CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM INCORPORATION ON 2 DECEMBER 2005 TO 31 DECEMBER 2006 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Contents
Page
Directors 1-3
Management and Administration 4
Directors Report and Statement of Directors' responsibilities 5-6
Report of the Investment Manager 7-8
Independent Auditor's Report 9-10
Investment Portfolio 11
Balance Sheet 12
Statement of Total Return 13
Cash Flow Statement 14
Notes to the Financial Statements 15-21 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Directors
Peter Grant CBE (Chairman) (appointed on 2 December 2005) Mr.GrantisChairmanofEgyptianDirectInvestmentFundLimited,TheEgyptInvestmentCompanyLimitedandof CoralGrowthInvestmentsLimitedandisaDirectorofothercompanies.HeretiredasChairmanofSunLife CorporationPLCinApril1995andwaspreviouslywithLazardBrothers&Co.Ltd.1952-88,Vice-Chairman1983-85 andDeputyChairman1985-88.HewasformerlyDeputyChairmanofLondonMerchantSecuritiesPLC,amemberof theCounciloftheInstituteofDirectors,memberoftheCivilAviationAuthorityandoftheIndustrialDevelopment AdvisoryBoardoftheDepartmentofTradeandIndustryandChairmanoftheFinanceCommitteeoftheBritishRed Cross. In 1997 he was named as a Commander of the Order of the British Empire.
Richard C. Blum (appointed on 6 December 2005) RichardC.BlumischairmanandpresidentofRichardC.Blum&Associates,Inc.,theGeneralPartnerofBlumCapital Partners,L.P.,along-termstrategicequityinvestmentmanagementfirmwhichactsasGeneralPartnerforvarious investmentpartnershipsandprovidesinvestmentadvisoryservices.Mr.BlumservesontheboardsofDirectorsof severalcompanies,includingCBRichardEllisGroup,Inc.Heisalsoco-ChairmanofNewbridgeCapital,LLC,an investmentmanagementfirmthatinvestsinAsiaandLatinAmerica.Mr.BlumalsoservesasChairmanoftheBoard ofRegentsoftheUniversityofCaliforniaandisamemberoftheAdvisoryBoardoftheBusinessSchoolatthat University. Mr.BlumisthefounderandChairmanoftheAmericanHimalayanFoundationandisHonoraryConsulofthe KingdomofNepalandMongolia.Inaddition,Mr.BlumservesontheboardofTrusteesofthefollowingnot-for- profitsorganisations:TheAmericanCancerFoundation,TheBrookingsInstitution,CaliforniaAcademyofSciences, TheCarterCenter,GlideFoundationandTheWildernessSociety.Mr.BlumhasaB.A.andaMBAdegreefromthe University of California, Berkeley. Mr. Blum is a Director of Egyptian Direct Investment Fund Limited and of Coral Growth Investments Limited.
Richard F. Coons (appointed on 6 December 2005) Mr.CoonshasextensiveanddiversifiedexperienceinbothU.S.andinternationalinvestmentbanking,inwhich fieldhehasheldseniorpositionswiththreemajorfirms.Inrecentyears,hehasbeenanindependentadvisorto severalsmallmerchantbanksinNewYork,aswellasoperatinginLondonasaconsultanttoaU.S.groupengaged inmergersandacquisitions.In1986,heformedanAmericanwhollyownedsubsidiaryofBaringBrothers&Co.to conductinternationalbrokeragetransactionsforU.S.institutionalinvestors,andservedasitsChiefExecutive Officer. In1979,Mr.CoonsjoinedJ.HenrySchroderBank&TrustCo.inNewYork(whollyownedbySchroder,Wagg– London)asexecutiveVicePresident,specialisingincapitalmarketsintheU.S.andEurope.Clientsincludedsmall growthcompaniesinterestedinraisingequitycapitaloverseas,aswellasmajorU.S.corporationsrequiringafull rangeofinternationalfinancialservices.Hewasdirectlyinvolvedintheformationof,andwaselectedFounding Directorof,aUS$100millionfundplacedwithEuropeaninstitutionsforinvestmentinU.S.oilandgasproperties. Heoriginatedtheconceptandimplementedtheformationofabroker/dealersubsidiaryofJ.HenrySchroderBank &TrustCo.,whichbecameamemberoftheNewYorkStockExchange,toexecutetransactionsforinstitutional customers.Duringhisprior25yearsatKidder,Peabody&Co.Incorporated,Mr.Coonswasengagedinawide varietyoffinancialtransactions,bothintheU.S.andoverseas,andhadprincipalresponsibilityformanyofthe firm’s major accounts. In1966and1967,heworkedvirtuallyfulltimedesigningasuccessfulplantore-floatIntraBank(Beirut),whichhad gonebankruptandceasedoperations.AtKidder,Peabody,hewasamemberoftheExecutiveCommittee, managedtheCorporateFinanceDepartment,andwastheSeniorManageroftheInternationalDepartment.Mr. Coons received a BA from Princeton and a MBA from Harvard Business School. Mr. Coons is a Director of Coral Growth Investments Limited.
1 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Directors (continued)
Tarek Ben Halim (appointed on 2 December 2005) Mr.BenHalimisaformerinvestmentbankerwithGoldmanSachs,JPMorganandCreditSuisseFirstBoston.During his23yearcareerheworkedincorporatefinance,equitiesandfixedincome.HeworkedatGoldmanSachsfrom 1991to2003andwasnamedaManagingDirectorin1997.DuringhistimeatGoldmanSachshehadresponsibility forthefirm’sinvestmentbankingbusinessintheMENAregion,SouthAfrica,EasternEuropeandRussia.In2001he wasappointedHeadofGoldmanSachs’Milanoffice.AfterleavingGoldmanSachsin2003,heworkedwiththe Coalition Provisional Authority in Iraq as deputy director of Private Sector Development. CurrentlyMr.BenHalimisservingasadvisortotheCentralBankofLibyaonbankingsectorreformandisanon- executiveDirectorofMajidalFutaimGroupinDubai.Inaddition,heisthefounderofAlfanar,aneworganisation setuptosupportsocialchangeintheArabworld.HeisaTrusteeofCommonPurposeInternational,aUKbased civilsocietyorganisation.InthepasthewasamemberoftheInternationalAdvisoryBoardoftheCairoand AlexandriaStockExchanges.Mr.BenHalimreceivedaBScfromWarwickUniversityinEnglandin1977andaMBA from Harvard University in 1980. Mr. Ben Halim is a Director of Coral Growth Investments Limited.
Ove Hoegh (appointed on 6 December 2005) Mr.HoeghistheformerSeniorPartnerofHoeghInvestA/S,afamilyownedcompany.Mr.Hoeghisagraduateof theRoyalNorwegianNavalAcademyandhasanMBAfromHarvardBusinessSchool.From1966to1974hewas ManagingDirectorofLeifHoegh&CoA/Sandfrom1974to1979wasChairmanofthesamecompany.Mr.Hoegh hasbeenontheboardsofanumberofNorwegiancompaniesandassociations.HeisaDirectorofApexSilver MinesCorp,Oceanor/ASA,TheEgyptianGrowthInvestmentCompanyLimitedandofCoralGrowthInvestments Limited.
Fahad Mazyad Al-Rajaan (appointed on 19 July 2006) BorninKuwait,MrAl-RajaanreceivedhissecondaryeducationatVictoriaCollegeinCairo.Hegraduatedfromthe AmericanUniversityinWashingtonD.C.(B.A.inBusinessAdministration).HestartedhiscareerasManagerofthe "NewIssuesDepartment"attheKuwaitInvestmentCompanyin1976.In1981hejoinedtheKuwaitReal InvestmentConsortiumasChairmanandManagingDirector.In1984hewasappointedDirectorGeneralofthe Public Institution for Social Security (Kuwait). He maintains this position to date. Mr.Al-RajaanisalsothechairmanofAhliUnitedBank(Bahrain),AhliUnitedBank(UK),DeltaInternationalBank (Cairo) and Wafra Investment Advisory Group (New York). He is a director of National Industries Group (Kuwait). PreviouslyheheldthepositionofChairmanoftheEgyptianGulfBank(Cairo)andDeputyChairmanofthe Industrial Bank of Kuwait (Kuwait). Mr. Al-Rajaan is a Director of Coral Growth Investments Limited.
Bertrand P. Viriot (appointed on 6 December 2006) Mr.ViriothasrecentlyretiredastheManagingDirectoroftheSaudiFrenchBankinRiyadh.Thisbankisajoint venturebetweentheCréditAgricoleIndosuezandleadingSaudibusinessmen.Mr.Viriotstartedhiscareerin investmentbankingwithMorganStanley&Co.inNewYorkandjoinedtheSuezGroupin1967inParis.In1969he becamedirectorofSuezAmericanCorporationinNewYorkuntil1973.HereturnedtoParisatthattimewiththe SuezGroupwhichhadthenbecomeCréditAgricoleIndosuez. From1973todate,Mr.Viriottooksenior assignmentsforCréditAgricoleIndosuezinParis,NewYorkandHongKongin1987whenhebecameSenior CountryOfficerfortheGroupinHongKongandChina.In1993Mr.ViriotspentayearasSeniorCountryOfficerin theUnitedKingdom.From1994to1997hewasSeniorCountryOfficerforAustraliaandNewZealandbasedin Australia.ThisbankisoneofthemostsuccessfuljointventurebanksinSaudiArabia.Mr.Viriotisagraduateofthe University of Paris and a graduate of the Paris Law School and Institute of Political Sciences. Mr. Viriot is a Director of Coral Growth Investments Limited.
2 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Directors (continued)
Mohamed Younes (appointed on 2 December 2005) Mr.YounesistheChairmanoftheConcordInternationalInvestmentsGroup,LP.FromJuly1977toDecember1979 Mr.YouneswasPresidentofIndustrialHoldingsLimitedinNewYork.Priortothat,hewasheadofInternational CorporateFinanceandamemberoftheboardofDirectorsofKidder,Peabody&Co.Incorporated.FromDecember 1979toFebruary1987hewasChairmanandChiefExecutiveofKidder,PeabodyInternationalLimited.Hewas appointedChairmanoftheConcordGroupin1988andconcurrentlyservedasChairmanofBaringBrothers&Co., Inc., the New York based corporate finance affiliate of Baring Brothers & Co., Limited, until 1992. Mr.YounesisagraduateofCairoUniversityandhasaMBAfromtheHarvardBusinessSchool.Hehasservedon theBoardsofDirectorsofEuroclearClearanceSystem,UBAFArabAmericanBank,NewYorkandBaringBrothers& Co.Limited,London.Hehasservedonanumberofadvisorycommitteesonsecurities-relatedissues,includingthe AdvisoryCommitteeonInternationalCapitalMarketstotheBoardoftheNewYorkStockExchangeandthe International Capital Committee of the Securities Industry Association, New York. Mr.YounesisamemberoftheboardofDirectorsoftheCentralBankofEgypt.Heisalsoamemberoftheboards ofDirectorsofITInvestments,TheEgyptianInvestmentCompany,TheEgyptInvestmentCompanyLimited,The EgyptianGrowthInvestmentCompanyLimited,EgyptianDirectInvestmentFundLimited,TheIT-Concord-Misr TechnologyVentureCapitalFundLimited,AlBorgLaboratoryLimited,LecicoEgypt,BiscoMisrandCoralGrowth Investments Limited respectively.
3 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Management and Administration
Registered Office Administrator, Secretary, Registrar and Channel Regency Court Islands Stock Exchange Sponsor Glategny Esplanade Butterfield Fund Services (Guernsey) Limited St Peter Port P.O. Box 211 Guernsey Regency Court Channel Islands GY1 3NQ Glategny Esplanade St Peter Port Legal Advisers Guernsey As to Guernsey Law: Channel Islands GY1 3NQ Ogier Ogier House Custodian St Julian's Avenue HSBC Bank, Egypt St Peter Port 3 Abou El Feda Street Guernsey GY1 1WA Zamalek Cairo 11211 Investment Manager Egypt Stanhope Overseas Limited C/O Concord International Investments Auditors 667 Madison Avenue Ernst & Young LLP New York 14 New Street NY 10021 St Peter Port USA Guernsey Channel Islands GY1 4AF Placing Agent Concord Consultant Services Limited Sea Meadow House Blackburne Highway Road Town, Tortola British Virgin Islands
4 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Directors' Report and Statement of Directors' Responsibilities
TheDirectorsofCoralGrowthInvestments(Parallel)LimitedpresenttheAnnualReportandFinancial Statements for the period ended 31 December 2006.
Incorporation
TheCompanywasincorporatedinGuernseyon2December2005andisaclosedendedinvestment companywithlimitedliability.TheCompanyhasbeenauthorisedbytheStatesofGuernseyAdvisory& Finance Committee under the Control of Borrowing (Bailiwick of Guernsey) Ordinances 1959 to 1989. The Company was listed on the Channel Islands Stock Exchange ("CISX") on 31 January 2006.
Term
TheCompanyhasafixedinitiallifeof10yearsfromtheFirstClosing.Thistermmaybeextendedonceonly by two further years by a resolution of the Board of Directors.
Principal Activity
The principal activity of the Company is that of a closed ended investment fund. TheinvestmentobjectiveoftheFundistoachievelongtermcapitalappreciationbytakingadvantageof significantopportunitiesfordirectinvestmentsinEgypt.TheInvestmentswillbeinequityandequity relatedsecurities.TheFundwillmakeinvestmentsinthemodernisationofEgyptianindustryandindustry relatedservicesoftheprivatesectoraswellasprivatisedcompaniesinconnectionwithrestructurings, recapitalisationsandcapitalinjections.TheFundmayprovidecapitaltoentrepreneursorcorporatepartners seeking to establish new ventures in Egypt.
Dividend
The Directors do not propose a dividend for the period.
Significant Shareholdings
Thefollowingshareholdingsrepresentinterestsof3percent.ormoreofthetotalnumberofparticipating preference shares of the Fund: Number Number Of Units Of Shares Percentage Egyptian National Post Organization 173 3,460 67.6% Industrial Modernisation Centre 83 1,660 32.4%
The following were the Directors of the Company during the period under review:
Peter Grant, CBE (Chairman) Richard C. Blum Richard F. Coons Tarek Ben Halim Ove Hoegh Fahad Mayzad Al- Rajaan Bertrand P. Viriot Mohamed S. Younes
The biographical information relating to the Directors is shown on pages 1 to 3.
5 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Directors' Report and Statement of Directors' Responsibilities (Continued)
TheBoardactsindependentlyoftheInvestmentManagerandamajorityoftheDirectorsarenotemployees of,orprofessionaladvisersto,theInvestmentManageroranyothercompanyintheConcordInternational Investments Group, LP. TheaddressofeachoftheDirectorsforthepurposesoftheCompanyistheregisteredofficeofthe Company. NoDirectorisinterestedbeneficiallyorotherwiseinanysharesoftheCompanyorhashadanydirector indirect interest in any assets acquired or disposed of by the Company. ExceptforMrMohamedYounes,whoisChairmanofConcordInternationalInvestmentsGroup,L.Pthe parentcompanyoftheInvestmentManager,noDirectoroftheCompanywasorismateriallyinterestedin anycontractofsignificancesubsistingduringorattheendofthefinancialyear.Eachofthedirectorsare entitledtoanannualfeeofUS$20,000each.TheChairmanisentitledtoanannualfeeofUS$30,000.These feesareallocatedequallybetweentheCompanyandCoralGrowthInvestmentsLimited.Therehasbeenno change in these interests between 31 December 2006 and the date of this report.
Directors' Responsibilities
TheDirectorsareresponsibleforpreparingfinancialstatementsforeachfinancialperiodwhichgiveatrue andfairviewofthestateofaffairsoftheCompanyandoftherevenueandexpenditureoftheCompany forthatperiodandwhichareinaccordancewithapplicablelaws.Inpreparingthosefinancialstatements the Directors are required to: * select suitable accounting policies and apply them consistently; * make judgements and estimates that are reasonable and prudent; * state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and * prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. TheDirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonable accuracyatanytimethefinancialpositionoftheCompanyandwhichenablethemtoensurethatthe financialstatementsareproperlypreparedinaccordancewithTheCompanies(Guernsey)Law,1994.They arealsoresponsibleforsafeguardingtheassetsoftheCompanyandfortakingreasonablestepsforthe prevention and detection of fraud and other irregularities.
Corporate Governance AsaGuernseyincorporatedcompany,theCompanyisnotrequiredtocomplywiththeCodeofBestPractice publishedbytheUKCommitteeofCorporateGovernance(the"CombinedCode").TheDirectors,however, attach a high degree of importance to the maintenance of high standards of corporate governance.
Auditors AresolutionproposingtheappointmentofErnst&YoungLLPasAuditorsoftheCompanyistobe proposed at the forthcoming Annual General Meeting.
By Order of the Board
Peter Grant, CBE - Chairman Mohamed Younes - Director
30 January 2008
6 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Report of the Investment Manager
CoralGrowthInvestments(Parallel)LimitedhasbeenoperationalsinceitsfirstclosinginDecember2005.One subsequentclosinghastakenplace.TheCurrentPaid-upCapitaloftheCompanyisUSD25.6million.The CompanyhasobtainedtheapprovaloftheGuernseyfinancialservicesregulatortoextenditsplacement periodtillDecember2007.CoralGrowthInvestmentsLimited(CGIL),TheCompany'ssisterfund,hasraised USD 84.5 million in commitments. During2006,wereviewedanumberofpotentialinvestmentsandsuccessfullystudied,negotiatedandclosed the Company's first transaction in December 2006. InJanuary2006,wewereapproachedbytwomajorinternationalprivateequityinvestors,namelyCitigroup VentureCapitalInternational(CVCI)andCapitalInternationalPrivateEquityFundIV(CIPEF),withaviewto the Company and CGIL joining them in acquiring 100% of Amoun Pharmaceutical Company (Amoun). Amounwasestablishedin1998asahighqualityproducerofbothhumanandveterinarydrugswithasound businessandmarketingstrategy.Inlessthan8yearsAmounbecameoneofthelargestpharmaceutical companiesinEgypt,manufacturingoff-patentbrandedgenericformulationscoveringabroadrangeof therapeutic segments with over EGP600 million of expected revenues in 2006 and a market share of 5.6%.1
Structuringthedealtookaconsiderableamountofworkandtimeforustoensurethatthefinalstructure providedtheinvestorswiththenecessaryinter-groupgovernance,controloftheinvestmentandtax efficiency.Anumberofspecialpurposevehicleswereestablishedbytheinvestors,amongwhichCoral Growth Holdings was established by the Company, CGIL and their co-investors.
OnNovember9,2006,Mercury(Egypt)PharmaceuticalManufacturing,oneofthespecialpurposevehicles establishedbytheconsortium,launchedatenderoffertoacquirethefreefloatofAmounatapriceof EGP50pershare.3,478,719sharesweretendered,representing5.8%ofAmounatavalueofEGP173.9 million. The transaction was executed on November 27, 2006. OnDecember7,2006,theexecutionofthesaleandpurchaseof55,799,542sharesbelongingtoAmoun's founder,Dr.Bassilyandhisfamily,representing93%ofAmoun,tookplaceontheEgyptianStockExchange atapricepershareofEGP47withavalueofEGP2,622million.ThisbroughtMercury(Egypt)Pharmaceutical Manufacturing'stotalstakeinAmounto59,278,261sharesrepresenting98.8%ofAmoun’scapitalatatotal cost of EGP2,796 million, excluding all due diligence, legal and transaction costs. The transaction was 50% financed by a syndicated bank loan provided by Arab African International Bank. OnDecember7,2006,theconsortiumgainedcontrolofAmoun’sboardofdirectors.Amoun'scurrentboard ofdirectorsconsistsofsevenmemberssixofwhomrepresenttheacquisitionconsortium(Mercury(Egypt) PharmaceuticalManufacturingCompany)inadditiontoDr.BassilytheBoard'sChairman.Twoboard membersoftheconsortiumwereappointedasViceChairmenofAmoun'sboard,Mr.SunilNairfrom CitigroupVentureCapitalInternational(CVCI)andMr.AshleyDunsterfromCapitalInternationalPrivate EquityFund(CIPEF).Mr.MohamedS.YounesisaboardmemberofAmounPharmaceuticalCompany, Mercury(Egypt)PharmaceuticalManufacturingCompanyandMercury(Egypt)PharmaceuticalDistribution Company(thelattertwoarespecialpurposevehiclesestablishedforconductingtheacquisitionofAmoun and its distribution operations). ThetwoCoralfundsinvestedUSD21.1millioninaggregateinthetransaction,withtheCompany'sshare being USD4.9 million.
1 According to figures published by IMS Egypt's Pharmaceutical Index 2005
7 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Report of the Investment Manager (continued)
The following highlights the basic financial indicators of Amoun (Figures in USD thousand) First Financial Financial Financial 6 Months of year 2004* year 2005* year 2006** 2007***
Revenues 53,806 81,360 111,472 47,770 Earningsbeforeinterest,taxes,depreciationand amortisation "EBITDA" 22,185 40,469 56,364 25,807 Net profit before tax 13,377 32,160 34,840 6,703 Tax - (404) (248) (543) Minority interest - - (475) - Net profit after tax 13,377 31,756 34,117 6,160 Earnings per share (EGP) ^0.22 ^0.53 ^^0.57 ^^^0.58 *ThefiguresrepresentconsolidatedfiguresforAmounanditsdistributionoperationasreportedintheduediligencereportpreparedbyKPMG inconnectionwiththetransaction.Amoun'shistoricalauditedannualstatementswerenotconsolidated;theyrepresentAmounstandalone operations only. **Mercury(Egypt)PharmaceuticalManufacturingPro-formaconsolidatedfigurespreparedbyKPMGandbasedontheauditedstatementsof: Amoun Pharmaceutical, Amoun Partnership, Mercury (Egypt) Pharmaceutical Manufacturing and Mercury (Egypt) Pharmaceutical Distribution. ***Mercury(Egypt)PharmaceuticalManufacturingPro-formaconsolidatedfigurespreparedbyKPMGandbasedontheauditedstatementsof: Amoun Pharmaceutical, Amoun Distribution, Mercury (Egypt) Pharmaceutical Manufacturing and Mercury (Egypt) Pharmaceutical Distribution. ^Thenumberofsharesforearningspershareoffinancialyear2004andfinancialyear2005wereadjustedtoreflect1:2stocksplitthat occurred in 2005 and a stock dividend of one share per two shares that took place in 2006. ^^ Amoun Pharmaceutical number of shares was used for the calculation of earnings per share for 2006 and first six months of 2007. ^^^ Earnings per share for the first half of 2007 was calculated for the six month period (not annualised). GrowthinrevenueswasdrivenbytheAmoun'sabilitytolaunchnewproductsinthemarketandthere- pricingofexistingproductsbytheEgyptianMinistryofHealth.Localsalesofhumanproductsconstitutedthe bulkoftheAmoun'srevenues,astheyaccountedfor91%ofitstotalrevenuesinthefirsthalfofthe2006, whereasveterinaryproductsaccountedfor8.4%ofAmoun'srevenues.Localsalesconstitutedapproximately 99%ofitssalesintheperiod2004-05andthefirsthalfof2006,reflectingthefactthatthecompany concentrated on establishing itself in the local market during its initial years of operation. Amounstartedtoentertheexportmarketinrecentyearsandhastakenstepstoopengrowthopportunities throughAfrica,theMiddleEastandEasternEuropewithmorethan200productregistrationsacrossthe regionsandsalesagentsinmorethan30countries.BecauseofAmoun'sstateoftheartproductionfacility, itiswellpositionedtotaptheexportmarket.Asactivatingexportsisatoppriorityfortheacquisition consortium,theBoardofDirectorsestablishedacommitteecomprisingtwoboardmembersandthe MarketingDirector.ThiscommitteewillbeworkingunderthedirectionofAmoun'sChairmantoformulate the company’s export strategy. WithanEBITDAmargininexcessof50%,thecompany’smarginsaresignificantlyhigherthanthoseofits peers.TheEBITDAmarginimprovedsignificantlyovertheyears,asitincreasedfrom41%in2004to50%in 2005.ThisimprovementwasduetoseveralfactorsthatincludedthereductioninEgyptiancustomdutiesin September2004,thedecreaseinEgyptianpound/USdollarexchangeratein2005,(asmostofthecompany‘s rawmaterialsareimported)andtherepricingofproductsbytheEgyptianMinistryofHealthin2004and 2005.TheimprovementintheEBITDAmargincontinuedthroughthefirsthalfof2006,bytheendofwhich it was approximately 52% of revenues.
Stanhope Overseas Limited January 2008
8 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Independent Auditor's Report to the Members of Coral Growth Investments (Parallel) Limited
WehaveauditedtheCompany'sfinancialstatementsfortheperiodended31December2006which comprisetheBalanceSheet,StatementofTotalReturn,CashFlowStatementandtherelatednotes1to15. These financial statements have been prepared on the basis of the accounting policies set out therein. ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithSection64ofthe Companies(Guernsey)Law,1994.Ourauditworkhasbeenundertakensothatwemightstatetothe Company’smembersthosematterswearerequiredtostatetotheminanauditor'sreportandfornoother purpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneother thantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orforthe opinions we have formed. Respective responsibilities of Directors and Auditors TheDirectorsareresponsibleforthepreparationofthefinancialstatementsinaccordancewithapplicable Guernsey law as set out in the Statement of Directors' Responsibilities. Ourresponsibilityistoauditthefinancialstatementsinaccordancewithrelevantlegalandregulatory requirements and International Standards on Auditing (UK and Ireland).
Wereporttoyououropinionastowhetherthefinancialstatementsgiveatrueandfairviewandare properlypreparedinaccordancewiththeCompanies(Guernsey)Law1994.Wealsoreporttoyouif,inour opinion,theDirectors'Reportisnotconsistentwiththefinancialstatements,iftheCompanyhasnotkept properaccountingrecords,orifwehavenotreceivedalltheinformationandexplanationswerequirefor our audit. WereadotherinformationcontainedintheAnnualReportandconsiderwhetheritisconsistentwiththe auditedfinancialstatements.TheotherinformationcomprisesonlytheDirectors,Managementand Administration,Directors'ReportandStatementofDirectors'responsibilities,ReportoftheInvestment ManagerandInvestmentPortfolio.Weconsidertheimplicationsforourreportifwebecomeawareofany apparentmisstatementsormaterialinconsistencieswiththefinancialstatements.Ourresponsibilitiesdo not extend to any other information. Basis of audit opinion WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UKandIreland)issuedby theAuditingPracticesBoard.Anauditincludesexamination,onatestbasis,ofevidencerelevanttothe amountsanddisclosuresinthefinancialstatements.Italsoincludesanassessmentofthesignificant estimatesandjudgementsmadebytheDirectorsinthepreparationofthefinancialstatements,andof whethertheaccountingpoliciesareappropriatetotheCompany'scircumstances,consistentlyappliedand adequately disclosed. Weplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichwe considerednecessaryinordertoprovideuswithsufficientevidencetogivereasonableassurancethatthe financialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityor error. Informingouropinionwealsoevaluatedtheoveralladequacyofthepresentationofinformationinthe financial statements.
9 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Independent Auditor's Report (continued)
Opinion Inouropinionthefinancialstatementsgiveatrueandfairview,inaccordancewithUnitedKingdom AccountingStandards,ofthestateoftheCompany’saffairsasat31December2006andofitsresultsfor theperiodthenended,andhavebeenproperlypreparedinaccordancewiththeCompanies(Guernsey) Law, 1994.
Ernst & Young LLP Guernsey Channel Islands
Date: 31 January 2008
10 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Investment Portfolio as at 31 December 2006
% of net assets Unlisted Investments Nominal Cost Value attributable to US$ US$ holders of participating redeemable preference shares
Coral Growth Holdings* 4,929,390 4,907,979 4,907,979 18.99%
Total investment 4,907,979 4,907,979 18.99%
Cash at bank and other net assets 20,941,148 81.01%
Total net assets attributable to holders of participating redeemable preference shares 25,849,127 100.00%
* TheCompany'sholdingof4,929,390sharesrepresents14.0%ofthetotalissuedsharecapitalofCoralGrowth Holdings.
11 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Balance Sheet as at 31 December 2006
31.12.2006 Notes US$ Assets Investments: financial assets at fair value through profit or loss 2 & 5 4,907,979 Debtors, prepayments and accrued income 7 26,988 Cash at bank 11 (b) 21,013,556
Total assets 25,948,523
Equity Management share capital 1
Total equity 1
Liabilities Creditors and accruals 8 99,395
Net assets attributable to holders of participating redeemable preference shares 10 25,849,127
Total liabilities 25,948,522
Total equity and liabilities 25,948,523
Net asset value per participating redeemable preference share at 31 December 2006 14 5,048.66
Net asset value per participating redeemable preference share at First Closing 5,000.00
Participating redeemable preference shares in issue 10 5,120
Approved by the Board of Directors on 30 January 2008 and signed on its behalf by:
Peter Grant,CBE - Chairman Mohamed Younes - Director
The notes on pages 15 to 21 form an integral part of these Financial Statements.
12 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Statement of Total Return For the period from incorporation on 2 December 2005 to 31 December 2006
2.12.2005 to 2.12.2005 to 2.12.2005 to 31.12.2006 31.12.2006 31.12.2006 Notes US$ US$ US$ Revenue Capital Total Income Investment income 6 1,127,471 - 1,127,471
1,127,471 - 1,127,471
Expenses Investment Manager's fees 4(a) 394,858 - 394,858 Administration fees 4(d) 85,528 - 85,528 Directors' fees 4(e) 81,566 - 81,566 Sundry expenses 43,812 - 43,812 Legal and professional fees 40,285 - 40,285 Audit fees 31,344 - 31,344 Directors' & Officers' insurance premium 31,235 - 31,235 Consultancy fees 31,151 - 31,151 Custodian's fees 4(c) 18,283 - 18,283
758,062 - 758,062
Net gain for the period 369,409 - 369,409
Realised foreign exchange gains 2 - 48,188 48,188 Unrealised gains on currency revaluation 2 - 88,439 88,439
Total gain for the period 369,409 136,627 506,036
The Directors consider the activities of the Company to be of a continuing nature.
The Company has no recognised gains and losses other than those included above.
The notes on pages 15 to 21 form an integral part of these Financial Statements.
13 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Cash Flow Statement For the period from incorporation on 2 December 2005 to 31 December 2006
02.12.2005 to 31.12.2006 Operating Activities Notes US$
Net cash outflow from operating activities 11(a) (637,467)
Financing activities
Issue of shares 9,10 25,343,092
Net cash inflow from financing activities 25,343,092
Investing activities
Purchase of investments 5 (52,694,805) Proceeds on maturity of investments 48,914,297
Net cash outflow from investment activities (3,780,508)
Increase in cash 20,925,117
Reconciliation of net cash flow movement
Net cash at the start of the period - Unrealised currency gain on cash held 88,439 Increase in cash for the period 20,925,117
Net cash at the end of the period 11 (b) 21,013,556
The notes on pages 15 to 21 form an integral part of these Financial Statements.
14 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
1. Establishment CoralGrowthInvestments(Parallel)Limited(the"Company")wasincorporatedinGuernseyon2December2005. TheCompanyreceivedregulatoryapprovalfromtheGuernseyFinancialServicesCommissionunderTheControlof Borrowing(BailiwickofGuernsey)Ordinance,1959,asamended,on8December2005.TheFirstClosingofthe Companywason21December2005.TheCompanywaslistedontheChannelIslandsStockExchange("CISX")on31 January 2006.
2. Principal Accounting Policies Thefollowingaccountingpolicieshavebeenappliedconsistentlyindealingwithitemswhichareconsideredtobe material in relation to the Company's Financial Statements: Basis of Accounting TheFinancialStatementshavebeenpreparedundergenerallyacceptedaccountingprinciplesintheUnited Kingdomandunderthehistoricalcostconventionasadjustedbytherevaluationofinvestmentsandinaccordance withtheStatementOfRecommendedPracticeforInvestmentTrustCompaniesissuedbytheUnitedKingdom Association of Investment Companies. Investments - Listed investments ListedinvestmentsarevaluedatthebidpriceprevailingatthecloseoftherespectivemarketontheBalanceSheet date, as this is deemed to reflect the fair value of the investments held. - Unlisted investments UnlistedinvestmentsareincludedintheBalanceSheetatfairvalueasdeterminedbytheDirectors.Invaluing unlisted investments the Directors will take into consideration the following factors: (i)Investmentsacquiredinthereportingperiodpriortothevaluationdatearevaluedatcostunlesstherehasbeen a material deterioration in the financial position of the investment. (ii)Whereasignificanttransactionwhichestablishesanarm'slengthpriceforaninvestmenthasbeeneffected,the transaction will form the basis of the valuation. (iii)Otherwise,unlistedinvestmentswillbevaluedbyreferencetotheirprofitsandtheprice/earningsmultiples applicabletocomparablelistedcompanieslessasuitablediscounttoreflecttheirlackofmarketability.Profitsfor thepurposeofthevaluationswillbethosedisclosedinthelatestauditedfinancialstatementstakinginto consideration any subsequent financial information. (iv) Unlisted discounted notes are valued at historical cost plus interest earned for the period. UnrealisedandrealisedgainsorlossesoninvestmentsareshownwithintheStatementofTotalReturnascapital movements. Share Capital InaccordancewithFinancialReportingStandard25-FinancialInstruments:DisclosureandPresentation, participating redeemable preference shares have been disclosed as a financial liability. Income Incomearisingfrominvestmentsisaccountedforonanex-dividendbasisandisshowngrossofwithholdingtaxes. Other investment income is accounted for on an accruals basis. Expenses Expenses are accounted for on an accruals basis. Foreign Currencies Foreigncurrencyassetsandliabilities,includinginvestmentsatfairvalue,aretranslatedintoUSDollarsattherate ofexchangerulingattheBalanceSheetdate.Investmenttransactionsandincomeandexpenditureitemsare translatedattherateofexchangerulingatthedateoftherelevanttransaction.Exchangedifferencesareincluded intheStatementofTotalReturnascapitalmovementsiftheyareofacapitalnatureandrecognisedasrevenue movements if they are of a revenue nature. The EGP:USD exchange rate as at 31st December 2006 was 5.7089. 15 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
2. Principal Accounting Policies (continued) Functional and Presentational Currency ThefinancialstatementsoftheCompanyarepresentedinthecurrencyoftheprimaryeconomicenvironmentin which the entity operates (its functional currency). TheDirectorshaveconsideredtheprimaryeconomicenvironmentoftheCompanyandconsideredthecurrencyin whichtheoriginalfinancewasraised,distributionsmade,andultimatelywhatcurrencywouldbereturnedto investorsonabreakupbasis.TheDirectorshavealsoconsideredthecurrencytowhichtheunderlyinginvestments areprimarilyexposed. Onbalance,theDirectorsbelieveUSdollarsbestrepresentsthefunctionalcurrency. ThereforethebooksandrecordsaremaintainedinUSdollarsandforthepurposeofthefinancialstatementsthe resultsandfinancialpositionoftheCompanyarepresentedinUSdollarswhichisalsothepresentationcurrencyof the Company.
3. Taxation TheCompanyisexemptfromGuernseyincometaxundertheIncomeTax(ExemptBodies)(Guernsey)Ordinance, 1989 and accordingly is charged an annual exemption fee of £600.
4. Material Agreements (a) Investment Management Agreement UnderthetermsoftheInvestmentManagementAgreementdated6December2005,StanhopeOverseasLimited wasappointedwitheffectfromthe21December2005asInvestmentManager(the"InvestmentManager"),andis paidabasicmanagementfeeof2percent.perannumofthetotalPaidupCapitaloftheCompanyatthedateof calculationofthefeelessanamountequalto(i)thedisposalvalueofrealisedFundInvestments(assumingforthis purposethatthedisposalvalueoftheFundInvestmentistheacquisitioncostofsuchinvestment);and(ii)the acquisitioncostofanyFundInvestmentwhichhasbeenwrittendownorwrittenoffpermanently.The management fee is paid quarterly in advance. AperformancefeeispayabletotheInvestmentManagerinaccordancewiththeCompany'sPrivatePlacement MemorandumunderSection3-"SummaryofTerms"-"DistributionsandPerformanceFee".Disposalproceeds frominvestmentswillbeappliedinmakingdistributionstoshareholdersandinpaymentofaperformancefeeto the Investment Manager in the following amounts and order of priority: Returnofcapital.First100percent.Bywayofdistributiontoshareholdersuntildistributionsequalcommitted capital attributable to Investments realised. 6percent.Second100percent.bywayofdistributionstoShareholdersuntilcumulativedistributionsrepresenta6 per cent. annual internal rate of return on the paid-up capital attributable to each realised investment. 20percent.Third100percent.bywayofaperformancefeetotheInvestmentManagerofanamountequalto20 per cent. of the aggregate of the total amounts distributed to Shareholders. 80/20split:Thereafter,80percent.bywayofdistributiontoShareholdersand20percent.bywayofperformance fee to the Investment Manager.
(b) Structuring Agreement UnderthetermsoftheStructuringAgreementdated6December2005,theCompanywillpaytoConcord(BVI) InternationalLimited,asthestructuringagent,astructuringfeeof1percent.oftheaggregatevalueoftheUnits issuedduringthePlacingandsubsequentissuesasconsiderationforconsultation,structuringandadvisoryservices providedtotheCompany.TheaggregatevalueisdeterminedusingthePlacingPrice($100,000perunit)netofany feesorcommissionspayableontheunits.UnderthetermsoftheStructuringAgreement,Concord(BVI) InternationalLimitedwillbaretheestablishmentcostsoftheCompanyotherthanlistingexpensesandselling commissions. Structuring fees are offset, in the financial statements, against the share premium (note 10).
16 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
4. Material Agreements (continued)
(c) Custodian Agreement UnderthetermsofaCustodianAgreementdated6December2005,theCompanyappointedHSBCCairoas Custodian.HSBCispaid0.20percent.perannumonthemonthendportfoliovaluecomprisedofphysicalequity and0.15percent.perannumonthemonthendportfoliovaluecomprisedofscriplessequity.Custodyfeesare chargedat0.03%onFloatingRateNotes.Feesarechargedmonthlyandaresubjecttoamonthlyminimumof US$250forequitiesandUS$100forFloatingRateNotes.InadditiontransactioncostsofUS$60perphysicalequity transaction, US$40 per scripless equity transaction and US$50 per floating rate note transaction are charged.
(d) Administration Agreement UnderthetermsofanAdministration,SecretarialandRegistrarAgreementdated6December2005,theFund appointedButterfieldFundServices(Guernsey)LimitedasAdministrator,Secretary,andRegistrar.Forvaluation, administration,accounting,corporatesecretarialandcomplianceservicesafeeischarged,basedonthestandard hourlychargingratesinforcefromtimetotime,subjecttoaminimumfeeofGBP7,500perquarter.Inadditiona oneofftimespentfeewaschargedforthetakeonoftheFundofGBP3,000.Feesarechargedforcorporateand secretarialservicesinconnectionwithBoardmeetingattendanceatGBP2,000forattendanceatmeetingsin Guernsey and GBP3,000 for attendance at meetings outside Guernsey. These fees are payable quarterly in arrears.
(e) Directors' fee agreement TheDirectorsareentitledtoanannualfeeofUS$20,000each.TheChairmanisentitledtoanannualfeeof US$30,000.ThesefeesareallocatedequallybetweentheCompanyandtheCompany'sparallelfund,CoralGrowth Investments Limited.
5. Investments - financial assets at fair value through profit or loss Unlisted Investments UnlistedInvestmentscomprisetheCompany'sprimaryinvestmentaspecialpurposevehicle"CoralGrowth Holdings".TheCompany'sunderlyinginvestmentisintheEgyptianPharmaceuticalCompany"Amoun".The underlyinginvestmentismadethroughaseriesofspecialpurposevehicleswhicharedetailedbelow(allholdings stated are as at 31 December 2006): The Company held 14.0% of the share capital of Coral Growth Holdings. Coral Growth Holdings held 12.86% of the share capital of Mercury (Cayman) Holdings. Mercury (Cayman) Holdings held 99.8% of the share capital of Mercury (Egypt) Pharmaceutical Manufacturing. Mercury (Egypt) Pharmaceutical Manfacturing held 98.8% of the share capital of Amoun. Therefore the Company indirectly held a 1.8% share of the underlying investment.
31.12.2006 US$
Purchase of investments 52,694,805 Cost of investments matured (47,786,826)
Cost of investments at 31 December 2006 4,907,979
Fair value as at 31 December 2006 4,907,979
17 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
6. Investment Income 31.12.2006 US$
Discounted note interest Interest received on maturity of notes 1,127,471
1,127,471
7. Debtors and prepayments 31.12.2006 US$
Prepayments 26,987 Management share capital 1
26,988
8. Creditors and accruals 31.12.2006 US$
Administration fees 40,780 Audit fees 31,344 Directors' fees 23,261 Other creditors and accruals 4,010
99,395
9. Share capital and share premium Nominal Value Authorised US$
100 Management shares of US$0.01 each 1 40,000 Unclassified Shares of US$0.01 each 400
401
Issued Share Capital Number of Share Shares capital Equity share capital US$
(I) Management shares US$0.01 each: Shares issued during the period 100 1
Balance at 31 December 2006 100 1
ThemanagementshareshavebeencreatedinordertocomplywithGuernseylawunderwhichtheparticipating sharesmustbeissuedwithpreferenceoveranalternateclassofcapital.Themanagementshareshavebeenissued totheInvestmentManageranditsnominee.Themanagementsharescarryarighttovoteatgeneralmeetingsof theCompanybutdonotcarrytherighttoreceivedividends.Inawinding-up,managementsharesrankonlyfor thereturnofthenominalPaid-upCapitalafterthereturnofthenominalCapitalPaid-uponparticipatingshares and nominal shares. Theunclassifiedsharesaretermedassuchpendingissue.Theyareissuedasparticipatingredeemablepreference shares or nominal shares.
18 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
9. Share capital and share premium (continued) Participatingredeemablepreferencesharesmaybeissuedandredeemedatpricesinaccordancewiththe Company'sPrivatePlacementMemorandumandArticlesofAssociation.Participatingredeemablepreference sharescarrytherighttovoteonlimitedmattersatgeneralmeetingsoftheCompanyandtoreceivedividendsand in a winding-up rank first for the return of the nominal paid-up capital. NominalsharescarryneithertherighttovoteatgeneralmeetingsoftheCompanynortoreceivedividendsandin awinding-uprankonlyforthereturnofthenominalpaid-upcapitalafterthereturnofthenominalcapitalpaid- up on participating redeemable preference shares. AttheBalanceSheetdatethetotalCommittedCapitalamountedtoUS$25,600,000ofwhich100%hadbeen called and paid up.
10. Net assets attributable to holders of participating redeemable preference shares Non-equity share capital Number ofNumber of Share Share units shares capital premium US$ US$ Participating redeemable preference shares of US$0.01 each issued during the period 256 5 ,120 51.2 25 ,599,949
Structuring fees attributable to the above issues (note 4b) - - - (256,909) Total non-equity shares at 31 December 2006 256 5 ,120 51.2 25 ,343,040
ParticipatingsharecapitalhasbeenissuedinUnitseachcomprising20participatingredeemablepreferenceshares ofnominalvalue$0.01each.Theparticipatingredeemablepreferencesharesinissueat31December2006areall fully paid.
31.12.2006 Revenue reserve US$ Net income for the period 369,409 Balance at 31 December 2006 369,409
Capital reserve Realised foreign exchange gains 48,188 Unrealised foreign exchange gains 88,439 Balance at 31 December 2006 136,627
Summary of net assets attributable to holders of participating redeemable preference shares Share capital 51 Share premium 25,343,040 Revenue reserve 369,409 Capital reserve 136,627 Balance at 31 December 2006 25,849,127
19 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
11. Cash flow statement (a) Reconciliation of net gain to net cash outflow from operating activities 2.12.2005 to 31.12.2006 US$ Net gain for the period 369,409 Interest received on maturity of notes (1,127,471) Realised loss on foreign exchange 48,188 Increase in debtors and prepayments during the period (26,988) Increase in creditors and accruals during the period 99,395 Net cash outflow from operating activities (637,467)
(b) Analysis of changes in cash 31.12.2006 US$ Cash at bank 21,013,556
12. Controlling party and related parties disclosure IntheopinionoftheDirectorsthereisnoultimatecontrollingpartyoftheCompanyasdefinedbyFinancial Reporting Standard No. 8 - Related Party Disclosures. MohamedS.YounesisaDirectorofStanhopeOverseasLimited,whichistheInvestmentManageroftheCompany andofConcord(BVI)InternationalLimited,whichistheStructuringAgenttowhommanagementfeesand structuring fees respectively are payable (Note 4). LauraOsmanisthesoleDirectorofCoralGrowthHoldingsandofConcord(BVI)InternationalLimited,whichisthe StructuringAgenttowhomstructuringfeesarepayable(Note4).TheCompanyowns14.0%ofthesharesofCoral Growth Holdings.
13. Risks arising from investments in financial assets and liabilities Currency risk TheCompany'sprimaryinvestmentisaspecialpurposevehicle("SPV")denominatedinUSDollars.TheSPVholds anassetdenominatedinEgyptianPounds(EGP)asitsunderlyinginvestment.Accordingly,achangeinthevalueof theEGPagainsttheUSDollarwillaffecttheperformanceoftheCompanyinUSDollarterms.At31December 2006theCompanyheldcashinUSDollarsof$264,429andinEgyptianPoundsofequivalentto$20,749,127.The Company does not hedge against adverse currency movements. Currency exposure Other net current Cash liabilitiesInvestments Total US$ US$ US$ US$ Egyptian Pound 20,749,127 - 4,907,979 25,657,106 Sterling (GBP) - (37,581) - (37,581) US dollar (US$) 264,429 (34,826) - 229,603 Total net assets 21,013,556 (72,407) 4,907,979 25,849,128 Liquidity and market risk Egyptisanemergingmarket.Emergingmarkets,includingEgypt,aresubjecttoparticularinvestmentrisksand considerations.Furthermore,thelikelihoodofadversepoliticalandeconomicdevelopmentsmaybemagnifiedin emergingmarkets.AstheCompanywillinvestmainlyinprivate/unlistedsecurities,whenseekingtoselllittleorno marketmayexistforthesecurities.Asat31December2006,theCompanyhadheld$4,907,979ofinvestments representing18.98%ofthenetassetsattributabletoholdersofparticipatingredeemablepreferenceshares.The presentinvestmentcomprisesaspecialpurposevehiclewhoseunderlyingassetisanEgyptianCompany'Amoun Pharmaceutical Company'.
20 CORAL GROWTH INVESTMENTS (PARALLEL) LIMITED
Notes to the Financial Statements
13. Risks arising from investments in financial assets and liabilities (continued) Interest rate risk Fixed rate financial assets comprise the investments. Cash balances do not bear interest. Interest rate exposure Other net current Cash liabilitiesInvestments Total US$ US$ US$ US$ Fixed rate - - - - Floating rate - - - - Non interest bearing 21,013,556 (72,407) 4,907,979 25,849,128 Total net assets 21,013,556 (72,407) 4,907,979 25,849,128
Fair value InaccordancewiththeCompany'saccountingpoliciesallfinancialassetsandliabilities(otherthaninvestments whicharecarriedatfairvalue)arecarriedathistoriccost.IntheopinionoftheDirectorsthisisnotmaterially differentfromfairvalue.TheparticipatingredeemablepreferencesharesareshownintheFinancialStatementsat netassetvalue.Thefairvalueofthesesharesat31December2006isconsideredtobetheirMarketvalue $5,049.54.
14. Net asset value per participating redeemable preference share
Thenetassetvalueperparticipatingredeemablepreferencesharecalculationhasbeenmadebydividingthenet assetsattributabletoparticipatingredeemablepreferencesharesbythetotalnumberofparticipatingredeemable preference shares in issue at the Balance Sheet date.
31.12.2006
Net assets attributable to holders of participating redeemable preference shares $25,849,127
Total number of participating redeemable preference shares 5 ,120
Net asset value per participating redeemable preference share $5,048.66
15. Reconciliation of net asset value per participating redeemable preference share per the financial statements to published net asset value
NAV per NAV Equity Share US$ US$
Net asset value reported to CISX as at 31 December 2006 25,853,638 5,049.54 Accrual adjustment (4,511) (0.88) Net asset value per financial statements as at 31 December 2006 25,849,127 5,048.66
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