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Interim results for the six month period ending 30 June 2008

30 September 2008

ACP Capital (“ACP Capital”, “ACP” or the “Company”; AIM: APL), a Jersey-incorporated integrated finance and asset management company, today announces its interim results for the six month period ended 30 June 2008.

Highlights:

• £38.4 million invested in ACP Mezzanine Limited ("ACPM") resulting in the Company owning 54.17% of the share capital of ACPM and making it a subsidiary of the Company • Revaluation of investment and loan portfolio resulting in a consolidated unrealised loss of £30.4 million (2007: unrealised gain of £3.5 million)
• Net asset value per share at 30 June 2008: £1.03 (30 June 2007: £1.19)
• Loss per share £0.0716 (30 June 2007: earnings per share £0.0429)
• Consolidated cash and cash equivalents at the balance sheet date of £88.3 million (30 June 2007: £127.7 million)
• EGM held on 17 July 2008 at which Mr. John Chapman, Mr. James Lowenstein and Mr. Patrick McCann were elected directors and Messrs Vago, Youngblood, Discepolo, Braxton, Larsen and Georges were removed as directors
• No further investments made since August 2008; a loan commitment of circa €10.7 million relating to Leasecom Group SAS remains outstanding
• Pfaff advised that it had filed for insolvency on 11 September 2008. The directors are of the opinion that it is unlikely that the loan and accrued interest (€9,061,250) will be repaid to ACP Mezzanine. GCI, in which the Company owns circa 29% is a significant investor in Pfaff and the insolvency of Pfaff will have a negative impact on GCI. These balances are included on the balance sheet as at 30 June 2008. Please refer to note 7b on page 17 for further details
• Decision to terminate Deutsche Bank AG facility made on 25 September 2008 resulting in breakage fees for the Company of circa £2.4 million (and ACP Mezzanine of €3.2 million) but exit from an uneconomic facility
• Intention to monetise the Company’s assets over time and return cash to investors, subject to shareholders’ approval

For further information:

• Chris Wells / Stewart Wallace of Collins Stewart Europe Limited - +44 (0) 207 523 8350
• www.acpcapital.com

John Chapman, Chairman of ACP Capital Limited, said:

Dear Shareholders:

I am new to ACP and have just become Chairman following a July shareholder vote. My brief is unambiguous: run off the group’s assets paying due attention to price, efficiently rationalise the group’s structure, satisfy our obligations and return all excess capital to shareholders. Toward these ends, we have been in preliminary negotiations with direct investee companies. No disposals of assets at this early stage but no reason for pessimism either. We have eliminated our leverage and are net cash. We have five new directors including a director responsible for ensuring improved internal controls and reporting are in place. We have put a lot of effort into being able to announce a return of capital but we are not yet in a position to do so. We will do our best to get an announcement out over the next several weeks.

Here I would like to present the Company’s results for the first half of the year, when the Company was under former management, and a synopsis of the unusual events that transpired over the last several months.

Before doing so, I would like to make two observations. First, our portfolio is simple. It comprises investments in the equity of four quoted companies (one of which is our affiliate, ACPM) and two unquoted companies, investments in the debt of a quoted company and an unquoted company, investments in several structured products, and cash. Second, we have an overly complex legal structure that includes a Jersey parent, several UK and Jersey affiliated companies and a partnership, and some affiliated companies in Cyprus and Germany that are no longer directly relevant to our business. Given the precipitous exit of the former directors and the apparent lack of documentation and procedures, we have had to spend substantial time and money working with counsel to get a handle on this structure. This exercise is now close to conclusion.

The May 2008 Request For Return of Capital

Dissatisfied with ACP’s execution of its business model and compensation practices, ACP’s largest shareholder, owning close to 30% of ACP’s shares, served a written request on the board in mid-May 2008. That request noted that ACP’s shares had been trading at a significant discount to NAV and requested an opportunity to redeem some shares for cash. This shareholder requested that the Company refrain from participating in ACPM’s offering scheduled for the following month and from making any new investments until it had received shareholder approval for doing so. As of mid-May 2008, the Company had uninvested cash of circa £45.7 million. The request also asked for a meeting with ACP’s board to discuss the merit of these ideas.

On 2 June, the board rejected the shareholder’s requests and stated that it: (i) would not meet with the shareholder, (ii) would proceed with the large participation in ACPM’s secondary offering making ACPM a de-facto subsidiary of the Company, (iii) intended to continue making new investments, and (iv) offered to assist the shareholder to sell its shares through a “block trade”.

The ACPM Secondary Offering

On 4 June 2008, ACPM proceeded with the secondary offering. The ACPM offering was ultimately coercive because, notwithstanding that the original intention was to raise money at €0.80 per share, its secondary fundraising was placed at €0.60 per share, a 21.5% discount to the share price at the opening of the road show on 13 May 2008. Existing shareholders were faced with the unpleasant choice of either subscribing for new shares or not subscribing and having their ownership interest diluted.

According to ACPM’s RNS announcement on 7 May 2008, the objective was to raise €150 million to fund a purported “pipeline” of mezzanine debt. The “pipeline’s” largest component was a transaction called “Helios CDO Limited,” a large collateralised debt obligation (“CDO”) structured transaction comprising sixty-one small loans to German corporate borrowers sourced by a third party broker.

ACPM issued an RNS announcement dated 4 June 2008 stating that “the management of the investment manager, including the Executive Directors Derek Vago and Eric Youngblood, committed to a combined minimum subscription of €1.25 million in the placing.” Despite their commitment to subscribe in the amount of €1.15 million, the two Executive Directors appear to have subscribed for less than 4% of that amount. Rather than raising €150 million, the offering raised only €80 million. Almost 60% of the funds raised, €47.5 million (£38.4 million), was ACP’s money. Furthermore, ACP exercised its right to purchase 1 million ordinary shares of ACPM granted on 20 July 2006 at €1.00 per share.

The upshot of the ACPM secondary offering was that ACP increased its investment in ACPM from about 47% to about 54% through the investment of £38.4 million. Management did not invest in a meaningful way. Existing shareholders who did not subscribe were diluted. The Company now owns a controlling interest in ACPM. ACPM’s results now must be consolidated with the Company’s under IFRS rules. And finally the Company’s cash position was reduced by the £38.4 million investment in ACPM or 20 pence per ACP share which is close to 60% of today’s share price.

The 17 June Requisition

A little over a week after the ACPM secondary offering, on 17 June 2008, our largest shareholder requisitioned an extraordinary general meeting of shareholders to replace six directors with three new ones. The idea was that the Company would be placed in “run off.” The Company would write no new business but, rather, would undertake an orderly realisation of its assets over a period of years with no forced sale of any asset so as to achieve the highest risk adjusted return for shareholders.

Following the approach from the largest shareholder, but before the EGM it triggered, the Company and ACPM undertook a number of transactions, not all of which were announced:

1. On 11 June 2008, ACPM entered into a commitment to subscribe for €15 million of loan notes issued by an SPV formed to fund Leasecom Group SAS (“Leasecom”), a so-called “strategic platform”. On 13 June 2008 ACPM advanced about 28% of that commitment;
2. On 16 June 2008 ACPM made a loan to PFAFF Industrie Maschinen (“PFAFF”), a German sewing machine manufacturer, for €9 million (“the PFAFF loan”). This investment was introduced by GCI Management AG, another “strategic platform.” A wholly-owned subsidiary of GCI Management, was the majority shareholder in PFAFF. The PFAFF loan was secured by a pledge over that entity’s shares in PFAFF.
   
   Less than ninety days after the drawdown, PFAFF voluntarily filed for insolvency. According to a report issued by a “stakeholder conference” on the eve of insolvency, PFAFF suffered from an unworkable capital structure including liquidity constraints, high overheads, “over-aged” product lines, uncompetitive product pricing and other issues. It appears as of this writing that any recovery from the PFAFF loan investment will be minimal. As a result of the integrated finance strategy pursued by former management, these consequences will be felt at the Company both through its ownership of about 29% of GCI and about 54% of ACPM;
3. On 18 June 2008 and 8 July 2008, the Company and ACPM, respectively, renegotiated their financing arrangements with Deutsche Bank. The amendments to the facilities resulted in a steep increase in the minimum return criteria to be paid to Deutsche Bank through 2012. This had the effect of increasing costs to shareholders resulting from the change in control on 17 July 2008. As a result of the decreased valuation of the underlying CDO and ABS portfolios and large margin calls, the facilities were largely cash collateralised;
4. Finally, both ACP and ACPM were taking substantial steps to complete investments in the Helios CDO Limited transaction. The plan was that the Company would have invested €15.0 million and ACPM €56.6 million (together 56% of the transaction) in several classes of notes issued by a Lehman Brothers structured CDO. The notes had eight year maturities. The underlying portfolio comprised sixty-one loans to German Mittelstand borrowers in amounts between circa €0.5 million and circa €3.5 million.

The July Option and Share Awards Vesting

The Company called the extraordinary general meeting for 17 July 2008. At a board meeting held on 16 July 2008, the board took steps to ensure that options over approximately 12.8 million ACP shares granted to the former executive directors immediately vested and were exercised should the resolutions proposed at the EGM be passed.

As a result of this action, following the EGM, the three former executive directors owned or controlled a total of approximately 27.4 million Company shares or approximately 13.2% of the Company’s share capital. It appears that this ownership or control was achieved through a cash investment of approximately £7.5 million. Furthermore, the massive granting of these options will further negatively affect the Company’s income statement for the year ending December 2008.

The Extraordinary General Meeting

On 17 July 2008 about 53% of the Company’s shares outstanding and about 64% of those shares voting at the meeting voted to remove all of the Company’s directors save for those based in Jersey. So, as of 17 July 2008 the Company’s board comprised five directors - James Lowenstein, Patrick McCann and myself as well as the two incumbent Jersey directors. Between the time our largest shareholder asked the Company to cease making new investments and the EGM removing the former directors, the Company’s cash position had been reduced from about £45.7 million to £12.8 million.

On 25 July, the three former executive directors resigned from their employment positions with the Company’s group by lawyers’ letters alleging “constructive dismissal,” and ceased to be members of ACP’s advisor, ACP Capital UK LLP. The story is not a pretty one.

The New Board and New Management Team

So what has been accomplished since the general meeting in July? First, we have strengthened our board of directors by adding substantial depth on the legal and accounting sides. We now have five new independent directors: James Lowenstein, Patrick McCann, Stephen Coe, Antony Gardner-Hillman, and me. I am a lawyer and Chartered Financial Analyst with substantial experience in winding up funds, selling off their assets and returning the proceeds to shareholders. Tony is an Oxford University educated lawyer who was a partner with one of Jersey’s main law firms and a founder of one of Jersey’s substantial trust companies. He brings twenty-five years of legal and regulatory experience to the board. Steve is a chartered accountant with many years of hands on experience in the offshore funds industry. His brief is to head the audit committee and implement appropriate reporting and financial controls. Patrick is a barrister in Dublin and Jim is former US ambassador to Luxembourg. Jim, Patrick and Steve all have experience in winding up investment companies.

Following the changes at board level, we undertook a comprehensive examination of the office to reduce overheads and to assemble a small team that could manage and sell the assets. We also moved into less expensive office space. We looked at the staff and decided that we could accomplish our goals with fewer people. We selected a core group of six ACP staff whom we believed had the right skills and familiarity with our portfolio. Lyndon Miles will be the ACP group’s new managing director. Lyndon has many years’ experience in debt finance and was formerly a director with the Company. In addition to overall responsibility for the office, Lyndon will oversee the disposal of our debt portfolio. Jean-Christophe Gas will be second in charge at the director level. JC has many years experience in corporate finance and was formerly a Vice-President with the Company. Both Lyndon and JC will work together under my direct supervision and will have sufficient support to accomplish our objectives of disposing of all assets at the right price in the best interest of shareholders.

Helios CDO Limited is Blocked and Leverage Eliminated

Given the state of the world’s financial markets, proceeding with a large structured transaction like the Helios CDO transaction and having a leverage facility with Deutsche Bank seemed imprudent and in any event was contrary to the wishes of our shareholders. So, following the EGM, both ACP and ACPM declined to participate in the Helios CDO transaction and informed Deutsche Bank that we intended to terminate our leverage facilities.

Regarding the leverage, our calculations showed that notwithstanding the combined breakage costs of over €6 million, it was in ACP’s interest to terminate those facilities. We have now done so and both ACP and ACPM are unlevered.

With the elimination of the Deutsche leverage facilities, our portfolio is relatively straightforward.

Our Portfolio and Results

On a look-through basis as of 30 June, about 56% of our investments and loan portfolio comprised investments in IFR Capital, an AIM-quoted food retailer and manufacturer. We also have equity and debt investments in Leasecom, an unlisted French leasing business; equity in Davenham, an AIM-quoted, Manchester-based specialist commercial finance company; equity in GCI Management, a Frankfurt-quoted investment company; a loan to GCI Automotive Holding; investments in CDO and CLO structured products, primarily through our investment in ACPM; and cash.

Our results for the period to 30 June 2008 are a consolidated loss of £15.0 million, resulting primarily from the write-down of ACPM’s structured portfolio and a reduction in value of our listed investments in IFR Capital, GCI Management and Davenham. Because, following the ACPM secondary, we now have a controlling interest in ACPM, we are required to consolidate ACPM’s financial statements with ours. About 29% of ACPM’s portfolio comprises structured debt products – the CDO and CLO products that are so topical these days. Those products had previously been carried at cost.

The ACPM board determined that given the substantially discounted pricing in the market, historic cost was an inappropriate valuation methodology and that market price based on indicative pricing gave a truer indication of the value of these assets. This, and the revaluation of several other assets has led to a write down at ACPM of approximately €28.5 million, which, because of our 54% interest in ACPM results in a contributed loss to the Company of €12.5 million. Other factors contributing to the decrease in the Company’s NAV include the decline in the IFR Capital equity price from €0.735 to €0.505, the decline in the GCI Management equity price from €3.91 to €1.87 and the decline in the Davenham equity price from £2.13 to £1.17.

Since 30 June 2008 the market for structured products has weakened further as have the equity prices of ACPM, IFR Capital, GCI Management and Davenham, our four quoted investee companies.

On 11 September PFAFF filed for insolvency. The PFAFF insolvency is expected to have a double effect on the Company through the so-called “integrated finance strategy” developed by former management: first through its 54% interest in ACPM (which has a €9 million loan to PFAFF) and second through its circa 29% interest in GCI.

Depending on how the PFAFF insolvency plays out, how the equity markets price the IFR Capital, GCI Management and Davenham common equity, and what shape the structured product market is in at year end, the Company’s year-end valuation may be further adversely affected. As I said, the picture is not a particularly pretty one.

I, our directors, and our employees all appreciate your support in these difficult times.

Respectfully yours,

John D. Chapman
Chairman
29 September 2008

About the Company:

ACP Capital is a Jersey-incorporated closed-ended investment company quoted on AIM. Through its regulated Jersey subsidiary, it is also the investment manager and majority shareholder of ACP Mezzanine.

The board of ACP Capital is carrying out an in-depth review of the assets and businesses of ACP Capital with a view to minimising or curtailing future spending on new acquisitions and, in due course and subject to the necessary regulatory requirements, initiating a gradual realisation of the group's assets as opportunities arise. It is also intended that any net proceeds received by ACP Capital on the disposal of any assets will be returned to shareholders.

For further information:

• Chris Wells / Stewart Wallace of Collins Stewart Europe Limited - +44 (0) 207 523 8350
• www.acpcapital.com

Independent Review Report of ACP Capital Limited

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 which comprises the Consolidated Income Statement, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement, and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board for use in the United Kingdom. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review 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, for our review work, for this report, or for the conclusions we have formed.

Directors’ Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Rules of the AIM Market.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’ as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Rules of the AIM Market.

Kingston Smith LLP
Chartered Accountants

Devonshire House
60, Goswell Road
London EC1M 7AD
Dated: 29 September 2008

Consolidated Income Statement (Unaudited)
For the period ended 30 June 2008

			6 months ended 30 June 2008		6 months ended 30 June 2007		Full year ended 31 December 2007
			Unaudited		Unaudited		Audited
			£		£		£
Operating income
Investment income			7,362,976		3,306,932		11,710,009
Fees receivable			3,455,542		2,017,511		5,734,489
Total operating income			10,818,518		5,324,443		17,444,498
Operating expenses
Interest payable and other related financing costs			(668,514)		(14,644)		(322,064)
Other operating expenses			(3,417,625)		(1,327,185)		(2,661,698)
Equity-settled share-based payments			(1,896,373)		(512,253)		(1,207,248)
Total operating expenses			(5,982,512)		(1,854,082)		(4,191,010)
Net operating income			4,836,006		3,470,361		13,253,488
Change in fair value of investments			(20,520,052)		3,472,814		(12,678,348)
Impairments of loans and receivables			(9,887,298)		-		-
Net foreign exchange gains / (losses)			10,589,662		(348,874)		987,825
Negative goodwill			1,127,177		-		-
(Loss) / profit before tax			(13,854,505)		6,594,301		1,562,965
Income taxes	3		-		(57,022)		(83,055)
(Loss) / profit for the period			(13,854,505)		6,537,279		1,479,910
Attributable to:
Equity shareholders			(14,208,435)		6,537,279		1,479,910
Minority interests			353,930		-		-
			(13,854,505)		6,537,279		1,479,910
(Loss) / earnings per share (pence)	4
Basic			(7.16)		4.44		0.85
Diluted			(7.16)		4.29		0.83

Consolidated Balance Sheet (Unaudited)
As at 30 June 2008

			6 months ended 30 June 2008		6 months ended 30 June 2007		Full year ended 31 December 2007
			Unaudited		Unaudited		Audited
			£		£		£
Assets
Non-current assets
Investments
Investments measured at fair value through profit or loss			169,658,210		102,920,354		164,676,271
Loans and receivables			49,608,230		15,594,569		16,012,561
			219,266,440		118,514,923		180,688,832
Property, plant and equipment			14,681		13,684		27,233
Trade and other receivables			-		100,000		-
Total non-current assets			219,281,121		118,628,607		180,716,065
Current assets
Investments measured at fair value through profit or loss			537,991		-		-
Trade and other receivables			6,398,107		1,707,018		2,610,567
Cash and cash equivalents			88,347,308		127,723,421		59,855,959
Total current assets			95,283,406		129,430,439		62,466,526
Total assets			314,564,527		248,059,046		243,182,591
Equity & reserves
Issued share capital			196,096		199,531		199,531
Share premium			216,734,311		216,734,311		216,734,311
Capital redemption reserve			3,435		-		-
Share-based payment reserve			4,151,875		962,107		1,657,102
Shares held for Employee Share Award Plan			(1,699,298)		-		-
Translation reserve			(215,069)		-		-
Retained earnings			(17,152,338)		19,616,789		14,559,419
Total shareholders' equity			202,019,012		237,512,738		233,150,363
Minority interest			54,937,482		-		-
Total equity			256,956,494		237,512,738		233,150,363
Liabilities
Non current liabilities
Loans and borrowings			53,138,639		8,833,594		9,188,157
Total non current liabilities			53,138,639		8,833,594		9,188,157
Current liabilities
Trade and other payables			4,386,339		1,586,631		761,016
Current income tax payable			83,055		126,083		83,055
Total current liabilities			4,469,394		1,712,714		844,071
Total liabilities			57,608,033		10,546,308		10,032,228
Total equity and liabilities			314,564,527		248,059,046		243,182,591
Net asset value per share			1.03		1.19		1.17

Mr. J. Chapman
Chairman

Consolidated Statement of Changes in Equity (Unaudited)
For the period ended 30 June 2008

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Consolidated Cash Flow Statement (Unaudited)
For the period ended 30 June 2008

			6 months ended 30 June 2008		6 months ended 30 June 2007		Full year ended 31 December 2007
			Unaudited		Unaudited		Audited
			£		£		£
Cash flow from operating activities
Investment income			6,840,478		3,702,227		11,695,798
Fees received			1,296,389		1,236,675		5,698,894
Operating expenses			(1,393,647)		(1,337,922)		(2,645,365)
Taxes paid			-		-		(69,061)
Net cash inflow from operations			6,743,220		3,600,980		14,680,266
Cash flow from investing activities
New lending / investments			(10,720,950)		(51,642,906)		(233,309,998)
Sale / repayment of investments			3,812,277		12,866,175		113,881,100
Acquisition of subsidiary net of cash acquired			32,938,914		-		-
Purchase of property, plant and equipment			-		-		(17,026)
Net cash inflow / (outflow) from investing activities			26,030,241		(38,776,731)		(119,445,924)
Cash flow from financing activities
Proceeds from issues of share capital net of issue costs			-		145,290,791		145,290,833
Purchase of own shares			(1,699,298)		-		-
Interest payable and other financial costs			(802,663)		-		(281,021)
Repayment of finance			(1,058,270)		-		-
Drawdown of loan			2,522,168		8,833,594		9,947,352
Dividends paid			(6,983,618)		(1,994,681)		(1,988,377)
Net cash (outflow) / inflow from financing activities			(8,021,681)		152,129,704		152,968,787
Net increase in cash and cash equivalents			24,751,780		116,953,953		48,203,129
Cash and cash equivalents at the start of the period			59,855,959		10,769,468		10,769,468
Effect of exchange rate fluctuations			3,739,569		-		883,362
Cash and cash equivalents at end of period			88,347,308		127,723,421		59,855,959

Included within cash and cash equivalents of £88,347,308, £19.6 million is held on a margin account to offset a facility from Deutsche Bank AG.

Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008

1. General Information

ACP Capital Limited (the “Company”) is a company incorporated on 30 August 2005 and registered in Jersey under registration number 91066. The Company's shares were admitted to trading on AIM on 6 January 2006. The Company and its subsidiaries (together the “Group”) carry on business as investment holding and management companies.

2. Basis of Preparation

The unaudited interim financial statements have been prepared on the basis of the accounting policies set out in the Group's Report and Financial Statements for the period ended 31 December 2007. The interim financial statements comply with IAS 34 "Interim Financial reporting". The interim financial statements and the comparative information for the periods ended 30 June 2007 and 31 December 2007 do not constitute statutory financial statements within the meaning of the Companies (Jersey) Law 1991. The Report and Financial Statements for the period ended 31 December 2007 contained an unqualified audit report and the audit report did not contain any statement of matters that needed to be brought to the attention of the members.

The interim financial statements were authorised for issue by the Directors on 29 September 2008.

3. Taxation

The income tax charge represents UK Corporation tax charged at standard rate of 30% on the Group's share of profits arising in ACP Capital UK LLP, a limited partnership in which ACP Capital’s subsidiary, ACP Capital (UK) Limited, is the controlling partner. The company and a number of the subsidiaries are registered in Jersey as exempt companies and are, therefore, not liable to Jersey income tax on profits derived outside Jersey. Confirmation has been obtained from the Comptroller of Income Tax in Jersey that, by concession, the companies will be liable to tax in Jersey only in respect of income, other than bank interest income, arising in Jersey. During the period no income, other than bank interest income, arose in Jersey. The subsidiaries resident in Cyprus had no income subject to Cyprus company taxes in the period.

The Company has exempt status for Jersey taxation purposes for the year of assessment 2008. Effective 1 January 2009, Jersey’s tax regime will change. The new regime will impose a general corporate income tax rate of 0%. A 10% rate will apply to certain regulated financial services companies and 20% rate will apply to utilities and income from Jersey land (i.e. rents and development profits). Jersey registered companies will be treated as resident for tax purposes and will be subject to zero or ten percent standard income tax rate.

Since the Company is not a regulated financial service entity, the effect of the new tax regime is limited to the change of status from exempt to liable to Jersey income tax at 0%.

Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)

4. Earnings Per Share

The calculation of the basic earnings and diluted earnings per share attributable to the equity shareholders of the Company is based on the following data:

		6 months ended 30 June 2008		6 months ended 30 June 2007		Full year ended 31 December 2007
		Unaudited		Unaudited		Audited
		£		£		£
(Loss) / profit for the period attributable to equity shareholders		(14,208,435)		6,537,279		1,479,910
Weighted average number of ordinary shares for the purposes of basic earnings per share		198,529,632		147,108,737		173,535,776
Effect of dilutive potential ordinary shares:
Share options		-		5,109,838		4,949,411
Weighted average number of ordinary shares for the purposes of diluted earnings per share		198,529,632		152,218,575		178,485,187

Share options in Share options in issue for the period ended 30 June 2008 have been excluded from the calculation of diluted earnings per share for that period as they are anti-dilutive. Therefore, the basic and diluted earnings per share figure for that period is the same.

5. Segment Reporting

The Group operates only one business and in one geographical segment. Accordingly, no additional segment analysis is disclosed.

6. Acquisition of Subsidiary

In June 2008, the Company exercised options as part of an Option Deed to acquire 1,000,000 shares in ACP Mezzanine Limited at €1.00 per share. The Company also subscribed for 79,219,798 shares as part of ACP Mezzanine’s secondary placing of 133,333,333 shares for a consideration of £47,531,879.

The Company had previously acquired 46.35% of ACP Mezzanine Limited in July 2006 for £32,106,018 and acquired a further 0.47% in June 2007 for £162,591. The initial investment was included in the accounts at market value. The transactions in June 2008 resulted in a controlling interest of 54.17%. As the holding is now in excess of 50%, ACP Mezzanine Limited is accounted for as a subsidiary.

Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)

6. Acquisition of Subsidiary (cont)

The net assets acquired in these transactions, and the goodwill arising, are as follow:

		July 2006		June 2007		June 2008
		£		£		£
Investments measured at fair value through profit or loss		-		-		44,553,053
Loans and receivables		-		-		42,963,979
Trade and other receivables		-		-		1,487,969
Cash and cash equivalents		68,310,677		67,746,089		71,392,189
Loans and borrowings		-		-		(37,647,258)
Trade and other payables		(1,691,658)		(1,677,676)		(3,256,652)
Acquiree's fair value of net assets before combination		66,619,019		66,068,413		119,493,280
Fair value of share of net assets acquired		30,874,984		312,713		40,661,364
Goodwill		1,231,034		(150,122)		(2,208,089)
Consideration		32,106,018		162,591		38,453,275
Net cash inflow arising on acquisition:
Cash consideration paid						(38,453,275)
Cash and cash equivalents acquired						71,392,189
						32,938,914

The Company's investment in ACP Mezzanine Limited had previously been carried in the balance sheet at fair value. In acquiring a controlling stake, £3,286,836 of fair value losses and £2,107,020 of foreign exchange gains that were recognised in prior periods, have been written back to the Income Statement in the current year.

In accordance with the requirements of IFRS 3 in accounting for piecemeal acquisitions, a total of £1,127,177 of negative goodwill arose on the acquisition of ACP Mezzanine Limited.

The negative goodwill arising is attributable to the acquisition of the shares at a discount to ACP Mezzanine Limited's net asset value.

The results contributed by ACP Mezzanine Limited in the period between date of acquisition of a controlling interest and the balance sheet date was a surplus of £769,000.

If the acquisition had been completed on 1 January 2008, total group revenue for the period would have been £16.956 million, and losses for the period would have been £37.535 million.

Notes to the Unaudited Interim Financial Statements
For the period ended 30 June 2008 (Continued)

7. Post Balance Sheet Events

a) Changes to Directors

At an Extraordinary General Meeting held on 17 July 2008, Mr. Derek Vago, Mr. Eric Youngblood, Mr. Nikolaj Larsen, Mr. Alan Braxton, Mr. Daniele Discepolo and Mr. Francois Georges were removed as Directors. At the same meeting, Mr. John Chapman, Mr. Patrick McCann, and Mr. James Lowenstein were appointed as Directors.

On 17 September 2008, Ms. Hilary Valentine and Mr. Craig Stewart resigned as Directors. On the same date, Mr. Antony Gardner-Hillman and Mr. Stephen Coe were appointed as Directors.

b) Pfaff Industrie Maschinen

As at 30 June 2008, loans and receivables include £7.1 million (€9 million) in respect of this investment; a further €61,250 of income receivable on this facility is included within trade receivables. Any impairment in value of this investment results from events subsequent to 30 June 2008 and no provision has been made in these consolidated financial statements for any loss that may eventually rise.

Pfaff is currently in discussions with its creditors, but it is expected that this one investment may detrimentally affect the net asset value of ACP Mezzanine as the directors consider it unlikely that the loan and accrued interest will be repaid.

c) Deutsche Bank Facility

On 25 September 2008, the Company announced that it had agreed to terminate its sale and repurchase transaction with Deutsche Bank AG (“Deutsche”) by settling all outstanding commitments, interest and associated breakage fees and as a consequence its balance sheet will be in a net cash position and free of debt.

As a result of the early termination of the facility, a breakage fee of £2.4 million was paid to Deutsche on 25 September 2008.

Directors and Advisors

Directors

Mr. Heiner Kamps (resigned 3 March 2008)
Mr. Derek Vago (removed 17 July 2008)
Mr. Eric Youngblood (removed 17 July 2008)
Mr. Nikolaj Larsen (removed 17 July 2008)
Mr. Alan Braxton (removed 17 July 2008)
Mr. Daniele Discepolo (removed 17 July 2008)
Mr. Francois Georges (removed 17 July 2008)
Mr. John Chapman (appointed 17 July 2008)
Mr. Patrick McCann (appointed 17 July 2008)
Mr. James Lowenstein (appointed 17 July 2008)
Ms. Hilary Valentine (resigned 17 September 2008)
Mr. Craig Stewart (resigned 17 September 2008)
Mr. Antony Gardner-Hillman (appointed 17 September 2008)
Mr. Stephen Coe (appointed 17 September 2008)

Registered Office:

Ordnance House
31 Pier Road
St Helier, Jersey, JE4 8PW
Channel Islands

Secretary:

R&H Fund Services (Jersey) Limited
Ordnance House
31 Pier Road
St Helier, Jersey, JE4 8PW
Channel Islands

Registrars:

Computershare Investor Services (Channel Islands) Limited
Ordnance House
31 Pier Road
St Helier, Jersey, JE4 8PW
Channel Islands

Bankers:

Deutsche Bank International Limited
PO Box 727
St Paul’s Gate
New Street
St Helier, Jersey, JE4 8ZB
Channel Islands

Nominated Adviser and Broker:

Collins Stewart Europe Limited
9th Floor
88 Wood Street
London, EC2V 7QR

Auditor:

Kingston Smith LLP
Devonshire House
60 Goswell Road
London, EC1M 7AD

Legal Advisers:

Travers Smith LLP
10 Snow Hill
London, EC1A 2AL

Ozannes
P.O Box 733
29 Esplanade
St Helier, Jersey JE4 0ZS
Channel Islands

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