138 STUDENT LIVING JAMAICA LIMITED FINANCIAL STATEMENTS 30 SEPTEMBER 2015

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1 FINANCIAL STATEMENTS

2 FINANCIAL STATEMENTS I N D E X PAGE Independent Auditors' Report to the Members 1-2 FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss and Other Comprehensive Income 3 Consolidated Statement of Financial Position 4 Consolidated Statement of Changes in Equity 5 Consolidated Statement of Cash Flows 6 Statement of Profit or Loss and Other Comprehensive Income 7 Statement of Financial Position 8 Statement of Changes in Equity 9 Statement of Cash Flows 10 Notes to the Financial Statements 11-40

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5 Page 3 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME YEAR ENDED Note 2015 $ REVENUE: Income 6 11,997,650 Other operating income 7 91,134 12,088,784 EXPENSES: Administrative and other expenses 8 (11,222,768) PROFIT FROM OPERATION 866,016 Finance costs 10 ( 2,045,575) LOSS BEFORE TAXATION ( 1,179,559) Taxation ,931 NET LOSS FOR THE YEAR, BEING TOTAL COMPREHENSIVE LOSS ( 244,628) LOSS PER STOCK UNIT 12 ( 0.06 )

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7 Page 5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY YEAR ENDED Share Accumulated Capital Deficit Total $ $ $ TOTAL COMPREHENSIVE INCOME Net loss - (244,628) ( 244,628) TRANSACTION WITH OWNERS Issue of shares 721,152, ,152,783 BALANCE AT 721,152,783 (244,628) 720,908,155

8 Page 6 CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED 2015 $ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ( 244,628) Items not affecting cash resources: Deferred taxation ( 934,931) Interest income ( 67,123) Interest expense 1,958,338 Depreciation 1,637,918 2,349,574 Changes in operating assets and liabilities: Receivables ( 38,118,117) Taxation recoverable ( 3,112,397) Payables 261,924,650 Cash provided by operating activities 223,043,710 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment ( 98,162,489) Construction in progress (note 28 & 29) ( 429,069,657) Investment property (note 28 & 29) (1,037,564,848) Short term deposits ( 509,868,288) Cash used in investing activities (2,074,665,282) CASH FLOWS FROM FINANCING ACTIVITIES: Share capital 285,587,663 Preference shares 172,642,500 Short term borrowings 401,247,473 Long term loan 1,036,683,615 Cash provided by financing activities 1,896,161,251 NET INCREASE IN CASH AND CASH EQUIVALENTS 44,539,679 Cash and cash equivalents at beginning of year - CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 20) 44,539,679

9 Page 7 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME YEAR ENDED Note 2015 $ REVENUE: Income 6 11,997,650 Other operating income 7 91,134 12,088,784 EXPENSES: Administrative and expenses 8 (11,222,768) PROFIT FROM OPERATION 866,016 Finance costs 10 ( 2,045,575) LOSS BEFORE TAXATION ( 1,179,559) Taxation ,931 NET LOSS FOR THE YEAR ( 244,628) OTHER COMPREHENSIVE INCOME: Item that will or may not be reclassified to profit or loss Shares in subsidiary for other than cash ,000,000 TOTAL COMPREHENSIVE INCOME 465,755,372

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11 Page 9 STATEMENT OF CHANGES IN EQUITY YEAR ENDED Share Accumulated Capital Reserve Deficit Total $ $ $ $ TOTAL COMPREHENSIVE INCOME Net loss - - (244,628) ( 244,628) Other comprehensive income - 466,000, ,000, ,000,000 (244,628) 465,755,372 TRANSACTIONS WITH OWNERS Issue of shares 721,152, ,152,783 BALANCE AT 3O SEPTEMBER ,152, ,000,000 (244,628) 1,186,908,155

12 Page 10 STATEMENT OF CASH FLOWS YEAR ENDED 2015 $ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ( 244,628) Items not affecting cash resources: Deferred taxation ( 934,931) Interest income ( 67,123) Interest expense 1,958,338 Depreciation 1,637,918 2,349,574 Changes in operating assets and liabilities: Receivables ( 30,825,705) Taxation recoverable ( 3,112,397) Payables 235,702,759 Cash provided by operating activities 204,114,231 CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment ( 98,162,489) Construction in progress (note 28 & 29) ( 256,256,853) Investment property (note 28 & 29) (1,037,564,848) Short term deposits ( 509,868,288) Cash used in investing activities (1,901,852,478) CASH FLOWS FROM FINANCING ACTIVITIES: Share capital 285,587,663 Preference shares 172,642,500 Short term borrowings 247,368,216 Long term loan 1,036,683,615 Cash provided by financing activities 1,742,281,994 NET INCREASE IN CASH AND CASH EQUIVALENTS 44,543,747 Cash and cash equivalents at beginning of year - CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 20) 44,543,747

13 Page IDENTIFICATION AND PRINCIPAL ACTIVITIES: (a) 138 Student Living Jamaica Limited (138 SL) is a limited liability company. The company is incorporated in Jamaica on 15 August 2014 and is domiciled in Jamaica. The registered office of the company is located at 7 th Floor, Scotiabank Centre, Corner of Duke and Port Royal Streets, Kingston. (b) The company is established to construct and rent living facilities at the University of the West Indies under a 65 years concession agreement granted by the University of the West Indies. This agreement was initially established between K Limited and the University of the West Indies on 3 July In a Deed of Noration between University of the West Indies, K Limited and 138 Student Living Jamaica Limited dated 13 November The rights and obligation set out in the concession agreement were transferred to 138 Student Living Jamaica Limited. The Project Arrangement The terms of the Concession Agreement requires the company to design, finance, construct and operate 1,584 units of student accommodation in 3 development phases in not more than 48 months. Phase 1 Being the construction of 576 units due 1 August This consist of Block A, B, C and D. Phase 2 Being the construction of another 576 units due 1 August Phase 3 Being the construction of the remaining 432 units due 1 August Key elements of the Concession Agreement The Founder of the company, K Limited, must retain at least 51% of the ordinary shares in the company, (138 SL). Liquidated damages shall be payable by the company in respect of failure to achieve completion of Phase 1, Phase 2 and Phase 3. Liquidated damages are calculated on a daily basis for each delay that is not subject to an agreed extension of time by way of liquidated damages in the sum of US$2,500 per day up to a maximum of 5% of the contract price. After the latest time for completion UWI is entitled to terminate the concession agreement. The latest time for Phase 1 completion shall be the date falling fifteen (15) months after the time for final Phase 1 completion. (c) The company, (138 SL), is a public listed company and was listed on the Jamaica Stock Exchange on 18 December 2014.

14 Page IDENTIFICATION AND PRINCIPAL ACTIVITIES (CONT D): (d) The company has a 100% subsidiary, 138 SL Restoration Limited, a limited liability company, incorporated and domiciled in Jamaica and which has a 35 years concession agreement. The concession was granted by the University of the West Indies, Mona, for the restoration and reconstruction of certain traditional Halls. The company and its subsidiary are referred to as the Group. 2. REPORTING CURRENCY: Items included in the financial statements of the group are measured using the currency of the primary economic environment in which the group operates ( the functional currency ). These financial statements are presented in Jamaican dollars, which is considered the group s functional and presentation currency. 3. SIGNIFICANT ACCOUNTING POLICIES: The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. (a) Basis of preparation These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs), and have been prepared under the historical cost convention. They are also prepared in accordance with requirements of the Jamaican Companies Act. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group s accounting policies. Although these estimates are based on management s best knowledge of current events and action, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4. Amendments to published standards and interpretations effective in the current year that are relevant to the group s operations IAS 27 (Amendment), Consolidated and Separate Financial Statements (effective for annual periods beginning on or after 1 January 2014). The amendment defines an investment entity and requires a parent that is an investment entity to measure its investment in particular subsidiaries at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated and separate financial statements.

15 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (a) Basis of preparation (cont d) Amendments to published standards and interpretations effective in the current year that are relevant to the group s operations (cont d) IAS 32 (Amendments), 'Financial Instruments: Presentation' (effective for annual periods beginning on or after 1 January 2014) clarifies that an entity currently has a legally enforceable right to offset if that right is not contingent on a future event and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all the counterparts. In addition, it clarifies that gross settlement is equivalent to net settlement if, and only if, the gross settlement mechanism has features that eliminate or result in insignificant credit and liquidity risk and process receivables and payables in a single settlement process or cycle. IAS 36 (Amendments), 'Impairment of Assets', (effective for annual periods beginning on or after 1 January 2014) was amended by the issue of Recoverable Amount Disclosures for Non-financial Assets, which is effective for accounting periods beginning on or after 1 January The amendments align the disclosures required for the recoverable amount of an asset or Cash Generating Unit (CGU) when this has been determined on the basis of fair value less costs of disposal with those required where the recoverable amount has been determined on the basis of value in use. Certain disclosures are now only required when an impairment loss has been recorded or reversed in respect of an asset or CGU. Other disclosure requirements have been clarified and expanded, for assets or CGUs where the recoverable amount has been determined on the basis of fair value less costs of disposal. IFRIC 21 Levies, (effective for annual periods beginning on or after 1 January 2014). IFRIC 21 addresses the accounting for a liability to pay a levy recognised in accordance with IAS 37, Provisions, and the liability to pay a levy whose timing and amount is certain. It excludes income taxes within the scope of IAS 12, Income Taxes. IFRIC 21 indicates that the obligating event that gives rise to a liability to pay a levy is the event identified by the legislation that triggers the obligation to pay the levy. It concludes that the fact that an entity is economically compelled to continue operating in a future period, or prepares its financial statements under the going concern principle, does not create an obligation to pay a levy that will arise from operating in the future. Accordingly, a liability to pay a levy is recognised when the obligating event occurs. This might arise at a point in time or progressively over time. The interpretation also requires that an obligation to pay a levy triggered by a minimum threshold is recognised when the threshold is reached.

16 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (a) Basis of preparation (cont d) Amendments to published standards and interpretations effective in the current year that are relevant to the group s operations (cont d) Annual improvements to IFRS, , and cycles contain amendments to certain standards and interpretations and are effective for accounting periods beginning on or after 1 July The main amendments applicable to the group are as follows: IAS 24, 'Related Party Disclosures' has been amended to extend the definition of related party to include a management entity that provides key management personnel services to the reporting entity, either directly or through a group entity. For related party transactions that arise when key management personnel services are provided to a reporting entity, the reporting entity is required to separately disclose the amounts that it has recognized as an expense for those services that are provided by a management entity; however, it is not required to look through the management entity and disclose compensation paid by the management entity to the individuals providing the key management personnel services. IAS 40 (Amendment), Investment Property clarifies the interrelationship of IFRS 3, Business Combinations and IAS 40 when classifying property as investment property or owner-occupied property. IFRS 13, 'Fair Value Measurement' has been amended to clarify that issuing of the standard and consequential amendments to IAS 39 and IFRS 9, did not intend to prevent entities from measuring short-term receivables and payables that have no stated interest rate at their invoiced amounts without discounting, if the effect of not discounting is immaterial. The amendments did not result in any effect on the group s consolidated financial statements. Standards and amendments to published standards that are not yet effective and have not been early adopted by the group IAS 16, 'Property, Plant and Equipment' (effective for annual periods beginning on or after 1 January 2016). The amendment explicitly states that revenue-based methods of depreciation cannot be used for property, plant and equipment. This is because such methods reflect factors other than the consumption of economic benefits embodied in the asset.

17 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (a) Basis of preparation (cont d) Standards and amendments to published standards that are not yet effective and have not been early adopted by the group (cont d) IFRS 7, Financial Instruments: Disclosures, (effective for annual periods beginning on or after 1 July 2016) has been amended to clarify when servicing arrangements are the scope of its disclosure requirements on continuing involvement in transferred assets in cases when they are derecognized in their entirety. A servicer is deemed to have continuing involvement if it has an interest in the future performance of the transferred asset e.g. if the servicing fee is dependent on the amount or timing of the cash flows collected from the transferred financial asset; however, the collection and remittance of cash flows from the transferred asset to the transferee is not, in itself, sufficient to be considered continuing involvement. IFRS 9, Financial Instruments, (effective for annual periods beginning on or after 1 January 2018), replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets amortised cost, fair value through other comprehensive income (FVOCI) and fair value though profit or loss (FVTPL) - are similar to IAS 39, the criteria for classification into the appropriate measurement category are significantly different. IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss model, which means that a loss event will no longer need to occur before an impairment allowance is recognized. IFRS 15, Revenue from Contracts with Customers, (effective for annual periods beginning on or after 1 January 2017). It replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC 31 Revenue Barter Transactions involving Advertising Services. The new standard applies to contracts with customers. However, it does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other IFRSs. It also does not apply if two companies in the same line of business exchange non-monetary assets to facilitate sales to other parties. Furthermore, if a contract with a customer is partly in the scope of another IFRS, then the guidance on separation and measurement contained in the other IFRS takes precedence. The directors anticipate that the adoption of the standards, amendments and interpretations, which are relevant in future periods, is unlikely to have any material impact on the financial statements.

18 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (b) Basis of consolidation Where the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiary ( the Group ) as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree s identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of profit or loss and other comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. The group used the reviewed financial statements of its subsidiary, 138 SL Restoration Limited, at 30 September 2015 for the purpose of consolidation. The subsidiary operated for two months. (c) Foreign currency translation Foreign currency transactions are accounted for at the exchange rates prevailing at the dates of the transactions. Monetary items denominated in foreign currency are translated to Jamaican dollars using the closing rate as at the reporting date. Exchange differences arising from the settlement of transactions at rates different from those at the dates of the transactions and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are recognized in profit or loss. (d) Property, plant and equipment Items of property, plant and equipment are recorded at historical cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

19 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (d) Property, plant and equipment (cont d) Depreciation is calculated on the straight line basis at such rates as will write off the carrying value of the assets over the period of their expected useful lives. The expected useful lives of property, plant and equipment are as follows: Furniture and equipment Equipment and machinery 10 years 10 years (e) Investment property Investment property is initially recognised at cost and subsequently carried at fair value with changes in the carrying value recognised in the statement of profit or loss. Rent receivable is spread on a straight-line basis over the period of the lease. (f) Provisions Provisions for restructuring costs and legal claims are recognized when the group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise employee termination payments. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. (g) Cash and cash equivalents Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand and short term deposits with original maturity of 90 days or less.

20 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (h) Impairment of non-current assets Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the greater of an asset s net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identified cash flows. (i) Current and deferred income taxes - Current tax charges are based on taxable profits for the year, which differ from the profit before tax reported because taxable profits exclude items that are taxable or deductible in other years, and items that are never taxable or deductible. The group s liability for current tax is calculated at tax rates that have been enacted at the reporting date. Deferred tax is the tax that is expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. (j) Revenue recognition Revenue from the provision of rental services is measured at the fair value of the consideration received or receivable. Subsequent to completion of construction, interest income is recognised in the income statement for all interest bearing instruments on an accrual basis unless collectability is doubtful.

21 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (k) Financial instruments A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity in another entity. Financial assets (i) Classification The group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The group s loans and receivables comprise trade and other receivables, short term deposits and cash and cash equivalents. (ii) Recognition and Measurement Regular purchases and sales of financial assets are recognized on the tradedate the date on which the group commits to purchase or sell the asset. Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method. The group assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in note 3(m). Financial liabilities The group s financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method. At the reporting date, the following items were classified as financial liabilities: trade payables, short term borrowings, redeemable preference shares and long term loan.

22 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (l) Receivables Receivables are carried at original lease agreement amount. Other receivables are stated at amortised cost. (m) Trade and other payables Trade and other payables are stated at amortised cost. (n) Share capital Ordinary shares are classified as equity. Incremental costs directly attributed to the issue of ordinary shares are recognised as a deduction from equity. (o) Investment in subsidiary Investment by the company in subsidiary is stated at cost. (p) Preference shares Preference shares is classified as a liability if it is redeemable on a specific date or at the option of the stockholders, or if dividends are not discretionary. Dividends thereon are recognised as interest in profit or loss. The Group s redeemable preference shares are redeemable on specific dates, and bear entitlements to distributions that are cumulative and not at the discretion of the directors. Accordingly, they are presented as financial liability. (q) Borrowings and borrowing costs ` Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Borrowing costs incurred for the construction of the qualifying assets are capitalised during the period of time that is required to complete and prepare asset for its intended use. Other borrowing costs are expensed. Investment income earned on the temporary investment of qualifying assets is deducted from borrowing costs eligible for capitalisation.

23 Page SIGNIFICANT ACCOUNTING POLICIES (CONT D): (r) Dividend distribution Dividend distribution to the group s shareholders is recognised as a liability in the Group s financial statements in the period in which the dividends are approved by the Group s shareholders. In the case of interim dividends, this is recognised when declared by the directors. Dividend for the year that are declared after the reporting date are deal with in the subsequent event note. (s) Segment reporting - An operating segment is a component of the company that engages in business activities from which it may earn revenues and new expenses; whose operating results are regularly reviewed by the entity s Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and for which discrete financial information is available. Based on the information presented to and reviewed by the CODM, the entire operations of the company are considered as one operating segment. 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY: Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (a) Critical judgements in applying the group s accounting policies In the process of applying the group s accounting policies, management has not made any judgements that it believes would cause a significant impact on the amounts recognized in the financial statements. (b) Key sources of estimation uncertainty The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

24 Page CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONT D): (b) Key sources of estimation uncertainty (cont d) (i) Fair value estimation A number of assets and liabilities included in the group s financial statements require measurement at, and/or disclosure of fair value. 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. Market price is used to determine fair value where an active market (such as a recognized stock exchange) exists as it is the best evidence of the fair value of a financial instrument. The fair value measurement of the group s financial and non-financial assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorized into different levels based on how observable the inputs used in the valuation technique are. The standard requires disclosure of fair value measurements by level using the following fair value measurement hierarchy: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). The classification of an item into the above level is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur. The group measures financial instruments (note 5) at fair value

25 Page CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONT D): (b) Key sources of estimation uncertainty (cont d) (i) Fair value estimation (cont d) The fair value of financial instruments that are not traded in an active market are deemed to be determined as follows: The face value, less any estimated credit adjustment, for financial assets and liabilities with a maturity of less than one year are estimated to approximate their fair values. These financial assets and liabilities include cash and bank balances, receivables, payables, redeemable preference shares and short term loan. The carrying value of long term liabilities approximates their fair values, as these loans are carried at amortised cost reflecting their contractual obligations and the interest rates are reflective of current market rates for similar transactions. (ii) Depreciable assets 5. FINANCIAL RISK MANAGEMENT: Estimates of the useful life and the residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The group applies a variety of methods in an effort to arrive at these estimates from which actual results may vary. Actual variations in estimated useful lives and residual values are reflected in profit or loss through impairment or adjusted depreciation provisions. The group is exposed through its operations to the following financial risks: - Credit risk - Fair value or cash flow interest rate risk - Foreign exchange risk - Other market price, and - Liquidity risk In common with all other businesses, the group s activities expose it to a variety of risks that arise from its use of financial instruments. This note describes the group s objectives, policies and processes for managing those risks to minimize potential adverse effects on the financial performance of the group and the methods used to measure them.

26 Page FINANCIAL RISK MANAGEMENT (CONT D): There have been no substantive changes in the group s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. (a) Principal financial instruments The principal financial instruments used by the group, from which financial instrument risk arises, are as follows: - Receivables - Cash and cash equivalents - Short term deposits - Payables - Short term borrowings - Long term loan - Redeemable preference shares (b) Financial instruments by category Financial assets Loans and Receivables The Group The Company $ $ Receivables 23,319,893 22,889,326 Short term deposits 509,868, ,868,288 Cash and cash equivalents 44,539,679 44,543,747 Total financial assets 577,727, ,301,361 Financial liabilities at amortised cost The Group The Company $ $ Short term borrowings 401,247, ,368,216 Payables 217,850, ,089,253 Long term loan 1,036,683,615 1,036,683,615 Redeemable preference shares 172,642, ,642,500 Total financial liabilities 1,828,423,820 1,643,783,584

27 Page FINANCIAL RISK MANAGEMENT (CONT D): (c) Financial instruments not measured at fair value Financial instruments not measured at fair value include cash and cash equivalents, short term deposits, receivables and payables. Due to their short-term nature, the carrying value of cash and cash equivalents, short term deposits, receivables and payables balances approximate their fair value. (d) Financial risk factors The Board of Directors has overall responsibility for the determination of the group s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the group s finance function. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investments of excess liquidity. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the group's competitiveness and flexibility. Further details regarding these policies are set out below: (i) Market risk Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises from US$ foreign currency cash and cash equivalents. The group manages this risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The group further manages this risk by maximizing foreign currency earnings and holding net foreign currency assets.

28 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (i) Market risk (cont d) Currency risk (cont d) Concentration of currency risk The table below summarises the group s exposure to Jamaican dollar equivalents foreign currency risk at 30 September At 30 September The Group and the Company US$ Financial assets: Cash and cash equivalents 30,300,117 Total financial assets 30,300,117 Financial liability: Short term borrowings 153,879,257 Total financial liability (153,879,257) Net financial position (123,579,140)

29 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (i) Market risk (cont d) Currency risk (cont d) Foreign currency sensitivity The following table indicates the sensitivity of profit before taxation to changes in foreign exchange rates. The change in currency rate below represents management s assessment of the possible change in foreign exchange rates. The sensitivity analysis represents outstanding foreign currency denominated cash and bank and short term borrowings accounts adjusts their translation at the year-end for 8% depreciation and a 1% appreciation of the Jamaican dollar against the various currencies. The changes below would have no impact on other components of equity. The Group and the Company Effect on % Change in Profit before Currency Currency Rate Taxation $ USD +1 1,235,791 USD -8 (9,886,331) Price risk Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The group does not have a significant exposure and as such, market price fluctuations are not expected to have a material effect on the net results or stockholders equity.

30 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (i) Market risk (cont d) Cash flow and fair value interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Floating rate instruments expose the group to cash flow interest rate risk, whereas fixed rate instruments expose the group to fair value interest rate risk. The group s short term deposits are due to mature within 12 months of the reporting date, while the group s long term loan are reprice within 6 months of the reporting date. Interest rate sensitivity There is no significant exposure to interest rate risk on short term investments, as these deposits have a short term to maturity and are constantly reinvested at current market rates. There is no significant exposure on the long term loan within the short term. (ii) Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Credit risk arises from trade receivables, short term deposits and bank balances. Receivables Revenue transactions in respect of the group s primary operations are settled in cash. For its operations done on a credit basis, the group has policies in place to ensure that sales of services are made to customers with an appropriate credit history. Cash and bank balances Cash transactions are limited to high credit quality financial institutions. The group has policies that limit the amount of credit exposure to any one financial institution.

31 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (ii) Credit risk (cont d) Maximum exposure to credit risk The maximum exposure to credit risk is equal to the carrying amount of receivables, short term deposits and cash and bank balances in the statement of financial position. Receivables that are past due but not impaired As at 30 September 2015, receivables of $1,537,996 were past due but not impaired. These relate to independent customers for whom there is no recent history of default. Receivables that are past due and impaired As of 30 September 2015, the company had no receivables that were impaired. There is no creation and release of provision for impaired receivables included in expenses in profit or loss. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash. The entity started trading in August 2015 and at 30 September 2015, has no pattern to yet determine impairment estimates. Concentration of risk trade receivables The company has no credit exposure for receivables at their carrying amounts as at 30 September (iii) Liquidity risk Liquidity risk is the risk that the group will be unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities.

32 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (iii) Liquidity risk (cont d) Liquidity risk management process The group s liquidity management process, as carried out within the group and monitored by the Finance Department, includes: (i) (ii) (iii) (iv) Monitoring future cash flows and liquidity on a daily basis. Maintaining a portfolio of short term deposit balances that can easily be liquidated as protection against any unforeseen interruption to cash flow. Maintaining committed lines of credit. Optimising cash returns on investments. Cash flows of financial liabilities The maturity profile of the group s financial liabilities, based on contractual undiscounted payments, is as follows: The Group Within 1 1 to 5 Over 5 Year Years Years Total $ $ $ $ 30 September 2015 Payables 255,796, ,796,403 Short term borrowings 401,247, ,247,473 Long term loan 90,037, ,749,652 2,661,937,141 3,237,723,907 Redeemable preference shares - 80,710, ,194, ,904,719 Total financial liabilities (contractual maturity dates) 747,080, ,460,021 3,238,131,491 4,551,672,502

33 Page FINANCIAL RISK MANAGEMENT (CONT D): (d) Financial risk factors (cont d) (iii) Liquidity risk (cont d) Cash flows of financial liabilities (cont d) The Company Within 1 1 to 5 Over 5 Year Years Years Total $ $ $ $ 30 September 2015 Payables 224,024, ,024,350 Short term borrowings 247,368, ,368,216 Long term loan 76,404, ,966,915 2,341,868,286 2,841,239,615 Redeemable preference shares - 80,710, ,194, ,904,719 Total financial liabilities (contractual maturity dates) 547,796, ,677,284 2,918,062,636 3,969,536,900 (e) Capital management 6. INCOME: The group s objectives when managing capital are to safeguard the group s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders. The Board of Directors monitors the return on capital, which the group defines as net operating income, excluding non-recurring items, divided by total stockholders equity. The Board of Directors also monitors the level of dividends to stockholders. There are no particular strategies to determine the optimal capital structure. There are also no external capital maintenance requirements to which the group is subject. Income represents revenue from the rental of dormitory.

34 Page OTHER OPERATING INCOME: The Group and the Company 2015 $ Interest income 91, EXPENSES BY NATURE: Total administrative and other expenses: The Group and the Company 2015 $ Staff costs (note 9) 1,718,767 Rent and storage 212,662 Security services 31,990 Depreciation 1,637,918 Cleaning 616,305 Audit fees 2,100,000 Professional fees 719,200 Directors fees 540,000 Bank charges 110,558 Repairs and maintenance 280,730 Travelling and entertainment 104,112 Utilities 2,204,664 Insurance 203,875 Telephone, internet and cable 428,053 Other operating expenses 313,934 11,222, STAFF COSTS: The Group and the Company 2015 $ Salaries and wages 1,413,082 Statutory deductions 158,281 Staff benefits 147,404 1,718,767 The average number of persons employed by the group during the year (since April 2015) was four (4).

35 Page FINANCE COSTS: The Group and the Company 2015 $ Interest expense 2,045, TAXATION EXPENSE: (a) Reconciliation of theoretical tax charge that would arise on loss before taxation using the applicable tax rate to actual tax charge. The Group and the Company 2015 $ Loss before taxation (1,179,559) Tax 25% ( 294,890) Adjusted for the effects of: Expenses not deducted for tax purposes 996,632 Net effect of other charges and allowances 233,189 Taxation credit in income statement 934,931 (b) Subject to agreement with the Tax Administration Jamaica, the company has tax losses of $14,670,380 available for offset against future taxable profits. A deferred tax asset has been recognised in respect of these losses. 12. LOSS PER STOCK UNIT: Loss per stock unit is calculated by dividing the net loss attributable to stockholders by the weighted average number of ordinary stock units in issue at year end $ Net loss attributable to stockholders ( 244,628) Weighted average number of ordinary stock units 382,171,233 Loss per stock unit ( per share) 0.06

36 Page INVESTMENT PROPERTY: The Group and the Company 2015 $ At cost 1,255,347,408 (a) (b) This represents all cost incurred in relation to Block B and Block C as at the end of the reporting period, which have been certified as completed. Rental income and direct operating expenses in relation to the investment property are as follows: The Group and the Company 2015 $ Rental income 11,997,650 Operating expenses (11,222,768) 14. PROPERTY, PLANT AND EQUIPMENT: The Group and the Company Furniture, Machinery Fixtures & & Computer Equipment Equipment Software Total $ $ $ $ At cost: Additions 96,553,220 1,098, ,675 98,162, September ,553,220 1,098, ,675 98,162,489 Depreciation: Charge for the year 1,628,763 9,155-1,637, September ,628,763 9,155-1,637,918 Net Book Value: 30 September ,924,457 1,089, ,675 96,524,571

37 Page CONSTRUCTION IN PROGRESS: This represents cost to date of investment in construction of buildings for rental not yet certified as being completed. 16. DEFERRED INCOME TAXES: Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate of 25%. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities. The amounts determined after appropriate offsetting are as follows: 2015 $ Deferred tax liabilities (2,732,664) Deferred tax assets 3,667,595 Net deferred tax assets 934,931 The movement in deferred taxation is as follows: 2015 $ Credit for the year (note 11) 934,931 Balance at end of year 934,931 Deferred taxation represents the amount for accelerated tax depreciation and tax losses. 17. INVESTMENT IN SUBSIDIARY: 2015 $ Investment of the company in the subsidiary: 138 SL Restoration Limited 466,000,000

38 Page RECEIVABLES: The Group The Company $ $ Receivables 1,537,996 1,537,996 Advance to contractor 17,127,614 10,265,769 Prepayments and deposits 6,465,506 6,465,506 Other receivables 7,240,359 6,809,792 UWI Mona 5,813,765 5,813,765 38,185,240 30,892, SHORT TERM DEPOSITS: This represents deposits with financial institutions with original maturities of greater than 90 days but less than 1 year. Included in short term deposits are amounts required under various loan agreements representing debt service reserves, totalling $70 million. Also, $103 million cash collateral being held under the Construction Loan Agreement from Jamaica Mortgage Bank (JMB) and National Commercial Bank Jamaica Limited (NCB). 20. CASH AND CASH EQUIVALENTS: The Group The Company $ $ Foreign currency accounts 30,300,117 30,300,117 Jamaican currency current accounts 14,227,135 14,231,203 Cash in hand 12,427 12,427 44,539,679 44,543,747

39 Page SHARE CAPITAL: Authorised - 480,500,000 ordinary shares at no par value 94,500,000 cumulative redeemable preference shares 2015 $ Stated capital 414,500,000 ordinary shares issued and fully paid 691,646,457 34,528,500 preference shares issued and fully paid 172,642, ,288,957 Shares issued to professionals for other than cash (share based payment) 435,565,120 Initial public offering 505,691,410 Less: IPO transactions costs ( 47,461,247) 458,230,163 Closing balance 30 September ,795,283 Less redeemable preference shares required by IFRS to be accounted for as liabilities in the financial statements (172,642,500) 721,152,783 At the end of the reporting period, the company s issued and fully paid up ordinary share capital stood at 414,500,000. This includes shares allotted in the initial public offering in November 2014 of 82,900,000 at a price of $4.00 per share. As part of the initial public offering, the company also offered 33,680,000 cumulative redeemable preference shares at $5.00 per share. Arising from the over-subscription for these shares, an additional 848,000 shares were issued to subscribers. Preference dividend for the years 2014 to 2017 will be accumulated and be paid in 2018 and annually thereafter. Dividend yield on preference shares will be indexed to the Government of Jamaica 180 day weighted average Treasury Bill yield plus a premium of three percent. The paid up share capital for both classes is net of transaction cost incurred of $47,461,000. Share based payment Share based payment arrangements are measured at the fair value of the goods or services received or the fair value of the equity instruments granted using the option pricing model, the inputs to that model being the share price, exercise price and the expected dividends. The share based payment is recognised as part cost of the investment property with a corresponding increase in equity. The share based payment arrangement entered on 13 November 2014 issued ordinary shares in lieu of payment for fees for consultancy and other services.

40 Page SHARE CAPITAL CONT D): Share based payment (cont d) The members are prohibited from disposing of more than: - 50% of their respective holdings of ordinary shares in Phase 1 - A further 50% of their remaining holdings in Phase 2 - The remainder of their holding in Phase RESERVE: This represents shares in subsidiary,138 SL Restoration Limited, for other than cash. 23. LONG TERM LOAN: The Group and the Company 2015 $ JCSD Trustee Services Limited 1,036,683,615 This represents a long term note issued with JCSD Trustee Services Limited through CIBC FirstCaribbean International Bank with a fifteen (15) year tenor carrying interest at six (6) months weighted average treasury bill yield (WATBY) plus basis point subject to all in floor of 10% and cap of 14%. The loan facilities are secured by the following: (a) Debenture over the fixed and floating assets of the issuer inclusive of the building under Phase1. (b) Assignment of rights under Concession Agreement to cover Phase 1 of the project. (c) Assignment of all insurance policies. (d) Assignment of lease for the benefit of the note holders. (e) Debt service reserve account with at least one period debt service. (f) Promissory notes (g) Maintenance reserve account with minimum value of deposits of up to 3% of the total value of the building.