Final Results

17 January 2017

This announcement contains inside information 

Elegant Hotels Group plc

Full Year Results Statement

A solid performance against a backdrop of challenging market conditions

Elegant Hotels Group plc ("Elegant Hotels" or the "Company" or the "Group"), the owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados, today announces its results for the year ended 30 September 2016.

Highlights

· Revenue down 5.2% to $57.0 million (2015: $60.1 million)

· RevPAR down 6.7% to $238 (2015: $255)

· ADR (average daily rates) up 1.3% to $378 (2015: $373)

· Adjusted EBITDA: down 11.6% to $19.6 million (2015: $22.2 million)

· Adjusted operating profit: down 14.5% to $16.3 million (2015: $19.1 million)

· Adjusted EPS of 13.1 cents per share (2015: 14.7 cents per share)

· Successful acquisition, refurbishment and reopening of Waves Hotel & Spa in Barbados

· Signed management contract in November for Hodges Bay Resort & Spa in Antigua, the Group's first property outside Barbados

· Year-end net debt of $61.8 million (2015: $40.8 million)

· Proposed final dividend of 3.5 pence per share, resulting in a full year dividend of 7.0 pence per share

Commenting on the results, Sunil Chatrani, CEO of Elegant Hotels, said:

"Against a backdrop of challenging market conditions, the Group has delivered a solid performance and made good progress in key areas during the year. We have significantly expanded our business, both through the acquisition of Waves Hotel & Spa in Barbados and the management contract that we recently signed on a property in Antigua. Despite the current challenges that the Group and the wider Barbados luxury hotel market are facing, we continue to be confident in our long term growth prospects and remain committed to our expansion strategy in both Barbados and across other parts of the Caribbean."

Analyst Conference call

A conference call for analysts with the Company's management team will take place at 9.00am (GMT) today, the details of which are as follows:

For further information

NOTES TO EDITORS:

Elegant Hotels owns and operates six luxury hotels and a beachfront restaurant, Daphne's, on the island of Barbados. The Group's portfolio comprises 553 rooms, making it twice as large (by room number) as the closest competitor in the Barbados luxury hotel room market. Five of the six properties are situated along the prestigious west coast of Barbados commonly known as the "Platinum Coast". The properties are all freehold, with a total aggregate plot size of approximately 22 acres and an aggregate beachfront of 2,500 feet. In the year ended 30 September 2016, the Group achieved revenues of $57.0 million and EBITDA before non-recurring items of $19.6 million.

Together, the Group's six existing hotels - Colony Club, Tamarind, The House, Crystal Cove, Turtle Beach and Waves Hotel & Spa - offer styles encompassing classic and contemporary, family-friendly and adults-only.

The Group's shares were admitted to trading on the London Stock Exchange's AIM in May 2015. Its objective now is to leverage its position as a leading hotel operator in Barbados and to expand both on Barbados and further into the Caribbean, as exemplified by its recent signing of a management contract with Hodges Bay Resort & Spa in Antigua.

Investor website: http://www.eleganthotelsgroup.com

Commercial website: http://www.eleganthotels.com 

BUSINESS REVIEW

Revenue and demand

Revenue of $57.0 million for the financial year ended 30 September 2016 represents a decrease of 5.2% over the previous year (2015: $60.1 million). Our first half of the financial year performance was encouraging. Our strategy of driving rates, while holding occupancy levels relatively stable, worked well. However, we experienced a decline in demand in the second half of the year (March to September 2016) which the Board believes is a result of the recent weakening of sterling and the fact that our holidays are priced in US dollars.

For the financial year as a whole, Average Daily Rates (ADR) have grown by 1.3% from $373 in 2015 to $378 in 2016, with occupancy falling by 5.5 percentage points to 62.9% and Revenue per Available Room (RevPar) falling by 6.7% to $238.

When demand is high the Group has managed yields by maintaining headline prices and reducing discounts. The Group was able to hold its rates during the peak winter trading months as demand for luxury holidays in Barbados held up well.

The Group took steps to mitigate the decline in demand in the second half of the year through promotional activity and appropriate special offers in addition to expanding the sales team in the US and the UK.

Colony Club delivered a record year with RevPAR up 3%, providing further evidence that our strategy of refurbishing, repositioning and repricing our hotels is working. All of our other hotels were affected by the tougher market conditions in the second half of the year.

Turtle Beach began to recover from the disruption of the refurbishment works at the neighbouring hotel, which affected bookings last year. However, the hotel still experienced a decline in RevPAR of 8%. Similarly, The House, Tamarind and Crystal Cove, saw RevPAR declines of 8%, 11% and 6% respectively, primarily due to a decrease in occupancy. We expect The House, Turtle Beach and Tamarind to benefit from some targeted refurbishment expenditure next year. Daphne's restaurant, which sits between Tamarind and The House, was also negatively impacted by the declines in occupancy at both properties.

Arrivals to Barbados from the UK and the US, which are the key markets for customers in our hotels, rose by 2.2% and 11.5% respectively for the 2016 calendar year up to the end of October. However, while visitor numbers and airlift to the island have continued to increase, demonstrating good underlying growth in demand for Barbados as a holiday destination, most of that growth has recently been in the villa rental segment and at the lower-cost end of the hotel market. Data from Barbados Tourism Marketing Inc. shows that, for the first six months of calendar 2016, demand for luxury accommodation from the UK decreased by 6.6%, while overall arrivals increased by 5.6%.

Longer term, customer demand is expected to continue to be bolstered by recent increases in airlift to the island. Throughout winter 2016 and running into 2017 there have been additional flights from JetBlue, Delta and British Airways. Extra services will be running from Atlanta, Toronto and Montreal, and new routes from continental Europe, via Condor from Munich and Air France from Paris, should also serve to boost visitor numbers to Barbados.

Elegant's ability to manage yield is assisted by stronger negotiating positions with tour operators than most of our competitors. This is partly because, with six hotels on the island, we are by far the largest hotel operator on Barbados; but also because we benefit from the expertise of our specialised revenue team based in Florida.

Profitability

Group operating profit before exceptional items and the bargain purchase gain decreased by 14.5% to $16.3 million (2015: $19.1 million). Adjusted EBITDA (EBITDA before exceptional items and the bargain purchase gain on Waves) decreased by 11.6% to $19.6 million (2015: $22.2 million). Adjusted EBITDA margin was lower at 34.4%, reflecting the decline in revenue and increased central costs (2015: 36.9%).

Our most recent addition to the portfolio, Waves, had a 'soft opening' in August and, as is normal when a hotel initially opens, incurred a small EBITDA loss of $0.3m. Demand for Waves is growing well and the Board is confident about its outlook and future.

The Group continues to focus closely on cost control through its increasingly centralised functions that serve all the properties. The aim of these central functions is to reduce costs while not compromising on the quality of the properties or customer service. For example, procurement and accounting have been working in conjunction with the engineering team to introduce more efficient air-conditioning units across the portfolio to reduce the Group's cost of electricity. The procurement department is also working towards a programme of direct importation that should combine with the Group's on-island supplier relationships to lower food and beverage unit costs.

In the current financial year, our operational improvements have been offset by an increase in the Group's central costs. There have been two major drivers of this increase:

· Firstly, costs associated with being a publicly listed company. The IPO of Elegant Hotels occurred in May 2015 so in the 2016 financial year the Group bore the costs associated with being a public company for a full 12 months versus only about one third of that period in the prior year; and

· Secondly, Elegant Hotels has added to its central structure in order to position the Group for growth. The 192 rooms that will be added to Elegant Hotels' portfolio as a result of the Waves acquisition and the Hodges Bay management contract represent a 40% increase in rooms since the IPO. The Board believes that the longer term benefits from these and future additions to the portfolio justify the extra cost base that has been required to establish a platform for growth. The head office team has been strengthened across the areas of finance, operational management and marketing. This has increased central costs in advance of revenue.

Basic and diluted earnings per share were 15.5 cents (2015: 7.2 cents). On an adjusted basis (excluding exceptional costs and the bargain purchase gain associated with the acquisition of Waves, together with the associated tax impact), and reflecting the total shares in issue - basic earnings per share were 13.1 cents (2015: 14.7 cents) and diluted earnings per share were 13.1 cents (2015: 14.6 cents).

Expansion strategy

In March 2016, the Group announced that it had acquired Waves Hotel & Spa ("Waves"), its first acquisition since becoming a public company last year. Waves has been independently valued at $22 million by Terra Caribbean. The difference of approximately $4.0 million between the total consideration and the fair value of the assets is shown as a gain on acquisition in the income statement. This gain has been excluded from the calculation of the adjusted EBITDA of the Group.

Waves is a four star, 70-bedroom all-inclusive resort located at Prospect Bay in the parish of St. James in Barbados. It has a prime beachfront location on the popular west coast, or "Platinum Coast", of the island and is close to a number of popular tourist destinations including the areas of Holetown and Bridgetown. The hotel occupies approximately 1.8 acres of freehold land on a beachfront of 178 feet and its facilities include two restaurants, a bar, a coffee shop, a gym and a destination spa with eight treatment rooms.

Waves was closed in mid-April 2016, fully refurbished at a cost of approximately $5.6m, and re-opened in August 2016. Occupancy for the 2017 financial year is expected to exceed initial estimates and the property has been well received by guests and tour operators alike. As forecasted in the development plan, Waves lost $0.3 million of EBITDA during its initial opening period. The Group expects Waves to be EBITDA positive for the year ending 30 September 2017 with profitability growing further in the 2018 financial year and beyond.

In November 2016, the Group signed its first management contract to bring Hodges Bay, a 122-room luxury hotel in Antigua into the Elegant Hotels portfolio. The hotel is currently under construction and is expected to open its doors in mid to late 2017. This will be Elegant Hotels' first property outside Barbados. It is expected to be earnings enhancing in the 2018 financial year. The Board believes that management contracts of this kind represent a compelling opportunity to expand beyond Barbados, given they require far less capital investment than full ownership, and is therefore considering a number of other similar targets.

The 192 rooms that will be added to Elegant Hotels' portfolio as a result of the Waves acquisition and the Hodges Bay management contract represent a 40% increase in available rooms (from 483 to 675) since the Company's admission to AIM in May 2015.

The Board believes that acquisitions and management agreements, both on Barbados and in other parts of the Caribbean, will be key to the long-term growth of Elegant Hotels - and therefore remains firmly committed to its long-term expansion strategy.

Key Performance Drivers

Guest experience: Elegant's core philosophy and strategy are unchanged. We recognise that everything starts and ends with the guest experience we provide. Refurbishing, repositioning and re-pricing our existing portfolio remains a key part of our strategy of continual improvement, and we plan to invest approximately $1.5 million in the next financial year on our existing hotels, over and above the usual 4% of Group revenue that we allocate for regular furniture, fixtures and equipment (FF&E) and our regular maintenance expenditure at each property.

Rate and occupancy: We believe the current decline in demand requires us to continue to tactically manage our rates day-to-day in order to maintain occupancy and maximise RevPAR, a task our specialised revenue team in Florida is well equipped for. Taking into account the Group's booking patterns (current and historic), competitor pricing and flight availability, the team develops tactical offers, value-added offers and promotional sales and marketing programmes. In higher demand seasons, such as the extremely busy Christmas and New Year periods, we continue to be disciplined and cautious with any discounting.

Cost control: The largest component of cost in almost any hospitality business is labour. Given fluctuations in occupancy during the 2016 financial year this has been a major focus for the Group. Each hotel has a 'labour grid programme' to provide discipline in manning levels. For each hotel, there is a defined manning programme that varies with forecast occupancy every week and is strictly applied. The forecasts are also fed through to the procurement team to improve control, the competitive bid process and to reduce wastage. Central corporate costs have risen in the year for two reasons; the increased costs of being a listed company (Elegant Hotels was public for only about four months of the prior financial year); and the costs associated with positioning the Group for growth.

Expansion: Our strategy is focused on driving long-term growth from expanding the Group further through acquisitions both on Barbados and in other parts of the Caribbean. Following the successful acquisition of Waves in Barbados and the signing of the Hodges Bay management agreement in Antigua, the team continues to work actively on a number of other opportunities.

Dividend

The Board is recommending to shareholders at its Annual General Meeting a final dividend of 3.5 pence per share. Together with the interim dividend of 3.5 pence per share, this equates to a total dividend of 7.0 pence per share for the 2016 financial year. The final dividend is subject to the approval of the Company's shareholders and will be paid on 8 March 2017 to shareholders on the register on 27 January 2017. The Company's ordinary shares will become ex-dividend on 26 January 2017.

It is the Board's intention to maintain the current dividend policy. As always, this will be subject to the discretion of the Board and to the Company having sufficient distributable reserves.

People and Board

The success of Elegant Hotels is down to its people. Each member of staff in every property plays their part in making sure our guests enjoy the best possible experience. Our back office teams in Barbados and in Florida support the hotels in doing this. They have also been instrumental in integrating the Waves acquisition into the portfolio.

We have made a number of changes to our head office team. We welcome Jeff Singleton as interim Chief Financial Officer. We would like to thank our previous Chief Financial Officer, Richard Jones, for his efforts and wish him well in the future. Further, we would like to congratulate Gayle Tamla on her promotion to Group Operations Director.

During the year, our team's dedication to quality and service has been reflected in numerous awards that each of the hotels has received. Most recently, Elegant won the Sales and Marketing Best Practices Award at the Caribbean Hotel Information Exchange Forum. In addition, all of the Group's properties apart from Waves (which has only recently come under the Group's ownership) were awarded TripAdvisor's coveted Certificate of Excellence for 2016, as well as the prestigious Green Globe Certificate.

On behalf of the Board, we would like to thank all of those people that have made a difference at Elegant Hotels this year. It has been a challenging year and we are grateful for the dedication and support of our employees, suppliers and business partners. We would also like to thank our shareholders for their continued support and belief in the long-term prospects of Elegant Hotels.

Summary and Outlook

Over the last year the Group has experienced a variety of challenges. In common with the rest of the luxury hotel market in Barbados, the Group has seen an impact on customer demand as a result of wider issues that are largely beyond its control. However, we are encouraged by positive trends such as the increased popularity of Barbados as a tourist destination and the improving airlift to the island and believe our strategy of continued investment in our properties to improve them every year will position us well for the future.

The Board is delighted with the progress of our expansion strategy since the Company's IPO last year. It remains committed to increasing the scale of our business both in Barbados and the wider Caribbean islands. Despite the challenging market conditions, we firmly believe in our strategy and remain confident in our long-term prospects.

FINANCIAL REVIEW

A year of solid financial performance in a challenging trading environment

The 2016 financial year has seen a decrease in total revenue, gross profit and adjusted earnings before interest, tax, depreciation and amortisation (adjusted EBITDA) as a result of the reduced demand for luxury holidays in Barbados because of economic uncertainty and weaker currency affecting the UK traveller in particular.

Revenue

Total revenue decreased by 5.2% in the year to $57.0 million (2015: $60.1 million). Colony Club delivered a record year with RevPAR up 3%, providing further evidence that our strategy of refurbishing, repositioning and repricing our hotels is working. However, Turtle Beach, The House, Tamarind and Crystal Cove saw RevPAR declines of 8%, 8%, 11% and 6% respectively because of decreases in occupancy. Daphne's restaurant, which sits between the two hotels, was negatively impacted by the declines in occupancy at both properties.

Gross profit

Total gross profit decreased by 6.5% to $35.1 million (2015: $37.6 million) as a direct result of the fall in revenue.

Exceptional costs

The Group incurred costs in relation to the acquisition of Waves and other projects which are considered to be non-recurring. In the prior year there were costs for the IPO that were specific to the listing and also to other related activities such as the amendment to the Group's borrowing arrangements. All of these costs are regarded as one-off in nature and will not recur. However, in the case of share awards in relation to the IPO, the cost will be recognised over several years.

As exceptional costs do not reflect the underlying performance of the Group, the financial performance of the business is being presented after adjustment for such items. The table below sets out the impact on each of the lines in the Income Statement. The remainder of this review is based on the adjusted results excluding the impact of exceptional costs.

Exceptional costs incurred in the year amounted to $2.2 million (2015: $10.2 million). They comprised acquisition and other one-off costs of $2.0 million (2015: $4.1 million, comprising re-financing costs, one-off legal costs and restructuring costs) and share based payments charges relating to share options issued to Directors and senior management at the time of IPO under the Group's Long Term Incentive Plan (LTIP) amounting to $0.2 million (2015: $0.5 million). In the 2015 financial year there were also costs directly associated with the IPO of $5.6 million.

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses at $18.2 million were significantly lower than the previous year (2015: $29.3 million) as the Group incurred costs in relation to the IPO in the prior year. SG&A expenses after adjusting for acquisition, IPO and other one-off costs, non-exceptional share-based payment charges, and the bargain purchase gain associated with the acquisition of Waves, were up $0.7 million on the prior year at $19.8 million (2015: $19.1 million), principally reflecting the full year costs of running a public company.

EBITDA

Reported EBITDA and adjusted EBITDA are set out in the following table:

Adjusted EBITDA decreased by 11.6% to $19.6 million (2015: $22.2 million). Adjusted EBITDA margin in the 2016 financial year was 34.4% (2015: 36.9%). This reduction is because certain central costs are fixed in nature so a fall in revenue will lead to a fall in EBITDA margin combined with the additional full year costs of running a public company.

Financial expenses

Financial expenses in the 2016 financial year were $2.2 million (2015: $3.1 million), a reduction of $0.9 million. This was principally due to the fact that the Group was operating with higher debt levels in the period prior to the IPO in May 2015.

Proceeds from the issue of shares amounting to $42.0 million were used, along with cash resources in the business, to achieve a renewal of the Group's credit agreement with the Bank of Nova Scotia. Prior to the IPO, the drawdown of facilities under the credit agreement was $102.0 million. At IPO, the drawdown was reduced to $45.0 million. However, it was increased by $18.5 million in March 2016 to finance the Waves acquisition.

Taxation

The total taxation charge for the year of $2.0 million was $1.0 million higher than the prior year (2015: $1.0 million) due to the reduction in the level of one-off costs incurred during the year. After adjusting for exceptional costs, the taxation charge on the adjusted profit before tax amounted to $2.5 million (2015: $3.0 million).

The effective tax rate on the adjusted profit before tax is 17.6% (2015: 18.8%).

Adjusted profit for the year

Profit after tax and after adjustment for exceptional costs and the bargain purchase gain has decreased by $1.3 million to $11.7 million (2015: $13.0 million), representing a decrease of 10%.

Earnings per share

Basic earnings per share (EPS) for the year was 15.5 cents (2015: 7.2 cents). Adjusted basic EPS (after adjusting for exceptional costs) decreased by 11% to 13.1 cents per share (2015: 14.7 cents).

Dividend

At the time of the IPO the Directors stated an intention to implement a progressive dividend policy in line with the growth in future earnings, subject to the discretion of the Board and to the Company having sufficient distributable reserves. For the year ending 30 September 2016, having taken into account the current and expected future trading performance of the Company, and subject to the Company having sufficient distributable reserves, the Directors intend that the total annual dividend payable will equate to a dividend yield of 7% (calculated on the basis of the IPO price of £1 per ordinary share).

The Board is recommending a final dividend of 3.5 pence per share for shareholders on the register on 27 January 2017, payable on 8 March 2017, subject to the approval of the Company's shareholders at its Annual General Meeting. This makes a total dividend of 7.0 pence per share for the year ended 30 September 2016.

Balance Sheet

The most significant change in the balance sheet during the period was the result of the acquisition and subsequent refurbishment of Waves, in addition to the continued investment in maintaining and improving the existing hotels. Property plant and equipment at historic cost increased by $27.5 million to $172.8 million (2015: $145.3 million).

The strength of the Group's balance sheet lies in its assets as well as the renewed financing arrangements. The Group's property, excluding Waves, was valued at $235.5 million by CBRE as at 15 April 2015, which is greater than its value in these financial statements. Waves was recently valued by Terra Caribbean at $22.0 million which is the fair value used in the accounts. While we acknowledge that there has been a recent fall in demand for luxury holidays in Barbados which may affect the cash flow generation which we do not expect to be permanent, the asset values are still in the Directors' opinion significantly in excess of their carrying values in the accounts.

Third party debt of $45.0 million with the Bank of Nova Scotia was renegotiated at the time of the Waves acquisition and increased to a fully drawn term loan facility of $63.5 million. There is an undrawn overdraft facility of $10.0 million and a revolving credit facility of $5.0 million.

Cash Flow

Strong EBITDA conversion provides a sound basis for the Group's cash flow. Capital expenditure on the existing hotels for the year of $3.9 million is in line with expectations. At year end, the Group had net debt of $61.8 million (2015: $40.8 million) comprising a term loan of $63.5 million; an outstanding balance of $2.0 million relating to a loan from the vendor of Waves and cash and cash equivalents of $3.7 million. 

Consolidated Statement of Comprehensive Income

All amounts relate to continuing activities.

The notes below form part of these financial statements.

Approved on behalf of the Board of Directors on 16 January 2017 and signed on its behalf by:

.......................................... Director .......................................... Director

Simon Sherwood Sunil Chatrani

The notes below form part of these financial statements.

The notes below form part of these financial statements.

The notes below form part of these financial statements.

Approved on behalf of the Board of Directors on 16 January 2017 and signed on its behalf by:

.......................................... Director .......................................... Director

Simon Sherwood Sunil Chatrani

The notes below form part of these financial statements.

The notes below form part of these financial statements.

The notes below form part of these financial statements.

The notes below form part of these financial statements.

1. General information

Elegant Hotels Group plc ("Elegant Hotels" or the "Company") is a public limited company incorporated in the United Kingdom. The address of the registered office is 10 Norwich Street, London, EC4A 1BD. The principal activity of the Company and its subsidiaries (collectively the "Group") is the ownership and operation of hotels and restaurants on the island of Barbados.

Elegant Hotels Group plc was incorporated on 10 April 2015.

On 11 May 2015 the subsidiaries were acquired by the Company shortly before the listing of the Company's shares on the London Stock Exchange's AIM on 26 May 2015.

By applying the principles of reverse acquisition accounting under IFRS 3 "Business Combinations", the Group has presented its 2015 results as if the Company had always owned the subsidiaries and has included the results for the Group from 1 October 2014 rather than from the 11 May 2015 acquisition date.

2. Basis of preparation

The consolidated financial statements presented in this document have been prepared in accordance with International Financial Reporting Standards as adopted by the EU. The Company's financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and as applied in accordance with the Companies Act 2006. The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes. The profit for the year included a loss on ordinary activities after tax of $575,000 (2015: $3,468,000) in respect of the Company. The Company had no other items of comprehensive income in the year.

The functional currency of the Company is sterling. The Group presents its financial information in United States dollars, which is the dominant currency of the trading entities. 

The financial information is presented in United States dollars unless otherwise indicated. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

3. Measurement convention

The consolidated financial statements are prepared on the historical cost basis except that certain assets and liabilities are stated at their fair value. These include loans and receivables.

4. Accounting policies

Both the parent company financial statements and the group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").

Going concern

The Group meets its day-to-day working capital requirements with the assistance of its bank facilities which were renewed on 26 May 2015. The Group's forecasts and projections take account of reasonably possible changes in trading performance and show that the Group should be able to operate within the level of its current facilities, meet future debt repayments and will continue to comply with its banking covenants for at least the foreseeable future. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.

The principal accounting policies applied by the Group and Company in the preparation of these consolidated financial statements for the years ended 30 September 2015 and 30 September 2016 are set out below. These policies have been consistently applied to all periods presented.

Changes to accounting policies since the last period

The following standards, interpretations and amendments, issued by the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC), are both relevant and effective for the first time in the current financial year and have been adopted by the Group with no significant impact on its consolidated results or financial position for the current reporting period:

• Annual improvements to IFRSs (2010-2012 Cycle) - Minor amendments to various accounting standards, effective for periods beginning on or after 1 January 2014 onwards.

• Annual improvements to IFRSs (2011-2013 Cycle) - Minor amendments to various accounting standards, effective for periods beginning on or after 1 January 2015 onwards.

• IFRS 10 'Consolidated Financial Statements'.

• IFRS 12 'Disclosure of Interests in Other Entities'.

• Amendments to IFRS 10, IFRS 11 and IFRS 12 'Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance'.

Management are assessing the following standards, which are not a full list of those coming into effect, for the impact on the Group:

• IFRS 9 'Financial Instruments' (effective date for accounting periods from 1 January 2018). This standard has not yet been endorsed for use in the EU.

• IFRS 15 'Revenue from contracts with Customers' (effective date for accounting periods from 1 January 2017). This standard has not yet been endorsed for use in the EU.

• IFRS 16 'Leases'. This standard has not yet been endorsed by the EU.

• Amendments to IAS 1: 'Disclosure Initiative' (effective date for accounting periods from 1 January 2016). This amendment has not yet been endorsed for use in the EU.

• Annual improvements to IFRSs (2012-2014 Cycle) - Minor amendments to various accounting standards, effective for periods beginning on or after 1 January 2016 onwards.  This amendment has not yet been endorsed for use in the EU.

• Annual improvements to IFRSs (2013-2015 Cycle) - Minor amendments to various accounting standards, effective for periods beginning on or after 1 January 2017 onwards.

• Annual improvements to IFRSs (2014-2016 Cycle) - Minor amendments to various accounting standards, effective for periods beginning on or after 1 January 2017 onwards.

• Amendments to IAS 16 and IAS 38: 'Clarification of Acceptable Methods of Depreciation and Amortisation' (effective date for accounting periods from 1 January 2016). This amendment has not yet been endorsed for use in the EU.

The other standards not yet in effect are not expected to have a material impact on the Group or Company.

Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Separate parent company financial statements

In the parent company financial statements, all investments in subsidiaries are carried at cost less impairment.

Merger reserve

On 11 May 2015 the Company became the new holding company for the Group. This was put into effect through a share-for-share exchange of 56,615,788 ordinary shares of £0.01 in the Company for the whole of the issued capital of eight St Lucia domiciled companies. These companies own all of the share capital in ten trading subsidiaries. The accounting treatment for this type of transaction, where the new and the acquired companies remain under common control is scoped out of IFRS 3.

Accordingly, as required under IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors' the Group has applied the principles within IFRS 3 'Business Combinations' to assist its judgement in identifying a suitable accounting policy. The introduction of the new holding company has been accounted for as a capital reorganisation using the merger accounting principles prescribed within IFRS 3 'Business Combinations'. Therefore the consolidated financial statements of the Group are presented as if the acquired entities have always been part of the Group.

The use of merger accounting principles has resulted in a balance on Group and Company capital and reserves which has been classified as a merger reserve and included in the Group's shareholders' funds.

The Company has recognised the value of its investment in the acquired St Lucian companies at a value based upon the initial share placing price on admission to AIM of £1 per share. As permitted by section 612 of the Companies Act 2006 the amount attributable to share premium has been transferred to the merger reserve.

Revenue Recognition

Revenue for the Group is measured at the fair value of the consideration received or receivable. The Group recognises revenue for services provided when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.

Revenue arising from the provision of hotel accommodation, restaurant and bar services and activities is recognised when the service is provided and the products are delivered to the customer.

All deposits for accommodation and similar income which are received in advance of the related performance are classified as deferred revenue and shown as a liability until completion of the performance.

Finance income and expense

Finance income is recognised in profit and loss on an accruals basis. Finance cost is recognised as it accrues in profit or loss, using the effective interest method.

Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Elegant Hotels Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. 

Retirement Benefits: Defined contribution schemes

Contributions to defined contribution schemes are charged to the Consolidated Statement of Comprehensive Income in the year to which they relate.

Share based payment transactions

Employees (and Directors) receive remuneration in the form of equity-settled share-based payments, whereby employees render services in exchange for shares or for rights over shares. The fair value of the employee services received in exchange for the grant of options or shares is recognised as an expense. The total amount to be expensed on a straight line basis over the vesting period is determined by reference to the fair value of the options or shares determined at the grant date, excluding the impact of any non-market based vesting conditions (for example, continuation of employment and performance targets).

The share options are valued using the Black-Scholes option pricing model. Non-market based vesting conditions are included in assumptions about the number of options that are expected to become exercisable or the number of shares that the employee will ultimately receive. This estimate is revised at each Balance Sheet date to allow for forecast leaving employees and the difference is charged or credited to the Statement of Profit and Loss and Other Comprehensive Income, with a corresponding adjustment to reserves.

Foreign currency transactions and balances

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 US dollars, which is the functional currency of the subsidiary companies, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity.

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation), or a disposal involving loss of control over a subsidiary that includes a foreign operation, all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss.

The Group contracted foreign exchange forward contracts to secure the required funding, in US dollars, from the proceeds of the placing which were denominated in sterling. The Group also enters into forward US dollar/sterling forward exchange contracts to secure the amount of approved and declared dividends. No other forward contracts or similar contracts are conducted.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs. Under the transition provisions of IFRS 1, land and buildings which were previously revalued were measured on the basis of their deemed cost, being their Barbados GAAP carrying value, including revaluations, as at 1 October 2005 being the effective date of the Elegant Hotels subsidiary companies' conversion of IFRS.

Depreciation on assets under construction does not commence until they are complete and available for use. These assets represent 'fit-outs'. Land is not depreciated.

Depreciation is provided on all other items of property, plant and equipment so as to write off their carrying value over the expected useful economic lives. It is provided at the following annual rates:

Inventories

Inventories are valued at the lower of cost and net realisable value on a first in, first out basis. The cost is determined using a weighted average basis. Net realisable value is the estimated selling price in the normal course of business less the estimated costs necessary to make the sale.

Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset.

They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Accounts receivable are presented in current assets in the Statement of Financial Position, except for those with maturities greater than one year after the reporting date.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

The Company advances loans to its subsidiary undertakings which are accounted for as part of its net investment in those operations. These loans are repayable on demand and are stated at amortised cost less provision for impairment.

Financial assets

The Group classifies non-derivative financial assets into the following categories: cash and cash equivalents, short-term investment deposits to secure local electricity supplies, accounts receivable, financial assets at fair value through profit or loss, and held-to-maturity investments. The classification depends on the purpose for which the assets are held.

Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date for financial assets other than those held at fair value through profit or loss.

Cash and cash equivalents

Cash and cash equivalents comprise of cash balances and fixed deposits with original maturity dates of 90 days or less. The carrying value of cash and cash equivalents in the Statement of Financial Position is considered to be fair value.

Impairment of non-financial assets

Assets that have indefinite useful lives are not subject to amortisation and are tested annually for impairment. All other non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

The Elegant Hotels Group determine any impairment by comparing the carrying values of each of the Elegant Hotels Group assets (or the cash-generating unit to which it belongs) to their recoverable amounts, which is the higher of the asset's fair value less costs to sell and its value in use. Fair value represents market value in an active market. Value in use is determined by discounting future cash flows arising from the asset. Future cash flows are determined with reference to the Elegant Hotels Group's own projections using pre-tax discount rates.

Financial liabilities

All financial liabilities are recognised initially at fair value and subsequently at amortised cost.

Leased assets

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an 'operating lease'), the total rentals payable under the lease are charged to the Consolidated Statement of Profit and Loss and Other Comprehensive Income on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term. 

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are reflected in profit or loss.

Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

Share capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments.

Segment reporting

An operating segment is a component of the Elegant Hotels Group that engages in business activities from which it may earn revenues and incur expenses; whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and for which discrete financial information is available.

All revenue and operating profit is derived from the main activity of the Group. Each hotel is considered to be a separate operating segment of the Group based on the information provided to the CODM (considered to be the Board of Directors). These segments are aggregated for the purposes of disclosure as the aggregation criteria of International Financial Reporting Standard 8 are considered to be met.

Dividend distribution

Dividend distribution to the shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are appropriately authorised and approved for payment and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements.

Taxation

Income tax on the profit or loss for the period comprises current and deferred tax. Income tax is recognised in the statement of profit or loss except to the extent that it relates to items recognised directly into equity, in which case it is recognised into equity.

The Group follows the liability method of accounting for corporation tax, whereby the future tax asset (when it is probable that taxable profits will be available against which the deferred tax asset can be utilised) or liability resulting from temporary difference is accounted for at the expected corporation tax rate.

 Current tax for the year is the expected tax payable on the taxable income for the year, using the best estimate of the weighted average annual income tax rate expected for the full financial year.

Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets or liabilities, using the tax rates enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the unused tax losses and credits can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefits will be realised.

Deferred tax assets and liabilities are offset only if certain criteria are met.

Related parties

A party is related to the Elegant Hotels Group, if:

(i) directly, or indirectly through one or more intermediaries, the party:

• is controlled by, or is under common control with, the Elegant Hotels Group (this includes parents, subsidiaries and fellow subsidiaries);

• has a direct or indirect interest in the Elegant Hotels Group that gives it significant influence; or

• has joint control over the Elegant Hotels Group

 (ii) the party is an associate of the Elegant Hotels Group;

(iii) the party is a joint venture or a partnership in which the Elegant Hotels Group is a venturer or a partner;

 (iv) the party is a member of the key management personnel of the Elegant Hotels Group or their parent entities;

(v) the party is a close member of the family of any individual referred to in (i) or (iv);

 (vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or

(vii) the party is a post-employment benefit plan for the benefit of employees of the Elegant Hotels Group, or any entity that is a related party of the entity.

A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

The Elegant Hotels Group has a related party relationship with its Directors, related companies, other Group companies and affiliated parties controlled by its Directors, senior officers, executives and significant shareholders of the parent company. "Key management personnel" represents certain senior officers of the Elegant Hotels Group.

5. Accounting estimates and judgements

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Judgements made by the Directors, in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are:

Property, plant and equipment - The assessment of the useful economic lives requires judgement in order that depreciation can be charged over the life selected. This also includes the assessment of residual values that will be attributed to the hotel properties. Judgement is also required in determining whether the carrying values of the assets have any indication of impairment.

Taxation - Management judgement is required to determine the amount of deferred tax assets that can be recognised based on the likely timing and level of future taxable profits. Where entities are loss making and are expected to continue to be loss making into the future it is judged that deferred tax assets should not be recognised in respect of these losses as it is not known when the losses will be able to be utilised in these entities.

The Group provides for anticipated risks, based on reasonable estimates, for tax risks in the respective countries in which it operates. The amount of such provisions are based on various factors, such as experience with previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible authority. Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws and the amount and timing of future taxable income. Differences could arise between the actual results and the assumptions made or future changes to these assumptions which could necessitate future adjustment to tax income or expense already recorded.

Allowances for bad debts and inventory obsolescence - Valuation allowances are made with reference to the ageing of receivable and inventory balances and the view of management as to whether amounts are recoverable.

Share based payments - Estimating the fair value for share-based payment tranactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The estimate also requires determination of the expected life of the share option, volatility and dividend yield and making assumptions about them. These estimates are reassessed at the end of each reporting period. The assumptions and model used for estimated fair value for share-based payment transactions is disclosed in note 27.

6. Financial instruments - risk management

The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. The Group has not issued or used any other financial instruments of a speculative nature. The Group contracts forward currency contracts to secure the value of approved dividends payable to its shareholders. No other new forward currency contracts are undertaken.

The Group is exposed to the following financial risks:

· Credit risk

· Liquidity risk

· Market interest rate risk

To the extent financial instruments are not carried at fair value in the Consolidated Statement of Financial Position, book value approximates to fair value at 30 September 2016 and 30 September 2015.

Trade and other receivables are measured at amortised cost. Book values and expected cash flows are reviewed by the Board and any impairment charged to the Consolidated Statement of Comprehensive Income in the relevant period.

Cash and cash equivalents are held in various currencies including US dollars, Barbados dollars and sterling .

Trade and other payables are measured at book value and amortised cost.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. At 30 September 2016 the Group has trade receivables of $2,396,000 (2015: $2,217,000).

The Group is exposed to credit risk in respect of these balances such that, if one or more of the customers' encounter financial difficulties, this could adversely affect the Group's financial results. The Group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering into contracts and by entering into contracts with customers with agreed credit terms. Provision is made against any receivable considered to be impaired.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet its expected cash requirements as determined by regular cash flow forecasts prepared by management.

Market interest rate risk

Market interest rate risk arises from the Group's borrowings which are denominated in US dollars.

None of the Group's financial assets and liabilities are subject to fixed rates of interest. The most significant element of the financial liabilities relates to the Group's long-term loan which is subject to interest at LIBOR plus 2.75 basis points and is therefore entirely variable.

The Group is also exposed to market interest rate risk in respect of its cash balances held pending investment in the growth of the Group's operations. The effect of interest rate changes in the Group's interest-bearing assets and liabilities and the re-pricing of its interest-bearing liabilities are set out in note 34.

Capital Management

The Group's capital is made up of share capital, share premium, merger reserve, translation reserve and retained earnings totalling $112,959,000 (30 September 2015: $105,841,000).

The Group's objectives when maintaining capital are:

· To safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

· To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The capital structure of the Group consists of shareholders equity as set out in the Consolidated Statement of Changes in Equity. All funding required to expand the Group's business, including the acquisition and development of new hotels and for working capital purposes are financed from existing cash resources where possible. Management will also consider future fund-raising or bank finance where appropriate.

7. Acquisition of Swiss International Ltd (owner of Waves Hotel & Spa)

On 3 March 2016 the Group purchased Waves Hotel & Spa via the acquisition of 100% of the shares of Swiss International Ltd for $5.4m. This was satisfied in cash and a loan from the vendor of $2.0m. The loan is payable in four equal instalments which commenced on 3 September 2016 and will be settled within the next three years.

The acquisition is in line with the Group's stated strategy to expand both on Barbados and further into the Caribbean. In the period immediately following the date of acquisition up to 18 April 2016 the operation of the hotel and spa was licensed back to the former owner to fulfil existing customer reservations. The property closed for renovation and reopened in August 2016. Waves therefore contributed a small operating loss for the period.

Effect of acquisition 

The acquisition had the following effect on the Group's assets and liabilities.

Acquisition related costs

The Group incurred acquisition related costs of $0.9m comprising legal, professional and due diligence fees, stamp duty and renovation/refurbishment project management fees. These costs have been included in administrative expenses in the Group's Statement of Comprehensive Income. 

Acquired receivables

The fair value of acquired receivables was $0.1m. The gross contractual amounts receivable are $0.1m and, at the acquisition date, all of the contractual cash flows were expected to be received.

8. Revenue

Virgin Holidays represented 12% of the Group's total revenue (2015: 12%). No other customer represented more than 10% of the Group's total revenue.

9. Profit before taxation

10. Staff numbers and costs

The average number calculated on a full time equivalent basis, of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:

The aggregate payroll costs of employees were as follows:

11. Directors' remuneration

The aggregate remuneration (including amounts receivable under long-term incentive schemes) of the highest paid Director during the year was $437,000 (2015: $409,000).

None of the Directors received a payment in lieu of pension contribution (2015: none).

12. Exceptional items

Expenses incurred in respect of the acquisition of Waves, the Company's placing and AIM listing transaction and other one-off costs including re-financing costs and one-off professional fees. 

13. Finance income

14. Finance expense

15. Taxation

16. Earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year and total comprehensive income attributable to equity holders of the parent company by the weighted average number of ordinary shares outstanding during the year.

The Company has 4,037,084 potentially issuable shares (2015: 2,657,895) all of which relate to share options issued to Directors and key management personnel of the Company. The dilutive number of issuable shares is 221,921 (2015: 185,441) for the purposes of calculating the dilutive earnings per share.

Diluted earnings per share amounts are calculated by dividing profit for the year and total comprehensive income attributable to equity holders of the parent Company by the weighted average number of ordinary shares outstanding during the year together with the dilutive number of ordinary shares.

Adjusted basic earnings per share have been calculated in order to compare earnings per share year on year and to aid future comparisons. The weighted average number of shares in issue in 2015 has been restated on a pro-forma basis to reflect the post-IPO share capital structure. The adjustment assumes that the total shares issued were in issue throughout all of 2015. In addition, earnings have been adjusted to exclude IPO and listing expenses, share based payments and other one-off costs (and any associated impact on the taxation charge).

Adjusted diluted earnings per share is calculated by applying the same adjustments to earnings as described in relation to adjusted earnings per share divided by the weighted average number of ordinary shares outstanding during the year adjusted by the effect of the outstanding share options.

17. Property, plant and equipment - Group

No interest has been capitalised into property, plant and equipment. No items of property, plant and equipment are held under finance leases. The Group's principal properties are used as security for bank loans (see note 24).

The subsidiary companies transitioned to IFRS in 2005. On transition the properties were revalued by independent valuers. The overall increase in value was taken to the revaluation surplus. Subsequent additions have been shown at cost. The fair value of the Group's property, plant and equipment is considered to be greater than the book value recorded in these financial statements on the basis of the property valuation carried out by CBRE at the time of the IPO. The valuation was performed as at 15 April 2015 and indicated a value of $235.5 million.

All of the Group's non-current assets are located in Barbados.

18. Investments in subsidiaries

The Group and Company have the following investments in subsidiaries:

*Wholly owned held indirectly through subsidiary undertakings

All investments in subsidiaries have been consolidated in these financial statements. Included within investments are intercompany loans to the subsidiaries which are considered by management to be as permanent as equity and have been treated as such.

During the year, investments held by the Company decreased by $9.0 million as a result of movements in intercompany loans classified as investments.

19. Deferred tax assets and liabilities - Group

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

The recoverability of the deferred tax asset is dependent on future taxable profits in excess of those arising from the reversal of deferred tax liabilities. The deferred tax asset has been recognised to the extent that it is considered to be recoverable based on forecasts for future periods. At 30 September 2016, the value of the unrecognised deferred tax asset is $892,000 (2015: $694,000). Deferred tax assets and deferred tax liabilities are presented net in the statement of financial position as the Group has the legal right to settle current tax amounts on a net basis and the deferred tax amounts are levied by the same taxing authority on the same group of entities that intend to realise the asset and settle the liability at the same time.

20. Inventories

There is no significant difference between the fair value of inventories and the values stated above

21. Trade and other receivables

There were no receivables that were past due or considered to be impaired. There is no significant difference between the fair value of the other receivables and the values stated above.

All amounts shown under trade and other receivables are due to be received within one year.

22. Short-term investments

Deposits are lodged with the providers of utility services in Barbados to secure supplies. There is no significant difference between the fair value of the short-term investments and the values stated above.

23. Cash and cash equivalents

Cash and cash equivalents comprise cash, cash at bank and bank deposits with a maturity of up to 90 days.

24. Bank loans, other interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group and Company's interest-bearing loans and borrowings, which are measured at amortised cost. For more information about the Group and Company's exposure to interest rate and foreign currency risk, see note 34.

Terms and debt repayment schedule

The Bank of Nova Scotia

On 26 May 2015, certain subsidiaries of the Group entered into a Credit Agreement with the Bank of Nova Scotia to provide a Term Loan Commitment of up to $50 million at LIBOR plus 275 basis points. This was increased for the acquisition of Waves to $63.5m and is fully drawn; a Revolving Loan Commitment of $5 million at LIBOR plus 275 basis points; and an Uncommitted Operating Overdraft of $10 million at Base Rate less 200 basis points. Neither the Revolving Loan nor the Operating Overdraft has been drawn.

The Company is party as a guarantor to cross-guarantees in respect of the indebtedness of the subsidiary undertakings to the Bank of Nova Scotia. At 30 September 2016 the total indebtedness of subsidiary undertakings under these cross-guarantees amounted to $63.5 million (2015: $45.0 million).

As part of the acquisition of the Waves Hotel & Spa property, the Group agreed a loan with the vendor in the amount of $2,000,000. This loan is to be settled by four instalments of $500,000 each. Two instalments are due in the 2017 financial year and the remainder in February 2018 and February 2019.

Henry Stanley Rawle Moe

On 3 March 2014, Daphne's Restaurant Limited (the "Mortgagor") signed an agreement with Henry Stanley Rawle Moe (the "Lender") to finance the purchase of a parcel of land of approximately 12,000 square feet situated at Paynes Bay, St, James, Barbados.

The Mortgagor agreed to pay the balance of Bds$5,600,000 (US$2,828,000) by two equal annual payments together with interest of 5% per annum. Final payment of principal and interest was made on 3 March 2016.

25. Trade and other payables

All trade and other payables are due for repayment within 12 months. There is no significant difference between the fair value of the trade and other payables and the values stated above.

Trade payable days at 30 September 2016 were 42 days (2015: 36 days).

26. Employee benefits

The Group operates a number of defined contribution pension plans. The total expense relating to these plans in the current year was $114,000 (2015: $190,000).

27. Share based payments

Awards are made under long-term incentive and other arrangements. Certain employees of the Group have been eligible for options over ordinary shares in the Company, awarded under the Share Option Scheme. The Company has no employees.