aardvark investments s.a

AARDVARK INVESTMENTS S.A.(Formerly Artemis Fine Arts S.A.)

CONSOLIDATED AUDITED ANNUAL REPORT2006 - 2007

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AARDVARK INVESTMENTS S.A.(Formerly Artemis Fine Arts S.A.)

Consolidated Audited Annual Report2006-2007

Annual General Meeting 1st February 2008. 11.30 hrs at Hotel Le Royal, 12 BoulevardRoyal, Luxembourg.

The Reports are available at DEXIA Banque Internationale à Luxembourg, 69 route d’Esch,Luxembourg, and Experta Corporate and Trust Services, 180 rue des Aubépines, Luxembourg.

The notices of shareholder meetings and other financial information are published in theMemorial de Luxembourg and the Luxembourg Wort.

The articles of incorporation are filed at the Greffe du Tribunal d’Arrondissement deLuxembourg, where copies are available for inspection.

The Consolidated Audited Annual Report for 2006-2007 that follows on pages 7 through to18 is subject to the approval by shareholders at the Ordinary Annual General Meeting thatwill be held on Friday 1st February 2008 at 11.30 hrs at Hotel Le Royal, 12 BoulevardRoyal, Luxembourg.

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AARDVARK INVESTMENTS S.A.

Societe Anonyme. Registre du Commerce: Luxembourg B, No 8935.

Registered office: 180 Rue des Aubepines, Luxembourg. L-1145.

Board of Directors during the year.

Mr. Robert Byrne Noonan. Chairman Eurotower, 1 Eurotower Road, Gibraltar.

Mr. Ian Rosenblatt. Managing Director. (Appointed 29th November 2006) Eurotower, 1 Eurotower Road, Gibraltar.

Mr. Andrew Mann.Le Roqueville, 20 Boulevard Princesse Charlotte, Monaco.

Mr. Cyrille Houglet (Resigned 30th June 2007) 45 rue le Marois, 75016 Paris, France.

Independent Auditor.Moore Stephens SARL.16 Allee Marconi, L-2012, Luxembourg.Grand Duchy of Luxembourg.

Websites.General website: www.aardvarkinvestments.comInvestor relations website: www.aardvarkinvestments.com/investor.php

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Directors’ Report

The Board of Directors has approved the accounts of the company and group for the yearended 30 September 2007. The consolidated net loss for the year is US$1.4 million(2006: US$675K). The consolidated operating loss for the year was US$2.3 million(2006: US$1.3 million) of which US$380K was attributable to the continued disposal of theremaining artwork and US$1.9 million attributable to the costs associated with the newactivities developing new and advanced biofuel technologies with commercial and technologicalpotential.

The residual art portfolio net of the provision at the end of the year amounted to US$1.5 millionand the board, having refused two offers for the remainder of the portfolio, have decided in theabsence of a viable offer to dispose of the art stock in conjunction with our partners over timeunless a new acceptable offer is received. It is estimated that the annual cost associated withretaining the art stock will amount to circa US$20K. All the art trading subsidiaries have beenliquidated with the exception of the London and Geneva operations and these will be closed inearly 2008. The company no longer employs any art experts.

At the year end the group had cash and short term receivables of US$15.1 million and totalassets of US$19.5 million.

The Holding Company’s unconsolidated loss for the year amounted to US$1,373K (2006:US$554K) which after deducting the US$31K movement on the foreign exchange reserves mustbe added to the loss brought forward from prior years of US$7,967K leaving a loss ofUS$9,309K to be carried forward. The Directors do not recommend the payment of a dividend.

At the close of the offer period El Rocio Investments Ltd, the principle shareholder, owned96.3 per cent. of the shares in issue. It is expected that following the intended placement inearly 2008 this shareholding will be diluted sufficiently to bring it in line with the listing rules.

A significant start has been made in the re-positioning of the company to enter the renewableenergy business. At the Extraordinary General Meeting held on the 2nd of February 2007 all theresolutions proposed were passed by the shareholders and the amended statutes of thecompany incorporating the changes proposed in the resolutions were filed at Grevenmacher on12 February 2007.

The Directors believe that some existing sources of biofuels are manufactured in a non-sustainable manner, or potentially in conflict with food production and may therefore have alimited long-term commercial future. Our strategy is to find biofuel technologies that haveimproved yields; do not compete in the food chain; can thrive in marginal conditions; are cost-effective to produce; and have commercially viable and useful by-products which will effectivelyreduce the cost of the biofuels and in themselves be profitable. Our current research effortswhilst focusing ultimately on the development of alternative fuels is also looking to bring someof these by-products to the market as soon as possible in order to produce income for thecompany.

In March 2007 the company acquired MALTAgen Forschung GmbH for €1.5 million plusacquisition expenses. MALTAgen is a world-leader in barley transformation research. Maltagenwas founded as a research subsidiary of a leading manufacturer in the malting industry withmore than 140 years of barley expertise. Maltagen’s molecular farming makes possible the

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economic production of high quality proteins, carbohydrates and lipids, and offers the potentialto do large scale-up at low cost with low maintenance requirements. Transgenic barley grainsserve as bioreactors for valuable raw material and biopharmaceuticals. The company’s currentproducts range from food and feed improvement products (functional food, neutra-ceuticalsand food & feed additives), to oral vaccines, pharmaceuticals, cell culture media agents andvery importantly, to enzymes used in the production of biofuels. Development and regulatorytimings mean that these products will come to the market in phases over the next five years,but the on-going development costs can be met by the company.

In May 2007 the company established CEQUESTA Ltd, a wholly owned subsidiary establishedin Israel. Cequesta is a specialist in algae technology. Of all plants, algae have the most excitingfuture since their potential productivity per hectare is more than 50 times any other plant variety.To achieve their potential, improvements are needed in algae strains, photo-bioreactor design,and processing. Cequesta knows and understands these areas very well and has retained themost experienced researchers in this exciting field. The company has independent developmentteams in four places around the world, coordinated from Jerusalem. It believes it will be the firstto produce low-cost biofuel from algae, along with other very important commercial productslike fishmeal; natural neutraceuticals; replacements for synthetic neutraceuticals and syntheticfood additives; and fish oils.

One of the investment opportunities the Company has identified, and has agreed terms toacquire, is Ecoenergy Investments N.V. Ecoenergy is the exclusive global license holder ofspecialised canola and mustard seed varieties from the University of Idaho Brassica breedingand research programme. The licenses and agreements are designed to initiate seed breedingprogrammes and to allow the company to acquire elite seed crop varieties. The agreementbetween Ecoenergy and the University of Idaho covers a broad research and developmentprogramme over the next five years coupled with worldwide licensing rights. It is envisaged thatthese energy specific crop varieties will produce more revenue per hectare than other similarbiofuel sources, and therefore will be highly attractive to farming communities on a global basis.Ecoenergy currently have trials underway in Argentina, Paraguay, Romania, Spain, France andthe UK.

The board continues to look for acquisitions or opportunities to enhance the existing portfolio,and will further expound on its business plan in the offering memorandum that is beingprepared for a placement that it is anticipated will be in early 2008.

Mr. Cyrille Houglet resigned from the board with effect from 30 June 2007. At this stage theboard does not intend to replace him. However the board will create a Technical AdvisoryCommittee comprising of Messrs. Sarx, Benoit, Brown and Waimann all of whom are currentlyeither working for the group or are advisors. Full details of their biographies are available on thecompany website.

The mandate of the company’s auditors Moore Stephens S.a.r.l expires at the annual generalmeeting and they offer themselves for re-election.

We are most grateful to the group’s advisers, employees and shareholders, for their continuedinvaluable help and guidance.

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Independent Auditors’ Report to the Members of Aardvark Investments S.A.

We have audited the accompanying consolidated financial statements of Aardvark InvestmentsS.A. which comprise the consolidated balance sheet as at 30 September 2007 and the incomestatement, statements of changes in equity and cash flow statement for the year then ended,and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidatedfinancial statements in accordance with International Financial Reporting Standards. Thisresponsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error; selecting and applying appropriate accountingpolicies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based onour audit. Except as discussed below, we conducted our audit in accordance with InternationalStandards on Auditing. Those standards require that we plan and perform the audit to obtainreasonable assurance whether the consolidated financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by management, as well asevaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

Our audit work was conducted subject to the following limitation:

External valuations for the paintings and part of the works on paper were obtained by thedirectors in 2005 based on auction estimates. The works on paper not subject to externalvaluations were valued by the directors. Based on these valuations the directors made anoverall specific provision against the works of art. The value of the art stock at 30 September2007 is based on the 2005 valuation less the specific provision adjusted for disposals.

We have not obtained external valuations for the stock remaining at 30 September 2007.Consequently we are unable to form an opinion on the net realisable value.

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OpinionIn our opinion, except for the effects of any adjustments that may have been necessary had webeen able to satisfy ourselves as to the realisable value of works of art, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Group at30 September 2007 and of its financial performance and its cash flows for the year then endedin accordance with International Financial Reporting Standards.

Without further qualifying our opinion we draw attention to note 1.1 which states that the Groupis focused on the development of products which are ecologically beneficial and sustainable.At this stage the commercial viability of these products cannot be determined. In addition thereis a risk that the Group may not have available sufficient resources to complete thedevelopment phase.

Moore Stephens S.a.r.L.Chartered Accountants

16, Allée Marconi,B.P. 260.2012 LuxembourgDecember 19th, 2007

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Aardvark Investments S.A.Group and Holding Company Income Statement Year ended 30th September 2007

2007 2006Group Company Group Company

US$ 000 US$ 000 US$ 000 US$ 000Notes

Sales 1,828 1,340 5,032 3,760Commission income 9 20 10

––––––––––––––––––––––––––––––––––––––––Turnover 1.3 1,837 1,340 5,052 3,770Direct costs of sales 1.4 (1,735) (1,321) (5,140) (3,701)Other direct costs (26) (25) (51) (82)Net trading (loss)/income 76 (6) (139) (13)

Operating expensesGeneral and administrative expenses (1,319) (414) (709) (516)Payroll costs including social charges (1,011) (235) (404) (144)Depreciation on fixed assets 1.7 & 6 (26) (6) (2)Amortisation of intangible assets 1.6 (2)Total operating expenses (2,358) (649) (1,119) (662)

Operating loss (2,282) (655) (1,258) (675)

Financial income and expensesInterest income 873 406 518 495Interest and other financial expenses (86) (75) (113) (105)Exchange (loss)/gain 106 29 52 41Net financial income and expenses 893 360 457 431(Loss) for the year before

write-offs and taxation (1,389) (295) (801) (244)Provision against investment in

subsidiaries (1,042) (214)(Loss)/Profit on disposal of other

fixed assets (1) 234Taxation charges 1.10 & 5 (37) (36) (109) (96)

––––––––––––––––––––––––––––––––––––––––Loss for the year (1,427) (1,373) (676) (554)

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Loss per share 15 (0.91) (0.87) (0.43) (0.35)

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Statement of recognized income and expense

for the Year ended 30 September 2007

Exchange consolidation adjustment 10 82 101Foreign exchange reserve on term loans

to subsidiaries 10 31 20––––––––––––––––––––––––––––––––––––––––

Net gains/(losses) not recognized in the income statement 82 30 101 20

Net loss for the year (1,427) (1,373) (676) (554)––––––––––––––––––––––––––––––––––––––––

Total recognized losses (1,345) (1,343) (575) (534)––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

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Aardvark Investments S.A.Group and Holding Company Balance Sheets Year ended 30th September 2007


US$ 000 US$ 000 US$ 000 US$ 000Assets Notes

Fixed assetsGoodwill 1.6 & 3 2,307Patents and licences 1.6 7Tangible fixed assets 1.7 & 6 132 11Investments in subsidiaries 1,990 5,121Loans to subsidiaries 579Total fixed assets 2,446 1,990 11 5,700

Current assetsStock (art and other) 1.8 & 7 1,522 1,478 2,938 2,537Trade and other debtors 8 345 95 887 82Short term loans 16 5,988Development costs 87Amounts due from subsidiaries 12,757 252Cash and deposits at banks 9,154 4,811 16,673 15,263Total current assets 17,096 19,141 20,498 18,134

––––––––––––––––––––––––––––––––––––––––––Total assets 19,542 21,131 20,509 23,834

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Liabilities and shareholders’ equity

Shareholders’ equityShare capital 11, 12 & 14 7,864 7,864 7,864 7,864Legal reserve 10 1,014 1,014 1,014 1,014Non-distributable reserve 10 & 13 19,226 19,226 19,226 19,226Retained (loss)/earnings 10 (7,923) (7,936) (7,329) (7,413)Total shareholders’ equity 20,181 20,168 20,775 20,691

Loss for the year (1,427) (1,373) (676) (554)

Current liabilitiesAmounts due to subsidiaries 2,077 3,322Trade creditors and other payables 9 711 182 284 249Balance due on capital repayment 13 77 77 126 126Total current liabilities 788 2,336 410 3,697

––––––––––––––––––––––––––––––––––––––––––Total liabilities and shareholders’ equity 19,542 21,131 20,509 23,834

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Approved by the Board of Directors on 19th December 2007

Ian Rosenblatt Andrew MannManaging director Director

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Aardvark Investments S.A.Group Cash Flow Statement Year ended 30th September 2007

2007 2006US$ 000 US$ 000

Operating loss before financial income,taxation and other charges (2,282) (1,258)

Adjustment for:Depreciation and amortization 28 6

––––––– –––––––Operating loss before working capital changes (2,254) (1,252)(Increase)/decrease in trade and other receivables

after adjustment for provisions 542 2,848Decrease in inventories after adjustment

for provisions 1,416 4,814(Decrease) in trade and other payables 420 (225)

––––––– –––––––Cash generated from operating activities 124 6,185Interest and other financial expenses paid (86) (113)Income taxes paid (47) (40)(Loss)/Profit on exchange 106 52

––––––– –––––––Net cash generated from operating activities 97 6,084

Cash flows from investing activitiesShort term loans (21,260)Short term loans repaid 15,272Investment in subsidary (2,307)Development costs (87)Capital repayment (US$6 per share) (49) (1,854)Purchase of fixed assets (153)Proceeds from disposal of fixed assets 233Interest received 784 540

––––––– –––––––Net cash (paid) received from investing activities (7,800) (1,081)

Cash flows from financing activitiesDividends paid (2) (11)

––––––– –––––––Net cash (spent) in financing activities (2) (11)

––––––– –––––––Net increase/(decrease) in cash and

cash equivalents (7,705) 4,992Effect of exchange rate changes 186 101Cash at the beginning of the year 16,673 11,580

––––––– –––––––Cash at end of year 9,154 16,673

––––––– –––––––––––––– –––––––

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Aardvark Investments S.A.Notes to the Group and Holding Company Financial StatementsYear ended 30th September 2007

1 Accounting Policies

1.1 Principal activity (see also note 19)Aardvark Investments S.A. the holding company, is registered in Luxembourg, as acommercial company (also called a “soparfi”). Its subsidiaries and other operating entities(listed in note 2) are incorporated or established in other countries. The company is nolonger actively involved in trading of art work and is in the process of disposing of itsremaining portfolio. The group’s focus is now on the research and development andeventual sale of products that are environmentally ecologically beneficial and sustainable.

1.2 Basis of presentationThe group financial statements comprise the accounts of the holding company, and itssubsidiaries as set out in Note 2. Investments in subsidiaries are carried at the lower ofcost and realizable value.All inter-company balances, transactions and unrealized profits arising from intra-groupoperations are eliminated in preparing the consolidated financial statements.Both the group accounts and the holding company accounts have been prepared underthe historical cost convention, and in accordance with International Financial ReportingStandards.These financial statements have been prepared on a going concern basis.

1.3 TurnoverArt sales. This comprises the group’s and company’s share of sales to and commissionson consignment sales from external customers and excludes sales taxes.Other sales. This comprises the income from trials and other consulting activity and alsoincludes non-refundable research grants.Sales and purchases are recorded at the time of substantial agreement or invoicing.

1.4 Cost of salesThis comprises the group’s and company’s share of the cost of items sold, also includingall commissions paid to third parties on the sale of these items and all other chargesrelated to the art trading activity (restoration costs, insurance charges, photography costs,transport costs, exhibition and catalogue costs).

1.5 Foreign currenciesTransactions denominated in foreign currencies other than US$ are recorded at the rate ofexchange ruling at the dates of the transactions. Monetary assets and liabilities aretranslated into US$ at period end rates. The resulting exchange differences are dealt within the results for the period, with the exception of exchange differences arising from theretranslation of the opening net investment in overseas subsidiaries, and term loans tothese subsidiaries, which are dealt with in the group and company’s reserves.On consolidation, the assets, liabilities and results of the overseas subsidiaries aretranslated into US$ at the period end rates.

1.6 Intangible fixed assetsGoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of thegroup’s share of the net identifiable assets of the acquired subsidiary at the date ofacquisition. Goodwill on acquisitions of subsidiaries is included in intangible fixed assets.Goodwill is reviewed annually for impairment and carried at cost less accumulatedimpairment losses. Impairment losses on goodwill are not reversed. Gains or losses on thedisposal of an entity include the carrying amount of goodwill relating to the entity sold.

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Aardvark Investments S.A.Notes to the Group and Holding Company Financial StatementsYear ended 30th September 2007(Continued)

Patents and licencesAcquired patents, trademarks and licenses are shown at historical cost less theaccumulated depreciation charged over their useful lives.

1.7 Tangible fixed assets and depreciationThe tangible fixed assets are recorded at their acquisition cost.Depreciation is calculated on the acquisition cost at rates estimated to write off the costof the relevant assets by equal amounts over their expected useful lives.The annual rates are: 12.5-33.3 per cent. on a straight line basis.

1.8 StockWorks of art and other stock are stated at the lower of cost and net realizable value. Costof works of art comprises purchase cost together with restoration costs if applicable.Cost of other stocks comprise purchase cost of raw materials and consumables. Aprovision is made against any item that in the opinion of management has suffered apermanent impairment in value.

1.9 Accounts receivableAccounts receivable are shown net of provisions.

1.10 TaxationProvision for taxation is made at current rates on taxable profits, taking into account taxlosses available to individual subsidiaries.A deferred tax asset is recognized only to the extent that it is probable that future taxableprofits will be available against which the unused tax losses/credits can be utilized.

1.11 Critical accounting judgements and key sources of estimation uncertaintyAccounting estimates and judgement are based on assessments of uncertain futureevents and are used in the preparation of the financial statements. Such judgement andestimates may impact on the amounts reported as assets, liabilities, revenues andexpenses. Estimates and judgement are exercised in all areas of the business. The keyareas identified include the valuation of works of art held in stock (see note 7) and ofgoodwill (see note 5).

2 Entities included in the consolidationThe following subsidiaries involved in the research and development of eco-energyproducts are included in the consolidation.Name Country OwnershipMaltagen Forschung GmbH Germany 100%Cequesta Ltd Israel 100%Eco-Energy Europe SRL Romania 100%Blenheim Investments LLC United States 100%The remaining art dealing subsidiaries and branches included in this consolidation are:Artemis Fine Arts Ltd. United Kingdom 100%Artemis Fine Arts SA, Luxembourg,

Geneva Branch Switzerland 100%

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The following subsidiary formerly known as Artemis Real Estate SA is involved in thedevelopment of a commercial property in Germany and is included in the consolidation.Aardvark Real Estate S.A. Luxembourg 100%Aardvark Real Estate S.L. Spain 100%The following art dealing companies have been liquidated during the year.C.G. Boerner Ltd. United Kingdom 100%Artemis Fine Arts GmbH (formerly

C.G. Boemer GmbH) Germany 100%Artemis- Boerner Inc (formerly C.G.

Boerner Inc) United States 100%Artemis Fine Arts Inc. United States 100%

3 GoodwillIn, March 2007 the company purchased the entire share capital of Maltagen ForschungGmbH for US$2.3 million (including legal expenses). Maltagen is a biotechnologycompany specialising in the research and development of high value adding bio-molecules from transgenic barley. Its potential products include animal vaccines, cellculture supplements, animal feed additives, organic sweetners and formenting enzyemes.An evaluation of Maltagen’s intellectual property was carried out by the management andas a result management have determined that there is no need to process an impairmentof the goodwill associated with the investment.

4 Payroll2007 2006

Group Company Group CompanyUS$ 000 US$ 000 US$ 000 US$ 000

The total pension costs included in payrolls were: 0 0

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––The average number of employees

during the year was 9 4––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Directors’ fees Fees paid to the directors during the year amounted to US$176K (2006 US$76K)

5 Taxation2007 2006


Adjustment in respect of prior years 71 61Taxation refund (26) (26) 0Taxation charge for the year 63 62 38 35

––––––––––––––––––––––––––––––––––––––––37 36 109 96

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

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6 Fixed assets2007 2006

US$ 000 US$ 000 US$ 000 US$ 000Group Company Group Company

Cost or valuation (01.10.06 & 01.10.05) 541 28 646 28Additions 153Disposals (211) (134)Exchange adjustment (63) 29

––––––––––––––––––––––––––––––––––––––––Cost or valuation (30.09.07 & 30.09.06) 420 28 541 28

––––––––––––––––––––––––––––––––––––––––Depreciation (01.10.06 & 01.10.05) 530 28 630 26Charge for the year 26 6 2Disposals (211) (134)Adjustment arising from business

combination 7Exchange adjustment (64) 28

––––––––––––––––––––––––––––––––––––––––Depreciation (30.09.07 & 30.09.06) 288 28 530 28

––––––––––––––––––––––––––––––––––––––––Net book value (30.09.07 & 30.09.06) 132 11

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Fixed assets comprise office equipment, furniture, computer equipment and laboratoryequipment.

7 Stock2007 2006


Art stockPainting, Works on paper and sundry 3,142 3,118 5,202 4,801Specific provision against art stock (1,640) (1,640) (2,264) (2,264)

––––––––––––––––––––––––––––––––––––––––Net value of art stock 1,502 1,478 2,938 2,537Laboratory material 20

––––––––––––––––––––––––––––––––––––––––1,522 1,478 2,938 2,537

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Certain works of art have been sold at a loss this year and the loss has been takenagainst the provision created in prior years.

8 Current trade and long term debtors2007 2006


Art trade debtors 115 115 535 52Less provision against art trade debtors (52) (52) (52) (52)Other trade debtors 51

––––––––––––––––––––––––––––––––––––––––Net trade debtors 114 63 483Balance due on sale of freehold property 279Interest receivable 106 17 17Prepayment and sundry debtors 125 32 108 65

––––––––––––––––––––––––––––––––––––––––Total trade and other debtors 345 95 887 82

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

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9 Trade creditors and other payables2007 2006


Art trade creditors 9 2 25 15Other trade creditors 46Accruals and sundry creditors 604 164 173 163Taxation payable 45 9 77 62Prior year dividends 7 7 9 9

––––––––––––––––––––––––––––––––––––––––711 182 284 249

––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

10 Shareholders’ equityThe movement of the equity during the period is as follows:

Share Legal Non- Retained RetainedCapital reserve distributable earnings earnings

reserveCompany Company Company

& Group & Group & Group Group CompanyUS$ 000 US$ 000 US$ 000 US$ 000 US$ 000

Balance brought forward at 1 October 2005 7,864 1,014 19,226 (440) 1,049

Loss for the previous year (6,990) (8,482)Exchange difference on retranslation 101Foreign exchange reserve on term

loans to subsidiaries 20–––––––––––––––––––––––––––––––––––––––––––––––––––

Balance as at 30 September 2006 7,864 1,014 19,226 (7,329) (7,413)––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Loss for the previous year (676) (554)Exchange difference on

retranslation 82Foreign exchange reserve on term

loans to subsidiaries 31–––––––––––––––––––––––––––––––––––––––––––––––––––

Balance as at 30 September 2007 7,864 1,014 19,226 (7,923) (7,936)––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Under Luxembourg law the legal reserve is not distributable.

11 Treasury stockAs at 30 September 2007 and 2006 the company held no treasury shares and no sharebuyback program was in progress.

12 Share priceAs at 30 September 2007 the last price per share was €6.71 on the Brussels StockExchange and US$9.60 on the Luxembourg Exchange.

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Aardvark Investments SANotes to the Group and Holding Company Financial StatementsYear ended 30th September 2007(Continued)

13 Capital repaymentAt the Extraordinary General Meeting held on 15 April 2005 the shareholders approvedthe resolution authorising the board of directors of the company to return up toUS$18 million to shareholders. This repayment was being made against thenon-distributable reserve and is tax free as it is a return of share premium.The first and only repayment of US$6 per share was made with effect from 1 September2006. No further payment has been made because the tender offer made by El RocioInvestments Ltd for all the shares of the company included the balance due on eachshare of the remaining capital repayment due.The amount shown as a current liability is the balance that has not been collected byshareholders.

14 Called up Share Capital2007 2006

US$ 000 US$ 000Authorised (see note 19)1,000,000,000 shares of US$5 par value (2,146,453 in 2006) 5,000,000 10,732

––––––––––––––––––––––––––––––––––––––––––––––––Issued, called up and fully paid1,572,898 shares of US$5 each (1,572,898 in 2006) 7,864 7,864

––––––––––––––––––––––––––––––––––––––––––––––––

15 Earnings/(loss) per share(Losses) per share have been calculated on the following basis:


US$ 000 US$ 000 US$ 000 US$ 000–the loss for the year amounted to (1,427) (1,373) (676) (554)–the weighted average number 000’s 000’s 000’s 000’s

of shares in issue amounted to 1,573 1,573 1,573 1,573

16 Related party transactionsBlenheim Investments LLC has during the year made short term loans to certain of thecompanies associated with principle shareholder El Rocio Trust. These loans have beenmade on a commercial basis (interest has been charged at 3.25 per cent. over LIBOR).Loans totalling US$21.3 million have been made of which US$15.6 million has beenrepaid prior to the year end and the outstanding balance at the year end was US$6million. During the period interest of US$0.44 million was earned on the loans made.

17 Contingent liabilitiesa A subsidiary of the company has in the normal course of business through its

bankers given a guarantee of GBP 50,000 against customs duties. This guaranteeis secured by an interest bearing deposit.

b Lease CommitmentsThe Group has the following annual commitments under

operating leases: 2007 2006US$ 000 US$ 000

Payable within one year 36 42Payable within two to five years 50 21

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18 Financial InstrumentsThe Group has no other financial instruments except cash and balances arising directlyfrom its operations.

a. Foreign Currency RiskThe Group has exposure to foreign currency risk on sales, purchase, investments andloans that are denominated in a currency other than US dollars. The currencies giving riseto this risk are primarily the Euro and the Pound Sterling. Management does not hedgeagainst the movement in foreign currencies.

b. Liquidity riskSurplus cash is fixed on term deposits. The return is linked to bank interest rates.Management does not hedge against the movement in interest rates.

c. Credit RiskCredit risk is the risk that a counterparty will fail to discharge its obligations and cause afinancial loss. The directors believe that there is no significant credit risk arising fromcounterparties.

19 Changes to the company’s statutesAt an EGM held on 2 February 2007, the following changes to the company’s statuteswere passed:a) the change of the company’s name to Aardvark Investments SAb) the change of the company’s objects to enable it to invest and participate in other

activities and businesses other than art dealingc) the increase in the company’s authorised share capital to US$5 billiond) the granting to the board of directors the authority for five years the right to

increase the subscribed capitalOther changes.During the year the name of Artemis Real Estate SA was changed to Aardvark Real EstateSA.

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20 Analysis of Income and operating costs between ongoing and discontinuedactivities

Group CompanyUS$ 000 US$ 000

2007 2007TurnoverArt sales and commission income 1,680 1,340Research grants and income 157Total turnover 1,837 1,340Direct costsArt sales (1,650) (1,321)Research sales (85)Total direct costs (1,735) (1,321)Other direct costsArt sale costs (26) (25)Research costsTotal other direct costs (26) (25)Net trading (loss)/profitArt sales 3 (6)Research sales 73Net trading profit/(loss) 76 (6)Operating expensesGeneral and administrative expensesRelated to art dealing (182) (100)Related to R&D and ongoing activities (1,137) (314)Total administration expenses (1,319) (414)Payroll costs including social chargesRelated to art dealing (196) (45)Related to R&D and ongoing activities (815) (190)Total payroll costs including social charges (1,011) (235)Depreciation of fixed assetsRelated to art dealing (5)Related to R&D and ongoing activities (21)Total depreciation of fixed assets (26)Amortization of research intangible assets (2) (2)Operating lossRelated to art dealing (380) (151)Related to R&D and ongoing activities (1,902) (504)Total operating (loss) (2,282) (655)

The company is in the process of liquidating its remaining art stock. It is not the intentionof management to invest any more in art except where a purchase of a partner’s sharemay aid the timely disposal of an item. Ongoing costs associated with the disposal of theart stock, include the cost of insurance, storage, transport, and possible commissionspayable on the sale of an item. The group does not employ anyone directly engaged inthe disposal of the art stock. Annual costs (excluding commissions payable) associatedwith the disposal of the art stock are estimated to be between US$ 15K to 20K.

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21 Forthcoming StandardsThe International accounting Standards Board has published International FinancialReporting Standards No 7 (“IFRS 7”) - Financial Instruments Disclosure Requirements.IFRS 7 will apply to the financial statements for the periods ending 31 March 2008onwards. On implementation of IFRS 7, there will be no impact on reported results,assets and liabilities. However, the financial statements will include additional disclosureon risk and financial position and performance. In particular, the company will be requiredto present additional quantitative data about risk exposure and a sensitivity analysisshowing the impact of changes which were reasonably possible at the reporting date.In addition, International Accounting Standard 1 (“IAS 1”) - Presentation of FinancialStatements has been revised and will apply to the financial statements from the sameaccounting period. The revisions to this standard will require additional disclosures, bothqualitative and quantitative, concerning the company’s capital, but again, there is notexpected to be any impact on the reported results, assets and liabilities of the company.

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