70 / 95
ANNUAL REPORT
2015
Notes to The Consolidated Financial Statement
AL MAZAYA HOLDING COMPANY K.S.C.P. AND ITS SUBSIDIARIES
31 December 2015
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.
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.
In such situations, the percentage of work completed is measured based on the costs incurred up until the end of the reporting
period as a proportion of total costs expected to be incurred.
66