TIDMOTM
RNS Number : 5945M
Ottoman Fund Limited (The)
26 May 2010
THE OTTOMAN FUND LIMITED
Condensed Unaudited Interim Financial Statements
For the six months ended 28 February 2010
Chairman's Statement
Dear Shareholders:
Our net asset value per share as at 28 February 2010 was 83.2 pence as compared
with 89.4 pence as at 31 August, 2009. The primary reasons for this reduction
in NAV were the return of GBP8 million in capital in February and a reduction of
about 5% in the appraised value of our portfolio. As I have explained
previously, for each valuation period we retain two appraisers, Savills and
TKSB. We use the Savills valuations for the disclosure in our financial
statements and the TKSB valuation as a check on the Savills one. Historically
both valuation companies have tended to reach similar conclusions.
+----------------+------------------+------------------+------------------+----------------+
| | Savills | TKSB | Average | Average |
+----------------+------------------+------------------+------------------+----------------+
| |28 February 2010 | 28 February 2010 | 28 February 2010 |31 August 2009 |
+----------------+------------------+------------------+------------------+----------------+
| | ($) | ($) | ($) | ($) |
+----------------+------------------+------------------+------------------+----------------+
| Riva | 100,574,323 | 106,250,000 | 103,410,662 | 108,098,500 |
+----------------+------------------+------------------+------------------+----------------+
| Bodrum | 31,637,222 | 40,294,000 | 35,965,611 | 38,731,500 |
+----------------+------------------+------------------+------------------+----------------+
| Kazikli | 8,472,799 | 10,073,000 | 9,272,900 | 9,761,500 |
+----------------+------------------+------------------+------------------+----------------+
| Alanya | 11,409,526 | 12,629,892 | 12,019,709 | 12,716,629 |
+----------------+------------------+------------------+------------------+----------------+
| TOTAL | 152,090,870 | 169,246,892 | 160,668,882 | 169,308,129 |
+----------------+------------------+------------------+------------------+----------------+
In February, shareholders approved a restructuring that enabled us to become
self managed with an external advisor, Civitas Property Partners SA. As a
consequence, our costs will be substantially reduced since our advisor is not
compensated according to assets under management, but, rather with a fixed fee
and incentives to sell assets at favourable prices or enter into favourable
development agreements. Since our shareholders approved the restructuring, the
advisor has taken charge of advancing the approvals process for the Riva land,
soliciting bids and co-development proposals for Riva and Bodrum, marketing the
Alanya units by exhibiting at a number of trade shows in northern Europe and
Russia, and overseeing the correction of the defects at Alanya. We have seen a
fair degree of interest in units at Alanya and are hopeful that over the summer
there will be a significant numbers of sales. Progress has been made in
connection with the approvals for Riva and we expect that before the end of the
year we will be eligible to apply for a construction permit. In connection with
Bodrum, we are at a point where the asset can be sold or developed. Kazikli is
not part of our advisor's mandate since it is an interest in a joint venture
rather than a direct interest in property. Our strategy there is to sell that
investment. There have been several expressions of interest but so far no
transaction.
For much of the last year, the Turkish economy has been in recession. The
economy in 2009 contracted about 5% and unemployment rose from 11% to 16%.
Major manufacturing sectors have been hit with a 33% decrease in exports, mainly
in the textile and automotive sectors. The property sector, while affected, has
not been hit as hard as in many other countries. This is primarily because of
lower levels of leverage, an immature mortgage market, and the absence of
securitization and other financial instruments. The economy now seems on the
mend. Lower interest rates are positively affecting home sales while prime
residential and commercial property prices are stable. But given the glut of
property assets for sale across the globe there has been little foreign interest
in Turkish assets and transaction volume is limited.
I look forward to writing again when we release our annual report for the year
ended 31 August 2010.
Respectfully yours,
John D. Chapman
Chairman
25 May 2010
Independent review report to The Ottoman Fund Limited
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half yearly report for the six months ended 28 February 2010,
which comprise consolidated statement of comprehensive income, consolidated
statement of changes in equity, consolidated balance sheet, consolidated cash
flow statement, comparative figures and associated notes.
We have read the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with IAS 34 'Interim Financial Reporting' which
requires that the financial information must be presented and prepared in a form
consistent with that which was adopted in the company's annual financial
statements.
As disclosed in note 1, the annual financial statements of the company are
prepared in accordance with International Financial Reporting Standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with the basis of preparation set out in
note 1(a).
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the company for the purpose of the AIM Rules for Companies and for no other
purpose. We do not, in producing this report, 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.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity' issued by the International Auditing and
Assurance Standards Board. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Independent review report to The Ottoman Fund Limited (continued)
The maintenance and integrity of The Ottoman Fund Limited's 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 28 February 2010 is not prepared, in all
material respects, in accordance with IAS 34 'Interim Financial Reporting'.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
26 May 2010
Consolidated Statement of Comprehensive Income
+----------------------+-------+--------------+--------------+-------------+
| | | (unaudited) | (unaudited) | (audited) |
+----------------------+-------+--------------+--------------+-------------+
| | | Six months | Six months | Year ended |
| | | ended | ended | |
+----------------------+-------+--------------+--------------+-------------+
| | | 28 February | 28 February | 31 August |
| | | 2010 | 2009 | 2009 |
+----------------------+-------+--------------+--------------+-------------+
| | notes | GBP | GBP | GBP |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Income | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Bank Interest | | 68,329 | 314,949 | 421,225 |
+----------------------+-------+--------------+--------------+-------------+
| Total income | | 68,329 | 314,949 | 421,225 |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Operating Expenses | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Management fee | 2 | (413,993) | (1,132,740) | (1,522,740) |
+----------------------+-------+--------------+--------------+-------------+
| Other operating | | (444,856) | (578,879) | (1,121,090) |
| expenses | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Foreign exchange | | 174,201 | 448,219 | 786,720 |
| gains | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Total operating | | (684,648) | (1,263,400) | (1,857,110) |
| expenses | | | | |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Loss before taxation | | (616,319) | (948,451) | (1,435,885) |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Taxation | | - | (27,153) | (24,126) |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Loss for the period | | (616,319) | (975,604) | (1,460,011) |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Attributable to: | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Equity shareholders | | | | |
| of the company | | (616,314) | (975,600) | (1,460,005) |
+----------------------+-------+--------------+--------------+-------------+
| Minority interest | | (5) | (4) | (6) |
+----------------------+-------+--------------+--------------+-------------+
| | | (616,319) | (975,604) | (1,460,011) |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| Basic and diluted | | | | |
| earnings per share | 3 | (0.46) | (0.72) | (1.08) |
| (pence) | | | | |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
| | | | | |
+----------------------+-------+--------------+--------------+-------------+
The accompanying notes on pages 8 to 14 are an integral part of the financial
statements.
Consolidated Balance Sheet as at 28 February 2010
+----------------------+-------+--------------+----------------------+--------------+
| | | (unaudited) | (unaudited) | (audited) |
+----------------------+-------+--------------+----------------------+--------------+
| | | Six months | Six months | Year ended |
| | | ended | ended | |
+----------------------+-------+--------------+----------------------+--------------+
| | | 28 February | 28 February | 31 August |
| | | 2010 | 2009 | 2009 |
+----------------------+-------+--------------+----------------------+--------------+
| | notes | GBP | GBP | GBP |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Non-current assets | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Intangible assets | 4 | 2,117 | 5,884 | 3,226 |
+----------------------+-------+--------------+----------------------+--------------+
| Plant and Equipment | 5 | 13,624 | 27,514 | 20,021 |
+----------------------+-------+--------------+----------------------+--------------+
| Inventories | 6 | 92,631,946 | 92,165,002 | 92,494,972 |
+----------------------+-------+--------------+----------------------+--------------+
| Loans and | 7 | 8,515,984 | 8,685,404 | 9,014,112 |
| receivables | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | 101,163,671 | 100,883,804 | 101,532,331 |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Current assets | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Other receivables | | 1,071,485 | 859,668 | 986,075 |
+----------------------+-------+--------------+----------------------+--------------+
| Cash and cash | | 10,173,221 | 20,069,747 | 18,366,304 |
| equivalents | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | 11,244,706 | 20,929,415 | 19,352,379 |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Total assets | | 112,408,377 | 121,813,219 | 120,884,710 |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Current liabilities | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Other payables | | (257,969) | (257,600) | (353,340) |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Net assets | | 112,150,408 | 121,555,619 | 120,531,370 |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Equity | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Share capital | 8 | 127,483,015 | 135,483,052 | 135,483,052 |
+----------------------+-------+--------------+----------------------+--------------+
| Retained earnings | | (15,332,654) | (13,927,511) | (14,951,715) |
+----------------------+-------+--------------+----------------------+--------------+
| Equity attributable | | 112,150,361 | 121,555,541 | 120,531,337 |
| to owners of the | | | | |
| parent | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Minority interest | | 47 | 78 | 33 |
| equity | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Total Equity | | 112,150,408 | 121,555,619 | 120,531,370 |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| Net asset value per | 9 | 83.2 | 90.2 | 89.4 |
| Ordinary share | | | | |
| (pence) | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
| | | | | |
+----------------------+-------+--------------+----------------------+--------------+
The accompanying notes on pages 8 to 14 are an integral part of the financial
statements.
These financial statements were approved by the Board of Directors on 25 May
2010.
Antony R Gardner-Hillman Andrew
I Wignall
Consolidated Statement of Changes in Equity
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Group | Share | Retained | Minority | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | capital | earnings | interest | Total |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | GBP | GBP | GBP | GBP |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| For the six months ended 28 February 2010 (unaudited) | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| As at 1 September 2009 | 135,483,052 | (14,951,715) | 33 | 120,531,370 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Reduction of Ordinary Share Capital | (8,000,037) | - | - | (8,000,037) |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Loss for the period | - | (616,314) | (5) | (616,319) |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Foreign exchange on subsidiary translation | - | 235,375 | 19 | 235,394 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| At 28 February 2010 | 127,483,015 | (15,332,654) | 47 | 112,150,408 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| For the six months ended 28 February 2009 (unaudited) | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| As at 1 September 2008 | 135,483,052 | (13,762,210) | 17 | 121,720,859 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Loss for the period | - | (975,600) | (4) | (975,604) |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| Foreign exchange on subsidiary translation | - | 810,299 | 65 | 810,364 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| At 28 February 2009 | 135,483,052 | (13,927,511) | 78 | 121,555,619 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| For the year ended 31 August 2009 (audited) | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| 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 subsidiary translation | - | 270,500 | 22 | 270,522 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| At 31 August 2009 | 135,483,052 | (14,951,715) | 33 | 120,531,370 |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
| | | | | |
+-------------------------------------------------------+--------------------+-----------------+-----------------+---------------+
The accompanying notes on pages 8 to 14 are an integral part of the financial
statements.
Consolidated Statement of Cash Flows
+-----------------------------+--------------+--------------+-------------+
| Group | (unaudited) | (unaudited) | (audited) |
+-----------------------------+--------------+--------------+-------------+
| | Six months | Six months | Year ended |
| | ended | ended | |
+-----------------------------+--------------+--------------+-------------+
| | 28 February | 28 February | 31 August |
| | 2010 | 2009 | 2009 |
+-----------------------------+--------------+--------------+-------------+
| | GBP | GBP | GBP |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Cash flow from operating | | | |
| activities | | | |
+-----------------------------+--------------+--------------+-------------+
| Net Loss for the period | (616,319) | (948,451) | (1,435,885) |
+-----------------------------+--------------+--------------+-------------+
| Net foreign exchange | 174,201 | (448,219) | (786,720) |
| (gains)/losses | | | |
+-----------------------------+--------------+--------------+-------------+
| (Increase)/decrease in | (85,410) | 155,759 | 29,352 |
| other receivables | | | |
+-----------------------------+--------------+--------------+-------------+
| Increase/(decrease) in | (95,371) | (56,922) | 38,818 |
| other payables | | | |
+-----------------------------+--------------+--------------+-------------+
| Net cash outflow from | (622,899) | (1,297,833) | (2,154,435) |
| operating activities before | | | |
| interest and tax | | | |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Tax | - | (27,153) | (24,126) |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Net cash outflow from | (622,899) | (1,324,986) | (2,178,561) |
| operating activities | | | |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Purchase of inventories | (136,974) | (661,748) | (991,718) |
+-----------------------------+--------------+--------------+-------------+
| Purchase of plant and | (414) | (627) | (3,171) |
| equipment | | | |
+-----------------------------+--------------+--------------+-------------+
| Purchase of intangible | - | (2,544) | - |
| assets | | | |
+-----------------------------+--------------+--------------+-------------+
| Loan to developer | 657,370 | 255,328 | 277,199 |
+-----------------------------+--------------+--------------+-------------+
| Net cash outflow from | 519,982 | (409,591) | (717,690) |
| investing activities | | | |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Cash flow from financing | | | |
| activities | | | |
+-----------------------------+--------------+--------------+-------------+
| Capital distribution | (8,000,037) | - | - |
+-----------------------------+--------------+--------------+-------------+
| Net cash outflow from | | | |
| financing activities | (8,000,037) | - | - |
+-----------------------------+--------------+--------------+-------------+
| Net decrease in cash and | | | |
| cash equivalents | (8,102,954) | (1,734,577) | (2,896,251) |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| Cash and cash equivalents | 18,366,304 | 20,900,040 | 20,900,040 |
| at start of period | | | |
+-----------------------------+--------------+--------------+-------------+
| Effect of foreign exchange | (90,129) | 904,284 | 362,515 |
| rates | | | |
+-----------------------------+--------------+--------------+-------------+
| Cash and cash equivalents | 10,173,221 | 20,069,747 | 18,366,304 |
| at end of period | | | |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
| | | | |
+-----------------------------+--------------+--------------+-------------+
The accompanying notes on pages 8 to 14 are an integral part of the financial
statements.
Notes to the financial statements
1. Accounting policies
The annual financial statements for the year ended 31 August 2009 were prepared
in accordance with International Financial Reporting Standards ("IFRS") issued
by the International Accounting Standards Board (IASB) and interpretations
issued by the International Financial Reporting Committee of the IASB (IFRIC).
The accounting policies adopted in the preparation of the half yearly financial
report are consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 31 August 2009.
(a) Basis of preparation
The interim financial statements have been prepared on a historical cost basis,
except for certain financial instruments detailed below.
The interim financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting.
(b) Basis of consolidation
Subsidiaries
The interim financial statements incorporate the financial statements of the
Company and entities controlled by the Company (its subsidiaries) made up to 28
February 2010. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control
commences up to the date that control ceases.
Joint ventures
A joint venture is a contractual agreement whereby two or more entities
undertake an activity that is the subject of joint control. The results and
assets and liabilities of joint ventures held by subsidiaries are incorporated
in these financial statements using the proportionate consolidation method.
(c) Revenue recognition
Interest receivable on fixed interest securities is recognised 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 consolidated statement of comprehensive
income in the period in which the services or goods are provided to the Group
except for expenses which are incidental to the disposal of an investment which
are deducted from the disposal proceeds of the investment.
(e) Noncurrentassets
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.
Notes to the financial statements (continued)
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 | 3 |
| improvements | years |
+------------------+-------+
| Furniture and | 5 |
| fittings | years |
+------------------+-------+
| Computer | 4 |
| hardware | years |
+------------------+-------+
| Computer | 3 |
| software | 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 consolidated statement of comprehensive income.
Inventories
Inventories are stated at the lower of cost and net realisable value. Land
inventory is recognised at the time a liability is recognised - generally after
the exchange of unconditional contracts.
Loans and receivables
Loans and receivables are recognised on an amortised cost basis. Where they are
denominated in a foreign currency they are translated at the prevailing balance
sheet exchange rate.
(f) Cash and cash equivalents
Cash and cash equivalents comprise current deposits with banks.
(g) Taxation
The Company is zero rated for Jersey taxation purposes. 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.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more tax in the future or right to
pay less tax in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted.
(h) Foreign currency
The results and financial position of the Group are expressed in pounds
sterling, which is the functional currency of the Group.
Notes to the financial statements (continued)
(h) Foreign currency (continued)
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary items and non monetary assets and liabilities that are fair
valued and that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Exchange differences on translation
of the Group's net investment in foreign operations are recognised directly in
equity.
(i) Share capital
Ordinary shares are classified as equity. External costs directly attributable
to the issue of new shares are shown as a deduction to reserves.
2. Management fee
+--------------------+----------------+---------------+--------------------------+
| | Six months | Six months | Year ended |
| | ended | ended | |
+--------------------+----------------+---------------+--------------------------+
| | 28 February | 29 February | 31 August 2009 |
| | 2010 | 2009 | |
+--------------------+----------------+---------------+--------------------------+
| | GBP | GBP | GBP |
+--------------------+----------------+---------------+--------------------------+
| Management fee | 413,993 | 1,132,740 | 1,522,740 |
+--------------------+----------------+---------------+--------------------------+
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 is reduced to GBP32,500 per month and
from 1 February 2010 will be paid on a weekly basis up to the date of
termination.
Civitas Property Partners S.A. were appointed as Investment Advisors to the
Company on 2 December 2009. The Advisory Fee structure is heavily incentive
based with an annual fixed component of EUR425,000 per annum and an incentive
component based on a percentage of realisation value.
3. Earnings per share
The basic and diluted earnings per ordinary share is based on the net loss for
the period of GBP616,319 and 134,764,709 shares, being the weighted average
number of ordinary shares in issue. (28 February 2009: loss GBP975,604 and
134,764,709 shares; 31 August 2009 loss GBP1,460,011 on 134,864,709 shares).
4. Intangible assets
+--------------------+----------------+---------------+----------------+
| | Six months | Six months | Year ended |
| | ended | ended 29 | 31 August 2009 |
| | 28 February | February 2009 | |
| | 2010 | | |
+--------------------+----------------+---------------+----------------+
| | GBP | GBP | GBP |
+--------------------+----------------+---------------+----------------+
| Opening Book Cost | 3,226 | 4,976 | 4,976 |
+--------------------+----------------+---------------+----------------+
| Additions | - | 2,544 | - |
+--------------------+----------------+---------------+----------------+
| Amortisation and | (1,109) | (1,636) | (1,750) |
| impairment charge | | | |
+--------------------+----------------+---------------+----------------+
| Closing net book | 2,117 | 5,884 | 3,226 |
| cost | | | |
+--------------------+----------------+---------------+----------------+
The intangible asset relates to a CRM program, with a useful life of 6 years.
There has been no impairment during the year.
Notes to the financial statements (continued)
5. Plant and equipment
+--------------------+----------------+---------------+-----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 31 August 2009 |
| | 28 February | 29 February | |
| | 2010 | 2009 | |
+--------------------+----------------+---------------+-----------------+
| | GBP | GBP | GBP |
+--------------------+----------------+---------------+-----------------+
| Opening Book Cost | 20,021 | 37,700 | 37,700 |
+--------------------+----------------+---------------+-----------------+
| Additions | 414 | 627 | 3,171 |
+--------------------+----------------+---------------+-----------------+
| Disposals | - | (2,298) | - |
+--------------------+----------------+---------------+-----------------+
| Depreciation | (6,811) | (8,515) | (20,850) |
+--------------------+----------------+---------------+-----------------+
| Closing net book | 13,624 | 27,514 | 20,021 |
| cost | | | |
+--------------------+----------------+---------------+-----------------+
6. Inventories
+--------------------+----------------+---------------+-----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 31 August 2009 |
| | 28 February | 29 February | |
| | 2010 | 2009 | |
+--------------------+----------------+---------------+-----------------+
| | GBP | GBP | GBP |
+--------------------+----------------+---------------+-----------------+
| Opening book cost | 92,494,972 | 91,503,254 | 91,503,254 |
+--------------------+----------------+---------------+-----------------+
| Purchases at cost | 136,974 | 661,748 | 991,718 |
+--------------------+----------------+---------------+-----------------+
| Closing book cost | 92,631,946 | 92,165,002 | 92,494,972 |
+--------------------+----------------+---------------+-----------------+
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 Fund has a 50% share, in the Kazikli village, in the
district of Milas.
7. Loans and receivables
+--------------------+----------------+---------------+-----------------+
| | Six months | Six months | Year ended |
| | ended | ended | 31 August 2009 |
| | 28 February | 29 February | |
| | 2010 | 2009 | |
+--------------------+----------------+---------------+-----------------+
| | GBP | GBP | GBP |
+--------------------+----------------+---------------+-----------------+
| Opening Balance | 9,014,112 | 8,573,984 | 8,573,984 |
+--------------------+----------------+---------------+-----------------+
| Repayment of loan | (657,370) | (255,328) | (277,199) |
+--------------------+----------------+---------------+-----------------+
| Unrealised | - | (499,727) | - |
| depreciation | | | |
+--------------------+----------------+---------------+-----------------+
| Exchange gain | 159,242 | 866,475 | 717,327 |
| revaluation of | | | |
| loan | | | |
+--------------------+----------------+---------------+-----------------+
| Closing Balance | 8,515,984 | 8,685,404 | 9,014,112 |
+--------------------+----------------+---------------+-----------------+
The third party loan is EUR10,034,309 in respect of the investment in the
Riverside Resort in Alanya and secured by a mortgage. No interest is accruing
and repayments are based upon sales of the development. The intercompany loans
have no interest accruing and no repayment date and principally relate to the
purchase and development of land.
8. 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 | 127,483,015 |
| ordinary | |
| shares of | |
| no par | |
| value | |
+-------------+-------------+
Notes to the financial statements (continued)
8. Called up share capital (continued)
On incorporation of the Company, 2 founder shares of no par value were issued to
the Manager. Subsequent to the termination of the management agreement in
February 2010, the 2 founder shares were transferred to The Herald Charitable
Trust. These shares are not eligible for participation in the Fund investments
and carry no voting rights at general meetings of the Company.
9. Net asset value per share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of GBP112,150,408 and 134,764,709 shares (28 February
2009 GBP121,555,619 and 134,764,709 shares; 31 August 2009 GBP120,531,370 on
134,764,709 shares).
10. Financial instruments
The disclosure of the Fund's financial instruments has been limited to the
consolidated financial position. This approach has been adopted as this covers
all of the principle 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 principal risks the Company faces from its financial instruments are:
(i) Market risk
(ii) Credit risk
(iii) Foreign currency risk
(iv) Interest rate risk
(v) Liquidity risk
As part of regular Board functions, the Board reviews each of these risks. As
required by IAS 32: Disclosure and Presentation, an analysis of financial assets
and liabilities, which identifies the risk to the Company of holding such items,
is given below.
(i) Market price risk
Market price risk arises mainly from uncertainty about future prices of
financial instruments used in the Company's operations. It represents the
potential loss the Fund might suffer through holding market positions as a
consequence of price movements and movements in exchange rates.
(ii) Credit risk
The Group places loans with third parties and is therefore potentially at risk
from the failure of any such third party of which it is a debtor. Recovery of
the loans at 28 February 2010 is dependent on successful completion and sale of
properties by the third party developer. Further details of loans made to
subsidiaries and developers can be found in note 7. The largest counterparty
risk is with the Company's bankers. Bankruptcy or insolvency of Deutsche Bank
International may cause the Company's rights with respect to cash held to be
delayed or limited.
The Group's principal financial assets are loans and receivables, other
receivables and cash and cash equivalents. The maximum exposure of the Group to
the credit risk is the carrying amount of each class of financial assets.
Notes to the financial statements (continued)
(ii) Credit risk (continued)
Loans and receivables are represented by loans to and receivables from third
parties.
Other receivables are represented mainly by prepayments and other debtors where
no significant credit risk is recognised.
(iii) Foreign currency risk
The Group operates Sterling, Euro, US Dollar and Turkish Lira bank accounts.
Exchange gains or losses arise as a result of the movement in the exchange rate
between the date of the transaction denominated in a currency other than
Sterling and its settlement.
Currency rate exposure
An analysis of the Group's currency exposure is detailed below:
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | | Net | | Net | | Net |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | Non-current | monetary | Non-current | monetary | Non-current | monetary |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | assets | assets | assets | assets | assets | assets |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | 28 February | 28 February | 28 February | 28 February | 31 August | 31 August |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | GBP | GBP | GBP | GBP | GBP | GBP |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| Sterling | - | 6,032,724 | - | 14,783,348 | - | 13,887,289 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| Euro | 8,515,984 | 1,682,416 | 8,685,404 | 1,150,637 | 9,014,112 | 1,231,512 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| US Dollar | 92,631,946 | 2,406,015 | 92,165,002 | 4,025,699 | 92,494,972 | 3,140,563 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| Tukish Lira | 15,741 | 865,582 | 33,398 | 712,131 | 23,247 | 739,675 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | 101,163,671 | 10,986,737 | 100,883,804 | 20,671,815 | 101,532,331 | 18,999,039 |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+-------------+------------+
(iv) Interest rate risk
Interest rate movements may affect: (i) the fair value of the investments in
fixed interest rate securities, (ii) the level of income receivable on cash
deposits, (iii) interest payable on the company's variable rate borrowings.
The interest rate profile of the Group excluding short term debtors and
creditors was as follows:
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | | Non- | | Non- | | Non- |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | Floating | interest | Floating | interest | Floating | interest |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | rate | bearing | rate | bearing | rate | bearing |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | 28 February | 28 February | 28 February | 28 February | 31 | 31 |
| | | | | | August | August |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | 2010 | 2010 | 2009 | 2009 | 2009 | 2009 |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | GBP | GBP | GBP | GBP | GBP | GBP |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| Sterling | 6,083,192 | - | 14,891,461 | - | 13,993,334 | - |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| Euro | 1,682,416 | 8,515,984 | 1,150,637 | 8,685,404 | 1.231,512 | 9,014,112 |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| US Dollar | 2,406,017 | 92,631,946 | 4,025,699 | 92,162,002 | 3,140,563 | 92,494,972 |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| Tukish Lira | 1,596 | 15,741 | 1,950 | 33,398 | 895 | 23,247 |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | 10,173,221 | 101,163,671 | 20,069,747 | 100,883,804 | 18,366,304 | 101,532,331 |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
| | | | | | | |
+-------------+-------------+-------------+-------------+-------------+------------+-------------+
Notes to the financial statements (continued)
(v) Liquidity risk
The Group's assets mainly comprise cash balances and realisable investments,
which can be sold to meet funding commitments if necessary. As at 28 February
2010 the Company does not have any significant liabilities due.
11. 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.
Corporate Information
+----------------------+------------------------+--------------------------+
| Directors of the | Registered Office | Legal Advisor (UK) |
| Fund | | |
+----------------------+------------------------+--------------------------+
| John Chapman | Herald House | Travers Smith |
| (Executive | | |
+----------------------+------------------------+--------------------------+
| Chairman) | 8 Hill Street | 10 Snow Hill |
+----------------------+------------------------+--------------------------+
| Anthony | St Helier | London EC1A 2AL |
| Gardner-Hillman | | |
+----------------------+------------------------+--------------------------+
| Eitan Milgram | Jersey JE4 9XB | |
+----------------------+------------------------+--------------------------+
| Angelo Moskov | | |
+----------------------+------------------------+--------------------------+
| Andrew Wignall | Investment Advisor | Legal Advisor (Jersey) |
+----------------------+------------------------+--------------------------+
| | Civitas Property | Ozannes |
| | Partners S.A. | |
+----------------------+------------------------+--------------------------+
| | East 53rd Street | PO Box 733 |
+----------------------+------------------------+--------------------------+
| | MMG Building | 29 The Esplanade |
+----------------------+------------------------+--------------------------+
| | Marbella | St Helier |
+----------------------+------------------------+--------------------------+
| | Republic of Panama | Jersey JE4 OZS |
+----------------------+------------------------+--------------------------+
| | | |
+----------------------+------------------------+--------------------------+
| | Banker | Registrar |
+----------------------+------------------------+--------------------------+
| | Deutsche Bank | Capita IRG (Offshore) |
| | International Ltd | Ltd |
+----------------------+------------------------+--------------------------+
| | P.O. Box 727 | Victoria Chambers |
+----------------------+------------------------+--------------------------+
| | St Pauls Gate | Liberation Square |
+----------------------+------------------------+--------------------------+
| | New Street | 1/3 The Esplanade |
+----------------------+------------------------+--------------------------+
| | St Helier | St Helier |
+----------------------+------------------------+--------------------------+
| | Jersey JE4 8ZB | Jersey JE4 OFF |
+----------------------+------------------------+--------------------------+
| | | |
+----------------------+------------------------+--------------------------+
| | Auditors to the Fund | Nominated Advisor and |
| | | Broker |
+----------------------+------------------------+--------------------------+
| | PricewaterhouseCoopers | Singer Capital Markets |
| | CI LLP | Ltd |
+----------------------+------------------------+--------------------------+
| | Twenty Two Colomberie | One Hanover Street |
+----------------------+------------------------+--------------------------+
| | St Helier | London W1S 1YZ |
+----------------------+------------------------+--------------------------+
| | Jersey JE1 4XA | |
+----------------------+------------------------+--------------------------+
| | | |
+----------------------+------------------------+--------------------------+
| | | Administrator and |
| | | Secretary |
+----------------------+------------------------+--------------------------+
| | | Herald Fund Services Ltd |
+----------------------+------------------------+--------------------------+
| | | 8 Hill Street |
+----------------------+------------------------+--------------------------+
| | | Herald House |
+----------------------+------------------------+--------------------------+
| | | 8 Hill Street |
+----------------------+------------------------+--------------------------+
| | | St Helier |
+----------------------+------------------------+--------------------------+
| | | Jersey JE4 9XB |
+----------------------+------------------------+--------------------------+
| | | |
+----------------------+------------------------+--------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR AFMITMBTTBBM
Ottoman Fund (LSE:OTM)
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