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His Highness Sheikh Khalifa bin Zayed Al Nahyan<br />
President of the UAE, Supreme Commander of the UAE<br />
Armed Forces and Ruler of Abu Dhabi
His Highness Sheikh Mohammed bin Rashid Al Maktoum<br />
Vice President and Prime Minister of the UAE<br />
and Ruler of Dubai
His Highness Sheikh Hamdan bin Mohammed<br />
Bin Rashid Al Maktoum,<br />
Crown Prince of Dubai
Table of<br />
Contents<br />
Deyaar at a Glance 02<br />
Chairman’s Message 04<br />
CEO’s Message 06<br />
BOARD OF DIRECTORS 08<br />
Principal Officers 10<br />
Business Review 11<br />
• Property Development<br />
• Property Management & Leasing Services<br />
• International Development<br />
Corporate Governance 12<br />
Corporate Social Responsibility 15<br />
Financial Highlights 18<br />
Independent Auditors’ Report 20<br />
• Consolidated Income Statement 22<br />
• Consolidated Statement OF COMPREHENSIVE INCOME 23<br />
• Consolidated Statement OF FINANCIAL POSITION 24<br />
• Consolidated Statement of Cash FlowS 25<br />
• Consolidated Statement of Changes in Equity 26<br />
• Notes to the Consolidated Financial Statements 28<br />
Principal Network 58<br />
deyaar annual report 2009 1
At Deyaar, we have remained<br />
committed to safeguarding<br />
our shareholders and<br />
customers amidst continuing<br />
challenges to the real estate<br />
sector. The company is<br />
therefore continuing on a<br />
path of sustained product<br />
and revenue<br />
diversification, in-line<br />
with its long-term<br />
growth strategy.<br />
Vision 2015<br />
Continuing its commitment to evolving<br />
market needs, Deyaar has developed its<br />
vision 2015, mandating a balanced growth<br />
strategy. As part of this five-year growth<br />
vision, the company will focus on property<br />
development and consolidating incomeproducing<br />
assets in 2010.<br />
In 2009, the key focus for the company was<br />
streamlining its project portfolio to adjust<br />
to new market conditions and strengthen<br />
its customer service offering. This strategy<br />
has been exceptionally well-received by the<br />
market and Deyaar now looks forward to<br />
further strengthening its capital position by<br />
focusing on payment plans and reviewing cost<br />
structures to align with market conditions.<br />
Property Development<br />
Property development remains Deyaar’s<br />
core business area. By combining<br />
engineering ingenuity, the latest<br />
technologies and a vision to create<br />
communities that provide natural<br />
living environments and top quality to<br />
its residents, the company has firmly<br />
established itself as one of the leading<br />
property developers in the UAE and abroad.<br />
With seven projects delivered in the past<br />
year, Deyaar successfully met its 2009<br />
operational strategy target. For 2010,<br />
the company is committed to deliver six<br />
projects across prime master-planned<br />
communities in Dubai. These include four<br />
residential properties and two commercial.<br />
The first project to be delivered in 2010<br />
will be Hamilton Residency, a premier<br />
residential tower located in Business Bay.<br />
This will be followed by Mayfair Tower,<br />
Mayfair Residency and Clayton Residency,<br />
all contemporary residential towers located<br />
in Business Bay. The year 2010<br />
will also see the handover of 51@Business<br />
Bay and The Metropolis, two state of<br />
the art commercial towers located at<br />
Business Bay.<br />
Deyaar<br />
at a glance<br />
Every Deyaar development passes<br />
stringent quality tests, from design level<br />
to the execution, ensuring only the best<br />
is delivered to Deyaar’s customers. The<br />
company’s property development standards<br />
continue to set benchmarks for our industry.<br />
Recurring-income assets &<br />
property management<br />
In-line with the company’s vision 2015,<br />
Deyaar is focusing on expanding its<br />
portfolio of income-producing assets.<br />
While the exact volume and range of this<br />
portfolio will continually be reviewed to<br />
optimise the company’s returns, Deyaar<br />
plans to significantly increase the incomeproducing<br />
segment of its development<br />
portfolio. In 2011, Central Park, a premier<br />
mixed-use project located in Dubai<br />
International Financial Centre, will be<br />
released in the market as a leasehold<br />
income-producing property. This will be<br />
followed by other major projects that will be<br />
delivered to the market as short-and longterm<br />
leasehold properties, with Deyaar<br />
acting as the developer and the landlord.<br />
The company also plans to significantly<br />
expand its property management portfolio as<br />
part of its vision 2015, doubling its current<br />
property management portfolio in five years.<br />
Deyaar, a principal player in property<br />
development and management in the UAE,<br />
currently manages approximately 12,500<br />
units in 850 properties across the emirates,<br />
making it the third-largest property<br />
management company in the UAE by<br />
number of units managed, with over 95 per<br />
cent occupancy.<br />
Deyaar’s property management division has<br />
seen a marked evolution since its inception,<br />
transforming from an institutional property<br />
manager focused on the management of<br />
Deyaar properties to a large, multi-client<br />
manager of premium and mid-range<br />
properties across the UAE. The company<br />
believes this is an opportune time to further<br />
build on its success and accumulated<br />
knowledge in this segment by targeting new<br />
landlords and proactively boosting confidence<br />
among real estate investors in the region.<br />
2 deyaar annual report 2009 3
The year 2009 was a significant one for Deyaar, in the<br />
wake of continuing strains in the world financial order.<br />
However, I am glad to note that it is also a year where<br />
Deyaar has shone through as a pioneer of innovation<br />
and customer service management within the regional<br />
real estate sector.<br />
The past twelve months were also significant in that it<br />
was a period where the company’s inherent strengths<br />
and the skills and commitment of its people, have<br />
stood out amidst peers. This is especially satisfying<br />
since it reflects the continuing dynamism and foresight<br />
that Deyaar has always looked to embody.<br />
The global economic crisis did offer us some hard<br />
lessons that, on one hand, created a rich learning<br />
opportunity, but on the other hand inspired us to revisit<br />
our business model and explore innovative solutions. In<br />
this regard, Deyaar’s 2009 business strategy was a clear<br />
indication of Deyaar’s strong fundamentals, resilient<br />
business model and long-term strategic vision. Indeed,<br />
the company showed itself to be ahead of the curve,<br />
emerging as one of the few real estate companies in the<br />
region to stay profitable for the full year.<br />
Through 2009, the company adopted and implemented<br />
a strategic shift in its development focus, sharpened its<br />
investment focus, reassessed its resource allocation<br />
and streamlined its product portfolio with the aim<br />
of sufficiently addressing imminent challenges and<br />
reinforcing Deyaar’s strong business fundamentals.<br />
goals initiated last year. Our ultimate goal remains, as<br />
always, delivering optimum value to our shareholders<br />
and customers.<br />
As we look ahead to 2010, our industry continues to<br />
face some challenges for the short-term. The global<br />
economic downturn has had considerable impact on<br />
liquidity levels and investor confidence worldwide<br />
and the financial markets remain under pressure.<br />
While Deyaar itself has plans in place to negotiate<br />
different market scenarios over the next twelve<br />
months, the industry at large will likely continue to be<br />
impacted over the next few months. We are however,<br />
confident that the UAE is well positioned to weather<br />
these conditions.<br />
We believe that the various initiatives and plans<br />
introduced by the Government to support the real<br />
estate sector will continue to have a positive impact<br />
on the speed of recovery within the sector, as we<br />
have already seen over the past few months. We are<br />
also pleased by the commitment of the real estate<br />
authorities in this regard.<br />
We remain confident of the mid to long-term outlook<br />
for the real estate sector, here in the region and<br />
worldwide. One of the biggest positives from the<br />
current downturn for us, as a Dubai-based developer,<br />
is that this period will serve as an opportunity for<br />
the local market to mature and a buoyant secondary<br />
market to develop.<br />
Chairman’s<br />
Message<br />
Deyaar will continue to pursue many of<br />
the strategic goals initiated last year, over<br />
the next 12 months. Our ultimate goal, as<br />
always remains, delivering optimum value<br />
to our shareholders and customers.<br />
While the sector itself continued to be hurt by the<br />
global financial crisis in 2009, both regionally and<br />
worldwide, Deyaar continued its resilient financial<br />
performance, with full-year net profits reaching AED<br />
30 million. The company also continued to be in an<br />
overall strong cash position with a debt-to-equity ratio<br />
of less than 17 percent. In light of the success of our<br />
2009 business strategy, Deyaar will, over the next<br />
12 months, continue to pursue many of the strategic<br />
Taking all this into account, we look forward to another<br />
exciting year of operations in 2010. On behalf of the<br />
entire Deyaar team, I would like to thank you for your<br />
continued faith in us, as we look towards a future that<br />
holds much promise and potential.<br />
Abdullah Al Hamli<br />
Chairman<br />
4 deyaar annual report 2009 5
CEO’s<br />
Deyaar has always<br />
exemplified an approach of<br />
innovation, customer care<br />
and long-term sustainable<br />
growth, and its operational<br />
performance in 2009 further<br />
validates the company’s<br />
commitment in this regard.<br />
Message<br />
In 2009, as uncertainty gave way to new<br />
benchmarks, Deyaar once again proved<br />
that its model is built on long-term<br />
fundamentals and real market insight.<br />
The company’s 2009 business strategy<br />
clearly reflected Deyaar’s dynamic<br />
approach, offering resilience in the wake of<br />
the global financial constraints and further<br />
strengthening its leadership position.<br />
The year 2009 emphasised the importance<br />
of responding quickly to changes in<br />
the market landscape. I am glad that<br />
Deyaar’s dynamism and quick adaptability<br />
to change in meeting customer<br />
expectations was one of the hallmarks of<br />
its success in the year.<br />
Among the biggest challenges for Deyaar<br />
at the start of the year was to safeguard the<br />
best interests of customers while securing its<br />
own cash flows. In line with this commitment,<br />
Deyaar unveiled its business strategy in<br />
February last year, which was subsequently<br />
rolled out across all business units.<br />
As part of this strategy, Deyaar’s project<br />
portfolio was divided into four categories,<br />
with each category comprising 25 per<br />
cent of the overall project portfolio.<br />
The projects were slotted into these<br />
categories on the basis of the progress of<br />
construction and overall project feasibility<br />
in light of new demand-supply dynamics.<br />
The company committed itself to delivering<br />
seven projects for the year, while the<br />
other projects were either scheduled for<br />
delivery over the next two years or grouped<br />
together for consolidation. In cases where<br />
the project was still at planning stage, the<br />
development plan was shelved temporarily.<br />
An important focus for the company’s<br />
strategy was to enable customers to<br />
transfer ownership to projects that will<br />
be completed on a fast-track basis.<br />
The company’s financial strategy was<br />
critical in achieving this.<br />
As part of its financial strategy, Deyaar<br />
structured new payment schedules and<br />
provided individual assistance to customers<br />
in consolidating their investments across<br />
projects and supporting them in accessing<br />
finance through lending institutions.<br />
In some instances, the company also<br />
revised the sale price of projects, passing<br />
on the benefits of the reduced cost of<br />
construction to customers.<br />
Owing to this prompt and timely action,<br />
the company not only met its handover<br />
commitment for the year, but also<br />
successfully safeguarded most of its<br />
customers from the distressing impact of<br />
the market correction. In the process, the<br />
company continued to secure its own cash<br />
flows, recording exceptional revenues in<br />
the context of existing market conditions,<br />
through the year 2009.<br />
At Deyaar, building up a healthy cash flow<br />
has been one of the cornerstones of our<br />
business model. To effectively use this<br />
financial strength for the benefit of its<br />
customers, investors and shareholders,<br />
the company has been stress-testing cash<br />
flows on a weekly basis and modeling<br />
different market conditions and scenarios<br />
within these tests. This also means keeping<br />
debt to very low levels and efficiently using<br />
balance sheet strength and cash reserves.<br />
Deyaar has always exemplified an approach<br />
of innovation, customer care and long-term<br />
sustainable growth, and its operational<br />
performance in 2009 further validates the<br />
company’s commitment in this regard.<br />
Globally, all countries and institutions<br />
today share a common determination in<br />
achieving a swift recovery from the ongoing<br />
continuing effects of the financial crisis.<br />
In this regard, I am glad to note that Deyaar<br />
continues to be an industry leader, serving<br />
as an example to other institutions.<br />
As a new market landscape emerges,<br />
innovation and diversification – both on<br />
the product and income front – will pave<br />
the way forward for new opportunities.<br />
I am confident that Deyaar will have<br />
an important role in shaping this new<br />
landscape. Our priority for 2010 will be<br />
to further build on our strengths and<br />
consolidate our capital position to support<br />
our customers, ultimately maximising value<br />
for our shareholders.<br />
As we continue to evolve, we remain fully<br />
prepared to integrate into and be part of the<br />
new and emerging realities that will shape<br />
our future.<br />
Markus Giebel<br />
Chief Executive Officer<br />
6 deyaar annual report 2009 7
Abdullah Ali Al Hamli<br />
Chairman<br />
Deyaar is led by its Chairman, Abdullah Ali<br />
Al Hamli, who has overall responsibility<br />
for the company’s management across<br />
all its business units. A widely respected<br />
professional, Mr. Al Hamli currently serves<br />
as Chief Executive Officer of Dubai Islamic<br />
Bank (DIB) where his tenure spans over a<br />
period of 10 years.<br />
Prior to joining DIB, Mr. Al Hamli held a<br />
number of senior positions at leading public<br />
and private-sector organisations in Dubai,<br />
including more than a decade as Director<br />
of Information Systems at Dubai Ports<br />
Authority and Jebel Ali Free Zone.<br />
Mr. Al Hamli holds a BSC in Economics<br />
and Maths from Al Ain University and has<br />
undergone extensive training in operating<br />
systems, database management, as well<br />
as design and development of commercial<br />
business applications within leading<br />
educational institutions worldwide.<br />
Mr. Al Hamli was a member of Deyaar’s<br />
Board of Directors prior to his appointment<br />
as Chairman in July 2009.<br />
Mr. Abdullah<br />
Ibrahim Lootah<br />
Vice Chairman<br />
Mr. Fahad<br />
bin Fahad<br />
Member<br />
Mr. Abdullah<br />
Ali Al Hamli<br />
Chairman<br />
Mr. Mohammed<br />
Al Nahdi<br />
Member<br />
Mr. Mohammed<br />
Saeed Al Sharif<br />
Member<br />
Mr. Khalifa Suhail<br />
Juma Al Zaffin<br />
Member<br />
Board of<br />
Directors<br />
Mr. Saeed<br />
Rashid Al Yateem<br />
Member<br />
Mr. Buti Abdullah<br />
Al Jumairi<br />
Member<br />
Mr. Adnan<br />
Chalwan<br />
Member<br />
8 deyaar annual report 2009 9
Krishnamurthy. S<br />
Group CFO<br />
Richard Imran<br />
Ding<br />
Vice President -<br />
Legal & General<br />
Counsel<br />
Amit Jauhri<br />
Vice President –<br />
Marketing<br />
Markus Giebel<br />
Chief Executive<br />
Officer<br />
Saeed Mohammed<br />
Al Qatami<br />
Vice President<br />
– Business<br />
Development<br />
Nasser El Din Aly<br />
Amer<br />
Vice President –<br />
Sales<br />
Dimitre Michev<br />
Vice President –<br />
Strategic Planning<br />
and MIS<br />
Lina Anani<br />
Vice President<br />
– Corporate<br />
Communications<br />
Wassef Serhan<br />
Vice President<br />
– International<br />
Business<br />
Development<br />
Spencer Brod<br />
Vice President<br />
– Asset<br />
Management &<br />
Contracts<br />
Property Development<br />
In 2009, Deyaar focused its attention on adjusting<br />
its product portfolio and aligning resources to<br />
accommodate changing market dynamics. This<br />
was also done to prepare the company for the<br />
long-term trends developing within the regional real<br />
estate sector. As part of this proactive approach, the<br />
company revisited its business strategy at the start<br />
of the year.<br />
As per the new business strategy, Deyaar’s portfolio<br />
was divided into four groups, each constituting<br />
25 per cent of its total portfolio. These projects<br />
were categorised as: unannounced projects,<br />
comprising projects that were planned but were<br />
yet to be launched or sold; announced projects,<br />
comprising projects that were launched and in<br />
various stages of construction; projects that were<br />
complete but not handed over due to infrastructure<br />
delays; and projects that were experiencing a<br />
consolidation process.<br />
The company held back the entire 25 per cent of the<br />
portfolio that was unannounced and not released for<br />
sale. Twenty-five per cent of the portfolio that had<br />
been previously launched and sold continued as per<br />
schedule. Projects that were complete at the time<br />
but had not been handed over due to infrastructure<br />
delays, such as lack of electricity and water supply<br />
provision by master developers, constituted 25 per<br />
cent of the portfolio.<br />
Projects that were yet to be built or were in<br />
initial stages of construction were considered for<br />
consolidation, wherein customers owning units in<br />
similar projects in comparable areas were offered<br />
the option to transfer their ownership to projects<br />
that would be completed on a fast-track basis,<br />
with the rest of the projects being phased out.<br />
Such projects constituted the remaining 25 per cent<br />
of the company’s portfolio.<br />
Reinforcing its commitment to customers through<br />
this strategy, the company delivered seven projects<br />
in the UAE, comprising nearly 4 million square feet<br />
of units. This area encompasses over 1,300 units<br />
at leading master-planned communities within<br />
the country.<br />
As a result of this strategy, the company forged ahead<br />
relative to its regional industry peers, demonstrating<br />
consistent profitability and especially strong<br />
operations within the property development segment.<br />
Property management and<br />
leasing services<br />
Further consolidating its position as the property<br />
manager of choice in the UAE and in line with the<br />
company’s strategy to diversify its revenue base,<br />
Deyaar announced its plans to double the size of its<br />
property management portfolio over the next five years.<br />
Deyaar, which is already a significant player in<br />
property development and management in the UAE,<br />
currently manages approximately 12,500 units in<br />
850 properties across the emirates, with over 95 per<br />
cent occupancy.<br />
In 2009, Deyaar further streamlined its<br />
long-term strategy of income diversification,<br />
and the company’s planned expansion in property<br />
management is in line with this overall strategy.<br />
The company now has a proven track record of<br />
not only efficiently managing its portfolio, as<br />
demonstrated in the high occupancy rate, but also<br />
providing property owners with expert insight and<br />
guidance to optimise the return on their assets.<br />
Going forward, this will continue to be one of the key<br />
business areas for Deyaar.<br />
International Development<br />
Continuing its focus on expanding its footprint<br />
outside its home market, providing overall<br />
diversification of income, the company handed over<br />
Saifi Village II, its premier luxury project in Lebanon<br />
in July of 2009.<br />
Saifi Village II comprises 72 state-of-the-art, upscale<br />
apartments and penthouses strategically located within<br />
the landmark Beirut City Center master development.<br />
Designed by leading Beirut-based architecture firm,<br />
Nabil Gholam, Saifi Village II overlooks the iconic<br />
Martyr’s Square and Debbas Piazza.<br />
The company is actively looking for new opportunities<br />
to expand its presence within the country.<br />
Principal<br />
Officers<br />
Business<br />
Review<br />
10 deyaar annual report 2009 11
We continue to make<br />
consistent strides in<br />
achieving the highest level of<br />
sophistication in this regard,<br />
combining fair governance<br />
with shareholder interest.<br />
In line with Deyaar’s commitment to<br />
international best-practice reporting<br />
standards and management policies, the<br />
company has been introducing a range<br />
of initiatives to progressively enhance its<br />
corporate governance structures. While we<br />
recognise that Middle East is undergoing<br />
a period of transition in developing a<br />
truly world-class corporate governance<br />
framework, Deyaar itself remains dedicated<br />
to an elevated standard when it comes to<br />
transparency, accountability and business<br />
conduct. We continue to make consistent<br />
strides in achieving the highest level of<br />
sophistication in this regard, combining fair<br />
governance with shareholder interest.<br />
At the beginning of 2010, Deyaar aligned<br />
its corporate governance framework with<br />
the new ‘Ministerial Resolution No. (518)<br />
of 2009 concerning Governance Rules<br />
and Standards for Institutional Discipline’<br />
issued by Ministry of Economy and SCA<br />
Authority and materially implemented the<br />
key requirements ahead of the April 30,<br />
2010 implementation date.<br />
This demonstrates the company’s<br />
commitment to continually reviewing<br />
corporate governance to ensure the<br />
ongoing transparency of our practices and<br />
the delivery of high standards and quality<br />
information to stakeholders.<br />
Our achievements are validated by some<br />
of the corporate governance measures<br />
introduced by the company in 2009.<br />
Corporate<br />
Governance<br />
12 deyaar annual report 2009 13
Corporate<br />
Governance<br />
(continued)<br />
Board of Directors:<br />
In 2009, Deyaar adopted some key<br />
guidelines with regards to the composition<br />
of the company’s Board of Directors.<br />
Under this guideline, all board members<br />
of Deyaar are required to be non-executive<br />
directors, with more than 1/3rd of the Board<br />
comprising independent directors. Further,<br />
the position of the Chairman and Chief<br />
Executive Officer are required to be held by<br />
separate individuals.<br />
In 2009, the company also mandated a<br />
new quorum, whereby all board meetings<br />
must be held in presence of majority of the<br />
directors. Directors are also not granted<br />
shareholder proxies to represent them in<br />
the company’s Annual General Assembly<br />
Meeting. Additionally, all members of the<br />
board are required to disclose to Deyaar all<br />
their positions in other public and private<br />
companies, so as to preclude any conflict of<br />
interest or potentially unfair gains resulting<br />
from their directorial position at Deyaar.<br />
No remuneration was provided to the<br />
company’s Board of Directors during 2009.<br />
Audit Committee<br />
Deyaar also installed a new audit<br />
committee, comprising non-executive<br />
directors and majority of independent<br />
directors, including an accounting and<br />
financial expert. This committee is<br />
entrusted with supervising the company’s<br />
auditing procedure and maintaining<br />
the highest level of compliance with<br />
laws and regulations that govern our<br />
business. The company also appointed<br />
an independent external auditing firm,<br />
with no current or former partners of the<br />
external auditor permitted to be on the<br />
audit committee.<br />
Internal Controls<br />
The company also activated an internal<br />
control system in 2009. The system of<br />
Internal Controls is designed to provide<br />
reasonable assurance that the company’s<br />
objectives are achieved, assets are<br />
safeguarded, transactions are authorised<br />
and properly recorded and that material<br />
errors and irregularities are either<br />
prevented or would be detected in a timely<br />
manner. Additionally, establishing a sound<br />
system of Internal Controls ,is meant to<br />
safeguard the shareholders interests.<br />
2010 corporate governance programme<br />
The company has embarked on and<br />
already achieved a significant portion of<br />
its corporate governance targets for 2010,<br />
within the first quarter of the year.<br />
These include:<br />
• Production of Deyaar’s first Corporate<br />
Governance Manual that outlines the best<br />
practices appropriate for a growing brand<br />
such as ours<br />
• Appointment of the company’s new audit<br />
committee comprising three directors<br />
who serve on the company’s board<br />
• Appointment of a nomination and<br />
remuneration committee, comprising<br />
three directors, which has been approved<br />
by the board<br />
• Provision for confidential reporting<br />
through creation of a hotline and<br />
email id; employees can use these to<br />
report abnormalities<br />
As we have highlighted in the past, Deyaar<br />
remains committed to leading corporate<br />
governance initiatives within the regional<br />
real estate sector. We believe that the<br />
regional real estate sector is at an important<br />
crossroads and our collective actions will<br />
define how we differentiate ourselves from<br />
other emerging markets. At Deyaar, we<br />
look at corporate governance as one of<br />
our key differentiating factors and one that<br />
we will continue to enhance and develop<br />
concomitant with our founding ethos of<br />
accuracy, transparency and integrity.<br />
Extending the company’s NOOR<br />
scholarship program launched<br />
in 2007, Deyaar continued to<br />
provide financial assistance to<br />
young national students from<br />
top-ranking colleges within<br />
the UAE.<br />
At Deyaar, we view Corporate Social<br />
Responsibility (CSR) as a constant and<br />
ongoing process of integrating our business<br />
objectives with larger community goals and<br />
translating our entrepreneurial success<br />
into enrichment for the economy that<br />
we operate in and the communities that<br />
we serve.<br />
Our CSR programme is therefore driven<br />
by a holistic approach that mandates<br />
direct and sustained engagement with the<br />
community. We pursue this programme in<br />
partnership with educational, economic and<br />
social welfare institutions having proven<br />
credentials and a strong track record of<br />
accomplishments within the region.<br />
Corporate Social<br />
In 2009, Deyaar further sharpened its focus<br />
in the area of CSR, providing leadership<br />
tools and continuing to direct resources<br />
towards relevant social causes in our home<br />
market – the UAE.<br />
Extending the company’s NOOR<br />
scholarship program launched in 2007,<br />
Deyaar continued to provide financial<br />
assistance to young national students from<br />
top-ranking colleges within the UAE. In<br />
2009, a total of 40 students were offered<br />
scholarship bursaries to pursue a Higher<br />
Diploma or Bachelor program. Institutions<br />
whose students were offered these<br />
bursaries include prominent educational<br />
establishments such as Dubai Men’s<br />
College and Dubai Women’s College.<br />
Responsibility<br />
14 deyaar annual report 2009 15
Deyaar also continued its commitment to<br />
special needs as a relevant CSR goal by<br />
extending its association with the Dubai<br />
Autism Centre (DAC) as key sponsor of their<br />
2009 campaign. DAC is a government of<br />
Dubai initiative to promote and encourage<br />
a better understanding of Autism and to<br />
provide specialised services for people with<br />
Autism and those who care for them.<br />
In 2009, Deyaar sponsored Art Dubai,<br />
a leading exhibition that included an<br />
extensive program of events and welcomed<br />
over 70 galleries from 30 countries.<br />
The company also endorsed the Real Estate<br />
Regulatory Agency’s ARELLO Conference in<br />
which experts discussed numerous topics<br />
related to the real estate industry.<br />
Corporate Social<br />
Responsibility<br />
16 deyaar annual report 2009 17
Financial<br />
Highlights<br />
As per IFRIC 15<br />
aeD million<br />
2009 2008 Growth<br />
P&L<br />
Gross Revenue 1,835 1,383 33%<br />
Net Profit 30 655 -95%<br />
Balance Sheet<br />
Total Assets 11,357 12,309 -8%<br />
Total Liabilites 4,605 5,575 -17%<br />
Total Equity (Net Assets) 6,752 6,734 0%<br />
Total Debt 1,130 791 43%<br />
Bank Balances 684 641 7%<br />
Issued Share Capital 5,778 5,778 0%<br />
balance sheet 2008 / 2009<br />
14,000<br />
12,000<br />
10,000<br />
8,000<br />
6,000<br />
11,357<br />
7,282<br />
12,309<br />
Non Current<br />
Assets<br />
11,357<br />
7,257 3,475<br />
1,130<br />
AED MILLION<br />
12,309<br />
4,784<br />
791<br />
Total Liabilities<br />
less debt<br />
Total debt<br />
Profitability Ratios<br />
ROE 0.45% 9.72%<br />
ROA 0.27% 5.32%<br />
Net Profit Ratio 1.64% 47.36%<br />
EPS in AED 0.0052 0.1133<br />
Balance Sheet Ratios<br />
Debt Equity Ratio 16.74% 11.75%<br />
Cash to Total Assets 6.02% 5.21%<br />
Net Asset Value Per Share 1.17 1.17<br />
4,000<br />
2,000<br />
0<br />
4,075 5,052<br />
2009 2008 2009 2008<br />
Total<br />
assets<br />
Current<br />
Assets<br />
6,752 6,734<br />
Equity<br />
Total liabilities<br />
& equity<br />
net income<br />
q1 q2 q3 q4 year<br />
As per IFRIC 15<br />
Net Income 2009 (21) 61 9 (19) 30<br />
Net Income 2008 162 145 142 206 655<br />
NET INCOME 2008 / 2009<br />
aeD million<br />
350<br />
Quarterly Net Income<br />
Cumulative Quarterly Net Income<br />
700<br />
300 600<br />
250 500<br />
200 400<br />
162<br />
150 300<br />
100 200<br />
50 100<br />
(21)<br />
145<br />
61<br />
142<br />
9<br />
(50)<br />
2009<br />
(100)<br />
Q1 Q2 Q3 Q4<br />
206<br />
(19)<br />
- -<br />
2008<br />
162<br />
(21)<br />
307<br />
40<br />
449<br />
49<br />
655<br />
30<br />
Q1 Q2 Q3 Q4<br />
Business line 2008 / 2009<br />
2009 2008<br />
aeD MILLION<br />
2009 2008<br />
BD International 14% 27%<br />
BD UAE 59% 0%<br />
BD-Omega 17% 22%<br />
Property Sales 0% 38%<br />
Property Management 4% 6%<br />
Other Income 5% 7%<br />
TOTAL Gross Revenue 100% 100%<br />
17%<br />
4%<br />
59%<br />
5%<br />
14%<br />
6% 7%<br />
27%<br />
38% 22%<br />
18 deyaar annual report 2009 19
Independent Auditors’<br />
Report<br />
To the shareholders of Deyaar Development PJSC<br />
Report on the Financial Statements<br />
We have audited the accompanying financial<br />
statements of Deyaar Development PJSC and<br />
Subsidiaries (the “Group”), which comprise<br />
the consolidated statement of financial<br />
position as at 31 December 2009, and the<br />
consolidated statements of income and<br />
comprehensive income, consolidated cash<br />
flow statement and consolidated statement<br />
of changes in equity for the year then ended,<br />
and a summary of significant accounting<br />
policies and other explanatory notes.<br />
Directors’ Responsibility for the<br />
Financial Statements<br />
The Directors are responsible for the<br />
preparation and fair presentation of these<br />
consolidated financial statements in<br />
accordance with International Financial<br />
Reporting Standards and the applicable<br />
provisions of the articles of association of<br />
Deyaar Development PJSC and the UAE<br />
Commercial Companies Law of 1984 (as<br />
amended). This responsibility includes:<br />
designing, implementing and maintaining<br />
internal control relevant to the preparation<br />
and fair presentation of consolidated<br />
financial statements that are free from<br />
material misstatement, whether due to<br />
fraud or error; selecting and applying<br />
appropriate accounting policies; and making<br />
accounting estimates that are reasonable in<br />
the circumstances.<br />
Auditors’ Responsibility<br />
Our responsibility is to express an opinion<br />
on these financial statements based on our<br />
audit. We conducted our audit in accordance<br />
with International Standards on Auditing.<br />
Those standards require that we comply<br />
with ethical requirements and plan and<br />
perform the audit to obtain reasonable<br />
assurance whether the consolidated<br />
financial statements are free from<br />
material misstatement.<br />
An audit involves performing procedures<br />
to obtain audit evidence about the amounts<br />
and disclosures in the consolidated financial<br />
statements. The procedures selected<br />
depend on the auditors’ judgement,<br />
including the assessment of the risks of<br />
material misstatement of the consolidated<br />
financial statements, whether due to fraud<br />
or error. In making those risk assessments,<br />
the auditor considers internal control relevant<br />
to the entity’s preparation and fair presentation<br />
of the consolidated financial statements in<br />
order to design audit procedures that are<br />
appropriate in the circumstances, but not<br />
for the purpose of expressing an opinion<br />
on the effectiveness of the entity’s internal<br />
controls. An audit also includes evaluating<br />
the appropriateness of accounting policies<br />
used and the reasonableness of accounting<br />
estimates made by the Directors, as well as<br />
evaluating the overall presentation of the<br />
consolidated financial statements.<br />
We believe that the audit evidence we have<br />
obtained is sufficient and appropriate to<br />
provide a basis for our audit opinion.<br />
Emphasis of matters:<br />
Without qualifying our audit opinion,<br />
we draw attention to the following:<br />
1- Note 4.2 to the consolidated financial<br />
statements sets out major sources of<br />
estimation uncertainty and refers to<br />
assumptions made by management<br />
in determining or testing the carrying<br />
amounts of certain assets. It is<br />
reasonably possible, on the basis of<br />
existing knowledge, that outcomes within<br />
the next financial year that are different<br />
from the assumptions could require<br />
material adjustments to the carrying<br />
amounts of the assets affected.<br />
2- Note 16 to the consolidated financial<br />
statements. The Group signed a<br />
Memorandum of Understanding (MOU)<br />
in December 2008 with a third party<br />
(the seller) to enter into negotiations for<br />
the execution of a sale and purchase<br />
agreement (the agreement) for acquiring<br />
the seller’s interest in a building (the<br />
interest). According to the MOU, the terms<br />
of MOU will automatically terminate after<br />
a certain period or on the execution of<br />
the agreement. In accordance with the<br />
terms of the MOU, the Group paid AED<br />
72.1 million as a refundable deposit.<br />
The Group also made additional payments<br />
of AED 113.7 million in this respect<br />
during the current year. A party that had<br />
initially financed the seller’s interest<br />
has shown an outstanding murabaha<br />
balance of AED 186.3 million as receivable<br />
from the Group. Management believe<br />
that the amounts paid by the Group are<br />
recoverable from the seller and any<br />
murabaha balance is also payable by<br />
the seller since a sale and purchase<br />
agreement was never signed and<br />
accordingly the terms of MOU have<br />
automatically terminated due to the<br />
passage of time. The ultimate outcome<br />
of the matter cannot be determined at<br />
this stage and accordingly no provision<br />
that may result has been made in the<br />
financial statements.<br />
Report on Other Legal and<br />
Regulatory Requirements<br />
We also confirm that, in our opinion, the<br />
consolidated financial statements include<br />
in all material respects, the applicable<br />
requirements of the UAE Commercial<br />
Companies Law of 1984 (as amended)<br />
and the articles of association of Deyaar<br />
Development PJSC; proper books of account<br />
have been kept by Deyaar Development PJSC<br />
and the contents of the report of the Board<br />
of Directors relating to these consolidated<br />
financial statements are consistent with<br />
the books of account. We have obtained<br />
all the information and explanations which<br />
we required for the purpose of our audit<br />
and, to the best of our knowledge and<br />
belief, no violations of the UAE Commercial<br />
Companies Law of 1984 (as amended) or<br />
of the articles of association of Deyaar<br />
Development PJSC have occurred during the<br />
year which would have had a material effect<br />
on the business of Deyaar Development<br />
PJSC or on its financial position.<br />
Opinion<br />
In our opinion, the financial statements<br />
present fairly, in all material respects,<br />
the financial position of the Group as<br />
of 31 December 2009, and its financial<br />
performance and its cash flows for the year<br />
then ended in accordance with International<br />
Financial Reporting Standards.<br />
Signed by<br />
Farrukh Seer (Registration No.491)<br />
For Ernst & Young<br />
Dubai, United Arab Emirates<br />
17 February 2010<br />
20 deyaar annual report 2009 21
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated<br />
Income Statement<br />
Year ended 31 December 2009<br />
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated Statement of<br />
Comprehensive<br />
Income<br />
Year ended 31 December 2009<br />
Year ended Year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
nOtes AED ‘000 aeD ‘000 aeD ‘000<br />
(Restated)<br />
(Restated)<br />
Revenues 9 1,835,082 1,382,617 1,869,116<br />
Cost of revenues 9 (1,637,493) (873,027) (1,159,995)<br />
GROSS PROFIT 197,589 509,590 709,121<br />
Other operating income 10 122,913 156,565 222,869<br />
Selling, general and administrative expenses 11 (287,106) (268,026) (384,836)<br />
Impairment of investment in associates (10,500) (50,000) (50,000)<br />
Finance costs (33,683) (15,409) (18,297)<br />
Income from deposits 17,559 28,768 63,764<br />
Net gain on fair valuation of investment properties 24 27,202 304,242 304,242<br />
Share of results of associates 21 6,552 (2,001) (2,001)<br />
Profit before tax 40,526 663,729 844,862<br />
Income tax (15,621) - -<br />
Profit for the year/ period before<br />
Pre-incorporation profit 24,905 663,729 844,862<br />
Pre-incorporation profit, net - - 107,395<br />
Year ended Year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
nOtes AED ‘000 aeD ‘000 aeD ‘000<br />
(Restated)<br />
(Restated)<br />
Profit for the year/period 24,905 663,729 952,257<br />
Exchange differences on<br />
translation of foreign operations (7,069) (874) (874)<br />
Other comprehensive<br />
(loss) income for the year/period (7,069) (874) (874)<br />
Total comprehensive income<br />
for the year/period 17,836 662,855 951,383<br />
Attributable to:<br />
Equity holders of the parent 23,084 653,871 936,871<br />
Non-controlling interests (5,248) 8,984 14,512<br />
17,836 662,855 951,383<br />
Profit for the year/period 24,905 663,729 952,257<br />
Attributable to:<br />
Equity holders of the parent 30,153 654,745 937,745<br />
Non-controlling interests (5,248) 8,984 14,512<br />
24,905 663,729 952,257<br />
Earnings per share attributable to<br />
the equity holders of the parent:<br />
- basic and diluted earnings per share 13 0.0052 0.1133 0.1623<br />
22 The attached notes 1 to 38 form part of these consolidated financial statements.<br />
The attached notes 1 to 38 form part of these consolidated financial statements.<br />
deyaar annual report 2009 23
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated Statement of<br />
Financial Position<br />
At 31 December 2009<br />
2009 2008<br />
nOtes aeD ‘000 aeD ‘000<br />
(Restated)<br />
ASSETS<br />
Bank balances and cash 14 683,867 641,194<br />
Accounts and notes receivable 15 577,081 1,062,520<br />
Prepayments and other assets 16 556,392 727,557<br />
Properties held for sale 17 542,017 -<br />
Properties under construction 18 2,673,692 3,775,254<br />
Land held for future developments 19 1,611,334 1,587,493<br />
Advances for purchase of land 20 1,222,299 1,126,094<br />
Investments in associates 21 586,870 656,018<br />
Property, plant and equipment 23 34,723 35,298<br />
Investment properties 24 1,899,943 1,729,030<br />
Goodwill 6 968,964 968,964<br />
TOTAL ASSETS 11,357,182 12,309,422<br />
LIABILITIES AND EQUITY LIABILITIES<br />
Accounts payable and accruals 25 1,362,797 1,923,969<br />
Advances from customers 1,944,854 2,712,519<br />
Islamic finance obligations 26 955,242 574,921<br />
Other borrowings 27 174,924 216,504<br />
Retentions payable 153,944 138,318<br />
Employees’ end-of-service-benefits 28 13,742 9,348<br />
TOTAL LIABILITIES 4,605,503 5,575,579<br />
EQUITY<br />
Equity attributable to equity holders of the parent company<br />
Share capital 29 5,778,000 5,778,000<br />
Statutory reserve 30 155,278 152,263<br />
Exchange translation reserve (7,943) (874)<br />
Retained earnings 812,620 785,482<br />
6,737,955 6,714,871<br />
Non-controlling interests 31 13,724 18,972<br />
TOTAL EQUITY 6,751,679 6,733,843<br />
TOTAL LIABILITIES AND EQUITY 11,357,182 12,309,422<br />
Chairman<br />
chief Executive Officer<br />
17 February 2010 17 February 2010<br />
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated Statement of<br />
Cash Flows<br />
Year ended 31 December 2009<br />
10 July 2007 to<br />
31 december<br />
2009 2008<br />
Notes aeD ‘000 aeD ‘000<br />
(Restated)<br />
OPERATING ACTIVITIES<br />
Profit before tax 40,526 844,862<br />
Adjustments for:<br />
Depreciation 23 11,793 14,019<br />
Provision for employees’ end-of-service benefits 28 5,765 7,329<br />
Income from deposits (17,559) (63,764)<br />
Finance costs 33,683 18,297<br />
Share of results of associates (6,552) 2,001<br />
Gain on disposal of a subsidiary - (4,242)<br />
Net gain on fair valuation of investment properties (27,202) (304,242)<br />
Loss / (gain) on disposal of property, plant and equipment 25 (121)<br />
40,479 514,139<br />
WORKING CAPITAL CHANGES:<br />
Accounts and notes receivable 485,439 (732,093)<br />
Prepayments and other assets 171,165 (307,742)<br />
Properties held for sale (542,017) -<br />
Properties under construction, net 1,101,562 (3,654,106)<br />
Land held for future developments (23,841) 367,888<br />
Advances for purchase of land (96,205) (1,033,553)<br />
Retentions payable 15,626 98,069<br />
Accounts payable and accruals (576,793) 427,179<br />
Advances from customers (767,665) 2,539,871<br />
Cash used in operations (192,250) (1,780,348)<br />
Employees’ end-of-service benefits paid 28 (1,371) (1,085)<br />
Net cash used in operating activities (193,621) (1,781,433)<br />
INVESTING ACTIVITIES<br />
Purchase of property, plant and equipment 23 (11,977) (33,368)<br />
Proceeds from disposal of property, plant and equipment 734 984<br />
Investment properties, net (143,711) -<br />
Investments in associates 75,700 (658,019)<br />
Deposits maturing after three months (84,897) (936)<br />
Income from deposits 17,559 63,764<br />
Net cash outflow on transfer/acquisition of subsidiaries - (225,353)<br />
Net cash used in investing activities (146,592) (852,928)<br />
FINANCING ACTIVITIES<br />
Increase in capital - 3,178,000<br />
Pre-incorporation profits,net - 107,395<br />
Islamic finance obligations received 496,249 664,179<br />
Islamic finance obligations paid (115,928) (1,347,594)<br />
Net movement in other borrowings (41,580) 214,427<br />
Finance costs paid (33,683) (18,297)<br />
Net cash from financing activities 305,058 2,798,110<br />
(Decrease) / Increase in cash and cash equivalents (35,155) 163,749<br />
Net foreign exchange difference (7,069) (874)<br />
Cash and cash equivalents at 1 January 620,259 457,384<br />
Cash and cash equivalents at 31 December 14 578,035 620,259<br />
24 The attached notes 1 to 38 form part of these consolidated financial statements.<br />
The attached notes 1 to 38 form part of these consolidated financial statements.<br />
deyaar annual report 2009 25
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated Statement of<br />
Changes in Equity<br />
Year ended 31 December 2009<br />
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Consolidated Statement of<br />
Changes in Equity(cntd.)<br />
Period Year ended 31 December 2008 - restated<br />
attributable to equity holders of the parent<br />
exchange N nONshare<br />
Statutory translation RetaineD cONTROLLING<br />
capital reserve reserve earnings Total interest Total<br />
aeD ’000 AED ’000 AED ’000 AED ’000 AED ’000 AED ’000 AED ’000<br />
At 1 January 2009<br />
as previously reported 5,778,000 152,263 (874) 1,353,711 7,283,100 18,972 7,302,072<br />
Effect of change in accounting<br />
policy (note 38) - - - (568,229) (568,229) - (568,229)<br />
At 1 January 2009 as restated 5,778,000 152,263 (874) 785,482 6,714,871 18,972 6,733,843<br />
Profit for the year - - - 30,153 30,153 (5,248) 24,905<br />
Other comprehensive loss - - (7,069) - (7,069) - (7,069)<br />
Total comprehensive<br />
income for the year - - (7,069) 30,153 23,084 (5,248) 17,836<br />
Transfer to statutory reserve - 3,015 - (3,015) - - -<br />
At 31 December 2009 5,778,000 155,278 (7,943) 812,620 6,737,955 13,724 6,751,679<br />
attributable to equity holders of the parent<br />
exchange N nONshare<br />
Statutory translation RetaineD cONTROLLING<br />
capital reserve reserve earnings Total interest Total<br />
aeD ’000 AED ’000 AED ’000 AED ’000 AED ’000 AED ’000 AED ’000<br />
Issue of shares 5,778,000 - - - 5,778,000 - 5,778,000<br />
Minority interest acquired - - - - - 4,460 4,460<br />
Profit for the period 10 July 2007<br />
to 31 December 2008<br />
(as previously stated) - - - 1,505,974 1,505,974 14,512 1,520,486<br />
Effect of change in accounting<br />
policy (note 38) - - - (568,229) (568,229) - (568,229)<br />
Profit for the period 10 July 2007<br />
to 31 December 2008 as restated - - - 937,745 937,745 14,512 952,257<br />
Other comprehensive loss - - (874) - (874) - (874)<br />
Total comprehensive income<br />
for the period as restated - - (874) 937,745 936,871 14,512 951,383<br />
Transfer to statutory reserve - 152,263 - (152,263) - - -<br />
At 31 December 2008<br />
as restated 5,778,000 152,263 (874) 785,482 6,714,871 18,972 6,733,843<br />
26 The attached notes 1 to 38 form part of these consolidated financial statements.<br />
The attached notes 1 to 38 form part of these consolidated financial statements.<br />
deyaar annual report 2009 27
DEYAAR DEVELOPMENT PJSC & SUBSIDIARIES<br />
Notes to the Consolidated<br />
Financial Statements<br />
At 31 December 2009<br />
1<br />
Activities (cntd.)<br />
Country of Percentage<br />
Joint Ventures Principal activity incorporation OF equity<br />
2009 2008<br />
Arady Development L.L.C. Property development u.A.E. 50% 50%<br />
Dubai International<br />
Development. Co. LLC * Property development u.A.E. 50% 50%<br />
Alarko Deyaar Gayrimenkul Property development turkey 50% 50%<br />
1<br />
Activities<br />
During the period ended 31 December 2008, the Company disposed of its 40% interest in Saudi Deyaar Real Estate<br />
Development Company Ltd, a joint venture in Saudi Arabia (note 8).<br />
Deyaar Development PJSC (the “Company”) was formally<br />
incorporated and registered as a Public Joint Stock<br />
Company in the Emirate of Dubai, UAE on 10 July 2007.<br />
The principal activities of the Company are property<br />
investment and development, brokering, managing<br />
and renting of buildings and provision of related<br />
support services.<br />
The Company was given approval by the UAE Ministry<br />
of Economy and Emirates Securities and Commodities<br />
Authority on 6 April 2007 to publish the Initial Public<br />
Offering of 55% of the shares of the Company, pursuant<br />
to fulfilment of all legal requirements and necessary<br />
procedures in accordance with the laws of the UAE.<br />
The founders of the Company contributed 45% of the<br />
Company’s equity in kind. Share allotments were<br />
completed by 30 May 2007.<br />
The address of the Company’s registered office<br />
is P. O. Box 30833, Dubai, United Arab Emirates.<br />
In accordance with the Articles of Association<br />
of the Company, the first financial period of<br />
the Company commenced on 10 July 2007,<br />
the date of its incorporation, and ended on<br />
31 December 2008. Therefore, comparatives<br />
comprise the consolidated financial statements<br />
of the company for the period from 10 July<br />
2007 to 31 December 2008. The management<br />
have also presented the consolidated results<br />
of the Group’s operations for the year ended 31<br />
December 2008 for the convenience of readers.<br />
The accompanying consolidated financial<br />
statements comprise the activities of the<br />
Company and the following subsidiaries and<br />
joint ventures (collectively referred to as<br />
the “Group”):<br />
cOuntry of<br />
Percentage<br />
Subsidiaries Principal activity incorporation OF equity<br />
2009 2008<br />
Omega Engineering L.L.C. Mechanical, electrical and plumbing u.A.E. 55% 55%<br />
Nationwide Realtors L.L.C. * Brokerage and other related services u.A.E. 100% 100%<br />
Beirut Bay Sal property investment and development Lebanon 100% 100%<br />
Deyaar For Development Sa representative Office of Deyaar Lebanon 100% 100%<br />
Deyaar (UK) Ltd representative Office of Deyaar uK 100% 100%<br />
Deyaar Cayman Ltd * Investment holding company Cayman Islands 100% 100%<br />
Deyaar West Asia Cooperatief U.A. Investment holding company Netherlands 100% 100%<br />
Deyaar Development Corporation Property investment and development uSA 100% 100%<br />
Deyaar Mauritius Ltd * property investment and development Mauritius 100% 100%<br />
Deyaar City Mauritius Ltd * Property investment and development Mauritius 100% 100%<br />
Deyaar Malaysia Sdn Bhd * Property investment and development Malaysia 100% 100%<br />
Flamingo Creek L.L.C. property investment and development u.A.E. 100% 100%<br />
Deyaar Hospitality LLC * Property investment and development u.A.E 100% -<br />
Deyaar International LLC * Property investment and development u.A.E 100% -<br />
Deyaar Ventures LLC * property investment and development u.A.E 100% -<br />
Deyaar Property Management LLC * Property investment and development u.A.E 100% -<br />
Deyaar Limited * property investment and development u.A.E 100% -<br />
Deyaar Al Emarat Holding WLL* Property investment and development Bahrain 100% -<br />
During the period ended 31 December 2008, the Company disposed of its 100% interest in Dubai Insaat Gayrimenkul Sanayi Ve Ticaret Limited<br />
Sirketi, DIB Tower SAL and Town Tower SAL (note 8).<br />
* These subsidiaries did not carry out any activities during the year.<br />
* This joint venture did not carry out any operations during the year.<br />
2<br />
These consolidated financial statements have<br />
been prepared in accordance with International<br />
Financial Reporting Standards and applicable<br />
requirements of United Arab Emirates laws.<br />
The consolidated financial statements have been<br />
presented in United Arab Emirates Dirhams<br />
(AED), which is the Company’s functional and<br />
presentation currency, and all values are rounded<br />
to the nearest thousands except where otherwise<br />
indicated. Each entity in the Group determines its<br />
own functional currency and items included in the<br />
financial statements of each entity are measured<br />
using that functional currency.<br />
The consolidated financial statements are<br />
prepared under the historical cost convention<br />
modified to include the measurement at fair<br />
value of investment properties.<br />
3<br />
Basis of Preparation<br />
Basis of Consolidation<br />
subsidiary companies<br />
Basis of consolidation from 1 January 2009<br />
Subsidiaries are fully consolidated from the date<br />
of acquisition, being the date on which the Group<br />
obtains control, and continue to be consolidated<br />
until the date that such control ceases.<br />
The financial statements of the subsidiaries are<br />
prepared for the same reporting period as the<br />
parent company, using consistent accounting<br />
policies. All intra-group balances, income and<br />
expenses, unrealised gains and losses and<br />
dividends resulting from intra-group transactions<br />
are eliminated in full.<br />
A change in the ownership interest of a<br />
subsidiary, without a change of control, is<br />
accounted for as an equity transaction.<br />
Losses are attributed to the non-controlling<br />
interest even if that results in a deficit balance.<br />
If the Group loses control over a subsidiary, it:<br />
• Derecognises the assets (including goodwill)<br />
and liabilities of the subsidiary<br />
• Derecognises the carrying amount of any<br />
non-controlling interest<br />
• Derecognises the cumulative translation<br />
differences, recorded in equity<br />
• Recognises the fair value of the<br />
consideration received<br />
• Recognises the fair value of any<br />
investment retained<br />
• Recognises any surplus or deficit in profit<br />
or loss<br />
• Reclassifies the parent’s share of<br />
components previously recognised in other<br />
comprehensive income to profit or loss.<br />
Basis of consolidation prior to 1 January 2009<br />
In comparison to the above mentioned<br />
requirements which were applied on a prospective<br />
basis, the following differences applied:<br />
Non-controlling interests represented the<br />
portion of profit or loss and net assets that<br />
were not held by the Group and were presented<br />
separately in the consolidated income statement<br />
and within equity in the consolidated statement<br />
of financial position, separately from the parent<br />
shareholders’ equity. Acquisitions of noncontrolling<br />
interests were accounted for using<br />
the parent entity extension method, whereby,<br />
the difference between the consideration and<br />
the book value of the share of the net assets<br />
acquired were recognised in goodwill.<br />
Losses incurred by the Group were attributed<br />
to the non-controlling interest until the balance<br />
was reduced to nil. Any further excess losses<br />
were attributable to the parent, unless the<br />
non-controlling interest had a binding obligation<br />
to cover these.<br />
Upon loss of control, the Group accounted for the<br />
investment retained at its proportionate share of<br />
net asset value at the date control was lost.<br />
28 deyaar annual report 2009 29
4 Significant Accounting Judgements, Estimates<br />
and Assumptions<br />
4.1 Judgements<br />
The preparation of the Group’s consolidated<br />
financial statements requires management to<br />
make judgments, estimates and assumptions<br />
that affect the reported amounts of revenues,<br />
expenses, assets and liabilities, and the<br />
disclosure of contingent liabilities, at the end<br />
of the reporting period. However, uncertainty<br />
about these assumptions and estimates could<br />
result in outcomes that require a material<br />
adjustment to the carrying amount of the asset<br />
or liability affected in future periods.<br />
In the process of applying the Group’s<br />
accounting policies, management has made<br />
the following judgements, apart from those<br />
involving estimations, which have the most<br />
significant impact on the amounts recognised in<br />
the consolidated financial statements.<br />
Investment properties<br />
The Group has elected to adopt the fair value<br />
model for investment properties. Accordingly,<br />
both investment properties and investment<br />
properties under construction are carried at<br />
fair value with the gain or losses arising from<br />
changes in fair values of investment properties<br />
included in the consolidated income statement.<br />
Classification of properties<br />
Management decides at the time of acquisition<br />
of the property whether it should be classified<br />
as held for sale, held for development or<br />
investment property. The Group classifies<br />
properties as land held for future development<br />
when the intention is to develop the properties<br />
for the purpose of selling them to third parties<br />
and as properties under construction when<br />
such development activities have commenced.<br />
The Group also classifies properties as<br />
investment properties when the intention is<br />
to hold them for rental, capital appreciation or<br />
for undetermined use. The Group changes the<br />
classification when the intention changes.<br />
4.2 Estimates and Assumptions<br />
The key assumptions concerning the future and<br />
other key sources of estimation uncertainty at<br />
the reporting date, that have a significant risk of<br />
causing a material adjustment to the carrying<br />
amounts of assets and liabilities within the next<br />
financial year, are discussed below:<br />
Revaluation of investment properties<br />
The Group carries its investment properties<br />
at fair value, with changes in fair value being<br />
recognised in the income statement. The Group<br />
engaged independent valuation specialists to<br />
determine the fair values of investment properties<br />
as at 31 December 2009. For investment<br />
properties under construction the management<br />
used a valuation technique based on a discounted<br />
cash flow model as there is a lack of comparable<br />
market data because of the nature of the property.<br />
The determined fair value of the investment<br />
properties is most sensitive to the estimated yield<br />
as well as the long-term vacancy rate. The key<br />
assumptions used to determine the fair value of<br />
the investment properties are further explained in<br />
note 24.<br />
Impairment of investments in associates<br />
Investments in associates are tested for<br />
impairment annually (as at 31 December) and<br />
when circumstances indicate that the carrying<br />
value of the investments in associates may be<br />
impaired. Impairment is determined by assessing<br />
the recoverable amount of the associate. Where<br />
the recoverable amount of the associate is less<br />
than the carrying amount, an impairment loss<br />
is recognised. The key assumptions used to<br />
determine the recoverable amount for associates<br />
are further explained in note 21.<br />
Net realisable value of inventories and advances<br />
against purchase of land<br />
The carrying amounts of inventories (properties<br />
held for sale, properties under construction and<br />
land held for future development) and advances for<br />
purchase of land are compared with net realisable<br />
value to determine that cost does not exceed the<br />
net realisable value. Key assumptions used for<br />
determining net realisable value are set out in<br />
notes 17, 18, 19 and 20. The Group also estimates<br />
the cost to complete properties under construction<br />
in order to determine the cost attributable to<br />
properties being developed. These estimates<br />
include the cost of providing infrastructure and<br />
construction activities, potential claims by main<br />
contractors and subcontractors and the cost<br />
of meeting other contractual obligations to the<br />
customers.<br />
Impairment of goodwill<br />
Goodwill is tested for impairment annually (as at 31<br />
December) and when circumstances indicate that<br />
the carrying value may be impaired. Impairment is<br />
determined by assessing the recoverable amount<br />
of the cash generating unit to which goodwill<br />
relates. Where the recoverable amount of the cash<br />
generating unit or group of cash generating units<br />
is less than the carrying amount, an impairment<br />
loss is recognised. The key assumptions used to<br />
determine the recoverable amount for the cash<br />
generating unit to which goodwill is allocated,<br />
including a sensitivity analysis, are further<br />
explained in note 7.<br />
5<br />
Significant Accounting<br />
Policies<br />
Changes in accounting policies and<br />
disclosures<br />
The accounting policies adopted are consistent<br />
with those of the previous financial year except<br />
as follows:<br />
The Group has adopted the following new and<br />
amended IFRS and IFRIC interpretations as of<br />
1 January 2009:<br />
IFRS 2 Share-based Payment: Vesting Conditions<br />
and Cancellations effective 1 January 2009<br />
IFRS 2 Share-based Payment: Group Cashsettled<br />
Share-based Payment Transactions<br />
effective 1 January 2010 (early adopted)<br />
IFRS 3 Business Combinations (Revised) and<br />
IAS 27 Consolidated and Separate Financial<br />
Statements (Amended) effective 1 July 2009<br />
(early adopted) including consequential<br />
amendments to IFRS 7, IAS 21, IAS 28, IAS 31<br />
and IAS 39<br />
IFRS 7 Financial Instruments:<br />
Disclosures effective 1 January 2009<br />
IFRS 8 Operating Segments effective<br />
1 January 2009<br />
IAS 1 Presentation of Financial Statements<br />
effective 1 January 2009<br />
IAS 23 Borrowing Costs (Revised) effective<br />
1 January 2009<br />
IAS 32 Financial Instruments: Presentation<br />
and IAS 1 Puttable Financial Instruments and<br />
Obligations Arising on Liquidation effective<br />
1 January 2009<br />
IAS 39 Financial Instruments: Recognition and<br />
Measurement - Eligible Hedged Items effective<br />
1 July 2009 (early adopted)<br />
IFRIC 9 Remeasurement of Embedded<br />
Derivatives and IAS 39 Financial Instruments:<br />
Recognition and Measurement effective for<br />
periods ending on or after 30 June 2009<br />
IFRIC 13 Customer Loyalty Programmes<br />
effective 1 July 2008<br />
IFRIC 15 Agreements for the Construction of<br />
Real Estate effective 1 January 2009<br />
IFRIC 16 Hedges of a Net Investment in a Foreign<br />
Operation effective 1 October 2008<br />
IFRIC 18 Transfers of Assets from Customers<br />
effective 1 July 2009 (early adopted)<br />
Improvements to IFRSs (May 2008)<br />
Improvements to IFRSs (April 2009,<br />
early adopted)<br />
When the adoption of the standard or<br />
interpretation is deemed to have an impact on<br />
the financial statements or performance of the<br />
Group, its impact is described below:<br />
IFRIC 15 Agreements for the<br />
Construction of Real Estate<br />
IFRIC 15 Agreements for the Construction of<br />
Real Estate was issued in July 2008 and became<br />
effective for annual financial years beginning on<br />
or after 1 January 2009. This interpretation is to<br />
be applied retrospectively. It clarifies when and<br />
how revenue and related expenses from the sale<br />
of a real estate unit should be recognised if an<br />
agreement between a developer and a buyer is<br />
reached before the construction of the real estate<br />
is completed. The interpretation also states that<br />
a developer shall recognise revenue by reference<br />
to the stage of completion using the percentage of<br />
completion method only if the developer transfers<br />
to the buyer control and the significant risks and<br />
rewards of ownership of the work in progress<br />
in its current state as construction progresses.<br />
The impact of this change is set out in note 38.<br />
IFRS 7 Financial Instruments:<br />
Disclosures<br />
The amended standard requires additional<br />
disclosures about fair value measurement<br />
and liquidity risk. Fair value measurements<br />
related to items recorded at fair value are<br />
to be disclosed by source of inputs using a<br />
three level fair value hierarchy, by class, for<br />
all financial instruments recognised at fair<br />
value. In addition, a reconciliation between the<br />
beginning and ending balance for level 3 fair<br />
value measurements is now required, as well<br />
as significant transfers between levels in the fair<br />
value hierarchy. The amendments also clarify<br />
the requirements for liquidity risk disclosures<br />
with respect to derivative transactions and assets<br />
used for liquidity management. The liquidity<br />
risk disclosures, presented in note 35, are not<br />
significantly impacted by the amendments.<br />
IFRS 8 Operating Segments<br />
IFRS 8 replaced IAS 14 Segment Reporting<br />
upon its effective date. The Group concluded<br />
that the operating segments determined in<br />
accordance with IFRS 8 are the same as the<br />
business segments previously identified under<br />
IAS 14. IFRS 8 disclosures are shown in note 33,<br />
including the related comparative information.<br />
30 deyaar annual report 2009 31
5<br />
Significant Accounting Policies (cntd.)<br />
IAS 1 Presentation of Financial<br />
Statements<br />
The revised standard separates owner and<br />
non-owner changes in equity. The statement<br />
of changes in equity includes only details of<br />
transactions with owners, with non-owner<br />
changes in equity presented in a reconciliation<br />
of each component of equity. In addition,<br />
the standard introduces the statement of<br />
comprehensive income: it presents all items of<br />
recognised income and expense, either in one<br />
single statement, or in two linked statements.<br />
The Group has elected to present two statements.<br />
Standards issued but not yet effective<br />
up to the date of issuance of the<br />
Group’s financial statements are<br />
listed below:<br />
IFRIC 17 Distributions of Non-cash<br />
Assets to Owners<br />
This interpretation is effective for annual periods<br />
beginning on or after 1 July 2009 with early<br />
application permitted. It provides guidance on how<br />
to account for non-cash distributions to owners.<br />
The interpretation clarifies when to recognise<br />
a liability, how to measure it and the associated<br />
assets, and when to derecognise the asset and<br />
liability. The Group does not expect IFRIC 17 to<br />
have an impact on the consolidated financial<br />
statements as the Group has not made non-cash<br />
distributions to shareholders in the past.<br />
Business combinations and goodwill<br />
Business combinations prior to 31<br />
December 2008<br />
Business combinations were accounted for<br />
using the purchase method. Transaction costs<br />
directly attributable to the acquisition formed<br />
part of the acquisition costs. The non-controlling<br />
interest (formerly known as minority interest)<br />
was measured at the proportionate share of the<br />
acquiree’s identifiable net assets.<br />
Business combinations achieved in stages<br />
were accounted for as separate steps.<br />
Any additional acquired share of interest did not<br />
affect previously recognised goodwill.<br />
When the Group acquired a business, embedded<br />
derivatives separated from the host contract by the<br />
acquiree were not reassessed on acquisition unless<br />
the business combination resulted in a change in<br />
the terms of the contract that significantly modified<br />
the cash flows that otherwise would have been<br />
required under the contract.<br />
Contingent consideration was recognised if, and<br />
only if, the Group had a present obligation, the<br />
economic outflow was more likely than not and a<br />
reliable estimate was determinable. Subsequent<br />
adjustments to the contingent consideration<br />
affected goodwill.<br />
Business combinations from<br />
1 January 2009<br />
No business combination has taken place since<br />
1 January 2009. The following policy will now<br />
apply for any business combination:<br />
Business combinations are accounted for<br />
using the acquisition method. The cost of an<br />
acquisition is measured as the aggregate of<br />
the consideration transferred, measured at<br />
acquisition date fair value and the amount of any<br />
non-controlling interest in the acquiree. For each<br />
business combination, the acquirer measures<br />
the non-controlling interest in the acquiree either<br />
at fair value or at the proportionate share of the<br />
acquiree’s identifiable net assets. Acquisition<br />
costs incurred are expensed.<br />
When the Group acquires a business,<br />
it assesses the financial assets and liabilities<br />
assumed for appropriate classification and<br />
designation in accordance with the contractual<br />
terms, economic circumstances and<br />
pertinent conditions as at the acquisition date.<br />
This includes the separation of embedded<br />
derivatives in host contracts by the acquiree.<br />
If the business combination is achieved in stages,<br />
the acquisition date fair value of the acquirer’s<br />
previously held equity interest in the acquiree<br />
is remeasured to fair value as at the acquisition<br />
date through profit and loss.<br />
Any contingent consideration to be transferred<br />
by the acquirer will be recognised at fair value<br />
at the acquisition date. Subsequent changes to<br />
the fair value of the contingent consideration<br />
which is deemed to be an asset or liability,<br />
will be recognised in accordance with IAS 39<br />
either in profit or loss or as change to other<br />
comprehensive income. If the contingent<br />
consideration is classified as equity, it shall not be<br />
remeasured until it is finally settled within equity.<br />
Goodwill is initially measured at cost being the<br />
excess of the consideration transferred over<br />
the Group’s net identifiable assets acquired<br />
and liabilities assumed. If this consideration is<br />
lower than the fair value of the net assets of the<br />
subsidiary acquired, the difference is recognised<br />
in profit or loss.<br />
After initial recognition, goodwill is measured at<br />
cost less any accumulated impairment losses.<br />
For the purpose of impairment testing, goodwill<br />
acquired in a business combination is, from<br />
the acquisition date, allocated to each of the<br />
Group’s cash generating units that are expected<br />
to benefit from the combination, irrespective of<br />
whether other assets or liabilities of the acquiree<br />
are assigned to those units.<br />
Where goodwill forms part of a cash-generating<br />
unit and part of the operation within that unit<br />
is disposed of, the goodwill associated with the<br />
operation disposed of is included in the carrying<br />
amount of the operation when determining<br />
the gain or loss on disposal of the operation.<br />
Goodwill disposed of in this circumstance is<br />
measured based on the relative values of the<br />
operation disposed of and the portion of the<br />
cash-generating unit retained.<br />
Investments in associates<br />
The Group’s investments in its associates<br />
are accounted for using the equity method.<br />
An associate is an entity in which the Group has<br />
significant influence.<br />
Under the equity method, the investment in the<br />
associate is carried in the statement of financial<br />
position at cost, plus post acquisition changes in<br />
the Group’s share of net assets of the associate.<br />
Goodwill relating to the associate is included<br />
in the carrying amount of the investment and<br />
is neither amortised nor individually tested<br />
for impairment.<br />
The income statement reflects the share of<br />
the results of operations of the associate.<br />
Where there has been a change recognised<br />
directly in the equity of the associate, the<br />
Group recognises its share of any changes and<br />
discloses this, when applicable, in the statement<br />
of changes in equity. Unrealised gains and losses<br />
resulting from transactions between the Group<br />
and the associate are eliminated to the extent of<br />
the interest in the associate.<br />
The share of profit or loss of associates is shown<br />
on the face of the income statement. This is the<br />
profit or loss attributable to equity holders of the<br />
associate and therefore is profit or loss after tax<br />
and non-controlling interests in the subsidiaries<br />
of the associates.<br />
The financial statements of the associate are<br />
prepared for the same reporting period as the<br />
parent company. Where necessary, adjustments<br />
are made to bring the accounting policies in line<br />
with those of the Group.<br />
After application of the equity method, the<br />
Group determines whether it is necessary to<br />
recognise an additional impairment loss on the<br />
Group’s investment in its associates. The Group<br />
determines at each reporting date whether there<br />
is any objective evidence that the investment in<br />
the associate is impaired. If this is the case the<br />
Group calculates the amount of impairment as<br />
the difference between the recoverable amount<br />
of the associate and its carrying value and<br />
recognises the amount in the income statement.<br />
Upon loss of significant influence over the<br />
associate, the Group measures and recognises<br />
any retaining investment at its fair value.<br />
Any difference between the carrying amount of<br />
the associate upon loss of significant influence<br />
and the fair value of the retaining investment and<br />
proceeds from disposal are recognised in profit<br />
or loss.<br />
Interest in joint ventures<br />
The Group has interest in joint ventures which<br />
are jointly controlled entities, whereby the<br />
venturers have a contractual arrangement that<br />
establishes joint control over the economic<br />
activities of the entity. The Group recognises<br />
its interest in the joint venture using the<br />
proportionate consolidation method. The Group<br />
combines its proportionate share of each of<br />
the assets, liabilities, income and expenses<br />
of the joint venture with similar items, line by<br />
line, in its consolidated financial statements.<br />
The financial statements of the joint venture are<br />
prepared for the same reporting period as the<br />
parent company. Adjustments are made where<br />
necessary to bring the accounting policies in line<br />
with those of the Group.<br />
Adjustments are made in the Group’s<br />
consolidated financial statements to eliminate<br />
the Group’s share of intra-group balances,<br />
income and expenses and unrealised gains and<br />
losses on transactions between the Group and its<br />
jointly controlled entity. Losses on transactions<br />
are recognised immediately if the loss provides<br />
evidence of a reduction in the net realisable<br />
value of current assets or an impairment loss.<br />
The joint venture is proportionately consolidated<br />
until the date on which the Group ceases to have<br />
joint control over the joint venture.<br />
Upon loss of joint control and provided the<br />
former joint control entity does not become a<br />
subsidiary or associate, the Group measures<br />
and recognises its remaining investment at its<br />
fair value. Any difference between the carrying<br />
amount of the former joint-controlled entity<br />
upon loss of joint control and the fair value<br />
of the remaining investment and proceeds<br />
from disposal are recognised in profit or loss.<br />
When the remaining investment constitutes<br />
significant influence, it is accounted for as<br />
investment in an associate.<br />
32 deyaar annual report 2009 33
5<br />
Significant Accounting Policies (cntd.)<br />
Revenue recognition<br />
Provided it is probable that the economic benefits<br />
will flow to the Group and the revenue and<br />
costs, if applicable, can be measured reliably,<br />
revenue is recognised in the consolidated income<br />
statement as follows:<br />
Sales of properties<br />
The Group adopted IFRIC 15 “Agreement for<br />
the Construction of Real Estate” effective for<br />
accounting periods beginning on or after<br />
1 January 2009. As per IFRIC 15 an agreement<br />
for the construction of real estate in which<br />
buyers have only limited ability to influence<br />
the design of the real estate, is an agreement<br />
for the sale of goods within the scope of IAS 18<br />
“Revenue Recognition” and accordingly revenue<br />
shall be recognised only when significant risks<br />
and rewards of ownership of real estate in its<br />
entirety have been transferred to the buyer.<br />
The Group was recognising revenues on the<br />
basis of percentage of completion method up to<br />
31 December 2008. After the adoption of IFRIC<br />
15 revenue is recognised in accordance with the<br />
requirements of IAS 18 as mentioned below.<br />
Consequently, the comparative figures for<br />
the period ended 31 December 2007 and the<br />
year ended 31 December 2008 have been<br />
restated and the impact of the adoption of the<br />
new standard on the consolidated financial<br />
statements is disclosed in note 38.<br />
The requirements of IAS 18 “<br />
Revenue Recognition” are as follows:<br />
• the Group has transferred to the buyer the<br />
significant risks and rewards of ownership of<br />
the units;<br />
• the Group retains neither continuing<br />
managerial involvement to the degree usually<br />
associated with ownership nor effective control<br />
over the units sold;<br />
• the amount of revenue can be<br />
measured reliably;<br />
• it is probable that the economic benefits<br />
associated with the transaction will flow to the<br />
Group; and<br />
• the costs incurred or to be incurred in respect<br />
of the transaction can be measured reliably.<br />
In accordance with paragraph 1 of the Appendix<br />
of IAS 18, the Group also recognises revenues for<br />
units where handover is delayed at the buyer’s<br />
specific request, provided:<br />
• it is probable that delivery will be made;<br />
• the property units are on hand, identified and<br />
ready for delivery to the buyer at the time the<br />
sale is recognised;<br />
• the buyer specifically acknowledges the<br />
deferred delivery instructions; and<br />
• the usual payment terms apply.<br />
When revenue is not recognised if one or more<br />
of the above conditions are not met, the cash<br />
advances received from property buyers are<br />
recorded under liabilities as advances from<br />
customers.<br />
Contract revenues<br />
Contract revenue represents the total value of<br />
work performed during the period including the<br />
estimated sales value of contracts in progress<br />
assessed on a percentage of completion method,<br />
measured by reference to total cost incurred to<br />
date to estimated total cost for each contract.<br />
No profit is taken until a contract has progressed<br />
to a point where its outcome can be estimated<br />
reliably. Where the outcome of a contract cannot<br />
be estimated reliably, revenue is recognised only<br />
to the extent of contract costs incurred that it is<br />
probable will be recoverable and contract costs<br />
are recognised as an expense in the period in<br />
which they are incurred. Provision is made for<br />
all losses expected to arise on completion of<br />
the contracts entered into at the statement of<br />
financial position date, whether or not work has<br />
commenced on these contracts.<br />
Fee and commission income<br />
Fee and commission income is recognised<br />
when earned.<br />
Income from deposits<br />
Income from deposits is recognised on an<br />
accrual basis.<br />
Services<br />
Revenue from services is recognised in the<br />
period in which the services are rendered.<br />
Cost of sale of property<br />
Cost of sale of property includes the cost of<br />
land and development costs. Development<br />
costs include the cost of infrastructure and<br />
construction. The cost of sale in respect of<br />
residential and commercial units is based on<br />
the estimated proportion of the development<br />
cost incurred to date to the estimated total<br />
development costs for each project.<br />
Borrowing costs<br />
Borrowing costs directly attributable to the<br />
acquisition, construction or production of<br />
qualifying assets, which are assets that<br />
necessarily take a substantial period of time<br />
to get ready for their intended use or sale, are<br />
added to the cost of those assets, until such time<br />
as the assets are substantially ready for their<br />
intended use or sale.<br />
All other borrowing costs are recognised in profit<br />
or loss in the period in which they are incurred.<br />
Income tax<br />
Taxation is provided in accordance with the<br />
relevant fiscal regulations of the countries in<br />
which the Group operates.<br />
Current tax is the expected tax payable on the<br />
taxable income for the year, using tax rates<br />
enacted or substantially enacted at the statement<br />
of financial position date, and any adjustments to<br />
the tax payable in respect of prior years.<br />
Income tax relating to items recognised in<br />
other comprehensive income is recognised in<br />
other comprehensive income and not in the<br />
income statement.<br />
Deferred income tax is provided, using the<br />
liability method, on all temporary differences at<br />
the statement of financial position date between<br />
the tax bases of assets and liabilities and their<br />
carrying amounts.<br />
Deferred income tax assets and liabilities are<br />
measured at the tax rates that are expected to<br />
apply to the period when the asset is realised<br />
or the liability is settled, based on laws that<br />
have been enacted at the statement of financial<br />
position date.<br />
Deferred income tax assets are recognised<br />
for all deductible temporary differences and<br />
carry-forward of unused tax assets and unused<br />
tax losses to the extent that it is probable that<br />
taxable profit will be available against which the<br />
deductible temporary differences and the carryforward<br />
of unused tax assets and unused tax<br />
losses can be utilised.<br />
The carrying amount of deferred income tax<br />
assets is reviewed at each statement of financial<br />
position date and reduced to the extent that<br />
it is no longer probable that sufficient taxable<br />
profit will be available to allow all or part of<br />
the deferred income tax asset to be utilised.<br />
Unrecognised deferred tax assets are reassessed<br />
at each reporting date and are recognised to the<br />
extent that it has become probable that future<br />
taxable profits will allow the deferred tax asset to<br />
be recovered.<br />
Properties held for sale<br />
Properties acquired or constructed with the<br />
intention of sale are classified as properties held<br />
for sale upon acquisition or when construction<br />
is completed. Properties held for sale are stated<br />
at the lower of cost and net realisable value.<br />
Net realisable value represents the estimated<br />
selling price less costs to be incurred in selling<br />
the property.<br />
Cost includes the cost of land, infrastructure,<br />
construction and other related expenditure<br />
such as professional fees and engineering costs<br />
attributable to the property, which are capitalised<br />
as and when activities that are necessary to get<br />
the property ready for the intended use are in<br />
progress. Completion is defined as the earlier of<br />
issuance of a certificate of practical completion,<br />
or when management considers the property<br />
to be completed. The cost of land and cost<br />
incurred in the course of development relating to<br />
properties sold during the year, for which revenue<br />
is recognised, are transferred to cost of sales.<br />
Properties under construction<br />
Properties in the course of construction for sale<br />
are classified as properties under construction.<br />
Such properties are stated at the lower of<br />
cost and realisable value. Cost includes the<br />
cost of land, infrastructure, construction and<br />
other related expenditure such as professional<br />
fees and engineering costs attributable to the<br />
property, which are capitalised as and when<br />
activities that are necessary to get the property<br />
ready for the intended use are in progress.<br />
Land held for future development<br />
Land held for future development is stated<br />
at the lower of cost and net realisable value.<br />
Net realisable value is the estimated selling<br />
price in the ordinary course of business less the<br />
estimated costs of completion and the estimated<br />
costs necessary to make the sale.<br />
Advances for purchase of land<br />
Advances for purchase of land are carried at the<br />
lower of cost and expected economic benefits to<br />
be received.<br />
Property, plant and equipment<br />
Property, plant and equipment are stated at<br />
cost less accumulated depreciation and any<br />
impairment in value. Depreciation is calculated<br />
on a straight-line basis over the estimated useful<br />
lives of the assets as follows:<br />
Leasehold improvements<br />
Furniture and fixtures<br />
Plant and equipment<br />
Motor vehicles<br />
Buildings<br />
4 years<br />
4 to 5 years<br />
4 years<br />
4 years<br />
20 years<br />
Expenditure incurred to replace a component<br />
of an item of property, plant and equipment<br />
that is accounted for separately is capitalised<br />
and the carrying amount of the component that<br />
is replaced is written off. Other subsequent<br />
expenditure is capitalised only when it increases<br />
future economic benefits of the related item<br />
of property, plant and equipment. All other<br />
expenditure is recognised in the income<br />
statement as the expense is incurred.<br />
34 deyaar annual report 2009 35
5<br />
Significant Accounting Policies (cntd.)<br />
Property, plant and equipment are reviewed<br />
for impairment whenever events or changes in<br />
circumstances indicate that the carrying amount<br />
of property, plant and equipment may not be<br />
recoverable. Whenever the carrying amount<br />
of property, plant and equipment exceeds<br />
their recoverable amount, an impairment<br />
loss is recognised in the income statement.<br />
The recoverable amount is the higher of fair<br />
value less costs to sell of property, plant and<br />
equipment and the value in use. The fair value<br />
less costs to sell is the amount obtainable from<br />
the sale of property, plant and equipment in<br />
an arm’s length transaction while value in use<br />
is the present value of estimated future cash<br />
flows expected to arise from the continuing use<br />
of property, plant and equipment and from its<br />
disposal at the end of its useful life.<br />
Reversal of impairment losses recognised in<br />
the prior years is recorded when there is an<br />
indication that the impairment losses recognised<br />
for the property, plant and equipment no longer<br />
exist or have reduced.<br />
Investment properties<br />
Investment properties including investment<br />
properties under construction are measured<br />
initially at cost, including transaction costs.<br />
The carrying amount includes the cost of<br />
replacing part of an existing investment property<br />
at the time that cost is incurred if the recognition<br />
criteria are met; and excludes the costs of<br />
day-to-day servicing of an investment property.<br />
Subsequent to initial recognition, investment<br />
properties are stated at fair value, which reflects<br />
market conditions at the reporting date. Gains or<br />
losses arising from changes in the fair values of<br />
investment properties are included in the income<br />
statement in the period in which they arise.<br />
Investment properties are derecognised when<br />
either they have been disposed of or when the<br />
investment property is permanently withdrawn<br />
from use and no future economic benefit is<br />
expected from its disposal. The difference<br />
between the net disposal proceeds and the<br />
carrying amount of the asset is recognised in the<br />
income statement in the period of derecognition.<br />
Transfers are made to or from investment<br />
property only when there is a change in use.<br />
For a transfer from investment property to<br />
owner-occupied property, the deemed cost<br />
for subsequent accounting is the fair value at<br />
the date of change in use. If owner occupied<br />
property becomes an investment property, the<br />
Group accounts for such property in accordance<br />
with the policy stated under property, plant and<br />
equipment up to the date of change in use.<br />
Accounts receivable<br />
Accounts receivable are stated at original invoice<br />
amount less a provision for any uncollectible<br />
amounts. An estimate for doubtful debts is<br />
made when collection of the full amount is no<br />
longer probable. Bad debts are written off when<br />
there is no possibility of recovery.<br />
Cash and cash equivalents<br />
Cash and cash equivalents comprise cash-inhand,<br />
bank balances and short-term deposits<br />
with an original maturity of three months or less,<br />
net of outstanding bank overdrafts.<br />
Impairment of financial assets<br />
The Group assesses at each statement of<br />
financial position date whether there is any<br />
objective evidence that a financial asset or a<br />
group of financial assets is impaired. A financial<br />
asset or a group of financial assets is deemed<br />
to be impaired if, and only if, there is objective<br />
evidence of impairment as a result of one or<br />
more events that has occurred after the initial<br />
recognition of the asset (an incurred ‘loss<br />
event’) and that loss event has an impact on<br />
the estimated future cash flows of the financial<br />
asset or the group of financial assets that can<br />
be reliably estimated. Evidence of impairment<br />
may include indications that the debtors or a<br />
group of debtors is experiencing significant<br />
financial difficulty, default or delinquency in<br />
interest or principal payments, the probability<br />
that they will enter bankruptcy or other financial<br />
reorganisation and where observable data<br />
indicate that there is a measurable decrease<br />
in the estimated future cash flows, such as<br />
changes in arrears or economic conditions that<br />
correlate with defaults.<br />
Accounts payable and accruals<br />
Liabilities are recognised for amounts to be<br />
paid in the future for goods or services received,<br />
whether billed by the supplier or not.<br />
Loans and borrowings<br />
After initial recognition, interest-bearing loans<br />
and borrowings are subsequently measured at<br />
amortised cost using the effective interest rate<br />
method. Gains and losses are recognised in<br />
the consolidated income statement when the<br />
liabilities are derecognised as well as through<br />
the amortisation process.<br />
Employees’ end-of-service benefits<br />
The Group provides end-of-service benefits to<br />
its employees. The entitlement to these benefits<br />
is based upon the employees’ final salary and<br />
length of service, subject to the completion of a<br />
minimum service period. The expected costs<br />
of these benefits are accrued over the period<br />
of employment.<br />
With respect to its UAE national employees,<br />
the Group makes contributions to a pension fund<br />
established by the General Pension and Social<br />
Security Authority calculated as a percentage of<br />
the employees’ salaries. The Group’s obligation<br />
is limited to these contributions, which are<br />
expensed when due.<br />
Provisions<br />
Provisions are recognised when the Group has<br />
an obligation (legal or constructive) arising from<br />
a past event, and the costs to settle the obligation<br />
are both probable and able to be reliably<br />
measured.<br />
Foreign currency translation<br />
The consolidated financial statements are<br />
presented in UAE Dirhams (AED) which is the<br />
functional currency of the parent company.<br />
Each company in the Group determines its own<br />
functional currency and items included in the<br />
financial statements of each entity are measured<br />
using that functional currency.<br />
Transactions in foreign currencies are recorded<br />
in the functional currency at the rate ruling at<br />
the date of the transaction. Monetary assets and<br />
liabilities denominated in foreign currencies are<br />
retranslated at the rate of exchange ruling at the<br />
statement of financial position date.<br />
All differences are taken to profit or loss.<br />
Any goodwill arising on the acquisition of a<br />
foreign operation and any fair value adjustments<br />
to the carrying amounts of assets and liabilities<br />
arising on the acquisition are treated as assets<br />
and liabilities of the foreign operation and<br />
translated at the closing rate.<br />
As at the reporting date, the assets and liabilities<br />
of subsidiaries with functional currencies other<br />
than AED are translated into AED at the rate of<br />
exchange ruling at the statement of financial<br />
position date and, their income statements are<br />
translated at the weighted average exchange<br />
rates for the year.<br />
The exchange differences arising on<br />
the translation are recognised in other<br />
comprehensive income. On disposal of a foreign<br />
entity or operations, the component of other<br />
comprehensive income relating to that particular<br />
foreign entity or operation is recognised in the<br />
income statement.<br />
Contingencies<br />
Contingent liabilities are not recognised in the<br />
consolidated financial statements. They are<br />
disclosed unless the possibility of an outflow<br />
of resources embodying economic benefits is<br />
remote. A contingent asset is not recognised in the<br />
consolidated financial statements but disclosed<br />
when an inflow of economic benefits is probable.<br />
36 deyaar annual report 2009 37
6<br />
Business Combination<br />
Deyaar Development PJSC (under formation)<br />
took over the interest of Dubai Islamic Bank PJSC<br />
in the equity of Deyaar Development Company<br />
P.S.C. as of 30 May 2007 for a consideration of<br />
AED 2,600,000,000 to be settled by the issue<br />
of 2,600,000,000 shares of AED 1 each in the<br />
Company. In accordance with the prospectus<br />
issued at the time of initial public offering, profit<br />
earned up to the date of incorporation (10 July<br />
2007) belonged to the shareholders of Deyaar<br />
Development Company P.S.C. This profit was<br />
included in accounts payable and accruals at<br />
10 July 2007. The assets and liabilities of Deyaar<br />
Development Company P.S.C, at the time of<br />
takeover and on the date of incorporation are<br />
summarised on the right:<br />
During the previous period, a purchase<br />
price allocation exercise was carried out by<br />
management and the fair values of the assets<br />
and liabilities of Deyaar Development Company<br />
P.S.C at the time of takeover corresponded to<br />
the book values of the assets and liabilities as<br />
of the same date. The goodwill was assigned to<br />
the “property and development activities” unit.<br />
The goodwill mainly represented the experience<br />
gained and reputation established by Deyaar<br />
Development Company P.S.C in completing and<br />
delivering real estate projects inside and outside<br />
the UAE.<br />
During the previous period, the Group also<br />
acquired Flamingo Creek LLC, an entity<br />
incorporated and registered in the Emirate of<br />
Dubai, UAE and engaged in the development<br />
of the Flamingo Creek project, from a related<br />
party (note 32). The fair value of the identifiable<br />
assets and liabilities of the entity at the date of<br />
acquisition was as shown on the right:<br />
30 May 2007 10 July 2007<br />
aeD‘000<br />
aeD‘000<br />
Property, plant and equipment 14,956 17,495<br />
Properties under construction 2,641,494 3,233,325<br />
Accounts and notes receivable 245,267 330,427<br />
Advances on purchase of properties 64,859 92,541<br />
Prepayments and other assets 317,220 431,873<br />
Deposits maturing after three months 20,000 20,000<br />
Bank balances and cash 564,598 457,384<br />
Total assets 3,868,394 4,583,045<br />
Employees’ end-of-service benefits 2,805 3,104<br />
Retentions payable 44,531 40,249<br />
Term finance 1,346 2,078<br />
Islamic finance obligations 857,038 1,258,336<br />
Advances from customers 2,883 172,648<br />
Accounts payable and accruals 1,324,992 1,471,135<br />
Minority interest 3,763 4,459<br />
Total liabilities &<br />
minority interest 2,237,358 2,952,009<br />
Book value of net assets acquired 1,631,036 1,631,036<br />
Consideration 2,600,000<br />
Goodwill 968,964<br />
aeD ‘000<br />
Properties under construction 369,965<br />
Total assets 369,965<br />
Advances from customers 115,626<br />
Fair value of net assets acquired 254,339<br />
Purchase consideration 254,339<br />
7<br />
Impairment Testing of<br />
Goodwill<br />
The Group performed its annual impairment<br />
test on goodwill as at 31 December 2009.<br />
The recoverable amount of the property<br />
development unit (the “unit”) to which goodwill is<br />
allocated has been determined based on a value<br />
in use calculation using cash flow projections<br />
from financial budgets approved by senior<br />
management covering a 3-year period, as that<br />
value is estimated to be higher than fair value<br />
less cost to sell.<br />
Key assumptions used in value-in-use<br />
calculations<br />
The key assumptions used in the calculation of<br />
the value-in-use are as follows:<br />
• Completion of existing projects under<br />
development and collection of remaining cash<br />
from customers. This is based on experience<br />
of recent past and comparison of remaining<br />
cash due from customers with prevailing<br />
market prices;<br />
• Assumptions set out in notes 17, 18, 19 and 20;<br />
• Cash flows beyond the 3-year period are<br />
extrapolated using a 3.0% growth rate (2008:<br />
3.0%) that is the same as the long-term<br />
average estimated inflation/GDP Growth rates<br />
for UAE Economy.<br />
• The Group will expand its operations in other<br />
countries in the MENA region. This is based<br />
on feasibility studies prepared by independent<br />
consultants; and<br />
• 10% Discount rate - Discount rate reflects the<br />
current market assessment of the risks specific<br />
to the unit. The discount rate was estimated<br />
based on the average percentage of a weighted<br />
average cost of capital for the industry. This<br />
rate was further adjusted to reflect the market<br />
assessment of any risk specific to the cash<br />
generating unit for which future estimates of<br />
cash-flows have not been adjusted.<br />
As a result of the test, management did not<br />
identify impairment for the unit to which goodwill<br />
of AED 968,964 thousand is allocated.<br />
Sensitivity to changes in assumptions<br />
With regard to the assessment of value-in-use<br />
of the property development unit, management<br />
believes that any adverse change in any of<br />
the above key assumptions would cause the<br />
carrying value of the unit to materially exceed its<br />
recoverable amount.<br />
8<br />
Disposal of Subsidiaries<br />
and a Joint Venture<br />
During the period ended 31 December 2008, the<br />
Group disposed of its interests in the following:<br />
• Town Tower SAL, a company acquired<br />
during the period, and DIB Tower SAL, both<br />
wholly owned subsidiaries in Lebanon. The<br />
subsidiaries assets mainly consisted of land<br />
costing AED 104,340,000 and AED 98,341,000<br />
respectively. The sale consideration and the<br />
related cost are included in revenues and cost<br />
of revenues respectively. The sale resulted in a<br />
profit of AED 177,764,460.<br />
• A 40% interest in a joint venture in Saudi<br />
Arabia. The disposal resulted in a loss of AED<br />
241,000. The loss is included in selling and<br />
administrative expenses.<br />
• A 100% interest in Dubai Insaat Gayrimenkul<br />
Sanayi Ve Ticaret Limited Sirketi. The disposal<br />
resulted in a gain of AED 4,242,000, which is<br />
included in other operating income.<br />
Goodwill arising on acquisition -<br />
38 deyaar annual report 2009 39
9<br />
Revenues and Costs<br />
10 Other Operating Income<br />
Year ended Year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
aeD‘000 aeD‘000 aeD‘000<br />
(Restated)<br />
(Restated)<br />
Revenue:<br />
Sale of properties 1,479,823 1,024,990 1,403,952<br />
Services income 12,552 700 1,766<br />
Contract revenues 342,707 356,927 463,398<br />
1,835,082 1,382,617 1,869,116<br />
Year endeD year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
aeD‘000 aeD‘000 aeD‘000<br />
Management fees 20,019 18,895 25,642<br />
Brokerage and commission 14,036 58,951 88,115<br />
Gain on disposal of a subsidiary 9,493 - 4,242<br />
Others 79,365 78,719 104,870<br />
122,913 156,565 222,869<br />
Cost:<br />
Cost of properties sold (notes 17 and 18) 1,288,465 558,488 758,117<br />
Cost of services 11,155 619 1,508<br />
Contract costs 337,873 313,920 400,370<br />
1,637,493 873,027 1,159,995<br />
Sale of property relates to the sale of land and residential, retail and commercial units in various projects in the U.A.E.<br />
and Lebanon.<br />
Cost of properties sold includes AED 207,812,221 profit recognised prior to the incorporation of the Company as a Public Joint<br />
Stock Company under the percentage of completion method. Such profit has not been reversed following the implementation of<br />
IFRIC 15 since the ongoing projects were recorded at their fair values on the date of acquisition. If such profit had been reversed,<br />
the gross profit on sale of properties would have been as follows:<br />
Year ended Year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
aeD‘000 aeD‘000 aeD‘000<br />
Sales 1,835,082 1,382,617 1,869,116<br />
Cost of sales determined on the above basis (1,429,681) (873,027) (1,159,995)<br />
Gross profit determined on the above basis 405,401 509,590 709,121<br />
11 Selling, General and Administrative Expenses<br />
Year endeD year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
aeD‘000 aeD‘000 aeD‘000<br />
Payroll and related expenses 84,241 111,638 188,992<br />
Sales and marketing 122,124 71,966 89,273<br />
Rent 18,044 22,949 29,274<br />
Legal and professional fees 21,279 12,810 15,030<br />
Communication 3,797 2,195 3,156<br />
Other expenses 37,621 46,468 59,111<br />
12 Finance Costs<br />
287,106 268,026 384,836<br />
During the year ended 31 December 2009, AED 24,896,308 and AED 40,952,010 of borrowing<br />
costs have been capitalised on qualifying assets and included in properties under construction<br />
and investment properties respectively (period ended 31 December 2008: AED 33,886,552 and<br />
AED 12,486,739 respectively).<br />
13 Earnings Per Share<br />
Basic earnings per share are calculated by dividing the profit attributable to the equity holders of the<br />
parent for the year/period by the weighted average number of shares outstanding during the period of<br />
5,778,000,000 of AED 1 each.<br />
The Company has not issued any instruments which would have an impact on earnings per share<br />
when exercised.<br />
40 deyaar annual report 2009 41
14 Bank Balances and Cash<br />
15 Accounts and Notes Receivable<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Cash in hand 589 581<br />
Current accounts 235,008 271,824<br />
Deposits maturing within three months 342,438 347,854<br />
Cash and cash equivalents 578,035 620,259<br />
Deposit maturing after three months 105,832 20,935<br />
Bank balances and cash 683,867 641,194<br />
Bank balances and cash located:-<br />
Within UAE (AED) 622,268 574,953<br />
Outside UAE (other currencies) 61,599 66,241<br />
683,867 641,194<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Accounts and notes receivable 615,972 561,572<br />
Less: provision for doubtful debts (80,000) -<br />
535,972 561,572<br />
Due from related parties (note 32) 41,109 500,948<br />
The movement of provision for doubtful debts during the year/period is as follows:<br />
577,081 1,062,520<br />
2009 2008<br />
aeD’000<br />
aeD’000<br />
Cash at banks earns profit at floating rates based on prevailing bank deposit rates. Short-term fixed deposits are made for<br />
varying periods of between one day and three months, depending on the immediate cash requirements of the Group, and earn<br />
profit at the respective short-term deposit rates.<br />
Deposits amounting to AED 254,763,958 (2008: 186,319,499) are placed with Dubai Islamic Bank PJSC, a major shareholder<br />
(note 32). These are denominated in UAE Dirham, with an effective profit rate ranging from 0.27% to 6.25% per annum.<br />
Balance at the beginning of the year/period - -<br />
Provided during the year/period 80,000 -<br />
Balance at the end of the year/period 80,000 -<br />
As at 31 December, the ageing analysis of unimpaired receivables is as follows:<br />
past due but not impaired<br />
neither<br />
Past due Less than Between Between More than<br />
Total nor impaired 30 days 30 to 60 days 60 to 90 days 90 days<br />
AED’000 AED’000 AED’000 AED’000 AED’000 AED’000<br />
2009 577,081 277,575 288,800 3,979 38 6,689<br />
2008 1,062,520 813,274 213,743 - 25,083 10,420<br />
42 deyaar annual report 2009 43
16 Prepayments and Other Assets<br />
18 Properties Under Construction<br />
These include unsold units in completed projects as well as the units sold where handover has not taken place as<br />
of 31 December 2009.<br />
The movement in properties held for sale during the year/period was as follows:<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Advances to contractors 205,284 427,651<br />
Prepayments 25,501 55,070<br />
Contract work in progress 39,426 97,476<br />
Retentions receivable 64,635 39,623<br />
Accrued income on deposits 3,921 5,939<br />
Accrued rental income 957 2,418<br />
Advance under MOU (see below) 185,808 72,142<br />
Other assets 30,860 27,238<br />
556,392 727,557<br />
The Group signed a Memorandum of Understanding (MOU) in December 2008 with a third party (the seller) to enter into<br />
negotiations for the execution of a sale and purchase agreement (the agreement) for acquiring the seller’s interest in a building<br />
(the interest). According to the MOU, the terms of MOU will automatically terminate after a certain period or on the execution of<br />
the agreement. In accordance with the terms of the MOU, the Group paid AED 72.1 million as a refundable deposit. The Group<br />
also made additional payments of AED 113.7 million in this respect during the current year. A party that had initially financed the<br />
seller’s interest has shown an outstanding murabaha balance of AED 186.3 million as receivable from the Group. Management<br />
believe that the amounts paid by the Group are recoverable from the seller and any murabaha balance is also payable by the<br />
seller since a sale and purchase agreement was never signed and accordingly the terms of MOU have automatically terminated<br />
due to the passage of time. The ultimate outcome of the matter cannot be determined at this stage and accordingly no provision<br />
that may result has been made in the financial statements.<br />
17 Properties Held for Sale<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
(Restated)<br />
Balance, beginning of the year/period - -<br />
Transferred from properties under construction (note 18) 1,830,482 -<br />
Carrying value of properties sold during the year/period (note 9) (1,288,465) -<br />
Balance, end of the year/period 542,017 -<br />
Properties held for sale are carried at the lower of cost and net-realisable value. Net-realisable value takes into consideration<br />
the value that the Company can obtain by offering these properties to those customers who have committed to buy units in<br />
development launched in the previous year.<br />
The movement in properties under construction during the year/period was as follows:<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
(Restated)<br />
Balance, beginning of year/period 3,775,254 1,645,832<br />
Acquired during the year/period (note 6) - 369,965<br />
Additions during the year/period 704,024 4,019,883<br />
Borrowing costs capitalised 24,896 46,373<br />
Carrying value of properties sold during the year/period (note 9) - (758,117)<br />
Related to subsidiaries disposed of - (123,894)<br />
Transferred to properties held for sale (note 17) (1,830,482) -<br />
Transferred to investment properties (note 24) - (1,424,788)<br />
Balance, end of the year/period 2,673,692 3,775,254<br />
Properties under construction are carried at the lower of cost and net-realisable value. Net realisable<br />
value has been determined on the basis of committed sale price if the remaining receivable amount<br />
is lower than the current market value of the units booked by customers. Customers have already<br />
committed to purchase a large proportion of the properties under construction. Advances received<br />
from customers in this respect are shown as a liability. For units not yet booked by customers, net<br />
realisable value takes into consideration the value the Group can obtain by offering these units to the<br />
customers who have committed to buy units in developments launched in the previous year.<br />
19 Land Held for Future Development<br />
Land held for future development is carried at the lower of cost and net-realisable value in accordance<br />
with the Group’s accounting policy, regardless of its fair value.<br />
The key assumptions used in the calculation of net realisable value are as follows:<br />
• Construction will start in 2012 and beyond;<br />
• Selling prices and cost of construction will remain at the current level; and<br />
• Cost of financing will be 10% per annum.<br />
20 Advances for Purchase of Land<br />
These advances represent amounts paid for the acquisition of plots of land. These plots of land are<br />
expected to be handed over in the coming years and their related commitments are disclosed in note<br />
34. The Group has performed a test to determine that economic benefits expected to be received<br />
under the contracts exceed the unavoidable cost of meeting the obligations. Management believe that<br />
all plots of land being purchased will eventually be developed and sold to third parties. Assumptions<br />
used for assessing expected economic benefits are similar to those set out in note 19.<br />
44 deyaar annual report 2009 45
21 Investments in Associates<br />
23 Property, Plant and Equipment<br />
During the previous period, the Group had acquired:<br />
a) 22.72% of the equity of SI Al Zorah Equity Investments Inc, a company registered in the Cayman Islands. The associate is a<br />
holding company investing in companies engaged in property development.<br />
b) 40% of the equity of Landmark Properties LLC, a company registered in the UAE which is involved in real estate brokerage.<br />
The following table illustrates summarised information of the Group’s investments in the associates<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Share of associates’ statement of financial position:<br />
Assets 464,284 526,366<br />
Liabilities (81,792) (96,454)<br />
Net assets 382,492 429,912<br />
Share of associates’ income statement:<br />
Revenues 16,310 3,103<br />
Profit / (Loss) 6,552 (2,001)<br />
Carrying amount of investments 586,870 656,018<br />
Furniture Plant capital<br />
leasehold and and Motor work in<br />
Building improvements fixtures equipment vehicles progress Total<br />
aeD’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000<br />
Cost:<br />
At 1 January 2009 - 381 17,674 14,592 7,414 9,068 49,129<br />
Additions 10,798 - 911 7,613 380 1,423 21,125<br />
Disposals - - (683) (126) (1,286) - (2,095)<br />
Transfers - - (263) (44) - (8,841) (9,148)<br />
At 31 December 2009 10,798 381 17,639 22,035 6,508 1,650 59,011<br />
Depreciation:<br />
At 1 January 2009 - 137 6,447 4,953 2,294 - 13,831<br />
Depreciation charge<br />
for the year 405 216 4,427 4,822 1,923 - 11,793<br />
Relating to disposals - - (513) (75) (748) (1,336)<br />
At 31 December 2009 405 353 10,361 9,700 3,469 - 24,288<br />
Net carrying value:<br />
At 31 December 2009 10,393 28 7,278 12,335 3,039 1,650 34,723<br />
The excess of carrying amounts over the share of net assets represent premiums paid by the Group at the time of acquisition of<br />
the investments. The carrying values of the investments are subjected to annual impairment tests.<br />
The recoverable amount of investments is determined based on a value in use calculation using cash flow projections from<br />
financial budgets approved by senior management covering a five-year period. The pre-tax discount rate applied to cash flow<br />
projections is 10% and cash flows beyond the five-year period are extrapolated using a 3.0% growth rate that is the same as<br />
the long-term average estimated inflation/GDP Growth rates for UAE Economy. As a result of this analysis, management has<br />
recognised an impairment charge which is shown on the face of the consolidated income statement.<br />
22<br />
Investments in Joint Venture<br />
The Group’s share of assets and liabilities in the joint ventures included in the consolidated financial statements is as under:<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Property, plant and equipment 1 2<br />
Investment properties 1,475,947 1,305,246<br />
Prepayments and other receivables 88,540 126,672<br />
Bank balances and cash 68,209 87,471<br />
Total assets 1,632,697 1,519,391<br />
Furniture Plant capital<br />
leasehold and and Motor work in<br />
improvements fixtures equipment vehicles progress Total<br />
aeD’000 AED’000 AED’000 AED’000 AED’000 AED’000<br />
Cost:<br />
Acquired in business<br />
combination 170 4,539 6,028 3,911 2,847 17,495<br />
Additions 211 13,469 8,703 4,084 6,221 32,688<br />
Disposals - (334) (133) (581) - (1,048)<br />
Transfers - - (6) - - (6)<br />
At 31 December 2008 381 17,674 14,592 7,414 9,068 49,129<br />
Depreciation:<br />
Depreciation charge<br />
for the period 137 6,533 4,977 2,372 - 14,019<br />
Relating to disposals - (86) (21) (78) - (185)<br />
Transfers - - (3) - - (3)<br />
At 31 December 2008 137 6,447 4,953 2,294 - 13,831<br />
Net carrying value:<br />
At 31 December 2008 244 11,227 9,639 5,120 9,068 35,298<br />
Accruals and other liabilities 493,469 477,262<br />
Income and profit for the year 92,074 295,533<br />
46 deyaar annual report 2009 47
24 Investment Properties<br />
25 Accounts Payable and Accruals<br />
The movement in investment properties during the year/period was as follows:<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Balance, beginning of period / period 1,729,030 -<br />
Additions during the year/period 143,711 -<br />
Transferred from properties under construction (note 18) - 1,424,788<br />
Net gain on fair valuation of investment properties 27,202 304,242<br />
Balance, end of year/period 1,899,943 1,729,030<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Accruals for purchase of land 617,938 607,680<br />
Accounts and notes payable 402,793 362,800<br />
Due to related parties (note 32) 16,342 394,314<br />
Accrued Islamic facilities charges 37,365 31,694<br />
Tax payable 15,167 4,897<br />
Other payables and accruals 273,192 522,584<br />
1,362,797 1,923,969<br />
(i) Investment properties include properties that are being developed by a 50% joint venture in DIFC. The development<br />
comprises an office tower, a residential tower and an eight-level podium. The Company intends to lease its share of these<br />
properties after completion to generate rental income and accordingly the properties have been treated as investment<br />
properties by electing to adopt the revision of IAS 40 ‘Investment Properties’ whereby properties that are being constructed<br />
or developed for future use as investment properties are classified as investment properties during the development phase.<br />
The revision of IAS 40 ‘Investment Properties’ became effective for financial years beginning on or after 1 January 2009.<br />
The Group has prepared internal valuations of those properties as of 31 December 2009. The valuations were based on a<br />
five-year discounted cash flow model supported by existing lease and current market rents for similar properties in the same<br />
location adjusted to reflect the level of completion of construction of those properties. The discount rate used reflects current<br />
market assessments of the uncertainty and timing of the cash flows.<br />
The valuations were based on an individual assessment, for each property type in this development, of both their future<br />
earnings and their required yield. In assessing the future earnings of the properties, Management took into account potential<br />
changes in rental levels from each contract’s rent and expiry date compared with the estimated current market rent, as well<br />
as changes in occupancy rates and property costs.<br />
Included in property costs are operating expenses, maintenance, leasing and property administration costs. The value<br />
estimated for the building upon completion was adjusted for the percentage of completion achieved as of 31 December 2009.<br />
The assumptions used in arriving at fair values of properties in this development are as follows:<br />
2009 2008<br />
Long-term vacancy rate 10% 10%<br />
Long-term growth in rental rates – every alternative year 5% 5%<br />
Discount rate 10% 10%<br />
The gain on these properties, based on the above, amounts to AED 91.1 million (2008: AED 356.23 million)<br />
(ii) Investment properties also include plots of land in the UAE and outside the UAE, which have been retained by management<br />
for development to be used in future as investment properties and for undetermined use respectively. The Group has<br />
obtained fair values for these properties based on open market valuations carried out by independent valuers. This has<br />
resulted in a net loss on valuation of investment properties of AED 63.9 million (2008: AED 51.99 million).<br />
Accordingly a net gain of AED 27.2 million (2008: 304.24 million) is included in the consolidated income statement.<br />
26 Islamic Finance Obligations<br />
2009 2008<br />
aeD‘000<br />
aeD‘000<br />
Facility one - 40,928<br />
Facility two 185,942 183,993<br />
Facility three 75,000 150,000<br />
Facility four 200,000 200,000<br />
Facility five 160,000 -<br />
Facility six 39,300 -<br />
Facility seven 255,000 -<br />
Facility eight 40,000 -<br />
955,242 574,921<br />
The Islamic finance obligations represent Istisna’s and Mudarabah facilities obtained from Dubai<br />
Islamic Bank PJSC, a major shareholder, and from other local Islamic banks and financial institutions.<br />
The facilities are used to finance the construction of the properties under construction as follows:<br />
• Facility one was fully repaid in full in 2009.<br />
• Facility two is repayable after 6 months of completion of the property involved, with an effective profit<br />
rate based on EIBOR and with an applicable minimum rate. Repayment of the facility is expected<br />
within 6 months. The facility is secured via assignment of sales proceeds from the property.<br />
• Facility three is a revolving corporate facility and is repayable within 6 months, with an effective profit<br />
rate based on EIBOR and with an applicable minimum rate. The facility is secured via assignment of<br />
project proceeds.<br />
• Facility four is repayable within 6 months, with an effective profit rate based on EIBOR and with an<br />
applicable minimum rate. The facility is secured via assignment of project proceeds.<br />
• Facility five is repayable after 1 year from completion of construction, with an effective profit rate<br />
based on EIBOR and with an applicable minimum rate. Facility is secured via mortgage over<br />
property being constructed and assignment of sales proceeds from the property.<br />
• Facility six is a revolving working capital facility repayable within 6 months, with an effective profit<br />
rate based on EIBOR and with an applicable minimum rate.<br />
• Facility seven is repayable within 15 months and to be utilised for the on going activities of the<br />
company. The facility carries an option to extend repayment for a further period of 1 year. The profit<br />
rate on the facility is fixed.<br />
• Facility eight is a revolving corporate facility and repayable within 12 months, with an effective profit<br />
rate based on EIBOR and with an applicable minimum rate. The facility is secured via mortgage on<br />
property and lease rentals derived from the property.<br />
48 deyaar annual report 2009 49
27 Other Borrowings<br />
32 Transactions with Related Parties<br />
Other borrowings include an Islamic overdraft facility from a local Islamic bank, which carries an effective rate based on EIBOR.<br />
Other borrowings also include loans obtained to finance the purchase of motor vehicles and equipment. The loans are secured<br />
by mortgages over the vehicles and equipment purchased. These loans carry profit at an average rate of 4.3% and are repayable<br />
in equal monthly instalments over a period of three to four years.<br />
Related parties represent major shareholders, joint ventures, associates, directors and key management personnel of the<br />
Group, and companies of whom they are principal owners. Pricing policies and terms of these transactions are approved by the<br />
Group’s management.<br />
Transactions with related parties included in the consolidated income statement for the year/period are as follows:<br />
28 Employees’ End of Service Benefits<br />
Movements in the provision recognised in the statement of financial position are as follows:<br />
2009<br />
income Management<br />
revenue Cost of revenue from deposits fees income<br />
aeD’000 aeD’000 aeD’000 aeD’000<br />
2009 2008<br />
aeD’000<br />
aeD’000<br />
Balance at the beginning of the year/period 9,348 3,104<br />
Provided during the year/period 5,765 7,329<br />
End of service benefits paid (1,371) (1,085)<br />
Balance at the end of the year/period 13,742 9,348<br />
An actuarial valuation has not been performed as the net impact of discount rates and future increases in benefits is not likely to<br />
be material.<br />
29 Share Capital<br />
2009 2008<br />
aeD’000<br />
aeD’000<br />
Authorised, issued and fully paid<br />
3,178,000,000 shares of AED 1 each paid in cash 3,178,000 3,178,000<br />
2,600,000,000 shares of AED 1 each paid in kind 2,600,000 2,600,000<br />
5,778,000 5,778,000<br />
As set out in note 6, the Company acquired the interest of Dubai Islamic Bank PJSC in Deyaar Development Company P.S.C. by<br />
the issue of 2,600,000,000 shares of AED 1 each.<br />
30 Statutory Reserve<br />
As required by the UAE Commercial Companies Law of 1984 (as amended) and the Company’s articles of association, 10% of the<br />
profit for the year is required to be transferred to a statutory reserve until such time that the reserve equals 50% of the paid up<br />
share capital. The reserve is not available for distribution except in the circumstances stipulated by the Law.<br />
31 Non-controlling Interests<br />
Non-controlling interest represents the minority shareholders’ proportionate share in the aggregate value of the net assets of<br />
the subsidiaries and the results of the subsidiaries’ operations.<br />
Major shareholders - - 7,323 13,793<br />
Other related parties - 16,786 - -<br />
10 July 2007 to 31 December 2008<br />
- 16,786 7,323 13,793<br />
income Management<br />
revenue Cost of revenue from deposits fees income<br />
aeD’000 aeD’000 aeD’000 aeD’000<br />
Major shareholders 200,000 - 36,871 3,008<br />
Other related parties - 111,128 3,078 55,641<br />
200,000 111,128 39,949 58,649<br />
Balances with related parties included in the statement of financial position are as follows:<br />
As at 31 December 2009<br />
accounts Accounts Fixed Islamic finance<br />
aDvances receivable payable deposits Facilities<br />
aeD’000 aeD’000 AED’000 AED’000 aeD’000<br />
Major shareholders - - 1,113 254,764 500,242<br />
Joint ventures - 17,403 13,401 - -<br />
Other related parties - 23,706 1,828 - -<br />
As at 31 December 2008<br />
- 41,109 16,342 254,764 500,242<br />
accounts Accounts Fixed Islamic finance<br />
aDvances receivable payable deposits Facilities<br />
aeD’000 aeD’000 AED’000 AED’000 aeD’000<br />
Major shareholders - 114,316 - 186,319 533,993<br />
Joint ventures - 368,514 24,575 - -<br />
Other related parties 72,142 18,118 369,739 100,000 -<br />
72,142 500,948 394,314 286,319 533,993<br />
During the previous period, the Group acquired 40% of the equity of Landmark Properties LLC, of which 30% was acquired from<br />
a related party (note 21).<br />
During the previous period also, the Group also acquired Flamingo Creek LLC from a related party (note 6).<br />
50 deyaar annual report 2009 51
32 Transactions with Related Parties (cntd.)<br />
34 Commitments<br />
Compensation of key management personnel<br />
The remuneration of directors and other members of key management during the year/period was as follows:<br />
year ended Year ended 10 July 2007 to<br />
31 December 31 December 31 December<br />
2009 2008 2008<br />
aeD‘000 aeD‘000 aeD‘000<br />
Payroll and related expenses 42,109 27,038 33,656<br />
Employees’ end-of-service benefits 1,195 1,444 1,654<br />
At 31 December 2009, the Group had commitments of AED 789,768,142 (2008: AED 1,587,760,597)<br />
with respect to project-related contracts issued as of the end of the year/period net of invoices<br />
received and accruals made at that date. At 31 December 2009, the Group also had commitments<br />
with respect to purchase of land of AED 373,938,030 (2008: AED 1,157,632,279).<br />
At 31 December 2009, the Group had contingent liabilities in respect of performance and other<br />
guarantees issued by bank on behalf of a subsidiary in the ordinary course of business from which<br />
it is anticipated that no material liabilities will arise, amounting to AED 101,637,112 (2008: AED<br />
200,710,593).<br />
35 Financial Risk Management Objectives and Policies<br />
33 Segment Information<br />
43,304 28,482 35,310<br />
The Group’s principal financial instruments comprise Islamic finance facilities, term finance<br />
and trade payables. The main purpose of these financial instruments is to raise finance for the<br />
Group’s operations. The Group has various financial assets such as trade receivables and cash and<br />
short-term deposits, which arise directly from its operations.<br />
Operating segment<br />
For management purposes the Group is organised into two major operating segments: Property development activities, (which<br />
include property investment, development, brokering, managing and renting of buildings), and electrical and mechanical works.<br />
Management monitors the operating results of its operating segments for the purpose of making decisions about performance<br />
assessment. Segment performance is evaluated based on operating profit or loss. Transactions between segments are<br />
conducted at estimated rates which approximate to market rates on an arm’s length basis.<br />
Year ended 31 December 2009:<br />
Property<br />
Electrical<br />
Development and mechanical<br />
activities works tOtal<br />
aeD’000 aeD’000 aeD’000<br />
Segment revenues - external 1,479,823 355,259 1,835,082<br />
Segment profit 36,611 (11,706) 24,905<br />
As at 31 December 2009<br />
Segment assets 11,059,236 297,946 11,357,182<br />
Period from 10 July 2007 to 31 December 2008:<br />
Property<br />
Electrical<br />
Development and mechanical<br />
activities works tOtal<br />
aeD’000 aeD’000 aeD’000<br />
Segment revenues - external 1,403,952 465,164 1,869,116<br />
Segment profit 812,612 32,250 844,862<br />
Pre-incorporation profit, net 107,395<br />
As at 31 December 2008<br />
952,257<br />
Segment assets 12,007,603 301,819 12,309,422<br />
Geographic information<br />
The main risks arising from the Group’s financial instruments are profit rate risk, foreign currency<br />
risk, credit risk, and liquidity risk. The Board of Directors reviews and agrees policies for managing<br />
each of these risks which are summarised below.<br />
Profit rate risk<br />
The Group’s exposure to the risk of changes in market profit rates relates primarily to the Group’s<br />
long-term debt obligations with floating rates and fixed deposits. Profit on financial instruments<br />
having floating rates is re-priced at intervals of less than one year and profit on financial instruments<br />
having fixed rate is fixed until the maturity of the instrument. Other than commercial and overall<br />
business conditions, the Group’s exposure to market risk for changes in profit rate environment<br />
relates mainly to its bank borrowings and fixed deposits.<br />
The following table demonstrates the sensitivity to a reasonably possible change in profit rates, with<br />
all other variables held constant, on the Group’s profit before tax (through the impact on floating rate<br />
deposits and borrowings). There is no impact on the Group’s equity.<br />
sensitivity<br />
change of net profit<br />
in basis from loans<br />
Currency POints AED’000<br />
2009<br />
AED + 50 393<br />
AED - 50 (377)<br />
2008<br />
AED + 57 1,991<br />
AED - 57 (1,991)<br />
All the current financing of the company carries either fixed profit rate or an applicable minimum rate<br />
which historically has remained higher than the rate based on EIBOR.<br />
The profit rate sensitivity set out above relates primarily to the Dirham as the Group does not have any<br />
significant net exposure for financial assets and financial liabilities denominated in currencies other<br />
than the Dirham or currencies pegged to US Dollar.<br />
Revenue earned from properties outside the United Arab Emirates amounts to AED 287,373,324 (10 July 2007 to 31 December<br />
2008: AED Nil). Properties located outside the United Arab Emirates amount to AED 460,173,255 (2008: AED 650,591,457).<br />
52 deyaar annual report 2009 53
35 Financial Risk Management Objectives and Policies (cntd.)<br />
Foreign currency risk<br />
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.<br />
The Group’s exposure to foreign currency risk is primarily limited to its investment in foreign subsidiaries. The net assets<br />
(liabilities) of foreign subsidiaries are as follows:<br />
Currency<br />
aeD’000<br />
equivalent<br />
Lebanese Lira (2,315)<br />
Turkish Lira 51,156<br />
Kazakhstan Tenge (16,529)<br />
British Pound Sterling (4,898)<br />
USD (9,136)<br />
Bahrain Dinar 2,381<br />
Malaysian Ringgit (64)<br />
Any variation in exchange rates between the currencies and AED will result in recognition of foreign currency translation reserve<br />
in equity on the opening net investment. It will also result in a change in the rate used for recording of income, expenses and<br />
profit in the consolidated financial statements of the next year.<br />
Credit risk<br />
The Group monitors receivable balances on an ongoing basis and books provision for doubtful debts when necessary.<br />
With respect to credit risk arising from the other financial assets of the Group, which comprise mainly cash and cash<br />
equivalents, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the<br />
carrying amount of these instruments.<br />
Liquidity risk<br />
The Group monitors its risk to a shortage of funds using a recurring liquidity forecasting tool. This tool considers the maturity<br />
of both its financial investments and financial assets (e.g. accounts receivable, other financial assets) and projected cash flows<br />
from operations.<br />
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank facilities.<br />
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and borrowing facilities, by continuously<br />
monitoring forecasted and actual cash flows and matching the maturity profiles of financial assets and liabilities.<br />
Liquidity risK (cntd.)<br />
The table below summarises the maturity profile of the Group’s financial liabilities at based on contractual undiscounted<br />
payments.<br />
At 31 December 2009<br />
On Less than 3 3 to 12 1 to 5 Over<br />
Demand months months years 5 years Total<br />
aeD’000 AED’000 AED’000 AED’000 AED’000 AED’000<br />
Islamic finance facilities - - 734,556 275,143 - 1,009,699<br />
Term finance 126,522 26,922 22,930 531 - 176,905<br />
Accounts payable, accruals<br />
and retentions payable 13,742 1,325,432 - 153,944 - 1,493,118<br />
Total undiscounted<br />
financial liabilities 140,264 1,352,354 757,486 429,618 - 2,679,722<br />
As at 31 December 2008<br />
On Less than 3 3 to 12 1 to 5 Over<br />
Demand months months years 5 years Total<br />
aeD’000 AED’000 AED’000 AED’000 AED’000 AED’000<br />
Islamic finance facilities - - 602,077 - - 602,077<br />
Term finance 147,523 61,205 8,156 1,385 - 218,269<br />
Accounts payable, accruals<br />
and retentions payable 9,348 1,735,582 188,387 138,318 - 2,071,635<br />
Total undiscounted<br />
financial liabilities 156,871 1,796,787 798,620 139,703 - 2,891,981<br />
Capital Management<br />
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital<br />
ratios in order to support its business and maximise shareholder value.<br />
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or<br />
adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue<br />
new shares.<br />
Capital comprises share capital, reserves and retained earnings and is measured at AED 6,737,955,000 as at 31 December 2009<br />
(2008: AED 6,714,871,000).<br />
54 deyaar annual report 2009 55
36 Maturity Analysis<br />
37 Fair Values Of Financial Instruments<br />
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or<br />
settled:<br />
within<br />
aFter<br />
12 months 12 months tOtal<br />
aeD‘000 aeD‘000 aeD‘000<br />
ASSETS<br />
Bank balances and cash 683,867 - 683,867<br />
Accounts and notes receivable 577,081 - 577,081<br />
Prepayments and other assets 556,392 - 556,392<br />
Properties held for sale 542,017 - 542,017<br />
Properties under construction 1,715,908 957,784 2,673,692<br />
Land held for future developments - 1,611,334 1,611,334<br />
Advances for purchase of land - 1,222,299 1,222,299<br />
Investments in associates - 586,870 586,870<br />
Property, plant and equipment - 34,723 34,723<br />
Investment properties - 1,899,943 1,899,943<br />
Goodwill - 968,964 968,964<br />
TOTAL 4,075,265 7,281,917 11,357,182<br />
within<br />
aFter<br />
12 months 12 months tOtal<br />
aeD‘000 aeD‘000 aeD‘000<br />
Financial instruments comprise financial assets and financial liabilities.<br />
Financial assets of the Group include bank balances and cash, trade and other receivables,<br />
investments in associates and due from related parties. Financial liabilities of the Group include loans<br />
from financial institutions, accounts payable and retentions payable.<br />
The fair values of the financial assets and liabilities are not materially different from their carrying<br />
value unless stated otherwise.<br />
38 Changes In Accounting Policy<br />
During the year, the Group changed its accounting policy in respect of accounting for revenue from<br />
sale of residential and commercial units by adopting IFRIC 15 “Agreement for the Construction of<br />
Real Estate”.<br />
As a result, the carrying values of the properties under construction recognised in 2007 and 2008 were<br />
adjusted at these dates with changes in values recognised in income statement.<br />
There is no impact of the change on the statement of financial position amounts as of 10 July 2007.<br />
Restatements of the Group’s change in properties under construction, revenues and costs on sale of<br />
properties for the period ended 31 December 2008 and retained earnings as of 31 December 2008<br />
are as follows:<br />
LIABILITIES<br />
Accounts payable and accruals 1,362,797 - 1,362,797<br />
Advances from customers 1,426,641 518,213 1,944,854<br />
Islamic finance obligations 700,242 255,000 955,242<br />
Term finance 174,393 531 174,924<br />
Retentions payable - 153,944 153,944<br />
Employees’ end-of-service benefits - 13,742 13,742<br />
Period from 10 July 2007<br />
to 31 December 2008:<br />
Balance as<br />
Balance at<br />
Previously<br />
31 December<br />
reported Adjustments Restated<br />
aeD’000 aeD’000 aeD’000<br />
TOTAL 3,664,073 941,430 4,605,503<br />
NET 411,192 6,340,487 6,751,679<br />
Sale of properties 3,788,833 (1,919,717) 1,869,116<br />
Cost of properties sold (2,493,817) 1,333,822 (1,159,995)<br />
Tax on sale of properties (17,666) 17,666 -<br />
Profit for the period 1,520,486 (568,229) 952,257<br />
At 31 December 2008:<br />
Properties under construction 2,653,857 1,121,397 3,775,254<br />
Advances from customers 1,090,214 1,622,305 2,712,519<br />
Retained earnings 1,353,711 (568,229) 785,482<br />
56 deyaar annual report 2009 57
Deyaar - UAE Offices<br />
HEAD OFFICE<br />
Monarch Office Tower<br />
21st to 24th Floor<br />
Opp Trade Center, Sheikh Zayed Road<br />
P.O Box 30833, Dubai<br />
TEL +9714 3297667<br />
FAX +9714 3296163<br />
AL AIN<br />
Office# 402, 2nd floor<br />
Dubai Islamic Bank Building<br />
Oudh Al Thouba Street, Global R/a<br />
P.O Box 86644<br />
TEL +9713 7510443<br />
FAX +9713 7513473<br />
Deyaar - International Offices<br />
DEYAAR FOR DEVELOPMENT SA<br />
(LEBANON)<br />
8th floor, Ibiza Bldg, Verdun<br />
Beirut, Lebanon<br />
TEL: +9611803857<br />
FAX: +9611803860<br />
DEYAAR DEVELOPMENT CORPORATION<br />
(USA)<br />
3205 Mc Culloch Circle, Houston TX 77056<br />
Principal<br />
Network<br />
DEIRA<br />
Al Masood Building<br />
5th & 10th floor<br />
Airport Road<br />
P.O Box 30833, Dubai<br />
TEL +9714 2955844<br />
FAX +9714 2954029<br />
GHUSAIS - Facilities Management<br />
Halab street#13,<br />
Community-242, Al Ghusais<br />
Industrail Area 1,Warehouse#2<br />
P.O Box 30833, Dubai<br />
TEL +9714 2586933<br />
FAX +9714 2580729<br />
SHARJAH<br />
Al Qasimiya Area,Immigration Road<br />
Opp King Faisal Mosque,<br />
Dubai Islamic Bank Building<br />
P.O Box 28001, Sharjah<br />
TEL +9716 5730500<br />
FAX +9716 5730600<br />
RAS AL khaimah<br />
Office# 102,1st Floor<br />
Dubai Islamic Bank Building<br />
Al Nakheel Area<br />
P.O Box 9579<br />
TEL + 9717 2275666<br />
FAX +9717 2285666<br />
AJMAN<br />
Office# 403, 4th floor<br />
A& F Tower, Ajman Bank Building<br />
Sheikh Khalifa Road, Naeimya Area<br />
P.O Box 17177<br />
TEL +9716 7465143<br />
FAX +9716 7411517<br />
ABU DHABi<br />
Haji Abdullah Hussein Al Khorry Building,<br />
Office # 502-504<br />
Above Union National Bank<br />
Opp Abu Dhabi Chamber Of Commerce<br />
Airport Road<br />
P.O Box 111130, Abu Dhabi<br />
TEL +9712 6353000<br />
FAX +9712 6353111<br />
FUJAIRAH<br />
Office# 201, 2nd Floor<br />
Dubai Islamic Bank Building,<br />
Hamed Bin Abdullah Road<br />
P.O Box 1376<br />
TEL +9719 2241235<br />
FAX +9719 2241236<br />
58 deyaar annual report 2009 59
www.deyaar.ae