TIDMOTM
RNS Number : 0949Y
Ottoman Fund Limited (The)
28 February 2017
THE OTTOMAN FUND LIMITED (the "Company")
Final results for the year ended 31 August 2016
The Company is pleased to announce as follows its final results
for the year ended 31 August 2016 together with the publication of
its 2016 annual report and accounts, a full copy of which will
shortly be available on the Company's website:
www.theottomanfund.com.
Enquiries:
N+1 Singer
James Maxwell/Gillian
Martin 0207 496 3000
Vistra Fund Services
Limited
Company Secretary 01534 504 700
Chairman's Statement
Dear Shareholders,
Net assets at fiscal year-end 2016 were GBP2.18 million (August
2015: GBP5.73 million). The decline in net assets is principally
represented by the capital distribution of GBP2.7 million announced
in February 2016 and net costs of approximately GBP850,000,
including taxes and foreign exchange loses. It should be noted that
net assets do not include any potential recoveries from the former
CFO or the Mandalina company.
Since we last reported to shareholders on 17 November 2016, our
lawyers in Turkey have managed to have dismissed one of the
embezzler's claims against the Company. This is important for
several reasons including that it brings us substantially closer to
being able to wind up the Turkish subsidiaries. Following a very
attenuated process over a period of many months, we are now
majority shareholders in the Mandalina company and have called a
shareholder meeting for the end of this month in order to obtain
board representation. If successful this should be a substantial
step in repatriating the Mandalina capital. My fellow director,
Andrew Wignall, and I are preparing to give evidence in the
criminal trial scheduled for 16 March 2017. We also continue our
efforts to negotiate a return of the money Sinan Kalpakcioglu
embezzled from our Turkish subsidiary companies.
We are hopeful that these efforts will achieve the desired
result, enable the board to return additional capital to
shareholders and wind up the Company.
I will report back to shareholders as soon as practicable.
John D. Chapman
Chairman
The Ottoman Fund Limited
28 February 2017
Directors' Report
The Directors submit their Report and the audited consolidated
financial statements (the "Financial Statements") of The Ottoman
Fund Limited (the "Company") and its subsidiaries (together, the
"Group") for the year ended 31 August 2016. The Company was formed
on 9 December 2005 and commenced trading on its admission to the
AIM market on 28 December 2005. The Company is quoted on the AIM
market of the London Stock Exchange.
Principal Activity
The Company was established to invest in Turkish property.
During 2014 the Company sold its remaining property interests. The
Company's remaining assets are substantially cash balances. In
addition, the Company has proceeded with legal actions in Turkey to
recover remaining money taken without authorisation by the former
Chief Financial Officer, totalling $1.35 million, and to recover a
loan to Mandalina of EUR1.3 million, which was impaired in the
prior year. There is no certainty as to the recoverability of any
of these amounts.
Investment Policy
Upon Admission to AIM, the Company's strategy was to invest in
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, having sold all investments previously
held.
Results, Dividends and Returns
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 for the
year ended 31 August 2016 (2015: nil). The consolidated statement
of comprehensive income is set out on page 8 of this Annual Report
and consolidated Financial Statements.
On 25 February 2016, the Group announced a return of capital to
shareholders of approximately GBP2.7 million, or 2 pence per share.
The payment date for the return of capital was 6 April 2016.
The Group is involved in ongoing litigation in relation to
events from the current and prior years. Details of the ongoing
matters are disclosed in notes 20 and 21.
Auditor
Baker Tilly Channel Islands Limited was appointed during the
year and have expressed their willingness to continue in office. A
resolution for their re-appointment will be considered at the next
Annual General Meeting ("AGM").
Life
Further to the announcement on 17 November 2016 the Company has
twelve months from that date to implement its current investing
policy in accordance with Rule 15 of the AIM Rules. If this is not
fulfilled, the Company will be suspended pursuant to AIM Rule 40.
The Board is hopeful that its efforts will enable the board to
return additional capital to shareholders and wind up the Company
within this timeframe.
Manager & Custodian
Subsequent to the removal of Development Capital Management
(Jersey) Limited as manager of the Company in 2010, management was
internalised at the Board level and the Board engaged with Civitas
Property Partners S.A. as Investment Advisor, including to manage
and sell the Company's Turkish assets.
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
The Directors of the Company are listed on page 27. John D
Chapman (Executive Chairman), Antony Gardner-Hillman and Andrew
Wignall all served as Directors throughout the year.
Shareholders' Interests (as at 31 August 2016)
Size of shareholding (in shares) No. of shareholders
1 - 9,999 27
10,000 - 99,999 11
100,000 - 999,999 4
1,000,000 - 9,999,999 13
10m+ 3
At 31 August 2016 the Company was aware of the following
interests of 3% or more in the ordinary share capital of the
Company:
Number % held
QVT Financial LP 43,335,000 32.16%
Weiss Asset Management LLC 40,132,000 29.78%
Toscafund Asset Management LLP 22,551,098 16.73%
Lars Bader 7,940,000 5.89%
JPMorgan Securities CREST transition account 7,113,766 5.28%
The Directors are not aware of other 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 GBP125,000 for the year ended
31 August 2016 (2015: 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. In addition to the above, during the prior year,
Andrew Wignall was remunerated GBP25,000 and Antony Gardner-Hillman
was remunerated GBP18,400 for additional services provided to
the.
None of the directors have any interests in the Company's share
capital.
Andrew Wignall
Director
The Ottoman Fund Limited
28 February 2017
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 confirm that they have complied with the above
requirements in preparing 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.
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
28 February 2017
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF THE OTTOMAN FUND
LIMITED
We have audited the consolidated financial statements of The
Ottoman Fund Limited (the "company" and together with its
subsidiaries is referred to as the "Group") for the year ended 31
August 2016, which comprise the consolidated statement of financial
position, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the consolidated
statement of cash flows, and related notes. The financial framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
This report is made solely to the company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991,
as amended. Our audit work is undertaken so that we might state to
the company's members those matters we are required to state to
them in an auditors' report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
members as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of the Directors and Auditor
As explained more fully in the Statement of Directors'
Responsibilities on page 5, the Directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APBs) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition we read the
other information contained in the annual report and consider
whether it is consistent with the audited financial statements. If
we become aware of any apparent misstatements or material
inconsistencies with the financial statements, we consider the
implications for our report. Our responsibilities do not extend to
any other information.
Opinion on the financial statements
In our opinion, the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 August 2016 and of its loss for the year then ended;
-- have been properly prepared in accordance with IFRS as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the
Companies (Jersey) Law, 1991 as amended.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Jersey) Law 1991 requires us to report to you
if, in our opinion:
-- proper accounting records have not been kept; or
-- proper returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns.
Ewan John Spraggon
For and on Behalf of Baker Tilly Channel Islands Limited
Chartered Accountants
St Helier, Jersey
Date: 28 February 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 August 2016
Year ended Year ended
31 August 31 August
2016 2015
notes GBP GBP
Revenue
Finance income 2(c) 3,819 152,581
3,819 152,581
Operating expenses
Management/advisory fee 4 - (108,844)
Other operating expenses 5 (961,844) (1,249,170)
Loan impairment 8 - (973,069)
Total operating expenses (961,844) (2,331,083)
Foreign exchange gains 9 480,097 2,455,587
(Loss)/gain before tax (477,928) 277,085
Tax charge 6 (534,342) (2,606,868)
Loss for the year (1,012,270) (2,329,783)
----------- -----------
Other comprehensive income:
Foreign exchange gain/(loss) on subsidiary translation 153,504 (1,159,163)
Other comprehensive profit/loss for the year 153,504 (1,159,163)
----------- -----------
Total comprehensive loss for the year (858,766) (3,488,946)
----------- -----------
Loss attributable to:
Equity shareholders of the Company (1,012,270) (2,329,783)
Minority interests - -
----------- -----------
(1,012,270) (2,329,783)
----------- -----------
Total comprehensive loss attributable to:
Equity shareholders of the Company (858,766) (3,488,946)
Minority interests - -
----------- -----------
(858,766) (3,488,946)
----------- -----------
Basic and diluted loss per share (pence) 7(b) (0.75) (1.73)
All items in the above statement derive from discontinuing
operations.
The accompanying notes on pages 12 to 26 are an integral part of
the financial statements.
Consolidated Statement of Financial Position
As at 31 August 2016
As at 31 As at 31
August 2016 August 2015
notes GBP GBP
Assets
Non-current assets
Loans and receivables 8 - -
------------ ------------
- -
Current assets
Trade and other receivables 11 138,491 212,499
Cash and cash equivalents 16 3,516,795 7,160,639
------------ ------------
3,655,286 7,373,138
Total assets 3,655,286 7,373,138
------------ ------------
Liabilities
Current liabilities
Trade and other payables 12 (1,478,964) (1,642,756))
(1,478,964) (1,642,756))
Net assets 2,176,322 5,730,382
------------ ------------
Equity
Share capital 13 49,940,922 52,636,216
Retained earnings 14 (44,966,778) (43,954,508)
Translation reserve (2,797,822) (2,951,326)
------------ ------------
Equity attributable to shareholders of the parent 2,176,322 5,730,382
Minority interests' equity - -
------------ ------------
Total equity 2,176,322 5,730,382
------------ ------------
Net asset value per ordinary share (pence) 15 1.6 4.3
The accompanying notes on pages 12 to 26 are an integral part of
the financial statements.
These financial statements were approved by the Board on 28
February 2017.
Antony Gardner-Hillman Andrew Wignall
Director Director
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 2016
As at 1 September
2015 52,636,216 (43,954,508) (2,951,326) - 5,730,382
Return of capital (2,695,294) - - - (2,695,294)
Loss for the year - (1,012,270) - - (1,012,270)
Foreign exchange
loss on
subsidiary translation - - 153,504 - 153,504
At 31 August 2016 49,940,922 (44,966,778) (2,797,822) - 2,176,322
------------ ------------ ----------- -------- -----------
For the year ended
31 August 2015
As at 1 September
2014 84,392,980 (41,624,725) (1,792,163) - 40,976,092
Return of capital (31,756,764) - - - (31,756,764)
Loss for the year - (2,329,783) - - (2,329,783)
Foreign exchange
loss on
subsidiary translation - - (1,159,163) - (1,159,163)
At 31 August 2015 52,636,216 (43,954,508) (2,951,326) - 5,730,382
------------ ------------ ----------- -------- -----------
The accompanying notes on pages 12 to 26 are an integral part of
the financial statements.
Consolidated Statement of Cash Flows
notes Year ended Year ended
31 August 31 August
2016 2015
GBP GBP
Cash flow from operating activities
Loss (1,012,270) (2,329,783)
Adjustments for:
Finance income (3,819) (152,581)
Tax 534,342 2,606,868
Impairment of loan 8 - 973,069
(481,747) 1,097,573
Net foreign exchange losses/(gains) 153,504 (1,083,913)
Decrease in trade and other receivables 74,008 1,015,135
(Decrease)/increase in trade and other payables (163,792) 1,554,753
Net cash (outflow)/inflow from operating activities before interest,
depreciation, amortisation
and tax (418,027) 2,583,548
Finance income received 3,819 152,581
Tax (534,342) (2,606,868)
Net cash (outflow)/inflow from operating activities (948,550) 129,261
Cash flow from investing activities
Repayment of loan 8 - 885,414
---------- -----------
Net cash inflow from investing activities - 885,414
Cash flow from financing activities
Return of Capital 13 (2,695,294) (31,756,764)
---------- -----------
Net cash outflow from financing activities (2,695,294) (31,756,764)
Net decrease in cash and cash equivalents (3,643,844) (30,742,089)
Cash and cash equivalents at start of the year 7,160,639 37,902,728
Effect of foreign exchange rates - -
---------- -----------
Cash and cash equivalents at end of the year 3,516,795 7,160,639
---------- -----------
The accompanying notes on pages 12 to 26 are an integral part of
the financial statements.
Notes to the consolidated financial statements
1. General information
The Ottoman Fund Limited had invested in Turkish land and
new-build residential property in Riva, Bodrum and Alanya. The
Group has as at the year end sold its investments. The Company is a
limited liability company incorporated and domiciled in Jersey,
Channel Islands since 9 December 2005. 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 28 February
2017.
2. Accounting policies
The consolidated financial statements of the Group for the year
ended 31 August 2016 comprise the Company and its subsidiaries,
listed in note 10, (together, the "Group") and have been prepared
in accordance with International Financial Reporting Standards
("IFRS") issued by the International Accounting Standards Board
("IASB") as applicable in the European Union 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 & going concern
The consolidated financial statements have been prepared on a
historical cost basis.
The Company has sufficient funds to remain in operation for the
foreseeable future. Further to the announcement on 17th November
2016 the Company is likely to remain listed on AIM until 16th
November 2017. The Board will consult with shareholders should
there be a need to extend the life of the Company beyond that
date.
(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 of an entity exists when the Company
directly or indirectly controls a majority of the voting rights in
that entity or has the ability to appoint or remove the majority of
its board of directors. 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 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.
The gains or losses from sale of inventory are recognised at the
book gain or loss amount with any foreign exchange gains or losses
being reflected separately in the statement of comprehensive
income.
(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.
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 are classified as loans and
receivables and comprise deposits held at call with banks and other
short-term highly liquid investments with original maturities of
three months or less.
(g) Taxation
Profits arising in the Company for the 2016 year of assessment
and future periods will be subject to tax at the rate of 0% (2015:
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 (2015: 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 and a dividend tax of 15% may arise
on certain distributions from the subsidiaries.
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 presentational 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
("historical translated cost");
- 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 and how they have been derived.
Exchange gains/losses on the translation of subsidiaries balances
are accounted for in the translation reserve.
(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 of 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.
The Directors' have assessed the recoverability of the loan
receivable from Mandalina Yapi Insaat Sanayi ve Ticaret Anonim
Sirketi ("Mandalina"), the results of which are disclosed in note
8.
In addition to the above, the Directors have made assessments
with regard to contingent liabilities and an assessment of the
matter discovered during 2014 in relation to the financial impact
of the amount of funds that have been removed from the Group's
Turkish entities (and entities affiliated with the Group) without
authorisation. Please refer to notes 20 and 21.
(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 2016 and have not been early adopted:
IFRS 9, 'Financial instruments' - classification and
measurement' (effective 1 January 2018)
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.
As noted in these financial statements, the Company is currently
involved in litigation. The operations of the Company now relate to
resolving these issues. It is anticipated that once resolved, the
Company will return all available money to shareholders with
operations therefore coming to an end. On this basis, these
financial statements have been prepared on the basis that the
amounts in the Statement of Comprehensive Income have been derived
from discontinuing operations.
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.
Within the above segment, the remaining significant asset at the
year end date was cash. The CODM considers on a regular basis the
repatriation of money from Turkey to Jersey.
4. Management/advisory fee
2016 2015
GBP GBP
Management fee - 108,844
---- -------
Civitas was appointed as Investment Advisor to the Group on 2
December 2009. The advisory fee structure was incentive-based with
an annual fixed component of EUR212,500, and an incentive component
based on a percentage of realisation value. It was agreed that the
fee for the prior financial year would be based upon a percentage
of the realised sales value of the Alanya apartments. The contract
with Civitas has now been terminated, with final payment of
EUR149,073 being made on 23 November 2016.
5. Other operating expenses
2016 2015
GBP GBP
Legal fees 400,527 344,660
Professional fees 191,555 418,758
Advisory and consultancy fees - 52,507
Travel and subsistence 7,006 31,632
Directors' remuneration 125,000 150,000
Administration fees 142,018 96,318
Audit services 29,000 37,006
Other operating expenses 66,738 118,289
------- ---------
961,844 1,249,170
------- ---------
During the period the Group had one employee in Turkey.
Subsequent to the period end terms were agreed for the termination
of that employment, the costs for whom are included in the amounts
above.
6. Tax 2016 2015
GBP GBP
Overseas tax - Turkey 534,342 2,606,868
------- ----------
This above represents taxation on profits earned by the Turkish
subsidiaries and any related adjustments to tax amounts, and
therefore no tax reconciliation is deemed necessary. The decrease
in tax is partly due to the prior year amount including outstanding
amounts payable in relation to the funds removed from the Group's
Turkish entities without authorisation during the period.
Refer to note 2(g) for further information.
7. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the gain
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
2016 2015
(Loss)/gain attributable to equity holders of the Company (GBP1,012,270) (GBP2,329,783)
--------------- ---------------
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 loss per share are calculated as 0.75
pence (2015: 1.73 pence loss).
8. Loans and receivables 2016 2015
GBP GBP
Opening balance - 1,923,733
Repayment of loan - (885,414)
Impairment of loan - (973,069)
Exchange (loss)/gain on revaluation of loan - (65,250)
Closing balance - -
---- ---------
The loan in relation to the Riverside Resort apartments in
Alanya was impaired in the prior year to reflect the Group's
ongoing difficulties with receiving the amounts owed from
Mandalina, which are related to the action being taken against the
Group's former Chief Financial Officer in Turkey, see note 21 for
further details.
9. Foreign currency gains 2016 2015
GBP GBP
Other foreign currency gain 480,097 2,455,587
Net currency gains 480,097 2,455,587
------- ---------
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. The translation of cash
balances relates to the Jersey group entities, with the balances of
the Turkish entities being recognised as subsidiary translation
foreign exchange as part of other foreign exchange losses.
10. 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 50,000 99.99
Osmanli Yapi 2 Turkey YTL 193,534,525 YTL 50,000 99.99
All of the above companies have been incorporated into the Group
accounts.
11. Trade and other receivables
2016 2015
GBP GBP
Prepayments and accrued income 20,050 20,950
VAT receivable - 9,171
Other receivables 118,441 182,378
138,491 212,499
------------- -------
The Directors consider that the carrying amount of the above
receivables approximates to their fair value. Prepayments include
advances to suppliers and other receivables relate to payments on
account with the tax office in Turkey.
12. Trade and other payables
2016 2014
GBP GBP
Accruals 52,319 42,648
Taxation (overseas taxation - Turkey) 1,013,234 1,188,751
Other payables 413,411 411,357
1,478,964 1,642,756
--------- ---------
The Directors consider that the carrying amount of the above
payables approximates to their fair value.
See notes 2(g) and 6 for further information on taxation.
13. 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 (2015: 134,764,709) 52,636,216
----------
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 determined by 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 and to invest in the Group's current
assets when the Board feels it will give rise to capital
appreciation. As the Group sold its assets during the prior year,
the Board decided to return excess capital to shareholders. As part
of the process, the Board reviews cash flow forecasts to ensure
that sufficient cash is retained to support the operations of the
Group.
Movements in ordinary share capital during the year Number GBP
Ordinary shares in issue at 1 September 2015 134,764,709 52,636,216
Movement during the year - (2,695,294)
----------- ----------
Ordinary shares in issue at 31 August 2016 134,764,709 49,940,922
----------- ----------
14. Retained earnings
2016 2015
GBP GBP
At start of year (43,954,508) (41,624,725)
Bank and deposit interest earned 3,819 152,581
Operating expenses (961,844) (2,331,083)
(958,025) (2,178,502)
Net movement on foreign exchange 480,097 2,455,587
Tax (534,342) (2,606,868)
----------- -----------
Loss for the year (1,012,270) (2,329,783)
At end of year (44,966,778) (43,954,508)
----------- -----------
15. Net asset value per share
The net asset value per ordinary share is based on the net
assets attributable to equity shareholders of GBP2,176,322 (2015:
GBP5,730,382) and on 134,764,709 ordinary shares
(2015: 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 2016 was 1.6 pence (2015: 4.3 pence).
16. Cash and cash equivalents
2016 2015
GBP GBP
Bank balances 3,516,795 7,160,639
--------- ---------
17. Financial instruments
The Group's financial instruments comprise loans, cash balances,
receivables and payables that arise directly from its operations,
for example, in respect of 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
Credit risk is the risk that counterparties will be unable to
deliver on assets due to the Group. 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
remote.
The Board monitors 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 A3.
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. Other receivables are represented mainly by prepayments and
other receivables, the Directors do not consider there to be
significant credit risk in relation to these amounts.
Credit risk exposure
In summary, compared to the amounts in the consolidated
statement of financial position, the maximum exposure to credit
risk was as follows:
Balance Maximum Balance Maximum
sheet exposure sheet exposure
at 31 August at 31 August at 31 August at 31 August
2016 2016 2015 2015
Non-current assets GBP GBP GBP GBP
Loans and receivables
- - - -
Current assets
Cash and cash equivalents 3,516,795 3,516,795 7,160,639 7,160,639
Other receivables 138,491 138,491 212,499 212,499
------------ ------------ ------------ ------------
3,655,286 3,655,286 7,373,138 7,373,138
------------ ------------ ------------ ------------
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 2016 assets at 31 assets at 31 31 August 2015
August 2016 August 2016 August 2015 August 2015
GBP GBP GBP GBP GBP
Pounds Sterling - 2,080,404 (1,415,415) - 495,236 (1,538,834)
Euro - - - - - -
US Dollar - 39,969 - - 5,146,807 -
Turkish Lira - 55,949 (63,549) - 88,339 (103,922)
--------------- -------------- --------------- --------------- -------------- ---------------
- 2,176,322 (1,478,964) - 5,730,382 (1,642,756)
--------------- -------------- --------------- --------------- -------------- ---------------
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 2015.
Currency Profit & Loss at Profit & Loss at
31 August 31 August
2016 2015
GBP GBP
Euro - -
US Dollar 1,998 257,340
Turkish Lira 2,797 (779)
---------------- ----------------
4,796 256,561
---------------- ----------------
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 the level of income
receivable on cash deposits. 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 Group 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
2016 2016 2015 2015
GBP GBP GBP GBP
Pounds Sterling 3,475,387 382 2,013,120 -
US Dollar 25,271 14,698 4,473,540 673,267
Turkish Lira - 1,057 - 712
------------ ------------ ------------ ------------
3,500,658 16,137 6,486,660 673,979
------------ ------------ ------------ ------------
Maturity profile
The following table sets out the carrying amount, by maturity,
of the Group's financial instruments:
2016
31 August 2016 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 3,500,658 - - - 3,500,658
--------- ------ ------- --------- ---------
3,500,658 - - - 3,500,658
--------- ------ ------- --------- ---------
Non-interest bearing
Cash 16,137 --- 16,137
Trade and other receivables 138,491 --- 138,491
Trade and other payables (1,478,964) ---(1,478,964)
(1,324,336) ---(1,324,336)
----------- -----------
2015
31 August 2015 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 6,486,660 - - - 6,486,660
--------- ------ ------- --------- ---------
6,486,660 - - - 6,486,660
--------- ------ ------- --------- ---------
Non-interest bearing
Cash 673,979 --- 673,979
Trade and other receivables 212,497 --- 212,497
Trade and other payables (1,642,756) ---(1,642,756)
(756,280) --- (756,280)
----------- -----------
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 GBP3,501 (2015:GBP6,487). 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. The Board
monitors the cash situation of the Group on an ongoing basis and
reviews cash flow forecasts at the time of making capital
distributions to shareholders to ensure that sufficient cash is
retained to support the operations of the Group.
The Group has sufficient cash reserves to meet liabilities due
for the foreseeable future.
18. Related party transactions
Information regarding subsidiaries can be found in note 10.
John D. Chapman is a shareholder in the Turkish subsidiaries due
to Turkish law requirements and is also a director. Mr Chapman
receives no additional benefit from being a shareholder or director
of the Turkish subsidiaries.
Andrew Wignall has served as a director of the Turkish
subsidiaries since 4 June 2015 and receives director's fees of
GBP10,000 per annum in total for his services.
Information regarding Directors' interests can be found in note
19.
Ali Pamir is a director of the Investment Advisor, Civitas
Property Partners S.A. and during the year was a director and
shareholder of the Turkish subsidiaries due to Turkish law
requirements. Mr Pamir received 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.
Subsequent to the period end terms were agreed for the termination
of that employment.
Vistra Nominees I Limited is a related party being the holder of
the 2 founder shares of The Ottoman Fund Limited (see note 13).
During the year Ali Pamir was a shareholder in Mandalina, which
until disposal held the title to the Alanya apartments. Ali Pamir
remains a director of Mandalina. Mr Pamir's shares in Mandalina
were transferred to the Company subsequent to the year end
date.
The Directors do not consider there to be an ultimate
controlling party.
19. Directors' interests
Total compensation (excluding performance fees and additional
service fees) paid to the Directors of the Company over the year
was GBP125,000 (2015: 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. No performance fee has been paid during the year
(2015: nil). Antony Gardner-Hillman and Andrew Wignall were
remunerated GBP25,000 per director for their services during the
year (2014: 3 directors remunerated GBP25,000 per director).
In addition to the above, in the prior year, Andrew Wignall was
remunerated GBP25,000 and Antony Gardner-Hillman was remunerated
GBP18,400 for additional services provided to the Group in
connection with the ongoing matters in Turkey.
20. Contingent liabilities
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 Group 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
financial statements.
During the prior financial reporting year, a case against the
Group had been lodged in Turkey for US$1m by a party who claimed to
have acted as an intermediary on one of the land sale transactions
during the year and was therefore entitled to a fee. On 19 March
2015, the lawyers acting on behalf of the Group advised that the
case had been heard in court and that the presiding judge, after
hearing from both parties, accepted the Group's lawyer's motion to
immediately dismiss the lawsuit that had been filed against the
Group. The counterparty to the lawsuit has appealed the decision
and the case is therefore yet to be concluded and the appeal
hearing will take place on February 28, 2017. The Directors are of
the opinion, taking note of the initial judgement, that it is not
appropriate to provide for this legal claim as it does not meet the
recognition criteria under IAS 37.
During the period, the embezzler filed various collection
proceedings against Osmanli Yapi 1 and Osmanli Yapi 2 in relation
to amounts allegedly payable for purported services rendered
totalling TL1.38m (GBP356k).
On 16 February 2017, the cout ruled in favour of OY1 with
rejected all claims. The plaintiff may appeal this judgment.
The Directors believe this does not meet the recognition
criteria under IAS 37.
Enforcement Proceedings initiated by Arkan & Ergin against
Osmanlı Yapı 1 and 2:
1. The proceeding initiated against OY 1 at 5th Enforcement
Office of Istanbul under file no. 2016/811
Arkan & Ergin sought 92.516,21 TRL from OY 1 for the regular
financial services and additional services. They claim that they
have provided additional services to OY 1 which amounts to
74.588,15 TRL. This additional request was not supported by any
documents. The part which was grounded was paid to the Enforcement
Office, along with related judicial and attorney's fees. An
objection was filed to the remaining part which halts the
proceeding. The file is still open and Arkan & Ergin may file a
lawsuit at civil courts for the annulment of our objection.
2. The proceeding initiated against OY 2 at 5th Enforcement
Office of Istanbul under file no. 2016/812
Arkan & Ergin sought 127.915,22 TRL from OY 2 for the
regular financial services and additional services. They claim they
have provided additional services to OY 2 which amounts to
98.305,76 TRL. This additional request was not supported by any
documents. The part which was grounded was paid to the Enforcement
Office, along with related judicial and attorney's fees. An
objection was filed to the remaining part which halts the
proceeding. The file is still open and Arkan & Ergin may file a
lawsuit at civil courts for the annulment of our objection.
21. Post balance sheet events
On 16 February 2017, the hearing for the case where Sinan
Kalpakçıo lu was claiming approximately USD 300,000 from OY1 took
place. The judge ruled in favour of OY1 with all claims being
rejected by the judge. The appeal period is yet to begin, therefore
the case may continue.
Subsequent to the year end, Ottoman Fund Company I Limited took
ownership of 25,500 shares of Mandalina, which represents 51% of
the shares in issue.
As disclosed in note 4, the contract with Civitas has now been
terminated, with final payment of EUR149,073 being made on 23
November 2016.
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 OKFDNQBKDKBB
(END) Dow Jones Newswires
February 28, 2017 10:27 ET (15:27 GMT)
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