Annual Report 2014

Notes to The Consolidated Financial Statement

AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES

31 December 2014

Notes to The Consolidated Financial Statement

AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES

31 December 2014

Real estate development

99.7%

96%

90.42%

99%

98%

100%

80%

99%

99.85 %

99.9%

-

99.7%

96%

90.81%

99%

98%

100%

80%

99%

99.85 %

99.9%

100%

Principal activities

Al Mazaya Real Estate Development Company K.S.C. (Closed)

Seven Zones Real Estate Company K.S.C. (Closed)

First Dubai Real Estate Development Company – K.S.C.P.*

Mezzan Combined For General Trading Company - W.L.L.

Gulf Turkey for General Trading Co. W.L.L.

First Kuwait for projects management Co. W.L.L.

Al Mazaya Real Estate Free Zone( FZ)/ LLC

Al Dana Real Estate Limited

Al Rayhan Real Estate Limited

Advantage General Trading Co. W.L.L.

Mazaya Lebanon Company - S.A.L. (Holding)

Mazaya Lamartien - S.A.L.

Mazaya Turkey Gayimenkul

Yatirimlarianonim Sirketi (note 9)

ownership

interest %

2014

ownership

interest %

2013

Country of

incorporation

Entity

Kuwait

U.A.E

Lebanon

Turkey

27

The consolidated financial statements include the financial statements of the Parent Company and the following subsidiaries,

where the Parent Company has direct investment :

Business combinations and goodwill

A business combination is the bringing together of separate entities or businesses into one reporting entity as a result one

entity, the acquirer, obtaining control of one or more other businesses. The acquisition method of accounting is used to

account for business combinations. The cost of an acquisition is measured as the aggregate of the consideration transferred,

measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. Under this method,

the Group recognises, separately from goodwill, identifiable assets acquired, liabilities assumed and any non-controlling

interests in the acquiree at the acquisition date. For each business combination, the Group elects to measure the non-

controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.

Acquisition costs incurred are expensed and included in other expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification

and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the

acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity

interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.

Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be

recognised in accordance with IAS 39 either in consolidated statement of income or as a change to other comprehensive

income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted

for within equity. In instances where the contingent consideration does not fall within the scope of IAS 39, it is measured

in accordance with the appropriate IFRS.

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Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount

recognised for non-controlling interest over the Group’s net identifiable assets acquired and liabilities assumed. If this

consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit

or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of

impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the

Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or

liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit (group of cash generating units) and part of the operations within

that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the

operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is

measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Financial assets and liabilities

Initial recognition and measurement

Financial assets and liabilities within the scope of IAS 39 are classified as “loans and receivables”, “available for sale

investments” and “financial liabilities other than at fair value through profit or loss”. The Group determines the appropriate

classification of each instrument at initial recognition.

Regular way purchases or sales of financial assets are recognised using trade date accounting. Financial liabilities are not

recognised unless the Group becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are measured initially at fair value (transaction price) plus, in case of a financial asset or

financial liability not classified as at fair value through profit or loss, transaction costs that are directly attributable to the

acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities

at fair value through profit or loss are expensed immediately.

Subsequent measurement

The subsequent measurement of financial assets and liabilities depends on their classification as described below:

Financial assets

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash in hand, bank

balances and short term deposits with an original maturity of three months or less, net of outstanding bank overdrafts and

restricted cash balances.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an

active market. After initial recognition loans and receivables are carried at amortised cost using the effective interest rate

method, less impairment losses, if any. Amortised cost is calculated by taking into account any discount or premium arising

on acquisition and fees or costs that are an integral part of the interest rate method.

The effective interest rate method amortisation is included in the consolidated statement of income. The losses arising from

impairment are recognised in the consolidated statement of income.

Bank deposit and accounts receivable are classified as “Loan and advances”.

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Annual Report 2014 - page 58-59

Warning.