1. Investment Approach

At an extraordinary general meeting (EGM) held on 1 July 2014, Leaf’s shareholders voted to accept the Leaf Board’s proposed resolution to change the Leaf Group’s investment strategy to an orderly realisation and return of capital to the shareholders, which will occur on an asset-by-asset basis in timeframes appropriate for each asset.

Key elements of the new strategy, disclosed in the EGM circular to shareholders in advance of the meeting are:

• Orderly and expedient realisation: The investments are to be realised in an orderly and expedient manner, at the Leaf Board’s discretion. The board will balance the goal of returning capital expediently to investors with the goal of maximising the realisation value of the investments. 

In executing this aspect of the new strategy, Leaf will take a flexible approach that appropriately balances timing of any monetisation while still maximising value for shareholders. This means that some investments may be considered appropriate for sale in the short term, while others may be held for a longer period, as required by circumstances and market conditions.

• No new investments into new companies: Leaf will not invest in any new portfolio companies, but will make judicious additional investments in existing portfolio companies where required to preserve or enhance the realisation value of these investments.

• Timing of realisations and redemptions is unpredictable: Leaf’s holdings are all in the debt and equity of unlisted companies. Therefore, realisations of these investments require the cooperation of the investee companies and of other investors as well as Leaf. In addition, the individual circumstances and market conditions surrounding each investment must be taken into account, affecting the timescale before which a particular investment can be realised. 

The result of this change in strategy will help to accelerate the timing of cash distributions to shareholders. Any such cash distributions, in the form of redemptions, resulting from each realisation will depend on many factors, including Leaf Group’s working capital needs and the requirements of Cayman Island law with respect to redemptions. As a result, Leaf will not announce a redemption schedule.