Become a Member

Track your favourite stocks
Create & monitor portfolios
Daily portfolio value

Company	Chg	Chg %
Quickpicks
£	%
Add shares to your quickpicks to display them here!

Unaudited Interim Report and Financial Statements

3rd Feb 2011 12:52

RNS Number : 6466A

Ludgate Environmental Fund Limited

03 February 2011

London, 3rd February 2011

Ludgate Environmental Fund Limited ("LEF" or "the Fund") announces interim results to 31 December 2010


LUDGATE ENVIRONMENTAL FUND LIMITED

UNAUDITED INTERIM REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1ST JULY 2010 TO 31ST DECEMBER 2010

STATEMENT OF INVESTMENT POLICY
The Investment Policy of Ludgate Environmental Fund Limited (the "Company") is to provide capital growth and return through investment in a diverse portfolio of securities issued by cleantech companies over the expected life of the Company.

The cleantech sector includes companies whose businesses operate in the following areas:

*	Energy efficient and alternative energy resources;

*	Water treatment and management;

*	Waste management and recycling (resource recovery);

*	Industrial process advances; and

*	Emission reduction technologies.

The Company invests in quoted and unquoted securities of companies at the development capital and expansion stages of growth. Earlier stage investments can also be made. The Company seeks to maximize returns and reduce risk through active engagement with the management of investee companies and the holding of substantial and influential minority interests in respect of unquoted investments.

The Company concentrates principally on companies based in Continental Europe and the UK.

No single investment at subscription would normally have a value greater than 15% of the net assets of the Company. No individual holding is reduced or increased due to either relative growth or reductions of the Company's other investments; the board remains conscious of the risk profile and expected returns from the portfolio. The directors noted that the further subscription of securities of agri.capital would in aggregate exceed the normal limit for any given holding of 15% of NAV at the date of investment; in so doing they determined that expected cashflows from the series of securities were of sufficient quality and such limited duration to mitigate the implied concentration risk and departure from established policy.

The Company may borrow up to an amount equivalent to 25% of its net assets to finance investments or for any other purpose. The Board does not contemplate making any significant borrowing until and unless the portfolio is substantially invested in financial assets in the cleantech sector.

CHAIRMAN'S STATEMENT
I am pleased to report to our shareholders on the performance of Ludgate Environmental Fund Limited ('the Company') for the six months to 31st December 2010. We made one new investment in financial assets of £298,000 and an additional subscription to an existing holding of € 4 million in the period. The net asset value of our Company's funds (NAV) was £55,448,745 on 31st December 2010 compared with £47,756,825 on 31st December 2009. The Company was profitable at an operating level and included a net gain of £943,014 in the movement in fair value on investments.
NAV per share was 99p (31st December 2009: £1.04) and the quoted mid price for the shares 90p (31st December 2009: 95.5p). While disappointing this continues to represent a lower discount to NAV than any of our peers and does not include the payment in this period of an increased dividend of 1.65p per share in respect of the financial year ended 30th June 2010. We were pleased to be able to recommend the payment of a progressive ordinary dividend to an extraordinary shareholders' meeting which also approved a fully subscribed capital raising of £10 million at a price equivalent to NAV per share. The dividend payment was fully covered by receipted income from current yields on existing financial assets. The subscription and dividend continue to endorse our strategy of seeking to provide significant total return to shareholders over the anticipated life of the Company.
The directors reviewed the performance of the underlying financial assets and deployment of cash holdings at regular board and investment committee meetings. The renewal of the authority to raise additional capital at NAV was sought in anticipation of the fund's becoming fully invested and considering the identified portfolio of further opportunities to provide superior returns over the life of the Company. The board compares the performance of the Company with similar funds in the public and private markets, applicable indices and discrete companies. We remain vigilant about the financial strength of our invested assets at a time when bank finance and working capital support remain difficult and expensive for small capitalization and growth companies; the limited availability of project and non recourse finance in the United Kingdom also impedes the development of some companies, particularly in the waste and alternative energy sectors. Uncertainty over domestic tariff regimes adds a political dimension to economic restriction.

The directors were pleased to approve two investments in the period under review. A subscription of £298,000 was made to a photovoltaic solar developer, Lumicity. This added to the earlier subscribed holding of Hightex intended to assist and exploit their development of a solar business Solarnext. A further investment of €4 million was made in a series of guaranteed return equity instruments in agri.capital, the largest biogas operator in Germany. We continue to see complementary investments in the biogas sector in Continental Europe and the UK and will be seeking to diversify and exploit our exposure. The directors are aware that the rate of the Company's investment was disappointing in the period. To an extent this is a reflection of the relative scarcity of companies at an appropriate stage of development as well as the intensity of investment management involvement in the direction and strategy of the underlying holdings. We believe that the streamlining of the investment advisory arrangement with Ludgate Investments Limited and the resolution of their own strategic commitment and shareholding will be of considerable benefit to the realization of your company's objectives.
Although the concerns over the institutional quality of the bank deposits have abated since the last reporting period, the returns have been reduced on cash holdings. The directors are mindful of the importance of achieving full investment in the current period and looking for early realisations to underscore both the investment thesis and anticipated returns. We continue to apply conservative valuation principles to our net assets and to the diversification of specific holdings. Given the currency of the investment, advisory and management knowledge being demonstrably acquired and proven in the solar, biogas, trading and environmental packaging sectors as well as the burden of indirect costs expressed as a total expense ratio, the directors believe that the Company's performance over its expected life would be enhanced if the funds available were significantly greater.

The Company is compliant with all the principles of the AIC Corporate Governance Guide for Investment Companies. The Company did disclose individual directors' remuneration in the period in accordance with the listing requirements for the AIM. The Company's audit committee has met regularly formally and informally and has reviewed the controls and practices around financial reporting and made appropriate recommendations to the board. Separately the board reviewed the methodology, controls and the adviser's reporting on the performance of investment holdings and made appropriate recommendations. The board has also assessed and reviewed the work and contractual arrangements with the Company's external company secretary and administrators, State Street. Again, appropriate recommendations have been made.
The directors have noted that the discount to NAV at which your Company's shares have been traded has increased during the period though still stands at a premium to that of its peers. The paucity of trades in the Company's share and the absence of trades in its warrants necessarily leads to the exceptional effect on quoted prices of individual transactions as well as the spread and prices shown by market makers to ensure the required liquidity. The stability of the share register and the low market capitalization of the Company also contribute. In the opinion of the directors the expected returns from the portfolio over the life of the Company continue significantly to exceed the market cost of funds.
The Company benefits from a strong investment trend, particularly with emerging inflation in its principal markets toward the ownership of financial assets while its share price is constrained for the reasons adumbrated before as well as the underperformance of the poor comparators of buyout and venture funds. Similarly, the European sovereign debt crisis has had the least immediate effect on the cost and availability of bank debt in Germany, Netherlands and France where the Company's assets outside the UK are located. The domestic market has been affected by local government finance reductions under the Comprehensive Spending Review, tariff regime uncertainties and weak bank finance. The outlook for the Company's current investments is good, the opportunity to improve returns from the growth of the Company itself significant and the challenges of the investment environment appropriately diversified.

The board considers that the adviser has performed creditably in managing the financial assets of the Company and continues to establish a good base from which to deliver the anticipated total return to shareholders over the expected life of the Company.

REPORT OF THE DIRECTORS
The Directors present their report and the unaudited interim financial statements for the period 1st July 2010 to 31st December 2010.

INCORPORATION
Ludgate Environmental Fund Limited (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 increase in net assets attributable to shareholders from operations before dividends for the period amounted to £1,064,395 (for the year ended 30th June 2010: net decrease of £4,380,680).

The Directors recommended and the Company paid a dividend for the year ended 30th June 2010 of 1.65 pence per share in issue as at 4th August 2010 (dividend for the year ended 30th June 2009: 1.5 pence per share in issue as at 18th September 2009).

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 and subsequently (except where stated) were:-
D. Adamson		(appointed 2nd August 2010)
M. Christensen
H. Grant		(resigned 3rd August 2010)
S. Hansen
D. Maccabe		(resigned 2nd August 2010)
D. Pirouet		(appointed 2nd August 2010)
J. Shakeshaft

COMPANY SECRETARY
The Company Secretary is State Street Secretaries (Jersey) Limited of 22 Grenville Street, St. Helier, Jersey, JE4 8PX.
INDEPENDENT AUDITORS
BDO Alto Limited had 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 ADVISER
The Company's Nominated Adviser is PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH who had expressed its willingness to continue in office.
REGISTRAR
Computershare Investor Services (Channel Islands) Limited, Queensway House, Hilgrove Street, St Helier, JE4 9XY.

BROKER
Matrix Corporate Capital LLP, One Vine Street, London, WIJ 0AH.

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

LEGAL ADVISERS
Norton Rose, 3 More London Riverside, London SE1 2AQ (in relation to English law).
Carey Olsen, 47 Esplanade, St Helier, Jersey, JE1 OBD (in relation to Jersey law).

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

REGISTERED OFFICE
22 Grenville Street
St. Helier
Jersey
JE4 8PX

BY ORDER OF THE BOARD
Marisa Warren
Authorised Signatory
State Street Secretaries (Jersey) Limited
Secretary
Date 2/11/2011

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, as adopted by the European Union.

Company (Jersey) Law 1991 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 2010
			Unaudited		Audited		Unaudited
			interim		annual		interim
			financial		financial		financial
			statements		statements		statements

	Notes		31st Dec 10		30th Jun 10		31st Dec 09
ASSETS
Non-current assets
Financial assets at fair value through profit or loss	7,21		31,438,913		26,719,866		28,552,092
Loans receivable	10		-		-		500,000

			31,438,913		26,719,866		29,052,092

Current assets
Derivatives at fair value through profit or loss	8		643,166		682,737		204,451
Loans receivable	10		1,500,000		1,200,000		-
Trade and other receivables	11		513,580		261,208		291,210
Cash and cash equivalents	9		21,578,151		16,672,333		18,404,483

			24,234,897		18,816,278		18,900,144

TOTAL ASSETS		£	55,673,810	£	45,536,144	£	47,952,236

LIABILITIES
Non-current liabilities
Retention of performance fees	3,13		186,648		186,164		185,323
Current liabilities
Trade and other payables	12		38,417		44,193		10,088

TOTAL LIABILITIES			225,065		230,357		195,411

NET ASSETS ATTRIBUTABLE TO EQUITY SHAREHOLDERS			55,448,745		45,305,787		47,756,825

TOTAL LIABILITIES AND NET ASSETS ATTRIBUTABLE TO EQUITY SHAREHOLDERS		£	55,673,810	£	45,536,144	£	47,952,236

			£		£		£
Net asset value per ordinary share outstanding			0.99		0.99		1.04
These interim financial statements on pages 7 to 39 were approved and authorised for issue by the Board of Directors on the 2nd day of February 2011 and were signed on its behalf by:

Director: Donald Adamson

STATEMENT OF COMPREHENSIVE INCOME

			Unaudited		Audited		Unaudited
			interim		annual		interim
			financial		financial		financial
			statements		statements		statements

			1st Jul 10		1st Jul 09		1st Jul 09
			to		to		to
	Notes		31st Dec 10		30th June 10		31st Dec 09

INCOME:
Deposit interest income			69,845		302,209		254,257
Income on financial assets at fair value through profit or loss			606,642		1,738,240		1,084,737
Loan facility interest			-		461		461
Other income			150,801		-		17,445
Gain on financial assets and derivatives at fair value through profit or loss	7, 8		943,014		107,441		-
Movement on foreign exchange			115,042		( 166,997)		121,626

			1,885,344		1,981,354		1,478,526

EXPENSES:
Loss on financial assets and derivatives at fair value through profit or loss	7, 8		-		4,589,458		2,404,519
Legal fees			15,004		41,816		40,761
Professional fees			137,448		169,003		83,326
Investment management and advisory fees	18		535,668		967,807		497,800
Provision for interest receivable	11		-		357,988		285,207
Administration and accountancy fees			27,567		89,875		32,520
Directors' fees and expenses	4		79,569		102,968		47,778
Transaction cost			-		7,148		-
Audit fees			15,000		32,265		12,985
Miscellaneous fees			10,693		3,706		3,272

			820,949		6,362,034		3,408,168

TOTAL COMPREHENSIVE INCOME/(LOSS)		£	1,064,395	£	(4,380,680)	£	( 1,929,642)



Gain/(loss) per ordinary share	6	£	0.02	£	(0.10)	£	(0.04)

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO EQUITY SHAREHOLDERS

			Ordinary shares		Change in net		Total net assets
			and		assets attributable		attributable
			warrants		to equity		to equity
			issued		shareholders		shareholders

FOR THE PERIOD ENDED 31ST DECEMBER 2010

Opening balance as at 1st July 2010			47,729,427		( 2,423,640)		45,305,787

Total comprehensive income			-		1,064,395		1,064,395

Issue of ordinary shares			10,000,009		-		10,000,009

Placement fees	18		(163,000)		-		(163,000)

Dividends paid to equity shareholders			-		(758,446)		( 758,446)

Balance as at 31st December 2010	14	£	57,566,436	£	( 2,117,691)	£	55,448,745

FOR THE YEAR ENDED 30TH JUNE 2010

Opening balance as at 1st July 2009			47,729,427		2,646,536		50,375,963

Total comprehensive income			-		(4,380,680)		(4,380,680)

Dividends paid to equity shareholders			-		(689,496)		(689,496)

Balance as at 30th June 2010	14	£	47,729,427	£	(2,423,640)	£	45,305,787

CASH FLOW STATEMENT


			Unaudited		Audited		Unaudited
			interim		annual		interim
			financial		financial		financial
			statements		statements		statements

			1st July 10		1st July 09		1st July 09
			to		to		to
	Notes		31st Dec 10		30th Jun 10		31st Dec 09

Cash flows from operating activities	17		(779,824)		(1,080,420)		(1,133,294)

Cash flows from investing activities
Purchase of investments	7		(3,736,462)		(11,341,197)		(10,351,197)
Sale of investments	7		-		297,089		48,092
Interest and dividends received			528,499		2,083,206		1,449,108
Loan finance provided	10		(300,000)		(900,000)		(200,000)
Loan finance repaid	10		-		210,570		210,570

Net cash used in investing activities			(3,507,963)		(9,650,332)		(8,843,427)


Cash flows from financing activities
Dividends paid to equity shareholders			(758,446)		(689,496)		-
Payment of placement fees	18		(163,000)		-		-
Proceeds from issue of ordinary shares during the period	14		10,000,009		-		-

Net cash generated from/(used in) financing activities			9,078,563		(689,496)		-

Net increase/(decrease) in cash and cash equivalents			4,790,776		(11,420,248)		(9,976,721)

Effects from changes in exchange rates on cash and cash equivalents			115,042		(166,997)		121,626

Cash and cash equivalents at beginning of the period/year			16,672,333		28,259,578		28,259,578

Cash and cash equivalents at end of the period/year	9	£	21,578,151	£	16,672,333	£	18,404,483

NOTES TO THE FINANCIAL STATEMENTS
1.	REPORTING ENTITY
	The Company was registered as a public company on 7th June 2007, number 97690 under the Companies (Jersey) Law 1991. The Company was admitted to 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.

2.	ACCOUNTING POLICIES
	a) Basis of preparation
	These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the European Union and International Accounting Standards Board ("IASB"), and its predecessor body, as well as interpretations issued by the International Financial Reporting Interpretation Committee ("IFRIC") and its predecessor body. The more significant policies are set out below:-

	New Accounting Standards, amendments to existing Accounting Standards and/or interpretations of existing Accounting Standards (separately or together, "New Accounting Requirements") adopted during the current period

	The Directors have assessed the impact, or potential impact, of all New Accounting Requirements. In the opinion of the Directors, there are no mandatory New Accounting Requirements applicable in the current period that had any material effect on the reported performance, financial position, or disclosures of the Company. Consequently, no mandatory New Accounting Requirements are listed. The Company has not adopted any New Accounting Requirements that are not mandatory.

	Non-mandatory New Accounting Requirements not yet adopted

	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 at fair value through profit or loss and derivatives at fair value though profit and 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 recognised 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.
	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 and performance fees retained.
	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.

	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 equity as they entitle the shareholder to a pro rata share of the Company's net assets in the event of the Company's liquidation.

	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 and 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
	The Company presents basic EPS and NAV data for its ordinary shares. Basic EPS is calculated by dividing the comprehensive income attributable to equity shareholders from operations by the weighted average number of ordinary shares in issue during the year. (For further details see note 6). NAV per equity share is calculated by dividing net assets attributable to equity shareholders by the number of equity 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
	Profits arising in the Company are subject to Jersey Income Tax at the rate of 0%.

	The Company was registered under the Reporting Fund regime Regulation 51 of The Offshore Fund (Tax) Regulations 2009 in the United Kingdom effective 1st July 2009.

	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 changes in net assets attributable to equity shareholders.

	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 mid 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 ("IPEVCV") 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.

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

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

- agri.capital Class G Preference Shares are valued at cost.

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

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

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

- New Earth Solutions Ordinary Shares and Convertible Loan Notes are valued at cost.

- Lumicity Limited Loan Notes are valued at cost.

- Terra Nova SAS A shares are valued at cost. Terra Nova SAS B shares represent founder shares issued to the Company at €10 per share as a result of a working capital adjustment and are valued at 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 through profit or loss is derived using the Black scholes option pricing model.

	p) Non-consolidation
	The Directors have not consolidated the Company's investments within these interim financial statements as they do not believe that the Company had the power to exercise control over such investments as set out in the provisions of paragraph 12 of International Accounting Standard 27 (Consolidated Financial Statements and Accounting for Investments in Subsidiaries), or under the Standard Interpretations Committee pronouncement Number 12 (SIC 12 - Consolidation: Special Purpose Entities). The Directors have arrived at this opinion because the Company in any of its investments:

	- does not hold a controlling stake;
	- does not have the power to govern the financial and operating policies;
	- does not have the power to remove the majority of the members of the board of directors; and
	- does not have the power to cast the majority of votes at meetings of the board of directors.

	q) Associates
	Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
	As the Company operates as a venture capital organisation it uses the scope exemption of IAS 28 'Investment in Associates' and designates upon initial recognition some investments that would otherwise be equity accounted as investments at fair value through profit or loss with subsequent changes in fair value recognised in the statement of comprehensive income in the period of the change.

	r) Segmental reporting
	An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. The Directors perform regular reviews of the operating results of the Company and make decisions using financial information at the entity level only. Accordingly, the Directors believe that the Company has only one reportable operating segment.

	The Directors are responsible for ensuring that the Company carries out business activities in line with the transaction documents. They may delegate some or all of the day to day management of the business, including the decisions to purchase and sell securities, to other parties both internal and external to the Company. The decisions of such parties are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Directors. Therefore, the Directors retain full responsibility as to the major allocation decisions of the Company.

3.	PERFORMANCE FEES RETAINED AND PAYABLE		31st Dec 10		30th Jun 10

	Performance fees payable	£	nil	£	nil

	Performance fees are payable to the Adviser with reference to the increase in adjusted net asset value per share over the course of each performance period. The Adviser 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 Adviser 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 periods which ended on 31st December 2010 and 30th June 2010.
	20% of performance fees earned by the Adviser 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 Investments Limited ("LIL") group may provide corporate financial services to the Company and investee companies. 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. Further details supplied in Note 16.
	LIL also provided services to certain portfolio companies. The total paid by portfolio companies to LIL for the period ended 31st December 2010 was £122,472.
	LIL will reimburse the Company £150,801 from its placement fee in agri.capital.

4.	DIRECTORS' REMUNERATION AND INTERESTS								Period ended						Year ended
									31st Dec 10						30th Jun 10

	Directors' fees								74,092						91,000
	Directors' expenses								5,477						11,968

							£		79,569					£	102,968

	The details of the directors remuneration is as follows:								Period ended						Year ended
									31st Dec 10						30th Jun 10

	J. Shakeshaft (Chairman)								28,296						40,000
	S. Hansen								11,819						17,000
	M. Christensen								11,819						17,000
	D. Maccabe								1,416						17,000
	D. Adamson								10,371						-
	D. Pirouet								10,371						-
	H. Grant								-						-

							£		74,092					£	91,000

	As at the balance sheet date, the following Ordinary Shares and Warrants of the Company were held by the Directors, the Directors of the Adviser, the Investment Adviser and the Principals of the Investment Adviser.

						Ordinary								Manager
						Shares					Warrants			Warrants
	31ST DECEMBER 2010

	J. Shakeshaft					115,445					12,500			-
	M. Christensen					10,000					2,500			-
	D. Adamson					50,000					10,000			25,000
	N. Meir (including S. Meir's holdings)					150,500					37,500			95,000
	N. Curtis					15,000					-			-
	N. Pople					50,000					12,500			95,000
	Ludgate Investments Limited					-					-			775,250

	30TH JUNE 2010

	J. Shakeshaft					115,445					12,500			-
	M. Christensen					10,000					2,500			-
	D. Adamson					50,000					10,000			25,000
	N. Meir (including S. Meir's holdings)					150,500					37,500			95,000
	N. Pople					50,000					12,500			95,000
	Ludgate Investments Limited					-					-			775,250

5.	DIVIDENDS

	The Directors recommended and the Company paid a dividend of 1.65 pence per share in issue as at 4th August 2010 (30th June 2010: 1.5 pence per share in issue as at 18th September 2009).

6.	EARNINGS PER SHARE
	The calculation of the basic and diluted earnings per share is based on the following information:

									31st Dec 10					30th Jun 10
	Total comprehensive income/(loss)						£		1,064,395			£		(4,380,680)

									Number					Number
	Weighted average number of equity shares for the purposes of basic earnings per share								51,113,102					45,996,419

	Gain/(loss) per ordinary share						£		0.02			£		(0.10)

	Outstanding Warrants are not dilutive for both periods presented as the exercise price of the warrants exceeded the average market price of Ordinary Shares issued.
7.	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 10				30th Jun 10
	Opening cost of investments									31,619,268				20,445,152

	Cost of Loan Notes converted into Preference/Ordinary Shares									(4,500,000)				(210,570)

	Purchases/(disposals) during the period:
	New investments acquired									3,736,462				11,341,197

	Conversions									4,500,000				210,570

	Investments sold									-				(167,081)

	Closing cost of investments							£		35,355,730			£	31,619,268

										31st Dec 10				30th Jun 10
	Opening fair value of investments									26,719,866				20,646,179

	Cost of Loan Notes converted into Preference Shares									( 4,500,000)				( 210,570)

	Purchases/(disposals) during the period:

	New investments acquired									3,736,462				11,341,197

	Conversions									4,500,000				210,570

	Investments sold									-				(189,650)

	Fair value movement									982,585				(5,077,860)

	Closing fair value of investments							£		31,438,913			£	26,719,866

	Further details of the investments held can be found in Note 21 to these financial statements.
	IFRS 7 requires the Company to classify fair value measurements using a three level 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 31st December 2010.
				Level 1		Level 2					Level 3			Total
				£		£					£			£
	Financial assets at fair value through profit or loss			2,802,883		3,250,380					25,385,650			31,438,913

	Derivatives at fair value through profit or loss			-		-					643,166			643,166

	Financial assets whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include mainly 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).

	The movements in Level 3 financial assets for the period ended 31st December 2010 by class of financial assets were as follows:
			Derivatives			Unquoted equities					Unquoted securities			Total
			£			£					£			£
	Opening balance		681,608			16,087,725					4,500,000			21,269,333

	Total losses (realised/unrealised) included in the statement of comprehensive income		(38,442)			1,108,658					-			1,070,216

	Purchases, sales, issuances, and settlements (net)		-			7,891,267					( 4,202,000)			3,689,267

	Closing balance	£	643,166		£	25,087,650			£		298,000		£	26,028,816

	For unquoted equities, if the multiple used or the recent market transaction price used in the valuation had increased by 5%, this would have resulted in an increase in value of £85,649. A decrease of 5% would have resulted in a decrease in value of £85,649.

	Evidence of title of financial assets at fair value through profit or loss are held by the following parties:

											31st Dec 10			30th Jun 10

	Walker Crips Stockbrokers Limited										5,354,803			5,535,465
	State Street (Jersey) Limited										26,084,110			21,184,401
									£		31,438,913		£	26,719,866

8.	DERIVATIVES AT FAIR VALUE THROUGH PROFIT AND LOSS										31st Dec 10			30th Jun 10

	Rapid Action Packaging Limited										228,521			211,440
	agri.capital										414,645			470,168
	Phoslock Water Solutions Limited										-			1,129
									£		643,166		£	682,737

	As noted above, the warrants have been valued using the Black Scholes option pricing model.

9.	CASH AND CASH EQUIVALENTS										31st Dec 10			30th Jun 10

	Royal Bank of Scotland International - current account GBP										378,281			65,752
	Royal Bank of Scotland International - current account EUR										453,248			186,437
	Royal Bank of Scotland International - current account AUD										317			269
	Royal Bank of Scotland International - escrow account GBP										5			6
	Royal Bank of Scotland International - escrow account EUR										2			2
	Barclays/Royal Bank of Scotland International - reserve account										186,428			185,698
	Walker Crips Stockbrokers Limited										198,280			184,278

	Cash held on fixed term deposit:
	Fixed term deposits held with Bank of Scotland										-			2,500,000
	Fixed term deposits held with Barclays (GBP)										5,286,006			4,307,627
	Fixed term deposits held with Barclays (EUR)										-			683,414
	Fixed term deposits held with ABN AMRO (GBP)										5,000,000			1,500,369
	Fixed term deposits held with ABN AMRO (EUR)										-			1,823,778
	Fixed term deposits held with Royal Bank of Scotland International										4,075,385			5,234,703
	Fixed term deposits held with Lloyds (GBP)										6,000,199			-

									£		21,578,151		£	16,672,333

	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 (Year ended 30th June 2010: £nil). 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 Adviser 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.

	Cash and cash equivalents are held by the following banks and brokers:

	Bank/Broker										31st Dec 10			30th Jun 10

	Walker Crips Stockbrokers Limited										198,280			184,278
	Royal Bank of Scotland International										4,907,238			5,487,169
	Barclays										5,472,434			5,176,739
	Lloyds										6,000,199			-
	ABN AMRO										5,000,000			3,324,147
	Bank of Scotland										-			2,500,000

											21,578,151			16,672,333

10.	LOAN RECEIVABLE										31st Dec 10			30th Jun 10
	Rapid Action Packaging Limited										1,500,000			1,200,000

	The Company has entered into a £1,000,000 Loan Facility Agreement dated 30th June 2009 with Rapid Action Packaging Limited ("RAP") which was increased to £1,500,000 during the year ended 30th June 2010. 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 was paid to the Company on the date of entering into the Loan Facility and was 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 further commitment and arrangement fee was paid to the Company on the date the extension of £0.5million to the Loan Facility was agreed, satisfied by the receipt or warrants issued by RAP, allowing the Company to purchase 250 shares and 100 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 2010 £1,500,000 (30th June 2010: £1,200,000) had been drawn under the facility and the Company had been issued 2,250 (30th June 2010: 2,010) warrants in RAP.

11.	TRADE AND OTHER RECEIVABLES		31st Dec 10		30th Jun 10
	Fixed deposit interest receivable		35,302		16,830
	Investment income receivable (net of provision)		315,697		237,554
	Receivable from the Adviser		150,801		-
	Prepayments and other receivables		11,780		6,824

		£	513,580	£	261,208

	Investment income receivable is net of provision for EWT of £nil (30th June 2010: £357,988).

12.	TRADE AND OTHER PAYABLES		31st Dec 10		30th Jun 10
	Directors' fees and expenses payable		22,871		8,500
	Professional fees payable		-		1,873
	Audit fees payable		15,000		15,000
	Administration and accountancy fees payable		-		18,820
	Others		546		-

		£	38,417	£	44,193

	All expenses are payable on presentation of an invoice.

13.	PERFORMANCE FEE RETENTION		31st Dec 10		30th Jun 10
	Retention of performance fees	£	186,648	£	186,164

	For further details please refer to note 3.

14.	STATED CAPITAL ACCOUNT		31st Dec 10	30th Jun 10
	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.

			No. of	No. of
		No. of	Investor	Manager
		Ordinary Shares	Warrants	Warrants

	Opening balance at 1st July 2010	45,966,419	6,683,775	1,285,250
	Issued during the period	10,293,365	-	-

	Balance at 31st December 2010	56,259,784	6,683,775	1,285,250

	Opening balance at 1st July 2009	45,966,419	6,683,775	1,285,250

	Balance at 30th June 2010	45,966,419	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 ordinary 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.

	A second placing of shares occurred on 22nd February 2008, 2,673,509 Ordinary Shares of no par value were issued at a price of £1.12 per share. On 10th November 2008 a further issue of 16,557,807 Ordinary Shares were placed at a price of £1.09 per share. On 5th August 2010 a further issue of 10,293,365 Ordinary Shares were placed at a price of £0.97 per share. No warrants were attached to these shares. The Ordinary Shares and warrants are listed and traded on AIM.

	The Ordinary Shares and Founder Shares carry the right to vote at general meetings, dividends and the surplus assets of the Company on winding-up. All holders of the Ordinary Shares and Founder Shares have the same voting rights.

			31st Dec 10		30th Jun 10
			Stated capital		Stated capital

			£		£

Opening balance			47,729,427		47,729,427
Issued during the period			10,000,009		-
Placement Fees			(163,000)		-
Closing balance		£	57,566,436	£	47,729,427


WARRANTS:			31st Dec 10		30th Jun 10

Investor Warrants:
Issue of warrants at IPO (1:4 exercisable for ordinary shares)	Number		6,683,775		6,683,775
Exercise price			£1.50		£1.50

Manager Warrants:
Issue of Manager Warrants at IPO	Number		1,285,250		1,285,250
Exercise price			£1.75		£1.75


The Investor Warrants entitle the holder to subscribe for one Ordinary Share in the Company at a price of £1.50 up to the Final Subscription Date of 31st October 2012. Investors who subscribed for Shares pursuant to the placing received one Investor Warrant for every four shares acquired.

The Manager Warrants were issued in registered form and entitle the holder to subscribe for one share at a price of £1.75 until the Final Subscription Date of 31st October 2012.

The subscription right of all warrants may only be exercisable during the 28 days following the date of publication of the Company's annual audited financial statements for any of the financial periods/years ended 30th June 2008 to 2011 inclusive and/or during the 28 days prior to the Final Subscription Date of 31st October 2012.

15.

SEGMENT INFORMATION

Geographical information

The Company's country of domicile is Jersey, Channel Islands. Except for bank interest receivable, all of the Company's revenues are generated from outside the Company's country of domicile.

Non-current assets

The Company has no non-current assets other than financial instruments and loans receivable in the prior year.

Major investment company

For management purposes, the Company is organised into one main operating segment, which invests in quoted and unquoted equity and unquoted debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Company as a whole.

16.

FINANCIAL RISK MANAGEMENT

The Board of Directors is responsible for the establishment and oversight of the Company's risk management framework. Policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. These are reviewed regularly to reflect changes in market conditions and the Company's activities.

The Company maintains positions in a variety of financial instruments dictated by its investment management strategy. The Company's investment portfolio comprises quoted and unquoted equity investments, unquoted debt securities and cash which the Company intends to hold for an indefinite period (subject to the life of the Company). Asset allocation is determined by the Board who manages the distribution of the assets to achieve the investment objectives.

The Directors are aware that substantially all of the business of the Adviser is accounted for in the services provided to the Company under the Advisory Agreement. A significant proportion of the business of the Adviser is accounted for in the services provided to the Company under the Advisory Agreement and other, principally corporate finance, services provided from time to time to the Company. In reviewing the performance of the Adviser, the Directors have paid particular attention to the risks to the Company of the reputation, financial standing, compliance and operation of each. They are satisfied that there are sufficient controls in place to ensure that officers of the Adviser cannot exercise undue influence over financial reporting and that it is a going concern.

The nature and extent of the financial instruments outstanding at the balance sheet date and the risk management policies employed by the Company are discussed below.

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Company's income and or the value of its holdings in financial instruments. The Adviser is responsible for monitoring, measuring and reporting market risk.

The Company's exposure to market risk comes mainly from movements in the value of its investments.

The Company's strategy on the management of investment risk is driven by the Company's investment objective. The Company's investment objective is to deliver to investors a significant level of capital growth in the medium to long term by building a diverse portfolio of investments in cleantech companies. The Company's market risk is managed by the Adviser in accordance with the policies and procedures in place.

The Company seeks to achieve its investment objective and minimise investment risk through the identification of appropriate technologies and companies within the cleantech sector using a rigorous review and selection process; by adding value to companies in the portfolio through active support at all stages of their growth and by focusing on maximising returns for shareholders by assisting companies in achieving an appropriate and timely exit.

Potential investments are screened to ensure that investments comply with the investment criteria, as described in the Admission Document and described in the Investment Policy. A full review and due diligence are undertaken before a potential investment can be submitted for approval by the Screening Committee, Investment Committee and the Adviser.

Monitoring of the portfolio is carried out on a quarterly basis by the Adviser who reviews the investments against technology developments, commercial progress, financial and trading results including management accounts, management assessment, market intelligence and anticipated planning and exit. Investment risk is also reviewed at the time of any investment proposal, the publication of the net asset values and any capital raising.

The Company's overall market positions are reviewed quarterly by the Board of Directors. Details of the Company's investment portfolio composition as at the balance sheet date are disclosed in Note 21 to these financial statements.

Interest Rate Risk

To the extent the Company incurs indebtedness, changes in interest rates can affect the Company's net interest income, which is the difference between the interest income earned on interest-bearing assets and the interest expense incurred on interest-bearing liabilities. Changes in the level of interest rates can also affect, among other things, the Company's ability to acquire loans and investments, the value of its investments and the Company's ability to realise gains from the settlement of such assets. Interest rate risk is mitigated by a policy of holding diversified instruments with varied counterparties.

The majority of the Company's financial assets are fixed rate or non-interest bearing and all of the Company's financial liabilities are non-interest bearing. Therefore, the Directors believe that the Company's exposure to interest rate risk is minimal. Any excess cash and cash equivalents are invested in fixed term deposits with maturities of 12 months or less. Investments in debt securities are in fixed rate instruments and therefore the Company has limited exposure to prevailing interest rates. Any adverse movement in interest rates would negatively affect the return on cash deposits over time. The amount of cash held on fixed term deposits is expected to reduce over the forthcoming years in accordance with the Company's stated investment objectives.

The Company's overall interest rate risk is reviewed by the Board on at least a quarterly basis.

Interest Rate Profile:	31st Dec 10
	Interest charging basis	Effective interest rate		Principal Amount
Financial assets:

Cash and cash equivalents	Fixed	0.32%		21,578,151

Financial assets at fair value though profit or loss:

Unquoted securities	Fixed	8.00%		3,548,380
Quoted equities	Non-interest bearing	n/a		2,802,883
Unquoted equities	Non-interest bearing	n/a		14,643,838
Unquoted equities	Fixed	8.00%		6,425,676
Unquoted equities	Fixed	10.00%		3,874,732
Unquoted equities	Fixed	8.16%		143,404
Derivatives at fair value through profit or loss	Non-interest bearing	n/a		643,166

Loan receivable	Fixed	8.00%		1,500,000

Trade and other receivables	Non-interest bearing	n/a		513,580

			£	55,673,810
Financial liabilities:
Trade and other payables	Non-interest bearing	n/a		38,417

Retention of performance fees	Floating	0.70%		186,648

			£	225,065

	30th Jun 10
	Interest charging basis	Effective interest rate		Principal Amount

Financial assets:

Cash and cash equivalents	Fixed	1.81%		16,672,333

Financial assets at fair value though profit or loss:

Unquoted securities	Fixed	8.00%		7,802,820
Quoted equities	Non-interest bearing	n/a		2,829,321
Unquoted equities	Non-interest bearing	n/a		9,238,127
Unquoted equities	Fixed	8.00%		2,768,700
Unquoted equities	Fixed	10.00%		3,702,473
Unquoted equities	Fixed	8.16%		378,425

Derivatives at fair value through profit or loss	Non-interest bearing	n/a		682,737

Loan receivable	Fixed	8.00%		1,200,000

Trade and other receivables	Non-interest bearing	n/a		261,208

			£	45,536,144

Financial liabilities:

Trade and other payables	Non-interest bearing	n/a		44,193
Retention of performance fees	Floating	0.70%		186,164

			£	230,357

Interest rate sensitivity

IFRS 7 Financial Instruments: Disclosures ("IFRS 7") requires a sensitivity analysis for each type of risk to which the entity is exposed at the balance sheet date, showing how the profit or loss and equity would have been affected by changes in the relevant risk variable that are reasonably possible.

As disclosed above, the majority of the Company's financial assets and financial liabilities are non-interest bearing or fixed rate. During the period, the Company's interest income from fixed deposit was £69,845 (Year ended 30th June 2010: £302,209) of which £35,302 (Year ended 30th June 2010: £16,830) is outstanding at the end of the period. Had interest rates been 50 basis points higher throughout the period the Company would have increased its income by £107,891, with a corresponding decrease in income being recognised had interest rates been 50 basis points lower (Year ended 30th June 2010: £83,362).

Currency Risk
The Company may invest in financial instruments and enter into transactions that are denominated in currencies other than its functional currency, sterling. Consequently the Company is exposed to risk that the exchange rate of its functional currency relative to other foreign currencies may change in a manner that has an adverse effect on the value of that portion of the Company's assets and liabilities denominated in currencies other than sterling.

The Company's policy is to accept a limited amount of currency risk within the portfolio. It does not hedge either the fair value of its foreign currency investments nor the cashflows, if any, arising from such investments. Any gain or loss, recognised as a result of the Company's investment and valuation policies is recognised in the statement of comprehensive income. When the Company has entered into a definitive contract to purchase or sell securities denominated in foreign currency it purchases forward contracts; any ineffectiveness in this hedging would also be recognised in the statement of comprehensive income. The Company's overall currency risk and exposure is monitored on a quarterly basis by the Board of Directors. The Directors intend to keep this policy under quarterly review as the portfolio becomes more invested. The Directors further consider that investment in currencies is a separate asset class and not as such part of the normal trading business of the Company.

As at the balance sheet date the Company had the following currency risk exposure:

Financial assets at fair value through profit or loss		31st Dec 10		30th Jun 10
Financial assets at fair value through profit or loss
Unquoted equities denominated in EUR		14,872,061		11,143,445
Quoted equities denominated in AUD		451,237		471,179

	£	15,323,298	£	11,614,624

		31st Dec 10		30th Jun 10

Cash and cash equivalents
Cash and cash equivalents denominated in EUR		453,250		2,693,631
Cash and cash equivalents denominated in AUD		317		269

	£	453,567	£	2,693,900

Trade receivables:
Trade receivables denominated in EUR	£	163,018	£	11,216

Currency sensitivity

As at 31st December 2010 if GBP had strengthened against the EUR by 5%, with all other variables held constant, the profit for the period as per the statement of comprehensive income would have decreased and the net assets of the Company would have decreased by £737,539 (Year ended 30th June 2010: increase of £659,441 in loss and decrease in net assets). A 5% weakening of GBP against the EUR would have resulted in a increase in the profit for the year as per the statement of comprehensive income and an decrease in net assets of the Company of £815,175 (Year ended 30th June 2010: decrease of £728,859 in loss and increase in net assets), with all other variables held constant.

As at 31st December 2010 if GBP had strengthened against the AUD by 5%, with all other variables held constant, the profit for the period as per the statement of comprehensive income would have decreased and the net assets of the Company would have decreased by £21,503 (Year ended 30th June 2010: increase of £22,450 in loss and decrease in net assets). A 5% weakening of GBP against the AUD would have resulted in a increase in the profit for the period as per the statement of comprehensive income and an increase in the net assets of the Company of £23,766 (Year ended 30th June 2010: decrease of £24,813 in loss and increase in net asset), with all other variables held constant.

The movement in foreign exchange, excluding foreign exchange movements on financial assets at fair value through profit or loss which are reflected in the statement of comprehensive income as part of losses or gains on financial assets at fair value through profit or loss, for the period ended 31st December 2010 was a gain of £115,042 (Year ended 30th June 2010: loss of £166,997). This movement has been largely caused by the variance in the EUR:GBP exchange rate during the year on deposits held in EUR. The EUR:GBP exchange rate moved from 1.2214 as at 30th June 2010 to 1.1671 as at 31st December 2010.

Other price risk
Market price risk is the risk that the value of an instrument will fluctuate as a result of changes in market prices (other than those arising due to currency risk or interest rate risk) whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As the majority of the Company's financial instruments are held at fair value with changes in fair value being recognised in the statement of comprehensive income, all changes in market conditions will directly affect the profit for the period and the Company's net assets. Price risk is monitored and reviewed by the Directors on a quarterly basis, at any valuation event and at each investment committee meeting, whichever is the more frequent.
Risk is mitigated in a thematic portfolio diversified by securities, assets, geography and industrial sector. No single investment can account for more than 15% of ungeared NAV at investment. No single investment held for short term trading can be more than £750,000. The following table breaks down the investment assets held by the Company:
	31st Dec 10			30th Jun 10
Financial assets at fair value through profit or loss	percentage of net assets			percentage of net assets
Equity investments:
Quoted	5.05%			6.24%
Unquoted	45.24%			35.51%

Debt investments:
Unquoted	6.40%			17.22%

Market price risk sensitivity
7.48% of the Company's investment assets are listed on European stock exchanges (30th June 2010: 8.83%). 1.44% of the Company's investments are listed on the Australian stock exchange (30th June 2010: 1.76%). A 10% increase in stock prices as at 31st December 2010 would have increased the profit for the year and would have increased the net assets of the Company by £280,288 (30th June 2010: £282,932 decrease in loss and increase in net assets). An equal change in the opposite direction would increase the loss and decrease the net assets of the Company by an equal but opposite amount.

Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amount of financial assets best represents the maximum exposure at the balance sheet date. At the reporting date the Company's financial assets exposed to credit risk amounted to the following:

		31st Dec 10		30th Jun 10
Preference share holdings		13,301,511		9,580,251
Unquoted securities		3,548,380		7,802,820
Loan receivable		1,500,000		1,200,000
Trade and other receivables		513,580		261,208
Cash and cash equivalents		21,578,151		16,672,333

Total financial assets exposed to credit risk	£	40,441,622	£	35,516,612


The Company is subject to credit risk with respect to its unquoted securities. The Company and its Adviser seek to mitigate credit risk by actively monitoring the underlying credit quality of the Company's investment holdings. As noted above, monitoring of the portfolio is carried out on a quarterly basis by the Investment Adviser who will review the investments against milestones of technology developments, commercial progress, financial and trading results including management accounts, management assessment, market intelligence and anticipated planning and exit. Any indications of credit risk will be reported to the Board who will also review the portfolio and the related credit risk on a quarterly basis. The Company holds no hedges or insurance against counterparty risk. The Directors believe that the purchase of credit insurance would expose the Company to an unapproved asset class of derivatives.

The Company holds fixed term deposits of varying maturities with a number of banks each with a minimum long term credit rating from Standard and Poors, Moody's, or Fitch of AA- through a pooled account. This service is titled "Cash2". All transactions are in the name of State Street (Jersey) Limited (formerly: Mourant & Co. Limited) Client Nominee, advised by State Street (Jersey) Limited (formerly: Mourant & Co. Limited) . The Company is the beneficial owner of these deposits. There is no additional payment, liquidity, or settlement risk associated with the pooling.

The Company analyses the credit concentration based on the counterparty, industry and geographical location of the financial assets that the Company holds. The Company's financial assets exposed to credit risk were concentrated in the following industries:

	31st Dec 10	30th Jun 10

Cleantech industries	46.64%	53.06%
Banks/financial services	53.36%	46.94%

All of the Company's financial assets which were held at the balance sheet date are European with the exception of Phoslock Water Solutions Limited which is Australian. None of the financial assets are either past due or impaired.
Concentration Risk
The Company may be exposed at any given time to a degree of concentration risk. To the extent that the Company's investments are concentrated in any one sub-sector of the cleantech sector, country or asset class downturns affecting the source of concentration may result in total or partial loss on such investments, which will reduce the Company's net asset value. The Directors consider the sector a diversified asset class and that effective hedging could be achieved by replication in purchasing differentiated securities but that the cost of these transactions would negate the value of the protection. The Company's investments are concentrated as follows:

	31st Dec 10	30th Jun 10
Investments in cleantech industries	100.00%	100.00%
Geographical area - Holland	5.45%	7.27%
Geographical area - Germany	32.75%	24.22%
Geographical area - France	9.09%	10.22%
Geographical area - UK	51.26%	56.53%
Geographical area - Australia	1.44%	1.76%

Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

The Company may face liquidity risks. Most of the investments in which the Company invests are relatively illiquid i.e. private companies which require a long-term capital commitment. A substantial amount of the Company's funds are concentrated in a limited number of investments subject to legal and other restrictions on resale, transfer, pledge or other disposition or that are less liquid than publicly traded securities. The illiquidity of these investments may make it difficult to sell investments if the need arises or the Investment Adviser determines that such a sale would be in the Company's interests.
The Directors monitor liquidity risk at least quarterly and perform going concern tests before the semi-annual publication of the financial statements. As an operating practice the Company is expected to hold at least sufficient working capital for a year's continuous operation on a rolling basis. The Company also holds sums equivalent to three months' forward operating expenses in call accounts. The Directors review this policy regularly. The Company also has permission to borrow sums equivalent of up to 25% of NAV in accordance with the terms of its Articles of Association.

Maturity profile
The tables below show the maturity of the current borrowings under the facilities, rather than the maturity over the whole life of the facilities and the expected maturity of the securities, rather than the legal maturity date.
	31st Dec 10		30th Jun 10
	Within one year	One to five years	Within one year	One to five years
Financial assets:	£	£	£	£

Cash and cash equivalents	21,578,151	-	16,672,333	-
Financial assets at fair value through profit or loss	-	31,438,913	-	26,719,866
Derivatives at fair value through profit or loss	228,521	414,645	211,440	471,297
Loan receivable	1,500,000	-	1,200,000	-
Trade and other receivables	513,580	-	261,208	-
	-
	23,820,252	31,853,558	18,344,981	27,191,163
Financial liabilities:
Trade and other payables	38,417	-	44,193	-
Retention of performance fees	-	186,648	-	186,164

	38,417	186,648	44,193	186,164

Financial instruments by category

	Amounts recognised in balance sheet according to IAS 39

				Fair value
	Carrying		Amortised	recognised in
Category in accordance with IAS 39	amount		Cost	profit or loss			Fair value
	£		£	£			£
At 31st December 2010
Cash, loans and receivables	23,591,731		23,591,731	-			23,591,731
Fair value through profit or loss	32,082,079		-	32,082,079			32,082,079
Other liabilities	225,065		225,065	-			225,065

At 30th June 2010:
Cash, loans and receivables	18,133,541		18,133,541	-			18,133,541
Fair value through profit or loss	27,402,603		-	27,402,603			27,402,603
Other liabilities	230,357		230,357	-			230,357

Disclosure of material income, expenses, gains and losses resulting from financial assets and financial liabilities:
		Cash,			Fair value	Financial
		loans and			through	liabilities at
		receivables			profit or loss	amortised cost
		£			£	£
31st December 2010
Net income		-			943,014	-
Interest income		69,845			489,274	-
Dividend income		-			117,368	-
Foreign exchange loss		115,042			-	-

Net result for the period		184,887			1,549,656	-
30th June 2010:
Net loss		-			( 4,589,458)	-
Interest income		302,670			1,261,701	-
Dividend income		-			476,539	-
Foreign exchange gain		( 166,997)			-	-
Gain on disposal		-			107,441
Net result for the year		135,673			( 2,743,777)	-

	Capital Management
	The Company is an investment company listed on the AIM in London. Capital can only be increased either by the issue of new shares at net asset value or by borrowing up to the disclosed limit of 25% of NAV. Capital can only be reduced by the repurchase and cancellation of shares or the payment of special dividends both of which require shareholder resolution. The Company seeks to provide long term capital return in accordance with its stated investment policy from a diversified portfolio of securities of cleantech companies. The Company does not hold or intend to hold any derivatives other than those which may be embedded in or between the assets in the portfolio.

	The Company will at all times maintain sufficient liquidity to cover at least twelve months' anticipated operating expenses. The Directors will also assure themselves that the NAV of the Company is sufficient for the cost effective management of the portfolio and the Company's objectives.

17.	CASH GENERATED FROM OPERATIONS		31st Dec 10		30th Jun 10

	Total comprehensive income		1,064,395		( 4,380,680)

	Adjustments for:

	Unrealised (gain)/ loss on financial assets at fair value through profit or loss		( 943,014)		4,589,458
	Gain on sale of investments		-		( 107,441)
	Movement on foreign exchange: cash and cash equivalents		( 115,042)		166,997
	Interest and dividends on investments receivable		( 606,642)		( 1,738,240)
	(Increase)/decrease in trade and other receivables		( 174,229)		369,829
	Decrease in trade and other payables		( 5,776)		17,346
	Increase in retention of performance fees		484		2,311

	CASH FLOW FROM OPERATIONS	£	( 779,824)	£	( 1,080,420)

	NON-CASH MOVEMENTS		31st Dec 10		30th Jun 10

	Purchase of investments:

	Conversions		4,500,000		210,570

		£	4,500,000	£	210,570

18.	RELATED PARTY DISCLOSURE
	Directors remuneration and expenses payable for the period ended 31st December 2010 are disclosed in note 4.

	H. Grant is an employee of a subsidiary of State Street Corporation, affiliates of which provide ongoing administration services to the Company at commercial rates.

	The terms and conditions of any transactions with key management personnel and their related parties are no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm's length basis.

	Under the Investment Advisory Agreement the Adviser is entitled to receive a investment management and advisory fee from the Company at a rate of 2% per annum of the Company's net asset value calculated for each three month period ending on 31 March, 30th June, 30th September and 31 December each year on the basis of the Company's net asset value at the end of the preceding period and payable quarterly in arrears.

	During the period the management fee was £535,668 (Year ended 30th June 2010: £967,807). No accrued management fees were outstanding as at period end (Year ended 30th June 2010: £ Nil).

	There were placing fees payable to the Corporate Finance Division of LIL of £163,000 during the period (Year ended 30th June 2010: £nil). Such fees were charged on normal commercial terms.

	Under the terms of the Investment Management Agreement the Manager is also entitled to a performance fee which is payable in arrears in respect of each annual period ending 30th June. The first calculation period began on the admission date and ended on 30th June 2008. The performance fee is dependent on the Company's performance and amounted to £nil for the period ended 31st December 2010.

	During the period the adviser's fee and expense was £nil (Year ended 30th June 2010: £1,408). No accrued adviser fees were outstanding as at period end (Year ended 30th June 2010: £Nil).

	During the period the Adviser received £122,472 (Year ended 30th June 2010: £374,000) from investee companies.

19.	IMMEDIATE HOLDING COMPANY AND ULTIMATE CONTROLLING PARTY
	In the opinion of the Directors there is no single ultimate controlling party since the criteria contained within the definition of "control" in IAS 24 - Related Party Disclosures are not satisfied by any one party.

20.	SHAREHOLDERS' INTERESTS
	As at the balance sheet date, the registered holdings of the Company of at least 3% of the total share capital included:

	AS AT 31ST DECEMBER 2010	Ordinary	Percentage
		shares held	shareholding

	Morstan Nominees Limited	8,019,271	14.25%
	The Bank of New York (Nominees) Limited (468641)	7,568,308	13.45%
	Flintshire County Council	5,791,288	10.29%
	HSBC Global Custody Nominee (UK) Limited (786698)	4,000,000	7.11%
	Quintain Estates and Development PLC	4,000,000	7.11%
	Harewoord Nominees Limited	4,632,013	8.23%
	Chase Nominees Limited	3,799,457	6.75%
	HSBC Global Custody Nominee (UK) Limited (771096)	3,669,094	6.52%
	BNY (OCS) Nominees Limited	2,125,000	3.78%
	Ocean Capital Holdings II B.V.	1,839,757	3.27%

	AS AT 30TH JUNE 2010	Ordinary	Percentage
		shares held	shareholding

	Morstan Nominees Limited	8,019,271	17.45%
	The Bank of New York (Nominees) Limited (468641)	5,509,635	11.99%
	HSBC Global Custody Nominee (UK) Limited (786698)	4,000,000	8.70%
	Quintain Estates and Development PLC	4,000,000	8.70%
	Chase Nominees Limited	3,777,439	8.22%
	Flintshire County Council	3,732,615	8.12%
	HSBC Global Custody Nominee (UK) Limited (771096)	2,639,757	5.74%
	BNY (OCS) Nominees Limited	2,228,397	4.85%
	Ocean Capital Holdings II B.V.	1,839,757	4.00%

21. INVESTMENTS		31st Dec 10		31st Dec 10		30th Jun 10		30th Jun 10
		Cost		Fair value		Cost		Fair value
		£		£		£		£
Quoted equity securities:
Hydrodec Group plc Ordinary Shares		3,498,417		1,212,796		3,498,417		1,108,842

Renewable Energy Generation Ordinary shares		720,241		413,850		720,241		474,300

Phoslock Water Solutions Limited Ordinary shares		443,713		451,237		396,518		471,179

Hightex Group plc Ordinary Shares		730,000		725,000		730,000		775,000

Total quoted equities:		5,392,371		2,802,883		5,345,176		2,829,321
Unquoted equities:
STX Services B.V. Ordinary Shares		692,162		1,570,550		692,162		1,563,194

Rapid Action Packaging Limited Ordinary Shares		4,000,000		4,332,942		1,500,000		1,500,000

Emergya Wind Technologies B.V. Preference Shares*		4,471,385		143,404		4,471,385		378,425

agri.capital Preference Shares (Class E, F and G)		9,853,262		10,300,408		6,461,995		6,471,173

New Earth Solutions Ordinary Shares		4,959,968		5,882,647		2,959,968		3,444,280

Terra Nova SAS Preference Shares		2,688,582		2,857,699		2,688,582		2,730,653

Total unquoted equities:		26,665,359		25,087,650		18,774,092		16,087,725

Unquoted securities:
Hydrodec Group plc Convertible Bonds		3,000,000		3,250,380		3,000,000		3,302,820

Rapid Action Packaging Limited 8% Convertible Loan Notes		-		-		2,500,000		2,500,000

Lumicity Limited Loan Notes		298,000		298,000		-		-

New Earth Solutions 8% Convertible Loan Notes		-		-		2,000,000		2,000,000

		3,298,000		3,548,380		7,500,000		7,802,820

Total investments:	£	35,355,730	£	31,438,913	£	31,619,268	£	26,719,866
* The original cost of investment is £2.7million and upon the conversion of the loan notes to preference shares, these increased to £4.5 million incorporating the actual fair value of the loan notes at the time of conversion.

Website: www.ludgateenvironmental.com

Ludgate Environmental Fund Limited

John Shakeshaft +44 (0)7771 976 278

Ludgate Investments Limited

Nick Pople / Nigel Meir +44 (0)20 7621 5770

Media Enquiries

Shared Value Limited

Peter Edsinger +44 (0)20 7321 5038

NOMAD

PricewaterhouseCoopers LLP

Melville Trimble +44(0)20 7213 8898

Broker

Matrix Corporate Capital LLP

Paul Fincham +44 (0)20 3206 7175

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR EAAADEDNFEFF

Related Shares:

FTSE 100 Latest

Value8,275.66

Change0.00