LEAF.L Regulatory News (LEAF)

27 Mar 2008 12:16

Leaf Clean Energy Company27 March 2008 27 March 2008 Leaf Clean Energy Company ("Leaf" or "the Company") Interim Results for the period ended 31 December 2007 Leaf Clean Energy Company, a closed end investment company incorporated for thepurpose of acquiring interests in, owning, operating and managing clean energycompanies and projects predominantly in North America, today announces itsinterim results for the period ended 31 December 2007. Highlights: * First investment made; a $20 million acquisition of substantial interest inGreenline Industries * Significant progress has been made in originating and pursuing opportunitiesin the clean energy space. Progress made since the December trading statementincludes an additional four investment term sheets signed and an increase in thetotal amount of investment opportunities under due diligence from $600 millionto $740 million December 07 March 08Deals Closed 0 1 Executed LOI 1 4 Deal in Diligence 22 23 Total value potential $600 million $740 million * The Company still expects to be substantially invested by December 2008 * As noted in the Company's Admission Document, Leaf has the right to financeits investments through a combination of debt and equity. To date, no debtfinancing has been utilised and the Board believes that the Company will stillbe able to obtain debt on the same terms as initially anticipated at IPO. For further information, please contact: Simon ShawChairman, Energy & Climate Advisors+44 (0) 20 7553 2361 Daniel Shapiro,President, Energy & Climate Advisors+1 225 987 7408 Ivonne Cantu / Oliver GoadCenkos Securities plc+44 (0) 20 7397 8900 Chairman's Interim Statement I am pleased to report the encouraging progress made by the Company during itsfirst financial reporting period since listing on the Alternative InvestmentMarket. In the lead up to the Company's admission to AIM on 28 June 2007, wepresented a business plan for investing primarily in North American clean energyassets which we felt gave investors a chance to realise substantial long-termcapital appreciation. The fundraising was well supported, totalling £200million before expenses. The hard work began in earnest immediately thereafter. The first priority for our advisers, Energy & Climate Advisors (a joint venturebetween EEA Fund Management and Shaw Capital, a subsidiary of The Shaw GroupInc.), has been to originate and pursue privately-negotiated acquisitions ofinterests in clean energy projects and companies. This investment strategy isdeveloping well. Energy & Climate Advisors has originated and reviewedinvestment opportunities in a wide range of industries including wind energy,solar energy, energy efficiency, pollution control, emission credit aggregation,waste-to-energy, wave energy, biomass power and biofuels. It continues tooriginate and successfully pursue transactions on what your Board believes to becommercially attractive terms. We have been pleasantly surprised by both the quantity of deal flow and thequality of projects. On March 14, 2008 the Company closed its first investment,acquiring a substantial interest in the San Francisco-based Greenline Industriesfor US$20 million. Greenline is a leading provider of modular waterlessbiodiesel equipment that enables the consistent, cost-effective production ofbiodiesel. We believe that Greenline's innovative technology and establishedpresence in the market will be a platform for success. In addition to the Greenline Industries investment, the Company has signed fourHeads of Terms for investments in a diverse group of opportunities, which arenow progressing through due diligence towards their scheduled completions.These targeted investments extend across several sectors, demonstrating thebreadth of our portfolio; hydropower, traditional alternative fuels, cellulosicethanol, solar power, geothermal energy, carbon credit aggregation and landfillgas. The projected combined investment represented by this group totalsapproximately US$85 million, which is in line with the Company's target capitaldeployment. The Company also continues to originate and negotiate furtheropportunities that we hope to have under contract in the near future. The Board believes that the convergence of improved technologies, higher fossilfuel prices and increasing regulatory support (as evidenced by enactment of theEnergy Independence & Security Act in the U.S. last December) will continue todrive demand for clean power and fuels in North America and elsewhere. The issueof climate change in particular has become a key political topic in the US.With a Democrat-controlled Congress and all three leading Presidentialcandidates extolling the need for climate regulation, we expect the arrival of aregulated and constrained carbon market in the next few years. All thesefactors will continue to create value around our principal assets. Through ourmembership of the American Coalition on Renewable Energy (ACORE) and theCoalition for Emission Reduction Projects (CERP), we continue to monitor thelegislative programme to ensure that the Company remains well positioned togenerate significant value for our shareholders. I believe our investors have also benefited from the affiliation of Energy &Climate Advisors with its joint venture partners, Shaw Capital and EEA FundManagement. Shaw Capital has provided the Company with a substantial base inthe United States with its numerous affiliate offices focused on consultancy andengineering services in the energy and environmental markets, allowing theCompany to evaluate a number of superior investment opportunities prior to theirreaching a wider public audience. Furthermore, as well as bringing itsexperience in project assessment and valuation Shaw Capital, through itsaffiliates, has provided the Company with a deep pool of technical expertise,giving us superior project-screening capabilities. EEA Fund Management hasbrought its proven traditional asset management mentality and transactionalrigour to our analysis, as well as the ability to optimize the value ofmarketable environmental attributes from the Company's prospective investments.We are proud of the team we have assembled and the progress we have made sincelast summer. In conclusion, the Company's investment activity is in line with our businessplan and is gathering momentum. It has been an immensely exciting initialperiod for the Company, and we look forward to reporting further progress in thesecond half as we continue to construct our investment portfolio. The Boardreiterates its expectation that the Company will be substantially fully investedby the end of December 2008. Peter Tom Chairman 27 March 2008 Report of the Asset Adviser Since the establishment of Leaf Clean Energy Company ("Leaf" or the "Company"),Energy & Climate Advisors ("E&CA") the Appointed Representative (acting onbehalf of EEA Fund Management in its role as Asset Advisor of Leaf), has madesubstantial progress in identifying and developing opportunities for investmentby the Company. Opportunities identified have come from a wide range ofsectors in the clean energy space, from leading edge solar companies or biofuelstechnologies to more established renewable sectors such as geothermal, wind, orbiomass. E&CA has been encouraged by the volume of deal flow that has beengenerated and, as a result, has allowed the team to select opportunities thatstand out. Leaf's investment pipeline currently stands at over 24 opportunitiesrepresenting over $740 million of equity investment. These projects can bebroken down into the following stages of development: • A: Closed investments $20 million• B: Executed Heads of Terms $85 million• C: Negotiating terms $280 million• D: Due diligence commenced $360 million Closed Investments Leaf has formed Leaf Bioenergy Company, intended to be its platform company forinvestments in the bioenergy sector, including companies with technologies,equipment and projects converting biomass to fuels and biomass to heat andpower. The first investment within Leaf Bioenergy in the technology platformsegment is a $20 million preferred equity investment in Greenline Industries, acompany with a proven ability to develop, commercialize, and deploy biofueltechnology and modular production facilities with a commanding market share.Greenline facilities use multiple feedstock choices in a computer controlledcontinuous flow technology, previously used only in large-scale productionfacilities. Unlike most designs that must use water, Greenline pioneered aninnovative waterless technology, thereby eliminating the energy intensiveproblem of removing the water from the fuel and avoiding the environmentalcomplications associated with obtaining permits and treating wastewater. Theinvestment gives Leaf well-targeted exposure to the biodiesel industry throughan investment in technology and fabrication, without having direct exposure toan individual project. Executed Heads of Terms At present, Leaf has executed four other exclusive Heads of Terms with projectsrepresenting $85 million of investment opportunities in hydro power, solar,landfill gas, and ethanol (cellulosic) and is in the process of finalizingdefinitive documents. These projects have the potential to be closed within thenext 60 days. Negotiating terms Leaf is also in the process of negotiating Heads of Terms with a further sevencompanies. These opportunities, totalling approximately $280 million inprospective investment, are in the geothermal, solar, waste-to-energy, wind,biofuels and clean technology sectors. If agreement can be reached on therelevant terms, E&CA expects that these projects could potentially reachdefinitive documentation and closing within 60 - 90 days. Due Diligence Commenced Leaf also has begun due diligence on an additional twelve other opportunitiesrepresenting over $360 million of potential investments. As noted herein, the opportunity pipeline has continued to develop since thelast trading statement provided in December 2007. It is the Board's intentionto provide a detailed report on the portfolio as soon as Leaf's participation inthe projects under development and negotiation are finalized. Energy and Climate AdvisorsAppointed Representative27 March 2008 Income Statement (Unaudited) Note For the period from 14 May 2007 (date of incorporation) to 31 December 2007 US$'000 Income Interest income on cash balances 11,449Total investment income 11,449 Expenses Management fees 4 3,954 Directors' remuneration 8 187 Administration fees 121 Other expenses 152 Net foreign exchange loss 3,651Operating expenses 8,065 Net income from operations 3,384 Income tax expense 9 -Retained profit for the period 3,384 Basic and diluted earnings per share (cents) 7 1.69 Balance Sheet (Unaudited) Note At 31 December 2007 US$'000 Cash and cash equivalents 394,575Bank interest receivable 68Other receivables and prepayments 102Total assets 394,745 Issued share capital 6 40Share premium 387,248Retained earnings 3,384Total equity 390,672 Creditors and accrued expenses 4,073Total liabilities 4,073Total equity & liabilities 394,745Net asset value per shares (cents) 3 195.3 Approved by the Board of Directors on 27 March 2008Statement of Changes in Equity (Unaudited) Share Capital Share Premium Retained Earnings Total US$'000 US$'000 US$'000 US$'000 Balance at 14 May 2007 - - - - Proceeds from shares issued 40 401,019 - 401,059Share issue expenses (note 6) - (13,771) - (13,771)Retained profit for the period - - 3,384 3,384Balance at 31 December 2007 40 387,248 3,384 390,672 Cash Flow Statement (Unaudited) For the period from 14 May 2007 (date of incorporation) to 31 December 2007 US$'000 Cash flows from operating activitiesInterest received 11,381Operating expenses paid (443)Net cash from operating activities 10,938 Financing activitiesProceeds from the issue of shares 401,059Share issue costs (13,771)Net cash from financing activities 387,288 Net increase in cash and cash equivalents 398,226Foreign exchange difference on cash and cash equivalents (3,651)Cash and cash equivalents at 14 May 2007 -Cash and cash equivalents at 31 December 2007 394,575 Notes to the Interim Financial Statements 1 The Company Leaf Clean Energy Company (the "Company") was incorporated and registered in theCayman Islands on 14 May 2007 for the purpose of acquiring interests in, owning,operating and managing clean energy companies and projects including renewableenergy projects, and other projects that create environmental benefits throughgreenhouse gas emission reductions. Pursuant to the Company's Admission Document dated 22 June 2007 there was anoriginal placing of up to 200,000,000 Ordinary Shares of GB£0.0001 each for GB£1each. The Shares of the Company were admitted to trading on the AIM market of theLondon Stock Exchange ("AIM") on 28 June 2007 when dealings also commenced. The Company's agents and the Asset Adviser perform all significant functions.Accordingly, the Company itself has no employees. 2 Significant Accounting Policies The interim financial statements of the Company for the period ended 31 December2007 are unaudited. 2.1 Basis of presentation These financial statements have been prepared in accordance with InternationalFinancial Reporting Standard ("IFRS") IAS 34 Interim Financial Reporting. Theydo not include all of the financial information required for full annualfinancial statements. The financial statements have been prepared under thehistoric cost convention. The preparation of financial statements in conformity with IFRS requires the useof critical accounting estimates. It also requires the Board of Directors toexercise its judgement in the process of applying the Company's accountingpolicies. The financial statements do not contain any critical accountingestimates or significant judgements in applying accounting policies. These interim financial statements were approved by the Board on 27 March 2008. 2.2 Foreign currency translation The US Dollar is the currency of the primary economic environment in which theentity operates ("The functional currency"). It is also the currency in whichthe interim financial statements are presented ("The presentational currency"). Monetary assets and liabilities denominated in foreign currencies as at the dateof these financial statements are translated to US Dollars at exchange ratesprevailing on that date. Expenses are translated into US Dollars based onexchange rates on the date of the transaction. All resulting exchangedifferences are recognised in the income statement. 2.3 Interest income Interest income is recognised on a time-proportionate basis using the effectiveinterest rate method. 2.4 Share issue costs Costs directly related to the issue of shares are deducted from equity. 2.5 Cash and cash equivalents Cash comprises cash on hand and demand deposits. Cash equivalents areshort-term highly liquid investments that are readily converted to known amountsof cash and which are subject to an insignificant risk of changes in value. 3 Net Asset Value per share The Net Asset Value per share as at 31 December 2007 is US$1.953 per share basedon 200,000,000 ordinary shares in issue as at that date. 4 Management fee Annual fees Under the Asset Advisory Agreement a management fee is payable quarterly inadvance, equating to 0.5% per quarter of the Net Asset Value of the Company. Management fees for the period ended 31 December 2007 amounted to US$3,954,447and the amount accrued but not paid at the period end is US$3,855,691. Performance fees Under the Asset Advisory Agreement an annual performance fee may also payable,depending on the annual performance of the Company. Any performance fee willbecome payable once annualized Total Shareholder Return in any performanceperiod exceeds an annual rate of 9% ("the Hurdle"). Once the Hurdle isexceeded, the performance fee will become payable in an amount equal to 20% ofany aggregate return over and above the Hurdle. Total Shareholder Return iscalculated on the basis of the increase in market capitalization of the Company,allowing for dividend distributions. There were no performance fees payable for the period ended 31 December 2007. 5 Cash and cash equivalents US$'000Certificate of deposits Sterling Certificate of Deposit 335,037United States Dollar Certificate of Deposit 59,538Total 394,575 6 Share Capital Ordinary Shares of GB£0.0001 each Number US$ In issue at the start of the period - -Issued during the period 200,000,000 40,058In issue at 31 December 2007 200,000,000 40,058 The authorised share capital of the Company is GB£25,000 divided into 250million Ordinary Shares of GB£0.0001 each. Under the terms of the placing of the Company's shares and admission to tradingon AIM on 28 June 2007, the Company issued 200,000,000 shares of GB£0.0001 eachpar value at a price of GB£1 each. The difference between the issue price andthe par value has been transferred to share premium account, net of share issueexpenses. Share capital and premium received has been translated to US Dollars at theexchange rate prevailing at the date of receipt of the proceeds. The holders of ordinary shares are entitled to receive dividends as declaredfrom time to time and are entitled to one vote per share at meetings of theCompany. All shares rank equally with regards to the Company's assets. Share issue costs Share issue costs, which have been written-off against share premium account,comprise the following: US$'000Cenkos Securities plc - Commission on funds raised 12,475Cenkos Securities plc - Corporate fee 416London Stock Exchange - AIM listing fees 17Legal fees and other share issue costs 863Total share issue costs 13,771 Cenkos Securities plc is the Nominated Adviser and Broker and acted as PlacingAgent. 7 Earnings per Share Basic and Diluted Basic and diluted earnings per share is calculated by dividing the profitattributable to equity holders of the Company by the weighted average number ofordinary shares in issue during the period: 2007 Profit attributable to equity holders of the Company (US$'000) 3,384Weighted average number of ordinary shares in issue (thousands) 200,000Basic and fully diluted earnings per share (cents per share) 1.69 There is no difference between the basic and diluted earnings per share for theperiod as there are no potential dilutive ordinary shares. 8 Directors' Remuneration The non-executive chairman is entitled to receive an annual fee of £60,000 andthe non-executive directors receive £25,000 each per annum. The members ofaudit committee receive an additional £5,000 per annum. The Directors are eachentitled to receive reimbursement of any expenses incurred in relation to theirappointment. Total fees and expenses payable to the Directors for the periodended 31December 2007 amounted to US$186,628. 9 Taxation Cayman Islands taxation The Company has received from the Governor-in-Cabinet of the Cayman Islands, anundertaking that, for a period of 20 years from 5 June 2007, no laws of theCayman Islands imposing any tax on profits, income, gains or appreciation shallapply to the Company and that no such tax or any tax in the nature of estateduty or inheritance tax shall be payable on the shares, debentures or otherobligations of the Company. Under the current Cayman Islands law, no tax will becharged on profits or gains of the Company and dividends of the Company would bepayable to Shareholders resident in or outside the Cayman Islands withoutdeduction of tax. 10 Related Party Transactions Parties are considered to be related if one party has the ability to control theother party or to exercise significant influence over the other party in makingfinancial or operational decisions. The Asset Adviser and Management Company are considered related parties due tothe significant management contract in place. See note 4 regarding managementfees payable. 11 Post balance sheet event On 14 March 2008 the Company acquired an interest in San Francisco-basedGreenline Industries for US$20m. This information is provided by RNS The company news service from the London Stock Exchange