Half-Yearly Results, NAV and Dividend

Duet Real Estate Finance Limited

(the "Company")

Half-Yearly Results, NAV and Dividend

Duet Real Estate Finance Limited (LSE: DREF), a registered closed-ended collective investment scheme incorporated in Guernsey, today announces its half-yearly results for the period from 1 January 2015 to 30 June 2015 and its quarterly dividend.

Highlights

Ø Dividends paid in the six months ended 30 June 2015 totalled 2.25 pence per share (30 June 2014: 3.90 pence). A dividend of 0.30 pence per share for the quarter ended 30 June 2015 to be paid on 25 September 2015 to members on the Company's register on 4 September 2015.

Ø A total of 23.51 pence per share (2014: 13.35 pence) has been returned by way of B share issues and redemptions in the six months ended 30 June 2015.

Ø The NAV total return for the six months ended 30 June 2015 was 3.6% (period to 30 June 2014: 2.8%) including dividends paid and adjusted for capital returned in the period.

Ø The total shareholder return in the six months ended 30 June 2015 was 9.1% (period to 30 June 2014: 7.3%) including dividends paid and adjusted for capital returned in the period.

Ø The Master Fund continues its realisation phase and will continue to receive repayments of or sell off its underlying investments and return capital to the Company. The Directors intend to continue to distribute such proceeds to shareholders by way of further B share issues and redemptions.

Chairman's Statement

I am pleased to present the Company's half-yearly financial report and unaudited condensed interim financial statements for the period ended 30 June 2015.

Investment Performance, Capital Management and Dividends

The Company's NAV per share at 30 June 2015 was 27.4 pence (30 June 2014: 78.9 pence). The Company paid two dividends during the period to 30 June 2015, totaling 2.25 pence per share (period to 30 June 2014: 3.9 pence) and returned 23.51 pence per share by means of B share issues and redemptions (period to 30 June 2014: 13.35 pence). Based on the opening NAV per share of 51.3 pence as at 31 December 2014 (31 December 2013: 93.5 pence) the NAV total return in the period was 3.6% (period to 30 June 2014: 2.8%).

The Company's share price at 30 June 2015 was 25.25 pence (30 June 2014: 75.6 pence). Based upon an opening share price of 46.75 pence at 31 December 2014 (31 December 2013: 86.5 pence), the total shareholder return in the period to 30 June 2015, including dividends paid and adjusting for capital returned in the period, was 9.1% (period to 30 June 2014: 7.3%).

During the period to 30 June 2015, the Company bought back and cancelled 428,000 of its own shares for £147,781. Since the period end and to the date of this report the Company has bought back and cancelled a further 1,525,487 of its own shares for £382,625. All purchases were made at discounts to the prevailing NAV, at an average price of 94.3% of NAV, and so were accretive to NAV per share.

Including the dividend of 0.3 pence per share to be paid on 25 September 2015 in respect of the second quarter of 2015, the Company will have paid dividends totaling 1.30 pence per share in respect of the six month period to 30 June 2015.

In total, the Company has now repaid capital of 64.82 pence per share and paid dividends of 25.45 pence per share.

Outlook

Since the summer of 2013, the Master Fund has been in its realisation phase and will continue to receive repayments on its loans, sell off assets and return capital to the Company. The General Partner of the Master Fund has elected to extend the life of the Fund by one year to 22 December 2015 (the first of two extensions available to the General Partner at its discretion, the second being for a period of one year and one month). With regard to the profile of the remaining investments, the Directors expect the General Partner to elect for the second extension in due course which would take its life to 22 January 2017. 

As the underlying portfolio of the Master Fund continues to harvest, your Board anticipates continuing to make distributions of capital via B Share issues and redemptions along with paying dividends the quantum of which may fluctuate dependent on the timing of investment realisations and resultant reduction in capital base.

David Staples

Chairman 

24 August 2015

Interim Board Report

Principal Risks and Uncertainties

The principal risks and uncertainties faced by the Company, which have not materially changed and which are expected to apply to the remaining period to 31 December 2015, are considered to fall into the following categories:

General market, economic, fiscal and regulatory environment:

· The Company's and the Master Fund's targeted returns are based on estimates and assumptions that are inherently subject to significant business and economic uncertainties and contingencies, and the actual rate of return may be materially lower than the targeted returns.

· Declaration, payment, and the amount of any future dividends by the Company are subject to the discretion of the Directors and will depend upon, among other things: the performance of the Master Fund, realisations of its underlying investments and consequent returns of capital, distributions made by the Master Fund and the size of any such distributions as well as the Company's financial position and cash requirements.

· The Ordinary Shares may trade at a discount to NAV.

· The Company and the Master Fund are exposed to changes in tax and other laws, accounting standards or regulation and any potential costs arising, potentially with retrospective effect.

· The Master Fund is exposed to the commercial real estate market. The value of underlying real estate and the rental income it produces may fluctuate as a result of factors which are outside the Company's control.

Concentration and other risks due to the investment strategy of the Company:

· The Company is not able to participate in the investment or divestment decisions of the Master Fund, in which it has invested substantially all of its capital.

· It may not be possible for the Company to dispose of its interest in the Master Fund if it wished to do so.

· The value of an investment can go down as well as up and, as a result, a Limited Partner in the Master Fund (including the Company) may lose some or all of its commitment or the value of its investment.

· There is currency risk in the Master Fund from material movements in the exchange rate between Sterling and the currency in which certain investments are made. To limit currency risk the Master Fund uses currency derivatives to hedge its exposure, but there is no guarantee that the hedges will be completely effective.

· Borrowers from the Master Fund may repay loans early leading to different returns, and a loss of further returns from that investment.

· Repayments from and sales of loans may lead to early repayments of capital to shareholders.

· As the Master Fund sells off its loans or they are repaid, so the number of remaining loans in the portfolio diminishes which will lead to increased concentration risk and potentially proportionately greater currency risk at the Master Fund level.

· Investments within the Master Fund may not all be realised prior to the planned or extended termination of the Master Fund exposing the Master Fund and/or the Company to additional costs.

Reliance on the Investment Adviser:

· The Investment Adviser is dependent upon the expertise of key personnel in providing investment advisory services to the Company and the Master Fund.

· Failure by the Investment Adviser or other third-party service providers of the Company and/or the Master Fund to carry out its or their obligations could materially disrupt the business of the Company and/or of the Master Fund.

The principal risks and uncertainties in relation to financial instruments are disclosed in note 11 to the audited financial statements for the year ended 31 December 2014.

Related Parties

Related party disclosures are given in note 15.

Going Concern

The Directors, after due consideration, have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the unaudited condensed interim financial statements are prepared on a going concern basis. In forming this expectation, the Directors have considered the key supporting assumptions including the level of cash cover for commitments made to invest in the Master Fund, projected cash inflows by way of distributions from the Master Fund and the level of ongoing expenses of the Company.

Statement of Directors' Responsibility

The Directors confirm that, to the best of their knowledge, these unaudited condensed interim financial statements for the period have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union and give a true and fair view of the assets, liabilities, financial position and profit of the Company as required by Disclosure and Transparency Rule DTR 4.2.4. The Chairman's Statement, Interim Board Report and the Investment Adviser's Report (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure and Transparency Rules DTR 4.2.7R and DTR 4.2.8R, namely:

a. an indication of important events that have occurred during the first six months of the financial year and their impact on the unaudited condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

b. material related party transactions that have taken place in the first six months of the current financial year that have materially affected the financial position or performance of the Company during that period, and any material changes in the related party transactions disclosed in the Annual Report.

By order of the Board:

David Staples

Director

24 August 2015

Investment Adviser's Report

Upon the completion of its investment programme in May 2013, the Master Fund consisted of 15 investments with an original acquisition cost of £264.7 million. Based on the respective acquisition cost of each investment, the fully invested portfolio had a blended loan-to-value ratio of 69.6% along with a blended cash pay coupon and payment-in-kind coupon of 9.8% and 2.1% respectively. The portfolio provides the income and total return as targeted in the Company's prospectus, whilst maintaining a resilient risk profile.

Following the full realisation of 7 of the Master Fund's investments prior to 31 December 2014, a further 2 investments were fully realised during the 6 months ended 30 June 2015 earning returns in-line with the Fund's stated objective.

As at 30 June 2015, the Master Fund consisted of 6 investments with a combined unrealised balance of £75.0 million. Based on the respective balance of each investment, the portfolio as at 30 June 2015 had a blended loan-to-value ratio of 71.5% along with a blended cash pay coupon and payment-in-kind coupon of 7.3% and 4.3% respectively.

In respect of the unrealised investments forming the residual portfolio, we continue to assess and monitor investments, with a particular focus on such aspects as debt servicing arrangements, compliance with loan covenants and the asset management of the underlying real estate.

The Company is 95% drawn against its total commitment to the Master Fund. Following a second partial cancellation of available commitments by the Master Fund in May 2015, a total of £0.53 million (0.7% of total remaining commitment following the second partial cancellation of available commitments) remains available to be drawn by the Master Fund for follow-on contributions to existing investments and for working capital.

A summary of the key performance and investment activity of the Master Fund is as follows:

Performance - for the six month period to 30 June 2015

In May 2015, the Master Fund received a full repayment of mezzanine loan investment 7 (secured by retail property in Germany), earning returns in line with its investment criteria.

In June 2015 the Master Fund also realised its United Kingdom Business Park investment (Loan 9), following a refinancing of the underlying portfolio, earning returns in-line with its investment criteria.

In July 2015 the Master Fund successfully secured the extension of the facility on mezzanine loan investment 2 beyond the initial termination date of July 2015 to December 2016. The sponsor had approached its lenders for an extension of the facilities in order to market the property and maximise the sale price over the extension period. The cash interest and payment-in-kind interest rates remain unchanged and the investment has benefited from an extension fee.

The Investment Adviser anticipates the trend of earlier repayments to continue due to the increased liquidity in the financing markets, the ongoing deleveraging through amortisation of most transactions, and the generally rising trend in asset values which has encouraged borrowers to refinance or sell the assets that back the remaining loans in the Master Fund.

Investment Performance

The Company raised £76.0m and has, including the dividend to be paid on 25 September 2015, paid dividends totalling £19.0m and returned capital totalling approximately £49.9m. The total value to paid-in ratio of the Company at 30 June 2015 was 1.17 (31 December 2014: 1.15; 30 June 2014: 1.12), based on capital raised.

The following table summarises the progression of the Company's Net Asset Value over the course of the six months ended 30 June 2015, showing the effect of dividends paid and capital returned during each period.

Net Asset Value Performance

The composition of the fully invested portfolio of the Master Fund along with the make-up of the portfolio as at 30 June 2015 are detailed in the tables that follow:

Portfolio as at 30 June 2015

(1) Post provision for impairment

Portfolio as at 30 June 2015

(1) Post provision for impairment

ERED Investment Adviser LLP

August 2015

Independent review report to Duet Real Estate Finance Limited

Introduction

We have been engaged by the Company to review the unaudited condensed set of financial statements in the half-yearly financial report for the six month period ended 30 June 2015, which comprises the Unaudited Condensed Statement of Comprehensive Income, Unaudited Condensed Statement of Financial Position, Unaudited Condensed Statement of Changes in Equity, Unaudited Condensed Statement of Cash Flows and related notes. We have read the other information contained in the Half-Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the Unaudited Condensed Interim Financial Statements.

Directors' responsibilities

The Half-Yearly Financial Report is the responsibility of, and has been approved by, the Directors of the Company. The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The Unaudited Condensed Interim Financial Statements included in this Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the Unaudited Condensed Interim Financial Statements in the Half-Yearly Financial Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Unaudited Condensed Interim Financial Statements in the Half-Yearly Financial Report for the six month period ended 30 June 2015 are not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

PricewaterhouseCoopers CI LLPChartered AccountantsGuernsey, Channel Islands

24 August 2015

Unaudited Condensed Statement of Comprehensive Income

for the period ended 30 June 2015

The notes form an integral part of these unaudited condensed interim financial statements.

Unaudited Condensed Statement of Financial Position

as at 30 June 2015

The notes form an integral part of these unaudited condensed interim financial statements.

The unaudited condensed interim financial statements were approved by the Board of Directors on 24 August 2015 and were signed on its behalf by:

David Staples

Director

Unaudited Condensed Statement of Changes in Equity

for the period ended 30 June 2015

The notes form an integral part of these unaudited condensed interim financial statements.

Unaudited Condensed Statement of Cash Flows

for the period ended 30 June 2015

The notes form an integral part of these unaudited condensed interim financial statements.

Notes to the unaudited interim financial statements for the period ended 30 June 2015

1. General information

The Company was incorporated in Guernsey on 7 January 2011 and is a registered closed-ended collective investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended, and The Registered Collective Investment Scheme Rules 2008 issued by the Guernsey Financial Services Commission. The Ordinary Shares were admitted for trading on the Main Market of the London Stock Exchange on 14 March 2011.

The Company is a feeder fund and invests in the European Real Estate Debt Fund L.P. (the "Master Fund").

These unaudited condensed interim financial statements were approved for issue on 24 August 2015. These unaudited condensed interim financial statements do not constitute statutory accounts under Guernsey Company Law and have been reviewed by the independent auditors but not audited.

2. Basis of preparation

The unaudited condensed interim financial statements for the six months ended 30 June 2015 have been prepared on the going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 "Interim Financial Reporting" as adopted by the European Union. These unaudited condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The preparation of unaudited condensed interim financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Directors to exercise judgement in the process of applying the Company's accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions change. The Directors believe that the underlying assumptions are appropriate and that the Company's financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 10.

3. Significant accounting policies

The accounting policies adopted are consistent with those of the previous financial year. Statutory audited annual financial statements of the Company are prepared in accordance with IFRS as adopted by the European Union. These unaudited condensed interim financial statements do not contain all the information and disclosures as presented in the annual financial statements.

New IFRS standards, amendments and interpretations

The Company has adopted the following amendments since 1 January 2015.

Annual improvements 2011-2013 (effective 1 July 2014) (endorsed for 1 Jan 2015)

The Directors have assessed the impact of the amendments and concluded that there is no material impact on the Company's results of operations or financial position.

Impact of standards issued but not yet applied

IFRS 9, 'Financial instruments', issued in November 2009. This standard is the first step in the process to replace IAS 39, 'Financial instruments: recognition and measurement'. IFRS 9 introduces new requirements for classifying and measuring financial assets and may affect the Company's accounting for its financial assets. The standard is not applicable until 1 January 2018 but is available for early adoption. However, the standard has not yet been endorsed by the EU. The Company has yet to assess IFRS 9's full impact. However, initial indications are that it should not materially affect the Company's accounting for its financial instruments.

4. Taxation

The Company is domiciled in Guernsey, Channel Islands. Under the current laws of Guernsey, there are no income, estate, corporation, capital gains or other taxes payable by the Company. The Company does not currently incur any withholding tax in respect of income received from the Master Fund.

The Company has obtained exemption from Guernsey Income Tax under The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is subject to an annual fee of £1,200.

5. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors as it is the body that makes strategic decisions. The Board is of the opinion that there is only a single operational segment, being the investment in the Master Fund and the associated investment of cash awaiting calls from the Master Fund.

6. Seasonality of operations

The nature of the entity is such that the effect of seasonality is not considered to impact the operations and results of the Company.

7. Expenses

8. Earnings per share and net asset value per share

The earnings per share calculation is based on profit for the period and total comprehensive income of £1,336,516 (30 June 2014: £1,922,639) and the weighted average number of shares in issue for the period of 73,569,405 (30 June 2014: 74,785,247).

Net asset value per share is based on net assets of £20,067,690 (31 December 2014: £37,837,717) divided by the 73,338,709 (31 December 2014: 73,766,709) Ordinary Shares in issue.

9. Dividends

10. Financial assets at fair value through profit or loss

The non-current investment comprises an investment in the Master Fund. The Company has a committed investment of £75,333,953 (31 December 2014: £75,333,953) of which £71,451,201 (31 December 2014: £71,451,201) had been drawn down as at the period end. On 22 April 2015 £739,567 of the undrawn down amount was cancelled, £2,610,308 having been cancelled on 13 November 2014, leaving the undrawn commitment to the Master Fund at 30 June 2015 at £532,877 (31 December 2014: £1,272,444).

The Master Fund had a scheduled termination date of 22 December 2014 unless extended at the discretion of the General Partner for a maximum of two years and one month by the addition of a one year period and a one year and one month period. The General Partner of the Master Fund has elected to extend the life of the Fund by one year to 22 December 2015 (the first of two extensions available to the General Partner at its discretion). With regard to the profile of the remaining investments, the Directors expect the General Partner to elect for the second extension in due course.

Equalisation was paid to or received from the Master Fund when additional investors were admitted to the Master Fund, including the initial investment by the Company. Amounts were paid to or received from the Master Fund so as to equalise (in percentage terms) the net amount drawn from all investors after taking into account any amounts distributed by the Master Fund to prior existing investors. Equalisation paid to the Master Fund was included as part of the purchase cost of the investment and equalisation received from the Master Fund represents a temporary return of capital which can be called again by the Master Fund from the Company as part of its commitment to invest. The Company did not receive any equalisation payments from the Master Fund in the period, as the Master Fund is closed to new investors. No further equalisation amounts are expected to be received or paid in future periods.

The Company's investment in the Master Fund is subject to the terms and conditions set out in the Master Fund's offering documents and is accounted for by the Company as at fair value through profit or loss as determined by the Directors at the period end date, this fair value being primarily based on the latest available coterminous reported information from the Master Fund. The Directors review the details of the reported information obtained from the Master Fund and consider: (i) the liquidity of the Master Fund and/or its underlying investments, (ii) the type of investments held within the Master Fund, (iii) the date of the net asset value (NAV) provided, (iv) any restrictions on redemptions, and (v) the basis of accounting adopted by the Master Fund in valuing the investments held and in reporting to investors (the Master Fund reports to investors using IFRS principles). If necessary, the Directors make adjustments to the NAV of the Master Fund so as to obtain the best estimate of fair value as at the period end date. No such adjustments have been made to the reported NAV of the Master Fund as at 30 June 2015. In addition to normal short term receivables/payables and cash balances, the investment portfolio held by the Master Fund as at 30 June 2015 included:

i) originated debt with fixed or determinable payments that are not quoted in an active market and classified as "loans and receivables" measured at amortised cost less any impairment; and

ii) debt instruments comprising of commercial mortgage backed securities which are classified at fair value through profit or loss and valued by the Master Fund based on a combination of quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs.

Although the Directors use their best judgement in estimating the fair value of investments, there are inherent limitations in any estimation techniques.

The significant matters considered by the Directors in determining the fair value of the investment in the Master Fund are noted above. The investment in the Master Fund is a level 3 investment (see below) and as expected, there are significant unobservable inputs used by the General Partner to the Master Fund in assessing its own view on the values of the investments held at the level of the Master Fund. No quantitative information is provided by the Company in respect of those significant unobservable inputs as those inputs are not developed by the Company when measuring its fair value assessment for its investment in the Master Fund and those significant unobservable inputs at the Master Fund level are not reasonably available to the Company.

The Company's investment in the Master Fund is categorised as level 3 within the fair value hierarchy under IFRS 13, which indicates inputs for the asset that are not based on observable market data (unobservable inputs). The table below shows the movements in level 3 investments and the unrealised gain thereon recognised in the statement of comprehensive income.

The Company is exposed to market price risk from its holding in the Master Fund. If the NAV of the Master Fund increased (or decreased) by 5%, with all other variables held constant, net assets would increase (or decrease) by £944,953 (31 December 2014: £1,284,497). The Company's investment in the Master Fund gives rise to no direct exposure to currency risk or interest rate risk although the Master Fund itself is exposed to such risks.

11. Payables

12. Share capital

Authorised

The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value.

Under Guernsey law, the whole of the share capital account is distributable subject to meeting the solvency test criteria and any restrictions in the Articles of Incorporation of the Company.

Allotted, called up and fully paid

Ordinary Shares carry the rights to any dividend or other distribution out of the profits of the Company and to vote. On winding up, the Ordinary Shareholders shall be entitled to the surplus assets remaining after payment of all creditors.

B Shares do not carry any rights to any dividend or other distribution out of the profits of the Company or any voting rights and are not transferable. B Shares were issued to existing shareholders and redeemed during the period ended 30 June 2015 as detailed below.

On 20 January 2015, the Company made a Capital Return to shareholders of £10,437,988 equivalent to 14.15 pence per Ordinary Share by way of an issue and redemption on 21 January 2015 of B Shares on a pro rata basis.

On 16 June 2015, the Company made a Capital Return to shareholders of £6,864,503 equivalent to 9.36 pence per Ordinary Share by way of an issue and redemption on 17 June 2015 of B Shares on a pro rata basis.

The Company's objective when managing its capital is to follow its investment objective to provide shareholders, through its investment in the Master Fund, with regular dividends and an attractive total return, whilst limiting downside risk to capital through exposure to European commercial real estate debt. During the period, the Master Fund realised certain of its investments and made capital distributions to the Company. The Company's policy is to return such capital distributions to investors. The mechanism for making these capital returns is largely by way of an issue of redeemable B Shares to existing shareholders and subsequent redemption of these shares pro rata to their holding.

The Company has a significant investment in the Master Fund and therefore the Company's financial performance when managing its capital depends almost entirely on the performance of its investment in the Master Fund. However, in addition the Company may borrow up to 20% of NAV, has the ability to suspend payment of dividends if necessary, may buy back its own shares and may issue further shares.

Purchase of own shares

During the period the Company purchased 428,000 (30 June 2014: 225,000) of its own shares for £148,081 (30 June 2014: £184,012).

The shares were bought back on the open market and were cancelled. The cancelled shares represented 0.6% (30 June 2014: 0.3%) of the voting rights.

13. Cash and cash equivalents

14. Financial risk management

The Company's activities expose it to a variety of financial risks. The main risks arising from the Company's financial instruments are market risk, credit risk and liquidity risk.

These unaudited condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and therefore should be read in conjunction with the Company's annual financial statements for the year ended 31 December 2014.

15. Related party and material transactions

The Company pays a fixed annual fee of £25,000 to the Investment Adviser, ERED Investment Adviser LLP ("ERED"), a joint venture between DRC Capital LLP and Duet Private Equity Limited. The charge for the period was £12,500 (30 June 2014: £12,500) and at 30 June 2015 £6,250 was prepaid (31 December 2014: £Nil). There are no performance fees payable at the Company level, although the Investment Adviser is incentivised by performance fees payable at the Master Fund level.

Transactions and balances with the Master Fund are disclosed in note 10. In addition distributions from the Master Fund of £1,875,839 (30 June 2014: £3,353,374) are included in investment income in the statement of comprehensive income.

Directors' interests

No Director has a material interest in any contract which is significant to the Company's business. David Staples has an interest in 7,000 shares (31 December 2014: 7,000) and David Moore has an interest in 39,329 shares (31 December 2014: 39,329). No other Director who held office at 30 June 2015 had an interest in the Ordinary Shares of the Company.

16. Subsequent events

On 13 August 2015, £306,423 was received from the Master Fund, representing a distribution of investment income.

The Company declared a dividend of 0.30 pence per Ordinary Share payable on 25 September 2015 to those shareholders on the register on 4 September 2015.

Subsequent to 30 June 2015, up to the date of this report, a further 1,525,487 shares have been bought back for £382,625.

Corporate Information

For further information, please contact:

DRC Capital LLP +44 (0)20 7042 0600

Dale Lattanzio

Cyrus Korat

Stifel Nicolaus Europe Limited +44 (0)20 7710 7600

Neil Winward

Mark Bloomfield

Tunga Chigovanyika