Sunday, August 31, 2008

Carbon Planet

Carbon Planet is a privately held Australian company "whose mission is to enable every individual and business on the planet to manage their contribution to the defining issue of our age, global warming. Established in 2000, Carbon Planet has been working with businesses around the world, helping them quantify the risks and explore the opportunities emerging in the carbon constrained economy." They are raising money through both a retail and institutional fundraising round to help in their expansion. This kind of venture fundraising from retail investors is legal in Australia if sufficient disclosures are made in the offer document. But it's rare. Which makes me wonder why they are prepared to go through the hassle of raising money from the public. They plan on listing on the ASX by the end of 2010.

The plan is to raise $(A)4 million from retail investors in amounts as small as $2,000 and $10 million from institutional investors. The shareholders equity of the company was -$2.7 million at the end of 2007 and they lost $2.3 million in 2007. The main liabilities are loans from directors. Since the end of 2007 the firm has already raised $6.3 million from private equity placements for it seems 151 million shares for an average of 4.2 cents a share. But 82% of issued shares to date are held by the directors. The retail placement share price is 50 cents. A massive paper windfall for the the investors (mainly the directors) so far this year. The company states it has $2 million in the bank at the moment and has not repaid the director loans. So did it burn $4 million so far this year? It would be really nice to have accounts for more recent months, but none are provided. The expansion plans are ambitious but vague beyond the very near future and they admit to a very large number of competitors in Australia and doubtless plenty more elsewhere. On the plus side, the directors and key employees have a strong entrepreneurial track record including founding and profitably selling a technology company.

Given the short track record, ambitious but vague plans, lack of up to date financial information, and seemingly exorbitant valuation placed on already issued shares (the company is valued at $85 million based on this placement or about 100 times 2007 sales) I'm not planning on participating in this investment. Maybe I'm missing out on the next Google, but I don't think so.


Anonymous said...

Very astute observations Moom. No you are not missing out...there will be many dissapointed investors in the near future it seems - refer also to the release:

Anonymous said...

See below. If Carbon Planet advanced the office of climate Change one dollar as stated or paid the 10k "licence fee" to the Office of Cliamte Change they may soon find themselves in the clink under Australias clear anti-corruption laws. It is normally an offence to pay fees to any govt official or agency if legislation is not in place and it was not and is not. I would assume the ASX may have some views on all this...

PNG govt taken to task over carbon trading
Sir Mekere Morauta, Leader of the PNG Opposition, speaking in Parliament, has challenged the Somare Government over its putative carbon trading activities.

He has expressed alarm at developments that had recently come to light in relation to premature carbon trading, and unusual agreements with a large number of companies to trade carbon on behalf of PNG “without proper scrutiny and without regulatory policy or legislation in place”.

“If we are not careful, cowboys operating behind the scenes, using our name and wearing our cloak, will reap the lion’s share of carbon revenue,” Sir Mekere said.

“It appears that the Prime Minister and his henchmen, including the Minister for Planning and more recently the Director of the Office of Climate Change, have been hawking these potential assets around the world to all and sundry”.

Sir Mekere said one firm appointed by the government, Climate Assist (PNG), is a one dollar company based in Rockhampton with its sole director, Mr Gregory Corby, providing an address in Toowoomba.

“Another Australian company, Carbon Planet, last year advanced the Office of Climate Change $1.2 million,” he said. “As with Climate Assist, the Opposition wonders what connections Carbon Planet and its Chairman, Mr Jim Johnson have with the Prime Minister or the Prime Minister’s associates.”

“A close relative of the Prime Minister is involved with yet another company, Pacific Carbon,” he said. “The media alleges the PM’s relative has been urging people in East Sepik to sign away rights to land for trading carbon to this company.

“We also wonder why, when questioned about this payment by an AAP reporter, Mr Johnson would say so defensively: ‘I am not explaining at all. I am not having this conversation’.