Annual Financial Report

RNS Number : 1761R

Golden Prospect Precious Metals Ltd

27 April 2009

 



GOLDEN PROSPECT PRECIOUS METALS LIMITED

Annual Results Announcement    

The financial information set out in this announcement reproduces the Company's statutory annual report and audited financial statements for the year ended 31 December 2008.

The Auditors reported on those financial statements, their report was unqualified and did not contain a statement under Section 65(3) of The Company (Guernsey) Law, 1994.

Summary Information

Structure

Golden Prospect Precious Metals Limited ('the Company') was incorporated in Guernsey on 16 October 2006 under the Companies Law (Guernsey) 1994 as a limited liability closed-end investment company.

The Company's ordinary shares and warrants were admitted to trading on AIM, the market of that name operated by the London Stock Exchange on 28 November 2006 and the Official List of the Channel Islands Stock Exchange ('CISX') on 24 June 2008.

On 9 April 2009, the Company issued 18,924,294 new Ordinary shares at a value of £7,569,718.

Investment Objective and Policy

The Company's investment objective is to generate above average returns for Shareholders primarily through the capital appreciation of its investments. The Directors believe that such returns can be obtained by investing in a selective portfolio of securities and other instruments in the precious metals, diamond and uranium sectors.

Chairman's Statement

Introduction

This year has been overshadowed by the bursting of the credit bubble. A consequential credit crunch has caused severe de-leveraging in financial markets which has negatively impacted the equity, bond and commodity markets.

Investment performance

The Company's share price performance has been disappointing. It started the year at 96.5p and subsequently traded down to a low of 18.5p before recovering to 27.5p by the year end. The Net Asset Value per share began the year at 104p, rose to a peak of 117p in February 2008, before falling to a low of 22.5p in October 2008 and recovering to 35p at the year end.

Over the year, the performance of gold has been encouraging if volatile. Bullion began trading the year at $833.70 per oz and hit a high on 14 March 2008 at $1,002.95 per oz. It subsequently corrected over the rest of the year falling to a low of $712.30 on 12 November 2008. It finished at $882.05 at the end of the year. While in US dollar terms gold appreciated only marginally, in many other currencies, it was more dramatic. In sterling terms gold appreciated by 39.7% for the year.

On 15 September 2008, your Board appointed CQS Cayman Limited Partnership (which has delegated to New City Investment Managers Limited ('NCIM')) as the new investment manager for the Company, replacing Ambrian Asset Management Ltd.  NCIM is a specialist resource manager responsible for assets of over £200m and is owned by CQS Cayman LLP, a leading asset manager with offices worldwide including New York, London and Hong Kong. 

Outlook

Whilst the current market environment is still volatile, it is your Directors' belief that gold and gold equities should form an integral part of an investor's portfolio. All the liquidity that is being pumped into the financial system convinces us that gold's prospects are greater than they have been for many years.

Your Board agrees with its investment manager's comments on the outlook of fiat currencies and hence at some point, when these currencies devalue, gold would have its day. The current conditions which witness Governments' printing of money aggressively and as a result running huge deficits cannot last indefinitely without any major loss of confidence in these currencies.

Short term volatility will continue. Our investment manager intends to take advantage of this by continuing to position the portfolio for a sustained upturn in gold and gold equities.

Since the year end, during April 2008 the funds have been increased by £7,569,718 (before expenses) by the issue of 18,924,294 new ordinary shares at 40p per share (approximate NAV) to professional investors. The Company now has 31,851,000 ordinary shares in issue.

Proposed Cancellation of Admission to Trading on AIM and New Trading Facility on the International Bulletin Board of the London Stock Exchange

Your Board has been carefully reviewing the trading liquidity in the Company's ordinary shares and warrants and the costs associated therewith. The Board will be proposing to shareholders and warrantholders that the Company cancels the admission of its ordinary shares and warrants to trading on AIM. Subject to such cancellation taking effect, the Board intends to set up a new trading facility on the International Bulletin Board of the London Stock Exchange for both the ordinary shares and the warrants, so that shareholders and warrantholders will still be able to trade their shares in London, yet the costs to the Company will reduce by £35,000 a year (as result of the cancellation of the admission of the ordinary shares and warrants to trading on AIM).

The Company's investment managers already manage two companies (Geiger Counter Limited and New City Energy Limited) the securities of which are listed on the Channel Islands Stock Exchange (CISX) and also trade on the International Bulletin Board of the London Stock Exchange.

Resolutions to approve the cancellation of the admission of the Company's ordinary shares and warrants (as required by the AIM Rules for Companies) will therefore be proposed at this year's Annual General Meeting of the Company and at a separate meeting of the warrantholders to be held immediately following the conclusion of such Annual General Meeting.

It is intended that the Company's ordinary shares and warrants remain listed on the Channel Islands Stock Exchange which serves us well and allows ordinary shares to be held in UK Individual Savings Accounts (ISAs).

Malcolm Alec Burne

Chairman

23 April 2009

Investment Manager's Report

We took over the management of Golden Prospect Precious Metals Limited (GPPM) on 15 September 2008. This coincided with turbulent markets for equities, bonds and commodities.

We have carried out an extensive review of the portfolio and have subsequently been adjusting the holdings to reflect the new market paradigm as a result of the credit bubble bursting. Cheap credit is no longer available and the credit contraction is causing the banking system and the real economy, (i.e. corporations and households) to de-lever. This process has unwound quickly and caused all other asset prices to fall, be they equities, bonds or commodities as these assets were sold to pay down debt.

Our fund, which is significantly positioned in gold equities was not exempt from this decline. However, we have taken the correct steps to reshape the portfolio in order to best weather the storm. Our main adjustments have been hence to buy gold bullion and increase our weightings in well capitalised producers which generate good cash flow at these gold prices. Our rational is simple - a contraction of credit will make capital scarce and hence companies which are not self sustaining would eventually be unable to bring their projects to completion and hence fail or be at the mercy of those companies with strong balance sheets. In contrast, we have reduced positions in companies which may need financing.

Whilst the performance of gold and gold equities have been disappointing over the past few months, it is important for shareholders to remember that your investment in GPPM has fundamental attractions. Gold and gold equities have so far suffered together in this credit crunch. However, given that the authorities are fighting this by expanding their balance sheets and pumping even more liquidity in the system, it is only a matter of time before currencies are compromised and inflation (or even the possibility of hyper inflation) takes hold.

It is very difficult to predict the exact timing of when confidence in a currency begins to wane or when the expanding liquidity begins to flow into the system, but when it happens, it tends to move very quickly. Even now, trying to buy physical gold in the UK is difficult, as evidenced by premiums rising as high as 20% above spot prices.

In the end, history shows that fiat currencies have not survived for long periods of time without some kind of crisis. Gold and silver have been the currency of choice for over thousands of years and, in time, will be again. 

In the meantime, we will ensure that the portfolio is in the best position to weather the storm and to take advantage of the upturn when it happens. Gold remains the ultimate store of value.

John Wong

Will Smith

New City Investment Managers Limited

14 March 2009

Board Members

Directors of the Company

The Directors have overall responsibility for the Company's activities including the review of its activities and performance. 

The three Directors of the Company, all of whom are non-executive are listed below:

Malcolm Burne, is a former stockbroker and financial journalist with The Financial Times. He has controlled and managed fund management, venture capital and investment banking companies in London, Australia, Hong Kong and North America. He has been a director of over 20 companies, many of which have been in the mineral resource and gold exploration fields. In 1997, he founded Golden Prospect plc and was executive chairman until 2007 when the company changed its name to Ambrian Capital plc. In addition, he was executive chairman of the Australian Bullion Company (Pty) Ltd., which at the time was Australia's leading gold dealer and member of the Sydney Futures Exchange. He is currently a director of several other resources companies in Australia, the UK and Canada. 

Kaare Foy, has been a director of Great Panther Resources Limited, a silver exploration and mining company based in Vancouver, since 1994. He is currently executive chairman of Great Panther and has been heavily involved with its silver and gold projects in North America. He also serves as executive chairman for Canadian exploration company Cangold Limited. Kaare has been a director of several other resource exploration and mining companies over the past eight years and worked with Malcolm Burne at the Australian Bullion Company (Pty) Ltd during the 1980s. 

Robert King, is a Director of Cannon Asset Management Limited, which he joined in February 2007. Prior to this he was a director of Northern Trust International Fund Administration Services (Guernsey) Limited where he worked from 1990 until February 2007, specialising in the administration of offshore open and closed ended investment funds. He has been in the offshore fund administration industry since 1986. He holds a number of board appointments in other investment companies.

Colin Bird and John Bowles resigned as Directors on 8 September 2008.

Directors' Report 

The Directors present their Report and the Audited Financial Statements of Golden Prospect Precious Metals Limited (the 'Company') for the year ended 31 December 2008.

Shareholder information

The Company announces its net asset value on a monthly basis. 

Results and dividends

The Company's performance during the year is discussed in the Investment Manager's Report. The results for the year are set out in the Income Statement. The Directors do not recommend the payment of a dividend for the year ended 31 December 2008.

Significant Shareholders

Ambrian Capital plc ('Ambrian') was the Company's largest shareholder and warrant holder throughout the first half of 2008 when it owned almost 50 percent of the issued Ordinary Shares and Warrants. On 28 July 2008, Ambrian sold its entire shareholding and over half its warrant holding to a number of new investors. Following the sale, Ambrian held only 2,900,000 Warrants (22.4%) while the largest shareholder held 1,516,000 Ordinary Shares (11.7%). It is hoped that this broader and potentially more liquid investor base will benefit the secondary market for the Company's Ordinary Shares and Warrants. 

Directors' interests

The Directors held the following interests in the share capital of the Company either directly or beneficially as at 31 December 2008:

				Ordinary Shares		Warrants
Robert King				20,000		Nil
Colin Bird (resigned 8 September 2008)				Nil		Nil
John Bowles (resigned 8 September 2008)				2,814		Nil
Malcolm Burne				50,000		25,000
Kaare Foy				10,000		Nil

All Directors are entitled to remuneration for their services of £12,000 per annum. None of the Directors has a contract of service with the Company.

Corporate governance

As an investment company, most of the Company's day to day responsibilities are delegated to third parties and all of the of the Directors are non-executive. As a Guernsey incorporated Company, the Company is not required to comply with the Code of Best Practice published by the UK Committee of Corporate Governance (the 'Combined Code'). The Directors have however taken the action that they consider appropriate to ensure that the appropriate level of corporate governance, for an investment company incorporated in Guernsey whose securities are listed on the Alternative Investments Market of the London Stock Exchange, is attained and maintained.

The Directors of the Board will take appropriate measures to ensure that the Company complies, as appropriate given the Company's size and nature of business, with aspects of the Combined Code. For the purposes of assessing compliance with the Combined Code, the Board considers all of the Directors as independent of the Investment Manager and free from any business or other relationship that could materially interfere with the exercise of their independent judgement.

Board responsibilities 

The Board of Directors is responsible for the corporate governance of the organisation. The Board will ensure that the organisation's operations are conducted reasonably and within the framework of any applicable laws, regulations, rules, guidelines and codes as well as established policies and procedures. The Board will regularly assess and document whether its approach to corporate governance achieves its objectives and, consequently, whether the Board itself is fulfilling its own responsibilities. The Board will review the effectiveness of its overall approach to governance and make changes where that effectiveness needs to be enhanced. 

The Board meets at least four times a year and between these formal meetings there is regular contact with the Investment Manager and the Secretary. The Directors are kept fully informed of investment and financial controls, and other matters that are relevant to the business of the Company and should be brought to the attention of the Directors. The Directors also have access to the Administrator and, where necessary in the furtherance of their duties, to independent professional advice at the expense of the Company. The Board is responsible for the appointment and monitoring of all service providers to the Company.

The Board considers that because of the small size of the Company and the close knit nature of the Board, it would not be appropriate to appoint any Board Committees to perform specific duties.

Going concern

The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Financial Statements since the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future.

Relations with shareholders

The Investment Manager will maintain regular dialogue with any institutional shareholders, the feedback from which is reported to the Board. In addition, Board members will be available to respond to shareholders' questions at the Annual General Meeting.

Investment Manager

The Investment Manager is entitled to an investment management fee and a performance fee as detailed in note 4. Ambrian Asset Management Limited novated the agreement on 15 September 2008 to New City Investment Managers Limited to act as the Company's Investment Manager.

Auditors

The Auditors, BDO Novus Limited, have indicated their willingness to continue in office. Accordingly, a resolution for their reappointment will be proposed at the forthcoming Annual General Meeting.

Approved by the Board of Directors on 23 April 2009 and signed on behalf of the Board on 24 April 2009 by:  

Robert King                                    Kaare Foy   

Independent Auditors' Report To The Members Of Golden Prospect Precious Metals Limited

We have audited the Financial Statements of Golden Prospect Precious Metals Limited for the year ended 31 December 2008 which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet, the Cash Flow Statement and the related notes. These Financial Statements have been prepared under the historical cost convention as modified by the revaluation of investments and in accordance with the accounting policies set out therein.

This report is made solely to the Company's Members, as a body, in accordance with Section 64 of the Companies (Guernsey) Law, 1994. Our audit work has been undertaken so that we might state to the Company's Members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company's Members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditors

As described in the Statement of Directors' Responsibilities within the Directors' Report the Company's Directors are responsible for the preparation of the Financial Statements in accordance with applicable law and International Financial Reporting Standards (IFRS).

Our responsibility is to audit the Financial Statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the Financial Statements give a true and fair view and are properly prepared in accordance with the Companies (Guernsey) Law, 1994. We also report to you if, in our opinion, the Directors' Report is not consistent with the Financial Statements, if the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law is not disclosed.

We read the other information accompanying the Financial Statements and consider whether it is consistent with the Financial Statements. This other information comprises the Chairman's Statement, Board Members, the Investment Manager's Report, the Directors' Report, and the Schedule of Substantial Interests. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Financial Statements. Our responsibilities do not extend to any other information.  

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the Financial Statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation of the Financial Statements, and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the Financial Statements.

Opinion

In our opinion the Financial Statements:

• give a true and fair view, in accordance with IFRS, of the state of the Company's affairs as at 31 December 2008 and of its net loss for the year then ended; and

• have been properly prepared in accordance with the Companies (Guernsey) Law, 1994.

CHARTERED ACCOUNTANTS

Place Du Pre

Rue Du Pre

St Peter Port

Guernsey

24 April 2009

Income Statement

For the year ended 31 December 2008

									01.01.08	16.10.06
									to 31.12.08	to  31.12.07
					Notes	Revenue		Capital	Total	Total
						£		£	£	£
Income
Dividend income from equity securities
designated at fair value through profit or loss						22,906		-	22,906	34,328
Interest income for financial assets
that are not at fair value through profit or loss:
Cash and cash equivalents					1	22,481		-	22,481	54,543
						45,387		-	45,387	88,871
Net (losses)/gains on financial assets at fair value
through profit or loss					1,6	-		(9,312,289)	(9,312,289)	2,614,792
Net gains on foreign currency					1	65,597		-	65,597	1,656
Total (expense)/income						110,984		(9,312,289)	(9,201,305)	2,705,319
Expenses
Performance fees						-		-	-	(92,400)
Investment Management fees					4	(142,841)		-	(142,841)	(220,258)
Administration fees					4	(62,500)		-	(62,500)	(64,933)
Custodian fees					4	(19,932)		-	(19,932)	(12,923)
Directors' fees					4	(52,795)		-	(52,795)	(65,220)
Audit fees						(8,200)		-	(8,200)	(10,200)
Transaction costs						(14,595)		-	(14,595)	(43,396)
Brokerage fees						(45,000)		-	(45,000)	(49,068)
Directors' insurance costs						(6,013)		-	(6,013)	(12,000)
Registrar's fees						(11,042)		-	(11,042)	(10,000)
Sponsor fees						(2,500)		-	(2,500)	-
Legal fees						(30,792)		-	(30,792)	-
Printing						(16,853)		-	(16,853)	-
Other expenses						(74,152)		-	(74,152)	(45,234)
Total operating expenses						(487,215)		-	(487,215)	(625,632)
Operating (loss)/profit before finance costs						(376,231)		(9,312,289)	(9,688,520)	2,079,687
and tax
Finance costs
Interest expense for financial liabilities that are
not at fair value through profit or loss:
Loan payable						(144,896)		-	(144,896)	(128,297)
Loan arrangement and commitment fees						(5,996)		-	(5,996)	(5,167)
(Loss)/profit for the year/period before tax						(527,123)		(9,312,289)	(9,839,412)	1,946,223
Withholding tax					2	(2,556)		-	(2,556)	(4,738)
(Loss)/profit for the year/period						(£529,679)		(£9,312,289)	(£9,841,968)	1,941,485
Basic (loss)/earnings per Ordinary Share (pence)					5	(4.10p)		(72.04p)	(76.14p)	15.02p
Diluted (loss)/earnings per Ordinary Share (pence)					5				(38.07p)	7.51p

The 'Total' column of this statement represents the Company's Income Statement, prepared in accordance with IFRS. The supplementary 'Revenue' and 'Capital' columns are both prepared for information purposes only.

All the items in the above statement derive from continuing operations.

Statement of Changes in Equity
For the year ended 31 December 2008
					Realised		Unrealised
		Notes	Share	Share	Capital		Capital		Revenue		Distributable
			Capital	Premium	Reserve		Reserve		Reserve		Reserve	Total
			£	£	£		£		£		£	£
Balance as at 1 January 2008			12,927	-	1,455,345		1,159,447		(673,307)		12,422,955	14,377,367
Loss on securities designated at
fair value through profit or loss		12	-	-	(5,950,446)		(3,361,843)		-		-	(9,312,289)
Loss for the year		12	-	-	-		-		(529,679)		-	(529,679)
Total recognised income and expense
for the year			12,927	-	(4,495,101)		(2,202,396)		(1,202,986)		12,422,955	4,535,399
Balance as at 31 December 2008			£12,927	£-	(£4,495,101)		(£2,202,396)		(£1,202,986)		£12,422,955	£4,535,399

Statement of Changes in Equity

For the period from 16 October 2006  (date of incorporation) to 31 December 2007

							Realised		Unrealised
		Notes	Share		Share		Capital		Capital		Revenue	Distributable
			Capital		Premium		Reserve		Reserve		Reserve	Reserve	Total
			£		£		£		£		£	£	£
Balance as at 16 October 2006			-		-		-		-		-	-	-
Gain on securities designated at
fair value through profit or loss		12	-		-		1,455,345		1,159,447		-	-	2,614,792
Loss for the period		12	-		-		-		-		(673,307)	-	(673,307)
Total recognised income and expense
for the period			-		-		1,455,345		1,159,447		(673,307)	-	1,941,485
Issue of Ordinary Shares		11	12,927		12,913,779		-		-		-	-	12,926,706
Issue costs relating to the issue of		1,11
Ordinary Shares			-		(490,824)		-		-		-	-	(490,824)
Transfer to Other		11
Distributable Reserve			-		(12,422,955)		-		-		-	12,422,955	-
Balance as at 31 December 2007			£12,927		£-		£1,455,345		£1,159,447		(£673,307)	12,422,955	£14,377,367

Balance Sheet
As at 31 December 2008
						Notes	£		£
							31.12.2008		31.12.2007
Current Assets
Financial assets at fair value through profit or loss						1,6	4,562,248		16,748,178
Cash and cash equivalents						1,7	478,502		188,464
Receivables						8	402,984		3,254
Total Assets							5,443,734		16,939,896
Current Liabilities
Payables and accruals						9	(64,495)		(162,529)
Loan payable						10	(750,000)		(2,400,000)
Bank overdraft						7	(93,840)		-
Total Liabilities							(908,335)		(2,562,529)
Total Assets less Current Liabilities							£4,535,399		£14,377,367
Equity
Ordinary share capital						11	12,927		12,927
Share premium						11	-		-
Revenue reserve						12	(1,202,986)		(673,307)
Distributable reserve						12	12,422,955		12,422,955
Other reserves						12	(6,697,497)		2,614,792
Total Equity							£4,535,399		£14,377,367
Number of Ordinary Shares in issue						11	12,926,706		12,926,706
Net Assets Value per Ordinary Share (pence)							35.09 p		111.22 p

The Audited Financial Statements were approved by the Board of Directors on 23 April 2009 and signed on 24 April 2009 on its behalf by:

Robert King                                    Kaare Foy

Cash Flow Statement
For the year ended 31 December 2008
									01.01.2008		16.10.2006
									to 31.12.2008		to 31.12.2007
							Notes		£		£
Cash flows from operating activities
(Loss)/profit for the year/period									(9,841,968)		1,941,485
Adjustment for:
Losses/(gains) on financial assets at fair value through
profit or loss									9,312,289		(2,614,792)
Net gains on foreign currency									(65,597)		(1,656)
Withholding tax									2,556		4,738
Operating cash flows before movements in working capital									(592,720)		(670,225)
Increase in receivables							8		1,243		(3,254)
(Decrease)/increase in payables and accruals							9		(98,034)		162,529
Purchase of financial assets at fair value									(2,373,074)		(19,909,872)
Sale of financial assets at fair value									4,845,742		5,776,486
Withholding tax									(2,556)		(4,738)
Net cash generated from/(used in) operating activities									1,780,601		(14,649,074)
Cash flows from financing activities
Proceeds from issue of Ordinary Shares							11		-		12,926,706
Issue costs relating to issue of Ordinary Shares							11		-		(490,824)
Loan (repaid)/advanced							10		(1,650,000)		2,400,000
Net cash (used in)/generated from financing activities									(1,650,000)		14,835,882
Net increase in cash and cash equivalents									130,601		186,808
Net cash and cash equivalents at beginning of year/period									188,464		-
Effect of foreign exchange rate changes									65,597		1,656
Cash and cash equivalents at end of year/period									384,662		188,464

Notes to the Financial Statements

1. Principal Accounting Policies

The following accounting policies have been applied consistently in dealing with items which are considered to be material in relation to the Company's Financial Statements:

Statement of Compliance

The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) which comprise standards and interpretations by the International Accounting Standards Board (IASB) and the additional disclosures required regarding income and capital within the Income Statement and in accordance with the Investments Trusts Statement of Recommended Practice (SORP) 2005 (Revised).

Adoption of new and revised Standards

In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 January 2008. The adoption of these new and revised Standards throughout the year has not resulted in any change to the Company's accounting policies.

At the date of authorisation of these financial statements, the following standards and interpretations, which have not been adopted in these financial statements, were in issue but not yet effective:

• IFRS 1 - First-time adoption of International Financial Reporting Standards - Amendment relating to cost of an investment on first-time adoption (Effective date - 1 January 2009)

• IFRS 2 - Share Based Payments - Amendment relating to vesting conditions and cancellations (Effective date - 1 January 2009)

• IFRS 3 - Business Combinations - Comprehensive revision on applying the acquisition method (Effective date - 1 July 2009)

• IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations - Amended for Annual Improvements to IFRS's (Effective date - 1 July 2009)

• IFRS 7 - Financial Instruments: Disclosures - Amendments enhancing disclosures about fair value and liquidity risk

• IFRS 8 - Operating Segments (Effective date - 1 January 2009)

• IAS 1 - Presentation of Financial Statements - Comprehensive revision including requiring a statement of comprehensive income, amendments relating to disclosure of puttable instruments and obligations arising from liquidation and amendments due to the Annual Improvement of IFRS's (Effective date - 1 January 2009)

• IAS 16 - Property Plant and Equipment - Amended for Annual Improvements of IFRS's (Effective date - 1 January 2009)

• IAS 19 - Employee Benefits - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 20 - Government Grants and Disclosure of Government assistance - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 23 - Borrowing costs - Comprehensive revision to prohibit immediate expensing & amendments resulting from Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 27 - IAS 28 and IAS 31 - Consequential amendments arising from amendments to IFRS 3 and amendments resulting from Annual Improvements to IFRS's (Effective date - 1 July 2009)

• IAS 29 - Financial Reporting in Hyperinflationary Economies - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 32 - Financial instruments presentation - Amendments relating to puttable instruments and obligations arising on liquidation (Effective date - 1 January 2009)

• IAS 36 - Impairment of Assets - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 38 - Intangible Assets - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items (Effective date - 1 July 2009)

• IAS 39 - Financial Instruments: Recognition and Measurement - Amendments for embedded derivatives when reclassifying financial instruments (Effective date - 30 June 2009)

• IAS 39 - Financial Instruments: Recognition and Measurement - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 40 - Investment Property - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IAS 41 - Agriculture - Amended for Annual Improvements to IFRS's (Effective date - 1 January 2009)

• IFRIC 13 - Customer Loyalty Programmes (Effective for annual periods beginning after 1 July 2008)

• IFRIC 15 - Agreements for the construction of real estate - Amendment to standardise the recognition of revenue amongst real estate developers (Effective date - 1 January 2009)

• IFRIC 16 - Hedges of a Net Investment in a Foreign Operation (Effective for annual periods beginning after 1 October 2008)

• IFRIC 17 - Distributions of Non-cash Assets to Owners (Effective date - 1 July 2009)

• IFRIC 18 - Transfers of Assets from Customers (Effective date - 1 July 2009)

The Directors anticipate that the adoption of these Standards in future periods will have no material financial impact on the Financial Statements of the Company.

Basis of preparation

The Financial Statements are presented in Sterling which is also the functional currency of the Company as the majority of transactions are effected in Sterling. The Financial Statements have been prepared on a historical cost basis except for the measurement of financial assets and financial liabilities at fair value through profit or loss.

The preparation of Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The 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 revision and future periods if the revision affects both current and future periods.

Financial assets

The classification of financial assets at initial recognition depends on the purpose for which the financial asset was acquired and its characteristics.

All financial assets are initially recognised at fair value. All purchases of financial assets are recorded on trade date, being the date on which the Company becomes party to the contractual requirements of the financial asset.

Fair value through profit or loss

A financial asset is classified in this category if it was acquired principally for the purpose of selling in the short term. Derivates are classified as held for trading unless they are designed as hedges. In this case, the derivatives are classified as current assets. These financial assets are carried in the Balance Sheet at fair value with changes in fair value recognised in the Income Statement. 

Derecognition of financial assets

A financial asset (in whole or in part) is derecognised either (i) when the Company has transferred substantially all the risks and rewards of ownership, or (ii) when it has neither transferred nor retained substantially all the risks and rewards and when it no longer has control over the asset or a proportion of the asset, or (iii) when the contractual right to receive cash flows has expired. Any gain or loss on derecognition is taken to the Income Statement as appropriate.

Impairment of financial assets

An assessment is made at each balance sheet date to determine whether there is objective evidence that a specific financial asset or a group of financial assets may be impaired. If such evidence exists, the estimated recoverable amount of that asset is determined by publicly available information such as quoted market prices or by calculating the net present value of future anticipated cash flows. In estimating these cash flows, management makes judgements about a counterparty's financial situation and the net realisable value of any underlying collateral. 

Financial assets are grouped on the basis of similar credit risk characteristics that are indicative of the debtors' ability to pay all amounts due according to the contractual terms and the collective impairment provision is estimated for any such group where credit risk characteristics of the group of financial assets has deteriorated. Factors such as any deterioration in country risk, industry performance, technological obsolescence as well as identified structural weaknesses or deterioration in cash flows are taken into consideration and the amount of the provision is based on the historical loss pattern within each group, adjusted to reflect current economic change.

Financial liabilities

The classification of financial liabilities at initial recognition depends on the purpose for which the financial liability was issued and its characteristics. All financial liabilities are initially recognised at fair value net of transaction costs incurred. All purchases of financial liabilities are recorded on trade date, being the date on which the Company becomes party to the contractual requirements of the financial liability.

Fair value through profit or loss

This category comprises only 'out of the money' interest rate and foreign exchange derivatives. They are carried in the Balance Sheet at fair value with changes in fair value recognised in the Income Statement. 

  Other financial liabilities

After initial measurement these liabilities are subsequently measured at amortised cost using the effective interest rate method. The amortisation is included in 'Other expenses' in the Income Statement.

Derecognition of financial liabilities

A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires or is cancelled. Any gain or loss on derecognition is taken to the Income Statement.

Determination of fair value

The fair value of financial assets and liabilities that are quoted in an active market is determined by reference to market bid and offer prices respectively at the close of business on the balance sheet date. The fair value of liabilities with a demand feature is the amount payable on demand. The fair value of interest-bearing financial assets and liabilities that are not quoted in an active market and are not payable on demand is determined by discounting expected cash flows using the current market interest rates for financial instruments with similar terms and risk characteristics. For equity investments that are not quoted in an active market, a reasonable estimate of the fair value is determined by reference to the current market value of other instruments that are substantially similar, or is determined using net present value techniques. The fair value of unquoted derivatives is determined either by discounted cash flows or option-pricing models.

Offsetting financial instruments

Financial assets and financial liabilities are only offset and the net amount reported in the Balance Sheet and Income Statement when there is a currently enforceable legal right to offset the recognised amounts and the Company intends to settle on a net basis or realise the asset and liability simultaneously.  

Interest income and expense 

Interest income and interest expense are recognised within the Income Statement using the effective interest rate method. The effective interest rate is the rate that exactly discounts the future cash inflows and outflows of a financial instrument through its expected life. 

The calculation includes all incidental fees, discounts and transaction costs, these cash flows are integral in calculating the Income Statement charge. Transaction costs are incremental costs that are directly attributable to the purchase or disposal of a financial instrument.

Income

All income is accounted for on an accruals basis and is recognised in the Income Statement.  

Expenses

Expenses are accounted for on an accruals basis. Expenses are charged to the Income Statement as items of a revenue nature. Expenses incurred on the acquisition of investments at fair value through the profit or loss are also charged to the Income Statement, as items of a capital nature.

Share Issue Expenses

There were no share issue costs during the year (31 December 2007: £490,824). In the prior period these were treated as a deduction from equity in the Statement of Changes in Equity, and written off against the Share Premium Account.

  Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant changes in value.

Capital Reserves

Gains and losses recorded on the realisation of investments and realised exchange differences of a capital nature are accounted for in the Realised Capital Reserve. Unrealised gains and losses recorded on the revaluation of investments held at the year end and unrealised exchange differences of a capital nature are accounted for in the Unrealised Capital Reserve.

Translation of foreign currency 

Items included in the Company's Financial Statements are measured using the currency of the primary economic environment in which it operates ('the functional currency'). The currency in which the Company's Shares are denominated and in which its operating expenses are incurred is Sterling. The Company's investments are denominated in many different currencies. Accordingly, the Directors regard Sterling as the functional currency. The Company has also adopted Sterling as its presentational currency.

Transactions in currencies other than the functional currency are recorded using the exchange rate prevailing at the transaction date. Foreign exchange gains and losses resulting from the settlement of such transactions and those from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Translation differences on non-monetary items such as financial assets held at fair value through profit or loss are reported as part of net gains or losses on financial assets through profit or loss in the Income Statement.

Segmental reporting

A business segment is a distinguishable component of the Company that is engaged in providing products and services and that is subject to risks and returns that are different from those of other business segments. The Board of Directors is of the opinion that the Company is organised in one main business segment, namely the management of the Company's investments in order to achieve the Company's objectives.

The total fair value of the financial instruments held by the Company by each major geographical segment and the equivalent percentages of the total value of the Company  can be found in the portfolio statement.

Securities sold awaiting settlement

Securities sold awaiting settlement are sales of securities transacted before the year end with a post year end settlement date.

2. Taxation

The amounts disclosed as taxation in the Income Statement of the Company relate solely to withholding tax suffered at source on income. The Company is exempt from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and has paid an annual exemption fee of £600. With effect from 1 January 2008, Guernsey's Corporate Tax changed, however there is no effect on the Company's tax position as a result of this change as the Company will continue to register as tax exempt.

3. Distribution To Shareholders

The Directors do not expect income (net of expenses) to be significant and do not currently expect to declare any cash dividends. In the event that net income is significant, the Directors may consider the distribution of net income in the form of cash dividends. To the extent that any cash dividends are paid, they will be paid in accordance with any applicable laws and the regulations of the Alternative Investments Market of the London Stock Exchange and of the Channel Islands Stock Exchange.

4. Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Directors are responsible for the determination of the investment policy of the Company and have overall responsibility for the Company's activities. All Directors are entitled to remuneration for their services of £12,000 per annum. During the year ended 31 December 2008, directors fees of £52,795 were charged to the Company (31 December 2007: £65,220) and £9,000 was payable at the year end (31 December 2007: £15,000). All Directors are non-executive.

The following contracts, not being contracts in the ordinary course of business, have been entered into by the Company and are, or may be material:

Investment Manager

The Company's investment manager was novated on 15 September 2008 to New City Investment Managers Limited (the 'Investment Manager'). The Investment Manager is entitled to an annual management fee, payable monthly in arrears, of 1.5 % of Net Asset Value. 

The Investment Manager is also entitled to reimbursement of certain expenses incurred by it in connection with its duties. During the year ended 31 December 2008 investment management fees of £142,841 were charged to the Company (31 December 2007: £220,258) and £5,814 was payable at the year end (31 December 2007: £18,442).

The Investment Manager is also entitled to receive an annual Performance Fee equal to 20% of the increase in the Company's Net Asset Value on the last Trading Day of each calendar year, above an annual hurdle for growth of 8% and subject to a high water mark. During the year ended 31 December 2008 no performance fees had accrued to the Investment Manager (31 December 2007: £92,400).

Administrator

The Company's administrator is Northern Trust International Fund Administration Services (Guernsey) Limited (the 'Administrator'). In consideration for the services provided by the Administrator under the Administration and Secretarial Agreement, the Administrator is entitled to receive from the Company an annual fee of 0.10 % of the average monthly Net Asset Value of the Company calculated at each month end and paid quarterly, subject to a minimum fee of £37,500 per annum. The Company will also pay a corporate governance fee of £25,000 per annum. During the year ended 31 December 2008 administration fees of £62,500 were charged to the Company (31 December 2007: £64,933) and £15,882 was payable at the year end (31 December 2007: £15,625).

Custodian

The Company's custodian is Northern Trust (Guernsey) Limited (the 'Custodian'). In consideration for the services provided by the Custodian under the Custodian Agreement, the Custodian is entitled to receive an annual custody fee of 0.10% of the average Net Asset Value of the Company calculated at each month end and paid quarterly. In addition the Company will pay custody transaction charges at rates depending on the number of trades effected and the location of securities held. During the year ended 31 December 2008 custodian fees of £19,932 were charged to the Company (31 December 2007: £12,923) and £2,125 was payable at the year end (31 December 2007: £1,811).

5. Basic And Diluted Earnings Per Ordinary Share

Basic earnings per Ordinary Share is calculated by dividing the net loss for the year of £9,841,968 (31 December 2007: profit of £1,941,485) by the weighted average number of Ordinary Shares outstanding during the year. As there has been no additional issue of Ordinary Shares during the year, the weighted average number of Ordinary Shares is 12,926,706.

Diluted earnings per Ordinary Share is calculated by dividing the net loss for the year of £9,841,968 (31 December 2007: profit of £1,941,485) by the weighted average number of Ordinary Shares outstanding during the year adjusted for the effects of the dilutive Warrants. The diluted weighted average number of Ordinary Shares as at 31 December 2008 was 25,853,412 Shares (31 December 2007: 25,853,412).

In the unlikely event that the Warrants were converted, there would be a dilution of the NAV per Ordinary Share as shown below.  

					31.12.2008		31.12.2007
Net Assets per Ordinary Share diluted					17.54 p		55.61 p

6. Financial Instruments

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of its financial assets and liabilities are disclosed in Note 1. The following table analyses the carrying amounts of the financial assets and liabilities by category as defined in IAS 39. 

Categories of financial instruments:										31.12.2008
										% of net assets
									Fair Value	attributable to
									£	shareholders
Financial assets designated as at fair value through profit or loss
		Listed equity securities							4,319,786	95.25
		Listed debt securities							242,462	5.35
									£4,562,248	100.60
Financial instruments designated as loans and receivables
		Cash and cash equivalents							478,502	10.55
		Receivables							402,984	8.89
									£881,486	19.44
Financial instruments designated as other financial liabilities
		Payables and accruals							(64,495)	(1.42)
		Loan payable							(750,000)	(16.54)
		Bank overdraft							(93,840)	(2.07)
									(£908,335)	(20.03)
Net losses on financial assets at fair value through profit or loss:
										01.01.08
										to 31.12.08
										£
Realised losses on financial assets
designated as at fair value through profit or loss										(5,950,446)
Net unrealised losses on financial assets
designated as at fair value through profit or loss										(3,361,843)
Net losses on financial assets
at fair value through profit or loss										(£9,312,289)

										31.12.2007
										% of net assets
									Fair Value	attributable to
									£	shareholders
Financial assets designated as at fair value through profit or loss
		Listed equity securities							16,538,656	115.03
		Listed debt securities							209,522	1.46
									£16,748,178	116.49
Financial instruments designated as loans and receivables
		Cash and cash equivalents							188,464	1.31
		Receivables							3,254	0.02
									£191,718	1.33
Financial instruments designated as other financial liabilities
		Payables and accruals							(162,529)	(1.13)
		Loan payable							(2,400,000)	(16.69)
									(£2,562,529)	(17.82)

Net gains on financial assets at fair value through profit or loss:

16.10.2006 to

31.12.2007

£

Realised gains on financial assets

designated as at fair value through profit or loss

1,455,345

Net unrealised gains on financial assets

designated as at fair value through profit or loss

1,159,447

Net gains on financial assets

at fair value through profit or loss

£2,614,792

7. Cash and Cash Equivalents

For the purpose of the Cash Flow Statement, cash and cash equivalents comprise the following:
									31.12.2008			31.12.2007
									£			£
Cash at bank									£478,502			£188,464
Bank overdraft									(£93,840)			-
										£384,662		£188,464

8. Receivables

							31.12.2008		31.12.2007
							£		£
Dividend income receivable							253		1,527
Bank interest receivable							278		1,727
Sales of investments awaiting settlement							400,973		-
General expenses prepaid							1,480		-
							£402,984		£3,254

The Directors consider that the carrying amount of receivables approximate their fair value.

9. Payables and Accruals

								31.12.2008		31.12.2007
								£		£
Administration fee payable (Note 4)								15,882		15,625
Directors' fees payable (Note 4)								9,000		15,000
Investment management fee payable (Note 4)								5,814		18,442
Other accruals								16,016		8,198
Audit fee payable								8,500		5,700
Custodian fee payable (Note 4)								2,125		1,811
Loan commitment fees payable								1,732		747
Performance fee accrual (Note 4)								-		92,400
Loan interest payable								5,426		4,606
								£64,495		£162,529

The Directors consider that the carrying amount of payables approximate their fair value.

10. Loan Payable

								31.12.2008		31.12.2007
								£		£
Loan amount drawn								£750,000		£2,400,000

Allied Irish Bank plc has made available to the Company a multicurrency revolving loan facility of up to £3 million. The Company drew down £2,400,000 on 23 March 2007, this was reduced to £750,000 during the year. Loan interest is charged at Libor plus a margin of 0.90% per annum plus mandatory cost (if any) which is the percentage rate per annum calculated by the Bank. The interest rate as at 31 December 2008 was 5.28160%. The loan incurs a commitment fee of 0.45% per annum on the daily unutilised portion of the loan facility, payable quarterly in arrears. 

An arrangement fee of £3,000 was also charged. Each amount withdrawn is repayable on the last day of its interest period which is agreed between the Company and the Bank. If the Company fails to select an interest period for a withdrawal, the interest period is 3 months.

The Company shall ensure that at all times net borrowings will not exceed 30% of adjusted Net Asset Value and borrowings will not exceed 100% of the value of its Eligible Assets. Eligible Assets are investments in companies that have a market capitalisation of more than £100 million and are listed on the leading stock exchanges of countries with long term foreign currency credit ratings of at least AA by Standard & Poor's or its equivalent by Moody's & Fitch. 

On 11 March 2009 the Company renewed the above facility which will mature on 11 June 2009. The loan margin is 0.9%. On 19 March 2009 the Company drewdown a further £500,000 which will mature on 19 June 2009 at a margin of 1.1%.

11. Share Capital, Share Premium and Distributable Reserve

Authorised Share Capital						£
200,000,000 Ordinary Shares of £0.001 par value						£200,000
200,000,000 Warrants of no par value						£-

					No. of				Share
					Shares				Capital
					2008		2007		2008		2007
Issued and Fully Paid Share Capital									£		£
Equity Shares
Ordinary Shares of £0.001 each at inception
As at 1 January					12,926,706		12,926,706		12,927		12,927
As at 31 December					12,926,706		12,926,706		12,927		12,927

The Company is a closed ended investment company with an unlimited life. The Ordinary Shares are not puttable instruments. As such they are not required to be classified as debt under IAS 32 because redemption is conditional upon certain market conditions and/or Board approval.

IFRIC Interpretation 2: 'Members' Shares in Co-operative Entities and Similar Instruments' paragraph 7 states 'Members' share is equity if the entity has an unconditional right to refuse redemption of the members' share.' 

As defined in the Articles of Association, redemption of Ordinary Shares is at the discretion of the Directors, therefore the Ordinary Shares have been classified as equity.

Ordinary Shareholders are entitled to one vote for each Ordinary Share held and are entitled to receive any distributions declared by the Company. On a winding up, the Ordinary Shareholders shall be entitled, pro rata to their holdings, to all the assets of the Company available for distribution to shareholders.

No additional Warrants were issued during the year (31 December 2007: 12,926,706). Warrant holders are entitled to subscribe for Ordinary Shares on any Subscription Date at a subscription price of 105p per Ordinary Share. All Warrants can be exercised at any time within a thirty-six month period of the date of the Warrant Agreement which was 15 November 2006.

Warrant holders agreed at a Warrant holders meeting held on 27 May 2008 to change the terms of the Warrant Instrument as follows:

1. Extend the subscription period by one year to 14 November 2009;

2. Reduce the subscription price from 120 pence to 105 pence per Ordinary Share; and

3. Reduce the closing price condition on the Ordinary Shares at which the accelerated call feature can be exercised by the Company from 140 pence or more to 122.5 pence or more. The requirement that the closing price condition must be met for any 20 or more trading days out of a period of 30 consecutive trading days before the accelerated call feature can be exercised was not changed.   

By way of a special resolution passed on 8 November 2006, it was resolved that the amount standing to the credit of the share premium account of the Company be cancelled and the amount so cancelled be credited to Distributable Reserve. This resolution was approved by the Royal Court of Guernsey on 17 November 2006.

No distributions were made from the Distributable Reserve during the year.  

12. Reserves

							01.01.2008		Movement		31.12.2008
							£		£		£
Distributable reserve							12,422,955		-		12,422,955
Realised gains/(losses) on investments sold							1,455,345		(5,950,446)		(4,495,101)
Movement in unrealised gains/(losses) on investments							1,159,447		(3,361,843)		(2,202,396)
Net expenditure for the year							(673,307)		(529,679)		(1,202,986)
							£14,364,440		(£9,841,968)		£4,522,472
							16.10.2006		Movement		31.12.2007
							£		£		£
Distributable reserve							-		12,422,955		12,422,955
Realised gains on investments sold							-		1,455,345		1,455,345
Movement in unrealised gains on investments							-		1,159,447		1,159,447
Net expenditure for the period							-		(673,307)		(673,307)
							£-		£14,364,440		£14,364,440

13. Statement of Changes in Net Assets Attributable To Holders of Ordinary Shares

									31.12.2008		31.12.2007
									£		£
Movement due to issues and redemptions of shares
Issue of Ordinary Shares									-		12,926,706
Costs of issue of Ordinary Shares									-		(490,824)
									-		12,435,882
(Decrease)/increase in net assets attributable to holders of Ordinary Shares									(9,841,968)		1,941,485
Net assets attributable to holders of Ordinary Shares as at beginning of year/period									14,377,367		-
Net assets attributable to holders of Ordinary Shares as at end of year/period									£4,535,399		£14,377,367

14. Financial Risk Management

The Company is exposed to a variety of financial risks as a result of its activities. These risks include credit risk, liquidity risk and market risk (including currency risk, fair value interest rate risk and price risk). The Company's risk management policies, approved by the Board of Directors, seek to minimise the potential adverse effects of these risks on the Company's financial performance. 

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

As at the date of the Balance Sheet, financial assets exposed to credit risk comprise a single debt instrument as disclosed in Note 6 as well as bank balances and receivables. It is in the opinion of the Board of Directors that the carrying amount of these financial assets represents the maximum credit risk exposure as at the date of the Balance Sheet.

As at 31 December 2008 there were no debt instruments past due.

The Board of Directors has a policy in place of spreading the aggregate value of transactions concluded amongst approved counterparties with an appropriate credit quality. The Company's exposure and the credit ratings of its counterparties are continuously monitored by management. The following table illustrates the credit concentration by institution:

						31.12.2008		31.12.2007
						£		£
Debt securities:
Crescent Gold Convertible loan						242,462		209,522
Cash and cash equivalents:
Northern Trust (Guernsey) Limited						478,502		188,464
Other receivables						402,984		3,254
Total assets at credit risk						£1,123,948		£401,240

Liquidity risk

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments.

Whilst most of the Company's financial assets are listed securities which are considered readily realisable as they are listed on major recognised stock exchanges, some of the financial assets held by the Company may not be listed on recognised stock exchanges and so will not be readily realisable and their marketability may be restricted. The Company might only be able to liquidate these positions at disadvantageous prices, should the Investment Manager determine, or it become necessary, to do so.

The following table details the Company's liquidity analysis for its financial liabilities. The table has been drawn up based on the undiscounted net cash flows on the financial liabilities that settle on a net basis and the undiscounted gross cash flows on those financial liabilities that require gross settlement.

				Less than			3 months		1 year		31.12.2008
				1 month	1-3 months		to 1 year		to 5 years		Total
				£	£		£		£		£
Gross settled:
Borrowings				-	750,000		-		-		750,000
Bank overdraft					93,840				-		93,840
Loan interest				5,426	-		-		-		5,426
Investment management
fee payable				5,814	-		-		-		5,814
Administration fee payable				15,882	-		-		-		15,882
Directors' fees payable				9,000	-		-		-		9,000
Audit fee payable				-	-		8,500		-		8,500
Other payables				3,857	-		16,016		-		19,873
				£39,979	£843,840		£24,516		£-		£908,335

				Less than			3 months		1 year		31.12.2007
				1 month	1-3 months		to 1 year		to 5 years		Total
				£	£		£		£		£
Gross settled:
Borrowings				-	2,400,000		-		-		2,400,000
Performance fee accrual				-	92,400		-		-		92,400
Investment management
fee payable				18,442	-		-		-		18,442
Administration fee payable				15,625	-		-		-		15,625
Directors' fees payable				15,000	-		-		-		15,000
Audit fee payable				-	-		5,700		-		5,700
Other payables				1,811	-		13,551		-		15,362
				£50,878	£2,492,400		£19,251		£-		£2,562,529

The Investment Manager manages liquidity on a daily basis. The Company's overall exposure to liquidity risk is monitored by the Board of Directors on a quarterly basis.

The Company expects to meet its other obligations for operating cash flows at the Balance Sheet date. The Company expects to maintain current debt to equity ratio within 30% of NAV. 

Market risk

The Company's activities expose it primarily to the market risks of changes in market prices, interest rates and foreign currency exchange rates.

Price risk

Price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk).

The Company is exposed to market price risk arising from its financial assets designated as at fair value through profit or loss. The performance of these financial assets will be affected by the performance of the investee companies. The exploration, development and production of metal and mineral deposits involves significant uncertainties and the investee companies will be subject to all the hazards and risks normally encountered in such activities. Many of these are difficult to predict and are outside the control of the investee companies. They include, amongst others, issues relating to the environment, the climate, the geopolitical environment, local and international regulatory requirements, licensing terms, planning permission, unexpected geological formations, rock falls, flooding, pollution, legal liabilities, the availability and reliability of plant and equipment, the scaling-up of operations, the reliance on key individuals, local finance and tax regimes, foreign currency repatriation, capital and budget constraints, contractors and suppliers, local employment regulations and practices, employment unions and the availability of suitable labour. In addition, there is often no guarantee that the estimates of quantities and grades of metals and minerals disclosed by investee companies will be available for extraction.

The Company's financial assets are exposed to market price fluctuations which are monitored by the Investment Manager in pursuance of the investment objectives and policies. Adherence to investment guidelines and to investment and borrowing powers set out in the Placing and Offer for Subscription document mitigates the risk of excessive exposure to any particular type of security or issuer. However, with respect to the investment strategy utilised by the Company there is always some, and occasionally some significant, degree of market risk.

Price sensitivity

The value of the Company's financial assets had a sensitivity of £228,112 (31 December 2007: £837,409) to a 5% increase or decrease in the market prices with other variables being held constant as at 31 December 2008. A 5% change is the sensitivity rate used when reporting price risk internally to key management personnel.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. 

The Company is exposed to interest rate risk as it has a loan, the drawn down component of which is subject to interest calculated as a function of LIBOR (see Note 10), and cash and cash equivalents which are invested at short term rates. The Investment Manager manages the Company's exposure to interest rate risk on a daily basis in accordance with the Company's investment objective and policies. The Company's overall exposure to interest rate risk is monitored on a quarterly basis by the Board of Directors.

The Company is exposed to interest rate risk as it has a loan, the drawn down component of which is subject to interest calculated as a function of LIBOR (see Note 10), and cash and cash equivalents which are invested at short term rates. The Investment Manager manages the Company's exposure to interest rate risk on a daily basis in accordance with the Company's investment objective and policies. The Company's overall exposure to interest rate risk is monitored on a quarterly basis by the Board of Directors.

Interest rate sensitivity

The sensitivity analysis below has been determined based on the Company's exposure to interest rates for interest bearing assets and liabilities at the date of the Balance Sheet and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. 

If interest rates had been 25 basis points higher or lower and all other variables had been held constant, the Company's net assets attributable to holders of Ordinary Shares for the year to 31 December 2008 would have been £876 (31 December 2007: £2,851) lower or higher due to the change in the interest payable on the bank loan and the interest receivable on cash and cash equivalents.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates. The presentation currency of the Company is Sterling. The Company's financial assets are currently denominated in various currencies other than Sterling and the Company may hold other financial instruments, the price of which may be determined with reference to currencies other than Sterling. 

To the extent that these financial instruments are unhedged, or are not adequately hedged, the value of the Company's financial instruments may fluctuate with exchange rates as well as with price changes in various local markets and currencies. The value of the financial assets may therefore be affected unfavourably by fluctuations in currency rates and exchange control regulations. The Investment Manager has the power to manage exposure to currency movements by using hedging instruments. The Investment Manager's treatment of currency transactions is set out in Note 1 to the Financial Statements under 'Translation of foreign currency'.

There were no hedging instruments held at 31 December 2008 (31 December 2007: None).

The carrying amount of the Company's foreign currency denominated financial assets and financial liabilities at the date of the Balance Sheet is as follows:

				31.12.2008				31.12.2007
				Assets		Liabilities		Assets		Liabilities
				£		£		£		£
Australian Dollar (AUD)				2,106,508		(23,528)		5,505,547		-
Canadian Dollar (CAD)				2,054,951		-		4,655,825		(382)
United States Dollar (USD)				364,704		(70,312)		2,992,876		-
Euros (EUR)				8		-		3		-
				4,526,171		(93,840)		13,154,251		(382)

Foreign currency sensitivity

The Company is mainly exposed to AUD, CAD and USD.

The following table details the Company's sensitivity to a 5% increase or decrease in Sterling against the relevant foreign currencies. A 5% change is the sensitivity rate used when reporting foreign currency risk internally to key management personnel. The sensitivity analysis includes only outstanding foreign currency denominated financial assets and financial liabilities and adjusts their translation at the year end for a 5% change in foreign currency rates. A positive number indicates an increase in net assets attributable to holders of Ordinary Shares where Sterling weakens against the relevant currency and a negative number indicates a decrease in net assets where Sterling strengthens against the relevant currency.

								31.12.2008
						AUD		CAD		USD
						£		£		£
Change in net assets in response to a						109,630		108,155		15,494
5% change in foreign currency rates						(99,190)		(97,855)		(14,019)
								31.12.2007
						AUD		CAD		USD
						£		£		£
Change in net assets in response to a						289,766		245,023		157,520
5% change in foreign currency rates						(262,169)		(221,688)		(142,518)

15. Contingent Liabilities

There were no contingent liabilities at the balance sheet date.

16. Subsequent Events

The Company held an EGM on 6 April 2009. The two resolutions which proposed to increase the shares in issue to 174,146,588 and to grant the Directors authority to issue new shares other than on a pro-rata basis, at such a price and on such other terms and conditions as the Directors may determine, were duly passed by the requisite majority.

On 9 April 2009 the Directors agreed to issue 18,924,294 Ordinary Shares at a price of 40p per share representing an increase in funds of £7,569,718.

17. Controlling Party

The issued shares of the Company are owned by numerous parties and therefore, in the opinion of the Directors, there is no immediate or ultimate controlling party of the Company.

Substantial Interests

Significant Shareholders

The Company has received notification that the following Shareholders had a substantial interest of 10% or more of the Company's issued share capital as at 16 March 2009:

						% of issued share capital
South Yorkshire Pensions Authority						11.70%

Significant Warrant Holders

The Company has received notification that the following Shareholders had a substantial interest of 10% or more of the Company's warrants as at 16 March 2009:

						% of warrants
Clients of Pershing Keen Nominees Limited PSL981 Account						23.60%
Ambrian Capital plc						22.40%

Portfolio Statement

						Fair Value		% of Total
Description					Holding	£		Net Assets
Equities
	Australia
	Allied Gold Ltd				445,000	91,711		2.02
	Lihir Gold Ltd				410,000	597,125		13.17
	Newcrest Mining Ltd				20,000	320,579		7.06
	Resolute Mining Ltd				1,340,000	298,907		6.59
	Sino Gold Ltd				88,880	209,035		4.61
	Other holdings				2,366,597	34,937		0.77
						1,552,294		34.22
	Canada
	Barrick Gold Corp				12,700	319,700		7.05
	Goldcorp Inc				27,500	597,103		13.16
	Mano River Resources Inc				7,640,000	129,134		2.85
	Red Back Mining				22,000	105,482		2.32
	Silver Wheaton Corp				50,000	222,266		4.90
	Yamana Gold Inc				60,000	317,764		7.01
	Other holdings				197,400	61,492		1.36
						1,752,941		38.65
	United Kingdom
	Centamin Egypt Ltd				750,000	307,500		6.78
	Jubilee Platinum plc				1,075,000	102,125		2.25
	Pan African Resources plc				7,150,000	125,125		2.76
	Other holdings				6,516,666	119,583		2.64
						654,333		14.43
	United States
	Gold Bullion				6,000	357,392		7.88
						357,392		7.88
	Total Equities					4,316,960		95.18
	Warrants					2,826		0.06
	Total warrants					2,826		0.06

As at 31 December 2008						Fair Value		% of Total
					Holding	£		Net Assets
Debt Securities
	Australia
	Crescent Gold Ltd				1,250,000	242,462		5.35
						242,462		5.35
	Total Debt Securities					242,462		5.35
	Total investments					4,562,248		100.59
	Other current assets less current liabilities					(26,849)		(0.59)
	Total Net Assets					£4,535,399		100.00

Further details are available on the Company's website - www.gppm.co.uk

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END

 

 

FR SESFIMSUSEIL