TIDMOTM
RNS Number : 9729G
Ottoman Fund Limited (The)
10 February 2010
THE OTTOMAN FUND LIMITED
Annual Report and Financial Statements
For the year ended 31 August 2009
Chairman's Statement
I report upon the audited financial statements for the year ended 31 August
2009.
Dear Shareholders:
As at 31 August 2009, our portfolio value, on a fair value basis, was $163.4
million as compared to $222.4 million a year earlier. The appraised value of
our portfolio, as measured in US Dollars, fell by approximately 25% year on year
and according to the valuers is now worth about 10% less than cost. Each of our
assets is independently appraised by two valuation companies, one local (TKSB)
the other international (Savills). We use the Savills valuations for our
disclosure in the financial statements and use the TKSB valuation as a check on
the Savills one. Notwithstanding that the two valuations are done independently,
both the local and international appraisers tend to reach similar conclusions as
to the value of our portfolio as at 31 August 2009:
+--------------------+--------------------+--------------------+--------------------+
| | Savills | TKSB | Average |
| | ($) | ($) | ($) |
+--------------------+--------------------+--------------------+--------------------+
| | | | |
| Riva | 104,000,000 | 112,197,000 | 108,098,500 |
+--------------------+--------------------+--------------------+--------------------+
| | | | |
| Bodrum | 37,600,000 | 39,863,000 | 38,731,500 |
+--------------------+--------------------+--------------------+--------------------+
| | | | |
| Kazikli | 9,450,000 | 10,073,000 | 9,761,500 |
+--------------------+--------------------+--------------------+--------------------+
| | | | |
| Alanya | 12,300,000 | 13,133,257 | 12,716,629 |
+--------------------+--------------------+--------------------+--------------------+
| | | | |
| TOTAL | 163,350,000 | 175,266,257 | 169,308,129 |
+--------------------+--------------------+--------------------+--------------------+
Property prices in Turkey have been relatively stable compared with prices in
some other countries, though transactions in assets like ours have been limited
so it is difficult to determine a market clearing price for the Company's
assets. Given the state of global property markets, our focus has been to
reduce costs primarily by restructuring the Company and replacing the external
manager with an internal management structure under the aegis of a board of
directors representing shareholder interests. The culmination of this process
is the EGM now scheduled for 22 February, where the shareholders will be asked
to approve a proposed restructuring, including the termination of the third
party manager. This final step is required under Jersey law and should result
in immediate and substantial savings to shareholders.
The Proposed Restructuring
This restructuring process commenced in 2008, when the external manager was
given notice and the Board began interviewing candidates to manage or advise the
Board on these assets. In March 2009 most of the Board resigned, two new
Jersey-based directors joined the Board, and I was elected Executive Chairman.
Following regulatory approval obtained in July and November, two additional
directors joined the Board. These two directors are portfolio managers for
shareholders owning in excess of 50% of the Company's share capital.
In November 2009, the Board determined that the most efficient way of managing
the Company's assets would be through internalising management at the Board
level with an external advisor in Turkey.
Chairman's Statement (continued)
For our external advisor, we appointed Civitas Property Partners. Civitas was
founded by Ali Pamir, Firuz Soyuer and Kerem Saltoglu. Their experience
includes providing property related services to many leading Turkish and
international firms. Their experience runs the gamut of the property universe
and includes land and asset appraisals, investment advisory services,
transactional work, land development, architectural design, construction
management, working with local and national governmental bodies regarding zoning
and permits, property management, marketing, and asset disposals. Ali and Firuz
set up and managed Colliers Turkey in 1991 and subsequently set up and currently
run DTZ's Turkish affiliate. Kerem has over twenty years of experience in
investment banking in Turkey and elsewhere with several leading international
financial institutions.
We have entered into a contract with Civitas for advisory services primarily in
relation to property disposals. The fee structure is heavily incentive based
with an annual EUR425,000 fixed component and an incentive component based on a
percentage of realisation value. (By way of reference, the original management
contract called for an annual fixed management fee that amounted to 2% of the
GBP150 million raised in the offering plus incentives). The Civitas contract
may be terminated on short notice should things not work out (which we of course
hope will not be the case).
The Company's Assets
Our assets comprise two direct investments in undeveloped land, Riva and Bodrum,
an investment in undeveloped land held through a 50:50 joint venture with a
Turkish partner, Kazikli, and an investment in a completed holiday property
structured as a loan, Alanya.
The Company's interest in Riva comprises nearly a million square metres of
undeveloped and unserviced land on the Asian side of the Bosporus. Several
other substantial local investors also own land in Riva. Riva is the largest
undeveloped site within commuting distance to Istanbul. According to Savills'
August 2009 valuation, Riva had a market value of $104 million as compared with
a purchase price of $114 million. Following the valuation date, progress has
been made on zoning, which may positively affect Riva's value. The Company's
current strategy for Riva is to continue to increase its value by continuing to
pursue the requisite governmental approvals and most likely selling the land at
the appropriate time.
The Company's interest in Bodrum comprises approximately 150,000 square metres
of undeveloped, though serviced and zoned, land designated for luxury holiday
homes on the Bodrum peninsula. According to Savills' August 2009 valuation,
Bodrum had a market value of $37.6 million as compared with a purchase price of
$38.6 million. The Company's current strategy for Bodrum is to obtain
construction permits, which we expect will increase its value either in
connection with an outright sale or development.
The Company's interest in Kazikli comprises a 50% interest in a joint venture
owning approximately 210,000 square metres of undeveloped and unserviced land in
Kazikli. The idea behind Kazikli was to use the land for luxury holiday homes
on the Mediterranean. Given the lack of infrastructure in the area, the vision
was that homeowners would approach their property by sea and that the
development would include a marina. Savills' August 2009 appraisal values the
Company's portion of the land at $9.45 million as compared with the $10 million
purchase price. The Company's current strategy for Kazikli is to sell the
property in conjunction with our joint venture partner.
Chairman's Statement (continued)
Alanya is a completed development comprising four apartment blocks, adjoining
land, and recreational facilities such as a swimming pool and gym, in central
Alanya, a popular holiday
destination in coastal Antalya. The four apartment blocks contain 215 units,
108 of which were retained by the developer and 107 sold to the Company with the
Company's interest structured as a loan to the developer repayable upon the sale
of each unit. The developer sold its units several years ago while the Company's
units largely remain unsold. The reasons for this disparity have been
attributed to initial errors in pricing and marketing and subsequent changes in
market conditions. When I visited the development this past April, the onsite
agent informed me that only a small percentage of the Company's units were
saleable due to defects and poor upkeep. In addition, local brokers were of the
view that we had used overly aggressive pricing assumptions given market
conditions.
Since then we have commissioned an engineer and architect to assess the
development and most effective way of improving it. We have been in
negotiations with the builder, which have resulted in some improvements. We
have adjusted pricing to take into account market conditions. These steps have
resulted in increased sales, and twenty-five units have now either been sold or
are under contract. Civitas has developed a comprehensive marketing plan aimed
at northern European buyers and commencing this month will be participating in a
number of sales exhibitions in major European cities. We are hopeful that these
efforts will bear fruit.
* * * *
The Ottoman Fund is financially strong. We own several first rate properties.
We have no debt, no significant contingent liabilities, and even after the
recent capital distribution have a large positive cash balance. Our focus now
is on our cost base, which will be further reduced through the proposed
restructuring, and increasing the value of our investments. We will continue to
pursue approvals in connection with Riva and Bodrum. We will see how our new
marketing strategy works with the unsold units at Alanya. Most importantly, we
will continue to endeavour to realise shareholder value through asset sales -
but only at prices that reflect the full and fair value of our assets.
Respectfully yours,
John D. Chapman
Chairman
9 February 2010
Directors' Report
The Directors submit their Report and audited Financial Statements for the year
ending 31 August 2009.
Principal Activity
The Company is a closed-ended, Jersey registered, investment company formed to
access the Turkish property market and in particular new build residential
developments in major cities and coastal destinations.
Listing
The Company is quoted on the AIM market of the London Stock Exchange.
Investment Policy
Upon Admission, the Company's strategy was to develop new-build residential
developments in major cities and coastal locations in Turkey, aimed at both the
local and tourist markets with an emphasis on off-plan sales. The Company now
intends to make no new investments, to make additional investments in existing
assets only if those investments are accretive to shareholder value, and to
opportunistically dispose of assets at appropriate times as and when market
conditions permit.
Results and Dividends
It is not intended in normal circumstances that the Company will pay dividends
on the shares.
The income statement is set out on page 9 of this Annual Report and Financial
Statements. The Directors do not recommend the payment of a dividend.
On 20 January 2010 the Board announced the return of GBP8 million of capital,
approximately 5.9p per share, to shareholders via a capital distribution.
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) currently provides custody services in relation to
cash held by the Company, but such arrangements are expected to be terminated.
Board of Directors
The Directors of the Company are listed on page 27. John D Chapman served as
Director throughout the year, being appointed Executive Chairman on 13 March
2009. On the same date Antony Gardner-Hillman and Andrew Wignall were appointed
to the Board and Sir Timothy Daunt, Roger King, Roger Maddock and Sencar Toker
resigned. Angelo Moskov joined the Board on 17 July 2009 and Eitan Milgram on 5
November 2009.
Shareholders' Interests (as at 31 August 2009)
+----------------------------------------+----------------------------------------+
| Size of shareholding (in shares) | No. of shareholders |
+----------------------------------------+----------------------------------------+
| | |
+----------------------------------------+----------------------------------------+
| 1 - 9,999 | 34 |
+----------------------------------------+----------------------------------------+
| 10,000 - 99,999 | 12 |
+----------------------------------------+----------------------------------------+
| 100,000 - 999,999 | 7 |
+----------------------------------------+----------------------------------------+
| 1,000,000 - 9,999,999 | 6 |
+----------------------------------------+----------------------------------------+
| 10m+ | 4 |
+----------------------------------------+----------------------------------------+
Directors' Report (continued)
At 31 August 2009 the Company was aware of the following interests of 3% or more
in the ordinary share capital of the Company:
+------------+------------+--------+--------+
| | Number | % held | |
+------------+------------+--------+--------+
| Weiss | 40,132,000 | 29.78% | |
| Asset | | | |
| Management | | | |
| LLC | | | |
+------------+------------+--------+--------+
| Toscafund | 35,000,000 | 25.97% | |
| Asset | | | |
| Management | | | |
| LLP | | | |
+------------+------------+--------+--------+
| QVT | 25,000,000 | 18.55% | |
| Financial | | | |
| LP | | | |
+------------+------------+--------+--------+
| Deutsche | 18,335,000 | 13.61% | |
| Bank AG | | | |
+------------+------------+--------+--------+
Otherwise, the Directors are not aware of interests of 3% or more in the
Company's issued share capital.
Directors' Interests
The maximum aggregate amount of ordinary remuneration payable to the Directors
permitted under the Articles is GBP150,000 per annum. The Directors received in
aggregate GBP127,486 for the year ended 31 August 2009 (2008: GBP117,179).
Commencing 13 March 2009 John D. Chapman has been employed under an executive
service contract that provides for an annual fee of GBP75,000 and a
discretionary bonus.
None of the directors have any interests in the Company's share capital. Angelo
Moskov is a partner with QVT Financial LP which owns a shareholding of 18.55% in
the Company. Eitan Milgram who joined the Board after the Year End is an
Executive Vice President of Weiss Asset Management LLC, which owned a
shareholding of 29.78% in the Company at the end of this financial period.
By Order of the Board
Herald Fund Services Limited
Secretary
9 February 2010
Statement of Directors' Responsibilities
The Directors are responsible for preparing the financial statements in
accordance with applicable law and International Financial Reporting Standards.
Company law requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing
those financial statements, the Directors are required to:
· select suitable accounting policies and apply them consistently;
· make judgments and estimates that are reasonable and prudent;
· prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
· state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping accounting records that disclose with
reasonable accuracy, at any time, the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps to prevent and detect fraud and
other irregularities.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE OTTOMAN FUND LIMITED
We have audited the financial statements (the "financial statements") of The
Ottoman Fund Limited which comprise the Group and Company Balance Sheets as at
31 August 2009 and the Consolidated Income Statement, the Group and Company
Statements of Changes in Equity and the Group and Company Statements of Cash
Flows for the year then ended and a summary of the significant accounting
policies and other explanatory notes.
Directors' Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these
financial statements in accordance with International Financial Reporting
Standards and with the requirements of Jersey law. This responsibility includes:
designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit in accordance with International Standards
on Auditing. Those Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditors' judgement, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE OTTOMAN FUND LIMITED
(CONTINUED)
Opinion
In our opinion, the financial statements give a true and fair view of the
financial position of the Group and Company as at 31 August 2009, the financial
performance of the Group for the year ended 31 August 2009 and the cash flows of
the Group and Company for the year ended 31 August 2009 in accordance with
International Financial Reporting Standards and have been properly prepared in
accordance with the requirements of the Companies (Jersey) Law 1991.
Report on other legal and regulatory requirements
We read the other information contained in the Annual Report and consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. The other information
comprises only the Chairman's Statement, the Directors' Report, the Statement of
Directors Responsibilities and the Corporate Information.
In our opinion the information given in the Directors' report is consistent with
the financial statements.
The maintenance and integrity of The Ottoman Fund Limited website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
This report, including the opinion, has been prepared for and only for the
Company's members as a body in accordance with Article 110 of the Companies
(Jersey) Law 1991 and for no other purpose. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
PricewaterhouseCoopers CI LLP
February 2010
Chartered Accountants
Jersey, Channel Islands
+--------------+--------+------------+--------+------------+--------+
| Consolidated | | | | | |
| Income | | | | | |
| Statement | | | | | |
| For the year | | | | | |
| ended 31 | | | | | |
| August 2009 | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | Year | | Year | |
| | | ended | | ended | |
+--------------+--------+------------+--------+------------+--------+
| | | 31 | | 31 | |
| | | August | | August | |
+--------------+--------+------------+--------+------------+--------+
| | | 2009 | | 2008 | |
+--------------+--------+------------+--------+------------+--------+
| | notes | GBP | | GBP | |
+--------------+--------+------------+--------+------------+--------+
| Income | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Bank | | 421,225 | | 1,307,327 | |
| interest | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Total | | 421,225 | | 1,307,327 | |
| income | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Operating | | | | | |
| expenses | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Management | 4 | (1,522,740 | ) | (3,008,219 | ) |
| fee | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Other | 5 | (1,121,090 | ) | (1,349,199 | ) |
| operating | | | | | |
| expenses | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Foreign | 12 | 786,720 | | 1,485,810 | |
| exchange | | | | | |
| gains | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Total | | (1,857,110 | ) | (2,871,608 | ) |
| operating | | | | | |
| expenses | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Loss | | (1,435,885 | ) | (1,564,281 | ) |
| before | | | | | |
| tax | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Tax | 6 | (24,126 | ) | (16,478 | ) |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Loss | | (1,460,011 | ) | (1,580,759 | ) |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Attributable | | | | | |
| to: | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Equity | | (1,460,005 | ) | (1,580,746 | ) |
| shareholders | | | | | |
| of the | | | | | |
| Company | | | | | |
+--------------+--------+------------+--------+------------+--------+
| Minority | | (6 | ) | (13) | |
| interests | | | | | |
+--------------+--------+------------+--------+------------+--------+
| | | (1,460,011 | ) | (1,580,759 | ) |
+--------------+--------+------------+--------+------------+--------+
| Basic | 7 | (1.08 | ) | (1.13 | ) |
| and | | | | | |
| diluted | | | | | |
| earnings | | | | | |
| per | | | | | |
| share | | | | | |
| (pence) | | | | | |
+--------------+--------+------------+--------+------------+--------+
The accompanying notes on pages 13 to 26 are an integral part of the financial
statements.
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Group | | | | | | | | | |
| and | | | | | | | | | |
| Company | | | | | | | | | |
| Balance | | | | | | | | | |
| Sheet | | | | | | | | | |
| As at | | | | | | | | | |
| 31 | | | | | | | | | |
| August | | | | | | | | | |
| 2009 | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | Group | | Company | | Group | | Company | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 2009 | | 2009 | | 2008 | | 2008 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | notes | GBP | | GBP | | GBP | | GBP | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Non-current | | | | | | | | | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Intangible | 8 | 3,226 | | - | | 4,976 | | - | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Plant | 9 | 20,021 | | - | | 37,700 | | - | |
| and | | | | | | | | | |
| equipment | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Investment | 13 | - | | 5 | | - | | 5 | |
| in | | | | | | | | | |
| subsidiaries | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Inventories | 10 | 92,494,972 | | - | | 91,503,254 | | - | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loans | 11 | 9,014,112 | | 121,053,367 | | 8,573,984 | | 108,402,176 | |
| and | | | | | | | | | |
| receivables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 101,532,331 | | 121,053,372 | | 100,119,914 | | 108,402,181 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Current | | | | | | | | | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Other | 15 | 986,075 | | 26,853 | | 1,015,427 | | 85,367 | |
| receivables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | 20 | 18,366,304 | | 14,793,101 | | 20,900,040 | | 16,893,761 | |
| and | | | | | | | | | |
| cash | | | | | | | | | |
| equivalents | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | 19,352,379 | | 14,819,954 | | 21,915,467 | | 16,979,128 | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Total | | 120,884,710 | | 135,873,326 | | 122,035,381 | | 125,381,309 | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Current | | | | | | | | | |
| liabilities | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Other | 16 | (353,340 | ) | (132,904) | | (314,522 | ) | (233,181 | ) |
| payables | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | 120,531,370 | | 135,740,422 | | 121,720,859 | | 125,148,128 | |
| assets | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Share | 17 | 135,483,052 | | 135,483,052 | | 135,483,052 | | 135,483,052 | |
| capital | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Retained | 18 | (14,951,715 | ) | 257,370 | | (13,762,210 | ) | (10,334,924 | ) |
| earnings | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Equity | | 120,531,337 | | 135,740,422 | | 121,720,842 | | 125,148,128 | |
| attributable | | | | | | | | | |
| to owners of | | | | | | | | | |
| the parent | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Minority | | 33 | | - | | 17 | | - | |
| interests' | | | | | | | | | |
| equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Total | | 120,531,370 | | 135,740,422 | | 121,720,859 | | 125,148,128 | |
| equity | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | 19 | | | | | | | | |
| asset | | 89.4 | | 100.7 | | 90.3 | | 92.9 | |
| value | | | | | | | | | |
| per | | | | | | | | | |
| ordinary | | | | | | | | | |
| share | | | | | | | | | |
| (pence) | | | | | | | | | |
+--------------+--------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
The accompanying notes on pages 13 to 26 are an integral part of the financial
statements.
These financial statements were approved by the Board on 9 February 2010.
Antony Gardner-Hillman Andrew Wignall
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Group and Company Statement of | | | | | | | |
| Changes in Equity | | | | | | | |
| | | | | | | | |
+------------------------------------------+-+-------------+-+----------+-+-------------+-+
| Group | Share | | Retained | | Minority | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | capital | | earnings | | interest | | Total | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | GBP | | GBP | | GBP | | GBP | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| 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 | (14,516,948 | )| - | | - | | (14,516,948 | )|
| share capital | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | (1,580,746 | )| (13 | )| (1,580,7597 | )|
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Foreign exchange on | - | | 431,871 | | 35 | | 431,906 | |
| subsidiary translation | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2008 | 135,483,052 | | (13,762,210 | )| 17 | | 121,720,859 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 | | | | | | | | |
| August 2009 | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2008 | 135,483,052 | | (13,762,210 | )| 17 | | 121,720,859 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | (1,460,005 | )| (6 | )| (1,460,011 | )|
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Foreign exchange on | - | | 270,500 | | 22 | | 270,522 | |
| subsidiary translation | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2009 | 135,483,052 | | (14,951,715 | )| 33 | | 120,531,370 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Company | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 | | | | | | | | |
| August 2008 | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2007 | 150,000,000 | | (18,435,333 | )| - | | 131,564,667 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Reduction of ordinary | (14,516,948 | )| - | | - | | (14,516,948 | )|
| share capital | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Loss for the year | - | | 8,100,409 | | - | | (8,100,409 | )|
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2008 | 135,483,052 | | (10,334,924 | )| - | | 125,148,128 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| For the year ended 31 | | | | | | | | |
| August 2009 | | | | | | | | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| As at 1 September 2008 | 135,483,052 | | (10,334,924 | )| - | | 125,148,128 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| Profit for the year | - | | 10,592,294 | | - | | 10,592,294 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
| At 31 August 2009 | 135,483,052 | | 257,370 | | - | | 135,740,422 | |
+----------------------------+-------------+-+-------------+-+----------+-+-------------+-+
The accompanying notes on pages 13 to 26 are an integral part of the financial
statements.
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Group | | | | | | | | |
| and | | | | | | | | |
| Company | | | | | | | | |
| Statement | | | | | | | | |
| of Cash | | | | | | | | |
| Flows | | | | | | | | |
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Group | | Company | | Group | | Company | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Year | | Year | | Year | | Year | |
| | ended | | ended | | ended | | ended | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 31 | | 31 | | 31 | | 31 | |
| | August | | August | | August | | August | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 2009 | | 2009 | | 2008 | | 2008 | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | GBP | | GBP | | GBP | | GBP | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| flow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (1,435,885 | ) | 10,592,287 | | (1,564,281 | ) | 8,100,409 | |
| (loss)/profit | | | | | | | | |
| before tax | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | (786,720 | ) | (12,574,954 | ) | (1,485,810 | ) | (10,818,189 | ) |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
| (gains) | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| (Increase)/decrease | | | | | | | | |
| in | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| other | 29,352 | | 58,521 | | (401,932 | ) | (61,022 | ) |
| receivables | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Increase/(decrease) | | | | | | | | |
| in | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| other | 38,818 | | (100,277 | ) | 28,358 | | 83,893 | |
| payables | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | | | | | | | |
| cash | (2,154,435 | ) | (2,024,423 | ) | (3,423,665 | ) | (2,694,909 | ) |
| outflow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
| before | | | | | | | | |
| interest | | | | | | | | |
| and tax | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Tax | (24,126 | ) | - | | (16,478 | ) | - | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | | | | | | | |
| cash | (2,178,561 | ) | (2,024,423 | ) | (3,440,143 | ) | (2,694,909 | ) |
| outflow | | | | | | | | |
| from | | | | | | | | |
| operating | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| flow | | | | | | | | |
| from | | | | | | | | |
| investing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loans | - | | (145,630 | ) | - | | (1,239,099 | ) |
| to | | | | | | | | |
| subsidiaries | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | (991,718 | ) | - | | (6,540,962 | ) | - | |
| of | | | | | | | | |
| inventories | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | (3,171 | ) | - | | (66,802 | ) | - | |
| of plant | | | | | | | | |
| and | | | | | | | | |
| equipment | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Purchase | - | | - | | (5,232 | ) | - | |
| of | | | | | | | | |
| intangible | | | | | | | | |
| assets | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Loan | 277,199 | | - | | - | | - | |
| to | | | | | | | | |
| developer | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | | | | | | | |
| cash | (717,690 | ) | (145,630 | ) | (6,612,996 | ) | (1,239,099 | ) |
| outflow | | | | | | | | |
| from | | | | | | | | |
| investing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| flow | | | | | | | | |
| from | | | | | | | | |
| financing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Share | - | | - | | (14,516,948 | ) | (14,516,948 | ) |
| buy-back | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | | | | | | | |
| cash | - | | - | | (14,516,948 | ) | (14,516,948 | ) |
| outflow | | | | | | | | |
| from | | | | | | | | |
| financing | | | | | | | | |
| activities | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | | | | | | | | |
| decrease | (2,896,251 | ) | (2,170,053 | ) | (24,570,087 | ) | (18,450,956 | ) |
| in cash | | | | | | | | |
| and cash | | | | | | | | |
| equivalents | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| and | 20,900,040 | | 16,893,761 | | 44,898,891 | | 35,221,363 | |
| cash | | | | | | | | |
| equivalents | | | | | | | | |
| at start of | | | | | | | | |
| the year | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Effect | 362,515 | | 69,393 | | 571,236 | | 123,354 | |
| of | | | | | | | | |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
| rates | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Cash | | | | | | | | |
| and | 18,366,304 | | 14,793,101 | | 20,900,040 | | 16,893,761 | |
| cash | | | | | | | | |
| equivalents | | | | | | | | |
| at end of | | | | | | | | |
| the year | | | | | | | | |
+---------------------+------------+--------+-------------+--------+-------------+--------+-------------+--------+
The accompanying notes on pages 13 to 26 are an integral part of the financial
statements.
Notes to the financial statements
1. General information
The Ottoman Fund Limited has invested in Turkish land and 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 plc.
These consolidated financial statements have been approved by the Board on 9
February 2010.
2. Accounting policies
The consolidated financial statements of the Group for the year ended 31 August
2009 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).
No new IFRS standards that affect the Group have been applied during the current
financial year.
(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 the
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 using the
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.
Notes to the financial statements (continued)
(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
On 1 January 2009 under the new Jersey "Zero/Ten" regime the Company became zero
rated for Jersey taxation purposes. Profits arising in the Company for the 2009
year of assessment and future periods will be subject to tax at the rate of 0%.
However, withholding tax may be payable on repatriation of assets and income to
the Company in Jersey. The Company pays an International Services Entity fee and
neither charges or pays Goods and Services Tax, this fee is currently GBP100 per
annum for each Jersey registered company within the Group.
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.
Notes to the financial statements (continued)
(g) Taxation (continued)
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
In these financial statements, the results and financial position of the Company
are expressed in Pounds Sterling, which is the Company's presentation currency.
The results and financial position of the entities based in Jersey are recorded
in Pounds Sterling, which is the functional currency of these entities. In these
entities, transactions in currencies other than sterling are recorded at the
rates of exchange prevailing on the dates of the transactions. Monetary balances
(including loans) that are denominated in foreign currencies are retranslated at
the rates prevailing on the balance sheet date.
The results and financial position of the entities based in Turkey are recorded
in Turkish Lira, which is the functional currency of these entities. In order to
translate the results and financial position of these entities into the
presentation currency (Pounds Sterling):
- non-monetary assets (including inventory) are translated at the rates of
exchange prevailing on the dates of the transactions
- monetary balances (including loans) are translated at the rates prevailing on
the balance sheet date and
- items to be included in the income statement are translated at the average
exchange rates for the year
Foreign exchange gains or losses are recorded in either the income statement or
in equity depending on their nature.
(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 Income Statement.
(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)
Notes to the financial statements (continued)
(j) New standards and interpretations not applied (continued)
Amendments to IFRS 7 - Financial Instruments: Disclosures (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 has invested 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
+------------+-----------+-----------+
| | 2009 | 2008 |
+------------+-----------+-----------+
| | GBP | GBP |
+------------+-----------+-----------+
| Management | 1,522,740 | 3,008,219 |
| fee | | |
+------------+-----------+-----------+
On 30 June 2008, the Company notified DCM Capital Management (Jersey) Ltd that
the management agreement would be terminated with effect from 31 December 2008.
Up until 31 December 2008 the manager received a fee of 2% of committed capital.
On 6 January 2009 the Company extended the manager's contract for a further
three months, with the fees reduced to GBP65,000 per month, this extension with
a one month notice period remained in place to 31 December 2009. With effect
from 1 January 2010 the management fee was reduced to GBP32,500 per month and
from 1 February 2010 will be paid on a weekly basis up to the date of
termination.
5. Other operating expenses
+----------------+-----------+-----------+
| | 2009 | 2008 |
+----------------+-----------+-----------+
| | GBP | GBP |
+----------------+-----------+-----------+
| Legal | 72,911 | 165,038 |
| and | | |
| professional | | |
| fees | | |
+----------------+-----------+-----------+
| Advisory | 216,173 | 163,137 |
| and | | |
| consultancy | | |
| fees | | |
+----------------+-----------+-----------+
| Marketing | 93,840 | 123,714 |
+----------------+-----------+-----------+
| Travel | 52,441 | 117,697 |
| and | | |
| subsistence | | |
+----------------+-----------+-----------+
| Directors' | 127,486 | 117,179 |
| remuneration | | |
+----------------+-----------+-----------+
| Administration | 108,414 | 95,649 |
| fees | | |
+----------------+-----------+-----------+
| Audit | 39,260 | 48,648 |
| services | | |
| - for | | |
| audit | | |
| work | | |
+----------------+-----------+-----------+
| Other | 410,565 | 518,137 |
| operating | | |
| expenses | | |
+----------------+-----------+-----------+
| | 1,121,090 | 1,349,199 |
+----------------+-----------+-----------+
| The | | |
| company | | |
| has no | | |
| employees. | | |
+----------------+-----------+-----------+
| | | |
| | | |
| Notes | | |
| to the | | |
| financial | | |
| statements | | |
| (continued) | | |
| | | |
| 6. Tax | | |
+----------------+-----------+-----------+
| | 2009 | 2008 |
+----------------+-----------+-----------+
| | GBP | GBP |
+----------------+-----------+-----------+
| Irrecoverable | 24,126 | 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 GBP1,460,011 (2008: loss GBP1,580,759) and on 134,764,709 shares
(2008: 138,178,080 shares) being the weighted average number of ordinary shares
in issue during the year.
The diluted earnings per share are based on the possibility that the options
disclosed in Note 17 will be exercised.
Given the low levels of profit and options in existence, both the basic and
diluted earnings per share are calculated as 1.08 pence (2008: 1.13 pence).
8. Intangible assets
+--------------+--------+--------+--------+
| Cost | | GBP | |
+--------------+--------+--------+--------+
| At 1 | | 9,216 | |
| September | | | |
| 2008 | | | |
+--------------+--------+--------+--------+
| Additions | | - | |
+--------------+--------+--------+--------+
| At 31 | | 9,216 | |
| August | | | |
| 2009 | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Amortisation | | | |
+--------------+--------+--------+--------+
| At 1 | | (4,240 | ) |
| September | | | |
| 2008 | | | |
+--------------+--------+--------+--------+
| Charge | | (1,750 | ) |
| for | | | |
| the | | | |
| year | | | |
+--------------+--------+--------+--------+
| At 31 | | (5,990 | ) |
| August | | | |
| 2009 | | | |
+--------------+--------+--------+--------+
| | | | |
+--------------+--------+--------+--------+
| Net | | 3,226 | |
| book | | | |
| value | | | |
| at 31 | | | |
| August | | | |
| 2009 | | | |
+--------------+--------+--------+--------+
| Net | | 4,976 | |
| book | | | |
| value | | | |
| at 31 | | | |
| August | | | |
| 2008 | | | |
+--------------+--------+--------+--------+
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 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 1 | 22,845 | | 43,957 | | 66,802 | |
| September | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Additions | 627 | | 2,544 | | 3,171 | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 31 | 23,472 | | 46,501 | | 69,973 | |
| August | | | | | | |
| 2009 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Depreciation | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 1 | (5,336 | ) | (23,766 | ) | (29,102 | ) |
| September | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Charge | (4,383 | ) | (16,467 | ) | (20,850 | ) |
| for | | | | | | |
| the | | | | | | |
| year | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| At 31 | (9,719 | ) | (40,233 | ) | (49,952 | ) |
| August | | | | | | |
| 2009 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Net | 13,753 | | 6,268 | | 20,021 | |
| book | | | | | | |
| value | | | | | | |
| at 31 | | | | | | |
| August | | | | | | |
| 2009 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
| Net | 17,509 | | 20,191 | | 37,700 | |
| book | | | | | | |
| value | | | | | | |
| at 31 | | | | | | |
| August | | | | | | |
| 2008 | | | | | | |
+--------------+-----------+--------+--------------+--------+---------+--------+
Notes to the financial statements (continued)
10. Inventories
+-----------+------------+---------+------------+---------+
| | Group | Company | Group | Company |
+-----------+------------+---------+------------+---------+
| | 2009 | 2009 | 2008 | 2008 |
+-----------+------------+---------+------------+---------+
| | GBP | GBP | GBP | GBP |
+-----------+------------+---------+------------+---------+
| Opening | 91,503,254 | - | 89,927,782 | - |
| book | | | | |
| cost | | | | |
+-----------+------------+---------+------------+---------+
| Purchases | 991,718 | - | 1,575,472 | - |
| at cost | | | | |
+-----------+------------+---------+------------+---------+
| Closing | 92,494,972 | - | 91,503,254 | - |
| book | | | | |
| cost | | | | |
+-----------+------------+---------+------------+---------+
This represents the purchase of 149,550 square metres of development land on the
Bodrum peninsula, 931,739 square metres on the Riva coastline and 209,853 square
metres, of which the Group 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 Savills on the basis of open market value. On this basis, a total fair
value of GBP91.9 million 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:
+----------------------------------------+-------------+-+------------+-+----------+-+
| | 2009 | | 2008 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| | GBP | | GBP | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Closing book cost | 92,494,972 | | 91,503,254 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Increase/(decrease) in valuation of | | | | | |
| inventory properties at acquisition | | | | | |
| exchange rate | | | | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Golturkbuku, Bodrum | (3,125,000 | )| 1,849,693 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Riva | (7,611,283 | )| 14,781,376 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Kazikli | (718,940 | )| 2,206,531 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Total increase/(decrease) in valuation | | | | | |
| of inventory properties at acquisition | (11,455,223 | )| 18,837,600 | | |
| exchange rate | | | | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Foreign exchange gain/(loss) | 10,896,322 | | 2,491,873 | | |
+----------------------------------------+-------------+-+------------+------------+-+
| Open market value | 91,936,071 | | 112,832,727 | |
+----------------------------------------+-------------+-+--------------+------------+
| | | | | | | |
+----------------------------------------+-------------+-+------------+-+----------+-+
11. Loans and receivables
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| | Group | Company | Group | | Company | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| | 2009 | 2009 | 2008 | | 2008 | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| | GBP | GBP | GBP | | GBP | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| Opening | 8,573,984 | 108,402,176 | 7,211,525 | | 96,468,242 | |
| balance | | | | | | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| New | - | 145,630 | - | | 1,239,096 | |
| loans | | | | | | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| Repayment | (277,199) | - | - | | - | |
| of loan | | | | | | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| Exchange | 717,327 | 12,505,561 | 1,362,459 | | 10,694,838 | |
| gain on | | | | | | |
| revaluation | | | | | | |
| of loan | | | | | | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
| Closing | 9,014,112 | 121,053,367 | 8,573,984 | | 108,402,176 | |
| balance | | | | | | |
+-------------+-----------+-------------+-----------+--------+-------------+--------+
The third party loan is for EUR10,034,309 in respect of the investment in the
Riverside Resort in Alanya and is 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.
Notes to the financial statements (continued)
12. Foreign currency gains
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| | Group | | | Company | | Group | | Company | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| | 2009 | | | 2009 | | 2008 | | 2008 | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| | GBP | | | GBP | | GBP | | GBP | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| Translation | 69,393 | | | 69,393 | | 123,351 | | 123,351 | |
| of cash | | | | | | | | | |
| balances | | | | | | | | | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| Gain | 717,327 | | | 12,505,561 | | 1,362,459 | | 10,694,838 | |
| on | | | | | | | | | |
| loans | | | | | | | | | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
| Net | 786,720 | | | 12,574,954 | | 1,485,810 | | 10,818,189 | |
| currency | | | | | | | | | |
| gains | | | | | | | | | |
+-------------+---------+--------+--------+------------+--------+-----------+--------+------------+--------+
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 | 1,027,694 | (489,058 | ) | | 538,636 | | 15,748 | | (171,204 | ) |
+---------+-----------+-------------+--------+--------+---------+--------+---------+--------+----------+--------+
15. Other receivables
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| | | Group | | | Company | | Group | | Company | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| | | 2009 | | | 2009 | | 2008 | | 2008 | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| | | GBP | | | GBP | | GBP | | GBP | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| Prepayments and | | | | | | | | | |
| accrued income | 100,774 | | | 26,853 | | 301,032 | | 85,367 | |
+----------------------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| Other | | 530,369 | | | - | | 667,231 | | - | |
| taxation | | | | | | | | | | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| Other | | 354,932 | | | - | | 47,164 | | - | |
| receivables | | | | | | | | | | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
| | | 986,075 | | | 26,853 | | 1,015,427 | | 85,367 | |
+-------------+--------+---------+--------+--------+---------+--------+-----------+--------+---------+--------+
The Directors consider that the carrying amount of the above receivables
approximates to their fair value. Prepayments include advances to suppliers.
Notes to the financial statements (continued)
16. Other payables
+--------------+---------+---------+---------+---------+
| | Group | Company | Group | Company |
+--------------+---------+---------+---------+---------+
| | 2009 | 2009 | 2008 | 2008 |
+--------------+---------+---------+---------+---------+
| | GBP | GBP | GBP | GBP |
+--------------+---------+---------+---------+---------+
| Accruals | 231,821 | 132,899 | 227,232 | 233,176 |
+--------------+---------+---------+---------+---------+
| Amounts | - | 5 | - | 5 |
| due to | | | | |
| subsidiaries | | | | |
+--------------+---------+---------+---------+---------+
| Accrued | - | - | 11,147 | - |
| tax | | | | |
+--------------+---------+---------+---------+---------+
| Other | 121,519 | - | 76,143 | - |
| payables | | | | |
+--------------+---------+---------+---------+---------+
| | 353,340 | 132,904 | 314,522 | 233,181 |
+--------------+---------+---------+---------+---------+
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 Company's
investments and carry no voting rights at general meetings of the Company. The
Company's former broker, Numis Securities Limited, holds an option to purchase
1.25% of the issued share capital of the Company at a price of GBP1 per share.
This option will lapse on the 5th anniversary of admission, being 28 December
2010.
+-----------+--------+-------------+--------+-------------+--------+
| Movements | | Number | | GBP | |
| in | | | | | |
| ordinary | | | | | |
| share | | | | | |
| capital | | | | | |
| during | | | | | |
| the year | | | | | |
+-----------+--------+-------------+--------+-------------+--------+
| Ordinary | | 134,764,709 | | 135,483,052 | |
| shares | | | | | |
| in issue | | | | | |
| at 1 | | | | | |
| September | | | | | |
| 2008 | | | | | |
+-----------+--------+-------------+--------+-------------+--------+
| Movement | | - | | - | |
| during | | | | | |
| the year | | | | | |
+-----------+--------+-------------+--------+-------------+--------+
| Ordinary | | 134,764,709 | | 135,483,052 | |
| shares | | | | | |
| in issue | | | | | |
| at 31 | | | | | |
| August | | | | | |
| 2009 | | | | | |
+-----------+--------+-------------+--------+-------------+--------+
18. Retained earnings
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | Group | | Company | | Group | | Company | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | 2009 | | 2009 | | 2008 | | 2008 | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | GBP | | GBP | | GBP | | GBP | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| At | (13,762,210 | ) | (10,334,924 | ) | (12,613,335 | ) | (18,435,333 | ) |
| start | | | | | | | | |
| of | | | | | | | | |
| year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Bank | 421,225 | | 234,538 | | 1,307,327 | | 1,118,622 | |
| and | | | | | | | | |
| deposit | | | | | | | | |
| interest | | | | | | | | |
| earned | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Operating | (2,643,830 | ) | (2,217,198 | ) | (4,357,348 | ) | (3,836,402 | ) |
| expenses | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Tax | (24,126 | ) | - | | (16,548) | | - | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| | (2,246,731 | ) | (1,982,660 | ) | (3,066,569 | ) | (2,717,780 | ) |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Net | 786,720 | | 12,574,954 | | 1,485,810 | | 10,818,189 | |
| movement | | | | | | | | |
| on | | | | | | | | |
| foreign | | | | | | | | |
| exchange | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| (Loss)/profit | (1,460,011 | ) | 10,592,294 | | (1,580,759 | ) | (8,100,409 | ) |
| for the year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Foreign | | | | | | | | |
| exchange | 270,522 | | - | | 431,906 | | - | |
| on | | | | | | | | |
| subsidiary | | | | | | | | |
| translation | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| Minority | (16 | ) | - | | (22 | ) | - | |
| interests | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
| At end | (14,951,715 | ) | 257,370 | | (13,762,210 | ) | (10,334,924 | ) |
| of | | | | | | | | |
| year | | | | | | | | |
+---------------+-------------+--------+-------------+--------+-------------+--------+-------------+--------+
Notes to the financial statements (continued)
19. Net asset value per share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of GBP120,531,370 (2008: GBP121,720,859) and on
134,764,709 ordinary shares (2008: 134,764,709), being the number of ordinary
shares in issue at the period end.
20. Cash and cash equivalents
+----------+------------+------------+------------+------------+
| | Group | Company | Group | Company |
+----------+------------+------------+------------+------------+
| | 2009 | 2009 | 2008 | 2008 |
+----------+------------+------------+------------+------------+
| | GBP | GBP | GBP | GBP |
+----------+------------+------------+------------+------------+
| Bank | 18,366,304 | 14,793,101 | 20,900,040 | 16,893,761 |
| balances | | | | |
+----------+------------+------------+------------+------------+
| | 18,366,304 | 14,793,101 | 20,900,040 | 16,893,761 |
+----------+------------+------------+------------+------------+
21. Financial instruments
The disclosure on the financial instruments has been limited to the consolidated
financial position. This approach has been adopted as this covers all of the
principal risks associated with the Company.
The disclosures below assume that the properties held by the Group are in US
Dollars as this is the currency in which they are valued by Savills. In the
opinion of the directors this is also the currency that any future disposals
would occur in.
The Company's financial instruments comprise loans, cash balances and
receivables and payables that arise directly from its operations, for example,
in respect of sales and purchases awaiting settlement, and receivables 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 IFRS: 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 Company might suffer through holding market positions as a
consequence of price movements. The Company has no such exposures to market
price risk.
(ii) Credit risk
The Group places loans with third parties and is therefore potentially at risk
from the failure of any such third parties of which it is a debtor. Recovery of
the loans at 31 August 2009 is dependent on successful completion and sale of
properties by third party developers. 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.
Notes to the financial statements (continued)
(ii) Credit risk (continued)
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 receivables
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 2009 was as follows:
+-------------+------------+------------+------------+------------+
| | Balance | Maximum | Balance | Maximum |
+-------------+------------+------------+------------+------------+
| | sheet | exposure | sheet | exposure |
+-------------+------------+------------+------------+------------+
| | at 31 | at 31 | at 31 | at 31 |
| | August | August | August | August |
+-------------+------------+------------+------------+------------+
| | 2009 | 2009 | 2008 | 2008 |
+-------------+------------+------------+------------+------------+
| Non-current | GBP | GBP | GBP | GBP |
| assets | | | | |
+-------------+------------+------------+------------+------------+
| Loans | | | | |
| and | 9,014,112 | 9,014,112 | 8,573,984 | 8,573,984 |
| receivables | | | | |
+-------------+------------+------------+------------+------------+
| | | | | |
+-------------+------------+------------+------------+------------+
| Current | | | | |
| assets | | | | |
+-------------+------------+------------+------------+------------+
| Cash | | | | |
| and | 18,366,304 | 18,366,304 | 20,900,040 | 20,900,040 |
| cash | | | | |
| equivalents | | | | |
+-------------+------------+------------+------------+------------+
| Other | 986,075 | 986,075 | 1,015,427 | 1,015,427 |
| receivables | | | | |
+-------------+------------+------------+------------+------------+
| | 28,366,491 | 28,366,491 | 30,489,451 | 30,489,451 |
+-------------+------------+------------+------------+------------+
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 Pound 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 in Pounds Sterling is detailed
below:
+----------+-------------+------------+-------------+------------+
| Currency | Non-current | Net | Non-current | Net |
| | assets at | monetary | assets at | monetary |
| | 31 August | assets | 31 August | assets |
| | 2009 | at 31 | 2008 | at 31 |
| | | August | | August |
| | | 2009 | | 2008 |
+----------+-------------+------------+-------------+------------+
| | GBP | GBP | GBP | GBP |
+----------+-------------+------------+-------------+------------+
| Pounds | - | 13,887,289 | - | 16,114,878 |
| Sterling | | | | |
+----------+-------------+------------+-------------+------------+
| Euro | 9,014,112 | 1,231,512 | 8,573,984 | 774,914 |
+----------+-------------+------------+-------------+------------+
| US | 92,494,972 | 3,140,563 | 91,503,254 | 3,823,355 |
| Dollar | | | | |
+----------+-------------+------------+-------------+------------+
| Turkish | 23,247 | 739,675 | 42,676 | 887,798 |
| Lira | | | | |
+----------+-------------+------------+-------------+------------+
| | 101,532,331 | 18,999,039 | 100,119,914 | 21,600,945 |
+----------+-------------+------------+-------------+------------+
Notes to the financial statements (continued)
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 2008.
+----------+---------+-----------+---------+-----------+
| Currency | Profit | Equity | Profit | Equity |
| | & Loss | at | & Loss | at |
| | at | 31 | at | 31 |
| | 31 | August | 31 | August |
| | August | 2009 | August | 2008 |
| | 2009 | | 2008 | |
+----------+---------+-----------+---------+-----------+
| | GBP | GBP | GBP | GBP |
+----------+---------+-----------+---------+-----------+
| Euro | 512,281 | - | 467,445 | - |
+----------+---------+-----------+---------+-----------+
| US | 157,028 | 4,624,749 | 191,168 | 4,575,163 |
| Dollar | | | | |
+----------+---------+-----------+---------+-----------+
| Turkish | 36,984 | 1,162 | 44,390 | 2,134 |
| Lira | | | | |
+----------+---------+-----------+---------+-----------+
| | 706,293 | 4,625,911 | 703,003 | 4,577,297 |
+----------+---------+-----------+---------+-----------+
A 5% weakening of Sterling against the relevant currency would have resulted in
an equal but opposite effect on the amounts in the financial statement above 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 Company holds only cash deposits.
The interest rate profile of the Group excluding short term receivables and
payables was as follows:
+----------+------------+-------------+------------+-------------+
| Currency | Floating | Non | Floating | Non |
| | | interest | | interest |
+----------+------------+-------------+------------+-------------+
| | rate | bearing | rate | bearing |
+----------+------------+-------------+------------+-------------+
| | at 31 | at 31 | at 31 | at 31 |
| | August | August | August | August |
+----------+------------+-------------+------------+-------------+
| | 2009 | 2009 | 2008 | 2008 |
+----------+------------+-------------+------------+-------------+
| | GBP | GBP | GBP | GBP |
+----------+------------+-------------+------------+-------------+
| Pounds | 13,993,334 | - | 16,262,692 | - |
| Sterling | | | | |
+----------+------------+-------------+------------+-------------+
| Euro | 1,231,512 | 9,014,112 | 774,914 | 8,573,984 |
+----------+------------+-------------+------------+-------------+
| US | 3,140,563 | 92,494,972 | 3,823,355 | 91,503,254 |
| Dollar | | | | |
+----------+------------+-------------+------------+-------------+
| Turkish | 895 | 23,247 | 39,079 | 42,676 |
| Lira | | | | |
+----------+------------+-------------+------------+-------------+
| | 18,366,304 | 101,532,331 | 20,900,040 | 100,119,914 |
+----------+------------+-------------+------------+-------------+
Notes to the financial statements (continued)
Maturity profile
The following table sets out the carrying amount, by maturity, of the Group's
financial instruments:
+----------+------------+--------+--------+--------+--------+------------+--------+
| | | | | 2009 | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | Within | | Within | Within | More | | |
| | | | | | than | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 1 year | | 2-3 | 4-5 | 5 | Total | |
| | | | years | years | years | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | GBP | | GBP | GBP | GBP | GBP | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Floating | | | | | | | |
| rate | | | | | | | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| Cash | 18,366,304 | | - | - | - | 18,366,304 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
| | 18,366,304 | | - | - | - | 18,366,304 | |
+----------+------------+--------+--------+--------+--------+------------+--------+
Non-interest bearing
+-------------+----------+--------+--------+--------+--------+----------+--------+
| Other | 986,075 | | - | - | - | 986,075 | |
| receivables | | | | | | | |
+-------------+----------+--------+--------+--------+--------+----------+--------+
| Other | (353,340 | ) | - | - | - | (353,340 | ) |
| payables | | | | | | | |
+-------------+----------+--------+--------+--------+--------+----------+--------+
| | 632,735 | | - | - | - | 632,735 | |
+-------------+----------+--------+--------+--------+--------+----------+--------+
+----------+------------+--------+--------+--------+--------+------------+--------+
| | | | | 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 | |
+-------------+-----------+--------+--------+--------+--------+-----------+--------+
Repayments of the third party loan of EUR10,034,309, 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 GBP183,663 (2008: GBP209,000). 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, loans receivable and
development property, which can be sold to meet funding commitments if
necessary. As at 31 August 2009 the Group does not have any significant
liabilities due.
The Group has sufficient cash reserves to meet any liabilities due.
22. Commitments
The Group has no outstanding commitments as at 31 August 2009.
Notes to the financial statements (continued)
23. Related party transactions
Information regarding subsidiaries and subsidiary loans can be found in notes 11
and 13.
24. Directors' interests
Total compensation to the Directors over the period was GBP127,486 (2008:
GBP117,179).
Commencing 13 March 2009 John D. Chapman as Executive Chairman has been employed
under an executive service contract that provides for an annual fee of GBP75,000
pro-rated monthly and a discretionary bonus.
Angelo Moskov is a partner with QVT Financial LP and Eitan Milgram is an
Executive Vice President of Weiss Asset Management LLC which are substantial
investors in the Company.
25. Post balance sheet events
Change of Administrator and registered office
On 9 November 2009, the Company appointed Herald Fund Services Limited as its
administrator in place of BNP Paribas Securities Services Fund Administration
Ltd, and relocated its registered office to Herald House, 8 Hill Street, St
Helier, Jersey JE4 9XB.
Change of Nominated Adviser and Broker
On 5 August 2009 Singer Capital Markets Ltd replaced Numis Securities Limited as
nominated adviser and broker.
Return of Capital
On 20 January 2009 the Directors announced a return of GBP8 million of capital
to shareholders of record as at 29 January 2009 via a capital distribution.
Proposed Restructuring
It is proposed that the Company internalises its management by terminating the
Management Agreement and taking over the day to day management of the Company.
In order to do this the Company will need to reclassify as a "Listed Fund".
The internalisation is conditional upon Shareholder approval and the issue to
the Company by the Jersey Financial Services Commission of a certificate in
accordance with the Listed Fund Guide and the CIF law.
An Extraordinary General Meeting has been scheduled for 22 February 2010 for
discussion of the restructuring proposals.
Retirement of the Manager and Investment Adviser
Notice was served to the Manager, Development Capital Management (Jersey) Ltd
and DCM Danismanlik A.S., with effect from 31 December 2008. The Management
Agreement has been extended since then on a month to month basis at a reduced
fee.
It is anticipated that the Manager and Investment Adviser will retire upon the
finalisation of the proposed restructuring (noted above).
Notes to the financial statements (continued)
25. Post balance sheet events (continued)
Appointment of new Investment Adviser
Civitas Property Partners S.A. were appointed Investment Adviser to the Company
on 2 December 2009.
Change of Custodian
At the EGM on 22 February 2010, the Company will propose to the Shareholders to
terminate the appointment of BNP Paribas SA (Jersey Branch) as custodian of the
Company. The Company does not intend to appoint a new custodian.
Corporate Information
+--------------------+------------------------+-------------------+
| Directors of the | Registered Office | Legal Adviser |
| Company | Herald House | (England) |
| John Chapman | 8 Hill Street | Travers Smith LLP |
| (Executive | St Helier | 10 Snow Hill |
| Chairman) | Jersey JE4 9XB | London EC1A 2AL |
| Antony | | |
| Gardner-Hillman | Manager and | |
| (Appointed 13 | Promoter | Legal Adviser |
| March 2009) | Development Capital | (Jersey) |
| Andrew Wignall | Management (Jersey) | Ozannes |
| (Appointed 13 | Ltd | PO Box 733 |
| March 2009) | (See Note 25) | 29 The Esplanade |
| Angelo Moskov | BNP House | St Helier |
| (Appointed | Anley Street | Jersey JE4 OZS |
| 17 July 2009) | St Helier | |
| Eitan Milgram | Jersey JE2 3QE | |
| (Appointed | | |
| 5 November 2009) | Custodian | Registrar |
| Roger Maddock | BNP Paribas SA | Capita IRG |
| (Resigned | (Jersey Branch) | (Offshore) Ltd |
| 13 March 2009) | (See Note 25) | Victoria Chambers |
| Sencar Tokar | BNP House | Liberation Square |
| (Resigned | Anley Street | 1/3 The Espanade |
| 13 March 2009) | St Helier | St Helier |
| William King | Jersey JE2 3QE | Jersey JE4 OFF |
| (Resigned | | |
| 13 March 2009) | Investment Advisor | Nominated Adviser |
| Sir Timothy Daunt | Civitas Property | and Broker |
| (Resigned | Partners S.A. | Singer Capital |
| 13 March 2009) | (Appointed 2 | Markets Ltd |
| | December 2009) | (Appointed 5 |
| | East 53rd Street | August 2009) |
| | MMG Building 2nd | One Hanover |
| | Floor | Street |
| | Marbella | London W1S 1YZ |
| | Republic of Panama | |
| | | Administrator and |
| | DCM Danismanlik | Secretary |
| | A.S. | Herald Fund |
| | (See Note 25) | Services Ltd |
| | Macka C No.32 | (Appointed 9 |
| | Normanli A. | November 2009) |
| | Zemin Kat D:4 | Herald House |
| | Sisli 34367 | 8 Hill Street |
| | Istanbul | St Helier |
| | Turkey | Jersey JE4 9XB |
| | | |
| | Auditors to the | |
| | Fund | |
| | PricewaterhouseCoopers | |
| | CI LLP | |
| | Twenty Two Colomberie | |
| | St Helier | |
| | Jersey JE1 4XA | |
+--------------------+------------------------+-------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLFVEFVIILII
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