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The Value Catalyst Fund Limited ("VCF" or "the Company")

Preliminary Results for the year ended 30th June, 2009

The Board of The Value Catalyst Fund Limited announces its results for the year ended 30th June, 2009.

 

For further information, please contact:

 

Azhic Basirov / Siobhan Sergeant

Smith & Williamson Corporate Finance Limited

+44 (0)20 7131 4000

Investment Advisor's Report

For the year ended 30th June, 2009 The Value Catalyst Fund ("VCF" or the "Company") returned -61.95%. For the period from inception to the 30th June, 2009 VCF has returned 2.00%. 

The Company has always focused on building concentrated stakes in closed-end funds, REITs and active equity value positions and this has been a difficult environment to hold such a concentrated portfolio. The initial credit crisis affected the liquidity of all asset classes with the exception of credit worthy government bonds but since February, liquidity has been returning into different areas of the financial system. While equity markets have staged a sharp recovery it has taken considerably longer to see liquidity or interest re-emerge in substantial corporate stakes. M&A activity, more often than not, feeds off acquirers having banking lines of credit and this has, not surprisingly, been almost totally absent for over a year now. The initial sharp bounce was not accompanied by M&A activity and corporate acquirers held off in disbelief. Strangely, what corporate activity there was in the first six months of 2009 happened at higher than normal premiums to quoted prices as sellers tried to hold out for pre-credit crisis prices. Since August though, there has been a marked change and the pace of activity has picked up substantially. It is as if buyers have given up waiting to be too clever and decided that if they have the resources they will make the acquisition that they've had their eyes on for the last year. As a result we have seen an increase in activity, which we believe will lead to quite a few major transactions in the portfolio over the next year. The same change of attitude has also occurred in the real estate markets, which have clearly been hampered by the lack of bank debt, however, since August there has been an unseemly dash to buy property assets, especially the higher yielding industrial type. This has been a consequence of huge portfolios of property being gummed up in the re-organisations of RBS and HBOS or Lloyds and the government policy of driving savings out of deposits accounts by slashing interest rates as depositors receive almost zero from their bank accounts.

Closed-end funds have also been affected as many of the major investors in the closed-end fund arena have been selling aggressively to raise cash. The volatile world has had many unintended consequences of late and one of those has been a much greater desire for shareholders to receive cash, any which way they can. This has made re-organising a closed-end fund and the calling of Extraordinary General Meetings (EGMs) much more common practise. Many of the EGMs called by other investors have simply been done to try and realise cash as selling a large holding at any reasonable discount had not been possible. This has certainly made our job easier but it has also widened the universe of potential funds because we may have looked at certain institutions and assumed they would always vote against a re-organisation, however economically sensible, whereas now they wish to receive cash.  Discounts have become more volatile in general too. There has been a huge reduction in the capital in the closed-end market with capacity from market makers, proprietary trading desks and hedge funds being reduced. We would guess that capacity to be no more than 10% of what it was two years ago.

The portfolio is concentrated and has suffered substantial mark downs in value as a result of the liquidity driven crisis, however the health and fundamentals of the largest positions in the portfolio is remarkably sound. They are all well financed and stable businesses that are actually performing very well. Fundamentally our largest positions have passed through the credit crisis without issue and we expect that this will show itself over the coming year. Our results have also been negatively affected by a decision to write down one of the largest positions, Celtic Properties, as we felt it was starting to trade on thin volume at too high a price on the Frankfurt exchange. To be clear: not because we thought the company was doing badly. Quite the opposite - we felt the market was getting ahead of itself on insufficient volume to rely on the price.

One of the frustrating issues has been the reduced ability to participate sufficiently in the opportunities thrown up in 2009. Our concentrated positions will be beneficiaries of the rally but this will only show through when we conclude their realisation. One of the most important determinants of value is the time frame any investor has to achieve a disposal. We expect to have realised the largest position Implenia by the end of 2009 and the resources will be redeployed mainly into the closed-end fund sector where we see the most opportunities at the moment.

What follows is a review of the significant holdings of the Company.

Closed-end funds

Active Capital Trust PLC ("Active Capital")

Laxey Partners hold 16.3% of the issued ordinary shares. Active Capital is a UK listed Investment Trust (the "Trust") invested in a portfolio of UK Smaller Companies. The Trust was originally restructured in July 2006 with a targeted performance return and a discount target - which it failed to achieve by the targeted date of 31st May, 2009. Chris Agar of Laxey Partners was appointed to the board of Active Capital on 30th May, 2008 and has been instrumental in tailoring a proposal to restructure the company which was approved by shareholders at the AGM on 27th August, 2009. The restructuring changed Active Capital's policy to realise the investments in an orderly manner and return cash as soon as practicable after repaying the remaining bank debt. The investment management fee was amended to progressively reduce the basic fee and to incentivise the managers to repay the assets over one year and to return in excess of 52pps (the approximate NAV at strike date) increased by 7.5% compounded. 

Alternative Investment Trust ("AIT")

The Australian investment trust, AIT, has exposure to a portfolio of leading absolute return funds and a remaining single direct investment. Formerly Everest Babcock & Brown Alternative Investment Trust ("EBI"), following a vote by unit holders at a meeting held on the 30th January, 2009, AIT was put into wind down with an orderly realization of its portfolio to be managed by Laxey. 

The exposure to the portfolio of absolute return funds is via a Swap with Macquarie Bank Ltd. Under the terms of the realization, the leverage from the Swap facility must be paid down before unit holders can receive distributions from assets sold or redeemed. This requirement does not apply to AIT's direct investments from which the first distribution to come since the wind down began was paid to unit holders on the 18th August, 2009. AIT paid out AUD0.47 per unit (AUD61.5m in total), which represented 23% of the 30th June, 2009 AIT's Net Tangible Assets, and 41% of the closing unit price at the time of announcement.

Future distributions will follow when the leverage on the Swap facility has been paid off. It was USD290m on the 31st December, 2008 and at the 30th June, 2009 it stood at USD111m. Since the period end, the debt has fallen further to USD93.7m (as at the end of August 2009). 

 

The underlying portfolio of AIT includes some well known hedge funds. At the 30th June, 2009 the Top 10 names were:

Fund Name	Strategy	% Gross Assets
TPG-Axon Partners Offshore Ltd	Multi-Strategy	13.27%
Everest Babcock & Brown Income	Income Producing	8.51%
Drawbridge Specal Opportunities	Asset Based Lending	8.21%
Eton Park Overseas Fund Ltd	Multi-Strategy	4.33%
ESL Investments	Long/ short Equity	3.99%
Silver Point Capital Partnership LP	Credit Investments	3.93%
Marathon Special Opportunity Fund	Distressed Securities	3.78%
Everest Absolute Return Fund	Multi-Strategy	2.18%
Och-Ziff Global Special Investments	Multi-Strategy	2.05%
Perry Partners International	Multi-Strategy	1.95%
Total		52.20%

The strategies of the underlying funds include: Asset Based Lending; Distressed Securities; Income Funds; Equity Long/Short; Credit Related Investments and Multi-Strategy. While we anticipate that the pace of redemptions will slow as the underlying portfolio becomes more illiquid, Laxey is looking at alternative ways to create liquidity.

Celtic Property Development SA ("Celtic") 

Formerly EEDF, a closed-end fund re-organised by Laxey Partners, Celtic is one of eastern Europe's leading property developers and managers. Despite difficult trading conditions experienced by all property companies over the last six months in particular, Celtic has continued to show resilience. In September 2008, the completion of the Luminar Building in the Mokotow district of Warsaw allowed the finalisation of a pre-sale agreement to a German fund, with the building fully let to one tenant. In October 2008, the retail property in Łodz was sold with the proceeds allowing Celtic to reduce the levels of debt on the group balance sheet. In December 2008, the Mokotow Plaza Building Phase I was completed and by the end of the year was already 60% leased increasing to 70% as of today. The pre-sales of the residential properties in early 2009 are also going well with 15 of the 16 units sold, and with the finishing of the first phase on time in June 2009 and the second phase on time in September 2009.

With limited bank financing available and significant uncertainty as to the demand for office space in the short-to-medium term, Celtic has postponed the development of other office development projects, whilst continuing to seek additional income from alternative sources. 

This is highlighted by the award to Celtic, in March 2009, of a property management contract in the UK where the company is set to sell some GBP80m of property in 2009. Further developments of this strategy are being pursued and Celtic is about to be appointed for the asset management and disposal of ca €700m of property in Italy where it has now established an office. Two other such instructions are also being actively pursued.

Celtic is continuing to cooperate with, and to provide assistance to, the Warsaw city authorities to progress the planning changes hoped for in respect to the large 56ha Ursus site in Warsaw. The new zoning plan for the area is being issued in first draft and  submitted for public consultation  in November with the subject site being earmarked for change in use from the existing industrial to 680,000sq.m of high density residential, offices and a retail mall. It is anticipated that the Usrus site will be a main driver of value for the group in the coming years. To take a full advantage of the increase in value, Celtic intends to issue an IPO, currently planned for finalization, in Q1/2 2010. A listing on the Warsaw Stock Exchange will allow Celtic to achieve access to funds managed by Polish pension funds and other Polish institutional investors.

Lastly, the clearing of a significant amount of the outstanding debt due by the company in 2008 and the 'retrenching' and diversification activities of the company make it well placed for 2010. 

Lion Selection Ltd ("Lion" or "LST")

Lion is a resource investment company incorporated in Australia. It provides capital to mining and exploration companies.

Laxey has held an interest in Lion since April 2007 and Lion has had an eventful couple of years. A history of trading at a significant discount to NTA, -48% in December 2008 and an average of -36% over the last year, Lion's preferred method for tackling its discount has been to work with the idea of turning itself into a gold miner (instead of an investor in mines). Last September, after considerable shareholder pressure, it announced details of an off-market buy-back worth AUD150m at a 5% discount to NTA, which Laxey's funds participated in.

Lion's latest proposal is to merge its gold interests with Catalpa Resources Limited. LST already holds 47% of Catalpa. The new asset would be a mid tier gold producer, and will also hold LST's 30% interest in Cracow - an Australian gold mine in Queensland. LST shareholders will receive one share in Catalpa for each LST share they own. Catalpa itself owns a gold project in Western Australia.

Additionally they will then demerge Lion Selection Group ("LSG"), the group that holds the non-gold LST assets and list LSG on the Australian National Stock Exchange.  LST shareholders will receive one LSG share for every LST share they own. Lion has said that new LSG shares should be available for tender but are yet to provide details, and there is no expectation of the liquidity that LSG might expect once it is listed.

At the same time as the LSG demerger, Lion will make a 10c cash distribution to its shareholders. Shareholders will vote on the above sometime in November. The 10c cash distribution represents approx. 6% of the December, 2008 NTA.

Private Equity Investor ("PEI") 

PEI is a UK incorporated investment company that invests mostly in pre-IPO stage information technology companies. Colin Kingsnorth is a member of the PEI board having joined it following a previous re-organisation led by Laxey Partners. 

PEI's portfolio of largely US technology focused companies has been put out for bid on the secondary market. To date, cash bids in excess of PEI's trading price have been received and are currently under consideration. A full exit is expected before the end of Q4, 2009.

The Throgmorton Trust PLC

A UK incorporated investment trust, The Throgmorton Trust aims to provide capital growth and total returns from investments in predominately listed smaller UK companies.

Currently trading on a 16% discount to NAV and with a bi-annual tender for 10%, at the last tender at the end of August 2009 26.6% of the shares in issue were put in for tender. This resulted in an effective exit for 48% of the total shares tendered. The exit price is determined by the establishment of an exit pool and in August the exit price was 94.8% of NAV. Though future tenders will depend on market conditions, using the above numbers as assumptions this is a very profitable trade with a current IRR of 22% to the next tender in Feb 2010.

Non closed-end funds

DouglasBay Capital plc 

Formerly LIT PLC, DouglasBay Capital plc is an investment holding company listed on AIM, majority owned by funds managed by Laxey Partners. Its major portfolio holding is TDG, a logistics company acquired in October 2008. TDG is a market leader in Europe's in-freight forwarding, transport and warehousing with operations in ten countries and 7,000 employees. Since the acquisition of TDG, the company has streamlined its business and reduced the cost base. Furthermore, TDG has a substantial property portfolio that DouglasBay Capital is managing with a view to unlocking value for shareholders through disposals and selected re-developments. The company is rapidly progressing its de-gearing to enhance its equity value. TDG sits in a highly consolidating industry and following the disposal or redevelopment of its property portfolio, its logistics business will be well poised to take part in this consolidation.

Implenia AG ("Implenia")

Implenia is Switzerland's leading construction services group, formed following the merger of two leading Swiss construction companies in March 2006. It provides general contracting, industrial and commercial construction services as well as real estate development. Implenia has a high quality balance sheet and a valuable land bank and as a result of the company's attractive positioning in Switzerland as the undisputed market leader and its expertise in infrastructure development, Implenia is of strategic interest to leading European and global contractors.

Across all funds Laxey Partners holds approximately 50% of Implenia's share capital and for much of 2009 we have been in discussions with various parties, including Implenia, who have expressed interest in acquiring all or part of our stake. The most public of these interested parties is Strabag, the European construction group that has made no secret of its wish to acquire Implenia, under friendly terms. 

We agreed an exit from the entire position on Friday 13th November, 2009. The exit resulted from a placement of stock with Credit Suisse, to a number of Swiss and international investors. One of the conditions of the placement was the withdrawal of all legal proceedings initiated on both sides. That is, all legal motions filed by Implenia against the Laxey funds and the Laxey funds against Implenia, no longer exist.

  

Portfolio Statement As at 30th June, 2009	2009	2009	2008	2008
	Market	% of total	Market	% of total
	Value	net assets	value	net assets
Description	US$		US$
Investment funds - long	27,972,539	27.13	165,653,586	61.84
Investment funds - short	(28)	-	(1,461,128)	(0.55)
Investment funds - long swaps	(2,522,279)	(2.45)	(3,455,000)	(1.29)
Investment funds - short swaps	34,630	0.03	-	-
Equities - long	173,897,768	168.64	271,097,693	101.20
Equities - short	-	-	(12,102,599)	(4.52)
Equities - long swaps	223,656	0.22	(38,153)	(0.01)
Equities - warrants	2,694,677	2.61	2,760,161	1.03
Index swaps - short	-	-	666,225	0.25
Futures - short	-	-	3,245,755	1.21
	202,300,963	196.18	426,366,540	159.16
Other assets less liabilities	(99,179,543)	(96.18)	(158,472,910)	(59.16)
Total net assets	103,121,420	100.00	267,893,630	100.00
			2009	2008
Analysis of investments by currency			% of	% of
			investments	investments
British pound			25.64	23.30
United States dollar			1.01	4.08
Euro			34.14	37.77
Other			39.21	34.85
			100.00	100.00

  

	2009	2008
Analysis of investments by geographical sector	% of investments	% of investments
Asia exc Japan	0.34	1.20
Europe Developed exc UK	3.95	6.67
European Emerging	0.22	14.44
European Regional Developed	46.99	11.67
Greece	(1.29)	(0.20)
Japan	0.16	1.77
Netherlands	1.50	3.70
Norway	0.54	0.36
Other	2.10	5.10
South Korea	-	3.71
Switzerland	35.94	21.99
UK	8.83	29.15
USA	0.72	0.44
	100.00	100.00

  Income Statement

For the year ended 30th June, 2009

	Notes	2009 US$	2008 US$
Income Dividends on long equity securities and investment funds		5,607,507	14,839,017
Interest - Cash balances		298,520	1,968,776
- Debt securities		179,433	296,911
- Derivatives		-	18,365
- Others		-	59,361
Other income		31,836	-
Net realised gains/(losses) on financial assets and liabilities at fair value through profit or loss - Equities and funds		(121,152,290)	25,901,691
- Debt securities		-	53,454
- Derivatives		13,581,748	11,658,365
- Forwards		39,435,807	(25,392,803)
Net unrealised gain/(loss) on financial assets and liabilities other than currency forwards at fair value through profit or loss - Equities and funds		(99,109,150)	(28,947,487)
- Debt securities		-	14,354
- Derivatives		(2,748,304)	(1,545,242)
Net unrealised gain/(loss) on currency forwards		8,067,624	(6,064,868)
Total investment expense		(155,807,269)	(7,140,106)
Expenses Dividends payable on short equity securities and investment funds		354,640	829,246
Interest expense - Cash balances		4,155,993	9,373,982
- Derivatives		101,455	2,665,704
Investment expenses		4,612,088	12,868,932
Investment management fee		1,420,856	2,050,669
Administration fee		272,321	481,233
Audit fees		45,419	43,256
Directors' fees		126,620	122,815
Other expenses		2,487,637	1,764,467
Total other expenses		4,352,853	4,462,440
Total expenses
		8,964,941	17,331,372
Net loss
		(164,772,210)	(24,471,478)
Loss per ordinary share Basic and fully diluted	7	US$(1.15)	US$(0.19)

  

Balance Sheet As at 30th June, 2009		2009	2008
Assets	Notes	US$	US$
Investment funds - long at fair value through profit or loss		27,972,539	165,653,586
Investment funds - long swaps at fair value through profit or loss		97,793	118,180
Investment funds - short swaps at fair value through profit or loss		34,630	-
Equities - long at fair value through profit or loss		173,897,768	271,097,693
Equities - long swaps at fair value through profit or loss		242,832	131,991
Equities - warrants at fair value through profit or loss		2,694,677	2,760,161
Index swaps - short at fair value through profit or loss		-	666,225
Futures - short at fair value through profit or loss		-	3,326,317
Amounts receivable on currency forwards		2,556,369	1,203,688
Cash at bank and brokers		821,023	6,653,509
Cash held as margin at brokers		441,306	13,175,093
Amounts due from outstanding sale settlements		3,095,634	1,027,541
Other debtors and accrued income		337,155	3,335,926
Loans receivable		2,668,897	2,649,991
Total assets		214,860,623	471,799,901
Equity
Share capital	4	1,619	1,420
Share premium		171,291,268	154,115,451
Retained earnings		(68,171,467)	113,776,759
Total shareholders' funds		103,121,420	267,893,630
Liabilities Investment funds - short at fair value through profit or loss		28	1,461,128
Investment funds - long swaps at fair value through profit or loss		2,620,072	3,573,180
Equities - short at fair value through profit or loss		-	12,102,599
Equities - long swaps at fair value through profit or loss		19,176	170,144
Futures - short at fair value through profit or loss		-	80,562
Amounts payable on currency forwards		5,048	6,719,991
Overdrawn balances at brokers		108,579,155	160,004,564
Amounts due for outstanding purchase settlements		29,345	18,886,169
Other creditors and accrued expenses		486,379	907,934
Total liabilities		111,739,203	203,906,271
Total liabilities and equity		214,860,623	471,799,901
Net asset value per ordinary share	6	US$0.68	US$2.03

Statement of Changes in Shareholders' Capital For the year ended 30th June, 2009

	Share capital US$	Share premium US$	Retained earnings US$	Total US$
Balance at 1st July, 2007	1,361	141,579,776	152,392,241	293,973,378
Decrease in net assets arising from operations	-	-	(24,471,478)	(24,471,478)
Dividend	-	-	(14,144,004)	(14,144,004)
Issue of shares	59	12,535,675	-	12,535,734
Balance at 30th June, 2008	1,420	154,115,451	113,776,759	267,893,630
Balance at 1st July, 2008	1,420	154,115,451	113,776,759	267,893,630
Decrease in net assets arising from operations	-	-	(164,772,210)	(164,772,210)
Capitalisation in lieu of dividend	-	-	(17,176,016)	(17,176,016)
Issue of shares	199	17,175,817	-	17,176,016
Balance at 30th June, 2009	1,619	171,291,268	(68,171,467)	103,121,420

On 11th December, 2008, there was a capitalisation in lieu of dividend of US$17,176,016. As a result of this capitalisation, 19,928,085 additional ordinary shares were issued.

  CashFlow Statement

For the year ended 30th June, 2009

	Notes	2009 US$	2008 US$
Cash flows from operating activities
Dividends received		8,050,883	13,719,501
Interest received		492,084	2,531,343
Other income received		31,836	-
Dividends paid on short positions		(373,533)	(902,702)
Management fee paid		(1,502,256)	(6,137,399)
Administration fee paid		(292,922)	(485,915)
Performance fee paid		-	(9,394,758)
Other expenses paid		(2,230,008)	(1,798,743)
Interest paid		(4,557,786)	(12,528,988)
Decrease/(increase) in prepaid expenses		541,264	(868,462)
(Increase)/decrease in loans receivable		(18,906)	73,793
Decrease in cash held as margin		12,293,914	44,281,880
Purchase of investments		(127,511,306)	(358,718,591)
Sale of investments		160,669,659	335,944,803
Net cash inflow from operating activities		45,592,923	5,715,762
Financing activities Dividend paid	2	-	(3,146,409)
Issue of shares		-	1,538,139
Net cash outflow from financing activities		-	(1,608,270)
Increase in cash and cash equivalents		45,592,923	4,107,492
Opening cash and cash equivalents		(153,351,055)	(157,458,547)
Closing cash and cash equivalents
		(107,758,132)	(153,351,055)
Non cash flow movement Relates to re-invested dividend	2	17,176,016	10,997,595

1. Accounting policies

The financial statements have been prepared in accordance with the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative financial instruments) at fair value through profit or loss. The principal accounting policies which have been applied are set out below. Such policies are in accordance with and comply with International Financial Reporting Standards ("IFRS").

The Company has adopted the US Dollar ("US$") as its measurement and reporting currency in which shares are issued.

2.	Dividends
		US$
	2008 Dividend
	Paid 30th November 2008 - Capitalisation in lieu of dividend of US$0.13 per ordinary share	17,176,016
	2007 Dividend
	Paid 30th November 2007 - Dividend of US$0.1121 per ordinary share	14,144,004

The Directors have proposed a capitalisation in lieu of a dividend of US$0.07 per ordinary share for the year ended 30th June, 2009.

3.	Investments
		2009 US$	2008 US$
Long positions: Market value		202,226,361	436,018,287
Cost		269,392,267	389,942,928
Short positions:		34,602	(9,651,747)
Market value
Proceeds		(82,051)	(14,575,330)

All of the Company's investments are designated as financial assets and liabilities held at fair value through profit or loss.

Investments valued by the Directors using a valuation technique comprise Celtic Property Development S.A., DouglasBay Capital plc and Balkan Reconstruction Investment Financing SCA.

The Company has a holding in Celtic Property Developments S.A. (Celtic) of US$45,220,461, or 21.05% of the Total Assets of the Company as at 30th June, 2009.  The Directors, with the advice of the Investment Advisor, consider that although Celtic has a stock market quotation, trading is not sufficient to enable the quoted price to be a reliable estimate of fair value. Therefore, the Directors, with the advice of the Investment Advisor, have estimated the fair value based on the proportionate share of the estimated net asset value of Celtic as at 30th June, 2009. This has resulted in Celtic being carried at €35 per share at 30th June, 2009.

The Company has a holding in DouglasBay Capital plc (DouglasBay) of US$42,098,256, or 19.59% of the Total Assets of the Company as at 30th June, 2009.  The Directors, with the advice of the Investment Advisor, consider that although DouglasBay has a stock market quotation, trading is not sufficient to enable the quoted price to be a reliable estimate of fair value. Therefore, the Directors, with the advice of the Investment Advisor, have reviewed the fair value based on comparable earnings multiples and the value of the property portfolio. On the basis of this review, the Directors have determined that there has been no significant change to the cost of acquisition and therefore have continued to carry the investment at cost.

The Company has a holding in Balkan Reconstruction Investment Financing S.C.A. (BRIF) of US$5,454,155, or 2.54% of the Total Assets of the Company as at 30th June, 2009.  BRIF is not quoted and the Directors, with the advice of the Investment Advisor, consider that the latest reported net asset value as at 30th June, 2009 is not a reliable estimate of fair value. Instead the investment is being carried at €12.77, the price at which the company issued new shares in December 2008, February 2009 and March 2009.

These three investments comprise a combined total value of US$92,772,872 or 43.18% of the Total Assets of the Company as at 30th June, 2009. The net change in fair value for the period resulting from these three investments recorded in the income statement amounted to a loss of US$31,972,161.

The Company had an investment in Implenia AG valued at US$60,123,843 as at 30th June, 2009. Subsequent to the year end, this investment was sold for US$58,659,578.

4. Share capital

	2009 Number			2009 US$	2008 Number	2008 US$
Authorised share capital Founder shares of US$1 each	100			100	100	100
Ordinary shares of US$0.00001 each	4,990,000,000			49,900	4,990,000,000	49,900
				50,000		50,000
	2009 Number			2009 US$	2008 Number	2008 US$
Issued share capital Founder shares of US$1 each	100			100	100	100
Ordinary shares of US$0.00001 each (previously US$0.001) At 1st July	132,123,198			1,320	1,261,731	1,261
Issued during year	-			-	7,009	7
Issued on account of 100:1 Stock split	-			-	125,605,260	-
Issued on account of dividend reinvestment	19,928,085			199	5,249,198	52
At 30th June	152,051,283			1,519	132,123,198	1,320
Total issued share capital				1,619		1,420

5. Reserves

	2009 US$	2008 US$
Share premium At 1st July	154,115,451	141,579,776
Relating to issues of shares	17,175,817	12,535,675
At 30th June	171,291,268	154,115,451
Retained earnings At 1st July	113,776,759	152,392,241
Net loss for the year	(164,772,210)	(24,471,478)
Dividend	(17,176,016)	(14,144,004)
At 30th June	(68,171,467)	113,776,759

6. Net asset value per ordinary share

The net asset value per ordinary share is based on the net assets attributable to ordinary shares and the number of ordinary shares in issue at 30th June, 2009.

	2009
	2009		2008
	Total	Per Share	Total	Per Share
	US$	US$	US$	US$
Net asset value	103,121,420	0.68	267,893,630	2.03

7. Loss per ordinary share

The basic loss per ordinary share is based on the net loss during the year of US$164,772,210 (2008: US$24,471,478) and the weighted average number of ordinary shares in issue during the year of 143,097,294 (2008: 129,393,226).

8.  Publication of Non-Statutory Accounts

The financial information set out in this preliminary announcement does not constitute statutory accounts. The balance sheet as at 30 June 2008 and the group profit and loss account, statement of changes in net assets, consolidated cash flow statement and associated notes for the year then ended have been extracted from the Company's 2008 financial statements upon which the auditor's opinion is unqualified.

9.  Copies of Annual Report

Copies of the annual report and accounts will be sent to shareholders. Further copies will be available from Laxey Partners, 4th Floor, Derby House, 64 Athol Street, Douglas, Isle of Man IM1 1JD

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