TIDMOTM
RNS Number : 9037A
Ottoman Fund Limited (The)
08 February 2011
THE OTTOMAN FUND LIMITED (the "Company")
Notice of Final Results for the year ended 31 August 2010
The Company is pleased to announce as follows its final results
for the year ended 31 August 2010, a full copy of which is also
available on the Company's website: www.theottomanfund.com.
Chairman's Statement
Dear Shareholders:
Our net asset value per share as at 31 August 2010 was 81.6
pence as compared with 83.2 pence as at 28 February 2010. Because
we are internally managed our running costs are low, though the
Company has had unusual expenses this year in connection with
improving and marketing Alanya.
Two appraisers value our assets: Savills and TSKB. We use the
Savills valuation for the disclosure in our financial statements
and the TSKB valuation as a check on the Savills one. Historically
both companies have tended to reach fairly similar conclusions.
Average
Savills TSKB Average 28 February
31 August 2010 31 August 2010 31 August 2010 2010
($) ($) ($) ($)
--------- ---------------- ---------------- ---------------- -------------
Riva 100,800,000 104,867,000 102,833,500 103,410,662
--------- ---------------- ---------------- ---------------- -------------
Bodrum 32,626,742 40,294,000 36,460,371 35,965,611
--------- ---------------- ---------------- ---------------- -------------
Kazikli 8,663,415 10,058,000 9,360,708 9,272,900
--------- ---------------- ---------------- ---------------- -------------
Alanya 10,852,413 10,194,515 10,523,464 12,019,709
--------- ---------------- ---------------- ---------------- -------------
TOTAL 152,942,570 165,413,515 159,178,043 160,668,882
========= ================ ================ ================ =============
These valuation figures must be taken with a strong caveat.
Three of the Company's assets (Riva, Bodrum and Kazikli) are sui
generis. Each is unique because of its size and location. So the
most robust valuation methodology - completed sales of comparable
assets - is only of limited applicability to these valuation
figures. Nonetheless, in consultation with our advisor, we use
these numbers in determining our target for sales prices. Bids
substantially at variance with these figures are unlikely to be
successful, at least in the current economic environment.
These financial statements reflect about eight months of the
Company's new structure - internalization of management at the
Board level with an external advisor, Civitas Property Partners
S.A., on the ground in Turkey. Perhaps that is an insufficient
period to measure progress, but we are not satisfied with our
results over the last year, whether measured on a fiscal or
calendar year basis. Our objective, as we have announced
previously, is to sell assets and return capital to our
shareholders. We have not had any major asset sales over the last
year, though we have received several bids.
In connection with Riva, our most valuable asset, we obtained
1/1000 zoning and following financial year end have paid the
municipality GBP2 309,684 for the final permit prerequisite to
building. Although it is quite unlikely that we will be involved in
the development of Riva, it is our expectation that the final
zoning permission should increase Riva's value. Riva as a whole
comprises 16 million square meters of developable land. About 3.9
million square meters of that land has been zoned and of the zoned
portion we own 935,000 square meters. Ours is by far the largest
piece of zoned land in Riva. There are many reasons why Riva should
eventually be successful including that it is the largest plot of
undeveloped land within commuting distance to Istanbul. But Riva is
a large project that requires substantial resources.
We have received approaches from prospective buyers interested
either in an outright purchase or a revenue sharing agreement. But
we have yet to be offered a price or arrangement that we find
acceptable.
There have also been developments in connection with Bodrum and
Kazikli. Though as of the date of this letter neither has proceeded
to contract.
Our biggest disappointment has been in the marketing of the
Alanya units. While Alanya represents less than ten per cent of our
assets, it has been the most problematic asset. When the Company
was floated its first investment was in 107 units in a holiday
development in Alanya (the Company bought half while the developer
retained and sold the remainder). The initial targets were UK and
Irish investors looking for holiday homes on the Mediterranean. The
Company's initial marketing efforts were slow. Although the
developer, who owned half the development, sold his entire stake,
we sold only a few.
Since becoming Company Chairman I have made several trips to
Alanya. I was initially quite disappointed with what I saw. The
properties had not been properly maintained and there were
construction issues. Our advisor has taken the lead in forcing the
remediation of defects and ensuring proper upkeep. I am satisfied
that it is now one of the more attractive properties in Alanya and
seems to offer value commensurate with price. But following the
financial dislocation of the last few years there no longer is a
market for these types of assets in the UK or Ireland. The target
market is now Russia. Over the last year our advisor has
participated in a number of exhibitions in Russia and we have
invested GBP504,618 in improving and marketing the property.
Nonetheless our success has been limited. Part of the explanation
is that there is a glut of product on the market. Our advisor
estimates that 11,000 units in Alanya are up for sale and
prospective buyers of holiday property are more limited than they
were at the height of the boom.
Nonetheless we are not satisfied with relying on "market
conditions" as a full explanation of our lack of success since at
the right price any asset should be saleable. We have consequently
decided to increase commissions and use external brokers. Following
year end, we have asked our advisor to undertake a comprehensive
analysis of the Alanya holiday market so we can increase sales. I
hope that over the next year these steps will produce results.
Turkey has over the last several years been one of the world's
fastest growing economies. Government debt is low. The banking
system has been healthy since the banking crisis in 2001. The
Turkish property market is healthy and there is liquidity. We are
hopeful that these factors will assist us in monetizing assets and
returning capital over the next year.
John D. Chapman
Chairman
Consolidated Statement
of Comprehensive Income
For the year ended 31 August 2010
Year ended Year ended
31 August 31 August
2010 2009
GBP GBP
Revenue
Bank interest 152,141 421,225
---------- ----------
Total revenue 152,141 421,225
Operating expenses
Management/advisory fee (600,621) (1,522,740)
Other operating expenses (1,734,182) (1,121,090)
Total operating expenses (2,334,803) (2,643,830)
Foreign exchange (losses)/gains (682,998) 786,720
Loss before tax (2,865,660) (1,435,885)
---------- ----------
Tax - (24,126)
Loss for the year (2,865,660) (1,460,011)
---------- ----------
Other comprehensive income:
Foreign exchange on subsidiary translation 258,424 270,522
Other comprehensive income for the year 258,424 270,522
---------- ----------
Total comprehensive loss for the year (2,607,236) (1,189,489)
---------- ----------
Loss attributable to:
Equity shareholders of the Company (2,865,651) (1,460,005)
Minority interests (9) (6)
---------- ----------
(2,865,660) (1,460,011)
---------- ----------
Total comprehensive loss attributable to:
Equity shareholders of the Company (2,607,248) (1,189,505)
Minority interests 12 16
---------- ----------
(2,607,236) (1,189,489)
---------- ----------
Basic and diluted earnings per share (pence) (2.13) (1.08)
All items in the above statement derive from continuing
operations.
Consolidated Statement of Financial Position
As at 31 August 2010
2010 2009
GBP GBP
Assets
Non-current assets
Intangible assets 2,687 3,226
Plant and equipment 7,548 20,021
Inventories 92,474,333 92,494,972
Loans and receivables 7,470,112 9,014,112
----------- -----------
99,954,680 101,532,331
Current assets
Other receivables 1,055,067 986,075
Cash and cash equivalents 9,249,402 18,366,304
----------- -----------
10,304,469 19,352,379
Total assets 110,259,149 120,884,710
----------- -----------
Liabilities
Current liabilities
Other payables (335,052) (353,340)
Net assets 109,924,097 120,531,370
----------- -----------
Equity
Share capital 127,483,015 135,483,052
Retained earnings (17,775,471) (14,909,820)
Translation reserve 216,508 (41,895)
----------- -----------
Equity attributable to owners of the parent 109,924,052 120,531,337
Minority interests' equity 45 33
----------- -----------
Total equity 109,924,097 120,531,370
----------- -----------
Net asset value per ordinary share (pence) 81.6 89.4
Consolidated Statement of
Changes in Equity
Share Retained Translation Minority
capital earnings Reserve interest Total
GBP GBP GBP GBP GBP
For the year
ended 31
August 2009
As at 1
September
2008 135,483,052 (13,449,815) (312,395) 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 (14,909,820) (41,895) 33 120,531,370
----------- ----------- ----------- -------- -----------
For the year
ended 31
August 2010
As at 1
September
2009 135,483,052 (14,909,820) (41,895) 33 120,531,370
Return of
capital (8,000,037) - - - (8,000,037)
Loss for the
year - (2,865,651) - (9) (2,865,660)
Foreign
exchange on
subsidiary
translation - - 258,403 21 258,424
At 31 August
2010 127,483,015 (17,775,471) 216,508 45 109,924,097
----------- ----------- ----------- -------- -----------
Consolidated Statement of Cash Flows
Year ended Year ended
31 August 31 August
2010 2009
GBP GBP
Cash flow from operating activities
Net loss before tax (2,865,660) (1,435,885)
Adjustments for:
Interest (152,141) (421,225)
Depreciation 7,274 20,850
Amortisation 1,455 1,750
Previously capitalised expenses written off 342,134 -
(2,666,938) (1,834,510)
Net foreign exchange losses/(gains) 941,395 (516,198)
(Increase)/decrease in
other receivables (68,992) 29,352
(Decrease)/increase in
other payables (18,288) 38,818
---------- ----------
Net cash outflow from operating activities
before interest, depreciation, amortisation and
tax (1,812,823) (2,282,538)
Interest received 152,141 421,225
Tax - (24,126)
---------- ----------
Net cash outflow from operating activities (1,660,682) (1,885,439)
Cash flow from investing activities
Purchase of inventories (321,495) (991,718)
Purchase of plant and equipment (412) (3,171)
Sale of plant and equipment 5,638 -
Purchase of intangible assets (916) -
Repayment of loan to developer 834,294 277,199
---------- ----------
Net cash inflow/(outflow) from investing
activities 517,109 (717,690)
Cash flow from financing activities
Return of Capital (8,000,037) -
---------- ----------
Net cash outflow from financing activities (8,000,037) -
Net decrease in cash and cash equivalents (9,143,610) (2,603,129)
Cash and cash equivalents at start of the year 18,366,304 20,900,040
Effect of foreign exchange rates 26,708 69,393
---------- ----------
Cash and cash equivalents at end of the year 9,249,402 18,366,304
---------- ----------
Notes to the financial statements
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 4 February 2011.
Management/Advisory fee
2010 2009
GBP GBP
Management fee 600,621 1,522,740
------- ---------
During the year DCM Capital Management (Jersey) Ltd were paid
GBP314,938 (2009:GBP1,522,740) under the revised management
agreement. Up until 31 December 2008 the manager had received a fee
of 2% of committed capital. This agreement terminated on 22
February 2010 in line with the restructuring of the Group and the
internalisation of the management of the Group.
Civitas Property Partners S.A. were appointed as Investment
Advisors to the Group on 2 December 2009. The advisory fee
structure is heavily incentive-based with an annual fixed component
of EUR425,000 and an incentive component based on a percentage of
realisation value. Civitas were paid GBP285,683 (2009:Nil) during
the period.
Other operating expenses
2010 2009
GBP GBP
Legal and professional fees 96,596 72,911
Advisory and consultancy fees 162,414 216,173
Marketing 578,445 93,840
Travel and subsistence 70,590 52,441
Directors' remuneration 138,385 127,486
Administration fees 122,099 108,414
Audit services 53,764 39,260
Depreciation 7,247 20,850
Amortisation 1,455 1,750
Other operating expenses 503,187 387,965
--------- ---------
1,734,182 1,121,090
--------- ---------
The Group has no employees.
Inventories
2010 2009
GBP GBP
Opening book cost 92,494,972 91,503,254
Purchases at cost 321,495 991,718
Previously capitalised expenses written off (342,134) -
----------- -----------
Closing book cost 92,474,333 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 Group
has a 50% share, in the Kazikli village, in the district of
Milas.
In accordance with the accounting policy, 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 market value. On
this basis, a total market value of GBP91.6 million (2009:GBP91.9
million) has been determined for inventories held by the Group at
the balance sheet date. In accordance with the Group's accounting
policy, unrealised gains or losses as a result of this valuation
have not been recognised in the consolidated income statement.
Loans and receivables
2010 2009
GBP GBP
Opening balance 9,014,112 8,573,984
New loans - -
Repayment of loan (834,294) (277,199)
Exchange (loss)/gain on revaluation of loans (709,706) 717,327
--------- ---------
Closing balance 7,470,112 9,014,112
--------- ---------
The third party loan made to the developer, Okyap1 In aat ve
Muhendislik ve Ozel E itim Hizmetleri Sanayi ve Ticaret Limited
irketi ("Okyap1"), in respect of the investment in the Riverside
Resort in Alanya is for GBP7,470,112 (2009:GBP9,014,112) and is
secured by a mortgage over the Alanya property. No interest is
accruing and repayments are based upon sales of the
development.
Enquiries:
Singer Capital Markets
James Maxwell 0203 205 7500
Company Secretary
Herald Fund Services Limited 01534 610 610
This information is provided by RNS
The company news service from the London Stock Exchange
END
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