Notes to The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C. (HOLDING) AND ITS SUBSIDIARIES
For the year ended 31 December 2011
40
12. INVESTMENT PROPERTIES
116,921,489
-
801,770
(32,538,709)
-
-
(11,239,341)
(88,537)
73,856,672
101,852,535
1,089,036
3,174,783
-
20,816,119
(519,366)
(8,935,807)
(555,811)
116,921,489
19,906,643
11,620,362
86,648,299
-
-
-
(16,028,799)
(293,970)
101,852,535
Balance at the beginning of the year
Additions
Transferred from properties held for trading (note 8)
Adjustments
Transferred from fixed assets
Reversal of revaluation surplus
Changes in fair value
Foreign currency translation adjustments
Balance at the end of the year
2011
KD
2010 (Restated)
KD
2009 (Restated)
KD
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 of KD 34.712
Million and the resultant amount of KD 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 of KD 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 of KD 8.3 Million was transferred to trade and other receivables and an equal amount
of allowance for doubtful debts has been recorded.
