LEAF.L Regulatory News (LEAF)

Results for the period ended 31 December 2011

The Board of Leaf Clean Energy Company ("Leaf" or the "Company") are pleased to announce the Company's interim results for the period ended 31 December 2011.

Highlights of the period are:

·; NAV per share for the Leaf portfolio was 159.09 cents or 102.37 pence at US$1.5540 to the GBP1 (30 June 2011: 165.60 cents).

·; Leaf made an additional US$5 million of direct equity and debt investments into existing portfolio businesses.

·; The Company earned US$1.5 million of interest income from debt investments in the portfolio companies. This income has been recorded in the intermediate holding companies and included in the assessment of valuations for the relevant subsidiaries.

·; Leaf repurchased 1.4 million shares at an average price of 78 pence, taking advantage of the weakness in the Company's share price to deliver value to shareholders; and

·; The Company received cash payments of accrued and current interest and repayments of principal on loans to its investee companies totalling US$5.5 million and US$15.5 million respectively.

For further information, please contact: 

Ivonne Cantu +44 (0) 207 397 8900 

Cenkos Securities plc 

CHAIRMAN'S STATEMENT

I am pleased to report on the progress made by Leaf Clean Energy Company ("Leaf" or the "Company") in the six months ended 31 December 2011. During this period we remained focused on growth initiatives and operational improvements at our portfolio companies, whilst actively evaluating potential investments in certain attractive sub-sectors. As a result, our portfolio companies improved their overall performance in preparation for eventual realisations.

Although this period was marked by challenging market conditions, in particular the impact on renewables of the continued decline in the current and forward prices of natural gas in the U.S. resulting from the over-supply of shale gas, I am confident that the progress made by the Leaf team has strengthened our portfolio and furthered the Company's efforts to deliver long-term value to its shareholders.

Portfolio performance

Despite the continued volatility of the market environment, Leaf's portfolio continues to perform in line with expectations. Our portfolio companies have continued to build and strengthen their management teams, optimize operations, increase intellectual property, and pursue commercial opportunities globally.

Several of our portfolio companies have recently passed critical milestones:

(1) SkyFuel has secured a large-scale domestic commercial order. This is a significant milestone for the company.

(2) Maxwest executed an agreement for its second commercial facility and also an agreement for a facility in China. In addition, Maxwest has strengthened its senior management and board of directors, adding a Chief Operating Officer and new board members who collectively bring over 50 years of executive experience from the water industry.

(3) Multitrade Telogia, LLC (MT) repaid a construction loan to Leaf after refinancing with a USDA-guaranteed loan from a US commercial bank.

(4) Invenergy closed a US$200 million term loan, the proceeds of which will be used to fund project build-outs and for general corporate purposes.

Economic and political background

Following a strong U.S. market rally during the first half of 2011, the public investment climate over the last six months of 2011 has become more uncertain. Concerns about the sustainability of the U.S. economic recovery, the politically-charged atmosphere of the upcoming 2012 elections in the U.S. and the stability of certain economies in Europe have all contributed to low investor confidence.

Despite the backdrop of slower growth for renewables in the Western economies, global public and private investment in renewable energy reached a new record of US$260 billion in 2011, further illustrating political and financial commitment to the sector at large. However, this record really reflects record private investment. On the public side, renewable energy stocks suffered from sector over-capacity, especially in the solar sub-sector, where valuations were down as much as 70% from their most recent highs, and investor concerns over lapsing U.S. and European government subsidies. Furthermore, U.S. mainstream political support for clean energy over the last year has been adversely affected by large discoveries of economically recoverable shale gas, trade tensions with China over clean energy subsidies and the high-profile bankruptcy of US solar manufacturer Solyndra.

Current and projected natural gas prices threaten to depress US power prices for the foreseeable future, which in turn will affect the competitiveness of clean energy sources, especially given the decline in government subsidies.However, according to the Energy Information Administration (EIA), some forecasts anticipate the retirement of up to 20% of existing US coal capacity over the next five to seven years. This capacity is expected to be replaced by additional natural gas generation capacity, higher utilization of existing natural gas plants and additional capacity from mainstream renewables. We believe that this trend will, over the medium term, help absorb the large natural gas oversupply and eventually result in price appreciation for power prices and renewable energy assets.

The economic and market challenges faced by the sector have forced companies in the U.S. clean energy industry to search for new ways to reduce costs, streamline operations and strengthen their financial position in order to stay economically and operationally viable. We continue to believe that the long-term drivers for renewable energy remain strong and the short-term challenges create opportunities to invest at attractive prices.

Net assets

During the interim period ended 31 December 2011, Leaf's net asset value (NAV) per share fell by 3.9 per cent, from 165.60 cents (106.56 pence) to 159.09 cents (102.37 pence) . Of our US$208.9 million of net assets, US$50.8 million was held in cash and US$156.7 million is invested in portfolio companies. The Board believes that the cash balances provide sufficient liquidity to meet the needs of the portfolio. 

Outlook

Whilst the current market environment has presented significant challenges, Leaf continues to represent a valuable and well-diversified clean energy portfolio with strong growth potential. We have a talented and focused investment team with the requisite expertise in the clean energy sector to enable us to navigate these difficult market conditions and identify attractive areas for further investment.

With Leaf's team now at full strength and with the current portfolio stabilized and positioned for growth, we are confident that the Company has the potential to provide our shareholders with a competitive return over the medium term.

The Interim Report and Accounts set out below incorporate both financial statements for the Company and consolidated financial statements for the wider Leaf Group. References to NAV in my report and the Management Report reflect the Company's NAV.

Peter Tom

Chairman

15 March 2012

 (1) Based on US$/GBP exchange rate of 1.5540 on 31 December 2011

MANAGEMENT REPORT

The Board and management of Leaf have focused during the period on providing the necessary financial and operational support to our investee companies to ensure that their potential is optimised and that they are strongly positioned for eventual realisations as market conditions improve. We have ensured throughout that Leaf has adequate capital to meet the ongoing needs of the portfolio.

In the meantime, Leaf continues actively to evaluate new, high-quality investment opportunities. The Leaf Board and management reviewed a number of new opportunities during the six months ending 31 December 2011, but did not make any investments in new companies or projects during the period under review, choosing instead to make additional investments in several of its current investee companies. In summary:

·; Leaf made an additional US$5 million of direct equity and debt investments in existing portfolio businesses;

·; The Company earned US$1.5 million of interest income from debt investments in the portfolio companies. This income has been recorded in the intermediate holding companies and included in the assessment of valuations for the relevant subsidiaries;

·; Leaf repurchased 1.4 million shares at an average price of 78 pence, taking advantage of the weakness in the Company's share price to deliver value to shareholders; and

·; The Company received cash payments of accrued and current interest and repayments of principal on loans to its investee companies totalling US$5.5 million and US$15.5 million respectively.

Financial Performance

Leaf's total NAV on 31 December 2011 was US$208.9 million, US$10.8 million lower than the NAV at 30 June 2011. This change resulted mainly from a US$9 million comprehensive loss for the period of which US$6.2 million resulted from a revaluation in the carrying value of the portfolio companies, with the balance being the Company's US$1.7 million share repurchase. US$51 million of the Company's NAV was held in cash and US$157 million in investments.

NAV per share for the Leaf portfolio was 159.09 cents or 102.37 pence at US$1.5540 to the GBP1. This was a decrease of 3.9% for the six month period from 30 June 2011. The decrease was due primarily to the comprehensive loss for the period (-4.2%) offset by share repurchases (+0.3%).

Among the key performance milestones passed by Leaf and its portfolio companies during the past six month interim report period:

·; MiaSolé, our thin film photovoltaic solar portfolio company, announced that it had achieved a champion device efficiency of 17.3% and that it is producing modules with 14% efficiency in commercial volumes. With this new efficiency milestone, MiaSolé has again set a new world record for the highest efficiency of commercial scale thin-film solar modules. The company also strengthened its senior leadership, appointing a new CEO, John Carrington and new president, Bob Baker. Messrs. Carrington and Baker were former senior executives at First Solar and Intel respectively;

·; Multitrade Telogia, LLC (MT), our wood fuelled biomass portfolio company, closed a permanent financing via a USDA-guaranteed loan from a commercial bank and repaid Leaf's outstanding construction loan principal and interest. Optimization of plant performance resulted in record output and EBITDA for MT during the interim period;

·; Invenergy, the large scale renewable generation company, closed a strongly oversubscribed US$200 million long-term loan financing, and completed financings for its 110 MW Gratiot County and 200 MW Bishop Hill wind projects;

·; MaxWest, the innovative solution provider for wastewater treatment, signed a contract for its second commercial facility in the U.S. with a large private wastewater treatment provider. It was singled out at the Clinton Global Initiative's (CGI) Seventh Annual Meeting in New York City for its Commitment to Action, "Landfill Reduction through Biosolids Processing", highlighting its exemplary approach to addressing challenges in environment and energy; and

·; SkyFuel, the utility scale solar thermal power solution company, was awarded a contract for a large project in the U.S. and continues to make progress on other commercial opportunities.

Market Environment

The U.S. economy continued its slow recovery during the period, despite the constant and continuing threat that long-drawn-out efforts to find a solution to the European sovereign debt crisis might lead to a reversal of progress to date. On the political front, President Obama's State of the Union address featured several clean energy initiatives and, while reluctantly conceding that a Climate Change Bill was not expected, he called on the U.S. Congress to set a U.S. federal clean energy standard.

Against this political and economic backdrop, in 2011 the U.S. regained the lead in clean energy investment among all countries after a two-year hiatus, achieving a 33% increase over 2010 to US$56 billion, compared with US$47 billion by second-place China. This achievement was, however, enabled in large measure by several federal renewable energy initiatives which have since expired, and this level of investment may not be sustained beyond 2012 if the U.S. Congress allows the production tax credit, the last remaining federal support measure, to expire at the end of this year.

2011 investment by venture capital ("VC") and private equity ("PE") firms in clean energy in the United States grew by 32% in US dollar terms during the second half over the first half of calendar 2011, while globally VC and PE investments in clean energy declined by 3% half-on-half. Calendar year-on-year growth in 2011 over 2010 of VC and PE clean energy investment in the U.S. grew by 14%, while globally it grew by only 4%.

Prices of quoted renewable energy companies continued to underperform the broader public market in calendar year 2011. The NEX index fell 40% compared with a flat (-0.0032%) performance by the S&P 500. Most of this decline can be attributed to negative investor sentiment relating to events in the solar and wind markets, including: the high-profile bankruptcy of Solyndra; continued decreases in already low natural gas prices in the U.S., resulting from shale-based oversupply; significant reductions in solar PV prices; and the expiration of feed-in tariffs and certain tax grants in Europe and the U.S. respectively. As a result, the NEX price ended 2011 at 18% of its 2007 high.

The long-term drivers for increased adoption of renewable energy in North America, such as the ever-increasing cost of fossil fuels, the need to find new industrial sources of economic growth and job creation, the desire to achieve energy independence and to maintain global competitiveness, increasing global demand for energy, and the need to address climate change issues, however, remain strong and provide evidence that the NEX is in an oversold position. Public and private valuations are attractive in many cases and have created opportunities for discerning investors such as Leaf who are in a position to identify and capture this value.

Outlook

Leaf's Board and management believes that the diversity and balance of the Leaf portfolio, together with management's focus on adding value to existing investee companies, will enable the Company to benefit from eventual improvements in the clean energy markets. Management is focused on positioning the existing Leaf portfolio of investee companies for eventual realisation and identifying opportunities for new investments in order to provide a competitive long-term return to Leaf's shareholders.

15 March 2012

INDEPENDENT REVIEW REPORT TO LEAF CLEAN ENERGY COMPANY

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 31 December 2011, which comprises the consolidated and company statements of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated and company statements of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' responsibilities

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

As disclosed in notes 2, the annual financial statements of the Group and Company are prepared in accordance with IFRSs. The condensed set of financial statements included in this half-yearly report have been prepared in accordance with IAS 34 Interim Financial Reporting.

Our responsibility

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

Scope of review

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

Conclusion in respect of condensed parent company financial statements

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of parent company financial statements in the half-yearly report for the six months ended 31 December 2011 is not prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.

Conclusion in respect of condensed consolidated financial statements

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial statements in the half-yearly report for the six months ended 31 December 2011 is not prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.

KPMG Audit LLC

Chartered Accountants Heritage Court

41 Athol Street

Douglas

Isle of Man

IM99 1HN

15 March 2012

Parent company statement of comprehensive income

For the six months ended 31 December 2011

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

Parent company statement of financial position

as at 31 December 2011

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

The financial statements were approved by the Board of Directors on 15 March 2012 and signed on their behalf by:

Parent company statement of changes in equity

For the six months ended 31 December 2011

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

Parent company statement of cash flows

For the six months ended 31 December 2011

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

Notes to the financial statements

for the six months ended 31 December 2011

1 The Company

Leaf Clean Energy Company ("Leaf" or the "Company") was incorporated and registered in the Cayman Islands on 14 May 2007. The Company was established to invest in clean energy projects, predominantly in North America. Clean energy includes activities such as the production of alternative fuels, renewable power generation and the use of technologies to reduce the environmental impact of traditional energy. The Company seeks to achieve long term capital appreciation primarily through making privately negotiated acquisitions of interest (principally equity but also equity-related and subordinated or mezzanine debt securities) in both projects and companies which own assets or which participate in the clean energy sector and through the generation and commercialisation of carbon credits derived from these projects.

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

The Company's agents and the in-house management team perform all significant functions.

The financial statements of the Company as at and for the year ended 30 June 2011 are available upon request from the Company's registered office at PO Box 309GT, Ugland House, George Town, Grand Cayman, Cayman Islands or at www.leafcleanenergy.com.

2 Statement of compliance

These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the financial statements of the Company as at and for the year ended 30 June 2011.

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

These condensed interim financial statements were approved by the Board of Directors on 15 March 2012.

3 Accounting policies

The accounting policies applied by the Company in these interim financial statements are the same as those applied by the Company in its financial statements as at and for the year ended 30 June 2011.

4 Use of estimates and judgements

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

The significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended 30 June 2011.

During the period ended 31 December 2011, management reassessed its estimates in respect of the valuation of unquoted investments in subsidiaries (See note 12.2).

5 Financial risk management policies

The Company'sfinancial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 30 June 2011. 

6 Net Asset Value per Share

7 Management Fees

Management fees for the six months ended 31 December 2011 payable to Leaf USA were US$1,855,492 (period ended 31 December 2010: US$1,650,564) and the amount accrued but not paid at the period end was US$259,645 (30 June 2011: US$364,626).

8 Other administration expenses

9 Legal and professional fees

Legal and professional fees represent legal, advisory and consultancy fees incurred during and after the implementation of investment acquisitions, as well as work on group and portfolio structuring.

10 Administration fees

With effect from November 2009, the Company administrator is entitled to an administration fee, payable quarterly in arrears and calculated in respect of each quarter or other period with a minimum fee of GBP25,000 per quarter at the rate of 0.1% per annum where the total assets of the parent company less borrowings is less than US$100,000,000; 0.09% where the total assets of the Company less borrowings at the end of the relevant quarter is greater than or equal to US$100,000,000 but less than US$200,000,000; and at the rate of 0.08% per annum where the total assets of the Company less borrowings at the end of the relevant quarter is greater than or equal to US$200,000,000.

Administration fees for the periodamounted to US$104,486 (period ended 31 December 2010: US$221,615) and US$51,482 was outstanding as at 31 December 2011 (30 June 2011: US$53,049)

11 Directors' remuneration

Details of the Directors' basic annual remuneration are as follows:

Directors' fees and expenses paid during the six months ended 31 December 2011 were:

The Directors are also entitled to receive reimbursement of any expenses in relation to their appointment. Total fees and expenses paid to the Directors for the six months ended 31 December 2011amounted to US$716,338 (period ended 31 December 2010: US$565,865) of which US$nil was outstanding at 31 December 2011 (June 2011: US$nil). The Directors engaged Mercer Limited to review Leaf's remuneration for its Directors as compared to companies similar to Leaf in the United States and the United Kingdom. The Directors adopted the recommendations of Mercer effective 1 April 2011.

12 Investments

12.1 The subsidiaries

Since incorporation, for efficient portfolio management purposes, the Company has established the following subsidiary companies:

*Indirect subsidiaries

The Company also has control over the following underlying investee companies:

 (1) Voting rights 81.9%

12.2 Investments in subsidiaries at fair value through profit or loss

12.3 Portfolio valuation methodology

Unquoted investments are valued by applying an appropriate valuation technique, which makes maximum use of market-based information, is consistent with models generally used by market participants and is applied consistently from period to period, except where a change would result in a better estimation of fair value. The Company primarily invests in unquoted direct investments. Unquoted direct investments have characteristics similar to private equity investments, in that the value is generally determined through the sale or flotation of the entire business, rather than the sale of an individual instrument. Valuations of such investments are based upon the "International Private Equity and Venture Capital Valuation Guidelines."

The inhouse management conducted a valuation analysis of the Company's investment portfolio based upon standard valuation approaches compatible with the "International Private Equity and Venture Capital Valuation Guidelines." Given the uncertainties inherent in estimating the fair value of unquoted direct investments, a degree of caution was applied by the inhouse management in exercising judgements and making the necessary estimate.

13 Share Capital

14 Basic and Diluted Loss per Share

Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period:

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

15 Related Party Transactions

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

The Company administrator and the Directors are considered related parties due to the significance of the contracts with these parties. Details of the fee arrangements with these parties are given in notes 7, 10 and 11.

16 Subsequent Events

Leaf Clean Energy Company purchased 2,500,000 shares at GBP0.78 per share in January 2012.

Consolidated statement of comprehensive income

For the six months ended 31 December 2011

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

Consolidated statement of financial position

as at 31 December 2011

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

The financial statements were approved by the Board of Directors on 15 March 2012 and signed on their behalf by:

Consolidated statements of changes in equity

for the six months ended 31 December 2011

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

Consolidated statement of cash flows

For the six months ended 31 December 2011

The accompanying notes form an integral part of these interim financial statement

Notes to the consolidated financial statements

For the six months ended 31 December 2011

1 The Company

Leaf Clean Energy Company ("Leaf" or the "Company") was incorporated and registered in the Cayman Islands on 14 May 2007. The Company was established to invest in clean energy projects, predominantly in North America. Clean energy includes activities such as the production of alternative fuels, renewable power generation and the use of technologies to reduce the environmental impact of traditional energy. The Company seeks to achieve long term capital appreciation primarily through making privately negotiated acquisitions of interest (principally equity but also equity-related and subordinated or mezzanine debt securities) in both projects and companies which own assets or which participate in the clean energy sector and through the generation and commercialisation of carbon credits derived from these projects.

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

The Company's agents and the management team perform all significant functions. Accordingly, the Company itself has no employees.

The consolidated financial statements of the Group as at and for the year ended 30 June 2011 are available upon request from the Company's registered office at PO Box 309GT, Ugland House, George Town, Grand Cayman, Cayman Islands or at www.leafcleanenergy.com.

2 Statement of compliance

These 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 the Group as at and for the year ended 30 June 2011.

 The condensed consolidated financial statements were authorised for issue by the Board of Directors on 15 March 2012.

3 Significant accounting policies

The accounting policies applied by the Group in these consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2011.

4 Use of estimates and judgements

The preparation of 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 the Group'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 2011.

During the period ended 31 December 2011 management reassessed its estimates in respect of:

·; the valuation of unquoted investments (see note 13); and

·; impairment of goodwill and other intangible assets (see note 15) 

5 Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 30 June 2011.

6 Management Fees

Management fees for the six months ended 31 December 2011 payable to Leaf USA were US$1,855,492 (period ended 31 December 2010: US$1,650,564) and the amount accrued but not paid at the period end was US$259,645 (30 June 2011: US$364,626).

7 Other administration expenses

7.1 Legal and professional fees

Legal and professional fees represent legal, advisory and consultancy fees incurred during and after the implementation of investment acquisitions, as well as work on group and portfolio structuring.

7.2 Administration fees

With effect from November 2009, the Company administrator is entitled to an administration fee, payable quarterly in arrears and calculated in respect of each quarter or other period with a minimum fee of GBP25,000 per quarter at the rate of 0.1% per annum where the total assets of the parent company less borrowings is less than US$100,000,000; 0.09% where the total assets of the Company less borrowings at the end of the relevant quarter is greater than or equal to US$100,000,000 but less than US$200,000,000; and at the rate of 0.08% per annum where the total assets of the Company less borrowings at the end of the relevant quarter is greater than or equal to US$200,000,000.

Administration fees for the periodamounted to US$104,486 (period ended 31 December 2010: US$221,615) and US$51,482 was outstanding as at 31 December 2011 (30 June 2010: US$53,049)

8 Directors' remuneration

Details of the Directors' basic annual remuneration are as follows:

Directors' fees and expenses paid during the six month ended 31 December 2011 were:

The Directors are also entitled to receive reimbursement of any expenses in relation to their appointment. Total fees and expenses paid to the Directors for the six months ended 31 December 2011amounted to US$716,338 (period ended 31 December 2010: US$565,865) of which US$nil was outstanding at 31 December 2011 (June 2011: US$nil). The Directors engaged Mercer Limited to review Leaf's remuneration for its Directors as compared to companies similar to Leaf in the United States and the United Kingdom. The Directors have adopted the recommendations of Mercer effective 1 April 2011.

9 Interest income on investments at fair value through profit or loss

The Group had US$1,466,327 of interest income from loans made by the parent company to its portfolio companies. Of this, US$791,703 was from non-subsidiaries and is recognised in profit or loss. US$674,624 was from Leaf's investment in subsidiaries and was eliminated on consolidation.

10 Impairment of non-financial assets

Non-financial assets are assessed for impairment at each reporting period end. This review is undertaken in conjunction with the review of the Company's investment in each subsidiary.

11 Loss per share

Basic and Diluted

Basic and diluted loss per share is calculated by dividing the loss attributable to equity holders of the Group by the weighted average number of ordinary shares in issue during the period:

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

12 The Subsidiaries

Since incorporation, for efficient portfolio management purposes, the Company has established the following subsidiary companies:-

*Indirect subsidiaries

The Company also has control over the following underlying investee companies:

(1) Voting rights 81.9%

13 Investments

Investments comprise ordinary stock, loans and preferred stock carrying a cumulative preferred dividend, preferential return of capital and capped rights to share in profits. The Directors, with advice from the in-house management team, Leaf Clean Energy USA, LLC, have reviewed the carrying value of each investment and calculated the aggregate value of the Company's portfolio. Investments are measured at the Directors' estimate of fair value at the reporting date, in accordance with IAS 39 'Financial Instruments: Recognition and measurement'.

13.1 Investments at fair value through profit or loss

Investments are stated at fair value through profit or loss on initial recognition. Loans are stated at fair value in conjunction with the related equity investment in the investee company. All investee companies are unquoted.

13.2 Portfolio valuation methodology

Unquoted investments are valued by applying an appropriate valuation technique, which makes maximum use of market-based information, is consistent with models generally used by market participants and is applied consistently from period to period, except where a change would result in a better estimation of fair value. The Company primarily invests in unquoted direct investments. Unquoted direct investments have characteristics similar to private equity investments, in that the value is generally determined through the sale or flotation of the entire business, rather than the sale of an individual instrument. Valuations of such investments are based upon the "International Private Equity and Venture Capital Valuation Guidelines."

The in-house management team conducted a valuation analysis of the Company's investment portfolio based upon standard valuation approaches compatible with the "International Private Equity and Venture Capital Valuation Guidelines." Given the uncertainties inherent in estimating the fair value of unquoted direct investments, a degree of caution was applied by the Asset Advisor in exercising judgements and making the necessary estimates. 

14 Property, plant and equipment

As of 31 December 2011, the Group was of a view that the deferred infrastructure grant of one of its subsidiaries should be reclassified from noncurrent liability to property, plant and equipment. The reclassification contributed nil impact to the net profits and the net assets of the Group.

15 Intangible assets

Other intangible asset

Other intangible assets comprise an Electric Power Purchase and Sale agreement with Seminole Electric Cooperative with a Group subsidiary, Multitrade Telogia LLC. The subsidiary agreed to sell and Seminole Electric Cooperative agreed to buy power upon commencement of commercial operations. The contract ends in November 2023.

16 Share capital

17 Loans and borrowings

Long term debt comprises:

(i) a promissory note of US$8,200,000 executed by a Group subsidiary to finance the construction of a methane recovery project secured by a mortgage and security interest in all the assets of that project and the note is payable over 180 months, which began in October 2006. The note bears interest at a rate of 8.11% per year; and

(ii) a promissory note of US$20,701,000 through the Rural Utilities Service (RUS), an agency of the U.S. Department of Agriculture, executed by a Group subsidiary as long term financing for its biomass power plant, the construction of which had been previously financed on a short term basis by the Company. While the total available principal is US$20,701,000, with a maturity of 31 December 2029, advances to 30 June 2010 were US$14,211,653, and to 31 December 2010 were US$20,701,000, which are included in the above balances. Repayment began on 31 December 2010. Interest is payable quarterly at a rate of 3.247% per annum. The loan places certain restrictions on the Group subsidiary along with the pledge of most of the assets and income; and

(iii) a promissory note of US$6,500,000 through a commercial bank, guaranteed by the U.S. Department of Agriculture,

executed by a Group subsidiary as long term financing for its biomass power plant, the construction of which had been previously financed on a short term basis by the Company. Interest is payable monthly at an annualized rate of 275 basis points above the U.S. Prime Rate. The loan places certain restrictions on the Group subsidiary along with the pledge of most of the assets and income.

18 Related Party Transactions

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

The Company administrator and the Directors are considered related parties due to the significance of the contracts with these parties. Details of the fee arrangements with these parties are given in notes 7.2 and 8.

19 Subsequent Events

Leaf Clean Energy Company purchased 2,500,000 shares at GBP0.78 per share in January 2012.