, the Directors' annual remuneration was reviewed and recommended to be increased from 3 March 2010 to US$200,000 for the Chairman, US$150,000 for the independent Directors and US$400,000 for the Executive Director, Bran Keogh, who was appointed in February 2010 to oversee the migration transition and the new management team.
On 12 November 2009, Nora Mead Brownell resigned as a Director of the Company.
Details of the Directors' basic annual remuneration during the year were as follows:
|
|
Remuneration for the period from 1 July 2009 to 3 March 2010 |
Remuneration for the period from 4 March 2010 to 30 June 2010 |
|
|
US$ |
US$ |
|
Peter Tom (Chairman) |
140,000 |
200,000 |
|
Bran Keogh |
100,000 |
400,000 |
|
J. Curtis Moffatt |
105,000 |
150,000 |
|
Peter O'Keefe |
105,000 |
150,000 |
|
Nora Mead Brownell |
105,000 |
- |
|
|
555,000 |
900,000 |
Directors' fees and other expenses paid during the year were as follows:
|
30 June 2010 |
Directors' fees |
Other emoluments |
Total |
|
|
US$ |
US$ |
US$ |
|
Peter Tom (Chairman) |
153,724 |
99,167 |
252,891 |
|
Bran Keogh |
191,788 |
196,051 |
387,839 |
|
J. Curtis Moffatt |
115,095 |
20,861 |
135,956 |
|
Peter O'Keefe |
115,095 |
30,755 |
145,850 |
|
Nora Mead Brownell |
39,750 |
26,911 |
66,661 |
|
|
615,452 |
373,745 |
989,197 |
|
30 June 2009 |
Directors' fees |
Other emoluments |
Total |
|
|
US$ |
US$ |
US$ |
|
Peter Tom (Chairman) |
110,834 |
8,430 |
119,264 |
|
Bran Keogh |
54,468 |
13,980 |
68,448 |
|
J. Curtis Moffatt |
60,601 |
- |
60,601 |
|
Peter O'Keefe |
60,601 |
- |
60,601 |
|
Nora Mead Brownell |
60,601 |
- |
60,601 |
|
|
347,105 |
22,410 |
369,515 |
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 2010 amounted to US$989,197 (2009: US$369,515) of which US$225,000 was outstanding at 30 June 2010 (June 2009: US$135,000).
10 Directors' remuneration (continued)
Due to the disestablishment of Energy and Climate Advisors ("E&CA"), formely the investment advisor for the Group, the Directors were paid a total of US$178,394 to monitor the disestablishment process. E&CA contributed US$23,000 towards the additional Directors' fees.
Bran Keogh received US$50,000 in additional compensation for his services on the aborted merger processes.
Mr J. Curtis Moffatt, the Chairman of the Audit Committee and one of the Board 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 to 30 June 2010 amounted to US$5,938 (2009: US$54,044) and the amount accrued but not paid at the period end was US$ nil (2009: US$nil).
At the time Van Ness Feldman was engaged to assist in the due diligence matter on behalf of Leaf, Mr. Moffatt recused himself from any consideration of the proposed investment by Leaf since such consideration would rely, in part, upon the advice and counsel of Van Ness Feldman.
11 Impairment of non-financial assets
Non-financial assets are assessed for impairment at each reporting period end. This review is undertaken in conjunction with the review of the Company's investment in each subsidiary.
|
|
Year ended 30 June 2010 |
Year ended 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Goodwill ( note 18) |
(1,481) |
- |
|
Pre-operating expenses |
(1,294) |
- |
|
Property, plant and equipment (note 17) |
(1,616) |
- |
|
Total |
(4,391) |
- |
12 Loss per share
Basic and Diluted
Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the year:
|
|
Year ended 30 June 2010 |
(Restated) Year ended 30 June 2009 |
|
|
|
|
|
Loss attributable to equity holders of the parent (US$'000) |
(41,034) |
(55,226) |
|
Weighted average number of ordinary shares in issue (thousands) |
177,466 |
189,760 |
|
Basic and fully diluted loss per share (cents per share) |
(23.12) |
(29.10) |
There is no difference between the basic and diluted loss per share for the year.
13 The Subsidiaries
Since incorporation, for efficient portfolio management purposes, the Company has established the following subsidiary companies:-
|
|
Country of incorporation |
Percentage of shares held |
|
Leaf Bioenergy Company |
Cayman Islands |
100% |
|
Leaf Biomass Company |
Cayman Islands |
100% |
|
Leaf Biomass Investments, Inc.* |
USA (Delaware) |
100% |
|
Leaf Escalona Company* |
Cayman Islands |
100% |
|
Leaf Finance Company |
Cayman Islands |
100% |
|
Leaf Greenline 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 LFG Company |
Cayman Islands |
100% |
|
Leaf LFG US Investments, Inc.* |
USA (Delaware) |
100% |
|
Leaf MaxWest Company* |
USA (Delaware) |
100% |
|
Leaf Miasole* |
Cayman Islands |
100% |
|
Leaf Range Fuels Company* |
Cayman Islands |
100% |
|
Leaf Skyfuels Company* |
Cayman Islands |
100% |
|
Leaf Solar Company |
Cayman Islands |
100% |
|
Leaf VREC* |
Cayman Islands |
100% |
|
Leaf Waste Energy |
Cayman Islands |
100% |
|
Leaf Wind Company |
Cayman Islands |
100% |
|
Leaf Clean Energy USA, LLC |
USA (District of Columbia) |
100% |
*Indirect subsidiaries
The Company has also control over the following underlying investee companies:
|
|
Country of incorporation |
Principal activity |
Effective interest held |
|
Energia Escalona Coopertief U.A |
Netherlands |
Hydro Energy |
87.5% |
|
Escalona B.V |
Netherlands |
Hydro Energy |
87.5% |
|
Energia Escalona I S.A. de C.V |
Mexico |
Hydro Energy |
87.5% |
|
Energia 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 |
100% |
|
MaxWest Environmental Systems Inc |
USA (Nevada) |
Waste Energy |
51.39%(1) |
|
Multitrade Rabun Gap LLC |
USA (Virginia) |
Biomass |
75%(2) |
|
Multitrade Telogia LLC |
USA (Virginia) |
Biomass |
61.25%(3) |
|
Telogia Power LLC |
USA (Virginia) |
Biomass |
61.25%(3) |
(1) Voting rights 60.9%
(2) Voting rights 81.9%
(3) Voting rights 66.25%
14 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 inhouse 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'.
14.1 Investments at fair value through profit or loss
|
|
|
|
|
|
30 June 2010 US$'000 |
(Restated) 30 June 2009 US$'000 |
|
|
|
|
|
Balance brought forward |
85,826 |
55,000 |
|
Purchases at cost |
3,500 |
61,226 |
|
Unrealised revaluation losses on investments |
(8,650) |
(30,400) |
|
Balance carried forward |
80,676 |
85,826 |
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.
14.2 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 inhouse 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 Asset Advisor in exercising judgements and making the necessary estimates.
15 Trade and Other Receivables
|
|
30 June 2010 |
(Restated) 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Accounts receivables |
2,204 |
578 |
|
Interest receivables |
556 |
30 |
|
Prepayments |
575 |
1,952 |
|
Other receivables |
20 |
422 |
|
Total |
3,355 |
2,982 |
16 Cash and Cash Equivalents
|
|
30 June 2010 |
(Restated) 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Short term fixed deposits |
30,251 |
105,154 |
|
Bank current account balances |
68,727 |
66,698 |
|
Total |
98,978 |
171,852 |
17 Property, plant and equipment
|
|
Total |
|
|
US$'000 |
|
Cost |
|
|
Balance at 1 July 2009 |
57,669 |
|
Additions |
5,819 |
|
Acquisition through business combination |
3,937 |
|
Impairment |
(1,616) |
|
Disposals |
(7) |
|
Balance at 30 June 2010 |
65,802 |
|
|
|
|
Depreciation |
|
|
Balance at 1 July 2009 |
4,412 |
|
Depreciation of assets acquired through business combination |
82 |
|
Charge for the year |
3,838 |
|
Balance at 30 June 2010 |
8,332 |
|
|
|
|
Carrying amounts |
|
|
30 June 2009 |
53,257 |
|
30 June 2010 |
57,470 |
18 Intangible assets
|
|
Goodwill |
Other intangibles |
Total |
|
|
US$'000 |
US$'000 |
US$'000 |
|
Cost |
|
|
|
|
Balance as at 1 July 2009 |
16,131 |
2,006 |
18,137 |
|
Purchased goodwill of sub-subsidiary |
100 |
- |
100 |
|
Acquisitions through business combinations (note 19) |
11,491 |
- |
11,491 |
|
Non-controlling interests share of goodwill on acquisition |
(24) |
- |
(24) |
|
Balance at 30 June 2010 |
27,698 |
2,006 |
29,704 |
|
|
|
|
|
|
Amortisation and impairment losses |
|
|
|
|
Balance as at 1 July 2009 |
- |
- |
- |
|
Amortisation |
- |
(128) |
(128) |
|
Impairment loss |
(1,481) |
- |
(1,481) |
|
Balance at 30 June 2010 |
(1,481) |
(128) |
(1,609) |
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
1 July 2009 |
16,131 |
2,006 |
18,137 |
|
30 June 2010 |
26,217 |
1,878 |
28,095 |
|
|
|
|
|
Other intangible asset
Other intangible assets comprise an Electric Power Purchase and Sale agreement with Seminole Electric Cooperative with a Group subsidiary, Multitrade Telogia LLC. The subsidiary agreed to sell and Seminole Electric Cooperative agreed to buy power upon commencement of commercial operations. The contract ends in November 2023.
19 Acquisition of subsidiary
On 31 October 2009 the Group obtained control of Maxwest Environmental Systems Inc, a company that operates a biosolids gasification facility in Sanford, Florida by acquiring 50.5 percent voting interests in the company and subsequent investments post acquisition resulted in 60.09 percent voting interests in the company. The effective Group's equity interest in the company is 51.39 percent at 30 June 2010.
|
Consideration transferred |
Note |
US$'000 |
|
Purchase consideration |
|
|
|
Investment in Series A preferred shares |
|
10,000 |
|
Investment in Series B preferred shares |
|
3,750 |
|
Total |
|
13,750 |
|
|
|
|
|
Identifiable assets acquired and liabilities assumed |
|
|
|
|
|
US$'000 |
|
|
|
|
|
Property, plant and equipment |
17 |
3,855 |
|
Intangible assets |
18 |
100 |
|
Inventory |
|
20 |
|
Cash and cash equivalents |
|
3,611 |
|
Trade and other receivables |
|
322 |
|
Trade and other payables |
|
(2,530) |
|
Total net identifiable assets |
|
5,378 |
|
Fair value of interest in net assets acquired |
|
2,259 |
|
|
|
|
|
19 Acquisition of subsidiary (continued)
Goodwill Goodwill was recognised as a result of the acquisition as follows: |
|
US$000 |
|
Fair value of consideration transferred |
|
13,750 |
|
Fair value of interest in net assets acquired |
|
(2,259) |
|
Goodwill on acquisition (note 18) |
|
11,491 |
|
|
|
|
|
Transactions separate from the acquisition |
|
|
The Group incurred acquisition-related costs of US$79,638 relating to external legal fees. The legal fees costs have been included in administrative expenses in the Group's consolidated statement of comprehensive income.
20 Share capital
|
Ordinary shares of GB£0.0001 each |
Number of shares |
Share capital US$'000 |
Share premium US$'000 |
|
|
|
|
|
|
As at 30 June 2009 |
183,633,773 |
37 |
359,603 |
|
Repurchased during the year |
(40,733,047) |
(7) |
(36,488) |
|
As at 30 June 2010 |
142,900,726 |
30 |
323,115 |
|
|
|
|
|
The authorised share capital of the Company is GB£25,000 divided into 250 million Ordinary Shares of GB£0.0001 each.
Under the terms of the placement on 22 June 2007, the Company issued 200,000,000 shares of GB£0.0001 each par value at a price of GB£1 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 40,733,047 shares were repurchased by the Company leaving 142,900,726 shares in issue as at 30 June 2010. The shares were repurchased in 11 tranches and a reverse auction tender during the year at an average price of 58 pence per share for a total consideration of GB£23,767,981 (US$36,494,586). The Company's share price has averaged 77 pence during the year.
The repurchases of the Company's shares are in line with its capital management philosophy whereby the Board manages the Company's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board manages the Company's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.
Company capital comprises share capital, share premium and reserves. The Company is not subject to externally imposed capital requirements.
21 Trade and Other Payables
|
|
30 June 2010 |
(Restated) 30 June 2009 |
|
|
US$'000 |
US$'000 |
|
Creditors and accrued payables |
5,017 |
5,377 |
|
Directors' fees payable * |
225 |
135 |
|
Administration fees payable* |
57 |
55 |
|
Audit fees payable * |
52 |
44 |
|
Total |
5,351 |
5,611 |
* These payables are accrued by the parent company.
22 Loans and borrowings
|
|
30 June 2010 US$'000 |
(Restated) 30 June 2009 US$'000 |
|
|
|
|
|
Current loans |
2,693 |
1,577 |
|
Non-current loans |
21,908 |
7,689 |
|
Total |
24,601 |
9,266 |
Long term debt comprises:
(i) a promissory note of US$8,200,000 executed by a Group subsidiary to finance the construction of a methane recovery project secured by a mortgage and security interest in all the assets of that project and the note is payable over 180 months, which began in October 2006. The note bears interest at a rate of 8.11% per year; and
(ii) the first tranche of a promissory note of US$20,701,000 through the Rural Utilities Service (RUS), an agency of the U.S. Department of Agriculture, executed by a Group subsidiary as long term financing for its biomass power plant, the construction of which had been previously financed on a short term basis by the Company. While the total available principal is US$20,701,000, with a maturity of 31 December 2029, advances to 30 June 2010 were US$14,211,653, included in the above balances. Repayment is scheduled to begin on 31 December 2010. Interest is payable quarterly at a rate of 3.267%. The loan places certain restrictions on the Group subsidiary along with the pledge of most of the assets and income.
23 Related Party Transactions
Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions.
The former Asset Advisor, the Company administrator and the Directors are considered related parties due to the significance of the contracts with these parties. Details of the fee arrangements with these parties are given in note 8.2, 8.3 and 10.
24 Capital Commitments
As at 30 June 2010 capital commitments in respect of investments were as follows:
|
|
Initial commitment |
Drawn down |
Remaining commitment |
|
|
US$'000 |
US$'000 |
US$'000 |
|
|
|
|
|
|
Investment in subsidiary |
21,000 |
(6,226) |
14,774 |
|
|
21,000 |
(6,226) |
14,774 |
25 Exchange Rates
The following exchange rates were used to translate assets and liabilities into the reporting currency at 30 June 2010:
GBP Sterling to US$ 1.4961 (2009: 1.6469)
26 Subsequent events
There were no material subsequent events after the reporting date.
Related Shares:
LEAF.L