Information  X 
Enter a valid email address

Value Catalyst Fund (VCF)

  Print      Mail a friend       Annual reports

Wednesday 20 September, 2006

Value Catalyst Fund

Final Results

Value Catalyst Fund Limited (The)
20 September 2006


The Value Catalyst Fund Limited

Chairman's Statement

The year in review

I am pleased to report that in the twelve months ended 30th June, 2006 the Net
Asset Value ('NAV') of The Value Catalyst Fund Limited ('VCF' or the
'Company') increased by 12.82% (dividends reinvested).

For the period from inception to 30th June, 2006 the Company's NAV has
increased by 118.32% (dividends reinvested).

The listing on the Alternative Investment Market (AIM) was successfully
completed in December 2005. This should have the impact of increasing
marketability for shares in the fund, whilst also enhancing the investment
adviser's opportunities to pursue the fund's aim of maximising total return.

On behalf of the shareholders I should like to express my thanks to the team
at Laxey Partners for the excellent overall performance.



John Bourbon
Chairman

19th September, 2006

Investment Advisor's Report

At cross purposes!

Part of the lot of being an activist shareholder is having to constantly address
the unsaid issues that face shareholders or companies. Near the top of the list 
are jobs for the directors, either executive or non-executive. We're not quite 
sure how many times a non-executive has told us that he (or she) doesn't do it 
for the salary but in most cases, we're sorry: we just don't believe you. It 
doesn't seem to matter how wealthy people are, the idea of an extra £15k works 
wonders and by the time you reach the chairman you can normally multiply 
everything by two. That's just for funds. For operating companies the numbers 
get much larger, although the excuses are often the same. It simply amazes us 
the hog wash that some people soak up from company directors, when really they 
are keen to simply find anything which keeps them in gainful employment.

What a surprise you might say, but shareholders, especially those claiming to 
be professional shareholders need to be ruthless with those they choose to run 
their investments. This might sound obvious but it amazes us just how little 
focus on the correct people shareholders have when the chairman or CEO position 
needs to be filled. To us this is something the private equity world has 
excelled at. Some might call them no more than glorified head hunters. Whatever 
they do, it has worked - even after paying their performance fees! They expend 
considerable effort picking the right people, in fact it's top of their list and 
so it should be. To us, all too often, institutional shareholders are more than 
happy to approve whoever the board suggests and we believe they are just not 
interacting enough on a critical decision. We have tried to find some data on 
pension fund deficits in private equity firms - but couldn't, although we feel 
confident that there are a lot fewer holes there than at the traditional fund 
managers. The point is, the so called long-term and supportive shareholder is 
often asleep at the wheel. We don't advocate wholesale change to every company 
but long term institutional shareholders with pension fund deficits
should ask themselves why those holes are there and why the private equity 
world, with its focus on the best possible management, is winning.

How we see risk

As an absolute return vehicle the investment advisor aims to minimise market 
risk, currency risk and interest rate risk.

Market risk (beta) will be reduced by the selective use of derivative and 
synthetic positions, including futures, stock shorts and index swaps while 
capturing stock-specific risk (alpha). This procedure is applied to all 
investments. Using regression and volatility analysis we will determine the 
beta for the investment against a list of possible hedges while considering the 
degree of the investment's leverage. We will also consider the relative costs 
of the hedge versus the expected return of the investment and the capital used 
in order to hedge in an effort to maximise the fund's performance.

If using futures did not provide a sufficiently tight correlation between the
investment and the hedge then additional analysis would be conducted to include 
the use of short stock positions. If neither of these options was available we 
would consider use of other instruments such as index swaps. The betas will 
then be monitored on a continuing basis and the hedge adjusted accordingly. 
The fund's aggregate estimated market exposure is monitored daily.

If we perceived the value of an investment to have a large exposure to a move in
interest rates, such as the capitalisation rate of a property company, then we
would consider the use of interest rate futures to reduce this risk.

All currency risks are eliminated by the use of forward contracts.

As a result the fund's performance has shown little correlation to the market.
The graph in the annual report shows our estimated exposure versus a rolling 
beta of the funds performance against a composite index comprising of 50% 
developed markets and 50% emerging markets. From the divergence of the estimated 
exposure with the rolling beta, it can clearly be seen that the current 
investment and hedging policy has been very successful in reducing market risk 
while the fund continues to produce absolute returns.

Closed-end funds tend to be easier to hedge than operating companies, where 
large positions can introduce greater volatility to the portfolio and greater 
stock specific risk. Should this be a concern? Well yes if we don't believe 
we can extract the return and exit we anticipate, but no if we feel confident 
that is possible. It is vital that we can always see an exit and a liquidity 
event and that's where being an activist is so important to the equation. By our 
actions we can create liquidity events that help us control risk.

Investment Advisor's Report: Portfolio Review

It has been another busy year and we are continuing to find plenty of
opportunities, despite the often repeated statement that discounts are narrow.
Well they might be in the UK but there are plenty of opportunities in different
markets and we expect the next year's report to be covering some of the 
positions we are currently building up in non-UK funds. Below is a recap of 
some of the larger positions your Company has been actively engaged in during 
the year.

Edinburgh Small Companies Trust PLC ('EFS')

Edinburgh Small Companies Trust plc is a UK incorporated investment trust,
investing in UK quoted mid-sized companies.

Laxey Partners first acquired a stake in EFS (22.3% across all funds) in April
2006 when the company was trading at a 20% discount to NAV. To address this
discount, we requisitioned the company to propose a 50% tender at Net Asset
Value, as well as the introduction of a mechanism to manage any future discount
drift, namely, a buy-back facility. If greater than 50% tender then there is
clearly a share register that would prefer its capital returned and the company
will be put into liquidation.

On the 20th of July EFS published a circular in response to our requisition and
to our delight the board went so far as to state that it:

'unanimously recommends that Shareholders vote in favour of the resolution
proposed by Laxey....'

Unanimous board backing for a Laxey proposal? We think this may well be a first!

At the time of writing the tender was still to happen, so it is unclear if the
company will meet all tender requests or liquidate, but the resolution to 
approve the reorganisation was supported by 95% of those who voted.

As at the 30th June, 2006 your Company had a 6.64% economic interest in EFS,
worth $8,363,240, 3.76% of the Company's NAV.

Saurer AG

A Swiss company, Saurer AG manufactures and markets textile machinery and
transmission systems for special vehicles.

Across its funds, Laxey Partners held a 26% stake in Saurer AG and following a
lively AGM in May, a Laxey representative was elected to the board, against the
company's wishes, to undertake a strategic review. However, the company did not
wish to carry out such a review so we called an EGM to replace the chairman and 
a number of board members with a team of operating professionals, who would form
the majority of the board going forward and be able to conduct such a review. 
The week following our EGM notice we sold our stake to a Swiss company called 
Unaxis at CHF120 a share, which was just short of the appraised future value 
for the company.

As at the 30th June, 2006 your Company had a 5.10% economic interest in Saurer,
worth $55,987,041, 25.15% of the Company's NAV.

Freeport PLC

Freeport PLC operates three factory outlet shopping centres on mainland Europe.
The largest and most important of which is in Portugal. Freeport used to be
predominately a UK based company, but after selling its UK assets, all that is
left are the three European centres. It's really the rump of the original
company.

At the end of 2005, Laxey Partners and other shareholders blocked the proposed
re-organisation of Freeport - the board had wanted to move the company off-shore
to Jersey. Whilst there is nothing wrong with Jersey or Guernsey as a
jurisdiction it does leave more to the discretion of the directors than being UK
domiciled. Since then, Sean Collidge, chairman and CEO has left Freeport (citing
shareholder pressure).

Well the incentive structure for Sean wasn't great for shareholders. Based on
valuations, it encouraged 'full' valuations of the centres. It also encouraged
distributions regardless at what price assets where sold at i.e. less than the
valuations the incentive payments had just paid out on. Not ideal, but under
shareholder pressure the non-executives rallied and realized that they needed to
address the positions of chairman and CEO and Collidge subsequently left the
company. The same executives that put all the incentives in place for Sean in 
the first place!

At the time of writing a temporary chairman (although he appears keen to make it
a full time job), is dealing with a number of offers for the company. Clearly 
the new temporary chairman may not want to sell the company because he would 
then need another job and it will be interesting to see how co-operative he 
will be with potential bidders. The jury is out.

As at the 30th June, 2006 your Company had a 7.26% economic interest in Freeport,
worth $22,446,586, 10.08% of the Company's NAV.

Absolute Europe AG and Absolute US AG

Part of the Absolute fund dynasty of Switzerland, the family consolidation
process that has seen Absolute Private Equity AG and Absolute Managers AG merge
continues. The sector that is funds of private equity funds has been very
lucrative to your Company over the last couple of years and we continue to see
opportunities. We don't have a position in it but the new KKR fund, which was
launched at the beginning of this year in a €5bn fanfare, is already trading 15%
below its issue price and following an all too familiar pattern.

This time, Absolute Europe (focus: European hedge funds) and Absolute US (focus:
North American hedge funds) are to merge. Before they do, Absolute Europe is to
distribute 40% of its market capitalisation (expected in October) and Absolute US
has announced the addition of a buy-back facility (for up to 10% of the shares in
issue).

As at the 30th June, 2006 your Company had a 0.43% economic interest in Absolute
Europe, worth $1,820,091, 0.82% of the Company's NAV.

As at the 30th June, 2006 your Company had a 0.43% economic interest in Absolute
US, worth $2,375,844, 1.07% of the Company's NAV.

NERA ASA

NERA is a Norwegian telecoms company focused on transmission and satellite
services. In May, in a deal orchestrated by us, Eltek ASA (a Norwegian telecoms
supplier) proposed the merger of NERA and Eltek. This is a great outcome for NERA
as the combined entity really does seem to have a logical synergy. We had
previously replaced the chairman and CEO of NERA but were still disappointed with
the progress being made. The injection of the dynamic Eltek team should see the
benefits of the combined entity in the next year, although we have now completed
our active participation (other than support for the current management).

As at the 30th June, 2006 your Company had a 4.39% economic interest in NERA,
worth $12,107,672, 5.44% of the Company's NAV.

Roto Smeets De Boer NV ('RSDB')

A graphic and printing services business, RSDB is based in the Netherlands and
serves Northern Europe and Hungary although 70% of its sales are to the Dutch
market; it is the largest printing company in the Netherlands. From its three
divisions: Roto Smeets; PlantijnCasparie and Media Partners it offers a range of
services from printing magazines and promotional materials to their distribution.
The company is listed on the EM Amsterdam Exchange.

Despite its excellent technology, machinery and a solid customer base, RSDB has
drifted and gone largely unnoticed in the market; in its field, it is ranked 8th
or 9th in Europe. It is considerably undervalued and its management has been
criticised for doing little to raise the company's profile.

Over sixty-five percent of the RSBD shares in issue are in the hands of five
shareholders and Laxey Partners, across its funds, has a 19% stake. Share trading
is modest and infrequent, at best.

We would like to see the company de-list and join forces with another player in
its ongoing consolidation. Discussions with one interested party ended in May.
Regrettably, this process was handled poorly and as a consequence, Laxey has
worked closely with the company's Supervisory Board to replace its CEO and to
appoint a new chairman (to the Supervisory Board); which sits above the company's
Executive Board.
One to watch.

As at the 30th June, 2006 your Company had a 4.86% economic interest in RSDB,
worth $6,999,557, 3.14% of the Company's NAV.

Active Capital Trust PLC ('AIT')

AIT is a UK incorporated closed-end fund. Its aim is to achieve an absolute
return from capital appreciation via investment in public and private capital
issues at the early stage of their development.

AIT had the aim of paying shareholders 155p (99.9p per ordinary share plus an
amount equal to an absolute return of 7.5% p.a., on or before 31st May, 2007). 
In the event that the fund was unable to pay this amount shareholders would be 
given the opportunity to consider the future of the fund. Therefore, investors 
who are able to buy shares at a substantial discount have what amounts to a 
win-win situation. Either the fund achieves the payment of the target amount 
or the fund is highly likely to be restructured and the discount captured. 
Whilst the restructuring is not certain the presence of this kind of structure 
attracts investors who will make it more likely!

With this in mind and with almost a quarter of the portfolio in cash, the fund
announced a tender offer for 30% of the shares in issue; with subsequent tenders
following designed to cap the discount at 10%. Prior to this announcement, the
fund was trading at around a 12% discount and has moved to the 7-8% range since.
As a back stop, shareholders will be given the opportunity to vote on the
company's future at the AGM in 2009 if certain performance objectives are not
achieved.

The first, 30% tender occurred on the 11th of July. Across its funds, Laxey
tendered just under half of its position at 97% of NAV.

As at the 30th June, 2006 your Company had a 2.75% economic interest in AIT,
worth $3,576,548, 1.61% of the Company's NAV.

Laxey Partners Limited





Portfolio Statement
As at 30th June, 2006
                                    2006       2006          2005          2005
                                  Market       % of        Market    % of total
                                   value      total         value    net assets           
                                     US$     assets           US$
Description
                         
Investment funds - long      173,249,948      77.82     184,607,885      103.10

Investment funds - long
swaps                         (1,225,228)     (0.55)       (485,545)      (0.27)

Investment funds - short      (5,769,759)     (2.59)     (7,337,686)      (4.10)

Investment funds - long
swaps                          2,774,824       1.25          24,005        0.01

Investment funds - short
swaps                           (162,915)     (0.07)        (42,262)      (0.02)

Equities - long              245,788,469     110.39     126,705,828       70.76

Equities - long swaps           (345,630)     (0.16)         50,738        0.03

Equities - short             (51,470,723)    (23.12)    (27,454,381)     (15.33)

Equities - short swaps          (828,751)     (0.37)              -           -

Equities - warrants              320,178       0.14         369,657        0.21

Fixed income                      27,466       0.01               -           -

Index swaps - short             (461,051)     (0.21)       (637,602)      (0.36)

Futures - long                   643,289       0.29           9,119        0.01

Futures - short               (2,635,633)     (1.18)       (345,536)      (0.19)
                             ------------   --------    ------------     -------
                             359,904,484     161.65     275,464,220      153.85

Other assets less
liabilities                 (137,259,315)   (61.65)    (96,411,305)     (53.85)
                             ------------   --------    ------------     -------

Total net assets             222,645,169     100.00     179,052,915      100.00
                             ============   ========    ============     =======


   
                                                               2006         2005
Analysis of investments by currency                            % of         % of
                                                        investments  investments

British pound                                                 26.05       38.11

United States dollar                                          12.26       20.27

Euro                                                          17.26       14.76

Other                                                         44.43       26.86
                                                            ---------    -------
                                                             100.00      100.00
                                                            =========    =======



                                                               2006        2005
Analysis of investments by geographical                       % of         % of
sector                                                  investments  investments

Asia ex. Japan                                                 9.87        3.70

Chile                                                         (0.20)       9.65

Egypt                                                          0.26        1.10

Europe Developed ex UK                                        16.87       18.92

European Emerging                                              3.61        5.28

European Regional Developed                                    0.45        0.39

Greece                                                         1.09        2.46

Hungary                                                        0.67        0.92

Netherlands                                                    2.11           -

Norway                                                         4.23        5.45

Other                                                         10.67       10.28

South Korea                                                    2.88        2.80

Switzerland                                                   16.61        8.12

Taiwan                                                         0.11        0.64

UK                                                            14.72       27.80

USA                                                           16.05        2.49
                                                            ---------    -------
                                                             100.00      100.00
                                                            =========    =======



Income Statement
For the year ended 30th June, 2006

                                            2006            2005
                                             US$             US$

Income

Dividends                             11,938,611       7,513,962

Interest                               1,409,191         440,984

Net realised gains on realisation of
financial assets and liabilities at
fair value through the profit 
and loss                              60,002,290       4,578,797

Net unrealised (loss)/gains on
financial assets and liabilities 
other than currency forwards at fair
value through the profit and loss    (20,187,948)     26,653,802

Net unrealised (loss)/gains on
currency forwards at fair value 
through the profit and loss            (9,263,591)      8,657,020

                                        ---------       ---------
Total investment income                43,898,553      47,844,565
                                        ---------       ---------

Expenses

Dividends payable on short positions   1,233,114       1,043,334

Interest expense                      10,188,253       4,470,509
                                       ---------       ---------
Investment expenses                   11,421,367       5,513,843
                                       ---------       ---------

Investment management fee              5,556,441       4,370,915

Performance fee                          955,464       2,043,146

Administration fee                       375,468         300,485

Audit fees                                30,430          30,430

Directors' fees                          102,091          52,877

Other expenses                         1,353,679       2,123,627

                                       ---------       ---------
Total other expense                    8,373,573       8,921,480
                                       ---------       ---------                              

Total expenses                        19,794,940      14,435,323
                                         
                                       ---------       ---------
Net profit                            24,103,613      33,409,242
                                       =========       =========

Earnings per ordinary share
Basic and fully                         US$20.57        US$30.77
diluted                                =========       =========




Balance Sheet
As at 30th June, 2006                          2006             2005
                                                US$              US$
Assets

Investment funds - long                 173,249,948      184,607,885

Investment funds - long                   2,774,824           24,005
swaps

Investment funds - short                      5,220                -
swaps

Equities - long                         245,788,469      126,705,828

Equities - long swaps                       704,516           96,368

Equities - warrants                         320,178          369,657

Index swaps - short                         360,607           33,475

Debt securities                              27,466                -

Futures - long                              643,289            9,119

Futures - short                             157,274          217,201

Amounts receivable on currency
forwards                                  5,374,306        9,043,418

Cash at bank and brokers                  3,932,564        1,286,644

Cash held as margin at                   27,114,413       20,416,083
brokers

Amounts due from outstanding sale
settlements                              11,516,901        1,743,606

Other debtors and accrued income          1,690,020          248,625
  
                                         ----------        ---------
Total assets                            473,659,995      344,801,914
                                         ==========        =========

Equity

Share capital                                 1,327            1,186

Share premium                           135,071,990      110,683,952

Retained earnings                        87,571,852       68,367,777
                                         ----------        ---------
Total shareholders' funds               222,645,169      179,052,915
                                         ----------        ---------

Liabilities

Investment funds - short                  5,769,759        7,337,686

Investment funds - short swaps              168,135           42,262

Investment funds - long swaps             1,225,228          485,545

Equities - long swaps                     1,050,146           45,630

Equities - short swaps                      828,751                -

Equities - short                         51,470,723       27,454,381

Index swaps - short                         821,658          671,077

Futures - short                           2,792,907          562,737

Amounts payable on currency forwards      7,114,357        1,519,878

Overdrawn balances at                   166,677,377      119,346,722
brokers

Amounts due for outstanding purchase
settlements                               7,274,001        1,893,417

Other creditors and accrued expenses      5,821,784        6,389,664
                                         ----------        ---------
Total liabilities                       251,014,826      165,748,999
                                         ----------        ---------

Total liabilities and equity            473,659,995      344,801,914
                                         ==========        =========

Net asset value per ordinary share        US$181.33        US$164.81
                                         ==========        =========





Statement of Changes in Net Assets
For the year ended 30th June, 2006

                            Share           Share       Retained
                          capital         premium       earnings        Total
                              US$             US$            US$           US$

Balance at 1st
July, 2004                  1,183     110,260,105     37,558,081   147,819,369

Increase in net
assets arising
from operations                 -               -     33,409,242    33,409,242

Dividend                        -               -     (2,599,546)   (2,599,546)

Issue of shares                 3         423,847              -       423,850
                          -------       ---------      ---------     ---------
Balance at 30th
June, 2005                  1,186     110,683,952     68,367,777    179,052,915
                          -------       ---------      ---------      ---------

Balance at 1st
July, 2005                   1,186     110,683,952    68,367,777    179,052,915

Increase in net
assets arising
from operations                  -               -    24,103,613     24,103,613

Dividend                         -               -    (4,899,538)    (4,899,538)

Issue of shares                141      24,388,038             -     24,388,179
                           -------       ---------      ---------     ---------
Balance at 30th
June, 2006                   1,327     135,071,990     87,571,852   222,645,169
                           =======       =========      =========     =========


Cash Flow Statement
For the year ended 30th June, 2006

                                              2006              2005
                                               US$               US$

Operating activities

Dividends received                      10,502,399         9,162,084

Interest received                        1,404,008           428,286

Dividends paid on short                 (1,607,098)       (1,078,640)
positions

Management fee paid                     (4,714,246)       (3,099,273)

Administration fee paid                   (367,971)         (296,152)

Performance fee paid                    (2,043,146)       (1,819,184)

Other expenses paid                     (2,155,997)       (1,643,672)

Interest paid                           (9,474,362)       (4,208,232)

Increase in cash held as margin         (6,698,330)       (5,701,267)
                                         ---------         ---------
Net cash outflow from operating
activities                             (15,154,743)       (8,256,050)
                                         ---------         ---------

Investing activities
Purchase of investments               (507,868,139)     (280,730,178)

Sale of investments                    458,849,506       251,286,688
                                        ----------        ----------
Net cash outflow from investing
activities                             (49,018,633)      (29,443,490)
                                        ----------        ----------

Financing activities

Dividend paid                             (756,111)       (2,175,696)

Subscriptions                           20,244,752                 -
received                                ----------        ----------

Net cash inflow/(outflow) from
financing activities                    19,488,641        (2,175,696)
                                        ----------        ----------

Decrease in cash and cash equivalents  (44,684,735)      (39,875,236)

Opening cash and cash equivalents      (118,060,078)     (78,184,842)
                                        ----------        ----------

Closing cash and cash equivalents      (162,744,813)     (118,060,078)
                                         ==========        ==========





Notes to the Financial
Statements
For the year ended 30th June, 2006

1.  Accounting policies

(a) Basis of preparation

    The financial statements have been prepared in accordance with the 
    historical cost convention as modified by the revaluation of investments. 
    The principal accounting policies which have been applied are set out below, 
    such policies complying with International Financial Reporting Standards.

    The Company has adopted the US$ as its measurement and reporting currency. 
    The Company trades in a number of different currencies and markets and as a
    consequence the Directors have determined that the measurement currency of 
    the Company is the currency in which shares are issued.

2.  Dividend

    2006 Dividend

                                                                   Total
                                                                     US$
    2005 Dividend
    Paid 30th September 2005
    Dividend of US$4.51 per ordinary                           4,899,538
    share                                                      =========

    2004 Dividend
    Paid 25th September, 2004
    Dividend of US$2.40 per ordinary                           2,599,546
    share                                                      =========

3.  Investments

                                                    2006            2005
                                                     US$             US$

       Long positions:
              Market value                   421,233,316     311,281,687
                                              ==========       =========

              Cost                           371,213,177     246,032,508
                                              ==========       =========

       Short positions:
              Market value                   (61,328,832)    (35,817,467)
                                              ==========       =========

              Proceeds                       (51,868,410)    (31,315,953)
                                              ==========       =========





4.  Share capital
                                   2006        2006           2005        2005
                                   Number       US$           Number       US$
    Authorised share capital
    Founder shares of US$1          100         100            100         100
    each
    
    Ordinary shares of       49,900,000      49,900     49,900,000      49,900
    US$0.001 each
                                            --------                   --------
                                             50,000                     50,000
                                            ========                   ========

                                   2006        2006           2005        2005
                                   Number       US$           Number       US$
    Issued share capital
    Founder shares of US$1          100         100            100         100
    each                        ---------    --------      ---------    --------

    Ordinary shares of
    US$0.001 each

    At 1st July, 2005         1,086,372       1,086      1,083,144       1,083
    Issued during year          141,417         141          3,228           3
                               ---------    --------      ---------    --------
    At 30th June, 2006        1,227,789       1,227      1,086,372       1,086
                               ---------    --------      ---------    --------

    Total issued share                        1,327                      1,186
    capital                                 ========                   ========

    In September 2005, the Company issued 23,358 Ordinary Shares to shareholders
    who elected to reinvest their 2005 dividend. In November and December 2005,
    the Company issued 31,076 and 86,983 Ordinary Shares respectively.

5.  Reserves
                                       2006            2005
                                        US$             US$
    Share premium

    At 1st July, 2005           110,683,952     110,260,105
    
    Relating to issues of        24,388,038         423,847
    shares                       ----------       ---------
    
    At 30th June, 2006          135,071,990     110,683,952
                                 ==========       =========

    Retained earnings
    
    At 1st July, 2005            68,367,777      37,558,081
    
    Net profit for the year      24,103,613      33,409,242
    
    Dividend                     (4,899,538)     (2,599,546)
                                 ----------       ---------
    At 30th June, 2006           87,571,852      68,367,777
                                 ==========       =========

6.  Net asset value per ordinary share

    The net asset value per ordinary share is based on the net assets
    attributable to ordinary shares and the number of ordinary shares in issue
    at 30th June, 2006.

                                             2006                      2005
                                 Total        Per         Total   Per Share
                                            Share
                                   US$        US$           US$         US$

    Net asset value        222,645,169     181.33   179,052,915      164.81
                             =========   ========     =========    ========

7.  Earnings per ordinary share

    The basic earnings per ordinary share is based on the increase in net
    assets arising from operations (before appreciations) during the year
    of US$24,103,613 (2005: US$33,409,242) and the weighted average number
    of ordinary shares in issue during the year of 1,171,696 (2005:
    1,085,603).

8. Publication of Non-Statutory Accounts

The financial information set out in this preliminary announcement does not
constitute statutory accounts. The balance sheet as at 30 June 2006 and the
group profit and loss account, statement of changes in net assets, consolidated
cash flow statement and associated notes for the year then ended have been
extracted from the Company's 2006 financial statements upon which the auditor's
opinion is unqualified.

9. Copies of Annual Report

Copies of the annual report and accounts will be sent to shareholders. Further
copies will be available from HSBC Securities Services (Isle of Man) Limited,
12-13 Hill Street, Douglas, Isle of Man, IM1 1EF.








                      This information is provided by RNS
            The company news service from the London Stock Exchange