Company Registration No. SC469889 (Scotland) GOLF RECREATION SCOTLAND LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 3 a SEP 2015 EEQNT DESK I II Q. GOLF RECREATION SCOTLAND LIMITED COMPANY INFORMATION Directors Trump Trump Secretary Graff-Rlccio Company number 30469689 Reglstered of?ce Bishops Court 29 Albyn Place ABERDEEN AB10 1YL Auditor Johnston Carmichael LLP 227 West George Street GLASGOW 62 2ND (Appointed 29 September 2015) GOLF RECREATION SCOTLAND LIMITED CONTENTS Page Strategic report 1 - 2 Directors? report 3 - 4 Independent auditor's report 5 - 6 Pro?t and loss account 7 Statement of comprehensive income 8 Group balance sheet 9 Company balance sheet . 10 Group statement of changes in equity 11 Company statement of changes in equity 12 Consolidated statement of cash ?ows 13 Notes to the ?nancial statements 14 - 27 GOLF RECREATION SCOTLAND LIMITED STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 The directors present the strategic report and ?nancial statements for the year ended 31 December 2015. Fair review of the business During the year, the implementation of signi?cant improvements to the luxury hotel and long awaited enhancements to the world renowned Ailsa Course continued. 'The hotel and Ailsa Course re-opened in June 2016 following its closure in September 2015. The Trump Organisation remain fully committed to reviving the resort, including the transformation of the iconic Turnberry Lighthouse into goif's most impressive halfway house. The changes to the course include redesign of several holes and a lengthening of the course, which will help ensure the course evolves to meet the modern standard of championship golf, whilst being sensitive to the history and scenic beauty of this famous course. All proposed changes have been carefully considered in conjunction with the RM and we ?rmly believe the changes will be embraced by both amateur and professional players alike. as wet] as the wider gol?ng community. We were delighted to welcome the Women's Open to Turnberry in July 2015 and look forward to welcoming many more championships in the years to come. Principal risks and uncertainties The directors have undertaken a comprehensive review of the risks facing the company. The group operates in an industry which is both competitive and challenging, factors which can be heightened by adverse weather conditions. The directors have detailed knoMedge and experience of the sector. and have established business policies and an organisation structure to limit these risks, which are regularly reviewed and reassessed to proactively limit their impact. Development and performance The pro?t and loss account and balance sheet are set out on pages 6 and 7. The operating loss before depreciation and foreign exchange for the nine months pre closure period ended 30 September 2015 was ?254k, and the loss for the financial year before depreciation, amortisation and foreign exchange amounted to ?1 ,650k (2014: ?303k pro?t). Total equity at the year-end was a de?cit of ?13,682k (2014: de?cit of ?6,727k). Signi?cant capital expenditure has taken place in 2015 which is re?ected in the current year results and this spend will continue during 2016. Fixed asset additions in 2015 amounted to ?17.502k (2014: ?1.401k), with ?16,221k being in relation to the renovations of the hotel and golf course. GOLF RECREATION SCOTLAND LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 Key performance indicators Management of the group provide the directors with a suite of KPi's at the end of each month. These include a month on month and year on year changes In revenue. costs and operating pro?t for each department. Turnover for the group Increased by 24% due to a full year?s trading in the Turnbeny resort being recognised. however turnover for the resort has reduced by 13% from 2014 to 2015. as a result of the closure of the hotel and Alisa course during the final quarter of 2016. Upon completion of the construction project. it is expected that revenue will increase as the property is reestablished as an industry-leading resort. The directors believe that the resort will return to pro?tability in the short to medium term. Non-financial KPi's include the number of repeat customers to the resort and guest satisfaction, We strive to ensure that Turnberry remains established as a world-leading destination golf resort and are con?dent that the work currently being undertaken will encourage new visitors to experience the resort, as well as drivlng repeat custom from our previous guests. On behalf of the board ?hump GOLF RECREATION SCOTLAND LIMITED REPORT FOR THE YEAR ENDED 31 DECEMBER 2015 The directors present their annual report and ?nancial statements for the year ended 31 December 2015. Principal activities The principal activity of the group continued to be that of the operation of the Turnberry Resort and associated leisure facilities. Directors The directors who held of?ce during the year and up to the date of signature of the ?nancial statements were as follows: Trump Trump (Appointed 29 September 2015) Results and dividends The results for the year are set out on page 7. No ordinary dividends were paid. The directors do not recommend payment of a ?nal dividend. Auditor The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006. Statement of directors? responsibilities The directors are responsible for preparing the Annual Report and the ?nancial statements in accordance with applicable law and regulations. Company law requires the directors to prepare ?nancial statements for each ?nancial year. Under that law the directors have elected to prepare the ?nancial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the ?nancial statements unless they are satis?ed that they give a true and fair view of the state of affairs of the group and company, and of the pro?t or loss of the group for that period. in preparing these ?nancial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and accounting estimates that are reasonable and prudent; - state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ?nancial statements; prepare the ?nancial statements on the going concern basis unless it is inappropriate to presume that the group and company continue in business. The directors are responsible for keeping adequate accounting records that are suf?cient to show and explain the group's and company?s transactions and disclose with reasonable accuracy at any time the ?nancial position of the group and company and enable them to ensure that the ?nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. GOLF RECREATION SCOTLAND LIMITED maecroas' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 Statement of disclosure to auditor So far as each person who was a director at the date of approving this report is aware. there is no relevant audit Information of which the company's auditor is unaware. Additionally. the directors individualiy have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all reievant audit intormation and to establish that the company's auditor is aware of that information. On behalf of the board 37:? Trump Director .2313 i 1e -4- GOLF RECREATION SCOTLAND LIMITED INDEPENDENT REPORT TO THE MEMBERS OF GOLF RECREATION SCOTLAND LIMITED We have audited the ?nancial statements of Golf Recreation Scotland Limited for the year ended 31 December 2015 set out on pages 7 to 27. The ?nancial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland". This report is made solely to the company?s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company?s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the Directors' Responsibilities Statement set out on pages 3 - 4, the directors are responsible for the preparation of the financial statements and for being satis?ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the ?nancial statements in accordance with applicable law and International Standards on Auditing (UK and ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the ?nancial statements An audit involves obtaining evidence about the amounts and disclosures in the ?nancial statements suf?cient to give reasonable assurance that the ?nancial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group's and the parent company?s circumstances and have been consistently applied and adequately disclosed; the reasonableness of signi?cant accounting estimates made by the directors; and the overall presentation of the ?nancial statements. In addition, we read all the ?nancial and non-?nancial information in the Annual Report to identify material inconsistencies with the audited ?nancial statements and to identify any information that is apparently materiain incorrect based on, or materially inconsistent with, the knoWiedge acquired by us in the course of performing the audit. if we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the ?nancial statements: - give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2015 and of its loss for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and - have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Strategic Report and the Directors' Report for the ?nancial year for which the ?nancial statements are prepared is consistent with the ?nancial statements. GOLF RECREATION SCOTLAND LIMITED INDEPENDENT REPORT, (CONTINUED) TO THE MEMBERS OF GOLF RECREATION SCOTLAND LIMITED Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if. in our opinion: - adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or - the parent company ?nancial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration speci?ed bylaw are not made; or - we have not received all the information and explanations we require for our audit. fa I S?knsien 3 I I We Chartered Accountants Statutory Audltor 227 West George Street GLASGOW GZ 2ND GOLF RECREATION SCOTLAND LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2015 Pe?od ended 31 December 31 December 2015 2014 Notes ?000 ?000 Turnover 3 11.410 9,209 Cost of sales (7,685) (5,755) Gross pro?t 4 3,725 3,454 Administrative expenses (5.375) (3,151) Operating (loss)Ipro?t before depreciation, amortisation and foreign exchange (1,650) 303 Depreciation and amortisation (5,701) (3,861) Loss on foreign exchange (1,045) (30) Operating loss 4 (8,396) (3,588) Interest payable and similar charges 7 (15) Loss before taxation (8.396) (3,603) Taxation 8 - 4 Loss for the ?nancial year 18 (8,396) (3,603) The pro?t and loss account has been prepared on the basis that all operations are continuing operations. GOLF RECREATION SCOTLAND LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015 31 December 2015 ?000 Loss for the year (8,396) Other comprehensive expenditure - Currency translation differences (2.082) Total comprehensive expenditure for the year (10,478) Pe?od ended 31 December 2014 ?000 (3,603) (6,727) GOLF RECREATION SCOTLAND LIMITED GROUP BALANCE SHEET AS AT 31 DECEMBER 2015 2015 2014 Notes ?000 ?000 ?000 ?000 Fixed assets Goodwill 9 8,308 10,899 Tangible assets 10 39.069 24.678 47.377 35.57? Current assets Stocks 13 354 234 Debtors 14 2,730 672 Cash at bank and In hand 1,826 747 4,910 1,663 Creditors: amounts falling due within 16 one year (3,238) (43,957) Net current assetsl?labliitles] 1,672 (42,304) Total assets less current liabilities 49.049 (6.727) Creditors: amounts felling due after 16 more than one year (82,731) - Net liabilities (13.682) (6.727) Capital and reserves Called up share capital 17 1.014 - Other reserves 18 (2,697) (3.124) Profit and loss reserves - 18 (11.999) (3.603) Equity attributable to owners of the parent company (13,682) (6.727) The ?nancial statements were approved by the board of directors and authorised for issue on and are signed on its behalf by: Trump Director GOLF RECREATION SCOTLAND LIMITED COMPANY BALANCE SHEET AS AT 31 DECEMBER 2015 2015 2014 Notes ?000 ?000 ?000 ?000 Fixed assets Investments 11 46.516 41,677 Current assets Debtors 14 1 9.579 257 Cash at bank and In hand 13 7 1 9.592 264 Creditors: amounts due within 15 one year . - (42,016) Net current - 19.592 (41.761) Total assets less current liabilities 65.107 (74) Creditors: amounts falling due after 16 . more than one year (62.731) - Net assetal?labilwee) 2.376 (74) . Capital and reserves Called up share capital 17 1.014 - Olher reserves 18 2.467 (1) Profit and less reserves 18 (1.105) (73) Total equity 2.378 (74) The ?nancial statements were approved by the board of directors and authorised for issue on and are signed on Its behatf by: Trump Director Company No. 80469689 -10.. GOLF RECREATION SCOTLAND LIMITED GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015 Notes Balance at 11 February 2014 Period ended 31 December 2014: Loss and total comprehensive expendrture for the year Balance at 31 December 2014 Year ended 31 December 2015: Loss and total comprehensive expenditure for the year Issue of share capital - 17 Equity component of ?nancing loans Balance at 31 December 2015 Share capth ?000 1,014 1,014 Other reserves ?000 (3,124) (3,124) (2,082) 2,509 (2,697) Pro?t and loss reserves ?000 (3,603) (3,603) (8.396) (11,999) Total ?000 (6,727) (6,727) (10.478) 1.014 2,509 (13,682) -11- GOLF RECREATION SCOTLAND LIMITED COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015 Share capital Notes ?000 Balance at 11 February 2014 - Period ended 31 December 2014: Loss and total comprehensive expenditure for the year - Balance at 31 December 2014 - Year ended 31 December 2015: Loss and total comprehensive expenditure for the year - Issue of share capital 17 1,014 Equity component of ?nancing loans - Balance at 31 December 2015 1,014 Other reserves ?000 (1) (1) (41) 2.509 2,467 Profit and loss reserves ?000 (73) (73) (1,032) (1.105) Total ?000 (74) (74) (1,073) 1 ,014 2,509 2.376 -12- GOLF RECREATION SCOTLAND LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2015 Notes Cash ?ows from operating activities Cash absorbed by operations 24 Investing activities Purchase of tangible ?xed assets Purchase of subsidiarles Net cash used in investing activities Financing activities Interest paid Proceeds from borrowings Net cash generated from ?nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2015 ?000 ?000 (2.572) (17,503) (17,503) 21,154 21,154 1,079 747 1,826 2014 ?000 (1,082) (39,718) (15) 42,015 ?000 (453) (40,800) 42,000 747 747 -13- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 1.1 1.2 1.3 Accounting policies Company information Golf Recreation Scotland Limited (?the Company") is a limited company domiciled and incorporated in Scotland. The registered of?ce is Bishops Court, 29 Albyn Place, ABERDEEN, AB10 1YL. The Group consists of Golf Recreation Scotland Limited and all of its subsidiaries. Accounting convention These ?nancial statements have been prepared in accordance with FRS 102 ?The Financial Reporting Standard applicable in the UK and Republic of ireiand? 102") and the requirements of the Companies Act 2006. The ?nancial statements are prepared in Sterling, however the functional currency of the company is US Dollars. The functional currency of other group companies is Sterling. Monetary amounts in these ?nancial statements are rounded to the nearest ?000. The ?nancial statements have been prepared on the historical cost convention. The principal accounting policies adopted are set out below. As permitted by $408 Companies Act 2006. the Company has not presented its own pro?t and loss account and related notes. The Company?s loss for the year was ?1 ,032k (2014 - ?73k loss). Basis of consolidation The consolidated ?nancial statements incorporate those of Golf Recreation Scotland Limited and all of its subsidiaries entities that the Group controls through its power to govern the ?nancial and operating policies so as to obtain economic bene?ts). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes. All ?nancial statements are made up to 31 December 2015. Ali intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, adjustments are made to the ?nancial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group. The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs direcin attributable to the business combination. The excess of the cost of a business combination over the fair value of the identi?able assets, liabilities and contingent liabilities acquired is recognised as goodwill. Going concern These ?nancial statements are prepared on the going concern basis. The group is dependent on continuing ?nance being made available by its ultimate owner to enable it to continue operating and to meet Its liabilities as they fall due. The Trump Organisation have con?rmed that it will ensure all necessary ?nancial support is provided to the group for the foreseeable future to enable it to meet its financial obligations as they fall due for at least a period of 12 months from the date of signing the ?nancial statements. -14- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 1.4 1.5 1.6 1.7 Accounting policies (Continued) Turnover Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business. net of discounts and VAT. Revenue from the sale of goods is recognised when the signi?cant risks and rewards of ownership of the goods have passed to the buyer, the amount of revenue can be measured reliably, it is probable that the economic bene?ts associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from the provision of services is recognised at the point that the service is provided. Intangible ?xed assets Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impaln?nent losses. Goodwill is considered to have a ?nite useful life and is amortised on a systematic basis over its expected life, which is 5 years. For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to bene?t from the acquisition. Cash-generating units to Which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit. the impairment loss is allocated ?rst to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rate on the basis of the carrying amount of each asset in the unit. Other intangible assets relate to advance bookings. These are written off over a period of 1 year. Tangible ?xed assets Tangible ?xed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses. Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases: Freehold land and buildings 10 - 40 years Aircraft 25 years Fixtures, ?ttings and equipment 2 - 20 years Assets in the course of construction are not depreciated. The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account. impairment of ?xed assets At each reporting and date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. if any such indication exists. the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. -15- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 1.8 1.9 1.10 Accounting policies (Continued) Stocks Stocks are valued on a ?rst in, ?rst out basis and are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and. where appiicable. direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provision is made for obsolete, slow-moving or defective items where appropriate. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities. Financial instruments The group has elected to apply the provisions of Section 11 'Basic Financiai Instruments' and Section 12 'Other Financial instruments Issuesits ?nancial instruments. Financial instruments are recognised in the group?s statement of ?nancial position when the group becomes party to the contractual provisions of the instrument Financial assets and liabilities are offset and the net amounts presented in the ?nancial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. Basic ?nancial assets Basic ?nancial assets. which include trade and other debtors and cash and bank balances, 'are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a ?nancing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Trade debtors. loans and other receivables that have ?xed or determinable payments that are not quoted In an active market are classi?ed as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective Interest method. less any impairment. Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt Instrument to the net carrying amount on initial recognition. -15- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 Accounting policies (Continued) Impairment of ?nancial assets Financial assets. other than those held at fair value through pro?t and loss, are assessed for indicators of Impairment at each reporting end date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the ?nancial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the assets original effective interest rate. The impairment loss is recognised in pro?t or loss. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in pro?t or loss. Derecognition of ?nancial assets Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the ?nancial asset and substantially all the risks and rewards of ownership to another entity, or if some signi?cant risks and rewards of ownership are retained but control of the asset has transferred to another party that Is able to sell the asset in its entirety to an unrelated third party. Classi?cation of ?nancial liabilities Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities. Basic ?nancial liabilities Basic financial liabilities, including trade and other creditors and loans from fellow group companies are 1.11 initially recognised at transaction price unless the arrangement constitutes a ?nancing transaction. where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classi?ed as cun'ent liabilities if payment is due within one year or less. If not. they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method. of financial liabilities Financial liabilities are derecognised when the group?s contractual obligations expire or are discharged or cancelled. Equity instruments Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. -17- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 1.12 1.13 1.14 Accounting policies (Continued) Employee bene?ts The costs of short-ten'n employee bene?ts are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or ?xed assets. The cost of any unused holiday entitlement is recognised in the period in which the employee?s services are received. Termination bene?ts are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination bene?ts. Leases Rentals payable under operating leases, including any lease incentives received, are charged to income. on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic bene?ts from the lease asset are consumed. Foreign exchange Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting and date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the pro?t and loss account for the period. The functional currency of Golf Recreation Scotland Limited is US Dollars and the presentational currency is Sterling. Foreign exchange differences arising upon presentation are taken to other reserves. Judgements and key sources of estimation uncertainty In the application of the group's accounting policies. the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate ls revised where the revision affects only that period. or in the period of the revision and future periods where the revision affects both current and futiire periods. Critical judgements The following judgements (apart from those involving estimates) have had the most signi?cant effect on amounts recognised in the ?nancial statements. Assets held as construction In progress Due to the resort-wide renovation, certain ?xed asset additions have been categorised as 'construction in progress'. As work remains on-going at the balance sheet date. no depreciation charge has been recognised in the current year for such assets. An assessment is made on the completion status of these assets and, when considered complete, the asset is re-categorised based on its type and depreciated accordingly. -13. GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 2 Judgements and key sources of estimation uncertainty I (Continued) Key sources of estimation uncertainty The estimates and assumptions which have a signi?cant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows. Useful life of goodwill The group establishes a reliable estimate of the useful life of goodwill arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business and the expected useful life of the cash generating units to which the goodwill is attributed. Fixed asset investments Fixed asset investments are measured at cost, less any impairment. The investments are assessed for any indicators of impairment, based on the assets acquired as part of the investment. lntercompan loans Loans advanced from the parent and to subsidiaries are financing transactions attracting no interest and are repayable one year and one day after the end of the ?nancial period. As such the directors are required to assess a market rateof interest for similar borrowing that may be available from lenders at arms length, in order to quantify the carrying amount upon Initial recognition at fair value, and the corresponding equity component. Market rates of interest are estimated by the directors by comparison with interest rates offered by banks for lending of comparable risk pro?le. 3 Turnover and other revenue 2015 2014 ?000 ?000 Turnover Sale of goods 4,300 3,547 Provision of services 7,110 5,662 11 ,410 9,209 Turnover analysed by geographical market 2015 2014 ?000 ?000 United Kingdom 11,410 9,209 -19- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 4 Operating loss Operating loss is stated after charging: Exchange losses Depreciation of owned tangible fixed assets Amortisation of intangible assets Cost of stocks recognised as an expense Operating lease charges Auditors' remuneration Fees payable to the company?s auditor and its associates: For audit services Audit of the ?nancial statements of the group and company Audit of the company's subsidiaries Employees 2014 ?000 The average number of persons (including directors) employed by the group during the year was: Operating Administrative Their aggregate remuneration comprised: Wages and salaries Social security costs 2015 Number 297 40 337 2014 Number 305 39 344 -20. GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 7 Interest payable and similar charges 2015 2014 . ?000 ?000 Interest on ?nancial liabilities measured at amortised cost: Interest on ?nance leases and hire purchase contracts - 15 Taxation- The charge for the year can be reconciled to the loss per the pro?t and loss account as follows: 2015 2014 ?000 ?000 Less before taxation (8,396) (3,603) Expected tax charge based on the standard rate of corporation tax in the UK of 20.21% (2014: 21.49%) (1,697) (774) Tax effect of expenses that are not deductible in determining taxable pro?t 1 1 Deferred tax movement not recognised 564 259 Depreclation and amortisation permanent differences 1,132 514 Tax expense for the year - . The group has a deferred tax asset of ?7.9m (2014: ?8.4m) that has not been recognised as there is no certainty of taxable pro?ts in the future. Intangible ?xed assets Group Goodwill Other Total Intangibles ?000 ?000 ?000 Cost At 1 January 2015 and 31 December 2015 12,063 400 12,463 Amortisation At 1 January 2015 1,342 222 1,564 Amortisation charged for the year 2,413 178 2,591 At 31 December 2015 3,755 400 4,155 Carrying amount At 31 December 2015 8,308 - 8.308 At 31 December 2014 10,721 178 10,899 I -21- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 9 10 11 Intangible ?xed assets The company had no intangible ?xed assets at 31 December 2015 or 31 December 2014. Tangible fixed assets Group Cost At 1 January 2015 Additions Business combinations Transfers from assets under construction At 31 December 2015 Depreciation and impairment At 1 January 2015 Depreciation charged in the year At 31 December 2015 Carrying amount At 31 December 2015 At 31 December 2014 The company had no tangible ?xed assets assets at 31 December 2015 or 31 December 2014. Fixed asset Investments Investments in subsidiaries Freehold land Assets under and buildings construction ?000 ?000 24,165 1,401 - 16,176 3,294 (4,044) 27,459 13,533 1,336 - 2,251 - 3,587 - - 23,872 13.533 22.829 1,401 Group 2015 Notes ?000 23 - Aircra? ?000 269 1,014 1 ,283 51 51 1 .232 2014 ?000 Fixtures, ?ttings and equipment ?000 1 ,408 43 750 2,201 960 809 1,769 432 44a Company 2015 ?000 45,515 (Continued) Total ?000 26.974 16.488 1.014 44,476 2,296 3,111 5,407 39,069 24.678 2014 ?000 41,677 GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 11 Fixed asset investments Movements in ?xed asset investments Company Cost or valuation At 31 December 2014 Additions Effect of foreign exchange Disposals At 31 December 2015 Carrying amount At 31 December 2015 At 31 December 2014 (Con?nud) Shares ?000 41,677 2,810 2,042 (1,014) 45,515 45,515 41,677 During the year, the company acquired 100% of the membership interests of DT Connect LLC, a limited liability company registered in Delaware, for a consideration of ?1,013,514 of share capital in the company. The value In DT Connect LLC related solely to ?xed assets. The company disposed of the investment in DT Connect LLC to it's subsidiary DT Connect Europe Limited, in exchange for ?1,013,514 of share capital. There was no gain or loss arising from the transaction. 12 Financial instruments Group 2015 ?000 Carrying amount of ?nancial assets Cash and cash equivalents 1,826 Debt instruments measured at amortised cost 748 Equity instruments measured at cost less impairment Carrying amount of ?nancial liabilities Measured at amortised cost 65,759 13 Stocks Group 2015 ?000 Raw materials and consumables 354 '2014 ?000 747 446 42,898 2014 ?000 234 Company 201 5 ?000 13 19,579 45,515 62,731 Company 2015 ?000 2014 ?000 257 41 ,677 42,015 2014 ?000 -23- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 15 14 Debtors Group Company 2015 2014 2015 2014 Amounts falling due within one year: ?000 ?000 ?000 ?000 Trade debtors 749 446 - - Amounts due from subsidiary - - - 257 Other debtors 1,665 - - Prepayments and accrued income 316 226 - - 2,730 672 - 257 Amounts falling due after one year: Amounts due from subsidiary undertakings - - 19,579 - Total debtors 2.730 672 19,579 257 Creditors: amounts falling due within one year Group Company 2015 2014 2015 2014 ?000 ?000 ?000 ?000 Other taxation and social security 90 237 - - Trade creditors 991 341 - - Amount due to parent - 42,015 - 42,015 Accruals and deferred income 2,157 1,364 - - 3,238 43,957 - 42,015 16 Included in trade creditors above are amounts payable in respect of construction costs associated with the on-going renovation of the hotel and golf course. Creditors: amounts falling due after more than one year Group Company 2015 2014 2015 2014 ?000 ?000 ?000 ?000 Amount due to parent 62,731 - 62,731 - lntercompany loans are repayable one year and one day after the ?nancial year end, on a rolling basis in accordance with agreements in place between the two parties. -24.. GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 17 18 19 Share capital Group and company 2015 2014 Ordinary share capital ?000 ?000 Issued and fully paid 1,013,515 Ordinary of ?1 each 1,014 - Reconciliation of movements during the year: Number At 1 January 2015 100 Issue of fully paid shares 1,013,414 At 31 December 2015 1,013,514 On 31 March 2015, 1,013,414 ?1 Ordinary shares were issued in exchange for 100% of the membership interest in OT Connect LLC, a limited liability company registered in Delaware. Reserves Other reserves Other reserves represents amounts taken to equity as a result of the release of inter-company creditors, and the equity component of ?nancing loans received from the parent company. Pro?t and loss reserves - The pro?t and loss reserve account represents the accumulated comprehensive loss for the period and from prior periods. Operating lease commitments Lessee At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: Group Company 2015 2014 2015 2014 ?000 ?000 ?000 ?000 Within one year 391 384 - - Between two and ?ve years 702 993 - - 1,093 1,377 - - -25- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE ENDED 31 DECEMBER 2015 20 Capital commitments 21 22 At 31 December 2015 the group had capital commitments as follows: Group Company 2015 2014 2015 2014 ?000 ?000 ?000 ?000 Contracted for but not provided in the ?nancial statements: Acquisition of property, plant and equipment 520 - - - Related party transactions Remuneration of key management personnel The directors are considered to be the key management of the group. There is no remuneration of key management perSOnneI from the group. The following amounts were outstanding at the reporting and date: Amounts owed to related parties 2015 2014 ?000 ?000 Group Parent 63,169 42,015 No guarantees have been given or received. The group has taken advantage of the exemption within FRS 102 Section 33 paragraph 33.1A from the requirement to disclose transactions withwhoiiy owned companies within the group. Controlling party The ultimate parent undertaking is The Donald J. Trump Revocable Trust, a New York state grantor trust registered in New York, USA. The ultimate controlling party is Mr Donald Trump. Golf Recreation Scotland Limited is the smallest and largest group of companies for which group accounts are prepared. -25- GOLF RECREATION SCOTLAND LIMITED NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 23 Subsidiaries Details of the company's subsidiaries at 31 December 2015 are as follows: Name of undertaking and country of Nature of business Class of Held incorporation or residency shareholding Direct indirect SLC Turnberry Limited United Golf and leisure facilities Ordinary Kingdom 100.00 DT Connect Europe Limited United Helicopter operations Ordinary Kingdom 100.00 Nitto World Co., Limited United Dormant Ordinary Kingdom 100.00 The share capital of Nltto World 00., Limited is 100% owned by SLC Turnberry Limited 24 Cash generated from operations 2015 2014 ?000 ?000 Loss for the year after tax (8,395) (3,603) Adjustments for: Finance costs - 15 Amortisation and impairment of intangible assets 2,591 1,564 Depreciation and impairment of tangible fixed assets 3,111 2,296 Movements in working capital: (Increase)ldecrease in stocks (120) 648 (lncrease)ldecrease in debtors (1,034) 176 Increase/(decrease) in creditors 1,276 (1,549) Cash absorbed by operations (2,572) (453) -27-