AnnualReport

ANNUAL REPORT

2016

otes To The Consolidated Financial Statements

AL MAZAYA HOLDING K.S.C.P. AND ITS SUBSIDIARIES

As At 31 December 2016

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 Group 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.