20th May 2008 07:00
|
For Immediate Release |
20 May 2008 |
THE OTTOMAN FUND LIMITED
Interim Results for the period ended 29 February 2008
The Ottoman Fund, which invests in the development of local housing and holiday homes in the major cities and coastal resorts of Turkey, is pleased to announce its interim results for the six months ended 29 February 2008.
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
Bruce Garrow
Nick Westlake
020 7260 1000
THE OTTOMAN FUND LIMITED
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 29 FEBRUARY 2008
Chairman's Statement
I am pleased to report upon the unaudited interim financial statements for the six months ended 29 February 2008.
Results
The unaudited Net Asset Value ("NAV") of the Fund at 29 February 2008 was £122.4m (31 August 2007: £137.4m), of which £22.5m related to cash reserves (31 August 2007: £44.9m). The principle reason for the reduction in NAV was the return of capital to shareholders of £14.5m through a share buy-back scheme, as announced on 22 November 2007. The NAV per ordinary share has been maintained around 91p.
As shareholders will be aware the Fund also reports a net asset value adopting a fair value basis, using independent revaluations of the Fund's assets. The "fair value" NAV decreased by 1% during the period from 98.4p to 97.5p (see table below). The "fair value" NAV was at a 6.7p, or 7%, premium to the unaudited NAV.
Against these measures it is therefore disappointing to report that the Fund's share price fell 8.5% from 96.8p to 85.5p, although it should be noted that such a decrease arose in the context of significant falls during the period in the AIM market generally and listed real estate companies in particular.
Portfolio Review
As announced on 1 November 2007, following the conclusion of the strategic review the Board adopted a strategy of orderly realisation of the assets of the Fund over a period of 18 to 24 months, to be effected in a manner which seeks to maximise value for shareholders.
The focus has been firmly on implementing this strategy, whilst prudently taking forward the planning and design phases of the existing portfolio so as to maximise its value. The Board has not pursued any further investment opportunities for new development projects.
The Fund and its Manager are in discussions with several investors who have expressed interest in the acquisition of one or more of the assets. Prospective purchasers include private equity real estate investors and local and international real estate development and investment companies.
The current portfolio comprises four investments, which are summarised below:
Golturkbuku, Bodrum: Set on the Bodrum peninsula and within 45 minutes from the Bodrum-Milas International airport in an established location for wealthy Turkish and international purchasers, the development is planned to consist of 247 units of villas, apartments and hotel villas with a built area of approximately 60,000 square metres. The leading hotel operator Banyan Tree Hotels and Resorts have agreed to provide hotel and residence management and interior design services for their first venture into Turkey. The land was acquired in April 2006 for $38.6m (including further aggregation of additional plots in 2007) and the valuation at 29 February 2008 at open market value by Kuzeybati Worldwide Real Estate Services, an international associate of Savills Commercial Limited, was $43.3m.
Riva: Located to the north east of the Asian side of Istanbul, Riva represents one of the last significant contiguous areas available for large scale development of housing for the rapidly expanding population of Istanbul that is within commutable distance of the central business district. The total land aggregation is now 931,739 square metres and represents an exciting opportunity for development of mid-tier family housing. The land was acquired in September 2006 for $114.4m (including further aggregation of additional plots in 2007) and the valuation at 29 February 2008 at open market value by Kuzeybati Worldwide Real Estate Services was $144.5m.
Kazikli: This development is a joint venture with the Ado Group, a leading supplier of building materials in the region, and is situated on the Bodrum peninsula, only 34km from the Bodrum-Milas International airport, in a spectacular natural bay setting. It will consist of approximately 330 luxury villas, some with private moorings, 120 hotel rooms and supporting leisure and social facilities. The master plan and concept design process has been completed by Atelier Xavier Bohl, who has an excellent reputation from his work on Port Alacati, Marina Limassol and Larnaca. The land was acquired in January 2007 for $10.0m and the valuation at 29 February 2008 at open market value by Kuzeybati Worldwide Real Estate Services was $12.6m.
Alanya: The Fund has an investment in a holiday apartment development situated in the coastal resort of Alanya in the Antalya province. Due to its sandy beaches, lively nightlife and historic heritage, Alanya is a popular destination for international holidaymakers and second home owners. The resort is a gated development consisting of 215 apartments, of which the Fund has financed 107 with a loan of €10.4m (see note 7 to the financial statements). Construction is fully completed with marketing focusing on the Dutch, Scandinavian and Russian markets. The resort will benefit from improved accessibility following the opening of Gazipasa airport, which will cut the post flight travel time from approximately 90 minutes to 25 minutes. The valuation at 29 February 2008 at open market value by Kuseybati Worldwide Real Estate Services for the apartments financed by the Fund was $17.5m.
Set out below is the independent revaluation at 29 February 2008 of the Fund's assets that cannot be reflected on the balance sheet under IFRS:
|
Net assets (unaudited) as at 29 February 2008 |
£122,404,820 |
|
Increase in valuation of inventory properties |
|
|
Golturkbuku, Bodrum |
984,956 |
|
Riva |
14,254,564 |
|
Kazikli |
1,162,403 |
|
Total increase in valuation of inventory properties at acquisition exchange rate |
16,401,923 |
|
NAV (fair value basis) before foreign exchange loss |
£138,806,743 |
|
NAV per share (fair value basis) before foreign exchange loss |
102.5p |
|
Foreign exchange loss |
£(6,691,931) |
|
Net asset value (fair value basis) |
£132,114,812 |
|
Number of ordinary shares in issue |
135,483,052 |
|
Net asset value per share at 29 February 2008 (fair value basis) |
97.5p |
|
Net asset value per share at 31 August 2007 (fair value basis) |
98.4p |
Turkey
Whilst Turkey has not been immune to the current global banking and financial liquidity crisis, it has also had its own significant developments during the period under review. Most notably, the Chef Prosecutor has applied for the closure, for "anti-secular activities", of the ruling AKP political party and the banning from office of some of its leaders, including the Prime Minister. There will inevitably by a period of political uncertainty.
In respect of the economy, interest rates were gradually reduced to a level of 15.25% during the period and although inflation reached 9.2% in March 2008, core inflation excluding energy and food prices was approximately 4.5%. GDP growth for 2008 is forecast by economists around 3.5 to 4%. Following a strong rally in the Turkish Lira in the final quarter of 2007, Turkey's current account deficit has placed increasing pressure on the Lira amidst a fall in global risk appetite.
It would have been reasonable to expect that the combination of Central Bank reductions in interest rates and the introduction of the new mortgage law, extending housing loans from 5 years to 20 years, would have had a positive impact on the residential property market, but this has not been borne out. Monthly mortgage interest rates actually increased during the period due to the shortage in the credit markets arising from the global credit squeeze, and together with increased sophistication in buyer perception of value and dipping consumer confidence, this has led to slowing buyer demand in the short term.
Uncertainty arising over the legislation relating to foreign ownership of Turkish property has undoubtedly had a negative impact on the second home market and there have been reported instances of property price reductions during the period in Turkish holiday resorts. An amendment to the law on land registries regulating property sales to foreign parties, which was recently cancelled by the Constitutional Court following an appeal filed by the Republican People's Party (CHP), has now been referred to Parliament with the aim of addressing this uncertainty.
Corporate
Musa Erden submitted his resignation from the Board in April 2008, having accepted a full-time appointment with a Turkish bank and the Board is grateful for his valuable contributions to the Fund since 2005.
Outlook
In the short term, uncertainties arising from global credit conditions and the political climate may be expected to impact demand for housing both in the primary and second home market. However, the longer term outlook of the Turkish real estate market remains sound as it is underpinned by a significant anticipated housing shortfall due to population growth and urbanisation and a requirement to improve the quality of the inadequate existing housing stock. Continued growth in Turkey's tourism industry is anticipated to have a beneficial impact on the holiday home market.
The Fund is continuing discussions with investors who have expressed interest in acquiring the Fund's assets with the aim of maximising value for shareholders in line with the realisation strategy.
Sir Timothy Daunt
Chairman
May 2008
|
Consolidated Balance Sheet (unaudited) |
||||
|
As at 29 February 2008 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Six months ended |
Six months ended |
Year ended |
||
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
||
|
notes |
£ |
£ |
£ |
|
|
Non-current assets |
||||
|
Intangible assets |
4 |
31,446 |
- |
3,099 |
|
Plant and equipment |
5 |
18,373 |
- |
- |
|
Inventories |
6 |
91,502,129 |
79,524,583 |
89,927,782 |
|
Loans and receivables |
7 |
7,670,498 |
7,192,613 |
7,211,525 |
|
99,222,446 |
86,717,196 |
97,142,406 |
||
|
Current assets |
||||
|
Other receivables |
932,295 |
325,219 |
597,017 |
|
|
Cash and cash equivalents |
22,480,313 |
51,104,890 |
44,898,891 |
|
|
23,412,608 |
51,430,109 |
45,495,908 |
||
|
Total assets |
122,635,054 |
138,147,305 |
142,638,314 |
|
|
Current liabilities |
||||
|
Other payables |
(230,234) |
(188,499) |
(5,251,654) |
|
|
Net assets |
122,404,820 |
137,958,806 |
137,386,660 |
|
|
Equity |
||||
|
Share capital |
8 |
135,483,052 |
150,000,000 |
150,000,000 |
|
Retained earnings |
(13,078,258) |
(12,041,133) |
(12,613,335) |
|
|
Equity attributable to owners of the parent |
122,404,794 |
137,958,867 |
137,386,665 |
|
|
Minority interest equity |
26 |
(61) |
(5) |
|
|
Total Equity |
122,404,820 |
137,958,806 |
137,386,660 |
|
|
Net asset value per share (pence) |
9 |
90.8 |
92.0 |
91.6 |
These financial statements were approved by the Board of Directors on 19 May 2008.
Sir Timothy Daunt Roger King
|
Consolidated Income Statement |
||||
|
For the six months ended 29 February 2008 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||
|
Six months ended |
Six months ended |
Year ended |
||
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
||
|
notes |
£ |
£ |
£ |
|
|
Income |
||||
|
Bank interest |
813,185 |
1,350,306 |
2,607,646 |
|
|
Total income |
813,185 |
1,350,306 |
2,607,646 |
|
|
Operating expenses |
||||
|
Management fee |
2 |
(1,495,890) |
(1,487,671) |
(2,999,985) |
|
Other operating expenses |
(715,073) |
(583,365) |
(1,026,652) |
|
|
Foreign exchange gains/(losses) |
469,670 |
12,134 |
(4,646) |
|
|
Total operating expenses |
(1,741,293) |
(2,058,902) |
(4,031,283) |
|
|
Loss before tax |
(928,108) |
(708,596) |
(1,423,637) |
|
|
Tax |
(15,988) |
- |
- |
|
|
Loss for the period |
(944,096) |
(708,596) |
(1,423,637) |
|
|
Attributable to: |
||||
|
Equity shareholders of the company |
(944,089) |
(708,607) |
(1,423,656) |
|
|
Minority interest |
(7) |
11 |
19 |
|
|
(944,096) |
(708,596) |
(1,423,637) |
||
|
Basic and diluted loss per share (pence) |
3 |
(0.68) |
(0.50) |
(0.95) |
|
Consolidated Statement of Changes in Equity |
||||
|
For the six months ended 29 February 2008 |
||||
|
Group |
||||
|
Share |
Retained |
Minority |
||
|
capital |
earnings |
interest |
Total |
|
|
£ |
£ |
£ |
£ |
|
|
For the six months ended 29 February 2008 (unaudited) |
||||
|
Balance at 1 September 2007 |
150,000,000 |
(12,613,335) |
(5) |
137,386,660 |
|
Reduction of Ordinary share capital |
(14,516,948) |
- |
- |
(14,516,948) |
|
Loss for the period |
- |
(944,089) |
(7) |
(944,096) |
|
Foreign exchange on subsidiary translation |
- |
479,166 |
38 |
479,204 |
|
At 29 February 2008 |
135,483,052 |
(13,078,258) |
26 |
122,404,820 |
|
For the six months ended 28 February 2007 (unaudited) |
||||
|
Balance at 1 September 2006 |
150,000,000 |
(10,962,860) |
(42) |
139,037,098 |
|
Loss for the period |
- |
(708,607) |
11 |
(708,596) |
|
Foreign exchange on subsidiary translation |
- |
(369,666) |
(30) |
(369,696) |
|
At 28 February 2007 |
150,000,000 |
(12,041,133) |
(61) |
137,958,806 |
|
For the year ended 31 August 2007 (audited) |
||||
|
Balance at 1 September 2006 |
150,000,000 |
(10,962,860) |
(42) |
139,037,098 |
|
Loss for the year |
- |
(1,423,656) |
19 |
(1,423,637) |
|
Foreign exchange on subsidiary translation |
- |
(226,819) |
18 |
(226,801) |
|
At 31 August 2007 |
150,000,000 |
(12,613,335) |
(5) |
137,386,660 |
|
Consolidated Statement of Cash Flows |
|||
|
For the six months ended 29 February 2008 |
|||
|
(unaudited) |
(unaudited) |
(audited) |
|
|
Six months ended |
Six months ended |
Year ended |
|
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Cashflow from operating activities |
|||
|
Bank interest received |
813,185 |
1,350,306 |
2,607,646 |
|
Total operating expenses |
(1,741,293) |
(2,058,902) |
(4,031,283) |
|
Loss for the period |
(928,108) |
(708,596) |
(1,423,637) |
|
Net foreign exchange (gains)/losses |
(469,670) |
(12,134) |
4,646 |
|
(Increase)/decrease in other receivables |
(335,278) |
287,517 |
15,719 |
|
(Decrease)/increase in other payables |
(5,021,420) |
(8,626) |
89,039 |
|
Net cash outflow from operating activities |
(6,754,476) |
(441,839) |
(1,314,233) |
|
Cash flow from investing activities |
|||
|
Purchase of plant and equipment |
(21,434) |
- |
- |
|
Purchase of intangible assets |
(46,522) |
- |
- |
|
Purchase of inventories |
(1,574,347) |
(60,147,297) |
(65,585,006) |
|
Loan to developer |
- |
(2,798,088) |
(2,750,760) |
|
Net cash outflow from investing activities |
(1,642,303) |
(62,945,385) |
(68,335,766) |
|
Cash flow from financing activities |
|||
|
Share buy-back |
(14,516,948) |
- |
- |
|
Net cash outflow from financing activities |
(14,516,948) |
- |
- |
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
(22,913,727) |
(63,387,224) |
(69,649,999) |
|
Cash and cash equivalents at start of the period |
44,898,891 |
114,862,336 |
114,862,336 |
|
Effect of foreign exchange rates |
495,149 |
(370,222) |
(313,446) |
|
Cash and cash equivalents at end of the period |
22,480,313 |
51,104,890 |
44,898,891 |
THE OTTOMAN FUND LIMITED
CONDENSED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 29 FEBRUARY 2008
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 interim financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 August 2007, except for the adoption of IFRS 7: Financial Instruments.
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 29 February 2008. 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 are 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 fund 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 Group 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
Computers 4 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 company within the Group, which is currently £600 per annum. However, withholding tax may be payable on repatriation of assets and income to the fund.
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 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 Company are expressed in pounds sterling, which is the functional currency of the Company.
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 Company'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 months ended |
Six months ended |
Year ended |
|
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Management fee |
1,495,890 |
1,487,671 |
2,999,985 |
The Manager receives a management fee quarterly in advance of 2% per annum of the amount subscribed at the placing plus any capital gains retained for investment. The fees of the Investment Adviser are met by the Manager.
3. Earnings per share
The basic and diluted earnings per Ordinary share is based on the net loss for the period of £944,096 (29 February 2007: £708,596; 31 August 2007: £1,423,637) and on 138,178,080 shares (29 February 2007: 150,000,000; 31 August 2007: 150,000,000), being the weighted average number of shares.
4. Intangible assets
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Opening book cost |
3,099 |
- |
3,984 |
|
Additions |
46,522 |
- |
- |
|
Amortisation and impairment charge |
(18,175) |
- |
(885) |
|
Closing net book cost |
31,446 |
- |
3,099 |
The intangible assets relate to leasehold improvements and a CRM programme, with a useful life of 6 years. There has been no impairment during the period.
5. Plant and equipment
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Opening book cost |
- |
- |
- |
|
Additions |
21,434 |
- |
- |
|
Amortisation and impairment charge |
(3,061) |
- |
- |
|
Closing net book cost |
18,373 |
- |
- |
6. Inventories
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Opening book cost |
89,927,782 |
19,377,286 |
19,377,286 |
|
Purchases at cost |
1,574,347 |
60,147,297 |
70,550,496 |
|
Closing book cost |
91,502,129 |
79,524,583 |
89,927,782 |
This represents the purchase of 185,175 square metres of development land on the Bodrum peninsula, 931,739 square metres on the Riva coastline and 247,664 square metres, of which the Company has a 50% share, in the Kazikli village in the district of Milas.
7. Loans and receivables
|
29 February 2008 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
|
|
Opening book cost |
7,270,339 |
4,472,251 |
4,472,251 |
|
Loans granted |
- |
2,798,088 |
2,798,088 |
|
Exchange gain/(loss) on revaluation of loan |
400,159 |
(77,726) |
(58,814) |
|
7,670,498 |
7,192,613 |
7,211,525 |
The third party loan is €10,377,760 in respect of the investment in the Riverside Resort in Alanya secured by a mortgage. No interest is accruing and repayments are based upon sales of the development. The intercompany loans have no interest accruing, nor repayment date and principally relate to the purchase and development of land.
8. Called up share capital
|
Authorised: |
|
|
Founder shares of no par value |
10 |
|
Ordinary shares of no par value |
Unlimited |
|
Issued and fully paid: |
£ |
|
2 Founder shares of no par value |
- |
|
134,764,709 Ordinary Shares of no par value |
135,483,052 |
On incorporation of the Fund, 2 Founder shares of no par value were issued to the Manager. These shares are not eligible for participation in the Fund investments and carry no voting rights at general meetings of the Fund.
On 21 November 2007, 15,235,291 Ordinary shares were repurchased by the company for cancellation at 95 pence per share at a total cost of £14,516,948.
|
Movements in share capital during the period |
Number |
£ |
|
Shares in issue at 1 September 2007 |
150,000,000 |
150,000,000 |
|
Purchased for cancellation on 21 November 2007 |
(15,235,291) |
(14,516,948) |
|
Shares in issue at 29 February 2008 |
134,764,709 |
135,483,052 |
9. Net asset value per share
The net asset value per Ordinary share is based on the net assets attributable to equity shareholders of £122,404,820 (28 February 2007: £137,958,806; 31 August 2007: £137,386,660) and 134,764,709 shares. (28 February 2007: 150,000,000 shares; 31 August 2007: 150,000,000 shares).
10. Financial instruments
The Company'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 Company 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 Company's operations. It represents the potential loss the Company 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 loans at 29 February 2008 is dependent on successful completion and sale of properties by the third party developer. Further details of loans made to subsidiaries and developers 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 assets |
Net monetary assets |
Non-current assets |
Net monetary assets |
Non-current assets |
|
|
29 February 2008 |
29 February 2008 |
28 February 2007 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
£ |
£ |
|
|
Sterling |
- |
17,740,744 |
- |
36,490,426 |
- |
|
Euro |
7,670,498 |
714,320 |
7,192,613 |
612,568 |
7,211,525 |
|
US Dollar |
91,502,129 |
3,639,468 |
79,524,583 |
14,025,880 |
89,927,782 |
|
Turkish Lira |
49,819 |
1,087,842 |
- |
112,736 |
3,099 |
|
99,222,446 |
23,182,374 |
86,717,196 |
51,241,610 |
97,142,406 |
Interest rate risk
The Group's cash balances earn interest at the prevailing market rate, dependant on the account type.
|
Floating |
Non interest |
Floating |
Non interest |
Floating |
|
|
rate |
bearing |
rate |
bearing |
rate |
|
|
29 February 2008 |
29 February 2008 |
28 February 2007 |
28 February 2007 |
31 August 2007 |
|
|
£ |
£ |
£ |
£ |
£ |
|
|
Sterling |
17,837,040 |
- |
36,353,715 |
- |
34,595,451 |
|
Euro |
714,320 |
7,670,498 |
612,569 |
7,490,701 |
625,912 |
|
US Dollar |
3,639,468 |
91,502,129 |
- |
79,524,583 |
9,653,478 |
|
Turkish Lira |
289,485 |
49,819 |
112,736 |
- |
24,050 |
|
22,480,313 |
99,222,446 |
37,079,020 |
87,015,284 |
44,898,891 |
Liquidity risk
The Group's assets mainly comprise cash balances and realisable investments, which can be sold to meet funding commitments if necessary.
Related Shares:
Ottoman Fund