Final Results

T2 Income Fund Limited
29 June 2006

                             T2 Income Fund Limited



                         Announcement of Final Results



The Directors of T2 Income Fund (TIDM: T2I) are pleased to announce the final
results for the period from 9 June 2005 (date of incorporation) to 31 December
2005. The full Report will be posted to shareholders shortly and will be
available from the Company's offices at Regency Court, Glategny Esplanade, St.
Peter Port, Guernsey GY1 3NQ.


T2 Income Fund Limited

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



CHAIRMAN'S STATEMENT





It is my pleasure to present to you the Report and Accounts of T2 Income Fund
Limited for its first fiscal period of operations ending 31 December 2005. As
you are aware, the Company was launched in August 2005 when it raised net
proceeds of £36.6 million of equity. The investment objective of the Company is
to maximize its portfolio's total return principally by investing in the debt
and equity securities of small to medium sized companies. The Company has a
particular focus on debt securities of technology related companies. We intend
to make those investments primarily in the UK and Europe, although we can make,
and have made, investments outside of those areas. The investments of the
Company are managed by T2 Advisers, LLC.



Although the first several months of operations were slower than anticipated, we
did see, and continue to see, a healthy flow of potential deals. While we have
been pleased with the investment opportunities we have been seeing, we chose,
for a variety of reasons, to not yet consummate many of those transactions. The
reasons include transaction-specific due-diligence issues, pricing and equity
terms that were unacceptable, and the Company's ability to achieve what it
considers an appropriate risk/reward relationship in its investments. It is
important to emphasize that the Company and its Adviser believe that we must
maintain high credit standards for our portfolio investments. As a result, we
have not achieved the original projected yield for the period ending 31 December
2005, reflecting the slower pace of investment. Nonetheless, the Company remains
committed to identifying and analyzing the best possible investment
opportunities without reducing the investment discipline that our shareholders
expect.



Since the end of 2005, there has been considerably more activity. As of the date
of this message, we have made a total of seven investments, aggregating nearly
£18 million, and these investments, on a weighted average basis, bear an
interest rate of more than 600 basis points over LIBOR.



For the period from inception through 31 December  2005, the Company earned net
investment income of approximately £202,000, and net asset value per share was
£0.97 as of the end of the year.



Management of the Company and its Adviser are committed to finding and executing
quality transactions that meet our established parameters of credit quality and
attractive risk-adjusted returns. We will continue to report to you about the
on-going progress of the portfolio, and look forward to a rewarding year ahead.





William Harley Tozier
Chairman




T2 Income Fund Limited

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



DIRECTORS' REPORT



The Directors present their report and the audited financial statements for the
period from incorporation on 9 June 2005 to 31 December 2005.



Principal activities

T2 Income Fund Limited (the 'Company') is a closed-ended investment company
which was incorporated with limited liability in Guernsey on 9 June 2005 in
accordance with The Companies (Guernsey) Law, 1994.  The Company was admitted to
the Alternative Investment Market of the London Stock Exchange (AIM) on 5 August
2005.



The Company will primarily invest in the debt and equity securities of small to
medium sized companies, with a particular focus on technology related companies.
The Company will seek to achieve a high level of current income by investing in
debt securities, and to obtain long-term capital growth through the acquisition
of equity interests, which may be acquired as part of the Company's debt
investment or separately. The Company intends to invest primarily in companies
located in the United Kingdom and elsewhere in Europe.



Results and dividends

The results for the period are set out on page 7.  No distribution was declared
or paid during the period.



Directors

The Directors of the Company are set out on page 3.  Details of Directors
holdings in the Company are given in note 11.



Statement of directors' responsibilities

The Directors are responsible for preparing the financial statements, in
accordance with International Financial Reporting Standards, for each financial
period which give a true and fair view of the state of affairs of the Company as
at the end of the financial period and of the profit or loss for that period in
accordance with The Companies (Guernsey) Law, 1994.  In preparing these
financial statements, the Directors are required to:



•                     select suitable accounting policies and 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 the going concern
basis unless it is inappropriate to presume that the Company will continue in
business.



The Directors confirm that they have complied with the above requirements in
preparing the financial statements.



The Directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements have been
properly prepared in accordance with The Companies (Guernsey) Law, 1994. 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.



Auditors

A resolution for the appointment of Grant Thornton UK LLP will be proposed at
the forthcoming Annual General Meeting.



Approved by the board of directors on 28 June 2006.



Patrick Francis Conroy                                 Frederick Peter Forni
Director                                               Director


REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF T2 INCOME FUND LIMITED



We have audited the financial statements of T2 Income Fund Limited for the
period ended 31 December 2005 which comprise the income statement, the balance
sheet, the statement of changes in shareholders' equity, the statement of cash
flows and notes 1 to 13.  These financial statements have been prepared under
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 and 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

The directors' responsibilities for preparing the Annual Report and the
financial statements in accordance with applicable Guernsey law and
International Financial Reporting Standards (IFRSs) as adopted by the European
Union are set out in the Statement of Directors' Responsibilities.



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, whether the financial statements have been properly prepared in
accordance with The Companies (Guernsey) Law, 1994 and whether the information
given in the Directors' Report is consistent with the financial statements.  We
also report to you if, in our opinion, the company has not kept proper
accounting records or if we have not received all the information and
explanations we require for our audit.



We read other information contained in the Annual Report and consider whether it
is consistent with the audited financial statements. The other information
comprises only the Chairman's Statement, the Directors' report and the Portfolio
Statement.  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 audit 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 judgments 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 IFRSs as adopted by the European Union, of the state of the company's
affairs as at 31 December 2005 and of its profit for the period then ended;

•             the financial statements have been properly prepared in accordance
with The Companies (Guernsey) Law, 1994; and

•             the information given in the Directors' Report is consistent with
the financial statements for the period ended 31 December 2005.





GRANT THORNTON UK LLP
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
LONDON



28 JUNE 2006






T2 Income Fund Limited

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



INCOME STATEMENT






                                                                                   Period to
                                                                                    31 December 2005
                                                                 Notes                           GBP


Revenue
Interest income                                                    2                         648,866
Other income                                                       2                          46,978
Investment Income
Net gain on financial assets and liabilities at fair               5                          
value through profit and loss                                                                 33,384
Total Income                                                                                 729,228

Expenses
Management fees                                                    4                         300,967
Administration and secretarial fees                                4                          16,329
Custodian fees                                                     4                           6,123
Legal and professional fees                                                                    9,167
Directors' remuneration                                            4                          36,418
Directors' and officers' insurance                                                            17,054
Audit fees                                                                                    15,000
Share issue expenses                                             2(f)                         68,801
Other expenses                                                                                57,413 

Total Expenses                                                                               527,272
                                                                                             

Profit for the period                                                                        201,956
                                                                                             

Retained profit brought forward                                                                    -
                                                                                                   

Retained profit carried forward                                                              201,956
                                                                                             


Basic Earnings per share                                           12                         0.0053
Diluted Earnings per share                                         12                         0.0048

















The accompanying notes on pages 11 to 17 form an integral part of these
financial statements.




T2 Income Fund Limited

As at 31 December 2005



BALANCE SHEET




                                                                                   Period to
                                                                                    31 December 2005
                                                                 Notes                           GBP
ASSETS
Non-current assets

Financial assets at fair value through the profit and              5                       
loss account                                                                               5,887,644

                                                                                           5,887,644

Current assets
Trade and other receivables                                        6                          40,440
Cash and cash equivalents                                          7                      35,694,293
                                                                                          35,734,733

Total assets                                                                              41,622,377

EQUITY
Capital and reserves attributable to the Company's
equity holders

Share premium                                                      9                      36,694,149
Other reserve                                                                                  4,167
Retained earnings                                                                            201,956

Total equity                                                                              36,900,272

LIABILITIES
Current liabilities

Trade and other payables                                           8                       4,722,105

Total liabilities                                                                          4,722,105

Total equity and liabilities                                                              41,622,377

Net Asset Value per Share                                                                      £0.97




The financial statements were approved by the Board of Directors on 28 June 2006
and were signed on its behalf by:



Patrick Francis Conroy
Director




Frederick Peter Forni
Director





The accompanying notes on pages 11 to 17 form an integral part of these
financial statements.


T2 Income Fund Limited

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY




                                             Share           Share         Other       Retained     Total
                                           Capital         Premium      Reserves       Earnings     Equity
                             Note              GBP             GBP     GBP                  GBP             GBP




Proceeds from preferred       
ordinary shares issued        9                  -      38,000,000             -              -      38,000,000
                                                                               
Set-up fees in relation to                                                     
issue of shares                                  -     (1,305,851)             -              -      (1,305,851)
Amortisation of fair value                       
of options                                       -               -         4,167              -           4,167
Profit for the period                            -               -                      201,956         201,956
                                                                 

Balance at 31 December                                                     
2005                                             -      36,694,149         4,167        201,956      36,900,272






The accompanying notes on pages 11 to 17 form an integral part of these
financial statements.


T2 Income Fund Limited

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



STATEMENT OF CASHFLOWS




                                                                                   Period to
                                                                                    31 December 2005
                                                                 Notes                           GBP
Cash flows from operating activities

Cash generated from operations                                    10                         156,573

Net cash inflow from operating activities                                                    156,573

Cashflows from investing activities
Purchase of investments                                                                  (1,156,429)
                                                                                         

Net cash outflow from investing activities                                               (1,156,429)

Cashflows from financing activities
Proceeds from issue of shares                                                             38,000,000
Set-up fees paid                                                                         (1,305,851)
                                                                                         

Net cash inflow from financing activities                                                 36,694,149
                                                                                          

Net increase in cash and cash equivalents                                                 35,694,293

Cash and cash equivalents at beginning of period                                                   -
                                                                                                   

Cash and cash equivalents at end of period                                                35,694,293






The accompanying notes on pages 11 to 17 form an integral part of these
financial statements.






T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



1.   GENERAL INFORMATION

T2 Income Fund Limited ('the Company') was incorporated and domiciled in
Guernsey, Channel Islands, as a company limited by shares on 9 June 2005.  The
address of the registered office is P.O. Box 211, Regency Court, Glategny
Esplanade, St Peter Port, Guernsey, Channel Islands, GY1 3NQ.



2.   ACCOUNTING POLICIES

(a)  Basis of preparation

The financial statements of the Company have been prepared in accordance with
International  Financial Reporting Standards('IFRS') and all applicable
requirements of Guernsey Company Law.  The financial statements have been
prepared under the historical cost convention as modified by the revaluation of
investments at fair value through the Income Statement.



(b)  Foreign currency translation

(i)   Functional and presentation currency

The Financial Statements of the Company are presented in the currency of the
primary economic environment in which the entity operates (its functional
currency). The Directors have considered the primary economic currency of the
Company and considered the currency in which the original finance was raised,
distributions made, and ultimately what currency would be returned on a break up
basis.  The Directors have also considered the currency to which the underlying
investments are exposed.  On balance, the Directors believe Sterling best
represents the functional currency.  Therefore the books and records are
maintained in Sterling and for the purpose of the financial statements the
results and financial position of the Company are presented in Sterling, which
is also the presentation currency of the Company.



(ii)      Transactions and balances

Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the
translation at period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.



Translation differences on non-monetary items are reported as part of the fair
value gain or loss reported in the Income Statement.



(c) Revenue recognition

Revenue is recognised as follows:



Interest income - recognised on an accruals basis as this relates to bank
interest income.



Other income - relates to closing fees and is recognised on an accruals basis.



(d)      Expenditure

All expenses are accounted for on an accruals basis.  The management fees,
administration fees, finance costs and all other expenses (excluding set up
expenses which were offset against share premium) are charged through the income
statement.



(e) Taxation

The Company is exempt from Guernsey taxation under the Income Tax (Exempt
Bodies) (Guernsey) Ordinance, 1989. A fixed annual fee of £600 is payable to the
States of Guernsey in respect of this exemption.



(f)   Share issue expenses

Share issue expenses of an equity transaction are accounted for as a deduction
from equity (net of any income tax benefit) to the extent they are incremental
costs directly attributable to the equity transaction that otherwise would have
been avoided.





T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



2. ACCOUNTING POLICIES (continued)

(g) Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short term highly liquid investments and bank overdrafts.



(h) Trade and other receivables

Receivables are recognised initially at fair value plus transaction costs that
are directly attributable to their acquisition or origination.  They are
subsequently measured at amortised cost.



(i)   Trade and other payables

Payables are recognised initially at fair value and subsequently stated at
amortised cost.



(j)   Financial assets and liabilities at fair value through profit or loss

Purchases and sales of investments are recognised on trade date - the date on
which the Company acquires or disposes of the economic benefits of the asset.
Investments are initially recognised at fair value, and transaction costs for
all financial assets and financial liabilities carried at fair value through
profit or loss are expensed as incurred.  Investments are derecognised when the
rights to receive cash flows from the investments have expired or the Company
has transferred substantially all risks and rewards of ownership.



The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date.  The quoted market price used
for financial assets held by the Company is the current bid price.  The fair
value of financial instruments that are not traded in an active market is
determined by using valuation techniques.  Valuation techniques used include the
use of comparable recent arm's length transactions.



Gains and losses arising from changes in the fair value of the financial assets
at fair value through profit and loss are included in the income statement in
the period in which they arise.



(k)       Critical accounting estimates and judgements in applying accounting
policies

The Company makes estimates and assumptions that affect the reported amounts of
assets and liabilities within the next financial year.  Estimates are
continually evaluated and based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under
the circumstances.



Unlisted Debt Securities

The Company can invest in financial instruments which are not quoted in active
markets.  Fair values are determined by using valuation techniques.  Where
valuation techniques, such as the Market Capitalization Approach, are used to
determine fair values they are carried out by an independent valuation firm
specifically engaged by the Company to carry out the valuations.  Changes in
assumptions could affect the reported fair value of financial instruments.



(l)   New standards

New standards and interpretations have been published that are mandatory for the
Company's accounting periods beginning on or after 1 January 2006 or later
periods and which the Company has not early adopted:



The Company has not early adopted the new standard IFRS 7 (Financial
Instruments: Disclosure), therefore no disclosures have been made.



The Company has early adopted IAS 39(Financial Instruments: Recognition and
Measurement) (amendment).


T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



3. FINANCIAL RISK MANAGEMENT

(1) Financial risk factors

The Company is exposed to interest rate risk, credit risk, liquidity risk and
currency risk arising from the financial instruments it holds. The risk
management policies employed by the Company to manage these risks are discussed
below.  The primary objectives of the financial risk management function are to
establish risk limits, and then ensure that exposure to risks stays within these
limits.  The operational and legal risk management functions are intended to
ensure proper functioning of internal policies and procedures to minimise
operational and legal risks.



(a) Interest rate risk

Interest rate risk is the risk that the value of financial instruments will
fluctuate due to changes in market interest rates. The Company will have
exposure to interest rate risk if the Board determines that the Company should
borrow to fund future investments. The exposure arises on the difference between
the rate of interest the Company is required to pay on borrowed funds and the
rate of interest which it receives on the debt securities in which it invests.



The Company is exposed to risks associated with the effects of fluctuations in
the prevailing levels of market interest rates on its financial position and
cash flows.



The Company may, but is not required to, hedge against interest rate
fluctuations by using standard hedging instruments such as futures, options and
forward contracts.



(b) Credit risk

Credit risk arises when a failure by counterparties to discharge their
obligations could reduce the amount of future cash inflows from financial assets
on hand at the balance sheet date.  The Company invests primarily in senior
debt,  senior subordinated debt and junior subordinated debt.  The maximum
investment size, at the time of the investment, will generally be limited to 15%
of the Company's Gross Assets.  However, the Company may make larger investments
and it may seek to syndicate or sell down a portion of any such investment,
after it has been acquired.



It is proposed that a credit rating system be established.  The purpose of the
rating system is to monitor the credit quality of T2's investment portfolio on
both an individual and portfolio basis and the future on-going monitoring
required.



(c) Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and
liabilities does not match. As the Company's investments will not generally be
in publicly traded securities, they are likely to be subject to legal and other
restrictions on resale or otherwise be less liquid than publicly traded
securities. The illiquidity of the Company's investments may make it difficult
for them to be sold quickly if the need arises. Since the Company intends to
invest in debt securities with a term of up to seven years, and hold investments
in debt securities and related equity securities until maturity of the debt, the
Company does not expect realisation events to occur in the near term.




(d) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate
due to changes in foreign exchange rates. The Company may make investments in
currencies other than Sterling. To the extent that it does, the Company will be
exposed to a potentially adverse currency risk. Changes in the rate of exchange
may affect the value of the Company's investments, and the level of income that
it receives from those investments.  The Company's policy is not to enter into
any currency hedging transactions.









T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



3. FINANCIAL RISK MANAGEMENT (continued)


Assets                                                            USD             GBP            Total
Financial assets at fair value through p&l account          5,887,644               -        5,887,644
Cash and cash equivalents                                           -      35,694,293       35,694,293
Trade and other receivables                                    31,688           8,752           40,440
Total assets                                                5,919,332      35,703,045       41,622,377

Liabilities
Trade and other payables                                    4,653,822          68,283        4,722,105




(e)  Market risk

The Group's exposure to market risk is comprised mainly of movements in the
Company's investments.  The investment portfolio is managed within parameters
disclosed in the Company's offering memorandum.



(2) Fair value estimation

The fair values of the Company's short-term trade receivables and payables
approximate to their carrying amounts at the balance sheet date.



4. FUND EXPENSES

Management fee

The Investment Manager, T2 Advisers, LLC, is entitled to receive an annual fee
payable quarterly in advance. For the period from the Company's admission to
trading on AIM until the quarter end next following six months from the date of
admission, the management fee will be calculated based on 2% of the initial
value of the Company's gross assets upon admission. Thereafter, the management
fee will be calculated based on 2% of the average value of the Company's gross
assets at the end of the two most recently completed quarters.



Total fees charged for the period ended 31 December 2005 amounted to GBP300,967.
The total amount due and payable at the period end amounted to GBP2,150.



Administration and secretarial fees

The Administrator and Secretary, Butterfield Fund Services (Guernsey) Limited,
is entitled to an annual fee for its services as administrator and secretary, of
0.075% of the Net Asset Value of the Company, calculated on the last business
day of each quarter and payable quarterly in arrears.  The fee is subject to a
minimum of GBP40,000 per annum.   They are also due a fixed accounting fee of
GBP10,000 per annum plus a fixed fee of GBP5,000 for their registrar services.



Total Administration and secretarial fees (excluding accounting and registrar
fees) charged for the period ended 31 December 2005 amounted to GBP16,329.  The
total amount due and payable at the year end amounted to GBP10,082.



Custodian fees

The Custodian, Butterfield Bank (Guernsey) Limited is entitled to custody fees
of 0.02% of the Net Asset Value of the Company subject to a minimum of GBP15,000
per annum.  The fee is payable quarterly in arrears.



Total fees charged for the period ended 31 December 2005 amounted to GBP6,123.
The total amount due and payable at the year end amounted to GBP3,781.



Directors fees

The current level of fees for the Chairman of the Board of Directors of the
Company is GBP25,000 per annum, and GBP20,000 each for non-executive directors.





T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



4. FUND EXPENSES (continued)

Total fees charged to the Company for the period ended 31 December 2005 amounted
to GBP36,418.  The total amount due and payable at the period end amounted to
GBP16,250.



5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
                                                                                     2005
                                                                                      GBP

Listed debt securities                                                  1,186,814

Unlisted debt securities                                                4,700,830

                                                                        5,887,644



Gains recognised in relation to financial assets at fair value through
profit and loss
- realised                                                              -

- unrealised                                                            33,384

                                                                        33,384




6. TRADE AND OTHER RECEIVABLES
                                                                                               2005
                                                                                                GBP

Accrued bank interest                                                                         7,541
Loan interest receivable                                                                      6,683
Prepaid expenses                                                                             26,216
                                                                                             40,440


7. CASH AND CASH EQUIVALENTS
                                                                                               2005
                                                                                                GBP

Call account                                                                              5,110,197
Fixed deposit                                                                            30,584,096
                                                                                         35,694,293


For the purposes of the Cash Flow Statement, the above items represent the year
end cash and cash equivalents.



8.      TRADE AND OTHER PAYABLES
                                                                                               2005
                                                                                                GBP
Current liabilities
Payable for investments                                                                   4,650,853
Management fees                                                                               2,150
Administrator's fees                                                                         10,082
Custodian's fees                                                                              3,781
Audit fees                                                                                   15,000
Directors' fees                                                                              16,250
Other accruals                                                                               23,989
                                                                                          4,722,105

T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



9.   SHARE CAPITAL

The Company has the power to issue an unlimited number of ordinary shares of no
par value.



On incorporation two Ordinary Shares were issued at 100p each to the subscribers
to the Memorandum of Association of the Company.  On Admission to the AIM on 5
August 2005 the Company repurchased these Ordinary Shares.



On Admission to the AIM on 5 August 2005 the Company allotted 38,000,000 fully
paid Ordinary Shares.



Ordinary shares are classified as equity.  Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction from
the proceeds, net of tax.



The Investment manager, T2 Advisers LLC, has been granted options to purchase
4,222,222 Ordinary Shares at the Placing Price, as reduced by dividends paid per
share, subject to the Company achieving certain performance criteria as follows:



The Investment manager options will vest and become exercisable in respect of 50
per cent immediately on conclusion of the first three month period during which
the Company pays dividends on the Shares in an aggregate amount during that
three month period equal to or exceeding 8 per cent of the Initial offer Price
on an annualized basis (the hurdle rate). The remaining 50 per cent will vest
and become exercisable immediately on conclusion of the twelve month period
following the date specified above.



In accordance with IFRS 2, the value of the options was based upon an estimate
of the fair value of the services received. The Company believes that the fair
value can be determined by a comparison to a performance-based incentive fee
program, which arrangements are common practice in the industry, because the
option program was similarly intended to compensate the Investment manager for
achieving superior returns.  The fair value estimate was based, in good faith,
upon the present value of a hypothetical performance-based incentive fee,
assuming a fee of 20% of the excess return above an 8% hurdle rate over a
ten-year period; the fair value of the options was determined to be £100,000.
For the period ending 31 December 2005 the Company charged £4,167 to expense
representing the amortization of the fair value of the options.



The calculation of fair value is sensitive to a number of assumptions, including
the average interest rate on investments, the pace of investment activity, the
amount and cost of leverage, if any, and expenses.  It should be noted that the
actual value of the options may ultimately be substantially greater or less than
the fair value calculated. If actual financial performance is significantly
better than the assumptions used in the calculation of fair value, the options
could be worth several million pounds; to the extent that the performance
criteria is not achieved, the options would expire worthless.


Share Capital                                               Shares in                           GBP
                                                                issue

Ordinary shares
Shares issued during the period                            38,000,000                             -
Shares in issue as at 31 December 2005                     38,000,000                             -

Share Premium                                                                                   GBP

Shares issued during the period                                                          38,000,000
Set-up fees                                                                             (1,305,851)
Total as at 31 December 2005                                                             36,694,149

Total value of shares in issue as at 31 December 2005                                    36,694,149

T2 Income Fund Limited



NOTES TO THE FINANCIAL STATEMENTS (continued)

For the period from 9 June 2005 (date of incorporation) to 31 December 2005



10. CASH GENERATED FROM OPERATIONS
                                                                                               2005
                                                                                                GBP

Profit for the period                                                                       201,956
Adjustments for:
Unrealised gain arising on adjustment to fair value of investments                         (33,384)
Amortisation of fair value of options                                                         4,167
Changes in working capital:
Trade and other receivables                                                                (87,418)
Trade and other payables                                                                     71,252

Cash inflow from operations                                                                 156,573



11. RELATED PARTY TRANSACTIONS

Saul Rosenthal is a member of BDC Partners which owns T2 Advisers LLC.

Saul Rosenthal and Patrick Conroy are directors of T2 Advisers LLC.

Patrick Firth is a director of the Administrator Butterfield Fund Services
(Guernsey) Limited.



The following transactions were carried out with related parties:
                                                                                               2005
                                                                                                GBP
Amounts due to related parties
Fees due to P Conroy as Chief Financial Officer to the Company                                4,167

Fees due to the Investment Manager T2 Advisers, LLC                                           2,150



The Investment manager has been granted options giving it the right to acquire
4,222,222 Ordinary Shares at the Placing Price, subject to the Company achieving
certain performance criteria.  As at 31 December 2005 the criteria had not been
met, refer note 9.



Directors shareholdings in Company

Saul Rosenthal holds 1,055,556 ordinary shares in the Company as at 31 December
2005.  This is equal to a beneficial interest of 2.5% based on the Share Capital
as at that date when diluted by the number of Ordinary Shares subject to the
option.



12.       EARNINGS PER SHARE

Earnings per share has been calculated by dividing the profit attributable to
ordinary share holders (£201,956) by the weighted average number of ordinary
shares outstanding during the period (38,000,000).  Diluted earnings per share
has been calculated by dividing the profit attributable to ordinary share
holders (£201,956) by the weighted average, except for the period between
incorporation and flotation, number of ordinary shares outstanding during the
period adjusted for the effects of all dilutive potential ordinary shares
(42,222,222).



13.       POST BALANCE SHEET EVENTS

Since the year end the Company has made a number of new investment purchases,
these are detailed below:



27/03/06                        US$1,400,000                        FCI International S.A.S.
05/04/06                        US$4,850,000                        Stratus Technologies, Inc 2nd Lien (3/06)
25/04/06                        US$1,945,500                        Stratus Technologies, Inc 2nd Lien (3/06)
08/05/06                        US$7,500,000                        Corel Primary Corel Corp
08/06/06                        US$5,015,822                        Infor Global Solutions 2nd Lien




T2 Income Fund Limited



Portfolio Statement

As at 31 December 2005




                                                                 Fair                      % of net
                                                                Value                        assets

Corel Corporation (2/05) 2nd Lien Term Loan                 1,186,814                         3.22%

Peer 1 Network (USA) Inc. loan                              4,700,830                        12.74%

Total financial assets at fair value through profit &       
loss                                                        5,887,644                        15.96%

Cash balances                                              35,694,293                        96.73%

Other net liabilities                                     (4,681,665)                       -12.69%

Net Assets                                                 36,900,272                       100.00%



The above financial information does not constitute statutory accounts within
the meaning of Section 240, Companies Act 1985. The information for the period
has been extracted from the statutory accounts of the Group for the period ended
31 December 2005 which have been audited by the Group's auditors Grant Thornton
UK LLP and whose report thereon is unqualified.





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