Deyaar Development PJSC — Regulatory Filings 2016

Apr 28, 2016

DEYAAR DEVELOPMENT PJSC

n

r

n

n

r

[

n

D

[ )

lJ

l 1

l

L

L

LJ

_J

l J

J

CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (UNAUDITED)

FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2016

I J n r n l J r n l [_ I L [ L~ [ L' L (~ LJ L J

Deyaar Development P JSC

CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (Unaudited) For the three months period ended 31March2016

Content	Pages
Independent auditor's report on review of condensed consolidated interim financial information
Condensed consolidated statement of financial position	2
Condensed consolidated statement of profit or loss	3
Condensed consolidated statement of profit or loss and other comprehensive income	4
Condensed consolidated statement of changes in equity	5
Condensed consolidated statement of cash flows	6
Notes to the condensed consolidated interim financial information	7-19

KPMG Lower Gulf Limited P.0.Box 341145 Level 12, IT Plaza Dubai Silicon Oasis Dubai United Arab Emirates

Telephone +971 (4) 356 9500 Main Fax +971 (4) 326 3788 Audit Fax +971 (4) 326 3773 Website: www.ae-kpmg.com

Independent Auditors' Report on Review of Condensed Consolidated Interim Financial Information

The Shareholders Deyaar Development P JSC

Introduction

We have reviewed the accompanying 31 March 2016 condensed consolidated interim financial information ofDeyaar Development PJSC ("the Company") and its subsidiaries (collectively referred to as "the Group") which comprises:

• the condensed consolidated statement of financial position as at 31 March 2016;
• the condensed consolidated statement of profit or loss for the three months period ended 31 March 2016;
• the condensed consolidated statement of profit or loss and other comprehensive income for the three months period ended 31 March 2016;
• the condensed consolidated statement of changes in equity for the three months period ended 31 March 2016;
• the condensed consolidated statement of cash flows for the three months period ended 3 I March 2016; and
• notes to the condensed consolidated interim financial information.

Management is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34, 'Interim Financial Reporting'. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review oflnterim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying 31 March 2016 condensed consolidated interim financial information is not prepared, in all material respects, in accordance with IAS 34, 'Interim Financial Reporting'.

~TV'\;

KP MG Lower Gulf Limited Muhammad Tariq Registration No: 793 Dubai, United Arab Emirates

2 7 APR 2016

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 March 2016

		31 March 2016	31 December 2015
	Note	AED'OOO	AED'OOO
		(Unaudited)	(Audited)
··,
ASSETS Non-current assets
Property and equipment		275,104	264,927
Investment properties	6	253,876	253,556
Properties held for development and sale	8	315,223	313,543
Trade and other receivables		4,509	5,165
Investments in joint ventures and associates	13	1,246,346	1,181,640
Long term fixed deposits	7	50,860	51,650
Available-for-sale financial assets		22,755	23,893
		2,168,673	2,094,374
Current assets
Properties held for development and sale	8	996,767	998,897
Inventories		1,846	2,227
Due from related parties	9	1,951,333	1,951,333
Trade and other receivables		317,603	336,607
Cash and bank balances		770,343	823,340 4,112,404
Total assets		4,037,892 6,206,565	6,206,778
EQUITY
Share capital		5,778,000	5,778,000
Legal reserve		242,529	242,529
Available for sale fair valuation reserve		3,420	4,558
Accumulated losses		(1,311,503)	(l,362,534)
Total equity		4,712,446	4,662,553
LIABILITIES
Non-current liabilities
Borrowings	10	324,423	342,308
Retentions payable		11,882	10,368
Advances from customers		4,059	12,087
Provision for employees' end of service benefits		11,493	10,990
		351,857	375,753
Current liabilities
Borrowings	JO	91,540	136,540
. ·Trade and other payables	11	839,616	837,359
Retentions payable		17,526	17,499
Advances from customers Due to related parties	· 9	180,940	163,061 14,013
		12,640 1,142,262	1,168,472
Total liabilities		1,494,119	1,544,225
Total equity and liabilities		6,206,565	6,206,778

The condensed consoli ted interim financial information was approved by the Board of Directors, and authorised for issue on 'gned o their behalf by

2 7 APR 2016

Hani K. Fansa

Chief Financial Officer

/ The notes on pages 7' o 19 are an integral part of the condensed consolidated interim financial information. The independent auditors' report on review of condensed consolidated interim financial information is set out on page I.

l '

n

n

[

[J

_.J

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the three months period ended 31 March 2016

	Three months ended
		31 March	31 March
		2016	2015
	Note	AED'OOO	AED'OOO
		(Unaudited)
			(Restated)
Revenue		60,218	36,197
Direct costs		(30,600)	(8, 157)
Other operating income		1,593	3,036
General and administrative expenses		(31,678)	(33, 105)
Provision for claims		(11,547)	(55,522)
Write back of provision for impairment against advance for purchase of
properties	12		56,469
Finance cost		(4,826)	(7,910)
Finance income		3,165	2,498
Share of results from joint ventures and associates	13	(4,178)	64,798
Write back of provision for impairment of investment in associate	13	68,884
Profit for the period		51,031	58,304
Earnings per share - basic and diluted		Fils 0.88	Fils 1.01

The notes on pages 7 to 19 are an integral part of the condensed consolidated interim financial information. The independent auditors' report on review of condensed consolidated interim financial information is set out on page l.

l ^~

n

r

f,

n

n

l J

L

I

__J

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the three months period ended 31 March 2016

	Three months ended
	31 March
	2016	31 March 2015
	AED'OOO	AED'OOO
	(Unaudited)
		(Restated)
Profit for the period	51,031	58,304
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Change in fair value of available-for-sale financial assets	(1,138)	(1,138)
Total comprehensive income for the period	49,893	57,166

The notes on pages 7 to 19 are an integral part of the condensed consolidated interim financial information. The independent auditors' report on review of condensed consolidated interim financial information is set out on page l .

Deyaar Development PJSC

'----

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

he hr hs io d de d 3 1 h 2 0 1 Fo M 6 t t t r ee m on p er en ar c
	S ha re ita l ca p A E D 'O O O	l Le g a re ser ve A E D 'O O O	ha Ex c ng e lat io tra ns n re ser ve A E D 'O O O	Av i la b le- fo a r le fa ir sa lu ion at va re se rv e A E D 'O O O	Ac lat d cu mu e los ses A E D 'O O O	l To ta ity eq u A E D 'O O O
lan 2 0 1 iou d d ite d Ba I Jan	0 0 0 7 7	2 1 3, 3 9 4		5, 5 0 6	1, 6 2 3, 8 3 6	4, 3 7 3, 0 6 4
5, ly ( ) at ort ce ua ry as p rev s rep e au f fec f c ha in ing l icy E ( 2. 3 ) t o t te ng e ac co un p o no	5, 8, -	-	- -	-	( ) ( 9 1 7 )	( 9 1 7 )
lan 1 2 0 1 5 ( d ) ( d ite d ) Ba Jan at tat ce ua ry res e au	5, 8, 0 0 0 7 7	2 1 3, 3 9 4	-	5, 5 0 6	( 1, 6 2 4, 7 5 3 )	4, 3 7 2, 1 4 7
l c he f he d d d To ive inc io ( ite ) ta t om p re ns om e or p er un au
f it for he io d, iou ly d Pr t ort o p er as p rev s rep e	-			-	5 5, 2 1 9	5 5, 2 1 9
E f fec f c ha in ing l icy ( 2. 3 ) t o t te ng e ac co un p o no	-	-	-	-	3, 0 8 5	3, 0 8 5
Pr f it for he io d ( d ) t tat o p er res e	-	-	-	-	5 8, 3 0 4	5 8, 3 0 4
Ot he he ive inc for he io d t r c om p re ns om e p er	-	-	-	( 1, 1 3 8 )	-	( I, 1 3 8 )
To l c he ive inc for he io d ( d ) ta t tat om p re ns om e p er res e (u d ite d ) na u	-	-	-	( 1, 1 3 8 )	5 8, 3 0 4	5 7, 1 6 6
Ba lan 3 1 M h 2 0 1 5 ( d ) (u d ite d ) at tat ce arc res e na u	5, 7 7 8, 0 0 0	2 1 3, 3 9 4	-	4, 3 6 8	( 1, 5 6 6, 4 4 9 )	4, 4 2 9, 3 1 3
l d ite d At Jan 2 0 1 6 ( ) ua ry au	5, 7 7 8, 0 0 0	2 4 2, 5 2 9	-	4, 5 5 8	( 1, 3 6 2, 5 3 4 )	4, 6 6 2, 5 5 3
l c he f he d ( d d ) To ive inc io ite ta t om p re ns om e or p er un au
Pr f it for he io d t o p er	-	-	-	-	5 1, 0 3 1	5 1, 0 3 1
Ot he he ive inc for he io d t r c om p re ns om e p er	-			( 1, 1 3 8 )	-	( 1, 1 3 8 )
To l c he ive inc for he io d (u d ite d ) ta t om p re ns om e p er na u	-		-	( 1, 1 3 8 )	5 1, 0 3 1	4 9, 8 9 3
Ba lan 3 1 M h 2 0 1 (u d ite d ) 6 at ce ar c na u	5, 7 7 8, 0 0 0	2 4 2, 5 2 9	-	3, 4 2 0	( 1, 3 1 1, 5 0 3 )	4, 7 1 2, 4 4 6

^Ll__ L l_ \ l ,-------, \_ l LJ ·;---:] CJ , J :=::J ·------- J ==1

The notes on pages 7 to 19 are an integral part of the condensed consolidated interim financial information.

Deyaar Development PJSC

l I

n

n

n

\·

[

[

l

L

L

l.J

L

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the three months period ended 31 March 2016

		Three months ended 31 March
		2016	2015
	Note	AED' OOO	AED'OOO
		(Unaudited)
			(Restated)
Cash flows from operating activities
Net cash generated from operating activities	14	22,814	45,008
Cash flows from investing activities
Additions to property and equipment		(I I ,338)	(769)
Proceeds on reduction of investment in an associate			206
Additions to investment property - net		(320)	(660)
Term deposits maturing after three months		36,378	354,621
Income from deposits		2,163	2,383
Net cash generated from investing activities		26,883	355,781
Cash flows from financing activities
Net movement in borrowings		(62,885)	(66,721)
.· Finance costs paid		(4,221)	(7,880)
Net cash used in financing activities		(67,106)	(74,601)
Net {decrease) I increase in cash and cash equivalents		(17,409)	326,188
Cash and cash equivalents, beginning of the period		453,340	439,292
Cash and cash equivalents, end of the period		435,931	765,480
For the purpose of statement of cash flows, cash and cash equivalents comprise:
Cash on hand		3,260	792
Current accounts		156,952	189,672
Fixed deposits		660,991	828,954
Cash and bank balances		821,203	1,019,418
Less : Deposit maturing after 3 months		(385,272)	(253,938)
Cash and cash equivalents		435,931	765,480

The notes on pages 7 to 19 are an integral part of the condensed consolidated interim financial information. The independent auditors' report on review of condensed consolidated interim financial information is set out on page 1.

Deyaar Development PJSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31 MARCH 2016

1 Legal status and activities

Deyaar Development PJSC (the "Company") was incorporated and registered as a Public Joint Stock Company in the Emirate of Dubai, UAE on 10 July 2007. The registered address of the Company is P. 0. Box 30833, Dubai, United Arab Emirates ("UAE). The Company is listed on Dubai Financial Market.

The principal activities of the Company and its subsidiaries (together, "the Group") are property investment and development, brokering, facility and property management services.

This condensed consolidated interim financial information has been reviewed, not audited.

2 Basis of preparation and accounting policies

2.1 Basis of preparation

The condensed consolidated interim financial information for the three months period ended 31 March 2016 has been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed consolidated interim financial information should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards.

UAE Federal Law No. 2 of 2015 being the Commercial Companies Law ("UAE Companies Law of 2015") was issued on 1 April 2015 and has come into force on 1 July 2015. Companies are allowed to ensure compliance with the new UAE Companies Law of 2015 by 30 June 2016 as per the transitional provisions contained therein.

2.2 Significant accounting policies

The accounting policies adopted in the preparation of the condensed consolidated interim financial information are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2015.

2.3 Change in accounting policy (2015)

Revenue from sale of properties

In the previous period, the Group recognised revenue and related cost for sale of properties in the condensed consolidated statement of profit or loss when the risks and rewards of ownership were transferred to the buyer. The significant risks and rewards were deemed to be transferred when the title deed was registered in the name of the buyer, which in the case of properties, generally used to take place only upon completion of construction and physical handover of the property. However, in certain circumstances, equitable interest in the property was considered vested in the buyer before the legal title passes and therefore the risks and rewards of ownership were transferred at that stage. In such cases, provided that the Group had no further substantial acts to complete in connection with the sale of the property, revenue and related cost was recognised when equitable interest in the property had been passed to the buyer.

IFRS 15 Revenue from contracts with customers

During the previous year, the Group reviewed the impact of IFRS 15 and accordingly elected to early adopt IFRS 15 for its annual consolidated financial statements with effect from 1 January 2015, as the Group considered it to be a better reflection of the business performance of the Group. The Group applied IFRS 15 using the cumulative effect method i.e., by recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity as at 1 January 2015.

2 Basis of preparation and accounting policies (continued)

2.3 Change in accounting policy (2015) (continued)

IFRS 15 Revenue from contracts with customers (continued)

IFRS 15 Revenue from contracts with customers was issued in May 2014 and is effective from annual periods commencing on or after 1 January 2018 either based on a full retrospective or modified application, with early adoption permitted. IFRS 15 replaces existing revenue recognition guidance and outlines a single comprehensive model of accounting for revenue arising from contracts with customers that is based on transfer of control. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity is entitled in exchange for transferring goods or services to a customer.

)

r

[

[

[

[

r

[

[

L

L

L

.L

l

L

L

L

L

Impact of early adopting IFRS 15 on the condensed consolidated interim financial information of the Group for the three months period ended 31 March 2015 is as follows:

i. Condensed consolidated statement of profit or loss

	As previously reported	Impact of recognition of restatement	Restated
Three months period ended 31March2015 (unaudited)	AED'OOO	AED'OOO	AED'OOO
Revenue	62,705	(26,508)	36,197
Direct I operating costs	38,373	(30,216)	8,157
Share of results from joint ventures and
associates	65,421	(623)	64,798
Profit for the period	55,219	3,085	58,304
Earnings per share attributable to the equity holders of the Company- basic and diluted	Fils 0.96	Fils 0.05	Fils 1.01

ii. Condensed consolidated statement of cash flows

Three months period ended 31 March.2015 (unaudited)	As previously reported AED'OOO	Impact of recognition of restatement AED'OOO	Restated AED'OOO
Cash flows from operating activities
Profit for the period	55,219	3,085	58,304
Share ofresults from associates and joint ventures	(65,421)	623	(64,798)
Operating cash flows before payment of employees' end of service benefits and changes in working capital	(7,244)	3,708	(3,536)
Changes in working capital
Advance from customers - non-current	51,504	(9,717)	41,787
Advance from customers - current	(30,886)	36,225	5,339
Property held for development and sale	33,466	(30,216)	3,250

I I

n

c

c

L

L

L

u

L

l '

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

2 Basis of preparation and accounting policies (continued)

2.3 Change in accounting policy (2015) (continued)

For the cumulative effect of early adoption of IFRS 15 as an adjustment to opening balance of equity as at I January 2015, the condensed consolidated interim financial information for the three months period ended 31 March 2016 should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards.

3 Estimates and assumptions

The preparation of condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing the condensed consolidated interim financial information, the significant judgements made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015.

The Group has an established control framework with respect to the measurement of fair values, and management has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.

The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements ofIFRS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period in which the change has occurred.

4 Financial risk management

The Group's activities potentially expose it to a variety of financial risks: market risk (including currency risk, price risk, cash flow and fair value interest rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial infonnation does not include all financial risk management information and disclosures required in the annual consolidated financial information, and should be read in conjunction with the Group's annual consolidated financial statements as at 31 l December 2015. The Group's financial risk management objectives and policies are consistent with l that disclosed in the consolidated financial statements as at and for the year ended 31 December 2015.

5 Segmental information

Operating segment:

The Board of Directors are the Group's chief operating decision maker. The Board considers the business of the Group as a whole for the purpose of decision making.

Management has determined the operating segments based on segments identified for the purpose of allocating resources and assessing performance. The Group is organised into two major operating segments: Property development and propetties and facilities management.

Management monitors the operating results of its operating segments for the purpose of making strategic decisions about performance assessment. Segment performance is evaluated based on operating profit or loss.

	Property development activities AED'OOO	Property and facilities management AED'OOO	Total AED'OOO
Three months period ended 31 March
2016 (unaudited)
Segment revenues - external	39,626	20,592	60,218
Segment profit	45,587	5,444	51,031
As at 31 March 2016 (unaudited)
Segment assets	6,066,494	140,071	6,206,565
Three months period ended 31 March 2015 (unaudited)
Segment revenues - external (restated)	19,086	17,111	36,197
Segment profit (restated)	52,378	5,926	58,304
As at 31 December 2015 (audited)
Segment assets	6,062,466	144,312	6,206,778

Deyaar Development P JSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

5 Segmental information (continued)

Geographic information

Total assets located outside the United Arab Emirates as at 31 March 2016 amount to AED 3,280,300 (31 December 2015: AED 3,280,300).

6 Investment properties

	UAE		UAE	31 March	31 December
	Office	UAE	Retail	2016	2015
	Building	Land	Units	Total	Total
	AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO
			(Unaudited)		(Audited)
Fair value hierarchy	3	3	3
Fair value at the beginning of
reporting period	85,733		167,823	253,556	329,320
Additions			320	320	3,362
Transfer to property and
equipment (Note i below)					(95,302)
Net fair value gain on valuation
of investment properties					16, 176
Fair value at the end of reporting
period	85,733		168,143	253,876	253,556

1. During the previous year, the Company reclassified a plot of land from investment properties to property and equipment. This property was earlier recognized in the consolidated financial statements of the Company in accordance with the fair value accounting pol icy adopted for the measurement of investment properties and upon reclassification, the carrying value of AED 95.3 million was deemed to be the cost of the property in accordance with the accounting policy adopted for recognition and measurement of property and equipment. This reclassification was a result of the change in management's intention to use the property as reflected by the Company's relevant business model. Based on the management's assessment of the fair value of the property reclassified, there was no material difference between the carrying value of the plot of land and its fair value on the transfer date and accordingly no gain or loss was recognised in the Company's consolidated profit or loss upon transfer

Bank borrowings are secured against investment properties for the value of AED 80,000,000 (31 December 2015: AED 80,000,000)

Valuation processes

Retail units included in the Group's investment properties are valued by independent professionally qualified valuers who hold a recognised relevant professional qualification and have experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use. UAE office building is valued by the Groups' finance department.

Management believes that there was no material variance in the value of the Group's investment properties in the current period.

I l

6 Investment properties (continued)

Valuation processes (continued)

Information about fair value measurements using significant unobservable inputs (Level 3) are as l follows: I

						Sensitivity of management estimates
Country	Segment	Valuation	Estimate	Range of inputs	Impact lower AED'OOO	Impact higher AED'OOO
		Income	rental value	Estimated AED 100 to AED 230 per sqft per annum	(913)	913
UAE	Office building capitalisation		Discount rate	12.29%	10,567	(8,437)

[

[

[

[

L

[

L

[

L

l

L

L

L

L

L

A change of 100 basis points in management's estimate at the reporting date would have increased I (decreased) equity and profit or loss by the amounts shown above.

Valuation techniques underlying management's estimation of fair value:

For office building, the valuation was determined using the income capitalisation method based on following significant unobservable inputs:

Estimated rental value (per sqft p.a.)	based on the actual location, type and quality of the properties and cun-ent market rents for similar properties;
Cash flow discount rate	reflecting current market assessments of the uncertainty in the amount and timing of cash flows.

For retail units, the valuation was determined using the indicative fair values of these investment properties as at 31 December 2015 provided by the independent firm of surveyor and property consultant. The surveyor has used sales comparison method to determine the fair values ofretail units.

7 Long term fixed deposits

In 2014, the Company had signed a financial restructuring plan with a financial institution for settling its Wakala deposit amounting to AED 101 million. Key terms of the financial restructuring plan were as follows:

• The financial institution will make a 20% of the outstanding amount as a down payment upon signing the restructuring plan;
• 65% of the amount will be paid in monthly predetennined instalments, over a period of 12 years and will carry interest rate of 2% per annum; and
• 15% of the remaining amount will be converted into conve1tible contingent instruments and will be settled in cash or the financial institution's equity shares or combination of both after a period of 12 years. This will carry a profit rate of 1 % payment in kind.

In 2014, upon signing the restructuring plan, and considering the key terms of the same, management had recognized an impairment charge of AED 15.3 million and present value impact of AED 6.7 million on the non-current fixed deposit. In 2015, the Company received AED 2.3 million against convertible contingent instruments and had accordingly written back the impairment charge by that amount.

Deyaar Development P JSC

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

7 Long term fixed deposits (continued)

As at 3 1 March 2016, the Company has cumulatively received AED 31.4 million (31 December 2015: AED 30.3 million) from the financial institution towards the repayment of deposit including early repayment of some of the instalments. The balance outstanding amount has been classified as noncurrent in accordance with the agreement.

8 Properties held for development and sale

Management's assessment of the net realisable value of the properties held for development and sale resulted in a net provision for impairment amounting to AED 440,000 (for the year ended 31 December 2015: AED 9,102,000 and for three months period ended 31March2015: AED 3,051,888), which was recognized in the condensed consolidated statement of profit or loss under "direct costs".

Net realisable value has been determined on the basis of committed sale price if the remaining receivable amount is lower than the current market value of the units booked by customers. For units not yet booked by customers, net realisable value takes into consideration the current market.

Residential units in a building and a plot of a land with a total carrying value of AED 289,064,000 (31 December 2015: AED 290,687,000) are mortgaged under Islamic finance obligations (Note I 0).

During the current period, the Company has sold properties with a carrying value of AED 24.5 million (for three months period ended 31 March 2015: AED 5.2 million) which has been recognised in condensed consolidated statement of profit or loss under "directs costs".

For land held for future development and use amounting to AED 424.5 million as at the reporting date (31 December 2015: AED 424.5 million), management is currently evaluating feasibility of the projects and considering alternative viable and profitable options.

9 Related party transactions and balances

Related parties include the significant shareholders, key management personnel, associates, joint ventures, directors and businesses which are controlled or jointly controlled, directly or indirectly, by the significant shareholders or directors.

(a) Related party transactions

During the period, the Group entered into the following significant transactions with related parties:

	Three months period ended 31 March 2016	Three months period ended 31 March 2015
	AED'OOO	AED' OOO
	(Unaudited)	(Unaudited)
Other operating income/finance income
A significant shareholder	1,817	653
A joint venture		1,096

I

[

f

[

[

[

[

[

[

[

[

L

l

L

L

L

L

Li

( L

9 Related party transactions and balances (continued)

(b) Remuneration of key management personnel

	Three months period ended	Three months period ended
	31 March 2016	31 March 2015
	AED'OOO	AED'OOO
	(Unaudited)	(Unaudited)
Compensation to key management personnel Salaries and other sho1t tenn employee benefits Termination and post employment benefits	8,331 353	7,785 240
Directors' fees	337	375
	9,021	8,400

(c) Due from related parties comprises:

	31 March 2016	3 I December 2015
	AED'OOO	AED'OOO
	(Unaudited)	(Audited)
Current
Due from joint ventures	15,106	15,106
Due from other related paities	1,936,227	1,936,227
	1,951,333	1,951,333

Cash and cash equivalents include fixed deposits of AED 340,000,000 (31 December 2015: AED 330,000,000) deposited with a significant shareholder of the Company (a bank), at market prevailing profit rates.

At 31 March 2016, the Group had bank borrowings from the significant shareholder (a bank) of AED 250,913,000 (31 December 2015: AED 264, 119,000) at market prevailing profit rates.

In 20 I 0, the Group entered into a sale and purchase agreement with a related party to sell properties with a canying value of AED 1,337,846,000 and rights to purchase plots amounting to AED 899,589,000. The sale consideration as per the initial agreement was AED 3,647,483,730.

The salient terms and conditions of the transaction were as follows:

• 1. The sale consideration is receivable on or before I June 2016;
• n. The sale consideration can be settled in cash or in kind or a combination of both, at the discretion of the purchaser. Where settlement is in kind, the fair value of the assets transferred will be determined by an independent valuation expert, to be selected by the seller and purchaser; and
• 1. The commitment on the remaining purchase price of the land held for development remains with the Group.

Following the amendments to the original agreement, the sale consideration was reduced by approximately AED 731 million, as a result of the purchaser's commitment to settle this balance on demand, on or before 3 l December 2016, in cash or in kind, or a combination of both.

Deyaar Development P JSC

l J

n t I I_,

[

[

L

l

LJ

l_J

LJ

c

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

9 Related party transactions and balances (continued)

(c) Due from related parties comprises: (continued)

During 2014, pursuant to the addendum to original sale and purchase agreement for a plot of land with the master developer, the Group had entered into an amendment agreement with the related party, which resulted in a further reduction of the sale consideration by AED 141 million. Further, the related party had also transferred plots of land thereby settling receivable balance of AED 669,307,510 against the outstanding receivable.

In 2015, the Company settled an amount of AED 108 million relating to certain plots on behalf of the related party resulting in reduction of the Company's commitments. The receivable amount is reflected in the books of the Company after deducting the future committed payments of AED 170 million (Note 15) relating to rights to purchase plots from the sale consideration as per the sale and purchase agreement. Management is currently evaluating various options and expects that the balance will be settled during current year.

(d) Due to related parties comprises:

	31March2016	3 1 December 2015
	AED'OOO	AED'OOO
	(Unaudited)	(Audited)
Current
Due to a significant shareholder	341	1,714
Due to a joint venture partner	12,299	12,299
	12,640	14,013

10 Borrowings

	31 March 2016	31 December 2015
	AED'OOO	AED'OOO
	(Unaudited)	(Audited)
Non-current	324,423	342,308
Current	91,540	136,540
Total borrowings	415,963	478,848
		Islamic finance obligations AED'OOO
1 January 2015		650,161
Repayments		(171,313)
3 1 December 2015 - audited		478,848
1 January 2016		478,848
ReEayments 31 March 2016 - Unaudited		(62,885) 415,963

10 Borrowings (continued)

The Islamic finance obligations represent Ijarah, Murabaha and Mudarabah facilities obtained from Dubai Islamic Bank PJSC (a significant shareholder), and from other local Islamic banks and financial institutions. The facilities were availed to finance the properties under construction. In the previous year, the Group signed restructuring agreements of Ijarah and Murabaha facilities with the banks, whereby these facilities had been restructured into finance obligations repayable over five to eight years, with a revised profit rates. The Islamic finance obligations carry market prevailing profit rates, and are repayable in monthly or quarterly instalments over a period of five to eight years from the reporting date (31 December 2015: five to eight years).

The Islamic finance obligations are secured by mortgages over properties classified under property l held for development and sale (Note 8), property and equipment and investment property (Note 6).

The borrowings include an amount of AED 250,913,000 (31December2015: AED 264,119,000) [ obtained from the significant shareholder. Refer note 9.

11 Trade and other payables [

Trade and other payables include provision for claims relating to claims made by third parties against the Company. The provisions I write back of provisions are based on management's best estimate [ after considering the potential cash flows in respect of the claims on a case to case basis. -

12 Write back of net provision for impairment against advance for purchase of properties [

In 2014, the Company recorded an impairment provision of AED 68.6 million against advance paid for purchase of prope1iies of AED 114 million, which was expected to be swapped with other plots [ offllan~ andf chas.h "t~ay1 ment due to hc~ahnges din the _madster dhevbelopmefnt plan. The, prbovisio~ was . re ect1ve o t e m1 ia assessment w 1c was etermme on t e as1s o management s est estimate of the value of the new land expected to be received by the Company. In March 2015, the master developer proposed settlement options to the Company to accommodate the Company for the f advance paid for purchase of prope11ies. The write back of provision for the three month period ended - 3 l March 2015 was determined on the basis of offers received from the master developer and their fair values as determined by an independent firm of surveyors and property consultant. [

Subsequently, in August 2015, the Company had signed a sale and purchase agreement for a new plot of land with the master developer and recognized this land including expected legal I registration charges as at year ended 31 December 2015 . On the basis of the fair value of land, cash received and registration charges for land, the Company had written back a net provision of AED 157 .8 million during the year ended 31 December 2015 and recorded the land at the net realisable value as assessed and valued by an independent and professionally qualified valuer.

13 Investments in joint ventures and associates

During the current period, the management has written back provision for impainnent against investment in associate based on their assessment of recoverable amount of the Group's share of assets held by the entity in which associate holds an interest. Management's assessment was based on the indicative fair values of the assets after considering the development progress of the project undertaken by the entity.

Furthermore, share of results from joint ventures and associates for the period amounts to AED 4.17 million (three months period ended 31 March 2015: AED 64.8 million).

I_ J

n

c

[

~

0

[

0

c

[

L

L

L

Ll

f i

~

L

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

14 Cash flows from operating activities

	Three months ended 31 March
	2016	2015
	AED'OOO	AED'OOO
		(Unaudited)
		(Restated)
Profit for the period	51,031	58,304
Adjustment for
Depreciation	1,161	811
Provision for employees' end of service benefits	685	734
Provision I (reversal of) provision for impairment of
properties held for development and sale	440	(3,052)
Provision for claims	11,547	55,522
Reversal of provision of investment in an associate	(68,884)
Reversal of provision for impairment against advance for
purchase of properties		(56,469)
Finance income	(3,165)	(2,498)
Finance costs	4,826	7,910
Share ofresults from associates and a joint venture	4,178	(64,798)
Operating cash flows before payment of employees' end of service benefits and changes in working capital	1,819	(3,536)
Payment of employees' end of service benefits	(183)	(408)
Changes in working capital:
Property held for development and sale (net of project cost
accruals)	(890)	3,250
Retentions payables - non-current	1,514	214
Trade and other receivables - non-cun-ent	656	14,005
Trade and other receivables - current	20,228	27,062
Inventories	381	(324)
Due from related parties		(43,476)
Retentions payable	26	(90)
Advance from customers - non-cmTent	(8,028)	41,787
Advances from customers - cun-ent	17,879	5,339
Trade and other payables	(9,215)	1,236
Due to related parties	(1,373)	(51)
Net cash generated from operating activities	22,814	45,008

15 Commitments

At 31March2016, the Group had total commitments of AED 620,350,000 (31 December2015: AED 643,676,951) with respect to project related contracts issued as of the end of the period I year net of invoices received and accruals made as at that date. The Group also had commitments with respect to purchase of land of AED 170,416,000 (31 December 2015: AED 170,416,000).

16 Contingent liabilities

At 31 March 2016, the Group had contingent liabilities in respect of performance and other guarantees issued by a bank on behalf of a subsidiary, in the ordinary course of business, from which it is anticipated that no material liabilities will arise, amounting to AED 10,874,800 (31 December 2015: AED 26,106,660)

The Company is also a party to certain legal cases wherein the Company did not accept the handover due to the status of infrastructure of ce1tain plots of land. Based on review of opinion provided by the legal advisors, management is of the opinion that no cash outflow is expected against penalty charges claimed against the Company in the legal cases. Considering the circumstances and merits of each of the cases, the Company has not recognized any provision in respect of these penalty charges. The Company has elected not to present the complete disclosures as required by IAS 37 "Provision and Contingent Liabilities and Contingent Assets" as management is of the view that since the legal claims are sub-judice and are disputed, therefore this information may be prejudicial to their position on these matters. Also refer Note 15.

r

[

[

[

[

[

[

r L

L

L

L

( L

\ '-

L

L

Ce1tain other contingent liabilities may arise during the normal course of business, which based on the infonnation presently available, either cannot be quantified at this stage or in the opinion of the management is without any merit. However, in the opinion of management, these contingent liabilities are not likely to result in any cash outflows for the Group.

17 Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

	Loans and	Available
	receivables	for-sale
	(at amortized cost)	financial assets (at fair value)	Total
31 March 2016 (unaudited)	AED'OOO	AED'OOO	AED'OOO
Assets as per statement of financial position
Available-for-sale financial assets		22,755	22,755
Trade and other receivables	103,838		103,838
Due from related parties Long term fixed deposits	1,951,333 50,860"		1,951,333 50,860
Bank balances	767,083		767,083
	2,873,114	22,755	2,895,869
			Amortised
			cost
			AED'OOO
Liabilities as per statement of financial position
Trade and other payables			768,102
Retentions payable			29,407
Borrowings Due to related parties			415,964 12,640
			1,226,113

I. J

[J

0

[

[J

0

0

c

[

[

D

L

L

L

L

u

G

u

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS PERIOD ENDED 31MARCH2016 (continued)

17 Financial instruments by category (continued)

	Loans and	Available
	receivables	for-sale	Total
31December2015	AED'OOO	AED'OOO	AED'OOO
Assets as per statement of financial position
Available-for-sale financial assets		23,893	23,893
~rade and other receivables	102,080		102,080
Due from related parties	1,951,333		1,951,333
Long term fixed deposits	51,650		51,650
Bank balances	821,493		821,493
	2,926,556	23,893	2,950,449
			Amortised
			cost
			AED'OOO
Liabilities as per statement of financial position
Trade and other payables			771,392
Retentions payable			27,867
Borrowings			478,848
Due to related parties			14,013
			1,292,120

The following table presents the Group's financial assets that are measured at fair value, by valuation method:

	Levell AED'OOO	Total AED'OOO
As at 31March2016 (unaudited)
Available-for-sale financial assets	22,755	22,755
As at 31December2015 (audited)
Available-for-sale financial assets	23,893	23,893

The carrying value less impairment provision of trade receivables are assumed to approximate their fair values keeping in view the period over which these are expected to be realised. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. Other receivables and payables approximate their fair values.