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Half Yearly Report

10th Mar 2010 07:00

RNS Number : 3342I

Leaf Clean Energy Company

10 March 2010

Leaf Clean Energy Company Interim Report

For the half year ended 31 December 2009

CONTENTS

Management and Administration	1
Chairman's Interim Statement	2
Report of the Asset Advisor	3
Review report by Independent Auditors	6
Unaudited financial statements of the Company:
- Condensed statements of comprehensive income	7
- Condensed statements of financial position	8
- Condensed statements of changes in equity	9
- Condensed statements of cash flows	12
- Notes to the condensed interim financial statements	14-29

MANAGEMENT AND ADMINISTRATION

Directors	Peter Tom (Non-executive Chairman) *
	Bran Keogh (Non-executive Director) *
	J. Curtis Moffatt (Non-executive Director)*
	Peter O'Keefe (Non-executive Director) *
	* independent

Registered Office	PO Box 309GT
	Ugland House
	George Town
	Grand Cayman
	Cayman Islands

Asset Advisor	EEA Fund Management Limited
	7th Floor
	22 Billiter Street
	London EC3M 2RY

Administrator	EHM International Limited
	1 Liverpool Street
	London
	EC2M 7QD

Nominated Advisor, Placing Agent and Broker	Cenkos Securities plc
	6.7.8 Tokenhouse Yard
	London EC2R 7AS

Registrar	Computershare Investor Services PLC
	The Pavilions
	Bridgewater Road
	Bristol BS99 6ZZ

Depositary	Computershare Investor Services plc
	P.O. Box 82
	The Pavilions
	Bridgewater Road
	Bristol BS99 6ZZ

Auditors	KPMG Audit LLC Heritage Court 41 Athol Street Douglas Isle of Man IM99 1HN

CHAIRMAN'S INTERIM STATEMENT

It gives me great pleasure to report to shareholders on the performance of Leaf Clean Energy Company ("Leaf Clean" or the "Company"). The period covered in this Interim Report continued to see the effects of a contracting global economy and tightening credit markets. In addition, this period was marked by two significant events for our company: the unsuccessful, proposed merger with Trading Emissions plc ("TEP") and the consolidation of our asset management agreement under EEA Fund Management ("EEA"). Although these circumstances posed challenges, the Board, along with EEA, has taken measures to ensure that shareholders' interests in the company are properly safeguarded.

To begin with, the failure to conclude the merger between Leaf Clean and TEP was a disappointment as we believe it would have benefited our shareholders in aligning two very synergistic businesses. With a combined market capitalization of over £500 million, the merger would have created the world's largest publicly traded low-carbon business. In December 2009, your Company agreed to merge with TEP, and we take comfort in the fact that, of the Leaf shareholders who voted, 94% voted affirmatively for the merger. Despite these efforts, the transaction failed to obtain the requisite approval from TEP's shareholders.

Whilst the merger would have brought Leaf Clean a greater diversity of environmental assets, I am confident of the Company's ability to continue to execute its strategy on an independent basis. The Company is already substantially invested in a well balanced portfolio of over US$200 million in investments across a range of clean energy sectors including biomass, waste-to-energy, solar and wind, with a balance between technology and project-related investments.

This period also saw Leaf Clean investing an additional aggregate US$28.3 million in portfolio companies, disbursed mostly between a secured financing of our wind business - Invenergy Wind - and an increase to a majority stake in MaxWest Environmental Systems, a waste-to-energy business focused on the conversion of municipal sewage to usable energy. The slower rate of investment reflects a greater emphasis on active management of current assets and the late stage of our investment cycle.

As part of this focus on our existing investments, I am pleased to announce that the Board has asked our fellow Director, Bran Keogh, to take on an executive role with the Company to assist EEA. This arrangement allows Leaf Clean and EEA to make greater use of Bran's operational experience and deep knowledge of both our portfolio companies and the energy market.

In addition to our emphasis on portfolio management, the Board has noted the significant deterioration in its share price in the recent months and the deep discount to net asset value at which the Company's shares are trading. Taking account of the cash balances required for further strategic investment in existing assets, the possibility of realisations from existing investments and the income from interest bearing investment securities, your Board has decided to pursue a share buyback programme. The Company will implement a buyback of up to US$27 million of shares at a maximum price of 65p per share, which would represent up to14.6% of Leaf Clean's issued share capital. The buyback will be implemented by way of a reverse auction tender subject to shareholders approval. A circular detailing the terms of the tender will be posted to shareholders shortly. Following the tender, your Board will continue to keep the situation under review and may consider a further buyback programme subject to asset realisations and general market conditions.

The Board continues to support the investment objectives and recommendations of its Asset Advisor, EEA. As such, with EEA's advice, Leaf Clean continued to value investments conservatively to reflect the broader context of the past year's severe economic dislocations. The net asset value of your Company as at 31 December 2009 is US$291 million of which US$136 million was held in cash. Of this figure, $98 million is committed to portfolio companies and, as noted above, the Company has committed a further US$27million to a share buyback. The Company is of the view that the balance of US$11 million is sufficient to meet the Company's working capital requirements for the foreseeable future. The net asset value per share at year end was 158.23 cents (98.9 p) (1), reflecting net losses on investments of US$14.4 million.

Whilst there have been challenges stemming from the current market environment, Leaf Clean continues to represent a valuable and well diversified clean energy portfolio. Jointly with our asset advisor, EEA, we remain committed to ensuring the success of the Company's portfolio companies and optimistic about the milestones that they achieved over the period and the improving market conditions.

Peter Tom

Chairman

10 March 2010

(1) Based on US$/£ exchange rate of 1.6 on 31 December 2009

REPORT OF THE ASSET ADVISOR

Noteworthy Events and Key Financial Data for 1 July - 31 December 2009

·; The Company made an additional US$28.3 million in direct equity and debt investments into existing portfolio businesses.

·; The Company's total NAV is US$291 million, of which US$136 million was held in cash and US$183 million in investments. The Company's NAV per share is 158.23 cents, 105.7p at $1.4972 to the £1.

·; 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.

Overview

Leaf Clean Energy Company's ("Leaf Clean" or "Company") 2009 Interim Report and financial statements encompasses the period from 1 July to 31 December 2009. This period was dominated by a widespread global recession as the banking crisis of late 2008 rippled through almost every sector during 2009. The renewable energy industry, in particular, lost momentum as credit markets dried up and demand weakened during the recession. Another impact has been a significant dampening of valuations across most asset classes, including many businesses comparable to Leaf Clean's portfolio companies. In turn, the Leaf Board has valued the Company's NAV at US$291 million, representing a reduction of 7% from the June 2009 Annual Report and financial statements.

The Company's assets reflect a balanced and diverse portfolio of clean energy investments principally in North America. There is both sectoral diversity as well as of investment type. The Company invests in active operational assets along with more growth-oriented corporate equity. The investments themselves have been made across a broad range of financial instruments including equity, senior preference equity, convertibles and debt. Current market conditions have resulted in a number of the investments being structured to enhance downside protection through an emphasis on debt-like instruments, including convertible loan stock. It is the Asset Advisor's view that the breadth of the Company's portfolio facilitate the generation of shareholder value as the global economy normalizes and the drivers behind the growth in clean energy and climate change continue apace. The current portfolio is made up of the following 10 investments:

MaxWest Environmental Systems, Inc. ("MaxWest") designs, builds, owns, and operates waste-to-energy gasification facilities. MaxWest also seeks to deploy proprietary waste-to-energy gasification technology using a variety of waste streams, but specifically well-suited to municipal solid sludge. The MaxWest system is uniquely modular and scalable, and its first build-own-operate project has been successfully constructed in Sanford, Florida.

SkyFuel, Inc. ("SkyFuel") is emerging as a world leader in the design and deployment of concentrating solar power (CSP) systems, designing low-cost, large scale solar thermal plants that produce steam for power generation, desalination, wastewater treatment, and other industrial applications. To this end, SkyFuel is developing the parabolic SkyTrough and linear Fresnel technology systems, which incorporate ReflecTech, a highly reflective, silver-metallised outdoor weatherable film designed for solar energy concentrators. SkyFuel's solar plants can be integrated into existing facilities using its proprietary FuelSaver approach, or can be built as standalone solar power plants.

Johnstown Regional Energy, LLC. ("JRE") owns and operates three high-Btu landfill gas-to-methane projects at Waste Management landfills located in Pennsylvania. JRE extracts raw landfill gas that is subsequently cleaned in advanced technology processing plants and sold via connecting pipelines. The high quality "green" gas ultimately displaces the use of fossil fuelled-based natural gas, making it eligible for renewable energy credits (RECs) and/or carbon credits.

Multitrade Rabun Gap, LLC ("Rabun Gap") is a special purpose entity formed to refurbish, construct and operate a 20 MW nameplate wood-fuelled biomass facility in Rabun Gap, Georgia. The facility achieved commercial operations in January 2010. Rabun Gap will use native renewable fuel from the local forest industry and will sell power to a Georgia co-operative under a long-term power purchase agreement.

Multitrade Telogia, LLC ("Telogia") is a special purpose entity formed to purchase, refurbish and operate an existing 14 MW capacity wood-fuelled biomass facility in Telogia, Florida. The facility achieved commercial operations in August 2009. Telogia will use native renewable fuel from the local forest industry, as well as wood waste that would otherwise be put into landfills, to generate renewable power that will be sold to a Florida co-op under a long term-power purchase agreement executed in December 2008.

Energia Escalona ("Escalona") is a special purpose entity formed to construct and operate a 9.3 MW capacity run-of-river hydroelectric facility on the Las Minas River near Veracruz, Mexico. Escalona is designed to utilise constant river flow from the upstream discharge of an already existing 15 MW plant. Power from Escalona is to be sold to a large Mexican industrial business.

Invenergy Wind, LLC ("Invenergy") is 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.

Miasolé develops and manufactures thin-film copper-indium-gallium-diselenide (CIGS) solar photovoltaic cells. This is done by utilizing a differentiated vacuum deposition process that is highly efficient and is designed to apply CIGS material over large area substrates in a continuous fashion. Miasolé is leveraging expertise in semiconductor manufacturing and a deep understanding of CIGS material to manufacture new, versatile, and low-cost solar products.

Range Fuels, Inc. ("Range Fuels is a leading cellulosic 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.

Vital Renewable Energy Company ("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.

Over the relevant reporting period, the Company has executed a number of transactions involving existing portfolio companies as noted above. This has been in line with our previous reporting, where we had envisaged subsequent investments into a number of current portfolio companies to ensure each is appropriately capitalised to execute their respective business plans. The specific investments made during the period are as follows:

·; US$10.0 million working facility to Invenergy

·; US$10.0 million preferred equity investment into MaxWest

·; US$9.8 million in convertible notes to Rabun Gap

·; US$1.5million capital repayment from Telogia.

As of 31 December 2009, the Company was not actively negotiating nor had it entered into any Heads of Terms for investment. As noted, the Asset Advisor's (EEA Fund Management) short-term focus has been on managing the Company's existing portfolio of investments although EEA has continued to assess and review investment opportunities.

On the whole, Leaf's investments are performing adequately against a difficult background and we remain optimistic as to the value generation potential of the investments. Some selected noteworthy events from the Company's portfolio over the reporting period, are as follows:

·; MaxWest's first of its kind biosolids gasification facility in Sanford, Florida is progressing according to plan. The plant provides a cost-effective means of disposing municipal biosolids for the town of Sanford. In addition, MaxWest has also secured additional sources of biosolid waste from neighbouring municipalities under merchant contracts executed in the period. MaxWest has also executed a Heads of Terms for a subsequent plant in the northeastern U.S. and, most recently, participated in a competitive bid process conducted by a large U.S. municipality where they were selected as the solution provider. As a result, exclusive negotiations for a facility in that municipality are now underway.

·; 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 (UL 1703 and IEC 61646 and 61730). In addition, Miasolé has also commenced commercial shipment to selected customers.

·; Rabun Gap achieved Commercial Operations Date on January 28, 2010. In addition, Rural Utility Services, a division of the U.S. Department of Agriculture, has earmarked a US$20.7 million long-term favourable fixed-rate interest loan to the facility.

·; Telogia has been completed on time and within budget. In addition, on October 30, 2009, Telogia received an ITC cash grant of approximately US$3 million.

·; SkyFuel completed its commercial demonstration facility at the SEGS-II solar facility in California. Furthermore, SkyFuel also completed the optical performance testing at NREL, a significant milestone.

Initially, it was not expected that the Company would generate significant levels of income at this stage in the investment cycle, however where investments have been structured on a debt or convertible basis, those particular instruments are generating interest income for the Company over the life of the investment. The Company received US$2.5 million of income

from investments during the year.

Prospective for 2010

The prospects for the environmental/clean energy market look considerably more positive than six months ago, as the underlying drivers remain strong - increasing focus on climate change and the environment more broadly and energy security issues.

Furthermore, the US government has yet to disburse the bulk of US$200 billion in stimulus money that has been earmarked for renewable energy programs. About US$24 billion has been allocated to date, with US$57 billion projected in 2010 and US$56 billion in 2011. In fact, Leaf Clean has already benefited from increased incentives for renewable energy and clean fuels, mostly in the government backed low-cost financing and/or loan guarantees. This development is in line with the overall investment thesis, which sees a combination of public policy pressures and increasing commercial interest in North American clean energy assets driving substantial long-term capital appreciation around these assets. As a result, EEA continues to work closely with the senior management teams of Leaf's portfolio companies to ensure that each is positioned properly to take advantage of relevant government grants, guarantees, and incentives.

The Asset Advisor also views the developing political and societal dynamics in the United States around climate change as significant. Although the Copenhagen summit on climate change this past December failed to produce an heir to the Kyoto Protocol, we, nevertheless, are encouraged by the incremental progress made. Achieving some level of commitment from the United States, China, and India is a crucial and unprecedented step. Further stateside, California became the first state in the U.S. to adopt comprehensive regulations to reduce greenhouse gases from commercial systems and the U.S. Environmental Protection Agency (EPA) announced this past December that greenhouse gases threaten the public health and welfare of the nation's citizens. The finding was significant, as it makes it possible for the Obama administration to begin regulating these, even if a climate bill is not passed in the US Congress. These developments, in our view, will see large corporations take a stronger interest in clean technology and in ways to reduce emissions of greenhouse gases through clean energy consumption and green products and services. The Company has positioned itself to benefit from US government climate change and energy policy, in whatever guise is pursued by policy makers. The portfolio's value would be enhanced with an expanded Renewable Portfolio Standard, with initiatives to support low carbon energy or as a result of a carbon pricing regime such as Cap and Trade.

Encouragingly, there are some indications that an economic recovery is gathering. The S&P 500, NASDAQ and Russell 2000 are up over 8% in the last 6 months. We are also seeing more activity in renewable energy IPO and merger and acquisition markets as investors and companies return to the capital markets. In this context, your Asset Advisor is actively planning for and evaluating approaches for the realization of value at the portfolio company level.

EEA Fund Management Limited

Asset Advisors to Leaf Clean Energy Company

10 March 2010

Review report by KPMG Audit LLC to Leaf Clean Energy Company

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 31 December 2009, which comprises the consolidated and company statements of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.

As disclosed in note 2(a) the annual financial statements are prepared in accordance with IFRS. The condensed sets of financial statements included in this half yearly report have been prepared in accordance with IAS 34 Interim Financial Reporting.

The accounting policies that have been adopted in preparing the condensed set of financial statements are consistent with those that the Directors currently intend to use in the next annual financial statements.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 31 December 2009 is not prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.

KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN

10 March 2010

Condensed statements of comprehensive income

for the six months ended 31 December 2009

		Company			Group
		(Unaudited)	(Unaudited)	(Audited)	(Unaudited)	(Unaudited) (Restated Note 2b)	(Audited) (Restated Note 2b)
	Note	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Interest income on cash balances		121	3,941	4,430	206	3,961	4,438
Unrealised losses on revaluation of investments at fair value through profit or loss	11	(14,415)	(14,000)	(30,400)	(9,200)	(14,000)	(30,400)
Net foreign exchange loss		(1,009)	(23,409)	(16,818)	(1,020)	(23,409)	(16,818)
Gross portfolio return		(15,303)	(33,468)	(42,788)	(10,014)	(33,448)	(42,780)
Management fees	7.1	(3,127)	(3,414)	(6,902)	(3,127)	(3,414)	(6,902)
Other administration expenses	7.2	(4,397)	(2,624)	(4,169)	(4,397)	(2,624)	(4,169)
Net portfolio return		(22,827)	(39,506)	(53,859)	(17,538)	(39,486)	(53,851)
Sales revenue and other income		-	-	-	7,501	1,158	2,782
Profit on disposal of assets		-	-	-	75	-	57
Impairment of non-financial assets	8	-	-	-	(5,215)	-	-
Operating expenses		-	-	-	(10,288)	(1,915)	(4,430)
Loss before finance costs		(22,827)	(39,506)	(53,859)	(25,465)	(40,243)	(55,442)
Finance costs		-	-	-	(368)	(115)	(119)
Loss before tax		(22,827)	(39,506)	(53,859)	(25,833)	(40,358)	(55,561)
Taxation		-	-	-	-	-	-
Loss for the period/year		(22,827)	(39,506)	(53,859)	(25,833)	(40,358)	(55,561)
Other comprehensive income
Exchange differences on translation of foreign operations		-	-	-	(22)	(144)	(123)
Total comprehensive income		(22,827)	(39,506)	(53,859)	(25,855)	(40,502)	(55,684)
Loss for the period/year attributable to
Equity holders of the parent		(22,827)	(39,506)	(53,859)	(25,286)	(40,221)	(55,226)
Non-controlling interest		-	-	-	(547)	(137)	(335)
		(22,827)	(39,506)	(53,859)	(25,833)	(40,358)	(55,561)
Total comprehensive income attributable to
Equity holders of the parent		(22,827)	(39,506)	(53,859)	(25,263)	(40,329)	(55,338)
Non-controlling interest		-	-	-	(592)	(173)	(346)
		(22,827)	(39,506)	(53,859)	(25,855)	(40,502)	(55,684)
Basic and diluted loss per share (cents)	9	(12.43)	(20.36)	(28.38)	(13.77 )	(20.73)	(29.10)

The accompanying notes form an integral part of these financial statements

Condensed statements of financial position

as at 31 December 2009

		Company			Group
		(Unaudited)	(Unaudited)	(Audited)	(Unaudited)	(Unaudited) (Restated Note 2b)	(Audited) (Restated Note 2b)
	Note	31 Dec 2009	31 Dec 2008	30 Jun 2009	31 Dec 2009	31 Dec 2008	30 Jun 2009
		US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Assets
Investments at fair value through profit or loss	11.1	-	-	-	76,626	92,226	85,826
Investments in subsidiaries at fair value through profit or loss	11.2	182,754	163,118	168,868	-	-	-
Property, plant and equipment	12	-	-	-	62,488	32,101	53,257
Intangible assets	13	-	-	-	28,521	15,931	18,137
Total non-current assets		182,754	163,118	168,868	167,635	140,258	157,220
Inventories		-	-	-	219	3	128
Trade and other receivables		82	206	121	1,765	3,161	2,982
Cash and cash equivalents		135,519	199,549	167,075	141,778	202,762	171,852
Total current assets		135,601	199,755	167,196	143,762	205,926	174,962
Total assets		318,355	362,873	336,064	311,397	346,184	332,182

Equity
Share capital	15	37	38	37	37	38	37
Share premium	15	359,603	364,208	359,603	359,603	364,208	359,603
Foreign currency translation reserve		-	-	-	(88)	(108)	(112)
Retained losses		(69,068)	(31,888)	(46,241)	(72,894)	(32,603)	(47,608)
Total equity attributable to equity holders of the parent		290,572	332,358	313,399	286,658	331,535	311,920
Non-controlling interest		-	-	-	4,931	1,027	2,404
Total equity		290,572	332,358	313,399	291,589	332,562	314,324

Liabilities
Unpaid capital contributions to subsidiaries		10,476	14,623	14,745	-	-	-
Loans and borrowings	16	-	-	-	7,899	8,241	7,689
Deferred infrastructure grants	17	-	-	-	1,824	1,824	1,600
Deferred revenue	18	-	-	-	1,381	1,381	1,381
Total non-current liabilities		10,476	14,623	14,745	11,104	11,446	10,670
Loans and borrowings	16	-	-	-	2,774	474	1,577
Trade and other payables		3,492	345	844	5,930	1,702	5,611
Unpaid capital contributions to subsidiaries		13,815	15,547	7,076	-	-	-
Total current liabilities		17,307	15,892	7,920	8,704	2,176	7,188
Total liabilities		27,783	30,515	22,665	19,808	13,622	17,858
Total equity and liabilities		318,355	362,873	336,064	311,397	346,184	332,182

Net asset value per share (cents)	6	158.23	177.76	170.67	156.10	177.32	169.86

The accompanying notes form an integral part of these financial statements

Condensed statements of changes in equity

for the six months ended 31 December 2009

	Share Capital	Share Premium	Retained earnings	Total
	US$'000	US$'000	US$'000	US$'000
Company
Balance at 1 July 2008	40	386,067	7,618	393,725
Total comprehensive income	-	-	(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 (audited)	(37)	359,603	(46,241)	313,399
Total comprehensive income	-	-	(22,827)	(22,827)
Balance at 31 December 2009 (unaudited)	37	359,603	(69,068)	290,572

Balance at 1 July 2008	40	386,067	7,618	393,725
Total comprehensive income	-	-	(39,506)	(39,506)

Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Repurchase of shares	(2)	(21,859)	-	(21,861)
Total contributions by and distributions to owners	(2)	(21,859)	-	(21,861)
Balance at 31 December 2008 (unaudited)	38	364,208	(31,888)	332,358

Condensed statements of changes in equity

for the six months ended 31 December 2009 (continued)

	Share Capital	Share Premium	Foreign currency translation reserve	Retained earnings	Total	Non-controlling interest	Total equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Group
Balance at 1 July 2008 as reported previously	40	386,067	-	7,618	393,725	-	393,725
Effect of change in accounting policy (note 2b)*	-	-	-	-	-	-	-
Balance at 1 July 2008 (restated)	40	386,067	-	7,618	393,725	-	393,725
Total comprehensive income for the period	-	-	(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 (audited)	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 2b)	-	-	(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 income	-	-	24	(25,286)	(25,262)	(593)	(25,855)

Transactions with owners, Recorded directly in equity
Changes in ownership interest in subsidiaries
Increase in non-controlling interest due to acquisition of subsidiaries	-	-	-	-	-	3,120	3,120
Total transactions with owners	-	-	-	-	-	3,120	3,120
Balance at 31 December 2009 (audited)	37	359,603	(88)	(72,894)	286,658	4,931	291,589

* There is no effect on opening retained earnings as at 1 July 2008 as all subsidiaries were acquired after that date.

The accompanying notes form an integral part of these financial statements

Condensed statements of changes in equity

for the six months ended 31 December 2009 (continued)

	Share Capital	Share Premium	Foreign currency translation reserve	Retained earnings	Total	Non-controlling interest	Total equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Group
Balance at 1 July 2008 as reported previously	40	386,067	-	7,618	393,725	-	393,725
Effect of change in accounting policy (note 2b)*	-	-	-	-	-	-	-
Balance at 1 July 2008 (restated)	40	386,067	-	7,618	393,725	-	393,725
Total comprehensive income	-	-	(108)	(40,221)	(40,329)	(173)	(40,502)

Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Repurchase of shares	(2)	(21,859)	-	-	(21,861)	-	(21,861)
Total contributions by and distributions to owners	(2)	(21,859)	-	-	(21,861)	-	(21,861)
Changes in ownership interest in subsidiaries
Increase in non-controlling interest due to acquisition of subsidiaries	-	-	-	-	-	1,200	1,200
Total changes in ownership interest in subsidiaries	-	-	-	-	-	1,200	1,200
Total transactions with owners	(2)	(21,859)	-	-	(21,861)	1,200	(20,661)
Balance at 31 December 2008 (restated) (unaudited)	38	364,208	(108)	(32,603)	331,535	1,027	332,562

Reconciliation of balances as at 31 December 2008
Balance at 31 December 2008 as reported previously	38	364,208	-	(31,771)	332,475	-	332,475
Effect of change in accounting policy (noted 2b)	-	-	(108)	(832)	(940)	1,027	87
Balance at 31 December 2008 (restated) (unaudited)	38	364,208	(108)	(32,603)	331,535	1,027	332,562

* There is no effect on opening retained earnings as at 1 July 2008 as all subsidiaries were acquired after that date.

The accompanying notes form an integral part of these financial statements

Condensed statements of cash flows

For the six months ended 31 December 2009

	Company			Group
	(Unaudited)	(Unaudited)	(Audited)	(Unaudited)	(Unaudited) (Restated Note 2b)	(Audited) (Restated Note 2b)
	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Cash flows from operating activities
Interest received on cash balances	142	4,019	4,598	206	4,179	4,605
Cash received from customers	-	-	-	7,502	1,153	2,834
Operating expenses paid	(4,450)	(7,954)	(12,902)	(17,583)	(9,901)	(16,511)
Net cash used in operating activities	(4,308)	(3,935)	(8,304)	(9,875)	(4,569)	(9,072)

Cash flows from investing activities
Purchase of investments in subsidiaries at fair value through profit or loss	(26,239)	(91,998)	(122,088)	-	-	-
Purchase of financial assets at fair value through profit or loss	-	-	-	-	(51,226)	(61,226)
Purchase of intangible asset	-	-	-	-	-	(2,000)
Proceeds from disposal of property, plant and equipment	-	-	-	75	-	-
Acquisition of subsidiaries net of cash acquired	-	-	-	(10,139)	(13,093)	(15,172)
Net purchases of property, plant and equipment	-	-	-	(10,513)	(7,284)	(23,449)
Payment of cash held in escrow account	-	-	-	-	(4,803)	(4,803)
Net cash used in investing activities	(26,239)	(91,998)	(122,088)	(20,577)	(76,406)	(106,650)

Cash flows from financing activities
Repurchase of shares during the period	-	(21,861)	(26,467)	-	(21,861)	(26,467)
Net borrowings received/(paid)	-	-	-	1,407	(11,602)	(11,181)
Infrastructure grants received	-	-	-	-	-	1,445
Net cash used in financing activities	-	(21,861)	(26,467)	1,407	(33,463)	(36,203)

Net decrease in cash and cash equivalents	(30,547)	(117,794)	(156,859)	(29,045)	(114,638)	(151,925)
Cash and cash equivalents at start of the period	167,075	340,752	340,752	171,852	340,752	340,752
Effect of exchange rate fluctuations on cash and cash equivalents	(1,009)	(23,409)	(16,818)	(1,029)	(23,352)	(16,975)
Cash and cash equivalents at end of period/year	135,519	199,549	167,075	141,778	202,762	171,852

The accompanying notes form an integral part of these financial statements

Condensed statements of cash flows (continued)

For the six months ended 31 December 2009

	Company			Group
Reconciliation of loss before tax to net cash used in operating activities	(Unaudited)	(Unaudited)	(Audited)	(Unaudited)	(Unaudited) (Restated Note 2b)	(Audited) (Restated Note 2b)
	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000

Loss before tax	(22,827)	(39,506)	(53,859)	(25,833)	(40,358)	(55,561)
Adjustments for:
Unrealised losses on revaluation of investments at fair value through profit or loss	14,415	14,000	30,400	9,200	14,000	30,400
Impairment of assets	-	-	-	5,215	-	-
Depreciation	-	-	-	1,451	450	1,082
Foreign exchange loss	1,009	23,409	16,818	1,020	23,409	16,818
Profit on disposal of assets	-	-	-	(75)	-	-
Movement in trade and other receivables	18	109	194	85	271	944
Movement in trade and other payables	3,077	(1,947)	(1,857)	(938)	(2,341)	(2,755)
Net cash used in operating activities	(4,308)	(3,935)	(8,304)	(9,875)	(4,569)	(9,072)

The accompanying notes form an integral part of these financial statements

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2009

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 Asset Advisor perform all significant functions. Accordingly, the Company itself has no employees.

The consolidated financial statements of the Group as at and for the year ended 30 June 2009 are available upon request from the Company's registered office at PO Box 309GT, Ugland House, George Town, Grand Cayman, Cayman Islands or at www.leafcleanenergy.com.

2 Basis of preparation

(a) Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 June 2009.

Leaf is an investment company. However, because it holds majority stakes and therefore has the power to control, it is required to prepare group financial statements that consolidate the results of such investments. In order to present information that is comparable with other investment companies, Leaf also publishes financial statements of the Company, which include investments in subsidiaries regarded as part of the Company's investing business at fair value.

These condensed consolidated interim financial statements were approved by the Board of Directors on [date].

(b) 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 interim 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 interim period ended 31 December 2009, as disclosed in note 14. This change in accounting policy has been applied retrospectively and the comparative amounts have been accordingly restated.

2 Basis of preparation (continued)

(b) Changes in accounting policies (continued)

(ii) Accounting for business combinations

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.

(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 condensed interim financial statements as of and for the six months period ended on 31 December 2009. 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.

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Except as described below, in preparing these condensed consolidated interim 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:

2 Basis of preparation (continued)

During the six months ended 31 December 2009 management reassessed its estimates in respect of:

·; the valuation of unquoted investments (see note 11); and

·; impairment of goodwill and other intangible assets (see note 8 and 13)

3 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

(i) Business combinations

The Group has changed its accounting policy with respect to accounting for business combinations. See note 2(b)(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.

(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.

(b) 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.

3 Significant accounting policies (continued)

(i) Recognition and measurement

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.

(i) Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For measurement of goodwill at initial recognition, see note 3(a)(i).

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.

(d) Impairment of non-financial assets

At each balance sheet 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 Significant accounting policies (continued)

(e) 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.

(f) Receivables

Receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

(g) 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.

(h) 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 income statement using 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.

(i) 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.

(j) 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.

(k) 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 income statement. This includes expenses directly related to making an investment which is held at fair value through profit or loss.

3 Significant accounting policies (continued)

(l) 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.

(m) Investments in subsidiaries

The Company designated its investments in subsidiaries, 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 in subsidiaries, including foreign exchange movements, are recognised in the statement of comprehensive income for the period. Investments in unquoted subsidiaries 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. Fair value for this purpose is determined with reference to the valuation of the underlying investee entities.

(n) 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 period.

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

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 policies

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 30 June 2009.

6 Net Asset Value per share

	(Unaudited)	(Unaudited)	(Audited)
	31 December 2009	31 December 2008	30 June 2009
Company
Net assets attributable to equity holders of the parent (US$'000)	290,572	332,358	313,399
Number of ordinary shares in issue (thousands)	183,634	186,974	183,634
Net asset value per share (cents per share)	158.23	177.76	170.67

6 Net Asset Value per share (continued)

	(Unaudited)	(Unaudited)	(Audited)
	31 December 2009	31 December 2008	30 June 2009
Group
Net assets attributable to equity holders of the parent (US$'000)	286,658	331,535	311,920
Number of ordinary shares in issue (thousands)	183,634	186,974	183,634
Net asset value per share (cents per share)	156.10	177.32	169.86

7 Charges and fees

7.1 Management fees

Annual fees

On 25 September 2009, EEA Fund Management Limited ( the "Asset Advisor" or "EEA"), the 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.

EEA continues to act as investment advisor to Leaf under the terms of the existing Asset Advisory Agreement.

Under the Asset Advisory Agreement, the 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 period ended 31 December 2009 amounted to US$3,126,530 (period ended 31 December 2008: US$ US$3,414,101) and the amount accrued but not paid at the period end is US$ nil (30 June 2009: US$nil).

7.2 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 period amounted to US$119,376 (period ended 31 December 2008: US$130,039) and

US$60,878 was outstanding as at 31 December 2009 (30 June 2009: US$233,712).

8 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.

Group	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009
	US$'000	US$'000	US$'000
Goodwill ( note 13)	(721)	-	-
Other Intangible assets ( note 13)	(430)	-	-
Pre-operating expenses	(1,374)	-	-
Property, plant and equipment (note 12)	(2,690)	-	-
Total	(5,215)	-	-

9 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 period:

	(Unaudited)	(Unaudited)	(Audited)
	6 months ended 31 December 2009	6 months ended 31 December 2008	Year ended 30 June 2009
	US$'000	US$'000	US$'000
Company
Loss attributable to equity holders of the parent (US$'000)	(22,827)	(39,506)	(53,859)
Weighted average number of ordinary shares in issue (thousands)	183,634	194,034	189,760
Basic and fully diluted loss per share (cents per share)	(12.43)	(20.36)	(28.38)
Group
Loss attributable to equity holders of the parent (US$'000)	(25,286)	(40,221)	(55,226)
Weighted average number of ordinary shares in issue (thousands)	183,634	194,034	189,760
Basic and fully diluted loss per share (cents per share)	(13.77)	(20.73)	(29.10)

There is no difference between the basic and diluted loss per share for the period.

10 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%

*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	75%
Escalona B.V	Netherlands	Hydro Energy	75%
Energia Escalona I S.A. de C.V	Mexico	Hydro Energy	74%
Energia Escalona s.r.l.	Mexico	Hydro Energy	74%
Energentum S.A. de C.V	Mexico	Hydro Energy	73%
Johnstown Regional Energy LLC	USA (Pennsylvania)	Landfill	100%
MaxWest Environmental Systems Inc	USA (Nevada)	Waste Energy	42%**
Multitrade Rabun Gap LLC	USA (Virginia)	Biomass	75%
Multitrade Telogia LLC	USA (Virginia)	Biomass	61.25%
Telogia Power LLC	USA (Virginia)	Biomass	61.25%

** Voting rights 50.5%

11 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 Asset Advisor, 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'.

11.1 Investments at fair value through profit or loss

Group	(Unaudited)	(Unaudited)	(Audited)
	31 December 2009 US$'000	(Restated) 31 December 2008 US$'000	(Restated) 30 June 2009 US$'000

Balance brought forward	85,826	55,000	55,000
Purchases at cost	-	51,226	61,226
Unrealised revaluation losses on investments	(9,200)	(14,000)	(30,400)
Balance carried forward	76,626	92,226	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.

11.2 Investments in subsidiaries at fair value through profit or loss

Company	(Unaudited)	(Unaudited)	(Audited)
	31 December 2009 US$'000	(Restated) 31 December 2008 US$'000	(Restated) 30 June 2009 US$'000

Balance brought forward	168,868	55,000	55,000
Purchases at cost	28,301	122,118	144,268
Unrealised revaluation losses on investments	(14,415)	(14,000)	(30,400)
Balance carried forward	182,754	163,118	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 Asset Advisor 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.

12 Property, plant and equipment

	Gas production plants	Projects under development	Land and Buildings	Machinery and plant equipment	Vehicles	Office equipment	Total
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
Cost
Balance at 1 July 2009	7,954	42,294	361	6,823	14	223	57,669
Additions	326	4,983	57	4,138	-	83	9,587
Acquisition through business combination	3,832	3	-	-	7	95	3,937
Impairment	-	(2,690)	-	-	-	-	(2,690)
Disposals	-	-	-	-	-	(70)	(70)
Balance at 31 December 2009 (unaudited)	12,112	44,590	418	10,961	21	331	68,433

Depreciation
Balance at 1 July 2009	2,253	2,151	2	6	-	-	4,412
Depreciation of assets acquired through business combination	82	-	-	-	-	-	82
Charge for the period	419	634	2	250	3	143	1,451
Balance at 31 December 2009 (unaudited)	2,754	2,785	4	256	3	143	5,945

Carrying amounts
30 June 2009 (audited)	5,701	40,143	359	6,817	14	223	53,257
31 December 2009 (unaudited)	9,358	41,805	414	10,705	18	188	62,488

13 Intangible assets

	Goodwill	Other intangibles	Total
	US$'000	US$'000	US$'000
Cost
Balance as at 1 July 2008	-	-	-
Acquisitions through business combinations	15,931	-	15,931
Balance at 31 December 2008	15,931	-	15,931

Balance as at 1 July 2009	16,131	2,006	18,137
Purchased goodwill of sub-subsidiary	100	-	100
Acquisitions through business combinations	11,491	-	11,491
Balance at 31 December 2009	27,722	2,006	29,728

Amortisation and impairment losses
Balance as at 1 July 2008	-	-	-
Amortisation and impairment loss	-	-	-
Balance at 30 December 2008	-	-	-

Balance as at 1 July 2009	-	-	-
Amortisation	-	(56)	(56)
Impairment loss	(721)	(430)	(1,151)
Balance at 31 December 2009	(721)	(486)	(1,207)

Carrying amounts
1 July 2008	-	-	-
31 December 2008	15,931	-	15,931

1 July 2009	16,131	2,006	18,137
31 December 2009	27,001	1,520	28,521

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.

14 Acquisition of subsidiaries

For the year ended 30 June 2009, the Group acquired the following subsidiaries:

In July 2008, the Group obtained control of Multitrade Rabun Gap LLC, a company that operates a 20MW nameplate wood-fuelled biomass facility in Rabun Gap, Georgia. The Group contributed US$4.1m capital to acquire 75 percent ownership interest in the company.

On 4 August 2008, the Group committed US$20.9 million in equity and a construction loan to Energentum S.A. de C.V, a company that is constructing a 9.3 MW capacity run-of river hydroelectric facility on the Las Minas River near Veracruz, Mexico. The Group made the acquisition through a 75 percent ownership in Energia Escalona Coopertief U.A, the intermediate parent company of Energentum S.A. de C.V, registered in Netherlands.

On 19 November 2008, the Group invested US$28.4m to acquire 100 percent of Johnstown Regional Energy LLC, a company that owns and operates three landfill gas-to-methane projects that were placed in operation in 2006 and 2007 at Waste Management landfills located in Pennsylvania.

14 Acquisition of subsidiaries (continued)

On 6 February 2009, the Group obtained control of Multitrade Teogia LLC, a company that operates an existing 14 MW capacity wood-fuelled biomass facility in Telogia, Florida by acquiring 61.25 percent ownership in the company. The Group views Telogia as an opportunity to build upon its existing biomass platform, while teaming up with the same operational partners from the Group's Multitrade Rabun Gap investment.

The following summarises the major classes of consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition dates:

	Multitrade Rabun Gap LLC	Energentum S.A. DE c.v	Johnstone Regional Energy LLC	Multitrade Telogia LLC	30 June 2009 Total
	US$'000	US$'000	US$'000	US$'000	US$'000
Consideration transferred
Purchase consideration
Cash	-	-	1,794	-	1,794
Loan	-	-	11,715	-	11,715
Equity investment	4,093	1,300	14,891	2,650	22,934
Total	4,093	1,300	28,400	2,650	36,443

Identifiable assets acquired and liabilities assumed (100%)
Property, plant and equipment	4,020	11	21,463	6,160	31,654
Cash and cash equivalents	4,842	-	15,882	571	21,295
Trade and other receivables	387	1,546	1,191	630	3,754
Trade and other payables	(5,706)	(333)	(497)	(3,227)	(9,763)
Deferred infrastructure grants	-	-	(2,051)	-	(2,051)
Deferred revenue	-	-	(1,386)	-	(1,386)
Loans and borrowings	-	-	(20,315)	(134)	(20,449)
Total net identifiable assets	3,543	1,224	14,287	4,000	23,054
Fair value of interest in net asset acquired	2,658	917	14,287	2,450	20,312

Goodwill Goodwill was recognised as a result of the acquisition as follows:
Fair value of consideration transferred	4,093	1,300	28,400	2,650	36,443
Fair value of interest in net assets acquired	(2,658)	(917)	(14,287)	(2,450)	(20,312)
Goodwill on acquisition	1,435	383	14,113	200	16,131

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. The effective Group's equity interest in the company is 42 percent.

14 Acquisition of subsidiaries (continued)

Consideration transferred		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
	Note	US$'000

Property, plant and equipment	12	3,855
Intangible assets	13	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

Goodwill Goodwill was recognised as a result of the acquisition as follows:
Fair value of consideration transferred		13,750
Fair value of interest in net assets acquired		(2,259)
Goodwill on acquisition	13	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.

15 Share capital

Ordinary shares of GB£0.0001 each	Number of shares	Share capital US$'000	Share premium US$'000

In issue at 1 July 2008	200,000,000	40	386,067
Repurchased during the year	(16,366,227)	(3)	(26,464)
As at 30 June 2009	183,633,773	37	359,603
Repurchased during the period	-	-	-
As at 31 December 2009	183,633,773	37	359,603

In issue at 1 July 2008	200,000,000	40	386,067
Repurchased during the year	(13,026,227)	(2)	(21,859)
As at 31 December 2008	186,973,773	38	364,208

16 Loans and borrowings

	31 December 2009 US$'000	(Restated) 31 December 2008 US$'000	(Restated) 30 June 2009 US$'000

Current loans	2,774	474	1,577
Non-current loans	7,899	8,241	7,689
Total	10,673	8,715	9,266

Long term debt comprises 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.

17 Deferred infrastructure grants

Government grants relating to construction of the Somerset Methane plant owned by Johnston Regional Energy LLC ("JRE"), a Group subsidiary, are deferred and recognised over the useful lives of the identifiable assets the grant funds were used to construct. The amortisation of the grants is classified as a reduction to depreciation and amortisation expenses in the consolidated statement of comprehensive income.

18 Deferred revenue

On 20 December 2006, a subsidiary company, JRE, entered into a Gas Purchase and Sale Agreement wherein $1,650,000 was advanced to JRE and will be satisfied by a discounted selling price over seven years with no greater than 75% of the gas production from the Somerset Methane Recovery Project being dedicated to the counter party. The discounted price is subject to various floor and ceiling gas prices as defined in the agreement. The Group has not recognised any revenue for the six months ended 31 December 2009 (period ended 31 December 2008: US$nil).

19 Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions.

The Asset Advisor and the Company administrator are considered related parties due to the significance of the contracts with these parties. Details of the fee arrangements with these parties are given in note 7.

The Directors are considered related parties as they have authority and responsibility for planning, directing and controlling the activities of the Company.

Details of the Directors' annual remuneration are as follows:

	Basic annual remuneration
	US$
Peter Tom (Chairman)	140,000
Bran Keogh	100,000
J. Curtis Moffatt	105,000
Peter O'Keefe	105,000
Nora Mead Brownell	105,000

On 12 November 2009, Nora Mead Brownell resigned as a Director of the Company.

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 six months ended 31 December 2009 amounted to US$328,632 (period ended 31 December 2008: US$148,389) of which US$130,000 was outstanding at 31 December 2009 (June 2009: US$135,000).

19 Related Party Transactions ( 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.

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 six months to 31 December 2009 amounted to US$4,150 (period ended 31 December 2008: US$8,842) and the amount accrued but not paid at the period end was US$ nil (2008: 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.

Leaf Finance Company, a group subsidiary, entered into a construction loan agreement of US$17.5 million with Multitrade Rabun Gap, a fellow subsidiary, at acquisition to fund the construction of the biomass facility in Rabun Gap, Georgia. The interest is compounded quarterly at the rate of 10 percent per annum. The maturity date is the earlier of the date six months following the commercial operations or 30 June 2010.

On 3 September 2009 and 9 November 2009, Leaf Finance Company entered into two convertible note agreements of US$4 million and US$5.8 million with Multitrade Rabun Gap to fund its existing construction. The terms of both loan agreements is 5 years from the date of the convertible note and the interest is accrued at the rate of 8 percent per annum.

On 6 February 2009, the Company also entered into a construction loan agreement with Telogia Power LLC, to fund a total of US$9,500,000 for its refurbishment and operations. The maturity date is the earlier of the date one year following the commercial operation date or 30 June 2010. Interest is compounded quarterly at a rate of 15 percent per annum.

20 Capital Commitments

As at 31 December 2009 the following capital commitments were outstanding in relation to investments.

Investment	Initial commitment	Drawn down	Remaining commitment
	US$'000	US$'000	US$'000

Vital Renewable Energy, LLC	50,000	(6,226)	43,774
Multitrade Rabun GAP, LLC	31,393	(27,167)	4,226
MaxWest Environment Systems, Inc	25,000	(13,750)	16,250
Energia Escalona SV	20,900	(7,085)	13,815
SkyFuels, Inc	10,000	-	10,000
Invenergy Wind, LLC	10,000	-	10,000
	147,293	(54,228)	98,065

21 Post balance sheet events

On 19 January 2010, the Company extended the second tranche of preferred shares investment of US$6,250,000 to MaxWest Environmental Systems, Inc.

On 15 February 2010, the Company extended the first tranche of the bridge facility of US$3,500,000 to SkyFuel, Inc.

In January 2010, 1,460,000 shares were repurchased by the Company leaving 182,173,773 shares in issue at January 2010. The Shares were purchased in 7 tranches at prices of between 67.5 pence to 70 pence per share for a total of £997,523 (US$ 1,623,621).

This information is provided by RNS

The company news service from the London Stock Exchange

END

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