IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFUL

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1 ANNUAL REPORT

2 IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFUL H.H. Sheikh Nawaf Al Ahmad Al Jaber Al Sabah Crown prince of the State of Kuwait H.H. Sheikh Sabah Al Ahmad Al Jaber Al Sabah Amir of the State of Kuwait H.H. Sheikh Nasser Al Mohammed Al Ahmad Al Sabah Prime minister of the state of Kuwait

3 CONTENTS BOARD MEMBERS 6 EXECUTIVE MANAGEMENT 6 CHAIRMAN S LETTER 8 INDEPENDENT AUDITOR S REPORT 10 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 12 CONSOLIDATED STATEMENT OF INCOME 13 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 14 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 15 CONSOLIDATED STATEMENT OF CASH FLOWS 16 NOTES TO THE CONSOLIDATED 18 TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 5

4 BOARD MEMBERS Marzouq Jassim Al Marzouq CHAIRMAN Ahmad Abdulaziz Al Sarawi VICE CHAIRMAN & CEO Shavak Srivastava BOARD MEMBER EXECUTIVE MANAGEMENT Marzouq Jassim Al Marzouq CHAIRMAN Ahmad Abdulaziz Al Sarawi VICE CHAIRMAN & CEO David Boesley GM OPERATIONS AND MARKETING Adam Shepherd GM LEASING Rachid Kazma GM PROJECTS Tamer Ali Ayoub HEAD OF ACCOUNTS 6 Annual Report

5 CHAIRMAN S LETTER HONORABLE SHAREHOLDERS PEACE AND GOD S MERCY AND BLESSINGS BE UPON YOU, ON BEHALF OF THE BOARD MEMBERS, MYSELF AND THE EXECUTIVE TEAM OF TAMDEEN SHOPPING CENTERS COMPANY, IT IS MY PLEASURE TO PRESENT TO YOU THE ANNUAL REPORT ON THE PERFORMANCE OF THE COMPANY FOR THE FISCAL YEAR ENDED ON 31ST DECEMBER, WHICH REPRESENTS A SUMMARY OF THE COMPANY S ACHIEVEMENTS DURING LAST YEAR. HONORABLE BROTHERS, The current global events and its implications on the local economy had and still have impact on the economic cycle and affecting all businesses including real estate investment business which represents the most important investment activity for our company. Emanating from the understanding of the Company s Board members and its Executive Team to these events as well as the successive changes, we set our sight since end of year on several strategic policies and objectives and endeavored to accomplish them with extreme prudence and vision during year. These policies actually had great impact on the growth of the Company s assets and profits as compared with last year. Such impact was manifested through the following: First: Preserved high occupancy rates at 360 Mall at yearend without compromising the standard for the investors. Second: Operated Sama Salmiya Commercial Complex in the second half of year, where the occupancy rate reached 85%. Moreover, the Geant Hypermarket Chain which belongs to FuCom Company (an affiliate company) is occupying a space on the ground floor and the basement of this complex, thus making it extremely competitive with its counterparts who conduct the same business, and also contributory to increasing the Company s operational revenues. Third: Complete acquisition of Tamdeen Entertainment Company, which is specialized in providing distinct entertainment services, and also the owner of the entertainment trademarks The Bowl Room, The Freeze Club and Infunity. Hence, it is considered a good investment opportunity since it compliments the Company s main activity. Fourth: Executed an investment amounted to 25% of the shares of FuCom Company at the end of year, which specializes in managing and operating the hypermarkets and also owns the rights for (Geant Hypermarket) trademarks; currently considered amongst the leading and largest hypermarket chains in the world, managed according to the best international standards of retail business. Fifth: Succeeded in realizing the main objective of establishing GLA Company, which specializes in managing and operating the commercial complexes, the matter had great impact on raising the operation efficiency of the complexes under its management, and this reflected clearly on increasing the revenues and profits of these complexes. Sixth: Continued the construction and development works in many real estate investment projects, whereby the Company has completed the construction works of Sama Ghurnata Project comprising several commercial shops, restaurants, business offices and a supermarket. This project is expected to be finalized at the end of the present year (2011). Moreover, the Company is expected to commence executing and completing Sama AlJahra Project during the second quarter of the present year (2011), where this project comprises business offices and a supermarket. In addition to the aforesaid, during the year the Company began, in collaboration with Tamdeen Group companies, preparing the studies and designs works for the commercial area of the Maysam Project labeled as The Eight which is considered amongst the most important future projects for the Company in the domain of real estate investment, and it will comprise a chain of international restaurants, several commercial shops, and a building for hotel apartments. HONORABLE BROTHERS, The well thoughtout regional expansion is still considered amongst our strategic objectives, and we are pursuing it through slow but definite steps. In this context, the Company is now concluding the consultation and technical studies for our investment projects at the brotherly State of Qatar through Barwa AlDoha Real Estate Company, an affiliate company and considered amongst the leading companies specialized in the domain of real estate investment. HONORABLE BROTHERS, Despite the Company s expansion in its current projects and the increasing level of spending on these projects, thanks to God the Company has carried out exclusive performance as well as high rates of growth, which were manifested clearly in the following: First: Increased the Company s total assets in 31st December to (232,589,098 Kuwaiti Dinars), representing 7% growth rate as compared with last year. Second: Realized net profits amounted to (3,331,773 Kuwaiti Dinars) as of 31st December as compared with losses at the amount of (367,908 Kuwaiti Dinars) as on 31st December. Third: The revenues from operation and other activities amounted to (17,452,760 Kuwaiti Dinars), while the operational costs and the general expenses amounted to (10,401,298 Kuwaiti Dinars), in addition to total financing charges of nearly (3,719,689 Kuwaiti Dinars). HONORABLE BROTHERS, According to the aforesaid, it can be recognized that despite the negative situations and adverse economical challenges prevailing in our region, yet Tamdeen Shopping Center Company thanks to God has managed to realize enormous improvement in its performance due to the distinct operational assets it owns. HONORABLE SHAREHOLDERS, On this occasion, on behalf of my colleagues, members of the Board of Directors, myself, and the Executive Team of the Company, I would like to extend earnest thanks and gratitude to His Highness the Amir Sheikh Sabah Al Ahmad Al Jaber Al Sabah may God protect him, His Highness the Crown Prince Sheikh Nawaf Al Ahmad Al Jaber Al Sabah may God protect him, and His Highness the Prime Minister Sheikh Naser Al Mohammed Al Ahmad Al Sabah may God protect him, for their continuous support to the private sector in the country, and also for their honorable visit to the Amiri opening of the 360 Mall on 23rd February 2011, which was amongst the events of the State s celebrations for the National Day and Liberation Day of our beloved country Kuwait. IN CONCLUSION, I would like to extend utmost thanks to the honorable shareholders of the Company for the constant backing and trust they bestowed upon us, and to the members of the Board of Directors and the Executive Management Team and all the personnel in the Company for the genuine and diligent efforts they put forth towards the success of Tamdeen Shopping Centers Company. God is the guardian of success,,, Peace and God s Mercy and Blessings be upon you, MARZOUQ JASSIM AL MARZOUQ CHAIRMAN 8 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 9

6 INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying consolidated financial statements of Tamdeen Shopping Centers Company (K.S.C.C), the Parent Company and its subsidiaries referred to as the Group which comprise the consolidated statement of financial position as of 31 December and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. 10 Annual Report MANAGEMENT S RESPONSIBILITY FOR THE CONSOLIDATED Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITORS' 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 whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of 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 of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Bader A. AlWazzan (Licence No. 62A ) Al Fahad, Al Wazzan & Co. Deloitte & Touche Kuwait 6 March 2011 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. OPINION In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December, and of its consolidated 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 Furthermore, in our opinion, proper books of accounts have been kept by the Parent Company and the consolidated financial statements, together with the contents of the report of the Board of Directors relating to these consolidated financial statements, are in accordance therewith. We further report that we obtained all the information and explanations that we required for the purpose of our audit and that the consolidated financial statements incorporate all information that is required by the Commercial Companies Law of 1960, as amended, and by the Parent Company s Articles of Association; that an inventory was duly carried out; and that to the best of our knowledge and belief, no violations of the Commercial Companies Law of 1960, as amended, or of the Articles of Association of the Parent Company have occurred during the year ended 31 December that might have had a material effect on the business of the Group or on its consolidated financial position. TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 11

7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 31 DECEMBER (ALL AMOUNTS ARE IN KUWAITI DINAR) CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED 31 DECEMBER (ALL AMOUNTS ARE IN KUWAITI DINAR) Assets Noncurrent assets Property and equipments Investment properties Investment in associates Receivables Current assets Lands held for trading Inventories Receivables Available for sale investments Investments at fair value through profit or loss Cash, current accounts, deposits and investment portfolios Total assets Equity and liabilities Equity Equity attributable to shareholders of the Parent Company Share capital Share premium Statutory reserve Change in fair value reserve Foreign currency translation reserve Retained gains / (losses) Noncontrolling interest Total equity Liabilities Noncurrent liabilities Loans and bank facilities Trade and other payables Post employment benefits Current liabilities Trade and other payables Loans and bank facilities Total liabilities Total equity and liabilities NOTE ,068, ,000,000 20,497,503 8,130, ,695,609 11,454, ,372 13,012,154 4,539,622 4,696,941 33,893, ,589, ,000,000 14,000, ,038 (585,844) 75,357 1,576, ,251,703 6,150, ,402,334 79,462,500 3,068, ,164 82,845,750 21,034,519 7,306,495 28,341, ,186, ,589,098 81,264,550 77,255,553 21,944,165 12,873, ,338, ,654 13,465,866 2,698, ,831 7,209,773 23,984, ,323, ,000,000 14,000,000 (1,622,048) 1,678,877 (1,547,939) 112,508,890 6,264, ,773,723 78,846,600 3,018, ,954 82,084,713 10,008,055 6,456,715 16,464,770 98,549, ,323,206 Revenues Operating revenues Operating costs Gains from change in fair value of investment properties Gross profit Other operating expenses Gain on sale of properties and equipments Impairment of property and equipments Impairment of receivables Other operating income General and administrative expenses Gain from operation Gains / (losses) from investments at fair value through profit or loss Gains from available for sale investments Group s share from associates results Group s share from excess of the fair value of net assets of an associate over the acquisition cost Interest payables Finance charges Losses from foreign currency differences Board of Directors remuneration Net profit / (loss) for the year before deductions KFAS Zakat Net profit / (loss) for the year Attributable to Shareholders of the Parent Company Noncontrolling interest Net profit / (loss) for the year NOTE ,864,464 (2,917,908) 5,524,949 13,471,505 (71,755) 35,000 (237,821) (4,425,408) 517,941 (2,114,578) 7,174, , ,149 (398,626) 110,443 (3,719,689) (137,014) (3,000) 3,426,961 (15,418) (79,770) 3,331,773 3,310,129 21,644 3,331,773 3,429,283 (1,805,534) 1,623,749 (81,834) 564, ,646 (1,775,819) 437,209 (108,269) 147,301 (328,534) 538,057 91,226 (1,132,703) (11,195) (1000) (367,908) (367,908) (385,392) 17,484 (367,908) The accompanying notes are an integral part of these consolidated financial statements The accompanying notes are an integral part of these consolidated financial statements Ahmad Abdul Aziz Al Sarawi Vice Chairman & CEO Marzouq Jassim Al Marzouq Chairman 12 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 13

8 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER (ALL AMOUNTS ARE IN KUWAITI DINAR) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER (ALL AMOUNTS ARE IN KUWAITI DINAR) Net profit / (loss) for the year Other comprehensive income Net change in fair value of available for sale investments Foreign currency translation Total other comprehensive (losses) / income Comprehensive income for the year Attributable to: Shareholders of the Parent Company Noncontrolling interest NOTE 9 3,331,773 1,036,204 (1,739,366) (703,162) 2,628,611 2,742,813 (114,202) 2,628,611 (367,908) (653,623) 1,651, , , , , ,595 Balance as of 1 January Total comprehensive income for the year Balance as of 31 December EQUITY ATTRIBUTABLE TO OWNER S OF THE PARENT COMPANY Share capital 100,000, ,000,000 Share premium 14,000,000 14,000,000 Statutory reserve Change in fair value reserve (968,425) (653,623) (1,622,048) Foreign currency translation reserve 289,100 1,389,777 1,678,877 Retained earning/ (losses) (1,162,547) (385,392) (1,547,939) Total 112,158, , ,508,890 Noncontrolling Interest 5,986, ,833 6,264,833 Total 118,144, , ,773,723 Balance as of 1 January 100,000,000 14,000,000 (1,622,048) 1,678,877 (1,547,939) 112,508,890 6,264, ,773,723 Total comprehensive income for the year 1,036,204 (1,603,520) 3,310,129 2,742,813 (114,202) 2,628,611 Transferred to statutory reserve 186,038 (186,038) Balance as of 31 December 100,000,000 14,000, ,038 (585,844) 75,357 1,576, ,251,703 6,150, ,402,334 The accompanying notes are an integral part of these consolidated financial statements The accompanying notes are an integral part of these consolidated financial statements 14 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 15

9 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER (ALL AMOUNTS ARE IN KUWAITI DINAR) NOTE Cash Flows from operating activities Net profit / (loss) for the year Adjustments for: Depreciation and amortization Gains from fair value of financial investments Impairment in payments paid for purchase of properties Impairment of property and equipments Gain on sale of projects in progress Gains / (losses) from investments at fair value through profit or loss Gains from available for sale investments Group s share from associates results Group s share from excess of fair value of an associate s net assets over acquisition cost Finance costs Post employment benefits Operating profit before changes in working capital Inventories Trade receivables Investments at fair value through profit or loss Trade payables Net cash generated from operating activities Cash flows from investing activities Paid for acquisition of property, equipment, projects in progress and investment properties Advance payment to purchase property and equipment Proceeds from sale of property, equipment and projects in progress Paid for acquisition of investments available for sale Cash generated from acquisition of subsidiary Paid for acquisition of an associate Cash dividends received Net cash used in investing activities Cash flows from financing activities Paid for finance costs Net proceeds from / (paid for) loans and bank facilities Net cash used in financing activities Net decrease in cash and cash equivalents Foreign exchange differences Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year ,331, ,711 (5,524,949) 4,425, ,821 (35,000) (263,814) (136,149) 398,626 3,719, ,103 6,741,219 (46,718) 1,988, ,645 (683,459) 8,729,756 (7,776,667) (287,770) 1,195,224 (804,574) (360,000) 136,149 (7,897,638) (6,082,848) 2,664,244 (3,418,604) (2,586,486) (58,366) 6,309,244 3,664,392 (367,908) 382,208 (564,467) 108,269 (147,301) 328,534 (538,057) 1,132,703 35, ,367 12,428 (10,115,418) (513,237) 16,697,916 6,451,056 (28,695,657) (429,086) 21,497,610 1,051,677 (495,000) 147,301 (6,923,155) (450,000) (2,333,906) (2,783,906) (3,256,005) 112,675 9,452,574 6,309,244 The accompanying notes are an integral part of these financial statements. 16 Annual Report

10 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER 1 COMPANY S OVERVIEW TAMDEEN SHOPPING CENTERS (K.S.C.C) THE PARENT COMPANY WAS INCORPORATED ON 1 MARCH 2005 ACCORDING TO ESTABLISHMENT CONTRACT REGISTERED BY NO. 1148/C/ PART (1). THE COMPANY IS LOCATED IN AL ZAHRAA 360 MALL 4TH FLOOR OFFICE 5 P.O. BOX SAFAT KUWAIT. THE OBJECTIVES OF THE PARENT COMPANY ARE: Owning, sale and purchase of lands and properties and development thereof for the Company inside and outside Kuwait, and carrying out maintenance and management of third parties properties. Owning, sale and purchase of shares and bonds in real estate companies for the Company s account only inside and outside Kuwait, and establish and manage real estate funds (subject to approval of Central Bank of Kuwait). Conducting studies and providing any advisory services in the real estate sector, provided that the conditions applicable to the service provider should be met. Owning, managing and operating hotels, health clubs and touristic facilities, and renting in and renting out thereof. Owning and managing the commercial markets and residential complexes. Utilization of the surplus funds by investing these funds in portfolios managed by specialized entities. Direct participating in setting up the infrastructures of BOT based residential, commercial and industrial areas and projects and real estate facility management. The Parent Company may have interest, or participate with entities that carry out similar activities or these that can assist the Parent Company in achieving its objectives inside Kuwait and abroad and it may establish, affiliate or purchase these entities. These consolidated financial statements include the financial statements of the Parent Company and its subsidiaries (together referred to as the Group ) as follows: Tamdeen Entertainment Co. K.S.C.C. Tamdeen Bahraini Real Estate Co. B.S.C.C. GLA for property management (W.L.L) Ownership 100% (0.35% under concession letter) 59% 100% (1% under concession letter) Country of incorporation Kuwait Bahrain Kuwait The financial statements were authorized for issue by the Board of Directors on 6 March BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented in these financial statements unless otherwise stated. 21 BASIS OF PREPARATION The financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS) on the historical cost basis except for certain financial instruments that are measured at fair values. 211 New and revised IFRSs affecting amounts reported in the current year (and / or prior years) The following new and revised IFRSs have been adopted in these consolidated financial statements. The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. Amendments to IFRS 5 (Noncurrent Assets Held for Sale and Discontinued Operations) Amendments to IAS 1 Presentation of Financial Statements Amendments to IAS 7 Cash Flows IFRS 3 (revised in 2008) Business Combinations IAS 27 (revised in 2008) Consolidated and Separate Financial Statements IAS 28 (revised in 2008) Investments in Associates IFRIC 17 Distributions of Noncash Assets to Owners IFRIC 18 Transfers of Assets from Customers The amendments to IFRS 5 clarify that the disclosure requirements in IFRSs other than IFRS 5 do not apply to noncurrent assets (or disposal groups) classified as held for sale or discontinued operations unless those IFRSs require (i) specific disclosures in respect of noncurrent assets (or disposal groups) classified as held for sale or discontinued operations, or (ii) disclosures about measurement of assets and liabilities within a disposal group that are not within the scope of the measurement requirement of IFRS 5. All the assets and liabilities of a subsidiary should be classified as held for sale when the Group is committed to a sale plan involving loss of control of that subsidiary, regardless of whether the Group will retain a noncontrolling interest in the subsidiary after the sale. The amendments to IAS 1 clarify that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or noncurrent. The amendments to IAS 7 specify that only expenditures that result in a recognized asset in the statement of financial position can be classified as investing activities in the statement of cash flows. IFRS 3 (2008) allows a choice on a transactionbytransaction basis for the measurement of noncontrolling interests at the date of acquisition either at fair value or at the noncontrolling interests share of recognized identifiable net assets of the acquiree. IFRS 3 (2008) changes the recognition and subsequent accounting requirements for contingent consideration. IFRS 3 (2008) requires acquisitionrelated costs to be accounted for separately from the business combination, generally leading to those costs being recognized as an expense in profit or loss as incurred. The revised Standard has affected the Group s accounting policies regarding changes in ownership interests in its subsidiaries that do not result in loss of control. Increases in interests in existing subsidiaries or decreases in interests in existing subsidiaries that did not involve a loss of control are dealt with in equity, with no impact on goodwill or profit or loss. When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised standard requires the Group to derecognise all assets, liabilities and noncontrolling interests at their carrying amount and to recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognized at its fair value at the date control is lost. The resulting difference is recognized as a gain or loss in profit or loss. The principle adopted under IAS 27(2008) (see above) that a loss of control is recognized as a disposal and reacquisition of any retained interest at fair value is extended by consequential amendments to IAS 28. The Interpretation provides guidance on the appropriate accounting treatment when an entity distributes assets other than cash as dividends to its shareholders. The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from customers and concludes that when the item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognise the asset at its fair value on the date of the transfer, with the credit being recognized as revenue in accordance with IAS 18 Revenue. 18 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 19

11 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER 212 New and revised IFRSs in issue but not yet effective The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: IFRS 9 Amendments to IFRS 7 IAS 24 Amendments to IAS 1 Amendments to IAS 32 IFRIC 19 Financial Instruments Level of disclosures about Credit risk and collateral held Related Party Disclosures Presentation of analysis of items of other comprehensive income Classification of Rights Issues Extinguishing Financial Liabilities with Equity Instruments IFRS 9. This standard will become effective for financial years beginning on or after 1 January This standard establishes principles for the financial reporting of financial assets that will present relevant and useful information to users of the financial statements for their assessment of the amounts, timing and uncertainty of the entity s future cash flows. Most of other amendments will have impact on disclosures and presentation only. 22 BASIS OF CONSOLIDATION SUBSIDIARIES The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the noncontrolling interests even if this results in the noncontrolling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intragroup transactions, balances, income and expenses are eliminated in full on consolidation. Changes in the Group s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests. Any related accumulated items in equity will be accounted for as if the Company had directly disposed of the relevant assets (reclassified to profit or loss or transferred directly to retained earnings). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting. BUSINESS COMBINATIONS Acquisitions of businesses combination are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisitiondate fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisitionrelated costs are generally recognized in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer s previously held equity interest in the acquiree over the net of the acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisitiondate amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree and the fair value of the acquirer s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain. Noncontrolling interests may be initially measured either at fair value or at the noncontrolling interests proportionate share of the recognized amounts of the acquiree s identifiable net assets. The choice of measurement basis is made on a transactionbytransaction basis. When a business combination is achieved in stages, the Group s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (the date when the Group obtains control) and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. GOODWILL Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group s cashgenerating units (or groups of cashgenerating units) that is expected to benefit from the synergies of the combination. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods. INVESTMENTS IN ASSOCIATES An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group s share of the profit or loss and other comprehensive income of the associate. When the Group s share of losses of an associate exceeds the Group s interest in that associate, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognized immediately in the profit or loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases. When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group consolidated financial statements only to the extent of interests in the associate that are not related to the Group. 23 PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation and impairment losses. Property and equipment are depreciated on the straightline method over their estimated useful lives considering their residual values at the end of their estimated useful lives, which are as follows: Buildings and constructions Games, machinery and equipments Furniture, fixtures and computers Vehicles Estimated useful life (Year) The estimated useful lives of property and equipment are periodically reviewed and effect of any such changes is recognized prospectively in the consolidated statement of income. Gain or losses resulting from the disposal of property and equipment is included in the consolidated statement of income being the difference between the selling price and net carrying value of the property and equipment at the date of sale. 20 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 21

12 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER Project under construction are included in property, plant and equipment in the consolidated statement of financial position until they are completed and ready for their intended use. At that time, they are reclassified under similar assets and the depreciation is calculated from this date. Properties being constructed or developed principally for investment property are stated as projects in progress. These are stated at cost till completing the construction or development and they accounted for as investment properties. 24 INVESTMENTS PROPERTIES During the period, the Group changed the accounting policy of the investment properties. The Group decided to adopt the fair value model instead of the cost model. The Group s management believes that applying the fair value model will result in more fairly presented financial statements. According to the previous policy, the Group was applying the cost model where as the investment properties were recorded at historical cost less accumulated depreciation and any other accumulated impairment losses. Investment properties were depreciated on straight line method on its estimated useful life. According to the fair value model, investment properties are initially measured at its cost including the transaction s cost. Subsequently it is remeasured at fair value and gains and losses are recognized in the statement of income. There is no impact on the retained earnings resulted from these changes in the accounting policies as there is no significant difference between the fair value and the book value of these investments properties as of 31 December. 25 IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS OTHER THAN GOODWILL At the end of each reporting period, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. The recoverable amount is the higher of an asset s fair value less costs to sell or value in use. Impairment losses are recognized in the income statement for the period in which they arise. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the extent that it does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. 26 LANDS HELD FOR TRADING Lands are classified at cost when acquired in order to be sold as lands held for trading. Land and real estate held for trading are stated at the lower of cost or its net realizable value. Net realizable value is determined based on the basis of estimated sale value, less the estimated expenses necessary to complete the sale. 27 INVENTORIES Inventories are stated at the lower of weighted average cost and net realizable value. 28 FINANCIAL INSTRUMENTS Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. FINANCIAL ASSETS Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (FVTPL), held to maturity, availableforsale (AFS) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets. All regular way purchases or sales of financial assets are recognized and derecognised on a trade date basis. The Group has determined the classification of its financial assets as follows: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL) Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. Financial assets at FVTPL are stated at fair value, with any gains arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in (note 3.3). LOANS AND RECEIVABLES Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables and cash and cash equivalent) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for shortterm receivables when the recognition of interest would be immaterial. AVAILABLE FOR SALE (AFS) AFS financial assets are nonderivatives and are not classified as (a) loans and receivables, (b) heldtomaturity investments or (c) financial assets at fair value through profit or loss. The financial assets available for sale are remeasured at fair value. The fair value is determined in the manner described in note 3. Changes in the fair value of availableforsale financial assets are recognized in other comprehensive income and accumulated under the heading of changes in fair value reserve. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period. Dividends on AFS equity instruments are recognized in profit or loss when the Group s right to receive the dividends is established. Foreign exchange gains and losses are recognized in other comprehensive income. IMPAIRMENT IN VALUE Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment will be affected. For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. Objective evidence of impairment for a portfolio of receivables could include the Group s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognized is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the income statement. In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. DERECOGNITION The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset in its entirety, the difference between the asset s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. FINANCIAL LIABILITIES Financial liabilities (including borrowings) are recognized initially at fair value, net of transaction costs incurred subsequently measured at amortised cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. DERECOGNITION The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged and expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognized in profit or loss. 29 CASH AND CASH EQUIVALENT Cash and cash equivalents represent cash on hand and at banks, cash at portfolios, and time deposits that mature within three months from the date of placement. 22 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 23

13 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER 210 BORROWINGS Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statement of income over the period of the borrowing using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the financial position date. 211 POST EMPLOYMENT BENEFITS The Parent Company is liable under Kuwait Labor Law to make payments under defined benefit plans to employees at cessation of employment. The defined benefit plan is unfunded and is based on the liability that would arise on involuntary termination of all employees on the financial position date. This basis is considered to be a reliable approximation of the present value of this liability. 212 TRADE PAYABLES the consolidated statement of financial position as a finance lease obligation. Operating lease payments are recognized as an expense on a straightline basis over the lease term. In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straightline basis 215 FINANCE COSTS Finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of that asset. Capitalization of finance costs is suspended during extended periods in which active development is interrupted. Capitalization of finance costs is ceased when substantially all the activities necessary to prepare the asset for its intended use are completed. Other finance costs are recognized as expenditures in the period in which they are incurred. 216 FOREIGN CURRENCIES Functional and presentation currency 3 FINANCIAL RISK MANAGEMENT The Group s financial assets and liabilities include the following financial instruments acquired in the normal course of business as of 31 December and : Available for sale assets, which include investments in shares (note 9). Investments at fair value through profit or loss, which include investments in shares (note 10). Loans and receivables, which include receivables (note 8), and cash and cash equivalents (note 11). Financial liabilities, which include payables (note 15), and loans and bank facilities (note 14) 31 FINANCIAL RISK FACTORS Loans and bank facilities (note 14). Time deposits (note 11). Financial instruments issued at fixed interest rate expose the Group to fair value interest rate risk arises from changes in interest rates. Financial instruments issued at variable interest rates expose the Group to cash flow interest rate risks. The Group s management monitors interest rate risk by regular tracking of market interest rates. Price risks Equity price risk is the risk that value of the instrument will fluctuate as a result of changes in market prices (other than those arising from foreign exchange risk and interest rate risk). Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective yield method. 213 REVENUE RECOGNITION Service revenues are recognized on delivery of service. Interest income is recognized on a time proportion basis. Dividend income is recognized when the right to receive it is established. 214 OPERATING LEASE Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Group as lessor Rental income from operating leases is recognized on a straightline basis over the term of the relevant lease. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group s net investment outstanding in respect of the leases. The Group as lessee Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease. The corresponding liability to the lessor is included in Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates( the functional currency ). The consolidated financial statements are presented in Kuwaiti Dinars, which is the Parent Company s functional and the Group s presentation currency. Transactions and balances Foreign currency transactions are translated at the exchange rates to Kuwaiti Dinars prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of income. Group Companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: Assets and liabilities for each financial position presented are translated at the closing rate at the date of the financial position. Income and expenses for each income statement are translated at average exchange rates. All resulting exchange differences are recognized as a separate component of equity. The Group s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk, and price risk), credit risk and liquidity risk. These risks are monitored and managed by the top management. MARKET RISK Market risk is the risk that an enterprise may incur financial losses due to adverse movements in market price of investments, interest and foreign currency rates. Foreign Exchange Risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group manages its risks arising from changes in foreign currencies rates through monitoring the markets exchange rates on a daily basis Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market rate of return. The Group is exposed to interest rate risk as it holds the following financial instruments: The Group is exposed to equity securities price risk because of investments held by the Group and classified on the financial position as available for sale, and investments at fair value through profit or loss. These investments are managed by specialized companies the Group diversifies its portfolio. CREDIT RISK Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation causing the other party to incur a financial loss. Financial assets, which potentially subject the Group to credit risk, consist principally of cash and cash equivalents and trade and other receivables. The Group manages this risk by placing cash with high credit rating banks. LIQUIDITY RISK Liquidity risk is the risk that an enterprise will encounter difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk management comprises principally obtaining adequate cash and cash equivalents, and highly liquid financial instruments, as well as maintaining the financial resource to the Group. Management monitors rolling forecasts of the Group s liquidity reserve on the basis of expected cash flows. 24 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 25

14 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER The following are the financial commitments maturity dates as of 31 December : 33 FAIR VALUE ESTIMATION Liabilities One month 1 3 Months 3 months 1 year 1 2 years 2 5 years The fair values of financial assets and financial liabilities are determined as follows: The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. Trade payables Loans and bank facilities 288, , ,703 2,077,889 19,395,071 7,128,249 6,153,622 3,068,086 89,537,573 The fair values of other financial assets and financial liabilities (excluding those described above) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis. The following are the financial commitments maturity dates as of 31 December : The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. Liabilities Trade payables Loans and bank facilities One month 331, , Months 752,688 1,742,684 3 months 1 year 8,923,725 6,720, years 8,973, years 3,018,159 90,491,162 Level one: Level two: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Quoted prices in active markets for similar instruments, or prices declared by investee fund managers, or other valuation techniques where important inputs are based on comparable market information, either directly or indirectly. Level three: Inputs for the asset or liabilities that are not based on observable market data. 32 CAPITAL RISK MANAGEMENT: The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents balances) and equity (comprising issued capital, reserves, retained earnings and noncontrolling interests). The gearing ratios at 31 December and were as follows: The table below represents the financial instrument s analysis that recorded at fair value on the levels above mentioned: Assets Available for sale investments Level one 4,539,622 4,539,622 Total 4,539,622 4,539,622 Total loans and bank facilities (note 14) Less : cash and cash equivalents (note 11) Net debt Total equity Total capital Gearing ratio 86,768,995 (4,696,941) 82,072, ,402, ,474, % 85,303,315 (7,209,773) 78,093, ,773, ,867, % Assets Investments at fair value through profit or loss Available for sale investments Level one 466,831 2,698,844 3,165,675 Total 466,831 2,698,844 3,165, Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 27

15 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER 4 PROPERTY AND EQUIPMENT 4 PROPERTY AND EQUIPMENT (CONTINUED) Buildings & constructions Games, machinery & equipment Furniture, fixtures & computers Vehicles Projects in progress Total Buildings & constructions Games, machinery & equipment Furniture, fixtures & computers Vehicles Projects in progress Total Cost As at 1 January Acquisition of a subsidiary Additions Disposals Transferred from projects in progress Transferred to investment properties As at 31 December Accumulated depreciation As at 1 January Acquisition of a subsidiary Depreciation for the year Disposals As at 31 December 1,049,363 1,049,363 13,117 13, ,068 7, ,405 1,209, , , , ,920 25,575 5,206 (110,619) 95,082 86,329 9,522 34,381 (72,171) 58,061 4,010 12,485 16, ,058 2, ,356,376 7,353,153 32,926,432 (66,249,211) (1,742,768) (77,462,180) 79,181, ,044,374 7,391,213 32,939,063 (66,359,830) (77,462,180) 81,552, ,907 9, ,575 (72,171) 288,090 Cost As at 1 January Additions Disposals Impairment Transferred from projects in progress Transferred to investment properties Foreign currency differences As at 31 December Accumulated depreciation As at 1 January Depreciation for the year Disposals As at 31 December 1,049,363 4,929,942 5,979,305 13, , ,022 1,209,898 31,022 2,993,229 4,234, , , ,156 95,082 33,051 (460) 216, ,954 58,061 43,715 (237) 101,539 16,495 13,300 29,795 2,050 4,797 6,847 79,181,802 6,831,447 (3,040,000) (237,821) (8,139,452) (14,357,767) (3,758) 60,234,451 81,552,640 6,908,820 (3,040,460) (237,821) (14,357,767) (3,758) 70,821, , ,711 (237) 753,564 Net book value As at 31 December 1,036, ,036 37,021 14,445 79,181,802 81,264,550 Net book value As at 31 December 5,813,283 3,754, ,415 22,948 60,234,451 70,068, Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 29

16 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER Projects in progress as of 31 December are represented in: 6 INVESTMENT IN ASSOCIATES Lands Buildings under constructions The Group has obtained bank facilities against mortgage part from projects in progress. The cost of these projects is amounted to KD 40,658,690 as of 31 December (KD 72,410,969 as of 31 December ). 43,541,437 16,703,536 60,244,973 46,566,217 32,615,491 79,181,708 Tamdeen for Housing Company K.S.C.C Barwa Al Doha Company. (W.L.L. Qatari) Fucom Central Market Company K.S.C.C AlMaysam Trading Co K.S.C.C Ownership percentage 20% 35% 25% 36% 211,104 19,825, , ,000 20,497, ,186 21,417, ,675 21,944,165 Projects in progress include lands with book value of KD 28,898,100 as of 31 December. The Group has obtained bank facilities against promise of mortgage of these lands. During the year, the group sold part of lands that included in projects in progress to related parties (note 18). Depreciations are allocated as follows: Operating costs General and administrative expenses (Note 16) Other operating expenses 317,737 76,546 71, ,711 30,184 49,963 71, ,575 Movements during the year represented in: Balance as at 1 January Establishing, acquisition and capital increase of associates Group s share in associates results Group s share from excess of the fair value of net assets of an associate over the cost of acquisition Foreign currency translation Transfer of an associate to a subsidiary 21,944, ,000 (398,626) (1,408,036) 20,497,503 2,271,676 20,495,000 (328,534) 538,057 1,013,691 (2,045,725) 21,944,165 Following are the assets, liabilities, revenues, profits and losses resulted from investment in associate as of 31 December. 5 INVESTMENT PROPERTIES Balance as of 31 December is represented as follows: Tamdeen for Housing Company K.S.C.C Barwa Al Doha Company W.L.L. Qatari Fucom Central Market Company K.S.C.C AlMaysam Trading Company K.S.C.C Assets 1,320,311 67,042,416 9,139, ,000 Liabilities 264, ,343 7,738,700 Revenues 15, ,378 17,103,305 Net profit / (loss) 4,590 (525,485) (862,498) Balance at the beginning of the year Transferred from property and equipments Additions change in fair value 77,255,553 14,357,767 2,861,731 5,524, ,000,000 77,462,180 (206,627) 77,255, LANDS HELD FOR TRADING Investments properties are represented in the value of mall 360 in south Surra area. This mall is pledged for a bank against loans and bank facilities. During year, the Group has acquired two lands in Subah AlSalim area; the Group purchased these lands with an amount of KD 11,454,400 from related parties. 30 Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 31

17 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER 8 RECEIVABLES Available for sale investments represented in investments in quoted local shares in a portfolio managed by a related party, which include investments of KD 860,000 as at 31 December (KD 760,000 as of 31 December ) represents investments in a shareholding company by 30% of the Parent Company s share capital. Available for sale investments which are pledged to a local bank against loans and bank facilities is amounted to KD 3,735,048 as of 31 December (KD 2,698,844 as of 31 December ). Noncurrent Prepayments to purchase properties and equipments Impairment Current Trade and notes receivables Prepaid expenses Staff receivables Margin of letters of guarantee Due from related parties Others Deferred expenses 12,555,424 (4,425,408) 8,130,016 3,488,201 51,364 90,373 24,000 7,826, ,804 1,140,114 13,012,154 21,142,170 12,873,970 12,873,970 6,885,983 63,880 93,508 24,000 5,432, , ,026 13,465,866 26,339, INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Foreign shares Local shares 434,206 32, ,831 The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security. The carrying value of trade receivables approximates its fair value. The other classes within trade and other receivables do not contain impaired assets. Provision provided for impairment during is amounted to KD 4,425,408 (Nil during ). 11 CASH, CURRENT ACCOUNTS, DEPOSITS AND INVESTMENT PROPERTIES 9 AVAILABLE FOR SALE INVESTMENTS Following is the movement of available for sale investments during the year: Cash on hand Banks current accounts Time deposits Cash at investment portfolios 1,615 1,363,055 2,669, ,423 4,696,941 3,905 6,263, , ,692 7,209,773 Investment portfolios are managed by related parties (note 18). The cash which is pledged to a local bank against loans and bank facilities is amounted to KD 642,549 as of 31 December (KD 510,529 as of 31 December ). For purpose of preparing the statement of cash flows, cash and cash equivalent is represented in the following: Balance at the beginning of the year Additions Change in fair value Balance at the end of the year 2,698, ,574 1,036,204 4,539,622 3,352,467 (653,623) 2,698, Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 33

18 FOR THE YEAR ENDED 31 DECEMBER NOTES TO THE CONSOLIDATED FOR THE YEAR ENDED 31 DECEMBER Cash, current accounts, deposits and investment portfolios (Less) Frozen accounts against letter of guarantee Cash pledged to a local bank against loans and bank facilities Cash and cash equivalents 4,696,941 (390,000) (642,549) 3,664,392 7,209,773 (390,000) (510,529) 6,309,244 Loans and bank facilities are granted from local banks against the following guarantees: Joint guarantee by Kuwait National Cinema Company (shareholder of 30%), and Tamdeen Real Estate Company (shareholder of 30%). Pledging the 360 Mall Kuwait (note 5), and promising to pledge projects in progress (note 4). The noncurrent portion of loans is due during periods ranging between 2 to 5 years. 12 SHARE CAPITAL 15 TRADE PAYABLES The issued and paid up capital amounted to KD 100,000,000 distributed over 1,000,000,000 shares at 100 fils per share as of 31 December (KD 100,000,000 as of 31 December ). Noncurrent Refundable deposits 3,068,086 3,018, STATUTORY RESERVE In accordance with the Law of Commercial Companies 1960, and the Company s Articles of Association, 10% of the net profit before KFAS, National Labor Support Tax, Board of Directors remuneration and Zakat expense for the year is required to be transferred to statutory reserve. The General Assembly may resolve to discontinue such annual transfers when the statutory reserve reaches 50% of the Company s paid up capital. Distribution of the statutory reserve is limited to the amount required to enable the payment of a dividend of 5% of paid up capital to be made in years when accumulated profits are not sufficient for the payment of such dividend. Current Trade payables Retention Due to related parties Leave provision Staff bonuses and accrued expenses Deferred rental income Others KFAS Zakat Refundable deposits represent deposits received from tenants of investment properties. 694,557 3,179,715 15,272, , , , ,218 15,418 79,770 21,034,519 24,102, ,938 5,167,210 2,979, , , ,850 31,166 10,008,055 13,026, LOANS AND BANK FACILITIES 16 GENERAL AND ADMINISTRATIVE EXPENSES Noncurrent Loans Current Loans Overdrafts Effective interest rate 79,462,500 5,096,046 2,210,449 7,306,495 86,768, % 78,846,600 3,507,110 2,949,605 6,456,715 85,303, % Staff costs Rents Transportation and residence expenses Subscription and other fees Professional and consultancy fees Insurance Donations Depreciation and amortization (note 4) Others 1,275,561 7,902 34,858 21, , ,000 76, ,882 2,114,578 1,238,370 18,345 29,400 9, ,655 44,964 50,000 73,969 77,040 1,775, Annual Report TAMDEEN Shopping Centers Company KSCC and its subsidiaries Kuwait 35

19 FOR THE YEAR ENDED 31 DECEMBER 17 STAFF COSTS Salaries and wages Bonus Leave expenses Post employment benefits Number of employees (Employee) 1,361, , , ,256 2,003, , ,863 83,172 33,594 1,603, RELATED PARTIES TRANSACTIONS In the Group s ordinary course of business, there are some transactions with related parties (who represent major shareholders, managers and companies owned or being influenced by those managers). Conditions and prices of those transactions have been approved by the Group s management. The following is the major transactions and the related balances: Transactions with related parties Rents Gains from available for sale investments Key management compensation Acquisition of an associate Acquisition of a subsidiary Sale of projects in progress Acquisition of lands held for trading 2,207,134 36, ,615 1,170,000 11,454, ,048 40, ,470 20,000,000 6,290,000 55,046,360 Balances arising from transactions Due from Related parties Cash in investment portfolio Due to related parties Projects in progress Acquisition of lands held for trading 7,826, ,949 15,272,018 11,454,400 5,432, ,692 2,979,364 5,738, Annual Report