National Corporation for Tourism and Hotels. Interim condensed financial statements for the three months ended 31 March 2017 (unaudited)

Transcription

1 Interim condensed financial statements for the three months ended 2017 (unaudited)

2 Interim condensed financial statements for the three months ended 2017 Pages Report on review of interim condensed financial statements 1 Interim condensed statement of financial position 2 Interim condensed statement of income 3 Interim condensed statement of comprehensive income 4 Interim condensed statement of changes in equity 5 Interim condensed statement of cash flows

3 Report on review of interim condensed financial statements to the board of directors of National Corporation for Tourism and Hotels Introduction We have reviewed the accompanying interim condensed statement of financial position of National Corporation for Tourism and Hotels (the Corporation ) as at 2017, and the related interim condensed statements of income, comprehensive income, changes in equity and cash flows for the three-month period then ended. Management is responsible for the preparation and presentation of this interim condensed financial information in accordance with International Accounting Standard 34, Interim Financial Reporting. Our responsibility is to express a conclusion on this interim condensed financial information based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagement 2410, Review of interim financial information performed by the independent auditor of the entity. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting. PricewaterhouseCoopers 1 May 2017 Jacques E Fakhoury Registered Auditor Number 379 Abu Dhabi, United Arab Emirates PricewaterhouseCoopers, (Abu Dhabi Branch), License no Al Khatem Tower, Abu Dhabi Global Market, 25 th Floor, PO Box 45263, Abu Dhabi - United Arab Emirates T: +971 (0) , F: +971 (0) , Douglas O Mahony, Paul Suddaby, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy (1)

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5 Interim condensed statement of income Three months ended Notes (Unaudited) (Unaudited) Operating revenues 190,269, ,056,533 Cost of services (151,075,575) (163,272,856) Gross profit 39,194,238 47,783,677 General and administrative expenses (7,083,264) (5,426,542) Share of profit from a joint venture , ,860 Investment and other income, net 2,095,180 3,819,929 Finance income 1,150, ,964 Finance costs (2,606,832) (2,286,121) Profit for the period 33,180,001 45,184,767 Basic and diluted earnings per share The notes on pages 7 to 22 form an integral part of these interim condensed financial information. (3)

6 Interim condensed statement of comprehensive income Three months ended (Unaudited) (Unaudited) Profit for the period 33,180,001 45,184,767 Other comprehensive income - - Total comprehensive income for the period 33,180,001 45,184,767 The notes on pages 7 to 22 form an integral part of these interim condensed financial information. (4)

7 Interim condensed statement of changes in equity Share capital Statutory reserve General reserve Cumulative changes in fair value of available-for -sale investments Retained earnings Total At 1 January 2016 (audited) 540,000, ,555,665 15,000,000 10,646,538 31,117, ,319,684 Profit for the period ,184,767 45,184,767 Total comprehensive income for the period ,184,767 45,184,767 Bonus shares issued (Note 16) 27,000, (27,000,000) - Cash dividends declared (Note 16) (81,000,000) (81,000,000) Directors' remuneration paid (Note 17) (12,197,183) (12,197,183) At 2016 (Unaudited) 567,000, ,555,665 15,000,000 10,646,538 (43,894,935) 669,307,268 At 1 January 2017 (audited) 567,000, ,719,061 15,000,000-65,390, ,109,925 Profit for the period ,180,001 33,180,001 Total comprehensive income for the period ,180,001 33,180,001 At 2017 (Unaudited) 567,000, ,719,061 15,000,000-98,570, ,289,926 The notes on pages 7 to 22 form an integral part of these interim condensed financial information. (5)

8 Interim condensed statement of cash flows Three months ended Notes (Unaudited) (Unaudited) Cash flows from operating activities Profit for the period 33,180,001 45,184,767 Adjustments for: Depreciation of property, plant and equipment 9 8,330,661 7,996,293 Provision for employees end of service benefits 2,270,049 2,316,614 Dividend income - (1,250,000) Share of profit from joint venture 10 (430,304) (724,860) Gain on disposal of property, plant and equipment (144,164) (157,317) Finance costs 2,606,832 2,286,121 Finance income (1,150,375) (568,964) 44,662,700 55,082,654 Changes in working capital: Inventories 653,842 (1,038,399) Trade and other receivables 7,957,685 94,947,440 Trade and other payables (13,985,207) (17,465,307) Net cash from operations 39,289, ,526,388 Employees end of service benefits paid (1,721,293) (1,403,465) Finance costs paid (2,384,242) (2,063,529) Net cash generated from operating activities 35,183, ,059,394 Cash flows from investing activities Increase in term deposits (19,814,916) (105,399,125) Purchase of property, plant and equipment 9 (3,439,200) (10,423,139) Dividend received - 1,250,000 Interest received 1,150, ,964 Proceeds from disposal of property, plant and equipment 144, ,922 Net cash used in investing activities (21,959,141) (113,776,378) Cash flows from financing activities Term loan paid (24,078,025) (17,500,000) Directors' remuneration paid 17 - (12,197,183) Dividends paid - (5,242,930) Receipt of term loans 251,322 3,520,571 Net cash used in financing activities (23,826,703) (31,419,542) Net decrease in cash and cash equivalents (10,602,359) (17,136,526) Cash and cash equivalents, beginning of the period 111,573, ,485,026 Cash and cash equivalents, end of the period ,970, ,348,500 The notes on pages 7 to 22 form an integral part of these interim condensed financial information. (6)

9 for the three months ended General information National Corporation for Tourism and Hotels (the Corporation ), a public shareholding company, was incorporated in Abu Dhabi, United Arab Emirates ( UAE ) on 11 December 1996 by Law No. (7) of 1996, to own, manage and invest in hotels and leisure complexes and to undertake other related business. The Corporation s shares are listed in Abu Dhabi Securities Exchange. The Corporation s registered address is P O Box 6942, Abu Dhabi, UAE. The Corporation owns four hotels within the UAE: (a) Abu Dhabi InterContinental Hotel, which is managed by an international hotel operating company; and (b) Danat Al Ain Resort, Al Dhafra Beach Hotel and Danat Resort Jebel Dhanna directly operated by the Corporation. In addition, the Corporation provides catering services and has investments (other than available-for-sale or fair value through profit or loss) in the following entity: Name National Transportation Company L.L.C ( the Joint venture ) Country of operation Principal activity Interest United Arab Emirates Transport services 50% The Corporation operates five hotel properties and rest houses through management agreements along with three hotel properties through asset management agreements, all owned by other parties. The interim condensed financial statements for the period ended 2017 were authorised for issuance on 1 May Basis of preparation The interim condensed financial statements for the three months ended 2017 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting as issued by the International Accounting Standards Board ( IASB ) and applicable requirements of the UAE Commercial Companies Law of No (2) of The interim condensed financial statements have been presented in United Arab Emirates Dirhams (), which is the functional currency of the Corporation. The interim condensed financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Corporation s annual financial statements for the year ended 31 December In addition, results for the three months ended 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December (7)

10 for the three months ended 2017 (continued) 3 Accounting policies The accounting policies adopted in the preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Corporation s annual financial statements for the year ended 31 December Amendments to IFRSs effective for the financial year ending 31 December 2017 are not expected to have a material impact on the Corporation. 4 Estimates The preparation of interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim condensed financial information, the significant judgments made by management in applying the Corporation s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December Financial risk management and financial instruments 5.1 Financial risk factors The Corporation s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The interim condensed financial information do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Corporation s annual financial statements as at 31 December There have been no changes in the risk management department or in any risk management policies since year end. 5.2 Liquidity risk Compared to year end, there was no material change in the contractual undiscounted cash out flows for financial liabilities. The main characteristics of the term loans provided to the Corporation are described in Note 13. (8)

11 for the three months ended Financial risk management and financial instruments (continued) 5.3 Fair value estimation The fair values of the financial assets and liabilities of the Corporation are not materially different from their carrying values at the reporting date except for Term Loan 1 which carries a fixed interest rate. Set out below is a comparison of carrying amount and fair value of the Term Loan 1: Carrying amount Fair value December December 2016 Financial liabilities Fixed rate loan 105,000, ,500, ,265, ,868,130 Floating rate loan 173,939, ,044, ,939, ,044,096 The management assessed that cash and short-term deposits, trade and other receivables, trade and other payables, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. (a) Fair value hierarchy The Corporation uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data (9)

12 for the three months ended Financial risk management and financial instruments (continued) 5.3 Fair value estimation (continued) (a) Fair value hierarchy (continued) The following table shows the analysis of financial instruments recorded at fair value by level of the fair value hierarchy at 2017: Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Term loans Fixed rate loans - 101,265,047 - Floating rate loans - 173,939,983 - The following table shows the analysis of financial instruments recorded at fair value by level of the fair value hierarchy at 31 December 2016: Quoted prices in active markets (Level 1) Significant observable inputs (Level 2) Significant unobservable inputs (Level 3) Term loans Fixed rate loans - 116,868,130 - Floating rate loans - 180,044,096 - During the year, there were no transfers between or into Level 1, Level 2 and Level 3 fair value measurements. (10)

13 for the three months ended Financial risk management and financial instruments (continued) 5.3 Fair value estimation (continued) (b) Term loan The Corporation received a fixed rate loan from Government of Abu Dhabi, which carries simple interest at 2% per annum. The fair value of the loan is calculated using present value calculations at market interest rates prevailing at reporting date. 6 Seasonality of operations The seasonal nature of the Corporation s activities only concerns the hotel division, from which revenue is mainly generated in the first and last quarters of the year. 7 Operating segments The primary segment reporting format is determined to be operating segments as the Corporation s risks and rates of return are affected predominantly by differences in the products and services produced. The operating segments are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic operating unit that offers different products and serves different markets. For management purposes, the Corporation is currently organised into four major operating segments. These segments are the basis on which the Corporation reports its primary segmental information. These are: - Hotels - Retail services - Catering services - Holding Segment performance is measured based on profit or loss. (11)

14 for the three months ended Operating segments (continued) The following tables present revenue and profit information for the Corporation s operating segments for the three months ended 2017 and 2016, respectively. Retail Catering Eliminating Three months ended Hotels services services Holding entries Total 2017 (unaudited) Operating revenue 67,254,815 24,029, ,570,406 - (2,584,515) 190,269,813 Cost of services (51,214,817) (16,124,921) (89,450,951) - 5,715,114 (151,075,575) Gross profit 16,039,998 7,904,186 12,119,455-3,130,599 39,194,238 General and administrative expenses (7,083,264) - (7,083,264) Investment and other income, net* ,225,779 (3,130,599) 2,095,180 Share in profit of a joint venture , ,304 Finance income ,150,375-1,150,375 Finance costs (2,606,832) - (2,606,832) Profit for the period 16,039,998 7,904,186 12,119,455 (2,883,638) - 33,180,001 * Investment and other income include management fee income from owned hotels amounting to 1,812,485 and from managed hotels amounting to 1,912,881. (12)

15 for the three months ended Operating segments (continued) Retail Catering Eliminating Three months ended Hotels services services Holding entries Total 2016 (unaudited) Operating revenue 79,468,159 24,861, ,626,027 - (2,898,803) 211,056,533 Cost of services (53,867,360) (16,154,550) (99,857,713) - 6,606,767 (163,272,856) Gross profit 25,600,799 8,706,600 9,768,314-3,707,964 47,783,677 General and administrative expenses (5,426,542) - (5,426,542) Investment and other income, net* ,527,893 (3,707,964) 3,819,929 Share in profit of a joint venture , ,860 Finance income , ,964 Finance costs (2,286,121) - (2,286,121) Profit for the period 25,600,799 8,706,600 9,768,314 1,109,054-45,184,767 * Investment and other income include management fee income from owned hotels amounting to 2,365,826 and from managed hotels amounting to 2,219,616. (13)

16 for the three months ended 2017 (continued) 7 Operating segments (continued) The following table presents assets and liabilities information for the Corporation s operating segments as at 2017 and 31 December 2016, respectively: Hotels Retail services Catering services Holding Eliminating entries Total At 2017 Total assets 423,579,853 21,920, ,720, ,266,769 (125,113,608) 1,291,373,502 Total liabilities 48,526,032 12,572, ,079, ,923,314 (52,017,063) 473,083,576 At 31 December 2016 Total assets 435,640,760 25,479, ,823, ,268,749 (127,978,384) 1,295,234,065 Total liabilities 57,383,512 15,830, ,240, ,203,215 (51,534,118) 510,124,140 All the income and expenses relating to operations of the Corporation is generated in UAE and denominated in UAE Dirham. (14) (14)

17 for the three months ended Earnings per share Basic earnings per share amounts are calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share are calculated by dividing the profit for the period by the weighted average number of ordinary shares outstanding during the period, adjusted for the effects of dilutive instruments. The following reflects the income and share data used in the earnings per share computations: Three months ended Profit for the period () 33,180,001 45,184,767 Weighted average number of ordinary shares outstanding during the period (as adjusted for the issue of bonus shares) 567,000, ,000,000 Basic and diluted earnings per share () As at 2017, the Corporation has not issued any instruments which would have a dilutive impact on earnings per share when converted or exercised. 9 Property, plant and equipment December 2016 Property, plant and equipment at net carrying amount 747,677, ,569,116 Movement of the property, plant and equipment during the three months ended is as follows: Opening net book amount at 1 January 752,569, ,012,186 Additions 3,439,200 10,423,139 Disposals (436) (69,605) Depreciation charge for the period (8,330,661) (7,996,293) Closing net book amount at 747,677, ,369,427

18 for the three months ended Property, plant and equipment (continued) The depreciation charge has been allocated in the interim condensed statement of income as follows: Three months ended Cost of services 7,849,836 7,514,353 General and administrative expenses 480, ,940 8,330,661 7,996, Investment in a joint venture December 2016 Investment in a joint venture 13,224,094 12,793,790 Movement of the investment in a joint venture for the three months ended follows: Beginning of the period 12,793,790 10,571,468 Share of profit 430, ,860 End of the period 13,224,094 11,296,328 (16)

19 for the three months ended Investment in a joint venture (continued) Details of share of profit in a joint venture as disclosed in the interim condensed statement of comprehensive income are as follows: Three months ended Share of profit from joint venture 430, , Available-for-sale investments Movement of the available-for-sale investments for the three months ended is as follows: Beginning of the period - 13,396,538 Net loss in fair value - - End of the period - 13,396,538 Investments in unquoted securities represent the Corporation's equity interest of 4.89% in Sawaeed Employment L.L.C. In August 2016, the Corporation sold the investments in unquoted securities which resulted in a realised gain of 11 million. (17)

20 for the three months ended 2017 (continued) 12 Cash and bank balances December 2016 Cash on hand and cash in banks 100,970, ,573,341 Term deposits 260,217, ,402,306 Cash and short term deposits 361,188, ,975,647 Less: term deposits with original maturity of more than three months (260,217,222) (240,402,306) Cash and cash equivalents 100,970, ,573,341 Term deposits represent deposits held with financial institutions in the UAE, and denominated in UAE dirhams and carry profit at the prevailing market rates ranging from 1.7 % to 4 % (2016: 1.3% to 2%) per annum. For the purpose of the interim condensed statement of cash flows, cash and cash equivalents are comprised of the following: Three months ended Cash on hand and cash in banks 100,970,982 61,348,500 Term deposits 260,217, ,000,000 Cash and short term deposit 361,188, ,348,500 Less: term deposits with original maturity of more than three months (260,217,222) (140,000,000) Cash and cash equivalents 100,970, ,348, Term loans December 2016 Term loan 1 105,000, ,500,000 Term loan 2 7,969,608 7,718,286 Term loan Term loan 4 165,970, ,325,810 Total loans 278,939, ,544,096 Less: non-current portion (230,783,933) (236,888,046) Current portion 48,156,050 65,656,050 (18)

21 for the three months ended Term loans (continued) Term loan 1 In accordance with article 4 of law no. 7 of 1996, dated 11 December 1996 the Government of Abu Dhabi sold the three hotels namely Abu Dhabi Intercontinental Hotel, Danat Al Ain resort (formerly Al Ain Intercontinental Hotel) and Al Dhafra Beach Hotel to the Corporation for an amount of 350 million. The sale amount of 350 million has been granted as a long term loan by the Government of Abu Dhabi to the Corporation and is to be repaid over 20 years following a grace period of 5 years commencing from 11 December 1996 being the date of the loan agreement. The loan carries simple interest at 2% per annum to be charged after a grace period of 3 years. As at 31 March 2017, one scheduled payment due in 2016 amounting to 17.5 million have not been settled. Term loan 2 During 2013, the Corporation obtained a loan facility from a local bank amounting to 220 million. The loan will be utilised to for the construction of a new hotel, Grand Marina. Total drawdown as at 2017 amounted to 8 million. Repayment of the loan is due after 36 months from first installment for main civil works contractor payments. The loan carries interest at the rate of 4% over 3-months EBOR, subject to a minimum interest rate of 6.5% per annum. Interest is paid on a quarterly basis. The loan is to be repaid over 9 years by 36 quarterly installments. Additional drawdown of 212 million is available for this loan as at The loan facility is secured by the following: (i) Mortgage over the land plots and buildings of Abu Dhabi Intercontinental Hotel (ii) Assignment of revenues of Abu Dhabi Intercontinental Hotel (iii) Assignment of revenues up to 20 million of Danat Resort Jebel Dhanna (iv) Assignment of entire revenues of the new hotel (v) Assignment of insurance in relation to the above property. Term loan 3 During 2014, the Corporation obtained a loan facility from a local bank amounting to 250 million for a new hotel to be constructed on its Plot in Saadiyat Island, Abu Dhabi. No drawdown has been made by the Corporation as at Repayment of the loan is due after 3 years from initial drawdown. The loan is to be repaid in 12 years through 24 semi-annual installments. The loan carries interest at the rate of 3.5% over 3-months EBOR, subject to a minimum interest rate of 6.5% per annum. Interest is to be paid on a quarterly basis. The loan facility is secured by the common security in Term Loan 2, and assignment of entire revenue of the new hotel, and all other related assignments. (19)

22 for the three months ended 2017 (continued) 13 Term loans (continued) Term loan 4 During 2015, the Corporation obtained a loan facility from a local bank amounting to 600 million which are split into two facilities of: (i) Facility A milllion which is utilized to repay two existing loans from the same local bank and (ii) Facility B million which will be utilised to repay another existing loan from the same local bank and to meet future investment opportunities. Facility A was fully utilised as at 31 December 2015, while Facility B drawdown amounted to 55.4 million as at Total drawdown for both facilities as at 2017 amounted to million. Total outstanding loan balance for both facilities as at 2017 amounted to million. Facility A carries interest at the rate of 3% over 3-months EBOR, subject to a minimum interest rate of 4.25% per annum. Facility B carries interest at the rate of 3.25% over 3-months EBOR, subject to a minimum interest rate of 4.5% per annum. The Facilities A and B are to be repaid in 10 years from the date of the Loan Facility Agreement through semi-annual installments and one final payment on the final repayment date. Interest is to be paid on quarterly basis. The loan facility is secured by the following: (i) Mortgage over the land plots and buildings of Abu Dhabi Intercontinental Hotel, Danat Resort Jebel Dhanna and Al Dhafra Beach Hotel (ii) Assignment of insurances of Abu Dhabi Intercontinental Hotel, Danat Al Ain Resort, Danat Resort Jebel Dhanna and Al Dhafra Beach Hotel (iii) Assignment of receivables from Abu Dhabi Intercontinental Hotel, Danat Al Ain Resort, Danat Resort Jebel Dhanna and Al Dhafra Beach Hotel (iv) Account Pledge over bank accounts of the Corporation and its divisions, Abu Dhabi Intercontinental Hotel, Danat Al Ain Resort, Danat Resort Jebel Dhanna and Al Dhafra Beach Hotel. As at 2017, the Company has an unamortised prepaid loan arrangement fee of 7.8 million (31 December 2016: 8 million) related to the new facility and is netted off from the loan balance. There have been no defaults or breach of loan covenants during the year. (20)

23 for the three months ended Related party balances These represent transactions with related parties, i.e. associated companies, directors and key management personnel of the Corporation, and companies of which they are principal owners and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Corporation s management. Following is the total amount of transactions and related balances which have been entered into with related parties during the three months ended : Revenue Rental income 77,578 83,900 Expenses Other expenses 565, ,330 Balances due from/to related parties included in the interim condensed statement of financial position are as follows: December 2016 Due from a related party National Transport Company 89,321 55,223 Due to a related party National Transport Company 604, ,914 (21)

24 for the three months ended 2017 (continued) 15 Contingencies and commitments (a) Contingencies (i) Bank guarantees At 2017, the Corporation had outstanding contingent liabilities in respect of letters of guarantee of 80.6 million (31 December 2016: 75.2 million). (ii) Legal case The Corporation is a defendant in a labour related legal proceeding which arose in the normal course of business. The Corporation does not expect that the outcome of such proceeding will have a material effect on the Corporation s operations, cash flows, or financial position. (b) Commitments At 2017, the Corporation had estimated commitments for the Grand Marina Hotel and new outlets at Abu Dhabi Intercontinental Hotel and Danat Al Ain Resort and Al Dhafra Beach Hotel renovation of 14.8 million (31 December 2016: 15 million). 16 Dividends and bonus shares In 2016, cash dividends of 0.15 per share amounting to 81 million in respect of 2015 were proposed by the Board of Directors. These dividends were declared and approved in the Annual General Meeting (AGM) held on 22 March During the period, million bonus shares were proposed by the Board of Directors. Issuance of these shares was subsequently approved in the AGM held on 24 April 2017 (2016: 27 million bonus shares were approved by the shareholders on 22 March 2016). 17 Board of directors remuneration For the year ended 31 December 2016, the remuneration of the Board of Directors amounted to 12.6 million, which was subsequently approved in the AGM held on 24 April 2017 (2016: remuneration of the Board of Directors for the year ended 31 December 2015 amounted to 12.2 million and was approved by the shareholders in the AGM on 22 March 2016). (22)