Quantum Funds Management Pty Ltd
FEBRUARY 2014
Quantum Property and Opportunity Fund
Managers Overview
On behalf of Quantum Funds Management Ltd, we provide this report to investors on the operations of the Quantum Property & Opportunity Fund over the past year and to provide additional information on the accounts and the investments in the Fund.

Investments
The fund undertook as per the product disclosure statement (the PDS), investments in property development projects, in Australia. The Fund undertook four main investments during the life of the Fund.

Unfortunately, the timing of starting development projects during the last 5 years, has caused overall losses in the 4 investments of the Fund, with only a partial return of capital in the DAAOT and the Woolloomooloo Wharf investment.

Investment Invested amount ($,000’s) %
of Fund
Cash returned ($,000’s)
Casuarina Beach 289 4.5 0
Woolloomooloo Wharf 213 3.3 164^
Gateway on Palmer 939 14.6 0
DAAOT 5,000 77.6 120
^ - this cash was used to repay creditors owing in the fund, including $125,067 to the Manager

This is in part due to asset values falling to such a level that caused the total equity to be lost and in some cases the eventual sale was even less than the actual bank debt.

A summary of the investments outcomes is detailed below. We have finalised the sales of the final assets in the Quantum Property and Opportunity Fund (the Fund), being the interest in the bulky goods project at Gepps Cross South Australia, held in the da Vinci Advisors Opportunity Fund and the remaining final lot in the Woolloomooloo Wharf property (Lot 5, Manta Restaurant).

At this stage, following various reports and updates provided over the last few years, performance of the property portfolio has been poor. Development projects and the restaurant property have been sold below original bank valuations. In one asset sale, Casuarina Beach, the eventual sale price was even below the bank debt, causing a loss to the Bank on its debt funded.

This has impacted the amount of the final return of capital, to be paid to investors.


DAAOT

Bourke Street Foundry
The Manager relinquished its investment in this project at a nil value to Multiplex Brookfield, as the loan from Multiplex Brookfield was greater than the investment in this asset. Multiplex Brookfield has made a claim in respect of the exit on the Foundry project, against Quantum Funds Management Ltd as a trustee of the Fund. Quantum has denied that any funds are owning, and is meeting all legal costs on this claim form its own funds.

Gepps Cross
This asset was sold and the proceeds were used to repay the debt owning on the asset to the National Australia Bank, any net proceeds were received by DAAOT and used to pay creditors and make a distribution to unit holders. This asset was purchased on a yield of approximately 7.25% and the last portion of land sold at a 10.6% passing yield, illustrating a reduced valuation of 46% on the asset over the forecast development value.

The manager received funds from the settlement of the project which are available for distribution.

The Wharf (QPT#12) winding up
During 2013 the final asset of QPT#12 (Lot 5, Manta Restaurant) was sold on 1st July 2013. With the final asset of QPT#12 settled, Quantum Funds Management are have wound up the fund, and the proceeds were used to repay credits in the QPOF trust. No cash was available for distribution to investors.

The other 2 assets, Casuarina Beach and Gateway on Palmer, both were wound up with nil cash available after repayment to creditors.

Final distribution
Then accounts for the period to 30th June 2013, have been finalised and can be accessed via the investor portal.

The accounts have been audited and prepared on the basis that the Fund will be wound up in the coming months. On the face of the accounts, creditors exceed liabilities, however the Manager has advised the auditor that it would waiver its fees owing to provide that all remaining cash to be distributed to unit holders.

The basis of the distribution is based upon the available cash after all asset sales of $126,085, writing off all Quantum fees of $219,274 and paying GST of $19,564, which leaves $106,521 available for unit holders. On a normal distribution basis.

This will provide a final cash distribution of be 1.54 cents per $1.00 unit, being available for investor's payable in February 2014. The fund will then be wound up.
Quantum Funds Management Pty Ltd
Level 5, Fairfax House, 19-31 Pitt Street, Sydney NSW 2000
T: 1300 360 949 @: investors@quantumgroup.com.au
www.quantumgroup.com.au
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