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AL MAZA YA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
12.
INVESTMENT PROPERTIES
2011
2010
(Restated)
KD
KD
Balance at the beginning of the year
116,921,489
1
01,852,535
Additions
1,089,036
Transferred from properties held for trading (note 8)
801,770
3,174,783
Adjustments
(32,538,709)
Transferred from fixed assets
20,816,119
Reversal of revaluation surplus
(519,366)
Changes in fair value
(11,239,341)
(8,935,807)
Foreign currency translation adjustments
(88,537)
(555,811)
Balance at the end of the year
73,856,672
116,921,489
MhZAVA
AIMTOUAO
2009
(Restated)
KD
19,906,643
11,620,362
86,648,299
(16,028,799)
(293,970)
101,852,535
The fair value of the Group's investment properties at 31 December 2011 has been arrived at on the basis of a
valuation carried out at that date by independent evaluators.
Investment properties amounting to KD 9,708,334 (2010: KD 9,647,000) are pledged against a term loan
disclosed in note 14.
Adjustments represent the following:
One of the Group's subsidiaries Al Mazaya Real Estate Company FZ LLC ("MREC FZ") on 4 December 2007
signed a sale and purchase agreement with Limitless Company LLC (Limitless) for purchasing 9 plots in Down
Town Jebel Ali, Dubai (DTJA) for KD 34.712 Million of which KD 19.6 Million was paid in cash and the
remaining consideration of KD 15.166 Million was deferred. MREC FZ has sought to terminate the agreement
and submitted a claim before the Dubai International Arbitration Tribunal claiming an amount of KD 15.8
Million plus interest besides claiming alternative reliefs in accordance with the prevailing UAE laws and the
Real Estate rules and regulations applicable in Dubai. Based on the opinion of the Group's internal legal
advisory, MREC FZ claim is supported based on the fact that Limitless has not done the necessary infrastructure
like electricity, water plumbing, drainage, approach roads etc that was required for delivery of the plots to FZ
under the agreement.
As on the date of issue of the consolidated financial statements the arbitration proceeding
is ongoing and the Group's management is of the view that based on the legal opinion, the Group's liability to
Limitless towards this deferred consideration is remote. Limitless has also submitted their plea to the arbitration
committee for forfeiture of the advance amount paid by the Group. Accordingly, the Group has offset the related
deferred consideration of KD 15.166 Million (see note 16) against the carrying value of the investment property
ofKD 34.712 Million and the resultant amount ofKD 19.546 Million has been recorded as fair value decline of
investment properties.
In a separate transaction, the Group had entered into a Sale Purchase Agreement (SPA) with an investor to
acquire Waterfront land (WF) in Dubai at a cost of KD 42 Million by paying KD 31.5 Million in advance. A
consideration of KD 10.5 Million was deferred and recorded as a payable. A cumulative provision reflecting a
fair value decline ofKD 24.7 Million had been recorded against the Waterfront assets in prior years.
Due to certain delays in the development of the project from the master developer, the Group has withdrawn its
right to the acquired properties and demanded the settlement of advance paid. Accordingly, the Group has offset
the outstanding deferred consideration payable to the investor of KD 9 Million (see note 16) against the carrying
value of the land amounting to KD 17.3 Million. The net amount ofKD 8.3 Million was transferred to trade and
other receivables and an equal amount of allowance for doubtful debts has been recorded.
DTJA
WF
KD
KD
34,711,975
17,373,130
(15,165,579)
(9,040,096)
(19,546,396)
Balance at the beginning of the year
Adjustment of deferred consideration (note 16)
Decline in fair value (note 7)
Adjustment by transfer to accounts receivable and
other debit balances
(8,333,034)
Balance at the end of the year
29
Total
KD
52,085,105
(24,205,675)
(19,546,396)
(8,333,034)