Port Erin Biopharma PEBI Final Results

  Port Erin Biopharma (PEBI) - Final Results

RNS Number : 9804P
Port Erin Biopharma Investments Ltd
01 November 2012




1 November 2012



           Port Erin Biopharma Investments Limited (the 'Company')

Report and audited accounts for the period from 3 May 2011 (date of
incorporation) to 30 June 2012

Port Erin Biopharma Investments Limited (LSE : PEBI), a Company investing in
the biotechnology and biopharmaceutical sector, releases its final results for
the year ended 30 June 2012.

The 2012 Annual Report and Audited Accounts will be available from the
Company's website http://www.porterinbiopharma.com/.

Financial Highlights

· Investment income of £510,515

· Operating profit of £422,748

· Profit for the period of £425,208

· Total assets of £3,156,154

· Cash of £237,391

· Total equity and liabilities of £3,156,154

- Operating expenses of less than £95,000

- Near 17% return on available capital

- Net asset value per share of 9.47 pence

               For further information, please contact:-                  

Port Erin Biopharma Libertas Capital Corporate Finance  Peterhouse Capital
Investments Ltd     Limited                             Limited
The Company         Nomad                               Broker
Denham Eke          Sandy Jamieson                      Jon Levinson

+44 162 463 9396    +44 207 569 9650                    +44 207 562 3350





Chairman's statement

Introduction

I have  great pleasure  in presenting  the maiden  annual report  and  audited 
accounts for Port Erin Biopharma Investments Limited.

We set up the company over a  year ago, essentially to track my own  portfolio 
investments within the biotechnology sector. This is a sector which I  believe 
to be both undervalued and to  offer excellent opportunities in its  potential 
for growth. This is a view that I have outlined in the recently published book
"Cracking the Code", which outlines the tremendous advances being made in  the 
bio sciences as a result of the fusion of computer power and cumulative  human 
discovery.

Financial Review

We raised net  cash of just  under £2.7 million  (£3.0 million before  listing 
expenses) in September  2011. I am  pleased to report  that, by the  reporting 
date, we have increased our total assets  to £3,156,154 - nearly a 17%  return 
on available capital.  This is  despite the  fact that  it took  some time  to 
become invested.  At  the end  of  June 2012,  we  held cash  of  £237,391,  a 
portfolio of assets valued at £2,909,183 and receivables of £9,580.

During the same period,  we have generated  an income of  £510,515 made up  of 
£16,448 dividend  income,  net sales  gains  of £226,308  and  net  unrealised 
portfolio gains of £267,759. This,  after subtracting all expenses of  £94,062 
and adding interest income  and foreign exchange gains  of £8,755, produced  a 
total comprehensive  income  of  £425,208. In  addition,  admission  costs  of 
£301,954 have been taken into equity.

Bearing in mind the  current size of  the company, I and  the board have  been 
very careful to minimise on-going operating  expenses. Thus we have been  able 
to keep the annual running cost of the Company, after listing expenses,  under 
a relatively modest £95,000.

Strategy and Outlook

Our strategy is very  simple - to invest  the portfolio into those  bio-pharma 
companies which I hold in my personal portfolios.

The bulk  of the  portfolio (approximately  70%) is  and will  be invested  in 
companies that are cash generative, and often dividend paying, and which  have 
market capitalisations in excess of US$ 5 billion. Many of these companies are
situated in the USA, home to the  bulk of the world's largest drug  companies, 
but there are also representatives from  elsewhere in the world, providing  us 
with a diversified spread and a generous income stream. Names such as  Pfizer, 
Inc., Sanofi  SA,  Celgene  Corporation and  GlaxoSmithKline  fall  into  this 
category, and  while growth  for these  companies is  somewhat constrained  by 
their sheer  scale, and  by  rich-world government  pressures on  health  care 
costs, they have substantial exposure to emerging markets. The combination  of 
rich-world standards in drug manufacture and emerging market potential  growth 
in sales is  a potent one  and leads us  to believe that  many of these  large 
companies will experience better than expected sales and profits in the  years 
ahead. Emerging  markets currently  have very  low per  capita expenditure  on 
drugs  and   we  believe   that  this   provides  significant   opportunities. 
Furthermore, Price Earnings ratios and other measures of share values indicate
fundamental opportunities in these larger companies.

To provide greater, albeit more speculative,  upside to the portfolio we  also 
hold  a  range  of  smaller  to   medium  sized  companies  which  amount   to 
approximately a third of the portfolio. Names such as Medivation, Inc.  (which 
is commercialising  a  new  prostate drug)  and  Plethora  Solutions  Holdings 
(developing a male sexual health product), as well as Summit plc (involved  in 
research into Duchenne muscular dystrophy), all feature.

This balanced portfolio approach we hope  will continue to yield positive  NAV 
results and we remain optimistic for the next year.

Jim Mellon

Chairman

Directors' report

The  Directors  of  Port  Erin  Biopharma  Investments  Limited  present   the 
Directors' report and  financial statements  for the  period from  3 May  2011 
(date of incorporation) to 30 June 2012. The Directors have elected to prepare
this set of  financial statements from  the date of  incorporation to 30  June 
2012. A previous set of financial  statements from date of incorporation to  6 
June 2011 was prepared for, the AIM admission.

Principal activity

The Company was formed for the purpose of investing in the biotechnology and
biopharmaceutical sector. The Company was incorporated on 3 May 2011 under the
Isle of Man Companies Act 2006 and has no employees other than Directors. On
15 September 2011 the Company's shares were admitted to AIM.

Results and transfer to reserves

The results and transfers to reserves for the year are set out on page 7.

The Company made a profit for the period after taxation of £425,208.

Dividend

The Directors do not propose the payment of a dividend.

Directors

The Directors who served during the period and to date were:

                         Appointed    Resigned

                                 
James Mellon            3 May 2011
Thomas Winnifrith       3 May 2011 30 May 2012
Nicholas James Woolard  3 May 2011
Denham Eke             30 May 2012



Directors' Interests

As at 30 June 2012, the interests of the Directors and their families (as such
term is defined in the  AIM Rules for Companies) in  the share capital of  the 
Company are as follows:

                          Number of Ordinary Shares  Percentage
                                Direct        Other                  of Issued
                             Interests    Interests
                                                                       Capital
                                     
James Mellon^(1)(2)(3)(4)      310,000    3,850,000                     12.61%
Nicholas James Woolard         100,000            -                      0.30%



Notes to Directors' Interests:



(1) Shellbay  Investments Limited,  wholly owned  by a  trust of  which  James 
Mellon is a life tenant, holds 3,100,000 Ordinary Shares.

(2) Galloway Limited, wholly owned by a trust of which James Mellon is a  life 
tenant, holds 750,000 Ordinary shares.

(3) Denham Eke  is a  director of  Shellbay Investments  Limited and  Galloway 
Limited.

(4) Post period, Galloway Limited  acquired a further 250,000 Ordinary  shares 
on 19 July 2012 and James Mellon is now interested, in aggregate, in 4,410,000
Ordinary shares representing  approximately 13.36 per  cent. of the  Company's 
issued share capital.



As at 30 June 2012 the Directors  and their families (as such term is  defined 
in the AIM Rules for Companies) held the following Warrants:

                           Number of Warrants
James Mellon^(1)                    2,100,000
Nicholas James Woolard^(2)            100,000





Notes to Directors' Interests:



(1) Shellbay Investments Limited acquired 1,500,000 Warrants on 5 August 2011
and a further 600,000 on 9 August 2011.

(2) Nicholas James  Woolard acquired 50,000  Warrants on 12  July 2011 and  a 
further 50,000 on 8 August 2011.



Significant shareholdings

Except for the interests disclosed in  this note, the Directors are not  aware 
of any holding of ordinary shares as  at 30 June 2012 representing 3% or  more 
of the issued share capital of the Company:

                                      Number of Percentage of total

                                ordinary shares      issued capital

                                   30 June 2012        30 June 2012
                                                                

James Mellon^(1)                      4,160,000              12.61%
Share Nominees Limited                4,110,934              12.46%
State Street Nominees Limited         3,250,000               9.85%
The Bank of New York (Nominees)       2,260,000               6.85%
XCAP Nominees Limited                 1,150,500               3.49%
Jim Nominees Limited                  1,135,000               3.44%

Note:

(1) James Mellon's shareholding consists of 3,100,000 shares held by Shellbay
Investments Limited, and  750,000 shares  held by  Galloway Limited.  Shellbay 
Investments Limited and  Galloway Limited are  companies which are  indirectly 
wholly owned by the trustee of a settlement under which James Mellon is a life
tenant. The balance of James Mellon's shareholding is held in his own name.



On behalf of the Board

Denham Eke

Director
18 Athol Street


Douglas

30                                                                     October 
2012
Isle of Man


IM1 1JA


British Isles



Statement of Directors' Responsibilities in  Respect of the Directors'  Report 
and the Financial Statements

The Directors  are responsible  for preparing  the Directors'  Report and  the 
financial statements in  accordance with  applicable law  and regulations.  In 
addition, the Directors have  elected to prepare  the financial statements  in 
accordance with International Financial Reporting Standards.

The financial statements  are required to  give a  true and fair  view of  the 
state of affairs of the Company and of  the profit or loss of the Company  for 
that period.

In preparing these financial statements, the Directors are required to:

·  select  suitable   accounting  policies  and   then  apply   them 
consistently;

· make judgements and estimates that are reasonable and prudent;

·  state  whether  they  have  been  prepared  in  accordance   with 
International Financial Reporting Standards, 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 are responsible for  keeping proper accounting records that  are 
sufficient to show and  explain the Company's  transactions and disclose  with 
reasonable accuracy at any  time the financial position  of the Company.  They 
have general responsibility for  taking such steps as  are reasonably open  to 
them to safeguard the assets  of the Company and  to prevent and detect  fraud 
and other irregularities.

The Directors  are  responsible  for  the maintenance  and  integrity  of  the 
corporate  and  financial  information  included  on  the  Company's  website. 
Legislation  governing  the   preparation  and   dissemination  of   financial 
statements may differ from one jurisdiction to another.

On behalf of the Board

Denham Eke

Director

30 October 2012

Report of the  Independent Auditors, KPMG  Audit LLC, to  the members of  Port 
Erin Biopharma Investments Limited

We have audited the  financial statements of  Port Erin Biopharma  Investments 
Limited for the period from 3 May 2011 (date of incorporation) to 30 June 2012
which comprise  the  Statement  of  Comprehensive  Income,  the  Statement  of 
Financial Position, the Statement of Cash  Flows and the Statement of  Changes 
in Equity and the  related notes. The financial  reporting framework that  has 
been  applied  in  their  preparation  is  applicable  law  and  International 
Financial Reporting Standards (IFRSs).

This report is made solely to the Company's members, as a body. 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 auditor's  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 Auditor

As explained more fully in  the Directors' Responsibilities Statement set  out 
on page 5,  the Directors  are responsible  for the  preparation of  financial 
statements that give a true and fair view. Our responsibility is to audit, and
express an opinion on, the financial statements in accordance with  applicable 
law and International Standards on Auditing (UK and Ireland). Those  standards 
require us  to comply  with  the Auditing  Practices Board's  (APB's)  Ethical 
Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in  the 
financial  statements  sufficient  to  give  reasonable  assurance  that   the 
financial statements are  free from material  misstatement, whether caused  by 
fraud or  error.  This  includes  an assessment  of:  whether  the  accounting 
policies  are  appropriate  to  the  Company's  circumstances  and  have  been 
consistently  applied  and   adequately  disclosed;   the  reasonableness   of 
significant accounting  estimates  made  by the  Directors;  and  the  overall 
presentation of the financial statements.

Opinion on the financial statements

In our opinion the financial statements:

· give a true and fair view of the state of the Company's affairs as at  30 
June 2012 and of its profit for the period then ended; and

· have been properly prepared in accordance with IFRSs.



KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99
1HN

Statement of comprehensive income

for the period from 3 May 2011 (date of incorporation) to 30 June 2012

                                           Notes              
                                                                
                                                           2012
                                                              £ 
                                                                
Investment Income                              3        510,515 
                                                                
Operating expenses                                              
Directors' fees                              2,5       (10,000) 
Other costs                                    4       (84,062) 
Foreign exchange gains                                    6,295 
                                                                
                                                         ────── 
Profit from operating activities               5        422,748 
                                                                
Interest received                                         2,460 
                                                         ────── 
Profit before taxation                                  425,208 
                                                                
Taxation                                    1(i)              - 
                                                         ────── 
Profit for the period                                   425,208 
                                                                
Other comprehensive income                                    - 
                                                         ────── 
Total comprehensive income for the period               425,208
                                                         ══════ 
                                                                
Basic and diluted earnings per share (EPS)                
                                                                
                                              13      0.0181
                                                         ══════ 









The Directors consider that the Company's activities are continuing.



The notes form part of these financial statements.







Statement of financial position

as at 30 June 2012



                                                      Notes            

                                                                    2012
                                                                       £
Current assets
Convertible loans                                       8         64,033
Financial assets at fair value through profit or loss                 

                                                        7      2,845,150
Trade and other receivables                                        9,580
Cash and cash equivalents                                        237,391
                                                                ────────
Total assets                                                   3,156,154
                                                                ════════
Equity and liabilities
Capital and reserves
Share capital                                           6             33
Share premium                                           6      2,699,013
Retained earnings                                                425,208
                                                                ────────
                                                               3,124,254
Current liabilities
Trade and other payables                               10         31,900
                                                                ────────
Total equity and liabilities                                   3,156,154
                                                                ════════



The notes form part of the financial statements.



These financial  statements were  approved by  the Board  of Directors  on  30 
October 2012 and were signed on their behalf by:



Denham Eke



Director

Statement of changes in equity

for the period from 3 May 2011 (date of incorporation) to 30 June 2012



                                             Share    Share Retained         

                                           Premium  Capital   Profit     Total
                                                 £        £        £         £
Balance at 3 May 2011                            -        -        -         -
                                                                         

Total comprehensive income for the                                        
period
                                                 -        -  425,208   425,208

                                                          
Shares issued                            3,000,967       33        - 3,001,000
Share issue costs                        (301,954)        -        - (301,954)
                                          ──────── ──────── ────────  ────────
Balance at 30 June 2012                  2,699,013       33  425,208 3,124,254
                                          ════════ ════════ ════════  ════════





The notes form part of these financial statements.

Statement of cash flows

for the period from 3 May 2011 (date of incorporation) to 30 June 2012



                                                   Notes               

                                                                    2012
                                                                       £
Cash flows from operating activities
Profit for the period                                            425,208
Adjusted for:
Interest received                                                (2,460)
Realised and unrealised gains                                  (494,066)
                                                                 ───────
Operating profit before changes in working capital              (71,318)
Increase in receivables                                          (9,580)
Increase in payables                                              31,900
                                                                 ───────
Net cash outflow from operating activities                      (48,998)
                                                                 ───────
Cash flows from investing activities
Purchase of investments                                      (3,775,097)
Proceeds from sale of investments                              1,359,980
Interest received                                                  2,460
                                                                 ───────
                                                             (2,412,657)
                                                                 ───────
Cash flows from financing activities                                

Share issues                                           6     3,001,000
Share issue costs                                              (301,954)
                                                                 ───────
                                                               2,699,046
                                                                 ───────
Increase in cash and cash equivalents                            237,391
Cash and cash equivalents at beginning of period                       -
                                                                 ───────
Cash and cash equivalents at the end of period                   237,391
                                                                 ═══════





The notes form part of these financial statements.

Notes



(forming part of the financial statements for the period from 3 May 2011 (date
of incorporation) to 30 June 2012)



1 Accounting policies



 Port Erin Biopharma Investments Limited is a Company domiciled
in the Isle of Man. The Company's strategy is to create value for Shareholders
through investing in companies that have the potential to generate substantial
revenues through the development of biopharmaceutical drugs.



 The principal accounting policies are set out below.



 a) Statement of compliance



 The financial statements are prepared on the historical
cost basis except  for the valuation  of financial assets  and liabilities  at 
fair value  through  profit  or  loss and  in  accordance  with  International 
Financial Reporting Standards  (IFRS) and the  interpretations adopted by  the 
International Accounting Standards Board (IASB).



 The financial statements  were approved by the  Board 
of Directors on 30 October 2012.



 b) Basis of preparation



 Use of estimates and judgment

The preparation  of  financial statements  in  conformity with  IFRS  requires 
management to  make  judgements, estimates  and  assumptions that  affect  the 
application of policies and 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 on-going basis. Revisions to accounting estimates are recognised in  the 
period in which  the estimate  is revised if  the revision  only affects  that 
period or in the  period of the  revision and future  periods if the  revision 
affects both current and future periods.



 Going concern

The financial statements have been prepared  on a going concern basis,  taking 
into consideration the level of cash and cash equivalents held by the Company.
The Directors  have  a  reasonable  expectation that  the  Company  will  have 
adequate resources for its continuing  existence and projected activities  for 
the foreseeable future,  and for these  reasons, continue to  adopt the  going 
concern basis in preparing  the financial statements for  the period ended  30 
June 2012.



Functional and presentation currency

These financial  statements  are presented  in  Pound Sterling  which  is  the 
Company's functional currency.



 c) Investment income



  Any  realised  and  unrealised  gains  and  losses  on 
investments are presented within Income.



 Interest income earned during the period, is accrued on
a time apportionment basis, by reference to the principal outstanding and  the 
effective rate applicable.



 Dividend income is recognised when a security held goes
ex-dividend. Dividends are shown as net cash received, after the deduction  of 
withholding taxes.



 d) Financial instruments



 Classification

The Company  classifies  its investments  in  equity securities  as  financial 
assets at  fair value  through  profit or  loss.  These financial  assets  are 
classified as held for trading or  designated at fair value through profit  or 
loss at inception.



 Classification (continued)

Financial assets held for trading are acquired or incurred principally for the
purpose of selling in the short term.



Financial assets designated  at fair value  through profit or  loss are  those 
that are managed  and their  performance evaluated on  a fair  value basis  in 
accordance with the Company's documented investment strategy.



Financial assets that are classified as loans and receivables include  amounts 
due from brokers, other receivables and cash and cash equivalents.



 Recognition/de-recognition

 Purchases and  sales of investments  are recognised  on 
their trade date, which is the date  on which the Company commits to  purchase 
or  sell  the  asset.  Investments  are  initially  measured  at  fair  value. 
Investments are de-recognised when the rights  to receive cash flows from  the 
investments have  expired or  the Company  has transferred  substantially  all 
risks and rewards of ownership.



 Measurement

 Subsequent to initial recognition, all financial assets
and financial liabilities at fair value through profit or loss are measured at
fair value. Any gains and losses  arising from changes in Financial assets  at 
fair value through profit or loss are included in profit or loss in the period
in which they  arise. Interest  from Financial  assets at  fair value  through 
profit or loss is  recognised in the Statement  of Comprehensive Income  using 
the effective interest rate method.  Dividend income from Financial assets  at 
fair  value  through  profit  or  loss  is  recognised  in  the  Statement  of 
Comprehensive  Income  when  the  Company's   right  to  receive  payment   is 
established.



 Fair value measurement principles

 The fair value of investment holdings is based on their
quoted market prices at the reporting date on a recognised exchange or in  the 
case  of   non-exchange  traded   instruments,   sourced  from   a   reputable 
counterparty, without  any  deduction  for  estimated  future  selling  costs. 
Financial assets  are priced  at  their closing  bid prices,  while  financial 
liabilities are priced at their closing offer prices.



 Company assets may, at any time include securities  and 
other financial instruments or obligations that are thinly traded or for which
no market exists and/or which are restricted as to their transferability under
securities laws.



 If  a  quoted  market  price  is  not  available  on  a 
recognised stock exchange,  or a  market is  not sufficiently  active for  the 
market price to be considered reliable, or if a price is not available from  a 
reputable counterparty,  fair  value  of  the  financial  instruments  may  be 
estimated by the Directors using valuation techniques, including use of recent
arm's length  market transactions,  reference  to the  current fair  value  of 
another instrument  that  is  substantially the  same,  discounted  cash  flow 
techniques, option  pricing  models  or any  other  valuation  technique  that 
provides a reliable estimate of prices obtained in actual market transactions.



 Cash and cash equivalents

 Cash and  cash equivalents comprise  cash balances  and 
call deposits with  maturities of three  months or less  from the  acquisition 
date that are subject to an insignificant risk of changes in fair value.



 Compound financial instruments

 Compound  financial  instruments  comprise  convertible 
loans that  can be  converted  to equity  at the  option  of the  issuer.  The 
financial instrument  is initially  recognised at  fair value.  Subsequent  to 
initial recognition, the derivative component is measured at fair value  while 
the non-derivative  loan component  is measured  at amortised  cost using  the 
effective interest method.



 Trade and other receivables

 Trade and other  receivables originated by the  Company 
are initially recognised at  fair value and  subsequently stated at  amortised 
cost less impairment losses.



 Trade and other payables

 Trade and  other payables are  initially recognised  at 
fair value less directly attributable transaction costs. Subsequently they are
measured at amortised cost using the effective interest method.



 e) Share capital and share premium



 Ordinary shares are classified as equity. The  ordinary 
shares of the  Company have  a par value  of £0.000001  each. Excess  proceeds 
received for  the  issue  of  shares  has  been  credited  to  share  premium. 
Incremental costs directly attributable  to the issue  of ordinary shares  are 
recognised as a deduction from equity, net of any tax effects.



 f) Share based payments - warrants



The fair  value  of warrants  is  calculated using  the  Black-Scholes  option 
pricing model  (where no  fair value  of  the service  or assets  provided  is 
evident) and is recognised as expense over the vesting period where applicable
with a corresponding increase in equity. On determining fair values, terms and
conditions attaching to  the warrants  are taken into  account. Management  is 
also required to make certain  assumptions and estimates regarding such  items 
as the  life of  warrants, volatility  and forfeiture  rates. Changes  in  the 
assumptions used to estimate fair  value could result in materially  different 
results.



 g) Foreign currencies



Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction.  Monetary assets  and liabilities  denominated in  foreign 
currencies are retranslated at  the rate of exchange  ruling at the  reporting 
date. All differences are taken to the income statement.



 Non-monetary assets and  liabilities that are  measured 
in terms of  historical cost in  a foreign currency  are translated using  the 
exchange rate at the date of the transaction.



 h) New standards and interpretations not yet adopted



A number of new standards, amendments to standards and interpretations are not
yet effective for  the period, and  have not been  applied in preparing  these 
financial statements:



                                                   Effective date (accounting
                                               periods commencing on or after)


New/Revised International Accounting Standards
/ International Financial Reporting  Standards 
(IAS/IFRS)
IFRS 9  Financial Instruments-  Classification                  1 January 2015
and Measurement
IFRS 10 Consolidated Financial Statements                       1 January 2013
IFRS 11 Joint Arrangements                                      1 January 2013
IFRS  12  Disclosure  of  Interests  in  Other                  1 January 2013
Entities
IFRS 13 Fair Value Measurement                                  1 January 2013



 The  Directors  do  not  expect  the  adoption  of  the 
standards and  interpretations to  have  a material  impact on  the  Company's 
financial statements in the period of initial application.



 There  has been  no material  impact on  the  Company's 
financial statements of new standards  or interpretations that have come  into 
effect during the current reporting period.



 i) Taxation



The Company is subject to income tax at a  rate of 0% in the Isle of Man,  and 
accordingly, no tax has been provided for in these financial statements.



 The  Company may  be subject  to withholding  taxes  in 
relation to income  from investments,  or investment  realisation proceeds  or 
gains, and such amounts will be accounted for as incurred.



2 Directors' fees



The fees of Directors who  served during the period from  3 May 2011 (date  of 
incorporation) to 30 June 2012 were as follows:

                          2012

                             £

                             
James Mellon                 -
Thomas Winnifrith            -
Nicholas James Woolard  10,000
Denham Eke                   -
                       ───────
                        10,000
                       ═══════



On 6  May  2011,  Shellbay  Investments  Limited  entered  into  a  letter  of 
appointment with  the Company  to  provide the  services  of James  Mellon  as 
Non-Executive Chairman of  the Company. The  letter of appointment  is for  an 
initial period of twelve months,  from 16 May 2011 and  was renewed on 1  June 
2012, and may  be terminated  on not  less than  one month's  notice given  by 
either party at any  time. The letter of  appointment contains provisions  for 
early termination,  inter alia,  in the  event of  a breach  by James  Mellon. 
Remuneration under  the letter  of appointment  shall be  payable to  Shellbay 
Investments Limited and  shall be  satisfied by the  issue of  such number  of 
Ordinary Shares equivalent to 15.0 per cent. of any increase in the Net  Asset 
Value of  the Company  over each  quarterly period.  There are  no  provisions 
providing for any benefit to Shellbay  Investments Limited or James Mellon  on 
the termination  of  the  engagement. The  Director  of  Shellbay  Investments 
Limited has agreed to waive any share-based payments until the Net Asset Value
of each share exceeds 10.00 pence.



On 6 May 2011, Thomas Winnifrith entered into a letter of appointment with the
Company to  provide services  as an  Executive Director  and Chief  Investment 
Officer of the Company. The letter of appointment was for an initial period of
twelve months, from 16 May 2011. Thomas Winnifrith's employment was terminated
on 30 May 2012  under the provisions of  the appointment without  compensation 
due.



On 6 May 2011 Nicholas James Woolard entered into a letter of appointment with
the Company to provide  services as a Non-Executive  Director of the  Company. 
The letter of appointment is for an  initial period of twelve months, from  16 
May 2011, and may be terminated on not less than three months' notice given by
either party to  the other  at any time.  The letter  of appointment  contains 
provisions for early  termination, inter  alia, in the  event of  a breach  by 
Nicholas James Woolard. Remuneration under the letter of appointment shall  be 
an annual fee of £10,000 payable on a quarterly basis. There are no provisions
providing for any benefit to Nicholas James Woolard on the termination of  the 
engagement.



Denham Eke was appointed a Director on  30 May 2012 and currently receives  no 
remuneration for providing his services.



At present,  there  are  no other  fees  due  by the  Company  in  respect  of 
investment management services.



3 Investment income

                                             2012

                                                £

                                                
Dividend income                            16,448
Net realised gains on sale of investments 226,308
Net unrealised gains on investments       267,759
                                          ───────
                                          510,515
                                          ═══════



4 Other costs

                                                 2012

                                                    £

                                                    
Auditors' remuneration for the current period  14,400
Bank charges                                      826
Insurance                                       5,939
Marketing                                       1,000
Professional fees                              61,857
Sundry expenses                                    40
                                              ───────
                                               84,062
                                              ═══════



 The Company has no employees other than the Directors.



5 Profit from operating activities



 Profit from operating activities is stated after charging:

                   2012

                      £

                      
Auditors' fees   14,400
Directors' fees  10,000
                ═══════



6 Share capital and share premium



 Each share in the Company confers upon the shareholder:



· the  right  to one  vote  at  a meeting  of  the shareholders  or  on  any 
resolution of shareholders;

· the right to an equal share in any dividend paid by the Company, and

· the right to an equal share  in the distribution of the surplus assets  of 
the Company on its liquidation



 The Company may  by resolution of  Directors redeem, purchase  or 
otherwise acquire  all  or  any  of  the shares  in  the  Company  subject  to 
regulations set out in the Company's Articles of Association.



                                                  2012
                                                     £
Authorised
2,000,000,000 Ordinary shares of £0.000001       2,000
                                              ════════
Issued
33,000,000 Ordinary shares of £0.000001 each        33
                                              ────────
                                                    33
                                              ════════



                                                    2012
                                                       £
Share premium
3 shares issued at incorporation                     997
30,000,000 shares issued on 15 September 2011  2,999,970
Share issue costs                              (301,954)
                                                ────────
At 30 June 2012                                2,699,013
                                                ════════



On incorporation  the  authorised share  capital  of the  Company  was  £2,000 
divided into 2,000 ordinary  shares of £1 each.  At incorporation, 3  ordinary 
shares were subscribed  for at  £333.33 each,  resulting in  share premium  of 
£997.



On 9  May 2011,  pursuant to  a Director's  resolution, the  authorised  share 
capital was  divided into  2,000,000,000 ordinary  shares of  £0.000001  each. 
Following this,  the  shares  issued  at  incorporation  were  sub-divided  by 
1,000,000 resulting in there being 3,000,000 ordinary shares in issue at  this 
date.



On 15 September 2011 the Company issued 30,000,000 ordinary shares at a  price 
of £0.10 each resulting in share premium of £2,999,970.



Capital management

The Company manages its capital to maximise the return to shareholders through
the optimisation of equity. The capital structure of the Company as at 30 June
2012 consists  of  equity  attributable  to equity  holders  of  the  Company, 
comprising issued capital, reserves and retained earnings as disclosed.



The Company manages its capital structure  and makes adjustments to it in  the 
light of economic  conditions and  the strategy approved  by shareholders.  To 
maintain or  adjust  the capital  structure,  the Company  may  make  dividend 
payment to shareholders, return  capital to shareholders  or issue new  shares 
and release the share premium account. No changes were made in the objectives,
policies or processes during the period under review.



7 Financial assets at fair value through profit or loss

              2012

                 £

                 
Quoted   2,802,587
Unquoted    42,563
           ───────
         2,845,150
           ═══════



Equities 2,834,603
Warrants    10,547
           ───────
         2,845,150
           ═══════



8 Convertible loans



The Company has subscribed  US$ 100,000 to a  10% Convertible Promissory  Note 
issued by Ampliphi Biosciences Corporation  of Seattle, USA ("Ampliphi").  The 
terms of the Note, at Ampliphi's  discretion, allow the principal and  accrued 
interest to be converted into either Common Stock at the rate of US$ 0.20  or, 
subject to a number of conditions precedent which, if met, allow the principal
and accrued interest be converted at a discounted rate of 10% of US$ 0.20.



9 Financial instruments



 Financial Risk Management

The Company has risk  management policies that  systematically view the  risks 
that could  prevent  it from  achieving  its objectives.  These  policies  are 
intended to  manage risks  identified  in such  a  way that  opportunities  to 
deliver the Company's objectives are  achieved. The Company's risk  management 
takes place  in  the context  of  day-to-day operations  and  normal  business 
processes  such  as  strategic  and  business  planning.  The  Directors  have 
identified each risk  and are  responsible for  coordinating and  continuously 
improving risk  strategies,  processes and  measures  in accordance  with  the 
Company's established business objectives.



 The Company's  principal financial instruments  consist of  cash, 
receivables and payables arising from its operations and activities. The  main 
risks arising from the  Company's financial instruments  and the policies  for 
managing each of these risks are summarised below.



 Credit Risk

Credit risk is the risk of  loss associated with the counterparty's  inability 
to fulfil its obligations. The Company's credit risk is primarily attributable
to investments, receivables and cash balances with the maximum exposure  being 
the reported balance in the statement of financial position. The Company has a
nominal level of debtors and as such the Company believes that the credit risk
is minimal. The Company holds available cash with licensed banks which have  a 
strong history. The Company considers the credit ratings of banks in which  it 
holds funds in order to reduce exposure to credit risk.



The  carrying  amount  of  financial  assets  represents  the  maximum  credit 
exposure. The maximum exposure to credit risk at the reporting date was:

                          Carrying amount
                                     2012
                                        £
Investments and loans
 Quoted                        2,802,587
 Unquoted                         42,563
Convertible loans                  64,033
Cash and cash equivalents         237,391
                                  ───────
                                3,146,574
                                  ═══════



 Market price risk

Market price risk  is the risk  that the  market price will  fluctuate due  to 
macro-economic issues  such as  changes  in market  factors specific  to  that 
security, market interest rates and foreign exchange rates.



The Company  is  exposed  to  significant  market  price  risks  as  financial 
instruments recognised are linked to market price volatility.



A 1% increase/decrease in market value of investments would  increase/decrease 
equity and profit by £28,452.



 Cash flow and funding risk

The Company  is  exposed  to  liquidity  risk to  the  extent  that  it  holds 
investments that it may not be able to sell quickly at close to fair value.



The risk is managed by  the Company by means of  cash flow planning to  ensure 
that future cash requirements are anticipated and, where financial instruments
have to be sold to  meet these requirements, the process  is carried out in  a 
controlled manner intended to minimise the liquidity risk involved.



 Interest rate risk

A significant  share of  the Company's  assets is  comprised of  cash held  at 
banks. As a result, the Company is subject to risk due to fluctuations in  the 
prevailing level of market  interest rates. However,  income earned from  bank 
interest is not considered material to the Company's performance or  financial 
position.



 Fair values of financial instruments

At 30  June 2012  the carrying  amounts  of cash  resources, trade  and  other 
receivables, and trade and other payables approximate fair value due to  their 
short-term maturities.

Foreign currency risk

The Company is  exposed to foreign  currency risk on  fluctuations related  to 
financial  assets  and  liabilities  that  are  denominated  in  a  number  of 
currencies.



                 GBP equivalents as at 30 June 2012
                                                                    
                                  
                                    Trade &                             

    Convertible            other receivables Cash at bank Total by currency

          loans Investments
              £           £                 £            £                 £
GBP           -     424,240             9,580      120,905           554,725
USD      64,033   1,952,842                 -      108,089         2,124,964
CAD           -      30,057                 -            -            30,057
CHF           -     160,387                 -        4,411           164,798
DKK           -      73,848                 -        1,529            75,377
JPY           -     140,607                 -        2,457           143,064
SEK           -      63,169                 -            -            63,169
        ───────     ───────           ───────      ───────           ───────
         64,033   2,845,150             9,580      237,391         3,156,154
        ═══════     ═══════           ═══════      ═══════           ═══════



The following significant exchange rate applied during the year:



    Average rate for active period Period end rate (30 June 2012)

                                                                
USD                         1.5909                         1.5617



Sensitivity analysis

A 5% per cent. strengthening of Sterling against the US Dollar at 30 June 2012
would have decreased  equity and profit  for the period  by the amounts  shown 
below. The analysis assumes that  all other variables, in particular  interest 
rates, remain constant.



        Equity Profit or loss

                            
USD (£138,558)     (£138,558)



A 5% per cent.  weakening of Sterling  against the US Dollar  at 30 June  2012 
would have increased  equity and profit  for the period  by the amounts  shown 
below. The analysis assumes that  all other variables, in particular  interest 
rates, remain constant.



      Equity Profit or loss

                          
USD £145,528       £145,528





Notes (continued)



(forming part of the financial statements for the period from 3 May 2011 (date
of incorporation) to 30 June 2012)



9 Financial instruments (continued)



Fair value hierarchy measurement at 30 June 2012



Investments in securities at fair value



                         Quoted prices                             

                     In active markets Significant other  Significant

                         for identical        observable unobservable

                                assets            inputs       Inputs

                Total         (level 1)         (level 2)    (level 3)
Investments
Quoted      2,802,587         2,802,587                 -            -
Unquoted       42,563                 -                 -       42,563
              ───────           ───────           ───────      ───────
            2,845,150         2,802,587                 -       42,563
              ═══════           ═══════           ═══════      ═══════



There have been no disposals of  investments classified as level 3 during  the 
period.



10 Trade and other payables

                                  2012
                                     £
Due to related party (note 12)  17,500
Provision for audit fee         14,400
                               ───────
                                31,900
                               ═══════

11 Share warrants



At the  date of  admission to  AIM, the  Company issued  30,000,000  warrants, 
entitling the holder to subscribe for one new ordinary share for every placing
share, and which will not be admitted  to trading on AIM. The warrants may  be 
exercised for 12.5 pence at  any time within two years  of the date of  issue. 
The warrant exercise is either at the option of the holder or at the option of
the Company, in the  event that the  closing price of  the ordinary shares  is 
more than 20 pence for five consecutive trading days. In considering the share
subscription price, the lack of historic share price performance data, and the
price and conditions attaching to exercise, the Directors deem the warrants to
have no separate value  from the shares issued  on the Company's admission  to 
AIM.



 The total number of share warrants in issue as at the year-end is
set out below:



                                               Fair value of warrants at
                                                              issue
              Grant    Term in Exercise     

Recipients     Date      Years   Price     Issued


Placing     9 September    2     £0.125  30,000,000             -
subscribers    2011



12 Related party transaction



Under an agreement dated 1 December 2011, Burnbrae Limited, a Company  related 
to both James  Mellon and  Denham Eke, provide  certain services,  principally 
accounting  and  administration,  to  the  Company.  This  agreement  may   be 
terminated by either party  on three months' notice.  The charge for  services 
provided is £30,000 per annum.



13 Basic and diluted earnings per share



The calculation of basic  earnings per share  of the Company  is based on  the 
profit for the year of £425,208 and  the weighted average number of shares  of 
23,428,235 in issue during the period.



Diluted earnings per share  are calculated by  adjusting the weighted  average 
number of ordinary  shares outstanding  to assume conversion  of all  dilutive 
potential ordinary shares such as warrants  and options. There is no  dilutive 
effect at 30 June 2012 because the warrants are not able to be exercised until
a market-based criterion is satisfied.  This criterion had not been  satisfied 
at 30 June 2012.



14 Commitments and contingent liabilities



There are no known commitments or contingent liabilities as at the period end.



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

END


FR BKDDBNBDDKKN -0- Nov/01/2012 07:00 GMT
 
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