TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 1

Transcription

1 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 1

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 Jaber Al Mubarak Al Hamad Al Sabah Prime minister of the State of Kuwait

3 CONTENTS BOARD MEMBERS 7 EXECUTIVE MANAGEMENT 7 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 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 5

4 BOARD MEMBERS Mohammad Jassim Al Marzouq CHAIRMAN Osama Abdulatif Alabd Al Jaleel VICE CHAIRMAN Shavak Srivastava BOARD MEMBER Tareq Abdulmohsin Al Julaibi BOARD MEMBER Mohammad Mostafa Al Marzouq BOARD MEMBER EXECUTIVE MANAGEMENT Ahmad Abdulaziz Al Sarawi CEO Mohammed Metwally GM - DEVELOPMENT Tamer Ali Ayoub DEPUTY FINANCE MANAGER 6 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 7

5 CHAIRMAN S LETTER HONORABLE SHAREHOLDERS MAY PEACE AND ALLAH S MERCY AND BLESSINGS BE UPON YOU, IT GIVES ME A GREAT PLEASURE, FOR MYSELF AND ON BEHALF OF MY COLLEAGUES ON THE BOARD OF DIRECTORS AND ALL THE STAFF OF TAMDEEN SHOPPING CENTERS COMPANY, TO MEET YOU TO REVIEW WITH YOU THE ANNUAL REPORT FOR THE YEAR ENDED ON 31 DECEMBER 2016 WHICH OUTLINES THE MAIN ACHIEVEMENTS MADE IN THE PAST YEAR AND THE PLANS FOR THE COMING YEARS. OUR REPORT INCLUDES THE COMPANY S FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 31 DECEMBER 2016 AND THE REPORT OF THE INDEPENDENT AUDITOR. ESTEEMED SHAREHOLDERS, 2016 has now ended along with the far-reaching economic consequences at the local, regional and international levels. During the year, global oil prices to break through the US $ 50 ceiling with deep effects on the country s current account surplus. Meanwhile, the Government s decision to raise fuel prices left its mark on the inflation rate which rose to 3.5% for the year as estimated by the Central Bank of Kuwait. Simultaneously, the government announced new, higher, prices for electricity and water to take effect from May Against the backdrop of these developments, the Central Bank of Kuwait raised the discount rate on the KD, thereby raising lending rates. All these factors will, no doubt, have a deep impact on the local economy. With these developments still fresh in our mind, state support for the private sector has now become more important, even inevitable, if the local economy is to sail through this phase. This support is essential for the success of the five-year plan which started with the fiscal year 2015/2016 and will end in 2019/2020 and which envisages the private sector becoming a basic partner in the development process, if employment opportunities are to be created for the national manpower, if the business environment is to be improved through the necessary reducing bureaucratic and administrative laxity and allow investment projects to take off. ESTEEMED SHAREHOLDERS, That, as we see it, was a brief analysis of the economic situation and developments in 2016 for the State of Kuwait. For the achievements of Tamdeen Shopping Centers Company during that year, we are pleased to review with you the key developments of your company, as follows: 1. The Company has started the building and development of Sheikh Jaber Al-Abdullah Al-Jaber Al Sabah Tennis Count, which we had announced in late The project is, in fact, a splendid extension of Mall 360 and will add a leasing space of some 40,000 square meters, a fivestar world-class hotel, covered and open-air tennis courts and a tennis academy. The project is currently is under construction. 2. During 2016, the Company supported and developed several facilities of Mall 360 by re-opening the food court, giving it a new and unique look and widening the restaurants choice for visitors of the Mall. Another amazing development will be the opening of a shop for the prestigious world-class brand, Bloomingdales, during the first quarter of Work is ongoing well on the development and construction of the Sama Al-Jahra project, which is another major asset in Tamdeen Shopping Centers portfolio within the State of Kuwait, the project is scheduled for completion by the end of We have now obtained all the licenses for building the Phase 1 of the Khairan Project located in the South of the country at the center of Sabah Al-Ahmed Seaside City, which occupies an area of 350,000 square meters of land on the sea front. The project features a commercial center, hotel, hotel apartments, residential towers and a yacht marina. In conjunction with its strategic partners, the company plans to develop this project, and work is scheduled to start during the last quarter of Operational revenues increased in 2016 compared to 2015as a result of the efforts to attract new tenants and the wide diversity of operating activities within the company s various commercial centers. Rental revenues for the year rose to KD 17.6 million compared to KD 17.4 million in 2015, and the number of visitors to Mall 360 rose by 2%. 6. Total assets rose to KD 293 million by the end of 2016 against KD 280 million at the end of the previous year. 7. The year 2016 saw our shareholders equity rise to KD million compared to KD million at the end of Our subsidiary companies posted a remarkable strong performance in 2016, with both Tamdeen Entertainment Company and Three-Sixty Style Company achieving total revenues of KD 8 million approximately. 9. Our net profits amounted to KD 11,201,281 for the year 2016 compared to KD 12,564,528 for Given this performance, the company s board of directors has recommended the general assembly to distribute a cash dividend for the year ended 31 December 2016 at the rate of 6% of the nominal value of the share, translating into 6 Fils per share. The board of directors has also recommended the payment of a remuneration to the members of the board of directors in the amount of KD 50,000 for the year Both recommendations are subject to the approval of the General Assembly. IN CONCLUSION I would like to take this opportunity, for myself and on behalf of my colleagues on the board of directors, to express our deepest thanks and gratitude to His Highness the Amir, Sheikh Sabah Al-Ahmad Al Jaber Al Sabah, His Highness the Crown Prince, Sheikh Nawwaf Al Ahmad Al Jaber Al Sabah and His Highness the Prime Minister, for their continuous support to the Kuwaiti private sector. I would also like to thank our esteemed shareholders for the generous confidence and valuable support they have extended to us. My thanks and appreciation are due to the members of our board of directors. It goes without saying that I and my board colleagues appreciate the continuous efforts of all the company s employees and their faithful dedication which enabled Tamdeen Shopping Centers Company to achieve the positive results it did in May Peace and God s Mercy and Blessings be upon you MOHAMMAD JASSIM AL MARZOUQ CHAIRMAN 8 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 9

6 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS REPORT ON THE AUDIT OF THE CONSOLIDATED OPINION We have audited the accompanying consolidated financial statements of the Tamdeen Shopping Centers Company K.S.C.C.( Parent Company ) and its subsidiaries (referred collectively as the Group ) which comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended,and notes to the consolidated financial statements,including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2016, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. BASIS FOR OPINION We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group s financial reporting process. process. AUDITOR S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain understanding of internal control relevant to the audit 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 Group s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS Furthermore, in our opinion, proper books of account have been kept by the Parent Company and the consolidated financial statements, together with the contents of the report of the Parent Company s 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 Companies Law No.1 of 2016 and its executive regulations,and by the Parent Company s Memorandum of Incorporation and Articles of Association, as amended, that an inventory was duly carried out; and that, to the best of our knowledge and belief, no violations of the Companies Law No 1 of 2016 and its executive regulations, or of the Parent Company s Memorandum of Incorporation and Articles of Association,as amended, have occurred during the financial year ended 31 December 2016 that might have had a material effect on the business of the Group or on its consolidated financial position. Bader A. Al-Wazzan (Licence No. 62A ) Deloitte & Touche Al Wazzan & Co. Kuwait, 9 February Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 11

7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016 (ALL AMOUNTS ARE IN KUWAITI DINAR) CONSOLIDATED STATEMENT OF INCOME (ALL AMOUNTS ARE IN KUWAITI DINAR) Note Assets Non-current assets Property, plant and equipment 5 8,469,958 8,751,269 Lands, properties and projects under development 6 41,689,148 26,889,926 Investment properties 7 138,100, ,405,000 Investment in associates 8 25,315,689 26,267,943 Available for sale investments 9 7,343,190 7,395,885 Intangible assets 39,374 49, ,957, ,759,239 Current assets Lands held for trading 10 32,791,650 32,791,650 Inventories 802, ,981 Trade and other receivables 11 7,737,154 4,910,212 Available for sale investments 9 13,875,304 14,497,017 Cash at bank, on hand and investment portfolios 12 17,385,788 21,412,391 72,592,029 74,377,251 Total assets 293,549, ,136,490 Equity and liabilities Equity Share capital ,000, ,000,000 Share premium 13 14,000,000 14,000,000 Statutory reserve 14 5,624,284 4,480,639 Change in fair value reserve 3,444,656 4,059,708 Foreign currency translation reserve 1,273,295 1,211,715 Retained earnings 27,284,917 23,227,769 Equity attributable to shareholders of the Parent Company 151,627, ,979,831 Non-controlling interests 8,553,518 8,516,184 Total equity 160,180, ,496,015 Liabilities Non-current liabilities Bank facilities 17 93,530,000 89,990,000 Post-employment benefits 18 1,384,889 1,298,163 94,914,889 91,288,163 Current liabilities Bank facilities 17 21,288,943 18,190,780 Trade and other payables 19 17,164,886 15,161,532 38,453,829 33,352,312 Total liabilities 133,368, ,640,475 Total equity and liabilities 293,549, ,136,490 Note Revenues Operating revenues 20 26,377,797 26,312,299 Operating costs 21 )9,863,546( )8,804,413( Gross profit 16,514,251 17,507,886 Other income 22 2,943,675 2,704,250 General and administrative expenses 23 )4,994,903( )5,075,835( Other expenses 24 )51,239( )509,816( Net profits of investments ,356 1,633,262 Net disposal profit / acquisition of associates 8 22,480 - Group's share from associates results 8 70,120 )25,345( Net finance costs 26 )3,774,803( )3,401,581( Profit for the year before deductions 11,436,937 12,832,821 Contribution to KFAS )88,309( )102,327( Zakat )97,347( )115,966( Board of Directors remunerations 16 )50,000( )50,000( Net profit for the year 11,201,281 12,564,528 Attributable to: Shareholders of the Company 11,200,793 12,546,189 Non-controlling interests ,339 Net profit for the year 11,201,281 12,564,528 The accompanying notes form an integral part of these consolidated financial statements The accompanying notes form an integral part of these consolidated financial statements Mohammad Jassim Al Marzouq Chairman Osama Abdulatif Alabd Al Jaleel Vice Chairman 12 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 13

8 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (ALL AMOUNTS ARE IN KUWAITI DINAR) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (ALL AMOUNTS ARE IN KUWAITI DINAR) Equity attributable to shareholders of the Parent Company Note Share capital Share premium Statutory reserve Change in fair value reserve Foreign currency translation reserve Retained earnings Total Noncontrolling Interest Total Net profit for the year 11,201,281 12,564,528 Other comprehensive income items Items that may be reclassified subsequently to statement of income: Transferred to statement of income on sale of available for sale investments - )618,469( Change in fair value of available for sale investments )621,713( 1,170,384 Foreign currency translation 98, ,493 Group's share of associate's reserves 8 6, Total other comprehensive income items )516,626( 1,144,391 Total comprehensive income for the year 10,684,655 13,708,919 Attributable to: Shareholders of the Company 10,647,321 13,453,864 Non-controlling interests 37, ,055 10,684,655 13,708,919 Balance as at 1 January ,000,000 14,000,000 3,199,191 3,506, ,938 17,963, ,525,967 6,486, ,012,194 Net profit for the year ,546,189 12,546,189 18,339 12,564,528 Other comprehensive income items , , , ,716 1,144,391 Transferred to statutory reserve - - 1,281, )1,281,448( Acquisition of subsidiaries ,774,902 1,774,902 Dividend )6,000,000( )6,000,000( - )6,000,000( Balance as at 31 December ,000,000 14,000,000 4,480,639 4,059,708 1,211,715 23,227, ,979,831 8,516, ,496,015 Balance as at 1 January ,000,000 14,000,000 4,480,639 4,059,708 1,211,715 23,227, ,979,831 8,516, ,496,015 Net profit for the year ,200,793 11,200, ,201,281 Other comprehensive income items )615,052( 61,580 - )553,472( 36,846 )516,626( Transferred to statutory reserve - - 1,143, )1,143,645( Dividends (Note 16) )6,000,000( )6,000,000( - )6,000,000( Balance as at 31 December ,000,000 14,000,000 5,624,284 3,444,656 1,273,295 27,284, ,627,152 8,553, ,180,670 The accompanying notes form an integral part of these consolidated financial statements The accompanying notes form an integral part of these consolidated financial statements 14 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 15

9 CONSOLIDATED STATEMENT OF CASH FLOWS (ALL AMOUNTS ARE IN KUWAITI DINAR) Cash Flows from operating activities Net profit for the year 11,201,281 12,564,528 Adjustments for: Depreciation 830, ,377 Change the fair value of investment properties )31,240( )74,380( Losses from acquisition of subsidiaries - 183,262 Provisions & Impairment 51, ,922 Losses on disposal of property, plant and equipment - 7,632 Net profits on sale of an associate )22,480( - Gains on sale of lands and properties in progress - )658,967( Net profits from available for sale investments )707,356( )1,633,262( Group's share from associate s results (Note 8) )70,120( 25,345 Net finance costs 3,774,803 3,401,581 Post-employment benefits (Note 18) 339, ,677 Operating profit before changes in the working capital 15,366,351 15,442,715 Inventory )36,153( )84,596( Trade and other receivables )676,657( )606,304( Trade and other payables 797, ,749 Paid Post-employment benefits (Note 18) )252,947( )134,789( Net cash generated from operating activities 15,197,721 15,499,775 Cash flows from investing activities Net paid for acquisition of property, plant and equipment and projects under development )15,914,470( )4,161,079( Paid for construction and development of investment properties )1,410,246( )978,068( Paid for acquisition of lands held for trading - )23,924( Proceeds from sale of lands and properties in progress - 7,000,000 Paid for acquisition of intangible assets - )49,216( Paid for acquisition of available for sale investments - )7,835,491( Proceeds from sale of available for sale investments - 1,949,161 Paid for acquisition of an associate )49,426( - Proceeds from reduction of associates share capital 1,153,636 1,472,726 Net cash paid for acquisition and establishment of subsidiaries )20,000( )8,902,059( Cash dividends received 707, ,296 Net cash used in investing activities )15,533,150( )10,841,654( Cash flows from financing activities Net paid from finance costs )4,044,086( )4,276,712( Net proceeds from Bank facilities 6,780,529 18,382,413 Cash dividends paid )6,027,617( )5,969,516( Net cash (used in) / generated from financing activities )3,291,174( 8,136,185 Net (decrease) / increasein cash and cash equivalents )3,626,603( 12,794,306 Cash and cash equivalents at the beginning of the year 21,012,391 8,218,085 Cash and cash equivalents at the end of the year 17,385,788 21,012,391 The accompanying notes form an integral part of these consolidated financial statements. 16 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 17

10 1- COMPANY S OVERVIEW TAMDEEN SHOPPING CENTERS (K.S.C.C) THEP ARENTCOMPANY WAS INCORPORATED ON 1 MARCH 2005 UNDER AUTHENTICATED ARTICLE OF ASSOCIATIONS NO. 1148/VOL.(1). THE COMPANY IS LOCATED AT AL - ZAHRAA 360 MALL 4TH FLOOR OFFICE 5 - P.O. BOX SAFAT KUWAIT. THE OBJECTIVES OF THE 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 Company may have interest, or participate with entities that carry out similar activities or these that can assist the Company in achieving its objectives inside Kuwait and abroad and it may establish,incorporate, acquire or affiliate these entities. These consolidated financial statements include the financial statements of the Company and its subsidiaries as set out in (Note 27) (together referred to as the Group ). On 1 February 2016, the new Companies Law no. 1/2016 was published in the Official Gazette which is effective from 26 November According to the new law, the companies law No. 25 of 2012and its amendments have been cancelled. The new Executive Regulations of Law No. 1 of 2016 was issued on 12 July 2016 and was published in the Official Gazette on 17 July 2016, which cancelled the Executive Regulations of Law No. 25 of Companies should make necessary arrangement to be in compliance with provisions of the new law within six months from the executive regulation effective date. These consolidated financial statements were authorized for issue by the Board of Directors on 9 February BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES 2.1 BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS).These consolidated financial statements have been prepared on the historical cost basis except for investment property and certain financial instruments that are re-measured at fair value, as explained in the accounting policies below. The accounting policies of the Group have been consistently applied to all years presented, except as stated in note 2.2 in relation to adoption of new and revised International Financial Reporting Standards. 2.2 APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) New and revised IFRSs in issue and become effective The following new and revised IFRSs, which became effective for annual periods beginning on or after 1 January 2016, have been adopted in these consolidated financial statements. The application of these revised IFRSs has had no 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 IAS 1 Presentation of Financial Statements relating to Disclosure initiative Amendments to IFRS 11 Joint arrangements relating to accounting for acquisitions of interests in joint operations Amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets relating to clarification of acceptable methods of depreciation and amortization Amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture: Bearer Plants Amendments to IAS 27 Separate Financial Statements relating to accounting investments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method in separate financial statements. Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investment in Associates and Joint Ventures relating to applying the consolidation exception for investment entities Annual Improvements to IFRSs Cycle covering amendments to IFRS 5, IFRS 7, IAS 19 and IAS New and revised IFRS in issue but not yet effective THE GROUP HAS NOT YET APPLIED THE FOLLOWING NEW AND REVISED IFRSs THAT HAVE BEEN ISSUED BUT ARE NOT YET EFFECTIVE: New and revised IFRSs Annual Improvements to IFRS Cycle amending IFRS 1, IFRS 12 and IAS 28. The amendments to IFRS 1 and IAS 28 are effective for annual periods beginning on or after 1 January 2018, the amendment to IFRS 12 for annual periods beginning on or after 1 January Amendments to IAS 7 Statement of Cash Flows to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. Effective for annual periods beginning on or after 1 January Amendments to IAS 40 Investment Property: Amends paragraph 57 to state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management s intentions for the use of a property by itself does not constitute evidence of a change in use. The paragraph has been amended to state that the list of examples therein is non-exclusive. Effective for annual periods beginning on or after 1 January IFRS 9 Financial Instruments (revised versions in 2009, 2010, 2013 and 2014) The IFRS 9 in its final form is effective. IFRS 9 contains accounting requirements for financial instruments and replaces IAS 39 Financial Instruments: Recognition and Measurement. The standard contains requirements in the following areas: Classification and measurement: Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a fair value through other comprehensive income category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39, however there are differences in the requirements applying to the measurement of an entity s own credit risk. Impairment: The 2014 version of IFRS 9 introduces an expected credit loss model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognized Hedge accounting: Introduces a new hedge accounting model that is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures. Derecognition: The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39. IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014, effective for annual periods beginning on or after 1 January IFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 16 Leases IFRS 16 was issued on January 2016 with an effective date of annual periods beginning on or after 1 January IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16 s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures (2011) relating to the treatment of the sale or contribution of assets from an investor to its associate or joint venture. The effective date of these amendments are deferred indefinitely. Management anticipates that these new standards, interpretations and amendments will be adopted in the Group s financial statements as and when they are applicable and adoption of these new standards, interpretations and amendments, except for IFRS 9, may have no material impact on the financial statements of the Group in the period of initial application. The application of IFRS 9 may have significant impact on amounts reported and disclosures made in the Group s financial statements in respect of Group s financial assets and financial liabilities. 18 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 19

11 2.3 SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION OF THE SUBSIDIARIES The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company (a) has power over the investee (b) is exposed, or has rights, to variable returns from its involvement with the investee and (c) has the ability to use its power to affects its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three components of controls listed above. Consolidation of the subsidiary begins when the company obtains control over the subsidiary and ceases when the Company losses control over the subsidiary. Specifically, income and expenses of subsidiary acquired or disposed of during the year are included in the consolidated statement of income or other comprehensive income from the date in which the Company gains control until the date when Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the noncontrolling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group s accounting policies. All intra-group 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 s losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to shareholders of the Company. When the Group loses control of the subsidiary, a gain or loss is recognized in profit or loss and 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 non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary. 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 under IAS 39, or the cost on initial recognition of an investment in an associate or a joint venture. 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 acquisition-date 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. Acquisition-related costs are generally recognised in the consolidated statement of income as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except for deferred tax assets or liabilities, liabilities or equity instruments related to share based payment arrangements and assets that are classified as held for sale in which cases they are accounted for in accordance with the related IFRSs. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Ifthe net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer s previously held interest in the acquiree, the excess is recognised immediately in the consolidated statement of income as profits. Non-controlling interests may be initially measuredin the acquired subsidiary either at fair value or at the non-controlling interests proportionate share of the recognised amounts of the acquiree s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. When a business combination is achieved in stages, the Group s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date (date of initial acquisition) and the gain or loss, if any, is recognized in the consolidated statement of income. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in the consolidated statement of comprehensive income are transferred to the consolidated statement of income where such treatment would be appropriate if that interest is disposed of. GOODWILL Goodwill, arising on an acquisition of a subsidiary is carried at cost as 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 cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or less frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating units is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in in the consolidated statement of income. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 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. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results, assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5. Under the equity method, an investment in an associate or a joint venture is initially recognised 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 or joint venture. When the Group s share of losses of an associate or a joint venture exceeds the Group s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group s share of the net fair value of the identifiable assets and liabilities of the investee is recognised 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 and liabilities over the cost of the investment, after reassessment, is recognised immediately in the consolidated statement of income. When the Group transacts with an associate or a joint venture, profits or losses resulting from the transactions with the associates or joint venturesare derecognised only to the extent of the Group s share in the associate or joint venture PROPERTY, PLANT AND EQUIPMENTS Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes the purchase price and directly associated costs of bringing the asset to a working condition for its intended use. Maintenance and repairs, replacements and improvements of minor importance are included in the statement of income in the period in which they were incurred. In situations, where it is clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of such assets beyond its originally assessed standard of performance, the expenditure is capitalized. Depreciation is calculated based on estimated useful life of the applicable assets on a straight linemethod except for lands. The value of property, plant and equipment is reduced to its recoverable amount if the carrying amount is greater than its estimated recoverable amount. The residual value, useful life and depreciation method are reviewed at the end of each financial period. Any change in the estimated lives is accounted as of the beginning of the financial year in which it is occurred. Gains or losses resulted from the disposal of property, plant and equipment are included in the consolidated statement of income being the difference between the selling price and carrying value of such assets LANDS AND PROPERTIES UNDER DEVEL- OPMENT Incurred costs on construction or production of capital assets are charged under lands and properties under development till construction or production of these assets is complete, at which time it is reclassified as property, plant and equipment, investment property, or trading properties. The cost includes all direct costs and other costs attributable on a reasonable basis. Lands and properties under development; intended to be used as investment properties, are considered as investment properties recognized at cost and then re-measured at fair value through accredited independent valuers where the lower valuation is adopted. In case there is no reliable method for measuring the fair value of such land under development, the properties are recognized at cost till the date of completion of developing the property or the date of reliably determining their fair value, whichever occurs first. 20 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 21

12 2.3.4 INTANGIBLE ASSETS Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line method over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in the consolidated statement of income when the asset is derecognized INVESTMENT PROPERTIES Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair value of investment properties are included in profit or loss in the period in which they arise. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS The Group annually, reviews the tangible and intangible assets to determine whether there is objective evidence that those assets may be impaired.if such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired. Net recoverable amount is the higher of the asset s fair value less costs to sell or value in use. Impairment losses are recognised in the consolidated statement of income for the year in which they arise. When an impairment loss subsequently reverses, the impairment is reversed to the extent of the net carrying amount that would have been determined had no impairment loss been recognised for the asset. A reversal of an impairment loss is recognised immediately in the consolidated statement of income FINANCIAL INSTRUMENTS Financial assets and liabilities are recognised when the Group becomes a party to the contractual obligations instrument. All Financial assets or liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets or liabilities (other than financial instruments classified at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or liabilities as appropriate, on initial recognition. Transaction costs attributable to the acquisition are recognised directly in the consolidated statement of income. FINANCIAL ASSETS Financial assets are classified into specified categories: financial assets at fair value through profit or loss (FVTPL), held to maturity, available-for-sale (AFS) financial assets and loans and receivables. At the date of acquisition, the Group determines the appropriate classification of its financial assets based on the purpose of acquisition of such financial assets. All regular way purchases or sales of financial assets are recognised on a trade date basis. The Group classifies its financial assets as follows: Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (trade and other receivables and cash at banks) are measured at amortized cost using the effective yield rate, less any impairment losses. Available for sale (AFS) Financial Assets AFS financial assets are non-derivatives and are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss. The financial assets available for sale are re-measured at fair value. The fair value is determined in the manner described in note 3.3. Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income and accumulated under the heading of changes in fair value reserve. When the financial assets Available for sale are disposed of or 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 recognised in profit or loss when the Group s right to receive the dividends is established. Foreign exchange gains and losses are recognised in other comprehensive income. Impairment Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Impairment loss is recognized directly in the statement of income 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. For financial assets carried at amortised cost, the amount of the impairment loss recognised 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 recognised in the consolidated statement of income. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to the consolidated statement of income in the period. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other consolidated 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 all the financial asset and substantially all the risks and rewards of ownership of the asset to another party. 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 recognised in other comprehensive income and accumulated in equity is recognised in the consolidated statement of income. FINANCIAL LIABILITIES Financial liabilities (including borrowings and trade and other payables) are recognised initially at fair value, net of transaction costs incurred and subsequently re-measured at amortised cost using the effective yield 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 recognised in the consolidated statement of income LANDS HELD FOR TRADING Lands held for trading are stated at cost when acquired. Cost is determined on an individual basis for such lands, cost represents the fair value of the consideration given, plus ownership transfer fee,brokerage and any other expenses necessary to develop land or real estate. Land or real estate held for trading are classified under current assets and are valued at the lower of cost or net realisable value on an individual basis. Net realisable value is determined on the basis of estimated sale value, less the estimated expenses necessary to complete the sale INVENTORIES Inventories are stated at the lower of cost or net realisable value. Cost is determined on a weighted average cost basis. Net realizable value is the estimated selling prices less all the estimated costs of completion and costs necessary to complete the sale CASH AND CASH EQUIVALENT Cash and cash equivalents represent cash on hand and at banks, cash at investment portfolios, and time deposits that mature within three months from the date of placement POST-EMPLOYMENT BENEFITS The Group is liable under KuwaitiLabor Law to make payments under defined benefit plans to employees upon termination of employment. Regarding the non-kuwait Labour in other countries; the indemnity is calculated based on law identified in these countries. Such payment is made on a lump sum basis at the end of an employee service. Defined benefit plan is un-funded and is based on the liability that would arise on involuntary termination of all employees on the financial statements date. This basis is considered to be a reliable approximation of the present value of the Group s liability. 22 Annual Report 2016 TAMDEEN Shopping Centers Company - KSCC and its subsidiaries - Kuwait 23