manazel real estate annual report...

MANAZEL REAL ESTATE ANNUAL REPORT 2016

H.H SheikhKhalifa Bin ZayedAl Nahyan

President of the UAEand Supreme Commanderof the UAE Armed Forces

H.H SheikhMohamed Bin Rashid Al Maktoum

Vice President of the UAEand Prime Minister of the UAE,Ruler of Dubai

H.H SheikhMohamed Bin ZayedAl Nahyan

Abu Dhabi Crown Princeand Deputy Supreme Commanderof the UAE Armed Forces

The Late H.H SheikhZayed Bin Sultan Al Nahyan

May God Rest His Soul

AddressPrestige Towers,Mohammed bin Zayed City, Next to The Outlet Capital MallP.O. Box: 33322Abu Dhabi, United Arab Emirates

Table ofContents

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Key Highlights

Chairman’s Statement

Board of Directors

About Manazel Real Estate

Corporate Governance Statement

Vision, Mission and Objectives

Organizational Structure

Business Overview – Residential

Business Overview – Commercial

Business Overview – Retail

Business Overview - Subsidiaries

Shari’a Board Report

Zakat On Manazel Real Estate Company Shares

Board of Directors’ Report

Independent Auditors’ Report

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statement

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KeyHighlights

of 2016

Revenues AED 748.6 Million

EBITDA AED 271.0 Million

Net Profit AED 206.5 Million

Earnings per share AED 0.08

Book Value per share AED 1.08

Total Assets AED 4.7 Billion

Shareholders Equity AED 2.8 Billion

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Chairman’sStatement

H.E Mohamed M. Al QubaisiChairman of Board of Directors

2016 was a challenging year for the region due to changing economic fundamentals that caused various marketdynamics to change domestically, regionally and internationally leading to the need for rebalancing and recalculatingby private sector businesses. Manazel Real Estate sees itself with a competitive advantage due to the emergingtrend of Public & Private Partnerships (PPP) and the continuous demand for middle income housing putting thecompany in an advantageous position in the years to come.

The company continued to follow the diversification strategy launched late 2014 creating additional recurring revenue streams while insulating the company’s returns from the cyclical nature of the real estate sector. During 2016 the company continued on taking measured steps forward through its Diversification, Expansion and Development Strategies aiming to capture income by further developing and enhancing existing facilities within its projects.

Our subsidiaries also played a pivotal role in achieving the overall strategy as Manazel Specialists and Census International, our Property Management and Facility Management arms, respectively continue to service Manazel Real Estate’s portfolio of Projects. Manazel Mall, the company’s retail operating arm, has also continued in aggressively ensuring that our retail portfolio which includes Capital Mall and Al Reef 1 Retail are fully operational; new additions to this portfolio include the Retail area of Al Reef 2 and Manazel Amman. Meanwhile Manazel Healthcare continues to make progress in moving the Manazel Medical City project from concept to reality. Manazel Real Estate also recently announced the launch

On behalf of the Board of Directors of Manazel Real Estate PJSC, I am pleased to present the Company’s annual report and audited financial statements for the year ended 31st December 2016.

of its new hospitality water front project in Ghantoot a one of a kind that targets a new consumer segment.

With our current business model set Manazel Real Estate guarantees the success of its end goal while also adding to the total value created for its investors through utilizing its resources (land bank, subsidiaries and Human Capital) to diversify and further expand into existing closely aligned growth sectors such as Retail Management, Property Management, Facilities Management and Healthcare while studying potential Shari’a compliant ventures such as the recently launched hospitality water front project in Ghantoot in order to increase its recurring revenue streams.

The company is well funded, opportunities are plentiful and the fundamentals are strong; all signs that the company is set for future expansion being able to seize opportunities to expand geographically and operations wise. With a successful track record of servicing the Middle Income segment Manazel is well positioned to capitalize on the expected population growth, the continuous demand and shortage of supply both domestically and regionally making it well positioned for future growth.

BOARD OFDIRECTORS

H.E MOHAMED MEHANNA AL QUBAISI CHAIRMAN

H.E MOHAMED THAALOOB AL DERAI VICE CHAIRMAN

H.E KHALID DEEMAS AL SUWAIDI MEMBER

H.E NASER ALMUR ALZAABI MEMBER

H.E MOHAMED SAEED AL GHFELI MEMBER

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ABOUT MANAZEL REAL ESTATE

“Manazel”, one of the leading Real Estate companies in the United Arab Emirates, was established in May 2006, and is headquartered in Abu Dhabi.

Manazel has a unique strategy and vision that lives up to the Nation’s development future. The Company has chosen to concentrate its work on developing lively residential compounds and multi-purpose real estate aimed at the middle income segment.

This strategy has allowed it to overcome most of the difficulties that faced the real estate sector in the past years, resulting in the delivery of thriving communities rich with amenities and services in carefully planned surroundings.

By adopting the highest quality standards, Manazel is committed to strategically invest in residential and commercial developments that balance between creating prosperous and sustainable communities on one hand, and on the other generating profitable returns for its shareholders.

Since quality standards are often affected by prices, Manazel has succeeded in reducing the gap between these two factors in order to create a wide range of affordable quality real estate that lives up to the aspirations and lifestyles of its clients, taking into account the rules of real estate investment according to Islamic law.

Being one of the prominent architects and builders of society, we take pride in our ability to achieve a balance between our numerous roles in planning, building, ownership, investment, community partnership, and business management. We have a team of competitive individuals who possess the skill and will to excel in their careers.

We believe in equal opportunities, and we encourage them to harness their energy to achieve their full potential.

• Legal status: Private Joint Stock Company (PJSC)• Issued capital: AED Two billion, six hundred million (AED 2.6 billion)• Number of issued shares: Two billion, six hundred million (2.6 billion shares)• Share nominal value: AED 1

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Corporate Governance Statement

Manazel Real Estate is committed to ensuring that its business operates in accordance with best practice and this statement highlights the key aspects of its first corporate governance report prepared in compliance of Ministerial Resolution No. 228 of 2015 by the Ministry of Economy.

The General Assembly:

The General Assembly is made up of all the company’s shareholders and exercises its mandate in accordance with the law and the company’s Articles of Association. The General Assembly is entrusted with approving the Annual Report on the company’s activities including the Audited Financial position during the preceding financial year. As part of its mandate the General Assembly is also entrusted with appointing external auditors and approving their report that includes the Income Statement, Balance Sheet, as well as the Board of Directors’ recommendation in regard to the distribution of dividends.

Board of Directors and CommitteesThe Board of Directors of Manazel Real Estate comprises of five members whom were appointed by the General Assembly and are non-executive and independent members of the Board. The Company, through its Board of Directors is committed to applying best practices in corporate governance while taking into account the applicable laws in the United Arab Emirates.

The Board of Directors currently maintains two Board Committees established to assist the Board with its responsibilities. The Committees are:

1. Executive & Risk Management Committee2. Nominations and Remunerations Committee and3. Audit Committee

BOARD COMMITTEES

Executive & Risk Management Committee:

The Executive & Risk Management Committee’s mandate involves strategic decisions related to the internal and external investments of the Company that cover finance, legal, projects, procurement and investments functions. The Committee is responsible for providing recommendations for feasibility studies and financial models related to investments, subject to Shari’a compliance. The Executive & Risk Management Committee comprises of four (4) non-executive directors and the Chief Executive Officer (CEO).

Nominations and Remunerations Committee

The Board of Directors has composed the Nominations and Remunerations Committee to support the Board in ensuring the ongoing independence of the Board members. The Nominations and Remuneration Committee’s role in relation to nomination matters includes setting formal and transparent procedures for selecting new Directors for appointment and re-election to the Board of Directors and its committees. The Committee is also responsible for developing policies and making recommendations for the selection, appointment, re-election and granting remuneration, benefits, incentives and the salaries of the Board of Directors, senior management and employees of Manazel Real Estate and its subsidiaries.

The Nominations and Remunerations Committee comprises of four (4) non-executive and independent members of the Board of Directors and the CEO.

Audit Committee

The Board of Directors has composed the Audit Committee whose purpose is to oversee, supervise and approve all tasks and functions related to both internal Audit and external audit. The Board delegates to the Audit Committee to:

• Oversee the integrity of and review the Company’s financial statements• Review and implement the Company’s internal control systems and risk management systems• Monitor the Company’s adherence to the applicable laws and regulations• Oversee the independence and objectivity of the external auditor and implement policy with the external auditor to ensure the external auditors independence

The Audit Committee comprises of three (3) non-executive and independent members of the Board of Directors, and the CEO.

DISCLOSURE, TRANSPERANCY, COMPLIANCE

Manazel Real Estate listed on the Abu Dhabi Stock Exchange (ADX) toward the end of 2014 with the ticker of “MANAZEL”. The company conforms to the Listing and Disclosure Obligations as required by SCA (Securities and Commodities Authority) and ADX (Abu Dhabi Securities Exchange) rules. Conformity to these legal requirements has necessitated the creation of an Investor Relations function and the introduction of four policies in 2015, and since then has been regularly applied.

• Investor Relations Manual• Share Trading Policy• Corporate Disclosure Policy• Employee Disclosure, Media and Share Trading Policy

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Vision,Mission &

Objectives

OurVision

OurMission

OurCore Values

To create, sustain and grow a premium portfolio of quality properties in the UAE and region that expand the value of our companyand guarantee the highest returns for our investors and shareholders.

To be positioned at the forefront of the middle income sector of the real estate market of the UAE through the creation of vibrant, sustainable communities that provide elevated standards of living to investors while yielding lucrative returns for stakeholders.

• Value CreationWe serve as dedicated land administrators, creating lasting value through our communities and investment properties to ensure aprosperous legacy for generations to come.

• Commitment to QualityTo succeed in creating sustainable communities, we invest in and manage assets that adhere to the highest standards of qualityand service

• Community DevelopmentWe aim to weave vibrant environments that balance security, comfort and convenience where people can thrive in self-sufficientcommunities.

• Corporate Social ResponsibilityBy acting as an equal opportunity employer, we create job opportunities that contribute to the social and economic development of the UAE and support nationals working in the private sector.

• TransparencyOur corporate culture is built on the pillars of ethics, honesty and openness in everything we do.

• Global Best PracticesWe remain on par with leading developers across the region by adopting international best practices and working with likemindedpartners.

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Manazel Real Estate

ORGANIZATIONALSTRUCTURE

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Manazel Real Estate

ORGANIZATIONALSTRUCTURE

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BUSINESS OVERVIEWRESIDENTIAL

DARI INITIATIVE

Manazel has established Al Manzel Real Estate to be solely responsible for operating and managing the company’s Dari initiative. Headed by a dedicated team Al Manzel Real Estate oversees the effective and timely delivery of its homes ensuring that they comply with Abu Dhabi’s sustainability and environmental standards and building codes.

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In order to fulfill the UAE’s vision of ensuring that its citizens have access to high quality of living, Manazel Real Estate with the support of key government parties created the Dari Initiative in order to provide UAE Nationals with access to quality homes within the bounds of the AED 2 million government grants. Through Dari aspiring home owners granted the government loans now have the ability to choose from among the 10 types of villas of varying sizes to build their home in a turn-key operation. Each of the villa types are designed to preserve the traditional UAE culture and adhere to traditional family values incorporating six and seven bedrooms, two majlis spaces and accompanying service rooms, including a kitchen, laundry, store room and maid’s room.

Dari also opened a showcase Villa for the duration of two years which should help potential clients to realistically envision the home that the initiative can provide through their building, project management and post delivery services. These post delivery services include home furnishing deals with UAE certified global and local suppliers, interior design, landscaping, and maintenance services, all at negotiated and favorable rates.

As the first real estate company in the country to attempt to tackle this housing objective and meeting the UAE vision Manazel has received a certificate of appreciation from the Ministry of Presidential Affairs, and another from “Absher”.

BUSINESS OVERVIEW

RESIDENTIAL AL REEF 1

Al Reef Community is a mixed-use development project formed of two components; Al Reef Villas and Al Reef Downtown. Considered as one of the first fully integrated residential communities in the Emirate of Abu Dhabi Al Reef 1 spreads over a million square meters, is in close proximity to the Abu Dhabi Airport and is situated just 30 minutes away from the city. Designed to house 16,000 residents both Al Reef Villas and Al Reef Downtown provide its residents the added benefits of convenience of location in addition to other pluses of community living offering them the perfect getaway from the constant commotion of city life.

Spread across 4 architecturally themed districts the 2,376 villas that make up “Al Reef Villas” include Arabian, Desert, Mediterranean and Contemporary themed villas while Al Reef Downtown, which lies at the center of the development covering an area of 137,310 square meters, is comprised of 46 residential buildings with 1,818 residential units ranging from modern studios, to one, two and three-bedroom apartments also with distinct architectural layouts. In an effort to meet the government’s directives to reduce power consumption and carbon emissions, Manazel has constructed a district cooling plant in Al Reef Downtown which has the capability to provide 8,000 tons (28,000KW) of cooling capacity for the whole development which also results in a healthier and safer environment.

Manazel Real Estate, its subsidiaries and various authorities will continue to establish many needed facilities on vacant land plots that will enhance the quality of living within the Al Reef Community. One such facility that the company has made significant head way in the process of its establishment is with regards to the development of a school.

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The Al Reef 2 project that launched in 2014 builds on Manazel’s successful Al Reef Community Development which delivered the concept of community living for the middle income segment. This residential project is comprised of 860 villas spread across 4 areas each boasting its own community center with modern and contemporary designs. Al Reef 2, which consists of two and three bedroom villas, four community centers, community facilities, open landscapes and infrastructure networks with roads, is scheduled to be fully handed over by the end of 2018.

BUSINESS OVERVIEWRESIDENTIALMANAZEL AL REEF 2

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Located in the Al Samha area of Abu Dhabi the project is strategically located on the Abu Dhabi – Dubai highway, 35 minutes away from the Abu Dhabi City Center and another 35 minutes from the Dubai Expo 2020 site. Once completed, the project will include several public facilities for residents such as a healthcare clinic, a school, two mosques, and customer service outlets for utility companies, in addition to multi-sports pitches, swimming pools, children’s playgrounds, and open spaces with parks and a cycling track; additionally an area of over 8,000 square meters has been allocated for retail space to serve the residents.

Throughout the year we have focused our efforts on finalizing the sale of the Al Reef 2 project and on overseeing construction efforts in order to ensure that the project is completed; Phase 1 of handover of Al Reef 2 Villas is expected to commence at the end of 2017 as planned`. During the course of 2017, Manazel will continue working on ensuring all necessary networks such as roads, water, electricity, sewage network and communications services are in place; in addition to the completion of the mosques, community centers, school and shops, so that the residents benefit from the services immediately upon receipt of the villas.

BUSINESS OVERVIEW

RESIDENTIALMANAZEL AMMAN ( JORDAN)

In an effort to spread the Manazel brand and leverage opportunities domestically and regionally the company took the strategic decision in 2015 to expand its operations outside of its home market to the wider GCC region. Manazel Amman considered as Manazel first venture outside the UAE reinforces the company’s strategy of diversifying its revenue streams by pursuing unexplored investment opportunities that will add to the geographical diversity of Manazel Real Estate’s portfolio.

As Manazel’ s second largest development to date Manazel Amman offers a rapidly increasing population affordable housing for residents seeking spacious living, a vibrant community and quality facilities within a gated community. Using a combination of smart architecture, innovative design and a grand vision a picturesque gated community was created that offers various types of Villas and Apartments, catering to a wide range of tastes and needs. This community was designed to ensure a feeling of comfort, security, privacy and a serene atmosphere ideal for families.

The new community will include 1,253 units of two, three and four bedroom villas and apartments, located in a peaceful area just outside Jordan’s capital city. The project which sits on half a million square meters of real estate, is situated just 10 minutes away from Queen Alia International Airport and 25 minutes from the center of Amman by car. This development will include retail shops, mosques, gyms, pharmacies, a medical center and a kindergarten.

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BUSINESS OVERVIEWRESIDENTIAL

GHANTOOT HOTEL & RESORT

Ghantoot Hotel & Resort, considered as a major real estate project for Manazel and a major tourism project within the country will be located in Ghantoot, which is an important coastal area between Abu Dhabi and Dubai. The ’Ghantoot’ project supports Manazel Real Estate’s overall strategy while also presenting the company with an opportunity to service the various consumer segments that exist in the UAE and wider GCC region.

Spread over an area of approximately 1.3 million square meters and situated between Abu Dhabi and Dubai initial concept designs of the unique coastal project consists of a luxurious hotel and resort style villas with a view of the coastal ocean with dedicated water front and space for residents’ boats and yachts enabling them to pursue all the exciting marine & leisure activities that come with such a location. Additionally it is set to include numerous services and facilities such as mosques, community centers, retail areas and clinics making the project unique and one of its kind.

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BUSINESS OVERVIEW

COMMERCIALMANAZEL MEDICAL CITY HOSPITAL

Manazel Medical City Hospital, envisioned to be the first integrated hospital complex in the UAE once completed, is the embodiment of Manazel’s goal to diversify its operations and capitalize on its land bank and on the gaps, needs and shortages of the healthcare sector in both the UAE and other GCC countries. By providing world class healthcare through an integrated system of centers of excellence in carefully selected, highly specialized clinical specialties and super specialties we aim to help bridge the healthcare gap defined by Manazel with the Health Authority of Abu Dhabi (HAAD). Representing its first foray into the healthcare sector the hospital complex will provide comprehensive patient care and wellness programs to ensure high quality patient care starting from awareness, diagnosis management to homecare while utilizing state of the art technology.

Manazel Medical City Hospital master plan will cover an area of over 73,000 square meters as well as a staff accommodation complex. The healthcare facilities are expected to cover a Gross Floor Area of over 89,000 square meters and exceeding 300 beds. The medical complex is conveniently located in Mohamed Bin Zayed City, southeast of Abu Dhabi City and a 20-minute drive from Abu Dhabi Airport and a one-hour driving distance from the south of Dubai.

During the course of the year Manazel successfully obtained the final approvals from HAAD for the Manazel Medical City Hospital Project as well as finalizing the detailed master plan from UPC and completing various design aspects of the project. The Manazel Medical City Hospital construction is expected to begin by the end of 2017 with project delivery scheduled in time with the Dubai Expo 2020.

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BUSINESS OVERVIEWRETAIL

MANAZEL MALLS

Manazel Malls was established to take up operational and managerial control of The Outlet Capital Mall and all retail areas in Al Reef Community and Al Reef 2 in Abu Dhabi in addition to future retail projects. The new subsidiary ensures that a dedicated professional and experienced team is now responsible for all of Manazel’s retail operations and will drive operational efficiencies and improve performance across this line of business.

The establishment of this new subsidiary supports Manazel’s business strategy with a focus on, not only capitalizing on its expertise in the property space, but also growing non-cyclical revenues through diversification into closely aligned growth sectors. Manazel Malls also strategically provides Manazel with the potential to manage retail assets on behalf of third parties within the UAE and across the wider GCC region.

AL REEF RETAILTHE OUTLET CAPITAL MALL

Al Reef Retail provides close to 17,000 community residents located in Al Reef Development with many shopping opportunities that include a supermarket, F&B, and neighborhood services. The retail space which is managed by Manazel Malls is comprised of a Gross Leasable Area of over 8,750 square meters with the majority strategically located in Al Reef Downtown houses. Among the well-known brands currently operating at Al Reef are Select Market, Costa, Royal Orchid, Fast Rent a Car, 800 Pizza & Il Forno, , UAE Exchange, Supercare & Al Manara Pharmacy. Recently concluded deals include Starbucks, Ibn Sina Medical Centre & National Bank of Fujairah.

Over the course of the year we have focused on speeding up the leasing process to reach a status of 100% operation in the majority of the retail spaces. In 2017 Manazel Malls will continue in developing additional space within the community to provide unique retail components. Additionally Al Reef Community Management Office will continue to regularly hold events and activations to elevate the spirit of the community residents while at the same time enhancing the sales of existing retailers.

Located in Mohamed Bin Zayed close to Abu Dhabi, “The Outlet Capital Mall” will be offering Mohamed Bin Zayed’s 85,000 residents as well as the people who live within a 30 minute drive (estimated at 1.6 million citizens) with premium retail space and quality products at a reasonable price.

The mall covers a total of 60,578 square meters of Gross Leasable Area, offering 296 retail units; current operating stores include several well-known brands such as Lulu Hypermarket, UAE exchange, Malabar Gold & Diamonds, Il Forno, Dr. Nutrition, Springfield, The Face Shop, Giordano, Papa Murphy’s Pizza, McDonald’s, Subway, Popeye’s, Baskin Robbins, Second Cup, Bin Sina Pharmacy, Action Zone & Etisalat. The mall also recently signed with a local bank. The mall offers customers easy accessibility with a three-story, 3,000 parking space complex and a wide retail and F&B variety across its stores.

Over the course of the year Manazel Malls will be focusing on ramping up the leasing progress and expediting fit out of leased shops in order to reach highest level of operational capacity. The company will also focus on rebranding the Mall’s new identity in partnership with other external parties. The company has partnered with Macarthur + Company who will bring in their practical know-how and experienced consultants in the field of retail management and marketing in order to provide great returns for investors and profitable sales for retailers, in addition to proper planning and provision of leasing services and consultancy relating to operations. This will help the company as we focus on rebranding the Mall’s new identity which will be done through holding various events consistently for the mall’s visitors, also working towards its goal of becoming a Destination Mall. M

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Edara was established to provide operational and managerial oversight of both Manazel Specialists and Census International. Manazel Real Estate acquired the non-controlling interest of the two entities in 2014 and are now wholly-owned by Manazel. This acquisition has allowed Manazel to strengthen cash flow, improve operational efficiencies and increase the profitability of the entities. With the release of the new Abu Dhabi real estate law, Manazel Specialists & Census International are well placed to leverage the opportunities created by this new law.

The subsidiary ensures the successful flow of operations by managing and resolving operational and technical issues in all phases of its projects life cycles. By internalizing many of the services provided for all commercial, retail and residential properties, Edara eliminates the costs associated with multiple providers and outsourced personnel. Additionally it aims to increase and develop Manazel Specialists & Census International in order for them to be standalone profit portfolios while the stability and quality of services provided remains static, which is done by ensuring smooth coordination between both subsidiaries when servicing Manazel’s property portfolio or additional third party clients as they strive to succeed in their respective strategic & operational goals.

The Company was tasked with ensuring compliance with Abu Dhabi Law No 3 of 2015 concerning the regulation of the Real Estate sector within the limited time constraint and successfully able to register Manazel Real Estate as an approved master developer, Manazel Specialists and its agents as approved Real Estate Brokers and Al Reef Capital as an approved sub-developer.

Edara Company has also successfully reduced operational costs and contributed to the success of Manazel being awarded the Forbes Middle East Award.

BUSINESS OVERVIEW MANAZEL REAL ESTATE

SUBSIDIARIES

EDARA

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Census International, a subsidiary of Manazel Real Estate, is a facilities management company currently managing all of Manazel Real Estate’s projects by offering a multitude of facilities management services catering to all classes of the real estate sector with customers across Abu Dhabi. Census International offers an integrated delivery model that lays emphasis on the flexibility to respond to the changing demands of the region’s active business environment with consistent quality, all the while enhancing the value of customers’ property portfolios in line with Manazel’s strategy.

Over the course of the year Census continued providing its services to Manazel’s various projects in Abu Dhabi and Dubai. Within The Outlet Capital Mall, Census provided various facilities management services including the provision of valet service, mall tenant fit-out processes as well as post-opening facility management contracts. Census International has also secured cleaning contracts for Al Reef Villas, Al Reef Downtown and Prestige Towers as well as a landscaping contract for Al Reef Community.

Over the course of 2016 and for the coming year Census endeavors to expand its operations pitching for and scoring Facilities Management Project tenders across the UAE by focusing on targeting various residential community projects across the UAE in order to support Manazel’ strategy.

Manazel Specialists is a full service portfolio management company that provides life-cycle and comprehensive administrative services covering all aspects of real estate consultancy, design and implementation of related procedures. The company also offers property sales services, resale, leasing and management. Manazel Specialists has worked on and within several developments in Abu Dhabi and Dubai, namely Dunes Village, Al Reef Villas and Downtown, Prestige Towers and Capital Mall.

During the course of 2016, Manazel Specialists successfully opened new outlets in the Al Reef Retail areas thereby providing residents of Al Reef Community with retail opportunities to satisfy their various needs. The opening of outlets received a positive feedback from residents and was a step forward in the company’s aim to build and foster a relationship of trust with the community. Moreover, with the aim of being more accessible to residents and providing better services to villa and apartment owners, the Manazel Specialists offices were revamped and the Community Management Office was relocated to the Central Plaza at the heart of the retail area. The upgraded Community Management Office that is managed by Manazel Specialists comprises of three different sections covering Sales, Administration and Customer Relations and is charged with creating and sustaining a lively and engaged community by regularly holding events. The CMO hosted many Family and Social themed events during 2016 such as “World Diabetes Day”, “Donate to read”, movie night and “National Day” in addition to shopping events according to demand. Additionally, as part of its social responsibility Manazel Specialists will organize activities for residents of communities under its management on a continuous basis.

During the year 2016, the company team established a diverse customer base in the UAE and the region and established close relationships with key and secondary developers and investors in the public and private sectors, giving the company a high profile with the ability to advise clients and help them succeed.

CENSUSINTERNATIONAL

MANAZELSPECIALISTS

Shari’a Board Report

Shari’a Report by the Shari’a Supervisory Board Submitted to the Annual GeneralAssembly of Manazel Real Estate Company (the “Company”) about the activities of the Company during the Financial Year ending on 31st Dec, 2016

Pursuant to Clause 5-2 of the Articles of Association of the Company which stipulates that the Company and all its subsidiaries shall, in consultation with the Shari’a Supervisory Board (the “Shari’a Board”), comply with the Shari’a rules and principles in all its objectives, activities, actions and any ancillary act thereto and their execution, and clause 54-3 which stipulates that the Shari’a Board shall submit an annual report that shall be read in the ordinary annual meeting of the General Assembly of the Company, the Shari’a Board is pleased to submit the following report to the shareholders of the Company:

The Shari’a Board obtained the agreements and documents that it required for its review. It reviewed the template agreements and documents used by the Company, the procedures adopted by it as well as the financing and investment activities carried out by it. The Shari’ a Board directed for rectifying discrepancies found in some of the documents in line with the rules and principles of Shari’a, and the management of the Company expressed its keen desire to implement the instructions of the Shari’a Board. The Shari’a Board, therefore ,

1. confirms that the Company has assured to have used template documents approved by its Shari’a Board; however, in case of some financing transactions from some Islamic banks, it has not complied with this requirement;

2. directs the Company to submit all its agreements and documents, as well as transactions, activities and investments to the Shari’a Board for its approval prior to entering into them to ensure full compliance with the rules and principles of Shari’a as stipulated in its Articles of Association.

3. confirms that the activities of the Company, its investments and transactions in general do not contravene the rules of Shari’a;

4. states that it is the obligation of each shareholder to pay the Zakat of his shares as the Articles of Association does not require the Company to pay the Zakat of the shares on behalf of the shareholders. Therefore, if someone is holding shares for trading purposes, he is required to pay 2.5% of the market price of his share at the end of his Zakat year as per the lunar calendar, or 2.5775% if he pays the Zakat as per the Gregorian calendar. However, if the shareholder is holding shares to get the annual dividend, he is required to pay 10% of the dividend, if any. The attached letter explains this further.

5. also confirms that the Shari’a board has reviewed the annual accounts for the year ending on 31st December 2016, and emphasizes the fact that the accuracy of the information and the figures is the responsibility of the management of the company.

Shari’a Board Opinion:

The Shari’a Board, while emphasizing the fact that the responsibility of compliance with the rules of Shari’a and fatawa of the Shari’a Board in all the activities, transactions and investments of the Company is that of the Board of Directors, confirms that the activities of the Company, its agreements, transactions as well as investments entered into during the year are not in breach of the rules of Shari’a in general and that the Company has expressed its sincere desire to comply with the principles and rules of Shari’a in all its transactions and activities.

Dr. Hussain Hamid HassanChairman

Dr. Abdul Hakim Zoeir Dr. Muhammed QaseemMember Member

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Zakat on Manazel Real EstateCompany Shares for 2016

Dear Shareholder,

Zakat on Manazel Real Estate shares are calculated as follows:

Firstly:

Zakat imposed on stocks bought for trading purposes (i.e. to be sold at a higher price) are calculated as follows:

Zakat Base per share = market value per share at the end of the year1, in addition to the dividend on the share distributed in that year if any.

Zakat per share = Zakat Base per share x 2.5775%2

The amount of Zakat the = Number of shares x Zakat per shareShareholder is obligated to pay .

***

Secondly:

Zakat imposed by Shar’ia law upon the shareholder for shares purchased for the purpose of obtaining its annual dividends without the intention of trading will be 10% of earnings if any.

1 End of the Company’s Financial Year 2 Amount of Zakat for the Lunar Calendar is 2.5%; and Gregorian Calendar 2.5775%

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Manazel Real Estate PJSC

BOARD OF DIRECTORS’ REPORT AND

CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2016

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BOARD OF DIRECTORS’ REPORT31 DECEMBER 2016


54 55

On behalf of the Board of Directors, I am pleased to present the audited consolidated financial statements of Manazel Real Estate PJSC (the “Company”) and its subsidiaries (together referred to as the “Group”) for the year ended 31 December 2016.

Results and appropriationsThe Group has earned revenues of AED 749 million and recorded a profit of AED 207 million for the year ended 31 December 2016 compared to revenues of AED 740 million and a profit of AED 195 million for the year ended 31 December 2015. Earnings per share for the year ended 31 December 2016 amounts to AED 0.079 compared to earnings per share of AED 0.075 for the year ended 31 December 2015. The Group’s total assets have increase from AED 4,211 million as at 31 December 2015 to AED 4,701 million as at 31 December 2016.

DirectorsAs at the end of the reporting period, the Board of Directors comprises:

Mohamed M. Al Qubaisi - Chairman Mohamed Thaaloob Al Derai - Vice ChairmanMohamed Saeed Al Ghfeli - MemberKhalid Deemas Al Suwaidi - MemberNaser Almur AlZaabi - Member

AuditorsA resolution to appoint external auditors for the ensuing year will be put to the members at the Annual General Meeting.

On behalf of the Board of Directors

Mohamed M. Al Qubaisi Chairman

30 March 2017

Report on the Audit of the Consolidated Financial Statements

Opinion We have audited the consolidated financial statements of Manazel Real Estate PJSC (the “Company”), and its subsidiaries (collectively referred to as the “Group”) which comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

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 (“IFRSs”).

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (the “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 the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit mattersKey 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

INDEPENDENT AUDITORS’ REPORTTO THE SHAREHOLDERS OF MANAZEL REAL ESTATE PJSC

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INDEPENDENT AUDITORS’ REPORTTO THE SHAREHOLDERS OF MANAZEL REAL ESTATE PJSC continued

Key audit matters continued

(a) Recognition of Revenue on Property Development and Land SalesRevenue recognition on property development and land sales involves significant judgements and use of estimates. The revenue of the Group from property development and sales amounted to AED 570,447 thousand for the year ended 31 December 2016. The Group assesses for each of its contracts with customers, whether to recognise revenue over time or at a point in time based on a consideration of whether the Group has created a real estate asset with no alternative use and whether the Group has an enforceable right to payment for performance completed at any time during the life of the contract (see Note 3 and 6 to the consolidated financial statements).

Revenue recognition on property development and sales was assessed as a key audit matter due to the significance of the assessment of satisfaction of performance obligations, estimation of total cost of project completion and judgements made in assessing the timing of revenue recognition.

We reviewed a sample of contracts with customers for property development and sale and assessed the management’s identification of performance obligations and determination of whether the revenue shall be recognised over time or at a point in time. We assessed the satisfaction of performance obligations and where appropriate we corroborated it with external available evidence.

We examined approved project cost budgets for significant on-going real estate developments and reviewed the projects’ completion percentages in light of costs incurred and also reviewed invoices, on a sample basis, to substantiate the costs incurred. For significant projects, we recalculated the amount of revenue to be recognized.

(b) Valuation of Investment PropertiesThe valuation of investment properties involves a degree of complexity and significant judgements and estimates. The property valuations were carried out by external valuers (the “Valuers”). In determining a property’s valuation, the Valuers take into account property-specific information such as the current tenancy agreements and rental income and apply assumptions for yields and estimated market rent, which are influenced by prevailing market yields and comparable market transactions, to arrive at valuation.

We read the valuation reports for properties and assessed that the valuation approach for each was in accordance with the established standards for valuation of properties and suitable for use in determining the fair value for the purpose of the consolidated financial statements.

We assessed the Valuers’ independence, qualifications and expertise and read their terms of engagement to determine whether there were any matters that might have affected their objectivity or may have imposed scope limitations upon their work.

We involved our internal valuation specialists in reviewing the valuation of the properties. The review included discussions with management, and consideration of the estimates and judgements used in Valuer’s valuation and assessment of valuation against our expectations. Where the assumptions were outside expected range or otherwise unusual, we obtained further audit evidence to support the explanations provided by management. Investment properties as at 31 December 2016 amounted AED 1,676,506 thousand (note 15).


Emphasis of matter

Without qualifying our opinion, we draw attention to Note 6 to the consolidated financial statements which state that the Company is carrying an amount of AED 491 million as recoverable from the Government related entities in respect of the infrastructure costs incurred by the Company on various developments amounting to AED 561 million. The management supported by the Board of Directors is in discussions with Abu Dhabi Water and Electricity Authority and other government related entities relating to reimbursement of infrastructure costs. The Company received an amount of AED 68 million during the year ended 31 December 2011, AED 1 million during the year ended 31 December 2013 and AED 1 million during the year ended 31 December 2014 and the remaining AED 491 million have been claimed. The ultimate outcome of the matter and the timing of the reimbursements is currently uncertain.

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 Board of Director, 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 express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information 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, 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 International Financial Reporting Standards and in compliance with the applicable provisions of the Company’s Memorandum and Articles of Association and 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 Company 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. M

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Auditor’s 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the 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.

58 59

2016 2015 Notes AED’000 AED’000

Revenue 6 748,616 739,932

Cost of revenue 6 (494,294) (496,026)

GROSS PROFIT 254,322 243,906

Changes in fair value of investment properties, net 15 88,811 66,653

Reversal of impairment of properties held for sale 12 - 4,502

Reversal of impariment loss on developmentwork-in-progress 14 30,819 -

Gain on disposal of property, plant and equipment 1,204 -

Finance costs 7 (54,904) (59,487)

General and administrative expenses 8 (84,755) (66,028)

Selling and marketing expenses 8 (11,057) (14,897)

Ancillary fees for the Board of Directors’ special efforts 24 (18,500) (11,400)

Other income 9 576 32,219

PROFIT FOR THE YEAR 206,516 195,468

Attributable to:

Owners of the Parent 206,516 195,477

Non-controlling interests - (9)

206,516 195,468

Earnings per share

Basic and diluted earnings per share (in AED per share) 23 0.079 0.075

The attached notes 1 to 32 form part of these consolidated financial statements.


Other information 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 auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would 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 neces sary 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, and the Articles of Association of the Company;

iii) the Group has maintained proper books of account;

iv) the consolidated financial information included in the report of the Board of Directors is consistent with the books of account and records of the Group;

v) investments in shares and stocks are included in note 13 to the consolidated financial statements and include purchases and investments made by the Group during the year ended 31 December 2016;

vi) note 24 reflects the disclosures relating to related party transactions and the terms under which they were conducted;

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 Company has contravened, during the financial year ended 31 December 2016, any of the applicable provisions of the UAE Federal Law No. (2) of 2015 or of its Memorandum and Articles of Association which would materially affect its activities or its consolidated financial position as at 31 December 2016; and

viii) note 30 reflects the social contributions made during the year.

Andre KasparianPartnerErnst & YoungRegistration No: 365

Abu Dhabi30 March 2017

CONSOLIDATED INCOME STATEMENTYear ended 31 December 2016


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2016 2015 Notes AED’000 AED’000

ASSETSBank balances and cash 10 179,992 15,094Trade and other receivables 11 810,737 495,345Properties held for sale 12 5,902 5,902Investments carried at fair value through other comprehensive income 13 1,980 7,416Development work-in-progress 14 190,617 262,760Recoverable infrastructure costs 6 491,017 491,017Investment properties 15 1,676,506 1,581,034Property, plant and equipment 16 1,343,881 1,352,235

TOTAL ASSETS 4,700,632 4,210,803

EQUITY AND LIABILITIESEquity attributable to owners of the CompanyShare capital 17 2,600,000 2,500,000Reserves 202,751 101,671

2,802,751 2,601,671Non-controlling interest (1,177) (1,177)

TOTAL EQUITY 2,801,574 2,600,494

LIABILITIESTrade and other payables 19 579,160 517,800Retentions payable 23,269 18,057Islamic financing 20 1,259,350 1,040,836Advances from customers 21 33,473 29,910Employees’ end of service benefits 22 3,806 3,706

TOTAL LIABILITIES 1,899,058 1,610,309

TOTAL EQUITY AND LIABILITIES 4,700,632 4,210,803

CHAIRMAN CHIEF EXECUTIVE OFFICER


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEYear ended 31 December 2016


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAt 31 December 2016


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2016 2015 Note AED’000 AED’000

PROFIT FOR THE YEAR 206,516 195,468

Changes in fair value relating to investments carried

at fair value through other comprehensive income (5,436) (5,510)

Realised gain on sale of investments carried at fair value

through other comprehensive income - 11,854

Gain on revaluation of property, plant and equipment 16 - 384,269

Other comprehensive (loss) income for the year that will

not be reclassified to consolidated income statement (5,436) 390,613

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 201,080 586,081

Attributable to:

Owners of the Parent 201,080 586,090

Non-controlling interests - (9)

201,080 586,081


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CONSOLIDATED STATEMENT OF CASH FLOWSAt 31 December 2016


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2016 2015 Notes AED’000 AED’000

OPERATING ACTIVITIESProfit for the year 206,516 195,468

Adjustments for: Depreciation of property, plant and equipment 16 9,546 9,153 Gain on disposal of property, plant and equipment (1,204) - Changes in fair value of investment properties 15 (88,811) (66,653) Reversal of impairment of development work-in-progress (30,819) - Finance costs 7 54,904 59,487 Provision for impaired receivables 229 14 Provision for employees’ end of service benefits 22 1,043 1,615

Net cash flows from operations 151,404 199,084

Movements in working capital: Development work-in-progress 102,962 (60,921) Trade and other receivables (315,621) (148,338) Properties held for sale - (1,169) Trade and other payables 65,558 (38,330) Retentions payable 5,212 (44,024) Advances from customers 3,563 (114,487)

13,078 (208,185)Employees’ end of service benefits paid 22 (943) (246)

Net cash flows from (used in) operating activities 12,135 (208,431)

INVESTING ACTIVITIESProceeds from sale of investments - 22,141Additions in property, plant and equipment 16 (2,917) (5,039)Proceeds from disposal of investment properties - 66,500Proceeds from disposal of property, plant and equipment 2,929 -Additions to investment properties 15 (6,661) (19,845)

Net cash (used in) from investing activities (6,649) 63,757

FINANCING ACTVITIESDividend paid (3,282) (16,302)Finance cost paid, net (55,820) (50,366)Islamic financing received, net 20 218,514 200,538

Net cash from financing activities 159,412 133,870

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 164,898 (10,804)

Cash and cash equivalents at the beginning of the year 15,069 25,873

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10 179,967 15,069


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1 CORPORATE INFORMATION

Manazel Real Estate PJSC (the “Company” or the “Parent”) was established on 12 April 2006 as a private joint stock company and was registered on 13 May 2006.

The Company and its subsidiaries (together referred to as the “Group”) are principally engaged in the Shari’a compliant real estate business which includes development, sales, investment, construction, management and associated services. The Company is domiciled in the United Arab Emirates and its registered office address is P.O. Box 33322, Abu Dhabi.

The consolidated financial statements of the Group for the year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Board of Directors on 30 March 2017.

2 BASIS OF PREPARATION

2.1 Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”), general principles of the Shari’a as determined by Group’s Fatwa and Shari’a Supervisory Board and also comply with the applicable requirements of the laws in the UAE. The accounting policies have been consistently applied other than changes as a result of application of new and revised standards mentioned in Note 2.4.

The Federal Law No. 2 of 2015, concerning Commercial Companies has come into effect, replacing the existing Federal Law No. 8 of 1984.

2.2 Basis of preparation

The consolidated financial statements have been prepared on a historic cost basis except for investments carried at fair value through other comprehensive income, investment properties that have been measured at fair value and land included in capital work in progress which has been carried at revalued amounts.

The consolidated financial statements have been presented in United Arab Emirates Dirham (“AED”), which is the Company’s functional and presentation currency, and all values are rounded to the nearest thousands except where otherwise indicated.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS31 DECEMBER 2016


2 BASIS OF PREPARATION continued2.3 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2016. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Company controls an investee if and only if the Company has:

a. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); b. exposure, or rights, to variable returns from its involvement with the investee; and c. the ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

a. The contractual arrangement with the other vote holders of the investee; b. Rights arising from other contractual arrangements; and c. The Company’s voting rights and potential voting rights.

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of income from the date the Company gains control until the date the Company ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the assets transferred.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

The financial statements of the subsidiaries are prepared for the same reporting year as of the Parent.



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2 BASIS OF PREPARATION continued2.3 Basis of consolidation continued

Non-controlling interests principally represent the interest in subsidiaries not held by the Company and are presented separately in the consolidated income statement and within equity in the consolidated statement of financial position, separately from the Company shareholders’ equity. The Group’s accounting policy for acquisition of non-controlling interests is using the ‘entity concept method’. Under this method, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid are recognised directly in equity and attributed to the owners of the Company.

Details of the Company’s subsidiaries are as follows:

Manazel International 100% 100% 100% 100% U.A.E Investments in real estate Capital Co. L.L.C. and commercial projects

Manazel International 100% 100% 100% 100% Jordan Investments in real estate Capital – Jordan L.L.C. and commercial projects

Manazel International 100% 100% 100% 100% K.S.A Purchase and development Capital – Saudi Arabia Ltd. of properties for resale or lease

Tatweer Capital Co. L.L.C. 100% 100% 100% 100% U.A.E Properties management and brokerageDunes Village L.L.C. * 99% 99% 99% 99% U.A.E Development, sale and management of properties

Manazel Specialists 100% 100% 100% 100% U.A.E Real estate management Real Estate L.L.C. and leasingensus International General Maintenance L.L.C. 100% 100% 100% 100% U.A.E Facility management services

Al Reef Cooling L.L.C 100% 100% 100% 100% U.A.E District cooling

Capital Cooling L.L.C 100% 100% 100% 100% U.A.E District cooling

Capital Mall L.L.C 100% 100% 100% 100% U.A.E Management services

Al Reef Capital Real Estate 100% 100% 100% 100% U.A.E Investments in real estate and commercial projects

Proportion Place of Proportion of of voting incorporationName of subsidiary ownership interest power held and operation Principal activity 2016 2015 2016 2015



2 BASIS OF PREPARATION continued2.3 Basis of consolidation continued

*1% non-controlling interest in Dunes Village L.L.C is entitled to 40% share of profits of Dunes Village L.L.C. In the event of loss the Company takes 99% share of loss.

The shares of Tatweer Capital Co. L.L.C. are registered in the name of two of the Company’s directors. The two directors have collateralised their share fully in favour of the Company and empowered the Company to act by proxy in respect of the total shares with an assignment of all rights and obligations relating to the shares of the Company. The proxy is irrevocable unless otherwise agreed in writing by the Company’s Board of Directors.

2.4 Changes in accounting policies and disclosures

The Group applied, for the first time, certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2016. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The nature and the effect of these changes are disclosed below. Although the new standards and amendments applied for the first time in 2016, they did not have a material impact on the annual consolidated financial statements of the Group.

IFRS 14 Regulatory Deferral AccountsIFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and OCI. The standard requires disclosure of the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. Since the Group is an existing IFRS preparer and is not involved in any rate-regulated activities, this standard does not apply.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of InterestsThe amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 Business Combinations principles for business combination accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation if joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.



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2 BASIS OF PREPARATION continued2.4 Changes in accounting policies and disclosures continued continued

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are applied prospectively. These amendments do not have any impact on the Group as it has not acquired any interest in joint operations during the period.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and AmortisationThe amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is a part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are applied prospectively and do not have any impact on the Group, given that it has not used a revenue-based method to depreciate its non-current assets.

Annual Improvements 2012-2014 Cycle

These improvements include:

IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsAssets (or disposal groups) are generally disposed of either through sale or distribution to the owners. The amendment clarifies that changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment is applied prospectively.

IFRS 7 Financial Instruments: Disclosures

(i) Servicing contractsThe amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures need not be provided for any period beginning before the annual period in which the entity first applies the amendments.

(ii) Applicability of the amendments to IFRS 7 to condensed interim financial statementsThe amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment is applied retrospectively.




IAS 19 Employee BenefitsThe amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment is applied prospectively.

IAS 34 Interim Financial ReportingThe amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. This amendment is applied retrospectively.

These improvements do not have any impact on the Group.

Amendments to IAS 1 Disclosure InitiativeThe amendments to IAS 1 clarify, rather than significantly change, existing IAS 1 requirements. The amendments clarify:

• The materiality requirements in IAS 1• That specific line items in the statement(s) of profit or loss and OCI and the

statement of financial position may be disaggregated• That entities have flexibility as to the order in which they present the notes to

financial statements• That the share of OCI of associates and joint ventures accounted for using

the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss

Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement(s) of profit or loss and OCI. These amendments do not have any impact on the Group.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

The amendments address issues that have arisen in applying the investment entities exception under IFRS 10 Consolidated Financial Statements. The amendments to IFRS 10 clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value.

Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value. The amendments to IAS 28 Investments in Associates and Joint Ventures allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries.



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These amendments are applied retrospectively and do not have any impact on the Group as the Group does not apply the consolidation exception.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue recognitionThe Group recognises revenue from contracts with customers based on a five step model as set out in IFRS 15:

Step 1. Identify 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 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 services to a customer, excluding amounts collected on behalf of third parties.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 allocates 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 Group satisfies a performance obligation.

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

a) The Group’s performance does not create an asset with an alternate use to the Group and the Group has an enforceable right to payment for performance completed to date.b) The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced.c) The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continuedRevenue recognition continued

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

When the Group satisfies a performance obligation by delivering the promised goods or services it creates a contract based asset 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.

Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes and duty. The Group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent.

Revenue is recognised to the extent it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably.

Rental incomeRental income receivable from operating leases, less the Group’s initial direct costs of entering into the leases, is recognised on a straight-line basis over the term of the lease, except for contingent rental income which is recognised when it arises.

Revenue from district cooling servicesRevenue from district cooling services comprises of available capacity and variable output provided to customers and is recognised when services are provided.

Dividend incomeDividend income is recognised when the right to receive payment is established.

Service charges and expenses recoverable from tenantsService charges and related income for services rendered to tenants are recognised when such services are rendered.

Cash and cash equivalentsCash and cash equivalents include cash on hand, bank balances and short term deposits with an original maturity of three months or less.

Trade receivablesTrade receivables are stated at original invoice amount less a provision for any uncollectable amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when there is no possibility of recovery.



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3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued

Properties held for saleProperties acquired with the intention of sale are classified as properties held for sale. Properties held for sale are stated at cost or at net realisable value, whichever is lower. Cost includes the cost of land, infrastructure, construction and other related expenditure such as professional fees and engineering costs attributable to the project, which are capitalised as and when the activities that are necessary to get the assets ready for the intended use are in progress. Net realisable value represents the estimated selling price less costs to be incurred in selling the property.

Investments carried at fair value through other comprehensive incomeInvestments carried at fair value through other comprehensive income are initially recorded at cost and subsequently measured at fair value. Subsequent changes in fair value and gains and losses arising on disposal are recognised in consolidated statement of comprehensive income and dividend income is credited to consolidated income statement when the right to receive the dividend is established.

Development work-in-progressProperty being constructed for sale in the ordinary course of business, rather than to be held for rental or capital appreciation, is held as inventory and is measured at the lower of cost and net realisable value.

Cost includes:• Freehold and leasehold rights of land;• Amounts paid to contractors for construction;• Financing costs, planning and design costs, costs of site preparation, professional

fees and legal services, property transfer changes, construction overheads and other related costs.

Net realisable value is the estimated selling price in the ordinary course of the business, based on market prices at the reporting date and discounted for the time value of money, if material, less costs to completion and the estimated costs to sell.

The costs of inventory recognised in income statement on disposal is determined with reference to the specified costs incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property sold.

Investment propertyInvestment property comprises completed property and property under construction or re-development held to earn rentals or for capital appreciation or both. Property held under a lease arrangement is classified as investment property when the definition of an investment property is met.




Investment property continuedInvestment property is measured initially at cost including transaction costs. Transaction costs include transfer of taxes, professional fees for legal services, initial leasing commissions and other incidental costs to bring the property to the condition necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.

Subsequent to initial recognition, investment property is stated at fair value. Gains and losses arising from changes in the fair values are included in the consolidated income statement in the period in which they arise.

Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of investment property are recognised in the consolidated income statement in the year of retirement or disposal.

Gains and losses on the disposal of investment property are determined as the difference between net disposal proceeds and the carrying value of the asset in the previous consolidated financial statements.

Transfer to, or from investment property shall be made when there is a change in use, evidenced by:

• commencement of owner-occupation, for a transfer from investment property to owner-occupied property;

• commencement of development with a view to sale, for a transfer from investment property to inventories;

• end of owner-occupation, for a transfer from owner-occupied property to investment property; or

• commencement of an operating lease to another party, for a transfer from inventories to investment property.



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Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulated depreciation and any impairment in value, other than land included in capital work in progress which is carried at revalued amount. Such cost includes the cost of replacing part of the property, plant and equipment when that cost is incurred, if the recognition criteria are met. All other repair and maintenance costs are recognised in consolidated income statement as incurred. Land is not depreciated.

The cost of property, plant and equipment is their purchase cost together with any incidental costs of acquisition.

Depreciation is charged so as to write off the cost of property, plant and equipment on a straight line basis over the expected useful economic lives of the assets concerned as follows:

District cooling plants 40 years

Furniture and fixtures 4 years

Leasehold building improvements 4 to 10 years

Computers and software 3 years

Office equipment 4 years

Motor vehicles 4 years

Office building 30 years

The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. During 2015, the estimate of useful life of district cooling plants has been changed from 25 years to 40 years.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in consolidated income statement in the year the asset is derecognised.

Capital work in progress is recorded at cost incurred by the Group for the construction of the assets. Allocated costs directly attributable to the construction of the assets are capitalised. The capital work in progress is transferred to the appropriate asset category and depreciated in accordance with the Group’s policies when construction of the asset is completed and available for use.




Trade and other payablesLiabilities are recognised for amounts to be paid in the future for goods or services received, whether billed by the supplier or not.

Employees’ end of service benefitsThe Group provides for end of service benefits of its non-UAE national employees in accordance with UAE labour law. The entitlement to these benefits is based upon the employees’ length of service and completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment.

Pension and national insurance contributions for UAE citizens are made by the Group in accordance with Federal Law No. 2 of 2000.

OffsettingFinancial assets and financial liabilities are only offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and the Group intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

Impairment of financial assetsThe Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial assets or the 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 profit 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 change in arrears or economic conditions that correlate with defaults.

LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if the right is not explicitly specified in an arrangement.



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Leases continuedLeases are classified as finance leases whenever the terms of the lease arrangement include a promise from the lessor to transfer substantially all the risks and rewards of ownership to the lessee, upon expiry or early termination of the lease. All other leases are classified as operating leases.

The Group as lessorAmounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases. Contingent rents are recognised as revenue in the period in which they are earned.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The Group as lesseeAssets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments (as benefits of these assets are owned by the lessee). The corresponding liability is included in the consolidated statement of financial position as a finance lease obligation.

The Group as lessee continuedLease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of return on the remaining balance of the liability. Finance charges are charged directly to the consolidated income statement, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on financing costs.

A leased asset is depreciated over the useful life of the asset, however, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Where operating leases relate to plots of land on which the Group is constructing its development properties, the lease payments are allocated to the cost of development work-in-progress on a straight line basis over the construction period which represents the time pattern of the Group’s benefits. For all other operating leases, lease payments are charged to the consolidated income statement on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into operating lease are also spread on a straight-line basis over the lease term.




Foreign currenciesThe individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in UAE Dirhams (AED) which is the functional currency of the Group and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in the consolidated income statement in the period in which they arise except for:

• Exchange differences on foreign currency fundings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to financing costs on those foreign currency fundings;

• Exchange differences on transactions entered into in order to hedge in a Shari’a-compliant way certain foreign currency risks; and

• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in consolidated income statement and reclassified from equity to profit or loss on disposal or partial disposal of the net investment.

The assets and liabilities of foreign operations are translated into AED at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on the translations are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the consolidated income statement.

Financing costsFinancing 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 temporary investment of specific financings pending their expenditure on qualifying assets is deducted from the financing costs eligible for recognition.

All other financing costs are recognised in consolidated income statement in the period in which they are incurred.



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Impairment of non-financial assetsAt end of each reporting period, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in consolidated income statement, unless the relevant asset is carried at a revalued amount, in which case the revaluation decrease will include impairment. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the consolidated income statement in those expenses categories consistent with the function of the impaired asset.

An assessment is made at each reporting date for each asset as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the consolidated income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.




ProvisionsProvisions are recognised when the Group has a present obligation, either legal or constructive, as a result of a past event, and it is probable that the Group will be required to settle the obligation through an outflow of resources embodying economic benefits, and the amount of the obligation can be estimated reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Fair value of financial instrumentsFor investments traded in an active market, fair value is determined by reference to quoted market bid prices. Fair values of financial instruments where there is not an active market are estimated using valuation methods such as net present values of future cash flows.

4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

In the process of applying the Group’s accounting policies, management is required to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates and assumptions.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.



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4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS continued

JudgementsClassification of propertiesIn the process of classifying properties, management has made various judgements. Judgement is needed to determine whether a property qualifies as an investment property, property, plant and equipment, development work-in-progress and/or property held for sale. The Group develops criteria so that it can exercise that judgement consistently in accordance with the definitions of investment property, property, plant and equipment, development work-in-progress and property held for sale. In making its judgement, management considered the detailed criteria and related guidance for the classification of properties as set out in IAS 2, IAS 16, and IAS 40, in particular, the intended usage of property as determined by management and approved by the Company’s Board of Directors.

Transfer from and to investment propertiesTransfers are made to investment property when, and only when, there is a change in use, evidenced by the end of owner occupation or commencement of an operating lease. Transfers are made from investment property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of development with a view to sell.

Classification of financial assetsManagement decides on acquisition of a financial asset whether it should be classified as amortised cost, fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVTOCI”).

Reimbursement of infrastructure-related costsThe Group, being master developer for real estate projects, incurs certain infrastructure-related costs relating to development of projects which are reimbursable by government and related authorities as per the memorandum of understanding and / or acknowledgements by such government-related authorities. Determination of the amount of reimbursement of costs recoverable from government authorities requires significant judgement. The management takes into account the latest communications with the related government-related authorities. As at 31 December 2016, the Group has recognised an amount of AED 491 million (2015: AED 491 million) representing costs reimbursable by the relevant authorities. Any difference between the amounts actually reimbursed by the government-related authorities in future periods and the amounts expected will be recognised in the consolidated income statement.




Estimation and assumptionsThe key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, which 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:

Impairment of accounts receivableAn estimate of the collectable amount of trade accounts receivable is made when collection of the full amount is no longer probable. For individually significant amounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length of time past due, based on historical recovery rates.

At the statement of financial position date, gross trade accounts receivable were AED 73 million (2015: AED 79 million), with a provision for doubtful debts of AED 1 million (2015: AED 1 million recognised). Any difference between the amounts actually collected in future periods and the amounts expected will be recognised in the consolidated income statement.

Valuation of unquoted investmentsSuch assets primarily consist of investments in private equity investments and co-investment in funds and are valued in accordance with International Private Equity and Venture Capital Valuation Guidelines, including but not limited to current market value of another instrument which is substantially the same or expected cash flows of the underlying net asset base of the investment. This determination requires significant estimates and judgement with respect to future earnings, cash flows and discount rates. In making these estimates, the Group evaluates, among other factors, expected cash distributions as well as the business outlook for each investment together with relevant market risk and volatility.

Estimation of net realisable value for properties held for sale and development work-in-progressProperties held for sale and properties classified under development work-in-progress are stated at the lower of cost or net realisable value (NRV). NRV is assessed by independent real estate valuation consultants with reference to market conditions and prices for similar properties existing at the end of the reporting period, off-plan sales prices, costs of completion etc at the end of the reporting period.

Due to the limited number of comparable market transactions, the independent real estate valuation consultants of the Group have used significant judgement in arriving at the NRV of properties held for sale and development work in progress. The realisable values may significantly differ from the current estimates made by the independent real estate valuation consultants.



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Estimation and assumptions continuedEstimation of fair value of investment propertiesThe fair value of investment properties is determined by independent real estate valuation consultants based on methods such as the Comparative Method of Valuation, the Hypothetical Development Approach, and the Income Capitalisation Method.

Such valuations are based on certain assumptions, which are subject to uncertainty and might materially differ from the actual values realised.

Under the Comparative Method of Valuation the fair value is determined by considering recent prices of similar properties in the same location and similar conditions, with adjustments to reflect any changes in the nature, location or economic conditions since the date of the transactions that occurred at those prices.

Estimation of fair value of investment properties continuedThe Hypothetical Development Approach requires the use of estimates such as future cash flows from assets (such as selling and leasing rates, future revenue streams, construction costs and associated professional fees and financing cost), targeted internal rate of return and developer’s risk and targeted profit. These estimates are based on local market conditions existing at the end of the reporting period.

Under the Income Capitalisation Approach, the income receivable under existing lease agreements and projected future rental streams are capitalised at appropriate rates to reflect the investment market conditions at the valuation dates.

The determination of the fair value of revenue-generating properties requires the use of estimates such as future cash flows from assets (such as leasing, tenants’ profiles, future revenue streams, capital values of fixtures and fittings, and the overall repair and condition of the property) and discount rates applicable to those assets. These estimates are based on local market conditions existing at the end of the reporting period.

The continuing volatility in the global financial system and in the real estate industry has contributed to the significant reduction in transaction volumes in the UAE. Therefore, in arriving at their estimates of market values as at 31 December 2015 the valuers have used their knowledge and professional judgement and have not only relied solely on historic transactional comparables. In these circumstances, there is greater degree of uncertainty than which exists in a more active market in estimating market values of investment properties.

As a result of the fair value assessment, an increase in fair value of AED 89 million (2015: Increase in fair value of AED 67 million) has been recognised in the consolidated income statement for the year.


Estimation and assumptions continuedImpairment of capital work in progressImpairment testing of capital work in progress requires an estimation of the value in use of the cash-generating units. The value in use requires the Group to estimate the future cash flows, terminal value of the assets, cost to complete the construction of the assets, and choose a suitable discount rate in order to calculate the present value of the cash flows.

At the reporting date, gross capital work in progress was AED 191 million (2015: AED 263 million). Impairment provided during the year amounts to AED nil (2015: AED nil). Any difference between the amounts actually realised in future periods and the amounts expected to be realized will be recognised in the consolidated income statement

Useful lives of property, plant and equipmentThe Group’s management determines the estimated useful lives of its property, plant and equipment for calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation charge would be adjusted where the management believes the useful lives differ from previous estimates.

Cost to complete the projectsThe 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 providing infrastructure activities, potential claims by subcontractors and the cost of meeting other contractual obligations to the customers.

ContingenciesBy their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events.



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5 FUTURE CHANGES IN ACCOUNTING POLICIES – STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standards, interpretations and amendments that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The management intends to adopt these standards, if applicable, when they become effective. The management anticipates that the adoption of these standards interpretations and amendments, with the exception of IFRS 16, will have no material impact on the consolidated financial statements of the Group.

• IFRS 2 Classification and Measurement of Share-based Payment Transactions —

Amendments to IFRS 2

• IFRS 9 Financial Instruments

• Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an

Investor and its Associate or Joint Venture

• IFRS 16 Leases

• IAS 7 Disclosure Initiative - Amendments to IAS 7

• IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses - Amendments

to IAS 12

IFRS 16 has been issued in January 2016 and it supersedes IAS 17. IFRS 16 introduces a single model for accounting of lease and requires lessees to recognise assets and liabilities for most leases, whereas the accounting for the lessor has remained substantially unchanged. The Group is assessing the impact of adopting IFRS 16. The adoption of the standard will result in recognition of additional assets and liabilities for leases where the Group is a lessee.

2016 2015 AED’000 AED’000

RevenueSale of properties 570,447 582,061Property management fees 13,566 8,940Rental income 66,065 56,995Revenue from district cooling services 19,777 25,392Transfer fee income 17,510 21,043Facility management services and others 61,251 45,501

748,616 739,932

Cost of revenueCost of properties sold, net 395,357 409,301Operating cost of rental properties 58,818 52,973Cost of district cooling services 17,302 19,924Cost of facility management services 22,817 13,828

494,294 496,026

6 REVENUE AND COST OF REVENUE

Cost of properties sold is recorded net of an amount waived by a contractor of AED nil

(2015: AED 68,182).

In arriving at the cost of properties sold, the Company has taken into account that the Government related entities will reimburse the infrastructure costs incurred by the Company on various developments amounting to AED 561 million. The management supported by the Board of Directors is in discussions with Abu Dhabi Water and Electricity Authority and other government related entities relating to recovery of infrastructure costs. The Company received an amount of AED 68 million during the year ended 31 December 2011, AED 1 million during the year ended 31 December 2013 and AED 1 million during the year ended 31 December 2014 and the remaining AED 491 million have been claimed.

On 13 January 2015, the Company received a letter from Abu Dhabi Urban Planning Council informing the Company of the decision by the Executive Council dated 16 December 2014 in respect of the transfer and receipt of the infrastructure assets of the developed projects in Abu Dhabi. The Company has been asked to co-operate with the Abu Dhabi Urban Planning Council in order to submit a report to the Executive Council.



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2016 2015 AED’000 AED’000

Mall advertisements 1,277 422Project and others 9,780 14,475

11,057 14,897

2016 2015 AED’000 AED’000

Finance costs incurred during the year 65,662 63,908

Unwinding of discount of payable 19,886 25,633

Finance cost charged to income statement (54,904) (59,487)

Finance cost capitalized (note 14) 30,644 30,054

7 FINANCE COSTS

8 EXPENSES

8.1 GENERAL AND ADMINISTRATIVE EXPENSES

8.2 SELLING AND MARKETING EXPENSES



2016 2015 AED’000 AED’000

Forfeited advances relating to properties - 621Reversal of excess accruals related to completed projects - 21,366Others 576 10,232

576 32,219

2016 2015 AED’000 AED’000

Cash and bank balances 179,967 15,069

Restricted deposits 25 25

179,992 15,094

Restricted deposits (25) (25)

179,967 15,069

9 OTHER INCOME

10 CASH AND CASH EQUIVALENTS



Included in cash and bank balances are bank deposits of AED 25 thousand (2015: AED 25 thousand) held with an Islamic bank in Abu Dhabi. They can only be utilised for certain specific activities.

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2016 2015 AED’000 AED’000

Payroll and employees related expenses 60,381 48,568

Depreciation 2,501 2,507

Rent expense 4,988 2,254

Legal and professional charges 3,588 139

Commission expenses 724 -

Transportation expenses 944 902

Communication expenses 1,154 849

Other expenses 10,475 10,809

84,755 66,028

2016 2015 AED’000 AED’000

Trade receivables 72,652 79,370

Provision for impaired receivables (1,222) (993)

71,430 78,377

Prepayments 41,697 33,595

Advances to contractors 88,837 128,738

Receivable from sale of properties (*) 433,308 220,352

Receivable for concept and detailed design fee (note 24) 123,871 -

Advances for purchase of real estate properties 16,400 -

Rent receivable 25,279 23,568

Others 9,915 10,715

810,737 495,345

11 TRADE AND OTHER RECEIVABLES



As at 31 December 2016, trade receivables at nominal value of AED 1,222 thousand (2015: AED 993 thousand) were impaired.

* Receivable from sale of properties include AED 58,876 thousand (having total contract value of AED 93,150 thousand) receivable from related parties (note 24).

11 TRADE AND OTHER RECEIVABLES continued



Movements in the provision for impairment of trade receivables were as follows:

As at 31 December, the ageing of unimpaired trade receivables and receivables from sale of properties is as follows:

Unimpaired receivables are expected, on the basis of past experience, to be fully recoverable. It is not the practice of the Group to obtain collateral over receivables and the vast majority are, therefore, unsecured.

2016 2015 AED’000 AED’000

At 1 January 993 979

Charge for the year 229 14

At 31 December 1,222 993

Past due but not impaired Neither past due nor < 30 31 - 90 91 – 180 181 – 365 > 365 Total imparied days days days days days AED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000

2016 504,738 367,741 124,076 5,298 3,163 2,589 1,871

2015 298,729 189,891 94,661 5,814 3,471 2,840 2,052

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12 PROPERTIES HELD FOR SALE

13 INVESTMENTS CARRIED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME



Properties held for sale comprise:

Movement in properties held for sale is as follows:

During the year, the Group has disposed of investments amounting to AED nil (2015: AED

14 million).

2016 2015 AED’000 AED’000Commercial properties 5,902 5,902

2016 2015 AED’000 AED’000

Unquoted equities 1,980 7,416

Geographical concentration of investments is as follows:

Outside UAE 1,980 7,416

2016 2015

AED’000 AED’000

Balance at 1 January 5,902 609,861

Additions during the year - 120,003

Transfer to property, plant and equipment (note 16) - (605,128)

Reversal of impairment during the year - 4,502

Disposals during the year - (123,336)

Balance at 31 December 5,902 5,902

14 DEVELOPMENT WORK-IN-PROGRESS

Development work-in-progress represents development and construction-related costs incurred on properties being constructed by the Group for sale in the ordinary course of business. The movement during the year is as follows:

2016 2015 AED’000 AED’000


Additions during the year 225,246 336,740

Finance cost capitalized (note 7) 30,644 30,054

Reversal of impairment 30,819 -

Cost of properties sold during the year (358,852) (305,873)




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Movement in investment properties during the year is as follows:

The fair value of investment properties at 31 December 2016 has been arrived at on the basis of a valuation carried out by independent real estate valuation consultants. The valuation, which conforms to the Royal Institution of Chartered Surveyors Valuation Standards and the relevant statements of the International Valuations Standards, was arrived at by using recognised valuation methods comprising the Comparative Method of Valuation, Income Capitalisation Method and Hypothetical Development Approach.



15 INVESTMENT PROPERTIES

Commercial propertiesThe Company signed an agreement (“the agreement”) with a related party in prior years in

respect of a property located in Abu Dhabi. Under the agreement, the Company is required

to construct, develop and manage the property. In return, the Company is entitled to the

gross lease income net of operating cost arising from the property after deduction of

a payment of 30% of “net profit” (as defined in the agreement) to the related party for a

period of 30 years.

The consideration paid by the Company has been included as part of the cost of the property. The agreement contains a lease in accordance with IFRIC 4 - Determining whether an Arrangement contains a Lease and is held under operating leases. Accordingly, the property has been classified under Investment Property with changes in fair value based on the Company’s entitlement arising from the agreement taken to the consolidated income statement.

Investment properties comprise the following:

2016 2015 AED’000 AED’000

Residential properties 122,217 122,217

Commercial properties 1,554,289 1,458,817

1,676,506 1,581,034

15 INVESTMENT PROPERTIES continued

2016 2015 AED’000 AED’000

Balance at 1 January 1,581,034 1,561,036

Additions 6,661 19,845

Disposals - (66,500)

Changes in fair value during the year, net 88,811 66,653

Balance at 31 December 1,676,506 1,581,034


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16 PROPERTY, PLANT AND EQUIPMENT continued



Depreciation charge for the year has been reflected in cost of revenue from district cooling services and general and administrative expenses as follows:

During the year, the Group adopted the revaluation model of IAS 16. The revalued properties consist of land plots held by the Group as property, plant and equipment.

The fair value of land carried under revaluation model as at 31 December 2015 has been arrived at on the basis of a valuation carried out by independent real estate valuation consultant. The valuation, which conforms to the Royal Institution of Chartered Surveyors Valuation Standards and the relevant statements of the International Valuations Standards, was arrived at by using recognised valuation methods.

17 SHARE CAPITAL

Share capital comprises 2,600,000 thousand (2015: 2,500,000 thousand) authorised, issued and fully paid up ordinary shares with a par value of AED 1 each.

18 STATUTORY RESERVE

In accordance with the UAE Federal Law No. (2) of 2015, 10% of the profit for the year shall be transferred to the statutory reserve. The Company may resolve to discontinue such annual transfers when the reserve totals 50% of the issued share capital. The reserve is not available for distribution.

2016 2015 AED’000 AED’000

General and administrative expenses (note 8) 2,501 2,507

Cost of district cooling services (note 6) 7,045 6,646

9,546 9,153

19 TRADE AND OTHER PAYABLES

20 ISLAMIC FINANCING

2016 2015 AED’000 AED’000

Trade payables 127,578 39,068

Notes payable 238,606 248,487

Dividend payable 91,242 94,524

Accruals 79,155 90,218

Due to related parties (note 24) 8,435 7,078

Deferred income 7,660 13,026

Finance costs payable 8,205 9,121

Refundable deposit 12,908 12,502

Others 5,371 3,776

579,160 517,800

Expected profit Maturity 2016 2015 AED’000 AED’000

Islamic financing arrangement 1 Variable rate 2013 to 2022 272,350 300,550

Islamic financing arrangement 2 Variable rate 2015 to 2030 - 715,286

Islamic financing arrangement 3 Variable rate 2016 to 2017 100,000 25,000

Islamic financing arrangement 4 Variable rate 2016 to 2023 470,000 -

Islamic financing arrangement 5 Variable rate 2016 to 2023 417,000 -

1,259,350 1,040,836



Financing from banks is represented by the following facilities:

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20 ISLAMIC FINANCING continued



Movements in Islamic financing during the year are as follows:

Islamic financing are secured by a number of security documents including registered mortgages over various properties in Abu Dhabi and assignment of rental proceeds.

21 ADVANCES FROM CUSTOMERS

Advances from customers represent collections made from customers in respect of sales of properties.

22 EMPLOYEES’ END OF SERVICE BENEFITS

Movement in provision for employees’ end of service benefits is as follows:

2016 2015 AED’000 AED’000

Balance at the beginning of the year 1,040,836 840,298

Islamic financing obtained 262,064 330,194

Islamic financing paid (43,550) (129,656)

Balance at the end of the year 1,259,350 1,040,836

2016 2015 AED’000 AED’000


Charge for the year 1,043 1,615

Paid during the year (943) (246)


23 BASIC AND DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT

24 TRANSACTIONS AND BALANCES WITH RELATED PARTIES



Basic earnings per share are calculated by dividing the profit for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the Parent by the weighted average number of ordinary shares used to calculate basic earnings per share, plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

The following reflects the profit and share data used in calculating the basic and diluted earnings per share computations:

The Group does not have any instruments which would have a dilutive impact on earnings per share when converted or exercised.

These represent transactions with related parties, i.e. associated companies, major shareholders, directors and key management personnel of the Company and and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the management.

2016 2015Profit for the year attributable to ordinary equity holders of the

Company for basic and diluted earnings per share (AED ‘000) 206,516 195,477

Weighted average number of ordinary shares (‘000) 2,600,000 2,600,000

Basic and diluted earnings per share (AED) 0.079 0.075

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24 TRANSACTIONS AND BALANCES WITH RELATED PARTIES continued



Balances with related parties as at the end of the reporting period comprise:

Significant transactions with related parties during the year were as follows:

2016 2015 AED’000 AED’000

Due from related parties (note 11): Directors and key management personnel 58,876 -

Receivable for concept and detailed design fee 123,871 -

Due to related parties: Directors 8,000 6,000

Others 435 1,078

Total amount due to related parties (note 19) 8,435 7,078

25 CONTINGENCIES AND COMMITMENTS

26 RISK MANAGEMENT

26.1 Capital management

The Group’s policy is to maintain a strong capital base to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of healthy capital ratios.

The Group’s strategy for monitoring capital is based on the gearing ratio. This ratio is calculated as net debt divided by total equity.

Gearing ratio



CommitmentsDevelopment expenditure contracted for at the end of the reporting period but not provided for is as follows:

Contingent liabilitiesThere are certain claims under litigation against the Group. Although it is not possible at this time to predict the outcome of these claims, management does not expect that these claims will have a material adverse effect on the Group’s financial position.

The Group’s policy is to keep its gearing ratio within acceptable limits. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 December 2016 and 2015.

2016 2015 AED’000 AED’000Development work-in-progress, investment properties under construction and capital work in progress 549,000 758,559

2016 2015 AED’000 AED’000

Islamic financing 1,259,350 1,040,836Bank balances and cash (179,992) (15,094)

Net debt 1,079,358 1,025,742

Equity attributable to owners of the Company 2,802,751 2,601,671

Gearing ratio (%) 39% 39%

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2016 2015 AED’000 AED’000

Ancillary fees for the Board of Directors’ special efforts 18,500 17,000Reversal of prior year accrual of AED 5,600 thousand - (5,600)

Net ancillary fees for the Board of Directors’ special efforts 18,500 11,400

Key management remuneration 17,939 11,458

Number of key management personnel 9 8

Consultancy costs paid to a related party - capitalised in development work in progress - 11,250

Rent expense 4,040 2,204

Gain on disposal of property, plant and equipment 1,204 -

26 RISK MANAGEMENT continued



26.2 Financial risk management objectives

The Group is exposed to credit risk, liquidity risk, market risk and profit rate risk. The Group’s treasury function provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group by analysing exposures by degree and magnitude of risks.

26.3 Market risk

Market risk arises from fluctuations in profit rates and currency rates. The management monitors the market risk on an ongoing basis and on any significant transaction. Market risk is further analysed into profit rate risk and equity price risk.

26.4 Profit rate risk

Profit rate risk arises from the possibility that changes in profit rates will affect the value of financial instruments. The Group is exposed to profit rate risk on its profit-bearing assets and liabilities (Islamic financing).

Profit rates on Islamic financing are constantly monitored for adverse events and further repriced when an appropriate opportunity arises.

Islamic financing carry variable profit rates, however these are subject to a minimum expected fixed profit rate.

26.5 Equity price risk

Equity price risk is the risk that the fair value of equities decreases as a result of changes in the levels of equity indices and the value of individual stocks. Equity price risk arises from equity instruments held as fair value through other comprehensive income. Management of the Group monitors equity securities in its investment portfolio based on changes in fair values. Material investments within the portfolio are managed by qualified fund managers as well as on an individual basis. All buy and sell decisions related to investments are approved by the Board of Directors. The primary goal of the Group’s investment strategy is to maximise investment returns.





26.5 Equity price risk continued

The effect on other comprehensive income as a result of change in fair value of equity instruments held at fair value through other comprehensive income at 31 December 2016 due to reasonably possible change in fair values, with all other variables held constant, is as follows:

26.6 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

Trade receivables are reviewed on an ongoing basis and provision made for doubtful debts as and when required. In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Geographically 100 percent (2015: 100 percent) of the Group’s trade receivables are based in United Arab Emirates. Its five largest receivables account for 70% of the trade receivables as of 31 December 2016 (2015: 64%).

The Group has entered into contracts for the sale of residential and commercial units on an instalment basis. The instalments are specified in the contracts. The Group is exposed to credit risk in respect of instalments due. However, the legal ownership of residential and commercial units is transferred to the buyer only after all the instalments are recovered. In addition, instalments dues are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

The credit risk on liquid funds is limited because the counterparties are reputable local banks closely monitored by the regulatory body. The carrying amount reflected in these consolidated financial statements represents the Group’s maximum exposure to credit risk for such receivables.



2016 2015 Effect on Effect on other other comprehensive comprehensive 2016 income 2015 income % AED’000 % AED’000

Change in fair value +10% 198 +10% 741Change in fair value +10% (198) -10% (741)

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26.7 Liquidity risk

The responsibility for liquidity risk management rests with the management of the Group, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate banking facilities and reserve financing facilities, and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The maturity profile is monitored by management to ensure adequate liquidity is maintained. The maturity profile of the financial liabilities at the end of the reporting period based on contractual undiscounted repayment arrangements was as follows:

Up to 1 to 6 6 to 12 Over 1 month months months 1 year Total AED’000 AED’000 AED’000 AED’000 AED’000

At 31 December 2016Trade and other payables 133,805 166,706 49,849 238,377 588,107

Retentions payable 450 10,030 12,789 - 23,269

Islamic financing 26,137 98,140 72,015 2,021,556 2,217,848

Total 160,392 274,876 134,653 2,259,933 2,829,224

At 31 December 2015Trade and other payables 30,808 188,625 94,978 203,389 517,800

Retentions payable 7,722 8,344 1,992 - 18,058

Islamic financing - 66,200 50,000 1,296,427 1,412,627

Total 38,530 263,169 146,970 1,499,816 1,948,485


26.8 Maturity profile

The maturity profile of the assets and liabilities at 31 December 2016 was as follows:



Amounts expected to be recovered or settled Within 12 months After 12 months Total of balance sheet of balance sheet AED’000 AED’000 AED’000

Bank balances and cash 179,992 179,992 -

Trade and other receivables 810,737 706,366 104,371

Properties held for sale 5,902 - 5,902

Investments carried at fair value

through other comprehensive income 1,980 - 1,980

Development work-in-progress 190,617 33,326 157,291

Recoverable infrastructure costs 491,017 150,000 341,017

Investment properties 1,676,506 - 1,676,506

Property, plant and equipment 1,343,881 - 1,343,881

TOTAL ASSETS 4,700,632 1,069,684 3,630,948

LIABILITIES

Trade and other payables 579,160 362,084 217,076

Retentions payable 23,269 23,269 -

Islamic financing 1,259,350 133,941 1,125,409

Advances from customers 33,473 33,473 -

Employee’s end of service benefits 3,806 - 3,806

TOTAL LIABILITIES 1,899,058 552,767 1,346,291

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Amounts expected to be recovered or settled Within 12 months After 12 months Total of balance sheet of balance sheet AED’000 AED’000 AED’000

Bank balances and cash 15,094 15,094 -

Trade and other receivables 495,345 435,345 60,000

Properties held for sale 5,902 - 5,902

Investments carried at fair value

through other comprehensive income 7,416 7,416 -

Development work-in-progress 262,760 158,241 104,519

Recoverable infrastructure costs 491,017 150,000 341,017

Investment properties 1,581,034 - 1,581,034

Property, plant and equipment 1,352,235 - 1,352,235

TOTAL ASSETS 4,210,803 766,096 3,444,707

LIABILITIES

Trade and other payables 517,800 324,075 193,725

Retentions payable 18,057 18,057 -

Islamic financing 1,040,836 116,747 924,089

Advances from customers 29,910 29,910 -

Employee’s end of service benefits 3,706 - 3,706

TOTAL LIABILITIES 1,610,309 488,789 1,121,520

27 FAIR VALUE



Financial instruments comprise financial assets and financial liabilities.

Financial assets of the Group include bank balances and cash, investments and trade and other receivables. Financial liabilities of the Group include trade and other payables, retentions payable, due to related parties and Islamic financing. The fair values of the financial assets and liabilities are not materially different from their carrying values.

Fair value measurement recognised in the consolidated statement of financial positionThe Group uses the following hierarchy for determining and disclosing the fair value of assets by valuation technique:

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

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

The following table shows the analysis of assets recorded at fair value by level of the fair value hierarchy:

The maturity profile of the assets and liabilities at 31 December 2015 was as follows:

The following table shows a reconciliation of all movements in the fair value of assets categorised within Level 3.

2016:

Investment properties

Investments carried at fair value through OCI

Total

2015:

Investment properties

Investments carried at fair value through OCI

Total

Level 1 Level 2 Level 3 Total AED’000 AED’000 AED’000 AED’000

- - 1,676,506 1,676,506

- - 1,980 1,980

- - 1,678,486 1,678,486

- - 1,581,034 1,581,034

- - 7,416 7,416

- - 1,588,450 1,588,450

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28 SEGMENT INFORMATION



Segmental information is presented in respect of the Group’s business and geographical segments. The primary reporting format, business segments, reflects the manner in which financial information is evaluated by the Board of Directors and the management. Business segments are identified on the basis of internal reports about the components of the Group that are regularly reviewed by the management of the Company for allocation of resources and performance assessment. Segment performance is evaluated based on gross profit and changes in fair values of investment properties.

28.1 Business Segments

For financial reporting purposes, the Group is organised into five main operating segments:

• Property development and sales • Investment properties portfolio • Property management and related activities • Direct cooling services • Facility management

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27 FAIR VALUE continued



Investment properties amounting to AED 1,653 million (2015: AED 1,561 million) have been valued using income capitalisation and hypothetical development approach methods using the following unobservable inputs:

Investment properties amounting to AED 24 million (2015: AED 20 million) have been valued using comparable method of valuation.

Significant parts of the financial investments classified under Level 3 are valued using inputs from external fund managers and it is not practical to disclose the sensitivity of inputs to the valuation techniques used.

During the years ended 31 December 2016 and 2015, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 fair value measurements.

2016 2015

Discount rate (%) 7.9% - 11.41% 7.9% - 11.41%

Rent per sqm (AED) 600 - 4,000 600 - 4,000

Rental growth rate (%) 1% - 3% 1% - 4%

Occupancy rates (%) 46% - 100% 46% - 100%

110 111

2016 2015 AED’000 AED’000

Balance as at 1 January 1,588,450 1,584,249

Additions during the year 6,661 19,845

Disposals - (76,787)

Net changes in fair value 83,375 61,143

Balance as at 31 December 1,678,486 1,588,450

28

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Man

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28 SEGMENT INFORMATION continued

28.2 Geographical segments

The Group operated only in two geographical segments, i.e., United Arab Emirates and Jordan.

29 DIVIDEND

Bonus share of 0.04 shares for every share were declared amounting to AED 100 million relating to year 2015 was approved by the shareholders in the Annual General Meeting held on 24 April 2016 (2015: No dividend were declared).

30 SOCIAL CONTRIBUTIONS

The social contributions (including donations and charity) made during the year amount to AED 0.1 million (2015: AED 0.33 million).

31 ACQUISITION OF NON CONTROLLING INTEREST

During 2014, the Company entered into an agreement with the minority shareholders of Manazel Specialist Real Estate LLC and Census International Company LLC and acquired the shares held by the minority shareholders for a consideration of AED 176,918 thousand. The transaction has resulted in increasing Company’s shareholding in these two subsidiaries to 100%. The difference between the share of the net assets acquired and the consideration paid has been charged to equity.

32 COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period presentation. Such reclassifications have no effect on the previously reported profit or equity of the Company.

2016 2015 Total Total Total Total income assets income assets AED ‘000 AED ‘000 AED ‘000 AED ‘000

United Arab Emirates 748,616 4,573,514 739,932 4,115,707

Jordan - 127,119 - 95,096

748,616 4,700,633 739,932 4,210,803


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manazel real estate annual report...

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