ARAB INTERNATIONAL HOTELS COMPANY
PUBLIC SHAREHOLDING COMPANY
FINANCIAL STATEMENTS
31 DECEMBER 2020
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Arab International Hotels Company Public Shareholding Company
Amman – Jordan
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Arab International Hotels Company Public
Shareholding Company (the Company), which comprise the statement of financial position as at
31 December 2020, and the statement of income, the statement of comprehensive income,
statement of changes in equity and statement of cash flows for the year then ended, and notes to
the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the
financial position of the Company as at 31 December 2020, and its financial performance and its
cash flows for the year then ended in accordance with International Financial Reporting Standards
(IFRSs).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards, are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company
in accordance with the International Code of Ethics for Professional Accountants (IESBA Code)
together with the ethical requirements that are relevant to our audit of the financial statements in
Jordan, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Emphasis of a Matter
Without qualifying our openion, we draw attention to note (28) to the financial statements, which
describes the potential effect of COVID-19 pandemic on the Company’s operating environment.
Ernst & Young Jordan
P.O. Box 1140
Amman 11118
Jordan
Tel: 00 962 6580 0777\ 00 962 6552 6111
Fax:00 962 6553 8300
ey.com/me
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements for the current year. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. For each matter below, our
description of how our audit addressed the matter provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial statements section of our report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to our assessment of the risks
of material misstatement of the financial statements. The results of our audit procedures, including
the procedures performed to address the matters below, provide the basis for our audit opinion
on the accompanying financial statements.
Revenue recognition
How the key audit matter was addressed
Our audit procedures include considering the
appropriateness of the Company’s revenue
recognition accounting policies and assessed
compliance with the policies in terms of
applicable International Financial Reporting
Standards. We tested the Company’s controls
around revenue recognition and key controls
in the revenue cycle. We performed analytical
procedures for the gross margin for rooms
and food and beverages departments.
We performed also analytical procedures that
was based on building expectations about the
revenue figures for the year using financial
and non-financial information. We selected
and tested a sample of journal entries on
revenue accounts.
Refer to note (25) to the financial statements
for more details about revenues and note (5)
for significant accounting policies applicable
to revenue account.
Other information included in the Company’s 2020 annual report.
Other information consists of the information included in the annual report, other than the financial
statements and our auditor’s report thereon. Management is responsible for the other information.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information; we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of the financial statements
in accordance with IFRSs, 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.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exist. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exist, we are required
to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However future events or
conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current period,
and are therefore the key audit matters. We describe these matters in our auditor’s report, unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonable be expected to outweigh the public
interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
The Company maintains proper books of accounts which are in agreement with the financial
statements.
The partner in charge of the audit resulting in this auditor’s report was Waddah Issam Barqawi;
license number 591.
Amman – Jordan
28 February 2021
ARAB INTERNATIONAL HOTELS COMPANY PLC
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
The accompanying notes from 1 to 28 form part of these financial statements
Notes
2020
2019
ASSETS
JD
JD
Non-current assets -
Property and equipment
6
13,583,901
14,503,310
Financial assets at fair value through other
comprehensive income
7
4,359,067
5,202,367
Investments in associates
8
42,770,137
49,038,537
Deferred tax assets
18
418,409
-
61,131,514
68,744,214
Current assets -
Inventories
359,786
384,553
Accounts receivable and other current assets
11
1,009,848
4,584,180
Financial assets at amortized cost
9
1,500,000
1,500,000
Cash and short term deposits
12
4,365,716
2,736,877
7,235,350
9,205,610
Total Assets
68,366,864
77,949,824
EQUITY AND LIABILITIES
EQUITY-
Paid-in capital
13
32,000,000
32,000,000
Share premium
13
3,644,693
3,644,693
Statutory reserve
13
8,000,000
8,000,000
Voluntary reserve
13
8,000,000
8,000,000
Fair value reserve
7
(4,314,265)
(3,469,552)
Company’s share of the fair value reserve / investments
in associates
(3,678,657)
(2,487,136)
Retained earnings
2,566,762
10,651,397
Total Equity
46,218,533
56,339,402
Non-current liabilities -
Long-term loans
15
8,456,878
7,656,301
Bonds payable
10
10,000,000
10,000,000
18,456,878
17,656,301
Current liabilities -
Current portion of long- term loans
15
2,422,534
1,484,310
Accounts payable
448,167
877,390
Provisions and other current liabilities
16
820,752
1,592,421
3,691,453
3,954,121
Total Liabilities
22,148,331
21,610,422
Total Equity and Liabilities
68,366,864
77,949,824
ARAB INTERNATIONAL HOTELS COMPANY PLC
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2020
The accompanying notes from 1 to 28 form part of these financial statements
Notes
2020
2019
JD
JD
Operational revenues from Amman Marriott Hotel
3,170,300
10,822,183
Operational costs from Amman Marriott Hotel
(4,069,601)
(8,183,363)
Depreciation of property and equipment
6
(1,170,121)
(1,328,015)
Operational (loss) profits from the hotel
(2,069,422)
1,310,805
Share of (losses) profits from associates
8
(3,315,414)
4,441,755
Interest income
234,581
154,857
Finance costs
(966,228)
(1,044,148)
Dividends income
162,732
371,543
Other income
184,655
50,684
Depreciation of property and equipment
6
(29,120)
(34,095)
Administrative expenses
17
(784,828)
(894,136)
(Loss) profit before income tax
(6,583,044)
4,357,265
Income tax (expense) surplus
18
418,409
(140,776)
National contribution tax
-
(7,039)
(Loss) profit for the year
(6,164,635)
4,209,450
JD / Fils
JD / Fils
Basic and diluted (loss) earnings per share
19
(0/193)
0/132
ARAB INTERNATIONAL HOTELS COMPANY PLC
STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
The accompanying notes from 1 to 28 form part of these financial statements
Notes
2020
2019
JD
JD
(Loss) profit for the year
(6,164,635)
4,209,450
Add: Other comprehensive income items not to be
reclassified to profit or loss in subsequent
periods:
Net change in fair value reserve
7
(844,713)
(761,630)
Company’s share of the net change in fair value reserve
from the investments in associates
8
(1,191,521)
(1,054,051)
Total comprehensive (loss) income for the year
(8,200,869)
2,393,769
ARAB INTERNATIONAL HOTELS COMPANY PLC
STATEMENT OF CHANGE IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
The accompanying notes from 1 to 28 form part of these financial statements
Paid-in
capital
Share
premium
Statutory
reserve
Voluntary
reserve
Fair value
reserve*
Company’s share
from the fair
value reserve /of
the investment in
associates*
Retained
earnings
Total
JD
JD
JD
JD
JD
JD
JD
JD
2020 -
Balance at 1 January 2020
32,000,000
3,644,693
8,000,000
8,000,000
(3,469,552)
(2,487,136)
10,651,397
56,339,402
Total comprehensive loss for the year
-
-
-
-
(844,713)
(1,191,521)
(6,164,635)
(8,200,869)
Dividends (note 14)
-
-
-
-
-
-
(1,920,000)
(1,920,000)
Balance at 31 December 2020
32,000,000
3,644,693
8,000,000
8,000,000
(4,314,265)
(3,678,657)
2,566,762
46,218,533
2019 -
Balance at 1 January 2019
32,000,000
3,644,693
8,000,000
13,000,000
(2,707,922)
(1,433,085)
3,361,947
55,865,633
Total comprehensive loss for the year
-
-
-
-
(761,630)
(1,054,051)
4,209,450
2,393,769
Transfers
-
-
-
(5,000,000)
-
-
5,000,000
-
Dividends (note 14)
-
-
-
-
-
-
(1,920,000)
(1,920,000)
Balance at 31 December 2019
32,000,000
3,644,693
8,000,000
8,000,000
(3,469,552)
(2,487,136)
10,651,397
56,339,402
* It is restricted to use an amount of JD 7,992,922 from retained earnings as at 31 December 2020, which represents the total negative balance
of the fair value reserve and Company’s share of fair value reserve / investment in associates.
ARAB INTERNATIONAL HOTELS COMPANY PLC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
The accompanying notes from 1 to 28 form part of these financial statements
Notes
2020
2019
OPERATING ACTIVITIES
JD
JD
(Loss) profit before income tax
(6,583,044)
4,357,265
Adjustments for:
Depreciation on property and equipment
6
1,199,241
1,362,110
Gain on sale of property and equipment
-
(46,412)
Recovered from expected credit losses
(6,002)
-
Finance costs
966,228
1,044,148
Interest income
(234,581)
(154,857)
Share of loss (profit) from associates
8
3,315,414
(4,441,755)
Dividends income
(162,732)
(371,543)
Changes in working capital:
Inventories
24,767
13,114
Accounts receivable and other current assets
(130,778)
(3,487,786)
Accounts payable
(429,223)
(6,353)
Provisions and other current liabilities
(771,669)
(204,332)
(2,812,379)
(1,936,401)
Income tax paid
18
(186,831)
(80,113)
Net cash flows used in operating activities
(2,999,210)
(2,016,514)
INVESTING ACTIVITIES
Purchase of property and equipment
6
(279,832)
(1,019,608)
Purchase of financial assets at fair value through other
comprehensive income
-
(1,926)
Decrease in associate capital (note 8)
2,474,080
-
Dividends received from associates
8
163,904
4,268,109
Interest income received
234,581
154,857
Dividends received
-
371,543
Related parties – Beaches Company for Hotels and Resorts
receivable
3,711,112
-
Purchase of shares in associates
8
(876,519)
-
Proceed from sale of property and equipment
-
54,723
Net cash flows from investing activities
5,427,326
3,827,698
FINANCING ACTIVITIES
Dividends paid
14
(1,920,000)
(1,920,000)
Repayments of loans
15
-
(2,193,310)
Proceeds from loans
1,738,801
4,254,000
Finance costs paid
(618,078)
(1,044,148)
Net cash flows used in financing activities
(799,277)
(903,458)
Net increase (decrease) in cash and cash equivalents
1,628,839
907,726
Cash and cash equivalents on 1 January
2,736,877
1,829,151
Cash and cash equivalents on 31 December
12
4,365,716
2,736,877
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-1-
(1) GENERAL
The Arab International Hotels Company (the “Company”) was registered as a Public Shareholding
Company in 1975 with a paid-in capital of JD 3,000,000. The paid in capital was increased several
times throughout the years to become JD 32,000,000 with par value of JD 1 per share .
The Company owns Amman Marriott Hotel which commenced its operations during 1982. The
Hotel is managed by Marriott International Corporation in accordance with a management
agreement signed during 1976 and its subsequent amendments the latest of which was in 2014
and is valid until 2041 .
The financial statements were approved by the Company’s Board of Directors on 9 February
2021. These financial statements require the approval of the General Assembly of the
shareholders of the Company.
(2) BASIS OF FINANCIAL STATEMENTS PREPARATION
(2-1) BASIS OF PREPARATION
The financial statements are prepared under the historical cost convention except for the financial
assets at fair value through other comprehensive income which are presented at fair value as at
the date of the financial statements.
The financial statements have been prepared in accordance with International Financial Reporting
Standards.
The financial statements have been presented in Jordanian Dinar, which is the functional currency
of the Company.
(2-2) CONCEPTUAL ACCOUNTING CONCEPTS
Due to the spread of Corona virus (COID-19) as disclosed in note (28) which may cast significant
doubt on the Company’s ability to continue as a going concern. The Company’s management
believes that it is appropriate to use the going concern basis for the financial statements based
on the future business of the Company, in addition to its ability to obtain or reschedule banking
facilities.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-2-
(3) CHANGES IN ACCOUNTING POLICIES
The accounting policies used in the preparation of the financial statements are consistent with
those used in the preparation of the annual financial statements for the year ended 31 December
2019 except for the adoption of new standards effective as of 1 January 2020 shown below:
Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 Business Combinations clarifies that to be considered a business, an
integrated set of activities and assets must include, at a minimum, an input and a substantive
process that, together, significantly contribute to the ability to create output. Furthermore, it
clarifies that a business can exist without including all of the inputs and processes needed to
create outputs.
The amendments have been applied to transactions that are either a business merger or the
acquisition of assets which its acquisition date is on or after the beginning of the first annual
reporting period that began on or after January 1, 2020. Consequently, the company did not have
to reconsider these transactions that occurred on Earlier periods. Early application is permitted
and must be disclosed.
These amendments had no impact on the financial statements of the Company.
Amendments to IAS 1 and IAS 8: Definition of “Material”
The IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of
‘material’ across the standards and to clarify certain aspects of the definition. The new definition
states that, ’Information is material if omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of general-purpose financial statements
make on the basis of those financial statements, which provide financial information about a
specific reporting entity.
These amendments had no impact on the financial statements of the Company.
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
Interest Rate Benchmark Reform Amendments to IFRS 9 and IFRS 7 includes a number of reliefs,
which apply to all hedging relationships that are directly affected by interest rate benchmark
reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing
and or amount of benchmark-based cash flows of the hedged item or the hedging instrument.
These amendments have no impact on the financial statements of the Company.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-3-
Amendments to IFRS 16 Covid-19 Related Rent Concessions
On 28 May 2020, the IASB issued Covid-19-Related Rent Concessions - amendment to IFRS 16
Leases. The amendments provide relief to lessees from applying IFRS 16 guidance on lease
modification accounting for rent concessions arising as a direct consequence of the Covid-19
pandemic. This relates to any reduction in lease payments which are originally due on or before
30 June 2021. As a practical expedient, a lessee may elect not to assess whether a Covid-19
related rent concession from a lessor is a lease modification.
The amendment applies to annual reporting periods beginning on or after 1 June 2020. Earlier
application is permitted.
The amendment s did not have a material impact on the financial statements of the company.
(4) USE OF ESTIMATES
The preparation of the financial statements requires management to make estimates and
assumptions that affect the reported amounts of financial assets and liabilities and disclosure of
contingent liabilities. These estimates and assumptions also affect the revenues and expenses and
the resultant provisions. In particular, considerable judgment by management is required in the
estimation of the amount and timing of future cash flows when determining the level of provisions
required. Such estimates are necessarily based on assumptions about several factors involving
varying degrees of judgment and uncertainty and actual results may differ resulting in future
changes in such provisions.
Allowance for expected credit losses : Allowance for expected credit loss on receivables is reviewed
and under the principles and assumptions approved by the Company’s management to estimate
the allowance amount and in accordance with IFRS requirements.
Income Tax provision: The fiscal year shall be charged in respect of the income tax expense in
accordance with the regulations, laws and accounting standards. The needed income tax provision
is calculated accordingly.
Useful life of properties and equipment : The Company’s management estimates the useful life for
its tangible assets for the purpose of calculating depreciation by depending on the expected useful
life of these assets. Impairment loss is recorded in the statement of income (if any).
Legal Provision: To meet any legal obligations, provisions are made for these obligations based on
the opinion of the Company's legal advisor.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-4-
(5) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and equipment
Property and equipment is stated at cost, net of accumulated depreciation and accumulated
impairment losses (except lands).
Property and equipment depreciation is calculated using the straight-line method over their
estimated useful lives using the following annual depreciation rates:
%
Hotel’s building, renovations, and improvements 2-20
Furniture and fixture 8-12
Machinery and equipment 6-20
Vehicles 15
Fire extinguishing system 4
Solar System 5
The assets carrying values of property and equipment are reviewed whenever indications arise
or events incur that indicates that the carrying value is non recoverable. The asset’s carrying
amount is written down to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Expenditure incurred to replace a component of an item of property and equipment that is accounted
for separately is capitalised and the carrying amount of the component that is replaced is written
off. Other subsequent expenditure is capitalised only when it increases the future economic benefits
of the related item of property and equipment. All other expenditures are recognised in the statement
of profit or loss as the expense is incurred.
Financial assets at fair value through other comprehensive income
These assets represent investments in equity instruments for the purpose of maintaining them
over the long term.
Financial assets at fair value through other comprehensive income are recorded at fair value plus
acquisition costs at the date of acquisition and subsequently measured at fair value. Changes in
fair value are reported as a separate component in the statement of other comprehensive income
and in the statement of equity including the change in fair value resulting from conversion
differences of non-cash items of assets at foreign currencies. In case of sale of such assets or
part of it, the gains or losses is recorded at the statement of comprehensive income and in the
statement of equity and the valuation reserve balance for sold assets will be transferred directly
to retained earnings and not through statement of income. These assets are not subject to
impairment testing and dividends received are recognized in the statement of profit and loss when
declared.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-5-
Financial assets at amortized cost
Financial assets at amortized cost are the financial assets that the Company's management, in
accordance with its business model, intends to maintain in order to collect contractual cash flows
which consist of payments of principal and interest on the outstanding debt balance.
These assets are recognized at cost, plus acquisition costs, and the allowance / discount is
amortized using the effective interest method, restricted or credited to the interest, and any
impairment charge is removed and the original or part of the asset cannot be recovered. Their
value in the statement of income.
The amount of impairment in value of these assets represents the difference between the carrying
value of the records and the present value of the expected cash flows discounted at the original
effective interest rate.
Investments in associates
An associate is an entity in which the Company has significant influence on the financial and
operating decision-making (the Company does not control) which the company owns 20% to 50%
from the voting rights. The Company’s investments in its associates are accounted for using the
equity method.
Income and expenses resulting from transactions between the Company and the associate are
eliminated to the extent of the interest in the associate.
Accounts receivable
Accounts receivable are stated at original invoice amount less provision expected credit losses.
The Company applies the simplified approach in calculating the expected credit loss in
accordance with the international financial accounting standard number (9).
Inventories
Inventories are valued at cost (weighted average costing) or net realizable value whichever is
lower.
Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and
short-term deposits with maturities of three months or less, net of outstanding bank overdrafts.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-6-
Fair value
The Company measures financial instruments such as financial assets at fair value through other
comprehensive income at fair value on the date of the financial statements as disclosed in
(note 22).
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. The fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the
liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing the asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability
to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements
are categorised within the fair value hierarchy, described as follows, based on the lowest level
input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-7-
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at
amortized cost using the effective interest rate method.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive)
arising from a past event and the cost to settle the obligation is both probable and able to be reliably
measured.
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services
that are subject to risks and returns that are different from those of other business segments which
are measured based on the reporting to management and the decision makers in the Company.
A geographical segment is engaged in providing products or services within a particular economic
environment that are subject to risks and return that are different from those of segments operating
in other economic environments.
The Company's activity consists of three economic sectors the revenues and expenses of the
Marriott Amman Hotel, investments in financial assets through other comprehensive income and
investments in associates.
Revenue and expenses recognition
Revenue is recognized based on the five-step model framework derived from the international
financial reporting standard number (15) which includes the identification of the contract, price,
allocating the contract price to the performance obligation in the contract and recognizing revenue
when the company satisfies the performance obligation. Whereby revenue is recognized when
selling goods to the customers and issuing the invoice to the customer at a point in time.
Interest revenue is recognised on accrual basis using effective interest rate.
Profits of associates is recognised by using the equity method when the associates declare their
results.
Other income is recognised on accrual basis.
Expenses are recognised on accrual basis.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-8-
Foreign currency
Foreign currency transactions during the year are recorded using exchange rates that are in effect
at the dates of the transactions. Assets and liabilities denominated in foreign currencies are
translated to Jordanian Dinars using the prevailing exchange rates at year end. Foreign exchange
gains or losses are reflected in the statement of income.
Income Taxes
Income tax is accounted for in accordance with the Income Tax Law No. (34) of 2014 and
International Accounting Standard No. (12) which states that deferred tax is provided for
temporary differences, at each reporting date, between the tax basis of assets and liabilities and
their carrying amounts for financial reporting purposes.
Current tax is calculated based on taxable profits, which may differ from accounting profits
appearing in the statement of profit or loss. Accounting profits may include non-taxable profits or
expenses which may not be tax deductible in the current but in subsequent applicable years.
Deferred Tax Assets
Deferred tax assets are recognized for all deductible temporary differences such as unused tax
expenses and losses to the extent that it is probable that taxable profit will be available against
which the loses can be utilized. Management judgment is required to determine the amount of
deferred tax assets that can be recognized, based upon the likely timing and the level of future
taxable profits.
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-9-
(6) PROPERTY AND EQUIPMENT
Lands
Hotel’s
building and
renovations
and
improvements
Furniture
and fixtures
Machinery and
equipment
Vehicles
Fire
extinguishing
system
Work in
progress*
Solar
system
Solar
System
Total
2020-
JD
JD
JD
JD
JD
JD
JD
JD
JD
Cost
At 1 January 2020
2,094,168
17,497,244
8,789,331
7,512,299
352,175
424,782
1,630,831
2,620,208
40,921,038
Additions
-
17,664
83,563
132,204
-
-
25,980
20,421
279,832
Transfers
-
1,495,205
16,800
124,627
-
-
(1,636,632)
-
-
At 31 December 2020
2,094,168
19,010,113
8,889,694
7,769,130
352,175
424,782
20,179
2,640,629
41,200,870
Accumulated depreciation
At 1 January 2020
-
11,994,009
7,683,996
5,897,381
219,142
424,782
-
198,418
26,417,728
Depreciation for the year
-
366,305
266,087
403,371
31,772
-
-
131,706
1,199,241
At 31 December 2020
-
12,360,314
7,950,083
6,300,752
250,914
424,782
-
330,124
27,616,969
Net book value
At 31 December 2020
2,094,168
6,649,799
939,611
1,468,378
101,261
-
20,179
2,310,505
13,583,901
* The estimated cost to complete the projects as at 31 December 2020 is approximately JD 80,000, and it is expected to complete these
projects during the year 2021.
** The total cost of fully depreciated assets as at 31 December 2020 is JD 12,178,425 (2019: JD 9,605,357).
*** The depreciation expenses at 31 December 2020 is divided between depreciation of operating property and equipment (JD 1,170,212) and
depreciation of general and administrative property and equipment (JD 29,120).
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-10-
Lands
Hotel’s
building and
renovations
and
improvements
Furniture
and fixtures
Machinery and
equipment
Vehicles
Fire
extinguishing
system
Work in
progress*
Solar
system
Solar
System
Total
2019-
JD
JD
JD
JD
JD
JD
JD
JD
JD
Cost
At 1 January 2019
2,094,168
16,926,786
8,721,333
7,603,209
409,550
424,782
2,134,590
2,437,715
40,752,133
Additions
-
-
67,864
363,369
80,235
-
416,152
91,988
1,019,608
Transfers
-
570,458
-
-
-
-
(570,458)
-
-
Returns from contractors
-
-
-
-
-
-
-
(437,210)
(437,210)
Disposals
-
-
-
(275,883)
(137,610)
-
-
-
(413,493)
At 31 December 2019
2,094,168
17,497,244
8,789,197
7,690,695
352,175
424,782
1,980,284
2,092,493
40,921,038
Accumulated depreciation
At 1 January 2019
-
11,646,688
7,248,269
5,770,698
319,373
420,944
-
54,828
25,460,800
Depreciation for the year
-
347,320
437,112
401,167
29,084
3,838
-
143,589
1,362,110
Disposal
-
-
-
(275,882)
(129,300)
-
-
-
(405,182)
At 31 December 2019
-
11,994,008
7,685,381
5,895,983
219,157
424,782
-
198,417
26,417,728
Net book value
At 31 December 2019
2,094,168
5,503,236
1,103,816
1,794,712
133,018
-
1,980,284
1,894,076
14,503,310
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-11-
(7) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
2020
2019
JD
JD
Investment in companies’ shares – quoted in Amman
Stock Exchange
4,182,067
5,025,367
Investment in companies’ shares– unquoted in Amman
Stock Exchange
177,000
177,000
4,359,067
5,202,367
Movement on the financial assets at fair value is as follows:
2020
2019
JD
JD
At 1 January
5,202,367
5,962,071
Investment during the year
1,413
1,926
Change in fair value
(844,713)
(761,630)
At 31 December
4,359,067
5,202,367
Movement on fair value reserve is as follows:
2020
2019
JD
JD
At 1 January
(3,469,552)
(2,707,922)
Change in fair value
(844,713)
(761,630)
At 31 December 2020
(4,314,265)
(3,469,552)
(8) INVESTMENT IN ASSOCIATES
Percentage of ownership
Value
2020
2019
2020
2019
%
%
JD
JD
Business Tourism Company
35.516
35.516
16,802,918
18,393,353
Al Dawliyah for Hotels and Malls Company
26.91
26.91
12,701,929
13,790,409
Interior Design Studio Company
25
25
-
-
Beaches Company for Hotels and Resorts*
48.89
30.93
763,192
2,503,328
Jordan Investor Center Company
49.34
49.34
10,986,524
12,836,044
Arab International Real Estate Company
42.35
42.35
1,515,574
1,515,403
42,770,137
49,038,537
ARAB INTERNATIONAL HOTELS COMPANY PLC
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-12-
* The General Assembly approved in their extraordinary meeting held on 28 June 2020 on merging the
Company with its associate “Beaches Company for Hotels and Resorts“. The legal procedures were
not completed until the date of preparing these condensed financial statements.
The schedule below includes a summary of the associates main operations:
Company
Main operation
Business Tourism Company – private shareholding
Owning company of Jordan Valley Marriot and
Petra Marriott Hotels
Al Dawliyah for Hotels and Malls Company - PLC
Owning company of Sheraton Amman Hotel
Interior Design Studio Company LLC.
Interior designs projects for hotels
Beaches Company for Hotels and Resorts – private
shareholding
Owning company of Marriot Aqaba Hotel
Jordan Investor Center Company – private shareholding
Investments in stocks and companies
Arab International Real Estate Company – private
shareholding
Investments in lands and real estate
Movement on investment in associates is as follows:
2020
2019
JD
JD
Balance at 1 January
49,038,537
49,918,942
Decrease in associate capital
(2,474,080)
-
Dividends paid
(163,904)
(4,268,109)
Share of (loss) profit from associates
(3,315,414)
4,441,755
Share of change in fair value reserve
(1,191,521)
(1,054,051)
Purchase of additional shares in associate*
876,519
-
42,770,137
49,038,537
* During 2020 the Company purchased 876,519 shares from Beaches Company for Hotels and
Resorts – private shareholding.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-13-
Al Dawliyah for
Hotels and Malls
Company
Business
Tourism
Company
Jordan
Investor
Center
Company
Interior
Design
Studio
Company
Beaches
Company
for Hotels
and Resorts
Arab
International
Real Estate
Company
Total
2020 -
JD
JD
JD
JD
JD
JD
JD
Investment in associates
Current assets
1,712,941
3,164,608
1,310,631
-
4,791,868
93,991
11,074,039
Non-current assets
58,563,453
54,628,713
24,114,666
-
-
3,482,598
140,789,430
Current liabilities
(6,008,612)
(3,509,818)
(7,270,106)
-
-
(1,759)
(16,790,295)
Non-current liabilities
(4,260,463)
(3,245,960)
-
-
(3,020)
-
(7,509,443)
Equity
(50,007,319)
(51,037,543)
(18,155,191)
-
(4,788,848)
(3,574,830)
(127,563,731)
Ownership %
26.91
35.516
49.34
25
48.89
42.35
-
Investment carrying amount
12,701,929
16,802,918
10,986,524
-
763,192
1,515,574
42,770,137
Revenues
Operating (losses) Revenues
(2,386,696)
(3,012,005)
(910,633)
-
161,390
1,439
(6,146,505)
Administrative expenses
(727,566)
(599,268)
(262,708)
(98,636)
(397,412)
(926)
(2,086,516)
Finance costs
(264,840)
(201,289)
(670,166)
-
-
-
(1,136,295)
(Loss) Income before tax
(3,379,102)
(3,812,562)
(1,843,507)
(98,636)
(236,022)
513
(9,369,316)
Income tax expense
-
-
-
-
-
(108)
(108)
(Loss) profit for the year
(3,379,102)
(3,812,562)
(1,843,507)
(98,636)
(236,022)
405
(9,369,424)
The Company’s share of (loss) profit for
the year
(909,316)
(1,354,070)
(909,623)
(24,659)
(117,574)
(172)
(3,315,414)
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-14-
Al Dawliyah for
Hotels and Malls
Company
Business
Tourism
Company
Jordan
Investor
Center
Company
Interior
Design
Studio
Company
Beaches
Company for
Hotels and
Resorts
Arab
Internation
al Real
Estate
Company
Total
2019 -
JD
JD
JD
JD
JD
JD
JD
Investment in associates
Current assets
2,469,140
6,691,889
9,619,902
310,897
26,445,896
95,001
45,632,725
Non-current assets
61,052,267
56,543,069
25,234,079
14,553
2,600,000
3,482,598
148,926,566
Current liabilities
(5,778,067)
(1,989,189)
(11,177,016)
(285,904)
(13,416,039)
-
(32,646,215)
Non-current liabilities
(3,438,017)
(6,056,188)
-
(90,430)
-
(1,988)
(9,586,623)
Equity
54,305,323
55,189,581
23,676,965
(50,883)
15,629,857
3,575,611
152,326,453
Ownership %
26,91
35,516
49,342
25
30,926
42,353
Investment carrying amount
13,790,409
18,393,353
12,836,044
-
2,503,328
1,515,403
49,038,537
Revenues
Operating Revenues
11,439,137
18,239,116
2,572,425
377,458
19,519,106
2,732
52,149,974
Administrative expenses
(10,578,867)
(15,578,499)
(1,320,996)
(573,180)
(6,057,084)
(110)
(34,108,736)
Finance costs
(274,619)
(315,242)
(816,936)
(16,242)
-
-
(1,423,039)
Income (loss) before tax
585,651
2,345,375
434,493
(211,964)
13,462,022
2,622
16,618,199
Income tax expense
(95,571)
(160,000)
-
-
-
-
(255,571)
Profit (loss) for the year
490,080
2,185,375
434,493
(211,964)
13,462,022
2,622
16,362,628
The Company’s share of profit (loss) for
the year
131,880
776,158
214,388
(40,970)
3,359,189
1,110
4,441,755
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-15-
(9) FINANCIAL ASSETS AT AMORTIZED COST
On 12 October 2017, Arab International Hotels Company purchased 15 bonds from Jordan Ahli
Bank (sister company) with a variable interest rate where the interest rate at the beginning of each
period equals to the discount rate of the Central Bank of Jordan plus 2% margin which amounted
to 6.75% at issuance date. The interest at year end was 7.5% and the interest is paid semi-
annually. The Bond is due in one instalment on 12 October 2023. In October 2018 the Board of
Directors decided to sell Jordan Ahli Bank bonds, thus the bonds were classified as current
assets.
(10) BONDS PAYABLE
On 22 January 2017, Arab International Hotels Company Public Shareholding Company issued
a 10,000 bonds through Jordan Ahli Bank with a par value of JD 1,000 and a total value of JD
10,000,000 for five years at a fixed interest rate of 5.5%. paid semi-annually. The bond principal
is due in one instalment on 22 January 2022.
(11) ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS
2020
2019
JD
JD
Trade receivables
363,842
525,163
Provision for expected credit losses
(33,288)
(39,290)
330,554
485,873
Amounts due from related parties (note 20)
23,299
3,799,907
Other current assets
655,995
298,400
1,009,848
4,584,180
Expected credit losses provision amounted to JD 33,288 as at 31 December 2020 (2019: JD
39,290).
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-16-
Movement on expected credit losses provision is as follows:
2020
2019
JD
JD
Balance as at 1 January
39,290
38,977
Provision of the year
-
313
Recovered from expected credit losses
(6,002)
-
Balance as at 31 December
33,288
39,290
As at 31 December, the ageing of unimpaired receivables net of expected credit losses provision
is as follows:
1 - 30
31 – 60
61 – 90
91 – 120
>120
days
days
days
days
days
Total
JD
JD
JD
JD
JD
JD
2020
261,269
39,930
4,561
6,000
18,794
330,554
2019
287,005
155,870
12,295
5,703
25,000
485,873
The management expects to collect all unimpaired receivables balances. It is not the practice of
the Company to obtain collateral against the receivable, therefore they are unsecured.
(12) CASH AND SHORT TERM DEPOSITS
2020
2019
JD
JD
Short-term deposits*
2,939,233
689,458
Cash on hands and at banks
1,426,483
2,047,419
4,365,716
2,736,877
* Short term deposits represent deposits held with local banks in Jordanian Dinar with maturities
of three months or less, bearing an interest rate 4%.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-17-
(13) EQUITY
Paid-in capital
The Company authorized paid-in capital amounted to JD 32,000,000 divided to 32,000,000
shares with par value of JD 1 per share as at 31 December 2020.
Share premium
The amount accumulated in this account represents the difference between the proceeds of share
issuances and the par value of the issued shares.
Statutory reserve
The accumulated amounts in this account represent cumulative appropriations of 10% of the profit
before income tax. The statutory reserve is not available for distribution to the shareholders. The
Company is allowed to stop the transfer to this account when the reserve amount reaches 25%
of the share capital.in reference to that the Company decided not to transfer any additional
amounts to the statutory reserve.
Voluntary reserve
The accumulated amounts in this account represent cumulative appropriations of 20% of the profit
before income tax. The statutory reserve is available for distribution to the shareholders. At its
meeting held on 22 April 2019, the General Assembly approved the transfer of JD 5,000,000 from
voluntary reserve to retained earnings.
(14) Dividends
The General Assembly approved in its meeting held on 28 April 2020, the distribution of cash
dividends amounted to JD 1,920,000 representing 6% of the paid in capital as a result of 2019’s
operations (2019: JD1,920,000).
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-18-
(15) Loans
2020
2019
Current
portion of
long- term
loans
Long term
loans
Current
portion of
long- term
loans
Long term
loans
JD
JD
JD
JD
Jordan Ahli Bank – USD (1)
709,000
-
709,000
-
Jordan Ahli Bank – USD (2)
330,866
1,985,204
330,866
1,985,204
Jordan Ahli Bank – JD (3)
531,868
1,329,673
444,444
1,417,097
Jordan Ahli Bank – USD (4)
Jordan Ahli Bank – JD (5)
850,800
-
3,403,200
1,738,801
-
-
4,254,000
-
2,422,534
8,456,878
1,484,310
7,656,301
Jordan Ahli Bank – USD (1)
This represents Jordan Ahli Bank loan amounting to USD 10,000,000 (JD 7,090,000). The
Company signed an agreement with Jordan Ahli Bank on 6 August 2015 for a loan which was
granted against the Company’s guarantee and with an interest rate of 4.10%. The loan will be
repaid in 10 equal semi- annual instalments. The first instalment was due on 30 September 2015,
and the interest will be paid every 6 months. During the period ended 31 December 2020, the
loan was rescheduled, as the due dates for the instalments of the year 2020 were postponed until
the end of the loan life in 31 March 2021.
Jordan Ahli Bank – USD (2)
This balance represents Jordan Ahli Bank loan amounting to USD 4,200,000 (JD 2,977,800). The
Company signed an agreement with Jordan Ahli Bank on 15 April 2015. this loan was granted
against the Company’s guarantee and with an interest rate of 4%. The loan will be paid in 18
equal semi- annual instalments. The first instalment was due on 30 September 2017, and the
interest will be paid every 6 months. The loan instalments for the years 2018 and 2017 were
rescheduled to 2025 and 2026 while the interest will be paid every 6 months. During the period
ended 31 December 2020, the loan was rescheduled, as the due dates for the instalments of the
year 2020 were postponed until the end of the loan life on October 2027.
Jordan Ahli Bank – JD (3)
On 4 November 2015 the Company signed an energy loan agreement with Jordan Ahli Bank with
a ceiling of JD 4,000,000 with an annual interest rate of 4% on utilized balance. The loan will be
paid in 18 semi annual instalments, the first instalment was due on 1 November 2017. The last
instalment will be due on 1 May 2025. During the period ended 31 December 2020, the loan was
rescheduled, as the due dates for the instalments of the year 2020 were postponed until the end
of the loan life on May 2024.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-19-
Jordan Ahli Bank – USD (4)
This balance represents Jordan Ahli Bank loan amounting to USD 6,000,000 (JD 4,254,000). The
Company signed an agreement with Jordan Ahli Bank on 26 March 2019 for a loan which was
granted against the Company’s guarantee and with an interest equivalent to LIBOR 2.5% and
minimum 5%. The loan will be paid in 10 equal semi - annual instalments. The first instalment
was due on 28 February 2021, and the interest will be paid monthly.
Jordan Ahli Bank – JD (5)
On 15 June 2020 the Company signed a funding operating expenses and salaries agreement
with Jordan Ahli Bank with a ceiling of JD 3,000,000 with an annual interest rate of 3% on utilized
balance. The loan will be paid in 16 semi annual instalments, the first instalment will be due on
30 June 2022. The last instalment will be due on 31 December 2028. The Company utilized an
amount of JD1,738,801 as of 31 December 2020.
These loans were granted against the Company’s guarantee.
Movement on the loans is as follows:
2020
2019
JD
JD
Balance as at 1 January
9,140,611
7,079,921
Proceeds from loans
1,738,801
4,254,000
Loans repayments
-
(2,193,310)
10,879,412
9,140,611
- The amount of annual payments and maturities of the loans are as follows:
Year
JD
2021
2,422,534
2022
1,565,767
2023
1,850,320
2024 - 2028
5,040,791
10,879,412
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-20-
(16) PROVISIONS AND OTHER CURRENT LIABILITIES
2020
2019
JD
JD
Due to share holders and dividends payable
358,660
337,278
Board of Directors’ benefits
-
65,000
Accrued expenses
462,092
653,506
Income tax provision (note 18)
-
186,831
Other credit balances
-
342,767
National contribution taxes provision
-
7,039
820,752
1,592,421
(17) ADMINISTRATIVE EXPENSES
2020
2019
JD
JD
Salaries, wages and other benefits
315,314
405,280
Prior years income tax
43,167
-
Social security
11,863
14,660
Board of Directors travel and transportation expenses
97,293
101,682
Chairman office expenses
5,171
5,208
BOD remuneration
-
65,000
Insurance expenses
56,726
74,141
Governmental fees
27,420
26,747
Donations
19,200
19,200
Rent
19,350
19,350
Professional fees
12,950
10,000
Advertisement expenses
3,296
6,910
Vehicles expenses
13,977
17,900
Bank expenses
20,313
23,629
Property tax expenses
45,724
46,368
Stationery and publications
6,483
8,715
Hospitality expenses
3,263
6,175
Solar System expenses
69,337
33,266
Others
13,981
9,905
784,828
894,136
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-21-
(18) INCOME TAX
The income tax for the years ended 31 December 2020 has not been calculated due to the excess
in expenses over taxable income in accordance with income tax law no (38) of 2018.
The income tax for the year ended 31 December 2019 is calculated in accordance with the
Income Tax Law No. (38) of 2018.
The Company submitted its tax declarations to the Income Tax and Sales Tax departments up to
the year 2019.
The Company obtained clearance from the Income Tax Department up to the year 2018.
A- The movement on income tax provision is as follow:
2020
2019
JD
JD
Balance as at 1 January
186,831
126,168
Income tax expense for the year
-
140,776
Income tax paid
(186,831)
(80,113)
Balance as at 31 December
-
186,831
B- The reconciliation between the accounting profit and taxable income is as follows:
2020
2019
JD
JD
Accounting (loss) profit
(6,583,044)
4,357,265
Non-taxable income
3,478,146
(4,813,299)
Non-deductible expenses
1,012,856
1,159,913
Taxable (loss) income
(2,092,042)
703,879
Income tax expense for the year
-
140,776
Statutory income tax rate
20%
20%
Effective income tax rate
-
3.23%
The income tax expense at it appears on the statement of profit and loss is as follows:
2020
2019
JD
JD
Current year income tax expense
-
(140,776)
Deferred tax assets
418,409
-
Income tax surplus (expense)
418,409
(140,776)
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-22-
(19) BASIC AND DILUTED (LOSS) EARNINGS PER SHARE
2020
2019
(Loss) Profit for the year (JD)
(6,164,635)
4,209,450
Weighted average number of shares (share)
32,000,000
32,000,000
JD/ Fils
JD/ Fils
Basic (loss) earnings per share
(0/193)
0/132
The diluted earnings per share of the (loss) profit for the year to shareholders of the Company is
equal to the basic earnings per share of (loss) profit for the year.
(20) RELATED PARTIES
Related parties represent associated companies, sister companies, major shareholders, directors
and key management personnel of the Company, and entities controlled, jointly controlled or
significantly influenced by such parties. Pricing policies and terms of these transactions are
approved by the Company’s management.
Related parties balances included in the statement of financial position is as follow:
2020
2019
JD
JD
Assets
Bank deposit - Jordan Ahli Bank
2,939,233
689,458
Current account at Jordan Ahli Bank
1,295,098
2,025,919
Financial assets at amortized cost (note 9)
1,500,000
1,500,000
The other debit balances includes due from related
parties broken down as follows:
Due from Interior Design Studio Company Partner
23,299
23,299
Petra Marriott Hotel
-
16,494
Jordan Valley Marriott Hotel
-
40,195
Due from Business Tourism Company
-
1,000
Due from Al Dawliyeh for hotels and malls
-
4,582
Due from Beaches Company for Hotel and Resorts
-
3,711,112
Due from Jordan investor company
-
3,225
23,299
3,799,907
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-23-
Liabilities:
2020
2019
JD
JD
Loans granted by Jordan Ahli Bank
10,879,412
9,140,611
Due to banks - Jordan Ahli Bank
-
-
Bonds payable (note 10)
7,300,000
7,300,000
Financial assets at fair value through other comprehensive income:
2020
2019
JD
JD
The Joradan Worsted Mills Company
1,854,410
2,079,347
El Zay Ready Wear Manufacturing Company
145,396
176,006
Jordan Ahli Bank
1,216,813
1,501,263
Transactions with related parties included in the statement of income are as follows:
2020
2019
JD
JD
Interest income on deposits - Jordan Ahli Bank
21,721
46,501
Dividends income
162,732
294,584
Interest income on financial assets at amortized cost
90,134
113,250
Key management salaries and benefits and Board of
Directors remuneration
302,698
347,630
Finance costs – Jordan Ahli Bank
414,708
494,148
Finance costs bonds – related parties
401,500
401,500
(21) RISK MANAGEMENT
Interest rate risk
The Company is exposed to interest rate risk on its interest bearing assets and liabilities such as
bank deposits and bank overdraft and term loans. There is no interest rate risk associated with
interest rate on bonds as it bears fixed interest rates.
The sensitivity of the statement of income is the effect of the assumed changes in interest rates
on the Company’s profit for one year, based on the floating rate financial assets and financial
liabilities held at 31 December.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-24-
The following table demonstrates the sensitivity of the statement of income to reasonably possible
changes in interest rates as 31 December, with all other variables held constant.
2020-
Increase
in basis points
Effect on
profit
for the year
Currency
JD
JD
100
(65,396)
USD
100
(72,791)
Decrease
in basis points
Effect on
profit
for the year
Currency
JD
JD
100
65,396
USD
100
72,791
2019-
Increase
in basis points
Effect on
profit for the
year
Currency
JD
JD
100
(11,721)
USD
100
(72,791)
Decrease
in basis points
Effect on
profit for the
year
Currency
JD
JD
100
11,721
USD
100
72,791
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-25-
Equity price risk
The following table demonstrates the sensitivity of the fair value reserve to reasonably possible
changes in equity prices, with all other variables held constant.
2020-
Change in
equity price
Effect on
equity
Equity price
%
JD
Amman Stock Exchange
5
(5)
217,953
(271,953)
2019 -
Change in
equity price
Effect on
equity
Equity price
%
JD
Amman Stock Exchange
5
260,118
(5)
(260,118)
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.
The Company seeks to limit its credit risk with respect to customers by setting credit limits for
individual customers and monitoring outstanding receivables. The Company seeks to limit its
credit risk with respect to banks by only dealing with reputable banks.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-26-
Liquidity risk
The Company limits its liquidity risk by ensuring bank facilities are available.
The table below summarises the maturities of the Company’s (undiscounted) financial liabilities
at 31 December, based on contractual payment dates and current market interest rates.
31 December 2020
Less than
3 months
3 to 12
months
1 to 5
years
Total
JD
JD
JD
JD
Bonds payable
-
550,000
11,100,000
11,650,000
Accounts payable and other current liabilities
1,268,919
-
-
1,268,919
Loans
820,313
1,647,224
9,820,116
12,287,653
Total
2,089,232
2,197,224
20,920,116
25,206,572
31 December 2019
Bonds payable
-
550,000
11,100,000
11,650,000
Accounts payable and other current liabilities
2,469,811
-
-
2,469,811
Loans
820,313
1,094,406
8,634,133
10,548,852
Total
3,290,124
1,644,406
19,734,133
24,668,663
Currency risk
Most of the Company’s transactions are in Jordanian Dinars and US Dollar. The Jordanian Dinar
is fixed against US Dollar (1.41 USD / 1JD). Accordingly, the effect of currency risk is not material
to the financial statements.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-27-
(22) FAIR VALUE FINANCIAL INSTRUMENTS
Financial instruments comprise of financial assets and liabilities.
Financial assets consists of cash on hand and at banks, account receivable, and some other debit
balances. Financial liabilities consist of accounts payable, due to banks, loans, and some other
current liabilities.
The Company uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value
are observable, either directly or indirectly.
Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are
not based on observable market data.
Assets measured at fair value
2020-
Level 1
Level 2
Level 3
Total
JD
JD
JD
JD
Financial assets at fair value through other
comprehensive income
4,182,067
-
177,000
4,359,067
2019-
Financial assets at fair value through other
comprehensive income
5,025,367
-
177,000
5,202,367
(23) CAPITAL MANAGEMENT
The primary objective of the Company's capital management is to ensure that it maintains healthy
capital ratios in order to support its business and maximize shareholder value.
The Company manages its capital structure and makes adjustments to it in light of changes in
business conditions. No changes were made in the objectives, policies, or processes for the
current year and previous year.
Capital comprises of paid-in capital, share premium, statutory reserve, voluntary reserve , change
in fair value reserve, company’s share from change in fair value reserve /from investment in
associates, and retained earnings and is measured at JD 46,218,533 as of 31 December 2020
(2019: JD 56,339,402).
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-28-
(24) CONTINGENCIES AND COMMITMENTS
Lawsuits
The Company is a defendant in a number of lawsuits amounting JD 6,634 representing legal
claims related to its activities (2019: JD 43,385).
The Company filed a number of lawsuits amounting JD 29,459 representing legal claims related
to its activities.
Capital commitments
Expected cost to complete the projects in progress as of 31 December 2019 is approximately JD
5,000,000 and it is expected to complete such projects during the year 2021.
(25) SEGMENT INFORMATION
A business segment is the Company’s assets and operations engaged in providing products
together or are subject to risks and returns services differ from those of other business segments.
Geographical segment is associated in providing products or services in a particular economic
environment subject to risks and rewards that are different from those in other segments operating
in other economic environments. Segment results are as follows:
The following table represent Marriott Amman operating revenues:
2020
2019
JD
JD
Rooms Revenues
1,594,033
6,470,310
F&B Revenues
1,330,082
4,013,850
Other Revenues
246,185
338,023
3,170,300
10,822,183
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-29-
The following table summarizes the Segment results:
Hotel
sector
Investment
in financial
assets
Total
31 December 2020 -
JD
JD
JD
Revenues
1,488,882
(1,052,028)
436,854
Segment results -
(Loss) profit before income tax
(5,531,016)
(1,052,028)
(6,583,044)
Income tax surplus
418,409
-
418,409
National contribution tax
-
-
-
Loss for the year
(5,112,607)
(1,052,028)
(6,164,635)
Other Segment Information
Capital expenditure
279,832
-
279,832
Depreciation
1,199,241
-
1,199,241
31 December 2019 -
Revenues
15,181,700
659,322
15,841,022
Segment results -
Profit before income tax
3,697,943
659,322
4,357,265
Income tax expense
(119,474)
(21,302)
(140,776)
National contribution tax
(7,039)
-
(7,039)
Profit for the year
3,571,430
638,020
4,209,450
Other Segment Information
Capital expenditure
1,019,608
-
1,019,608
Depreciation
1,362,110
-
1,362,110
Assets and Liabilities
31 December 2020
Assets segment
48,824,098
19,124,357
68,366,864
Liabilities segment
22,148,331
-
1,362,110
31 December 2019
Assets segment
54,392,682
23,557,142
77,949,824
Liabilities segment
21,610,422
-
21,610,422
The Company share from associates (losses) profits amounted to 3,315,414 JD for the year
ended 31 December 2020 (2019: JD 4,441,755).
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-30-
(26) STANDARDS ISSUED BUT NOT YET EFFECTIVE
The standards and interpretations that are issued but not yet effective, up to the date of issuance
of the Company’s financial statements are disclosed below. The Company intends to adopt these
standards, if applicable, when they become effective.
IFRS 17 Insurance Contracts
IFRS 17 provides a comprehensive model for insurance contracts covering the recognition and
measurement and presentation and disclosure of insurance contracts and replaces IFRS 4 -
Insurance Contracts. The standard applies to all types of insurance contracts (i.e. life, non-life,
direct insurance and re-insurance), regardless of the type of entities that issue them, as well as
to certain guarantees and financial instruments with discretionary participation features. The
standard general model is supplemented by the variable fee approach and the premium allocation
approach.
The new standard will be effective for annual periods beginning on or after 1 January 2023 with
comparative figures required. Early application is permitted provided that the entity also applies
IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17.
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the
requirements for classifying liabilities as current or non-current. The amendments clarify :
- what is meant by a right to defer settlement,
- the right to defer must exist at the end of the reporting period,
- that classification is unaffected by the likelihood,
- that an entity will exercise its deferral right,
- and that only if an embedded derivative in a convertible liability is itself an equity
instrument would the terms of a liability not impact its classification.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023
and must be applied retrospectively.
Reference to the Conceptual Framework – Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the
Conceptual Framework. The amendments are intended to replace a reference to the Framework
for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to
the Conceptual Framework for Financial Reporting issued in March 2018 without significantly
changing its requirements.
The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of
potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within
the scope of IAS 37 or IFRIC 21 Levies, if incurred separately.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-31-
At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets
that would not be affected by replacing the reference to the Framework for the Preparation and
Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022
and apply prospectively.
The amendments are not expected to have a material impact on the Company.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use,
which prohibits entities from deducting from the cost of an item of property, plant and equipment,
any proceeds from selling items produced while bringing that asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. Instead, an
entity recognises the proceeds from selling such items, and the costs of producing those items,
in profit or loss.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022
and must be applied retrospectively to items of property, plant and equipment made available for
use on or after the beginning of the earliest period presented when the entity first applies the
amendment.
The amendments are not expected to have a material impact on the Company.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to
include when assessing whether a contract is onerous or loss-making.
The amendments apply a “directly related cost approach”. The costs that relate directly to a
contract to provide goods or services include both incremental costs and an allocation of costs
directly related to contract activities.
General and administrative costs do not relate directly to a contract and are excluded unless they
are explicitly chargeable to the counterparty under the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022.
The Company will apply these amendments to contracts for which it has not yet fulfilled all its
obligations at the beginning of the annual reporting period in which it first applies the amendments.
The amendments are not expected to have a material impact on the Company.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-32-
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial
liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued
amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing
whether the terms of a new or modified financial liability are substantially different from the terms
of the original financial liability. These fees include only those paid or received by the borrower
and the lender, including fees paid or received by either the borrower or lender on the other’s
behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on
or after the beginning of the annual reporting period in which the entity first applies the
amendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022
with earlier adoption permitted. The Company will apply the amendments to financial liabilities
that are modified or exchanged on or after the beginning of the annual reporting period in which
the entity first applies the amendment.
The amendments are not expected to have a material impact on the Company.
IBOR reform Phase 2
IBOR reform Phase 2, which will be effective on 1 January 2021, includes a number of reliefs and
additional disclosures. The reliefs apply upon the transition of a financial instrument from an IBOR
to a risk-free-rate (RFR).
Changes to the basis for determining contractual cash flows as a result of interest rate benchmark
reform are required as a practical expedient to be treated as changes to a floating interest rate,
provided that, for the financial instrument, the transition from the IBOR benchmark rate to RFR
takes place on an economically equivalent basis.
(27) COMPARATIVE FIGURES
Some of 2019 comparative figures were reclassified to correspond with those of 2020
presentation. The reclassification has no effect on the loss and equity of the year 2019.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-33-
(28) THE OUTBREAK OF CORONAVIRUS (COVID-19) AND ITS IMPACT ON THE COMPANY
The coronavirus has had an impact on the global economy and caused disruption in global
markets together with travel restrictions which has adversely impacted the tourism and hospitality
sector as a result of cancellations of conferences and hotel reservations. Further to the above,
the Cabinet of Jordan decided to cease all commercial travel to and from the Kingdom effective
17 March 2020 until 4 September 2020 and tightened travel procedures, in addition to the
quarantine of arrivals to the Kingdom.
The Jordanian Prime Minister issued the following defense orders under Defense Law No. 13 for
the year 1992 which have directly or indirectly affected the Company's operations and
performance:
1. Defense Order No. 1 which suspends certain provisions of Social Security Law No. 1 of 2014
and its amendments and the regulations applied by the Social Security Corporation. This
including the suspension of the application of old-age insurance for the months of March,
April and May 2020 for all those subject to the Jordanian Labor Law in the private sector.
2. Defense Order No. 6 which sets the wages of workers in private sector and any other
organization subject to the Jordanian Labor Law as follows:
• Workers who perform their work in the workplace are entitled to their full wages. It is
permissible for the employer to agree with the employees to reduce wages up to 30%
of the employees’ wage granted that this policy is applied across the entire entity
including the salaries of top management personnel.
• Full time workers who perform their work remotely at the entities which are authorized
to work remotely or those included in the suspension decision are entitled to receive
their full wages.
• Part time workers who perform their work remotely at the entities which are authorized
to work remotely or those included in the suspension decision are entitled to receive
their wages based on the actual hours worked granted that the wages received are no
less than the minimum wage in place or as stated in the Defense Order.
• Employers who are authorized to operate at a lower capacity or those who are included
in the suspension decision may request from the Minister of Labor the authorization to
pay employees wages equaling no less than 50% of the ordinary wages provided that
the wages paid are no less than the minimum wage in place.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-34-
Defense Order No. 6 was further amended on 31 May 2020 as follows:
• In the most affected economic sectors and based on mutual agreement, the amendment
allows the employer to deduct up to 30% of the worker’s monthly wages for each of the
months of May and June of the year 2020 for the worker present at the workplace or
working remotely and without coercion or pressure by the employer under penalty of
liability and the penalties stated in the Defense Order. This is provided that the worker
receives no less than the minimum wage and that the reduction begins with the wages
of the higher management employees in the institution.
• Reduction from workers’ monthly wages without requiring the approval of the worker or
the Ministry of Labor, due to the economic circumstances of the employer and at the
same time the need to maintain the minimum wage of workers who are not required to
work so that the rate of reduction does not exceed 50% for the months of May and June
of the year 2020. This is provided that the worker’s wage after the reduction is no less
than the minimum wage, all of this in sectors in general, other than those classified as
more adversely affected.
• In the most affected economic sectors, the employer can deduct up to 60% of the
monthly wage of the worker. This is provided that the worker’s wage after the reduction
is no less than JD 150 per month without requiring the approval of the Ministry of Labor
or the worker.
• The employer can deduct 50% of the annual leave balance for the year 2020 for workers
who are not assigned to work on the site of the institution or remotely for a period of
thirty days or more during the period extending from the mandate of the Defense Law.
Other decisions were also issued by various Government agencies to assist in the continuity of
various sectors of the Jordanian economy by reducing the financial burden to these sectors.
Examples include the following:
1. The Central Bank of Jordan’s resolution to compel all operating Jordanian banks to postpone
loan installments payable by companies and individuals without imposing any penalties or
additional financial burdens.
2. The Central Bank of Jordan’s resolution to reduce the interest rates on credit facilities.
3. The Central Bank of Jordan’s resolution to provide the financing needs for the public and
private sectors at low interest rates to finance its operations.
4. The Central Bank of Jordan’s resolution to reduce the costs associated with its sponsored
programs to support the economic sectors.
ARAB INTERNATIONAL HOTELS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2020
-35-
During September 2020, the Government stopped institutional quarantine procedures for
travelers arriving from all destinations and replaced it with home-based quarantine procedures.
This has further adversely impacted the operating environment of the Tourism and Hospitality
sector.
Some of the Company's investments and operating activities were affected by the current
conditions, which had a negative impact on the Company’s operating results for the year
compared to prior year. Management has prepared a preliminary study to determine the impact
of the coronavirus on the Company's activities and its financial performance in order to be able to
take appropriate measures to carry out its activities under the current circumstances.
Management is also preparing a detailed study to determine the impact of the coronavirus on the
Company's operations, its ability to recover its assets and meeting its obligations for both the
medium and long terms.