REG - Livermore Inv. Group - Annual Financial Report <Origin Href="QuoteRef">AUIV.L</Origin> - Part 2
26/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSZ2915Ga
consolidated financial statements and our
auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
Independent Auditor's Report to the Members of Livermore Investments Group Limited (continued)
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors for the consolidated Financial Statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISA, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
· Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's
internal control.
Independent Auditor's Report to the Members of Livermore Investments Group Limited (continued)
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Board of Directors.
· Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to
continue as a going concern.
· Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner
that achieves a true and fair view.
· Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the
audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Independent Auditor's Report to the Members of Livermore Investments Group Limited (continued)
Other Matter
This report, including the opinion, has been prepared for and only for the Company's members as a body and for no other
purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to
whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's report is Mr Nicos Mouzouris.
Nicos MouzourisCertified Public Accountant and Registered Auditorfor and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered Auditors
Limassol, 25 May 2017
Livermore Investments Group Limited
Consolidated Statement of Financial Position as at 31 December 2016
Note 2016 2015
Assets US $000 US $000
Non-current assets
Property, plant and equipment - 26
Available- for-sale financial assets 4 - 78,464
Financial assets at fair value through profit or loss 5 81,769 1,533
Financial assets at fair value through other comprehensive income 6 5,634 -
Investment property 9 - 123,324
Investments in subsidiaries 11 5,252 -
Trade and other receivables 13 2,513 1,128
--------- ---------
95,168 204,475
Current assets --------- ---------
Trade and other receivables 13 5,427 4,490
Available- for-sale financial assets 4 - 2,683
Financial assets at fair value through profit or loss 5 20,318 8,268
Financial assets at fair value through other comprehensive income 6 1,039 -
Current tax asset - 6
Cash at bank 14 60,383 25,770
--------- ---------
87,167 41,217
--------- ---------
Total assets 182,335 245,692
--------- ---------
Equity
Share capital 15 - -
Share premium and treasury shares 15 169,187 177,053
Other reserves (39,842) 2,631
Retained earnings 27,829 (31,047)
--------- ---------
Total equity 157,174 148,637
--------- ---------
Liabilities
Non-current liabilities
Bank loans 18 - 75,003
Deferred tax 12 - 3,937
Provisions 32 - 385
--------- ---------
- 79,325
Current liabilities --------- ---------
Bank loans 18 - 1,407
Bank overdrafts 19 1,160 13,208
Trade and other payables 20 8,616 2,770
Provisions 32 385 128
Dividend payable 21 15,000 -
Derivative financial instruments 17 - 217
--------- ---------
25,161 17,730
--------- ---------
Total liabilities 25,161 97,055
--------- ---------
Total equity and liabilities 182,335 245,692
--------- ---------
Net asset value per share
Basic and diluted net asset value per share (US $) 22 0.90 0.77
--------- ---------
These consolidated Financial Statements were approved by the Board of Directors on 25 May 2017. The notes 1
to 37 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2016
Note 2016 2015
US $000 US $000
Continuing operations
Investment income
Interest and dividend income 25 26,334 25,675
Profit / (loss) on investments 26 1,695 (33,955)
------ ------
Gross profit / (loss) 28,029 (8,280)
Other income - 35
Administrative expenses 27 (7,888) (4,749)
------ ------
Operating profit / (loss) 20,141 (12,994)
Finance costs 28 (218) (1,114)
------ ------
Profit / (loss) before taxation 19,923 (14,108)
Taxation charge 29 (38) (15)
------ ------
Profit / (loss) for the year from continuing operations 19,885 (14,123)
Discontinued operation
Profit for the year on discontinued operations 23 14,091 9,364
------ ------
Profit / (loss) for the year 33,976 (4,759)
------ ------
Earnings per share
Basic and diluted earnings per share ( US $)
- From continuing operations 30 0.11 (0.07)
- On discontinued operations 30 0.08 0.05
------ ------
0.19 (0.02)
------ ------
The profit / (loss) for the year (both from continuing and discontinued operations) is wholly attributable to the owners of
the parent.
The notes 1 to 37 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2016
Note 2016 2015
US $000 US $000
Profit / (loss) for the year 33,976 (4,759)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Available for sale financial assets - fair value losses - (34,906)
Foreign exchange gains / (losses) from translation of subsidiaries 190 (314)
------ ------
34,166 (39,979)
------ ------
Items that are not reclassified subsequently to profit or loss
Financial assets designated at fair value through other comprehensive income - fair value losses (4,301) -
------ ------
Reclassification to profit or loss
Available for sale financial assets
- Reclassification to profit or loss due to disposals 26 - 3,459
- Reclassification to profit or loss due to impairment 26 - 31,726
Foreign exchange losses reclassified on disposal of subsidiary 23 1,538 -
------ ------
1,538 35,185
------ ------
Total comprehensive income for the year 31,403 (4,794)
------ ------
The total comprehensive income for the year is wholly attributable to the owners of the parent.
The notes 1 to 37 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2016
Note Sharecapital Sharepremium Treasury Shares Shareoption reserve Translation reserve Investments revaluation reserve Retained earnings Total
US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Balance at 1 January 2015 - 215,499 (36,902) 5,777 (1,414) (1,426) (21,560) 159,974
------ ------ ------ ------ ------ ------ ------ ------
Purchase of own shares - - (1,544) - - - - (1,544)
Dividends - - - - - - (4,999) (4,999)
Transfer on expiry of options 16 - - - (271) - - 271 -
------ ------ ------ ------ ------ ------ ------ ------
Transactions with owners - - (1,544) (271) - - (4,728) (6,543)
------ ------ ------ ------ ------ ------ ------ ------
Loss for the year - - - - - - (4,759) (4,759)
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses - - - - - (34,906) - (34,906)
- Reclassification to profit or loss due to disposals 26 - - - - - 3,459 - 3,459
- Reclassification to profit or loss due to impairment 26 - - - - - 31,726 - 31,726
Foreign exchange losses arising from translation of subsidiaries - - - - (314) - - (314)
------ ------ ------ ------ ------ ------ ------ ------
Total comprehensive income for the year - - - - (314) 279 (4,759) (4,794)
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31 December 2015 - 215,499 (38,446) 5,506 (1,728) (1,147) (31,047) 148,637
Adjustment on initial application of IFRS 9 3.1 - - - - - (34,471) 34,471 -
------ ------ ------ ------ ------ ------ ------ ------
As restated - 215,499 (38,446) 5,506 (1,728) (35,618) 3,424 148,637
------ ------ ------ ------ ------ ------ ------ ------
Purchase of own shares - - (7,866) - - - - (7,866)
Dividends - - - - - - (15,000) (15,000)
Transfer on expiry of options 16 - - - (5,429) - - 5,429 -
------ ------ ------ ------ ------ ------ ------ ------
Transactions with owners - - (7,866) (5,429) - - (9,571) (22,866)
------ ------ ------ ------ ------ ------ ------ ------
Profit for the year - - - - - - 33,976 33,976
Other comprehensive income:
Financial assets at fair value through OCI- Fair value losses - - - - - (4,301) - (4,301)
Foreign exchange gains arising from translation of subsidiaries - - - - 190 - - 190
Foreign exchange losses reclassified on disposal of subsidiary 23 - - - - 1,538 - - 1,538
------ ------ ------ ------ ------ ------ ------ ------
Total comprehensive income for the year - - - - 1,728 (4,301) 33,976 31,403
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31 December 2016 - 215,499 (46,312) 77 - (39,919) 27,829 157,174
------ ------ ------ ------ ------ ------ ------ ------
The notes 1 to 37 form part of these consolidated financial statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2016
Cash flows from operating activities
(Loss) / profit before tax 19,923 (13,731)
Adjustments for
Depreciation 7 16
Provision charge 32 - 513
Interest expense 28 216 267
Interest and dividend income 25 (26,334) (25,675)
Gain / (Loss) on investments 26 (1,695) 33,955
Exchange differences (243) 558
---------- ----------
(8,126) (4,097)
Changes in working capital
Decrease in trade and other receivables* 24,486 17,053
Increase in trade and other payables* 4,251 649
---------- ----------
Cash flows from operations 20,611 13,605
Interest and dividends received 26,561 25,969
Settlement of litigation 32 (128) -
Tax paid (39) (18)
---------- ----------
Net cash from operating activities 47,005 39,556
---------- ----------
Cash flows from investing activities
Proceeds from disposal of subsidiary - net of cash and cash equivalents disposed 23 31,752 -
Acquisition of investments (37,039) (32,415)
Proceeds from sale of investments 14,462 13,679
Settlement of derivative (148) 2,332
Acquisition of associate 10 - (7,500)
Capital return of associate - 8,183
---------- ----------
Net cash used for investing activities 9,027 (15,721)
---------- ----------
Cash flows from financing activities
Purchase of own shares 15 (7,866) (1,544)
Interest paid (331) (390)
Dividends paid - (4,999)
---------- ----------
Net cash used for financing activities (8,197) (6,933)
---------- ----------
Net increase / (decrease) in cash and cash equivalents: - from continuing operations 47,835 16,902
- of discontinued operations 23 826 2,332
Cash and cash equivalents at the beginning of the year 12,562 (6,548)
Exchange differences on cash and cash equivalents (245) (124)
Cash and cash equivalent of subsidiaries, removed on change in investment entity status 2.1 (1,755) -
---------- ----------
Cash and cash equivalents at the end of the year 14 59,223 12,562
---------- ----------
Cash and cash equivalents at the end of the year
14
59,223
12,562
----------
----------
*other than movements on change in investment entity status
The notes 1 to 37 form part of these consolidated financial statements.
Notes on the Financial Statements
1. General Information
Incorporation, principal activity and status of the Company
1.1. The Company was incorporated as an international business company and registered in the British Virgin Islands (BVI)
on 2 January 2002 under IBC Number 475668 with the name Clevedon Services Limited. The liability of the members of the
Company is limited.
1.2. The Company changed its name to Empire Online Limited on 5 May 2005 and then to Livermore Investments Group Limited
on 28 February 2007.
1.3. The principal activity of the Company changed to investment activities on 1 January 2007. Before that the principal
activity of the Company was the provision of marketing services to the online gaming industry and, since 1 January 2006,
the operation of online gaming.
1.4. The principal legislation under which the Company operates is the BVI Business Companies Act, 2004.
1.5. The registered office of the Company is located at Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin
Islands.
2. Basis of preparation
The consolidated financial statements of Livermore Investments Group Limited have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the European Union and on a going concern basis. The
consolidated financial statements have been prepared on an accrual basis (other than for cash flow information) using the
significant accounting policies and measurement bases summarised in note 3, and also on a going concern assumption.
The financial information is presented in US dollars because this is the currency in which the Company primarily operates.
The Directors have reviewed the accounting policies used by the Company and consider them to be the most appropriate.
2.1. Investment entity status
On 28 October 2016, Livermore disposed to a third party the 100% of the shares of its subsidiary Livermore Investments AG
in Switzerland, and as a result discontinued its investment property activities that constituted an operating segment of
the Group (notes 23 and 24). The Directors have determined that since the discontinuance of its investment property
activities, Livermore meets the definition of an investment entity, as this is defined in IFRS 10 "Consolidated Financial
Statements". As per IFRS 10 an investment entity is an entity that:
(a) obtains funds from one or more investors for the purpose of providing those investors with investment management
services;
(b) commits to its investors that its business purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
(c) measures and evaluates the performance of substantially all of its investments on a fair value basis.
In accordance with IFRS 10, an investment entity is exempted from consolidating its subsidiaries, unless any subsidiary
which is not itself an investment entity mainly provides services that relate to the investment entity's investment
activities.
In Livermore's situation, none of its subsidiaries provides such services.
Given the above, these financial statements consolidate the Company's subsidiaries up to 28 October 2016. As of that date,
the subsidiaries have been de-consolidated, and recognised as Investments in subsidiaries at their fair value as at 28
October 2016 (note 11). No material gains or losses occurred on this transition.
3. Accounting Policies
The significant accounting policies applied in the preparation of the consolidated financial statements are as follows:
3.1. Adoption of new and revised IFRS
As from 1 January 2016, the Company adopted all the new or revised IFRS and relevant amendments which became effective and
also were endorsed by the European Union, and are relevant to its operations.
The adoption of the above did not have a material effect on the consolidated financial statements.
In addition to the above, the Company has elected to apply IFRS 9 "Financial Instruments" as issued in July 2014, earlier
than its effective date, because the new accounting policies reflect better the Company's business model and provide more
reliable and relevant information for its users to assess the amounts and timing of future cash flows.
IFRS 9 replaces IAS 39 ''Financial Instruments: Recognition and Measurement''. The new standard introduces extensive
changes to IAS 39's guidance on the classification and measurement of financial assets and introduces a new 'expected
credit loss' model for the impairment of financial assets.
The date of the initial application of IFRS 9 is 1 January 2016. In accordance with the transitional provisions in IFRS 9
(par 7.2.15), comparative figures have not been restated, and therefore are presented in accordance with the previously
applied policies in accordance with IAS 39.
The most significant impact of the adoption of IFRS 9, was on the classification and measurement of the Company's financial
assets. The Directors have reviewed the classification and measurement of the Company's financial assets based on the new
criteria that consider the assets' contractual cash flows and the business model in which they are managed, and determined
that:
· Financial assets previously classified as "financial assets at amortised cost", shall remain in this same category.
· Financial assets previously classified as "financial assets at fair value through profit or loss", shall remain in
this same category.
· Financial assets previously classified as "available-for-sale" shall be reclassified as "financial assets at fair
value through profit or loss". However, the Directors on initial application date have made an irrevocable election to
designate certain equity investments that are not held for trading, which were previously classified as
"available-for-sale", as "financial assets at fair value through other comprehensive income".
The impact of the adoption of IFRS 9 is summarized as follows:
31 December 2016 1 January 2016
US $000 US $000
Reclassification out of Available-for-sale financial assets (95,566) (81,147)
Reclassification to Financial assets at fair value through profit or loss 85,429 67,196
Designated as Financial assets at fair value through other comprehensive income 10,137 13,951
------ ------
Net assets impact - -
------ ------
Adjustment to Retained earnings 34,832 34,471
Adjustment to Investments revaluation reserve (34,832) (34,471)
------ ------
Equity impact - -
------ ------
Also, the profit or loss for the year 2016 is higher by USD 3.669m (representing an increase of USD 0.02 on basic and
diluted earnings per share for 2016) due to the adoption of IFRS 9. This is mostly attributable to the fact that the
additional fair value losses recognised in profit or loss are less than the impairment losses on available-for-sale
financial assets that would have been recognised based on IAS 39.
The adoption of IFRS 9 did not have any significant impact on the Company's financial liabilities.
The following Standards, Amendments to Standards and Interpretations had been issued by the date of authorisation of these
consolidated financial statements but are not yet effective (nor early adopted), or have not yet been endorsed by the EU,
for the year ended 31 December 2016:
Endorsed by the EU Effective (IASB) for annual periods beginning on or after
· IFRS 14: "Regulatory Deferral Accounts" No 1 January 2016
· IFRS 15: "Revenue from Contracts with Customers" Yes 1 January 2018
· IFRS 16: "Leases" No 1 January 2019
· IFRIC 22: "Foreign Currency Transactions and Advance Consideration" No 1 January 2018
· Annual Improvements to IFRS 2014-2016 Cycle No 1 January 2017 / 2018
· Amendment to IFRS 2: "Classification and Measurement of Share-based Payment Transactions" No 1 January 2018
· Amendments to IFRS 4: "Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts" No 1 January 2018
· Amendment to IFRS 10, and IAS 28: "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" No to be determined
· Clarifications to IFRS 15: "Revenue from Contracts with Customers" No 1 January 2018
· Amendment to IAS 7: "Disclosure Initiative" No 1 January 2017
· Amendment to IAS 12: "Recognition of Deferred Tax Assets for Unrealised Losses" No 1 January 2017
· Amendment to IAS 40: "Transfers of Investment Property" No 1 January 2018
The Board of Directors expects that when the above Standards or Interpretations become effective in future periods, they
will not have a material effect on the financial statements.
3.2. Basis of consolidation (policy applied up to 28 October 2016 - refer to note 2.1)
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiaries.
Control is achieved where the Company is exposed, or has right, to variable returns from its involvement with a subsidiary
and has the ability to affect those returns through its power over the subsidiary.
The financial statements of all the Group companies are prepared using uniform accounting policies. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by the Group. All subsidiaries have a reporting date of 31 December.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The results and cash flows of any subsidiaries acquired or disposed of during the year are included in the consolidated
financial statements from the effective date of acquisition or up to the effective date of disposal.
3.3. Investments in subsidiaries (policy applied since 28 October 2016 - refer to note 2.1)
Subsidiaries are entities controlled either directly or indirectly by the Company.
Investments in subsidiaries are initially recognised at their fair value and subsequently measured at fair value through
profit or loss. Subsequently, any gains or losses arising from changes in their fair value are included in profit or loss
for the year.
Dividends and other distributions from subsidiaries are recognised as income when the Company's right to receive payment
has been established.
A subsidiary which provides services that relate to the Company's investment activities is consolidated rather than
included within the investments in subsidiaries measured at fair value through profit or loss.
3.4. Investments in associates and joint ventures
An associate is an entity over which the Company is able to exert significant influence but not control.
A joint venture is an arrangement that the Company controls jointly with one or more other investors, and over which the
Company has rights to a share of the arrangement's net assets rather than direct rights to underlying assets and
obligations for underlying liabilities.
Investments in associates and joint ventures are measured at fair value through profit or loss in accordance with IAS 39,
based on the exemption available by IAS 28 "Investments in Associates and Joint Ventures" for entities that are venture
capital organisations or similar entities.
Dividends and other distributions from associates and joint ventures are recognised as income when the Company's right to
receive payment has been established.
3.5. Current assets are those which, in accordance with IAS 1 Presentation Of Financial Statements are:
• expected to be realised within normal operating cycle, via sale or consumption, or
• held primarily for trading, or
• expected to be realised within 12 months from the reporting date, or
• cash and cash equivalent not restricted in their use.
All other assets are non-current.
3.6. Investment property income
Rental income is recognised on a straight line basis over the lease term. Service charges and management fees are
recognised as the related costs are incurred and charged. Changes to rental income that arise from reviews to open market
rental values or increases that are indexed linked on a periodic basis are recognised from the date on which the adjustment
becomes due. Lease incentives granted are recognised as an integral part of the net consideration for the use of the
property. Lease incentives are allocated evenly over the life of the lease. Rental income and services charged are stated
net of VAT and other related taxes.
3.7. Interest and dividend income
· Interest income is recognised based on the effective interest method.
· Dividend income is recognised on the date that the Company's right to receive payment is established, which in the case
of quoted securities is the ex-dividend date.
3.8. Foreign currency
The individual financial statements of each group company are presented in the currency of the primary economic environment
in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and
financial position of each group company are expressed in USD, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
Transactions in foreign currencies other than each group entity's functional currency are recorded at the rates of exchange
prevailing on the dates of the transaction. Monetary assets and liabilities denominated in non-functional currencies are
translated into functional currency equivalents using year-end spot foreign exchange rates. Non-monetary assets and
liabilities are translated upon initial recognition using exchange rates prevailing at the dates of the transactions.
Non-monetary assets that are measured in terms of historical cost in foreign currency are not re-translated.
Gains and losses arising on the settlement of monetary items and on the re-translation of monetary items are included in
the profit or loss for the year. Those that arise on the re-translation of non-monetary items carried at fair value are
included in the profit or loss of the year except for differences arising on the re-translation of non-monetary
available-for-sale financial assets in respect of which gains and losses are recognised in other comprehensive income. For
such non-monetary items any exchange component of that gain or loss is also recognised in other comprehensive income.
The results and financial position of all group entities that have a functional currency different from US dollars are
translated into the presentation currency as follows:
(i) assets and liabilities are translated at the closing rate at the reporting date; and
(ii) income and expenses and also cash flows are translated at an average exchange rate (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case the items
are translated at the rates prevailing at the dates of the transactions); and
(iii) exchange differences arising are recognised in other comprehensive income within the translation reserve. Such
translation exchange differences are reclassified to profit or loss in the period in which the foreign operation is
disposed of.
3.9. Taxation
Current tax is the tax currently payable based on taxable profit for the year in accordance with the tax laws applicable in
jurisdictions where the Group operates.
Deferred taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be
controlled by the group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses
available to be carried forward as well as other income tax credits to the group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted as at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense within profit or loss, except
where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also
charged or credited directly to equity.
3.10. Investment property
Investment properties are measured initially at cost, and thereafter are stated at fair value, which reflects market
conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are
included in the profit or loss in the year in which they arise.
3.11. Equity instruments
Equity instruments issued by the Company are recorded at proceeds received, net of direct issue costs.
Own equity instruments purchased by the Company or its subsidiaries are recorded at the consideration paid, including
directly associated costs, and they are deducted from total equity as treasury shares until they are sold or cancelled.
Where such shares are subsequently sold, any consideration received is included in total equity.
The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from the premium received.
3.12. Share Options
IFRS 2 "Share-based Payment" requires the recognition of equity settled share based payments at fair value at the date of
grant.
The Company issues equity-settled share based payments to certain employees. The fair value of share-based payments to
employees at grant date is measured using the Binomial pricing model.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the
Company's estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting
conditions. The corresponding credit is taken to the share option reserve.
On exercise of the options any related amounts recognised in the share option reserve are transferred to share premium.
On lapse of the options any related amounts recognised in the share option reserve are transferred to retained earnings.
3.13. Borrowing costs
Borrowing costs primarily comprise interest on the Group's borrowings. Any borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets are added to the cost of the corresponding assets until such
time as the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed in the
period in which they are incurred and reported within "finance costs".
No borrowing costs have been capitalised for either 2016 or 2015.
3.14. Financial assets (policy applied as from 1 January 2016 - refer to note 3.1)
Financial assets are recognised when the Company becomes a party to the contractual provisions of the financial
instrument.
A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the
financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred or the Company retains the contractual
rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition if the Company transfers substantially all
the risks and rewards of ownership of the asset, or if the Company neither retains nor transfers substantially all the
risks and rewards of ownership but does transfer control of that asset.
The Company classifies its financial assets in the following measurement categories:
(a) those to be measured at fair value (either through other comprehensive income, or through profit or loss), and
(b) those to be measured at amortised cost.
The classification depends on the entity's business model for managing the financial assets and the contractual terms of
the cash flows. Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at fair value through profit or loss
The Company classifies the following financial assets at fair value through profit or loss:
(a) equity investments that are held for trading;
(b) other equity investments for which the Directors have not elected to recognise fair value gains and losses through
other comprehensive income; and
(c) debt investments that do not qualify for measurement at either amortised cost or at fair value through other
comprehensive income.
All financial assets within this category are measured at their fair value, with changes in value recognised in the profit
or
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