Half Yearly Report

RNS Number : 3340A

Clean Energy Brazil PLC

31 January 2011

 

28 January 2011

Clean Energy Brazil PLC

("CEB" or the "Company")

Consolidated interim financial statements
for the six months ended 31 October 2010

Clean Energy Brazil PLC, an investment company focused on Brazil's sugar cane/ethanol industry, is pleased to announce its results for the six months ended 31 October 2010.

Further enquiries:

Singer Capital Markets (Nominated Adviser) Claes Spang	Tel: [phone]
IOMA Fund & Investment Management Limited (Administrator) Philip Scales	Tel: [phone]

Chairman's Statement

Dear Shareholders,

The Company's NAV decreased to US$34.4 million (23 US cents per share) as at 31 October 2010 from US$41.6 million (28 US cents per share) as at 30 April 2010.  The decrease in net asset value is primarily a result of our changed estimate of the value of our investment in Unialco MS.  Our assets remain the same as they were six months ago: cash and our investment in Unialco MS. 

As I mentioned in my last statement, we have received a purported claim by Unialco SA in connection with our investment in Unialco MS.  That claim would fall under the investment agreement we entered into at the time the investment was made.  The investment agreement is governed under English law.  We have consequently retained UK counsel.  They have reviewed the underlying facts, and we have made our own demands in connection with Unialco SA's failure to fulfil its obligations, in particular to make the required investment in the Dourados project.  This legal manoeuvring is still in its initial stages and it would be premature to predict the outcome.

At the same time, we continue our negotiations to sell our stake in Unialco.  Our running costs are low.  We have eliminated all non-essential expenses and have essentially outsourced all required services.  We will continue to endeavour to obtain fair value for our investment.

Respectfully yours,

Jossef Barath

Chairman

28 January 2011

 

Independent Review Report To Clean Energy Brazil Plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly report for the six months ended 31 October 2010 which comprises Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' responsibilities

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

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

Our responsibility

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

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 31 October 2010 is not prepared, in all material respects, in accordance with IAS 34 and the AIM Rules.

KPMG Audit LLC

Chartered Accountants 

Heritage Court

41 Athol Street

Douglas

Isle of Man

IM99 1HN

28 January 2011

Consolidated Statement of Comprehensive Income
For the six months ended 31 October 2010

		(Unaudited)	(Unaudited)	(Audited)
	Note	6 Months ended 31 October 2010	6 Months ended 31 October 2009	12 Months ended  30 April 2010
		$'000	$'000	$'000
Interest income on bank balances		70	130	292
Sundry income		77	6	16
Fair value movement on revaluation of investments	7	(5,843)	10,207	(2,015)
Fair value movement on agricultural assets		-	(137)	(1,164)
Loss from cane sales		-	(395)	(170)
Gain on disposal of agricultural assets		21	-	-
Investment expense		-	(1,689)	(1,689)
Cancellation of operating leases of land		-	-	(1,492)
Net investment (expense)/income		(5,675)	8,122	( 6,222)
Provision for potential claim		-	-	(6,880)
Other administration fees and expenses		(1,340)	(3,876)	(5,858)
Total administrative expenses		(1,340)	(3,876)	(12,738)
Foreign exchange gain		202	1,209	127
Finance costs		(5)	(13)	(35)
(Loss)/profit for the period before tax		(6,818)	5,442	(18,868)
Taxation		(36)	(125)	(239)
(Loss)/profit for the period after tax		(6,854)	5,317	(19,107)
Other comprehensive (loss)/income		(339)	2,461	3,464
Total comprehensive (loss)/income for the period		(7,193)	7,778	(15,643)
Basic and diluted (loss)/earnings per share		($0.05)	$0.04	$(0.13)

Consolidated Statement of Financial Position
At 31 October 2010

		(Unaudited)	(Unaudited)	(Audited)
	Note	31 October 2010	31 October 2009	30 April 2010
		$'000	$'000	$'000
Non-current assets
Investments at fair value through profit or loss	7	20,068	38,133	25,911
Property, plant and equipment		50	142	133
Total non-current assets		20,118	38,275	26,044
Current assets
Trade and other receivables		1,007	4,405	468
Agricultural assets		-	2,283	2,616
Cash and cash equivalents		20,678	23,443	20,079
Total current assets		21,685	30,131	23,163
Total assets		41,803	68,406	49,207
Current liabilities
Provision for potential claim	10	(6,880)	-	(6,880)
Trade and other payables		(490)	(3,359)	(701)
Total liabilities		(7,370)	(3,359)	(7,581)
Net assets		34,433	65,047	41,626
Equity:
Share capital	8	2,920	2,920	2,920
Share premium		-	82,584	-
Distributable reserves		29,568	(21,738)	36,422
Other reserves		1,945	1,281	2,284
Total equity		34,433	65,047	41,626
Net Asset Value per share ($)	9	0.23	0.44	0.28

Consolidated Statement of Changes in Equity
For the six months ended 31 October 2010

	Share capital	Share premium	Distributable reserves	Other reserves	Shareholders' funds
	$'000	$'000	$'000	$'000	$'000
Changes in equity for period ended 31 October 2009 (unaudited)
Balance at 1 May 2009	2,920	82,584	(27,055)	(1,180)	57,269
Profit for the period	-	-	5,317	-	5,317
Other comprehensive income
Foreign exchange gain on translation of subsidiaries	-	-	-	2,461	2,461
Balance at 31 October 2009	2,920	82,584	(21,738)	1,281	65,047
Changes in equity for year to 30 April 2010 (audited)
Balance at 1 May 2009	2,920	82,584	(27,055)	(1,180)	57,269
Loss for the year	-	-	(19,107)	-	(19,107)
Other comprehensive income
Foreign exchange gain on translation of subsidiaries	-	-	-	3,464	3,464
Transactions with owners recorded directly in equity
Cancellation of share premium	-	(82,584)	82,584	-	-
Balance at 30 April 2010	2,920	-	36,422	2,284	41,626
Changes in equity for period ended 31 October 2010 (unaudited)
Balance as at 1 May 2010	2,920	-	36,422	2,284	41,626
Loss for the period	-	-	((6,854)	-	(6,854)
Other comprehensive loss
Foreign exchange on translation of subsidiaries	-	-	-	(339)	(339)
Balance at 31 October 2010	2,920	-	29,568	1,945	34,433

 

Consolidated Statement of Cash Flows
For the six months ended 31 October 2010

	(Unaudited)		(Unaudited)	(Audited)
	6 Months ended 31 October 2010		6 Months ended  31 October 2009	12 Months ended 30 April 2010
	$'000	$'000		$'000
Cash flows from operating activities
(Loss)/profit for the period after tax	(6,854)	5,317			(19,107)
Adjustments for:
Fair value adjustment	5,843	(10,070)			3,179
Finance income and expense	(267)	(1,326)			(384)
Tax paid	36	125			239
Profit on disposal of agricultural assets	(21)	-			-
Depreciation of fixed assets	8	9			20
Changes in working capital
Change in trade and other receivables	50	(3,696)			241
Change in agricultural assets	-	576			244
Change in provision for potential claim	-	-			6,880
Change in trade and other payables	(248)	2,574			(67)
Net cash flows used in operations	(1,453)	(6,491)			(8,755)
Cash flows from investing activities
Interest income	70	130			292
Disposal of agricultural assets	2,123
Disposal of fixed assets	-	55			67
Purchase of fixed assets	-	-			(14)
Net cash flows generated from investing activities	2,193	185			345
Cash flows from financing activities
Interest expense and other finance costs	(5)	(13)			(35)
Net cash flows used in  financing activities	(5)	(13)			(35)
Net increase/(decrease) in cash and cash equivalents	735	(6,319)			(8,445)
Effect of exchange rate fluctuations on cash balances	(136)	3,169			1,931
Cash and cash equivalents at start of period	20,079	26,593			26,593
Cash and cash equivalents at end of period	20,678	23,443			20,079

Selected notes to the condensed consolidated interim financial information
For the six months ended 31 October 2010

1. General information

The Company is a closed-end investment company incorporated on 19 September 2006 in the Isle of Man as a public limited company.  The address of its registered office is IOMA House, Hope Street, Douglas, Isle of Man.

The Company is listed on the AIM market of the London Stock Exchange. 

The condensed consolidated financial information comprises the results of the Company and its subsidiaries (together referred to as the "Group") and is unaudited.

The consolidated financial statements of the Group as at and for the year ended 30 April 2010 are available upon request from the Company's registered office at IOMA House, Hope Street, Douglas, Isle of Man or at www.cleanenergybrazil.com.

2. Statement of Compliance

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the period ended 30 April 2010.

These interim consolidated financial statements were approved by the Board of Directors on 28 January 2010.

3. Significant accounting policies

The accounting policies applied by the Group in these interim consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 April 2010.

4. Critical accounting estimates and assumptions

The preparation of condensed consolidated interim financial statements in conformity with IFRSs requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results for which form the basis of making the judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at end for the year ended 30 April 2010.

5. Financial risk management policies

The principal risks and uncertainties are consistent with those disclosed in preparation of the Group's annual financial statements for the year ended 30 April 2010.

6. (Loss)/earnings per share

The basic and diluted (loss)/earnings per share is calculated by dividing the (loss)/profit for the period attributable to ordinary shareholders by the weighted average number of shares outstanding during the period:

	6 months ended 31 October 2010 (unaudited)	6 months ended 31 October 2009 (unaudited)	year ended 30 April 2010 (audited)
(Loss)/earnings attributable to ordinary shareholders of the Company	$(6,854,000)	$5,317,000	$(19,107,000)
Weighted average number of shares in issue	147,563,929	147,563,929	147,563,929
Basic (loss)/earnings per share (cent)	(4.6)	3.6	(12.9)

There is no difference between fully diluted loss/earnings per share and basic earnings per share.

7. Investments

Investments at the period end comprise one holding as follows:

Name	Country of Incorporation	Proportion of ownership interest
Unialco MS Participaçoes SA	Brazil	33%

The investment is considered to be a joint venture.  However it is not equity accounted for, but designated as held at fair value through profit or loss in accordance with a permitted exemption under IAS 31. The investment in Unialco is stated at fair value, as estimated by the Directors.

	Unialco
	$'000
Balance at 30 April 2010	25,911
Fair value adjustment	(5,843)
Balance at 31 October 2010	20,068

8. Share capital

Ordinary shares of 1pence each As at 31 October 2010 and 30 April 2010	Number of shares	Value £'000
Issued	147,563,929	1,475
Authorised	600,000,000	6,000

All shares are fully paid and each ordinary share carries one vote.

In addition to the ordinary shares, 25,000,000 equity warrants are admitted to trading on the AIM market. Each warrant entitles the holder to subscribe for one new ordinary share at £1.00 per share, subject to adjustment as detailed in the Company's Admission Document published in December 2006.

9.   Net asset value (NAV)

The NAV per share is calculated by dividing the net assets attributable to the equity holders of the Company at the end of the period by the number of shares in issue. 

	31 October 2010	31 October 2009	30 April 2010
Net assets	$34,433,000	$65,047,000	$41,626,000
Number of shares in issue	147,563,929	147,563,929	147,563,929
NAV per share	$0.23	$0.44	$0.28

10. Provision

In the financial statements for the year ended 30 April 2010, a provision was made for a potential claim against Clean Energy Brazil Limited ("CEBL"), pursuant to an investment agreement dated 10 December 2007 made between Unialco MS Participações S/A, CEBL, Unialco S/A -Álcool e Açúcar, and others relating to Unialco MS Participações S/A. The provision has been retained for the current period, but the Company intends to vigorously defend against any claim in this matter.

11. Subsequent events

In December 2010, CEBL issued a letter before action seeking compensation of $36.55 million in respect of its investment in Unialco MS. 

 

END

 

 

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