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Widespread Portfolios interim result to 30 September 2008

Widespread Portfolios Ltd - Interim Report for the period to 30 September 2008

Your directors submit the financial statements of Widespread Portfolios Limited for the six months to 30 September 2008.

The trading result for the period was a loss of $298,000 (6 months to 30 September 2007, $306,000 loss).

An analysis of the result is provided in the table below

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Major Investments

Our major investments are detailed in the table below on the basis of their market values as at 30 September and as at the date of this report.

Table Sept 2.PNG

style="margin-right: 0px; margin-bottom: 10px; margin-left: 0px; padding: 0px; font-size: 11px; line-height: 16px; font-family: 'Lucida Grande', Lucida, Verdana, sans-serif; color: rgb(0, 0, 0); letter-spacing: normal;">All listed assets are included at market values with the exception of Asian Minerals which (as has been the case for six of the last eight years) is currently included at directors' valuation. This valuation approach takes into account independent project valuation data, the strategic nature of the shareholding, our close association with the company (including board representation), and all the present circumstances surrounding the Ban Phuc Nickel Project in Vietnam (further detail on these circumstances is included below). Recent sales in Canada of small shareholdings by small shareholders are not, in our view, a relevant benchmark for the value of our significantly larger stake in the company.  

As can be seen from the table, we have quite a diverse set of major investments, both in terms of geographical spread and by commodity. Share trading activity is obviously not possible in current market conditions and in any event represents only a tiny fraction of our portfolio.

In terms of our own viability we have the cash resources to sustain the company well into 2010 by which time we expect market conditions to have improved and/or one or more of our major investments will have some success.  

Asian Mineral Resources  (presently 38.3% of our portfolio)

Until 13 June 2008, AMR was steadily progressing towards its goal of establishing a small-scale, high-grade underground nickel mine in northern Vietnam. The mining license had finally been granted in December 2007, substantial sums of money raised in early 2008 (including USD 34 million invested by Malaysian Smelting Corporation for a 20% stake in the company), and the mining camp, processing plant and mine development were well advanced and proceeding according to plan.. The company had already invested USD 61.5 million in the project since its inception and was in negotiations with a number of potential financiers willing to invest another USD 45 million to finance the completion of the plant. With 100 million shares on issue the market value of the company was then approximately CAD 150 million

On 13 June 2008, the Vietnamese Ministry of Finance introduced a number of economic measures including a 20% export tariff on oil, gas, and various metals, including nickel and copper. As there is no smelter in Vietnam capable of handling nickel and copper, the mine output must be exported and the export tariff was therefore effectively a 20% royalty on all mine revenue.

Few mining projects can withstand a royalty of this magnitude and this initiative effectively destroyed overnight the viability of the Ban Phuc nickel mine development. The consequences of this impacted immediately on the company - the finance negotiations were suspended and the market value of the company collapsed, to a recent low of CAD 3 million. The project has been mothballed with most of te 538 people (predominantly Vietnamese) who were involved in the construction being laid off.  

There is light on the horizon. The Asian Minerals project was operating within the auspices of a recently granted (2007) twenty year investment license which, together with other Vietnamese investment laws, theoretically protected the project and its investors from any adverse consequences of any subsequent law changes. Asian Minerals is presently pursuing these rights (which include the right to compensation) but no speedy resolution is expected, hence in the interests of ensuring the company's survival, the decision to mothball the project.  

Further information about AMR can be found at www.asianminres.com  and any ongoing announcements by Asian Minerals in Canada will continue to be re-released by Widespread Portfolios in New Zealand.   

King Solomon (11.6% of the portfolio)

King Solomon Mines ("KSO") is a minerals explorer with a number of gold, copper and other base metal projects in the Sonid region of Inner Mongolia in China. Sonid is on the edge of the Gobi desert - along strike and across the Mongolian-Chinese border from Ivanhoe's well-known and huge Oyu Tolgoi copper/gold deposit.

Widespread Portfolios holds 11% of the present issued capital of 90.8m shares and is represented on the board by Chris Castle.

A recent quarterly report issued by KSO confirmed interesting grades of molybdenum mineralisation at Marmot Ridge. While the field season has now concluded ongoing analysis of exploration results will continue during the northern winter.

Despite these encouraging results the KSO share price has recently fallen in line with that of virtually every other listed mineral exploration stock. It's also apparent that raising further cash from shareholders and other investors, even with the most exciting of exploration results, would not be easy for any mineral exploration company.  

Taking these factors into account, KSO management (with the support of the board) have taken a number of steps to reduce operating costs, while still maintaining a reasonable level of exploration activity. This strategy is designed to ensure that the company will survive these tough times and be in a position of relative strength when the sun eventually shines on equity and commodity markets.  

More information can be found at www.kingsolomonmines.com

Widespread Energy Limited ("WEN") (7.9% of the portfolio)

Widespread holds 26.5% of WEN, is the largest shareholder and provides management services to the company.  

Widespread Energy is a venture capital investor in the energy sector.

During the six months to 30 September 2008, Widespread Energy continued to advance the work programmes for the two directly held petroleum exploration permits - PEP 38526 at Kotuku (near Lake Brunner) and PEP 50439offshore west coast of the South Island.

The recent share market reversals and the accompanying collapse of oil prices together mean that the climate for raising equity capital for oil exploration, particularly in frontier (i.e. non-Taranaki) New Zealand locations has evaporated.

Widespread Energy's initial response to these changed market conditions has been to reduce expenditure levels to the bare minimum required to meet work programme commitments.  By doing so, the company has the resources (without raising further capital) to remain in business and keep PEP 38526 in good standing until March 2010 and PEP 50439 until March 2012. Market conditions are presently so difficult it's pointless trying to farm out future major work programme commitments, but when conditions improve this will also be undertaken.

Widespread Energy has also been progressing various aspects of the Chatham Rise Rock Phosphateproject, held in a joint venture with Widespread Portfolios. Further detail on this exciting project is included later in this report.

Widespread Energy holds 11.8% of Green Gate Limited, a private oil and gas exploration company established in 2003, which has built up a portfolio of primarily South Island focused petroleum exploration permits in North Canterbury, Murchison and the Solander/Great South Basin. Green Gate (1/3) and Australian listed company GB Energy (2/3) were granted an onshore Taranaki permit in September 2008. 

Market conditions are also affecting Green Gate's ability to finance the work programme commitments for the five permits it holds and the company is exploring other options. These include seeking farm in partners or surrendering some permits.

Widespread Energy continues to hold a small investment (NZD56,000) in Akura Limited, a Fiji based private company, which has lodged applications for three Petroleum Exploration Licenses with the Mineral Resources Department of Fiji for a total of 17,667 square kilometres, most of this being offshore of Fiji. It is understood that these are about to be granted. Notwithstanding that, the political landscape in Fiji is such that Widespread Energy will not contemplate investing further in Akura until Fiji's interim government has achieved greater international acceptance than it has at present.

The outlook for Widespread Energy is positive. It also has the existing resources to sustain its viability and to advance its three principal projects during the next eighteen months.

Further information about WEN can be found on the Widespread Energy page at www.widespread.co.nz

Chatham Rise Rock Phosphate Project

This project has the potential to be the most exciting asset to be developed by the Widespread Group.

A joint venture presently comprising Widespread Energy Limited (90%) and Widespread Portfolios Limited (10%) applied last year for a prospecting license over an area of 3,048 km2 on the Chatham Rise, 600 km east of Christchurch. This area is believed to include significant seabed deposits of rock phosphate (also known as phosphorite) and other potentially valuable minerals.  

Fletcher Challenge Corporation most recently explored the area in the early 1980s. This work followed earlier exploration programmes that included an intensive sampling programme of an area of 227 square kilometres. Based on samples taken this area is thought to contain up to 14 million tonnes of phosphorite nodules. The area was identified using seismic techniques, techniques that also indicated that similar concentrations of phosphorite nodules could exist elsewhere on the Chatham Rise seabed. Much of this prospective ground is within the Widespread application area and has the potential to contain 60 million to 200 million tonnes of rock phosphate (P2O5).

 Initial scoping studies of a possible mining operation on only this limited area of the Chatham Rise make compelling reading.

At present the New Zealand fertiliser industry annually imports from Morocco approximately one million tonnes of rock phosphate and uses it to make a range of fertilisers including superphosphate.

Although the fertiliser industry has negotiated long term supply contracts with the Moroccan suppliers that presently reflect lower prices, earlier in 2008 spot prices for rock phosphate ex Morocco reached USD 500/tonne to which freight costs of over USD 100/tonne must be added. 

Although rock phosphate prices have subsequently reduced, the New Zealand based fertiliser companies, also exposed to the weakening New Zealand dollar, will likely face steeply rising rock phosphate costs as supply contracts are renewed. One, Ravensdown Fertiliser Company, has already responded to this challenge by seeking other, local possible sources including the historic Clarendon Hill deposit in Southland.

Initial estimates indicate that rock phosphate could possibly be mined on the Chatham Rise for a cost per tonne equivalent to just the cost of freighting it from Morocco. Therefore, although the Chatham Rise rock phosphate is less concentrated than the imported material it appears likely that huge cost savings could be achieved. Other advantages of mining a local source would be reduced exposure to currency risk and likely ongoing price increases, as well as a significantly reduced carbon footprint.

It's also possible for the rock phosphate to be processed to derive phosphoric acid, the basic ingredient for a range of other fertilisers used in other countries.         

In the circumstances it's not surprising that, despite the license not yet being granted, there has been significant and increasing local and overseas interest in our Chatham Rise project since the application was advised to shareholders and the share market some months ago.

The license, initially for a two-year period, is now expected to be granted in early 2009.

Other Long Term Holdings

The investments included in this category are Glass Earth, Fischer-Watt Gold, and Golden Phoenix Resources. 

Glass Earth operates in New Zealand and is seeking large gold deposits in the Coromandel / Central Volcanic Region, and in Central Otago. The company is using a range of new technologies with the aim of discovering other gold deposits of a similar scale to that mined at Waihi and Macraes. This opportunity exists because, compared to other epithermal gold regions around the world, New Zealand is virtually unexplored with modern exploration techniques. The website iswww.glassearthlimited.com.

Fischer-Watt Gold Company is a junior mining company that trades in the USA under the symbol of FWGO.OB. The company's backers have a very strong background in all facets of the mineral industry, exploration, production (both underground and open pit), and finance. The company recently announced that it had acquired a portfolio of mineral claims and leases on over 55,000 acres in Wyoming, South Dakota and Arizona that cover some of the most prospective uranium-bearing geology in the United States.

Golden Phoenix is a private mineral exploration company in which Widespread invested in 2007. Its focus is in China where it has recently acquired tenements potentially containing substantial gold deposits. Golden Phoenix's present strategy is to list on the ASX when market conditions are suitable.   

Directors

Independent director Marion Franks has advised the board that due to her personal circumstances and other time commitments she intends to resign from the board of Widespread Portfolios with effect from 30 November. Marion Franks has been a most valuable member of the board since we listed on the stock exchange in early 2004 and her contribution is acknowledged. 

The board has already identified several possible candidates to fill this vacancy and will advise the appointment of a replacement director in due course.

Outlook

The outlook for Widespread Portfolios is surprisingly positive. And though our total assets (around $6.1 million today) are only a quarter of those 12 months ago, we are pretty much in the same position as we were in 2005. The growth since then (we quadrupled in size in two years) was largely attributable to our Asian Minerals investment. The recent retrenchment can principally be laid at the same door. Time will tell whether the unauthorised actions of part of the Vietnamese government will be redressed or compensated for.

Several of your directors were deeply involved in equity markets at the time of the 1987 sharemarket collapse and the structure of Widespread Portfolios (established in 1989 with a kitty of only $200,000) was designed to ensure that if the same market anarchic conditions recurred, we would survive. So we have, from the outset, had no debt, entered no equity contracts with open ended liabilities and had a very low level of fixed overheads.

We are cashed up and have a sound, relatively diverse portfolio. Granted, their market values are depressed but their fundamental asset values (including strong management teams, enough cash, and exciting prospects) are in place.

By investing in Widespread you are indirectly investing in the future commodity prices of nickel, molybdenum, fertiliser, energy and gold. We are confident that the powerhouse that is China, together with the other BRIC countries (Brazil, India and Russia) will continue to drive base metal and energy prices over the medium to longer term. Locally, energy has to be a good sector to be in. And world population growth, together with the move to biofuels, will underwrite our desire to invest in the fertiliser industry.   

For and on behalf of the Board,

Linda J Sanders                         Chris D Castle

Chairman                                   Director                                             

Onekaka, 28 November 2008   

NZX Format Report

Widespread Portfolios Limited 

Half year ended 30 September 2008 

This report has been prepared in a manner which complies with generally accepted accounting practice and gives a true and fair view of the matters to which the report relates and is based on unaudited accounts. 

CONSOLIDATED OPERATING STATEMENT 
NZ$'000: Current period Previous corresponding period 

Total operating revenue: 110; 451 
OPERATING SURPLUS (DEFICIT) BEFORE UNUSUAL ITEMS AND TAX: (346); (153) 
Unusual items for separate disclosure: Nil 
OPERATING SURPLUS (DEFICIT) BEFORE TAX: (346); (153) 
Less tax on operating profit: 48; 153 
OPERATING SURPLUS (DEFICIT) AFTER TAX BUT BEFORE MINORITY INTERESTS: (298); (306)

Less minority interests: Nil 
Equity earnings: Nil 
OPERATING SURPLUS (DEFICIT) AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: (298); (306)
Extraordinary items after tax attributable to Members of the Listed Issuer: Nil 
OPERATING SURPLUS (DEFICIT) AND EXTRAORDINARY ITEMS AFTER TAX ATTRIBUTABLE TO MEMBERS OF THE LISTED ISSUER: (298); (306)  
Earnings per share: (0.0522); (0.0314)
Interim/Final/Special Dividend: Nil 
Record Date: n/a. Date Payable: n/a 
Imputation tax credit on latest dividend: n/a 

This announcement is in relation to the half year to 30 September 2008. 

Widespread Portfolios Limited will lodge with the NZX and send to holders its Interim Report once completed.