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TIDMEPL
RNS Number : 8482W
Economic Lifestyle Prop Inv Co Ltd
06 February 2012
Economic Lifestyle Property Investment Company Limited
Annual Report and Audited Consolidated Financial Statements
for the year ended 31 October 2011
Economic Lifestyle Property Investment Company Limited
Directors, Management and Administration
Directors Administrator and Company Secretary
C L Walker-Robson (Chairman) International Administration
T J Emmott Group (Guernsey) Limited
J K Farrell PO Box 282
A Simpson Regency Court
Glategny Esplanade
Registered office St Peter Port
Regency Court Guernsey
Glategny Esplanade GY1 3RH
St Peter Port
Guernsey Registrar
Capita Registrars (Guernsey)
Investment Adviser Limited
EPIC Asset Management Limited Longue Hougue House
Floor 7 St Sampson
22 Billiter Street Guernsey
London GY1 3US
EC3M 2RY
Custodian and Bankers
Solicitors to the Company Northern Trust (Guernsey) Limited
Stephenson Harwood PO Box 71
One St Paul's Churchyard Trafalgar Court
London Les Banques
EC4M 8SH St Peter Port
Guernsey
Independent Auditors GY1 3DA
Ernst & Young LLP
Royal Chambers Advocates to the Company
St Julian's Avenue Carey Olsen
St Peter Port Carey House
Guernsey Les Banques
GY1 4AF St Peter Port
Guernsey
GY1 4BZ
Listing Sponsor
Carey Commercial Limited
1(st) and 2(nd) Floors
Elizabeth House
Les Ruettes Brayes
St Peter Port
Guernsey
GY14LX
Chairman's Statement
The results for the year ended 31 October 2011 are in accordance with expectation and show total net assets of GBP4,594,317 ( 2010 - GBP4,544,965), a small increase in the net asset value per share to 19.37p per share compared to GBP19.22p at 30 April 2011 and 19.16p at 31 October 2010.
The tender offer at 18.26p per share from Matrix that was notified to shareholders in the circular dated 27 November 2011 was accepted by shareholders in respect of 41.6% of the Company's shares. The Company paid Matrix GBP1,802,849 for these shares which were then cancelled. For comparative purposes, if this purchase of shares had taken place at 31 October 2011, the net asset value per share of the remaining 13,841,721 shares in issue would be 20.17p per share.
The 2011 financial year saw the sale of the last remaining flats, all at prices slightly in excess of the DTZ valuation at 31 October 2010. The freehold reversions still remain to be sold and are yielding ground rents of GBP28,250 per annum.
Following the sales of the remaining flats, the cash at bank increased to GBP5,402,031 at 31 October 2011 (2010 - GBP2,454,772) and currently stands at GBP3,493,000 following the purchase of the shares referred to above. The cash is now held on deposit in Guernsey, though deposit interest rates available are disappointingly low.
The last remaining material uncertainty for the Company is the outcome of the claim against Cluttons in respect of their valuation of St. James's Heights. From my previous reports shareholders will be aware of the lengthy correspondence between the Company's lawyers and Cluttons' legal advisors and that the Company has made it clear that it will, if necessary, issue legal proceedings against Cluttons. In this regard, the Board is advised that following longer waiting lists for the Courts, that it might now take until summer 2013 for a case to be heard and that it is possible final resolution might not be achieved until the end of 2013. Accordingly, in accordance with standard accounting practice, the Company has increased its provision for all the estimated costs, including estimated legal fees, to winding up by GBP360,000 and the provision at 31 October 2011 now stands at GBP1,034,228. Legal proceedings have not yet been issued as the legal advisors for Cluttons have very recently agreed to enter mediation. While this is an encouraging step forward, it is at an early stage and shareholders should recognise that Cluttons having agreed to mediation does not mean that a settlement will be reached. The Court's protocol is now to strongly encourage mediation but a successful outcome cannot be assured. Accordingly, in accordance with standard accounting practice, no allowance for any recovery has been made in these accounts. The Company remains well funded and has provided sufficiently to take the claim through the Courts if this proves necessary.
The Board would also like to remind shareholders that as there is a two year building warranty period that follows the sale of the last flat, which took place on 31 October 2011, final liquidation of the Company is unlikely to take place until late 2013/early 2014, irrespective of how the claim against Cluttons proceeds.
In summary, this has been a year of some achievement with the Board now focused on maximising the return from the claim against Cluttons and the sale of the freehold reversions. We would also like to thank the administration team for its continued day to day administration of the Company's operations.
C L Walker-Robson
Chairman 30 January 2012
Property Report
I am pleased to report that the sale of the final apartment at St James Heights completed on 31 October 2011. I had previously advised that the Board had declined to sell the second block of 25 apartments to an institutional purchaser because of the low offers received. Proceeds from the sales of apartments individually has exceeded the highest such offer by some 30%.
Property assets now consist of five freeholds which have appeared to be close to sale for almost two years. However, we were unable to come to a final agreement with the long-standing prospective purchaser and have withdrawn the freeholds from the market for the time being, but expect to achieve a satisfactory sale within the next 12 months.
T J Emmott
Director
30 January 2012
Directors' Report
The Directors present their annual report and the audited consolidated financial statements of Economic Lifestyle Property Investment Company Limited (the "Company") and its wholly owned subsidiaries (together the "Group") for the year ended 31 October 2011.
Business activities
The Company was registered as a limited liability company in Guernsey on 23 August 2005. The Company's original investment objective was to carry on the business of achieving capital growth by investing in a portfolio of properties suitable for retirement living throughout the United Kingdom. At the Extraordinary General Meeting held on 3 October 2007, the investment objective was amended and is now to conduct an orderly realisation of the property assets of the Group, to be effected in a manner which, in the opinion of the Board, in each case is on the most appropriate terms for the Group.
Going concern
It is the intention of the Directors to realise the assets in an orderly manner and consequently the financial statements are prepared on a break-up basis.
Results
The results for the year are set out in the Consolidated Income Statement on page 9.
Directors
The Directors of the Company are as stated on page 1.
Directors' interests
The Directors have no disclosable interests in the material contracts entered into by the Company, other than Alison Simpson who is a director of the Administrator and Secretary of the Company, International Administration (Guernsey) Limited. Timothy Emmott has an interest in 4,690,500 shares and a non-beneficial interest in 320,000 shares, John Farrell an interest in 2,994,484 shares and Colin Walker-Robson an interest in 300,000 shares.
Directors' responsibilities
The Directors are responsible for preparing consolidated financial statements for each accounting period which present a true and fair view of the state of affairs of the Group and its results of operations for the period.
In preparing these consolidated financial statements the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the consolidated financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulation.
Purchase of own shares
The Company has an authority in place to make market purchases of up to 14.99% of Ordinary Shares with a minimum price of 0.001p and a maximum price equal to 105% of the average of the middle market quotations for a share as derived from the Official List of the Channel Islands Stock Exchange for the five business days immediately preceding the day on which the Ordinary Shares are purchased. It is the intention to renew this authority at the forthcoming Annual General Meeting.
Directors' Report (continued)
Auditors
Ernst & Young LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the Annual General Meeting.
So far as each of the Directors is aware, there is no relevant audit information of which the Company's auditor is unaware, and each has taken all the steps he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Alison Simpson
Director
30 January 2012 Independent Auditors' Report
We have audited the consolidated financial statements of Economic Lifestyle Investment Company Limited for the year ended 31 October 2011 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Cash Flow Statement, Consolidated Statement of Changes in Equity and the related notes 1 to 12. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards. These consolidated financial statements have been prepared on the break up basis.
This report is made solely to the company's members, as a body, in accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the consolidated financial statements
An audit involves obtaining evidence about the amounts and disclosures in the consolidated financial statements sufficient to give reasonable assurance that the consolidated financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the consolidated financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited consolidated financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on consolidated financial statements
In our opinion the consolidated financial statements:
-- give a true and fair view of the state of the group's affairs as at 31 October 2011 and of its profit for the year then ended;
-- have been properly prepared in accordance with International Financial Reporting Standards; and
-- have been prepared in accordance with the requirements of the Companies (Guernsey) Law, 2008.
Independent Auditors' Report to the members of Economic Lifestyle Property Investment Company Limited (continued)
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:
-- proper accounting records have not been kept; or
-- the consolidated financial statements are not in agreement with the accounting records; or
-- we have not received all the information and explanations we require for our audit.
Ernst & Young LLP
Guernsey, Channel Islands
31 January 2012
Notes:
1. The maintenance and integrity of the Economic Lifestyle Investment Company Limited web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the consolidated financial statements since they were initially presented on the web site.
2. Legislation in Guernsey governing the preparation and dissemination of consolidated financial statements may differ from legislation in other jurisdictions.
Consolidated Statement of Comprehensive Income for the year ended 31 October 2011
2011 2010
Note GBP GBP
Income
Bank interest 1 285 850
Profit on disposal of investment
properties 346,238 499,331
Movement in fair value adjustment
on investment properties 24,189 620,551
Ground rents 30,551 17,426
_________ _________
Total income 401,263 1,138,158
_________ _________
Expenses
Administration costs 3 (8,089) 102,595
_________ _________
Total expenses (8,089) 102,595
_________ _________
Operating profit for the year 409,352 1,035,563
Movement in estimated costs to
winding up 7 (360,000) (517,720)
_________ _________
Profit for the year 49,352 517,843
Pence Pence
Basic and diluted earnings per
Ordinary Share 9 0.21 2.18
The results shown above all relate to continuing operations.
The profit for the year is the "total comprehensive income" as defined by IAS 1. There is no other comprehensive income as defined by IFRS.
The notes on pages 12 to 20 form an integral part of these consolidated financial statements.
Consolidated Statement of Financial Position as at 31 October 2011
2011 2010
Note GBP GBP
Assets
Investment properties 5 418,857 3,300,799
Debtors 6 55,950 142,465
Cash and cash equivalents 5,402,031 2,454,772
_________ _________
5,876,838 5,898,036
_________ _________
Total assets 5,876,838 5,898,036
_________ _________
Liabilities
Creditors 7 1,282,521 1,353,071
_________ _________
Total liabilities 1,282,521 1,353,071
_________ _________
Total net assets 4,594,317 4,544,965
Represented by:
Share capital 8 237 237
Special capital reserve 7,412,989 7,412,989
Capital redemption reserve 13 13
Accumulated loss (2,818,922) (2,868,274)
_________ _________
Total equity 4,594,317 4,544,965
Pence Pence
Net asset value per Ordinary Share 9 19.37 19.16
The financial statements on pages 8 to 20 were approved by the Board of Directors and signed on its behalf on 30 January 2012 by:
C L Walker-Robson
Director
The notes on pages 12 to 20 form an integral part of these consolidated financial statements.
Consolidated Cash Flow Statement for the year ended 31 October 2011
2011 2010
GBP GBP
Cash flows from operating activities
Bank interest 285 850
Expenses paid (320,161) (349,961)
_________ _________
Net cash outflow from operating
activities (319,876) (349,111)
_________ _________
Cash flows from investing activities
Purchase of investment properties (111,007) (216,146)
Sale of investment properties 3,378,142 2,032,563
_________ _________
Net cash inflow from investing
activities 3,267,135 1,816,417
_________ _________
Increase in cash and cash equivalents 2,947,259 1,467,306
Reconciliation of net cash flows
to movements in cash and cash
equivalents
Cash and cash equivalents at
beginning of year 2,454,772 987,466
Increase in cash and cash equivalents 2,947,259 1,467,306
_________ _________
Cash and cash equivalents at
end of year 5,402,031 2,454,772
The notes on pages 12 to 20 form an integral part of these consolidated financial statements.
Consolidated Statement of Changes in Equity for the year ended 31 October 2011
Special Capital
Share Share capital redemption Accumulated
capital premium reserve reserve loss Total
GBP GBP GBP GBP GBP GBP
2010
Balance at
1 November
2009 237 - 7,412,989 13 (3,386,117) 4,027,122
Profit for
the year - - - - 517,843 517,843
________ ________ ________ _______ ________ ________
Balance as
at 31 October
2010 237 - 7,412,989 13 (2,868,274) 4,544,965
________ ________ ________ _______ ________ ________
2011
Balance at
1 November
2010 237 - 7,412,989 13 (2,868,274) 4,544,965
Profit for
the year - - - - 49,352 49,352
________ ________ ________ _______ ________ ________
Balance as
at 31 October
2011 237 - 7,412,989 13 (2,818,922) 4,594,317
________ ________ ________ _______ ________ ________
The notes on pages 12 to 20 form an integral part of these consolidated financial statements.
1. Principal accounting policies
Introduction
Economic Lifestyle Property Investment Company Limited (the "Company") and its wholly owned subsidiaries, ELPIC Properties Limited, ELPIC Properties C Limited and ELPIC Properties J Limited, (the "Subsidiaries") (together the "Group") invested in a portfolio of properties, originally intended to be suitable for retirement living, throughout the United Kingdom. The Company is a limited liability company incorporated and domiciled in Guernsey, Channel Islands.
Going concern
The consolidated financial statements of the Group have not been prepared on a going concern basis as it is the intention of the Directors to conduct an orderly realisation of the property assets of the Group and consequently the consolidated financial statements are prepared on a break-up basis. The additional costs associated with the application of the break up basis compared to the going concern basis are:
2011
Impact NAV
per share
GBP pence
Estimated future costs to winding
up including liquidation costs (note
7) (1,034,228) (4.36)
________ ________
Net reduction (1,034,228) (4.36)
2010
Impact NAV
per share
GBP pence
Provision for future sales costs
of investment properties (65,046) (0.27)
Write off of marketing expenses on
unsold properties (364,015) (1.53)
Estimated future costs to winding
up including liquidation costs (note
7) (1,007,959) (4.25)
________ ________
Net reduction (1,437,020) (6.05)
1. Principal accounting policies (continued)
Statement of Compliance
The financial statements have been prepared in conformity with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"), interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC") and applicable Guernsey legal and regulatory requirements.
IASB and IFRIC have issued the following standards and interpretations with an effective date after the date of these financial statements:
Effective
date
Periods beginning
on or after
IAS 24 Related Party Disclosures 1 January
2011
IFRIC 14 Prepayments of a Minimum Funding 1 January
Requirement 2011
IFRS 9 Financial Instruments: Classification 1 January
and Measurement 2013
IFRS 7 Disclosures: transfers of financial 1 July 2011
assets (amendment)
IFRS 10 Consolidated financial statements 1 January
2013
IFRS 11 Joint arrangements 1 January
2013
IFRS 12 Disclosure of interest in other 1 January
entities 2013
IFRS 13 Fair value measurement 1 January
2013
It is not anticipated that these standards will have a significant impact on the Group's financial statements.
Basis of presentation
The consolidated financial statements have been prepared under the historical cost convention except for measurement of investment properties which are valued using the fair value model under IAS 40 'Investment Property' at the balance sheet date. The financial statements are prepared in Sterling, being the functional and presentation currency, since the majority of the Company's assets are denominated in Sterling.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Economic Lifestyle Property Investment Company Limited and its Subsidiaries. All the Subsidiaries are companies with limited liability incorporated and domiciled in Guernsey, Channel Islands.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation.
Accounting policies adopted by the subsidiaries and the financial year end of the Subsidiaries are consistent with that of the Company.
Bank interest income
Bank interest income is recognised on an accruals basis.
1. Principal Accounting Policies (continued)
Expenses
All expenses are accounted for on an accruals basis. Provision is made for estimated costs to winding up including the estimated costs of liquidation.
Marketing expenses
Prior to the decision to proceed with an orderly realisation of assets, marketing costs were recorded as prepaid expenses with a view to being charged to the profit and loss account at the time that reversionary life interests on the properties were sold. As a consequence of preparing the consolidated financial statements on a break-up basis all marketing expenses were charged in full in the Consolidated Statement of Comprehensive Income for the year ended 31 October 2007.
Investment properties
Investment properties are initially recognised at the fair value of the consideration given, including directly attributable transaction costs that are associated with the acquisition of the investment property.
After initial recognition, investment properties are measured at fair value, with the movements in unrealised gains and losses on revaluation of properties recognised in the Consolidated Statement of Comprehensive Income. Fair value is based upon directors' market valuations of the properties at the balance sheet date (see note 5).
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits and highly liquid investments readily convertible within three months or less to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents at the balance sheet date comprised amounts held on current or overnight deposit accounts.
Use of judgements and estimates
In the process of applying the Group's accounting policies the Directors are required to make certain judgements and estimates to arrive at a fair carrying value for its assets and liabilities. Significant areas requiring the Director's judgement include the valuation of investment properties and estimated costs to be incurred in the period to winding up as disclosed in note 5 and notes 3 and 7 respectively.
2. Material agreements
a) Property adviser fee
Under the terms of a property advisory agreement dated 22 September 2005 between the Company, ELPIC Properties Limited, EPIC Investment Partners (Guernsey) Limited (the "Investment Manager") and Economic Lifestyle Limited (the "Property Adviser"), the Property Adviser was entitled to receive fees from the Investment Manager.
This agreement was subsequently amended on 28 July 2008 and the Property Adviser agreed to waive its outstanding fees under the original agreement but receives a fee from the Company for continuing management of the properties of GBP20 per property per month. The Property Adviser was entitled to receive success fees for the sale of properties in excess of target prices. The Property Adviser has been paid an additional fee of GBP1,000 per month between 1 April 2009 and 28 February 2011 as no success fees were achievable. From 31 March discretionary fees may be paid relating to any assistance provided in the resolution of final disposals but none have been incurred to date.
b) Administration fee
Under the terms of an administration agreement dated 22 September 2005 between the Company and International Administration (Guernsey) Limited (the "Administrator") the Administrator is entitled to receive fees at a rate of 0.11% per annum of the audited net asset value of the Company subject to a minimum of GBP20,000 per annum. In addition fees of GBP6,000 per annum are payable on two subsidiaries.
3. Administration costs
2011 2010
GBP GBP
Directors' fees 47,538 56,149
Legal and professional fees 159,430 126,472
Administration fees 35,517 34,153
Audit fees 16,875 19,333
Vacant and other property costs 101,063 215,746
Other expenses 54,853 45,261
________ ________
415,276 497,114
Less: previously provided (423,365) (394,519)
________ ________
(8,089) 102,595
As the Company's financial statements have been prepared on a break-up basis, a provision for estimated costs to be incurred to the expected date of orderly realisation of the Company's assets was made in the financial statements to 31 October 2007 and has been periodically updated as new information has become available. The costs for the year set out above are the additional (or written back) costs arising in the year which differ from the provisions made prior to the relevant financial year.
4. Taxation
The Company has obtained exemption from Guernsey Income Tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is subject to an annual fee of GBP600. The Subsidiaries are taxed at the company standard rate of 0%.
5. Investment properties
GBP
2011
Cost brought forward 5,344,382
Additions 25,000
Disposals (at cost) (5,369,382)
_________
Cost at end of year -
Net gain from fair value
adjustments on investment
property (freehold reversions) 418,857
_________
Fair value at end of year 418,857
GBP
2010
Cost brought forward 9,069,103
Additions 126,617
Disposals (at cost) (3,851,338)
_________
Cost at end of year 5,344,382
Net loss from fair value
adjustments on investment
property (1,978,537)
Estimated disposal costs (65,046)
_________
Fair value at end of year 3,300,799
The Group's remaining property investments at 31 October 2011 comprised freehold reversions on five properties sold on 125 year leases. These have been valued by the directors' on the basis of open market valuation as at 31 October 2011. The directors have referred to prior year valuations (as prepared by independent valuers in 2010) and offers for the properties in the preparation of their open market valuation as at 31 October 2011 and consider that there have been no market movements or other factors which would give rise to a significant change in the valuation based on those prior year valuations and offers.
5. Investment properties (continued)
The Group's movements in investment property since incorporation are summarised below:
GBP
Historical cost 24,317,928
Disposals:
Leaseholds (16,237,365)
Reversionary interests (308,807)
Life interests (1,050,473)
__________
Total disposal proceeds (17,596,645)
Net loss to date (6,302,426)
__________
Value at 31 October 2011 418,857
The net loss is before allowance for any recovery that may result from litigation in respect of the investment property.
6. Debtors
2011 2010
GBP GBP
Due on sales of investment properties - 101,794
Other debtors 55,950 40,671
________ ________
55,950 142,465
7. Creditors
2011 2010
GBP GBP
Audit fee payable 19,222 22,881
Administration fee payable 5,000 8,333
Directors' fees payable 49,371 25,833
Accrued expenses 147,828 194,130
Development costs 26,872 93,935
Estimated costs to winding up (see
below) 1,034,228 1,007,959
________ ________
1,282,521 1,353,071
Estimated costs to winding up represents a provision for costs expected to be incurred to the estimated realisation date of 31 March 2014. Estimated costs to winding up includes an allowance for litigation. In accordance with standard accounting practice no allowance has been made in these financial statements for any recoveries from such litigation.
7. Creditors (continued)
The movement on the provision is set out below:
2011 2010
GBP GBP
Provision at 1 November 1,007,959 884,758
Utilised in year (333,731) (394,519)
Provision made in year 360,000 517,720
________ ________
Provision at 31 October 1,034,228 1,007,959
8. Share capital and share premium
Authorised share capital 2011 2010
GBP GBP
275,000,000 Ordinary Shares of 0.001p
each 2,750 2,750
100,000,000 Unlimited Capital Shares - -
of no par value
Issued share capital
Number GBP
Ordinary Shares of 0.001p
Balance at 1 November 2009 23,714,938 237
_________ _________
Balance at 31 October 2010 23,714,938 237
_________ _________
Balance at 31 October 2011 23,714,938 237
The Capital Shares carry the right to receive, and participate in, any dividends or other distributions out of the profits of the Company available for dividend and resolved to be distributed in respect of any accounting period.
The balances on the special capital reserve and capital redemption reserve arose as part of capital restructuring and reduction during 2007 and subsequent repurchase of shares in 2008.
9. Earnings per Ordinary Share and net asset value per Ordinary Share
Basic and Diluted Earnings per Ordinary Share is calculated based on the profit for the year of GBP49,352 (2010: GBP517,843), and weighted average number of Ordinary Shares in issue of 23,714,938 (2010: 23,714,938). Net asset value per Ordinary Share is calculated by dividing the total assets less total liabilities of the Company by the number of Ordinary Shares in issue.
10. Financial risk management objectives and policies
The Group's investment objective was to carry on the business of achieving capital growth by investing in a portfolio of properties suitable for retirement living throughout the United Kingdom. At the Extraordinary General Meeting on 3 October 2007, the investment objective was amended to be to conduct an orderly realisation of the property assets of the Group.
The Group's financial instruments comprise cash and cash equivalents that arise directly from the Group's operations.
The main risks arising from the Group's financial instruments are credit risk, liquidity risk and interest rate risk.
Credit risk
Credit risk arises where a failure by counterparties to discharge their obligations reduces the amount of future cash inflows from financial assets. The Group's cash and cash equivalents are primarily held with Northern Trust whose credit risk is considered low (rated A-1+ by Standard & Poor).
Liquidity risk
Liquidity risk is the risk that arises where the maturity of assets and liabilities does not match. The Group's objective is an orderly realisation of the assets and return of capital to shareholders. The Group maintains sufficient cash on a short-term basis to meet its financial commitments. Surplus cash is distributed periodically, having regard to budgeted future commitments. At 31 October 2011 and 2010 cash and cash equivalents are held on current accounts.
Interest rate risk
The Group's exposure to market risk for changes in interest rates relates primarily to the Group's cash. All cash bears interest at floating rates.A 50 basis point decrease/increase in interest rates would decrease/increase net profit and net assets by GBP27,010 (2010: GBP12,274). The impact of interest rate changes on the fair value would be negligible.
Capital management
The Group is realising its assets in an orderly manner and making periodic returns to shareholders. The Board monitors future cash requirements to meet expenses to the anticipated wind up date and makes appropriate provisions. As disclosed in note 12, GBP1,802,849 was returned to shareholders as part of a post year end tender offer.
Fair value
For certain financial instruments including debtors and creditors the carrying value approximates to fair value due to the immediate or short term nature of those financial instruments.
.
11. Related party transactions
Transactions with related parties are entered into on terms equivalent to those that prevail in an arm's length transaction.
Administration fees of GBP35,517 (2010: GBP34,153) were payable to International Administration (Guernsey) Limited, of which GBP5,000 was outstanding at 31 October 2011 (2010: GBP8,333).
Property management fees of GBP9,444 (2010 GBP22,712) were paid to the Property Adviser and associates.
Directors' fees for the year are disclosed in note 3. The amount of Directors' fees outstanding as at 31 October 2011 was GBP49,371 (2010: GBP25,833).
12. Subsequent events
Pursuant to a tender offer set out in a circular dated 27 October 2011 and approved at an EGM on 24 November 2011, 9,873,217 shares were tendered at 18.26 pence per share. The Company paid GBP1,802,849 and the shares were subsequently cancelled. 13,841,721 shares remain in issue and as at 31 October this would have represented a NAV per share of 20.17 pence per share after deduction of the GBP1,802,849 payable on cancellation of the shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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