LBB.L Regulatory News (LBB)

1 May 2007 07:03

Greenhouse Fund Limited (The)01 May 2007 For Immediate Release 1 May 2007 The Greenhouse Fund Limited ("Greenhouse" or "the Fund") Final Results for the period ended 31 December 2006 The Greenhouse Fund (AIM:GHF), the Jersey domiciled closed-ended investmentcompany, today reports its results for the period to 31 December 2006. Highlights for the period: •Successful placing and IPO, raising £9.8 million (gross) •Maiden investment in Molectra, a tyre recycling technology •Acquisition of Bauxsol technology licenses •NAV at 31 December 2006 of 8.90p •Cash and equivalents at 31 December 2006, £8.17m •Post year-end further investment in Molectra Commenting on the results, Chairman Nigel Wray said: "I am delighted to reporton the first year's trading for Greenhouse. The green sector continues to have aremarkably high profile within the business and political arenas, and I believeGreenhouse is ideally positioned to capitalise upon this. The significant developments within our Molectra tyre recycling technology areparticularly exciting. The additional investment made in Molectra givesGreenhouse the right to acquire a majority stake, and I look forward toannouncing further developments as soon as Molectra's technology is taken to itsnext stage of operation". For further information please contact: Greenhouse AdvisorPaul Gazzard 01725 510 383Rodger Sargent 020 7399 4260 Evolution Securities 020 7071 4300Fergus Marcroft Buchanan Communications 020 7466 5000Charles RylandBen Willey CHAIRMAN'S STATEMENT These are the first set of full accounts for The Greenhouse Fund Limitedcovering the period to 31 December 2006. Greenhouse is a Jersey domiciledclosed-ended investment company, with the objective of creating a portfolio ofsustainable environmental technologies. It listed on AIM on 12 January 2006. Financial performance As at 31 December 2006, Greenhouse had net assets of £13.81m, including cash of£8.17m and investments of £5.66m. The loss for the period was £0.3m and theperiod end NAV was 8.9p. Portfolio Molectra Australia Pty Ltd ("Molectra") On 27th March 2006, Greenhouse announced its first investment, in Molectra.Molectra has developed a sustainable process that re-cycles and recoversmaterials from used vehicle tyres. The disposal of tyres is a majorenvironmental issue as shredding and land-filling, the main disposal methodcurrently utilised, is being increasingly banned or becoming prohibitivelyexpensive around the globe. Greenhouse believes these legislative and commercialpressures present a major opportunity for Molectra and will further benefit fromgovernment incentive schemes designed to encourage environmentally responsiblebehaviour. The derivative products from tyres put through the Molectra process are; •High grade crumb rubber; for large scale use in road surfacing and other applications or in high value re-bonded rubber products; •Oil; which may be further fractionated into valuable end products including limolene for fragrances and fuel oils; •Carbon; used for industrial applications such as activated carbon and carbon black. Greenhouse invested £750,000 by way of a convertible note secured overMolectra's assets that, upon conversion, will equate to 32% of Molectra'sequity. On 26th March 2007, following the period covered by the accounts, Greenhouse invested an additional c.£1.2million in Molectra Technologies Pty Ltd("Molectra Technologies"), the parent of Molectra, in cash via a convertiblenote. The convertible note is unsecured, cannot be redeemed for a cashalternative, and must be exercised before 31 December 2008. Upon conversion, Greenhouse would receive a 39% shareholding in MolectraTechnologies. Alternatively Greenhouse can elect to redeem the note for 39% ofthe assets of Molectra Technologies, this redemption would translate into a 26%stake in Molectra. This gives Greenhouse the right to acquire in total acontrolling 58% stake in Molectra. This subsequent investment also givesGreenhouse the right to appoint two directors to the board of MolectraTechnologies with various controlling rights. These investments enabled Molectra's existing plant to be scaled up and providedthe support and business infrastructure required to deliver the solution on alarger scale. A commercial pilot plant, capable of processing 250,000 tyres peryear, has been constructed and has commenced continuous daily operations. Theprimary objective of the pilot trial, run over a 3-month period was to establishthe scalability and the continuous commercial viability of the technology. Greenhouse commissioned a report from Wiley & Co. ("Wiley"), to analyse allaspects of the plant's operation, which was received in March 2007. Wiley is aninternationally renowned engineering firm that was involved in the constructionof the plant from inception. The report examined the construction, commissioningand operation of the pilot plant, and crucially, the operating and capital costsassociated with the ten-fold scale up from pilot to full-scale plant. The Wileyreport strongly endorses the economic and commercial viability of the Molectraprocess. A full-scale plant is designed to process c.2.6 million tyres per year or 26,000tonnes, which is ten-times the capacity of the current pilot plant. It isanticipated that a full scale plant will cost c.£6 million to build and takec.12 months to construct. Based on the Wiley report, the Directors expect theoperating cost associated with processing this volume would be c.£70 per tonne.Various target sites outside Sydney in New South Wales, Australia, are currentlybeing considered for the full-scale plant. Bauxsol licences and other assets On 29 June 2006, Greenhouse announced the acquisition of five Bauxsol technologysub-licences and the purchase of the business and assets of SterlingEnvironmental Solutions Ltd from Virotec International Ltd ("Virotec"). Bauxsolextracts heavy metals, arsenic, phosphates and cyanide from water, soil and airthrough its bespoke re-agents, without creating any hazardous waste streams.Once treated, wastes are rendered inert or non-hazardous, and significantlyeasier and cheaper to either be disposed of or reused. The consideration of £5 million was satisfied by the issue of 30,000,000 newGreenhouse shares and £500,000 cash, giving Virotec a 19% holding in Greenhouse.Virotec will receive an ongoing royalty on any revenue earned from thetechnologies. In addition, if any of the technologies are subsequently sold byGreenhouse, any sale will include the obligation to continue to pay royalties toVirotec and for Virotec to retain a 19% interest in the technologies for zeroconsideration. The five Bauxsol platform technologies being sub-licensed to Greenhouse are: (a) ViroConcrete, speciality cement products with many potentialapplications. Following ongoing research and collaboration with QueensUniversity, Belfast, Greenhouse will increase commercial and sales support asthe concrete market gains awareness of the products and their potential; (b) ViroAirFilter, development has progressed with the USEnvironmental Protection Agency and is designed to remove mercury, CO2 and otherpolluting metals from industrial flue emissions by 'gas scrubbing' suchhazardous compounds from waste gases prior to their release into the atmosphere; (c) ViroFertiliser, aims to control the level of phosphatepollution and to increase crop yields via the slow release of phosphate fromfertilisers. A ViroFertiliser re-agent is added to the fertiliser, binding withthe phosphate, keeping it in situ, thus decreasing the fertiliser run off, waterpollution and providing higher yields. Tests have shown a significantimprovement in crop yields when the ViroFertiliser was used on, amongst others,cotton crops in Australia; (d) Gastric animal applications, aims to relieve chronic gastricproblems within commercially farmed animals. Demonstrations indicating thepotential for a product have already been carried out on horses. Greenhouse iscurrently negotiating with a partner to commence field trials with commerciallivestock; (e) Any further new commercial applications developed from theBauxsol technology, giving Greenhouse access to the time of the scientists andfacilities involved in the development of Bauxsol in the Southern CrossUniversity in New South Wales, Australia. Greenhouse's strategy is to continue to develop the Bauxsol technologies, usingboth academic and commercial partners from within industry. Once an applicationhas been fully commercialised, Greenhouse will consider the strategic optionsavailable so as to maximise shareholder value. Such alternatives may includeintroducing new structures for each license, depending on the particular marketand opportunity that it faces. Greenhouse also purchased the business and assets of Sterling EnvironmentalSolutions Ltd ("Sterling"), with a view to establishing a regional treatmentcentre ("RTC") for the treatment of high strength organic waste streams.Greenhouse believes this area of the waste management market is currentlylacking a high-technology solution. The Fund has recently retained anindependent consultant to re-examine the scale and economic rationale ofoperating in this sector. Board appointment On 7th August 2006, it was announced that Brian Sheeran, was appointed to theboard of Greenhouse as non-executive Deputy Chairman. The future Greenhouse has always considered that Molectra has the potential to develop asignificant presence within the waste tyre recycling industry. Post year-end,the pilot plant performance and Wiley report on its success confirms this. Anumber of options for the development of the full-scale plant are currentlybeing considered. The various Bauxsol applications continue to be developed, with ongoing researchby various academic, regulatory and commercial bodies. As well as developing theexisting portfolio, Greenhouse continues to actively seek out new sustainabletechnologies, a number of which are currently being investigated and assessed. The first year of Greenhouse has been a success, and I look forward to much morein the future. Nigel Wray Chairman Greenhouse Fund Limited 30th April 2007 THE GREENHOUSE FUND LIMITED DIRECTOR'S REPORT for the Period 13 December 2005 to 31 December 2006 The Directors submit their Report and Financial Statements for the period 13December 2005 to 31 December 2006. The Greenhouse Fund Limited (the "Fund") was incorporated on 13 December 2005and operates as an unclassified fund within the provisions of the CollectiveInvestment Funds (Jersey) Law 1988. Principal Activity The Fund is a Jersey domiciled closed-ended investment company, created toinvest in sustainable environmental technologies, and was listed on AIM on 12January 2006. Listing The Fund is listed on the Alternative Investment Market. Investment Objective The Fund's objective is to generate a significant level of long-term capitalgrowth through investment in a diverse portfolio of environmental technologies. Investment Policy The investment policy of the Fund is to invest in sustainable environmentaltechnologies to create a portfolio of investment holdings within theEnvironmental Sector. It will invest in minority, majority or entire stakes inpublic or private entities, depending on the opportunity. As well as making aninitial investment, the Fund may also meet the working capital requirements of aportfolio company or from time to time make additional capital injections intosuch portfolio company. The Fund will spread its investments across theEnvironmental Sector. Basic business principles and analysis and techniques will be applied todetermine the best opportunities for the Fund. Distributions It is not intended in normal circumstances that the Fund will pay dividends onthe shares. The proceeds realised from the portfolio will be available for reinvestment intofurther investment opportunities (net of any costs). The Board will, however,consider the distribution of capital profits on the shares after the first threeyears of the Fund's life and at any time if the Manager does not believe thereto be further attractive investment opportunities. Following the end of thetenth year of the Fund's life, the proceeds from the sale of the portfolio willbe returned to Shareholders as determined by the Board. The income statement is set out within this Annual Report and FinancialStatements. The Directors do not recommend the payment of a dividend. Life The Fund will have a ten year life, subject to extension by shareholders byspecial resolution (requiring a two-thirds majority of those voting). Custodian - Fixed Income Portfolio BNP Paribas (Jersey Branch) provides custody services for the Fund. Shareholder's Interests Extent of Holdings No. of shareholders 1-9,999 13 10,000-99,999 20 100,000-999,999 17 1,000,000-9,999,999 20 10m+ 4 At 30 March 2007 the Fund was aware of the following interests of 3% or more inthe Ordinary share capital of the Fund: Number % Held Virotec Investments pty Limited 30,000,000 19.33%ODL Nominees Limited 18,110,000 11.67%PIHL Equity LLP 17,500,000 11.27%Mr David Perry Gaskell 14,475,000 9.33%Roy Nominees Limited 7,500,000 4.83%Chase (GA Group) Nominees Limited 7,000,000 4.51%Smith & Williamson Nominees 5,895,000 3.80%J M Finn Nominees Limited 5,176,508 3.33%Goldman Sachs International 5,128,000 3.30%Vidacos Nominees Limited 5,000,000 3.22%Smith & Williamson Nominees 5,000,000 3.22% Directors' Interests The maximum amount of remuneration payable to the Directors permitted under theArticles is £75,000 per annum. The Directors received in aggregate £39,221 forthe period ended 31 December 2006. The interests of the Directors in the Ordinary share capital of the Fund as at31 December 2006 are: Nigel William Wray controls or is beneficially interested in 40.31% of thepartnership capital of PIHL Equity LLP, which controls 17,500,000 shares in theFund. Mr Wray and family members hold, through a nominee account, a further443,667 shares. Roger Maddock controls 250,000 ordinary shares and by virtue of being a Directorof the Manager is treated as being interests in the 750,000 shares held by theManager. Roger Maddock is both a Director of the Fund and non-executive Chairman of theManager. By Order Of The Board BNP Paribas Fund Services Jersey Limited Secretary 30th April 2007 STATEMENT OF DIRECTORS' RESPONSIBILITIES The Directors are responsible for preparing the financial statements inaccordance with applicable law and International Financial Reporting Standards. The Directors are required by the Companies (Jersey) Law 1991 to preparefinancial statements for each year which give a true and fair view of the stateof affairs of the Fund and of the profit or loss of the Fund for that period. In preparing these financial statements the Directors are required to: . select suitable accounting policies and then apply them consistently; . make judgements and estimates that are reasonable and prudent; . prepare the financial statements on a going concern basis unless it isinappropriate to presume that the Fund will continue in business; and . state whether applicable accounting standards have been followed,subject to any material departures disclosed and explained in the financialstatements. The Directors are responsible for keeping accounting records which aresufficient to show and explain the Fund's transactions and are such as todisclose with reasonable accuracy, at any time, the financial position of theFund and to enable them to ensure that the financial statements comply with theCompanies (Jersey) Law 1991. They are also responsible for safeguarding theassets of the Fund and hence for taking reasonable steps for the prevention anddetection of fraud, errors and non-compliance with applicable law andregulations. In so far as the directors are aware: . there is no relevant audit information of which the company's auditorsare unaware; and . the directors have taken all steps that they ought to have taken to makethemselves aware of any relevant audit information and to establish that theauditors are aware of that information. The directors are responsible for the maintenance and integrity of the corporateand financial information included on the company's website. Legislation inJersey governing the preparation and dissemination of financial statements maydiffer from legislation in other jurisdictions. REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF THE GREENHOUSE FUND LIMITED We have audited the group and parent company financial statements (the''financial statements'') of The Greenhouse Fund Limited for the period ended 31December 2006 which comprise the group income statement, the group and parentcompany balance sheets, the group and parent company statements of changes inequity, the group and parent company statements of cash flows and notes 1 to 19.These financial statements have been prepared under the accounting policies setout therein. This report is made solely to the company's members, as a body, in accordancewith the Companies (Jersey) Law 1991. Our audit work has been undertaken so thatwe might state to the company's members those matters we are required to stateto them in an auditor's report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company and the company's members as a body, for our audit work, for thisreport, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the Annual Report and thefinancial statements in accordance with applicable law and InternationalFinancial Reporting Standards (IFRSs) are set out in the Statement of Directors'Responsibilities. Our responsibility is to audit the financial statements in accordance withrelevant legal and regulatory requirements and International Standards onAuditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a trueand fair view and whether the financial statements have been properly preparedin accordance with the Companies (Jersey) Law 1991. We also report to youwhether in our opinion the information given in the Directors' Report isconsistent with the financial statements. In addition we report to you if, in our opinion, the company has not kept properaccounting records, if we have not received all the information and explanationswe require for our audit, or if information specified by law regardingdirectors' remuneration and other transactions is not disclosed. We read other information contained in the Annual Report and consider whether itis consistent with the audited financial statements. The other informationcomprises only the Directors' Report, the Chairman's Statement and the Statementof Directors' Responsibilities. We consider the implications for our report ifwe become aware of any apparent misstatements or material inconsistencies withthe financial statements. Our responsibilities do not extend to any otherinformation. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the financial statements. It also includes an assessment of thesignificant estimates and judgments made by the directors in the preparation ofthe financial statements, and of whether the accounting policies are appropriateto the group's and company's circumstances, consistently applied and adequatelydisclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the financial statementsare free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the financial statements. Opinion In our opinion: • the group financial statements give a true and fair view, in accordance with IFRSs, of the state of the group's affairs as at 31 December 2006 and of its loss for the period then ended • the parent company financial statements give a true and fair view, in accordance with IFRSs, of the state of the parent company's affairs as at 31 December 2006; • the financial statements have been properly prepared in accordance with the Companies (Jersey) Law 1991; and • the information given in the Directors' Report is consistent with the financial statements. In our opinion the group financial statements give a true and fair view, inaccordance with IFRSs, of the state of the group's affairs as at 31 December2006 and of its loss for the period then ended. GRANT THORNTON UK LLP REGISTERED AUDITOR CHARTERED ACCOUNTANTS London 30th April 2007 THE GREENHOUSE FUND LIMITED Income Statement For the Period 13 December 2005 to 31 December 2006 Notes £ Income Bank interest 14,110 Deposit interest 372,948 --------------- Total Income 387,058 --------------- Operating expenses Management fees 2 (190,093) Other operating expenses 3 (501,780) --------------- Total operating expenses (691,873) --------------- --------------- Net loss for the period (304,815) --------------- Basic and diluted loss per share (pence) 5 (0.22) All items in the above statement derive from continuing operations. All income is attributable to the equity holders of the Greenhouse Fund Ltd. There are no minority interests. THE GREENHOUSE FUND LIMITED Balance Sheet As at 31 December 2006 Group Company 2006 2006 Notes £ £ Non-Current Assets Intangible assets 6 4,942,801 - Investments in subsidiaries 8 - 5,069,541 Investments held at fair value through profit or loss 6 718,874 718,874 -------- -------- 5,661,675 5,788,415 Current assets Other receivables 10 38,181 38,181 Cash and cash equivalents 9 8,169,101 8,169,101 -------- -------- 8,207,282 8,207,282 -------- -------- Total assets 13,868,957 13,995,697 Current liabilities Other payables 11 (56,795) (56,797) --------- --------- --------- --------- Net assets 13,812,162 13,938,900 --------- --------- Equity Share capital 12 14,116,977 14,116,977 Retained earnings 13 (304,815) (178,077) --------- --------- Total Equity 13,812,162 13,938,900 --------- --------- Net asset value per Ordinary share (pence) 14 8.90 8.98 --------- --------- The financial statements were approved by the board of Directors and signed on 30th April 2007 THE GREENHOUSE FUND LIMITED Statement of Changes in Equity For the period 13 December 2005 to 31 December 2006 Group Retained earnings Total £ £ Net operating loss for the period (304,815) (304,815) --------------------- ---- --------- -------- At 31 December 2006 (304,815) (304,815) --------------------- ---- --------- -------- Company Retained earnings Total £ £ Net operating loss for the period (178,077) (178,077) --------------------- ---- --------- -------- At 31 December 2006 (178,077) (178,077) --------------------- ---- --------- -------- THE GREENHOUSE FUND LIMITED Statement of Cash Flows For the period 13 December 2005 to 31 December 2006 Group Company Notes 2006 2006 £ £ Cash flow from operating activities Net loss for period (304,815) (178,077) Amortisation 126,738 - Increase in other receivables (38,181) (38,181) Increase in other payables - 56,795 -------- -------- Net cash outflow from operating activities (216,258) (159,463) Cash flow from investing activities Purchase of unlisted investments (718,873) (718,873) Purchase of intangible investments (569,540) (569,540) -------- --- -------- Net cash outflow from investing activities (1,288,413) (1,288,413) Cash flow from financing activities Issue of Ordinary shares 10,072,250 10,072,250 Sales commission and formation costs paid (455,273) (455,273) --------- --------- Net cash inflow from financing activities 9,616,977 9,616,977 --------- --------- Net increase in cash and cash equivalents 8,112,306 8,169,101 Cash and cash equivalents at start of the period - - --------- --------- Cash and cash equivalents at 31 December 2006 9 8,112,306 8,169,101 --------- --------- Notes to the financial statements 1 Summary of Significant Accounting Policies These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). (a) Basis of preparation The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments and derivative instruments. Adoption of new and revised standards In the current year the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for annual reporting beginning on 1 January 2006. The adoption of these new and revised Standards and Interpretations has had no material impact on the accounting policies of the Group and the methods of computation in the Group's financial statements. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: - IAS 1 Presentation of Financial Statements: Capital Disclosures - IFRS 7 Financial Instruments Disclosure - IFRS 8 Operating Segments - IFRIC 7 Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies - IFRIC 8 Scope of IFRS 2 - IFRIC 9 Reassessment of Embedded Derivates - IFRIC 10 Interim Financial Reporting and Impairment - IFRIC 11 IFRS 2: Group and Treasury Share Transactions - IFRIC 12 Service Concession Arrangements The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material financial impact on the financial statements of the Group. (b) Basis of consolidation The financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences up to the date that control ceases. (c) Finance income and expense Interest on short term deposits, expenses and interest payable are treated on an accruals basis. (d) Investing activities Intangible assets Intangible assets are stated at cost less any provisions for amortisation and impairments. They are amortised over their useful life, estimated to be 20 years, using the straight line method. The amortisation charge is recognised within other operating expenses in the income statement. Impairment of intangible fixed assets At each balance sheet date, the Group reviews the carrying amount of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequent reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Investments held at fair value through profit or loss For financial assets acquired, the cost is the fair value of the consideration. Subsequent to initial recognition, held at fair value assets are measured at fair value. Unlisted investments are valued by the directors using the International Private Equity and Venture Capital Valuation Guidelines as recommended by the British Venture Capital Association, with the valuation performed 6 monthly at each reporting date. Assets are derecognised at the trade date of the disposal, with any gains or losses being taken to the income statement. In addition certain expenses associated with the acquisition of an investment have been capitalised. (e) Movements in Fair Value Changes in the fair value of all held at fair value assets are taken to the income statement. On disposal, realised gains and losses are also recognised in the income statement. (f) Cash and cash equivalents Cash and cash equivalents comprise current deposits with banks. (g) Expenses All expenses are recognised in the income statement on an accruals basis. Transactions costs incurred on the disposal of investments are deducted from the proceeds on sale. (h) Taxation The Fund is an Exempt Company for Jersey taxation purposes. The Fund pays an exempt company fee, for each company in the group, which is currently £600 per annum. (i) Foreign currency The results and financial position of the Fund are expressed in pounds sterling, which is the functional currency of the Company. Transactions in currencies other than sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items and non monetary assets and liabilities that are fair valued and that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in net profit or loss for the period where investments are classified as fair value. (j) Share capital Ordinary and Founder shares are compound instruments. The equity element exists with the shares taking the legal form of an equity instrument with discretionary dividends payable to shareholders. However, the entity is a Limited Life Company with an obligation to wind-up on the twelfth anniversary of the Company's admission to AIM, meeting the definition of a liability under IAS 32. The stated intention of the Fund is to make distributions to Shareholders in advance of the wind-up date, which the directors forecast will leave a minimal liability enforceable on the company by the shareholders. Accordingly, the fair value of the debt element of the compound instrument on issue is considered to be immaterial, therefore the consideration received on issue of the Ordinary and Founder shares in issue are considered to be equity instruments under IFRS and have been classified as equity. (k) Key assumptions and estimates The Group makes estimates and assumptions concerning the future. The Board has considered the critical accounting estimates and assumptions used in the financial statements and concluded that the main area of significant risk which may cause material adjustment to the carrying value of assets and liabilities within the next financial year is in respect of the assumptions used to value intangible assets, unlisted investments and the split between share issue costs and listing expenses. The Board has initially recorded the intangible assets at purchase cost and they are then amortised over their estimated useful life. The amortisation period is the Directors' best estimate of the useful life of the licences, but this is difficult to predict with any certainty for new technologies. The carrying value of the intangible assets was £4,942,801 at the year end. Unlisted investments are recorded at their fair value upon initial recognition and these are reviewed at each reporting date, using generally accepted valuation methodologies, as noted in the above policy. The initial fair value was equal to the purchase cost and there was no change in the fair value at the year end of £718,874. Professional fees incurred as part of the IPO have been split between costs associated with the Listing and costs associated with the issue of shares. Fees relating to both activities have been apportioned based on the Directors' estimate of the work undertaken, with the majority of the fees considered to relate to the issue of shares. The fees relating to the Listing were £66,990 and the share issue expense of £455,273 has been off-set against share capital. (l) Segmental reporting The Group primarily operates in the UK, however it has one holding in an Australian entity, being the unlisted investment of £718,874. No revenue or operating expenses were incurred outside of the UK. 2 Management fee 2006 £ Management fee 190,093 ======== The management fee paid to Development Capital Management ( Jersey) Limited is 2% per annum of the amount subscribed plus any gains retained by the Fund for reinvestment. The management agreement between the Fund and the Manager is terminable by either party on twelve month's notice, subject to an initial term of 36 months from admission. 3 Other operating expenses £ Legal and professional fees 138,154 Amortisation charge 126,738 Admission costs 66,990 Other 58,149 Directors' remuneration 39,221 Marketing and public relations 31,583 Custodian fees and bank charges 25,945 Auditor's remuneration for audit services 15,000 -------- 501,780 4 Loss attributable to the parent company The loss attributable to the parent company, Greenhouse Fund Ltd, was £178,077. As permitted by Companies (Jersey) Law 1991, no separate profit and loss account is presented in respect of the parent company. 5 Earnings per share The earnings per Ordinary share is based on the net loss for the period of £304,815 and on 137,341,906 weighted average Ordinary shares in issue during the period. The diluted return per Ordinary share is based on the net loss for the period and 137,341,906 shares. 6 Investing activities Group Intangible Unlisted 2006 assets investments Total £ £ £ Opening book cost - - - Purchases at cost 5,069,539 718,874 5,788,413 Amortisation charge (126,738) - (126,738) --------- ---------- -------- Closing net book amount 4,942,801 718,874 5,661,675 ========= ========== ======== There has been no impairment in intangible assets in the period. The useful economic life of the intangible asset is 20 years. The intangible assets relate to the acquisition of intellectual property by Greenhouse IP Development Ltd and the cost has been apportioned equally to each licence acquired. The total consideration for intangible assets was £569,539 cash and the issue of 30,000,000 15p new shares in the Company to Virotec Investments Pty. Limited. Company Intangible Unlisted 2006 assets investments Total £ £ £ Opening book cost - - - Purchases at cost - 718,874 718,874 --------- ---------- -------- - 718,874 718,874 ========= ========== ======== The unlisted investments were designated as financial assets at fair value through profit and loss upon initial recognition, in accordance with the group's accounting policy. 7 Transactions costs Group Company 2006 2006 £ £ Sales - - Purchases - - -------- -------- - - ======== ======== 8 Investment in subsidiary undertakings Shares Loans Total £ £ £ Greenhouse Organic Solutions 1 - 1 Ltd Greenhouse IP Development Ltd 1 5,069,539 5,069,540 -------- --------- -------- 2 5,069,539 5,069,541 ======== ========= ======== The Fund holds 1 Ordinary share of £1 in Greenhouse Organic Solutions Ltd, which is incorporated in Jersey. The principal activity of this company is to develop a regional treatment centre for high strength organic waste. The Fund also holds 1 Ordinary share of £1 in Greenhouse IP Development Ltd which is incorporated in Jersey. This represents the entire issued share capital of this company. The principal activity of this company is to develop Bauxsol applications to commercialisation. The authorised share capital of each is 10,000 shares of a nominal value of £1. 9 Cash and cash equivalents Group Company 2006 2006 £ £ Cash at bank and in hand 169,101 169,101 Short-term bank deposits 8,000,000 8,000,000 -------- -------- 8,169,101 8,169,101 ======== ======== 10 Debtors - Group and company Group Company 2006 2006 £ £ Bank and deposit interest receivable 34,244 34,244 Prepayments 3,937 3,937 -------- -------- 38,181 38,181 ======== ======== 11 Creditors - amounts falling due within one year Group Company 2006 2006 £ £ Amounts due to subsidiary undertakings - 2 Accruals 56,795 56,795 -------- -------- 56,795 56,797 ======== ======== 12 Share Capital Authorised: Founder shares of no par value 10 Ordinary shares of no par value Unlimited £ Issued and fully paid: 2 Founder shares of no par value - 27,225,000 Ordinary shares issued on 14 December 272,250 2005 at 1p 98,000,000 Ordinary shares issued on 22nd December 9,800,000 2005 at 10p 30,000,000 Ordinary shares issued on 29th June 4,500,000 2006 at 15p ---------- 14,572,250 Less Admission costs off-set against share capital (455,273) ---------- 14,116,977 ========== Founder shares carry no right to vote at the general meetings of the Company as there are Participating Ordinary Shares in issue. Participating Ordinary shares have priority on winding up the Company. The 30,000,000 ordinary shares were issued as part of the consideration for the investment in intangible assets. 13 Retained earnings Group Company 2006 2006 £ £ Balance at 19 December 2005 - - Bank interest earned 387,058 387,058 Operating expenses (691,873) (565,135) -------- -------- At 31 December 2006 (304,815 (178,077) ======== ======== 14 Net Asset Value per share The net asset value per ordinary share is based on the net assets attributable to equity shareholders of £304,815 and on 155,225,000 ordinary shares in issue at the period end. 15 Financial instruments The Fund's financial instruments comprise money market funds, cash balances and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The main risks the Fund faces from its financial instruments are (i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency movement, (ii) currency risk, (iii) credit risk, (iv) interest rate risk and (v) liquidity risk. The Board regularly reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised below and have been applied throughout the period. The numerical disclosures exclude short-term debtors and creditors as their carrying amount is considered to be a reasonable approximation of their fair value. Market price risk Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Fund's operations. It represents the potential loss the Fund might suffer through holding market positions as a consequence of price movements and movements in exchange rates. Credit risk The company places funds with third parties and is therefore potentially at risk from the failure of any such third party of which it is a creditor. The Company expects to place any such funds on a short-term basis only. Interest rate risk The interest rate risk profile of financial assets at the balance sheet date was as follows: Fixed interest Floating interest £ £ Sterling cash deposit 8,000,000 169,101 -------- -------- 8,000,000 169,101 ======== ======== Currency exposure An analysis of the Group's currency exposure is detailed below: Net Monetary Investments at assets 31 December 2006 £ £ Australian dollar 6 718,874 ----------- ----------- 6 718,874 =========== =========== 16 Post balance sheet events On 27 March 2007, the Fund invested £1.2 million cash in Molectra Technologies Pty Ltd ('MTP') via a convertible note. Upon conversion the Fund would receive a 39% shareholding in MTP, or alternatively to redeem for 39% of the assets of MTP which would translate into a 26% stake in Molectra Australia Pty Ltd. 17 Related party transactions Virotec Investments Pty Limited hold 30,000,000 shares and Brian Sheeran is both deputy Chairman of the Fund and Executive Chairman of Virotec International plc. During the period the Parent Company provided funds of £5,069,539 to Greenhouse IP Development Limited for the purchase of the Bauxsol Licences. 18 Directors interests & remuneration The total compensation paid to Directors over the period was £39,221. Nigel William Wray controls or is beneficially interested in 40.31% of the partnership capital of PIHL Equity LLP, which owns 17,500,000 shares in the Fund. Mr Wray and family members hold, through a nominee account, a further 443,667 shares. Roger Maddock owns 250,000 ordinary shares and by virtue of being a Director of the Manager is treated as being interested in the 750,000 shares held by the Manager. 19 Commitments and contingencies There were no contingencies as at 31 December 2006. The only commitment relates to ongoing research being provided by Queens University Belfast. This is part of ongoing testing being performed in relation to the Virotec licences. Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of the Company will be held on 13th June 2007 at BNP House, Anley Street, St. Helier, Jersey, Channel Islands at 10.30am for the transactions of the following business: Ordinary Resolutions 1) To receive and adopt the Financial Statements of the Company for the period ending 31 December 2006 and the Directors' and Auditors' reports thereon. 2) To re-appoint Messrs Grant Thornton UK LLP as Auditors of the Company and to authorise the Directors to fix their remuneration. 3) To re-appoint Brian James Sheeran as Director of the Company. Special Resolution 4) That the Company be and is hereby generally and unconditionally authorised to make market purchases of fully paid shares in the Company ('Shares') provided that: (a) the maximum number of Shares hereby authorised to be purchased shall be 23,268,227.50 being 14.99 per cent of the total number of Shares in issue as at 31 March 2007. (b) The minimum price which may be paid for a Share is one pence; (c) The maximum price which may be paid for a Share is an amount equal to 105% of the average of the middle market quotations of a Share taken from the London Stock Exchange for the five business days immediately preceding the date of purchase (or such other amount as may be specified by the London Stock Exchange from time to time); (d) The minimum and maximum prices for the Shares, referred to in sub-paragraphs (b) and (c) of this resolution are in all cases exclusive of any expenses payable by the Company; (e) The Company shall fund the payments of the purchases of the Shares in any manner permitted by the Companies (Jersey) Law 1991, as amended (the 'Law'); (f) The Directors reasonably believe that the Company shall be able to meet the solvency tests prescribed by the Law; (g) The authority hereby conferred shall expire at the Annual General Meeting of the Company to be held in 2008, unless such authority is varied, revoked or renewed prior to such time by the Company in general meeting by special resolution; and (h) The Company may enter into a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will or may be completed or executed wholly or partly after the expiration of such authority. By order of the board BNP Paribas Fund Services Jersey Limited, Secretary, BNP House, Anley Street, St. Helier, Jersey JE2 3QE. 30th April 2007 Notes: 1) A Shareholder entitled to attend and vote at the Meeting convened by this Notice is entitled to appoint one or more proxies to attend and (on a poll) to vote instead of him/her. A proxy need not also be a member of the Company. 2) A form of proxy is enclosed. The Chairman of the Meeting would be willing to act as your proxy if desired. Please sign and complete the form and return, to reach the office of the Registrar not later than 48 hours before the time fixed for the meeting. Corporate Information Director of the Fund (all non-executive) Nigel Wray (Chairman) Brian Sheeran (Deputy Chairman) Roger Maddock Roger King Registered Office Legal Adviser (English Law) BNP House Norton Rose Anley Street Kempson House St. Helier Camomile Street Jersey JE2 3QE London EC3A 7AN Manager and Promoter Legal Adviser (Jersey Law) Development Capital Management ( Carey Olsen Jersey) Limited BNP House 47 Esplanade Anley Street St Helier St. Helier Jersey JE10BD Jersey JE2 3QE Directors of the Manager Registrar Roger Maddock Capita IRG (Offshore) Limited Anthony Able Victoria Chambers Kevin Mundy Liberation Square Marcel van Miert 1/3 The Esplanade St. Helier Jersey JE4 0FF Custodian Nominated Adviser and Broker BNP Paribas (Jersey Branch) Evolution Securities Limited BNP House 100 Wood Street Anley Street London EC2V 7AN St. Helier Jersey JE2 3QE Investment Adviser Auditors to the Fund Greenhouse Capital Limited Grant Thornton UK LLP Suite 409 Grant Thornton House St James Court Melton Street St Dennie Street London NW1 2EP Port Louis Mauritius Administrator and Secretary BNP Paribas Funds Services Jersey Limited BNP House Anley Street St. Helier Jersey JE2 3QE This information is provided by RNS The company news service from the London Stock Exchange