TIDMOTM
RNS Number : 9241F
Ottoman Fund Limited (The)
30 May 2013
THE OTTOMAN FUND LIMITED (the "Company")
Interim Financial Statements for the period ended 28 February
2013
The Company is pleased to announce as follows its unaudited
interim results for the six months ended 28 February 2013, a full
copy of which is available on the Company's website:
www.theottomanfund.com.
Enquiries:
N+1 Singer
James Maxwell/Matt Thomas 020 7496 3000
Vistra Secretaries Limited 01534 504 700
Company Secretary
Chairman's Statement
Dear Shareholders:
Our net asset value per share as at 28 February 2013 was 63.5
pence as compared with 63.9 pence as at 31 August, 2012. As I have
explained previously, for each valuation period we retain two
appraisers, BNP Paribas and TSKB, to each independently appraise
the value of our properties. We then use an average of the two
valuations for our balance sheet numbers. We and our local advisors
believe that this average is the best estimate of value.
Shareholders should bear in mind however that Riva and Bodrum are
large assets measured in terms of both value and size and that in
recent years there have been no truly comparable transactions.
BNP Paribas TSKB Average Average
28 February 28 February 28 February 31 August
2013 2013 2013 2012
($) ($) ($) ($)
-------- ------------ ------------ ------------ ------------
Riva 79,500,000 129,470,000 104,485,000 94,275,000
-------- ------------ ------------ ------------ ------------
Bodrum 29,000,000 34,740,000 31,870,000 31,720,000
-------- ------------ ------------ ------------ ------------
Alanya 5,265,000 5,720,000 5,492,500 6,292,500
-------- ------------ ------------ ------------ ------------
TOTAL 113,765,000 172,930,000 141,847,500 132,287,500
======== ============ ============ ============ ============
The market in Turkey for large land plots such as Riva and
Bodrum remains subdued. In Turkey as elsewhere in the world demand
is primarily for income producing assets or development
opportunities in the city centre. Neither Riva nor Bodrum fit that
description. With that reality in mind, we continue our efforts to
negotiate a revenue sharing agreement for our Riva property, which
will appropriately compensate our shareholders without assuming
undue risk. Over the last six months we have continued to receive
serious expressions of interest for our Bodrum property and several
prospective purchasers have undertaken substantial due diligence.
We continue to sell units at Alanya and have a full time marketing
manager on site. During the current financial year we have sold
four units with thirty-seven remaining.
I look forward to writing again when we release our annual
report for the year ended 31 August 2013.
Respectfully yours,
John D. Chapman
Chairman
29 May 2013
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 28 February 2013, 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 28 February 2013 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 2013
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
28 February 29 February 31 August
2013 2012 2012
notes GBP GBP GBP
Revenue
Bank Interest 117,582 112,846 194,446
Profit on sale
of inventory - - 274,426
Profit on sale
of joint venture - - 386,897
------------ ------------ ------------
Total income 117,582 112,846 855,769
------------ ------------ ------------
Operating Expenses
Management fee 3 (104,945) (128,725) (217,635)
Other operating
expenses (488,663) (307,686) (755,211)
Inventory impairment 7 - (4,390,277) (5,817,026)
Loan impairment 8 (425,000) (426,055) (426,055)
Total operating
expenses (1,018,608) (5,252,743) (7,215,927)
------------ ------------ ------------
Foreign exchange
gains/(losses) 322,409 (212,524) (551,657)
Loss before tax (578,617) (5,352,421) (6,911,815)
Taxation 1(g) (4,423) (137,232) (131,022)
Loss for the period (583,040) (5,489,653) (7,042,837)
------------ ------------ ------------
Other comprehensive
income
Foreign exchange
on subsidiary translation (25,020) 14,560 56,106
Other comprehensive
income for the period (25,020) 14,560 56,106
------------ ------------ ------------
Total comprehensive
loss for the period (608,060) (5,475,093) (6,986,731)
------------ ------------ ------------
Loss attributable
to:
Equity shareholders
of the Company (583,026) (5,489,641) (7,042,815)
Minority interests (14) (12) (22)
------------ ------------ ------------
(583,040) (5,489,653) (7,042,837)
------------ ------------ ------------
Total comprehensive
loss attributable
to:
Equity shareholders
of the Company (608,049) (5,475,082) (6,986,732)
Minority interests (11) (11) 1
------------ ------------ ------------
(608,060) (5,475,093) (6,986,731)
------------ ------------ ------------
Basic and diluted
earnings per share
(pence) 4 (0.43) (4.07) (5.23)
The accompanying notes on pages 7 to 17 are an integral part of
the financial statements.
Consolidated Balance Sheet
(unaudited) (unaudited) (audited)
Six months Six months Year ended
ended ended
28 February 29 February 31 August
2013 2012 2012
notes GBP GBP GBP
Non-current assets
Intangible assets 5 1,106 1,809 1,438
Plant and equipment 6 2,480 4,259 2,863
Inventories 7 78,718,372 85,179,221 78,635,982
Loans and receivables 8 2,958,676 4,171,758 3,870,603
81,680,634 89,357,047 82,510,886
Current assets
Other receivables 659,221 1,020,558 649,558
Cash and cash
equivalents 3,273,947 6,907,811 3,069,128
------------- ------------- -------------
3,933,168 7,928,369 3,718,686
Total assets 85,613,802 97,285,416 86,229,572
Current liabilities
Advances received 12 - (1,881,591) -
Other payables (69,683) (260,001) (77,393)
------------- ------------- -------------
(69,683) (2,141,592) (77,393)
Net assets 85,544,119 95,143,824 86,152,179
------------- ------------- -------------
Equity
Share capital 9 120,003,007 127,483,015 120,003,007
Retained earnings (34,422,326) (32,286,126) (33,839,300)
Translation reserve (36,563) (53,087) (11,540)
------------- ------------- -------------
Equity attributable
to owners of
the parent 85,544,118 95,143,802 86,152,167
Minority interest
equity 1 22 12
------------- ------------- -------------
Total Equity 85,544,119 95,143,824 86,152,179
------------- ------------- -------------
Net asset value
per Ordinary
share (pence) 10 63.5 70.6 63.9
The accompanying notes on pages 7 to 17 are an integral part of
the financial statements.
These financial statements were approved by the Board of
Directors on 29 May 2013.
Antony R Gardner-Hillman Andrew I Wignall
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 28 February
2013 (unaudited)
As at 1 September
2012 120,003,007 (33,839,300) (11,540) 12 86,152,179
Loss for the period - (583,026) - (14) (583,040)
Foreign exchange
on subsidiary translation - - (25,023) 3 (25,020)
----------------- ------------- ------------- ------------ -------------
At 28 February 2013 120,003,007 (34,422,326) (36,563) 1 85,544,119
----------------- ------------- ------------- ------------ -------------
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 year ended
31 August 2012 (audited)
As at 1 September
2011 127,483,015 (26,796,485) (67,646) 33 100,618,917
Return of capital (7,480,008) - - - (7,480,008)
Loss for the year - (7,042,815) - (22) (7,042,837)
Foreign exchange
on subsidiary translation - - 56,106 1 56,107
----------------- ------------- ------------- ------------ -------------
At 31 August 2012 120,003,007 (33,839,300) (11,540) 12 86,152,179
----------------- ------------- ------------- ------------ -------------
The accompanying notes on pages 7 to 17 are an integral part of
the financial statements.
Consolidated Statement of Cash Flows
(unaudited) (unaudited) (audited)
Six months Six months Year ended
ended ended
28 February 29 February 31 August
2013 2012 2012
Cash flow from operating GBP GBP GBP
activities
Loss for the period (583,040) (5,489,653) (7,042,837)
Adjustments for:
Interest (117,582) (112,846) (194,446)
Tax 4,423 137,232 131,022
Depreciation 383 696 2,092
Amortisation 332 371 742
Impairment of inventory - 4,390,277 5,817,026
Impairment of loan 425,000 426,055 426,055
Profit on sale of
inventory - - (274,426)
Profit on sale of
joint venture - - (386,897)
------------ ------------ --------------
(270,484) (648,868) (1,521,669)
Net foreign exchange
(gains)/losses (336,508) 240,808 290,103
(Increase)/decrease
in other receivables (9,663) (76,050) 294,950
Increase/(decrease)
in other payables (7,710) 329,327 (273,707)
------------ ------------ --------------
Net cash outflow from
operating activities
before interest, depreciation,
amortisation and tax (624,365) (153,783) (1,210,323)
Interest received 117,582 112,846 194,446
Taxation (4,423) (137,232) (131,022)
Net cash outflow from
operating activities (511,206) (178,169) (1,146,899)
Cash flow from investing
activities
Purchase of inventories (82,390) (69,293) (7,432)
Proceeds on sale of
inventories - - 4,548,240
Purchase of plant and
equipment - (1,006) (1,006)
Repayment of loan 798,465 - -
------------ ------------ --------------
Net cash inflow/(outflow)
from investing activities 716,075 (70,299) 4,539,802
Cash flow from financing
activities
Return of Capital - - (7,480,008)
------------ ------------ --------------
Net cash outflow from
financing activities - - (7,480,008)
Net increase/(decrease)
in cash and cash equivalents 204,869 (248,468) (4,087,105)
Cash and cash equivalents
at start of period 3,069,128 7,180,340 7,180,340
Effect of foreign exchange
rates (50) (24,061) (24,107)
------------ ------------ --------------
Cash and cash equivalents
at end of period 3,273,947 6,907,811 3,069,128
------------ ------------ --------------
The accompanying notes on pages 7 to 17 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
2012 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 2012.
The interim financial statements should be read in conjunction
with the annual financial statements for the year ended 31 August
2012, 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 28 February
2013. 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.
(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 statement of
comprehensive income.
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
Profits arising in the Company for the 2013 year of assessment
and future periods will be subject to tax at the rate of 0% (2012:
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 nor pays
Goods and Services Tax. This fee is currently GBP200 (2012: 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.
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 statement of comprehensive income
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 the statement of changes 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
statement of comprehensive income.
(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 and loan recoverability
In reflection of the economic environment and market conditions
during the prior year which continued throughout the current
financial year end, the frequency of transactions similar to the
inventory and apartments on an arm's length basis remained
consistently low as in the prior periods.
Consistent with previous years the Company has obtained two
independent valuations which have been reviewed by the Board. For
all periods up to and including 31 August 2011, the more
conservative of the two valuations was used as the starting point
for the assessment of the net realisable values as the Directors
believed this represented a more realistic and prudent outcome.
From the interim period ending 29 February 2012, the valuations
have been significantly different from each other. The reasons for
the differences in the two valuations obtained arise primarily due
to differing assumptions used by the valuers, exacerbated by the
lack of recent comparative sales and the unique nature of the
assets. Following discussions with the Investment Advisor and the
valuers, the Directors believe that an average of the two
valuations represents the most appropriate estimate of the assets'
value. As such this average valuation has been used in the
Directors' assessment of the net realisable value of the properties
and the recoverability of the loan receivable from Mandalina.
As a result of their assessment, the Directors believe that
impairment is necessary to the loan receivable. Please refer to
note 8 for further details.
Critical judgements in applying the Group's accounting
policies
The Group did not make any other critical accounting judgements
during the current financial year.
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 two 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.
2. Segment reporting
The CODM receives regular reports on the Company's assets by the
Investment Advisors, Civitas Property Partners S.A. ("Civitas").
During this financial year Civitas has 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 2. In addition the year end valuations
provided by BNP Paribas (through an alliance member, Kuzeybati,
formerly an alliance member of 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 Six months
ended ended Year ended
28 February 29 February 31 August
2013 2012 2012
GBP GBP GBP
Management fee 104,945 128,725 217,635
------------ ------------ ---------------------
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 28
February 2013 was GBP18,298 (29 February 2012: GBP35,474; 31 August
2012: GBP35,474).
4. Earnings per share
Basic earnings per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
Six months ended 28 February Six months ended 29 February Year ended
2013 2012 31 August 2012
Loss attributable to equity (GBP583,026) (GBP5,489,641) (GBP7,042,815)
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 (0.43) pence (29
February 2012:(4.07) pence; 31 August 2012:(5.23) pence).
5. Intangible assets
Six months
ended Six months Year ended
28 February ended 29 February 31 August
2013 2012 2012
GBP GBP GBP
Opening net book
value 1,438 2,180 2,180
Additions - - -
Amortisation
and impairment
charge (332) (371) (742)
------------- ------------------- -----------
Closing net book
value 1,106 1,809 1,438
------------- ------------------- -----------
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 Six months
ended ended Year ended
28 February 29 February 31 August
2013 2012 2012
GBP GBP GBP
Opening net book
value 2,863 3,949 3,949
Additions - 1,006 1,006
Disposals - - -
Depreciation (383) (696) (2,092)
Closing net book
value 2,480 4,259 2,863
------------- ------------- -----------
7. Inventories
Six months Six months
ended ended Year ended
28 February 29 February 31 August
2013 2012 2012
GBP GBP GBP
Opening book cost 78,635,982 89,500,205 89,500,205
Purchases at cost 82,390 69,293 7,432
Sale during the
period - - (5,329,055)
Profit on sale - - 274,426
Impairment of inventory - (4,390,277) (5,817,026)
Closing book cost 78,718,372 85,179,221 78,635,982
------------- ------------- ------------
This represents 149,550 square metres of development land on the
Bodrum peninsula and 931,739 square metres on the Riva
coastline.
The directors have assessed the net realisable value at 28
February 2013 using the same approach as at the year end (31 August
2012) and are satisfied that no impairment is required (the
impairment at 31 August 2012 related to Riva and Bodrum and the
impairment at 28 February 2012 related to Riva).
8. Loans and receivables
Six months Six months
ended ended
28 February 29 February Year ended
2013 2012 31 August 2012
GBP GBP GBP
Opening Balance 3,870,603 4,800,000 4,800,000
Repayment of (798,465) - -
loan
Impairment of
loan (425,000) (426,055) (426,055)
Exchange (loss)/gain
revaluation of
loan 311,538 (202,187) (503,342)
Closing Balance 2,958,676 4,171,758 3,870,603
------------- ------------- ----------------
Previously, the third party loan in respect of the investment in
the Riverside Resort in Alanya had been made to the developer,
Okyapı İn aat ve Mühendislik ve Özel E itim Hizmetleri Sanayi ve
Ticaret Limited irketi ("Okyapı").
As a means of achieving improved economic benefit for the Group,
the titles of the apartments are held by Mandalina Yapı 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 120,003,007
-----------
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 GBP85,544,119 on
134,764,709 shares (29 February 2012: GBP95,143,824 on 134,764,709
shares; 31 August 2012: GBP86,152,179 on 134,764,709 shares).
11. Financial risk management
The disclosure on the financial instruments has been limited to
the consolidated financial position. This approach has been adopted
as this covers all of the principal risks associated with the
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 BNP Paribas (formerly 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. On 3 December 2010, the third party loan was
assigned to a related entity, see note 8 for further information.
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 A2.
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
28 February 28 February 28 February 29 February 29 February 29 February
2013 2013 2013 2012 2012 2012
GBP GBP GBP GBP GBP GBP
Sterling - 2,223,434 (52,795) - 3,309,328 (48,992)
Euro 2,958,676 2,981 - 4,171,758 759 -
US Dollar 78,718,372 1,017,459 - 85,179,221 1,748,578 (1,881,591)
Turkish
Lira 3,586 619,611 (16,888) 6,068 728,112 (211,009)
------------ ------------ ------------ ------------ ------------ ------------
81,680,634 3,863,485 (69,683) 89,357,047 5,786,777 (2,141,592)
------------ ------------ ------------ ------------ ------------ ------------
31 August 31 August 31 August
2012 2012 2012
GBP GBP GBP
Sterling - 1,915,673 (38,035)
Euro 3,870,603 2,490 -
US Dollar 78,635,982 1,139,559 -
Turkish
Lira 4,301 583,571 (39,358)
------------ ------------ ------------
82,510,886 3,641,293 (77,393)
------------ ------------ ------------
(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
28 February 28 February 29 February 29 February 31 August 31 August
2013 2013 2012 2012 2012 2012
GBP GBP GBP GBP GBP GBP
Sterling 2,251,312 - 3,325,637 20 1,901,420 -
Euro - 2,961,657 734 4,171,783 - 3,873,093
US Dollar 1,007,852 78,727,979 3,385,910 85,189,973 1,128,331 78,647,210
Turkish
Lira - 5,781 - 190,800 8,676 21,284
------------ ------------ ------------ ------------ ---------- -----------
3,529,164 81,695,417 6,712,281 89,552,576 3,038,427 82,541,587
------------ ------------ ------------ ------------ ---------- -----------
(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 28 February 2013 the Group
does not have any significant liabilities due.
The Group has sufficient cash reserves to meet liabilities
due.
12. Contingent liability
The Directors have been informed that an intermediate Turkish
court has upheld an administrative order disallowing certain tax
benefits from a restructuring transaction that may have had
similarities to the restructuring of Osmanli Yapi 2. This
intermediate court decision is now under appeal to the Turkish
Supreme Court. The Company is monitoring the appeal, but at present
this development does not meet the Recognition criteria under IAS
37, and the Directors have consequently made no provision in the
accounts.
13. Related party transactions
John D. Chapman is a shareholder in the Turkish subsidiaries due
to Turkish law requirements. Mr Chapman receives no additional
benefit from being a shareholder of the Turkish subsidiaries.
Information regarding Directors' interests can be found in note
14.
Ali Pamir is a director of the Investment Advisor, Civitas
Property Partners S.A. and is a director and shareholder of the
Turkish subsidiaries due to Turkish law requirements. Mr Pamir
receives no additional benefit from being a shareholder of the
Turkish subsidiaries. Information regarding amounts paid to the
Investment Advisor can be found in note 3.
Sinan Kalpakcioglu is a Turkish resident consultant to The
Ottoman Fund Limited. Mr Kalpakcioglu is a director and shareholder
of the Turkish subsidiaries due to Turkish law requirements. Mr
Kalpakcioglu receives no additional benefit from being a
shareholder of the Turkish subsidiaries. Fees paid to Mr
Kalpakcioglu during the period amounted to GBP16,933 (29 February
2012: GBP9,833; 31 August 2012: GBP61,458); GBP7,867 remained
outstanding at the period end (29 February 2012: GBP4,917; 31
August 2012: GBP6,667).
Vistra Nominees I Limited is a related party being the holder of
the 2 founder shares of The Ottoman Fund Limited.
Sinan Kalpakcioglu and Ali Pamir are shareholders in Mandalina,
which holds the title to the Alanya apartments.
The Directors do not consider there to be an ultimate
controlling party.
14. Directors' interests
Total compensation paid to the Directors during the period was
GBP137,657 (29 February 2012: GBP75,000; 31 August 2012:
GBP150,000).
During the year John D. Chapman as Executive Chairman has been
employed under an executive service contract that provides for an
annual fee of GBP75,000 pro-rated monthly and a discretionary
performance fee. A performance fee has been paid during the period
equalling GBP62,657.
Eitan Milgram is an Executive Vice President of Weiss Asset
Management LLC which is a substantial investor in the Company.
15. Subsequent Events
The Directors are satisfied that there were no material events
subsequent to the year end that would have an effect on these
financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMGFKFGVGFZM
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