for the period 1 July 2009 to 31 December 2009

LUDGATE ENVIRONMENTAL FUND LIMITED

UNAUDITED INTERIM REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1ST JULY 2009 TO 31ST DECEMBER 2009

CHAIRMAN'S STATEMENT

I am pleased to report to our shareholders on the performance of Ludgate Environmental Fund Limited ("the Company") in the six months to 31st December 2009. There were two investments in new financial assets amounting to £7,648,550 and additional subscriptions to three existing holdings of £2,702,647 as well as the provision of £200,000 in loan facilities. The net asset value ("NAV") was £47,756,825 as at 31st December 2009 compared with £51,395,149 as at 31st December 2008. The Company was profitable at an operating level but recognised a net loss of £2,404,519 on investments. NAV per share was £1.04 (31st December 2008: £1.12) and the quoted mid price for shares 95.5p. Structurally this represented the lowest discount to NAV amongst our peer group and was confirmed in a successful placing of a large block of secondary shares in December 2009.

The directors recommended and paid a dividend during the period ended 31st December 2009 (relating to the year ended 30th June 2009) of 1.5 pence per share in issue as at 18th September 2009.

The directors continue to review the performance of the Company's portfolio of financial assets and cash against comparable funds, applicable indices and the expected investment returns of shareholders at regular meetings of the board and the investment committee. As a matter of practice the boards of the Company and the Investment Manager met jointly to receive recommendations from the Adviser and to act as the investment committee for the Company; all investment decisions made in the period were unanimous. The directors also remain vigilant in assessing the investment quality and fair value of the underlying holdings as going concerns during a period of continuing weak earnings and difficult finance for small capitalization companies.

Within the portfolio the directors were pleased to approve new investments of £4,959,968 in New Earth Solutions in the UK, building upon the Adviser's knowledge and experience developed from our biogas investments in Germany and of £2,688,582 in Terra Nova, a new waste electronic recycling technology with profound environmental importance to meet new EU regulations.

As the directors had expected, a further investment of £2,117,012 was subscribed in securities of agri.capital and £200,000 in a working capital facility established for RAP, each case enhancing the value of the original investment. Conversely £432,970 was invested in EWT necessitating a significant write down of the existing holding; the decision to invest new money was made in the anticipation that the future returns from this particular funding would significantly exceed the Company's hurdle rates and mitigate the poor economic and operational performance of EWT. Each of these investments and the strategic review of the holdings and prospects undertaken by directors has underscored the value to the Company of owning a significant proportion of an investee company's equity capital or equivalent and of actively managing our interests through nominated directors or observers. The directors have also sought to ensure that the Company has a well diversified asset allocation.

The Company's improved rate of investment in financial assets left the portfolio with £18,404,483 in cash holdings on 31st December 2009. The directors reviewed the treasury policy with regard to the expected timing and currency of future investments as well as to the returns, interest rate outlook and reputation of deposit banks. They also considered the performance of the cash, essentially an asset diversifier and deflation hedge within the portfolio. The medium term ambition remains to hold no more than 15% of NAV in cash. The policy of keeping cash on appropriate term deposits with prime banks is unchanged. Necessarily the cash held will, as it has to date, restrict the growth of NAV while providing high quality risk diversification within the portfolio.

The Company is compliant with all the principles of the AIC Corporate Governance Guide for Investment Companies and those of section one of the Combined Code with the exception of the role of a chief executive, executive directors' remuneration and the need for internal audit which are not considered relevant to an externally managed investment company. The Company's audit committee has met regularly and reviewed the Manager's controls over financial reporting and made appropriate recommendations to the Board. Cognisant of the diverse financial securities owned by the Company and aware of the increasing diligence required under evolving accounting standards for such assets, the directors commissioned, assessed and approved as a working policy valuation principles proposed by the Adviser. The directors have increased confidence that the published NAV reflects the distributable value of the holdings rather than merely accounting or investment convention.

Matrix became broker to the Company during this period. Their published research, advice and market making has improved trading in the Company's securities. The directors have noted the relative illiquidity of the Company's shares, partly the result of having a number of important long term shareholders. As the Company grows organically and diversifies its holdings, with significantly improved web based communication and media presence, the payment of a dividend and a more significant standing in the peer group the attractions of the Company to a broad group of institutional and retail investors should increase. Strategically the directors of the Company believe that cleantech investments will significantly outperform general technology over the expected life of the Company.

The outlook for investment is uncertain. The outcome at Copenhagen in failing to achieve global enforcement of arbitrary carbon emission standards should stimulate the local initiatives in which the Company is diversely invested through agri.capital, New Earth Solutions, and STX. From our portfolio companies we have observed that bank finance will remain difficult and expensive for small and emerging companies for some years and that government grants across Europe for cleantech endeavours are an irregular and unpredictable source of funds. Where cleantech companies are providing supply chain solutions, such as RAP or new process technologies, such as Terra Nova, to existing consumers we can see demand growing faster than typically seen in comparable industrial companies. This may allow the strategic sale or IPO of such cleantech companies at an early date.

Measured against the expectations for the portfolio your Board considers that the Manager and Advisor have performed creditably reflecting the need for cash earnings and diversified holdings of real assets. The new investments made and the potential for NAV and dividend growth in uncertain and increasingly competitive cleantech markets suggests that the Company is well positioned to exploit the opportunities in defined areas of the cleantech and environmental sector.

REPORT OF THE DIRECTORS

The Directors present their report and the unaudited interim financial statements for the period 1st July 2009 to 31st December 2009.

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 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 decrease in net assets attributable to shareholders from operations for the period amounted to £2,619,138 (net decrease in net assets attributable to shareholders from operations for the year ended 30th June 2009 amounted to £2,986,039).

The Directors recommended and paid a dividend during the period ended 31st December 2009 (relating to the year ended 30th June 2009) of 1.5 pence per share in issue as at 18th September 2009 (30th June 2009: £nil).

GOING CONCERN

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

DIRECTORS

The directors who held office during the period were:-

J. Shakeshaft

M. Christensen

H. Grant

D. Maccabe

S. Hansen

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.

REPORT OF THE DIRECTORS

BROKER

Fairfax I.S. PLC, 46 Berkeley Square, Mayfair, London, WIJ 5AT (up to 29th July 2009)

Matrix Corporate Capital LLP, One Vine Street, London, WIJ 0AH (from 29th July 2009)

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

Tracy Barnes

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 2009

Unaudited

interim

financial

statements

Audited

annual

financial

statements

Unaudited

interim

financial

statements

Notes

31st Dec 09

30th Jun 09

31st Dec 08

ASSETS

Non-current assets

Financial assets at fair value through profit or loss

7

28,552,092

20,646,179

20,092,049

Loan receivable

10

500,000

510,570

-

29,052,092

21,156,749

20,092,049

Current assets

Derivatives at fair value through profit or loss

8

204,451

194,334

-

Trade and other receivables

11

291,210

976,003

411,948

Cash and cash equivalents

9

18,404,483

28,259,578

31,124,532

18,900,144

29,429,915

31,536,480

TOTAL ASSETS

£

47,952,236

£

50,586,664

£

51,628,529

LIABILITIES

Non-current liabilities

Retention of performance fees

13

185,323

183,853

183,397

Current liabilities

Trade and other payables

12

10,088

26,848

49,983

TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

195,411

210,701

233,380

NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

47,756,825

50,375,963

51,395,149

TOTAL LIABILITIES INCLUDING NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

£

47,952,236

£

50,586,664

£

51,628,529

£

£

£

Net asset value per ordinary share outstanding

1.04

1.10

1.12

These interim financial statements on pages 6 to 39 were approved and authorised for issue by the Board of Directors on the 29 day of January 2010 and were signed on its behalf by:

Director: John Shakeshaft

STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD 1ST JULY 2009 TO 31ST DECEMBER 2009

Unaudited

interim

financial

statements

Audited

annual

financial

statements

Unaudited

interim

financial

statements

1st Jul 09

to

31st Dec 09

1st Jul 08

to

30th Jun 09

1st Jul 08

to

31st Dec 08

Notes

INCOME:

Deposit interest income

254,257

989,694

511,171

Income on financial assets at fair value through profit or loss

1,084,737

1,596,697

300,633

Loan facility interest

461

2,523

-

Commitment fees

-

-

3,797

Other income

17,445

1,229

483

Placement fees

-

16,941

-

Movement on foreign exchange

121,626

307,512

937,930

1,478,526

2,914,596

1,754,014

EXPENSES:

Loss on financial instruments at fair value through profit or loss

7, 8

2,404,519

4,394,769

2,847,487

Legal fees

40,761

3,231

2,230

Professional fees

83,326

161,500

113,936

Investment management fees

18

497,800

838,495

349,484

Provision for interest receivable

285,207

-

-

Administration & accountancy fees

32,520

58,528

32,106

Directors' fees and expenses

4

47,778

71,213

29,960

Audit fees

12,985

9,750

1,000

Issue costs

18

-

360,000

343,296

Miscellaneous fees

3,272

3,149

1,368

3,408,168

5,900,635

3,720,867

FINANCE COST:

Distribution to shareholders

689,496

-

-

DECREASE IN NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS FROM OPERATIONS

£

( 2,619,138)

£

( 2,986,039)

£

( 1,966,853)

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

FOR THE PERIOD 1ST JULY 2009 TO 31ST DECEMBER 2009

Share

capital account

Retained

earnings

Total

Opening balance as at 1st July 2009

47,729,427

2,646,536

50,375,963

Decrease in net assets attributable to shareholders from operations

-

( 2,619,138)

( 2,619,138)

Balance as at 31st December 2009

£

47,729,427

£

27,398

£

47,756,825

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

Decrease in net assets attributable to shareholders from operations

-

( 2,986,039)

( 2,986,039)

Balance at 30th June 2009

£

47,729,427

£

2,646,536

£

50,375,963

CASH FLOW STATEMENT

FOR THE PERIOD 1ST JULY 2009 TO 31ST DECEMBER 2009

Unaudited

interim

financial

statements

Audited

annual

financial

statements

Unaudited

interim

financial

statements

1st July 09

to

31st Dec 09

1st Jul 08

to

30th Jun 09

1st Jul 08

to

31st Dec 08

Notes

Cash flows from operating activities

17

( 1,133,294)

( 1,386,495)

( 86,835)

Cash flows from investing activities

Purchase of investments

7

( 10,351,197)

( 7,232,198)

( 4,936,452)

Sale of investments

48,093

-

-

Interest and dividends received

1,449,108

1,213,110

279,600

Loan finance provided

10

( 200,000)

( 532,750)

-

Loan finance repaid

10

210,570

399,361

399,361

Net cash used in investing activities

( 8,843,427)

( 6,152,477)

( 4,257,491)

Cash flows from financing activities

Proceeds from issue of ordinary shares during the period/year

14

-

17,999,996

17,999,996

Net cash generated from financing activities

-

17,999,996

17,999,996

Net (decrease)/increase in cash and cash equivalents

( 9,976,721)

10,461,024

13,655,670

Effects from changes in exchange rates on cash and cash equivalents

121,626

329,692

-

Cash and cash equivalents at beginning of the period/year

28,259,578

17,468,862

17,468,862

Cash and cash equivalents at end of the period/year

9

£

18,404,483

£

28,259,578

£

31,124,532

NOTES TO THE INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD 1ST JULY 2009 TO 31ST DECEMBER 2009

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 joined the Alternative Investment Market ("AIM") on the 2nd August 2007. The registered office of the Company is 22 Grenville Street, St Helier, Jersey, JE4 8PX.

The Company will have a life of approximately eight years from Admission to AIM, expiring on 30th June 2015 (the "Proposed Wind-up Date"). The Directors may, not less than three months prior to the Proposed Wind-Up Date, propose a special resolution to extend the life of the Company by four years. Further such resolutions may then be proposed in the same manner not less than three months prior to the expiry of each such four year period.

The principal activities of the Company include building a diversified portfolio of investment holdings in 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 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 year ended 30th June 2009, which have been prepared in accordance with International Financial Reporting Standards published by the International Accounting Standards Board ("IASB") as adopted by the European Union and interpretations issued by the International Financial Reporting Interpretations Committee.

New standards, amendments and interpretations which are effective for the current period

In November 2006, the IASB issued IFRS 8, "Operating Segments" which is effective for annual periods beginning on or after 1st 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.

In the Directors' opinion there are no 'Operating Segments', as the Company's activities are limited to one operating segment.

IAS 1 (Revised) Presentation of financial statements. The revised standard prohibits the presentation of items of income and expenses (that is, 'non-owner changes in equity') in the statement of changes in equity. It requires non-owner changes in equity to be presented separately from owner changes in equity. All non-owner changes in equity are required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated statement of financial position as at the beginning comparative period, in addition to the current requirement to present statements of financial position at the end of the current period and comparative period. The Company has applied lAS 1 (revised) from 1st January 2009, and has elected to present solely a Statement of Comprehensive Income.

IFRS 7 (amendment) 'Financial instruments: Disclosures'. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy.

The Company has made an assessment of the impact of these new standards and amendments and it is not considered that they will have any significant impact on the performance or position of the Company.

New standards and interpretations effective but not applicable

The following standards, amendments and interpretations to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after 1st July 2009 or later periods but are not relevant for the Company's operations:

 - IFRS 2 (Amendment) Share based payments (Effective for periods beginning on or after 1st January 2009).

 - IFRS 3 (Revised) Business Combinations and IAS 27 consolidated and separate financial statements (Effective for periods beginning on or after 1st July 2009).

 - IAS 23 (Revised) Borrowing Costs (Effective for periods beginning on or after 1st January 2009).

 - IAS 32 (Revised) Financial Instruments: Presentation and IAS 1 Presentation of financial statements - Puttable financial instruments and obligations arising on liquidation (Effective for periods beginning on or after 1st January 2009).

 - IAS 39 (Revised) Financial Instruments: Recognition and Measurement - Eligible Hedged Items (Effective for periods beginning on or after 1st July 2009).

 - IAS 39 (Revised Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures - Reclassification of Financial Assets (Effective for periods beginning on or after 1st January 2009).

 - IFRIC 13 Customer Loyalty Programmes (Effective for periods beginning on or after 1st July 2009).

 - IFRIC 15 Agreements for the construction of real estate (Effective for periods beginning on or after 1st January 2009).

 - IFRIC 16 Hedges of Net Investment in a Foreign Operation (Effective for periods beginning on or after 1st October 2008).

 - IFRIC 17 Distributions of Non-cash Assets to Owners (Effective for periods beginning on or after 1st July 2009).

 - IFRIC 18 Transfer of assets from customers (Effective for periods beginning on or after 1st July 2009).

The IASB has issued amendments to twenty IFRS Standards which amend twenty standards. The amendments include changes in presentation, recognition and measurement plus terminology and editorial changes.

b) Basis of measurement

These financial statements have been prepared on a historical cost basis except for the below. The policies have been consistently applied to both periods presented.

Financial instruments designated at fair value through profit or loss are measured at fair value and changes therein are recognised in the Statement of Comprehensive Income. 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 Statement of Comprehensive Income. 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 Statement of Comprehensive Income.

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.

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, warrants, loans receivable, trade and other receivables, cash and cash equivalents, trade and other payables, performance fees retained and net assets attributable to shareholders.

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

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. These financial assets are designated on the basis that they form part of a group of financial assets which are managed and have their performance evaluated on a fair value basis. Upon initial recognition attributable transaction costs are recognised in the Statement of Comprehensive Income when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in the Statement of Comprehensive Income.

Derivatives at fair value through profit or loss

The warrants held by the Company are classified as derivative financial instruments held for trading. Therefore they are recognised at fair value, with realised and unrealised gains and losses being recognised in the Statement of Comprehensive Income. The derivatives are derecognised when the rights to receive cash flows from it have expired or the Company has transferred substantially all risks and rewards of ownership.

Loan and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recognised at fair value plus directly attributable transaction costs and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised when there is objective evidence that the Company will be unable to collect all of the amounts due under the terms of the receivable. The Company's loans and receivables comprise loans receivable, trade and other receivables and cash and cash equivalents.

Financial liabilities

All liabilities are classified as other financial liabilities and are measured at amortised cost using the effective interest rate method.

Cash and cash equivalents

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.

Ordinary shares

Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability.

The Ordinary Shares of the Company are treated as liabilities as the Company has a definite life.

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 debt securities at fair value through profit or loss), interest income and loan interest income. Interest income and loan interest income are recognised as they accrue in the Statement of Comprehensive Income, using the effective interest rate method. Dividend income is recognised in the Statement of Comprehensive Income 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.

Foreign currency gains and losses are reported in the Statement of Comprehensive Income on a net basis.

j) Earnings per share ("EPS") and net asset value ("NAV") per share

As noted above the Ordinary Shares of the Company are treated as liabilities as the Company has a definite life. The liabilities arising from the Ordinary Shares are carried at the redemption amount being the net asset value calculated in accordance with IFRS.

The Company presents basic EPS and NAV data for its ordinary shares. Basic EPS is calculated by dividing the net increase/decrease in net assets attributable to ordinary shareholders from operations by the weighted average number of ordinary shares in issue during the period. For further details see note 6. NAV per ordinary share is calculated by dividing net assets attributable to ordinary shareholders by the number of ordinary shares outstanding at the year end.

k) Transaction costs

Expenses incurred by the Company that are directly attributable to the offering of new shares have been expensed to the Statement of Comprehensive Income.

l) Taxation

The Company has exempt status for Jersey taxation purposes for the year of assessment 2008. Effective 1st January 2009, Jersey's tax regime has changed. The new regime imposes 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%.

m) Dividends payable

Dividends payable to ordinary shareholders are accounted for when a legal obligation arises.

Dividends payable, if any, on ordinary shares are recognised in the Statement of Comprehensive Income as finance costs.

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.

As at the balance sheet date, the fair values of quoted equities are based on quoted bid prices at the period end. Unquoted equities and unquoted securities are valued using a variety of methods as follows:

- Rapid Action Packaging Limited Ordinary Shares are valued at cost.

 - Rapid Action Packaging Limited Convertible Bonds are valued at cost.

 - Agri.capital Class F Preference Shares are valued at cost.

 - Hydrodec Group plc Convertible Bonds are valued using the Black Scholes option valuation method which is carried out by an independent broker.

 - Agri.capital Class E Preference Shares have been valued based on a defined valuation uplift.

 - STX Services B.V. shares have been valued based on a multiple of profit after tax for the year, within EVCA guidelines.

 - Emergya Wind Technologies B.V. Preference Shares have been valued at the latest transaction price per share as per EVCA guidelines.

 - New Earth Solutions are valued at cost.

Terra Nova SAS A shares are valued at cost. B shares were revalued at the period end to the value/cost of the A shares.

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.

The fair value of derivatives at fair value through profit or loss is derived using the Black-Scholes Option Pricing Model.

q) Restatement - prior period reclassification of equity to debt

In the prior period financial statements the Company's ordinary shares issued and retained earnings were classified as equity. As the Company has a limited life all equity should be classified as debt in accordance with IFRS and therefore the prior period comparatives have been restated. This restatement has had no impact on the Company's result as per the Statement of Comprehensive Income or the NAV of the Company and therefore no reconciliation is required to be presented in these financial statements.

3.

PERFORMANCE FEES RETAINED AND PAYABLE

1st Jul 09

to

31st Dec 09

1st Jul 08

to

30th Jun 09

Performance fees payable

-

£

-

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 time-weighted average number of shares in issue since the end of the last performance period for which a performance fee was earned.

The conditions for payment of performance fees were not met for the performance period which ended on 30th June 2009.

20% of performance fees earned by the Manager shall be retained and deposited in a Reserve Account (see note 9). 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 09

1st Jul 08

to

to

31st Dec 09

30th Jun 09

Directors' fees

41,253

68,054

Directors' expenses

6,525

3,160

£

47,778

£

71,214

As at the balance sheet date, the following ordinary shares and warrants of the Company were held by the Directors, the Directors of the Manager, the Investment Advisor and the Principals of the Investment Advisor;

Ordinary

Warrants

Shares

FOR THE PERIOD ENDED 31ST DECEMBER 2009

J. Shakeshaft

115,445

12,500

M. Christensen

10,000

2,500

FOR THE YEAR ENDED 30TH JUNE 2009

J. Shakeshaft

60,000

12,500

M. Christensen

10,000

2,500

5.

DIVIDENDS

The Directors recommended and paid a dividend during the period ended 31st December 2009 (relating to the year ended 30th June 2009) of 1.5 pence per share in issue as at 18th September 2009.

6.

EARNINGS PER SHARE

The calculation of the basic and diluted change in net assets attributable to shareholders from operations per share is based on the following information:

31st Dec 09

30th Jun 09

Decrease in net assets attributable to shareholders from operations

£

( 2,619,138)

£

( 2,986,039)

Number

Number

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

45,966,419

39,933,026

Basic and diluted change in net assets attributable to shareholders from operations per ordinary share

( 0.06)

£

( 0.07)

7.

Outstanding warrants are anti-dilutive for both periods presented as the exercise price of the warrants exceeded the average market price of ordinary shares issued during the period.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

As noted above the Company has designated its investment holdings in 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 Statement of Comprehensive Income.

Investments:

31st Dec 09

30th Jun 09

Opening cost of investments

20,445,152

11,284,106

Cost of Loan Notes converted into Preference Shares

( 210,570)

( 1,884,115)

Purchases/(disposals) during the period/year:

New investments acquired

10,351,197

7,232,198

Conversions

210,570

3,812,963

Investments sold

( 30,649)

-

Closing cost of investments

£

30,765,700

£

20,445,152

31st Dec 09

30th Jun 09

Opening fair value of investments

20,646,179

18,003,084

Fair value at date of conversion of Loan Notes

( 210,570)

( 3,812,963)

Purchases/(disposals) during the period/year:

New investments acquired

10,351,197

7,232,198

Conversions

210,570

3,812,963

Investments sold

( 30,649)

-

Fair value movement

( 2,414,635)

( 4,589,103)

Closing fair value of investments

£

28,552,092

£

20,646,179

Further details of the investments held can be found in note 21 to these interim financial statements.

The Company adopted the amendment to IFRS 7, effective 1st January 2009. This requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 - Inputs for the asset or liability that are not based on observable market data.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following table analyses within the fair value hierarchy the Company's financial assets measured at fair value at 31 December 2009.

Level 1

Level 2

Level 3

Total

£

£

£

£

31st December 2009:

Financial assets

2,823,725

3,192,000

22,536,367

28,552,092

Financial assets whose values are based on quoted market prices in active markets, and therefore classified within level 1, include mainly of actively listed equities. The Company does not adjust the quoted market price for these.

Financial assets that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. Level 2 includes mainly convertible bonds. As level 2 bonds are not traded in an active market, valuations are based on an option valuation method which was carried out by an independent broker.

Financial assets classified within level 3 have significant unobservable inputs, as they trade infrequently. Level 3 includes equities and convertible loan notes. As the observable prices are not available for these equities and convertible loan notes, the Company has used valuation methods as described in note 2 (o).

For Rapid Action Packaging Limited and STX Services B.V. unqouted equities, if the multiple used in the valuation increased by 5%, this would have resulted in an increase in value of £359,221.

The movement in Level 3 financial asests for the period ended 31st December 2009 by class of financial instruments was as follows:

Unquoted equities

Unquoted securities

Total

Opening balance

10,870,935

2,500,000

13,370,935

Total losses (realised/unrealised) included in comprehensive income

( 1,533,100)

-

( 1,533,100)

Purchases, sales, issuances, and settlements (net)

8,698,532

2,000,000

10,698,532

Closing balance

£

18,036,367

£

4,500,000

£

22,536,367

8.

DERIVATIVES AT FAIR VALUE THROUGH PROFIT AND LOSS

31st Dec 09

30th Jun 09

Rapid Action Packaging Limited

123,736

113,211

Emergya Wind Technologies B.V.

72,345

78,396

Phoslock Water Solutions Limited

8,370

2,727

£

204,451

£

194,334

As noted above, the warrants have been valued using the Black-Scholes Option Pricing Model.

9.

CASH AND CASH EQUIVALENTS

31st Dec 09

30th Jun 09

Royal Bank of Scotland International - current account GBP

430,164

270,878

Royal Bank of Scotland International - current account EUR

190,349

98,805

Royal Bank of Scotland International - current account AUD

262

1,494

Royal Bank of Scotland International - escrow account GBP

6

6

Royal Bank of Scotland International - escrow account EUR

2

2

Royal Bank of Scotland International - reserve account

183,482

183,482

Walker Crips Stockbrokers Limited

57,891

-

Mourant & Co Limited - client account

2

2

Cash held on fixed term deposit:

Fixed term deposits held with Bank of Scotland

3,900,064

5,000,000

Fixed term deposits held with Barclays

903,740

3,903,741

Fixed term deposits held with BNP (EUR)

694,888

-

Fixed term deposits held with BNP (GBP)

4,335,798

-

Fixed term deposits held with UBS

1,522,490

6,000,000

Fixed term deposits held with ABN AMRO

1,014,993

4,038,314

Fixed term deposits held with AIB (GBP)

2,585,176

1,050,600

Fixed term deposits held with AIB (EUR)

-

2,555,149

Fixed term deposits held with Royal Bank of Scotland International

2,585,176

5,157,105

Fixed escrow account held with Royal Bank of Scotland International

-

-

£

18,404,483

£

28,259,578

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.

The cash held on the Reserve Account represents 20% of the performance fees earned by the Manager to date. The balance on this account can 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.

10.

LOAN RECEIVABLE

31st Dec 09

30th Jun 09

Rapid Action Packaging Limited

500,000

300,000

Emergya Wind Technologies

-

210,570

£

500,000

£

510,570

The Company has entered into a £1,000,000 Loan Facility Agreement dated 30th June 2009 with Rapid Action Packaging Limited ("RAP"). The loan is unsecured, bears interest at 8% per annum, payable semi-annually in arrears commencing 31st December 2009 and is repayable on the Final Repayment Date of 20th May 2011. A commitment fee and arrangement fee are payable to the Company on the date of entering into the Loan Facility and are satisfied by the receipt of warrants issued by RAP, allowing the Company to purchase 500 shares and 200 shares, respectively, at an exercise price of £417.03 per share. A drawdown fee is also payable to the Company and is satisfied by the receipt of warrants issued by RAP allowing the Company to purchase 1 share in RAP in respect of each £1,250 drawdown at an exercise price of £417.03 per share. As at 31st December 2009 £500,000 (30th June 2009: £300,000) has been drawn under the facility and the Company had been issued 1,100 (30th June 2009: 940) warrants in RAP.

RAP is entitled to drawdown the remaining £500,000 before the Final Repayment Date of 20th May 2011.

The Company had entered into a Convertible Warranted Loan Facility Agreement (the "EWT Loan Agreement") dated 3rd April 2009 with Emergya Wind Technologies Holdings N.V. ("EWT"). Under the terms of the EWT Loan Agreement the Company agreed to lend EWT up to a maximum of €232,750.

Under the terms of the EWT Loan Agreement the Company converted its participation in the loan into Class C Cumulative Preference Shares in EWT (the "Preference Shares"). The number of Preference Shares is equal to the amount in euros of the participation in the loan outstanding on the issue date together with any accrued interest multiplied by ten.

During the period the Company exercised their option to convert the loan into Class C Cumulative Preference shares at €0.03 per share.

11.

TRADE AND OTHER RECEIVABLES

31st Dec 09

30th Jun 09

Fixed deposit interest receivable

57,722

385,659

Investment income receivable

218,149

582,520

Prepayments and other receivables

15,339

7,824

£

291,210

£

976,003

12.

TRADE AND OTHER PAYABLES

31st Dec 09

30th Jun 09

Directors' fees and expenses payable

4,483

7,423

Professional fees payable

5,605

1,375

Audit fees payable

-

6,550

Mourant & Co. fees payable

-

11,500

Ludgate Investments Limited management fees payable

-

-