30th May 2014 12:37
LONDON (Alliance News) - The Ottoman Fund Ltd Friday said its net asset value per share decreased over the first-half of the current financial year, mainly due to a return of capital, a write down in the value of the Bodrum asset, and a currency loss.
The fund said it is also mulling a further capital return.
In a statement, the fund said its net asset value was 50.6 pence on February 28, down from 65.9 pence on August 31.
"The primary reason for the reduction in sterling denominated net asset value over that six month period was a return of capital of 6.37 pence per share following the sale of ten per cent of the company's interest in the Riva land, a write down in the value of the Bodrum asset, and a currency "loss," which is a function of the significant decline in the US dollar and Turkish Lira as measured in Sterling over the period," Chairman John Chapman said a statement.
The fund holds its assets in Turkish subsidiaries, which are required to keep their books in Turkish lira, while the Ottoman Fund keeps its books in Sterling. Under accounting rules, the Turkish subsidiaries are typically required to book assets at historical Turkish lira cost, which is then translated into the reporting currency, resulting in a gain or loss. Valuations are done in dollars, as large land deals in Turkey tend to be negotiated in the currency and then translated into Turkish Lira at the closing. The fund doesn't hedge dollar or lira exposure, so is exposed to each currency when reporting in sterling.
"Following period end we announced the sale of the remainder of the Riva land, bringing the total sales price for the land to USD95.3 million. Our sales price was at about the US dollar book value of the asset," Chapman added.
"We have announced a return of capital of approximately GBP27 million of the sale proceeds for the end of this month and expect to announce a further return of capital following a capital reduction at our Turkish subsidiary. We currently expect to be able to make this announcement by the end of August," he added.
Shares were Friday quoted at 27 pence, untraded.
By Samuel Agini; [email protected]; @samuelagini
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