Nimrod Sea Assets Nimrod Sea Assets Limited Limited ... · Limited Interim Financial Report ......

Nimrod Sea Assets Limited

Interim Financial Report

From 1 April 2015 to 30 September 2015 (Unaudited) Published [●] November 2015


Interim Financial Report

From 1 April 2015 to 30 September 2015 (Unaudited) Published 25 November 2015

NIMROD SEA ASSETS LIMITED (the “Company”)

CONTENTS

Defined terms used in this Interim Financial Report shall have the same meaning as ascribed to them in the Company's Prospectus dated 12 March 2014.

Page

1 Summary Information

2 Company Overview

4 Chairman’s Statement

5 Executive Directors’ Investment Report to 17 November 2015

12 Interim Management Report

13 Directors Information

15 Unaudited Financial Statements

19 Notes to the Financial Statements

39 Key Advisers and Contact Information


SUMMARY INFORMATION

Listing Specialist Fund Market of the London Stock Exchange

Ticker NSA

Current/Future Anticipated Dividend

The Board anticipates declaring a quarterly dividend of 2 cents per Ordinary Share from June 2015 until March 2016. This will be funded by income received net of expenditure, and where necessary, added to from the Company's capital resources. The Board anticipates returning 20 cents per share of unrequired uninvested capital after March 2016.

Currency USD

Launch Date/Price 24 March 2014 / USD 1.00 per Share

Incorporation Guernsey

Consultancy Service Provider Stamford Maritime Limited

Corporate and Shareholder Adviser

Nimrod Capital LLP

Administrator JTC (Guernsey) Limited

Auditor Deloitte LLP

Market Makers Jefferies International Limited Winterflood Securities Limited

SEDOL, ISIN BK0SC85, GG00BK0SC854

Year End 31 March

Stock and Shares ISA Eligible

Website www.nimrodseaassets.com

1


COMPANY OVERVIEW


Nimrod Sea Assets Limited (LSE:NSA) (“NSA” or the “Company”) is a non-cellular Guernsey company limited by shares and incorporated on 8 October 2012. The ordinary shares of the Company were admitted to trading on the Specialist Fund Market (“SFM”) of the London Stock Exchange (“LSE”) on 24 March 2014.

The Company’s total issued share capital currently consists of 130,000,000 ordinary shares of no par value (the “Shares”) which were admitted to trading at an issue price of USD 1.00 per share.

Investment Objectives and Policy

The Company's investment objective is to obtain income return and capital appreciation for its Shareholders by participating in vehicles which acquire, charter and sell Marine Assets associated with the offshore oil and gas industry.

To pursue its investment objective, the Company obtains exposure to Marine Assets by acquiring interests in special purpose holding companies (“Marine Asset Companies”).

The majority of the Marine Assets to which the Company will have exposure at any time are those that are needed for the inspection, repair, maintenance and operation of installed infrastructure and production equipment for use in the offshore oil and gas industry.

The Company aims to provide Shareholders with a total return, which will comprise distributions of income to be made throughout the life of the Company and, potentially, capital growth.

The Board has conducted extensive reviews of the existing portfolio, investment policy and the investment process and future opportunities. Market conditions have remained uncertain and the Board considers that, unless market conditions improve significantly, it is unlikely to make any further new investments.

Investments to date

As at 30 September 2015, the Company had completed investments in the following Marine Asset Companies; Bukit Timah Offshore DIS, Norseman Offshore IS, DSV Alliance AS, Volstad Maritime II DIS, Altus Subsea IS, Aberdeen DIS and Jane Offshore Limited.

Distribution Policy

Following the significant deterioration of the oil market during 2015, the Company has previously made announcements regarding the payment of distributions (RNS number: 7405Q, 5576R and 9410A) as well as the strategy to be adopted regarding uninvested capital (RNS number: 9410A). The Board has previously announced that it anticipates declaring a quarterly dividend of 2 cents per Ordinary Share from the end of June 2015 until March 2016. This will be funded by income received net of expenditure, and where necessary, added to from the Company's capital resources. The dividends of 30 June 2015 and 30 September 2015 have been distributed to Shareholders.

2


COMPANY OVERVIEW (Continued)

As a result of the poor market conditions and on the basis the Company is unlikely to make any further new investments; the Board anticipates returning unrequired uninvested capital after March 2016. Save for unanticipated market changes or events, the Company currently anticipates returning a further 20 cents per share at that stage. The Company will consider the best method of returning this sum to Shareholders.

3


CHAIRMAN’S STATEMENT

I would like to present the Interim Report and Financial Statements of the Company for the six months from 1 April 2015 to 30 September 2015 (the "Period"). On behalf of the Board of Directors, can I take this opportunity to thank all Shareholders for their support during this time.

From 24 March 2014 (the date the Company listed on the SFM) to 30 September 2015, the Company has invested 54% of the Company’s investable funds available in what has become an incredibly challenging market. The vast majority of these funds were invested in the first full year since the Company’s listing on the SFM.

Unfortunately, despite some intermittent signs of recovery in the oil price, the sector in which the Company operates has worsened since the publication of the Annual Financial Report to 31 March 2015. The severe reduction in spending by the major oil companies and the exploration and development companies has been so severe that it has had a significant impact on all sectors of the offshore oil and gas sector and those that serve it. This has led to cash flow problems for many companies including the ship owners and charterers with which the Company deals. The Company has focused on the inspection, repair and maintenance (“IRM”) area which has historically been less volatile than other sectors of the offshore market, and while still true, this down cycle, however, has also been unkind to the IRM businesses.

A full account of these issues is contained in the Executive Directors’ Investment Report on pages 5 to 11.

In addition, further details of all the investments held by the Company can also be found in the Executive Directors’ Investment Report on pages 8 to 11.

As a result of the problems facing the sector, the Company announced on 1 October 2015 that it is unlikely to transact any further deals and therefore believes that, other than a substantial increase in oil prices, it is likely to be in the best interests of the Shareholders to return unrequired uninvested cash which is anticipated to be some 20 cents per share.

In addition, as a consequence of the Company’s earlier action to pay four quarterly dividends of 2 cents per share until March 2016, most of which has been funded from capital, Shareholders will have already seen the return of a part of the funds not invested to date.

It is clearly disappointing that the Company has not been able to meet the objectives envisaged at launch nearly two years ago, as a result of the incredibly rapid and significant deterioration in the oil price and the subsequent effect on the offshore sector as a whole. We are confident that the actions taken thus far have mitigated some of these issues.

While the outlook for the Company is challenging, the Company is focused on maximising the return to Shareholders from its existing assets and on ensuring it has the necessary expertise to do this. This will now constitute the main focus of our activities over the coming year.

Jeffrey Vidamour

Chairman

24 November 2015 4

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT to 17 November 2015 Overview

In its Interim Financial Report for the period from 1 April 2015 to 30 September 2015 (the “Period") the Company reported an overall net loss of USD 19,173,616 which included a net movement in unrealised losses on its investment portfolio of USD 17,337,082. The overall trading loss also includes costs borne in operating DSV Alliance of USD 1,784,104. DSV Alliance AS with effect from 18 June 2015 has directly operated this vessel because the previous charterer is in administration. (For an update on this project please refer to the Investment Portfolio). This is disappointing and reflects the severity of the continued downturn in the offshore oil and gas market which has seen new lows in crude prices, ongoing geopolitical tensions, and further vigorous cost reductions by Exploration and Production operators (“E&P”). This has, unsurprisingly, had further negative impact on both asset values and the ability of the Company’s counterparties to honour their commitments to the Company.

The Board has prudently decided to mark asset values down further to reflect the change in circumstances and the uncertainty around counterparties who are experiencing an unprecedented drop in demand. The revised values imply a Net Asset Value of 68.96 cents per share.

Market Update

The Board has spent a great deal of time analysing the current market and therefore, as announced previously, anticipates it will return a portion of uninvested capital to Shareholders. In the current environment the Executive Directors see no realistic prospect of deploying the funds as originally intended and they believe the market may worsen further due to the oversupply of vessels and undersupply of work (which has been dramatically scaled back) and do not currently expect this situation to change in the foreseeable future.

This downturn has been driven not only by the immediate cessation or postponement of works by E&P companies, but also the effect of Russian sanctions which has consequently increased the available North Sea fleet. Petrobras has started to redeliver foreign flagged vessels which will result in new vessels entering other regional markets in the midst of a major cyclical downturn.

Given these market conditions, the banks providing senior debt to the industry have become extremely risk averse. The Company is still unable to receive dividends from the Bukit Timah investment, despite the charterer remaining in full compliance with their obligations, and the declining value of the Odin Viking (Norseman AS) has seen the Company inject fresh capital by way of a capital call into this investment. All banks involved in the Company’s various investments report consistently that they are becoming more negative on the sector and it is therefore not expected for this situation to change.

A sudden rebound in commodity prices, which is not forecast in any event, will not make an immediate short-term difference to the economics for the offshore vessel owners. Tendering, planning and engineering takes time to arrange and very large numbers of engineers have been made redundant. This, in conjunction with the over supply of vessels in every asset class, means that a rebound in terms of vessel owners’ financial stability and performance

5

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015 will take time to resolve. This timing effect for a rebound in offshore activity will be, in the view of the Executive Directors, well outside the original Prospectus’ investment period of 18 to 24 months. Further, we do not believe asset prices have reached their lowest point, or that prospective charterers have the degree of certainty in their forward order books for them to commit realistically to offshore support vessels.

The scale of this market downturn can be appreciated from the graph below which highlights that E&P companies have reduced expenditure more than twice as much as in the Global Financial Crisis of 08/09 and of course the rebound in the oil price has not occurred in the current period as it did then.

Source: Pareto Securities

Investment Portfolio

The value of the Company’s investments needs to be understood in a market context where the only sale and purchase activity relating to vessels is where the seller is normally distressed or desperate to sell. There are few representative deals that fall under the normal shipping parlance of “willing buyer, willing seller”; but that in turn obviously reflects the poor state of the demand side of the market and the abundance on the supply side.

In the view of the Executive Directors, vessel values are fundamentally too low, but it is also clear that, regrettably, they do not see a recovery for at least two years while the industry stabilises (only a major geopolitical event, as in 1990-1, could accelerate this). Traditionally

6

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015 more offshore maintenance work is implemented in Summer as weather constraints lessen for E&P operators; 2015 has been very poor and our enquiries tell us that next year could be worse. For an industry with high fixed costs and high leverage this would likely see further bankruptcies amongst vessel operators.

Drop in Offshore Support Vessel (Subsea, AHTS and PSV) Utilisation

Source: Pareto Securities, Bourbon Offshore

Number of PSVs and AHTS Stacked

Source: Bourbon Offshore

During the period under review the Company concluded two restructuring events as reported on pages 8 to 11.

7

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015 Project Investment Summary

Marine Asset Company Percentage of

ownership

Purchase cost

(USD)

Percentage of

*investable

funds as at

Purchase

Value as at 30

September 2015

(USD)

Bukit Timah Offshore DIS 26% 8,585,125 7.1% 6,900,836 Norseman Offshore IS (note: an additional USD 344,000 had

been injected into this investment by

way of a capital call) 43% 9,068,500 7.2% 5,729,322

Volstad Marine DIS II 20.50% 7,261,000 6.1% 5,997,736

Altus Subsea IS 51% 9,639,000 8.0% 8,580,902

DSV Alliance AS 99.50% 10,061,689 8.3% 2,000,000

Aberdeen Offshore DIS 75% 12,750,000 10.6% 1,550,000

Jane Offshore Ltd 50% 8,022,500 6.6% 6,648,300

Totals 65,387,814 53.9% 37,407,096

*investable funds as at the launch of the company

The valuations stated above are as per the latest information available to the Board as at 17 November 2015, being the latest practicable date prior to publication of these Financial Statements.

Project Investment Review

Marine Asset Company Bukit Timah Offshore DIS Vessel Type Anchor Handling Tug Supply Vessels Vessel Swiber Elsie-Marie

Swiber Anne Christine Swiber Mary-Ann

Counterparty/Charterer Newcruze Offshore Marine Pte Ltd, guaranteed by Swiber Holdings Ltd (“Swiber”)

Investment update

This investment has underperformed due to the banking consortium preventing dividend payments from being distributed despite Swiber continuing to maintain an immaculate payment record and recent stable vessel valuations. Such a stance by the banks unfortunately reflects market sentiment and we are not confident of this position changing in the short-term.

8

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015

Marine Asset Company Norseman Offshore IS Vessel Type North Sea Anchor Handler Tug Supply Vessel Vessel Odin Viking Counterparty/Charterer Viking Supply Ships A/S (“Viking Supply”) Investment update The vessel is a high specification unit that has been dramatically

affected by the drop in work following the Russian sanctions, and the asset has suffered a large drop in independent shipbroker valuations (from USD 45,000,000 at investment to USD 28,900,000 in August 2015). We have injected USD 344,000 of equity by way of a capital call. Viking Supply continues to honour all its obligations to the Company, but we are unlikely to receive a dividend for the foreseeable future.

Marine Asset Company Volstad Maritime DIS II Vessel Type Seismic Vessel Vessel Oceanic Endeavour Counterparty/Charterer CGG Eidesvik Ship Management AS (“CGG Eidesvik”) Investment update This seismic investment continues to perform as forecast. The

seismic market is extremely weak but we believe we have an excellent counterparty, who is proactively restructuring their business to cope with the new reality of cost conditions. The vessel is one of the most capable in its class with up to date technology installed.

Marine Asset Company DSV Alliance DIS Vessel Type Dive Support Vessel Vessel DSV Alliance (previously named Red7 Alliance). Counterparty/Charterer DSV Alliance DIS no longer has a counterparty because its

former charterer, Red7 Marine Offshore Limited, went into administration on 18 June 2015 and the charter was formally terminated on 24 June 2015.

Investment update In September the Company and the Bank of London and the Middle East (“BLME”), the mortgage provider, reached agreement regarding the immediate future of the vessel. The Company will provide some further working capital which is now first priority recoverable when the vessel is sold. We are hoping for some short-term charters while market conditions are so poor to allow us to recover some value in a managed fashion. The vessel has been laid up in the UK at a very competitive cost, but has the ability to mobilise quickly for available, or even emergency, works.

9

NIMROD SEA ASSETS LIMITED (the “Company”) EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015

Marine Asset Company Altus Subsea IS Vessel Type Remote Operated Support Vessel Vessel Altus Invictus Counterparty/Charterer Marine Engineering Diving Services FZC (“MEDS”) Investment update The Altus Invictus had been working at the start of the year on

the South Stream project in the Black Sea. Due to political tensions this project was cancelled, at short notice and at huge cost to all involved, and MEDS suffered from delayed payment from the overall contractor that has led to severe cash flow issues. As already announced we are working with MEDS to bring payments up-to-date. As a maintenance focused vessel which has recently secured work (although at a day rate lower than we would have liked) we believe long term this will remain a good investment if MEDS can trade through this downturn.

Marine Asset Company Aberdeen Offshore DIS Vessel Type Platform Supply Vessel Vessel FS Cygnus Counterparty/Charterer Fletcher Supply Ships Limited (“Fletcher”) Investment update

The FS Cygnus was changed to a new pay-as-you-earn charter model following the restructuring of Fletcher. The vessel is now on charter to Enquest but the rate is well below that required to earn an economic profit for shareholders and there is no expectation of a dividend in the future without a dramatic change in the day rates for this class of vessel. No segment of the entire offshore vessels market has been harder hit than Platform Supply Vessels (“PSV’s”) with day rates in the North Sea well below Operating expenditure. While this situation cannot last forever, it can clearly last significantly longer as there are 79 North Sea PSVs in lay-up at the time of writing. As new PSVs come off long-term charters owners are reluctant to contract at current rates for long periods and therefore the pool continues to grow. E&P companies are using this to drive their costs down in the short-term despite widespread industry acknowledgement that current North Sea PSV rates are unsustainable.

10


EXECUTIVE DIRECTORS’ INVESTMENT REPORT (Continued) to 17 November 2015

Marine Asset Company Jane Offshore Ltd

Vessel Type Multi Purpose Support Vessel Vessel EDT Jane Counterparty/Charterer EDT Offshore Ltd (“EDT”) Investment update The EDT Jane had poor utilisation over the Summer in what is

normally the busiest time of the year which is placing severe financial strain on EDT. EDT remains in full compliance with the charter agreement despite the vessel having had very low utilisation. This is a maintenance focused asset which has recently secured work, although at day rates lower than we would have liked, and we believe long term it will remain a good investment if it can trade through this downturn.

Summary

The charterers of the vessels are regrettably all suffering from a market that is as weak as anyone can remember it, and unfortunately there is still some residual tonnage being delivered next year which will further increase capacity. Despite current market conditions, the Company owns substantive assets and we remain hopeful that most of these companies can trade through this down turn and asset values and day rates will revert to a more normalised environment.

The support of the shareholders in these challenging times is greatly appreciated.

11


INTERIM MANAGEMENT REPORT from 1 April 2015 to 30 September 2015 (the “Period”)

A description of important events which have occurred during the Period, their impact on the performance of the Company as shown in the financial statements and a description of the principal risks and uncertainties facing the Company are given in the Chairman’s Statement, Executive Directors’ Investment Report and the notes to the financial statements contained on pages 19 to 38 and are incorporated here by reference.

Other than the information set out in the Chairman’s Statement and the Executive Directors’ Investment Report, the Board is not aware of any events during the six month period ended 30 September 2015, which would have had a material impact on the financial position of the Company.

There are a number of potential risks and uncertainties which could have a material impact on the Company’s performance over the remaining six months of the financial year and could cause actual results to differ materially from expected results. A detailed explanation of the risks is summarised in the Executive Directors’ Investment Report on pages 5 to 11.

Going Concern

The Company’s principal activities are set out within the Company Overview on pages 2 to 3. The financial position of the Company is set out on pages 15 to 18. In addition, Note 12 to the financial statements includes the Company’s objectives, policies and processes for managing its capital; its financial risk management objectives and its exposures to interest rate risk, liquidity risk and capital management.

After making all necessary enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and has significant liquid funds to do so. Accordingly, the Directors have adopted the going concern basis in preparing the financial statements.

Responsibility Statement

The Directors jointly and severally confirm that to the best of their knowledge:

(a) The condensed set of financial statements has been prepared in accordance with IAS 34 “Interim Financial Reporting”;

(b) the Interim Management Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the Period and description of principle risks and uncertainties for the remaining six months of the year); and

(c) the Interim Management Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties’ transactions and changes therein).

Signed on behalf of the Board of Directors on 24 November 2015

Jeffrey Vidamour Peter Atkinson Chairman Chairman of Audit Committee

12


DIRECTORS INFORMATION

Jeffrey (Jeff) Vidamour (Age 65) Chairman of the Board and the Investment Committee

Jeff is a non-executive director of MEIF II Channel Islands Transport Limited which owns the Condor Group. He retired as an executive director of the Condor Group on 31 December 2007 after 40 years' service in the marine industry. Whilst at the Condor Group he was responsible for vessel chartering requirements and as Project Director oversaw the acquisition, building and commissioning of three purpose built Ro-Ro/Ro-Pax (roll-on/roll-off freight and passenger) vessels for the Condor Group's own Channel Islands service.

He is Guernsey resident and is chairman of James 750 Limited, a subsidiary of the States of Guernsey, which owns and operates two 3000 tonne coastal oil tankers. Jeff is a non-executive director of Guernsey Stevedores Limited.

Peter Atkinson (Age 60) Non-executive Director and Chairman of the Audit Committee

Peter is a non- executive director and an Advocate of the Royal Court of Guernsey and an English Solicitor. Admitted to the Bar in 1980, he was senior partner of Collas Day Advocates (now Collas Crill) for 14 years. He is presently a Consultant with AFR Advocates. He specialises in corporate and fiduciary work and has been and continues to act as a non-executive director of private companies and companies within the financial services sector. Past and current directorships include companies listed on the London Stock Exchange and Channel Islands Securities Exchange. He is a former chairman of the Guernsey Bar and resides in Guernsey.

Norbert Bannon (Age 66) Non-executive Director and Chairman of the Remuneration Committee

Norbert is a non-executive director and adviser to a number of financial companies in Ireland and the UK. He is chairman of a large UK defined benefit pension fund and one of Ireland's largest defined contribution pension schemes. He is chairman of Doric Nimrod Air Two Limited, a LSE listed company, and chairs several audit and risk committees.

He has extensive experience in international finance, having been CEO of banks in Singapore and New York. He was CEO of Ireland’s largest venture capital company and was Finance Director and Head of Risk at large Irish investment bank. He has worked as a consultant on risk issues internationally. He earned a degree in Economics from Queens University Belfast, studied at Stanford Graduate School of Business and is a Chartered Accountant.

13


DIRECTORS INFORMATION (Continued)

Jeremy Punnett (Age 42) Executive Director

Jeremy is an executive director of the Company and is also a director of Stamford Maritime Limited. He was formerly president of Offshore Installation Services, a specialist well abandonment and subsea construction company and was responsible for the chartering and operation of vessels in Brazil, China and the UK and for the delivery of complex subsea projects in these regions. Prior to this Jeremy was a director of Bibby Offshore Holdings Ltd from 2009 to 2011, where he was responsible for strategic planning and corporate development. At Bibby Offshore Holdings Ltd, Jeremy led the acquisition and financing of the dive support vessel "Bibby Sapphire", as well as the charter of dive support vessels "Toisa Polaris" and "Bibby Aquamarine". Previously Jeremy was a strategy consultant at KPMG Transaction Services and PA Consulting Group Ltd. Jeremy has a MBA (Distinction) from Manchester Business School and both a Master of Commerce and a Bachelor of Commerce from the University of Auckland.

Cyril (Cy) Green (Age 66) Executive Director

Cy is an executive director of the Company and is also a director of Stamford Maritime Limited. He has extensive experience in corporate, offshore and maritime transactions and in vessel building and conversion. He is currently a director of Stamford Maritime Limited. Cy was a main board director of Bibby Line Group Ltd, a £1.3 billion diversified conglomerate with roots in the marine sectors. He was also the CEO of Bibby Line Limited, the marine division of the group comprised of four businesses, and was a founding director of Bibby Offshore Holdings Ltd where he was executive chairman for 2005. During his time at Bibby, Cy implemented and applied robust investment management criteria and processes across all of the Bibby entities' marine activities led M&A activity, and also sat as the development portfolio chairman of the platform companies acquired by Bibby Line Group Limited. In addition he has executive experience from his earlier career with Mobil Oil (now Exxon Mobil), Burmah Castrol (now BP) and PA Consulting Group Ltd. Cy is a chartered engineer and member of the Institute of Directors, winning its award for "Regional Director of the Year, 2007" for the turnaround and tripling of shareholder value of the Bibby Line Group's marine division. He has a BSc (Hons) in Fuel Engineering from the University of Leeds.

14

1 Apr 2015 to 1 Mar 2014 toNotes 30 Sep 2015 30 Sep 2014

USD USD

7 (17,337,082) - 1,103,474 507,000

53,930 89,837 (16,179,678) 596,837

4 (2,990,871) (1,167,369) (2,990,871) (1,167,369)

(19,170,549) (570,532)

(3,067) (16,257)

(19,173,616) (586,789)

(19,173,616) (586,789)

Cents Cents

6 (14.75) (0.45)

Total comprehensive loss for the period

The notes on pages 19 to 38 form an integral part of these financial statements.

Unrealised foreign exchange loss

STATEMENT OF COMPREHENSIVE INCOMEfor the period ended 30 September 2015

Operating Income

Operating expenses

Net loss for the period before finance costs and foreign exchange loss

Net movement in unrealised losses on financial assets at fair value through profit and loss

Bank interest receivedDistributions received from investments

In arriving at the results for the financial period, all amounts above relate to continuingoperations.

There are no recognised gains or losses for the period other than those disclosed above.

NIMROD SEA ASSETS LIMITED (the "Company")

Net loss for the period attributable to shareholders

Loss per share for the period - basic and diluted

15

30 Sep 2015 31 Mar 2015Notes USD USD

7 37,407,096 45,591,678

8 49,391 41,106 53,193,767 66,730,471 53,243,158 66,771,577

90,650,254 112,363,255

9 1,008,112 304,034 1,008,112 304,034

1,008,112 304,034

89,642,142 112,059,221

10 - - 11 122,895,175 122,895,175

(33,253,033) (10,835,954)

89,642,142 112,059,221

Cents Cents68.96 86.20

Director

STATEMENT OF FINANCIAL POSITION

Cash and cash equivalents

Jeffrey Vidamour

Share premiumShare capital


Current liabilities

Peter Atkinson

Payables - due within one year

Director

Net asset value per share

Revenue reserve


Total net assets

Equity

Total assets

The Financial Statements were approved by the Board of Directors and authorised for issue on 24 November 2015 and are signed on its behalf by:

Financial assets designated at fair value through proft and loss

as at 30 September 2015

Non-current assets

Current assets

Total liabilities

Receivables

16

1 Apr 2015 to 1 Mar 2014 to30 Sep 2015 30 Sep 2014

USD USD

(19,173,616) (586,789)

17,337,082 - (53,930) (89,837) 704,078 270,557

(8,285) (146,420) 3,067 16,257

(1,191,604) (536,232)

(8,808,500) (12,953,125) (344,000) -

53,930 89,837

(9,098,570) (12,863,288)

- 126,875,000 - (3,979,827)

(3,243,463) -

(3,243,463) 122,895,173

66,730,471 -

(13,533,637) 109,495,653 (3,067) (16,257)

53,193,767 109,479,396 66,730,471

Payment of uncalled share capital

(Decrease)/increase in cash and cash equivalents

Distributions to holders of shares

Increase in payablesIncrease in receivables

Cash and cash equivalents at end of period

Interest received

Purchase of investmentsInvesting activities

Foreign exchange movement

Cash and cash equivalents at beginning of period

Foreign exchange movement

for the period ended 30 September 2015

Financing activities

Share issue costs

Net cash flow used in investing activities

STATEMENT OF CASH FLOWS

Operating activities

Net movement in unrealised losses on financial assets at fair value through profit and loss

Interest received

Net cash used in operating activities


Proceeds on issue of shares

Net loss for the period attributable to shareholders


Net cash flow (used in)/from financing activities

17


Share Revenue TotalCapital Reserve

USD USD USD

122,895,175 (10,835,954) 112,059,221

- (19,173,616) (19,173,616)

- (3,243,463) (3,243,463)

122,895,175 (33,253,033) 89,642,142

Share Revenue TotalCapital Reserve

USD USD USD

2 - 2

- (10,835,954) (10,835,954) 126,875,000 - 126,875,000

(3,979,827) - (3,979,827)

122,895,175 (10,835,954) 112,059,221



Ordinary Shares

Ordinary Shares

STATEMENT OF CHANGES IN EQUITYfor the period ended 30 September 2015

Balance as at 1 April 2015

Dividends paid

Balance as at 30 September 2015

for the period ended 31 March 2015

Balance as at 31 March 2015

Balance as at 1 March 2014

Share issue proceedsShare issue costs


18

1

2

(a)

The Company is an investment entity and as such does not consolidate the entities itcontrols. Instead interests in subsidiaries are classified as fair value through profit and lossand measured at fair value. More details are provided in Note 2(k).

The Company's investment objective is to obtain income returns and a capital appreciationfor its Shareholders by participating in vehicles which acquire, charter and sell Marine Assetsassociated with the offshore oil and gas industry.


GENERAL INFORMATION

Changes in accounting policies and disclosure

On 7 March 2014 the Company changed its financial year end from 28 February to 31March.

The following Standards or Interpretations that are expected to affect the Company havebeen issued but not yet adopted by the Company as shown below. Other Standards orInterpretations issued by the IASB and IFRIC are not expected to affect the Company.

Basis of preparation

The financial statements incorporate the results of Nimrod Sea Assets Limited (the"Company").

The Company was incorporated in Guernsey on 8 October 2012 with registered number55718. Its share capital consists of one class of Ordinary Shares ("Ordinary Shares") of nopar value. The Company's Ordinary Shares were admitted to trading on the Specialist FundMarket ("SFM") of the London Stock Exchange ("LSE") on 24 March 2014.

The significant accounting policies adopted by the Company are as follows:

The financial statements have been prepared in conformity with IFRS as adopted by theEuropean Union, which comprise standards and interpretations approved by the InternationalAccounting Standards Board ("IASB") and International Financial Reporting InterpretationsCommittee ("IFRIC") and applicable Guernsey law. The financial statements have beenprepared on a historical cost basis modified by the revaluation of investments at fair valuethrough profit or loss.

In the current period no new and revised Standards and Interpretations have been adopted.

ACCOUNTING POLICIES

NOTES TO THE FINANCIAL STATEMENTS

IFRS 7 Financial Instruments: Disclosures - Deferral of mandatory effective date of IFRS 9and amendments relating to additional hedge accounting disclosure (and consequentialamendments). Applied only when IFRS 9 is adopted, which is effective for annual periodsbeginning on or after 1 January 2018.


19

2

(a)

(b)

(c)

(d)

(e)

IAS 34 Interim Financial Reporting - amendments resulting from September 2014 AnnualImprovements to IFRs effective for annual periods beginning on or after 1 January 2016.

Interest income

Expenses

Interest income is accounted for on an accruals basis.

IFRS 10 Consolidated Financial Statements - amendments regarding the application of theconsolidation exception effective for annual periods beginning on or after 1 January 2016.

Share capital

Taxation

IFRS 9 Financial Instruments - classification and measurement of financial assets effectivefor annual period beginning on or after 1 January 2018. The standard contains revisedguidance including new general hedge accounting requirements that align hedge accountingmore closely with an entity's risk management approach and a new expected credit lossmodel for calculating impairment on financial assets.

ACCOUNTING POLICIES (continued)

The Directors have considered the above and are of the opinion that these Standards andInterpretations are not expected to have an impact on the Company’s financial statementsexcept for the presentation of additional disclosures and changes to the presentation ofcomponents of the financial statements. These items will be applied in the first financialperiod for which they are required.

The Company has been assessed for tax at the Guernsey standard rate of 0%. Dividendsreceivable from investments held in Marine Asset Companies are recognised at an amountthat includes any withholding taxes payable to the relevant tax authorities.

All expenses are accounted for on an accruals basis.


IFRS 15 Revenue from Contracts with Customers - effective for annual periods beginning onor after 1 January 2018.

Ordinary Shares (the "Shares") are classified as equity. Incremental costs directlyattributable to the issue of Shares are recognised as a deduction from equity.

IFRS 7 Financial Instruments: Amendments resulting from September 2014 Annualimprovements to IFRSs, effective for annual periods beginning on or after 1 January 2016.

Other requirements of IFRS 9 relating to accounting for liabilities and derecognition offinancial instruments are effective for annual periods beginning on or after 1 January 2018.

NOTES TO THE FINANCIAL STATEMENTS (continued)

Basis of preparation (continued)


20

2

(f)

(g)

(h)

(i)

(j)

(k) Financial instruments

Foreign currencies

Financial assets and financial liabilities are recognised in the Company’s balance sheet whenthe Company becomes a party to the contractual provisions of the instrument. Financialassets and financial liabilities are initially measured at fair value. Transaction costs that aredirectly attributable to the acquisition or issue of financial assets and financial liabilities (otherthan financial assets and financial liabilities at fair value through profit or loss) are added toor deducted from the fair value of the financial assets or financial liabilities, as appropriate,on initial recognition. Transaction costs directly attributable to the acquisition of financialassets or financial liabilities at fair value through profit or loss are recognised immediately inprofit or loss.


Distributions from investments are accounted for on an accruals basis.


The Directors are of the opinion that the Company is engaged in a single segment ofbusiness, being participating in vehicles that acquire, charter and sell Marine Assetsassociated with the offshore oil and gas industry.

Segmental reporting

Cash at bank and short term deposits which are held to maturity are carried at cost. Cashand cash equivalents are defined as call deposits, short term deposits with a term of no morethan three months from the start of the deposit and highly liquid investments readilyconvertible to known amounts of cash and subject to insignificant risk of changes in value.The Company invest its cash and cash equivalents with Royal Bank of Scotland InternationalLimited and Diversified Enhanced Yield Account ("DEYA").

Going concern

The financial statements of the Company are presented in the currency of the primaryeconomic environment in which it operates (its functional currency). For the purpose of thefinancial statements, the results and financial position of the Company are expressed in USDollars, which is the functional currency of the Company, and the presentation currency forthe financial statements.


Distributions received from investments


At each balance sheet date, monetary assets and liabilities that are denominated in foreigncurrencies are retranslated at the rates prevailing at that date. Non-monetary items carried atfair value that are denominated in foreign currencies are translated at the rates prevailing atthe date when the fair value was determined. Non-monetary items that are measured interms of historical cost in a foreign currency are not retranslated. Exchange differences arerecognised in profit or loss in the period in which they arise. Transactions denominated inforeign currencies are translated into USD at the rate of exchange ruling at the date of thetransaction.

The Directors have a reasonable expectation that the Company has adequate resources tocontinue in operational existence for the foreseeable future and has significant liquid funds todo so. Accordingly, the Directors have adopted the going concern basis in preparing thefinancial statements.


21

2

(k) Financial instruments (continued)Financial assets


Financial assets are classified into the following specified categories: financial assets ‘at fairvalue through profit or loss’ ("FVTPL") and ‘loans and receivables’. The classificationdepends on the nature and purpose of the financial assets and is determined at the time ofinitial recognition.

All financial assets are recognised and derecognised on a trade date where the purchase orsale of a financial asset is under a contract whose terms require delivery of the financialasset within the timeframe established by the market concerned, and are initially measuredat fair value, plus transaction costs, except for those financial assets classified as at fairvalue through profit or loss, which are initially measured at fair value.



Derecognition of financial assetsThe Company derecognises a financial asset only when the contractual rights to the cashflows from the asset expire, or when it transfers the financial asset and substantially all therisks and rewards of ownership of the asset to another entity. If the Company neithertransfers nor retains substantially all the risks and rewards of ownership and continues tocontrol the transferred asset, the Company recognises its retained interest in the asset andan associated liability for amounts it may have to pay.

On derecognition of a financial asset in its entirety, the difference between the asset'scarrying amount and the sum of the consideration received and receivable and thecumulative gain or loss that had been recognised and accumulated in equity is recognised inprofit or loss.

Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable paymentsthat are not quoted in an active market are classified as ‘loans and receivables’. Loans andreceivables are measured at amortised cost using the effective interest method, less anyimpairment. Interest income is recognised by applying the effective interest rate, except forshort-term receivables when the recognition of interest would be immaterial.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. Fair value is determined in the manner describedin Note 7.


Financial assets at fair value through profit and loss ("FVTPL")

The Company’s investments in Marine Asset Companies have been designated as at FVTPLon the basis that they are managed and their performance is evaluated on a fair value basis,in accordance with the Company’s documented investment strategy, and information aboutthe investments is provided internally on that basis.

22

2

(k) Financial instruments (continued)

3

Financial liabilities and equityDebt and equity instruments are classified as either financial liabilities or as equity inaccordance with the substance of the contractual arrangement.

SIGNIFICANT JUDGEMENTS AND ESTIMATES

Derecognition of financial liabilitiesThe Company derecognises financial liabilities when, and only when, the Company’sobligations are discharged, cancelled or they expire.

In the application of the Company's accounting policies, which are described in Note 2, theDirectors are required to make judgements, estimates and assumptions about the carryingamounts of assets and liabilities that are not readily apparent from other sources. Theestimates and associated assumptions are based on historical experience and other factorsthat are considered to be relevant. Actual results may differ from these estimates.

Equity instruments

Repurchase of the Company's own equity instruments is recognised and deducted directly inequity. No gain or loss is recognised in profit or loss on the purchase, sale, issue orcancellation of the Company's own equity instruments.



Financial liabilities, including borrowings, are initially measured at fair value, net oftransaction costs.

Financial liabilities are subsequently measured at amortised cost using the effective interestmethod, with interest expense recognised on an effective yield basis.



Financial liabilities

An equity instrument is any contract that evidences a residual interest in the assets of anentity after deducting all of its liabilities. Equity instruments issued by the Company arerecognised at the proceeds received, net of direct issue costs.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised if therevision affects only that period, or in the period of the revision and future periods if therevision affects both current and future periods.

The following are the critical judgements and estimates that the Directors have made in theprocess of applying the Company's accounting policies and that have the most significanteffect on the amounts recognised in financial statements.

23

3

41 Apr 2015 to 1 Mar 2014 to30 Sep 2015 30 Sep 2014

USD USD154,756 157,600 555,550 562,789 43,707 43,752 24,000 - 1,556 1,251

16,000 16,000 7,370 6,314

44,504 58,377 139,788 165,046 21,499 20,578

* 165,927 122,982 32,110 12,680

** DSV Alliance DIS costs 1,784,104 -

2,990,871 1,167,369

*

**

5

Stamford management feeNimrod management fee

With respect to the DSV Alliance investment, the Company received notice on 18 June 2015that Red7Marine Offshore Limited (the charterer of the vessel) had been put intoadministration. The vessel was returned to the Partnership (represented for this purpose byits General Partner, DSV Alliance AS) and the charter was formally terminated on 24 June2015 to protect the Company’s legal position. The Company is providing working capital untilthe vessel is sold in order to protect the value of the investment.

Fair value measurement

Registrars fee

OPERATING EXPENSES

Directors' remuneration

The Company's financial assets are measured at fair value for financial reporting purposes.In estimating the fair value of an asset the Board have approved a discounted cash flowmethodology for assets with long term charter and the adjusted asset valuation methodologyfor assets with short term or no charter using inputs from the Marine Asset Companiesunderlying the investments and market wide data e.g. depreciation rates. The valuationtechniques and inputs to the fair value models are reviewed bi-annually by the directors toensure the assumptions are still appropriate. Detailed information about the valuationtechniques and inputs used in determining the fair value of the financial assets is disclosedin Note 7.

Legal and professional expenses

Accountancy fees

SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)


Administration fees

Under their terms of appointment, two Executive Directors are paid a fee of USD 75,000 perannum by the Company. All three remaining Directors are paid a fee of GBP 25,000. TheChairman receives an additional GBP 5,000 per annum and the Chairman of the AuditCommittee receives an additional GBP 4,000 per annum.

Bank interest and charges

Included in legal and professional expenses non audit services provided by the auditors inthe sum of USD 30,676.

Investment acquisition costs

for the period ended 30 September 2015NOTES TO THE FINANCIAL STATEMENTS (continued)

Other operating expenses

Audit fee

Directors' and officers' insurance

DIRECTORS' REMUNERATION

24

6

7

30 Sep 2015 31 Mar 2015USD USD

45,591,678 - 8,808,500 56,235,314

344,000 - (17,337,082) (10,643,636)

37,407,096 45,591,678

65,387,814 56,235,314

(27,980,718) (10,643,636)

•

•

•

Additions - payment of uncalled share capital

There have been no transfers between levels during the period. The level 3 reconciliation isprovided in Note 7 above.

IFRS 13 requires disclosure of fair value of measurements of financial assets and liabilities,using a three-level hierarchy as detailed below:

Opening valuation

The Company holds interests in Marine Asset Companies that will enter into medium to longterm contractual relationships with counterparties that will charter the Marine Asset held bythe Marine Asset Company. The investments in Marine Asset Companies are stated at fairvalue. Any changes to their fair value are recognised through the profit or loss.


Unrealised depreciation on valuation carried forward

Closing valuation


Movement in unrealised depreciation on investments

Under IFRS 13, all of the investments have been classified as Level 3 under the fair valuehierarchy as their valuations are derived from techniques that include inputs that are notbased on observable market data.

Level 1: Quoted prices (unadjusted) in active market for identical assets or liabilities,

Level 2: Inputs other than quoted prices included within Level 1 that are observablefor the assets or liability, either directly (that is, as prices) or indirectly (that is, derivedfrom prices),Level 3: Inputs for the assets or liability that are not based on observable market data(that is unobservable inputs).

EARNINGS PER SHAREEarnings per share is calculated by dividing the net loss for the year attributable toShareholders of USD 19,173,616 (September 2014: 586,789) by the weighted averagenumber of Shares in issue during the period since the placing in March 2014 of 130,000,000(September 2014: 130,000,000).

Additions - purchase of investments


FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS

Closing Marine Assets cost

25

7

The valuations are the responsibility of the Board of Directors of the Company. The valuationmethod and its inputs were considered and approved by the Board. On a bi-annual basis thevaluation results and underlying assumptions will be reviewed to ensure that they remainappropriate.

Marine Assets 2

Valuation process for Level 3 valuations

Marine Assets 1

The valuation of the investments as at 30 September 2015 has been derived using theDiscounted Cash Flow (DCF) method for assets with a long term charter and AdjustedValuation for assets with a short term or no charter.

Under the DCF method the fair value of investments is estimated using assumptionsregarding the forecast distributions from the underlying partnerships and the residual valueof the return of capital at the end of the project. The present value of the projected cashflows from the distributions and residual value at the end of the project is derived using adiscount rate that is considered to be appropriate. The discount rate is based on marketconditions, investment performance and other relevant information. The discount rate isreviewed bi-annually. During the period the Board has increased the discount rates used toreflect greater market concern.

Under the Adjusted Asset Valuation method the fair value of investments is based on thelatest available independent valuation of the vessel held by the Marine Asset Company,carried out by an independent valuer on a "willing seller and willing buyer" basis. Theindependent valuation has then been adjusted for the available cash in the Marine AssetCompany, repayment of the mortgage and associated interest, subject to any agreementsrelating to the allocation of the proceeds on sale of the vessel between the Company and themortgage provider, ongoing operating expenses to reflect the estimated sale date or longterm charter and prevailling market conditions.


NOTES TO THE FINANCIAL STATEMENTS (continued)for the period ended 30 September 2015

FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS (continued)

26

7

Percentageof

ownership

Acquisitioncost

Unrealisedloss on

investments

Fair value as at 30 Sep

2015

Fair value as at 31 Mar

2015

%

* Bukit Timah Offshore DIS 26 8,585,125 (1,684,289) 6,900,836 8,584,624 Norseman Offshore IS 43 9,068,500 (3,339,178) 5,729,322 7,851,598 Volstad Marine DIS II 20.5 7,261,000 (1,263,264) 5,997,736 6,728,184 Altus Subsea IS 51 9,639,000 (1,058,098) 8,580,902 10,103,223 DSV Alliance DIS 99.5 10,061,689 (8,061,689) 2,000,000 6,515,717 Aberdeen Offshore DIS 75 12,750,000 (11,200,000) 1,550,000 5,808,332 Jane Offshore Ltd 50 8,022,500 (1,374,200) 6,648,300 -

65,387,814 (27,980,718) 37,407,096 45,591,678

*

In arriving at the above fair values, the Board have considered the following:

Bukit Timah Offshore DIS is held through an intermediate holding company Nimrod Sea AS which is100% owned by the Company and incorporated in Norway.

Marine Assets 1

The valuations stated above are as per the latest information available to the Board as at 17 November2015, being the latest practicable date prior to publication of these Financial Statements.

Distributions payable by Bukit Timah Offshore DIS have been temporarily suspended. Whilst thecharterer of the vessel has been paying their fees to the Marine Asset Company in full and on schedule,the bank which has a mortgage over the vessel has invoked a reasonableness clause based on marketconditions, requiring the Marine Asset Company as mortgagor to suspend distributions for the time being.The Company have considered that the suspension is temporary and that distributions will resume. Thishas been reflected in the valuation to recommence in December 2016 and delay is factored in to the endof charter.

Distributions payable by Norseman Offshore IS have been temporarily suspended. The vessel wasvalued in August 2015 and was marked down causing a loan-to-value breach. The Company had toinject USD 344,000 of equity by means of a capital call. The Company have considered that thesuspension is temporary and that distributions will resume. This has been reflected in the valuation torecommence in June 2016 and delay is factored in to the end of charter. The reduction in residual valueof the vessel has also been included in the valuation.




All Marine Asset Companies are incorporated in Norway and operate within the North Sea and SouthEast Asia.

All Marine Asset Companies’ principal activities are associated with offshore oil and gas industry anddeep sea exploration.

27

7

Fair Value at 30

September2015

Valuationtechnique

Significantunobservable

input

USD

33,857,096 DCF Discount Rate

Residual value of vessels net of loans in SPV

Distributions payable by Jane Offshore Ltd have been temporarily suspended. Whilst thecharterer of the vessel remain in full compliance, the bank which has a mortgage over the vesselhas invoked a reasonableness clause based on the market conditions, requiring the MarineAsset Company as mortgagor to suspend distributions for the time being. The Company haveconsidered that the suspension is temporary and that distributions will resume. This has beenreflected in the valuation to recommence in January 2017 and delay is factored evenly over theremaining term of charter.

Distributions payable by Altus Subsea IS have been temporarily suspended. The Altus Invictuswas working at the start of the year on a project which was cancelled at a short notice causingcash flow issues. The Company is working with MEDs to bring payments up to date andtherefore the Company have considered that the suspension is temporary and that distributionswill resume. This has been reflected in the valuation to recommence in December 2015 anddelay is factored in to the end of charter.

Marine Assets 2With respect to DSV Alliance AS during September 2015 the Company and BLME, the mortgageprovider of the vessel, reached agreement regarding the immediate future of the vessel. TheCompany will provide further working capital for the vessel which is now first priority recoverablewhen the vessel is sold. The Marine Asset has therefore been valued on the adjusted valuationbasis.

Range* (weighted average)

With respect to the Aberdeen Offshore DIS investment, following restructuring of FletcherShipping Limited, the Marine Asset is now on a new pay as you earn charter to Fletcher SupplyShips Ltd. The vessel is on time charter to Enquest Britain Ltd, but the day rate is below what isrequired to earn a profit and there is no expectation that a distribution by the Marine Asset will bepaid in the forseeable future. The Marine Asset has therefore been valued on the adjustedvaluation basis with an immediate sale.

Further information is given in the Executive Directors' Investment Report on page 5 to 11.




FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS(continued)

Information about fair value measurement using significant unobservable inputs (Level 3)

18.9% - 27.6% (22.7%)Marine Assets 1

USD5,806,350 - USD10,484,513(USD7,614,411)

Asset class

28

7

Fair Value at 30

September2015

Valuationtechnique

Significantunobservable

input

USD

2,000,000 Valuation N/ADIS

1,550,000 Valuation N/A

Asset classSensitivityused*

Favourablechange in fair

value

Unfavourablechange in fair

valueUSD USD

5% 6,239,466 4,811,947

20% 1,813,928 1,813,928

** 20% - -

Valuation20% 1,471,580 1,471,580

Information about fair value measurement using significant unobservable inputs (Level 3)(continued)

Asset class

Range* (weighted average)

Marine Assets 2

The significant unobservable inputs used in the fair value measurements categorised withinLevel 3 of the fair value hierarchy together with a quantative sensitivity analysis as at 30September 2015 are shown below:

Marine Assets 1

Significantunobservable input

Marine Assets 2

Adjustedvaluation

DSV Alliance

Aberdeen

FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS(continued)


Offshore DIS


AberdeenOffshore DIS

Adjustedvaluation

Residual value of vessels net of loans in SPV

DSV Alliance DIS

Discount Rate

Sensitivity analysis to significant changes in unobservable inputs

Valuation

29

7

*

**

8 RECEIVABLES


23,696 41,106 25,695 -

49,391 41,106

9


10,739 21,197 99,542 55,186 77,378 77,378 92,592 92,592 26,750 57,681

701,111 -

1,008,112 304,034

PrepaymentsSundry debtors

The above carrying value of payables is equivalent to the fair value.

Accrued administration fees

DSV Alliance creditor

Accrued management fee


PAYABLES (amounts falling due within one year)

Sensitivity analysis to significant changes in unobervable inputs (continued)


Other accrued expenses



The sensitivity analysis refers to a percentage amount added or deducted from the input andthe effect this has on the fair value. An increase in discount rate will result in a decrease infair value and vice versa. An increase in residual value will result in an increase in fair valueand vice versa. When performing sensitivity analysis on discount rates, the rates have beenincreased or decreased by five whole percentage points.

The sensitivity analysis reflects the allocation of the proceeds on sale of the vessel betweenthe Company and the mortgage provider.

In carrying out the sensitivity analysis it was assumed that all other variables remainedconstant. The sensitivity rates used represent the Board's assessment of what changes mayfeasibly occur to the residual value of the vessels and also the possible changes in themarket and risk profile of the investments.

There has been significant disruption in the Company’s principal markets where the dramaticdecrease in the oil price has resulted in failure and stress amongst the charter holders towhom the underlying vessels are leased. This disruption has also led to significant illiquidityand uncertain pricing both for the underlying vessels and Company’s investments. Thesereasons give rise to material uncertainty in valuation.

Accrued shareholder advisor feeAccrued audit fee

30

10

30 Sep 2015 31 Mar 2015Ordinary Ordinary

Shares Shares

130,000,000 130,000,000

130,000,000 130,000,000

11


Issued share premium 122,895,175 122,895,175

122,895,175 122,895,175

12

The Share Capital of the Company is represented by an unlimited number of shares of nopar value being issued or reclassified by the Company as Ordinary Shares.


Issued share capital

The Company's objective is to obtain income returns and a capital return for its Shareholdersby participating in vehicles which acquire, charter and sell Marine Assets associated with theoffshore oil and gas industry. Risk is inherent in the Company's activities, but is managedthrough a regular process of identification, measurement and monitoring by the Board ofDirectors. The financial risks which the Company are exposed to include: market risk,interest rate risk, credit risk (including counterparty risk), liquidity risk and capitalmanagement risk. The Board regularly review and agrees policies for managing each ofthese risks and these are summarised overleaf:

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

SHARE PREMIUM

On a winding up, Ordinary Shareholders are entitled to the surplus assets attributable to theOrdinary Share class remaining after payment of all the creditors of the Company. Membershave the right to receive notice of and to attend, speak and vote at general meetings of theCompany.

The Shareholders shall have the right to receive notice of and to attend, speak and vote atgeneral meetings of the Company and each holder of Shares being present in person or byattorney at a meeting shall upon a show of hands have one vote and upon a poll each suchholder present in person or by proxy or by attorney shall have one vote in respect of eachShare held by him/her.


Members holding Ordinary Shares are entitled to receive, and participate in, any dividendsout of income attributable to the Ordinary Shares; other distributions of the Companyavailable for such purposes and resolved to be distributed in respect of any accountingperiod; or other income or right to participate therein.

SHARE CAPITAL


31

12

(a)

(b) Credit risk

Market risk is the risk that the future cash flows or fair value of the investments will fluctuatedue to general economic and market conditions, such as currencies, interest rates,availability of credit, inflation rates, economic uncertainty, changes in laws, trade barriers,currency exchange controls and national and international political circumstances. All ofthese may affect the price level, volatility and liquidity of securities prices and result in lossesin the value of the Company's assets.




FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

The Company is exposed to credit risk in respect of its cash and cash equivalents, arisingfrom possible default of the relevant counterparty, with a maximum exposure equal to thecarrying value of those assets.

The effects of the changing market place are considered in deriving an appropriate discountrate for determining the fair value of the assets. The sensitivity on the fair value of theCompany's investment portfolio as a result of a 5% increase/ decrease in discount rates areshown in Note 7.

The credit risk on liquid funds is limited as the counterparties are banks with high creditratings assigned by international credit-rating agencies. The Company monitors theplacement of cash balances on an ongoing basis. The Company invests its cash and cashequivalents with Royal Bank of Scotland International Limited and Diversified EnhancedYield Account ("DEYA") facility which at 30 September 2015 deposited cash in StandardChartered, Lloyds, BNP and Santander. DEYA facility is maintained by JTC CashManagement service where the Company's "on call" cash is amalgamated with otherparticipating parties in order to diversify and thus reduce the level of depositor risk andenhance yield. The credit risk is mitigated through the spread of the Company's cash acrossvarious counterparties each with a Standard and Poor's ratings ranging between Aa3 to Ba1at the time of signing.

The Company is exposed to credit risk in respect of its financial assets designated at fairvalue, arising from possible default of the counterparties that will charter the marine assetfrom the Marine Asset Company in which the Company holds an interest. There is noguarantee that all of the counterparties will honour their contractual obligations and defaultmay adversely effect the dividends received if they do not meet their financial obligations andthe residual value if the vessel is poorly maintained by the counterparty.

Market Risk

The residual value of a vessel at the end of a charter term may also be impacted if there isnot a market for a willing sale due to market conditions prevailling at the time. The residualvalue of the vessels is monitored through independent valuations and broker reports. Thesensitivity on the fair value of the Company's investment portfolio as a result of a 20%increase/ decrease in residual value is shown in Note 7.

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

The Company invests in Marine Asset Companies holding highly specialised Marine Assetsfor use within the offshore oil and gas industry and which have few alternative uses. TheCompany's performance will therefore depend largely on the overall condition of the offshoreoil and gas industry.

32

12

(b) Credit risk (continued)

for the period ended 30 September 2015NOTES TO THE FINANCIAL STATEMENTS (continued)


Sellers’ credits have been entered into for some of the investments as a way of mitigating therisk of default by the charterer. The sellers’ credit acts as a performance related obligation,which subject to the charter performing all of its obligations becomes repayable at the end ofthe charter. In the event of default by the charterer of its obligations the sellers credit wouldnot be paid. The table below shows the Company’s seller’s credits in place with the variouscharter parties.

The Investment Committee reviews the counterparties involved in the Marine Asset whenconsidering whether to invest and reviews all financial arrangements of any potential MarineAsset.

The Committee receives quarterly reports and regular market updates from the ExecutiveDirectors and reports from the Partnerships or the Commercial Manager of the Partnership.Prior to entering into an investment, the Investment Committee carefully considers the currentmarket conditions and cautiously reviews the financial strength of the investmentcounterparties. Norton Rose Fulbright provides a report on the legal arrangements andunderlying financial strength of the counterparties. The Committee continue to monitor thefinancial stability of each of its investments and this is considered when establishing theappropriate valuation method. If the income receivable from a counterparty ceases, or theCommittee concludes that the income will not be paid in the longer term, the Committee willrefer to broker reports and valuations and comparable sales (if any) to ascertain the value ofthe underlying Marine Asset.


The overall credit exposure on a DCF basis is $33,857,096 and this assumes in one case thecharterer’s contract is extended for a further 5 years. If any of the charterers had a creditevent which meant they were no longer able to adhere to the charter contract with the SPVthe value recovered may be on an asset sale basis it is not practical to quantify at the periodend. The asset sale basis would be expected to be significantly lower as evidenced by theasset sale valuations of the FS Cygnus and DSV Alliance (see note 7 for further details).

The Marine Assets companies into which the Company invests frequently utilise a substantialamount of leverage to finance the purchase of the marine assets. These Marine Assetscompanies will therefore likely to be required to comply with loan covenants andundertakings. There is therefore a credit risk to the Company that the Marine Asset Companyunderlying the investments may fail to comply with any covenants and the relevant lenderswill recall the loans. In such circumstances the Marine Asset Company may be required tosell the asset to repay the outstanding loan. If the asset is sold, in relation to that MarineAsset the Company will receive only the proceeds left after the deduction of the outstandingloan repayments.

33

12

(b) Credit risk (continued)

Jane Offshore Ltd Global

* No sellers credit.

All charterer arrangements allow the charterer to conduct worldwide operations as noted inthe table above. The Board does not consider that credit risk is concentrated in onegeographic location.

Global USD1.56mNewcruze Offshore Marine Pte Ltd, guaranteed by Swiber Holdings Limited


EDT Offshore Ltd, guaranteed by Ulricus Management Ltd

Further information is given in Note 7 on page 25 to 30.

The Company seeks to avoid investing in any Marine Asset with excessive or potentiallyonerous financing arrangements. The Committee monitors the performance of eachinvestment to ensure it is not in default of its loan covenants. In the event that an investmentdoes default on its loan covenants, the Executive Directors work closely with the board of theMarine Asset Companies and engage with the lender. The Committee has reviewed eachinvestment in which there is any bank lending and is satisfied that either the loan is in goodstanding or any breach is being addressed.

The Investment Comittee considers the counterparty risk prior to making an investmentdecision. The Board does not quantify the counterparty risk for all the investments on anongoing basis due to the limited information available on a number of the charterers. TheExecutive Directors obtain regular updates from the appointed commercial manager onwhether the charterer and debt is in compliance and reports to the board should issues arise.

Sellers Credit (exc. interest)

Counterparty/Charterer

Bukit Timah Offshore DIS

Marine Engineering Diving Services

Fletcher Supply Ships Limited


*

USD11.99m


Norseman Offshore IS

Volstad Maritime DIS II

Altus Subsea IS

Aberdeen Offshore DIS

Marine Asset Company Location

DSV Alliance DIS no longer has a counterparty because its former charterer, Red7 MarineOffshore Limited, went into administration on 18 June 2015 and the charter was formallyterminated on 24 June 2015.

Global

Global

Global

Global

Viking Supply Ships A/S

CGG Eidesvik Ship Management AS

USD2.322m

*

*

34

12

(c) Interest rate risk

As at 30 September 2015:Non-interest Total

0-3 months 3-6 months BearingUSD USD USD USD

Financial assets

- - 37,407,096 37,407,096 - - 49,391 49,391

53,193,767 - - 53,193,767 53,193,767 - 37,456,487 90,650,254

Financial liabilities- - 1,008,112 1,008,112 - - 1,008,112 1,008,112

53,193,767 -

As at 31 March 2015:Non-interest Total

0-3 months 3-6 months BearingUSD USD USD USD

Financial assets

- - 45,591,678 45,591,678 - - 41,106 41,106

1,926,461 64,804,010 - 66,730,471 1,926,461 64,804,010 45,632,784 112,363,255

Financial liabilities- - 304,034 304,034 - - 304,034 304,034

1,926,461 64,804,010

Total financial liabilities

Total interest bearing

Assets held at fair value through profit and lossReceivables


Total financial assets


Accrued expenses




Total financial assets

Total financial liabilities

Interest rate risk arises from the possibility that changes in interest rates will affect futurecash flows, it is also the risk that fluctuations in market interest rates will result in a reductionin deposit interest earned on bank deposits held by the Company.

Assets held at fair value through profit and loss

Total interest bearing

Other than cash and cash equivalents, none of the assets or liabilities of the Companyattract or incur interest. The following table details the Company's exposure to interest raterisks:

Receivables

Accrued expenses

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12

(c) Interest rate risk (continued)

(d) Liquidity risk

As at 30 September 2015:

Less than 1 to 3 3 months to Greater than

1 month months 1 year 1 year Total

894,818 58,379 54,915 - 1,008,112

894,818 58,379 54,915 - 1,008,112

As at 31 March 2015:

Less than 1 to 3 3 months to Greater than

1 month months 1 year 1 year Total

304,034 - - - 304,034

304,034 - - - 304,034

Accruedexpenses



If interest rates had been 25 basis points higher throughout the period and all other variableswere held constant, the Company's net assets attributable to shareholders as at 30September 2015 would have been $132,984 (31 March 2015: $166,826) greater due to anincrease in the amount of interest receivable on the bank balances.

Accruedexpenses


If interest rates had been 25 basis points lower throughout the period and all other variableswere held constant, the Company's net assets attributable to shareholders as at 30September 2015 would have been $132,984 (31 March 2015: $166,826) lower due to adecrease in the amount of interest receivable on the bank balances.

Liquidity risk is the risk that the Company will encounter difficulty in realising assets orotherwise raising funds to meet financial commitments. The Company’s main financialcommitment is its ongoing operating expenses.

The Board of Directors regularly monitor the cash flow of the Company to ensure it hassufficient liquid resources available to fulfil its operational plans and to meet its financialobligations as they fall due.

The table below details the residual contractual maturities of financial liabilities:


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12

(e)

13

14 COMMITMENTS AND CONTINGENT LIABILITIES

30 Sep 2015 31 Mar 2015

USD 1,978,000 2,322,000NOK 6,150,000 5,250,000USD 5,000,000 -

15 RELATED PARTY TRANSACTIONS

There are uncalled capital commitments in place in respect of certain Marine AssetCompanies. It is unknown if the commitment will be called upon, as this is dependent onseveral conditions and circumstances. The uncalled capital commitments are summarised asfollows:

The Company shall pay to Nimrod for its services as Corporate and Shareholder Adviser afee of USD 301,964 per annum (adjusted annually for inflation from 2015 onwards, at 2.5 percent per annum) payable quarterly in arrears.

Nimrod Capital LLP ("Nimrod") is the Company's Placing Agent and Corporate andShareholder Adviser. In consideration for Nimrod acting as placing agent in the initialOrdinary Share Placing, the Company agreed to pay to Nimrod, at Admission, a placingcommission equal to 2.5 per cent of the initial gross proceeds of the initial Ordinary SharePlacing. The amount has been deducted from Share premium.

Capital management

Volstad Marine DIS IIJane Offshore Ltd

ULTIMATE CONTROLLING PARTY

The Company manages its capital to ensure that the Company will be able to continue as agoing concern while maximising the return to Shareholders.


Equity includes all capital and reserves of the Company that are managed as capital.


During the period, the Company incurred USD 154,756 (September 2014: USD 3,332,015)of expenses with Nimrod, of which USD 77,378 (March 2015: USD 77,378) was outstandingto this related party at 30 September 2015. USD Nil (September 2014: USD 3,174,415) ofexpenses related to share issue costs.


In the opinion of the Directors, the Company has no ultimate controlling party.

The capital structure of the Company consists of cash and cash equivalents and equityattributable to equity holders, comprising issued capital and retained earnings.


Norseman Offshore IS

The Company's Board of Directors reviews the capital structure on a bi-annual basis.

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15 RELATED PARTY TRANSACTIONS (continued)

16

On 1 October 2015 the Company announced that unless market conditions improvesignificantly, it is unlikely to make any further new investments. Consequently the Boardanticipates returning unrequired uninvested capital after March 2016.

EVENTS AFTER STATEMENT OF FINANCIAL POSITION DATE

Note that Directors' fees have been disclosed in Note 5 and Directors' interests noted in theDirectors' Report.

During the Period, the Company incurred USD 555,550 (September 2014: USD 562,789) ofexpenses with Stamford, of which USD 93,386 (March 2015: USD 92,592) was outstandingto this related party at 30 September 2015.

Stamford Maritime Limited ("Stamford") is the Company's Consultancy service provider. TheCompany shall pay to Stamford for its services of the Executive Directors, together withcertain investment support services to the Directors and the Company, a fee of USD1,083,999 per annum (adjusted annually for inflation from 2015 onwards, at 2.5 per cent perannum) payable monthly in arrears.

The details of the fee can be found in the Company’s prospectus available from theCompany’s website but is approximately 20% above an annualised 8% hurdle. Noperformance fee has been accrued for the period.

Stamford shall also be entitled to receive a Performance Fee from the Company payable incertain circumstances.



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KEY ADVISERS AND CONTACT INFORMATION

Exchange Specialist Fund Market of London Stock Exchange Ticker NSA Listing Date 24 March 2014 Financial Year end 31 March Base Currency USD ISIN GG00BK0SC854 SEDOL BK0SC85 Country of Incorporation Guernsey – Registration number 55718

Registered OfficeNimrod Sea Assets Limited Dorey Court Admiral Park St Peter Port GuernseyGY1 2HT

Placing Agent and Corporate and Shareholder Adviser Nimrod Capital LLP St Helen’s Place LondonEC3A 6AB

Consultancy Service Provider Stamford Maritime Limited Southgate Chambers 37/39 Southgate Street Winchester HampshireSO23 9EH

Advocates to the Company (as to Guernsey law) Carey Olsen P.O. Box 98 Carey House Les Banques St Peter Port, Guernsey GY1 4BZ

AuditorDeloitte LLP PO Box 137, Regency Court Glategny Esplanade, St Peter Port Guernsey, GY1 3HW

Administrator and Company Secretary JTC (Guernsey) Limited P.O. Box 156 Dorey Court Admiral Park St Peter Port GuernseyGY1 4EU

RegistrarAnson Registrars Limited PO Box 426, Anson House Havilland Street St Peter Port GuernseyGY1 2QE

UK Transfer Agent Anson Registrars (UK) Limited 3500 Parkway WhiteleyFarehamHampshirePO15 7AL

Solicitors to the Company (as to English law) Herbert Smith Freehills LLP Exchange House Primrose Street LondonEC2A 2EG

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