TIDMOTM
RNS Number : 4548M
Ottoman Fund Limited (The)
29 January 2009
?
+-------------------------------------+--------------------------------------------+
| For Immediate Release | 29 January 2009 |
+-------------------------------------+--------------------------------------------+
THE OTTOMAN FUND LIMITED
Preliminary Results for the year ended 31 August 2008
The Ottoman Fund, which invests in the development of local housing and
holiday homes in the major cities and coastal resorts of Turkey, announces its
preliminary results for the year ended 31 August 2008.
The Fund is managed by Development Capital Management (Jersey) Limited.
Copies of the Financial Statements are currently being printed and will be sent
to shareholders shortly. They may also be obtained free of charge from
Development Capital Management Limited, 36 Dover Street, London, W1S 4NH.
List of Contacts
Development Capital Management
Tom Pridmore
Andrew Mitchell
Roger Hornett
020 7355 7600
Numis Securities
Charles Farquhar
Nick Westlake
020 7260 1000
THE OTTOMAN FUND LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2008
Chairman's Statement
I report upon the audited financial statements for the year ended 31 August
2008.
Results
The audited Net Asset Value ("NAV") of the Fund at 31 August 2008 was GBP121.7m
(31 August 2007: GBP137.4m), of which GBP20.9m related to cash reserves (31
August 2007: GBP44.9m). The principal reason for the reduction in NAV was the
return of capital to shareholders of GBP14.5m through a share buy-back scheme,
as announced on 22 November 2007. The NAV per ordinary share has reduced to
90.3p from 91.6p at 31 August 2007.
As shareholders will be aware, the Fund also reports a NAV adopting a fair value
basis, restating the property assets using independent revaluations at 31 August
2008. The fair value NAV increased by 8% during the year from 98.4p to 106.1p
(see table below) due to favourable foreign exchange movements. The fair value
NAV was at a 15.8p premium to the audited NAV.
The Fund's share price fell 27.1% from 96.75p to 70.50p during the year and more
recently to 34.0p as at 15 January 2009, a 62.3% discount to the audited NAV at
31 August 2008 and a 68.0% discount to the fair value NAV at 31 August 2008. The
turmoil of the global financial markets during the year and, in particular,
subsequent to the year-end is well documented with share prices of UK quoted
companies in the real estate sector coming under significant pressure and many
now trading at significant discounts to NAV.
Portfolio Review
As announced on 1 November 2007 and detailed in my interim report, following the
conclusion of the strategic review, the Board adopted a strategy of orderly
realisation of the assets of the Fund over a period of 18 to 24 months, to be
effected in a manner which seeks to maximise value for shareholders.
Therefore the focus has been firmly on achieving maximum value from the existing
portfolio through the planning and design phases whilst managing the on-going
sale process of the assets as projects.
In line with this policy, the Board has taken steps where possible to reduce the
running cost of the Fund. The Board gave notice on 30 June 2008 to the Manager
to terminate the management agreement with effect from 31 December 2008. An
extension to the Manager's appointment until 31 March 2009, with fees materially
reduced, has been agreed to allow for required regulatory approvals to be
finalised.
Set out below is the independent revaluation at 31 August 2008 of the Fund's
assets that cannot be reflected on the balance sheet under IFRS:
+---------------------------------------------------------+-----+-------------+-+
| Net assets as at 31 August 2008 | GBP | 121,720,859 | |
+---------------------------------------------------------+-----+-------------+-+
| Increase in valuation of inventory properties based on | | | |
| independent valuations | | | |
+---------------------------------------------------------+-----+-------------+-+
| Golturkbuku, Bodrum | | 1,849,693 | |
+---------------------------------------------------------+-----+-------------+-+
| Riva | | 14,781,376 | |
+---------------------------------------------------------+-----+-------------+-+
| Kazikli | | 2,206,531 | |
+---------------------------------------------------------+-----+-------------+-+
| Total increase in valuation of inventory properties at | | 18,837,600 | |
| acquisition exchange rate | | | |
+---------------------------------------------------------+-----+-------------+-+
| NAV (fair value basis) before foreign exchange gain | GBP | 140,558,459 | |
+---------------------------------------------------------+-----+-------------+-+
| NAV per share (fair value basis) before foreign | | 104.3 | p|
| exchange gain | | | |
+---------------------------------------------------------+-----+-------------+-+
| Foreign exchange gain | GBP | 2,491,873 | |
+---------------------------------------------------------+-----+-------------+-+
| Net asset value (fair value basis) | GBP | 143,050,332 | |
+---------------------------------------------------------+-----+-------------+-+
| Number of ordinary shares in issue | | 134,764,709 | |
+---------------------------------------------------------+-----+-------------+-+
| Net asset value per share at 31 August 2008 (fair value | | 106.1 | p|
| basis) | | | |
+---------------------------------------------------------+-----+-------------+-+
| Net asset value per share at 31 August 2007 (fair value | | 98.4 | p|
| basis) | | | |
+---------------------------------------------------------+-----+-------------+-+
The valuations have all been prepared by Kuzey Bati Worldwide Real Estate
Services, an international associate of Savills Commercial Limited, on an open
market value basis with Bodrum and Riva valued in line with 2007 valuations and
Kazikli showing a 14% increase. Bodrum's underlying increase has reduced from
GBP3.6m to GBP1.8m due to the investment in further capitalised development
costs, which has increased the book value of the project. Whilst the Board
acknowledges the expertise of the above valuer, it is aware of the difficulties
in preparing open market valuations under current market conditions, principally
due to the lack of comparable evidence. To make the valuation process more
robust in light of this uncertainty, the Board sought a second opinion from Elit
Gayrimenkul Degerleme A.S., which reflected comparable, although slightly
higher, valuations to those of Kuzey Bati.
The valuations as at 31 August 2008 were carried out on a basis consistent with
the previous half-yearly valuations of the Fund's property portfolio and are
included in this report for continuity. These valuations are carried out on a
"market approach" basis, taking into account transactions and asking prices for
comparable properties and land in the relevant locations and applying a value
adjustment where thought appropriate by the valuer. These valuations do not
imply that the Fund's assets would currently be realisable for cash at the
stated NAV, particularly in current market conditions where credit and hence
liquidity are tight. This is demonstrated by the inability of the Fund to secure
offers for the assets at full NAV during the previous 12 months. Despite this,
the Board considers it appropriate to publish these valuations, but with the
caveat that they should not be regarded as representing realisable values in
current market conditions and that the values have no doubt deteriorated since
the year end. A write-down of the book value of the Fund's property portfolio is
not, however, thought to be appropriate at this stage since the Fund has no
borrowings and is not in the position of having to sell at any price to repay
debt or comply with loan covenants. The Board will continue to monitor the
situation closely and review the position again at the time of the next
half-yearly valuation.
The foreign exchange movement has improved to a GBP2.5m gain from a GBP8.7m loss
in 2007 due to the strengthening of the dollar against sterling by 9.5% during
the year and 2% against the blended acquisition rate.
The current portfolio comprises four investments, which are summarised below:
Golturkbuku, Bodrum: Current book value: GBP24.7m; current valuation: GBP25.4m*.
Set on the Bodrum peninsula and within 45 minutes from the Bodrum-Milas
International airport in an established location for wealthy Turkish and
international purchasers, the development project prepared for the site consists
of 247 units of villas, apartments and hotel villas with a built area of
approximately 60,000 square metres. Leading operator Banyan Tree Hotels and
Resorts have agreed to provide hotel and residence management and interior
design services for their first venture into Turkey. The project's master plan
has been completed by WATG with architectural designs provided by local
architects YPU.
The Manager has been in discussions with numerous interested parties over the
past 12 months. An offer was obtained from a prospective purchaser at a level
comparable to the site's independent land valuation but was subsequently
withdrawn due to the prospective purchaser encountering difficulties with its
financing arrangements in light of the significant deterioration in global
credit conditions. No further acceptable offers have subsequently been received
by the Board.
Riva: Current book value: GBP62.3m; current valuation: GBP79.8m*. Located to the
north east of the Asian side of Istanbul, Riva represents one of the last
significant contiguous areas available for large scale development of housing
for the rapidly expanding population of Istanbul that is within commutable
distance of the central business district. The total land aggregation remains at
931,739 square metres and the Fund recently received approval of its 1:1000
scale plans from the Beykoz Municipality. The Fund and other significant
landowners in Riva continue to discuss the zoning process with the Greater
Istanbul Municipality.
The Manager has been conducting talks with a number of Middle Eastern investors
interested in acquiring the Riva site. An offer was received but was rejected by
the Board as it was felt that it significantly under-valued the assets.
Kazikli: Current book value: GBP5.4m; current valuation: GBP7.8m*. This
development is a joint venture with the Ado Group, a leading supplier of
building materials in the region, and is situated only 34km from Bodrum-Milas
International airport, in a spectacular natural bay setting. It will consist of
approximately 330 luxury villas, some with private moorings, 120 hotel rooms and
supporting leisure and social facilities. The master plan and concept design
process has been completed by Atelier Xavier Bohl, who has an excellent
reputation from his work on Port Alacati, Marina Limassol and Larnaca.
The Manager has conducted discussions with several parties regarding the sale of
the Fund's equity interest in the site but to date has not secured an acceptable
offer.
Alanya: Current book value: GBP8.6m; current valuation: GBP9.1m*. The Fund has
an investment in a holiday apartment development situated in the coastal resort
of Alanya in the Antalya province. The resort is a gated development consisting
of 215 apartments, of which the Fund has financed 107. Construction is fully
completed with marketing during the year focusing on the Netherlands,
Scandinavian and Russian markets. To date an acceptable offer has not been
received to acquire the units as a bulk purchase. 7 units have been reserved at
discounts of circa 25% to the original list price, of which 2 sales have legally
completed and the balance are in the process of being exchanged. The slow rate
of sales reflects the weakening of the market generally and in particular for
second homes. Sales progress has also been adversely impacted by delays in the
opening of Gazipasa airport which is expected to cut post flight travel time to
Alanya from approximately 90 minutes to 25 minutes but has been subject to
continued uncertainty in relation to its scheduled completion date.
The period since 31 August 2008 has seen sales volumes further decreasing in the
Alanya region. While the winter period is traditionally the off season for such
secondary home sales, the extent of such falls indicates market conditions are
becoming increasingly challenging; buyers in relevant markets such as Russia,
the Netherlands and the UK are impacted by deterioration in their own economic
circumstances.
*Converted at the prevailing exchange rate of GBP1:USD1.82 at 31 August 2008.
Turkey
The political situation stabilised with the decision in July by the
Constitutional Court to neither close down the governing AKP (Justice and
Development Party) nor ban any party members.
Significant efforts are being made to address the re-unification of Cyprus, with
the Greek Cypriot President and his Turkish counterpart in talks under UN
auspices. Progress would significantly assist the very slow-moving negotiations
on Turkish EU accession.
Within the economy during the year, the Central Bank combated the rising annual
rate of inflation, peaking at 12.1% in July, with interest rate increases to
16.75% from 15.25% in February 2008. However, with the global deterioration in
economic activity and declines in commodity prices (most notably oil) rapidly
reflected in inflation rates (CPI fell to 10.8% from 12% in October) there
were consecutive cuts in interest rates of 1.25% in December 2008 and 2.00% in
January 2009. Nonetheless, rates remain high at 13%.
Turkey, in common with most countries, is now facing a slowdown in its economy
in the face of the global financial crisis, with weakening consumer confidence,
significant stock market volatility and a depreciating currency. These factors
have limited the positive impact on the Turkish residential market of the new
mortgage system introduced in 2007 and legislation clarifying the rules relating
to foreign ownership of residential property. Confidence in the real estate
market is weak, with sales performance of projects across the country slowing
and the construction market contracting significantly over the last 12 months.
Sales price reductions in excess of 15% have been reported for certain suburban
developments in Istanbul. Overseas investors' perceptions of the Turkish
property market were affected by the protracted AKP closure case and the need
for new legislation on foreign ownership.
Tourism continues to play a very important part in the Turkish economy with
total inward visitors at 18.5m in 2007, a rise of 9.7% on 2006, which places the
country 11th in the most popular tourist destination by visitor numbers. 2008
figures are currently indicating that the rising trend is continuing with
visitors 13% up on 2007; despite the current financial crisis there has been no
significant decline in 2009 bookings. (Source: Office of Culture and Tourism)
Although current conditions are poor, there is an expected long-term demand for
new housing due to:
- An estimated additional 325,000 new homes required to be built annually to
meet the increasing
population (70 million, forecast to reach 100
million by 2050, of which 50% under the age of 30).
- Rapid urbanization and the movement away from multi-generational living
arrangements.
- Inadequacy of the current housing stock (approximately 55% of all houses
have been built without
permits and 40% are in need of extensive
structural repair).
(Source: Istanbul Chamber of Commerce)
Outlook
Whilst the political climate seems less uncertain, current economic conditions
are adversely impacting the Fund's ability to realise its assets; the valuations
at 31 August 2008 are clearly not realisable at present. Nonetheless, the Fund
and Manager are continuing their efforts to realise the assets at returns which
would maximise shareholder value.
Sir Timothy Daunt
Chairman
28 January 2009
Directors' Report
The Directors submit their Report and audited Financial Statements for the year
ending 31 August 2008.
Principal Activity
The Fund is a closed-ended, Jersey registered, investment company formed to
access the Turkish property market and more particularly new build residential
developments in major cities and coastal destinations.
Listing
The Fund is quoted on the AIM market of the London Stock Exchange.
Investment Strategy
The Fund's focus is on new-build residential developments in major cities and
coastal locations, aimed at both the local and tourist markets. The Fund's
investment scope also includes land purchase and joint venture projects with
local and other partners. The Fund is actively involved in the sale of
properties "off-plan" (i.e. properties will be sold before they are built).
Results and Dividends
It is not intended in normal circumstances that the Fund will pay dividends on
the shares.
As announced on 1 November 2007 the Board has changed the fund's portfolio
strategy from the reinvestment of proceeds into further property to the
distribution of sales proceeds, arising from the realisation of the portfolio,
to the shareholders.
The income statement is set out on page 10 of this Annual Report and Financial
Statements. The Directors do not recommend the payment of a dividend.
Life
The Company has a life of 10 years from the date of its admission to trading on
the AIM market plus up to 2 further years for the planned realisation of the
portfolio. The life may be extended by special resolution of shareholders
(requiring a two-thirds majority of those voting).
Custodian
BNP Paribas (Jersey branch) provides custody services in relation to the Fund.
Board of Directors
The Directors of the Fund are listed on page 28. Other than John Chapman who was
appointed on 17 October 2007 and Musa Erden who resigned on 17 June 2008, all
served throughout the year.
Shareholders' Interests
+----------------------------------------+----------------------------------------+
| Extent of Holdings | No. of shareholders |
+----------------------------------------+----------------------------------------+
| | |
+----------------------------------------+----------------------------------------+
| 1 - 9,999 | 31 |
+----------------------------------------+----------------------------------------+
| 10,000 - 99,999 | 16 |
+----------------------------------------+----------------------------------------+
| 100,000 - 999,999 | 11 |
+----------------------------------------+----------------------------------------+
| 1,000,000 - 9,999,999 | 12 |
+----------------------------------------+----------------------------------------+
| 10m+ | 3 |
+----------------------------------------+----------------------------------------+
At 30 September 2008 the Fund was aware of the following interests of 3% or more
in the ordinary share capital of the Fund:
+------------+------------+--------+--------+
| | Number | % held | |
+------------+------------+--------+--------+
| Vidacos | 57,040,000 | 42.33 | % |
| Nominees | | | |
| Limited | | | |
+------------+------------+--------+--------+
| Morstan | 35,805,037 | 26.57 | % |
| Nominees | | | |
| Limited | | | |
+------------+------------+--------+--------+
| Deutsche | 18,805,000 | 13.95 | % |
| Bank | | | |
+------------+------------+--------+--------+
| Credit | 4,872,000 | 3.62 | % |
| Suisse | | | |
| Securities | | | |
| (Europe) | | | |
| Limited | | | |
+------------+------------+--------+--------+
The Directors are not otherwise aware of interests of 3% or more in the Fund's
issued share capital.
Directors' Interests
The maximum amount of remuneration payable to the Directors permitted under the
Articles is GBP150,000 per annum. The Directors received in aggregate GBP117,179
for the year ended 31 August 2008 (2007: GBP103,063).
The interests of the Directors in the ordinary share capital of the Fund at 31
August 2008 are:
+--------------------------------------------------+---------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------+---------------+------------+
| Non Executive Directors | Beneficial | Beneficial |
+--------------------------------------------------+---------------+------------+
| Sir Timothy Daunt | 5,000 | 5,000 |
+--------------------------------------------------+---------------+------------+
| Sencar Toker | 5,000 | 5,000 |
+--------------------------------------------------+---------------+------------+
By virtue of being a director of the Manager, Roger Maddock is treated as being
interested in the 1,000,000 ordinary shares held by the Manager (2007: 1,000,000
ordinary shares).
Roger Maddock is both a Director of the Fund and non-executive Chairman of the
Manager.
By Order of the Board
BNP Paribas Fund Services Jersey Limited
Secretary
28 January 2009
+----------------+--------+------------+--------+------------+--------+
| Consolidated | | | | | |
| Income | | | | | |
| Statement | | | | | |
| For the year | | | | | |
| ended 31 | | | | | |
| August 2008 | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | Year | | Year | |
| | | ended | | ended | |
+----------------+--------+------------+--------+------------+--------+
| | | 31 | | 31 | |
| | | August | | August | |
+----------------+--------+------------+--------+------------+--------+
| | | 2008 | | 2007 | |
+----------------+--------+------------+--------+------------+--------+
| | notes | GBP | | GBP | |
+----------------+--------+------------+--------+------------+--------+
| Income | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Bank | | 1,307,327 | | 2,607,646 | |
| interest | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Total | | 1,307,327 | | 2,607,646 | |
| income | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Operating | | | | | |
| expenses | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Management | 4 | (3,008,219 | ) | (2,999,985 | ) |
| fee | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Other | 5 | (1,349,199 | ) | (1,026,652 | ) |
| operating | | | | | |
| expenses | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Foreign | 12 | 1,485,810 | | (4,646 | ) |
| exchange | | | | | |
| gains/(losses) | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Total | | (2,871,608 | ) | (4,031,283 | ) |
| operating | | | | | |
| expenses | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Loss | | (1,564,281 | ) | (1,423,637 | ) |
| before | | | | | |
| tax | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Tax | 6 | (16,478 | ) | - | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Loss | | (1,580,759 | ) | (1,423,637 | ) |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Attributable | | | | | |
| to: | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Equity | | (1,580,746 | ) | (1,423,656 | ) |
| shareholders | | | | | |
| of the | | | | | |
| company | | | | | |
+----------------+--------+------------+--------+------------+--------+
| Minority | | (13 | ) | 19 | |
| interest | | | | | |
+----------------+--------+------------+--------+------------+--------+
| | | (1,580,759 | ) | (1,423,637 | ) |
+----------------+--------+------------+--------+------------+--------+
| Basic | 7 | (1.13 | ) | (0.95 | ) |
| and | | | | | |
| diluted | | | | | |
| earnings | | | | | |
| per | | | | | |
| share | | | | | |
| (pence) | | | | | |
+----------------+--------+------------+--------+------------+--------+
The accompanying notes are an integral part of the financial statements.
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Consolidated | | | | | | | | | |
| Balance | | | | | | | | | |
| Sheet | | | | | | | | | |
| As at 31 | | | | | | | | | |
| August 2008 | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | Group | | Company | | Group | | Company | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 2008 | | 2008 | | 2007 | | 2007 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | notes | GBP | | GBP | | GBP | | GBP | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Non-current | | | | | | | | | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Intangible | 8 | 4,976 | | - | | 3,099 | | - | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Plant | 9 | 37,700 | | - | | - | | - | |
| and | | | | | | | | | |
| equipment | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Investment | 13 | - | | 5 | | - | | 5 | |
| in | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Inventories | 10 | 91,503,254 | | - | | 89,927,782 | | - | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loans | 11 | 8,573,984 | | 108,402,176 | | 7,211,525 | | 96,468,242 | |
| and | | | | | | | | | |
| receivables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 100,119,914 | | 108,402,181 | | 97,142,406 | | 96,468,247 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Current | | | | | | | | | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Other | 15 | 1,015,427 | | 85,367 | | 597,017 | | 24,345 | |
| receivables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | 20 | 20,900,040 | | 16,893,761 | | 44,898,891 | | 35,221,363 | |
| and | | | | | | | | | |
| cash | | | | | | | | | |
| equivalents | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 21,915,467 | | 16,979,128 | | 45,495,908 | | 35,245,708 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Total | | 122,035,381 | | 125,381,309 | | 142,638,314 | | 131,713,955 | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Current | | | | | | | | | |
| liabilities | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Other | 16 | (314,522 | ) | (233,181 | ) | (5,251,654 | ) | (149,288 | ) |
| payables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | 121,720,859 | | 125,148,128 | | 137,386,660 | | 131,564,667 | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Share | 17 | 135,483,052 | | 135,483,052 | | 150,000,000 | | 150,000,000 | |
| capital | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Retained | 18 | (13,762,210 | ) | (10,334,924 | ) | (12,613,335 | ) | (18,435,333 | ) |
| earnings | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Equity | | 121,720,842 | | 125,148,128 | | 137,386,665 | | 131,564,667 | |
| attributable | | | | | | | | | |
| to owners of | | | | | | | | | |
| the parent | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Minority | | 17 | | - | | (5 | ) | - | |
| interest | | | | | | | | | |
| equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Total | | 121,720,859 | | 125,148,128 | | 137,386,660 | | 131,564,667 | |
| equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | 19 | 90.3 | | 92.9 | | 91.6 | | 87.7 | |
| asset | | | | | | | | | |
| value | | | | | | | | | |
| per | | | | | | | | | |
| ordinary | | | | | | | | | |
| share | | | | | | | | | |
| (pence) | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
These financial statements were approved by the Board of Directors on 28 January
2009.
Sir Timothy Daunt Roger
King
The accompanying notes are an integral part of the financial statements.
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Consolidated Statement of Changes in | | | | | | | |
| Equity | | | | | | | |
| For the year ended 31 August 2008 | | | | | | | |
| | | | | | | | |
+--------------------------------------------+-+-------------+-+----------+-+-------------+-+
| Group | Share | | Retained | | Minority | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | capital | | earnings | | interest | | Total | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | GBP | | GBP | | GBP | | GBP | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 August | | | | | | | | |
| 2007 | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2006 | 150,000,000 | | (10,962,860 | )| (42 | )| 139,037,098 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | (1,423,656 | )| 19 | | (1,423,637 | )|
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Foreign exchange on | - | | (226,819 | )| 18 | | (226,801 | )|
| subsidiary translation | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2007 | 150,000,000 | | (12,613,335 | )| (5 | )| 137,386,660 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 August | | | | | | | | |
| 2008 | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2007 | 150,000,000 | | (12,613,335 | )| (5 | )| 137,386,660 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Reduction of ordinary share | (14,516,948 | )| - | | - | | (14,516,948 | )|
| capital | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | (1,580,746 | )| (13 | )| (1,580,759 | )|
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Foreign exchange on | - | | 431,871 | | 35 | | 431,906 | |
| subsidiary translation | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2008 | 135,483,052 | | (13,762,210 | )| 17 | | 121,720,859 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Company | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 August | | | | | | | | |
| 2007 | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2006 | 150,000,000 | | (11,949,137 | )| - | | 138,050,863 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | (6,486,196 | )| - | | (6,486,196 | )|
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2007 | 150,000,000 | | (18,435,333 | )| - | | 131,564,667 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 August | | | | | | | | |
| 2008 | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2007 | 150,000,000 | | (18,435,333 | )| - | | 131,564,667 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Reduction of ordinary share | (14,516,948 | )| - | | - | | (14,516,948 | )|
| capital | | | | | | | | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Profit for the year | - | | 8,100,409 | | - | | 8,100,409 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2008 | 135,483,052 | | (10,334,924 | )| - | | 125,148,128 | |
+------------------------------+-------------+-+-------------+-+----------+-+-------------+-+
The accompanying notes are an integral part of the financial statements.
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Consolidated | | | | | | | | |
| Statement of | | | | | | | | |
| Cash Flows | | | | | | | | |
| For the year | | | | | | | | |
| ended 31 | | | | | | | | |
| August 2008 | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Group | | Company | | Group | | Company | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Year | | Year | | Year | | Year | |
| | ended | | ended | | ended | | ended | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 31 | | 31 | | 31 | | 31 | |
| | August | | August | | August | | August | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 2008 | | 2008 | | 2007 | | 2007 | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | GBP | | GBP | | GBP | | GBP | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash flow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Bank | 1,307,327 | | 1,118,622 | | 2,607,646 | | 2,169,409 | |
| interest | | | | | | | | |
| received | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Operating | (2,871,608 | ) | 6,981,787 | | (4,031,283 | ) | (8,655,605 | ) |
| expenses | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| (Loss)/profit | (1,564,281 | ) | 8,100,409 | | (1,423,637 | ) | (6,486,196 | ) |
| for the year | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (1,485,810 | ) | (10,818,189 | ) | 4,646 | | 4,860,223 | |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
| (gains)/losses | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| (Increase)/decrease | | | | | | | | |
| in | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| other | (401,932 | ) | (61,022 | ) | 15,719 | | 241,375 | |
| receivables | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Increase/(decrease) | | | | | | | | |
| in | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| other | 28,358 | | 83,893 | | 89,039 | | (47,249 | ) |
| payables | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (3,423,665 | ) | (2,694,909 | ) | (1,314,233 | ) | (1,431,847 | ) |
| cash | | | | | | | | |
| outflow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
| before | | | | | | | | |
| interest | | | | | | | | |
| and tax | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Tax | (16,478 | ) | - | | - | | - | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (3,440,143 | ) | (2,694,909 | ) | (1,314,233 | ) | (1,431,847 | ) |
| cash | | | | | | | | |
| outflow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| flow | | | | | | | | |
| from | | | | | | | | |
| investing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loans | - | | (1,239,099 | ) | - | | (19,407,116 | ) |
| to | | | | | | | | |
| subsidiaries | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | (6,540,962 | ) | - | | (65,585,006 | ) | - | |
| of | | | | | | | | |
| inventories | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | (66,802 | ) | - | | - | | - | |
| of plant | | | | | | | | |
| and | | | | | | | | |
| equipment | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | (5,232 | ) | - | | - | | - | |
| of | | | | | | | | |
| intangible | | | | | | | | |
| assets | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loan | - | | - | | (2,750,760 | ) | - | |
| to | | | | | | | | |
| developer | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (6,612,996 | ) | (1,239,099 | ) | (68,335,766 | ) | (19,407,116 | ) |
| cash | | | | | | | | |
| outflow | | | | | | | | |
| from | | | | | | | | |
| investing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| flow | | | | | | | | |
| from | | | | | | | | |
| financing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Share | (14,516,948 | ) | (14,516,948 | ) | - | | - | |
| buy-back | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (14,516,948 | ) | (14,516,948 | ) | - | | - | |
| cash | | | | | | | | |
| outflow | | | | | | | | |
| from | | | | | | | | |
| financing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (24,570,087 | ) | (18,450,956 | ) | (69,649,999 | ) | (20,838,963 | ) |
| decrease | | | | | | | | |
| in cash | | | | | | | | |
| and cash | | | | | | | | |
| equivalents | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | 44,898,891 | | 35,221,363 | | 114,862,336 | | 56,053,485 | |
| and | | | | | | | | |
| cash | | | | | | | | |
| equivalents | | | | | | | | |
| at start of | | | | | | | | |
| the year | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Effect | 571,236 | | 123,354 | | (313,446 | ) | 6,841 | |
| of | | | | | | | | |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
| rates | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | 20,900,040 | | 16,893,761 | | 44,898,891 | | 35,221,363 | |
| and | | | | | | | | |
| cash | | | | | | | | |
| equivalents | | | | | | | | |
| at end of | | | | | | | | |
| the year | | | | | | | | |
+---------------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
The accompanying notes are an integral part of the financial statements.
Notes to the financial statements
1. General information
The Ottoman Fund Limited invests in Turkish new build residential property in
major cities and coastal destinations aimed at both the domestic and tourist
markets.
The Company is a limited liability company domiciled in Jersey, Channel Islands.
The Company is quoted on the AIM market of the London Stock Exchange.
These consolidated financial statements have been approved by the Board of
Directors on 28 January 2009.
2. Accounting policies
The consolidated financial statements of the Company for the year ended 31
August 2008 comprise the Company and its subsidiaries, listed in note 13,
(together, the 'Group') and have been prepared in accordance with International
Financial Reporting Standards ("IFRS") issued by the International Accounting
Standards Board (IASB) and interpretations issued by the International Financial
Reporting Committee of the IASB (IFRIC).
The following IFRS standards have been applied in the current financial year:
IFRS 7 Financial Instruments: Disclosures and the amendment to IAS 1
Presentation of Financial Statements. There is no material financial impact
arising from the application of these standards and interpretations. The
financial statements have been updated to include new disclosures arising from
these standards where appropriate.
(a) Basis of preparation
The consolidated financial statements have been prepared on a historical cost
basis, except for certain financial instruments detailed below.
(b) Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
31 August 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 its 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.
Joint ventures
A joint venture is a contractual agreement whereby two or more entities
undertake an activity that is the subject of joint control. The results and
assets and liabilities of joint ventures held by subsidiaries are incorporated
in these financial statements using the proportionate consolidation method.
(c) Revenue recognition
Interest receivable on fixed interest securities is recognised on an effective
interest method. Interest on short term deposits, expenses and interest payable
are treated on an accruals basis.
(d) Expenses
All expenses are charged through the income statement in the period in which the
services or goods are provided to the Group except for expenses which are
incidental to the disposal of an investment which are deducted from the disposal
proceeds of the investment.
(e) Non current assets
Intangible assets
Intangible assets are stated at cost less any provisions for amortisation and
impairments. They are amortised over their useful life of 6 years. The
amortisation is based on the straight-line basis. At each balance sheet date,
the Group reviews the carrying amount of its intangible assets to determine
whether there is any indication that those assets have suffered an impairment
loss.
General
Assets are recognised at the trade date on acquisition and disposal. Proceeds
will be measured at fair value which will be regarded as the proceeds of sale
less any transaction costs.
Plant and equipment is stated at cost less accumulated depreciation and any
recognised impairment loss. Depreciation is charged so as to write off the cost
of assets, other than land or properties under construction, over their
estimated useful lives, using the straight line method on the following basis:
+---------------------------------+-----------------------------------------+
| Leasehold improvements | 3 years |
+---------------------------------+-----------------------------------------+
| Furniture and fittings | 5 years |
+---------------------------------+-----------------------------------------+
| Computer hardware | 4 years |
+---------------------------------+-----------------------------------------+
| Computer software | 3 years |
+---------------------------------+-----------------------------------------+
The gain or loss on the disposal or retirement of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the income statement.
Inventories
Inventories are stated at the lower of cost and net realisable value. Land
inventory is recognised at the time a liability is recognised - generally after
the exchange of unconditional contracts.
Loans and receivables
Loans and receivables are recognised on an amortised cost basis. Where they are
denominated in a foreign currency they are translated at the prevailing balance
sheet exchange rate.
(f) Cash and cash equivalents
Cash and cash equivalents comprise current deposits with banks.
(g) Taxation
The Company is an Exempt Company for Jersey taxation purposes. The Company pays
an exempt company fee for each Jersey company within the Group, which is
currently GBP600 per annum. However, withholding tax may be payable on
repatriation of assets and income to the company.
The subsidiaries will be liable for Turkish corporation tax at a rate of 20%.
Additionally, a land sale and purchase fee may arise when land is sold or
purchased.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more tax in the future or right to
pay less tax in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted.
(h) Foreign currency
The results and financial position of the Group are expressed in pounds
sterling, which is the Group's functional currency.
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary items and non monetary assets and liabilities that are fair
valued and that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Exchange differences on translation
of the Group's net investment in foreign operations are recognised directly in
equity.
(i) Share capital
Ordinary shares are classified as equity. External costs directly attributable
to the issue of new shares are shown as a deduction to reserves. Any redemption
in shares is deducted from ordinary share capital with any transaction costs
taken to the Profit and Loss account.
(j) New standards and interpretations not applied
At the date of authorisation of these financial statements, the following
standards and Interpretations were in issue but not yet effective
IFRS 8 - Operating Segments (effective for annual periods beginning on or after
1 January 2009) Amendment 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 32 and IAS 1 - Puttable Financial Instruments and Obligations
arising on Liquidation (effective for annual periods beginning on or after 1
January 2009)
Revised IFRS 3 - Business Combinations (effective for annual periods beginning
on or after 1 July 2009)
The Directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on the financial
statements of the Group.
3. Segment reporting
The Group's activities are based in Turkey and Jersey. The Group invests in
Turkish new build residential property through its Turkish subsidiary companies.
Accordingly, the net revenue and assets of the Group are substantially derived
from its activities based in Turkey. The Group also holds assets and generates
revenue in Jersey. Such activities are undertaken by the Company and by Ottoman
Finance Company 1 Limited which has issued the loan to the third party described
in note 11.
In the opinion of the Directors sufficient information of the Group's operating
segments has been provided above.
4. Management fee
+------------+-----------+-----------+
| | 2008 | 2007 |
+------------+-----------+-----------+
| | GBP | GBP |
+------------+-----------+-----------+
| Management | 3,008,219 | 2,999,985 |
| fee | | |
+------------+-----------+-----------+
The Manager receives a management fee quarterly in advance of 2% per annum of
the amount subscribed at the placing plus any capital gains retained for
investment. The fees of the Investment Adviser are met by the Manager.
On 30 June 2008, the Company notified the Manager that the management agreement
would be terminated with effect from 31 December 2008.
5.Other operating expenses
+----------------+-----------+-----------+
| | 2008 | 2007 |
+----------------+-----------+-----------+
| | GBP | GBP |
+----------------+-----------+-----------+
| Legal | 165,038 | 94,034 |
| and | | |
| professional | | |
| fees | | |
+----------------+-----------+-----------+
| Advisory | 163,137 | 191,711 |
| and | | |
| consultancy | | |
| fees | | |
+----------------+-----------+-----------+
| Marketing | 123,714 | 63,196 |
+----------------+-----------+-----------+
| Travel | 117,697 | 90,000 |
| and | | |
| subsistence | | |
+----------------+-----------+-----------+
| Directors | 117,179 | 103,063 |
| remuneration | | |
+----------------+-----------+-----------+
| Administration | 95,649 | 97,289 |
| fees | | |
+----------------+-----------+-----------+
| Audit | 48,648 | 40,000 |
| services | | |
| - for | | |
| audit | | |
| work | | |
+----------------+-----------+-----------+
| Other | 518,137 | 347,359 |
| operating | | |
| expenses | | |
+----------------+-----------+-----------+
| | 1,349,199 | 1,026,652 |
+----------------+-----------+-----------+
| The | | |
| company | | |
| has no | | |
| employees. | | |
+----------------+-----------+-----------+
| 6. Tax | | |
+----------------+-----------+-----------+
| | 2008 | 2007 |
+----------------+-----------+-----------+
| | GBP | GBP |
+----------------+-----------+-----------+
| Irrecoverable | 16,478 | - |
| overseas tax | | |
+----------------+-----------+-----------+
This tax represents irrecoverable withholding tax on bank interest.
7. Earnings per share
The basic and diluted earnings per ordinary share is based on the net loss for
the year of GBP1,580,759 (2007: loss GBP1,423,637) and on 138,178,080 shares
(2007: 150,000,000 shares) being the weighted average number of ordinary shares
in issue during the year.
8. Intangible assets
+--------------+--------+------------+--------+
| | | Intangible | |
+--------------+--------+------------+--------+
| | | assets | |
+--------------+--------+------------+--------+
| | | GBP | |
+--------------+--------+------------+--------+
| Cost | | | |
+--------------+--------+------------+--------+
| At 1 | | 3,984 | |
| September | | | |
| 2007 | | | |
+--------------+--------+------------+--------+
| Additions | | 5,232 | |
+--------------+--------+------------+--------+
| At 31 | | 9,216 | |
| August | | | |
| 2008 | | | |
+--------------+--------+------------+--------+
| | | | |
+--------------+--------+------------+--------+
| Amortisation | | | |
+--------------+--------+------------+--------+
| At 1 | | (885 | ) |
| September | | | |
| 2007 | | | |
+--------------+--------+------------+--------+
| Charge | | (3,355 | ) |
| for | | | |
| the | | | |
| year | | | |
+--------------+--------+------------+--------+
| At 31 | | (4,240 | ) |
| August | | | |
| 2008 | | | |
+--------------+--------+------------+--------+
| | | | |
+--------------+--------+------------+--------+
| Net | | 4,976 | |
| book | | | |
| value | | | |
| at 31 | | | |
| August | | | |
| 2008 | | | |
+--------------+--------+------------+--------+
| Net | | 3,099 | |
| book | | | |
| value | | | |
| at 31 | | | |
| August | | | |
| 2007 | | | |
+--------------+--------+------------+--------+
The intangible asset relates to a CRM program, with a useful life of 6 years.
There has been no impairment during the year.
9. Plant and equipment
+--------------+-----------+--------+--------------+--------+---------+--------+
| | Furniture | | Leasehold | | | |
| | and | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | fittings | | improvements | | Total | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | GBP | | GBP | | GBP | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Cost | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Additions | 22,845 | | 43,957 | | 66,802 | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 31 | 22,845 | | 43,957 | | 66,802 | |
| August | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Depreciation | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Charge | (5,336 | ) | (23,766 | ) | (29,102 | ) |
| for | | | | | | |
| the | | | | | | |
| year | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 31 | (5,336 | ) | (23,766 | ) | (29,102 | ) |
| August | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Net | 17,509 | | 20,191 | | 37,700 | |
| book | | | | | | |
| value | | | | | | |
| at 31 | | | | | | |
| August | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Net | - | | - | | - | |
| book | | | | | | |
| value | | | | | | |
| at 31 | | | | | | |
| August | | | | | | |
| 2007 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
10. Inventories
+-----------+------------+---------+------------+---------+
| | Group | Company | Group | Company |
+-----------+------------+---------+------------+---------+
| | 2008 | 2008 | 2007 | 2007 |
+-----------+------------+---------+------------+---------+
| | GBP | GBP | GBP | GBP |
+-----------+------------+---------+------------+---------+
| Opening | 89,927,782 | - | 19,377,286 | - |
| book | | | | |
| cost | | | | |
+-----------+------------+---------+------------+---------+
| Purchases | 1,575,472 | - | 70,550,496 | - |
| at cost | | | | |
+-----------+------------+---------+------------+---------+
| Closing | 91,503,254 | - | 89,927,782 | - |
| book | | | | |
| cost | | | | |
+-----------+------------+---------+------------+---------+
This represents the purchase of 185,175 square metres of development land on the
Bodrum peninsula, 931,739 square metres on the Riva coastline and 247,664 square
metres, of which the Fund has a 50% share, in the Kazikli village, in the
district of Milas.
In accordance with the accounting policy in note 2, inventories are stated at
the lower of cost and net realisable value. Inventories were valued at the year
end by Kuzey Bati Real Estate on the basis of open market value. On this basis,
a total fair value of GBP112.8m has been determined for inventories held by the
Company at the balance sheet date. In accordance with the Company's accounting
policy, unrealised gains or losses as a result of this valuation have not been
recognised in the consolidated income statement.
Reconciliation of book cost to Open Market Value:
+-----------------------------------------------+-------------+-+-------------+-+
| | 2008 | | 2007 | |
+-----------------------------------------------+-------------+-+-------------+-+
| | GBP | | GBP | |
+-----------------------------------------------+-------------+-+-------------+-+
| Closing book cost | 91,503,254 | | 89,927,782 | |
+-----------------------------------------------+-------------+-+-------------+-+
| Increase in valuation of inventory properties | | | | |
| at acquisition exchange rate | | | | |
+-----------------------------------------------+-------------+-+-------------+-+
| Golturkbuku, Bodrum | 1,849,693 | | 3,583,496 | |
+-----------------------------------------------+-------------+-+-------------+-+
| Riva | 14,781,376 | | 14,264,477 | |
+-----------------------------------------------+-------------+-+-------------+-+
| Kazikli | 2,206,531 | | 1,110,604 | |
+-----------------------------------------------+-------------+-+-------------+-+
| Total increase in valuation of inventory | 18,837,600 | | 18,958,577 | |
| properties at acquisition exchange rate | | | | |
+-----------------------------------------------+-------------+-+-------------+-+
| Foreign exchange gain/(loss) | 2,491,873 | | (8,742,360 | )|
+-----------------------------------------------+-------------+-+-------------+-+
| Open market value | 112,832,727 | | 100,143,999 | |
+-----------------------------------------------+-------------+-+-------------+-+
11.Loans and receivables
+-------------+-----------+-------------+-----------+--------+------------+--------+
| | Group | Company | Group | | Company | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| | 2008 | 2008 | 2007 | | 2007 | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| | GBP | GBP | GBP | | GBP | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| Opening | 7,211,525 | 96,468,242 | 4,381,865 | | 81,928,195 | |
| balance | | | | | | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| New | - | 1,239,096 | 2,841,146 | | 19,407,110 | |
| loans | | | | | | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| Exchange | 1,362,459 | 10,694,838 | (11,486 | ) | (4,867,063 | ) |
| gain/(loss) | | | | | | |
| on | | | | | | |
| revaluation | | | | | | |
| of loan | | | | | | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
| Closing | 8,573,984 | 108,402,176 | 7,211,525 | | 96,468,242 | |
| balance | | | | | | |
+-------------+-----------+-------------+-----------+--------+------------+--------+
The third party loan is EUR10,377,760 in respect of the investment in the
Riverside Resort in Alanya and secured by a mortgage. No interest is accruing
and repayments are based upon sales of the development. The intercompany loans
have no interest accruing and no repayment date and principally relate to the
purchase and development of land.
12. Foreign currency losses
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| | Group | | | Company | | Group | | Company | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| | 2008 | | | 2008 | | 2007 | | 2007 | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| | GBP | | | GBP | | GBP | | GBP | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| Translation | 123,351 | | | 123,351 | | (38,410 | ) | (38,410 | ) |
| of cash | | | | | | | | | |
| balances | | | | | | | | | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| Foreign | - | | | - | | 45,250 | | 45,250 | |
| exchange | | | | | | | | | |
| on | | | | | | | | | |
| settlement | | | | | | | | | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| Gain/(loss) | 1,362,459 | | | 10,694,838 | | (11,486 | ) | (4,867,063 | ) |
| on loans | | | | | | | | | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
| Net | 1,485,810 | | | 10,818,189 | | (4,646 | ) | (4,860,223 | ) |
| currency | | | | | | | | | |
| gains/(losses) | | | | | | | | | |
+----------------+-----------+--------+--------+------------+--------+---------+--------+------------+--------+
13. Investment in subsidiary undertakings
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| | Country | | | Authorised | | Issued | | Ownership | |
| | of | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Name | incorporation | | | share | | share | | % | |
| | | | | capital | | capital | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Ottoman | Jersey | | | GBP10,000 | | GBP1 | | 100 | |
| Finance | | | | | | | | | |
| Company | | | | | | | | | |
| 1 | | | | | | | | | |
| Limited | | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Ottoman | Jersey | | | GBP10,000 | | GBP1 | | 100 | |
| Finance | | | | | | | | | |
| Company | | | | | | | | | |
| 2 | | | | | | | | | |
| Limited | | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Ottoman | Jersey | | | GBP10,000 | | GBP1 | | 100 | |
| Finance | | | | | | | | | |
| Company | | | | | | | | | |
| 3 | | | | | | | | | |
| Limited | | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Ottoman | Jersey | | | GBP10,000 | | GBP1 | | 100 | |
| Finance | | | | | | | | | |
| Company | | | | | | | | | |
| 4 | | | | | | | | | |
| Limited | | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Ottoman | Jersey | | | GBP10,000 | | GBP1 | | 100 | |
| Finance | | | | | | | | | |
| Company | | | | | | | | | |
| 5 | | | | | | | | | |
| Limited | | | | | | | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Osmanli | Turkey | | | YTL | | YTL | | 99.99 | |
| Yapi 1 | | | | 46,146,312 | | 46,146,312 | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Osmanli | Turkey | | | YTL | | YTL | | 99.99 | |
| Yapi 2 | | | | 188,284,941 | | 188,284,941 | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Osmanli | Turkey | | | YTL | | YTL | | 99.99 | |
| Yapi 3 | | | | 5,249,584 | | 5,249,584 | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
| Osmanli | Turkey | | | YTL | | YTL | | 99.99 | |
| Yapi 4 | | | | 11,249,104 | | 11,249,104 | | | |
+---------+---------------+--------+--------+-------------+--------+-------------+--------+-----------+--------+
All of the above companies have been incorporated into the Group accounts.
14. Interests in joint ventures
The Group has the following interest in a joint venture, Mobella, a project
management company.
+---------+--------+----------+--------+-----------+--------+
| | | Country | | Ownership | |
| | | of | | | |
+---------+--------+----------+--------+-----------+--------+
| | | Domicile | | % | |
+---------+--------+----------+--------+-----------+--------+
| Mobella | | Turkey | | 50 | |
+---------+--------+----------+--------+-----------+--------+
Summarised financial information of joint venture is as follows:
+---------+---------+-------------+--------+--------+---------+--------+---------+--------+----------+--------+
| | Assets | Liabilities | | | Equity | | Revenue | | Loss | |
+---------+---------+-------------+--------+--------+---------+--------+---------+--------+----------+--------+
| Mobella | 753,246 | (10,098 | ) | | 743,148 | | 28,964 | | (309,615 | ) |
+---------+---------+-------------+--------+--------+---------+--------+---------+--------+----------+--------+
15.Other receivables
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| | | Group | | | Company | | Group | | Company | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| | | 2008 | | | 2008 | | 2007 | | 2007 | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| | | GBP | | | GBP | | GBP | | GBP | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| Prepayments and | 301,032 | | | 85,367 | | 167,204 | | 24,345 | |
| accrued income | | | | | | | | | |
+----------------------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| Other | | 667,231 | | | - | | 375,080 | | - | |
| taxation | | | | | | | | | | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| Other | | 47,164 | | | - | | 54,733 | | - | |
| receivables | | | | | | | | | | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
| | | 1,015,427 | | | 85,367 | | 597,017 | | 24,345 | |
+-------------+--------+-----------+--------+--------+---------+--------+---------+--------+---------+--------+
The directors consider that the carrying amount of the above receivables
approximates to their fair value. Prepayments include advances to suppliers.
16. Other payables
+--------------+---------+---------+-----------+---------+
| | Group | Company | Group | Company |
+--------------+---------+---------+-----------+---------+
| | 2008 | 2008 | 2007 | 2007 |
+--------------+---------+---------+-----------+---------+
| | GBP | GBP | GBP | GBP |
+--------------+---------+---------+-----------+---------+
| Accruals | 227,232 | 233,176 | 187,767 | 149,283 |
+--------------+---------+---------+-----------+---------+
| Amounts | - | 5 | - | 5 |
| due to | | | | |
| subsidiaries | | | | |
+--------------+---------+---------+-----------+---------+
| Accrued | 11,147 | - | 23,107 | - |
| tax | | | | |
+--------------+---------+---------+-----------+---------+
| Other | 76,143 | - | 5,040,780 | - |
| payables | | | | |
+--------------+---------+---------+-----------+---------+
| | 314,522 | 233,181 | 5,251,654 | 149,288 |
+--------------+---------+---------+-----------+---------+
17. Called up share capital
+-------------+-------------+
| Authorised: | |
+-------------+-------------+
| Founder | 10 |
| shares | |
| of no | |
| par | |
| value | |
+-------------+-------------+
| Ordinary | Unlimited |
| shares | |
| of no | |
| par | |
| value | |
+-------------+-------------+
| | |
+-------------+-------------+
| Issued | GBP |
| and | |
| fully | |
| paid: | |
+-------------+-------------+
| 2 | - |
| founder | |
| shares | |
| of no | |
| par | |
| value | |
+-------------+-------------+
| 134,764,709 | 135,483,052 |
| ordinary | |
| shares of | |
| no par | |
| value | |
+-------------+-------------+
On incorporation of the Company, 2 founder shares of no par value were issued to
the Manager. These shares are not eligible for participation in the Fund
investments and carry no voting rights at general meetings of the Company.
On 21 November 2007, 15,235,291 ordinary shares were repurchased by the Company
for cancellation at 95 pence per share at a total cost of GBP14,516,948.
+--------------+--------+-------------+--------+-------------+--------+
| Movements | | Number | | GBP | |
| in | | | | | |
| ordinary | | | | | |
| share | | | | | |
| capital | | | | | |
| during | | | | | |
| the year | | | | | |
+--------------+--------+-------------+--------+-------------+--------+
| Ordinary | | 150,000,000 | | 150,000,000 | |
| shares | | | | | |
| in issue | | | | | |
| at 1 | | | | | |
| September | | | | | |
| 2007 | | | | | |
+--------------+--------+-------------+--------+-------------+--------+
| Purchased | | (15,235,291 | ) | (14,516,948 | ) |
| for | | | | | |
| cancellation | | | | | |
| on 21 | | | | | |
| November | | | | | |
| 2007 | | | | | |
+--------------+--------+-------------+--------+-------------+--------+
| Ordinary | | 134,764,709 | | 135,483,052 | |
| shares | | | | | |
| in issue | | | | | |
| at 31 | | | | | |
| August | | | | | |
| 2008 | | | | | |
+--------------+--------+-------------+--------+-------------+--------+
18.Retained earnings
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Group | | Company | | Group | | Company | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 2008 | | 2008 | | 2007 | | 2007 | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | GBP | | GBP | | GBP | | GBP | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| At | (12,613,335 | ) | (18,435,333 | ) | (10,962,860 | ) | (11,949,137 | ) |
| start | | | | | | | | |
| of | | | | | | | | |
| year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Bank | 1,307,327 | | 1,118,622 | | 2,607,646 | | 2,169,409 | |
| and | | | | | | | | |
| deposit | | | | | | | | |
| interest | | | | | | | | |
| earned | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Operating | (4,357,348 | ) | (3,836,402 | ) | (4,026,637 | ) | (3,795,382 | ) |
| expenses | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Tax | (16,548 | ) | - | | - | | - | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | (3,066,569 | ) | (2,717,780 | ) | (1,418,991 | ) | (1,625,973 | ) |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | 1,485,810 | | 10,818,189 | | (4,646 | ) | (4,860,223 | ) |
| movement | | | | | | | | |
| on | | | | | | | | |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| (Loss)/profit | (1,580,759 | ) | 8,100,409 | | (1,423,637 | ) | (6,486,196 | ) |
| for the year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Foreign | 431,906 | | - | | (226,801 | ) | - | |
| exchange | | | | | | | | |
| on | | | | | | | | |
| subsidiary | | | | | | | | |
| translation | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Minority | (22 | ) | - | | (37 | ) | - | |
| interest | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| At end | (13,762,210 | ) | (10,334,924 | ) | (12,613,335 | ) | (18,435,333 | ) |
| of | | | | | | | | |
| year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
19.Net asset value per share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of GBP121,720,859 (2007: GBP137,386,660) and on
134,764,709 ordinary shares (2007:150,000,000), being the number of ordinary
shares in issue at the period end.
20.Cash and cash equivalents
+----------+------------+------------+------------+------------+
| | Group | Company | Group | Company |
+----------+------------+------------+------------+------------+
| | 2008 | 2008 | 2007 | 2007 |
+----------+------------+------------+------------+------------+
| | GBP | GBP | GBP | GBP |
+----------+------------+------------+------------+------------+
| Bank | 20,900,040 | 16,893,761 | 44,898,891 | 35,221,363 |
| balances | | | | |
+----------+------------+------------+------------+------------+
| | 20,900,040 | 16,893,761 | 44,898,891 | 35,221,363 |
+----------+------------+------------+------------+------------+
21. Financial instruments
The Fund's financial instruments comprise investments, loans, 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 principal risks the Company faces from its financial instruments are:
(i) Market risk
(ii) Credit risk
(iii) Foreign currency risk
(iv) Interest rate risk
(v)Liquidity risk
As part of regular Board functions, the Board reviews each of these risks. As
required by IAS 32: Disclosure and Presentation, an analysis of financial assets
and liabilities, which identifies the risk to the Company of holding such items,
is given below.
(i) Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company's operations. It represents the
potential loss the Fund might suffer through holding market positions as a
consequence of price movements and movements in exchange rates.
(ii) Credit risk
The Group places loans with third parties and is therefore potentially at risk
from the failure of any such third party of which it is a debtor. Recovery of
the loans at 31 August 2008 is dependent on successful completion and sale of
properties by the third party developer. Further details of loans made to
subsidiaries and developers can be found in note 11. The largest counterparty
risk is with the Company's bankers. Bankruptcy or insolvency of BNP Paribas may
cause the Company's rights with respect to cash held to be delayed or limited.
The Group's principal financial assets are loans and receivables, 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.
Loans and receivables are represented by loans to and receivables from third
parties.
Other receivables are represented mainly by prepayments and other debtors where
no significant credit risk is recognised.
Credit risk exposure
In summary, compared to the amounts in the Consolidated Balance Sheet, the
maximum exposure to credit risk at 31 August 2008 was as follows:
+-------------+------------+------------+------------+------------+
| | Balance | Maximum | Balance | Maximum |
+-------------+------------+------------+------------+------------+
| | sheet | exposure | sheet | exposure |
+-------------+------------+------------+------------+------------+
| | at 31 | at 31 | at 31 | at 31 |
| | August | August | August | August |
+-------------+------------+------------+------------+------------+
| | 2008 | 2008 | 2007 | 2007 |
+-------------+------------+------------+------------+------------+
| Non-current | GBP | GBP | GBP | GBP |
| assets | | | | |
+-------------+------------+------------+------------+------------+
| Loans | 8,573,984 | 8,573,984 | 7,211,525 | 7,211,525 |
| and | | | | |
| receivables | | | | |
+-------------+------------+------------+------------+------------+
| | | | | |
+-------------+------------+------------+------------+------------+
| Current | | | | |
| assets | | | | |
+-------------+------------+------------+------------+------------+
| Cash | 20,900,040 | 20,900,040 | 44,898,891 | 44,898,891 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+-------------+------------+------------+------------+------------+
| Other | 1,015,427 | 1,015,427 | 597,017 | 597,017 |
| receivables | | | | |
+-------------+------------+------------+------------+------------+
| | 30,489,451 | 30,489,451 | 52,707,433 | 52,707,433 |
+-------------+------------+------------+------------+------------+
Fair value of financial assets and liabilities
The book value of the cash at bank and loans to third parties included in these
financial statements are approximate to their fair value.
(iii) Foreign currency risk
The Group operates Sterling, Euro, US Dollar and Turkish Lira bank accounts.
Exchange gains or losses arise as a result of the movement in the exchange rate
between the date of the transaction denominated in a currency other than
Sterling and its settlement.
Currency rate exposure
An analysis of the Group's currency exposure is detailed below:
+----------+-------------+------------+-------------+------------+
| | Non-current | Net | Non-current | Net |
| | assets at | monetary | assets at | monetary |
| | 31 August | assets | 31 August | assets |
| | 2008 | at 31 | 2007 | at 31 |
| | | August | | August |
| | | 2008 | | 2007 |
+----------+-------------+------------+-------------+------------+
| | GBP | GBP | GBP | GBP |
+----------+-------------+------------+-------------+------------+
| Sterling | - | 16,114,878 | - | 34,470,508 |
+----------+-------------+------------+-------------+------------+
| Euro | 8,573,984 | 774,914 | 7,211,525 | 625,912 |
+----------+-------------+------------+-------------+------------+
| US | 91,503,254 | 3,823,355 | 89,927,782 | 4,687,988 |
| Dollar | | | | |
+----------+-------------+------------+-------------+------------+
| Turkish | 42,676 | 887,798 | 3,099 | 459,846 |
| Lira | | | | |
+----------+-------------+------------+-------------+------------+
| | 100,119,914 | 21,600,945 | 97,142,406 | 40,244,254 |
+----------+-------------+------------+-------------+------------+
Foreign currency sensitivity
The table below details the Group's sensitivity to a 5% increase in the value of
Sterling against the relevant currency. With all other variables held constant,
net assets attributable to shareholders and the change in net assets
attributable to shareholders per the consolidated income statement would have
decreased by the amounts shown below. The analysis is performed on the same
basis for 2007.
+---------+---------+-----------+---------+-----------+
| | Profit | Equity | Profit | Equity |
| | & Loss | at | & Loss | at |
| | at | 31 | at | 31 |
| | 31 | August | 31 | August |
| | August | 2008 | August | 2007 |
| | 2008 | | 2007 | |
+---------+---------+-----------+---------+-----------+
| | GBP | GBP | GBP | GBP |
+---------+---------+-----------+---------+-----------+
| Euro | 467,445 | - | 391,872 | - |
+---------+---------+-----------+---------+-----------+
| US | 191,168 | 4,575,163 | 234,399 | 4,496,389 |
| Dollar | | | | |
+---------+---------+-----------+---------+-----------+
| Turkish | 44,390 | 2,134 | 22,992 | 155 |
| Lira | | | | |
+---------+---------+-----------+---------+-----------+
| | 703,003 | 4,577,297 | 649,263 | 4,496,544 |
+---------+---------+-----------+---------+-----------+
A 5% weakening of Sterling against the relevant currency would have resulted in
an equal but opposite effect on the above financial statement amounts to the
amounts shown above, on the basis that all other variables remain constant.
(iv) Interest rate risk
Interest rate movements may affect: (i) the fair value of the investments in
fixed interest rate securities, (ii) the level of income receivable on cash
deposits, (iii) interest payable on the company's variable rate borrowings.
The interest rate profile of the Group excluding short term debtors and
creditors, was as follows:
+----------+------------+-------------+------------+------------+
| | Floating | Non | Floating | Non |
| | | interest | | interest |
+----------+------------+-------------+------------+------------+
| | rate | bearing | rate | bearing |
+----------+------------+-------------+------------+------------+
| | at 31 | at 31 | at 31 | at 31 |
| | August | August | August | August |
+----------+------------+-------------+------------+------------+
| | 2008 | 2008 | 2007 | 2007 |
+----------+------------+-------------+------------+------------+
| Assets | GBP | GBP | GBP | GBP |
+----------+------------+-------------+------------+------------+
| Sterling | 16,262,692 | - | 34,595,451 | - |
+----------+------------+-------------+------------+------------+
| Euro | 774,914 | 8,573,984 | 625,912 | 7,211,525 |
+----------+------------+-------------+------------+------------+
| US | 3,823,355 | 91,503,254 | 9,653,478 | 89,927,782 |
| Dollar | | | | |
+----------+------------+-------------+------------+------------+
| Turkish | 39,079 | 42,676 | 24,050 | 3,099 |
| Lira | | | | |
+----------+------------+-------------+------------+------------+
| | 20,900,040 | 100,119,914 | 44,898,891 | 97,142,406 |
+----------+------------+-------------+------------+------------+
Maturity profile
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments:
+----------+------------+--------+--------+--------+--------+------------+--------+
| | | | | 2008 | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | Within | | Within | Within | More | | |
| | | | | | than | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 1 year | | 2-3 | 4-5 | 5 | Total | |
| | | | years | years | years | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | GBP | | GBP | GBP | GBP | GBP | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Floating | | | | | | | |
| rate | | | | | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Cash | 20,900,040 | | - | - | - | 20,900,040 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 20,900,040 | | - | - | - | 20,900,040 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
Non-interest bearing
+-------------+-----------+--------+--------+--------+--------+-----------+--------+
| Other | 1,015,427 | | - | - | - | 1,015,427 | |
| receivables | | | | | | | |
+-------------+-----------+--------+--------+--------+--------+-----------+--------+
| Other | (314,522 | ) | - | - | - | (314,522 | ) |
| payables | | | | | | | |
+-------------+-----------+--------+--------+--------+--------+-----------+--------+
| | 700,905 | | - | - | - | 700,905 | |
+-------------+-----------+--------+--------+--------+--------+-----------+--------+
+----------+------------+--------+--------+--------+--------+------------+--------+
| | | | | 2007 | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | Within | | Within | Within | More | | |
| | | | | | than | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 1 year | | 2-3 | 4-5 | 5 | Total | |
| | | | years | years | years | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | GBP | | GBP | GBP | GBP | GBP | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Floating | | | | | | | |
| rate | | | | | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Cash | 44,898,891 | | - | - | - | 44,898,891 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 44,898,891 | | - | - | - | 44,898,891 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
Non-interest bearing
+-------------+------------+--------+--------+--------+--------+------------+--------+
| Other | 597,017 | | - | - | - | 597,017 | |
| receivables | | | | | | | |
+-------------+------------+--------+--------+--------+--------+------------+--------+
| Other | (5,251,654 | ) | - | - | - | (5,251,654 | ) |
| payables | | | | | | | |
+-------------+------------+--------+--------+--------+--------+------------+--------+
| | (4,654,637 | ) | - | - | - | (4,654,637 | ) |
+-------------+------------+--------+--------+--------+--------+------------+--------+
Repayments of the third party loan of EUR10,377,760, in respect of the investment
in the Riverside Resort in Alanya, are based upon sales of the development and
therefore have been excluded from this maturity profile.
Interest rate sensitivity
An increase of 100 basis points in interest rates during the period would have
increased the net assets attributable to shareholders and changes in net assets
attributable to shareholders by GBP209,000 (2006: GBP448,989). A decrease of 100
basis points would have had an equal but opposite effect.
(v) Liquidity risk
The Group's assets mainly comprise cash balances and realisable investments,
which can be sold to meet funding commitments if necessary. As at 31 August 2008
the Group does not have any significant liabilities due.
22. Commitments
The Group has no outstanding commitments at 31 August 2008.
23. Related party transactions
Information regarding subsidiaries and subsidiary loans can be found in notes 10
and 12. The Company's broker, Numis Securities Limited, holds an option to
purchase 1.25% of the issued share capital of the fund at a price of GBP1 per
share. This option will lapse on the 5th anniversary of admission, being 28
December 2010.
24. Directors interests
Total compensation to the Directors over the period was GBP111,235 (2007:
GBP103,063).
Sir Timothy Daunt and Sencar Toker each hold 5,000 ordinary shares. By virtue of
being a director of the Manager, Roger Maddock is treated as being interested in
the 1,000,000 ordinary shares held by the Manager.
25. Post balance sheet event
Due to recent market conditions the market values of properties in the Turkish
real estate sector have experienced some decline. This is likely to have
impacted properties held within the Fund, however, as no external valuation has
been performed since the balance sheet date, the Directors are not able to
quantify the decrease that may have occurred.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR CKCKPKBKDQDB
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