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CQS Rig Finance Fund Ltd (RIG)

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Tuesday 28 June, 2011

CQS Rig Finance Fund Ltd

Half-yearly report






For release on Tuesday 28 June 2011



                          CQS Rig Finance Fund Limited
                                (the "Company")

         Interim Report and Condensed Financial Statements (Unaudited)


The  Company  announces  its  Interim  Report and Condensed Financial Statements
(Unaudited) for the six months ended 31 March 2011.

A  full copy of  the unaudited half  year report will  today be available on the
Company's website:  www.cqsrigfinance.com and is set out below.



Enquiries:

Hugh Field
Arbuthnot Securities Limited
Telephone 020 7012 2000


Secretary
Kleinwort Benson (Channel Islands) Fund Services Limited
Telephone 01481 7271



CQS RIG FINANCE FUND LIMITED
(Registered Number: 45805)

INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS
ENDED 31 MARCH 2011


Table of Contents
                                                               Page



 Management and Administration                                  1



 Investing Policy                                               2



 Investment Manager's Report                                    4



 Financial Statements



 - Unaudited Condensed Statement of Comprehensive Income        6



 - Unaudited Condensed Statement of Changes in Equity           7



 - Unaudited Condensed Statement of Financial Position          8



 - Unaudited Condensed Statement of Cash Flows                  9



 - Notes to the Unaudited Condensed Financial Statements        10





Management and Administration

Directors                                  Nominated Adviser and Broker
Michael Salter        (Chairman)           Arbuthnot Securities Limited
(UK resident)                              Arbuthnot House
Bruce Appelbaum  (US resident)             20 Ropemaker Street
Trevor Ash             (Guernsey           London EC2Y 9AR
resident)                                  England
Jonathan Gamble   (Guernsey
resident)
Gavin Strachan      (UK resident)



Investment Manager                         Sub-Administrator
CQS Cayman Limited Partnership             State Street Fund Services (Ireland)
PO Box 309GT                               Limited
Ugland House                               78 Sir John Rogerson's Quay
South Church Street                        Dublin 2
George Town                                Ireland
Grand Cayman
Cayman Islands



Prime Broker and Custodian                 Registrar, Transfer Agent & Paying
Credit Suisse Securities (Europe)          Agent
Limited                                    Capita Registrars (Guernsey) Limited
One Cabot Square                           2nd Floor
London E14 4QJ                             No. 1 Le Truchot
England                                    St Peter Port
                                           Guernsey GY1 4AE



Independent Auditor
Ernst & Young LLP
2nd Floor
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey GY1 4AF



Investment Adviser
CQS (UK) LLP
5th Floor
33 Grosvenor Place
London SW1X 7BL
England



Administrator and Company Secretary
Kleinwort Benson (Channel Islands) Fund
Services Limited
Dorey Court
Admiral Park
St Peter Port
Guernsey GY1 3BG



Registered Office
Dorey Court
Admiral Park
St Peter Port
Guernsey GY1 3BG





Investing Policy

The Company's Investing policy in the period under review was as follows:

The  Company's investing  policy 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 of the Net Asset Value of the Company per ordinary
share as at the beginning of the year.


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  Advisor for  the period  ended 31 March  2011 was CQS  (UK) LLP. The
Investment  Advisor  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.

The  Investment Adviser seeks to achieve the  investing policy 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 offshore exploration and production of
oil and natural gas.

The  Company seeks, 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 approximately 100 per cent. although gearing up to 150 per cent is permitted.

The  Company  seeks  to  construct  the  Portfolio  using a range of securities,
derivatives  and  other  agreements  including  but  not limited to positions in
bonds,  floating  rate  securities,  sovereign  bonds,  asset-backed securities,
loans,  repurchase  agreements,  interest  rate  and  credit  default  swaps and
swaptions,  total return swaps, interest rate  futures and options, bond futures
and options, currency swaps, foreign exchange contracts, futures and options and
other options and derivatives.

The   Portfolio  includes  exposure,  either  directly  or  synthetically  using
derivatives,  to  debt  instruments  that  are  secured. Such instruments may be
denominated  in any currency and the Company has the flexibility to trade in any
market  or  instrument  using  various  techniques  to achieve its stated return
objectives.  The  Company  may  trade  both  rated  and unrated debt instruments
although  it expected, in most cases, that such instruments will not be rated by
a  recognised  rating  agency.  The  Company  may also trade listed and unlisted
securities.

Derivatives  may be  used for  hedging or  investment purposes.  The Company may
execute  trades synthetically using  derivatives including, but  not limited to,
total  return swaps  referencing the  secured debt  instruments selected for the
Portfolio.  The Company  may also  retain amounts  in cash, or cash equivalents,
pending reinvestment if this is considered appropriate to the achievement of its
investment objective.

It  is expected  that investments  will often  be held  through to  maturity (or
earlier  redemption/repayment by  the issuer/borrower),  although the Investment
Adviser  may trade investments depending on  the prevailing market conditions at
any  time. The performance of such investment is therefore expected to be driven
primarily by the performance of the assets securing the investments.

The  following  new  Investing  Policy  was  approved by shareholders in General
Meeting and adopted by the Company on 7 April 2011:

The Company's investment objective is to provide Shareholders with an attractive
total return, through a combination of capital appreciation and dividends.

The  Investment Adviser seeks to achieve the investment objective of the Company
by  sourcing and trading a  portfolio comprising predominantly debt instruments.
The Investment Adviser will seek to use fundamental credit and industry analysis
to  identify instruments  expected to  provide attractive  risk-adjusted returns
which  meet  the  investment  objective  of  the  Company.  Such instruments are
expected   to   be  issued  primarily  to  finance  companies  involved  in  the
construction,   modification   and   operation  of  offshore  rigs  and  related
infrastructure   equipment,  and  companies  involved  in  the  development  and
operation  of assets used in the offshore and/or onshore exploration, production
and  distribution  of  oil,  natural  gas  and  other  resources. Investments in
adjacent  sectors such  as shipping  and transportation  may be  included at the
discretion of the Investment Adviser.

It  is  expected  that  the  Portfolio  will  be passively managed, although the
Investment  Adviser may elect to become  actively involved in workout situations
should  they arise. It is expected that some investments will be held through to
maturity (or earlier redemption/repayment by the issuer /borrower), while others
may  be held  for shorter  terms to  capture mispricing  of risk. The Investment
Adviser  may trade investments depending on  the prevailing market conditions at
any time.

The  Company seeks, 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,  industry
consolidation   and  workouts,  and  from  equity  appreciation  for  securities
exhibiting equity characteristics. The Company is permitted to borrow to enhance
the  returns of the Portfolio.  The gearing of the  Portfolio is not expected to
exceed  30% of  Net  Asset  Value,  and  from  time to time the Portfolio may be
constructed  with little or no gearing. The  Company may retain amounts in cash,
or  cash equivalents, pending reinvestment if  this is considered appropriate to
the achievement of its investment objective.

The Company may construct the Portfolio using a range of securities, derivatives
and  other  agreements  including  but  not  limited  to  positions  in secured,
unsecured and subordinated bonds, including convertible bonds, that may be fixed
or  floating  rate  securities,  payment-in-kind  bonds, senior, second lien and
mezzanine  loans, equities and equity warrants. The Company may trade both rated
and  unrated  debt  instruments  although  it  expects, in most cases, that such
instruments  will  not  be  rated  by  a  recognised  rating agency. Exposure to
securities  may be taken directly or synthetically through the use of repurchase
agreements,  total return swaps and other derivatives referencing the securities
selected  for the Portfolio. Interest rate and foreign exchange transactions may
be  effected using swaps,  forwards, futures and  options and other derivatives.
The   Company  may  trade  listed  and  unlisted  securities,  and  may  execute
derivatives transactions on exchange or over the counter.


Investment Manager's Report
For the six months ended 31 March 2011

Energy Markets

West  Texas Intermediate  crude oil  prices gained  33.5% over the  period under
review,  rising from c.USD80 at the end  of September 2010 to USD107 on 31 March
2011.

Research  analysts remained  optimistic about  the outlook  for the  sector. For
example,  in the  February 2011 edition  of its  Global Energy Outlook, Barclays
Capital stated that:

"The  level of global  oil spare capacity  fell in 2010 to  below 5 mb/d, and we
expect  it to finish 2011 lower than 4 mb/d.  Reduced spare capacity in the face
of  surging  demand,  together  with  a  sharp reduction in surplus inventories,
implies  a period of enhanced volatility. Within the broad swings, we expect oil
prices  to follow  an upwards  overall trend  from now  until the  middle of the
current  decade,  with  lower  spare  capacity  over time resulting in a greater
sensitivity to geopolitical trends and demand-side shocks. The supply and demand
balance  for oil remains very constructive  in 2011, with global demand expected
to increase by 2%, led by further strong growth in Chinese oil demand."

Financial Markets

Over  the first  six months  of the  Company's financial  year, major equity and
credit  market indices were volatile,  but generally higher at  the end of March
2011 than they were at the beginning of October 2010. The FTSE 100 Index and S&P
500 Index   rose   6.5% and  16.2% respectively  in  the  period  under  review.
Meanwhile,  credit markets, as measured by the Merrill Lynch European High Yield
Index, rallied by approximately 8%.

A  number of themes  persist that are  generating uncertainty in global markets.
Investors remain torn as optimism over government stimulus measures is offset by
concerns  surrounding the  speed and  effect of  their reduction,  combined with
lingering  fears  about  the  breadth  and  depth of the European sovereign debt
crisis.  We  believe  these  themes  are  likely  to  continue  during  2011 and
escalating unrest in the Middle East is generating further uncertainty.

The Portfolio

The  Company's NAV  per Ordinary  Share rose  steadily over the six-month period
from 27.64 pence at the end of September 2010 to 29.50 pence at the end of March
2011. This  reflected improving financial markets, rising oil prices and greater
stability  in offshore markets  following the spill  at the Macondo  well in the
Gulf of Mexico in April 2010.

The  Company  participated  in  a  number  of  new issues during the period. The
continued activity in the new issue market is encouraging.

As  at  the  end  of  March  2011, the  portfolio was divided into various broad
categories.  Analysed  by  value,  Floating  Production  Storage  and Offloading
vessels  (FPSOs) were the largest single category accounting for some 28% of the
portfolio, drilling rigs accounted for 27%. 18% of the portfolio was invested in
well intervention vessels and 11% in barges and oil service ships. The remainder
of  the portfolio  was spread  over accommodation  vessels, seismic  vessels and
cash.

The  FPSO sector  continued to  recover during  the period  under review  with a
steady  stream of contracts being awarded.  In the Drilling sector, activity was
characterised  by a sharp increase in orders for new sixth generation ultra-deep
drilling  equipment  as  companies  attempted  to  renew their fleets and secure
access  to new high-specification vessels. The bifurcation in day-rates suggests
that  these  vessels  will  be  in  greater  demand  compared  with  their older
counterparts due to increased operational efficiency and safety.

Financing

In  October  2010, the  Company  agreed  extensions  to  its  secured  financing
arrangements ("Secured Facility") with Credit Suisse Securities (Europe) Limited
("CS")  and executed an extension to  its unsecured loan facility ("Subordinated
Facility") with RBC Cees Trustees Limited ("RBC").

On  30 November 2010, the Company  announced that in  line with its objective of
reducing  leverage, it had repaid the  principal and outstanding interest on its
Subordinated  Facility. The Subordinated Facility was repaid out of the proceeds
of portfolio realisations.

On  14 December 2010 the  Company announced  the repayment  of all cash borrowed
under its Secured Facility to CS.

Although  the Company continues  to operate a  Prime Brokerage Agreement with CS
that  allows the Company to  borrow in one or  more currencies against assets of
the  Company,  as  at  the  31 March  2011, the  Company has net surplus cash of
GBP2.2m.

Outlook

Markets  appear to have regained  some footing, although we  are cautious on the
medium-term  outlook due to  continued macroeconomic risks  which include fiscal
deficits and geopolitical unrest in the Middle East and North Africa region.

We  are, however,  encouraged by  the level  of oil  prices and  expectations of
future  demand for energy which supports  exploration and production spending by
the  oil  majors  and  national  oil  companies.  This feeds down into increased
contract  activity and demand for  energy infrastructure. Furthermore, continued
pressure  on financial institutions to de-lever  their balance sheets means that
companies  still need to make use of  the bond markets to secure their financing
requirements. This should provide further opportunities going forward.

Final Dividend and New Investment Objective and Investing Policy

In  March 2011, the Company proposed a final  dividend of one pence per ordinary
share  in respect  of the  year ended  30 September 2010 and  announced proposed
changes  to the  Investment Objective  and Investing  Policy for  the Company to
reflect the current and expected market environment and opportunities. The final
dividend  and changes  were ratified  at the  Company's AGM on 7 April 2011. The
final  dividend was paid on 11 May 2011 and the text of the new Investing Policy
is as detailed in Note 1.


CQS Cayman Limited Partnership
Date: June 2011

All  data sourced from Kleinwort Benson (Channel Islands) Fund Services Limited,
Bloomberg and Barclays Global Energy Outlook



Unaudited Condensed Statement of Comprehensive Income
For the six months ended 31 March 2011

                                             Six months ended   Six months ended
                                                  31 March 2011    31 March 2010

                                                            GBP              GBP

                                       Notes          Unaudited        Unaudited



Operating income                         9            2,430,318       15,761,568
                                            ------------------------------------


Operating expenses

Other operating expenses                10            (382,332)        (379,963)

Finance costs                                         (240,582)      (1,211,045)
                                            ------------------------------------
Total operating expenses                              (622,914)      (1,591,008)


                                            ------------------------------------
Net profit                                            1,807,404       14,170,560




                                            ------------------------------------
Total comprehensive profit for the
period                                                1,807,404       14,170,560





Profit per Ordinary Share                7

Basic and Diluted                                         1.86p           14.55p


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 unaudited condensed
financial statements.


Unaudited Condensed Statement of Changes in Equity
For the six months ended 31 March 2011

                                     Other Reserve Accumulated Losses      Total

                                               GBP                GBP        GBP

                                         Unaudited          Unaudited  Unaudited



Balance at 1 October 2010               90,982,384       (64,056,784) 26,925,600



Total comprehensive profit for the
period                                           -          1,807,404  1,807,404


                                    --------------------------------------------
Balance at 31 March 2011                90,982,384       (62,249,380) 28,733,004




 For the six months ended 31 March 2010

                                     Other Reserve Accumulated Losses      Total

                                               GBP                GBP        GBP

                                         Unaudited          Unaudited  Unaudited



Balance at 1 October 2009               90,982,384       (80,448,048) 10,534,336



Total comprehensive profit for the
period                                           -         14,170,560 14,170,560


                                    --------------------------------------------
Balance at 31 March 2010                90,982,384       (66,277,488) 24,704,896


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


Unaudited Condensed Statement of Financial Position
As at 31 March 2011

                                   31 March 2011 30 September 2010 31 March 2010

               Notes                         GBP               GBP           GBP

Assets                                 Unaudited           Audited     Unaudited



Non-current assets

Investments at fair value
through profit or loss          4     19,935,402        29,689,306   *45,599,515
                                  ----------------------------------------------


Current assets

Investments at fair value       4
through profit or loss                 7,085,894         9,165,053    *7,552,139

Cash and cash equivalents       11     2,207,649                 -            *-

Interest receivable                            -                 -         2,676

Other assets                              91,015            33,512        40,053
                                  ----------------------------------------------
                                       9,384,558         9,198,565     7,594,868
                                  ----------------------------------------------


Total assets                          29,319,960        38,887,871    53,194,383



Equity and liabilities



Equity

  * Other reserve                     90,982,384        90,982,384    90,982,384

  * Accumulated losses              (62,249,380)      (64,056,784)  (66,277,488)
                                  ----------------------------------------------
  *                                   28,733,004        26,925,600    24,704,896
                                  ----------------------------------------------
Current liabilities

Financial liabilities at fair
value through profit or loss-
forward foreign exchange
contracts                                223,546                 -             -

Interest-bearing borrowings     8              -         5,015,056   *22,376,431

Short term borrowings           8              -         3,807,588     3,955,434

Payable for securities
purchased                                138,531           321,047             -

Other liabilities and payables  12       224,879         2,818,580     2,157,622
                                  ----------------------------------------------
Total liabilities                        586,956        11,962,271    28,489,487
                                  ----------------------------------------------


Total equity and liabilities          29,319,960        38,887,871    53,194,383



Net Asset Value per Share                 29.50p            27.64p        25.36p


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

* Comparative figures have been restated in line with the most recent audited
financial statements.


Unaudited Condensed Statement of Cash Flows
For the six months ended 31 March 2011


                                                                      Six months

                                                        Six months         ended
                                                             ended
                                                     31 March 2011 31 March 2010

                                               Notes           GBP           GBP

                                                         Unaudited     Unaudited



Net cash inflow from operating activities       14      11,039,574    15,826,311



Financing activities:

Interest expense paid                                    (710,293)   (1,115,068)

Decrease in interest-bearing borrowings                (8,121,632) *(15,687,226)
                                                    ----------------------------
Cash outflow from financing activities                 (8,831,925) *(16,802,294)


                                                    ----------------------------
Net increase / (decrease) in cash                        2,207,649    *(975,983)
                                                    ----------------------------


Reconciliation of net cash flow to movement in net cash:

Net increase / (decrease) in cash and cash
equivalents                                              2,207,649    *(975,983)

Cash and cash equivalents at start of period                     -       975,983
                                                    ----------------------------
Cash and cash equivalents at end of period               2,207,649            *-


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

* Comparative figures have been restated in line with the most recent audited
financial statements.


Notes to the Unaudited Condensed Financial Statements
For the six months ended 31 March 2011

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 an authorised  closed-ended investment company
with  limited liability under The Companies (Guernsey) Law, 2008 (the "Companies
Law") and its Ordinary Shares are traded on AIM, a market operated by the London
Stock Exchange plc and listed on the Channel Island Stock Exchange ("CISX").

In  the period  under review  the Company's  investment objective was to provide
Shareholders  with an  attractive total  return, primarily  through income, with
scope for capital appreciation.

The  Investment Adviser seeks 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.

Subsequent  to the  period end  a new  Investing Policy  was adopted  on 7 April
2011. The  Company's new investment objective is to provide Shareholders with an
attractive  total  return,  through  a  combination  of capital appreciation and
dividends.

The  Investment Adviser  seeks to  achieve the new  investment objective  of the
Company  by  sourcing  and  trading  a  portfolio  comprising predominantly debt
instruments.  The Investment  Adviser will  seek to  use fundamental  credit and
industry  analysis to identify instruments  expected to provide attractive risk-
adjusted  returns which meet  the new investment objective  of the Company. Such
instruments are expected to be issued primarily to finance companies involved in
the  construction,  modification  and  operation  of  offshore  rigs and related
infrastructure   equipment,  and  companies  involved  in  the  development  and
operation  of assets used in the offshore and/or onshore exploration, production
and  distribution  of  oil,  natural  gas  and  other  resources. Investments in
adjacent  sectors such  as shipping  and transportation  may be  included at the
discretion of the Investment Adviser.

The  Company seeks, 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,  industry
consolidation   and  workouts,  and  from  equity  appreciation  for  securities
exhibiting equity characteristics. The Company is permitted to borrow to enhance
the  returns of the Portfolio.  The gearing of the  Portfolio is not expected to
exceed  30% of  Net  Asset  Value,  and  from  time to time the Portfolio may be
constructed  with little or no gearing. The  Company may retain amounts in cash,
or  cash equivalents, pending reinvestment if  this is considered appropriate to
the achievement of its new investment objective.

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

These  condensed interim financial statements for  the six months ended 31 March
2011 have been prepared in accordance with IAS 34, "Interim Financial Reporting"
and   the  Companies  Law  (Guernsey),  2008. The  condensed  interim  financial
statements  do not  include all  the information  and disclosure required in the
annual  financial statements and should be  read in conjunction with the audited
financial  statements of the Company for the year ended 30 September 2010, which
have   been  prepared  in  accordance  with  International  Financial  Reporting
Standards ("IFRS").

The  audited financial statements of the Company for the year ended 30 September
2010 are  available upon request  from the Company's  registered office at Dorey
Court, Admiral Park, St Peter Port, Guernsey GY1 3BG and are also available from
the Company's website.

Basis of preparation

The  condensed interim  financial statements  of the  Company are  prepared on a
historical  cost  or  amortised  cost  basis  as  modified by the revaluation of
financial  assets and financial liabilities held at fair value through profit or
loss.

The  accounting policies  applied by  the Company  in these  condensed unaudited
interim financial statements are consistent with those applied by the Company in
its financial statements as at and for the year ended 30 September 2010.

These   condensed  interim  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.

The accounting policies have been applied consistently by the Company.

Going Concern

The  Company has adequate financial  resources and is well  placed to manage its
business  risks  successfully  to  continue  in  operational  existence  for the
foreseeable future, therefore it is appropriate to prepare the interim financial
statements on a going concern basis.

New standards and interpretation not yet adopted

A  number  of  new  standards,  amendments  to standards and interpretations are
effective  for annual periods beginning after  1 October 2010, and have not been
applied  in preparing these financial statements.  None of these are expected to
have  a significant effect on  the measurement of the  amounts recognised in the
financial statements of the Company.

IFRS  9 "Financial Instruments" issued in November 2009 (IFRS 9(2009)), however,
will change the classification of financial assets. The standard is not expected
to  have an impact  on the measurement  basis of the  financial assets since the
majority  of the Company's  financial assets are  measured at fair value through
profit or loss.

IFRS  9 (2009) deals with classification and measurement of financial assets and
its  requirements represent a significant  change from the existing requirements
in  IAS 39 in  respect of  financial assets.  The standard  contains two primary
measurement categories for financial assets: at amortised cost and fair value. A
financial  asset would  be measured  at amortised  cost if  it is  held within a
business model whose objective is to hold assets in order to collect contractual
cash  flows, and the asset's  contractual terms give rise  on specified dates to
cash  flows that are solely payments of  principal and interest on the principal
outstanding.  All other  financial assets  would be  measured at fair value. The
standard  eliminates  the  existing  IAS  39 categories  of  "held to maturity",
"available for sale" and "loans and receivables".

For  an investment  in an  equity instrument  that is  not held for trading, the
standard  permits  an  irrevocable  election,  on  initial  recognition,  on  an
individual  share-by-share basis,  to present  all fair  value changes  from the
investment  in  other  comprehensive  income.  No  amount  recognised  in  other
comprehensive  income would  ever be  reclassified to  profit or  loss. However,
dividends  on such  investments are  recognised in  profit or  loss, rather than
other  comprehensive income unless they clearly  represent a partial recovery of
the  cost of  the investment.  Investments in  equity instruments  in respect of
which  an  entity  does  not  elect  to  present  fair  value  changes  in other
comprehensive  income would be measured at fair value with changes in fair value
recognised in profit or loss.

The standard requires that derivatives embedded in contracts with a host that is
a  financial asset within the  scope of the standard  are not separated; instead
the  hybrid financial instrument  is assessed in  its entirety as  to whether it
should be measured at amortised cost or fair value.

IFRS  9 is effective for annual periods beginning on or after 1 January 2013 but
is not yet approved by the European Union. Earlier application is permitted. The
Company does not plan to adopt this standard early.

Significant accounting judgements and estimates

The  preparation of  the Company's  financial statements  requires management to
make judgements, estimates and assumptions that affect the amounts recognised in
the  financial  statements.  However,  uncertainty  about  these assumptions and
estimates  could result in outcomes that  could require a material adjustment to
the carrying amount of the asset or liability affected in the future.

(i) Fair value of financial instruments
When  the fair value  of financial assets  and financial liabilities recorded in
the  Statement of Financial Position cannot be derived from active markets, they
are  determined using a variety of valuation  techniques that include the use of
mathematical pricing models incorporating discounted cash flow techniques. These
pricing  models apply assumptions regarding  asset specific factors and economic
conditions  generally,  including  delinquency  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 Statement of Financial  Position date but where this is
not  feasible a degree of judgement is required in establishing fair values. The
judgements  include considerations of liquidity and  model inputs such as credit
risk  (both  own  and  counterparty's),  correlation  and volatility. Changes in
assumptions  about  these  factors  could  affect  the  reported  fair  value of
financial  instruments.  No  such  models  were  used  in deriving fair value of
financial  assets within  these financial  statements. The non-performing assets
have been assigned values in line with market expectations of recoverability.

(ii) Functional currency
The primary objective of the Company is to generate returns in GBP, its capital-
raising  currency. The liquidity of the Company is managed on a day-to-day basis
in  GBP  and  the  Company's  performance  is  evaluated  in GBP. Therefore, the
management considers the GBP as the currency that most faithfully represents the
economic effects of the underlying transactions, events.

3.  Segmental Reporting

IFRS  8 'Operating  Segments'  requires  a  'management  approach',  under which
segment  information is presented  on the same  basis as that  used for internal
reporting  purposes. Operating segments are reported in a manner consistent with
the  internal reporting  used by  the chief  operating decision maker. The chief
operating  decision maker is responsible  for allocating resources and assessing
the performance of the operating segments.

The  Board of Directors is charged with the overall governance of the Company in
accordance  with the Company's Admission Document and the Company's Articles and
Memorandum.  The  Board  has  appointed  CQS  Cayman  Limited Partnership as the
Investment  Manager. The Board  of Directors and  CQS Cayman Limited Partnership
are  considered the Chief Operating Decision  Maker ("CODM") for the purposes of
IFRS 8.

CQS  Cayman Limited Partnership is responsible for decisions in relation to both
asset  allocation, asset  selection and  any investment  adviser delegation. CQS
Cayman  Limited Partnership  has been  given authority  to act  on behalf of the
Company,  including  the  authority  to  purchase  and sell securities and other
investments on behalf of
the  Company  and  to  carry  out  other  actions  as appropriate to give effect
thereto.  Any  changes  to  the  investment  strategy  outside  of the Company's
Admission  Document  must  be  approved  by  the  Board  and  then the Company's
shareholders  in  accordance  with  the  terms  of  the  Admission Document, the
Company's Articles and the AIM rules for Companies. As set out in Note 1 above a
change  to the Company's Investment Objective  and Investing Policy was approved
by the shareholders on 7 April 2011.

The  Company sources and trades in a portfolio of secured debt instruments which
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 operates a single operating
segment  under IFRS  8 with all  investment cash  and investment  holdings being
managed  at a Company level. CQS  Cayman Limited Partnership allocates decisions
based  on a single integrated investment  strategy and the Company's performance
is  evaluated on an  overall basis. Investment  cash is allocated  to CQS Cayman
Limited  Partnership  who  has  discretionary  authority to invest the Company's
assets  and is responsible  for all investment  decisions made on  behalf of the
Company,  subject to the control  and policies of the  Board of Directors of the
Company. CQS Cayman Limited Partnership has appointed an investment adviser, CQS
(UK)  LLP. The  Investment Advisor  is responsible  for the management of and/or
providing  investment advice  on the  Portfolio and  also assists the Investment
Manager  with related ancillary services. The internal reporting provided to CQS
Cayman  Limited  Partnership  for  the  Company's  assets  and  liabilities  and
performance  is  prepared  on  a  consistent  basis  with  the  measurement  and
recognition principles of IFRS. There were no changes in the reportable segments
during the period.

Geographical areas
The  Company is  incorporated in  Guernsey. The  Company invests in secured debt
instruments,  which are  classified as  non-current assets  on the  Statement of
Financial Position and the assets that the debt instruments are secured over are
physically  located either "On location" or in China, Dubai, Korea, West Africa,
Norway, Indonesia, Singapore, Netherlands and USA.

                   Interest income Realised gain/(loss) Non-current assets

                       6 months to          6 months to              As at

                     31 March 2011        31 March 2011      31 March 2011

                               GBP                  GBP                GBP



On location                328,725              188,871         17,174,542

China                   *(325,846)            (613,745)                  -

Dubai                            -                    -            127,265

Korea                            -                    -              2,192

West Africa/Norway         616,138            (512,905)          2,631,403

Singapore                  351,466            1,807,040                  -

USA                        626,937                    -                  -


                  --------------------------------------------------------
Total                    1,597,420              869,261         19,935,402


*The  negative interest income is due to the reversal of a coupon accrued in the
prior financial year which was not received.

                   Interest income Realised gain/(loss) Non-current assets

                        6 month to          6 months to              As at

                     31 March 2010        31 March 2010      31 March 2010

                               GBP                  GBP                GBP



On location                217,009            (723,623)         *8,196,517

China                      109,527              163,222        *14,575,550

Dubai                            -                    -            134,485

Korea                            -          (1,310,988)                  -

West Africa/Norway         309,014                    -          5,623,509

Norway/China               218,939               55,734                  -

Norway                           -              389,841                  -

Indonesia                        -                    -            169,742

Singapore                    4,804            4,772,291        *15,895,169

Netherlands                      -            (191,682)                  -

USA                              -                    -          1,004,543


                  --------------------------------------------------------
Total                      859,293            3,154,795        *45,599,515


*Comparative  figures have  been restated  in line  with the most recent audited
financial statements.

Major customers
The Company regards its shareholders as customers, as it relies on their funding
for  continuing  operations  and  meeting  its  objectives.  The  Company  has a
diversified  shareholder population, however  as at 31 March  2011 there were 3
shareholders  that held more  than 10% of the  shares (30 September 2010: 3) (31
March 2010: 1).

4.  Investments at fair value through profit and loss

                                   31 March 2011 30 September 2010 31 March 2010

                                             GBP               GBP           GBP

                                       Unaudited           Audited     Unaudited



Cost of investments at start of
period                                85,207,322       104,930,681   104,930,681

Purchase of investments                9,401,759        37,126,695    10,763,884

Sales proceeds on disposal of
investments                         (20,769,199)      (65,845,318)  (25,372,055)

Realised gain on sale of
investments                              869,261         8,995,265     3,154,795
                                  ----------------------------------------------
Cost of investments at end of
period                                74,709,143        85,207,323    93,477,305

Unrealised loss on investments      (47,687,847)      (46,352,964)  (40,325,651)
                                  ----------------------------------------------
Investments at fair value through
profit or loss at end of period       27,021,296        38,854,359    53,151,654


 5. Fair value hierarchy

IFRS 7 requires disclosures surrounding the level in the fair value hierarchy in
which fair value measurements are categorised for financial instruments measured
in  the Statement of  Financial Position. This  requires the Company to classify
fair  value  measurements  using  a  fair  value  hierarchy  that  reflects  the
significance of the inputs used in making the measurements.
Financial instruments recognised at fair value were analysed in the 30 September
2010 report between those whose fair value is based on:
  * Quoted  prices  (unadjusted)  in  active  markets  for  identical  assets or
    liabilities (Level 1).
  * Inputs  other than quoted prices included in Level 1 that are observable for
    the  assets  or  liabilities,  either  directly  (as  prices)  or indirectly
    (derived from prices) (Level 2); and
  * Inputs  for the asset or  liability that are not  based on observable market
    data (unobservable inputs) (Level 3).

There  are no significant  transfers between levels  of the fair value hierarchy
from 30 September 2010 to 31 March 2011.

6.  Explanatory note on significant movements during the reporting period

The Company has, during the 6 months ended 31 March 2011, repaid all debts using
cash  received from repayment proceeds of  the Company's previous investments in
debt  issued  by  Skeie  Drilling  &  Production  ASA  ("SKDP") following SKDP's
takeover by Rowan Companies Inc.

7.  Profit/(loss) per ordinary share

                                                     31 March 2011 31 March 2010

                                                               GBP           GBP

                                                         Unaudited     Unaudited



The calculation of the basic and diluted earnings
per share is based on the following data:

Earnings for the purpose of basic earnings per share
being net profit attributable to equity holdings         1,807,404    14,170,560
                                                    ----------------------------
Weighted average number of ordinary shares for the
purpose of basic earnings per share                     97,410,000    97,410,000


8.  Interest-bearing borrowings and short-term borrowings

               Effective                   31 March   30 September 31 March 2010
               rate*           Maturity        2011           2010

                                                GBP            GBP           GBP

                                          Unaudited        Audited     Unaudited



Facilities
borrowings-EUR LIBOR + 2%   21 Oct 2010           -             10            10

Facilities
borrowings-USD LIBOR + 2%   21 Oct 2010           -     25,928,862    25,863,241

Facilities
borrowings-
NOK            LIBOR + 2%   21 Oct 2010           -              -     6,641,783

Deposits-GBP        -                 -           -   (20,143,711)  (10,128,603)

Deposits-NOK        -                 -           -      (770,105)             -
                                       -----------------------------------------
Total Bank overdrafts                             -      5,015,056    22,376,431


*  The effective rate  as at 30 September  2010 was LIBOR +2.00% and at 31 March
2010 it was LIBOR +4.00%.

Short-term borrowings

               Effective                               30 September     31 March
               rate**        Maturity    31 March 2011       2010**       2010**

                                                   GBP          GBP          GBP

                                             Unaudited      Audited    Unaudited

Short-term
borrowings     LIBOR + 3.00% 21 Oct 2010             -    3,807,588    3,955,434


**  The  effective  rate  as  at  30 September  2010 and 31 March 2010 was LIBOR
+3.00%.

In  October  2010, the  Company  agreed  extensions  to  its  secured  financing
arrangements ("Secured Facility") with Credit Suisse Securities (Europe) Limited
("CS")  and executed an extension to  its unsecured loan facility ("Subordinated
Facility") with RBC Cees Trustees Limited ("RBC").

On  30 November 2010, the Company  announced that in  line with its objective of
reducing  leverage, it had repaid the  principal and outstanding interest on its
Subordinated  Facility. The Subordinated Facility was repaid out of the proceeds
of  portfolio  realisations.  On  14 December  2010 the  Company  announced  the
repayment  of all cash  borrowed under its  Secured Facility to  CS. The Company
continues to operate a Prime Brokerage Agreement with CS that allows the Company
to  borrow in one or  more currencies against assets  of the Company. Borrowings
under  this agreement are netted with the cash balances and the net cash balance
is shown in note 11.

9.  Operating income
                                                        Six months    Six months
                                                             ended         ended

                                                     31 March 2011 31 March 2010

                                                               GBP           GBP

                                                         Unaudited     Unaudited



Interest income from investments at fair value
through profit and loss                                  2,405,112       859,293

Realised foreign exchange gain/(loss)                      350,203   (2,282,402)

Realised gains on investments at fair value through
profit and loss                                            869,261     3,154,795

Movement in unrealised (loss)/gain on investments at
fair value through profit and loss                     (1,334,874)    13,427,557

Movement in unrealised loss on forward contracts         (223,546)             -

Movement in unrealised foreign exchange gain               364,162       602,325
                                                    ----------------------------
Total operating income                                   2,430,318    15,761,568


10.  Other operating expenses
                                                      Six months    Six months
                                                           ended         ended

                                                   31 March 2011 31 March 2010

                                                             GBP           GBP

                                              Note     Unaudited     Unaudited

Investment management and administration fees

Investment management and performance fee      15      (204,767)     (127,769)

Administration fees                            15       (60,515)      (60,515)



Other operating expenses

Audit and accounting fees                               (24,932)      (24,932)

Directors' fees                                         (43,631)      (46,760)

Legal fees                                                     -      (60,807)

Other expenses                                          (48,487)      (59,180)
                                                  ----------------------------
Total other operating expenses                         (382,332)     (379,963)



11.  Cash and cash equivalents
                          31 March 2011   30 September 2010   31 March 2010

                                    GBP                 GBP             GBP

                              Unaudited             Audited       Unaudited



 Cash and bank balances       2,207,649                   -               -
                        ----------------------------------------------------
                              2,207,649                   -               -


The cash balances were held at Credit Suisse Securities (Europe) Limited.

12.  Other liabilities and payables
                              Note 31 March 2011 30 September 2010 31 March 2010

                                             GBP               GBP           GBP

                                       Unaudited           Audited     Unaudited



Interest payable                           7,639           490,702       511,366

Secured financing fees
payable                                        -         1,649,955     1,120,706

Due to related parties

Investment management fees     15        103,882           565,508       386,372



Accrued expenses

Audit fees                                 2,341            15,537        20,756

Directors' fees                            9,712            10,275        20,506

Legal fees                                 7,265             7,264        25,000

Other payables                            94,040            79,339        72,916
                                  ----------------------------------------------
Total payables                           224,879         2,818,580     2,157,622



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 15.
  * Accrued  expenses are  non-interest bearing  and have  an average term of 3
    months.


13.  Share capital

Authorised        share
capital                          31 March 2011 30 September 2010   31 March 2010

                                           GBP               GBP             GBP

                            Number of Ordinary         Number of       Number of
                                        Shares   Ordinary Shares Ordinary Shares

                                     Unaudited           Audited       Unaudited



Ordinary  shares  of no
par value each                       Unlimited         Unlimited       Unlimited
                       ---------------------------------------------------------

Issued   and   fully
paid                         31 March 2011     30 September 2010   31 March 2010

                                       GBP                   GBP             GBP

                        Number of Ordinary    Number of Ordinary       Number of
                                    Shares                Shares Ordinary Shares

                                 Unaudited               Audited       Unaudited



Balance  at start of
the period                      97,410,000            97,410,000      97,410,000

Issue     of     new
Ordinary Shares with
no par value                             -                     -               -
                    ------------------------------------------------------------
Balance  at  the end
of the period                   97,410,000            97,410,000      97,410,000

14.  Notes to condensed statement of cash flows
                                                       Six months    Six months
                                                            ended         ended
                                                    31 March 2011 31 March 2010

                                                              GBP           GBP

                                                        Unaudited     Unaudited



Net profit                                              1,807,404    14,170,560

Adjustments for:

- Realised gain on sale of investments                  (869,261)   (3,154,795)

- Movement in unrealised loss on forward contracts        223,546             -

- Movement in unrealised loss/(gain) on investments     1,334,884  (13,427,557)

- Realised foreign exchange (gain)/loss                 (350,203)     2,282,402

- Movement in unrealised foreign exchange gain          (364,162)     (602,325)

- Interest income                                     (1,597,420)     (859,293)

- Interest expense                                        240,582     1,211,045
                                                   ----------------------------
                                                          425,370     (379,963)



Purchases of investments                              (9,584,274)  (10,763,884)

Sales proceeds on disposal of investments              20,769,199    25,369,379

Interest received                                       1,597,420       859,293
                                                   ----------------------------
                                                       12,782,345    15,464,788



(Increase) in receivables                                (57,503)      (25,419)

(Decrease)/Increase in payables                       (2,110,638)       766,905
                                                   ----------------------------
                                                      (2,168,141)       741,486
                                                   ----------------------------
Net cash inflow from operating activities              11,039,574    15,826,311


Purchases  and sales of investments are considered to be operating activities of
the Company, given its purpose, rather than investing activities.

15.  Material agreements and related party transactions

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 its  portfolio of assets on  a day-to-day basis in
accordance  with its investment objectives and  investing policy, subject to the
overall supervision and direction of the Board of Directors.

The  Company pays  the Investment  Manager a  Management Fee and Performance Fee
(see note 10).

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  GBP204,767  (31  March  2010: GBP127,769)  of which GBP103,882 was
outstanding  at  31 March  2011 (30  September 2010: GBP565,508, 31 March 2010:
GBP386,372).

Performance fee
The  performance fee in respect  of each performance year  is an amount equal to
20 per  cent  of  the  amount,  if  any,  by  which  the  total  return for such
performance year 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 ended 31 March 2011 (31
March 2010: GBP Nil).

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

Total return means in respect of each performance year the excess, if any, of:
(i)  the Company's net asset value on the last day of such performance year plus
the  aggregate of any capital return and/or dividends payable in respect of such
performance year, over
(ii) the Company's net asset value on the first day of such performance year.

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 USD14,200 per month. In addition,
the  Administrator is entitled  to an annual  company secretarial fee  on a time
charge  basis with a minimum of USD50,400 per annum. Administration fees for the
period   were  GBP60,515  (31  March  2010: GBP60,515)  of  which  GBP  Nil  was
outstanding  at 31 March  2011 (30 September  2010: GBP Nil,  31 March 2010: GBP
Nil).

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.

Investment by CQS Group Entities
CQS  Group  Entities  held  11,538,836 shares  as at 31 March 2011 (30 September
2010: 12,611,086), (31 March 2010: 12,611,086)

Directors Interests
Mr.  Gavin  Strachan  held  59,482 shares  as  at  31 March  2011. (30 September
2010: 59,482), (31 March 2010: 59,482).
Mr.  Michael  Salter  held  38,964 shares  as  at  31 March  2011. (30 September
2010: 38,964), (31 March 2010: 38,964).
Mr.  Bruce  Appelbaum  held  15,000 shares  as  at  31 March 2011. (30 September
2010: 15,000), (31 March 2010: 15,000).

Loan received from RBC Cees Trustee Limited
The Subordinated Facility had been provided by RBC in its capacity as trustee of
certain  assets for the  benefit of Michael  Hintze, Chief Executive  of CQS who
holds  a majority interest  in CQS Cayman  LP, the Company's Investment Manager,
see Note 8 for further details.

16.  Dividend policy and proposed dividends

There  were no dividends  paid during the  reporting period but  as noted in the
significant  events after the period end (note 19) a dividend was paid after the
period end in respect of the year ended 30 September 2010.

17.  Foreign exchange rates

The following foreign exchange rates were used:

 Currency                   31 March 2011   30 September 2010   31 March 2010



 Norwegian Krone                   8.8612              9.2282          9.0188

 United States Dollar              1.6029              1.5758          1.5175

 Euro                              0.8853              0.8664          1.1235


18.  Significant events during the period

The  Company has during  the six months  ended 31 March 2011 repaid  all debt as
further described in Notes 6 and 8.

19.  Significant events after the period end

A  dividend of 1p per ordinary  share in respect of  the year ended 30 September
2010 was approved at the AGM of the Company on 7 April 2011. A total dividend of
GBP974,100 was paid on 11 May 2011.

A  new investing policy was adopted by  the Company on 7 April 2011. This is set
out in Note 1.

There  were  no  other  significant  events  after  the  period end that require
adjustment  to or disclosure in the condensed interim financial statements other
than the above.

20.  Seasonal or cyclical changes

The Company is not subject to seasonal or cyclical changes.

21.  Comparative period

The  comparative amounts in these condensed interim financial statements are for
the  period ended 31 March  2010 and 30 September 2010. The  investments at fair
value  through profit or loss were  classified as current and non-current assets
and  the cash deposits were offset against the interest - bearing borrowings for
the   period   ended   31 March  2010 so  that  they  are  consistent  with  the
classifications  in the audited financial statements as at 30 September 2010 and
in the unaudited condensed interim financial statements as at 31 March 2011.

22.  Approval of the condensed interim financial statements

The condensed interim financial statements were approved by the Board of
Directors on 27 June 2011.


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