HBS Investment Limited 2015

HBS INVESTMENTS LIMITED
Report and financial statements

for the year ended 31 December 2015
HBS INVESTMENTS LIMITED

Report and financial statements
Pages
Independent auditors report
1-2
Statement of financial position
Statement of profit or loss and other comprehensive income
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
7 - 29
Independent auditor's report

to the shareholders of
HBS Investments Limited
Report on the financial statements

We have audited the accompanying financial statements of HBS Investments Limited (the
Company), which comprise of the Companys statement of financial position as at 31 December
2015 and the statements of profit or loss and other comprehensive income, changes in equity and
cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory information as set out on pages 3 to 29.
Management responsibility for the financial statements
The Management is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as Management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors responsibility
Our responsibility is to express an opinion on the Companys financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the Companys financial statements. The procedures selected depend on the auditors
judgment, including the assessment of the risks of material misstatement of the Companys
financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Companys preparation and fair presentation of the
Companys financial statements 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
Companys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the Companys and financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independent auditor's report

to the shareholders of
HBS Investments Limited (continued)
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position
of HBS Investments Limited, as of 31 December 2015, and its financial performance and cash
flows for the year then ended, in accordance with International Financial Reporting Standards.
Other matter
As disclosed in note 3, the corresponding figures for the statement of financial position as at 31
December 2014 and the statements of profit or loss and other comprehensive income, changes in
equity and cash flows statement for the year then ended have been extracted from the unaudited
financial statements prepared by the management.
Restriction of use
This report has been prepared solely for the purpose of providing information to Shareholders of HBS
Investments Limited to enable it to prepare the financial statements of the Company. The financial
statements may not be suitable for other purposes and therefore, should not use for any other purpose.
Deloitte & Touche (M.E.) & Co. LLC

Muscat, Sultanate of Oman
Xx xxx 2016

3
Statement of financial position

at 31 December 2015
Notes
2015
RO
2014
RO
Unaudited
2,764,758
58,063,318
3,207,807
194,562
1,407,670
49,534,009
3,188,459
140,604
64,230,445
54,270,742
39
11,874,138
39
13,444,491
11,874,177
13,444,530
52,351,268
5,000
40,826,212
-
Total liabilities
52,356,268
40,826,212
Total equity and liabilities
64,230,445
54,270,742
ASSETS
Cash balances with banks and brokers
Investments at fair value through profit and loss
Loans and advances
Accrued interest
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Retained earnings
6
7
8
Shareholder's equity
Liabilities
Subordinated loan from related parties
Accrued and other payables
_____________________
Chairman
10
_____________________
Chief Financial Officer
The accompanying notes form an integral part of these financial statements

4
Statement of profit or loss and other comprehensive income

Notes
Revenues
Dividend income
Interest income
Realised (loss) / gain on sale of investments
Unrealised loss on investments at fair value through
profit and loss
Other income
Expenses
Operating expenses
Foreign exchange loss
11
(Loss) / profit and total comprehensive (loss) / income

for the year
2015
RO
2014
RO
Unaudited
1,477,731
719,821
(334,528)
837,854
797,614
164,249
(3,197,832)
-
(962,355)
116,879
(1,334,808)
954,241
(126,578)
(108,967)
(87,739)
(88,515)
(235,545)
(176,254)
(1,570,353)
777,987

5
Statement of changes in equity

Share
capital
RO
Retained
earnings
RO
Total
RO
At 1 January 2014 (Unaudited)

Profit and total comprehensive income for the year (unaudited)
39 12,666,504
777,987
12,666,543
777,987
At 1 January 2015 (Unaudited)

Loss and total comprehensive loss for the year
39 13,444,491
(1,570,353)
13,444,530
(1,570,353)
A 31 December 2015
39 11,874,138
11,874,177

6
Statement of cash flows

Notes
(Loss) / profit for the year

Adjustments for:
Realised loss / (gain) on sale of investments
Unrealised loss on investments at fair value
through profit and loss
2015
RO
2014
RO
Unaudited
(1,570,353)
777,987
334,528
(164,249)
3,197,832
962,355
1,962,007
1,576,093
(53,958)
5,000
(129,244)
-
1,913,049
1,446,849
(19,430,567
)
7,368,898
(19,348)
(14,903,786)
(12,081,017
(9,801,509)
Operating profit before changes in operating assets

and liabilities
Changes in operating assets and liabilities
Other assets
Other liabilities
Net cash generated from operating activities
Investing activities
Investments purchased during the year
Sales proceeds from investments
Net movement in loans and advances
7
7
Net cash used in investing activities
5,108,403
(6,126)
)
Financing activities
Net movement in subordinated loan from related parties
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The accompanying notes form an integral part of these financial statement
11,525,056
8,324,176
1,357,088
1,407,670
(30,484)
1,438,154
2,764,758
1,407,670

7
Notes to the financial statements

1.
General Information
HBS Investments Limited (the Company) is an unlisted company incorporated on 6 April 2001
in the territory of the British Virgin Islands and continued as a company incorporated in the
Republic of Seychelles on 14 March 2012. The principal activities of the Company are trading in
international securities.
The Companys principal place of business and registered address is second floor, Capital City,
Independence Avenue, P O Box 1312, Victoria, Mahe, Seychelles.
The Company is classified as an investment entity as per the criteria in IFRS-10 Consolidated
Financial Statements and accordingly is mandatorily exempt from consolidating its investment in
subsidiaries and associates.

8
Notes to the financial statements (continued)

2.
Adoption of new and revised International Financial Reporting Standards

(IFRS) (continued)
2.1
New and revised IFRSs applied with no material effect on the combined financial statements
The following new and revised IFRSs, which became effective for annual periods beginning on or
after 1 January 2015, have been adopted in these financial statements. The application of these
revised IFRSs has not had any material impact on the amounts reported for the current and prior
years but may affect the accounting for future transactions or arrangements.
2.2
Annual Improvements to IFRSs 2010 - 2012 Cycle that includes amendments to IFRS 2,
IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.
Annual Improvements to IFRSs 2011 - 2013 Cycle that includes amendments to IFRS 1,
IFRS 3, IFRS 13 and IAS 40.
Amendments to IAS 19 Employee Benefits to clarify the requirements that relate to how
contributions from employees or third parties that are linked to service should be attributed to
periods of service.
New and revised IFRS in issue but not yet effective

The Company has not yet applied the following new and revised IFRSs that have been issued but
are not yet effective:
Effective for annual periods
New and revised IFRSs
beginning on or after
IFRS 14 Regulatory Deferral Accounts
1 January 2016
Amendments to IAS 1 Presentation of Financial Statements

relating to Disclosure initiative
1 January 2016
Amendments to IFRS 11 Joint arrangements relating to

accounting for acquisitions of interests in joint operations
1 January 2016
Amendments to IAS 16 Property, Plant and Equipment and

IAS 38 Intangible Assets relating to clarification of
acceptable methods of depreciation and amortisation
1 January 2016
Amendments to IAS 16 Property, Plant and Equipment and

IAS 41 Agriculture relating to bearer plants
1 January 2016
Amendments to IAS 27 Separate Financial Statements

relating to accounting investments in subsidiaries, joint
ventures and associates to be optionally accounted for using
the equity method in separate financial statements
1 January 2016

9

2.

(IFRS) (continued)
2.2
New and revised IFRS in issue but not yet effective (continued)

Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12

Disclosure of Interests in Other Entities and IAS 28 Investment in Associates
and Joint Ventures relating to applying the consolidation exception for
investment entities
1 January 2016
Annual Improvements to IFRSs 2012 - 2014 Cycle covering amendments to

IFRS 5, IFRS 7, IAS 19 and IAS 34
1 January 2016
IFRS 9 Financial Instruments (revised versions in 2009, 2010, 2013 and 2014) 1 January 2018
IFRS 9 issued in November 2009 introduced new requirements for the
classification and measurement of financial assets. IFRS 9 was subsequently
amended in October 2010 to include requirements for the classification and
measurement of financial liabilities and for derecognition, and in November
2013 to include the new requirements for general hedge accounting. Another
revised version of IFRS 9 was issued in July 2014 mainly to include a)
impairment requirements for financial assets and b) limited amendments to
the classification and measurement requirements by introducing a fair value
through other comprehensive income (FVTOCI) measurement category for
certain simple debt instruments.
A finalised version of IFRS 9 which contains accounting requirements for
financial instruments, replacing IAS 39 Financial Instruments: Recognition
and Measurement. The standard contains requirements in the following
areas:
Classification and measurement: Financial assets are classified by
reference to the business model within which they are held and their
contractual cash flow characteristics. The 2014 version of IFRS 9
introduces a 'fair value through other comprehensive income' category for
certain debt instruments. Financial liabilities are classified in a similar
manner to under IAS 39, however there are differences in the
requirements applying to the measurement of an entity's own credit risk.
Impairment: The 2014 version of IFRS 9 introduces an 'expected credit
loss' model for the measurement of the impairment of financial assets, so
it is no longer necessary for a credit event to have occurred before a
credit loss is recognised
Hedge accounting: Introduces a new hedge accounting model that is
designed to be more closely aligned with how entities undertake risk
management activities when hedging financial and non-financial risk
exposures.
Derecognition: The requirements for the derecognition of financial
assets and liabilities are carried forward from IAS 39.
Amendments to IFRS 7 Financial Instruments: Disclosures relating to
disclosures about the initial application of IFRS 9
When IFRS 9 is first applied
IFRS 7 Financial Instruments: Disclosures relating to the additional hedge

accounting disclosures (and consequential amendments) resulting from the
introduction of the hedge accounting chapter in IFRS 9
When IFRS 9 is first applied

10

2

(IFRS) (continued)
2.2
New and revised IFRS in issue but not yet effective (continued)

IFRS 15 Revenue from Contracts with Customers
1 January 2018
In May 2014, IFRS 15 was issued which established a single

comprehensive model for entities to use in accounting for revenue arising
from contracts with customers. IFRS 15 will supersede the current revenue
recognition guidance including IAS 18 Revenue, IAS 11 Construction
Contracts and the related interpretations when it becomes effective.
The core principle of IFRS 15 is that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. Specifically, the standard introduces
a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations
in the contract.
Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation.
Under IFRS 15, an entity recognises when (or as) a performance obligation
is satisfied, i.e. when control of the goods or services underlying the
particular performance obligation is transferred to the customer. Far more
prescriptive guidance has been added in IFRS 15 to deal with specific
scenarios. Furthermore, extensive disclosures are required by IFRS 15.
IFRS 16 Leases
1 January 2019
IFRS 16 specifies how an IFRS reporter will recognise, measure, present

and disclose leases. The standard provides a single lessee accounting
model, requiring lessees to recognise assets and liabilities for all leases
unless the lease term is 12 months or less or the underlying asset has a low
value. Lessors continue to classify leases as operating or finance, with
IFRS 16s approach to lessor accounting substantially unchanged from its
predecessor, IAS 17.
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures (2011) relating to the
treatment of the sale or contribution of assets from and investor to its
associate or joint venture
Effective date deferred

indefinitely

11

2.

(IFRS) (continued)
Management anticipates that these new and revised standards, interpretations and amendments will
be adopted in the Companys financial statements for the year beginning 1 January 2016 or as and
when they are applicable and adoption of these new standards, interpretations and amendments,
except for IFRS 9 and IFRS 15, may have no material impact on the financial statements of the
Company in the period of initial application.
Management anticipates that IFRS 15 and IFRS 9 will be adopted in the Companys financial
statements for the annual year beginning 1 January 2018. The application of IFRS 15 and IFRS 9
may have impact on amounts reported and disclosures made in the Companys financial statements
in respect of revenue from contracts with customers and the Companys financial assets and
financial liabilities. However, it is not practicable to provide a reasonable estimate of effects of the
application of these standards until the Company performs a detailed review.
3.
Summary of significant accounting policies

Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as promulgated by the International Accounting Standards Board (IASB) and
the interpretations issued by the International Financial Reporting Interpretations Committee
(IFRIC) of the IASB.
Basis of preparation
These financial statements are prepared under the historical cost convention, as modified by
remeasurement of fair value of investment securities. All subsidiaries, associates and joint ventures
are measured at fair value through profit or loss with a change in fair values to be recognised in
profit and loss.
The corresponding figures for the statement of financial position and the statements of profit or
loss and other comprehensive income, changes in equity and cash flows statement for the year
ended 31 December 2014 have been extracted from the unaudited financial statements prepared by
the management.
The statement of financial position is presented in descending order of liquidity as this
presentation is more appropriate to the Companys operations.
Changes in accounting policies and disclosures
The accounting policies are consistent with those used in the previous financial year except for
where the Company has adopted certain new standards of, amendments and interpretations to
IFRS.

12

3.
Summary of significant accounting policies (continued)

Foreign currency translation
Functional and presentation currency
Items included in the financial statements are measured using Rial Omani which is the Companys
functional and presentation currency.
Transactions and balances
Transactions in foreign currencies are translated into Rial Omani and recorded at the foreign
exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies, which are stated at historical cost, are translated into Rial Omani at the foreign
exchange rate ruling at the reporting date. Foreign exchange differences arising on translation are
recognised in the statement of profit or loss. Non-monetary assets and liabilities denominated in
foreign currencies, which are stated at historical cost, are translated into Rial Omani at the foreign
exchange rate ruling at the date of the transaction.
Changes in the fair value of monetary securities denominated in foreign currency classified as
available-for-sale are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security. Translation
differences related to changes in amortised cost are recognised in profit or loss, and other changes
in carrying amount are recognised in other comprehensive income.
Financial instruments initial recognition and subsequent measurement
The Company classifies its financial assets in the following categories: at fair value through profit
or loss, available for sale, loans and advances and held-to-maturity. The classification depends on
the purpose for which the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
Date of recognition
All financial assets and liabilities are initially recognised on the trade date, i.e., the date that the
Company becomes a party to the contractual provisions of the instrument. This includes regular
way trades: purchases or sales of financial assets that require delivery of assets within the time
frame generally established by regulation or convention in the market place.
Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on the purpose and the
managements intention for which the financial instruments were acquired and their characteristics.
All financial instruments are measured initially at their fair value plus transaction costs, except in
the case of financial assets and financial liabilities recorded at fair value through profit or loss.

13

3.

Financial instruments initial recognition and subsequent measurement (continued)
Subsidiaries and Associates
Classification
Subsidiaries are all entities (including special purpose entities) over which the Company:
has power over the investee;

is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Company controls another entity. Income from subsidiaries
is recognised to the extent that the Company receives dividends from accumulated net profits of
the subsidiaries arising subsequent to the date of acquisition by the Company.
Associates are all entities over which the Company has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights.
Valuation
All subsidiaries, associates and joint ventures are measured at fair value through profit or loss with
a change in fair values to be recognised in profit and loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise financial securities held-for-trading
which are acquired principally for the purpose of selling in the short-term and instruments so
designated by management upon inception. Financial assets at fair value through profit or loss are
initially recognised at fair value and transaction costs are expensed in the statement of profit or
loss. Unrealised gains or losses arising from changes in fair value are included in the statement of
profit or loss and comprehensive income in the period in which they arise. Derivatives are also
categorised as held for trading unless they are designated as hedging instruments.
Management may only designate an instrument at fair value through profit or loss upon initial
recognition when the following criteria are met, and designation is determined on an instrument by
instrument basis:
The designation eliminates or significantly reduces the inconsistent treatment that would
otherwise arise from measuring the assets or liabilities or recognising gains or losses on them
on a different basis.
The assets and liabilities are part of a group of financial assets, financial liabilities or both,
which are managed and their performance evaluated on a fair value basis, in accordance with a
documented risk management or investment strategy.
The financial instrument contains one or more embedded derivatives, which significantly
modify the cash flows that would otherwise be required by the contract.

14

3.

Available-for-sale investments
Available-for-sale investments include equity and debt securities. Equity investments classified as
available-for-sale are those which are neither classified as held for trading nor designated at fair
value through profit or loss. Debt securities in this category are intended to be held for an
indefinite period of time and may be sold in response to needs for liquidity or in response to
changes in the market conditions.
The Company has not designated any receivables as available-for-sale. After initial measurement,
available-for-sale financial investments are subsequently measured at fair value.
Unrealised gains and losses are recognised directly in other comprehensive income in the
cumulative changes in fair value. When the investment is disposed of, the cumulative gain or loss
previously recognised in equity is recognised in the statement of profit or loss. Interest earned
whilst holding available-for-sale financial investments is reported as interest income using the
effective interest rate (EIR). Dividends earned whilst holding available-for-sale investments are
recognised in the statement of profit or loss when the right of the payment has been established.
The losses arising from impairment of such investments are recognised in the statement of profit or
loss and removed from the cumulative changes in fair value.
Financial investments held-to-maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Companys management has the positive intention and
ability to hold to maturity. In the case where the Company sells more than an insignificant amount
of held to maturity assets, the entire category would be tainted and reclassified as available-forsale.
Held-to-maturity investments are initially recognised at fair value plus transaction costs. These are
subsequently carried at amortised cost using the effective interest method.
Fair value measurement principles
Regular purchases and sales of financial assets are recognised on the trade date the date on which
the Company commits to purchase or sell the asset. Investments are initially recognised at fair
value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or losses are initially recognised at fair value,
and transaction costs are expensed in the statement of profit or loss. The fair value of financial
instruments is based on their quoted market bid price at the reporting date without any deduction
for transaction costs. If a quoted market price is not available, the fair value of the instrument is
estimated based on discounted cash flow and other valuation techniques. The fair value of
derivatives that are not exchange-traded is estimated at the amount that the bank would receive or
pay to terminate the contract at the reporting date taking into account current market conditions
and the current creditworthiness of the counter-parties.

15

3.

Derecognition of financial assets and liabilities
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognised when:
The rights to receive cash flows from the asset have expired; or
The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
pass-through arrangement; and either:
the Company has transferred substantially all the risks and rewards of the asset, or
the Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. Where an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.
Impairment of financial assets
The Company assesses at each reporting date whether there is objective evidence that a financial
asset or a group of financial assets is impaired. A financial asset or a group of financial assets is
impaired and an impairment loss is incurred if, and only if, there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the asset
(a loss event) and that loss event (or events) has an impact on the estimated future cash flows of
the financial asset or group of financial assets that can be reliably estimated. Objective evidence
that a financial asset or group of assets is impaired includes observable data that comes to the
attention of the Company about the following loss events:
significant financial difficulty of the issuer or obligor;

a breach of contract, such as a default or delinquency in interest or principal payments;
the Company granting to the borrower, for economic or legal reasons relating to the
borrowers financial difficulty, a concession that the lender would not otherwise consider;
it becoming probable that the borrower will enter bankruptcy or other financial
reorganisation;
the disappearance of an active market for that financial asset because of financial difficulties;
or
observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although
the decrease cannot yet be identified with the individual financial assets in the group,

16

including adverse changes in the payment status of borrowers in the Company, or national or
local economic conditions that correlate with defaults on the assets in the Company.

17

3.

Impairment of financial assets (continued)
The Company first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial assets
that are not individually significant. If the Company determines that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment and
for which an impairment loss is or continues to be recognised are not included in a collective
assessment of impairment.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on receivables or held-to-maturity
investments carried at amortised cost has been incurred, the amount of the loss is measured as the
difference between the assets carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred) discounted at the financial assets
original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account and the amount of the loss is recognised in the statement of profit or loss. If a
loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any
impairment loss is the current effective interest rate determined under the contract.
The calculation of the present value of the estimated future cash flows of a collateralised financial
asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling
the collateral, whether or not foreclosure is probable.
Future cash flows in a group of financial assets that are collectively evaluated for impairment are
estimated on the basis of the contractual cash flows of the assets in the Company and historical
loss experience for assets with credit risk characteristics similar to those in the Company.
Historical loss experience is adjusted on the basis of current observable data to reflect the effects
of current conditions that did not affect the period on which the historical loss experience is based
and to remove the effects of conditions in the historical period that do not exist currently. The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the
Company to reduce any differences between loss estimates and actual loss experience. When a
loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans
are written off after all the necessary procedures have been completed and the amount of the loss
has been determined. If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed by adjusting the allowance account. The
amount of the reversal is recognised in the statement of profit or loss.

18

3.

Financial Instruments Initial recognition and subsequent measurement (continued)
Impairment of financial assets (continued)
Available-for-sale financial investments
For available-for-sale financial investments, the Company assesses at each reporting date whether
there is objective evidence that an investment or a group of investments is impaired. In the case of
equity investments classified as available-for-sale, objective evidence would include a significant
or prolonged decline in the fair value of the investment below its cost. The determination of what
is significant or prolonged requires judgement. Where there is evidence of impairment, the
cumulative loss measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that investment previously recognised in the statement of profit
or loss is removed from equity and recognised in the statement of profit or loss. Impairment
losses on equity investments are not reversed through the statement of comprehensive income;
increases in their fair value after impairment are recognised directly in other comprehensive
income.
In the case of debt instruments classified as available-for-sale, impairment is assessed based on the
same criteria as financial assets carried at amortised cost. Interest continues to be accrued at the
original effective interest rate on the reduced carrying amount of the asset and is recorded as part
of Interest income. If, in a subsequent year, the fair value of a debt instrument increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised
in the statement of profit or loss, the impairment loss is reversed through the statement of profit or
loss.
Impairment of non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the assets carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an assets fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets that suffered an
impairment are reviewed for possible reversal of the impairment at each reporting date.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks and brokers,
other short-term highly liquid investments with original maturities up to three months or less, and
bank overdrafts and borrowings.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.

19

Where such shares are subsequently sold or reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included in
equity attributable to the Companys equity holders.
3.

Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised as interest expense in the statement of profit or loss
over the period of the borrowings using the effective interest method.
Other liabilities
Other liabilities are stated at amortised cost using the effective interest method.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a
result of past events; it is more likely than not that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated. If the effect is material, provisions are
determined by discounting the expected future cash flows at a rate that reflects current market
assessments of the time value of money and, where appropriate, the risks specific to the liability.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is
recognised even if the likelihood of an outflow with respect to any one item included in the same
class of obligations may be small.
Revenue recognition
Investment income includes gains and losses arising from disposals and changes in fair value of
financial assets at fair value through profit or loss. Dividend income is recognised in the period in
which the entitlement is established. Other income is credited to income on accrual basis.
Trade and settlement date accounting
All regular way purchases and sales of financial assets are recognised on the trade date, i.e., the
date that the Company commits to purchase or sell the asset. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame generally
established by regulation or convention in the market place.
Offsetting
Financial assets and financial liabilities are only offset and the net amount reported in the
statement of financial positing when there is a legally enforceable right to set off the recognised
amounts and the Company intends to either settle on a net basis, or to realise the asset and settle
the liability simultaneously.

20

3.

Dividends
Dividend distribution to the Companys shareholders is recognised as a liability in the financial
statements of the Company in the period in which the dividends are approved by the Companys
shareholders. Dividend for the year is calculated by the Company based on the profit available for
distribution after all statutory appropriations.
Income tax
The Company is registered in the Republic of Seychelles which is a tax free zone.
4.
Critical accounting estimates and judgements in applying accounting policies

The preparation of the financial statements, as per IFRS, requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities at the reporting date and
the resultant provisions and changes in fair value for the year. Such estimates are necessarily based
on assumptions about several factors involving varying, and possibly significant, degrees of
judgment and uncertainty and actual results may differ from managements estimates resulting in
future changes in estimated assets and liabilities.
Going concern
The Companys management has made an assessment of the Companys ability to continue as a
going concern and is satisfied that the Company has the resources to continue in business for the
foreseeable future. Furthermore, the management is not aware of any material uncertainties that
may cast significant doubt upon the Companys ability to continue as a going concern. Therefore,
the financial statements continue to be prepared on the going concern basis.
Investment entity criteria
The Companys management made an assessment that it qualifies for an investment entity criteria
under IFRS-10 Consolidated Financial Statements and therefore eligible for exemption from
consolidation rule. The criteria is based on characteristics of an entity and how it measures and
evaluates the performance of its investments. The Company obtains funds from the shareholders
and directors to manage their investments. These funds are reinvested solely for returns from
capital appreciation and investment income. The Company measures and evaluates the
performance of substantially all of its investments on a fair value basis.
Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of
financial position cannot be derived from active markets, they are determined using certain
valuation techniques, derived from observable market data where possible. Where observable
market data are not available, judgment is used to establish fair values.

21

4.
Critical accounting estimates and judgements in applying accounting policies

(continued)
Classification of investments
Management decides on acquisition of an investment whether it should be classified as held for
trading, carried at fair value through profit or loss, or available-for-sale or held-to-maturity
investments.
Fair value of financial instruments
Where the fair values of financial assets and financial liabilities recorded on the statement of
financial position cannot be derived from active markets, they are determined using certain
valuation techniques, derived from observable market data where possible. Where observable
market data are not available, judgment is used to establish fair values.
5.
Financial risk management policies

The Companys activities expose it to a variety of financial risks and those activities involve the
evaluation, analysis, acceptance and management of risk or combination of risks. As taking risk is
core to the financial business and operational risks are an inevitable consequence of any business,
the Companys aim is to achieve an appropriate balance between risk and return while minimising
the potential adverse effects on the financial performance.
The Management defines risk limits and sets suitable policies in this regard for management of
credit risk, liquidity risk as well as market risk relating to the investment and liability management
activities of the Company. Risk Management is carried out by the Management in accordance with
documented policies approved by the management.
The principal types of risks at the Company are credit risk, liquidity risk and market risk (interest
rate risk, price risk and currency risk).
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation
and cause the other party to incur a financial loss. Credit exposures arise principally from
investment activities and other assets in the Companys asset portfolio. There is also a credit risk in
off-balance sheet financial instruments, such as financial guarantees.

22

5.
Financial risk management policies (continued)

Credit risk (continued)
The Company attempts to control credit risk by monitoring credit exposures, limiting transactions
with specific counterparties, and continually assessing the creditworthiness of counterparties.
Concentrations of credit risk arise when a number of counterparties are engaged in similar
business activities, or have similar economic features that would cause their ability to meet
contractual obligations to be similarly affected by changes in economic, political or other
conditions. Concentrations of credit risk indicate the relative sensitivity of the Companys
performance to developments affecting a particular industry or geographic location.
Market risk
The Company take on exposures to market risk which is the risk that the fair value or the future
cash flows of the financial assets carried at fair value will fluctuate because of changes in market
prices. Market risks arise from the open positions in interest rate, currency and equity products, all
of which are exposed to changes in interest rates, credit spreads, equity prices and foreign
exchange rates.
The market risks on investments listed in the securities markets for the Company are monitored by
the Management. The Management monitors the risks, allocations and returns from local and
foreign investments through regular meetings. The Management of the Company has proper risk
management policies in place to ensure that interest rate risk, price risk and foreign exchange risk
are mitigated considering the macro-economic indicators affecting the investment activities.
Price risk
The Company is exposed to equity securities price risk because of investments held and classified
in the statement of financial position as investments at fair value through profit or loss. The
Company manages its market risk from its investing activities by diversification based on
extensive research on equity or fund positions. Market risks are measured against management
targets, past trends in world indices and market specific indices, before taking positions and
subsequently monitored regularly.
The impact of 10% change in the market price of the quoted securities at 31 December 2015 is
RO 2,630,986 (2014 RO 2,157,062).
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument carried at fair value will
fluctuate due to changes in the market interest rates. The Company is exposed to interest rate risk
as a result of mismatches or gaps in the amount of interest based assets and liabilities that mature
or re-price in a given period. The Company manages this risk by matching / re-pricing of assets
and liabilities. The Company is not excessively exposed to interest rate risk as its assets and
liabilities are re-priced frequently. Bonds held by the Company carry interest ranging from 3% to
10% (2014 2.625% to 9.5%) per annum. There are no interest bearing financial liabilities.

23

5.

Currency risk
Currency risk arises where the value of a financial instrument changes due to changes in foreign
exchange rates. The Companys exposure to assets denominated in foreign currencies (excluding
US Dollars which is pegged to the Omani Rial) is RO x xxx (2014: RO XXXX) of the total assets
at the reporting date. Management regularly monitors the currency risk by reviewing the positions
and within the overall context of its investment guidelines.
The net open position of the Company at the yearend is set out below:
Foreign currency exposures
Assets denominated in US Dollars (included assets denominated

in GCC currency pegged with US Dollars)
Percentage of total assets
Assets denominated in other foreign currencies
Percentage of total assets
2015
RO
2014
RO
Unaudited
XXX
x.xx%
Xxxx
x.xx%
XXX
x.xx%
Xxxx
x.xx%
Oman operates with a fixed exchange rate, and the Omani Rial is pegged to the US Dollar at
$2.6008 per Omani Rial. Accordingly, currency risk arises on assets not denominated in Rial
Omani or currencies not linked to the US Dollar.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet
commitments associated with financial instruments. Liquidity risk may result from an inability to
sell a financial asset quickly at close to its fair value. It includes the risk of being unable to fund
assets at appropriate maturities and rates and the risk of being unable to liquidate an asset at a
reasonable price and in an appropriate time frame.
The Company manages the liquidity risk by ensuring sufficient liquid assets such as cash and cash
equivalents, listed securities are available to meet its obligations when they fall due. At the
reporting date the Company is positioned well to meet its liquidity commitments considering
available liquid funds.
The Company holds investment securities listed on the securities markets and other quoted
investments. Those investments are liquid in nature and can be sold in response to need for
liquidity. As at 31 December 2015 the quoted investments were 45.3% (2014: 43.5%) of the total
investment securities.

24

5.

Fair value estimation
The estimate of fair values of the financial instruments is based on information available to
management at the reporting date. Whilst management has used its best judgment in estimating the
fair value of the financial instruments, there are inherent weaknesses in any estimation technique.
The estimates involve matters of judgment and cannot be determined with precision. The bases
adopted in deriving the fair values are as follows:
Current account balances due to and from banks and brokers
The carrying amount of current account balances due to and from banks and brokers are
considered to be a reasonable estimate of fair value due to their short-term nature.
Investments
Quoted market prices, when available, are used as the measure for fair value. However, when the
quoted market prices do not exist, fair value presented is estimated using discounted cash flow
models or other valuation techniques.
Capital risk management
The Companys objectives when managing capital are to safeguard its ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and
to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to
reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including
current and non-current borrowings as shown in the statement of financial position) less cash and
cash equivalents. Total capital is calculated as equity as shown in the statement of financial
position plus net debt.
6.
Cash and cash equivalents

Cash and cash equivalents included in the cash flow statement comprise the following amounts:
Cash balances with banks and brokers
2015
RO
2014
RO
Unaudited
2,764,758
1,407,670
Bank deposits carry interest ranging from xx% to xx% (2014 : xx,xxx) per annum.

25

7.
Investments
At 31 December, investment at fair value through profit or loss comprised the following:
2015
RO
Investments in quoted securities
Investments in unquoted securities
2014
RO
Unaudited
26,309,861
31,753,457
21,570,620
27,963,389
58,063,318
49,534,009
(a) The analysis of investments at fair value through profit or loss is as follows:
31 December 2015
Cost
Fair value
RO
RO
Quoted securities
Equities
Bonds
Mutual funds
Exchange traded funds
Unquoted securities
Equities
Private equity funds
31 December 2014
Cost
Fair value
RO
RO
Unaudited
Unaudited
5,746,479
12,172,168
4,864,515
5,992,990
4,329,506
11,490,590
4,942,216
5,547,549
5,273,574
10,254,290
3,825,740
2,393,066
4,841,328
10,505,927
3,814,906
2,408,459
28,776,152
26,309,861
21,746,670
21,570,620
19,273,291
5,836,675
22,557,461
9,195,996
14,907,589
4,786,405
23,371,404
4,591,985
25,109,966
31,753,457
19,693,994
27,963,389
53,886,118
58,063,318
41,440,664
49,534,009
(b) Movement in investments at fair value through profit or loss during the year is as follows:
7.
2015
RO
2014
RO
Unaudited
At 1 January
Purchases during the year
Sales during the year
Realised (loss) / gain during the year
Unrealised loss during the year
49,534,009
19,430,567
(7,368,898)
(334,528)
(3,197,832)
40,536,732
14,903,786
(5,108,403)
164,249
(962,355)
At 31 December
58,063,318
49,534,009
Investments (continued)

26

(c) Details of significant investments are as follows:
Market value
Investee
Nature of
business
Holding
%
Origin
2015
RO
2014
RO
Unaudited
Hedgwick Investments Limited
Edgeprop Limited
Niche Investments Limited
Mount Properties Limited
Hilton Head Investments Limited
Cabtal Holdings Limited
Investra Properties UK Limited
Haleprop Holdings Limited
Campbell Holdings Limited
MASO Holding
Fusion PFS Limited
Sherburn Holdings Limited
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
Real Estate
50
50
50
75
65
65
30
25
30
25
25
30
Seychelles
Seychelles
Seychelles
Seychelles
British Virgin Islands
Thailand
2,175,690
1,803,533
578,276
1,073,531
1,920,424
1,905,928
924,888
521,307
2,232,945
2,684,605
1,916,611
1,374,120
2,175,690
2,009,700
655,545
1,052,700
1,922,921
1,908,407
889,282
602,113
2,488,200
2,684,605
-
No individual investment constitutes 10% or more of the Companys investment portfolio. These
investments are carried at fair value through profit and loss as at the reporting date.
The Company has no arrangement to provide any financial support to the investee nor any support
provided during the year.
8.
Loans and advances

2015
RO
Loan to directors
Advance to a financial institution
Provision against advance
3,207,807
3,740,813
(3,740,813)
3,207,807
Loan to directors is unsecured and interest free with no fixed maturity.
2014
RO
Unaudited
3,188,459
3,740,813
(3,740,813)
3,188,459

27

9.
Share capital
(a) The Companys authorised share capital is RO 19,250 (2014 RO 19,250) shares of Baisas
385 (2014 Baisas 385) each. 100 (2014 100) shares of Baisas 385 (2014 Baisas 385)
each have been issued and are fully paid.
(b)Details of the shareholders and their shareholding are as follows:
2015
Holding
Shares
(%)
RO
Mr. Salim Hassan Yousuf Macki
Mr. Basil Salim Hassan Macki
Mrs. Hannah Salim Hassan Macki
2014
Holding
Shares
(%)
RO
Unaudited
Unaudited
60
20
20
23
8
8
60
20
20
23
8
8
100
39
100
39
10. Subordinated loan from related parties
Loan from a director

Loan from an associated company
2015
RO
2014
RO
Unaudited
47,064,902
5,286,366
38,508,081
2,318,131
52,351,268
40,826,212
The loans are unsecured and interest free with no fixed payment terms.
11.
Operating expenses
Registration and renewal charges

Custody fees and bank charges
Management fees
Legal and consultancy fees
Other expenses
2015
RO
2014
RO
Unaudited
10,080
25,468
72,233
2,086
16,711
5,415
19,576
53,781
1,991
6,976
126,578
87,739

28

12. Related party transactions
(a) These represent transactions with related parties as set out in accordance with IAS 24, related
party disclosures. Pricing policies and the terms of the transactions are approved by the
Companys Boards of Directors.
(b) Transactions with related parties of the Company or holders of 10% or more of the Companys
shares or their family members are as follows:
2015
2014
RO
RO
Unaudited
Sitting fees
Expenses paid by or on behalf of the directors
Movement in loan to directors
Subordinated loan received during the year
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
(c) Balances due from / (to) related parties at the reporting date are follows:
Loan to directors (Note 8)
2015
RO
2014
RO
Unaudited
3,207,807
3,188,459
47,064,902
4,286,366
38,508,081
2,318,131
52,351,268
40,826,212
Subordinated loans from:

- a director (Note 10)
- an associated company (Note 10)
13. Commitments
At reporting date, the Company had the following outstanding commitments which are expected to
mature within one year as shown below:
2015
2014
RO
RO
Unaudited
Investments expected to mature within one year
Investments expected to mature more than one year
14. Fair value of financial instruments
XX
XX
XX
XX
XX
XX

29

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Consequently,
differences can arise between carrying values and fair values.
The fair values of financial instruments are not significantly different from the carrying values
included in the financial statements.
Fair value estimation
The Company follows IFRS 7 for financial instruments that are measured in the statement of
financial position at fair value; this requires disclosure of fair value measurements by level of the
following fair value measurement hierarchy:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets.
Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3 - Inputs for the assets that are not based on observable market data (that is, unobservable
inputs).
The following table presents the investments that are measured at fair value at the reporting date:
31 December 2015
Financial assets at fair value through
profit or loss
- Quoted investments
- Unquoted investments
31 December 2014 (unaudited)

Financial assets at fair value through
profit or loss
- Quoted investments restated
- Unquoted investments
Level 1
RO
Level 2
RO
Level 3
RO
Total
RO
26,309,861
-
31,753,457
26,309,861
31,753,457
26,309,861
31,753,457
58,063,318
21,570,620
-
27,963,389
21,570,620
27,963,389
21,570,620
27,963,389
49,534,009
Transfers between levels

During the reporting period ended 31 December 2015, there were no transfers between Level 1 and
Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
15.
Fair value of financial assets and liabilities

The fair value of financial assets and liabilities at the reporting date approximates their carrying
amount in the statement of financial position.

30

16. Approval of financial statements

The financial statements were approved by the Management and authorised for issue on
XX XXX 2016.

HBS Investment Limited 2015

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HBS INVESTMENTS LIMITED

Report and financial statements

HBS INVESTMENTS LIMITED

Statement of financial position

Statement of profit or loss and other comprehensive income

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Independent auditor's report

Report on the financial statements

Independent auditor's report

Deloitte & Touche (M.E.) & Co. LLC

HBS Investments Limited

Statement of financial position

Total equity and liabilities

The accompanying notes form an integral part of these financial statements

HBS Investments Limited

Statement of profit or loss and other comprehensive income

(Loss) / profit and total comprehensive (loss) / income

The accompanying notes form an integral part of these financial statements

HBS Investments Limited

Statement of changes in equity

At 1 January 2014 (Unaudited)

At 1 January 2015 (Unaudited)

The accompanying notes form an integral part of these financial statements

HBS Investments Limited

Statement of cash flows

(Loss) / profit for the year

Operating profit before changes in operating assets

Net cash used in investing activities

The accompanying notes form an integral part of these financial statement

HBS Investments Limited

Notes to the financial statements

HBS Investments Limited

Notes to the financial statements (continued)

Adoption of new and revised International Financial Reporting Standards

New and revised IFRS in issue but not yet effective

Amendments to IAS 1 Presentation of Financial Statements

Amendments to IFRS 11 Joint arrangements relating to

Amendments to IAS 16 Property, Plant and Equipment and

Amendments to IAS 16 Property, Plant and Equipment and

Amendments to IAS 27 Separate Financial Statements

HBS Investments Limited

Notes to the financial statements (continued)

Adoption of new and revised International Financial Reporting Standards

Effective for annual periods

Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12

Annual Improvements to IFRSs 2012 - 2014 Cycle covering amendments to

When IFRS 9 is first applied

IFRS 7 Financial Instruments: Disclosures relating to the additional hedge

When IFRS 9 is first applied

HBS Investments Limited

Notes to the financial statements (continued)

Adoption of new and revised International Financial Reporting Standards

Effective for annual periods

IFRS 15 Revenue from Contracts with Customers

In May 2014, IFRS 15 was issued which established a single

Step 1: Identify the contract(s) with a customer.

IFRS 16 specifies how an IFRS reporter will recognise, measure, present

Effective date deferred

HBS Investments Limited

Notes to the financial statements (continued)

Adoption of new and revised International Financial Reporting Standards