ASIAN HOTELS AND PROPERTIES PLC AnnuAl RepoRt 2012/13

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notes to the financial statementsPASSIONASIAN HOTELS AND PROPERTIES PLCAnnual Report 2012 /13136use that are largely independent of the cashinflows of other assets or CGUs.Impairment losses are recognised in profitor loss. Impairment losses recognised inrespect of CGUs are allocated to reducethe carrying amounts of the other assetsin the CGU (group of CGUs) on a pro-ratabasis.For other assets, an impairment loss isreversed only to the extent that the asset’scarrying amount does not exceed thecarrying amount that would have beendetermined, net of depreciation oramortisation, if no impairment loss hadbeen recognised.(i) Financial assetsFinancial assets are assessed at eachreporting date to determine whether thereis objective evidence that it is impaired.A financial asset is impaired if there isobjective evidence of impairment as aresult of one or more events that occurredafter the initial recognition of the asset, andthat loss event(s) had an impact on theestimated future cash flows of that assetthat can be estimated reliably.Objective evidence that financial assets areimpaired includes default or delinquency bya debtor, restructuring of an amount due tothe company on terms that the Companyand the Group would not considerotherwise, indications that a debtor orissuer will enter bankruptcy, adversechanges in the payment status of borrowersor issuers, economic conditions thatcorrelate with defaults or the disappearanceof an active market for a security.The Company and the Group considerevidence of impairment for financial assetsmeasured at amortised cost (loans andreceivables) at specific asset level. Allindividually significant assets are assessedfor specific impairment.An impairment loss in respect of a financialasset measured at amortised cost iscalculated as the difference between itscarrying amount and the present value ofthe estimated future cash flows discountedat the asset’s original effective interestrate. Losses are recognised in profit orloss and reflected in an allowance accountagainst loans and receivables or held-tomaturityinvestment securities. Intereston the impaired asset continues to berecognised. When an event occurring afterthe impairment was recognised causes theamount of impairment loss to decrease,the decrease in impairment loss is reversedthrough profit or loss.(ii) Non-financial assetsThe carrying amounts of the Companyand the Group non-financial assets, otherthan inventories and deferred tax assets,are reviewed at each reporting date todetermine whether there is any indicationof impairment. If any such indication exists,then the asset’s recoverable amount isestimated. An impairment loss is recognisedif the carrying amount of an asset exceedsits recoverable amount.(k)Employee Benefits(i) Defined contribution plansEmployees’ Provident Fund and Employees’Trust Fund (EPF & ETF) are recognised asincurred.Employees are eligible for Employees’Provident Fund contributions andEmployees’ Trust Fund contributions in linewith respective statutes and regulations.The Company and the Group contribute15% and 3% of gross emoluments ofemployees to Employees’ Provident Fundand Employees’ Trust Fund respectively.(ii)Defined benefit plansA defined benefit plan is a post-employmentbenefit plan other than a definedcontribution plan.The Company and the Group are liableto pay retirement benefits under thePayment of Gratuity Act, No. 12 of 1983.The liability recognised in the financialstatements in respect of defined benefitplans is the present value of the definedbenefit obligation as at the reporting date.The defined benefit obligation is calculatedby a qualified actuary as at the reportingdate using the Projected Unit Credit(PUC) method as recommended by LKAS19 - ‘Employee Benefits’. Such actuarialvaluations will be carried out every year.The liability is not externally funded. AllActuarial gains or losses are recognisedimmediately in profit or loss applying thefaster recognition approach.Under the Payment of Gratuity Act No. 12of 1983, the liability to an employee arisesonly on completion of 5 years of continuedservice.(l) ProvisionsProvisions are recognised when theCompany and the Group have a presentobligation (legal or constructive) as a resultof a past event, it is probable that anoutflow of resources embodying economicbenefits will be required to settle theobligation and a reliable estimate can bemade of the amount of the obligation.Where the Company and the Groupexpect some or all of a provision tobe reimbursed, for example under aninsurance contract, the reimbursement isrecognised as a separate asset but onlywhen the reimbursement is virtually certain.The expense relating to any provision ispresented in the income statement net ofany reimbursement.
PASSION137 ASIAN HOTELS AND PROPERTIES PLCAnnual Report 2012 /13If the effect of the time value of money ismaterial, provisions are discounted usinga current pre-tax rate that reflects, whereappropriate, the risks specific to the liability.Where discounting is used, the increase inthe provision due to the passage of time isrecognised as a finance cost.(m) Contingent Assets and ContingentLiabilitiesAll contingent liabilities are disclosed asa note to the financial statements unlessthe outflow of resources is remote. Acontingent liability recognised in a businesscombination is initially measured at its fairvalue. Subsequently, it is measured at thehigher of:• The amount that would be recognisedin accordance with the generalguidance for provisions above (LKAS37) or• The amount initially recognisedless, when appropriate, cumulativeamortisation recognised in accordancewith the guidance for revenuerecognition (LKAS 18)Contingent assets are disclosed, whereinflow of economic benefit is probable butnot virtually certain.(n) Revenue recognitionRevenue is recognised to the extent thatit is probable that the economic benefitswill flow to the Group, and the revenueand associated costs incurred or tobe incurred can be reliably measured.Revenue is measured at the fair value of theconsideration received or receivable, netof trade discounts and value added taxes,after eliminating sales within the Group.The following specific criteria are used forrecognition of revenue:(i) Sale of ApartmentsRevenue has been recognised onapartment sales of ‘The Emperor’ up to themaximum of percentage completion or cashpaid by the buyer whichever is lower.(ii) Income from Hotel/RestaurantsRevenue is recognised on the roomsoccupied on daily basis and food andbeverages and hotel related sales areaccounted for at the time of sale..(iii) Interest IncomeInterest income is recognised on an accrualbasis.(iv) Rental IncomeRental income is recognised on an accrualbasis.(v) Dividend IncomeDividend income is recognised on a cashbasis.(vi) Other Gains and LossesNet gains and losses of a revenue naturearising from the disposal of property,plant and equipment and other noncurrentassets, including investments, areaccounted for in the income statement,after deducting from the proceeds ondisposal, the carrying amount of suchassets and the related selling expenses.(vii) Other IncomeOther income is recognised on an accrualbasis. Net gains and losses of a revenuenature arising from the disposal of property,plant and equipment and other noncurrentassets, including investments, areaccounted for in the income statement,after deducting from the proceeds ondisposal, the carrying amount of suchassets and the related selling expenses.Gains and losses arising from activitiesincidental to the main revenue generatingactivities and those arising from a Group ofnotes to the financial statementssimilar transactions, which are not materialare aggregated, reported and presented ona net basis.Any losses arising from guaranteed rentalsare accounted for in the year of incurringthe same. A provision is recognised if theprojection indicates a loss.(o) Expenditure recognitionExpenses are recognised in the incomestatement on the basis of a directassociation between the cost incurred andthe earning of specific items of income. Allexpenditure incurred in the running of thebusiness and in maintaining the property,plant and equipment in a state of efficiencyhas been charged to the income statement.For the purpose of presentation of theincome statement, the “function ofexpenses” method has been adopted, onthe basis that it presents fairly the elementsof the Company and Group’s performance.(p) Borrowing costsBorrowing costs directly attributable to theacquisition, construction or production ofan asset that necessarily takes a substantialperiod of time to get ready for its intendeduse or sale are capitalised as part of thecost of the respective assets. All otherborrowing costs are expensed in the periodthey occur. Borrowing costs consist ofinterest and other costs that the Groupincurs in connection with the borrowing offunds.(q) Guaranteed RentalLosses if any, of guaranteed rentals willbe accounted for in the year in which theyoccur. A provision is recognised if the bestestimate indicates a loss.(r) Segment ReportingA segment is a distinguishable componentof the Company that is engaged either
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ASIAN HOTELS AND PROPERTIES PLC AnnuAl RepoRt 2012/13

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