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Financial Statements For The Period Ended 31 August 2015
International Hotel Group Limited
(previously RBDL Investments Limited)
(Incorporated in the British Virgin Islands)
(Company number 1862176)
JSE share code: IHL
ISIN: VGG7396G1046
("IHGL" or the "Company")
FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 AUGUST 2015
IHGL, the hotel and leisure focused property investment company, which has a primary listing on the Euro MTF
Market of the Luxembourg Stock Exchange ("LuxSE") and a secondary listing on the Alternative Exchange ("AltX")
of the JSE, announces its results for the period from 10 February 2015 (date of incorporation) to 31 August 2015.
Highlights
- Listed on the Euro MTF Market of the Luxembourg Stock Exchange on 31 July 2015
- Acquisition of Holiday Inn Express in Dunstable, north of London
- Acquisition of a Travelodge hotel under development in Belvedere, in south east London
Financial
- No dividend has been declared for the period ended 31 August 2015
- Basic loss per share of 7.67 pence
- Basic headline loss per share of 7.98 pence
Post year-end
- Listed on the AltX of the JSE and initial private placement of 12,350,000 shares - 14 October 2015
- Changes to the Company’s Board of Directors - 19 October 2015
- Second private placement of 13,875,000 shares - 20 October 2015
- Acquisition of loans secured against three Travelodge hotels in the UK - 2 November 2015
- Further placing of 6,125,000 shares - 20 November 2015
The post year-end capital raisings were in line with the strategy outlined in the IHGL’s pre-listing statement issued on
Wednesday, 7 October 2015 and the abridged pre-listing statement released on the LuxSE website and SENS on the
same date, whereby investors were advised that the funds raised would be used to conclude, inter alia, a number of
acquisitions.
Martin Wilsher, Chairman, commented:
"This is the first period when there is no significant trading benefit from the properties acquired and certain initial
costs have led to the loss-making position in this start-up phase. However following the successful capital raises post
year end and the acquisition of additional properties, we look forward to announcing more favourable results in
future."
INTERNATIONAL HOTEL GROUP LTD
(BVI Company number: 1862176)
FINANCIAL STATEMENTS FOR THE PERIOD ENDING
31 August 2015
CORPORATE INFORMATION
Directors
Helder Pereira (Chief executive officer)
David Hart (Chief financial officer)
Peter Todd (Chairman, non-executive director)
Miles Walton (Non-executive director)
Daniel Romburgh (Independent non-executive director) - resigned 19/10/2015
Director appointments after year end
Michael Watters - (appointed 19/10/2015)
Martin Wilsher - (appointed 19/10/2015)
Marcel Von Aulock - (appointed 19/10/2015)
Secretary
Osiris Secretarial Services Limited
Coastal Building
Wickham's Cay II
Road Town, Tortola
British Virgin Islands
(P O Box 2221, Road Town, Tortola, British Virgin Islands)
Auditors
Deloitte Ltd.
James Frett Building
Wickham's Cay 1
Road Town 3083, Tortola
British Virgin Islands
Registered address of the company
Coastal Building
Wickham's Cay II
Road Town, Tortola
British Virgin Islands
(P O Box 2221, Road Town, Tortola, British Virgin Islands)
The Luxembourg Stock Exchange ISIN code (Primary Listing)
VGG7396G1046
The Johannesburg Securities Exchange ISIN code (Secondary Listing after year end)
VGG7396G1046
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for the preparation and fair presentation of the consolidated financial statements of International Hotel Group Limited for the period since
incorporation to 31 August 2015, comprising the statements of financial position at 31 August 2015, statement of comprehensive income, statement of changes in equity,
statement of cash flows and the notes to the consolidated financial statements which include a summary of significant accounting policies and other explanatory notes, in
accordance with International Financial Reporting Standards.
The Directors are also responsible for such internal control as they determine are necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management as well as the preparation of
the supplementary schedules included in these financial statements. The Directors have made an assessment of the ability of the Group and the Company to continue as
going concerns and have no reason to believe that the businesses will not be going concerns in the year ahead.
The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.
Approval of the annual financial statements
The consolidated financial statements of the International Hotel Group Limited, as identified in the first paragraph, were approved by the Board of Directors on 23
November 2015 and are signed on their behalf by:
DAVID R HART
DIRECTOR
Deloitte Ltd.
Wickham's Cay 1
P.O. Box 3083
Road Town, Tortola
British Virgin Islands VG 1110
Tel: + 1 (284) 494 2868
Fax: + 1 (284) 494 7889
deloittebvi@deloitte.com
www.deloitte.com
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and Board of Directors of
International Hotel Group Ltd.
Report on the Financial Statements
We have audited the accompanying financial statements of International Hotel Group Ltd., which comprise the
statement of financial position as at August 31, 2015, and the statement of comprehensive income, the statement of
changes in shareholder's equity and the statement of cash flows for the period from February 10, 2015 (date of
incorporation) to August 31, 2015, and a summary of significant accounting policies and other explanatory
information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects the financial position of International
Hotel Group Ltd. as of August 31, 2015, and the results of its operations and its cash flows for the period from February
10, 2015 (date of incorporation) to August 31, 2015 in accordance with International Financial Reporting Standards.
November 23, 2015
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms,
and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global")
does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
Deloitte Ltd. is an affiliate of DCB Holding Ltd., a member firm of Deloitte Touche Tohmatsu Limited.
REPORT OF THE DIRECTORS
The directors have pleasure in presenting their report on the activities of the group for the first set of financial statements for the 31 August 2015 reporting period.
GENERAL REVIEW
The company (International Hotel Group Ltd) has a primary listing on the Luxembourg Stock Exchange and subsequent to this reporting period has listed shares as a
secondary listing on the AltX of the Johannesburg Securities Exchange (JSE) to raise additional capital to acquire further hotel assets during the subsequent financial
years. The company is established in the British Virgin Islands (BVI) with the primary objective of opportunistically acquiring good quality undervalued hotel property
assets (predominantly in the UK and Europe), in order to offer investors a high yielding property investment. The group's loss after tax from these activities were as
follows:
31-Aug-15
GBP
Loss after tax (188,392)
HOLDING COMPANY
The company's holding company and ultimate parent is Oceantides Property Holdings Limited which owns 80% of the shares. After the secondary listing on the
Johannesburg Securities Exchange (JSE) it is not anticipated that the company will have a controlling shareholder.
DIVIDEND
No dividend has been declared during the reporting period ended 31 August 2015 or subsequently to the date of the presentation of these financial statements.
COMPARATIVES
This is the first 31 August year end reported, and includes results for the period 10 February 2015 (date of incorporation) to 31 August 2015 and as such no comparative
results are presented.
GOING CONCERN
This is the first year the Group has commenced operations and the group includes two subsidiaries which have properties being used to provide hotel accommodation.
Subsequent to this year end the group has listed on the JSE and accordingly raised capital to acquire further hotel assets. The capital raised will be sufficient to ensure the
group operates as a going concern for the foreseeable future and at least until the hotel assets deliver adequate returns. As a consequence, the directors believe that the
group is well placed to manage its business risks successfully.
Therefore after making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the
foreseeable future. Accordingly, they have adopted the going concern basis in preparing the annual report and accounts.
EVENTS AFTER THE REPORTING DATE AND FUTURE DEVELOPMENTS
The directors have listed shares as a secondary listing on the AltX of the JSE, thereby raising additional capital to acquire further hotel assets. This secondary listing has
taken place after the reporting period but before the financial statements have been approved.
Subsequent to the reporting period the group acquired the debt of three hotel properties for GBP23,500,000 with the intention to acquire the hotels in the future. The debt
was acquired through the creation of a new subsidiary which is 100% owned by the International Hotel Group Ltd.
No other material events occurred between the reporting period date and the date on which the annual financial statements were approved.
DIRECTORS
The directors are listed on page 3.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31 August 2015
Notes 2015
GBP
Rental Income 2 163,890
Other expenses 3 (484,917)
Other income 4 166,124
Net Finance expense 5 (27,588)
Finance expense (88,790)
Fair value gain on interest rate cap 61,202
Loss before tax (182,491)
Taxation charge 6 (5,901)
Loss after taxation (188,392)
Other Comprehensive Income -
Total Comprehensive loss for the year (188,392)
Earnings per share
Basic loss per share (pence) 7 (7.67)
Diluted loss per share (pence) 7 (7.67)
Basic headline loss per share (pence) 7 (7.98)
Diluted headline loss per share (pence) 7 (7.98)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 August 2015
Notes 2015
ASSETS GBP
Non-current Assets 15,554,613
Property, Plant and Equipment 8 8,800,000
Intangible assets 9 993,411
Investment Property 10 5,700,000
Non-current financial assets 18 61,202
Current Assets 1,160,916
Inventories 12 6,299
Trade and other receivables 13 421,986
Cash and cash equivalents 14 732,631
Total Assets 16,715,529
EQUITY AND LIABILITIES
Capital and Reserves 2,376,874
Share capital 15 2,650
Share premium 15 2,562,616
Accumulated loss (188,392)
Non-current Liabilities 7,433,230
Interest-bearing loans and borrowings 11 6,608,908
Deferred tax liability 16 824,322
Current Liabilities 6,905,425
Trade and other payables 17 1,064,053
Short term portion of interest bearing loans and borrowings 11 5,761,356
Corporate tax payable 80,016
Total Equity and Liabilities 16,715,529
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 August 2015
Retained Earnings/
Share Capital Share Premium Accumulated Loss Total Equity
GBP GBP GBP GBP
Balance as at 10 February 2015 - - - -
Issue of shares - 19 March 2015 1 - - 1
Cancellation of shares - 31 March 2015 (1) - - (1)
Issue of shares - 31 March 2015 2,650 2,562,616 - 2,565,266
Total Comprehensive loss - (188,392) (188,392)
Balance as at 31 August 2015 2,650 2,562,616 (188,392) 2,376,874
Notes 15 15
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 31 August 2015
Notes 2015
GBP
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before tax (182,491)
Adjustments to reconcile profit before tax to net cash flows:
Decrease in investment properties 183,883
Bargain purchase of subsidiaries (166,124)
Net Finance expense 27,457
Working capital adjustments:
Decrease in trade and other receivables and prepayments 181,740
Increase in trade and other payables 379,410
Interest paid (27,457)
Net cash inflow from operating activities 396,418
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of a subsidiary, net of cash acquired 21 361,214
Net cash inflow from investing activities 361,214
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Interest bearing borrowings (25,000)
Net cash outflow from financing activities (25,000)
Net increase in cash and cash equivalents 732,631
Balance at the beginning of the year -
BALANCE AT YEAR END 732,631
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 August 2015
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of preparation
The consolidated financial statements of the International Hotel Group Ltd have been prepared in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
The consolidated financial statements have been prepared on a historical cost basis, except for Investment Properties, freehold land and buildings classified as Property,
Plant and Equipment and derivative financial instruments, that have been measured at fair value. The consolidated financial statements are presented in Pounds Sterling.
This is the first 31 August year end reported for the period 10 February 2015 to 31 August 2015 and as such no comparatives are presented.
1.2 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 August 2015. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee
- The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption, and when the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control
until the date the Group ceases to control the subsidiary.
Profit or loss and each component of Other Comprehensive Income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling
interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity
while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
Common accounting policies have been used by all companies in the group.
1.3 Summary of significant accounting policies
Property, Plant and Equipment
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. The present value of the expected cost for the decommissioning of an asset
after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Freehold land and buildings are subsequently measured at fair value less accumulated depreciation on buildings and impairment losses recognised at the date of
revaluation. Freehold land and buildings are comprised of fixtures, fittings and equipment, integral features and buildings which are depreciated separately (refer below).
Valuations are performed with sufficient frequency to ensure that the carrying amount of a revalued asset does not differ materially from its fair value.
A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to the extent that it reverses a revaluation deficit of the same
asset previously recognised in profit or loss, the increase is recognised in profit and loss. A revaluation deficit is recognised in the statement of profit or loss, except to
the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Where assets are acquired during the year they are only depreciated from
the date they are available for use. The different categories are depreciated as follows:
- Property, Plant and Equipment - 10 years,
- Buildings - 40 years
An item of Property, Plant and Equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if
appropriate.
Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which
reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period
in which they arise, including the corresponding tax effect. Fair values are determined based on an annual evaluation performed by an accredited external independent
valuer applying a valuation model consistent with IFRS 13.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is
expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of
derecognition.
Transfers are made to (or from) Investment Property only when there is a change in use. For a transfer from Investment Property to owner-occupied property, the deemed
cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an Investment Property, the Group accounts for such
property in accordance with the policy stated under Property, Plant and Equipment up to the date of change in use.
Leases
Group as a Lessor
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental
income. Contingent rents are recognised as revenue in the period in which they are earned.
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. The following
specific recognition criteria must be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on consumption /
utilisation of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances. The
Group does not provide any extended warranties or maintenance contracts to its customers.
Rendering of Services
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the
stage of completion of the transaction at the end of the reporting period excluding value added taxation. The outcome of a transaction can be estimated reliably when all
the following conditions are satisfied:
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the company;
- the stage of completion of the transaction at the end of the reporting period can be measured reliably; and
- the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses
recognised that are recoverable. Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. Stage of
completion is determined by services performed to date as a percentage of total services to be performed.
Rental income
Rental income arising from operating leases on Investment Properties and Property, Plant and Equipment is accounted for on a straight-line basis over the lease terms and
is included in revenue in the statement of profit or loss due to its operating nature.
Employee benefits
Short-term employee benefits
The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service.
The provisions for employee entitlements to wages, salaries, annual and sick leave represent the amount which the Group has a present obligation to pay as a result of
employees' services provided to the Statement of Financial Position date. The provisions have been calculated at undiscounted amounts based on current wage and salary
rates.
Retirement benefits
Where companies in the group have employees they contribute to defined contribution funds. Contributions to defined contribution funds are charged against income as
incurred.
Borrowing costs
Borrowing costs that are directly attributable to the acquisition or production of a qualifying asset form part of the cost of the assets and are capitalized as such. Other
borrowing costs are recognized as an expense.
Loans and borrowings
All loans and borrowings are initially recognized at cost, being the fair value of the consideration received and including acquisition charges associated with the
borrowing/loan.
After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortized cost. Amortized cost is calculated by taking into account any
discount or premium on settlement.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset
but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.
Income taxes
Deferred income tax is provided, using the Statement of Financial Position method, on all temporary differences at the Statement of Financial Position date which results
from differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences (unless the deferred tax liability arises from goodwill amortization or the initial recognition of
an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss).
Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilized (unless the
deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss).
The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax
rates (and tax laws) that have been enacted or subsequently enacted at the Statement of Financial Position date.
Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the
amount due for those periods, the excess is recognised as an asset.
Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates
(and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:
- a transaction or event which is recognised, in the same or a different period, to Other Comprehensive Income, or
- a business combination.
Current tax and deferred taxes are charged or credited to Other Comprehensive Income if the tax relates to items that are credited or charged, in the same or a different
period, to Other Comprehensive Income.
Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in
equity.
Impairment of assets
The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment
testing for an asset is required, the company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-
generating unit's fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the
Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset.
Irrespective of whether there is any indication of impairment, the company also:
- tests intangible assets with an indefinite useful life or intangible assets not yet available for use for impairment annually by comparing its carrying amount with its
recoverable amount. This impairment test is performed during the annual period and at a similar time every period.
- tests goodwill acquired in a business combination for impairment annually.
Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.
An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is
allocated to reduce the carrying amount of the assets of the unit in the following order:
- first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit and
- then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit
An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer
exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated. The increased carrying amount of an asset other than
goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset in prior periods. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised
immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.
Intangible Assets
An intangible asset is recognised when:
- it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
- the cost of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is
expected to generate net cash inflows. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an
indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.
The amortisation period and the amortisation method for intangible assets are reviewed every year end. Reassessing the useful life of an intangible asset with a finite
useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying
amount is amortised over its useful life.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.
Share capital and equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Ordinary shares are classified as
equity.
Fair value measurement
The Group measures financial instruments such as derivatives, and non-financial assets such as investment properties, at fair value at each balance sheet date. Fair value
related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the following
notes:
- Property, Plant and Equipment under revaluation model - note 8
- Investment Properties - note 10
- Financial instruments - note 18
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best
use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The directors determine the policies and procedures for recurring fair value measurement, such as Investment Properties and revalued Property, Plant and Equipment.
External valuers are involved for valuation of significant assets, such as properties. Involvement of external valuers is decided upon annually by the directors. Selection
criteria include market knowledge, reputation, independence and whether professional standards are maintained. The directors decide, after discussions with the Group's
external valuers, which valuation techniques and inputs to use for each case.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or
liability and the level of the fair value hierarchy as explained above.
Financial instruments
Financial Assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available
for sale (AFS) financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair
value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades)
are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified in four categories:
- Held-to-maturity investments
- AFS financial assets
- Financial assets at fair value through profit or loss
- Loans and receivables
Interest
For all financial instruments measured at amortised cost and interest-bearing financial assets classified as AFS, interest income is recorded using the effective interest
rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the financial asset or liability.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through
profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including
separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. This category
also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. The
Group has not designated any financial assets at fair value through profit or loss. Financial assets at fair value through profit or loss are carried in the statement of
financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair
value) in the statement of profit or loss.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely
related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are
measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.
Loans and receivables
This category is the most relevant to the Group. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less
impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss in
finance costs for loans and in cost of sales or other operating expenses for receivables. This category generally applies to trade and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's
consolidated statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to
a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has
retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of
the asset, the Group continues to recognise the transferred asset to the extent of the Group's continuing involvement. In that case, the Group also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the
maximum amount of consideration that the Group could be required to repay.
Impairment of financial assets
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if
one or more events that has occurred since the initial recognition of the asset (an incurred 'loss event'), has an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation
and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether impairment exists individually for financial assets that are individually significant, or
collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective
assessment of impairment.
The amount of any impairment loss identified is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows
(excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset's
original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the statement of profit or loss. Interest income
(recorded as finance income in the statement of profit or loss) continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. Loans together with the associated allowance are written off when there is no realistic
prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss
increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting
the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statement of profit or loss.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair
value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial
instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are
also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IAS 39
are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the
EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is
included as finance costs in the statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated
as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as interest rate caps, to hedge its interest rate risks. Such derivative financial instruments are initially recognised at
fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair
value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is
recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal
right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of six months or less,
which are subject to an insignificant risk of changes in value.
Trade and other payables
Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received,
whether or not billed to the Group.
Payables to related parties are carried at cost. Where the time value of money is significant they are recognised at amortised cost.
RISK MANAGEMENT
Capital management policies and procedures
The company' s capital management objectives are to ensure the company's ability to continue as a going concern. The company monitors capital on the basis of the
carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position. The company sets the amount of capital in
proportion to its overall financing structure, i.e. equity and financial liabilities. The company manages the capital structure and makes adjustments to it in the light of
changes in economic conditions and the risk characteristics of the underlying assets.
All derivative activities for risk management purposes are carried out by management that have the appropriate skills, experience and supervision. It is the Group's
policy that no trading in derivatives for speculative purposes is undertaken.
Liquidity risk
The company manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-term financial liabilities as well as cash-outflows due in
day-to-day business. The company has minimised its liquidity risk by ensuring that it has adequate banking facilities and reserve borrowing capacity. Prudent liquidity
risk management includes maintaining sufficient cash and ensuring the availability of funding from an adequate amount of credit facilities. The company has also raised
capital with a secondary listing on the JSE subsequent to the reporting period.
The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments (there are no amounts owing after 5
years):
2015
On demand Less than 3 months 3 to 12 months 1 to 5 years
GBP GBP GBP GBP
Interest bearing borrowings - 5,686,356 75,000 6,608,908
Accounts payable - 713,058 - -
- 6,399,414 75,000 6,608,908
Credit risk
The company's exposure to credit risk is limited to the carrying amount of financial assets recognised at the statement of financial position date. The company
continuously monitors defaults of customers and other counterparties, identifies and incorporates this information into its credit risk controls. The company's policy is to
deal only with creditworthy counterparties. The company's management considers that all the financial assets are not impaired for each of the reporting dates under
review and are of good credit quality, including those that are past due. In respect of trade and other receivables, the company is not exposed to any significant credit risk
exposure to any single counterparty or any group of counterparties having similar characteristics. The bulk of clients pay for hotel accommodation via credit cards and
this greatly reduces the credit risk, customers which are given credit are usually given credit terms of 30 days and this short period also reduces credit risk. The credit risk
for liquid funds is considered negligible, since the counterparties are reputable banks with quality external credit ratings.
Foreign exchange risk
The group's transactions are carried out in Pounds and there are no significant foreign exchange exposures.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's
exposure to the risk of changes in market interest rates relates primarily to the Group's long-term debt obligations with floating interest rates. The Group manages its
interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. To manage this, the Group entered into an interest rate cap, in which it
agrees to cap the potential interest payments on specific debt. At 31 August 2015, after taking into account the effect of interest rate caps, GBP3,375,000 of the Group's
borrowings are at a capped interest rate.
At 31 August 2015, if interest rates on Pound-denominated borrowings had been 0.25% higher (which is management's assessment of the most probable movement) with
all other variables held constant, finance charges would have been around GBP7,687 extra and post-tax profit for the year would have been around GBP7,160 lower, mainly as a
result of higher interest expense on floating rate borrowings.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the
sale.
Significant judgements and sources of estimation uncertainty
In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and
related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from
these estimates which may be material to the financial statements. Significant judgements include:
Trade Receivables and Loans
The company assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or
loss, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
The impairment for trade receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for industry and client-specific economic conditions and
other indicators present at the reporting date that correlate with defaults on the portfolio.
Trade Receivables and Loans
The company assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or
loss, the company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
The impairment for trade receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for industry and client-specific economic conditions and
other indicators present at the reporting date that correlate with defaults on the portfolio.
Fair Value
When the fair values of financial assets and financial liabilities recorded in the Statement of Financial Position cannot be measured based on quoted prices in active
markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Impairment Testing
The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs
to sell. These calculations require the use of estimates and assumptions. It is possible that the assumptions may change which may then impact our estimations and may
then require a material adjustment to the carrying value of goodwill and tangible assets.
The company reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In
addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash
flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of
assets. Expected future cash flows used to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. They
are significantly affected by a number of factors including revenue and profits, together with economic factors such as high inflation or a significant deterioration in the
economy and industry.
Taxation
Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business. The company recognises liabilities for anticipated tax audit issues based on estimates of
whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact
the income tax and deferred tax provisions in the period in which such determination is made.
The company recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will
reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the company to make significant estimates related to expectations of
future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction.
To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the company to realise the net deferred tax assets recorded at the
end of the reporting period could be impacted.
Operating lease commitments – Group as lessor
The Group has entered into property leases on its hotel property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the
arrangements, such as the lease term not constituting a major part of the economic life of the hotel property and the fair value of the asset, that it retains all the significant
risks and rewards of ownership of these properties and accounts for the contracts as operating leases.
Revaluation of Property, Plant and Equipment and Investment Properties
The Group carries its investment properties at fair value, with changes in fair value being recognised in the statement of profit or loss. The Group engaged an
independent valuation specialist to assess fair value as at 31 August 2015 for investment properties and for revalued land and buildings.
For Investment Properties and Property, Plant and Equipment, a valuation methodology including the current economy, nature of the properties, locality, tenancy, risk
profile, forward rent and earning capability and exposure to future expenses and property risk, the tenancy income capability and expenditure for each property and
tenant, historic expenditure profile as well as future expenditure increases have been considered. The value therefore indicates the fair market value for each property.
In addition, it measures land and buildings at revalued amounts with changes in fair value being recognised in OCI.
2. RENTAL INCOME
Operating lease arrangements
The Group as lessor
The Group has entered into an operating lease on its Hotel Investment Property (refer note 10). This lease has a term to 31 October 2015 whereupon it automatically rolls
over if not terminated and is expected to continue rolling over. The lease has a basic rental of GBP1 a year with an additional fee based upon the performance and results of
the underlying hotel.
After one year but
Within one year not more than five More than five years Total
years
GBP GBP GBP GBP
Future minimum rentals receivable under non-cancellable
operating leases as at 31 August are, as follows: 1 - - 1
The budgeted performance rentals receivable (under
cancellable operating leases) for the period 1 September 2015 360,472
to 31 August 2016 is as follows:
The rental received (including additional fee) for the period of 1 April 2015 to 31 August 2015 on the lease was GBP163,890.
3. OTHER EXPENSES
2015
GBP
Other expenses include the following items:
Audit Fees - for audit 25,000
Audit Fees - for tax services 5,000
Fair value losses:
Fair value loss on Investment Property (refer note 10) 183,883
Admin fees 2,600
Management fees incurred 155,992
Professional and legal fees 4,850
Directors remuneration and fees 21,950
Due to the acquisition of The Gateway Hotel Dunstable Ltd at year end the only employees in the period to August 2015 were directors of IHGL and SWIL. There was
therefore an average of 7 staff members during the year. However due to the abovementioned acquisition at year end there were 41 members of staff employed by the
group as at 31 August 2015.
4. OTHER INCOME
2015
GBP
Other income is arrived at after taking the following item into account:
Bargain purchase on acquisition of subsidiaries (refer note 21). 166,124
5. NET FINANCE CHARGES
2015
GBP
Net finance expense is arrived at after taking the following items into account:
Interest Paid: Financial Institutions 88,659
Bank charges 131
Fair value movement on interest rate cap (61,202)
27,588
The fair value movement on the interest rate cap relates to an interest rate cap contract that is not designated under hedge accounting, refer to note 18 for details.
6. TAXATION
2015
GBP
UK Corporate taxation
- Current year 31,286
UK Deferred taxation
- Current year (25,385)
Taxation expense 5,901
Taxation reconciliation
The tax charge for the period differs from the standard rate of corporation tax in the UK of 20%, the difference is explained below.
Loss on UK ordinary activities before tax (52,330)
Tax on loss at standard UK tax rate of 20% (10,466)
Effects of:
Fair value adjustment not deductible for tax purposes 36,777
Acquisition of subsidiary adjustment (20,410)
Income tax expense reported in the statement of profit or loss 5,901
Factors that may affect future tax charges
The UK rate of corporation tax reduced from 24% to 23%, effective from 1 April 2013 and to 21%, effective from 1 April 2014. A reduction to 20%, effective from 1
April 2015, was included in the Finance Act 2013 which was enacted on 17 July 2013.
7. EARNINGS PER SHARE (EPS)
Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the parent (after adjusting for
interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following reflects the income and share data used in the basic and diluted EPS computations:
2015
GBP
Loss attributable to ordinary equity holders of the parent for basic earnings: (188,392)
Potential dilution -
Loss attributable to ordinary equity holders of the parent adjusted for the effect of dilution (188,392)
Number of ordinary shares in issue 2,650,000
Weighted average number of ordinary shares for basic EPS 2,457,273
Effects of dilution -
Weighted average number of ordinary shares adjusted for the effect of dilution 2,457,273
Subsequent to year end there have been shares issued which resulted in additional capital being raised.
Headline earnings per share
The following table provides the profit/(loss) amount used:
Loss attributable to equity holders of the parent for the basic and diluted EPS calculations (188,392)
Plus IAS 40 changes in fair value of Investment Property (net of deferred tax) 158,498
Net fair value loss on Investment Property 183,883
Deferred taxation (25,385)
Less IFRS 3 Bargain gains on purchases of subsidiaries (166,124)
Headline loss attributable to equity holders of the parent (196,018)
8. PROPERTY, PLANT AND EQUIPMENT
2015
GBP
Freehold land and
buildings
At Cost or Valuation:
At 10 February 2015 -
Additions - acquisition of a subsidiary (note 21) 8,800,000
At 31 August 2015 8,800,000
Depreciation and impairment:
At 10 February 2015 -
Depreciation charge for the year -
At 31 August 2015 -
Net book value
Net book value at 31 August 2015 8,800,000
Revaluation of land and buildings
The revalued land and buildings consist of hotel premises being the Holiday Inn Express Dunstable. Management determined that these constitute one class of asset
under IFRS 13, based on the nature, characteristics and risks of the property.
As at 31 August 2015, the property's fair value is based on a valuation performed by Savills Advisory Services Limited who have more than 25 years combined
experience in the valuation of similar properties in the UK. They have prepared this valuation in accordance with Royal Institution of Chartered Surveyors' ("RICS")
Valuation – Professional Standards January 2014 (the "RICS Red Book") published in November 2013 and effective from 6 January 2014. The principals of fair value
measurement have been applied in the determination of value which is defined as "The price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date." (IFRS 13).
If land and buildings were measured using the cost model, the carrying amounts would be as follows:
Cost 8,800,000
Accumulated depreciation and impairment -
Net carrying amount 8,800,000
9. INTANGIBLE ASSETS
2015
Goodwill GBP
Cost or valuation:
At 10 February 2015 -
Acquisition of subsidiaries (refer note 21) 993,411
At 31 August 2015 993,411
Impairment:
At 10 February 2015 -
Impairment -
At 31 August 2015 -
Net book value
Net book value at 31 August 2015 993,411
Goodwill is allocated to the following cash generating units:
Redefine Dunstable Ltd 356,455
The Gateway Hotel Dunstable Ltd 636,956
993,411
Goodwill acquired through business combinations is allocated to the subsidiaries as CGUs for impairment testing.
The Group considers the relationship between the carrying amounts compared to recoverable amounts as well as net asset values and future earning potential among
other factors, when reviewing for indicators of impairment. Goodwill is tested annually for impairment regardless of indicator and the Group performed its annual
impairment test in August 2015. The above two subsidiaries were acquired on the 28 August 2015 and the assets were fairly valued at this date, as such the carrying
value does not exceed the fair value less costs to sell and there does not appear to be any impairment required.
10. INVESTMENT PROPERTY
2015
GBP
Land Hotel Property Total
GBP GBP GBP
Opening balance at 10 February 2015 - - -
Additions on acquisition of companies (refer note 21) 800,000 4,900,000 5,700,000
Development Expenditure Capitalised - 183,883 183,883
Net gain / (loss) from fair value adjustment - (183,883) (183,883)
Closing balance at 28 August 2015 800,000 4,900,000 5,700,000
The Group's investment properties consist of two properties in the United Kingdom. Management determined that the investment properties consist of two classes of
assets - Hotel Properties and Land (held for future development) based on the nature, characteristics and risks of each property.
As at 31 August 2015, the fair values of the properties are based on valuations performed by Savills Advisory Services Limited, and signed by two RICS (Royal
Institution of Chartered Surveyors) Registered Valuers. Savills Advisory Services Limited have more than 25 years combined experience in the valuation of similar
properties in the UK and are qualified to express an opinion on the Market Value of the Properties. The valuation has been prepared in accordance with Royal Institution
of Chartered Surveyors' ("RICS") Valuation – Professional Standards January 2014 (the "RICS Red Book") published in November 2013 and effective from 6 January
2014. The principals of fair value measurement have been applied in the determination of value which is defined as "The price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date." (IFRS 13)
During the year GBP183,883 of development expenditure was incurred on the hotel property. This expenditure was capitalised to the property, however as the properties fair
value is GBP4,900,000 this expenditure has been subsequently impaired.
GBP
Rental income derived from investment properties 163,890
Direct operating expenses (including repairs and maintenance) that did not generate rental income during the period. (4,850)
Profit arising from investment properties carried at fair value 159,040
The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for
repairs, maintenance and enhancements.
Description of valuation techniques used and key inputs to valuation on investment properties:
The valuation of the hotel property has been prepared by Savills Advisory Services Ltd based on an Income Capitalisation method based on the projected fair
maintainable trade of the subject hotel. They have adopted a capitalisation rate of 10%, which has been applied to the projected fair maintainable Net Operating Profit for
the Hotel. They have deducted costs of GBP95,300 associated to the termination of the existing lease as well as the outstanding immediate Capex costs of GBP87,000.
The valuation of the land has been prepared by Savills Advisory Services Ltd based on market value upon completion of the development, capitalising the hotel rent to be
received at a net initial yield of 5.0% and have reflected the terms of the lease, the covenant strength of the tenant, the rental level and comparable evidence. Purchaser's
costs have been deducted at 5.8%.
11. LOANS AND BORROWINGS
Interest-bearing loans and borrowings 2015
Interest Rate Maturity GBP
Current portion of interest-bearing loans and borrowings
Related party loan - refer note 19 6% 27 September 2015 1,078,219
Related party loan - refer note 19 6% 27 September 2015 4,583,137
Bank Loan LIBOR +2% 31 May 2019 100,000
5,761,356
Non-Current interest-bearing loans and borrowings
Bank Loan (includes interest rate cap on GBP3,375,000 capping LIBOR to 2%), [1] LIBOR +2.25% 31 July 2020 4,408,908
Bank Loan LIBOR +2% 31 May 2019 2,200,000
6,608,908
The interest rate used for the amortised cost calculation is a fair market rate for the risks relating to the loans and management therefore assess that the fair value of the
loans approximates the above amortised cost carrying value.
[1] This loan is secured by the following: Legal charge over property (Gateway Hotel); 2x debentures; security assignment over any subordinated debt; fixed charge over
all the bank accounts stated in SFA (Senior Facility Agreement).
12. INVENTORIES
2015
GBP
Food and beverage stock 6,299
Inventories comprise food and beverages which are kept at the hotel for sale to clients. The food and beverages relate to The Gateway Hotel Dunstable Ltd (i.e. the
Holiday Inn Express Dunstable hotel).
13. TRADE AND OTHER RECEIVABLES
2015
GBP
Trade receivables 355,705
Allowance for doubtful debts – trade receivables (5,211)
Receivables from other related parties - refer note 19 56,539
Prepayments 14,953
421,986
The maximum exposure to credit risk at the reporting date is the value of the debtors above. The company does not hold any collateral as security.
14. CASH AND CASH EQUIVALENTS
2015
GBP
Cash in bank 732,631
Cash held with the banks does not earn interest. There is no collateral held by counterparties on the bank accounts. At 31 August 2015, the Group had no undrawn
committed borrowing facilities.
15. SHARE CAPITAL
Authorised
1 000 000 000 Ordinary shares of par value GBP0.001 per share 1,000,000
Issued
At 10 February 2015: 1 share at GBP1 1
Cancellation of 1 GBP1 share at 31 March 2015 (1)
Issue of 2 650 000 ordinary shares of par value GBP0.001 per share - 31 March 2015 2,650
2,650
Share Premium
2 650 000 ordinary shares issued at a GBP0.999 premium per share - 31 March 2015 2,647,350
Transaction costs capitalised for shares issue (84,734)
2,562,616
Total Share Capital and Share Premium 2,565,266
During the year, the authorised share capital was modified and increased from 50 000 GBP1 shares to 1 000 000 000 GBP0.001 shares.
There are no shares held in treasury.
16. DEFERRED TAXATION
2015
GBP
Deferred Tax relates to the following:
Revaluations of investment properties to fair value (141,297)
Revaluations of land and buildings to fair value - IFRS 3 adjustment on acquisition (681,110)
Timing difference relating to accelerated capital allowances (1,915)
Net Deferred tax (Liability) (824,322)
Reflected in the statement of financial position as follows:
Deferred tax assets: -
Deferred tax liabilities: (824,322)
Net Deferred tax (Liability) (824,322)
The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off deferred tax assets and deferred tax liabilities relate to income taxes
levied by the same tax authority.
17. TRADE AND OTHER PAYABLES
Trade payables 500,366
Trade payables to related parties - refer note 19 212,692
Accruals 262,753
Accruals to related parties - refer note 19 88,242
1,064,053
Trade and other payables are usually settled within 30 days or at the end of the month after invoice date.
Due to the short term nature of the trade and other payables the carrying value approximates fair value.
18. FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
Financial liabilities by category
The accounting policies for financial instruments have been applied to the line items below:
Financial liabilities
at amortised cost
2015 GBP
Interest bearing borrowings 12,370,264
Accounts payable 713,058
13,083,322
Cash flows relating to payables are not discounted as they are short term in nature.
Financial assets by category
The accounting policies for financial instruments have been applied to the line items below:
Financial instruments
2015 at fair value through Cash and bank Loans and Total
profit or loss balances receivables GBP
Accounts receivable - - 407,033 407,033
Cash and cash equivalents - 732,631 - 732,631
Derivatives not designated as hedges:
Interest rate cap 61,202 - - 61,202
61,202 732,631 407,033 1,200,866
Financial instruments through profit or loss reflect the positive change in fair value of interest rate caps that are not designated in hedge relationships, but are,
nevertheless, intended to reduce the level of interest rate risk for debt repayments.
Cash flows relating to receivables are not discounted as they are short term in nature.
Fair value measurement
The following table provides the fair value measurement hierarchy of the Group's assets and liabilities.
Fair value measurement hierarchy for assets as at 31 August 2015:
Quoted prices in active Significant Significant Total
markets (Level 1) observable inputs unobservable inputs GBP
(Level 2) (Level 3)
Assets measured at fair value:
Derivative financial assets
Interest rate cap - 61,202 - 61,202
Investment Property -
Land - - 800,000 800,000
Hotel Property - - 4,900,000 4,900,000
Property, Plant and Equipment - - 8,800,000 8,800,000
- 61,202 14,500,000 14,561,202
There have been no transfers between Level 1 and Level 2 during the period. No Liabilities have been carried at fair value.
Fair values
Set out below is a comparison, by class, of the carrying amounts and fair value of the Group's financial instruments, other than those with carrying amounts that are
reasonable approximations of fair values:
Carrying amount Fair value
GBP GBP
Financial assets
Derivatives not designated as hedges
Interest Rate cap 61,202 61,202
The Group enters into derivative financial instruments with counterparties, principally financial institutions with investment grade credit ratings. Interest rate caps are
valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include interest rate cap
models, using present value calculations. The models incorporate various inputs including the expected interest rate curves.
Hedging activities and derivatives
Derivatives not designated as hedging instruments
The Group uses interest rate caps to manage some of its transaction exposures. The interest rate caps are not designated as hedges and are entered into for periods
consistent with the related borrowings for a period commencing on 12 August 2015 and expiring on 31 July 2020.
Interest rate cap
At 31 August 2015, the Group had a facility with Santander for GBP4,500,000 at an interest rate of 2.25% plus LIBOR. The group entered into an interest rate cap
agreement for an amount of GBP3,375,000 of this facility whereby the Group caps it's interest rate at 2.25% plus LIBOR capped at 2%, i.e. the maximum interest payable
per the cap is 4.25%. The cap is being used to reduce the exposure to changes in the LIBOR rate on GBP3,375,000 of the GBP4,500,000 loan. This interest rate cap is classified
as a financial instrument through profit and loss and the fair value of the interest rate cap of GBP61,202 has been recognised in profit and loss.
19. RELATED PARTIES
Note 20 provides information about the Group's structure, including details of the subsidiaries and the holding company. The following table provides the total amount
of transactions that have been entered into with related parties for the relevant financial year.
Purchases/expenses Amounts owed by Amounts owed to
Sales to related parties from related parties related parties related parties
GBP GBP GBP GBP
Entity with significant influence over the Group:
Redefine International PLC, loan - refer note 11 - - - (5,661,355)
Redefine International PLC, accounts payable - refer note 17 - - - (56,700)
Redefine BDL Management Ltd, accruals - refer note 17 - (88,242) - (88,242)
Sandgate Worcester Ltd - accounts receivable - refer note 13 163,890 - 56,539 -
2015
Compensation of key management personnel of the Group
GBP
Short-term employee benefits - Directors 21,950
Expenses payable under investment management agreement
RBDL Capital Managers Ltd - Investment management fees - refer note 17 (155,992) (155,992)
During the period there were three business acquistions, namely the acquisition of Redefine Belvedere Ltd, Sandgate Worcester Investments Ltd and Redefine Dunstable
Ltd. These businesses were acquired from related parties. Redefine Belvedere Ltd and Redefine Dunstable Ltd were acquired from Redefine International Plc and
Sandgate Worcester Investments Ltd was acquired from Oceantides Property Holdings Ltd (a shareholder of IHGL), refer note 21 for details of the transactions.
Transactions with related parties are carried out at arm's length.
20. GROUP INFORMATION
Information about subsidiaries
The consolidated financial statements of the Group include:
Country of % equity interest
Principal activities incorporation 2015
Redefine Belvedere Ltd ('Belvedere') Land Development into future hotel British Virgin Islands 100%
Sandgate Worcester Investments Ltd ('SWIL') Hotel owning company United Kingdom 100%
Intermediary holding company of The Gateway
Redefine Dunstable Ltd ('Dunstable') Hotel Dunstable Ltd British Virgin Islands 100%
The Gateway Hotel Dunstable Ltd ('Gateway') Hotel owning and operating company United Kingdom 100%
The company's holding company and ultimate parent is Oceantides Property Holdings Limited which owns 80% of the shares. After the expected listing on the
Johannesburg Securities Exchange (JSE) it is not anticipated that the company will have a controlling shareholder.
21. BUSINESS COMBINATIONS
Acquisitions in 2015
Acquisition of Sandgate Worcester Investments Ltd ('SWIL')
On 31 March 2015, the Group acquired 100% of the voting shares of SWIL, an unlisted company based in the United Kingdom. SWIL's main activity is that it owns a
Hotel which it leases out to a third party. The acquisition was paid for by issuing 2,650,000 shares in IHGL of GBP1 (GBP0.001 par and GBP0.999 share premium) to purchase
SWIL for GBP800,000 and pay off the shareholder loan for GBP1,850,000. The Group acquired SWIL as it owns a good quality hotel and the group intends to acquire and
develop a portfolio of hotels.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of SWIL as at the date of acquisition were:
Fair value
recognised on
acquisition
Assets GBP
Investment Property (Hotel Property) 4,900,000
Trade and Other Receivables 500,172
Bank and Cash 4,677
5,404,849
Liabilities
Interest-bearing loans and borrowings (4,175,000)
Trade and other payables (71,921)
Accruals (36,500)
Deferred tax (166,682)
(4,450,103)
Total identifiable net assets at fair value 954,746
Bargain Purchase recognised in profit and loss (154,746)
Purchase consideration (800,000)
From the date of acquisition, SWIL contributed GBP163,890 of revenue and a loss of GBP52,330 to profit before tax of the Group. If the combination had taken place at the
beginning of the year, revenue would have been GBP464,751 and profit before tax for the Group would have included a profit of GBP1,128,716.
Acquisition of Redefine Belvedere Ltd ('Belvedere')
On 28 August 2015, the Group acquired 100% of the voting shares of Belvedere, an unlisted company based in the United Kingdom. Belvedere's main activity is that it
owns a piece of land which will be used for the future development of a hotel. The acquisition price was GBP800,000 which included a loan payable to the prior shareholder
which was assigned to IHGL (i.e. the actual purchase price was GBP357,833) and will be paid by IHGL. The Group acquired Belvedere as it owns prime land which will be
used to develop a hotel on and the group intends to develop and acquire a portfolio of hotels.
Assets acquired and liabilities assumed
Fair value
recognised on
acquisition
GBP
Assets
Land 800,000
Trade and Other Receivables 71,150
871,150
Liabilities
Interest-bearing loans and borrowings (442,167)
Accruals (59,772)
(501,939)
GBP
Total identifiable net assets at fair value 369,211
Bargain Purchase recognised in profit and loss (11,378)
Purchase consideration (357,833)
As it was acquired at the Group year end Belvedere contributed GBPNil of revenue and GBPNil of profit before tax to the Group in the 2015 year. If the combination had taken
place at the beginning of the year, revenue would have been GBPNil and profit before tax for the Group would have included a gain of GBP369,111.
Acquisition of Redefine Dunstable Ltd ('Dunstable')
On 28 August 2015, the Group acquired 100% of the voting shares of Redefine Dunstable Ltd ('Dunstable'), an unlisted company based in the United Kingdom.
Dunstable's main activity is that it owns a 100% subsidiary, The Gateway Hotel Dunstable Ltd which owns and operates a hotel. The Gateway Hotel Dunstable Ltd
('Gateway'), an unlisted company based in the United Kingdom. The acquisition price was GBP9,250,000 less loans payable by Dunstable and working capital of Redefine
Dunstable Ltd and The Gateway Hotel Dunstable Ltd. The final acquisition price after assignment of a shareholder loan to IHGL was GBP278,218 which will be paid by
IHGL. The Group acquired Dunstable as it's subsidiary owns a trading hotel property and the group intends to acquire and develop a portfolio of hotels.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Redefine Dunstable Ltd and The Gateway Hotel Dunstable Ltd as at the date of acquisition were:
Fair value
recognised on
acquisition
GBP
Assets
Hotel Property 8,800,000
Trade and other receivables 236,598
Inventories 6,299
Other financial assets 61,202
Cash and short term deposits 356,537
9,460,636
Liabilities
Interest-bearing loans and borrowings (8,992,044)
Trade and other payables (412,760)
Deferred tax liabilities (683,025)
Accruals (88,000)
(10,175,829)
Total identifiable net assets at fair value (715,193)
Goodwill on acquisition 993,411
Purchase consideration (278,218)
Net cash flows from obtaining control of subsidiaries
Net cash flow on acquisition of subsidaries
Cash paid -
Less: cash and cash equivalent balances acquired 361,214
Assignment of subsidiary loans from previous holding companies (6,875,303)
Amount owing for acquisitions (1,436,051)
(7,950,141)
Consideration for acquisitions
Cash paid -
Shares issued 2,650,000
Amounts payable 5,661,355
Total consideration 8,311,355
Net cash inflow from acquisitions 361,214
22. SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on its products and services and has two reportable segments, as follows:
- The hotel rental segment, which holds a hotel property which is rented out to a separate company which manages and runs the property and pays a rental fee to the
group.
- The hotel trading segment, which holds and trades as a hotel (i.e. managing and running the property).
No operating segments have been aggregated to form the above reportable operating segments.
The directors monitor the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements.
There were no inter segmental sales in the period under review.
The hotel trading segment was acquired on 28 August 2015 and as such no profit and loss results are included in consolidated financials and the segmental results below.
Hotel trading
Hotel rental segment segment Total Segments
GBP GBP GBP
Revenue 163,890 - 163,890
Income/(expenses)
Professional fees (4,850) - (4,850)
Interest Expense (27,457) - (27,457)
Segment profit 131,583 - 131,583
Total Assets 5,333,633 9,347,997 14,681,630
Total Liabilities (2,445,821) (503,843) (2,949,664)
There are no items in the segment managed on a group basis which require separate disclosure.
All non-current assets are situated in the United Kingdom.
23. STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group
intends to adopt these standards, if applicable, when they become effective.
IFRS 9 Financial Instruments
In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39
Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is
permitted if the date of initial application is before 1 February 2015. The adoption of IFRS 9 will have an effect on the classification and measurement of the Group's
financial assets, but no impact on the classification and measurement of the Group's financial liabilities.
IFRS 14 Regulatory Deferral Accounts
IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing accounting policies for
regulatory deferral account balances upon its first-time adoption of IFRS. IFRS 14 is effective for annual periods beginning on or after 1 January 2016. Since the Group is
an existing IFRS preparer, this standard would not apply.
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. This amendment is effective for annual
periods beginning on or after 1 July 2014. It is not expected that this amendment would be relevant to the Group, since none of the entities within the Group has defined
benefit plans with contributions from employees or third parties.
Annual improvements 2010–2012 Cycle
These improvements are effective from 1 July 2014 and are not expected to have a material impact on the Group. They include:
- IFRS 2 Share-based Payment
- IFRS 3 Business Combinations
- IFRS 8 Operating Segments
- IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
- IAS 24 Related Party Disclosures
Annual improvements 2011-2013 Cycle
These improvements are effective from 1 July 2014 and are not expected to have a material impact on the Group. They include:
- IFRS 3 Business Combinations
- IFRS 13 Fair Value Measurement
- IAS 40 Investment Property
- Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests
- Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants
- Amendments to IAS 27: Equity Method in Separate Financial Statements
- IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is
recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The
principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede
all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January
2018 with early adoption permitted. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.
- Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation
The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which
the asset is part) rather than the economic benefits that are consumed through use of the asset. The amendments are effective prospectively for annual periods beginning
on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group given that the Group has not used a
revenue-based method to depreciate its non-current assets.
24. EVENTS AFTER THE REPORTING PERIOD
The directors have listed shares as a secondary listing on the AltX of the JSE, thereby raising additional capital to acquire further hotel assets. This secondary listing has
taken place after the reporting period but before the financial statements have been approved.
Subsequent to the reporting period the group acquired the debt of three hotel properties for GBP23,500,000 with the intention to acquire the hotels in the future. The debt
was acquired through the creation of a new subsidiary which is 100% owned by the International Hotel Group Ltd.
No other material events occurred between the reporting period date and the date on which the annual financial statements were approved.
30 November 2015
Sponsor
Java Capital
Date: 30/11/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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