LBB.L Regulatory News (LBB)

18 Sep 2006 07:00

Greenhouse Fund Limited (The)18 September 2006 For Immediate Release 18 September 2006 The Greenhouse Fund Limited ("Greenhouse" or "the Fund") Interim Results for the period ended 30 June 2006 The Greenhouse Fund (AIM:GHF), the Jersey domiciled closed-ended investmentcompany, today reports its interim statement to shareholders for the period to30 June 2006. Highlights for the period: •Successful placing and IPO, raising £9.8 million (gross) •Maiden investment in Molectra, a tyre recycling technology •Acquisition of technologies from Virotec International Ltd •Net Asset Value as of 30 June 2006, 9.02p, an increase of 18% since fund launch •Cash and equivalents at 30 June 2006, £8,853,365 Commenting on the results, Chairman Nigel Wray said: "The first six months of Greenhouse have seen the investment in Molectra as wellas the acquisition of technology from Virotec. The green sector is enjoyingremarkable growth, due to regulatory, commercial and consumer pressures and itoffers tremendous commercial opportunities. Greenhouse will continue to seek out new sustainable technologies, whilstdeveloping the pipeline of technologies it has acquired and I look to the futurewith confidence." For further information please contact: Greenhouse AdvisorPaul Gazzard 01725 510 383Rodger Sargent 020 7399 4260Evolution Securities 020 7071 4300Fergus MarcroftBuchanan Communications 020 7466 5000Charles RylandBen Willey CHAIRMAN'S STATEMENT These are the first set of interim accounts for The Greenhouse Fund Limitedcovering the period to 30 June 2006. Greenhouse is a Jersey domiciledclosed-ended investment company, created to invest in sustainable environmentaltechnologies, and was listed on AIM on 12 January 2006. Greenhouse has set rigorous investment criteria. Any acquisition must have amarket ready or near market ready patentable green technology with scalableglobal market potential. The target company must employ management with a highlevel of technical expertise within its particular area, and have a requirementfor capital, commercial and financial management support. Greenhouse may takeminority, majority or 100% stakes in public or private entities, provided itdoes not invest more than 35% of its net asset value in any one investment. TheFund aims to maximise value by the subsequent flotation, restructuring, jointventure or sale of technologies it develops. Financial performance As at 30 June 2006, Greenhouse had net assets of £13,998,150, including cash of£8,853,365 and investments of £5,158,861. The loss for the period was £51,837and the period end NAV was 9.02p, an increase of 18% on launch NAV. Portfolio Molectra Australia Pty Ltd ("Molectra") On 27 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 technology has been developed over thelast 10 years and has won many international awards and prizes during this time,including the Global 100 Eco-tech award at the 2005 World Expo. The disposal of tyres is a major environmental issue as shredding andland-filling, the main disposal method currently utilised, is being increasinglybanned or becoming prohibitively expensive around the globe. Greenhouse believesthese legislative and commercial pressures present a major opportunity forMolectra and will further benefit from government incentive schemes designed toencourage environmental behaviour. Greenhouse has agreed to invest up to £750,000 by way of a convertible notesecured over Molectra's assets that, upon conversion, will equate to 32% ofMolectra's equity. This investment will enable the existing Molectra plant andprocess to be scaled up and provide the support and business infrastructurerequired to deliver the solution on a larger scale. A small-scale commercialplant will be constructed and operated for a minimum of 3 months at Molectra'ssite, during which potential joint venture or commercial partners will examinethe process. Upon the completion of the trial, Greenhouse will consider furtherfunding options for the next phase of Molectra's development. It is anticipatedthe results of the trial will be available by the first quarter of 2007. 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 at 15p and £500,000 in cash, giving Virotec a 19% holding inGreenhouse. Virotec will receive an ongoing royalty on any revenue earned fromthe technologies. In addition, if any of the technologies are subsequently soldby Greenhouse, any sale will include the obligation to continue to pay royaltiesto Virotec 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 Technology, speciality cement products with applications in shotcreteing, grouting, high density concrete, acid exposed concrete or concretes that are exposed to water or wet environments, particularly salt water environments. Greenhouse intends to develop this technology with a view to full commercial realisation. Following further proposed research and collaboration with Queens University, Belfast, Greenhouse will increase commercial and sales support as the concrete market gains awareness of the products and their potential; (b) ViroAirFilter Technology, development of which has progressed in collaboration with the US Environmental Protection Agency, is designed to remove mercury, CO2 and other polluting metals from industrial flue gasses by 'gas scrubbing' such environmentally hazardous compounds from waste gases prior to their release into the atmosphere; (c) ViroFertiliser Technology, aims to control the level of phosphate pollution and to increase crop yields via the slow release of phosphate from superphosphate fertilisers. A ViroFertiliser re-agent is added to the fertiliser, binding with the phosphate, keeping it in situ, thus decreasing the fertiliser run off, water pollution and provides the user with the opportunity to achieve greater value from the fertiliser. Tests have shown a significant improvement in crop yields when the ViroFertiliser was used on, amongst others, cotton crops in Australia; (d) Gastric animal applications, aims to relieve chronic and potentially life threatening gastric problems within commercially farmed animals. Demonstration and proving work indicating the potential for a product has already been carried out on horses. The next step is to negotiate with a commercial partner to commence field trials with commercial livestock to move towards demonstrating the real commercial application of this product; (e) Any further new commercial applications developed from the Bauxsol technology. This gives Greenhouse access to the time and efforts of the three main scientists, their facilities and staff involved in the development of Bauxsol and its applications in the Southern Cross University in New South Wales, Australia. Greenhouse's strategy is to further develop the Bauxsol technologies, using bothacademic and commercial partners from within industry. Once an application hasbeen fully commercialised, Greenhouse will consider the strategic optionsavailable so as to maximise shareholder value. Such alternatives includeintroducing a new structure for each license, depending on the particular marketand opportunity that it faces. Greenhouse has also purchased the business and assets of Sterling EnvironmentalSolutions Ltd ("Sterling"), a UK non-trading company with a view to establishinga regional treatment centre ("RTC") for the treatment of high strength organicwaste streams. The assets acquired include all intellectual property rightsowned or used by Sterling, including all rights relating to the concept for thetreatment of industrial waste at an RTC. Greenhouse believes collaboration witha waste management operator would further enhance the credibility of the projectand it is Greenhouse's intention to seek a joint venture partner to assist inthe establishment of the RTC. In addition, Greenhouse has entered into a 12 month option, for nominalconsideration on grant and exercise, to acquire the business and assets ofImperativePlus Pty Ltd, a wholly owned subsidiary of Virotec. Post balance sheet events On 7 August 2006, it was announced that Brian Sheeran, Virotec ExecutiveChairman, was appointed to the board of Greenhouse as non-executive DeputyChairman to oversee commercialisation of these technologies. The future The Board is delighted with the progress made by Greenhouse in its firstreporting period and believes that Molectra has the potential to develop asignificant presence within the waste tyre recycling industry, a sector theBoard expects to grow significantly in the future due to regulatory pressure andpublic sentiment. The Bauxsol platform technology has already achieved commercial and regulatoryrecognition and has had significant development capital invested in it byVirotec. Greenhouse will benefit from this proving work and has the opportunityto further develop the technology into new and as yet commercially untappedareas. The Board considers that sufficient investment has been made in theBauxsol technologies to demonstrate the potential for each one to become, intime, the platform for a significant business. Similarly, the RTC concept hasthe potential to offer an alternative to landfill in the disposal of highstrength organic wastes and be rolled out across the UK and Europe. Greenhouse will continue to seek out new sustainable technologies, whilstdeveloping the pipeline of technologies it has acquired. I look forward toreporting further developments to you in the future. Nigel WrayChairmanGreenhouse Fund Limited18 September 2006 THE GREENHOUSE FUND LIMITED Consolidated Condensed Interim Income Statement (unaudited) For the period 13 December 2005 to 30 June 2006 Notes £Income Bank interest 8,211Deposit interest 174,962 -------Total Income 183,173 -------Operating expenses Management fees 3 (91,288)Other operating expenses (143,722) -------Total operating expenses (235,010) ------- -------Net loss for the period (51,837) ------- Basic earnings per share (pence) 2 (0.04) THE GREENHOUSE FUND LIMITED Consolidated Condensed Interim Balance Sheet(unaudited) AS AT 30 JUNE 2006 Notes £ £ Non-Current AssetsIntangible assets 4 5,000,000Investments held at fair value throughprofit or loss 4 158,861 -------- 5,158,861Current assetsOther receivables 24,387Cash and cash equivalents 8,853,365 -------- 8,877,752 --------Total assets 14,036,613 Current liabilitiesOther payables (38,463) -------- --------Net assets 13,998,150 --------Equity Share capital 5 14,572,250Retained earnings (574,100) -------- Total Equity 13,998,150 -------- Net asset value per Ordinary share (pence) 9.02 -------- THE GREENHOUSE FUND LIMITED Consolidated Statement of Changes in Equity (unaudited) FOR THE PERIOD 13 DECEMBER 2005 TO 30 JUNE 2006 Share Retained capital earnings Total £ £ £Issue of Ordinary Shares Capital 14,572,250 - 14,572,250Expenses of share issue - (522,263) (522,263)Net operating loss for the period - (51,837) (51,837)------------- --------- -------- --------- --------At 30 June 2006 14,572,250 (574,100) 13,998,150------------- --------- -------- --------- -------- THE GREENHOUSE FUND LIMITED Condensed Interim Statement of Cash Flows (unaudited) For the Period 13 December 2005 to 30 June 2006 £Cash flow from operating activities Net loss for period (51,837)Increase in other receivables (24,387)Increase in other payables 38,463 -------- Net cash outflow from operating activities (37,761) Cash flow from investing activitiesPurchase of investments (658,861) -------- Net cash outflow from investing activities (658,861) Cash flow from financing activitiesIssue of Ordinary shares 10,072,250Sales commission and formation costs paid (522,263) --------Net cash inflow from financing activities 9,549,987 --------Net increase in cash and cash equivalents 8,853,365Cash and cash equivalents at start of the period - --------Cash and cash equivalents at 30 June 2006 8,853,365 -------- THE GREENHOUSE FUND LIMITED Notes to the Condensed Interim Financial Statements (unaudited) 1 Summary of Significant Accounting Policies These condensed interim 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. (b) Basis of consolidation The interim financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 30 June. 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) Revenue recognition Interest receivable on fixed interest securities is recognised on an effective yield basis. Interest on short term deposits, expenses and interest payable are treated on an accruals basis. (d) Investments 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. 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 appropriate valuation methodologies. Assets are derecognised at the trade date of the disposal, Proceeds will be measured at fair value which will be regarded as the proceeds less any transaction costs. (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 share capital Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are shown as a deduction to reserves. Founder shares Founder shares are classified as equity. THE GREENHOUSE FUND LIMITED Notes to the Condensed Interim Financial Statements (unaudited) 2 Returns per share The earnings per ordinary share is based on the net loss for the period of £51,837 and on 120,806,784 ordinary shares, being the weighted average number of ordinary in issue during the period. 3 Management fee £ Management fee 91,288 -------- 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. 4 Investing activities Intangible Unlisted Total assets investments £ £ £ Opening book cost - - - Purchases at cost 5,000,000 158,861 5,158,861 -------- ------- -------- Closing book cost 5,000,000 158,861 5,158,861 -------- ------- -------- 5 Called up 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 2005 at 1p 272,250 98,000,000 Ordinary shares on 22nd December 2005 at 10p 9,800,000 30,000,000 Ordinary shares on 29th June 2006 at 15p 4,500,000 -------- 14,572,250 The 30,000,000 ordinary shares were issued as part of the consideration for investment in intangible assets. 6 Net Asset Value per share The net asset value per ordinary share is based on the net assets attributable to equity shareholders of £13,998,150 and on 155,225,000 ordinary shares, being the number of ordinary shares in issue at the period end. 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