15th Apr 2008 07:01
Rapid Realisations Fund Limited15 April 2008 15 April 2008 Rapid Realisations Fund Limited Final Results Rapid Realisations Fund Limited (the "Company" or "Rapid"), the AIM quotedcompany which seeks to exploit the investment opportunity represented bycompanies in "pre-flotation" and other late stage situations, today announcesits audited results for the period from inception to 31 December 2007 (the"Period"). Financial Highlights • Net Asset Value per share at 31 December 2007 of 98.15p • Cash and cash equivalents as at 31 December 2007 £55.5 million • Profit for the period of £1.2 million Since period end • Net Asset Value per share at 31 March 2008 increased to 103.00p after successfully listing three investments, the most significant being Enegi Oil Plc • Now invested circa £18 million with an excellent pipeline of potential investments Investment Policy The fund manager, Cenkos Fund Managers Limited ("Cenkos") believes that a largenumber of private companies can be successfully prepared for flotation or saleby investing time, financial expertise and capital. In addition Cenkos believesthat current volatility in the stock market (especially AIM) and the strictercontrols being imposed on AIM applicants will reduce market appetite for smallerIPOs in the short term. To the extent that this causes companies to delayseeking a flotation, it increases the number of opportunities for the Company tooffer substantial pre-flotation investment. The Company's investee companies will also typically have one or more of thefollowing attributes: • a requirement to increase the scale of its operations; • a need to replace a retiring owner-manager, or early stage investors; • a need to change strategy and invest to make it an attractive flotation or sale prospect; • a need to make a strategic acquisition or some other transformation to make it an attractive flotation or sale prospect; • a decision to delay flotation because of small cap stock market volatility. Each business in which the Company invests will, in the opinion of Cenkos, becapable of achieving a realisation either through a sale or by listing itsshares on a stock exchange within 6 to 36 months of an investment by theCompany. Investment Highlights During the first five months since inception Rapid has reviewed in excess of 100companies but has been very selective and only made three investments in theperiod under review investing less than £3 million. East Lancashire Coachbuilders Limited (The Darwen Group Limited) EastLancashire Coachbuilders Ltd produces high quality buses, tailored to customers'individual requirements and is acknowledged as a world-class passenger carryingvehicle builder. The company has now been successfully floated on AIM and Rapidhas sold its shareholding. Daily Internet Plc Daily Internet Plc is an SME internet hosting business witha broad suite of products, providing customers with a one-stop shop for all oftheir internet requirements. The company is currently considering furtherinvestment and actively pursuing bolt-on acquisitions. The company has nowlisted on the Plus market. Enegi Oil Plc Enegi is in oil and gas exploration and development with aproduction licence and an interest in an exploration licence in Newfoundland,Canada. The company's aim is to increase production through horizontal drillingand reengineering growing to 5000 boepd by 2009. The company has nowsuccessfully listed on AIM raising £15 million new equity. Since the Period end we have reviewed in excess of 50 companies and have madethe following 5 significant investments, plus a follow on investment in EnegiOil Plc, investing circa £14 million in total. Deep Blue In August 2005, Deep Blue acquired Harry Ramsden's "Locals" whichconsisted of twelve shops. The successful completion of the acquisitiontransformed Deep Blue into one of the sector's largest operators. Deep Blue'sgrowth strategy is based on buying existing businesses and small chains fromowner/managers to build a chain of branded fish and chip shops. Take2studios Take2 founded in 1999, hires out camera and grip equipment andservices to production companies making dramas, features, commercials,promotional videos and corporate in-house shorts. The company also sells filmstock and consumables. The investment is being used to expand the businessstarting with an acquisition of Web Lighting (in liquidation), and itsequipment, for £300,000, followed by a purchase of further £200,000 worth oflighting equipment and rebranding under the Take 2 Lighting brand. The lightingdivision will enable the Company to compete at all levels with their two mainrivals Panavision and Media Film Services. The remaining funds will be spent onexpanding their UK and South African operations. Taylormade Betting Limited Taylormade are a new independent bookmaker. Eachshop offers air-conditioned, live screening of all UK horse races, live footballmatches as well as a multitude of special betting offers. Concept Building Solutions Concept offer insurance claim management services andrepairs as well as private building repair within the household sector. Conceptpioneered a unique service, undertaking all aspects of building repair work forthe client, whilst incorporating a free of charge claims management services.This service is based on relationships with insurers/loss adjusters providing aone-stop shop totally focused on providing a complete, robust and efficienttotal claims management service. The Concept management has built a national network of franchisees and now havemore than 120 local businesses. Concept negotiates directly with the insurancecompany concerned to agree a schedule of repairs and/or reinstatement. The workis then carried out and the franchisee is paid directly by the insurancecompany. Concept is aiming to increase the number of franchisees and the servicesoffered. WDScott Limited WDScott was founded in the early 20th century and operated asthe largest, best-known Australian management consultancy business until it wassold to Coopers and Lybrand in the 1980s. It was later re-launched in 2004 aspart of the RCP Group consultancy service package. In 2007, all the RCP Groupassets were transferred to WDScott Limited which is a specialised performanceimprovement consultancy business with its main operations in the UK andAustralia, and an increasing presence in the US and Eastern Europe. The company's management consists of experienced executives within theconsulting industry who believe they can use the WDScott brand name to build aworld leader in consultancy through both organic growth and targetedacquisitions. Commenting, Peter Tom, Chairman: "I am extremely pleased with the Company's progress to date. During the periodunder review, Rapid made three investments all of which are now traded on alisted exchange with the Enegi flotation being the most significant event andthe Net Asset value per share by 31 March 2008 increased to 103.00p. Moreimportantly, since the period end the Company has made a further six investmentsand there is a strong pipeline of potential investments. In addition there areopportunities to take strategic investments in existing quoted companies. The investment opportunities are increasing as the impact of the credit squeezeand volatile stock markets take effect and the Board is confident that this willprovide the company with an excellent opportunity to deliver on its objectivesand provide good returns for shareholders." Enquiries: Steve CharnockCenkos Fund Managers Limited +44 (0)7770 363 683Fund Manager [email protected] Philip SecrettGrant Thornton Corporate Finance +44 (0) 20 7383 5100Nominated Adviser [email protected] Notes to Editors: Rapid Realisations Fund Limited ("Rapid") is a closed ended investment fundlisted on the AIM market of the London Stock Exchange (AIM). The investmentobjective of the fund is to seek to exploit the investment opportunityrepresented by companies in "pre-IPO" and other late stage situations with aview to arbitraging differences in public and private company valuations. Thefund is managed by Cenkos Fund Managers Limited. Balance SheetAs at 31 December 2007 Notes 31 December 2007 £ Non-current assets Fair value through profit or 2 & 6 3,070,920 loss investments Current assets Other receivables 7 442,968 Cash and cash equivalents 8 55,463,259 55,906,227 Current liabilities Other payables 9 87,144 Net current assets 55,819,083 Total net assets 58,890,003 Equity attributable to equity holders Revenue Reserve 1,212,308 Distributable reserve 10 57,677,695 Total Equity 58,890,003 Net asset value per Ordinary 11 0.9815 Share The accompanying notes form an integral part of these financial statements. Income StatementFor the period 12 July 2007 to 31 December 2007 Notes 12 July 2007 To 31 December 2007 £ Income 2 Bank interest 1,526,039 Commission rebate income 3 27,160 Other investment income 2,783 Movement in net unrealised gain 6 54,872 on fair value through profit or loss investments Total income 1,610,854 Expenses Investment management fee 3 239,099 Administration fee 3 36,571 Custodian fee 3 7,314 Brokers fees and commissions 18,261 Directors' fees and expenses 4 55,675 Auditor's remuneration 16,500 Legal and professional fees 14,759 Other expenses 10,367 Total expenses 398,546 Profit for the period 1,212,308 Earnings per Ordinary Share 5 0.020 The accompanying notes form an integral part of these financial statements. Statement of Changes in EquityFor the period 12 July 2007 to 31 December 2007 Notes 12 July 2007 To 31 December 2007 £ Issue of Ordinary Shares 10 60,000,000 Issue costs on issuance of 2e (2,322,305) Ordinary Shares Transfer out to distributable 10 (57,677,695) reserve - Transfer in to distributable 10 57,677,695 reserve Profit for the period 1,212,308 Balance carried forward 58,890,003 The accompanying notes form an integral part of these financial statements. Statement of Cash FlowsFor the period 12 July 2007 to 31 December 2007 Notes 12 July 2007 To 31 December 2007 £ Operating activities Commission rebates received 27,160 Operating expenses paid (323,738) Purchase of investments (3,016,048) Cash flows used in operating (3,312,626) activities Financing activities Bank interest received 1,098,190 Ordinary Shares issued 60,000,000 Issue costs on issuance of (2,322,305) Ordinary Shares Cash flows from financing 58,775,885 activities Net increase in cash and cash 55,463,259 equivalents Cash and cash equivalents, end 8 55,463,259 Cash and cash equivalents, end of period Cash and cash equivalents comprise the followingbalance sheet amounts:Bank deposits 55,463,259 55,463,259 The accompanying notes form an integral part of these financial statements. Notes to the Financial StatementsFor the period 12 July 2007 to 31 December 2007 1. The Company: The Company is a closed-ended investment company and was registered with limitedliability in Guernsey on 12 July 2007. The Company commenced business on 2August 2007 when the Ordinary Shares of the Company were admitted to trading onAIM. The Company will seek to exploit the investment opportunity represented bycompanies in "pre-IPO" and other late stage situations with a view toarbitraging differences in public and private company valuations. Cenkos FundManagers Limited (the "Investment Manager") believes that a large number ofprivate companies can be successfully prepared for IPO or trade sale byinvesting time, financial expertise and money. In addition the InvestmentManager believes that current volatility in the stock market (especially AIM)and the stricter controls being imposed on AIM applicants will reduce marketappetite for smaller IPOs in the short term. To the extent that this causescompanies to delay seeking a flotation, it increases the number of opportunitiesfor the Company to offer substantial pre-IPO investment. It is the Company's policy to invest in companies that are profitable or closeto profitability. These companies will also typically have one or more of thefollowing attributes: • a requirement to increase the scale of its operations; • a need to replace a retiring owner-manager, or early stage investors; • a need to change strategy and invest to make it an attractive floatation or trade sale prospect; • a need to make a strategic acquisition or some other transformation to make it an attractive floatation or trade sale prospect; and/or • a decision to delay floatation because of small cap stock market volatility. Typically, the funds invested will be used to buy investee companies to meetworking capital requirements and to finance capital expenditure in order to makepossible the expansion of the businesses either by acquisition or throughorganic growth. Each business in which the Company invests will, in the opinionof the Investment Manager, be capable of achieving a realisation either througha sale or by listing of its shares on a stock exchange within 6 to 36 months ofan investment by the Company. 2. Principal Accounting Policies: The following accounting policies have been applied consistently in dealing withitems which are considered material in relation to the Company's financialstatements: (a) Basis of Preparation: The financial statements of the Company have been prepared in accordance withInternational Financial Reporting Standards ("IFRS"), which comprise standardsand interpretations approved by the International Accounting Standards Board ("IASB"), and International Accounting Standards and Standing InterpretationsCommittee interpretations approved by the International Accounting StandardsCommittee ("IASC") that remain in effect. The financial statements of the Company have been prepared under the historicalcost convention modified by the revaluation of investments at fair value throughprofit or loss, and in accordance with IFRS and The Companies (Guernsey) Law,1994. The preparation of financial statements in conformity with IFRS requiresmanagement to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Actual results could differ from suchestimates. (b) Income: Bank interest income is classified as finance income in the Income Statement andis recognised on an accruals basis at the gross amount receivable. Otherinvestment income and commission rebates are included in the financialstatements on an accruals basis. (c) Foreign Currency: (i) Functional and Presentation Currency The Company's investors are mainly from the UK, with the subscriptions andredemptions of the Ordinary Shares denominated in sterling. The primary activityof the Company is to offer UK investors with an attractive return on theirinvestment, primarily through investing in companies which are likely to achievean IPO or a sale within a short term time horizon and through a small number ofinvestment companies that are already listed. The performance of the Company ismeasured and reported to investors in sterling. The Directors consider thesterling as the currency that most faithfully represents the economic effects ofthe underlying transactions, events and conditions. The financial statements arepresented in sterling, which is the Fund's functional and presentation currency. (ii) Transactions and Balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreign exchangegains and losses resulting from the settlement of such transactions and from thetranslation at period-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the Income Statement.Translation differences on non-monetary financial assets and liabilities such asequities at fair value through profit or loss are recognised in the IncomeStatement. (d) Investments: Investments have been designated as fair value through profit or loss inaccordance with IAS 39 (Revised) "Financial Instruments: Recognition andMeasurement". Unquoted investments are valued in accordance with the International PrivateEquity and Venture Capital valuation guidelines. As at 31 December 2007, allunquoted investments were valued at cost as the Directors are of the opinionthat cost currently approximates fair value. Typically investments in unquoted companies are made by way of a package ofinstruments, for example a convertible loan note or outright purchase of shareswhich also has an attached equity interest in the form of a warrant or option ofshares. In these circumstances the Directors are of the opinion that it is notpossible to attribute a fair value to each of the separate components of thetotal investment in that company and therefore the Directors fair value theinvestment package as a whole. All regular way purchases and sales of investments are recognised on trade date- the date on which the Company commits to purchase or sell the investment. Realised and unrealised gains and losses are included in the Income Statement. (e) Placing Expenses: Expenses incurred in the Placing of the Company amounted to £2,322,305. Theamount in full has been written off to the share premium account. (f) Expenses: Expenses are accounted for on an accruals basis. (g) Cash and Cash Equivalents: Cash and cash equivalents are defined as cash in hand, demand deposits andhighly liquid investments readily convertible to known amounts of cash andsubject to insignificant risk of changes in value. For the purposes of theStatement of Cash Flows, cash and cash equivalents consist of cash in hand,deposits in bank. (h) Segmental Reporting: The Directors are of the opinion that the Company is engaged in a single segmentof business, being investment business. 3. Related Parties: The Company is responsible for the continuing fees of the Investment Manager,Administrator, Registrar and the Custodian in accordance with the InvestmentManagement, Administration, Registrar and Custodian Agreements. Investment Management Agreement Pursuant to the provisions of the Investment Management Agreement, theInvestment Manager is entitled to receive an advisory fee during the period at1.0% per annum of the net asset value of the Company, increasing to 2.0% perannum when 50% of the net proceeds of the Placing have been invested. This feeis paid quarterly in advance. During the period ended 31 December 2007 the Investment Manager earnedcommissions from the Company's investment in PDI Production Inc, at 2% of theinvested amount. The investment Manager rebated 50% of this income back to theCompany. This commission rebate is included in the Income Statement. The Investment Manager is also entitled to a performance fee for a relevantaccounting period when the following two tests are met: • If the adjusted closing net asset value (NAV) per Ordinary Share(where the adjusted NAV is the NAV of the Company excluding any liability foraccrued management and performance fees and after adding back any dividendsdeclared or paid during the performance period) exceeds the opening NAV perOrdinary Share by a hurdle rate equivalent to 7.5% per annum (the "Hurdle NAVper Ordinary Share"); and • If the adjusted closing net asset value (NAV) per Ordinary Share ishigher than the highest previously recorded opening NAV per Ordinary Share asreduced by the sum of all dividends and distributions per Ordinary Share(including distributions of capital) since the date such highest opening NAV perOrdinary Share was established (the "High Watermark") Once entitled to a performance fee for a relevant accounting period the fee ispayable, in arrears, by reference to the amount the adjusted closing NAV perOrdinary Share exceeds either (i) the opening NAV per Ordinary Share, (where theadjusted NAV is the NAV of the Company excluding any liability for accruedperformance fees and after adding back any dividends declared or paid during theperformance period), or (ii) where the High Watermark exceeds the Hurdle NAV perOrdinary Share for the relevant accounting period. The performance fee is calculated by taking an amount equal to 20% of the NAVincrease per Ordinary Share in that relevant accounting period, multiplied bythe time weighted average of the total number of Ordinary Shares in issue forthe relevant accounting period. The first performance period begins on Admissionand ends on 31 December 2007. Each subsequent performance period is a period ofone financial year. As at 31 December 2007 the performance fee creditor was£nil. Administration Agreement Pursuant to the provisions of the Administration Agreement, Praxis Fund ServicesLimited is entitled to receive an administration fee during the period of 0.15%per annum of the net asset value of the Company, subject to an annual minimum of£60,000 applied on a quarterly basis, calculated and paid quarterly in arrears.As at 31 December 2007 the administration fee creditor was £17,364. Registrar Agreement Pursuant to the provisions of the Registrar Agreement, Capita Registrars(Guernsey) Limited is entitled to a fee of £5,000 per annum together with a perdeal fee per shareholder transaction. As at 31 December 2007 the registrar feecreditor was £1,619. Custodian Agreement Pursuant to the provisions of the Custodian Agreement, Cenkos Channel IslandsLimited is entitled to receive custodian fee during the period of 0.03% perannum of the net asset value of the Company, subject to an annual minimum of£15,000 applied on a quarterly basis. As at 31 December 2007 the custodian feecreditor was £4,257. Directors' Interest The interests of the Directors, who held office during the period, and theirfamilies are set out below: Ordinary SharesPeter Tom 50,000Robert Holt 50,000Susie Farnon *100,000 There were no changes in the interests of the Directors prior to the date ofthis report. * 50,000 of which will be held by the executors of an estate of which SusieFarnon is one of several ultimate beneficiaries. Susie Farnon is also anexecutor of the estate. 4. Directors' Fees: Each of the Directors has entered into an agreement with the Company providingfor them to act as a non-executive director of the Company. Their annual fees,excluding all reasonable expenses incurred in the course of their duties whichwill be reimbursed by the Company are as follows: Annual Fee £Peter Tom 50,000Robert Holt 25,000Susie Farnon 25,000 5. Earnings per Ordinary Share: Earnings per Ordinary Share is based on profit for the period of £1,212,308 andon a weighted average of 60,000,000 Ordinary Shares in issue. 6. Fair Value Through Profit or Loss Investments: 12 July 2007 To 31 December 2007 £Unquoted investments 3,070,920 3,070,920 Purchases and closing book cost at 31 December 3,016,048 Movement in net unrealised foreign exchange gain onnon-base currency investments 54,872Closing fair value at 31 December 3,070,920 7. Other Receivables: 31 December 2007 £Bank interest receivable 427,849Other investment income receivable 2,783Prepayments 12,336 442,968 The Directors consider that the carrying amount of other receivables approximates fair value. 8. Cash and Cash Equivalents: 31 December 2007 £Cash at bank 55,463,259 9. Other Payables: 31 December 2007 £Administration fee 17,364Custodian fee 4,257Brokers fees and commissions 17,661Legal and professional 12,119Audit fee 16,500Directors' fees 11,753Registrar's fee 1,619Other payables 5,871 87,144 The Directors consider that the carrying amount of other payables approximates fair value. 10. Share Capital: 31 December 2007Authorised Share Capital £Unlimited Shares of no par value that may be issued as Ordinary Shares - - Share PremiumAllotted, issued and fully paid £60,000,000 Ordinary Shares 60,000,000Issue costs on issuance of Ordinary Shares (2,322,305)Transfer to distributable reserve (57,677,695) - On 18 July 2007 the holders of the Subscriber Shares, Praxis Nominees Limitedand Praxis Fund Services Limited, passed a written resolution approving thecancellation of the entire amount which stood to the credit of the share premiumaccount immediately after the Placing, conditionally upon the issue of theOrdinary Shares and the payment in full thereof and with respect to any furtherissue of Ordinary Shares. The cancellation was confirmed by the Royal Court on23 November 2007. By a resolution dated 18 July 2007 the holders of the Subscriber Shares in theCompany granted the Company the authority to make market purchases of up to14.99% of its own issued Ordinary Shares following the conclusion of thePlacing. This authority will expire at the earlier of the date 18 monthsfollowing the passing of such resolution and the conclusion of the first annualgeneral meeting of the Company. A renewal of the authority to make purchases ofOrdinary Shares will be sought from Shareholders at each annual general meetingof the Company. 11. Net Asset Value per Ordinary Share: The net asset value per Ordinary Share is based on the net assets attributableto equity shareholders of £58,890,003 and on the period end number of OrdinaryShares in issue of 60,000,000. 12. Financial Instruments: (a) Significant accounting policies: Details of the significant accounting policies and methods adopted, includingthe criteria for recognition, the basis of measurement and the basis on whichincome and expenses are recognised, in respect of its financial assets andfinancial liabilities are disclosed in note 2 to these financial statements. (b) Categories of financial instruments: Financial assets are made up of unquoted investments classified as investmentsat fair value through profit or loss. As at 31 December 2007, the fair value ofthe Company's financial assets was £3,070,920. This was 5.21% of net assetsattributable to equity shareholders. There are no financial liabilities. (c) Derivatives: In accordance with the Company's scheme particulars the Company may invest inderivatives or forward foreign exchange contracts for the purpose of efficientportfolio management. No derivatives or forward foreign exchange contracts wereheld during the period ended 31 December 2007. 13. Financial Risk Management: Strategy in Using Financial Instruments: The Company's activities expose it to a variety of financial risks: market risk(including currency risk, fair value interest rate risk, cash flow interest raterisk and price risk), credit risk and liquidity risk. The Company's overall riskmanagement program focuses on the unpredictability of financial markets andseeks to minimise potential adverse effects on the Company's financialperformance. The Company will seek to exploit the investment opportunity represented bycompanies in "pre-IPO" and other late stage situations with a view toarbitraging differences in public and private company valuations. The InvestmentManager believes that a large number of private companies can be successfullyprepared for IPO or trade sale by investing time, financial expertise and money.In addition the Investment Manager believes that current volatility in the stockmarket (especially AIM) and the stricter controls being imposed on AIMapplicants will reduce market appetite for smaller IPOs in the short term. Tothe extent that this causes companies to delay seeking a flotation, it increasesthe number of opportunities for the Company to offer substantial pre-IPOinvestment. Market Price Risk: All securities investments present a risk of loss of capital. The InvestmentAdviser moderates this risk through a careful selection of securities and otherfinancial instruments within specified limits. The maximum risk resulting fromfinancial instruments is determined by the fair value of the financialinstruments. The Company's portfolio and investment strategy is reviewedcontinuously by the Investment Adviser and the Investment Manager and on aquarterly basis by the Board. The Company's exposure to market price risk arises from uncertainties aboutfuture prices of its investments. This risk is managed through diversificationof the investment portfolio. It is the Company's intention to build a portfolioof investments which is diversified by both sector and stage of development.Generally the Company will seek not to invest (or commit to invest) more than15% of the Company's net assets in any single investment at the time ofinvestment (or commitment), or more than 15% of the Company's net assets inspecial situations (such as investments in companies already listed) at the timeof investment (or commitment), although such limit may be increased to 30% incertain cases where the Board deems appropriate on the advice of the InvestmentManager. At 31 December 2007, the Company's market risk is affected by three maincomponents: changes in actual market prices, interest rate and foreign currencymovements. Interest rate and foreign currency movements are shown below. A 5%increase in the value of investments, with all other variables held constant,would bring about a 0.26% increase in net assets attributable to equityshareholders. If the value of investments had been 5% lower, with all othervariables held constant, net assets attributable to equity shareholders wouldhave fallen by 0.26%. Interest Rate Risk: The Company is exposed to risks associated with the effects of fluctuations inthe prevailing levels of market interest rates on its financial instruments andfuture cash flows. The table below summarises the Company's exposure to interestrate risks. At 31 December 2007 Weighted average Less than 1 1-3 months 3 months - No fixed Total effective month 1 year maturity interest rate £ £ £ £ £AssetsFixed interest rate unquoted debtsecurities* 10.00% - - - 180,000 180,000Cash at bank 6.29% 35,122,695 20,340,564 - - 55,463,259Non-interest bearing - 351,781 76,068 - 2,906,039 3,333,888Total assets 35,474,476 20,416,632 - 3,086,039 58,977,147 LiabilitiesNon-interest bearing - - - - 87,144 87,144Total liabilities - - - 87,144 87,144 *Although the convertible loan note has an indicated redemption date writteninto the loan agreements, this redemption date is based on the planned eventdate. The actual event date is not known, therefore for maturity analysispurposes the convertible loan has been categorised as "No fixed maturity". The sensitivity analyses below have been determined based on the Company'sexposure to interest rates for interest bearing assets and liabilities (includedin the interest rate exposure table above) at the Balance Sheet date and thestipulated change taking place at the beginning of the financial period and heldconstant through the reporting period in the case of instruments that havefloating rates. A 25 basis point increase or decrease is used when reporting interest rate riskinternally to key management personnel and represents management's assessment ofthe possible change in interest rates. If interest rates had been 25 basis points higher and all other variables wereheld constant, the Company's increase in net assets attributable to equityholders for the period ended 31 December 2007 would have been an increase of£57,363 due to the increase in the interest earned on the Company's cashbalances. If interest rates had been 25 basis points lower and all other variables wereheld constant, the Company's increase in net assets attributable to equityholders for the period ended 31 December 2007 would have been a decrease of£57,363 due to the decrease in the interest earned on the Company's cashbalances. The Company's sensitivity to interest rates has decreased during the currentperiod as the Company has invested its capital into its investments therebyreducing its cash balances that are interest bearing. Foreign Currency Risk: Foreign currency risk is the risk that the fair value of future cash flows of afinancial instrument will fluctuate because of changes in foreign exchangerates. The Company's assets may be invested in securities and other investments thatare denominated in currencies different to the reporting currency. Accordingly,the value of an investment may be affected favourably or unfavourably byfluctuations in exchange rates. The Company may through forward foreign exchangecontracts hedge its exposure back to sterling but has not done so during thefinancial period. Currency Exposure: A proportion of the net assets of the Company are denominated in currenciesother than sterling. The carrying amounts of these assets and liabilities are asfollows: Assets Liabilities 31 December 31 December 2007 2007 £ £ British Pound 56,203,444 81,602US Dollars 2,773,703 5,542 Equity attributable to Ordinary Shareholders 58,977,147 87,144 The Company is exposed to US Dollar. The sensitivity analysis below has been determined based on the sensitivity ofthe Company's outstanding foreign currency denominated financial assets andliabilities to a 10% increase / decrease in the Sterling against US Dollar,translated at the balance sheet date. Foreign Currency Risk, continued: The following details the Company's sensitivity to a 10% increase/ decrease inforeign currency rates. 10% is the sensitivity rate used when reporting foreigncurrency risk internally to key management personnel and represents management'sassessment of the possible change in foreign exchange rates. As at 31 December 2007 if Sterling had weakened by 10% against the US Dollar,with all other variables held constant, the increase in net assets attributableto Ordinary Shares would have been 0.47% lower. Conversely, if Sterling hadstrengthened by 10% against the US Dollar, with all other variables heldconstant, the increase in net assets attributable to Ordinary Shares would havebeen 0.47% higher. Credit and Liquidity Risk: Credit risk is the risk that an issuer or counterparty will be unable orunwilling to meet a commitment that it has entered into with the Company. Liquidity risk is the risk that the Company will encounter in realising assetsor otherwise raising funds to meet financial commitments. It is the aim of the Company to invest in companies which are likely to achievea listing or realisation within six to thirty-six months. 14. Dividend: The Directors do not recommend the payment of a dividend for the period ended 31December 2007. 15. Post Balance Sheet Events: Since the Period end we have reviewed in excess of 50 companies and madeinvestments in 5 companies, plus a follow on investment in Enegi Oil Plc,investing over £14 million Copies of the annual report will be sent to shareholders shortly and will beavailable for a period of one month to the public at the offices of Cenkos FundManagers Limited at 6.7.8 Tokenhouse Yard, London, EC2R 7AS and will beavailable at the Company's website www.rapidrealisations.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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