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"), invest 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 unaudited 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:

30 April 2012

31 October 2011

Statement of compliance

The consolidated financial statements of the Group for the period to 30 April 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), in particular IAS 34 ''Interim Reporting'', and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and applicable Guernsey legal and regulatory requirements and on the historical cost basis, except for the revaluation of properties.

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.

1.         Principal accounting policies (continued)

Basis of consolidation

The consolidated financial statements comprise the financial statements of Economic Lifestyle Property Investment Company Limited and the 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.

The Subsidiaries' accounting policies and financial year end are consistent with that of the Company.

Bank interest income

Bank interest income is recognised on an accruals basis.

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 fees

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. In the current year and as a consequence of preparing the consolidated financial statements on a break-up basis all marketing costs have been charged in full in the Consolidated Statement of Comprehensive Income.

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.

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. 

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.

2.         Material agreements

a)         Property adviser fee

Under the terms of a property advisory agreement dated 22 September 2005 between the Company, the 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 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 £20 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 £1,000 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 Group (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 £20,000 per annum. In addition fees of £6,000 per annum are payable on two subsidiaries.

3.         Administration costs

3.         Administration costs (continued)

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 period set out above are the additional (or written back) costs arising in the period which differ from the provisions made prior to the relevant financial period.

4.         Investment properties

The Group's remaining property investments at 30 April 2012 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 30 April 2012. 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 30 April 2012 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.         Debtors

6.         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 £600.  The Subsidiaries are taxed at the company standard rate of 0%.

7.         Creditors

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.

8.         Share capital  

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 £1,802,849 and the shares were subsequently cancelled. 13,841,721 shares remain in issue.

9.         Gain per Ordinary Share and net asset value per Ordinary Share

Gain per Ordinary Share is calculated based on the gain for the period of £50,170 and the weighted average number of Ordinary Shares in issue of 15,143,684. In the prior period ended 30 April 2011 the gain per Ordinary Share was calculated based on the gain for the period of £13,421and the weighted average number of Ordinary Shares in issue of 23,714,938.

Net asset value per Ordinary Share was calculated by dividing the total assets less total liabilities of the Company by the number of Ordinary Shares then in issue of 13,841,721 (31 October 2011: 23,714,938).

10.        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 for the period payable to International Administration (Guernsey) Limited are disclosed in note 3.  The amount of administration fees outstanding at 30 April 2012 was £5,000 (31 October 2011: £5,000).

Directors' fees in the period amounted to £24,834 (2011: £22,331).  The amount of directors' fees outstanding as at 30 April 2012 was £68,455 (31 October 2011: £49,371).

Property management fees of £Nil (2011: £8,100) were paid to the Property Adviser and associates.

11.        Subsequent events

There were no significant subsequent events.