TIDMOTM
RNS Number : 0311W
Ottoman Fund Limited (The)
20 December 2013
THE OTTOMAN FUND LIMITED (the "Company")
Final results for the year ended 31 August 2013
The Company is pleased to announce as follows its final results
for the year ended 31 August 2013, a full copy of which is
available on the Company's website: www.theottomanfund.com.
Enquiries:
N+1 Singer
James Maxwell/Matthew 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 31 August 2013 was 65.9
pence as compared with 63.5 pence as at 28 February 2013. The
primary reason for this increase in NAV is the reversal of a prior
impairment for the Riva asset, which was offset against a small
impairment to the Bodrum asset and a small impairment of the Alanya
loan. Over the last financial year, we have sold 10 units at Alanya
and have realized EUR957,500. Following period end, we announced
the sale of 106,207 m(2) of Riva land for $12 million plus VAT.
That transaction closed this past October and we are now in the
process of completing the mandatory judicial procedure required to
transfer the proceeds from Turkey to Jersey. We expect to be able
to announce a distribution of excess capital, including the Riva
proceeds, early in the new year. Following this post-period
transaction, 824,793 m(2) of Riva land remains available for
sale.
As I have explained previously, for each valuation period we
retain two appraisers, BNP Paribas and TSKB, to each independently
appraise our properties. We had historically relied on the BNP
valuations for the disclosure in our financial statements and the
TSKB valuation as a check on the BNP valuations. Historically both
valuation companies had tended to reach similar conclusions. Over
the last three valuation periods, however, the valuations have
diverged substantially so we have used an average of the two. We
and our local advisors believe that the average of the two
valuations most closely approximates what we would expect to
realize upon sale or development.
BNP Paribas TSKB Average Average
31 August 2013 31 August 2013 31 August 2013 31 August 2012
($) ($) ($) ($)
---------- ---------------- ---------------- ---------------- ----------------
Riva 80,125,000 121,090,000 100,607,500 94,275,000
---------- ---------------- ---------------- ---------------- ----------------
Bodrum 27,000,000 30,890,000 28,945,000 31,720,000
---------- ---------------- ---------------- ---------------- ----------------
Alanya 4,875,000 4,775,000 4,825,000 6,292,500
---------- ---------------- ---------------- ---------------- ----------------
TOTAL 112,000,000 156,755,000 134,377,500 132,287,500
========== ================ ================ ================ ================
One reason for the wide variance in the Riva valuation has been
until very recently the absence of comparable transactions. Without
good comparables, the appraisers are forced to rely on their
projections of future costs and sale prices. These factors
necessarily require judgment and give rise to variances of opinion.
Nonetheless, based on recent transactions, the bulk of which were
post valuation, progress in completing required infrastructure, and
the opinions of our valuers and advisor, we are comfortable with
carrying this asset at approximately $100 m(2).
Riva's viability as an Istanbul suburb has been dependent on
infrastructure development. The third bridge crossing the Bosporus
to the north is now expected to be completed by 2015. This bridge
and the planned road leading off of the bridge and running
alongside Riva's southern portion are important developments that
will reduce travel time and should make Riva a more viable
community. These developments have been reflected in Riva land sale
prices. In late 2012, several transactions were reported for a
total of 60,000 m(2) of land at prices averaging $275 m(2). Given
the economics of building and selling residential units in Riva
this figure seemed on the high side, and questions were raised
about whether the transaction was bona fide. Earlier this year,
however, a single buyer purchased around 100,000 m(2) of land for
$165 m(2). And this past October we sold 106,207 m(2) of Riva land
for about $113 m(2) plus VAT.
There are various reasons why different parcels of Riva land
will sell for different prices including differences in zoning and
location. But the long term prospects seem positive, and our
current view of the best way to monetize the Riva asset is through
land sales rather than any development deal.
We continue to have serious expressions of interest for the
Bodrum asset. Reputable developers and investors in the region have
put resources into evaluating the asset but have ultimately backed
away for various reasons. We also continue to sell units at Alanya,
and during calendar year 2013 have sold 18 units with 20 available
for sale. Given the age and quality of our remaining inventory, we
have cut prices and increased broker commissions. We will endeavour
to dispose of the remaining Alanya inventory by the end of calendar
year 2014.
In the face of currency depreciation and a large current account
deficit, demand in Turkey for property assets remains robust. Based
on current market conditions, I expect that we will eventually
receive a fair value for our assets.
I look forward to writing again when we release our semi-annual
report for the period ended 28 February 2014.
Respectfully yours,
John D. Chapman
Chairman
19 December 2013
(1) Valuation figures for Riva do not reflect the post-period
sale of 106,207 m(2) of Riva land for $12 million plus VAT
Directors' Report
The Directors submit their Report and the audited consolidated
financial statements of The Ottoman Fund Limited (the "Company")
and its subsidiaries (together, the "Group") for the year ending 31
August 2013.
Principal Activity
The Company is a closed-ended, Jersey registered, investment
company formed to access the Turkish property market and in
particular new build residential developments in major cities and
coastal destinations.
Listing
The Company is quoted on the AIM market of the London Stock
Exchange.
Investment Policy
Upon Admission, the Company's strategy was to develop new-build
residential developments in major cities and coastal locations in
Turkey, aimed at both the local and tourist markets with an
emphasis on off-plan sales. The Company now intends to make no new
investments, to make additional investments in existing assets only
if those investments are accretive to shareholder value, and to
opportunistically dispose of assets at appropriate times as and
when market conditions permit.
Results and Dividends
It is not intended in normal circumstances that the Company will
pay dividends on the shares.
The Directors do not recommend the payment of a dividend (2012:
nil).
The consolidated statement of comprehensive income is set out in
this Annual Report and Financial Statements.
Life
The Company has a life of 10 years from the date of its
admission to trading on the AIM market on 28 December 2005, plus up
to 2 further years for the planned realisation of the portfolio.
The life may be extended by special resolution of shareholders
(requiring a two-thirds majority of those voting).
Manager
Subsequent to the removal of Development Capital Management
(Jersey) Limited as manager of the Company in 2010, management has
been internalised at the Board level and the Board relies on
Civitas Property Partners SA to manage and sell the Company's
Turkish assets.
Custodian
Subsequent to the termination of the custody agreement with BNP
Paribas (Jersey branch) in 2010, the Company has not appointed a
replacement.
Board of Directors
John D Chapman (Executive Chairman), Antony Gardner-Hillman,
Andrew Wignall and Eitan Milgram all served as Directors throughout
the year.
Shareholders' Interests (as at 31 August 2013)
Size of shareholding (in shares) No. of shareholders
1 - 9,999 22
10,000 - 99,999 10
100,000 - 999,999 7
1,000,000 - 9,999,999 7
10m+ 5
At 31 August 2013 the Company was aware of the following
interests of 3% or more in the ordinary share capital of the
Company:
Number % held
Weiss Asset Management LLC 40,132,000 29.78%
QVT Financial LP 25,000,000 18.55%
Toscafund Asset Management LLP 22,551,098 16.73%
QVT Financial LP CFD 18,335,000 13.61%
Lars Bader 11,350,000 8.42%
Otherwise, the Directors are not aware of interests of 3% or
more in the Company's issued share capital.
Directors' Interests
The maximum aggregate amount of ordinary remuneration payable to
the Directors permitted under the Articles is GBP150,000 per annum.
The Directors received in aggregate GBP150,000 for the year ended
31 August 2013 (2012:GBP150,000). Commencing 13 March 2009 John D.
Chapman has been employed under an executive service contract that
provides for an annual fee of GBP75,000 and a discretionary
performance fee.
None of the directors have any interests in the Company's share
capital. Eitan Milgram is an Executive Vice President of Weiss
Asset Management LLC, which owns a shareholding of 29.78% in the
Company at the end of this financial period.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the consolidated
financial statements in accordance with applicable law and
International Financial Reporting Standards.
The Companies (Jersey) Law 1991 requires the Directors to
prepare financial statements for each financial year which give a
true and fair view of the state of affairs of the Group and of the
profit or loss of the Group for that year. In preparing those
financial statements, the Directors are required to:
-- select suitable accounting policies and apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Group will continue
in business; and
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy, at any time, the
financial position of the Group and to enable them to ensure that
the financial statements comply with the Companies (Jersey) Law
1991. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and
hence for taking reasonable steps to prevent and detect fraud and
other irregularities.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
So far as the Directors are aware, there is no relevant audit
information of which the Group's auditors are unaware, and each
Director has taken all the steps that he ought to have taken as a
director in order to make himself aware of any relevant audit
information and to establish that the Group's auditors are aware of
that information.
By Order of the Board
Vistra Secretaries Limited
Secretary
19 December 2013
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE OTTOMAN FUND
LIMITED
Report on the financial statements
We have audited the accompanying consolidated financial
statements (the "financial statements") of The Ottoman Fund Limited
which comprise the consolidated statement of financial position as
of 31 August 2013 and the consolidated statement of comprehensive
income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended anda
summary of significant accounting policies and other explanatory
information.
Directors' responsibility for the financial statements
The directors are responsible for the preparation of financial
statements that give a true and fair view in accordance with
International Financial Reporting Standards and with the
requirements of Jersey law. The directors are also responsible for
such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors' responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those Standards require
that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditors' judgement, including
the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements give a true and fair
view of the financial position of the Group as of 31 August 2013,
and of the financial performance and cash flows of the Group for
the year then ended in accordance with International Financial
Reporting Standards and have been properly prepared in accordance
with the requirements of the Companies (Jersey) Law 1991.
Report on other legal and regulatory requirements
We read the other information contained in the Annual Report and
consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the
financial statements. The other information comprises only the
chairman's statement, the directors' report, the statement of
directors' responsibilities and corporate information.
In our opinion the information given in the directors' report is
consistent with the financial statements.
This report, including the opinion, has been prepared for and
only for the Company's members as a body in accordance with Article
113A of the Companies (Jersey) Law 1991 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Christopher Stuart
For and on behalf of PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
19 December 2013
Notes
The maintenance and integrity of The Ottoman Fund Limited
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the financial statements since
they were initially presented on the website.
Legislation in Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Consolidated Statement of Comprehensive Income
For the year ended 31 August 2013
Year ended Year ended
31 August 31 August
2013 2012
notes GBP GBP
Revenue
Finance income 247,518 194,446
Profit on sale of inventory 10 - 274,426
Profit on sale of joint venture 14 - 386,897
Total revenue 247,518 855,769
Operating expenses
Management/advisory fee 4 (197,930) (217,635)
Other operating expenses 5 (837,794) (755,211)
Inventory impairment 10 3,809,755 (5,817,026)
Loan impairment 11 (425,000) (426,055)
Total operating expenses 2,349,031 (7,215,927)
Foreign exchange gains/(losses) 12 846,703 (551,657)
Gain/(loss) before tax 3,443,252 (6,911,815)
Tax charge 6 (8,087) (131,022)
Gain/(loss) for the year 3,435,165 (7,042,837)
---------- ----------
Other comprehensive income:
Foreign exchange (loss)/gain on subsidiary translation (725,056) 56,106
Other comprehensive (loss)/income for the year (725,056) 56,106
---------- ----------
Total comprehensive gain/(loss) for the year 2,710,109 (6,986,731)
---------- ----------
Gain/(loss) attributable to:
Equity shareholders of the Company 3,435,166 (7,042,815)
Minority interests (1) (22)
---------- ----------
3,435,165 (7,042,837)
---------- ----------
Total comprehensive gain/(loss) attributable to:
Equity shareholders of the Company 2,710,109 (6,986,732)
Minority interests - 1
---------- ----------
2,710,109 (6,986,731)
---------- ----------
Basic and diluted earnings/(loss) per share (pence) 7 2.55 (5.23)
All items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of the financial
statements.
Consolidated Statement of Financial Position
As at 31 August 2013
As at 31 As at 31 August 2012
August 2013
notes GBP GBP
Assets
Non-current assets
Intangible assets 8 774 1,438
Plant and equipment 9 3,462 2,863
Inventories 10 82,589,097 78,635,982
Loans and receivables 11 2,923,760 3,870,603
------------ --------------------
85,517,093 82,510,886
Current assets
Trade and other receivables 15 676,721 649,558
Cash and cash equivalents 20 2,766,951 3,069,128
------------ --------------------
3,443,672 3,718,686
Total assets 88,960,765 86,229,572
------------ --------------------
Liabilities
Current liabilities
Trade and other payables 16 (98,477) (77,393)
(98,477) (77,393)
Net assets 88,862,288 86,152,179
------------ --------------------
Equity
Share capital 17 120,003,007 120,003,007
Retained earnings 18 (30,404,134) (33,839,300)
Translation reserve (736,596) (11,540)
------------ --------------------
Equity attributable to shareholders of the parent 88,862,277 86,152,167
Minority interests' equity 11 12
------------ --------------------
Total equity 88,862,288 86,152,179
------------ --------------------
Net asset value per ordinary share (pence) 19 65.9 63.9
The accompanying notes are an integral part of the financial
statements.
These financial statements were approved by the Board on 19
December 2013.
Antony Gardner-Hillman Andrew Wignall
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 2013
As at 1 September 2012 120,003,007 (33,839,300) (11,540) 12 86,152,179
Gain/(loss) for the
year - 3,435,166 - (1) 3,435,165
Foreign exchange (loss)
on
subsidiary translation - - (725,056) - (725,056)
At 31 August 2013 120,003,007 (30,404,134) (736,596) 11 88,862,288
----------- ------------- ------------- --------------- -----------
For the year ended
31 August 2012
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 gain
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 are an integral part of the financial
statements.
Consolidated Statement of Cash Flows
Notes Year ended Year ended
31 August 31 August
2013 2012
GBP GBP
Cash flow from operating activities
Net gain/(loss) 3,435,165 (7,042,837)
Adjustments for:
Interest (247,518) (194,446)
Tax 8,087 131,022
Depreciation 9 496 2,092
Amortisation 8 664 742
(Write back)/impairment of inventory 10 (3,809,755) 5,817,026
Impairment of loan 11 425,000 426,055
Profit on sale of inventory 10 - (274,426)
Profit on sale of joint venture 14 - (386,897)
(187,861) (1,521,669)
Net foreign exchange (gains)/losses (1,001,639) 290,103
(Increase)/decrease in other receivables (27,163) 294,950
Increase/(decrease) in payables 21,084 (273,707)
Net cash outflow from operating activities before interest, depreciation,
amortisation and
tax (1,195,579) (1,210,323 )
Finance income received 247,518 194,446
Tax paid (8,087) (131,022)
Net cash outflow from operating activities (956,148) (1,146,899)
Cash flow from investing activities
Purchase of inventories 10 (143,360) (7,432)
Proceeds on sale of inventories - 4,548,240
Purchase of plant and equipment (1,095) (1,006)
Repayment of loan 11 798,465 -
---------- ------------ ---
Net cash inflow from investing activities 654,010 4,539,802
Cash flow from financing activities
Return of Capital 17 - (7,480,008)
---------- ------------
Net cash outflow from financing activities - (7,480,008)
Net decrease in cash and cash equivalents (302,138) (4,087,105)
Cash and cash equivalents at start of the year 3,069,128 7,180,340
Effect of foreign exchange rates 12 (39) (24,107)
---------- ------------
Cash and cash equivalents at end of the year 2,766,951 3,069,128
---------- ------------ ---
The accompanying notes are an integral part of the financial
statements.
Notes to the financial statements
1. General information
The Ottoman Fund Limited has invested in Turkish land and
new-build residential property in Riva, Bodrum and Alanya. 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 19 December 2013.
2. Accounting policies
The consolidated financial statements of the Group for the year
ended 31 August 2013 comprise the Company and its subsidiaries,
listed in note 13, (together, the "Group") and have been prepared
in accordance with International Financial Reporting Standards
("IFRS") issued by the International Accounting Standards Board
("IASB") and interpretations issued by the International Financial
Reporting Committee of the IASB ("IFRIC").
These policies have been consistently applied in all years
presented, unless otherwise stated.
No new standards or amendments to standards were issued which
were relevant to the Group and applicable for the year under
review.
(a) Basis of preparation
The Group has cash and cash equivalents in excess of GBP2.77m at
the balance sheet date and under GBP100,000 of liabilities. The
Directors have reviewed this information and are comfortable that
the Company will continue as a financially viable entity for the
foreseeable future. Based on that the financial statements have
been prepared on a going concern basis.
The consolidated financial statements have been prepared on a
historical cost basis.
(b) Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 August each year. 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 the sale 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 estimates 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. In
prior years, 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. As in the prior year, the valuations are
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 taking
into account other management assumptions 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 (note 10) and the recoverability
of the loan receivable from Mandalina (note 11).
As a result of their assessment, the Directors believe that
impairment is necessary to the inventory and the loan receivable.
Please refer to notes 10 and 11 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.
(k) Changes in accounting policy and disclosures
New and amended standards adopted by the group
There are no IFRSs or IFRIC interpretations that are effective
for the first time for this financial year that would be expected
to have a material impact on the Group.
New standards, amendments and interpretations issued but not
effective and not early adopted
At the date of the authorisation of these consolidated financial
statements, the following statements, standards and interpretations
were in issue but not yet effective for periods commencing on or
after 1 January 2013 and have not been early adopted:
IFRS 9, 'Financial instruments' - classification and
measurement' (effective 1 January 2015)
IFRS 10, 'Consolidated financial statements' (effective 1
January 2013)
IFRS 11, 'Joint arrangements' (effective 1 January 2013)
IFRS 12, 'Disclosures of interests in other entities' (effective
1 January 2013)
IFRS 13, 'Fair value measurement' (effective 1 January 2013)
IAS 28 (revised 2011), 'Associates and joint ventures'
(effective 1 January 2013)
The full impact of the adoption of these standards and
interpretations in future periods on the financial statements of
the Group is still being assessed by the Directors.
3. 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.
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 above. In addition the year end valuations
provided by BNP Paribas (through an alliance member, Kuzeybati) 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.
4. Management/advisory fee
2013 2012
GBP GBP
Management fee 197,930 217,635
------- -------
Civitas Property Partners S.A. ("Civitas") was 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. Civitas was paid GBP197,930 (2012: GBP217,635)
during the year.
5. Other operating expenses
2013 2012
GBP GBP
Legal and professional fees 196,449 133,193
Advisory and consultancy fees 108,413 121,091
Marketing 6,744 4,738
Travel and subsistence 12,886 47,717
Directors' remuneration 150,000 150,000
Directors' bonus 62,657 -
Administration fees 70,000 69,776
Audit services 78,080 51,933
Depreciation 496 2,092
Amortisation 664 742
Other operating expenses 151,405 173,929
------- -------
837,794 755,211
------- -------
The Group has no employees.
6. Tax 2013 2012
GBP GBP
Irrecoverable overseas tax 8,087 131,022
----- -------
This tax represents taxation on taxable profits earned by the
Turkish subsidiaries.
7. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the
gain/(loss) attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
year.
2013 2012
Gain/(loss) attributable to equity holders of the Company 3,435,165 (GBP7,042,815)
------------ ---------------
Weighted average number of ordinary shares in issue 134,764,709 134,764,709
------------ ---------------
(b) Diluted
The diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. As the
options expired without exercise, the basic and diluted earnings
per share are the same.
Both the basic and diluted gain/(loss) per share are calculated
as 2.55 pence (2012: (5.23) pence).
8. Intangible assets
Cost GBP
At 1 September 2012 and 31 August 2013 10,132
Amortisation
At 1 September 2012 (8,694)
Charge for the year (664)
------
At 31 August 2013 (9,358)
------
Net book value at 31 August 2013 774
------
Net book value at 31 August 2012 1,438
------
The intangible asset relates to computer software, with a useful
life of 6 years. There has been no impairment during the year.
9. Plant and equipment
Furniture and Leasehold
fittings improvements Total
Cost GBP GBP GBP
At 1 September 2012 19,252 46,501 65,753
Additions 1,095 - 1,095
At 31 August 2013 20,347 46,501 66,848
------------- ------------ -------
Depreciation
At 1 September 2012 (17,389) (45,501) (62,890)
Charge for the year (194) (302) (496)
------------- ------------ -------
At 31 August 2013 (17,583) (45,803) (63,386)
------------- ------------ -------
Net book value at 31 August 2013 2,764 698 3,462
------------- ------------ -------
Net book value at 31 August 2012 1,863 1,000 2,863
------------- ------------ -------
10. Inventories 2013 2012
GBP GBP
Opening net realisable value 78,635,982 89,500,205
Purchases at cost 143,360 7,432
Sale during the year - (5,329,055)
Profit on sale - 274,426
Write back/(impairment) of inventory 3,809,755 (5,817,026)
----------- ------------
Closing net realisable value 82,589,097 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.
In accordance with the accounting policy in note 2, inventories
are stated at the lower of cost and net realisable value.
Consistent with previous years the Company has obtained two
independent valuations of the inventories from BNP Paribas (through
an alliance member, Kuzeybati) and TSKB on the basis of market
values which have been reviewed by the Board. In the previous and
current year, the valuations have been significantly different from
each other and, following discussions with the Investment Advisor
and the valuers, the Directors believe that as of the balance sheet
date the current inventory valuation is a fair approximation of
what the Board currently expects is realisable, being an average of
the two valuations taking into account other management
assumptions. On this basis, a total market value of GBP83.6 million
(gross of selling costs) (2012: GBP79.6 million) has been
determined by the Directors for inventories held at the balance
sheet date. In accordance with the accounting policy, unrealised
gains or losses as a result of this valuation have not been
recognised in the statement of comprehensive income.
The impairment above relates to the write back of previous
impairments to Riva (GBP5,199,755), which the Directors believe are
now recoverable. There has been a further impairment during the
year to Bodrum (GBP1,390,000). The Directors believe the net
realisable value for Bodrum (GBP18.7 million) at the year end was
lower than the cost and have therefore impaired the asset
accordingly. The prior year impairment relates to Riva
(GBP5,199,755) and Bodrum (GBP617,271).
11. Loans and receivables 2013 2012
GBP GBP
Opening balance 3,870,603 4,800,000
Repayment of loan (798,465) -
Impairment of loan (425,000) (426,055)
)
Exchange gain/(loss) on revaluation of loan 276,622 (503,342
Closing balance 2,923,760 3,870,603
--------- ----------
The Alanya 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
valuation estimates and subjective judgements, which may vary from
the actual values and sales prices realised upon ultimate
disposal.
12. Foreign currency losses 2013 2012
GBP GBP
Translation of cash balances (39) (24,107)
Other foreign currency loss 846,742 (527,550)
Net currency losses 846,703 (551,657)
------- --------
Foreign currency gains or losses on transactions and balances in
the Turkish subsidiaries are recognised in the translation reserve,
not in the amounts above. The Company has no accounts in any
currency other than Pound Sterling.
13. Investment in subsidiaries - Company
Country of Authorised Issued Ownership
Name incorporation share capital share capital %
Ottoman Finance Company I Limited Jersey GBP10,000 GBP1 100
Ottoman Finance Company II Limited Jersey GBP10,000 GBP1 100
Osmanli Yapi 1 Turkey YTL 57,395,416 YTL 57,395,416 99.99
Osmanli Yapi 2 Turkey YTL 193,534,525 YTL 193,534,525 99.99
All of the above companies have been incorporated into the Group
accounts. On 14 June 2013, Ottoman Finance Company III Limited,
Ottoman Finance Company IV Limited and Ottoman Finance Company V
Limited were dissolved. During the period, Osmanli Yapi 1 and
Osmanli Yapi 4 were combined. Osmanli Yapi 2 and Osmanli Yapi 3
were also combined.
14. Interests in joint ventures
In the year ended 31 August 2012, as part of the sale of the
Kazikli village, the Group sold its interest in the joint venture,
Mobella Insaat Taahhut Turizm San ve Tic A.S. ("Mobella"), a
project management company.
On sale of Mobella, a gain of GBP386,897 was recorded by the
Group due to a combination of exchange losses from prior periods,
the write-off of intercompany loans and the write-off of other
assets held in Mobella by the Group.
15. Trade and other receivables
2013 2012
GBP GBP
Prepayments and accrued income 33,367 50,381
VAT receivable 508,008 546,889
Other receivables 135,346 52,288
676,721 649,558
------- -------
The Directors consider that the carrying amount of the above
receivables approximates to their fair value. Prepayments include
advances to suppliers.
16. Trade and other payables
2013 2012
GBP GBP
Accruals 71,536 38,035
Other payables 26,941 39,358
------ ------
98,477 77,393
------ ------
The Directors consider that the carrying amount of the above
payables approximates to their fair value.
17. 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 (2012: 134,764,709) 120,003,007
-----------
The 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 excess capital to
shareholders.
Movements in ordinary share capital during the year Number GBP
Ordinary shares in issue at 1 September 2012 134,764,709 120,003,007
Movement during the year - -
----------- -----------
Ordinary shares in issue at 31 August 2013 134,764,709 120,003,007
----------- -----------
18. Retained earnings
2013 2012
GBP GBP
At start of year (33,839,300) (26,796,485)
Bank and deposit interest earned 247,518 194,446
Profit on sale of inventory - 274,426
Profit on sale of joint venture - 386,897
Operating expenses 2,349,031 (7,215,927)
2,596,549 (6,360,158)
Net movement on foreign exchange 846,703 (551,657)
Tax (8,087) (131,022)
----------- -----------
Loss for the year 3,435,165 (7,042,837)
Minority interests 1 22
----------- -----------
At end of year (30,404,134) (33,839,300)
----------- -----------
19. Net asset value per share
The net asset value per ordinary share is based on the net
assets attributable to equity shareholders of GBP88,862,288 (2012:
GBP86,152,179) and on 134,764,709 ordinary shares
(2012:134,764,709), being the number of ordinary shares in issue at
the year end. The net asset value per share for the year ended 31
August 2013 was 65.9 pence (2012: 63.9 pence).
20. Cash and cash equivalents
2013 2012
GBP GBP
Bank balances 2,766,951 3,069,128
--------- ---------
21. Financial instruments
The disclosure on the financial instruments has been limited to
the consolidated financial position. This approach has been adopted
as this covers all of the principal risks associated with the
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 Kuzeybati (an alliance member of BNP Paribas). 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.
Consistent with the prior year, 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 11 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, due to the likelihood of
it occurring being deemed to be minimal.
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.
Credit risk exposure
In summary, compared to the amounts in the consolidated
statement of financial position, the maximum exposure to credit
risk at 31 August 2013 was as follows:
Balance Maximum Balance Maximum
sheet exposure sheet exposure
at 31 August at 31 August at 31 August at 31 August
2013 2013 2012 2012
Non-current assets GBP GBP GBP GBP
Loans and receivables 2,923,760 2,923,760 3,870,603 3,870,603
Current assets
Cash and cash equivalents 2,766,951 2,766,951 3,069,128 3,069,128
Other receivables 676,721 676,721 649,558 649,558
------------ ------------ ------------ ------------
6,367,432 6,367,432 7,589,289 7,589,289
------------ ------------ ------------ ------------
Fair value of financial assets and liabilities
The book values of the cash at bank and loans and receivables
included in these financial statements approximate to their fair
values.
(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 given the
Group's exposure.
Currency rate exposure
An analysis of the Group's currency exposure in Pound Sterling
is detailed below:
Currency Non-current Net monetary Liabilities at Non-current Net monetary Liabilities at
assets at 31 assets at 31 31 August 2013 assets at 31 assets at 31 31 August 2012
August 2013 August 2013 August 2012 August 2012
GBP GBP GBP GBP GBP
Pounds Sterling - 1,879,325 (71,536) - 1,915,673 (38,035)
Euro 2,923,760 548 - 3,870,603 2,490 -
US Dollar 82,589,097 844,608 - 78,635,982 1,139,559 -
Turkish Lira 4,236 620,714 (26,941) 4,301 583,571 (39,358)
--------------- -------------- --------------- --------------- -------------- ---------------
85,517,093 3,345,195 (98,477) 82,510,886 3,641,293 (77,393)
--------------- -------------- --------------- --------------- -------------- ---------------
Foreign currency sensitivity
The table below details the Group's sensitivity to a 5% increase
in the value of Sterling against the relevant currencies. This
percentage is considered reasonable due to volatility in current
and historic exchange rate movements. With all other variables held
constant, net assets attributable to shareholders and the change in
net assets attributable to shareholders per the consolidated income
statement would have decreased by the amounts shown below. The
analysis has been performed on the same basis as for 2012.
Currency Profit & Loss at Equity at Profit & Loss at Equity at
31 August 31 August 31 August 31 August
2013 2013 2012 2012
GBP GBP GBP GBP
Euro 146,215 - 193,655 -
US Dollar 42,230 4,129,455 56,978 3,931,799
Turkish Lira 29,689 212 27,211 215
---------------- ---------- ---------------- ----------
218,134 4,129,667 277,844 3,932,014
---------------- ---------- ---------------- ----------
A 5% weakening of Sterling against the relevant currency would
have resulted in an equal but opposite effect on the amounts in the
financial statements to the amounts shown above, on the basis that
all other variables remain constant.
(iv) Interest rate risk
Interest rate movements may affect: (i) the fair value of the
investments in fixed interest rate securities, (ii) the level of
income receivable on cash deposits, (iii) interest payable on the
company's variable rate borrowings. There is no policy in place to
mitigate this risk as the Board believes such a policy would not be
cost effective, given the Group exposure.
The Company holds only cash deposits.
The interest rate profile of the Group excluding short term
receivables and payables was as follows:
Currency Floating Non interest Floating Non interest
rate bearing rate bearing
at 31 August at 31 August at 31 August at 31 August
2013 2013 2012 2012
GBP GBP GBP GBP
Pounds Sterling 1,917,248 246 1,901,420 -
Euro - 2,924,308 - 3,873,093
US Dollar 844,608 82,589,097 1,128,331 78,647,210
Turkish Lira - 8,537 8,676 21,284
------------ ------------ ------------ ------------
2,761,856 85,522,188 3,038,427 82,541,587
------------ ------------ ------------ ------------
Maturity profile
The following table sets out the carrying amount, by maturity,
of the Group's financial instruments:
2013
0 to 3 3 to 6 6 to 12 More than
months months months 1 year Total
GBP GBP GBP GBP GBP
Floating rate
Cash 2,761,856 - - - 2,761,856
--------- ------ ------- --------- ---------
2,761,856 - - - 2,761,856
--------- ------ ------- --------- ---------
Non-interest bearing
Cash 5,095 - - - 5,095
Other receivables 168,713 -508,008 -676,721
Other payables (98,477) - - -(98,477)
------- ------- -------
75,331 -508,008 -583,339
------- ------- -------
2012
0 to 3 3 to 6 6 to 12 More than
months months months 1 year Total
GBP GBP GBP GBP GBP
Floating rate
Cash 3,038,427 - - - 3,038,427
--------- ------ ------- --------- ---------
3,038,427 - - - 3,038,427
--------- ------ ------- --------- ---------
Non-interest bearing
Cash 30,701 - - - 30,701
Other receivables 420,434 -229,124 -649,558
Other payables (77,393) - - -(77,393)
------- ------- -------
373,742 -229,124 -602,866
------- ------- -------
Interest rate sensitivity
An increase of 10 basis points in interest rates during the
period would have increased the net assets attributable to
shareholders and changes in net assets attributable to shareholders
by GBP2,762 (2012:GBP3,038). A decrease of 10 basis points would
have had an equal but opposite effect.
(v) Liquidity risk
The Group's assets mainly comprise cash balances, loans
receivable and development property, which can be sold to meet
funding commitments if necessary. As at 31 August 2013 the Group
does not have any significant liabilities due.
The Group has sufficient cash reserves to meet liabilities due
for the foreseeable future.
22. Related party transactions
Information regarding subsidiaries can be found in note 13.
Information regarding the joint venture sold in 2012 can be found
in note 14.
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
23.
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 4.
Sinan Kalpakcioglu has been engaged during the period as 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. Consultancy fees paid to Mr Kalpakcioglu
amounted to GBP48,400 (2012: GBP61,458); GBP7,867 remained
outstanding at the year end (2012: GBP6,667).
Vistra Nominees I Limited is a related party being the holder of
the 2 founder shares of The Ottoman Fund Limited (see Note 17).
Sinan Kalpakcioglu and Ali Pamir are shareholders in Mandalina,
which holds the title to the Alanya apartments (see Note 11).
The Directors do not consider there to be an ultimate
controlling party.
23. Directors' interests
Total compensation (excluding performance fees) paid to the
Directors of the Company over the year was GBP150,000 (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 of US$100,000 has been paid
during the year. Antony Gardner-Hillman, Andrew Wignall and Eitan
Milgram were remunerated GBP25,000 per director for their services
during the year (2012: GBP25,000 per director).
Eitan Milgram is an Executive Vice President of Weiss Asset
Management LLC which is a substantial investor in the Company.
24. 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.
25. Post balance sheet events
On 1 November 2013, the Group sold 106,207 m(2) of its Riva land
parcel for $12 million plus VAT to EAG Tourism & Construction
AS. The sale price was at a small premium to the Group's last
published carrying value at the year end. It is expected that the
entire $12 million minus a 1% fee to the investment advisor will be
available for distribution to shareholders following a court
approved capital reduction in Turkey, which is expected to occur
within three months. Following this transaction, 824,793 m(2) of
Riva land remain available for sale or development.
Trade and other receivables include amounts relating to VAT
receivable on the purchase of the land in Turkey, it is anticipated
that this amount will fall by GBP242,793 as some of the VAT is
recoverable on completion of the above transaction.
Subsequent to the year end, the decision was taken to reduce the
share capital requirements of Osmanli Yapi 2 to facilitate a return
of capital to the Company. Using 31 August 2013 exchange rates, the
value of the reduction is estimated to be GBP11,242,337, which
represents repayment of payables to Osmanli Yapi 2 and remittance
of sales proceeds by GBP3,618,991 and GBP7,623,346,
respectively.
Other than the above, 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
FR NKCDBABDDPBD
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