Jebel Ali Free Zone FZE - London Stock Exchange · of Dubai and implementing regulations issued by the Jebel Ali Free Zone Authority (“JAFZA”). The Establishment’s registered

Jebel Ali Free Zone FZE

Consolidated financial statementsfor the year ended 31 December 2015


Consolidated financial statements for the year ended 31 December 2015

Pages

Independent auditor’s report 1 - 2

Consolidated balance sheet 3

Consolidated statement of comprehensive income 4

Consolidated statement of changes in equity 5

Consolidated statement of cash flows 6

Notes to the consolidated financial statements 7 - 36

PricewaterhouseCoopers (Dubai Branch), License no. 102451Emaar Square, Building 4, Level 8, P O Box 11987, Dubai - United Arab EmiratesT: +971 (0)4 304 3100, F: +971 (0)4 346 9150, www.pwc.com/me

Douglas O’Mahony, Paul Suddaby, Jacques Fakhoury and Mohamed ElBorno are registered as practising auditors with the UAE Ministry of Economy

Independent auditor's report to the shareholder of Jebel Ali Free Zone FZE

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Jebel Ali Free ZoneFZE (the “Establishment”) and its subsidiary (together “the Group”), which comprise theconsolidated balance sheet as at 31 December 2015 and the consolidated statements ofcomprehensive income, changes in equity and cash flows for the year then ended, and asummary of significant accounting policies and other explanatory notes.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidatedfinancial statements in accordance with International Financial Reporting Standards, and forsuch internal control as management determines is necessary to enable the preparation ofconsolidated financial statements that are free from material misstatement, whether due tofraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these consolidated financial statements basedon our audit. We conducted our audit in accordance with International Standards on Auditing.Those standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the consolidated financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the consolidated financial statements. The procedures selected depend on theauditor’s judgement, including the assessment of the risks of material misstatement of theconsolidated financial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the consolidated financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentation of the consolidatedfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.


The notes on pages 7 to 36 form an integral part of these consolidated financial statements. (4)

Consolidated statement of comprehensive income

Year ended 31 December2015 2014

Note AED’000 AED’000

Revenue 18 1,811,639 1,688,442Cost of sales 19 (392,063) (353,559)Gross profit 1,419,576 1,334,883

Other operating income 20 77,752 82,452General and administrative expenses 21 (182,549) (179,291)Selling and marketing expenses 22 (57,724) (55,116)Operating profit 1,257,055 1,182,928

Finance income 24 15,989 167,361Finance costs 24 (280,440) (286,036)Finance costs – net 24 (264,451) (118,675)Profit and total comprehensive income for

the year 992,604 1,064,253



Consolidated statement of changes in equity

Sharecapital

Retainedearnings Total

AED’000 AED’000 AED’000

Balance at 1 January 2014 4,268,000 2,346,035 6,614,035

Total comprehensive income for the year - 1,064,253 1,064,253

Balance at 31 December 2014 4,268,000 3,410,288 7,678,288

Total comprehensive income for the year - 992,604 992,604

Balance at 31 December 2015 4,268,000 4,402,892 8,670,892



Consolidated statement of cash flowsYear ended 31 December

2015 2014Notes AED’000 AED’000

Operating activitiesProfit for the year 992,604 1,064,253Adjustments for:

Depreciation 5,6 100,889 88,160Amortisation 7 90,726 90,726Finance income 24 (15,989) (167,361)Profit commission on Sukuk borrowing 24 167,144 167,144Finance cost on bank borrowings 24 52,314 79,382Other finance costs 24 60,982 39,510Provision for employees’ end of service benefits

and general pension and social security 23 11,954 11,205Provision for impairment of trade receivables 10 444 2,614Payment of employees’ end of service benefits

and general pension and social security (10,962) (8,708)Operating cash flows before changes in working

capital 1,450,106 1,366,925

Changes in working capital:Trade and other receivables (93,196) (34,203)Trade and other payables 75,146 18,639Due from related parties 6,635 26,638Due to related parties (31,639) 11,702Deferred revenue 29,026 18,013

Net cash generated from operating activities 1,436,078 1,407,714

Investing activitiesPurchase of property and equipment (1,098) (1,307)Purchase of investment property (344,519) (50,282)Movement in long term fixed deposits 883,060 (401,168)Finance income received 17,510 5,042Net cash from / (used in) investing activities 554,953 (447,715)

Financing activitiesProfit commission paid on Sukuk and bank

borrowings (220,812) (248,462)Repayment of bank borrowing (2,135,560) (452,720)Movement in restricted cash 163,432 6,000Other finance costs paid - (7,649)Net cash used in financing activities (2,192,940) (702,831)

Net (decrease) / increase in cash and cashequivalents (201,909) 257,168Cash and cash equivalents at the beginning of theyear 403,356 146,188Cash and cash equivalents at the end of the year 11 201,447 403,356


Notes to the consolidated financial statements for the year ended 31 December2015

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1 Legal status and activities

Jebel Ali Free Zone FZE (the “Establishment”) was established as a Jebel Ali Free ZoneEstablishment under registration number 1283 pursuant to Law No 9 of 1992 issued by the Rulerof Dubai and implementing regulations issued by the Jebel Ali Free Zone Authority (“JAFZA”).The Establishment’s registered office is P.O. Box 16888, Jebel Ali, Dubai, United Arab Emirates.

The Establishment and its subsidiary (together, the “Group”) are wholly-owned by EconomicZones World FZE (“EZW”/the “Parent”).

On 17 March 2015, DP World Limited and its wholly-owned subsidiary, DP World FZE hasacquired 100% shares of the Parent company from Port and Free Zone World FZE (“PFZW”/ the“former intermediate parent”). Accordingly, DP World FZE became the intermediate parentcompany (“DP World”/ the “intermediate parent”).

The ultimate parent company is Dubai World Corporation (the “Ultimate parent”).

The Establishment develops and manages free zones, develops sells and lease warehouses, andprovide facility management services.

Subsidiary Principal activityHolding percentage

2015 2014

United Arab EmiratesJAFZ Sukuk (2019) Limited* Financing (Sukuk borrowing) 100 100

*The Establishment holds 100% beneficial interest in JAFZ Sukuk (2019) Limited, a special-purpose entity incorporated for the execution of AED 2.39 billion Islamic trust certificates(Note 14).

On 13 November 2007 and subsequently amended on 22 April 2012, the Establishment enteredinto two agreements with JAFZA, one agreement to acquire a land use right for a period of 99years and another agreement for the purchase of assets. The Establishment paid JAFZA AED 8.9billion and AED 3 billion as consideration for the acquisition of the land use rights and purchaseof assets respectively. Under the land use right agreement, the Group will be liable to pay JAFZAa contingent consideration of 2% of revenue (limited to licensing and registration activity) earnedfrom the fourth year onward and increases to 50% by the end of the 99th year.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financialstatements are set out below. These policies have been consistently applied to all the yearspresented unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of the Establishment have been prepared in accordance withInternational Financial Reporting Standards (“IFRS”) and IFRS interpretations committee (“IFRSIC”) applicable to companies reporting under IFRS.


Notes to the consolidated financial statements for the year ended 31 December2015 (continued)

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2 Summary of significant accounting policies (continued)

2.1 Basis of preparation (continued)

The consolidated financial statements comply with IFRS as issued by the International AccountingStandards Board (“IASB”).

These consolidated financial statements have been prepared under the historical cost convention asmodified by the revaluation of derivative financial instruments.

At 31 December 2015, the current liabilities included deferred revenue amounting to AED 309(Note 15) million and customer advances of AED 664 million (Note 17) which does not require anoutflow of cash resources in the next 12 months. The Group has a net current assets of AED 65million as at 31 December 2015 after adjustment of the deferred revenue and customer advances.

The preparation of the consolidated financial statements in conformity with IFRS requires the use ofcertain critical accounting estimates. It also requires management to exercise its judgement in theprocess of applying the Group’s accounting policies. The areas involving a higher degree ofjudgement or complexity, or areas where assumptions and estimates are significant to the financialstatements are disclosed in Note 4.

(a) New amendments and interpretations adopted by the Group during the current year

There are no standards, amendments or interpretations that became effective for the first time forthe annual reporting period commencing 1 January 2015 and have a material impact on the Group.

(b) New standards, amendment and interpretations not yet adopted by the Group

Certain new accounting standards and interpretations have been published that are not mandatoryfor 31 December 2015 reporting periods and have not been early adopted by the Group. None ofthese are expected to have a significant effect on the consolidated financial statements of the Group,except the following set out below:

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognitionof financial assets and financial liabilities. The complete version of IFRS 9 was issued inJuly 2015. It replaces the guidance in IAS 39 that relates to the classification andmeasurement of financial instruments. IFRS 9 retains but simplifies the mixed measurementmodel and establishes three primary measurement categories for financial assets: amortisedcost, fair value through other comprehensive income and fair value through profit or loss.The basis of classification depends on the entity’s business model and the contractual cashflow characteristics of the financial asset. Investments in equity instruments are required tobe measured at fair value through profit or loss with the irrevocable option at inception topresent changes in fair value in other comprehensive income with no subsequent recycling.There is now a new expected credit losses model that replaces the incurred loss impairmentmodel used in IAS 39. For financial liabilities there were no changes to classification andmeasurement except for the recognition of changes in own credit risk in othercomprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9relaxes the requirements for hedge effectiveness by replacing the bright line hedgeeffectiveness tests. It requires an economic relationship between the hedged item andhedging instrument and for the ‘hedged ratio’ to be the same as the one management actuallyuse for risk management purposes. Contemporaneous documentation is still required but isdifferent to that currently prepared under IAS 39. The standard is effective for accountingperiods beginning on or after 1 January 2018 and earlier adoption is permitted. The Group isyet to assess IFRS 9’s full impact.



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2.1 Basis of preparation (continued)

(b) New standards, amendment and interpretations not yet adopted by the Group (continued)

IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition andestablishes principles for reporting useful information to users of financial statements aboutthe nature, amount, timing and uncertainty of revenue and cash flows arising from anentity’s contracts with customers. Revenue is recognised when a customer obtains control ofa good or service and thus has the ability to direct the use and obtain the benefits from thegood or service. The standard will replace the existing IAS 18 ‘Revenue’ and IAS 11‘Construction contracts’ and related interpretations. The standard is effective for annualperiods beginning on or after 1 January 2018 and earlier application is permitted. The Groupis currently assessing the full impact of IFRS 15.

IFRS 16 “Leases”, sets out the principles for the recognition, measurement, presentation anddisclosure of leases. All leases result in the lessee obtaining the right to use an asset at thestart of the lease and, if lease payments are made over time, also obtaining financing.Accordingly, IFRS 16 eliminates the classification of leases as either operating leases orfinance leases as is required by IAS 17 and, instead, introduces a single lessee accountingmodel. Lessees will be required to recognise: (a) assets and liabilities for all leases with aterm of more than 12 months, unless the underlying asset is of low value; and (b)depreciation of lease assets separately from interest on lease liabilities in the incomestatement. IFRS 16 substantially carries forward the lessor accounting requirements in IAS17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases,and to account for those two types of leases differently. The standard is effective foraccounting periods beginning on or after 1 January 2019. The Group is yet to assess IFRS16’s full impact.

IAS 1 amendment, is on disclosure initiative. It clarified that the entity is not required toaggregate or disaggregate information in a manner that obscures useful information;specified additional subtotals are acceptable if they are made up of items recognised andmeasured under IFRS, presented and labelled in a manner understandable and consistentfrom period to period; permitted an entity to disaggregate specific line items required by IAS1; and required management to consider the understandability and comparability of financialstatements when determining the order of notes.

There are no other standards that are not yet effective and that would be expected to have a materialimpact on the Group in the current or future reporting periods and on foreseeable future transactions.

2.2 Principles of consolidation

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. TheGroup controls an entity when the Group is exposed to, or has rights to, variable returns from itsinvolvement with the entity and has the ability to affect those returns through its power over theentity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.They are deconsolidated from the date that control ceases.



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2.2 Principles of consolidation (continued)

(a) Subsidiaries (continued)

The Group applies the acquisition method to account for business combinations. The considerationtransferred for the acquisition of a subsidiary is the fair values of the assets transferred, theliabilities incurred to the former owners of the acquiree and the equity interests issued by theGroup. The consideration transferred includes the fair value of any asset or liability resulting from acontingent consideration arrangement. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at their fair values at theacquisition date. The Group recognises any non-controlling interest in the acquiree on anacquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionateshare of the recognised amounts of acquiree’s identifiable net assets. Acquisition-related costs areexpensed as incurred.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’spreviously held equity interest in the acquiree is remeasured to fair value at the acquisition datethrough profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at theacquisition date. Subsequent changes to the fair value of the contingent consideration that isdeemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss oras a change to other comprehensive income. Contingent consideration that is classified as equity isnot remeasured, and its subsequent settlement is accounted for within equity.

(b) Eliminations on consolidation

Inter-company transactions, balances and unrealised gains or losses on transactions betweenGroup companies are eliminated. When necessary amounts reported by subsidiaries have beenadjusted to conform with the Group’s accounting policies.

2.3 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using thecurrency of the primary economic environment in which the entity operates (‘the functionalcurrency’). The consolidated financial statements are presented in United Arab Emirates Dirham(“AED”), which is the Group’s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions or valuation where items are re-measured. Foreignexchange gains and losses resulting from the settlement of such transactions and from thetranslation at year-end exchange rates of monetary assets and liabilities denominated in foreigncurrencies are recognised in the consolidated statement of comprehensive income, except whendeferred in other comprehensive income as qualifying cash flow hedges.



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2.3 Foreign currency translation

(b) Transactions and balances

Balances and transactions denominated in US dollars (“USD”) have been translated into thepresentation currency at a fixed rate as the exchange rate of AED to USD has been pegged since1981.

2.4 Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation. Historical costincludes expenditures that are directly attributable to the acquisition of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item willflow to the Group and the cost of the item can be measured reliably. The carrying amount of thereplaced part is derecognised. All other repairs and maintenance are charged to the statement ofcomprehensive income during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate their cost to their residualvalues over their estimated useful lives, as follows:

YearsMotor and utility vehicles 5-10Furniture and fixtures 5-10Equipment 3-5

The assets’ residual values, useful lives and methods of depreciation, are reviewed and adjusted ifappropriate at each financial year end.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’scarrying amount is greater than its estimated recoverable amount.Gains and losses on disposals are determined by comparing the proceeds with the carrying amountand are recognised within the statement of comprehensive income.

Capital work-in-progress is stated at cost. When commissioned, capital work-in-progress istransferred to the appropriate category of property and equipment and depreciated in accordancewith the Group’s policy.

2.5 Land use right

The total cost of acquiring land use right is capitalised as a land use right asset and is carried atcost less accumulated amortisation and impairment, if any. Amortisation is calculated using thestraight-line method to allocate the cost over the term of rights of 99 years that is included under‘cost of sales’ in the statement of comprehensive income.



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2.6 Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is notoccupied by the companies in the consolidated Group, is classified as investment property.Investment property also includes property that is being constructed or developed for future useas investment property.

Investment property is measured initially at its cost, including related transaction costs and whereapplicable borrowing costs. After initial recognition, investment property is carried at cost lessaccumulated depreciation and impairment, if any.

The fair value for disclosure purposes of the investment property is based on active market prices,adjusted, if necessary, for any difference in the nature, location or condition of the specific asset.If this information is not available, the Group uses alternative valuation methods, such as recentprices on less active markets or discounted cash flow projections. Valuations are performed as ofthe financial position date by professional valuers who hold recognised and relevant professionalqualifications and have recent experience in the location and category of the investment propertybeing valued.

Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable thatfuture economic benefits associated with the expenditure will flow to the Group and the cost ofthe item can be measured reliably. All other repairs and maintenance costs are expensed whenincurred. When part of an investment property is replaced, the carrying amount of the replacedpart is derecognised.

When investment property is sold, gains and losses on disposal are determined by reference to itscarrying amount and are taken into account in determining operating profit.

Investment property under construction is not depreciated until such time as the relevant assets arecompleted and commissioned.

Depreciation is calculated using the straight-line method to allocate their cost to their residualvalues over their estimated useful lives, as follows:

YearsBuildings 20-35Infrastructure 5-50

The useful lives and depreciation method are reviewed periodically to ensure that the method andperiod of depreciation are consistent with the expected pattern of economic benefits from theseassets.

2.7 Financial assets

2.7.1 Classification

The Group classifies its financial assets as loans and receivables or as derivatives. Theclassification depends on the purpose for which the financial assets were acquired. Managementdetermines the classification of its financial assets at initial recognition.



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2.7 Financial assets (continued)

2.7.1 Classification (continued)

Loans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market. They are included in current assets, except for maturitiesgreater than 12 months after the end of the reporting period. These are classified as non-currentassets. The Group’s loans and receivables comprise ‘due from related parties’, ‘trade and otherreceivables’ and ‘cash and cash equivalents’ in the balance sheet (Notes 8, 10 and 11).

Derivatives are categorised as held for trading unless they are designated as hedges. Assets in thiscategory are classified as current assets if expected to be settled within 12 months, otherwise theyare classified as non-current.

2.7.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the “trade-date” – the date onwhich the Group commits to purchase or sell the asset. Investments are initially recognised at fairvalue plus transaction costs for all financial assets not carried at fair value through profit or loss.Financial assets are derecognised when the rights to receive cash flows from the investments haveexpired or have been transferred and the Group has transferred substantially all risks and rewardsof ownership.

Loans and receivables are subsequently carried at amortised cost using the effective interestmethod.

2.8 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet whenthere is a legally enforceable right to offset the recognised amounts and there is an intention tosettle on a net basis or realise the asset and settle the liability simultaneously.

2.9 Impairment of financial assets

Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that afinancial asset or Group of financial assets is impaired. A financial asset or a Group of financialassets is impaired and impairment losses are incurred only if there is objective evidence ofimpairment as a result of one or more events that occurred after the initial recognition of the asset(a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows ofthe financial asset or Group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a Group of debtors isexperiencing significant financial difficulty, default or delinquency in interest or principalpayments, the probability that they will enter bankruptcy or other financial reorganisation, andwhere observable data indicate that there is a measurable decrease in the estimated future cashflows, such as changes in arrears or economic conditions that correlate with defaults.



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2.9 Impairment of financial assets (continued)

Assets carried at amortised cost (continued)

For loans and receivables category, the amount of the loss is measured as the difference betweenthe asset’s carrying amount and the present value of estimated future cash flows (excluding futurecredit losses that have not been incurred) discounted at the financial asset’s original effectiveinterest rate. The carrying amount of the asset is reduced and the amount of the loss is recognisedin the consolidated statement of comprehensive income. If a loan has a variable interest rate, thediscount rate for measuring any impairment loss is the current effective interest rate determinedunder the contract. As a practical expedient, the Group may measure impairment on the basis ofan instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised (such as animprovement in the debtor’s credit rating), the reversal of the previously recognised impairmentloss is recognised in the consolidated statement of comprehensive income.

2.10 Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered intoand are subsequently re-measured at their fair value. The method of recognising the resulting gainor loss depends on whether the derivative is designated as a hedging instrument, and if so, thenature of the item being hedged. The Group designates its derivatives as hedges of a particularrisk associated with a recognised asset or liability or a highly probable forecast transaction (cashflow hedge).

The Group documents at the inception of the transaction the relationship between hedginginstruments and hedged items, as well as its risk management objectives and strategy forundertaking various hedging transactions. The Group also documents its assessment, both athedge inception and on an ongoing basis, of whether the derivatives that are used in hedgingtransactions are highly effective in offsetting changes in fair values or cash flows of hedged items.A hedge of the foreign currency risk of a firm commitment is accounted for as a cash flow hedge.

The full fair value of a hedging derivative is classified as a non-current asset or liability when theremaining hedged item is more than 12 months, and as a current asset or liability when theremaining maturity of the hedged item is less than 12 months. Trading derivatives are classified asa current asset or liability.

The effective portion of changes in the fair value of derivatives that are designated and qualify ascash flow hedges is recognised in other comprehensive income. The gain or loss relating to theineffective portion is recognised immediately in the statement of comprehensive income.



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2.10 Derivative financial instruments and hedging activities (continued)

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedgeditem affects profit or loss (for example, when the forecast sale that is hedged takes place). Thegain or loss relating to the effective portion of interest rate swaps hedging variable rateborrowings is recognised in the consolidated statement of comprehensive income within ‘Financecost - net’. However, when the forecast transaction that is hedged, results in the recognition of anon-financial asset (for example, inventory or fixed assets), the gains and losses previouslydeferred in equity are transferred from equity and included in the initial measurement of the costof the asset. The deferred amounts are ultimately recognised in cost of goods sold in the case ofinventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria forhedge accounting, any cumulative gain or loss existing in equity at that time remains in equity andis recognised when the forecast transaction is ultimately recognised in the statement ofcomprehensive income. When a forecast transaction is no longer expected to occur, thecumulative gain or loss that was reported in equity is immediately transferred to the statement ofcomprehensive income within ‘other gains/ (losses) – net’.

2.11 Trade receivables

Trade receivables are amounts due from customers for properties sold or services performed in theordinary course of business. If collection is expected in one year or less (or in the normal operatingcycle of the business if longer), they are classified as current assets. If not, they are presented asnon-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method, less provision for impairment.

2.12 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

2.13 Share capital

Ordinary shares are classified as equity.

2.14 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in theordinary course of business from suppliers. Trade payables are classified as current liabilities ifpayment is due within one year or less (or in the normal operating cycle of the business if longer).If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method.



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2.15 Advances from customers

Instalments received from buyers for sales of warehouses and/or service prior to meeting therevenue recognition criteria, are recognised as advances from customers. These are considered acurrent liability as they are repayable on demand on cancellation of the contracts, subject tocertain penalties.

2.16 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings aresubsequently carried at amortised cost; any difference between the proceeds (net of transactioncosts) and the redemption value is recognised in the statement of comprehensive income over theperiod of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan tothe extent that it is probable that some or all of the facility will be drawn down. In this case, thefee is deferred until the draw down occurs. To the extent there is no evidence that it is probablethat some or all of the facility will be drawn down, the fee is capitalised as a pre-payment forliquidity services and amortised over the period of the facility to which it relates.

2.17 Employee benefits

(a) End of service benefits to non-UAE nationals – Defined benefit plan

An accrual is made for employees employed in the UAE for estimated liability for employees’entitlement to annual leave as a result of services rendered by the employees up to the balancesheet date. Provision is also made, using actuarial techniques, for the full amount of end ofservice benefits due to the non-UAE Nationals in accordance with the Group policy and UAElabour law, for their periods of service up to the balance sheet date. The accrual relating to annualleave and leave passage is disclosed as a current liability, while the provision relating to end ofservice benefits is disclosed as a non-current liability.

(b) General pension and social security – Defined contribution plan

The Group joined a pension scheme on 6 March 2006, the date of the Establishment’sincorporation. Any employee transferred from JAFZA will continue their pension scheme withthe Establishment. The scheme is a defined contribution plan, operated by the Federal GeneralPension and Social Security Authority. Contributions for eligible UAE National employees aremade and charged to the statement of comprehensive income, in accordance with the provisionsof Federal Law No. 7 for 1999 relating to Pension and Social Security Law.

2.18 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as aresult of past events, where it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation, and a reliable estimate of the amount can bemade. Provisions are not recognised for future operating losses.



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2.18 Provisions (continued)

Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision isrecognised even if the likelihood of an outflow with respect to any one item included in the sameclass of obligation may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle theobligation using a pre-tax rate that reflects current market assessments of the time value of moneyand risks specific to the obligation. Increases in provisions due to the passage of time arerecognised as interest expense.

2.19 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. The Grouprecognises revenue when the amount of revenue can be reliably measured; when it is probable thatfuture economic benefits will flow to the entity; and when specific criteria have been met for eachof the Group’s activities, as described below.

(a) Lease rental

Lease rental is recognised on a straight line basis over the lease term. Where the consideration forthe lease is received for subsequent periods, the attributable amount of revenue is deferred andrecognised in the subsequent period. Unrecognised revenue is classified as deferred revenue underliabilities in the balance sheet.

(b) Administrative services

Revenue from license, registration administration and consultancy service are recognised as theservice is provided.

(c) Sale of property

Revenue from sale of property, normally warehouses, is recognised in the consolidated statementof comprehensive income when the risks and rewards of ownership are transferred to the buyer.The significant risks and rewards are deemed to be transferred when the property is transferred tothe buyer, which in the case of the buildings generally takes place only upon completion ofconstruction and physical handover of the property.

(d) Other operating income

Other operating income is recognised when the service is provided and right to receive payment isestablished.

.



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2.20 Interest income

Interest income is recognised using the effective interest method. When a loan and receivable isimpaired, the Group reduces the carrying amount to its recoverable amount, being the estimatedfuture cash flow discounted at the original effective interest rate of the instrument, and continuesunwinding the discount as interest income. Interest income on impaired loan and receivables isrecognised using the original effective interest rate

2.21 Segment information

The Group is managed as a single business unit and its assets are located in Jebel Ali Free Zone,Dubai, United Arab Emirates. The Chief Executive Officer (“CEO”) is the Group’s chiefoperating decision-maker. Management has determined the operating segments based on theinformation reviewed by the CEO for the purposes of allocating resources and assessingperformance. The CEO considers the business from a service perspective only as the business isgeographically carried out in United Arab Emirates. Apart from lease rental, all other activitiessuch as administrative services and license and registration do not meet the quantitative thresholdrequired by IFRS 8. Accordingly, management has determined that the business is one reportablesegment based on the information reviewed by the Chief Executive Officer for the purposes ofallocating resources and assessing performance.

3 Financial risk management

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including cash flowand fair value interest rate risk), credit risk and liquidity risk. The Group’s overall riskmanagement programme focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on the Group’s financial performance. The Group usesderivative financial instruments to hedge certain risk exposures.

(a) Market risk

(i) Foreign exchange risk

The Group does not have any significant foreign currency exposure, as the majority of itstransactions are denominated in United Arab Emirates Dirham (“AED”).

(ii) Price risk

The Group is not exposed to equity securities or commodity price risk.



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3 Financial risk management (continued)

3.1 Financial risk factors (continued)

(a) Market risk (continued)

(iii) Cash flow and fair value interest rate risk

The Group’s interest rate risk arises from Sukuk borrowing and bank borrowings denominated inAED. Borrowings issued at variable rates expose the Group to cash flow interest rate risk whichis partially offset by cash held at variable rates. Borrowings issued at fixed rates expose the Groupto fair value interest rate risk. The Group management did not set ratio of variable rateborrowings to fixed rate borrowings.

The Group manages its cash flow interest rate risk by using floating-to-fixed interest rateswaption agreements (Note 9). Such interest rate swaptions have the economic effect ofconverting borrowings from floating rates to fixed rates. The Group raised long-term borrowingsat floating rates and should partially purchase swaptions to fixed rates as per terms of the bankborrowing agreement. Under these agreement, the Group has the right but not the obligation onother parties to exchange, at specified intervals (primarily quarterly), the difference between fixedcontract amounts and floating-rate interest amounts calculated in reference to the agreed notionalamounts. Sukuk borrowings issued at fixed rates expose the Group to fair value interest rate risk.

During 2015, The Group has fully repaid its term facility and consequently Group is not exposedto interest rate risk as at year end.

As at 31 December 2014, if the interest rate on the non-hedged portion of bank borrowing ofAED 1,085,560,000 had been 1% higher/lower with all other variables held constant, profit forthe year would have been AED 10,856,000 lower/higher, mainly as a result of higher/lowerinterest expense on floating rate borrowings. If the interest rate on the hedged portion of bankborrowing of AED 1,050,000,000 had been 1% higher/ lower with all other variables heldconstant, profit for the year would have been AED 10,500,000 lower/ higher.

(b) Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for theother party by failing to discharge an obligation. The Group has no significant concentrations ofcredit risk. Credit risk arises from cash and cash equivalents held at banks, trade receivables,including rental receivables from lessees, related party receivables and derivative financialinstruments (Note 8, 9, 10 and 11). Credit risk is managed on a Group basis. The Group haspolicies in place to ensure that rental contracts are entered into only with lessees with anappropriate credit history. The Group’s maximum exposure to credit risk to customer is disclosedin Note 10. Derivative assets and bank deposits are limited to high-credit-quality financialinstitutions. The table below excludes cash on hand amounting to AED 225,000 (2014: AED215,000) and presents an analysis of short term bank deposits and cash and cash equivalents byrating agency designation at the end of reporting period based on Moody's ratings or its equivalentfor the main banking relationships:



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(b) Credit risk (continued)

Counterparties with external credit rating (Moody’s)2015 2014

AED’000 AED’000A1 2,046 618,674A2 13,663 61,878Baa1 185,109 423,759Baa2 52 170,323* 352 174,999

201,222 1,449,633

*Balance of AED 352,000 (2014: AED 174,999,000) are maintained with banks with no formalcredit rating. However, management views these banks to be high-credit-quality financialinstitutions and does not expect these financial institutions to default.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability offunding through an adequate amount of credit facilities. Due to the dynamic nature of theunderlying business, the Group maintains flexibility in funding by keeping credit lines available.

The table below analyses the Group’s financial liabilities into relevant maturity based on theremaining period at the balance sheet to the contractual maturity date. The amounts disclosed inthe table are the contractual undiscounted cash flows. Balances due within 12 months equal theircarrying balances as the impact of discounting is not significant.

Less than1

year

Between 1year and 2

years

Between 2years and

5 yearsOver 5

years TotalAED’000 AED’000 AED’000 AED’000 AED’000

At 31 December 2015Sukuk borrowing 167,144 167,144 2,638,036 - 2,972,324Trade and other

payables excludingadvances fromcustomers (Note 17) 896,207 - - - 896,207

Due to related parties(Note 8) 19,037 - - - 19,037

1,082,388 167,144 2,638,036 - 3,887,568



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(c) Liquidity risk (continued)

Less than1 year

Between 1year and 2

years

Between 2years and

5 yearsOver 5

years TotalAED’000 AED’000 AED’000 AED’000 AED’000

At 31 December 2014Bank borrowings 287,551 302,329 1,131,260 674,033 2,395,173Sukuk borrowing 167,144 167,144 2,805,181 - 3,139,469Trade and other

payables excludingadvances fromcustomers (Note 17) 791,280 - - - 791,280

Due to related parties(Note 8) 48,196 - - - 48,196

1,294,171 469,473 3,936,441 674,033 6,374,118

3.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue asa going concern in order to provide returns to the shareholder and to maintain an optimal capitalstructure to reduce the cost of capital. In order to maintain or adjust the capital structure, theGroup may adjust the amount of profit distributable to the shareholder or manage its workingcapital requirements. Consistent with others in the industry, the Group monitors capital on thebasis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt iscalculated as total borrowings (including current and non-current borrowings gross of transactioncosts) less cash and bank balances (including short term deposits). Total capital is calculated as‘Total equity’ as shown in the consolidated balance sheet plus net debt.

The gearing ratios at 31 December 2015 and 2014 were as follows:

2015 2014AED’000 AED’000

Total Sukuk and bank borrowings (Note 14 and 16) 2,387,320 4,522,880Less: Cash and bank balances (Note 11) (201,447) (1,449,848)Net debt 2,185,873 3,073,032Total equity 8,670,892 7,678,288Total capital 10,856,765 10,751,320

Gearing ratio 20% 29%



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3.3 Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. Thedifferent levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2) Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs) (Level 3).

The following table presents the Group’s assets measured at fair value at 31 December 2015.

Level 1 Level 2 Level 3 TotalAED’000 AED’000 AED’000 AED’000

Derivative financial instruments(Note 9) - 1,500 - 1,500

There are no liabilities measured at fair value at 31 December 2015.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience andother factors, including expectations of future events that are believed to be reasonable under thecircumstances.

4.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accountingestimates will, by definition, seldom equal the related actual results. The estimates andassumptions that have a significant risk of causing a material adjustment to the carrying amountsof assets and liabilities within the next financial year are addressed below.

Impairment of non-financial assets

Impairment of non-financial assets is a key area involving management judgement, requiringassessment as to whether the carrying value of assets can be supported by the net present value offuture cash flows derived from such assets using cash flow projections which have beendiscounted at an appropriate rate.

In calculating the net present value of the future cash flows for investment property andinvestment property under construction of a project, certain assumptions are required to be madein respect of the impairment reviews. The key assumptions on which management has based itscash flow projections when determining the recoverable amount of the assets are as follows:

Management’s projections have been prepared on the basis of strategic plans, knowledge ofthe market, and management’s views on achievable growth in market share over the longterm period of ten years;



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4 Critical accounting estimates and judgements (continued)

4.1 Critical accounting estimates and assumptions (continued)

Impairment of non-financial assets (continued)

Terminal value upon exit of the 10 year cash flows projection; and The discount rate of 12% based on the Group’s weighted average cost of capital with a risk

premium reflecting the relative risks in the markets in which the businesses operate.

At 31 December 2015 and 2014 no impairment has been recognised against investment propertiesunder construction (Note 6).

5 Property and equipment

Motor andutility

vehiclesFurniture

and fixtures Equipment

Capitalwork-in-progress Total

AED’000 AED’000 AED’000 AED’000 AED’000CostAt 1 January 2014 90 54,861 24,800 - 79,751Additions - - - 1,307 1,307Transfer - 1,012 295 (1,307) -Disposals (46) (31) (1) - (78)At 31 December 2014 44 55,842 25,094 - 80,980Additions - - - 1,098 1,098Transfer - 1,795 163 (1,958) -Transferred from a

related party (Note 8) - 9,904 25 860 10,789

At 31 December 2015 44 67,541 25,282 - 92,867

DepreciationAt 1 January 2014 90 48,656 24,403 - 73,149Charge for the year - 2,616 254 - 2,870Transfer - (161) 161 - -Disposals (46) (31) (1) - (78)At 31 December 2014 44 51,080 24,817 - 75,941Charge for the year - 3,626 191 - 3,817Transferred from a

related party (Note 8) - 8,292 17 - 8,309

At 31 December 2015 44 62,998 25,025 - 88,067

Net book amountAt 31 December 2015 - 4,543 257 - 4,800

At 31 December 2014 - 4,762 277 - 5,039

Depreciation of AED 3,817,000 (2014: AED 2,870,000) is included under General andadministrative expenses (Note 21).



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6 Investment property

Buildings andInfrastructure

Investmentproperties

underconstruction Total

AED’000 AED’000 AED’000CostAt 1 January 2014 3,495,056 135,732 3,630,788Additions - 72,094 72,094Transfers 11,765 (11,765) -Transfer from the parent company(Note 8) - 770,621 770,621

Disposals (15,375) - (15,375)At 31 December 2014 3,491,446 966,682 4,458,128Additions - 395,507 395,507Transfer 711,957 (711,957) -At 31 December 2015 4,203,403 650,232 4,853,635

DepreciationAt 1 January 2014 929,069 10,269 939,338Charge for the year (Note 19) 85,290 - 85,290Disposals (15,375) - (15,375)At 31 December 2014 998,984 10,269 1,009,253Charge for the year (Note 19) 97,072 - 97,072At 31 December 2015 1,096,056 10,269 1,106,325

Net book amountAt 31 December 2015 3,107,347 639,963 3,747,310

At 31 December 2014 2,492,462 956,413 3,448,875

The following amounts have been recognised in the consolidated statement of comprehensiveincome in respect of investment property:

2015 2014AED’000 AED’000

Lease rental income (Note 18) 1,555,655 1,427,485

Direct operating expenses 171,352 148,229

At 31 December 2015, the Group had capital commitment of AED 693,741,000 (2014: AED595,856,000).



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6 Investment property (continued)

Management has provided, for each class of property, assumptions made in the determination offair values and other key information on the properties. Management believes that theseinformation are beneficial in evaluating the fair values of the investment property.

Level 1 Level 2 Level 3 TotalAED’000 AED’000 AED’000 AED’000

Buildings and infrastructure - - 6,988,900 6,988,900Investment properties under construction - - 752,289 752,289Total - - 7,741,189 7,741,189

On an annual basis, the Group engages external, independent and qualified valuers to determinethe fair value of the Group’s investment property.

The external valuations of the Level 3 investment properties have been performed using incomecapitalisation and residual method of valuation. The external valuers, in discussion with theGroup’s management, have determined these inputs based on the current lease rates, specificconditions and comparable rentals in the corresponding market.

The Group has all investment properties in Dubai, of which a significant portion has been leasedout.

The significant unobservable inputs used in the fair value measurement categorised within Level 3of the fair value hierarchy of the entity's portfolios of investment property are:

Market rental value (per sqm per annum); Rent growth per annum; Historical and estimated long term occupancy rate; and Yields, discount rates and terminal capitalisation rate.

Significant increases/(decreases) in estimated rental value (per sqm per annum) and rent growthper annum in isolation would result in a significantly higher/(lower) fair value measurement.Significant increases/(decreases) in long-term occupancy rate and discount rate in isolation wouldresult in a significantly lower/(higher) fair value measurement.

At 31 December 2015 and 2014, the Group’s investment property were fair valued on an openmarket basis by independent professionally-qualified valuers who have recent experience in thelocations and categories of the investment properties valued. Based on such valuation, the fairvalue of the investment property at 31 December 2015 is AED 7,741,189,000 (2014: AED6,710,563,000) including investment property under construction of AED 752,289,000 (2014:AED 956,413,000).

For all investment property the current use of the properties is their highest and best use.



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7 Land use right2015 2014

AED’000 AED’000CostAt 1 January and 31 December 8,981,867 8,981,867

AmortisationAt 1 January 642,928 552,202Charge for the year (Note 19) 90,726 90,726

At 31 December 733,654 642,928

Net book amount at 31 December 8,248,213 8,338,939

The land use right of the Group is held under a long-term lease arrangement and amortised over theterm of the lease of 99 years.

8 Related party transactions and balances

Related parties include the parent, the intermediate parent and the ultimate parent company, keymanagement personnel and any businesses (other related parties) which are controlled, directly orindirectly by the shareholders and directors or over which they exercise significant managementinfluence.

During the year the Group entered into the following significant transactions with related partiesin the normal course of business and at prices and terms agreed by the Group’s management.

2015 2014AED’000 AED’000

Income:Revenue generated from other related parties 35,120 35,776Finance income earned from ultimate parent company - 33,989

Expenses:Cost recharged from the parent company 36,556 58,919Cost recharged from other related parties 14,855 13,396Repair and maintenance charged by other related parties 47,965 46,091Security services charged by other related party 7,921 6,108Other expenses – other related parties 11,523 10,115

Key management remuneration:- Salaries and other short term employee benefits 28,466 19,635- Termination and post-employment benefits 2,091 1,866

30,557 21,501

Transfer of investment property from the parent company(Note 6) - 770,621



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8 Related party transactions and balances (continued)

Transfer of property and equipment from the parent company (Note 5)

2015 2014AED’000 AED’000

Net book amount 2,480 -

Related party balances include the following:2015 2014

AED’000 AED’000Due from related parties:Parent company 643 -Other related parties 19,092 23,946

19,735 23,946

Due to related parties:Parent company - 34,533Other related parties 19,037 13,663

19,037 48,196

During 2014, the loan receivable from the ultimate parent of AED 765,453,000 was assigned tothe parent company, which was settled by the transfer of Investment property of AED770,621,000 (Note 6), the difference between these balances was recognised as a balance due tothe parent company.

During the year, property and equipment amounting to net book amount of AED 2,480,000 weretransferred from the parent company to the Establishment (Note 5).

9 Derivative financial instruments

In 2013, the Group entered into interest rate swap agreements (“swaptions”) for a notional amountof AED 1,050,000,000. Under these swaptions, in consideration for a premium, the Grouppurchased the right but not the obligation to receive an agreed upon capped 3 months EIBORinterest rate. The EIBOR cap rates that can be exercised during the corresponding referenceperiods as per the terms of the swaptions are as follows:

Reference periods EIBOR cap rateFrom 19 December 2013 to 18 December 2014 1.10%From 19 December 2014 to 18 December 2015 1.45%From 19 December 2015 to 18 December 2016 1.95%

The fair value of the Group’s derivative financial instruments, which represent swaptions that arenot traded in an active market, is determined by using valuation techniques which maximise theuse of observable market data (Mark to Market) where it is available and rely as little as possibleon entity specific estimates. Since significant inputs required to fair value the swaptions areobtained through quotations from banks for new swaptions under similar terms, the instrument isincluded in Level 2. The fair value of swaptions can be analysed as follows:



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9 Derivative financial instruments (continued)

2015 2014AED’000 AED’000

Current assets 1,500 1,326Non-current assets - 1,326

1,500 2,652

10 Trade and other receivables

2015 2014AED’000 AED’000

Trade receivables 80,977 94,187Less: provision for impairment of receivables (62,557) (83,434)

18,420 10,753Other receivables and prepayments 100,938 45,207As at 31 December 119,358 55,960

At 31 December 2015 and 2014, the Group had a broad base of customers with no concentration ofcredit risk within trade receivables. The carrying amounts of the Group trade and other receivablesare denominated entirely in AED.

As of 31 December 2015, trade receivables of AED 34,000 (2014: AED 1,115,000) were fullyperforming.

As of 31 December 2015, trade receivables of AED 18,386,000 (2014: AED 9,638,000) were pastdue but not impaired. These relate to a number of independent customers for whom there is norecent history of default. The ageing analysis of these trade receivables is as follows:

2015 2014AED’000 AED’000

1 to 12 months 2,160 2,209Over 12 months 16,226 7,429As at 31 December 18,386 9,638



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10 Trade and other receivables (continued)

As of 31 December 2015, trade receivables of AED 62,557,000 (2014: AED 83,434,000) wereimpaired and provided for. The ageing of these receivables is as follows:

2015 2014AED’000 AED’000

1 to 12 months 10,272 8,275Over 12 months 52,285 75,159As at 31 December 62,557 83,434

Movements in the Group’s provision for impairment of trade receivables are as follows:

2015 2014AED’000 AED’000

At 1 January 83,434 87,013Provision for impairment of trade receivables (Note 21) 444 2,614Written off during the year (21,321) (6,193)As at 31 December 62,557 83,434

The creation and release of provision for impairment of receivables have been included in “Generaland administrative expenses” (Note 21) in the statement of comprehensive income. Amountscharged to the allowance account are generally written off when there is no expectation of recovery.

The other classes within trade and other receivables do not contain impaired assets. The maximumexposure to credit risk at the reporting date is the fair value of each class of receivable mentionedabove. The Group does not hold any collateral as security.

The carrying value less impairment provision of trade receivables is assumed to approximate theirfair values due to the short-term nature of trade receivables. Other receivables approximate theirfair values. The fair values are within Level 3 of the fair value hierarchy.

11 Cash and bank balances2015 2014

AED’000 AED’000

Cash at banks and on hand 32,447 326,136Fixed deposits 169,000 1,123,712

201,447 1,449,848

Current accounts and fixed deposits are placed with domestically-incorporated banks and localbranches of international banks. Fixed deposits earned interest at rates ranging from 0.6% to 2.5%per annum (2014: 0.6% to 1.6%).



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11 Cash and bank balances (continued)

For purposes of the statement of cash flows, cash and cash equivalents comprise the following:

2015 2014AED’000 AED’000

Cash and bank balances 201,447 1,449,848Less: Long term fixed deposits - (883,060)Less: Restricted cash - (163,432)Cash and cash equivalents 201,447 403,356

A long term fixed deposits of AED 332,302,750 was assigned by the Establishment to the parentcompany and accordingly was excluded from the cash and bank balance as at 31 December 2015.Additionally, long term deposit of AED 25,438,098 was held in the name of the Establishment forthe benefit of the parent company.

12 Share capital

The total authorised, issued and fully paid share capital of the Establishment at 31 December 2015and 2014 comprises 4,268 shares of AED 1,000,000 each.

13 Employees’ end of service benefits2015 2014

AED’000 AED’000

At 1 January 20,955 17,955Charge for the year (Note 23) 3,295 3,619Transfer 2,424 503Payments during the year (2,303) (1,122)At 31 December 24,371 20,955

In accordance with the provisions of IAS 19, management has carried out an exercise to assess thepresent value of its obligations at 31 December 2015, using the projected unit method, in respectof employees’ end of service benefits payable under the UAE Labour Law. Under this method, anassessment has been made of an employee’s expected service life with the Group and the expectedbasic salary at the date of leaving the service. Management has assumed averageincrement/promotion cost of 4% (2014: 5%). The expected liability at the date of leaving theservice has been discounted to its net present value using a discount rate of 4.16 % (2014: 3.15%).



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14 Sukuk borrowing

On 19 June 2012, the Group issued through its subsidiary JAFZ Sukuk (2019) Limited, Sukuktrust certificates (“Sukuk”) for a nominal value of AED 2,387,000,000 (AED 2,340,000,000 net oftransaction costs of AED 47,000,000) which are listed on Nasdaq Dubai and the Irish StockExchange. The Sukuk matures seven years from the issue date and bears a profit commission at acoupon rate of 7% per annum to be paid semi-annually. The Sukuk are denominated in UnitedStates Dollars (“USD”).

Up to the date of full repayment of bank borrowings (Note 16), Sukuk were secured in parri passuwith bank borrowings. After the repayment of bank borrowings on 21 December 2015, thesecurity for Sukuk was released and henceforth Sukuk become unsecured.

The following fair values of Islamic Sukuk are based on quoted market rates and are within Level1 of the fair value hierarchy:

Carrying amount Fair value2015 2014 2015 2014

AED’000 AED’000 AED’000 AED’000

Sukuk borrowing 2,387,320 2,387,320 2,671,435 2,735,725Deferred borrowing costs (27,954) (34,722) - -

2,359,366 2,352,598 2,671,435 2,735,725

15 Deferred revenue2015 2014

AED’000 AED’000

At 1 January 318,547 300,534Additions during the year 1,584,681 1,445,498Released during the year (Note 18) (1,555,655) (1,427,485)At 31 December 347,573 318,547

Current portion 309,403 279,490Non-current portion 38,170 39,057

347,573 318,547

16 Bank borrowings2015 2014

AED’000 AED’000Non-currentTerm loan - 1,904,120Deferred borrowing costs - (27,074)

- 1,877,046CurrentTerm loan - 231,440Deferred borrowing costs - (23,053)

- 208,387Total bank borrowings - 2,085,433



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16 Bank borrowings (continued)

The Group obtained a syndicated loan facility from a consortium of banks which bore interest at arate of three months EIBOR plus 2.75% per annum and paid on a quarterly basis. Effective 22September 2014, the interest rate on term loan has been revised to EIBOR plus 1.85% per annum.

On 21 December 2015, the Group repaid the full outstanding balance against the term loan bypaying AED 2,135,560,000, which comprised of early repayment of AED 1,904,120,000 andcontractual payments of AED 231,440,000 (2014: AED 452,720,000).

The Group amortised additional deferred borrowing costs amounting to AED 26,357,000 due tosuch early repayment during the year (Note 24).

Bank borrowings were secured with the assignment of accounts receivable and mortgage overcertain land use rights. Consequent to the repayment of bank borrowings on 21 December 2015,the security over bank borrowings was released.

17 Trade and other payables2015 2014

AED’000 AED’000

Trade payable 53,745 42,645Refundable deposits 663,496 611,779Accrued expenses 145,532 109,591Retention and other payables 33,434 27,265Advances from customers 24,917 29,962

921,124 821,242

The carrying value of trade and other payables is assumed to approximate their fair values due tothe short-term nature of trade and other payables. The fair values are within Level 3 of the fairvalue hierarchy.

18 Revenue2015 2014

AED’000 AED’000Lease rental income:

- Plots 691,921 622,231- Warehouses 316,205 303,434- On site residences 280,437 248,814- Offices 249,857 236,707- Others 17,235 16,299

1,555,655 1,427,485Administration service revenue 129,917 130,346License and registration fees 126,067 130,611

1,811,639 1,688,442



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19 Cost of sales

2015 2014AED’000 AED’000

Utilities 118,627 102,885Depreciation of investment property (Note 6) 97,072 85,290Amortisation of land use right (Note 7) 90,726 90,726Repairs and maintenance 74,280 62,939Others 11,358 11,719

392,063 353,559

20 Other operating income2015 2014

AED’000 AED’000

Lease transfer, sub-lease income and lease commission 28,424 22,343Public health services 14,237 13,050Courier service income 10,367 11,672Facility manager operating fee income 4,784 4,382Rent on occupancy post termination 2,302 5,030Sale of property from repossessed facility 1,181 4,779Outdoor advertisement revenue 253 5,361Loss on disposal of investment property - 478Others 16,204 15,357

77,752 82,452

21 General and administrative expenses2015 2014

AED’000 AED’000

Staff cost (Note 23) 108,452 87,078Expenses recharged by related parties 51,676 70,883Security charges 7,921 6,108Depreciation (Note 5) 3,817 2,870Provision for impairment of trade receivables (Note 10) 444 2,614Others 10,239 9,738

182,549 179,291



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22 Selling and marketing expenses

2015 2014AED’000 AED’000

Staff cost (Note 23) 45,387 43,856Advertisements 4,015 2,869Exhibitions 2,796 2,772Events 1,143 1,423Others 4,383 4,196

57,724 55,116

23 Staff cost2015 2014

AED’000 AED’000

Salaries and other staff benefits 124,420 108,348Bonus 17,465 11,381Pension expenses 8,659 7,586End of service benefits (Note 13) 3,295 3,619

153,839 130,934

Included under:2015 2014

AED’000 AED’000

General and administrative expenses (Note 21) 108,452 87,078Selling and marketing expenses (Note 22) 45,387 43,856

153,839 130,934

24 Finance costs - net2015 2014

AED’000 AED’000Finance income:Interest income on bank deposits 15,989 6,159Interest income on balance due from a related party - 14,682Unwinding of fair value loss of balance due from a related

party - 146,52015,989 167,361

Finance costs:Profit commission on Sukuk borrowing (167,144) (167,144)Interest on bank borrowing (52,314) (79,382)Amortisation of borrowing cost on early repayment of loan (26,357) -Fair value loss on interest rate swaptions (1,177) (4,012)Other finance charges (33,448) (35,498)

(280,440) (286,036)(264,451) (118,675)



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25 Financial instruments by category

Derivativeused forhedging

Loans andreceivables

Assets per balance sheet AED’000 AED’00031 December 2015Due from related parties - 19,735Derivative financial instruments 1,500 -Trade and other receivables excluding prepayments - 21,562Cash and bank balances - 201,447

1,500 242,744

31 December 2014Due from related parties - 23,946Derivative financial instruments 2,652 -Trade and other receivables excluding prepayments - 14,687Cash and bank balances - 1,449,848

2,652 1,488,481

Other financialliabilities at

amortised costLiabilities per balance sheet AED’00031 December 2015Due to related parties 19,037Sukuk borrowing 2,359,366Trade and other payables excluding refundable deposits and customer

advances 232,7112,611,114

31 December 2014Due to related parties 48,196Sukuk borrowing 2,352,598Bank borrowings 2,085,433Trade and other payables excluding refundable deposits and customer

advances 179,5014,665,728



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26 Future minimum rental payments receivable under non-cancellableleases

The Group has non-cancellable leases having terms of between 1 and 15 years. Futureminimum rentals receivable under non-cancellable operating leases as at 31 December are asfollows:

2015 2014AED’000 AED’000

Within one year 1,122,465 990,923After one year but not more than five years 2,149,955 1,925,506More than five years 2,235,213 2,150,638

5,507,633 5,067,067

All land leases agreements entered after April 2010 contain rent review provisions whereby theGroup will review the rent every 5 years, subject to certain negotiated rent caps.

Documents

Jebel Ali Free Zone FZE - London Stock Exchange · of Dubai and implementing regulations issued by the Jebel Ali Free Zone Authority (“JAFZA”). The Establishment’s registered