Deyaar Development PJSC - Regulatory Filings 2017

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Consolidated financial statements · for the year ended 31 December 2016

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Consolidated financial statements for the year ended 31 December 2016 ·

	Pages
Directors' report
Independent auditors' report on consolidated financial statements	2-9
Consolidated statement of financial position	10
Consolidated statement of profit or loss	11
Consolidated statement of profit or loss and other comprehensive income	12
Consolidated statement of changes in equity	13
Consolidated statement of cash flows	14
Notes to the consolidated financial statements	15 - 55

Abdulla Ali Obaid Al Hamli	Chairman
Abdullah Ibrahim Lootah	Vice Chairm
Khalifa Suhail Al Zaffin	Director
Mohamed Al Sharif	Director
Dr. Adnan Chilwan	Director
Obaid Nasser Lootah	Director
Mohamed Al Nahdi	Director
Saif Al Yarabi	Director
Yasser Al Falasi	Director

KPMG Lower Gulf Limited Level 12, IT Plaza Dubai Silicon Oasis, Dubai, UAE Tel. +971 (4) 356 9500, Fax +971 (4) 326 3788

Independent auditors' report

To the Shareholders of Deyaar Development PJSC

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Deyaar Development PJSC ("the Company") and its subsidiaries ("the Group"), which comprise the consolidated statement of financial position as at 31 December 2016, the consolidated statement of profit or loss and other comprehensive income (comprising a separate consolidated income statement and a consolidated statement of profit or loss and other comprehensive income), changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2016, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

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 Consolidated Financial Statements section of our report. We are independent of the Group in accordance with International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities in accordance with these requirements and IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Deyaar Development PJSC Independent auditors' report 31 December 2016

Key audit matter

How our audit addressed the key audit matter

Valuation of properties held for development and sale

Refer to note 9 of the consolidated financial statements

The Group holds properties for development and sales of AED 1,290 million, which comprise of completed residential and commercial properties (AED 254 million). land held for mixed-use development (AED 425 million) and development work in progress (AED 611 million).

The net realisable value of property held for development and sale is determined by management based on their internal assessment by taking into consideration available internal as well as comparable market data adjusted for property specific characteristic. Key inputs used by management in their valuation exercise included future projected cash flows and current market rent. which are influenced by the prevailing market forces and the specific characteristics of each property in the portfolio.

In addition, when deemed necessary, the Group also uses a professionally qualified external valuers to fair value the Group's portfolio of properties held for.development and sale. The valuers perform their work in accordance with the Royal Institution of Chartered Surveyors ('RICS') Valuation - Professional Standards and have considerable experience in the markets in which the Group operates.

The estimation of property cost and net realisable value is a complex process as a change in the Group's forecast estimate of sales price and construction cost could have a material impact on the carrying value of properties held for development and sales in the Group's financial statements.

We assessed the appropriateness of the valuation methodologies, assumptions, critical judgement areas and estimates used by management in the internal valuation process.
We undertook discussions with the management and external valuer and evaluated underlying assumptions used with the assistance of market data, where available and applicable;
We tested the appropriateness of key inputs used in the valuation of property held for development and sale;
For commercial and residential properties held for sale, we benchmarked the key assumptions used by management to external industry data and comparable property transactions, particularly the sales price;
We assessed the rationale for changes in the key inputs, estimates and assumptions from the previous period;
We evaluated the competence, objectivity and independence of the external property valuer, and the experience of the management personnel included in the valuation process; and
Based on the outcome of our evaluation we assessed the adequacy of disclosures in the consolidated financial statements.

Deyaar Development PJSC Independent auditors' report 31 December 2016

Key audit matter (continued)

How our audit addressed the key audit matter (continued)

Valuation of investment properties

Refer to note 6 of the consolidated financial statements

The investment property portfolio is valued at AED 330.7 million. The net fair value gain recorded in the consolidated statement of profit or loss amounts to AED 75.5 million.

The Group performs an internal valuation to determine the fair value of some of its investment properties and also engages a professionally qualified external valuers to fair value 74% of its investment property portfolio.

The valuers performed their work in accordance with the Royal Institution of Chartered Surveyors ('RICS') Valuation - Professional Standards. The fair value definition as per RICS Valuation Standards, adopted by the external valuers, complies with the fair value definition under IFRS.

The property portfolio valued by management is valued by using discounted cashflows. Key inputs into the valuation process are discount rates, yield rates and contracted lease rent and forecasted operating expenses, which are influenced by prevailing market forces and the specific characteristics, such as property location, income return, growth rate and occupancy rate, of each property in the portfolio.

The valuation of the portfolio is a significant judgment area and is underpinned by a number of assumptions. The existence of significant estimation uncertainty warrants specific audit focus in this area as any error in determining the fair value, could have a material impact on the value of the Group's investment properties and the fair value gain or loss recognized in respect of these investment properties.

For properties valued by an external valuer, we have performed the following procedures:

We assessed the competence, independence and integrity of the external valuers and read their terms of engagement with the Group to determine whether there were any matters that might have affected their objectivity or may have imposed scope limitations on their work;
We obtained the external valuation reports for all properties valued by the valuers and assessed the valuation approach used by the valuer in determining the fair value of the properties;
We have also tested whether property specific data supplied to the external valuers by management reflected the underlying property records;
We met the external valuers of the portfolio to discuss the results of their work. We discussed and evaluated the valuation process, overall performance of the portfolio and the significant assumptions used in the valuation; and
Based on the outcome of our evaluation we assessed the adequacy of the disclosure in the consolidated financial statements.

Deyaar Development PJSC Independent auditors ' report 3 7 December 20 7 6

Key audit matter (continued)

How our audit addressed the key audit matter (continued)

Valuation of investment properties (continued)

Refer to note 6 of the consolidated financial statements

For properties internally valued by management, we have performed the following procedures:

We evaluated the significant assumptions used by management in their valuation process which includes expected rental values, forecast yields, occupancy rates and discount rate. We corroborated these assumptions by reference to lease agreements, published indices, and comparable market data available;
We have assessed the key inputs and assumptions in the valuation model and sensitivities to key factors;
We have also assessed the rationale for changes in the key inputs, estimates and assumptions from the previous period; and
Based on the outcome of our evaluation we assessed the adequacy of the disclosure in the consolidated financial statements.

Impairment of investment in joint ventures and associates ("equity accounted investees")

Refer to note 7 of the consolidated financial statements

The carrying value of the Group's investment in joint venture and investment in associate is AED 885.7 million and AED 370.3 million respectively.

The carrying value and recoverable amount of Group's investment in equity accounted investees is dependent on the intrinsic value of the underlying investment in these equity accounted investees.

To assess whether an impairment exists in the carrying value of the Group's investment in equity accounted investees, management is required to assess the value of the property portfolio held by equity accounted investees whether classified as property held for development and sale or investment properties.

To evaluate the management's assessment of recoverability of its investment in equity accounted investees, we have performed the following procedures:

We assessed the Group's controls over evaluating the methodologies, inputs and assumptions used by the Group in determining fair values;
On a sample basis, we tested the pricing inputs used into valuation models;
We assessed key inputs and assumptions used in the valuation models and their sensitivities to key factors;

Deyaar Development PJSC Independent auditors ' report 31 December 2016

Key audit matter (continued)

How our audit addressed the key audit matter (continued)

Impairment of investment in joint ventures and associates ("equity accounted investees") (continued)

Refer to note 7 of the consolidated financial statements

The Group performs an internal valuation to determine the fair value of property portfolio held by equity accounted investees and, when deemed necessary, also engages professionally qualified external valuers to determine the fair value of property portfolio of equity accounted investees.

Impairment of investment in equity accounted investees is an area that involves significant management judgment and requires an assessment as to whether the carrying value of the investment in equity accounted investees can be supported by the carrying value of the assets held by equity accounted investees. The assessment process is complex and highly judgmental and is based on assumptions that are affected by expected future market or economic conditions.

Due to the significance of the carrying value of the investment in equity accounted investees in the Group's financial statements and the inherent uncertainties associated with estimating future cash flows and the appropriate discount rates, the impairment of investment in equity accounted investees is a key audit matter.

We assessed the rationale for changes in the key inputs, estimates and assumptions from the previous period;
Based on the price assessment reports obtained from independent valuers, we assessed the significant unobservable valuation inputs and discussed these with valuers and critically assessed the assumptions and estimates used; and
Based on the outcome of our evaluation we assessed the adequacy of the disclosure in the consolidated financial statements.

Recoverability of amounts due from related parties

Refer to note 11 of the consolidated financial statements

The carrying amount of group's amount due from related parties is AED 1,956 million against which a provision for bad and doubtful debt of AED 1.5 million has been recognized.

A provision for impairment against amount due from related parties is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

We analysed balances due from related parties for which no provision was created against by the Group to determine whether there were any indicators of impairment;
We obtained balance confirmations from related parties and assessed the terms and conditions of their settlement, as applicable; and

Deyaar Development PJSC Independent auditors ' report 31 December 2016

Key audit matter (continued)

How our audit addressed the key audit matter (continued)

Recoverability of amounts due from related parties (continued)

Refer to note 7 7 of the consolidated financial statements

The carrying value of the amount due from related parties may not be reflective of its recoverable amount, as at the reporting date. Determination of the recoverable amount incorporates significant judgments based on various assumptions.

There continues to be a significant risk over recoverability of amounts due from related party, and the risk of financial loss to the Company if the related party fails to meet its contractual obligations. Therefore, recoverability of amounts due from related parties is deemed as a key audit matter.

• We assessed whether appropriate disclosures have been made in the consolidated financial statements.

Other information

Management is responsible for the other information. Other information consists of the information included in the Group's 2016 Annual Report, other than the consolidated financial statements and our auditors' report thereon. We obtained the report of the Group's Board of Directors, prior to the date of our auditors' report, and we expect to obtain the remaining sections of the Group's 2016 Annual Report after the date of our auditors' report.

Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit o.f the consolidated financial statements, our responsibility is to read the other information identified above and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, 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 Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and their preparation in compliance with the applicable provisions of the UAE Federal Law No. (2) of 2015, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group'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 Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 exists. 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 consolidated 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 consolidated 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 Group'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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated 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 auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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.

Auditors ' Responsibilities for the Audit of the Consolida.ted Financial Statements (continued)

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, 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 consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' 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 reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Further, as required by the UAE Federal Law No. (2) of 2015, we report that:

i) we have obtained all the information and explanations we considered necessary for the purposes of our audit;
ii) the consolidated financial statements have been prepared and comply, in all material respects, with the applicable provisions of the UAE Federal Law No. (2) of 2015;
iii) the Group has maintained proper books of accounts;
iv) the financial information included in the Directors' report, in so far as it relates to these consolidated financial statements, is consistent with the books of accounts of the Group;
v) as disclosed in note 35 to the consolidated financial statements, the Group has not purchased any shares during the financial year ended 31 December 2016;
vi) note 11 to the consolidated financial statements discloses material related party transactions and the terms under which they were conducted; and
vii) based on the information that has been made available to us nothing has come to our attention which causes us to believe that the Group has contravened during the financial year ended 31 December 2016 ~my of the applicable provisions of the UAE Federal Law No. (2) of 2015 or in respect of the Articles of Association of the Company, which would materially affect its activities or its consolidated financial position as at 31 December 2016.

KPMG Lower Gulf Limited.

Vijendra Nath Malhotra Registration No. : 48 Dubai, United Arab Emirates

Date: 2 8 FEB 2017

KPMG Lo-..ver Gulf Limited 1s a member firm of thn KPMG network of independent member firms attilimcd vv11h KPMG International Coopcrauve (" KPMG lnternauonal"), a Swiss entity All righ!s reserved KPMG Lower Gulf L1m1ted Branch 1s registered and licensed as a Free Zone Company under the rules and regulot1ons of ttie DSDA

Consolidated statement of financial position

As at 31 December 2016

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			At 31 December
		2016	2015
	Notes	AED'OOO	AED'OOO

ASSETS
Non-current assets
Property and equipment	5	343,955	264,927
Investment properties	6	330,669	253,556
Investments in joint ventures and associate	7	1,256,016	1,181 ,640
Properties held for development and sale	9	333,482	313,543
Trade and other receivables	JO	141,128	158,620
Long term fixed deposits	12	50,377	51 ,650
Available-for-sale financial assets	8	22,186	23,893
		2,477,813	2,247,829
Current assets
Properties held for development and sale	9	956,747	998,897
Inventories		2,171	2,227
Trade and other receivables	JO	176,379	183, 152
Due from related parties	II	1,954,449	1,951 ,333
Cash and bank balances	12	647,171	823,340
		3,736 917	3,958,949
Total assets		6,214,730	6,206,778
EQUITY
Share capital	13	5,778,000	5,778,000
Legal reserve	14	264,144	242,529
Available for sale fair valuation reserve	8	2,851	4,558
Accumulated losses		(1,172,327)	(1,362,534)
Total equity		4,872,668	4,662,553

LIABILITIES Non-current liabilities
Borrowings	15	343,046	342,308
Advances from customers	16	54,052	12,087
Retentions payable	18	27,874	10,368
Provision for employees' end of service benefits	19	12,892	10,990
		437 864	375,753
Current liabilities
Borrowings	15	95,633	136,540
Advances from customers	16	52,344	163,06 I
Trade and other payables	17	736, 767	771 ,392
Retentions payable	18	1,155	17,499
Provision for claims	25	6,000	65,967
Due to related parties	II	12,299	14,013
		904,198	1,168,472
Total liabilities		1,342 062	1,544,225
Total equity and liabilities		6,214,730	6,206,778
A?t These consolidated financial statements were approved by the Board of Directors on .Z. 6 f.E.6.		L	!1.2QJ£.and signed
onits		L

Abdulla Ali 6t?aid Al Hamli -S-ae_e_d_A_lf-Q- ~i +--,,;;i"'----- Chairman Chief Ex Ott e Officer

The notes on pages 15 to 55 form an integral part of these consolidated financial statements.

The independent auditors' report on audit of consolidated financial statement is set out on pages 2 to 9.

Consolidated statement of profit or loss

For the year ended 31December2016

		Year ended 31 December
		2016	2015
	Notes	AED'OOO	AED'OOO

Revenue	20	428,260	257,102
Direct I operating costs	21	(268,802)	( 124,485)
Other operating income	22	55,244	15,169
General and administrative expenses	23	(141,718)	(158,200)
Provision for claims	25	(4,630)	(22,220)
Write back of provision for impairment against advance for purchase
of properties	26	6,144	157,877
Write back of provision for impairment of investment in an associate	7	68,884
Gain from fair valuation adjustment on investment properties	6	75,492	16,176
Operating profit		218,874	141,419
Finance cost	27	(19,485)	(26,775)
Finance income	27	11,264	9,892
Finance cost, net		(8,221)	(16,883)
Share of results from joint ventures and associate	7	5,492	166,818
Profit for the year		216,145	291,354
Profit attributable to:
Equity holders of the Company		216,145 .	291,354
		216,145	291,354
Earning per share attributable to the equity holders of the Company
during the year - basic and diluted	28	Fils 3.74	Fils 5.04

The notes on pages 15 to 55 form an integral part of these consolidated financial statements.

The independent auditors' report on audit of consolidated financial statement is set out on pages 2 to 9.

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Consolidated statement of profit or loss and other comprehensive income For the year ended 31December2016

	Note	Year ended 31 December
		2016 AED'OOO	2015 AED'OOO
Profit for the year		216,145	291,354
Other comprehensive income from items that may be subsequently reclassified to profit or loss:
Change in fair value of available-for-sale financial assets	8	(1,707)	(948)
Other comprehensive income for the year		(l,707)	(948)
Total comprehensive income for the year		214,438	290,406
Attributable to:
Equity holders of the Company		214,438	290,406
Total comprehensive income for the year		214,438	290,406

The notes on pages 15 to 55 form an integral part of these consolidated financial statements.

The independent auditors' report on audit of consolidated financial statement is set out on pages 2 to 9.

Consolidated statement of changes in equity For the year ended 31December2016

	Share capital AED'OOO	Legal reserve AED'OOO	Available for sale fair valuation reserve AED'OOO	Accumulated losses AED'OOO	Total equity AED'OOO
Balance at 1 January 2015, as previously reported	5,778,000	213,394	5,506	(1,623,836)	4;373,064
Effect of change in accounting policy (Note 2.3)				(917)	(917)
Balance at 1 January 2015 (restated)	5,778,000	213,394	5,506	(1,624,753)	4,372,147
Total comprehensive income for the year
Profit for the year				291,354	291,354
Other comprehensive income			(948)		(948)
Total comprehensive income for the year			(948)	291,354	290,406
Transfer to legal reserve		29,135		(29, 135)
Balance at 3 1 December 2015	5,778,000	242,529	4,558	(1,362,534)	4,662,553
Balance at I January 2016	5,778,000	242,529	4,558	(1,362,534)	4,662,553
Total comprehensive income for the year
Net profit for the year				216,145	216,145
Other comprehensive income			(1,707)		(1,707)
Total comprehensive income for the year			(1,707)	216,145	214,438
Transfer to legal reserve		21,615		(21,615)
Board of Directors' remuneration				(4,323)	(4,323)
Balance at 3 I December 2016	5,778,000	264,144	2,851	(1,172,327)	4,872,668

The notes on pages 15 to 55 form an integral part of these consolidated financial statements.

Consolidated statement of cash flows

For the year ended 31 December 2016

		Year ended 31 December
		2016	2015
	Notes	AED'OOO	AED'OOO

Cash flows from operating activities
Net cash (used in) I generated from operating activities	29	(65,892)	47,374
Cash flows from investing activities ·
Purchase of property and equipment		(62,977)	(25,703)
Additions to investment properties	6	(848)	(3,362)
Movement in term deposits with an original maturity of more than three
months		231,274	186,909
Finance income received on deposits		10,887	8,668
Net cash generated from investing activities		178,336	166,512
Cash flows from financing activities
Net movement in borrowings		(40,169)	(171,314)
Finance cost paid		(18,443)	(28,524)
Net cash used in financing activities		(58,612)	(I 99,838)
Increase in cash and cash equivalents		53,832	14,048
Cash and cash equivalents, beginning of the year		453,340	439,292
Cash and cash equivalents, end of the year	12	507,172	453,340

The notes on pages 15 to 55 form an ihtegral part of these consolidated financial statements.

The independent auditors' report on audit of consolidated financial statement is set out on pages 2 to 9.

Notes

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(forming part of the consolidated financial statements)

1 Legal status and activities

Deyaar Development P JSC (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.

In the current year, the Company has incorporated a new subsidiary, Deyaar Parking Management LLC, to carry out car park rental and management activities. Refer note 34.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

These consolidated financial statements present the financial position and results of the operations and cash flows of the Company and its subsidiaries (together, "the Group") and the Group's interest in its equity accounted investees (Note 34).

The consolidated financial statements of the Group have been prepared in accordance with and comply with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (IASB) and the requirements of UAE Federal Law No. (2) of 2015.

UAE Federal Law No. (2) of 2015 being the Commercial Companies Law ("UAE Companies Law of2015") was issued on l April 2015 and has come into force on 1July2015. Companies are allowed to ensure compliance with the new UAE Companies Law of 2015 by 30 June 2017 as per the transitional provisions contained therein.

The consolidated financial statements have been prepared on the historical cost convention basis except for investment properties and available-for-sale financial assets which are stated at fair values.

The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4.

A number of new standards and amendments to standards are effective for annual periods beginning after I January 2016 and earlier application is permitted. Except for the early adoption of IFRS 15 as mentioned in Note 2.3, the other new standards and amendments have· not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group have been set out below.

IFRS 9 Financial Instruments

IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after I January 2018, with early adoption permitted.

2 Summary of significant accounting policies (continued)

2.1 Basis of preparation (continued)

IFRS 9 Financial Instruments (continued)

The Group is assessing the potential impact on its consolidated financial statements resulting from the application ofIFRS 9.

IFRS 16 Leases (2016)

IFRS 16, published in January 2016 replaces the previous guidance in IAS 17 Leases. Under this revised guidance, leases will be brought onto companies' balance sheets, increasing the visibility of their assets and liabilities. It further removes the classification of leases as either operating leases or finance leases treating all leases as finance leases from the perspective of the lessee, thereby eliminating the requirement for lease classification test. The revised guidance has an increased focus on who controls the asset and may change which contracts are leases. IFRS 16 is effective for annual periods beginning on or after I January 2019.

The following new or amended standards are not expected to have a significant impact of the Group's consolidated financial statements:

IFRS 14 Regulatory Deferral Accounts.
Accounting for Acquisitions of Interests in Joint Operations (Amendments to lFRS 11 ).
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to !AS 16 and IAS 38).
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28).
Annual Improvements to IFRSs 2012-2014 Cycle-various standards.
Investment Entities: Applying the Consolidation Exception (Amendments to IFRS I 0, IFRS 12 and IAS 28).
Disclosure Initiative (Amendments to IAS I).

2.2 Basis of consolidation

(a) Subsidiaries

Subsidiaries are all entities over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases.

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The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the accounting policies adopted by the Group.

Notes (continued)

2 Summary of significant accounting policies (continued)

2.2 Basis of consolidation (continued)

(a) Subsidiaries (continued)

The Group recognises any non-controlling interest in the acquiree on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

(b) Eliminations on consolidation

Material inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Consolidated financial statements are prepared using uniform accounting policies for like transactions.

(c) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50%. of the . voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition. The Group's investment in associate includes goodwill identified on acquisition.

The Group's share of post-acquisition profit or loss is recognised in the consolidated statement of profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its canying value and recognises the amount in the consolidated statement of profit or loss.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group's consolidated financial statements only to the extent of unrelated investor's interests in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associate have been changed where necessary to ensure consistency with the policies adopted by the Group.

Notes (continued)

2 Summary of significant accounting policies (continued)

2.2 Basis of consolidation (continued)

(d) Joint ventures

The Group's interests in jointly controlled entities are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost and adjusted thereafter to recognise .the Group's share of the post acquisition profits or losses and movements in other comprehensive income. When the Group's share of losses in a joint venture equals or exceeds its interests in the joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of joint ventures. The Group's investment in joint venture includes goodwill identified on acquisition.

The Group determines at each reporting date whether there is any objective evidence that the investment in joint ventures is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognises the amount in the consolidated statement of profit or loss.

Profits and losses resulting from upstream and downstream transactions between the Group and its joint venture are recognised in the Group's consolidated financial statements only to the extent of unrelated investor's interests in the joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impaiiment of the asset transferred. Accounting policies of joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group._

2.3 Change in accounting policy- Early adoption of IFRS 15 in 2015

Except for the early adoption of IFRS 15 ih the previous year and the corresponding changes below, the Group has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

IFRS 15 Revenue from contracts with customers

IFRS 15 Revenue from contracts with customers was issued in May 2014 and is effective from annual periods commencing on or after I 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.

The Group had reviewed the impact of IFRS 15 and accordingly elected to early adopt IFRS I 5 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 had 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 Januaty 2015.

The details and the quantitative impact of the change in accounting policy is as follows:

Revenue from sale of properties

The Group previously recognised revenue for sale of properties in the 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 or in certain circumstances when equitable interest in the property vest with the buyer before legal title passes. Upon early adoption of IFRS 15, revenue is recognised as and when the performance obligation of the Group is satisfied. Also, refer note 2.20.

Notes (continued)

2 Summary of significant accounting policies (continued)

2.3 Change in accounting policy (continued)

Sales commission

The Group previously recognised sales commission related to sale of prope1ties as selling expenses when these were incurred. Under IFRS 15, the Group capitalises those commission fees as costs of obtaining a contract when they are incremental and amortises them consistently with the pattern of revenue for the related contract. If the expected amortization period is one year or less, then the commission fee is expensed when incmTed.

Impacts on consolidated financial statements

The details of adjustments to the accumulated losses and other account balances as at I January 20 I 5 are detailed below:

Consolidated statement of financial position

	31 December 2014 AED'OOO	Adjustments/ Reclassifications AED'OOO	1 January 2015 AED'OOO
	(As previously reported)		(Restate(Q .
Assets
Trade and other receivables	259,613	57,411	317,024
Properties held for sale and development	1,403,134	(177,684)	1,225,450
Investments in joint ventures and associate	1,032,579	(17,757)	. 1,014,822
	2,695,326	(138,030)	2,557,296
Liabilities
Trade and other payables	660,415	4,504	664,919
Advances from customers	288,285	(141,617)	146,668
	948,700	(137,113)	811,587
Equity
Accumulated losses	(1,623,836)	(917)	(1,624,753)

Impact of early adopting IFRS 15 on the consolidated financial statements of the Group for the year ended 31 December 2015 was as follows:

i. Consolidated statement of profit or loss

Year ended 31December2015	As per IFRS 15 AED'OOO	As per old policy AED'OOO	Impact due to change AED'OOO

Revenue	257,102	290,138	(33,036)
	124,485	177,261	(52,776)
Direct I operating costs Share of results from joint ventures and associate	166,818	153,786	13,032
Profit for the year	291,354	258,582	32,772
Earnings per share attributable to the equity holders of the Company- basic and diluted	Fils 5.04	Fils 4.48	Fils 0.56

Notes (continued)

2 Summary of significant accounting policies (continued)

2.3 Change in accounting policy (continued)

Impacts on consolidated financial statements (continued)

ii. Consolidated statement of profit or loss and other comprehensive income

Year ended 31December2015	As per IFRS 15 AED'OOO	As per old policy AED'OOO	Impact due to change AED'OOO
Profit for the year	291,354	258,582	32,772
Total comprehensive income for the year	290,406	257,634	32,772

iii. Consolidated statement of financial position

	As per IFRS 15	As per old policy	Impact clue to change
As at 31 December 2015	AED'OOO	AED'OOO	AED'OOO
Assets			,-
Investment in joint ventures and associate	1,181,640	1,186,365	, I (4,725)
Properties held for development and sale - Non-current	313,543	590,813	(277,270)
Properties held for development and sale - Current	998,897	846,535	152,362 I I
Trade and other receivables - Non-current	5,165	5,165	-,
Trade and other receivables - Current	336,607	297,680	38,927
	2,835,852	2,926,558	(90,706)
Liabilities
Trade and other payables	771,392	766,888	4,504
Advance from customers - Non-current	12,087	161,428	~ (149,341)
Advance from customers - Current	163,061	140,785	22,276
	946,540	1,069,101	J (122,561)
Equity
Accumulated losses	(1,362,534)	(1,394,389)	31,855 ,-.,
Consolidated statement of cash flows iv.			'--'
	As per	As per	Impact due
Year ended 31December2015	IFRS 15 AED'OOO	old policy AED'OOO	to change AED'OOO
			_,
Cash flows from operating activities
Profit for the year	291,354	258,582	32,772 _J
Share of results from an associate and joint ventures	(166,818)	(153,786)	( 13,032)
Operating cash flows before payment of employees' end of service benefits and			J
changes in working capital Changes in working capital:	(10,262)	(30,002)	19,740
Properties held for development and sale net of project cost	15,412	68,188	J (52,776)

Trade and other receivables Advances from customers	(22,491)	(40,975)	18,484 J

Notes (continued)

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2 Summary of significant accounting policies (continued)

2.4 Segment reporting

Operating segments are reported in a manner consistent with the internal rep01ting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

2.5 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in United Arab Emirates Dirham ("AED"), which is the Company's functional and the Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated statement of profit or loss within "finance income or cost". All other foreign exchange gains and losses are presented in the consolidated statement of profit or Joss within "other operating income or expense".

(c) Group entities

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of the statement of financial position;
(ii) Income and expenses for each statement of profit or loss are translated at average exchange rates; and
(iii) All resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment m foreign operations, and of borrowings are taken to equity.

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Company are reclassified to profit or loss.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss.

2 Summary of significant accounting policies (continued)

2.6 Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation. The cost of property and equipment is its purchase cost together with any incidental costs of acquisition. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

All other repairs and maintenance costs are charged to the consolidated statement of profit or loss during the financial year in which they are incurred.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method, at rates calculated to reduce the cost of assets to their estimated residual value over their expected useful lives, as follows:

Type of assets	Years
Buildings	20
Leasehold improvements	4
Furniture and fixtures	4-5
Office equipment	4
Motor vehicles	4

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at.the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's can-ying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the asset's carrying amount. These are recognised within "other income or expense" in the consolidated statement of profit or loss.

Capital work-in-progress is stated at cost and includes property that is being developed for future use. When commissioned, capital work-in-progress is transferred to the respective category, and depreciated in accordance with the Group's policy.

2.7 Investment property

Recognition

Land buildings owned by the Group for the purposes of generating rental income or capital appreciation or both are classified as investment properties. Properties that are being constructed or developed for future use as investment properties are also classified as investment properties.

Measurement

Investment properties are initially measured at cost, including related transaction costs. Subsequent to initial recognition, investment prope1iies are accounted for using the fair value model under International Accounting Standard No. 40 "Investment Prope1iy". Any gain or loss arising from a change in fair value is recognised in the profit or loss.

2 Summary of significant accounting policies (continued)

2.7 Investment property (continued)

Measurement (continued)

When the Group begins to redevelop an existing investment property for continued future use as an investment property, the property remains as an investment property, which is measured based on fair value model and is not reclassified as development property during the redevelopment as an investment property.

Transfer from properties held/or sale to investment properties

Certain properties held for sale are transferred to investment properties when those properties are either released for rental or for capital appreciation or both. The properties held for sale are transferred to investment properties at fair value on the date of transfer and gain arising on transfer is recognised in profit or loss. Subsequent to initial measurement, such properties are valued at fair value in accordance with the measurement policy for investment properties. Any gain arising on this remeasurement of the specific property is recognised in profit or loss.

Transfer from investment properties to properties held for sale

Properties are transferred from investment properties to properties held for development and sale when there is a change in intention to use the property. Such transfers are made at the fair value of the properties at the date of transfer and gain arising on transfer is recognised in statement of profit or loss. Subsequent to initial measurement, such properties are valued at cost in accordance with the measurement policy for properties held for development and sale.

Transfer from investment properties to owner-occupied property

If an investment property becomes owner-occupied prope1ty, it is reclassified as prope1ty and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.

Sale of investment properties

Certain investment properties are sold in the ordinary course of business. No revenue and direct I operating costs are recognised for sale of investment properties. Any gain or loss on disposal of sale of investment properties (calculated as the difference between the net proceeds from disposal and carrying amount) is recognised in the consolidated statement of profit or loss.

2.8 Impairment of non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets, other than investment property, to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

2 Summary of significant accounting policies (continued)

2.8 Impairment of non-financial assets (continued)

A cash generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CG Us.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit , exceeds its recoverable amount. Impairment losses, if any, are recognised in the profit or loss.

2.9 Financial assets

2.9.1 Classification

The Group classifies its financial assets in the categories set out below. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date, which are classified as noncurrent assets. Loans and receivables are carried at amortised cost using the effective interest method. Loans and receivables are classified as trade and other receivables, due from related parties, and cash and bank balances (Notes 10, 11 and 12) in the financial position.

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(b) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories of financial assets. They are included in non- ' l current assets unless the investment matures or management intends to dispose of it within twelve .J months of the end of the reporting period.

2.9.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date, being ihe date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Available-for-sale financial assets are subsequently carried at fair value. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risks and rewards of ownership.

Changes in the fair value of the available-for-sale financial assets are recognised in other comprehensive income. Dividends on available-for-sale financial assets are recognised in the profit or loss as part of other income when the Group's right to receive payments is established.

Notes (continued)

2 Summary of significant accounting policies (continued)

2.10 Impairment of financial assets

(a) Assets carried at amortised cost

The Group assesses at the end of each repo1ting period whether there is objective evidence that a financial asset or group of financial assets is impaired.

A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an . improvement in the debtor's credit rating), the reversal of the previously recognised impairment loss is recognised in the profit or loss.

(b) Assets classified as available-for-sale

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in the profit or loss. Impairment losses recognised in the profit or loss on equity instruments are not reversed through the profit or loss.

2.11 Properties held for development and sale

Land and buildings identified as held for sale, including buildings under construction, are classified as such and are stated at the lower of cost and estimated net realisable value. The cost of work-in-progress comprises construction costs and other related direct I operating costs. Net realisable value is the estimated selling price in the ordinary course of business, less cost of completion and selling expenses.

2 Summary of significant accounting policies (continued)

2.12 Trade and other receivables

Trade receivables are amounts due from customers for properties sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at fair value and subsequently measured at amo1iised cost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the profit or loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to the profit or loss.

2.13 Cash and cash equivalents

Cash and cash equivalents includes cash in hand and at bank, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, net of bank overdrafts. In the consolidated statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

2.14 Employee benefits

(a) End of service benefits to non-UAE nationals

The provision for staff terminal benefits is based on the liability that would arise if the employment of all staff were terminated at the reporting date and is calculated in accordance with the provisions of UAE Federal Labour Law and the relevant local laws applicable to overseas subsidiaries. Management considers these as long-term obligations and accordingly they are classified as long-term liabilities.

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(b) Pension and social security policy within the U.A.E

The Group is a member of the pension scheme operated by the Federal Pension General and Social Security Authority. Contributions for eligible UAE National employees are made and charged to the consolidated statement of profit or loss, in accordance with the provisions of Federal Law No. 7 of 1999 relating to Pension and Social Security Law.

2.15 Advances from customers

Instalments received from buyers, for properties sold or services performed, prior to meeting the revenue recognition criteria, are recognised as advances from customers. If their settlement, through revenue recognition or refund, is expected in one year or less, they are classified as current liabilities. If not, they are presented as non-current liabilities.

Notes (continued)

1 )

2 Summary of significant accounting policies (continued)

2.16 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. These are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Bo1TOwings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or ~II of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.

2.18 Borrowings costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the tempora1y investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other boo-owing costs are recognised in profit or loss in the period in which they are incurred.

2.19 Provisions

Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a rate that reflects cun-ent market assessments of the time value of money and risks specific to the obligation. Increases in provisions due to the passage of time are recognised as interest expense.

2 Summary of significant -accounting policies (continued)

2.20 Revenue recognition

As a result of early adoption of IFRS 15 with effect from I January 2015, the Group has applied the following accounting policy with effect from I January 2015 (Note 2.3).

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordina1y course of the Group's activities.

Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognised when the Group transfers control over a product or service to a customer.

(a) Revenue from sale of properties

The Group recognises revenue from sale of prope1ties based on a five step model as set out in IFRS 15:

Step 1 Identify the contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.
Step 2 Identify the performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.
Step 3 Determine the transaction price: The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or service to a customer, excluding amounts collected on behalf of third paities.
Step 4 Allocate the transaction price to the performance obligations in the contract: For a contract that has more than one performance obligation, the Group will allocate the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Group expects to be entitled in exchange for satisfying each performance obligation.

Step 5 Recognise revenue when (or as) the entity satisfies a pe1formance obligation.

The Group satisfies a performance obligation and recognises revenue over time, if one of the following criteria is met:

1. The customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs; or
1. The Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
1. The Group's performance does not create an asset with an alternative use to the Group and the entity has an enforceable right to payment for performance completed to date.

For performance obligations where one of the above conditions are not met, revenue 1s recognised at the point in time at which performance obligation is satisfied.

When the Group satisfies a performance obligation by delivering the promised goods or services, it creates a contract asset based on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognised, this gives rise to a contract liability.

Notes (continued)

2 Summary of significant accounting policies (continued)

2.20 Revenue recognition (continued)

(b) Forfeiture income

Forfeiture income is recognised in the consolidated statement of profit or loss when, in the case of properties sold and not yet recognised as revenue, a customer does not fulfil to the contractual payment terms. This is deemed to take place when, despite rigorous follow-up with the defaulted customer, as per the procedures set out by the Dubai Real Estate Regulatory Authority, the customer continues to default on the contractual terms.

(c) Service revenue

Revenue from services such as property management and facilities management is recognised in the accounting period in which the services are rendered.

(d) Leasing income

Leasing income from operating leases is recognised on a straight-line basis over the lease term. When the Group provides operating lease incentives to its customers, the aggregate cost of incentives are recognised as a reduction of rental income over the leas'e term on a straight-line basis. ·

(e) Finance income

Finance income is recognised in the consolidated statement of profit or loss on a time-proportion basis using the effective yield method.

(f) Dividend income

Dividend income is recognised when the right to receive the dividend is established.

2.21 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's consolidated financial statements in the period in which the dividends are approved by the Company's shareholders.

2.22 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-line basis over the period of the lease.

2 Summary of significant accounting policies (continued)

2.23 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is repo1ted in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

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2.24 Directors' remuneration

Pursuant to Article 169 of the Federal Law No. 2 of 2015 and in accordance with the atticles of association of the Company, the Directors shall be entitled for remuneration, which shall not exceed I 0% of the net profits after deducting depreciation and the reserves.

3 Financial risk management

3.1 Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, cash flow and fair value interest rate risk and other price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.

Risk management is carried out by the senior management under policies approved by the Board of Directors. Management evaluates financial risks in close co-ordination with the Group's operating units.

Market risk

Currency risk

Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group does not have any significant exposure to foreign currency risk since the majority of transactions are denominated in AED, US Dollars or other currencies, whereby the AED or other currencies are pegged to the US Dollar.

Price risk

The Group is exposed to equity securities price risk through investments held by the Group and classified as available-for-sale.

Cash flow and fair value interest rate risk

The Group has an insignificant interest rate risk arising from interest bearing bank deposits. Bank deposits are placed with banks offering favourable rates. The Group's interest rate risk arises from its interest bearing liabilities.

At 31 December 2016, if profit rates on borrowings had been I% higher/lower with all other variables held constant, profit for the year would have been AED 4.4 million lower/higher (2015: profit for the year would have been AED 5.1 million lower/higher), mainly as a result of higher/lower interest expense on floating rate borrowings.

Notes (continued)

3 Financial risk management (continued)

3.1 Financial risk factors (continued)

Credit risk

The Group is exposed to credit risk in relation to its monetary assets, mainly trade and other receivables, due from related parties, cash at bank and bank deposits. Trade receivables are made to customers with an appropriate credit history. The Group has no other significantconcentrations of credit risk. Bank deposits are limited to high-credit-quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure at the reporting date. The maximum exposure to credit risk at the repotting date was:

	2016	2015
	AED'OOO	AED'OOO

Long term fixed deposits	50,377	51,650
Trade and other receivables	111,411	102,080
Due from related parties	1,954,449	1,951,333
Bank balances	645,718	821,493
	2,761,955	2,926,556

Liquidity risk

The Group monitors its risk of a possible shortage of funds using cash flow forecasts. These forecasts consider the maturity of both its financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows from operations.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities. The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecasted and actual cash flows and matching the maturity profiles of financial assets and liabilities. The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

		------- Contractual cash flows -------
	Carrying	Contractual	Within 1	2 to 5	More than 5
	amount	cash flows	.year	years	years
	AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO

As at 31December2016
Islamic finance facilities	438,679	482,747	112,326	351,268	19, 153
Trade and other payables	736,767	736,767	736,767
Retentions payable	29,029	29,029	1,155	27,874
Due to related parties	12,299	12,299	12,299
	1,216,774	1,260,842	862,547	379,142	19,153

As at 31 December 2015
Islamic finance facilities	478,848	535,211	157,855	317,791	59,565
Trade and other payables	771,392	771,392	771,392
Retentions payable	27,867	27,867	17,499	10,368
Due to related parties	14,013	14,013	14,013
	1,292, 120	1,348,483	960,759	328,159	59,565

3 Financial risk management (continued)

3.2 Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to maximise returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

There were no changes in the Group's approach to capital management during the year. Except for complying with certain provisions of the UAE Federal Law No. (2) of 2015, the Group is not subject to any externally imposed capital requirements.

3.3 Fair value estimation

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 of IFRS, 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).

' -I _J

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

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

	Level 1 AED'OOO	Total AED'OOO

As at 31De~ember2016 Available-for-sale financial assets	22,186	22,186
As at 3 1 December 2015 Available-for-sale financial assets	23,893	23,893

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to the short-term nature of trade receivables. The fair value of ¹ financial liabilities for disclosure purposes is estimated by discounting the future contractual cash J 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.

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4 Critical accounting estimates and judgements

Estimates and judgements are continua!ly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Valuation of investment properties

The Group follows the fair value model under IAS 40 where investment property owned for the purpose of generating rental income or capital appreciation, or both, are fair valued based on valuation carried out by an independent registered valuer, who carried out the valuation in accordance with RlCS Appraisal and Valuation Manual issued by the Royal Institute of Chartered Surveyors and the internal valuation by the Group's finance department.

The fair values have been determined by taking into consideration market comparables and I or the discounted cash flows where the Group has on-going lease arrangements. In this regard, the Group's current lease arrangements, which are entered into on an arm's length basis and which are comparable to those for similar properties in the same location, have been taken into account.

In case where the Group does not have any on-going lease arrangements, fair values have been determined, where relevant, having regard to recent market transactions for similar properties in the same location as the Group's investment properties. These values are adjusted for differences in key attributes such as property size.

Management of the Company has reviewed the assumption and methodology used by the independent registered valuer and in their opinion these assuinptions and methodology seems · reasonable as at the reporting date considering the current economic and real estate outlook in UAE.

(b) Recoverability of investment in a joint venture and an associate ("equity accounted investees")

Recoverability of investment in equity accounted investees is an area involving significant management judgement, and requires an assessment as to whether the carrying value of the investment in equity accounted investees can be supported by the carrying value of the assets held by equity accounted investees.

For property portfolio held by equity accounted investees, management performs an internal valuation to determine the fair value using a valuation technique based on a discounted cash flow model and, when deemed necessary, also engages professionally qualified external valuers to determine the fair value of property portfolio of equity accounted investees.

In calculating the net present value of the future cash flows of properties portfolio of equity accounted investees, certain assumptions are required to be made in respect of the impairment reviews. The key assumptions on which management has based its cash flow projections when determining the recoverable amount of the assets are as follows:

Discount rate based on the Group's weighted average cost of capital with a risk premium reflecting the relative risks in the markets in which the businesses operate.
Growth rate based on a conservative view of the long-term rate of growth.

Management assesses the impairment for property portfolio held by equity accounted investees whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that are considered important, which could trigger an impairment review include evidence that no profits or cash flows will be generated from the related asset.

Notes (continued)

4 Critical accounting estimates and judgements (continued)

(c) IFRS 15 Revenue from contracts with customers

The application of revenue recognition policy m accordance with IFRS 15 has required management to make the followingjudgements:

Satisfaction of performance obligation

The Group is required to assess each of its contracts with customers to determine whether performance obligations are satisfied over time or at a point in time in order to determine the appropriate method of recognising revenue. The Group has assessed that based on the sale and purchase agreements entered into with customers and the provisions of relevant laws and regulations, where contracts are entered into to provide real estate assets to customer, the Group does not create an asset with an alternative use to the Group and usually has an enforceable right to payment for performance completed to date. In these circumstances the Group recognises revenue over time and in other cases, revenue is recognised at a point in time.

Determination of transaction prices

The Group is required to determine the transaction prices in respect of each of its contracts with customers. In making such judgement the Group assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component in the contract and any non-cash consideration in the contract.

Transfer of control in contracts with customers

In cases where the Group determines that performance obligations are satisfied at a point in time, . revenue is recognised when control over the asset that is subject of the contract is transferred to r- the customer. In the case of contracts to sell real estate assets, this is generally when the unit has been handed over to the customer.

Allocation of transaction price to performance obligation in contracts with customers

The Group has elected to apply the input method in allocating the transaction price to performance obligations where revenue is recognised over time. The Group considers that the use of input method which requires revenue recognition on the basis of the Group's efforts to the satisfaction of the performance obligation provides the best reference of revenue actually earned. In applying the input method, the Group estimates the cost to complete the projects in order to determine the amount of revenue to be recognised.

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Cost to complete the projects

The Group estimates the cost to complete the projects in order to determine the cost attributable to revenue being recognised. These estimates include the cost of design and consultancy, construction, potential claims by contractors as evaluated by the project consultant and the cost of meeting other contractual obligations to the customers.

L- L_ L.~ L__, L-..i '--------"'

Notes (continued)

5 Property and equipment

	Capital work in progress AED'OOO	Buildings AED'OOO	Leasehold improvements AED'OOO	Furniture and fixtures AED'OOO	Office equipment AED'OOO	Motor vehicles AED'OOO	Total AED'OOO
Cost
At I January 2015		39,743	3,318	7,556	21,086	913	72,616
Transfers (Note 6 and Note 9)	199,891						199,891
Additions	22,353		1,838	270	6,160		30,621
Dis osals					(503)		(503)
At 31 December 2015	222,244	39,743	5,156	7,826	26,743	913	302,625
At I January 2016	222,244	39,743	5,156	7,826	26,743	913	302,625
Additions	82,288			432	253		82,973
At 31 December 2016	304,532	39,743	5,156	8,258	26,996	913	385,598
Depreciation
At I January 2015		5,446 .	877	7,000	18,953	475	32,751
Charge for the year (Note 23)		1,427	2,017	228	1,609	125	5,406
Dis osals					(459)		(459)
At 31 December 2015		6,873	2,894	7,228	20, 103	600	37,698
At I January 20 I 6		6,873	2,894	7,228	20,103	600	37,698
Charge for the ~ear (Note 232		2,270	201	66	1,283	125	3,945
At 31 December 2016		9,143	3,095	7,294	21,386	725	41,643

Net book value - 31 December 2016	304,532	30,600 .	2,061	964	5,610	188	343,955
Net book value - 31 December 2015	222,244	32,870	2,262	598	6,640	313	264,927

L_ L__J L_; l I I ~) _J ,__J __J .___..J ~ _J ,__J ___] __J

Buildings with a carrying value of AED 18.1 million (2015 : AED 19.4 million) are mortgaged under Islamic finance obligations (Note 15).

Capital work-in-progress represents expenditure incurred on properties and development of properties which are intended to be used according to Company's relevant . business model.

Notes (continued)

6 Investment properties

	UAE	UAE	UAE	UAE
	Office	Parking	Stores	Retail	2016	2015
	building	spaces	units	units	Total	Total
	AED'OOO	AED'OOO	AED'OOO	AED'OOO AED'OOO		AED'OOO
Fair value hierarchy	3	3	3	3
Fair value at l January	85,733			167,823	253,556	329,320
Additions	62			786	848	3,362
Transfer from properties held for sale
(Note 9 and Note i below)			773		773
Transfer to property and equipment
(Note 5 and Note ii below)						(95,302)
Net gain from fair value adjustments
on investment property		66,445	9,938	(891)	75,492	16,176
Fair value at 31 December	85,795	66,445	10,711	167,718	330,669	253,556

1. During the current year, the Company reclassified its portfolio of parking spaces and store units in various buildings from property held for sale to investment properties as a result of change in use of these parking spaces and store units. The parking spaces and store units were reclassified to investment properties at their fair value on the date of transfer based on a fair valuation exercise carried out by an external valuer resulting in a fair value gain of AED 66.45 million and AED 9.93 million respectively. The gain has been recognised in the consolidated statement of profit or loss in accordance with the accounting policy adopted for the measurement of investment properties.
ii. In the previous year, the Company had reclassified a plot of land from investment prope1ties to property and equipment. This prope1ty was earlier recognised in the consolidated financial statements of the Company in accordance with the fair value accounting policy adopted for the measurement of investment properties and upon reclassification, the carrying ·value of the land amounted to 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 use of this property. 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.

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Investment property is recognised at fair value and categorised within the level of the fair value hierarchy based on the lowest level input that is significant to fair value measurement in their entirety. The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (level l);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
o Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The Group's policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer.

Direct I operating costs recognised in the consolidated statement of profit or loss include AED 4. l million (2015: AED 2.7 million) and rental income recognised in consolidated statement of profit or loss includes AED 32.9 million (2015: AED 30.3 million) from investment property (Note 20 and note 21).

Bank borrowings are secured against investment property for the value of AED 131.5 million (2015: AED 80 million) (Note 15).

Notes (continued)

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6 Investment properties (continued)

Valuation processes

Retail units, parking spaces and store 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. Valuation of UAE office building is valued by the Groups' finance depa1tment. The Group's finance department includes a team that also reviews the valuations performed by the independent valuers for financial rep01ting purposes. Discussions of valuation processes and results are held between management and the independent valuers on a regular basis ..

At each financial year end, the finance depattment:

verifies all major inputs to the independent valuation repo1t;
assesses property valuation movements when compared to the prior year valuation report; and
holds discussions with the independent valuers.

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

						Sensitivity of management estimates
Country	Segment	Valuation	Estimate	Range of inputs	Impact lower AED'OOO	Impact higher AED'OOO
	Office	Income	Estimated rental value	AED 95 to AED 210 per sqft per annum	(914)	914
UAE	building	capitalisation	Discount rate	11.59%	9,067	(11,572)

A change of 100 basis points in management's estimate at the reporting date would have increased/( 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 supported by the terms of any existing lease, other contracts or external evidence such as current 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, parking spaces and store units, the valuation was determined using the indicative fair values of these investment properties as at 31 December 2016 provided by an independent professionally qualified valuer. The valuer has used sales comparison method to detennine the fair values of these assets.

Notes (continued)

7 Investments in joint ventures and an associate

	Joint Ventures			Associate		Total
	2016 AED'OOO	2015 AED'OOO	2016 AED'OOO	2015 AED'OOO	2016 AED'OOO	2015 AED'OOO
At 1 January, as previously reported	882,403	740,285	299,237	292,294	1,181,640	1,032,579
Effect of change in accounting policy (Note 2.3)		(17,757)				(17,757)
Adjusted balance at 1 January	882,403	722,528	299,237	292,294	1,181,640	1,014,822
Share of profit Reversal of provision for impairment against investment in an associate (i)	3,290	159,875	2,202 68,884	6,943	5,492 68,884	166,818
At 31 December	885,693	882,403	370,323	299,237	1,256,016	I,181,640

(i) During the current year, the management has written back provision for impairment against investment in associate amounting to AED 68.8 million based on their assessment of the L recoverable amount of the Group's share of assets held by the entity in which associate holds an interest. Management's assessment is based on the indicative fair values of the assets after considering the development progress of the project undertaken by the entity.

Investment in an associate

The Group has a 22.72% interest in Solidere International Al Zorah Equity Investments Inc ("Al Zorah"), a company registered in the Cayman Islands. The associate is a holding company investing in companies engaged in property development.

Summarised financial information relating to the Group's share of its associate is as follows:

Name	% interest held	Assets AED'OOO	Liabilities AED'OOO	Revenue AED'OOO	Net profit AED'OOO
31 December 2016
AI Zorah	22.72	312,955	(82,551)	6,I39	2,202
		312,955	(82,551)	' 6,139	2,202
31 December 2015
AI Zorah	22.72	315,059	(84,577)	11,223	6,943
		315,059	(84,577)	I 1,223	6,943

The Group's share of its associate commitments amounts to AED 46 million (2015: AED 46.5 million).

N ates (continued)

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7 Investments in joint ventures and associate (continued)

Investment in joint ventures

The Group has a 50% interest in the following joint ventures, which are engaged in property development. The following amounts represent the Group's 50% share of the assets, liabilities, revenue and results of the joint ventures. They also include consolidation adjustments made at the Group's level to ensure uniform accounting policies. These are included in the Group's consolidated statement of financial position and statement of profit or loss:

Name	% interest held	Country of incorporation	Non current assets AED'OOO	Current assets AED'OOO	Current AED'OOO	liabilities Net profit AED'OOO

31 December 2016
Arady Development LLC	50	U.A.E	803,329	141,981	56,257	3,290
Dubai International
Development Co. LLC (*)	50	U.A.E		150
			803,329	142, 131	56,257	3,290

Name	% interest Held	Country of incorporation	Non current assets AED'OOO	Current Assets AED'OOO	Current liabilities AED'OOO	Net profit AED'OOO
3 l December 2015
Arady Development LLC	50	U.A.E	825,689	145,574	60,542	159,875
Dubai International
Development Co. LLC (*)	50	U.A.E		150
			825,689	145,724	60,542	159,875

The Group's proportionate share in joint ventures commitments is AED Nil (2015: AED Nil).

* This joint venture did not commence its commercial activities as at the reporting date.

8 Available-for-sale financial assets

	2016 AED'OOO	2015 AED'OOO
1 January Change in fair value	23,893 {1,707}	24,841 (948)
31 December	22,186	23,893

Notes (continued)

9 Properties held for development and sale

			Land held
	Properties	Properties	for future
	held		under development
	for sale	construction	and sale	Total
	AED'OOO	AED'OOO	AED'OOO	AED'OOO
1 January 2015 (as previously
reported)	462,832	387,123	553, 179	1,403,134
Effect of change in accounting policy
(Note 2.3)	(158,626}	{19,058}		{177,684)
Adjusted balance at 1January2015	304,206	368,065	553,179	1,225,450
Additions (Note 26)		111,707	233,633	345,340
Transfer due to development of
properties (Note (i) below)		309,183	(309, 183)
Provision for impairment (Note 26)			(53,113)	(53, 113)
Reversal of impairment (Note 21)	9,102			9,102
Transfer to property and equipment
(Note 5)		(104,589)		(I 04,589)
Sales (Note 21}	{16,197}	{93,553)		(109,750)
31 December 201-5	297,111	590,813	424,516	1,312,440
1 January 2016	297,111	590,813	424,516	1,312,440
Additions	1,898	213,787		215,685
Reversal of impairment (Note 21)	3,295			3,295
Transfer to investment property
(Note 6)	(773)			(773)
Sales (Note 21)	(46,952)	(193,466)		(240,418)
31 December 2016	254,579	611,134	424,516	1,290,229

	2016	2015
	AED'OOO	AED'OOO
Non-current portion	333,482	313,543
Current EOrtion	956,747	998,897
As at 31 December	1,290,229	1,312,440

(i) In the previous year, the Company launched a project for construction of properties on a certain land held for future development. Accordingly, the land was transferred to prope1ties under construction.

Notes (continued)

9 Properties held for development and sale (continued)

Management's assessment of the net realisable value of the properties held for development and sale resulted in a net reversal of impairment amounting to AED 3.3 million (2015: AED 9.1 million), which was recognised in the profit or loss under "direct I operating costs" (Note 21 ).

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 expected market prices.

In the current year, the Company has reclassified its portfolio of parking spaces and store units in various buildings from property held for sale to investment properties based on change in their use.

A plot of a land with a total carrying value of AED 244 million (2015: AED 244 million) is mortgaged under Islamic finance obligations (Note 15).

In the current year, the Company has recognised an amount of AED 240.4 million (2015 : AED 109.8 million) in consolidated statement of profit or loss under "direct I operating costs" against revenue recognised of AED 306.9 million (2015: AED 147 million) (Note 21 and note 20).

For land held for future development and use, management is currently evaluating feasibility of the projects and considering alternative viable and profitable options.

	2016	2015 ·
	AED'OOO	AED'OOO
Trade receivables (refer (i) below)	196,875	212,292
Less: provision for impairment of trade receivables	(110,108)	(119,852)
	86,767	92,440
Advance for purchase of properties (refer (ii) below)	136,293	153,455
Advances to contractors	49,605	67,892
Advances to suppliers	18,530	17,192
Prepayments	1,668	1,153
Other receivables	24,644	9,640
	230,740	249,332
	317,507	341,772
Less: current portion	(176,379)	(183, 152)
Non-current portion	141,128	158,620

10 Trade and other receivables

Notes (continued)

10 Trade and other receivables (continued)

i. Contract balances

Contract assets primarily relate to the Group's right to consideration for work completed but not yet received at the repmting date. Contract liabilities primarily relate to the advance consideration received from customers for sale of prope1ties.

The following table provides information about contract assets and contract liabilities from contracts with customers.

	2016	2015
	AED'OOO	AED'OOO

Contract assets (included in trade receivables)	86,767	92,440
Contract liabilities (Advances from customers - Note 16)	106,396	175,148

Significant changes in the contract balances during the year are as follows:

	Contract liabilities AED'OOO
Revenue recognised that was included in the contract liability balance at
the beginning of the year	149,342
Increases due to cash received, excluding amounts recognised as revenue
during the year · ·	184,337

ii. Advance for purchase of properties - non-current

	2016 AED'OOO	2015 AED'OOO
Advance for purchase of share in real estate projects (i)	392,813	295,088
	392,813	295,088
Less: provision for impairment against
advance for purchase of share in real estate projects (i)	(256,520)	(141,633)
	136,293	153,455

⁽i) In the previous years, the Company had entered into a Memorandum of Understanding (MoU) for purchase of its share of a portfolio of investment properties in a real estate project. The Company had paid an advance for the purchase of properties of AED 186 million out of total consideration of AED 353 million. Subsequently, the Company had reached a settlement agreement in 2015 with the parties in the MoU, whereby agreeing to J pay AED 186.2 million in various instalments. The advance is recoverable by means of transfer of the Company's share of properties in the project (Note 25).

Notes (continued)

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10 Trade and other receivables (continued)

As at 31 December2016, trade receivables of AED 61.6 million (2015: AED 61.9 million) were receivable from sale of properties but not impaired. ·

As at 31 December 2016, trade receivables of AED 25.2 million (2015: AED 30.6 million) were receivable from other streams of revenue but not impaired. The ageing analysis of these trade receivables is as follows:

	2016	2015
	AED'OOO	AED'OOO

Not due	1,708	4,370
Upto 3 months	7,804	7,293
Over 3 months	15,646	18,919
	25,158	30,582

As at 31 December 2016, trade receivables of AED 110. l million (2015: AED 119.9 million) were impaired and fully provided for. The ageing analysis of these trade receivables is as follows:

	2015
	AED'OOO

110,108	119,852
	2016 AED'OOO

Movements of the Group's provision for impairment of trade receivables are as follows:

	2016 AED'OOO	2015 AED'OOO
At I January (Reversal and adjustment of) I provision for impairment of	119,852	118,507
trade receivables	(9,744)	1,345
At 31 December	110,108	119,852

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable. The Group holds title deeds of the assets sold or post-dated cheques as security.

Notes (continued)

11 Related party transactions and balances

Related pa1ties include the significant shareholders, key management personnel, associate, joint ventures, directors and businesses which are controlled directly or indirectly by the significant shareholders or directors or over which they exercise significant management influence.

(a) Related party transactions

During the year, the Group entered into the following significant transactions with related parties in the normal course of business and at prices and terms agreed by the Group's management.

	2016	2015
	AED'OOO	AED'OOO
A significant shareholder
Other operating income/finance income	5,636	4,770
Finance cost	11,091	13,009
Remuneration of key management personnel


Salaries and other short term employee benefits
Termination and post-employment benefits
Board of Directors' remuneration I fees

Due from related parties comprises:


Current
Due from joint ventures
Due from other related parties

Less : provision for impairment for due from a related party

Cash and bank balances include fixed deposits of AED 290 million (2015: AED 330 million) deposited with the significant shareholder of the Company (a bank), at market prevailing profit rates.

In 2010, the Group entered into a sale and purchase agreement with a related party to sell properties with a carrying value of AED 1,337.8 million and rights to purchase plots amounting to AED 899.6 million. The sale consideration agreed on by both parties as per the initial agreement was AED 3,647.5 million.

Notes (continued)

11 Related party transactions and balances (continued)

(c) Due from related parties (continued)

The salient terms and conditions of the transaction including subsequent revisions are as follows:

1. The sale consideration is receiyable on or before 1June2016;
1. The sale consideration can be settled in cash or 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 31 December 2017, in cash or in kind, or a combination of both.

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 .3 million against the outstanding receivable.

During 2015, the Company settled an amount of AED 108 million relating to ce11ain 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 30) relating to rights to purchase plots from the sale consideration as per the sale and purchase agreement. Management is · currently evaluating various options for settlement of the balance.

(d) Due to related parties comprises:

	2016	2015
	AED'OOO	AED'OOO
Current
Due to a significant shareholder		1,714
Due to a joint venture partner	12,299	12,299
	12,299	14,013

At 31 December 2016, the Group had bank borrowings from the significant shareholder (a bank) of AED 307.6 million (2015: AED 264.l million) at market prevailing profit rates. Also refer note 15.

12 Cash and bank balances

	2016 AED'OOO	2015 AED'OOO

Cash and bank balances including call deposits	165,628	161,493
Fixed deposits	530,467	711,650
Cash in hand	1,453	1,847
	697,548	874,990
Less: long term fixed deposits with a financial
institution - net (i)	{50,377}	(51,650)
	647,171	823,340

Notes (continued)

12 Cash and bank balances (continued)

Bank balances include cash of AED 83.4 million (2015 : AED 32 million) and fixed deposits of AED 205 million at market prevailing profit rates (2015: AED 245 million) held in escrow accounts.

i. Long term fixed deposits

During 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 predetermined instalments, over a period of 12 years and will carry profit rate of2% per annum; and
15% of the remaining amount will be converted into convertible 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 recognised 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.

As at 31 December 2016, the Company has cumulatively received AED 32.4 million (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.

Cash and cash equivalents include the following for the purposes of the consolidated statement of cash flows:

	2016	2015
	AED'OOO	AED'OOO
Cash and bank balances	697,548	874,990
Less: deposits with original maturity more than three months	(190,376)	(421,650)
Cash and cash equivalents	507,172	453,340

I l..-

Short-term fixed deposits have original maturities of three months or less. Short-term fixed and call deposits bear profit at market rates.

13 Share capital

At 31 December 2016 and 31 December 2015, share capital comprised of 5,778,000,000 shares of AED 1 each. All shares are authorised, issued and fully paid up.

14 Legal reserve

In accordance with the UAE Federal Law No. (2) of 2015 and the Company's Articles of j Association, 10% of the profit for the year is transferred to a legal reserve, which is not distributable. Transfers to this reserve are required to be made until such time as it equals at least 50% of the paid up share capital.

Notes (continued)

15 Borrowings

	2016	2015
	AED'OOO	AED'OOO

Non-current
Islamic finance obligations	343,046	342,308
	343,046	342,308

Current
Islamic finance obligations	95,633	136,540
	95,633	136,540
Total borrowings	438,679	478,848

		Total AED'OOO

1 January 2015		650, 161
Repayments		(171,313)
31 December 2015		478,848
Additional drawdown		100,000
Repayments		(140, 169)
3 1 December 2016		438,679

The Islamic finance obligations represent Ijarah and Murabaha facilities obtained from Dubai Islamic Bank PJSC (a significant shareholder), and from other local Islamic banks. 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 banks, whereby these facilities were restructured into finance obligations repayable over five to seven years, with revised. profit rates. The Islamic finance obligations carry market prevailing profit rates and are repayable in monthly or quarterly instalments over a period of four to seven years from the reporting date (2015: one to eight years).

The Islamic finance obligations are secured by mortgages over properties classified under properties held for development and sale (note 9), property and equipment (note 5) and investment properties (note 6).

Also refer note 11.

16 Advances from customers

Advances from customers represent instalments received from customers towards purchases of properties held for development and sale.

Notes (continued)

17 Trade and other payables

	2016	2015
	AED'OOO	AED'OOO
Trade payables	66,905	104,193
Payables for purchase of land	391,888	391,888
Accrued Islamic facilities charges	1,072	29
Project cost accruals	77,861	44,846
Other payables and accrued expenses	199,041	230,436
	736,767	771,392

18 Retentions payable

	2016	2015
	AED'OOO	AED'OOO
Non-current portion	27,874	10,368
Current portion	1,155	17,499
	29,029	27,867

Non-current retention are due to be paid to contractors within 1 to 5 years from the rep01ting date.

19 Provision for employees' end of service benefits

	2016 AED'OOO	2015 AED'OOO
At 1 January Charge for the year	10,990 2,917	9,350 2,503
Payments	(1,015}	(863)
At 31 December	12,892	10,990

The provision for employees' end of service benefits, disclosed as non-current liability, is calculated in accordance with the UAE Federal Labour Law.

'--

1 J

20 Revenue

	2016 AED'OOO	2015 AED'OOO
Sale of properties	306,854	147,089
Forfeiture income	648	2,171
Property management	41,859	38, 198
Leasing income	33,861	32,578
Facilities management	45,038	37,066
	428,260	257,102

Notes (continued)

20 Revenue (continued)

Transaction price allocated to the remaining performance obligations

The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the repotting date.

	2017	2018	2019	Total
	AED'OOO	AED'OOO	AED'OOO	AED'OOO
Sale of properties	615,536	194,545	134,060	944,141

The Group applies the practical expedient as per IFRS 15 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

21 Direct I operating costs

	2016	2015
	AED'OOO	AED'OOO

Cost of properties sold (Note 9)	240,418	109,750
Reversal of impairment of properties held for development
and sale, net (Note 9)	(3,295)	(9,102)
Facilities management	27,141	20,752
Leasing cost	4,139	3,085
Others	399
	268,802	124,485

Applying the practical expedient as per IFRS 15, the Group recognises the incremental costs of obtaining contracts as an expense when incurred if the ammtisation period of the assets that the Group otherwise would have recognised is one year or less.

22 Other operating income

	2016	2015
	AED'OOO	AED'OOO
Write back of provisions and liabilities no longer payable
(refer note (i) below)	28,385
Reversal of provision for bad debts	8,400
Sales management fee		1,962
Others	18,459	13,207
	55,244	15, 169

This includes an amount AED 18 million representing the reversal of excess liability created during project construction phase in the previous years. ·
The Company's management has performed assessment of all liabilities and provisions payable as at 31 December 2016.

Notes (continued)

23 General and administrative expenses

	2016	2015
	AED'OOO	AED'OOO
Staff costs (Note 24)	89,858	90,942
Marketing and selling expenses	13,765	20,840
Legal and professional charges	8,512	14,945
Depreciation (Note 5)	3,945	5,406
Rent	2,367	1,177
Provision for impairment of trade and other receivables and
due from a related party, net (Note 10 and 11)	193	1,345
Social contributions		132
Others	23,078	23,413
	141,718	158,200

24 Staff costs

	2016 AED'OOO	2015 AED'OOO
Salaries and wages	59,427	60,245
End of service benefits (Note 19)	2,917	2,503
Pension and social secm ity contributions	788	831
Other benefits	26,726	27,363
	89,858	90,942

25 Provision for claims

Provision for claims include the following:

1. Provision of AED 6 million relates to legal claim made by cusfomers against the Company for refund of partial payments made to purchase certain property units. In accordance with Law No. 9 of 2009 applicable in the Emirate of Dubai, the Company has earlier forfeited these amounts due to failure of customers to pay the outstanding balances as per the Sale and Purchase Agreement. ·
ii. Provision for claim of AED 65.9 million at the end of previous year was pertaining to the portion under appeal. The provision was based on management's best estimate after considering the potential cash flows in respect of the claim. In the current year, management has settled an amount of AED 64.6 million against this claim and written back the net provision of AED 1.3 million based on management's assessment of this claim.

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 contractors claims are disputed, this information may be prejudicial to their position on these matters.

Notes (continued)

26 Write back of 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 properties of AED 114 million, which was expected to be swapped with other plots of land and cash payment due to changes in the master development plan. The provision was reflective of the initial assessment which was determined on the basis of management's best 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 advance paid for purchase of properties. The write back of provision for the year ended 31 December 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.

In August 2015, the Company had signed a sale and purchase agreement for a new plot of land with the master developer and recognised 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 proJessionally qualified valuer. During the current year, the Company has written back a provision of AED 6.1 million which is no longer required.

27 Finance ( cost)/income

	2016	2015
	AED'OOO	AED'OOO
Finance cost on bank borrowings	19,485	26,775
Finance income from short-term bank deposits Finance income from unwinding of discount on trade	10,293	8,410
receivables	971	1,482
Total finance income	11,264	9,892
Net finance cost	{8,2212	(16,883)

28 Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares, if any.

	2016	2015
Profit attributable to equity holders of the Company (AED'OOO) Weighted average number of ordinary shares in issue	216,145	291,354
(thousands)	5,778,000	5,778,000
Earnings per share (fils)	3.74	5.04

Diluted

The Company has not issued any instruments which would have a dilutive impact on earnings per share when exercised.

Notes (continued)

29 Cash flow from operating activities ^r

	2016	2015
	AED'OOO	AED'OOO

Profit for the year	216,145	. 291,354
Adjustment for
Depreciation (Note 5)	3,945	5,406
Provision for employees' end of service benefits (Note 19)	2,917	2,503
Provision for doubtful debts, net (Note 10, 11and23)	193	1,345
Reversal of impairment of properties held for development
and sale, net (Note 21)	(3,295)	(9,102)
Write back of provision against advance for purchase of
properties	(6,144)	(157,877)
Reversal of provision of investment in an associate	(68,884)
Provision against claims	4,630	22,220
Finance income (Note 27)	(11,264)	(9,892)
Finance cost (Note 27) Share of results from an associate and joint ventures (Note	19,485	26,775
7)	(5,492)	(166,818)
Gain on fair valuation of investment property (Note 6)	{75,492}	(16,176)
Operating cash flows before payment of employees' end of
service benefits and changes in working capital	76,744	(10,262)
Payment of employees' end of service benefits (Note 19)	(1,015)	(863)
Changes in working capital:
Properties held for development and sale (net of project
cost accruals)	24,733	15,412
Retention payable- non-current	17,506	9,127
Retention payable - current	(16,344)	(8,234)
Trade and other receivables - non-current	17,492	29,840
Trade and other receivables - current	8,495	(22,491)
Advance from customers - non-current	41,965	(89,230)
Advances from customers - current	(110,717)	117,710
Inventories	56	(485)
Due from related parties	(4,654)	8,641
Trade and other payables	(118,439)	(1,630)
Due to related earties	{1,714}	(161)
Net cash (used in) /generated from operating activities	(65,892}	47,374

30 Commitments

At 31December2016, the Group had total commitments of AED 612. l million (2015: AED 643.7 million) with respect to project related contracts issued net of invoices received and accruals made at that date. The Group also had commitments with respect to purchase of land of AED 170.4 million (31December2015: AED 170.4 million) (Note 1 l(c) and Note 31).

' .

Notes (continued)

31 Contingent liabilities

At 31 December 2016, the Group had contingent liabilities in respect of performance and other guarantees issued by a bank on behalf of a subsidiaty, in the ordinaty course of business, from which it is anticipated that no material liabilities will arise, amounting to AED 10.6 million (2015 : AED 26.1 million).

The Company is also a party to certain legal cases in respect of cetiain plots of land. Based on review of opinion provided by the legal advisors, management is of the opinion that no cash outflow in respect of these claims is expected to be paid by the Company in these legal cases and accordingly no provision is recognised. 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 30.

Certain other contingent liabilities may arise during the normal course of business, which based on the information 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.

32 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 <let.ermined the operating segments based on the purpose of allocating resources and assessing performance. The Group is organised into two major operating segments: Propetiy development and properties 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	Properties and facilities management -AED'OOO	Total AED'OOO
31December2016
Segment revenues - external	341,363	86,897	428,260
Segment profit	188,688	27,457	216,145
Segment assets	6,049,892	164,838	6,214,730
3 1 December 2015
Segment revenues - external	181,838	75,264	257,102
Segment profit	265,949	25,405	291,354
Segment assets	6,062,466	144,312	6,206,778

Geographic information

The carrying amount of the total assets located outside the United Arab Emirates as at 31 December 2016 is AED 3.3 million (31December2015: AED 3.3 million).

Notes (continued)

33 Financial instruments by category

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

	Loans and	Available
	receivables	for-sale	Total
31December2016	AED'OOO	AED'OOO	AED'OOO

Assets as per statement of financial position
Available-for-sale financial assets		22,186	22, 186
Trade and other receivables	111,411		lll,411
Due from related parties	1,954,449		1,954,449
Long term fixed deposits	50,377		50,377	r
Bank balances	645,718		645,718
	2,761,955	22,186	2,784,141

		Amortised
		cost	Total
		AED'OOO	AED'OOO
Liabilities as per statement of financial position
Trade and other payables		736,767	736,767	r
Retentions payable		29,029	29,029
Borrowings		438,679	438,679	L~
Due to related parties		. 12,299	12,299	r 1
		1,216,774	1,216,774	I
				L,
	Loans and	Available
31 December 2015	receivables AED'OOO	for-sale AED'OOO	Total AED'OOO	J

Assets as per statement of financial position				--,
Available-for-sale financial assets		23,893	23,893	J
Trade and other receivables	102,080		102,080
Due from related parties	1,951,333		1,951,333	J
Long term fixed deposits	51,650		51,650
Bank balances	821,493		821,493
	2,926,556	23,893	2,950,449
		Amortised		j
		cost	Total
		AED'OOO	AED'OOO	J

Liabilities as per statement of financial position
Trade and other payables		771,392	771,392
Retentions payable		27,867	27,867
Borrowings Due to related parties		478,848	478,848
		14,013	14,013	J
		1,292,120	1,292,120

1 ._)

N ates (continued)

·1

-!	34	Subsidiaries and equity accounted investees entities

	Name of entity	Country of	Effective	Principal activities
]	Subsidiaries	incorporation	ownership
l	Deyaar Facilities Management LLC	UAE	100%	Facility management services Brokerage and other
I	Nationwide Realtors LLC	UAE	100%	related services
l	Deyaar Hospitality LLC	UAE	100%	Property Investment and Development
J	Deyaar International LLC	UAE	100%	Real Estate Consultancy
l	Deyaar Ventures LLC	UAE	100%	Property Investment and Development Property Investment
l	Flamingo Creek LLC	UAE	100%	and Development Property Investment
)	Beirut Bay Sal	Lebanon	100%	and Development Investment Holding
1 J	Deyaar West Asia CooperatiefU.A.	Netherlands	100%	Company Property Investment
]	Deyaar Development Cooperation	USA	100%	and Development Property Investment
	Deyaar Al Emarat Holding WLL	Bahrain	100%	and Development
]	Deyaar AL Tawassol Lil Tatweer Aleqare Co.	KSA	100%	Property Investment and Development Property Investment
J	Deyaar Limited LLC	UAE	100%	and Development
	Deyaar Owners Association Management LLC	UAE	100%	Owners Association Management
J	Deyaar Parking Management LLC	UAE	100%	Parking Management
-,	Joint Ventures
·1	Dubai International Development Co.	UAE	50%	Property Investment and Development
	Arady Developments LLC	UAE	50%	Property Investment and Development
J ]	Associate SI Al Zorah Equity Investments Inc.	Cayman Islands	22.72%	Property Investment and Development

35 I nvestment in shares

During the year, the Group has not purchased or invested in any shares.

AI assistant

Deyaar Development PJSC — Regulatory Filings 2017

66353_rns_2017-03-01_f1253bdf-1ca5-48cc-9f74-cb672c691bf7.pdf

Consolidated financial statements for the year ended 31 December 2016 ·

Independent auditors' report

Report on the Audit of the Consolidated Financial Statements

Opinion

Basis for opinion

Key Audit Matters

Key audit matter

How our audit addressed the key audit matter

Valuation of properties held for development and sale

How our audit addressed the key audit matter (continued)

Valuation of investment properties

How our audit addressed the key audit matter (continued)

Valuation of investment properties (continued)

Impairment of investment in joint ventures and associates ("equity accounted investees")

Refer to note 7 of the consolidated financial statements

Key audit matter (continued)

Impairment of investment in joint ventures and associates ("equity accounted investees") (continued)

Recoverability of amounts due from related parties

Key audit matter (continued)

How our audit addressed the key audit matter (continued)

Recoverability of amounts due from related parties (continued)

Other information

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Auditors ' Responsibilities for the Audit of the Consolida.ted Financial Statements (continued)

Report on Other Legal and Regulatory Requirements

Consolidated statement of financial position

Consolidated statement of profit or loss

Consolidated statement of profit or loss and other comprehensive income For the year ended 31December2016

Consolidated statement of changes in equity For the year ended 31December2016

Consolidated statement of cash flows

Notes

(forming part of the consolidated financial statements)

1 Legal status and activities

2 Summary of significant accounting policies

2.1 Basis of preparation

IFRS 9 Financial Instruments

2 Summary of significant accounting policies (continued)

2.1 Basis of preparation (continued)

IFRS 9 Financial Instruments (continued)

IFRS 16 Leases (2016)

2.2 Basis of consolidation

(a) Subsidiaries

2 Summary of significant accounting policies (continued)

2.2 Basis of consolidation (continued)

(b) Eliminations on consolidation

(c) Associates

Notes (continued)

2 Summary of significant accounting policies (continued)

2.2 Basis of consolidation (continued)

(d) Joint ventures

2.3 Change in accounting policy- Early adoption of IFRS 15 in 2015

IFRS 15 Revenue from contracts with customers

Revenue from sale of properties

Notes (continued)

2 Summary of significant accounting policies (continued)

2.3 Change in accounting policy (continued)

Sales commission

Impacts on consolidated financial statements

Consolidated statement of financial position

i. Consolidated statement of profit or loss

Notes (continued)

2.3 Change in accounting policy (continued)

Impacts on consolidated financial statements (continued)

ii. Consolidated statement of profit or loss and other comprehensive income

iii. Consolidated statement of financial position

Notes (continued)

2 Summary of significant accounting policies (continued)

2.4 Segment reporting

2.5 Foreign currency translation

(a) Functional and presentation currency

(b) Transactions and balances

(c) Group entities

2 Summary of significant accounting policies (continued)

2.6 Property and equipment

2.7 Investment property

Recognition

Deyaar Development PJSC Regulatory Filings 2017