Barwa Real Estate Company: Condensed Consolidated Interim Financial Statements - 30 June 2017

Transcription

1. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 June 2017
2. Barwa Real Estate Company Q .P.S.C. Index to the condensed consolidated interim financial statements Pages Report on review of condensed consolidated interim financial information 1 Condensed consolidated interim statement of financial position 2 Condensed consolidated interim statement of profit or loss 3 Condensed consolidated interim statement of comprehensive income 4 Condensed consolidated interim statement of changes in equity 5 Condensed consolidated interim statement of cash flows 6-7 Notes to the condensed consolidated interim financial statements 8 – 24
4. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION As at 30 June 2017 Notes ASSETS Cash and bank balances Financial assets at fair value through profit or loss Receivables and prepayments Trading properties Finance lease receivables Due from related parties Available-for-sale financial assets Advances for projects and investments Investment properties Property, plant and equipment Investments in associates Goodwill Deferred tax assets TOTAL ASSETS 5 6 7 6 8 9 10 LIABILITIES AND EQUITY LIABILITIES Payables and other liabilities Provisions Due to related parties Obligations under Islamic finance contracts Deferred tax liabilities TOTAL LIABILITIES 11 12 8 13 EQUITY Share capital Treasury shares Legal reserve General reserve Other reserves Retained earnings 17 Total equity attributable to equity holders of the Parent Non-controlling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 30 June 2017 (Reviewed) QR'000 31 December 2016 (Audited) QR'000 3,624,953 28,741 799,598 2,781,428 266,243 108,745 159,809 4,963,443 15,407,499 580,437 572,992 126,411 1,378 29,421,677 2,875,318 29,477 1,137,270 3,201,609 1,459,708 201,785 181,372 4,870,074 13,851,222 591,636 675,768 126,411 1,289 29,202,939 2,154,728 62,176 615,600 8,206,468 1,345 11,040,317 2,252,807 61,083 321,384 8,206,468 1,258 10,843,000 3,891,246 (4,119) 1,452,226 4,639,231 (279,793) 8,453,959 3,891,246 (4,119) 1,452,226 4,639,231 (264,542) 8,514,812 18,152,750 228,610 18,381,360 29,421,677 18,228,854 131,085 18,359,939 29,202,939 These condensed consolidated interim financial statements were approved by the Board of Directors on 25th July 2017 and signed on their behalf by: H.E. Salah Bin Ghanem Al Ali Chairman Salman Bin Mohamad Al Muhannadi Group Chief Executive Officer The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements. 2
5. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS For the six months ended 30 June 2017 Notes For the three months ended 30 June 2017 2016 (Reviewed) QR'000 QR'000 For the six months ended 30 June 2017 2016 (Reviewed) QR'000 QR'000 Rental income Rental operation expenses Net rental income Finance lease income Net rental and finance lease income 332,104 (95,147) 236,957 9,448 246,405 295,403 (82,764) 212,639 55,258 267,897 656,455 (189,480) 466,975 30,607 497,582 587,126 (182,532) 404,594 113,355 517,949 Income from consultancy and other services Consulting operation and other services expenses Net consulting and other services income 60,510 (43,641) 16,869 75,456 (53,718) 21,738 132,956 (91,636) 41,320 158,583 (99,476) 59,107 469,082 54,878 (2,280) (108,817) (21,770) (7,461) 37,219 959,753 630,243 25,133 2,726 (313) (1,273) (110,066) (28,361) (3,762) 155,024 1,246,407 Net fair value gain on investment properties Share of results of associates Gain on sale of available-for-sale financial assets Loss on sale of investments in associates Loss on financial assets at fair value through profit or loss General and administrative expenses Depreciation Impairment losses - net Other income Operating profit before finance cost and tax 9 10 228,632 36,077 (3,681) (57,985) (10,789) (4,047) 2,186 453,667 14 15 323,414 9,064 2,726 (313) (1,963) (55,946) (13,724) (3,740) 25,356 574,509 Finance cost Finance income Profit before income tax (41,974) 23,691 435,384 (38,337) 19,947 556,119 (86,771) 46,618 919,600 (74,537) 41,196 1,213,066 Income tax expense Net profit for the period (420) 434,964 (1,144) 554,975 (1,708) 917,892 (2,295) 1,210,771 432,530 2,434 434,964 549,092 5,883 554,975 911,958 5,934 917,892 1,200,550 10,221 1,210,771 Attributable to: Equity holders of the Parent Non-controlling interests Basic and diluted earnings per share attributable to equity holders of the Parent (expressed in QR per share) 16 16 1.11 1.42 2.34 The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements 3 3.09
6. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2017 Three months ended 30 June 2017 2016 (Reviewed) QR'000 QR'000 Profit for the period Six months ended 30 June 2017 2016 (Reviewed) QR'000 QR'000 434,964 554,975 917,892 1,210,771 16,014 (22,057) (14,936) (7,614) 30,635 (45,542) (4,131) (6,234) (6,043) (22,550) (14,907) (10,365) 428,921 532,425 902,985 1,200,406 426,234 2,687 526,666 5,759 428,921 532,425 896,707 6,278 902,985 1,189,423 10,983 1,200,406 Other comprehensive income Other comprehensive income that will be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations Net loss on available-for-sale financial assets Other comprehensive loss for the period Total comprehensive income for the period Attributable to: Equity holders of the Parent Non-controlling interests The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements. 4
7. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2017 Noncontrolling interests Equity attributable to owners of the parent Balance at 1 January 2017 Profit for the period Other comprehensive income for the period Total comprehensive income for the period Partners’ contribution: Share capital Treasury shares Legal reserve General reserve Other reserves Retained earnings Total QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 1,452,226 - 4,639,231 - 3,891,246 - (4,119) - (264,542) (15,251) (15,251) QR’000 8,514,812 911,958 911,958 18,228,854 911,958 (15,251) 896,707 131,085 5,934 344 6,278 Total Equity QR’000 18,359,939 917,892 (14,907) 902,985 Dividends for 2016 (Note 22) Non-controlling interests on gaining control over a subsidiary (Note 23.ii) - - - - - (972,811) (972,811) - (972,811) - - - - - - - 91,235 91,235 Other movements - - - - - - - 12 12 Total transactions with owners - - - - (972,811) (972,811) 91,247 (881,564) 8,453,959 18,152,750 228,610 18,381,360 Balance at 30 June 2017 (Reviewed) 3,891,246 (4,119) 1,452,226 4,639,231 (279,793) Noncontrolling interests Equity attributable to owners of the parent Balance at 1 January 2016 Profit for the period Other comprehensive income for the period Total comprehensive income for the period Partners’ contribution: Share capital Treasury shares Legal reserve General reserve Other reserves Retained earnings Total QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 QR’000 1,399,641 - 4,639,231 - 3,891,246 - (4,119) - (210,026) (11,127) (11,127) 7,855,259 1,200,550 1,200,550 17,571,232 1,200,550 (11,127) 1,189,423 (856,074) Total Equity QR’000 QR’000 147,207 10,221 762 10,983 17,718,439 1,210,771 (10,365) 1,200,406 - (856,074) (30,000) (30,000) Dividends for 2015 (Note 22) - - - - - (856,074) Transaction with non-controlling interest - - - - - - Other movements - - - - - - (99) (99) Total transactions with owners - - - - - (856,074) (856,074) (30,099) (886,173) 8,199,735 17,904,581 128,091 18,032,672 Balance at 30 June 2016 (Reviewed) 3,891,246 (4,119) 1,399,641 4,639,231 (221,153) The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements. 5 -
8. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS For the six months ended 30 June 2017 Notes OPERATING ACTIVITIES Profit for the period Adjustments for: Finance cost Finance income Net fair value gain on investment properties Unrealised losses on financial assets at fair value through profit or loss Loss / (gain) on sale of financial assets at fair value through profit or loss Loss / (gain) on sale of available-for-sale financial assets Depreciation Share of results of associates Impairment losses - net Loss on sale of investments in an associate Finance lease income Net deferred tax Change in provisions - net Dividend income Gain from sale of property, plant and equipment Income from reversal of provisions Other income 9 (i) 10 14 15 12&15 Operating gain before working capital changes Changes in working capital: Change in receivables and prepayments Change in trading properties Change in finance lease receivables Change in amounts due from / due to related parties Change in provisions Change in payables and accruals NET CASH GENERATED FROM OPERATING ACTIVITIES INVESTING ACTIVITIES Cash and cash equivalent acquired through business combination Finance income received Dividends received from associates Proceeds from sale of an associate Purchase of investment properties Payments for purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Advances paid for purchase of investments and properties Payments for purchase of property, plant and equipment Proceeds from sale of property, plant and equipment Dividend income received Net (payments for) / receipts from financial assets at fair value through profit or loss Net movement in short term deposits maturing after three months NET CASH GENERATED FROM INVESTING ACTIVITIES 30 June 2017 Reviewed QR'000 30 June 2016 Reviewed QR'000 917,892 1,210,771 86,771 (46,618) (469,082) 2,280 42 26,011 (54,878) 7,461 (30,607) 2 (3,257) (176) (86) (33,699) 74,537 (41,196) (630,243) 1,273 (39) (2,726) 32,614 (25,133) 3,762 313 (113,355) (60) (85) (4,373) (145,857) (4,794) 402,056 185,536 (34,491) 1,343,257 (134,150) (185,743) 1,576,465 23 10 9 355,409 (24,573) (212,023) 427,129 (292,894) (88) (45,315) 207,645 30,195 67,807 37,118 (334,797) (1,278) (6,742) 176 3,189 (1,585) 742,453 536,536 The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements 6 75,216 4,000 1,183 (110,375) (92) 10,899 (92,471) (2,979) 3,055 464 619,991 508,891
9. Barwa Real Estate Company Q .P.S.C. CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (continued) For the six months ended 30 June 2017 Notes FINANCING ACTIVITIES Finance cost paid Payments for obligations under Islamic finance contracts Dividends paid Payment to non-controlling interest Change in restricted bank balances NET CASH USED IN FINANCING ACTIVITIES 13 NET INCREASE IN CASH AND CASH EQUIVALENTS Net foreign exchange difference Cash and cash equivalents at 1 January CASH AND CASH EQUIVALENTS AT 30 JUNE 5 5 30 June 2017 Reviewed QR'000 30 June 2016 Reviewed QR'000 (120,617) (511,962) (30,744) (663,323) (108,590) (61,450) (445,766) (30,000) (18,399) (664,205) 1,449,678 11,666 1,346,125 2,807,469 52,331 (5,704) 1,003,256 1,049,883 Note: (i) Depreciation for the six month period ended 30 June 2017 include an amount of QR 4,241 thousand charged to rental operation expenses in the condensed consolidated interim statement of profit or loss (2016 - QR 4,253 thousand) Non-cash movements for the period are summarised as follows: Description Change in receivables and prepayments Changes in amounts due from / due to related parties Change in finance lease receivables Change in payables and accruals 30 June 2017 QR’000 30 June 2016 QR’000 (152,135) (521,407) 149,792 (87,578) (129,425) (385,233) 240,926 (12,085) The attached notes from 1 to 24 form an integral part of these condensed consolidated interim financial statements. 7
10. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 1 CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES Barwa Real Estate Company Q.P.S.C. (“the Company” or “the Parent”) was incorporated pursuant to the provision of Article 68 of the Qatar Commercial Companies Law No. 5 of 2002 as Qatari Public Shareholding Company under Commercial Registration No. 31901 dated 27 December 2005. The term of the Company is 100 years starting from the date of declaration in the Commercial Register. The Company is a listed entity on the Qatar Exchange. The Company’s registered office address is P.O. Box 27777, Doha, State of Qatar. The principal activities of the Company and its subsidiaries (together, “the Group”) include investment in all types of real estate including acquiring, reclamation, dividing, developing and reselling of land and to establish agricultural, industrial, commercial projects on land, or lease those land, and also buying, selling and leasing buildings or projects. It also administers and operates real estate investments in and outside the State of Qatar. The Group is engaged in the business of developing domestic and international real estate projects, investing, hotels ownership and management, projects consulting and others. Qatar Companies Law No. 11 of 2015 (Companies Law) which is applicable to the group has come into effect from 16 June 2015. The Ministry of Economy and Commerce (MOEC) had extended the transitional period determined for complying with the Companies Law till August 2017. Additionally, the executive regulations necessary to apply the Companies Law have not yet been issued by the MOEC. The group is currently in communication with the MOEC in order to amend its articles of association to be in compliance with the new Companies Law. Diplomatic ties and transport links to the State of Qatar were cut off in early June 2017, by a number of members of the Gulf Cooperation Council and certain other countries. It is currently impractical to determine the extent of this impact on the Group or how and when the blockade may end. Management believes that based on the information currently available, these events are not expected to have a material impact on the financial position, as well as business results and cash flows in the foreseeable future; The management is monitoring the effect of the blockade on its financial position and its clients and the potential impact of the situation. The Group’s subsidiaries accounting for more than 2% of the total assets and /or operational results of the Group during the current or previous period are included in these condensed consolidated interim financial statements are listed below. In addition to the below listed subsidiaries, there are a number of other subsidiaries’ financial statements that are consolidated into these condensed consolidated interim financial statements and are accounting for less than 2% of the total assets and/or operational results of the Group. Country of incorporation Name of subsidiary Asas Real Estate Company W.L.L Al-Waseef Asset Management Company W.L.L. Barwa International Company W.L.L. Barwa Al Sadd Company W.L.L. Barwa Salwa Company W.L.L Barwa Al- Baraha W.L.L. Barwa Village Company W.L.L. Masaken Al Sailiya & Mesaimeer Company W.L.L. Barwa District Cooling Company W.L.L. Qatar Real Estate Investment Company P.J.S.C. Qatar Project Management Company Q.P.S.C. Shaza Hotels Investment Company B.S.C.C Lusail Golf Development Company W.L.L. Barwa Real Estate Saudi Arabia W.L.L. Madinat Al Mawater W.L.L. Mustawdaat Logistics W.L.L. Qatar Qatar Qatar Qatar Qatar Qatar Qatar Qatar Qatar Qatar Qatar Bahrain Qatar KSA Qatar Qatar 8 Group effective shareholding percentage 30 June 31 December 2017 2016 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70% 100% 100% 100% 100% 100%
11. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 2 BASIS OF PREPARATION The condensed consolidated interim financial statements for the period ended 30 June 2017 have been prepared in accordance with International Financial Reporting Standards, IAS 34 “Interim Financial Reporting” (“IAS 34”). The condensed consolidated interim financial statements are presented in Qatari Riyals, which is the Group’s functional and presentational currency and all values are rounded to the nearest thousands (QR’000) except when otherwise indicated. The condensed consolidated interim financial statements do not include all information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2016. In addition, results for the six month period ended 30 June 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2017. 3 SIGNIFICANT ACCOUNTING POLICIES The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2016. There are no amendments to IFRSs that have a material effect on the group for the period ended 30 June 2017. (a) New standards and interpretations are effective for annual periods beginning after 1 January 2017 and not yet adopted by the Group A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2017 and have not been applied in preparing these consolidated financial statement. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below: IFRS 9, ‘Financial instruments’ (Annual periods beginning on or after 1 January 2018). IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. IFRS 15, ‘Revenue from contracts with customer’ (Annual periods beginning on or after 1 January 2018). The new standard introduces the core principle that revenue must be recognised when the goods or services are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. IFRS 16, ‘leases’ (Annual periods beginning on or after 1 January 2019) requires lessees to recognise nearly all leases on the balance sheet which will reflect their right to use an asset for a period of time and the associated liability to pay rentals. The lessor’s accounting’ model largely remains unchanged. The Group is in the process of assessing the impact of the new standards, not yet effective, as of 30 June 2017. 4 ACCOUNTING ESTIMATES The preparation of these interim condensed consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates. Information about significant areas of estimation uncertainty and critical judgement in applying accounting policies that have the most significant effect on the amount recognised in the condensed consolidated interim financial information is described in note 41 of the annual consolidated financial statements for the year ended 31 December 2016. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that were applied to the consolidated financial statements for the year ended 31 December 2016 in addition to the business combination judgements (Note 23) . 9
12. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 5 CASH AND BANK BALANCES Cash and bank balances are comprised of the following: As at 30 June 2017 (Reviewed) QR’000 As at 31 December 2016 (Audited) QR’000 Cash on hand Short term deposits (i) Current accounts Call accounts Restricted balances Margin bank accounts 539 3,074,881 163,752 224,341 145,750 15,690 390 2,397,656 116,017 230,559 114,605 16,091 Total cash and bank balances Short term bank deposits maturing after 3 months Restricted bank balances and margin accounts (ii) 3,624,953 (656,044) (161,440) 2,875,318 (1,398,497) (130,696) Cash and cash equivalents 2,807,469 1,346,125 Notes: (i) Short term bank deposits are made for varying periods depending on the cash requirements of the Group with original maturity period ranging up to twelve months and carry profit at commercial market rates. Cash and cash equivalents include fixed deposits with maturity dates from one to three months amounting to QR 2,418,837 thousand (2016: QR 999,159 thousand). (ii) Restricted bank balances are restricted mainly to cover certain bank guarantees issued by the Group and the settlement of dividends yet unclaimed by the parent’s shareholders. 10
13. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 6 CURRENT AND NON-CURRENT PRESENTATION PREPAYMENTS AND FINANCE LEASE RECEIVABLES OF RECEIVABLES AND The following table presents the current and non-current distinction of receivables and prepayments and finance lease receivables at the reporting date: Receivables and prepayments 31 December 30 June 2016 2017 (Audited) (Reviewed) QR’000 QR’000 Current Non-current Finance lease receivables 31 December 30 June 2016 2017 (Audited) (Reviewed) QR’000 QR’000 768,140 31,458 1,103,235 34,035 61,253 204,990 799,598 1,137,270 266,243 493,534 966,174 (i) 1,459,708 Note: (i) 7 At 31 January 2017, Qatar Real Estate Investment Co. "A wholly owned subsidiary" - entered into a termination and release agreement with its main customer, whereby 9 of its finance lease agreements have been terminated resulting in the collection of an amount of QR 1,172 Million in cash during the month of February 2017. TRADING PROPERTIES Properties available for sale Properties under development- net 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 192,469 2,588,959 2,781,428 192,469 3,009,140 3,201,609 Movements of properties available for sale during the period were as follows: 30 June 2017 At 1 January Additions during the period Properties sold during the period At 30 June (Reviewed) QR’000 30 June 2016 (Reviewed) QR’000 192,469 192,469 176,112 176,112 Movements of properties under development during the period were as follows: At 1 January Additions Capitalised finance cost Transfer to investment property (i) (Note 9) Reversal of impairment (Note 14) Foreign exchange adjustment At 30 June (i) 30 June 2017 (Reviewed) QR’000 30 June 2016 (Reviewed) QR’000 3,009,140 61,822 38,194 (535,336) 9,386 5,753 2,588,959 3,616,641 231,430 37,090 (820,482) 16,368 2,225 3,083,272 During the period ended 30 June 2017 an amount of QR 535,336 thousand has been transferred to investment properties related to Shell Project, as a result of commencement of the lease. 11
14. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 8 RELATED PARTY DISCLOSURES Qatari Diar Real Estate Investment Company Q.S.C is the main shareholder of the company, which owns 45% of the company’s shares including one preferred share that carries preferred rights over the financial and operating policies. The remaining 55% of the shares are widely held and publicly traded at the Qatar Exchange. The Group has transactions with related parties, i.e. main shareholder, associated companies, directors and key management of the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing policies and terms of these transactions are approved by the Group’s management. Related party transactions Transactions with related parties during the period were as follows: For the 6 months ended 30 June 2016 2017 (Reviewed) (Reviewed) QR’000 QR’000 Income from consultancy and other services – Main shareholder Rental income – Main shareholder / associates 41,669 10,127 64,248 1,277 Balances with related parties included in the consolidated interim statement of financial position were as follows: Due from related parties Due to related parties 31 December 30 June 31 December 30 June 2016 2016 2017 2017 (Audited) (Audited) (Reviewed) (Reviewed) QR’000 QR’000 QR’000 QR’000 Qatari Diar Real Estate Investment Co. Q.S.C. Associate companies (i) Entities under common control Other related parties 24,568 3,688 80,489 108,745 21,375 97,154 83,256 201,785 585,084 29,772 744 615,600 Current and non-current portions of due from and due to related parties were as follows: Due from related parties 31December 30 June 2016 2017 (Audited) (Reviewed) QR’000 QR’000 Non-current (i) Current (i) 108,745 108,745 291,637 28,788 959 321,384 Due to related parties 31 December 30 June 2016 2017 (Audited) (Reviewed) QR’000 QR’000 85,627 116,158 201,785 578 615,022 615,600 574 320,810 321,384 The decrease resulted mainly from the acquisition of Nuzul Holding B.S.C.C. (Note 23) Compensation of directors and other key management personnel The remuneration of directors and other members of key management during the period were as follows: For the three months ended 30 June 2016 2017 (Reviewed) (Reviewed) QR’000 QR’000 Total key management staff benefits (Group basis) 12,892 12 13,335 For the six months ended 30 June 2016 2017 (Reviewed) (Reviewed) QR’000 QR’000 27,475 27,095
15. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 9 INVESTMENT PROPERTIES At 1 January Additions Acquired through business combination (Note 23) Transfer from trading properties (Note 7) Net fair value gain Foreign exchange adjustment At 30 June Notes: (i) 30 June 2017 (Reviewed) QR’000 30 June 2016 (Reviewed) QR’000 13,851,222 334,797 203,373 535,336 469,082 13,689 15,407,499 11,222,850 110,375 820,482 630,243 (7,220) 12,776,730 Investment properties are located in the State of Qatar, Republic of Cyprus and United Kingdom. (ii) Investment properties are stated at fair value, which has been determined based on valuations performed by accredited independent valuers as at 30 June 2017 for local properties and international properties except for 2 properties owned by Nuzul Holding (Note 23) which have been valued as at 31 December 2016. Those valuers are accredited independent valuers with recognised and relevant professional qualifications and with recent experience in the location and category of those investment properties being valued. In arriving at estimated market values the valuers have used their market knowledge and professional judgement and not only relied on historical transactional comparable. In the absence of current prices in an active market, the valuations are based on the aggregate of the estimated cash flows expected to be received from renting the property. A yield that reflects the specific risks inherent in the net cash flows is applied to the net annual cash flows to arrive at the property valuation. (iii) The Group has no restrictions on the realisab ility of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements, other than the commitments disclosed in note 19. (iv) Included in investment properties are certain properties with a carrying value of QR 1,262,521 thousand at 30 June 2017 (31 December 2016: QR 1,254,000 thousand) for which the title deeds will be transferred to the Group upon completion of the construction of the projects and settlement of the full amount of the related land. The condensed consolidated interim financial statements have been prepared on the basis that the beneficial interest of these investment properties resides with the Group. (v) Description of valuation techniques used by the group and key inputs to valuation on some of the investment properties are as follows: Range (weighted average) Type of Valuation 30 June 31 December Significant unobservable inputs properties technique 2017 2016 Commercial properties DCF method Estimated rental value per sqm per month Rent growth p.a. Long-term vacancy rate Discount rate Market cap QR 17-300 0%-3% 0%-15% 8.44% - 9.00% 6.75%-7% QR 17-300 0%-3% 0%-15% 8.44%-8.81% 6.75%-7% Residential properties DCF method Estimated rental value per sqm per month Rent growth p.a. Long-term vacancy rate Discount rate Market cap QR 31-83 0%-5% 0%-15% 8.44%-8.81% 6.50%-7% QR 31-83 0%-5% 0%-15% 8.44%-8.81% 6.50%-7% Land Bank Direct comparison Estimated land value per sqm 13 QR 2,000-17,000 QR 2,000-17,000
16. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 9 INVESTMENT PROPERTIES (continued) Discounted Cash Flow Method (DCF): It is considered the most commonly used technique for assessing Market Value within the Income Approach. This is a financial modelling technique based on explicit assumptions regarding the prospective cash-flow to a property or business and the costs associated with being able to generate the income. A market-derived discount or internally calculated rate is applied to estimate cash flows to establish a present value of the income stream. This Net Present Value (“NPV”) is an indication of Market Value. Direct Comparison Approach: This approach involves a comparison of the subject property to similar properties that have actually been sold in arms’-length transactions or are offered for sale. This approach demonstrates what buyers have historically been willing to pay (and sellers willing to accept) for similar properties in an open and competitive market and is particularly useful in estimating the value of the land and properties that are typically traded on a unit basis. Generally, the opinion on value is based on evidence of open market transactions in similar property with adjustments of the comparable to differentiate the differences between the subject property and the comparable. 10 INVESTMENTS IN ASSOCIATES The following table illustrates the summarised financial information of the Group’s investments in associates: Six months ended 30 June 2017 (Reviewed) QR’000 At 1 January Dividends received from associates Share of results of associates Disposal Acquired through business combination (Note 23) Net impairment losses (Note 14) Share of change in fair value reserve of available for sale financial assets Currency translation adjustment At 30 June 675,768 (37,118) 54,878 (91,100) (3,354) (23,978) (2,104) 572,992 Six months ended 30 June 2016 (Reviewed) QR’000 723,494 (4,000) 25,133 (1,495) (18,450) 2,103 (3,795) 722,990 Six months ended 30 June 2017 (Reviewed) QR’000 Six months ended 30 June 2016 (Reviewed) QR’000 1,352,747 (779,755) 1,646,057 (923,067) Group share of net assets of associates 572,992 722,990 Carrying amount of the investments 572,992 722,990 137,073 54,878 187,044 25,133 Total group’s share of the associates’ statement of financial position: Total assets Total liabilities Group’s share of associates’ revenues and results: Revenues Results 14
17. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 11 PAYABLES AND OTHER LIABILITIES Subcontractors and suppliers Clients advances and unearned income Retention payable Contribution to social and sports fund Accrued expenses Accrued finance cost Employees end of services benefits Other payables The maturity of payables and other liabilities are as follows: Non-current Current 12 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 443,641 46,716 215,970 39,816 332,418 31,136 97,633 947,398 2,154,728 428,144 100,563 213,695 124,325 333,430 26,788 93,475 932,387 2,252,807 976,682 1,178,046 2,154,728 895,468 1,357,339 2,252,807 PROVISIONS Six months ended 30 June 2017 (Reviewed) QR'000 At 1 January Utilized during the period Reversal during the period (note 15) Acquired through business combination (Note 23) Translation adjustments At 30 June 61,083 (86) 1,179 62,176 Six months ended 30 June 2016 (Reviewed) QR'000 207,028 (86) (145,857) (2) 61,083 Provisions are analysed by nature as follows: 30 June 2017 (Reviewed) QR'000 Provision for litigations Provision for committed costs At 30 June / 31 December 21,895 40,281 62,176 15 31 December 2016 (Audited) QR'000 20,802 40,281 61,083
18. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 13 OBLIGATIONS UNDER ISLAMIC FINANCE CONTRACTS The movements in the obligations under Islamic finance contracts during the period were as follows: At 1 January Repayment during the period At 30 June 30 June 2017 (Reviewed) QR’000 30 June 2016 (Reviewed) QR’000 8,206,468 8,206,468 7,697,837 (61,450) 7,636,387 The maturity profile of obligations under Islamic finance contracts are as follows: Non-current portion 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 8,206,468 8,206,468 8,206,468 8,206,468 Note: (i) The Islamic finance contracts have been obtained for the purpose of financing long term projects, working capital requirements of the Group and settlement of previously obtained banking facilities. The contracts carry profits at commercial rates. There were no securities pledged against any of the contracts at 30 June 2017 and 31 December 2016. 16
19. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 14 IMPAIRMENT LOSSES - NET Six months ended 30 June 2017 (Reviewed) QR’000 Six months ended 30 June 2016 (Reviewed) QR’000 Impairment losses : Available for sale financial assets Receivables and prepayments Due from related parties Investment in associates (Note 10) 12,687 806 7,116 2,396 743 25,260 Reversal of impairment: Trading properties (Note 7) Receivables and prepayments Investment in associates (Note 10) (9,386) (3,762) (16,368) (1,459) (6,810) 7,461 3,762 Net impairment losses 15 OTHER INCOME Dividend income Income from reversal of provisions (Note 12) Penalties from contractors Others 16 Six months ended 30 June 2017 (Reviewed) QR’000 Six months ended 30 June 2016 (Reviewed) QR’000 3,257 86 18,495 15,381 37,219 4,373 145,857 4,794 155,024 BASIC AND DILUTED EARNINGS PER SHARE Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the period as follows: For the six months ended 30 June 2016 2017 (Reviewed) (Reviewed) Profit attributable to owners of the parent (QR’000) 911,958 1,200,550 Ordinary shares issued and fully paid (Thousand shares) 389,125 389,125 (50) (50) 389,075 2.34 389,075 Treasury Shares (Thousand shares) Weighted average number of shares outstanding during the period (in thousand shares) Basic and diluted earnings per share (QR) 3.09 There were no potentially dilutive shares outstanding at any time during the period and therefore the diluted earnings per share are equal to the basic earnings per share. 17
20. Barwa Real Estate Company Q .P.S.C. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2017 17 OTHER RESERVES 30 June 2017 (Reviewed) QR’000 30 June 2016 (Reviewed) QR’000 Translation reserves: Currency translation differences from foreign operations (286,891) (243,582) 7,098 22,429 (279,793) (221,153) Available-for-sale financial assets: Gain on remeasurement at fair value 18 CONTINGENT LIABILITIES The Group had the following contingent liabilities from which it is anticipated that no material liabilities will arise: Bank guarantees 19 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 105,262 102,873 COMMITMENTS 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 Contractual commitments to contractors and suppliers for properties under development 426,477 736,291 Commitments for operating leases (i) 423,269 470,159 Commitments for purchase of investments 301,987 363,859 Note: (i) Commitments for operating leases are analysed as follows: Less than one year Between 1 and 5 years More than 5 years Total operating lease expenditure contracted for at 30 June / 31 December 18 30 June 2017 (Reviewed) QR’000 31 December 2016 (Audited) QR’000 81,799 245,849 95,621 423,269 82,773 277,560 109,826 470,159