Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C. AND ITS SUBSIDIARIES
31 December 2012
If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by
valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for
each of the Group’s cash-generating units to which goodwill allocated. These budgets and forecast cash flow calculations
generally cover a period of two to five years.
Properties held for trading
Property acquired or being constructed for sale in the ordinary course of business, rather than to be held for rental or
capital operation, is held as properties held for trading and is measured at lower of cost and net realisable value.
Cost includes freehold and leasehold rights for land, amount paid to contractors for construction, borrowing costs,
planning and design costs, cost of site preparation, professional fees for legal services, property transfer taxes, construction
overheads and other related costs.
Net realizable value is the estimated selling price in the ordinary course of business, based on market prices at the
reporting date and discounted for the time value of money of material, less costs of completion and estimated cost of sale.
The cost of properties held for trading recognised in profit or loss on disposal is determined with reference to the specific
cost incurred on the property sold and an allocation of any non-specific costs based on the relative size of the property
sold.
Employees’ end of service benefits
The Group provides end of service benefits to its expatriate employees. Provision is made for amounts payable to employees
under the Kuwaiti Labour Law, employee contracts and applicable labour laws in the countries where the subsidiaries
operate. The expected costs of these benefits are accrued over the period of employment.
With respect to its national employees, the Parent Company makes contributions to Public Institution for Social Security
calculated as a percentage of the employees’ salaries. The Parent Company’s obligations are limited to these contributions,
which are expensed when due.
Treasury shares
Treasury shares consist of the Parent Company’s own issued shares that have been reacquired by the Group and not yet
reissued or cancelled. The treasury shares are accounted for using the cost method. Under this method, the weighted
average cost of the shares reacquired is charged in equity. When the treasury shares are reissued, gains are credited to a
separate account in equity (the “treasury shares reserve”), which is not distributable. Any realised losses are charged to the
same account to the extent of the credit balance in that account. Any excess losses are charged to retained earnings then to
the voluntary reserve and statutory reserve. Gains realised subsequently on the sale of treasury shares are first used to offset
any previously recorded losses in the order of reserves, retained earnings and the treasury shares reserve account. No cash
dividends are paid on these shares. The issue of bonus shares increases the number of treasury shares proportionately and
reduces the average cost per share without affecting the total cost of treasury shares.
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