Final Results

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 £7.1 million (2008: £9.1 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 £3 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 £3.9 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 £0.70 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 £0.70 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 £2.1 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 £1.65 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 £190,000 (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 £197,000. 

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 £1,332,000 (equating to a sale price of £166,500 per flat). The independent market valuation, assuming sale as a single investment, of the eight flats as at 30 September 2009 was £1,150,000. The value assuming sale individually with vacant possession was £1,360,000. 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 £717,500 (30 September 2008: £805,000) assuming sale individually with vacant possession and £482,000 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 £430,500. This equates to a sale price of £71,750 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 £371,000 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 £3 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 £1.1 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 30 September 2009			Year ended 30 September 2008
			Revenue	Capital	Total	Revenue	Capital	Total
	Note		£	£	£	£	£	£
Unrealised losses on investment property		7	-	(378,016)	(378,016)	-	(106,500)	(106,500)
Profit on off-plan sales or write back on rescinded sales		9	-	-	-	(240,870)	-	(240,870)
Realised losses on property contracts yet to complete		9	-	-	-	(4,113)	-	(4,113)
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 profit or loss		8	-	8,907	8,907	-	11,668	11,668
Unrealised gains on investment held at fair value through profit or loss		8	-	39,486	39,486	-	20,769	20,769
Interest income		2	60,696	-	60,696	339,315	-	339,315
Rental Income		2	88,034	-	88,034	36,411	-	36,411
Investment management fee		3	(186,267)	-	(186,267)	(182,477)	-	(182,477)
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 activities before taxation			(344,621)	(1,524,838)	(1,869,459)	(358,331)	(74,063)	(432,394)
Taxation		5	(17,607)	-	(17,607)	(6,514)	-	(6,514)
Provision for winding down expenses		4	(100,000)	-	(100,000)	-	-	-
Net loss for the year after taxation			(462,228)	(1,524,838)	(1,987,066)	(364,845)	(74,063)	(438,908)
Loss per share (pence)			(4.1)	(13.7)	(17.8)	(3.3)	(0.7)	(3.9)

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	£		£
Non-current assets
Investment properties	7	-		804,500
Investments held at fair value through profit and loss	8	-		3,012,365
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 profit and loss	8	105,422		-
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	£		£
Net cash inflow / (outflow) from operating activities after interest and before taxation	16	1,799,559		(4,835,453)
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 activities		2,975,118		3,287,708
Net increase / (decrease) in cash and cash equivalents		4,766,969		(1,553,971)
Cash and cash equivalents at the start of the year		274,200		1,828,171
Cash and cash equivalents at the end of the year		5,041,169		274,200

Consolidated Statement Of Changes In Equity

for the year ended 30 September 2009

	Stated Capital	Capital Reserves	Issue Costs Reserve	Revenue Reserve	Total
	£	£	£	£	£
For the year ended 30 September 2009
At 1 October 2008	10,505,154	(315,755)	(679,868)	(454,435)	9,055,096
Revaluation of investment property	-	(378,016)	-	-	(378,016)
Loss for the year	-	(1,146,822)	-	(462,228)	(1,609,050)
At 30 September 2009	10,505,154	(1,840,593)	(679,868)	(916,663)	7,068,030
For the year ended 30 September 2008
At 1 October 2007	10,505,154	(241,692)	(679,868)	(89,590)	9,494,004
Revaluation of investment property	-	(106,500)	-	-	(106,500)
Gain/(loss) for the year	-	32,437	-	(364,845)	(332,408)
At 30 September 2008	10,505,154	(315,755)	(679,868)	(454,435)	9,055,096

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
		£		£
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
		£		£
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 £175,000 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
		£		£
Legal fees	112,556		90,194
Administration and secretarial services	38,440		38,114
Directors' remuneration	36,872		43,048
Auditors' fees - for audit services	31,000		30,236
Miscellaneous expenses	56,951		93,468
Other expenses		275,819		295,060
Rental expenses		31,265		11,537
Provision for winding down expenses		100,000		-
		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
		£		£
Income tax on rental income		17,607		6,514
Reconciliation of tax charges
Net loss on ordinary activities before finance costs and taxation		(1,869,459)		(432,394)
Adjustment for disallowable income and expenses
Interest income		(60,696)		(339,315)
Cancellation of gain recognised in prior year		-		240,870
Realised losses on investments held at fair value through profit or loss		-		4,113
Realised losses on property contracts		113,323		-
Realised gain on sale of property		(18,108)		-
Realised gains on investments held at fair value through profit or loss		(8,907)		(11,668)
Unrealised gains on investments held at fair value through profit or loss		(39,486)		(20,769)
Unrealised losses on investment property		378,016		106,500
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 £1,987,066 (2008: loss of £438,908) and on 11,153,098 shares (2008: 11,153,098), being the weighted average number of shares in issue.

7.     Investment property

		2009		2008
		£		£
Opening valuation		804,500		989,183
Movement during the year:
Transfer from property contracts yet to complete		1,504,700		-
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 £88,034 (2008 - £36,411) with direct expenses of £31,265 (2008 - £11,537).

8.     Investments held at fair value through profit or loss

		2009		2008
		£		£
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
			£				£
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 Property	(1,504,700)		(165,000)
Canon House
Capitalised costs	19,500
Write-off deposit after rescission of contract	(1,100,000)
Retention recoverable from Mundays Solicitors	(150,000)
Write-off of capitalised costs	(113,323)		(1,343,823)		-
					-
Write back of Oldham Place sales
proceeds recognised in prior year	-				430,043
Write back of Oldham Place sales
realised gain recognised in prior year	-				(240,870)
	-				189,173
Proceeds for rescission of Oldham Place	-				(332,489)
Write off of capitalised costs of Oldham Place	-				(4,113)
Oldham Place deposit refunded			-				(147,429)
Rescission of Tring and Hayes contracts			-				(304,524)
Purchases			-				1,514,698
Closing book cost			-				1,508,823

					Cannon
			The Heart		House		Total
			£		£		£
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 costs			-		(113,323)		(113,323)
Sale of Flat 405 at cost			(167,184)		-		(167,184)
Transfer to investment properties			(1,504,700)		-		(1,504,700)
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 £1.66 million. One of the apartments was sold during the period for £185,292, one in November 2009 for £191,606 and the remaining 8 apartments were sold in March 2010 for a total consideration of £1.332 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 £113,323 and deposits amounting to £1.1 million. On 22 September 2009 the Fund received £3 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 £0.70 for each participating share redeemed.

10.   Debtors

		2009		2008
		£		£
Receivables due to rescission of Oldham Place		-		332,489
Amount retained by Mundays Solicitors for Wallington		150,000		-
Interest receivable		2,897		188,981
Rent receivable		3,704		-
Prepayments		4,829		11,980
		161,430		533,450

11.   Other payables

		2009		2008
		£		£
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 £9,125 (2008: £9,391) due to BNP Paribas Fund Services Jersey Limited.

12.   Cash in escrow

In 2008 the Company held a deposit of £3,000,000 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 £3,000,000 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
		£		£
		7,068,030		9,055,096

15.   Capital reserves

		2009		2008
		£		£
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 properties		(378,016)		(106,500)
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
				£			£
Deposits and acquisition costs relating to property contracts			(1,526,384)			(1,502,948)
Cash released from / (deposited in) escrow			3,000,000			(3,000,000)
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 operating activities				1,799,559			(4,835,453)

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 average period for which rate is fixed Years		Weighted average interest rate %		Fixed interest £		Floating rate £		Non-interest bearing £
2009
Assets
Fixed interest securities	1.16		0.63		105,422		-		-
Sterling cash deposit	-		1.00		-		5,041,169		-
Debtors	-		1.00		-		150,000		-
Total assets	1.16		0.95		105,422		5,191,169		-

	Weighted average period for which rate is fixed Years		Weighted average interest rate %		Fixed interest £		Floating rate £		Non-interest bearing £
2008
Assets
Fixed interest securities	0.58		4.90		3,012,365		-		-
Sterling cash deposit	-		-		-		3,274,200		-
	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 1 Year £		Within 2-3 Years £		Within 4-5 Years £		More than 5 Years £		Total £
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 1 Year £		Within 2-3 Years £		Within 4-5 Years £		More than 5 Years £		Total £
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 £50,412 (2008 £32,742). 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:

	£
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 £0.70 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 £0.70 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 £191,606. 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 £1.332 million (equating to £166,500 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 £430,500. This equates to a sale price of £71,750 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 £1.1 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 £1.1m 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.

 

END

 

 

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