Abu Dhabi Marina Real Estate Investment PJSC

Transcription

1 Abu Dhabi Marina Real Estate Investment PJSC CONSOLIDATED FINANCIAL STATEMENTS AND BOARD OF DIRECTORS REPORT 31 DECEMBER 2013

2 Abu Dhabi Marina Real Estate Investment PJSC BOARD OF DIRECTORS REPORT 31 DECEMBER 2013

3 BOARD OF DIRECTORS REPORT 3 1 December 2013 The Board of Directors have pleasure in submitting their report and the audited consolidated financial statements for the year ended 31 December Principal activities and review o f business developments Abu Dhabi Marina Real Estate Investment PJSC (the Company ) is a private joint stock company that was incorporated in Dubai, United Arab Emirates ( UAE ) in accordance with the provisions of the UAE Commercial Companies Law No (8) of 1984 (as amended). The consolidated financial statements comprise the financial statements of the Company, Rkaiz Properties LLC, Marsa Jordan Real Estate Development LLC and Marsa Abu Dhabi Properties LLC and its subsidiary (collectively, the Group ). The Group s registered office is at P O Box 474, Dubai, UAE. The principal activities of the Group involve owning, selling, purchasing and leasing real estate, carrying out real estate project investment and all associated activities. Results fo r the year The results for the year of the Group are summarized as follows: /2 Revenues Rental income Profit / (Loss) for the year 11.Q81L972 ( ) The movement in accumulated losses was as follows: Attributable to the equity holders o f the parent: Balance at 1 January 2013 (74,436,348) Profit for the year attributable to the equity holders of the parent 10,154,667 Transfer to statutory reserve (1,015,467) Balance at 31 December 2013 (65.297,148) f Auditors A resolution proposing the reappointment of Ernst & Young as auditors of the Group will be put to the Annual General Meeting. ^OnJbehalTaf'-tne Board o f Directors Abu Dhabi

4 Abu Dhabi Marina Real Estate Investment PJSC CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2013

5 EY Building a better working world Ernst & Young P.O. Box th Floor. Al Attar Business Tower Sheikh Zayed Road Dubai, United Arab Emirates Tel Fax; dubai^ae.ey.com ev.com/mena INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS OF ABU DHABI MARINA REAL ESTATE INVESTMENT PJSC Report on the Consolidated Financial Statements We have audited the accom panying financial statements o f Abu Dhabi M arina Real Estate Investment PJSC (the Com pany ) and its subsidiaries (the Group ), which comprise the consolidated statement o f financial position as at 3 1 Decem ber 2013, and the consolidated statement o f com prehensive income, consolidated statement o f changes in equity and consolidated statement o f cash flows for the year then ended, and a sum m ary o f significant accounting policies and other explanatory inform ation. M anagem ent's responsibility fo r the consolidated fin a n c ia l statem ents M anagement is responsible for the preparation and fair presentation o f these consolidated financial statements in accordance with International Financial Reporting Standards and the applicable provisions o f the articles o f association o f the Company and the UAE Commercial Com panies Law o f 1984 (as amended), and for such internal control as management determines is necessary to enable the preparation o f the consolidated financial statements that are free from material misstatement, w hether due to fraud or error. A u d ito r s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about w hether the consolidated financial statem ents are free from m aterial m isstatem ent. An audit involves perform ing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgm ent, including the assessm ent o f the risks o f material misstatement o f the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation o f the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose o f expressing an opinion on the effectiveness o f the entity s internal control. An audit also includes evaluating the appropriateness o f accounting policies used and the reasonableness o f accounting estim ates made by m anagem ent, as well as evaluating the overall presentation o f the consolidated financial statem ents. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. A m e m b e r tn m of E f n it & Y o urn j G lo n a l Lim ite d

6 EY Building a better working world O pinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position o f the Group as o f 3 1 December 2013, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on Other Legal and Regulatory Requirements We also confirm that, in our opinion, the consolidated financial statements, include in all material respects, the applicable requirements o f the UAE Commercial Companies Law o f 1984 (as amended) and the articles o f association o f the Company; proper books o f account have been kept by the Company and the contents o f the report o f the Board o f Directors relating to these consolidated financial statements are consistent with the books o f account. We further report that we have obtained ail the information and explanations which we required for the purpose o f our audit and, to the best o f our knowledge and belief, no violations o f the UAE Commercial Companies Law o f 1984 (as am ended) or o f the articles o f association o f the Company have occurred during the year which would have had a material effect on the business o f the Company or on its financial position. Signed by M ohammad Mobin Khan Partner Ernst & Young R egistration No January 2014 Dubai

7 Abu Dhabi Marina Real Estate Investment PJSC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 Decem ber /2 Notes A ED A ED Revenue _ 1,534,000 Cost o f revenue - (1,508,000) - 26,000 Rental income 6 6,150,028 3,102,973 Community charge (1.165,135) ( ) 4,984,893 2, Gain on sale o f investm ent properties 2,119,107 - O ther income 453, ,457 General and adm inistrative expenses 3 (3,034,586V (2,885,668) Depreciation 4 (229,765) ( ) W rite off o f equipm ent and fixtures 4 - (31,860) Finance costs (1,491,350) (3,279,894) Increase / (decrease) in fair value o f investm ent properties 6 4,410,453 (691,265) Reversal o f provision for doubtful debts, net 9 4,368,895 - PROFIT (LOSS) FOR THE YEAR 11,580,972 (4,687,377) Other comprehensive expense during the year: Board o f directors rem uneration (500,000) - PROFIT (LOSS) FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR (4.687,377) Profit (loss) for the year attributable to: Equity holders o f the Parent 10,654,667 (2,582,103) N on-controlling interests 926,305 (2,105,274) 11,580,972 ( ) Total comprehensive income attributable to: Equity holders o f the Parent 10,154,667 (2,582,103) N on-controlling interests 926,305 ( ) 11 nsn.q7i (4 6X7 177) The attached notes 1 to 18 form part o f these consolidated financial statem ents.

8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 3 I December /2 Notes A ED A ED ASSETS Non-current assets Equipment and fixtures 4 507, ,021 Investment properties 6 83,100, ,607, Current assets Accounts receivable and prepayments 9 34,011,389 27,823,971 Due from a related party , ,085 Bank balances and cash 10 24,354, , TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital ,000, ,000,000 Statutory reserve 12 1,374, ,498 Shareholders account , ,000 Accumulated losses (65,297,148) (74,436,348) Equity attributable to equity holders of the parent 86,277, ,150 Shareholders account 15 40,956, Non-controlling interests (16,756,410) ( ) Total equity 110,477, ,871 Non-current liabilities Ijara financing arrangements 14 14,688,323 17,098,629 Due to related parties 15 2,639,998 2,180,251 Employees end of service benefits 197, , Current liabilities / Bank overdraft 10-2,993,52 k Accounts payable and accruals 13 4,247,519 3,775,380 Ijara financing arrangements 14 2,414,383 2,423,285 Y Due to related parties , Total liabilities TOTAL EQUITY AND LIABI Board The attached notes I to 18 form part of these consolidated financial statements. 4 <

9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 Decem ber 2013 Attributable to the equity holders of the /rare lit Noncontrolling Share capital Statutory reserve Shareholders' account Accumulated losses Total Shareholders' account interests Total Balance ai 1January 2012 ISO, , ,000 (71,854,245) 78, ,758,057 (15.577,441) Total comprehensive loss For the year (2,582,103) (2,582,103) - (2,105,274) (4,687,377) Movement during the year Balance at 31 December ,000, , (74,436,348) 76,123, (17,682,715) 99,396,871 Total comprehensive income for the year ,154,667 10,154, ,305 11,080,972 Transfer to statutory reserve ( *. Balance at 31 December 2013 i5o.oon.ooo zno.onn <6L22ZJJ3) Mti.75ft.jim 1lfl The attached notes 1 to 18 form part o f these consolidated financial statem ents.

10 CONSOLIDATED STATEMENT OF CASH FLOWS Y ear ended 31 D e c e m b e r 2013 Notes 2013 A ED 2012 OPERATING ACTIVITIES Profit/(loss) for the year 11,080,972 Non-cash adjustm ents: D epreciation 4 229,765 Write o ff equipm ent and fixtures 4 Reversal o f provision for doubtful debts, net (4,368,895) Provision for em ployees end o f service benefits, net 57,923 (Increase) / decrease in fair value o f investm ent properties 6 (4,410,453) Finance costs 1,491,350 Gain on sale o f investm ent property (2,119,107) Return on fixed deposits (58,145) 1,903,410 W orking capital changes: Property under developm ent Accounts receivable and prepaym ents (1,818,523) Due from a related party 97,071 A ccounts payable and accruals 472,139 Deferred income Due to related parties 7, N et cash from (used in) operating activities 7,982,196 \ INVESTING ACTIVITIES Additions to investm ent properties 6 (401,840) Proceeds from sale o f investm ent properties 7,461,400 Proceeds from sale o f investment properties under developm ent 7 A dditions to advances for purchase o f investm ent properties 8 Purchase o f equipm ent and fixtures 4 (105,319) Return on fixed deposits received 58,145 Net cash from investing activities 7,012,386 FINANCING ACTIVITIES Shareholders account Ijara financing arrangem ents paid (2,419,208) Finance costs paid (1,491,350) N et cash used in financing activities (3,910,558) - NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 11,084,024 Cash and cash equivalents at 1 January 13,270,398 CASH AND CASH EQUIVALENTS AT 31 DECEMBER (4,687,377) 348,423 31,860 51, ,265 3,279,894 ( ) (423,527) 178,090 (885,508) (858,085) (507,390) (312,000) ( ) (9, ) (2,607,141) 10,200,000 3,200,000 ( ) (697,544) ,198,379 (25,245,114) (3,279,894) ( ) (6,280,882) The attached notes 1 to 18 form part o f these consolidated financial statements. 6

11 31 D ecem b er CORPORATE INFORMATION Abu Dhabi M arina Real Estate Investm ent PJSC (the Com pany ) is a private joint stock com pany that was incorporated in Dubai, United Arab Emirates ( UAE ) in accordance with the provisions o f the UAE Federal Commercial Com panies Law No (8) o f 1984 (as amended). The Com pany s registered office is at P O Box 474, Dubai, UAE. The consolidated financial statem ents com prise the financial statements o f the Com pany, Rkaiz Properties LLC, Marsa Jordan Real Estate Developm ent LLC and M arsa Abu Dhabi Properties LLC and its subsidiary (collectively the G roup ). The beneficial interests in Rkaiz Properties LLC, Marsa Jordan Real Estate Development LLC and Marsa Abu Dhabi Properties LLC and its subsidiary are assigned to the Com pany. Accordingly, the consolidated financial statem ents o f the Group fully consolidate the financial statements o f Rkaiz Properties LLC, Marsa Jordan Real Estate D evelopm ent LLC and M arsa Abu Dhabi Properties LLC. The principal activities o f the Group involve owning, selling, purchasing and leasing real estate, and carrying out real estate project investment and all associated activities. The accom panying consolidated financial statem ents o f the Group for the year ended 31 December 2013 were authorised for issue by Board o f Directors on 30 January BASIS OF PREPARATION The consolidated financial statem ents have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International A ccounting Standards Board (IASB) and applicable requirements o f the UAE Com m ercial Com panies Law o f 1984 (as amended). The consolidated financial statem ents have been prepared in UAE Dirhams (), which is the functional currency o f the Group. The consolidated financial statem ents are prepared on a historical cost basis, modified for re-m easurem ent o f investment properties and investment properties under development, at fair value. Basis of consolidation The consolidated financial statem ents com prise the financial statem ents o f the Com pany and its subsidiaries as at 31 December each year. The consolidated financial statem ents include the follow ing subsidiaries: Country of Name o f subsidiary incorporation Principal activity % o f holding Marsa Jordan Real Estate Development LLC Jordan Real estate project investment 100% 100% Rkaiz Properties Co. LLC UAE Selling, purchasing and leasing real estate 100% 100% Marsa Abu Dhabi Properties LLC UAE Selling, purchasing and leasing real estate 100% 100% Marsa Al Nakeel Properties LLC (subsidiary o f Marsa Abu Dhabi Properties LLC) UAE Selling, purchasing and leasing real estate 51% 51% 7

12 31 December BASIS OF PREPARATION continued Basis of consolidation continued Subsidiaries are fully consolidated from the date o f acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statem ents o f the subsidiaries are prepared for the same reporting period as the parent com pany, using consistent accounting policies. All intra group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are elim inated in full. Total com prehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance. A change in the ow nership interest o f a subsidiary, w ithout a loss o f transaction. If the G roup loses control over a subsidiary, it: control, is accounted for as an equity D erecognises the assets (including goodw ill) and liabilities o f the subsidiary. Derecognises the carry ing am ount o f any non-controlling interest. Derecognises the cum ulative translation differences recorded in equity. Recognises the fair value o f the consideration received. Recognises the fair value o f any investm ent retained. Recognises any surplus or deficit in profit or loss. Reclassifies the parent's share o f com ponents previously recognised in other com prehensive income to profit or loss or retained earnings, as appropriate. 2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES The accounting policies adopted are consistent with those o f the previous financial year, except for the follow ing new and am ended IFRS: IAS I Presentation o f Items o f Other Comprehensive Income - Amendments to IAS I The am endm ents to IAS 1 introduce a grouping o f items presented in other com prehensive income (OCI). Items that could be reclassified (or recycled) to profit or loss at a future point in tim e now have to be presented separately from items that will never be reclassified. The am endm ent affected presentation only and had no impact on the G roup s financial position or perform ance. IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 These am endm ents require an entity to disclose information about rights to set-off financial instruments and related arrangem ents (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect o f netting arrangem ents on an entity s financial position. The new disclosures are required for all recognised financial instrum ents that are set o ff in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangem ent or sim ilar agreem ent, irrespective o f whether they are set o ff in accordance with IAS 32. As the Group is not setting o ff financial instruments in accordance with IAS 32 and does not have relevant offsetting arrangements, the am endm ent does not have an impact on the Company. IFRS 13 Fair Value Measurement IFRS 13 establishes a single source o f guidance under IFRS for all fair value m easurem ents. The standard does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. IFRS 13 requires an entity to disclose inform ation that helps users of its financial statem ents assess both o f the following: (a) For assets and liabilities that are measured at fair value on a recurring or non-recurring basis in the statem ent o f financial position after initial recognition, the valuation techniques and inputs used to develop those measurem ents, (b) For fair value m easurem ents using significant unobservable inputs, the effect o f the measurem ents on profit or loss or other com prehensive income for the period.

13 31 December CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES continued IFRS 13 Fair Value Measurement The application o f IFRS 13 has not materially impacted the fair value m easurem ents carried out by the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determ ined. Annual im provem ents to International Financial Reporting Standards. IAS 1 Presentation o f Financial Statements: Clarification o f the requirem ents for com parative information The adoption o f the above am endm ents did not have any impact on the financial perform ance and position o f the Group. 2.3 SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS Estimation uncertainty The key assum ptions concerning the future and other key sources o f estim ation uncertainty at the date of consolidated statem ent o f financial position, that have a significant risk o f causing a material adjustment to the carrying am ounts o f assets and liabilities within the next financial year, are discussed below. Revaluation o f investment properties and investment properties under development The Group carries its investment properties at fair value, with changes in fair value being recognized in the consolidated statem ent o f com prehensive income. The Group engaged independent valuation specialist to determine fair value as at 3 1 December The valuer used com parable market data to determ ine the fair value o f the investment properties and investm ent properties under development. Impairment on advances fo r purchase o f investment properties The Group treats advances for purchase o f investment properties as impaired when there is an objective evidence o f impairment. Any decline in value is considered as impairment and is recognised in the consolidated statement o f com prehensive income. Impairment o f rent and trade receivables An estimate o f the collectible am ount o f trade receivables is made when collection o f the full amount is no longer probable. For individually significant am ounts, this estimation is performed on an individual basis. Amounts which are not individually significant, but which are past due, are assessed collectively and a provision applied according to the length o f tim e past due, based on historical recovery rates. At the statem ent o f financial position date, gross rent and trade receivables were A ED 52,647,028 (2012: 50,734,780). with provision for doubtful debts am ounting to 23,601,874 (2012: 23,601,874). Any difference between the am ounts actually collected in future periods and the am ounts expected will be recognised in the consolidated statem ent o f com prehensive income. Judgments Classification o f property The Group determ ines w hether a property is classified as investment property or developm ent property: Investm ent property com prises land and buildings (principally offices, residential and retail property) which are not occupied substantially for use by, or in the operations of, the G roup, nor for sale in the ordinary course o f business, but are held primarily to earn rental income or capital appreciation or undeterm ined use. Developm ent property com prises property that is held for sale in the ordinary course of business. Principally, this is a property that the Group develops and intends to sell before or on completion of construction.

14 31 December SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS continued Judgments continued In the process o f applying the G roup s accounting policies, m anagem ent has made the following judgm ents, apart from those involving estim ations, which have the most significant effect in the am ounts recognised in the consolidated financial statem ents: Operating leases The Group has entered into com m ercial property leases on its investment properly portfolio. The Group has determined, based on an evaluation o f terms and conditions o f the arrangem ents, that it retains all the significant risks and rewards o f ow nership o f these properties and so accounts for the contracts as operating leases. 2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue recognition Sale o f properties Revenues on sale o f plots are recognised on the basis o f the full accrual method as and when all o f the following conditions are met: A sale is consummated and contracts are signed; The buyer s initial investment, to the date o f the financial statements, is adequate to demonstrate a commitment to pay for the property; and The Group has transferred to the buyer the usual risks and rewards o f ownership in a transaction that is in substance a sale and does not have a substantial continuing involvement with the property. Revenues on sale o f units or apartments are recognised when equitable interest in a property vests in the buyer and all the following conditions have been satisfied: The G roup has transferred to the buyer the significant risks and rewards o f ow nership o f the property; The G roup retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the property sold; The am ount o f revenue can be measured reliably; It is probable that the econom ic benefits associated with the transaction will flow to the Group; and The costs incurred or to be incurred in respect o f the transaction can be m easured reliably. Rental income Rental income is recognised over the life o f the lease term. Income from deposits Profit on deposits is recognised as the profit accrues using the effective interest method. Equipment and fixtures Equipment and fixtures are stated at cost less accumulated depreciation and any impairment in value. Depreciation is calculated on a straight line basis over the estimated useful lives o f assets as follows: Telephone systems Furniture and fixtures Buildings and decoration Computers 2 years 4 years 4 years 2 years Expenditure incurred to replace a com ponent o f an item o f equipment and fixtures, that is accounted for separately, is capitalised and the carrying am ount o f the component that is replaced is written off. Other subsequent expenditure is capitalised only when it increases future economic benefits o f the related item o f equipment and fixtures. All other expenditure is recognised in the consolidated statement o f comprehensive income as the expense is incurred. 10

15 31 Decem ber SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction o f an asset are capitalized (net o f interest income on temporary investment o f borrowings) as part o f the cost o f the asset until the asset is commissioned for use. Borrowing costs in respect o f com pleted assets or not attributable to assets are expensed in the period in which they are incurred. Property under development Properties acquired, constructed or in the course o f construction for sale are classified as property under development. Those are stated at the lower o f cost or net realizable value. The cost o f those properties includes the cost o f land and other related expenditures which are capitalized as and when activities that are necessary to get the properties ready for sale are in progress. The property is considered to be com plete when all related activities, including the infrastructure and facilities for the entire project have been com pleted. Investment properties Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition investment properties are stated at fair value which reflects market conditions at the reporting date. Gains and losses arising from changes in fair value o f investment properties are included in the consolidated statement o f comprehensive income in the year in which they arise. Investment properties are derecognised when either they have been disposed o f or when the investment properties are permanently withdrawn from use and no future economic benefits are expected from their disposal. Any gains or losses on the retirement or disposal o f investment properties are recognised in the consolidated statement o f comprehensive income in the year o f retirement or disposal. Transfers are made to investm ent property when, and only when, there is a change in use, evidenced by the end o f owner occupation, com m encem ent o f an operating lease to another party or completion o f construction or development. Transfers are made from investment properties when, and only when, there is a change in use, evidenced by com m encem ent o f ow ner occupation or com m encem ent o f developm ent with a view to sale. For a transfer from investm ent property to owner occupied property or inventories, the deemed cost o f property for subsequent accounting is its fair value at the date o f change in use. If the property occupied by the Group as an owner occupied property becom es an investment property, the Group accounts for such property in accordance with the policy stated under equipm ent and furnitures up to the date o f change in use. Investment properties under development Investment properties under developm ent represent land and developm ent works perform ed. These are initially recorded at cost, representing purchase price o f land and costs based on contractual paym ents for the design, procurement, developm ent and construction. Subsequent to initial recognition, investment properties under development are stated at fair value. Gain and losses arising from changes in fair values o f investment properties under developm ent are included in the consolidated statement o f com prehensive income in the year in which they arise. Investment properties under developm ent are derecognized when either they have been disposed o f or the investment properties under developm ent are perm anently withdrawn from use and no future econom ic benefit is expected from their disposal. Any gains or losses on the retirement or disposal are recognised in the consolidated statement o f com prehensive income in the year o f disposal.

16 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Financial instruments - recognition, de-recognition and offsetting A financial asset or a financial liability is recognised when the Group becomes a party to the contractual provisions o f the instrument. All regular way" purchases and sales o f financial assets are recognised on the trade date (i.e. the date that the G roup com m its to purchase or sell the asset). Regular way purchases or sales are purchases or sales of financial assets that require delivery o f assets within the tim e frame generally established by regulation or convention in the m arket place. A financial asset (or w here applicable a part o f a financial asset or a part o f group o f financial assets) is derecognised either when: (i) (ii) the rights to receive cash flows from the asset have expired; the Group retains the right to receive cash flows from the asset, but has assum ed an obligation to pay them in full w ithout m aterial delay to a third party under a pass through arrangement; or (iii) the G roup has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards o f the asset, or (b) has neither transferred nor retained substantially all the risks and rewards o f the asset, but has transferred control o f the asset. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different term s or the terms o f an existing liability are substantially modified, such an exchange or m odification is treated as a derecognition o f the original liability and the recognition o f a new liability, and the difference in the respective carrying am ounts is recognized in the consolidated statem ent o f com prehensive income. Financial assets and financial liabilities are only offset and the net am ount reported in the consolidated statem ent o f financial position when there is a legally enforceable right to set o ff the recognised am ounts and the Group intends to settle on a net basis or to realise the asset and settle the liability sim ultaneously. Impairment of financial assets The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a group o f financial assets is impaired. A financial asset or a group o f financial assets is deemed to be impaired if, and only if, there is objective evidence o f impairment as a result o f one or more events that has occurred after the initial recognition o f the asset and that loss event has an effect on the estim ated future cash flows o f the financial asset or the group o f financial assets that can be reliably measured. Impairment of non-financia! assets At each reporting date, the Com pany reviews the carrying amounts o f its non-financial assets to determine whether there is any indication that those assets have suffered an im pairment loss. If any such indication exists, the recoverable am ount o f the asset is estimated in order to determine the extent o f the im pairm ent loss (if any). Where it is not possible to estim ate the recoverable amount o f an individual asset, the Com pany estim ates the recoverable amount o f the cash-generating unit to which the asset belongs. W here a reasonable and consistent basis o f allocation can be identified, assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group o f cash-generating units for which a reasonable and consistent allocation basis can be identified. Recoverable am ount is the higher o f fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments o f the tim e value o f money and the risks specific to the asset. If the recoverable am ount o f an asset (or cash-generating unit) is estim ated to be less than its carrying amount, the carrying am ount o f the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised im m ediately in the consolidated statement o f com prehensive income.

17 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Impairment of non-financial assets continued For assets excluding goodwill, an assessm ent is made at each reporting date w hether there is any indication that previously recognised im pairm ent losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or CGUs recoverable amount. A previously recognised im pairment loss is reversed only if there has been a change in the assum ptions used to determ ine the asset s recoverable am ount since the last impairment loss was recognised. The reversal is limited so that the carrying am ount o f the asset does not exceed its recoverable amount, nor exceed the carrying am ount that would have been determined, net o f depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognized in the consolidated statement o f com prehensive income unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase. Cash and cash equivalents For the purpose o f the consolidated statement o f cash flows, cash and cash equivalents consist o f cash at banks and on hand and short term deposits with an original maturity o f three m onths or less. Accounts receivable Accounts receivable are stated at original invoice am ount less a provision for any uncollectible amounts. An estimate for doubtful debts is made when collection o f the full am ount is no longer probable. Bad debts are written o ff when there is no possibility o f recovery. Employees pension and end of service benefits The Group provides end o f service benefits to its expatriate employees. The entitlement to these benefits is based upon the em ployees final salary and length o f service, subject to the completion o f a minimum service period. The expected costs of these benefits are accrued over the period o f employment. With respect to its UAE national em ployees, the Group makes contributions to a pension fund established by the General Pension and Social Security Authority calculated as a percentage o f the em ployees salaries. The G roup s obligations are limited to these contributions, which are recognised in the consolidated statem ent o f com prehensive income when due. Ijara financing arrangements Profit-bearing Ijara financing is recorded at the proceeds received, net o f direct issue costs. bearing Ijara financing is measured using the effective profit method. Subsequently, profit- Finance charges are accounted for on an accrual basis. Accounts payable and accruals Liabilities are recognized for amounts to be paid in the future for goods or services received, whether billed by the supplier or not. Provisions Provisions are recognised when the Group has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and able to be reliably measured. Foreign currencies Transactions in foreign currencies are recorded at the rate ruling at the date o f the transaction. M onetary assets and liabilities denom inated in foreign currencies are retranslated at the rate o f exchange ruling at the reporting date. All differences are taken to the consolidated statem ent o f com prehensive income. Leases The determ ination o f w hether an arrangem ent is, or contains a lease is based on the substance o f the arrangem ent at inception date o f w hether the fulfilm ent o f the arrangem ent is dependent on the use o f a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangem ent.

18 31 December SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued Leases continued For arrangem ents entered into prior to 1 January 2005, the date o f inception is deemed to be 1 January 2005 in accordance with the transitional requirem ents o f ffric 4. Group as lessee Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership o f the leased item, are capitalised at the com m encem ent o f the lease at the fair value o f the leased property or, if lower, at the present value o f the minimum lease payments. Lease payments are apportioned between finance charges and reduction o f the lease liability so as to achieve a constant rate o f interest on the rem aining balance o f the liability. Finance charges are recognised in finance costs in the consolidated statement o f com prehensive income. A leased asset is depreciated over the useful life o f the asset. However, if there is no reasonable certainty that the Group will obtain ow nership by the end o f the lease term, the asset is depreciated over the shorter o f the estimated useful life o f the asset and the lease term. Operating lease paym ents are recognised as an operating expense in the consolidated statem ent o f com prehensive income on a straight-line basis over the lease term. Group as a lessor Leases in which the Group does not transfer substantially all the risks and benefits o f ownership o f an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount o f the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Fair values Fair values are calculated using m ethods such as net present value o f future cash flows. 2.5 FUTURE CHANGES IN ACCOUNTING POLICIES - STANDARDS ISSUED BUT NOT YET EFFECTIVE Standards and interpretations issued and expected to have an impact on the G roup s financial position, performance and / or disclosures but not yet effective up to the date o f issuance o f the consolidated financial statem ents are listed below: IFRS 9 Financial Instruments IAS 32 O ffsetting Financial Assets and Financial Liabilities A m endm ents to IAS 32 IAS 36 Recoverable Amount Disclosures for Non-Financial Assets A m endm ents to IAS 36 The Group does not expect these am endm ents to have any significant impact on the financial statements, when implemented in future periods. Improvements to International Financial Reporting Standards IFRS 9 Financial Instruments - hedge accounting (Am endm ents to IFRS 9, IFRS 7 and IAS 39) Investm ent Entities (Am endm ents to IFRS 10, IFRS 12 and IAS 27) IAS 32 O ffsetting Financial Assets and Financial Liabilities - Amendm ents to IAS 32 IAS 39 Novation o f Derivatives and Continuation o f Hedge A ccounting - Am endm ents to IAS IAS 36 Recoverable A m ount Disclosures for Non-Financial Assets - A m endm ents to IAS 14

19 Abu Dhabi Marina Real Estate investment PJSC 31 D ecem b e r 2013 GENERAL AND ADMINISTRATIVE EXPENSES Staff costs Legal and professional fees Rentals Others ,188,862 1,259, , ,050, , , EQUIPMENT AND FIXTURES Telephone systems Furniture and fixtures Buildings and decorations Computers Total 2013 Cost: At 1 January 2013 Additions 150, , ,455, , At 31 December ,940,986 Depreciation: At 1 January 2013 Charge for the year , At 31 December ,748 1, ,411 Net carrying amount: At 31 December S Cost: At 1 January' 2012 Additions Write off 16, ,380 76,497 1,019, (31.860) , ,544 (31.860) At 31 December Depreciation: At 1 January 2012 Charge for the year 16, , , , At 31 December Net carrying amount: At 31 December ,

20 31 Decem ber PROPERTY UNDER DEVELOPMENT At I January - 2,871,975 Additions during the year - 1,329,910 Sold during the year - (1, ) Transferred during the year (note 6) - (2, ) At 31 December INVESTMENT PROPERTIES At 1 January Additions during the year Transfers from advances for purchase o f investment properties (note 8) Transfers from property under developm ent during the year (note 5) Disposals during the year Increase / (decrease) in fair value o f investm ent properties At 31 December 2013 A ED 83,630, ,840 (5,342,293) 4,410, ,607,141 6,710,239 2,693,885 ( 10,200,000) (691,265) Investment properties are stated at fair value, which has been determ ined based on valuations performed by an accredited independent valuer, as at 31 Decem ber The fair values o f the properties have been determined by using the com parable method o f valuation based on transactions observable in the market. Investment properties represent office space on the 10th floor and the 13th floor in the Infinity Tow er and the six villas A064, E012, S518, A072, D021, E3D589, apartments 701, 702, 703, 708, 709, 710 in Sana 1 and apartments 1908 and 1910 in Burooj Views in M arina Square. The 13" floor is subject to a first degree mortgage o f up to 15,286,797 in favour o f a local Islamic bank against financing liabilities, while there is an undertaking to mortgage the villa E012 in favour o f local Islamic bank upon final issuance o f title deeds o f the m entioned villa. Rental income earned during the year from the investment properties am ounted to 6,150,028 (2012: 3,102,973). 7 INVESTMENT PROPERTIES UNDER DEVELOPMENT At 1 January - 3,200,000 Sold during the year _; ( ) At 31 Decem ber = = Investment properties under developm ent com prise land, which is stated at fair value, with changes in fair value being recognized in the consolidated statem ent o f com prehensive income. During the previous year, land has been sold at carrying value. 16

21 31 Decem ber ADVANCES FOR PURCHASE OF INVESTMENT PROPERTIES /2 At 1 January - 6,182,819 Additions during the year Transfers to investment properties (note 6) : (6,710,239) At 31 December Advances for purchase o f investm ent properties represent paym ents in advance by the Group for the purchase o f properties that are under construction. Advances also include certain contractual obligations relative to the respective properties. During the previous year, the properties has been com pleted and transferred to investment properties. 9 ACCOUNTS RECEIVABLE AND PREPAYMENTS Trade receivables (*) 49,600,405 50,146,374 Less: provision for im pairm ent o f investm ent properties transferred to provision on trade receivables (*) (23,601,874) (23, ) Trade receivables, net 25,998,531 26,544,500 Rent receivable, net o f provision 3,046, ,406 Accrued income - 24,103 O ther receivables 26, ,926 Receivable for investm ent properties sold 4,312,100 - Prepayments and other receivables 628, ,036 Advances for purchase o f investm ent properties 2,793,013 7,186,908 Less: provision for loss on impairment o f advances for purchase o f investm ent properties (2,793,013) (7, ) 34*011, (*) In 2010, the M arsa Abu Dhabi Properties LLC, the C om pany's subsidiary, ( first party ) signed an agreem ent with A! Jazeera International Developm ent Com pany LLC, Sama Emirates Real Estate Investment LLC and Green Touch International LLC ( second parties ) to buy 23% o f C20 land in Reem Island for an am ount o f ,374. Al Jazeera International Development Com pany LLC signed a separate agreement with the m aster developer o f Reem Island to buy the C20 land jointly on behalf o f them selves and the first party. The second parties were not able to honour the term s and conditions o f the agreement, and were not able to acquire the ownership from the master developer and transfer the partial ownership o f the land to the nam e o f the first party. In October 201 1, the Com pany filed a law suit against the second parties to term inate the agreem ent to buy the C20 land. The court has issued its prelim inary ruling on 11 January 2012 in favour o f M arsa Abu Dhabi Properties LLC to terminate the agreem ent and request Al Jazeera International Developm ent LLC to pay the full am ount received from the Com pany plus a com pensation am ount o f 1 million and a 5% delay interest starting from 27 O ctober 2011 and up to the final settlem ent date. 17

22 31 Decem ber A C C O U N T S R E C E IV A B L E AND P R E PA Y M E N T S continued In February 2012, the first party appealed the first ruling and requested all the second parties collectively to fulfil the liabilities due to the Com pany. On 28 February 2012, the appeal was ruled in the C om pany s favour, whereby Al Jazeera International D evelopm ent Com pany LLC will pay an am ount o f 27,429,558, Emirates Real Estate LLC will pay an am ount o f 16,468,994 and International Green Touch LLC will pay an amount of 5,701,822 and these am ounts will be subject to a 5% delay interest starting from 27 October 2011 and up to the final settlem ent date. On 31 Decem ber 2011, the land has been transferred from investment properties under developm ent to trade receivables with the carrying value o f the land as o f 31 December 201 I. In July 2012, the second parties appealed to the court o f cassation which issued a decision to stop the execution of the judgm ent. The hearing was held on 18 February 2013 by the court o f cassation which upheld the previous decision. In February 2014, a final settlem ent agreem ent was signed between the first party and the second party, wherein the second parties agreed to transfer all o f their rights in C20 land to the first party. It was also agreed that the execution o f the court judgm ent shall be waived unless the second parties fail to transfer C20 land to the first party after com pleting the necessary form alities with the m aster developer. In February 2014, the first party also signed an agreem ent with Central Park Properties to swap C20 land against C 2 1 land and the agreem ent was provided to the master developer for execution. The Com pany will reverse any excess provision to the consolidated statem ent o f com prehensive income upon settlement o f the term s o f the above agreements. Movements in the provision recognised in the consolidated statement o f financial position are as follows: Provision as at 1 January 7,186, Reversal during the year (4,368,895) _; Provision at 31 Decem ber As at 31 December, the ageing o f unimpaired trade and rent receivables is as follows: Past due but not impaired Neither past due nor Total impaired days day days >120 days ,600, ,600, ,146, , CASH AND CASH EQUIVALENTS Cash and cash equivalents com prise o f the follow ing consolidated statem ent o f financial position amounts: A ED Bank balances and cash 24,354,422 16,263,919 Bank overdraft : (2, )

23 31 December SHARE CAPITAL ,000,000 authorised, issued and fully paid ordinary shares o f 1 each STATUTORY RESERVE As required by the UAE Com m ercial Com panies Law No (8) o f 1984 (as am ended) and the C om pany s Articles o f Association, 10% o f the profit for the year is transferred to the statutory reserve. The Com pany may resolve to discontinue such annual transfers when the reserve totals 50% o f the paid-up share capital. The statutory reserve is not available for distribution. 13 ACCOUNTS PAYABLE AND ACCRUALS Trade payables Accrued expenses Rental advance from custom ers Other payables , ,750 2,589, , , ,315 2,574, IJARA FINANCING ARRANGEMENTS Effective profit rate % Maturity Current Ijara (1) Ijara (2) 9% 7.75% , , , Total current Non-current 1 to 5 years Ijara (I) 9% Ijara (2) 7.75% ,916 10, , , ,825,057 Non-current > 5 years Ijara (1) Ijara (2) 9% 7.75% ,438 2,183, , Total non-current Total

24 31 December IJARA FINANCING ARRANGEMENTS continued The Group entered into different Ijara financing arrangem ents with a local Islamic bank to finance the purchase of investment properties. The Ijara financing facilities are repayable in different semi-annual rental instalments. These financing arrangem ents are secured by the corporate guarantees o f the shareholders and a first degree mortgage on the investment properties and a com prehensive insurance over the mortgaged villas the Group owns as o f the reporting date. 15 RELATED PARTY TRANSACTIONS Related parties represent associated companies, shareholders, directors and key management personnel of the Group, and companies o f which they are principal owners. Pricing policies and terms o f these transactions are approved by the G roup's management. Balances with related parties reflected in the consolidated statement o f financial position as o f 31 December are follows: Due from a related party Current assets: Mr Ali A1 Khaja ,085 Due to related parties Current liabilities: Aayan Properties 493,352 1,200,000 Al Dura National 7,575,000 - Mr Adel Al Zarouni ,068, Non-current liabilities: Aayan Properties 2,639, Shareholders account: Al Nakheel United Real Estate PJSC , Shareholders' account: Emirates N ational Investm ents 100, Mazaya National Investm ents 100, Compensation of key management personnel The remuneration o f directors and other members o f key m anagement during the year were as follows: Short-term benefits 657,300 1,050,279 End o f service benefits 57,923 51,

25 Abu Dhabi Marina Real Estate Investment PJSC 31 Decem ber GUARANTEES AND COMMITMENTS As at 31 December 2013, the G roup s future com m itm ents in respect o f purchase o f properties am ounted to nil (2012: nil). Operating leases - Company as lessor: The Group has entered into leases on its investment properties. The leases typically have lease term s between 1 year and 4 years and include clauses to enable periodic upward revision o f the rental charge according to prevailing market conditions. The Group does not have non-cancel table operating leases as o f 31 December RISK MANAGEMENT The G roup s principal financial liabilities comprise accounts payable, amounts due to related parties and bank borrowings. The main purpose o f these financial liabilities is to raise finance for the G roup s operations. The Group has various financial assets such as bank balances and cash, amounts due from related parties and other receivables, which arise directly from its operations. The main risks arising from the G roup s financial instruments are profit rate risk, credit risk, liquidity risk and foreign currency risk. The Board o f Directors reviews and agrees policies for managing each o f these risks which are summarised below: Profit rate risk Profit rate risk is the risk that the fair value o f future cash flows o f a financial instrum ent will fluctuate because o f changes in m arket profit rates. The G roup s profit rate risk arises from bank deposits and bank borrowings. The Group manages its profit rate risk by having fixed rate Ijara financing arrangem ents. The Group analyses its profit rate exposure on a dynam ic basis. The Group calculates the impact on profit and loss o f a defined profit rate shift based on the sim ulations perform ed. The impact on profit on a 1% shift in the profit would be a maximum increase or decrease o f n il (2012: 120,064). Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Group attem pts to control credit risk by lim iting transactions with specific counterparties, and continually assessing the creditw orthiness o f counterparties. With respect to credit risk arising from financial assets o f the Group, the G roup s exposure to credit risk arises from default o f the counterparty, with a m aximum exposure equal to the carrying am ount o f these instruments. Liquidity risk Liquidity risk is the risk that an institution will be unable to meet its net funding requirem ents. Liquidity risk can be caused by m arket disruptions or credit downgrades which may cause certain sources o f funding to dry up immediately. To guard against this risk, m anagem ent has diversified funding sources and assets are managed with liquidity in m ind, maintaining a healthy balance o f cash and cash equivalents. The table below sum m arises the maturities o f the G roup s financial liabilities at 31 December, based on contractual undiscounted paym ents: 21

26 31 D ecem b er R ISK M A N A G E M E N T continued Liquidity risk continued On Less than 3 to 12 1 to 5 demand 3 months months years > 5 vears Total At 31 December 2013 Accounts payable - - 1,657, ,657,959 Ijara financing arrangements - 343,529 3,379,675 15,456,646 3,087,685 22,267,535 Due lo related parties - - 8,068,852 2,639,998-10,708, , , At 31 December 2012 Bank overdraft 2, , Accounts payable I jara financing arrangements - 1, , , ,205 Due to related parties , Foreign currency risk Foreign currency risk is the risk that financial instrument will fluctuate due to changes in foreign exchange rates. Assets are typically funded in the same currency as that o f the business being transacted to eliminate exchange exposures. M anagement believes that there is a minimal risk o f significant loss due to exchange rate fluctuations and consequently the Group does not hedge its foreign currency exposure. Capital management The primary objective o f the G roup's capital management is to ensure that it maintains healthy capital ratios in order to support its business and m axim ise shareholder value. The Group monitors capital on the basis o f the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total Islamic financing arrangem ents (including current and non-current as shown in the consolidated statem ent o f financial position), trade and other payables less cash and bank balances. Total capital is calculated as equity as shown in the consolidated statem ent o f financial position plus net debt. The gearing ratios at 31 Decem ber were as follows: Total Ijara financing arrangem ents (note 14) 17,102,706 19,521,914 Trade and other payables (note 13) 4,247,519 3,775,380 Bank overdraft (note 10) - 2,993,521 Less: cash and bank balances (note 10) (24,354,422) ( ) Net debt (3,004,197) ,896 Total equity attributable to parent 86,277, ,150 Total capital Gearing ratio ( 4% ) 12%