TIDMAHCG
RNS Number : 2514C
Action Hotels PLC
28 September 2018
Action Hotels plc
Interim financial statements for the six months ended 30 June
2018
Action Hotels plc, the leading owner, developer and asset
manager of branded three and four-star hotels in the Middle East
and Australia, is pleased to announce its unaudited results for the
six months ended 30 June 2018.
Key Highlights and Financial Overview
Year-on-year growth in key financial performance indicators -
Revenue (up 16%) and Gross profit (up 12%)
Total reported revenue increased to $32.7m (30 June 2017:
$28.1m), driven by new hotel rooms
Gross profit increased by $2.4m to $21.9m (30 June 2017:
$19.5m)
Adjusted EBITDA(1) decreased by 64% to $2.4m (30 June 2017:
$6.8m), mainly due to the downward fair value adjustment of $3.8m
of the investment land.
Net loss before tax of $13.0m (30 June 2017: Net loss of $5.3m),
as expected and primarily driven by the impact of increased
financing costs to develop the pipeline and the impact of
depreciation on newly opened hotels
LTV of 61% (2017: 58%)
Property asset values have decreased by $11m to $564m since 31
Dec 2017, resulting in a net asset value (NAV) of $184m at 30 June
2018 (31 December 2017: $202m)
Adjusted NAV (adding back deferred tax liability and assets) is
$206m compared to $224m as at year end.
Adjusted NAV per share was USD 1.40/GBP 1.06 (2017: USD 1.52/GBP
1.12)
Operational Highlights
2,623 operating rooms at the end of June, a 20% increase from H1
2017 (30 June 2017: 2,181) with the openings of ibis Styles,
Bahrain (August 2017) and Novotel Melbourne South Wharf (March
2018)
Strong occupancy levels from our mature hotels(2) , being
maintained on a like-for-like basis at 73.7% (30 June 2017:
72.7%)
Average EBITDA breakeven occupancy levels across the portfolio
remain low at c. 37% (30 June 2017: 37%)
Continued strong operational and financial performances from the
two hotels in Kuwait, ibis Salmiya and ibis Sharq, with both hotels
operating over 80% occupancy
Ibis Budget Melbourne Airport also continues to perform strongly
with around 90% occupancy (30 June 2017: 90%)
Current Trading and Portfolio update
The Board confirms that, current trading remains on track with
management expectations, despite certain markets in the Middle East
facing headwinds impacting the performance of businesses throughout
the region. Growth comes from the newly opened rooms and the
occupancy of the Groups seven mature hotels(2) at 73.7% underpins
Action's resilient business model in the economy and midmarket
hotel sector, with low break-even levels and the recently opened
hotels delivering growth. However, mindful of the current economic
and political climate in the Middle East there is pressure on room
rates and as at the reporting of the interim results the Board took
the decision to further delay the opening of the Mercure Riyadh
Hotel which is now expected to open during late 2019 in a prime
location of Riyadh in Saudi Arabia.
The interim results include a downward fair value adjustment of
investment land of $3.8m. This follows the commencement of an
exercise to explore the sale of the aforementioned land with a view
to providing working capital to the Group. This sale exercise, has
to date, elicited offers which are below the fair value of the land
as held on the Group's balance sheet reported as at 31 December
2017. Accordingly, the Board has deemed it appropriate to apply a
downward fair value adjustment of this land to reflect this
proposal. There can be no guarantee that this land will be sold, or
that such a value could be achieved in such a sale.
Additionally, Action Hotels has received an unsolicited approach
by way of a non-binding letter of intent for the sale of a hotel in
Australia. The Board is considering this offer, which is above the
current book value of the hotel, on its merits and in the context
of the cash requirements of the Group and other fundraising
opportunities available to it. There can be no certainty that any
deal will proceed, or that such a value could be achieved in such a
sale.
RECOMMED CASH OFFER for ACTION HOTELS PLC by ACTION REAL ESTATE
CO KSCC
At the recent Court Meeting held on 24th September, a majority
in number of Scheme Shareholders, who voted (either in to person or
by proxy) and who together represented over 3/4ths of the voting
rights of Scheme Shareholders who are on the Company's register of
members at the Voting Record Time, voted in favour of the
resolution to approve the Scheme. The resolution was accordingly
passed.
At the recent General Meeting held on 24th September, the
requisite majority of Action Hotels Shareholders voted (either in
to person or by proxy) to pass the Special Resolutions in
connection with i) amending the Articles to give authority to the
directors to take all such actions as may be necessary to implement
the Scheme; and ii) the de-listing of the Action Hotels Shares from
the AIM Market.
Full details of the resolutions passed are set out in the
notices of the Court Meeting and General Meeting contained in the
scheme document dated 31 August 2018 that was sent to Action Hotels
Shareholders (the "Scheme Document"), a copy of which is available
on Action Hotel's website at www.actionhotels.com
Commenting on the results, Andrew Lindley, Action Hotels Interim
CEO and CFO said:
"We are pleased to update the market on the first half year
results, with solid operational performances being delivered across
our hotel portfolio. Even though the markets remain challenging
across the Middle East, our strategy of continued investment into
our hotel pipeline delivers growth from new rooms."
Commenting on the results, Sheikh Mubarak A.M. Al Sabah, Founder
and Chairman of Action Hotels said:
"I am pleased to announce a solid performance for Action Hotels
for the first six months of 2018. We continue to be committed to
our strategy of meeting the increasing demand for quality, value
for money internationally branded hotel accommodation across the
Middle East and Australia."
For more information, contact:
Action Hotels plc
Andrew Lindley, Chief Financial Officer
Katie Shelton, Director of Corporate Affairs +44 (0)77 9977 0588
WH Ireland Limited (Financial Adviser to
Action Hotels)
Adrian Hadden
Jessica Cave +44 (0)20 7220 1666
Notes to Editors
Action Hotels PLC
Action Hotels PLC is a leading owner, developer and asset
manager of branded three- and four-star hotels in the Middle East
and Australia. Established in 2005, Action Hotels currently has 14
completed hotels with 2,623 rooms in aggregate across the Middle
East and Australia, with further properties in development in the
Middle East.
More information is available at
http://www.actionhotels.com/
Notes
1. Adjusted EBITDA is defined as operating profit before
depreciation, amortisation, restructuring and listing costs, gains
and losses arising from the disposal of property, plant and
equipment and pre-opening costs.
2. On a like-for-like basis - a comparison of the mature trading
hotels; ibis Glen Waverly, ibis Budget Melbourne Airport, ibis
Sharq, ibis Salmiya, ibis Amman, Holiday Inn Muscat and ibis
Muscat, excluding any currency movements.
3. Adjusted NAV is the net asset value of the Group adjusted for
the deferred tax provision required on the revaluation of
properties to the Statement of Financial Position.
All currency amounts are in US $ unless otherwise stated.
Cautionary Statement
This announcement contains unaudited information and
forward-looking statements that are based on current expectations
or beliefs, as well as assumptions about future events. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts and undue
reliance should not be placed on any such statements because they
speak only as at the date of this document and are subject to known
and unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and Action Hotel's plans
and objectives, to differ materially from those expressed or
implied in the forward-looking statements. Action Hotels undertakes
no obligation to revise or update any forward-looking statement
contained within this announcement, regardless of whether those
statements are affected as a result of new information, future
events or otherwise, save as required by law and regulations.
Operating performance
Six months Six months % change
ended 30 ended 30
June 2018 June 2017
Revenue $32.7m $28.1m +16%
Total Occupancy 65.3% 64.0% +1.3%
Occupancy(2) 73.7% 72.7% +1.0%
Total Portfolio
Consolidated revenues were 16% higher over the period, with
contribution from new rooms and Middle East and Australian hotels
continuing to contribute strong average occupancies. Total
occupancy is lower than the mature (like for like) occupancy by
8.4% (30 June 2017: 8.7%) due to the weighting of lower occupancies
in the newly opened hotels as they grow to maturity in their
respective markets.
Total operating rooms reached 2,623 as at 30 June 2018, a 20%
increase on the same period last year.
Despite pressure across the Middle Eastern markets, the Group's
seven mature hotels(2) continue to deliver strong occupancy levels
at a combined 73.7%, (30 June 2017: 72.7%) 100bp above previous
year illustrating the resilient business model.
Middle East
In the Middle East, hotels showed an increase in occupancy of
4.4% but a decrease in ADR of 7.5% (on a like for like basis,
excludes hotels opened in the last 12 months) resulting in a RevPAR
reduction of 1.0%. Kuwait, however, remained strong with an average
occupancy of over 80% across the two hotels. Management is working
closely with its hotel operators to ensure that hotels continue to
grow their market share and maintain a low-cost base resulting in
low breakeven levels.
Australia
The Australian hotels performed well, performing above last year
and delivering an increase of 48% in revenue, driven predominantly
from the opening of our largest hotel, Novotel Melbourne South
Wharf, in March 2018 and continues to show encouraging trading with
occupancy over 50% after only 3 1/2 months trading. Ibis Budget
Melbourne Airport recorded the highest occupancy in the portfolio
with year to date occupancy of just below 90%.
Hotel pipeline
Action Hotels now has 14 operating hotels with 2,623 rooms. The
Group's pipeline currently consists of a further two hotels,
Novotel Dubai Creek and Mercure Riyadh Olaya, and a total of 2,969
rooms upon completion of the pipeline hotel developments.
Financial Performance
Six months Six months % change
ended 30 ended 30
June 2018 June 2017
Total revenue $32.7m $28.1m +16%
Gross Profit $21.9m $19.5m +12%
Adjusted EBITDA (1) $2.4m $6.8m -64%
Adjusted EBITDA (1) margin 7% 24% -17%
Reported (loss) before
tax $(13,018) $(5,307k)
Adjusted EBITDA amounted to $2.4m, a 64% decrease over the same
period last year with adjusted EBITDA margin reducing to 7%, mainly
due to the downward fair value adjustment of the investment land of
$3.8m.
The operating performance is stable with the growth coming
predominantly from the new rooms in Australia and Bahrain. The
steady central overheads of the Head Office helped to support
EBITDA margin at 20% excluding the $3.8m impairment.
Gross Finance costs have increased by $1.7m over the same period
versus last year as the company has, as planned, utilised debt
facilities to fund the pipeline of hotels, some of the funds are
also directed to the operation increasing interest payments
reported in the financial statements. With the opening of two
hotels in 2017 the Depreciation and Amortisation charge has also
increased by $0.9m as expected over last year with the full year
effect coming through as the hotels mature. Also, the company has
increased pre-opening costs compared to the same period last year
by $0.4m, with the opening of the 347 room Novotel South Wharf,
Melbourne March 2018, compared to no hotel openings in H1 2017 and
the 95 room ibis Styles Bahrain in August 2017.
Net Asset Value
Net asset value reduced by $18m to $184m at 30 June 2018 (2017:
$202m), mainly due to the operating loss including the downward
fair value adjustment on the investment land. NAV will be reviewed
at year end as perform fair value assessments of our portfolio at
the end of the reporting period by certified valuers.
Six months Year ended % change
ended 30 31 December
June 2018 2017
Net asset value $184m $202m -9%
Adjusted NAV (3) $206m $224m -8%
Adjusted NAV (3) per share $1.40 $1.52 -8%
Interim Dividend
The Board maintain their position to not pay a dividend.
Review report on the condensed interim consolidated financial
information to the shareholders of Action Hotels plc
Introduction
We have reviewed the accompanying condensed interim consolidated
statement of financial position of Action Hotels plc and its
subsidiaries (together "the Group") as at 30 June 2018 and the
related condensed interim consolidated income statement and
statements of comprehensive income, changes in equity and cash
flows for the six-month period then ended and other explanatory
notes. Management is responsible for the preparation and
presentation of this condensed interim consolidated financial
information in accordance with International Accounting Standard 34
"Interim Financial Reporting" as adopted for use in the European
Union. Our responsibility is to express a conclusion on this
condensed interim consolidated financial information based on our
review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of interim financial
information performed by the independent auditor of the entity'. A
review of interim financial information consists of making
inquiries, 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 condensed interim
consolidated financial information is not prepared, in all material
respects, in accordance with International Accounting Standard 34
"Interim Financial Reporting" as adopted for use in the European
Union.
Material uncertainty relating to going concern
We draw attention to Note 2 to the condensed interim
consolidated financial information, which indicates that the Group
incurred a net loss of US$ 13 million during the six-month period
ended 30 June 2018 and, as of that date, the Group's current
liabilities exceeded its current assets by US$ 188 million. As
stated in Note 2, these conditions indicate that a material
uncertainty exists that may cast significant doubt on the Group's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
PricewaterhouseCoopers
28 September 2018
Virendra Lodhia
Dubai, United Arab Emirates
Note:
The maintenance and integrity of Action Hotels plc's website is
the responsibility of the directors; the work carried out by the
independent auditors does not involve consideration of these
matters and, accordingly, the independent auditors accept no
responsibility for any changes that may have occurred to the
condensed interim consolidated financial information and
half-yearly report since they were initially presented on the
website.
Condensed interim consolidated income statement
Six month ended 30 June
-------------------------
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Revenue 32,672 28,079
Cost of sales (10,782) (8,619)
------------ -----------
Gross profit 21,890 19,460
General and administrative expenses (26,414) (18,014)
------------ -----------
Operating (loss) / profit (4,524) 1,446
Adjusted EBITDA 2,402 6,751
Depreciation and amortization (6,234) (5,230)
Pre-opening expenses (505) (95)
Other expenses - net (187) 20
Operating (loss) / profit (4,524) 1,446
-------------------------------------- ------------
Finance income 123 117
Finance costs (8,617) (6,870)
------------ -----------
Finance costs - net (8,494) (6,753)
------------ -----------
Loss before tax (13,018) (5,307)
Income tax - (273)
Deferred tax - 2,296
------------ -----------
Loss for the period (13,018) (3,284)
============ ===========
Loss is attributable to:
Owners of Action Hotels plc (12,850) (3,118)
Non-controlling interests (168) (166)
------------ -----------
Total (13,018) (3,284)
============ ===========
Loss per share attributable to equity
holders of the Company:
Basic (8.7)c (2.1)c
------------ -----------
Diluted (8.7)c (2.1)c
------------ -----------
All operations were continuing throughout the periods. The
accompanying notes on pages 7 to 28 are an integral part of this
condensed interim consolidated financial information.
Condensed interim consolidated statement of comprehensive
income
Six month ended 30 June
-------------------------
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Loss for the period (13,018) (3,284)
Other comprehensive income
Items that may be reclassified to
profit or loss:
Exchange differences on translation
of foreign operations (4,987) 3,208
------------ -----------
Other comprehensive (loss) / income
for the period net of tax (4,987) 3,208
------------ -----------
Total comprehensive loss for the
period (18,005) (76)
============ ===========
Total comprehensive loss for the
period is attributable to:
Owners of Action Hotels plc (17,837) 90
Non-controlling interests (168) (166)
------------ -----------
(18,005) (76)
============ ===========
Total comprehensive income attributable to equity shareholders
arises from continuing operations. The accompanying notes on pages
7 to 28 are an integral part of this condensed interim consolidated
financial information.
Condensed interim consolidated statement of financial
position
30 June 31 December
2018 2017
Note USD'000 USD'000
(Unaudited) (Audited)
Assets
Non-current assets
Property and equipment 8 531,848 538,545
Investment property 7 10,890 14,725
Intangible assets 15,431 15,950
Deferred tax assets 3,084 3,084
Cash and bank balances 3,195 3,201
----------- -----------
564,448 575,505
----------- -----------
Current assets
Inventories 324 267
Trade and other receivables 14,192 14,160
Due from related parties 9 10,608 10,459
Cash and bank balances 7,827 8,199
----------- -----------
32,951 33,085
----------- -----------
Total assets 597,399 608,590
=========== ===========
Liabilities
Current liabilities
Trade and other payables 27,089 30,580
Due to related parties 5,819 6,470
Borrowings 10 182,556 183,779
Loan due to related parties 9 5,000 -
Finance lease liabilities 533 518
220,997 221,347
----------- -----------
Non-current liabilities
Borrowings 10 128,138 127,799
Loan due to related parties 9 25,549 19,765
Trade and other payables 3,517 2,076
Deferred tax liabilities 25,711 25,711
Provision for employees end of service
benefits 1,160 1,123
Derivative financial liabilities 501 501
Finance lease liabilities 7,998 8,435
----------- -----------
192,574 185,410
----------- -----------
Total liabilities 413,571 406,757
----------- -----------
Net assets 183,828 201,833
=========== ===========
Equity
Share capital 11 24,102 24,102
Share premium 11 24,479 24,479
Revaluation reserve 99,341 99,341
Merger and other reserves 12 (8,926) (3,939)
Retained earnings 26,567 39,417
----------- -----------
Net equity attributable to owners
of Action Hotels plc 165,563 183,400
Non-controlling Interests 18,265 18,433
----------- -----------
Total equity 183,828 201,833
=========== ===========
The accompanying notes on pages 7 to 28 are an integral part of
these condensed interim consolidated financial information. The
condensed interim consolidated financial information was approved
by the Board of Directors and authorised for issue on 28 September
2018. They were signed on its behalf by:
.............................................
.............................................
Rawaf I. Bourisli Andrew Lindley
Dirctor Chief Executive Officer
Condensed interim consolidated statement of changes in
equity
Attributable to owners of Action Hotels plc
-------------------------------------------------------------
Merger and Non-
Share Share Revaluation other Retained Controlling Total
capital premium reserve reserves earnings Total Interests equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2017
(Audited) 24,102 24,479 84,123 (9,417) 55,861 179,148 15,640 194,788
Loss for the
period - - - - (3,118) (3,118) (166) (3,284)
Other
comprehensive
income for the
period - - - 3,208 - 3,208 - 3,208
------- ------- ----------- ---------- -------- -------- ------------ --------
Total
comprehensive
income / (loss)
for
the period - - - 3,208 (3,118) 90 (166) (76)
Transactions with
owners:
Dividends - - - - (2,864) (2,864) - (2,864)
Share based
payments - - - 4 - 4 - 4
At 30 June 2017
(Unaudited) 24,102 24,479 84,123 (6,205) 49,879 176,378 15,474 191,852
======= ======= =========== ========== ======== ======== ============ ========
At 1 January 2018
(Audited) 24,102 24,479 99,341 (3,939) 39,417 183,400 18,433 201,833
Loss for the
period - - - - (12,850) (12,850) (168) (13,018)
Other
comprehensive
loss for the
period - - - (4,987) - (4,987) - (4,987)
------- ------- ----------- ---------- -------- -------- ------------ --------
Total
comprehensive
income for the
period 24,102 24,479 99,341 (4,987) (12,850) (17,837) (168) (18,005)
At 30 June 2018
(Unaudited) 24,102 24,479 99,341 (8,926) 26,567 165,563 18,265 183,828
======= ======= =========== ========== ======== ======== ============ ========
The accompanying notes on pages 7 to 28 are an integral part of
this condensed interim consolidated financial information.
Condensed interim consolidated statement of cash flows
Six months ended 30 June
--------------------------
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Cash flows from operating activities:
Loss before tax (13,018) (5,307)
Adjustments for:
Finance costs 8,617 6,751
Finance income (123) (117)
Depreciation of property and equipment 5,822 4,907
Amortisation of intangible assets 412 323
Loss on disposal of property and equipment 282 -
Provision for end of service benefits 426 373
Loss on fair valuation of investment property 3,835 -
Share based payments - 4
------------ ------------
Operating cash flows before payment of
employees' end of service benefits and
changes in working capital: 6,253 6,934
Payment of employees end of service benefits (383) (375)
Increase in trade and other receivables (172) (7,260)
(Increase)/decrease in receivables due
from related parties (2,857) 3,656
Increase in inventories (60) (20)
(Decrease)/increase in trade and other
payables (2,257) 1,883
Increase in due to related parties 2,094 1,496
------------ ------------
Cash generated from operation 2,618 6,314
Tax paid - -
------------ ------------
Net cash generated from operating activities 2,618 6,314
------------ ------------
Cash flow from investing activities
Interest received 123 117
Capital expenditure from restricted cash 565 842
Transfers to restricted cash (830) (821)
Purchase of intangible assets (158) (63)
Purchase of property and equipment (11,868) (27,986)
------------ ------------
Net cash used in investing activities (12,168) (27,911)
------------ ------------
Cash flow from financing activities
Repayment of borrowings (17,972) (41,182)
Drawdown of borrowings 24,099 60,891
Drawdown of loan from related parties 11,212 11,254
Finance costs paid (8,226) (6,979)
Dividend paid - (2,864)
Net cash generated from financing activities 9,113 21,120
------------ ------------
Net decrease in cash and cash equivalents (437) (477)
Cash and bank balances at the beginning
of the period 7,227 3,595
Effect of foreign exchange changes (169) 188
------------ ------------
Unrestricted cash and cash equivalents
at end of the period 6,621 3,306
Restricted cash and cash equivalents 1,206 751
------------ ------------
Total cash and cash equivalents at the
end of the period 7,827 4,057
------------ ------------
Cash and cash equivalents 7,827 4,057
Deposits having original maturity of more
than three months 3,195 181
------------ ------------
Cash and bank balances 11,022 4,238
============ ============
The notes on pages 7 to 28 are an integral part of this
condensed interim consolidated financial information
1 General information
Action Hotels plc ("the Company") is incorporated in Jersey
under the Companies (Jersey) Law 1991 with the registered number
112945. The address of the registered office is 5(th) Floor, 37
Esplanade, St Helier Jersey, JE1 2TR.
The Company is a public limited company and has its primary
listing on the AIM division of the London Stock Exchange. The
principal activities of the Company and its subsidiaries ("the
Group") are owning, developing, operating and managing hotel assets
in the Middle East and Australia. The Group's principal
administrative subsidiary, Action Hotels Limited, is domiciled in
Dubai International Financial Centre, which is its principal place
of business.
Action Hotels plc was incorporated in Jersey on 7 May 2013 and
took control of the Action Hotels business on 9 December 2013
through a common control transaction with its shareholder. The
Company issued 100 million shares to its shareholder in return for
100% of the beneficial interest in and voting control over the
issued share capital of Action Hotels Limited. Action Hotels
Limited in turn acquired 100% of the issued share capital of Action
Hotels Company LLC, a company incorporated in Kuwait, through a
share for share exchange.
Action Hotels plc was subsequently admitted to trading on the
AIM division of the London Stock Exchange and issued a further
47,637,195 shares on 23 December 2013.
Pursuant to the transaction, Action Hotels Company LLC, which
had previously been the parent company of the Group became a
subsidiary of Action Hotels plc and the existing shareholder of
Action Hotels Company LLC became the shareholder in Action Hotels
plc.
The half year results and condensed interim consolidated
financial information for the six months ended 30 June 2018 (the
"condensed interim consolidated financial information") comprise
the results of the Group.
This condensed interim consolidated financial information has
been reviewed, not audited.
2 Basis of preparation
The condensed interim consolidated financial information has
been prepared in accordance with IAS 34 'Interim financial
reporting' as adopted by the European Union. The condensed interim
consolidated financial information should be read in conjunction
with the annual financial statements for the year ended 31 December
2017, which have been prepared in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the European
Union and IFRS Interpretation Committee interpretations as adopted
by the European Union and the Companies (Jersey) law 1991.
The condensed interim consolidated financial information have
been prepared on the going concern basis. The Directors have made
this assessment for a period of at least twelve months from the
date of the approval of these condensed interim consolidated
financial information after consideration of the Group's
expenditure commitments, current financial projections and expected
future cash flows, together with the available cash resources and
undrawn committed borrowing facilities.
The accounting policies adopted are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements for the year ended 31 December 2017, except
for the adoption of new and amended standards as set out in the
following pages.
Going Concern
The Group incurred a net loss of USD 13,018,000 for the period
ended 30 June 2018 (30 June 2017: USD 3,284,000) and as of 30 June
2018, the Group's current liabilities exceeded its current assets
by USD 188,046,000 (31 December 2017: USD 188,262,000). Total
assets continue to exceed total liabilities by USD 183,828,000 (31
December 2017: USD 201,833,000).
Notwithstanding this, the condensed interim consolidated
financial information has been prepared on the going concern basis.
The Directors have made this assessment for a period of at least
twelve months from the date of the approval of this condensed
interim consolidated financial information after consideration of
the Group's expenditure commitments, current financial projections
and expected future cash flows, together with the available cash
resources and undrawn committed borrowing facilities. The Group
prepares detailed forward cash flow projections for future periods.
There are a number of assumptions and estimates involved in
calculating these future projections, including Management's
expectations of increase in gross sales from maturing hotels and
hotels still due to open from the pipeline; growth in EBITDA;
timing and quantum of future capital expenditure; the estimation of
future funding and the cost of such funding.
Management is also in the process of refinancing existing and
negotiating further new funding facilities. The principal
shareholder and a shareholder has also confirmed their intention to
provide continued financial support to the Group so as to enable
the Group both to meet its liabilities as and when they fall due
and to carry on its business without significant curtailment of
operations for a period of at least twelve months from the date of
the approval of this condensed interim consolidated financial
information.
(a) New standards, amendments and interpretations adopted by the Group from 1 January 2018.
A number of new or amended standards became applicable from 1
January 2018 which the Group has adopted:
-- IFRS 9, 'Financial Instruments' (effective from 1 January 2018); and
-- IFRS 15, 'Revenue from Contracts with Customers' (effective from 1 January 2018).
Upon adoption of these standards, the Group has assessed the
impact on the Group's condensed interim consolidated financial
information line items and noted no material differences which
would require any disclosure / adjustment.
There are no other IFRSs or IFRSIC interpretations that are
effective and would be expected to have a material impact on the
Group.
b) New standards and amendments not early adopted by the Group
Certain new standards and amendments to existing standards have
been published and are mandatory for the Group's accounting periods
beginning after 1 January 2019 or later periods, but have not been
early adopted by the Group:
-- IFRS 16, 'Leases' (effective from 1 January 2019)
The new standard eliminates the classification of leases as
either operating leases or finance leases for a lessee. Instead all
leases are treated in a similar way to finance leases applying IAS
17. Leases are 'capitalised' by recognising the present value of
the lease payments and showing them either as lease assets
(right-of-use assets) or together with property, plant and
equipment. The Group is in the process of assessing the potential
impact of the application of IFRS 16 on the amounts reported and
disclosures made in this condensed interim consolidated financial
information.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group's condensed interim consolidated financial
information.
New accounting policies applied from 1 January 2018
IFRS 9, 'Financial Instruments' - Accounting Policies
Classification
From 1 January 2018, the Group classifies its financial assets
in the following measurement categories:
-- Those to be measured subsequently at fair value (either
through other comprehensive income or through profit or loss);
and
-- Those to be measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows. Management determines the classification of its investment
at initial recognition .
Recognition and measurement
Regular purchases and sales of financial assets are recognised
on trade-date, the date on which the Group commits to purchase or
sell the asset. Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially
all the risks and rewards of ownership.
Financial assets at fair value through other comprehensive
income (FVOCI) are carried at fair value. After initial
measurement, the Group present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification
of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments
continue to be recognised in profit or loss as other income when
the Group's right to receive payments is established.
The Group classifies debt instruments at amortized cost using
effective interest rate method.
IFRS 9 replaces the 'incurred loss' model with a forward-looking
'expected credit loss' (ECL) model. The Group applies the
simplified approach to providing for expected credit losses
prescribed by IFRS 9, which permits the use of the lifetime
expected loss provision.
IFRS 15, 'Revenue from Contracts with Customers' - Accounting
Policies
The Group recognises revenue from contracts with customers based
on a five step model as set out in IFRS 15.
1) Identify the contract(s) with a customer: A contract is
defined as an agreement between two or more parties that creates
enforceable rights and obligations and sets out the criteria for
every contract that must be met.
2) Identify the performance obligations in the contract: A
performance obligation is a promise in a contract with a customer
to transfer a good or service to the customer.
3) Determine the transaction price: The transaction price is the
amount of consideration to which the Group expects to be entitled
in exchange for transferring promised goods or services to a
customer, excluding amounts collected on behalf of third
parties.
4) Allocate the transaction price to the performance obligations
in the contract: For a contract that has more than one performance
obligation, the Group will allocate the transaction price to each
performance obligation in an amount that depicts the amount of
consideration to which the Group expects to be entitled in exchange
for satisfying each performance obligation.
5) Recognise revenue when (or as) the entity satisfies a
performance obligation at a point time or over time.
The Group satisfies a performance obligation and recognises
revenue over time, if one of the following criteria is met:
-- The customer simultaneously receives and consumes the
benefits provided by the Group's performance as the Group performs;
or
-- The Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
-- The Group's performance does not create an asset with an
alternate use to the Group and the Group has an enforceable right
to payment for performance obligations completed to date.
For performance obligations where none of the above conditions
are met, revenue is recognised at the point in time at which the
performance obligation is satisfied.
Revenue is recognised in the condensed interim consolidated
income statement to the extent that it is probable that the
economic benefits will flow to the Group and the revenue and costs,
if and when applicable, can be measured reliably.
(i) Owned and leased hotels
Revenue is primarily derived from hotel operations, including
the rental of rooms, food and beverage sales and other services
from owned and leased hotels operated under the Group's brand
names. Revenue is recognised when rooms are occupied, food and
beverages are sold and services are performed.
Revenue is recognised net of returns, rebates, municipality fees
and discounts. Service charges collected from the customers are
recorded as revenue, as the Group is the principal/ primary obligor
and is required to provide the service to the customer in return
for the receipt of the service charge.
(ii) Customer loyalty programmes
The Group's hotels participate in the Le Club Accor hotels and
IHG Rewards customer loyalty programmes to provide customers with
incentives to buy room nights. These customer loyalty programmes
are owned and operated by Accor/IHG respectively and, therefore,
the entity retains no obligations in respect of the award credits
other than to pay the programme operator for the granted award
credits.
The Group concluded that it is acting as principal in this
transaction and, in substance, is earning revenue from supplying
these awards to its customer. The Group measures these revenues at
fair value and recognises these gross from the costs of
participating in the programme.
(iii) Other revenue and expenses
Other revenue and expenses are recognised on the accrual
basis.
3 Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk.
The condensed interim consolidated 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 Group's annual financial statements as at 31
December 2017. There have been no changes in the risk management
department or in any risk management policies since the year
end.
4 Critical judgements and accounting estimates
The preparation of condensed interim consolidated financial
information requires management to make judgements, 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 this condensed interim consolidated financial
information, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
Group's annual consolidated financial statements for the year ended
31 December 2017.
5 Segment information
The Board of Directors of the Group is the Group's chief
operating decision-maker. Management has determined the operating
segments based on the information reviewed by the Board for the
purposes of allocating resources and assessing performance of the
Group.
The Group is organised within two geographical regions, Middle
East and Australia excluding central functions. These geographical
regions along with hotels under construction and undeveloped land
sites comprise the Group's four reportable segments. No operating
segments have been aggregated to form these reportable
segments.
Central management costs represent the head office and
management costs incurred at the Group level, which have not been
subsequently allocated to any operating segment. Each of the
geographical segments derives its revenue from the ownership and
management of hotel operations.
The Board of Directors use a measure of adjusted EBITDA to
assess performance.
(a) Segmental revenue and results
The following is an analysis of the Group's revenue and results
by reportable segments:
Six months ended 30 June 2018
(Unaudited)
Middle East Australia Consolidated
USD'000 USD'000 USD'000
Revenue 20,504 12,168 32,672
------------
Adjusted EBITDA - hotel operations 7,861 4,357 12,218
Central management and other costs (16,742)
------------
Operating profit (4,524)
Finance income 123
Finance costs (8,617)
------------
Loss before tax (13,018)
============
Six months ended 30 June 2017
(Unaudited)
Middle East Australia Consolidated
USD'000 USD'000 USD'000
Revenue 19,881 8,198 28,079
Adjusted EBITDA - hotel operations 7,896 3,313 11,209
Central management and other costs (9,763)
------------
Operating profit 1,446
Finance income 117
Finance costs (6,870)
Loss before tax (5,307)
============
The revenue of each segment for each period arises wholly from
external sales.
Adjusted EBITDA for hotel operations represent the profit earned
by each segment without allocation of central administration costs
including Directors' salaries, pre-opening costs, investment
revenue and finance costs, and tax.
(b) Segmental assets
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Middle East hotel operations 277,542 280,814
Australia hotel operations 231,602 123,037
Hotels under construction 62,566 176,037
Undeveloped land sites 10,890 14,725
Not allocated 14,799 13,977
----------- -----------
597,399 608,590
=========== ===========
For the purposes of monitoring segment performance and
allocating resources between segments, the Group's management
monitor the tangible, intangible and financial assets attributable
to each segment. Assets classed as not allocated represent the
current assets attributable to the central management function of
the business and mainly relate to head office cash balances and
certain balances with related parties.
Other segmental information
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Additions and contributions to property
and equipment
Middle East hotel operations 1,074 2,024
Australia hotel operations 1,958 213
Hotels under construction 9,544 79,307
12,576 81,544
=========== ===========
(c) Geographical information - Revenue
The country of domicile for the Group's head office is United
Arab Emirates (UAE); the table below shows the revenue from
external customers split between those attributed to the country of
domicile and all other foreign countries.
30 June 30 June
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
UAE 2,076 2,246
Kuwait 6,918 6,828
Oman 7,265 7,242
Bahrain 2,932 2,363
Jordan 1,312 1,202
Australia 12,169 8,198
----------- -----------
32,672 28,079
=========== ===========
(d) Geographical information - Non-current assets
The country of domicile for the Group's head office is United
Arab Emirates (UAE); the table below shows the non-current asset
split between those attributed to the country of domicile and all
foreign countries.
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
UAE 93,416 88,589
KSA 16,698 16,542
Kuwait 48,605 49,482
Oman 105,674 107,080
Bahrain 54,651 55,168
Jordan 15,502 15,545
Australia 229,902 243,099
564,448 575,505
=========== ===========
6 Loss per share
(a) Basic loss per share
Basic loss per share is calculated by dividing the profit/(loss)
attributable to the equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
Loss per share attributable to equity 30 June 30 June
holders of the Company: 2018 2017
(Unaudited) (Unaudited)
Loss for the period (USD'000) (12,850) (3,118)
------------ ------------
Weighted average number of shares 147,637,195 147,637,195
------------ ------------
Basic loss per share (USD) (0.087) (0.021)
------------ ------------
(b) Diluted loss per share
Diluted loss per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares.
30 June 30 June
2018 2017
(Unaudited) (Unaudited)
Loss for the period (USD'000) (12,850) (3,118)
----------- -----------
Weighted average number of shares 147,637,195 147,637,195
----------- -----------
Diluted loss per share (USD) (0.087) (0.021)
----------- -----------
The 5,179,116 options (30 June 2017: 5,179,116 options) are not
included in the calculation of diluted earnings per share because
they are antidilutive for the period ended 30 June 2018 and 2017.
These options could potentially dilute basic earnings per share in
future.
The 3,690,930 warrants (30 June 2017: 3,690,930 warrants) are
not included in the calculation of diluted earnings per share
because they are antidilutive for the period ended 30 June 2018 and
2017. These options could potentially dilute basic earnings per
share in future.
7 Investment property
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
At 1 January 14,725 14,725
Net loss from fair valuation (3,835) -
10,890 14,725
=========== ===========
At 30 June 2018 and 31 December 2017, investment property
represent the Group's interest in land held for undetermined use
situated in the UAE. Investment properties are carried at fair
value. The valuation method adopted to determine the fair value is
based on inputs not based on observable data (that is, unobservable
inputs - level 3). The net loss from fair valuation is a result of
the internal assessment undertaken by the management for TECOM
land.
8 Property and equipment
Operational Hotels
Fixture,
Fittings Hotels under
Land Buildings & Equipment construction Other FF&E Vehicles Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost or fair value:
At 1 January 2018
(Audited) 117,870 248,350 47,781 160,321 5,059 417 579,798
Additions - 449 2,043 9,544 425 115 12,576
Transfers - 116,291 3,175 (119,466) - - -
Disposals - (709) - (282) - - (991)
Exchange differences (2,099) (8,483) (1,039) (1,524) (24) (1) (13,170)
------- --------- ------------ ------------- ---------- -------- --------
At 30 June 2018
(Unaudited) 115,771 355,898 51,960 48,593 5,460 531 578,213
======= ========= ============ ============= ========== ======== ========
Accumulated depreciation:
At 1 January 2018
(Audited) - 18,168 20,227 - 2,563 295 41,253
Charge for the period - 3,258 2,248 - 262 54 5,822
Exchange differences - (319) (379) - (11) (1) (710)
------- --------- ------------ ------------- ---------- -------- --------
At 30 June 2018
(Unaudited) - 21,107 22,096 - 2,814 348 46,365
======= ========= ============ ============= ========== ======== ========
Net book value:
At 30 June 2018
(Unaudited) 115,771 334,791 29,864 48,593 2,646 183 531,848
======= ========= ============ ============= ========== ======== ========
At 1 January 2018
(Audited) 117,870 230,182 27,554 160,321 2,496 122 538,545
======= ========= ============ ============= ========== ======== ========
Leased assets
Buildings includes the following amounts where the Group is a
lessee under a finance lease (note 15):
Leasehold building 30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Cost 9,330 9,330
Accumulated depreciation (1,164) (931)
-----------
Net book amount 8,166 8,399
=========== ===========
Hotels in operation and under construction are carried at fair
value. The valuation method adopted to determine the fair value is
based on inputs not based on observable data (that is, unobservable
inputs - level 3).
At 30 June 2018, had the land and buildings of the Group been
carried at historical cost less accumulated depreciation and
impairment losses, their carrying amount would have been USD
387,942,000 (31 December 2017: USD 397,005,000). The revaluation
surplus is disclosed in the condensed interim consolidated
statement of changes in equity. The revaluation surplus cannot be
distributed due to legal restrictions.
Total assets under construction as at 30 June 2018 include a
hotel in Dubai Healthcare City, amounting to USD 40,059,000 (31
December 2017: USD 31,770,000) and hotels in the Kingdom of Saudi
Arabia amounting to USD 8,532,000 (31 December 2017: USD
8,143,000).
Land, buildings and fixtures and fittings of operational hotels
and hotels under construction with a carrying amount of USD
486,009,000 (31 December 2017: USD 374,401,000) have been pledged
to secure borrowings of the Group. The Group is not allowed to
pledge these assets as security for other borrowings or to sell
them to another entity.
9 Related party balances and transactions
The Group has entered into various transactions with related
parties in the normal course of its business concerning financing
and other related services. Prices and terms of payment are
approved by the Group's management. All significant related party
transactions and balances are listed below and are principally with
entities under control of the Group's principal shareholder, Action
Group Holding Co. KSCC:
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Due from related parties 10,608 10,459
Due to related parties (5,819) (6,470)
4,789 3,989
=========== ===========
Due from related parties
30 June 31 December
Name of related parties Relationship 2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Action Real Estate Co. Dubai Shareholder 8,815 8,740
Action Real Estate Co. KSA Others 971 971
Action Realty Australia Pty
Ltd Others 537 542
Action Business Center Ltd Others 285 206
10,608 10,459
=========== ===========
Interest is charged on amounts due from related parties in
Australia at a rate of 6% (2017: 6%). The total interest charge is
of USD 23,000 (30 June 2017: USD 24,000).
Interest is charged on the advance paid to Action Real Estate
Co. Dubai amounting to USD 3,714,000 (31 December 2017: USD
3,714,000) at a rate of 5% (30 June 2017: 5%). The total interest
income charged during the period amounted to USD 93,000 (30 June
2017: 93,000).
During the period, the Group received rent from related parties
for leasing of premises amounting to USD 106,000 (30 June 2017: USD
86,000).
Due to related parties
30 June 31 December
Name of related parties Relationship 2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Action Real Estate Co. K.S.C.C.
(AREC) Others 3,463 4,650
Action Group Holding Company
K.S.C.C Shareholder 1,425 1,224
Action Group Holding Company
(Oman) Others 42 49
Others Others 889 547
----------- -----------
5,819 6,470
=========== ===========
Expenditure incurred on services provided by related
parties:
Name of related parties Relationship 30 June 30 June
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Action Real Estate Co. K.S.C.C. Others 2,246 2,187
Dr. Suad M. S. Al Sabah Others 317 172
Action Group Holding Company
K.S.C.C Shareholder 588 156
3,151 2,515
=========== ===========
Expenditure incurred by related parties on behalf of the Group
and subsequently recharged:
30 June 30 June
Name of related parties Relationship 2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Action Real Estate Co. K.S.C.C. Others 96 991
Action Group Holding Company
(Oman) Others 1 -
Action Group Australia Others - 8
97 999
=========== ===========
Expenditure incurred by the Group on behalf of the related
parties and subsequently recharged:
Name of related parties Relationship 30 June 30 June
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Action Real Estate Co. K.S.C.C. Others 22 66
Action Group Holding Company
K.S.C.C Shareholder 9 1
Action Group Holding Company
(Oman) Others - 2
31 69
=========== ===========
Related party guarantees
Further, one of the shareholders of the Group and the ultimate
owner of the Group have provided performance guarantees on behalf
of the Group for certain borrowings. These guarantees, issued in
the normal course of business, are outstanding at the end of the
period and no outflow of resources embodying economic benefits in
relation to these guarantees is expected by the Group.
This guarantee fees paid is included above as part of
expenditure incurred on services provided by related parties.
Relationship 30 June 2018 30 June 2017
USD'000 USD'000
Action Group Holding Company
K.S.C.C Others 211 77
Dr. Suad M. S. Al Sabah Others 317 172
Others Shareholder 26 -
554 249
============ ============
During 2016, the Group entered into a conditional agreement with
Sheikh Mubarak Al Sabah to purchase his interest in Action Hotels
FZ-LLC. An amount of USD 3,714,000 was paid as refundable advance
against this agreement. Further in December 2016, Sheikh Mubarak Al
Sabah transferred his interest in Action Hotels FZ-LLC together
with the advance to Action Real Estate Co. Dubai. The amount of
advance paid has been included within due from related parties
above.
Loans due to related parties
30 June 31 December
Relationship 2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Action Real Estate Company Kuwait Others 13,373 15,855
Water Front Place Development
Trust Others 1,893 1,989
Action Group Kuwait Others 283 1,921
EBLA Computer Consultancy Co.
KSC Others 15,000 -
=========== ===========
30,549 19,765
=========== ===========
During the period, the Group obtained an additional loan
amounting to USD 15,000,000 (31 December 2017: Nil) from EBLA
Computer Consultancy Co. KSC for investment in the Group's
development pipeline and general working capital purposes repayable
in 3 annual instalments of USD 5,000,000 from the date of draw
down. This loan carries an interest rate of 9% per annum
In June 2018, the other related party loans were extended by
mutual agreement and are now repayable within 13 months from the
date of the condensed interim consolidated financial information.
The loans carry an interest rate of 9.9% (31 December 2017: 9.9%)
per annum. As at 30 June 2018, there is no material variance
between the carrying value of the loans and their fair value.
During the period, the Group paid an interest on these loans
amounting to USD 979,000 (30 June 2017: USD 428,000).
At 30 June 2018, the Group had total undrawn borrowing
facilities from a related party amounting to USD 9,458,000 (31
December 2017: USD 9,036,000).
Remuneration of Key Management Personnel:
30 June 30 June
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Salaries and consultancy fees 497 513
Other benefits 130 127
627 640
=========== ===========
10 Borrowings
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Secured
Borrowings 310,694 311,578
Less: non-current borrowings (128,138) (127,799)
Current borrowings 182,556 183,779
=========== ===========
The table below analyses the borrowings into relevant maturity
groupings based on the remaining period as at the condensed interim
consolidated statement of financial position date to the
contractual maturity date.
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Due:
6 months or less 178,994 182,016
6 - 12 months 3,562 1,763
1 - 2 years 8,705 9,346
2 - 5 years 31,056 25,959
More than 5 years 88,377 92,494
----------- -----------
310,694 311,578
=========== ===========
The annual interest rate on loans is as following:
30 June 31 December 2017
2018
USD'000 USD'000
(Unaudited) (Audited)
Kuwaiti Dinar with an annual interest rate 5.00% 4,75%
----------- ----------------
Bahraini Dinar with an annual interest rate 5.37% 5.25%
----------- ----------------
United States Dollar with an annual interest rate 6.53% 5.95%
----------- ----------------
Australian Dollar with an annual interest rate 4.85% 3.64%
----------- ----------------
Arab Emirates Dirham with an annual interest rate 6.38% 5.68%
----------- ----------------
Bank facilities are secured by Hotel Properties, Group's
corporate guarantees and letter of undertakings. There is no
material variance between the carrying value of loans and their
fair value.
The current borrowings in local currency is as follows:
30 June 31 December 30 June 31 December
Local 2018 2017 2018 2017
Currency Local Currency '000 In USD '000
US Dollar (USD) 22,809 23,336 22,809 23,336
Bahraini Dinar (BHD) 11,350 11,950 29,977 31,700
Kuwait Dinar (KWD) 150 100 495 331
Australian Dollar (AUD) 171,179 162,675 126,792 126,981
UAE Dirhams (AED) 9,120 5,250 2,483 1,431
------- -----------
182,556 183,779
======= ===========
The non-current borrowings in local currency is as follows:
30 June 30 June
Local 2018 31 December 2017 2018 31 December 2017
Currency Local Currency '000 In USD '000
US Dollar (USD) 73,178 75,851 73,178 75,851
Kuwait Dinar (KWD) 8,250 8,350 27,223 27,663
UAE Dirhams (AED) 101,879 89,193 27,737 24,285
------- ----------------
128,138 127,799
======= ================
At 30 June 2018, the Group has undrawn banking facilities of USD
25,473,000 (31 December 2017: USD 38,928,000) with commercial
banks. The facilities include short-term and long-term loans.
Unamortised arrangement fees and other transaction costs amount to
USD 4,035,000 (31 December 2017: USD 3,897,000).
During the period, the Group did not comply with certain terms
in certain loan agreements. The Group has not remedied this
non-compliance during the period-end and continues to classify
these loans amounting to USD 29,977,000 (2017: USD 28,517,000) as
current in accordance with IAS 1, Presentation of financial
statements. Up to the date of authorisation of this condensed
interim consolidated financial information for issue, the Group has
not received any notice for accelerated repayment of banking
facilities from any of its lenders.
As at and the year ended 31 December 2017, the Group did not
comply with certain terms of a loan agreement for entities in
Australia. However, this non-compliance was remedied before the
period-end date. Since, the Group is in process of entering into an
agreement to re-finance this loan, therefore, in accordance with
IAS 1, Presentation of financial statements, the Group has
reclassified these loans, amounting to USD 125,374,000 as
current.
11 Share capital and share premium account
Number of USD'000
Share capital shares
At 1 January 2017 (Audited) 147,637,195 24,102
----------- -------
At 31 December 2017 (Audited) 147,637,195 24,102
----------- -------
At 30 June 2018 (Unaudited) 147,637,195 24,102
----------- -------
USD'000
Share premium
At 1 January 2017 (Audited) 24,479
-------
At 31 December 2017 (Audited) 24,479
-------
At 30 June 2018 (Unaudited) 24,479
-------
The authorised share capital of the Company is GBP 40 million
divided into 400 million shares of 10 pence each. They entitle
holders to participate in dividends and to share proceeds of
winding up of the Company in proportion to the number and of
amounts paid on the shares held.
On 23 December 2013, the Company issued 47,637,195 new ordinary
shares at GBP 0.64 as part of its listing on the AIM division of
the London Stock Exchange.
12 Other reserves
Foreign
currency Share-based
Statutory Voluntary translation payment Merger
reserve reserve reserve reserve reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January
2017 (Audited) 4,507 2,907 (12,010) 828 (5,649) (9,417)
Transfers to
reserves - - - 4 - 4
Total comprehensive
income for the
year - - 5,474 - - 5,474
--------- --------- ------------ ----------- -------- ---------
At 31 December
2017 (Audited) 4,507 2,907 (5,536) 832 (5,649) (3,939)
========= ========= ============ =========== ======== =========
At 1 January
2018 (Audited) 4,507 2,907 (6,536) 832 (5,649) (3,939)
Total comprehensive
loss for the
period - - (4,987) - - (4,987)
--------- --------- ------------ ----------- -------- ---------
At 30 June 2018
(Unaudited) 4,507 2,907 (11,523) 832 (5,649) (8,926)
========= ========= ============ =========== ======== =========
13 Fair value measurements of non-current assets
The change in fair value measurements of hotels in operation for
the six-month period ended 30 June 2018 is considered by the
management to be immaterial. The change in fair value of investment
property is seen Note 7.
The Directors' believe that these valuations, on the basis of
current use, represent the highest and best use of the respective
assets. The valuation technique has remained unchanged from 31
December 2017 and the Directors of the Group review the valuation
process undertaken and consider whether it remains appropriate.
The Group uses the following hierarchy for determining the fair
value of assets and liabilities held at fair value 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
significant effect on the recorded fair value are observable,
either directly or indirectly; and
- Level 3: techniques which use inputs which have significant
effect on the recorded fair value that are not based on observable
market data.
The fair value measurements of property and equipment and
investment properties are classified as Level 3 in the fair value
hierarchy in their entirety, due to the fact that significant
unobservable inputs are used in arriving at an appropriate fair
value.
The fair value measurement is sensitive to changes in
unobservable inputs. The discount and yield rates used to establish
a net present value for each separately valued property are as
follows and if changed, could result in a materially different fair
value.
At 30 June At 31 December
2018 2017
(Unaudited) (Unaudited)
Discount rate: owned asset 7.8%-11.5% 7.8%-11.5%
------------ --------------
Exit yield 6.3% - 15.0% 6.3% - 15.0%
------------ --------------
The future forecast results represent an unobservable input for
each property. Each separate property valuation is directly
dependent on the forecast results and hence a significant/
sustained decrease in expected future results would result in a
similar proportional reduction in the fair value of the property.
Since there is no significant change in discount rate and exit
yield, the fair value of property and equipment remains as is as at
31 December 2017.
Fair value of investment property
At 30 June At 31 December
2018 2017
(Unaudited) (Unaudited)
Discount rate: owned asset 11% 10%
----------- --------------
RevPAR (in USD) 55- 95 71- 98
----------- --------------
14 Commitments
At 30 June 2018, the Group had entered into contractual
commitments for hotels under construction amounting to USD
34,398,000 (31 December 2017: USD 43,757,000).
15 Lease arrangements
(a) Operating lease arrangements
The Group leases land, building and office space under various
operating lease agreements. The remaining lease terms of the
majority of the leases are between one to twenty years and are
renewable at mutually agreed terms.
30 June 30 June
2018 2017
USD'000 USD'000
(Unaudited) (Unaudited)
Lease payments under operating leases recognised as an expense during the period 2,069 1,366
----------- -----------
At the condensed interim consolidated statement of financial
position date, the future minimum lease payments payable under
operating leases are as follows:
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Within one year 4,611 4,674
Between two and five years 17,355 17,550
After 5 years 72,208 74,688
----------- -----------
94,174 96,912
=========== ===========
(b) Finance lease arrangements
During 2016, the Group entered into a finance lease for a
property in the Kingdom of Saudi Arabia for a period of twenty
years. Management has determined that this lease should be
accounted for as finance lease. Accordingly, the Group recognised a
finance lease asset and a
liability amounting to USD 9,330,000 in 2016. At the condensed
interim consolidated statement of financial position date, the
commitments in relation to finance leases are payable as
follows:
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Within one year 644 610
Between two and five years 2,813 2,778
After 5 years 11,339 11,712
----------- -----------
Minimum lease payments 14,796 15,100
Future finance charges (6,265) (6,147)
----------- -----------
8,531 8,953
=========== ===========
The present value of finance lease liabilities is as
follows:
30 June 31 December
2018 2017
USD'000 USD'000
(Unaudited) (Audited)
Within one year 533 518
----------- -----------
Between two and five years 2,059 2,085
After 5 years 5,939 6,350
----------- -----------
7,998 8,435
----------- -----------
8,531 8,953
=========== ===========
16 Seasonality of operations
Due to the seasonal nature of the hospitality business, higher
revenues and operating profits are usually expected in the second
half of the year than the first six months.
17 Events after reporting period
On 24 September 2018, the Board of Action Hotels announced that,
at the Court Meeting and the General Meeting held on the same day,
in connection with the recommended acquisition by Action Real
Estate Co KSCC ("Action Real Estate") of the entire issued and to
be issued ordinary share capital of Action Hotels, to be effected
by way of a scheme of arrangement under Article 125 of the Jersey
Companies Law (the "Scheme"), all of the resolutions proposed were
duly passed.
At the Court Meeting, a majority in number of Scheme
Shareholders, who voted (either in to person or by proxy) and who
together represented over 3/4th of the voting rights of Scheme
Shareholders who are on the Company's register of members at the
Voting Record Time, voted in favour of the resolution to approve
the Scheme. The resolution was accordingly passed.
At the General Meeting, the requisite majority of Action Hotels
Shareholders voted (either in to person or by proxy) to pass the
Special Resolutions in connection with:
i) amending the Articles to give authority to the directors to
take all such actions as may be necessary to implement the Scheme;
and
ii) the de-listing of the Action Hotels Shares from the AIM Market.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR KDLFLVKFFBBB
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September 28, 2018 02:02 ET (06:02 GMT)
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