Starvest Plc

www.starvest.co.uk

ANNUAL REPORT & FINANCIAL STATEMENTS
for the year ended 30 September 2007

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CONTENTS

Company information

Chairman’s statement

Review of portfolio

Board of directors

Directors’ report

Statement of directors’ responsibilities

Report of the independent auditor

Profit and loss account

Balance sheet

Cash flow statement

Notes to the financial statements

Notice of annual general meeting

Company share price information and announcements

PAGES

2

3

6

16

17

20

21

22

23

24

25

34

36

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COMPANY INFORMATION

Directors

R Bruce Rowan – Chairman & Chief Executive
Anthony C R Scutt – Non executive director
John Watkins – Finance director

Secretary, registered office John Watkins, FCA
and business address

123 Goldsworth Road, Woking
Surrey GU21 6LR

Auditor

email@starvest.co.uk

Tel: 01483 771992
Fax: 01483 772087

Grant Thornton UK LLP
Churchill House
Chalvey Road East
Slough SL1 2LS

Registered number

3981468

Solicitors

Nominated advisor

Bankers

Broker

Registrars

Listing

Website

Ronaldsons
55 Gower Street
London WC1E 6HQ

Grant Thornton UK LLP
Grant Thornton House
Melton Street
London NW1 2EP

Allied Irish Bank (GB)
10 Berkeley Square
London W1J 6AA

Simple Investments Limited
1 High Street
Godalming
Surrey GU7 1AZ

Share Registrars Limited
Craven House
West Street
Farnham
Surrey GU9 7EN

Tel: 01252 821390

London Stock Exchange
Alternative Investment Market (AIM)
Ticker: SVE
Traded on PLUS

Register for email alerts at
www.starvest.co.uk
updated regularly to provide information
as it is released to the market

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CHAIRMAN’S STATEMENT

I am pleased to present my sixth annual statement to Shareholders for the twelve month period
ended 30 September 2007.

HIGHLIGHTS

Your Directors’ chosen investment policy has generated exciting returns during the year to 30
September 2007. The headline results are:

◆ a gross profit of £5.3m,

◆ a profit before tax of £5.0m,

◆ a profit after tax of £3.5m,

◆ a 36% increase in the fully diluted net asset value per share,

◆ the payment of a maiden dividend of one penny per share to be followed by a final dividend

of 0.5 pence per share, making a total of 1.5 pence for the year, and

◆ the buy-back of 2,050,000 of the Company’s Ordinary shares for treasury at prices from 17 to

32 pence.

As at 30 September, the Company had:

◆ net assets with a balance sheet value of £5.2m, an increase of 98% during the year;

◆ a net asset value of £15.1m consisting of trade investments at mid market valuation, cash less

liabilities;

◆ unrealised investment appreciation of £9.9m before tax.

COMPANY STATISTICS

30 September
2007

30 September
2006

C h a n g e

• Portfolio net asset value

• Net asset value - basic per share

• Net asset value - fully diluted per share

• Share price

• Discount to basic net asset value

£15.1m

42.89p

38.45p

29.75p

44.17%

£12.1m

31.18p

28.29p

17.00p

83.41%

+ 25%

+ 37%

+ 36%

+ 75%

Unless otherwise stated, all net asset values are based on mid market prices or the Directors’
valuation, if lower.

The year end values on a fully diluted basis but before tax on unrealised profits since July 2003
are as follows:

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CHAIRMAN’S STATEMENT CONTINUED

REVIEW OF BUSINESS AND CURRENT ACTIVITIES

The highlight of the year must be the successful takeover of African Platinum plc (Afplats) by
Impala Platinum Holdings Limited at 55 pence per share. Whilst the Company sold a part of its
holding in earlier periods and made two market sales in the current year, the total proceeds
during the year amounted to £5.49m. With a cost price of one penny per share, the result is
excellent; not only has it facilitated the payment of a special dividend, but provided welcome
cash for investment in new opportunities and a share buy-back programme.

Your Company now has 72% by value of its current investments in the natural resource sector, a
reduction from 78% a year ago. This reduction arises in part from the diversification following the
Afplats sale and in part from continued growth in Myhome International plc.

The natural resource sector continues to be the Company’s prime focus; your Board remains of
the opinion that this sector shows no sign of anything other than exciting growth in the medium
term with the worldwide demand for access to natural resources continuing unabated. New
opportunities are continually presented to us.

As occurred during 2006, this year the net asset value peaked in June, this time at 48 pence per
share, since when declining sentiment has been a feature of the market and therefore of share
prices generally. Therefore, as occurred during the previous year, it is not surprising to find that
the net asset value has fallen a little from the peak.

During the year your Company made seven new investments and increased its commitment to
seven existing investee companies. Of the new investments, five are mineral exploration
ventures. Having added one further investment since the year end, your Company now holds a
spread of thirty-one active investments of which sixteen are quoted on AIM, and ten are quoted
on PLUS; one has suspended its PLUS quotation pending further developments. In addition, one
is expecting to be admitted to AIM and another to PLUS during the December quarter, one is
quoted on and another is intending to join the Toronto exchange.

Your Company has board representation on nine investee companies: Tony Scutt is a non
executive director of Addworth plc, Agricola Resources plc, Beowulf Mining plc and of Oracle
Coalfields plc. John Watkins is chairman of Lisungwe plc and of Franchise Investment Strategies
plc and a non executive director of Greatland Gold plc, Red Rock Resources plc and of Regency
Mines plc.

The Company continues to seek opportunities to invest in small company new issues and to
support pre-IPO opportunities so as to enhance shareholder value and to make disposals as
market conditions permit.

FUNDING REQUIREMENT

Given the £5.49m proceeds from the disposal of the remaining interest in Afplats, coupled with
bank and loan facilities, the Company has been able to expand its spread of investments without
the need to raise new finance and thereby dilute the existing shareholdings.

SHARE BUY-BACKS

During 2006, the Company was able to clear the deficit on the profit and loss account and so
move to a position where, for the first time, it was in a position to pay a dividend and/or buy back
its own shares for treasury. The buy-backs during the year totalled 2,050,000 shares which
equates to 5.5% of the shares in issue.

At the annual general meeting in December 2007, the Board will seek a renewal of its authority
to buy back up to 15% of its shares.

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DIVIDENDS

In furtherance of our previously stated objective of paying a dividend, I am pleased that we were
able to utilise the funds arising from the successful takeover of Afplats and pay a first special
dividend of one penny per share on 20 June 2007.

At the forthcoming annual general meeting, your Board will seek Shareholders’ approval for the
payment of a final dividend of 0.5 penny, making a total of 1.5 pence for the year. The payment
will be made on 11 January 2008 with a record date of 14 December 2007.

Subject to conditions at the time, it is the present intention of the Board to maintain a dividend
in future years.

SHAREHOLDER INFORMATION

We expect to make a net asset value statement immediately prior to the annual general meeting.
Thereafter, we expect to issue an interim statement during mid April and quarterly updates by
mid January and mid July.

During the year, the Company’s shares were admitted to trading on PLUS, although AIM remains
the prime market.

Announcements made to the London Stock Exchange are sent to those who register at the
Company website, www.starvest.co.uk where historic reports and announcements are also
available.

OUTLOOK

Given the increased spread of investments, the Directors look forward with optimism to reporting
increased asset values in the year ahead.

ANNUAL GENERAL MEETING

As indicated on page 34, we plan to hold our annual general meeting on Wednesday 12
December when we look forward to meeting those Shareholders able to attend.

R Bruce Rowan
Chairman & Chief Executive
29 October 2007

The Starvest share price graph during the period since July 2004 shows the price having trebled,
as follows:

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REVIEW OF PORTFOLIO

The Starvest portfolio value has increased dramatically over the past five years with a 24%
increase in the last year:

At 30 September 2007, the portfolio comprised investments in the following companies:

Addworth plc - (AIM ticker: ADW)

WEBSITE: www.addworth.co.uk

Addworth is an active capital investment company specialising in financing, promoting and
launching early-stage entrepreneurially-managed companies, seeking eventual admission to
the AIM or PLUS markets. Addworth provides strategic consultancy services for their further
development while retaining key equity interests and thereby establishing its own investment
portfolio. Successful introductions in the past year notably include Branded Entertainment plc,
Gaming Ventures plc, Oil and Gas Support Services plc, and Uranium Prospects plc. Work
continues on promoting a number of further new flotations in an expanding range of market
sectors in the coming year.

Agricola Resources plc - (PLUS ticker: AGRI)

WEBSITE: www.agricolaresources.com

Agricola Resources is continuing its exploration for uranium in both Finland and Sweden, and
has extended its work programme through a joint venture in Sweden with Beowulf Mining plc
on the latter’s Ballek four copper-gold-uranium exploration permits. In May Agricola placed a
29.9% strategic stake in its enlarged share capital with the Australian Energy Ventures Limited,
enabling it to accelerate and broaden its exploration programme with the application of the
resultant funds.

Ariana Resources plc - (AIM ticker: AAU)
WEBSITE: www.arianaresources.com

Ariana Resources focuses on exploring for, acquiring and developing economic gold deposits
in Turkey, concentrating on the Tethyan metallogenic belt, which is believed to have the
potential to host a multi-million ounce world-class deposit. The company portfolio extends
over 1,820 sq km under 114 exploration permits across Turkey, as a result of its active

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acquisition policy, with its flagship asset in western Turkey being the 235 sq km Sindirgi project,
covering some 45 sq km of gold-silver bearing quartz alone.
Its on-going drilling programme
is being expanded as a result of a recent share placement which could lead to its current JORC
gold resource reaching its baseline target of 250,000 oz.

Belmore Resources (Holdings) plc - (PLUS ticker: BEL)

WEBSITE: www.belmoreresources.com

Belmore Resources is a minerals exploration company focusing on projects in the Republic of
Ireland and Northern Ireland, priority being given to its zinc exploration properties in County
Clare. Here it has a 50% interest in six prospecting licences covering 267 sq km and a 100%
interest in two prospecting licences covering 86 sq km. Previous exploration had identified a
high grade resource of zinc and lead-rich massive sulphides of approximately 400,000 tonnes
at 12% zinc plus lead and 75 g/t silver. Further 100% interest blocks are held in Donegal and
Dromore, Northern Ireland.

Beowulf Mining plc - (AIM ticker: BEM)
WEBSITE: www.beowulfmining.com

Beowulf’s focus is on the exploration and development of mineral deposits in Northern
Sweden where its more recent activities have been focused on its Ruoutevare iron titanium
deposit, its Grundtrask gold deposit, and its Ballek copper, gold and uranium prospect.
Ruoutevare has a non-JORC compliant resource of 116 million tonnes, grading 38.2% iron, 5.6%
titanium dioxide, and 0.17% vanadium oxide. Detailed geological mapping has suggested that
the ore reserves could be increased significantly by the extra diamond drilling now being
undertaken so as to make them JORC-compliant. The project scoping study is expected to be
completed in 2008.

The drilling programme completed in early 2007 in Grundtrask returned gold grades of up to
5.2m at 4.28 g/t from the Southern gold structure; Beowulf are seeking a joint venture partner
to continue exploration and development.

Meanwhile for Ballek, an earn-in agreement with Agricola Resources plc has been concluded
whereby the latter was granted the option to acquire a 51% interest by undertaking a specific
programme of survey and diamond drilling work by the end of 2008, with this interest to be
increased to 70% in the event of further specific project expenditures.

Black Rock Oil & Gas plc - (AIM ticker: BLR)
WEBSITE: www.blackrockoilandgasplc.co.uk

Black Rock Oil & Gas is an exploration and production company with licences in onshore
Colombia, and in the Southern Gas Basin of the UK North Sea. In Colombia it is in a 50/50 joint
venture with operator Kappa Resources in the Las Quinchas Association Contract and the
Alhucema E & P Contract, both situated in the prolific hydrocarbon basin of the Middle
Magdalena Valley. For Las Quinchas, following completion of its farm-in obligations, its 50%
interest is subject to the approval of Ecopetrol, the state oil company. This block contains the
Arce and Baul heavy oilfields and a number of exploration prospects including the Acacia Este
oil discovery. The Arce oilfield is currently undergoing a steam injection test to determine
commerciality and development options. Black Rock made a placement of new shares in June
to raise additional working capital and to cover the costs of an appraisal well on the Acacia Este
discovery and an exploration well for the Alhucema area planned for late 2007 and early 2008.

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In the UK, Black Rock has a 15% interest in two adjacent North Sea blocks, one of which
contains the Monterey Gas discovery and the Stinson and Winchester prospects; the joint
venture has under application a four year extension to the licence with the aim of improving
the marginal economics of the Monterey discovery, although a 50% relinquishment would be
applied if the licence extension is approved.

Brazilian Diamonds Limited - (AIM ticker: BDY)

WEBSITE: www.braziliandiamonds.com

Brazilian Diamonds is a leading Brazil-based exploration company focused on the discovery of
kimberlites in its 100% owned properties in the States of Minas Gerais and Bahia.
Its diamond
exploration databases were largely acquired from De Beers. The Company now awaits final
approval before seeking local State environmental authorisation for the development of the
Canastra 1 kimberlite, for which mine feasibility work has been completed and Mines
Department approval granted. Mines Department and Bahia State environmental licences
have already been obtained to start planned bulk testing on the Salvador 1 kimberlite;
excavation work of trenches to collect large samples for further assessment of its diamond
potential are expected to yield first results before the 2007 year-end. The company strategy for
non-core activities on its properties is to form joint ventures. A feasibility study is also currently
underway for a joint venture to mine alluvial diamonds on its San Antonio river drainage
properties.

Carpathian Resources Limited -

(AIM ticker: CPNR and Sydney ASX ticker: CPN)

WEBSITE: www.carpathian.com.au

Carpathian Resources is an Australian oil and gas explorer and producer focusing on projects
in the Czech Republic. Its main producing asset is its 60% interest in the Janovice gas field in
Northern Moravia with the adjacent marginal Krasna oil field where the current 75% interest
reduces to 50% after pay-out. Janovice produces 1.2 million cubic feet of gas a day, and from
latest production testing, shows up to 4 billion cubic feet in place.

Exploration activities cover the 90% interest Mosnov, Roznov, and Morava permits and the 60%
interest Raskovice - Moravka permit. The Morava project is located in the northern part of the
Vienna Basin, an area of prolific oil and gas production, and while oil is the principal target with
a 5 million barrel potential, gas is also seen as a possibility. The company is evaluating the
acquisition of other interests in Russian, European, Middle Eastern, and Kazakhstan oil and gas
fields and infrastructure to broaden its growth strategy.

Concorde Oil and Gas plc

WEBSITE: www.concordeoilandgas.com

Concorde Oil & Gas was incorporated in August 2005 to locate, evaluate, acquire, explore,
develop, and operate oil and gas properties and projects primarily in the Russian Federation.
The company experienced difficulties in 2006 in raising sufficient finance for its first major
acquisition target, Pechora Energy which holds an exclusive production licence valid until 2014
for the Luzkoye oil field in the Komi Republic of Russia. Following the agreement of a financing
package with Altima Partners LLP, an offer to acquire Pechora for US$33 million was accepted.
Subsequently, Altima injected U$41 million in exchange for the issue of 113 million new
Concorde shares valued at 0.9p a share, the value now used by Starvest.

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Existing shareholders have faced a substantial dilution of their original stake, but now have an
investment in a much larger company as a result of the restructuring, since when the Kuwait
Energy Company has acquired part of the Altima stake and now holds one third of the equity.
Kuwait Energy appointees have assumed the chairmanship and two non-executive
directorships of the company.

Concorde’s listing was suspended in November 2006 and withdrawn from PLUS in October
2007. The company has deferred its intention to seek an alternative listing until late 2008, by
which time further expansion and development plans in Russia already under consideration
should have been concluded, promising drilling results released, new oil reserve figures
officially ratified, production expected to reach 8,000 barrels/day, and any further funding
needs by then secured.

The Core Business plc - (AIM ticker: CORE)
WEBSITE: www.thecorebusiness.co.uk

The Core Business seeks to create, develop, launch and distribute personal care products from
make-up and skin care to men’s grooming and hair care. As a personal care and beauty
management group, it assists companies and individuals in leveraging, diversifying, and
creating brands in the global beauty sector, and helps in the developing of existing brands and
the creating of new ones. It continues to attract considerable retailer interest through dynamic
presentation of its brands and consultancy services.

DTT plc - (PLUS ticker: DTT)

WEBSITE: www.drivertransporttraining.co.uk

DTT is the UK’s largest and fastest growing group of companies specialising in the training of
commercial drivers. Operating through a network of 11 regional training centres, practical and
theoretical courses are offered leading to licences and qualifications with some 5,500 drivers
being trained each year followed by support into employment through its recruitment services
offering temporary or permanent staff employment through its Driver Supply brand. Under
the company’s strategic plan, growth by acquisitions is expected over the next two years to
enable DTT to be in a position to capitalise on the advent of the European Training Directive
and the business opportunities that this will create. The recent acquisition of ODK for a mixture
of cash and DTT shares is the first step in this plan. DTT sees growth being achieved by
establishing further new branch operations or developing new partnerships through DTT
franchising arrangements.

Franchise Investment Strategies plc – (PLUS ticker: FIN)

Franchise Investment Strategies was originally created as a holding company for the
development of franchising operations in diverse sectors of the UK, with a view to applying the
franchise model that had been so successfully developed by Myhome International, and by
supporting particularly strong franchise businesses in subscribing for key equity stakes if they
were ultimately to be launched as quoted companies. However, the lack of experienced
managers specialising in franchise operations has severely restricted the development of this
business, which currently serves as an investment holding company with interests held in
Myhome International and DTT only.

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Franconia Minerals Corporation
- (Toronto ticker: TSX-V)
WEBSITE: www.franconiaminerals.com

Franconia Minerals, an Alberta-formed corporation,
is focused on the exploration and
development of Platinum Group Metals (PGM) and Base Metals in the continental United
States, with its corporate head office in Spokane, Washington. Its most advanced project is the
Birch Lake Platinum-Palladium-Copper-Nickel project located in the Duluth Complex in north
eastern Minnesota. The project includes two inferred PGM resources, the 100 million tonnes
Birch Lake resource and the 120 million tonnes Maturi resource. The company is also actively
exploring for base metals at its Red Knoll copper property in Arizona. Franconia has
exploration agreements with Teck Cominco American Inc. to advance zinc and copper projects
in the western United States.

Fundy Minerals Limited - (PLUS ticker: FUND)

WEBSITE: www.fundyminerals.com

is actively involved in the
Fundy Minerals, with head office in New Brunswick, Canada,
exploration of gold, diamond and base metals in Canada and Africa.
It has a 100% interest in
eight mineral exploration and development properties in New Brunswick, two of which have
gold deposits, one a deposit model, and three reflect base metal deposits. Also, it has a high-
grade limestone deposit, with production expected by December 2007. In West Africa, Fundy
holds a permit over 2,000 sq km of Liberia, where it has confirmed that a significant quantity of
gem quality alluvial diamonds has been extracted. Its initial interest in Liberia was in possible
gold mineralisation, but its alluvial diamond discovery in the southern area of its permit led to
its efforts being concentrated on locating the Kimberlitic source of these diamonds. The
company has expressed its intention to move from trading on PLUS to a more senior exchange.

Gippsland Limited

- (AIM ticker: GIP and Sydney ASX ticker: GIP)
WEBSITE: www.gippslandltd.com.au

Gippsland is an Australian-based international resource company with its prime assets being
tantalum-tin projects in the Central Eastern desert of Egypt adjacent to the Red Sea, and
notably include the 40 million tonne Abu Dabbab and the 98 million tonne Nuweibi projects,
where its 50% interest is matched by an Egyptian State partner. The recently completed Abu
Dabbab feasibility study, based on an annual mill-feed rate of 2 million tonnes for a production
level in excess of 650,000 lbs of tantalum pentoxide, will rank Gippsland as the world’s second
largest producer. Current spot market prices for tantalum pentoxide are approaching US$ 50
per lb. However, several years of production has been already pre-sold. In addition, Gippsland
has been undertaking exploration drilling within the Wadi Allaqi region and has obtained
highly encouraging gold results in three separate tenements.

Goliath Resources Inc - (Pink sheets: GHRI)
WEBSITE: www.goliathresources.com

Goliath Resources is a Vancouver-based minerals exploration company with interests in copper,
gold and molybdenum in Canada and Zambia.
It acquired three mineral projects in Canada
from the BellMin Group in late 2006, the main focus being on the Phelps Dodge-owned
Mazenod Lake in the North-West Territories where, under a joint venture agreement, Goliath
will ultimately earn a 75% interest. Previous drilling and geophysics had identified project

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areas of mineralisation prospective for large-scale copper, gold and possibly uranium. The
second project is the Flume Licence in the Yukon, again owned by Phelps Dodge, in which
Goliath has the right to earn a 100% interest under earn-in expenditure commitments; large
areas of this project are as yet unexplored, but earlier geochemical studies indicated a high
potential for gold mineralisation. The third project is the Java property in British Columbia, a
copper-molybdenum porphyry prospect formerly owned by Kennecott. The Zambia project
involves a Goliath-led consortium which has been issued a 25 year mining licence covering
main tailing dumps exceeding 100 million tons in the Zambian Copper Belt; their treatment is
seen by management to have substantial near-term cash-flow potential.

Greatland Gold plc - (AIM ticker: GGP)

WEBSITE: www.greatlandgold.com

Greatland Gold has gold projects covering a total area of some 300 sq km in Tasmania,
consisting of the Firetower project in the north with an initial
inferred JORC-compliant
resource of 90,000 oz. of gold, and three historic gold fields, Warrentinna, Forrester and
Waterhouse, which were mined some 100 years ago and had produced a substantial amount of
high grade gold at surface.
In addition to these Tasmanian interests, the company has the
Lackman Rock project in Western Australia where gold and nickel sulphide have already been
ear-marked as targets for future exploration drilling. The main focus of the company until now
has been on Firetower, and on deciding whether to mine an existing resource of some 50,000
oz, or whether to establish first a larger resource and then to build its own mine. However
recent rock chip sampling at Warrentinna has also yielded very encouraging results, and calls
for further exploration effort to be undertaken on seeking new high-grade shoots beneath the
historic workings and in un-mined quartz-lodes. The future therefore holds useful promise.

Guild Acquisitions plc - (PLUS ticker: GACQ)
Guild Acquisitions is a fledgling investment
established to grow early-stage small to medium sized companies by injecting seed capital,
management support, and access to further funds from capital markets for their development.

trading company

Hidefield Gold plc - (AIM ticker: HIF)
WEBSITE: www.hidefieldgold.com

Hidefield is a gold company focusing on the acquisition and development of highly
prospective projects in North and South America. The company has a diverse portfolio of
projects.
In South America and Alaska the projects are directly held by Hidefield, while those
projects in Canada, Nevada and Arizona are held in independent self-funded associate
companies.

The company’s substantial direct gold project interests are principally in Argentina where it is
actively exploring the advanced stage East Santa Cruz gold project in Santa Cruz Province.

Hidefield also operates in joint venture with Minera Sud Argentina S.A. with which it is currently
In Brazil the
exploring a number of gold exploration licences in three Patagonian provinces.
company is focused on the evaluation of the advanced stage Cata Preta gold project in Minas
Gerais state.
In Alaska Hidefield has a 60% interest in the Golden Zone and South Estelle
mineral projects and an option to earn up to 100% subject to its expenditures. The Golden
Zone property has a measured and indicated resource of 253,000 oz of gold, 1.2 million oz of
silver, and 6.1 million pounds of copper. The South Estelle property is in joint venture with
International Tower Hill Mines.

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India Star Energy plc - (AIM ticker: INDY)
WEBSITE: www.indiastarenergy.co.uk

India Star Energy is an investment company focused on gold, platinum group metals and
uranium interests in Canada.
Investments include a 15% stake in Canadian Golden Dragon
with interests in two high grade platinum and palladium properties in Ontario; an interest in
Canadian explorer East West Resource Corporation with a portfolio of early stage properties for
platinum, palladium, gold and base metals, a copper-molybdenum deposit in Thunder Bay, and
a 50% share in the Magotte joint venture with East West Resource, targeting uranium.

KEFI Minerals plc - ( AIM ticker : KEFI )
WEBSITE: www.kefi-minerals.com

Kefi Minerals is an early stage gold and copper exploration company with four 100%-owned
projects in Turkey and one in Bulgaria. It owns an extensive exploration database which
contains information regarding some one hundred further prospective sites in Turkey, where
recent changes to the mining law and the progressive development attitude of the Turkish
Government have generated a positive environment for exploration and mining companies.
Kefi has recently announced a gold discovery at its Yanikli Prospect in the Artvin project in
north eastern Turkey, with geological mapping and geochemical data already having defined
15 new targets in the same project area. The Bulgarian interest is focused on the Lehovo
project area, located 150 km south of Sofia and bordering Greece, where Kefi has met with
encouraging results for gold and silver from its initial rock chip sampling work. Bulgaria has a
long tradition of mining for base metals and precious metals and currently has a number of
operating mines; the growing benefits of the change-over from a state to a market economy
form an increasingly attractive background to the local mining sector.

Lotus Resources plc - (Expected to be admitted to PLUS)

WEBSITE: www.lotus-resources.com

Lotus Resources is focused on China where it is assembling a portfolio of mining and
exploration interests that have the potential to generate early cash flow from production and
where it can add value through the application of modern Western techniques thus improving
productivity. The initial focus is on a number of gold projects. The company has a mixed Board
of Chinese and British executives and a team of experienced Chinese geologists. The company
expects to be admitted to PLUS during the fourth quarter 2007 and to move to AIM during
2008.

Matisse Holdings plc - (AIM ticker: MAT - suspended)

It has been
Matisse Holdings was originally established to invest in publishing businesses.
seeking either reverse takeovers or key acquisitions, but presently has its shares suspended
through the application of AIM regulations governing inactive cash shells.

Myhome International plc - (PLUS ticker: MYH)

WEBSITE: www.myhomeplc.com

Myhome International is a leading residential homecare services franchise business continuing
to enjoy an impressive rate of expansion throughout the UK, Ireland and, more recently,
Australia.

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The past year has seen a further extension of the range of branded services offered to its clients
through its very successful franchising model, which is being rapidly rolled out across the
whole of the UK. In addition to home cleaning and garden maintenance, its range of services
now include fabric cleaning (Stainbusters), ironing and dry cleaning (Ferrum), and plumbing
and drainage (DSH Services), all services appealing to “cash rich, time poor” clients, encouraging
significant cross-selling opportunities, and attracting serious reliable entrepreneurs as
franchisees, who now total over 400 in number. There is clear potential for Myhome’s model to
be applied more widely through overseas expansion and joint ventures with, say, insurers and
financial services companies. Myhome is well down the path to becoming a multi-branded,
multi-product international residential franchise operation. The acquisition of Chipsaway was
announced in October 2007 which, subject to shareholder approval, will increase the number
of franchisees to 750.

Oracle Coalfields plc - (PLUS ticker: ORCP )
WEBSITE: www.oraclecoalfields.com

Oracle Coalfields operates as an explorer and developer of coal in the Sindh Province of
Pakistan.
In February 2007, an exploration licence was granted over a 100 sq km area of the
Indus East coalfield and after the company’s successful introduction to PLUS in August, a
programme of exploration drilling to establish the best location of the envisaged mine site is
being undertaken from October onwards, with the exploration licence then expected to be
converted to a mining lease. Plans for the financing and construction of the coal mine and the
commencement of production will follow. Oracle has entered into a joint venture agreement
(Oracle 80% interest) with Sindh Koela Limited, a local Pakistani company, which will work with
Oracle to achieve these objectives as well as assuming the role of establishing one or more
mine-mouth power plants. Pakistan has a major, yet largely untapped, coal resource of 185
billion tonnes (Indus East 1.8 billion tonnes), along with a serious shortage of electricity that is
hindering its planned economic growth, so the role of Oracle Coalfields should assume
increasing importance as its project nears fruition. Oracle recognises its major ethical
responsibility of ensuring that any coal-fired power generating plant with which it is
associated, conforms to international emission standards.

Red Rock Resources plc - (AIM ticker: RRR)

WEBSITE: www.rrrplc.com

Red Rock, in which Regency Mines holds a 43.5% interest, operates as a mineral exploration and
development company focusing on manganese, iron ore and gold and hopes to move to early
bulk production and sales of manganese from its high grade Zambian resource. Two of its high
grade iron ore properties in Western Australia have been farmed out in an option/royalty
agreement with Jupiter Mines, although its nearby Mt Alfred property has been retained.
It
also has tenements in the Northern Territory of Australia containing further iron ore
mineralisation and manganese targets.

It has recently disposed of its Australian and Malawi uranium interests to Retail Star Limited
(ASX: RSL) for shares equivalent to 15.6% of Retail Star with options to increase which suggests
a readiness to exchange assets for equity interests at the right price. Its wide portfolio suggests
that it is well placed to benefit from rising commodity prices.

13

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

REVIEW OF PORTFOLIO CONTINUED

Regency Mines plc - (AIM ticker: RGM)
WEBSITE: www.regency-mines.com

Regency Mines, apart from its interest in Red Rock Resources, is focused on exploring areas of
copper and nickel potential in Western Australia and Queensland and, where appropriate, on
the development of these assets by joint venture, acquisition or disposal. The company
broadened its portfolio in 2006 with the acquisition of a 75% interest in the 140 sq km
Mambare open pit nickel and cobalt project in Papua New Guinea where the aim is to offer
direct shipping of ore production to Asian Pacific rim customers within the next two years.
Regency has assembled a sound investment portfolio including equity interests in small
mining companies, evidencing its well executed strategy of converting licence interests into
equity stakes.

Sheba Exploration (UK) plc - (PLUS ticker: SHE)

WEBSITE: www.shebagold.com

Sheba is a mineral exploration company operating in the Tigray State of Ethiopia within the
Northern Ethiopia gold fields area, which it chose for its numerous gold occurrences, most of
which have not been explored. Sheba holds a 100% interest in the two exclusive exploration
licences for Mereto and Shehagne, and has new projects under current licence application. At
Mereto, trenches at the Adi Gefa prospect have returned gold intersections of 8m at 2.3g/t and
6m at 3.7 g/t, directly beneath the soil anomaly, while soil sampling on the flanks of the licence
area located a further extension of the soil anomaly up to 690 ppb gold. The trenching here
has indicated at least five drill-ready targets, with more in the pipeline, and the style of gold
mineralisation is seen to enforce the potential for low cost bulk mining. Joint venturing of
mature properties, to raise capital for resource estimation and new property acquisitions, and
the initiation of feasibility studies of small-scale opportunities for mining gold, remain the
strategic objectives for this operation.

St Helen’s Capital plc - (PLUS ticker: SHCP)

WEBSITE: www.sthelenscapital.co.uk

St Helen’s Capital is a fully integrated corporate financial services firm with a fast-growing list
of clients formed by start-up, early-stage, and fast-growing companies.
Its services on offer
include fund-raising, financial services, investment recommendations, leasing, mergers and
acquisitions, and business service advice. It sees itself as a one-stop shop for growth, and as a
It has thus established itself as a major conduit for
reliable experienced corporate adviser.
fledgling companies seeking to access the AIM and PLUS markets.

14

S TA R V E S T P L C

Sunrise Diamonds plc - ( AIM ticker : SDS )
WEBSITE: www.sunrisediamonds.com

Sunrise Diamonds is focused on the identification, acquisition, exploration, and development
of diamond projects in its present Finland operations in the Karelian Craton, a prospective
block which, over the border in Russia, hosts world-class diamond deposits. Sunrise’s planned
drilling operations this summer have been held back somewhat by the current global shortage
of drilling service providers which with the larger number of explorers operating today in
Scandinavia, caused tightened drill rig availability. As a result, Sunrise was not able to complete
all
its drilling plans, and had to concentrate instead on gathering and analyzing more
geophysical data. Sunrise enjoys exclusive access to the valuable BHP Billiton database from its
former Finnish diamond exploration activities, which has resulted in Sunrise now having a
surplus of drilling targets on hand, so that the rig slots that it has been able to book for the
coming year should ensure faster progress and more regular news flow.

Treslow Limited - (Expecting to be admitted to AIM)

Treslow has a copper-nickel prospect near Armstrong in north-west Ontario, Canada. Following
its conversion to a plc and expected introduction to AIM, it will be seeking further funding to
advance the project. Drilling is expected to be started in January 2008. Commercial quantities
of uranium and rare earths are also a possibility, but the initial focus is on nickel.

15

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

BOARD OF DIRECTORS

R Bruce Rowan
- CHAIRMAN AND CHIEF EXECUTIVE

Bruce Rowan, who has managed the Company's operations
since January 2002, is well known in London as an investor in
small mineral exploration start-up ventures.
In addition to his
chairmanship of the Company, he is chairman of AIM quoted
Tiger Resource Finance plc, of Australian ASX quoted Sunvest
Corporation Limited and is a non-executive director of PLUS
quoted Gledhow Investments plc.

Anthony C R Scutt
- NON-EXECUTIVE DIRECTOR

Tony is an experienced private investor and investment analyst
as well as a director of investee companies Addworth plc,
Agricola Resources plc, Beowulf Mining plc and Oracle
Coalfields plc.

John Watkins, FCA
- FINANCE DIRECTOR AND COMPANY SECRETARY

John is a chartered accountant in public practice and a non-
executive director of other companies including AIM quoted
investees Greatland Gold plc, Red Rock Resources plc and
Regency Mines plc.
In addition, he is chairman of PLUS quoted
Lisungwe plc and Franchise Investment Strategies plc.

16

S TA R V E S T P L C

DIRECTORS’ REPORT

The Directors present their seventh annual report on the affairs of the Company, together with the
financial statements for the year ended 30 September 2007. Comparative information is for the
fourteen month period ended 30 September 2006.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

Since Bruce Rowan was appointed Chief Executive on 31 January 2002, the Company’s principal
activity has been the use of his expertise to invest in small company new issues and to support
pre IPO opportunities.

The Company’s key performance indicators and developments during the period are given in the
Chairman’s statement and in the trade investment portfolio review.

KEY RISKS AND UNCERTAINTIES

This business carries with it a high level of risk and uncertainty, although the rewards can be
outstanding. Often there is a lack of liquidity in the Company’s investments, most of which are, or
in the case of pre IPO investments expect to be, quoted on AIM or PLUS, such that the Company
may have difficulty in realising the full value in a forced sale. Accordingly, an investment is only
made after thorough research into both the management and the business of the investment
target, both of which are closely monitored thereafter. Furthermore, the Company limits the
amount of each investment, both as to the absolute amount and percentage of the investee
company. Details of other financial risks and their management are given in Note 17 to the
financial statements.

RESULTS AND DIVIDENDS

The Company’s results are set out in the profit and loss account on page 22. The audited financial
statements for the year ended 30 September 2007 are set out on pages 22 to 33.

As approved by the Members at an extraordinary general meeting on 23 May 2007, on 20 June
2007, a special dividend was paid at the rate of one penny per share to those shareholders whose
names were on the register on 25 May 2007.

At the annual general meeting to be held on 12 December 2007 the Directors will propose a
resolution that a final dividend for the year of 0.5 pence per share be paid on 11 January 2008 to
those shareholders whose names are on the register on 14 December 2007.

DIRECTORS AND THEIR INTERESTS

The Directors who served during the period, together with all their beneficial interests in the
shares of the Company at 30 September 2007 are as follows:

30 September 2007

30 September 2006

Ordinary
shares of
£0.01 each

%

Share
options
(Note 1)

Ordinary
shares of
£0.01 each

Share
options

Ronald Bruce Rowan

8,570,000

23.03

3,350,000

8,570,000

3,350,000

Anthony Charles Raby Scutt

160,000

0.43

550,000

160,000

550,000

(Note 2)

John Watkins

835,000

2.24

1,675,000

835,000

1,675,000

Note 1: Options over 2,600,000 Ordinary shares have been issued under the 2002 share options scheme. On 14 February
2005 options over 2,975,000 Ordinary shares were issued under the 2005 share options scheme. Further
information with respect to share options is given in Note 11 to the Financial Statements.

Note 2: Of the Ordinary shares registered in the name of Tony Scutt, 64,000 are beneficially held, 25,000 are held as a joint
trustee with Mrs Amelia Robinson for The Ridgeway Investors Group and 71,000 are held as joint trustee with Mr
Peter Rickwood for the Acumen Brigade Investors Group.

17

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

DIRECTORS’ REPORT CONTINUED

Apart from the interests disclosed above, no director held any other interest in the share capital
of the Company during the year. No changes in the interests disclosed above have taken place
since the year end.

SUBSTANTIAL SHAREHOLDINGS

At the close of business on 26 October 2007, the following were registered as being interested in
3% or more of the Company’s ordinary share capital:

Ordinary shares of
£0.01 each

Percentage of issued
share capital

8,570,000

5,197,732

1,597,740

1,443,579

23.03%

13.97%

4.29%

3.88%

Ronald Bruce Rowan

Barclayshare Nominees Limited

JIM Nominees Limited

LR Nominees Limited

SHARE CAPITAL

There were no share issues during the year.

In accordance with the authority to purchase up to 5,600,000 Ordinary shares granted at the 2006
annual general meeting, the Company purchased 2,050,000 of its own Ordinary shares in the year
to be held in treasury. The prices paid ranged from 17 pence to 32 pence and the total cost
amounted to £577,732.

These purchases were made to enhance the underlying net asset value per share given the
substantial discount at which shares have been traded. The Directors will place a further
resolution before Shareholders at the forthcoming annual general meeting so as to give
themselves the opportunity to make further purchases should circumstances be favourable.

CHARITABLE AND POLITICAL DONATIONS

During the period there were no charitable or political contributions.

PAYMENT OF SUPPLIERS

The Company’s policy is to settle terms of payment with suppliers when agreeing terms of
business, to ensure that suppliers are aware of the terms of payment and to abide by them.
It is
usual for suppliers to be paid within 14 days of receipt of invoice. At 30 September 2007, the
Company’s trade creditors were equivalent to less than one day’s costs.

POST BALANCE SHEET EVENTS

There are no reportable post balance sheet events.

TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

The directors understand that the requirement to prepare financial statements in accordance
with IFRS currently only applies to groups. As the Company is not part of a group it will continue
to take advantage of the exemption available to AIM companies which do not prepare
consolidated accounts and so defer the transition for the foreseeable future. The matter will be
kept under review.

As the IFRS rules currently stand, transition may be deferred indefinitely.

18

S TA R V E S T P L C

DIRECTORS’ REPORT CONTINUED

AUDITOR

The Directors will place a resolution before the annual general meeting to reappoint Grant
Thornton UK LLP as auditor for the coming year.

REMUNERATION

The remuneration of the Directors has been fixed by the Board as a whole. The Board seeks to
provide appropriate reward for the skill and time commitment required so as to retain the right
calibre of director without paying more than is necessary.

Details of directors’ fees and of payments made for professional services rendered are set out in
Note 5 to the financial statements, directors’ emoluments.

MANAGEMENT INCENTIVES

Other than the 2002 and 2005 share option schemes noted above, the Group has no bonus, share
purchase, share option or other management incentive scheme.
In accordance with legislation,
the Company has introduced a stakeholders’ pension plan for the benefit of any future
employees.

CONTROL PROCEDURES

The Board has approved financial budgets and cash forecasts; in addition, it has implemented
procedures to ensure compliance with accounting standards and effective reporting.

By order of the Board

John Watkins
Finance Director and Company Secretary

29 October 2007

NAV ––––
Price ––––

19

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

STATEMENT OF
DIRECTORS’ RESPONSIBILITIES

DIRECTORS’ RESPONSIBILITIES FOR THE
FINANCIAL STATEMENTS

The directors are responsible for preparing
the Annual Report and the financial
statements in accordance with applicable
law and regulations.

statements

Company law requires the directors to
for each
prepare financial
financial year. Under that law the directors
have elected to prepare financial statements
in accordance with United Kingdom
Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
The financial statements are required by law
to give a true and fair view of the state of
affairs of the company and of the profit or
loss of the company for that period.
In
preparing these financial statements, the
directors are required to:

◆ select suitable accounting policies and

then apply them consistently;

◆ make judgments and estimates that are

reasonable and prudent;

◆ state whether applicable UK accounting
standards have been followed, subject to
any material departures disclosed and
explained in the financial statements;

The directors are responsible for keeping
proper accounting records that disclose
with reasonable accuracy at any time the
financial position of the company and
enable them to ensure that the financial
statements comply with the Companies Act
1985. They
are also responsible for
safeguarding the assets of the company and
hence for taking reasonable steps for the
prevention and detection of fraud and other
irregularities.

In so far as the directors are aware:

◆ there is no relevant audit information of
which the company’s auditor is unaware;
and

◆ the directors have taken all steps that
they ought
to have taken to make
themselves aware of any relevant audit
information and to establish that the
auditor is aware of that information.

The directors are responsible for
the
maintenance and integrity of the corporate
and financial information included on the
company’s website. Legislation in the
United Kingdom governing the preparation
and dissemination of financial statements
may differ
from legislation in other
jurisdictions.

◆ prepare the financial statements on the
is
the

going concern basis unless
inappropriate to presume that
company will continue in business.

it

20

S TA R V E S T P L C

REPORT OF THE INDEPENDENT AUDITOR
TO THE MEMBERS OF STARVEST PLC

We have audited financial statements of Starvest
plc for the year ended 30 September 2007 which
comprise the profit and loss account, the balance
sheet, the cash flow statement and notes 1 to 18.
These financial statements have been prepared
under the accounting policies set out therein.

This report is made solely to the company’s
members, as a body, in accordance with Section
235 of the Companies Act 1985. Our audit work
has been undertaken so that we might state to
the company’s members those matters we are
required to state to them in an auditor’s report
and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the company
and the company’s members as a body, for our
audit work, for this report, or for the opinions we
have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS
AND AUDITOR

The directors’ responsibilities for preparing the
Annual Report and the financial statements in
accordance with United Kingdom law and
Accounting
Kingdom
Generally Accepted Accounting Practice) are set
out
Directors’
Statement
the
in
Responsibilities.

Standards

(United

of

Our responsibility is to audit the financial
statements in accordance with relevant legal
and regulatory requirements and International
Standards on Auditing (UK and Ireland).

1985

and whether

We report to you our opinion as to whether the
financial statements give a true and fair view,
whether the financial statements have been
properly prepared in accordance with the
Companies Act
the
information given in the Directors’ Report is
consistent with the financial statements. We also
report to you if, in our opinion, the company has
not kept proper accounting records, if we have
not
and
the
explanations we require for our audit, or if
information specified by law regarding directors’
remuneration and other transactions is not
disclosed.

information

received

all

We read other information contained in the
is
Annual Report and consider whether
consistent with the audited financial statements.
The other
information comprises only the
Chairman’s Statement, Review of Portfolio, Board
of Directors and the Directors’ Report. We
consider the implications for our report if we

it

become aware of any apparent misstatements or
inconsistencies with the parent
material
company
Our
responsibilities do not extend to any other
information.

statements.

financial

to the

relevant

BASIS OF AUDIT OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of
evidence
and
It also
disclosures in financial statements.
includes an assessment of
the significant
estimates and judgments made by the directors
in the preparation of the parent company
financial
the
accounting policies are appropriate to the
company’s circumstances, consistently applied
and adequately disclosed.

statements, and of whether

amounts

We planned and performed our audit so as to
obtain all the information and explanations
which we considered necessary in order to
provide us with sufficient evidence to give
reasonable
financial
statements are free from material misstatement,
whether caused by fraud or other irregularity or
error.
In forming our opinion we also evaluated
the overall adequacy of the presentation of
information in the financial statements.

assurance

that

the

OPINION
In our opinion:

◆ the financial statements give a true and fair
in accordance with United Kingdom
view,
Generally Accepted Accounting Practice, of
the state of the company’s affairs as at 30
September 2007 and of its profit for the year
then ended;

◆ the financial statements have been properly
prepared in accordance with the Companies
Act 1985; and

◆ the information given in the Directors’ Report
is consistent with the financial statements for
the year ended 30 September 2007.

GRANT THORNTON UK LLP
REGISTERED AUDITORS
CHARTERED ACCOUNTANTS
LONDON THAMES VALLEY OFFICE
SLOUGH

29 October 2007

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2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2007

Notes

Year ended
30 September 2007

14 month period
ended
30 September 2006

Operating income

Direct costs

Gross profit

Administrative expenses

Operating profit

Interest receivable

Interest payable

Profit on ordinary activities before taxation

Tax on profit on ordinary activities

Profit on ordinary activities after taxation

Earnings per share - basic

Earnings per share - fully diluted

2

3

6

6

£

5,494,067

(177,924)

5,316,143

(272,076)

5,044,067

71,114

(84,413)

5,030,768

(1,505,236)

3,525,532

9.6 pence

8.8 pence

£

1,699,430

(97,613)

1,601,817

(266,683)

1,335,134

7,728

(4,334)

1,338,528

(400,000)

938,528

2.5 pence

2.4 pence

There are no recognised gains or losses in either period other than the profit for the period.

All of the operations are continuing.

The accompanying accounting policies and notes form an integral part of these financial
statements.

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S TA R V E S T P L C

BALANCE SHEET
AS AT 30 SEPTEMBER 2007

30 September 2007

30 September 2006

Fixed assets

Investments

Current assets

Debtors

Trade investments

Cash at bank

Note

£

7

8

9

10,257

4,750,185

3,006,588

7,767,030

Creditors - amounts due
within one year

Net current assets

10

(2,548,969)

Total assets less current liabilities

Share capital and reserves

Called-up share capital

Share premium account

Profit and loss account

11

12

12

372,173

2,026,396

2,819,492

£

£

–

£

2

107,902

3,082,898

-

3,190,800

(553,369)

5,218,061

5,218,061

2,637,431

2,637,433

372,173

2,026,396

238,864

Equity shareholders’ funds

13

5,218,061

2,637,433

The financial statements on pages 22 to 33 were approved by the Board of Directors on 29
October 2007 and signed on its behalf by:

R Bruce Rowan
Chairman and Chief Executive

John Watkins
Finance Director

The accompanying accounting policies and notes form an integral part of these financial
statements.

23

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2007

Net cash inflow/(outflow)
from operating activities

Returns on investment
and servicing of finance:

Interest receivable

Interest payable

Taxation paid

Equity dividends paid

Financing:

Notes

14

Year ended
30 September 2007
£

14 month period ended
30 September 2006
£

3,484,305

(234,249)

71,114

(84,413)

7,728

(4,334)

(13,299)

(395,880)

(367,172

422,268

3,130,222

3,394

(86,472)

-

-

(317,327)

-

-

Company shares repurchased

New short term loan

(577,732)

1,000,000

Increase/(decrease)
in cash in the year

15

The accompanying notes and accounting policies form an integral part of these financial
statements.

24

S TA R V E S T P L C

NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2007

1

STATEMENT OF ACCOUNTING POLICIES

The principal accounting policies are summarised below. They have all been applied
consistently throughout the year and the previous year.

Basis of accounting

The accounts have been prepared under the historical cost convention and in
accordance with applicable United Kingdom accounting standards.

Operating income

Operating income represents amounts receivable for trade investment sales.
Operating income is recognised on the date of sale contract.

Direct costs

Direct costs include the book cost of investments sold during the year together with
any impairment in value of investments recognised in the year.

Investments

Fixed asset investments are stated at cost less any provision for impairment. Current
asset trade investments are stated at the lower of cost or mid-market valuation.
Profits and losses, including profits arising from warrants held, are accounted for as
realised.

Taxation

Corporation tax payable is provided on taxable profits at the current rate.

Deferred tax

Deferred tax is provided on a full provision basis on all timing differences which have
arisen but not reversed at the balance sheet date.

Options

No charge to profit is made in respect of the options over the Company’s shares held
by Directors as all of the options had fully vested prior to 1 October 2006 and the
extension of the life of the options during the year had no impact on their fair values.

Treasury shares

Where the Company acquired its own shares (‘treasury shares’) these are deducted
from shareholders’ funds. No profit or loss is recognised on purchase or subsequent
sale of treasury shares.

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2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

NOTES TO FINANCIAL STATEMENTS CONTINUED

2

PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

3

TAXATION

Profit on ordinary activities before taxation
is stated after charging:

Auditor’s remuneration - audit

Auditor’s remuneration - non-audit services

Directors’ emoluments

Year
ended
30 Sept 2007
£

14 month period
ended
30 Sept 2006
£

13,206

20,445

144,525

11,888

20,053

107,642

Auditor’s remuneration for non-audit services provided during the year comprises
nominated advisor fees of £16,744, tax compliance service fees of £3,231 and tax
advisory fees of £470; (2006: nominated advisor fees of £9,333 and tax compliance
fees of £2,500 and tax advisory fees of £8,220).

Year
ended
30 Sept 2007
£

14 month period
ended
30 Sept 2006
£

1,509,342

400,643

(4,106)

1,505,236

(643)

400,000

Current year taxation

UK corporation tax at 30% (2006: 30%)
on profits for the year

Adjustments in respect of prior years

Total current tax charge for the year

The tax assessed is lower than the standard
rate of corporation tax in the UK at 30%
(2006: 30%). The differences are explained
below:

Profit on ordinary activities before taxation

5,030,768

Profit on ordinary activities at 30% (2006: 30%)

1,509,230

Effect of:

Expenses not deductible for tax purposes

Marginal relief

Adjustments in respect of prior years

Current tax charge for the year

112

-

(4,106)

1,505,236

1,338,528

401,598

40

(995)

(643)

400,000

4

STAFF COSTS

The Company had no employees during the year or the previous year; the two
executive directors provide professional services as required on a part time basis.

26

S TA R V E S T P L C

NOTES TO FINANCIAL STATEMENTS CONTINUED

5

DIRECTORS’ EMOLUMENTS:

R B Rowan

A C R Scutt

J Watkins

Year
ended
30 Sept 2007
£

14 month period
ended
30 Sept 2006
£

84,000

16,500

44,025

144,525

52,000

16,000

39,462

107,462

Amounts paid to third parties

Included in the above are the following amounts paid to third parties:

◆ In respect of the management services of Bruce Rowan, £84,000 (2006: £24,000)
was paid to Sunvest Corporation Limited, a company of which he is a director and
shareholder. (In 2006: £28,000 of the above remuneration was paid through his
business, in respect of professional services)

◆ In respect of the professional services of John Watkins, FCA, £26,525 + VAT (2006:

£29,462+ VAT) of the above remuneration was paid through his business.

Pensions

No pension benefits are provided for any director.

Directors’ share options

Aggregate emoluments disclosed above do not include any amounts for the value
of options to acquire Ordinary shares in the company granted to or held by the
directors.

Details of share options held by the directors are set out in Note 11.

Other transactions involving directors

In addition to the remuneration disclosed above, £nil (2006: £14,000) was paid to
Bruce Rowan, through his business, for the provision of office facilities.

27

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

NOTES TO FINANCIAL STATEMENTS CONTINUED

6

EARNINGS PER SHARE

Year
ended
30 Sept 2007
£

14 month period
ended
30 Sept 2006
£

The basic earnings per share is derived by
dividing the profit for the year attributable
to ordinary shareholders by the weighted
average number of shares in issue.

Profit for the year/period

3,525,532

938,528

Weighted average number of Ordinary
shares of £0.01 in issue

36,608,492

37,217,259

Earnings per share - basic

9.6 pence

2.5 pence

Weighted average number of Ordinary
shares of £0.01 in issue inclusive of
outstanding options

40,229,710

39,373,141

Earnings per share - fully diluted

8.8 pence

2.4 pence

7

FIXED ASSET INVESTMENTS

The Company’s dormant subsidiary, Starvest Nominees Limited, was dissolved on 1
May 2007.

8

DEBTORS

Prepayments

Total

30 Sept 2007
£

30 Sept 2006
£

10,257

10,257

107,902

107,902

9

CURRENT ASSET INVESTMENTS, AT COST OR MARKET VALUE IF LOWER

Publicly traded investments at cost

Unrealised loss

Unquoted investments

30 Sept 2007
£

30 Sept 2006
£

4,723,134

(130,096)

4,593,038

157,147

4,750,185

3,153,061

(70,163)

3,082,898

-

3,082,898

28

S TA R V E S T P L C

NOTES TO FINANCIAL STATEMENTS CONTINUED

9

CURRENT ASSET INVESTMENTS CONTINUED

The market value of these investments was:

Quoted on AIM

Quoted on PLUS

Quoted on foreign stock exchanges

Unquoted investments at cost

30 Sept 2007
£

30 Sept 2006
£

7,526,412

3,585,079

3,371,961

157,147

5,732,312

6,360,677

-

-

Total

14,640,599

12,092,989

Trade investments

The Company has holdings in the companies described in the review of portfolio on
pages 6 to 15.

Of these, the Company has holdings amounting to 20% or more of the issued share
capital of the following companies:

Name

Franchise Investment
Strategies plc - see note 1

Lotus Resources plc

Sheba Exploration (UK) plc

Treslow Limited

Country
of
incorporation

Class of Percentage
of issued
capital

shares
held

Profit/(loss)
for the last

reserves at last
financial year balance sheet date

Capital and Accounting
ye a r
end

England &
Wales

England &
Wales

England &
Wales

England &
Wales

Ordinary

27.43%

16,123

£801,911

31 May

Ordinary

36%

Note 2

Note 2

Note 2

Ordinary

30.65%

£(92,252)

£374,480

28 February

Ordinary

23%

Note 2

Note 2

Note 2

Note 1: Franchise Investment Strategies plc is considered to be an associated undertaking.
Equity accounting has not been used as the Company does not prepare consolidated
accounts. The other companies named above are not associated undertakings as the
Company does not exercise significant influence.

Note 2: The Company is supporting Lotus Resources plc and Treslow Limited through their
respective pre IPO processes; the required information is either not available or could
be misleading as the deals were in progress at 30 September 2007.

10

CREDITORS

Amounts falling due within one year:

Bank overdraft

Short term loan

Trade creditors

Owing to group undertakings

Corporation tax

Social security and other taxes

Accruals

Total

30 Sept 2007
£

30 Sept 2006
£

-

1,000,000

1,502

-

1,510,000

292

37,175

2,548,969

123,634

-

13,176

2

400,643

-

15,914

553,369

29

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

NOTES TO FINANCIAL STATEMENTS CONTINUED

10

CREDITORS CONTINUED

The bank overdraft is secured by a charge over certain of the Company’s
investments having a value at the balance sheet date of £3.5m.

The short term loan is secured by a charge over certain of the Company’s
investments having a value at the balance sheet date of £2.4m.

11

SHARE CAPITAL

The authorised share capital of the Company and the called up and fully paid
amounts were as follows:

Authorised

Number

Nominal £

As at 30 September 2006 and 30 September 2007,
Ordinary shares of £0.01 each

250,000,000

2,500,000

Called up, allotted, issued and fully paid

As at 30 September 2006 and 30 September 2007

37,217,259

372,173

Shares held in treasury

Between 19 January 2007 and 24 August 2007, the Company purchased a total of
2,050,000 of its own shares to be held in treasury. The prices paid were between 17
pence and 32 pence.

Share options

The Company has established share option schemes: on 27 June 2002 the 2002
share option scheme; and on 14 February 2005 the 2005 share option scheme.
Options have been granted under both schemes to subscribe for ordinary shares as
follows:

At
30 Sept
2006

Granted
during
the year

At
30 Sept
2007

Exercise
price

Date from which
exercisable

Expiry
date
(Note 1)

RB Rowan

1,400,000

RB Rowan

200,000

RB Rowan

1,750,000

ACR Scutt

ACR Scutt

J Watkins

J Watkins

J Watkins

200,000

350,000

700,000

100,000

875,000

-

-

-

-

-

-

-

-

1,400,000

5 pence

27 June 2002

31 May 2012

200,000

6 pence

18 November 2003

31 May 2012

1,750,000

15 pence

14 February 2005

31 January 2015

200,000

6 pence

18 November 2003

31 May 2012

350,000

15 pence

14 February 2005

31 January 2015

700,000

5 pence

27 June 2002

31 May 2012

100,000

6 pence

18 November 2003

31 May 2012

875,000

15 pence

14 February 2005

31 January 2015

5,575,000

5,575,000

Note 1: By resolution at the extraordinary general meeting held on 23 May 2007, the expiry

dates of options were extended to the dates quoted above.

Note 2: The market value of shares at 30 September 2007 was 29.75p (2006: 17.25p) and the
range during the year was 15.0p to 36.5p (2006: 7.5p to 29.5p), the average for the year
being 24.25p (2006: 18.75p).

30

S TA R V E S T P L C

NOTES TO FINANCIAL STATEMENTS CONTINUED

12

RESERVES

The movements on reserves during the year were as follows:

As at 30 September 2006

Profit for the period

Dividend paid at the rate of one penny per
share on 20 June 2007

Company repurchase of shares for treasury

Share
premium
account
£
2,026,396

-

-

-

As at 30 September 2007

2,026,396

13

MOVEMENT ON EQUIT Y SHAREHOLDERS’ FUNDS

Profit for the period

Dividend paid

Shares held in treasury

Net increase in shareholders’ funds

Opening shareholders’ funds

Closing equity shareholders’ funds

Year
ended
30 Sept 2007
£

3,525,532

(367,172)

(577,732)

2,580,628

2,637,433

5,218,601

14

RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS

Profit
and loss
account
£
238,864

3,525,532

(367,172)

(577,732)

2,819,492

Period
ended
30 Sept 2006
£

938,528

-

-

938,528

1,698,905

2,637,433

Year
ended
30 Sept 2007
£

Period
ended
30 Sept 2006
£

Operating profit

5,044,067

1,335,134

Unrealised trade investment loss

Decrease in debtors

Increase/(decrease) in creditors

73,266

97,645

9,877

40,113

42,635

(7,577)

Increase in trading investments at cost

(1,740,550)

(1,644,554)

Net cash inflow/(outflow)
from operating activities

3,484,305

(234,249)

31

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

NOTES TO FINANCIAL STATEMENTS CONTINUED

15

ANALYSIS AND RECONCILIATION OF NET FUNDS

30 Sept
2006
£

Cash
flow
£

30 Sept
2007
£

Cash in hand and at bank/(bank overdraft)

(123,634)

3,130,222

3,006,588

Short term loan

Net funds

-

(1,000,000)

(1,000,000)

(123,634)

2,130,222

2,006,588

Increase/ (decrease) in cash in the year

Advance of new short term loan

Movement in net funds in the year

Net debt at 1 October 2006

Net funds at 30 September 2007

Year
ended
30 Sept 2007
£

3,130,222

(1,000,000)

2,130,222

(123,634)

2,006,588

Period
ended
30 Sept 2006
£

(317,327)

-

(317,327)

193,693

(123,634)

16

COMMITMENTS

As at 30 September 2007, the Company had entered into commitments to invest in
new issues of securities by two companies, one expecting to be admitted to AIM and
the other to PLUS. The maximum commitment amounted to £325,000 (2006:
£300,000, of which £100,000 was paid in advance).

17

FINANCIAL INSTRUMENTS

The Company uses financial instruments, comprising cash, bank overdraft, short
term loan, trade investments and trade creditors, which arise directly from is
operations. The main purpose of these instruments is to further the company’s
operations.

Short term debtors and creditors

Short term debtors and creditors have been excluded from all the following
disclosures.

Trade investments

Trade investments are stated at cost less any provision for impairment. The
difference between fair and book value is set out in Note 9. The Board meets bi-
monthly to consider investment strategy in respect of the Company’s portfolio.

Interest rate risk

The Company finances its operations through retained profits and new investment
funds raised. The Board utilises short term floating rate interest bearing accounts
and a short term floating rate loan to ensure adequate working capital is available
whilst maximising returns on deposits.

32

S TA R V E S T P L C

NOTES TO FINANCIAL STATEMENTS CONTINUED

Liquidity risk

The Company seeks to manage financial risk, to ensure sufficient liquidity is available
to meet foreseeable needs and to invest cash assets safely and profitably.

Borrowing facilities

Currently the Company has an overdraft facility of £750,000 arranged with its
bankers (2006: £750,000).

On 6 November 2006, the Company was granted a loan of £1million, for a period of
one year extendable at the Company’s option, secured on certain investments with
a market value at 30 September 2007 of £2,409,750. Interest is payable at the rate of
3.5% above the Barclays Bank plc base rate for the time being.

Currency risk

The Company trades substantially within the United Kingdom and all transactions
are denominated in Sterling. Consequently, the Company is not significantly
exposed to currency risk.

Fair values

Except where shown above, the fair values of the Company’s financial instruments
are considered equal to the book value.

18

CONTROL

There is considered to be no controlling related party.

33

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

NOTICE OF ANNUAL GENERAL MEETING

STARVEST PLC

Notice is hereby given that the seventh Annual General Meeting of STARVEST plc will be held at St
Ethelburga’s, 78 Bishopsgate, London EC2N 4AG on Wednesday 12 December 2007 at 3.00 pm for
the purpose of considering and, if thought fit, passing the following resolutions which will be
proposed as ordinary resolutions in the case of resolutions 1 to 4 and as special resolutions in
the case of resolutions 5 to 7.

ORDINARY BUSINESS

1

2

3

4

To receive the report of the Directors and the audited financial statements of the Company for
the year ended 30 September 2007.

To re-appoint Ronald Bruce Rowan retiring by rotation as a Director in accordance with the
Articles of Association at the conclusion of the meeting and, being eligible, offers himself for re-
election as a director of the Company.

To re-appoint Grant Thornton UK LLP as auditors of the Company to act until the conclusion of
the next Annual General Meeting and to authorise the Directors to determine their
remuneration.

THAT in respect of the year ended 30 September 2007, the Directors be empowered to pay a
final dividend on 11 January 2008 at the rate of 0.5 pence per share to those Members on the
register as at 14 December 2007.

SPECIAL BUSINESS

5

THAT for the purposes of section 80 of the Companies Act 1985 (“the Act”), the Directors be and
they are hereby generally and unconditionally authorized to exercise all the powers of the
Company to allot any relevant securities (as defined in section 80(2) of the Act) up to a
maximum aggregate nominal amount of £2,072,077, provided that:

a)

b)

this authority shall expire on whichever is the earlier of the conclusion of the next Annual
General Meeting of the Company or the date falling fifteen months from the date of
passing of this Resolution, unless previously varied, revoked or renewed by the Company in
General Meeting;

the Company shall be entitled to make, prior to the expiry of such authority, any offer or
agreement which would or might require relevant securities to be allotted after the expiry
of such authority and the directors may allot any relevant securities pursuant to such offer
or agreement as if such authority had not expired; and

c) all prior authorities to allot relevant securities be revoked but without prejudice to the
allotment of any relevant securities already made or to be made pursuant to such
authorities.

6

THAT the Directors be and they are hereby empowered pursuant to section 95 of the Act to
allot equity securities (within the meaning of section 94 of the Act) wholly for cash pursuant to
the authority conferred on them by resolution 4 as if section 89(1) of the Act did not apply to
any such allotment provided that:

a) such power shall be limited to the allotment of equity securities, in connection with a rights
issue, subject to such exclusions or other arrangements as the directors may deem
necessary or expedient to deal with fractional entitlements or legal or practical problems
under the laws of, or the requirements of, any regulatory body or any stock exchange or
otherwise in any territory; and for the purposes of this resolution “rights issue” means an

34

S TA R V E S T P L C

NOTICE OF ANNUAL GENERAL MEETING CONTINUED

offer of equity securities to holders of ordinary shares in proportion to their respective
holdings (as nearly as may be);

b) such power shall be limited to the allotment (otherwise than pursuant to paragraph (a)

above) of equity securities up to an aggregate nominal value of £2,072,077;

c)

such power shall expire at the conclusion of the next Annual General Meeting of the
Company unless previously varied, revoked or renewed by the Company in General
Meeting provided that the Company may, before such expiry, make any offer or agreement
which would or might require equity securities to be allotted after such expiry and the
directors may allot equity securities pursuant to any such offer or agreement as if the
power hereby conferred had not expired; and

d) all prior powers granted under section 95 of the Act be revoked provided that such

revocation shall not have retrospective effect.

7

THAT the Company be unconditionally and generally authorised to make market purchases (as
defined by the Companies Act 1985 Section 163(3) of Ordinary shares of £0.01 each in its
capital, provided that:

a)

b)

c)

d)

the maximum number of shares that may be so acquired is 5,600,000, being a number that
approximates to 15% of the issued ordinary share capital of the Company at the date of the
meeting;

the minimum price that may be paid for the shares is £0.01 per share, being the nominal
value per share;

the maximum price that may be so paid per share is an amount equal to 20% higher than
the average of the middle market quotations per share as derived from the Daily List of the
Alternative Investment Market of the London Stock Exchange for the fifteen business days
immediately preceding the day on which the shares are purchased; and

the authority conferred by this resolution shall expire on the date falling eighteen months
from the date of passing of this resolution but not so as to prejudice the completion of a
purchase contracted before that date.

If you are a registered holder of Ordinary Shares in the Company, whether or not you are able to
attend the meeting, you may use the enclosed form of proxy to appoint one or more persons to
attend and vote on a poll on your behalf. A proxy need not be a member of the Company.

A form of proxy is provided, which may be sent to the Company’s registrar. This may be sent by
facsimile transfer to 01252 719232, or by mail using the enclosed reply paid card to:

The Company Secretary
Starvest plc
c/o Share Registrars Limited
Craven House, West Street
Farnham, Surrey
GU9 7EN

In either case, the signed proxy must be received by 3.00 pm on Monday 10 December 2007.

By Order of the Board

Registered Office:

John Watkins
Director and Company Secretary

29 October 2007

123 Goldsworth Road
Woking
Surrey
GU21 6LR

35

2 0 0 7 A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S

COMPANY SHARE PRICE INFORMATION
AND ANNOUNCEMENTS

Share price information is available from the following information providers:

◆ Financial Times

◆ The Times

◆ Evening Standard

◆ London Stock Exchange website: www.londonstockexchange.com using EPIC: SVE

◆ PLUS Markets website: www.plusmarketsgroup.com using EPIC: SVE

◆ Price information relating to investee companies traded on AIM is also available from
the London Stock Exchange website using the EPIC quoted in the investment report on
pages 6 to 15. Prices relating to investee companies quoted on PLUS are available at
www.plusmarketsgroup.com.

Company announcements are available from:

◆ Company website: www.starvest.co.uk and by email alert for those who register on the

site.

◆ London Stock Exchange website: www.londonstocexchange.com using EPIC: SVE

Company quarterly updates, interim and annual reports are mailed to all Shareholders
and others who may request them from the Company Secretary by writing to the registered
office or by registering on the website: www.starvest.co.uk.

Expected timetable for 2007/08:

◆ January Chairman’s update by 15 January 2008

◆ Interim report to 31 March 2008 by 23 April 2008

◆ July Chairman's update by 16 July 2008

◆ Annual report to 30 September 2008 by 14 November 2008.

Taxation of Shareholders:
It must always be the personal responsibility of each
Shareholder to deal with all matters of personal taxation and to take professional
advice as necessary.

However, so as to assist Shareholders, in response to questions the Company has taken
professional advice concerning the tax status of private investors holding the Company’s
shares.
In their letter dated 2 August 2006, HM Customs & Revenue stated “that the
company may be regarded as a qualifying company for taper relief purposes for the period
April 2000 to date.”

So long as this position maintains and may be relevant, the Company’s shares may be
regarded as business assets and so qualify for enhanced taper relief.

Original share certificates in the name of Web Shareshop (Holdings) plc remain valid.

36

AGM VENUE
St Ethelburga’s

78 Bishopsgate

London EC2N 4AG

Directions to St Ethelburga's
The Centre is located within St Ethelburga’s Church, on the east side of
Bishopsgate between St Helen’s Place and Clarke’s Place, just south of
Camomile Street. (It is exactly opposite a very tall office block clearly
marked no. 99 Bishopsgate.)

Entrance is by the passageway at the side of the church.

The nearest mainline/underground station is Liverpool Street (about 3
minutes walk). Exit the mainline Station onto Bishopsgate, turn right (south)
and cross over the road. Continue past Hounsditch and Camomile Street
and St Ethelburga's is a few yards further on, on the left.

Alternatively Bank or Monument Underground stations are both about 6/7
minutes walk. From Bank, take Threadneedle Street to Bishopsgate. Turn
left into Bishopsgate and cross over the road. Pass under the foot-bridge
and St Ethelburga’s is a few yards up the road on the right. From
Monument, take Gracechurch Street, which becomes Bishopsgate after you
cross Leadenhall Street. Pass under the foot-bridge and St Ethelburga’s is a
few yards up the road on the right.

Bus route numbers 8, 26, 35, 47, 48, 149, 242, 344 and 388 stop outside the
Centre.

The Centre has no car park and Bishopsgate is a red route. The nearest NCP
car park is in Stoney Lane, off Hounsditch.

www.starvest.co.uk

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