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N
otes To The Consolidated Financial Statements
AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES
As At 31 December 2016
ANNUAL REPORT
2016
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 consolidated statement of income 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 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.
Also, 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, which are expensed when due.
Share based payment transactions
The Group operates an equity-based payment plan to its employees. Under the terms of the plan, shares
are granted to permanent employees. The cost of equity-settled transactions with employees is measured
by reference to the fair value at the date on which they are granted. The fair value of the shares is measured
based on market prices available taking into account the terms and conditions upon which those shares were
granted.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and / or service conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent
to which the vesting period has expired and the Group’s best estimate of the number of equity instruments
that will ultimately vest. The consolidated statement of income expense or credit for a period represents the
movement in cumulative expense recognised as at the beginning and end of that period.
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.
Other reserves
Other reserve is used to record the effect of changes in ownership interest in subsidiaries, without loss of control.
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