LEAF.L Regulatory News (LEAF)

Interim Results for the half year period ended 31 December 2013

Directorate Changes

The board of Leaf Clean Energy Company ("Leaf") are pleased to announce the Leaf Group's interim results for the period ended 31 December 2013.

Highlights of the period are:

· NAV per share for the Leaf Group was 141.27 cents or 85.24 pence at US$1.6574 to the GBP1 (30 June 2013: 142.66 cents).

· US$0.4 million gain on revaluation in the carrying value of the portfolio companies.

· Leaf made an additional US$5.9 million of direct equity and debt investments into existing portfolio businesses.

· Leaf earned US$0.8 million of interest income from debt investments in the portfolio companies during the period.

· Leaf received cash payments of accrued and current interest and repayments of capital (including principal on loans to its investee companies) totalling US$0.7 million and US$5.1 million respectively.

Directorate Changes

The Company announces that Peter Tom and Bran Keogh have tendered their resignation as Directors of the Company with effect from 31 May 2014. Stephen Coe and Mark Lerdal will be appointed as directors of the Company with effect from 1 April 2014. Peter and Bran have agreed to remain as directors until 31 May 2014 to allow for an orderly handover of their responsibilities. Following a transition period, Mark Lerdal will take on the role of Chairman as well as day to day management responsibilities for the Company. Stephen Coe will be appointed as a non-executive director and will be chairman of the audit committee.

The Company wishes to thank Peter and Bran for their substantial contribution to Leaf from its inception in 2007 particularly through the difficult market conditions in the sector in the recent years.

Mark Lerdal (55) is a partner in MP2 Capital, LLC, a company organized to develop, finance, own and operate photovoltaic projects throughout North America. He has been involved in energy development and finance for over 25 years. He currently serves as a non-executive director of Trading Emissions PLC and Onsite Energy Corporation. He resides in San Francisco, California.

Stephen Coe (48) qualified as a Chartered Accountant with PriceWaterhouseCoopers in 1990. From 1997 to 2006 he was a director of the Bachmann Trust Company Limited and managing director of Bachmann Fund Administration Limited. Between 2003 and 2006, Stephen was managing director of Investec Administration Services Limited and of Investec Trust (Guernsey) Limited prior to becoming self-employed in 2006, providing director services to financial services clients. Currently, Stephen sits on the board of a number of companies listed on AIM and on the Main Market of the LSE. He resides in Guernsey.

Update on Requisition of EGM by Crystal Amber Fund Limited

Crystal Amber has confirmed to the Company that it has withdrawn the requisition for an EGM lodged with the Company on 6 March 2014.

For further information, please contact:

Bran Keogh +1-202-289-7881

Leaf Clean Energy Company

Ivonne Cantu +44 (0) 207 397 8900

Cenkos Securities plc

CHAIRMAN'S STATEMENT

Over the past two years, Leaf Clean Energy Company ("Leaf") and its subsidiary (together, the "Leaf Group") has been an increasingly active owner of strategic renewable energy and resource innovation businesses. This trend continued during the reporting period, with Leaf management's deep operational experience and financial expertise guiding investees' to further deliver on their business plans.

The U.S. clean energy market presented an improving picture during the reporting period of July 1, 2013 through December 31, 2013. Against this backdrop, we continued to focus exclusively on enhancing the value of our portfolio and consider it well positioned for exits at optimal valuations as acquisition and public markets pick up. In anticipation of this outcome, we have begun a sale process for Multitrade Telogia, LLC, Leaf's operationally optimised biomass power plant investment, whose board has engaged a financial advisor to assist with the process. We are also actively pursuing realisations for several other companies.

Current market conditions

In the United States, the main focus of Leaf's investment portfolio, the market has continued to outperform the global picture. After a sharp drop in clean energy investment during the first quarter of 2013, investment levels recovered steadily through the rest of the year. 

In the public markets, there was more good news. The rally in the WilderHill New Energy Global Innovation Index (NEX) that began in July 2012 continued apace throughout 2013. This is a good sign for valuations and strengthens the opportunities for realisations within the Leaf portfolio.

The release in September 2013 of the EPA's long-awaited proposals for stringent emission standards for new coal power plants was another positive development. Due to be implemented during summer 2014, the standards are expected to benefit our sector by dampening demand for fossil fuels. In October through December, U.S. clean energy project finance picked up, growing by 22% on the previous quarter to US$5.5 billion, aided by two major financing deals for Invenergy, a Leaf investee. Analysts expect this progress to continue, with 2014 forecast to be a stronger year for the largest renewable energy subsectors, solar and wind.

Globally, new global clean energy investment fell for the second consecutive year, decreasing 11% to US$254 billion through calendar year 2013. This was mainly due to a major pullback in European investment, where uncertainty surrounded renewable energy subsidies in key countries. However, the 4th quarter of 2013 saw clean energy companies secure US$5.4 billion on the public markets, a three year high and project finance also posted a 19% 4th quarter increase, driven primarily by large European wind projects.

Portfolio performance

Against this backdrop, Leaf's portfolio of investees in renewable energy and resource innovation continued to perform well. Several companies recently passed important milestones:

MaxWest Environmental Systems, Inc., the leader in wastewater biogasification systems, was selected by a San Francisco Bay Area coalition of 19 cities and agencies for final negotiations to design and build a large waste to energy project in the area.

Invenergy Wind LLC commissioned several wind energy projects that increased its installed capacity by more than 200 megawatts to more than 3,700 megawatts and completed financing for three major projects with combined capacity of more than 600 megawatts. The company also announced the sale of the 500-megawatt Highland Energy Wind Project to MidAmerican Energy Company.

SkyFuel, Inc., a utility scale solar thermal power solution company, continued its commercial expansion by commissioning the first solar thermal desalination project in North America.

Vital Renewable Energy Company (VREC), a developer of ethanol facilities in Brazil, closed out US$31 million in financing for agricultural and industrial expansion plans to grow its crushing capacity by 50%.

Energía Escalona, the hydroelectric project development company based in Mexico City, progressed its flagship project, receiving several required permits through December 2013. The company anticipates closing financing and beginning construction in the second half of 2014. 

Lehigh Technologies, Inc., the green materials company, continued its global expansion with increased non-U.S. sales and significant overall revenue growth due to rising interest from tire and industrial rubber companies and plastics applications in its micronized rubber powder products.

Global Market Outlook

After a turbulent 2013, the outlook for clean energy markets, globally and in the United States, is strong, although fundraising for investee companies from venture capital and private equity investors remains very challenging.

The fundamental drivers of renewable energy and clean energy technologies are unchanged, and include the increasingly urgent need to address climate change through more stringent regulation and other means, the long-term trend of rising cost of fossil fuels, and the falling cost of renewables.

In the U.S., renewable electricity generation costs reached all-time lows in 2013, undercutting fossil fueled competitors in some locations. Building on this cost competitiveness, the expected retirement of 20% of coal plants nationwide by 2015 will provide a significant opportunity to scale wind and solar power, since natural gas is unlikely to fill all the demand. Developing countries, meanwhile, are looking to find a cleaner way to accommodate their growing energy needs. Investment in Latin America is expanding beyond Brazil, with Chile, Mexico and Uruguay all spending more than US$1bn on clean energy in 2013. India's investments edged up in 2013 to US$7.8bn from US$7.6bn the previous year. Japan, meanwhile, is moving quickly to reduce its dependence on nuclear generation via replacement with solar power. Clean energy investment there rose by 56% in 2013 over 2012 - an increase of almost US$13 billion.

Leaf outlook

Against this backdrop, the Leaf Board is closely monitoring our portfolio's strategic performance in order to achieve the best return for our investors. We are optimistic that the clean energy market will steadily rebound. In the meantime, the board continues its work to reduce Leaf's expenses. In November, the board undertook an assessment of all operating costs and subsequently implemented a number of strategic cost reduction initiatives, including a 73% reduction in director costs. The board is aware that Leaf's move to more active oversight of the portfolio companies, while necessary and productive, also increased our costs. It is working on recharging management and oversight costs to the portfolio companies wherever our agreements permit.

Now that much of the optimisation is complete, Leaf is actively pursuing realisations for several companies.

Net assets

These condensed interim financial statements were approved by the Board of Directors on 26 March 2014. During the interim period ended 31 December 2013, Leaf's net asset value (NAV) per share decreased by 1.0 per cent, from 142.66 cents (93.79 pence) to 141.27 cents (85.24 pence). Due to the strengthening of the pound sterling versus the U.S. dollar during the period, the 1.0% U.S. dollar decrease in the per share NAV translated into a 9.1% decrease in the NAV per share in GBP terms. Of our US$181.9 million of net assets, US$19.3 million was held in cash and US$162.6 million is invested in portfolio companies. The Board believes that the cash balances provide sufficient liquidity to meet the needs of the portfolio.

MANAGEMENT REPORT

Overview

2013 witnessed the second consecutive year of contraction for global clean energy investment, falling 11% from 2012 levels, to US$254 billion. However, this fall in investment volume was concentrated mainly in Europe, where uncertainty surrounded renewable energy subsidies in key countries.

In Leaf's main investment geography, the United States, the picture has improved steadily since the disappointing first quarter of 2013. The market recovery through the subsequent three quarters has resulted in an investment climate favourable for Leaf's interest in pursuing some near term realisations. Leaf's only wind investment, Invenergy, was not significantly impacted by the PTC delay, and the policy uncertainty had a limited impact on our company.

On the public markets front, the continuing rally in the WilderHill New Energy Global Innovation Index (NEX) that began in July 2012 continued apace throughout 2013, and the increase in public market equity raises in the sector, noted in Leaf's latest annual report, accelerated. This is a very good sign for valuations and hence the prospect for realisations within the Leaf portfolio.

Expanded investments

The Leaf Board and management continued its active oversight of its primarily non-passive portfolio of investments, optimising the performance of investee companies and positioning them for the best possible realisation outcomes at the appropriate time. As part of this effort, Leaf made additional investments in several current investee companies during July to December 2013.

In summary:

· Leaf made an additional US$5.9 million of direct equity and debt investments in existing portfolio businesses;

· Leaf earned US$0.8 million of interest income from debt investments in the portfolio companies during the period; and

· Leaf received cash payments of accrued and current interest and repayments of capital (including principal on loans to its investee companies) totalling US$0.7 million and US$5.1 million respectively.

Financial performance

Leaf's total Net Asset Value (NAV) on 31 December 2013 was US$181.9 million, US$1.8 million lower than on 30 June 2013. This change resulted from the US$1.8 million comprehensive loss for the period, which consisted primarily of US$0.8 million of interest income on loans to portfolio companies, and a US$0.4 million gain on revaluation in the carrying value of the portfolio companies, less US$2.8 million of administration expenses and US$0.1 million of taxation expense. At the end of the period, US$19.3 million of Leaf's NAV was held in cash and US$162.6 million in investments. 

NAV per share for the Leaf portfolio was 141.27 cents or 85.24 pence at US$1.6574 to the GBP1. This was a decrease of 1.0% for the six-month period from 30 June 2013. The decline was primarily due to administration expense (-1.6%), which was partially offset by interest income on loans to portfolio companies (+0.4%) and the unrealised gain on revaluation of investments (+0.2%).

Portfolio highlights

Key performance milestones passed by Leaf and its portfolio companies during the period included the following:

Energía Escalona, the hydroelectric project development company based in Mexico City, continued development of its flagship hydroelectric development project and anticipates closing financing and beginning construction in the second half of 2014. Escalona is also expanding its development team to support efforts to identify additional attractive projects to develop. Importantly, Mexico's government has passed sweeping constitutional energy reforms that are expected to catalyse further growth and investment in the country's power generation markets.

MaxWest Environmental Systems, Inc., the leader in wastewater biogasification systems, added significant run-times to its second-generation gasification facility, which serves a suburb of Orlando under a long-term commercial contract. The company was also selected in February by the Bay Area Biosolids to Energy Coalition ("BAB2E"), a coalition of 19 cities and agencies in the San Francisco Bay Area, to enter into final negotiations for a local project. In other news, MaxWest worked closely with federal regulators at the U.S. Environmental Protection Agency (EPA), resulting in a favourable ruling that recognises the company's proprietary gasification system as a novel, low emissions technology. This ruling further differentiates MaxWest's product from rival solutions, such as incineration, and enables a streamlined permitting process in many U.S. states that will aid the company's expansion.

Lehigh Technologies, Inc., the green materials company, continued its global expansion with increased non-U.S. sales and significant overall revenue growth. As tire and industrial rubber companies evaluate opportunities for sustainable, lower-cost, and lower-volatility input materials, Lehigh has benefited from rising interest in its Micronized Rubber Powder ("MRP) products. Lehigh also made its first sales in the European market. In November and January, Lehigh added two independent directors to its Board: the former Chief Operating Officer of Yokohama Tire Corporation; and the former Chief Financial Officer of Ashland Inc. These executives will provide valuable expertise and guidance to Lehigh as the company continues to grow.

Invenergy Wind LLC (Invenergy), North America's largest independently owned wind power generation company, commissioned several new wind energy projects, increasing its installed capacity by more than 200 megawatts. Invenergy has now developed and placed into service more than 3,700 megawatts of wind generation capacity. The company also completed project financings for its existing Orangeville, Prairie Breeze, Gorzyce and Miami wind energy projects. Together, these four installations are slated to add over 600 megawatts of total capacity to the company's portfolio, once operational. In July, Invenergy announced an initiative to develop renewable energy projects in Japan. Finally, in November, the company announced the sale of its 500 megawatt Highland Energy wind project to MidAmerican Energy Company.

SkyFuel, Inc., the utility scale solar thermal power solution company, continued its commercial expansion, and has now completed three commercial projects across several different applications, including hybrid geothermal and natural gas power generation, and a fourth project has commenced construction. Most recently, the company commissioned the first solar thermal desalination project in North America. 

Vital Renewable Energy Company (VREC), a developer of sugar-cane-based ethanol facilities in Brazil, closed a US$31 million financing led by Darby Latin American Mezzanine Fund II, L.P. VREC will use the proceeds to fund its agricultural and industrial expansion plans, which include increasing its crushing capacity by 50%. The company also achieved a record 2013/2014 crushing season and hit most of its key financial targets.

Multitrade Telogia, LLC (Telogia), the biomass power plant, now optimised operationally, has hired a financial advisor and begun a process to sell the plant.

Market environment and outlook

Global

In the year through 31 December 2013 global new investment in clean energy dropped by 11% (US$32 billion) from the 2012 level, according to Bloomberg New Energy Finance. This decline was almost entirely due to a dramatic US$40 billion (40.9%) fall in European investment, caused by two factors. First, the pull back from and future uncertainty around renewable energy subsidies in France, Italy and Germany. Second, the falling cost of solar and wind installations, which while making renewables more competitive also made it possible to expand clean energy systems at much lower investment levels.

U.S. investment dropped by 8.4% (US$4.6 billion) during 2013, in part due to the uncertainty surrounding the late extension of the wind Production Tax Credit (PTC) by Congress.. China had its first investment decline in a decade, falling by 3.8% (US$2.5 billion). Its Asian neighbour, Japan, more than made up for the U.S. and Chinese declines, growing clean energy investment (primarily in solar) by 56% (US$12.7 billion) as part of a national strategy to replace nuclear power following the Fukushima disaster.

Other regions had a mixed year. Investment in clean energy in Latin America broadened, with Brazil's US$3.4 billion decline in investment from 2012 largely replaced by US$1 billion of investment each from Mexico, Uruguay and Chile. Canada increased its investment by US$1.8 billion. Investment in Australia and South Africa each dipped slightly while India had a slight increase over 2012.

Clean Energy Pipeline reported that global venture capital and private equity (VC/PE) investment declined 24% in 2013 on a year-on-year basis, and attributed this primarily to the large drop in capital-intensive solar manufacturing companies, which previously constituted a very large proportion of VC/PE investment in the sector.

The brightest spot in clean energy investment during 2013 was in the public markets for listed stocks. The NEX index was up nearly 54% for the year, as compared to 29% for the S&P 500 and 14% for the FTSE 100. This continuation of the rally that began in July 2012 has rejuvenated the market for initial, secondary and convertible note public offerings of clean energy stocks. 2013 saw a nearly three-fold increase over 2012 in the amounts invested by the public in these offerings compared to 2012. A significant factor in the increased public markets interest in clean energy stocks has been the listing and subsequent performance of "YieldCos", which are yield-oriented publicly listed vehicles that provide investors access to conventional and renewable energy power project cash flows. Notable renewable-energy-related YieldCo IPOs were made during the period by NRG (US$471 million), TransAlta Renewables (Canadian $202 million), and Pattern Energy (US$319 million).

United States

While investment in the first quarter of 2013 fell to a four-year low, investment in April through December was higher than during the same period in 2012. Excluding corporate and government R&D, U.S. new investment in clean energy increased in the second half of 2013 by 54% over the first half of the year and by 43% over the second half of 2012.

While the PTC expired again at the end of 2013, we do not expect to see a similar negative Q1 impact for 2014, since the 2013 renewal included a new provision requiring only that construction begin in 2013 for a project to be eligible for the tax credit.

Given the political climate resulting from plentiful low cost natural gas, Congress did not manage to make progress on developing new federal policies to support clean and renewable energy during the reporting period. Without the motivators of rising power costs and energy dependency worries, the necessity of addressing climate change has not been enough to generate the political will for new legislation to address GHG emissions.

Faced with this situation, President Obama has begun to deliver on his pledge to take unilateral action under existing laws, if necessary, to tackle climate change by regulating carbon emissions. On January 8, 2014, the U.S. Environmental Protection Agency (EPA) published a proposed rule to regulate emissions from new coal-powered and new gas-fired plants, using its powers under the Clean Air Act. An EPA proposed ruling on the thornier issue of regulating existing plants is due this summer, with regulations rolled out a year later. If sufficiently strict, these rules could significantly boost the U.S. renewables market.

Even without progress towards new federal policies, clean and renewable energy technologies are making remarkable progress in the U.S. According to the latest Energy Infrastructure Update report from the Federal Energy Regulatory Commission (FERC), biomass, geothermal, hydropower, solar and wind accounted together for more than a third of all new electrical generating capacity in the first 11 months of 2013. Furthermore, these renewable sources accounted for 99% and 100% of all new electrical generating capacity in October and November of 2013, respectively.

Leaf outlook

While it is still too early to be confident of a robust clean energy market recovery, the improving U.S. outlook discussed above increases Leaf's confidence that there may be near- and medium-term opportunities for realisations of some portfolio companies. The company is identifying near term opportunities, as described in the Chairman's Statement, while continuing its focus on active management of the existing portfolio.

Leaf's board and management continue to believe that this portfolio's diversity and balance, together with Leaf's focus on adding value to investee companies, positions the company well to benefit as clean energy markets continue to improve. Our goal remains eventual realisation of our investee companies in order to provide a long-term return to Leaf's shareholders.

INDEPENDENT REVIEW REPORT TO LEAF CLEAN ENERGY COMPANY

Introduction

We have reviewed the accompanying interim condensed consolidated financial statements of Leaf Clean Energy Company (the "Company"), which comprise the condensed consolidated statement of financial position as of 31 December 2013, the condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six month period then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim condensed consolidated financial statements.

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

Directors' responsibilities

The Directors are responsible for the preparation and fair presentation of the interim condensed consolidated financial statements in accordance with IAS 34, Interim Financial Reporting and the AIM Rules.

Our responsibility

Our responsibility is to express a conclusion on the interim condensed consolidated financial statements based on our review.

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements as of and for the six month period ended 31 December 2013 are not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting' and the AIM Rules.

KPMG

PO Box 493

Century Yard, Cricket Square

Grand Cayman, KY1-1106

Cayman Islands

26 March 2014

Condensed consolidated statement of comprehensive income

for the six months ended 31 December 2013

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Condensed consolidated statement of financial position

as at 31 December 2013

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

The interim condensed consolidated financial statements were approved by the board of directors on 26 March 2014 and signed on their behalf by:

Condensed consolidated statement of changes in equity

for the six months ended 31 December 2013

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Condensed consolidated statement of cash flows

for the six months ended 31 December 2013

1 Leaf received repayment by one of its investee companies of a US$1.2 million secured senior convertible promissory note along with US$98,000 of accrued interest due on this note in the form of a new secured senior convertible promissory note with a principal amount of US$1.298 million during the period.

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Condensed consolidated statement of cash flows

for the six months ended 31 December 2013

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

Notes to the interim condensed consolidated financial statements

for the six months ended 31 December 2013

1 Leaf

Leaf was incorporated and registered in the Cayman Islands on 14 May 2007. Leaf 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. Leaf seeks to achieve long term capital appreciation primarily through making privately negotiated acquisitions of interest (principally equity but also equity-related and subordinated or mezzanine debt securities) in both projects and companies which own assets or which participate in the clean energy sector and through the generation and commercialisation of carbon credits derived from these projects.

The Shares of Leaf were admitted to trading on the AIM market of the London Stock Exchange ("AIM") on 28 June 2007 when dealings also commenced.

Leaf's agents and the management team (all employees of Leaf's subsidiary) perform all significant functions. Accordingly, Leaf itself has no employees.

The consolidated financial statements of Leaf as at and for the year ended 30 June 2013 are available upon request from Leaf's registered office at PO Box 309, Ugland House, George Town, Grand Cayman KY1-1104, Cayman Islands or at www.leafcleanenergy.com.

The interim condensed consolidated financial statements as at and for the six months ended 31 December 2013 are for the Leaf Group. Refer to note 13.

2 Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of Leaf as at and for the year ended 30 June 2013.

AIM rules require Leaf to prepare consolidated financial statements in accordance with IFRS as adopted by the EU. However, Leaf early-adopted the amendments to IFRS 10 issued by the IASB in October 2012, requiring investment entities to measure controlled portfolio investees at fair value. These amendments have not yet been endorsed by the EU and therefore may not be early-adopted under the EU-IFRS framework. Leaf obtained a derogation from AIM permitting such early adoption. As a result, given that there are currently no other material differences between IFRS and IFRS as adopted by the EU that affect the Leaf Group, these interim condensed consolidated financial statements are prepared in accordance with IFRS.

These interim condensed consolidated financial statements were approved by the board of directors on 26 March 2014.

3 Significant accounting policies

Save as for explained above, the accounting policies applied by Leaf in these interim condensed consolidated financial statements are the same as those applied by Leaf in its consolidated financial statements as at and for the year ended 30 June 2013.

4 Use of estimates and judgements

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

The significant judgements made by management in applying Leaf's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 June 2013.

The most significant area requiring estimation and judgement by the directors is the valuation of unquoted investments, (see note 11).

5 Financial risk management

The Leaf 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 2013.

6 Other administration expenses

7 Restricted cash

The restricted cash balance at 31 December 2013 consisted of collateral deposits of US$69,671 and US$31,051 associated with the corporate credit cards for Leaf Clean Energy Company and Leaf Clean Energy USA, LLC held by the Royal Bank of Scotland International and HSBC US, respectively.

At 30 June 2013 the restricted cash balance consisted primarily of restricted cash collateral accounts securing two letters of credit with HSBC USA totalling US$3.1 million in aggregate, which were in relation to one of the Leaf Group's investments. Both letters of credit were released during the six month period ended 31 December 2013 and the corresponding cash collateral accounts were released and the cash in the accounts was made available to the Leaf Group again on an unrestricted basis.

8 Directors' remuneration

Details of the directors' basic annual remuneration areas in effect during the period was as follows:

Directors' fees and expenses payable during the six month ended 31 December 2013 were:

In addition to the above basic annual remuneration, Mr. Moffatt and Mr. O'Keefe were also entitled to receive a US$2,500 fee for each board meeting attendance, a US$10,000 fee for audit committee membership and a US$1,500 fee per diem fee for each additional day spent by them performing Leaf duties, up to a US$150,000 cap on all fees.

The remuneration committee of the Leaf board of directors met during the period to review the director's remuneration. The directors adopted the committee's recommendation that, effective January 1, 2014, the chairman will be paid US$50,000, executive director US$200,000, and the non-executive directors US$25,000. This represents a reduction of 73% on an annualised basis.

Each director is also entitled to receive reimbursement of any expenses in relation to their appointment. Total fees and expenses payable to the directors for the six months ended 31 December 2013 amounted to US$566,156 (period ended 31 December 2012: US$618,248) of which US$369,218 was outstanding at 31 December 2013 (31 December 2012: US$377,656).

9 Basic earnings/(loss) per share

Basic and Diluted

Basic and diluted earnings/(loss) per share is calculated by dividing the earning/(loss) attributable to equity holders of Leaf by the weighted average number of ordinary shares in issue during the period:

There is no difference between the basic and diluted earnings/(loss) per share for the period.

10 Investments

Investments in underlying investee companies (held through various wholly owned intermediary subsidiaries) comprise ordinary stock, loans, convertible notes and preferred stock carrying a cumulative preferred dividend, preferential return of capital and capped rights to share in profits. The directors, with advice from the in-house management team, Leaf Clean Energy USA, LLC, have reviewed the carrying value of each investment and calculated the aggregate value of the Leaf Group'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 Critical accounting estimates and assumptions

These disclosures supplement the commentary on the use of estimates and judgments (see note 4).

Key sources of estimation uncertainty

Determining fair values

The determination of fair values for financial assets for which there is no observable market prices requires the use of valuation techniques as described in accounting policy 3.1 from the 30 June 2013 financial statements. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. See also "Valuation of financial instruments" below.

Critical judgements in applying the Leaf Group's accounting policies

Critical judgements made in applying the Leaf Group's accounting policies include:

Valuation of financial instruments

The Leaf Group's accounting policy on fair value measurements is discussed in accounting policy 3.1 from the 30 June 2013 consolidated financial statements. The Leaf Group measures fair value using the following hierarchy that reflects the significance of inputs used in making the measurements:

· Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

· Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments: quoted market prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

· Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments the Leaf Group determines fair values using valuation techniques.

Leaf, through its wholly-owned subsidiaries, holds full or partial ownership interests in a number of unquoted clean energy companies. These investments are classified as level 3 in the fair value hierarchy.

11.1 Investments at fair value through profit or loss

The following table shows a reconciliation of the opening balances to the closing balances for fair value measurements in Level 3 of the fair value hierarchy.

Investments are stated at fair value through profit or loss on initial recognition. Loans are reviewed for impairment in conjunction with the related equity investment in the investee company. All investee companies are unquoted. Leaf has an established control framework with respect to the measurement of fair values. The directors, with advice from the in-house management team, Leaf Clean Energy USA, LLC, has overall responsibility for all significant fair value measurements, including Level 3 fair values. The in-house management team regularly reviews significant unobservable inputs and valuation adjustments.

Leaf received repayment by one of its investee companies of a US$1.2 million secured senior convertible promissory note along with US$98,000 of accrued interest due on this note in the form of a new secured senior convertible promissory note with a principal amount of US$1.298 million during the period.

11.2 (a) Significant unobservable inputs used in measuring fair value

The table below sets out information about significant unobservable inputs used at 31 December 2013 in measuring financial instruments categorised as Level 3 in the fair value hierarchy.

Significant unobservable inputs are developed as follows.

EBITDA and operational multiples: Represent amounts that market participants would use when pricing the investments. EBITDA and operational multiples are selected from comparable public companies or publicly disclosed transactions based on geographic location, industry, size, target markets and other factors that management considers to be reasonable. The traded multiples for the comparable companies are determined by dividing the enterprise value of the company by its EBITDA or operational metric and further adjusted if appropriate for considerations such as the lack of marketability and other differences between the comparable peer group and specific company.

11.2 (a) Significant unobservable inputs used in measuring fair value

Discount rate: Represents the rate used to discount projected levered or unlevered forecasted cash flows and terminal value for a project or company to their present values as part of the calculation of enterprise value for the project or company. Leaf uses a capital asset pricing model (CAPM) approach to calculate a discount rate appropriate for each project or company.

11.2 (b) Effects of unobservable input on fair value measurement

Although Leaf believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in Level 3, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on Leaf's net asset value (NAV) at 31 December 2013 (US$ millions): (Favourable: 25.7, Unfavourable: (23.5)).

The favourable and unfavourable effects of using reasonably possible alternative assumptions for the above unobservable inputs for the valuation of Leaf's unlisted private equity investments have been calculated by varying these inputs in the applicable valuation models based on a reasonable lower and upper range as determined by Leaf Management. The most significant unobservable inputs are the discount rate, either WACC or cost of equity, EBITDA and operational multiples. The WACC and cost of equity used in the models at 31 December 2013 ranged between 7.2% and 18.5% (with reasonably possible alternative assumptions ranging between 6.2% and 19.5%). The EBITDA multiple used in the models at 31 December 2013 was 9, with reasonably possible alternative assumptions of 12 and 7. The operational multiples used in the models at 31 December 2013 ranged from US$106/mm tons to US$123/mm tons, and US$1,877/MW to US$1,945/MW, with reasonably possible alternative assumptions of US$113/mm tons to US$152/mm tons, and US$1,058/MW to US$2,277/MW.

12 Financial instruments not measured at fair value

The financial instruments not measured at fair value through profit or loss are short-term financial assets and financial liabilities whose carrying amounts approximate their fair value, these are all categorised within level 2 of the fair value hierarchy.

13 The subsidiaries

The interim condensed consolidated financial statements comprise Leaf and the following consolidated subsidiary:

Leaf has committed to provide credit support in the form of a letter of credit in the amount of US$2.7 million to one of the investee companies to back a one year surety bond, should this be required by the investee company's customer. In the event that this credit support is required, Leaf plans to place US$2.7 million of cash collateral in a restricted account against which the letter of credit will be issued to the surety company. In addition, Leaf has committed to invest US$1.5 million in cash to enable one of its investee companies to provide a long-term credit support required by the investee company's contract with one of its customers. Excepting the above additional commitments, the maximum exposure to loss is the carrying amount of the financial assets held. Excepting the above commitments, and the additional investments described elsewhere in this report, during the period Leaf did not provide financial support to unconsolidated companies and has no intention of providing financial support or other support.

(1) Voting rights 81.9%

14 Share capital

The authorised share capital of the Leaf Group is GBP25,000 divided into 250 million Ordinary Shares of GBP0.0001 each.

Under the terms of the placement on 22 June 2007, Leaf issued 200,000,000 shares of GBP0.0001 each par value at a price of GBP1 each. The difference between the issue price and the par value was transferred to share premium account, net of share issue expenses.

Leaf have repurchased 71,254,274 shares, since 30 June 2012 there have been no further share repurchases.

Share capital and premium received was translated to US Dollars at the exchange rate prevailing at the date of receipt of the proceeds.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of Leaf. All shares rank equally with regards to the Leaf Group's assets.

Capital management

The board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The board manages the Leaf Group's affairs to achieve shareholder returns through capital growth rather than income, and monitors the achievement of this through growth in net asset value per share.

The Leaf Group's capital comprises share capital, share premium and reserves and is not subject to externally imposed capital requirements.

15 Subsequent Events

There have been no subsequent events.