Accounting Frontline. Issue: 03. Accounting Advisory Services. KPMG in the Lower Gulf

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1 Accounting Frontline Issue: 03 Accounting Advisory Services KPMG in the Lower Gulf 2017 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

2 Contents IFRS 9 for non-financial entities or corporate entities 4 Accounting for nonrefundable up-front fees under IFRS 15 7 Accounting potpourri a mixture of accounting issues 9 Hedging for dummies 11 IFRS 16 Leases KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

3 Foreword The landscape of international accounting is evolving increasingly quickly. The IASB has issued new standards on revenue, leases and financial instruments with implementation due over the next few years. The IASB has also been issuing amendments and exposure drafts to update existing standards. Many of the changes that were planned as a response to the economic crisis have now been issued and entities are busy gearing themselves up to implement the changes. Change is, perhaps, the only constant in a swiftly changing accounting universe. It is indeed an exciting time for both accountants and auditors alike. In this newsletter, we evaluate the significant aspects of these changes and explain how they are expected to impact the financial statements of entities in the United Arab Emirates and beyond: Most banks have by now taken tangible steps to implement IFRS 9 - Financial instruments. However, IFRS 9 has an impact beyond just banks. Our article on IFRS 9 for non-banking clients explores some of these changes. IFRS 15 - Revenue from contracts with customers is expected to have a wide impact across different sectors. Our article on IFRS 15 evaluates the accounting for nonrefundable fees under the new standard and compares it with the current requirements. Hedging has traditionally been seen as complex and difficult. In our article, we focus on the non- financial services sector and explain some of the more challenging concepts. Accounting Potpourri, our new section, clarifies some upcoming IFRS changes. IFRS 16 - Leases is expected to grow the balance sheets of lessees with significant operating leases. We highlight some of the key requirements of the new standard. As always, we would be delighted to receive feedback from you on topics that we should cover in forthcoming issues of Accounting Frontline. Yusuf Hassan Partner Accounting Advisory Services KPMG Lower Gulf 2017 KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

4 I Accounting Frontline Issue: 03 IFRS 9 for non-financial entities or corporate entities IFRS 9 - effective from 1 January revamps accounting for financial instruments (such as loans, investments, receivables and deposits) through its impact on classification, hedging, measurement and disclosures. Obviously, banks and financial institutions are the most impacted. However, IFRS 9 has a significant impact on non-financial entities as well. Classification Classification is how financial assets are classified on an entity s balance sheet. It is important because it determines the basis of measurement, as well as how changes are accounted for. The basis of measurement is important since it affects volatility. For instance, fair value changes in an equity share classified as fair value through profit or loss (FVTPL) is recognized in an entity s P&L. However, fair value changes in a non-trading equity share classified as fair value through other comprehensive income (FVOCI) can t be recognized in a profit or loss account. Any such movements, including that arising on sales, are recognized in OCI. The first step in the classification process is to establish that the cash flows from assets are solely payments of principal and interest (SPPI). This ensures only plain vanilla lending arrangements are classified and measured at amortized cost. The next step is to assess the business model in which the financial assets are managed. Nonfinancial entities need to classify their financial assets into amortized cost, fair value through profit or loss account or fair value through OCI business models, based on, for example, how the portfolios are managed as shown through the portfolio s KPIs, the way portfolio managers are compensated, or the basis of measurement for internal reporting. Appropriate documentation is required to support any conclusions reached. Debt instruments that meet the SPPI criteria may also be held in a business model for liquidity purposes that is, some of the portfolio may be sold to meet cash flow needs (perhaps for acquisitions). Sales should be more than infrequent and of significant value. For these portfolios, interest income, foreign exchange revaluations and impairment losses or reversals are recognized in the profit or loss and computed in the same manner as financial assets measured at amortized cost. The remaining fair value changes are recognized in OCI. Upon derecognition, the cumulative fair value change recognized in OCI is recycled to the profit or loss account. Impairment losses must be recognized for all investments in debt securities not classified as FVTPL. These reflect probability-weighted estimates of expected credit losses (ECLs) based on historical experience and forward looking information: 12 month ECLs for assets where credit risk has not significantly increased and lifetime ECLs where it has.

5 Accounting Frontline Issue: 03 I Special exemption: Trade and lease receivables and contract assets The accounting treatment of trade receivables is of immense importance to non-financial entities as these are one of the most significant financial assets. In most cases, trade receivables should meet the criteria to be classified as amortized costs. From an impairment perspective, IFRS 9 allows nonfinancial entities with trade receivables that do not have a significant financing component to record lifetime ECLs without applying the general impairment model. For receivables and contract assets that do have a significant financing component, IFRS 9 gives a choice: either recognize lifetime ECLs or apply the general impairment model. Currently, most non-financial entities use a matrix approach to estimate incurred losses based on the number of days past due. This can still be used for trade receivables under IFRS 9 although with certain changes to reflect ECLs against incurred losses. As a result, bad debt provisions are expected to both increase and become more volatile. Practical example - adapted from example 12 of the implementation guidance to IFRS 9 ABC LLC, a manufacturer, has a portfolio of trade receivables of AED30m in It operates in one geographical region. Its customer base is a large number of small clients. Trade receivables are categorized by common risk characteristics that reflect customers abilities to pay amounts due. The trade receivables do not have a significant financing component in accordance with IFRS 15 - Revenue from contracts with customers. Paragraph of IFRS 9 states that the loss allowance for such trade receivables is always equal to lifetime expected credit losses. To determine the portfolio s expected credit losses, ABC LLC uses a provision matrix based on historical observed default rates over the expected life of the trade receivables, adjusted for forward-looking estimates. At every reporting date, the default rates are updated and changes in forward-looking estimates are analyzed. In this example, economic conditions are forecast to deteriorate. ABC LLC develops a provision matrix: Current 1-30 days past due days past due days past due More than 90 days past due Default rate 0.3% 1.6% 3.6% 6.6% 10.6% Trade receivables are measured using the provision matrix, with lifetime expected credit loss allowances calculated by multiplying gross carrying amounts by the lifetime expected credit loss rate: Gross carrying amount Lifetime expected credit loss allowance Current AED15,000,000 AED45, days past due AED7,500,000 AED120, days past due AED4,000,000 AED144, days past due AED2,500,000 AED165,000 More than 90 days past due AED1,000,000 AED106,000 AED 30,000,000 AED 580,000

6 I Accounting Frontline Issue: 03 Hedging IFRS 9 allows entities to switch to a new hedge accounting model that is aligned more closely with risk management. Under the new model, more risk management strategies (such as those related to commodity price risks) are likely to qualify for hedge accounting. The new model is principle based and permits hedge accounting to be applied even if there is ineffectiveness in excess of 80 to120 percent of the hedged item. The bright line no longer exists and has been replaced by a requirement to demonstrate that an economic relationship exists and the hedge ratio between the hedging instrument and the hedged item is still appropriate. The approach is judgmental and is expected to result in more hedges qualifying for hedge accounting. However, ensure an appropriate governance process is in place for significant decisions and judgments. Disclosures IFRS 9 moves away from a rule-based approach towards a judgmental approach and increases flexibility. However, it requires extensive disclosures to explain how judgment has been exercised, as well as quantitative disclosures about financial assets. Extensive disclosures are also needed where a nonfinancial entity applies hedge accounting. Mindset change is welcome but will require extra judgment IFRS 9 simplifies the complex accounting requirements of IAS 39 and aligns accounting with the way in which risk is managed. The responsibility for some accounting decisions, judgments and disclosures has moved from the finance department to a joint decision between risk management and finance. While the mindset change is welcome, it is likely to result in significant effort and investments.

7 Accounting Frontline Issue: 03 I Accounting for nonrefundable up-front fees under IFRS 15 Non-refundable fees under IFRS 15 Under IAS 18, many entities argued for upfront recognition of refundable fees. The new IFRS 15 - Revenue from contracts with customers modifies how revenue is recognized in an entity s profit or loss statement and is expected to significantly impact entities across sectors. IFRS 15 is mandatory for accounting periods commencing on or after 1 January Some contracts include nonrefundable up-front fees that are paid at or near inception such as joining fees for health clubs, activation fees for telecommunication contracts, and setup fees for outsourcing contracts. IFRS 15 helps determine the timing of recognition for such fees. In a local example, the guidance could impact the way local free zone authorities recognize their annual subscription fees. Relevant requirements An entity must assess whether the nonrefundable up-front fee relates to the transfer of a promised good or service to the customer. In many cases, that activity does not result in the transfer of a promised good or service to the customer that is, it s not a separate performance obligation but is an administrative task. If the up-front fee is in effect an advance payment for performance obligations to be satisfied in the future, revenue must be recognized when those goods or services are provided. The revenue recognition period extends beyond the initial contractual period if the entity grants the customer the option to renew the contract and that option provides the customer with a material right. Flowchart summarizing the accounting treatment: Promised good or service Does the fee relate to specific goods or services transferred to customers? Advanced payment for future goods or services Recognize as revenue upon transfer of promised good or service Recognize as revenue when control of good or service is transferred

8 I Accounting Frontline Issue: 03 Practical example Cable company X enters into a one-year contract to provide cable television to Mrs Z. In addition to a monthly service fee of AED100, Company X charges a one-time up-front installation fee of AED10. Company X has determined that its installation services do not transfer a promised good or service to the customer, but are instead a set-up activity and an administrative task. Mrs Z can renew the contract annually for an additional one-year period at the monthly service fee rate. Does the contract renewal grant Mrs Z a material right? After comparing the installation fee with the total one-year service fees of AED1,200, Company X concludes that the nonrefundable up-front fee does not grant Customer Z a material right as it is not deemed significant enough to influence Customer Z s decision to renew or extend the services beyond the initial one year term. The installation fee is therefore treated as an advance payment on the contracted one year cable service and is recognized as revenue over the one year contract term. What has changed? Under IAS 18 - Revenue, any initial or entrance fee is recognized as revenue when there is no significant uncertainty over its collection and the entity has no further obligation to perform any continuing services. It is recognized on a basis that reflects the timing, nature, and value of the benefits provided. Such fees may be recognized totally or partially up-front or over the contractual or customer relationship period, depending on facts and circumstances. Under IFRS 15, the entity needs to assess whether a nonrefundable, up-front fee relates to a specific good or service transferred to the customer and, if not, whether it gives rise to a material right to determine the timing of revenue recognition. What should you do? IFRS 15 is an important change to how revenue is recognized and will affect systems and processes as well as accounting. Entities are encouraged to evaluate the changes and to gear themselves to comply with the requirements of the standard.

9 Accounting Frontline Issue: 03 I Accounting potpourri a mixture of accounting issues What s new? We consulted our Accounting Advisory Services professionals to identify some emerging accounting issues. We hope these generate discussion and clarity in your dayto-day work. The clarifications: A temporary difference must now be calculated by comparing the carrying amount of an asset against its tax base at the reporting date. When an entity is determining whether or not a temporary difference exists, it should not consider: The expected manner of recovery of the related assets (for instance, by sale or by use) Whether any deferred tax asset is likely to be recoverable. Estimation of future taxable profit The IASB clarified that determining the existence and amount of the temporary differences and estimating the future taxable profit against which deferred tax assets can be utilized are two different steps. Estimating any future taxable profit inherently includes the expectation that an entity will recover more than the carrying amount of the asset. Therefore, if an entity believes that is likely to realize more than the carrying amount of an asset at the end of a reporting period, it should incorporate this assumption into its estimate of future taxable profits. Narrow scope amendment to IAS 12 Deferred tax assets on unrealized losses were being recognized in different ways so the IASB has issued a narrow scope amendment to increase clarity by clarifying the general underlying principles. These amendments are effective for annual periods beginning on or after 1 January How do deferred tax assets affect future taxable profits? The tax deduction resulting from the reversal of deferred tax assets is excluded from the estimated future taxable profit used to evaluate the recoverability of those assets.

10 I Accounting Frontline Issue: 03 IAS 7 - Net debt amendment For some time, investors have been calling for more disclosures on net debt, a term not defined in IFRS. The IASB has responded by requiring disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. This amendment is mandatory for accounting periods commencing on or after 1 January This should help users evaluate changes in borrowings. The disclosure requirements also apply to: Financial assets arising from financing activities (such as derivative assets that hedge long-term borrowings) Other assets and liabilities if they meet the disclosure objective (for example, cash and cash equivalents and interest payments that are classified as operating activities). The amendment does not prescribe a specific format but encourages management to consider the disclosure that best meets the objective based on the individual circumstances of the entity. The amendment suggests a reconciliation between opening and closing balances should meet the disclosure requirement. One possible way of providing the disclosures required by the amendment could be: Long-term borrowings Short-term borrowings 20X1 Cash flows Non- cash changes Acquisition Foreign exchange movements Fair value changes 20X2 22,000 (1,000) ,000 10,000 (500) ,700 Lease liabilities 4,000 (800) ,500 Assets held to hedge long term borrowings (675) (25) (550) Total liabilities from financing activities ,325 (2,150) (25) 33,650 ===== ======= ======= ======== ======== ======= Note that this example only shows current period amounts. Corresponding amounts for the preceding periods must be presented in accordance with IAS 1 - Presentation of financial statements Help us to help you! Accounting potpourri is an interactive feature where we interact with you and comment where we can. Send in your queries, comments and questions and we will try to answer them in future editions.

11 Accounting Frontline Issue: 03 I Hedging for dummies How does IFRS 9 help? Under IAS 39, hedging is a complex area of judgment. Many companies avoid hedge accounting, even if they hedge. IFRS 9 attempts to simplify the accounting for financial instruments and to align hedging with risk management. Hedging, previously largely the prerogative of banks and financial institutions, is now more accessible and simplified for corporates. Explaining the concept An airline CFO and a treasurer are reviewing their P&L in As ticket surcharges tested demand elasticity and fuel became an ever larger portion of cost, locking the price of fuel at US$100/bbl might have looked like a good strategy. Only one quarter later, everybody had become an oil and gas analyst, smarting about an overdue correction. Two human biases are often part of hedging strategies - the risk avoidance bias and the hindsight bias: Source: KPMG analysis of OPEC data Trend to continue Price plateaus Price reverts to mean Actual price Risk avoidance bias where certainty is preferred over a gamble is based on the logic of locking in US$100/bbl before things get even worse. Hindsight bias where things appear to be more predictable after the fact makes it seem more obvious that oil prices were going to fall. This indicates some of the issues associated with forecasting - because the past never tells us which way the future is heading. Treasurers might with hindsight - have analyzed the number of oil platforms in the Gulf of Mexico, tracked China s automotive market, or Ali al-naimi s body language. If an entity wants to remain focused on its core business, it should consider hedging despite the fact that in a years time it is quite likely that somebody will ask: Why did we buy an umbrella when it didn t rain? To understand why this is the wrong question, we must understand the basic concepts of risk management. Sea hedges In Miyako, Japan, seawall defenses were 10m above sea level - the watermark of a tsunami 50 years earlier. When the 2011 earthquake struck, causing the Fukushima disaster, the wave that hit Miyako was 17 meters high. If we decide a 20m wall is too expensive, we have two options: If our processes are strong enough to recover, we might decide to let the once-in-a-lifetime black swan loss hit us, and then continue with operations. If the wave repeats a bit too often, then maybe we can take our village somewhere else in other words, consider tweaking or pivoting the business model. In either case, the sea walls (our hedges), built even at 10m and viewed by some as ineffective, saved lives. In risk analytics, hedging is often linked to cash flow at risk (CFaR) methodology. CFaR models try to build worst case scenarios by coinciding revenue reductions (and delays) with increases in expenses. Nevertheless, these worst case scenarios allow correlations to cancel out some effects - if your revenues are falling, the chances are that your cost base will also diminish a bit. The focus is on cash flow because, from an operational perspective, cash is often the scarcest and most valuable element. While hedging strategies try to address cash setbacks, accounting for it is usually only an afterthought.

12 I Accounting Frontline Issue: 03 Risk is a probability of an occurrence (frequency) of an unwanted event multiplied by the consequence (severity) of the event. For example, for an individual taking a decision whether or not to buy an umbrella, one may feel that one soaked suit won t hurt. However, dividing it over one s capacity to withstand helps decide whether or not hedging would be appropriate. Maybe the individual is prone to pneumonia? If done properly, hedging increases an entity s capacity to withstand risk. Yet, from an operational perspective, hedging should be viewed only as a temporary solution because hedging really just buys time. Ideally, treasury, risk and operations departments should work together to minimize the underlying reasons that give rise to the exposures. From 2018, with IFRS 9, accounting rules are finally better aligned with risk and treasury ways of reasoning: For a fair value hedge you can use IFRS 9 non-derivatives IAS 39 derivatives only Invest in a fund with overweight exposure to the silica mining industry, whose performance fashions a 0.8 correlation to an input glass price. Under IAS 39, we could only do this through a derivative - although this at least offered a cheap exposure through leverage. Required derivatives often didn t exist and structuring them was prohibitively priced. Assuming creativity and cash are available, IFRS 9 might allow it. Non-financial items can be hedged IFRS 9 through risk components Basis risk change might involve IFRS 9 hedge ratio rebalancing IAS 39 hedge discontinuation We realize that glass producers are repeating elevator producers trick and keeping a larger share of the value for themselves. The correlation between a basket of silica mining companies and the price of glass falls to 0.6, making our hedge less effective. In an IAS 39 world, we would have to discontinue the hedge and create a new one (assuming we still want to continue the relationship at 0.6 correlation). In our bright and shiny IFRS 9 world, according to paragraph basis risk (another name for a situation where a change in the underlying instrument does not fully offset the instrument we are hedging), the change might involve simply rebalancing the hedge ratio to restore its effectiveness. Of course, an economic relationship should exist between the variables in the first instance. IFRS 9 makes hedging easier but it still isn t for everyone CFaR models help you think about risk management, Start by identifying and eliminating operational risk - and only then think about hedging to reduce finance and treasury risk. CFaR models enable you to identify and leverage correlations between asset classes and their differing volatilities to formulate actionable hedging strategies that can be translate into significant savings. Hedging is not for everyone but with the changes to IFRS 9, hedge accounting is now more straightforward. IAS 39 only in its entirely Because the final price of the glass also includes transport, production and administrative expenses and profit margins, we are actually addressing only one source of risk, or decomposing the risk into pieces, when investing in the silica mining industry. Under IAS 39, this was impossible. Under IFRS 9, it can be done.

13 Accounting Frontline Issue: 03 I IFRS 16 Leases Technical overview In January 2016, IASB issued IFRS 16 - Leases, redefining how leases are accounted for by the lessee. Under IAS 17 - Leases, a lessee had to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 requires the lessee to recognize almost all lease contracts on the balance sheet, with an optional exemption for certain short-term leases and leases of low-value assets. IFRS 16 will significant impact on lessees that have entered into contracts classified as operating leases under IAS 17. Scope IFRS 16 applies to all lease contracts except for: Leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources Leases of biological assets within the scope of IAS 41 - Agriculture Service concession arrangements within the scope of IFRIC 12 - Service concession arrangements Licenses of intellectual property granted by a lessor within the scope of IFRS 15 - Revenue from contracts with customers Rights held by lessees under licensing agreements within the scope of IAS 38 - Intangible assets for items such as films, video recordings, plays, manuscripts, patents and copyrights. A lessee may choose to apply IFRS 16 to leases of intangible assets other than those mentioned above. What is a lease? IFRS 16 defines a lease as a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for a consideration. In practice, it can be challenging to distinguish between a contract that conveys the right to use an asset and a contract for a service that is provided using the asset. Under IFRS 16, a contract contains a lease if there is an identified asset and the contract gives the right to control the use of that asset for a period of time in exchange for a consideration. An asset can be explicitly or implicitly identified, but is not identified if the supplier has a substantive right to substitute it. Substitution rights are substantive if the supplier can substitute an alternative asset and benefits economically from doing so. If a customer cannot readily determine whether the supplier has a substantive substitution right, it is presumed that the right is not substantive. Separating contract components Contracts often combine different kinds of obligations, such as lease components or a combination of lease and non-lease components. For example, leasing an office could include the lease of equipment and maintenance. In this situation, IFRS 16 requires each lease component to be identified and accounted for separately. Bundled contracts need to be carefully separated.

14 I Accounting Frontline Issue: 03 Lease terms As with IAS 17, IFRS 16 defines the lease term as the non-cancellable period of the lease plus periods covered by an option to extend or terminate - if the lessee is reasonably certain to exercise the extension option or not exercise the termination option. Recognition and measurement exemptions IFRS 16 contains two recognition and measurement exemptions: 1. Short-term leases (12 months or less) 2. Leases for low value underlying assets If either of the exemptions is applied, the leases are accounted for in the same way as current operating leases - on a straight-line or another systematic basis that better represents the pattern of the lessee s benefit). Election can be made on a lease-by-lease basis. Initial recognition and measurement The new lessee accounting model within IFRS 16 is the most important change. Under IFRS 16, lessees no longer distinguish between finance lease contracts (on balance sheet) and operating lease contracts (off balance sheet), but they are required to recognize a right-of-use asset and a corresponding lease liability for almost all lease contracts. This is based on the principle that, in economic terms, a lease contract is the acquisition of a right to use an underlying asset with the purchase price paid in instalments. This grosses up balance sheets by substantially increasing recognized financial liabilities and assets for entities with significant lease contracts and that are currently classified as operating leases. The lease liability is initially recognized on the commencement day and measured at an amount equal to the present value of the lease payments during the lease term that are not yet paid. Rightof-use assets are initially recognized on the commencement day and measured at cost, as the amount of the initial measurement of the lease liability, plus any lease payments made to the lessor at or before the commencement date less any lease incentives received, the initial estimate of restoration costs and any initial direct costs incurred by the lessee. The provision for the restoration costs is recognized as a separate liability. Discount rate The lessee uses the interest rate implicit in the lease as the discount rate. This is the rate that causes the present value of lease payments and the unguaranteed residual value to equal the sum of the fair value of the underlying asset and any initial direct costs of the lessor. If this rate cannot be readily determined, the lessee should instead use its incremental borrowing rate. Initial direct costs IFRS 16 defines initial direct costs as incremental costs that would not have been incurred if a lease had not been obtained. This includes commissions or other payments made to existing tenants to obtain a lease. All initial direct costs are included in the initial measurement of the right-of-use asset.

15 Accounting Frontline Issue: 03 I Subsequent measurement The lease liability is measured in subsequent periods using the effective interest rate method. The right-of-use asset must be depreciated in accordance with IAS 16 - Property, plant and equipment. The lessee must also apply the impairment requirements in IAS 36 - Impairment. Other measurement models IFRS 16 also permits lessees to use the fair value model under IAS 40 - Investment property or the revaluation model in IAS 16 if it relates to a class of property, plant and equipment and the lessee applies the revaluation model to all assets in that class. Lessor accounting IFRS 16 does not substantially change IAS 17 lessor accounting. The lessor still has to classify leases as either finance or operating, depending on whether the risk and rewards of the underlying asset have been transferred. For a finance lease, the lessor recognizes a receivable at an amount equal to the net investment in the lease (the present value of the aggregate of lease payments receivable by the lessor and any unguaranteed residual value). If an operating lease, the lessor continues to present the underlying assets. Transition IFRS 16 is effective for reporting periods beginning on or after 1 January Earlier application is permitted, but only alongside IFRS 15. What does it all mean? Balance sheets of lessees with major operating leases are likely to be significantly impacted. Both the asset and liability sides are expected to increase and the impact on balance sheet ratios could be considerable. Impacted entities should already be assessing the new standard and considering its impact.

16 Contact us: Raajeev B Batra Partner Head of Risk Consulting raajeevbatra@kpmg.com Yusuf Hassan Partner Head of Accounting Advisory Services yusufhassan@kpmg.com Bhaskar Sahay Director Accounting Advisory Services bsahay@kpmg.com kpmg.com/ae kpmg.com/om The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation KPMG Lower Gulf Limited and KPMG LLP, operating in the United Arab Emirates, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. Printed in the UAE. The KPMG name and logo are registered trademarks or trademarks of KPMG International KPMG Lower Gulf Limited and KPMG LLP, operating in the UAE, member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.