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•Overall loss $49.9 million, with an operating profit offset by unrealised writedowns

•Net tangible assets equal to 46 cents per share

•Bank debt repayments ahead of schedule

Keybridge Capital reported a loss of $49.9 million for the year to 30 June 2010. An operating profit of $7 million was offset by asset writedowns, a reduction in the value of deferred tax assets and foreign currency translation losses.

The loss in the second half of the year was $10.7 million, significantly reduced from the loss in the first half of $39.2 million.

A breakdown of the full year result is provided in Attachment 1.

During the year, $67 million of investment realisations were achieved. With the Company not making new investments, the bulk of this cashflow has been used to pay down the Company's corporate borrowings. Keybridge is currently ahead of the repayment schedule required under its corporate debt facility.

The Managing Director of Keybridge, Mark Phillips, said: "Whilst conditions remain challenging in our investment markets, we have made reasonable progress in achieving investment repayments and reducing our borrowings. Our key objective remains to repay our debt so that we can resume distributions to shareholders."

Investments

As at 30 June 2010, the written-down value of the Company’s investments by asset class was as follows:

	AUD million	%
Aviation	136	60%
Lending	38	17%
Shipping	27	12%
Property	15	7%
Infrastructure	10	4%
	226	100%

In the second half of the financial year, the Company took additional net writedowns against its investments of $15 million. These provisions arose because of the continuing difficult operating environment for some of the Company's investments, most notably in Shipping.

Whilst conditions in the Company's largest asset class of Aviation have remained soft during the 2010 financial year, there are now signs of improvement with passenger and freight traffic increasing. This provides a more confident outlook for this asset class, although there still needs to be an increase in the availability of senior debt in the sector.

Since June 2009, Keybridge has realised repayments from twelve separate investments. The largest realisations were in the Infrastructure asset class, with the remainder being spread across Lending, Property and Aviation. Only one, small realisation was achieved in the Shipping asset class.

Over the past 18 months, a range of the Company's investments have stopped paying cash income to Keybridge. This has been due to a variety of factors emanating from the global financial crisis, including the need within some transactions for cashflow to be directed to repaying non-recourse senior debt.

Attachment 2 includes a summary of the performance of the Company's investments by asset class.

Balance Sheet

	AUD million
Investments	226
Cash-on-Hand & Other Assets	7
Borrowings	(154)
Shareholders’ Funds	79

This level of shareholders' funds equates to net tangible assets of 46 cents per share.

Of the Company's assets, 79% are denominated in US Dollars with a further 5% in Euros. The US Dollar assets are hedged as to approximately two-thirds by borrowings also in US Dollars. Because there is an unhedged component of foreign currency assets, Keybridge's profitability and shareholders' funds will vary with changes in the value of the Australian Dollar against the US Dollar and, to a lesser extent, the Euro. In 2010, the Australian Dollar appreciated in value. As a result, the Company incurred foreign currency losses, with the majority being unrealised.

The following is the net currency position of the Company's balance sheet as at 30 June 2010:

Currency	Assets	Liabilities	Net
US Dollars	157m	104m	53m
Australian Dollars	39m	32m	7m
Euros	7m	-	7m

At 30 June 2009, Keybridge held an intangible asset in the form of a Deferred Tax Asset (DTA). With market conditions, and the Company's future profitability, being uncertain, it was decided during the first half of the 2010 financial year to write-down this DTA by $15 million, reducing its value to zero.

For the same reasons, the Company has not recognised in its accounts any new tax credits in 2010, despite incurring a large accounting loss.

Corporate Debt Facility

Keybridge had $154 million of outstanding corporate borrowings as at 30 June 2010. This figure includes $5 million of unrealised revaluation losses on interest rate swaps undertaken in prior periods to lock-in the bank bill and LIBOR costs of the Company's debt. These interest rate swaps mature in the first half of 2011.

The debt facility matures in June 2011. Ahead of that time, the Company has to meet a schedule of repayment obligations. Repayments totalling $64 million were achieved by 30 June 2010. This satisfied the repayment schedule through to 31 December 2010. By March 2011, a further $6.5 million of repayments have to be made and the Company is confident of achieving this requirement.

It is likely that full repayment of the Company's debt facility will take approximately a further two to three years to achieve.

Outlook

For the time being, the Company is not making new investments. Its priority is to achieve realisations of investments to repay its debt facility. It is only after outstanding borrowings have been reduced significantly that a resumption of distributions to shareholders can be contemplated.

Keybridge's strategies are to keep operating costs as low as practicable, bring forward investment realisations where possible and, for those transactions where this is not practicable, to preserve as much value for the Company and its shareholders as possible.

This last point is particularly relevant for the Company's aviation and shipping investments. In these asset classes, significant realisations are impractical in current market conditions.

A key objective for the Company in the next 6 to 12 months will be the refinancing of its corporate debt. It is imperative that Keybridge achieves ongoing terms from its lenders that enables the Company to continue realising its assets in the ordinary course.