Leaf Clean Energy Co LEAF Final Results

  Leaf Clean Energy Co (LEAF) - Final Results

RNS Number : 9397Q
Leaf Clean Energy Company
13 November 2012




                                      

                                      





    13 November 2012

                                      

                                      

                          Leaf Clean Energy Company

                   Results for the year ended 30 June 2012

                                      



The Board of Leaf Clean Energy Company ("Leaf" or "the Company") are pleased
to announce the Company's results for the year ended 30 June 2012.



Highlights of the year are:



· NAV per share for the Leaf portfolio was 141.22 cents or 90.03 pence at
US$1.5685 to the £1 (2011: 165.60 cents).



· Leaf  made an  additional  US$7.6 million  of  direct equity  and  debt 
investments into existing portfolio businesses.



· The Company received cash payments of accrued and current interest  and 
repayments of principal on  loans to its  investee companies totalling  US$5.1 
million and US$15.5 million respectively.



· The  Company  earned  US$1.8  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.



· The Company repurchased 3.9 million shares at an average price of 77.98
pence, taking advantage of  weakness in the Company's  share price to  deliver 
value to shareholders.





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



I am pleased to report on the progress made by Leaf Clean Energy Company
("Leaf" or the "Company") for the year ended 30 June 2012.



Three years ago we made three key  structural changes to deal with the  impact 
on the  private equity  market of  a global  contraction, which  continues  to 
hamper a return to the targeted gains we came to expect during the mid-2000s:



· We replaced our asset advisor with experienced professionals who  could 
partner with  our portfolio  company management  teams to  help them  navigate 
toward growth; we also replaced the operational teams in several of our active
investments with more experienced asset managers and O&M operators;



· We employed rigorous methods  to identify opportunities in areas  where 
others are not focused, such as companies trading at a steep discount or where
experienced management teams are in place and growth equity is needed to scale
up proven concepts; and



· We assumed  the worst  and husbanded our  resources to  ensure that  we 
could ride out a very difficult and sustained downturn.



Now the focus of the directors and the Leaf management team is to continue  to 
support our portfolio companies and realise the investments when opportune  to 
maximise returns to our shareholders.



Portfolio update



Cumulative public market forces and near-term growth concerns in our  industry 
resulted in generally lower valuations, most prominently in the wind and solar
PV sub-sectors.  We  were  therefore rigorous  in  reflecting  mark-to-market 
values in line with  relevant investment barometers  in the sector.  Although 
our aggregate  NAV  consequently  decreased,  the  great  majority  of  Leaf's 
portfolio companies continued to hit their milestones and several delivered on
value creation  initiatives  put  in  place  since  our  last  annual  report, 
reflecting our successful strategy of actively partnering with management.



Johnstown Regional Energy, LLC ("JRE") secured long-term contracts to sell its
reclaimed landfill gas production to buyers in California, commanding  premium 
prices due to the fuel's green  attributes. Leaf's management team and  board 
members  worked  closely  with  JRE's  operators  to  put  the  company  in  a 
considerably more favorable economic position while natural gas prices  remain 
low for the foreseeable future.



Multitrade Telogia, LLC, one of the company's biomass generation assets,
performed above expectations from an operational standpoint, benefiting from
the experienced operators and asset managers we had earlier put in place.



Evidence of our ability  to be rigorous and  opportunistic in our  acquisition 
strategy came  shortly  after  the  end  of  the  reporting  period  with  our 
investment in Atlanta-based  Lehigh Technologies,  Inc. ("Lehigh").  Lehigh's 
proprietary technology transforms end-of-life tires and post-industrial rubber
into new materials that are incorporated into high-performance tires, consumer
and  industrial  plastics  goods,   asphalt  and  coatings  and   construction 
materials. This investment further diversifies our portfolio and reduces  our 
exposure to  natural  gas prices  and  government incentives.  Lehigh  has  a 
seasoned management  team with  which we  are partnering  closely,  delivering 
solid sales to  tire manufacturers  and operating in  a number  of other  very 
promising vertical markets.



SkyFuel, Inc. ("SkyFuel") is an excellent example  of the way in which we  are 
conserving our resources  and planning  for the  long term.  During the  year 
SkyFuel sold,  shipped  and  delivered on  its  first  large-scale  commercial 
project with a large European power company. It also became the first company
in the concentrated solar power (CSP)  industry to offer insurance to  support 
the company's  product  warranties  through  a  first-of-its-kind  performance 
guarantee from Munich Re, a multinational reinsurance company. As a result of
Leaf's  successful  partnership  with  management  and  additional   financial 
support, SkyFuel is  now one of  the few remaining  standalone CSP  technology 
providers, with a strongly growing pipeline.



In summary,  I am  pleased to  say that  many of  the portfolio's  operational 
assets  have  now  been  de-risked  and  optimized  for  further   performance 
improvements, positioning them for continued  growth as our diverse  portfolio 
matures.





Economic and political background



The past year saw continued global  equity market volatility and clean  energy 
sector underperformance.  Factors  contributing to  the  volatile  investment 
climate included  the lingering  European  sovereign debt  crisis,  investment 
concerns over sustained global growth  and mixed economic indicators from  two 
of the world's largest economies, the United States and China.



The clean energy sector saw significant challenges over the period,  including 
high-profile solar  bankruptcies in  North America  and Europe  and  workforce 
reductions in some of the  world's largest wind turbine manufacturers.  These 
events all took  place under  intense public scrutiny,  leading to  scepticism 
amongst media outlets, conservative political leaders and the public at  large 
about the long-term  viability of  renewables as a  supplement to  traditional 
fossil fuels and  about the  US government's decision  to use  taxpayer-funded 
incentives to support a struggling industry. This fallout may continue in the
short term, further exacerbating the current trade tensions between China  and 
Western economies, with lasting implications for investors.



Despite these political headwinds, the re-election of President Obama and  the 
positive remarks he made during  the State of the  Union Address in the  early 
part of 2012, as  well as his  remarks and those of  Governor Cuomo and  Mayor 
Bloomberg of New York regarding increased severe weather and its  relationship 
to climate change, assured us that  the renewable energy sector will  continue 
to be a growing part of the US's  energy future. To date, this has rung  true 
and the next four  years may see  renewed focus in  the sector. According  to 
Bloomberg New  Energy Finance,  total  installed renewable  energy  generation 
capacity in the US grew by 21% over the past year, providing approximately 12%
of the nation's energy supply. Furthermore, between the first quarter of 2011
and the first quarter of 2012 US installed capacity from wind and solar  power 
generation increased by 17% and 85% respectively.



Key drivers  of  installed  capacity  growth  have  been  the  Production  and 
Investment Tax Credits (PTC and ITC)  and the precipitous decline in costs  of 
key renewable technologies, most notably solar PV and wind. According to  the 
Solar Energy Industry Association (SEIA), the  average price of a solar  panel 
has declined by  47% since  the beginning of  2011. Onshore  wind costs  have 
fallen by 15% over the same period. These continued cost declines have led to
wind  and  solar  PV  energy   prices  coming  within  striking  distance   of 
conventional fossil-fuel  alternatives  in many  parts  of the  US.  However, 
government support  through  subsidies  or  tax  credits  is  expected  to  be 
curtailed over  the  coming  years, which  undoubtedly  reduces  the  economic 
incentives for developers of renewable energy sources to construct projects at
the current pace.



In a separate  development, the  past year  saw natural  gas match  coal as  a 
primary fuel  source for  US power  generation for  the first  time since  the 
government  started  collecting  data  in  1977.  According  to  the   Energy 
Information  Agency  (EIA),  natural-gas-fired  plants  provided  33%  of   US 
generation, compared to coal's 34% share. In 2009, natural gas accounted  for 
23% of US generation, while coal provided 45%. This historic shift is largely
due to the unprecedented  discovery of large shale  gas reserves and  stricter 
environmental controls around emissions for the aging coal fleet in the US.



Sector performance



The public renewable energy market faced significant challenges as governments
in the developed economies pared back investment subsidies, consumers  enjoyed 
access to historically low natural gas  prices and investor confidence in  the 
broader sector remained depressed. These factors, coupled with the  continued 
challenge of accessing finance for renewable projects, trade tensions  between 
the US  and  China  and  negative  political  sentiment  in  the  US,  led  to 
disappointing headline performance  for the year  relative to other  markets. 
The WilderHill New Energy Global Innovation Index (NEX), which tracks 96 large
clean energy stocks worldwide,  has underperformed the S&P  500 by 19% so  far 
this year, hitting a nine-year low in the first quarter of 2012.



Global private equity and venture  capital renewable energy investment  echoed 
similar trends in 2012, down from a record 2011. Investment in the first half
of 2012 fell  16% to  $3.6bn from  $4.3bn in  2011. Despite  this decline  in 
private investment over the past  year, large investments continue to  reflect 
the importance  and  value-creation  opportunities of  addressing  energy  and 
sustainable solutions both domestically and internationally.



As the renewable energy  industry continues to mature  and the weaker  players 
exit the stage, I believe the  sector will emerge strengthened as  sustainable 
business models become essential.



Outlook



Despite the  underperformance of  the sector  over the  past year,  the  large 
majority of Leaf's  portfolio companies  are progressing  as expected  against 
their business  plans. I  believe  the team's  determination and  focus  have 
preserved capital in  an unstable  environment. As the  market recovers,  the 
value creation  initiatives  put  in  place  will  position  Leaf  to  deliver 
significantly improved shareholder value.



We believe that the long-term fundamentals  of the clean energy sector  remain 
strong and,  as  private market  investors,  we believe  that  valuations  for 
maturing  private  companies  are  at   an  attractive  level.  The   current 
environment is also  conducive to  making investments in  lean companies  that 
have exhibited strong fundamentals and  continued resilience in a  challenging 
environment.



Our priorities in the  current year are to  remain focused on partnering  with 
our portfolio companies  to deliver further  operational improvements,  whilst 
carefully husbanding our resources.



The Annual  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.



Net assets



For the  year ended  30 June  2012, Leaf's  net asset  value (NAV)  per  share 
decreased by 14.7 percent, from 165.60 cents to 141.22 cents. Of Leaf's US$182
million of net assets,  US$42 million was  held in cash. The  Board is of  the 
view that this balance  provides sufficient liquidity  to meet the  continuing 
needs of the portfolio.

^(1) Based on US$/£ exchange rate of 1.5685 on 30 June 2012



MANAGEMENT REPORT

During the year ended 30 June  2012 the clean energy investment markets  faced 
continued uncertainty  and  delays to  company  realizations, largely  due  to 
global economic and political  conditions, as described  below in the  "Market 
Environment" section. The WilderHill New Energy Global Innovation Index (NEX)
of publicly-quoted renewable energy  companies has lost more  than 75% of  its 
value since its high point in December 2007, and is down 44% in the year ended
30 June  2012.  In  the US,  abundant  and  low-cost shale  gas  has  been  a 
game-changer for  renewable and  non-renewable energy  alike, and  is a  major 
cause of the significant and sustained collapse in power prices in the US over
the past five  years, as  natural gas  is now  setting the  marginal price  of 
power. Nonetheless,  certain  sub-sectors  of the  investment  markets  offer 
compelling investment opportunities, especially  those that are not  dependent 
on government  incentives  and  those in  geographies  with  high  electricity 
prices.



The Board and management of Leaf continued to support and grow Leaf's existing
portfolio to ensure  that its  investee companies are  well-positioned as  the 
market improves. Selected  highlights are  as follows  (with further  details 
given in the "Portfolio Overview" section at the end of this report).



·  SkyFuel,  Inc.  (SkyFuel),  a  leading  concentrated  solar  equipment 
provider,  achieved  the  first  third-party  warranty  coverage  in  the  CSP 
sub-sector. Following  more  than  a  year  of  extensive  due  diligence  on 
SkyFuel's products, Munich Re, a leading worldwide reinsurance company, agreed
to underwrite insurance  for SkyFuel's product  warranties. These  warranties 
guarantee the thermal output of SkyFuel's SkyTrough system for five years  and 
the specular reflectance of the SkyTrough reflectors for 20 years.  SkyFuel's 
ability to offer innovative and capital-efficient insurance backing in support
of its  equipment sales  provides a  distinct advantage  in a  market that  is 
reliant on risk-averse lenders for project finance.



· Johnstown Regional Energy, LLC (JRE), a large landfill gas  reclamation 
company, negotiated and entered into  long-term fixed-price contracts to  sell 
its green biogas to buyers in  California. The California market provides  an 
appropriate price  incentive  for green  gas  and will  partially  offset  the 
unfavourable impact  on  JRE  of  the dramatic  drop  in  natural  gas  prices 
resulting from the development of shale gas.



· Invenergy Wind LLC (Invenergy), the largest independent wind  developer 
in the US, closed a $200  million long-term loan financing and closed  project 
financing for six wind  projects. During the period,  five of these  projects 
finished construction  and  commenced  commercial  operations.  In  addition, 
Invenergy completed  construction  and  began  commercial  operations  at  its 
previously financed  138.6  MW  Le  Plateau Wind  Energy  Centre  in  Quebec. 
Finally, Invenergy completed the sale of its 81 MW Bishop Hill II wind project
in Henry County, Illinois to MidAmerican Renewables, capping off a  productive 
year for the company.



· Certain  sub-sectors  of  the  broader  clean  energy  and  sustainable 
investment market have  provided opportunities for  attractive investment  and 
portfolio diversification. The Leaf Board and management reviewed hundreds of
new opportunities during the  year and were pleased  to announce in July  2012 
that  Leaf  has  led  an   investment  round  in  Lehigh  Technologies,   Inc. 
("Lehigh"). The investment in Lehigh closed on 20 July 2012, after the end of
the current reporting period.



Lehigh is  a leading  sustainable  materials manufacturer  whose  proprietary, 
cryogenic turbo mill technology  turns end-of-life and post-industrial  rubber 
material into sustainable chemical additives that are used in a wide range  of 
industrial and  consumer  applications.  Lehigh's  micronized  rubber  powder 
("MRP") products help  customers lower  their consumption  of oil-derived  and 
energy intensive materials. Its MRPs lower costs, increase the sustainability
profile of  end  products, and  deliver  performance without  sacrificing  the 
reliability offered  by traditional  raw materials.  Lehigh is  a  late-stage 
venture-backed company with a growing revenue stream.



Prior to Lehigh, only a few outlets for end-of-life material existed, with  it 
being incinerated, sent to landfills, or reused in lower-value  applications. 
Lehigh addresses  these environmental  challenges for  millions of  pounds  of 
material each year,  all the  while saving  customers money  and reducing  the 
energy-intensity of  its  customers'  raw materials.  This  is  a  disruptive 
technology, a high-growth company, and is led by a top-tier management  team. 
Lehigh also further diversifies Leaf's investment portfolio.





Financial Performance



Leaf's total NAV on 30 June 2012 was US$182 million, US$38 million lower  than 
the NAV at  30 June 2011.  The change in  NAV over the  annual report  period 
resulted mainly from the US$27.2 million unrealized loss on revaluation of the
Company's investments, operating expenses of US$5.9 million, and $4.8  million 
of share repurchases. US$42 million of the Company's NAV was held in cash and
US$143 million in investments.



NAV per  share for  the Leaf  portfolio was  141.22 cents  or 90.04  pence  at 
US$1.5685 to the £1.  This was a  decrease of 14.7 percent  for the one  year 
period from  30 June  2011. The  decrease for  the one  year period  was  due 
primarily to the unrealised loss  on revaluation of the Company's  investments 
(-12.8%) and  operating  expenses for  the  period (-2.7%),  offset  by  share 
repurchases (+0.8%).



For the period under review, there were several other noteworthy events:



· Leaf  made an  additional  US$7.6 million  of  direct equity  and  debt 
investments in existing portfolio businesses;



· The  Company  earned  US$1.8  million  of  interest  income  from  debt 
investments in the  portfolio companies  during the period.  This income  has 
been recorded  in  the accounts  of  the intermediate  holding  companies  and 
included in the assessment of valuations for the relevant subsidiaries;



· Leaf repurchased 3.9 million shares at an average price of 77.98 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$5.1 
million and US$15.5 million respectively.



Market Environment



The four  quarters ended  30 June  2012 witnessed  a pull-back  in the  global 
recovery in clean  energy investing  that had  been underway  during 2010  and 
2011. This  contraction  was  due  to the  combination  of  continued  global 
economic problems  and  interrelated  political developments  in  the  US  and 
Europe. The continuing sovereign debt  crisis has brought austerity  measures 
and credit tightening into play across Europe. The increasing polarisation of
the US Congress, exacerbated by presidential election year politics, has  made 
it difficult, if not impossible, for it to address long-term structural issues
in the US federal budget. These factors, combined with the impact of abundant
and low-cost  shale gas  in the  US, have  had a  dampening effect  on  policy 
support for clean energy in these  geographies. Another clear impact of  these 
global economic issues for the sector  and for Leaf's portfolio companies  has 
been that it  has become  much more difficult  for clean  energy companies  to 
raise new capital.



Ironically, the  resulting  weakening  and  increased  uncertainty  about  the 
continuation and extent of government renewable energy subsidies in Europe and
the US  has come  about  just as  several  renewable energy  technologies  are 
approaching, but have not  yet quite attained, grid  parity versus the  fossil 
fuels against which they compete. A main goal of government subsidisation  of 
renewable energy has been to enable sustainably profitable business models  in 
order to encourage the private investment in capacity and technology  required 
to achieve grid parity with fossil fuels.



The current pull-back in  subsidisation has pulled the  carpet out from  under 
many who invested on that premise. The  end result may be that the timing  of 
grid parity will  be delayed  and may  require even  greater subsidisation  to 
reach this goal than would otherwise have been required had governments stayed
the course.



In the case of solar PV, the remarkable progress towards grid parity has  come 
at the expense  of many  of the early-stage  and established  US and  European 
players in this market.  Manufacturers of solar PV  panels have continued  to 
experience a  brutal  pricing  environment due  to  global  over-capacity  and 
competition from Asian  panel manufacturers who  have been accused  by US  and 
European firms  of  pricing below  cost  in  US and  European  markets.  This 
resulted in the application by the  US in March 2012 of countervailing  duties 
on Chinese  solar  panels  and  in  May  2012  of  countervailing  duties  and 
anti-dumping duties on Chinese wind towers and solar panels.



By the  end  of  the  current  reporting  period,  massive  over-capacity  and 
cutthroat pricing in the solar PV  market had resulted in the bankruptcies  of 
an additional 13 solar PV panel manufacturers, in the wake of the high-profile
bankruptcy  of  early-stage  Solyndra  in  August  2011.  These  bankruptcies 
included several established  manufacturers such as  Q-Cells, Evergreen  Solar 
and Solon, while many other PV manufacturers  have had to cut jobs and  reduce 
production to conserve  cash. As  expected, the severe  depression of  public 
market prices for solar PV panel manufacturers resulting from this environment
has brought about a wave of consolidation M&A activity.



For the year ending 30 June 2012, global investment by venture capital  ("VC") 
and private equity ("PE") firms in clean energy was US$7.5 billion, which  was 
flat compared to the previous year ended 30 June 2011. For the latest quarter
ending 30  June 2012,  investment  was down  28%  from the  previous  calendar 
quarter and down 39% from the prior-year quarter.



In calendar year 2011 solar was the most popular sector for VC/PE  investment, 
with 30%  of  the  US$2.4  billion  of  total  solar  investment  directed  to 
crystalline PV and  the remainder  invested in  solar thermal,  thin film  and 
service and support. A total of US$367 million was invested by VC/PE in solar
thermal.



Global acquisition activity in renewable  energy was up year-on-year by  10.5% 
and 12.1% in dollar terms, respectively,  for calendar year 2011 and the  year 
ended 30 June 2012. For  calendar year 2011, activity in  the US was down  by 
22%, while in Europe it was up 34%. Two European deals dominated: the  US$7.9 
billion buyout by EDF of  the remaining 50% of  EDF Energies Nouvelles it  did 
not own and the  US$2.1 billion buyout  by Iberdrola of  the remaining 20%  of 
Iberdrola Renovables it did not own. Without these two large  re-acquisitions 
of corporate spin-offs  by their  parents -  deals that  perhaps indicate  the 
parents' view that public market prices in wind and solar are at  irrationally 
low levels - European acquisitions would have been down 4%.



In the public markets, new raises from renewable energy IPOs were down 15% and
77% on a  global basis in  dollar terms for  calendar year 2011  and the  year 
ended 30  June  2012  respectively.  The activity  during  both  periods  was 
dominated by solar,  wind and  China. Macroeconomic  and political  pressures 
depressed prices of existing public renewable energy companies, as measured by
the NEX index, which  fell 40% and  44%, for calendar year  2011 and the  year 
ended 30 June 2012, respectively, as compared  to the S&P 500, which was  flat 
for calendar year 2011 and increased by 1.7% during the four quarters ended 30
June 2012.  This decline  in public  market valuations  for renewable  energy 
companies has  continued  to  put  pressure  on  private  company  valuations, 
including the  prices for  many  businesses comparable  or related  to  Leaf's 
portfolio companies.

Outlook

While  the  short-term  data  are  unfavourable,  the  long-term  drivers  for 
increased adoption of renewable energy in North America remain strong.  These 
long-term drivers include  the underlying trend  of rising fossil-fuel  costs, 
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. Collectively, these factors provide evidence that  the 
NEX is in an oversold position. Public and private valuations are  attractive 
to buyers  in  many  cases  and  have  created  opportunities  for  discerning 
investors such as  Leaf who are  in a  position to identify  and capture  this 
value.

Given the increase in the expected length of time to liquidity events for  its 
existing portfolio companies as  a result of the  current state of the  global 
economy, Leaf has continued to  focus in the short  term on the management  of 
its existing portfolio, having prudently maintained sufficient cash to provide
appropriate financing for its portfolio.



Portfolio Overview



A. Active Investments - Growth Companies

MaxWest Environmental Systems ("MaxWest") 
 Waste-to-energy gasification

                                        

Investment: US$23.8mm                    Ownership: Significant Stake


                                        

Company Summary                          Recent Highlights

                                        

MaxWest designs, builds, owns and        · Completed the next-generation
operates waste-to-energy gasification    version of the proprietary MaxWest
facilities specifically applied to waste gasification technology and
water facilities.                        successfully installed it at the
                                         Sanford site

                                         
MaxWest plants can be "bolted-on" to
existing water treatment facilities,     · Highlighted at the Clinton
providing municipalities and industrial  Global Initiative's (CGI) Seventh
sites with a cost-effective,             Annual Meeting in New York City for
environmentally friendly alternative to  its Commitment to Action, "Landfill
traditional methods of waste disposal.   Reduction through Biosolids
                                         Processing", which noted its
                                        exemplary approach to addressing
                                         challenges in environment and energy

                                         

                                         
         www.maxwestenergy.com
                                         

                                         











SkyFuel Inc.
("SkyFuel")
Concentrated Solar Power

                                 

Investment: US$28.3mm             Ownership: Significant stake


                                 

Company Summary                   Recent Highlights

                                 

SkyFuel was founded in 2007 and   
is an emerging technology leader
in the solar thermal power        § Became first in the CSP industry to offer
equipment sector.                insurance to support the company's product
                                  warranties, underwritten by one of the
                                 world's leading reinsurance companies,
                                  Munich Re
SkyFuel is one of the few
remaining stand-alone             
concentrated solar power ("CSP")
technology providers.            § Secured a large-scale domestic commercial
                                  order

                                  
SkyFuel possesses proprietary and
patented technologies which       
provide a meaningful cost
advantage relative to its         
competitors:
                                  

                                  
§ SkyTrough® - an advanced,
low-cost, accurate parabolic      
trough based on ReflecTech®, and
                                  

                                  
§ ReflecTech® Mirror Film - a
shatterproof glass alternative    

                                           www.skyfuel.com/#/NEWS/



         www.skyfuel.com



B. Active Investments - Projects

Johnstown Regional Energy, LLC ("JRE") 
   Landfill Gas

                                                

Investment: US$33mm                              Ownership: Wholly owned


Company Summary                                  Recent Highlights

                                                

JRE owns and operates three high-Btu landfill    § Entered into long-term,
gas-to-methane projects in Pennsylvania.        fixed-price contracts to sell
                                                 JRE's green gas to California
                                                buyers

JRE extracts raw landfill gas that is            
subsequently cleaned in advanced technology
processing plants and sold to utility gas        § Currently selling 100% of
providers via connecting pipelines as an         JRE's gas to buyers in
alternative to fossil-based natural gas.        California

                                                

This high quality "green" gas ultimately         
displaces the use of fossil-fuel-based natural
gas, making it eligible for premium pricing in   
states which have renewable protocol standards
(RPSs) incorporating reclaimed landfill gas.



               www.jreenergy.com



Multitrade Rabun Gap ("Rabun
Gap")
Wood-fuelled biomass

                                     

Investment: US$11.4mm                 Ownership: Majority


Company Summary                       Recent Highlights

                                     

Rabun Gap is a 20 MW capacity         § O&M management firm has completed
wood-fuelled bio-mass facility in     operational improvement plans which have
Georgia.                              decreased burn rate and increased output

                                     

Rabun Gap utilises renewable fuel     § Experiencing continued
from the local forest industry and    higher-than-expected fuel prices due to
sells power to a Georgia co-operative the US Department of Agriculture's
under a long-term power purchase      apparent decision to refocus its BCAP
agreement.                            Program

                                     

                                      

                                      



Multitrade Telogia ("Telogia") 
 Wood-fuelled
biomass

                                  

Investment: US$7.3mm               Ownership: Majority


Company Summary                    Recent Highlights

                                  

Telogia is a 14 MW capacity        § Closed permanent financing via a USDA
wood-fuelled bio-mass facility in  guaranteed loan from a commercial bank and
Telogia, Florida.                  repaid Leaf's outstanding construction loan
                                   principal and interest

                                   
Telogia utilises renewable fuel
from the local forest industry and § Experiencing higher-than-expected fuel
sells power to a local             prices due to the US Department of
co-operative under a long-term     Agriculture's apparent decision to refocus
power purchase agreement.          its BCAP Program

                                   

                                   § Optimization of plant performance
                                   resulted in record output and EBITDA for
                                   Telogia during the annual reporting period

                                   

                                   

                                   









Vital Renewable Energy Company ("VREC") 
 Biofuels - Ethanol

                                                 

Investment: US$20.9mm                             Ownership: Significant stake


Company Summary                                   Recent Highlights

VREC is a renewable energy company focused on the 
development    of    sugar-cane-based     ethanol 
facilities and electricity generation in  Brazil, § VREC pursuing industrial
as well as related infrastructure projects.       and agricultural expansion
                                                  plans

                                                  

                                                  
                 www.vrec.com.br
                                                               



Energía Escalona ("Escalona")
   
 Hydro

                                   

Investment: US$8.6mm                Ownership: Majority


Company Summary                     Recent Highlights

                                   

Escalona is a hydroelectric project § Escalona reached several development
development company based in Mexico milestones in the past fiscal year,
City. The company's flagship       including permitting approval from the
development is a 12 MW run-of-river Mexican archaeological authority and
hydroelectric facility located in   approval of the final design and pathway
Veracruz, Mexico.
                                    

                                    § The Escalona project in Veracruz
                                   continues to be one of the premier
                                    projects in Mexico given the large
                                   pressure and steady water flows

                                    

                                    

                                    



C. Passive Investments

Invenergy Wind LLC ("Invenergy")
 
 Wind Power

                                  

Investment: US$30.0mm              Ownership: Minority


Company Summary                    Recent Highlights

                                  

The largest independently-owned    § Completed construction and began
wind energy developer in North     commercial operations at its 110 MW Gratiot
America, having put more than      County wind project in Breckenridge,
3,000 MW into operation since      Michigan, for which it had obtained equity
2004.                              financing from GE Energy Financial Services
                                   in October 2011

                                   
In addition to its large portfolio
of operating assets, Invenergy     § Closed financing and commenced
also has a strong and diversified  commercial operations at three of the wind
pipeline of 700 MW of wind power   projects it owns with its partner, Enerco,
projects in advanced stages of     with a combined capacity of 80 MW located
development across North America   in northwest Poland
and Europe.
                                   

                                   § Closed debt financing for its 200 MW
                                  California Ridge wind project currently
                                   under construction in central Illinois

                                   
       www.invenergyllc.com
                                   § Completed construction and began
                                   commercial operations at its 138.6 MW Le
                                   Plateau Wind Energy Centre in Quebec

                                   

                                   § Completed the sale of its 81 MW Bishop
                                   Hill II wind project in Henry County,
                                   Illinois to MidAmerican Renewables

                                   

                                   § Closed a strongly oversubscribed $200
                                   million long-term loan financing

                                   

                                   § Closed project financing for its 200 MW
                                   Bishop Hill wind project in Henry County,
                                   Illinois

                                   

                                         www.invenergyllc.com/news.html





Miasolé

  Solar PV

                                   

Investment: US$21.5mm               Ownership: Minority


Company Summary                     Recent Highlights

                                   

Miasolé develops and manufactures   § Announced the achievement of a champion
thin-film                           device efficiency of 17.3% and that it is
copper-indium-gallium-diselenide    producing modules with 14% efficiency in
(CIGS) solar photovoltaic cells.    commercial volumes

                                   

Miasolé's panels are designed to be § Strengthened its senior leadership,
used in residential, commercial and appointing a new CEO, John Carrington and
utility developments.               new president, Bob Baker, both former
                                    senior executives at First Solar and Intel

                                    
Miasolé utilises a differentiated
vacuum deposition process that is   
highly efficient and designed to
apply CIGS material over large-area 
substrates in a continuous fashion.
                                    

                                    
Miasolé is leveraging expertise in
semiconductor manufacturing and a   
deep understanding of CIGS material
to manufacture new, versatile and    www.miasole.com/pgs-news/overview.shtml
low-cost solar products.



          www.miasole.com





12 November 2012









Parent company statement of comprehensive income

for the year ended 30 June 2012



                                                Note   Year ended   Year ended

                                                     30 June 2012 30 June 2011
                                                          US$'000      US$'000
Interest income on cash balances                 7             65           48
Unrealised losses on revaluation of investments                            
at fair value through profit or loss
                                                12.2     (27,261)      (5,339)
Gain on restructuring of subsidiary              11                      3,381
Net foreign exchange gain (loss)                              (8)          125
Gross portfolio return                                   (27,204)      (1,785)
Management service fees                          8        (3,721)      (3,776)
Other administration expenses                    9        (2,214)      (2,752)
Total expenses                                            (5,935)      (6,528)
Loss before taxation                                     (33,139)      (8,313)
Taxation                                        3.7             -            -
Loss for the year and comprehensive loss                                    

for the year                                             (33,139)      (8,313)
Basic and diluted loss per share (cents)         17       (25.35)       (5.83)

                                      

The accompanying notes form an integral part of these financial statements

                                      

                                      

Parent company statement of financial position

 as at 30 June 2012



                                              Note   30 June 2012 30 June 2011
                                                          US$'000      US$'000
Assets
Investments in subsidiaries at fair value     12.2        143,237      178,400
through profit or loss
Total non-current assets                                  143,237      178,400
Trade and other receivables                    13           1,966        2,509
Cash and cash equivalents                      14          42,120       40,559
Total current assets                                       44,086       43,068
Total assets                                              187,323      221,468
Equity
Share capital                                  15              28           29
Share premium                                  15         306,809      311,574
Retained losses                                         (125,029)     (91,890)
Total equity                                              181,808      219,713
Trade and other payables                    8,9.2,16        5,064        1,729
Unpaid capital contributions to                               451           26
subsidiaries
Total current liabilities                                   5,515        1,755
Total liabilities                                           5,515        1,755
Total equity and liabilities                              187,323      221,468
Net asset value per share (cents)              6           141.22       165.60

                                      

                                      

The accompanying notes form an integral part of these financial statements

                                      

                                      

The financial statements were approved by the Board of Directors on 12
November 2012 and signed on their behalf by:

                                      

                                      

                                      

                                      

Peter Tom              J. Curtis Moffatt
Non-Executive Chairman Non-Executive Director

                                      

                                      

Parent company statement of changes in equity

for the year ended 30 June 2012



                                                                          

                          Share Capital Share Premium Retained losses    Total
                                US$'000       US$'000         US$'000  US$'000
Balance at 1 July 2011               29       311,574        (91,890)  219,713
Total comprehensive loss              -             -        (33,139) (33,139)
Transactions with owners,

recorded directly in
equity:
Contributions by and

distributions to owners
Repurchase of shares                (1)       (4,765)               -  (4,766)
Total contributions by                                                    
and
                                    (1)       (4,765)               -  (4,766)
distributions to owners
Balance at 30 June 2012              28       306,809       (125,029)  181,808
Balance at 1 July 2010               30       323,115        (83,577)  239,568
Total comprehensive loss              -             -         (8,313)  (8,313)
Transactions with owners,

recorded directly in
equity:
Contributions by and

distributions to owners
Repurchase of shares                (1)      (11,541)               - (11,542)
Total contributions by                                                    
and
                                    (1)      (11,541)               - (11,542)
distributions to owners
Balance at 30 June 2011              29       311,574        (91,890)  219,713

                                      

The accompanying notes form an integral part of these financial statements





Parent company statement of cash flows

for the year ended 30 June 2012

                                                      Year ended   Year ended

                                                Note 30 June 2012 30 June 2011
                                                          US$'000      US$'000
Cash flows from operating activities
Interest received on cash balances                             65           48
Operating expenses paid                                   (5,960)      (6,417)
Net cash used in operating activities                     (5,895)      (6,369)
Cash flows from investing activities
Repayment of capital by subsidiaries at fair    12.2       15,909       8,409
value through profit or loss
Additional investments in subsidiaries at fair  12.2      (7,582)     (31,355)
value through profit or loss
Amount repaid by/(paid to) group companies                  3,903      (1,389)
Payment of unpaid share capital to subsidiaries                 -      (6,930)
Net cash generated from/(used in) investing                12,230     (31,265)
activities
Cash flows from financing activities
Repurchase of shares                             15       (4,766)     (11,542)
Net cash used in financing activities                     (4,766)     (11,542)
Net increase/(decrease) in cash and cash                    1,569     (49,176)
equivalents
Cash and cash equivalents at start of the year             40,559       89,609
Effect of exchange rate fluctuations on cash                  (8)          126
and cash equivalents
Cash and cash equivalents at end of year                   42,120       40,559

                                      

                                      

Reconciliation of loss before taxation to net         Year ended   Year ended
cash used in operating activities
                                                Note 30 June 2012 30 June 2011
                                                          US$'000      US$'000
Loss before taxation                                     (33,139)      (8,313)
Adjustments for:
Unrealised losses on revaluation of investments                            
at fair value through profit or loss
                                                12.2       27,261        5,339
Gain on restructuring of subsidiary              11             -      (3,381)
Foreign exchange (loss)/gain                                    8        (125)
Movement in trade and other receivables                         8        (912)
Movement in trade and other payables                         (33)        1,023
Net cash used in operating activities                     (5,895)      (6,369)

                                      

The accompanying notes form an integral part of these financial statements

Notes to the parent company financial statements

for the year ended 30 June 2012



1 The Company



Leaf Clean Energy Company  ("Leaf" or the "Company")  was incorporated 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.



Pursuant to the Company's Admission Document  dated 22 June 2007 there was  an 
original placing of up to 200,000,000  Ordinary Shares of GBP0.0001 par  value 
for GBP1 each.



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.



2 Basis of preparation



2.1 Statement of compliance



The Company's separate financial statements  have been prepared in  accordance 
with International Financial Reporting Standards (IFRSs). In order to  present 
information that is comparable with other investment companies, Leaf publishes
separate financial  statements  of the  Company  in addition  to  consolidated 
financial statements, which  include investments in  subsidiaries regarded  as 
part of the Company's investing business at fair value.



The financial statements were authorised for issue by the Board of Directors
on12 November 2012.



2.2 Basis of measurement



The financial statements have been prepared on the historical cost basis
except for the investments in subsidiaries that are measured at fair value in
the statement of financial position.



2.3 Functional and presentation currency



The financial statements are presented in United States Dollars ("US$"), which
is the Company's functional currency.  All financial information presented  in 
US$ has been rounded to the nearest thousand, except when otherwise indicated.



2.4 Use of estimates and judgements



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



Estimates and  underlying  assumptions  are  reviewed  on  an  ongoing  basis. 
Revisions to accounting estimates  are recognised in the  period in which  the 
estimate is revised and in any future periods affected.



The most significant area requiring estimation and judgement by the  Directors 
is the valuation of unquoted investments, see note 5 and 12.







3 Significant accounting policies



The accounting policies set out below have been applied consistently to all
periods presented in these financial statements.



3.1 Financial instruments



(i) Non-derivative financial assets



The Company  classifies non-derivative  financial  assets into  the  following 
categories: investments at fair  value through profit or  loss and, loans  and 
receivables.



The Company initially recognised loans and  receivables on the date that  they 
are originated. All other financial assets (including assets designated as  at 
fair value through  profit or loss)  are recognised initially  on trade  date, 
which is the date that the Group becomes a party to the contractual  provision 
of the instrument.



The Company derecognise a financial asset  when the contractual rights to  the 
cash flows from the instrument expire,  or it transfers the rights to  receive 
the contractual cash  flows in a  transaction in which  substantially all  the 
risks and rewards  of ownership of  the financial asset  are transferred.  Any 
interest in such transferred assets that is created or retained by the Company
is recognised as a separate asset or liability.



Financial assets and liabilities  are offset and the  net amount presented  in 
the statement of  financial position when,  and only when,  the Company has  a 
legal right to offset the amounts and intends either to settle on a net  basis 
or to realise and settle the liability simultaneously.



Investments in subsidiaries



The Company designated its investments in subsidiaries, including equity, loan
and similar instruments, as  at fair value through  profit or loss on  initial 
recognition. Attributable transaction  costs are recognised  in the profit  or 
loss as  incurred. Gains  and losses  arising from  changes in  fair value  of 
investments, including  foreign  exchange  movements, are  recognised  in  the 
profit or loss.



Unquoted investments  are  valued using  recognised  valuation  methodologies, 
based on  the International  Private Equity  and Venture  Capital  Guidelines, 
which reflect  the  amount for  which  an  asset could  be  exchanged  between 
knowledgeable, willing parties on an arm's length basis.



Loans and receivables



Loans and receivables are financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are recognised  initially 
at fair value plus any directly attributable transaction costs. Subsequent  to 
initial recognition,  loans and  receivables are  measured at  amortised  cost 
using the effective interest method, less any impairment losses.



Loans and receivables comprise cash and cash equivalents, and trade and  other 
receivables.



Cash and cash equivalents



Cash and  cash equivalents  comprises  cash balances  and call  deposits  with 
maturities of three months or fewer from the acquisition date that are subject
to an insignificant risk of changes in  value, and are used by the Company  in 
the management of its short-term commitments.



(ii) Non-derivative financial liabilities



The Company  classifies non-derivative  financial liabilities  into the  other 
financial  liability  category.  Such  financial  liabilities  are  recognised 
initially at  fair value  less any  directly attributable  transaction  costs. 
Subsequent to initial recognition, these financial liabilities are measured at
amortised costs using the effective interest method.



The Company  initially  recognises  debt securities  issued  and  subordinated 
liabilities on  the  date  that  they  are  originated.  All  other  financial 
liabilities (including liabilities designated as at fair value through  profit 
or loss) are recognised initially  on trade date, which  is the date that  the 
Group becomes a party to the contractual provision of the instrument.



The  Company  derecognises   a  financial  liability   when  the   contractual 
obligations are discharged, cancelled or expire.



Other financial liabilities comprise bank overdrafts, and trade and other
payables.



Bank overdrafts that are repayable on demand and form an integral part of the
Company's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.



3.1 Share capital



Ordinary shares



Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.



Repurchase of share capital



When share capital  recognised as  equity is  repurchased, the  amount of  the 
consideration paid, which includes directly attributable costs, net of any tax
effects, is recognised as a deduction from equity.



3.3 Revenue and expense recognition



Interest  income  is  recognised  on  a  time-proportionate  basis  using  the 
effective interest rate method.



Dividends receivable on equity and non-equity shares, which carry  significant 
equity rights,  are recognised  as  revenue when  the shareholders'  right  to 
receive payment  has  been established,  normally  ex-dividend date.  When  no 
ex-dividend date is available,  dividends receivable on  or before the  period 
end are treated as revenue for the period. Provision is made for any dividends
not expected to be received. 



Fixed returns on  debt securities  and loans  are recognised  on an  effective 
interest rate basis, which is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial asset to that asset's
net carrying amount.



Expenses are accounted for on  an accrual basis and  are charged to profit  or 
loss. This includes expenses directly related to making an investment which is
held at fair value through profit or loss.



3.4 Foreign currency translation



Transactions in foreign currencies are  translated to the functional  currency 
of the Company at  exchange rates at the  dates of the transactions.  Monetary 
assets and liabilities denominated in foreign currencies at the reporting date
are retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair  value are  retranslated to  the functional  currency at  the 
exchange rate at the date that the fair value was determined. Foreign currency
differences arising on retranslation are recognised in profit or loss.



3.5 Dividends payable



Dividends payable are recognised  as a liability in  the period in which  they 
are declared and approved.



3.6 Earnings per share



The Company presents basic and diluted  earnings per share (EPS) data for  its 
ordinary shares.  Basic EPS  is  calculated by  dividing  the profit  or  loss 
attributable to ordinary shareholders of  the Company by the weighted  average 
number of  ordinary shares  outstanding during  the period,  adjusted for  own 
shares held.  Diluted  EPS is  determined  by  adjusting the  profit  or  loss 
attributable to  ordinary  shareholders and  the  weighted average  number  of 
ordinary shares outstanding, adjusted for own shares held, for the effects  of 
all dilutive potential ordinary shares,  which comprise convertible notes  and 
share options granted to employees.





3.7 Income tax expense



Cayman Islands taxation

The Company received from  the Governor-in-Cabinet of  the Cayman Islands,  an 
undertaking that, for a  period of 20 years  from 5 June 2007  no laws of  the 
Cayman Islands  imposing any  tax on  profits, income,  gains or  appreciation 
shall apply to the Company and  that no such tax or  any tax in the nature  of 
estate duty or inheritance tax shall  be payable on the shares, debentures  or 
other obligations of the Company. Under the current Cayman Islands law, no tax
will be  charged on  profits or  gains of  the Company  and dividends  of  the 
Company would be  payable to Shareholders  resident in or  outside the  Cayman 
Islands without deduction of tax.



3.8 Future changes in accounting policies



IASB (International Accounting Standards Board) and IFRIC (International
Financial Reporting Interpretations Committee) have issued the following
standards and interpretations with an effective date after the date of these
financial statements:



New/Revised International Financial Reporting                   Effective date
Standards (IAS/IFRS)
                                                           (accounting periods

                                                      commencing on or after)
IAS 1 Presentation of Financial Statements -                      1 July 2012
Amendments to revise the way other comprehensive
income is presented (June 2011)
IAS 12 Income Taxes - Limited scope amendment                                
(recovery of underlying assets) (December 2010)
                                                                1 January 2012
IAS 19 Employee Benefits - Amendment resulting from                         
the Post-Employment Benefits and Termination Benefits
projects (as amended in June 2011)                              1 January 2013
IAS 27 Consolidated and Separate Financial Statements           1 January 2013
- Reissued as IAS 27 Separate Financial Statements
(as amended in May 2011)
IAS 28 Investments in Associates - Reissued as IAS 28           1 January 2013
Investments in Associates and Joint Ventures (as
amended in May 2011)
IAS 32 Financial Instruments Presentation -                     1 January 2014
Amendments to application guidance on the offsetting
of financial assets and financial liabilities
(December 2011)
IFRS 7 Financial Instruments: Disclosures -                     1 January 2013
Amendments enhancing disclosures about offsetting of
financial assets and financial liabilities (December
2011)
IFRS 7 Financial Instruments: Disclosures -                     1 January 2015
Amendments requiring disclosures about the initial
applicable of IFRS 9 (December 2011)
IFRS 9 Financial Instruments - Classification and               1 January 2015
measurement of financial assets (as amended in
December 2011)
IFRS 9 Financial Instruments - Accounting for                   1 January 2015
financial liabilities and derecognition (as amended
in December 2011)
IFRS 10 Consolidated Financial Statements (May 2011)            1 January 2013
IFRS 11 Joint Arrangements (May 2011)                           1 January 2013
IFRS 12 Disclosure of Interests in Other Entities               1 January 2013
(May 2011)
IFRS 13 Fair Value Measurement (May 2011)                       1 January 2013
IFRIC Interpretation
IFRIC 20 Stripping Costs in the Production Phase of a           1 January 2013
Surface Mine



The Directors do not expect the adoption of the standards and interpretations
to have a material impact on the Company's financial statements in the period
of initial application.





4 Financial risk management



The Parent Company's investments  expose it to a  variety of financial  risks: 
market risk  (including currency  risk, market  price risk  and interest  rate 
risk), credit risk and liquidity risk.



Market price risk

The subsidiaries in which the Company  invests operate in sectors that may  be 
affected by the prevailing prices of  electricity, oil, natural gas and  other 
commodities. As energy  and fuels  derived from  non-renewable sources  become 
more expensive or scarce, renewable  energy and alternative fuels become  more 
valuable. Conversely, if non-renewable energy  and fuels become more  abundant 
or, for  other  reasons become  less  expensive,  the value  of  renewable  or 
alternative fuels may be negatively affected. As a result, the performance  of 
the project companies  is likely to  be dependent upon  prevailing prices  for 
these commodities,  which have  been  historically, and  may continue  to  be, 
volatile and subject to  wide variations for a  variety of reasons beyond  the 
control of the Company.  These factors include the  level of consumer  product 
demand,  weather  conditions,  governmental   regulations  in  producing   and 
consuming countries,  the price  and availability  of alternative  fuels,  the 
supply of  oil  and  natural  gas,  and  overall  geo-political  and  economic 
conditions. Therefore, volatility of commodity prices may adversely affect the
value of the Company'sinvestments.



Market price  risk  is managed  by  the management  team  of the  Company,  in 
accordance with parameters set by the Board.



All of the Company'sinvestments comprise interests in companies which are  not 
publicly traded or freely marketable. The Company may also be restricted  from 
selling certain  securities by  contract  or regulatory  considerations.  Such 
investments  may  therefore  be  difficult  to  value  or  realise.  Any  such 
realisation may involve significant time and expense.



If the value of the  Company'sinvestment portfolio increased/decreased by  5%, 
the net assets of the  Company would increase/decrease by US$7,232,372  (2011: 
US$9,015,949)



Foreign exchange risk

The Company is exposed  to foreign exchange risk  with regard to  transactions 
made in Sterling and balances held in Sterling.



An analysis  of net  assets by  currency exposure  as at  30 June  2012 is  as 
follows:



             Net Assets   Net Assets

               US$'000s     US$'000s
           30 June 2012 30 June 2011
US Dollars      181,702      219,881
Sterling            106        (168)
Total           181,808      219,713



An appreciation  of  the Sterling  against  the US  Dollar  of 5%  would  have 
decreased net assets by US$5,034 (2011: US$5,232). A decrease of 5% would have
an equal and opposite effect.



Interest rate risk

The Company is exposed to cash flow interest rate risk on cash balances  which 
are all short  term fixed  deposits. The  weighted average  interest rates  on 
short term fixed deposits as at 30 June 2012 were:



              30 June 2012 30 June 2011
                         %            %
Cash balances
US Dollars            0.15         0.05
Sterling                 -            -













Interest rate risk(continued)

The table below summarises the Company's exposure to interest rate risks.  It 
includes thefinancial assets  and liabilities at  the earlier of  contractual 
re-pricing or maturity  date, measured by  the carrying values  of assets  and 
liabilities:



30 June 2012        Less     1-3 3 months     1-5  Over 5 Non-interest   Total
                    than  months            years
                  1month             to 1           Years      bearing
                                     year
                 US$'000 US$'000  US$'000 US$'000 US$'000      US$'000 US$'000
Financial Assets
Investments in                                                         
subsidiaries at
fair value             -       -        -       -       -      143,237 143,237
through profit
or loss
Trade and other        -       -        -       -       -        1,966   1,966
receivables
Cash  and   cash  35,027       -        -       -       -        7,093  42,120
equivalents
Total  financial  35,027       -        -       -       -      152,296 187,323
assets
Financial
Liabilities
Trade and other        -       -        -       -       -      (5,064) (5,064)
payables
Unpaid capital                                                         
contributions to
subsidiaries           -       -        -       -       -        (451)   (451)
Total  financial       -       -        -       -       -      (5,515) (5,515)
liabilities
Total interest                                      
rate sensitivity
gap               35,027       -        -       -       -





30 June 2011        Less     1-3 3 months     1-5  Over 5 Non-interest   Total
                    than  months            years
                  1month             to 1           Years      bearing
                                     year
                 US$'000 US$'000  US$'000 US$'000 US$'000      US$'000 US$'000
Financial Assets
Investments in                                                         
subsidiaries at
fair value             -       -        -       -       -      178,400 178,400
through profit
or loss
Trade and other        -       -        -       -       -        2,509   2,509
receivables
Cash  and   cash  39,110       -    1,449       -       -            -  40,559
equivalents
Total  financial  39,110       -    1,449       -       -      180,909 221,468
assets
Financial
Liabilities
Trade and other        -       -        -       -       -      (1,729) (1,729)
payables
Unpaid capital                                                         
contributions to
subsidiaries           -       -        -       -       -         (26)    (26)
Total  financial       -       -        -       -       -      (1,755) (1,755)
liabilities
Total interest                                      
rate sensitivity
gap               39,110       -    1,449       -       -



No fair  value interest  rate sensitivity  analysis has  been provided  as  no 
financial assets or liabilities are subject to fair value interest rate  risk. 
If interest rates have been 1% higher/lower for the year, interest  receivable 
would have been US$350,265(2011: US$405,590) higher/lower.



























Credit risk

Credit risk is the risk that  the counterparty to a financial instrument  will 
fail to discharge an  obligation or commitment that  it has entered into  with 
the Company.



The carrying amounts  of financial  assets best represent  the maximum  credit 
risk exposure at  the reporting date.  This relates also  to financial  assets 
carried at amortised cost, as they have a short term maturity.



At the reporting date, the  Company'sfinancial assets exposed to credit  risk 
amounted to the following:



                                                     30 June 2012 30 June 2011
                                                          US$'000      US$'000
Investments in  subsidiaries at  fair value  through      143,237      178,400
profit or loss
Trade and other receivables                                 1,966        2,509
Cash and cash equivalents                                  42,120       40,559
                                                          187,323      221,468



The maximum exposure to credit risk  is represented by the carrying amount  of 
each financial asset in the  statement of financial position. Management  does 
not expect any  counterparty to  fail to meet  its obligations.No  impairment 
provisions have been made as  at the year end and  no debtors were past  their 
due date.



Cash balances are held with P-1* financial institutions.



*- A Moody's  rating of Prime-1  (P-1) means  that the issuer  has a  superior 
ability to repay short-term debt for the obligations.



Liquidity risk



Liquidity risk is  the risk  that the  Company will not  be able  to meet  its 
financial obligations as  they fall  due. The Company's  approach to  managing 
liquidity is  to ensure,  as far  as possible,  that it  will have  sufficient 
liquidity to meet its  liabilities when they fall  due, under both normal  and 
stressed conditions,  without  incurring unacceptable  losses.  The  Company's 
liquidity position is monitored by the Board of Directors.



Residual undiscounted contractual maturities of financial liabilities:





30 June 2012           Less than     1-3  3 months 1-5 years  Over 5 No stated
                                         to 1 year             years  maturity
                        1 month  months
                         US$'000 US$'000   US$'000   US$'000 US$'000   US$'000
Financial liabilities
Trade    and     other   (5,064)       -         -         -       -         -
payables
Unpaid         capital     (451)
contributions       to 
subsidiaries
                         (5,515)       -         -         -       -         -



30 June 2011           Less than     1-3  3 months 1-5 years  Over 5 No stated
                                         to 1 year             years  maturity
                        1 month  months
                         US$'000 US$'000   US$'000   US$'000 US$'000   US$'000
Financial liabilities
Trade    and     other   (1,729)       -         -         -       -         -
payables
Unpaid         capital      (26)
contributions       to 
subsidiaries
                         (1,755)       -         -         -       -         -



Fair values



All assets and liabilities at 30 June 2012 are considered to be stated at fair
value.







5. Critical accounting estimates and assumptions



These disclosures supplement the commentary on financial risk management  (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. 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 Company's accounting policies



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



Valuation of financial instruments

The Company's accounting  policy on  fair value measurements  is discussed  in 
accounting policy 3.1.  The Company  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 basedon quoted  market prices or dealer price  quotations. 
For all other financial instruments  the Company determines fair values  using 
valuation techniques.



The Company, through  its wholly-owned  subsidiaries, holds  full or  partial 
ownership interests  in a  number  of unquoted  clean energy  companies.  The 
Company's investments are classified as level 3 in the fair value hierarchy. A
reconciliation from the beginning balances to the ending balances is shown  in 
note 12.



6 Net Asset Value per Share



The net asset value per share as at 30 June 2012 is 141.22 cents based on  net 
assets of US$181,808,657 and  128,745,726ordinary shares in  issue as at  that 
date  (2011:  165.60  cents  based   on  net  assets  of  US$219,713,487   and 
132,675,726ordinary shares).









7 Interest income on cash balances



                                         Year ended 30 June Year ended 30 June
                                                       2012               2011
                                                    US$'000            US$'000
Interest income receivable on Sterling                    -                  1
cash balances
Interest income receivable on US Dollar                  65                 47
cash balances
                                                         65                 48



8 Management service fees



Leaf's wholly-owned subsidiary, Leaf  Clean Energy USA,  LLC ("Leaf USA"),  in 
Washington, DCprovides  assets  advisory,  portfolio  management  and  certain 
administrative services to  the Company.  Leaf USA is  entitled to  management 
fees which are  calculated based  on 20%  mark up on  the costs  of the  asset 
advisory and  portfolio  management services  provided  to Leaf  Clean  Energy 
Company. The administrative services provided to Leaf Clean Energy Company are
at cost base with nil mark up.



Leaf USA Service fees for the year ended 30 June 2012 payable to Leaf USA were
US$3,721,087 (year ended  30June2011: US$3,775,686) and  the amount  accrued 
but not paid at the period end was US$584,690 (30 June 2011: US$364,626).



9 Other administration expenses



                                         Year ended 30 June Year ended 30 June
                                                       2012               2011
                                                    US$'000            US$'000
Directors' remuneration (note 10)                     1,248              1,069
Legal and professional fees (note 9.1)                  228                715
Administration fees (note 9.2)                          195                313
Travel and subsistence expenses                         289                259
Directors' and Officers' insurance                       97                106
expense
Audit fees                                               89                 99
Other expenses                                            9                 93
Printing and stationery expenses                         15                 50
Registrar fees and costs                                 44                 48
Total                                                 2,214              2,752



9.1 Legal and professional fees

Legal and professional  fees represent  legal, advisory  and consultancy  fees 
incurred during and after the implementation of investment acquisitions.





9.2 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 year amounted to US$195,056 (2011: US$312,840) and
US$42,493 was outstanding as at 30 June 2012 (2011: US$53,049).



10 Directors' remuneration



In February  2011,  Mercer  Limited  ("Mercer")  was  engaged  to  conduct  an 
independent remuneration review,  and Mercer's recommendation  was adopted  by 
the Board at its meeting on 3 March 2011. As recommended by Mercer, the  basic 
annual remuneration for the Chairman and the Executive Director was maintained
at US$200,000 and US$400,000 respectively. In addition, the Executive Director
is eligible  to  receive an  annual  bonus of  US$350,000.  The  Non-Executive 
Directors fees were reduced from US$150,000  to US$60,000 with 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 reimbursement for each additional day  attending 
the Company's meetings.



Details of the Directors' basic annual remuneration during the year were as
follows:



              Remuneration for Remuneration for the       Remuneration for the
                       year to  period from 1 April   period from 1 July 2010
                               2011 to 30 June 2011           to 31 March 2011
                  30 June 2012
                       US$'000              US$'000                    US$'000
Peter     Tom              200                  200                        200
(Chairman)
Bran Keogh                 400                  400                        400
J.     Curtis              148                   60                        150
Moffatt
Peter O'Keefe              150                   60                        150
                           898                  720                        900



Directors' fees and expenses paid during the year were as follows:



30 June 2012         Directors' fees Annual bonus   Total
                             US$'000      US$'000 US$'000
Peter Tom (Chairman)             200            -     200
Bran Keogh                       400          350     750
J. Curtis Moffatt                148            -     148
Peter O'Keefe                    150            -     150
                                 898          350   1,248



30 June 2011         Directors' fees Other emoluments   Total
                             US$'000          US$'000 US$'000
Peter Tom (Chairman)             200                -     200
Bran Keogh                       400              175     575
J. Curtis Moffatt                143                -     143
Peter O'Keefe                    151                -     151
                                 894              175   1,069







The Directors are also  entitled to receive reimbursement  of any expenses  in 
relation to their appointment. Total reimbursement fees paid to the Directors
for the year ended  30 June 2012amounted to  US$218,230 (2011: US$216,750)  of 
which US$nil was outstanding at 30 June 2012 (June 2011: US$nil).



11 Gain on restructuring of subsidiary



For efficient portfolio management purposes, the Company dissolved one of  its 
subsidiaries in 2011, Leaf Finance Company, and distributed its net assets  to 
the  Company.   The  dissolution   resulted  in   a  one-time   net  gain   of 
US$3,381,454.This had  no effect  on profit  or  loss or  net assets  of  the 
Company as investments in subsidiaries are stated at fair value and there  was 
a consequent movement in the unrealised gain/loss on revaluation.



12 Investments



12.1 The subsidiaries

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

                                        Country of Percentage of
                                     incorporation   shares held
Leaf Bioenergy Company              Cayman Islands          100%
Leaf Biomass Company                Cayman Islands          100%
Leaf Biomass Investments, Inc.*     USA (Delaware)          100%
Leaf Clean Energy USA, LLC          USA (Delaware)          100%
Leaf Escalona Company*              Cayman Islands          100%
Leaf Hydro Company                  Cayman Islands          100%
Leaf Invenergy Company*             Cayman Islands          100%
Leaf Invenergy US Investments, Inc* USA (Delaware)          100%
Leaf LFG Company                    Cayman Islands          100%
Leaf LFG US Investments, Inc.*      USA (Delaware)          100%
Leaf MaxWest Company*               USA (Delaware)          100%
Leaf Miasolé*                       Cayman Islands          100%
Leaf Skyfuels Company*              Cayman Islands          100%
Leaf Solar Company                  Cayman Islands          100%
Leaf VREC*                          Cayman Islands          100%
Leaf Waste Energy                   Cayman Islands          100%
Leaf Wind Company                   Cayman Islands          100%



*Indirect subsidiaries

The story has been truncated,
[TRUNCATED]