TIDMOTM
RNS Number : 6395S
Ottoman Fund Limited (The)
21 May 2009
+-------------------------------------+------------------------------------------------+
| For Immediate Release | 21 May 2009 |
+-------------------------------------+------------------------------------------------+
THE OTTOMAN FUND LIMITED
Interim Results for the period ended 28 February 2009
The Ottoman Fund, which invests in the development of local housing and holiday
homes in the major cities and coastal resorts of Turkey, announces its interim
results for the six months ended 28 February 2009.
The Fund is managed by Development Capital Management (Jersey) Limited.
Copies of the Financial Statements are currently being printed and will be sent
to shareholders shortly. They may also be obtained free of charge from
Development Capital Management Limited, 36 Dover Street, London, W1S 4NH.
List of Contacts
Development Capital Management
Tom Pridmore
Andrew Mitchell
Roger Hornett
020 7355 7600
Numis Securities
Charles Farquhar
Nick Westlake
020 7260 1000
THE OTTOMAN FUND LIMITED
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2009
Dear Shareholders:
As this is my first letter to you as Chairman, I would like to dispense with the
usual format and focus on some key issues, including asset valuation, progress
in selling assets, structural changes to the board, and the new board's plans to
internalise management and reduce costs.
Valuation Issues
One might think that since most of our assets are at least in the colloquial
sense "investments," they would be marked to market. But under the relevant
accounting rules they are considered "inventory" rather than "investment
property" and must therefore be carried on the balance sheet at historical cost.
Our unaudited Net Asset Value ("NAV") is essentially that historical cost. To
supplement the balance sheet information, the Company also reports an adjusted
or "fair value" NAV. The primary difference between the two is that adjusted NAV
is based on periodic asset revaluation plus currency movements.
Unaudited NAV as at 28 February 2009 was GBP121.6m (31 August 2008: GBP121.7m),
of which GBP20.1m was cash (31 August 2008: GBP20.9m). The NAV per ordinary
share has decreased to 90.2p from 90.3p at 31 August 2008. As of 28 February
2009 the Company also had an adjusted NAV of 107.4p per share, as compared with
106.1p six months earlier, and 97.5p a year earlier. The year on year change
reflects primarily the benefit of currency movements, in particular the
strengthening of the dollar against sterling. This is significant from an NAV
perspective since our property assets are valued in dollars while our functional
currency is sterling. Measured in constant dollars our portfolio declined in
value over the accounting period by about twenty per cent.
The core of "fair value" NAV is a third party's appraisal of our assets.
Semi-annually two Turkish valuation companies, Kuzey Bati Worldwide Real Estate
Services and TSKB Real Estate Appraisal Company each appraise our assets. Kuzey
Bati is an international associate of Savills Commercial Limited, while TKSB is
a Turkish Capital Markets Board approved valuation company. These companies are
faced with a number of difficulties in providing objective valuations of Turkish
property assets as there is no public registry recording transaction prices, the
market is shallow and, especially outside of Istanbul, there is a low volume of
transactions. In addition there is often low transparency on data, in part for
local tax reasons. Given this reality, the appraisers are forced to focus on
asking prices as opposed to sale prices. They then make adjustments based on
their experience and expertise. It is difficult to test objectively the
adjustments and the relationship between asking price and value. Nonetheless,
this is probably the best methodology available. Given these weaknesses,
though, shareholders should be cautious in trying to extrapolate likely
realisation amounts from these valuations.
We derive "fair value" NAV as follows:
+------------------------------------------------------------+---+----------------+-+
| Net assets as at 28 February 2009 | | GBP121,555,619 | |
+------------------------------------------------------------+---+----------------+-+
| Decrease in valuation of inventory properties based on | | | |
| independent valuations | | | |
+------------------------------------------------------------+---+----------------+-+
| Golturkbuku, Bodrum | | GBP(2,041,338 | )|
+------------------------------------------------------------+---+----------------+-+
| Riva | | GBP(1,750,534 | )|
+------------------------------------------------------------+---+----------------+-+
| Kazikli | | GBP(211,872 | )|
+------------------------------------------------------------+---+----------------+-+
| Total decrease in valuation of inventory properties at | | GBP(4,003,744 | )|
| acquisition exchange rate | | | |
+------------------------------------------------------------+---+----------------+-+
| NAV (fair value basis) before foreign exchange gain | | GBP117,551,875 | |
+------------------------------------------------------------+---+----------------+-+
| NAV per share (fair value basis) before foreign exchange | | 87.2 | p|
| gain | | | |
+------------------------------------------------------------+---+----------------+-+
| Foreign exchange gain | | | |
+------------------------------------------------------------+---+----------------+-+
| Golturkbuku, Bodrum | | GBP5,817,635 | |
+------------------------------------------------------------+---+----------------+-+
| Riva | | GBP19,684,301 | |
+------------------------------------------------------------+---+----------------+-+
| Kazikli | | GBP1,629,601 | |
+------------------------------------------------------------+---+----------------+-+
| Total increase from foreign exchange | | GBP27,131,537 | |
+------------------------------------------------------------+---+----------------+-+
| Net asset value (fair value basis) | | GBP144,683,412 | |
+------------------------------------------------------------+---+----------------+-+
| Number of ordinary shares in issue | | 134,764,709 | |
+------------------------------------------------------------+---+----------------+-+
| Net asset value per share at 28 February 2009 (fair value | | 107.4 | p|
| basis) | | | |
+------------------------------------------------------------+---+----------------+-+
| Net asset value per share at 31 August 2008 (fair value | | 106.1 | p|
| basis) | | | |
+------------------------------------------------------------+---+----------------+-+
Progress in Realization of Assets
In November 2007 the board announced that following the completion of a
strategic review the Company's portfolio would be "progressively realized in a
managed way over the next 18-24 months so as to maximize the portfolio's value
potential and shareholder returns." Eighteen months into this process, the
results so far can only be termed disappointing. Although the Company has
received some low offers and indications of interest, no buyer has emerged for
the Company or any of its assets at anything approaching an appropriate price.
This result is perhaps unsurprising.
As a consequence of these results as well as the global financial crisis and its
disproportionate effects on the property sector and emerging market assets, the
new board will need to revisit this strategy and consider whether it is the best
way forward.
Structural Changes to the Board
On 13 March 2009, all of our directors except for me resigned. At the same time
we added two new Jersey resident directors. I was then elected the Chairman. The
new board invited representatives of each of our three largest shareholders to
join the board. Under applicable regulations, prospective directors must first
be approved by the Jersey Financial Services Commission before they can join the
board. One has now been approved and we are waiting for regulatory approval for
the other two. Once the new board is constituted, it will comprise three
independent directors and three shareholder representatives, collectively
representing holders of in excess of seventy per cent. of the Company's shares.
Internalisation Strategy
As previously reported, we are continuing to take substantial steps to reduce
our cost base primarily through a plan to internalise Company management and
thus streamline the current Company/external adviser/external manager structure.
Under Jersey law, the way the internalisation process works is that the board
must decide on an appropriate structure then obtain regulatory and shareholder
approval. On 30 June 2008 the board gave the manager notice that its contract
would be terminated as of 31 December 2008. As of 1 January 2009, the Company
entered into a new arrangement with the manager that extended its contract first
to 31 March 2009 and then to 30 June 2009 for a fee of about 25 per cent. of
what had been paid under the original contract. As of 31 May 2009 that contract
can be terminated on one month's notice. We expect that prior to the end of June
we will have a plan that will have been presented to the regulator in the form
of a circular to shareholders. Once the regulator is satisfied with our proposed
structure we will submit the circular for shareholder approval.
Portfolio
Our portfolio continues to comprise the following four investments:
Riverside, which is a completed holiday development in Alanya, a resort
destination on the Mediterranean, in the Antalya province. The development
comprises four high rise buildings with 215 apartments, of which the Company has
financed 107, as well as recreational facilities. Sales have been slow with only
two sales completed and an additional five under contract. Current book value is
GBP8.7m and the appraised valuation as of 28 February 2009 was GBP8.7m*.
Golturkbuku, which is semi-developed land on the Bodrum peninsula, a high-end
resort location for wealthy Turkish and international purchasers. The projected
development is designed to include 247 units of villas, apartments and hotel
villas with a built up area of approximately 60,000 square metres. Banyan Tree
Hotels and Resorts has agreed to provide hotel and residence management and
interior design services for their first venture into Turkey. The project's
master plan has been completed by WATG, with architectural designs provided by
local architects YPU. Golturkbuku has a book value of GBP24.0m and was appraised
on 28 February 2009 at GBP27.7m*.
Kazikli, which is zoned though undeveloped land overlooking a spectacular
natural bay. This development is a joint venture with the Ado Group, a leading
regional supplier of building materials. The planned development is designed
to comprise approximately 334 luxury villas, some with private moorings, 91
hotel rooms and supporting leisure and social facilities. The master plan and
concept design process has been completed by Atelier Xavier Bohl, who was also
involved with similar projects in Port Alacati, Marina Limassol and Larnaca.
Kazikli has a current book value of GBP5.5m and was appraised on 28 February
2009 at GBP6.9m*.
Riva, which is a large land parcel comprising 931,739 square metres of unzoned
land to the north east of the Asian side of Istanbul. Riva represents one of the
last significant contiguous areas available for large scale housing development
close to downtown Istanbul. The Company has received approval of its 1:1000
scale plans from the Beykoz Municipality and together with other significant
landowners in Riva continues to discuss the new 1:5000 scale plan with the
Istanbul Metropolitan Municipality. Riva has a current book value of GBP62.7m
and was appraised on 28 February 2009 at GBP80.6m*.
* Converted at the prevailing exchange rate at 28 February 2009.
* * * *
The last six months have been difficult. Although Turkey has so far been spared
the worst effects of the global downturn, economic activity in general has
slowed while development activity in particular has slowed considerably, with
[Government figures showing] the number of new construction permits issued
declining by about 17 per cent. during 2008. The Turkish Central Bank has
attempted to stimulate demand by cutting interest rates and unemployment has
reached 15.5 per cent. of the workforce. The Turkish banking system has so far
been largely spared many of the problems facing economies such as the US and UK,
with the sector benefiting from regulatory reforms introduced in response to
Turkey's own banking crisis in 2001. However, risk appetite has undoubtedly
contracted and lending criteria significantly tightened for those seeking to
finance real estate development.
In this climate, the manager's efforts to sell assets at appropriate prices have
so far been unsuccessful. The board is now focusing on cutting costs and will be
taking a more active role in the Company's management. We will need to
reconsider our strategy and take those steps necessary to ensure that our
shareholders receive value for their investments.
Lastly, I would like on behalf of the Company to express our appreciation to the
former board and its Chairman for steering the Company through these difficult
times.
Respectfully yours,
John D. Chapman
Chairman
20 May 2009
+----------------------------------+-------+--------------+--------------+--------------+
| Consolidated Income Statement | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| | | (unaudited) | (unaudited) | (audited) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | Six months | Six months | Year |
| | | ended | ended | ended |
+----------------------------------+-------+--------------+--------------+--------------+
| | | 28 February | 29 February | 31 August |
| | | 2009 | 2008 | 2008 |
+----------------------------------+-------+--------------+--------------+--------------+
| |notes | GBP | GBP | GBP |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Revenue | | 6,395 | - | - |
+----------------------------------+-------+--------------+--------------+--------------+
| Bank interest | | 308,554 | 813,185 | 1,307,327 |
+----------------------------------+-------+--------------+--------------+--------------+
| Total income | | 314,949 | 813,185 | 1,307,327 |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Operating expenses | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Management fee | 2 | (1,132,740) | (1,495,890) | (3,008,219) |
+----------------------------------+-------+--------------+--------------+--------------+
| Other operating expenses | | (578,879) | (715,073) | (1,349,199) |
+----------------------------------+-------+--------------+--------------+--------------+
| Unrealised loss on loans and | | (499,727) | - | - |
| receivables | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Foreign exchange gains | | 947,946 | 469,670 | 1,485,810 |
+----------------------------------+-------+--------------+--------------+--------------+
| Total operating expenses | | (1,263,400) | (1,741,293) | (2,871,608) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Loss before tax | | (948,451) | (928,108) | (1,564,281) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Tax | | (27,153) | (15,988) | (16,478) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Loss for the period | | (975,604) | (944,096) | (1,580,759) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Attributable to: | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Equity shareholders of the | | (975,600) | (944,089) | (1,580,746) |
| Company | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Minority interest | | (4) | (7) | (13) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | (975,604) | (944,096) | (1,580,759) |
+----------------------------------+-------+--------------+--------------+--------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
| Basic and diluted loss per share | 3 | (0.72) | (0.70) | (1.13) |
| (pence) | | | | |
+----------------------------------+-------+--------------+--------------+--------------+
+----------------------------------+-------+--------------+--------------+----------------+
| Consolidated Balance Sheet | | | |
+------------------------------------------+--------------+--------------+----------------+
| | | (unaudited) | (unaudited) | (audited) |
+----------------------------------+-------+--------------+--------------+----------------+
| | | 28 February | 29 February | 31 August |
| | | 2009 | 2008 | 2008 |
+----------------------------------+-------+--------------+--------------+----------------+
| |notes | GBP | GBP | GBP |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Non-current assets | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Intangible assets | 4 | 5,884 | 31,446 | 4,976 |
+----------------------------------+-------+--------------+--------------+----------------+
| Plant and equipment | 5 | 27,514 | 18,373 | 37,700 |
+----------------------------------+-------+--------------+--------------+----------------+
| Inventories | 6 | 92,165,002 | 91,502,129 | 91,503,254 |
+----------------------------------+-------+--------------+--------------+----------------+
| Loans and receivables | 7 | 8,685,404 | 7,670,498 | 8,573,984 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | 100,883,804 | 99,222,446 | 100,119,914 |
+----------------------------------+-------+--------------+--------------+----------------+
| Current assets | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Other receivables | | 859,668 | 932,295 | 1,015,427 |
+----------------------------------+-------+--------------+--------------+----------------+
| Cash and cash equivalents | | 20,069,747 | 22,480,313 | 20,900,040 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | 20,929,415 | 23,412,608 | 21,915,467 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Total assets | | 121,813,219 | 122,635,054 | 122,035,381 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Current liabilities | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Other payables | | (257,600) | (230,234) | (314,522) |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Net assets | | 121,555,619 | 122,404,820 | 121,720,859 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Equity | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Share capital | 8 | 135,483,052 | 135,483,052 | 135,483,052 |
+----------------------------------+-------+--------------+--------------+----------------+
| Retained earnings | | (13,927,511) | (13,078,258) | (13,762,210) |
+----------------------------------+-------+--------------+--------------+----------------+
| Equity attributable to owners of | | 121,555,541 | 122,404,794 | 121,720,842 |
| the Company | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Minority interest equity | | 78 | 26 | 17 |
+----------------------------------+-------+--------------+--------------+----------------+
| Total equity | | 121,555,619 | 122,404,820 | 121,720,859 |
+----------------------------------+-------+--------------+--------------+----------------+
| | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
| Net asset value per share | 9 | 90.2 | 90.8 | 90.3 |
| (pence) | | | | |
+----------------------------------+-------+--------------+--------------+----------------+
These financial statements were approved by the board of directors on 20 May
2009.
John D. Chapman
Chairman
+-------------+----------+--------------+--------------+----------+--------------+
| Consolidated Statement of | | | |
| Changes in Equity | | | |
+---------------------------------------+--------------+----------+--------------+
| | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Group | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| | | Share | Retained | Minority | |
| | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| | | capital | earnings | interest | Total |
| | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| | | GBP | GBP | GBP | GBP |
+-------------+----------+--------------+--------------+----------+--------------+
| For the six months ended 28 February 2009 | | |
| (unaudited) | | |
+------------------------------------------------------+----------+--------------+
| Balance | | 135,483,052 | (13,762,210) | 17 | 121,720,859 |
| at 1 | | | | | |
| September | | | | | |
| 2008 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Loss for | | - | (975,600) | (4) | (975,604) |
| the | | | | | |
| period | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Foreign | | - | 810,299 | 65 | 810,364 |
| exchange | | | | | |
| on | | | | | |
| subsidiary | | | | | |
| translation | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| At 28 | | 135,483,052 | (13,927,511) | 78 | 121,555,619 |
| February | | | | | |
| 2009 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| For the six months ended 29 February 2008 | | |
| (unaudited) | | |
+------------------------------------------------------+----------+--------------+
| Balance | | 150,000,000 | (12,613,335) | (5) | 137,386,660 |
| at 1 | | | | | |
| September | | | | | |
| 2007 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Reduction | | (14,516,948) | - | - | (14,516,948) |
| of | | | | | |
| ordinary | | | | | |
| share | | | | | |
| capital | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Loss for | | - | (944,089) | (7) | (944,096) |
| the | | | | | |
| period | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Foreign | | - | 479,166 | 38 | 479,204 |
| exchange | | | | | |
| on | | | | | |
| subsidiary | | | | | |
| translation | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| At 29 | | 135,483,052 | (13,078,258) | 26 | 122,404,820 |
| February | | | | | |
| 2008 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| For the year ended 31 August | | | |
| 2008 (audited) | | | |
+---------------------------------------+--------------+----------+--------------+
| Balance | | 150,000,000 | (12,613,335) | (5) | 137,386,660 |
| at 1 | | | | | |
| September | | | | | |
| 2007 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Reduction | | (14,516,948) | - | - | (14,516,948) |
| of | | | | | |
| ordinary | | | | | |
| share | | | | | |
| capital | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Loss for | | - | (1,580,746) | (13) | (1,580,759) |
| the year | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| Foreign | | - | 431,871 | 35 | 431,906 |
| exchange | | | | | |
| on | | | | | |
| subsidiary | | | | | |
| translation | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
| At 31 | | 135,483,052 | (13,762,210) | 17 | 121,720,859 |
| August | | | | | |
| 2008 | | | | | |
+-------------+----------+--------------+--------------+----------+--------------+
+--------------------------------------------+--------------+--------------+--------------+
| Consolidated Statement of Cash Flows | | | |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| | (unaudited) | (unaudited) | (audited) |
+--------------------------------------------+--------------+--------------+--------------+
| | Six months | Six months | Year |
| | ended | ended | ended |
+--------------------------------------------+--------------+--------------+--------------+
| | 28 February | 29 February | 31 August |
| | 2009 | 2008 | 2008 |
+--------------------------------------------+--------------+--------------+--------------+
| | GBP | GBP | GBP |
+--------------------------------------------+--------------+--------------+--------------+
| Cashflow from operating activities | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Revenue | 6,395 | - | - |
+--------------------------------------------+--------------+--------------+--------------+
| Bank interest received | 308,554 | 813,185 | 1,307,327 |
+--------------------------------------------+--------------+--------------+--------------+
| Operating expenses | (1,263,400) | (1,741,293) | (2,871,608) |
+--------------------------------------------+--------------+--------------+--------------+
| Loss for the period | (948,451) | (928,108) | (1,564,281) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Unrealised loss on loans and receivables | 499,727 | - | - |
+--------------------------------------------+--------------+--------------+--------------+
| Net foreign exchange gains | (947,946) | (469,670) | (1,485,810) |
+--------------------------------------------+--------------+--------------+--------------+
| Decrease/(increase) in other receivables | 155,759 | (335,278) | (401,932) |
+--------------------------------------------+--------------+--------------+--------------+
| (Decrease)/increase in other payables | (56,922) | (5,021,420) | 28,358 |
+--------------------------------------------+--------------+--------------+--------------+
| Net cash outflow from operating activities | (1,297,833) | (6,754,476) | (3,423,665) |
| before tax | | | |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Tax | (27,153) | - | (16,478) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Net cash outflow from operating activities | (1,324,986) | (6,754,476) | (3,440,143) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Cash flow from investing activities | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Purchase of inventories | (661,748) | (1,574,347) | (6,540,962) |
+--------------------------------------------+--------------+--------------+--------------+
| Purchase of plant and equipment | (627) | (21,434) | (66,802) |
+--------------------------------------------+--------------+--------------+--------------+
| Purchase of intangible assets | (2,544) | (46,522) | (5,232) |
+--------------------------------------------+--------------+--------------+--------------+
| Repayment of loan from developer | 255,328 | - | - |
+--------------------------------------------+--------------+--------------+--------------+
| Net cash outflow from investing activities | (409,591) | (1,642,303) | (6,612,996) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Cash flow from financing activities | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Share buy-back | - | (14,516,948) | (14,516,948) |
+--------------------------------------------+--------------+--------------+--------------+
| Net cash outflow from financing activities | - | (14,516,948) | (14,516,948) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Net decrease in cash and cash equivalents | (1,734,577) | (22,913,727) | (24,570,087) |
+--------------------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Cash and cash equivalents at start of the | 20,900,040 | 44,898,891 | 44,898,891 |
| period | | | |
+--------------------------------------------+--------------+--------------+--------------+
| Effect of foreign exchange rates | 904,284 | 495,149 | 571,236 |
+--------------------------------------------+--------------+--------------+--------------+
| Cash and cash equivalents at end of the | 20,069,747 | 22,480,313 | 20,900,040 |
| period | | | |
+--------------------------------------------+--------------+--------------+--------------+
Notes to the financial statements
1. Accounting Policies
These condensed financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) and interpretations issued by the
International Financial Reporting Committee of the IASB (IFRIC). The accounting
policies adopted in the preparation of the half yearly financial report are
consistent with those followed in the preparation of the Group's annual
financial statements for the year ended 31 August 2008.
(a) Basis of preparation
The interim financial statements have been prepared on a historical cost basis,
except for certain financial instruments detailed below.
The interim financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting.
(b) Basis of consolidation
Subsidiaries
The interim financial statements incorporate the financial statements of the
Company and entities controlled by the Company (its subsidiaries) made up to 28
February 2009. 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 subsidiaries
are included in the consolidated financial statements from the date that control
commences up to the date that control ceases.
Joint ventures
A joint venture is a contractual agreement whereby two or more entities
undertake an activity that is the subject of joint control. The results and
assets and liabilities of joint ventures held by subsidiaries are incorporated
in this report using the proportionate consolidation method.
(c) Revenue recognition
Interest receivable on fixed interest securities is recognised on an effective
yield basis. Interest on short term deposits, expenses and interest payable
is treated on an accruals basis.
(d) Expenses
All expenses are charged through the income statement in the period in which the
services or goods are provided to the Company 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
Intangible assets
Intangible assets are stated at cost less any provisions for amortisation and
impairments. They are amortised over their useful life of 6 years. The
amortisation is based on the straight-line basis. At each balance sheet date,
the Company reviews the carrying amount of its intangible assets to determine
whether there is any indication that those assets have suffered an impairment
loss.
General
Assets are recognised at the trade date on acquisition and disposal. Proceeds
will be measured at fair value which will be regarded as the proceeds of sale
less any transaction costs.
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, other than land or properties under construction, over their
estimated useful lives, using straight line method on the following bases:
Leasehold improvements 3 years
Furniture 5 years
Computers4 years
Computer software 3 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 income statement.
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.
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.
(f) Movements in fair value
Changes in the fair value of all held-at-fair value assets are taken to the
income statement. On disposal, realised gains and losses are also recognised in
the income statement.
(g) Cash and cash equivalents
Cash and cash equivalents comprise current deposits with banks.
(h) Taxation
The Company is an exempt company for Jersey taxation purposes. The Company pays
an exempt company fee for each Jersey incorporated company within the Group,
which is currently GBP600 per annum. However, withholding tax may be payable on
repatriation of assets and income to the Company.
The subsidiaries will be liable for Turkish corporation tax at a rate of 20 per
cent.. Additionally, a land sale and purchase fee may arise when land is
purchased.
Deferred tax is recognised in respect of all temporary differences that have
originated but not reversed at the balance sheet date, where transactions or
events that result in an obligation to pay more tax in the future or right to
pay less tax in the future have occurred at the balance sheet date. This is
subject to deferred tax assets only being recognised if it is considered more
likely than not that there will be suitable profits from which the future
reversal of the temporary differences can be deducted.
(i) Foreign currency
The results and financial position of the Group are expressed in pounds
sterling, which is the functional currency of the Group.
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary items and non monetary assets and liabilities that are fair
valued and that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Exchange differences on translation
of the Group's net investment in foreign operations are recognised directly in
equity.
(j) 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.
2. Management Fee
+------------------------------+-----------+-----------+-----------+
| | Six | Six | For year |
| | months | months | ended |
| | ended | ended | |
+------------------------------+-----------+-----------+-----------+
| | 28 | 29 | 31 |
| | February | February | August |
| | 2009 | 2008 | 2008 |
+------------------------------+-----------+-----------+-----------+
| | GBP | GBP | GBP |
+------------------------------+-----------+-----------+-----------+
| Management fee | 1,132,740 | 1,495,890 | 3,008,219 |
+------------------------------+-----------+-----------+-----------+
On 30 June 2008, the Company notified the manager that the management agreement
would be terminated with effect from 31 December 2008. On 6 January 2009 the
Company extended the manager's contract for a further three months, with the
fees being reduced to GBP65,000 per month. On 2 April 2009, the Company extended
the manager's contract on the same basis.As of 31 May 2009 that contract can be
terminated on one month's notice.
3. Earnings per share
The basic and diluted earnings per ordinary share is based on the net loss for
the period of GBP975,604 and 134,764,709 shares, being the weighted average
number of shares. (29 February 2008: loss GBP944,096 and 138,178,080 shares; 31
August 2008: loss GBP1,580,759 and 138,178,080 shares).
4. Intangible assets
+------------------------------+------------------+------------------+------------------+
| | 28 February 2009 | 29 February 2008 | 31 August 2008 |
+------------------------------+------------------+------------------+------------------+
| | GBP | GBP | GBP |
+------------------------------+------------------+------------------+------------------+
| Opening book cost | 4,976 | 3,099 | 3,099 |
+------------------------------+------------------+------------------+------------------+
| Additions | 2,544 | 46,522 | 5,232 |
+------------------------------+------------------+------------------+------------------+
| Amortisation and impairment | (1,636) | (18,175) | (3,355) |
| charge | | | |
+------------------------------+------------------+------------------+------------------+
| Closing net book cost | 5,884 | 31,446 | 4,976 |
+------------------------------+------------------+------------------+------------------+
The intangible asset relates to a CRM program with a useful life of 6 years.
There has been no impairment during the period.
5. Plant and equipment
+------------------------------+------------------+------------------+------------------+
| | 28 February 2009 | 29 February 2008 | 31 August 2008 |
+------------------------------+------------------+------------------+------------------+
| | GBP | GBP | GBP |
+------------------------------+------------------+------------------+------------------+
| Opening book cost | 37,700 | - | - |
+------------------------------+------------------+------------------+------------------+
| Additions | 627 | 21,434 | 66,802 |
+------------------------------+------------------+------------------+------------------+
| Disposals | (2,298) | - | - |
+------------------------------+------------------+------------------+------------------+
| Amortisation and impairment | (8,515) | (3,061) | (29,102) |
| charge | | | |
+------------------------------+------------------+------------------+------------------+
| Closing net book cost | 27,514 | 18,373 | 37,700 |
+------------------------------+------------------+------------------+------------------+
6.Inventories
+------------------------------+------------------+------------------+------------------+
| | 28 February 2009 | 29 February 2008 | 31 August 2008 |
+------------------------------+------------------+------------------+------------------+
| | GBP | GBP | GBP |
+------------------------------+------------------+------------------+------------------+
| Opening book cost | 91,503,254 | 89,927,782 | 89,927,782 |
+------------------------------+------------------+------------------+------------------+
| Purchases at cost | 661,748 | 1,574,347 | 1,575,472 |
+------------------------------+------------------+------------------+------------------+
| Closing book cost | 92,165,002 | 91,502,129 | 91,503,254 |
+------------------------------+------------------+------------------+------------------+
This represents the purchase of 931,739 square metres on the Riva coastline,
185,175 square metres of development land on the Bodrum peninsula and 247,664
square metres, of which the Group has a 50 per cent. share, in the Kazikli
village in the district of Milas.
7. Loans and receivables
+------------------------------+------------------+------------------+------------------+
| | 28 February 2009 | 29 February 2008 | 31 August 2008 |
+------------------------------+------------------+------------------+------------------+
| | GBP | GBP | GBP |
+------------------------------+------------------+------------------+------------------+
| Opening balance | 8,573,984 | 7,270,339 | 7,211,525 |
+------------------------------+------------------+------------------+------------------+
| Repayment of loan | (255,328) | - | - |
+------------------------------+------------------+------------------+------------------+
| Unrealised depreciation | (499,727) | - | - |
+------------------------------+------------------+------------------+------------------+
| Exchange gain on revaluation | 866,475 | 400,159 | 1,362,459 |
| of loan | | | |
+------------------------------+------------------+------------------+------------------+
| Closing balance | 8,685,404 | 7,670,498 | 8,573,984 |
+------------------------------+------------------+------------------+------------------+
The third party loan is EUR10,061,434 in respect of the investment in the
Riverside Resort in Alanya and secured by a mortgage on that property. The
property was valued at 28 February 2009 by Kuzey Bati Real Estate on the basis
of open market value at EUR9,747,195. No interest is accruing and repayments are
based upon sales of the development.
8. Called up share capital
+-------------+---------------+------------------+
| Authorised: | | |
+-------------+---------------+------------------+
| Founder | | 10 |
| shares | | |
| of no | | |
| par | | |
| value | | |
+-------------+---------------+------------------+
| Ordinary | | Unlimited |
| shares | | |
| of no | | |
| par | | |
| value | | |
+-------------+---------------+------------------+
| | | |
+-------------+---------------+------------------+
| Issued | | GBP |
| and | | |
| fully | | |
| paid: | | |
+-------------+---------------+------------------+
| 2 | | - |
| founder | | |
| shares | | |
| of no | | |
| par | | |
| value | | |
+-------------+---------------+------------------+
| 134,764,709 | | 135,483,052 |
| ordinary | | |
| shares of | | |
| no par | | |
| value | | |
+-------------+---------------+------------------+
On incorporation of the Company, 2 founder shares of no par value were issued to
the manager. These shares are not eligible for participation in the
Company's investments and carry no voting rights at general meetings of the
Company.
9. Net asset value per share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of GBP121,555,619 and 134,764,709 shares. (29 February
2008: GBP122,404,820 on 134,764,709 shares; 31 August 2008: GBP121,720,859 on
134,764,709 shares).
10. Financial instruments
The Group's financial instruments comprise investments, loans, cash balances and
debtors and creditors that arise directly from its operations, for example, in
respect of sales and purchases awaiting settlement, and debtors for accrued
income.
The principal risks the Group faces through the holding of financial instruments
are market price risk, credit risk, foreign currency risk, interest rate risk
and liquidity risk.
The board reviews and agrees policies for managing each of these risks. As
required by IAS32: Financial Instruments: Presentation, an analysis of financial
assets and liabilities, which identifies the risk to the Group of holding such
items is given below.
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 and movements in exchange rates.
Credit risk
The Group places loans with third parties and is therefore potentially at risk
from the failure of any such third party of which it is a creditor. Recovery of
the one outstanding loan at 28 February 2009 is dependent on successful
completion and sale of properties by a third party developer. Further details of
the loan made to the developer can be found in note 7.
Foreign currency risk
The Group operates sterling, euro, US dollar and Turkish lira bank accounts.
Exchange gains or losses arise as a result of the movement in the exchange rate
between the date of the transaction denominated in a currency other than
sterling and its settlement.
Currency rate exposure
An analysis of the Group's currency exposure is detailed below:
+------------+-------------+------------+-------------+------------+-------------+------------+
| | Non-current | Net | Non-current | Net | Non-current | Net |
| | | monetary | | monetary | | monetary |
+------------+-------------+------------+-------------+------------+-------------+------------+
| | assets | assets | assets | assets | assets | assets |
+------------+-------------+------------+-------------+------------+-------------+------------+
| | 28 | 28 | 29 | 29 | 31 August | 31 August |
| | February | February | February | February | 2008 | 2008 |
| | 2009 | 2009 | 2008 | 2008 | | |
+------------+-------------+------------+-------------+------------+-------------+------------+
| | GBP | GBP | GBP | GBP | GBP | GBP |
+------------+-------------+------------+-------------+------------+-------------+------------+
| Sterling | - | 14,783,348 | - | 17,740,743 | - | 16,114,878 |
+------------+-------------+------------+-------------+------------+-------------+------------+
| Euro | 8,685,404 | 1,150,637 | 7,670,498 | 714,320 | 8,573,984 | 774,914 |
+------------+-------------+------------+-------------+------------+-------------+------------+
| US dollar | 92,165,002 | 4,025,699 | 91,502,129 | 3,639,468 | 91,503,254 | 3,823,355 |
+------------+-------------+------------+-------------+------------+-------------+------------+
| Turkish | 33,398 | 712,131 | 49,819 | 1,087,842 | 42,676 | 887,798 |
| lira | | | | | | |
+------------+-------------+------------+-------------+------------+-------------+------------+
| | 100,883,804 | 20,671,815 | 99,222,446 | 23,182,374 | 100,119,914 | 21,600,945 |
+------------+-------------+------------+-------------+------------+-------------+------------+
Interest rate risk
Interest rate movements may affect: (i) the fair value of the investments in
fixed rate securities, (ii) the level of income receivable on cash deposits,
(iii) interest payable on any variable rate borrowings.
The interest profile of the Group, excluding short term debtors and creditors,
was as follows:
+------------+------------+-------------+------------+------------+------------+-------------+
| | Floating | Non | Floating | Non | Floating | Non |
| | | interest | | interest | | interest |
+------------+------------+-------------+------------+------------+------------+-------------+
| | rate | bearing | rate | bearing | rate | bearing |
+------------+------------+-------------+------------+------------+------------+-------------+
| | 28 | 28 | 29 | 29 | 31 August | 31 August |
| | February | February | February | February | 2008 | 2008 |
| | 2009 | 2009 | 2008 | 2008 | | |
+------------+------------+-------------+------------+------------+------------+-------------+
| Assets | GBP | GBP | GBP | GBP | GBP | GBP |
+------------+------------+-------------+------------+------------+------------+-------------+
| Sterling | 14,891,461 | - | 17,837,040 | - | 16,262,692 | - |
+------------+------------+-------------+------------+------------+------------+-------------+
| Euro | 1,150,637 | 8,685,404 | 714,320 | 7,670,498 | 774,914 | 8,573,984 |
+------------+------------+-------------+------------+------------+------------+-------------+
| US dollar | 4,025,699 | 92,165,002 | 3,639,468 | 91,502,129 | 3,823,355 | 91,503,254 |
+------------+------------+-------------+------------+------------+------------+-------------+
| Turkish | 1,950 | 33,398 | 289,485 | 49,819 | 39,079 | 42,676 |
| lira | | | | | | |
+------------+------------+-------------+------------+------------+------------+-------------+
| | 20,069,747 | 100,883,804 | 22,480,314 | 99,222,446 | 20,900,040 | 100,119,914 |
+------------+------------+-------------+------------+------------+------------+-------------+
Liquidity risk
The Group's assets mainly comprise cash balances and realisable investments,
which can be sold to meet funding commitments if necessary. At 28 February 2009
the Group does not have any significant liabilities due.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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