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CQS RIG Finance Fund LTD (RIG)

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Thursday 26 June, 2008

CQS RIG Finance Fund LTD

Half-yearly Report


For immediate release on 26 June 2008

                         CQS RIG FINANCE FUND LIMITED                          

  AUDITED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 MARCH 2008  

Investment Objective

The Company invests primarily in debt instruments issued to finance the
construction, modification and/or refurbishment of rigs and other
infrastructure and/or equipment used for the offshore exploration and
production of oil and natural gas.

The Company's investment objective is to provide Shareholders with an
attractive total return, primarily through income, with scope for capital
appreciation. The Company targets, in the absence of unforeseen circumstances,
an annualised gross dividend yield of 8 per cent. per annum of the Net Asset
Value of the Company.

The assets of the Company are managed by the Investment Manager, CQS Cayman
Limited Partnership, a limited partnership registered in the Cayman Islands.
The Investment Adviser, retained by the Investment Manager, is CQS Investment
Management Limited. The Investment Adviser is responsible for the management
of, and/or providing investment advice on, the Portfolio and will also assist
the Investment Manager with related ancillary services.

CQS will seek to achieve the investment objective of the Company by sourcing
and trading a portfolio of secured debt instruments using fundamental credit
and industry analysis to identify instruments with an attractive risk-adjusted
yield.

Dividends

  Declared     Ex-date     Payable       No of      Pence per      Total in GBP
                                        shares          share                  
                                                                               
 03-May-07   16-May-07   11-Jun-07  50,000,000           2.22         1,110,000
                                                                               
 02-Aug-07   15-Aug-07   10-Sep-07  50,000,000           1.95           975,000
                                                                               
 05-Nov-07   21-Nov-07   17-Dec-07  50,000,000           1.95           975,000
                                                                               
 05-Feb-08   13-Feb-08   10-Mar-08  97,410,000           1.98         1,928,718
                                                                               
 08-May-08   14-May-08   10-Jun-08  97,410,000           1.98         1,928,718

Financial Highlights

For the six months ended31 March 2008

  * Net asset value total return of -4.17% in the 6 months to 31 March 2008
   
  * Ordinary share price total return since 1 October 2007 of -2.48%
   
  * Consistent income stream allowed forecasted dividend payments to be met
   
  * Capital expanded through successful C class issue, raising £50 million
    gross in November 2007
   
Chairman's Statement

Introduction

I am pleased to present the Company's interim report for the six months from 1
October 2007 to 31 March 2008. In particular, I would like to welcome those new
shareholders who participated in the Company's C class share issue whose
conversion was completed on 15 January 2008.

Investment Performance

While performance for the period under review was met by a number of headwinds
in financial markets, the underlying fundamentals supporting the offshore oil
and gas infrastructure market continued to be buoyant. The Company's underlying
portfolio was influenced by the continued impact of the credit crunch and by
Viking ASA's announcement of its entering into Chapter 11 bankruptcy
proceedings.

While it is always disappointing to have to report a negative performance to
shareholders, in the context of such a challenging market environment, I
believe the Company's performance was satisfactory. The Company's net asset
value on 31 March 2008 was 90.94 pence per ordinary share against 99 pence on
30 September 2007. The price of ordinary shares declined from a closing price
of 102 pence on 30 September 2007 to 95.75 pence on 31 March 2008, representing
a return (including dividends) of -2.48% and bringing returns (including
dividends) to shareholders since inception to 3.75%. The ordinary shares ended
the period at a 5.29% premium to net asset value.

Dividends

The Company continues to meet its target for dividend distributions. A dividend
of 1.95 pence per ordinary share was paid on 17 December 2007 and a further
dividend of 1.98 pence per ordinary share was paid on 10 March 2008. A dividend
was declared on 8 May for the financial period from 1 January 2008 to 31 March
2008 which was paid on 10 June 2008, to holders on record on 16 May 2008, with
a corresponding ex-dividend date of 14 May 2008.

Outlook

With oil prices continuing to display strength and with associated demand for
offshore exploration and development remaining strong, the Company continues to
believe that the underlying fundamentals remain robust and that it will be able
to achieve its target annualised gross dividend yield of 8% as outlined in the
admission document dated 11 December 2006.

Michael Salter

Chairman

26 June 2008

Investment Manager's Report

Energy Markets

Crude oil prices remained strong over the period under review reflecting
persistent supply concerns. WTI crude oil prices rose from US$82 per barrel at
the end of September 2007 to US$101.5 on 31 March 2008. The latest IEA
projected global oil product demand in 2008 is little changed at 87.5 million
barrels per day, with downward pressures from weaker economic growth in the
OECD mostly offset by stronger FSU (demand) projections¹. Worldwide exploration
and production ("E&P") expenditures are forecasted to show another year of
double-digit growth in 2008. The Lehman Brothers "Original E&P Spending Survey"
² estimates that the 344 oil and gas companies surveyed plan to boost worldwide
E&P expenditures by more than 11% to an estimated US$369 billion in 2008 from
the US$332 billion spent in 2007. Average day rates for offshore drilling units
remained healthy.

Financial Markets

The fourth calendar quarter of 2007 was marked by growing concerns over
macroeconomic conditions, particularly in the US. Global equity and credit
markets were generally weak, exacerbated by banks' year-end balance sheet risk
reduction. The first quarter of 2008 witnessed further uncertainty and growing
concerns regarding the health of economies world-wide. Financial markets were
marked by continuing dislocations in the credit markets and turbulence in the
wider financial markets. The effects were to drive financing costs higher for
companies and the general decline in asset prices was exacerbated by forced
selling in many asset classes.

The Portfolio

Given the turmoil in global financial markets the portfolio held up relatively
well, in part due to the fundamental strength of the underlying companies and
assets, as well as continued corporate activity; however, as in other markets,
there appeared to be a flight to quality within the offshore oil and gas
infrastructure bond market.  Consequently, bond financing projects with lower
perceived construction risk and/or with drilling contracts outperformed those
where the construction was perceived to be more risky and/or the units are
being built on a more speculative basis. The performance of the Company's
portfolio was impacted by the Viking Drilling ASA announcement on 26 February
2008 relating to its intention to file for Chapter 11 bankruptcy protection in
the US. The Company's interest in instruments issued by Viking Drilling ASA on
27 February comprised a 1st lien security bond and a 2nd lien security bond.
The Company subsequently announced the recovery of about 94% of the par value
of the 2nd lien security bond. The 1st lien security bonds which as at 31 March
2008 had a quoted market price of 40% of par value has recovered significantly
to approximately 60% of par value at the 12 May 2008 estimated net asset value
announcement. On 6 May 2008 Viking Drilling ASA announced that it had decided
to proceed with the sale of rigs and related equipment, as its board of
directors believed the likelihood of obtaining acceptable prices were
favourable due to high oil prices and high activity in the rig market.

More broadly, the market for mid-water and deepwater drilling rigs remained
strong due to an undersupply of vessels in this sector.  Several high profile
contracts were awarded during the period under review. Most recently, one of
the Company's holdings, MPF Corp. Ltd, was awarded a three year contract by
Petrobras with a total contract value of US$630m. The shortage of drilling rigs
and sub-sea solutions has led to delays in field development with consequent
delays in the requirement for production and storage infrastructure and this is
causing some softening of bond prices to the FPSO (Floating Production, Storage
and Offloading vessel) sector. This is particularly true for the units being
built "on spec".

The portfolio benefited from a number of corporate events and early redemptions
of bonds and this kind of activity is very supportive of asset values due to
the tight security and covenant packages enjoyed by the bonds held. During the
period under review, a number of the Company's holdings were called including
the Frigstad Discover Invest Ltd. and Standard Drilling ASA bonds, both at 107.
Since 31 March 2008, a call notice has been received for the Company's holdings
of Eastern Echo Holding plc. The portfolio's holdings are ultimately secured on
physical assets deployed in the offshore oil and gas services industry, and
their performance remains closely linked to the market value of those assets.

Outlook

As markets appear to be stabilising, there have been signs of a pick-up in
issuance and we believe we will be able to continue to identify attractive
investment opportunities for the Company in both the secondary and primary
markets. We continue to believe the Company's portfolio to be well positioned
to capture the progression of the offshore oil and gas services investment
cycle, with holdings across a number of sub-sectors including drilling rigs,
seismic vessels, floating production units and sub-sea infrastructure.

¹ Source: International Energy Agency - Oil Markets Report March 2008

All share price data sourced from Bloomberg

² Source: Lehman Brothers

CQS Cayman Limited Partnership

26June 2008

Independent auditors' report to the members of CQS Rig Finance Fund Limited

We have audited the interim financial statements of CQS Rig Finance Fund
Limited for the six months ended 31 March 2008 which comprise the Income
Statement, the Statement of Changes in Shareholders' Equity, the Balance Sheet,
the Cash Flow Statement, and the related 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 the terms of our engagement. 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 auditors' 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 auditors

The directors' responsibilities for preparing the financial statements in
accordance with applicable International Financial Reporting Standards (IFRSs)
as adopted by the European Union are set out in the Statement of Directors'
Responsibilities.

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

We report to you our opinion as to whether the financial statements give a true
and fair view. We also report to you if, in our opinion the company has not
kept proper accounting records or, if we have not received all the information
and explanations we require for our audit.

We read other information contained in the Annual Report and consider whether
it is consistent with the financial statements. The other information comprises
only Management and Administration, Investment Objective, Dividends and
Financial Highlights, the Chairman's Statement and the Investment Manager's
Report. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any other information.

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 relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are
appropriate to the company's circumstances, consistently applied and adequately
disclosed.

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 assurance that the 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.

Opinion

In our opinion the financial statements give a true and fair view, in
accordance with International Financial Reporting Standards, of the state of
the company's affairs as at 31 March 2008 and of its loss for the period then
ended.

Ernst & Young LLP

Guernsey

26 June 2008

Income Statement

For the period from 1 October 2007 to 31 March 2008

                                         Notes    Period from 1     Period from
                                                   October 2007                
                                                                     8 November
                                                    to 31 March      2006 to 31
                                                           2008      March 2007
                                                                               
                                                            GBP       Unaudited
                                                                               
                                                                            GBP
                                                                               
Operating (loss)/income                    3        (3,873,839)       2,677,175
                                                                               
Operating expenses                                                             
                                                                               
Other operating expenses                   4          (855,082)       (451,118)
                                                                               
Finance costs                                       (2,263,830)       (516,228)
                                                                               
Total operating expenses                            (3,118,912)       (967,346)
                                                                               
Net (loss)/profit                                   (6,992,751)       1,709,829
                                                                               
(Loss)/earnings per Ordinary Share         5                                   
                                                                               
Basic & Diluted                                        (10.46)p           3.42p
                                                                               

All items in the above statement are derived from continuing operations.

All income is attributable to the Ordinary Shareholders of the Company.

The accompanying notes form an integral part of the interim financial
statements.

Statement of Changes in Shareholders' Equity

For the period from 1 October 2007 to 31 March 2008

                             Share        Share      Other Accumulated       Total
                                                                  Loss            
                           Capital      Premium    Reserve                        
                                                                                  
                    Notes      GBP          GBP        GBP         GBP         GBP
                                                                                  
Balance at                       -            - 48,724,675     777,280  49,501,955
                                                                                  
1 October 2007                                                                    
                                                                                  
Net loss for the period          -            -          - (6,992,751) (6,992,751)
                                                                                  
Total recognised income          -            - 48,724,675 (6,215,471)  42,509,204
and expense                                                                       
                                                                                  
Issuance of          11          -   50,000,000          -           -  50,000,000
Ordinary Shares                                                                   
                                                                                  
Costs related to     11          -  (1,022,039)          -           - (1,022,039)
issuance of                                                                       
Ordinary Shares                                                                   
                                                                                  
Transfer to other    11          - (48,977,961) 48,977,961           -           -
reserve                                                                           
                                                                                  
Dividends paid to                -            -          - (2,903,718) (2,903,718)
Shareholders                                                                      
                                                                                  
Balance at 31 March 2008         -            - 97,702,636 (9,119,189)  88,583,447

For the period from 8 November 2006 to 31 March 2007

Unaudited                    Share        Share      Other Accumulated       Total
                                        Premium                Profits            
                           Capital                 Reserve                        
                                                                                  
                   Notes       GBP          GBP        GBP         GBP         GBP
                                                                                  
Balance at                       -            -          -           -           -
                                                                                  
8 November 2006                                                                   
                                                                                  
Net profit for the               -            -          -   1,709,829  1,709,829
period                                                                            
                                                                                  
Issuance of         11           -  50,000,000          -           -  50,000,000
Ordinary Shares                                                                   
                                                                                  
Costs related to    11           -  (1,275,325)          -           - (1,275,325)
issuance of                                                                       
Ordinary Shares                                                                   
                                                                                  
Transfer to other   11           - (48,724,675) 48,724,675           -           -
reserve                                                                           
                                                                                  
Balance at 31 March 2007         -            - 48,724,675   1,709,829 50,434,504

The accompanying notes form an integral part of the interim financial
statements.

Balance Sheet

As at 31 March 2008

                                    Notes          31 March  30 September      
                                                                     2007      
                                                       2008                   
                                                                               
                                                        GBP          GBP      
                                                                               
Assets                                                                         
                                                                               
Non-current assets                                                             
                                                                               
Investments at fair value through     6         184,115,993  104,367,052      
profit or loss                                                                 
                                                                               
Current assets                                                                 
                                                                               
Derivative financial assets -         7           1,917,317      971,825      
unrealised gain on forward                                                     
exchange contracts                                                             
                                                                               
Receivable for securities sold                      585,088            -      
                                                                               
                                                  2,502,405      971,825      
                                                                               
Total assets                                    186,618,398  105,338,877      
                                                                               
Equity and liabilities                                                         
                                                                               
Equity                                                                         
                                                                               
Share capital                        10                    -            -      
                                                                               
Share premium account                11                    -            -      
                                                                               
Other reserve                        11          97,702,636    48,724,675      
                                                                               
Accumulated profits                              (9,119,189)      777,280      
                                                                               
                                                 88,583,447    49,501,955      
                                                                               
Current liabilities                                                            
                                                                               
Interest-bearing borrowings           8          96,334,579    53,751,884      
                                                                               
Payable for securities purchased                    823,183     1,586,660      
                                                                               
Other liabilities                     9             877,189       498,378      
                                                                               
Total liabilities                                98,034,951    55,836,922      
                                                                               
Total equity and liabilities                    186,618,398   105,338,877      
                                                                               
Net Asset Value per Share                             90.94p       99.00p      

The accompanying notes form an integral part of the interim financial
statements.

These financial statements were approved by the Board of Directors on 26 June
2008.

Signed on behalf of the Board of Directors by:

Director Director

Jonathan Gamble Trevor Ash

Cash Flow Statement

For the period from 1 October 2007 to 31 March 2008

                                         Notes   Period from 1     Period from
                                                  October 2007                 
                                                                8 November 2006
                                                   to 31 March               to
                                                          2008                 
                                                                 31 March 2007
                                                                               
                                                                     Unaudited
                                                                               
                                                           GBP             GBP
                                                                               
Net cash outflow from operating          12       (86,550,698)     (98,713,879)
activities                                                                     
                                                                               
Financing activities                                                           
                                                                               
Proceeds from issuance of Ordinary       11         50,000,000       50,000,000
Shares                                                                         
                                                                               
Costs related to issuance of Ordinary    11        (1,022,039)      (1,275,325)
Shares                                                                         
                                                                               
Interest expense paid                              (2,106,240)        (516,228)
                                                                               
Increase in interest-bearing borrowings             42,582,695      50,505,432
                                                                               
Dividends paid to shareholders                     (2,903,718)               -
                                                                               
Cash inflows from financing activities              86,550,698       98,713,879
                                                                               
Net increase in cash                                        -               -
                                                                               
Reconciliation of net cash flow to                                             
movement in net cash                                                           
                                                                               
Net increase in cash and cash                               -               -
equivalents                                                                    
                                                                               
Cash and cash equivalents at start of                       -               -
period                                                                         
                                                                               
Cash and cash equivalents at end of                         -               -
period                                                                         

The accompanying notes form an integral part of the interim financial
statements.

Notes to the interim financial statements for the period from 1 October 2007 to
31 March 2008

1. General information

CQS Rig Finance Fund Limited (the "Company") was registered on 8 November 2006
with registered number 45805 and is domiciled and incorporated in Guernsey,
Channel Islands. The Company is a closed-ended investment company with limited
liability formed under The Companies (Guernsey) Law, 1994 (the "Companies Law")
and its Ordinary Shares are traded on AIM and listed on CISX.

The Company's investment objective is to provide Shareholders with an
attractive total return, primarily through income, with scope for capital
appreciation. The Company will target, in the absence of unforeseen
circumstances, an annualised gross dividend yield of 8 per cent. per annum of
the Net Asset Value of the Company.

The Investment Adviser will seek to achieve the investment objective of the
Company by sourcing and trading a portfolio of secured debt instruments using
fundamental credit and industry analysis to identify instruments with an
attractive risk-adjusted yield. Such debt instruments are expected to be
primarily issued to finance the construction, modification and/or refurbishment
of rigs and other infrastructure and/or equipment used for the exploration of
oil and natural gas.

The Company will seek, on a global basis, to capture on its investments
attractive risk-adjusted yields and potential capital appreciation arising from
possible corporate activity, including but not limited to, refinancing and
industry consolidation. Returns are expected to be enhanced through gearing the
portfolio by up to 100 per cent although gearing up to 150 per cent. is
permitted.

The Company has no direct employees. For its services, the Investment Manager
receives a monthly management fee and may also be entitled to a
performance-related fee. The Company has no ownership interest in the
Investment Manager. The Company is administered by Kleinwort Benson (Channel
Islands) Fund Services Limited (the "Administrator").

2. Significant accounting policies

Statement of compliance

The financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), which comprise standards
and interpretations approved by the International Accounting Standards Board
("the IASB"), and International Accounting Standards and Standing
Interpretations Committee interpretations approved by the International
Accounting Standards Committee ("IASC") that remain in effect, together with
applicable legal and regulatory requirements of Guernsey Law and the Listing
Rules of the AIM market of the London Stock Exchange and the Channel Islands
Stock Exchange.

Basis of preparation

The financial statements of the Company are prepared on a historical cost or
amortised cost basis except that the following assets and liabilities are
stated at their fair value: derivative financial instruments, financial
instruments held for trading and financial instruments designated as fair value
through profit or loss upon initial recognition.

The same accounting policies, presentation and methods of computation are
followed in these interim financial statements as were applied in the
preparation of the Company's financial statements for the period ended 30
September 2007

The principal accounting policies are set out below. The preparation of
financial statements in conformity with IFRS requires the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. These financial statements are presented in GBP. The
functional currency of the Company is also considered to be GBP because that is
the currency of the primary economic environment in which the Company has
raised capital.

Standards, amendments and interpretations in issue but not yet effective

The IASB have issued the following standards applicable to the company with an
effective date after the date of these financial statements.

  * IAS 1 (revised) Presentation of Financial Statements
   
Comprehensive revision including requiring a statement of comprehensive income
- effective 1 January 2009

  * IAS 1 (revised) Presentation of Financial Statements & IAS 32 (revised)
    Financial Instruments: Disclosure
   
Amendments relating to disclosure of puttable instruments and obligations
arising on liquidation Comprehensive revision including requiring a statement
of comprehensive income - effective 1 January 2009

  * IAS 23 Borrowing Costs
   
Comprehensive revision to prohibit immediate expensing - effective 1 January
2009

  * IFRS 8 Operating Segments
   
Additional disclosures on operating segments - effective 1 January 2009

The Directors have not as of yet concluded to early adopt the above standards,
however is anticipated that these will not have any impact on the financial
position or the financial performance of the company.

Financial Assets

Financial assets are classified as at fair value through profit or loss and are
stated at fair value, with any resultant gain or loss being recognised in the
income statement. A financial asset is classified at fair value if it is held
for trading or is designated as such upon initial recognition. Where these
investments are interest-bearing, interest calculated using the effective
interest method is recognised in the income statement.

Financial assets classified as at fair value through profit or loss are
recognised/derecognised by the Company on the date it commits to purchase/sell
the investments in regular way trades. Financial assets held for trading
include derivatives including forwards and currency futures. Transaction costs
incurred in the purchase or sale of financial assets are expensed immediately.

Cash and cash equivalents

Cash and cash equivalents comprises balances and bank overdrafts held with the
Prime Broker with original maturities of three months or less.

Derivative financial instruments

Derivative financial instruments used by the Company to hedge its exposure to
foreign exchange and interest rate risks arising from operational, financing
and investment activities that do not qualify for hedge accounting are
accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value.
Subsequent to initial recognition, derivative financial instruments are stated
at fair value. The gain or loss on remeasurement to fair value is recognised
immediately in the income statement.

Forward exchange contracts

Fair value of forward exchange contracts is their quoted market price at the
balance sheet date being the present value of the quoted forward price. The
change in value is recorded in net gains/(losses) in the income statement.
Realised gains and losses are recognised on the maturity of a contract, or when
a contract is closed out and they are transferred to realised gains or losses,
and are recorded in the income statement.

Fair value

All financial assets carried at fair value are initially recognised at fair
value and subsequently re-measured at fair value based on either quoted bid
prices or bid prices provided by a third party broker. If quoted bid prices are
unavailable, the fair value of the financial asset is estimated using pricing
models incorporating discounted cash flow techniques. These pricing models
apply assumptions regarding asset-specific factors and economic conditions
generally, including delinquency rates, prepayment rates, default rates,
maturity profiles, interest rates and other factors that may be relevant to
each financial asset. Where such pricing models are used, inputs are based on
market related measures at the balance sheet date. No such models were used in
deriving fair value of financial assets within these interim financial
statements.

Derecognition of a financial asset

A financial asset or liability is derecognised when the contract that gives
rise to it is settled, sold, cancelled or expires.

Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction from the transaction currency to the
functional currency. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are translated to GBP at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on
translation are recognised in the income statement. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate at the date of transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are stated at
fair value are translated to GBP at foreign exchange rates ruling at the dates
the fair value was determined.

Provisions

A provision is recognised in the balance sheet when the Company has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the
obligation, and the obligation can be reliably measured. If the effect is
material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the liability.

Transaction expenses

The preliminary expenses of the Company directly attributable to its public
offerings are charged to the Statement of Changes in Shareholders Equity.

Interest income

Interest income is accrued based on the outstanding principal amount of the
Company's financial assets and their contractual terms. Premiums and discounts
associated with the purchase of financial assets are amortised or accreted into
interest income over the projected lives of the investments using the effective
interest method as defined under International Accounting Standard 39.

Taxation

The Company is a tax-exempt Guernsey limited company under the Income Tax
(Exempt Bodies) (Guernsey) Ordinance, 1989 and as such incurs a flat fee
(presently £600 per annum). Accordingly, no provision for income taxes is made.

Other receivables

Other receivables do not carry any interest and are short-term in nature and
are accordingly stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of
the contractual arrangements entered into. An equity instrument is any contract
that evidences a residual interest in the assets of the Company after deducting
all of its liabilities. Financial liabilities and equity are recorded at the
proceeds received, net of issue costs.

Other accruals and payables

Other accruals and payables are not interest-bearing and are stated at their
fair value.

Business and geographical segments

The Directors are of the opinion that the Company is engaged in a single
segment of business of investing in debt securities primarily issued to finance
the construction, modification and/or refurbishment of rigs and other
infrastructure equipment used for the offshore exploration and production of
oil and natural gas. Whilst investments are denominated in both US$ and
Norwegian Krone, the similarity of economic and political conditions relating
to entities operating in the global energy market lead the directors to
determine that the Company operates in a single geographical segment and
therefore no segmental information is provided. An analysis of the investment
portfolio by currency is given in note 14.

Finance costs

Finance costs arise from overdraft facilities held by the Company. These costs
are recognised in the income statement on an accruals basis.

Going concern

The Directors believe it is appropriate to adopt the going concern basis in
preparing the financial statements as, after due consideration, the Directors
consider that the Company has adequate resources to continue in operational
existence for the foreseeable future.

3. Operating (loss)/income

                                                   Period from     Period from 
                                                                               
                                                     1 October 8 November 2006 
                                                                            to 
                                                       2007 to                 
                                                                      31 March 
                                                      31 March                 
                                                                          2007 
                                                          2008                 
                                                                     Unaudited 
                                                                               
                                                           GBP             GBP 
                                                                               
Interest income from investments at fair value       8,116,405       2,312,710
through profit or loss                                                         
                                                                               
Net realised foreign exchange losses               (6,785,725)      (1,053,724)
                                                                               
Net realised gains on investments at fair              476,281          92,652
value through profit or loss                                                   
                                                                               
Net unrealised (losses)/gains on investments at    (2,890,760)       1,042,523
fair value through profit or loss                                              
                                                                               
Net unrealised gain on forward contracts               945,492         257,832
                                                                               
Net unrealised foreign exchange (losses)/gains      (3,735,532)         25,182
                                                                               
Total operating (loss)/income                       (3,873,839)      2,677,175

4. Other operating expenses

                                                    Period from     Period from
                                                                               
                                                 1 October 2007 8 November 2006
                                                                    to 31 March
                                                    to 31 March            2007
                                                           2008                
                                                                      Unaudited
                                                                               
                                                            GBP             GBP
                                                                               
Investment management and administration fees                                  
                                                                               
Investment management and performance fee (Note         648,346         367,160
13)                                                                            
                                                                               
Administration fee (Note 13)                             65,250          33,795
                                                                               
                                                        713,596         400,955
                                                                               
Other operating expenses                                                       
                                                                               
Audit and accounting fees                                27,706           5,643
                                                                               
Directors' fees                                          59,350          28,558
                                                                               
Other expenses                                           54,430          15,962
                                                                               
                                                        141,486          50,163
                                                                               
Total other operating expenses                          855,082         451,118

5. (Loss)/earnings per ordinary share

                                                    Period from     Period from
                                                                               
                                                 1 October 2007 8 November 2006
                                                             to     to 31 March
                                                                           2007
                                                  31 March 2008                
                                                                      Unaudited
                                                                               
                                                            GBP             GBP
                                                                               
The calculation of the basic and diluted                                       
earnings per share is based on the following                                   
data:                                                                          
                                                                               
Earnings for the purposes of basic earnings per     (6,992,751)       1,709,829
share being net profit attributable to equity                                  
holders                                                                        
                                                                               
Weighted average number of Ordinary Shares for      66,833,750       50,000,000
the purposes of basic earnings per share                                       
                                                                               
Effect of dilutive potential Ordinary Shares:                 -               -
                                                                               
Weighted average number of Ordinary Shares for      66,833,750       50,000,000
the purposes of diluted earnings per share                                     

6. Investments at fair value through profit and loss

                                                31 March           30 September
                                                2008                       2007
                                                                               
                                                         GBP                GBP
                                                                               
Cost of investments at start of period          105,473,467                 -
                                                                               
Purchase of investments                         110,882,932        130,469,558
                                                                               
Sales proceeds on disposal of investments       (28,719,512)       (25,328,052)
                                                                               
Realised gains on sale of investments                476,281           331,961
                                                                               
Cost of investments at end of period             188,113,168       105,473,467
                                                                               
Unrealised loss on investments                   (3,997,175)        (1,106,415)
                                                                               
Investments at fair value through profit or      184,115,993       104,367,052
loss at end of period                                                          

The performance of the Company's portfolio was impacted by the Viking Drilling
ASA announcement on 26 February 2008 relating to its intention to file for
Chapter 11 bankruptcy protection in the US. The Company's interest in
instruments issued by Viking Drilling ASA on 27 February comprised a 1st lien
security bond and a 2nd lien security bond. The Company subsequently announced
the recovery of about 94% of the par value of the 2nd lien security bond. The
1st lien security bonds which as at 31 March 2008 had a quoted market price of
40% of par value has recovered significantly to approximately 60% of par value
at the 12 May 2008 estimated net asset value announcement. On 6 May 2008 Viking
Drilling ASA announced that it had decided to proceed with the sale of rigs and
related equipment, as its board of directors believed the likelihood of
obtaining acceptable prices were favourable due to high oil prices and high
activity in the rig market.

Included in interest receivable is a coupon due from Thule Drilling ("Thule").
A coupon of $192,000 due on 14 March 2008 from Thule Drilling ("Thule") is past
due. Thule had announced they had entered into a sale agreement for Thule
Power, however no funds have been received by Thule for this sale.

 7. Derivative financial assets
   
The following was an open forward foreign exchange contract as at 31 March
2008:

Currency      Currency  Currency        Currency Settlement     Unrealised Gain
                                                                               
Sold       Amount Sold   Bought    Amount Bought    Date                    GBP
                                                                               
USD        196,989,780     GBP       101,400,000 22-April-08          1,917,317

The following was an open forward foreign exchange contract as at 30 September
2007:

Currency      Currency  Currency        Currency Settlement     Unrealised Gain
                                                                               
Sold       Amount Sold   Bought    Amount Bought    Date                    GBP
                                                                               
USD         98,967,960     GBP        49,400,000  21-Dec-07             971,825

 8. Interest-bearing borrowings
   
                        Effective     Maturity   31 March 2008     30 September
                             rate                                          2007
                                                                               
                                                           GBP              GBP
                                                                               
Bank overdrafts     LIBOR + 0.30%     30 March    (96,334,579)     (53,751,884)
                                          2009                                 

The Company borrows money from the Prime Broker by way of overdrafts. The Prime
Broker guarantees the Credit Facility on a rolling 364 day basis. The Company's
investments are held with the Prime Broker and 100% of these are used as
security for these overdrafts. If the value of the investments decline
additional collateral may be required to be provided. As at 31 March 2008, the
undrawn amount of the overdraft facility was GBP 18,986,642 (30 September 2007:
GBP 7,422,566.)

9. Other liabilities

                                               31 March 2008  30 September 2007
                                                                               
                                                            GBP             GBP
                                                                               
Due to related parties - Investment Manager             360,588         191,093
(Note 13)                                                                      
                                                                               
Interest payable                                        409,123         251,533
                                                                               
Accrued expenses                                        107,478          55,752
                                                                               
                                                        877,189         498,378

Other liabilities principally comprise amounts outstanding in respect of
ongoing costs. The Directors consider the carrying amount of other liabilities
approximates to their fair value.

Terms and conditions of the above other liabilities:

  * For terms and conditions relating to related parties, refer to Note 13.
   
  * Accrued expenses are non-interest bearing and have an average term of 3
    months.
   
10. Share capital

On 1 October 2007, the Board of Directors announced that in light of continuing
attractive investment opportunities in the "offshore oil and gas exploration
and production infrastructure sector" and demand from both existing
shareholders and potential new investors, it was considering proposals for a
further issue of equity securities to raise up to £50 million.

As a consequence, the Board decided to expand the Company through a placing of
C Shares at 100p per share.

On 18 October 2007, the Company published an admission document in connection
with the Placing. An EGM of the Company was convened on 5 November 2007 in
order to obtain the necessary approval of Shareholders to implement the
proposed Placing by adopting a new set of articles of association and also to
seek authority from Shareholders to approve the cancellation of the amount
standing to the credit of its share premium account immediately following
Admission of the C Shares, in order to increase the distributable reserves
available to it for such purposes.

As a result of the placing, 50 million C Shares were admitted to trading on AIM
and listed on the CISX, and dealings on AIM, commenced on 13 November 2007. Per
the admission document the net proceeds were accounted for and managed as a
separate pool of assets until conversion into ordinary shares, ranking pari
passu with the existing securities, once substantially invested in accordance
with the Company's existing investment objective.

On 17 December 2007, the Board announced that the Calculation Time for the
conversion of the C shares into Ordinary Shares would be 31 December 2007.
Further to this, on 10 January 2008, the Board announced the Conversion Time
would be the close of business on 14 January 2008 and that the Conversion Ratio
of the C Shares was 0.9482 Ordinary Shares for every one C share, based on the
following net asset values:

                          Net Asset Value
                                         
Ordinary Shares                   103.14p
                                         
C Shares                            97.8p

Following conversion 97.41 million Ordinary Shares are in issue

Authorised share capital                            31 March 2008     31 March
                                                                          2008
                                                                              
                                                        Number of          GBP
                                                         Ordinary             
                                                           Shares             
                                                                              
Ordinary shares of no par value each                    Unlimited            -

Issued and fully paid                                                         
                                                                              
                                                        Number of          GBP
                                                         Ordinary             
                                                           Shares             
                                                                              
Balance at start of period                             50,000,000            -
                                                                              
Issue of new Ordinary Shares with no par value         47,410,000            -
during the period                                                             
                                                                              
Balance at 31 March 2008                               97,410,000            -

Authorised share capital                          30 September     30 September
                                                          2007             2007
                                                                               
                                                     Number of            GBP  
                                                      Ordinary                 
                                                        Shares                 
                                                                               
Ordinary shares of no par value each                 Unlimited              -  

Issued and fully paid                                                         
                                                                              
                                             Number of Ordinary            GBP
                                                         Shares               
                                                                              
Balance at start of period                                    -              -
                                                                              
Issuance of Ordinary Shares with no par value at              2              -
date of incorporation                                                         
                                                                              
Issue of new Ordinary Shares with no par value       49,999,998              -
                                                                              
Balance at 30 September 2007                         50,000,000              -

11. Share premium account

                                          31 March    30 September     31 March
                                              2008            2007         2007
                                                                               
                                               GBP            GBP         GBP
                                                                               
Balance at start of period                      -              -             
                                                                               
Premium arising from issuance of       50,000,000      50,000,000   50,000,000
Ordinary Shares                                                                
                                                                               
Expenses of issuance of Ordinary       (1,022,039)     (1,275,325)  (1,275,325)
Shares                                                                         
                                                                               
Transfer to other reserve             (48,977,961)    (48,724,675) (48,724,675)
                                                                               
Balance at end of period                        -              -           -

The Ordinary Shares of the Company have no par value. As such, the proceeds
from the issuance of Ordinary Shares represent the premium on the issue of the
Ordinary Shares. In accordance with the accounting policies of the Company and
as allowed by IFRS, the costs of the issuance of Ordinary Shares have been
written off against equity. The issue costs associated with the issuance of
Ordinary Shares amounted to GBP 1,022,039 (2007:GBP 1,275,325).

The Company passed a special resolution cancelling the amount standing to the
credit of its share premium account immediately following its admission to AIM.
In accordance with the Companies Law, the Directors applied to the Royal Court
in Guernsey for an order confirming such cancellation of the share premium
account following admission. The other reserve created on cancellation is
available as distributable profits to be used for all purposes permitted by the
Companies Law, including the buy back of Ordinary Shares and the payment of
dividends.

12. Notes to cash flow statement

                                                  Period from       Period from
                                                                               
                                               1 October 2007   8 November 2006
                                                                             to
                                             to 31 March 2008                  
                                                                  31 March 2007
                                                                               
                                                                      Unaudited
                                                                               
                                                         GBP              GBP
                                                                               
Net (loss)/profit                                 (6,992,751)        1,709,829
                                                                               
Adjustments for:                                                               
                                                                               
Realised gain/(loss) on sale of investments         (476,281)          (92,652)
                                                                               
Net unrealised gain/(loss) on forward               (945,492)         (257,832)
contracts                                                                      
                                                                               
Unrealised (gain)/(loss) on investments            2,890,760        (1,042,523)
                                                                               
Interest income                                   (8,116,405)       (2,312,710)
                                                                               
Interest expense                                   2,263,830           516,228
                                                                               
                                                 (11,376,339)       (1,479,660)
                                                                               
Purchases of investments                        (110,882,932)     (110,936,210)
                                                                               
Sales proceeds on disposal of investments         28,719,512        12,827,995
                                                                               
Interest received                                  8,116,405         2,312,710
                                                                               
                                                 (74,047,015)      (95,795,505)
                                                                               
Increase in receivables                             (585,088)       (1,847,121)
                                                                               
(Decrease)/increase in payables                     (542,256)          408,407
                                                                               
                                                  (1,127,344)       (1,438,714)
                                                                               
Net cash outflow from operating activities       (86,550,698)      (98,713,879)

Purchases and sales of investments are considered to be operating activities of
the Company, given its purpose, rather than investing activities. Cash and cash
equivalents comprises overdraft facilities provided by the Prime Broker.

13. Material agreements and related parties

Investment Manager

The Company is a party to an Investment Management Agreement with the
Investment Manager, dated 8 November 2006, pursuant to which the Company has
appointed the Investment Manager to manage their respective assets on a
day-to-day basis in accordance with their respective investment objectives and
policies, subject to the overall supervision and direction of their respective
Boards of Directors.

The Company pays the Investment Manager a Management Fee and Performance Fee
(see Note 4).

Management Fee

Under the terms of the Investment Management Agreement, the Investment Manager
is entitled to receive from the Company a monthly management fee payable in
arrears as at the last business day of each month that is equal to 0.125 per
cent (equivalent to 1.5 per cent. per annum) of the net asset value of the
Company as at the first business day of the month. Management fees for the
period were GBP648,346 (31 March 2007:GBP212,028) of which GBP360,588 was
outstanding at 31 March 2008 (31 March 2007:GBP212,028).

Performance Fee

The performance fee in respect of each performance period will be an amount
equal to 20 per cent. of the amount, if any, by which the total return for such
performance period exceeds the performance hurdle. For the avoidance of doubt,
the performance fee arrangements are subject to a minimum of zero and will not
result in any repayment of performance fees in respect of previous performance
periods. There was no performance fee for the period (31 March 2007:
GBP155,132).

For these purposes performance period means each period corresponding to each
accounting period of the Company.

Total return means in respect of each performance period the excess, if any,
of:

 i. the Company's net asset value on the last day of such performance period
    plus the aggregate of any capital return and/or dividends payable in
    respect of such performance period, over
   
ii. the Company's net asset value on the first day of such performance period.
   
Administration Fee

Under the terms of the Administration Agreement, the Administrator is entitled
to receive from the Company an administration fee of 0.095 per cent of the net
asset value of the Company with a minimum of US$14,200 per month. In addition,
the Administrator is entitled to an annual company secretarial fee on a time
charge basis with a minimum of US$50,400 per annum.

Prime Broker and Custodian Fee

The prime broker and custodian will receive such fees as may be agreed with the
Company from time to time, reflecting normal commercial rates which may be
based upon a combination of transaction charges and interest costs.

14. Financial Risk Management objectives and policies
   
The Company's objective is to provide shareholders with an attractive total
return, primarily through income distributed as dividends, with the scope for
capital appreciation. The Company seeks to achieve its objective through
investing in a portfolio of securities on a leveraged basis complemented with
appropriate hedges.

The Company's principal financial instruments, other than derivatives, comprise
secured fixed and floating rate debt leveraged using collateralised lending
facilities provided by the Company's Prime Broker. The Company has various
liabilities in addition to the financing cost of the collateralised lending
facilities, including trade payables and expense payables that arise directly
from its operations.

The Company also enters into derivative transactions, primarily exchange-traded
options on interest rate futures and over-the-counter forward currency
contracts to manage the interest rate and currency risks arising from the
Company's operations.

The principal risks to which the Company will be exposed are market risks
including interest rate risk, currency risk and mark-to-market credit risk,
liquidity risk and counterparty credit risk. In certain instances, as described
more fully below, the Company will enter into derivative transactions in order
to seek to mitigate particular types of risk.

Market Risk

The Company's exposure to market risk is comprised mainly of movements in the
market value of its investments and, to the extent that the Company incurs
indebtedness, changes in interest rates that change its cost of borrowings.

Interest Rate Risk

The Company invests in both fixed rate and floating rate corporate debt
securities and finances its investment portfolio using the Company's equity
capital in combination with short-term collateralised borrowings from its Prime
Broker. The Company is exposed to movements in the price of its investments as
a result of changes in the absolute level and the shape of interest rate yield
curves. Increases (or decreases) in interest rates will typically cause a fall
(or rise) in the value of fixed rate debt investments while causing a small
impact on the value of floating rate investments. The sensitivity of each bond
to changes in interest rates is in part a function of the maturity of the bond,
its coupons and any embedded options. Changes in interest rates may also impact
the fundamental creditworthiness of individual issuers and this may in turn
impact the credit spread that is applied in valuing corporate bonds (see Credit
Risk - Mark-to-Market below).

The following table sets out the carrying amount, by maturity of the Company's
financial instruments that are exposed to interest rate risk.

                            Less than                                          
                                3                                              
                                                                               
As at 31 March    On demand  Months   3 to 12      1 to 5   >5 years   Total   
2008                                  months        years                      
                                                                               
                   GBP 000   GBP 000    GBP 000    GBP 000  GBP 000   GBP 000  
                                                                               
Fixed rate debt       -       1,579        -         61,579   14,887    78,045
                                                                               
Floating rate         -       1,929        -         88,770   15,366   106,065
notes                                                                          
                                                                               
Interest-bearing      -         -        (96,335)                  -   (96,335)
borrowings                                                                     

As at 30 September       On Less than    3 to 12    1 to 5 >5 years       Total
2007                                3     Months     years                     
                     demand                                                    
                               Months                                          
                                                                               
                    GBP 000   GBP 000    GBP 000   GBP 000  GBP 000    GBP 000 
                                                                               
Fixed rate debt           -         -          -    39,756   11,240     50,996 
                                                                               
Floating rate             -         -          -    42,081   11,282     53,363 
notes                                                                          
                                                                               
Interest bearing          -         -   (53,752)         -        -   (53,752) 
                                                                               
borrowings -                                                                   
floating                                                                       

Foreign Currency Risk

The Company's accounts are denominated in UK Pound Sterling ("GBP") while
investments are made and realised in other currencies, currently Norwegian
Krone ("NOK") and US Dollars ("USD"). Changes in the rates of exchange may have
an adverse effect on the value, price or income of the investments. A change in
foreign currency exchange rates may adversely impact returns on the Company's
non-GBP denominated investments. The Company's principal non-GBP currency
exposures are expected to remain the USD and NOK, but this may change from time
to time.

The following table sets out the Company's exposure to foreign currency risk.

As at 31 March 2008   Investments at fair      Other assets &               Net
                     value through profit         Liabilities                  
                                  or loss                                      
                                                                               
                                  GBP 000             GBP 000           GBP 000
                                                                               
Norwegian Krone                    48,281            (47,878)              403
                                                                               
US Dollar                         135,835           (139,588)           (3,753)
                                                                               
Total                             184,116           (187,466)           (3,350)

As at 30 September    Investments at fair      Other assets &               Net
2007                 value through profit         Liabilities                  
                                  or loss                                      
                                                                               
                                  GBP 000             GBP 000           GBP 000
                                                                               
Norwegian Krone                    20,463            (20,602)             (139)
                                                                               
US Dollar                          83,904            (83,077)              827
                                                                               
Total                             104,367           (103,679)              688

The Company's current exposure to a five per cent. positive or negative shift
in all exchange rates against GBP is less than GBP 150,000 in absolute terms,
but this may change from time to time and is not subject to explicit limits.

Credit Risk (Mark-to-Market)

The Company is subject to credit risk with respect to its investments.

The Company is exposed to movements in the price of its investments as a result
of changes in the absolute level and the shape of issuer credit spread curves.
Increases (or decreases) in credit spreads will typically cause a fall (or
rise) in the value of corporate debt investments. The sensitivity of each bond
to changes in credit spreads is in part a function of the maturity of the bond,
its coupons and any embedded options.

The credit spreads of individual bonds and issuers change frequently as the
market re-prices the fundamental creditworthiness of individual issuers under
prevailing or anticipated economic, political and commercial conditions. These
assessments may also lead to relative re-pricing of different parts of issuers
capital structures, re-assessment of individual issuers probability of default
or undergoing a corporate event together with the markets changing expectation
of loss given default.

The Company is also exposed to the risk of losses resulting from credit events
impacting individual issuers including, but not limited to corporate
restructuring and default. In these circumstances, the Company may be exposed
to a material loss that will in part be driven by the market price of recovery
for each part of the defaulting issuer's capital structure or the final
recovery value achieved in the event that the Company continues to hold the
security until repaid in full or in part following insolvency proceedings. The
maximum loss that the Company may suffer from an individual issuer default or
credit restructuring is the fair value of all investments in such issuer.

The Company is able to invest in debt securities that have not been rated by
credit rating agencies and all current investments are unrated. The Company
anticipates that all of its future investments will continue to be made in
unrated securities. Unrated investments are speculative and may exhibit higher
default rates than typically occur in rated investments. The volatility of
credit spreads of unrated debt may be significantly higher than that of rated
debt markets.

As at the date of these interim financial statements, there are no assets that
are past due or impaired other than those stated in Note 6.

Market Risk Management

The Investment Adviser analyses the price behaviour of its fixed income
investments in debt securities and any derivative hedges to assess their
relationship with changes in interest rate yield curves, using both
quantitative models and a subjective assessment of each instruments sensitivity
to changes in absolute levels of interest rates and the shape of individual
currency yield curves.

The Investment Adviser may use interest rate derivatives, including options on
interest rate futures, to seek to manage the risk of movements in interest
rates that the Investment Manager believes may adversely affect the Company's
Net Asset Value.

The Company's policy is to seek to mitigate currency risk by financing assets
in the same underlying currency as the asset itself and seek to hedge any
residual currency risk resulting from profits or losses made on investments or
hedges denominated in a currency other than GBP on a case by case basis. The
Company may also seek to hedge currency risk on a portfolio basis where the
Investment Adviser considers it to be appropriate. The Company may bear a level
of currency risk that could otherwise be hedged where the Investment Adviser
considers that bearing such risks is in the interests of the Company.

The Investment Adviser seeks to mitigate the impact of adverse movements in
credit spreads on the prices of its investments by using its fundamental credit
analysis experience to select a portfolio of credits that it believes will
exhibit a low correlation to credit spread indices and in particular to a
general widening in credit spreads. The portfolio of investments is also
selected to seek to achieve a high recovery level in the event of a default by
any individual issuer. The Investment Adviser seeks to monitor the credit
quality of its investments together with relevant economic, political and
commercial factors to identify adverse changes in the fundamentals impacting
individual investments and will attempt to reduce the Company's exposure to any
such credits prior to material prolonged impairment in their value. The
Investment Adviser seeks to minimise credit risk further, through
diversification achieved across issuers, geographic location of ship yards
responsible for the construction contracts and across the different types of
construction projects on which the bonds are secured.

Market Risk Assessment

The Investment Adviser uses a number of quantitative techniques to assess the
impact of market risks including credit events, changes in interest rates,
credit spreads and recovery values on the Company's investment portfolio and
any hedges. The Investment Adviser uses mathematical models to assist in the
quantifying of the sensitivity of the Company's portfolio of investments and
any hedges to market movements, both at a security and portfolio level. These
quantitative techniques are collectively used as decision support metrics by
the Investment Adviser and assist in the subjective assessment and management
of the Company's portfolio risk.

The Investment Adviser uses Value at Risk analysis ("VaR"), a technique widely
used by financial institutions to quantify, assess and report market risk. VaR
may be defined as a statistical framework that supports the quantifying of
market risk within a portfolio of tradable assets at a specified confidence
interval over a defined holding period. VaR seeks to simulate potential losses
that may impact a portfolio as a result of the interactive behaviour of all
material market prices, spreads, volatilities and rates based on the
historically observed relationships between these markets.

The Investment Adviser uses the RiskMetricsTM Group RiskManager ASP service to
calculate the VaR of the Company's portfolio on a daily basis and has applied
parameters to the model to calculate the predicted worst-case portfolio loss
resulting from market moves at a 99 per cent confidence interval over a ten
business day holding period. The ten business day holding period is the global
regulatory standard holding period per Basel guidelines.

RiskMetricsTM VaR estimates market risk in the portfolio with respect to
changes in credit spreads, interest rates and currencies amongst other
parameters. The RiskMetricsTM model supports a number of different statistical
approaches to quantifying market risk and the Investment Adviser has elected to
use a historical simulation of market movements over a two year period, rolling
one month forward each month.

Not all risks to which the portfolio may be exposed are intended to be captured
by VaR and, in particular, the framework does not seek to capture liquidity
risk, counterparty credit risk or extreme credit events such as an issuer
default. The Investment Adviser complements its RiskMetricsTM VaR analysis with
a number of additional metrics including scenario analysis, risk sensitivity
analysis, liability modelling and stress testing, to provide a comprehensive
assessment of portfolio risk. VaR does not provide any information regarding
the size of losses that may be sustained in the 1 per cent of modelled
instances that can be expected to exceed the VaR.

                                        31 March 2008       30 September 2007  
                                                                               
                                             VaR                   VaR         
                                                                               
                                       (GBP Millions)        (GBP Millions)    
                                                                               
First Lien Secured Debt (inc                1.86                  0.93         
hedges)                                                                        
                                                                               
Second Lien Secured Debt (inc               3.31                  1.38         
hedges)                                                                        
                                                                               
Portfolio diversification across            0.01                 (0.07)        
seniorities                                                                    
                                                                               
Total                                       5.18                  2.24         

                                             VaR                   VaR         
                                                                               
                                       (GBP Millions)        (GBP Millions)    
                                                                               
Fixed Rate Debt (inc hedges)                1.67                  1.01         
                                                                               
Floating Rate Debt (inc hedges)             3.44                  1.25         
                                                                               
Portfolio diversification across            0.07                 (0.02)        
coupon types                                                                   
                                                                               
Total                                       5.18                  2.24         

The VaR of the portfolio has been simulated by submitting mid-market prices to
RiskMetrics pricing models, i.e. the average of the bid and offer prices
observed in the market at year end. The use of mid-market prices deviates from
the bid valuations used elsewhere in the Financial Statements, but is
appropriate in the simulation of VaR as it allows for more accurate calibration
of the pricing models to the fair market value of the individual bonds, an
important precursor to the accurate assessment of the hypothetical profit or
losses resulting from changing market prices, spreads and rates. The time
series of market prices, rates and spreads used by RiskMetrics in performing a
historical simulation of hypothetical portfolio returns are all mid-market
levels and this provides further support for the use of mid-market pricing of
the Fund's portfolio to achieve a consistent calculation of risk.

Portfolio VaR can be simulated across various sub-portfolios within the fund to
reflect the market risk of individual asset pools and provide additional
insights into their relative market risk. These analyses are most applicable to
pools of securities with common risks and two different aggregations are
represented.

The first analysis breaks the portfolio down based on the quality of the
security interest on the underlying collateral of each bond, specifically
breaking the bonds into two categories, each having different expected recovery
levels in the event of an issuer default:

1st Lien - Secured bonds benefiting from a first lien charge on the underlying
construction contract and/or completed oil infrastructure assets. These assets
are repaid ahead of all other securities in the event of a default by the bond
issuer.

2nd Lien - Secured bonds secured by a charge on the underlying construction
contract and/or completed oil infrastructure assets, but where the charge is or
may at a future date be subordinate to a higher level of security that will be
repaid and discharged ahead of any repayments of 2nd lien debt in the event of
a default by the bond issuer.

The second analysis breaks the portfolio down based on the type of coupon paid
by the bond, specifically breaking the bonds into two categories, each having a
different exposure to movements in interest rates:

Fixed Rate Coupon Bearing - Bonds receiving a defined periodic coupon rate that
does not fluctuate with changing market conditions. The price of these bonds is
more sensitive to movements in interest rates than floating rate securities.

Floating Rate Coupon Bearing - Bonds receiving a variable periodic coupon rate
that fluctuates with changing market conditions, most typically re-fixing at
each coupon date based on a defined formula referencing a defined interest rate
benchmark for the currency of denomination of the bond, e.g. the US Dollar
three month Libor (London Interbank Offer Rate) plus a margin to reflect the
risk of the asset. The price of these bonds is less sensitive to movements in
interest rates than fixed rate securities.

VaR is a non-additive risk measure, i.e. the sum of the sub-portfolio VaRs will
rarely equal the total fund VaR as the individual risks quantified within each
pool of assets typically diversify risks within other asset pools. The
diversification value reported reflects the difference between the arithmetic
sum of the sub-portfolio VaRs and the total fund VaR. The diversification
differs between the two aggregations shown as the nature of risk offsets
between the different asset pools is different.

Credit Risk (Counterparty)

The Company is exposed to the risk of loss in the event of the default of
market counterparties with whom it purchases and sells investments and
derivative contracts.

The Company is also exposed to the risk of loss in the event of the default of
market counterparties with whom it has entered into derivative contracts and
foreign currency forward contracts for the purposes of hedging portfolio
exposures.

The Company is exposed to the risk of loss in the event of the default of its
Prime Broker, as the custodian of the Company's assets, as these investments
are held by the Prime Broker as collateral to secure any indebtedness that the
Company may incur. In the event of default of its Prime Broker, the Company
would be at risk of losing up to 100 per cent of its net assets, depending on
the final recovery value achieved by unsecured trade creditors.

Counterparty Credit Risk Assessment and Management

The Investment Adviser seeks to execute all purchase and sale transactions of
investments on a Delivery versus Payment ("DVP") settlement basis through
central clearing counterparties with a Standard & Poor's credit rating in
excess of A-. The use of DVP settlement protocols reduces the risk of loss to
the Company to adverse price movements between the trade date and settlement
date of a transaction. This settlement price risk is materially lower than the
risk associated with either the cash or security leg of a transaction failing
as a result of a counterparty default.

The Investment Adviser seeks to execute the majority of its interest rate
hedging strategies using exchange traded derivatives settled and margined
through a central clearing counterparty with a Standard & Poor's credit rating
in excess of A-.

The Investment Adviser seeks to execute all over the counter derivative
contracts and foreign currency contracts with market counterparties with a
Standard & Poor's credit rating in excess of A- and will seek to transact such
contracts with the Prime Broker, where commercially appropriate, to consolidate
a material proportion of its counterparty risks.

The Investment Adviser operates a policy of borrowing funds on a collateralised
basis only from the Prime Broker, which has a Standard & Poor's credit rating
in excess of A-, to reduce the probability of the Company suffering losses
resulting from the Prime Broker's default.

The Investment Adviser monitors the credit rating of all exchanges, all central
clearing counterparties and its Prime Broker together with the market
assessment of their creditworthiness, as expressed by each entities' credit
spread, where publicly quoted, to ensure compliance with policy.

Liquidity Risk

The market for debt instruments used to finance the construction, modification
and/or refurbishment of offshore oil and natural gas exploration and production
infrastructure, and auxiliary services, is illiquid. Accordingly, many of the
Company's investments are illiquid. As a result of this illiquidity, the
Company's ability to vary its portfolio in a timely fashion and to receive a
fair price in response to changes in economic and other conditions may be
limited.

Furthermore, where the Company acquires investments for which there is not a
readily available market, the Company's ability to deal in any such investment
or obtain reliable information about the value of such investment or risks to
which such investment is exposed may be limited.

The Company uses leverage in the form of borrowings from the Prime Broker on a
collateralised basis, using 100% of its portfolio of investments as security to
assist in achieving its objectives. The Company is exposed to the risk that
leverage may increase the impact of any adverse market price moves on the value
of its investments, and any associated hedges, and may need to dispose of
investments to maintain compliance with the Prime Brokers pre-agreed collateral
requirements under certain market conditions. The disposal of investments in
these circumstances may limit the Company's ability to achieve a fair price on
disposal of these assets.

The table below summarises the maturity profile of the Company's financial
assets and liabilities at 31 March 2008 based on contractual undiscounted
terms.

                          Less than                                           )
                                                                               
As at 31 March         On  3 Months      3 to 12      1 to 5       >5    Total
2008               demand                 months      years   years          
                                                                               
                  GBP 000   GBP 000      GBP 000    GBP 000 GBP 000   GBP 000
                                                                               
Investments at          -        6        3,508    150,349  30,253    184,116
fair value                                                                     
                                                                               
Forward exchange        -    1,917            -          -       -      1,917
contracts                                                                      
                                                                               
Interest-bearing        -        -            -    (96,335)      -    (96,335)
borrowings                                                                     
                                                                               
Trade receivables       -      585            -         -        -        585
                                                                               
Trade payables          -     (823)           -         -        -       (823)
                                                                               
Other liabilities       -     (877)            -        -        -       (877)
                                                                               
                        -      808         3,508     54,014   30,253    88,583

As at 30              On Less than      3 to 12 1 to 5 years      >5      Total
September 2007    demand         3                             years           
                                         Months                                
                            Months                                             
                                                                               
                 GBP 000   GBP 000      GBP 000      GBP 000 GBP 000    GBP 000
                                                                               
Investments at         -        1            4       81,840  22,522    104,367
fair value                                                                     
                                                                               
Forward exchange       -      972            -            -       -        972
contracts                                                                      
                                                                               
Interest bearing       -        -      (53,752)            -       -   (53,752)
borrowings                                                                     
                                                                               
Trade payables         -   (1,587)            -            -       -    (1,587)
                                                                               
Other                  -     (498)            -            -       -      (498)
liabilities                                                                    
                                                                               
                       -   (1,112)     (53,748)       81,840  22,522    49,502

Liquidity Risk Assessment and Management

The Investment Adviser seeks to monitor the liquidity of the Company's
investments qualitatively in the course of its day-to-day business, advising on
the trading of bonds and derivative hedge contracts with market counterparties.
The Investment Adviser seeks to understand the liquidity of the instruments in
which it invests though relative changes in the bid and ask prices quoted by
market counterparties and an assessment of the market depth provided by those
counterparties that make a two-way market in the Company's existing and
prospective investments.

The Investment Adviser seeks to manage the concentration of the Company's
exposure to individual bonds taking account of individual outstanding issue
sizes, total issuer debt outstanding and the aggregate exposure to any given
issuer, amongst other factors.

The Investment Adviser monitors the Company's financial resources to assess its
ability to maintain an appropriately leveraged portfolio in the event of
general market distress and/or a reduction in liquidity offered by market
counterparties to support trading of the Company's portfolio. The Investment
Adviser's assessment of the Company's financial resources in stressed market
conditions includes the impact of estimated adverse changes in the market value
of the Company's investments and any portfolio hedges, together with a widening
in the bid and ask price quotes used in the Prime Broker's collateral margin
process supporting any indebtedness of the Company.

The Investment Adviser seeks to monitor the leverage of the Company based both
on its assessment of risk within the portfolio of investments and against the
permitted gearing constraints described in the Company's Admission Document.

The Company has negotiated committed financing terms with its Prime Broker, as
described in the Company's Admission Document, to assist in maintaining
appropriate portfolio leverage in all reasonable market conditions and to
reduce the probability of needing to prematurely liquidate some, or all, of the
portfolio in the event of adverse market moves.

Capital risk management

The fair value of the Company's financial assets and liabilities approximate
their carrying amounts at the balance sheet date.

The Company's objectives when managing capital are to safeguard the Company's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as total debt divided by the net asset value. Total debt is
calculated as total borrowings (including borrowings and trade and other
payable as shown in the balance sheet). Net asset value is calculated as total
assets (as shown in the balance sheet) less total borrowings.

                                             31 March 2008        30 September
                                                                          2007
                                                                               
Total assets                                   186,618,398         105,338,877
                                                                               
Less: total liabilities                        (98,034,951)        (55,836,922)
                                                                               
Net asset value                                 88,583,447          49,501,955
                                                                               
Gearing ratio                                         111%               113%
                                                                               

15. Dividend policy and proposed dividends

The Company's policy is to pay quarterly dividends to Shareholders. The Company
will target gross dividends of equivalent to an annualised 8 per cent of the
Net Asset Value at the start of each financial year.

A final dividend of ₤975,000 was proposed by the Directors on 5 November 2007
in relation to the period ended 30 September 2007 in the amount of 1.95 per
share. This was paid on 17 December 2007. A first interim dividend of ₤
1,928,718 was proposed by the Directors on 5 February 2008 in relation to the
period ended 31 December 2007 in the amount of 1.98 per share. This was paid on
10 March 2008

                                                                  31 March 2008
                                                                               
                                                                            GBP
                                                                               
Dividends recognised as distributions to equity holders                        
during the period                                                              
                                                                               
Prior period final dividend recognised during the period                975,000
of GBP 1.95p                                                                   
                                                                               
First interim dividend recognised during the period of GBP            1,928,718
1.98p                                                                          
                                                                               
                                                                      2,903,718

The second interim dividend of ₤1,928,718 was proposed by the Directors on 8
May 2008 in relation to the period ended 31 March 2008 in the amount of 1.98
per share. This was paid on 10 June 2008 and has not been included as a
liability in these financial statements.

16. Post Balance Sheet Events

On 2 June 2008 MPU Offshore Lift ASA made an announcement and this resulted in
a significant drop in the quoted price of the instrument of which the Company
held NOK84m notional as at 31 March 2008 (NOK52m held as at 16 June 2008). As
at 16 June 2008, this instrument was priced at 75% based on a quote sourced
from a third party broker having been priced at 103.75% as at 31 March 2008.

17. Foreign exchange rates

The following foreign exchange rates were used as at 31 March 2008

British Pound Sterling                                                   1.0000
                                                                               
Norwegian Krone                                                         10.1133
                                                                               
United States Dollar                                                     1.9830
                                                                               

18. Approval of the financial statements

The financial statements were approved by the Directors on 25 June 2008.

For further information, please contact:

NOMAD and Broker

Arbuthnot Securities Limited

Alastair Moreton

Telephone 020 7012 2138

Company Secretary

Kleinwort Benson (Channel Islands) Fund Services Limited

Telephone (01481) 727111