Interim Results

15th Sep 2008 07:00



15 September 2008 

RAPID REALISATIONS FUND LIMITED

Interim Results

Rapid Realisations Fund Limited (the "Company" or "Rapid"), the AIM quoted company which seeks to exploit the investment opportunity represented by companies in "pre-flotation" and other late stage situations, today announces its interim results for the six months to 30 June 2008.

Financial Highlights

Net Asset Value per share at 30 June 2008 of 103.8p

Cash and cash equivalents at 30 June 2008 of £40.2 million

Profit for the period of £3.4 million

Three investments successfully listed, the most significant being Enegi Oil plc

Invested circa £15m in the period in seven investments

Since period end

Invested an additional circa £9.0 million with an excellent pipeline of potential investments 

Investment Highlights

In the six months under review we successfully listed three companies;

The Darwen Group, a manufacturer of high quality buses tailored to customers' individual requirements, was admitted to trading on AIM in January, at which point Rapid sold its shareholding realising a profit of approximately 100% of the original investment value.

Daily Internet Plc was listed on the Plus Market in January. The company is an SME internet hosting business with a broad suite of products providing customers with a one-stop shop for all of their internet requirements.

Enegi Oil Plc ("Energi") was successfully admitted to trading on AIM in February raising £15million of new equity. Enegi is in oil and gas exploration and development with a production licence and an interest in an exploration licence in Newfoundland, Canada. The company's aim is to increase production through horizontal drilling and reengineering; growing to 5000 barrels of oil extracted per day 2009.

In the six month period we reviewed in excess of 100 companies and made seven significant investments totaling circa £15 million;

Deep Blue Restaurants ("Deep Blue") acquired Harry Ramsden's "Locals" in August 2005 which consisted of twelve shops. The successful completion of the acquisition transformed Deep Blue into one of the sector's largest operators. Deep Blue's growth strategy is based on buying and rebranding existing businesses and small chains from owner/managers to build a chain of branded fish and chip shops. Deep Blue now has 26 shops with a further 10 identified targets in the current acquisition pipeline.

Take2studios, founded in 1999, hires out camera and grip equipment and services to production companies making dramas, features, commercials, promotional videos and corporate in-house shorts. The company also sells film stock and consumables. The investment has been used to expand the business starting with an acquisition of Web Lighting (in liquidation), for £300,000, followed by a purchase of £200,000 worth of lighting equipment and rebranding under the Take 2 Lighting brand. The lighting division has enabled the company to compete at all levels with their two main rivals; Panavision and Media Film Services. The remaining funds are being spent on expanding their UK and South African operations.

Taylormade Betting Limited is a new independent bookmaker chain. Each shop offers air-conditioned, live screening of all UK horse races, live football matches as well as a multitude of special betting offers. The company now has 13 outlets with a strong pipeline of potential additional sites.

Concept Building Solutions ("Concept") offers insurance claim management services and repairs as well as private building repairs within the household sector. Concept pioneered a unique service, undertaking all aspects of building repair work for the client, whilst incorporating free of charge claims management services. This service is based on relationships with insurers/loss adjusters providing a one-stop shop totally focused on providing a complete, robust and efficient total claims management service.

The Concept management team has built a national network of franchisees and now have more than 120 local franchise operators. Concept negotiates directly with the insurance company concerned to agree a schedule of repairs and/or reinstatement. The work is then carried out and the franchisee is paid directly by the insurance company.

Concept is focused on increasing the number of franchisees and the services offered.

WDScott Limited ("WDScott") was founded in the early 20th century and operated as the largest, best-known Australian management consultancy business until it was sold to Coopers and Lybrand in the 1980s. It was later re-launched in 2004 as part of the RCP Group consultancy service package. In 2007, all the RCP Group assets were transferred to WDScott which is a specialist performance improvement consultancy business with its main operations in the UK and Australia.

The company's management consists of experienced executives within the consulting industry who believe they can use the WDScott brand name to build a world leader in consultancy through both organic growth and targeted acquisitions.

In May, WDScott acquired Global Justice Solutions ("GJS") a specialist law, justice, policing and governance development assistance consulting and project management firm. GJS is an excellent business with high margins and a strong order book.

DDM Europe AG ("DDM") is a newly formed Swiss based company engaged in the acquisition and collection of distressed consumer debt portfolios from financial institutions. DDM are focused on the Eastern European consumer debt market and has a management team with an excellent track record in this market. 

 

Just Car Clinics ("JCC") is the UK's second-largest independent chain of collision repair centres, specialising in motor collision repair and accident damage rectification for cars, vans and motorbikes. 

The Group, which was set up in 2003 after a management buy out, has seen significant growth in the number of repair centres in operation in recent years and now have widespread coverage over the North of England. The Group currently carries out collision repairs to around 40,000 vehicles every year as well as providing a wide range of additional services. JCC now has 22 repair centres under its control employing over 550 staff in total and are now looking to acquire further sites in a fast-consolidating market worth in the region of £5.4bn per annum. JCC is an AIM quoted company.

Since the end of June we have invested circa £9 million in 4 investments;

Logicscope are the leading provider of trade notification software to the foreign exchange and OTC markets. Their innovative TradeSTP deal notification software is deployed in most major global FX trading banks and electronic dealing venues. Logicscope are now looking to expand sales and marketing capacity in the UK and across Europe.

Providence is an AIM and Irish Enterprise Exchange quoted international, upstream oil and gas production and exploration company currently actively involved in Ireland, UK, Nigeria and the Gulf of Mexico. Their portfolio is well diversified geographically and is also well balanced between production, appraisal and exploration assets. Providence is currently involved in 19 license interests world wide; at 12 of which they act as operator.

Rapid has invested in unquoted convertible loan notes with a 12% coupon payable six monthly in arrears on a term of four years. The loan notes will be convertible at €0.10. Providence is planning to list the convertible loan notes.

DDM Europe AG completed the purchase of their first portfolio of consumer debt in August 2008. The portfolio was purchased from Home Credit in Russia, one of the leading consumer credit suppliers in Eastern Europe, with DDM utilising a portion of the funding facility provided by Rapid to finance this acquisition. DDM's management team are positive about both the potential return offered by this portfolio and their current portfolio acquisition pipeline.

Barburrito is a Mexican fast-casual food concept developed by its two founders Morgan Davies and Paul Kilpatrick. Barburrito currently operate two Manchester based sites with their third to be opened in Liverpool's new shopping centre, Liverpool One, in September 2008.

Mexican food is under-represented in the UK and is tipped as being one of the next largest growth sectors (both retail and restaurant). This coupled with increasing customer demand for healthy, fast food served in an enjoyable and relaxed environment offers significant reasons for the likely success of a roll-out of Barburrito sites.

  Commenting, Peter Tom, Chairman:

"I am extremely pleased with the Company's progress to date. During the period under review, three of the Company's investments were listed in the UK, the Enegi flotation being the most significant event.

The continuing credit squeeze and volatile stock markets have increased the number of investment opportunities we are seeing. However we remain very selective and are building a relatively defensive portfolio which includes oil companies, fish and chips shops, betting shops, insurance repair work and a distressed debt company. We have now invested circa £30m in total and have 13 investments.

The Board is confident that the company is delivering on its objectives and should provide good returns for shareholders."

Enquiries:

Steve Charnock

Cenkos Fund Managers Limited +44 (0)7770 363 683

Fund Manager [email protected]

Philip Secrett

Grant Thornton UK LLP +44 (0) 20 7383 5100

Nominated Adviser [email protected]

Notes to Editors:

Rapid Realisations Fund Limited ("Rapid") is a closed ended investment fund listed on the AIM market of the London Stock Exchange (AIM). The investment objective of the fund is to seek to exploit the investment opportunity represented by companies in "pre-IPO" and other late stage situations with a view to arbitraging differences in public and private company valuations. The fund is managed by Cenkos Fund Managers Limited.

  Balance Sheet (Unaudited)

As at 30 June 2008

	Notes	30 June 2008		31 December 2007
		£		£
Non-current assets
Fair value through profit or loss investments	2 & 6	22,784,104		3,070,920
Current assets
Other receivables	7	281,304		442,968
Cash and cash equivalents	8	40,153,336		55,463,259
		40,434,640		55,906,227
Current liabilities
Other payables	9	937,562		87,144
Net current assets		39,497,078		55,819,083
Total net assets		62,281,182		58,890,003
Equity attributable to equity holders
Revenue Reserve		4,617,113		1,212,308
Distributable reserve	10	57,664,069		57,677,695
Total Equity		62,281,182		58,890,003
Net asset value per Ordinary Share	11	1.0380		0.9815

The accompanying notes form an integral part of these financial statements.

Income Statement (Unaudited)

For the period 1 January 2008 to 30 June 2008

	Notes	1 January 2008 To 30 June 2008		12 July 2007 To 31 December 2007
		£		£
Income	2
Bank interest		1,350,059		1,526,039
Commission income	3	72,500		27,160
Other investment income		77,464		2,783
Movement in net unrealised gain on fair value through profit or loss investments	6	3,181,456		54,872
Net realised gain on fair value through profit or loss investments	6	208,274		-
Foreign exchange losses	2	(5,518)		-
Total income		4,884,235		1,610,854
Expenses
Investment management fee	3	300,080		239,099
Performance fee	3	847,795		-
Administration fee	3	47,014		36,571
Custodian fee	3	9,403		7,314
Brokers fees and commissions		104,247		18,261
Directors' fees and expenses	4	60,468		55,675
Auditor's remuneration		8,657		16,500
Legal and professional fees		91,268		14,759
Other expenses		10,498		10,367
Total expenses		1,479,430		398,546
Profit for the period		3,404,805		1,212,308
Earnings per Ordinary Share	5	0.057		0.020

The results from the current and prior periods are derived from continuing operations.

Statement of Changes in Equity (Unaudited)

For the period 1 January 2008 to 30 June 2008

	Notes	1 January 2008 To 30 June 2008		12 July 2007 To 31 December 2007
		£		£
Balance brought forward		58,890,003		-
Issue of Ordinary Shares	10	-		60,000,000
Issue costs on issuance of Ordinary Shares	2e	(13,626)		(2,322,305)
Transfer in from / (out to) distributable reserve	10	13,626		(57,677,695)
		58,890,003		-
Transfer (out of) / in to distributable reserve	10	(13,626)		57,677,695
Profit for the period		3,404,805		1,212,308
Balance carried forward		62,281,182		58,890,003

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flows (Unaudited)

For the period 1 January 2008 to 30 June 2008

	Notes	1 January 2008 To 30 June2008		12 July 2007  To 31 December 2007
		£		£
Operating activities
Commission rebates received		72,500		27,160
Other investment income received		2,783		-
Operating expenses paid		(639,872)		(323,738)
Purchase of investments		(16,731,728)		(3,016,048)
Sales of investments		408,274		-
Cash flows used in operating activities		(16,888,043)		(3,312,626)
Financing activities
Bank interest received		1,583,638		1,098,190
Ordinary Shares issued		-		60,000,000
Issue costs on issuance of Ordinary Shares		-		(2,322,305)
Cash flows from financing activities		1,583,638		58,775,885
Net (decrease)/increase in cash and cash equivalents		(15,304,405)		55,463,259
Cash and cash equivalents, start of period		55,463,259		-
Effects of foreign exchange rate movements during the period		(5,518)		-
Cash and cash equivalents, end of period	8	40,153,336		55,463,259

Cash and cash equivalents comprise the following balance sheet amounts:
Bank deposits		40,153,336		55,463,259
		40,153,336		55,463,259

Notes to the Financial Statements (Unaudited)

Period ended 30 June 2008

1. The Company:

 

The Company is a closed-ended investment company and was registered with limited liability in Guernsey on 12 July 2007. The Company commenced business on 2 August 2007 when the Ordinary Shares of the Company were admitted to trading on AIM.

The Company will seek to exploit the investment opportunity represented by companies in "pre-IPO" and other late stage situations with a view to arbitraging differences in public and private company valuations. Cenkos Fund Managers Limited (the "Investment Manager") believes that a large number of private companies can be successfully prepared for IPO or trade sale by investing time, financial expertise and money. In addition the Investment Manager believes that current volatility in the stock market (especially AIM) and the stricter controls being imposed on AIM applicants will reduce market appetite for smaller IPOs in the short term. To the extent that this causes companies to delay seeking a flotation, it increases the number of opportunities for the Company to offer substantial pre-IPO investment.

It is the Company's policy to invest in companies that are profitable or close to profitability. These companies will also typically have one or more of the following 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 meet working capital requirements and to finance capital expenditure in order to make possible the expansion of the businesses either by acquisition or through organic growth. Each business in which the Company invests will, in the opinion of the Investment Manager, be capable of achieving a realisation either through a sale or by listing of its shares on a stock exchange within 6 to 36 months of an investment by the Company.

2. Principal Accounting Policies:

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Company's financial statements:

(a) Basis of Preparation:

The interim financial statements of the Company have been prepared in accordance with IAS 34 as adopted by the EU "Interim Financial Reporting", which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect.

The financial statements of the Company have been prepared under the historical cost convention modified by the revaluation of investments and assets and liabilities at fair value through profit or loss, in accordance with IFRS and The Companies (Guernsey) Law, 2008.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates.

(b) Income:

Bank interest income is classified as finance income in the Income Statement and is recognised on an accruals basis at the gross amount receivable. Other investment income and commission rebates are included in the financial statements on an accruals basis.

(c) Foreign Currency:

(i)Functional and Presentation Currency

The Company's investors are mainly from the UK, with the subscriptions and redemptions of the Ordinary Shares denominated in sterling. The primary activity of the Company is to offer UK investors with an attractive return on their investment, primarily through investing in companies which are likely to achieve an IPO or a sale within a short term time horizon and through a small number of investment companies that are already listed. The performance of the Company is measured and reported to investors in sterling. The Directors consider the sterling as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in sterling, which is the Fund's functional and presentation currency.

(ii) Transactions and Balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement. Translation differences on non-monetary financial assets and liabilities such as equities at fair value through profit or loss are recognised in the Income Statement.

(d) Investments:

Investments have been designated as fair value through profit or loss in accordance with IAS 39 (Revised) "Financial Instruments: Recognition and Measurement". 

Quoted investments at fair value through profit or loss are valued at the bid price on the relevant stock exchange, discounted, where necessary, to reflect any lack of liquidity. 

Unquoted investments are valued in accordance with the International Private Equity and Venture Capital valuation guidelines. 

Typically investments in unquoted companies are made by way of a package of instruments, for example a convertible loan note or outright purchase of shares which also has an attached equity interest in the form of a warrant or option of shares. In these circumstances the Directors are of the opinion that it is not possible to attribute a fair value to each of the separate components of the total investment in that company and therefore the Directors attribute a fair value to the investment 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 £13,626 for the period ended 30 June 2008 (31 December 2007: £2,322,305). The amount in full was written off to the distributable reserve. 

(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 and highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash in hand and deposits in bank.

(h) Segmental Reporting:

The Directors are of the opinion that the Company is engaged in a single segment of 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 Investment Management, Administration, Registrar and Custodian Agreements.

Investment Management Agreement

Pursuant to the provisions of the Investment Management Agreement, the Investment Manager is entitled to receive an advisory fee during the period at 1.0% per annum of the net asset value of the Company, increasing to 2.0% per annum when 50% of the net proceeds of the Placing have been invested. This fee is paid quarterly in advance. 

The Investment Manager is also entitled to a performance fee for a relevant accounting period when the following two tests are met: 

Once entitled to a performance fee for a relevant accounting period the fee is payable, in arrears, by reference to the amount the adjusted closing NAV per Ordinary Share exceeds either (i) the opening NAV per Ordinary Share, (where the adjusted NAV is the NAV of the Company excluding any liability for accrued performance fees and after adding back any dividends declared or paid during the performance period), or (ii) where the High Watermark exceeds the Hurdle NAV per Ordinary Share for the relevant accounting period.

The performance fee is calculated by taking an amount equal to 20% of the NAV increase per Ordinary Share in that relevant accounting period, multiplied by the time weighted average of the total number of Ordinary Shares in issue for the relevant accounting period. The first performance period began on Admission and ended on 31 December 2007. Each subsequent performance period is a period of one financial year. As at 30 June 2008 the performance fee creditor was £847,795 (31 December 2007: £nil).

Administration Agreement

Pursuant to the provisions of the Administration Agreement, Praxis Fund Services Limited 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 30 June 2008 the administration fee creditor was £23,619 (31 December 2007: £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 per deal fee per shareholder transaction. As at 30 June 2008 the registrar fee creditor was £1,243 (31 December 2007: £1,619).

Custodian Agreement

Pursuant to the provisions of the Custodian Agreement, Cenkos Channel Islands Limited is entitled to receive a custodian fee during the period of 0.03% per annum of the net asset value of the Company, subject to an annual minimum of £15,000 applied on a quarterly basis. As at 30 June 2008 the custodian fee creditor was £4,724 (31 December 2007: £4,257).

Directors' Interest

The interests in the Ordinary Shares of the Company held by the Directors, who held office during the period, and their families are set out below:

	30 June 2008		31 December 2007
Peter Tom	50,000		50,000
Robert Holt	50,000		50,000
Susie Farnon	*100,000		*100,000

There were no changes in the interests of the Directors prior to the date of this report.

* 50,000 of which will be held by the executors of an estate of which Susie Farnon is one of several ultimate beneficiaries. Susie Farnon is also an executor of the estate.

4. Directors' Fees:

Each of the Directors has entered into an agreement with the Company providing for 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 which will be reimbursed by the Company are as follows:

	Annual Fee
	£
Peter Tom	50,000
Robert Holt	25,000
Susie Farnon	25,000

5. Earnings per Ordinary Share:

Earnings per Ordinary Share is based on profit for the period of £3,404,805 and on a weighted average of 60,000,000 Ordinary Shares in issue.

6. Fair Value Through Profit or Loss Investments:

	1 January 2008 To 30 June 2008		12 July 2007  To 31 December 2007
	£		£
Investments listed on recognised investment exchanges*	7,985,034		-
Unquoted investments	14,799,070		3,070,920
	22,784,104		3,070,920
Book cost brought forward	3,016,048		-
Purchases of investments	16,731,728		3,016,048
Sales of investments	(408,274)		-
Net realised gain on fair value through profit or loss investments	208,274		-
Book cost carried forward	19,547,776		3,016,048
Net unrealised gain on fair value through profit or loss investments brought forward	54,872		-
Movement in net unrealised gain on fair value through profit or loss investments	3,181,456		54,872
Net unrealised gain on fair value through profit or loss investments carried forward	3,236,328		54,872
Fair value carried forward	22,784,104		3,070,920

* representing 12.82% (31 December 2007: nil%) of net assets 

As at 30 June 2008 the Company held 155,000 of its own Ordinary Shares in treasury (31 December 2007: nil).

7. Other Receivables:

	30 June 2008		31 December 2007
	£		£
Bank interest receivable	194,269		427,849
Other investment income receivable	77,464		2,783
Prepayments	9,571		12,336
	281,304		442,968

The Directors consider that the carrying amount of other receivables approximates fair value.

8. Cash and Cash Equivalents:

	30 June 2008		31 December 2007
	£		£
Cash at bank	40,153,336		55,463,259

9. Other Payables:

	30 June 2008		31 December 2007
	£		£
Performance fee	847,795		-
Administration fee	23,619		17,364
Custodian fee	4,724		4,257
Brokers fees and commissions	-		17,661
Legal and professional	2,050		12,119
Audit fee	8,080		16,500
Directors' fees	25,000		11,753
Registrar's fee	1,243		1,619
Other payables	25,051		5,871
	937,562		87,144

The Directors consider that the carrying amount of other payables approximates fair value.

10. Share Capital: 

	30 June 2008 & 31 December 2007
Authorised Share Capital	£
Unlimited Shares of no par value that may be issued as Ordinary Shares	-
	-

	30 June 2008		31 December 2007
Allotted, issued and fully paid	£		£
60,000,000 Ordinary Shares	-		60,000,000
Issue costs on issuance of Ordinary Shares	(13,626)		(2,322,305)
Transfer from/(to) distributable reserve	13,626		(57,677,695)
	-		-

On 18 July 2007 the holders of the Subscriber Shares, Praxis Nominees Limited and Praxis Fund Services Limited, passed a written resolution approving the cancellation of the entire amount which stood to the credit of the share premium account immediately after the Placing, conditionally upon the issue of the Ordinary Shares and the payment in full thereof and with respect to any further issue of Ordinary Shares. The cancellation was confirmed by the Royal Court on 23 November 2007.

By a resolution dated 18 July 2007 the holders of the Subscriber Shares in the Company granted the Company the authority to make market purchases of up to 14.99% of its own issued Ordinary Shares following the conclusion of the Placing. This authority will expire at the earlier of the date 18 months following the passing of such resolution and the conclusion of the first annual general meeting of the Company. A renewal of the authority to make purchases of Ordinary Shares will be sought from Shareholders at each annual general meeting of the Company.

11. Net Asset Value per Ordinary Share:

The net asset value per Ordinary Share is based on the net assets attributable to equity shareholders of £62,281,182 (31 December 2007: £58,890,003) and on the period end number of Ordinary Shares in issue of 60,000,000 (31 December 2007: 60,000,000).

12. Financial Instruments:

(a) Significant accounting policies:

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of its financial assets and financial liabilities are disclosed in note 2 to these financial statements.

(b) Categories of financial instruments:

Financial assets are made up of quoted and unquoted investments classified as investments at fair value through profit or loss. As at 30 June 2008, the fair value of the Company's financial assets was £22,784,104 (31 December 2007: £3,070,920). This was 3.63% (31 December 2007: 5.21%) of net assets attributable to equity shareholders.

There are no financial liabilities.

(c) Derivatives:

In accordance with the Company's scheme particulars the Company may invest in derivatives or forward foreign exchange contracts for the purpose of efficient portfolio management. No derivatives or forward foreign exchange contracts were held during the period ended 30 June 2008 (31 December 2007: none).

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 rate risk and price risk), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

The Company will seek to exploit the investment opportunity represented by companies in "pre-IPO" and other late stage situations with a view to arbitraging differences in public and private company valuations. The Investment Manager believes that a large number of private companies can be successfully prepared for IPO or trade sale by investing time, financial expertise and money. In addition the Investment Manager believes that current volatility in the stock market (especially AIM) and the stricter controls being imposed on AIM applicants will reduce market appetite for smaller IPOs in the short term. To the extent that this causes companies to delay seeking a flotation, it increases the number of opportunities for the Company to offer substantial pre-IPO investment.

Market Price Risk:

All securities investments present a risk of loss of capital. The Investment Adviser moderates this risk through a careful selection of securities and other financial instruments within specified limits. The maximum risk resulting from financial instruments is determined by the fair value of the financial instruments. The Company's portfolio and investment strategy is reviewed continuously by the Investment Adviser and the Investment Manager and on a quarterly basis by the Board.

The Company's exposure to market price risk arises from uncertainties about future prices of its investments. This risk is managed through diversification of the investment portfolio. It is the Company's intention to build a portfolio of investments which is diversified by both sector and stage of development. Generally the Company will seek not to invest (or commit to invest) more than 15% of the Company's net assets in any single investment at the time of investment (or commitment), or more than 15% of the Company's net assets in special situations (such as investments in companies already listed) at the time of investment (or commitment), although such limit may be increased to 30% in certain cases where the Board deems appropriate on the advice of the Investment Manager. 

At 30 June 2008, the Company's market risk is affected by three main components: changes in actual market prices, interest rate and foreign currency movements. 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 1.83% (31 December 2007: 0.26%) increase in net assets attributable to equity shareholders. If the value of investments had been 5% lower, with all other variables held constant, net assets attributable to equity shareholders would have fallen by 1.83% (31 December 2007: 0.26%).

Interest Rate Risk:

The Company is exposed to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial instruments and future cash flows. The table below summarises the Company's exposure to interest rate risks.

At 30 June 2008	Weighted average effective interest rate	Less than 1 month	1-3 months	3 months - 1 year	No fixed maturity	Total
		£	£	£	£	£
Assets
Fixed interest rate unquoted debt securities*	6.00%	-	-	-	3,740,000	3,740,000
Cash at bank	5.66%	19,132,097	21,021,239	-	-	40,153,336
Non-interest bearing	-	130,203	64,066	-	19,131,139	19,325,408
Total assets		19,262,300	21,085,305	-	22,871,139	63,218,744
Liabilities
Non-interest bearing	-	-	-	-	937,562	937,562
Total liabilities		-	-	-	937,562	937,562

At 31 December 2007	Weighted average effective interest rate	Less than 1 month	1-3 months	3 months - 1 year	No fixed maturity	Total
		£	£	£	£	£
Assets
Fixed interest rate unquoted debt securities*	10.00%	-	-	-	180,000	180,000
Cash at bank	6.29%	35,122,695	20,340,564	-	-	55,463,259
Non-interest bearing	-	351,781	76,068	-	2,906,039	3,333,888
Total assets		35,474,476	20,416,632	-	3,086,039	58,977,147
Liabilities
Non-interest bearing	-	-	-	-	87,144	87,144
Total liabilities		-	-	-	87,144	87,144

*Although the convertible loan note has an indicated redemption date written into the loan agreements, this redemption date is based on the planned event date. The actual event date is not known, therefore for maturity analysis purposes the convertible loan has been categorised as "No fixed maturity".

The sensitivity analyses below have been determined based on the Company's exposure to interest rates for interest bearing assets and liabilities (included in the interest rate exposure table above) at the Balance Sheet date and the stipulated change taking place at the beginning of the financial period and held constant through the reporting period in the case of instruments that have floating rates.

A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the possible change in interest rates.

If interest rates had been 25 basis points higher and all other variables were held constant, the Company's increase in net assets attributable to equity holders for the period ended 30 June 2008 would have been an increase of £49,779 (31 December 2007: £57,363) due to the increase in the interest earned on the Company's cash balances.

If interest rates had been 25 basis points lower and all other variables were held constant, the Company's increase in net assets attributable to equity holders for the period ended 30 June 2008 would have been a decrease of £49,779 (31 December 2007: £57,363) due to the decrease in the interest earned on the Company's cash balances.

The Company's sensitivity to interest rates has decreased during the current period as the Company has invested its capital into its investments thereby reducing 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 a financial instrument will fluctuate because of changes in foreign exchange rates.

The Company's assets may be invested in securities and other investments that are denominated in currencies different to the reporting currency. Accordingly, the value of an investment may be affected favourably or unfavourably by fluctuations in exchange rates. The Company may through forward foreign exchange contracts hedge its exposure back to sterling but has not done so during the financial period.

Currency Exposure:

A proportion of the net assets of the Company are denominated in currencies other than sterling. The carrying amounts of these assets and liabilities are as follows:

	Assets		Liabilities
	30  June  2008		30  June  2008
	£		£
Australia Dollar	3,007,121		-
British Pound	57,518,307		937,562
Euro	2,693,316		-
US Dollars	-		-
Equity attributable to Ordinary Shareholders	63,218,744		937,562

	Assets		Liabilities
	31 December 2007		31 December 2007
	£		£
British Pound	56,203,444		81,602
US Dollars	2,773,703		5,542
Equity attributable to Ordinary Shareholders	58,977,147		87,144

The Company is exposed to Australian Dollar, Euro and US Dollar.

The sensitivity analysis below has been determined based on the sensitivity of the Company's outstanding foreign currency denominated financial assets and liabilities to a 10% increase / decrease in the Sterling against Australian Dollar, Euro and US Dollar, translated at the balance sheet date.

The following details the Company's sensitivity to a 10% increase/ decrease in foreign currency rates. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the possible change in foreign exchange rates.

As at 30 June 2008 if Sterling had weakened by 10% against the Australian Dollar, Euro and US Dollar, with all other variables held constant, the increase in net assets attributable to Ordinary Shares would have been 0.92% (31 December 2007: 0.47%) lower. Conversely, if Sterling had strengthened by 10% against the Australian Dollar, Euro and US Dollar, with all other variables held constant, the increase in net assets attributable to Ordinary Shares would have been 0.92% (31 December 2007: 0.47%) higher.

Credit and Liquidity Risk:

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Company.

Liquidity risk is the risk that the Company will encounter in realising assets or otherwise raising funds to meet financial commitments. 

It is the aim of the Company to invest in companies which are likely to achieve a 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 30 June 2008 (31 December 2007: £nil).

15. Post Balance Sheet Events:

Since the end of June we have invested circa £9 million in 4 investments;

Copies of the interim report will be sent to shareholders shortly and will be available for a period of one month to the public at the offices of Cenkos Fund Managers Limited at 6.7.8 Tokenhouse Yard, London, EC2R 7AS and will be available at the Company's website www.rapidrealisations.com.

ENDIR SFDFIESASELU

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Related Shares:

RRF.L