TIDMOTM
RNS Number : 4832I
Ottoman Fund Limited (The)
30 May 2014
THE OTTOMAN FUND LIMITED (the "Company")
Interim Financial Statements for the period ended 28 February
2014
The Company is pleased to announce as follows its unaudited
interim results for the six months ended 28 February 2014, a full
copy of which is available on the Company's website:
www.theottomanfund.com.
Enquiries:
N+1 Singer
James Maxwell/Nick Donovan 020 7496 3000
Vistra Secretaries Limited 01534 504 700
Company Secretary
Chairman's Statement
Dear Shareholders,
Our net asset value as at 28 February 2014 was 50.6 pence per
share as compared with a net asset value of 65.9 pence per share as
at 31 August 2013. The primary reason for the reduction in Sterling
denominated net asset value over that six month period was a return
of capital of 6.37 pence per share following the sale of ten per
cent of the Company's interest in the Riva land, a write down in
the value of the Bodrum asset, and a currency "loss," which is a
function of the significant decline in the US dollar and Turkish
Lira as measured in Sterling over the period.
There is currency complexity in the Ottoman Fund. We hold our
assets in Turkish subsidiaries, which are required to keep their
books in Turkish lira, while the Ottoman Fund keeps its books in
Sterling. Under IFRS our Turkish subsidiaries are typically
required to book assets at historical Turkish lira cost, which is
then translated into Sterling, our reporting currency, resulting in
a gain or loss on our P&L. Our valuations are done in dollars
and large land transactions in Turkey tend to be negotiated in US
dollars and then translated into Turkish lira at the closing in
accordance with local law. We do not hedge dollar or lira exposure
so we are fully exposed to movement in each currency as against
Sterling, our reporting currency.
Following period end we announced the sale of the remainder of
the Riva land, bringing the total sales price for the land to $95.3
million. Our sales price was at about the US dollar book value of
the asset. Congratulations are due our investment advisor Civitas
Property Partners, specifically Ali Pamir, Firuz Soyuer, and Kerem
Saltoglu, for facilitating this sale of our largest asset at book
value. We have announced a return of capital of approximately GBP27
million of the sale proceeds for the end of this month and expect
to announce a further return of capital following a capital
reduction at our Turkish subsidiary. We currently expect to be able
to make this announcement by the end of August.
Once that capital reduction and distribution are completed,
subsequent to the year end, our balance sheet will primarily
comprise two property related assets, the Bodrum land and a loan
secured by the remaining Alanya units. We have those assets valued
by two appraisal companies and for our balance sheet take an
average of the two:
BNP Paribas TSKB Average Average
28 February 2014 28 February 2014 28 February 2014 31 August 2013
($) ($) ($) ($)
-------- ----------------- ----------------- ----------------- ---------------
Bodrum 25,400,000 28,070,000 26,735,000 28,945,000
-------- ----------------- ----------------- ----------------- ---------------
Alanya 3,458,000 3,375,000 3,416,500 4,825,000
-------- ----------------- ----------------- ----------------- ---------------
TOTAL 28,858,000 31,415,000 30,151,500 33,770,000
======== ================= ================= ================= ===============
We continue to sell units at Alanya and have sixteen available
for sale. We continue our efforts to sell the Bodrum asset
notwithstanding a subdued market for the Turkish holiday
sector.
I look forward to writing you next when we release our annual
report for the financial year ended 31 August 2014.
John D. Chapman
Chairman
The Ottoman Fund Limited
30 May 2014
Independent review report to the directors of The Ottoman Fund
Limited
Introduction
We have been engaged by The Ottoman Fund Limited (the "Company")
to review the condensed unaudited interim financial statements in
the half-yearly financial report for the six months ended 28
February 2014, which comprise the condensed unaudited consolidated
statement of financial position as at 28 February 2014, condensed
unaudited consolidated statement of comprehensive income, condensed
unaudited consolidated statement of changes in equity, condensed
unaudited 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 unaudited 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
Company and its subsidiaries, together the "group", are prepared in
accordance with International Financial Reporting Standards
("IFRSs") as issued by the International Accounting Standards
Board. The condensed set of unaudited financial statements included
in this half-yearly financial report have 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 unaudited interim 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 2014 is not prepared, in all material respects,
in accordance with International Accounting Standard 34, "Interim
Financial Reporting" and the AIM Rules for Companies.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
30 May 2014
Notes
(i) The maintenance and integrity of The Ottoman Fund Limited
website is the responsibility of the directors; the work carried
out by the independent auditors does not involve consideration of
these matters and, accordingly, the independent auditors accept no
responsibility for any changes that may have occurred to the
condensed unaudited interim financial statements and half-yearly
report since they were initially presented on the website.
(ii) Legislation in Jersey governing the preparation and
dissemination of financial information 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 28 February 31 August 2013
2014 2013
note GBP GBP GBP
Revenue
Finance income 160,970 117,582 247,518
Profit on sale of inventory 2,656,688 - -
Total income 2,817,658 117,582 247,518
------------- ------------ ---------------
Operating Expenses
Management/advisory fee 3 (186,401) (104,945) (197,930)
Other operating expenses (280,701) (488,663) (837,794)
(Impairment)/write back
of inventory 7 (2,685,000) - 3,809,755
Loan impairment 8 - (425,000) (425,000)
Total operating expenses (3,152,102) (1,018,608) 2,349,031
------------- ------------ ---------------
Foreign exchange gains 1,497,077 322,409 846,703
Gain/(loss) before tax 1,162,633 (578,617) 3,443,252
Taxation 1(g) (307,832) (4,423) (8,087)
Gain/(loss) for the period 854,801 (583,040) 3,435,165
------------- ------------ ---------------
Other comprehensive
loss
Foreign exchange on subsidiary
translation (1,140,729) (25,020) (725,056)
Foreign exchange loss
on sale of inventory 7 (11,855,443) - -
Other comprehensive loss
for the period (12,996,172) (25,020) (725,056)
------------- ------------ ---------------
Total comprehensive (loss)/income
for the period (12,141,371) (608,060) 2,710,109
------------- ------------ ---------------
Gain/(loss) attributable
to:
Equity shareholders of
the Company 854,801 (583,026) 3,435,166
Minority interests - (14) (1)
------------- ------------ ---------------
854,801 (583,040) 3,435,165
------------- ------------ ---------------
Total comprehensive (loss)/gain
attributable to:
Equity shareholders of
the Company (12,141,365) (608,049) 2,710,109
Minority interests (6) (11) -
------------- ------------ ---------------
(12,141,371) (608,060) 2,710,109
------------- ------------ ---------------
Basic and diluted earnings
per share (pence) 4 0.63 (0.43) 2.55
The accompanying notes on pages 7 to 17 are an integral part of
the financial statements.
Consolidated Statement of Financial Position
(unaudited) (unaudited) (audited)
Six months Six months Year ended
ended ended
28 February 28 February 31 August
2014 2013 2013
note GBP GBP GBP
Assets
Non-current assets
Intangible assets 5 - 1,106 774
Plant and equipment 6 - 2,480 3,462
Inventories 7 33,918,775 78,718,372 82,589,097
Loans and receivables 8 2,014,709 2,958,676 2,923,760
35,933,484 81,680,634 85,517,093
Current assets
Other receivables 341,003 659,221 676,721
Cash and cash equivalents 37,536,437 3,273,947 2,766,951
------------- ------------- -------------
37,877,440 3,933,168 3,443,672
Total assets 73,810,924 85,613,802 88,960,765
Current liabilities
Other payables (5,670,007) (69,683) (98,477)
------------- ------------- -------------
(5,670,007) (69,683) (98,477)
Net assets 68,140,917 85,544,119 88,862,288
------------- ------------- -------------
Equity
Share capital 9 111,423,007 120,003,007 120,003,007
Retained earnings (29,549,333) (34,422,326) (30,404,134)
Translation reserve (13,732,762) (36,563) (736,596)
------------- ------------- -------------
Equity attributable
to owners of the
parent 68,140,912 85,544,118 88,862,277
Minority interest
equity 5 1 11
------------- ------------- -------------
Total Equity 68,140,917 85,544,119 88,862,288
------------- ------------- -------------
Net asset value per
Ordinary share (pence) 10 50.6 63.5 65.9
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 30 May 2014.
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 2014 (unaudited)
As at 1 September 2013 120,003,007 (30,404,134) (736,596) 11 88,862,288
Return of capital (8,580,000) (8,580,000)
Gain for the period - 854,801 - - 854,801
Foreign exchange on subsidiary
translation - - (12,996,166) (6) (12,996,172)
----------------- ------------- ------------- ------------ -------------
At 28 February 2014 111,423,007 (29,549,333) (13,732,762) 5 68,140,917
----------------- ------------- ------------- ------------ -------------
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 year ended 31
August 2013 (audited)
As at 1 September 2012 120,003,007 (33,839,300) (11,540) 12 86,152,179
Gain for the year - 3,435,166 - (1) 3,435,165
Foreign exchange on subsidiary
translation - - (725,056) - (725,056)
----------------- ------------- ------------- ------------ -------------
At 31 August 2013 120,003,007 (30,404,134) (736,596) 11 88,862,288
----------------- ------------- ------------- ------------ -------------
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 ended Six months ended Year ended
28 February 28 February 2013 31 August 2013
2014
Cash flow from operating activities GBP GBP GBP
Net gain/(loss) for the period 854,801 (583,040) 3,435,165
Adjustments for:
Interest (160,970) (117,582) (247,518)
Tax 307,832 4,423 8,087
Depreciation 3,462 383 496
Amortisation 774 332 664
Impairment/(write back) of
inventory 2,685,000 - (3,809,755)
Impairment of loan - 425,000 425,000
Profit on sale of inventory (2,656,688) - -
1,034,211 (270,484) (187,861)
Net foreign exchange losses/(gains) 1,598,768 (336,508) (1,001,639)
Decrease/(increase) in other
receivables 335,718 (9,663) (27,163)
Increase/(decrease) in other
payables 5,571,530 (7,710) 21,084
----------------- ----------------- ---------------
Net cash inflow/(outflow)
from operating activities
before interest, depreciation,
amortisation and tax 8,540,227 (624,365) (1,195,579)
Interest received 160,970 117,582 247,518
Taxation (307,832) (4,423) (8,087)
Net cash inflow/(outflow)
from operating activities 8,393,365 (511,206) (956,148)
Cash flow from investing activities
Purchase of inventories (39,389) (82,390) (143,360)
Proceeds on sale of inventories 34,169,267 - -
Purchase of plant and equipment - - (1,095)
Repayment of loan 826,220 798,465 798,465
----------------- ----------------- ---------------
Net cash inflow from investing
activities 34,956,099 716,075 654,010
Cash flow from financing activities
Return of Capital (8,580,000) - -
----------------- ----------------- ---------------
Net cash outflow from financing (8,580,000) - -
activities
Net increase/(decrease) in
cash and cash equivalents 34,769,463 204,869 (302,138)
Cash and cash equivalents
at start of period 2,766,951 3,069,128 3,063,128
Effect of foreign exchange
rates 23 (50) (39)
----------------- ----------------- ---------------
Cash and cash equivalents
at end of period 37,536,437 3,273,947 2,766,951
----------------- ----------------- ---------------
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
2013 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 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
2014. 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 2013.
The Ottoman Fund Limited has invested in Turkish land and
new-build residential property in Riva (sold post period end),
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.
The interim financial statements should be read in conjunction
with the annual financial statements for the year ended 31 August
2013, 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 Group has cash and cash equivalents in excess of GBP37.54m
at the period end and liabilities of only GBP5.67m, relating
primarily to VAT payable from the sale of the Riva land during the
period. 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 this, the financial
statements have been prepared on a going concern basis.
The interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting.
(b) Basis of consolidation
Subsidiaries
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 statement of financial position 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 statement of financial
position 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 statement of financial position
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 2014 year of assessment
and future periods will be subject to tax at the rate of 0% (2013:
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 (2013: 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 statement
of financial position 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 statement of
financial position 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 statement of financial position 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 statement of financial position date;
and
- items to be included in the statement of comprehensive income
are translated at the average exchange rates for the period 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
inventory net realisable value and loan recoverability
In reflection of the economic environment and market conditions
during the current period, which have improved compared to previous
years, the frequency of transactions similar to the inventory and
apartments on an arm's length basis remained low although more
transactions took place than in the prior periods.
Consistent with previous periods the Company has obtained two
independent valuations which have been reviewed by the Board. In
prior periods, 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 period, 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 and the recoverability of the
loan receivable from Mandalina (note 8).
As a result of their assessment, the Directors believe that
impairment is required to inventory, please refer to note 7,
although no 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 period.
2. Segment reporting
The chief operating decision maker (the "CODM") in relation to
the Group is considered to be the Board itself. The factor used to
identify the Group's reportable segments is geographical area.
Based on the above and a review of information provided to the
Board, it has been concluded that the Group is currently organised
into one reportable segment: Turkey.
There are two types of real estate projects within the above
segment; these are development land and new build residential
property. There are 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 period 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 1. In addition the period 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.
3. Management fee
Six months ended Six months ended Year ended
28 February 2014 28 February 2013 31 August 2013
GBP GBP GBP
Management fee 186,401 104,945 197,930
----------------- ----------------- ---------------------
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 2014 was GBP18,217 (28 February 2013: GBP18,298; 31 August
2013: GBP 18,298).
4. Earnings per share
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
period.
Six months ended 28 February Six months ended 28 February Year ended
2014 2013 31 August 2013
Gain/(loss) attributable to GBP854,801 (GBP583,026) GBP3,435,165
equity 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 0.63 pence (28 February
2013: (0.43) pence; 31 August 2013: 2.55 pence).
5. Intangible assets
Six months ended Six months ended Year ended
28 February 2014 28 February 2013 31 August 2013
GBP GBP GBP
Opening net book value 774 1,438 1,438
Amortisation and impairment
charge (774) (332) (664)
------------------ ------------------ ----------------
Closing net book value - 1,106 774
------------------ ------------------ ----------------
The intangible asset relates to computer software, with a useful
life of 6 years. There has been no impairment during the
period.
6. Plant and equipment
Six months ended
28 February Six months ended Year ended
2014 28 February 2013 31 August 2013
GBP GBP GBP
Opening net book value 3,462 2,863 2,863
Additions - - 1,095
Depreciation (3,462) (383) (496)
Closing net book value - 2,480 3,462
----------------- ------------------ ----------------
7. Inventories
Six months ended Six months ended Year ended
28 February 2014 28 February 2013 31 August 2013
GBP GBP GBP
Opening net realisable
value 82,589,097 78,635,982 78,635,982
Purchases at cost 39,389 82,390 143,360
Sale during the period (48,681,399) - -
Profit on sale 2,656,688 - -
(Impairment)/write back
of inventory (2,685,000) - 3,809,755
Closing net realisable
value 33,918,775 78,718,372 82,589,097
------------------ ------------------ ----------------
This represents 149,550 square metres of development land on the
Bodrum peninsula and 318,916 square metres on the Riva
coastline.
The directors have assessed the net realisable value at 28
February 2014 using the same approach as at the year end (31 August
2013) and have assessed that the Bodrum land requires impairment by
the amount noted above (the write back and impairment at 31 August
2013 related to Riva and Bodrum).
During the period there was a sale of 612,823 square metres of
Riva. The foreign exchange loss on sale of inventory included in
other comprehensive income of GBP11,855,443 is a result of Riva
being held at the historical cost (and therefore historical
exchange rates) due to all previous impairments having been written
back and exchange rate fluctuations between Pound Sterling, Turkish
Lira and US Dollar since the initial purchase of the land.
8. Loans and receivables
Six months ended Six months ended Year ended
28 February 2014 28 February 2013 31 August 2013
GBP GBP GBP
Opening Balance 2,923,760 3,870,603 3,870,603
Repayment of loan (826,220) (798,465) (798,465)
Impairment of loan - (425,000) (425,000)
Exchange (loss)/gain
revaluation of loan (82,831) 311,538 276,622
Closing Balance 2,014,709 2,958,676 2,923,760
------------------ ------------------ ----------------
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.
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 111,423,007
-----------
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 GBP68,140,917 on
134,764,709 shares (28 February 2013: GBP85,544,119 on 134,764,709
shares; 31 August 2013: GBP88,862,288 on 134,764,709 shares).
11. Financial risk management
The disclosure on the financial risk management has been limited
to the consolidated financial position. This approach has been
adopted as this covers all of the principal risks associated with
the Group.
The disclosures below assume that the properties held by the
Group are in US Dollars as this is the currency in which they are
valued by BNP Paribas and TSKB. 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, 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.
(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 is detailed
below:
Net Net
Non-current monetary Non-current monetary
assets assets Liabilities Assets assets Liabilities
28 February 28 February 28 February 28 February 28 February 28 February
Currency 2014 2014 2014 2013 2013 2013
GBP GBP GBP GBP GBP GBP
Sterling - 1,148,543 (33,034) - 2,223,434 (52,795)
Euro 2,014,709 659 - 2,958,676 2,981 -
US Dollar 33,918,775 36,391,075 - 78,718,372 1,017,459 -
Turkish
Lira - (5,332,844) (5,636,973) 3,586 619,611 (16,888)
------------ ------------ ------------ ------------ ------------ ------------
35,933,484 32,207,433 (5,670,007) 81,680,634 3,863,485 (69,683)
------------ ------------ ------------ ------------ ------------ ------------
31 August 31 August 31 August
2013 2013 2013
GBP GBP GBP
Sterling - 1,879,325 (71,536)
Euro 2,923,760 548 -
US Dollar 82,589,097 844,608 -
Turkish
Lira 4,236 620,714 (26,941)
------------ ------------ ------------
85,517,093 3,345,195 (98,477)
------------ ------------ ------------
(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's exposure.
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 28 February 28 February 31 August 31 August
2014 2014 2013 2013 2013 2013
GBP GBP GBP GBP GBP GBP
Sterling 1,143,941 219 2,251,312 - 1,917,248 246
Euro - 2,015,368 - 2,961,657 - 2,924,308
US Dollar 70,309,821 29 1,007,852 78,727,979 844,608 82,589,097
Turkish
Lira - 543 - 5,781 - 8,537
------------ ------------ ------------ ------------ ---------- -----------
71,453,762 2,016,159 3,529,164 81,695,417 2,761,856 85,522,188
------------ ------------ ------------ ------------ ---------- -----------
(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 2014 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 GBP23,600 (28 February
2013: GBP16,933; 31 August 2013: GBP48,400); GBP7,867 remained
outstanding at the period end (28 February 2013: GBP7,867; 31
August 2013: GBP7,867).
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 (excluding performance fees) paid to the
Directors during the period was GBP75,000 (28 February 2013:
GBP75,000; 31 August 2013: GBP150,000).
During the period 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 was paid in the prior year
amounting to 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
On 9 May 2014, the Company announced a return of capital of
approximately GBP27 million, or 20.0572 pence per share, payable to
shareholders of record as of 16 May 2014. The shares traded
ex-entitlement on 14 May 2014 and the payment date was 27 May 2014.
This return of capital comprised the sale proceeds from the sale of
Riva Land announced on 6 February 2014.
On 15 May 2014, the Company announced it had sold the remainder
of its Riva land for $101 per m(2), or a total of $32,210,482.67
plus VAT to Danis Tourism and Construction A. and Levent Selamoglu.
The sale price approximated the Company's last published book value
for Riva. Taxes will be payable on the profits from the sale, which
primarily result from currency gains. The Company's Board of
Directors expects to announce a return of capital once a capital
reduction in Turkey has been completed.
Other than the above, the Directors are satisfied that there
were no material events subsequent to the period 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 KMGFKMGZGDZM
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