for the period 1 July 2008 to 31 December 2008

LUDGATE ENVIRONMENTAL FUND LIMITED

CHAIRMAN'S STATEMENT

Interim results for the period 1 July 2008 to 31 December 2008

I am pleased to report to our shareholders that in the period to 31 December 2008 Ludgate Environmental Fund Limited, quoted on the AIM in London under the symbols LEF.L and LEFW.L for the warrants, increased its net asset value (NAV) to £51,395,149 from £35,362,006 at the end of June 2008. This represents NAV equivalent to 112 pence per share, compared with 120 pence at the end of the previous period. 

LEF raised approximately £18,000,000 in new capital at the beginning of November 2008 in a placing of new shares to investors at a price equivalent to the prevailing NAV and a premium to the market price of your company's securities. Against a background of considerable distress in banking markets, closed new issue markets and falling equity markets this was a formidable endorsement of LEF's strategy and performance to date. The share price responded positively to the placing and has continued to outperform the broad market and our peer group of investment companies and listed cleantech funds. We would hope that in due course the shares will be traded at a premium to published NAV, better reflecting the Manager's performance and value added.

The new capital raised will permit LEF to purchase more significant and influential but typically minority positions in its underlying investments together with some prudent diversification of the portfolio within our committed Environmental/Cleantech sector. We believe that to continue to realise our primary investment objectives of creating significant, distributable returns for our shareholders over the anticipated life of the closed end company our business model of active shareholder participation is robust. The markets for IPOs, private equity and trade sales are, for differing reasons, likely to be muted for more than a year. LEF will therefore continue to seek board seats and purchase securities across the capital structure of our investee companies to protect and develop our shareholders' expected returns.

With due regard to the intensity of the economic problems in the term and trade finance banking markets, the liquidity positions of investee companies have been carefully reviewed both in due diligence and as a continuing matter of shareholder monitoring. This vigilance has also been applied to LEF itself and to the positions of fellow shareholders in our underlying assets where this might adversely affect the commercial performance and value of an investee company. We think that the Manager's increased attention to the governance and capital structure of specific investments within the sub sectors or clusters of LEF's holdings together with the company's increased capital base provide strong support for the execution of your company's strategy in changed and complex markets.

The Directors have reviewed the portfolio and the Manager's performance and pipeline at regular board meetings and also at the consideration of each investment proposal to ensure consistency with strategy and stated objectives as well as to consider and approve measures to mitigate new or unexpected risk. All board meetings have been attended by all directors or their alternates and all decisions have been unanimous. Particular attention has been given to treasury policies and directly to the cash deposits held by LEF. We believe that these are sufficiently diversified between creditworthy prime banks and tenor to provide LEF with sufficient liquidity for operations, continuing obligations, follow on investments and the exploitation of the expected schedule of new opportunities. In assessing risk and return the Fund has not had to relax any investment standard nor provide contingency funding to investee companies.

The Directors have reviewed the portfolio and the Manager's performance and pipeline at regular board meetings and also at the consideration of each investment proposal to ensure consistency with strategy and stated objectives as well as to consider and approve measures to mitigate new or unexpected risk. All board meetings have been attended by all directors or their alternates and all decisions have been unanimous. Particular attention has been given to treasury policies and directly to the cash deposits held by LEF. We believe that these are sufficiently diversified between creditworthy prime banks and tenor to provide LEF with sufficient liquidity for operations, continuing obligations, follow on investments and the exploitation of the expected schedule of new opportunities. In assessing risk and return the Fund has not had to relax any investment standard nor provide contingency funding to investee companies.

In the period your Company has made the following investments :

• Hydrodec Group plc (specialist oils recycling): an additional investment of £0.75 million as part of a £2 million fundraising achieved through the placing of 8,000,000 new ordinary shares at 25 pence per share;

• Emergya Wind Technologies B.V. (wind turbine manufacturing): a follow on investment of €1 million as part of a €31 million private placement of preference shares into the company;

• agri.capital (specialist developer, owner and operator of biogas plants in Germany): an investment of €3 million by way of 8% preferred stock with detachable warrants as part of a €10 million funding round;

• Phoslock Water Solutions Ltd (water treatment technology): an investment of A$0.55 million through the subscription of 5,000,000 ordinary shares with attached options as part of a A$1.7 million placing of new shares in the company at A$0.11 per share;

• Azure Dynamics plc (hybrid vehicles): an investment of £0.15 million in ordinary shares; and

• Renewable Energy Generation (wind energy generation): an investment of £0.46 million in ordinary shares

These last three investments result from a decision by your Board to allow up to £5 million in total and £0.75 million per investee company to be invested in small quoted companies which may develop into larger positions where the Fund's Advisor becomes more actively involved or which may be traded in the shorter term. 

In December 2008 your board reviewed the performance and strategy of the Company and concluded that its investment outlook is positive. The Environmental/Cleantech sector is likely to be a significant beneficiary of fiscal and governmental support in Europe and the USA in policies for economic recovery and growth. The social and political commitment to our investment themes remain strong. The commercial value of the sector is also increasing above national growth rates even in recession. Energy security at a national level is persistently important and an investment stimulus. Specifically, we think that the clusters of your company's investments in companies in the sub sectors of recycled hydrocarbons, biogas, carbon trading, environmentally enhancing packaging, wind technology and large scale water purification position your company well and knowledgeably for growth in 2009.

Your board considers that the Manager and its Advisor have continued to perform creditably in realising your Company's strategy during the period.

REPORT OF THE DIRECTORS

The Directors present their report and the unaudited interim financial statements for the period 1st July 2008 to 31st December 2008.

INCORPORATION

The Company was incorporated in Jersey, Channel Islands on 7th June 2007.

ACTIVITIES

The Company is a closed-ended investment company investing in the Environmental/Cleantech Sector including energy efficient and alternative energy sources, waste treatment and management, waste management and recycling, industrial process advances and emission reduction technologies.

RESULTS AND DIVIDENDS

The net loss for the period amounted to £1,966,853 (profit for the period from 7th June 2007 to 30th June 2008 amounted to £5,632,575).

The Directors do not recommend the payment of a dividend for the period.

GOING CONCERN

The Directors are of the opinion that the Company is a going concern, and accounts have been prepared on that basis.

DIRECTORS

The directors who held office during the period were:-

J. Shakeshaft

M. Christensen

H. Grant

D. Maccabe

COMPANY SECRETARY

The Company Secretary is Mourant & Co. Secretaries Limited of 22 Grenville Street, St. Helier, Jersey, JE4 8PX.

INDEPENDENT AUDITORS

BDO Alto Limited have expressed their willingness to continue in office. These interim financial statements were read by BDO Alto Limited for omissions and errors but no review of the numbers was performed.

NOMINATED ADVISOR

The Company's Nominated Advisor is PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH, who have expressed their willingness to continue in office.

REGISTRAR

Computershare Investor Services (Channel Islands) Limited, Ordnance House, 31 Pier Road, St. Helier, JE4 8PW.

BROKER

Fairfax I.S. PLC, 46 Berkeley Square, Mayfair, London, WIJ 5AT.

BANKERS

Royal Bank of Scotland International, 71 Bath Street, St. Helier, Jersey, JE4 8PQ.

LEGAL ADVISORS

Norton Rose, 3 More London Riverside, London, SE1 2AQ.

Carey Olsen, 47 Esplanade, St. Helier, Jersey, JE1 0BD.

INVESTMENT MANAGER

Ludgate Fund Management (Environmental) (Jersey) Limited, 22 Grenville Street, St. Helier, Jersey, JE4 8PX.

INVESTMENT ADVISOR

Ludgate Investments Limited, 80 Cannon Street, London, EC4N 6HL.

REGISTERED OFFICE

22 Grenville Street 

St. Helier

Jersey

JE4 8PX

BY ORDER OF THE BOARD

HELEN GRANT

Authorised Signatory

Mourant & Co. Secretaries Limited

Secretary

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the financial statements in accordance with applicable law and International Financial Reporting Standards.

Jersey company law requires the Directors to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

*

select suitable accounting policies and then apply them consistently;

*

make judgements and estimates that are reasonable and prudent;

*

state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

*

prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements have been properly prepared in accordance with the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

BALANCE SHEET

AS AT 31ST DECEMBER 2008

Unaudited

interim

financial

statements

Audited

annual financial statements

Unaudited interim financial statements

Notes

31st Dec 08

30th Jun 08

31st Dec 07

ASSETS

Non-current assets

Financial assets at fair value through profit or loss

7

20,092,049 

18,003,084 

6,109,463 

20,092,049 

18,003,084 

6,109,463 

Current assets

Loan receivable

9

- 

399,361 

Trade and other receivables 

10

411,948 

483,483 

441,167 

Cash and cash equivalents

8

31,124,532 

17,468,862 

20,800,237 

31,536,480 

18,351,706 

21,241,404 

TOTAL ASSETS

£

51,628,529 

£

36,354,790 

£

27,350,867 

EQUITY AND LIABILITIES

Capital and reserves

Stated capital

13

47,729,427 

29,729,431 

26,735,101 

Warrants

13

- 

- 

- 

Retained earnings

14

3,665,722 

5,632,575 

588,645 

TOTAL SHAREHOLDERS' EQUITY

£

51,395,149 

£

35,362,006 

£

27,323,746 

LIABILITIES

Non-current liabilities

Retention of performance fees

12

183,397 

- 

- 

Current liabilities

Trade and other payables

11

49,983 

992,784 

26,188 

Overdraft

- 

- 

933 

49,983 

992,784 

27,121 

TOTAL EQUITY AND LIABILITIES

£

51,628,529 

£

36,354,790 

£

27,350,867 

£

£

£

Net asset value per ordinary share outstanding

1.1181

1.2024

1.0220

These interim financial statements on pages 6 to 29 were approved and authorised for issue by the Board of Directors on the 22nd day of January 2009 and were signed on its behalf by:

Director: JOHN SHAKESHAFT

INCOME STATEMENT

FOR THE PERIOD 1ST JULY 2008 TO 31ST DECEMBER 2008

Unaudited interim financial statements

Audited annual financial statements

Unaudited interim financial statements

1st Jul 08

7th Jun 07

7th Jun 07

to

to

to

Notes

31st Dec 08

30th Jun 08

31st Dec 08

INCOME:

Deposit interest income

511,171 

1,194,199 

600,628 

Interest income on investments

300,633 

230,960 

34,676 

Loan facility interest

- 

2,704 

- 

Commitment fees

3,797 

541 

- 

Unrealised gain on financial assets at fair value through profit or loss

7

- 

6,718,978 

1,033,691 

Other income

483 

2,417 

1,194 

Movement on foreign exchange

15

937,930 

4,476 

4,595 

1,754,014 

8,154,275 

1,674,784 

EXPENDITURE:

Legal fees

2,230 

81,026 

33,951 

Professional fees

113,936 

299,803 

173,609 

Ludgate Investments Limited

17

343,296 

- 

- 

Investment management fees

17

349,484 

527,799 

215,019 

Performance fees

3

- 

916,988 

- 

Administration & accountancy fees 

32,106 

52,864 

36,011 

Fee paid on behalf of a third party

- 

9,750 

- 

Directors' fees and expenses

4

29,960 

43,560 

28,581 

Audit fees

1,000 

6,500 

7,500 

Issue costs

- 

581,187 

581,187 

Miscellaneous fees

1,368 

2,223 

10,281 

Unrealised loss on financial assets at fair value through profit or loss

7

2,847,487 

- 

- 

3,720,867 

2,521,700

1,086,139 

(LOSS)/PROFIT FOR THE PERIOD

£

(  1,966,853)

£

5,632,575 

£

588,645 

(Loss)/Earnings per ordinary share

6

£

(  0.0578)

£

0.2369 

£

0.0302 

Weighted average ordinary shares outstanding

6

33,998,002 

23,772,934 

19,502,417 

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Stated 

Retained 

capital account

Warrants

earnings

Total

Opening balance as at 1st July 2008

29,729,431 

- 

5,632,575 

35,362,006 

Issue of ordinary shares

17,999,996 

- 

- 

17,999,996 

Net loss for the period

- 

- 

( 1,966,853)

(1,966,853)

Balance as at 31st December 2008

£

47,729,427 

£

- 

£

3,665,722 

£

51,395,149 

Opening balance as at 7th June 2007

- 

- 

- 

- 

Issue of ordinary shares on incorporation

2 

- 

- 

2 

Issue of ordinary shares on IPO

26,735,099 

- 

- 

26,735,099 

Subsequent issue of ordinary shares

2,994,330 

- 

- 

2,994,330 

Net profit for the period

- 

- 

5,632,575 

5,632,575 

Balance at 30th June 2008

£

29,729,431 

£

- 

£

5,632,575 

£

35,362,006 

CASH FLOW STATEMENT

FOR THE PERIOD 1ST JULY 2008 TO 31ST DECEMBER 2008

Unaudited interim financial statements

Audited annual financial statements

Unaudited interim financial statements

1st July 08

7th Jun 07

7th Jun 07

to

to

To

Notes

31st Dec 08

30th Jun 08

31st Dec 08

Cash flows from operating activities

16

( 86,835)

( 609,129)

( 894,701)

Cash flows from investing activities

Purchase of investments

(4,936,452)

(11,284,106)

( 5,075,772)

Interest and dividends received

279,600 

32,027 

34,676 

Loan finance repaid/(provided)

399,361 

( 399,361)

- 

Net cash used in investing activities

(4,257,491)

(11,651,440)

( 5,041,096)

Cash flows from financing activities

Proceeds from issue of ordinary shares during the period

17,999,996 

29,729,431 

26,735,101 

Net cash generated from financing activities

17,999,996 

29,729,431 

26,735,101 

Net increase in cash and cash equivalents 

13,655,670 

17,468,862 

20,799,304 

Cash and cash equivalents at beginning of the period

17,468,862 

-

- 

Cash and cash equivalents at end of the period

8

£

31,124,532 

£

17,468,862 

£

20,799,304 

NOTES TO THE INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD 1ST JULY 2008 TO 31ST DECEMBER 2008

1.

REPORTING ENTITY

The Company was registered as a public Company on 7th June 2007 with registered number 97690 under the Companies (Jersey) Law 1991. The Company's IPO closed on 2nd August 2007 and its shares are listed on the Alternative Investment Market ("AIM"). The registered office of the Company is 22 Grenville Street, St Helier, Jersey, JE4 8PX.

The principal activities of the Company include building a diversified portfolio of investment holdings in Environmental and Cleantech companies. The Company's investment objective is to generate a significant level of capital growth in the medium to long term. The Company seeks to fulfil its investment objectives through the Investment Manager and its advisor, Ludgate Investments Limited (the "Investment Advisor") to identify, invest and build successful businesses within the Environmental/Cleantech sector. The Company thereby seeks to maximise returns and reduce investment risk through an active investment approach and an ability to provide important value-added services to portfolio companies throughout the life of each investment. 

The principal accounting policies adopted in the preparation of these interim financial statements are set out below.

2.

ACCOUNTING POLICIES

a) Basis of preparation

These interim financial statements should be read in conjunction with the annual financial statements for the period ended 30th June 2008, which have been prepared in accordance with International Financial Reporting Standards published by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee.

Applicable new standards and interpretations not yet effective 

In November 2006, the IASB issued IFRS 8, "Operating Segments" which is effective for annual periods beginning on or after 1 January 2009. The standard requires segmental disclosure based on the components of the entity that management monitors in making decisions about operating matters. This "management approach" differs from IAS 14, which currently requires the disclosure of two sets of segments, business and geographical segments, based on a desegregation of information contained in the financial statements. Under IFRS 8 operating segments become reportable based on threshold tests related to revenues, results and assets. The Company will apply IFRS 8 for its accounting period commencing 1 July 2009.

b) Basis of measurement

These financial statements have been prepared on a historical cost basis except for the following:

Financial instruments designated at fair value through profit or loss are measured at fair value and changes therein are recognised in the income statement. Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised within the financial statements are included in Section O of Note 2 'Determination of fair values'.

c) Functional and presentation currency

These financial statements are presented in sterling, which is the Company's functional and presentation currency.

d) Use of estimates and judgements

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

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

e) Foreign currencies

Transactions in foreign currencies, other than sterling, are translated at the foreign currency exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to sterling at the foreign currency closing exchange rate ruling at the balance sheet date. Foreign currency exchange differences arising on translation and realised gains and losses on disposals or settlements of monetary assets and liabilities are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to sterling at the foreign currency exchange rates ruling at the dates that the values were determined. Foreign currency differences arising on retranslation are recognised in the income statement. 

f) Financial instruments

Financial assets and financial liabilities are initially recognised on the Company's balance sheet when the Company becomes party to the contractual provisions of a given instrument.

Regular way purchases and sales of financial instruments are recognised on the trade date. Gains and losses are recognised from that date.

f) Financial instruments - (continued)

Financial assets cease to be recognised when the contractual rights to cash flows from the assets expire or the Company transfers the financial assets and substantially all of the risks and rewards of ownership have been transferred. Financial liabilities cease to be recognised when the liabilities are extinguished.

Financial instruments comprise investments in equity and debt securities, loans receivable, trade and other receivables, cash and cash equivalents and trade and other payables.

Financial instruments are recognised initially at fair value. Subsequent to initial recognition financial instruments are measured as described below. 

Cash comprises fixed deposits, cash balances and call deposits with banks. Cash equivalents are short-term highly-liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. 

Financial assets at fair value through profit or loss

An instrument is classified at fair value through profit or loss if it is held for trading or designated as such upon initial recognition. The Company has designated its investment holdings as at fair value through profit or loss as permitted by International Accounting Standard 39 Financial Instruments: Recognition and Measurement. Upon initial recognition attributable transaction costs are recognised in the income statement when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in the income statement.

Other financial instruments

Other financial instruments are measured at amortised cost using the effective interest rate method, less any impairment losses.

Ordinary shares

Ordinary shares are neither redeemable nor convertible and are classified as equity.

g) Provisions

A provision is recognised if, as a result of a past event, the Company has a legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to that liability. 

h) Revenue and expenses

Revenue is recognised to the extent that it is possible that economic benefits will flow to the Company and the revenue can be reliably measured. Expenses are accounted for on an accruals basis.

i) Finance income and expenses

Finance income comprises interest income on funds invested (including financial assets at fair value through profit or loss), interest income, loan interest income and changes in the fair value of financial assets at fair value through profit or loss. Interest income and loan interest income are recognised as they accrue in the income statement, using the effective interest rate method. Dividend income is recognised in the income statement on the date the Company's right to receive payments is established which is usually the ex-dividend date.

Finance expenses comprise interest expense on borrowings, unwinding of discounts on provisions and changes in the fair value of financial assets held at fair value through profit or loss. 

Foreign currency gains and losses are reported in the income statement on a net basis.

j) Earnings per share

The Company presents basic earnings per share data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. For further details please see Note 6.

k) Transaction costs

Expenses incurred by the Company that are directly attributable to the offering of new shares have been expensed to the income statement. 

l) Taxation 

The Company has exempt status for Jersey taxation purposes for the year of assessment 2008. Effective 1 January 2009, Jersey's tax regime will change. The new regime will impose a general corporate income tax rate of 0%, a 10% rate will apply to certain regulated financial services companies and a 20% rate will apply to utilities and income from Jersey land (ie rents and development profits).

Since the company is not a regulated financial service entity, the effect of the new tax regime is limited to the change of status from exempt to liable to Jersey income tax at a rate of 0%. 

In accordance with the investment objective of achieving substantial capital growth over the medium term the directors have not applied for distributor status for the Company. This may in certain circumstances lead to non-exempt UK taxpayers incurring an income tax liability on recognised but unrealised capital gains retained within the Company.

m) Dividends payable

Dividends payable, if any, on ordinary shares would be recognised in the 'Statement of Changes in Shareholders' Equity'.

n) Offsetting

Financial assets and liabilities are offset and the net amount is reported within assets and liabilities where there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

o) Determination of fair values

A number of the Company's accounting policies and disclosures require the determination of fair values for the financial assets and liabilities. Fair value is the amount for which an asset or liability could be exchanged or settled between knowledgeable, willing parties in an arms length transaction. Fair values have been determined for disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Financial assets for which quoted closing prices are available from a third party in a liquid market are valued on the basis of quoted bid prices. Where there are no available quoted prices the fair values will be determined in accordance with International Private Equity and Venture Capital Valuation Guidelines of the British Venture Capital Association as amended from time to time.

The fair values of quoted equities are based on quoted closing prices (Hydrodec Group plc Ordinary shares, Renewable Energy Generation Ordinary Shares, Phoslock Water Solutions Limited Ordinary Shares and Azure Dynamics plc Ordinary Shares). Unquoted equities and unquoted securities are valued at cost where the investment is purchased within twelve months of the period end (Rapid Action Packaging Limited and Emergya Wind Technologies B.V.) or at prices used for subsequent arms length purchases of the same investments (STX Services B.V. and Agri Capital Limited). The Hydrodec Group plc Convertible Bonds have been valued using the quoted share price for the Ordinary shares as the Directors consider this to be the best estimate of the fair value. 

The fair value of financial liabilities is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.

3.

PERFORMANCE FEES RETAINED AND PAYABLE

1st Jul 08

7th Jun 07

to

to

31st Dec 08

30th Jun 08

Performance fees payable

£

- 

£

916,988

Performance fees are payable to the Manager with reference to the increase in adjusted net asset value per share over the course of each performance period. The Manager becomes entitled to receive a performance fee if the following conditions are met:

 - The adjusted net asset value per share at the end of the performance period exceeds the Performance Hurdle. The Performance Hurdle is an amount equal to the placing price increased at a rate of 8% per annum on a compounded basis up to the end of the relevant performance period; and

 - The adjusted net asset value per share at the end of the performance period exceeds the High Watermark. The High Watermark is the highest previously recorded adjusted net asset value per share at the end of a performance period for which a performance fee was last earned.

If the above conditions are met the Manager is entitled to receive a fee equal to 20% of the amount by which the adjusted net asset value exceeds the higher of (i) the performance hurdle and (ii) the relevant High Watermark multiplied by the times-weighted average number of shares in issue since the end of the last performance period for which a performance fee was earned.

20% of performance fees earned by the Manager shall be retained and deposited in a Reserve Account. The Reserve Amount shall only be released on the final calculation date when the Administrator will calculate the Reserve Release Amount in accordance with Schedule 1 of the Management Agreement.

From time to time members of the Ludgate group may provide corporate financial services to the Company. The directors ensure that such services are pre-approved, provided on an arms length basis and market terms and that any possible conflicts of interest are disclosed.

4.

DIRECTORS' REMUNERATION AND INTERESTS

1st Jul 08

7th Jun 07

to

To

31st Dec 08

30th Jun 08

Directors' fees 

28,048 

40,829 

Directors' expenses

1,912 

2,731 

£

29,960 

£

43,560 

As at the balance sheet date, the following ordinary shares and warrants of the Company were held by the Directors:

Ordinary

Warrants

Shares

J. Shakeshaft

50,000

12,500

M. Christensen

10,000

2,500

5.

DIVIDENDS

The Directors have not recommended a dividend for the period ended 31st December 2008 (Period ended 30th June 2008: £nil).

6.

EARNINGS PER SHARE 

31st Dec 08

30th Jun 08

£

£

The calculation of the basic earnings per share is based on the following information:

Earnings for the purposes of basic earnings per share being net (loss)/profit attributable to equity holders 

( 1,966,853)

5,632,575 

Number

Number

Weighted average number of ordinary shares for the purposes of basic earnings per share 

33,998,002

23,772,934

7.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

As noted above the Company has designated its investment holdings in Environmental/Cleantech companies at fair value through profit or loss. Financial assets are initially recognised on the Company's balance sheet at fair value when the Company becomes party to the contractual provisions of a given instrument and changes thereafter are recognised in the income statement.

Investments:

31st Dec 08

30th Jun 08

Opening cost of investments

11,284,106 

- 

Purchases during the period

4,936,452 

11,284,106 

Closing cost of investments

£

16,220,558 

£

11,284,106 

Investments:

31st Dec 08

30th Jun 08

Opening fair value of investments

18,003,084 

- 

Purchases during the period

4,936,452 

11,284,106 

Fair value movement

( 2,847,487)

6,718,978 

Closing fair value of investments

£

20,092,049 

£

18,003,084 

Further details of the investments held can be found in Note 20 to these financial statements.

The following table shows an analysis of financial assets recorded at fair value, between those whose fair value is based on quoted market prices, those involving valuation techniques where all the model inputs are observable in the market, and those where the valuation techniques involve the use of non-market observable inputs.

Quoted market

Price (£)

Valuation technique - market observable inputs (£) 

Valuation technique - non-market observable inputs (£)

Total 

(£)

31st December 2008:

Financial assets

3,065,963 

4,263,158 

12,762,928 

20,092,049 

30th June 2008:

Financial assets

3,422,369 

8,052,632 

6,528,083 

18,003,084 

8.

CASH AND CASH EQUIVALENTS

31st Dec 08

30th Jun 08

Cash at bank:

Royal Bank of Scotland International - current account GBP

560,846 

465,325 

Royal Bank of Scotland International - current account EUR

77,722 

4,128 

Royal Bank of Scotland International - current account AUD

1,438 

- 

Royal Bank of Scotland International - escrow account GBP

9,271 

401 

Royal Bank of Scotland International - escrow account EUR

2,745 

- 

Mourant & Co Limited - client account

2 

2 

Cash held on fixed term deposit:

Fixed term deposits held with Bank of Scotland

7,871,299 

13,988,928 

Fixed term deposits held with Barclays

5,922,120 

- 

Fixed term deposits held with HSBC

6,061,768 

- 

Fixed term deposits held with UBS

7,579,006 

- 

Fixed term deposits held with ABN AMRO

3,038,315 

- 

Fixed escrow account held with Royal Bank of Scotland International

- 

3,010,078 

£

31,124,532 

£

17,468,862 

The Company has permission to borrow sums equivalent to 25% of the net asset value in accordance with its Articles of Association. At the balance sheet date no such facility had been entered into. The Board of Directors and Management of the Company have taken care to minimise the credit risk associated with cash and cash equivalents. The cash held in fixed term deposits has been diversified across a number of reputable financial institutions. 

9.

LOAN RECEIVABLE

31st Dec 08

30th Jun 08

Loan receivable - STX Services B.V.

£

- 

£

399,361 

The Company entered into a Loan Facility Agreement dated 5th June 2008 with STX Services B.V. The loan was unsecured, bore interest at 10% per annum, payable quarterly on the last business day of March, June, September and December and was repayable on the Facility End Date of 31st October 2008. A commitment fee was payable to the Company at a rate of 2% per annum on the loan facility amount. The facility was in the principal sum of €500,000.

The loan was repaid to the Company on 6th October 2008.

10.

TRADE AND OTHER RECEIVABLES

31st Dec 08

30th Jun 08

Fixed deposit interest receivable

177,564 

216,243 

Investment income receivable 

219,966 

198,933 

Loan facility interest receivable

- 

2,703 

Loan commitment fees receivable

3,797 

541 

Reimbursement of legal fees receivable

- 

59,000 

Prepayments and other receivables

10,621 

6,063 

£

411,948 

£

483,483 

11.

TRADE AND OTHER PAYABLES

31st Dec 08

30th Jun 08

Directors' fees and expenses payable

8,272 

177 

Professional fees payable

24,207 

5,538 

Performance fees payable

- 

916,988 

Pinsent Manson legal fees payable

- 

59,000 

Audit fees payable

1,000 

4,000 

Mourant & Co. fees payable

16,504 

1,667 

Ludgate Investments Limited management fees payable

- 

5,414 

£

49,983 

£

992,784 

The following expenses are payable on presentation of invoice: Directors' expenses, Professional fees, Pinsent Mason's legal fees, Mourant & Co fees and Audit fees.

The following expense is payable within 30 days of presentation of invoice: Ludgate Investments Limited management fees.

12.

PERFORMANCE FEE RETENTION

31st Dec 08

30th Jun 08

Retention of performance fees 

£

183,397 

£

- 

For further details please refer to Note 3.

13.

STATED CAPITAL ACCOUNT

31st Dec 08

30th Jun 08

AUTHORISED:

Ordinary shares of no par value each

Unlimited

Unlimited

The authorised stated capital of the Company comprises an unlimited number of voting, ordinary shares which are neither redeemable nor convertible and which have no par value.

ISSUED DURING THE PERIOD: 

No. of

ordinary shares

No. of investor warrants

No. of management warrants

Opening balance at 1st July 2008

29,408,610 

6,683,775 

1,285,250 

Issued during the period

16,557,807 

- 

- 

Balance at 31st December 2008

45,966,417 

6,683,775 

1,285,250 

Opening balance at 7th June 2007

- 

- 

- 

Issued on incorporation

2 

- 

- 

Issued during the period

29,408,608 

6,683,775 

1,285,250 

Balance at 30th June 2008

29,408,610 

6,683,775 

1,285,250 

Two Founder Shares of £1.00 each were issued on incorporation. The initial public offering of Ordinary Shares on 2nd August 2007 was priced at £1.00 per share. Subscribers for the shares received one investor warrant for every four ordinary shares subscribed. Each investor warrant entitles the holder to subscribe for additional shares in the Company at a subscription price of £1.50 until the final subscription date of 31st October 2012.