Emaar Malls : DocumentQ1 2017 Financial Statements

Emaar Malls PJSC and its subsidiaries

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31MARCH 2017

EY

Ernst & Young

P.O. Box 9267

28th Floor, Al Saqr Business Tower

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Fax: [phone]

[e-mail]

Building a better working world

Sheikh Zayed Road

Dubai, United Arab Emirates

ey.com/mena

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE SHAREHOLDERS OF EMAAR MALLS PJSC AND ITS SUBSIDIARIES Introduction

We have reviewed the accompanying interim condensed consolidated statement of financial position of Emaar Malls PJSC (the "Company") and its subsidiaries (the "Group") as of 31 March 2017 and the related interim condensed consolidated statements of income, other comprehensive income, cash flows and changes in equity for the three-month period then ended, and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 Interim Financial Reporting ("!AS 34 "). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

For Ernst & Young

Signed by:

Anthony O'Sullivan Partner

Registration Number 687

7 May 2017

Dubai, United Arab Emirates

A member firm of Ernst & Young Global Limited

Emaar Malls PJSC and its subsidiaries

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT

For the period ended 31 March 2017 (unaud ited)

(US $1.00 =AED 3.673)

1 January 2017 to	l January 2016 to
31 March	31 March
Notes	2017 AED'OOO	2016 AED'OOO
REVENUE
Rental income	4	836,312	833, 192
Tota l reven ue	836,312	833,192
EXPENSES
Operating expenses	5	(104,293)	(107,707)
Sales and marketing expenses	(13,286)	(12,307)
Depreciation of property, plant and equipment	10	(9,414)	(11,500)
Depreciation of investment properties	11	(83,260)	(78,039)
General and administrative expenses	(41,126)	(43,436)
Write-off	6	(3,873)
Tota l expenses	(251,379)	(256,862)
OPERATING PROFIT FOR THE PERIOD	584,933	576,330
Finance income	23,855	20,603
Finance costs	7	(69,654)	(68,205)
PROFIT FOR THE PERIOD	8	539,134	528,728
ATTRIBUTA BLE TO:
Equity holders of the Company	539,134	528,728
Earnings per share (AED)
- basic and diluted	9	0.04	0.04

Emaar Malls PJSC and its subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

For the period ended 31 March 2017 (unaudited)

(US $1.00 =AED 3.673)

1 January

2017 to

31 March

2017

AED'OOO

1 January

2016 to

31 March

2016

AED'OOO

Profit for the period

Other comprehensive income to be

reclassified to the consolidated income statement in subsequent period:

539,134

528,728

Other comprehensive income: Net movement on cash flow hedges	7,102	(41,765)
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD	546,236	486,963
ATTRIBUTABLE TO: Equ ity holders of the Company	546,236	486,963

....

Emaar Malls PJSC and its subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ·' ·

As at 31 March 2017 •I

(US $1.00 s AED 3.673)

31 March 2017	31 December 2016
(Unaudited)	(Audited)
Notes	AED'OOO	AED'OOO
ASSETS
Non-current assets Property, plant and equipment	195,034	203,SSS
Investment properties	21,321,616	21,218,905
21,516,650	21,422,460
Current assets
Inventories	11,294	12,467
Trade receivables	12	198,166	187,172
Advances, prepayments and other receivables	168,415	179,376
Due from related parties	13	62,974	55,828
Bank balances and cash	14	4,048,317	3,550,594
4,489,166	3,985,437
TOTAL ASSETS	26,005,816	25,407,897
EQUITY AND LIABILITIES
Equity
Share capital	I S	13,014,300	13,014,300
Reserves	16	881,460	874,358
Retained earnings	2,669,559	2,130,425
TOTAL EQUITY	16,565,319	16,019,083
Non-current liabilities
Employees' end of service benefits	15,018	14,850
Interest bearing loans and borrowings	17	4,560,348	4,558,428
Sukuk	18	2,738,211	2,737,734
Retentions payable after 12 months	56,511	46,519
7,370,089	7,357,531
Current liabilities
Due to related parties	13	115,299	86,883
Accounts payable and accruals	19	649,439	654,883
Advances and security deposits	975,204	911,593
Retentions payable within 12 months	10,148	9,515
Deferred income	320,218	368,349
2,070,408	2,031,283
TOTAL LIABILITIES	9,440,497	9,388,814
TOTAL EQUITY AND LIABILITIES	26,005,816	25,407,897

These interim condensed consolidated financial statements were authorised for issue on 7 May 2;0::..

Directors and signed on their behalf by:

..,_..ow.:::.

• - Chairman

The attached notes I to 21 fonn oart of these interim condensed consolidated financial statements .

4

.......

Emaar Malls PJSC and its subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period ended 31 March 2017 (unaudited)

(US $1.00 =AED 3.673)

1 January 2017 to 31 March 2017	I January 2016 to 31 March 20 / 6
Notes	AED'OOO	AED'OOO
OPERATING ACTIVITIES
Profit for the period	539,134	528,728
Adjustments for:
Depreciation of property, plant and equipment	10	9,414	11,500
Depreciation of investment properties	11	83,260	78,039
Provision for doubtful debts	(3,678)	1 18
Provision for employees' end of service benefits	839	440
Finance costs	69,654	68,205
Loss on disposal of property, plant and equipment	(43)	59
Finance income	(23,855)	(20,603)
Write-off	3,873
Working capital changes:	674,725	670,359
Inventories	1,173	49
Trade recei vables	(7,316)	6,838
Due from related parties	(7,146)	34,992
Advances, prepayments and other receivables	21,229	(1,099)
Due to related parties	28,718	(15,466)
Accounts payable and accruals	(29,106)	16,593
Advances and security deposits	63,611	(23,034)
Retentions payable	10,666	4,496
Deferred income	(48,131)	10,523
Net cash flows from operations	708,423	704,251
Employees' end of service benefits paid	(973)	(450)
Net cash flows from operating activities	707,450	703,801
INVESTING ACTIVITIES
Purchases of property, plant and equ ipment	I O	(893)	(5,442)
Amounts incurred on investment properties	I I	(185,971)	(122,338)
I nterest received	13,587	7,761
Proceeds from disposal of property, plant and equipment	43	36
Deposits under lien or maturing after three months	(487,705)	(519,153)
Net cash flows used in investing activities	(660,939)	(639,136)
FINANCING ACTIVITY
Fi nance cost paid	(36,493)	(34,560)
Net cash flows used in financing activities	(36,493)	(34,560)
INCREASE IN CASH AND CASH EQUIVA LENTS	10,018	30,105
Cash and cash equivalents at I January	25,164	26,777
CASH AND CASH EQUIVA LENTS AT 31 MARCH	14	35,182	56,882

Emaar Malls PJSC and its subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 March 2017 (unaudited)

1 January 2017 to

31 March 2017

Share Retained

capital Reserves earnings Total

AED'OOO AED'OOO AED'OOO AED'OOO

As at 1 January 2017 13,014,300 874,358 2,130,425 16,019,083

Profit for the period 539, 134 539,134

Other comprehensive income for the period 7, 102 7,102 Total comprehensive

income for the period 7,102 539, 134 546,236

As at 31 Ma rch 2017 13,014,300 881,460 2,669,559 16,565,319

1 January 2016 to

31 March 2016

Share Retained

capital Reserves earnings Total

AED'OOO AED'OOO AED'OOO AED'OOO

As at 1 January 201 6 13,014,300 491,419 1,937,945 15,443,664

Profit for the period 528,728 528,728

Other comprehensive loss for the period (41,765) (41,765) Total comprehensive

Income I (loss) for the period (41,765) 528,728 486,963

As at 31 March 2016 13,014,300 449,654 2,466,673 15,930,627

The attached notes 1 to 21 form oart of these interim condensed consolidated financial statements.

Emaar Malls PJSC and its subsidiaries

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 31 March 2017 (unaud ited)

CORPORATE INFORMATION

Emaar Malls Public Joint Stock Company (the "Company") and its subsidiaries (together the "Group") was established as a public joint stock company by Ministerial Decree number 922 of the year 2014 dated 30 September 2014.

The Company is a subsid iary of Emaar Properties PJSC (the "Parent Company"); a Company incorporated in the United Arab Emirates and listed on the Dubai Financial Market. During the year ended 31 December 2014, the Parent Company converted the legal status of the Company from that of a limited l iabi l ity company to public joint stock company and sold 15.37% of their shareholding in the Company through an Initial Public Offering ("!PO"). The Company is listed on the Dubai Financial Market and its shares were traded with effect from 2 October 2014.

The principal activities of the Group are retai 1 development and management of shopping malls.

The address of the registered office of the Group is P.O. Box 191741, Dubai, United Arab Emirates.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of prepa ration

The interim condensed consolidated financial statements of the Group for the period ended 31 March 2017 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting and appl icable requirements of United Arab Emirates law.

The interim condensed consolidated financial statements do not contain all information and disclosures required for fu ll financial statements prepared in accordance with International Financial Reporting Standards and should be read with the Group's annual consolidated financial statements as at 31 December 2016.

Results for the three-months period ended 31 March 2017 are not necessarily indicative of the results that may be expected for the year ending 31 Decem ber 2017 .

The interi m condensed consol idated financial statements have been prepared in United Arab Emirates Dirhams (AED), wh ich is the Company's functional and presentation currency and all val ues are rounded to the nearest thousand except where otherwise ind icated.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and entities controlled by the Company (its subsidiaries) as at 31 March 2017. Control is achieved where all the following criteria are met:

1. the Company has power over an entity;

2. the Company has exposure, or rights, to variable returns from its involvement with the entity; and

3. the Company has the ability to use its power over the entity to affect the amount of the Company's returns.

When the Group has less than a majority of the voting or simi lar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement with the other vote holders of the investee Rights arising from other contractual arrangements

The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee, if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, l iabilities, income and expenses of a subsidiary acquired or d isposed of during the year are included i n the statement of comprehensi ve income from the date the Group gains control unti l the date the Group ceases to control the subsidiary.

-

Emaar Malls PJSC and its subsidiaries

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 31 March 2017 (unaudited)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contin ued) Basis of consolidation (continued)

Subsidiaries

Subsid iaries are fully consolidated from the date of acquisition or incorporation, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsid iaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in ful l.

Share of comprehensive income/ (loss) within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownershi p interest of a subsidiary, without a Joss of control, is accounted for as an equity transaction . If the Group loses control over a subsid iary, it:

Derecognises the assets (includ ing good wi ll) and liabil i ties of the subsidiary; Derecognises the carrying amount of any non-controlling interest; Derecognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received;

Recognises the fair val ue of any investment retained; Recognises any surplus or deficit in profit and loss;

Reclassifies the parent's share of components previously recognised in other comprehensive income to profit and loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or l iabil ities.

The details of the Company's subsidiaries are as follows :

Name of the subsidiary

Country of incorporation

Principal activity Beneficial

Ownership 2017 2016

The Du bai Mall LLC UAE Self owned property leasing, buying and selling of real estate and management services

99% 99%

Emaar Dubai Malls LLC

UAE Self owned property leasing, buyi ng and selling of real estate and management services

99% 99%

Emaar International Mal ls LLC

UAE Self owned property leasing, buying and selling of real estate and management services

99% 99%

Special purpose entities

Special purpose entities are entities that are created to accomplish a narrow and well-defined objective. The financial information of special purpose entities is included in the Group's consolidated financial statements where the substance of the relationshi p is that the Group controls the special purpose entity and hence, they are accounted for as subsidiaries.

_ •"--

Emaar Malls PJSC and its subsidiaries

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 31 March 2017 (unaud ited)

1. SUMMARY OF SIGNIFICANT ACCOU NTING POLICIES (contin ued) Basis of consolidation (continued)

   Special purpose entities (continued)

   The accounting pol icies adopted in the preparation of the interim condensed consolidated financial statements for the three-months period ended 3 I March 20 I 7 are consistent with those used in the preparation of the Group's annual financial statements for the year ended 31 December 2016, except for the adoption of new standards and interpretations issued by the International Accounting Standard Board ("IASB") and effective for annual periods beginn ing on or after I Jan uary 2017, which do not impact the interim condensed consolidated financial statements of the Grou p.

   The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective except for IFRS 15 "Revenue from Contacts with Customers" and IFRS 9 "Financial Instruments" as disclosed i n the annual consol i dated financial statements for the year ended 31 December 2016.

2. SEGMENT INFORMATION

Management monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with the net profit or loss in the interim condensed consolidated financial statements.

Business segments

For management purposes, the Group is organised into five segments, namely:

Super Regional Malls:

Super regional malls include shopping centres which individually hold gross leasable area of more than 800 thousands sq. ft.

Regional Malls:

Regional malls include shopping centres ind ividually holds gross leasable area of more than 400 thousands sq. ft. but less than 800 thousands sq. ft.

Community Integrated Retail:

Community Retai l includes shopping centres or retail outlets individually hold gross leasable area of less than 400 thousands sq. ft.

Specialty Retail:

Specialty retail includes shopping centres mainly offering specialty stores for fine and casual d ining, commercial offices or retail outlets of man ufacturers.

Others:

Other segments incl ude businesses that individual ly do not meet the criteria for a reportable segment as per IFRS 8

Operating Segments and head office balances.

The following tables include reven ue, resu lts and other segment information from 1 January 2017 to 31 March 2017 and I Jan uary 2016 to 31 March 2016. Assets and l iabilities information regarding business segments are presented as at 31 March 2017 and 31 December 2016.

Emaar Malls PJSC and its subsidiaries

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 31 March 201 7 (unaud ited)

3 SEGMENT INFORMATION (contin ued) Business segments (contin ued) Super	Community
Regional Malls	Regional Malls	Integrated Retail	Specialty Retail	Others	Total
AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO
1 January 2017 to 31 March 2017:
Reven ue

Rental income 687,710 46,959 63,539 38,104 836,312

Resu lts

Profit for the period 519,522 29,336 41,198 27,149 (78,071) 539,134

Other segment information Capital expend iture

(Property, pl ant and equipment

and investment properties) 138,635 3,417 41,656 2,906 250 186,864

Depreciation

(Property, plant and equipment

and investment properties) 67,023 9,251 8,390 7,082 928 92,674

Finance costs 69,654 69,654

Assets and lia bilities as at 31 Ma rch 2017:

Segment assets	18,864,059	1,265,656	983,235	1,319,043	3,573,823	26,005,816
Segment l iabi l ities	1,466,538	107,643	193,784	85,949	7,586,583	9,440,497
Super	Community
Regional	Regional	integrated	Specialty
Malls	Malls	Retail	Retail	Others	Total
AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO	AED'OOO
1 January 2016 to
31 March 2016:
Reven ue
Rental income	681,778	47,539	66,989	36,886	833, 192
Results
Profit for the period	513,287	29,003	43,095	23,475	(80,132)	528,728

Emaar Malls PJSC and its subsidiaries

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 31 March 201 7 (unaud ited)

3 SEGMENT INFORMATION (contin ued)

Business segments (contin ued)

I January 2016 to 31 March 2016 :

Super Community

Regional Regional Integrated Specialty

Malls Malls Retail Retail Others Total

AED'OOO AED'OOO AED'OOO AED 'OOO AED 'OOO AED 'OOO

Other segment informa tion Capital expenditure

(Property, plant and equipment

(Property, plant and equipment and investment properties)	65,529	9,323	8,613	5,455	619	89,539
Finance costs Assets and lia bilities	68,205	68,205

and investment properties) 101,187 1,340 19,869 3,638 1,746 127,780 Depreciation

as at 31 Decem ber 2016:

Segment assets 18,829,367 1,261, 124 904,334 1,306,049 3,107,023 25,407,897

Segment l iabi l iti es 1,502,277 104,427 156,080 81,700 7,544,330 9,388,814

4 RENTAL INCOME	]January	I January
2017 to	2016 to
31 March	31 March
2017	2016
AED'OOO	AED'OOO
Base rent	556,320	532,640
Turnover rent	35,858	76,564
Services charges	89,100	88,493
Promotion and marketi ng contribution	12,672	1 1,617
Specialty leasi ng	57,217	59,835
Multimedia	17,517	23,440
Others	67,628	40,603
836,312	833, 192