Annual Financial Report

RNS Number : 1732E

BlueCrest AllBlue Fund Ltd

04 April 2011

 



BlueCrest AllBlue Fund Limited

(the "Company")

BlueCrestAllBlue Fund Limited is pleased to announce its preliminary results for the year ended 31 December 2010.

Richard Crowder, Chairman of the Company, commented:

"Following a successful year in 2009, the Company continued to deliver strong financial performance over 2010. The Company's shares continued to trade at a premium throughout the year and, with significant investor appetite for the shares, we were pleased to complete two further fund raisings over the year. These capital raisings have further improved the liquidity of the Company's Shares, which the Board believes is in the interests of all shareholders."

Highlights*:

·     The Company returned 8.18%** for the calendar year 2010.

·     The performance of AllBlue, the fund into which the Company invests, was strong throughout the year, posting positive returns in all quarters and only experiencing two negative months over the year. 

·     The key contributors to the performance in the year were the following underlying funds:

§ BlueCrest Capital International returned a strong 12.82%*** for the calendar year, contributing 4.27% to AllBlue during 2010.

§ BlueTrend returning a strong 15.98%*** for the calendar year, contributing 2.07% to AllBlue during 2010.

§ Emerging Markets returned 7.81%*** for the calendar year, contributing 1.21% to AllBlue during 2010.

§ BlueMatrix returning 6.44%*** for the calendar year, contributing 0.26% to AllBlue during 2010.

As at 31 December 2010, the investment portfolio of AllBlue was allocated on the following basis amongst the underlying funds:

Underlying fund	Allocation %*
BlueCrest Capital International	30
BlueCrest Emerging Markets	19
BlueCrest Multi Strategy Credit	18
BlueCrest Mercantile	13
BlueTrend	14
BlueMatrix	4
BlueCube	2
Cash	0

*The highlights referring to AllBlue Limited ("AllBlue") have been extracted from the Report by the Investment Manager of AllBlue.  On the invitation of the directors of the Company, this commentary has been provided by BlueCrest Capital Management LLP ("BlueCrest") as investment manager of AllBlue and is provided without any warranty as to its accuracy and without any liability incurred on the part of the Company, BlueCrest or AllBlue. The commentary is not intended to constitute, and should not be construed as, investment advice. Potential investors in the Company should seek their own independent financial advice and may not rely on this communication in evaluating the merits of investing in the Company. The commentary is provided as a source of information for shareholders of the Company but is not attributable to the Company.

**Refers to the Company's Sterling Shares.

*** Refers to Class A, US Dollar Shares of AllBlue Limited

Media enquiries:

M:Communications

Ed Orlebar,     Tel: [phone]            [e-mail] 

James Wallis, Tel: [phone]            [e-mail] 

Annual Financial Report for the year ended 31 December 2010

BlueCrest AllBlue Fund Limited (LSE: BABS, BABU, BABE) today, in accordance with DTR 6.3.5, releases its annual results for the year ended 31 December 2010.  The Company is a self-managed closed-ended investment company incorporated in Guernsey with registered number 44704 on 21 April 2006 with an unlimited life. 

The investment objective of the Company is to seek to provide consistent long-term capital growth through an investment policy of investing substantially all of its assets in AllBlue Limited ("AllBlue") or any successor vehicle of AllBlue. All three classes of shares have been admitted to the Official List of the United Kingdom Listing Authority and to trading on the London Stock Exchange's main market for listed securities.

AllBlue is a fund incorporated in the Cayman Islands with an investment objective to provide consistent long-term appreciation of its assets through investment in a diversified portfolio of underlying funds. 

CHAIRMAN'S STATEMENT

Dear Shareholder 

Following a successful year in 2009, the Company continued to deliver strong financial performance over 2010.  The Company saw an increase in both net asset value per share (Sterling Shares: 8.18%) and share price (Sterling Shares 6.72%).  The Company's shares continued to trade at a premium throughout the year and, with significant investor appetite for the shares, we were pleased to complete two further fund raisings over the year.  The first via a placing and offer for subscription of C shares in June 2010 raised £349 million, whilst the second placing of new Ordinary Shares in September 2010 raised an additional £83 million.  These capital raising exercises have further improved the liquidity of the Company's shares which the Board believes is in the interests of all shareholders. The aggregate net assets of the Company at the year end across the three share classes (in Sterling terms) were approximately £914 million. This represents approximately 26.6% of the net assets of AllBlue, the fund into which the Company invests.

Investment Performance

During 2010, the published Sterling Share NAV rose from 152.24p to 164.69p, a return of 8.18% for the year.  AllBlue, recorded ten months of positive performance over the year, with six of the seven strategies into which it invested delivering a positive return.   This represents continued strong and consistent performance relative to alternative asset management indices and to broader asset classes in general:

                                                                                    2010                2009                2008

Sterling Share NAV                                                  8.18%              21.54%            12.12%

Dollar Share NAV                                                      7.86%              21.02%            9.16%

HFRI Fund Weighted Composite Index (USD)           10.3%              20.0%              -19.0%

MSCI World Index Gross Total Return (USD)            12.3%              30.8%              -40.3%

BarclaysCap Global Bond Index (USD)                      6.4%                6.5%                6.8%

The Sterling Share NAV performance since launch in May 2006 is 68.02%.

Risk Management and Liquidity

BlueCrest has advised the Board that its risk management practices and procedures remained in full operation throughout the year.  It has further advised the Board that the underlying funds into which AllBlue invests continue to be highly liquid and that levels of leverage employed in the trading strategies are consistent with prior years.  The weighted average unencumbered cash within the underlying funds, a measure of the implicit leverage within the margin-based strategies employed by the underlying funds, stood at 64.5% as at 31 December 2010, in line with historical levels. BlueCrest monitors the counterparty risk on a regular basis and has continued to reduce the counterparty exposure of the Underlying Funds where appropriate.

Share Price Performance

During 2010 the market price of the Sterling Share increased from 159.30p to 170.00p, an appreciation of 6.72%.  This appreciation has seen the trading premium narrow slightly from 4.6% to 3.2%. The Company has continued to trade well relative to its peer group, a large number of which have continued to trade at a discount.  The average premiums over the year for each of the Sterling, Euro and US Dollar Share classes were 3.2%, 3.2% and 4.0%, respectively.

As at 31 December 2010, each of the Sterling, Euro and US Dollar Share classes were trading at premiums of 3.2%, 2.0% and 1.2% respectively.

Outlook

The Company has enjoyed a positive start to 2011, and has been advised by BlueCrest that the investment environment for the underlying funds into which AllBlue invests remains attractive.

I look forward to reporting to you again in the Half-Yearly Financial Report for the period ended 30 June 2011.

Richard Crowder

Chairman

1 April 2011

MANAGEMENT REPORT

A description of important events which have occurred during the financial year, their impact on the performance of the Company as shown in the financial statements and a description of the principal risks and uncertainties facing the Company, together with an indication of important events that have occurred since the end of the financial year and the Company's likely future development is given in the Chairman's Statement and the notes to the financial statements and is incorporated here by reference.

There were no material related party transactions which took place in the financial year, other than those disclosed in the report of the directors and at note 5 to the financial statements.

Going Concern

The performance of the investments held by the Company over the reporting year are described in the Statement of Comprehensive Income and in note 6 to the financial statements and the outlook for the future is described in the Chairman's Statement.  The Company's financial position, its cash flows and liquidity position are set out in the financial statements and the Company's financial risk management objectives and policies, details of its financial instruments and its exposures to market price risk, credit risk, liquidity risk, interest rate risk and the risk of leverage by underlying funds are set out at note 14 to the financial statements.  In order to cover the on-going expenses of the Company, on 21 December 2009 the Company entered into a £500,000 Overdraft Facility (the "Facility") with Barclays Private Clients International Limited ("Barclays"). This Facility is engaged to cover the costs of the Company as they fall due and is replenished by redeeming shares on a pro-

ratabasis in the underlying AllBlue Fund. On 7 February 2011 the Company renegotiated the facility and at present the Facility is due to expire on 30 August 2012 and may be renewed by agreement between the Company and Barclays.

The Company's Articles incorporate a discount management provision (which applies to each class of Share individually) that requires a continuation vote to be proposed in respect of the particular class of Shares at a class meeting of the relevant shareholders (by way of ordinary resolution).

As at 31 January 2011, the Sterling Shares had traded at an average 3.01% premium to their net asset values, the Euro Shares at an average 2.51% premium and the US Dollar Shares at an average premium of 3.53%, all over the previous 12 month period. As at 4 March 2011, being the latest practicable date prior to the issue of this report, the Company's Shares were trading at a premium to their net asset value of 3.70% in the case of Sterling Shares, 3.51% for Euro Shares and 4.24% for US Dollar Shares.  

After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in the preparation of this annual financial report.

Responsibility Statement

The Board of directors jointly and severally confirm that, to the best of their knowledge:

(a)        the financial statements, prepared in accordance with International Financial Reporting 
Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b)        This Management Report includes or incorporates by reference a fair review of the 
development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

Richard Crowder                                Jonathan Hooley                                

Director                                               Director

1 April 2011

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2010

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
Net gain on financial assets
at fair value through profit or
loss	6		44,104,640		826,383		3,937,928		-		-		-		47,419,574
Other operating income			-		-		-		-		-		-		-
Operating expenses	2		(610,142)		(14,433)		(71,969)		-		-		-		(669,127)
Increase in net assets
attributable to shareholders			43,494,498		811,950		3,865,959		-		-		-		46,750,447
Other comprehensive
income:
Currency aggregation
adjustment			-		-		-		-		-		-		359,801
Increase in net assets
attributable to shareholders
after other comprehensive
income			43,494,498		811,950		3,865,959		-		-		-		47,110,248
Earnings per Share for the			Pence (£)		Cent (€)		Cents ($)		Pence (£)		Cent (€)		Cents ($)
year
- Basic and Diluted	4		12.28		11.00		10.85		-		-		-

In arriving at the results for the financial year, all amounts above relate to continuing operations.

There are no items of other comprehensive income for the year other than those disclosed above.

Reconciliation of basic and diluted earnings per share for investment purposes to earnings per share per the financial statements:

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class
			Pence (£)		Cent (€)		Cents ($)		Pence (£)		Cent (€)		Cents ($)
Earnings per Share for
investment purposes			12.45		11.20		11.05		0.00		0.00		0.00
Adjustment for amortisation
of preliminary and other
expenses on a straight line
basis in accordance with
Prospectus			(0.17)		(0.20)		(0.20)		0.00		0.00		0.00
Earnings per Share per the
financial statements			12.28		11.00		10.85		0.00		0.00		0.00

The earnings per Share for investment purposes represents the earnings per Share attributable to shareholders in accordance with the Prospectus.

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2009

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
Net gain on financial assets
at fair value through profit or
loss	6		56,221,807		1,924,279		4,556,490		-		-		-		60,500,306
Other operating income			-		-		14,936		-		-		-		9,567
Operating expenses	2		(429,398)		(14,834)		(25,924)		(21,566)		(260)		(1,284)		(481,838)
Increase / (decrease) in net
assets attributable to
shareholders			55,792,409		1,909,445		4,545,502		(21,566)		(260)		(1,284)		60,028,035
Other comprehensive
income:
Currency aggregation
adjustment			-		-		-		-		-		-		(1,652,111)
Increase / (decrease) in net
assets attributable to
shareholders after other
comprehensive income			55,792,409		1,909,445		4,545,502		(21,566)		(260)		(1,284)		58,375,924
Earnings / (loss) per			Pence (£)		Cent (€)		Cents ($)		Pence (£)		Cent (€)		Cents ($)
Share for the year
- Basic and Diluted	4		26.93		28.79		25.21		(0.02)		(0.02)		(0.02)

In arriving at the results for the financial year, all amounts above relate to continuing operations.

There are no items of other comprehensive income for the year other than those disclosed above.

Reconciliation of basic and diluted earnings per share for investment purposes to earnings per share per the financial statements:

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class
			Pence (£)		Cent (€)		Cents ($)		Pence (£)		Cent (€)		Cents ($)
Earnings per Share for
investment purposes			27.15		29.02		25.28		0.00		0.00		0.00
Adjustment for amortisation
of preliminary and other
expenses on a straight line
basis in accordance with
Prospectus			(0.22)		(0.23)		(0.07)		(0.02)		(0.02)		(0.02)
Earnings per Share per the
financial statements			26.93		28.79		25.21		(0.02)		(0.02)		(0.02)

The earnings per Share for investment purposes represents the earnings per Share attributable to shareholders in accordance with the Prospectus.

STATEMENT OF FINANCIAL POSITION

As at 31 December 2010

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
FIXED ASSETS
Unquoted financial assets
designated as at fair value
through profit or loss	6		832,469,888		21,248,213		98,328,083		-		-		-		913,749,048
CURRENT ASSETS
Receivables & prepayments	7		43,780		814		3,685		-		-		-		34,263
			43,780		814		3,685		-		-		-		34,263
CURRENT LIABILITIES
Bank overdraft			52,526		191		13,144		-		-		-		61,120
Payables and accrued
liabilities	8		102,726		4,973		28,654		-		-		-		112,756
			155,252		5,164		41,798		-		-		-		173,876
NET CURRENT ASSETS /
(LIABILITIES)			(111,472)		(4,350)		(38,113)		-		-		-		(139,613)
NET ASSETS
ATTRIBUTABLE TO
SHAREHOLDERS			832,358,416		21,243,863		98,289,970		-		-		-		913,609,435

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
Represented by:
CAPITAL AND RESERVES
Share capital	9		-		-		-		-		-		-		-
Share premium	10		-		-		-		-		-		-		-
Treasury Shares	11		(483,079)		-		-		-		-		-		(483,079)
Distributable reserves	12		832,841,495		21,243,863		98,289,970		-		-		-		914,092,514
			832,358,416		21,243,863		98,289,970		-		-		-		913,609,435
SHARES IN ISSUE			505,390,176		13,360,975		61,803,190		-		-		-
NAV PER SHARE			£1.6469		€1.5900		$1.5903

Reconciliation of NAV for investment purposes to NAV per the financial statements:

			Ordinary Shares										C Shares
			Sterling Share Class			Euro Share Class				US$ Share Class			Sterling Share Class				Euro Share Class			US$ Share Class
				£			€				$			£			€				$
Published NAV per Share				1.6469			1.5900				1.5903			0.0000			0.0000				0.0000
Adjustment for amortisation of preliminary and other
expenses on a straight line basis in accordance with
Prospectus				0.0000			0.0000				0.0000			0.0000			0.0000				0.0000
NAV per Share per the financial statements				1.6469			1.5900				1.5903			0.0000			0.0000				0.0000

The published NAV per Share represents the NAV per Share attributable to shareholders in accordance with the Prospectus.

The financial statements were approved by the Board of directors on 1 April 2011 and are signed on its behalf by:

Richard Crowder                                Jonathan Hooley                                

Director                                               Director

STATEMENT OF FINANCIAL POSITION

as at 31 December 2009 

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
FIXED ASSETS
Unquoted financial assets
designated as at fair value
through profit or loss	6		318,365,831		7,789,813		23,446,094		95,453,774		1,086,802		5,772,324		439,760,856
CURRENT ASSETS
Receivables & prepayments	7		63,343		558		1,025		346		4		20		18,894
Cash & cash equivalents			774,439		41,956		17,597		-		-		-		822,532
			837,782		42,514		18,622		346		4		20		841,426
CURRENT LIABILITIES
Payables & accrued
liabilities	8		56,819		46,163		14,028		21,912		264		1,303		83,533
			56,819		46,163		14,028		21,912		264		1,303		83,533
NET CURRENT ASSETS /
(LIABILITIES)			780,963		(3,649)		4,594		(21,566)		(260)		(1,283)		757,893
NET ASSETS
ATTRIBUTABLE TO
SHAREHOLDERS			319,146,794		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		440,518,749

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
	Notes		£		€		$		£		€		$		£
Represented by:
CAPITAL AND RESERVES
Share capital	9		-		-		-		-		-		-		-
Share premium	10		-		-		-		-		-		-		-
Treasury Shares	11		(483,079)		-		-		-		-		-		(483,079)
Distributable reserves	12		319,629,873		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		441,001,828
			319,146,794		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		440,518,749
SHARES IN ISSUE			209,623,415		5,303,602		15,915,995		96,417,954		1,097,780		5,830,631
NAV PER SHARE			£1.5225		€1.4681		$1.4734		£0.9898		€0.9898		$0.9898

Reconciliation of published NAV for share to NAV per the financial statements:

	£		€		$		£		€		$
Published NAV per Share	1.5224		1.4690		1.4743		0.9897		0.9897		0.9897
Adjustment for amortisation of preliminary and other
expenses on a straight line basis in accordance with
Prospectus	0.0001		(0.0009)		(0.0009)		0.0001		0.0001		0.0001
NAV per Share per the financial statements	1.5225		1.4681		1.4734		0.9898		0.9898		0.9898

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

for the year ended 31 December 2010

		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Opening balance		319,146,794		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		440,518,749
Adjustment to allocation of
reserves brought forward		(19,938)		11,013		11,069		-		-		-		-
Issue of Shares		76,591,953		1,558,817		8,386,730		309,536,109		8,123,800		47,810,975		430,471,111
Share issue costs		(939,596)		(19,122)		(102,884)		(3,087,172)		(82,955)		(483,998)		(4,490,673)
Increase in net assets
attributable to shareholders		43,494,498		811,950		3,865,959		-		-		-		46,750,447
		438,273,711		10,148,822		35,611,562		401,881,145		9,127,387		53,098,018		913,249,634
Other comprehensive income:
Currency aggregation adjustment		-		-		-		-		-		-		359,801
		438,273,711		10,148,822		35,611,562		401,881,145		9,127,387		53,098,018		913,609,435
Transfer from C Shares		(21,566)		(260)		(1,284)		21,566		260		1,284		-
Share conversions		394,106,271		11,095,301		62,679,692		(401,902,711)		(9,127,647)		(53,099,302)		-
Closing balance		832,358,416		21,243,863		98,289,970		-		-		-		913,609,435

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO SHAREHOLDERS

for the year ended 31 December 2009

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
			£		€		$		£		€		$		£
Opening balance			257,377,005		7,844,246		25,216,708		-		-		-		282,155,572
Issue of Shares			-		-		-		96,417,954		1,097,780		5,830,631		100,997,226
Share issue costs			-		-		-		(964,180)		(10,978)		(58,306)		(1,009,973)
Increase in net assets
attributable to shareholders			55,792,409		1,909,445		4,545,502		(21,566)		(260)		(1,284)		60,028,035
			313,169,414		9,753,691		29,762,210		95,432,208		1,086,542		5,771,041		442,170,860
Other comprehensive
income:
Currency aggregation
Adjustment			-		-		-		-		-		-		(1,652,111)
			313,169,414		9,753,691		29,762,210		95,432,208		1,086,542		5,771,041		440,518,749
Share conversions			5,977,380		(1,967,527)		(6,311,522)		-		-		-		-
Closing balance			319,146,794		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		440,518,749

STATEMENT OF CASH FLOWS

for the year ending 31 December 2010

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
			£		€		$		£		€		$		£
Operating activities
Increase in net assets attributable to
Shareholders			43,494,498		811,950		3,865,959		-		-		-		47,110,248
Less: Unrealised appreciation on financial
assets at fair value through profit or loss			(41,777,843)		(256,757)		(3,435,516)		-		-		-		(44,282,127)
Less: Realised gains on conversions			(2,326,797)		(569,626)		(502,412)		-		-		-		(3,137,447)
Less: Interest income			-		(1,045)		-		-		-		-		(897)
Add: Interest expense			5,933		151		694		-		-		-		6,512
Adjustment to allocation of reserves
brought forward			(19,938)		11,013		11,069		-		-		-		-
Currency aggregation adjustment			-		-		-		-		-		-		(359,801)
Transfer from C Share			(21,566)		(260)		(1,284)		21,566		260		1,284		-
(Decrease) / increase in accrued
expenses and payables			45,907		(41,190)		14,626		(21,912)		(264)		(1,303)		29,222
(Increase) / decrease in prepayments and
accrued income			19,563		(256)		(2,660)		346		4		20		(15,369)
Net cashflow from operating activities			(580,243)		(46,020)		(49,524)		-		-		1		(649,659)

		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Investing activities
Interest received		-		1,045		-		-		-		-		897
Purchase of financial assets		(75,893,146)		(1,536,716)		(8,264,369)		(306,448,937)		(8,040,845)		(47,326,978)		(426,206,182)
Proceeds from sale of financial
Assets		-		-		-		-		-		-		-
Net cashflow from investing
Activities		(75,893,146)		(1,535,671)		(8,264,369)		(306,448,937)		(8,040,845)		(47,326,978)		(426,205,285)
Financing activities
Proceeds of issue of Shares		76,591,953		1,558,817		8,386,730		309,536,109		8,123,800		47,810,975		430,471,111
Share issue costs		(939,596)		(19,122)		(102,884)		(3,087,172)		(82,955)		(483,998)		(4,490,673)
Purchase of own Shares		-		-		-		-		-		-		-
Interest paid		(5,933)		(151)		(694)		-		-		-		(6,512)
Net cashflow from financing
activities		75,646,424		1,539,544		8,283,152		306,448,937		8,040,845		47,326,977		425,973,926
Cash and cash equivalents at
beginning of year		774,439		41,956		17,597		-		-		-		822,532
Currency aggregation adjustment		-		-		-		-		-		-		(2,634)
Increase / (decrease) in cash and
cash equivalents		(826,965)		(42,147)		(30,741)		-		-		-		(881,018)
Cash and cash equivalents at
end of year		(52,526)		(191)		(13,144)		-		-		-		(61,120)

STATEMENT OF CASH FLOWS

for the year ending 31 December 2009

			Ordinary Shares						C Shares
			Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
			£		€		$		£		€		$		£
Operating activities
Increase / (decrease) in net assets attributable to shareholders			55,792,409		1,909,445		4,545,502		(21,566)		(260)		(1,284)		58,375,924
Less: Unrealised appreciation on financial assets at fair value through profit or loss			(54,956,570)		(490,287)		(3,339,158)		-		-		-		(57,210,478)
Less: Realised gains on sales of financial assets			(94,076)		(2,400)		(3,315)		-		-		-		(98,255)
Less: Realised gains on conversions			(1,171,161)		(1,431,592)		(1,214,017)		-		-		-		(3,191,574)
Less: Interest income			(1,831)		(118)		(1)		-		-		-		(1,937)
Add: Interest expense			262		8		16		3		-		-		282
Currency aggregation adjustment			-		-		-		-		-		-		1,652,111
(Decrease) / increase in accrued expenses and payables			(78,396)		31,206		(39,803)		21,912		264		1,303		(60,662)
(Increase) / decrease in prepayments and accrued income			(14,298)		(353)		(648)		(346)		(4)		(20)		(11,599)
Net cashflow from operating activities			(523,661)		15,909		(51,424)		3		-		(1)		(546,188)

		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Investing activities
Interest received		1,831		118		1		-		-		-		1,937
Purchase of financial assets		-		-		-		(95,453,774)		(1,086,802)		(5,772,324)		(99,987,253)
Proceeds from sale of financial assets		459,200		12,327		25,645		-		-		-		485,992
Net cashflow from investing activities		461,031		12,445		25,646		(95,453,774)		(1,086,802)		(5,772,324)		(99,499,324)
Financing activities
Proceeds of issue of Shares		-		-		-		96,417,954		1,097,780		5,830,631		100,997,226
Share issue costs		-		-		-		(964,180)		(10,978)		(58,306)		(1,009,973)
Purchase of own Shares		-		-		-		-		-		-		-
Interest paid		(262)		(8)		(16)		(3)		-		-		(282)
Net cashflow from financing activities		(262)		(8)		(16)		95,453,771		1,086,802		5,772,325		99,986,971
Cash and cash equivalents at beginning of year		837,331		13,610		43,391		-		-		-		880,075
Currency aggregation adjustment		-		-		-		-		-		-		998
Increase in cash and cash equivalents		(62,892)		28,346		(25,794)		-		-		-		(58,541)
Cash and cash equivalents at end of year		774,439		41,956		17,597		-		-		-		822,532

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 December 2010

1          ACCOUNTING POLICIES

(a)        Basis of preparation

The financial statements have been prepared in conformity with International Financial Reporting Standards ("IFRS") as adopted by the European Union and applicable Guernsey law.  The financial statements have been prepared on an historical cost basis except for the measurement at fair value of unquoted financial assets designated at fair value through profit or loss.

The financial statements are presented in Sterling because that is the currency of the primary economic environment in which the Company operates.

The following Standards or Interpretations have been issued by the International Accounting Standards Board but not yet adopted by the Company:

IFRS7 Financial Instruments: Disclosures - Amendments enhancing disclosures about transfers of financial assets effective for annual periods beginning on or after 1 July 2011.

IFRS9 Financial Instruments - Classification and Measurement effective for annual periods beginning on or after 1 January 2013.

IAS 24 Related Party Disclosures - Revised definition of related parties effective for annual periods beginning on or after 1 January 2011.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments effective for annual periods beginning on or after 1 July 2010.

(b)       Going concern

As described in Note 9, should the average 12 month discount at which the Shares of any class trade to their net asset value exceed 5% of net asset value per Share, the Company is obliged to offer a continuation vote to class shareholders.

The Company triggered its rolling 12 month discount floor provision for each of the Sterling, Euro and US Dollar Share classes, by reference to the final NAV as at 30 April 2009, 27 February 2009 and 31 March 2009, respectively, although it is not expected to trigger the discount provisions in 2011.  In accordance with the articles of incorporation of the Company, continuation votes were proposed for all three classes of Shares by way of ordinary resolutions at separate class meetings held on 12 August 2009 and each continuation vote was passed.

The Company has adequate financial resources and as a consequence, the directors believe the Company is well placed to manage its business risks successfully.  After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors have adopted the going concern basis in preparing the financial information.

(c)        Taxation

The Company has been granted exemption under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 from Guernsey Income Tax, and is charged an annual fee of £600.

(d)       Expenses

All expenses are accounted for on an accruals basis.

(e)       Interest income

Interest income is accounted for on an accruals basis.

(f)        Share issue costs

The Share issue costs borne by the Company are recognised in the statement of changes in net assets attributable to shareholders, as the Company's Ordinary Shares have no fixed redemption date.

(g)       Cash and Cash Equivalents

Cash and cash equivalents are defined as call deposits and short term deposits readily convertible to known amounts of cash and subject to insignificant risk of changes in value, together with bank overdrafts.  For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and deposits at bank, together with bank overdrafts.

(h)       Investments

All investments are designated upon initial recognition as financial assets at "fair value through profit or loss".  Investments are initially recognised on the date of purchase (on 'trade date' basis) at cost, being the fair value of the consideration given, excluding transaction costs associated with the investment, with unrealised gains and losses on investments arising from change in fair value from prior years recognised in the Statement of Comprehensive Income.

Realised gains or losses are determined on the disposal of investments and are recognised in the Statement of Comprehensive Income.

In order to assess the fair value of unquoted investments the net asset value of the underlying investment in AllBlue Limited is taken into consideration.

The Company's net asset value is based on valuations of unquoted investments.  In calculating the net asset value and the net asset value per Share of the Company, the Administrator relies on the net asset values of the shares in AllBlue Limited supplied by the administrator of AllBlue Limited.  Those net asset values are based on the market value of the various investments held by AllBlue Limited.

(i)         Foreign currency translation

The financial statements are presented in Sterling, which is the Company's functional and presentation currency.  Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction.  Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at the reporting date.  All differences are taken to the Statement of Comprehensive Income.

For the purposes of aggregation income and expense items are translated at the average exchange rates for the period.  Exchange differences arising on currency consolidation due to translation of foreign currency balances to presentation currency are taken to the Other Comprehensive Income.

(j)         Segment information

For management purposes, the Company is organised into one business unit, and hence no separate segment information has been presented.  The Company determines that this operating segment is the investment in three share classes of a fund of hedge funds incorporated in the Cayman Islands.

(k)        Shares

Sterling, Euro and US Dollar ordinary Shares and C Shares have been classified as liabilities in accordance with IAS 32 because of the provisions contained in the Company's articles of association as described in Note 9.  The directors have been advised that this treatment does not result in the Shares being treated as a liability for the purpose of applying the solvency test set out in Section 527 of The Companies (Guernsey) Law, 2008, as amended.

2          OPERATING EXPENSES

		1 Jan 2010 to 31 Dec 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Administration fees		97,176		2,478		11,366		-		-		-		106,663
Directors' remuneration		169,158		4,314		19,785		-		-		-		185,671
Registration fees		89,519		2,283		10,470		-		-		-		98,257
Directors & Officers insurance		20,265		517		2,370		-		-		-		22,243
Broker fees		105,589		2,693		12,350		-		-		-		115,897
Audit fees		14,656		374		1,714		-		-		-		16,087
Annual & Regulatory fees		28,086		716		3,285		-		-		-		30,827
Legal & Professional fees		49,122		1,253		5,745		-		-		-		53,917
Printing of annual reports		7,477		191		875		-		-		-		8,207
Printing of half yearly reports		5,598		143		655		-		-		-		6,145
Bank interest on overdraft facility		5,933		151		694		-		-		-		6,512
Bank facility fee and charges		4,776		120		593		-		-		-		5,256
(Profit) / Loss on exchange		1,591		(41)		767		-		-		-		2,052
Other operating expenses		11,196		286		1,310		-		-		-		12,290
		610,142		15,478		71,969		-		-		-		670,024
Less: Bank interest earned		-		(1,045)		-		-		-		-		(897)
Total expenses for the year		610,142		14,433		71,969		-		-		-		669,127

		1 Jan 2009 to 31 Dec 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Administration fees		86,715		2,763		5,153		886		10		52		93,405
Directors' remuneration		148,658		4,732		8,841		20,805		236		1,215		180,330
Registration fees		47,977		1,529		2,851		490		6		29		51,679
Directors & Officers insurance		17,082		544		1,015		175		2		10		18,400
Broker fees		34,658		1,105		2,059		354		4		21		37,332
Audit fees		30,636		976		1,820		313		4		18		32,999
Annual & Regulatory fees		26,490		844		1,574		271		3		16		28,534
Legal & Professional fees		24,667		785		1,466		224		3		13		26,540
Printing of annual reports		625		20		38		6		-		-		673
Printing of half yearly reports		5,733		183		341		59		1		3		6,176
Bank interest on overdraft facility		262		8		16		3		-		-		282
Bank facility fee and charges		112		3		6		1		10		17		139
(Profit) / Loss on exchange		2,958		1,311		469		(2,069)		(20)		(113)		2,267
Other operating expenses		4,656		149		276		48		1		3		5,016
		431,229		14,952		25,925		21,566		260		1,284		483,772
Less: Bank interest earned		(1,831)		(118)		(1)		-		-		-		(1,937)
Total expenses for the year		429,398		14,834		25,924		21,566		260		1,284		481,838

3          DIRECTORS' REMUNERATION

	Annual fee
	£
Richard Crowder, Chairman	50,000
Jonathan Hooley, Chairman Audit Committee	40,000
Paul Meader	35,000
John Le Prevost	35,000
Andrew Dodd	Waived
	160,000

Each of the directors, with the exception of Andrew Dodd, earned additional ad-hoc fees of £10,500 each in the year of which £2,000 was included in tap share issue costs.  The directors of the Company are considered key management personnel.

4          EARNINGS PER SHARE

The earnings per each class of Shares is based on the net gain for the year of £43,494,498 (2009: £55,792,409) and 354,150,094 (2009: 207,114,660) Shares in the Sterling Ordinary Share class, €811,950 (2009: €1,909,445) and 7,380,991 (2009: 6,631,387) Shares in the Euro Ordinary Share class and $3,865,959 (2009: $4,545,502) and 35,626,003 (2009: 18,025,376) Shares in the US$ Ordinary Share class, £nil (2009: -£21,566) and 0 (2009: 96,417,954) Shares in the Sterling C Share class, €nil (2009: -€260) and 0 (2009: 1,097,780) Shares in the Euro C Share class, $nil (2009: -$1,284) and 0 (2009: 5,830,631) Shares in the US$ C Share class each, being the weighted average number of Shares in issue during the year.

5          RELATED PARTY TRANSACTIONS

Transactions with related parties are made on items equivalent to those that prevail in an arm's length transaction.

Anson Fund Managers Limited is the Company's administrator and secretary, Anson Registrars Limited is the Company's registrar, transfer agent and paying agent and Anson Administration (UK) Limited is the Company's UK Transfer agent.  John R Le Prevost is a director and controller of Anson Fund Managers Limited, Anson Registrars Limited and Anson Administration (UK) Limited.  £204,920 (2009: £145,084) of costs were incurred by the Company with these related parties in the year, of which £26,318 (2009: £8,663) was due to these related parties at 31 December 2010.

In accordance with IAS 28 the Company's investment transactions with AllBlue Limited represent a holding in excess of 21% (Dec 2009: 23%), therefore they are effectively transactions with a related party.  The totals of such transactions are shown in Note 6.

6          INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS

		For the year ended 31 December 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
UNQUOTED FINANCIAL ASSETS
Portfolio cost brought forward		219,938,860		6,065,636		17,703,882		95,453,774		1,086,802		5,772,324		336,253,746
Unrealised appreciation on valuation brought forward		98,426,971		1,724,177		5,742,212		-		-		-		103,507,110
Valuation brought forward		318,365,831		7,789,813		23,446,094		95,453,774		1,086,802		5,772,324		439,760,856
Movements in the year:
Gross Share conversions in the year		394,106,271		11,095,301		62,679,692		(401,902,711)		(9,127,647)		(53,099,302)		-
Adjustment for realised gain on Share conversions		2,326,797		569,626		502,412		-		-		-		3,137,447
Purchases at cost		75,893,146		1,536,716		8,264,369		306,448,937		8,040,845		47,326,978		426,206,182
Sales		-		-		-		-		-		-		-
Exchange gains on currency balances		-		-		-		-		-		-		362,436
Portfolio cost carried forward		692,265,074		19,267,279		89,150,355		-		-		-		765,959,811
Unrealised appreciation on valuation carried forward		140,204,814		1,980,934		9,177,728		-		-		-		147,789,237
Valuation carried forward		832,469,888		21,248,213		98,328,083		-		-		-		913,749,048

		For the year ended 31 December 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Realised gains on sales		2,326,797		569,626		502,412		-		-		-		3,137,447
Increase in unrealised appreciation		41,777,843		256,757		3,435,516		-		-		-		44,282,127
Net gains on financial assets at fair value through profit or loss		44,104,640		826,383		3,937,928		-		-		-		47,419,574

		For the year ended 31 December 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
UNQUOTED FINANCIAL ASSETS
Portfolio cost brought forward		213,155,443		6,611,498		22,823,717		-		-		-		235,115,765
Unrealised appreciation on valuation brought forward		43,470,401		1,233,890		2,403,054		-		-		-		46,296,632
Valuation brought forward		256,625,844		7,845,388		25,226,771		-		-		-		281,412,397
Movements in the year
Gross Share conversions in the year		5,977,380		(1,967,527)		(6,311,522)		-		-		-		-
Adjustment for realised gain on Share conversions		1,171,161		1,431,592		1,214,017		-		-		-		3,191,574
Purchase at cost		-		-		-		95,453,774		1,086,802		5,772,324		99,987,253
Sales		(365,124)		(9,927)		(22,330)		-		-		-		(387,737)
Exchange losses on currency balances		-		-		-		-		-		-		(1,653,109)
Portfolio cost carried forward		219,938,860		6,065,636		17,703,882		95,453,774		1,086,802		5,772,324		336,253,746
Unrealised appreciation on valuation carried forward		98,426,971		1,724,177		5,742,212		-		-		-		103,507,110
Valuation carried forward		318,365,831		7,789,813		23,446,094		95,453,774		1,086,802		5,772,324		439,760,856

		For the year ended 31 December 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Realised gains on sales		1,265,237		1,433,992		1,217,332		-		-		-		3,289,828
Increase in unrealised appreciation		54,956,570		490,287		3,339,158		-		-		-		57,210,478
Net gains on financial assets at fair value through profit or loss		56,221,807		1,924,279		4,556,490		-		-		-		60,500,306

IFRS 7 requires fair value to be disclosed by the source of inputs, using a three-level hierarchy:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The investments held by the Company have been classified as Level 2.  This is in accordance with the fair value hierarchy.

Details of the value of the classification are listed in the table below.  Values are based on the market value of the investments as at the reporting date:

Financial assets at fair value through profit or loss	Fair value		Fair value
through profit or loss	as at 31 Dec 2010		as at 31 Dec 2009
	GBP		GBP
Level 2	913,749,048		439,760,856

There have been no transfers between Level 2 and Level 3 of the fair value hierarchy during the year under review.

7          RECEIVABLES

		31 Dec 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Elimination		Total
		£		€		$		£		€		$		£		£
Prepayments		6,079		155		718		-		-		-		-		6,672
Other receivables		25,123		659		2,967		-		-		-		-		27,591
Inter class loan accounts		12,578		-		-		-		-		-		(12,578)		-
		43,780		814		3,685		-		-		-		(12,578)		34,263

		31 Dec 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Elimination		Total
		£		€		$		£		€		$		£		£
Prepayments		9,431		303		556		415		5		24		-		10,492
Other receivables		7,947		255		469		(69)		(1)		(4)		-		8,402
Inter class loan accounts		45,965		-		-		-		-		-		(45,965)		-
		63,343		558		1,025		346		4		20		(45,965)		18,894

8          PAYABLES (AMOUNTS FALLING DUE WITHIN ONE YEAR)

		31 Dec 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Elimination		Total
		£		€		$		£		€		$		£		£
Accrued administration fees		17,477		446		2,064		-		-		-		-		19,183
Accrued broker fees		12,860		328		1,519		-		-		-		-		14,115
Accrued registration fees		6,500		166		768		-		-		-		-		7,135
Accrued directors fees		-		-		-		-		-		-		-		-
Accrued bank charges		-		-		-		-		-		-		-		-
Accrued audit fees		18,221		465		2,152		-		-		-		-		20,000
Accrued printing costs		13,364		341		1,578		-		-		-		-		14,669
Inter class loan accounts		-		2,351		16,522		-		-		-		(12,612)		-
Other sundry accruals		34,304		876		4,051		-		-		-		-		37,653
		102,726		4,973		28,654		-		-		-		(12,612)		112,756

		31 Dec 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Elimination		Total
		£		€		$		£		€		$		£		£
Accrued administration fees		6,329		203		373		854		10		50		-		7,644
Accrued broker fees		-		-		-		-		-		-		-		-
Accrued registration fees		844		27		50		114		1		7		-		1,019
Accrued directors fees		23,432		753		1,383		20,612		233		1,203		-		46,579
Accrued bank charges		-		-		-		35		-		2		-		36
Accrued audit fees		20,888		671		1,233		214		2		12		-		22,499
Accrued printing costs		4,759		153		281		49		1		3		-		5,127
Inter class loan accounts		-		44,338		10,675		10		17		25		(45,965)		-
Other sundry accruals		567		18		33		24		-		1		-		629
		56,819		46,163		14,028		21,912		264		1,303		(45,965)		83,533

9          SHARE CAPITAL

Authorised Share Capital

An unlimited number of Unclassified Shares of no par value each.

Ordinary Shares

C Shares

Issued

Sterling Share Class

Euro Share Class

US$ Share Class

Sterling Share Class

Euro Share Class

US$ Share Class

Total

Number of Shares in issue at 31 December 2010

505,390,176

13,360,975

61,803,190

-

-

-

580,554,341

		Ordinary Shares						C Shares
The movement in Shares took place as follows:		Number of Sterling Share Class		Number of Euro Share Class		Number of US$ Share Class		Number of Sterling Share Class		Number of Euro Share Class		Number of US$ Share Class
Date of movement
Issue 21 April 2006		2		-		-		-		-		-
Issue 25 May 2006		135,283,597		5,676,877		9,632,602		-		-		-
Conversion 1 April 2008		2,323,063		(1,064,142)		(2,999,848)		-		-		-
Cancellation 19 May 2008		(198,000)		-		-		-		-		-
Conversion 1 July 2008		(9,400)		-		19,068		-		-		-
Conversion of C Shares 4 September 2008		71,997,994		1,663,467		8,086,481		-		-		-
Conversion 1 October 2008		(3,462,150)		223,992		5,980,852		-		-		-
Purchase of treasury Shares 26 November 2008		(100,000)		-		-		-		-		-
Purchase of treasury Shares 16 December 2008		(100,000)		-		-		-		-		-
Purchase of treasury Shares 19 December 2008		(150,000)		-		-		-		-		-
Purchase of treasury Shares 31 December 2008		(100,000)		-		-		-		-		-
Sub-total carried forward		205,485,106		6,500,194		20,719,155		-		-		-

		Ordinary Shares						C Shares
The movement in Shares took place as follows:		Number of Sterling Share Class		Number of Euro Share Class		Number of US$ Share Class		Number of Sterling Share Class		Number of Euro Share Class		Number of US$ Share Class
Date of movement
Sub-total brought forward		205,485,106		6,500,194		20,719,155		-		-		-
Conversion 1 January 2009		643,075		(615,782)		(111,870)		-		-		-
Conversion 1 April 2009		157,384		297,877		(624,923)		-		-		-
Conversion 1 July 2009		132,724		2,937,405		(4,332,028)		-		-		-
Conversion 1 October 2009		3,205,126		(3,816,092)		265,661		-		-		-
Issue 15 December 2009		-		-		-		96,417,954		1,097,780		5,830,631
As at 31 December 2009		209,623,415		5,303,602		15,915,995		96,417,954		1,097,780		5,830,631
Conversion 1 January 2010		428,601		(1,239,975)		1,054,347		-		-		-
C Share conversion 12 February 2010		62,681,311		739,574		3,914,102		(96,417,954)		(1,097,780)		(5,830,631)
Conversion 1 April 2010		(57,623)		(88,462)		209,612		-		-		-
Issue 23 June 2010		-		-		-		309,536,109		8,123,800		47,810,975
Conversion 1 July 2010		(478,014)		(130,586)		898,922		-		-		-
C Share conversion 6 August 2010		191,448,083		5,204,918		30,575,118		(309,536,109)		(8,123,800)		(47,810,975)
Tap issue 24 September 2010		46,363,168		977,928		5,251,553		-		-		-
Conversion 1 October 2010		(1,838,746)		149,756		2,785,793		-		-		-
Conversion 1 November 2010		(2,138,289)		2,319,969		324,975		-		-		-
Conversion 1 December 2010		(641,730)		124,251		872,773		-		-		-
As at 31 December 2010		505,390,176		13,360,975		61,803,190		-		-		-

In the event of a return of capital on a winding-up or otherwise, shareholders are entitled to participate in the distribution of capital after paying all the debts and satisfying all the liabilities attributable to the relevant share class.

The holders of Shares of the relevant share class shall be entitled to receive by way of capital any surplus assets of the share class in proportion to their holdings.  In the event that the share class has insufficient funds or assets to meet all the debt and liabilities attributable to that share class, any such shortfall shall be paid out of funds or assets attributable to the other share classes in proportion to the respective net assets of the relevant share classes as at the date of winding-up.

The Company's Articles incorporate a discount management provision (which applies to each class of Ordinary Shares individually) that will require a continuation vote to be proposed in respect of the particular class of Ordinary Shares at a class meeting of the relevant shareholders (by way of ordinary resolution) if, over the previous 12 month rolling period commencing from 1 January 2008, the relevant class of Ordinary Shares has traded, on average (calculated by averaging the closing mid-market share price on the dates which are 5 business days after the date on which each estimated Published NAV announcement is made for each NAV Calculation date over the period) at a discount in excess of 5 per cent to the average Net Asset Value per Ordinary Share of that class (calculated by averaging the NAV per Ordinary Share of that class as at the NAV Calculation Date at the end of each month during the period).

In the event that a vote to continue is proposed and passed for any class of Ordinary Shares as a result of the operation of such mechanism, no further continuation vote will be capable of being proposed for that class for a further 12 months from the date on which the requirement for such a continuation vote was triggered.

If such continuation vote is not passed, the directors will be required to formulate redemption proposals to be put to the shareholders of that class offering to redeem their Ordinary Shares at the relevant published Net Asset Value on the NAV Calculation Date immediately preceding such redemption (less the costs of all such redemptions).  However, where one or more such resolutions in respect of the same period is/are not passed and the class(es) of Ordinary Shares involved represent 75 per cent, or more of the Company's net assets attributable to all Ordinary Shares at the last NAV Calculation Date on or immediately preceding the date of the latest continuation resolution being defeated, the directors may first (at their discretion) put forward alternative proposals to all shareholders to offer to repurchase their Shares or to reorganise, reconstruct or wind up the Company.  If, however, such alternative proposals are not passed by the necessary majority of shareholders of the relevant class, the directors must proceed to offer to redeem the relevant class(es) of Ordinary Shares on the terms described above.

Where following redemption of any class of Ordinary Shares under the discount management provision, the number of Ordinary Shares of that class remaining in issue represent less than 25 per cent, of the Ordinary Shares of that class in issue immediately before such redemption or the listing for such class of Ordinary Shares on the Official List is withdrawn or threatened to be withdrawn or the directors determine that the conditions for the continued listing of that class are not (or they believe will not be) met, then the Company may redeem the remaining issued Ordinary Shares of that class within 3 months of such determination at a redemption price equal to the Net Asset Value of Ordinary Shares of that class on the NAV Calculation Date selected by the directors for such purpose (less the costs of such redemption).

The Company triggered its rolling 12 month discount floor provision for each of the Sterling, Euro and US Dollar Share classes, by reference to the final NAV as at 30 April 2009, 27 February 2009 and 31 March 2009, respectively.  In accordance with the articles of incorporation of the Company, continuation votes were proposed for all three classes of shares by way of ordinary resolution at separate class meetings held on 12 August 2009 and each continuation vote was passed.

10        SHARE PREMIUM

In April 2006 the shareholders of the Company passed a resolution to cancel the amount standing to the credit of the Company's share premium account (less any formation expenses set off against the share premium account) and the directors obtained from the Court in Guernsey an order confirming such cancellation of the share premium account in accordance with The Companies (Guernsey) Law, 1994 (as amended) (the "1994 Law").  The reserve created was thereafter available as distributable profits to be used for all purposes permitted by the 1994 Law, including the buy back of Shares and the payment of dividends.

On 1 July 2008 the 1994 Law was replaced by The Companies (Guernsey) Law, 2008 (as amended) (the "2008 Law").  The 2008 Law does not require share premium to be held in a separate account and any premium at which Shares are issued can be used for all purposes, including the buy back of Shares and the payment of dividends, provided that the Company would after any distribution still meet the statutory Solvency Test as such is defined in the 2008 Law.  Accordingly, upon the issue of C Shares in August 2008, December 2009 and June 2010 the entire amount of share premium received on the issue of such C Shares was immediately transferred to distributable reserves.

11        TREASURY SHARES

		31 Dec 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Balance as at 1 January 2010		483,079		-		-		-		-		-		483,079
Cancelled during the year		-		-		-		-		-		-		-
Acquired during the year		-		-		-		-		-		-		-
Balance as at 31 December 2010		483,079		-		-		-		-		-		483,079

		31 Dec 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Balance as at 1 January 2009		483,079		-		-		-		-		-		483,079
Cancelled during the year		-		-		-		-		-		-		-
Acquired during the year		-		-		-		-		-		-		-
Balance as at 31 December 2009		483,079		-		-		-		-		-		483,079

The treasury shares reserve represents 450,000 Sterling Shares purchased in the market at various prices per share ranging from £1.03 to £1.11 and held by the Company in treasury.  No cancellations of Shares took place in the year.

12        DISTRIBUTABLE RESERVES

		31 Dec 2010
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Balance as at 1 January 2010		319,629,873		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		441,001,828
Tap Issue		75,652,357		1,539,695		8,283,846		-		-		-		-
C Share Issue		(21,566)		(260)		(1,284)		306,470,503		8,041,105		47,328,261		425,980,438
Increase in net assets attributable to shareholders after other comprehensive income		43,494,498		811,950		3,865,959		-		-		-		47,110,248
Adjustment to allocation of reserves brought forward		(19,938)		11,013		11,069		-		-		-		-
Share conversions		394,106,271		11,095,301		62,679,692		(401,902,711)		(9,127,647)		(53,099,302)		-
Balance as at 31 December 2010		832,841,495		21,243,863		98,289,970		-		-		-		914,092,514

		31 Dec 2009
		Ordinary Shares						C Shares
		Sterling Share Class		Euro Share Class		US$ Share Class		Sterling Share Class		Euro Share Class		US$ Share Class		Total
		£		€		$		£		€		$		£
Balance as at 1 January 2009		257,860,084		7,844,246		25,216,708		-		-		-		282,638,651
Transfer from C Share Issue		-		-		-		95,453,774		1,086,802		5,772,324		99,987,253
Increase / (decrease) in net assets attributable to shareholders after other comprehensive income		55,792,409		1,909,445		4,545,502		(21,566)		(260)		(1,284)		58,375,924
Share conversions		5,977,380		(1,967,527)		(6,311,522)		-		-		-		-
Balance as at 31 December 2010		319,629,873		7,786,164		23,450,688		95,432,208		1,086,542		5,771,041		441,001,828

The Share issue costs incurred during the year in relation to the issue of C Shares amounted to £3,087,172 in the Sterling Share class, €82,955 in the Euro Share class and $483,998 in the US Dollar Share class.

The Share issue costs incurred during the year in relation to the tap issue amounted to £939,596 in the Sterling share class, €19,122 in the Euro Share class and $102,884 in the US Dollar Share class.

13        FINANCIAL INSTRUMENTS

The Company's main financial instruments comprise:

(a)        Cash and cash equivalents that arise directly from the Company's operations; and

(b)       Shares held in AllBlue Limited.

14        FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The main risks arising from the Company's financial instruments concerns its shares in AllBlue Limited ("AllBlue") and the risks attaching to those shares which are market price risk, credit risk, liquidity risk and interest rate risk and increased volatility due to leverage employed by the underlying funds as explained below.

The Company is not exposed to significant foreign exchange risk as each class of Shares in the Company is directly invested in shares of AllBlue denominated in the same corresponding currency.

So far as the Company is concerned, the only risk the Board can monitor and control is the liquidity risk attaching to its ability to realise shares in AllBlue for the purpose of meeting ongoing expenses of the Company.  Thereafter the Board recognises that the Company has via its holding of shares in AllBlue Limited an indirect exposure to the risks summarised below though it must be noted that there is little or nothing which the Board can do to manage each of these risks within AllBlue or the underlying funds in which AllBlue invests (the "underlying fund(s)").

(a)        Price Risk

The success of AllBlue's and the underlying funds' and, therefore, the Company's activities will be affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, currency exchange controls and national and international political circumstances.  These factors may affect the level and volatility of securities' prices and the liquidity of the underlying funds' investments.  Volatility or illiquidity could impair the underlying funds' profitability or result in losses.

Price sensitivity

The Company invests substantially all its assets in AllBlue and does not undertake any significant structural borrowing or hedging activity at the Company level.  Its performance is therefore directly linked to the net asset value of AllBlue, which itself is driven by the net asset values of the underlying funds, each of which hold a large number of positions in listed and unlisted securities.

At 31 December 2010, if the net asset value of AllBlue had been 10% higher with all other variables held constant, the net assets attributable to shareholders for the year would have been £91,374,905 (2009: £43,976,086) greater, arising due to the increase in the fair value of financial assets at fair value through profit or loss.

If the net asset value of AllBlue had been 10% lower with all other variables held constant, the net assets attributable to shareholders for the year would have been £91,374,905 (2009: £43,976,086) lower, arising due to the decrease in the fair value of financial assets at fair value through profit or loss.

The sensitivity is higher in 2010 than in 2009 because of an increase in the net financial assets and liabilities at fair value through profit or loss at the reporting date.

(b)       Credit Risk

The nature of commercial arrangements made in the normal course of business between many prime brokers and custodians means that in the case of any one prime broker or custodian defaulting on its obligations to AllBlue or any of the underlying funds, the effects of such a default may have negative effects on other prime brokers with whom AllBlue or such underlying fund deals.  The underlying funds and, by extension, AllBlue and the Company may, therefore, be exposed to systemic risk when AllBlue or an underlying fund deals with prime brokers and custodians whose creditworthiness may be interlinked.

The assets of AllBlue and the underlying funds may be pledged as margin with prime brokers or other counterparties or held with prime brokers or banks.  In the event of the default of any of these prime brokers, banks or counterparties, AllBlue or the underlying funds may not receive back all or any of the assets pledged or held with the defaulting party.

The maximum credit risk to which the Company was exposed at the year end was £913,776,639 (2009: £440,591,790).

The main concentration of risk for the Company relates to the investments in AllBlue, as these are the only investments the Company has.

(c)        Liquidity Risk

In some circumstances, investments may be relatively illiquid making it difficult to acquire or dispose of them at the prices quoted on the various exchanges.  Accordingly, an underlying fund's ability to respond to market movements may be impaired and, consequently, the underlying fund may experience adverse price movements upon liquidation of its investments which may in turn affect the value of AllBlue and hence the Company's investment in AllBlue.  Settlement of transactions may be subject to delay and administrative formalities. During the year, AllBlue changed from monthly redemptions of shares to quarterly redemptions.

There can be no assurance that the liquidity of the investments of AllBlue and the underlying funds will always be sufficient to meet redemption requests as, and when, made.  Any such lack of liquidity may affect the ability of the Company to realise its shares in AllBlue and the value of Shares in the Company.  For such reasons AllBlue's treatment of redemption requests may be deferred in exceptional circumstances including if a lack of liquidity may result in difficulties in determining the net asset value and the net asset value per share in AllBlue.  This in turn would limit the ability of the directors to realise the Company's investments in AllBlue should they consider it appropriate to do so and may result in difficulties in determining the net asset value of a Share in the Company.

The market prices, if any, for such illiquid investments tend to be volatile and may not be readily ascertainable and the relevant underlying fund may not be able to sell them when it desires to do so or to realise what it perceives to be their fair value in the event of a sale.  The size of the underlying funds' positions may magnify the effect of a decrease in market liquidity for such instruments.  Changes in overall market leverage, deleveraging as a consequence of a decision by the counterparties with which the underlying funds enter into repurchase/reverse repurchase agreements or derivative transactions, to reduce the level of leveraging, or the liquidation by other market participants of the same or similar positions, may also adversely affect the underlying funds' portfolios.

The sale of restricted and illiquid securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. 

The underlying funds may not be able readily to dispose of such illiquid investments and, in some cases, may be contractually prohibited from disposing of such investments for a specified period of time.  Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale.

The Company's Shares in issue are traded on the London Stock Exchange's Main Market for Listed Securities (the "LSE").  However, in certain circumstances there may be a limited market for the Shares and it may not be possible for investors to achieve a disposal of their holding within a short time period or for the investor to realise the full anticipated value of the Shares.

The table below details the residual contractual maturities of financial liabilities:

As at 31 December 2010		1-3 months		Over 1 year		Total
		£		£		£
Accrued expenses		112,756		-		112,756
Total		112,756		-		112,756
As at 31 December 2009		1-3 months		Over 1 year		Total
		£		£		£
Accrued expenses		83,533		-		83,533
Total		83,533		-		83,533

(d)       Interest Rate Risk

The prices of securities tend to be sensitive to interest rate fluctuations.  Unexpected fluctuations in interest rates could cause the corresponding prices of long positions and short positions adopted to move in directions which were not originally anticipated.  In addition, interest rate increases generally increase the interest or carrying costs of investments.  However, the Company's investments designated as at fair value through profit or loss are non interest bearing, and therefore are not exposed to interest rate risk.

The Company's own cash balances are not materially exposed to interest rate risk as cash and cash equivalents are held on floating interest rate deposits with banks and the Company does not rely on income from bank interest to meet day to day expenses.

(e)       Leverage by Underlying Funds

Certain underlying funds in which the Company may have an economic interest operate with a substantial degree of leverage and are not limited in the extent to which they either may borrow or engage in margin transactions.  The positions maintained by such underlying funds may in aggregate value be in excess of the net asset value of AllBlue.  This leverage presents the potential for a higher rate of total return but will also increase the volatility of AllBlue and, as a consequence, the Company, including the risk of a total loss of the amount invested.

(f)        Capital management

The investment objective of the Company is to provide shareholders with consistent long-term capital growth through an investment policy of investing substantially all of its assets in AllBlue or any successor vehicle to AllBlue.

As the Company's Ordinary Shares are traded on the LSE, the Ordinary Shares may trade at a discount to their Net Asset Value per Share.  However, in structuring the Company, the directors have given detailed consideration to the discount risk and how this may be managed.

At the last annual general meeting held pursuant to section 199 of The Companies (Guernsey) Law, 2008, as amended (the "2008 Law"), the directors were granted authority to buy back up to 14.99 per cent of the Ordinary Shares in issue.  The Company's authority to make purchases of its own issued Ordinary Shares will expire at the conclusion of the next general meeting of the Company to be held pursuant to section 199 of the 2008 Law and renewal of such authority will be sought at that next general meeting.  The timing of any purchases will be decided by the Board.

The directors intend that purchases will only be made pursuant to this authority through the market, for cash, at prices below the prevailing net asset value per Share where the directors reasonably believe such purchases will be of material benefit to the Company.

Following approval of the Court in Guernsey, the Company resolved to cancel the amount standing to the credit of its share premium account following Admission.  The amount released on cancellation has been credited as a distributable reserve in the books of account and may be used by the Company for the purpose of funding purchases of its Ordinary Shares as described above and the payment of dividends.  On 1 July 2008 The Companies (Guernsey) Law, 1994 (as amended) was replaced by the 2008 Law.  The 2008 Law does not require share premium to be held in a separate account and any premium at which shares are issued can be used for all purposes, including the buy back of Shares and the payment of dividends, provided that the Company would after any distribution still meet the statutory Solvency Test as such is defined in the 2008 Law.  Accordingly, upon the issue of C Shares in

August 2008, December 2009 and June 2010 the entire amount of share premium received on the issue of such C Shares was immediately transferred to distributable reserves.

The Company's authorised share capital is such that further issues of new Ordinary Shares could be made.  Subject to prevailing market conditions, the Board may decide to make one or more further such issues or reissues of Ordinary Shares for cash from time to time.  Any further issues of new Ordinary Shares or reissues of Ordinary Shares held in treasury will rank pari passu with Ordinary Shares in issue.

There are no provisions of the Companies Laws 1998 which confer rights of pre-emption in respect of the allotment of Shares.  There are, however, pre-emption rights contained in the Articles, but the directors have been granted the power to issue further Shares on a non-pre-emptive basis for a period concluding on 31 December 2011, unless such power is previously revoked by the Company's shareholders in general meeting pursuant to section 199 of the 2008 Law by a special resolution of shareholders passed on 14 July 2010.  The directors intend to request that the authority to allot Shares on a non-pre-emptive basis is renewed at each subsequent general meeting of the Company.

Unless authorised by shareholders, the Company will not issue further Ordinary Shares or re-issue Ordinary Shares out of treasury for cash at a price below the prevailing Net Asset Value per Share unless they are first offered pro-rata to existing shareholders.

The Company monitors capital on the basis of the carrying amount of reserves as presented on the face of the Statement of Financial Position.  Capital for the reporting year under review is summarised as follows:

		2010		2009
		GBP		GBP
Purchase of own shares		(483,079)		(483,079)
Distributable reserves		914,092,514		441,001,828
Total		913,609,435		440,518,749

15        SUBSEQUENT EVENTS

            There have been no material subsequent events.

            E&OE - In Transmission

 

END

 

 

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