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
Other reserves
Other reserve is used to record the effect of changes in ownership interest in subsidiaries, without loss of control.
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event and it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to
reflect the current best estimate. Where the Group expects some or all of a provision to be reimbursed, for example, under
an issuance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the consolidated statement of income net of any reimbursement.
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at fair value of the
consideration received or receivable. The following specific recognition criteria must also be met before revenue is
recognized:
Sale of property held for trading
A property is regarded as sold when the significant risks and rewards of ownership of real estate property have been
transferred to the buyer, which is normally on unconditional exchange of contracts. For conditional exchanges, sales are
recognised only when all the significant conditions are satisfied.
Sales of property under development
Where property is under development and agreement has been reached to sell such property when construction is
complete, the directors consider whether the contract comprises:
i)
A contract to construct a property or,
ii)
A contract for the sale of a completed property.
Where a contract is judged to be for the construction of a property, revenue is recognised using the percentage of
completion method as construction progresses. Where the contract is judged to be for the sale of a completed property,
revenue is recognised when the significant risks and rewards of ownership of the real estate have been transferred to the
buyer. If, however, the legal terms of the contract are such that the construction represents the continuous transfer of
work in progress to the purchaser, the percentage-of-completion method of revenue recognition is applied and revenue is
recognised as work progresses. Continuous transfer of work in progress is applied when:
• The buyer controls the work in progress, typically when the land on which the development takes place is owned by
the final customer
• and all significant risks and rewards of ownership of the work in progress in its present state are transferred to the
buyer as construction progresses, typically, when buyer cannot put the incomplete property back to the Group.
In such situations, the percentage of work completed is measured based on the costs incurred up until the end of the
reporting period as a proportion of total costs expected to be incurred.
Gain on sale of investments financial assets available for sale
Gain on sale of investment is measured by the difference between the sale proceeds and the carrying amount of investment
at the date of disposal, and is recognised at the time of the sale.
Rental income
Rental income receivable from operating leases except for contingent rental income which is recognised when it arises.
Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease
term on the same basis as the lease income.
Dividends income
Dividend income is recognized when the right to receive payment is established, which is generally when shareholders
approve the dividend.
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Management fees
Management fees earned for the provision of services over a period of time are accrued for over that period.
Interest income
Interest income is recognised as the interest accrues using the effective yield method.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
Group as a lessor
Leases where the Group retains substantially all the risks and benefits of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset
and recognised over the lease term on the same basis as rental income.
Group as a lessee
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating
leases. Operating lease payments are recognised as an expense in the consolidated statement of income on a straight-line
basis over the lease term, except for contingent rental payments which are expensed when they arise.
A property interest that is held by the Group under an operating lease may be classified and accounted for as an investment
property when the property otherwise meets the definition of an investment property, evaluated property by property, and
based on management’s intention. The initial cost of a property interest held under a lease and classified as an investment
property is determined at the lower of the fair value of the property and the present value of the minimum lease payments.
An equivalent amount is recognised as a liability.
Borrowing costs
Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised, if they are directly attributable to a
project, as part of projects under construction, over the period of the construction until the project concerned is completed
and becomes ready for its intended use, on the basis of actual borrowings and actual expenditure incurred on the project.
Capitalisation of borrowing costs ceases when substantially all activities necessary to prepare the project for its intended
use are complete. Borrowing costs capitalised is calculated using the Group’s weighted average cost of borrowings.
Contingencies
Contingent liabilities are not recognised in the consolidated financial statements, but are disclosed unless the possibility
of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognised in the consolidated financial statements, but are disclosed when an inflow of
economic benefit is probable.
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