TIDMOPF
RNS Number : 5137J
Off-Plan Fund Limited (The)
31 March 2010
+-----------------------------------+-----------------------------------+
| For immediate release | 31 March 2010 |
+-----------------------------------+-----------------------------------+
THE OFF-PLAN FUND LIMITED
(the "Company" or the "Fund")
Preliminary Results for the year ended 30 September 2009
CHAIRMAN'S STATEMENT
I am pleased to report that in the face of extremely challenging market
conditions, the Fund, with the assistance of the Manager, has been able to
return significant capital to its shareholders ("Members") since the end of the
financial year. The return of capital, which was conducted following
consultation with the Fund's largest shareholders by way of redemption of
shares, followed the successful rescission of the Fund's purchase agreements in
relation to development projects in Wallington and Liverpool. The Fund has also
benefited from a strong recovery in its share price during the latter part of
the financial year and thereafter.
Performance
The audited net asset value ("NAV") of the Fund at 30 September 2009 was GBP7.1
million (2008: GBP9.1 million). The NAV per ordinary share has reduced to 63.4p
at year-end from 81.2p at 30 September 2008.
The Fund's share price at the start of the period was 54.5p and amidst turmoil
in global financial markets hit a low of 7.75p in January 2009. However, it
recovered well and had rebounded to 47p by the end of the financial year.
Subsequent to the year end the discount to NAV has narrowed further with the
Fund's shares trading at 53p on 29 March 2010.
Redemption of Shares
As announced on 22 September 2009, following the rescission of its purchase
agreements with Henry Homes (Wallington) Limited ("HHW"), the Fund received the
sum of GBP3 million which was previously held in escrow by AIB Bank (CI) Limited
as collateral for a completion guarantee for the Fund's former obligations under
the agreements in respect of residential units of the proposed Canon House
development in Wallington. The return of these funds, taken together with other
cash held on deposit by the Fund, resulted in the Fund holding a level of cash
that was surplus to its working capital and solvency requirements.
The Board and the Manager consulted with a number of the larger shareholders of
the Fund who each expressed an interest in the Fund distributing some of its
available cash. Consequently and following careful consideration the Directors
unanimously resolved to return, on a pro rata basis, approximately GBP3.9
million of the Fund's cash to its Members. In determining the level of the
redemption the Directors considered the ongoing running costs of the Fund for
the next 12 months, together with a suitable contingency, to allow them to
conduct an orderly winding down of the activities of the Fund. As a winding down
of the Fund's activities constituted a change in the Fund's investment strategy,
it could only be implemented with approval from its Members, further details of
which are set out below.
With regard to the return of capital, as referred to above, on 26 October 2009
the Fund announced that it had posted a circular to its Members detailing
proposals to redeem, on a pro rata basis, up to 5,576,549 Participating Shares,
equivalent to 50 per cent of the 11,153,098 Participating Shares in issue, for
cancellation in accordance with the relevant provisions of the Companies
(Jersey) Law 1991. The Participating Shares were redeemed on 30 October 2009
(the "Redemption Date") pursuant to Article 36 of the Fund' Articles (the
"Redemption") to those Members that were registered holders on the Redemption
Date at a price of GBP0.70 per Participating Share.
The Redemption took place on a pro rata basis such that each Member had redeemed
one Participating Share for each two Participating Shares held at GBP0.70 per
share, so that each Member had the same proportion of their holding of
Participating Shares redeemed.
Further Share Redemptions
Following the sale of units in Walton and Leicester, as detailed below, the
Board have resolved to redeem, on a pro rata basis, up to 3,345,929
Participating Shares (equivalent to approximately 60 per cent of the 5,576,549
shares in issue) at a price of 63p per Participating Share, representing a
redemption of approximately GBP2.1 million. The redemption will take place on a
pro rata basis so that each member will have the same proportion of their
holding redeemed (save that the number of shares to be redeemed held by any
shareholder may be rounded down to the nearest whole share to avoid any
shareholder holding a fraction of a share as a result of the redemption). An
information circular in respect of the redemption will be despatched to
shareholders in due course.
Portfolio Review
The Heart, Walton-on-Thames: In late 2008, the Fund completed the purchase of 10
one-bedroom apartments with parking in this major regeneration development
project for GBP1.65 million, equating to a 24 per cent discount to the
prevailing Red Book value. The purchase was in line with the Fund's investment
strategy at the time aimed at acquiring high quality completed units located in
the Home Counties and inner M25 markets with good rental prospects which could
be held and let until the sales and mortgage markets improve.
In February 2009, one unit was sold for GBP190,000 (a 10 per cent profit after
deducting all transaction costs). The other units were let at an average annual
yield of 6.2 per cent. A further unit was sold in November 2009 for GBP197,000.
Following the decision by Members to commence the orderly winding down of the
activities of the Fund, on 2 February 2010 the Fund exchanged contracts for the
sale of all eight remaining units to Karlton Properties Limited for a total cash
consideration of GBP1,332,000 (equating to a sale price of GBP166,500 per flat).
The independent market valuation, assuming sale as a single investment, of the
eight flats as at 30 September 2009 was GBP1,150,000. The value assuming sale
individually with vacant possession was GBP1,360,000. On exchange the Fund
received a 10 per cent non-refundable deposit and completion took place on 2
March 2010.
Wimbledon House, Leicester: The six apartments were re-valued at GBP717,500 (30
September 2008: GBP805,000) assuming sale individually with vacant possession
and GBP482,000 assuming sale as a single lot for investment purposes. The
properties were sold at the Allsop residential property auction on 22 February
2010 for a total cash consideration of GBP430,500. This equates to a sale price
of GBP71,750 per flat. On exchange, the Fund received a 10 per cent
non-refundable deposit and, under the terms and conditions of the auction,
completion took place on 22 March 2010.
Rescission of Oldham Place, Liverpool: As announced on 8 January 2009, the Fund
rescinded the contracts for the purchase of 51 apartments to be built at a
development in Oldham Place, Liverpool, which it had entered into in April 2006
with the developer, Bentley Properties (Preston) Limited.
Due to delays related to the receivership of the appointed construction company
in December 2007 and an issue relating to the boundary with an adjoining plot of
land which required an amended planning permission, the developer was unable to
complete the units by 31 December 2008 as required in the purchase contracts.
Given prevailing market conditions and short-term prospects for UK residential
property (city centre apartments in particular) and having taken legal advice as
to the options available, the Board decided to exercise the Fund's contractual
right to rescind all contracts and recover the deposits which were held by the
developer's solicitors in respect of the development, together with interest
thereon. A total of GBP371,000 was received by the Fund in February 2009.
The onward purchasers of 29 of the units were informed of the Fund's intentions
in this regard and all such purchasers indicated their acceptance of the
position on the basis that they were repaid their deposits and accrued interest.
Rescission of Canon House, Wallington: As set out above, the Fund exercised its
right to rescind each of the purchase agreements entered into between the Fund
and HHW in respect of the 118 residential units which were to comprise part of
the proposed Canon House development in Wallington (the "Agreements").
The Fund sought to secure the return of sums outstanding following the
rescission of the Agreements. Bank of Scotland Plc ("BoS"), as lending bank to
HHW acknowledged the rescission of the Agreements and on 22 September 2009 the
Fund received the sum of GBP3 million previously held in escrow by AIB as
collateral for the completion guarantee provided by AIB to BoS in respect of the
Fund's former obligations under the Agreements.
The Fund has provided in full for the GBP1.1 million of deposits paid to HHW at
the start of the project as the latest information would suggest that HHW will
not be in a position to return these monies. As a beneficiary of an insurance
policy the Fund is entitled to recover this amount from Zurich Insurance but, in
accordance with IAS37 "Provisions, Contingent Liabilities and Contingent
Assets", the Fund must be virtually certain that a favourable outcome will
result from pursuing the claim in order to include this amount as a receivable
balance in the financial statements.
After taking legal advice, and since the claims process is still not underway,
it has been decided that there is not sufficient certainty at this point to be
able to recognise the claim and therefore the deposit has been fully provided in
the income statement. The Directors will be vigorously pursuing a claim in the
event that HHW are unable to refund the deposits and are confident of ultimately
recovering the deposit in full.
Board and advisers
In the period under review Joni Cline resigned as a director in order to pursue
other opportunities. Ms Cline had acted as the Board representative nominated by
Consensus Business Group since December 2007.
In March 2009, Graham Berry resigned as Chairman of the Fund for personal
reasons and I took on the Chairmanship of the Fund. Donald McKay Reid was
appointed to the Board of the Fund on 30 April 2009 as a non-executive Director.
In January 2009 the Board appointed Merchant John East Securities Limited as its
nominated adviser and broker and in October 2009 the Fund appointed Fairway Fund
Management Limited as administrator of the Fund.
Roger King
Chairman
31 March 2010
List of Contacts
Development Capital Management
(Manager)
Andy Gardiner
Tom Pridmore
020 7355 7600
Merchant John East Securities Limited
(Nominated Adviser)
Bidhi Bhoma/Simon Clements
020 7628 2200
Consolidated Income Statement
for the year ended 30 September 2009
+-------------------+---+--+-----------+-------------+-------------+-----------+-----------+-----------+
| | | Year ended | Year ended |
| | | 30 September 2009 | 30 September 2008 |
+-----------------------+--+---------------------------------------+-----------------------------------+
| | | Revenue | Capital | Total | Revenue | Capital | Total |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| |Note | GBP | GBP | GBP | GBP | GBP | GBP |
+-------------------+------+-----------+-------------+-------------+-----------+-----------+-----------+
| Unrealised losses on | | | | | | | |
| investment property |7 | - | (378,016) | (378,016) | - | (106,500) | (106,500) |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Profit on off-plan | | | | | | | |
| sales or write back |9 | - | - | - | (240,870) | - | (240,870) |
| on rescinded sales | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Realised losses on | | | | | | | |
| property contracts |9 | - | - | - | (4,113) | - | (4,113) |
| yet to complete | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Realised losses on | | | | | | | |
| property contracts |9 | - | (113,323) | (113,323) | - | - | - |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Realised gains on | | | | | | | |
| sale of property | | - | 18,108 | 18,108 | - | - | - |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Realised gains on | | | | | | | |
| investments held at | | | | | | | |
| fair value through |8 | - | 8,907 | 8,907 | - | 11,668 | 11,668 |
| profit or loss | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Unrealised gains on | | | | | | | |
| investment held at | | | | | | | |
| fair value through |8 | - | 39,486 | 39,486 | - | 20,769 | 20,769 |
| profit or loss | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Interest income |2 | 60,696 | - | 60,696 | 339,315 | - | 339,315 |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Rental Income |2 | 88,034 | - | 88,034 | 36,411 | - | 36,411 |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Investment management |3 | (186,267) | - | (186,267) | (182,477) | - | (182,477) |
| fee | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Write off of deposit |9 | - |(1,100,000) | (1,100,000) | - | - | - |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Rental expenses |4 | (31,265) | - | (31,265) | (11,537) | - | (11,537) |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Other expenses |4 | (275,819) | - | (275,819) | (295,060) | - | (295,060) |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Net loss on ordinary | | (344,621) |(1,524,838) | (1,869,459) | (358,331) | (74,063) | (432,394) |
| activities before | | | | | | | |
| taxation | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Taxation |5 | (17,607) | - | (17,607) | (6,514) | - | (6,514) |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Provision for winding |4 | (100,000) | - | (100,000) | - | - | - |
| down expenses | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Net loss for the year | | | | | | | |
| after taxation | | (462,228) |(1,524,838) | (1,987,066) | (364,845) | (74,063) | (438,908) |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| Loss per share | | (4.1) | (13.7) | (17.8) | (3.3) | (0.7) | (3.9) |
| (pence) | | | | | | | |
+-----------------------+--+-----------+-------------+-------------+-----------+-----------+-----------+
| | | | | | | | | |
+-------------------+---+--+-----------+-------------+-------------+-----------+-----------+-----------+
Notes
(a) The total column of this statement represents the profit and loss of the
Company and the Group.
(b) All items in the above statement derive from continuing operations.
(c) The Group has no recognised gains or losses other than those disclosed in
the Consolidated income statement.
Consolidated Balance Sheet
for the year ended 30 September 2009
+-----------------------------------------+----------+-------------+----------+-------------+
| | | 2009 | | 2008 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | Notes | GBP | | GBP |
+-----------------------------------------+----------+-------------+----------+-------------+
| Non-current assets | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Investment properties | 7 | - | | 804,500 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Investments held at fair value through | 8 | - | | 3,012,365 |
| profit and loss | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Property contracts yet to complete | 9 | - | | 1,508,823 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | - | | 5,325,688 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Current assets | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Investment property | 7 | 1,931,184 | | - |
+-----------------------------------------+----------+-------------+----------+-------------+
| Investments held at fair value through | 8 | 105,422 | | - |
| profit and loss | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Debtors | 10 | 161,430 | | 533,450 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Cash in escrow | 12 | - | | 3,000,000 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Cash and cash equivalents | | 5,041,169 | | 274,200 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | 7,239,205 | | 3,807,650 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Total assets | | 7,239,205 | | 9,133,338 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Current liabilities | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Other payables | 11 | (171,175) | | (78,242) |
+-----------------------------------------+----------+-------------+----------+-------------+
| Net Assets | | 7,068,030 | | 9,055,096 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Equity | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
| Stated capital | 13 | 10,505,154 | | 10,505,154 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Capital reserve | 15 | (1,840,593) | | (315,755) |
+-----------------------------------------+----------+-------------+----------+-------------+
| Issue costs reserve | | (679,868) | | (679,868) |
+-----------------------------------------+----------+-------------+----------+-------------+
| Revenue reserve | | (916,663) | | (454,435) |
+-----------------------------------------+----------+-------------+----------+-------------+
| Total shareholders' funds (all equity) | | 7,068,030 | | 9,055,096 |
+-----------------------------------------+----------+-------------+----------+-------------+
| Net asset value per share (pence) | 14 | 63.4 | | 81.2 |
+-----------------------------------------+----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+----------+-------------+----------+-------------+
Consolidated Statement of Cash Flows
for the year ended 30 September 2009
+----------------------------------------+----------+------------+----------+-------------+
| | | 2009 | | 2008 |
+----------------------------------------+----------+------------+----------+-------------+
| | Notes | GBP | | GBP |
+----------------------------------------+----------+------------+----------+-------------+
| Net cash inflow / (outflow) from | | | | |
| operating activities after | 16 | 1,799,559 | | (4,835,453) |
| interest and before taxation | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Income tax paid | | (7,708) | | (6,226) |
+----------------------------------------+----------+------------+----------+-------------+
| | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Investing activities | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Interest income received | | 19,782 | | 247,087 |
+----------------------------------------+----------+------------+----------+-------------+
| Purchase of investments | | - | | (1,529,299) |
+----------------------------------------+----------+------------+----------+-------------+
| Sale of investments | | 2,955,336 | | 4,569,920 |
+----------------------------------------+----------+------------+----------+-------------+
| Net cash inflow from investing | | 2,975,118 | | 3,287,708 |
| activities | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Net increase / (decrease) in cash and | | 4,766,969 | | (1,553,971) |
| cash equivalents | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Cash and cash equivalents at the start | | 274,200 | | 1,828,171 |
| of the year | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| Cash and cash equivalents at the end | | 5,041,169 | | 274,200 |
| of the year | | | | |
+----------------------------------------+----------+------------+----------+-------------+
| | | | | |
+----------------------------------------+----------+------------+----------+-------------+
Consolidated Statement Of Changes In Equity
for the year ended 30 September 2009
+-----------------+------------+-------------+-----------+-----------+-------------+
| | | | Issue | | |
| | Stated | Capital | Costs | Revenue | |
| | Capital | Reserves | Reserve | Reserve | Total |
+-----------------+------------+-------------+-----------+-----------+-------------+
| | GBP | GBP | GBP | GBP | GBP |
+-----------------+------------+-------------+-----------+-----------+-------------+
| For the year | | | | | |
| ended 30 | | | | | |
| September 2009 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| At 1 October | 10,505,154 | (315,755) | (679,868) | (454,435) | 9,055,096 |
| 2008 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| Revaluation of | - | (378,016) | - | - | (378,016) |
| investment | | | | | |
| property | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| Loss for the | - | (1,146,822) | - | (462,228) | (1,609,050) |
| year | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| At 30 September | 10,505,154 | (1,840,593) | (679,868) | (916,663) | 7,068,030 |
| 2009 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| For the year | | | | | |
| ended 30 | | | | | |
| September 2008 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| At 1 October | 10,505,154 | (241,692) | (679,868) | (89,590) | 9,494,004 |
| 2007 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| Revaluation of | - | (106,500) | - | - | (106,500) |
| investment | | | | | |
| property | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| Gain/(loss) for | - | 32,437 | - | (364,845) | (332,408) |
| the year | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
| At 30 September | 10,505,154 | (315,755) | (679,868) | (454,435) | 9,055,096 |
| 2008 | | | | | |
+-----------------+------------+-------------+-----------+-----------+-------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting policies
(a) Basis of preparation
The consolidated annual 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. Applicable Accounting Standards for these purposes are
International Financial Reporting Standards ("IFRS"), as issued by the
International Accounting Standards Board ("IASB").
Statement of Compliance
The consolidated financial statements have been prepared in accordance with IFRS
as issued by the IASB.
Going Concern
At the EGM of the Company held on 4 December 2009, a resolution was passed to
commence an orderly winding down of the Company's activities.
The financial statements have therefore not been prepared on the going concern
basis because the company is winding down.
The effect on the financial statements is that all assets and liabilities are
disclosed as current, and the accounting effect is that the assets and
liabilities are recognised at their realisable amounts net of costs of sale (or
best estimate thereof). In addition, provision is made for future costs to
completion of the orderly wind down of the Fund's activities.
(b) Use of estimates and judgments
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of accounting polices and
the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
The most significant estimates and judgements relate to the determination of
fair value of investment property and property contracts yet to complete and the
estimation of costs required to complete the orderly winding down of the
Company. The fair values of the properties are based on the net proceeds of the
post balance sheet sale.
(c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
30 September each year. 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 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 one wholly owned subsidiary, OPF Investment Properties Limited,
which it acquired during the year ended 30 September 2007. As this subsidiary
has not yet commenced trading and remained dormant throughout the year, the
Company's financial statements are materially similar in all respects to the
Group's financial statements.
(d) Revenue recognition
(i) Interest income
Interest receivable on fixed interest securities is recognised in 'Interest
income' using the effective interest method. The effective interest method is a
way of calculating the amortised cost of a financial asset or a financial
liability (or groups of financial assets or financial liabilities) and of
allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future
cash receipts or payments through the expected life of the financial instrument
or, where appropriate, a shorter period, to the net carrying amount of the
financial asset or financial liability. When calculating the effective interest
rate, the Group estimates cash flows considering all contractual terms of the
financial instrument but not future credit losses. The calculation includes all
amounts paid or received by the Group that are an integral part of the effective
interest rate, including transaction costs and all other premiums or discounts.
(ii) Profit on off-plan sales
Profit on off-plan sales is recognised once contracts with onward buyers have
become unconditional. The profit or loss is calculated in line with the
profit-share arrangement with each developer based on the difference between the
amount agreed with the buyer and the Company's purchase price.
(iii) 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.
(e) Expenses
Expenses are charged through the income statement, except for expenses which are
attributable to the disposal of an investment, which are deducted from the
disposal proceeds of the investment. In addition, certain expenses associated
with the acquisition of an investment, investment property and property
contracts yet to complete have been capitalised. An assessment of the costs to
wind up the Company is also charged through the income statement. Costs are
determined using experience of final legal fees and termination costs to service
providers.
(f) Investments held at fair value through profit or loss
Financial instruments are designated at fair value through the profit or loss if
the Group manages such investments and makes purchase and sale decisions based
on their fair value. Fair value is the amount at which an investment could be
exchanged between knowledgeable willing parties in an arms length transaction.
Purchases of investments are recognised on the trade date, being the date that
amounts are due for payment. Investments are derecognised when the rights to
receive cash flows from the investments have expired or the Group has
transferred substantially all risks and rewards of ownership. Investments are
initially recognised at fair value being the transaction price. Transaction
costs for all financial assets carried at fair value through profit and loss are
expensed as incurred.
Subsequent to initial recognition, all financial assets at fair value through
the profit and loss are measured at fair value. Gains and losses arising from
changes in fair value are presented in the income statement in the year in which
they arise. On disposal, realised gains and losses are also recognised in the
income statement.
Fair values of financial instruments traded in active markets are based on
quoted market prices as at the balance sheet date. The quoted market price used
for financial assets held by the Group is the current bid price.
(g) Investment properties
Property that is held for capital appreciation, and that is not occupied by the
companies in the Group, is classified as investment property.
Investment property is measured initially at its cost, including related
transaction costs. After initial recognition, investment property is carried at
fair value. Changes in fair values are recorded in the income statement. As the
Financial Statements have been prepared on a break up basis investment property
is carried at the amount of net proceeds received from sale.
Realised gains and losses on the disposal of investment property are recognised
once sale contracts have been exchanged and the purchaser's deposit has been
received.
(h) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks with an
original maturity of three months or less.
(i) Taxation
The taxation charge arises from income tax deducted at source on the net rental
income. UK tax has been deducted at source on all properties at the current rate
of tax (2009/10 - 20 per cent.; 2008/09 - 20 per cent.).
With effect from the 2009 year of assessment Jersey abolished the exempt company
regime for existing companies. Profits arising in the Company for the 2009 year
of assessment and future periods will be subject to tax at the rate of zero per
cent. In the prior year the Company was exempt from taxation under the
provisions of Article 123A of the Income Tax (Jersey) Law 1961 as amended.
(j) Share capital
Founder shares
Founder shares are classified as equity. Founder shares are not eligible for
participation in Company investments and carry no voting rights at general
meetings of the Company.
(k) Currency
The results and financial position of the Group are expressed in Pounds
Sterling, which is the Group's functional currency.
(l) Loans and receivables
Loans and receivables are shown on a recoverable basis. Receivables are of a
short-term nature and are accordingly stated at their nominal value as reduced
by appropriate allowances for estimated irrecoverable amounts.
(m)Property contracts yet to complete
The Group 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 Group is obliged to purchase these
properties at a contracted price, but has the right to sell or transfer the
contract to a third party. At the year end there were no properties held using
this definition.
(n) Provisions and contingencies
The Group applies IAS37 "Provisions, Contingent Liabilities and Contingent
Assets" ("IAS37") to relevant financial assets and liabilities. Therefore where
the probability of an outflow of resources from a contingent liability is
probable a provision is made. Where the probability is possible but not
probable, no provision is recognised. In respect of a contingent asset, if the
contingency is virtually certain (i.e. > 95% certain) the asset is not
contingent (and therefore recognised as a receivable); where the contingent
benefits are probable (i.e. >50% but <95%) but not certain, an asset is not
recognised (and disclosures are made); and where the inflow is not probable
(i.e. <50% probability) no asset is recognised and no disclosure is necessary.
(o) New standards and interpretations not applied
The accounting policies adopted are consistent with those of the previous
financial year, except that the Group has adopted the following amendment and
new International Financial Reporting Interpretations Committee (IFRIC)
interpretations during the year:
Amendments to IAS 39, Financial Instruments: Recognition and Measurement
and IFRS 7 Financial Instruments: Disclosures - Reclassification of Financial
Assets.
IFRIC 11, Group and Treasury Share Transactions.
IFRIC 12, Service Concession Arrangements.
IFRIC 14, The Limit on a Defined Benefit Asset Minimum Funding Requirements
and their Interaction.
Adoption of these standards and
interpretations did not have any effect on the financial performance or position
of the Group.
At the date of authorisation of these financial statements, the following
standards and Interpretations were in issue but not yet effective:
Amendments to IAS 1 - Presentation of Financial Statements: A Revised
Presentation (effective for annual periods beginning on or after 1 January
2009).
Amendments to IAS 23 - Borrowing Costs (effective for annual periods beginning
on or after 1 January 2009).
Amendments to IAS 27 - Consolidated and Separate Financial Statements (effective
for annual periods beginning on or after 1 July 2009).
Amendments to IAS 40 - Investment Property (effective for annual periods
beginning on or after 1 January 2009).
Revised IFRS 1 - First-time Adoption of International Financial Reporting
Standards (effective for annual periods on or after 1 January 2010).
Revised IFRS 2 - Share-based Payment (effective for annual periods on or after 1
January 2010).
Revised IFRS 3 - Business Combinations (effective for annual periods beginning
on or after 1 July 2009).
Revised IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations
(effective for annual periods beginning on or after 1 July 2009).
IFRS 8 - Operating Segments (effective for annual periods beginning on or after
1 January 2009).
Amendment to IFRS 7 - Financial Instruments (effective for annual periods
beginning on or after 1 January 2009).
IFRIC 15 - Agreements for the Construction of Real Estate (effective for annual
periods beginning on or after 1 January 2009).
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the financial
statements for the Group.
2. Income
+-----------------------------------------+----------+---------+----------+---------+
| | | 2009 | | 2008 |
+-----------------------------------------+----------+---------+----------+---------+
| | | GBP | | GBP |
+-----------------------------------------+----------+---------+----------+---------+
| | | | | |
+-----------------------------------------+----------+---------+----------+---------+
| Income from fixed interest securities | | 19,782 | | 195,349 |
+-----------------------------------------+----------+---------+----------+---------+
| Deposit interest | | 40,914 | | 143,966 |
+-----------------------------------------+----------+---------+----------+---------+
| Interest income | | 60,696 | | 339,315 |
+-----------------------------------------+----------+---------+----------+---------+
| Rental income | | 88,034 | | 36,411 |
+-----------------------------------------+----------+---------+----------+---------+
| | | 148,730 | | 375,726 |
+-----------------------------------------+----------+---------+----------+---------+
3. Management fee
+-----------------------------------------+----------+---------+----------+---------+
| | | 2009 | | 2008 |
+-----------------------------------------+----------+---------+----------+---------+
| | | GBP | | GBP |
+-----------------------------------------+----------+---------+----------+---------+
| | | | | |
+-----------------------------------------+----------+---------+----------+---------+
| Management fee | | 186,267 | | 182,477 |
+-----------------------------------------+----------+---------+----------+---------+
The management fees paid to the Manager and Promoter were 2 per cent 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. In July 2009 the fee was reduced to GBP175,000 per
annum. To take account of the Fund's commencement of an orderly winding down of
its activities, the notice period under the management agreement between the
Company and the Manager has been reduced (subject to consent from the Jersey
Financial Services Commission) from 12 months and is now terminable by giving
the Manager not less than six months notice in writing, such notice not to be
given before 30 June 2010.
4. Other operating expenses
+-----------------------------------+---------+---------+--------+---------+
| | | 2009 | | 2008 |
+-----------------------------------+---------+---------+--------+---------+
| | | GBP | | GBP |
+-----------------------------------+---------+---------+--------+---------+
| | | | | |
+-----------------------------------+---------+---------+--------+---------+
| Legal fees | 112,556 | | 90,194 | |
+-----------------------------------+---------+---------+--------+---------+
| Administration and secretarial | 38,440 | | 38,114 | |
| services | | | | |
+-----------------------------------+---------+---------+--------+---------+
| Directors' remuneration | 36,872 | | 43,048 | |
+-----------------------------------+---------+---------+--------+---------+
| Auditors' fees - for audit | 31,000 | | 30,236 | |
| services | | | | |
+-----------------------------------+---------+---------+--------+---------+
| Miscellaneous expenses | 56,951 | | 93,468 | |
+-----------------------------------+---------+---------+--------+---------+
| Other expenses | | 275,819 | | 295,060 |
+-----------------------------------+---------+---------+--------+---------+
| Rental expenses | | 31,265 | | 11,537 |
+-----------------------------------+---------+---------+--------+---------+
| Provision for winding down | | 100,000 | | - |
| expenses | | | | |
+-----------------------------------+---------+---------+--------+---------+
| | | 407,084 | | 306,597 |
+-----------------------------------+---------+---------+--------+---------+
5. Tax
With effect from the 2009 year of assessment Jersey abolished the exempt company
regime for existing companies. Profits arising in the Company for the 2009 year
of assessment and future periods will be subject to tax at the rate of zero per
cent. In the prior year the Company was exempt from taxation under the
provisions of Article 123A of the Income Tax (Jersey) Law 1961 as amended.
+----------------------------------------+----------+-------------+----------+-----------+
| | | 2009 | | 2008 |
+----------------------------------------+----------+-------------+----------+-----------+
| | | GBP | | GBP |
+----------------------------------------+----------+-------------+----------+-----------+
| | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Income tax on rental income | | 17,607 | | 6,514 |
+----------------------------------------+----------+-------------+----------+-----------+
| Reconciliation of tax charges | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Net loss on ordinary activities before finance | (1,869,459) | | (432,394) |
| costs and taxation | | | |
+---------------------------------------------------+-------------+----------+-----------+
| Adjustment for disallowable income and | | | | |
| expenses | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Interest income | | (60,696) | | (339,315) |
+----------------------------------------+----------+-------------+----------+-----------+
| Cancellation of gain recognised in | | - | | 240,870 |
| prior year | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Realised losses on investments held at fair value | - | | 4,113 |
| through profit or loss | | | |
+---------------------------------------------------+-------------+----------+-----------+
| Realised losses on property contracts | 113,323 | | - |
+---------------------------------------------------+-------------+----------+-----------+
| Realised gain on sale of property | (18,108) | | - |
+---------------------------------------------------+-------------+----------+-----------+
| Realised gains on investments held at fair value | (8,907) | | (11,668) |
| through profit or loss | | | |
+---------------------------------------------------+-------------+----------+-----------+
| Unrealised gains on investments held at fair | (39,486) | | (20,769) |
| value through profit or loss | | | |
+---------------------------------------------------+-------------+----------+-----------+
| Unrealised losses on investment | | 378,016 | | 106,500 |
| property | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Investment management fee | | 186,267 | | 182,477 |
+----------------------------------------+----------+-------------+----------+-----------+
| Write off deposit | | 1,100,000 | | - |
+----------------------------------------+----------+-------------+----------+-----------+
| Other expenses | | 275,819 | | 295,060 |
+----------------------------------------+----------+-------------+----------+-----------+
| Rental expenses | | 31,265 | | 6,143 |
+----------------------------------------+----------+-------------+----------+-----------+
| Taxable rental income | | 88,034 | | 31,017 |
+----------------------------------------+----------+-------------+----------+-----------+
+-----------------------------------------+---------+---------+----------+--------+
| Income tax @ 20% (2008 - 20%) | | 17,607 | | 6,203 |
+-----------------------------------------+---------+---------+----------+--------+
| Effect of different rate | | - | | 311 |
+-----------------------------------------+---------+---------+----------+--------+
| Total tax charge for the year | | 17,607 | | 6,514 |
+-----------------------------------------+---------+---------+----------+--------+
6. Loss per share
The loss per share is based on the net loss for the year of GBP1,987,066 (2008:
loss of GBP438,908) and on 11,153,098 shares (2008: 11,153,098), being the
weighted average number of shares in issue.
7. Investment property
+----------------------------------------+-----------+------------+----------+-----------+
| | | 2009 | | 2008 |
+----------------------------------------+-----------+------------+----------+-----------+
| | | GBP | | GBP |
+----------------------------------------+-----------+------------+----------+-----------+
| | | | | |
+----------------------------------------+-----------+------------+----------+-----------+
| Opening valuation | | 804,500 | | 989,183 |
+----------------------------------------+-----------+------------+----------+-----------+
| Movement during the year: | | | | |
+----------------------------------------+-----------+------------+----------+-----------+
| Transfer from property contracts yet | | 1,504,700 | | - |
| to complete | | | | |
+----------------------------------------+-----------+------------+----------+-----------+
| Fair value adjustment | | (34,700) | | (184,683) |
+----------------------------------------+-----------+------------+----------+-----------+
| | | 2,274,500 | | 804,500 |
+----------------------------------------+-----------+------------+----------+-----------+
| Effect of break up basis | | (343,316) | | - |
+----------------------------------------+-----------+------------+----------+-----------+
| Closing fair value | | 1,931,184 | | 804,500 |
+----------------------------------------+-----------+------------+----------+-----------+
The investment properties were sold in close proximity to the year end therefore
the net proceeds have been used as the closing fair value in the financial
statements (see note 21). The rental income arising from these properties in the
year was GBP88,034 (2008 - GBP36,411) with direct expenses of GBP31,265 (2008 -
GBP11,537).
8. Investments held at fair value through profit or loss
+-----------------------------------------+-----------+-------------+----------+-------------+
| | | 2009 | | 2008 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| | | GBP | | GBP |
+-----------------------------------------+-----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Opening valuation | | 3,012,365 | | 5,985,007 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Opening unrealised loss | | 32,551 | | 53,320 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Opening book cost | | 3,044,916 | | 6,038,327 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| | | | | |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Movements during the year: | | | | |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Purchases | | - | | 1,476,152 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Sales - proceeds | | (2,951,762) | | (4,486,169) |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Amortisation of fixed income book costs | | - | | 4,938 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Sales - realised gains | | 8,907 | | 11,668 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Effective yield adjustment - realised | | (4,277) | | - |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Effective yield adjustment - unrealised | | 703 | | - |
| | | | | |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Closing book cost | | 98,487 | | 3,044,916 |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Closing unrealised gains / (losses) | | 6,935 | | (32,551) |
+-----------------------------------------+-----------+-------------+----------+-------------+
| Closing fair value | | 105,422 | | 3,012,365 |
+-----------------------------------------+-----------+-------------+----------+-------------+
9. Property contracts yet to complete
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | 2009 | | | | 2008 |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | GBP | | | | GBP |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Opening book cost | | | 1,508,823 | | | | 446,078 |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Movements in the year: | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | | | | | - |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| The Heart | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Completion payments | 1,499,072 | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Capitalisation costs | 7,812 | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Sale of Flat 405 at cost | (167,184) | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Transfer to Investment | (1,504,700) | | (165,000) | | | | |
| Property | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Canon House | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Capitalised costs | 19,500 | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Write-off deposit after | (1,100,000) | | | | | | |
| rescission of contract | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Retention recoverable from | (150,000) | | | | | | |
| Mundays Solicitors | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Write-off of capitalised | (113,323) | | (1,343,823) | | - | | |
| costs | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | | | | | - | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Write back of Oldham Place | | | | | | | |
| sales | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| proceeds recognised in prior | - | | | | 430,043 | | |
| year | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Write back of Oldham Place | | | | | | | |
| sales | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| realised gain recognised in | - | | | | (240,870) | | |
| prior year | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| | - | | | | 189,173 | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Proceeds for rescission of | - | | | | (332,489) | | |
| Oldham Place | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Write off of capitalised | - | | | | (4,113) | | |
| costs of Oldham Place | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Oldham Place deposit refunded | | | - | | | | (147,429) |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Rescission of Tring and Hayes | | | - | | | | (304,524) |
| contracts | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Purchases | | | - | | | | 1,514,698 |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
| Closing book cost | | | - | | | | 1,508,823 |
| | | | | | | | |
+-------------------------------+-------------+----------+-------------+----------+-----------+----------+------------+
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | Cannon | | |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| | | | The | | House | | Total |
| | | | Heart | | | | |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| | | | GBP | | GBP | | GBP |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| | | | | | | | |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Opening book cost | | | 165,000 | | 1,343,823 | | 1,508,823 |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Acquisition costs | | | 7,812 | | 19,500 | | 27,312 |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Contracts rescinded | | | - | | (1,250,000) | | (1,250,000) |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Completion payment | | | 1,499,072 | | - | | 1,499,072 |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Write off capitalised | | | - | | (113,323) | | (113,323) |
| costs | | | | | | | |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Sale of Flat 405 at cost | | | (167,184) | | - | | (167,184) |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Transfer to investment | | | (1,504,700) | | - | | (1,504,700) |
| properties | | | | | | | |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
| Closing book cost | | | - | | - | | - |
+----------------------------+-------+----------+-------------+----------+-------------+----------+-------------+
The Heart
In late 2008, the Fund completed the purchase of 10 one-bedroom apartments at
The Heart, Walton-on-Thames, for GBP1.66 million. One of the apartments was sold
during the period for GBP185,292, one in November 2009 for GBP191,606 and the
remaining 8 apartments were sold in March 2010 for a total consideration of
GBP1.332 million.
Cannon House
During the year, the Fund exercised its rights to rescind the purchase agreement
in respect of the proposed Cannon House development in Wallington. This
rescission resulted in a write off of capitalised expenses of GBP113,323 and
deposits amounting to GBP1.1 million. On 22 September 2009 the Fund received
GBP3 million previously held in escrow by AIB as collateral for the completion
guarantee provided by AIB to BoS in respect of the Funds former obligation under
the agreements. As a consequence of having this cash balance, the directors
resolved to redeem 50 per cent of the participating shares in issue on a
pro-rata basis and on 30 October 2009 each registered holder received GBP0.70
for each participating share redeemed.
10. Debtors
+-----------------------------------------+-----------+---------+----------+---------+
| | | 2009 | | 2008 |
+-----------------------------------------+-----------+---------+----------+---------+
| | | GBP | | GBP |
+-----------------------------------------+-----------+---------+----------+---------+
| | | | | |
+-----------------------------------------+-----------+---------+----------+---------+
| Receivables due to rescission of Oldham | | - | | 332,489 |
| Place | | | | |
+-----------------------------------------+-----------+---------+----------+---------+
| Amount retained by Mundays Solicitors | | 150,000 | | - |
| for Wallington | | | | |
+-----------------------------------------+-----------+---------+----------+---------+
| Interest receivable | | 2,897 | | 188,981 |
+-----------------------------------------+-----------+---------+----------+---------+
| Rent receivable | | 3,704 | | - |
+-----------------------------------------+-----------+---------+----------+---------+
| Prepayments | | 4,829 | | 11,980 |
+-----------------------------------------+-----------+---------+----------+---------+
| | | 161,430 | | 533,450 |
+-----------------------------------------+-----------+---------+----------+---------+
11. Other payables
+-----------------------------------------+-----------+---------+----------+--------+
| | | 2009 | | 2008 |
+-----------------------------------------+-----------+---------+----------+--------+
| | | GBP | | GBP |
+-----------------------------------------+-----------+---------+----------+--------+
| | | | | |
+-----------------------------------------+-----------+---------+----------+--------+
| Tax | | 9,899 | | - |
+-----------------------------------------+-----------+---------+----------+--------+
| Provision for wind up costs | | 100,000 | | - |
+-----------------------------------------+-----------+---------+----------+--------+
| Accruals | | 61,276 | | 78,242 |
+-----------------------------------------+-----------+---------+----------+--------+
| | | 171,175 | | 78,242 |
+-----------------------------------------+-----------+---------+----------+--------+
Accrued expenses includes secretarial and administration fees of GBP9,125 (2008:
GBP9,391) due to BNP Paribas Fund Services Jersey Limited.
12. Cash in escrow
In 2008 the Company held a deposit of GBP3,000,000 with AIB Bank (CI) Limited as
a guarantee to Bank of Scotland. Due to the rescission of the purchase
agreements the Fund received the full sum of GBP3,000,000 on 22 September 2009.
13. Stated capital
The company is a no par value ("NPV") company.
+----------------------------------------+-----------+-------------+----------+-------------+
| Authorised: | | 2009 | | 2008 |
+----------------------------------------+-----------+-------------+----------+-------------+
| | | Number | | Number |
+----------------------------------------+-----------+-------------+----------+-------------+
| | | | | |
+----------------------------------------+-----------+-------------+----------+-------------+
| Founder shares | | 10 | | 10 |
+----------------------------------------+-----------+-------------+----------+-------------+
| 99,999,990 participating shares | | 99,999,990 | | 99,999,990 |
+----------------------------------------+-----------+-------------+----------+-------------+
| | | 100,000,000 | | 100,000,000 |
+----------------------------------------+-----------+-------------+----------+-------------+
+----------------------------------------+-----------+------------+----------+------------+
| Issued and fully paid: | | 2009 | | 2008 |
+----------------------------------------+-----------+------------+----------+------------+
| | | Number | | Number |
+----------------------------------------+-----------+------------+----------+------------+
| | | | | |
+----------------------------------------+-----------+------------+----------+------------+
| Founder shares | | 2 | | 2 |
+----------------------------------------+-----------+------------+----------+------------+
| Participating shares | | 11,153,098 | | 11,153,098 |
+----------------------------------------+-----------+------------+----------+------------+
All costs associated with the issue of shares have been taken to the issue costs
reserve.
14. Net asset value per share
+----------------------------------------+-----------+------+----------+--------+
| | | Net asset value |
| | | attributable per share |
+----------------------------------------+-----------+--------------------------+
| | | 2009 | | 2008 |
+----------------------------------------+-----------+------+----------+--------+
| | | P | | p |
+----------------------------------------+-----------+------+----------+--------+
| | | | | |
+----------------------------------------+-----------+------+----------+--------+
| Participating shares | | 63.4 | | 81.2 |
+----------------------------------------+-----------+------+----------+--------+
+----------------------------------------+-----------+-----------+----------+-----------+
| | | Net asset value |
+----------------------------------------+-----------+----------------------------------+
| | | 2009 | | 2008 |
+----------------------------------------+-----------+-----------+----------+-----------+
| | | GBP | | GBP |
+----------------------------------------+-----------+-----------+----------+-----------+
| | | | | |
+----------------------------------------+-----------+-----------+----------+-----------+
| | | 7,068,030 | | 9,055,096 |
+----------------------------------------+-----------+-----------+----------+-----------+
15. Capital reserves
+----------------------------------------+----------+-------------+----------+-----------+
| | | 2009 | | 2008 |
+----------------------------------------+----------+-------------+----------+-----------+
| | | GBP | | GBP |
+----------------------------------------+----------+-------------+----------+-----------+
| Capital reserve - realised | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Opening balance | | (98,521) | | (110,189) |
+----------------------------------------+----------+-------------+----------+-----------+
| Write off of deposit | | (1,100,000) | | - |
+----------------------------------------+----------+-------------+----------+-----------+
| Realised loss on property | | (113,323) | | - |
+----------------------------------------+----------+-------------+----------+-----------+
| Realised gain on sale of property | | 18,108 | | - |
+----------------------------------------+----------+-------------+----------+-----------+
| Realised gains on investments | | 8,907 | | 11,668 |
+----------------------------------------+----------+-------------+----------+-----------+
| Closing balance | | (1,284,829) | | (98,521) |
+----------------------------------------+----------+-------------+----------+-----------+
| | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Capital reserve - unrealised | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Opening balance | | (217,234) | | (131,503) |
+----------------------------------------+----------+-------------+----------+-----------+
| Movements in fair value of investment | | (378,016) | | (106,500) |
| properties | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Movements in fair value of investments | | 39,486 | | 20,769 |
+----------------------------------------+----------+-------------+----------+-----------+
| Closing balance | | (555,764) | | (217,234) |
+----------------------------------------+----------+-------------+----------+-----------+
| | | | | |
+----------------------------------------+----------+-------------+----------+-----------+
| Total capital reserve | | (1,840,593) | | (315,755) |
+----------------------------------------+----------+-------------+----------+-----------+
16. Cash outflow from operating activities
+----------------------------------------+-+----------+----------+--------+----------+----------+-------------+
| | | 2009 | | 2008 |
+----------------------------------------+-----------------------+-------------------+----------+-------------+
| | | GBP | | GBP |
+----------------------------------------+-----------------------+-------------------+----------+-------------+
| | | | | |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Deposits and acquisition costs relating | | (1,526,384) | | (1,502,948) |
| to property contracts | | | | |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Cash released from / (deposited in) | | 3,000,000 | | (3,000,000) |
| escrow | | | | |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Expenses from sale of property contracts | | - | | (2,290) |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Rental income received | | 89,383 | | 34,854 |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Deposit interest received | | 225,444 | | 67,958 |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Sale of property | | 185,292 | | - |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Proceeds for rescission of Oldham Place | | 332,489 | | - |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Investment management fees paid | | (186,267) | | (182,477) |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Rental expenses | | (31,265) | | (13,072) |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Other expenses | | (289,133) | | (237,478) |
+------------------------------------------+----------+-------------------+----------+------------------------+
| Net cash inflow / (outflow) from | | 1,799,559 | | (4,835,453) |
| operating activities | | | | |
+----------------------------------------+-----------------------+-------------------+----------+-------------+
| | | | | | | | |
+----------------------------------------+-+----------+----------+--------+----------+----------+-------------+
17. Financial instruments
The Group's financial instruments comprise fixed interest securities, cash
balances 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 the Group faces from its financial instruments are (i) market
price risk (comprising interest rate risk and other price risk), (ii) liquidity
risk and (iii) credit risk.
18. Financial instruments (continued)
The Board regularly reviews and agrees on policies for managing each of these
risks. The Manager's policies for managing these risks are summarised below and
have been applied throughout the year. The numerical disclosures exclude
short-term debtors and creditors.
(i) Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments used in the Group's operations. It represents the
potential loss the Group 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 year and reports to
the Board, which meets regularly in order to review investment strategy.
Interest rate risk
Interest rate movements may affect: (i) the fair value of the investments in
fixed interest rate securities, and (ii) the level of income receivable on cash
deposits.
The interest rate profile of the Group excluding short term debtors and
creditors (other than the inclusion of a deposit with Mundays Solicitors), at 30
September 2009 was as follows:
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| | Weighted | | Weighted | | | | | | |
| | average | | average | | | | | | Non-interest |
| | period | | interest | | Fixed | | Floating | | bearing |
| | for | | rate | | interest | | rate | | GBP |
| | which | | % | | GBP | | GBP | | |
| | rate is | | | | | | | | |
| | fixed | | | | | | | | |
| | Years | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| 2009 | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| Assets | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| Fixed interest | 1.16 | | 0.63 | | 105,422 | | - | | - |
| securities | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| Sterling cash | - | | 1.00 | | - | | 5,041,169 | | - |
| deposit | | | | | | | | | |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| Debtors | - | | 1.00 | | - | | 150,000 | | - |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
| Total assets | 1.16 | | 0.95 | | 105,422 | | 5,191,169 | | - |
+---------------------+----------+----------+----------+----------+----------+----------+-----------+----------+--------------+
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| | Weighted | | Weighted | | | | | | |
| | average | | average | | | | | | Non-interest |
| | period | | interest | | Fixed | | Floating | | bearing |
| | for | | rate | | interest | | rate | | GBP |
| | which | | % | | GBP | | GBP | | |
| | rate is | | | | | | | | |
| | fixed | | | | | | | | |
| | Years | | | | | | | | |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| 2008 | | | | | | | | | |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| Assets | | | | | | | | | |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| Fixed interest | 0.58 | | 4.90 | | 3,012,365 | | - | | - |
| securities | | | | | | | | | |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| Sterling cash | - | | - | | - | | 3,274,200 | | - |
| deposit | | | | | | | | | |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
| | 0.58 | | 4.90 | | 3,012,362 | | 3,274,200 | | - |
+---------------------+----------+----------+----------+----------+-----------+----------+-----------+----------+--------------+
The floating rate assets consist of cash deposits on call earning interest at
prevailing market rates.
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| | Within | | Within | | Within | | More | | |
| | 1 Year | | 2-3 | | 4-5 | | than | | Total |
| | GBP | | Years | | Years | | 5 | | GBP |
| | | | GBP | | GBP | | Years | | |
| | | | | | | | GBP | | |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| 2009 | | | | | | | | | |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Fixed rate | | | | | | | | | |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Assets | 105,422 | | - | | - | | - | | 105,422 |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| | 105,422 | | - | | - | | - | | 105,422 |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Floating rate | | | | | | | | | |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Cash | | | | | | | | | |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Deposit with | | | | | | | | | |
| Mundays Solicitors | 150,000 | | - | | - | | - | | 150,000 |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| Deposit | 5,041,169 | | - | | - | | - | | 5,041,169 |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
| | 5,191,169 | | - | | - | | - | | 5,191,169 |
+---------------------+-----------+----------+--------+----------+--------+----------+--------+----------+-----------+
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| | Within | | Within | | Within | | More | | |
| | 1 Year | | 2-3 | | 4-5 | | than | | Total |
| | GBP | | Years | | Years | | 5 | | GBP |
| | | | GBP | | GBP | | Years | | |
| | | | | | | | GBP | | |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| 2008 | | | | | | | | | |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| Fixed rate | | | | | | | | | |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| Assets | 2,512,690 | | 298,515 | | 201,160 | | - | | 3,012,365 |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| | 2,512,690 | | 298,515 | | 201,160 | | - | | 3,012,365 |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| Floating rate | | | | | | | | | |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| Cash | 246,200 | | - | | - | | - | | 246,200 |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| Deposit | - | | 3,028,000 | | - | | - | | 3,028,000 |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
| | 246,200 | | 3,028,000 | | - | | - | | 3,274,200 |
+---------------------+-----------+----------+-----------+----------+---------+----------+--------+----------+-----------+
Interest rate sensitivity
An increase of 100 basis points in interest rates during the year would have
increased the net assets attributable to shareholders and changes in net assets
attributable to shareholders by GBP50,412 (2008 GBP32,742). A decrease of 100
basis points would have had an equal but opposite effect.
(ii) Liquidity risk
As at 30 September 2009 the Group does not have any significant liabilities
payable.
(iii) Credit risk
The Group 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 Group
expects to place any such funds on a short-term basis only and spread these over
a number of years.
Management has a credit policy in place and the exposure to credit risk is
monitored on an ongoing basis.
The Group's principal financial assets are fixed interest securities, other
receivables and cash and cash equivalents. The maximum exposure of the Group to
the credit risk is the carrying amount of each class of financial assets.
Other receivables are represented by retentions and other debtors as shown in
the table below:
+------------------------------------+-----------+
| | GBP |
+------------------------------------+-----------+
| | |
+------------------------------------+-----------+
| Mundays retention | 150,000 |
+------------------------------------+-----------+
| Other debtors | 6,601 |
+------------------------------------+-----------+
| | 156,601 |
+------------------------------------+-----------+
The Mundays retention amount was received in November 2009 along with interest
accrued to that point.
19. Controlling party
There is no ultimate controlling party.
20. Capital management
The primary objective of the Fund's capital management is to ensure that it
retains sufficient liquidity to enable it to meet its ongoing expense
obligations in a timely manner and to ensure that there is a reasonable buffer
amount available at any one time. The Fund includes cash and debtors in its
resources to meet its objective and generally relies on the cash flows from
rental income to support this.
The Fund is able to reduce its liquidity by returning cash to the shareholders
in the form of a dividend or, by redeeming a portion of the Participating Shares
in issue.
21. Post Balance Sheet Events
Share redemption
In October 2009 it was resolved that the Fund redeem 5,576,549 Participating
Shares, equivalent to 50 per cent of the 11,153,098 Participating Shares in
issue, for cancellation in accordance with the relevant provisions of the
Companies (Jersey) Law 1991.
On 30 October 2009 (the "Redemption Date") the Fund redeemed those Participating
Shares on a pro-rata basis to those Members that were registered holders on the
Redemption Date at a price of GBP0.70 per Participating Share.
The Redemption took place on a pro rata basis such that each Member had redeemed
one Participating Share for each two Participating Shares held at GBP0.70 per
share, so that each Member had the same proportion of their holding of
Participating Shares redeemed.
Sale of investment properties
On 20 November 2009 one of the apartments at The Heart, Walton-on-Thames was
sold for GBP191,606. Following the decision by Members to commence the orderly
winding down of the activities of the Fund, on 2 February 2010 the Fund
exchanged contracts for the sale of all 8 remaining apartments at The Heart,
Walton-on-Thames, to Karlton Properties Limited for a cash consideration of
GBP1.332 million (equating to GBP166,500 per apartment). On exchange the Fund
received a 10 per cent non-refundable deposit and completion took place on 2
March 2010.
On 22 February 2010 the 6 apartments at Wimbledon House, Leicester, were sold at
the Allsop residential property auction for a total cash consideration of
GBP430,500. This equates to a sale price of GBP71,750 per flat. On exchange, the
Fund received a 10 per cent non-refundable deposit and, under the terms and
conditions of the auction, completion took place on 22 March 2010.
22. Amount receivable under beneficial entitlement to an insurance policy
Following the rescission of the contracts in relation to Canon House,
Wallington, the Fund's GBP1.1 million deposits paid under the purchase
agreements entered into with Henry Homes (Wallington) Limited ("HHW") are
recoverable. However, the Fund has provided in full for the GBP1.1m of deposits
paid to HHW at the start of the project as the latest information would suggest
that HHW will not be in a position to return these monies. As a beneficiary of
an insurance policy the Fund is entitled to recover this amount from Zurich
Insurance but, in accordance with IAS37 "Provisions, Contingent Liabilities and
Contingent Assets", the Fund must be virtually certain that a favourable outcome
will result from pursuing the claim in order to include this amount as a
receivable balance in the financial statements.
After taking legal advice, and since the claims process is still not underway,
it has been decided that there is not sufficient certainty at this point to be
able to recognise the recoverable claim and therefore the deposit has been fully
provided in the income statement. The Directors will be vigorously pursuing a
claim in the event that HHW are unable to refund the deposits and are confident
of ultimately recovering the deposit in full.
23. Dividend
The Company does not propose the payment of a dividend.
24. Availability of Report and Accounts
Copies of the Report and Accounts will be posted to shareholders today and will
be available from the Company's registered office 8th Floor, Union House, Union
Street, St Helier, Jersey JE4 8TQ, and on the Company's website
www.offplanfund.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JBMMTMBAJBFM
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