TIDMOTM
RNS Number : 3641E
Ottoman Fund Limited (The)
30 May 2012
The Ottoman Fund Limited (the "Company")
Interim Financial Statements for the period ending 29 February
2012
The Company is pleased to announce as follows its interim
results for the 6 months ended 29 February 2012, 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 29 February 2012 was 70.6
pence as compared with 74.7 pence as at 31 August 2011. The primary
reasons for the reduction in NAV are write downs in the carrying
values of Riva and the Alanya receivable. As I have explained
previously, for each valuation period we retain two appraisers,
Savills and TSKB, to each independently appraise the value of our
properties. We have historically relied on the Savills valuations
for the disclosure in our financial statements and the TSKB
valuation as a check on the Savills one. Historically both
valuation companies have tended to reach similar conclusions. This
time however the valuations diverged substantially and we have used
an average of the two. We and our local advisors believe that the
average of the two valuations most closely approximates what we
would expect to realize upon sale or development. Shareholders
should bear in mind however that there has been a dearth of
comparable transactions given the size of Ottoman's assets.
Savills TSKB Average Average
29 February 2012 29 February 2012 29 February 2012 31 August
2011
($) ($) ($) ($)
--------- ----------------- ----------------- ----------------- -------------
Riva 77,500,000 114,200,000 95,850,000 110,675,000
--------- ----------------- ----------------- ----------------- -------------
Bodrum 29,220,000 36,000,000 32,610,000 34,536,000
--------- ----------------- ----------------- ----------------- -------------
Kazikli 6,950,000 9,195,500 8,072,750 8,450,000
--------- ----------------- ----------------- ----------------- -------------
Alanya 6,400,000 6,400,000 6,400,000 9,189,500
--------- ----------------- ----------------- ----------------- -------------
TOTAL 120,070,000 165,795,500 142,932,750 162,850,500
========= ================= ================= ================= =============
Since I wrote to you last, we have closed the sale of our
interest in Kazikli and received the $9.5 million we were promised.
This figure is approximately what Ottoman paid for the asset in
2006 and approximately what we have carried it at. We expect to
distribute the cash proceeds from that transaction once they are
upstreamed from Turkey to Jersey. We also continue to sell units at
Alanya, and during the current financial year have sold 25 units
with 48 remaining.
We are currently considering a revenue sharing deal with a large
Turkish developer in connection with monetizing our Riva asset. The
broad outlines of the structure are we would contribute our land
and the developer would contribute financing and permitting,
construction and marketing expertise. The revenues upon sale would
then be split according to a formula. Demand for residential units
in and around the Istanbul area continues to be robust while there
is little demand for large tracts of undeveloped land. We may
consider a similar arrangement in connection with our Bodrum asset
as well.
I look forward to writing again when we release our annual
report for the year ended 31 August 2012.
Respectfully yours,
John D. Chapman
Chairman
29 May 2012
Independent review report to The Ottoman Fund Limited
Introduction
We have been engaged by the company to review the condensed
interim financial statements in the half-yearly financial report
for the six months ended 29 February 2012, which comprises the
consolidated statement of comprehensive income, the consolidated
balance sheet, the consolidated statement of changes in equity, the
consolidated statement of cash flows and related 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 interim 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
the AIM Rules for Companies which require that the financial
information must be presented and prepared in a form consistent
with that which will be adopted in the company's annual financial
statements.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards ("IFRSs") as issued by the International
Accounting Standards Board. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting".
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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed unaudited interim financial
statements in the half-yearly financial report for the six months
ended 29 February 2012 is not prepared, in all material respects,
in accordance with International Accounting Standard 34 and the AIM
Rules for Companies.
PricewaterhouseCoopers CI LLP Chartered Accountants 29 May 2012
Jersey, Channel Islands
(a) 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 condensed unaudited interim
financial statements since they were initially presented on the
website.
(b) Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Consolidated Statement of Comprehensive Income
(unaudited) (unaudited) (audited)
Six months Six months Year ended
ended ended
29 February 28 February 31 August 2011
2012 2011
notes GBP GBP GBP
Revenue
Bank Interest 112,846 59,375 153,089
------------ ------------- ---------------
Total income 112,846 59,375 153,089
------------ ------------- ---------------
Operating Expenses
Management fee 3 (128,725) (178,904) (311,890)
Other operating expenses (307,686) (462,209) (917,995)
Inventory impairment 7 (4,390,277) - (4,144,485)
Loan impairment 8 (426,055) - (2,481,093)
Total operating expenses (5,252,743) (641,113) (7,855,463)
------------ ------------- ---------------
Foreign exchange (losses)/gains (212,524) 432,273 (1,318,641)
Loss before tax (5,352,421) (149,465) (9,021,015)
Taxation 1(g) (137,232) - -
Loss for the period (5,489,653) (149,465) (9,021,015)
------------ ------------- ---------------
Other comprehensive
income
Foreign exchange on subsidiary
translation 14,560 (722,605) (284,154)
Other comprehensive income
for the period 14,560 (722,605) (284,154)
------------ ------------- ---------------
Total comprehensive loss
for the period (5,475,093) (872,070) (9,305,169)
------------ ------------- ---------------
Loss attributable to:
Equity shareholders of
the Company (5,489,641) (149,456) (9,021,014)
Minority interests (12) (9) (1)
------------ ------------- ---------------
(5,489,653) (149,465) (9,021,015)
------------ ------------- ---------------
Total comprehensive loss
attributable to:
Equity shareholders of
the Company (5,475,082) (872,003) (9,305,157)
Minority interests (11) (67) (12)
------------ ------------- ---------------
(5,475,093) (872,070) (9,305,169)
------------ ------------- ---------------
Basic and diluted earnings
per share (pence) 4 (4.07) (0.11) (6.69)
Consolidated Balance Sheet
(unaudited) (unaudited) (audited)
Six months Six months Year ended
ended ended
29 February 28 February 31 August
2012 2011 2011
notes GBP GBP GBP
Non-current assets
Intangible assets 5 1,809 2,267 2,180
Plant and equipment 6 4,259 5,575 3,949
Inventories 7 85,179,221 94,777,112 89,500,205
Loans and receivables 8 4,171,758 7,257,481 4,800,000
89,357,047 102,042,435 94,306,334
Current assets
Other receivables 1,020,558 1,032,698 944,508
Cash and cash equivalents 6,907,811 6,228,521 7,180,340
------------- ------------- -------------
7,928,369 7,261,219 8,124,848
Total assets 97,285,416 109,303,654 102,431,182
Current liabilities
Advances received 12 (1,881,591) - (1,461,165)
Other payables (260,001) (251,627) (351,100)
------------- ------------- -------------
(2,141,592) (251,627) (1,812,265)
Net assets 95,143,824 109,052,027 100,618,917
------------- ------------- -------------
Equity
Share capital 9 127,483,015 127,483,015 127,483,015
Retained earnings (32,286,126) (17,924,927) (26,796,485)
Translation reserve (53,087) (506,039) (67,646)
------------- ------------- -------------
Equity attributable
to owners of the
parent 95,143,802 109,052,049 100,618,884
Minority interest
equity 22 (22) 33
------------- ------------- -------------
Total Equity 95,143,824 109,052,027 100,618,917
------------- ------------- -------------
Net asset value per
Ordinary share (pence) 10 70.6 80.9 74.7
These financial statements were approved by the Board of
Directors on 29 May 2012.
Consolidated Statement of Changes in Equity
Share Retained Translation Minority
capital earnings reserve interest Total
GBP GBP GBP GBP GBP
For the six months ended
29 February 2012 (unaudited)
As at 1 September 2011 127,483,015 (26,796,485) (67,646) 33 100,618,917
Loss for the period - (5,489,641) - (12) (5,489,653)
Foreign exchange on subsidiary
translation - - 14,559 1 14,560
----------------- ------------- ------------- ------------ -------------
At 29 February 2012 127,483,015 (32,286,126) (53,087) 22 95,143,824
----------------- ------------- ------------- ------------ -------------
For the six months ended
28 February 2011 (unaudited)
As at 1 September 2010 127,483,015 (17,775,471) 216,508 45 109,924,097
Loss for the period - (149,456) - (9) (149,465)
Foreign exchange on subsidiary
translation - - (722,547) (58) (722,605)
----------------- ------------- ------------- ------------ -------------
At 28 February 2011 127,483,015 (17,924,927) (506,039) (22) 109,052,027
----------------- ------------- ------------- ------------ -------------
For the year ended 31
August 2011 (audited)
As at 1 September 2010 127,483,015 (17,775,471) 216,508 45 109,924,097
Loss for the year - (9,021,014) - (1) (9,021,015)
Foreign exchange on subsidiary
translation - - (284,154) (11) (284,165)
----------------- ------------- ------------- ------------ -------------
At 31 August 2011 127,483,015 (26,796,485) (67,646) 33 100,618,917
----------------- ------------- ------------- ------------ -------------
Consolidated Statement of Cash Flows
(unaudited) (unaudited) (audited)
Six months ended Six months ended Year ended
29 February 28 February 2011 31 August 2011
2012
GBP GBP GBP
Cash flow from operating activities
Loss for the period (5,489,653) (149,465) (9,021,015)
Adjustments for:
Interest (112,846) (59,375) (153,089)
Depreciation 696 1,833 3,599
Amortisation 371 420 507
Impairment of inventory 4,390,277 - 4,144,485
Impairment of loan 426,055 - 2,481,093
----------------- ----------------- ---------------
(785,100) (206,587) (2,544,420)
Net foreign exchange losses/(gains) 378,040 (903,776) (506,904)
(Increase)/decrease in other
receivables (76,050) 22,369 110,559
Increase/(decrease) in other
payables 329,327 (83,425) 1,477,213
----------------- ----------------- ---------------
Net cash inflow/(outflow)
from operating activities
before interest, depreciation,
amortisation and tax (153,783) (1,171,419) (1,463,552)
Interest received 112,846 59,375 153,089
Taxation (137,232) - -
Net cash inflow/(outflow)
from operating activities (178,169) (1,112,044) (1,310,463)
Cash flow from investing activities
Purchase of inventories (69,293) (2,302,779) (1,170,357)
Purchase of plant and equipment (1,006) - -
Sale of plant and equipment - 139 -
New loans issued - (20,383) -
Repayment of loan - 414,186 510,654
----------------- ----------------- ---------------
Net cash outflow from investing
activities (70,299) (1,908,837) (659,703)
Net increase/(decrease) in
cash and cash equivalents (248,468) (3,020,881) (1,970,166)
Cash and cash equivalents
at start of period 7,180,340 9,249,402 9,249,402
Effect of foreign exchange
rates (24,061) - (98,896)
----------------- ----------------- ---------------
Cash and cash equivalents
at end of period 6,907,811 6,228,521 7,180,340
----------------- ----------------- ---------------
Notes to the financial statements
1. Accounting policies
The annual financial statements for the year ended 31 August
2011 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 condensed
consolidated interim financial statements (the "interim financial
statements") are consistent with those followed in the preparation
of the Group's annual financial statements for the year ended 31
August 2011.
The interim financial statements should be read in conjunction
with the annual financial statements for the year ended 31 August
2011, which have been prepared in accordance with IFRS. These
interim financial statements have been reviewed, not audited.
(a) Basis of preparation
The interim financial statements have been prepared on a
historical cost basis, except for certain financial instruments as
detailed in this note.
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) (together "the Group") made up to 29 February
2012. The consolidated financial statements are prepared using
uniform accounting policies for like transactions. 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.
Intercompany transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred.
The Group applies a policy of treating transactions with
minority interests as transactions with parties external to the
Group. Minority interests represent the portion of profit and net
assets not held by the Group. They are presented separately in the
consolidated statement of comprehensive income and in the
consolidated statement of financial position separately from the
amounts attributable to the owners of the parent.
Joint ventures
A joint venture is a contractual arrangement whereby the Group
and another party undertake an economic activity that is subject to
joint control; that is, when the strategic financial and operating
policy decisions relating to the activities require the unanimous
consent of the parties sharing control.
The Group reports its interests in jointly controlled entities
using proportionate consolidation. The Group's share of the assets,
liabilities, income, expenses and cash flows of jointly controlled
entities are combined with the equivalent items in the results on a
line-by-line basis.
(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. Revenue from sales of inventory is recognised when the
significant risks and rewards of an asset have been
transferred.
(d) Expenses
All expenses are charged through the 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) Non current assets
General
Assets are recognised and derecognised at the trade date on
acquisition and disposal respectively. Proceeds will be measured at
fair value which will be regarded as the proceeds of sale less any
transaction costs.
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.
Plant & Equipment
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 over their estimated
useful lives, using the straight line method on the following
basis:
Leasehold improvements 3 years
Furniture and fittings 5 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 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.
Net realisable value will be determined by the Board as the
estimated selling price in the ordinary course of business less
costs to complete and selling costs. In determining the net
realisable value, the directors take into account the valuations
received from the independent appraisers, market conditions at and
(where relevant and appropriate) after the balance sheet date, and
offers received from third parties by the Company.
The valuations of the properties performed by the independent
appraisers are based on estimate and subjective judgements that may
vary from the actual values and sales prices realised by the
Company upon ultimate disposal.
Impairment is recognised through the statement of comprehensive
income at the time that the Board believes the net realisable value
is lower than cost and will remain so for the foreseeable
future.
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. Any
foreign exchange difference is recognised through the income
statement.
Loans are reviewed for impairment by the Board on a semi-annual
basis; any impairment is recognised through the statement of
comprehensive income.
(f) Cash and cash equivalents
Cash and cash equivalents comprise current and short term fixed
deposits with banks.
(g) Taxation
Throughout the year under the Jersey "Zero/Ten" regime the
Company was zero rated for Jersey taxation purposes. Profits
arising in the Company for the 2012 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 GBP200 (2011: GBP200) 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. Tax paid during the period relates
to the tax year end of 31 December 2011.
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 Group are expressed in Pound Sterling, which is the
Group's presentation currency. The functional currency of the
Company and Jersey subsidiaries is Pound Sterling; the functional
currency for the Turkish subsidiaries is Turkish Lira.
The results and financial position of the entities based in
Jersey are recorded in Pound 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) and non-monetary balances 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 unless the average is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and
expenses are translated at the rate on the dates of the
transactions.
Foreign exchange gains or losses are recorded in either the
statement of comprehensive income 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) Critical accounting estimates and assumptions
The Board makes estimates and assumptions concerning the future
in the preparation of the financial statements. The resulting
accounting estimates will, by definition, seldom equal the related
actual results. The estimates, assumptions and judgements that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are outlined below.
Principal assumptions underlying management's estimation of net
realisable value
In reflection of the economic environment and market conditions
during the prior year which continued throughout to the period end,
the frequency of transactions similar to the inventory and
apartments on an arms length basis decreased compared to prior
periods.
The Board have reviewed the independent valuations that have
been provided and believe impairment is necessary to the inventory
and the loan receivable. Please refer to note 7 and 8 for further
details.
Critical judgements in applying the Group's accounting
policies
The Group did not make any critical accounting judgements during
the current financial period.
2. Segment reporting
The chief operating decision maker (the "CODM") in relation to
the Group is considered to be the Board itself. The factor used to
identify the Group's reportable segments is geographical area.
Based on the above and a review of information provided to the
Board, it has been concluded that the Group is currently organised
into one reportable segment: Turkey.
There are two types of real estate projects within the above
segment; these are development land and new build residential
property. There are three individual projects held within the
development land type and one project in new build residential
property. The CODM considers on a quarterly basis the results of
the aggregated position of both property types as a whole as part
of their ongoing performance review.
The CODM receives regular reports on the Company's assets by the
Investment Advisors, Civitas Property Partners S.A. During this
financial period Civitas have provided detailed reviews as
requested of the Turkish economy and real estate market and also
their strategic advice regarding the individual properties listed
in the table on page 1. In addition the period end valuations
provided by Savills and TSKB are reviewed and reported on by the
investment advisor to the Board of Directors.
Other than cash and cash equivalent assets and related interest
and charges, the results of the Group are deemed to be generated in
Turkey.
3. Management fee
Six months ended Six months ended Year ended
29 February 2012 28 February 2011 31 August 2011
GBP GBP GBP
Management fee 128,725 178,904 311,890
----------------- ----------------- ---------------------
Civitas Property Partners S.A. ("Civitas") were appointed as
Investment Advisors to the Group on 2 December 2009. The advisory
fee structure is incentive-based with an annual fixed component of
EUR212,500 and an incentive component based on a percentage of
realisation value. The incentive fee paid for the period to 29
February 2012 was GBP35,474 (28 February 2011: GBPnil; 31 August
2011: GBP36,443).
4. Earnings per share
Earnings per share are calculated by dividing the profit
attributable to equity holders of the group by the weighted average
number of ordinary shares in issue during the year.
Six months ended 29 February Six months ended 28 February Year ended
2012 2011 31 August 2011
Loss attributable to equity (GBP5,489,641) (GBP149,456) (GBP9,021,014)
holders of the group
-------------------------------- -------------------------------- ----------------
Weighted average number of
ordinary shares in issue 134,764,709 134,764,709 134,764,709
-------------------------------- -------------------------------- ----------------
Due to the options lapsing without exercise in December 2010,
there is no dilution to the earnings per share. The earnings per
share are calculated as (4.07) pence (28 February 2011:(0.11)
pence; 31 August 2011:(6.69) pence).
5. Intangible assets
Six months ended Six months ended Year ended
29 February 2012 28 February 2011 31 August 2011
GBP GBP GBP
Opening net book value 2,180 2,687 2,687
Additions - - -
Amortisation and impairment
charge (371) (420) (507)
------------------ ------------------ ----------------
Closing net book value 1,809 2,267 2,180
------------------ ------------------ ----------------
The intangible asset relates to computer software, with a useful
life of 6 years. There has been no impairment during the
period.
6. Plant and equipment
Six months ended
29 February Six months ended Year ended
2012 28 February 2011 31 August 2011
GBP GBP GBP
Opening net book value 3,949 7,548 7,548
Additions 1,006 - -
Disposals - (139) -
Depreciation (696) (1,834) (3,599)
Closing net book value 4,259 5,575 3,949
----------------- ------------------ ----------------
7. Inventories
Six months ended Six months ended Year ended
29 February 2012 28 February 2011 31 August 2011
GBP GBP GBP
Opening book cost 89,500,205 92,474,333 92,474,333
Purchases at cost 69,293 2,302,779 1,170,357
Impairment of inventory (4,390,277) - (4,144,485)
Closing book cost 85,179,221 94,777,112 89,500,205
------------------ ------------------ ----------------
This represents 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. See note 12 regarding
the sale of Kazikli village.
The impairment above relates to Riva. The Directors believe the
net realisable value (GBP59,876,010) at the period end was lower
than cost and have therefore impaired the asset accordingly.
8. Loans and receivables
Six months ended Six months ended Year ended
29 February 2012 28 February 2011 31 August 2011
GBP GBP GBP
Opening Balance 4,800,000 7,470,112 7,470,112
New loans - 20,383 -
Repayment of loan - (414,186) (510,654)
Impairment of loan (426,055) - (2,481,093)
Exchange (loss)/gain
revaluation of loan (202,187) 181,172 321,635
Closing Balance 4,171,758 7,257,481 4,800,000
------------------ ------------------ ----------------
Previously, the third party loan in respect of the investment in
the Riverside Resort in Alanya had been made to the developer,
Okyap1 In aat ve Muhendislik ve Ozel E itim Hizmetleri Sanayi ve
Ticaret Limited irketi ("Okyap1").
On 3 December 2010, as a means of achieving improved economic
benefit for the Group, a fiduciary agreement and a settlement
agreement were signed by all relevant parties which resulted in the
loan due to the Group (EUR8,193,091 at the time of signing the
agreement) and the titles of the apartments being assigned to
Mandalina Yap1 Turizm Sanayi ve Ticaret A. . ("Mandalina") for the
ultimate benefit of the Group. Mandalina is not a part of the
Group. In order to further protect the Group's interest in the
Alanya apartments, the Group holds signed share transfer letters
from the shareholders of Mandalina which may be executed at any
time at the discretion of the Directors and would transfer
ownership of the shares in the Mandalina from the existing
shareholders to the Group.
The loan has been impaired to reflect the anticipated amount to
be received based on the value of the Alanya apartments and future
running costs of Mandalina which are deducted from the sales
proceeds of the Alanya apartments before being remitted to the
Group.
The valuation of the Alanya apartments used by the Directors in
the assessment of the recoverability of the loan is based on
estimate and subjective judgements that may vary from the actual
values and sales prices realised upon ultimate disposal.
9. Called up share capital
Authorised:
Founder shares of no par value 10
Ordinary shares of no par value Unlimited
Issued and fully paid: GBP
2 founder shares of no par value -
134,764,709 ordinary shares of no par value 127,483,015
-----------
2 founder shares of no par value are held by Vistra Nominees I
Limited. These shares are not eligible for participation in the
Company's investments and carry no voting rights at general
meetings of the Company.
Capital Management
As a result of the Group being closed-ended, capital management
is wholly subject to the discretion of the Board and is not
influenced by subscriptions or redemptions. The Group's objectives
for managing capital are to maintain sufficient liquidity to meet
the expenses of the Group as they fall due; to invest in the
Group's current assets when the Board feels it will give rise to
capital appreciation; and to return capital to shareholders where
possible.
10. Net asset value per share
The net asset value per ordinary share is based on the net
assets attributable to equity shareholders of GBP95,143,824 on
134,764,709 shares (28 February 2011: GBP109,052,027 on 134,764,709
shares; 31 August 2011: GBP100,618,917 on 134,764,709 shares).
11. Financial risk management
The disclosure on the financial risk management has been limited
to the consolidated financial position. This approach has been
adopted as this covers all of the principal risks associated with
the Group.
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 Group's financial instruments comprise loans, cash balances,
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 Group 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 7: Disclosure and Presentation, an
analysis of financial assets and liabilities, which identifies the
risk to the Group 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 Group's operations. It
represents the potential loss the Group might suffer through
holding market positions as a consequence of price movements. The
Group has no such exposures to market price risk.
(ii) Credit risk
The Group's third party loan in respect of the investment in the
Riverside Resort in Alanya is potentially at risk from the failure
of the third party. The largest counterparty risk is with the
Group's bankers. Bankruptcy or insolvency of Deutsche Bank
International Limited may cause the Group's rights with respect to
cash held to be delayed or limited. There is no policy in place to
mitigate this risk as the Board believes there is no need to do
so.
The Board does not monitor the credit quality of receivables on
an ongoing basis. Cash balances have been placed with Deutsche Bank
International Limited due to its Moody's credit rating of Aa3.
The Group's principal financial assets are other receivables and
cash and cash equivalents. The maximum exposure of the Group to
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.
(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
movements in the exchange rates between the date of a transaction
denominated in a currency other than Sterling and its settlement.
There is no policy in place to mitigate this risk as the Board
believes such a policy would not be cost effective.
An analysis of the Group's currency exposure is detailed
below:
Net Net
Non-current monetary Non-current monetary
assets assets Liabilities Assets assets Liabilities
29 February 29 February 29 February 28 February 28 February 28 February
2012 2012 2012 2011 2011 2011
GBP GBP GBP GBP GBP GBP
Sterling - 3,309,328 (48,992) - 2,328,668 (61,533)
Euro 4,171,758 759 - 7,237,098 1,687,227 -
US Dollar 85,179,221 1,748,578 (1,881,591) 94,777,112 2,188,968 -
Turkish
Lira 6,068 728,112 (211,009) 28,225 804,729 (190,094)
------------ ------------ ------------ ------------ ------------ ------------
89,357,047 5,786,777 (2,141,592) 102,042,435 7,009,592 (251,627)
------------ ------------ ------------ ------------ ------------ ------------
31 August 31 August 31 August
2011 2011 2011
GBP GBP GBP
Sterling - 1,874,849 (49,713)
Euro 4,800,000 1,912,374 -
US Dollar 89,500,205 1,758,716 (1,461,165)
Turkish
Lira 6,129 766,644 (301,387)
------------ ------------ ------------
94,306,334 6,312,583 (1,812,265)
------------ ------------ ------------
(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. There is no policy in place to
mitigate this risk as the Board believes such a policy would not be
cost effective.
The Company holds only cash deposits.
The interest rate profile of the Group excluding short term
receivables and payables was as follows:
Non- Non- Non-
Floating interest Floating interest Floating interest
rate bearing rate bearing rate bearing
29 February 29 February 28 February 28 February 31 August 31 August
2012 2012 2011 2011 2011 2011
GBP GBP GBP GBP GBP GBP
Sterling 3,325,637 20 2,350,877 - 1,875,580 26
Euro 734 4,171,783 1,687,227 7,237,098 1,912,336 4,800,038
US Dollar 3,385,910 85,189,973 2,188,968 94,777,112 129 92,719,957
Turkish
Lira - 190,800 1,449 28,225 17,855 154,625
------------ ------------ ------------ ------------ ---------- -----------
6,712,281 89,552,576 6,228,521 102,042,435 3,805,900 97,674,646
------------ ------------ ------------ ------------ ---------- -----------
(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 29 February 2012 the Group
does not have any significant liabilities due.
The Group has sufficient cash reserves to meet liabilities
due.
12. Subsequent Events
On 4 April 2011 the Company entered into a conditional agreement
to sell its entire interest in the Kazikli joint venture for a
total consideration of $9.5 million in cash. Under the terms of the
sale agreement, the buyer is obliged to pay the Company twenty-five
percent of the purchase price on signing with the remainder due
upon the Company's fulfilment of certain conditions. The buyer has
the right to rescind the transaction if the Company fails to fulfil
these conditions within four months from the signing of the
agreement.
In accordance with the Company's policy, all excess cash,
including sale proceeds, will be returned to shareholders.
As at 29 February 2012, payments of $3,000,000 (GBP1,881,591)
had been received with a $6.5 million post-dated cheque dated 31
March 2012 also being received After numerous discussions with the
buyer, the transaction was extended from 30 September 2011 to 31
March 2012 with a payment being received on 19 January 2012 of
$625,000 as a further deposit on the transaction. The effective
date of the sale of Kazikli and Mobella was 17 April 2012, at which
time the loan due to Osmanli Yapi 3 from Mobella (GBP222,973) was
written off. As at the date of approval of these financial
statements, a distribution has been agreed in principle by the
Board with final amounts to be announced.
Enquiries:
Singer Capital Markets 020 3205 7500
James Maxwell
Matt Thomas
Company Secretary 01534 504 735
Vistra Fund Services Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZKNLNGZZM
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