RNS Number : 3926X
Off-Plan Fund Limited (The)
24 June 2008
For Immediate Release 24 June 2008
THE OFF-PLAN FUND LIMITED
Interim Results for the six months ended 31 March 2008
The Off-plan Fund Limited, which specialises in providing forward finance to UK housebuilders, is pleased to announce its interim
results for the six months ended 31 March 2008.
Copies of the Financial Statements are currently being printed and will be sent to shareholders shortly. They may also be obtained free
of charge from Development Capital Management Limited, 36 Dover Street, London, W1S 4NH.
List of Contacts
Development Capital Management
Roger Hornett
Andy Gardiner
020 7355 7600
Numis Securities
Nick Westlake
Charles Farquhar
020 7260 100
Buchanan Communications
Charles Ryland
Isabel Podda
020 7466 5000
THE OFF-PLAN FUND LIMITED
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR SIX MONTHS ENDED 31 MARCH 2008
Chairman's Statement
I am pleased to report the unaudited interim financial statements for the six months ended 31 March 2008.
The period under review and subsequent months have proven to be very testing times for all involved in the UK housebuilding industry,
from developers and construction companies to estate agents and lenders. While your Company is in no way immune from the prevalent negative
sentiment surrounding the UK residential property market, it is important to reiterate that the Company was initially established in 2003 to
capitalise on a then perceived slowdown in the housing market and it is in these conditions that the Company expects to source the most
attractive deals with even the most reputable, well established developers finding that traditional sources of financing are no longer
available. The Wallington deal announced during the period is a good indication of the type of opportunity that the Manager expects to
negotiate and conclude in the coming months, with reputable developers and supportive lenders, as it continues to seek full investment
levels.
It is also worth highlighting that the majority of the Company's existing pipeline of units, and any upon which it may subsequently
contract, will not complete until 2010 at the earliest when, on current predictions, there is likely to be a significant shortfall of supply
of new homes in certain locations due to the difficulties faced by developers in the current market and the slowdown in new housing starts
and permissions. This provides the Company with a significant time frame over which to monitor developments in the market and ascertain the
best point in the cycle at which to actively market the units. With predictions of an outright house price crash now fading, as opposed to
the inevitable slow-down, the Board and the Manager are hopeful that the market will return to normality within the above timeframe allowing
the Company to maximise its returns on the current and future pipeline of projects.
Results
The unaudited net asset value ("NAV") of the Company at 31 March 2008 was �9.5m (30 September 2007: �9.5m), of which �6.3m (57p per
share) related to cash reserves (30 September 2007: �7.8m). The NAV per ordinary share has been maintained at around 85p.
As shareholders will be aware the Company also reports an unaudited "Red Book" net asset value which is intended to provide investors
with an indication of the potential value inherent in the portfolio deriving from the discounted prices to market value achieved by the
Company on entering into transactions. The "Red Book" NAV, derived from the latest Red Book valuations of the property portfolio prepared by
independent valuers, increased by 8% during the period from 94.4p to 101.6p due to the inclusion of Canon House, Wallington. The "Red Book"
NAV was at a 16.7p, or 20%, premium to the unaudited NAV.
Portfolio Review
Canon House, Wallington: During the period under review the Company contracted to purchase 118 units in a new development in Wallington,
Surrey for �25m, a 19% discount to the prevailing Red Book valuation. The site is very well located being adjacent to the railway station
with travel times of 30 minutes into London and easy access to the M25, Heathrow and Gatwick. It is expected to generate strong demand from
owner occupiers and investors given the high quality of on-site facilities.
The strip-out of the existing buildings is complete and construction is due to commence during the summer. Soft marketing has commenced
and early indications of investor interest are encouraging.
Oldham Place, Liverpool: The development consists of 51 apartments, all of which the Company has contracted to purchase, and is located
to the east of the city centre, between two city centre regeneration areas, Ropewalks and Mount Pleasant.
As reported in the 2007 annual report, the development faced difficulties when the appointed construction company went into receivership
in December 2007. As a result there has been no further on-site activity or sales in the period and the units sold remain at 29. However a
new project management team has been appointed, revised planning permission is expected shortly and the build contract has been put out to
tender. Completion is now expected to be towards the end of 2009 but this delay may prove beneficial to the Company in terms of the
additional time permitted for, and timing of, future marketing.
Although Liverpool is not an area which the Manager would currently focus on for new investment, it should be noted that the Company
entered into this deal in May 2006 and any recent fall in value is off-set by the increase from that date to the market peak, as supported
by the Venmore Partnership LLP valuation at 31 March 2008 of �8.3m, which is in line the time of exchange.
Brook Street, Tring and Yeading Lane, Hayes: It is with some regret that I have to report that despite the continued best efforts of the
Manager there has been very little progress on either development, which are with the same developer. Outstanding issues relating to the
s106 (affordable housing) elements on Tring and the purchase of the balance of the site on Hayes are a continuing frustration. Neither
construction nor marketing have commenced on either site.
The Board and the Manager are therefore taking advice as to their options and expect to make an announcement in the near future.
Wimbledon House, Leicester: The Company owns 6 flats in Leicester with a market value of �870,000 (30 September 2007: �911,000). Due to
the continuing weak local housing market, the Company will hold the units for the foreseeable future. All flats are presently let.
Market
Despite the Bank of England cutting interest rates to 5.0% in April and injecting �50bn into the credit market to support the banking
system, the desired result of narrowing the spread between official and market rates has yet to be achieved.
The latest figures on house prices remain somewhat mixed. Nationwide reported average annual house price inflation at minus 4.4% in May,
while HBOS showed the figure at minus 3.8%. Rightmove, which uses asking prices, reported an increase in prices to an annual inflation of
2.2% while official Land Registry numbers showed an annual increase of 2.7% for April. The latter figures also breakdown regional variations
and confirm that the areas in which the Manager is now focused continue to out-perform the market as a whole. Unsurprisingly volume of sales
have fallen - down 34% year on year as of February - with estate agents and housebuilders the key casualties.
Predictions appear to be bearing out a gradual slow-down, with the prospect of a crash now largely discounted. RICS expects house prices
to fall around 5% this year and the OECD expects a combined fall of 10% for 2008 and 2009.
April saw a further decline in overall mortgage approvals to just 58,000 units from 112,000 in March 2007. All lenders have now pulled
100% mortgage offers and even 95% products are becoming ever more scarce. The number of products on offer in total is now 50% lower than
before the Northern Rock crisis and the subsequent credit crunch. Self certification is becoming all but impossible with a number of smaller
lenders withdrawing from the market all together. There is a clear consolidation of the marketplace as the major lenders are increasing
their market share.
Corporate
At the Company's annual general meeting in April, shareholders voted in favour of the introduction of a new annual continuation vote. As
such the annual report to shareholders in respect of the financial year ending September 2008 will include details of the vote to be held at
the 2009 annual general meeting.
Outlook
The tightening of credit risk by lenders continues to improve the marketplace for the Company as small to medium-sized developers
require increased evidence of pre-sold units. The Manager is experiencing a greater level of pipeline opportunities in its target areas of
London and the South East and is working hard to select the right investment proposals, at the best terms achievable, in light of the
cooling of the overall housing market.
The Board and the Manager are also pursuing a number of options with lending banks and insurers with a view to utilising the flexibility
of the Company's financing model and combining it within an overall finance package that will fit the needs of the full project team -
developer, bank and the Company. I hope to be able to provide further details in the coming months.
Graham Berry
Chairman
June 2008
Consolidated Balance Sheet (unaudited) (unaudited) (audited)
31 March 31 March 30 September
2008 2007 2007
Notes � � �
Non-current assets
Quoted investments 5 2,925,713 5,666,608 5,985,007
Property contracts yet to 5 1,781,927 172,806 446,078
complete
Investment property 5 873,000 971,000 911,000
Debtors 253,532 - 253,532
5,834,172 6,810,414 7,595,617
Current assets
Debtors 279,889 530,815 437,022
Cash and cash equivalents 3,402,320 593,145 1,828,171
3,682,209 1,123,960 2,265,193
Creditors - amounts falling due within one year
Other payables (50,590) (73,978) (366,806)
Net current assets 3,631,619 1,049,982 1,898,387
Net assets 9,465,791 7,860,396 9,494,004
Equity
Stated capital 7 10,505,154 8,739,246 10,505,154
Capital reserve 145,105 67,600 99,153
Issue costs reserve (679,868) (609,232) (679,868)
Revenue reserve (504,600) (337,218) (430,435)
Total shareholders' funds (all 8 9,465,791 7,860,396 9,494,004
equity)
Net asset value per share 84.9 84.6 85.1
(pence)
The financial statements were approved by the Board of Directors on 23 June 2008 and signed on its behalf by:
Graham Berry Roger King
The accompanying notes are an integral part of the financial statements.
Consolidated Income Statement (unaudited)
Six months ended
31 March 2008
Revenue Capital Total
Notes � � �
Losses on revaluation of investment (38,000) - (38,000)
property
Realised gains on property - - -
contracts yet to complete
Realised gains/(losses) on - 11,668 11,668
investments
Unrealised gains/(losses) on - 34,284 34,284
investments
Investment income 148,280 - 148,280
Rental income 18,236 - 18,236
Investment management fee (93,531) - (93,531)
Rental expense (2,095) - (2,095)
Other expenses (103,518) - (103,518)
Net (loss)/gain on ordinary (70,628) 45,952 (24,676)
activities before finance costs and
taxation
Taxation 2 (3,537) - (3,537)
Net (loss)/gain for the period 3 (74,165) 45,952 (28,213)
after taxation
(Loss)/gain per share (pence) (0.7) 0.4 (0.3)
Notes
* The total column of this statement represents the profit and loss of the Company and the Group.
* All items in the above statement derive from continuing operations.
* The Group has no recognised gains or losses other than those disclosed in the Consolidated Income Statement.
The accompanying notes are an integral part of the financial statements.
(unaudited) (audited)
Six months ended Year ended
31 March 2007 30 September 2007
Revenue Capital Total Revenue Capital Total
� � � � � �
- (11,893) (78,183) - (78,183)
(11,893)
238,645 238,645 - 262,662 262,662
-
- (1,841) (1,841) - (3,442) (3,442)
- (9,137) (9,137) - - -
144,624 - 144,624 333,711 - 333,711
1,371 - 1,371 17,770 - 17,770
(74,228) - (74,228) (156,210) - (156,210)
- - - (14,994) - (14,994)
(136,171) - (136,171) (268,514) - (268,514)
227,667 151,370 (166,420) 259,220 92,800
(76,297)
- - - (3,094) - (3,094)
227,667 151,370 (169,514) 259,220 89,706
(76,297)
(0.8) 2.4 1.6 (1.7) 2.6 0.9
Consolidated Cash Flow (unaudited) (unaudited) (audited)
Statement
Six months ended Six months ended Year
ended
31 March 2008 31 March 2007 30 September 2007
� � �
Cash flows from operating
activities
Investment income received 236,335 244,863 271,833
Deposit interest received 28,147 6,792 63,044
Rental income received 13,684 1,371 17,772
Investment management fees (93,531) (74,228) (156,210)
paid
Secretarial fees paid (1,975) (19,513) (5,160)
Rental expenses (1,849) - (14,994)
Other cash payments (115,370) (132,066) (251,967)
Net cash inflow/(outflow) from 65,441 27,219 (75,682)
operating activities
Taxation paid (2,239) - (3,094)
Capital expenditure and investment activities
Deposits and acquisition costs (1,628,623) - 138,830
relating to property contracts
Proceeds from sale of property (2,290) 183,777 -
contracts
Purchase of investments (1,428,060) (905,749) (2,086,995)
Sale of investments 4,569,920 1,151,698 2,023,640
Net cash inflow from 1,510,947 429,726 75,475
investment activities
Net cash inflow/(outflow) 1,574,149 456,945 (3,301)
before financing
Financing
Issue of shares - - 1,765,908
Expenses of share issue - - (70,636)
Net cash inflow from financing - - 1,695,272
Increase in cash 1,574,149 456,945 1,691,971
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of Stated capital Capital reserves Investment property Issue costs reserve Revenue reserve Total
Changes in Equity revaluation reserve
� � � � � �
For the six months ended 31 March 2008 (unaudited)
At 1 October 2007 10,505,154 99,153 - (679,868) (430,435) 9,494,004
Revaluation of investment - - - - (38,000) (38,000)
property
Gain/(loss) for the period - 45,952 - - (36,165) 9,787
At 31 March 2008 10,505,154 145,105 - (679,868) (504,600) 9,465,791
For the six months ended 31 March 2007 (unaudited)
At 1 October 2006 8,739,246 (160,067) 42,107 (609,232) (260,921) 7,751,133
Revaluation of investment - - (42,107) - (11,893) (54,000)
property
Gain/(loss) for the period - 227,667 - - (64,404) 163,263
At 31 March 2007 8,739,246 67,600 - (609,232) (337,218) 7,860,396
For the year ended 30 September 2007 (audited)
At 1 October 2006 8,739,246 (160,067) 42,107 (609,232) (260,921) 7,751,133
Issue of shares 1,765,908 - - - - 1,765,908
Expenses of share issue - - - (70,636) - (70,636)
Revaluation of investment - - (42,107) - (78,183) (120,290)
property
Gain/(loss) for the year - 259,220 - - (91,331) 167,889
At 30 September 2007 10,505,154 99,153 - (679,868) (430,435) 9,494,004
The accompanying notes are an integral part of the financial statements.
Consolidated Statement of (unaudited) (unaudited) (audited)
Total Recognised Gains and
Losses
Six months ended Six months ended Year
ended
31 March 2008 31 March 2007 30 September 2007
� � �
Gain for the period 9,787 163,263 167,889
Loss on revaluation of (38,000) (54,000) (120,290)
investment property
Total gains and losses (28,213) 109,263 47,599
recognised in the period
The Group has no other recognised gains or losses that are not shown in the income statement.
Notes to the financial statements
* Accounting Policies
Basis of preparation
The interim financial statements have been prepared under the historical cost convention, as modified to include the revaluation of
quoted investments and investment properties and in accordance with applicable Accounting Standards and the Statement of Recommended
Practice for "Financial Statements of Investment Trust Companies" issued in January 2003 and amended in December 2005. For the accounting
period beginning on 1 October 2007 the Company has prepared its financial statements in accordance with International Financial Reporting
Standards ("IFRS"), as adopted by the International Accounting Standards Board ("IASB"). Prior to the period beginning 1 October 2007, the
Board had elected to continue to adopt UK Generally Accepted Accounting Principles ("UK GAAP") and therefore with the new Financial
Reporting Standards issued as part of the programme to converge UK GAAP with IFRS. The differences in these approaches have resulted in
presentational changes only and have not required the restatement of any prior period numbers.
The accounting policies adopted are consistent with those followed in the preparation of Group's financial statements for the year ended
30 September 2007 except where required by IFRS, in particular with regards to IAS 1 'Presentation of Financial Statements' and IFRS 40
'Investment Properties'.
a. Basis of consolidation
The financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 31 March. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences up to the date that control ceases.
The Company has only one subsidiary which it acquired during the year ended 30 September 2007. As this subsidiary has not yet commenced
trading, the Company's financial statements are materially similar in all respects to the Group financial statements, therefore the Company
has presented only Group financial statements for the six months ended 31 March 2008 and the year ended 30 September 2007.
b. Income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net
carrying amount. Interest receivable on cash and short-term deposits is accrued to the end of the financial year.
c. Rental income
Rental income from investment properties is based on short term tenancy agreements and is recognised in the period earned. Property
operating costs are expensed as incurred including any element of expenditure not recovered from tenants.
d. Quoted investments
Purchases of investments are recognised on a trade date basis and included in the balance sheet at fair value. Sales of investments are
also recognised on a trade date basis. Proceeds are measured at fair value, which is regarded as the proceeds of any sale less any
transaction costs. The fair value of the financial instruments is based on their quoted bid prices at the balance sheet date, without any
deduction for any estimated future selling costs.
Changes in the value of investments and gains and losses on disposal are recognised in the income statement as "gains/losses on
investments" and are allocated to realised/unrealised capital reserves as appropriate.
e. Property contracts yet to complete
The Company has contractual obligations to purchase property that is currently being constructed, i.e. it has entered into contracts to
purchase the property "off-plan". Under these contracts the Company is obliged to purchase these properties at a contracted price, but has
the right to sell or transfer the contract to a third party. The "Property contracts yet to complete" are included in the balance sheet at
the lower of cost and net realisable value. Cost includes legal and other expenses incurred to acquire the contracts. The Directors are of
the opinion that it is inappropriate to account for these contracts using fair value accounting methods because their fair value cannot be
estimated with sufficient reliability.
Realised gains and losses arising on the disposal of these contracts are taken to the realised capital reserve.
f. Investment property
Investment properties are measured initially at cost, and subsequently re-measured to market value, reflecting market conditions at the
balance sheet date. Gains or losses arising from the changes in fair values of investment properties are included in the consolidated income
statement, as gain or loss arising from revaluation of investment property.
2. Taxation
Under Article 123A of the Income Tax (Jersey) Law 1961, as amended, the Company has obtained Jersey exempt company status and is
therefore exempt for Jersey income tax on non Jersey source income and bank interest (by concession). A �600 (2007- �600) annual exempt
company fee is payable by both the Company and OFP Investment Properties Limited to the Treasurer of States.
The taxation charge arises from income tax deducted at source on the net rental income. Tax has been retained on all properties at the
current rate of tax (2007/08 - 22%). Tax has been retained on the net income received from tenants after the deduction of administrative
expenses.
3. Returns per share
The revenue return per share is based on the net loss for the period of �74,165 (31 March 2007: �76,297; 30 September 2007: �169,154)
and on 11,153,098 shares (31 March 2007: 9,294,248; 30 September 2007: 10,134,550), being the weighted average number of shares in issue.
The capital return per share is based on the gain for the period of �45,952 (31 March 2007: �227,667; 30 September 2007: �259,220) and
on 11,153,098 shares (31 March 2007: 9,294,248; 30 September 2007: 10,134,550), being the weighted average number of shares in issue.
4. Management fee
Six months ended Six months ended Year
ended
31 March 31 March 30 September 2007
2008 2007
� � �
Management fee 93,531 74,228 156,210
The management fee paid to Development Capital Management (Jersey) Limited ("DCM") is 2% per annum of the net asset value of the fixed
income portfolio held by the Company, plus any cash amount of deposits paid and outstanding in respect of property contracts yet to
complete.
The management agreement between the Company and DCM is terminable by either party on 12 months notice.
5. Fixed interest investments
31 March 2008 31 March 2007 30 September 2007
� � �
Opening valuation 5,985,007 5,941,738 5,941,738
Opening unrealised loss 53,320 51,719 51,719
Opening book cost 6,038,327 5,993,457 5,993,457
Movements during the period:
Purchases 1,378,132 895,425 2,086,995
Sales - proceeds (4,486,169) (1,148,640) (2,023,640)
Amortisation of fixed income book 2,791 (10,938) (16,644)
costs
Sales - realised gains 11,668 (1,841) (1,841)
Closing book cost 2,944,749 5,727,463 6,038,327
Closing unrealised loss (19,036) (60,855) (53,320)
Closing valuation 2,925,713 5,666,608 5,985,007
31 March 2008 31 March 2007 30 September 2007
� � �
Property contracts yet to complete
Opening book cost 446,078 336,602 336,602
Movements during the period
Purchases 1,335,849 5,875 298,649
Sales - proceeds - (169,671) (451,835)
Sales - realised losses - - 262,662
Closing book cost 1,781,927 172,806 446,078
The movement during the period in the table above refers to the deposit of �1,250,000 paid on the new development at Canon House and
associated legal costs. The table below summarises the costs associated with these contracts and applies the latest 'Red Book' valuations,
prepared by Venmore Partnership LLP for Oldham Place, CB Richard Ellis for Canon House and Cluttons for Brook Street, of the underlying
properties as a basis of valuation for these contracts. The 'Red Book' value may not represent the 'fair value' of the contracts as
explained in the 'market price risk'.
Oldham Place Brook Canon Yeading Total
Street House Lane
� � � � �
Deposits paid 336,602 292,774 1,250,000 - 1,879,376
Legal and acquisition costs - 2,937 79,974 8,813 91,724
Proceeds on disposal (430,043) - - - (430,043)
Gains on disposal 240,870 - - - 240,870
Book cost as at 31 March 2008 147,429 295,711 1,329,974 8,813 1,781,927
Outstanding completion 2,948,580 5,562,697 23,750,000 4,569,894 36,831,171
payments
Total historic cost 3,096,009 5,858,408 25,079,974 4,578,707 38,613,098
'Red Book' valuation 3,650,000 7,311,896 30,730,000 N/A 41,691,896
Approximate completion date Oct 09 Aug 09 Jun 10 Aug 09
The deposit paid on Canon House relates to 118 units. The deposit payable on Yeading Lane has not been reflected in the accounts due to
the unfulfilled condition of the developer securing the purchase of the balance of the site.
Investment property
31 March 2008 31 March 2007 30 September 2007
� � �
Opening book cost 989,183 982,893 982,893
Movements during the period:
Completion payment - - 6,290
Closing book cost 989,183 982,893 989,183
Closing unrealised loss (116,183) (11,893) (78,183)
Closing valuation 873,000 971,000 911,000
6. Contingencies
The Company holds a deposit of �3,000,000 with Allied Irish Bank as a guarantee to the Royal Bank of Scotland. Under the terms of the
guarantee a minimum of �3,000,000 balance need to be maintained at all times. This guarantee will reduce in line with the sale of units at
Canon House, Wallington Surrey and released on a quarterly basis.
7. Stated capital
31 March 2008 31 March 2007 30 September 2007
Authorised:
The Company is a no par value ('NPV')
company
Founder shares 10 10 10
99,999,990 participating 99,999,990 99,999,990 99,999,990
shares
100,000,000 100,000,000 100,000,000
Issued:
Founder shares 2 2 2
Participating shares 11,153,098 9,294,248 11,153,098
8. Net asset value per share
Net asset value
attributable per share
31 March 31 March 2007 30 September 2007
2008
p p p
Participating shares 84.9 84.6 85.1
Net asset value
31 March 31 March 2007 30 September 2007
2008
� � �
9,465,791 7,860,396 9,494,004
9. Financial instruments
The Company's financial instruments comprise fixed interest securities, cash balances, property contracts and debtors and creditors that
arise directly from its operations, for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income.
The main risks that the Company faces from its financial instruments are (i) market price risk, being the risk that the value of
investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency movement,
(ii) credit risk, (iii) interest rate risk and (iv) liquidity risk.
The Board reviews and agrees policies for managing each of these risks. The Manager's policies for managing these risks are summarised
below and have been applied throughout the period. The numerical disclosures exclude short-term debtors and creditors.
Market price risk
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's operations. It
represents the potential loss the Company might suffer through holding market positions as a consequence of price movements.
It is the Board's policy to hold a broad spread of fixed interest investments in order to reduce risk arising from factors specific to a
particular country or sector. The Manager monitors market prices throughout the period and reports to the Board, which meets regularly in
order to review investment strategy.
The Red Book valuations of the underlying properties, on which the Company holds contracts are based primarily upon "The estimated
amount for which a property should exchange on the date of the valuation, between a willing buyer and a willing seller in an arm's-length
transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion." This valuation
methodology is designed to encapsulate the fair value of the properties were they complete and held for investment purposes. The Company
however holds contracts to purchase these properties once complete and therefore is exposed to additional risks such as the risk that the
development fails to complete or completes in a sub-standard fashion not accounted for in the Red Book assumptions. The Company is also
exposed to changes in the value of the property caused by other economic factors.
The contracts are highly leveraged such that small changes in the values of the underlying properties can generate large changes in the
unrealised values of the contracts. By way of an example the change in value of a contract using a 5% deposit could be affected by
approximately twenty times the change in value of the underlying asset.
It is the Board's policy to value the property contracts yet to complete at the lower of cost and net realisable value as set out in
1(e). This eliminates to a significant degree the effect of market movements in the underlying property on the value of the contracts. The
total purchase price including acquisition costs, of the twenty-two contracts at Oldham Place is �3,096,009 and the Red Book valuation of
the properties as at 31 March 2008 is �3,650,000. The total purchase price including acquisition costs, of the thirty-eight contracts at
Brook Street is �5,858,408 and the Red Book valuation of the properties is �7,311,896. The total purchase price including acquisition costs,
of the one hundred and eighteen contracts at Canon House is �25,079,974 and the Red Book valuation of the properties is �30,730,000.
Should the Company complete on all the contracts and subsequent Red Book valuations fall by more than 19%, the Company would then be
exposed to any further falls in the market, as the net realisable value would then be below cost.
Credit risk
As part of the fixed interest portfolio the Company places funds with third parties and is therefore potentially at risk from the
failure of any such third party of which it is a creditor. The Fund expects to place any such funds on a short-term basis only and spread
these over a number of different providers.
The deposits in respect of the property contracts yet to complete are typically held in escrow with the developer's solicitors. This
money is only released to the developer on satisfactory completion of the property or receipt of appropriate guarantees. Should a developer
default on the contract the deposit and any interest earned would be returned to the Company.
Interest rate risk
The interest rate risk profile of financial assets at the balance sheet date was as follows:
Fixed interest
31 March 2008 31 March 2007 30 September 2007
� � �
Financial assets 2,925,713 5,666,608 5,985,007
Floating rate
31 March 2008 31 March 2007 30 September 2007
� � �
Financial assets 402,320 593,145 1,828,171
Deposit at AIB 3,000,000 - -
3,402,320 593,145 1,828,171
Non-interest bearing
31 March 2008 31 March 2007 30 September 2007
� � �
Financial assets
Property contracts yet to 1,781,927 172,806 446,078
complete
Debtors 253,352 - 253,352
2,035,279 172,806 699,430
All short-term debtors and creditors have been excluded from this disclosure.
The fixed interest assets have a weighted average maturity of 1.0 years (31 March 2007: 1.2 years; 30 September 2007: 1.1 years) and a
weighted average yield of 5.0% (31 March 2007: 5.1%; 30 September 2007: 5.1%) per annum.
The floating rate assets consist of cash deposits on call earning interest at the prevailing market rates. Changes in interest rates
will impact on the value of fixed interest securities and future cash flows from floating rate holdings. They will have no impact on the
property contracts yet to complete.
Liquidity risk
The Company's assets comprise cash balances and readily realisable securities, which can be sold to meet funding commitments if
necessary. They also comprise of property contracts yet to complete which are illiquid.
It is the intention of the Board to sell on the property contracts yet to complete. However should there be insufficient liquidity in
the market to enable this to happen the Company would be liable to pay the remaining commitment set out in the contract.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FKQKNKBKDCAB
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